Closing Bell - Closing Bell Overtime: Amazon, Apple, Meta Report And What They All Mean 2/1/24

Episode Date: February 1, 2024

The final 3 Big Tech companies reporting earnings today: Apple, Amazon and Meta. We have you covered with instant reaction to these market-moving numbers. Wedbush analyst Dan Ives and Evercore’s Amit Daryanani break down Apple; Third Bridge’s Scott Kessler and Roth MKM’s Rohit Kulkarni make sense of Meta and Amazon, including Meta’s first-ever dividend. Plus Bespoke’s Paul Hickey and G Squared’s Victoria Greene on how to play these trades. 

Stocks bouncing back, major indices ending near the highs after yesterday's post-Fed sell-off. That's the scorecard on Wall Street, but winners stay late for $5.5 trillion of market cap at stake in a massive hour of earnings. Welcome to Closing Bell Overtime. I'm John Fort with Morgan Brennan. And we are just moments away from a trio of magnificent seven earnings. We will break down the results from Amazon, Apple, and Meta as soon as they are released and get analyst and shareholder reaction

as we count down to all of the earnings calls. And let's bring in our market panel. Joining us now are Paul Hickey from Bespoke, Victoria Green from G Squared Private Wealth, Dan Ives from Wedbush, and our own Mike Santoli, CNBC Senior Markets Commentator. Dan Ives, you just sat down, so I'm going to hit you right off the top because Amazon, Nvidia, Oracle, among the names that are the best performers in tech today.

This is right up your alley. A lot of people were looking for these names to fade, but they haven't exactly. Yeah, I think it's just super bull for tech earnings. And I think ultimately what we're seeing here is that despite a lot of the bears out there, we're seeing resilient spending from digital advertising to enterprise to the AI revolution. I think we saw that from Redmond in terms of Microsoft. And this is just going to be more of it. In our opinion, it's the start of a new tech bull market. This is just more confirmation. Victoria, the temptation is to not bet on some of these outperforming mega caps

to continue to run throughout 2024. But, you know, the Russell and some of those other, they really haven't been performing up to this point. So what do you do? I'm leaning into a couple of them. Meadow's my top pick. I think they could get 40 billion on revenue here. I think they picked up all the ad dollars that Google lost there. And I just absolutely love today. Today's like our Super Bowl. I know technically that's February 11th, but today's the Super Bowl in the market for these coming out. And I think the mega caps still have legs. I mean, you're talking billions and billions of revenue and growth. Yes, they're expensive, but they're expanding. They have opportunities to capture more with AI. And I think they still have a little bit of room to run here. And we saw like return to trend in January. Large cap growth ran. Small EM international lagged.

Mike Santoli, we had all the major averages close the day higher, basically at session highs. Big tech helping with that bouncing, that bounce in recovery after the sell off we saw yesterday. I'll note we do have Amazon results out. We're going through those results right now. How does it speak to how we are once again poised for the Magnificent Seven to continue to lead the day? And what does it mean in terms of some of those high expectations, high hopes going into the print here? I mean, the hyper-attention on every wiggle in the stocks and how the earnings come in versus the vague expectations. I think, though, longer term trends mostly confirmed, both with the economy and with the large cap tech stocks. I'm most interested in the differentiation. You want to see them move one by one and not as one big blob. We have the results for Amazon. We're going to go to Kate Rooney right now for those

numbers. Hey, Morgan, so it's a beat here on the top and bottom line for Amazon in its fourth quarter. EPS, a dollar, that's 20 cents better than expected. Amazon's revenue, $170 billion. Street was looking for $166 billion. Looks like it's a slight beat on the Q1 revenue guides. The midpoint may be slightly light here. They've got $138 billion to $143 billion on Q1 revenue. Guidance Street was looking for $142. AWS growth, this has been a key number the street was watching. 13% right in line with what Wall Street was expecting. And we're going to keep looking through this for more guidance, guys, and a little bit more color. But beat there on the top and bottom line. Back to you. Kate Rooney, thank you. We'll come back to you when you have a little bit more. Dan Ives,

I see you nodding your head. Your reaction now is the key. I mean, I think fears you'd have 11, 12 percent growth. You saw 13 percent. It goes to really the debate here. I mean, you have Redmond leading, of course, where Google is in the cloud. Where's Amazon? You start to see a reacceleration. This is going to be the focus for Jassy on the call. Paul Hickey, for Amazon, North American segment operating revenue came in, it looks like, pretty strong. $105.5 billion versus $103 expected. That's for the revenue on the top line. International revenue also a little bit stronger than expected. We just talked about AWS. Does this kind of stack up well

enough in your estimation versus what we just saw from Microsoft, which really outperformed across just about everything? Yeah, no, I think 13 percent, they hit the AWS number right on the dot. The North American sales strong. And what you're seeing is Amazon able to, you know, they put in all that investment over the years and they, you know, they put in all that investment over the years and they, you know, the stock was punished for that. But now, you know, they beat estimates on earnings by 20 cents. They're reaping, you know, those investments now and benefiting from it. So that's an important thing to watch. They've continued to invest over time and it stands to their benefit. And making the cloud numbers, which some were a

