Palantir, Zscaler, AI, & more: Best of Asking for a Trend

In this episode of the Best of Asking for a Trend, Yahoo Finance's Josh Lipton sat down with executives and experts in sectors such as AI, tech, retail, the auto industry, and cybersecurity, with guests including Palantir CEO Alex Karp (PLTR), Canaccord Genuity Managing Director George Gianarikas, EY Strategy and Transactions, Americas Vice Chair Mitch Berlin, CarGurus Director of Industry Insights and Analytics Kevin Roberts, Alex Mill Chairman and former Gap CEO Mickey Drexler (GPS), and Zscaler Chairman and CEO Jay Chaudhry (ZS).

For more expert insight and the latest market action, click here.

This post was written by Mariela Rosales.

Video Transcript

Welcome to Best of asking for a trend.

This show recaps and highlights today's trends that will shape tomorrow's market.

We understand that with so many trends influencing the market and so little time to grasp them all, it can be difficult to digest.

That's why we dive deep into the trends.

So you don't have to.

Here are the key trends you should keep an eye out for.

I'm Josh Lipton and I am here now with Punier Ceo Alex Carp for this exclusive Yahoo finance interview here at A IP con.

This is the company's customer conference.

Alex, thanks for taking the time to chat.

Very happy to be here.

So today there's gonna be more than 250 of your customers and they're gonna be here, Alex talking about A IP.

This is your flagship A I platform.

Let's start there, Alex for, for many viewers who aren't as familiar what is a IP, how does it work and how are businesses leveraging it?

Right?

Iii I think what everybody watching this is familiar with is you have a massive he cycle around large language models and then when you try to use them in your enterprise.

You find out that it's more like self flagellation and it's expensive with no output.

And what we learned in the context of war fighting primarily but also across the uh 20 years of building uh software infrastructure were how do you manage an emergent natural resource called large language model uh models in a way where you actually get value, meaning you can transform your enterprise, you can change the margins, you can turn tech non technical people into technical people on the battlefield.

You can do things that would have otherwise cost billions of dollars for millions of dollars.

Meaning being very precise in how you allocate troops, being precise in how you target people.

Um There's a fundamental fallacy around large language models.

People could conflate uh actual data of an enterprise which is structured and can be taken apart and understood with a large language model which is much more like an emergent property, something that is can be modeled used, but you need precision and all the value in the market is going to go to chips.

And what we call ontology, we have this ontology and the ontology will allow you to take a large language model and use it, refine it and then impose it on your enterprise in the logic of enterprise and the security model of your enterprise.

And what does that mean for the 7070 people are here presenting talking about why they're using it, how they're using it.

You gotta remember we started uh selling this product just over a year ago.

Uh We started with the claim that we knew a lot about the precursors of large language models and large language models.

And the general approach of just buying models is going to be essentially self pleasuring for an enterprise at the cost of the enterprise and no one believed us.

And now you see 70 people saying, hey, we're using this for construction, we're using it for hospitals.

Uh the people who are not speaking, but we're using it on the battlefield.

We're using it to compress margins.

We're using it to build enterprises that we're only able to build in Asia and America.

We're making engineers uh better engineers.

We're making people are not engineers into engineers using our anology and a large language model.

And this works very, very quickly and it is substantially changing the health and vitality of every business here as opposed to the alternative, which is that you buy some large language model, you, you party with it basically.

And the next day you have a hangover.

And, and then, and so like and again, for, for people just looking at this, what does it mean for palant here?

It means we are sitting on the only thing that actually creates uh a quantifiable transformational value in an enterprise.

Yes, it is not understood well, because everybody understands the problem incorrectly.

Yes, it is going to transform America and our clients are leaving the way and, and by the way, it's like to actually show things that are not understood.

You have to actually show them the whole purpose of this conference is I can tell you how an ontology works.

It's actually quite simple.

You have the logic of the business, you including the security logic of the business and you have something that it approximates new knowledge in a new form called a large language model.

And it allows you to take the value of the new form, the raw resource of a large language model, largely powered by chips and put it into a precise organization in the logic of the business.

I can tell you that where I can show you 70 businesses say my business is stronger, healthier and much better than any other business in my sector.

And so what is the bottom line for investors listing Alex?

How would you characterize what is commercial demand like right now for a IP the way I would explain it to my most important investors, which are individual investors.

There's two parts of the market that are creating value.

People will pay for chips and ontology and you understand the chip side now and now you're going to understand and what does that mean for your business?

It means you can actually use this raw resource and process it into something that actually works.

And if you want to see exactly how, what the people presenting, you're going to see people in construction, using it to build buildings quicker, cheaper, more accurately, you're going to see people in the hospital industry saying, how could I possibly ever distribute my patients ethically fairly and commercially relevantly, how could I distribute resources across?

How can I manage my my company as not abstract units but as a portfolio.

These are, these things are happening within days.

