Area real estate but in the stock market, tech has regained, even expanded its leadership the nasdaq is having its best first half in 40 years, up 30 apple 3 trillion market cap nvidia tripled netflix is back. The socalled magnificent seven are responsible for the rally. What now the Economic Forecast got better rates may have peaked. Yet, tech is flat since june 15th are we at the beginning of a new run for check, or is that it is it time for the rest of the market to catch up here is dan, founder and senior portfolio manager. Dan, good evening to you and thank you so much for joining us lets start really basic where do we go from here this was the half that denied a lot of folks expectations. Well, you really have a big surge following nvidias results. Go back to the report on may 24th since that period of time, the s p is up about 70 and nvidia is up 40 . That took the s p from 4,400 or so and, so, i think, you know, thats driven obviously by valuations and multiple expansions we have earning season coming up that will be really important. If there is any kind of disappointments. Because right now everybody is so optimistic on ai. But over this last week, you saw Big Tech Companies report, micron come out and, you see, didnt accenture. All three of them the numbers went down even though they all three talked about ai being a big driver for their business. The problem is Everything Else is slowing down faster than ai can ramp to offset nvidia is in a bucket all of its own because they have everybody thats not i also think, dan, of the market prenvidia results and postnvidia results. The ai hype was something that was in the future. But nvidia said its here and they will be monetizing it this year i wonder how that changes expectations for the other tech giants like microsoft and google that have been part of this hype cycle, but we havent seen that monetization yet. Well, and i think thats exactly the problem. You need ai graphics chips and everybody is buying them from nvidia. It is the only place you can get them so you have got this huge surge but for someone like google, for example, because you saw a couple downgrades on that stock very recently, theyre talking about, well, this is going to cost them for more search results and people may not be clicking on as many ads. There is pluses and minuses for these other companies. And investors right now are just saying, wow, nvidia dels revenue went up 30 . I have never seen that in 30 years of large cap tech of being in this business so valuations have really gone up a lot, especially in technology and if you dont have poor numbers going up to match like you saw with accenture, you could see selloffs, as you did with them. To be fair, they werent big selloffs, but people didnt put them in the leaders category now you have the leaders. So it all begs the question, dan, of where do we go from here we have been talking about this all day because we are at that halfway point. Have a listen to what what this word of School Business professor mentioned to us on air earlier, and then i will ask you to respond to it. Tech investors, it is a winwin for them they say, listen, it is a long asset. If we have a recession, you know, tech is mostly immune. And if we have a recession, the fed will stop raising interrate rates. Thats really good for our longlive assets that we have. So everyone piling into tech because they say that it is a winwin no matter what happens to the economy. And, dan, in addition to that, tech has almost become a defensive play because you look at apple or google or microsoft balance sheet, there is just so much cash there. What do you think . It always makes me nervous when people say it is a winwin no matter what happens because thats now it works. Go back to the recession in 2008 or 01 02 because you are at the early stages of the internet what could go wrong . The nasdaq goes down 78 this is not a winwin for everybody. And valuations is sort of a lynch pin here in my mind where you have some Companies Growing at a reasonable price. So meta is just above a market multiple oracle also a similar situation. Then you have other companies and you brought up apple and its fantastic it got to 3 trillion, incredible but you are paying over 30 times or 1 to 2 Revenue Growth last year and this year at least with microsoft, you are getting, you know, much better growth over that period of time, and you are still paying low 30 multiple but with microsoft, you have some pluses and minuses there as well because theyre spending a lot to tryto gain share and search but if you look at the latest share data, it is showing they lost share against google. So there is going to be a lot of interesting things going on with how much money you are spending versus what benefits are you actually seeing. Yeah. You are referring to those documents that came out of the antitrust case, which we will be diving into later. Dan, if you were looking at valuations and things are looking frothy, i find it interesting, you still like nvidia does this go back to nvidia being the exception that it has more room to run and how about apple that is coming out with a vision pro that could create a whole new category this year. With vision pro, you have to remember thats maybe 150,000 units. At 3,500, you are talking half a billion revenues apple does 225 million iphones this is barely a half of 1 to revenues to them so if you look at apple, you can pay 30something times 1 to 2 Revenue Growth nvidia, you are paying roughly double this is a big difference in terms of revenues for the multiple you are paying. And thats the way i look at it with all of these names. Thats why we like oracle. We like meta we like nvidia as plays on ai. But with Everything Else, we have a much more skeptical views because the valuations have gone up a lot more than the overall benefit to these companies so things are trying to balance out growth and multiple. One final question for you, dan. I know you are a trader and you follow the earnings reports carefully and trim or increase your positions but if you are an average investor, are you holding on to tech for the rest of the year . And i guess is the nasdaq going to end up higher than it is now . You know, i thought the rally would peak out at 4,200 on the s p. Its obviously gone well beyond that by nvidia we have seen this before when valuations can go to levels you never managed possible so anything can happen but i look at it very simply the s p 500 at 20 times yields a little less than 5 . You can own a threemonth treasury bill. You have a very viable alternative where, at the beginning of last year, threemonth tbills yielded about 0. 