Yahoo Finance Executive Editor Brian Sozzi takes a look at the biggest stories as the trading day kicks off, weighing in on the upcoming earnings season, Nvidia’s (NVDA) and AMD’s (AMD) stock rallies, and more.
Sozzi also sits down with Zscaler (ZS) CEO Jay Chaudhry for a conversation about cybersecurity in the age of AI agents.
No rest for the weary.New week, new market vibes. Gotta give a shout out to the Sazi Unleashed team. Look at this board. It’s stacked with tremendously useful things out of the jump, and it’s only Monday. And I want to start with this cause I got dragged over the coals yesterday for this chart. And I don’t think I deserved it, to be honest with you. It’s now over 200,000 views. It’s comparing, uh, what, the tech stock, uh, bubble valuation levels versus what’s happening today.And I’m getting a lot of interesting uh replies out there. Shout out to my man Keith Lerner over Trus for even getting this chart and sending it over to me. Uh, it’s had a lot of debate. You know, we’re getting some good replies here. I asked the team to like go through them to make sure they’re all like valid and not like, you know, crazy replies from people. Um, one that stood out to me outside of the ones you’re seeing on this board right now is this, and I think it was a really good point. It’s not necessarily we’re seeing a bubble in the price, in the stock prices ofStocks, it’s the E or the other side of the PE ratio, the earnings. And I look at so many, uh, so many different tech companies and what they have reported over the past few quarters, and I, I can make the case, I mean we’re in a bit of an earnings bubble, and again, get at me on X. If you have something to say on this chart, uh, get at me, uh, let me know how you’re feeling about it, and keep it all, keep it all valid. Don’t, don’t, don’t attack me. I’m just sharing useful things with y’all out there. Come on, be a friend. Don’t be that person.All right. As far as I’m concerned, this is the week where earnings season begins, and I’m jazzed up. I love earnings season. You’ll hear some say it begins with the banks in a few weeks, but those peeps are out to lunch.I mean, come on here, we are getting results from great economic indicator companies and Corona maker constellation brands. Who doesn’t love a good Modelo or Corona? Levi’s, PepsiCo, and Delta. Now, I am no dope and will not tell you that all these things will, uh, these earnings reports will be absolutely amazing. I would be most concerned about constellation brands and PepsiCo giving pressure to consumer walls, going out to drink.Just ain’t cheap anymore. Delta’s outlook is at risk because of soaring fuel prices, even though sales trends likely stayed strong. I took two work trips in the 3rd quarter on Delta, and I can confirm Delta that Delta 1 luxury seats were all taken. Not by me though. These seats are too expensive. I just, you know, shuffled away. I walked down my my middle aisle, you know, and sat down and coached somewhere.Now here’s the overall setup into earnings, which is clearly super bullish. Wall Street analysts are truly in love with stocks and into the start of the 3rd quarter earnings season, leaving next to no margin for error if results and guides come up short in any way. 60% of stocks, 60% of S&P 500 stocks now carry a buy rating.From Wall Street analysts, the highest level on record according to new data from FactSet. The optimism is rooted in the hour for corporate earnings. Earnings have been hot, guys. The S&P 500 is expected to report year over year earnings growth of 29.5% for the recently completed third quarter. For the fourth quarter, Wall Street analysts are calling for earnings growth of 27.6%. It’s just so.I haven’t seen results like this before. Analysts are predicting year over year earnings growth of 32.4% for 2026 when it’s all said and done. It continues to be a banner season for corporate earnings, and I suspect when results start trickling in again this week, they’re going to be pretty strong as well. Now outside of corporate earnings, the other stories I’m watching, I’m watching.The march to 6 trillion for Nvidia. I, I, I just love that, that framing. Because we’re starting here today, Nvidia at a record high. There it is, dominating the office space heat map right now.And they’re not alone. AMD is pulling back, I think, a little bit, but it’s still hovering around a record high. Both hit record highs on Friday. Nvidia keeping that momentum going. And there are a couple of reasons why I think you’re seeing these rallies outside of Nvidia and AMD being just huge, huge names that everybody wants to own and Everybody’s very excited.Number one, it’s FOMO or fear of missing out. Once you start to see games like this, once you start to see top names like Nvidia and AMD rocking, a lot of people are going to get in there and say, you know what, I don’t want to miss the next big move, the next 5, 1015, 20, 25% moves in Nvidia and AMD. I missed.The rally for the past 3 years in these companies, I’m not missing anymore. I’m tired of sitting this dance out. So that’s why you see FOMO or fear of missing out, more people crop piling into the trade. Number 2, positioning ahead of guidance raises into your end. Now, AMD is gonna report for before Nvidia. Nvidia is kind of like reports at the end of the quarter. I wish Jensen didn’t do this, but it’s just what he does. It’s how the calendar lines up. It is what it is.When AMD comes out, it’s likely that quarter is going to be very strong. They’ll raise guidance. They’re going to get people enthused about the quarter from Nvidia. That’s how the market works. That’s