Closing Bell - Closing Bell: Major Move Higher Coming for Tech? 10/30/24

Episode Date: October 30, 2024

Is the tech trade about to make another major move higher in the weeks ahead? Trivariate’s Adam Parker, Sofi’s Liz Young Thomas and Invesco’s Brian Levitt debate where they stand. Plus, Alger’s Dan Chung – a Microsoft and Meta shareholder – tells us what he is expecting from those names when they report after the bell. And, we run through what to watch from Robinhood and Starbucks earnings. 

And welcome to Closing Bell. I'm Scott Wapner, live from Post 9 here at the New York Stock Exchange. This make or break hour begins with the countdown to Meta and Microsoft. Their earnings just about an hour away. We'll ask our experts what we should expect from both stocks moving forward. Both are in the green a little bit as we approach those numbers. In the meantime, the scorecard with 60 minutes to go in regulation looks like that. A bit of an interesting price action mix today, especially as we begin the final stretch you did have some better than expected

economic data you did have that better than expected report from alphabet and what was a higher Nasdaq and anything today higher by the way on the Nasdaq is going to be a new record high so we're going to watch that but the Nasdaq and

the S and P are now in the red. Elsewhere, Supermicro plunging today after losing its auditor. We're watching that stock closely. Look at that. Thirty three percent down. Shake Shack, though, having a big day following its big earnings. And that stock is acting accordingly to those numbers. It's up nine percent. It takes us to our talk of the tape, whether the tech trade is about to make another major move higher in the weeks ahead. Let's ask our panel. Adam Parker, Trivariate Research, Liz Young-Thomas, SoFi and Brian Levitt of Invesco. Adam's a CNBC contributor. It's good to have everybody here. Liz, let me ask you first. The price action today I find

rather interesting. You know, a lot of the mega caps are up, though I just see now, well, Meta's gone negative. NVIDIA is negative. Apple is negative. What should we glean from that, if anything? First of all, I think this might be an unpopular response. But this close to the election, we've got such a big amount of macro data this week. I think earnings season just hasn't been as much of a story. And unless there's a big amount of macro data this week. I think earnings season just hasn't been as much of a story. And unless there's a big surprise coming out of one of these headline companies, we're just trying to find direction in the market. I think the market has taken a pause after having such a stellar year up until this point, waiting to just get to the other side of this really

uncertain event and frankly, waiting for jobs numbers on Friday. We got past GDP today unscathed and I think that was a positive for the market. But now everybody's just sort of sitting on their hands. You suggest, Adam, that you would market weight the MAG-7, MAG-6, whatever you want to say about it, which is not like, you know, they're still such a big part of the S&P 500. OK, so I want to be market weight. That's fine. But what's your view on what's really at stake this week as we have Alphabet? I think they, you know, they certainly reported better than what some had feared they might. And the stock hadn't done much. But what about now? You know, one of the big investment controversies when you talk to institutional investors is, will we see return on investment from the hyperscalers?

A lot of people are doubting that there'll be enough proof cases out of Microsoft's and Meta's spend. And so, you know, after the big move in the summer, you saw that in a lot of my meetings. A couple weeks ago, Jensen from Media came to New York and said, you guys are crazy, there's a million examples. And then Stock had that one big day relative to everything else. I'm in the camp of there's a huge positive skewed toward we're going to get some proof cases here in the next two or three quarters and get another big leg up from this group. I don't know if it will be tonight at the close, but I think all it's going to take is a large cap company saying,

hey, you know what, we're getting better at predicting our customer behavior. We're getting better at predicting our employee behavior. In the past, we would have hired a thousand employees for this. Now, the analytics have picked up and then everyone's going to say, yeah, you know what, my doubts here have been, you know, kind of, you know, cured for the time being. So I think it's a pretty positive skew to getting some pretty good case studies, whether it's tonight or if it's, you know, in January earnings. I mean, it's kind of hard to pin. Well, I mean, didn't Alphabet, Brian, sort of give us that last night, right?

And now we hope that Meta and Microsoft continue a story into the rest of this week and then in the weeks that follow. We do, and I'm with Adam on this one. I mean, we know we've gone from, what, 35% earnings growth in these companies down to, you know, high teens earnings growth. So it's a slowing story that the market has certainly assessed. But we're starting to see some signs that the investment is paying off. Alphabet is a good indicator of that.

And I look at it as, you know, these are companies that are still going to grow earnings stronger than the broad market. And sentiment got a little bit weaker here. So the setup is fairly good. I'm with Adam. I expect there to be upside in these names. Do you think, though, we're going to revert back to the outperformance versus the rest of the market that we had before? A lot of that outperformance, I would argue, if you think about, I don't think you're going to have the same level of outperformance. Basically, if you think about the end of 23, you had a pretty broad market expecting six rate cuts. We had to price those all out. I think the market now is more aligned with what the Federal Reserve is ultimately going to do.