30 . Here you are getting 5. 3 . It depends on how risky you want to be. With expectations this high, i would be careful because what you have seen so far, accenture, micron, all very large, important companies. Numbers went down after they reported and so did the stocks. Yep you balanced that fomo with that fear and greed thank you for joining us talk to you again soon. Speaking of apple, as we just were, a late, breaking story. Goldman sachs is looking to end its Credit Card Partnership with the client and is talking to American Express to take over the apple business anna maria, thanks for joining us you just broke this story less than an hour ago tell us what you know so far this has been a turbulent relationship Goldman Sachs may not have goaten out of it everything they wanted to. Whats going on is that there have been several months of discussions playing out between Goldman Sachs and American Express pertaining to whether American Express would be interested in taking over the relationship that goldman has with apple this is a very difficult partnership to move, and we should start out by just talking about that in general, when you start out with a cobranded credit card program, that can be challenging to move. But add to the fact that in a relationship between goldman and apple, there is also goldman providing back end support services for apples recently launched by now pay later program, as well as the recently launched apple savings account that goldman is housing the deposits for whats been playing out is discussions to essentially see if American Express interested in taking over this relationship and this is all happening at a time when goldman is looking to pull further back on Consumer Lending. Exactly it feels from this partnership, apple has received all of the benefits but goldman has had to pay in terms this isnt exactly a huge money making business. Its loss making, is that right . So is this further admission that goldman is making missteps in this area, Consumer Banking goldman has definitely been faced with a number of challenging as it pertains to Consumer Lending, specifically last fall when it moved several of the Consumer Lending pieces like green sky and its Credit Card Partnership into that unit, it did disclose earlier this year and has been since with earnings that its incurred substantial losses from this unit so the relationship between apple and goldman in many ways is complex look, there are a lotof banks that have issues with apple getting bigger and bigger in Financial Services but part of that is also envy in the fact that apple had chosen to partner with goldman. And i remember when goldman when the Credit Card Partnership was announced and it rolled out in 2019, it was a real game changer in the credit card industry at that point because that was the first time that the incumbent banks, the retail banks were faced with a massive bank, in this case a wall street bank getting in on their turf. And goldman had been quite active in competing against those other banks like jp morgan chase, citi, et cetera, for credit card cobranded programs but theyre basically at a point right now where theyre reevaluating everything they talk publicly about it on the Consumer Lending front. It is such a fascinating dynamic playing out, particularly, between big tech and traditional banking. One piece of it. Well continue to follow it. Thanks for joining us. Thank you. As we head to break, take a look at the top nasdaq performers the usual suspects here, nvidia, tesla, meta. Those are all up more than 110 so far nvidia up almost 200 . Thats nearly tripling we are just Getting Started on this cnbc special. Tonight, linkedin founder and bc investor on the flood of money flowing into ai. Plus, break it up, you two the latest on microsoft and activision in court. And the San Francisco surprise a real estate flight that gives new meaning to the term open office that and more when we return. Dont miss our new member offer. The idea of doing a club of investors is something that i dreamed up a very long time ago, but now it is for real. Join jim cramer. Sleepovers just arent what they used to be. A house full of screens . Basically no hiccups . You guys have no idea how good youve got it. How old are you . Like, 80 . Back in my day, it was scary stories and flashlights. We dont get scared. Oh, really . Mom can see your search history. Thats what i thought. Introducing the next generation 10g network. Only from xfinity. Welcome back to our tech check special money has flooded into ai this week once again, multiple startups became unicorns overnight vaulting to billion dollar plus value weighs, while still having just dozens of employees and in many cases still unproven business models. There is type face aiai this week yesterday announced 100 million in new funding on is billion valuation. Now, it launched just four months ago its ceo told me it wasnt even looking for that money we were not actively seeking money. We were doing very well in terms of market. There was significant interest. There was also inflection ai this week. The oneyearold startup a 1. 