SOTS 2nd Hour: Return of the AI Trade? Goldman Cuts Recession Odds, and Live: Coinbase CEO 5/14/25

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Carl Quintanilla (1:02)

Good Wednesday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Mike Santoli, David Faber live at Post 9 of the New York Stock Exchange. Sarah Eisen's on assignment. Bulls continue to work with some slim year-to-date gains so far on the S&P and NASDAQ. Treasuries were keeping a close eye, especially on the long end, not too far from a five handle. Coming up this hour, recession odds falling. Goldman Sachs slashes its probability of a recession in the next 12 months and raises its growth forecast. The firm's chief US economist is going to join us to break down that call. Plus the CEO of Coinbase will be with us as the stock jumps 30% this week on news of its inclusion into this S&P 500

Michael Santoli (1:37)

All right, we are 30 minutes into the trading session. Here are three big movers we're watching. Tesla shares are gaining. The company reportedly resuming imports of Chinese parts for its CyberCam and semi-production here in the US while the Financial Times says a new pay deal could be in the works for CEO Elon Musk. The stock is the best performer in the Mag 7 over the last one month after having been the worst performer going into those market lows. United Health is trying to rebound. One of the best performers on the S&P Endow after yesterday's 18% plunge on pulled guidance and a surprise CEO exit, KeyBank, cutting estimates but writing that the company is, quote, staying on the struggle bus. And watch AMD, the stock in the green, after announcing a new $6 billion share buyback plan and optimism grows around loosening trade rules for the group. And on news of a Saudi chip deal, you see the share is up 5% right now.

David Faber (2:32)

Speaking of chips, Nvidia building on strong gains following the China tariff pause and news of a big AI agreement of its own to sell its highest end chips to Saudi Arabia. A number of bullish calls as well follow on the Saudi news. Bernstein, for example, writing that for investors worried about AI CapEx sustainability, we now have another deep-pocketed customer willing and capable of spend. Nvidia's market cap, by the way, now above 3 trillion. It's a bit above that of Apple. Microsoft still exceeds all of them. You know, Mike, we mentioned this on the nine, but I had a couple of people say to me, one in particular, everyone's back in on the AI trade as if nothing happened.

Michael Santoli (3:10)

Yes.

David Faber (3:11)

I'm just curious your thoughts about that and whether that resonates.

Michael Santoli (3:14)

It's largely true.

Obviously, when all of the focus and all of the pressure was coming from the trade story, there was a constant monitoring of, well, has the AI theme really shifted? Obviously, all the earnings from the hyperscalers more or less ratified that. By the way, over a six or 12-month basis, the Mag 7 has done nothing. So they're basically pretty much back where they started. The valuations are below, certainly below peak, and below probably their average for the last couple of years. And we're also at the time of the year, this sounds silly, but where you're going to start to say, 2026 estimates are more relevant and you can lean on them a little bit more. So I think all those things together combine with the fact that if you want to grab exposure to the US market because you were under-invested near the lows and during this rally, that's how you do it. And we talk about US exceptionalism as, oh, we're able to run bigger deficits because we had the reserve currency. In equity market terms, US exceptionalism is we have a half dozen completely dominant companies with trillion-dollar-plus market caps that are kind of their own ecosystem.