Closing Bell - Apple Unveils iPhone 16; Rubrik CEO Talks Earnings Before Analyst Call 9/9/24

Episode Date: September 9, 2024

Breaking down Apple’s newest offerings with Creative Strategies CEO Ben Bajarin, plus Jon walks through his checklist for event. Rubrik CEO Bipal Sinha on the company’s second quarterly report as a public company. Analysis of the strong quarter from Oracle with Wolfe’s Alex Zukin. Plus, where to find opportunity with Bespoke’s Paul Hickey and Wells Fargo’s Sameer Samana.

Well, if you wear a clock around your neck, you know that bell marks the end of regulation in the U.S. women's water polo team and Flava Flav ringing the closing bell at the New York Stock Exchange. Dentsply Sirona doing the honors at the NASDAQ. Stocks getting some relief after the worst week for the S&P 500 of the year with consumer discretionary and industrials leading the comeback. That is the scorecard on Wall Street, but winners stay late. Welcome to Closing Bell Overtime. I'm John Fort. Morgan Brennan is off today, and the week kicks off with two key earnings reports in software. Oracle, a mature winner, and Rubrik, which IPO'd just this year, coming in just moments. We'll bring you the numbers when we've got them. And our first on CNBC interview with

Rubrik's CEO, Bipul Sinha, before he talks to Wall Street on the analyst call. And did Apple hit the mark with today's iPhone 16 launch? We will talk about the chances the new iPhone will drive an upgrade super cycle. But first, let's break down today's market action with our panel, Paul Hickey of Bespoke Investment Group and Samir Samana of Wells Fargo Investment Institute. Guys, welcome. Paul, what did we learn today about that really dramatic market action that we saw last week with the Russell underperforming, some of the bigger stocks performing better? Is this comeback real, do you think? I mean, I think we're going to see, it's not the answer you probably want to hear, a lot of, you know, choppiness coming through for

the remainder of the month. Just as we didn't want to put too much weight on what happened in the market last week i don't want to put too much weight on what happened today you look you know the concern is what caused this sell-off last week and you know a lot of talk we're hearing about oh is it going to be a hard landing economic concerns but the economic data wasn't so bad last week. It was mixed. Services data was pretty strong. Manufacturing data was weak and employment data was mixed. And coming into the week, we were. And September is a weak month. The last four Septembers before this year, we were down 3% each of those months, and we didn't have a hard landing in any of those years. So I think it's more seasonal in nature, and we're going to see choppiness throughout the month as we go along. Samir, if I'm an investor, I'm trying to figure out, is this more of a repeat of a month ago, beginning of August, when things rebounded strongly and seemed to go along

that trajectory again, or of last year, where things similarly happened? Or is this a warning in a market that by historical standards, you look at the S&P and a number of other measures, is still expensive? I, it's still expensive. I think it's a market that, you know, all years really struggled with uncertainty. I mean, all the way back to the spring, you know, when we hit, you know, 50 to 50 for the first time, when we started sounding the cautious, you know, kind of tone with respect to, you know, look, valuations are fair. And when you have fair valuations, it's just very difficult for markets to make headway. Now, we've since increased our year-round target by just a little bit from 5,200 to 5,400 because earnings came in a little bit better than

expected. But that still doesn't give you a whole lot of upside from current levels. So I think the tricky part is going to be is for investors, they're going to have to be very patient. They're going to be very opportunistic. We do think there will be opportunities ahead of the elections. And eventually, we think the market probably scales up to 6,000, but that probably doesn't happen until 2025. I don't think it's a 2024 story. All right. While you were speaking, rubric earnings came out. The stock's initial move is lower, but let me get you those numbers. Results for fiscal Q2, it's a beat across the board and a raise. Revenue comes in at $205

million versus consensus expectations of $169 million. Non-GAAP earnings per share, a loss of $0.40 versus expectation of a $0.49 loss. On the Q3 guide, Rubrik got into a revenue range of $216.5 to 218.5 million. That's 217.5 million at the midpoint, which is above expectations. Non-dap EPS, a 40 cent loss on the guide, plus or minus a penny versus expectations of a larger 43 cent loss. For the full year, the guide is to revenue of 830 to 838 million, which is higher than they had been guiding before, higher than expectations, particularly of note here in the quarter. Subscription annualized recurring revenue was up 40% year over year to $919.1 million, getting close to that billion-dollar level.

