Closing Bell - Closing Bell Overtime: Averages Tumble; Bret Taylor On His New AI Company; Globalfoundries CEO On Chip Demand Environment 2/13/24

Episode Date: February 13, 2024

A red day across the board during the session but an official earnings bonanza after the bell with Airbnb, Lyft, Instacart, Robinhood, MGM, Zillow and IAC reporting. We have the numbers and analysis on all of them, including with top analysts Mark Mahaney, Evercore ISI, and Dan Dolev, Mizuho. Bret Taylor on his new AI company and the latest at OpenAI. Plus, Vital Knowledge’s Adam Crisafulli on today’s selling and Globalfoundries CEO Thomas Caulfield on the environment for chips and his company’s latest earnings report. 

A lot of red on the screen. The Bears coming out of hibernation today as the Dow plunges more than 600 points, but pairs some of the worst losses of the session here into the final moments of the close. That is the scorecard on Wall Street. The action, though, is just getting started. Welcome to Closing Bell Overtime. I'm Morgan Brennan with John Ford. Yeah, it could have been worse. The Dow, S&P, Nasdaq all down about 1.5%, but at one point they were down about 2%. The Russell 2000 falling more than four, though. And I'll get ready for a barrage of earnings from Airbnb, Lyft, Robinhood, Instacart, MGM and Zillow. Instant analysis of those results is coming up. And as we await those earnings,

let's bring in our market panel. Joining us now is Vital Knowledge founder and president Adam Chris Afouli. And we're going to add in CNBC senior markets commentator Mike Santoli in just a moment. But Adam, first, I'm going to go to you. The fact that at least at one point within the trading session, we were looking at the worst day for the Dow and the S&P in almost a year. We had that hotter than expected CPI reading this morning. Also, some mixed to disappointing earnings reports as well. And really an aggressive move higher in the bond market and Treasury yields to walk me through it. No, absolutely. You know, this is kind of the fourth hot inflation number for the month of

January after the jobs report. You had both ISMs coming in hot and now you have the CPI. You know, so I think the question people are asking themselves is, does this derail or does it delay the advent of monetary easing? So I think March is off the table as far as a potential rate cut. But I think their trajectory is still one of disinflation and one that's going to lead to the Fed cutting rates in the first half of this year alongside a slowdown in quantitative tightening. But, you know, I think you came in today, especially in tech, overbought, overcrowded. Valuations were very rich, above 5,000. You had a very aggressive rally, you know, just to kick off this year. And, you know, I think the combination of the CPI plus a bunch of underwhelming earnings, like you mentioned, it was just too much for the market to bear, and it had a pretty violent pullback. You know, I think that this is not kind of the start of something deeper. Like I said, unless you really see the inflation trajectory shift violently,

where you have goods inflation really start to move up again, and services and shelter costs fail to break lower, which you didn't really see that within the CPI today, then I think kind of the multi-month trend is still on track. Okay. So basically, we're due for a pullback. And that is a conversation we've been having here on overtime for a number of days now. But just to go back to the 10-year yield, I mean, we have that old saying, right? Don't fight the Fed. The market, you could argue, has been fighting the Fed, especially where it's been pricing and rate cuts for months and little by slowly moving back towards what the Fed's been saying all along. We saw more of that in action today. And up until today, where we did see stocks trade lower, we have seen, for the most part, equities pretty buoyant, even as we've seen that repricing happen in the Fed funds futures.

How does that continue to play out? No, I agree. And like I said, I think the real question is, is this delaying the advent of easing or does it really derail that whole key system? You have to wait until the second half of this year for rate cuts to begin. And I think, again, it's more the former than the latter. So the markets priced out rate cuts at the next two meetings, it's more the former than the latter. So the market's priced out rate cuts at the next two meetings. It's pretty much aligned with the last supplemental that we got in December from the Fed as far as kind of how they're projecting easing for the course of this year, which is about three cuts. So now we're kind of, again, we're moving into the summer where the market's pricing a cut. I think the Fed is probably OK with where things stand right now. Again, after they pushed back pretty

aggressively for the last several weeks. Yeah. Now it's a question of watching how the data comes in. Remember, if you listen to Powell, it wasn't so much that he needs inflation to get better. He wanted to kind of stay at the same trajectory on that same disinflationary pace. So if we continue to see that, then I think that means we can still get cuts within the first half of this year. So, Adam, what are investors watching for now is my big question. Normally, I would look to macro data, but I can't help but look at NVIDIA, which is reporting earnings in just a few days. It didn't want to be down today. It ended basically flat. And that other, you know, AI name that we've been watching closely,