3 billion in new funding for a 4 billion valuation. That is a monster round that comes two months after its main product. The ceo says that eyepopping valuation might be justified given how much he says ai will change the world this is going to be the greatest leap forward in productivity that our species has ever known, probably more so than the industrial revolution. Now, the sheer magnitude of deal flow in this space is huge as well. Data bricks announced it will pay 1. 3 billion to acquire ai startup mosaic that one way to measure that Purchase Price 21 million per employee, which just underlines how early we are in these businesses when this money is coming in the door lets take a step back and look at the history the current class of tech giants took years to achieve unicorn status yahoo steve jobs created apple in 1976 it went public four years later in 1980 at a 1. 7 billion valuation. There is amazon. Founded in 1994. It only hit 1 billion shortly after it went public three years later. So they were fast, but they were not this fast. Our next guest knows a thing or two about this he is behind some of the hottest ai names of the moment, including open ai and inflection ai, which we just mentioned. Reed hoffmann, also the cofounder of linkedin thank you for joining us and being with us on this holiday friday you just heard what i was saying there is so much money in the space that for those that say it is getting frothy, you are someone that is still putting a lot of money how do you respond to them well, ai is the new technology it is the steam engine of the mind he is referring to the industrial revolution. It is a similar kind of thing but, you know, within 2 to 5 years, there will be a personal intelligence thats a copilot for everything this will transform products and services it will transform industries it is really important with that kind of moment people are like, it is a lot of capitol and it seems like it is moving quickly, thats part of the venture in business when you are betting on the new platform that will be the implication of what we have with computers and phones and the internet and every single electronic device. Yep and in the Venture Capital world you hedge a bunch of bets. But i know that you sort of made it your personal mission to talk about the benefits of Artificial Intelligence but recent polls show a majority of americans are scared of the technology or at least concerned about it what do you think changes their mind i know you have been doing some work on the ground, but is there a seminal moment or a killer app that is able to sort of show what the opportunities are and take away some of that fear . Yeah. And in this context, perhaps we should change the context from killer app. Yes a good app. Yeah, its a good app you know, obviously, part of the recommendation is people using these products like go use pie use chatgpt. Get some exposure to them. But if you imagine you have a medical assistant on every smartphone you have a tutor for everyone from a threeyearold to a 75yearold and you see those benefits oh, gosh this search thing is really useful for me, and i can watch new shows and all the rest oh, this is interesting and good for me i think it is the experience because when it is unknown there is fear in it. And thats why you play with it. Right and many millions are starting to play within the form of chatgpt and bard a lot of folks were talking about this and the effect it might have on the 2020 president ial election. This may be sort of its biggest test so far. How do you expect it to perform and how do you expect ai and the chat bot to come out. I think it is a huge possibility for misinformation we will have hostile actors like the Russian Internet research agency, which, you know, over the last two election cycles was also trying to spread misinformation and dissension. They will obviously be using tools like this. That will be a challenge i think it is beholden upon us aztecnology platforms and company and so forth to level set that the right way, to try to make these sources of good information. I think thats a game on point of view. But the good news is i think the white house and other folks are paying a lot of attention. Thats one thing theyre asking of us and trying to make sure were on top of the election. Everyone sort of says theyre paying attention to the threat of misinformation and generative ai in this election cycle. Do you see work being done whats being done to actually prevent this well, i think there is a bunch of discussions so, for example, should you try to create its like all things generative ai have to be watermarked. You have identity certification within media platforms and a bunch of proposals being floated right you now. We need to move on those to make them happen. But the good thing with all this happening through the large Tech Companies is its all much more controllable you have that as a feature in this otherwise very, very fastmoving technology. Who is most likely to step up in the coming year is it the Tech Companies is it the Public Sector . A combination of both . I hope a combination of both. Mark has been working on responsible ai for decades open ai is really committed. It is one of the things that projects have attracted to it or ones that are like, how do we help humanity and society. The discussion goes beyond that. Google is deeply concerned so there is a swath, i think, of focus and interest on this look at it this way. Im hopeful, but we have to work in order to get there. Now, another thing that comes up in my conversations here in the bay area is this idea of who will dominate ultimately will it be the big incumbents, the existing big tech players, or is it going to be the startups you are on both sides of this. What do you think will happen. You have a company like tech face ai, another deal i covered this week. They got investment from both microsoft and googles venture arms what is the fate of the space, and who is going to dominate so i think there will be so much productivity and value created that we will see value for both five years ago, i wasnt so sure i was thinking