And coming up in just a few minutes, CEO Bipul Sinha, co-founder as well, going to break down those numbers with us before he dials into the analyst call, founder, I should say. Meanwhile, we also have a news alert on Amazon. Our Kate Rooney has the details. Kate. Hey, John, we are just getting news of a partnership between Oracle and AWS, Amazon Web Services. This is a launch of Oracle Database, they're calling it, at AWS. It's a new offering that's going to let customers use Oracle's autonomous database on infrastructure

within AWS and that service within AWS. We have a quote here from Larry Ellison, the Oracle chairman, founder, and CTO. He says, we're seeing huge demand from customers that want to use multiple clouds, he says, to meet this demand and give customers the choice and flexibility that they want. Amazon and Oracle are seamlessly connecting AWS services with the latest Oracle databases. A quote here as well from Matt Garman, the new AWS CEO, says as bar back as 08,

customers could run their Oracle workloads in the cloud. Since then, many of the world's largest and most secure organizations are using Oracle software and AWS. So these closer, this is closer ties with AWS and Oracle. Of course, Oracle is reporting earnings today after the bell. You can see here shares of Oracle down slightly on this news. Amazon pretty much flat after hours. John, back to you. Those Oracle results, I believe, are out and we are going through them. You know what else is down after hours? The temperature in Hades, given the back and forth that we had seen just a couple years ago between then the AWS CEO Andy Jassy and Larry Ellison about this database issue when AWS moved off of Oracle. It was looking a little tense there, but it looks like in Oracle land in Redwood City over there as they're mending fences with Microsoft, or it was a big deal that Ellison showed up with Satya Nadella at Microsoft. It looks like they're playing nice with all the hyperscalers, AWS included. Are we saying goodbye to Samir?

OK, Samir, let me go back to you on this then, because you were in the middle, I believe, of talking or just finished. So we're about to get Oracle results, but we've got this AWS Oracle partnership. And I just sort of laid out how these two companies were not the friendliest not too long ago. Yeah, I mean, look, I won't speak to those two names specifically, but I will tell you, I think technology still remains a leader. I mean, when I was seeing kind of the analogy this morning of how I would describe tech, to me, it's like in the NFL draft, when you have a player fall to you in kind of the late parts of the first round, because, again, there's some concerns about injuries, some concerns about character, whatever you have. You know, again, I think tech is still your leader.

And I think all these companies playing nicer tells me that they're all making a lot of money. Right. That's usually when people play nice is when there's money to be made. And I think given the recent sell off, I think, think you know tech is a really interesting opportunity at these levels so i think if there's a further pullback i think investors should look there all right samir thank you for joining us paul stick around uh let's turn now from redwood city to cupertino where apple took the wraps off of its latest iphone model the 16. Today, Steve, you're at Apple headquarters with some big takeaways. What do you think?

Yeah, John, so the takeaway from today is it's gonna be several more months here before we find out if all those AI features are actually compelling enough to spur what Apple bulls have been expecting to be, that huge upgrade cycle for the iPhone. So the iPhone 16, that's the new lineup announced today, they're getting an exclusive AI feature later this year

called visual intelligence. This is important because it's gonna set itself apart from the other AI hardware that Apple's selling. Visual intelligence, it lets you point the camera at something in the real world and get more information. It's very similar to features already found in products from Apple competitors, Google, Meta, OpenAI. They all have similar technology in their products. Other than that, this is really just, John, your standard iPhone upgrade. The screens are a little bit larger,

the battery is better, the new processors are faster and help those phones with the upcoming AI features. But as for the rollout of Apple intelligence, Apple made it clear it's going to be a slow one over the next several months. The iPhone 16 will get that first AI update this fall with a limited set of features such as summaries for your text messages. But the best stuff, like a more powerful version of Siri, the image generation, the integration with ChatGPT, that's not coming until later. And some of those features won't even happen until 2025. But Apple did give some more hints about the AI rollout outside of that initial U.S. English launch this year. It's going to come to other English-speaking countries

like Australia and Canada at first, and then more languages next year like Chinese and Spanish. But overall, we do not know too much more about the rollout plans for AI on those iPhones. We're going to have to wait and see how they do for upgrades in the coming months here, John. Yeah, when they say next year, you kind of don't know exactly what quarter, what month. Paul, Apple moved a bit in the session today,

ended up just barely north of break-even, but it has gone quite a bit positive since the Worldwide Developer Conference when they said that they were going to do these AI announcements. So how do you gauge this reaction? Yes, I mean, I think this is sort of par for the course. It normally actually does, you know, declines on these announcement days. So the fact that it was flat, you could say that's a win. And typically, I mean, it's been pretty much following the textbook. You know, it usually rallies into these events like it has this year. And then from now until the release date, it doesn't do much. It's usually a listless trading

