What made you confident that you could do something that hadn't been done before? I have no fear of failure. Trailblazing women changing the game. One of my favorite pieces of advice, think about what your boss's boss needs. Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just got to think big to accomplish big things. Julia Borsten hosts CNBC Changemakers and Power Players. New episodes every Tuesday, wherever you get your podcasts. Closing in on a peace deal, I'm Morgan Brennan, and this is your Morning Call. All right, we've got some breaking news to bring you here with U.S. stock futures popping this morning. Remember, the S&P and the Nasdaq both sitting at record highs after gains for the major averages yesterday, but taking a leg higher this morning as Treasury yields move lower as well, And as crude oil takes another leg lower as well with WTI now back below 99. Oh, look at that. Back below $95 a barrel. We're now down 7 percent in WTI futures. Brent is also down 6 and a half percent right now at about $103 per barrel. Really everything across the energy complex. Here's why. Dan Murphy is going to bring us the latest as we get these breaking news headlines regarding this conflict in Iran. Dan. Morgan, good morning to you. a major reversal underway right now in oil. According to Axios, the White House believes it is close to a one-page memorandum of understanding with Iran that could end the war and set the stage for broader negotiations. Now, according to Axios, officials say Iran is expected to respond on some key points within the next 48 hours. And while nothing is final at this stage, this is said to be the closest the two sides have come to a deal since the conflict began. Now inside the Axios report it describes this proposed framework that would include Iran agreeing to a moratorium on nuclear enrichment while the U.S. in exchange would begin lifting sanctions and releasing billions in frozen Iranian funds. Now both sides would also ease restrictions in the Strait of Hormuz under this current proposal. That is absolutely critical given that global shipping route has been at the center of this conflict. Also under this current plan, the memo would declare an end to active hostilities and trigger a 30-day window for negotiators to hammer out a more detailed, more comprehensive agreement. And again, according to Axios, during that period, shipping restrictions and U.S. naval blockades inside the Strait of Hormuz would be gradually rolled back. But of course, there are some major caveats here as well. The report suggests that if these talks collapse, then U.S. forces could reimpose the the blockade or resume military action as well, which of course leaves open the risk of a return to conflict. And as we track the pullback in crude oil off the back of this Axios report, it's important to remember that the timing here is really critical as well. President Trump saying this U.S. effort to escort commercial ships through the Strait of Hormuz is over now, at least for now, citing what he called great progress in talks with Iran. We're now getting more clarity on exactly what the president meant when he said that. That move has marked a sharp reversal and it also came just hours after senior U.S. officials basically described that operation as a matter of life or death for thousands of civilians stuck on the water. And interestingly as well, behind the scenes, Iran has taken somewhat of a victory lap here and is framing that pause very differently. State media there today calling it a climb down and also claiming that US forces failed to secure safe passage without Iran's permission. In fact, one Iranian lawmaker even called it a humiliating defeat for Washington. So as we see this report continuing to filter into the market, it is important to remember that the commentary that we're hearing from both sides still suggests that we could be far apart from a deal. But this Axios report is no doubt encouraging, suggesting that we could also see some diplomatic progress now underway. And of course, markets are reacting fast as a result. Morgan? Yeah, Dan, as you're talking, we're seeing Dow futures up about 270 points right now. NASDAQ absolutely surging up about 300 points on these reports as crude oil moves markedly lower here, certainly promising if all this is actually, in fact, true and comes to fruition. The other piece of this, I'm curious about your intel on it, is the fact that we're getting these details as Iran's foreign minister, Aragachi, is in China meeting with officials there. And we do know or we do suspect that an end to the conflict is part of what's being hashed out here ahead of President Trump and President Xi's meeting in China next week. This comes at a really critical moment, and it's important to flag this as well, Morgan. We have seen Iran's foreign minister touching down in Beijing, meeting with his Chinese counterpart Wang Yi, essentially holding talks here with the top ire of Iranian crude. Of course, the US also calling on China to push the Iranians to try and ease up on some of the requests that they have when it comes to finding a diplomatic off-ramp here. And the role of China could be absolutely critical, given the fact that it holds the majority of Iran's purse strings. So we're watching and waiting to see exactly what comes out of that meeting. But again, the timing also really important here because President Trump is expected to touch down in China as soon as the next few days. And of course, the backdrop here for that conversation will be very closely watched by the markets, not just given the fact that China could have somewhat of an influence on the trajectory of this conflict, but also given the broader U.S.