Supermicro, was actually up two and a third percent on a day like today. People don't want to sell these names, even if they are selling the WCLD, if they're selling, you know, the real estate sector, et cetera. So how much hinges sentiment wise on those kinds of names? It's hugely important. So we get to start of the January earnings season, kicks off tomorrow night with Cisco, and then you get AMAT Thursday. But like you said, next week is NVIDIA. And that's going to be it's crucially important. This is, you know, those super cap tech stocks are driving the entire market. And the AI thesis is playing a huge role in that entire sector, the narrative around it. So NVIDIA is going to be crucial next week to watch.

You also get to Fed Minutes next week, which will be also very important. But there aren't a lot of really major macro events on the calendar. We're kind of done with calendar quarter earnings. So it's going to be the January earnings season, which we start again tomorrow night. And then just the next several inflation numbers. So you get a couple more this week, the PPI import export prices, Michigan inflation expectations on Friday, and then you get the Fed minutes next week, and then just more of these January end reports. NVIDIA being a big one, but also Walmart, Home Depot, you get a bunch of big, important retailers also. So a lot of all

that's going to be very important. But yeah, NVIDIA next week will be crucial. We've got Robinhood earnings out. Kate Rooney has the numbers. Kate. Hey, Morgan. So it's a surprise profit here for Robinhood in the fourth quarter and a pretty big increase in deposits we're seeing. So it was three cents per share on that EPS number Street was expecting. A loss of a penny that was on revenue of $471 million, also a beat there for revenue. Net interest revenue, a big driver of all this, up 41%. Transaction-based revenue, that's essentially those fees from trading, was up 8%, primarily driven by cryptocurrencies, which saw a rebound in the quarter. Monthly active users,

up from the prior quarter, they slowed about 4% year over year. But revenue per user, that's key, it surprised at $81 per user, about a $4 beat there. Operating expenses were down 17%, so some of the recent cost-cutting in action there. And then on deposits, guys, Robinhood saw $4.6 billion. In new deposits for the quarter, $3 billion of that came from transfers from other brokerage firms. So they're looking to steal market share there. I spoke to CFO Jason Warnock. He says a promotion that they were offering, basically one percent on transfers resulted in that bump. He said there

was an average transfer price of about one hundred thousand dollars. So a higher income trader there that they're pulling over. He said positive net transfers they saw from every major brokerage firm. He called it encouraging, says that they've really rounded out their product selection, becoming a choice for folks with larger balances, which is not the reputation as how Robinhood really started. Question of the day, though, guys, rate expectations. He didn't call when the Fed would cut, but he did say a falling rate environment is good for asset growth and trading activity.

He thinks that 2024 will be the period where rates move from a headwind for their business into a tailwind, no revenue guidance. But, guys, we also have CEO Vlad Tenev tomorrow coming up on the Exchange broadcast exclusive 1 p.m. Eastern. And we'll see him tomorrow here at One Market, guys. Back over to you. All right. Looking forward to that interview. Kate Rooney, thanks.

With shares up something like 9% right now, spiking in overtime. Lyft and Airbnb earnings are out, too. Speaking of the share economy, Deirdre Bosa has the numbers. Hi, Dee. Hey, Morgan. So Lyft shares have been all over the place in just the last few minutes since those results came up. It was up as much as 12%, briefly negative, now up about 9%. Let me give you the numbers, though. It was revenue in line and a bottom line beat. Excuse me. Let me give you the numbers EPS of 18 cents adjusted versus eight cents expected revenue 1.22 billion and that was in line with expectations better than

