yesterday. >> josh brown this >> brk, an upcoming name. i think this has something going on. >> that would be berkshire hathaway. dow is just below 40,000 after topping it for the first time ever earlier in the session. i'll take you through the final stretch at 3:00. "the exchange" is now. ♪ ♪ >> thank you very much, scott. welcome to "the exchange." i'm kelly evans and here's what's ahead. it's a milestone moment for sure. the dow hitting 40,000 for the first time ever. but can the bulls keep it going? our market guest has some concerns about the strength of the economy and the consumer. here's here with what makes him worry and what he's still buying. and one of our guests is hoping to attract a particular kind of consumer. we'll tell you who, how and why they're on this year's disrupter 50s list. and is the latest tech a

killer or catalyst for language learning companies? the ceo says he's welcoming it with open arms and joinstous make his case. let's start with dom chu with the numbers. >> so if you talk about -- let's just bring in the headlines. 40,000 for the first time ever, rarified air. i'm going to take you through the charts in a couple seconds here, but i'm going to put the stars up off the bat. we did hit rarified air, record highs for all three indexes, the dow, s&p, and nasdaq. the dow above 40,000 at one point, just slightly below that. the s&p 500 is at 5316, about eight points up. so a very modest move. it's been very tight and narrow, but it has been marginal but to the upside. the nasdaq composite, up about 0.1 of 1%, 16,764.

let's focus on the dow, because we don't often focus on that price weighted index. since it closed above 30,000 in november of 2020, check out american express, caterpillar and microsoft. each stock has pretty much doubled in the course of that span. they are your leading percentage gainers in this price weighted index. they don't necessarily do something at all for the price and point total, but watch those, they made the most money for shareholders since november of 2020. as for the ones that have lagged, kind of not really participated and some days just lost money. verizon, intel, and 3m, losing a quarter to a third of their value. so those the leaders and laggards in the dow. speaking of the dow, the headliner today, retail has to be the biggest retailer out there, walmart. shares up 6% right now. it's a massive move higher,

adding 20, 25 points to the dow, better than expected earnings report, driven by e-commerce. a lot of good things happening at walmart. big day for the dow, kelly. back over to you. >> indeed it is, dom, thank you very much. this earnings season has painted a muddy picture when it comes to the consumer. walmart seeing strength in the high and middle class, and restaurants like mcdonald's warned about cracks. that conupsumer sentiment, a shp decline in may, but that's not stopped the wall street rally, with the dow hitting 40,000 today. joining me tomake sense of it, charlie is vice chair at his company. charlie, great to see you. >> thanks for having me, kelly. >> are you surprised we're here, 40,000? >> no, so i'm glad you're focusing on the dow, because the dow is not driven by the magnificent seven in the way the s&p 500 is. the dow is much more

traditional, industrial companies, a lot more value stocks. sko when the dow is doing well, that's the sign that it's not just a tech rally. so we are seeing some of the name, like goldman sachs, which is in the dow, up 20%. seeing some of the building product stocks that we like a lot that are up significantly, as well. so this is not just a tech rally, that's why the dow is doing so well and is so good. >> the dow has done better than you think. if you go to total returns, it's interesting to think back and think for a second that the dow, the s&p 500, the nasdaq, these are price indexes. so when stocks drop in price, you don't include the reinvested dividend. so if you go back and take from 1987 reinvested dividends, according to the s&p, the dow would be at 98,000. so we need to break out the dow k-100 hats here. >> great point. you can add about 2.5% dividend yield to most price

appreciations. that's not a bad estimate for what you would actually get. of course, you have to be disciplined and not pay taxes or pay a lot of commissions trading the stocks. if you just held these names in a tax exempt product, you're right, you would have significantly higher than the published returns. >> it's extremely impressive. what do you think is going on here? i look at japan and go okay, the yen is collapsing, so the price index or stock prices are doing okay. the economy doesn't seem that great. they have high debt situations, similar things to here. is there any way in which these gains might be some kind of phantom, or is it the genuine strength of the u.s. corporate economy? >> i think it is the latter. it could be earnings that have come out recently for first quarter earnings, surprise to the upside. and that's in the face of the fed obviously having produced an inverted yield curve, putting pressure on anybody, including consumers, that has debt. so we are getting solid