pattern. And then after the products actually go on sale and the sales surpass expectations, which they normally do, the stock rallies. And I think there's not a whole lot of excitement after today's announcement. But I think you just got to keep in mind, this isn't necessarily new news. We've been talking about this for a while. But you have the oldest installed base in the iPhone history. You have more than 40% of people have an iPhone that's at least two years old. And there are features on these new phones that you will only be able to get with these with the new phones. And so it'll incite people to to upgrade going forward right around the holiday season. And when we say, oh, that's not going to happen until 2025, 2025 is four months from now. So, you know, these products will will come out soon enough. And I

think it will surprise investors as to how how much the demand is going forward. Steve, a couple of hardware and cosmetic differences I noticed. One is new colors. Another is this new camera button that also has some AI capabilities. And then a third is on the pro versions of the phone you have slightly larger screens for the biggest screen area that these phones have ever had kind of a design and engineering modification for a thinner bezel along the outside i wonder if you had a chance to look at them and if you can notice the screen size difference yeah they're uh the cosmetic changes

aren't that different john i mean yes they're're technically just a couple tenths of an inch bigger than they were last year. But just glancing at it, you know, from afar or just, you know, quickly, if you see someone holding it, you're not going to really notice it's this year's phone versus last year's phone, especially with the case on it. That's not really what's going on here. That camera button you did mention, that is interesting because that is going to be exclusive to the iPhone 16 and switch on this other exclusive artificial intelligence feature i told you about visual intelligence this is kind of the breaking ground that we're seeing with a lot of these artificial intelligence

features these multi-modal meaning it can interpret images and videos at the same time we hear a lot of people talk about those meta glasses with the camera built in that can see your environment and give you information about it. So this is just really the beginning of that on the hardware side. Speaking of hardware, though, there are two other announcements that we got to get through. There was the Apple Watch and the AirPods. The AirPods Pro were actually kind of interesting, John, because they're adding a hearing aid feature for the first time. That's enabled because regulators allow over-the-counter hearing aids now. So I thought that was an interesting feature,

even a feature in the AirPods that will let you test your hearing. And then the Apple Watch, we can't forget, it's been 10 years pretty much to the day since the very first Apple Watch announced. They're calling that a new design, but really just the screen's a little bit bigger and brighter and the device is a little thinner,

but not a big change like we saw with the 10th anniversary of the iPhone, John. That's funny. I was just joking with someone today about the opposite of noise cancellation being able to enhance an eavesdrop on conversations nearby, and the hearing aid feature might be exactly that. Steve, thanks. Paul, thank you as well. And Oracle earnings, as you mentioned, are out. We got the numbers for you. Deirdre Bosa has them. Deirdre. Hey, John. So shares were up as much as 6%. They're now sitting around 5% up in after-hours trade, beating on the top and bottom lines.

Earnings per share coming in at $1.39, $1.32 is what the street was looking for. Revenue also coming in stronger than expected, $13.3 billion versus $13.2 expected. We have to wait for the conference call for guidance estimates to see if that's going to be updated. We also got an Oracle and Google Cloud partnership on the back of it announcing that Amazon partnership as well. Something else investors were looking at is its cloud infrastructure business revenue at $2.2 billion. That's up from $2 billion last quarter. This is seen as one of the fastest growing areas of Oracle. Larry Ellison, the executive chairman of the board, quoted in the release saying that in the first quarter, 42 additional cloud GPU

contracts were signed for a total of $3 billion. He also said that the recently signed AWS contract, he calls it a milestone in the multi-cloud era. He says soon customers will be able to use the latest Oracle database technology within every hyperscalers cloud. So that was the last one. So it's now operating Microsoft, Google, and now Amazon. Hyperscalers, yeah, they're the name of the game. I mean, I'm still thinking about all the trash that was going back and forth, particularly in Oracle's direction toward AWS just a couple years ago. But that's all in the past. There's money to be made. Thanks.

