CNBC Scott Wapner with Brad Gerstner at Milken Global - May 4th, 2026

0:00 Let's welcome in our headliner for our annual conversation from the Milken conference out in Beverly Hills, Brad Gerstner, the founder and CEO of Altimeter Capital. It's always great to catch up with you. This is especially timely given it comes on the heels of those mega cap earnings reports. We'll also discuss Anthropic versus OpenAI during our conversation today because you are an investor in both. So, that's a really interesting position to be in. But, let me get your thought if I could to start things off, Brad. where we are in the market first and foremost and and whether you like many are as surprised at the speed in which we rebounded from those March lows and hit these new highs as we have this conversation today. minor pullback, of course, in the moment notwithstanding.

0:47 Yeah, well, it's great to be here, Scott. not only on my 55th birthday. We're usually out there in the round with all these people walking around us. I think this is our sixth or seventh Milken together. So, it's great to be here. what I would say is I mean, listen, the conversation here has been terrific. we came into this year and there was a huge question overhanging the market. Would AI revenue show up to justify these legendary spending levels by the Mag 5? This year, we're going to have 800 billion in total CapEx by the Mag 5 and the question was, would there be revenues to justify that? And what we saw over the course of the last month were two things. Number one, the the market got comfortable that we were going to get past the geopolitical concerns in Iran and the Strait. And number two, they saw the revenues showing up from the hyperscalers. 28% revenue growth out of Amazon at tremendous scale or 39% for Azure, 63% for Google. Extraordinary. And of course, Anthropic is adding revenues at rates we've never seen before. By the way, and so is OpenAI. And so, the the question as to whether or not the revenues would show up to justify this level of spending has been answered answered very loudly at least for the moment. But, listen, part of the reason we're still hanging out at market multiples or in the case of Nvidia, way below market multiples is there's a wall of worry. Will the revenues continue?

2:09 Are they durable? Are the margins going to be high enough to justify, you know, the return on investment? Those questions have to be answered. I certainly feel strongly that they will be answered in the affirmative, but that's the reason we don't have a bubble and we're not running away with super high, you know, multiples in excess of the market. Yeah, I just read the stat before you joined us according to Goldman that the mega caps now trade at a smaller premium than they had before to the S&P like 13% for the simple reason of what you and, you know, we here at the desk have have talked about.

2:41 The the growth in the revenues and the earnings projections are are astounding. So, what does just figuring your positioning and knowing the stocks that you own, I don't know, the last month must have been just incredible for you guys. But, what does your positioning look like? Yeah, I mean, listen, last month was I've been at this now for over 20 years professionally in the public markets. It was our best month in the history of Altimeter. and we're bouncing off a you know, a bottom that was a you know, a tough month the month before, but we stayed the course. You can see what our exposures are to. We own compute. We own logic. We own memory. The substrate of AI.

3:21 and I and I continue to believe that, you know, those things are going to perform incredibly well. Think about memory as an industry is only trading at five times earning. In the case of Nvidia trading at 13 or 14 fully taxed GAAP earnings. And so, we think these things are undervalued. We understand the concerns that are in the market. But, listen, it comes down to this. If AI does what we think it's going to do and these companies supply the chips to AI, they're going to be much, much higher in the years ahead. I've said before, I think Nvidia will be the first $10 trillion company. I you know, as I sit here you know, in in May of '26, I believe that to be true. and you know, it whether it comes all at once or whether it comes over the course of the next two to three years, we're patient. We're going to own this. It's one of our largest holdings. So, as we sort of look at what we learned, so to speak, from these mega cap earnings reports right after they all came out, we characterized them on this program as Alphabet looking like the clear winner from the reports. Not in the biggest picture and you can have a different opinion, of course, and we'll get that from you momentarily. The clear loser from earnings appeared to be Meta. Still suspect appeared to be Microsoft. And humming along, Amazon, like you were just talking about and the reason why it's one of your largest positions. Have we characterized those fairly, do you think?

