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Join Jim Kramer, David Faber and me, Carl Cantonea on the opening bell hour of CNBC Squawk on the street. Good Thursday morning. Welcome to Squawk on the street. I'm David Faber with Sarah Eisen and Mike Santoli. Live from post line at the New York Stock Exchange, Jim and Carl have the morning off. Let's give you a look at futures as we get ready. To begin the trading day, a half hour from now, you can see we are setting up for a significantly higher open. And that is where our roadmap starts. Well, chips. One reason why we're getting a boost is after Micron sees, quote, "robust AI demand." The company CEO, Sanjay Marotra, is going to join us just a few minutes from now. Plus, my billionaire investor, David Tepper, says it's a, quote, "buy everything moment for the Chinese market." And Southwest meets investors. The airline raising its summer revenue forecast and authorizing a $2.5 billion share buyback. All right, let's start with the overall rally here. Of course, we're seeing Micron leading the way this morning. We're going to be speaking, as you just saw with the company's CEO. We'd also love to just get to China as well if we can, Sarah, because we've seen a number of escalating moves over the course of this week. The Politburo being the latest, at least in terms of the language used. And David Tepper, who much of Wall Street was focused on this morning during his time on Squawkbox. Made that the center of sort of his investment thesis near term in terms of what he sees. Take a listen to what Tepper had to say based on his reading of what came out of this Politburo meeting. So the question was, was China going to do the things that you want them to do? Okay, are they going to do the easing measures that you want them to do? So, yeah, they came the other day. And what's his name? He came in, Pan Gong Cheng, and I apologize because I can't even speak English. Well, you know, he came out and he was like, "Jovial." It's like, "Whoa." Jovial's saying, "We're going to cut and we're going to give you more." And he said, "We'll do more and more if needed." Now, the Chinese to say, "We'll do more and more if needed." They don't say that because it's not been healthy to say those sort of things in China. But they said that the other night, and I've listened very carefully what government officials say. So I took it that they did a lot. They exceeded expectations and he promised to do more and more and more. That's where we find ourselves this morning with Chinese stocks up again. And it's obviously lending a hand here as well along with, of course, the rally in chip stocks. Yeah, I mean, finally, China is showing that it's serious about trying to achieve its growth target. So we got the word, and this one is more talk. We didn't get specific policy action like we did with monetary policy over the last few days. But commitment to doing more. To stop the real estate market from declining. Yep, which is important. That's strong language. That was in the Xinhua News, the Chinese state news agency report after the Politburo meeting. And this meeting itself, in my understanding, is Sarah that it typically is not one that focuses on the economy. And so that was a bit of a change as well. And just, again, to Tepper's point, language that is not typical. Again, to your point, we've gotten a bunch of action this week, but we've both been sitting here talking about, yes, but is it enough? It's not what had been hoped for in terms of at least dealing with the real issues in the property market and/or a consumer that has been lagging dramatically. And there's some hints that fiscal may be around the corner, and I think that's what got people excited like Tepper. Reuters also had a report that China is basically looking to issue two trillion yuan of special sovereign bonds this year. It's about $250 billion, and part of that would go towards stimulating household consumption and fiscal spending. Either way, it's enough to put Chinese stocks positive for the year. We saw a big jump in bond yields in China, and there's a lot of excitement. It's translating here. I think the 10-year bond yield rose to the highest level since November 2022. Like on increased optimism, but they're finally going to do something about this growth slump. Tepper making the case that essentially it's China's whatever it takes moment. That it's not just going to be out, just enough to kind of hold things together. And then when it comes to the equity market in China, it's not just, wow, things got washed out, outflows got extreme, and we have a bear market bounce. So whether that's the case or not, I think it fits into this really mosaic of things going on, which is economies in the rest of the world continue to plug along, and now you have policy supportive on multiple levels when it comes to central banks in general. And then, of course, what's happening in China. It's also happening at a time you had this news that Saudi's giving up on a $100 barrel objective. This idea that we're not going to get there easily, so they're going to prepare for more supply. And so oil prices are down on a day, China is ripping, and what's better than that? It's tough to feel that worried about even the U.S. economy or anything else. Even if, as Tepper said, markets here are expensive, he's a value guy. It doesn't seem like compelling by, but I wouldn't short it, because things in general seem like they're holding together. Right. He did seem a little concerned about the valuation here, certainly, and also made the point versus Europe. The differential in P.E.'s mic, I believe, is as high as it's been in quite some time, 14 versus 22, roughly speaking. Everything is downstream of how big and