Ma mac, possibly some custom chips and well bring you key headline throughout this hour our own steve kovac is live on the ground at wwdc while rosenblats martin croquette and msnbc contributor are with me to discuss what the product means for apples bottom line with the event kick off as we speak lets get back to steve kovac out there in cupertino steve, people would be forgiven for thinking this whole thing is a headset unveil, but this is a developer conference which is paving the way for the new software for the next iphone and possibly macs that helped them gain a lot of market share during the pandemic. How important are those pieces during this event . Yeah. Incredibly important, jon. This is still some of the iphone companies and any updates to ios is incredibly important. What i will be looking for is around wallet and fintech, and they announced the buy now, pay later that sent shares of the firm down and they have huge ambitions for apple pay and there there was an interesting report that apple put out that 3 trillion happened in one year in u. S. Apps and how do they capture some of the activity if theyre not subject through the instore tax, and they do it through applepay so anything they can do to move the needle there is going to be super interesting, but to your point, its a Developers Conference and the reason why theyll announce a headset today because they need the developers in the audience right now to make the experiences and to make this product and get it sold so, steve, a lot of people have been saying for the past several years about everything that apple does, oh, its evolutionary, not revolutionary, and yet, here the stock is near a 3 trillion market cap at alltime highs how does the smart investor distinguish between disappointed chatter around these announcements and the reality that unlike amazon, right . Why didnt apple do the echo unlike amazon, apple is at an alltime high. Exactly a lot of that might be excitement leading up to this, but keep in mind, this will be a very longterm project this is not going to cannibalize the iphone like we saw the iphone cannibalize the ipod, for example. Its more like the watch, in my opinion, where its sort of like an accessory and they can kind of figure out the market fit from there if you remember when the watch first came out, by the way, that was the last major product about nine years ago it was mostly focused on trying to be a little iphone on your wrist and then they pared back a lot of those features and i expect to see something similar out of the headset. See how it works, no one has figured it out yet and what is apples vision for it. We know what apple thinks and what meta thinks and what is the apples pitch for mixed reality . Call me crazy, but shouldnt investors expect to hear something from ai from apples custom chips during this event theres been a lot of talk about nvidia in ai and apple has been building its own processing cores and doing its own ai work meant to feed into not just iphones, but into things like this mixed reality headset that we expect to see doesnt apple with Developers Need to make the case for the raw horsepower capability thats built into this thing, and not just for raw visualization and also for ai to be able to create environments and do it in an efficient way. And not just that apple, the privacyfocused company, they like a lot of the ai data to be processed on device so yes, especially there will be likely a mac announcement today, and expecting the n series chips that are outperforming intel and the transition that theyve successfully made off of intel and mac. That same chip is likely going to be powering a huge headset and thats a huge opportunity on the ai front that maybe we dont have a siri, chatgptpipe product, but we do have something under the hood so if they do make an ai pitch it will be something along those lines, i suspect. Steve, well come back to you during the hour to get the key analysis on the importance of what is being announced and steve kovac. Right now, lets get to Barton Crocket and casey newton casey, ill start with you on this one because this headset has been highly anticipated and yet people tend to think it its the news that apple announces and just about everything and its not a big deal and years later, perhaps it is a big deal. How do you frame what apples multiyear approach is to these technologies and how an investor should sort of prepare for that . I would prepare by measuring my expectations. You know, the first apple watch came out it wasnt great it did take a while for apple to figure out exactly what it was for. They got there in the end. Now its a 10 billion business. I think this vr ar headset could be an even bigger business and theres still a lot of fundamental technology that needs to get invented in order to work as well as apple wants it to, and for it to be affordable so if investors want to invest based on this product, i think they have to be prepared to be very patient. Martin, is this going to be a gaming console look, i think that we all hope its more than a gaming console, but i do think what your first guest said about expectations is really crucial here i mean, this is a launch where apple is basically getting people, i think, primarily to buy into the idea that this could become big and thats a great kind of setup for the stock. So