performance out of companies that are producing decent earnings. again, for these dow names, this isn't inflated pe ex-chance. in fact, we're seeing some very attractive ev enterprise value to down multiples that have come down. so, we have a measure that we use, which is value-to-private market value, where are stocks trading compared to what we think they're intrinsically worth, and that number is showing decent value. >> well, maybe it is. we were talking about this yesterday. maybe this is like the '90s all over again, and it's productivity wave, and we're going to be just fine. maybe you can address that and talk about why you expect to see this lbo wave coming, especially in an era of high interest rates. >> so let me take the second one first. traditionally, private equity firms don't spend a lot of time looking at pe ratios, they look

at this as the best measure for what they're paying for company. for many stocks we talk about all the time, value names that haven't kept one the market, that enterprise value has been coming down to what are now attractive levels. so building material companies, mohawk carpets, honeywell thermostats, those are now both less than eight times. they're about 7.5 times ev. the auto names, which you know i love, are now trading at less than six times. and the oil companies, apache, which just continues to make a lot of money and is going to have a wonderful find off the shores, is trading at less than four times. so those numbers are starting to make a lot of sense for private equity firms who have raised a lot of money and sitting on it for the last year. it's going to start to get spent in the next six months.

>> i've been wondering what will happen in that sector. the last time we had that many exclamation points about valuation points was the home builders a couple years ago. that would have been an amazing trade. so just final word, you have a little bit of caution on the consumer. what is that exactly and what is the market positioned for the next six months? >> thanks for calling that out. this is a change. i think two or three months ago, i would have talked to strength throughout the consumer with a very good job market, higher wages. that's still true for the middle class and for operating earnings, but not true as much for some of the lower wage earners. so we're seeing some pressure, we're seeing some caution, some price shopping that we weren't seeing before. a lot of this has to do with the fed reducing the money supply. when the upper end of the economic curve is thinking about its wealth, it's not thinking about the cash they have in the checking account or the cash they have in their pocket. but if you're living paycheck to

paycheck, you're worried about the cash that you have, and the fed has been taking cash out of the economy. so we are no longer flush in that regard. so the lower end consumer is under some pressure that they weren't under months ago. >> does that make you avoid consumer facing stocks? what's the investment thesis? >> so, no. homes and auto are still bought by generally by middle class and more affluent consumers. frankly, those people are doing very well, as the stock market hits highs. so we're very positive that's why we're positive on housing and autos, and those stocks are so cheap, that when we get the fed cuts that we still think we're still going to get this year, it's going to be much more financeable to buy a home or car. that's why we think those names can do quite well. >> charlie, thanks for joining us today.

dow >> in honor of dow 40,000, the cnbc pro team crunched the numbers to find ten stocks that have a forward pe ratio. for the full list, scan that qr code. we were just talking housing and another mixed bag on home construction in april. let's find out what's going on with diana. >> we saw a real divide with single and multifamily construction in april, entirely due to higher mortgage rates. single family starts were down less than 1%, but multifamily jumped 31%. single family is still way up, and multifamily down due to supply already coming onto the market year over year. so single family dropped because of this. a surge in mortgage rates in april, rates had come down to the start of the year, but then

we just took off. there were downward revisions then to march's read, as well, because of the rising rates. building permits, an indicator of future construction, dropped for single and multifamily, as both are stockpiling more supply. the latest read on builder sentiment that we got yesterday showed a drop back into negative territory with buyer traffic really taking the hit. in addition, 5% of builders cut prices, compared to 22% the month before. that ended four consecutive months of declines in those builder price cuts. so builders need to get buyers in, kelly. >> so on that note, we've been talking about the 7% mortgage rate. people say if it were still 3%, different story. you checked in with roam, they're trying to help people do assumable mortgages. and they have some new things up their sleeve, do they not? >> so let me explain, an assumable mortgage is when you buy a home and take on the seller's mortgage at their rate. this is only allowed on fha and

v.a. loans, but there are $1.5 trillion worth of assumable loans, made with those record low 3% rates. these loans have been hard to find and hard to do. roam lists homes and facilitates the transactions. but while you take on the old mortgage, you still have to come one the outstanding principal. and given how much home prices have risen in the last five years, that can be a lot. so roam is now announcing it's working with a lender that will make up the difference using a second loan. >> that give buyers the generational gift to be able to wind back the clock on rates and purchase that home with a mortgage as low as 2%. we may never see those rates again. >> so the second loan will be at the market rate. so when you blend the two rates, the overall payments are going to be much lower. there is a catch.

