Closing Bell - Closing Bell Overtime: 10/31/25

Episode Date: October 31, 2025

From the open to the close, “Closing Bell” and “Closing Bell: Overtime” have you covered. From what’s driving market moves to how investors are reacting, Scott Wapner, Jon Fortt, Morgan Brennan and Michael Santoli guide listeners through each trading session and bring to you some of the biggest names in business. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

That bell marks the end of regulation. White pro winning the frozen bell at the New York Stock Exchange, Canary Capital, doing the honors at the NASDAQ, and that's a wrap for the markets for the day, the week and the month. Stock's closing higher today, rallying in the last two hours, the NASDAQ up nearly 1%. For the week, 1% gains for the Dow and S&P 500, more than 2% for the NASDAQ, which cleared a big hurdle with five huge tech names reporting. And though October can be a tricky month for the markets, this year we were treated to gains with the NASDAQ again leading the way.

Today, consumer discretionary, the leading sector by far, thanks to the leap in Amazon shares, staples, materials, and utilities, the sector's on the downside. And Amazon, shaking up the magnificent seven standings. 24 hours ago, it was the worst performer in the group this year, barely higher, but today's gain, especially the head of Apple, Mehta, and Tesla, puts it right in the middle. So that's a scorecott on Wall Street, but winters stay late. Welcome to closing door overtime. I'm John Fort. Morgan Brennan is off today. Coming up, the big takeaways, from tech earnings. Who will be the winners? Maybe the losers from all this tech spending. Plus, we'll look ahead to the big catalyst for next week. More earnings, Palantir, AMD, and

McDonald's among them. And we are looking for alternative data. We will dive into J.P. Morgan's report on personal income. Now let's start with more on the markets. Big movers outside of Amazon and Apple. Let's get to Christina, Parts and Nevelis. Christina. Lucky number seven, actually, for Halloween. That's how many months the NASDAQ is actually closed in the green. Coinbase shares. Let's start with those, closing almost 5% higher after beating earnings expectations and boosting its share buyback program. The crypto exchange's strong quarter came as trading volume surged, helped by a more, what else, favorable regulatory environment under the Trump administration's push to really ease restrictions on digital assets. Robin Hood, also closing higher, almost 5 but 6% higher, riding high on multiple analysts upgrades and a major vote of confidence from institutional investors, specifically Genison Associates, who just opened a new 320,000,000,000.

$22 million position in the stock, signaling strong belief in the company's growth prospects. Then you also had Reddit. Shares also closed about almost 7.5% higher as advertising revenue soared nearly 75% year-over-year. The social media platform continues to see strong user growth driving those ad dollars. And in energy, both Exxon and Chevron topped earnings estimates. Exxon saw some strong production gains in Guyana and the Permian Basin, while Chevron hit record oil output boosted by its Hess acquisition. Happy Halloween. All right, Christina, thank you.

Now to the bond market, big moves and yields this week. As Fed officials, let us know a December cut is far from guaranteed. Rick Santelli is in Chicago. Rick. You know, maybe a December cuts far from guaranteed. Maybe that'll prove to push rates down because the two cuts that we already have that are definitely guaranteed haven't done much to push rates down.

Now, that's kind of spooky for a Halloween. comment, let's look at a week-to-date chart of twos and tens and realize right in the middle of that chart yields popped. That's the day after the Fed cut rates. And we are now up about 10 basis points almost exactly on the week in twos and tens. But it wasn't just the October meeting. It was the SEP meeting as well. Go back to the SEP meeting on a closing basis.

Yields are definitely still higher than they were pre-Sep. So 50 basis points of cuts, yields are higher. And something else odd happened. If you look at our yields for 10 years, subtracting from the German or the EU boon yields, what you'll find is it's now the widest in two months. Look at the right side of that chart. When the Fed cut, the relationship changed. Rates popped, and we really are outrunning Europe.

And this is a big issue because Europe's going to have to compete for investor dollars on their issuance. France is going to have to compete. Japan's going to have to compete. So even though many don't like these stubbornly high yields that seem to defy Fed rate cuts, investors seem to be quite pleased. John Ford, back to you. All right, Rick Santelli, thank you. Makes sense. Well, tech earnings meanwhile dominated the week with five of the biggest names in the world reporting.