expensive our tech stocks are. So if you believe it's a market where that gap can close, where value can work, that would mean non-U.S. stocks should be able to have a period of out performance. But it isn't necessarily a zero-sum game, and I think that's the key. Meanwhile, the micron-driven semi-move is also kind of like, "Hey, I guess the game is still intact." I mean, here's a key quote from the conference called, "Robust data center demand is exceeding our leading edge node supply and driving overall healthy supply demand dynamics." And, Sarah, their guidance at micron was more than anticipated. We'll obviously have an opportunity to go through all of this momentarily with Sanjay Marotra, but you can see what the stock is doing, and that's having an impact across the board. I think that expectations played a role, both in the China story and in the micron story, because expectations had been lowered. This was a chip stock that was up into earnings like 12% year to date, far below. Some of the other peers and competitors as last quarter was a little disappointing on the momentum front. So now with that set up, and then the bullish news, which did surpass all the street estimates, especially on the guidance front, driven by strong AI demand, and just a really bullish tone from Sanjay. This continues to be a theme across some of these AI-related names. You can see why the stock is jumping so much pre-market, 18% in taking the entire complex with them. They also had some good things to say on pricing, even X AI, which has always been the concern right about the cycle, the cyclical parts of the business, like PC. So it'll be great to get some more commentary just on what they're saying. It's all about these HBMs, which is driving the growth. Hi, bandwidth. Hi, bandwidth memory. Hi, bandwidth memory. That's the AI group. It's really fascinating too. That's the data center, I believe. There definitely was a tone of, let's not get too excited in advance of the mic card numbers in the 70s in general, because they have given up this leadership. This quarter, the NASDAQ 100, has been lagging the average stock in the S&P by like 5% points. So here we are at quarter end, and I think you had people making the case on some of the sell side deficit, just positioning has gotten muted in tech and toned down. So they can kind of have their moment at a time when things like home builders look tired yesterday. So this rotational market continues to kind of find an answer to every little pocket of weakness at least for now. Tepper was going through a whole scenario, Sarah, about the Japanese yen, and what Chinese is going to mean for rates there, and what it may mean for the currency strengthening. I don't know if you heard that, but it was interesting. And I thought of you, of course, immediately. What was his point? It was bearish on? Potentially over time, yes. If the Japanese currency continues to strengthen... Correct. As a result of part of what the Chinese... It has been, but we've been able to shrug it off a little bit. I mean, what the Chinese are doing are there, as a result of their stimulus, their currency is strengthening. Yes. Something that's actually welcome for a change. Usually they like it weak because it helps with exports, but it also spurred some concerns about outflows and confidence. And their currency is like that they were concerned about, right? Exactly. So some of the other... Yeah, and you look at the one-year chart, and it's just like... Still weak. It's just a little bounce after this match. I know. It's still very weak in the context. One other thing I would point out that's happening that we haven't been talking as much about is this move in commodities. I mean, gold continues to set record high after record high. I think it's the 40th of this year. And it's not just gold. We saw copper make a move as on the back of what's happening in China. Some of these other commodities as well, it was noticing... So natural gas, up 24% so far this month on pace for the fifth positive month in six. It's interesting, Mike, given the Fed is trying to fight inflation. And I'm not saying we're going to see a flare-up, but there is this idea that there's a bit of a reflation now that markets are so positive about everything. The rate cuts, the soft landing, the China stimulus. This is a risk, not that gold necessarily correlates, but it's going up for a reason. And I think we have to watch it for any signs of potential reality. I agree, although gold, I have to say, I was seeing a lot of work yesterday saying that this looks like it's burning itself out in the short term in terms of this vertical move. But I totally take your point, the long-term long end of the treasury curve is going higher. And we got a good weekly job as claims now this morning. No, four months low. And yields up again. I know, the Fed is so worried about the labor market, and sure there's reason to be worried, but weekly jobless claims, the Americans filing for jobless claims continue to show a lack of layoffs there. After the break, it's the stock of the morning. We've gotten exclusive with the CEO of Micron surging double digits ahead of the market open up 18% now. And taking a look at overall futures, it's helping the chip stocks, it's helping the tone, as well as more talk of China stimulus, putting to a sharply higher open. Dow futures up to 24, we'll be right back. Support for this program is provided by Chevron. The anchor offshore platform is utilizing breakthrough technology to enable us to produce oil and natural gas in the U.S. Gulf of Mexico at pressures up to 20,000 PSI, a new industry benchmark. Anchor is part of Chevron's plan to produce 300,000 net barrels of oil equivalent per day by 2026 in