What I'm interested in the Alex is because you, you can talk a lot of CEO S will say and they'll sit on your finds, they're interested in A I but actually they're not willing to pull the trigger yet because they have these questions about privacy, security vs but, but you're saying we're crushing it.

We're closing A I, what I would tell any of them is how are you doing it?

Well, there's a technical answer which I gave you the precursor of, but again, do you wanna know how we're doing it or do you wanna enjoy it being done?

Both?

Great.

Well, first, you, but no, actually, first you wanna see it works like the, the, the, the central issue I think, I mean, we have hundreds and hundreds of CEO S and by the way, the thing about the 70 people here presenting is, you know, they're presenting to other people.

I'm not paying them to present.

The reason they're presenting is they're like, wow, I didn't really believe this could work.

And now it's working really well.

So the most important thing, by the way for a normal user, someone who's gonna pay is does it work?

Then the second question is how does it work?

Does it scale?

What is the commercial model you really have to establish it works?

I would stand by the thing that it, in this case is people think of large language models as the value in of itself.

What they're gonna find is the large language model is much more like a chemistry experiment.

The outgrowth of which is a something that is useful when refined and the refinement of that for your enterprise happens in what we call our ontology, which is where we impose the logic of your business on large language model in the security and intellectual logic of your business.

And this is transformative and what it means for investors and others is there is value in this market.

People, you can identify where the value is very easily.

Are people paying for it?

Will they pay for it?

And what will there's a prey to optimality to a lot of this stuff?

And that prey to optimality happens when people say, oh, I am actually getting value and that's why people are here.

Let me ask you, you suggest I wanna broaden the conversation because you kind of suggested this just give your take on the moment we're in because there's some Alex you've heard who say listen, this is a historic moment.

Internet mobile.

And now A I NVIDIA Jensen Wong said the next industrial revolution has begun.

Do you agree with that?

You agree with Jensen?

Um I think you're gonna have very divergent for some people.

This is the next generation and for others who I think they're doing very similar things.

It's gonna fail.

Who defines the winners?

Who will be the winners?

Well, come talk to our 70 customers, they think they're winning.

It's like, you know, you look, it's a lot of this goes back to basic ideas of how you build things.

Why you gotta talk to people who are getting value and ask them, how are you getting value?

Why are you getting value?

Are you paying more or less for that value than you think you should?

And that's exactly what you're gonna see today.

You're gonna see people saying I'm getting a lot of value.

It went much quicker than I thought.

I'm, I'm outstripping what I thought I could do.

I'm better, much better than the people.

It happened efficiently.

And I'm probably, I don't think they'll say this, but I'm paying less than I think I should.

And that's why I'm very happy about it.

Let me get your t too, when we talk about A I, we got to talk geopolitics.

I'm very curious to get your answer to this question.

Who is in pole position, us or China?

Well, we have a very different problem in the us than any other country in the world.

We are in pole position, but we obviously have to move much, much quicker.

Um You see on the battlefield and again, uh without mentioning uh where these things are used.

Exactly what I'm talking about.

Large language model plus ontology is can be wielded as a very deadly weapon and create enormous efficiencies for uh especially small armies against large armies.

Um We have to be myopically focused in this culture of, we are in a pre war situation with our adversaries and we can no longer afford the theologies about what works on the battlefield.

We have to go very deep and look at what's happening on battlefields and do a diagnostic of it.

It's much less critical, but it's the same thing that businesses have to do what is working, what is not, not a theological thing of what would I like to believe is working and what works on the battlefield where our central advantage is uh as the United States of America, the leader of the West and the most important country in the world is technology, venture backed companies and especially software and software driven weapon systems.

And how, how do you get the software to control the hardware so that we can, we can get out of the business of trying to compete with people who are better at hardware and get into the business of producing something they do not produce as well.

Comes down to execution.

The problem we have in the West actually is again, is prey to optimality.

The, the the products that actually scare our enemies are, are just not products that employ mill millions of people.

They, but they still are deadly.

They are software driven hardware systems.

Moving to software driven autonomous hardware systems.

One of the biggest lessons of war and one of the reasons this is so crazy, valuable is the Russians and all of our adversaries have now learned the value of electronic warfare.

By the way again, these things are exactly isomorphic to commercial.

You have enormous new headwinds, the commercial, your competition has developed something that renders your product strategy irrelevant.

You have to rebuild it with a new playbook.

This is exactly what happens on the battlefield.

You cannot use a normal missile or normal tank on the battlefield anymore because the electric warfare, electronic warfare allows you to suppress the GPS signal.

And that means these things have to be controlled uh with software to go around map where the electronic, where the suppression happens.

And then in the final mile at some point, autonomously, completely different ways of doing a I completely different news ways of doing it.

All of which are an advantage to America.

If we implement just like in American industry, we have something called a chip industry that is the world's leading in this area.