Those companies representing $15 trillion in market cap, and that money is spending money. Big Cappex numbers as Amazon soars and meta-settles now. Investors are trying to figure out which companies' AI investments will pay off on McKenzie, Dallas. Join me now with more. Mack. Hey, John. So the hyperscaler prints are in and Wall Street is starting to pick its AI winners. Amazon defied expectation posting its strongest AWS growth since 2022. It also showed that its in-house chip strategy is setting the company up to bank record revenue of over $200 billion next quarter. Alphabet also riding high with cloud revenue jumping 34% after landing deals with OpenAI and meta and its future deal pipeline. That's up

almost 80% from a year ago. Now, both those companies hitting fresh out-time highs off the back of earnings. Meanwhile, Microsoft continues to lead on raw cloud growth at 40%, but with expectations sky high, even a solid quarter couldn't lift that stock. And then there's meta. It beat on revenue and earnings,

but shares logged their worst drop in three years, with investors questioning how CEO Mark Zuckerberg plans to deliver real ROI, especially without a cloud business to justify all that compute spend. Bottom line, John, everyone is pouring billions into AI, but only Amazon and Alphabet are starting to convince Wall Street that they can actually monetize it. I wonder, Mac, though, meta has been doing a good job monetizing reels, and that's really an AI-driven product. And to me, that was the test case for what Zuckerberg has been saying about how AI is going to benefit them internally, perhaps provide a proof to the rest of the market of what it can do, unlike previous versions. of matching people to content to boost engagement.

This is driven by AI guessing based on what your friends look at, what you'll want to look at as well. So maybe this move this week is a little bit of a too quick reaction to just the numbers out of meta, no? I mean, I feel like up until this quarter, it was meta that was actually showing an ROI for their AI investments in the context of their ad strategy. And what changed, the narrative that changed this week for Alphabet,

was that they were talking about a monetization strategy for Gemini and that's part of why you saw this reversal was actually fascinating over the course of the earnings call with Sundar Pichai on Wednesday the Alphabet CEO and then later with Andy Jassy as they both talked about this monetization strategy very different for the two companies uh... that you started to see the stock come up after hours but to your point John yes meta has been the leader in terms of showing an ROI I feel like what changed this

quarter is the fact that now we're hearing Alphabet they have a plan to make money off of their AI strategy and search that beat expectations, that was a big concern. Will their AI business cannibalize what they're doing over a Chrome and their search segment? Yeah, there's a lot of game left to play for these guys.

Mack, thank you. For more on the big takeaways from mega-cap tech earnings, let's bring in Madrona managing director, Matt McElwain. Matt, good to see you. We got an overall look that we can show you of this tech earnings and the AI story, looking at the cap-ex that's out there and the degree to which they're going to be able

to prove that it's worth it, at least what they've shown so far. So we'll put that up in a moment. There it is. It's up on the wall. What was your impression of meta earnings in particular and the degree to which the negative reaction was justified? It seems like a perceived leader in this group and then a perceived laggard in Amazon sort of switched positions at least for a while this week.

John, I completely agree with your comments just a few minutes ago. I think it's an overreaction on meta, and the macro point is that there's a rising tide that's lifting all hyperscalor boats right now. All four of these companies, I think, are must-owned companies, and now you get meta at a little bit of a better rate here. You know, notably, as you also point out, until this earnings today, or yesterday, rather, Amazon was actually down for the quarter and was really a laggard amongst this group of hypers, you know, over the past year. That's clearly turned around today in the market and deservedly so. You know, all of these companies have the capital and the wherewithal to build out data centers

and to enable models to be trained and run on those data centers. And that sets you up for what they're really doing, which is building what we think of as reasoning machines. You know, all those applications meta has that they're monetizing today are effectively reasoning machines that combine models and context and data and help solve real world problems. or help solve real world interests of people being connected and communicating together. Amazon's doing that as well, Google's doing that as well. Of course, Microsoft too. It strikes me that we, as investors, when I say we still don't know who's building an iPhone in their data center strategy and who's building a Wintel PC. And what I mean by that is

the degree to which these efforts to engineer chips specifically for AI that are more performance than competitors is going to be successful for one or more of these hyperscalers and give them an operational advantage over the competition. Right now, it seems like we're paying attention to top line growth numbers to share, but not yet thinking about who is going to be able to operate this stuff effectively and at lower cost. I think it's an all four of them are saying it's an all of the above strategy for me. And I think we all have skepticism onto the degree to they can do different things. Google, more optimistic on TPUs, their ability to build chips.