the U.S. Gulf of Mexico, home to some of our lowest carbon intensity producing operations. That's energy and progress. Visit chevron.com/anchor. My dad works in B2B marketing. He came by my school for career day and said he was a big row as man. Then he told everyone how much he loved calculating his return on ad spend. My friends still laughing me to this day. Not everyone gets B2B, but with LinkedIn, you'll be able to reach people who do. Get $100 credit on your next ad campaign. Go to linkedin.com/results to claim your credit. That's linkedin.com/results. Terms and conditions apply. LinkedIn, the place to be, to be. Earning your degree online doesn't mean you have to go about it alone. At Capelli University, we're here to support you when you're ready. From enrollment counselors who get to know you and your goals, to academic coaches who can help you form a plan to stay on track. We care about your success and are dedicated to helping you pursue your goals. Going back to school is a big step, but having support at every step of your academic journey can make a big difference. Imagine your future differently at Capella.edu. With an 18% surge pre-market in your shares, what is the AI story underestimated for you? AI is a great story for us. It's transforming the industry. Micron has strong products. In our fiscal fourth quarter, we delivered 93% year-over-year increase in revenue. Our fiscal year that we just ended, 62% growth in revenue. And of course, AI is a great driver. We achieved a record data center revenue and a record mix of data center revenue, which is only expected to be growing further in 25. We have multiple product lines here, addressing the AI demand in data center, high bandwidth memory where we shipped several hundred million dollars of revenue in fiscal 24, and expected to become multiple billions of dollars in 25. And high capacity DRAM, in addition to high bandwidth memory, another big growth driver for us, expected to become multiple billions of dollars in 25, and data center SSDs. We hit a record one billion dollars of revenue in fiscal fourth quarter alone, and this too will be multiple billions of dollars. So AI is a great story. Frankly, not only in data center, as you look ahead at smart phone and PCs, AI-enabled smart phones and PCs are going to require more memory content. So as we go through calendar year 25, particularly accelerating in second half of calendar 25, you'll see smart phone and PCs also continuing to drive strong demand for memory. I mean, that also might come as a surprise because people were worried about the X, you know, server business, the smartphone and PC business, the cyclicality, the downturn, the high inventories of those products. So we addressed that yesterday in our call. We talked about that, yes, while the sell-in is somewhat slower because of some of the inventory that has been built in PC and smart phone for three main factors really. First is expectation of tight supply and smart phone and PC customers really built up some inventory to make sure that they have supply for the second important factor of AI-enabled phones and PCs that require more memory. And third, of course, taking advantage of the lower prices that existed before in memory and building up inventories. We expect that by spring of 25 inventories will be in a healthier place. And then again, going forward through the rest of the calendar 25, we see that AI-enabled phones, as well as AI-enabled PCs will be driving refresh cycles in these end devices, continue to drive momentum, complementing the robust data center demand that we expect in 25. We are looking at 2025 to be a record revenue year with significant improvement and profitability for a micron. But also as you shift your focus and attention and capex into the more profitable businesses with high demand, how does the mix shift for you in terms of how big, for instance, the server business can get versus some of the others? Absolutely, data center is the big driver of growth. Server is, you know, if you look at training as well as high-end inference, they require five times more memory typically in AI servers. So AI and data center is a big part of the growth and that mix of revenue will be increasing. But with AI and especially in the backdrop of a tight industry supply environment at the leading edge of the technology nodes, the setup is great for demand and supply in 2025. And that boards well for a constructive financial performance, increasing the mix of a revenue toward higher profit pools. High bandwidth memory is a great example. It's a complex product, the most complex product that has been made in the memory industry yet. And micron is leading with that product, best product with HBM, shifting that into increasing mix of our revenue in 25 and that's a creative to our growth margins. So yes, I mean, this shift toward high value solutions is putting us in a strong position for constructive financial performance in 25. Yeah, well, you detailed that as well. Talking about a total addressable market, Sanjay, for high bandwidth to be 25 billion by calendar 25. To put that in perspective, it was 4 billion in calendar 23. All right, that's an enormous increase. That said, is 25 seen as the peak to a certain extent in terms of that kind of demand? We don't look at that as a peak. You know, AI is a 10 to 20 year journey here. And of course, you know, we are very early in this journey. AI is creating opportunities to transform the memory industry model. And AI memory, for example, high bandwidth memory requires more wafers to produce the same amount of gigabytes as standard products. So that actually is a tailwind to the demand supply environment because more memory, more wafers required to produce