4:45 I mean, listen, every all of those companies are doing extraordinary things. Let me just give you a statistic. It's just eight quarters ago that collectively they were doing $150 billion in revenue. Now, they're doing $350 billion in revenue. They are growing tremendously faster than what the consensus expectations were just a few quarters ago. I think all of those companies are going to do great. Certainly, people are asking the question about Meta. You're spending all this money on CapEx. What do we get for it, right? So, they're going to have to show continued acceleration. They're going to have to continue to do the things to maintain margin. You know, they they've talked about how they're going to continue to get fit, to tighten the belt, to make sure that the margins pay for what the the the returns that we're getting. But, I'll tell you this, if I know Mark Zuckerberg and team, they're going to deliver some great models and some great products productivity for the consumer, entertainment for the consumer later this year. I think it will continue to perform well. But, listen, Amazon, Microsoft, and Google have tangible returns. Their cloud revenues are accelerating at scale. We thought Amazon was best positioned you you know, for a lot of reasons. Partly because it had underperformed. Partly because of uranium. but, they're really just doing an incredible job.

6:00 Now, major shareholders of both Anthropic and OpenAI. OpenAI about ready to distribute all of their models across AWS, which we think will help accelerate OpenAI. but, clearly Google with its TPUs, its cloud you know, services is benefiting tremendously from what's going on in AI. And most amazing, let me just say, I was on here two years ago and I said, "Listen, Google is suspect because 10 blue links is going to get displaced by the answers of AI." They grew search revenues 19% in the quarter.

6:33 Way higher than we forecast a couple years ago. I'm glad we had the mental flexibility to own Google along the way here. But, the reality is this moment, because the rate of change is so high, Scott, you have to maintain your mental flexibility. But, I don't think you you're well served by trying to day trade this. You'll get whipsawed because the market was down a lot earlier in this year only to come roaring back. I mean, you look at the returns in the month of Mar- the month of March and and and month of April. If you sat out 3 weeks in April, you missed two or three years worth of return in many of these stocks. So, that's the danger of trying to think that you can outtrade this thing. To to borrow the the phrase from Yogi Berra, it's like déjà vu all over again a little bit, it sounds, around Meta specifically as you're just articulating. All the money they're spending. Can they hold in margins? Can they this, that, and the other? It almost feels like you want to draft another letter, but your position size today isn't what it was when you wrote the original time to get fit. But, are we in a little bit of a moment in which investors are crafting their own sort of questions about this company? Well, I I I'll tell you, Susan Li is an extraordinary CFO. She's focused on free cash flow. Mark and the team are totally AI pilled and are focused on delivering the best products in the market. I think they're going to shock the the world in the second half of this year with some of the products and the models that they're going to roll out. But, they know they have to deliver. The nice thing is AI is bringing incredible efficiencies to their business and everybody else's business. I think you're going to see margin expansion. If you look at the S&P 500 earnings increase, a tremendous amount of that is coming from margin expansion. I think we're going to see that for the next 3 years. It's going to show up in the economy in the form of productivity gains. And Meta led the way in in the fall of '22 and in the spring of of '23.

8:27 Remember, it was Mark Zuckerberg who wrote his own letter that said, "Flatter is faster. Leaner is better." He's lived up to it. He's led the way. I think he'll continue to do that with Susan making sure that margins stay intact notwithstanding all of this investment. I'm hoping that you're not going to give me a I love all of my children equally kind of answer when I ask you about Anthropic versus OpenAI in which you invest certainly in both. Because I feel like and Joel alluded to this a moment ago that investors have started to try and pick a winner at least now between the the two of them. And that Anthropic seems to have stolen a lot of the buzz because of their positioning within the enterprise relative to the consumer.

9:14 You've had some questions now being asked about who's on the best road map to an IPO. Is OpenAI missing some of their revenue targets and their user targets? All of these things that we gave them at least at the beginning the benefit of the doubt. Now, I don't feel like it's so much. How do you answer that? Well, listen, the Kentucky Derby was this weekend and the horse that started, you know, in last ended up winning the Derby. The fact of the matter is we have three or four horses in this race.

9:42 They're jockeying. They're changing positions along the way. They're all great. And guess who's winning? Team America is winning. We have multiple models competing. Whether it's Elon, whether it's Google, whether it's OpenAI, whether it's Anthropic, they are keeping America on the frontier at the moment. Make no mistake about it. Anthropic has taken the lead in January, February, March, and April by adding historic levels of new revenue, right? Because they came out with Claude Code and Opus 4.6 in early December, and enterprises across the world are adopting it. But, if you look at the growth in Codex over the course of the last 4 weeks or 3 weeks, it's pretty incredible. If you look at what what's being said on X and Twitter about Codex versus Claude Code, incredible. So, here's the thing you have to know.