And or at least the, the, the final product and we have something called software ontology, which actually makes all of this crazy valuable.

Do you implement it?

Do you go talk to people are doing it or do you read the powerpoint written by someone who has no skin in the game?

And, and, and the answer to that determines whether America in the West, which I view as a superior way of living because it's fairer better meritocratic leads to free speech allows for wealth creation.

Does that culture actually dominate and win?

And we by the way have to get out of the apologizing for our culture thing.

It's like we are a better way of living and we have to be willing to fight for it on the economic front with growth.

That's why this conference is so important.

We need growth.

What makes America different than our adversaries right now is not just Western system, we have growth.

Where is that growth coming from technology?

What is that technology?

It's compute plus ontology basically.

And that can change the very structure of our culture from manufacturing to weapon systems to how we organize things to our health care distribution can have a completely different way and better way of living.

Let me ask you this, you, you're talking about A I and we're talking about the benefits, the advantage of the use cases.

I am also interested.

I was to get your take on when you think about the risks of this technology.

Let me put one forward.

We have an election coming.

How concerned are you as an American executive, but also just an American citizen about the very adversaries we're talking about here deploying A I for nefarious purposes rampant to sow confusion and division and there's only one way to fight uh uh uh uh a deadly adversary.

What is that with a deadly set of weapons?

So like if you, you know, if you wanna fight our adversaries and by the way, my version of fighting is you're so strong, you're so willing to fight, they don't fight you.

So it was like, I recently have gotten in trouble for saying I'm a peace activist.

I am a peace activist.

I'm a peace activist because I want enormous growth in America and I want real deadly weapon system.

You want peace in the world.

You have a lot of growth in America and you have really deadly weapon systems and you tell your adversaries, you know what I just might use them.

I'm not even going to explain why I'll use them.

You start acting up, I will use them.

You don't act up, I through strength, peace through strength and a little bit of unpredictability.

You know, we are in a world where our adversaries are founders, they have the founder playbook, which is I'm gonna, I'm gonna be aggressive and win where I can.

We have a playbook written probably at Harvard and Yale and Stanford Institutions which are now symptomatic with not producing, producing structures where they don't see discrimination when it in front of you producing structures that and ideologies that are literally built for the decline of our country.

We need to get out of the business of we're declining.

We're apologizing, we're not going to use force we needed.

And the peace activists are actually us and the pe people who claim to he's activists are actually sowing destruction disorder discrimination.

It's an exact inversion of what they claim to be.

And we, and we, but those of us on our side who are pro growth, pro America, pro our economy transfers and pro having the best systems in the world.

We need to organize, build things and then we also need to have exact understanding of what works, what doesn't and implement it very quickly.

I I mentioned the election.

I want to stick with that real quickly.

Does it matter to palent here who wins Biden or Trump?

Does that impact any potential business you're going to have with the US government?

Look, we've been in, we've dealt, we've been in business for 20 years.

I have not seen an impact on our business, depending who's president.

I am interested.

Listen, we talk about these conflicts around the world right now.

Running hot.

Russia, Ukraine, Israel Hamas has that changed how the dod dod thinks about spending out and what they want to spend on.

Uh The dod is changing rapidly, how it's been So, uh well, there's much more of a focus you saw that we won this big maven contract.

Um These things are a natural growth, uh outgrowth of we need to fight better.

We need to fight quicker.

We need to fight on the terms where America has superiority.

Of course, we can move quicker.

Of course, the dod wants to move quicker.

Our society wants to move quicker.

I think unfortunately, we are going to end up moving even quicker because our adversaries are likely to continue their nefarious acts which Russia, China, Iran, I mean, all three are working together.

You know, one of the things I I just, I just II I travel around the world and basically wherever you go, people are like, well, I want you to, I want, I want you to be strong on this one and appease the other people who believe in appeasement, whether it's Iran, China, Russia, pick your favorite, the one you're sympathetic with.

They don't understand.

We have adversaries there working together despite what you problems, you may have.

Some people don't like the war in Ukraine.

Some people don't like Israel.

Some people want an appeasement strategy with China.

It doesn't work, they are working together against us and we have to work together against them.

Last question you mentioned, Maven, I wanted to get the dod recently disclosed and this is a five year $480 million contract with Pal.

Just walk.

What is that contract?

What is it?

What does it mean for your company?

I never know what we're allowed to say about these very sensitive contracts.

But I, I'll tell you what it means for the nation.

This country is focused on using A I to have a structural advantage in how we deploy and understand the battlefield, deploy our assets and understand the battlefield.

And P here plays a crucial role in that, in that arena.

We're gonna continue to play a crucial role in that arena.

And by the way, we're making it possible through our software to allow other software and hardware companies to work off of our platform.

So this is not just a win for Pollinger though.

It is and I'm very proud of it.

This is a win quite frankly for the tech ecosystem that powers this nation.