expected outlook as well and for the year ahead 2024 expecting rides growth in the mid-teens year over year so it's roughly in line with what we're seeing from Uber this may be the key point for investors Lyft is forecasting free cash flow in 2024, a milestone certainly for a company that has been burning through billions of dollars for years. It says that we anticipate Lyft will generate positive free cash flow for the full year for the first time. I had a chance to catch up with the CEO, and I asked him about the ads progress. They just started in-app ads last quarter. He said it's a relatively small business, but growing quickly. so we'll expect to hear more about that going forward let me bring you Airbnb as well because it is performing very strongly in the

after hours it is up more than 10% it was a beat on the top line I'm not going to compare the bottom line because complicating it was a one-time tax charge revenue, $2.2 billion versus $2.17 billion expected. We're seeing a loss of 55 cents. That included a lodging tax, one-time tax in Italy of a billion dollars that also impacted free cash flow. If you look at the fundamentals, though, Airbnb is strong this quarter. It beat on gross bookings and slightly higher average daily rate or ADR. The outlook was also strong. It beat against street expectations and it beat relative to the travel and hotel industry.

Guys, we have card out too. I could do a triple. Tell me or I can wait. I mean, we love earnings. So, you know, if you've got some numbers to give us, go for it. You know, is it moving? Let me tell you because I see this. It's moving.

Shares are down 6%. And this is an interesting one. There is something that I got to explain here, but first let me just tell you, it was a gap EPS of 44 cents, Instacart revenues in line, slightly less, 803 million versus 804 million, an additional $5 million buyback program, bringing the total to $1 billion. Remember that this is already an extremely small float. So the company continues to buy back shares. The bigger news here may be a significant restructuring, guys. This is the first company-wide layoffs we've seen from Instacart since it became a public company back last fall. It's going to affect 250 employees.

That's about 7% of the organization. and the company is calling this an efficiency drive. In addition and separately, three C-suite executives are departing the company. The COO, the CTO, and the chief architect. Instacart says that this is for personal reasons. The shares are now down 9%, guys. I'll continue to dig into all three of these names and bring you more as I get it. Three executives, top executives leaving for personal reasons? That sounds like somebody else has personal feelings about those.

D-O-O-C-T-O. All right. Deidre Bosa, that's a lot of earnings news. One of these things is not like the other. That's Instacart, which is down almost 10% as we were looking, whereas Airbnb is up around 8.5%. And Lyft right now getting a big lift up about 16.5%. Let's bring in CNBC Senior Markets Commentator Mike Santoli now. Mike, so a lot of green in the after hours after a day that saw more red than usual.

Not all green, though. We were just talking about Instacart, which was down big. Is the bias after a day like this to the upside in the next trading day or just perhaps after hours because volatility is awake? Yeah, I do think, I mean, these stocks, you could say, benefited from the fact that there was pressure on pretty much all of them during this session. There is a little bit of a theme, though, of these platforms that are different stages of maturing towards scale, where they're finally able to either break even or actually show some positive growth. Airbnb, of course, already bigger and well in that category, but also adding a $6 billion, up to a $6 billion buyback for Airbnb, which is pretty significant based on

its market cap. So I get the positive response on that level. Robinhood had probably the perfect operating environment with crypto ripping and a bull market in stocks and everything else in the fourth quarter. But they've managed to to outperform and go break even, you know, more than half the revenue is from net interest. So that's kind of what you're you know, you're paying for. And that stock is just nosing above its its recent 52 week high. All right. Adam, want to get your thoughts on all this, especially when you have Lyft forecasting positive free cash flow in 2024. And to Mike's point about Robinhood, some positive metrics there as well. I mean, we're talking about companies that after they IPO'd,

you know, really long time on this path to profitability, or at least I should say sustainable profitability. Yeah, no, I think, you know, cost cutting has been a huge theme now for the last several weeks throughout tech, throughout all of corporate America, but especially in tech. And you're really seeing the effects of it when these companies move aggressively to lower headcount. And then Instacart's the latest one to, you know, to really slash operating expenses. So getting to free cash flow positive for Lyft, that's obviously a very important milestone. For Airbnb, I think there was a little bit of anxiety after that Expedia report on Friday, but clearly they were outperforming one of their major competitors in

that space. So a decent night of reports so far to kind of wind down the calendar Q4 season. Well, we've got more. Zillow and Upstart. Steve Kovac has those. Steve? Yeah, John, I'll start here with Zillow. Shares are about 2% here after beating on the top and bottom lines. Earnings coming in at 20 cents a share adjusted. Street was looking for 12 cents. And revenues also a beat here at $474 million. Street was looking for $451.5 million. And guidance pretty much in line here. But I will note just some commentary here in the press release saying that their residential revenue outperformed the broader residential industry by 700 basis points. They said the broader industry declined by 4%. So just a little commentary there.