the same number of bits. With high bandwidth memory is a headwind to supply. Demand trends are strong. So overall, the trend is strong. Of course, our industry can go through cycles. But the important thing is discipline on supply. But are you dependent on continued increases in data center, demand, so to speak, or in creation? I mean, again, you're getting into things that could be gating issues, whether it's power, whether it's availability of transformers. I just wonder to the extent that you become so levered into that particular channel, are you at risk of what, you know, how many data centers can be put up in a given year and or years ahead? So, I mean, there's no question that destructive transformations like AI are never go linearly. You know, they can have their ups and downs. Important thing for us is that we can't just focus on the data center piece. AI is driving growth for memory content in smartphone and PCs as well. So when we look ahead, we see robust data center trends. We see robust AI enabled demand as well as a fresh cycle. In traditional servers, we see that in smartphones and PCs. So longer term trajectory is solid for memory and storage. Important thing is, of course, continuing to build greater value for our customer base through products such as high bandwidth memory, which, by the way, is 30% lower power than any other competitive product out in the market. And as you can imagine, data centers which are power hungry, lower power high bandwidth memory from micron is absolutely appealing to our customers. And then driving more innovation as we look ahead at the roadmap to bring closer partnership, differentiated solutions, continuing to focus on capex and supply growth and maintaining the discipline that micron has shown. These are tremendous opportunities for long term, healthy trajectory for memory and storage. And micron is well positioned. We say that we have really the most competitive product positioning in the history of the company in the backdrop of long term strong demand drivers driven by AI. So given this very favorable setup that you're painting for us, this picture you're painting for us, Sanjay, where is the biggest challenge for you? Is it in competition which is ramping up? Is it in supply because demand is so strong? Is it geopolitics given what's happening between US and China? What is the challenge? Look, leading edge memory supply is in tight place. And we, of course, continuing to work with our customers to address that. Maintaining our supply discipline is an important focus area for the company. You see that micron absolutely focused on that. And of course, continuing to manage the mix of the business through leveraging the strength of our product portfolio toward higher profit pools of the market. That's another focus area for us. And remaining diversified in terms of addressing the end markets from data center to the edge. In market opportunities, today we talked about data center and smartphone and PCs, but hey, automotive. I mean, that's another opportunity for more and more content as vehicles implement more content. So these are opportunities and with respect to geopolitics, of course, you know, what that requires is agile supply chains and a well diversified global footprint in terms of customer base as well as manufacturing and micron has shown that we have been able to navigate through that successfully. Okay, Sanjay, we really appreciate you joining us ahead of the Open with a stock up 18% pre-market Sanjay Marutra. One reason why teachers are looking quite strong, sorry to overcut you there. Take a look as we count you down the opening bell, we got a higher open ahead, it would appear. Support for this program is provided by Chevron. The anchor offshore platform is utilizing breakthrough technology to enable us to produce oil and natural gas in the U.S. Gulf of Mexico at pressures up to 20,000 psi, a new industry benchmark. Anchor is part of Chevron's plan to produce 300,000 net barrels of oil equivalent per day by 2026 in the U.S. Gulf of Mexico, home to some of our lowest carbon intensity producing operations. That's energy and progress. Visit chevron.com/anchor. My dad works in B2B marketing. He came by my school for career day and said he was a big row as man, then he told everyone how much he loved calculating his return on ad spend. My friends still laughing me to this day. Not everyone gets B2B, but with LinkedIn, you'll be able to reach people who do. Get a $100 credit on your next ad campaign. Go to linkedin.com/results to claim your credit. That's linkedin.com/results. Terms and conditions apply. Linkedin, the place to be, to be. China stimulus, chips rally and that takes us to Mike Santoli for 30 seconds here before we get an opening. What do you think? I mean, all of it amounted to about a percent and a half gain in the NASDAQ 100, which is sort of the old style of how this market makes progress. S&P 500 has just kind of managed to hang on to the post-fed gains coming into today, and then you get the added catalyst. You know, bond yields didn't start higher on that Java strength number, but they've actually backed off a little bit here. So, everything you're settling down to a pretty broad rally on the site. Let's get that open. Now, right here at the near Stock Exchange. The real-time exchange of headquarters here at the Big Board. Natural gas produces deep food. We'll start bringing it back to you. And then, it's the first thing. It's the only one. It's the answer. We'll start bringing it back to you. A higher age level. It's the only one. It's the only one. It's the only one. Thank you. Thank you. Don't you hear anything you said? No, it's not a roundie. We're out today. That's why I put both of my things