Closing Bell - Closing Bell Overtime: Apple Earnings; UPS CEO On Cutting Amazon Volume 1/30/25

Episode Date: January 30, 2025

It's another huge day of Big Tech earnings with the biggest company of all: Apple. Barbara Doran, CEO of BD8 Capital Partners, and Jose Rasco, CIO at HSBC Global Private Banking kick things off with where we are in the market right now. We break down earnings from Intel, KLA, Visa, Deckers, and U.S. Steel.Patrick Moorhead of Moor Insights discusses Intel’s report. We break down Apple from every angle withBarbara Doran, Patrick Moorhead, and Maxim Group’s Tom Forte, plus T. Rowe Price portfolio manager Tony Wang. Morgan sits down with UPS CEO Carol Tomé as the company's stock posted its worst day ever after investors shied away from the company's disappointing revenue guidance.

That's the end of regulation. The American Heart Association ringing the closing bell at the New York Stock Exchange. Tennessee Capital Investment Corp. doing the honors at the Nasdaq. Late-day volatility for the major averages as markets react to comments from President Trump just a few moments ago about tariffs on Canada and Mexico, but still closing mostly in the green. Now, attention turns to another crucial hour of earnings. That is the scorecard on Wall Street, but the action is just getting started. Welcome to Closing Bell Overtime. I'm Morgan Brennan with John Ford.

Yeah, the countdown to Apple results is on, expected to cross in just about 30 minutes, and we've got a great lineup of analysts and shareholders to break down every angle, including any clarity on China's sales and AI strategy. And it's not just Apple either. We're also going to get earnings in just a few moments from Intel, KLA, Visa, U.S. Steel, and more. But as we await that wave of earnings, let's bring in Barbara Duran of BD8 Capital Partners and Jose Rasco of HSBC Global Private Banking and Wealth Management. Great to have you both here.

As we do have, it looks like the major averages all finishing in the green. The S&P up maybe about half a percent. Jose, I want to go to you first, because you talk about the fact that the market or investors continue to reprice this market. And the expectation is that we're going to continue to see strong earnings results. Walk me through how we go higher from here. Well, I think, look, the deep seek shot across the bow is an interesting one. It reminds me of the 90s when we had a whole bunch of companies doing search. And then some company came along very late in the 90s, by the way.

And the winner of that search battle was one of the last entrants in the field. So I think deep seek has made it clear to us that it's not just about how much money you have and what you can raise. Sorry, hold on. Got to interrupt you here because Intel earnings are out. Our Christina Parsonevelis has the numbers. Christina. Four. That's how Intel is describing their Q4 results. The chip designer is what we're seeing is posting EPS of 13 cents. That is a penny beat on revenues of 14.3 billion with Q4 gross margins also slightly higher than the street estimate at 42.1%. It's their Q1 guide. That is a bit softer than Wall Street hoped. They're projecting revenue

around $12.2 billion. That's the midpoint below the $12.87 billion Wall Street expected. And those margins, they're also heading down. John, I know you and I just got off the phone about an hour ago with the Intel's interim CEOs, co-CEOs, I should say, where Michelle Halthaus explained the margin squeeze. It turns out for products like Lunar Lake, they're buying memory components from vendors and selling them at a cost, which really impacts margins. And they expect margins to be a little bit lower throughout the year. As for the Lite Q1 guide, she talked it up to being typical seasonality and then some early purchases in Q4 due to tariff concerns. She also confirmed they expect a ramp in PC sales in the second half of this year. John? All right. Christina Parks-Nevelis, thank you. Jose, get back to you on this. You were just beginning your answer there on the market.

Yeah, no, I think, look, it's not just about the money you can raise. It's about the innovation and about what are you going to do with the capital. So now there's going to be, you're going to have to explain the capital and it's going to have to be reflected in your sales earnings. And that will reflect the price. So I think we have this repricing just beginning. But remember, this innovation is actually going to lead to lower prices to a large degree in this technology, at least in the general sense of the technology.