Microsoft, further behind in that area, Amazon, I think with the announcement today, yesterday gets more credibility around their tranium chips. And what they're doing with that, in particular, how they're partnering with folks like Anthropic. When you go up the stack, then you say models. Again, Google, a year ago, there was a lot of skepticism around Gemini. they've had a very strong year with their models. Microsoft, you know, a big week for Microsoft a little bit overshadowed by the earnings is the partnership realignment with OpenAA. I think that sets Microsoft up well for the next five plus years. Amazon probably underappreciated going into this

week on their relationship with Anthropic and their bedrock offering, which allows what Amazon's always does, which has said price, convenience, and selection, we're going to give you the selection so you can build these reasoning machines on top of these models. The name behind all these names, Invidia, which topped $5 trillion in market cap for the first time this week, might have ended up a little bit below there to end the week, but still an important milestone. To what degree is its position protected, given the strength we've seen in AMD shares, this talk about custom chips, but then this overwhelming overall demand for AI and Data Center. I think the overwhelming demand is what's the winner here.

I mean, to think that the five companies that announced earnings this week are going to spend over half a trillion dollars on CAPEX next year, a fair bit of that comes Nvidia's way, even if they have their own chips that they're building. And recall that Nvidia is not just about amazing GPU and GPU systems, but they have CUDA, and they have capabilities up the stack. And they're the ones that are playing the most offense in investing into private companies and even partnering in new ways, take the Nvidia and Intel relationship and how that's come together in the last couple of months to, you know, kind of facilitate growth and partnership for both. You need a lot of CPUs along with those GPUs to build these reasoning machines that I'm talking about. And those reasoning machines are going to run on all of these hypers' data centers. Lots of changes. Matt McElwain from Madrona. Thank you.

Thanks, John. Now, above that data center infrastructure layer we've been talking about, AI is also changing the way software gets built and sold. Devrev is a startup orchestrating the work of human workers and AI agents. I spoke with Devrev, co-founder and CEO, Deerj Pandey, and Devrev investor, Vinod Kosla, about whether as agentic AI arrives, the old software model dies. One of the major software vendors, I won't name which ones, Their CEO asked me a couple of months ago, is the idea of software applications dead?

That's a pretty important question. And the answer is most likely yes in many, many applications. Because work happens across applications, not in applications. How do you actually mean this multiplayer? Because right now, Chad GPT is single player. talk to AI, you actually do it through a tool like ChatGPT and only caters with data that it's available on the public web. How do you really bring all of that, you know, within your enterprise, you know, make it permission aware, and make it highly conversational. So you can

look at, you know, both documents and business systems data. And of course, the same chat GPT like interface that is not scary for the common employee. Edge Pande, also the co-founder and former CEO of Nutanics. Now, the message there that some software applications might well get commoditized and turned into something more like niche features, perhaps. Well, coming up, more on mega-cap spending. If these companies are spending so much cash on an AI buildout, is there less left for things like dividends and buybacks?

Plus, the NASDAQ of 22% so far this year on pace for a 20% gain for the third straight year, six year out of seven. Will the rally keep rolling into 2026? Overtime's back in two. Welcome back to Overtime. Apple, Amazon, and a bunch of other interesting names hitting 52-week highs today. Western Digital up after earnings. Data storage rival Seagate also hit a record before going red.

Palantir also a new high. Those stocks are second, third, and fourth in the S&P 500 this year, trailing Robin Hood. Quantas Services, a power company often mentioned as part of the AI buildout, also on the list of today's highs. Well, the AI optimism lifting those stocks, also helping the major averages finish October, which has been a volatile month, with gains, the NASDAQ 100 up nearly 5 percent, longest monthly win streak since January 2018. S&P 500 is up more than 2% month to date, longest monthly win streak since August of 2021, led by tech, healthcare, discretionary, and utilities. Names like AMD, Micron, Terradine, and J.B. Hunt are leading the index higher,

Is it smooth sailing to the end of the year, or are there hiccups ahead? Let's bring in unlimited CEO and CIO. Bob Elliott. Friday, Bob, how are you feeling about these markets? Investors don't seem to want to let everything go down for too long. They certainly don't. I think part of what we're seeing to connect it to the Fed earlier in the week is that the Fed is cutting interest rates and there is more liquidity in the system.