in my years. This idea was long and coming. They added delay quite a bit, so they're celebrating it pretty heavily. Where do we want to start, guys? Met up, perhaps. Yes. As one name, obviously, we talked about the big meeting yesterday, this time, ahead of time. They unveiled, what, a $299 Quest III SVR headset, but it's a lot of it. It's still about the glasses as well. A lot of the attention was on the glasses, a lot of what they wanted to talk about. There also was a rollout of sort of new, their AI models and things like that that are going to have some utility down the road. The stock up about 1% here. Most of the commentary around the street is, okay, it's interesting that they're kind of resolute and investing in the hardware, the glasses and everything else, the VR headsets. But in reality, everyone's just mostly focused on higher engagement trends, all the bedrock core fundamentals continue to be strong, and I think that they continue to benefit from the overhang of doubt about alphabet as a play on those same trends. And so, you know, stock continues to make new highs. It's 24 times earnings. It's now back at a premium. Not super expensive, but it feels like the street's willing to tolerate the heavy investment, continued investment in the hardware side, because they're making the numbers. And there were a number of product rollout, it wasn't just the cheaper Oculus headset, the Quest 3S, but also Orion, which is their new futuristic smart glasses that Mark Zuckerberg was wearing that, I mean, he was very bullish, hopes it'll lead to the next foundational shift in personal computing. Julia Borson was there, she was talking to the chief product officer, which is unusual. I was just going over some of the analyst recaps of the event, and one number that stood out to me from Redbush, the reality labs of meta, the investments. It's an area of investor debate, because it still raises a lot of losses. 16.7 billion dollar operating losses over the past 12 months. Right. It's incredible. And for a thing that's not about $2 billion in revenue. Sure. Yeah. Although they, you know, but the glasses made bail them out, maybe at some point, I don't know. And they also increasingly analyst and webbush was bullish on the name. Increasingly, you think it's going to be more tied to the core. The core business, the core story as AI sort of takes over the company. Right. Well, AI, of course, being the, you know, their open source llama. They have, what, a 3.2 model now. Expanded business AI chat bots were also unveiled. Things like customer support. Take a listen to what Zuckerberg had to say at the conference. A lot of the stuff that we've been talking about for a long time. Right. Glasses, mixed reality, AI. It's happening. And, you know, we can start to see how the future of computing and the future of human connection are going to look. And it's pretty awesome. By the way, Marx changed his look dramatically. I don't know. You know, sometimes that can be a tell. Maybe you wanted to buy the stock when he changed his look. I mean, what do you think, Sarah? Way better right now. That's last year. Yeah, just a year ago. Well, he's grown out of his hair. Yeah. He's not wearing a hoodie. No. He ditched the hoodie a while ago, I guess. I don't get the oversized shirt thing. He's been working out a lot. Yeah, he looks great. Well done, Mark, at 40 years old or whatever he is. He's looking well. All right. I'm just going to say, though, when he comes to Matt, I mean, the street, they might as well call reality lamps, other bets. Because that's kind of the way the street views it in terms of alphabet, with its other bets. Meaning, it doesn't really obscure the strength of the core business. It shows you this is a company that doesn't operate in the world of really difficult trade-offs. They can kind of do it all, or they can have another bout of efficiency, even though they're still saying it's always the year of efficiency. And it's almost seen as the potential energy you can modulate that. If you wanted to, they've been saying about that. Maybe they should change the name to other bets instead of meta. Yeah. I mean, that's kind of stuck with the name. Well, let's talk about the universe, though. But it's also good that you would think that management is not kind of succumbing to the sunk-cross fallacy. You know, at least they're saying they're not. They're not doing this just because they've invested a lot in it. They're doing it because they say they're getting closer and who knows. Let's see how many they sell. We haven't checked on the defense stocks in a while. So I thought just would bring up ITA and the defense and aerospace ETF. Okay. Because if you look at what, to your chart of this, you know, it's hard for investors to process macro, the geopolitical risk right now, especially when we're in a sweet spot of macro economic sort of news, but the headlines today. IDF tells troops to prepare for a possible ground attack. China fires long-range missile into the Pacific. You know, Japan, like every day, we continue to get these headlines that are moving us closer to a trickier position, potentially all at war. And, you know, these stocks in the defense space have performed well as production ramps, as demand continues to increase from all parts of the world. So just worth noting, it's not moving on much today, but a good-looking chart of the last year. It's one of the stronger areas within industrials, especially over the last year or so. Usually it'll trade. Look, we didn't shut down the government. That's how it trades sometimes. It's based on, you know, DC stuff, or we're actually going to talk about spending less on defense, or we're going to miss some payments there. It never happens, but