Closing Bell - Closing Bell Overtime: Affirm CEO On Latest Quarter, Cracks In The Consumer; Hawaiian Airlines CEO On New Starlink WiFi Offering 2/8/24

Episode Date: February 8, 2024

Another huge slate of earnings with Affirm, Pinterest, Expedia, Cloudflare and Take-Two reporting. Affirm CEO Max Levchin discusses a strong quarter and the investor reaction. Roth analyst Rohit Kulkarni on Pinterest’s quarter and its new partnership with Google. Dom Rizzo, T Rowe Price Global Technology Equity Strategy Portfolio Manager, gives his top picks in tech despite record levels in the market. Plus, Hawaiian becoming the first major airline to offer WiFi through Starlink; Morgan sits down with CEO Peter Ingram and a Starlink VP to discuss. 

Talk about an adventurous 30 seconds into the close here. We got 5K today for the S&P 500, but as stocks settle, it looks like we're settling just below that level, 49.97. That is still a record close for the S&P. Got a record close for the Dow and a new 52-week high for the Nasdaq, too. That is the scorecard on Wall Street. The action is just getting started, though. Welcome to Closing Bell Overtime. I'm Morgan Brennan. John Ford is off today. As I mentioned, Dow and S&P closing in uncharted territory. We got that 52-week high for the Nasdaq. Let's get ready for another wild hour of earnings. We will have instant analysis of earnings from Affirm,

Pinterest, Expedia, Take-Two, and Cloudflare as soon as they cross. Plus, Affirm CEO Mac Levchin joins us in a first on CNBC interview before he dials into the call with analysts. And the portfolio manager of T. Rowe Price's Global Technology Fund reveals his top tech picks right now, including the Magnificent 7 stock that he thinks looks the most attractive. It might surprise you as we await those earnings. Let's bring in our market panel, though. Joining us now is Bespoke co-founder Paul Hickey and Annandale Capital chairman George C. Paul, we got it.

5K on the S&P and a new record closing high, although just shy of closing at that level. Is your trajectory higher from here or are we now going to chop around and continue to test this key level? Yeah, I mean, it's been two days. It would be perfect for it to happen on a Friday to close that level so everyone can think about it and celebrate over the weekend. But I think we still think there's more positives for the market here going forward than negative. So we still have a bullish outlook on things. And for all the talk that we constantly hear about how this is all a Fed-driven market, how do you explain this week when expectations for rate cuts in March were all but priced out. And the market rallies and hits 5000 for the first time. Since the peak of since the expectations for a rate cut peaked back in late

December, we've seen the S&P rally 5% and the Nasdaq rally 5%. And that's as expectations for rate cuts have come down. So the market is rallying on other things besides the Fed. And we've seen it in this earnings season where the results have been positive. But more importantly, the stocks have been reacting positively to those results. And that's an impressive trend that we've seen throughout this earnings season. Yeah. And we should be very clear, even though we got a new record for the S&P, we're only talking about a point zero six percent gain for the broader market here into the close. George, two percent since last Friday's employment report. True. George, I want to get your thoughts on this market, because the flip side of this

and argument goes valuations, you could argue, are rich. We got segments of the market overbought at these levels. And it raises questions about how much near-term upside there really is now that we've hit this key juncture. What a weird market, Morgan. It's really fascinating to watch. You look at Uber, and you look at Arm today, and you look at PayPal and the regional banks. It just gives you whiplash with your head swirling back and forth between things that are performing super well and other things that are performing dreadfullyfully and the short sellers are feasting on it. So if it were me, I would exercise quite a bit of caution right now. You never want to

jump all the way in or out of the market. You want to keep your positions on in areas that you're most favorable and attractive to. But I think right now is a good time to tweak things and to be cautious going forward. We've had such a run since October. It's been deliriously good. And you don't want to ever get overly exuberant and optimistic. That tends to end painfully. I mean, it is telling that you have the Russell 2000, the small caps, actually the outperformer today, up 1.5%. And we keep talking about how the mega cap names and the tech stocks are the ones that are really leading the charge here. When you talk about exercising caution, what does that look like and how much

of that depends on a broadening out of this rally? Yeah, exercising caution means writing some call options against positions that have had huge runs and buying some broad market put exposure on the back end and maybe even leaving a little more than you normally do in cash and earn 5.25% risk-free. I think that's a pretty hard return to fight against at these levels of the market. So if your normal cash allocation is 2% or 5%, I might take it to 8% or something like that. But just tweaking along the margins and keeping your core positions in place and not doing anything super drastic. Because as my colleague said, the market is acting really strong still. It really is. You wouldn't want to bet heavily against it. You just want to be a little more cautious. Okay. We got our first earnings release to go to Expedia. Those

