Closing Bell - Closing Bell: Chipmakers Retreat & Is Tech Underpriced? 3/8/24

Episode Date: March 8, 2024

From the open to the close, “Closing Bell” and “Closing Bell: Overtime” have you covered. From what’s driving market moves to how investors are reacting, Scott Wapner, Jon Fortt, Morgan Brennan and Michael Santoli guide listeners through each trading session and bring to you some of the biggest names in business.

Welcome to Closing Bell. I'm Scott Wapner on this Friday live from Post 9 here at the New York Stock Exchange. And this make or break hour begins with a chip wreck. The semis are sliding. Nvidia staging a stunning intraday reversal and all of it raising new questions about whether one of the best trades in the market simply got too frothy. We're going to ask our experts over this final stretch, including the Wharton School's Jeremy Siegel. He will join us momentarily to weigh in on that and the rally at large. In the meantime, your scorecard with 60 minutes to go in regulation of this week looks like this. NASDAQ is clearly the pain point today as several of the mega cap names face more selling pressure. The NASDAQ 100 has been off by more than 1% for much of the day,

even as Apple and Alphabet have been bucking the trend. And that is a rarity, as you know. Take a look at the Semi Index. It is getting smoked at this hour, off more than, well, just about 3%. That is the SMH. The Sox is down big. Names like Beyond NVIDIA are facing some serious selling pressure. Broadcom is down sharply after its earnings.

Marvell is one of the worst names in the space today, and that's after its own quarterly earnings report. AMD, KLAC, you get my drift. They're all lower. And it does take us to our talk of the tape bubble trouble and whether the one soaring semis are now in danger of an even bigger pullback. Let's ask Starship analyst Stacey Raskin of Bernstein. He does join us now. It's good to have you back.

It is stunning to watch what's taking place today in this market. Stacey, NVIDIA, a $100 intraday move, almost 10%. What do you make of it? Look, I was joking earlier that maybe some of these just blew a little too close to the sun for a bit. I mean, like semis have still had a monster year. They're up 20% year-to-date. They're up 70%, something like that, year-over-year. NVIDIA itself is up 80% year-to-date still. So, like, I don't worry too much. Some of this has probably kicked off. You know, we had Marvell and Broadcom report last night, and actually their AI revenues were quite strong, but the core businesses were not so good for either of them. You know, enterprise spending and the like,

carrier spending are not great. And so I think that kind of weighs on it. And then people, I think, were just looking at NVIDIA in particular, getting awfully close to that sort of magical four-figure, $1,000 kind of number. And maybe there's a little bit of profit-taking, and it kind of sets everything else down. But I'll be honest, on a noisy day like this,

I don't read too much into it. The space has still had a monster year. And I still think some of the markets, especially the AI related markets, still have legs to them. I think those those still have room. Now we can talk about some of the other markets. Well, I do want to do that. I do want to do that in a moment. But when you when you say something like the core businesses of these companies, you know, for the ones that reported not so good, This market has ignored, in many respects, the core businesses of many of these companies, and they've gotten this AI halo from NVIDIA. Did we overdo it in giving too much of a bump relative to AI when it's not that big a part

of business for many of these other chip players? Yes, possibly. In my coverage, there are two names that actually have meaningful AI revenues that's more than just a story that's actually contributing meaningfully to their numbers. It's NVIDIA and Broadcom and not a whole lot of others. Again, you can even look at an AMD, and AMD is doing really well, but as a percentage of the revenue, it's not that big and it has not been enough to offset weakness. You know, the stock's been great, like don't get me wrong, but AMD's

missed numbers like every quarter for the last year. You got names like Marvell last night where, again, like their forward guidance was very weak. You know, AI was not enough to make up the difference. Broadcom was kind of the opposite. I mean, Broadcom took two, maybe two and a half billion dollars of incremental headwind like out of their core business versus last quarter.

But they had like their AI business was stronger by exactly the same amount. It was actually enough to bridge the gap and offset it. And because of that, like our Broadcom numbers last night went up, not down on the back of all this. So there are some names

that I think are actually benefiting very well. But yeah, there are others where it is more of a story or a narrative, and we have yet to see it really influencing the numbers to a great degree. You make the point very well here for something like NAMD, a miss, a miss, a miss, a miss, and the stock and up and up and up and up. I mean, it's up 113 percent since November 1st. What kind of re-rating is needed in some of these names if you suggest that, you know, the fundamentals that these companies have been so rewarded on are good, obviously, but come on. I mean, we've been giving insane gains to these names. Yeah. It's funny that the ones that are succeeding, the valuations are not crazy.