youve got an argument for seeing and believing what could happen without actually having to deliver it today. So it couldnt be a better backdrop for starting down this road i do like the idea that apple is coming in with a highend device i think one of the things they need to do is separate themselves from whats already out there which is the Quest Products from meta and apple pursuing the premium end and thats right in apples wheelhouse and they make it seem like an aspirational product with something that can be the future i think you can see investors getting interested in that and its helpful for the equity and right now theres nothing meaningful for the models where we dont have anything meaningful yet and well look at whats happening today and see if we need to evaluate that. Speaking of met a how dangerous is this potentially for meta because theyre subsidizing their hardware with the argument that were building out an ecosystem and well build volumes of this thing. If apple comes in with a product that costs multiples more than meta that they dont have to subsidize and its even just equally popular. Not even more popular, doesnt that mean that meta bleeds cash for no great outcome down the road i think Mark Zuckerberg is that quest becomes the fitbit of Virtual Reality and the early leader that ends up being too cheap relative to the apple device out there, and i think that from the stock perspective thats not necessarily that, and i think investors need to see meta in the reality. We like the stock. We like it for the apps. Were not there for the metaverse. The risk is that they dig in their heels and they spend more chasing something that they arent going to win. Well have to see. Casey, barton says he hopes this is more than a gaming console, and i think part of the problem with things when they come out is they try to be everything and its a monitoring device that also helps to take time the metaquest, i dont know what that is and legless avatars and bad meeting room, i dont know, if they were to come out with a great gaming console that mixes in with reality and its the most awesome thing my kids have ever seen, that i can get behind what about it . I think youre right, but apple wouldnt have invested this much if they thought it could only be a gaming console gaming is a Good Business and its not a big enough business to catch apples attention what i have my eye on, what can it do with the productivity uses Something Like an Office Worker wants to pick up to do a virtual facetime call . Ill tell you, i tried it with the quest pro and its kind of only soso so i think theres a lot to be built there and if apple can get better at the productivity then they might have a hit on their hands. I dont know, though. Yeah, the iphone, it would be great if it can play games and if it can do word thats really i dont know if theres been a productivitydriven cultural phenomenon lately, but i guess well see. Along those lines, though, something that is productivity driving is apples custom chips. Those often get a lot of attention at wwdc, but perhaps we dont spend enough time talking about the kind of margin and value that those have created for apple and that should be important for investors, no . Yeah. The chips are clearly a key ingredient in why that hardware is just so good. Right . Particularly on the left side of things, apples laptops improved i would say more in the past three or four years than they did in the past ten and chips were a huge part of that story so vertical integration theyve got going on continues to drive excellence for them. All right casey newton and Barton Crocket. Meanwhile, a couple of headlines coming out of wwdc there is, as expected a 15inch macbook air. It will start at 1299 which is a lot cheaper than the rumors that ive been seeing also the 13 model, the price went down by a hundred bucks deflation in technology is back that hadnt been the case over the past year. So perhaps macro heads, keep note on that, as well. Lets turn to the chip stocks and the semiconductor etf smh on pace for the best first half of the year ever as ai hype drives a lot of gains nvidia has led the group higher up 170 . Advanced microdevices, amd gained more than 80 on semi and micron both up 40 citi out with a new note naming m micron a top pick writing with the exception of nvidia it expects a pullback as most chipmakers are not connected to generative ai and theyre facing growth and inventory challenges. Joining me is the analyst behind that call, citis chris donelly. I hear what youre saying here i also have noticed that a lot of the chips pulled way back in the months leading up to this year think about the likes of marvel, qualcomm theyre coming out with these new products and they have the growth areas and the ceos were excited about the stocks going up and then they tanked. So why at this point, even though theres been a runup in the smh is it a bad time to buy in sure. So we were just in asia last week and digging into the supply chain where products are bought and sold, et cetera, et cetera what we found is ai is doing very well, but theres a very thin slice of the market essentially nvidia and a couple of others and the rest of the Semiconductor Market from handsets to automotive to industrial and several other end markets and data center that has too much inventory is still pretty