How big is that ecosystem now, which has grown a lot since we first started talking, the, the, the venture capital world has completely flipped when we talked the last time by and large, the tech company co community was adversarial to palant here on this issue of supporting our nation.

Now, I think the tech community is the most, most supportive part of our economy in, in, in protecting our nation.

And why did that?

Why did that flip, by the way?

Hey, you know, they stopped hating the player or the game, Alex Carp.

I know you are very busy today.

We appreciate your time.

Thank you.

Take care.

Electrical grids across the country are feeling the pressure from the A I boom.

Our next guest says something's got to give for more.

Bring in George Generic managing director at Canon Court genuity.

Thanks so much for being here, George.

Um This is something we've been talking about a lot, right?

This huge demand for A I, the huge demand for power that comes along with it.

But of course, there's also a lot of talk about grid security, sort of around the country and resiliency and whether it's going to be able to keep up with this.

So where are the sort of the pain points in your view?

Well, thanks for having me on.

So we wrote a note last week that was inspired by a report from CT which is the Electric Reliability Council of Texas.

It's the organization that operates their electric grid down there.

Uh And like your other guests, probably we've written a lot about the potential for a ID centers to tax the energy grid.

But we, what we appreciate about the study from Ercot is it's one of the few that we've actually seen that in a granular way, tries to quantify what the impact could look like.

You know, the study was inspired by a bill in the Texas legislature that demanded Ercot analyze the impact of things like data centers on grid reliability as a winter storm in 2021 significantly impacted the grid and resulted in deaths and what the study found that was starting in 2028 2029 2030 in both the winter and summer.

The curve margins which is this buffer that they try to create to make sure that they can handle peak loads would turn negative.

And that is clearly not something that they want to do.

So, either they have to add significant energy ener energy generating assets to the grid or the demand for all this A I related hardware that people are buying has the down.

And like we say in our notes, something's got to give there.

Well, it doesn't seem like the latter thing is gonna happen necessarily, right?

At least not in the short term.

Are there any plans though in the works?

I mean, you know, I feel like for years now we've been talking about R CT, we've been talking about the grid problems in Texas specifically because of heat waves because of other winter storms as well, winter weather.

So is anything ha is anything giving on that side?

So there are plans to add significant energy generating assets, whether it's solar, whether it's stuff and with battery technology and even longer term.

And we're very bullish on the potential for nuclear technology, particularly small modular reactors that help create baseload clean energy across the country.

And we cover a company called new scale ticker symbol, Smr that hopefully over the next several years, we start to win uh some uh some contracts to build out the energy infrastructure in the United States for data centers.

And, and it seems like regional, this is really a regional issue.

We talked to another um analyst yesterday who covers the utility industry.

And she kind of said, well, it depends on where you're talking about.

Maybe in a place like Texas, you would have an issue, but there is sort of ample capacity in other places.

I guess the question is whether data center operators are gonna try to locate in those places that do have more capacity.

Yeah, that, that's a very fair point.

I mean, in Texas that there's a lot of cheap green energy.

So companies are putting their data centers there, you know, traditional parts in the Mid Atlantic, you know, we know some places in Ohio.

So yes, it's, it's kind of geography specific.

But ultimately, you know, if you, the more data centers you add the more EVs you add to the grid, it will begin to tax it.

And I thought this particular study was alarming just because you get to these this potential negative reserve margin scenario that's very, very dangerous for, for their grid and for the country.

And so, you know, and like I said, you know, there are, we, we followed up that note that we wrote with the uh basically uh calling out some posts yesterday or two days ago from Elon Musk and someone else who went back and forth on X that basically said these companies are buying so much of this A I related hardware.

They don't know where to put it, you know, and that's sort of creating an issue there too.

So it's not just having to put the energy generating assets in the ground.

It's also finding a where, where to put all this A I related hardware that, that they're buying.

And so there seems like there's this potential for an air pocket as all these ambitious plans to create, you know A I data centers meet the realities on the ground of building data centers, buying energy generating assets, getting permits, finding labor.

This is all the real world stuff that might slow down the uh the A I related stuff, right?

And not to mention, maybe have an effect on our electricity bills as well, potentially, even though it is regulated industry, you know, we've already seen that kind of an increase.

So George, as you mentioned, you kind of look at it as well through the prism of who could benefit from all of this, not just like where is it gonna create bottlenecks?

As you were just discussing, you talked about one idea, one company that might be poised to benefit.

Are there other sort of, you know, grid resiliency operators or alternative power operators that you're looking to here?

Certainly, you know, we cover a company called a Maresco uh that basically a clean tech integrator that should benefit, you know.

Uh Although they're not quite seeing demand from data centers yet that we're seeing some early signs from that same thing for a company we cover called fluence that hasn't really seen yet that, that data center demand, but they're starting to see the inklings of it.

And also if you want to buy a generator for your home to make sure that it's uh it's safe from any issues with the grid.