-China relationship. Of course, markets will be hanging in the balance and watching every single word. All right. Dan Murphy, thank you. with WTI crude trading about $95.80 a barrel right now, down more than a 6%. And of course, this is a report that is moving markets globally. So let's get to Karen Cho in Europe, in London, for more on the action we're seeing there. Karen. Morgan, good morning to you. We just heard a lot of color there from Dan about what still could go wrong from here. But markets are buying stocks, asking questions later. A very firm day of trade playing out. Already we were much stronger, roughly 1.5% to 1.7% on boards. As that Axios report crossed, we popped and the indices up well over 2% on the back of that. So the algorithm is kicking in very quickly and pushing this market higher. Nobody wanted to be wrong-footed on this Middle East conflict. And you can see just how these boards have raised ahead. Don't forget, as US markets have been brought up in recent weeks, European markets have largely been left behind. So that catch-up trade happening very quickly over the course of this week, and particularly today, 2.1% up on the FTSE 100, the Zetra DAX 2.2%, similar ranges for French stocks, and the Italian market 1.9% higher. In terms of the sectors that have been bought, it is all about the cyclical trade. For instance, basic resources this morning when they opened up for the trading session, up roughly just over 2%, now up about 4.5%. So you can see where investors are piling into the European markets. Autos as well have very much a beaten up trade of late. Concerns around the purchase of big ticket items. that is much stronger, travel and leisure as well. We've been talking at length in recent days around a jet fuel crisis for Europe and cancellations by certain airlines of certain routes given the capacity constraints, 4% up. Banking names too, 3.7%. Don't forget they've been hit by concerns around any further impairments too from the Middle East conflict. And as they reported this week, there were concerns about that very strong growth story being impacted by the Middle East situation. You mentioned the oil price too as you took a look at the reaction, 5% to 6% pullback in the commodity prices. It's been reflected in some of the sectors as well. If you look at the oil and gas sector, that has been down this morning, roughly 1%, now ramping up down to more than 2%, reflecting that spot price. So a bit more contained in terms of that sector versus the spot price. But clearly having some wash up for the stocks in the basket as markets react very quickly to the effect here. In terms of Asia today, don't forget that we're shut as the market is now seeing that Axios report cross, but they were much higher today. President Trump earlier had touted progress towards a final agreement with Iran. South Korea's Cosby hit the 7000 mark for the first time and, of course, powering ahead up more than 6 percent. Back to you, Morgan. All right, Karen, thank you. I see you and I dressed appropriately for the day and all the green on the screen, at least for now. Yes, we do appreciate the reporting. Thank you. Well, let's take a look at shares of AMD because those are soaring as well. Even before this report, first quarter results, companies' guidance beat forecasts data center revenue, jumping nearly 60 percent on continued strong demand for chips used to power AI workloads. CEO Lisa Su saying that business is now the primary driver of sales and earnings growth. She expects server growth to accelerate as they scale production to meet the demand. And it's not just AMD that's popping today. Intel, it's up another 5 percent in extended trading. Now it's up 7 percent after rising 13 percent to a record high yesterday. This is on reports that Apple is considering Intel and Samsung to make chips to power devices. Micron's micro market cap is also zooming past 700 billion dollars for the first time as memory stocks continue to rally. This is a 70 dollar stock a little over a year ago. Put that into perspective. And Samsung jumping 14 percent in South Korea, pushing its market cap above one trillion dollars. It's only the second Asian company after Taiwan sent me to top that mark. Well, let's talk more about AMD and just the surge we are seeing in semis and this build out of AI and the AI trade. Paul Meeks, head of tech research at Freedom Capital Markets. Paul, it's great to have you on. I think we've got to start with AMD because there was a lot to like in this report. Your takeaway. So I'm very bullish. I'm not necessarily bullish on the valuation. I prefer NVIDIA, believe it or not. But, yes, the data center revenues are booming. And there's a couple of things going on with AMD. not only are they, I wouldn't say necessarily closing the gap fully with NVIDIA, but they'll be a strong number two in the race for GPUs. But there's also been a renaissance in the data center of their CPU business, which in the past had been essentially the brains for the laptops and desktops and it was a pretty mature market. And now, again, an acceleration of growth in traditional CPUs. And so things are going well. I've taken my numbers up significantly for 26. I'll be reflected in the shares today. But even with my higher numbers for AMD, I value the stock now at over 50 times earnings, where NVIDIA off of a much bigger base is going to grow faster, and it's only trading at 24 times earnings. And that's more or less a S&P 500 market multiple. So I prefer NVIDIA Before I move on to some of the other names that have just been powering semis and broader markets higher here I want to take a step back on AMD specifically because this earnings report was very similar in nature and in terms of growth trajectories to the one we got with the last earnings report AMD sold off so hard on that, and now