Maybe they got out ahead of it, but now seems to be more aligned. So if we're in a resilient growth environment, which I believe we are, albeit moderating some, rates could come down a bit. That should lead to a broader market than what we've had in 2024. Let's just pause for a moment and focus more heavily on these big earnings that are coming in overtime. Steve Kovach is here with what to watch for from Microsoft's report. Julia Boorstin has a rundown of the key things that we need to look at as it relates to meta. Steve, let's start with you. And I guess this is going to come down largely to cloud growth and hopeful that Microsoft can match what Alphabet has already delivered in terms of their own growth rate.

That's exactly right. And I'll give you three quick things to focus on here. First, like you said, that Azure growth rate, Microsoft, of course, doesn't report clean revenue for Azure, so you can't compare that to Google that way. Just how much it grows, the expectations there in the street, 29% year on year. But that number would not be directly comparable to past quarters since Microsoft changed its segment reporting structure. Expectations, of course, are high after Google reported 35% cloud growth yesterday. Next, within those Azure numbers, how much of that is attributable to our artificial intelligence? That's been in the single-digit percentage points in past quarters. And finally, any more stats on Copilot sales? It's been a year since Microsoft started selling Copilot to businesses, but we still don't have a clear

picture from the company if it's living up to the hype. And then as for CapEx and all those AI spending, about $20 billion a quarter, Scott. Yeah, that's all. Just $20 billion a quarter. Why not? Steve, thank you. Steve Kovach giving us a good set. If you look at these CapEx numbers, they're just unbelievable. Microsoft's going to be up 50 percent. Meta is going to be up 68. Amazon's going to be up 40. And Apple is only going to be up 16 percent. But they're spending so much money. And at some point there's going to be I mean, there was last quarter to some degree, some more scrutiny on the ROI on that. But that's only going to pick up as the quarters continue to go and the money continues to escalate. Yeah, I mean, I guess the question is, like, when do people give up and get frustrated? My suspicion is people know this is an investment for years two through 10.

And, you know, I highly doubt these companies are going to come in and say, you know, we were wrong. We're shaving 10B a quarter out. I think the chance of that is so much less than you get some real proof cases the next few quarters. If people want to sell it because they're frustrated now, they could. But I don't think that's right. I think if the equities go up, whatever they've been, 10%, 11%, 12% per year for the next 5, 10 years, I expect this group to at least do as well as that if not better discuss their moats are huge deep by technologies that are in the way

on the have good pricing their immune to rising cpi their labor productivity shoots off i i think you want to own a chunk of these and uh... it's hard to know if you go back to you to ask people which will be stupid they would set up a little test when they were best performing in Q3. So it's really hard to pick these big names quarter to quarter. I think you just want to stick with the trends you know that are growing above GDP and to the names that are exposed to the good technologies in there. So I don't know what they're going to print tonight. That's a tough call. But yeah, I want to own these names over the next 12,

18 months for sure. Yeah, Julia, for Meta, I mean, there's a lot to live up to, right? This stock is, aside from NVIDIA, the best performer out of this group. That's absolutely right, Scott. Expectations are very high for Meta, with Meta shares doubling in the past year and 63% of analysts, despite the gains in the stock, rating Meta a buyer overweight. Now, those expectations further heightened by the better than expected results yesterday afternoon from Snap and Reddit, along with, of course, Google. Now, analysts expect Meta to grow its revenue 18 percent to 40.3 billion dollars. That would be a slight deceleration in its growth rate from last quarter's 22 percent revenue growth, while earnings per share are projected to grow by 20 percent. Now, here are some key areas to watch in Meta's report.

One is Meta's progress monetizing reels, as well as messaging. Also, how much Meta's investments in AI are paying off with improvement in ad results. There are also some tough comparisons to last year's peak spending by Chinese retailers on advertising that could weigh on things as well. We're also watching for any update on Meta's spending, especially after last quarter, Meta warned of, quote, significant capital expenditures growth in 2025. That CapEx issue, always one to watch for Meta. Which we will. Julia, thank you so much. That's Julia Borson with a good setup for us. Part of the reason, Liz, that money has started to go back into that trade is because

yields have been backing up. How much of an impediment do you feel like that is to the market, which is obviously adjusting to what could be a higher for longer scenario? Yeah. So the big move in yields, I think there was a threshold at 425 in the 10 year where we could explain it up until 425 that this happened because economic data was stronger. And then we started to get uncomfortable that anything beyond 425 is now on the witness stand of prove yourself, why do we have to go higher from here? And we're starting to worry about is it because supply and demand dynamics are out of balance for the Treasury market? Is it because inflation is coming back? Is it because the deficit

