Closing Bell - Closing Bell: Nvidia’s Moment of Truth 8/23/23

Episode Date: August 23, 2023

What does today’s report from Nvidia really mean for your money in the weeks ahead? Adam Parker from Trivariate, Bryn Talkington from Requisite Capital and Stephanie Link of Hightower break down their expert forecasts. Plus, Morgan Stanley’s Erik Woodring says Apple is now the most under-owned large cap tech stock by institutional investors. And, BTIG’s Jonathan Krinsky breaks down the key levels he is watching and what he’s forecasting for stocks for the rest of the year. 

Welcome to Closing Bell. I'm Scott Wapner. This make or break hour begins with the countdown to one of the most highly anticipated earnings reports arguably ever. NVIDIA set to report in overtime. The stock, one of the best performing of the year and so emblematic of the enormous hype around AI. We'll get you set up for what might happen tonight, how to react no matter what the results are. In the meantime, here's your scorecard with 60 minutes to go in regulation the story today is pretty simple the drop in yields means that picture right there green a rise in stocks the dow getting a boost from tech names like apple and microsoft and intel all three helping the nasdaq outperform today as well rates no doubt part of that story too after another read on manufacturing comes in just ugly. That part of the economy is clearly not doing so hot right now.

And speaking of things that are tough to look at today, look at that. Footlocker, ouch, down 30%, worst day ever. That after earnings disappointed and the CEO warned of slowing consumer trends. It brings us to our talk of the tape, this up and down market, and what today's report from NVIDIA really means to your money in the weeks ahead. We've got an all-star team to discuss that. Adam Parker is the founder and CEO of Trivariate Research. Bryn Talkington of Requisite Capital Management, a shareholder of NVIDIA.

Stephanie Link, the chief investment strategist at Hightower. It's great to have everybody with us. Adam Parker, you're here. I will start with you. You used to be a chip analyst, so you have a good eye on this one. What's it mean? What's it mean right in the here and now? Somebody emailed me today. It's like anticipating the Game of Thrones ending, like the guidance. Look, the two data points this week, for me, investing is changes in perception about rates. That's Jackson Hole. And changes in perception about growth, that's NVIDIA.

So these are at a duel this week. And the applied vol is, what, 11%, meaning $120 billion plus or minus is the implied vol on a stock this big. I think they need Goldilocks on the guidance, right? The guide, too good. I think people are going to doubt the sustainability, think there's pull forward. There'll be those questions about that again. And if it's a little bit, the guidance isn't strong enough, I think people will say, you know, pin in the balloon. So I think it's going to be, expectations are incredibly high.

I think earnings are up, what, 10% from July 1, even though they didn't report. The stock's up 50% in the past three months. Yeah. Okay. You talk about where expectations are. They're high. Stock's up 200% year to date. The last guide, okay, the revenue guide was $4 billion. Biggest upward sales revision of any mega cap company ever. $4 billion. Biggest upward sales revision of any mega cap company ever. Because of where tech has gone this month, right? The market's been edgy and tech's been kind of dicey. Does it matter more now because that narrative on AI needs to stay wholly intact? Yeah, I mean, the thing is,

AI being intact is not all. NVIDIA has a special position and an outsized excellent position in that category. There's clearly some fake AI that's gone up too. NVIDIA is not fake AI. No, but NVIDIA in many ways underscores where this whole hype is. I think everyone expects them to beat and beat by a healthy margin and guide for upward revisions. I think that NASDAQ goes down. But, you know, I think there's certainly hype about AI that's unrealistic in terms of cost reductions in the near-term window. So, yeah, I think this is a big one. I think it's a big one for where growth hinges,

and I think the expectations are quite high. But, you know, you and I talked about it, I think, in late March when I first wrote that big note on AI. You know, I wrote maybe NVIDIA could be $2 trillion market cap in five years. That was at $700 billion then. You meant five months. Yeah, I had no idea, 1.15, right? So we're getting there.

Maybe more like I'd change it to two years. So the challenge everyone has is everyone's expecting this thing to roll over and they'll disappoint. And then they want to buy it because most people didn't pro rata participate as much as they should have in the initial big trade up or were really overweight. So I don't know if it goes down. I hate to make that triple-breaking putt call. I think they produce good numbers. Maybe it sells off a little, and everyone wants to buy it up for this wave, because I think most people know I'm going to need this thing for years 3, 5, and 10. Well, Bryn was on it, right? You've owned it now for a while. Tell me how you're