results are out. Pippa Stevens has the numbers. Pippa. Hey, Morgan. Well, Expedia shares are under pressure despite the company beating top and bottom line estimates for the fourth quarter. EPS coming in at 172 adjusted. That was four cents ahead of estimates. Revenue at 2.89 billion, basically in line with expectations. The company did post a slight miss on gross bookings, however. And then also Expedia announced a CEO transition. Ariane Gorn will succeed Peter Kern on May 13th. Once again, Expedia shares now down 9%. Morgan? Okay. Pippa Stevens, thank you. Paul Hickey, want to get your thoughts on this? Because overall travel, it would seem, has been pretty solid this earnings season. When you see a stock

like that down 9%, how much of this is succession news versus going under the hood on some of those earnings metrics that we just heard? Well, I mean, I haven't really been able to look at the details of the report, but Expedia is up over 50 percent since its last earnings report. So it was under 100 when it last reported earnings and it was 155 or more coming into this earnings report. So it's had a monster run, so to speak. And, you know, travel is still very strong, but we're starting to see signs that the cushion that the consumer has had is getting a little bit thinner here as they spend down their excess savings. So that's going to be key to watch going forward. Are consumers willing to spend as much?

Bank of America survey released this week showed that financial wellness scores of consumers, even after last year's strong rally and the fact that we avoided a recession, financial wellness scores of consumers actually declined modestly. Not a big decline, but it did decline. So it's, you know, you're seeing some slowing of the consumer at underneath the surface. OK. Speaking of a read on the consumer as well as online advertising, Pinterest earnings are out. Julia Borsten has those numbers. Hi, Julia. Hi, Morgan. That's right. Pinterest beating expectations on the bottom line but missing on the top line.

The company reported adjusted earnings per share of 53 cents. That's two cents better than expected, while revenue of $981 million was $10 million short of expectations. The company did guide to first quarter revenue between $690 million and $705 million. That is in line with the company's prior guidance, but the midpoint is a hair below the analyst consensus of $703 million. Pins did grow its monthly active user base faster than expected, adding 16 million monthly active users for a record of 498 million MAUs. That is 11 million more than anticipated. But with this faster than expected user growth, average revenue per user was actually lighter than anticipated, particularly in the U.S. We're going to be talking about all of this and more

in our exclusive interview with Pinterest CEO Bill Reddy that's coming up in Fast Money. Morgan, back over to you. All right. Julia Borson, thank you. Affirm earnings are out. Kate Rooney has those numbers. Hi, Kate. Hi, Morgan. So Affirm beating across the board for the quarter. Guidance is also looking better than expected here. EPS, this was still a loss per share. It was 54 cents. That was a strong beat, 19 cents, better than expected. That was on revenue of $591 million, easily topping estimates there as well. Volume was stronger than expected. GMV, or gross merchandise volume, was $7.5 billion. On guidance, it looks like third quarter revenue and GMV guidance look better than expected here. Wall Street does pay attention to revenue less

transaction cost. RLTC, that grew 68% year over year, stronger than expected at $242 million. It was about 3% of gross merchandise volume. Customers, active customers up 13%. And then more activity per customer. It was 4.4 transactions versus 3.5 transactions per customer versus a year ago. Finally, delinquencies. So that was pretty much flat, 30-day delinquencies, flat across those installment loans, both year over year and quarter over quarter. That tends to be important and good news if it is staying flat, even amid some of the accelerated loan growth and GMB growth. And then loan loss provisions. You see the stock down more than 15 percent year after hours. It might be because of these loan loss provisions a bit higher than expected,