weak. So hey, we like nvidia and its doing great, but youve had numbers come down so far this year and we think numbers come down again in a month and a half and you show the chart where youve had the big spike in the semis over the last month, month and a half its small as far as a driver goes right now lets pump the brakes a little bit and continue with profits. Should semiconductor investors should be focused on ai across the board for driver and look at the continuing mov toward solid state memory as an issue. You could look at the shift in automotive platforms toward autonomous and digital you can look at the digitization of the manufacturing floor as a potential driver none of those directly airelated, but all of them continuing to happen are these stocks richly priced when you consider potential growth from those things do they need an ai storyline to deserve to go higher well, they definitely need that and ai was mentioned seemingly every other sentence in the meetings we had last week, but most of this is just way out there and youre talking a few years out in the future and right now its low Single Digits as part of the percentage of semis and the one thing we looked at that scared us is the sox index is at a 40, 40 percent premium to the s p 500 right now. Thats the highest premium its had in 15 years since the Global Financial crisis youre in an environment where in arc ggregate the things are coming down and were saying much the brakes on ai and clearly nvidia is getting a lot of the hype and the business and for the rest of the semis, its a pretty tough environment thats what i wonder, is the difference between the valuation of the names that are at the top very different historically from the valuation of the names at the bottom so is the whole sox sort of priced in a way thats concerning or is it that certain names have run up so far that its made the whole index look relatively expensive yeah. Its almost like i covered the meme stocks or Something Like that nvidia had such a huge blowout of a quarter and folks started buying everything they can get their hands on and then you had a lot of companies they could get their hands on and its one or two percent of the revenues the Semiconductor Space is extremely volatile and its never not been volatile. So you can have periods of time like the last six weeks where you get these sudden spikes and you have to be nimble, in my opinion, given the environment and even for the second half it looks sketchy right now. Chris danel, why, thank you for that view on Semiconductors Still getting some headlines out of apple wwdc. Apple announcing mac pro with apple silicon. Thats the last model in the lineup to ditch intel chips for apples own homegrown design so the transition off of intel from apple is now complete it was basically complete before because the mac pro is very low volume, but this is a very significant moment for apples ecosystem where they can now say to developers, they have completed that transition remarkably smoothly with share gains as we mentioned in the show with the mac. Coming up, should the fed hike, pause or pivot that is the question everyones asking after fridays strong jobs report. Well look at what the market is pricing in and how investors should position it plus, we are watching all of the updates as i mentioned, just now coming out of apples worldwide developer conference and well bring you the latest headlines with the stock up 50 from the recent low the exchange is back right after this ts hexcng ocn hit ehaen bc is it possible to protect my business from Cyber Threats . It is, with comcast business. Helping every connected device stay protected. Yours. Your employees. Even. Susan . Hers, too. Safe. Secure. And powered by the next generation 10g network. With comcast business, advanced security isnt just possible. Its happening. Get started with fast speeds and advanced security for 49. 99 a month for 12 months. Plus ask how to get up to a 750 prepaid card with qualifying internet. Welcome back to the exchange, stocks mostly in the green after posting in march Kristina Partsinevelos has a look at the numbers. Yeah. We have a mixed bag and the s p 500 is getting close to bull market territory and much of the gains have to do with the seven tech names, ai mafia or the magnificent seven as jim cramer likes to say including nvidia, apple, microsoft, google, amazon and tesla and that is on pace for its best first half of the year since 1991, the year the World Wide Web came to life with its first web page the nasdaq is up about 26 year to date and the nasdaq 100 hitting a fresh 52week high and apple helping with a lot of these moves given its weight and the launch of its new products and lets talk about sectors and financials led lower today by some big names, j. P. Morgan down 1. 