You buy Genack, GNRC, uh they make the generators that basically serve as backup power for residences and for, you know, for some uh commercial industrial applications as well.

A recent survey from EY reporting that us corporate M and A deal volume will increase by 20% from this year to next.

And the outlook is, it's only going up from there.

We'll have the author, we have the author of that survey joining us now, Mitch Berlin Strategy and Transactions Leader at Ey Mitch.

It's good to see you.

Thanks for being here.

Hi, Julie, thanks for having me.

So I feel like the conventional wisdom for a while was the rates would really have to start to move down more meaningfully before we saw an uptick.

Well, in a lot of stuff, right, in housing activity, but certainly M and A was on that list.

So is that what we need to unlock things or are people sort of chomping at the bit to get deals done anyway here.

Well, it's a little bit of both Julie.

We need, we do need the rates to come down a bit.

You know, when we started the year, we thought that we'd have about six different decreases in the fed borrowing rate.

Now we're expecting about two, but that's offset by the overall confidence in the market.

Corporate profits are high.

We have CEO confidence at an all time high.

99% of the CEO S we surveyed in a recent interview uh in a recent survey said that they plan on doing a deal at some point in fiscal 24.

And we're looking at GDP growth about 2.5% which is a little higher than initially predicted.

So we are expecting the market to come back despite that, despite the fact that we probably won't get, we know we won't get six cuts in interest rate, maybe more about two mitch, what are some of the motivations that you're hearing from in terms of why uh companies are going after deals?

Well, part of it is that, you know, a lot of these corporations have been, let's talk about corporate, then we'll talk about pe corporate has been sitting on the sidelines for about the last year and a half, but they need to transact to transform, to try to transform through organic means, just takes too long.

The pace of transformation is too fast.

So they really do need to do some sort of M and A to be able to continue to stay pace and or stay ahead of their overall competition, they're looking to gain market share.

So you see a lot of deals where they're hiring competitors to gain market share, they're looking for product expansion.

So particularly if you look at Life sciences, they have M and A patents that are coming to exploration, they need to increase their or I'm sorry, they have um they have patents that are expiring.

So they actually need to build our R and D pipeline.

And so they're looking to increase that through M and A, you have capacity expansion.

If you look at the oil and gas industry and the, and the consolidation around the basin and then tech is the largest, the largest sector that's doing transactions a year over year and this year is no exception.

And that has a lot to do with all the emerging A I technology that companies are trying to acquire as, as well as cyber, cyber technology to protect the data that they need to actually drive the A I that they're acquiring.

Mitch.

I wanna dig more into some of the sectors in a minute.

But first, I, I also want to dig into the timing, you know, we talked about when rates might be coming down and what effect that could have.

But the election also, I imagine is something of a factor.

Are we seeing sort of a rush of desire to get deals done at least announced if not closed before the presidential election.

Well, if you look at history in the last two elections, M and A started high the in the first quarter of the election and then it sort of tapers off towards the end of the year.

It's hard to determine whether that has to do with the election or just the normal M and A cycles where it's a little bit slower in the fourth quarter of the year.

This year may be different because, because there are clearly different attitudes and M and A between the different parties.

And so you have a party right now with the DOJ and FTC, that's putting a lot of scrutiny on deals if that party is out of office and the, and, and the Republican party comes in, there is potential for less scrutiny from the doj and FTC.

What people falsely think is that the, the interest rates are um will be impacted by the election, but the fed is really independent of whatever governing party is in.

So the, the fed will not increase or reduce or hold rates flat depending on the party, they're independent.

But I do think there are some emotional reactions around that that are actually imagine that Mitch.

Um But at the same time as you referred to, right?

This DOJ has been pretty active.

Is that something that um clients that folks you're talking to are taking into account whether they even decide whether they pursue a deal in the first place.

In other words, has that put a damper on things over the past couple of years?

Well, we, we certainly talk about it with their clients truly.

But what they're doing, it's not, it's not scaring them away from doing deals, but I think they're more cautious in how they're doing deals.

And so what we're working with them on is look at the current structure of this deal doesn't work because it's gonna be perceived as you dominating a certain product category or a certain geography.

How can we restructure that deal?

So you still get that return on investment, but maybe it's a little bit of a different structure that will satisfy the doj and FTC guidelines.

So it's not discouraging them.

It's just there, we're, we're working with our clients to create more scenarios than we have in the past.

Um Unless I, I do wanna dig more into energy in particular because there, the deal activity has just been a lot, right?

Because it's not just the number of deals, it's the size of the deals that we have seen of the ones that have been announced.

Um I believe only one of the large ones has closed in the form of Exxon um and uh pioneer, there's still a lot are a lot that are pending.

Um Do you think that we've kind of come to the end of that flurry of activity in that industry.

We have now come to the end.

I think there's still a lot of big deals in the pipeline.