how the market’s thinking right now at this moment. That’s why they’re pushing these stocks to record highs. And the last but not least.I like this one. I should because I wrote it. Zero signs of peak AI anything. Now we saw those micron results uh about a week and a half ago. Those were bang up. They’re sitting out there talking about capacity being constrained until 2028. It’s still 2026.It’s like it’s almost hard to believe. Then we had a note along the same lines out of Goldman Sachs today talking about strong demand in AI for AI data center buildouts, and Goldman shared a pretty cool chart. We just had it up here too as well, just showing the outlook for AI demand in data center build buildouts in this country. I think Goldman is making the case that despite all the NIMBYs or not my backyard people.Out there voicing concerns about their electricity bills going up and their water getting sucked out from under their lawn and turning it brown. The reality is AI dentist center growth is likely to be double digits this year, next year, and probably the year after. And there’s that chart right there. You’re seeing Goldman very bullish out here today on data center capacity for this year and next year, and to me it makes a lot of sense to that end.I want to go back to Micron because I think it’sI actually should say I know.It’s an important storyAnd I want, I want, I want to stay on. Now, I’ve gotten some messages from you on X saying I’m, I’m hyping Micron too much. I’m not hyping anything.It’s not my job to hide up anything. It’s my job to report the facts and tell you what it is. It makes no sense to me that Micron is trading on a single digit for PE. I’ll say, I said it last week. I’ll say it again. And I want you all to circle December 9th on the calendar. I know you love Micron. You’re obsessed with this stock. I can see it in the data that we have, because that’s when restrictions on buybacks lift for Micron because it was tied to the CHIPS Act funding the billions of dollars of got, I believe in.2024, those restrictions lift, and this comes at a time when Macron is putting up massive epic huge amounts of free cash flow. I believe $33 billion in free cash flow coming out in the next coming out of the next quarter, and there are figures now floating around thatI mean, huge. You can see the cash flow there, uh, free cash flow generation, uh, from Micron. Cantor Fitzgerald, get this, is modeling for Micron to generate about $150 billion in free cash flow next year, about $182 billion in 2028. Another analyst looking out for 2028 when it’s 2026.The fact is, and Micron talked about this on its last earnings call, it could purchase billions of dollars of its own stock and aggressively reduce its outstanding share count by at least according to Cantor Fitzgerald, by 30%.It’s producing a ton of free cash flow and it’s likely to use all that free cash flow to buy back its stock at what it believes are attractive levels. Micron told us this on the earnings call. That’s why I continue to mention Micron. I don’t want you to mention or miss out on another Micron move because you think the stock has risen triple digits this year. I believe it has. So circle December 9th on your calendar.Very important date there for all Micron watchers as it potentially will disclose a massive new stock buyback program. I don’t think it’s going to be as big as the one Jensen came out with Nvidia because they’re two totally different companies in many respects, but still, keep an eye on Micron here. The street is thinking this stock rallies into that December 9th announcement. Now another one I want to get to because I’m just clicking on all cylinders here.Had a great weekend, rest a little bit, worked out, got a lot of stuff in. That’s meta.And there are a lot of early predictions starting to come out on the potential for Meta’s muse andThese notes are going to be important because you’ve seen Meta stock rip higher over the past month. I think 20%, about 23, 24% at my last check, based on optimism regarding Muse, about the revenue potential for Muse. And shout out to the Deutsche Bank team because on the bottom of one of their notes, page seven, you know, it’s important to read the whole entire analyst notes. You just don’t want to read the first page and keep it moving. I read it all and I got it right here. On page 7, Deutsche Bank putting this forecast together, and it was 3 scenarios for them.Let’s start on the most optimistic scenario. By 2030.Deutsche Bank thinks Muse could generate $36.3 billion in sales, and I have to be honest, I did a double take. When I saw that number, I wanted to make sure it wasn’t $36 million because this product just came out and it’s not exactly like the whole world is using it, but I went back and double checked. It is in fact $36.3 billion not $36.1 million. The middle case for them is about 10.7.Million dollars and you can see some of those predictions on the chart. We laid it all out for you. Screen grab it, share them on social media. Tell tell them it came from the Yahoo Finance Sazi Unleashed team. They do great work. And then even on the base case, about $2.4 billion revenue potential for all things MetaMuse. And I can’t say that I’m surprised. There’s a lot of optimism, a lot of strong downloads for Mettause, a lot of early use cases for Mettause. I asked the company’s former CTO all about it.I’m sure you saw the, the Mongo DB guy is now headed over to Meta. Uh, how do these hires happen? Like Mark just reaches out to him and say, hey, we have an amazing opportunity. I mean, Mongo, the MongoDB guy was, I mean, he was leading his whole company.