Shares of Palantir and Dell rallied today on news that they're going to join the S&P 500 later this month. CNBC senior markets commentator Mike Santoli joins me now with a look at what typically happens after stocks are added to the index. Mike. Well, John, the initial reflex is very understandable. You're going to have, I don't know, trillions of dollars in some respects in price insensitive buying that goes into the S&P 500 index. Obviously, they're going to get a portion of it, the new entrance will. But this is a map of overall, if you look at all index inclusions in the S&P 500 over time and the path that it takes going into the

announcement date when it's going to go into the S&P. And then, of course, the inclusion date, it's going to be in a couple of weeks from now when they actually enter the index. And you see that usually the stocks have been on an outperformance trend. This is excess return that's being measured here relative to the index and then kind of gives it all back over the course of, let's say, 100 days. So essentially, you do get that initial bump, at least because of the perception that they're now going to be recipients of all this index ownership, which is 15 percent plus of all equity fund ownership right now. And yet it doesn't necessarily last because obviously fundamentals take over from there. Now, one

prominent example of this would be Tesla, when, of course, it was tremendous excitement around Tesla as a business, but also as a stock that was becoming kind of a bellwether of the growth world, Magnificent 7 and all the rest. This is a five-year chart. When did it go into the S&P 500? Well, it was in December of 2020. The price was around $2.31. Obviously, it went up huge from there, close to doubling, I guess, from right before the index inclusion. And then it's kind of giving it all back. So, in other words, there's no magic longer term to being in the index at this point, John. Well, it seems like chewing gum. Like, there's a trade there.

The flavor just doesn't last forever. If we go back to that first chart, it looks like if you're in there for a little bit before, and then you're in there for a little bit after, you tend to do a bit, well, let me see, average new entrant, median new entrant. Am I reading that correctly? Yeah, you're right. No, that's exactly right. I mean, there's still something to actually benefit from there. But, you know, and that's why there is this parlor game, and it's a quantitative one.

You can look at the biggest companies not in the index yet. Do they meet the inclusion standards? You might as well speculate that maybe they'll go in as the S&P refreshes the index. By the way, interesting thing is the reverse also works with S&P stocks booted out of the index. It basically looks like a U. So it's kind of like you get thrown out at a lower price and tend to migrate higher or at least revert to the mean after you've been out of the index. All right. So the clock is ticking. The big clock around your neck if you're a flavor of flavor at the night seat.

Mike, thanks. After the break, access you'll only get on Overtime. We got an interview with the CEO of Rubrik, fresh off of earnings before he talks to analysts on the conference call. And much more on Oracle's results and its new hyperscaler partnerships, plural as that stock gets a nice boost up five plus percent. Overtime's back in two. Welcome back. Rubric stock is lower right now in overtime, about 3%. That's despite a beat and a raise for its second quarterly report as a public company.

Joining us now in a first on CNBC interview before the earnings call is Rubric CEO Bipul Sinha. Bipul, good to see you. So let's start with the growth that you saw, particularly among large customers and what that signals about demand overall? Demand continues to be very strong, and we outperformed our quarter across both top line and profitability metrics, and we are raising our yearly guidance. If you look at our revenues, our subscription ARR grew 40% year over year to over $900 million. And our subscription revenue grew 50% year over year to $191 million. And most importantly, our profitability metrics, subscription ARR contribution margin, improved 1,300 basis point year over year. So we are very pleased with our results. Obviously, we are winning the cyber resilience market. That is the number one market segment within cybersecurity. Yeah. So for people who might not be familiar, yes, there's backup for

when you just want to be sure that you've got your data available should something go wrong. Then recovery also, that you can bring it back and bring it back safely. We have this CrowdStrike outage during the quarter, I believe, or at least just after, somewhere in there. You have some customer overlap, a significant amount with CrowdStrike. What sort of an impact did you see? CrowdStrike was an unfortunate event, and they are a great partner. And it actually showed that a simple human error can lead to a massive outage. And if you look at this, this was previewed to what a cybersecurity event would do to our global interconnected economy.

Obviously, this brought into focus the whole resilience. Every board of directors is asking the question that, are we able to bounce back upon a cyber incident? And that is really creating a lot of conversation. Obviously, this is one of the factors that goes into the market momentum that we are seeing across cybersecurity market. But what organizations are realizing is that they have invested a lot in the cyber prevention tools. But the cyber recovery and cyber resilience remain a weak spot. And everybody is rushing to fill that gap because they can't keep their businesses up and running if that particular problem is not addressed. And this is where Rubrik is focused on. And that's the

market we are winning. That is cyber resilience. Tell me your perspective, your relationship with Salesforce. They just acquired own company, but you've also opened up some new Salesforce compatible features that some on the street think lead you to some possible new areas of business. How is that balancing out? Businesses are looking for a single management control, single policy control for all of their data across all of their applications. And we support more than 20 different applications and Salesforce cyber resilience is one of them. Obviously, Salesforce coming in and acquiring own backup is very positive for us because that is an validation of our strategy that businesses need to create cyber resiliency for all of their SaaS

applications and that actually bodes very well. And in terms of like our product for Salesforce, we and Salesforce launched our solution together and we are a great partner of Salesforce. So overall, very pleased with how Salesforce is taking on this market. And this shows our opportunity as we become the standard for cyber resilience across all enterprise cloud and SaaS applications.