And again, I've made this point a number of times with you. But like NVIDIA, if they can actually deliver what people are thinking they can, like the stock is not expensive. Right. It's actually much cheaper than it was before this all started. Even Broadcom, the report was Broadcom is more expensive versus its own history, but it's trading right now in maybe the mid-20s. I mean, the entire SOX index is in the low 30s, right? You got some of these other names, though, where, like I said, the AI piece or whatever they have

has not been enough to offset. And I throw a lot of the analogs into those names. They've just been cutting numbers like crazy. The stocks just really haven't gone down. The multiples are very, very high for a lot of the analogs into those names. They've just been cutting numbers like crazy. The stocks just really haven't gone down. And like the multiples are very, very high for like a lot of the folks in the space right now. And at some point, you know, we do need fundamentals to start to pick up. This is what's been going on, by the way.

Like people have been buying the cuts broadly in the space, which is a normal thing to do in semis. You tend to want to buy them when there's blood in the streets. But usually the stocks go down before you buy them and in this case like the numbers have been cut and the stocks maybe they didn't rip in some of these but they didn't really go down either and yet people have been buying those cuts anyways and so it'd be very interesting to see what happens hopefully as we get you know maybe into the second afternoon the next year numbers do start to pick up do the stocks actually go up as the estimates start to

go up do the multiples just start to come down? Like, I don't know yet, but the typical practice would be that the multiples come down. I mean, that's the normal kind of cyclical investment behavior. I feel like this is a bit of a loaded question. Have you ever seen anything like an NVIDIA go up by this magnitude almost every day? I preface that and I say it's loaded because you'll say, well, I mean, Qualcomm in 99 and some of these other names had these unbelievable moves. But this one seems unique and it seems different. And when you begin a week where a stock is like 8.50 and it ends the week at 9.50, or maybe in a couple of days it hits that level, then today, obviously, you hit a breaking point of some respect. I'm not sure. And I've been doing doing this a long time but i wasn't doing it in 99 um but uh you know look i

think for an at scale company like nvidia like you haven't seen too much of of these kinds of like at least not consistently right you can you can have moments i mean meta have had this the idea a while back where we're you know on their earnings at spike but you have this kind of like consistent like upward upward pressure or upward bias on it um to have these stocks move this much where these stocks were already have like a trillion dollar market cap like i'm not sure that i've seen anything like that um uh in in for something to task i mean smaller you know like like small cap stocks sure they can move like this but for something that's like as big as nvidia's like this is again i've been doing this job 16 years. I'm not sure I've seen anything quite like this one before. Steve, Stacey, we're

going to make that the last word. I appreciate it very much. Thank you so much for helping us break this all down. Quite interesting. Stacey Raskin, Spriggan, Dan Greenhouse, now Solus Alternative Asset Management, CNBC, Senior Markets commentator, Mike Santoli as well. You fellows have seen a lot of markets, too. Michael, you just heard what Stacey said. I don't think I've ever seen anything like this in 16 years. You? Yeah, I mean, I actually was doing whatever I'm doing now in 99. So I remember the vertical moves in Qualcomm and also more the dynamics of it, which is once everybody collectively says, you know what, this unbelievable world changing fundamental story looks like it's grounded in some reality

and we can actually, you know, when they reported the numbers, NVIDIA did last time, and the guidance was fine. It was like, great, we got three more months. We don't have to worry about that moment coming when we have to decide that it's all overhyped. Now, I agree that the stock has gotten cheaper because estimates have gone up so much. But there's not really any precedent for two point two trillion dollar market cap companies sustaining even mid 30 P.E. I mean, it could happen. This could be the one. And, you know, big isn't what it used to be. I mean, in terms of two point two trillion, maybe is now more routine. But Microsoft barely got there at that scale. The point is, you have to assume

a ton of growth. Now, to me, what that scale. The point is you have to assume a ton of growth. Now, to me, what's more interesting market wide is the way that the momentum trade has been overplayed. Almost everybody would say it. That aspect, that characteristic has been so gunned to the upside that it was going to create some kind of instability. Amazingly, today, it just triggered a rotation. A little bit of momentum unwind. And guess what? Everyone just bought Apple and Alphabet because they've been the laggards. And that supported the S&P. And so can you hope that that stays the case, that we magically just hand the baton back and forth? I'm not sure. It comes to the point now where when you look at this

NVIDIA halo effect that has shined so brightly on so many of these names, whether it is, you know, look, the Marvell's of the world up 62% since November 1st, and ASML 68, and Taiwan Semi up 71. Not just up, but AMD up 113%. You're going to have to now, you know, disseminate which is legit and which got too much of a halo.