we're seeing it surge. And we saw a rally in the stock coming into this. And I'm just in terms of semis, what has changed here with the investor sentiment? So that's an excellent question, Morgan. Here's the deal. Of course, for several years, since the release of ChatGPT in November of 22, this has been the driver. However, as we got to the summer of 2025, and this really essentially lasted until just a couple of months ago here in 2026, The doomers really controlled the narrative for the AI infrastructure build out and started to worry about all the things that we worry about. Will these big expenditures ever lead to adequate ROI? Open AI is responsible for a lot of these spending plans. Are they going to be able to fund those plans? And so we did have a drawdown where actually stocks were going down on good news. But now, last couple of weeks, particularly through this earnings season, you have a situation where the narrative has gone back to build it and they will come. Very positive on all the players in the AI infrastructure ecosystem. And so the risk is back on because the narrative, the theme has changed. Yeah. Is that what's propelling Intel here? Intel is interesting because, you know, they have a couple of drivers, right? Here's a company that was down and out. They really have never had a problem designing chips, but they've had a problem for about 20 years of making them. And so they get the government investment. They get the investment from other marquee players. But Intel to be successful in the foundry business is going to be very tough. And I think the stock is way, way, way ahead of itself, given the fact that I will believe it when I see it, because here's a company that is going on a spree to manufacture chips for their foundry. And they've tried this before, and they've really been bad at execution. So I think Intel One Morgan is one that's way ahead of itself. Okay. Paul Meeks, great to have you on to kick off the hour. Thank you. Thank you. With all the semi-stocks surging right now, including Intel, which is up 7% again pre-market. We're going to hear more from AMD's CEO, Lisa Su, on these results and what we're seeing with this AI-propelled demand. That's going to be exclusively at 9 a.m. Eastern today. Don't want to miss that. In the meantime, don't want to miss what we have coming up here on Morning Call either. The countdown to Disney results before the market opened. The Morning Call crew is going to weigh in ahead of the tape. Plus, aside from NVIDIA, we are tracking other big winners in the global AI infrastructure build out. Not the chip names, names that might not even be on your radar, but they should after you hear from us today. And later, a strategy shift at strategy as Bitcoin hits a five month high. We'll continue to watch U.S. equity futures this morning as well. Bring you any breaking news and headlines, developments as we get them tied to this war in Iran and what could be potentially a path to conflict resolution. Futures are higher right now. We'll be right back. What made you confident that you could do something that hadn't been done before? I have no fear of failure. Trailblazing women changing the game. One of my favorite pieces of advice, think about what your boss's boss needs. Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just got to think big to accomplish big things. Julia Boorstin hosts CNBC Changemakers and Power Players. New episodes every Tuesday, wherever you get your podcasts. Welcome back to Morning Call. Well, let's get another check on U.S. stock futures, which are popping this morning. You can see right there on your screen on a new report on the Iran war, potential off-ramp that is materializing, supposedly. Axios citing officials reporting the U.S. and Iran are closing in on a one-page memo to end the war. This is also sending energy prices lower. Take a look at your screen. You've got WTI crude down about 7 percent right now, trading below $96 a barrel. And ICE Brent also down 6 percent, trading around $103 per barrel. natural gas is under a bit of pressure. Some of the other refined energy product prices are also lower on this this morning. And oh, by the way, Treasury yields also taking a breather here. So joining me now is Ben Emmons, founder and CIO at FedWatch Advisors. Great to have you on, Ben. Want to get your reaction to this. If we're actually seeing an off-ramp materialize to this conflict, what does it mean for markets, for asset classes? Good morning, Morgan. This is kind of an exciting day because that memo is really getting credibility in the markets because this is what we were looking for, the good scenario, I guess, is outlined in that memo. And importantly, that China is involved somehow in the background during this negotiation. I think that's what triggered the reaction because now we're going to get the energy relief through the markets. So we had for a while this dislocation of trade-off moves being closed off. So if you're getting all the commodities declining in price, yeah, no wonder that you're getting to lift the markets and yields lower because it takes the inflation risk scenario off the table, takes maybe rate hike scenario off the table, too. So I think that's how to interpret it this morning. And Morgan, it's a it's a firm risk on reaction to something that still has to be ironed out, but it seems to be credible. Certainly, we've seen the effects of this, and we're seeing them right now in real time with U.S. stock futures, for example, here in the American market. But this economy has been holding up better relative than many other parts of the world, in part because we are a net energy exporter and we are a little more insulated with this AI infrastructure build out. So is this a situation where you see a