I want to go back to the profitability question. There's gap and there's non-gap. And of course the gap is including some of the equity expense. How are you balancing that versus growth now as a public company? What should investors expect as far as your bottom line discipline?

Let me be very clear. Profitability is our number one focus. We want to build a large company and we want to build a profitable growth. Obviously we have a unique product in a very large market and we are seeing tremendous market momentum, but we want to combine growth and profitability together and make sure that we build a long-term business,

long-term profitable business. I'm a capitalist. I'm an engineer. I'm a capitalist. I like cash flow. And that's what we are building. Yeah. And a venture capitalist for a while as well. Bipul Sinha, founder, CEO of Rubrik. Thanks for joining us here first on Overtime. Thanks, John. After the break, we're going to take a closer look at Oracle's quarter, its new partnerships with Amazon and Google and the read through for other software names. Plus, on Friday, we outlined three key things Apple needed to address with today's iPhone unveil that might signal an upgrade. Supercycle is on the way. We'll discuss whether Apple's event hit the mark. Talk about the potential impact on shareholders when Overtime returns.

Welcome back to Overtime. Shares of Oracle are popping up now 8 plus percent after the company beat estimates on both lines. The company announcing a partnership with Google Cloud, and this comes after announcing a partnership with AWS. Let's bring in Alex Zukin of Wolf Research. He has an outperform rating, $160 price target on the stock. Getting closer to that, Alex. First of all, explain to me the relationship between Oracle and the hyperscalers. Because it was a quarter or two ago, I think there was another announcement that they were getting some of the overage business that the hyperscalers couldn't handle,

and it seemed like the stock also responded positively to that, and now we seem to have a little burying of the hatchet, perhaps, with AWS, no? I would even almost say it's like the tearing down of the Berlin Wall in terms of the rapprochement that you're seeing between Oracle and AWS. I think it's really, at the end of the day, it's a win for customers. I think ultimately customers have a lot of core workloads that are running on the Oracle database. And I think they have a lot of partnership opportunities these days in terms of where they want that compute. And they've signed very

large, very long duration deals. And the ability to use the dollars, use the compute from your preferred vendor to run your most mission critical workloads. I think Oracle's making it easier. I think Oracle's figured out that there is a real advantage to being able to tell your customers that they can run their Oracle database workload and not worry about which hyperscaler they're using, maybe even potentially be able to run it on multiple hyperscalers or have that be even something that you can kind of bounce one off the other. So I think it's an advantage for Oracle. I think they've been working really hard to get this type of parity between the hyperscalers. And I think they just

announced it. There's a weird effect happening right now. At least it's weird to me in enterprise software. It used to be that we talked about names like Oracle, Intel, Cisco as being bellwethers for what was happening in enterprise. Now it seems like AWS, Google Cloud, Microsoft Azure are sort of market makers in the sense that you have to deal with them. We're looking at their capital spending along with meta as an indication of what's going to happen with semiconductors. We're looking at them as a marketplace for being able to access applications in the enterprise. What's happening in there and what should we perhaps read into Oracle's relationship with them from that perspective? Yeah, I think it's if you can't

beat them, join them. And I think the amount of CapEx required to build out global scale compute and hyperscaler services, the ability to train, acquire enough GPUs and energy and compute to train the kind of foundation models and cutting edge large language models that are required and increasingly necessary for next generation workloads. I think this isn't if you can't beat them, join them. But I think Oracle's way of joining them is really unique and interesting. And I think you're going to see more of this because it's not just that they're market makers. It's that they're the stores through which you're consuming your workloads, your compute. And so these contracts that now a dollar of AWS, a dollar of Azure, a dollar of GCP can be used on your Oracle commitments. I think that's a really intriguing

go-to-market evolution. I think you're seeing a lot of companies, not just Oracle, take advantage of that. Okay. And I think that's the way of the future. Now, I got to ask, Oracle's stock is now up 8% in overtime and we have not gotten guidance yet.