the assumable mortgage has to cover at least 50% of the sale price of the home. >> we curate all of the homes, require at least 50% of the sales price to be met by the mortgage and you'll find the interest rate is around 5.5% or less, meaning that we have curated the down payment and rate perspective. >> and you do still need to put 15% down in cash. but, again, this is a creative way to lower your overall mortgage rate and monthly payment in, as you said, the 7% environment. and don't forget, roam takes a 1% commission cut on it. >> although it's still good to know what different ways people are trying to come up with to continue to make housing attractive. i wonder what we could ever do. it's like the sellers do i want to take that mortgage with me. >> that's not possible yet. you can do it with a sale, and it makes selling more attractive, as well, because sellers will get a lot more

buyers if they have advertised they have this assumable mortgage. they get five times more buyers. not that it's hard to find buyers, but it makes the transaction more attractive. >> maybe gives them the best price. diana, thank you very much. coming up, duolingo shares are getting hammered. the stock on pace for its worth month in 2 1/2 years. but the ceo says that plays right into their hands as the company tries to reach more customers with the help of generative ai. plus, a flurry of fed speak today, and we're here to break it down and tell us what india needs to do to become an economic superpower. it's already outperforming the s&p since the start of the pandemic. speaking of markets, another check on stocks with all three major indexes hitting all-time intraday highs. back after this.

♪ (upbeat music) ♪ ( ♪♪ ) with the push of a button, constant contact's ai tools help you know what to say, even when you don't. hi! constant contact. helping the small stand tall.

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welcome back. openai launched its gpt for o-model and folks are looking for the businesses that could did disrupt posting --

>> he added the technology will make language barriers obsolete. duolingo shares are under pressure on the day, down more than 6% as google introduced a slate of ai offerings, and the report spooked investors with the stock dropping 25% since last wednesday. but are the ai tools more catalyst than killer for duolingo? they already use chatgbt, and the co-founder and ceo is quick to note the translation is not the same thing as language learning. he joins us now for an exclusive to discuss. luis, welcome back. good to see you. >> hi, good to see you. thank you for having me. >> why do you think it's so important to distinguish between language learning and translation. why do i need to learn it if i don't need to learn it anymore? >> first of all, the ability to translate live on the fly has been around for many years. my phone has an app called

translate. and the reality is, the demand for languages has only gone up. most people learning languages on duolingo are doing so as a hobby or they want to learn a language like english or something. we are just not seeing people being dissuaded by the fact that language translation is good. >> i'm curious how you're thinking about the potential in the ways that ai might help or take us to the next iteration of what language learning and translation even looks like. >> we're very excited by all the advancements in ai, especially the ones of late. in particular, the thing that they really allow us to do is teach conversation better. and there's many aspects of learning a language you have to learn, vocabulary, how to read, how to listen, et cetera. but conversation is something we were never able to teach you with a computer, but now that's something that we can teach you. so we're super excited and applying all of this.

>> so in other words, you think the arrival of something like chatgbt is the place holder for this kind of technology, ai chat bots and so forth could get people from going ola, hello, to actually having more of a conversation and being able to learn more quickly and effectively? >> yeah, it definitely helps with conversation. the main thing it helps with is just practicing it, and also getting you to not be so scared of it. in the past, we have tried getting people to have conversation with another human, and the problem with that is that most people are just really scared of doing that, and then they stop. but having a conversation with something like an animated character on the other side, just gets you to practice. and we've seen that really helps with people. a lot of times people know all the words, they know everything. they're just really scared, and getting actual practice with this gets them out of their shell. >> i wonder if both can be true, where it helps your business take it to the next level, but also still eats away at that