little bit worried about right at 13 percent on the dot, is certainly something that, you know, people can take heart in. Yeah. Victoria, I mean, it was Amazon Web Services. It was a report card on the holiday retail season. And we have commentary here from Jassy saying that Q4 was a record breaking holiday shopping season. And then it was also the advertising business, which we know is growing very quickly for Amazon. Shares are up right now, almost 4% with the initial read on this report. What we've heard so far, your takeaway? Yeah, I like it. I think we knew that retail was going to come in strong, and I'm happy I participated in helping their earnings there over the holiday season. I think we all did. But look, we knew retail was strong from credit card

and some high-frequency data. AWS is great. It looks like maybe that trough is in. We'll see growing there, acceleration in the IT spending. Got to stop you there because meta earnings are out and Julia Boorstin has the numbers. Julia? A big beat here, John.

Meta beating expectations on the top and bottom lines. You see that shares are shooting higher, 6.5% in after hours, trading on revenue that grew faster than expected, 25% to $40.1 billion. That's versus the $39.2 billion that analysts had been expecting. And it's ahead of Meta's own guidance range for the quarter. Earnings per share of $5.33, coming in ahead of expectations of four dollars and 96 cents and some big news here meta declaring its first quarterly dividend ever 50 cents per share payable march 26 also

announcing a new 50 billion dollar share buyback now just to quickly go through some of the other key numbers here reality labs revenue crossing $1 billion for the first time, though the quarterly losses for Reality Labs of $4.64 billion was ahead of the losses expected for that division. Operating margins of 41 percent, ahead of operating margins expected of 39.5 percent. And given the big focus that we've had on expenses for Meta, I want to point out that the outlook for 2024 expenses is staying the same at a range of $94 to $99 billion. In terms of guidance, the company is giving revenue guidance in a range above the consensus. Q1 revenue outlook at between $34.5 billion and $37 billion. The estimate is for $33.8 billion.

And then the user numbers here, Facebook's daily active users, $2.11 billion ahead of expectations of $2.08. Monthly active users, $3.07 billion ahead of expectations of $3.06 billion. And daily active people, that's the number of people who are on all the different meta apps, up 8% over the last year, better than expected to 3.19 billion. Shares now up nearly 8% on this beat across the board. Back to you. All right, Julia, thank you. Mike Santoli, it's been a while since we heard from you, so I got to go to you on this, particularly when it comes to the dividend here. Yes, the numbers overall are good, but we've got Meta well above 400 a share. I know it peaked

above there a few days ago, but it had been in the dumps for a long time because of how much they were spending in part on the Metaverse and the fact that there were all these questions about whether the business model was broken. What does this mean for this kind of tech company that traditionally has shied away from a dividend, though we know Apple did it years and years ago,

to express this kind of confidence in cash flow and this sort of, I don't know, maturity? Yes. I'd say all of that applies, John. Pretty assertive statement that, look, there's enough to go around. You know, just in September 30th, earnings for this quarter were supposed to be $4.83. They came in at $5.33. That was only four months ago. You got to keep in mind the momentum in the underlying business. They are making gestures of capital discipline, of shareholder friendliness. They seem to have obviously taken to heart the criticism that they were being profligate and spending big. Very much, I think, setting themselves apart from Alphabet, which has not paid a dividend after a longer history as a public company.

And they're kind of happily having these loss leader businesses on the side. So obviously, Google's an amazing business. Meta's trying to maybe, you know, be a little bit distinct from that. There was a time when Microsoft initiated its dividend. There was a time when people say, oh, that's it. The growth years are over. We can't, you know, this is not, this is now a cash cow business. Clearly, that's been proven in hindsight to be false, as Apple has proven that false.

So it's interesting. It's about a two dollar annual rate of dividends, about a half a percent on the stock price right now. But it's a start. Yeah. I mean, there's a lot, Dan, I've said to like about this report. A lot of beats across the board, with the exception perhaps of reality labs losses being a little bit bigger than expected. But I mean, headcount, we were talking about the cost controls at Meta, and it really sent the stock higher last year. There was an expectation that maybe perhaps their spending was going to increase in 2024 as they continue to invest in AI. The fact that they're holding that estimate, $94 to $99 billion, steady with previous estimates, and that their head counts down 22% year over year, tells us what? It's a turnaround for the ages. I mean, the comeback kid Zuckerberg, I mean, go back a year and a half ago, and now you're doing a dividend.