is large and growing? Is it because the debt ceiling is coming? There are a number of things that could be moving treasury yields higher. I think if we start to approach 5%, stocks are going to care a lot more. So far, it has not been a problem. And to Adam's point, I do think you have to own these Meg 7 stocks. I think most investors do. Whether they want to or not. You own it probably somehow. You want to be present. But the expectations, first of all, have been that you have to be absolutely exceptional during earnings season and you have to continue being exceptional. And now add on top of that, they have to show proof of the profit. So it's getting

harder and harder to meet those expectations. I think investors are going to start, and they already have started, looking for other places to make money and looking for other places in the equity market for growth. And I think that's a good move. Yield's a problem at what point? I mean, yield's going up because the economy is stronger and you don't have as much reliance on rate cuts. I mean, so what? Especially with the core personal consumption expenditure, the Fed's preferred measure of inflation back in the low twos. So it is a, I don't know, is it a Goldilocks scenario? Is it a Platinum Locks scenario? We'll decide what we want to call this, but it is a nice backdrop. Now, I would actually be a buyer of the 10-year

Treasury here. I think, you know, 425 was a move on some pretty strong economic growth. That's likely to moderate. I mean, we still see leading indicators in certain places, certainly in the job market, suggesting things moderating a bit. So I don't think rates are going to five. I don't think rates are sustaining four and a quarter. If anything, I would say to investors who have been told now for a year they better get out of cash and lock this in. This is probably the third bite at the apple now to lock in over 4%. So I would be surprised if rates go higher from here. I think they come down as the economy moderates and as inflation remains contained.

Yeah, I mean, you had still a strong GDP number today. You lay out not just the bull case, but the Uber bull case. I thought it was, but then I told everyone about it and they're like, oh no, that seems like, no, I mean, I haven't heard anybody go, go to this, this point. Um, you say if the bull case catalysts materialize, you could see 450 to $500 in earnings at 20 times, you could see $450 to $500 in earnings. At 20 times, you go to $10,000 on the S&P. By 2030, you know, I was kind of saying. But that's not that far away. Yeah. And that's probably the average returns we've had over the last, you know, 20 and 50 years.

I know, but there are people who are saying you're going to have way below average returns in the years ahead. Like low single digits. I saw that note. A lot of people talked about it. I don't know why somebody would do that, write that note. Well, because eventually you're going to have a slowdown and earnings aren't going to

go anywhere near what you're talking about. The multiple is going to be too rich. When you work at a large public company with a huge private wealth network and you tell the network you think equity is going to be bad

for the next 10 years, you're really saying I don't want to work here. I mean, there's something real going on there. I don't know what that is, but there's only been a few chunks in the last 100 years where that was a correct call. For you to have the confidence to make that call right now, I think is crazy. You have the confidence to make that kind of call?

That's not crazy? That's the bull case. We said it's the bull case, not the base case. But what is the bull case? We're sitting here right now. The Fed just did one cut 50 bips. Everyone thinks it's what? You guys are experts in that. Six more. What's in the price? So I'm going to fight the Fed already? All right. Maybe there's a China stimulus coming. We know that they kind of got

too much. So you want to fight the Fed plus the China? OK. We're going to run at a massive deficit next year, which I think means the MAG-7 companies get Amazon and Walmart and Apple get money when we run into massive deficits. You want to fight a massive deficit, a China stimulus and the Fed? Okay. Margins are going up for the average company right now. So you want to fight that. And then you want to fight one or two decent proof cases from AI that come in the next two, three quarters. The bull case could really lather up where all of a sudden people are going to say it's the middle of 25. I see some productivity coming from public companies. The S&P is a superior asset class, and all of a sudden

I'll be dreaming about 10% earnings growth three, four years from now. And yeah, we'll be at 4, 450, we'll pay low 20s, and the market's at 10,000 in 2030. I don't think that's impossible. We talked about it with Zentner on the air a couple weeks ago, remember? I think that's a reasonable 30, 40% bull case scenario. So saying you know, saying 3% per year returns, the reason people are saying that, Scott, is because they're saying mortgages are high and multiples are high versus history. Well, they're high for a reason. The companies are awesome versus history. It's not like a total accident. It's not a bubble. I don't know. What do you guys think? Well, no, I think that that's right. And when you do these things in terms of your future

return expectations, Adam's exactly right. You look at valuations and it's some type of a reversion to the mean type argument on it. But there's other components that go into it. I mean, if I were going to do the building blocks of what an expected future return was, I've got to look at nominal growth. I've got to look at the dividend yield. I've got to look at a stock buyback yield. So it isn't just a reversion to the mean on valuations. And I would take the over as well. I mean, we can argue about the number itself, but the bull case itself that Adam has laid out seems somewhat reasonable. I mean, sure. Economies resilient. Earnings are still growing. I don't know what's going to happen in the election. Fed's cutting.