That was always going to be the case. Mike and I were sort of looking at charts while you were talking to Stacey. The charts, forget the fundamentals, the charts of a whole, I don't want to name them, but we all know what they are. They just are unsustainable. I just named them. Yes, I'm adding the chart to that. Thank you.

But they just, they look unsustainable. And for those of us that have been in markets for more than 10 minutes, you know you. But they just they look unsustainable. And for those of us that have been in markets for more than 10 minutes, you know, when you see a chart that's unsustainable and any number of these charts are unsustainable. But the one the one thing I will add to the 99 comment, first of all, Qualcomm split like three times in the year and was up 2000 percent. But besides that, the 99 blow off came after four years or five years of successful build out. It wasn't just the promise of the Internet by then, although obviously there was much more to come. You started to use the Internet. It started to be a thing that was available.

And there was this sense like taxi drivers were talking about it because they had used the Internet. And today, I think the whole Dan Ives argument that you're at the, it's not just Dan, but you're at the beginning stages of this really can't be said enough. If this is going to be what we all think it's going to be, there's years of investment to come down the road. And for stocks that, at least in the case of NVIDIA, everyone agrees is not too expensive. It's not 100 times EPS. It's not 150 times EPS. Presumably, there are more gains down the road to come for everybody. Sure. But in 99, let's just say there were many, many, many companies that were at the beginning or the precipice of the birth of the Internet.

And companies that were, you know, routers and switches and all of these other things. And some of them were pretenders. And the real ones, in quotes, are around today. But I would argue, and tell me if you think I'm wrong, we just did that. And what you're talking about is the IPO market in 99, which exploded where everybody was trading on nonsense. And you could make the case that the SPAC market, which we already blew up, was kind of that. It kind of mimicked the IPO market in the late 90s. I don't think it's going to match up that well. I think the market right now has gone a lot farther in exploiting and pricing into potential here than certainly 99.

When the Netscape IPO came out, nobody knew how to even talk about it. That's right. So I do think also Qualcomm, by the way. Qualcomm. People didn't. The mobile phone penetration was not really high by the time that thing imploded. So I just don't think it's the most helpful conversation because it's never going to match up perfectly well. Also, as I keep saying, unless you think the Nasdaq's going down 70 percent and earnings are going to be cut in half

next year for the s&p 500 then stop talking about 2000 because that's what happened it's not a good analog it there are certain pockets though it just conjures up thoughts yeah bubbles absolutely and unsustainable overheated markets can be overheated without them being historically vulnerable look every period of bank upset doesn't have to be the next 2008 but it's the nearest analog in which we look back at some moment of great crisis and we say, wow, hopefully this is not the next that. So that's why it's an easy point of reference. But let me just add real quick. ChatGPT came out in the fall of 22.

If we equate it, and I know that you're saying don't equate it, but let's do it for fun. If we equate it to the Netscape IPO, which was in August of 95, then we're in August of 96. I get it. But like, I think that I think that the market just goes from A to B a lot faster. I mean, Fang was 2013. Jim Cramer named it in 2013. It's 12 years ago. So like the idea of these platform companies that are just like buy them. You can't pay too high a price has been very well ingrained for a while. What do we want to make? And you reference so money coming out, money going in, money going into the apples of the world and the alphabets, the one that have that have been so beaten down. Apple was, you know, mostly under 170 for the for the duration of the week.

Now it's back above at 172 and change. So it's interesting that we can have some, you know, maybe a little bit of froth or whatever it is, come out of some of these mega cap names and then go into these other areas. And that's why the market at large hangs in. Like it's not like today, NVIDIA collapses and then the overall market

is having a massive problem. Today it didn't happen. I mean, again, it would surprise me if this is going to be the perfect choreography on an ongoing basis. But until the macro really breaks down, until you really have to question the important stuff, which is, is this expansion in good shape? Seems like it is. You know, jobs are in a comfortable zone right now based on this morning's numbers. Credit, unshakable. So all that stuff is nothing you have to worry about in the