Subscriber growth, digital advertising. I think you're seeing a narrative here. We saw it from Alphabet, saw it on Amazon here. Digital advertising, unless you have a telescope, hard to find the recession. And I think this is going to be super bullish across the board. This is a stock that could have a five in front of it. Paul, what does this tell us about popular narratives? Dan just referenced it a year and a half ago. So many people were saying, oh, their business model is broken. You know, TikTok is going to eat their lunch, blah, blah, blah. We've seen Apple go through these cycles

where people were saying that kind of thing. Hey, maybe we're in another one now. What do you look at as an investor in these kinds of companies to determine whether the story really does still have legs? Well, I mean, it's just amazing what all these different metrics they've reported. But Meta is a company that's taken AI and used it to its advantage big time on both serving its users. Last quarter, they mentioned that users were spending 7% more time on Instagram and 6% more on Facebook. And then they're also using it for their advertisers to get more effective ads served to those people who are spending more time on their apps. So, I mean, they've taken AI and they've really used it to their advantage. And it just shows some of these, you know, you have all these companies benefiting from spending or from selling products and selling the chips. But

Meta has really taken AI and taken it to another level. Morgan, got to mention the stock Meta now up more than 11 percent in overtime. But of course, things move around a lot and the call still to come. Call still to come. But to your point, this is a big move for this name in the after hours right now. Victoria, I want to go back to ad impressions for Meta and specifically the fact that the company says that across the family of apps that increased 21 percent year over year, the average price per ad increased 2 percent year over year.

We've already been having this conversation, I think, back to Google, to Alphabet earlier in the week about the recovery we're seeing in online advertising. How does this set us up in terms of some of the other names potentially that are yet to come? I think that advertisers are really looking for most bang for their buck. And as we had mentioned, Meta is doing the best job. I think above far, if a company wants to implement AI, how Meta is doing it is actually providing value to their customers. Now, remember, as a user, you're not the customer. The customer is the advertisers. 98% of their revenue is ads. And so the fact that they're able to have targeted ads, better upticks, so they have premier pricing. They saw a lot in the Chinese e-commerce last quarter. So they're seeing around the world people value Meta's platforms.

And remember, it's all encompassing. It's Instagram. It's WhatsApp. It's Messenger. It's Facebook. And it has Facebook with Reels. And the addition to ads to both Reels and Messenger has been key. But the fact that it's also targeted and you're seeing more daily users, that's huge.

Everybody wanted to say it's the death of Facebook. Everybody likes to talk about how they don't use Facebook products. But obviously, everybody is using Facebook products still. So I think, you know, the death of Facebook was definitely exaggerated in 22. And I'm happy to see the revenue come in there. And it's a little bit of a warning to others that advertisers will freely move their dollars to get more bang for their buck. And what Google lost, Meta picked up. And, you know, I think the one question I still have is what's happening with the Metaverse and Reality Labs. Are we really going to lean into this Metaverse? You know know I think the one question I still have is what's happening with the metaverse and Reality Labs are we really gonna lean into this metaverse you know I think we're seeing potentially what happens with Apple and

VR you know Meta's put a lot of bets into what's the next generation of social media gonna be and that could be huge over the next decade if they get it right well Dan Ives this is not a virtual dividend it's a real one it's hard to pay a dividend when you're dead. Let's let's talk more about that in the context of Maddie here. I don't know the share count off the top of my head. Maybe you do. But if they're paying like 50 cents a share on a regular basis, they're committing quite a bit of cash to go out the door. What does that signify for a company like this about the cost discipline that they have are going to have to have and they're going to have to grow this dividend, right?

And you can't you're not going to be genie back in the bottle. So it shows where they see this going for investors. There's a whole crew of investors now that are going to look at Meta that weren't because of the dividend. And I think this just shows it's the new age that Zuckerberg's had at Meta in terms of the efficiency. But they're able to do it while they're growing. Look at subscriber growth. Look at digital advertising. This is a Goldilocks, I think, you know, definitely something in Facebook headquarters probably going to print this off, put it on the mantle.

I got to think this could potentially make Meta more widely held among retail investors, too. And I realize it already is, but it's certainly a discussion to be had. We've got more details on Amazon. In the meantime, we're going to go back to Kate Rooney for those headlines. Kate. Hey, guys. Yep, so we brought you the top and bottom line. That was a beat.

Operating margins we have here, that came in at 7.8%. Pretty big increase from 2% about a year ago, but it was flat sequentially. So quarter over quarter, it was flat. We've also got operating income for AWS, 7.2 billion. That was flat sequentially. So quarter over quarter, it was flat. We've also got operating income for AWS, $7.2 billion. That was better than expected. Digging into the numbers, most of these segments are significantly better than what the street was looking for. Ad revenue included, $14.65 billion. That was a beat. North American revenue, $105.5 billion, stronger than expected. And that segment was up 13% or so year over year. Also looks

like international revenue came in well ahead of expectations at $40 billion. And those are some of the other details here, guys. But again, a strong quarter. And you can see it reflected in the shares here of Amazon after hours. Back to you. Yeah, up 4 percent right now. Kate Rooney, thank you. What's interesting to me, Mike Santoli, is that Amazon has laid out a lot of detail, more detail than I can remember seeing in the past, particularly around some of their AI initiatives. One of the other things, though, that they have broken out here is actually their space ambitions, because they said 100 percent success rate for Project Kuiper's protoflight mission. And actually talking about a private connectivity service with AWS that's going to allow customers to send data from remote locations directly to the cloud without relying on public Internet and naming some collaborations tied to that, too.

