Closing Bell - Closing Bell: Expectations Set Too High? 10/30/25

Episode Date: October 30, 2025

Are investor expectations – and magnificent 7 stock prices – set too high as these companies try to justify massive AI spending? Or is this just a pause in the AI-propelled rally? We discuss with Big Technology’s Alex Kantrowitz, Requisite Capital’s Bryn Talkington and Odyssey Capital’s Jason Snipe. Plus, it’s not just about earnings. We discuss the other big catalysts for stocks and what could be at stake for your money as we head into year end with NewEdge Wealth’s Cameron Dawson and Palumbo Wealth Management’s Phil Palumbo. And, Doug Clinton from Intelligent Alpha gets us set up for Amazon and Apple results.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Thank you, Brian. Yes, and welcome to Closy Bell. I'm Mike Santoli, in for Scott Wapner. This make-a-break hour begins with the indexes struggling to absorb some stingy reactions to some mega-cap results in the first round of the week's Mag 7 earnings gauntlet. The NASDAQ losing more than 1% on the day. That's down from a record high. With the S&P 500, not far from the lows of the day, it's off almost two-thirds of 1% right now. This is despite a nice lift in alphabet shares, now that's more than offset by pressure on meta and Microsoft after less than perfect quarters, or at least in the eyes of investors. That's what they saw. The broader tape meantime is trying to rotate away from semis and into some non-tech quality names, the Dow trying to stick in the green and the equal-weighted S&P 500 holding near the flat line as well. Bonds digesting the Fed's hawkish rate cut with yields inching up a bit after yesterday.

pop following the Federal Reserve decision and press conference, which sets us up for another run of Bellweather reports after the bell from Amazon and Apple and takes us to our talk of the tape. Our investor expectations and Mag7 stock prices set too high as these companies try to justify massive AI spending, or is this just a pause in the AI-propelled rally? Let's talk about all of it with our panel, Alex Cantuwait, founder of Big Technology,

Bryn Talkington of Requisite Capital Management, and Jason Snipe from Odyssey Capital. Brennan Jason, of course, also CNBC contributors. Welcome to all. And Alex, I'm looking at Amazon down more than 2% on the day. It's been a little bit of a laggard. It's down 7%. Maybe the results from Microsoft and Google have perhaps set the bar high.

But what's your read here on what investors need to hear out of Amazon in particular? They're going to have to see numbers. I mean, that's really what it comes down to for Amazon. And of course, Amazon has a higher base, so it's going to be tough to grow at the rate that Google and Microsoft are. But when Microsoft's putting up 39% growth and your expectation is to put up 18, investors are going to ask, why aren't you growing at the same rate? You're both enabling similar technology. There's a huge opportunity to jump because of the AI moment right now. Microsoft just made this great deal with OpenAI.

I think Microsoft this week is the biggest winner because of that deal with Open AI. What do you have if you're Amazon? And I think what Amazon can answer with is growth. numbers. And until then, there are going to be questions about what it's doing. Yeah, I guess Amazon is kind of outside the immediate open AI halo effect as Microsoft is inside. And I do want to get you also on the meta reaction because I wonder if this also kind of sets expectations down 11% today. You were here yesterday. We talked about how, you know, maybe investors were going to keep meta on a shorter leash when it comes to CAPX plans.

What's your takeaway in the day after? Yeah, we did say yesterday there was going to be a lot of pressure on. META and that's what happened, right? They are going to spend more than investors want and then they're being punished today, double-digit decline in the stock. I think that what META shows is that this path towards generative AI or the AI build-out

is not gonna be a clean one. It's not gonna be a smooth one. There are gonna be bumps in the road. For META, you have what could be a very serious threat to its product where people spend time with AI friends, maybe they don't wanna chat with human friends, right? This is one of the problems that META might see. Also, you could just say,

chat GPT is gonna be very engaging. So why am I going to spend time on reels? We know even over the past few weeks, Sam Altman has said that people will have romantic relationships with chat GPT, maybe even erotic relationship with chat chepti. And you're looking at this at Meta headquarters, and you say to yourself, well, we better spend if we want to stay ahead of this. The only thing is that spending the results from all this R&D is going to be delayed and it's not going to be showing up in the results right away. And so that's why we're going to get that chop. In some ways, I applaud Mark Zuckerberg for saying, I don't care what the market is doing.

We're going to spend and we're going to build the product that the market needs. On the other hand, you can make the argument, why do you have to build the models and superintelligence yourself? There's probably not going to be a moat there. Can't a company hoard that intelligence? Why don't you just build products on top of it? And so this is going to be the things that investors are going to have to struggle with as we move forward in this AI build. Yeah, I mean, maybe the third time that Zuckerberg has acted as if there was an existential threat and they needed to just go full speed ahead to try and get to the next spot.