And typically you'd get a macroeconomic response from the real economy, but there's so little demand to borrow that basically all that liquidity that's coming from the Fed and global central banks running easy money is being channeled into asset prices and basically moving from one mania to another when it comes to the financial markets. And so that's largely where we're seeing all that easing play out is in financial asset prices. Now, you say the AI hyperscalers haven't shown an indication they can generate revenues from the real economy commensurate with the CAPEX boom. But, I mean, if they could, then it would be too late to be spending on CAPX, right? I mean, don't they have to look at the best signal they have and the best historical sense they have of what's coming and build ahead of that or risk getting left behind? Well, I think a lot of these folks are basically taking the most rational choice that they possibly can, which is to even be in the game, you've got to build the infrastructure. And so I understand why they're doing what they're doing. And each individual agent, it almost seems clear that's the only path.

The challenge is that the environment might well be a winner-take-all environment, and let's be really really. That winner take all, while we're all focused on the U.S. markets, it may be in the U.S. or it may be somewhere else, for instance, from China, when it comes to these AI models. And so the real question is not whether or not they're acting rationally. I think the question is basically what is the likely ROI in all of this CAPEX, and as a group, does it make any sense, right? If everyone is jockeying to be the frontrunner and the winner, then almost inevitably there's going to be a lot of this CAPEX. that doesn't make a whole heck of a lot of sense. In a way, though, are the hyperscalers, the big tech companies, more protected themselves from that potential downside versus some of the folks who are taking the overage from them, maybe the coreweaves,

maybe the equipment makers who they're buying from now but might slow down their spending on later? I mean, these are big companies with outside businesses, not just based on what they're doing specifically with AI right now. they could stay warm during winter, right? Yeah, well, certainly these businesses, you know, Google, Amazon, meta, they all have core businesses, which, to be frank, are the way in which they're financing all of this AI spend. The challenge is, basically what's happened is they've channeled all of their free cash flow, you know, something like 60, 70 percent of the free cash flow right now, and moving towards basically all of their free cash flow into a huge AI bet.

And what that highlights is that there's a real risk that they don't get the return on investment from the spending that they're doing. And so that's really the question, not, you know, Google, Amazon, meta, et cetera. These companies are going to be around for a long time. The question is, would they be better off, you know, distributing that capital to shareholders or investing in all this infrastructure that may or may not be useful? And then on top of it, are investors themselves into those stocks really pricing in the right problem. abilities that they'll get a payoff. Look, the free cash flow on these companies are very low at this point. Well, that is the question then. Well, we're talking about an AI data center version of the warehouse buildout that Amazon did

during COVID that they then had to digest and recover from. Won't the whole market potentially suffer if that ends up being the case with AI? And as an investor, how do you strategize around that? Well, I think as an investor, you basically have to use this opportunity, this mania to take some profits here. There's no reason to go all in on this trade, given the overall picture is not looking particularly compelling from our way perspective across the whole sector. So, you know, use these rallies to take some money off the table, create a little more diversification in your equity portfolio. And, you know, that's what you said about gold a couple weeks ago, Bob, and that was a very prescient call based on what gold has done since it was at 4,300.

or so? Yeah, that's right. I mean, look, one of the things you learn if you've been in this business long enough is don't be greedy. And in the world of the financial markets and in a world of sort of speculative manias popping up everywhere, if you're a long-term investor, you're going to win because you probably have some bets on the table in those various areas. But the way you're going to win is by not leveraging into the mania, but by taking

your luck and taking your chips off the table when you're deeply in the money. Some people think greed is good, though. Bob Elliott, thank you. Well, Amazon soaring 10% after results yesterday. Are those numbers really worth an extra $250 billion in market cap, or is it a sign of excessive optimism in this market? Plus, we'll look at the other side of the coin with names hitting 52-week lows in today's session. Overtime, we'll be right back. Welcome back to Overtime.

Who's feeling down? lot of food and drink names making new 52 week lows today. Domino's Pizza, Constellation Brands, and Molson Coors. Food at home stocks not faring any better. General Mills, Hormel, and McCormick also down. Well, the overall S&P 500 and NASDAQ closing with gains today, thanks to Amazon's strong earnings, the NASDAQ ending the week much higher than the other major averages. Nasdaq up more than 2%. But is this a sign of excessive optimism? Let's ask Mike Santoli. Mike. Yeah, it's certainly time to start asking that question because we have been on such a role for, let's say, the last six months. Pretty flawless chart of the S&P 500.