The deeper dives will clearly be more expensive, but they'll be more product specific. I think it's good because it's going to lower prices and potentially lower demand for general AI searches and lower prices, I should say. And that means more people can enter the market. So I think it's positive for long term demand. Barbara, I want to get your thoughts on Intel, especially since today, the only sector in the S&P that finished in the red was tech. And we know semis in general have really been taking it on the chin as we see this rotation, perhaps still in part due to the deep-seek fears. Well, Intel, I think, is a special case. As we know, they've been behind the eight ball in the AI race. And their business

seemed to be normalizing in terms of demand, but their end markets are pretty lackluster right now. And as someone on another show said, the big question right now is the CEO's search, because they don't have a long-term strategy. The foundry issue, whether they're going to invest more in that, that's a big issue, because that will take away profitability from their core business. So we'll see what they're seeing, but it really looks like there's not a lot of green shoots here. And so I don't think investors were expecting a lot of new information. I think the downside's limited and we have to see a lot more of a turn before we see more upside potential. Jose, now that we're kind of past the Fed decision and we've seen this deep seek turbulence, what do you expect to really be, you know, wagging the market for the next month or so?

I think what's going to drive the market the next month or so is similar to what Barbara just said. I think you look, it's going to be management, it's going to be earnings, you know, cash is great, but what are you going to do? And the sense of innovation, the tech revolution is, I think, just beginning. But at the end of the day, it's going to be of innovation, the tech revolution is, I think, just beginning. But at the end of the day, it's going to be that innovation, the next leg in not just AI, but in the technology revolution in general. That's what's going to drive productivity and profitability. And that's why we're still positive on the sector, because we think we're just beginning this. And in the short term, you know, patient Powell is going to be patient and prudent. And that's fine. Remember,

the Fed did not move rates a lot in the 90s and the economy and the markets did really well. So it's all about earnings. And we think earnings are going to broaden out, especially as AI and other technologies get adopted by other companies. Barb, we're right about at the place on Apple where we were after people were doubting its position in AI. And a lot of the AI story has changed since then. Arguably, players like Apple might benefit from cheaper models being out there. I know you own it on behalf of clients, but what's its role in a portfolio these days? And what do you see as its potential, both defensively and for growth?

Well, it's a good question because I think it has both characteristics. On the defensive side, it really is the amount of cash they generate. And last year, they did a $90 billion share repurchase. We expect to hear something similar for this year. Plus, they keep increasing their dividend and their cash flow keeps accelerating their services business, which five years ago was 15 percent of revenues is now 25, 26 percent. And that's a higher margin business. So these are the defensive characteristics. And I think they're going to talk about a greater installed base, you know, which is going to look like it'll be up like six percent. And so it's about their ecosystem and increasing, you know, the margins and the fat there. So you've got growth right now. I mean, their phone, and we'll see what they say about the iPhone demand. It looks pretty

lackluster. The checks have been so-so. And that could be really because they haven't had the full AI rollout yet. It's coming in stages. But the typical upgrade cycle is two and a half to three and a half years. We're now about four and a half years. And there's some 700,000 phones, including the one I own, that are due for an upgrade. So I think that's the growth part of it. And that'll be later this year. I think we'll start to see that. Okay. In the meantime, Visa earnings are out. Hugh Son has the numbers for us. Hi, Hugh. Hey, Morgan. Yeah. So Visa just reported fiscal first quarter results that look like a beat on both the top and the bottom lines. Revenue rose 10% to $9.5 billion, above the $9.34 billion estimate. Profit on an adjusted basis rose 14 percent to $2.75 per share, also better than the $2.66

estimate. Like Amex and MasterCard before them, Visa said their results reflect strong holiday spending and improving payments volumes, signs of a still healthy consumer. Total payments volumes at Visa rose 9% in the quarter, while cross-border transactions jumped 16%. The stock was up about 0.4%. Last I checked, 0.56%. Back to you guys. Visa and MasterCard telling a similar story, it would seem right now. Thank you. We've got Decker's outdoor earnings out as well. That stock is moving pretty dramatically here. Julia Boorstin has the numbers for us.

Hi, Julia. Yeah, Decker's beating on the top and bottom line. Earnings of $3 versus the $2.56 estimates. Revenues of $1.83 billion versus the $1.73 billion estimate. Looking at the stock down more than 10%. The question is, what is behind that? If you look at the full year guidance, this is the company's fiscal third quarter. So for the full year guidance, they're guiding to

earnings per share between 575 and 580. The estimate is 563. So that is above estimates. But the revenue guidance for the full year of 4.9 billion is just below the estimates of 4.93 billion. So given the strength of this quarter, that indicates that perhaps next quarter will be weaker than analyst expectations. And just quickly, Hoka, which has been a huge growth driver for this company, revenues of $531 million, just a million ahead of estimates. UGG revenues, $1.24 billion ahead of estimates. But it really seems to be that revenue guidance that's weighing on the stock down more than 10%. Back to you. Okay. Julia Boorstin, thank you. Jose, I want to get your thoughts on