I mean, this is why I like, yeah, this is Mark, Mark, Mark has, has got the memo, man. He, he, he will personally go out and reach with you, he’ll deliver soup to you, he’ll do whatever it takes to get the right people because he knows that talent is what drives a business like his. And you see he’s continually refreshing the key leads in the company, you know, um, bringing a board member on to lead the compute side, you know, bringing on the Mongo DB CEO, bringing on Alex, bringing on Natt and Daniel, like, this is, this is what he does.
I mean, I’m still looking, I’m still digesting that new look for, uh, for Zuck. It takes, uh, it’s taken me a lot, you know, I don’t expect, I remember how Steve Jobs used to dress during his product reveals. It was like a black turtleneck and a pair of jeans, but we’re seeing a new evolution of that style. Shout out Zuck. You got a lot of things done right with Muse, and, uh, Wall Street really, really likes it. Now I’m gonna stay on all things tech because, uh, what we’re seeing with MUE ties into the security space, uh, the AI agents, we have to.Protect what these AI agents are doing, uh, given the importance they’re playing inside of companies. Jay Choudhury, Z Scaler CEO, is here with me on the Sazle studio. Jay, good to see you, man. It’s been a while, man. Welcome, welcome, welcome. Take a seat. You want anything to drink? You good? I’m good. I got a whole fridge. Um, you know, I was mentioning at the top here, we were just talking about meta and, and Muse. What, how are you starting to protect companies for this AI agent world?
Today, a user is the weakest link. Tomorrow there’ll be billions of agents. They become the weakest link.The best way to secure them is don’t trust them.Don’t trust agents. Don’t trust agents, but give them this much trust for certain applications and services, and that’s it. The problem today is that we let agents loose on our corporate network. It’s like getting inside your building. They go where they need to go. I’ve said
they’re running amok.
They’re running amok not only in your building, they get on the internet, then they start scouting what websites are out there.It’s easy to scan those websites. What’s more challenging is the frontier Aid model can find security vulnerabilities in a website, in a firewall, in a VPN, a load balancers. They break in and they get in. That’s the problem.
Are you using Muse? Have you tested what the potential of something like this is?
My team has been playing with Muse and a number of other similar things.This is this shows what can be done, but enterprises aren’t ready for it. Our job is to make sure we provide enough security and guard rails so they could be used in a securefashion.
Oh, well, Mark, uh, over at, uh, Meta, he’s really thinking about getting into the enterprise with, with agents. I mean, what’s the, what’s the risk if agents start to run, whether it’s from Muse or, or even OpenEye, whatever it is, what’s the risk to corporates?
So agents going rogue is the biggest risk today. A user gets compromised and then the user infects everything else. Tomorrow all these agents.Imagine an agent on your corporate network hacked or hijacked or it goes rogue. They’re far more dangerous because they work at machine speed.They have no coffee break, no weekend, no sleep time, and their number keeps on going, so they can get you confidential data out. They can bring systems down. Those are the type of risks that we have to deal with. Are
people already putting too much trust in agents?
So they aren’t. I worked with lots of large enterprises. Over 50% of Fortune 500 companies are our customers today. We provide zero trust for users. That means the users of the companies, they go through our exchange, our switchboard to make sure a user can only access application A, B, or C. We’re taking the same approach extended to agents, so agents are only given access to certain application services.We are working with many of the larger enterprises who want to embrace AI. There’s a lot of pressure on them because AI actually is delivering great productivity. It is reducing.
Well, they also have to protect the company at the sametime.
Absolutely. What’s holding them back is security. That’s what is bringing in. The old approaches were firewalls, VPN to secure. That wall is not going to work.What we pioneered when I started ZScaler in 2008, aero thrust architecture, is becoming more relevant today than it has ever been.
As someone that has been in this industry for, for a long time, you just mentioned you started of course ZScaler, um.When you hear Sam Altman say in an interview, I guess it was this morning, quote, the world should accept some bad things happening for the benefits of AI. Is that OK with you?