120.9 million versus 118 or so that the street was looking for. But again, the backdrop here is more volume and more revenue, but that could be what's weighing on shares here, Morgan. Back over to you. Yeah. I mean, if so, that is a big weight, especially given the beat we saw across the board and all the other metrics. Kate Rooney, thank you. Coming up, Affirm CEO Max Levchin will break down those numbers in a first on CNBC interview. We're just moments away from that. We have take two earnings out as well. Steve Kobach has those numbers. Yeah, Morgan, mostly in line with expectations here. So let me give you what we got. EPS, a gap loss of 54 cents a share. They were not comparing that. The street was looking for a 72 cent profit adjusted. Revenue is basically

right in line here at one point three four billion dollars. And then as for guidance, a hair light here looking between one point two seven billion and one point three two billion. That seems to be dragging shares down better than two and a half percent here. Street was looking for one and a half billion dollars for the current quarter, Morgan. OK, Steve, go back. Thank you. Thank you. Going to go back to the panel here and get some reaction because we just had a flurry of earnings reactions. So, Paul, I'm going to I'm going to go to you. Your reaction to what we just heard, especially since many of these are either consumer facing names or consumer related names. Yeah, not a lot of good reports there on the day that the S&P hits 5000. But so what I would say is you look at Pinterest,

online advertising, it's going to the top companies like Meta and Google. They're beneficiaries. You see Snap last, this week earlier, had a very poor report. Affirm, I mean, I know we're in a bull market and everything, but our analyst estimates go out to 2028, and that's over four years from now.

And you don't see any consensus forecast between now and then with the company profitable. So it's got a very stretched valuation. And this quarterly report in February is a public company. This is only its fourth one. But every time it's reported the February quarter here, it's been down over 10% in reaction. So this hasn't always been the best quarter to report for a firm. Interesting. Shares are pairing some of these losses, though, now down just two and a half percent. But as you can see, a lot of red on the screen. Expedia as well.

Take two and Pinterest all trading lower. Paul Hickey and George C., thanks for kicking off the hour with me. Thanks, Morgan. Thanks, Morgan. Well, the S&P 500 hit 5000, but is the rally really too narrow, as some say? Let's ask CNBC senior markets commentator Michael Santoli. Well, Morgan, what we know is it's very steep, at least at the S&P 500 level, and arguably it's narrowed, whether it's too narrow, a little bit of an eye of the beholder. First, take a look at the S&P itself against its 200-day moving average. Now, look, this is a pretty steep jailbreak-type movement. I've been pointing this out for a while, where if you just extend that uptrend from where we bottomed back in the fall,

it is always projected ahead by some measures to like 50-50. So this 5,000 area was kind of around where, you know, if all went well based on the life cycle of this sort of rally, where you might have been looking to at least say, OK, we did it, mission accomplished for a little while. This also, this distance between the index and the 200-day average is now above 12 percent. That's getting a little stretched. That's what overbought means. And it's basically just a little under what it was right there at late July when we did have a pullback begin. So just that's the broad atmosphere for the index. Now, take a look at the equal weighted S&P. It's the one that everybody says hasn't been doing much.

Well, it hasn't been doing as much, but I would argue it's still OK in terms of the condition it's in. It's up about, you know, 18 or so percent from those lows back in the fall. And as opposed to these other times when it hit the upper end of the range and just rolled over, you've kind of just been sort of consolidating in there. And it's not as stretched relative to its own trend line. So it seems like it's hanging in there and doing fine, even if the majority of stocks have shown a bit of a loss of momentum after the fourth quarter rally, Morgan. Is this a dynamic we've seen before where the S&P, you get a rally and then the equal weighted plays catch up afterwards?

It does resolve that way sometimes. Yes. Now, it's it's kind of a coin toss as to how it does go. Sometimes the index is going to reset lower and then maybe once you get pullback, then you can kind of have a broader rally thereafter. You know, look, you also go back to like 2019, the entire time in 2019 before the pandemic, the complaint was it's just a handful of big growth stocks working. And then you did, of course, have the shock. And after that, it became a little more of a of a broad market. But, yes, breadth divergences is what they call this, often do or sometimes do resolve with other stocks catching up. All right. Mike Santoli, great take. As always, we'll see you later in the show. We've got more earnings. Capri Holdings are out. Courtney Reagan has the numbers. Hi, Court.

Hi, Morgan. Yeah. So this is for the third quarter for Capri Holdings with the quarter ended December 30th and earnings and revenue coming up short of expectations. Adjusted EPS coming in at $1.20. The street was looking for $1.71. Revenue at $1.43 billion. The street here looking for $1.47 billion. No forward-looking guidance because of the pending merger with Tapestry, which both companies have said today they do still expect to occur sometime in this year, 2024. If you look at the adjusted gross margin, that was 65 percent. That was in line with FactSet estimates. However, each of the brand revenues did fall short of FactSet estimates. So Versace revenue fell 8.8%. Michael Kors, which is the largest brand, that revenue fell 5.6%. Jimmy Choo fell 1.2%. And in comments from CEO John Idol, he does note