moment. So it becomes more about the internal market mechanics. There's massive volume in NVIDIA today. It's going to trade $100 billion worth of stock today. OK, so maybe that's on a short term basis, pretty decisive to say the market saying kind of we got enough for now. And let me add, it's not just the semis. When you look at who's down the most today, it's a number of charts. Costco, Constellation Energy, William Sonoma, Wingstop, stocks that are up triple digit percentages, trading at mid double digit multiples that are all off today. Meanwhile, you've still got Visa and MasterCard positive on the day, Google and Apple positive on the day. And stepping back from that, you've got eight of 11 sectors in the S&P 500 outperforming the index right now. So it's not a market-wide, as you mentioned, destruction. Well, look, there was a period of time a year ago

or however long ago where if you lost the biggest market cap names within the market, you were going to have a big problem. There wasn't enough support underneath to carry the market or at least to hold it for a period of time. That's different now. Sure. Because we've had the broadening and we've had broadening from big areas and big name stocks, large market cap stocks that have hit new highs and are trading around those levels, too. That's helped us hang in if there needs to be an even bigger breather from some of these other. Of course. I mean, coming into the year, who had on their bingo card,

I'm sorry, Tesla down 20-something percent, Apple and Google down, and the broad market up, call it 8 percent. I mean, like literally nobody would have expected that. No, I wouldn't have expected that. But I do think one thing that I was handicapping, it wasn't that bold, but to say it's not just going to be an either-or market. It's not just going to be either MAG-7 or it's going to be the Russell 2000. There was differentiation going on all over the place. Those stocks you just mentioned, by the way, Dan,

are all the ones that have been carried by this momentum factor. So I think we have a chart of SPMO. It's the ETF for the S&P momentum stocks. And this decline today looks like nothing on the chart, on a one-year chart. There it is. But, you know, it actually, you see that just amazingly orderly ascent right there, and up 46% in 12 months. So all of that stuff gets flowed in there.

So, yeah. And the reason, Scott, a year ago it would have been different is you didn't have a broad earnings upswing. We're in the third quarter of earnings growth after a trough right now. The Fed is likely rounding into, you know, the moment where it's going to probably trim rates into an all-time high on the S&P 500. It's happened before, but it's, you know, it's kind of like a cherry on top. And the economy itself, of course, is doing fine.

Pasquarello, Goldman Sachs had an interesting note today, as he always does at the end of every week. For those wondering about the sustainability of this rally, he says, it's been fair to ask what would happen if one or more of the magnificent seven stocks really came off the pace. Well, it's clearly happened, yet the market has certainly held its ground. And others are talking about that as well. It's an interesting fact. You can maybe take your eye off of the big names for a moment, but don't lose sight of what got you here, what the big trend is, and why people continue to put money in by the dip in these mega cap names. Listen, I've been making the point on air for quite some time. I mean, most of the air time on your two shows goes to semis and homebuilders. I should say, from a sector standpoint,

we always talk about the semis and homebuilders outperforming. But I mean, I'm blue in the face. And a lot of consumer sectors, it's not the retailers per se, but a lot of things that are focused on the consumer continue to do very well. Again, look at the hotels sitting at or near highs. When you step out, I've mentioned industrials any number of times.

There's a whole host of a caterpillar. If there's a problem in the economy, someone should tell Caterpillar stock because it hasn't heard about it right now. And you can go industry by industry. And there's a number of them that are doing exceedingly well this year. They just don't have the thrust for the market, as do the semis because of NVIDIA. Even if some want to play the broadening out, and Wolf today is a good example of while we still expect the market leadership to broaden out in the months ahead, we're still long the AI trade in big tech unless the fundamentals start to disappoint. It's like we're still long this until you show me otherwise. And right now you're not showing me enough of otherwise. It's it's it's it's and and

not or is the way people I think are thinking about it. It feels as if it's really risky to to say, well, that trend has been overplayed and we're going to back thinking about it. It feels as if it's really risky to say, well, that trend has been overplayed and we're going to back away from it. And it is tough also, just if you're involved at all in big caps, you have to have some kind of representation in it. So, yeah, again, I think the broadening out is less dramatic and exciting. If you look at the mid cap ETF or you look at the equal weight S&P, yeah, made a new high after a really long period of nothing at all, which really contrasts with the S&P 500, which is this beautiful, tight uptrend we've had since October. What did we learn this week? We learned that the economy continues to hum along. Maybe it's cooling a bit.