5 and fidelity, and fifth third over 1 . The wall street journal reporting they may raise capital by 20 and thats putting pressure on the sector and i want to make a pivot and i want to talk about the cryptosphere because the sec is suing Crypto Exchange binance over alleged violations it is a notice issued against them by the sec and theyre selling off quite dramatically and marathon, nine riot, 7 , jon. The thing that caught my eye in the sec lawsuit and binance is the commingling of Customer Fund which is reminds me of ftx, but it seems like it would be different from any issues with Coinbase Coinbase public and seems to be operating in a way thats more visible and are people trading these things together, perhaps and not because theyre all necessarily doing the same things yes the answer is 100 yes and also because the sec is going after the names and it does get lumped in and in particular with binance there are 13 charges against the company and the four main points and one is the commingling of customer assets and the other is possibly selling unregistered securities and these are Digital Asset asks this brings up the whole question, what is the security the crypto world is saying the sec wont define it and another major point, too is theyre operating a platform that wasnt cleared by the sec and binance saying we dont operate the Clearing House in the United States we have binance. U. S. And thats not the Clearing House theres a lot of vagueness about whats going on internally with the company, but both coinbase and binance arguing the sec is not playing ball and not working with them and not communicating and jon, one last point and binance did say it is not a u. S. Exchange and theyre limited in reach and they just had this in a blog post about an hour ago. Some cryptocurrencies themselves traded down quite a bit down more than 5. 5 and ethereum, as well. Well keep our eyes on those, two. Kristina, thanks. Thank you were more than a week away from the next fed meeting and the market expecting a pause in the rate hikes and thanks to last weeks strong jobs report thins are shaping up differently for julys position and the remainder of the year. Steve liesman joins me now with that story hi, jon the big upside surprise in the jobs report didnt have markets price in a june height which is what some might have expected and theres a 70 probability that the fed pauses and what it did change was the markets implication for rate cuts this year they have been priced out before the jobs report, fed funds futures had seen at least one rate cut by december putting the yearend funds rate at 485 and after the number suggesting the fed would remain around current levels until the new year. The result, the gap between where the fed expects to be and where the market thinks the fed is going to be is near nothing and it had been a hundred basis points and last month, its just now eight basis points and among the reasons for the change you have the Stronger Economic growth in the jobs report and stubborn inflation that wont be helped, by the way, by the port shutdown and Higher Oil Prices and the rebuilding coffers, some estimating to sell a trillion dollars in bills and putting an upward pressure rates and meanwhile, while a pause is priced in for june and the nearly 70 on a july hike. So calling that more of a skip in june and then a hike. The extent to which theyre from a rate cut and its now believed likely to put rates below 5 even when the u. S. Turns around and its whether the markets internalize the possibility that the fed may not be cutting this year it all seemed a bit odd to expect that, to me, anyway, to a layman and were going from skipping and still moving forward and perhaps at a different pace steve liesman, thank you while my next guest agrees that theres going to be a pause at next weeks meeting, she is not stopping there saying the fed could be done with hikes altogether thanks to the slowing labor market and progress on inflation. Joining me now is Julia Coronado along with marty patel Portfolio Manager at Allspring Global investments. Welcome to both of you julia, it sure seems like with the strength of that job number, with the strength of the inflation reading at core, there would be a reason to raise from here, but you say no yeah. Lets take a look at the job report a little bit so the job number was very strong and the number jumped 0. 3 which was a large upward move in the Unemployment Rate and when we look at the diskcrepancy between the two readings and we see a falling workweek and aggregate hours worked which is a measure that feeds into gdp is slowing a lot faster than jobs so there is more indications of slowing in the labor market than just that Headline Payroll number suggests. Wage growth is moderating and we do think that things like used car prices which temporarily put upward pressure on core inflation in the next two months will go around and go deeply negative in the next two months and well see a string of inflation readings that will give it more comfort that its policy is starting to have an effect it seems to me that the fed is about to see a string of such good news for a long time, but the surprise to me has been how Little Things are slowing down relative to what one might expect the 75 basis point hikes eventually will catch up to us or well feel them or it will cause a break, right, on Credit Availability and were hearing from overseas, maybe not so much well, thats right and it shows you areas and not a close relationship between what the fed has done and what the economy has done weve had a record increase in short rates over the shortest period of time, 5 in one year and the economy is in good shape and the consumer is in good shape and the labor market looks not bad and were seeing signs that inflation is certainly not accelerating its actually tapering off so the fed is probably a little flummoxed because