nobody else. >> they should hire her. >> i'll be off tomorrow. i wish you a happy mother's day. >> thank you would you ever do this for jill? >> a chatbot, hell yes i would never tell "closing bell" starts right now. >> welcome to "closing bell. i'm scott wapner live at the new york stock exchange. we begin with the ai arms race alphabet higher on the back of the developer conference in california with the ceo saying not so fast microsoft. here's your score card with 60 minutes to go in regulation. that pop in google shares helping tech lead. nasdaq the only of the major averages in the green today. rough going elsewhere. the spike in jobless claims

renewing recession fears pacwest bringing regional bank worries front and center the dow down about 230 our talk of the tape the battle brewing in big tech and why one star analyst calls alphabet's answer a defining moment dan ives, good to see you. you go to 340 to 325 all because of ai? >> not just ai, but cloud. i think we're seeing a tick up, not just in march butinto apri and may. that's bullish for microsoft they're gaining share and it continues to be a rock of gibraltar stock. i believe this ai game is the most definable theme we've seen in the 15, 17 years.

microsoft is leading this "game of thrones" race 35 to 40% incrementally we believe could add to cloud opportunity. that's the sum of the parts why the stock continues to go higher. >> you think the monetization expectations for microsoft are that big >> yeah. from what we're hearing from clients and customers, they could look at another 30, $35 over the next years as a montage to ai on the cloud that's so important with what we heard from google in terms of them making sure they're going to play a big role in terms of the cloud for gcp. that's what's going on the enterprise is the golder goose. right now they continue to flex their muscles. >> i feel like we're making

these grand pronouncements it feels too early doesn't it to you? >> i get that. i get some that think it's a hype theme what we're starting to see is customers, partners are actually starting to do the math behind the monetization that's the important thing in the near term you're not baking in that microsoft is going to get too much incremental revenue, but i think it's going to think sooner than the street is expecting. it speaks to the monetization opportunity. this is a game changer for microsoft. i feel more and more emboldened from ai and cloud where they're continuing to gain share from aws. >> what could you possibly be checking on that is bearing results already on this -- the ai thing for microsoft beyond what we already know are we putting the cart -- i hear you

i hear you on everything you think. are we putting the cart before the horse in any way >> yeah, and i can see that narrative. it's really when partners, customers, beta customers and ultimately cios are more and more looking at what you can do on the cloud with chatgpt, with ai, i think it changes the whole game you're seeing google, amazon, oracle try and play catch up it's a "game of thrones" battle playing out microsoft continues to be in the lead i think monetization is going to come sooner than we expected on cloud. >> i wonder about this notion that you suggest of alphabet playing catch up others have brought forth that as well and whether it's a false narrative to begin with.

microsoft got out of the gates with their big chatgpt and they stole all the headlines and all the hype and the narrative around ai seemed to be build around that. then it was everybody else fighting for the scraps. how about that how would you address that as to whether alphabet is truly as behind as some people want you to believe >> first off, it was a black eye coming out of the gates. that's well-documented in terms of the launch event. the irony is that alphabet had the most ai engineers under the roof they can play catch up they'll be a major player. the problem with yesterday is that the definable strategy on how they'll monetize on the cloud, that continues to be the missing piece. it was a step in the right direction. you see the stock reacting accordingly. i think right now they are

playing catch up and i think it's been a surprise it's been a black eye moment for them that redman came around and took the lead for something they've been the leader in for five to seven year. >> you say the problem with yesterday, i don't read too many analysts on the street who had any problem with yesterday in fact, i see so many different glowing remarks regarding what alphabet did we made a wall i'm going to show you some of these. jeffries, of this event yesterday, one of the most substantial in years morgan stanley, will help erode the ai overhang. ubs, makes google look more front footed in ai oppenheimer, quelled angst atlantic equities, reassurance it remains competitive i don't see there was an issue