It’s not.Human ingenuity can always find solution to the problem. It has always found solutions, so I believe each party needs to take responsibility to do its own job. Models need to do better work on their side.And enterprises need to put better guardrails and policies in place. That’s where we come in working with model companies, working with enterprises, and bring the two together.
Do you think themodel development needs to, to slow down if we have Sam Alman saying this guy, look at this, I mean, I have him right here on the political page. I mean, to me, bad things happening is not, not acceptable. It’s not acceptable. Do we have to slow things down?
No, I don’t think development of security needs to slow down. I think the models need to go through better tests and more rigorous, but all over regulation of any of the staff.Is not good for business ever. Now
you have an investor day coming up, I believe tomorrow, first one since 2021. Now the street, and this is from JPMorgan, they were, they want to see greater visibility into the timing and magnitude of the AI and agentic contribution to your financials. Uh, what will you tell the street tomorrow?
So we will share the relevant information. I mean, obviously I can’t talk about it today.But we are given the visibility in our last earnings call we talked about the growth of our AI security, uh, AI and revenues. We are bullish. We got some of the largest customers depending upon us, trusting us to secure them against all these AI agents and some of the attacks that Frontier models can do against them.
Where do you fall in the agentic stack?
So genic stack, if you look at security, there are a few things that one needs to worry about. Number one, you may not be embracing any AI. You are still a target of these agentic attacks. All these security vulnerabilities that Methos preview of the world have found. Z killer comes in, makes sure I can hide your application behind our exchange. If they can’t reach you, they can’t breach you. That’s number one thing we’re doing with our customers.Number 2 is many of these companies will get breached. Once they get breached, the bad guys move on their corporate network and find very mission critical applications and bring them down. With ZScaler, we make sure that movement of the network doesn’t happen because everything is untrusted. We are breaking the old paradigm of old school network and fiber-based security, so those two things are the starting point from attacks.Then the third area is when you build application models and agents we become the policy engine, the switchboard that says this agent can only access application A, B, and C, and they can’t do anything else. That’s how it needs to be done. The old model is the opposite. They let you run around on the network and then they try to put control. The zero trust is the right way to do it.
Is this the most complicated environment that you have ever seen for your company?
Protecting securing policy for AI agents is fairly complicated because user was easy. Your identity and you do this. Agents can change identity in a second.And they have skills. They have tools. One agent can spawn 5 more agents. What permission should they have? What they shouldn’t? Those are the type of hard problems these are solving, and that’s what our researchers and developers are working on.
Jay, lastly, you’re, you’re a founder, you’re a CEO. You’ve been in this industry for a while. What would you tell the likes of, you know, I look at an anthropic and Dario and, and Opening Eye and Sam and a lot of other private companies that have raised a lot of money. What would you tell them about?Going public and their responsibility to investors with the technology they’re developing.
Going public is a good thing. It actually makes you more responsible and you do the right thing that needs to be done. Uh, we have been public for 8 years now.
It feels like yesterday. I remember when you went home,
but I think it’s a good thing. It puts some discipline, but at the same time if you run a good business, you have a lot more brand and also enterprises like to work with public companies because the transparency is there.
Jay, good to see you. Uh, let’s, uh, we’ll see you again soon. Good luck with Investor Day. I appreciate you coming down. Hope you like the new set. Bring me something next time, like a, like a, like, I don’t know, like a, I don’t know, corporate swag or something. I appreciate it. Thank you. Thank you, Brian. All right, we got a lot going on. This is a busy week for, uh, investing. I really enjoyed that, uh, conversation. I’m starting to get a little bit even more worried about AI agents, but we’ll, uh, as they say in corporate America, we will, uh, we will take that offline. Now, uh, from tech to, uh, the business of food, Wall Street.Has decided which beverage giant will win the year financially. I’m gonna get this out of the way because we got a lot going on here on Unleashed. If not for all 2027, Coca-Cola shares have ripped 22% this year, making it the eighth best performer on the Dow. PepsiCo shares have tanked to the tune of 13%. Hey, this is wild to see this divergence. It’s like the alligator mouth divergence in the beverage companies. I think.PepsiCo’s earnings report on Thursday is a critical one for the beverage and snacks icon. It has promised strong results in snacks on the back of its price cuts. It has promised aggressive cost cuts showing up in profits. Overall, it has simply promised a better second half