We'll see if it pays off this time. Bryn, I wonder how you're kind of taking in the individual results and then putting it into the bigger picture story of, hey, nobody is saying that overall spending is slowing down. The overall food chain is still going to be just packed with capital flowing through it at this point and what it means for the ones you own. I think, you know, so far, I think the big difference between Meta, Microsoft, and Google, is meta doesn't have cloud business. They're an advertising company. And so I just think they're just

spending and spending, like build it and they will come, but come for what? With Microsoft and Google, you have the cloud business, you have YouTube, you have Gemini, you have co-pilot, you have LinkedIn, you have so many other verticals that are all on fire. And so I think investors are going to be willing to pay a much higher premium in terms of letting need other companies spend versus I think meta has a much tighter leash because, once again, ultimately, it's a lot of It's like clicks for ads on Instagram, Facebook, WhatsApp, et cetera. To me where I still go back, that still makes me nervous, is because we are in this build-it and they will come environment,

is that when you look at the CAP-X-to-revenue of all these companies, except Apple, which I know we'll get to, you know, these CAP-X-to-revenue numbers are just massive. 30, maybe we'll even get to 40% for meta, possibly. We don't know the exact number. And so we've talked about this, these capital-like companies, are now very cap-x heavy. And so what type of multiple growth rate margins do you end up getting?

And so, I mean, I think with meta being down today, I thought that was actually very healthy, but the market does have some sanity that you have to have those checks in place. But do you think the margins on these companies will look very different five years from now if this is actually a bumpier road than they think it will be. Yeah, it's a good point.

I mean, the market is trying to be discerning when it gets these three-month updates. Jason, I know you own both Amazon and Alphabet at this point. When it comes to Amazon, I mean, there's always moving parts in there. I know who wants to kind of boil it down to AWS and what the growth and margins are there. But how are you viewing the setup here? Yeah, there's no doubt about it, Mike, that Amazon trades on AWS. Listen, we've had record retail numbers, but that hasn't really hit the stock.

The stock's only up 2%. has been the lagger out of the Mag 7. But for me, to Brin's point, it's going to be a story about CapEx going forward. I think we need to see some reacceleration. You know, 18 to 19% is solid, but we're probably going to need more than that. Desk they do own 30% of the base, but that lead is crunching down, right? Because obviously Microsoft now owns 20% of the cloud business. So for me, I think what's going to be interesting is this story, even with Project Rainer,

this kind of super compute cluster powered by this. the AWS chips, their proprietary chips, training. So I think that's going to be an interesting story for me because I think going into 2026, you'll start to see those numbers power through into AWS numbers. And depending on where you look, it looks like it might be additive in 4 to 5% growth. So that's one of the stories I'll be watching as well. You know, I think on the retail side, they did have their prime day, which was extended to four days, which was shared that it was the best prime day cycle.

ever. So I think that will be important to advertising as a read-through. So those are some of the things that I'm watching with Amazon. There's some talk, I think, Alex, that, you know, Amazon announcing this round of corporate layoffs at the home office kind of are white-collar positions, you know, on the week they're going to report earnings, maybe is a signal that, you know, they have to convey that they're focused on efficiency and that they're trying to run a tighter ship. I think that's a good read. And we also know that this is coming, mostly coming in retail, mostly coming middle management. And I do think that JASI has been saddled with this since he took over as CEO. There was a large overbuild during the pandemic for the expectation that people would shop online the way that they did during lockdown.

And it hasn't materialized, even though Amazon's retail business has grown. So I think that we're at this moment where companies like you saw with meta, the numbers have to look good. You have to figure out where to be efficient, where to cut. And as we get into earnings, at least this will be a story where Jassy can tell the market, hey, I'm focused on this, I'm cutting in places where we're low margin, so we could focus in areas where we're higher margin. Yeah. Bren, you kind of previewed the Apple conversation.

Let's get to that right now. Obviously, it's in a separate category here because they're not kind of building it, so to speak, their own AI models or the massive data center spend, and therefore their KAPEX story is pretty much minimal. What does it mean, though, when everyone's all of a sudden gotten excited about the iPhone 17 launch and the upgrade cycle and the fact that the stock has kind of run into this report? Yeah, I mean, from this quarter to last quarter, the stock is up 30%. So I think the excitement is definitely priced in the stock.