additional 10%, 20% of users who say, you know what? i don't need it at all, because the ai assistant is so helpful that i don't need to spend my precious time on this? >> we just haven't seen that. again, i really -- it's been eight years since google translate has been essentially perfect. so we just haven't seen that affect us. >> interesting. i'm curious, given your background, this isn't the first business you have been involved with. you were behind recapture back in the day, which helped leak it started training these systems to recognize images and so forth. just as a innovator, what is going through your mind as you watch the dawn of this new technology and other potential use cases? >> technology is amazing. i think it surprised us all a couple of years ago when we started seeing these large language models be there. i think it has a really lot of positive applications for education and for many things. in our case, we really are going

to try to teach a lot better. one thing that i think is better to say, some people say, you can learn anything you want with something like chatgbt. and that's not what i'm excited about. i'm excited an't the fact that it can explain things, but the reality is, the technology to learn anything you want has been around for hundreds of years. it's called a book. you can learn anything you want with a book and it works. it's just that it's hard to get people motivated to do it, and just to tutor also is hard to get people motivated to do it. so this is what we're excited at duolingo, because we're good at motivation and getting you to come back every day, combining that with better explanations, you know, also more conversational practice. so i think that's going to open up a lot for us. >> that's interesting as i think about motivation and the ways those might be applied. i'm reading a cook book now, you know, five minutes at a time, and i wish i could just chat

with it and say hey, i've got to make dinner tonight, what do you recommend, it would kind of bring that to life. i guess the last question in this vein is one that we have mentioned before, can this actually replace the traditional school experience in many ways? we've been nibbling at the edges of this for some time post covid, and it's thrown the door open to new ways of learning. >> you know, i think replace is not quite correct. i think it's going to transform it quite a bit. one thing that covid really taught us is we want kids to go to school. i think most kids are going to continue going to school. i think that there's going to be lot of changes in terms of who does the teaching or how much of the teaching is done by teachers versus computer. teachers do a lot of things that are not just giving you contempt. they motivate you, and a lot of the learning we do in school is

just watching others how they conduct their life and you learn a lot from that. by watching your teacher how they conduct themselves, you just learn a lot implicitly that way. so i don't think schools are going to go away, but i do think we're going to give much more individualized attention and explanations to students when a teacher in a classroom of 30 just can't do that. >> that's interesting. one of those parents a little resistant to having technology in the classroom, but if it was able to help my kids, i'm open to that case. luis, thank you for your time today. >> thank you for having me. for more on the businesses under threat from this new face of ai, let's bring in deidre bosa out west with today's tech check. deidre? >> hey, kelly, that was a great interview. you know, every company that may be threatened by generative ai finds a way to say that they're going to harness it. i think the duolingo ceo did just that. what he was talking about,

though, felt more like an argument in the chat bot era, and this week with the openai demo, we're moving into this era of agent. so when he says one of the most important things is conversational language learning, that's what these agents do. you can interrupt them. and i think that they can e motor, they can rationalize. so that's a huge difference from what he says that we have seen over the last -- i think he said eight years with google translate. a lot of that capability we have had, but what you are seeing on your screen right now is more of a tutor, someone who can respond in realtime. i think that is a big shift, certainly, you know, a lot that they will have to confront in this new model with this new generative ai. i'll just say that duolingo has held up a little better than some of the other public and tech companies. you look at sarah, that 12-month performance. they have been seen as most vulnerable in this generative ai shift. you can see right there, but if

you look at those three names, you can see that they have been a little vulnerable. ad tech is another area that could be vulnerable here. when you give all of these creative tools to the ai, but these names have held up a lot better, talking about generative ai that is seen as a co-pilot that needs to be harnessed. >> i wonder if there's any areas, and we talked obviously about the disruption to businesses that have traditionally outsized work that your ai agent can now do for you, i wonder if there's areas that would be enhanced. maybe duolingo is right, and now the ability to learn language conversationally will be much easier, draw more people in. what are other places that we should be thinking about, not just what's going to go away from this, but what could be enhanced? >> you hit on one of the most relevant conversations, especially that's being had here in silicon valley over the last 12, 18 months since we saw

chatgbt. this idea that in the long run, this is going to lead to more jobs, not less. better skilled jobs, upscaling by the workforce. but in these early stages, kelly, we're still seeing that shake out. maybe at the beginning we thought that chat bots would eliminate blue collar workers. what we have seen is white collar workers. it gives people the ability to code. so maybe it's leading to less junior engineers to make way for the expensive talent that our ai data scientists, so we're still in the early stages. we're seeing that shake out, but some of those white collar jobs will have to be sacrificed first is what we're seeing, until we see that real efficiency of upscaling take place. >> absolutely. deidre, nthank you. deidre bosa as we track the implications. coming up, lower after slashing its full-year guidance for the second time since february. we'll give you the name and what's behind the decline. as we go to break, here's a look