of the year compared to the weak first half of the year.Now PepsiCo dealing with a Wall Street perception problem, I think is one of their problems here that they have to figure out, and I don’t think they have figured it out just yet. GLP-1s is weighing on the business of snacking. Of course, PepsiCo owns Frito-Lay. Lay’s the big business. When I think snacking, I think about a PepsiCo and Frito-Lay, Tostitos. I still love a good Tostitos. They need to see the impact of promised PepsiCo cost cuts. I just mentioned that Pepsi.has said, has been saying they’re going to be aggressive in cutting costs. That’s not shown up, I would argue, in the financial statements just yet. PepsiCo management not open to a breakup. They shot this down last year despite being under attack from an activist. This might have to be explored again. And last but not least, Diet Coke and Coke Zero sales are on fire, and Coke has no snacks business. That’s why the street is really loving.All things Coca-Cola. The thing is, I don’t think PepsiCo will deliver on the top line promises because of pressure on the snacks business and market share loss in beverages to Coca-Cola. Higher inflation stands to pressure any cost savings, and I’m not alone in thinking this, as several Wall Street shops have cut their estimates into the results. Not helping cinnamon and PepsiCo is what we have heard on the inflation front the past two weeks from food giants General Mills and McCormick. Here’s what McCormick said.And then both of those companies ultimately warned about price inflation and how consumers are not or responding down the aisle. Now, allow me to quickly break this down further with a little something I call SAS intel. So I went out to the CVS, we got one right by Yahoo Finance HQ and I got a series of items, which I think explains.The divergence in the stock prices. I’m gonna pull out one by one, we’ll make this a little bit of a reveal here. Number one.Next generation competitors in lollipop.This is grabbing market share. I just talked to the founder of Ollipop. His sales have been through the roof. Competition, when I say market share, it’s not just market share loss to a Coca-Cola, Diet Coke, and Coke Zero. It’s with these companies. Better for your drinks. I’m not saying Pepsi doesn’t have things like this, but this thing’s on fire. Number 2.Good old fashioned Diet Coke. Diet Coke is having a moment. In the most recent quarter that was just reported, that was the 2nd quarter, Diet Coke sales up 7%. Coke Zero up 16%, and I just realized I’m shaking this can. It’s going to explode all over me, so I’m not going to open it. We’re just going to put it back on the table over here. Next up, out of the CVS bag, we have.We, we’ve got Quaker Oats, a longtime business for PepsiCo that they have owned for many, many years. I believe it came as part of the Gatorade business they acquired many, many years ago.Quaker Oats has been slow growth. Now PepsiCo has tried to reinvent this brand over the years. It has not exactly worked. So slow growth here. Unclear to me why this business is still inside of PepsiCo. I believe there’s even a rice business inside of it. So that is that. And last but not least, I left the big one for all of you as I wrap it up here.And you’re probably wondering why this guy put chips in his Celsius refrigerator. Look, no reason. I just wanted to do it for aesthetic purposes so I could pull the bag out and show you all, and then do my sizes and tell. Here it is, Lay’s. The fact is, uh, GLP-1s are hot, whether it’s pills, whether it’s shot in your arm, shot in your stomach. These things are happening and they’re only increasing, so you’re seeing people snack less. We heard this from Campbell’s Soup a few weeks ago when they reported earnings, and they operate that Snyder’s Lance business which sells a lot of pretzels. Also saw it in their goldfish business.So there’s that. And number 2, there was a lot of price hikes taken on Lay’s potato chips and other various snacks out of PepsiCo over the past few years. They tried to dial them back in the first half of the year, but the fact is they may not have dialed them back enough. And now there’s some reports that because of slower volume.The prices for Lay’s might be on the way back up, and Tostitos and whatever other snacks they sell.So a lot going on at PepsiCo. Bring on those Thursday earnings.Now let’s stay on the economy. For many, for many US households, it may not feel like the economy is doing well due to the higher cost of living brought on by the US war in Iran. Diesel prices are over $6 a gallon, if not higher in some locations. It costs over $30 to buy a decent New York strip at the supermarket. How do I know? I just did it and it cost me over $30.I just bought a bag of Lay’s potato chips from that table for over $5 at the CVS near Yao Finance HQ. That was a $5 purchase on my personal credit card. But believe it or not, the US economy is nearing an impressive achievement on the economic front. The US unemployment rate is nearing record consecutive months below 5%, points out strategist at Trust Keith Lerner. Love Keith’s work.The long time record dates back to the mid 1960s. Worthwhile perspective to keep in mind, as you hear people say the economy is terrible. It’s not terrible. It just may not be working for the masses for one reason or another. Believe me, if the economy was so awful, you would not have the S&P 500 sitting near a record and corporate earnings on pace to surge 30% this year. Stay unleashed.