It speaks to the fact that, and you can make this argument about advertising, too, with that revenue beat, that they continue to expand their octopus arms into different revenue channels and different businesses and do so very robustly. Yeah. And Amazon earnings release, you have to get through all the bullet points of, you know, by the way, we're also doing this. And it's a lot of expressions of limitless ambition and capacity. But you're right that they basically do want to accentuate the fact that, first of all, we're going to say it's all for some customer. We're all serving a customer in a better way.

We're obsessed with that. They say it explicitly. And then, you know, you kind of just get caught up in this idea that they've probably thought of it before the next guy has thought of it. And, you know, meanwhile, they're also delivering on the bottom line. So they can talk about the 12-month trailing free cash flow of like $36, $38 billion that was up from the prior year. And meanwhile, that's even as we invested in all these different areas. So it's a familiar story, but it's a comforting one. I think if you've owned this stock now, the numbers are going to go up. The estimates are going to go up for these two companies. And that means as much as the stocks

are going up, they're following the fundamentals. And that's one of the reasons that the MAG7 has become the MAG7 is because at least in this cyclical environment, they're kind of dominating the production of earnings growth as well. Wow. Yeah. All right. Mike, Paul, Victoria, Dan, don't go anywhere. You're all coming back for instant analysis of Apple's earnings, which are just moments away. But I got to make a clean break here because Clorox earnings are out. Kate Rogers has the numbers. I see what you did there.

Love that pun, John. Nice work. So Clorox out with its second quarter earnings here, $2.16 adjusted for EPS. That is not a comparable number. Revenue is coming in better than expected at $1.99 billion, better than the $1.80 billion expected by analysts. The company noting higher prices, a boost in its health and wellness segment, which saw a 25 percent increase in sales,

thanks in part to those price increases, also helping with higher volumes. Also updating its full year outlook for 2024, saying net sales are now expected to be down low single digits. That's updated to reflect the progress the company has made in the second quarter, as well as the raise in expectations for the second half of the fiscal year. For context, that compares to the previous expectation of net sales that would be down mid to high single digits. As you can see, the stock is higher by around 5 percent now, guys. Back over to you. That's a sizable move for Clorox. It's been a 6-6 season. I guess I'm not surprised to hear that pricing and volumes both contributed to that top line beat. Kate Rogers, thank you. Up next, much more reaction to the numbers from Amazon and Meta, the latter of which is holding its conference call in just

a few moments. And of course, we are still awaiting Apple earnings. We're going to bring you those as soon as they cross. Overtime is back in just a few. Welcome back to Overtime. We just got results from tech giants Amazon and Meta. Shares of both are shooting higher. Meta up almost 12 percent now here at Overtime. Let's bring in Rohit Kulkarni of Roth MKM and Scott Kessler of Third Bridge. Good afternoon to you both. Rohit, I'll start with you and I will start with the big mover of the session, which is Meta, which beat on almost every metric. And then of course has now initiated

a 50 cent per share dividend. Your thoughts. It's hard to find any yellow flags in this earnings release. Absolutely almost fine tooth combed, I looked through the earnings release. There very few yellow flags the only questions I would have is why dividend now why would you want to pay a dividend when you're accelerating growth and you have umpteen investment opportunities so maybe that's

just a question for management as we head into the earnings call and then the only other smallest of yellow flag is when do metaverse related losses start to slowly slow down. I think those are the only two questions that come to mind. Otherwise, you have an accelerating company. You have a company that's probably taking away market share from Google, which I believe that's the narrative that's going to seep into the market tomorrow and day after that builds on the move on top of what we already have. So nothing, absolutely nothing to see negative on this print. The only two questions I have is dividend and reality losses. OK, Scott, want to get your thoughts on meta, too, as we go through the numbers, especially

since it does seem like if you had to pick out a yellow flag, to Rohit's point, it would probably be the fact that the metaverse-related losses did seem to come in bigger than expectations. Look, I mean, people can pick on meta for the next number of years in terms of their progress when it comes to reality labs and the metaverse. They've backed away quite a bit from the pronouncements that they made on two plus years ago at Facebook Connect when they were talking in fact about the metaverse and how they were renaming the company the reality here pun intended I guess is that 25 percent revenue growth is significantly in excess what people expected the dividendout, I did some quick math. I mean, it's going

to amount to, I don't know, maybe $5 billion a year, which is nothing to sneeze at. But their pre-cash flow, I think, for the quarter was $11 billion. For the year, $43 billion. So I think they're expressing a level of confidence in their ability to continue to grow and to deliver here. Okay, Rohit, switching gears and going now to Amazon. AWS hit the expected growth at 13%. But I wonder more your thoughts on costs here because a couple of years back, Amazon was in the thick of it with having overbuilt and overhired

during the pandemic in the logistics network. Now we're starting to see efficiencies build with that scale. Andy Jassy has even been talking about how when you reach a certain level of efficiency, even in same day and next day delivery, that gets cheaper for you. How does that play for investors in this particular economic environment? I think Amazon is a slow-moving freight train, that they're slowly moving into the right direction. And acceleration is the name of the earnings that I would highlight. Look at e-commerce is accelerating. Third-party

sellers is accelerating. Advertising is accelerating. Subscriptions are accelerating. So everything is accelerating and going in the right direction for Amazon. On top of that, almost the two year process of reducing their cost basis is now starting to bear fruit. Last time we had checked that when they built out that fulfillment center footprint, almost more than what they've built in the last 15 years, they built that in two years. They probably need about two to four years to build into that. So I think now we are on that third year mark where

