[music]

This is Yahoo Finance's morning brief.

With me today, Yahoo Finance tech editor

Dan Howie and Kevin Man Henny and N

Walsh, CIO. Guys, let's dive right in.

We've got a mixed picture for futures

this morning, but there is no shortage

of things to watch here. Um I want to

start with the memory and storage trade

because um you know obviously sort of

the Microns um and and SKHEX's are the

biggies of this world but you have the

storage names too. SanDisk and Western

Digital both reported after the close

yesterday and even though SanDisk came

out with earnings per share that were up

more than 13,000%.

>> Sure.

>> Revenue was up by 372%.

um it wasn't good enough and it looks

like that you know people are looking at

the at the guidance and that's that was

the case with Western Digital as well. I

mean, you are immersed in this world,

Dan.

>> Live live it.

>> Yes.

>> I had a a SanDisk uh solid state drive

in my old computer that I built. So, uh

yeah. I mean, of course I did. I have

SKH Heinix. Uh it doesn't matter. Uh

yeah. I mean, I I think you know,

obviously they they beat on earnings. Uh

also that 1300%.

>> 13,000.

>> 13,000. Okay. Well, okay. So, I was

going to say they're up 3,100% uh over

the last 12 months, which doesn't make

sense. Um, and anytime I talk about

like, you know, the AI trade and like

the memory, I always say, "Yeah,

SanDisk, how about that?" You know, I

mean, they spun off obviously, but

that's

>> Western Digital. Yeah,

>> that makes I don't even know what that

is. But yeah, I mean, one of the one of

the things that uh Bernstein was saying

this morning was that uh in the near

term, sure, this doesn't look super

great, but then the downside because of

these long-term agreements that they

have, think long-term agreements are

twothirds their their volume. uh the

idea is okay so now there's a a good

floor for these companies going forward

and so you know and that's that's across

the the memory industry where you know

there's they're doing these long-term

agreements it's typically you know if

you look at the the revenue uh it's

always just a roller coaster right you

know they go through these cycles and so

the long-term agreements here this is

kind of an upside where the potential

for this you know future downswing which

I mean it's going to happen right things

can't go up forever uh it will be less

jarring but for now I think yeah people

are just looking at this and saying well

you didn't you didn't do gang busters

the way you know we want as far as

guidance goes but you know I mean the

the memory industry is so interesting

just because

so much of this is a result of AI but

it's also kind of a confluence of

factors where you know these companies

were uh I mean obviously Sandis was spun

off but other other memory companies

during COVID were you know rocking and

rolling in the first half and then just

sank into the abyss shortly thereafter.

Uh and so they, you know, they've come

out of that since and more. But it's,

you know, this idea of just go make more

chips right away doesn't happen because

they weren't making the capital

investments that they could have, right?

>> Because they didn't have the money to do

so.

>> Yeah. And they in the past they got

burned when they did that. Also when

they made too many chips. I was also I

was taken by that quote from um the CEO

of SanDisk who talked about this on the

call. David Gollor said, "We want to get

to this kind of boom and bust out of

it."

>> And it's like, well, that's what they

wanted for years to not have memory be

so cyclical.

>> Um, and so now they're they're getting

their wish.

>> Yeah. I mean, sometimes jewels in life,

sometimes our best isn't good enough.

And I think that's the tale of this

earning season for many technology

companies. Now, as you look at Western

Digital and Sandis, remember Western

Digital acquired them back in 2016

because they were intrigued by their

flash memory business. Last year, they

decided to spin them off because they

want to focus more on hard disk and lean

into the data center roll out.

>> Now, we're finding out that they're

actually both equally important. And

that's the takeaway for me as a

portfolio manager and for all investors

watching the show right now is that they

need to understand and appreciate how

diverse the supply chain is for the AI

revolution and how many

interdependencies there are for the

continuation of the AI revolution

whether it's memory whether it's storage

whether it's power whether it's rack

space whether it's data center

construction whether it's the chips

whether it's the memory all of it's

interdependent So if you want to look

for opportunities and play this AI

revolution, don't just try and pick one

or two. Don't just look at Sandesk and

Western Digital and say these are buys

right now because the street oversold

them. Maybe you should have been holding

them all along, but build a portfolio

around them.

>> Well, yeah.

>> One of the things I think is because I

constantly think, okay, what's the next

>> kind of shoe to drop here, right? Like

because we went everything was GPUs,

right?

>> And then it was CPUs and then it was

memory and storage. Well, networking is

one of the most important aspects.

>> Well, that started to happen, right? I

mean, if you look at um you know, the

Cisco of the world, you look at the um

why am I forgetting the company that

makes Gorilla Glass old Cornings of the

world? Optical components that Toto Toto

the uh the toilet maker there's

something uh because there was something

about the ceramic I think

>> really.

>> Um yeah, they were getting

>> puns we could use here, but [laughter]

I'll reframe.

>> It's I mean it was it was I can't recall

it off the top of my head. Somebody is

watching this and thinking uh that I I

I'm losing my mind. But it's it's just

interesting because you know and I go

back uh last year I had done this piece

on Nvidia where uh if you break out

their their networking business it's

massive.

>> Yes.

>> But you know that's

>> you've been that table for a long time

now

>> and I think I think networking you know

I mean I'm just a bozo but I feel like

that that's got to be at some point

people have to say oh yeah connecting

all this stuff is important. I mean SARS

that I feel like that has started to

happen when you look at the coherence of

the world. Aren't they kind of in that?

>> Um so there's also the question of

valuation. I was looking at the

valuation of some of these stocks this

morning. And the thing about memory

chipmakers is they tend to be cheap,

right? Because they are historically

cyclical. They were seen as sort of the

lowest quality of the semiconductor food

chain and therefore traded at a

discount. And guess what? They're still

even after all of these gains. Western

Digital is more pricey, but the Microns

and SanDisks of the world, they trade at

pretty low pees. So,

>> especially Micron trading at just six

times forward earnings right now.

>> Yeah. I mean, that's where SanDisk is

around that also, you know. So, that's

something to consider as well. But at

the same time, like it's interesting

when you talk about like what you should

do in your portfolio. You could also

just like buy all this stuff and then do

nothing.

>> Yeah. And and I think

>> just wait.

>> I think we need to be patient with the

AI revolution. If you're looking for one

hit wonders today and hitting home runs

today, you shouldn't necessarily be

looking at the hypers scanners who are

spending billions for potential ROI

years down the road. Look at who's

receiving the money, not who's spending

the money. And it's all these names that

we're talking about right now that are

lining up the contracts, which are

multi-year contracts, and receiving cash

today. Now, when you get opportunities

like this, when you see selloffs because

their best wasn't good enough and their

forward-looking guidance might have

disappointed, even though it's pretty

spectacular, if you look at their

forward-looking guidance, in my opinion,

yeah,

>> that's an opportunity to actually add

more to your portfolio, but not

necessarily sell.