whatever form it had by raising rates by this much we have this much response in the market in terms of inflation and growth just as it happened the good news is the economy is very strong despite what the fed has done and we hope the fed will take the foot off the break and stop raising rates and stop damaging the economy and let the economy grow which is what i think will happen. Julia, what is the fixed income strategy here aside from buying highquality bonds because yeah, we heard that before, but what should the fixed Income Investor do hear three months from now . I think what you were just outlining in terms of the repricing of fed policy. Thats going in the right direction and what the fed is trying to do here is find a rate it can hold at and its not the fed turning around and cutting quickly and its finding that rate that will gradually put downward pressure on inflation and keep the economy on an even keel i think were getting close to that rate and there may be another hike and there are risks to that and were not far from that it does mean higher for longer and it does mean a quick fed pivot and the playbook from last cycle of the fed reacting to every weakness with a rate cut will not come forward this cycle and what were the areas that benefited longer and there will be richness in credit spread and companies will have to show profits and real returns its not going to be a lot of Financial Engineering at their fingertips the way there was last cycle so there will be businesses that are in the real economy delivering real returns are the ones that i think are going to benefit in this higher rate environment. Cash probably not going trash again for a very, very long time julia, thank you now to Tyler Matheson whos got a cnbc news update tyler . Jon, thank you very much. And im Tyler Matheson here is your cnbc update at this hour police in davenport, iowa, say the bodies of three men were recovered from the site of a collapsed sixstory Apartment Building over the weekend. Meanwhile, a resident of that building filed a lawsuit today against the owner, the city of davenport and engineers and contractors who worked on the complex. The suit alleges they knew the building was failing and they didnt tell tenants their lives were in danger. New hampshire governor john sununu will not join the growing field of republicans in 2024 sununu shared the news on cnn and in a washington postop ed today. He will endorse the gops nominee, but he is rooting against donald trump. And spacexs latest Dragon Cargo Mission lifted off in florida. The rocket carrying thouds of pounds of Scientific Gear and provisions for the crew on the International Space station. This is dragons 28th commercial resupply mission to the iss jon, back to you tyler, thank you. Coming up, well have the latest headlines as market has 3 trillion in market cap again and 190. 73 is the share price to watch and so far apple has announced a nemaook w cbair and ios 17 the exchange will be right back and smooths dry skin. With 7 moisturizers and 3 vitamins, you can pay more but you cant get more. Gold bond. Champion your skin. You founded your Kayak Company because you love the ocean not spreadsheets. You need to hire. I need indeed. Indeed you do. Indeed instant match instantly delivers quality candidates matching your job description. Visit indeed. Com hire dr. King if you have diabetes, getting on dexcom is matching your job description. The single most important thing you can do. And its covered by medicare. Before using the dexcom g7, i was really frustrated. My a1c was stuck. female announcer dexcom g7 sends your glucose numbers to your phone or receiver without painful fingersticks so you can make better decisions in the moment. So easy to use, and my a1c has never been lower. female announcer now, more people than ever are covered by medicare. Call now to get started. Welcome back. Apple shares touching alltime high today as the companys annual worldwide developer conference continues lets get back out to steve kovac in cupertino in apple Head Quarters to recap what we heard so far we have the n2 ultra system chip, do we not . Thats exactly it and i think thats the biggest headline so far, jon basically the mac pro was the last model thathadnt moved over from intel yet and the m2 ultra chip will power the next model of the mac pro and they have completed their transition away to their own inhouse design and chips and taking shots at intel saying the performance of the new chip are 4x what theyve seen in intel mac. That transition is now complete. No more intel macs were getting news out of ios 17 and thats what theyre going over right now including a standby mode for lack of a better term kind of a nightstand mode you can turn it to its side and it will show photos and widgets and if you have one of the newer iphone 14 pros and even when the screen is also on display can display some of the widgets, as well and some cool features and i know youre asking me in the hour, what will we hear about ai it will help with predictive typing and announcing part of ios 17 and it is going to be improved on the keyboard due to Transformer Technology very similar to what chatgpt uses, jon. Better auto correct we can all get behind that exactly its spotty sometimes i think whats key here, though s that apples chip work is going to be essential to making