Sure. Chair Powell all but told us he's cutting rates. All but said it. They're right at the precipice of doing that. And I thought he made that perfectly clear. And the rally remains largely intact despite, you know, some tumult in NVIDIA today. You leave this week feeling, I think, no different, if anything, emboldened as to why we got here in the first place. It's almost as if interest rates don't matter nearly as much as everybody seems to make them out to be. And I think that if there's any takeaway from the last couple of months, at least in this environment, that the Fed and liquidity and all the bearish narratives that are advanced

over and over and over again for the better part of 20 years, at least in this environment, don't matter as much as the earnings backdrop, to which Mike alluded to, the economic backdrop you alluded to. That's why stock prices are going up. You want to give me a second to last word and we're going to see you in the zone anyway? I would simply say that this all can be true and help explaining why we're here. I still think it's tough to trust a market that hasn't had any payback in four and a half months. And, you know, you're not going to get away from that feeling of, you know, it feels as if at some point you catch up to the big pile of good news that's accumulated. Yeah. All

right. Good stuff. We'll see you back in the zone. Thank you, sir. Thank you, sir. Weekend. We'll see you on the other side of that. Pippa Stevens now has a look at the stock she's watching as we head into the close. Pippa. Hey, Scott. Well, Eli Lilly shares slipping after the FDA postponed approving the pharmaceutical company's Alzheimer's drug. The FDA's surprise move will delay regulatory action on the treatment that was widely expected to be approved this month. And Bitcoin is soaring to new highs, the cryptocurrency topping $70,000 for the first time ever after surpassing its COVID-era high earlier this week. The momentum follows spot Bitcoin ETFs getting approval earlier this year.

And the recent crypto mania also lifting Coinbase. Shares of the crypto exchange hit a new 52 week high today with Goldman upgrading the stock to neutral. Scott. All right, Pippa. Thank you. We'll see you soon. We're just getting started. Up next, more on today's intraday reversal for stocks with Wharton professor Jeremy Siegel. We get his first take on the jobs report. We'll get his take, obviously, on the rally,

what's happening in the chip stocks as well. We're live from the New York Stock Exchange. You're watching Closing Bell on CNBC. We're back. Stocks wobbling after hitting all-time highs earlier in the session. NVIDIA's incredible run taking a bit of a breather. Here to weigh in on all of it is Jeremy Siegel, professor of finance at the Wharton School and chief economist at Wisdom True.

We got a lot to talk about, professor, and it's great to have you on this Friday. So you're going to walk away to the weekend thinking what now about this rally? Well, Scott, when you have trending stocks, when you have momentum stocks, there's a very old saying in Wall Street, and it is up the staircase, down the elevator. And if you take a look at NVIDIA and other trending stocks, that's what happens. Momentum players move on. They have very tight stops on it. As long as it's going up there, they're in And as soon as it breaks their trend line, boy, they're out. We have what's called a one-day reversal, new high, then low. My experience is that's rarely the final high for the stock. Usually, you have a couple days, you know,

mixing on the price, and then it will resume its upward course. So this is something I've seen many, many times before and does not scare me. Okay, so the elevator goes down another floor or two, but then you get back on the escalator and you start going up? Yeah, yeah, to consolidate, yeah, that's exactly right. It's kind of like a head fake. I mean, you know, playing the momentum play requires a steal because, you know, when it goes down, it's so sharp. You say, oh, I'm going to get out.

And then what happens, it goes back up to new highs, and you're so angry at yourself for getting out, you get on again. And it goes up another group, and then what happens at the very end, and I don't think we're at that very end, is you're saying, hey, you know, diamond hands. I'm not selling this. It doesn't matter what. Unfortunately, that's usually the very top. Now you're using some of the lingo from the mean stock mania. Yeah, well, you know, I'm not saying they're meme stocks at all because these are real companies. But, you know, take a look at what happened to Cisco in 1999 and 2000. I mean, this was a great company. It got overvalued.

But, you know, we talked about this last time. Could NVIDIA get there? Yeah, but it would be at a much higher price to get to what Cisco's evaluation was in 2000 compared to what Nvidia is now. Does it tell you, though, when you watch a stock like this go up seemingly every day, and it just reaches these heights that make you sit back and say, I just can't believe what this stock is doing. Does it tell you that there's just too much froth in certain parts of the market, but not the whole thing? It tells me that we're beginning to get the trend followers and the momentum players. And they don't care what the valuation is.

They don't care what the stock does. They don't care what the company does. They got their charts. They say, wow, with this trend, you know, make the trend your friend. And I'm making it my friend. And I got my stop there. I'm riding it up. You know, everyone's convinced that they can jump off the train before it goes off the cliff. And I'm not saying NVIDIA is at all ready to do that. But these are the games that speculators play. And I'm beginning to see more of those sort of players move into the market.