We've been above the 50-day moving average since early May. It's also one of the longer stretches, let's say one of the half-dozen longest stretches over the last 40 years without at least a 5% pullback. We got a little barely 3% one. It just almost touched the 50-day moving average and was bought right there. So, again, at the index level, pretty flawless. at some point, things can overshoot. Take a look at this one gauge of investor sentiment. It's the investor's intelligence weekly poll of investment advisors or professional advisory services, and it's the ratio of bowls over bears. And now you see it's kind of entered into that

excessive optimism zone. It's not so much like a moment in time that says this is a trigger to sell or that the rally is about to end. We did spend a lot of time up here, actually, in 2024. So that was a year that also was lots of gentle and strong gains. So I don't think it's about saying that the rally's over, but it's time to start monitoring this for overheating. And maybe that's a question for early next year. I would also point out how low we were for so long. So there was, sentiment was pretty slow to get back in a bullish mode even after the S&P 500 started to race higher. That's just remarkable, Mike, when you say one of the longest stretches, without a 5% pullback, I believe you said, in 40 years.

When we look at some of the other more recent periods that seemed like long stretches of excitement, including after COVID, where are the other couple of more recent stretches like that? Do you happen to know? I mean, I would point to the year 2017, which barely even had a 3% pullback the way this one did, and is one of the reasons I'm mindful of looking into early next year, because it was pretty much strong from tape to tape in 2017. It was the first year of a new administration. Everyone was looking forward to tax cuts and all the rest of it.

And then you had its kind of big momentum move in early 2018. Then a real breakdown, a sharp correction, this sort of volatility implosion that we had. And then that was a very choppy year, 2018. And eventually, toward the end of the year, you actually had a near 20% decline. So it's probably not going to map exactly to that. I would also point out that even though it's one of the longest stretches without a 5% drop, the longest ones are like twice as far. long as this has been. So it doesn't mean like the clock is ticking so loudly.

Good history lesson. Mike Santoli. Thank you. Yep. Well, now it's time for a CNBC News update with Bertha Coombs. Bertha. John, a federal judge in Rhode Island this afternoon ordered the Trump administration to use emergency funds to pay federal food assistance benefits known as SNAP one day before they are set to be suspended because of the government shutdown. The president's National Economic Council Director Kevin Hassett told Fox News this afternoon, The government will use those funds to pay recipients.

About 42 million poor and disabled Americans use the SNAP program for food assistance. Venezuela is reportedly reaching out to Russia, China, and Iran for help and amid the continued buildup of U.S. forces in the Caribbean. The Washington Post reports that internal U.S. government documents show that President Nicolas Maduro has specifically asked Moscow for help with aging military capabilities. The Post reports it's unclear from the documents how Russia, China, and Iran have responded. And according to the Bureau of Prisons, Sean Diddy Combs has been transferred to a federal prison in New Jersey to serve out his sentence on prostitution-related charges. Combs' lawyers had requested the move there to address substance abuse problems and other issues.

John? Bertha, thank you. While optimism about AI keeps sending stocks higher, there is some concern. about the underlying strength of the economy, particularly the lower income consumer. But with no government data to confirm it, investors are flying blind by historical standards. Up next, we'll get J.P. Morgan's alternative to the personal income data that would have been released today. Stay with us. Welcome back to overtime. Amazon giving the markets a huge boost, all three major averages

closing higher for the day, week, and month, and overall three time periods, the NASDAX, the leader. percent gain in October. Shares of Netflix a winner today after announcing a 10-for-1 stock split, taking effect in a couple weeks. The company also said to be window shopping parts of Warner Brothers Discovery, whispers that helped that stock today. Twilio gaining 20 percent, the company beat on the top and bottom lines, raised guidance, and maybe the biggest driver of the stock gains on the conference call. It highlighted notable customer wins, including a nine-figure deal with a leading cloud company. And an interesting day for Getty Images. The company announced a photo licensing deal with perplexity. The stock jumped in pre-market,

got as high as 320 early in the session, then lost it all, and closed lower. Turning now to the economy, today would have been the day we got September personal income and spending data, which includes the Fed's preferred inflation gauge, the PCE. But this week's earnings reports have given us some clues on the pressure consumers are facing, especially the younger population. Chipotle saw broad pullback in all income cohorts, but the company said the 25 to 35-year-old group particularly is challenged. The stock got punished losing nearly a quarter of its value this week. And our next guest says the struggles the younger population is facing provide a signal for the state of the overall labor market. Joining me now is Chris Wheat. He is president of the J.P. Morgan

Chase Institute, which is out with its own report on personal income. Chris, what do the struggles of the younger set signal. Thanks for having me on, and I think it's really helpful to have this conversation. We have been looking at income growth for a while to really understand the take-home income in particular that people see. For the year as a whole, we've really seen quite tepid growth, but in the last couple of months, we've seen that start to come down, and what we drew attention to was those younger consumers where we're seeing less strong growth than we would usually see.