feeling now, ahead of the number. Well, I mean, there's such a frenzy around this. And it's like, listen, there is no hype around NVIDIA. I totally agree with Adam. I actually think that NVIDIA is not even remote. I think NVIDIA is not emblematic of the hype because they're actually delivering the numbers. I think the hype is, or what's unknown, is all of these companies, whether they're in China or in the U.S. or the hyperscalers or the VCs, just like clamoring to get these A100 and H100 chips. The reality is maybe it's hype, maybe it's not, but NVIDIA is going to monetize it until we find out. And so what I don't see outside of a few companies is these companies are trying to have their own chat GPT. And to me, I think that what you're seeing

in the options market today is so fascinating, Scott. And so we were looking at today, the most heavily traded options contract for Nvidia. Nvidia is the August 25th, so it's two days, a 500 strike, which is 30 points away. It's trading at over $11. Like it's 30 points out of the money. It should be trading around 10 cents. It's like $11. And so I think that they're going to crush the number. And there's so much energy in this market underneath it with options. I think it'll be fascinating. I think it could move much higher than 10 percent just because of what I'm seeing in the options market and how many

people are long this stock going into the earnings. I know, but you've got to admit you're really telling me, Bryn, that you don't think there's a lot of hype around this name. I mean, I read you what the stock has done in a really short period of time ahead of the realization of a lot of the of the guidance and the numbers that they suggest they can do. I mean, the whole AI story at this point is somewhat based on hype and hope. These well, OK, the numbers aren't really they're on the come. They're not going to happen for a long time. We're giving these companies the benefit of the doubt. Well, let's separate NVIDIA from the other companies, you're totally right, that are getting the benefit of the doubt.

Let's just look at year over year with NVIDIA. Year over year, this time last year, the revenues were 6.7. Their estimates are that they're going to come in around 11.1 billion. Earnings this time last year, I believe, were 53 cents. We're looking for two dollars and nine cents. Those are real numbers. And so what the analysts and what the analysts are saying is that NVIDIA has had a step function up and to the right in their earnings and that's going to continue to grow. That's to me what I'm not sure about, because how much of China was literally just grabbing all of these chips

until the bans come in? I don't know. And so my feeling is that over the next couple of quarters, this stock is these earnings are going to be very strong and very real. After that, I totally agree. We're going to have to start seeing these companies deliver products that actually do things that we're interested in. But right now, I just think this is the this is the company at the time that actually has their earnings versus so many other ones. Scott, or just to your point, betting on the come. Yeah. So, Stephanie Link, not an owner of NVIDIA, choose to play it through Broadcom, as you as you've said. And, you know, obviously you're looking at two different valuations for the stocks. There's a lot of hype around Broadcom, too. So you understand

hype around AI. But what do you think's hanging on these results now in overtime for the market at large, just given what this month has done and the kind of swoon that we've seen? Yeah, I mean, look, I think there are very high expectations for NVIDIA and for other names as well. In addition to Broadcom, I also think that Lamb Research also is going to benefit from AI. But there's a lot of hype there for sure and a lot of high expectations. But I think if the stock in any way tonight, if they disappoint, I think the weakness is going to get bought because we know they're the primary beneficiary of AI data center and the transformation. And I guess it depends on what you think the total addressable market can be in the next five years. I mean, it could go from anywhere from 80 billion to, if you listen to AMD, 150 billion. TSMC thinks it's a 50% CAGR for the next five years. So this is total addressable

market data center GPUs. So if you depends on what number you believe, obviously, it's very large either way. And these guys are going to benefit from it. The data center number, the bogey tonight is about eight billion. And I think they'll be able to do that. I do think also you are going to see in addition to data center, but China, the Poland, certainly. So I think the number is probably going to be good. But again, if it sells off on sell the news or whatnot, I think people are going to buy it because you have a huge mix shift happening in NVIDIA's business, right? And that to higher performance GPUs, it's 2.75 times greater in terms of performance than existing GPUs. So that mix alone is very powerful. So

yeah, I don't see if it's down. I don't think it's going to stay down. I'm just choosing to buy other names, maybe a little bit off the beaten path. This is, Adam, why we are talking so heavily about what the importance of this stock is to the overall market. Now, if Steph's right, then maybe a miss isn't such a big deal because people step in and buy. Do you believe that people would buy the weakness or do they sell tech if this misses? I mean, I think I said before, I think if it sells off, people want to own it. But I would, Steph, I think if they miss, the stock's going lower. I think if they just beat by less than the bulls are hoping and it sells off, then I think people say, wait, the stock's going lower. I think if they just beat by less than the bulls are hoping and it sells off,

then I think people say, wait, the fundamentals are there. It's on path. I don't think – I think if they miss tonight, it would be very surprising. So – and I think that surprise would mean the stock's going to be down 10%, 15%. No, but maybe, as you said, maybe the more important thing is by what degree did they beat? I mean, considering what they did last time. I think that's where we are. I think that's where we are. thing is by what degree do they beat? I mean, considering what they did last time. I think that's where we are. I think that's where we are. It's by what degree do they beat. I think they knew when they guided,

they had a lot of that in the bag. I told you a couple months ago, we bought an NVIDIA GPU on EQIX because we can do the language processing and work way faster. It's just way, way faster. So if small companies like mine are buying it, I'm sure a lot will over time. So I think they're still short. I think the runway is a long time, meaning you can't get them in the volume you want. Well, that's true, right?