what we're seeing in this environment, where the consumer is concerned, because, yes, we just got those disappointing guidance from from Decker's, but also Visa posting some very strong numbers, including cross-border volume at 16 percent up year over year. Consumers still out there, at least the U.S. consumers still out there, still spending, but continuing to be very discerning about where they put those dollars to work. How does this play out, continue to play out in the market? Now, remember, inflation has fallen a lot more than wages. So you have real disposable incomes, positive consumer spending in the fourth quarter, 4.2 percent. And that's pretty strong. So the U.S. consumer is far

from dead. There will be pockets of weakness. There will be pockets of concern. And I think we have to look out for those, in particular in certain sectors. But on balance, the labor markets look pretty good. And again, if you look at the Fed's commentary from yesterday, they're pretty comfortable where the unemployment rate is, where wages are. Wage gains have slowed. I think we'll see a pop in January just from the seasonal distortions. But consumer looks relatively healthy, even though we're seeing a pickup in some of the lending data and some of the loan data. On aggregate, it looks pretty good. All right. Jose, thank you. Barbara Duran, we'll see you in just a moment for Apple's results. Now, KLA, back to the chips, results are out.

Christina Parts in Nevelas has a number. Stocks headed higher. Yeah, that's because it's a beat on the top and bottom line as well for the guide. So what we're seeing, this is a company that makes equipment for chip makers, and EPS came in at $8.20, adjusted higher than the street anticipated on revenues of about $3.08 billion. The Q3 guidance, so Q3 EPS midpoint, $8.05, also higher, and Q3 revenue of $3 billion. So that was a beat on the guide. And I'll just read one quick line here.

KLA's December quarter results were above the midpoint of their guide ranges, despite navigating through the business impact of new U.S. government export controls released late in the quarter. And you can see the stock jumping 4 percent on this news. John Morgan. All right. Christina Parts Nevelis, thank you. We have more breaking news on tariffs. Megan Casella has the details. Hi, Megan. Hey, Morgan. So President Trump making a lot of news just now in the Oval Office, officially announcing he says that he will be placing tariffs of 25 percent on Canada and Mexico on Saturday, February 1st. Now, he had previously talked about this and had previously given something of a negotiating window saying the two countries could do more to shut down their borders, but now saying

that he will be imposing these tariffs on Saturday because of three reasons, people coming into the country because of drugs and fentanyl coming into the country, and because of the subsidies he says we're supplying to those two countries in the form of trade deficits. So he says, because of those big deficits, he has to impose these tariffs and that these tariffs may or may not, he says, rise with time. On oil specifically, he says that he's making the determination tonight on whether or not he will include oil in those tariffs.

So those could be carved out, he says, probably tonight. He will make a decision on that. Obviously, big impact there, given that oil is a huge part of this trading relationship, really with both countries, with Canada and with Mexico. And then finally, guys, he also talked about China just a little bit, but much more vague here. He says he's thinking about doing something on China because they're also sending fentanyl into the United States because of that hundreds of thousands of deaths. So China, he says, is going to end up paying a tariff on that. But he's yet to make that determination on what exactly that will be.

So as of now, 48 hours out or so from that Saturday deadline, Trump says as of now that 25 percent tariffs will be taking effect on Saturday on Canada and Mexico. Guys. All right. Megan Casella, thank you. After the break, longtime tech industry insider and analyst Patrick Moorhead joins us with his first take on Intel's results. And we're just minutes away from Apple's first quarter earnings report as questions swirl around competition in China and the company's AI strategy. We're going to bring you those numbers as soon as they cross. Overtime is back in two. Welcome back. Atlassian earnings are out and the stock is surging. Seema Modi has the details. Seema. Morgan, this is one of those software names

that provides productivity software to data centers. Earnings and revenue handily beat expectations thanks to a 30 percent year overover-year jump in subscription growth. CFO says strong enterprise sales execution driving better-than-expected revenue across both cloud and data centers. Q3 guidance also above consensus, and that is what is helping shares outperform by 19% here in overtime. John and Morgan? Yeah, nicely above as well. Sima Modi, thank you. Meantime, shares of Intel are now higher by almost 2%

after posting fourth quarter results. Joining us now is Patrick Moorhead from More Insights and Strategy. Pat, good to see you again. We're back to talking Intel. Their Q4 numbers were pretty good, but they had some pull forward from Q1. Their guide was particularly weak on the top. But was there anything here in this weaker guide not to expect? Anything new on the downside? No, there really isn't, John. And I think that the expectations here were anything that wasn't a disaster would be a positive. I mean, they did miss on their guide, but they did hit on