Usually those young workers are seeing the strongest growth, quite a gap between the youngest and people farther along in their careers. We really have seen that tighten a bit in the last couple of years, suggesting less growth from those young people and then less purchasing power as a result. So what are the implications for the economy then? Well, I mean, it's one of many signals to make sense of what's happening in the economy. Income is where I think things really start. That's where the money is coming into the house. It's where you're going to spend the money from. Of course, they're saving.

Of course, there's investment in other places we've actually seen more investment by young people, but even that could be a sign about the increasing prices of other assets such as housing. What about the older Americans and perhaps the better healed who have stocks in their portfolios and have been doing quite well? Is that carrying the economy overall in a way that's equal to or different what we've seen in other cycles? Well, I mean, you're right to draw attention to sort of the differences between the younger and the older, higher, lower income. Those people that have more exposure to assets in general, be it through stock ownership or housing assets, they're getting the benefit of all these asset price rises. If you don't have those things, it means less to you.

So it's definitely a thing to think about as you're trying to understand spending differences across groups. What does it imply? I don't know if you guys looked into this at all for the fourth quarter. I mean, there's been a lot of spending among the young, certainly the work in class that's credit driven. and that can reach an end for some at some point. How does that look overall versus how it's looked in the past? Well, when we try to think about what's going to happen forward, and honestly, mostly we're in the business of explaining what's happened,

more so than predicting what's going to happen. But it does kind of give us some sense of what some of at least the labor market dynamics are looking like, both from an employer point of view and from an employee point of view, when you see that softness in income, when you don't see, see the kind of behavior that's consistent with people moving between jobs, kind of the things you like to see in a robust labor market. It certainly makes you think that employers and others are maybe uncertain about what's going to come and making investment decisions in a more cautious way that can reflect that.

Income isn't growing as much as it has at other times, particularly for the young, but people are largely keeping their jobs. I guess that helps? All else equal, yes, but I mean, for some people, changing jobs is the way that they see income growth. Like, a lot of that income growth comes as you move from a job that maybe wasn't such a good fit to one that maybe is a better fit. So, like, no one wants to lose their job. But when people are proactively feeling good about the economy, finding better matches, that also leads to that job turnover. And sometimes that can actually be a good sign for the economy. Difference between losing your job and leaving your job, for sure. Chris Wheat, thank you.

Thank you. Well, up next, the founder of Wikipedia on why sites like his are so important in the age of AI. Plus, his take on Elon Musk's newly launched Grogapedia, plus do mega-cap tech stocks have a premium problem? We'll look at whether there's a risk that they are too expensive coming up on overtime. Welcome back to overtime. Dexcom was the worst performer in the S&P 500 today. The company, which makes monitors to help diabetics track their glucose levels, beating earnings estimates, but warning that next year's revenue growth could miss forecast.

That news prompting several firms, including J.P. Morgan, Goldman Sachs and RBC to cut their price targets. And I was part of this week's CNBC Technology Executive Council Summit. I spoke with Wikipedia founder Jimmy Wales about trust in the time of AI. He said too often AI models hallucinate, don't cite their work and act as if that's not a problem. If you like a certain TV show, you can go and chat with it about what other shows you might like and you're probably fine. And if it makes up a show out of thin air and that's happened to me, I was like, that's like,

show sounds really interesting and I'm not it's not in IMDB it's not anywhere and it's like oh no I didn't mean that it was a real show I was just telling you about shows you might like if they existed okay well I actually I'm a human I live here on earth and I only want to watch shows that exist so but anyway so that that is a big problem and actually you know Elon has just launched his Grogapedia which I haven't had time to look at I think they might have I've been talking to so many people I might repeat myself but like that's gonna be an issue. Like the large language models that he's using to write

Crockapedia are going to make massive errors and there's really no way to know for sure. So I'm not that, you know, optimistic that he's going to create anything very useful right now. CNBC's Technology Executive Council is made up of technology executives across industries. If you're interested in being a part of it, you can go to CNBCc councils.com slash TEC. Up next, Mike Santoli looks at the outlook for mega-cap tech stocks now that they're looking even more expensive on a free cash flow.

yield basis and later we'll look at which big names on next week's earnings calendar could have the biggest impact on the market and your money be right back welcome back to overtime shares of new old brands losing more than a quarter of their value today the company CEO says consumers are resisting the price hikes it put in place to help offset tariffs the maker of rubber made storage containers Sharpie markers and Elmer's glue missing Wall Street's earnings estimates slashing its full year forecast well cloud storage apparently doing a lot better than food storage.