I think we'll continue to see what we're gonna continue to see more.

These, particularly in oil and gas, oil and gas balance sheets are flush with cash.

Um, so it's, it's a lot easier than to do deals because they don't have to go to, uh, the, the syndicated market to actually finance these deals through debt.

As a matter of fact, if you look at the last 20 if you look at the largest 20 deals in 2024 only three of them, this is across all industries, many of those deals over oil and gas, only three of those deals actually went to the debt markets to fund those deals.

The rest were funded through cash or stock.

It was a busy day for the auto sector carmakers reporting monthly sales for May and Ford was a standout rising 11% compared to a year ago.

But if you look at hybrids and EVs sales of those vehicles soared 65% from last year.

Joining me.

Now, Kevin Roberts Cargo is director of Industry insights and analytics.

Kevin, it is great to have you on the show.

So listen, I looked at these for numbers, Kevin and, and you know, they look solid us auto sales.

They popped 11% in May from a year earlier.

But you are the pro Kevin.

So walk us through it.

Give give me your reaction to this report.

Yeah.

So we're seeing new inventory continue to grow and that's really helping to improve new vehicle sales.

And you're seeing that with the top line numbers, uh obviously the hybrid and EV numbers are coming from an overall kind of smaller base compared to internal combustion engines, but definitely seeing positive growth there.

And I think the really interesting trend is that, you know, for so many years, it was all the focus was on evs.

And now I think hybrids are really starting to get their chance to shine uh in this spotlight and really look like they might be kind of the goldilocks kind of opportunity for consumers out there as we transition away from, you know, fossil fuels to electric vehicles.

Now, that's interesting, Kevin, because hybrids are hot and, and you kind of characterize there as goldilocks.

Why are they popular, Kevin?

And how is Ford kind of um capitalizing on that trend?

Yeah, so hybrids tend to be at a price point that's somewhat in between uh EVs and internal combustion engines.

So affordability is always a key fact for consumers when they're looking at vehicles.

So the affordability is there and then you deal with the fact that uh ranging and kind of concerns about the overall usability of evs and charging and our charging infrastructure and all that really kind of kind of holds back some of that kind of ev adoption where with hybrids, particularly hub plug in hybrids, you can get kind of the best of all worlds where you get the kind of uh reduction in greenhouse gas emissions and some of the utility that you get with evs.

But then you still have that internal combustion engine uh around for longer road trips and the like that can really be beneficial for consumers.

And let's talk about evs too.

Kevin, you mentioned it there.

What is Ford's sort of tactic and strategy with that market?

It doesn't seem like it's a volume game.

Is it a cost gunning game?

What's the move for them, Kevin?

So what we've been seeing Ford do is we look at the, you know, which models are seeing the largest kind of price declines and particularly with the Ford F 150 lightning and the Mustang mach E, we've been seeing some pretty significant price declines on those new EV models.

And I think what you're seeing is as that price kind of gets reduced, consumers are showing much more kind of interest on that front.

We've seen that a lot with used dvs, in particular, the prices for UDVS have dropped quite significantly and as the prices really start to slow down for EVs adoption and interest really starts to pick up in line with that.

And Kevin, I just want to get your thoughts on E the EV market in general not seeing the growth.

Kevin that we used to.

What do you see ahead?

What jumpstarts this market?

Yeah, I, I think we're kind of in a kind of res resettlement period right now with evs where we had a lot of the early adopters who were very enthused to get into evs.

Now we're starting to get into that more kind of mainstream adoption.

I think it's a couple things, uh, range is less of an issue than I think what people think it really comes down to charging the charging infrastructure needs to get much more in place for consumers to adopt a little bit more and the cost needs to come down, there still is a pretty significant cost premium for evs.

And once we get down to relative cost parity between evs and internal combustion engines vehicles, I think we'll see a much more uh faster adoption rate.

But until we get that charging infrastructure in place and the cost in line, I think it's gonna be a little bit more of a difficult challenge and that's where hybrids can really come in and help the auto manufacturers out.

Kevin, I wanna get you out of here on this.

Listen, we talked evs, we talked hybrids, give me your take on, on pickups beyond for just industry wide, Kevin, as you look at that category, how healthy, how resilient.

Yeah, I mean, it's, it's definitely still really healthy from a sales volume point of view, but we are seeing as those inventory numbers I mentioned continue to grow.

We're seeing much more pickups get into the marketplace.

And so it would be really interesting to see if automakers are able to balance that kind of demand and production without having to uh increase incentives too much to kind of move those vehicles that are sitting on lots.

The results are in from major retailers signs point to consumers on the hunt for savings as discretionary income is pinched here by prolonged inflation and we know higher interest rates too.

Meanwhile, retail earnings from names such as Abercrombie and Fitch delivering a shining quarter despite a tough consumer, we're spending backdrop for more on how to read the current state of retail.