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good afternoon, everybody. welcome back to "the exchange." i'm tyler mathisen with your hourly news update. the trump hush money trial on a lunch break after michael cohen was being cross examined and harshly. todd blanche battled with cohen as he highlighted lies cohen told in the past. the proceedings slow going with multiple objections lodged and several side bars with the judge. it is unclear whether the defense will finish with cohen today, but there have been lots of revelations that call into question mr. cohen's history of not telling the truth.

south africa today urged the u.n.'s top court to order israel to top the offensive on rafah, saying the attacks must be stopped to ensure people's survival. israel, which has announced south africa's claims as baseless, says it will respond by tomorrow. the justice department today formally moved to reclassify marijuana as a less dangerous drug. sit a shift in u.s. drug policy as the department of health and human services now sees credible scientific support for medicinal uses. there will now be a 60-day public comment period, which the dea will issue its final decision. kelly, back to you. see you in a bit. >> tyler, thanks. pot stocks up about 7%. canopy, about 10%. amplify is also higher today. coming up, it's not easy eating green, but one company is using a prescription model to make healthy food more

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welcome back. markets are expecting the first cut in sent, perhaps to yesterday's cooler than expected cpi print. but all are fed leaders singing the same tune? steve liesman is here to wrap that up. steve? >> i think the way to think about it is the federal reserve playing for time. if i try to put it all together and look at like where the majority of the view of the fed is, there's some on both sides, but here's the majority view. this is the key, i think, they mostly believe that rates at the moment are high enough to bring down inflation. they mostly believe it's going to take more time at that high rate in order to get the 2% target. not much talk of higher rates or rate hikes, and they're looking everybody is focused on progress in the service sector. the other thing, kelly, if i could just play fight referee, okay? you ready? here we go.

if i have the fed on one side and inflation on the other, okay? i'm going to score two rounds for inflation, january and february. i'm going to score march a tie, particularly because that ppi revision downward, i think it may help the pce for march to be revised down. and then i'm going to give april to the fed. so i've got 2-1-1 for inflation, except for one thing, all the fed folks keep reminding us of the tremendous progress that we had last year in bringing down inflation. so yeah, we can count four rounds, but there's a bunch of other rounds out there that have sided in favor of lower inflation. and that's very much the view of the fed. the last several months have not all gone our way, but we have a lot of progress behind us. >> all right. let's broaden it out a little, steve, and dive deeper into rate cuts here and around the world. joining us now is the former governor of the bank of india and co-author of "breaking the

mold, india's untraveled path to prosperity." ragu, welcome. thank you very much. it's a great read for those now looking at india's outperformance and whether it can be sustained. before we dive into that, though, can you address more broadly what you think the right move for the fed is this year? are you surprised they may not be cutting as quickly as we thought? >> no, i like steve's analogy. i think, you know, we've had two readings. it would be problematic for the fed to cut after a reading that looks in their favor. i think they are a little worried that we don't fully understand why inflation started going up. they would be more worried if the news yesterday had been more inflation. for now, they think they have enough time. policy is restrictive. you are seeing a gentle slowdown

this the economy, certainly at the margins. the labor market is going down, a little bit, the recent numbers were a little rosier because march was very, very strong. so i think put it all together, they're going to wait and watch. they're going to see, you know, if they see successive months of disinflation, if they see housing inflation coming down, finally, and if they see the services side sort of stabilizing and maybe coming to newer territory, i think they will feel they have enough room to cut. but that would take a few months. >> i think that's correct. but as i listen to you talk about it, i think about the ticking time bomb and the back gru ground of the deficit, especially where rates are where they are, do you think we're going to muddle our way through and all the alarmists talk about how we've never been in a position like this before. is it all just going to blow over and are we going to work