yesterday with many of your counterparts on the streets. >> a step in the right direction. it was a lay up. it wasn't a three-pointer. if you look at what microsoft is doing, they're miles ahead of any competitor, including what we see from google that's why it's a step in the right direction. they are playing catch up. i think right now this is a defining six to nine months. the top of the mountain is redman. >> i want to bring in mark mahaney. joe taranova is with us too. mark, do you see it the same way dan ives does? >> i have a lot of respect i have a different take on it. i think google yesterday reminded people how deeply inventive they put ai across their products and how big their data pools are

i don't think google is behind i think google has been investing in machine learning and ai as long as anybody or longer than anybody else there's a couple big winners microsoft is one google is too. we had a month or two where the market forgot about google their annual developer conference, nothing more or less, you needed that to remind people of how well they implemented ai throughout their products and solutions i don't want to overstate yesterday. it was more of a reminder rather than breakthroughs >> ives say it was a lay up, not a three-pointer. do you disagree? >> i don't know about the lay up, three-pointer, whatever. i think they've been shooting ai baskets pretty well for a number of years i think that microsoft and -- what's brought all this out is chatgpt. we're all going to benefit from this the search experience is going

to be better i don't think chatgpt 4 is going to be able to pay 20 bucks a month. i think you'll get a lot of equivalence in the search results. i think we'll have a better search experience. you talk about monetizing it i think you'll have more search queries going on i think you'll see an increase in the ai work loads generational ai is more complex. those basic infrastructuresand service models, it's just as much if not more aws they'll see more volume across their platforms. you'll see cloud growth across the industry aws will benefit from that you'll start seeing it early in 2024 another reason to get more bullish on some of the stocks

that have been left behind google was one amazon is another. >> dan ives, how would you respond to that? >> mark has made excel llent points the one thing he's talking about is what's happening on cloud with gcp with amazon that right now -- look, consumer, google is going to continue to own that the big arm's race, the golden goose, enterprise. that's where microsoft is leading. alphabet, it was a step in the right direction. the biggest concern is amazon in terms of where they are in ai and it continues to be a wild goose hunt >> joe just rebalanced his etf got back into large cap tech one name that was conspicuously absent was alphabet. >> yeah. there was a yellow light for

alphabet it's all predicated on the other hand on price momentum you can make the argument now the green light has been turned on. >> you wish you added that >> you always do when you see a stock up 5% which you owned it the strategy, it does what it needs to do effectively, but when you look at these two companies, the deterioration in the fundamentals for either one of these companies was never really evident consistent with the type of selling you saw in q4 there's this belief out there that alphabet is a little more exposed to the macroeconomic weakness we're experiencing. the counter to that argument is we might have already seen the trough for i.t. spending, macroeconomic weakness when you look at these companies as they move forward, they're in a very, very strong position their arsenal is their balance

sheet and their cash and their ability to make acquisitions i would make the argument that microsoft has been better at making acquisitions in the last several years. i think fundamentally microsoft has been more consistent in delivering returns to shareholders through cap allocations. last couple years alphabet came around once again. the question ultimately comes down to if these two companies get into an arm's race and have to spend a lot of capital, do we see a little bit of a weakening in the desire to have the type of capital allocation strategy, in particular from alphabet, that we've been rewarded with. >> alphabet shares are up year to date more than microsoft shares. >> i realize that. >> in the contextof this whole conversation that seemed to leave alphabet sucking wind, in reality the stock has done better than microsoft. it's obviously close

>> yes. >> some would have you believe that the stock has been a dud relative to some of the others, that alphabet was completely left in the dust because microsoft came out with this gpt deal >> yeah. i think there's a distinction or at least a perception surrounding the managerial view. i think microsoft's management team is looked at as maybe being a little more effective in a lot of their policies and actions than alphabet. that's a case that's been evident. i also think, look, again going back to what happened in q4, it was all tax loss harvesting. it was mutual funds. it was hedge funds there was a lot of rule-based strategies that were enacting that selling pressure. i don't know that the fundamentals were called into question i think when you look at where they are at this moment and

where can they go from here, i still think microsoft is the more diversified company when you look at the layers of the cloud stack that they have, i don't think any other company in the world could compare. >> how do you respond to that, mark >> i will make one point what i find interesting about google and why i like meta is the silicon valley discount. the earnings growth here is the same or better than what you get out of most other tech companies, apple, microsoft. the multiples are 25 to 30% below what you have to pay you're paying 18 times earning for google versus 28 times, 27 times for microsoft. i think that -- i think what -- that's probably a negative statement about google management they had to fix the road a little bit in their narrative about ai there's other things they need to do.