conflict resolution and other parts of the world rally even harder? I mean, I think about Japan, with officials just in the last couple of days intervening in the yen. I think that's a fair point because we have been ahead of the curve in a conflict because of our economy being so specific driven by AI investment. The Treasury put a statement out yesterday that a third of our growth currently is driven by that, AI investment. And it's coming from foreigners too. And you can see it in the trade balance of all this importing of equipment. But if you think of a place like Japan, that's so tied into the Strait of Hormuz developments because of its trade balance and energy imports, that that's where the big relief will take place. And Nikkei, I think, could outperform S&P here temporarily, at least, as this relief continues. And the same is seen playing out in Europe because of all the shortage of jet fuel and actually shortage of energy in itself that they had to get from the U.S. now reverses, perhaps, if this scenario plays out, obviously, because, you know, it still has to be negotiated. But I think that's the way to go for me. You get a bit of a foreign outperformance, U.S. outperformance. Nonetheless, I think the reaction in Nasdaq is telling, too, that this is a relief rally. And, you know, Nasdaq is where the growth is, where the opportunity is. So I don't think the Nasdaq will stay much behind. Expect the foreign markets to see some outperformance. Yeah. I mean, if we do look at the U.S. specifically, the economic data, we talked a a little bit about this on the show yesterday. This has been an investment-led economy based on all of the data we've been getting. And before this war, we were in a good position, the U.S. was, in terms of economic growth as well. So I just want to get your thoughts on this data we've been getting and what is buoying the economy, especially since you did point out defense spending. We don't always talk about it very much, but this is a covert form of fiscal stimulus. Yeah, totally. You know, the data came out starting last week in durable goods and capital goods. And some of the data came out early this week with factory orders. That component of defense spending is up huge. There's like 18% or something. And then related to that, you get all this other equipment and software and hardware spending as well. That's all showing up in that data. I think the markets weren't so focused on this for a period of time because of the, I guess, the headline whipsawing that we saw from this conflict. But the economy itself is on an incredible robust path here. I put a graph in that note last night. I think you're seeing the cumulative growth rates of some of these particular items that are showing up in trade data and hard data. That's incredible. So I think the economy is actually maybe heading towards some sort of a 5% GDP level for a period of time here. Maybe even could overheat for that matter because it's such a strong investment-led surge of seeing coming through. All right, Ben Emmons, great to have you on. Thank you. We'll see how today goes. By the way, we haven't called it out. I'm going to call it out now for the control room to throw up, and that is the moves we're seeing in metals on this report this morning as well. Precious metals surging. Gold's up 3 percent. Silver's up 5 percent. And industrial metals like copper are also higher. As we head to break, though, we're also watching shares of contract manufacturer Flex. Out with strong numbers after the close last night. Investors also cheering the announcement to spin off the cloud and power business. You can see, look at those shares. They're flexing right now, up 20 percent. We're back after this. What made you confident that you could do something that hadn't been done before? I have no fear of failure. Trailblazing women changing the game. One of my favorite pieces of advice, think about what your boss's boss needs. Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just got to think big to accomplish big things. Julia Boorstin hosts CNBC Changemakers and Power Players. New episodes every Tuesday, wherever you get your podcasts. Welcome back to Morning Call. We're going to turn now to the AI infrastructure bill to dig a little deeper. It's not just hyperscalers and chip makers that are fueling stock market gains and booing the U.S. economy. industrial players and companies focused on this physical build out of compute capacity are also riding big gains. Take Caterpillar. It's sitting on a record backlog for its power generation and backup equipment. This is thanks to AI data center demands. Cat leadership expects power generation equipment sales to triple by 2030 from 2024 levels. You heard that right. Sales of its construction machinery, increasingly AI enabled as well, have also been strong since you need bulldozers and excavators to get all that construction going. Cats up more than 180 percent 188 percent over the past year It sitting at an all time high Other industrial names tied to the power generation demands GE Vernova Cummins which boosted guidance yesterday on power generation equipment Generac Quantipower Services these are all up between 120 and 175 percent in a year with even bigger gains over the past three years, because I've been tracking this. Another name to watch. Vertiv sitting at a record high, up more than 260 percent in 12 months, 2200 percent in three years. Vertiv works with NVIDIA on data center power, heat management, liquid cooling, among others. Other names to watch, AI switch provider Arista Networks, which reported a first quarter beat and issued positive guidance last night, though the stock is down this morning. It's still down about seven and a half, eight percent, as investors may have been