third quarter continued to be impacted by softening demand for fashion luxury goods. He also, though, says that sales did improve sequentially throughout the quarter, making a note also to say that sales were better in their own retail channels, though the wholesale channels did remain challenged. And you can see your shares down about 2% in reaction to these results. Morgan, back over to you. I mean, we have been hearing some other evidence that the higher end consumers are tightening their belts and And certainly the wholesale piece is going to be one to watch, which I know you are so closely. Courtney Reagan,

thank you. Thanks, Morgan. Do not go anywhere. We are just getting started on this whirlwind hour of earnings as we count down to all of the conference calls. Up next, though, Affirm CEO Max Levchin breaks down his company's results right here on Overtime before he speaks with analysts. Don't want to miss it. We're back in two. Welcome back to Overtime. Shares of a firm are getting hit in overtime despite posting better than expected Q2 fiscal results. Joining us now to break down those numbers before hopping on the earnings call is a firm CEO, Max Levchin. Max, it's great to have you on the show. And we talked about beats on the top

and bottom lines, better than expected Q3 revenue guidance, and a lot of the metrics that investors pay attention to, including, of course, revenue less transaction costs of 68 percent, even as delinquencies remained flat. Walk me through the quarter and how much of this is a reflection of the broader economy? How much is this a reflection of the market share you continue to take. It's totally evolved. The economy is strong, and frankly, we crushed it this quarter. I think we posted the single highest adjusted operating number ever. We grew way faster than I think most people expected us to. We accelerated the company to be

fast as it can be growth in over a year. And most importantly, unlike the rest of the lender set, we kept our dependencies flat during your quarter on quarter. So we've done really, really well. It's an extraordinary effort by a team to pull the team together. Yeah. You know, your stock's down 7.5% right now. Perhaps loan loss provisions that are slightly higher than expected. I think one analyst also pointing out maybe that implied guidance for the rest of the year was weaker than expected. I guess just walk me through those theories that are circulating as investors digest the print and we'll go from there.

I'm not sure I can react to a theory of theories, but I do have to say that the results speak for themselves. We really hit it out of the market's quarter. I think the top to bottom, there's not a single thing that I'm embarrassed by. And I'm very proud. We certainly don't make our judgment of the market based on one 10 minutes of after-hours trading. But I think as we understand what really happened last quarter, we'll see there's a lot to be excited about. So question for you, a key question, I think, is how do you continue to grow while you keep delinquencies down? And I asked that in a week where we had a New York Fed report just a few days ago, which showed that we're starting to see some cracks in the consumer, including rising delinquencies in things like credit cards and auto loans. How do you continue to keep that level down and how does it speak to how you're approaching credit management?

As you said, and as you saw, our delinquencies are flat, and that is not an accident. We run the company, first and foremost, through the lens of credit must continue to be pristine. Our calling card to the capital markets, to our investors, has been from the very beginning, we are in control of credit outcomes, and and will continue putting infinite emphasis on that going forward. No compromise there. The way we've been able to grow, the way we expect to continue to grow while maintaining these numbers, is by expanding our merchant reach and, most importantly, really growing transaction frequency. We have touched north of 15 million American consumers. Not all of them have been active in the last month or quarter, but we have underwritten them. We

understand the personal financial situation and we are continuously making ourselves available to them at great merchants like Walmart, Amazon, Priceline, et cetera, et cetera. And so as we broaden our consumer network, we do provide e-services to consumers. We still underwrite and decide on every single transaction. And when we see the consumer who cannot pay us back, we will not lend to them. That's how we've been able to maintain our diligencies as strong as we have. So when I see a firm grew volume 32 percent, that's four times the rate of e-commerce. It's more than double buy now, pay later industry growth rate of 14% as well.

As you do take this approach to credit and how you underwrite that to consumers, you're continuing to take market share. Who are you taking it from? And how does that speak to the consumer demographics that you are actually doing this lending with? Affirm provides an alternative to credit cards. We firmly believe that Affirm is the better way. You don't revolve. You know exactly what is going to be done paying off an Affirm transaction.