the stocks kind of trade off on that. Yeah, all at war. But on the other hand, we've got this chart that looks good. So there's that. Just trying to bring it back to the market, David. Yeah, I know, but you did throw in the all-out war in there. That was a little scary. All right, let's move. What do you think when you hear troops on the ground? I want to talk about Jeffries, actually. The stock is down, but it's worth mentioning because sometimes it can be a tell for the bigger investment bank/banks as well. And they've had quite a year. You can take a look at the stock price itself. And by the way, it's about a $16 billion market value now. They have about $253 million shares outstanding. Japanese SMBC has about 14 and a half percent. A lot of that is non-voting, so it may not show up in some of the share counts. They've added what I think over a thousand people during the downturn. And they rank fairly highly in a number of areas, hence why the stock has done well. That said, the reaction to earnings right now, not particularly strong, although they generally had some very positive things to say about the capital markets in terms of where they are. Net revenue, $671 million. They were down 3%. That's from the last quarter, but up 28% from the same quarter of last year citing solid overall market conditions and strength across a number of their businesses and both equities and fixed income. Equities, by the way, 42.3% from the prior year in terms of net revenues. And fixed income up 13.2%. So as you know, Mike, sometimes it can be helpful. Especially because we got some commentary around those conferences of a couple of weeks ago that indicated perhaps the street was a bit high in some of the estimates for certain investment banks in terms of trading and investment banking revenues. For the big firms, that's definitely true. It has been a really busy period for fixed income issuance and sales and trading. Should play into the strengths. I did note, though, Jeffree's Forever has traded around book value. It's like 1.4. I mean, the last three months, four months, it's ranked as the stock has gone up. So I don't know if that's the market reassessing how this firm can perform through a cycle or just there in a sweet spot in terms of their business mix. Things like private credit and everything kind of feeds into that level of transactions, even if the bigger firms aren't seeing massive volume spikes. Interesting. It's up to 57% this year. All right. We want to get to Southwest Airlines. Shares are up in early trading. Company is holding an investor day. That is in Dallas. Of course, we've been following the blow-by-blow between it and its large shareholder, Eliot, as they fight about directors. Let's get to Philippo. He's got some of the headlines for us from the meeting itself, Phil. And David, that meeting will actually start in about an hour. But we know essentially what they're going to be talking about. And it's changes that Southwest will be initiating in addition to priority seating, assigned seats, premium seating, all of that goes into effect in 2026. But in addition, the company announcing today, it will be offering international airline partnerships in the future, vacation packages. It's going to be enhancing the frequent flyer rewards program. And we want to show you this video because this is our first glimpse of what the interior will look like on Southwest Airlines planes once they add the premium seating, which essentially seats with greater legroom. You can't tell the greater legroom in these pictures, but you see the blue is going to be the predominant color on the interior plane of the planes once they start this. And again, that's coming in 2026. The company also announcing that it's going to continue targeting cost cuts. $500 million in cost cuts is the target through over the next couple of years on an annual basis. As you take a look at shares of Southwest, a couple of reasons why the stock is up more than almost 10% today. First of all, raising the guidance for the third quarter revenue, also announcing a $2.5 billion stock buyback. So you put those two together. That's the near term pop that you're seeing in shares of Southwest. The question is whether or not these changes and what investors here at the Investor Day program, which starts in about an hour, is that going to be enough to convince Elliot, management group, that the changes at Southwest will bring enough reasonable growth in terms of revenue and profits in the future. We'll talk with Bob Jordan, CEO of Southwest Airlines, later today on the closing bell overtime show, regarding what's going to be happening here at Southwest Airlines over the next couple of years, and the proxy fight with Elliot Management Group. My take, David, from listening to Bob and other executives as well as seeing the announcement today, I don't think this is going to sway Elliot at all. I think Elliot has dug in and has made the decision that it's going to move forward and fight to get more of its... First of all, get some of its people on the Southwest board. They've put forward 10 names. Not sure they get 10, but they do believe that they should have representation on the board and they're not going to slow down in their fight against Southwest. Yeah, that sounds like a fair characterization as well. They want Jordan out. I mean, I don't think that's changing, Phil. You know this. I'll be curious to hear what his thoughts are. That said, 10% move in the stock. I saw him earlier tonight, David. He's not going anywhere. Sorry to cut you off, David, but I saw Bob earlier today. He's excited about Investor Day. He's not going anywhere. He knows he's in a dogfight now with Elliot, and he believes that he is the person who