they need to act as better corporate citizens i think they'll do that and be more cost conscious. if they do that, there's more upside to google as a stock and particularly for meta. that's my comeback on that yes, it's outperformed microsoft, but it trades at a 25% lower multiple i don't think that's right. >> dan ives said microsoft is taking share from aws, the cloud business is that true >> i think that's true it's clearer in the last two quarters for one specific reason, which is asure is based more on spending aws has been more geared towards startups the startup land is soft right now. that will change the narrative is now it's taking market share i bet that changes in the next

12 months. i like amazon before the narrative changes. >> dan, no one is saying it's winner take all. it's probably not winner take most there are many players how do you view meta -- we haven't even discussed apple who knows what they have australian open their sleeve we need to wait and see what they have to bring to the table. how would you address is sea of come pepetitors out there >> i think this is a massive opportunity. when it comes to meta and what they're doing on ai, how they can monetize their base, then you see the u-turn from zuckerberg there's a monetization factor they're not talking about there.

co coopertino talked about opportunity. >> you added apple back. >> i did i'm glad i did just listening to this conversation, in reality if tech is able to grow as a percentage of gdp the way we expect it's going to, all these companies are going to benefit you're talking about tech as a percentage of gdp only at 5% that's going to grow to double digits that's a world where it's not winner take all, it's everyone is going to be able to participate and enjoy and succeed. >> you better have deep pockets, right? >> the concern i have is, if we have to spend money -- they all have deep pockets. i agree with that. if we have to spend money, who ru are you more confident in to make more decisions on spending? from my perspective it's

microsoft over alphabet. >> give me your thoughts on that, mark dan, we talk about the rewards we don't talk about the spend, how expensive that's going to be for all these players and the i amly implications. >> the three big winners are going to be pools of data, pools of ai and there's only so many of those we're not going to have that many winners i think there will be a handful of winners to joe's point, the market agrees with joe. that's why microsoft has this discount the market doesn't believe that google can allocate capital as well this is a throwdown to google management prove them rong.

i think meta's got this. i think zuckerberg has got this. if google can do this, if google management can realize this, there's a lot of upside to the stock. i hope they realize it i don't know if they will. >> last and quick, dan. >> joe nailed it the street wants these tech stalwarts to win this ai. >> guys, that was fun. appreciate it very much. let's get to our twitter question of the day. we want to know which ai player has the biggest upside opportunity. we're talking stockings. microsoft, alphabet, apple or meta head to twitter to vote. we have the results coming up later. in the meantime, let's get a check on top stocks to watch kristina partsinevelos, here with that. kristina >> reporter: i shouldn't be

smiling. the food and drug administration did not approve a new therapy treatment for bladder cancer that's sending shares of imm immunitybio plunging robin hood hasn't turned a profit since going public in july of 2021 they're cutting operating expenses for the first time in two years and increasing revenue per user they plan to launch 24 hours a day, 5 days a week trading for stocks like tesla and apple. shares are over 5% higher today. scott? we're just getting started pacwest plummeting in today's session. we're drilling down on that.

plus, top technician jason hunter breaking down the charts and weighing the odds of a recession. we're live from the new york stock exchange you're watching "closing bell" on cnbc. lily! welcome to our third bark-ery. oh, i can tell business is going through the “woof”. but seriously we need a reliable way to help keep everyone connected from wherever we go. well at at&t we'll help you find the right wireless plan for you. so, you can stay connected to all your drivers and stores on america's most reliable 5g network. that sounds just paw-fect. terrier-iffic i labra-dore you round of a-paws at&t 5g is fast, reliable and secure for your business. your record label is taking off. but so is your sound engineer. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates

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today. leslie picker is here with what's driving this lower. >> reporter: it's one number 9.5%, the amount pacwest's

deposits declined last week. volatility sent customers fleeing, particularly last thursday and friday. that was all revealed in a filing this morning. analysts say it stems from the niche venture community who were spooked saying pacwest was leaning towards an outright sale of the bank. pacwest has tried to match those deposit out flows, including moving $384 million in loans and selling $431 million of loans. pacwest has a respectable 288% coverage ratio for uninsured deposits pacwest and several of its peers facing significant declines

today. now about a $500 million cap, trading .26 times book value for comparative purposes, not saying it's headed in this direction, but silicon valley bank and signature bank had double that multiple before those two failed in march. scott? >> leslie, appreciate it stocks are mixed amid continuing fears surrounding the strength of the banking system my next guest says the s&p is on the cusp of a sharp slide. joining me now jason hunter of jpmorgan good to have you back. why do you think the technical setup favors a slide i've been hearing a lot of that over the last many weeks this market has proven more resilient than analysts expected >> the last time i was on your

show a month ago and the s&p was trading in about the same spot as now as someone who has been bearish since the start of the year, we got negative when the s&p was up near 4100 in december and it had been that way since. it's been a bit frustrating. while the headline indices have stayed here, we've got more conviction through the internal rotation number one, the market leadership has got more and more clustered in one spot. there's a handful of stocks that lead the market. you can see by looking at s&p 100 against the s&p 600, large cap over small cap, tells the story. mega cap leadership has kept the market where it is it's all consistent with a late cycle environment. we've seen the treasury curve start to take hold, not just in

equities but in other global markets. all these things are consistent with late cycle environment. the equity market has held up. it's been flight to quality more than flight to cash. we still think that's to come. you'll see the more full pricing for recession probability. >> not like these are lousy stocks it's hard to chip away at these things there's a reason why the money's gone there i could see if we were talking about another sector or -- i mean, they got the best balance sheets they have piles of cash. >> that's right. really, like i said, this is typical late cycle behavior. as growth starts to decelerate, the money moves into more quality names and you get more concentration as you go. from a technical point of view you see the breadth thin out and

the leadership dwindle to a handful of stocks later in the cycle. as the growth data starts to decelerate more towards negative growth territory, that's when you see flight to cash you see that rotation. where we think these mega cap names may be more at risk because of the crowding that's developed here. >> i wonder, though, as some might counter and say maybe we're at the beginning of a new cycle, fueled in part by ai and all these advancements that we're talking about and maybe we're looking at this wrong. >> if one's going to make that argument what you look for are -- what's typically the tip of the spear, the leading cyclicals, copper, gold, the semiconductor space overall, not just ones in the ai space, financials versus utilities. what you have is psychly calls

coming under more pressure versus defenses. unless you're telling me it's ai specifically that's going to drive this and the handful of names are going to drive the market into a new cycle -- could it be different this time? sure it's happened in the past. what's consistent with other late cycle environments to what we see right now is a fairly typical story. you see thin leadership and the growth decelerates to cause a true flight to cash. the crowded names, you could see the quality come under more pressure than the small cap. >> i'm wondering, if it may help you tread water so to speak for a while, stay in this tight range amid uncertainty about the economy which is the reason why cyclical stocks haven't done well until we can further answer the question of whether we'll have a soft landing or not if these large stocks keep you

afloat until we can answer that question, maybe you get through the rough waters and you actually have the ability to get the market to the other side >> that's wear we've used a number of models to make our case over the last few months. let's say if it's the soft landing scenario where the fed doesn't have to ease through neutral rate one of the models looks at fedex p expectations it looks at expectations of how high the rates go and how low they go in the easing cycle. the fixed market is priced for a soft landing it's not really looking for a soft landing, it's a binary bet. is the fed not going to do anything at all or will they have to do a lot of easing at the end of the year?

as it's priced right now, it's priced to move back to neutral which one would say is consistent with a soft lander. the upper end where the s&p should trade is 4,200, maybe 4,250. even in that scenario the s&p is at 4,200 and in a way is fully priced. >> what's the downside number we should watch >> we think we'll see a retest of the 3,500 low we saw in the fall and that should send the cycle bottom the curve will help set the stage for a cycle bottom. >> jason, thank you. jason hunter from jpmorgan. up next, kevin simpson is back to break down his latest trades he'll tell us where he sees 'ldo tt uny. hel haon "closing bell" in two minutes we got this. we got this.