You never pay late fees. You don't have compounding interest. But we really build the better product. And so the obvious source of these transactions are credit cards, but there's still plenty of transactions that happen in other modalities. And we are, you know, taking some of that share as well. But we are the better part of credit. The Affirm card, you're seeing that user base grow as well. Walk me through that, since it does represent an expansion into brick and mortar and physical retail. That's been a great success story for us. So we just published a few more numbers. As you saw

in our investor forum, just literally several weeks ago, we said we had less than half a million active card holders. We just announced that we are now north of 700,000. So the growth of the card users continues to really go very well. And that is our most active consumer base. The average from consumer transactions are half time of the year. The number of average transactions for the cardholder is about four times that number. So these are really consumers that have chosen to take a firm and make it a central credit spending device. And we certainly continue to innovate and invest in that product. There's lots of really good interest coming for the card in very immediate future. You're reporting higher funding capacity,

but you're also reporting higher funding costs as well. In a year where there's expectations that the Fed is going to begin cutting rates at some point this year, what does that mean for the business as the year unfolds? You know, to be completely honest, I think the story of the calendar 23 has been a hard proof that a firm knows how to operate in a higher rate environment. Higher for longer does not bother us. We just priced another securitization yesterday 100 basis points cheaper than the one before the one we did in December.

That shows that the market, capital markets are giving us credit for the quality of credit that we're able to maintain with our consumers and that we can run a very profitable business on a unit economic basis in the world of 5% federal rates. And so, you know, obviously nobody's going to complain if the federal reserve chooses to lower the rates, but we are very capable of running this company, excellent unit economics, excellent broad economics in a hybrid environment. So we're not holding our breath for it whatsoever. Okay. You reported a $93 million adjusted operating income compared to a loss a year on year, or I guess I should say a year ago in fiscal Q2. Max Levchin, founder and CEO of Affirm. It's great to break down the quarter

and the results with you before you get on the conference call. Thanks for joining us here on Overtime. Thank you. Well, both Bill and Cloudflare earnings are out. Pippa Stevens has the numbers. Pippa. Hey, Morgan. Well, shares of Bill Holdings jumping more than 18 percent, the company beating on revenue at $318 million against estimates of $298. Adjusted EPS coming in at $0.63. Now, it's unclear if that's comparable to estimates and does exclude a $0.24 per share restructuring impact. Those shares up 19%. Moving over to Cloudflare, which is also jumping here after the company beat on the top and bottom line for Q4.

Shares up 14%. Cloudflare posting a $0.15 adjusted EPS. That was $0.03 ahead of estimates and revenue coming in at $362 million, also ahead of expectations. Now, the company's Q1 revenue guidance was largely in line, and their EPS was slightly better for both Q1 and the full year. Those shares up 15%. Morgan? All right. Pippa Stevens, thank you.

Pinterest shares hit hard after a revenue miss. Up next, a top analyst tells us what he wants to hear on that earnings call, which kicks off in just a few minutes. Stay with us. Welcome back to Overtime. Pinterest shares plummeting, although paring back some of the initial losses after beating on the top line, but missing on revenue. Shares are down about 16% right now.

Joining us for more, Rohit Kulkarni of Roth MKM. Good to have you on. You surprised to see a move lower like this on the tape we just got? I'm not very surprised. What I would tell you is the bar was Pinterest was very high. After what we heard from the three mega caps last week, advertising is recovering and Pinterest is accelerating. So the bar was very high. People expected them to do a big beat and big raise. That hasn't happened. The whiffed on revenues and revenue guide for Q1 is accelerating, but not as high as what one would have expected. So we stay neutral. I think the company itself is improving, but the fundamentals aren't in line with the valuations that the company is trading at.

OK. How much would you expect maybe over the longer term, if not right now in this quarter, would you expect from some of these growing partnerships to actually, I guess, catalyze in terms of growth for the name? I think that's a very big part of the story for Pinterest. You have Amazon ads, buying ads on Pinterest. There are other potential partners in the pipeline. And I think that could add anywhere between $150 million to $300 million. That's a pretty big chunk of change for a company up to 10% of revenues for a company like Pinterest. So that is a big part of the story. We aren't seeing those

show up in numbers yet, but perhaps it's delayed or perhaps it's going to come in by second half. So what we want to hear on the call is where are they with Amazon partnership? Are there new partners coming down the line? And what are the numbers that they can share with regards to the way this partnership will continue to grow over the next, call it, six to 12 months? for all of these advertising dollars. And I ask that because we're seeing more and more companies build out more and more of their own advertising platforms, whether it is Amazon or it is Uber, which I know you cover as well. And then you factor in these partnerships. I guess how to think about these dynamics as they continue to evolve and what it means for Pinterest as well as others. Yeah, I think at least from the things that we have learned so far in the last 10 days is bigger

getting bigger. Look at like Google is growing 13%, Facebook is growing 23%, Amazon is growing 26%. So these are massive, massive ad companies and then you have Snap growing five percent pinterest growing 12 percent so so bigger getting bigger there is a lot of gravity with data that these larger companies are using uh to just improve the performance of the ads that they are showing to their users so i think that's the biggest uh way i would characterize what's happening in the market with ai with data and the gravity that these larger companies are pulling in more and more ad dollars. Whether a company like Pinterest can withstand that gravity force with such partnerships, I think that remains to be seen. But that's a very positive first step.