So now let's bring back Mike Santoli for another check on this week's big tech earnings and their free cash flow. Mike? Yeah, John, so, you know, you were just talking to Bob Elliott about how these big companies are sacrificing free cash flow in the current year in order to invest so much in CAPEX here are four big ones, Alphabet, Microsoft, Amazon, and META. This is the trend of their free cash flow yield.

So this is just free cash flow divided by market cap. As this number goes down, as this percentage goes down, it means the stocks are becoming more expensive on this basis. And you see they kind of hovered in this 3 to 4% yield zone for a while. And now they've plunged. And you have the meta and Amazon below 2%, like 1.5% free cash slow yield. Microsoft and Alphabet, obviously not that far above that. So at 2% free cash so yield, it means the stock's trading it 50 times cash earnings.

It's one way to think about it. And it's also kind of choking off their willingness or ability to buy back a lot of stock. Microsoft's pretty much stalled. What I find fascinating is that the market is not across the board penalizing these stocks for this, right? They're willing to do it. In fact, the reason that the yields are so low is because the stock prices in most cases are up. So for now, markets going along with this. One reason also is helping the overall market. You know, Nvidia's added $2 trillion plus in market cap this year. In large part, Nvidia is capturing a lot of what otherwise would be their free cash flow and kind of fall to the bottom line

or just be kind of held within these big companies. Mike, my free cash flow yield went down a lot when my wife and I were getting ready to have kids and we bought a bigger house. In a way, that's what this is, right? And just the question is, is the family going to come? Is the house going to be enough? And if so, maybe it pays off?

Without a doubt. And I think that is what the market's behavior around this would suggest, that that is the, kind of underlying premise. Now, I also maybe find a reassuring that meta did get penalized this week, right? It's down 12% week to date. It's not because they're spending on different things. I think there's a perception there that maybe they have a greater sense of urgency or desperation and maybe not as linear a path to ultimately getting paid back for all the hardware that they're building. Whether that's right or not, I think the market has one of those companies

on a shorter leash. And maybe that's a good thing. Interesting, too, implication, John, is Apple not shown here, but it now looks relatively cheap. Even though Apple's expensive based on its own history, it's got like a 3.2% free cash flow yield because they're not participating in this whole spending capex binge. Also interesting, Mike, that Microsoft stock didn't get too much of a lift too excited out of some pretty strong results here. So it's not like everything is just having people push the buy button. It's not indiscriminate at all. I agree with that. Now, Microsoft got a bit of a bump ahead of its results, you know, that people thought they got a pretty good deal on the Open AI arrangement and all the rest of it. But that's exactly right. And I also keep pointing out

over the course of this three-year AI-driven bull market, every one of these stocks has had at least a 20 or 25 percent or 30 percent drawdown at some point along the way. So it's not as if people have just been blithely saying, okay, we buy and it's only one direction from here, which is up. Especially meta. We remember that. Mike Santoy. Thank you. Palantir, AMD. and Qualcomm, just a few of the big name set to report earnings next week. Up next, we'll discuss which results could be the next market catalysts. And don't forget, you can catch us on the go by following the closing about Overtime podcast on your favorite podcast app.

We'll be right back. Welcome back to Overtime. Earning season keeps going strong next week when Palantir, Clorox on semi-Vornado and IAC report on Monday. Tuesday brings Pfizer, Amgen, AMD, Uber, and Marriott. Wednesday's highlights are McDonald's, Qualcomm, Lyft, DoorDash, Robin Hood, and Arm Holdings, Warner Brothers Discovery, Block, Take 2, AirB, and Expedia are on Thursday, and KKR, Wendy's, and Six Flags close out the week Friday. Our next guest now joins us with the most important catalysts on his list.