Shares up 2%, guys. I'll send it back over to you. All right. Let's see. Did you give us upstart as well? I will give you upstart%, guys. I'll send it back over to you. All right. Let's see. Did you give us upstart as well? I will give you upstart as well. I apologize about that. This is, we're seeing shares not moving because the stock is halted, but it was a beat with an 11 cent loss per share. 14 cent loss was what the street was looking for. Revenues was a beat as well at 140 million. Street was looking for 135 million or so.

And then we should also, the guidance is pretty off here. They're guiding towards a key one loss of 25 million. Street was looking for a 5 million profit. So not sure how that would affect shares if it starts trading again, guys. All right, Steve Kovach, thank you. Mike Santoli, back to you on these two names that to me, my questions are about lending, right? In this interest rate environment where so much of the market seemed to be responding to the idea that rates were going to stay higher for longer.

We saw the real estate sector. We saw the KRE really punished today. Did you notice anything about how stocks that are tied to either housing or to lending were acting today? Well, housing for sure. The homebuilders underperformed pretty significantly. They really do track the 10-year in an inverse way. So that makes sense. I mean, they were also pretty extended. It's been one of the leadership areas of the market. To me, with Upstart, it probably is much more about, again, this kind of lending platform, trying to reach certain scale.

You know, they arguably make people make firms credit decisions easier. I don't know. I just like the three year charts of almost all these stocks we're talking about because they just already had their crash three years ago. And now it's about, you know, trying to build some kind of base and convince investors that they have something sustainable. Zillow, I think, is just suffering from just low turnover in existing home sales more than anything else, not just interest rates. Perking up in overtime, though. Yeah, certainly is. Look at that, up about 6%. Well, we've got MGM earnings out as well. Contessa Brewer has those numbers. Contessa. Yeah, Morgan, there were beats on the top and the bottom line, new records to brag about for MGM Resorts. The report's earnings per share of $1.06 adjusted.

The street was expecting 71 cents. Revenues came in at $4.38 billion against consensus of $4.14 billion. Las Vegas is just on fire. MGM Strip Resort set a full year and a fourth quarter record for net revenue and for adjusted property EBITDA. Again, that's the key metric that analysts look for at profitability. Looking at the same metric, MGM China in Macau set a full year record and a fourth quarter record. Both segments handily beat expectations. But you know what didn't? MGM's regional casinos in the U.S. The company blamed a strike in Detroit, labor costs, and insurance.

We've heard that from other companies as well. Bet MGM, the sports betting effort, tiny contributor to the company's bottom line, but notably profitable in the fourth quarter. Right now we're seeing the shares up a little more than half a percent in the extended trade. Guys? Yeah, it'll be interesting to see how that segment does coming off the Super Bowl in this next quarter. Right now, we're seeing the shares up a little more than half a percent in the extended trade. Guys? Yeah, it'll be interesting to see how that segment does coming off the Super Bowl in this next quarter, too. Contessa Brewer, thank you. Adam Crisafulli, I'm going to go back to you because what we've just had is a flurry of earnings reports from consumer-facing names. Travel, we've been getting some really interesting commentary about travel so far in this earnings season.

Marriott this morning, for example, saying leisure travel growth continues, but it's at a slower pace. Airbnb just a few moments ago saying that they're basically outperforming not only street estimates, but travel industry trends, too. Winners and losers here. Yeah, no, I think in the domestic leisure market, I think one of the big issues is just comparisons are getting very difficult because you've had such a robust rebound in that industry for the last year or plus. You know, for MGM specifically, we've heard already from some of its peers when, in particular, we know Vegas is doing very well and we know Macau is seeing, you know, an extremely aggressive rebound given the whole reopening of that region.

