How do you sort of look at this new co-pilot and factor that into your forecasts?

Hi, Melissa.

Great to see you again.

Thank you for having me on your show.

Today was very supportive in terms of achieving my price tiger.

Microsoft is a topic for us.

Today's announcement from Microsoft was substantial.

Are we going to look back on this day and think this was the day Microsoft stock re-rated? Like is something changed in the narrative here where we have that clear monetization story?

Joining us is Brian Schwartz from Oppenheimer to talk about, I guess, the quarter, Brian, the guidance, which doesn't look too bad, 26.5 to 26.6.

Carl, thanks for having me.

Yeah, but it's not, it, it's uninspiring.

They essentially pushed through the, the beat in the top line in the guidance.

But if you peel away the, uh, you know, the on- the onions in I think what's driving the stock is first you're seeing a deterioration in the margins despite the revenue upside on both the gross margin, the operating margin.

So the profit structure of this business is deteriorating.

Number two, they're announcing a CFO is leaving the company.

Hmm

Uh, is that what the market's, at least in part, reacting to here?

Well, first of all, Mike, thank you very much for having me on, on your show.

Yes, that, that is a, a negative surprise.

I, I think the investment community was looking for, for a change, um, that, you know, Adobe had fallen behind the AI curve.

They've missed product cycles.

Um, the execution has been inconsistent.

But I think not having a successor name, it just puts a negative overhang on the stock.

Uh, but what's the real story in terms of what can drive, uh, the stock up from here?

So talk a little bit about, Brian, why you think not just market perform, but outperform.

Thank you, Kelly, for having me on your show.

Among this AI panic that's happening in the software industry, we're really looking for three traits to try to find winners in the future.

One, does the business have a defensible mode? Is there a place for them in the agentic AI future? Number two, can they drive strong organic growth? And number three, the valuation, the pricing.

With Oracle, we see all three of those characteristics.

And if I can build upon my answer, there's an opportunity here with Oracle to invest in a generational EPS compounder who is an AI winner.

So we have tried to de-risk our model.

Give us better competition, better information, better transparency, higher quality of companies to pick from, especially when all of our retirements depend on the performance, basically, of the S&P 500.

And what do people think is the likely scenario? What's being priced into the stock? People

are mostly avoiding the stock.

There is a big bear narrative right now in AI that's across enterprise software.

So this is the application layer.

AI is disrupting pricing models, go-to-market models, how businesses are conducting R&D, and investors are losing predictability of growth trajectories of these businesses, therefore cutting terminal multiples and lowering stocks.

So what investors are looking to see is they're looking to see backlog numbers, indications that businesses are investing heavily in these AI applications to improve the conviction level of the growth trajectory for these businesses.

To your first question, what's going to take for Salesforce to improve the narrative? We're going to have to see it in the numbers, in the numbers around agent force.

And then just before we go, I guess that similar logic would apply to your call on ServiceNow, which you also have a buy on.

But is it too late for Adobe to really make its name in AI, or is it just a matter of them transitioning, figuring out the right ways to monetize?

John, thank you very much for having me on the show.

It's good to see you again.

It's not too late for Adobe, but it's gonna take a while for them to get over this technology transition to AI.

So specifically with Adobe, the AI is threatening two parts of their business.

and they both relate to its competitive mode.

First, it's being threatened competitively from newer upstart AI, LLM providers like OpenAI and Thrapec that are able to increase the velocity of content creation both through text and through video at a much faster rate and scale than we've ever seen before.

Does Adobe have enough strength to fend off those rivals?

I imagine not everybody in investor world agrees with you that Microsoft is heading there soon.

No, that is fair, John.

First of all, thank you very much for having me on your show.

There's some concerns about the durability of spending in AI.

It has just been so robust so far.

And there's been mixed data points.

It seems companies are struggling to keep up.

So are we going to see across the whole technology spectrum and frankly global economy companies getting the real sort of measurable productivity benefit that would benefit the hyperscalers and Microsoft in particular? Is that what it takes to get you to 600 bucks to start to see that?

I'm not getting a huge signal from him that he's willing to jump on board with, you know, immediate rate cuts and that kind of thing.