Like Google, Apple's looking to do over $100 billion this quarter in revenues. So, you know, people always like those numbers, I think $102 billion. I think that what this is showing you is the 17 Pro in particular, what sold out in places in China, sold out in places in Japan, is that people are excited about this phone, I think, for the first time in multiple numbers. And I think on the AI side, it's like, what is actually everyone else building? Right now, from a retail perspective, I see some like perplexities, maybe not as good as chat GPT, which is not as good as GBT. but I think Amazon's very, I mean, Apple's very smart here. Ultimately, they could plug in Gemini, put some safety protocols where they're not selling our data. Google already has my Gmail, my search history, everything in my ecosystem. So I think Apple is going to be smart about this, let everybody spend. I looked actually in their CAPEX to revenue numbers have been very stable around 3%. So if you're still looking for a company with high margins, services business is on fire. I think Apple's right, right in the bullseye there. Yeah, it's kind of interesting, Jason. Just look at these companies side by side in terms of valuation.

You look at Apple's like kind of 30 times forward earnings. For Apple, that's kind of rich. It's also where like Amazon and Microsoft trade, but because those other companies are spending down their free cash flow, Apple's actually got the higher free cash flow yield right now. On that basis, it's still in harvest mode. So I don't know if that changes the equation for you in terms of risk reward, but how do you think about that? Yeah, there's no doubt about that, Mike, $100 billion buyback stories, right, that we've heard from them already, 35 times forward earnings of 8% growth rate.

I mean, that's always been the story, well, at least the story recently for me. But to Brin's point, I think the 17 Pro has done very well. It's accretive to the margin story, you know, for the stock. And I think the iPhone Air, it's less of a, less of a story because of how well the 17 Pro has done. And then early indications, you know, listen, the phones dropped on September 19th. We're not going to see a lot of runway on what those numbers look like. But early indications said those, at least the sales were up at least 10 percent, you know, in those first 10 days. So I think this is going to be an interesting re-through to the holiday quarter, which I know will all be focused on.

So these are some of the stories that I kind of focused on with Apple. Last quarter was a great quarter. I think it was a little bit of Pulford's services and hardware sales were up above 10%, which are really strong. I don't think we'll see quite that in this quarter, but I'm excited to see what we'll see in a few minutes. Alex, it was just, you know, a couple months ago, whatever it was when Apple had a big AI event. Everyone thought it was make or break in terms of them wowing everybody with what they were going to offer. And really, it's much more about the old upgrade cycle on the phones. So, I mean, does that buy them time in your mind in terms of investors?

expectations and demands for what they do in AI? I think the speed of this technology has brought them time. And by that, I mean, it's moving slower than a lot of people imagine. We've seen Amazon rollout Alexa Plus. We've spent 10 minutes talking about Amazon Alexa Plus is not to be mentioned because it's not there yet. We've talked about Google with their Gemini efforts and still not exactly a God model. So I think the technology still has to improve, the orchestration still has to improve.

And so this thing that might have been thought of as an immediate threat to Apple becomes more of an intermediate threat. And Apple, you have to give them credit. They're changing the narrative on their own, which is they released a much better phone with the iPhone 17. And if you think about the past couple of years, every earnings result has been, you know, how bad is iPhone growth going to be?

Is it actually going to slow down? Is it single digits? All right. Last quarter, the most recent quarter, 13% growth on the iPhone. This quarter, we're expecting strong results with the iPhone 17. So it is possible. Not only does Apple have some more time on AI,

but it's actually reversed the story. because the iPhone 17 is going to potentially spark that growth. And so we don't have to say, you know, when the earnings results come in, well, it was better than feared. We didn't say they did well. Yeah, they lulled everybody into a state of kind of skepticism about what they could do with the hardware. Guys, we have to leave it there. Thank you very much, Alex, Bryn, and Jason. Let's send it over to Christina Partsenevolo for a look at the biggest names moving into the close.

Hi, Christina. Hi, Mike. Well, I have a one we don't talk about often. C.H. Robertson, really the leader on the S&P 500 today after it beat expectations. in Q3, also authorized an additional $2 billion for its share repurchase agreement, so that's definitely helping shares. This is a shipping giant that's not improved revenue in its North American surface transportation segment.

I bring that up because it is the largest segment for them. So very important. That's why shares are up 20% on pace for their best day since 2007. Cardinal Health also seeing shares on their best day since, actually, 2004, after it beat estimates on the top and bottom line. The company also raised its full year earnings guidance and raised its price. guidance, specifically in its pharmaceutical and specialty solution segment, shares up almost 15%. And lastly, Moderna, surging. Got a lot of green today after a report from stat news

that it has been, quote, in talks with at least one large drugmaker on a deal of significant scope. What a tease, including a potential buyout. CNBC cannot confirm the report just yet. It's the best day for Bernerna since 2022, but the stock is still down nearly about 50% over just the last 12 months. Shares, though, up today. 16%, Mike. Wow, quite a pop bar. Thank you, Christina. We are just getting started here. Up next, it is not just about earnings. We'll discuss the other big catalyst for stocks and what could be at stake for your money as we head into year. And S&P 500 pretty much at session lows down about three quarters of 1%. We'll live from the New York Stock Exchange. You're watching Closing Bell on CNBC.