>> All right. Well, let's move on to the

next topic because we got a lot to fit

in today. Um, and speaking of a

long-term horizon, that brings me to

SpaceX. SpaceX today, we are watching it

just reported its earnings a couple of

days ago. Today is the first lockup

expiration. We're looking at around 911

12 million shares that will be eligible

for sale today. That doesn't mean that

all of those shareholders are going to

come to the market and sell today. It

means that they can, right? And so if

you're a SpaceX employee and you're

allowed to sell today and you've been

wait sitting on this gain and sitting on

this gain and waiting to exit and you

want to buy a car or you want to buy a

house or a boat, today is your chance to

cash out. And maybe you don't cash out

all of it. Maybe you cash out some of

it. Um but this has definitely been an

overhang on the stock that a lot of

people were talking about. And of course

it is not the last one. Correct.

>> We don't get through with this whole

process until December. So, but there's

a lot of visibility into the process.

Um, I recall you you don't own SpaceX. I

remember us talking about this. Um, but

it is a fascinating story to watch. It

is if nothing else.

>> It is. But most of Wall Street knew

about these lockup unwind periods. And I

think that's built into the price to a

degree. And what's wrong with those

SpaceX employees actually taking some

chips off the table and not being so

concentrated in the company that they

work for? I don't think there's anything

wrong with that. But I do question

the valuations that were put on SpaceX

at the IPO. As I discussed on your show

the last time, it it's hard for me to

fathom a company that lost $4 billion,

had an operating loss of $4 billion as

recently as last year commanding that

type of valuation. I know

>> I know Elon Musk is the Willy Wonka of

our times, right? He's a magician.

Everyone believes in him. But what if

there's a longer term plan here, Dan, to

actually fold SpaceX back into Tesla and

now all of a sudden they become a space

and robotics company and cars are just

an afterthought. Is that the longer term

play here? And if as an investor you

start to look at it that way, maybe it's

starting to get more and more attractive

to start buying SpaceX now, realizing

it's going to be part of this bigger

umbrella that could provide growth down

the road.

>> I mean, to me, it's just a it's a mobile

carrier essentially. Like that's the way

it's its revenue is set up right now. I

mean you look at the space side and it

just I mean that's what blew me away was

you know well the space

>> aspect of this is kind of a pitence

compared to what what the networking

side is doing and then obviously the AI

>> bet is going forward. You know we'll see

what happens with Grock or you know it's

I mean they've rolled out a new model.

It's you know not the best but it's not

terrible apparently. um you know but

they're also comparing that with you

know two of the the biggest AI labs in

the world open AI and and Anthropic and

oh yeah Meta is now catching up Google

is obviously there as well that they're

kind of uh apparently delayed their

their new frontier model but you know I

mean I I think when you look at this

company it just at points feels very

confusing just because it is a space

company you talk about all these

launches then you talk about what's

going on with with networking and

Starlink then you talk about Star Mind

which you know they were talking about

the other day where they

>> the partnership with Nvidia I mean and

they're also building terrestrial data

centers right now. I talked I talked to

an analyst yesterday, Ron uh Epstein

over at at Bank of America, like most

the vast majority of analysts who cover

this stock, he's got a buy equivalent

rating. And I I I quoted somebody who

was on the show in the last week, I

can't even remember who it was, called

it Frankenstein, right? Called SpaceX

Frankenstein. Like he got all these

parts

>> bolted on,

>> bolted together. And he really pushed

back against that and said, "It all

comes back to the rockets, right? And

the reusability of the rockets and the

flywheel that will create." And I've

heard this argument many times about

SpaceX now. And I said,"Well, then why

build terrestrial data centers?"

>> And it's like, "Well, it's a bridge to

this other thing." And he didn't address

why have a social network, but you know,

a social media platform, but like

whatever. Why have a car company? Why,

you know,

>> the social network part is uh

>> social social media platform, excuse me.

Let me let me That was Yes. Yes. For

sure. Um, you know, and I and I get this

argument that like down the road this

will be all of these things. I still

think and I know he's got a track

record, but I still think he got an

incredibly volatile and unpredictable

leader also. And I that's I I think

there should be an Elon Musk discount,

not a premium, but that you know, that's

just me.

>> I think the the idea of the the uh

robots becoming such a a massive revenue

source. I mean, you know,

>> on the Tesla side.

>> Yeah. Yeah. Yeah. I mean I mean like

that because eventually that's the idea,

right? maybe right that we see that the

two that's kind of been the general

thinking is that he'll do that. I think

that that's just a very strange element

to me just because

I don't know how many people actually

want that in their home. I'm sure there

are people that like dude this is cool

but they're also like you know

>> oh interesting it was higher when we

started talking and now it's lower. The

the other, by the way, the other story

that really caught my eye this morning,

remember before um the well earlier this

year when Anthropic said, "Be careful if

you're buying shares in Anthropic

through certain SPV, special purpose

vehicles." And then the Wall Street

Journal had a story today saying some of

the people who tried to buy into SpaceX

using them found out they didn't

actually have the shares.

>> Interesting.

>> Once the IPO happened. So there and and

that also brings me to the point which

our Jared Blicker is going to talk about

later is that retail investors keep

pouring into this thing. So we're seeing

the stock go down but it's it's retail

folks are getting back in

>> and the only thing I would remind those

retail investors and someday we may be a

holder of SpaceX. I don't want to sound

hypocritical but there are other

companies public companies with solid

balance sheets that are profitable who

are doing a lot of the things that

SpaceX is claiming that they are going

to do. Whether it's satellite

technologies, rocket propulsion, not

necessarily the orbital data centers,

but you look to Helmet aerospace, GE

aerospace, you look at lunar, you look

at our environment. Uh there's other

companies that can provide you with

exposure to space if you want to hold

SpaceX. So you get more of a diversified

play.

>> I mean, I guess it depends on your time

horizon, too.

>> Depends on your time and and your risk

tolerance.

>> Yeah, for sure. Um let's talk about the

Federal Reserve for a moment, shall we?

And let's

there's a lot to say about the Fed. So,

uh, the Wall Street Journal is out with

a story. First of all, there's a couple

things going on. The Wall Street Journal

is out with a story saying that, uh,

President Trump has been speaking

regularly to Fed Chair Kevin Worsh on

the phone. Not like regularly

consistently, but like it'll come in

bursts. And according to their

reporting, he's asking his opinion on

the economy. It doesn't it's not clear

if they're talking about monetary

policy. At the same time, Treasury

Secretary Scott Bessant yesterday

tweeted criticizing the main Fed

reporter at the Wall Street Journal,

Nick Timmeros, who we speak to

frequently here on the show. Um, which

seems to have done had to do with a

story that Nick wrote about uh Besson's

handling of the yen intervention and the

pressure that it was putting on the

Federal Reserve. separate Wall Street

Journal columnist, by the way, today

questioned that intervention and asked

if it was sort of like backdoor easing,

not on purpose, but backdoor monetary

easing because of the mechanics of the

way it's worked. Um, Kevin, I I like

should we be worried about Fed

independence?

>> If in fact the Fed is going to lose

their independence, certainly we should

be worried about that. What strikes me

about Kevin Worsh, and I go back and

forth. Is he a a hawk in Dove's

Clothing? Is he a dove in hawk's

clothing? I can't figure it out, but he

does seem to be a reformer that stands

on principles. And he does seem to want

to change the manner in which the Fed

operates, communicates, and the data

upon which they use. And he keeps

leaning into these task forces, saying,

"It's not just me, right? All of these

others are going to give me their

opinions and guide us forward." And then

I also think he's only one vote on the

FOMC even though he's the public face.