They just started. Does it sound reasonable, that kind of return? By 2030, a lot of different things are going to manifest, right? We're going to have finished the cutting cycle. I imagine we probably will have started a new cycle and maybe have gone through an entirely new market cycle. So the bull case by then is absolutely plausible. I think right now, and that note that we're referencing, one of the things that they talked about that was maybe a problem is this big bifurcation between the large caps and some of the leaders that have been leading and then the rest of the market and how that typically doesn't end well. And usually it ends in pain. Now, if that's not the case, and if those leaders can remain leaders and remain large and leading earnings growth and

leading the market, then this period can last longer, meaning there is more upside broadly in the market. I was at this panel yesterday and this guy was arguing against me vociferously for small caps. So I kind of said, all right, well, what do you mean? Let's take a step back. And market. I was at this panel yesterday and this guy was arguing against me vociferously for small caps. So I kind of said, all right, well, what do you mean? Let's take a step back. And what he said he meant was instead of having a 5% allocation, it would be like 7%. So I said, okay, you know, you're saying if I'm a high net worth individual guy to invest in one of these big, you know, companies and I have whatever, 20 million bucks, you want me to own 1.2 million instead of 1 million small cap, but I can still keep my 10 million in large cap,

or whatever the average guy at these big networks. Sure, the problem is Apple was bigger than the entire small cap universe. So you have to own large cap, high quality U.S. equities way, way more in size than small caps, and it's kind of messing around to get tiny, you get 10 bips of Apple performance. What I take from your thesis and your outlook is that this is not late cycle at all. That this is the beginning of what may be a long cycle.

You can't make a, well, we're late cycle argument if you think that we could have that kind of return five years from now. In the distribution of outcomes, bull bear base or whatever i think a realistic probability to the bull case would be that earnings grow for the next several years in a row and they're fueled in part by predictive analytics and predicting customer behavior and that's why you're seeing billions of dollars in capital spending from some large companies that can currently afford from cash is they're trying to drive better productivity labor productivity for the biggest equity so yeah that's in the distribution of outcomes and it's not zero. But even Liz, you made the argument many times that we are late cycle in your mind.

Yeah. And I would still I would still continue to make that argument. You made rates, right? You're like, right. She means more, I think, macro like rates, not margins. Yeah, yeah, yeah. But the argument there would still remain the same. His case is still plausible. Because between now and 2030, we could go through a cycle. And actually, It's not margins. Yeah, yeah, yeah. But the argument there would still remain the same. His case is still plausible. The economy. Because between now and 2030, we could go through a cycle. And actually, it's been shown that it's better for the market if the Fed cuts faster. So we could go through a cycle where they cut fast.

We have a little contraction. Unemployment goes up because we bounce better on the other side of it. They're not going to cut fast. I mean, aren't they telegraphing? Who knows? I think we kind of do know. We maybe know for next week, but I don't know that we know that for sure. I mean, look at how quickly the story changed

when we got one week jobs report. Suddenly we were pricing in two more cuts than we were three days before that. So the story could change very quickly. And the faster they cut, usually the better the recovery on the other side. I mean, I would think if this was end of cycle, we would see corporate borrowing year over year, double digits.

We don't have it. We would see credit spreads blowing out. We don't have it. We would see the bank tightening lending standards significantly. We don't have it. So to me, the only thing we got was the inversion of the yield curve after a very bizarre covid period. And so, you know, everybody rushes to say end of cycle because we know cycles don't die in bed of old age. They're all killed by the Federal Reserve. But if rates go up and there's not a lot of leverage in the system, you tend not to roll over.

And I would say that's what corporate borrowing costs are telling us, and that's what bank lending stands are telling us, that it's not end of cycle. People go back to that historical precedence for when they, okay, you never have a recession without an inverted yield curve. But you don't always have a recession when the yield curve inverts. So your first instinct is to say, well, when this happens, that happens. There's a cause.

There is an effect. We didn't even get frothy yet. Like, we could have a massive M&A market next year. There's a ton of pent-up demand. There's a ton of private. You start getting some of that going, and then you really get the bull case happening. I'm not talking about the election or whatever. Of course small caps can outperform by 10%

for two weeks. We get a Republican sweep, and people knee-jerk. There's less regular. I'm not talking short-term. I'm talking you look out 12, 18, 24 months. I think equities will work, and I think they'll work big relative to any of these other bonds or whatever other people do for the election. Let me tell you something. When we talked to Todd Boley of Eldridge out at the Alts Conference, the case conference out in