If you have Amazon and their muscle in your corner, I think Pinterest is a very attractive ad partner to have. And that's why people are excited about Pinterest. It's just that sometimes valuations overshoot fundamentals. And this is exactly that case. OK, we'll have to hear what they have to say on the call as well. Rohit Kulkarni, thanks for joining me. Hold rating on Pinterest. Shares are down about 14 percent right now in overtime. It's time now for a CNBC News update with Kate Rogers. Hi, Kate. Hi, Morgan. President Biden was found to have, quote, willfully retained and disclosed classified documents after his time as vice president. That's according to the final report released this afternoon by the special counsel investigating the case.

But counsel Robert Hearst said that he won't be prosecuting Biden because the evidence doesn't show proof beyond a reasonable doubt. Federal authorities are investigating online threats made against a potential witness in former President Trump's classified documents case. In a court filing, special counsel Jack Smith asked the judge's approval to file an exhibit under seal until the probe was over because it describes detailed threats. And the board of governors behind the Oscars are adding a new category for the first time since 2001 when they added Best Animated Film. The category for Best Casting will start next year and ends a 30-plus year fight for recognition.

Back over to you. All right. Kate Rogers, thank you. Up next, the portfolio manager of T. Rowe Price's Global Technology Fund on where he sees opportunities in the sector, which keeps outperforming the broader market. Stay with us. Welcome back to Overtime. The S&P hitting 5,000 for the first time just before the close. Just before the close.

Tech has been a major driver of this rally. And my next guest is here to share some of his top picks. Joining me now is Dominic Rizzo, portfolio manager of T. Rowe Price's Global Technology Equity Strategy. Let's talk tech. What do you buy right now when you have these record high valuations?

Well, first off, thanks for having me, Morgan. I really appreciate it. You know, I think there's a lot of great opportunities in tech. If we look at the fundamentals from this quarter, we saw really strong growth out of the major cloud companies. We saw AWS accelerate. We saw Microsoft accelerate. That's turning to capital infrastructure investments. We're going to see capital infrastructure grow 25% this year. And that, in turn, is going to result in strong demand for digital semiconductors. AI is going to drive the entire digital semiconductor market from 45 for AI chips from $45 billion in 2023 to $400 billion by 2027. That's over a 70 percent CAGR.

So I think the best place remains in digital semiconductor stocks like NVIDIA and AMD or in the cloud side names like Amazon. OK. I mean, speaking of that, to your point, we had ARM holdings surge 48% today in the regular trading session. And it does speak to this idea of some of these early companies realizing the gains from AI. Are there other areas? I mean, you just talked about NVIDIA and AMD. I just mentioned ARM, but are there other areas in terms of the so-called picks and shovels that are being overlooked right now? Yeah, I think you really have to try to find these linchpin technologies companies that are powering this AI revolution, right?

And so when I think about the areas that are probably underappreciated by the market, I think Taiwan Semi, which is manufacturing all of the different AI chips for the likes of NVIDIA, for the likes of AMD, for Qualcomm, for Apple. Samsung, who's providing a lot of the high bandwidth memory technology. If you look at AI data centers, high bandwidth memory goes through the roof in terms of consumption. And then ASML, who sells the EUV machine, the extreme ultraviolet lithography machine. We saw that company have 9 billion euros of orders this quarter. That gave us a very clear path to their 2025 earnings

guidance of roughly 30 euros at the midpoint, if not 35 euros at the high point. And so I think that entire ecosystem, that digital semiconductor ecosystem, has continued to have really strong fundamentals. If we look at what happened at ARM today, I think a couple different things happened. One, you got to remember, most of the shares are still owned by SoftBank, right? But if you look at the fundamentals, people got really excited about the V8 to V9 architecture upgrade. They said on their call that that comes with a 100% increase in royalty pricing. On top of that, they saw some pull-ins for AI licenses, right? So we're starting to see these AI stocks broaden out beyond just NVIDIA as we see more