can turn around things here at Southwest Airlines. Yeah. Well, as I said, a 10% move in the stock price can have a palliative effect at least on some of those rest of shareholders. Two and a half billion dollars share buyback, right? It's an 18 billion dollar market cap. Elliot owns 10%. They're going to buy the rest of it back from everybody else. If Elliot doesn't sell into it, Elliot owns that much more of the company. I mean, it's kind of a weird... They do have a poison fill as well. I guess they've got to kind of watch out on how that's going to work for you. Or how fast they'll buy it back, or whatever, or what it means for the biology, but it's interesting dynamic. A few other movers to get to. Estee Lauder's at the top of the market again. This has been several days running. It's a China story. Look, hints of whiffs of China, fiscal stimulus focused on the consumer directly benefits a stock that has lagged so far behind beauty competitors, staples, and the market. It's a stock that's still down 32% so far this year, but week to date is up 17.5%. So Estee has some other challenges as well, but one of the biggest ones has been weakness of the Chinese consumer and less travel by Chinese consumers around the Asian region. And so if they get a little shot in the arm in terms of government stimulus. I know they always talked about it being sort of the Chinese tourist market, but really it was the way they distributed where you have almost like quasi wholesalers. Chinese consumers buying in these centers. And then it was, you know, essentially distributing it back home and reselling stuff. They really got over levered to that channel. So obviously any relief on that front feels like. While we're on that note, I mean, I'd love to take a look at Cheers Ali Baba for the week as well. Similar story as Sarah just pointed out, of course, it's all China based on the idea that the consumer is going to at least have perhaps a willingness to spend a bit more as they become less concerned about how much property they own or whatever it is. It's a very similar move to Estee Lauder. I mean, if you come in this week, yeah, long China names, you'd be very happy right now. Las Vegas fans, Freeport Mac Moran, of course, Copper's made a big move higher on this. They're a big one. And you can argue that Chinese Communist Party knows how to trade this market because it really did get washed out and everyone was saying it was uninvestable forever and it was always false starts. And you do it for maximum impact. If in fact, part of the objective, as they've said, essentially, is to try and prop up the market and reinvigorate. But is it good for a longer, more sustainable investment? You know, there are still serious questions. Take a look at PVD, about 11 plus percent today, you know. I mean, JP Morgan in a note today says they call it a near-term tactical rally. They say it can continue because the magnitude of the current rally is just half of what we've seen in trading risk on episodes in China. And it's truly small market capital, I mean, relative to the rest of the world. You know, hard to avoid mentioning Nvidia on a day like this. And I say it because after the Micron numbers, Morgan Stanley's commentary about Micron, they're a bit cautious on Micron's valuation. But they essentially say it's a read-through for Nvidia because if Micron's commentary about the total market size for the high band with memory products are plausible, then you'd look at effectively Nvidia's cost of goods solved and what it means for their demand. So essentially, all they're saying is, yeah, nice for Micron, but what it means is the bulk case for Nvidia is probably reinforced by it. And you see the stock, it's up again another couple of percent, two and three-quarters percent. One-thirty for Nvidia is the August Hot. So it's sort of trying to fight its way back and kind of change this little downtrend that's been in place since June. Obviously having a huge impact on the NASDAQ 100. Guys, a little bit of news on a name I haven't talked about in a bit, which is TKO, of course, owner of the UFC. We're wrestling as well. They seem to have finally reached a hard fought and hard to get to settlement, at least on one of the key cases in terms of essentially violations of the Sherman Act that was brought by the company's former UFC athletes. It was consolidated. These are a bunch of lawsuits dating from 2014 to 2015. And then you had a judge kind of deny the originally proposed $335 million settlement. That was back in July. They seemed to have split the cases and now reached $375 million settlement on this one or revised terms. They think the original settlement was fair. They say the best interest to all the parties to bring the litigation to a close. There is this other Johnson case in the very early stages and they have a motion to dismiss that. But sort of a race is at least a concern on the part of some shareholders. They did have to go up a bit. It would seem, again, the judge has been quite difficult to deal with. That's what I'm told. Wanted to share that as well. Just wanted to also mention Accenture. It's at the top of the market because we've got Julie Sweet, the CEO, coming up next hour on a better revenue buy. 3 to 6% that are bookings as well and more AI related bookings as they help their enterprise customers sort of navigate these new waters. Before we had to break, let's hit the bond report. Check out how treasuries are fairing this morning. Yields. Currently they've been firmer ever since the Fed meeting and we've got some good economic data. Jobless things today as well. Lower than expected. Four months low. A little bit firmer yields. The 10 year yield just below 3.8%. So steadily creeping a little