The market seemingly shrugging off U.S.-China trade headlines, President Trump and President Xi reaching a trade truce during a high-stakes meeting, de-escalating their dispute. So what does it mean for the market going forward? Let's ask New Edge Wells, Cameron Dawson, and Palumbo wealth management's Phil Palumbo, both here at Post 9. Welcome to you both. It's interesting, Cam, because like two and a half weeks ago, the market had a little bit of a panic. on a perceived re-escalation of trade tensions. We got sort of a status quo type of a truce. Market seems to have moved on to, are earnings good enough? What does positioning look like? And did we get too overexposed to semis and Maggie Cap Tech? And now we're trying to undo it.

I mean, in so many ways markets moved on effectively in mid-April. And I think the key reason is, is that for all the fears around tariffs, you really haven't seen it hit earnings in aggregate, meaning that, yes, there are pockets of companies that are certainly feeling the pinch from tariffs. Certainly, Chipotle today is an example of that. But the reality is that in aggregate, earnings are continuing to make new 12-month forward highs. It was just suggests that because we have this AI CAPEX spin that's driving so much earnings growth and driving the majority of earnings growth, the markets have been able to drift higher. Today, of course, the reaction about meta, I think the key question to ask is, will this cause meta, today's

reaction or a weaker stock price to potentially pull back on CAPEX into 2026. And if that happens, we'd probably have bigger things to worry about. Yeah, I don't think the market is necessarily willing or ready to make that leap at this point. Phil, what about the general setup here? I mean, obviously, you've kind of had a good year. The history books and all the patterns say should continue to be pretty good into the end of this year. And working against that is maybe some concentration risk and valuation. Yeah, so I try not to think myopically, which I think is really important, right? So the whole talk about are we in a bubble, right? So when everybody's saying that we're in a bubble, normally the opposite happens. So when you think about situation today versus

1999, in 1999, Cisco was trading at a forward multiple of over 200 times. You had Intel trading over 100, 200 times. Today you have the Mag 7 minus Tesla on average 35 to 38 times. So valuations are reasonable. And then back in 1999, October 1999 to March of 2000, the NASDAQ doubled. So we're not in that euphoric time right now. So people got to can't be biopic. This is the biggest movement in terms of AI that we've ever seen in this country. And a lot of these companies will continue to perform like we're continuing to see yesterday and continue to see today. Yeah, we'll see what the reactions are, at least in the short term, to Amazon and Apple after the close. Guys, stick with me for a moment. We're going to get onto another one of the big drivers of this market.

Investors closely watching the Fed and what December might bring. CNBC Senior Economics correspondent, Steve Leesman joins us now, Steve. One day later. Yeah, coal or gifts, I guess, is the way to think about it. Markings continue to price in, Mike, a December rate cut, and that despite the aggressive pushback yesterday from Fed Chair Powell. Take a look at the numbers here, the probability of a cut in December. Now it's 71 percent, or I should say, still at 71 percent, down from 84 percent yesterday, but it was 64 percent after Powell came back.

Still a fairly confident trader. Several major Wall Street Fed watchers also continue to call for a cut, despite being surprised by Powell. hawkish tone at the press conference. Goldman Sachs writing, we still think a December cut is quite likely because the September dots implied that most participants saw it as the baseline. The labor market data are unlikely to send a convincingly reassuring message by the December meeting and Powell sees the policy stance as contributing to labor market cooling. But markets, they could be relying too much on those dots and the dot plus from September.

It showed a median of three rate cuts, but widespread disagreement you can see in the spread there. Seven of 19 members wanted just one cut or fewer this year. No more economists saying we now see a December pause as the most likely outcome. Data are likely to be modestly dovish in the months ahead, but we doubt the weakness will be sufficient to rekindle FOMC concerns about interring labor market. So where are we? In the absence of a reopening of the government, investors just need to watch this alternative data very carefully and listen closely to how Fed officials are reacting. If the divine on the committee continues, a cut may be increasingly unlikely, Mike. All right, yes, and we'll definitely need

you to parse all the Fed speak from here, because we do have a lot of diversion voices, Steve. Thank you very much. So, Cameron, the premise of the Bull case has been, we had this doveish term from the Fed. We're going to get more rate cuts, and it's an economy that doesn't quite need them, but it was going to be this kind of insurance and normalization cuts. So what are the stakes when it comes to December? Well, certainly fairly high, given the fact that if you look at the way that the market has performed since the September cut, it has had such a low-quality liquidity-sensitive bent to it that would suggest that at least that cohort of the market is very, very much counting on the Fed continuing to deliver. And I think to your point,