responding to a lower forecasted adjusted operating margin. But the networking equipment maker has seen shares surge, as you can see right there, up 355 percent over the past three years. Other names to watch, Carrier and Train on the HVAC and cooling side, electrical equipment maker Envent, Schneider Electric. Also utility stocks, which have had a big re-rating here in the last couple of years, independent power producers like Vistra and Talon as well. These are all favorites across Wall Street. But one stock that has not been getting some of the same love, but playing just as critical of a role and is in the midst of a big transformation is Lumen Technologies. The company just reported first quarter results and shares are up more than 100 percent in the past year. It's known for its legacy copper and fiber optic business and residential and enterprise customers, which still makes up more than half of its annual revenue, but the company is using that cash to make the AI shift, creating custom-built networks, digital services for the AI era, servicing hyperscalers like Amazon, Alphabet, Meta, Microsoft, all in the back of that robust fiber optic network. Stronger verticals means faster speeds, less latency for customers, and the street appears to be in a show-me state, with more than 70% of analysts covering keeping their hold ratings for now. But joining me to dig into all of this a little bit deeper is Lumen Technologies CEO Kate Johnson right here on set. It is great to have you. And we've been talking about this for a couple of years now, but Lumen is in the midst of a transformation. You've sold one part of the business and last night you announced acquisition as well. So where are we at within this transformation process? So we're doubling down on helping enterprises get the most out of AI. And last night's announcement that we intend to acquire software platform, Alcura, is all about solving what I think is a really, really complex problem for companies. AI does not operate in one place. It operates in data centers, in clouds, at millions of edge points. And it requires data in all of those places to move around in a non-deterministic way in real time. And the only way you can do that is with two things, a huge physical fiber platform, and that's what Lumen has, and a software layer for intelligence that can control and coordinate and orchestrate data flow. And that's what Alcura has. And so Better Together, we're creating the central nervous system for the AI economy. How quickly can this be realized in a big and meaningful way from an infrastructure build-out standpoint? So I think infrastructure build-out is about establishing the supply side of the AI economy. And we've all seen those huge contracts. I think what we're starting to see now is enterprises need to take advantage of that supply and to actually consume these services to transform their businesses. And their networks today, they're just not big enough, fast enough, secure enough, or intelligent enough. And so what we're doing is we're going after that side of the market. And it's great for Lumen and our shareholders because it's a software business. And software businesses, as we know, they have margin expansion compared to old telecom. and they're less capital intense, which is great. How big is the addressable market around that and around connectivity, I guess, in general, which is where you play? So we see a $70 billion total available market. And I think the really cool part about this is we were playing in one part of it around the 20, 25 billion side, but Alkira opens up markets internationally for us and also allows us to play in the data center interconnect space, which is just a massive expansion in terms of where we can play. How much of this is U.S.-driven versus other parts of the world? So that's the cool thing is that in the old days in telecom, you expanded wherever you could lay your fiber. And so international expansion was really, you know, sort of like guardrailed by your capital expenditures. But not anymore. With this platform, we have the physical density in the United States and we're supporting multinational companies here. But we can expand internationally and support them wherever they do business without having to do the capital outlay because this platform is carrier and cloud agnostic. So it grows wherever our customers need data to flow. Yeah. And last I checked, I mean, stocks under a bit of pressure this morning pre-market. What do investors need to know or understand as this plays out, especially given the fact that I do believe you beat earnings estimates last night? Yeah, we do. So the market's metabolizing. You know, what the heck does this mean? And I mean, it's a great time for Lumen where we're entering a growth phase. And this phase is a bit of an inflection. You know, the tough times are behind us. And it's really all about upside. It's about driving revenue growth. We're turning EBITDA around this year. And we have on the horizon a pivot to revenue growth for the first time in more than a decade. And it's all driven by really high quality, high margin revenues in our mix. So that's the takeaway. is that we've got to play in a really bright future. Yeah, and just, I guess, if I step back a bigger, more macro question for you. I mean, there is this debate about whether this AI build-out is a little bit bubbly or frothy. The more executives I speak to at the more companies I speak to who are on the front lines of this build-out, the clearer it becomes to me that this is just the tip of the iceberg. How do you see it? How sustainable is all of this? especially when last night, I think it was the information put out a report saying, you know, true to $2 trillion backlog, half of that is powered by open AI