We get that from Oracle on the call. How good a guide do you think is built into this move already? How much is it either at risk or perhaps could it go higher? Well, look, after hours moves, particularly in what has become an extraordinarily volatile software tape, I think are less indicative of what you're going to see on the guide. Historically, guides from Q1 to Q2 are a little bit more challenging from Oracle. Even if they guide more aggressively than they're used to, they might come in just maybe slightly below where

the consensus estimates are. So I think investors are starting to look maybe a little bit longer term on Oracle. And that's what you're seeing in the move. I think the's, you know, investors are starting to look maybe a little bit longer term on Oracle. And that's what you're seeing in the move. I think the relationship with Amazon, the backlog and the RPO that they just announced at $99 billion, indicative of what might be a longer duration growth curve. And prior commentary from Oracle CEOs saying they're going to accelerate every quarter this year.

They're going to grow faster coming out of this year. You've got an analyst state coming up on Thursday where all indications are they're going to take their long-term target up for next year from $65 billion to something else. I think all of those are maybe a little bit more of the focus of the move than the guidance, but they've got a high bar to clear on the guide for sure. OK, be careful with this move. Alex, thanks. Alex Zucan. Thanks, John. Well, time for a CNBC News update with Julia Boorstin. Julia. John, the Justice Department unveiled criminal charges on Monday against two alleged leaders of a white supremacist gang with trying to incite a race war. Officials say the two targeted black and Jewish people, the LGBTQ community,

as well as government officials through Telegram, aiming to bring about the collapse of the U.S. government. The men each face 15 criminal counts, including soliciting hate crimes and providing material support to terrorism. Harvey Weinstein was rushed from jail to Bellevue Hospital in Manhattan and had emergency heart surgery today after experiencing chest pains. That's according to his representatives. The hospital stay comes as Weinstein was due to appear in court this week, as New York prosecutors are reportedly working to secure a new indictment against him. And after 40 years in the anchor chair, Univision's Jorge Ramos is leaving the network but says he will continue to anchor until December. Ramos is one of America's most iconic Latino journalists, having co-anchored at the network since 1986.

Back over to you, John. Wow, Julia, thank you. Well, coming up, will Apple's latest iPhone drive an upgrade super cycle? We will break down the announcements and whether or not the company hit three important criteria at today's event. And real estate is one of the few S&P 500 sectors in the green so far this month, and it's been a major outperformer this quarter. Up next, Mike Santoli explains why it may not be too late to get in on the trade. We'll be right back. Welcome back to Overtime. Real estate has been one of the hotter sectors lately. It's the top sector in the S&P this quarter, up more than 14%.

But is there still more upside for this group? Let's ask Mike Santoli. Mike. Yeah, John, it's been quite a catch-up move. Look at the S&P real estate sector ETF relative to the S&P itself over the last year. You see all the upside really has come since mid to late April. What happened in mid to late April? The 10 year Treasury yield peaked at about four point seven percent. It's now down a full percentage point. So clearly that yield support for yield oriented assets such as real estate investment trust has been a big help. But it hasn't necessarily made the group particularly expensive in valuation terms compared to the index.

Take a look at this from Bank of America. It shows the price to forward profitability. That's funds from operations for REITs relative to the S&P 500 forward PE. That's the average long term there. So you see it's just kind of pulled up to average. You certainly need to think real estate fundamentals are going to be decent from here and have those cash flows go up from here. But it's not as if they're very stretched on this measure. I think there's another case to be made that B of A is making, which is right now, given

overall valuations, dividend yield in general probably is going to account for a lot more forward returns than it has in the last few years, in which case you might go to those sectors that have above index yields. How much does residential, do you think, factor into the overall impact on the sector here? A lot of us, when we think real estate, our minds automatically go to residential. But of course, there's commercial, there's industrial in there. And these REITs are doing a lot of business around the world. There's a pretty hefty portion to rental residential, of course. And so that's an area of the market that has been somewhat steady. There's been a little bit arguably of overbuilding, but that's subsiding. I do think it's relatively diversified. That's one

of the reasons that the ETF approach and some of the other real estate oriented funds like VNQ have done fairly well because they've not really just been, you know, a call option on downtown office vacancies or anything like that. Healthcare is huge in here. You know what else is big in the real estate sector? Cell tower companies. I mean, they are technically a lot of them categorized as REITs. And of course, data center REITs. So it's really well beyond just the standard, you know, building on the corner. Even technology needs a place to live. Mike beyond just the standard, you know, building on the corner. Even technology needs a place to live. Mike, thanks. Well, speaking of, will the iPhone 16 spark the next super cycle for Apple? A pair of tech experts are going to weigh in next.