it's the fact that the market in the economy doesn't necessarily need these cuts, which is why they have been bullish. But I think the challenge you have is that if you are cheering for a lot more cuts, you're effectively implying that the labor market is, in fact, far weaker than what is suggested by the headline numbers, and that growth estimates are too high, which means that an equity market trading at 22.9 times and credit spreads at 20-year tights would be very aggressive. So you really want to cheer for that middle of the road, a couple of tweaking cuts lower, but not necessarily anything much more than that because of the implications for growth. And I guess, Phil, that is the real question, is the underlying economy? Is it hanging

in there as well as the market pricing would imply. Because, you know, I saw yesterday when Powell had a hawkish tone, you saw the consumer discretionary stuff take a hit. You saw regional banks go down. Homebuilders didn't like it. So I just wonder how you're thinking about the Fed economy interplay here. I think in general, the economy's in really good shape. I mean, I look at it from a spending standpoint. You went from like fiscal spending to now private domestic spending. You know, with all the spending and CAPEX that we're seeing with data center buildouts, over the next six months, that's going to continue. You're going to see $50 billion in refunds from the Triple B plan that we saw the Act, which are retroactive for tax planning.

So consumers, I think, are in great shape. The economy is in great shape overall. So I do think the Fed's going to be cautious as relates to the labor market, because I do think we continue to see the labor market weakening. You know, with that, we'll get a few cuts, which is, it's really a perfect environment for stocks. Yeah, I mean, I guess the market still sees a couple more into next year, but we're sort of going to have to have a higher level of uncertainty around that. But, Cameron, in terms of the market action today, it's kind of what many voices have been calling for, right? You have, oh, look, we rediscovered non-tech quality stocks, and the average stock is holding up better, and we're letting the pressure come out of, you know, the big semis in Nvidia and Mag 7.

Obviously, it's one day. Yeah. So what should we expect from here out? Well, this is after yesterday when breadth was so very terrible. So we had the number of names trading above their 50-day moving average dropped to 47 percent, which means that less than 50% of the companies in the S&P 500 are actually participating in this rally. So today, that number will start to look better. But what we think that weakening breath does is it makes the market a little bit more fragile under the surface.

Remember this happened back in December of last year. Mag 7 stored higher, equal weight bled lower. And end result was that we ended up having more volatility in one queue because the market was just on a more fragile footing. So we would like to see broader participation in the market. We're not sure we're going to get it because we're still in this. environment where the majority of the earnings growth is coming from just this small cohort of names. Yeah. There's no doubt it's been a little bit erratic maybe or unstable under the surface. Phil, when it comes to your clients and you'd say, okay, look, you've done really well

in this segment of the market. Are you telling them to rebalance? You're saying maybe the equal weight looks better because it's interesting. One year ago, it was the trendy trade. Everybody said go equal weight. And this year, it's underperforming by like seven or eight percentage points. Yeah, so Mike, I look at the things. I think people today have to understand that markets don't go straight up. In 1995, when we laid the land for the internet from 95 to 98, the NASDAQ went up three and a half times. And during that time, there was seven corrections of greater than 15%. It's part of the game. So for me, I like the own good quality businesses for the long term.

There are there going to be times when you're going to get corrections. It's part of the game. I don't see a point in reducing any equity allocations here. I think we're in a great environment where risk assets will continue to thrive going forward. But again, we're going to get corrections as part of the game. People have to understand that. But overall, I think we're in good shape. Not the fun part of the game, but part of the game, I guess.

All right, guys, thank you very much, Cameron and Phil. Up next, Chipotle stock is sinking. We'll tell you what's driving that action. Closing Bell will be right back. Welcome back. Chipotle sinking in today's session. Kate Rogers is tracking that action for us. Mike, you see down 17% there. This is the third quarter in a row that Chipotle cut its outlook.

It's now expecting same store sales to be low single-digit declines for the full year versus a prior forecast of flat. For the quarter at same store sales were up 0.3%, but traffic also fell. CEO Scott Boatwright pointing to some macro pressures across the entire industry hitting the business. He also told me in an interview they've seen a pretty sizable step down in the consumer making under $100,000 in annual income. particularly those 25 to 34 in age, which Chipotle over indexes too. Boatwright says they're dining at home more, not necessarily going to competitors. In addition, he says the company's still gaining share with that cohort, but they're just spending considerably less in restaurants right now.

The company also seeing a tariff impact on its packaging, higher chicken and beef costs. The plan for the rest of the year is to lean into messaging around its value proposition and build on the success it's had of some of its limited time offers and product innovation. hopefully re-engage the consumer and keep them coming back for more, Mike. But it's definitely a tough environment. We'll hear a lot more next week. There's nine companies reporting. I was going to say, yeah, that'll be a good test of whether this is truly macro.