and Anthropic. Yeah. So what we see is a very bright future. Even just in inside of Lumen, we're just starting to use AI to transform our business. I think a lot of companies are, are playing at the edges, driving efficiency and productivity. But what we need to do is reimagine business workflows. How, how does, you know, a digital network services company serve an agentic retailer, an agentic pharmaceutical company and, you know, a genetic manufacturing company. And the interesting part is we're just in the early innings of starting to adopt AI. And yet 51% of the traffic on the internet is driven by AI agents and bots, autonomous workers. And if you think about that, that's, you know, just this much penetration and yet it's more than half of the internet traffic. So we really see a huge data workload proliferation on the horizon. For our business, that's fabulous. Obviously, it represents an enormous growth opportunity because we monetize packet flow. All right. Kate Johnson of Lumen, it's great to have you here on set. Thank you. Good to be here. All right. Well, still on deck. Meta looks to take, speaking of bots, takes a look at page from OpenAI's OpenClaw playbook. And Anthropic reportedly inks a $200 billion deal with Google as CEO Dario Amode warns of what he's calling a, quote, cyber moment of danger. Plus, two stocks were watching this morning. After years of signaling it would never sell any of its nearly $70 billion in Bitcoin holdings. That's what it is now. Strategy executives are saying they'd consider sales if that improved the company's capital structure or increased Bitcoin per share. This is a metric used to market the stock to investors. And take a look at shares of Supermicro. Those are soaring as third quarter profit beat forecasts, although revenue missed. Revenue guidance also topping estimates. You can see those shares are popping 17 percent. This has been a roller coaster of a ride with Supermicro in the last, call it, I don't know, year, maybe year and a half. Morning call. We'll be right back. I'm Morgan Brennan. Welcome back to Morning Call. Let's get a check on futures on the back of that Axios report that the U.S. and Iran are closing in on a one-page memo to end the war. You can see futures are at session highs right now, with all the major averages poised for big gains at the open. Inverse relationship to energy, as we see those prices come under pressure here, pretty significantly so on this report as well, with crude down almost 8 percent right now, trading below $95 per barrel. That's for WTI. And Brent's trading just below $102 per barrel, down 7 percent. Arbok gasoline futures are down 5 percent. Natural gas is down 2 percent here in the U.S. While outside, also Treasury yields are lower. But outside of the Iran headlines, we are also keeping an eye on AMD. That is soaring as first quarter results and the company's guidance beat forecasts. You can see shares are up 18 and a half percent right now. It's a big move for this stock. Data center revenue jumping nearly 60 percent on continued strong demand for chips used to power AI workloads. And it's not just AMD either. That's popping. Check out some of the other semiconductor names, too. You can see Micron's up about 6.5 percent, Intel up another 6.5 percent. That stock's been basically parabolic. And other names like Broadcom and Taiwan send me higher in the pre-market as well. Let's turn now to Anthropik. We've got a new warning from its CEO of what he calls a cyber moment of danger. Speaking alongside J.P. Morgan CEO Jamie Dimon at an event in New York yesterday to unveil these new AI agents that are focused on financial services, he said it's creating a narrow window for the world's tech firms, governments and banks to fix tens of thousands of software vulnerabilities that have been exposed by his company's latest model, Mythos. Now, a number of financial services stocks getting hit on the back of the events and news of these 10 new products that are being released to the market. You could see down between one and nearly nine percent yesterday, depending on the stock. But, for example, FiveServe, it looks like down almost nine percent. This morning, though, working to recover some of those losses. Everything is higher pre-market. Let's bring in XIE, CEO of Malo Santo, which works with companies on all things AI. It's great to have you back on the show. There was a lot that came out of that event with Anthropic yesterday, but I do want to focus specifically on security vulnerabilities and what this means when Dario Amode talks about six to 12 months to basically patch all of these vulnerabilities and get ahead of a rival like China. Well, first and foremost, thank you for having me back. Anthropic is the first AI company brave enough to build a business model off of its own warning label. What we're seeing with this cybersecurity incidents and the need to patch them and the models that are being built to be able to discover them is this tension between the business models of cybersecurity and AI colliding with the old security models of the Internet. The commercial pitch is that, you know, AI agents can do more work with less friction. But the cybersecurity warning attached to that is that attackers can do more with less human expertise So both of these statements are true at the same time And the market implications run a lot wider than security Anthropic is sitting on a very large IPO and a very large valuation headed into a potential IPO, which does position them as a leader and in a position to potentially significantly benefit from people adopting this AI to help solve these issues in these operating systems. So on the one hand, you do have the fact that attackers are now more enabled because they have this automated