The supply is a real big issue. I think it's going to last for two or three quarters at a minimum. And if they give any hint that that's not the case, I think the stock will sell off. But I'm with Steph. You know, I don't know, acquire, preach, or acquire preach or whatever that you know people want to own this thing because most people were not really overweight all year remember we talked about it a couple months ago the biggest firms previewed this year and none of them mentioned ai as a factor for 2023 when they previewed it in november so it's not only the biggest upward sales revision of any company mega cap ever but it's also that it

was really not what people thought was going to happen going into the year. Well, that underscores how offsides many were coming into this year, which is one of the reasons why you've had such a dramatic move higher in those names, because you had to pile in once the AI story hit. So, Bryn, you're going to get Powell. So Jackson Hole begins tomorrow, and then you get Jay Powell on Friday. Where's the market overall right now? If you if you take NVIDIA out of the picture and bring the Fed share into the picture, what's riding on that? How do you see that playing out? Well, we can't take NVIDIA out of the picture, right, because that's where animal spirits and the positivity. So if you say the bull case this week is the Nasdaq was oversold,

we're above 4,300 on the S&P. You've got NVIDIA kicks off if they deliver as like the options market and the frenzy. And then you have the two of the 10 continue to fall. And if Powell does the opposite of what he did last year, then that's setting up to say, hey, even though we have like PMI down, China and Germany don't look so great. Well, China looks terrible. But in the U.S. over here, because we're on shoring, we have just different set of circumstances. We're data dependent. I think that sets up for kind of a bounce off this small correction we've had. But that's a bunch of ifs that I'm walking through.

But I would say on the longer term side, I still think avoid small caps. We haven't liked financials. I do think interest rates matter. And although they don't matter to NVIDIA right now, they don't matter to tech, they absolutely matter to the broad economy. And I think with financials, with small regionals that have not managed their balance sheets, there are more lurking out there like Silicon Valley Bank. So I still think stay high quality, steer clear of the financials. Steph, you know, I said at the outset today, it's a pretty simple picture. To make it as simple as you can make it, you know, rates down, stocks up. Rates have been putting pressure on stocks for the better part of the last month, right?

The 10-year has been at these elevated levels and stocks have thought that was too hot to handle. Well, rates go down today. The manufacturing PMI number was ugly. Some of the retail numbers were ugly. Rates down, stocks up. Is it literally that simple? Well, for a day or two,

but rates are still on absolutely high. And I think on Friday, we're going to get an inline Powell commentary. But that inline commentary is that growth, while it's strong, inflation is persistent. It's coming down, but it's persistent. So rates are not whether they go another two times or not, Scott, I don't know. None of us do. They don't even know. And we are going to be data dependent. But the point being is that they are not going to reverse course anytime soon. And I think if rates do stay high, that will be kind of a struggle for the markets at large. And I think also you have a very seasonally kind of a sluggish period right now, August,

September in the markets. So make your shopping list and just kind of ignore the big picture and find some good stories on sale. I like that phrase, you know, one or two days, Steph, because to me, the good, good, you know, the good news is bad narrative was about two days. OK, that was last Monday and Tuesday. And I never liked that narrative. Oh, like to me, if we, it's going to be good, and we have a chance to get in the dream quadrant, which is slightly dovish perception about commentary tomorrow combined with really strong growth tonight from NVIDIA, and then you got a little runway back up for a while here. So we're in a vacuum in the next 10 days on real data points after NVIDIA.

I mean, I don't see anything that really I'm going to be like, wow, this matters till after Labor Day. So maybe we're going to get some fuel of like, all right, they're not incrementally hawkish and growth looks strong. And we can get back to a upward trajectory in the market over the next 10, 20 days. Adam, we should be paying more attention to Dick's Sporting Goods, Macy's, Foot Locker, and think that, as some of those CEOs suggest, the consumer's looking a little dicey to them. Now, once you get past the summer travel season, where people have obviously spent on travel and experiences and the like, and they're not spending on some retailers, although Abercrombie & Fitch's CEO would say,

wait a minute, look at our stock today because they seem to be doing just fine. There's one or two executing, but as you know, we've been writing for months now about the three things we have problems with retailers, stealing, which they call shrink. So you can't say it's good when your inventory came down because it was stolen. They're talking, though, about consumer trends. But Dick said stealing was a big They're talking, though, about consumer trends. But Dick said stealing was a big problem. Yeah, no, they did. But Foot Locker was talking about softening consumer trends. It's going to zero. It's just the question is when.