Beverly Hills a couple of weeks back, he said animal spirits as it relates to M&A. You have private equity sitting on a lot of dry powder. You have private equity looking for more realizations. I've talked to other senior executives of financial institutions who also think that you're about to go on a boom of dealmaking, a boom. So you add that to the mix as well, which Adam didn't even get to when he was laying out his full scenario. That's frosting on the cake. I was just doing the cake. That is the frosting. I mean, and there have been a lot of calls for that for 2025. And that would be good for a lot of sectors. It'd be good for the financial sector if we had market activity and capital markets activity that picks up that way because it has been lagging and it hasn't been as

additive to their bottom line. So that would be a positive thing. We'll see. I think we've got to get through 2024 first. I'm not sold that the Fed is going to be able to do this so methodically all the way through 2026 and get to this very smooth neutral rate. I think the neutral rate will still move around quite a bit. And what the market expects inflation to look like will still move around quite a bit. What do you think about that? I mean, the idea that you're going to have a big pickup in activity, whether you want to call it animal spirits or not, whether it ends up being that, but the commentary you're hearing from, you know, leaders, whether it's over in Saudi Arabia,

whether it's here in conversations that all of us probably have either on or offline, the expectation is that you're about to enter a period that we haven't seen in at least a couple of years. Yeah, I'm on board with that. And you look, again, at the fundamentals, whether it's of the businesses, whether it's of the private sector. Fundamentals continue to look strong, and you're right. We are likely to go through an investment cycle and an M&A cycle. And I think the Federal Reserve is going to be a tailwind with this.

They are going, you know, they got inflation back down to where they want it. They don't have to aggressively cut, but they can move when economic if the economy starts to deteriorate in certain places. I mean, they may have overdone it with the 50 basis points. I don't think so. But even if they did, wouldn't you rather they overdo it that way than the other? Of course. And I don't think that they did. Why do you need a five and a quarter, five and a half Fed funds rate if your preferred measure of inflation is 2 percent?

You don't. You're too tight for the inflation backdrop. And you might as well start bringing it down. And, you know, you try and keep price stability and full employment. All right. We'll leave it there. We kicked a lot around. I appreciate it. Good to see you very much, Liz. Thank you, Brian and Adam as well. That was fun. All right. To Pippa Stevens now for the biggest names moving into the close. Hi, Pippa. Hey, Scott. Well, Garmin is leading the S&P and hitting an all time high after better than expected Q3 results with revenue increasing 31 percent year over year in the company's fitness segment led by demand for wearables.

Garmin also lifted its full year forecast, expecting that momentum to continue into the holiday season. And Caesars Entertainment is sinking following a profit miss for Q3 with revenue coming in just in line with expectations. Caesars CEO saying, quote, there is still more headwinds than tailwinds for us. With competition and Hurricane Helene among the drags on margins, those shares down 8 percent. Scott. All right, Pippa, thank you. This is Pippa Stevens. We're just getting started here. Up next, much more on today's mega cap earnings and OT.

Aldridge Dan Chung. He owns both Microsoft and Meta. So we'll see what he'll be watching for when those reports hit. We're live at the New York Stock Exchange. And you are watching Closing Bell on CNBC. All right, welcome back. Strong start to mega cap tech earnings. Alphabet moving higher on a Q3 earnings beat thanks to strong revenue growth from its cloud business. Investors now turning their attention, of course, to Microsoft and Meta, both reporting their results in overtime.

Joining me now at Post 9, Aldridge Dan Chung. He holds both names either personally or within the fund. Okay, so one down, four to go, at least this week. We can't really get to NVIDIA yet. We got to wait about three or so weeks. But how would you assess what you got from Alphabet? Well, Alphabet had surprisingly good growth in Google Cloud. Search was actually stronger than people expected. So, you know, steady as she goes, really, at Google. And there's been a lot of negative sentiment around Google. Yeah, of course. Yeah. And you don't think any of it was founded? I mean, certainly not now, but there are legit

concerns about market share in search, whether it's because of Microsoft and others or even some of the upstarts that are out there, the younger upstarts like Perplexity and some others that are getting talked about a bunch. Yeah, no, I think there's definitely legitimate concerns around the challenges that they're going to face competitively around AI search competitors. And that still remains to be seen. So it's why Google's been in a bit of a penalty box. But meanwhile, near term, you know, it's a good company, great company, and still doing fine. Yeah. What about Microsoft? I mean, that stock hasn't really done anything lately either. Why not? Yeah, so Microsoft's interesting. I mean,

it's underperformed a bit in the last few months. We like it a lot. We think it's going to be a big winner in AI. We're going to hear tonight about how they did on Azure, which we think, based on Google's cloud results, got to have some pretty strong expectations about that. Meanwhile, Copilot, right, AI search enabled Copilot for Office is rolling out. You know, it's a small step in the right direction. So we're pretty positive about Microsoft. We think it's actually a great combination of a leader in the space as well as a good stock. I mean, the valuation there is quite reasonable. How are you thinking about spending overall? I mean, the CapEx numbers are just crazy, but I mean, they're in many eyes justified.