intelligence to power their attacks. And on the other hand, you do have the fact that Anthropic profits from having a dangerous model that can create those attacks. It's also interesting to note that in the system card for Mythos, the technical report that was released on Anthropic's website, there was an instance in its own alignment testing where when it was instructed to go and find security bugs inside of a code base, it inserted them. and then reported back as if it had been there all along. So we do have to, as these new technologies come out, also discern between what are the real valid risks and what element is sales and marketing to know where everything should sit. I want to go back to what you just said about inserting them, because I've had a couple of these conversations now with a couple of different executives at a couple of different companies that are on the forefront of this AI revolution, this inserting piece of it. I mean, is this an example of bots that are going rogue? And if so, how big of a risk is that, too, when you're talking about trying to deploy some of these capabilities to counter the cyber threats that bot swarms are going to represent? 100%. I mean, I think when it comes to cybersecurity specifically in these models, we have two different threats that pose different risks to how we are able to manage the way AI turns up in human life. The first is how these models get used. So people are able to develop and exploit bugs at an exponential rate. They're able to hack things much faster. But the second and kind of like the more important element of it is that we also have. Excuse me. What we also have is these models being given roles and responsibilities to audit and monitor themselves. And we, in order for that to be successful, have to maintain our ability to audit these systems. So that report that Anthropic put out, the Mythos system card, showed that in their own security testing, it was complying more often than not with malicious requests. It wouldn't start malicious hacking requests, but when it was dropped in the middle of them, it was 68% likely to complete the malicious request. So it wouldn't hack something if you asked it, but if you dropped it in the middle of a hacking task and asked it to complete it, it would. Something else concerning that came out in that system report is that it talked about how the models are now starting to ask themselves if they're being evaluated. They found that around 20-something percent of the time in Mythos testing, that it was checking itself and its reasoning traces to see if it was being evaluated. We have no way to know if it changed its behavior there. Anthropics specifically said that Mythos had saturated the benchmarks for cybersecurity, which means that we've lost our ability to see it. So on one hand, we know these things are going to be dangerous in the hands of the wrong people, but we also have to make sure that we maintain our ability to measure how they perform and how dangerous they are. Wow. I mean, I could just do another hour talking to you about this. Maybe one day we will. I appreciate it. Xie, thank you. Thank you for having me. We've got a lot more to come here on Morning Call, including high gas prices and a hit to McDonald's, bottom line. The potential hit the pain at the pump may deliver to the fast food giant's earnings, especially as we see a number of these restaurant chains reporting this week. Morning Call is back after this. Welcome back to Morning Call. McDonald's is set to report tomorrow morning, giving us the latest taste of consumer earnings. The results will come with a backdrop of war and rising energy prices. A gallon of regular gas officially crossing past the $4.50 mark this morning. It's up 30 cents from a week ago. It's up from $3.15 a year ago, so a more than 40 percent jump in a year. Those higher gas prices expected to take a bite out of McDonald's numbers. In fact, there's a distinct inverse relationship between gas prices and McDonald's sales. As gas prices rise, consumers have less disposable income and are more likely to cut back on discretionary spending, such as eating out, which has historically pressured sales for McDonald's. And actually, you can see that somewhat right here on the screen in terms of the chart between the two. McDonald's stock is down more than 16 percent since the war began. And by the way, it's not alone. The names that we've heard report so far, everyone from Chipotle to Wingstop to Domino's, have mentioned the impact of gas prices on consumer behavior. So we'll continue to track that morning call back after this. It's time now for your call sheet where we look at the topics driving the trading day ahead. The crew members today, Jeff Kilberg, founder and CEO at KCAM Financial, Stephanie Link, chief investment strategist at Hightower, both are CNBC contributors, and Matt Powers, managing partner at Powers Advisory Group. I mean, we've got to start with this report, guys, about a possible breakthrough between the U.S. and Iran here. And unclear whether it's actually going to happen and be realized, but certainly moving markets this morning. Stephanie, I'll start with you. I mean, it would be great news, but in the face of all of this uncertainty, Morgan, we are coming off the best markets in April since 2020. And a lot of that is because the economy continues to chug along despite all of this uncertainty. The Atlanta Fed tracker is at 3.7 percent. The consumer continues to consume. The AI boom, you talked about it earlier on your show. Anything that has to do with AI and the food chain data center grid power, and that's leading to better than expected earnings. Earnings right now are running up about 28 percent. Sales up about 11 and margins are expanding. Yeah. Matt