By coinnews 
00:00 Speaker A
It’s now time for some of today’s trending tickers. This morning we are watching Eli Lilly arm and D Wave. First up here, Eli Lilly falling after political reporting that President Trump is expected to sign an executive order to revive an effort to dramatically slash drug costs by tying the amount the government pays for some medicines to lower prices abroad. The order is expected to direct AIDS to pursue the initiative for a selection of drugs within the Medicare program. It could come as soon as next week. And it’s also interesting, of course, amid concerns about whether or not tariff policies are going to impact these pharma stocks. I’m still joined here by Keith Lerner of Truist. Keith, how are you thinking about a sector like pharma when there is such a question mark about obviously tariff policy, but then you also have Medicare prices and that policy as well?
01:33 Keith Lerner
Yeah, we, uh, I think healthcare is one of the most trickiest sectors. We call it the Charlie Brown sectors. Every time it feels like it’s going to start going the right direction, Lucy takes the ball. And the other thing with that sector that’s a, you know, a challenge is that the more money some of these companies make, the more the governments push against those prices. So it seems like we have these great demographic secular tail winds that it should do really well, but you have a lot of competition, the regulations change often, policy changes and you’re in the cross hairs of a lot of movements. So I mean we’re neutral the sector. I want to be positive there, but again, I’m just afraid that Lucy’s going to take the ball again from me next time I try to upgrade the sector.
03:05 Speaker A
That’s a great point. I feel like I’ve been hearing people say buy healthcare for years now and we haven’t necessarily seen that pop a lot of headwinds in the sector here. But next up, we are watching chip stocks as the Trump administration plans to rescind global chip export restrictions put in place under the Biden administration. They were set to take effect May 15th. Scrapping the so-called AI diffusion rule would provide opportunities for countries to negotiate their own chip access. This is separate from the curbs on China, which the Trump administration has continued to maintain. Though I do also want to talk specifically about arm here. You can see those shares moving to the downside. The company was down as much as 10% in the pre-market after issuing a weaker than expected outlook. The forecast from the company raising concerns about tariffs leading to a slowdown overall. And Keith, as you know, this comes as the chip sector has already been under a lot of pressure due to a lot of headwinds, cyclical macro uncertainty, and then of course, chip curbs as well. How are you thinking about the sector?
04:52 Keith Lerner
Well, the first thing which you acknowledged already is that they peaked last July. So this isn’t a new story and partly because they outperformed by so much. I think the challenge right now with the chip side is that not only the terrorist, but also there’s more competition than we thought before. And the question is really about margins going forward, especially as you think about like an Nvidia, like are they going to be able to hold these margins where they are? So I mean, even when we look at things from a fundamental and also a technical level, from a technical level, they are still on a relative basis not as strong. Going back to the point I said earlier, we would much prefer I’m sorry, software where we think that the the spend and the and the and the usage will continue to rise in a meaningful way and they’re a little bit less, um, have that headwind on the terrorist side as much. So listen, I think, you know, they’ve been beat up. Maybe we’re getting oversold bounce, but I don’t think it’s leadership in this market right now.
06:23 Speaker A
All right. Well, interesting to see whether or not the tariffs are going to impact super computers moving forward. Let’s talk about exactly that. D Wave reporting record quarterly revenue up more than 500% year over year in the first quarter. The CEO calling it the most significant quarter in the quantum computing company’s history. Taking a look at those shares up over 26%. Again, record first quarter revenue, posting a narrower quarterly loss than expected here. And Keith, this is something that analysts have been telling me is potentially the next big AI play. Like this could be the future AI play if we do get these super computers coming in from a company like D Wave. What would you say if a client asked you about that? If they asked you, okay, should I invest in a company like D Wave because it’s the future of AI?
07:45 Keith Lerner
Well, there’s always this falls into the category of like these story stocks. And the technology is real. There’s also been a big debate, you know, as far as is it five years away? Is it 10 years away? Is it 15 years? So I think it’s listen, I think that quantum computing is coming. It’s going to be probably revolutionary. The question is how quickly? And again, people a lot smarter than me have a big debate when. So I would say it’d be okay if you want to have that as more of like a high beta part of the portfolio, but it wouldn’t be the core. I would still, I think I would still be focused on some of these large cap companies that have big balance sheets that can kind of get through some of this uncertainty and they have more than one kind of business line as well. And also, I think anytime you have one of these new technologies, it’s hard to know who the winners are going to be. So maybe what you do is you stick with the kind of a core in these like core large cap tech companies and you have a smaller basket knowing maybe out of the three or four that you have, maybe the one that’s really going to do well will outperform maybe some of the losses you have on the other side.