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negative session the debt ceiling deadline, more banking turmoil. our next guest is still finding more opportunities joining me now kevin simpson good to see you. you find opportunities somewhere. today it lies in walmart you bought it at $152. it reports next week ymt. >> we're thinking if we go into a recession, scott, there's a chance the consumer down grades on their spending. oftentimes walmart becomes a beneficiary of that. we like the dividend we like the dividend growth. one thing i don't like, the multiple is a little high. we held it in the past

successfully when we get earnings next week, what i'll be looking for is not necessarily the numbers in the first quarter, but the margins move forward what are they projecting for the year end and what do they feel the consumer is going to look like that will tell us a lot. takes us a long time to build into a position, but i feel like it's a good defensive play. >> all these with covered calls? i want to make sure our viewers who don't see you all the time understand what your general strategy is. does it hold true for everything you do >> that's correct. walmart we're building a position we don't have any options written against it i enjoyed the conversation about microsoft. we have a $320 call on microsoft that expires next week we're tactical about the cover call sometimes we're too frugal about it if we like our names high term, they can call higher very tactical from that front.

walmart is a position we're building out no covered calls on it yet. >> you bought more merck at $118 tell me. >> same thing, the end process with merck we've been talking for weeks as we've been building in to m amemerck. we love the earnings massive cash machine we built out a 5% position we're set. we've written calls with merck as they were approaching earnings got lucky they didn't called away if our theme on health care makes sense, we feel comfortable with merck. >> tough for metals and mining and other commodities for obvious reasons. china data was weak. you made a move. i wonder if it was a direct result of the weaker data. you sold newcorp. at $140.

>> yeah. hate to see a stock go down. we loved the multiples loved their earnings top and bottom we think the theme for steal particularly will be great coming out of a recession. to your point, if the china re-opening story isn't playing out, we're not going to hold it forever. our good friend joe was having a conversation with himself yesterday about selling a stock that was down. >> i recall that. >> it was awesome. it goes down we sell them we move on one good saving grace for us with nucor, we were very aggressive on the call writing we brought in about $13 of premium this year. even though the stock is down 20, we have a $13 cushion. you're showing it now and it's

lower than wehere we exited. >> kevin, thank you. up next, kristina partsinevelos is back. >> reporter: elliot management has a new target the stock is far from flat today. no pressure if you can't guess it i'll have the answer after the break. new projects means new project managers.

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we got about 15 minutes to go before the closing bell let's get back to kristina partsinevelos for a look at the stocks we're watching. kristina >> reporter: let's start with the maker of high-end speakers sonos is plummeting 25% today. it has to do with soften demand and inventory tightening did you guess which stock i was talking about? goodyear soaring above 19% elliot owns roughly 10% in goodyear and sent a let tter to the company's board citing poord suggesting a sale might be best. elliot management wants to find value in goodyear tire that's what investors want to

hear. >> kristina, thank you last chance to weigh in on our twitter question which ai player has the biggest upside opportunity microsoft, alphabet, apple or meta head to twitter. we're bringing you the results after this break

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the results of our twitter question we asked who has the biggest upside opportunities from a stock standpoint there you go alphabet and microsoft neck and neck 36.5% each meta at the bottom apple at 18. up next, peloton's rough

ride it's had an ugly year and a tough day today. it's down almost 9%. we'll tell you why it's lower when we take you inside the market zone. we're here today to set the record straight about dupuytren's contracture. surgery is not your only treatment option. people may think their contracture has to be severe to be treated, but it doesn't. visit findahandspecialist.com today to get started.