No, but the consumer has been the big story. The store doesn't need to exist. Everyone knows that. I mean, over time. I don't know if it's five years, three years, 10 years. But what do you need Foot Locker? I mean, so some of those businesses are terminal. They have issues. But if you look at the over time, I don't know if it's five years, three years, 10 years, but what do you need Foot Locker? I mean, so some of those businesses are terminal. They have issues. But if you look at the real trends, I think their financing conditions are starting to deteriorate. You've seen that. You've seen shrink and you've seen growth in the footage slow, new products slow because they can't make money in urban areas. So I think the retailers are in bad shape as like a structural issue and they could only get bailed out by some really

strong idiosyncratic story or the fed but but i'm trying to get get to the the matter of the what's been a strong consumer right are these warning signs that the consumer's going to get tapped and that then we got a problem with the economy because look at the manufacturing number i'm not reaching that conclusion yet i'm just saying walmart and and amazon and other things are gaining share because nobody wants to walk into a retail where everything's glassed up and you have to ask some guy to open it for you. And then you have to check it out yourself and they don't have half the stuff you need. I mean, why would you want to do that again? So the comps at the existing stores are going to be bad. And then these companies realize they can't

make money there. And so, you know, I don't know why these things like Target couldn't go in half over two years or three years. But I think that's structural. I don't think that's necessarily a problem with the consumer. I think the consumer, no matter how you slice it, no matter what macro data you take in, it's in good shape that's getting worse. It's in good absolute terms, but it's declining. But it's still good enough. Steph, is that how you see it? I mean, do you take anything from what we've gotten this week and say say, oh, you know what I was banking on? Looks like we may have some red flags to worry about. No, I mean, I think the consumer is fine and it's attributed to jobs, wages and inflation coming down.

I think you have some that are structurally challenged. Dick's also not only did they have shrink, but they're going against covid where where they were like knocking the cover off the ball in terms of sales and traffic and trends. And so they that's that's normalizing for them. Macy's has been losing share to Amazon and others forever. Right. I mean, the stock is down 65 percent since February 2021. So this is not new. And Foot Locker is going through a transition away from Nike, which was 69 percent of their sales and is going to get to 50 percent. And the other brands are just not strong enough or big enough or popular enough to offset that. We should mention that, too. So that's your buy.

Nike's down like 10 straight days. Hasn't done that in, gosh, a long time. Yes. But this company is a good company. This is absolutely what you want to be buying. You may not want to buy it today. Maybe let the dust settle. But I think, yeah, down 10 straight days

for a quality company that has earnings power of 650 in the next two years with EBIT margins in the mid-teens up from 11% today. That's upside. And they have pricing power. They have DTC. That's upside. And they have pricing power. They have DTC.

That's going to help their margins as well. They're number one in China. And oh, by the way, their brands are still really, really strong. Footlocker even highlighted that on the conference call today. Just quickly on other parts of consumer, I think you want to own, I still think you want to own some housing companies. Look at Toll Brothers today. Look at Home Depot and Lowe's this week. You also want to own some housing companies. Look at Toll Brothers today. Look at Home Depot and Lowe's this week.

You also want to own some services companies. That's not exactly unknown. But look what Wynn put up. Look what Delta put up. Carnival Cruise put up. These are companies that are still pretty attractive. And then, of course, just well-run operators. When TJ is putting up a six comp and the expectation was for two, that's very telling.

They benefit from the higher inventories in the industry. So I just think there are places you can own in consumer. I don't think it's dead. And I just feel like, you know, these other ones that have disappointed is for good reason. OK, Bryn, you're going to get the last word. Do we need to worry about what's been the strongest part undeniably of this economy? Always, right? I mean, recessions start when unemployment's at all-time lows, first of all. And I'm not in this recession camp. I think, you know, the event that occurs to cause a recession. But look at 30-day credit card delinquencies. They are snapping up very, very quickly. And so what happens? 30 becomes 60, becomes 90. And so it's not evident today,

but you are seeing these cracks in the system. And I think people spent all this money on travel this summer. And I do think the consumer, they have spent that COVID money and people are putting their budgets in. I think on individual names like Foot Locker and Dick's, I mean, I agree with Adam. I mean, 55% of stocks, Scott, going back 30 years, don't even outperform a rolling 30-day T-bill. I mean, most stocks just do terrible, and it's a very small amount of names that make up all of the returns. And so I definitely think, though, you should continue to watch the consumer. And we are really ramping up that credit card spending, plus that 30-day delinquency is something that you just shouldn't ignore. All right, great.

Well, I think we're in general agreement. There's some things you can own. I think Steph's points on travel in particular resonate with me. I think that's got more to it. But the physical box retailers are the things I'm most negative on. All right, guys, we're going to leave it there. Good to see you guys. I appreciate it very much.