EPS and revenue. But if you look at the foundations of the different businesses, every one of the divisions except data center did pretty well and and i know that's a bit of an oxymoron because data center is so important but all in all it was pretty good news on the quarter uh i'm particularly interested in in what comes out in the call though because that's where um we might have some interesting conversations got a bit bit of a paradox, it seems to me, when it comes to Intel in particular. We've got all this talk out there with the AI environment, you know, Stargate, about building data centers. Intel's particularly experienced in building data centers, both domestically and around the world, but it doesn't have that convening power right now because its product

track record has been particularly weak. And, you know, it tripped up on fabs as well. Is there, what's the prospect of, through the foundry business, Intel recapturing that mojo that will allow perhaps some partnerships or some alleviation of the capital burden it would face to pull that off? Yeah, so, John, I so John, I think getting back to its original mojo where it had 95% revenue share in client in the data center with CPUs, I don't see that happening. But to the foundry question, I am hearing some very good things about 18A. And what happens is you won't get an all-in from somebody like an Apple until they have a demonstrated track record with, I will call it, the easier stuff. And this is why the Amazon commitments and the Microsoft commitments so far to Foundry were for networking chips. I do believe once they demonstrate and show the confidence of that, which primarily they can do this with their own products like Panther Lake on the PC side,

then people will come likely around 14. So it is positive news hearing some good stuff about 18, 18A and the foundry side. And right now the street is really about show me. It's not the potential that they want to see the delivery of, of Intel. I do want to go back to data centers and the AI ecosystem more broadly with you here, Pat. And that is, we had the reports this afternoon that OpenAI is apparently an initial talks to raise up to $40 billion in a new funding round at a $340 billion valuation. Pat. And that is we had the reports this afternoon that OpenAI is apparently in initial talks to raise up to $40 billion in a new funding round at a $340 billion valuation. We also know Sam

Altman's down in Washington to tout offerings for government uses as well. You take that, you layer it on what we heard from Microsoft and what we heard from Meta last night as those companies and those CEOs double down on their CapEx plans and their investments into AI. Where does that leave us now? And I ask you this because you joined us on the deep seek shakeout that happened Monday in the markets. Where does that leave us in terms of investing this AI ecosystem and who the next tranche of beneficiaries are going to be? Yeah, so if I said just I'm going to be very consistent with nothing else, this AI build-out continues at least for the next 18 months, and DeepSeq changes nothing.

What it does, well, not nothing, what it does do is potentially lowers the cost of compute for reasoning models, which benefits companies like ServiceNow, Adobe, and even Microsoft. But until we hit AGI and we're doing inference on everything with AGI, this continues, this build-out continues. This build-out continues. And as we saw with Meta and Microsoft, and I think we're going to see with Google and Amazon, it's pedal to the metal on CapEx. DeepSeek really didn't change much as it relates to investments. Reasoning, this decrease in cost was expected. It just typically doesn't get this amount of fanfare about the Stargate coming out and looking at that $500 billion build-out. The timing exasperated

the market's reaction to it. And with the NVIDIA run-up so much as anything but a cough, a whimper of an NVIDIA bull case, the market will react. And that's what we're seeing right now. All right. Patrick, stay on the line. As they say in radio, Apple earnings are just a few minutes away and we'll be seeking your wisdom there as well. And yeah, we are just a few minutes away from Apple's earnings report. Stock has had a healthy rally this week, up about 7% heading into this print. We're going to bring you the numbers and instant analysis as soon as they cross. And later, UPS just turned in its worst single-day percentage decline in its stock's

history. After posting weak guidance, announcing plans to slash deliveries for its largest customer, Amazon, we're going to hear from UPS CEO Carol Tomei about that major stock move. Welcome back. U.S. steel earnings are out. The company matching both top and bottom line estimates with a loss per share of 13 cents on a revenue of $3.51 billion. Those results both in line with drastically reduced estimates after the steelmaker had warned last month. Now, U.S. steel saying it expects first quarter adjusted EBITDA on the range of $100 to $150 million. They did not comment on M&A. And you can see shares right there are basically flat. Well, the final countdown is on. Apple results expected to cross in just moments. We're going to bring you the numbers and analysis right after this break. We are moments away from Apple