Amazon is now going to show leverage in North America retail, in international retail. Okay, Scott, it looks like we're having a little trouble with your shot there. Scott, still on Amazon, how much do we need to be worried here about an investment cycle, whether it's the traditional logistics investment cycle or an AI investment cycle, because those accelerator chips aren't cheap? Or are we in an environment, and with Andy Jassy, where he's going to telegraph that and not surprise us? Yeah, I'm not too sure about that, John. Amazon has never been shy about

committing significant amounts of capital over the longer term. I focus predominantly on the AWS and advertising businesses. And I have to take issue with the notion that AWS here has been a huge win. I mean, the reality is that, yes, they saw acceleration in growth. They met some forecasts. But if you look at Amazon and AWS, the growth pales in comparison to what Azure put up just a couple of days ago. And I think there is a significant question around market share shifts over the next couple of years. I think people are best suited perhaps to look more at the advertising business, which grew at a 26 percent rate, 15 billion in revenue. The advertising business, according to some experts we talked to, is going to be a major driver of growth for years to come. OK, Scott Kessler and Raheek Kulkarni, our thanks to both of you.

Amazon shares are now up about five and a half percent. We're going to shift from cloud to feet to shoes. Skechers and Deckers Outdoors earnings are both out. Kate Rogers has the numbers, Kate. Hi again, Morgan. Those two stocks moving in opposite directions. As you can see, Skechers down by more than 11 percent with a mixed report out for Q4. EPS beats at $0.56 versus estimates of $0.55, but revenues a miss for the quarter, $1.96 billion versus estimates of $2.04 billion. Also, the company giving light full-year guidance. It now sees $8.6 to $8.8 billion versus estimates of $8.9 billion in revenue. Now, Decker's Q3, that stock was higher last I checked. Yes, up by more than

5 percent now, 1.56 billion on revenues versus 1.45 billion for the quarter. EPS coming in at $15.11. That's a big beat versus the estimates of $11.48. The company also announcing a new CEO, Dave Powers. Its current CEO will be retiring effective August 1st. He's going to stay on the board through 2025. And Stefano Carotti, the company's chief commercial officer, will take Powers' place once he retires in August. Guys, back over to you. OK, Kate Rogers, thank you. We're just minutes away from hearing first quarter results, fiscal first quarter results from Apple. And back with us now, G Squared Private Wealth's Victoria Green, bespoke's Paul Hickey, Wedbush's Dan Ives, and our own Michael Santoli.

Dan, I'm going to go to you because this is a good segue. We're talking about, you know, the dividend for the first time ever at Meta. We're getting ready to hear from Apple. I wonder how much Meta is playing from the playbook of Apple. They're taking a page out of Cupertino because that's ultimately what Cook and Cupertino, if you look at what they've done, capital allocation, growth in the balance, that's what Zuckerberg's doing. And I think it's the smartest strategy.

It's hard to argue with what Apple's done. I think, you know, we'll see her in a few minutes. But in this market, look, at the end of the day, Meta's not doing a dividend if they felt that doomsday was coming. It just shows, unless you have a telescope, hard to find that recession. Victoria, how much does the quarter matter for Apple? Because we're reporting, sure, the fourth quarter, that's important to see. Q1, calendar Q1, typically not that strong. So is it a cost issue? Is it a staying power of

the iPhone issue? It's everything. Apple's fighting a war on multiple fronts right now. They have the argument about the App Store 30% payment. They've got kind of technology cracked down in China and obviously weak Chinese sales. They're staring at the fifth straight quarter in a row of potentially falling sales. That's the longest streak since 2001. You know, they kind of pre-warned on it. But fourth quarter is huge. It's the holiday sales. It's the new iPhone announcement. It's supposed to be their quarter. And they've just been mired. I mean, analysts are putting it at 1% growth potentially. But they even came out saying, hey, we're going to be flat year over year likely. And they're missing a catalyst. You know, they've struggled with their blood pulse ox in the Apple Watch having to be disabled.

They have a patent fight there. They've got, you know, fights with the EU on what they're doing with your app store. They've got fights with China and slow sales there. And potentially they're starting to lose market share to the Chinese phones. And so they really have a lot of different headwinds. I see they're trying to pivot.