And check out shares of Summit Therapeutics, which are skyrocketing after announcing its experimental lung cancer treatment cut the risk of disease progression or death by 49% versus Merck's blockbuster drug Keytruda in a late-stage study. Overtime will be right back. Welcome back. Friday here on Overtime, I walked you through some things past iPhone super cycles have had in common to help you handicap whether we'll get one this time with the iPhone 16. There are three broad categories. New network and AI capabilities, like with the iPhone 4S's FaceTime and 3.5G and iPhone 12's 5G, geographic expansion like when the China rollout accelerated with the iPhone 6, and improved screen and camera features with the iPhone 6, 10, and 12.

Let's look at how the 16 scores. Network and AI? Well, yes. Photos, stories, AI photo and video, moment search that we saw there in the presentation. There's even AI to create video out of the we saw there in the presentation. There's even AI to create video out of the photos and videos in your library. And Siri is enhanced now with generative AI. What about global geographic expansion? Actually, no. Apple intelligence for non-English languages, a lot of them coming next year, particularly India and China are important because they've got huge

populations and the satellite communications features aren't going to be available in China and India initially. All right. How about screen and camera? Yes. You have this new button for camera control. You can search for, you know, take a picture of a dog and they'll tell you what kind of dog it is. Maybe info about a new restaurant by taking a picture of the restaurant without having to speak or type. Also, the camera itself has been improved with macro shooting capabilities, being able to get really up close. And there's a bigger battery on the phone overall. Larger display as well on the Pro model, slightly larger, but still larger in this redesign. So two out of three, how does that fare? Let's talk more about it with our next guest. Joining

us now, Ben Beharin. He is the CEO of Creative Strategies. Ben, you're there at the event. I sort of looked through when we had super cycles in the past. It had been going on kind of a three year cadence, but we're not going to hit it in 24. Does it look possible, even likely, in 25? Yeah, I mean, I think you hit on all the right points, right? The dynamics that led to the last super cycle, which I think also included a good portion of upgrades being pulled forward into those first six months, is really just a phenomenon that I just really have a hard time believing we're going to see again. But at the same time, I do think the one reality for iPhone is that they have a very aging installed base. And the big question the last few years has always been, when is a good portion of that base that's on four and five-year-old phones going to upgrade

when they just haven't felt the need because their devices do all the things that they want them to do? And I think that within the iPhone 16 line, they've actually offered enough value there that I think that's going to convince a lot of consumers, which, you know, in years past, we've noticed a mixed shift more toward iPhone Pro than the base level iPhone 16s. And I think that might rebalance again this year just because of all the features and technology

that's packed into iPhone 16, as well as, again, aggressive carrier updates. So while I don't think super cycle, I definitely think we'll see a stronger cycle to upgrade, and particularly that's going to benefit the iPhone 16. Ben, part of the story of the last four years, I think, for the iPhone line has been the broadening of it. You know, people were shocked when the iPhone X cost $1,000. Who would pay that much? But they actually managed to build on these pro and pro max models going above that and then the iphone se they turn that into a viable though underpowered but viable 450 roughly offering at the lower end how much depends in this super cycle

calculus on how much they able to shift that revenue more toward the higher end of the iphone line they don't give us a breakdown on units versus revenue so it's harder than it used to be on how much they're able to shift that revenue more toward the higher end of the iPhone line. They don't give us a breakdown on units versus revenue, so it's harder than it used to be in the past to tell exactly which models they're selling more of. Yeah, I mean, I think obviously analysts will do their breakdown. I mean, I think if you follow my logic that you might see a stronger cycle for iPhone 16, that means we're going to have an ASP dynamic

that's different than we have in the past years where that's skewed toward the Pro and that mix has shifted toward the Pro. But I think you're absolutely right. A good portion of us sort of seeing if a super cycle plays out is really dependent on a good portion of those upgrades really being pulled forward. And I think, again, upgrades will happen in time. I think this makes a very attractive offering for, again, that very aged base that they're seeing. And again, I think this is the strongest base level iPhone that they've launched in the iPhone 16 in some time. So I think that will help. But I just don't think we're going to see a drastic pulling forward of upgrades based on the hardware. We know we have an aging base that just needs to upgrade.