Steph, thank you. Bryndi, you as well. Adam Parker here on set with us at Post 9. To our question of the day, we want to know, are you tempted to buy NVIDIA before tonight's earnings report? And at CNBC Closing Bell on X, formerly known as Twitter to Vote, the results a little later on in the hour. Let's get a check now on some top stocks to watch as we head into the close from Christina Parts and Neville Oso, who I know is watching NVIDIA. So I'm biased.

But you are going to tell us about other names. Yes, I do have some other names. And I want to talk about retail stocks because they're on the move today. Abercrombie. I talked about Abercrombie three times with colleagues today. Who knew it was so popular? It's at its highest level in a decade after smashing estimates and hiking its full year sales guidance. You can see Abercrombie up just over 22.5%.

William Sonoma, for example, another name, also higher on an earnings beat and improved operating margin outlook that overshadowed its weaker revenues up almost 13%. Foot Locker, though, not the case. Heading for its worst day ever after reporting a sharp drop in sales due to ongoing consumer softness. And that's weighing on Nike, which has already been under pressure and now heading for its longest losing streak on record, down almost two or almost three percent at this rate. And then lastly, there's been a lot of talk around the retail theft world shrink this week. But Truist says Avery Dennison could be a potential beneficiary as retails crack down on that trend.

Avery makes the smart labels that can help prevent theft or track stolen products. That note and an upgrade to buy on UBS have shares up 3 percent. 182 bucks shrinkage. Scott. Yep. All right. Thank you. Senior parts and we'll see in a little bit as we continue to count down and ramp up to NVIDIA's earnings in overtime. There's Apple up next. Morgan Stanley's Eric Woodring is back with us. He's out with a new note today. It's surprising, too, what he has to say about how owned Apple really is. Biggest stock in the market. Is it the most over-owned? Surprise you next. He's going to drill down on the tech trade after this break. We're live from the New York Stock Exchange. You're watching Closing Bell on CNBC. Shares of Apple trading higher, still, though, on track for their worst month of the year.

And a new note today from Morgan Stanley says it's now the most under-owned large-cap tech stock by institutional investors, ahead of Microsoft, Nvidia, Amazon, and Alphabet. Let's bring in one of the analysts behind that report today, Morgan Stanley's Eric Woodring. He does cover Apple. It's good to see you again. Thank you for having me, Scott. I think people would see this and say, what? Like, I thought everybody owned Apple. You mean there are actually people who don't? No, I hear you. But what we do is we compile a bunch of 13F filings, obviously 45 days after the end of the close of the quarter. And we look at the top 100 institutional active managers aggregate their relative weighting in these 15 different mega cap or large cap tech stocks. And ultimately, what the answer is, is that Apple's weighting

in the S&P is call it just shy of 8%. And Apple's weighting in the top 100 actively managed institutional portfolios is closer to just under 6%. So the answer is yes, Apple is under-owned more so those other companies that we think about are all the ones who are laying out their AI strategies. And that's where all the hype is. And we're still kind of waiting to find out what this is really going to mean for Apple moving forward. Is there any truth to that? No, I think that's fair. I think the other angle here, too, though, is remember, this is as of June 30th. So this is pre earnings, pre Apple earnings. But ultimately, if we think about what happened in the June quarter, you know, Apple has been on fire effectively since since February. It's been a Matt was a massive outperformer. And I think this is the market reaction to to to valuation, frankly, looking at numbers and saying, well, Apple is still declining in the near term. There's the potential to get back to growth in 2024, which I am bullish on,

but ultimately they need to put those numbers up. And I think investors got a little bit concerned, at least, with where valuation was as we got towards the end of the quarter, and we're looking at Apple trading, again, closer to 30 times PE. So I do think it's partially AI. I do think it's partially also valuation and investors just being mindful of Apple's run up year to date. Makes me also wonder whether you think Apple's near term direction is not going to be Apple's decision to make. I mean, there's nothing that's going to happen in the very, very near future. Now, of course, they have the upgrade cycle coming in September, but it's potentially going to be driven by, in part, what NVIDIA does after the bell today or wherever the