I appreciate it, Kate. Thank you. Up next, top technician, John Kolovis, is flagging the key S&P level that he is watching now. He'll join me after the break. Closing bell, be right back. The S&P 500 pulling back today on the back of last night's big tech earnings. But my next guest sees the index heading higher ultimately into year end. Let's bring in macro risk advisors, John Kolovis.

John, it's great to catch up with you here. I mean, we're, you know, S&P bleeding lower. here down about eight tenths of one percent. And there was some excitement when we got that breakout above 6,800. It seemed pretty emphatic. Where does this leave us as we just kind of give back some of those recent gains? Hey, Mike, good to see you again. I think ultimately, until we break the October lows, even the 50-day moving average is a little bit above there. I know yesterday and even today is a little bit, you know, scary. We got some volatility coming in. Ultimately, I think we still need to thread the needle to a little bit.

at least $7,000 by early next year, and if not a bit higher into 26, perhaps, you know, as high as $7,500 to $76. The market is sort of trying to get away with one of these rotations away from danger. You know, you have the mega caps that are really making the indexes look worse and the majority of stocks trying to hang in there. Is that something you think is sustainable? I mean, under what circumstances do we see a market change character like that? Right. I think what's uncanny of the last couple of years is how the market structure has changed so much, right? It's been very concentrated. What did we have earlier this week? We had one of the worst breath days on an up day, right? That used to never happen prior to like 2020. Now it seems to happen more often than not. So if you're talking about breath and concentration and the narrowness of the market, my take is that if you think the market is going to expand and see breath and participation to continue.

I think that's a pipe dream. I don't think that's going to happen anytime soon. I don't think it happens until after the next cyclical bear market, to be quite frank. Yeah, I mean, and that would be sort of the way it goes, right? I mean, everyone kind of points back to when, oh, small caps and the average stock did really well coming out of the crash in early 2000s, and that's because the mega caps got destroyed mostly. What about semis in particular? Because obviously, they're key leadership group. You have a lot of this fundamental tailwind, but, you know, the semi index has started to look a little extended. Yeah, so on the semis definitely overbought, right? 35% above its 200-day moving average is overbought, a little over 90% of stocks above their 200-day moving average. That's

overbought. In recent history, that's been good enough for, you know, a 7 to 10% decline. It even marked that big wallop we got in 24, which from memory was a about a 35 to 40% drawdown, right? That's been recent history. But you have to ask yourself, where are we in this cycle? If you think that semis are in a bubble and they're going to continue to go, 35% above the 200-day moving average isn't that overbought. If you look at those metrics during the late 90s, it was good enough for like a pullback. Of course, yes, I'm mindful of that, but like it didn't peak until it was 100% above its 200-day moving average, right? So, mindful of the overboughtness of things, sure. But I think it's too early to say that its bubble

has peaked. Yeah, it's going to say, I think kind of open-minded about how wild things could get. You never know if they will, but how they could get. You mentioned you think that the market can still work its way towards 7,000 on the S&P. What does, I guess, the general cycle and pattern work tell you about next year? We were just having a conversation. Sometimes you got a strong finish to a year and then maybe a little bit of a reset and a rethink. Yeah, that's one of those things. So we all know that end of year, you're supposed to have strength, right? We're on like the best three months, et cetera, et cetera, when we get into November. November is an awesome month historically. But what the, my worry is for next year as we go into a midterm election year,

that is a year when equity markets tend to either go through a major correction, if not some sort of cyclical bearer market. So you have above average odds of a huge shakeout next year. So what is that means? That means we're getting pretty darn close to some sort of important top in the equity market. So as I'm threading the needle to at least $7,000, maybe we overshoot that, I want to be looking for in that first part of the year, whether or not we're actually doing a proper top in the equity market to follow that seasonal pattern. I'm more worried about the longer term cycles for next year more so than what this year is trying to tell us. And ultimately, I just want to go back to the breath thing real quick, Mike. It's like those, like the semi, sorry,

the small caps, you got to keep a close, close eye on it, right? I think a lot of folks are thinking that we're going to get help from the Fed. We haven't gotten help from the Fed from the real economy stocks. Breath has been abysmal within small caps. Small caps are at new highs. The AD line is making almost new lows with it. So that's very, very important. So interest rates are they're going to be very, very key and could very well lead us into a mini-2018. If we see the 10-year, get above that 420 level, if not a little bit. So very, very important. Yeah, 2018, of course, 2022 were two midterm election years that were pretty rough in their own ways. You mentioned the 10-year yield. We're reacting to the Fed's adjustment in rhetoric anyway.