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about tesla. take a look. a few moments ago that stock, there it is, the spike why? perhaps because elon musk has tweeted moments ago, quote, excited to announce that i have a new ceo for x and twitter. she will be starting in six weeks. unnamed person my role will transition to being executive chair and cto overseeing products, software. >> i believe it's systems operations, not psychological operations >> look, i mean, people have been making the argument have can he have his attention in all these different places the one they seem to care about more than anything is tesla. >> right the perception is tesla has been the orphan company as he's been fixated on getting things straight at twitter. trying to finance the company and all the rest we don't really -- he did say he

was going to look for a permanent ceo for twitter some time ago you see the knee-jerk reaction it's not clear necessarily that the thing that's been weighing on tesla's shares and business is the fact that elon musk is ceo of multiple other companies pa because you're dealing with a lot of issues. >> price cuts. >> margins where they are. of course, it's good enough for the stock to twitch higher by a couple percent. >> we'll keep our eyes there marcie mcgregor, i know this is stealing our thunder, but the market hands pretty resilient. a lot of headwinds today we're kind of hanging in what's the message there >> i'm surprised with the market yesterday and today with

inflation showing it was cooling, that the market didn't get more of a rally. between now and memorial day it's all about the debt ceiling. when congress heads on recess, that's the deadline, earlier than janet yellen's june 1st deadline the market's hanging in. both parties are still talking they're making progress. that's a positive sign. >> are you worried about the debt ceiling impact on the market and at what point does the market care? >> i think it's exceedingly unlikely we have any sort of issue around the debt ceiling. the debt ceiling has been raised or amended over 100 times since world war ii you may get some volatility here over the next few weeks. what i don't -- we have to kick the can down the road to deal with this again in the fall. i think you get a deal before me

me memorial day >> we had a analyst from jpmorgan saying we're going back to 3,500 lows. you don't see that >> i think any volatility around the debt or anything over the summer and we get information that the economy is slowing, that's the opportunity for long-term vinvestors. >> you like the u.s. over anywhere in the world despite calls for an opposite strategy >> i like the u.s. right now i keep coming back to the fed. the fed is further ahead in their fight against inflation. if you look at europe, bank of england, they're earlier in their hiking cycles. on paper i like the u.s. more. on my shopping list is likely emerging markets we know about china's

re-opening, but there's an investment and credit cycle starting there that can be really interesting once this cycle pivots. >> marcie, appreciate you being here. steve kovach, peloton today, ugly >> let's go with plunging, that's what peloton is doing after they announced a recall of more than 2 million of their exercise bikes the seats of some models could break without warning, leading to injury. this isn't the first major recall for peloton in 2021 they recalled some of their treadmills after the death of a child who was pulled under the machine. that model is still off the market peloton said they'll give updated seats for free besides hardware issues, the company reporting earnings last week and it's expecting its first ever decline in subscribers.

you see shares down almost 9%. >> steve, appreciate that. steve kovach with the latest on peloton. mike santoli, we come back to you. again, look, you have a number of things you could say. this is why we should be down a lot today. we don't mention china all that much their numbers were weaker. regional bank problems and a few other things, yet this resiliency or as you've been making the case nothing to answer the question yet on where we should go and why. >> exactly every issue we're bringing up today we've been living with for a while. that's why the market is just chewing over it in this measured way as opposed to being shocked by any one headline. things i would look for, the banks made their low at the open, then they managed to grind their way higher that's allowed something besides

the big nasdaq stocks to do the work we have this market that has a fear of commitment it looks like all these things we were worried about is buying us a fed pause before the economy has fallen apart i know the continued concerns about the weak breadth in the market are almost overshadowing everything else. i guess my question is, what is it that worries people about a handful of stocks creating the bulk of the upside is it that those stocks go up from here and fall back to where they are today or does it obscure the message by the market that the economy seems to be slowing and the market gets it the other thing is, there's about 100 stocks in the s&p 500 within 5% of a 52-week high. it's a lot of semis, home builders, staples and health care it's also things like g.e. and tractor supply

it's a little more eclectic than just apple, microsoft and alphabet >> good to see you the dow loss cut basically in half. still a loss, but not as bad as it was i'll see you tomorrow. i'll send it to "overtime" with morgan brennan that's the score card on wall street. welcome to "closing bell overtime." john fortt is off today. we'll talk to rohit chopra about the latest turmoil in america's banking system as regionals tumble plus, katherine boyle will join us to discuss the