Now, obviously, you need to see a return on that at some point. You're the shareholder. What do you think about that? Right. So the CapEx numbers have gone up a lot for the hyperscalers and has taken as a result, for example, their free cash flow down near term. But we think for most of those companies, these are wise investments in the future. As a strategy, we're looking for the companies where the CapEx is flowing to, i.e. it's revenues for them. Okay.

In other words, NVIDIA? That's, of course, the leading. Yeah. But there's a lot of data center plays, semiconductor plays, even, as we've seen recently, power plays in electricity. Mm-hmm. Yeah, obviously, those are popular themes. Let me ask you before I get to meta, then, since you brought up the beneficiaries of the spend. What's going on with AMD?

You own that. Yeah. That stock's having a terrible day. It's trying to play catch-up, I think it's fair to say. What's your own view for somebody who actually owns this stock? Yeah, so the debate internally is AMD, if you weren't looking at the results from NVIDIA and others, is doing really quite well. It's growing nicely. The growth is re-accelerating. They upped their targets for their AI data center business. However, those

expectations today are much lower than they were at the beginning of the year. And the expectations for next year are still lower than they were at the beginning of the year. In other words, AMD is expected to be a huge winner. Right now, it's a winner, but you've got other places that seem to be winning the battle there. But I mean, as long as it's compared to Nvidia in the near term, that's the potential problem moving forward, right? It's a problem until it's not. Correct. But I mean, the outlook, when do you have an idea that you really think that AMD can

be a viable competitor to NVIDIA? Because that's what the market seems to only care about. Well, one of the challenges that they have is NVIDIA itself is a tremendous competitor. So NVIDIA's next generation of chips is talking about leapfrogging again. And there's kind of a fear, like, frankly, AMD's seen it before long ago. Remember when it was a competitor to Intel but never really could gain market share?

It lived in that sort of middle land for decades. So we'll see in the next year, I think, whether or not AMD can start to gain back share against NVIDIA. But for now, it remains sort of a second source supplier. And the fear is that NVIDIA, not only ramping up the technology, but improving supply may sort of cap AMD's near-term opportunity. I mean, since we're talking about NVIDIA, which is the best performer over the last three months out of the group, and stock's been remarkable. The other one that's right on its heels is Meta. So how are you viewing that? Because, you know, they went through the year of efficiency. They seem to be getting it right. The market obviously has been giving them the

benefit of the doubt. What now? How high is this bar now that the stock has done quite well into the print? Well, the remarkable thing about Meta and a lot of these companies is even at their size, they're really growing tremendously well, mid-teens to near 20% for companies that are already giants. We love Meta. It's one of our largest holdings. You know, I think the Metaverse didn't play out the way Mark Zuckerberg thought, and the name change is kind of odd there. But oddly enough, most of those investments have definitely benefited the AI efforts at Mudda. And so they're a leader in applying that to, of course, social media and to advertising. Lastly, about the group itself, you had a bit of a slumber in Q3.

Now this trade has woken up again. Is it going to resume its leadership role or not? And does it matter if it doesn't? Great question. I think the Magnificent Seven is not as a group going to outperform so easily as it did in years past. However, I would note that there is some softness in the economy in different spots. These are very solid companies, and they're, of course, a huge part of the market. So they offer a combination of growth and defensiveness that's fairly rare. And interestingly, it's within tech. We didn't talk about Apple. This is a good example of a company that really isn't demonstrating anything yet on the AI front, but has tremendous potential to deliver it to consumers through, of course,

the iPhone and its other devices. Yeah, of course, we'll get those earnings tomorrow with Amazon. Dan, I appreciate your time. Thank you. Thank you. Stan Chung joining us here at Post 9. Up next, Eli Lilly shares are sinking on weak results, lackluster sales of two key drugs. We've got the details when we come back on the bell. About 25 minutes or so from the closing bell shares of Eli Lilly falling today. Angelica Peebles here with those details. Angelica? Hey, Scott.

Manjaro and Zepan both coming up short of estimates in the third quarter. And of course, those are the GLP-1 drugs that are so crucial for Lilly. The company also trimming its full year sales forecast by $600 million. And that comes just one quarter after raising it. We are taking a little bit off the top of our guide because during the quarter, I think we changed an assumption. We changed the assumption that we should start promoting and launching sooner in the U.S. and in other markets. And we basically pushed some of that out into Q4 because of customer service levels. So we want to make sure people, when they get a prescription, can fill it. Now, Ricks is saying this is not a supply issue, nor is it a demand issue.