this mixed reality headset, we expect correctly and in the past back before this renaissance that apples been through and apple designed their chips to compete with intel and failed and they ended up having to go to intel and this time they have wildly succeeded how much does that pave the way for developer belief in what apple comes out with next and perhaps investor belief in it, as well. Yeah. Intensely. It just shows not only can they make their own cpus, but it also brings optimism and we know theyre working on their own modems for qualcomm and so when theyre ready to make that transition in chips and they have reports that maybe theyre trying to do their own inhouse chips like things with radio frequency chips and i know they just signed that deal and when the deal is up theyll switch over to that and on the developer front end, i know people will get their hands on them and put them through their paces and that does help with softer development and its not just pixar animators and things like that and that will be key, jon, for this new headset because those will also be running the m2 chips and these new maks can be for the new device. Steve, stick around we are at session lows on the dow. The s p still in the green, but barely about flat. The nasdaq higher fractionally lets bring rosenblatts Barton Crocket back in for what we heard so far i assume youve been keeping up with this keynote. Journalling . Now we have the phone, ios telling us what we did today and inviting us to reflect on what weve done whats the strategy here why is this an Important Software for apple well, i think the biggest, i think, support for apple stock has been their ability to take share in smartbone and their ability to take share in smartphone is a lot of things. One of them is their ability to innovate a feature set in a way that is addictive and also pull you into their proprietary ecosystem. Certainly, i think that journalling has a stab at that, and there is how much buying there is in that set and their attachment of improvement of basically your selfphoto that youre putting around your voicemail and around your contact, and i suspect thats something that will work better within the Apple Ecosystem than an apple an android and a suspect as we dig into more of these features it will give people a reason to move away from android and theyll have more envy and want to get into this ecosystem theyve had great traction with younger consumers and a lot of it is that what should we make of apples approach to what a lot of people are calling ai and the metaverse, but they refuse to use those buzz words right now theyre talking about advanced machines and those effort theyve been using ai for a while unless you turn it on and theyve been working on that all of the time in the phones and we expect to see that on the headset, and they throw shade on the term metaverse, and how should they try might try to trade apple that are caught caught up in the same storylines look, i think apple is distinguishing their brand and theyre trying to really, i think, position themselves to be a competitor with the incumbent which is meta with the oculus, and i think that this, you know, using of different terms and taking a different tech and meta is going for the high end and meta is going for the low end and its a differ eveentiation f approach which is premium and privacy first in trying to get people sub limb. Ly subliminally to get people interested in. Steve, we are still awaiting, of course, the big announcement that investors are expecting here and that is the mixed reality headset. Meta platforms right now, facebooks parent is trading about flat you spent a lot of time with metas folks who do these headsets what do you see as a potential win for meta in this presentation and i guess if it goes wrong like for google went wrong. What would be a big loss for meta in this presentation . For sure. I dont think anything will go wrong, jon, since this is a prerecords demo and very polished and edited. So were not going to see a live demo so lets put that aside for now, but what would hurt meta is if they announced a much lower than expected price. You know last week when they came out with their headset and tried to undercut this announcement today they talked a lot about price and look how affordable it is and its only hundreds of there ares and the implication is everyone is expecting the headset from apple to be thousands of dollars instead of a few hundred theres that aspect of it and also the aspect of just the peeds ap speeds and feeds of it and in that aspect apple will do better with the sharper displays and the better Processing Power and things like that to have a more highend experience than what youve seen with meta. Ive used metas headset including the pro headset and it does not look good and the real world looks pixelated and janke and buggy and if they can figure it out even while youre present that will be bad for meta. Yes, indeed a 3,000 headset is as crazy as a 1,000 phone a thousand dollar phone . Who would ever they carry the thousand dollar phones. The Business Model we await steve, barton, thank you all right. Coming up, the opec put. How much does it really matter to the Energy Markets . Our Brian Sullivan has the details from yesterdays meeting and the impact of saudi production cuts next and as we go to break, here