AI story continues to go and, you know, the overall drag higher that that story has meant to Megacap. I think you're exactly right. I was listening to your prior group, and I think a lot of what they said resonates with me in terms of if you get a really positive report from NVIDIA tonight, if you look at interest rates and they do fall lower in the near term, that's ultimately positive for stocks, Apple included in that group. Now, you're right, we are in a bit of an information vacuum. We aren't going to get any real news on Apple until mid-September when the iPhone launch comes. Ultimately, I do believe that can be a catalyst to drive numbers higher. I think this will be actually a good iPhone 15 cycle. But I think you're dead right that within the next 30 days,

a lot of the way that Apple will trade will be dictated by broader macro movements. And again, by NVIDIA tonight. What's your pushback to those who say it's just too rich? Apple's just too expensive. 30 times. You know, the fundamentals aren't phenomenal in the environment we're in with rates where we all know they are. How do you how do you push back on that? You know, when I started working at Morgan Stanley here in 2015, I heard the same narrative was Apple was expensive. If you made that call, you ultimately would have massively underperformed

because Apple has been a great outperformer. It's gone through different business model pivots that have ultimately driven the multiple higher. Listen, I think today it's fair that Apple has gone from call it 190 to 175. This is a bit of a consolidation that was needed after the stock was effectively up and to the right for the better of six months. What I think needs to happen is that numbers need to move higher. And ultimately, that will give investors kind of the confidence to say, OK, I am willing to pay whatever it may be, 25, 30 times for this stock, not just because of the near term, but you also have to think big picture longer term. Apple just added 150 million new users to their install base last year that are at the very beginning of their monetization curve.

I would argue they're not really impacting the model. So when we look at, for example, fiscal 24 EPS, is that reflective of the past user base and their spending and their profitability? Or is it reflective of these new users that are coming on board? I'd argue the former. And so ultimately, maybe what I'm saying is that the quote unquote normalized earnings power of Apple's installed base isn't necessarily what we're seeing in fiscal 24. It's what we're seeing further out. And on that basis, an Apple would actually be cheaper than the market thinks it is today. Apple ever going to buy something larger than Beats?

How do you view that? I remember last time I was on here, we talked about ESPN. I mean, it's part of the story of people talk about like they got a mountain of cash. What are they going to do with it? They're going to continue to buy back $20 billion of stock a quarter and pay a dividend and grow that dividend over time and obviously use the rest to reinvest. I don't think that Apple is going to do something big and flashy. I think ultimately their goal for cash, again, is to use it internally, build versus buy, so to speak. You know, you've seen them build an entire TV platform off of nothing when everyone thought

five years ago they were going to buy Netflix. So I unfortunately for this story, I don't think Apple will go out and buy anything like ESPN or something flashy, as cool as that may seem. I think this is going to be an internally driven business build versus buy. Appreciate it as always. Eric, thank you. We'll talk to you soon. Yeah. Eric Woodring joining us today from Morgan Stanley coming up. Trouble in the charts. Top technician Jonathan Krinsky mapping out his forecast where he sees this bounce heading from here. He'll join me at post nine next and later a breakdown of what to watch when NVIDIA does report in overtime. We're about a half hour away from that. And it's not just NVIDIA. Snowflake also reporting this afternoon

the key data you need to watch when those numbers hit the tape. We'll tell you. Closing Bell is coming right back. We're back on Closing Bell. The major average is rebounding today and setting up to snap a three-week losing streak. Our next guest, though, says this bounce could be set to stall and that we're only halfway through this recent correction. Joining us now, post nine, Jonathan Krinsky, BTIG. It's good to see you in the house. Good to be here. Why are we only halfway through? What tells you that? So there's two issues that we're looking at for the markets.

Now, short term, we did get some oversold conditions last week. I think we're seeing relief this week. But when we take a step back and look at the medium term picture, some of the momentum gauges that we would classify as medium term, such as weekly MACD, starting to flip over. We have a sell signal on that on the NASDAQ. We're very close to that on the S&P. The other issue that not a lot of people are talking about is this volume profile that we talk about. Most people look at volume over a time series. We like to look at it on a price basis. And if you think about what happened from the last time NVIDIA reported earnings in late May, we pretty much went straight up from 4,200 to 4,600 in the S&P. That creates what we call this

volume pocket. Oftentimes, what you see on the upside, you see an equal and opposite reaction on the downside. I think we're about halfway through that volume pocket. You've also suggested that some of the more recent strength in the NASDAQ is more than meets the eye, that under the surface, there are more stocks on one day. The day that the NASDAQ this week had its best day since July, you're like, well, wait a minute. More stocks were still down than up on that day, pretending some underlying weakness within the index. Yeah. So I think strength from mega caps tech is nothing new. We would not say that breadth overall is as weak as it was to start the year. Certainly it's expanded. But Monday, for instance, as you said, we had

only the ninth time where the Nasdaq was up at least one and a half percent with the advanced decline line negative, meaning more stocks were down than up. Now, forward returns on the other eight occurrences were somewhat mixed, but there were some notable times. One was, again, the last time NVIDIA reported earnings in May. That was a bullish catalyst. Before that, you have to go back to March, the end of March 2022, which is the tail end of that countertrend rally. And then there were a couple of occurrences in 2008 as well. Now, in fairness, you haven't liked this market for a while, right? I mean, you have, from my recollection, and please correct me if I'm wrong, you know, a lot of the march up, you've suggested, well, this can't last, can't last, can't last, and it lasted. Why was that? Maybe the technicals that you're relying so heavily on