10:29 I believe that the wave is the biggest wave in the history of technology, will be incredibly beneficial for America. I'm rooting for all of them because I'm rooting for America. I think you can own all of these. It's not that everyone is equal at a moment time, Scott, but this idea that one of these is going to win it all, I think is misplaced. On the enterprise side, just as we have with Amazon, Google, Microsoft, we have great competition. They split up the profits of the cloud business. I think you're going to see that in AI on the enterprise side. On the consumer side, sure, they haven't got to a billion weekly actives yet, but but they already are at over 900 weekly actives. It is the verb still in AI, but you can't count out Google or Claude, and a lot of consumers are using it. So, we have active competition. They're both doing great. Here's the deal. I would buy both of them today in the market if they were trading in the public market, because I believe that the entire sector is early in its penetration of the largest TAM, the total addressable market we have ever seen. We are still very early days. The two winners are going to be much, much bigger than they are today.

11:36 Brad, great to see you. Happy birthday, and I agree completely with your assessment of Open AI >> This is Joe Terranova, by the way. Scott can't see. Go ahead, Joe. >> Well, Brad knows me well enough to to know my voice. But, I have to ask you, there is some general concern about ultimately when Open AI and Anthropic step into the public market, where does the capital come from? Is that a concern from your perspective? walk us through how you see that unfolding.

12:04 Well, first, Joe, you heard me say many times they've already IPO'd. They were just private IPOs. Open AI raised 110 or 120 billion dollars in the most recent round. Look at the cap table of the investors in that round. It it looks First, it's bigger than any IPO we've had at 120 billion. And then, you know, the list of investors in that round from you know, the Fidelities and the Capital Groups to the Altimeters and the Coatues. It looks like a day-one IPO cap table. So, so I think you got to understand that. Secondly, whether or not they'll be bought in the IPO in the public markets, all depends on how the company is doing relative to its price.

12:41 You and I both know there are trillions and trillions and trillions of dollars on a global basis that look to find any opportunity for arbitrage, any opportunity for alpha. So, so long as they're priced fair to the future expectations of the company, of course, there's going to be tremendous demand for the business. The same for Anthropic. Frankly, the demand for Anthropic shares today is some of the highest demand I've ever seen over the last 25 years in Silicon Valley. So, you know, I hope, and you've heard me say, I want these companies to come public. I think it's super important that retail investors in the United States have the opportunity to participate in the two most you know, important companies to come along in technology in years. I'm thrilled SpaceX and x.ai are going public at the end of June, right? Most people, you know, are talking a lot about Anthropic and Open AI. Elon is an N of 1. He's building incredible capability, you know, and capacity on the data center side.

13:36 You know, and so that one's going to be the first one out of the gates. I love the fact that they're all coming public, and I would love to see each of them put some shares away for every kid in their in their Invest America, their Trump account, right? Could you imagine if every single one of these 40 or 50 million kids had a share of SpaceX or a share of Open AI or a share of Anthropic in their accounts? That's the way you align all these kids with the upside of capitalism and the upside of AI. But, I don't know if what I just heard from you is is exactly a ringing endorsement for the retail community to go out and buy these IPOs in the open market when they eventually do come public. If you suggest that they've already in a sense IPO'd, like what level of growth is going to be available to the retail community? What level of upside that's already been realized by the pros, not the average Joes?

14:29 Well, listen, you know, buying a company at a trillion dollars in value or a trillion and a half dollars in value is not a get-rich-quick scheme. So, I just want to be honest with folks watching at home for retail investors, right? You're hoping to compound these stocks at 20, 30% for a long period of time. That's how you make a lot of money, right? Long-term compounding. If your hope is that you're going to trade the IPO and double or triple or quadruple your money on a trillion-dollar valuation, it's just unlikely, right? You're right, today companies are staying private longer. More of the value capture is occurring in the private markets. We have to address that, right, as a country and make this more accessible to retail investors early in that value creation cycle. I don't make the rules of the market. I'm just reporting what I observe. I think they'll have plenty of retail and institutional demand so long as the price of the IPO leaves enough meat on the bone that investors can underwrite to 2 or 3 years of compounding in that 20 to 30% range. No, I just think it's it's it's important, and I think it's it's critically important to for them to hear for that cohort to hear from somebody like you with a bit of what I suppose you could you could call a reality check on what on on what may be. Speaking of of memory, do you think those stocks have have gone too parabolic, too crazy what what we've been seeing in certain parts of the chip area?