earnings. Back with us, Barbara Duran and Patrick Moorhead, along with CNBC senior markets commentator Mike Santoli and Tom Forte, the senior Internet analyst at Maxim Group. Mike Santoli, tell me about Apple's role in the mega cap mix in this market thus far and how it's different from the other names we talk about? It's pretty fascinating. It had a great ramp into the end of last year. I felt like that was mostly a bit of a defensive trade, something that felt like a bit of window dressing. Massive correction into early this year. It felt like people just had the preference for stuff with a greater direct leverage on AI. And right now, it was fascinating to see the rally on the deep seek news simply because whatever company are kind of touching customers and interfacing them with AI seemingly all of a sudden was going to be the way to go. So it's right between the recent high and low. It's still an expensive stock. It's 31 times forward earnings. Expectations for the basics like iPhone sales, not particularly high, but everyone wants to hear that story get a little more in vivid relief about how they're progressing on the Apple intelligence front.

Barbara Duran, not a sense that Apple's driving the overall market necessarily, but the way it touches China. And you talked about it being both defensive and growth in nature certainly tells us something about the overall environment. No, it does. And I'll tell you, it's going to be interesting what they have to say about China, because they're obviously losing share there. We'll see what they've been doing in terms of discounting and what the prognosis is, because China, it seems to be a combination of, you know, not made in China, their price points. And of course, there's worries about tariffs, although they seem to have navigated that pretty well in the past, both with the administration and with Chinese officials. So I think there's a lot that we're going to find out there. And but again, I think this is really iPhone driven.

I think investors are patient given the number of positives, margins, capital. And we'll wait to see how that worm turns, because that is over 50 percent of their sales is iPhones. All right. Well, we're seeing we're seeing the stock move around on the screen, and that's because we have the results. So let's get over to Steve Kovac for those. Steve. Hey there, Morgan. Yeah, it's a beat on the top and bottom lines for Apple, but we are seeing a sales dip here for the iPhone business and in greater China. I'll get to those in a minute, but let me read you the results here. EPS is a beat, $2.40 compared to the $2.35 the street wanted. Revenue, a slight beat here, $124.3 billion versus $124.12 billion expected. iPhone, though, here, a rare miss, $69.14 billion versus the $71.03 billion. That's down a little bit less than 1% year over year

for the same period, about 8 tenths of a percent. Services, though, a bright spot here again for another quarter. That was a beat at $26.34 billion versus a $26.09 billion expected. That's up nearly 14% year on year. And then Greater China, This is the story I think we're going to be talking about all afternoon, guys. Down 11 percent that business to 18.5 billion dollars. We see shares, let's call it flat-ish for now, guys. I'll send it back over to you. All right. Steve Kovach, thank you. Yeah, shares of Apple are down fractionally right now. Tom, I want to get to you for your reaction to this, especially since we were just talking about China. And it does seem like despite the holiday season, perhaps, and maybe largely because of China, you did see that sales dip in iPhone. The upgrade cycle is not manifesting yet here.

Yeah. So definitely, I think what you're seeing is that as it pertains to this super cycle that some investors were hoping for from artificial intelligence is either incredibly slow developing or it's not happening at all. But what encourages me when you look at the outperformance is the strong services. And I do think that there is a way for the stock to continue to work on the strength of services despite not seeing a super cycle as it pertains to AI and iPhones. Pat Moorhead, I want to get your reaction to the print we just got, whether it is China, whether it's services, whether it's the fact that Mac revenues had a handy beat as well. Yeah, we knew that iPhones would come in light and the only thing that could save it would be services, which it did.

What I'm looking to, though, is the future in China. I think it gets more difficult, not easier for them because all the Chinese manufacturers are going to amp up their AI capabilities. And Apple really hasn't even shown up there in China and not even a lot in the rest of the world. I think that the Mac bump is a positive sign, but I don't think it portends anything momentum about the future. And in fact, Apple has more competition with these new CoPilot Plus PCs from five or six manufacturers and three, soon to be four, chipset manufacturers, where it could get a little bit more difficult. It's a lot easier to flip somebody on a Mac than it is on an iPhone to Android. But I think Apple's job is going to get even harder in the future. And the stock is bouncing around between fractionally higher and fractionally lower.