is a look at the dow with intel, the worst performer on the back of that very widely expected apple announcement about the mack pro transitioninfr ielg omnts chips. The exchange is back after this. Welcome back to the exchange. Crude oil up about 1 paring initial gains after saudi arabia announced further voluntary production cuts at yesterdays opec meeting Brian Sullivan, what does that mean for the path of prices heading into the Summer Season jon, hi i dont know if it means prices are going to go up because of most of the bullish analysts we know have been wrong and theres got to be a floor now with all of the research that ive been reading with saudi arabia yesterday because they had a meeting on saturday and sunday in vienna, austria most believe there will be a floor because well refill the Strategic Petroleum reserve and wed like to do it with prices between 67 and 72 a barrel we see this new cut come in in july and i want to be clear this is not opec and this is saudi arabia deciding in july, one month only it will cut by an extra 1 Million Barrels per day and Prince Abdulaziz Bin Salman telling the group and telling us that those cuts certainly could be extended, jon, past the summer remember, weve sold 220 Million Barrels of oil from the Strategic Petroleum reserve and theres been a lot of extra oil floating around for the next 18 or so months and saudis with the opec april cut are looking to pull some of that off the market. A yeah looks like it. Coming up well for from Peter Diamondis and how the companies can stay competitive and ahead of the ai curve. That is next due at target in 5 copy that. Make a hard left down the alley. Sfx [tires screeching] sfx [police sirens wailing] networks got you covered. Please confirm requesting backup. Changing route. Go. Roadblock ahead. Back up, back up. Reverse reverse sfx [police sirens] next level moments. Were 30 seconds out. Need the next level network. North corridor, hurry coming through or 3, lets go. The network more businesses choose. Transplant received. At t business. This is dr. Arnold t. Petsworth, hes the owner of petsworth vetworld. Business was steady, but then an influx of new fourlegged friends changed everything. Dr. Petsworth welcomed these new patients. The only problem . More appointments meant he needed more space. Thats when dr. Petsworth turned to his American Express business card, which offers flexible spending limits that adapt with his business. He used his card to furnish a new exam room, and everyone was happy. Built for dr. Petsworth business. Built for your business. Amex business. Built for your business. Every day, businesses everywhere are asking. Is it possible . With comcast business. It is. Is it possible to use predictive monitoring to address operations issues . We can help with that. Can we provide health care virtually anywhere . We can help with that, too. Is it possible to survey foot traffic across all of our locations . Yeah absolutely. With global secure networking from comcast business. Its not just possible. Its happening. Exchange tech taking off this year thanks to the ai frenzy, the nasdaq on pace for its best first half of the year since 1991. My next guest say in order to stay relevant and grow rapidly, organizations need to leverage tech, calling out ai specifically, and they also need innovation and creativity. They lay out to do all that in their new book, exponential organizations 2. 0, the new playbook for 10x growth and impact joining me now to discuss, peter and celine peter, saleem, welcome i want to start with this broader question about ai, because a year ago and before, people were saying, chinas got this enormous lead and advantage in ai because they have no restraints on the data that they can gather on society. But somehow, there conversation has shifted with large language models, with this new front end, and it seems to me chinas had somewhat of a disadvantage because there are things that ai could answer that they dont want people to know. So how should an organization think about the advantages and disadvantages of engaging along that spectrum of how things can shift so quickly yeah, jon appreciate that. In this new book, we identified not just ai, ai is one of the most important attributes, but theres 11 of them that the highest performing companies out there are utilizing and theyre growing exponentially and allow a company to basically drive that massive growth. Now, ai is hypercritical and its growing more impactfully and exponentially than any other. Saleem, do you want to jump in yeah, we founded to answer your question, the open models over time always beat close models i think thats where china will have a different time. Trying to restrict the use of this is going to be very hard. Its the same for company, if they dont hop on the bandwagon, they wont be around for long. How about Data Security there are multimal companies coming out saying we have a way for you to use large language models, fors you to use these ai models but do it in a way that keeps your data safe companies, it would seem to me, have to do that. Governments certainly do, but youre saying its going to slow them down. What happens is you can train the data on open data sets, train the model and use your private data set to commercialize. I think well see a huge amount of that going forward. We described