Rather, he's saying that this is actually something called channel destocking. So basically, wholesalers have plenty of product, and they're working through that instead of buying more. Now, of course, this is raising questions because there is so much demand, as we know, for these products. So a lot of questions today about exactly what that dynamic looks like and what we should expect going forward, Scott. Angelica, thank you. Angelica Peebles with the latest on Lilly. We have some news on Amazon. Kate Rooney has that for us. Kate? Hey, Scott. So this is about Zoox. It's part of Amazon. It's

the autonomous driving part of the company. The CTO of that company, of that subsidiary, saying on stage at a TechCrunch Disrupt conference that those cars are in the next couple of weeks here. They're going to be rolling out in San Francisco, here in San Francisco and in Las Vegas. The CTO, Jesse Levinson, saying that they're going to start offering rides, starting with employees in the Soma neighborhood, which is pretty close to where we are, and on the Las Vegas Strip. The executive telling TechCrunch that Zoox is starting there, even though it's a more difficult part of the city, just because the company does have operations there.

He says, quote, we have achieved that internal safety readiness required to launch. The service says that the company is taking a measured approach to rolling out the robo-taxi service and that the company has been working closely with local and federal regulators. But, of course, Waymo, a big presence here in San Francisco. You have Tesla also going after this with their robo-taxis. So the latest in the sort of autonomous driving space, Scott. But big news here in San Francisco. Getting more crowded.

Hey, Rooney, thank you very much. Is there everywhere? Yeah, they are. They are. All right, up next, thank you very much. Yeah, they are. They are. All right, up next, we track the biggest movers into the close. Pippa Stevens joins us once again with that. Hi, Pippa. Hey, Scott.

Restaurants are serving up results and investors are mixed. The names to watch coming up next. All right, we're 15 from the closing bell. Super micro shares are sinking in today's session. To Seema Modi now for what is behind this big drop. Seema. And Scott, this is a company that counts Nvidia and Elon Musk's XAI as customers. It's caught up in a flurry of accounting headlines. Ernst & Young is dropping Supermicro as a client amid transparency concerns.

It follows accounting fraud allegations by Hindenburg Research, which revealed a short position in August. Supermicro vehemently denying the allegations and said it's working diligently to select new auditors. While the stock is down 30% today, it's down over 70% from its year high. The AI server maker, which will provide a crucial business update next Tuesday, and then it faces a November 16 deadline where Mizzou analysts say Supermicro needs to provide a plan to the Nasdaq to regain compliance with the exchange's listing requirements or it risks getting delisted. Competitors in the AI server space, Dell and HP Enterprise, you'll see are rallying on the news. Dell up nearly 7 percent, Scott. All right, Seema, thank you. Seema Modi. All right, back to Pippa Stevens now for some of the other big movers. Pippa?

Hey, Scott. Well, three big restaurant movers. So let's start here with Chipotle. It is falling after reporting lower than expected revenue for the quarter with a 6 percent rise in same-store sales missing. The street account estimate of 6.3 percent. Food, beverage and packaging costs rose year over year, including avocado prices. Earnings did beat, though, when Chipotle reiterated its full-year same-store sales outlook. Shake Shack is hitting a 52-week high, beating on both profit and revenue for the quarter and reporting better-than-expected same-store sales. Menu innovation and pricing power helped drive sales and grow traffic. And finally, Wingstop is plummeting.

Those same-store sales were up more than 20 percent, but that still was a miss thanks to high expectations ahead of the print. EPS also missing, although revenue was a beat. Now, the company did reiterate its guidance, but it did not raise it. And those shares are down 21 percent. Scott. All right, Pippa, thank you. Pippa Stevens. Programming note, CNBC will be live all night long on election night. We'll have the results as they come in. Reaction from the biggest names in business as well. All starts seven o'clock Eastern from the New York Stock Exchange right here. Still ahead, not just Microsoft and Meta reporting in OT.

We'll break down what to watch for when Robin Hood and Starbucks release their own results. We're back after the break. All right coming up we're going to run you through what to expect from all the big names porting an O.T. including Robin Hood and Starbucks and speaking of earnings don't miss the CEO of Coinbase on that

company's results at four o'clock Eastern and O.T. Market Zones next. We're now in the Closing Bell Market Zone CNBC senior markets commentator Mike Santoli here to break down the crucial moments of this trading day. Plus two earnings reports in O. T. we

are watching closely. Hey Rooney on what to expect from Robin Hood Kate Rogers looking ahead. To Starbucks first though to Mike interesting price action in this market as we started our program with I still. Curious about your

thoughts. Yeah I mean. The overall market is very low momentum right now right it's kind of gotten into this sort of drift this cruising altitude right below the highs. The S. your thoughts. Yeah, I mean, the overall market is very low momentum right now, right? It's kind of gotten into this sort of drift, this cruising altitude right below the highs. The S&P 500 is up 1% month to date, but it was all at the beginning of the month. The median stock in the S&P month to date is down half a percent. So what does that mean? It means some of the large stocks have actually started to contribute a little more to the upside. You see that today. Modest follow through the alphabet numbers in the form of Microsoft getting a bid, Amazon as well. So it's all coming together

in terms of earnings being good enough for now, not a huge beat rate, but good enough. The GDP number was nominally a miss, but it was way better than anybody thought we were getting a month ago. And so good enough economic data. Yields aren't blowing out to the upside at the moment. It's all fine for now I do think that there's a very much a wait and see maybe there's too crowded a Consensus that the market is a lock to rip higher in November December after the election and therefore nobody's doing any selling ahead of time It's really just again just this kind of Gliding and drifting around as opposed to high conviction moves. I mean, it will be interesting to see if the market has overdone it in its expectation of a so-called Trump trade.