He can't change policy by himself. So I

don't think they're going to lose their

independence. You may continue to see

political pressures as we have over the

past up teen decades. But I think

they're going to and they need to

maintain their their independence for

the proper functioning of the capital

markets.

>> Yeah. I mean I know this is less your

your purview, Dan, in in the tech world.

Um

I I it's the optics are not fantastic.

the optics are not fantastic,

>> right? I mean, I So, I think that

there's that. I also think that like

Bessant

sort of the the emmo of certainly the

president, many others in this

administration is to criticize the press

if the press says something they don't

like.

>> As a member of the press, not a big fan

of appreciate that, huh? [laughter]

>> Or as a member of the American public,

frankly, not a big not a big fan of of

that tactic. um you know not really

engaging on the merits of the story but

calling names

>> right

>> doesn't seem a terribly productive

certainly rise above that to to address

that and also by the way that then

raises questions about independence too

if Bessant is

>> you know coming out in this way but also

trying to get the Fed involved in that

yen intervention

>> true but I mean secretary of the

treasury and the chairman of the federal

reserve are two separate independent and

they should be

>> independent of one another.

>> They are independent, but they they do

collaborate and they have in the past,

which is legitimate for them to do so

under certain circumstances.

>> Yes.

>> All of that said, you know, Kevin Worsh

is going to be speaking at Jackson Hole

um in a couple of weeks.

>> Did he confirm he's going to speak at

the meeting?

>> That's a great question. I assumed he

was going to speak

>> telegraph anything, so maybe he wouldn't

that be interesting if they met and we

didn't hear anything about it. That

would be interesting, but I that would

be uh the I don't think the markets

would like that very much.

>> I wouldn't like it.

>> I don't think that [laughter] would be

>> I like transparency. I really do. I

don't want that entirely.

>> I So here here's another thing I would

say quickly before we get to the last

thing which I know Dan has much more to

say on.

>> To me, the issue is not that there's no

forward guidance. That's not the

problem.

>> The problem is there's no current

guidance. There's no like this is how

I'm thinking. There's nothing.

>> Yes.

>> Isn't that the problem? It's it's very

important for us to understand how they

look at and interpret data so we can

factor in what they may do in the

future. I understand when Kevin Worsh

says we're the referee. You should be

looking to the players. The Federal

Reserve is another player. Yeah,

>> they can have a major impact on how the

game is played by what they do with

their balance sheet and what they do

with interest rates. So removing any

type of guidance, Julie, I'm 100% on

board with you. Were we getting too

much? Probably. Were we getting

dissenting views with all the people and

the governors coming out in between

means and talking? Probably. But that

doesn't mean you take everything away,

right?

>> Yeah, I think so. Okay. Well, finally

getting back to tech. Um, you know, it's

interesting some of the newsful that's

come out over the past day that sort of

raises qu questions again about some of

the hyperskillers. And I know we we were

sitting in the newsroom together

yesterday where the news crossed that

Deis Hassabis was going to transition to

a new role at Deep Mind at Google and

that um Jeff Dean was going to be

leaving who's the chief scientist. Tabis

is now going to am I saying his name

right? Hassabis he's going to be now the

chief scientist at Google as well as the

chair of deep mind like just a shakeup

there. Um, you know, very interesting

that that is happening.

>> Not a good look for Google. Uh,

especially or Alphabet, whatever Google

uh especially as you know, we've seen

reporting that like I said earlier that

their uh Gemini 3.5 Pro that would be

their next frontier model is delayed

>> um because it they wanted to button up

some of the coding capabilities to match

up with what's going on with uh you know

I guess uh Opus 5 at Anthropic and 5.6 6

uh over at OpenAI. So losing these

people, you know, chief scientists, you

know, seeing uh uh Deis move up into the

chairman role, it doesn't feel as though

that that's what you want at a time

where this this company went from, you

know, a red alert, right, alarm bells

going off to leading

>> in AI. Yep.

>> To now

>> starting to fall back a little bit. And

it's not as though they're they're in

danger of losing, you know, any kind of

par or they've lost par, I guess, with

the very very very frontier, but it it

it's kind of a an overall sense of of

what's going on within within Google.

There's issues with capacity. There's

infighting over who can get access to

capacity to use for their different

needs for research, for powering models,

for training models, uh for running, you

know, customer services. And then you

have this and it just feels like uh

there's there's there's too much going

on at a company where you feel is in in

a negative way where you feel that this

should be the I mean they made they they

developed the idea of transformer

models.

>> They should be

>> they should be the leadership and it's

against this backdrop that they're

reportedly considering another $25

billion bond sale. Yeah.

>> So how's that going to hit at a time

when this is going on?

>> I just look at Alphabet as a

three-legged stool, right? So they have

their their search and the AI that

they've built into their search

capability which needs to improved and

refined and I think they will uh what

they're doing to using AI for YouTube

content moderation. It's hard to argue

that YouTube isn't killing it in terms

of social media from a platform

standpoint. And I just got back from a

business trip to to Arizona. I can't

tell you how many Whimo vehicles I saw

on the road.

>> I found it concerning. I won't get in

one just yet. But ironically, this is as

an aside, there was a gentleman sitting

in the passenger seat of a Whimo as the

car was driving him autonomously, and he

was speaking out loud. Now, I hope he

was speaking on a phone, on a speaker

phone, but was he speaking to this

invisible driver next to him? Have we

[laughter] lost our minds as a society?

But Alphabet, they're still one of my

favorite software plays right now. There

is a talent grab in this industry.

They're going to have to pay up to

replace scientists, but I still like

Alphabet.

>> Um, by the way, you know, nobody's

typing anymore. None of these tech

people are typing anymore. They're just

talking.

>> Yeah.

>> Which is a whole other that's another

topic for another day.

>> Don't do it on the subway. Shut up on

the subway.

>> Have you seen people talking to the

talking I see it everywhere. Yeah. It's

just just um the other on the other

hyperscaler front. The other story that

caught my eye was the Bloomberg report

that they looked at filings and they

sort of did the math and they said of

that that Microsoft AI revenue that they

just revealed to us, if you extrapolated

to the year, Open AI accounts for some

70% of that. And I don't think this is

what Microsoft wants it to be, right?

They've been trying to diversify. But

again, it's just like and sort of comes

to your earlier point about like own the

stuff the the suppliers don't own who

they're supplying to. Like we keep

hearing these hyperscaler stories where

there's some little things that you know

chinks in the armor.

>> Yeah. I think you have to be very

patient with the hyperscalers and

recognize that this is a long-term play.

Some of them are going to get it right.

Some of them are going to overspend.

Some of them are going to underspend. I

think Microsoft is going to get it

right, but you're going to have to be

patient with Microsoft. I think Meta

obviously they've revised their capex

guidance code looking forward. The

market didn't like that.

>> Yeah,

>> Microsoft says they're going to raise

the lower bound of their capex spending

limit. The market loved that. So, what

does the market want right now? Do we

want them to spend less? Do we want them

to spend more maintain their [laughter]

It depends. It depends.