We'll see what they talk about their VR and their $3,500 headset. It's 4.30 Eastern and Apple earnings are out. Steve Kovac has the numbers too. Steve. Hey there, John. Yep. And it's a beat on the top and bottom lines for Apple. Let me go over those big numbers and then dive into the details here. EPS coming in $2.18. Street was expecting $2.10. Revenues, growth again for the first time after four quarters of declining sales, $119.58 billion in revenue. Street was looking for $117.9 billion. That's about 2% revenue growth, again, first growing quarter for Apple after four quarters of declines. iPhone, that is also a beat, $69.7 billion in sales there

versus the $67.82 expected. I'm sorry, that was a slight miss on iPhone. And also, just to note there, that's the first full quarter of iPhone 15 sales. Services, just a very, very slight miss here, but up 11% year on year. Services coming in at $23.12 billion. Street was looking for $23.35 billion. And this is going to get a lot of attention, guys, so I want to make a big deal out of this. China, greater China sales down 13% year on year to $20.82 billion. We'll have some more commentary on that in a bit for you guys, but that is going to be a key figure people are going to be focusing on.

I'll send it back over to you. All right. Steve, thanks. Dan Ives, is this good news that Apple was able to beat despite a weak China, or is it bad news that iPhone didn't do better? Look, I think they have headwinds, but they're able to navigate. And you look at the beat. And also, when you look at the China number, you have to really understand what China did for iPhones relative to the other pieces. And look, the headwinds are well known. But if you look overall at these numbers and the margins, I think it's a massive step in the right direction. Now, it all comes down to the conference call and guidance, of course. But relative to, I think, a lot of the negatives coming in, I think this is important. Paul Hickey, want to get your thoughts on that top line beat, 2% revenue

growth. That breaks a four-quarter streak of flat or declining revenue for the company. How important is that, especially if you look under the hood and you do have some beats and misses? It's a little more of a mixed picture. Yeah, I think it's more of a mixed picture. I think that's probably the least important of the metrics that were just reported. If there was a company that needed a good quarter and a good reaction to earnings, it was Apple this quarter. The stock's done nothing for six months. It's, you know, rallies have stalled out three times in the high 190s. And that China number, which everyone was watching for, that was weak. So that's something to be concerned about. But the one but here is sentiment towards the stock has been weak.

Coming into the report, the percentage of sell ratings was the highest since the start of 2020. So analysts have been pretty negative on this stock relatively to its history. So not necessarily a great report here, but the conference call and guidance will be something that we'll be looking for and placing more of an impact on. The revenue growth, you know, 2% growth, you know, that's not much. It could be 2% down. That's not a big swing in either direction. Okay. Shares are under a little bit of pressure, down almost 1.5% right now. Let's get back to Steve Kovac for more on Apple. Steve. Yeah, Morgan, I chatted with CEO Tim Cook a bit about these results and specifically wanted to drill down on this 13 percent decline in China. I guarantee you that's going to get a

lot of attention on the call. So I asked Mr. Cook about that directly. Here's what he told me, kind of explaining why there was such a big drop over in China. Quote, the dollar is very strong versus the RMB. And so that negative 13 goes to a mid-single digit number. So that's how we did the phone last quarter. The good news is that we're four out of the top six top selling smartphones in urban China, end quote. So really explaining away a lot of that fall in greater China to foreign exchange headwinds. But of course, we know it's more than just that, especially with Huawei coming and putting out new phones and those other signals that we have from some of the same data Mr. Cook was citing there that says Huawei

is actually taking away some share from Apple and possibly expected to continue to do that throughout the year. Also, he pointed out 2.2 billion active device installs, which they're calling a new record. That's all devices, not just phones. And he also told me, without a specific number here, a record number of iPhone installs in China as well. Obviously, that's a benefit for the services business. And then let's move on from China and the iPhone and talk a little bit about Apple Watch. You guys remember the Apple Watch import ban here in the United States over that patent dispute with the blood oxygen sensor. I asked Mr. Cook about that as well and asked, would you be willing to license the technology from Massimo

in order to start selling the full featured watch. And he told me, no, we're focused on the appeal. And there's a lot of reasons to buy the watch even without a blood oxygen sensor. So basically saying, look, they're still fine going through this legal process. Plenty of other activities you can do on the watch. Fitness tracking, the car crash detection, for example, is another one he brought up. The fall detection, another one. And just kind of saying, look, people still will want to buy the Apple Watch in the United States, even without the O2 sensor, and said, you know, they're going to go through the appeals process. But no talk right now of licensing that technology from Mossimo, which won that patent dispute so far, guys. Yes, indeed, Steve.

Thanks for that additional color. Mike Santoli, I want to go back to you with this because looking at what Apple accessories, those were down. Services, the big standout here, speaking of those 2.2 billion active device installs, what does that say about Apple's either maturity or growth that it services that's outperforming and still the iPhone? Yeah, I mean, first of all, from an economics basis in terms of the repeatable revenue and the things the street wants to put a higher multiple on, it's good to see services outgrowing everything else. I think the concern would be that it's just a sluggish upgrade cycle, it seems, and that would mean it should possibly stay that way for the next few quarters.