We have the perfect guest Mickey Drexler, Alex Mill chairman and former Ceo of Gap Mickey.

Great to see you.

I say perfect guest Mickey because we were talking off camera.

You've got earnings season largely behind you.

A lot of retail names and, and, and you, you got a lot of reports and conference calls CEO S CFO S is an investor trying to get a sense of where this sector is at.

And we were talking, I said generally my gut was it seems decent, but you're the guru.

Well, I I'm not the guru because I make a lot of mistakes between, ok.

So um I do my service before I appear to talk about the industry.

Uh and I called them a bunch of people and this counters, designers and all that.

I think it's selectively good.

I don't think it's all or nothing.

I think quarterly reports.

I've learned this after running gap and J Crew public companies for years, quarter to quarter.

And I asked about color.

I looked, I wanted to get some color on the discounting today.

And inflation is crazy when you do these surveys.

This is Nicky Drexler.

You're going into the stores.

No.

Well, I go online.

Is it a online tells you how much goods are on sale, how, what percentage is off and all that.

But I've been saying, first of all, inflation to me is kind of a nightmare.

Still travel.

Uh Your point is in that it's increasing at a slower rate, but of course, it's still increase on top of 40 year highs.

You know, the government doesn't have people going to the supermarkets going to fashion stores and shopping.

You actually need food and gas, you're saying?

No.

Yeah.

But, but how did they know it's slowing in apparel?

Uh I hear mostly complain.

Well, I hear complaints about everything, designer prices.

Uh It's stunning to a lot of people, even those who can afford it because the rate of increased prices is hugely high and there's no, uh doesn't seem to be a letting down.

I told that the designer business, whatever it means is kind of slowing down.

But uh if you look at quarter to quarter, pick, pick your spots and I'm, I'm a merchandise product.

That's what I look at long term.

And is that a concept that's gonna work?

That's the unexpected that sees around corners.

Uh, and I don't hear a lot of, or see a lot of that designers, in my opinion, it used to be when I was a young guy, you know, you go to get Gucci Buckle shoes and it was like a kind of a deal.

And today, I don't know where I'm not, I'm not for the Manor Born, but I don't know where people don't buy designer clothes.

At what level and the weights for the be and it's mostly accessories from what I know and accessories are kind of like carrying around a little logo or maybe a bigger logo.

But um I think uh I, I think you buy goods, you buy the styles, you buy the products, you buy service.

And as I warned in a, I forgot where I was quoted.

I said if I were a consumer today buying a para, I would actually, before I gave them the credit card, I go online and see where I could get it at a better price.

Almost like a commodity in a way.

I know that sounds weird.

But there's so many different price uh issues and a lot of companies now have an online deal and if you're a customer, you slept to the store, you don't know about the online deal unless you know about it, then they'll honor that.

So, retail, not an easy one.

I'm not a, a good investor really because uh but I'm impressed.

Well, not a lot of people I always mention TJ Maxx because Carol's a great merchant and you know, you go and that's the real price.

Let me ask you, you mentioned TJ Max.

I would love to get your take on gap as well because they report Mickey, they knock it out of the park.

Stock is a monster over the last 12 months.

What are your thoughts on that name?

Well, uh, good for them.

All right.

Uh But three months if you've been in the stock, right.

Well, I, I used to be in the stock but that was a long time ago.

Uh I, I think that obviously perceived to be doing a good job.

Uh I don't pay much attention.

Um, I did include a gap in my percentage of summer item sale, but I'm not gonna repeat that because Richard's a friend and I think that moving forward but three months or a year after 20 years of see, for me, I have a high standard for everything I do.

Uh, and for everything everyone else does and when I see a stock, not just, oh, great earnings report boom because I think, I don't know, I don't follow gap but I think it's, they're happy.

I'm sure I spoke to some friends and I congratulate you and ask you one trend I'm very interested to get your take on this.

We're talking about this show.

Now, you're seeing online retailers mo really get into this just old fashioned brick and mortar game.

Like I'm thinking of Wayfair, of course, Warby Parker Figs.

It interests me that you see this trend.

Do, do you think that's a smart trend or there's risk to that?

Well, you know, trends, an interesting word.

I've learned not to follow trends because when you follow them, you follow them but you gotta call the end of the trend uh things, you know, it's interesting.

I met the two founders a long time ago on their game every time I go into a doctor's office now or wherever a nurse figs, figs, figs and people wear that stuff, not just working in a doctor's office.

I think they're really smart and they know much more than I do.

Uh I don't know from who would you mention a way, way, fair way, Robbie Parker.

I just, it interests me because if you're, I get it, but at the same time, it could be expensive and, and it seems like it could also carry risk like you're moving into a new area.

Like, do you know that strategy as well as you know, the online world?

Maybe the skills that the retail business has always been very logical for me.

You, we all have huge practices being a customer.

Some of those stores have too many stores, those business are opening too many stores.