companies really benefit. All right. 30 seconds I have here. Of the MAG7, what do you like the best right now? Right now, Amazon and NVIDIA. If we quickly go through Amazon, we have mix improving with ads and AWS, really strong growth. The company has caught religion on the cost side of things. Cost to serve continues to come down and the valuation's relatively reasonable at 12 times EBITDA if you look at two years. On NVIDIA, everyone knows the story,

but if we look at the valuation, it's really not that bad. It's roughly 25 times 26 earnings today. And again, we have that AI chip market going from $45 billion to $400 billion by 2027. Okay. Dom Rizzo of T. Rowe Price, thanks for joining me. Thank you for having me, Morgan. Getting technical on the tech. I could do this all day. New York Community Bank Corp plunging nearly 30% this week alone. Up next, a look at the other culprits fueling the regional bank crisis. Stay with us. 30 percent. That is how much New York Community Bank Corp has plunged just this week, making it the face of the recent regional banking crisis. Leslie Picker looks at some of the other names that are caught up.

We'll call it a mess. Well, it's absolutely a mess. And if you look at today's moves, it's basically wiped out the gains that they saw yesterday on some positive developments. But the root of New York Community Bank Corp's recent turmoil stems from exposure to pockets of commercial real estate. The bank revealed last week that it was quadrupling its reserves tied to potential bad loans and office properties alone. The read-through to the rest of the regionals was that any bank with outsized exposure to office could face similar pressure, and that's why you see the KRE down 10 percent this year,

although it took a little bit of a breather today. Wells Fargo analysts note in a note from this morning that commercial real estate represents a quarter of loans took a little bit of a breather today. Wells Fargo analysts note in a note from this morning that commercial real estate represents a quarter of loans skewed more heavily toward banks with between $1 and $10 billion in assets. And office is roughly 5% of loans across the banking system. The banks with the most exposure to office as a percentage of total risk-based capital include Columbia Banking System, Bank United, F&B Corporation, Bank OZK, and Western Alliance.

But it's not just contained here. Smaller banks in Germany, Switzerland, and Japan also recorded skyrocketing provisions recently tied to their prospective U.S. commercial real estate properties, which has some concerned about broader worldwide contagion. Although Treasury Secretary Janet Yellen said earlier this week that she expects further bank losses, but does not believe there's a systemic risk to the system from some of this commercial real estate exposure. Morgan, I mean, what are the other banks that are particular? I realize that the selling's been pretty broad based in light of this. But I guess what are some of the other names that are now particularly in the crosshairs? And I

ask this knowing that when we talk about New York Community Bank specifically, I mean, this is one of the banks that scooped up some of the assets from one of the other banks that failed signature last year. So, I mean, it just raises all kinds of questions about how portfolios are being reviewed and how investors are approaching it. Yeah, and I've seen people comment on this in terms of kind of what was the FDIC thinking when they blessed that acquisition of most of the assets and liabilities from Signature. Valley National has seen a pretty sizable hit. They also, similar to New York Community Bancorp, based on the East Coast. It's interesting.

This year, it seems like more East Coast concerns. Last year was more of a West Coast concern issue. Last year also stemmed largely from just this rapid rise in interest rates, this historic rise in interest rates, which put pressure on the balance sheets. Now attention has really turned more to commercial real estate exposure, provisions, things that everybody kind of knew was percolating as an issue, but they weren't sure kind of where they would pop up and how management was seeing stress in terms of its imminence, you know, next quarter. It seems like the fourth quarter kind of brought some banks into the forefront, and people are concerned about what might be uncovered in the quarters to come. I mean, this really speaks to the lags we see sometimes in monetary policy,

especially when you have rates higher for longer. So one to watch. You've been following it so closely and know you can continue to do so. Leslie Picker, thanks for joining me. Thank you. Well, Hawaiian Airlines launching its free Starlink powered Wi-Fi for passengers. Up next, why the sky is the limit for the SpaceX unit's huge new market opportunity.