Let's get back to Steve Kovach for more on Apple's results. Steve? Yeah, John, I caught up with Apple CEO Tim Cook on these results. Hopefully we can get a little more clarity on what's going on here. First of all, I want to talk about what he told me on artificial intelligence, Apple intelligence, and how that's informing iPhone demand. I know that's the question of the hour here. Let me tell you what he told me. This is a quote.

Quote, we saw that in markets where we had rolled out Apple intelligence that the year-over-year performance in the iPhone 16 family was stronger than those markets we had not rolled out Apple intelligence. So there you go, saying that Apple intelligence was a sales driver, at least in the markets where it was available. Obviously, only available in the United States at first and in just a few languages, English at first, and then some others. More languages are coming. And then the China question, again, like I just told you, those sales are down 11 percent year on year. I was here a year ago when they had a 13 percent dip for that holiday quarter. Tim Cook had several reasons behind this. Part of what I just told you, artificial intelligence has not launched in that country yet.

They still need the regulatory approval from the government there. there, and they need to find another AI partner based in China, whether that's Baidu, whether that's DeepSeek or some other, Alibaba, some other company in order to take the place that ChachiBT is using elsewhere for the Apple intelligence system. He also had a couple other things, blaming some inventory channels, and also talked a little bit about, this was a little confusing to me though, talking a little bit about subsidies from the government for devices that went into effect this year. I'm not quite sure how that affected sales last year. Maybe the idea here is that people waited for those subsidies to do their purchases in China, but that was an explanation for that. And then finally, I asked Mr. Cook about tariffs. That is a huge question in this new Trump administration looming over Apple and so many other companies.

He pretty much dodged that. I asked him if Trump has given him any indication that Apple may be able to miss those tariffs again like they did in the first administration. He said they're preparing, they're evaluating what tariffs would look like, but otherwise declined to comment on that. Right now, though, you guys see the market still trying to figure this out. Shares are about flat or so on these results, guys. Yep. Still bouncing around a bit, Steve Kovac. Thank you. Mike Santoli, we're going to go back to you now on this. Talking about Tim Cook and his approach to statesmanship, unlike a lot of tech CEOs in Silicon Valley that are just kind of showing up on the political scene. Tim

Cook has been photographed sitting down with Xi in China a decade ago, got close to Trump, managed to avoid getting hit with serious tariffs last time around. With all the talk about political and global impacts, how do you think that positions Apple as a stock? Yeah, I mean, I don't think it is necessarily the key swing factor here in the stock. But the general idea that Apple is essentially too big to marginalize or too big to penalize on any of its businesses, I think is is pretty much one of the reasons why we're here at three and a half trillion dollars in market cap. So I don't know if we're really trying to parse to finally exactly what tariffs might come, whether they can escape them or not.

But, you know, things have to start working pretty well here on the iPhone side globally for the story to kind of reaccelerate, I would imagine. You know, you had this pattern when there's been a not-so-great upgrade cycle for Apple, and quickly the street kind of turns it into a positive. It says, well, that's that much more pent up demand for upgrades down in future quarters. I'm not sure that's, you know, quite playing out right here or quite as persuasive. This stock has traded in the last month at 240 and at 219. And here we are at 238 trying to figure out, you know, if it makes sense to tilt one way or the other.

I think it's fine to just be hanging around these levels and holding up here and, you know, waiting to see it all play out. Barbara, I think about bear with me here for a second. But I think about the luxury fashion stocks that have been hit so hard in the last couple of years, in part because of the weakness that they've seen in their businesses in China. And it's been a turning point for some of those fashion houses this earnings season because North America and the consumers here in the U.S. have been showing up so strongly for those brands. It almost seems like investors are starting to de-risk the China piece of those companies' portfolios. Are we going to see something similar happen here now with Apple?

Well, excuse me, Morgan. I don't think that's going to happen here now with Apple? Well, excuse me, Morgan. I don't think that's going to happen here because the problem in China, of course, is the consumers not spending. We're all well aware of the China economic issues. And Apple, I think there are a couple of factors there. One is that they don't have the AI ready to go. And that could take a little longer. Maybe they do something with DeepSeek. But we know about the censorship that's going on with DeepSeek.