The regional market, you know, it's a little bit more economically sensitive. It's a little bit of a lower-end customer, which leaves it exposed to kind of some of the more macro softness that you're seeing in the consumer. You know, but I think in general, the travel industry is performing well. And the slowdown is more, again, an issue of kind of year-on-year comparisons than a dramatic shift in consumer activity. And you're seeing for Marriott and some of the airlines, I've talked about improvement in corporate travel trends, and that's coming back. Yeah, they certainly seem to have pricing power, according to the CPI numbers today. Adam Christofoli, thank you. Mike Santoli, we're going to see you in just a bit. But for now, a trio of gig economy stops reporting just a moment ago,

Airbnb, Lyft, and Instacart. We're going to start with the bad news first as Evercore ISI's head of internet research, Mark Mahaney, joins us. Mark, let's start with Instacart. It is down about seven, six and a half, seven percent after hours. They're laying off around seven percent of staff and say three executives, including the CTO and chief operating officer, are leaving for personal reasons. I don't know. To me, that streams credulity. How do three people all leave for personal reasons? But what's your take on this report? Hey, John, I'll just cut you off there. No, I don't cover Instacart. I apologize. The other two, too. I do cover the other two. But to have that kind of personnel change this soon after an IPO, that's an obvious shock. So you rarely see that. Your shock is as similar as mine.

So we don't have to talk so much about the bad news then. Let's talk about the good news. When it comes to Airbnb, this is a name in a sector travel that seems to have some pricing power. What do you see in this report that perhaps suggests that they can continue to perform? Demand trends are holding up. I think that's what you see. You kind of got that from Expedia, except they had this exposure to air bookings. Airbnb doesn't give you that. Airbnb is purely short-term rentals, and they seem to be either a share stabilizer or a share gainer. And most of their market's probably taking some share from Expedia and their VRBO assets. So it's a high margin, high ROIC return on invested capital business, and they keep proving it out. There's a lot of innovation here on both the host side

and on the consumer side. Demand trends seem very consistent. This was kind of a really solid, solid print with an outlook for the March quarter. I was more cautious about them for the March quarter, but it seems like they're powering through. So, you know, this is a good, solid quarter for Airbnb. The most expensive stock in online travel, and they deserve a premium. Interesting. What are your thoughts on Lyft, given the fact that they're projecting rides growth for this year in the mid-teens year on year? And we know that they're also forecasting for positive free cash flow. A lot of cost cutting starting to hit the

bottom line, it would seem, potentially here. What does it mean for Lyft as it tries to execute this turnaround and tries to, I guess, regain some of the market share against Uber? Well, all those are the right questions, Morgan. I don't think that they'll gain market share against Uber. But the biggest catalyst for many of these stocks has been, can you show that you can kind of turn the corner on profitability, especially names where people have really been skeptical for good reasons about their ability to generate profits.

And now they're putting the stake in the sand. They did this, by the putting the stake in the sand. They did this by the way, they did this a few, two years ago, and some big free cash flow goals that they had to walk back from. I think the market's giving them a lot more credibility. You do have to do management in place here. And they have been doing some pretty thoughtful things in terms of new products that are coming out. They're being pretty careful with their expenses. And overall, ride sharing demand is actually holding up very well. Gig economy is recovering and driver supply is improving too. You knew that from Uber. You're hearing it again from Lyft. So these ride-sharing businesses are really recovering very nicely. They have been for the last two years and we think they'll continue

to do this next year. There's just a big gap up, you know, catch-up trade on the part of Lyft. So hats off to them. They're turning the corner on profitability. They're flowing with Uber. They gain share. They can maintain share. And it's a big growth business. Good for them. All right. So we've got some tailwinds in terms of driver supply. But then you also have all of these labor dynamics afoot. You have this Valentine's Day strike for, I think, what, two hours tomorrow that's going to involve some of the Lyft drivers and Uber drivers and DoorDash drivers and others. You have the Biden administration issuing a rule that could curb gig work contracting as well. How real is the risk here around labor, at least stateside, in an election year? Well, I may be wrong, but I think the labor risk has been overstated. I think