Gap.

Oh, my God.

I'll never forget.

I was in an old navy in Arizona.

I said to the store manager, I said anything we can do and she says, yeah, we have two stores within 15 minutes each and, you know, something I was so, I, I, it, it annoyed the hell out of me and I blame myself.

It kind of sounds like a Starbucks.

Yeah.

Well, yeah, and, and more is not better.

And in stores, I think one at a time, the landlords now and you know, we only have two shops who are opening a third.

We get lots of demand for having a, a shop in someone's area.

But the landlords, they're my friends.

But you know what the rents are and I, I actually appealed to a couple saying, you know, Alex Mill, it's cool.

We're getting hot.

I always felt that and, and I like our clothes at fairly priced.

You don't need a mortgage and it's a taste style that we like.

That's what my, what I do.

My son started it.

So sack came from J crew after 15 years.

Gets it.

Z Scaler reporting a strong third quarter on the top and bottom lines.

Last week, the company also boosted its fiscal year guidance against the backdrop of more cautious guidance from peers in the cybersecurity sector for more.

We're now bringing in Z Scaler, Ceo Jay, Choudhry Jay.

It is good to have you on the show.

And you know, Jay, this is the first time we've had a chance to talk to you since you reported results.

Jay, you reported you beat the stock jumped, maybe start that there, Jay walk us through.

What drove the quarter.

So Cyber is the number one concern for Cio C sos and boats, but they also have to worry about cost savings.

Uh Market is tight.

There's a lot of deal scrutiny.

C skier is a unique provider where we provide the best cyber security with zero trust architecture, but we also reduce cost because we eliminate a bunch of legacy security point products, firewalls, VPN S and more.

So that's why we're able to close business uh by doing both at the same time.

Hey Jay, it's Julie here.

It's good to see you.

Um You guys recently reported a cyber breach.

I believe.

What can you tell us about that?

And did that have any kind of effect in the quarter or, or in the present quarter?

So there's no breach per se, there's a claim breach, so to speak, the social media can do all kinds of stuff.

Yes, we, we did have uh an engineer trying to play with a new server in a Q environment single machine that was out there discovered that was being set up.

So there's a lot of basis for it.

There's none to it.

We're very transparent with customers.

We kept in communication but it had no impact.

Rather customers came and said, wow, you guys had great transparent communication.

We love it, Jay when we have you, it's always worth getting your kind of broader take on the threat landscape.

Jay, I mean, a lot of threats, rogue states, bad actors, criminal gangs.

What are you seeing out there, Jay?

They, the two main areas, one the people who want to make money quick.

So ran somewhere on the rise and then there are nation states trying to steal secrets.

Those are the two big buckets and they are leveraging by getting on the network of the company moving laterally find high value assets and going after that.

So zero trust architecture is being clearly looked at as the primary solution for it.

The reason zero Zalar growth is happening is because companies are embracing zero trust architecture that we pioneered.

You talked about China just now the big threat from China is that all large companies who are present in China, they have a network coming from China all the way to the US or Europe.

Bad guys can get on the network in China, travel and try to infect stuff out there.

We allow you not to have a network connected to China or other countries and still have secure communication.

Those are the type of things, enterprises and fed government organizations need to do to secure themselves.

And Jay of course, um this is an election year, not only in the US, we just had an election in Mexico, we just had an election in India.

And I know that when you're talking about breaches or insecure communications, that's a very different issue than misinformation and disinformation.

But I'm just curious what you are seeing if anything sort of linked to geopolitics around the globe.

So we do track it though.

It's not our primary focus.

We are seeing uptake of this information.

Uh uh We have a research team that actually tries to figure out what content is generated by Gen A I and what what content is created by people.

It's fascinating to see, you can actually tell the difference and we're seeing a lot more content that's being put out, put out there that gen A I is creating.

So all of us have to need, need to worry about it.

Jay, I wanna talk to you on, on competition real quickly and specifically Microsoft uh moving into your world.

You know, I I was checking with an analyst Jay who covers uh the company and he was saying, listen that that is in his opinion, creating some noise in the market and on the street.

Um What are you seeing, Jay look, large companies like Microsoft, they want to expand in all areas, right?

So I'm not surprised that they're trying to expand in our area.

They have had overlapping products for a while.

Microsoft Windows has VPN built in for a long, long time.

But when I talk to large enterprises, they asked for two things.

Number one, they said I want a security provider like a Switzerland who can equally support my security to access office 365 Azure, Aws GCP and scores of SAS applications.

We are in a better position to do that than an application provider like Microsoft.

Number two with all the issue you're seeing out there with midnight blizzard.

I'm sure you saw the report that came from federal government about some of those issues.

More and more customers want application provider to be different from security provider, separation of applications and security is a better thing.

You don't want a Fox was the Henhouse Jay.

We always appreciate you coming on the show.

Thank you.