And we'll just have to wait until next week. Now, maybe thereafter, Meta, Microsoft. So Alphabet delivered. And now it's up to these two stocks, which have gone in different directions, to do the same. But it'll be interesting to see the price action in both of those names on the other side. For sure. I mean, Meta, there's such tremendous confidence in really just the fundamental momentum and that they've got things figured out. They are direct beneficiaries of AI in action right now. It's not just building data centers to have some down-the-road thing.

And, you know, the valuation's been reset higher for that reason. So definitely I think that there's a pretty demanding standard for them beating and pleasing the market. Microsoft, on the other hand, even though it's a more expensive stock, it's really underperformed, even on a year-to-date basis. And so you would think that they might not have as hard a time persuading the street that things are looking okay. We shall see, much like Alphabet. Kate Rooney, tell us about Robinhood. Hey, Scott.

Yeah, Robinhood you think of as sort of the entry-level trading platform for retail investors. Lately, though, it's really been trying to lure in more high net worth. Active traders have been rolling out some new features, and investors today are going to be watching how those efforts have been paying off. That'll be a big theme to watch for Robinhood's quarter. Watch deposit growth. So assets under custody, that'll be a sign of any sort of growing market share.

The company has been offering matching bonuses for folks to move assets over to the platform. Transaction-based revenue is always key. Mizuho expects Robinhood to get a boost from some of the elevated market activity lately and raised revenue estimates recently, pointing to the company's focus on more profitable growth. Cryptocurrency, another key area to watch. Bitcoin prices back above 73,000 in July. Robinhood said it was going to buy Bitstamp, a crypto exchange for about $200 million in cash. We may get an update on that.

And then finally, election betting. Robinhood just got into that prediction market earlier in the week. We're going to see if that comes up on the call. Big run up this year, though, for Robinhood, up more than 100 percent so far since January. Scott. All right. Kate Rooney, thank you very much to Kate Rogers now for a look at what to expect from Starbucks. Kate. Hey, Scott. Starbucks released preliminary results last week that did miss estimates on the top and bottom lines. It also said sales continued to fall in two key markets, the U.S., North America, which saw same-store sales drop 6 percent, and China, where same-store sales fell 14 percent. This will be Brian

Nichols' first quarter as CEO as he seeks to refocus the brand and improve service. Starting in the U.S. last week, Nichols said in a message, quote, our first quarter performance makes it clear that we need to fundamentally change our strategy so we can get back to growth. And that is exactly what we are doing with our back to Starbucks plan. He's already made changes, we know, to pricing, menu, management. So more details will be key in how investors analyze his plans and how long they're willing to give him for a turnaround. And Scott, quickly, we just also want to give you an update on a story we've been following with McDonald's and that E. coli outbreak. New numbers from the CDC as of today, 90 cases total. That's 15 new hospitalizations, 27. So that is five new deaths

stand at one. So no update there. And states still stand at 13. So 90 cases total, 27 hospitalizations, one death in 13 states. And as you can see, McDonald's stock is dipping just slightly on that. The company had said it expected the case count to grow as the investigation continues, of course, and we'll keep you updated as that develops. Back over to you. All right. I appreciate that very much, Kay Rogers. Thank you. Do you have a thought here? I mean, the market is likely to give Mr. Nickel the time, the benefit of the doubt, and the opportunity to try and turn that around. I can't really articulate a more specific plan. I don't think there's great incentive for them to show excellent results in the last three months.

So, therefore, maybe it's not about the actual quarter. It's about, I think, more tangible measures that he thinks that can be taken and whatever progress that they've been able to see in getting in that direction. But yeah, there's no doubt. It was a quick kind of blessing of the decision to have him be CEO. And now it's, you know, let's articulate it. We've seen it again. We've seen it with Nike. You've seen it with some other great American brands, Disney for that matter, with Iger coming back. All right. So we shall see. We're going to go out red. Looks like across the board, too. There you go.

The Dow, the S&P. Anything positive on the NAS will be a new high. Not going to get it. We'll see if Meta and Microsoft can change that. I'll send it in overtime with Morgan and John.