bit higher here. We'll be right back. Number of headlines that we're keeping an eye on this morning involving Open AI, including a major shift in the company's business model. Kate Rooney's got a lot of those changes for us. Kate. Hey, David. Yeah, a lot happening with Open AI in the last 24 hours. It right now is in the process of pivoting from being a nonprofit to what's known as a benefit corporation. This is according to a source familiar with the matter. It comes as the company wraps up what could be the largest private funding round in history. At least the biggest and recent memory it would value Open AI at $150 billion. That's again according to a source familiar who also tells me that Sam Altman will now get equity in this company for the first time. In the middle of that though, some material changes were seen in the C suite. Open AI's chief technology officer Mira Marathi stepping down yesterday. She has been instrumental in Open AI's growth developing chat GPT for example. You might have heard this name. She became really a household name at least in Silicon Valley when she stepped in as interim CEO about a year ago in Sam Altman. Was momentarily ousted by the board. Marathi has been an advocate for responsible AI and AI development. She did not say why she was leaving aside from wanting quote time and space to do her own exploration. Chief research officer Bob McGrew also resigned yesterday plus another top researcher. Altman tweeted that all of these decisions were made independently but this has absolutely been a trend for Open AI. Bulk of its co-founders are now gone. You have names like Ilya Sitzkevar, co-founder left earlier this year. John Schulman and Jan Leike went over to rival anthropic. Greg Brockman, one of the founders, is on a leave of absence. The list goes on but this talent exodus, it's a major vulnerability in a time when Open AI is battling it out with other tech companies. It's got the lead at this point with its large language model but others are really sprinting and spending billions to catch up. You've got anthropic absorbing some of these executives meta working on its competitive open source model. Google, Amazon, all really sprinting at trying to have the top language model here. And top researchers is one way to win and having deep pockets but yeah the latest guys at Open AI. Yeah but not stopping the enthusiasm amongst potential investors to the tune of what was much of six and a half billion dollars coming into the company kit. I mean just to your point to put that in perspective we have IPOs here that raise a fraction of that. It's an enormous amount of money and getting to a $150 billion value of which Mr. Altman is now going to own a percentage for a profit company. One takeaway is that Altman really right now is the key man. You have some of these material losses with a cheap technology officer but power is sort of consolidating around Sam Altman. He's had this prolific ability really to raise money to make these partnerships so he is emerging as the key player. He's some describe it and he's playing chess here so there's been a lot of executive turnover but one thing that has stayed constant is he is the leader. He's clearly back in the seat and able to raise an eye popping amount of money. Everybody is digging up the comments that Altman made to members of Congress last year when he said I make no money from Open AI. I'm doing this because I love it and positioning it as sort of this charitable endeavor to help make the world safe. Which does raise questions I think going forward now Kate about safety and security in this new world we're venturing into where they're leading. Those interesting things are the new structure that they're going for is a public benefit company or corporation which is what anthropic is. It's what XAI is. There's about 15 or so publicly traded examples. You've got Warby Parker, Allbirds for example, Ben and Jerry's Patagonia but the way that those are structures they have these sort of dual mandates. So it will still keep sort of the maybe the marketing side of this where they say we are also not only for profit. We are for the good of humanity. We're trying to build safe AI but they're kind of sort of had this dual mandate. So it's an interesting structural change in terms of governance but I think you're absolutely right in terms of some of his former comments. We've obviously heard what Elon Musk has had to say about that in terms of the pivot here but interesting stuff. All right. Thank you Kate. Kate Rooney and Mike. Thank you for joining. See you next hour. Another huge hour ahead including an interview with the CEO of Accenture and with the Treasury Secretary. We'll be right back. You've been listening to the opening bell on CNBC's Squawk on the Street. All opinions expressed by the Squawk on the Street participants are solely their opinions and do not reflect the opinions of CNBC, NBC, Universal or their parent company or affiliates. And may have been previously disseminated by them on television, radio, internet or another medium. 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David Faber, Sara Eisen and Mike Santoli began the show by discussing the market rally, getting a big boost from Chinese stocks after Beijing affirmed stimulus measures. Appaloosa’s David Tepper told CNBC it’s a “buy everything” moment for the Chinese market. Chip stocks also surged following Micron’s big beat; CEO Micron Sanjay Mehrotra joined the hour to discuss the company’s quarterly results. After the opening bells, the desk brought in Phil LeBeau to discuss Southwest’s Investor Day, as the company detailed plans to fight off activist investor Elliott Management.
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