That's right, and we've done reporting on this before about him in that sense in particular, where he's been pretty clear that he's not going to be as loyal to the president, at least from his remarks that we've seen, as maybe the president wants.

And I think that's very, very critical here in terms of what the president is looking for for his next Fed chair.

I understand the impendence of the Fed very well, but the president really kind of shrugs that off, it seems like, from his public remarks.

and is looking more at someone, as he has said, to just cut rates.

And I'm not entirely sure, to your point, that Kevin Warsh is going to be that person just to raise his hand all the time and to say to the president or somebody close to the president, OK, we as a Fed are going to move to cut rates.

It's, of course, very complicated to do that.

So right now, I think it's a little hard to tell from the market signals, but that would seem to be the place to watch.

All right, gang. Thank you. Ambassador, thank you for joining us. When we return, the R word on everyone's lips, recession, why the president's chaotic tariff whiplash is not helping. And later, I sit down with Pennsylvania Senator John Fetterman, why he says he will vote for the House GOP's government funding bill. The 11th hour just getting underway on a Tuesday night.Time now for Money, Power, Politics and right now the conversations in that world are all about one word, recession. That is because after an incredibly rough week on Wall Street, President Trump, he's refusing to rule one out. Today Trump tried to calm business leaders at a meeting of the Business Roundtable here in DC. That's why I'm down. Meanwhile, the Wall Street Journal is weighing in. The editorial board said that slower economic growth ahead seems inevitable. But if Trump wants to quiet the recession alarm in the short-term, he would be wise to put his tariff plans on the shelf. Well, we know he is not doing that. With us for more, Brian Schwartz, White House economic policy reporter for the Wall Street Journal, and Bharat Ramamurti, former National Economic Council Deputy Director. Okay, in theory, in theory, tariffs are meant to encourage companies to make things here in their home country, but the data shows that that doesn't happen or if it does, it takes a long, long time. So Donald Trump is appealing to some of his base, right, especially those who come from the manufacturing sector because when you think about those parts of the country, thousands and thousands of jobs have been lost year after year. But we have not seen one single company, right? We watched what happened at the Business Roundtable day, stand up and say, "Because of these tariffs, I'm opening up a factory here and I'm hiring 100,000 people," besides things we had already heard from, uh, Apple and other companies i- in the weeks prior. Nothing connected to these tariffs. So who are they serving?

Well, it's a great question. I mean, when you look at it, it- it's a question of, as I say, why are we actually going about doing this? And, you know, for- for Donald Trump, President Trump, uh, this is really part two of what we saw in the first term. I mean, he feels, he has said this and we've heard this at the Journal, uh, that he really didn't go far enough with the tariffs the first time around, that he was held back by people like Gary Cohn. And so he's now looking at this, uh, second go-around to go all in with what he wanted to do with the tariffs, and to your point with the companies is, I- I've noticed some of the announcements that have been put out there, I think, uh, were already kind of baked in, as in these were already plans that were in the works in some cases. Uh, so it's really unclear exactly what impact this is really having in terms of the, in terms of the, you know, reaction of this, uh, from corporate America, and I think for the president, this is just moving forward on what he really wanted to do in the first, in the first term.

There are still those out there, Republicans who say, you know, "This is his negotiating tactics," or you know, "This is so crazy, it just might work," but help us understand the actual long-term impact if we do face a recession where we're cutting thousands and thousands of jobs, and remember, people keep thinking, oh, all these federal jobs are in DC. They're all around the country, many in rural America where if you don't have those government jobs, there's not other jobs to be had.

That's exactly right. I mean, look, the- we've been through recessions before. We know it hits low-income folks, middle-income folks the hardest. We know that it has, in many cases, lifelong impacts on their earnings potential. It's something that you want to avoid and yet you have here Donald Trump essentially manufacturing a recession, came into office with a healthy economy, 4% unemployment, booming business investment, robust consumer spending, and all of that stuff has gone down the tank. And I mean, you can try to muddle through it, but the data is what the data is, and you look at not just the stock market down 10%, consumer confidence is down hugely. Goldman Sachs today predicted that growth would be about half what they were predicting before. You have the NFIB, it's a small business group.