And so it just sort of takes a little bit of that momentum out of the fact that you had a launch, you know, a few months ago for a new iPhone. And it's just not necessarily taking. Maybe you'll be able to spend this as easy comparisons in China if you think that that's, you know, more of a blip than a new trend. And, you know, services is by default becoming a big, bigger part of the whole in terms of revenue. And maybe it can hold its multiple here. And, you know, you always have the thing with Apple, especially if the cycle starts to look a little bit shaky for the general economy. It's like, well, they're buying back a ton of stock. Buffett owns 6%. He's not going to sell it.

It just sort of keeps kind of moving, even if it's not this effortless network effect growth that you see with the meta or an Amazon. OK. Shares are now down a little over 2%. Dan Ives, I mean, the commentary on China. Okay, so you adjust for currency fluctuations and what's going on with a strong dollar. But the idea that it's four out of the top six best-selling phones in urban China, and yes, record number of installs in China, but the fact that the number would still be down even if you adjusted, what does that tell us about the market in China?

And I think also the tensions between the U.S. and China where we know American companies are starting to be less engaged with the consumers there. Or I should say consumers less engaged with American companies. I mean, it's definitely a moment of truth for Apple. I mean, China, we've seen many times over the years the worries that this was going to be the demise. But it's 20 percent iPhones. And if you look at how they've navigated it, I mean, it's 10 percent politician, 90 percent CEO for Cook. This is going to be a key period. The next few quarters, given some of the Huawei issues, given the geopolitical. But I do think and they'll talk about in the conference call as you digest these, it does feel like this is starting to trough,

maybe move ahead. Victoria, close us out here. Meta is now up, I believe, about 14 percent after hours. Apple down about two. Questions about growth and investment in the future in both. So where's the opportunity? Well, I think it's interesting. You know, I think I'm more in the meta than Apple because I think meta has really embraced AI and they seem to be capturing more market share. And Apple seems to be losing its way a little bit. I'm not saying bet against them. They've done quite well for the last 20 years. But at the same point, if you look forward and say, what is this exponential transformative growth going to be for Apple? How are they going to sell more iPhones, sell more wearables? What happens if some of these headwinds start to bite, especially that app store? If they can't have that revenue share, that's going to really bring down services, which

is their second largest sector. So for me, I look at it, Apple's also really struggled really having any viewpoint on AI and how they're incorporating that series now like old school tech, you know, when are they going to come out with some better versions of AI? So for me, I think meta is more forward looking. I think you're seeing that in results, even though Apple was a bit of a beat, it's down right now versus meta. I think people see the possibility for continued revenue growth that it's a little bit clearer runway for meta over Apple. Okay. Or are people playing Apple now like they did meta two years ago and it'll be a mistake? We will see. Victoria Green, Paul Hickey, our own Mike Santoli, and Dan Ives here with us on set. Thank you.

Thank you. We are just getting started on Apple's earnings. A lot more to dig through. And up next, reaction from an analyst with a buy rating who thinks this stock has upside of roughly 20 percent or maybe a little more based on where we are after hours. Overtime, we will be right back. Welcome back to Overtime. Let's look at the Apple chart. It is down just shy of 2% at the moment in overtime after their earnings report beat estimates on the top and bottom lines, but showed a 13 percent decline in China. Joining us now to discuss Evercore ISI's Amit Dharianani.

Amit, the services business is really what outperformed here. And there's questions about growth, but the iPad could use some updating. So could the AirPods and some of the wearables that were weaker this year versus last. Do you stick with your ambitious price target? Short answer is yes, right? I mean, I think iPhone units were up very nicely, so that's obviously a nice positive for them. Margins are holding up well.

I do think the blemish on this, in fairness, I think right now, is more around China being down double digits. This was a big worry people had. I think the weakness is a little bit more notable versus not. So getting clarity on that and what they see for March would be very crucial. And then, you know, services and iPhones are probably two of the main drivers from our revenue bases continue to do fairly well. And, you know, John, to your point, iPads and wearables, I think these will get updated and refreshed through the year and could actually end up being a tailwind for them. So, I mean, we have record services growth, to your point, and you do have margins that are pushing 46% now.

How important is that to the story moving forward, even as the street does continue to pay close attention to things like iPhones, like the hardware, like what's going on in China specifically? Yeah, listen, I think end of the day, what investors will value in the long term is free cash flow and free cash flow growth. So having a high margin business is crucial for them, perhaps a little less crucial today than it was a year ago when everyone was

focused on free cash flow. But I do think a sustainable, durable, higher margin business is really important for Apple. And this will kind of stem across the portfolio that they have, both in the hardware and services side. So you want to hear on the durability of that. I actually don't think that's what people would be worried about. But certainly what's happening in China and then to a lesser degree in variables. And I would argue variables, I think, might be a bit of a leading indicator potentially on the macro weakness that they might be seeing. So I think China and variables are the two things that folks will focus on. I mean, ever since Apple hit a trillion dollars

in market cap, there are some people who have been saying, well, if they're going to hit two trillion, they need the next iPhone. Then they hit two trillion. Then they hit three trillion.