But it's extremely early stage, not late stage, because 25 years ago, it had been going on for many years before finally it cracked. But you're painting a scenario, though, in which exuberance starts to get a little bit irrational and then turns into pure euphoria, and that's when you have to worry. But you don't think we're anywhere near that stage yet? Yeah, exactly. Exactly. What did you make of Powell on the Hill this week, who came off to many, maybe a little more dovish than expected? Yeah, a little bit dovish. I mean, he said, and we're close. I didn't expect that. I mean, he could have shaded it.

You know, we saw that January report, a little worried. It means we've got a lot more work to go. But I think, you know, maybe he got some inkling of, you know, a rather softish good wage number that we're having now. And, you know, seeing some slowdown saying, you know, we are very, very close. I think next Tuesday's number, CPI, which, of course, is going to be the last one before the March 20th FOMC, is going to be the last one before the March 20th FOMC, is going to be quite important. I'd really like to see a reversal of that from the uptick that we had in January. And I think that

that is definitely possible. How many rate cuts are we getting this year, Professor? Well, you know, we talked about that. If we get too many, I'd worry because that means the economy is crashing. So, you know, you just say, oh, I just want as many as possible. No, you don't a rate cut in May or maybe June or earlier or later. However, I mean, I think, you know, my feeling is that we're going to have rate cuts. However, let me warn you, how many days is it going to be?

March 20th, 12 days. I think we're going to have less rate cuts on the dot plot than we did in December. Because I think, honestly, Fed officials are surprised and pleased the strength of the economy. They say, you know, we don't have to cut that soon, you know, and I can afford to wait a little longer before I can squelch inflation so that that might rattle the market a little bit but uh you know it's only because of the strength of the economy not because they're you know stubborn and won't do it beforehand in fact jay powell says i'm not waiting until all the inflation is wrung out before you know i'm going to start cutting which

would obviously be too late at that point how far far do you think the S&P can stretch? We call it, what are we, we're 51-30, we can call it now. It seems reasonable to you. Well, you know, we're 21 times forward earnings. Earnings are holding in very well and might actually come in a little bit higher. That's a full valuation, so I pay five ten percent over um hey can we get 50 over 60 70 absolutely just like we can get 50 under at the bottom of the bear market uh you know that that is the emotion that has always swung markets over the decades over over the centuries. And, you know, it's the type of volatility that a long-term holder in stocks has to get used to,

you know, to reap the benefits of the long-term returns. Let me ask you one more question before I let you run. Have you been watching how Apple has been trading in the last, you know, several weeks? Do you have any concern about it? What do you make of it for a stock that we used to say, as Apple goes, perhaps so goes the market? Not so much today. Well, you know, I mean, and one who could ask, you know, the first one maybe to topple, I'm not saying Apple is going to topple from the Mag 7 I mean but Tesla you know the competition again look at you know I mean

what Tesla's got in China which Musk has said you know this could be a problem besides all the other problems that EV has and that's quite what Tesla's mind is on what 50% from its high now Apple is still I mean this type of reaction from Apple if you take through history is certainly

nothing unusual and it still has a great base. But, you know, there is some competition. You know, take a look at the magnificent nine that reached their peak in 2000. How many of those are left? A few, but, you know, nothing stays at the top forever. We'll make that the last word. Enjoy the weekend. We'll see you soon.

Professor Jeremy Siegel of the Wharton School. Do you have a news alert to tell you about on Amazon? Fortune is reporting that the FTC has begun probing Amazon's new fees on U.S. sellers. Sellers are reportedly not happy with those new fees, which require sellers to either pay Amazon or begin shipping goods to at least four separate warehouses on their own dime. And another charge that punishes sellers for consistently low inventory. The FTC did not have any comment to CNBC about that story. We've reached out, of course, to Amazon and we'll update you with their response if, in fact, we do get one that stock down a little less than 1 percent on the session.