And I think a portion of that is going to fall into these next six months. Ben, do you think there's any particular advantage to carriers in subsidizing the AI-enabled version of this phone? I mean, it's not like it's a network upgrade that you're particularly supporting. So does it matter for them in the calculus? I mean, I think it does just from a contractual standpoint. There's obviously abilities to lock in

more of your customers. Even if you do that upgrade, right, you're still agreeing to stay with that carrier for a long period of time. And there might be other pricing dynamics come in. I mean, I know carriers don't just offer upgrades for a device, but they might say, you know, here's an Apple Watch as well. Here's a connectivity for that device. So they're actually offering more devices per person. And then again, a subscription rate as a part of that. So they're using that to broaden their ecosystem and then pull those economics in but the bottom line is they want loyalty they want customers coming and staying on their network and there are economic advantages for them over time regardless of model i'm not sure that you know the ai features do anything

to drive more data but again it just that customer loyalty as well as the economics for them in potential other devices and keeping them in their network is really the biggest reasons they do this. All right. Next, we'll be watching those pre-orders to see whether the high-end or lower-end models go out of stock first. Ben Beharin, thank you from Creative Strategies. Thank you. Up next, all the overtime earnings movers that need to be on your radar as we count down to the calls from Oracle and Rubrik. And Goldman Sachs CEO David Solomon making comments this hour at a Barclays conference, initially moving the stock lower. We'll bring you those headlines next. Welcome back.

Let's check in on today's overtime movers. Oracle beating estimates on earnings and revenue. Cloud services revenue up 21% year over year. Oracle also announcing a new strategic partnership with Amazon Web Services and also one with Google Cloud. Guidance is going to come on the call. Rubric posting a smaller than expected loss per share, topping revenue estimates. The company also raising its full year outlook. Subscription annualized recurring revenue was up 40 percent versus a year ago, but the stock is down about four and a half percent. We've got some news on Goldman Sachs.

Leslie Picker has the details. Leslie. Hey, John. Yes, CEO David Solomon speaking at the Barclays Financial Services Conference right now, making some news here that is affecting the stock price. You can see it's down almost 1%. He gave some guidance with regard to the FIC and equities business. He said that was trending down about 10% in the third quarter, largely due to fixed income currencies and commodities. He does note that that's comped to a pretty strong third quarter of 2023 and blames the macro environment for the 10 percent declines expected there. Of course, there are a few more weeks, he notes, in the quarter. So things could theoretically turn around. But that's what he

sees at this point in time. Also mentioned about a $400 million impact related to GM and the sale of financing loans there. That is pre-tax and mostly will be reflected in revenue. Also giving some interesting commentary with regard to the macro environment. He says a soft landing is the most likely scenario. However, he did note that eventually there will be some sort of a credit cycle. And so they're building up their private credit business and building up their credit exposure to one day be able to play a role in that. With regard to M&A, he says that strategic activity has picked up meaningfully. However, there are some headwinds, of course, still due to the FTC related

to the antitrust environment and the overall regulatory environment for M&A. However, he said that the backlog acceleration on M&A is indicative of good engagement on that front. Debt activity has also been robust. However, two kind of lagging aspects of this market include financial sponsors, which have been slower to transact and less active, I think, than many in the investment banking community expected, including Solomon himself. And then the IPO market has also been a little more dormant than I think a lot of people initially expected here. Also giving some comments on Basel III, not too much detail there. We're expecting a conversation with Vice Chairman Barr

tomorrow with an update on revisions for those capital rules. But he did say that, you know, it's important to remember that the purpose of Basel III was not to increase capital at U.S. banking institutions. It was to bring other institutions around the world up to U.S. standards. So we will be tuning into that tomorrow, and we will bring you the latest headlines from Barr's comments at the Brookings Institution. John? All right. Interesting detail for banking investors to chew over. Leslie, thanks. And don't miss an exclusive interview with David Solomon on Wednesday at noon Eastern on the Halftime Report. Up next, the key earnings and economic data that you need to watch tomorrow. Plus, find out which major software company

is set to launch its latest AI platform. We'll be right back. Welcome back to Overtime. A couple of earnings tomorrow to mention, including GameStop, which remember doesn't do much of an earnings call, and Dave & Buster's. And we'll also have the latest NFIB small business report. Also want to mention we're going to have ServiceNow CEO Bill McDermott with us talking about the latest AI rollout from that company. And then, of course, today, you know, we saw the markets move higher.

The S&P was up by more than a percent. The Dow a little bit more than the S&P. The Nasdaq about in line with all of that. And Apple had a big announcement. Gotta note, they're still at 3.3 trillion right now, about 10% ahead of Microsoft in that supposed market cap raise. Well, for now, that's gonna do it for overtime. Fast Money starts right now.