Where do you think that that ultimately goes? All right. So longer term, take a step back. I think interest rates are going higher for years and years to come. The last couple of years, really just been a consolidation lower of that upward term. What I'm trying to figure out now is whether or not this consolidation, this down draft interest rates is over, we need to push up higher. Our view was those April lows were going to be defended, and they are. Again, that 420 level, that 50-day moving after being important, then we have to look at the 200-day to say, okay, that trend is starting to reverse. I think what's super interesting is on the two-year yield. It looks like a major head and shoulders topic.

If you go back to 2021, and I always tell people that is what is obvious is often obviously wrong. And they can't seem to break it down and sustain level underneath that three and a half mark on the two-year. So I can make a decent technical case that we're probably not going to see much lower interest rates on the short end of the curve anytime soon. Maybe it'll be next year, maybe get a new Fed, maybe things get really, really ugly from economic standpoint. We'll get that breakdown. But I think everybody looking for this massive top on the two-year yield, I don't think we're going to get it quite yet. So that means interest rates are going to drift higher. and I think this broadening out theme won't be sustained.

We'll get moments when they'll work together, but I don't think it'll be completely sustained for periods of time, again, until the next cyclical bear market. Yeah, all right, yeah, that would be certainly an attitude adjustment if we get all those things in place. John, thank you very much. Talk to you again soon. Great. Thanks, Mike.

All right. As we do hit lows for the day on the S&P 500 down almost 9 tenths of 1%. We're tracking the biggest movers as we head into. the close. Christina is standing by with us. Thanks, Michael. We have a major e-commerce platform plunging to its worst day in 20 years on disappointing holiday guidance. Meanwhile, a pharmaceutical giant soars on weight loss, drug momentum, and an aerospace manufacturer's rough week just continues. I'll have those details next. Good over 12 minutes till the closing bell. The index is bleeding lower. The S&P down almost 1%. Let's get back to Christina for a look at the key

stocks to watch. Well, let's start with eBay because it's down today, despite beating Q3 estimates after its current quarter profit guidance really just missed the bar. Keep in mind that that is the holiday quarter, which is why you're seeing shares down 15% today. It was a big deal, and it's on pace for its worst day since 2005. Eli Lilly, though, shares are on the rise today after topping estimates in its third quarter and raising full-year profit and revenue outlook. The pharmaceutical giant is continuing to see strong demand for its weight-lost drugs, Manjaro, as well Zepbound, whose revenue are up over 100% year-over-year respectively. And then, last but not least, Boeing, continuing its

slide from yesterday after it was downgraded to hold from buy at Deutsche following the company's profit miss in its Q3 report yesterday morning. Deutsche cited higher capex and, quote, less favorable inventory assumptions in the downgrade as the stock really paces for its worst week since April. Shares down almost 6% right now. Mike? Yep, and helping away on the Dow, which is now down 114. Up next, get you set up for all the big names reporting in overtime what to watch from apple amazon reddit roku and more the market zone is next we are now in the closing bell market zone and we are getting you set up for all the big names reporting in overtime julia borrston watching roku and reddit for us you've seen apart to nevertheless on western digital vikensi sagallo is here to break down

what to watch from amazon and apple shareholder doug clinton standing by with what he's expecting from report. Julia, let's get it started. Well, let's start off with Roku, because when both Reddit and Roku report after the bell, advertising and AI is going to be in focus for both of them. Now, for Reddit, shares are down about 7% today, but still up 69% over the past year, an optimism about the company's user growth and also the value from AI licensing deals. Reddit analysts expect revenue to grow 50% and earnings per share to more than triple to 51 cents per share. from 16 cents in the year ago quarter. Now, for Roku, shares are up over about 2% today, or nearly 2% today, but they are up about 30% for the year on anticipation that Roku will benefit from a solid ad market and improved recommendation tools. Now, Roku's revenue is expected to grow 13.5% while the company is projected to swing to earnings of 9 cents per share from a loss of 6 cents per share a year ago. Mike? All right, Julia, thank you very much. Nina, what a run Western digital shares have had.

I imagine expectations are high. Oh, you know it, and that's because I'll talk about the share price up over 200%. This is a data storage giant that's been riding the AI wave with hard disk drive demand from hyperscaliers, staying incredibly strong. Capacity is essentially sold out through next year. And to Mike's point, that's why you saw shares really sore about 208% this year. The street does expect modest revenue beats, but the focus is really on margins. Analyst think gross margins could surprise to the upside as pricing moves up in this tight supply environment.