15:53 so, first, you know, if you look at the if you look at the multiples, the fully taxed GAAP earnings of those businesses, the multiples are actually flat to down, Scott. They're they're trading at 5x fully taxed earnings. Samsung's going to do more in profits this year than Google. And so, the question has always been, why the hell do these companies trade at five times earnings? Because people think it's a boom and a bust. There's no durability to the earnings. If you believe it's different this time, if you believe there's durability to those earnings through 2028, through 2029, which we do, and could be much further out, then these are ridiculous values in the public market. They main- We maintain them as some of our largest holdings. We think they will continue to compound, and we think I'm going to do a pod on this in a couple weeks with the CEO of of Micron. I think there's some industry restructuring going on that will be good for the long-term health of the business. More collaboration between them and the hyperscalers that perhaps will give people more confidence about the long-term durability so that it's not so much of a boom and bust anymore.

16:57 Well, when you look at some of the other chip names, I mean, the the gains in the last month are extraordinary doesn't even begin to tell the story of an AMD, for example, which is up 57% or a Broadcom, which is up 31% and so on and so on and so forth. Does that what level of pause, if any, does that give you about where these these stocks have gone? I mean, listen, you got to make choices.

17:28 Some of these stocks, understandably, have been meaned because people have gotten really excited about the CPU supercycle or the GPU supercycle. We just had this conversation. Obviously, token consumption is exploding. I think that will continue. But, look at Nvidia at 195 bucks. Nvidia is trading lower than it was 6 months ago. So, it's hard to say at 13 or 14 times fully taxed earnings on a business that's giving you guidance of a trillion dollars of future orders. It's hard to say that that's in bubble territory. I look forward to hearing from them in a couple weeks when they report.

18:05 But, I think Nvidia's terribly under-owned. I think it's terribly undervalued today, and so we're happy to sit in that and to own it. But, I agree with you. If you look at Arm, which is another one of our big holding, clearly Lisa's doing a great job. Look at what Lip Bu is doing at Intel because of the shortage in CPUs. And so, I think you have to Listen, when anything goes up 100% in a month, Scott, for retail investors, they they shouldn't feel bad about taking a little profitability, right? This game is either like hold it forever and let it compound or pull a little profitability off when you think the market is getting ahead of itself.

18:43 I'm just telling you, when you look at Altimeter's net exposures month over month, when the market pulled back on fears about Iran, we didn't run away from the market because we saw fundamental fundamentals accelerating. We pushed more onto the table. We've continued to make sure that we have our dollars in the things that we think are best valued, but our aggregate exposure is very long the market. We believe the market goes higher from here. Hopefully, we get the situation in Iran solved sooner rather than later. $120 oil will take its toll on the market if we don't solve that over the course of the next 3 to 4 months. Jim Lebenthal's got something for you on Nvidia. Hey hey, Brad. Good to talk to you always. Agree with you on Nvidia. Agree with you, by the way, that we all have to be long-term investors.

19:28 If you could just dig a little deeper on maybe what the most recent 6 months malaise, I'm going to call it that, in the stock price has been. Do you think it's competition that has cropped up, maybe from the hyperscalers like Alphabet, like Amazon, or maybe even competition for capital? I know you've got Cerebras, and they're going to go public here in a really quite soon. You mentioned Intel. So, you know, maybe this is just short-term competition either for capital or for the actual chip demand. I'd love to hear your thoughts on that. Either way, both of these should pass, right?

19:59 Joe, it's it's the exact right question and 100% the reason it is traded off is because people believe I I think incorrectly that all the share is moving to tranium or to TPUs or to cerebras. I'll be in New York next week for the cerebras IPO where I was on the board and and a major shareholder. But here's the thing to keep your eye on. Token per watt per dollar. Nvidia is one of the most efficient in the world. Where do you think that chat GPT 5.5 was trained?