Coming up, we're going bargain hunting for under the radar opportunities with patient capital management's Christina Malbon, why she is buying stocks that have been left for dead in this market. We're back on the bell after this quick break. We are back to Nasdaq retreating amid the broader chip sell off today. My next guest says she's finding opportunity in value names that have been left for dead in the current market. Joining me now, Christina Malbon of Patient Capital Management. Christina, welcome back. It's nice to see you. Thanks so much for having me, Scott. I'll get to these value plays in a minute, but as I look at the notes, the thing that honestly jumps out the most to me is that you

say big tech like Alphabet, Meta, and Amazon are still being underpriced, underpriced by the market. How so? Well, we think Google is a great example of this, right? So on the surface, you look at Google and you say it's trading at a market multiple. But if you actually start stripping out the businesses that are losing money or under monetized, you're really paying a below market multiple for the core of Google. On top of that, we're at the very beginning of an AI trend. And we know that Google has the most publications in AI research. And so they have put out an updated Gemini version that many are touting as as good, if not better than chat GPT. And we think longer term, the AI trend is going to accrue to the cloud players. And so we think Google is very

well positioned. And so that's what I mean when we say that they are underpriced. There's groups within the Magnificent Seven that are not pricing in Euphoria yet. Sure. Part of them, if you want to take Alphabet specifically, I mean, part of their rollout, some of their AI related initiatives have been what some have termed an embarrassment. I mean, even those, you know, close to the company have sort of panned what they've done thus far. Yeah, so I agree with that. Right. And we've had a ton of negative PR in relation to that. I think for us, we're long-term investors, and so we hold things, you know, three, five, ten years. And so this sort of negative PR blimp on the radar, we think, will be long forgotten over a five-year period. And we like to capitalize on those opportunities

by adding to those positions or building a position when the market is negative on a story. So if we're talking value names, what kinds of things should we be looking at? Yeah, so we like to think about value outside of the typical low price to book parameters. We think nowadays that there's a lot of value in the market for companies that can sustain growth for longer than the market expects or that are under earning, kind of like we highlighted with Google. And so a name that we're really excited about is Canada Goose. And you all might know Canada Goose as, you know, the luxury down jacket company. But what I think is underappreciated is that they have been on an innovation front. They're expanding beyond heavyweight down. They're moving into lightweight

down and clothing. And at the same time, they're expanding to a direct-to-consumer marketing, which is costing a lot of money to build up. So what we've seen is margins are compressed. So if you're just screening for stocks, you're going to say, hey, this company is trading for 20 times earnings. But it's actually at a margin that's over half of what the core is actually earning. So if you actually look at what the core is earning, it's trading at 10 times. And so we think that as they move forward

and gain scale on the investments that they've made, and as they go to cut costs, which they've announced a cost cutting program, that margins are actually going to build a lot faster than ConsenSys has priced in, and we see it as a bargain. What about Royalty Pharma? Why do you like that name, which is on your list in front of me?

Yeah, so this is, once again, another name that I think you kind of need to dig into the details to really understand where it's trading. And so this is a company that buys pharmaceutical royalties and they're the largest purchaser of royalties in the market. And it traded down over the last year

as interest rates increase. And the reason for that is they make a low teens return on these royalty deals. And so as interest rates went up, people became concerned about the spread between the return they were making and where they could borrow at. What we got confidence in

is that they're extremely disciplined and they actually manage the underwriting to maximize on the spread between their cost of capital and the return on these deals. What's also a little bit tricky is that their GAAP accounting is completely off. So when they buy a royalty, they make an estimate of what that royalty is worth. And then they account for it in GAAP at the current valuation, but they have to adjust it up

or down based on changes in assumptions. So the GAAP number just really isn't reflective of what they're taking home in cash at the end of the day. And if you look at what they're taking home in cash, this is a firm trading at eight times. That is deploying capital in a market where we've seen capital pulled back from biotechs. So we saw last year, there was almost no new capital

going to these young companies with innovative products. And that really lends itself to Royalty Pharma being able to buy these quality royalty assets when no one else is available. Furthermore, you see cash-strapped legacy players like Teva do deals with them when they want to monetize assets in their pipeline that they can't prioritize given the debt that they have to focus on repaying. Christina, thank you. We'll see you soon. Christina Malbon joining us. Up next, we're tracking the biggest movers as we head into the close. Pippa Stevens standing by once again with that. Pippa. Hey, Scott. One software stock is sinking after guidance

disappointed the street. We've got the details coming up next. I have an alert for you. I want to call your attention to shares of Macy's popping right now on a report from Axios saying that retailer considering negotiating a sale directly with activist investor Arkaus without launching a strategic review of the company. We've reached out to Macy's, have not received a comment yet. Certainly we'll keep you updated as we know more. But there's that move in that stock moving just about 4 percent higher. We do have less than 15 to go before the closing bell. We're back to Pippa Stevens for a look at the key stocks she's watching. Pippa.