Powers, what say you? Yeah, you know, I kind of echo a little bit of that. You know, we're oils elevated. You know, we're obviously we've had serious disruption risk through one of the most important shipping lanes in the world. And that's that's not news, clearly. But equities just don't seem that concerned right now. You know, the market's basically saying this doesn't turn into a prolonged supply shock. And even the rhetoric out of out of Washington, it's kind of gotten a little more aggressive. But investors are largely ignoring it. And, you know, I think we're looking for any kind of a ceasefire or mediation. It sounds like we could be there. But there's a clear bias toward believing there's an off ramp here. So where I think that gets more interesting is if that assumption is actually wrong, you know, because right now oil is high, but it's manageable. And if Hormuz stays constrained and kind of stays this way for a little while, you'll get another leg higher in crude. And that's that's when it stops being a headline risk and actually starts feeding directly into inflation and earnings. So so I think the market's comfortable with the situation, but it's also pretty dependent on on things not getting worse from here. Yeah. I mean, leaning towards the maintenance of a ceasefire and possible resolution of a conflict does seem to be where both parties are tilting here. In terms of the rhetoric, Jeff, I mean, look no further than the Pentagon press briefing yesterday to get a sense of that. Want to get your thoughts on that? Also want to get your thoughts on what Stephanie just touched on, and that is this A.I. and tech trade and specifically the surge we're seeing in semis. That just continues. Well, good morning, Morgan. Yeah, Stephanie, if we were playing darts right now, she just threw a bullseye on that dartboard because we talk about earnings and the profits on the marketplace. The 10-year average, Morgan, year-over-year growth, the 10-year average is about 8.5%. We're three times, almost four times, and up at 27%. So to see these companies, the profit, look at Palantir. I know Palantir is down yesterday, but look at the profit we're seeing in some of these names. Look at AMD up 20%. So I get excited. And when I look at crude oil down almost 10 percent, that's a big all clear. As we continue to try and navigate this off ramp in Iran, I don't see the all clear in oil until we're under $80. But I'll take the fact that the 10 year note is down five basis points. You're seeing the VIX going down lower. And again, we are at all time highs in the S&P 500, up 56 handles at the moment. So I have optimism. I'm excited about today. Stephanie, I don't know if you saw my gift to you this morning where we focus on industrials in this AI infrastructure build out. Room to run? Are you kidding? I was like I was I was watching with eyes wide open, Morgan. It was an awesome segment. Yeah, I mean, I mean, honestly, it is anything that is tied to building out the infrastructure to support this all of this CapEx from the Mag sevens. They will benefit. I mean, it is you name them all. I own Quanta, G.E. Ivernova. Eaton yesterday was a gift down two and a half percent on a great quarter. A lot of names out there. And then, of course, it is the semis. It's utilities. It's the power companies. We don't have enough power. So I still like that theme very much. OK, we got less than 90 seconds. I think we can do it here and get two more questions in. Matt, consumer earnings also in focus. We just talked about the inverse relationship between McDonald's and gas prices. I'd love to throw that chart back up there. But what are you watching? As far as McDonald's goes, you know, it's not a company we heavily follow. But I do, you know, obviously stock price down. I think the valuation for McDonald's right there is about exactly where it should be. You know, but I think, you know, what we're looking at right now, we got back to highs from techie. And so regardless, the consumer, I think we'll default back to that group when we need to see performance and probably fine in the short term, but not necessarily the most durable setup. Yeah. I mean, DoorDash, Instacart, Uber, Marriott, Kraft Heinz, and of course, Jeff Kilburg, Disney. Thoughts? Disney, interesting. It's been down 10% year to date. Maybe there's a trade here on the earnings. Implied volatility, we're expecting about a 6.5% move, so a $7 move here. But bigger picture, you want to own Netflix on a three and five year perspective because Netflix has beaten the brinks off of Disney from a margin perspective. Wow, we still got 40 seconds. Stephanie, you like Disney? Disney? No, but I do like Netflix. So I agree with Jeff very much. And that's a fairly new position for me because I think that the company is growing much more than Disney. Disney is a show me story. They've got to prove that they can grow double digits in the second half of the year. That's the big task at hand today. All right. Thank you to our morning call crew. Great to have you all here. Look at that. We just covered quite a bit. I'm very proud of us. As we do take a look at U.S. stock futures, which are trading at highs this morning. We've seen this surge on potential for a conflict resolution between the U.S. and Iran. Crude is lower. Treasury yields are lower. Squawk Buck starts now. What made you confident that you could do something that hadn't been done before? I have no fear of failure. Trailblazing women changing the game. One of my favorite pieces of advice, think about what your boss's boss needs. Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just gotta think big to accomplish big things. Julia Borsten hosts CNBC Changemakers and Power Players. New episodes every Tuesday, wherever you get your podcasts.