Still no next iPhone. Maybe there doesn't need to be a next iPhone. What's important here? I mean, Apple couldn't quit Qualcomm, which would have been beneficial to gross margins if they could, but their margins are still pretty good.

I'm not sure they're getting beaten in any major product category. So what's the most important thing strategically? Strategically, what really matters is keeping the 1.2 billion iPhone ecosystem, iPhone users, happy and content. And then importantly, getting them to spend more money in the ecosystem, be that on the services, on the app store, on buying AirPods and watches. But I think monetizing the ecosystem is probably the number one priority for them. And you know, hopefully the Vision Pro will be the next big product for them,

not this year, but hopefully in the next three, four years. Okay, Amit Dhariannani, thanks for joining us. Shares of Apple down about 1.5% right now. Well, Amazon's call with analysts doesn't kick off until 5.30 Eastern, but up next, Kate Rooney will have the highlights from the media call, which is currently underway. Those shares are up 7%. Stay with us. Microchip earnings are out, and Christina Partsenevelis has the numbers.

Christina. Well, microchip shares are down about a little bit less than 2%. They're regaining some of their earlier losses, but still falling on the weaker-than-expected guidance. The company posting a small beat on earnings per share. Revenues fell 22% in Q3, something we actually already expected since the company preannounced a few weeks ago. And because of that, they blame higher customer inventory levels. But talking about the guidance for Q4, Eps and revenue both came in a little light the company warning that they do plan to cut spending as well as limit activity and this is something very interesting

for a chip company they said that they're going to shut down their wafer fabs for two week periods in both the march quarter as well as the june quarter which will result in under utilization charges they also plan to reduce activities in factories of course that'll affect employees the March quarter, as well as the June quarter, which will result in underutilization charges. They also plan to reduce activities in factories. Of course, that will affect employees. But yet they're increasing their quarterly dividend to 45 cents a share from 0.439 from the previous quarter. You can see shares are down about 2%. Okay. Christina Parts in Avalos. Thank you. We have a news alert on Disney. Julia Borson has those details. Julia.

Hey, Morgan. Disney filing in its definitive proxy that its shareholder meeting will be April 3rd. Then Tryon filing its proxy recommending that two of Disney's directors not be reelected, recommending withhold votes on directors Michael Froman and Marina Elena Lagomasino. Tryon saying in a release that if elected, Nelson Peltz and Jay Rizzolo, those are the two names they want elected to the board, will work with Disney to initiate a board-led review of the company's creative processes and structure to insist that management implements an executable plan for streaming businesses and will press Disney to disclose expected returns on its $60 billion of announced investments in parks and experiences. They also say they'll have Disney

commit to a plan for a reasonable payback period in return for their investments in their direct to consumer ESPN business. Of course, we know that's a priority for Bob Iger. And they say that if elected, Pelts and Rizzolo will work to, quote, finally execute successful CEO succession process. Now, they also talk about aligning pay and performance for senior leaders by tying compensation to goals. Morgan, this is all pretty much in line with what Peltz has been saying already, but it comes ahead of Disney's earnings, which are on Wednesday. And I'm sure we will hear more then. Back over to you. And of course, mark your calendar for April's earnings, which are on Wednesday. And I'm sure we will hear more then. Back over to you.

And of course, mark your calendar for April as well, which I know you'll be covering all of it so closely. Julia Boorstin, thanks. Shares of Disney up fractionally right now. Up next, much more on this wild hour of earnings. As we count you down to several big earnings calls, we are not done. Meta up 15% in overtime. Welcome back to Overtime. Let's get back to Kate Rooney with more on Amazon's earnings. Kate.

Hey, Morgan. So I just got off the media call with CFO Brian Olsopski. The two themes here, cost cutting and AI. On AI first, I asked about AWS and some of the cloud acceleration that they saw. I asked if he's seeing a bottom. He would not necessarily call a bottom, but said there was acceleration in the quarter pointed to that 13% growth up from 12%. He said, quote, we expect the acceleration in AWS to continue into 2024, said the customers are now switching, talking about cost optimization into more discussions about cloud migration. So that scene is a good thing here for AWS, talked about some of the interest in generative AI as well, says he is seeing significant interest from customers. And then finally on cost, he said some of the financial outputs and strength

they're seeing is a result of the key input metrics, namely costs. He said they remain focused on streamlining and they will, quote, do more with less. Morgan, back to you and John. All right. Thanks. Up next, more earnings movers as we await conference calls from Apple and Amazon. We'll be right back. Look at these really big after-hours movers, Morgan. In particular, Amazon now up 9.5%, which would be something to write home about exclusively, except that Meta is up 14.5%.

Apple down just over 1%. Yeah, I mean, we had big beats across the board on top and bottom lines for all three of these names, but it's when you look under the hood, particularly in the case of Meta, which just initiated a dividend, that you can see what's really causing that spike higher. That's going to do it for us here at Overtime. Fast Money starts now.