Let's bring in Vital Knowledge founder, Adam, Chris Safuli. Adam, welcome. We do get some private sector data next week. How important is that? Yeah, I think it's going to be pretty valuable. You know, the government's obviously been shut down. We've been in a blackout period for official government economic statistics. So next week we get both ISMs, manufacturing, end services, the ADP jobs report, and then Michigan

sentiment report. You know, Powell on Wednesday when the press conference said that the Fed is looking at a lot of this data to kind of guide their way through the shutdown, and so it's going to be important for the market as well. Michigan sentiment particularly important? Just the inflation expectations piece of that, I think, gets watched pretty closely And, you know, just overall sentiment as well. But I think the inflation expectations is probably going to be the biggest piece of that report on Friday.

And we're going to get a sense from the Supreme Court on how they feel about tariffs. Yeah, I think that's going to be kind of one of the bigger catalyst to watch. There's a very important, the oral arguments in the IEPA tariff case are next week. I think it's expected that Supreme Court justices will sound skeptical about those tariffs. I think the consensus assumption right now is that they will eventually be stricken down. And the question is kind of how markets react to that. It's positive for earnings on the one hand, but it also could push yields higher and that it's going to prevent, it's going to lower revenue to the government.

And it could also create more uncertainty as the White House kind of figures out a new legal scaffolding for its tariff agenda going forward. Next week we're going to get another software name in the AI space making a case for these valuations and the market excitement. I'm saying another because I'm thinking about service now this week, which turned in a quarter that investors seem to appreciate, be excited about beat and a raise. But Palantir has just been doing extraordinarily well in the market this year. What do we need to see, you think, from Palantir, and what does it represent right now at this stage of the cycle?

Yeah, I think Palantir has been, you know, one of the hottest stocks. It's been, you know, a key member of the, you know, the whole AI narrative. And so expectations are very, very high for it. Unlike service now, where there had been a lot. a lot of concern about AI being almost an existential risk to a big-fitting business, talent are seen as being a huge beneficiary of the AI rollout. And so, you know, the expectations are very high. We saw this week with the mega-captex reports that if the numbers aren't perfect, you know, you could see a slump like you saw with meta, for the lesser extent, Microsoft. So, you know, they're going to have to thread the needle perfectly, but I think all signs

are that fundamentals of the company are certainly very healthy. Evaluation is a different story. The valuation is definitely very high with that stock. Very different kind of stock is McDonald's. It's now higher for the year, year-to-day, also higher over the past 12 months. As the narrative in food, away from home, has shifted quite a bit. For a while, the more sophisticated names were running. Now there seems to be more of an attention to value. What do you think McDonald's represents at a time we're not getting as much government data on the state of the consumer? And what do you be listening for there? Yeah, I mean, McDonald's, like you said, is definitely kind of a critical

cog in the economy, especially at the lower end of the consumer market, where there does seem to be some stress. So they're going to be able to give us some insight. You know, investors, we had a pretty big earnings disappointment this week from Chipotle, not necessarily apples-to-apples comparison to McDonald's, but I definitely think people will be watching that closely, again, just to kind of get a sense of the lower-rank consumer. I think the assumption is that McDonald's is going to perform better than a little bit more of an expensive fast casual name like Chipotle. And then you've also got some chip-related names reporting Qualcomm trying to compete on the server side in AI and they're looked at as a gauge

of overall smartphone buying and health, maybe some signal from Apple on how they'll do? Yeah, I mean, Apple definitely their guidance for the September court, for the December quarter round, it was quite robust. So it definitely does seem like the iPhone 17 is a stronger cycle for Apple than prior generations of the iPhone, the last few at least. You know, I think Qualcomm, like you said, AI is going to be a big topic of discussing. this new chip that they plan on launching next year, you know, how meaningful can it be, how much share they think they can capture? And then on the Apple relationship, you know, there's insourcing in the industry kind of continues and they're taking away market share

from Qualcomm. And that's kind of a big issue that investors are going to ask for clarity on, you know, going forward on the call next week. Yeah, I guess we'll see if this is a rising tide that's lifting boats both in iOS and in Android or if at the high end of the market and in markets like China, Apple is actually grabbing some share away from some of those premium names that Qualcomm supplies. So that'll be an interesting one to watch. Adam Chrisafouli, thank you. Thanks. Well, what a week of earnings, especially for the biggest tech names, big surprise for a lot of folks from Amazon and the way that it performed and boosted everything else. That'll do it for overtime.