aren't telling the whole story. Is that a fair depiction of sort of the case you made? I can't remember you coming on in any recent memory and saying, yeah, this is totally justified. I think we're going back to new highs or to 4,600 where we got to. Yeah, look, I think the breakout of 4,200 and the S&P accelerated the move. And that was really the trigger where we did see a bit of breadth expansion. Up until that point, it really was a Magnificent 7-led rally. So we've certainly seen breadth expand, but you haven't seen that follow through. For instance, the percentage of stocks above the 200 and the NYSE has yet to exceed 75%. 11 months into a new bull market, we've never not seen that threshold exceeded.

So in some ways, yes, it's been much stronger than we've anticipated. In other ways, we've never seen a new bull market that started this week internally. I know, but you've got to be careful when you do that because technicians would always say, well, we've never ended a bear market without some dramatic capitulation event. And we never really got that. And that's the kind of stuff you were saying at the time back then. Totally. And look, one of these two situations will be true. Either it will be the weakest start to a new market we've ever seen, or it will be one of the biggest head fakes and bear market rallies we've ever seen. We don't necessarily think we have to go back to the

lows, but I think a retest of 4,200 certainly makes sense in the scheme of things. So then set things up for us in 20 minutes or so, right after the bell tonight, overtime, NVIDIA. Yeah. So given everything that you've said, to what degree does that play a role in whether you're right or wrong from here forward? Look, we don't have a view on NVIDIA fundamentally, of course, nor do we know what the stock will do. All I can say is that, anecdotally speaking, this is the most anticipated, hyped-up earnings release we can recall in some time. NVIDIA's gapped up pretty strongly the last two earnings reports. Our sense is a gap-up this time will probably be sold into, sell the news. And we'd also say, just looking a little bit shorter term, the NASDAq broke down below the 50-day, right, a couple weeks ago.

It's now retesting that. We haven't been below the 50-day prior to this correction since January. So I think that's an important retest. We think it'll probably act as some resistance. All right, good stuff and good seeing you in person. Good seeing you. That's Jonathan Krinsky, BTIG, joining us. Coming up next, we are tracking the biggest movers as we head into the close. Christina Partsenevelis is standing by with that.

Christina. Will the apes huddle because AMC shares are getting crushed? I'll explain all of that after the break. All right, 15 before the close. Back to Christina Partsenevelis now for a look at the stock she's watching. Christina. Where are the hashtag ape traders when you need them? Shares of AMC getting crushed again today, down about 12 percent right now.

That's because tomorrow will be the last day of trading for its preferred equity units, ticker ape, which was launched to raise capital and pay down debt. Those ape shares will be converted to common AMC stock on Friday, which raises those fears of dilution. But have no fear, AMC also plans to do a reverse one for 10 stock split, a.k.a. reduce the number of outstanding AMC shares. You can see AMC is down about 12 percent, APE down almost 6 percent today. And you might be breaking a sweat if you take a look at shares of Peloton hitting an all time low. The company posted a much wider than expected loss, citing a recall of its bike seat post, which literally snaps off if you pedal too hard. You also had CEO Barry McCarthy, who wrote in a shareholder letter that consumer spending has shifted towards travel and experiences instead of Peloton hardware.

Shares down almost 23 percent. Brutal. Brutal. Barely above five bucks. Christina, thank you. Thanks. Christina Partsenevelos. We're also keeping an eye on Netflix.

Julia Boorstin is here with that move today. What's behind this, Julia? Well, Netflix shares are up about 4% today, and it's because of a bullish note from Oppenheimer with an overweight rating on the stock and a $515 12 to 18th month price target, laying out how paid sharing and advertising should boost Netflix's revenue by 40 percent by fiscal 25, 40 percent higher from where it was last year, saying that this increase will be in very high incremental margins. Oppenheimer writing, quote, We believe Netflix's dominance will continue, given its clear advantage in producing high engagement content and monetizing that content more effectively than peers. Oppenheimer is saying their analysis indicates a clear path back to double-digit revenue growth. Netflix shares, I just want to

point out, are up about 46% year-to-date. And Netflix may be benefiting from the fact that it appears better positioned to ride out the writers' and actors' strikes than its rival media giants. And this, of course, comes as the studios and writers standoff continues. Scott. Julia, thank you. Julia Boorstin. Last chance to weigh in on our question of the day. The question of the moment. Are you tempted to buy NVIDIA before tonight's earnings report, before those numbers come out in a matter of minutes in overtime? Head to at CNBC closing bell on X, formerly known as Twitter. The results are just after this break.