leveraging community, leveraging data, leveraging ai that you have to be using all of them to compete effectively in this world thats coming peter, how is creativity, which is another one of the exponential Growth Drivers you talk about, how is that different in this era of all kinds of different tools available, i think a lot of people think that specialization is really important right now, versus the older liberal arts mindset, how does creativity fit into that mindset that many people are in right now . Yeah, we speak about in the book the critical aspects of mindset, curiosity mindset really creative mindset, abuddance mindset, a day before something is truly a breakthrough, its a crazy idea. The challenges are most Large Companies are lumbering along and doing the same opening over and over again but what they really need to look at is a massively disruptive idea which threatens their base kodak is a perfect example, invented the digital camera but didnt take advantage of it because it cannibalized the paper and chemicals business, but that drove them out of business were seeing the same thing over and over again creativity and the willingness of an organization, one of the things we speak about is the importance of autonomy and the importance of taking moonshots inside your organization otherwise, youre going to be stuck in incrementalism. Its fundamental to a company here saleem, i see more organizations than ever confused about even how to work not just, you know, what to work on, but how much is hybrid, how much needs to be in person based on the nature of our work, based on the nature of our clients, et cetera do organizations need to figure that out is there a certain type of playbook they should follow in order to grow exponentially while also trying to allow for different modes of work . Yeah, absolutely. In fact, we identify this model seven or eight years ago and had a segment on cnbc squawk box where we did ranked the fortune 100 by this model. Just last year, we did a seven year trailing analysis and found in the fortune 100, the Ten Companies that followed this model the most compared to the ten that followed it the least delivered 40 times more shareholder returns over seven years. Thats an unbelievable number. As the external world becomes more volatile, your ability to adapt is going to drive market value. Now we can completely prove that were issuing a playbook on how to implement it. I dont remember seven years ago, peter, maybe you can chime in here. What was the impact of that model during covid, for example, was it proven out, was it challenged one of the elements of the model here is staff on demand, where youre actually uber is a perfect example. It doesnt own its drivers the drivers are on demand. If you have staff on demand, its one of those attributes it allows you to flex up and flex down as you have the righthand turns in society, like covid was one of the things were doing is were launching this book tomorrow, were going to be holding a threehour master class for entrepreneurs who want to build exponential organizations and for companies threatened by this because these Large Companies are the dinosaurs and the asteroid impact are these exponential technologies that are going to cause a dieout over the course of the next seven, eight years so if folks are interested in joining this master class, they can register and were going to walk through all of the attributes. Its fruand available. We also built the book as an ai so you can query the book. Its the old books are going to be something of a bygone era do you pay to query the ai . No, the ai is free and the course is free were trying to help entrepreneurs play a bigger gain and go out and solve the biggest problems in the world instead of building another photo sharing app, lets go out and make a dent in the universe why make quarrying the book in ai form free and charge for the book why not do it the other way around you want people to use it as they need to whenever they need to if they want to buy the book, great. But the ai gives them on demand access you can say im a shipping company, how do i turn 10x bigger and they ripple through and give you the answers from the book and all the case studies well upload this becomes an incredibly important nteraction i have to leave it there. I think thats a really interesting decision, and perhaps frame for value that im sure were going to explore with you guys later peter and saleem, thank you. Always something new with ai including at the apple event right now. Thats going do it for the exchange tyler and contessa are getting ready for that show, power lunch is going to start on the other side oth qckref isui bak dr. Aaron king if you have diabetes, getting on dexcom is the single most important thing you can do, and its covered by medicare. Before using the dexcom g7, i was really frustrated. My a1c was stuck. female announcer dexcom g7 sends your glucose numbers to your phone or receiver without painful finger sticks so you can make better decisions in the moment. So easy to use, and my a1c has never been lower. female announcer dexcom g7 is the most accurate cgm. Call now to get started. Good monday afternoon, everybody. Welcome to power lunch. Alongside contessa brewer, im Tyler Mathisen were continuing to watch apples big event, the worldwide Developers Conference out in