And that's a big problem for Apple to use chat GBT. So I think that probably is taking a little longer. So we'll see when that happens. But I think they were losing share before AI was introduced in their competitors. And part of that was their price points. And part of that, I think, is a made in China aspect to this. So, Tom Forte, there's a glass half empty and glass half full way to look at this, it seems to me. We heard from Steve Kovac that Tim Cook said that in markets where Apple

intelligence was out, the iPhone sales were stronger. Apple's been kind of letting this Apple intelligence marinate for a while. Still, I don't think it's completely even rolled it out in the U.S. So do we look at the upgrade cycle this time as being driven by software more versus hardware? And so that's a good thing because there's the possibility for them to pull ahead? Or is it such a bad thing that they don't have it out yet and we're not seeing it now? Yeah, so I think, John, we have to hang our hat on the software driving the upgrade cycle, given that they had the hardware, the iPhone 16 out in October or September rather, and then it's been a long and slow rollout for the software and they still don't have it globally and they may

never have it in China or may never have it for some time. But I do think that that is kind of a glass half full statement that in markets where they've had Apple intelligence and the AI related software, their iPhone sales have outperformed other markets. Yeah, really fascinating comments there. All right. We're going to leave the conversation there for now. Tom Forte, Patrick Moorhead, Barbara Duran and our own Mike Santoli.

Thanks for breaking it down for us with shares of Apple down fractionally right now. We've got much more reaction to Apple's results. That's coming up next when we are joined by the portfolio manager of T. Rowe Price's Science and Technology Fund. Plus, we'll dig into UPS's worst trading day ever and hear from the company's CEO about how tariffs could impact her business. And cue the QR code for the latest installment of my On the Other Hand newsletter. This week's debate is the arrival of DeepSeek, a threat to U.S. tech. You can scan that QR code on your screen. Type in cnbc.com slash OTOH to join the conversation.

Welcome back. Apple just out with earnings results moments ago. Joining us with his first take on the quarter is T. Rowe Price Portfolio Manager Tony Wong, who owns Apple in his fund. Tony, it's great to have you on. That's exactly where I'm going to start, because the stock is bouncing around between gains and losses right now. Investors have a lot to digest here. What's your key takeaway? Yeah, there's been a lot going on with DeepSeek and AI. And I think that looking forward, I think what's going to be really important is how Apple integrates its AI features. And so when you think about what they're really good at, they're really good at building products with a really strong ecosystem and integrating technology into our lives. And so what I'm looking forward to is just with the latest models that could be more efficient, how does Apple integrate that?

And then meanwhile, I think you also see open AI racing forward with their agentic AI. And so those are the things that I think people are thinking about. And, you know, just just Apple has this really great ecosystem, how we can drive a better upgrade cycle as well as increases growth in services. Yeah. And of course, they did post a services beat up 14 percent year over year. cook to our own Steve Kovac about Apple intelligence, that year-over-year performance in the iPhone 16 family was stronger in the markets where Apple intelligence was rolled out versus where it was not. How meaningful did you find that commentary? And does that outweigh the weakness we've seen in China? Yeah, I think that's very natural that with better features and improved kind of iOS that, you know, consumers are going to be upgrading their phones more or at least experiment with it. And, you know, I think you often need a better phone in terms of the hardware, the memory to use a lot of the newest and latest features. So I think that's very natural. I think what's going on in China is probably, you know, a combination of a tough macro. In addition, a lot of the subsidies are kind of more geared towards the kind of entry tier price point. In addition, it is like pretty

competitive, I think, when you see just the number of phones and form factors in China as well. Tony, now that we're past the holiday season, we are about to be in some of the slower quarters for Apple, which I think is interesting in that we already know which limited number of phones in Apple's current lineup are Apple intelligence compatible. But soon, later this year, we're going to have a new line of phones, if history is any guide, that are also going to be Apple intelligence compatible. How do you factor that in as an investor, especially given the strength of the services business, which is really driven by that installed base of loyal Apple users? Yeah, I think that's a great question. First, it is probably a form factor, right? Like if you

think about the new phones, like, you know know could there be a thinner phone could there be foldable on the horizon and then so I think that can get people excited about a new product in addition there's like the ecosystem the software upgrades that can happen so you know what kind of AI features that are on the comm to be shown to consumers is probably not a thing and then I think with all this innovation around AI, like, you know, how much of it can be done kind of on your iPhone, on the edge, just given the model efficiencies.