Hey, Scott. Petrobras is under pressure after the Brazilian oil giant's dividend disappointed Wall Street. The company said it will pay out roughly $2.9 billion in ordinary dividends, but won't make an extraordinary payout, which investors had been expecting. And MongoDB, also in the red after releasing its quarterly results. The database software company easily topped Q4 estimates, but the firm issued lighter than expected Q1 and full year guidance. Still, the CEO saying the platform is, quote, resonating with AI startups. Scott? Stephens, thanks so much. Still ahead, upsetting the Apple chart.

Get it? Those shares set to snap their longest losing streak in more than two years today. We're going to run through what's been behind this sour stretch and whether today's pop could have some staying power when Closing Bell comes right back. Time for the Closing Bell Market Zone. CNBC Senior Markets Commentator Mike Santoli here to break down the crucial moments of this trading day. Plus Steve Kovach on Apple heading for its first positive session, believe it or not, an eight. And Courtney Reagan on the sell off and Costco shares. Michael, I'll begin with you as we close out another week.

Your biggest takeaways are what? All those things can be wrapped together into the is the momentum on trade or is it off? And so today you had a little upset in that it's about a 50-50 up-down day. It's actually pretty orderly. And I think you can take away from that the idea that the jobs number today, the Powell testimony this week, even the other data, which showed moderate growth dynamics, are giving people a little bit of a psychological cushion that says even if the market needs to kind of have a period of turbulence, if this momentum trade unwinds further, it's not because the macro has fallen apart or financial conditions

are getting hostile. Yeah, NVIDIA loses $100 from its high. It's worth about half of the half percent decline in the S&P. Yeah, what an amazing day it's been for those shares. And finally, Steve Kovach, Apple above 170, above 171. Actually, it's going to end that streak. Yeah, maybe the nightmare is over, but it's been nightmarish headlines just all week, Scott, for Apple. I mean, we had the report earlier this week that sales of the iPhone are down 24 percent in China for the first six weeks of the year. On top of that, just those lingering questions about AI. Just this morning, Citi cutting its price target from $2.25 to $2.20. The list just goes on and on and on, not to mention

the regulatory pressure Apple is already feeling in the EU with the Digital to Market Act. They were kind of humbled today and actually had to reinstate the developer account for Epic Games, the Fortnite maker they've been beefing with legally for the last three and a half, four years now. So, look, there's just a lot going on right here. But the concerns remain about where Apple fits into the AI narrative and how it can recover in China, if it can recover at all, especially with that renewed competition from Huawei, Scott. Appreciate that very much, Steve Kovach. Thank you to Courtney Reagan. Nice run for Costco shares until today. Yeah, you know, Costco shares under pressure

after reporting second quarter results. Earnings did exceed expectations. Comparable sales, 5.6%. It was also better than consensus, and it was driven by traffic. But revenue and net sales, yeah, they slightly missed analyst estimates. But still, analysts like the margin expansion,

the membership numbers, along with that traffic-driven comparable sales number. Plus, there's some big-ticket items that had been under pressure, and those saw sales improvements, things like appliances. And while Costco is a consumer staple, you point out, Scott, it's had a really decent rally ahead of the print of 20 percent in three months. That's actually including today's downward pressure and well ahead of the other major indexes. Profit-taking, of course, could be some of the reason for the lower move on shares today. So I think it's important to keep all that in perspective, too. Back over to you.

We will. Thank you, Courtney Reagan. All right, Mike Santoli, I'll turn it back to you. You heard the sound effect. We're approaching a minute left. All right, CPI. Yeah. So we're going to learn early next week whether January was a blip or the start of something more worrisome.

Right now it feels like it was probably a blip, but you just never know until you get that report. Yeah, the stuff we got this week implied that January seasonals maybe looked like they were running a little hotter than expected. We also perhaps are at a point where we can start to explain away part of any upside surprise because we know it's going to happen with shelter. And we also know the Fed's orientation is not to look for excuses to sort of take away the rate cut expectations at this point. So, you know, with any luck, it kind of ends up being right in line with the trend, which is, I would say, stubborn disinflation still in train. Probably the markets, OK, the bond markets already had a big move, globally yields down, you know down at the lower end of this three-month range. So the bond market's kind of stayed out of the stock market's way. It's allowed the stock market to get preoccupied with its own little stories and chasing the latest hot thing. You have a great weekend. We'll see you on the other side

of that, Mike Santoli. Well, the end of the day certainly doesn't look like the beginning. What a day it's been. We did hit new records on the NASDAQ and the S&P before this midday pullback. We'll keep our eyes on all of it again on Monday.