>> Depends on who they are. I think their

their over reliance on open AI though is

is potentially I mean that's probably a

bit of an overhang just in that the it's

the same it's not this it's kind of akin

to what what Oracle's dealing with right

so much of what Oracle

>> has on the books going forward is open

AI

>> you know that $300 billion deal was it

over 5 years I I can't recall the the

exact uh length but Microsoft has been

wrapped up with open AI and you know

Julie to your point they're trying to

get rid not not get rid of it, but

they're trying to lower the dependence.

Invested into Anthropic, offering their

own models, saying that, "Hey, bring in

open models. We want to be the the

one-stop shop where you can come and

grab models."

>> Amazon's been doing that.

>> Yeah. [music]

Yeah. All right. Got to leave it there,

guys. Thank you very much. Appreciate

it. Opening bid coming to you right

next. Keep it right here.

Hey, hey, hey.

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>> I assure you there are other things

going in the on in the world of

investing besides stalking SpaceX shares

and trying to figure out why the bare

raid continues on momentum stocks

SanDisk or like SanDisk after its

blowout quarter last night. Take for

instance this fund stat. The S&P 500 has

notched 25 record high closes this year.

Exciting, I know. Or how about this one?

The S&P 500 crossed above 7,700

yesterday for the first time. Its eighth

100 point milestone of the year. Super

pumped about that. One last one because

I can be here all day doing this. Nike

stock is underperforming the S&P 500 by

the widest margin in 25 years. While I

find uh that riveting market data, the

reality is, and I hate to concede this,

this is a market that loves to follow

compelling stock stories. It remains

very focused on the post IPO story at

Elon Musk SpaceX and everything that is

happening on the chips space front.

Specifically on SpaceX though, a new

wrinkle to its story forms today. A

total of 911.5 million shares of SpaceX

held by employees and early investors

become eligible to trade. That equates

to about 43% more than the uh 638.9

million shares issued at the IPO.

SpaceX's free float or the number of

shares available to trade each day is

set to increase from 4.9% to 11.8% of

outstanding shares. So, there's a lot

going on here with all things SpaceX. My

opening bid round table is surely hot to

weigh in on all this stuff. Patrick

Kennedy, all source investment

management, founder and managing

partner, Kenny Pulcary, Slatesstone

Wealth Chief Market Strategist, and uh

Bridge Kurana, Wellington Management,

fixed income portfolio manager all here.

Kenny, let me start with you. Uh are you

a big buyer of SpaceX here?

>> I'm a buyer of SpaceX below 100. I've

been holding off. I'm thinking after

today, we're going to get another push.

Maybe not today, but over the next

couple of weeks, but below 100, I'd

start to dip my toes in it for sure

because I think it's a name that you got

to kind of buy and just put and put

aside and just forget you own it. Uh but

I'm not buying it yet.

>> Uh on days like this, Kenny, I reflect

back to when I used to talk to you on

the floor of the New York Stock

Exchange. So, I think you're the perfect

guy perfect guy to answer this question.

Uh there's this concern that all these

shares at SpaceX are going to come to

market in one single day. Now, like I

said yesterday today, and I I think it

bears repeating, that's not how this

works. No.

No, it's not how it works. And if they

were going to do a large chunk, like if

there were a lot of insiders that wanted

to sell, I would think that Goldman

Sachs or Morgan Stanley would would

organize some kind of a block sale and

maybe have already traded that premarket

to, you know, the institutions around

the street that they know would be like

a a secondary sale, but it would have

taken place already. I haven't seen that

yet. I haven't seen any indication of

that yet. But look, the day is still

young, right? It's only 9:30. Let's see

how that goes. But to your point, it

would never come, you know, with

everybody just trying to sell their

stock that they would absolutely try to

coordinate at Goldman and Morgan if that

were the case.

>> Kenny, can you imagine that freaking

[laughter] disaster? SpaceX goes down to

a dollar a share.

>> It would be a free-for-all.

>> That'd be [laughter] terrible. Pat, let

me get over to you here uh on SpaceX.

Um, this of course is, you know, a key

story in the market, key stock in the

market, but the sell-off we've seen in

in SpaceX post the IPO, has it spread to

the broader market? Like I just

mentioned, this is a market that has

notched 25 highs this year.

>> Yeah. So, as far as the broader market

goes, I think that it was anticipated

that SpaceX would have a bit of a

pullback, right? It IPOed at 2 trillion,

I want to say. So, that's a massive IPO.

It reminds me a lot of Uber back in the

day when there was a ton of pent-up

demand. It IPOs and the stock was flat

for a while just while it digested

everything. And I would agree completely

with Kenny that when these things go

IPO, institutions are not running to

sell. Employees are not running to sell.

Institutions that bought this thing at

say 80 or 70 a share equivalent within

the private markets. They're going to

hold it for a lot longer, right? They're

trying to sell north of 200. So my view

on that is that we'll see some digestion

here uh within the near term with

SpaceX, but I wouldn't see anything

below 100 um as far as like price action

goes. And if it did dip below 100, we

look at it as a buying opportunity. As

far as the broader market goes, I still

think the MAG 7 are are riding the horse

here and driving things, right? I mean,

I know MAG 7 was flat for the first 6

months of the year, but you know, they

show up for 3 days and all of a sudden

the market shoots higher and rallies

what, 5 10%. So, I think the

concentration in the Mag 7 is still

playing a huge theme within the market.

>> Good point there. Uh Pat bridge, let me

get over to you because you are my uh

fixed income expert here today. First

part of my question is this slide in

SpaceX shares going to make it harder

for SpaceX to raise the debt it needs to

hopefully reach Elon Musk goal of a

trillion dollars in sales in about 5

years which I don't know how he's going

to do it but I'm surely thinking he's

hoping to tap the debt markets to help

fund that.

>> Yeah I mean I think it's it's not only

SpaceX it's everyone. I mean, we saw

Alphabets coming with a $25 billion new

issue today. I there is so much

corporate issuance out right now and we

expect about 2 trillion this year, which

would be the largest ever. And the

reality is is these bonds are coming at

very attractive yields. I mean, for some

of the even highest quality

hyperscalers, 6 1/2, 7, you know, in

SpaceX's case, it's going to be probably

north of 7 and a half to 8%. And so, the

question you I think as a stock

investor, you have to ask is, you know,

what is a better risk adjusted return?

Is it buying these bonds, you know,

where um the volatility is going to be a

lot lower and you get these very

attractive yields and you have seniority

in the capital structure or do you want

to focus on the stocks and the

volatility that is there? So um you know

these bonds as I mentioned are coming at

really attractive levels um you know for

a lot of the best companies in the

world. Second part of my question uh

bridge on you mentioned the alphabet

bond sale $25 billion. How do you expect

that to be received at a time when there

is concerns on how much hyperscalers are

spending in the free cash flow negative

levels they are willing to run?