Welcome back to Overtime. Some news out of Hawaiian Airlines. The carrier has officially begun rolling out SpaceX's Wi-Fi offering to passengers, marking the first time a major U.S. commercial airline has deployed Starlink service. Almost two years in the making, Hawaiian's first commercial flight of the first Starlink-equipped aircraft is taking to the skies today. I sat down with CEO and President Peter Ingram this week. He says over the coming months, more of the fleet will tout connectivity. It's not meant to replace the authentic Hawaiian hospitality that really is

our hallmark, but really to give people another reason to come and fly Hawaiian Airlines. We think it will ultimately lead to an increase in demand, and that's going to accrue to our bottom line. For SpaceX, with more than 5,200 satellites in orbit, millions of residential users, and a growing list of enterprise customers, including T-Mobile, when they have a partnership with Carnival, and Deere, Starlink is rapidly expanding. And Chad Gibbs, VP of Starlink Business Operations, says SpaceX is, quote, just scratching the surface. One, at aviation, there's billions of passengers that fly every year.

And so in terms of a space where, if we think about our broader goal of Starlink, to expand connectivity and grow the pie of places where people can consume broadband, it just represents a huge market, a huge opportunity to expose more and more people, both to a great product and a great experience, but also to Starlink. And I think we're super excited about the number of passengers that will maybe learn about Starlink or learn about how great Starlink is for the first time flying on airplanes. It's the first time Hawaiian is offering Wi-Fi in flight. It's a capability Ingram says wasn't really viable until now. It will be free to passengers. Cost for the airline, though, that's undisclosed. SpaceX has really cracked

the code, literally, in terms of the technology to be able to deliver a wide bandwidth of very high quality connectivity to an airplane with a global reach. And of course, pending acquisition of Hawaiian to Alaska Airlines as well. How does that affect, if at all, your investments in your rollout of the service for the fleet? It doesn't change what we're doing at all. We're continuing rollout of the service for the fleet? It doesn't change what we're doing at all. We're continuing to invest in the future of the business. We've got the 787, the first one getting delivered this month. We're continuing that investment. We're investing in our lounge products. We're investing in our airport experience and we're investing in the experience

on board our airplanes. So all of those things are important to us, important to our guests, and it's important to Alaska as well as they look at what the benefits are of combining with Hawaiian Airlines. Of course, Starlink, part of that investment. Ingram not offering an update on that pending Alaska deal. Shareholder vote will happen later this month. Regulators this week did ask for more additional information for that merger. He does not, though, he does note that strong leisure demand does continue as consumers begin to return to Hawaii after last year's wildfires. Worth noting that with Starlink service, you can basically step onto the plane. You can download and stream in real time apps like Netflix, which typically you can't do on an airline.

For the full conversations, both of them, check out my podcast, Manifest Space. You can point your phone right at that QR code on the screen, or you can go to wherever you get your podcasts to download these discussions. Up next, Mike Santoli looks at the recent surge in CEO confidence could mean for both Wall Street and the economy. Welcome back. Shares of Pinterest are well off the lows. Julia Borson has details on this turnaround we're seeing in overtime. Well, Morgan, Pinterest shares even bounced from that big drop into the green. As Pinterest CEO said moments ago on the earnings call that the company is partnering with Google, saying that its next third-party ad integration is going to be with Google. Reddy said this will be focused on serving the unmonetized markets overseas.

This follows the full rollout of Pinterest partnership with Amazon for ads, which Bill Reddy said are live on search-related services, now testing those ads on the home screen, saying that they expect these types of partnerships to contribute more meaningfully to growth going forward. We see shares now off about 7%. We're going to be talking about all of this with Pinterest CEO Bill Reddy coming up in Fast Money. Back to you. All right. We'll be looking forward to that interview. Julia Borson, thank you. Mike Santoli returns with a look at the recent uptick in CEO confidence, what that means for the market. Mike.

Yeah, Morgan, not at super high levels, but probably the best reading in about a couple of years. This was released this morning back above this 50 level. A few implications here. One, things associated with higher CEO confidence are mergers and acquisitions to a lesser degree, capital expenditure budgets. That's probably net positive for the market if you do have a thaw in those areas. I'll also point out you have had an instance where you pop back above 50, like right here in 2006, and then it still rolled over into a recession, but not that many. Usually if you're above 50, the economy is in decent shape. I guess the final point is one of the findings inside the survey was that they expect to be reducing headcount about 23 percent,

say fewer employees in the next year. That's bad news for employees. Obviously, maybe CEOs are more confident because they feel they have more flexibility and fewer labor shortages out there, Morgan. Yeah. We had an update for the market, Mike. S&P hitting 5,000, although albeit barely. Very quickly, what do you watch tomorrow? The close is what I'm watching tomorrow because that's usually more relevant than an intraday tick. Okay. And we'll be here to cover it. Mike, thanks. That's going to do it for us here at Overtime.