All right, the results of our question of the day. Are you tempted to buy NVIDIA before tonight's earnings report? The majority of you said nope. I'll just wait, see what happens, see what happens in overtime. Is there a score of the vote? Was it close? Well, we don't have one today. Okay, well, you take my word for it. No is the answer. There's the countdown to the results.

28 minutes, 15 seconds or thereabouts. A full rundown of everything you need to watch for when we take you inside the Market Zone next. We're in the market zone. CNBC senior markets commentator Mike Santoli here to break down the crucial moments of this trading day. Plus, two major tech earnings we are waiting for in overtime. Kate Rooney on Snowflake. Christina Partsenevalos on NVIDIA. Mike Santoli, what's at stake? You know, it's going to be eye of the beholder. Look, there was nothing particularly wrong with Microsoft or Apple's results, but the stocks in the market sold off because it was ready to do so. I think we're going into the NVIDIA report in a much more neutral setup. We were oversold.

We've had a little relief. Yields are down. We've had our little 5% pullback. Question is, was that enough? Also, for as much as NVIDIA is up, for as far as it is above its longer-term trend line, it has been more overbought in the past, in November of 2021. Not only that, it's done nothing for a month. So I think it's a bit of a crapshoot short-term.

There is going to be a quarter where people have an oh-no moment. We front-loaded a lot of the enthusiasm for AI. Who the heck knows if it's going to be this one? Yeah. Should we also note, too, I mean, nice move in the S&P here. As we sort of move to the close here, we got better than 1% gain. Yes. You said it. Rates down, stocks up. And that's basically what it has been. I mean, banks also found their footing. That was important because that's been a very vulnerable spot in this little pullback. So, you know, look, again, I say it's come up to a neutral level. We're still a percent

below the 50-day average in the S&P 500. We're not quite broken the little downtrend. So it's constructive, but it hasn't really proven quite anything yet. You know, Kate, you can hear Snowflake. Hey, don't forget about us. We matter. Right. We matter. I know. It's been all about NVIDIA, but we've got a big one today here, Scott. So guidance is going to be key. Snowflake typically provides product revenue guidance. Street's looking for $675 million there for Q3. There's been a lot of talk about optimization headwinds. So in other words, software customers spending a little bit less in prior quarters

as they are optimizing spending, as it's called. The street's looking for any signs that some of that pressure is mitigating. Net recurring revenue is expected to continue to slip, but any silver linings there of booking improvement and momentum would be seen as a positive in this tougher budget environment. Any signs that consumption trends have bottomed based on some of the June and July trends we're going to see today. Snowflake also cut its forecast in the last report, so the stock was down last quarter on that lower outlook. It's been a big earnings mover in the past, and it's been on a streak lately of some downbeat reports.

So maybe today that'll turn around, but we'll see in a few minutes here, guys. Yes, we certainly will. Kate Rooney, thank you very much to Christina Partsenevelos as we count down to the big report. You, I mean, you feel the magnitude of what's at stake here as well, as closely as you cover a lot of these companies. This just feels different this time. Yeah, and we talked about this on Halftime Report because of its influence on the entire S&P 500 and this whole AI theme and whether it's going to be hype or not. And so NVIDIA actually remains one of the few thematic plays that is actually seeing a material bump in its numbers from AI. And that's why there's going to be so much emphasis placed on its data center revenues, given it contributes roughly 60% of total revenues

and includes those sought-after AI chips we keep talking about. So the street is expecting that number to more than double to $8 billion, at least in Q2, with analysts even calling for $15 billion in the coming quarters. That is a pretty big goal when total revenues are only expected to be about $11 billion in this Q2 quarter. Citi has that at $12 billion. BuySide is saying $14 billion. So I was chatting with Jordan Klein, managing director at Mizuho, about what to expect from the earnings call. He thinks NVIDIA's CFO will need to bring up the backlog since capacity is so constrained. There's a lot of concern about supplies. In other

words, give investors confidence about the visibility of future orders heading into 2024, and that should run the stock higher. This earnings report, though, is going to be definitely about supply constraints versus NVIDIA's demand environment. And the options market is definitely calling for at least a 10% swing post earnings in either direction. All righty. We will see you in ot when it all goes down mike santoli i turn to you we've got 45 seconds or so left we'll see do we find our footing in tech yeah do we fall further or is nvidia such a unique species within the market that it doesn't necessarily have coattails directly for other either macro

fundamental factors. Those are the questions right now. I think big picture, not to overthink it. If you thought four weeks ago, valuation was stretched, sentiment was too exciting, technicals were overbought. You've taken care of some, in some measure, all those things. The question is, is it enough? Maybe NVIDIA gives it a push in one direction or another on that score. I can't wait to see what happens over the next 30 minutes.