Western Digital's build-to-order strategy has been working well, giving them better visibility and cost control. The company's also been buying backstock aggressively, like so many others, which should continue. One thing to watch, though, is management's tone on 2026 demand visibility, especially with more data center announcements coming from who else the big cloud players. Valuation questions are creeping in, but with supply constraints last, until 2027, according to some Adelis. The growth story seems like it still has legs. The key will be whether they can keep expanding margins, while, of course, maintaining that revenue momentum

thanks to so many of the big spenders, those hyperscalers. Absolutely, right in the middle of the whole food chain. Christina, thank you very much. Mac, Amazon feels like the streets may be a little bit nervous here. Yeah, those shares down almost 3%. Because this quarter, Amazon needs to deliver a clean, especially on AWS. The street's looking for nearly 18% cloud growth,

and if they miss, it raises fresh questions about its ability to hang on to its top spot in the battle for cloud dominance. Now, retail, it's expected to be a bright spot with strong prime day comps and improving margins thanks to cost discipline and booming ad sales. But the big picture is about convincing investors that Amazon has a real AI plan.

AWS still leads with 30% market share, but it's been losing key deals to rivals and hasn't landed OpenAI, which is is really the ultimate get right now. Amazon just opened a new data center built for Anthropic, but investors want to know if that spend is translating into real revenue. And after a 15-hour outage last week,

plus 14,000 layoffs underway now, the pressure is really ongoing into the print, Mike. It certainly is. We'll see how it goes. Be back to you for that, McKenzie Segalos. Doug, how are you thinking about this? Obviously, there's always going to be give and take in the reactions, but talk a little bit about Amazon in particular

and its spot within this full AI boom. And, Mike, we actually have not owned Amazon at Intelligent Alpha. Our models, we use AI to do our stock picks. Our models haven't liked Amazon, and it's been right. It's been the worst performer of the Mag 7 year to date. And I think the primary concern is that question around AWS. We just saw an incredible cloud number from Google, Microsoft, even though they didn't quite hit, I think, what investors were hoping with 37% growth

in their guidance for Azure, they had a great number. And so the pressure is on, the problem for Amazon has just been they haven't had a top tier sort of offering just like Azure and OpenAI, Google GCP, and their AI, Gemini, they need something. They need to do a deal with OpenAI or they need to really ramp Anthroping and get developers excited about that to drive that AWS revenue growth. All right, so we'll see if they have answers for any of that. Let's turn now to Apple, which I think is one that you do own and which investors feel pretty comfortable, at least in the last couple of months, with its position.

So what are you going to be looking for in this report? It is all about the iPhone 17. I think that coming into this quarter of the last month, it feels like we've had universal positive reports about consumer demand for the iPhone 17. It's been better than investors had been expecting once the phone was announced. And really what I'm thinking about is what does that iPhone 17 growth sort of translate into over the next year? If you look at the street numbers, the street's expecting about 5.5% iPhone growth into next year. I think that number could be higher single digits. And so we'll get a sense from guidance tonight how Apple is thinking about really what that growth will look like for next year.

And then, you know, I've got to have your way in on the meta reaction here and whether it's symptomatic of anything, it's a loss of patience in their strategy on CapEx or in general, investors getting a little bit less patient with the open-ended spend? It's funny. They've been the one where they've probably had the most actual direct benefit from their core business to using AI. I think AI has been driving a lot of the revenue growth you've seen at Meta, but the problem for them is they've been far behind in terms of actually developing their own unique

technology. They've put a lot of development and resources into Lama, which just hasn't really taken off as a model. It is far behind the leaders in terms of GBT and Gemini. And now they're spending a lot of money. They've hired a lot of talent. They spent billions of dollars, which was talked about on the call, to bring in new talent to try to rejuvenate their superintelligence lab. And they're talking about spending even more in terms of cloud resources. They wish they had more capacity. They said it. They're going to get it next year. And I think they're going to have to show more in terms of actual AI product that customers are going to pay for beyond just improving their ad business. The company also issuing like $25 billion in new debt today to help

finance this. Of course, it's very manageable on META's balance sheet. But in general, is the increasing use of debt financing for data centers and such going to become a concern for you? I think it's something we should note, we should flag, and we should pay attention. attention to. But I go back to just what has been the commentary from the hyperscalers. Meta, Microsoft, and Alphabet universally all said they wish they had more supply, they've got more demand than they know what to do with. So they need to keep building so that they can monetize that. And ultimately, if that demand stays solid, they'll have no problem paying off the debt.

Doug, I really appreciate your perspective. We'll see how those numbers come through from Amazon and Apple in just a little bit. We're less than 30 seconds from the close. We're going to go out on the lows. The S&P 500 is now down a full 1%. The Dow is also on a quarter of 1%. The heaviest weights pressuring the S&P are meta, Microsoft, Invidia, as well as Amazon. So we'll see if those reports can rescue us this time around. That's going to do what the closing is out. We're hitting in overtime with John Kort.