our way out of it somehow? >> you talk about the fiscal deficit? >> yeah. >> yeah, no, the fed, that's not the fed's job. if it worries about the fiscal deficit, in addition to what is already said about the market, i think it's going to have a real problem, because then people are going to anticipate much more dovish policy. already it has a problem with the market in the sense that financial conditions today are about as easy as they were when the fed started raising interest rates, and we are 500 basis points up from then. so, i think the fed wants to focus solely on whether it's done the job on inflation, and if it starts talking about the deficit, i think that would be problematic for its overall message. but you're right, it is a problem. but it's not the fed's problem. >> i guess the way thinking about this, and bank of america had these great numbers, if we did 1 1/2 rate cuts, the

treasury would pi out $1.2 trillion this year, if they don't, it's $1.6 trillion. so even if the fed wants to be patient, some other officials might quite not be so patient. steve, go ahead. >> i was just going to add, you want the quick road, the express train to undermining the federal reserve's credibility is to take those calculations into account. the federal reserve cannot do that. i don't think the market would buy it, by the way. i think the market would see right through it, which is why getting back to what he was saying earlier, you've got to have the preconditions for the federal reserve to cut in the data. the count i gave you, the 2-1-1, not enough, kelly. so the fed's going to wait for that, and if it does it before it seems like they have the preconditions for it, the market will look through it and the fed's credibility will be eroded. i think it's fair to say that

powell, he covets the fed's credibility and understands the significance of it. >> right, but maybe i don't know if they would buy us towards not cutting. rajan, let me ask you about the situation in japan. is it a preview -- we've been asking you for decade it is japan -- where it is headed. look at quantitative easing and the issues they have been having. now they have a weakening currency and they're dealing with high inflation through imports, very different kind of problem, but the economy is in no better shape. a lot has to do with their stagnant debt situation. is that a preview of a direction that we could be heading, as well? >> well, i think you're right, the bank of japan wants to be very careful as it raises interest rates. it wants people to have enough time to absorb the rate increases. it also doesn't want to do it before it feels that it has finally conquered the disinflation problem. so for the bank of japan, yesterday was good news in the

sense that if the fed is going to be more accommodative over the medium term, it will give the bank of japan a little more room to, you know, move interest rates up slowly rather than more abruptly, which is what could be forced given the depreciation of the currency. that is also -- yes, again, they have at the really back of their mind, the calculation that japan has a huge debt outstanding and they don't want to move it to high real interest rates before they actually have to. so they're going to be as patient as they can, but i think, again, the primary concern in their minds is to make sure that inflation is well established before they start raising rates more sharply. >> professor, i'm so glad you're here, because i have this very, very burning question here, which is this. i've been around for a while, you've been around for a while, too. we've been around long enough to have seen india become the

flavor of the investment month, and then we have seen india snatch defeat away from the jaws of victory. can you convince us now, is what's going on for real in india, for people who make investment there is can feel like this is what we've been waiting for, for all of these decades? >> right. what's interesting about india, what's working well is really the services sector and growing services exports. after the pandemic, india's learned that you can provide consulting services from india, from bangladesh as well as city or another city in the united states. so services exports are exploding. we're seeing global capability centers, you know, semi front offices. jpmorgan has 3,000 lawyers in india doing their contracts for them. so indian services, especially provided by highly qualified

indians, exploding. that's good news. but people talking about india becoming another china, that's not going to happen. there is no place for another manufacturing export leg giant in the world. it is about the same size population wise as china. india has to find a different path from the chinese path. it cannot rely on manufacturing exports. it has to focus on something else. services may be the answer. so, lots of interesting plays in india. growth needs to be faster for india to grow rich before it grows old. >> go ahead. >> so our book is very much about that. what part should india take, a part in a world where there is increasing goods protectionism, where people are very hesitant about losing more of manufacturing. that has to be much more cleverly thought out than we're doing today. >> very well said. i encourage people to read the book. steve, i'll let you borrow a

company for your car ride back. >> thank you. >> i'll send you one, steve. >> always a pleasure, with the biversity of chicago's school ofusiness and our own steve liesman. "the exchange" is back after this.