And does that give Apple an advantage in terms of, you know, people upgrading their phone because they want to run the latest AI models? All right. Tony Wong, thank you. Up next, the latest details on last night's deadly plane and Army helicopter crash in Washington, D.C. Overtime, we'll be right back. Welcome back to Overtime. Officials are declaring last night's deadly crash between a passenger plane and an Army helicopter

a recovery effort with all passengers now presumed dead. Phil LeBeau has the latest details on the tragedy. Phil. And John, let me bring you up to speed in terms of where things stand with the investigation, because the NTSB is now at the Potomac River at the scene where you have three different pieces of the regional jet from American Airlines that are now inside the Potomac River, along with the Blackhawk helicopter. We have confirmed that there was a preliminary report by the FAA, an incident report, if you will, noting that the air traffic controller staffing at the time of the incident last night was not normal. Basically, you have two controllers typically handling

helicopter and airplane communications. It was under one air traffic controller. By the way, that is under FAA safety guidelines. That is allowed. And there's no indication that that was a definitive factor in the collision last night. Meanwhile, the black boxes have not yet been recovered. Here is the head of the NTSB talking this afternoon about where things stand with the investigation. We need to take our time to make sure it is accurate. That's best for you.

That's important for the families. It's important for legislators who are seeking answers to try to figure out what they're going to do about this. And so it will take time. We do have a lot of information, but we need some time to verify that. One last note, Reagan National opened at 11 a.m. this morning, and they have steadily been increasing their traffic throughout the day. Guys, back to you. Philip Bo, thank you. Up next, all the overtime earnings movers that you need to be

aware of as the analyst calls from Apple and Intel get ready to kick off. Plus, UPS having its worst day ever on week full year guidance and plans to slash deliveries from Amazon. This is something CEO Carol Tomei discussed with me earlier today. We are not a shrinking company. We are a growing company, but we need to take control of the Amazon volume. More of that first on CNBC interview when Overtime returns. Welcome back to what has been a very busy hour of earnings.

Here's a look at some more movers. Boot Barn is falling after the lower end of earnings and revenue guidance came in below estimates. See it down 6%. Deckers also falling sharply down 16% despite a beat on earnings and revenue. Full year revenue guidance came in light. And another check on Atlassian on the bright side, surging 16% on strong earnings, revenue, and revenue guidance. Well, meantime, UPS shares closing down 14% for their worst day on record as the street digested disappointing revenue and profit guidance from the shipping giant.

A key reason for the light 2025 forecast? Its decision to begin reducing volumes with its biggest customer, Amazon, by more than 50% by the back half of 2026. Now, Amazon comprised nearly 12 percent of UPS's revenue last year. That's according to some analysts. But it's also not a very profitable business for UPS. So I spoke with UPS CEO Carol Tomei today and I asked her about the investor reaction to that news. I think as the days and weeks come and analysts and investors digest our news, they will understand that we are taking control of our destiny.

We are going to grow in the parts of the market that value our end-to-end network and value the capabilities that we have been investing in that differentiate us from the rest of the market. We are not a shrinking company. We are a growing company, but we need to take control of the market. We are not a shrinking company. We are a growing company, but we need to take control of the Amazon volume. Well, UPS is focused on growing higher margin customers, for example, in health care, small and medium businesses. This is the strategy that Tomei laid out last year. But given UPS's global footprint, I did also ask her how the company is positioned for any change in trade and tariff policy under the new Trump administration.

Last year, we delivered 22.4 million packages a day. Of that, less than 400,000 packages were imported into the United States from countries like Canada, China, Europe, Mexico. So our risk exposure for our small package business is pretty small. As it relates to shippers broadly, they have lots of choices if tariffs are placed against them. They can do nothing and absorb the cost. They can pass the cost along, or they can look at other alternatives. Those alternatives might be a change in mode. In other words, moving from high- know, high premium air to perhaps ocean freight.

Or they can look at changing destination, not delivering to countries that are charging the tariffs. You can watch my full interview with UPS CEO Carol Tomei at CNBC.com. And there was a lot more to that interview. Well, Baker Hughes is set to report earnings at the top of the hour. We're going to hear from that company's CEO tomorrow on overtime in an exclusive interview as well. And we know energy policy has been front and center with this new administration, too. And before we go, check out Walgreens down sharply in overtime. The company just saying it is suspending its dividend as it, quote, continues disciplined execution against strategic priorities.

See that down 5 percent. Apple now down a percent and a half after earnings. And we'll continue to watch Apple. Stocks finished higher today. That does it for us here at Overtime.