20:28 On new Blackwell chips. We got Vera Rubin rolling out later this year. Notwithstanding all of the noise in the market, the pie is growing so much that it's a much bigger slice of the pie for Nvidia even if they're giving up a few share points to tranium or to TPUs which are also good products but on a token per watt basis, Nvidia is still the best in the business. When they roll out the the Vera Rubin LPX clusters later this year, remember LPX came from the grok acquisition that they announced at the end of last year. That's going to be another huge step forward for these models. So I think Nvidia is in an incredible position. Like I said, I think you'll hear from them on earnings but that is definitely what the market is worried about. But I think if you just look at the numbers, a trillion dollars over the course of the next you know six eight quarters, I think speaks for itself. You'll be on a panel in less than 20 out there with Senator Cruz and Kevin Hassett. The topic being investing in economic mobility.

21:32 So I think we all know the kinds of things that you're going to be talking about. Something Brad frankly that you've been talking about on this program for the last five years. Let's go down memory lane for a minute. Watch this. Everybody in this country should be able to participate in the future of America. I would love to see the Biden administration take the equivalent of a SoFi account or a Robinhood account and rather than focusing on social security at the end of people's lives, how about we give a $2,000 stipend at birth, right? That people can't withdraw, that compounds on the future of America in an account that they can see their savings grow, they can see a snowball grow. Right? To me, there's an opportunity. New Zealand, Australia already do it. I would love to see a national savings account in this country where everybody gets to participate in the value creation.

22:29 Well, who knew that some five years later we would be talking about this coming to reality. July 4th it all launches and the take up thus far has been pretty good I I I suppose. I don't I don't know what sort of expectations you had but five million children thereabout have signed up for these accounts according to the Treasury Secretary on April 15th. So what were your expectations and where do we go from here? How big do you really think this can be?

23:00 Well first Scott, let me start off with a thank you because I first talked about it on air with you. We've talked about it at least 10 times over the course of the last five years. It's an unbelievable dream that became law last July 4th. Starting in on July 4th, just 60 days from today, every child forevermore born in America will start off with an investment account at birth, automatic staple to their social security with a thousand dollars in the S&P 500. If you start with a thousand dollars and you save just $50 a month, it's $50,000 at age 18 for your kid, it's $200,000 at age 30 and it's a million dollars at age 55. 60 to 70% of the people in this country, they just don't participate in compounding. Now we're going to change all of that. It's an evolution of our social contract that will be bigger and even more important than social security. We're going to shift trillions of dollars in wealth from the compounding of the market to every family in America. I think it's an a necessary transformation in the age of AI. Kudos to the president signing it into law last July 4th. We'll launch it like you said this July 4th. Every child's going to have on their phone.

24:11 They're going to own a little bit of Nvidia, a little bit of Microsoft, of Caterpillar, of Walmart, etc. They're in the game. They can add 10 to 20 bucks a month. As you know, incredible philanthropist, my partner Michael Dell and Susan have have donated 6.25 billion. You know, this is what the phone app all the families are going to receive on July 4th. So a super important initiative. You mentioned the Treasury Secretary said a couple weeks ago we're at five million. I think we're already at six million. We'll be over 10 million by July 4th. There are 40 million kids in this country eligible today to go sign up at Trump accounts.gov. They get at least $250 and if they're under the age of two, they get a thousand dollars to seed that account. We have thousands of employers, right? We've talked about them here, large to small, from Uber to Nvidia, from Salesforce to AMD who've all said they'll add money to the accounts of their kids. This is going to be a 401k like benefit by all corporations in America adding to those accounts. So again, we expect that this is I mean if we get to 10 million accounts by July 4th, it's the single largest transformation of the social contract since social security in the industrial revolution. We're just getting started and if I can get some of my friends to donate shares of SpaceX or open AI or Anthropic to these accounts, it will quickly move us to 40 or 50 million accounts and importantly starting in 2027, you don't have to sign up. It's going to be automatic at birth. 3.7 million kids born a year. 3.7 million kids are going to start life off as a shareholder in the upside of America.

25:45 It's a great transformation, great moment for the country. All right, you go tell that story on stage moderated by Mr. Milken himself. I don't want to keep him waiting. So I'll let you go. I appreciate the time. Congratulations and we'll talk to you again soon. It's Brad Gerstner as always from Milken with us. We'll see you.