Committee stocks on the move: GE Vernova and Crowdstrike

Let's get to some other committee stocks on the move today. Shares of GE Vernova are lower after reporting earnings. This is a pretty big drop, down 7%. Joe, this is one you own. Yeah. This was disappointing guidance. The EBITDA margins were basically unchanged, and given where the business is with natural gas turbines and the participation in AI power equipment, they needed to exceed lofty expectations and really come out with a very aggressive and generous guidance. And in fact, they didn't do that, and that's why I think you're seeing the pullback here of 7%. I think it speaks towards the personality of what the momentum factor's been the last several weeks. Yeah. So much about that. Yeah. I heard it also. It was disappointing. Yeah. What was equally disappointing was the messaging in not having the earnings per share in their table. Like, how do you do that? So to me, that's sort of like, let's change the metric. And that's what, in fact, they did in the conference call. Let's look at the gigahertz. Let's look at the backlog. Let's do all that. Now, this is what happens. The stock's actually only down modestly, considering it's selling at nearly 80 times EBITDA this year, and earnings is ridiculous in terms of that multiple. So look, it's a small position for me, regrettably. I say regrettably, because where I entered it, it's up significantly. So I don't really care about being down today, but I'm not adding it here, because this is part of the whole AI complex. And as you go out, it's a power company, and margins just aren't that robust in a very capital-intensive company, particularly with competition coming on, eventually. Not now. Nuclear's a decade away. But FTAI, look at that. So the question is, will their backlog ever turn into actual cash flow? I believe it will. And it's got really good free cash flow. But it's enough for me right now. So it should be down. I think it's down modestly, relative to what it could be down. Worth holding onto at these levels, you think? As long as the AI dialogue continues. Well, speaking of AI dialogue, Cybernames giving back earlier gains after OpenAI said its AI models went rogue and targeted open-source platform known as Hugging Faces systems. Joe, you own CrowdStrike. This is such a wild story, the fact that they were just testing these models. They leapfrogged out of the sandbox and intruded into the internal systems of Hugging Faces, a company that most of us have never heard of. So let's take up the conversation of just kind of how do you think about where they are, all of the cybersecurity names relative to price and the recent highs. You're anticipating earnings in a couple of weeks. So I don't think you're going to see an aggressive nature in terms of adding to risk for positions that have been clear winners in the software space. Fundamentally, overall, nothing has changed surrounding the fact that you want to own cybersecurity in the software industry. CTOs are going to look universally at software and say, OK, for a lot of the SAS programs over the last several years, we almost feel as though we've been ripped off on price based on now what the disruption is for AI. But as it relates to cybersecurity and price itself, we are going to pay that price because we are moving more and more into an environment where you need to have, as an enterprise, that security. So it's benefiting CrowdStrike. It's benefiting Datadog, which is monitoring cloud infrastructure as well. Nothing is changing there. And Jenny mentioned Microsoft before, just touching on software. I actually see Microsoft having some relative outperformance in the month of July to the overall software industry itself. So if you are a Microsoft shareholder, as I am, maybe that's a signal that it's bottoming based on the nature of its force of its overwhelming balance sheet. Liz, do you think that the cyber incumbents are the ones that are going to be best positioned to prevent these types of threats? Yes, but I think cyber on a whole is just full of opportunity. I mean, if we've learned anything through this AI cycle, it's that security is paramount and everybody is so nervous about it from a business perspective, from a personal perspective. The demand for cybersecurity is only going to grow. Now, to Joe's point, they don't have to change their business models as much as SaaS companies likely have to change their business models. I don't think all of those die either. But cybersecurity likely has to grow up a little bit, has to keep up with the pace of how everything is innovating. But I think, I mean, cyber just broadly, even the ETFs, CIBR, bye. Yeah, just one thing on this. I think from a bigger societal perspective, we should all be paying really close attention to this and we should be very wary about this. If this could jump and connect to the internet when it wasn't connected, why wouldn't it be able to hack the cyber stocks too? I think we'll reflect back on this one day and say that was a warning shot and we all should have been paying a lot more attention to it.