>> Yeah, I mean I think it'll be

wellreceived. I mean obviously if you

look at the relative stock performance

between all the hyperscalers, Alphabets

has been by far the strongest and at the

end of the day you're still talking

despite all the free cash flow that they

are spending on AI capex you're still

talking about one of the best balance

sheets. So I think it will be

wellreceived. I think the the broader

problem for the corporate bond markets

is that you just know so much supply is

coming and that keeps on while spreads

in these sectors and in the AI part of

the economy have widened to reflect

that. What we're seeing is is the rest

of the market hasn't caught up yet and I

do think that's probably the next trend

is all these other companies, you know,

if you can buy Google bonds at 6 and a

half to 7%. It starts making everything

else in the corporate bond market look

quite expensive. Kenny, these balance

sheets of the hyperscalers are starting

to look like our country. So much debt.

[laughter]

>> Yeah. Yes, there are. But it is coming

at attractive prices to Bridg's point.

And look, here's the deal. To answer

that question, are you going to is an

investor going to invest in the bonds

where they, you know, they're locking in

these nice high yield or are they going

to trade or or invest in the stock? I

think it's I think it works both ways. I

think you're going to have people that

will do both. Uh, I think you'll have

more the trader type mentality.

Certainly want to jump into the stock

because there's more excitement there in

terms of trading it. But as a long-term

kind of investor that's looking for a

stable, solid deal, certainly the fixed

income side is the way to go.

>> Kenny, uh, Pat brought up a good point

calling out the MAG 7 in that return.

Are we just being reminded that if if

the market wants to hit new records this

year, the Mag 7 has to work?

>> I I I I do agree with that. I think the

MAG 7 has to work. And to his point, you

know, the first half of the year, it

really did nothing. So people get, you

know, frustrated with it or they sold

out of it. All you need to do is miss

one and two days you're going to miss

the whole thing, which speaks directly

to why you got to kind of have a plan

and stick to it. And even when it's not

working, unless those fundamental

stories have changed, then there's no

reason to really change your your

mindset, the the original reason you

bought those those names. But yes, I

think you have to be in those names. I

think you don't have to be in every

single one of them, but I think you have

to have exposure that's going to give

you broad exposure kind of across the AI

space. Pat, I mentioned at the top 25

record closes this year. Uh, still it's

it's off what we saw, I believe it was

57 or 54 record highs in in 2024, but

still a good year so far. Can these

record highs stay in play into the

second half of the year, into the fall,

into the winter months while we really

have no idea what's coming out of the

Federal Reserve?

>> I think they can, but we're priced to

perfection in my opinion. So, I I think

earnings are expected to come in what,

over 20% year-over-year. So that has to

play out and if it doesn't play out, I

think earnings would be the trigger that

brings the market lower and AI not

showing up the way we think it's going

to show up. I think as far as the

Federal Reserve goes as, you know, the

the rates are kind of set in stone right

now, I would think that we might get

another rate hike, but nothing crazy. So

as far as the risk that we're looking

at, we would look at AI expectations,

earnings over the next 6 months. If

inflation does pick up a bit and you

have oil sustained over 100, then

absolutely rates become a problem. But

in the near term, as far as what the

expectations are, we would think uh

sustaining that 20% year-over-year

earnings growth is really the big thing

that we need to be looking at.

>> All right, a big thanks to Pat Kenny and

Bridge. Awesome analysis on this busy

morning. Really appreciate it, guys.

>> All right, the uh Conference Board and

Business Council's closely watched

measure of CEO confidence out today

climbed to 52 in the third quarter, up

from 47 in the second quarter. Now, this

sounds encouraging until you remember

the second quarter was the worst reading

in years, and that 52 is still a full

seven points below the 59 that CEOs were

reporting in the first quarter. Of

course, that was before the latest bout

of tariff chaos, Fed rate hike fears,

and the AI spending backlash that is

corporate boardrooms really worried

about all this hitting them like a

freight train. Conference Board's

president and CEO Steve Allen joins me

now. Steve, good to get some time with

you here. Look, uh, I was just talking

in the prior segment about how the stock

market has had 25 record highs this

year, and I see this chart about CEO

confidence. It doesn't exactly align

with a record setting stock market here.

Where is that disconnect?

Well, you know, this is still pretty

much neutral territory. So, the the

measure of CEO confidence is, you know,

0 to 100. 50 is, you know, dead center

on that. This is a 52 rating. So, it's a

little more positive in the second

quarter, but but still in neutral

territory. Now, this is really important

because these CEOs drive capital

investment and therefore long-term

returns. They control hiring in this

country which which still is going well.

So, what we're hearing from them is

we're in a low higher low fire

environment. They're, you know, not big

plans to add lots of people. Lots of

investments still in AI and there's your

market reaction. Most of the mag seven

AI stocks have corrected, but you know,

you have all of that investment going

on. But in terms of long-term capital

investment, you know, for capacity and

other things, they're still sitting on

the sidelines here because their

borrowing costs are quite high. You've

talked about that. Um, and you know,

they don't want to lock into, you know,

uh, bad returns on capital projects and

so forth. But but look, you know,

sitting in neutral when you you know,

you've got a supply chain that's messed

up around the world. You've got still

the straight of Hormuz that's closed,

the oil impact of that, but also the

knock-on effects. It's not a bad place

to be. And and so therefore, you're

seeing, you know, some economic growth

still happening.

>> What has to happen, Steve, to get CEOs

more optimistic?

>> Well, you know, this they had adjusted

to tariffs from last year. they had

adjusted to Ukraine and then there's

this big shock with Iran and it's not

just Iran but it's this closing of the

straight okay so what has to happen is

the straight of Hormuz needs to open and

regular trade flows need to happen now

these countries around the Gulf are

building workarounds to that overland

routes pipelines and so forth but that's

not going to turn on right away so you

still have to be dependent on the

straight of Hormuz for 20 25% of the

world's oil flows remember there's about

6,000 consumer products just in this

country that are impacted by the price

of oil. That's packaging, that's

ingredients, it's pharmaceuticals,

makeup, food, you know, it it goes

throughout the entire economy here. So,

it's not just the gas pump, which of

course is very visible, but it's it's

throughout the economy.

>> How concerned, Steve, are our CEOs about

the possibility we get less information

from from the Federal Reserve? And as we

stand here today, we have a new Fed

chair that really hasn't tipped his hand

on what may not h what what may happen

next in terms of interest rates.

>> I think there's high confidence in the

new Fed chair. They you know CEOs have

experience with him from uh you know

before when he was on the Fed the

financial crisis. He is very hands-on.

He calls CEOs directly, gets input and

so forth. So I think they understand him

and they don't really, you know, worry

about whether he's out there

telegraphing things. You know, the

market has adjusted. Um, you know, he's

he's been very vocal that the market

needs to assess risk and and, you know,

not necessarily be guided by the Federal

Reserve and and that's happening uh as

well. So I I think they're fine with

that. Uh, you know, the the conference

board is projecting that uh rates are

stable for the balance of this year,

that there won't be an increase. uh

that's bounced up and down in the

prediction markets of course, but but

we're projecting that it'll be stable

because you've got pretty much full

employment and you know you're working

down the uh you know the situation with

inflation but you've got to deal with

this straight of hormones for inflation

really to be addressed.

>> Steve, yesterday I had a a great

conversation with Circle Co-founder and

CEO Jeremy Olair. Asked him about his

outlook for jobs. Take a listen to this

because I'd love to get your uh reaction

on the back end.