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visit feedingamerica.org/actnow welcome back. persistent inflation has shoppers searching for deals and while they're finding them at places like walmart whose shares are up 7% on the strong results and grocery sales. thrive mark has been on a mission to make healthy food more accessible. it serves a similar customer base to walmart with nearly half of its million-plus members of households making less than $1 million per year and they accept snap ebt benefits and that earned it the annual disruptor 50 list. we are joined by thrive market ceo nick green and julia

boorstin. >> what made them pop up top on the list. >> what's interesting about thrive is you figured how the to integrate ai to make the product better for you and the customers. tell us about that. how are you using ai right now? >> wooe always used machine learning to get recommendations of what they should buy on the site and what we are finding is the recommendations with ai and as the algorithm spins we can load the cart. for first members over half of what they buy is what we loaded in the cart for them using ai. >> that's an exciting thought. i almost think of you guys and i've looked at your selection before as an online trader joe's. it gives me that kind of vibe. a lot of the stuff is health focused and it's a little quirky. >> the way we look at it is take what you would find in the health retailer and cure eight them down to only the best and offer them at discounted prices through the membership model. like costco meets whole foods and trader joe's because we have

a the lot of our own branded products and more than 500 products under the thrive market brand. >> tell us about the trajectory. over a million members for the subscription plan. what's the plan to grow the business and do you think you will have a sense of how big the market is for this? >> we are almost nine years in. we feel like we're just getting started and we are 1.5 million members so we're growing quite rapidly in terms of the membership base. our members are getting more and more value from thrive as we add new categories and lean into new selection and we're sitting here looking at the u.s. households and there are hundreds of millions of people that want to get healthier. they want to live their values and they don't have an a affordable and accessible products. >> you have gie and high-protein products and how committed are you to the membership model? we know it is the gold star when it comes to membership in costco and it might be a difficult

hurdle for them to clear in order to become customers. first we shop with the membership model. it's $60 a year and $5, by charging that membership we can deliver the products at a price below retail significantly. the goal is to get the natural, better for you product for the conventional equivalent and make it accessible to the millions of families that can't go to the place. if you can't afford a membership, you get for free and now that we're accepting snap use the ebt on thrive to get the discounted groceries. >> it is a barrier to entry, with amazon prime membership they offer grocery and in a way you are competing with that. what other products or services are you thinking of adding to bulk up the sort of the value that you offer through your

membership? >> amazon has taken the everything store approach. they want to carry as much selection as possible and there's varying quality and the you have to sift through and figure out what's good. >> we think about ourselves as the everything store where it's ultra curated, everything is high quality and the members outsource their trust to us. they don't have to search 3 or 4,000 almond butters and they find three or four and order from those and we concentrate our volume and we are able to deliver in bulk so you're not getting onesies and twossies and zero waste fulfillment and sponsoring the membership for a family. >> one of the biggest things is a hang-up and i didn't look that deeply, is there more of an offering like fresh meats and produce that could be coming across the country to members that are signing up and not just the pantry staples? >> when we started we were just pantry staple food items. we've expanded outside of food now so we're doing everything

from home to beauty to non-toxic kids and baby products to pet products and everything has a better for you, more sustainable alternative and we did recently over the last few years get into frozen and we were doing seafood and frozen veg and a lot of categories and we are very open in experimenting the possibility of doing perishable and we have to do it in a way that's economical for the members and it's sustainable. >> do you think the consumer is okay with it right now or is it difficult at the price point? >> we are making it more affordable and save money for the staples on the market and spend more for high-quality staples in the grocery store. >> thank you for bridging it us to. nick green, ceo of thrive market and we appreciate it today. for the full list scan the qr code or head over to cnbc.com/disruptors. that's it for us today and i'll join tyler for "power lunch" after this quick break.

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♪ ♪net. good day, everyone. welcome to "power lunch." alongside kelly evan, i'm tyler matheson, and thank you for being with us on this historic day for the markets and the dow hitting 40,000 which means it's taken more than seven years to double from the first time it crossed 20,000. >> it's like the rule of sevens. and the s&p 500 and the nasdaq are both hitting record hi