>> We think this is a a fundamental shift.

We think that there will eventually be

billions of agents providing work and

labor and they'll be able to be

orchestrated and integrated within a

firm and across firm boundaries. We want

our employees to have the superpowers of

fleets of agents that they can use

themselves to amplify their own

capabilities. So, this is a this is an

opportunity to multiply the capabilities

of a firm and of of humans themselves.

>> Steve, uh Jeremy's not alone. Look, I

talked to a lot of CEOs. They are all in

on agents in this new ways of getting

business done. Are we headed into a high

fire backdrop next year?

>> No, I don't think so. This is what we're

hearing from most CEOs too. The

implementation of AI is not about

killing jobs. That was the fear of

course and we heard that and you do hear

that in a few cases where there is uh

these uh AI agents are taking over

customer service jobs which by the way

are largely overseas now. But what we're

hearing is a productivity upside. So if

you remember back to the '9s when there

was the last big digital evolution, we

got about 100 basis points uh extra in

the GDP for those years when you know

you saw that big surge in adoption of of

new technology. We're not projecting 100

basis points a year, but that is I think

where we're headed is that AI will

enhance the productivity of uh of

existing employees. Hence the low higher

low fire uh situation, you know, and and

you do have 10,000 baby boomers a year

leaving the market. So there's a natural

drain, right? And you're not adding the

immigrants that we were at one point.

So, you know, there isn't a big overage

uh of labor here.

>> Steve, good to see you here. Uh I

appreciate you taking the time. Always

enjoy this survey. I'll talk to you

soon.

>> Thank you.

>> All right, straight ahead, I take a look

at how robots are beginning to change

global supply chains and what that could

mean to your [music] online ordering

self. That's next.

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>> I'm keeping an eye on shares of

logistics giant GXO after its stock that

hit 9% on earnings on Wednesday. The

company called out a lot of new business

wins, but the street perhaps was looking

for just a little bit more. GXO

Logistics uh CEO Patrick Keller is here

with me now. Good to see you.

>> Good to see you, B. Look, I I mentioned

the stock reaction here just now. What

did the street

>> get wrong? Did they get anything wrong,

you think?

>> Well, I I was really surprised. I I

think the uh the street misread the

story.

>> Um we are celebrating our 5year

anniversary uh spinning out from XPO.

>> Can't believe it's been five years. here

and become a a publicly traded company.

Over those five years, we have been on a

firm strategy of M&A. We've built a

fantastic foundation of a business

through M&A, $13 billion uh revenue, 26

countries, 150,000 people. We're

diversified across many industry

verticals. And since I joined a year

ago, I have 32 years experience in this

in this industry. We're turning to

organic growth. And I think what you saw

yesterday in the reaction of the market

is an underappreciation for the

potential that we have in organic

growth. We participate in an industry

contract logistics that is a trillion

dollar marketplace less than 30%

penetration and we are one of the global

market leaders in that space. I thought

yesterday when we announced our Q2 new

business signings of $410 million

annualized revenue up 35% from last

year. I thought that was a great signal

that our strategy around driving organic

growth is working.

>> I signaled that we're going to

experience the same increase in sales

year in Q3. We feel really good about

the path we're on. The market will

determine our valuation over time. Uh

but we really are confident in the

strategy there. the the new business

that you won uh it was a very large uh

it was a large number and that would

continue the second half of this year.

Is it coming more from the acquisitions

you made or is it from existing

customers?

>> It's absolutely the result of the

acquisitions that we've made the

capabilities that we've built around the

world and it is coming from current

customers. We are operating uh for the

best brands around the world and our

customers are rewarding us with new

business. We saw phenomenal progress

with a new reinvigorated focus on the

B2B verticals I call them of aerospace

and defense technology and especially

data centers uh life sciences and

industrial I think in line with what we

saw Monday on the manufacturing index

we're seeing the same activity in the

marketplace that's a big driver for our

growth we're especially seeing

significant growth on the data center

front and the services we provide there

>> yeah I want to ask you about the data

center front just on the new business

wins That seems to be a metric the

street follows is very val very very

closely for you guys this year. How much

dollar value will you do in net new

business or in new business wins and

what does that look like next year?

>> Sure. Last year we signed over $1.1

billion of annualized new business.

We're seeing that come to life uh in our

revenue this year. Next year we will

significant this year we will

significantly above the 1.1 billion that

fuels uh our organic growth into 2027

>> and this is all profitable growth.

>> This is all profitable growth.

Absolutely.

>> On the data center front what are data

centers contracting with you for?

>> Yeah we we have an endto-end solution in

support of data center supply chain. So

we are supporting the build of the data

center with forward logistics. We do

rack assembly wiring. We're helping the

hyperscalers build the data centers. So

>> you're on these sites actually building

>> on the site uh with warehouses.

>> Interesting.

>> Uh performing this activity. We also

have services on the back end. We

provide the service parts that go into

the data centers. So when a part goes

down, we're providing the replacement

part. We're managing that activity as

well as the returns and reclamation of

product uh that's coming out of data

centers. So we have a lot of longevity

in the services that we've run.

>> What are you seeing in terms of

visibility? Because look, we've seen

tech stocks sell off. There's this fear

of uh we're building too much AI

capacity in this country. You know, as

you look out 18 months, how do these

contracts, how are they structured for

you?

>> Yeah, the our contracts are typically 5

years or longer.

>> Uh so we believe the commitments that

our customers are making around the

support of the data centers is a great

signal that they're in for the long

haul. I've seen the data that data

center capacity is going to triple by

2030. That's why we're very excited to

be on the sustainment side uh of the

equation from a supply chain

perspective. We're not seeing the

activity around the data center build

slow.

>> Uh ahead of talking to I was thinking

back I had a conversation two weeks ago

with General Motor CFO Paul Jacobson and

we were talking about cobots or these

robots in factories. Uh he said they are

starting to use them. Uh it made sense

to me. Now there's some being concern

some concerns that it's taking jobs away

from humans. How are you using cobots in

your business? Yeah, we we're going to

deploy over 20,000 uh robots in our

business just this year.

>> Are they the humanoids or the things

with like the arm or

>> not the humanoids yet? We we have

cobots. We have 45 humanoid pilots uh uh

that we've done. We have another one

launching uh in Europe later this year.

>> Who are you working with for that?

>> Uh we we work with a number of providers

um um electronics, agility and others.

>> Uh and it and it is uh fantastic

technology. I I think it is going to

play a big role in supply chain uh as we

look a couple years out. I think we're

two years away from having ROI on

humanoids in a warehouse. Uh and I think

that will happen uh in in 2829.

We're focused on the cobots today 20,000

deployed. What we find is that our

associates really love working with

robots.

>> So this is humans and robot working hand

in hand at least for now until the robot

gets super smart and pushes out the

human. And even on our even on our

humanoid pilots, it's human and it's

humans and humanoids working together.

We see a role for humans uh and our

associates in the warehouse uh long into

the future. It really is about applying

the robots to the right tasks to make

our associates jobs more meaningful,

easier to do uh and more productive.

>> Patrick, good to see you. Uh let's stay

in touch. Uh quarter look good to me. I

don't know what the market's thinking

about. Appreciate it.

>> Thank you. All right, before you go, I

want to let you know about a new episode

of my Power Players podcast that just

dropped today. I sit down with the CEO

of the Players Company, Tom Zang. Tom is

a former star sports scientist from the

San Francisco 49ers. Now he's helping

sports pros invest their money wisely

and not go broke in retirement like so

many often do. You can watch this

episode of Power Players and Yahoo

Finance, our app, YouTube, and Samsung

TV, or listen in on Apple Music,

Spotify, and Amazon. Be sure to leave me

a review and like, and subscribe where

you can. I love the fan feedback.

Julieman has you next on market

catalyst.

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>> Welcome to Market Catalyst. I'm Julie

Hyman. 30 minutes into the US trading

day. We got a kind of a mixed picture

here. Not much going on on the surface

of the major averages. You got to look

under the surface, under the hood to see

what's going on. So, right now, the Dow

is off by about 60 points, down by about

a tenth of 1%. The S&P 500 up by about a

tenth of 1%. The Nasdaq up about a fifth

of 1%. You get the idea. There is not a

heck of a lot of movement going on on

the bigger level here today, but there

is a lot of focus on individual stocks

that are reporting earnings. Just to

give you kind of an example here,

looking at some of our trending tickers,

which we're going to hit in detail a

little bit later on, but a lot of them

have to do with earnings. We talked

about SanDisk earlier in the day. The

Storage Maker coming out with numbers

that look pretty good, but not good

enough to please the street, especially

after the huge run that the stock has

had of more than 450% this year. So,

it's off a little bit today. We've got

Soundhound on the list, Constellation,

Celsius, Western Digital. All of these

are companies that have reported. Um,

and then if you look at the NASDAQ 100

here with its little bit of a stronger

performance today, a lot of the largest

cap tech stocks are doing pretty well in

today's session. Google recovering a

little bit after falling yesterday

following the news that it was basically

seeing a shakeup within its AI

operations at Deep Mind. Um, the Demis

Habis who heads that up moving to a

chairman role and also becoming chief

scientist of Google as the chief

scientist of Google. Jeff Dean leaves to

uh create a startup. So a lot of moving

parts there. Uh but still again we are

seeing kind of some strength going on

here. Looking at the semiconductors here

and this includes uh some of the memory

makers as well in some cases. So we've

got Western Digital SanDisk uh DRM the

ETF that tracks those memory makers are

all trading lower but otherwise we have

some strength within some areas of

semiconductors. So that's something to

point out as well. sector-wise again

because it is more micro focused today.

Not a lot of rhyme or reason on the

sector front. Energy stocks are doing

the best today. Material stocks are

doing the worst in today's session. So

getting back to the NASDAQ 100 a minute.

The other stock that we are watching

very closely today is SpaceX. The shares

are up right now, but of course they

have been running to the lows before

this little bit of a bounce that we've

been seeing over the past few sessions

or so. Today of course is the first

trunch of the lockup expiration. That

means the folks who held SpaceX when it

was private. This is the first day they

will be allowed to sell their shares and

in fact as many as 911 and a half or so

million shares um as far as we know are

available for sale today. Doesn't mean

that those are all coming to market. It

just means that people can start to sell

them if they want to. And then there

will be a number of other expirations

through the end of the year as more and

more supply comes to market. So joining

us to talk more about all of this is a

SpaceX shareholder. That's Chad

Anderson, the founder and CEO of Space

Capital. And Chad, we've been talking to

you throughout this whole process before

the company came public. Um, so you're a

shareholder. Are you guys selling any of

your shares today? Is there any is there

any nice trinket you've had your eye on?

And today is the day you get to cash out

and buy that thing. Yeah. So, um, look,

the float is going to 3x today. Some of

our shares are available. Um, and the

lockup's expiring. Um, we will

distribute shares to our underlying

investors, but, um, personally, I'm not

planning on selling mine. I'm very

excited about the company and where this

company's going.

>> How many of your underlying investors

have said, "We want to cash out some of

our shares."

>> I think for the most part, people have

been very bullish. I mean we've actually

had so the secondary this is a company

that stayed private for a very long time

and the private the the secondary market

was actually very active and we had

opportunities to sell multiple times

over the last few years and um

internally as a management team we have

you know advised not to do that and our

investors have backed the company the

entire way. So we have, you know, um

it's not just us, it's our underlying

investors that remain pretty bullish on

the company.

>> Pretty bull. But sorry to to to hammer

this. Is anybody in your who who are

your shareholders selling? Like has

anyone opted to do a has anyone

requested?

>> Not I mean I don't know what they're

going to do personally, but I am not

aware.

>> Okay. Okay. But through the fund they're

not they're not doing it. Gotcha.

>> Um and it is interesting to see the

stock up today. I mean, you know, we

knew that this was coming um and so we

had a lot of pressure on the stock going

up to today. But it is interesting now

that the this is possible to see the

shares moving higher.

>> Yeah. I mean, I think there's a lot of

great reasons for that. On the on the

lockup side, I mean, look, the float is

going to 3x today. That's great. I mean,

for in uh early employees who have built

the most valuable private company in

history, this gives them access to, you

know, liquidity and I think some of them

will sell. So, you got natural sellers

meeting uh long-term buyers because

you've got, think about it, um

institutions that have want to build a

position here at size literally have not

been able to do that because there

hasn't been enough float. So, um I think

actually, you know, that this is uh a

great um moment where natural sellers

are being meeting buyers and we'll see

what happens. But um I think there's a

lot of demand for this stock and a

company that is one of the most valuable

private company public companies in the

world with sort of startup growth

prospects.

>> Um and it's also been interesting and

and our our Jared Blicker is going to

give us more details on this later but

Vander research has come out with some

numbers showing that even as the stock

has been going down there's still a lot

of retail interest in particular in the

name. Why do you think that it has sort

of caught the imagination of retail

investors in particular? Well, so I

don't think we were expecting big

deviations from expectations, you know,

7 weeks after their IPO, but we were

wrong. They beat on every line. So, the

business is booming. Not only that,

they're um uh this is a company that is

uh making significant revenue, growing

um at a great clip, and investing

significantly in the future. And so when

I said, you know, startup growth

prospects, that's what I was talking

about. This is not a company that's, you

know, got something that it invented 20

years ago that's trying to, you know,

ring out as much value as it still can.

This is a company that is um uh the core

uh space and connectivity business is

basically funding its own growth and

then funding its investments into

Starship, which is going to enable all

types of new future markets. And then

the AI buildout, they've got the largest

war chest. they raised hundred billion

dollars for exactly this reason to

invest in the infrastructure of the

future. And so when you start thinking

about the investments that they're

making um and the markets that they're

going to be powering going forward with

AI uh robotics uh humanoid robotics and

autonomous vehicles on the connectivity

side

>> wait they don't own that stuff yet. Does

that imply that they're that you think

they are going to buy Tesla?

>> I think that SpaceX owns the pipes. So

all of the connectivity is going to run

through Starlink.

>> Gotcha. Whether they buy whether or not

Exactly.

>> Gotcha. Gotcha. Um so so you mentioned

the earnings. So let's let's dig into

the earnings a little bit. It see it

looked like the market maybe wasn't

happy with the capex. I mean as we know

certainly SpaceX is not alone in that

regard and they're not spending nearly

as much as some of the other

hyperscalers. Um what did you make of

that move and do you think is that what

was going on? Is was it the anticipation

of the lockup? Was it the capex? What do

you think was up there?

>> Yeah, I don't think this is a SpaceX or

sector or like space sector specific. I

think this is um really just a like a

rerating um marketwide of the AI capex

buildout, right? Um because space

companies at least as of this morning

like were not following the same sort of

movement that SpaceX was. SpaceX was

following the movements much more of

these other hyperscalers and the people

who are doing the big AI buildouts,

right? And so I think that there's some

um nervousness about where things are

going because you had these models.

everyone was excited about the models

and then suddenly it's wait a second

there's some headwinds here right um

that closed models are basically you

know we've got a lot of push from big

tech companies pushing for openweight

models there's a lot of competition from

China so we don't really know where the

models are going to land and every

quarter there's like a new leader right

on the leaderboard and so where are

models going and is that where the value

is going to acrue I think people are

starting to realize that that might not

be where it happens

>> but AI is going at least in our

perspective in one direction. This is a

massive opportunity. And so the value is

going somewhere else. It's going in the

applications that are leveraging these

models, these frontier models and

building um uh applications and also in

the infrastructure that the intelligence

runs on. Both of which SpaceX is a big

player in investing very heavily into.

And so um you know that's what makes me

bullish on again not just like uh the

numbers and the growth but also the

direction of the company and where this

company's going. So, something I I asked

another analyst yesterday. I'm curious

to get your take on when you think about

the future of SpaceX and building out

data centers in space once it gets the

whole flywheel going and gets Starship,

you know, to where it wants it to be to

be able to carry those payloads more

regularly and heavier payloads.

What how do you view the the enormous

buildout of terrestrial data centers in

terms of how it fits into that? Why do

that when you know when if your real

differentiator is going to be space data

centers?

>> Well, I think their real differentiator

is all of it. And so it's like and

that's why it's all of the above, right?

And so um what we've got here is

>> um SpaceX, one of the the most amazing

capable teams in the world that have

basically rebuilt the entire space

economy is built on top of their Falcon

9 launch vehicle. They came in and

looked at launch and access to orbit

from a first principles perspective and

completely rewrote the playbook and now

they're doing the same thing in

terrestrial AI data centers. I mean, if

you listen to Jensen Huang and others

talk about what SpaceX is capable of

doing. They can build things out in 20

days that would take other companies

years to do. And so they're producing

compute at a like better, faster,

cheaper than anyone else because they're

basically taking their team of rocket

scientists and applying it to AI data

centers. They're reimagining it. And

they said on their earnings call that

they're by doing the work of

understanding how they're going to build

these AI sats, they're actually helping

them rethink how to do their terrestrial

ones. And so they have a completely new

architecture that's enabling them to do

these things better, faster, cheaper.

And they're also applying it to Telos.

And they, you know, they didn't give us

a lot of those details.

>> Well, okay. So I wanted to ask you about

that too. When they talk about

potentially like everybody being

connected via Starlink

right now the infrastructure just

doesn't exist to do that and presumably

there would be a lot of money that would

have to be spent because you need a

tower to connect to the phones that we

have today or they would need to partner

with somebody. So like do you see that

as a realistic possibility in you know

in the shorter term longer term do you

want them to even do that? like it's

does that matter if they you know do

they have to have a huge reach when it

comes to that? How do you think about

that?

>> There's a lot of dynamics at play here.

Um and uh when Starlink first rolled

out, everyone said, "Okay, well that's

going to be great for rural customers

who don't have another option, right?

But then they pushed much more suburban

and then urban and we have our offices

just down the street here um in

Manhattan and we have Starlink on our

roof,

>> right? So, um there are limitations to

doing it purely through uh Starlink, but

>> you don't but it's not like on your

phones or is it on your phones?

>> It's coming. So, I mean I'm I have

connectivity to give me um SOS messages

currently in dead zones and things like

that, but no, this is the next phase. So

you need much more capable satellites to

go direct to cell and that's what these

V3 satellites are going to do in that

they just tested in their test in their

Starship test and they're going to

launch the operational satellites on the

first orbital operational flight of

Starship later this month.

>> Another question for you. How much do

you pay for that versus a conventional

telecom?

>> It's very comparable.

>> Yeah. But like the opportunity here is

not just in consumer and it's how

they're delivering connectivity wherever

you are whether it's direct to cell or

direct from satellite to a tower um that

they have reimagined and rearchitected

in a new way. And basically providing

you connectivity wherever you are so you

don't have to think about how many bars

you have. And then the big picture is

how the the massive growth in

connectivity when you start to think

about humanoid robotics coming online,

humanoid robots coming online, when you

start to think about autonomous vehicles

and all of the bandwidth and

connectivity that these robots and

machines are going to need. It's way

more than the current market today. So

they're building the infrastructure to

be a major player in this market that is

massively growing. And this is just one

of several markets that they're playing

in,

>> right? Okay, Chad. Good to see you as

always. Thank you. Coming up, we're

going to talk to Figma CFO on that

company's latest [music] earnings. We'll

be right back.

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>> Figma shares are down despite the

company reporting second quarter

earnings that beat analyst expectations.

s investors are seeking confidence in

Figma's stock as fears over AI

disruption weigh on the company's

future. Figma CFO Pier Milani joins me

now. You guys, it's down today, but you

guys have bounced quite a bit from the

lows. Preier, thanks so much for for

being with us here. Um, you know, so so

I'm curious. You did have 48% revenue

growth last quarter, which is the best

in a bit. So, um, do you see you all as

sort of turning a corner? And I know

last quarter you're building on that

momentum. Um do you think that this is

the pivot that some investors have been

waiting for.

>> Yeah, really good to be here Julian.

Thanks for having me. Yeah, I'm really

proud of the way the team executed. It

was a strong quarter across the board.

Uh you know, companies are coming to

Figma to reimagine how they're building

with AI and they're doubling down. So,

to your point, it was our third third

consecutive quarter of accelerated

revenue growth. Uh we, you know, we put

up 48% uh in the quarter. was our first

full quarter of AI credit monetization.

Um, and so this gives us a sense of of

where things are going and the

opportunity ahead. Um, and then net

dollar retention held strong at 136%.

Um, what one of the things I was

personally really proud of is our gross

profit dollar acceleration at 40%. Um,

and this is because everything that

Figma offers is unique over here. Um, it

has never been more important for folks

uh, you know, as code is becoming

commoditized for value to move up the

stack there. And so, you know, we see

the opportunity here um to be the the

full stack rather to be the canvas for

full stack creation. And I think um you

know, the the the you know, the next

little bit for us is going to be really

exciting.

>> Um Pier, I wanted to do I do want to get

more into sort of product and what

you're talking about, but just to linger

on the the numbers for just a moment.

So, your third quarter forecast at the

midpoint is $374 million. So, that would

be about 4 million higher than this

current quarter. It seems as though