it was thoroughly tested two or three years ago. I ago in California. You know, we debated this. We passed Uber and the gig economy companies won very strongly in a progressive state like California. That means they'll win in every other state, too. And the underlying truth behind this is that on every survey I've seen, drivers, not every driver, but the vast majority of drivers like working with gig economy companies for all the flexibility that it gives them. So I just I don't think labor as an issue is going to I think it's a fading issue. I know you'll have these strikes from time to time. Maybe you're wrong here, but I think it's a fading issue for these companies. Yeah, it seems like investors are agreeing with you because shares of Lyft are now up 32 percent. Mark Mahaney, thanks for joining

us. Thanks, Mark. Don't miss a First on CNBC interview with Lyft's CEO tomorrow. That's at 7.30 a.m. Eastern on Squawk Box. We got more earnings. IAC results are out. Steve Kovac has those numbers. Steve. Hey, Morgan. Yeah, shares up about 2 percent on this.

Revenue is coming in right in line, $1.06 billion. As for earnings, though, we cannot compare the EPS at $370 to our estimates, but the fourth quarter adjusted EBITDA was $157 million. That's above the estimates of $125 million. And just because MGM's reporting today, we should point out these comments here in IAC's release saying how their minority investments in MGM and Turo generated what they say is record fourth quarter revenue for IAC. Guys, I'll send it back over to you. A little pop there. All right. Steve, thank you. Thanks.

Robin Hood's earnings calls kicking off in just a couple of minutes now. Up next, an analyst with a buy rating on that stock is going to tell us what he wants to hear from management. Overtime will be right back. Welcome back to Overtime. Shares of Robinhood are moving higher in overtime. You can see up about 15 percent right now. The company posting a surprise profit in the fourth quarter. Joining us now is Dan Dola from Mizuho. Dan, I mean, you were bullish

on this name going into this print. And it looks like based on one of your recent notes, we've got profitability sooner than you expected as well. And not just that, but some other pretty strong numbers here, including net positive transfers, which they say came from every major brokerage competitor and record revenues of 37 percent year-on-year growth. Walk me through the results and where they go from here. Yeah. Hey, thank you again. Thank you for the kind words. I remember last time we met, I think I mentioned like you own Robinhood for the long term. Remember that? And that's kind of how I think about this today. Like everything they're firing literally on all cylinders, right?

Not only they beat revenue, but to me, the three most important KPIs are first, the mouths are rising. Remember, we talked about the UK launch. I expect from here for that metric to be even stronger. The retirement, right? They went from 390 million accounts. So sorry, 390,000 accounts to 490,000 accounts. So massive growth in retirement. The ARPU there went from $2,800 to $3,500.

So all these KPIs that we've been watching are moving in the right direction. But in my view, that's just the beginning. The fact that crypto trading has made a comeback here, as we've seen Bitcoin and some of the other cryptocurrency assets move higher here and emerge from their crypto winter, the read through there, especially as we do look to Coinbase earnings later in the week, which I know you're not nearly so bullish on. So I actually I was surprised the crypto revenue actually missed our estimate, which I'm proud of, because that's the part that I like least about them. I do think that going forward from here, there's going to be a lot more ETF trading.

So it's not going to show up in crypto. It's going to show up in equities, right? So if you're trading Bitcoin on the ETF, that's equities. The issue with Coinbase, this is not a good read across for Coinbase because the major issue that's haunting Coinbase is the take rate compression, which is, I think, kind of the February surprise that we've been talking about. So it's sort of a little bit apples and oranges. Dan, I just wonder, is this it? After this move, it's near 14, 13 and a half, 14 a share in overtime right now, Robinhood is. And it hasn't been really at this level or spent

much time here since it tumbled down from way higher in the kind of meme crazy pandemic time. I mean, what's left? Can they really take share from the Fidelity's, from the Schwab's of the world, or are they hitting their heads on the ceiling right now? No, I think, I really think this is just the beginning because now they're going global. I mean, they're already a global brand with, it's really interesting. They're a global brand without a global presence like everyone you go to europe you go to you know latin america everybody knows robin hood every market they go into they immediately get traction that's what's happening in the uk right now so i think this is really just the beginning of sort of robin hood becoming an established broker for younger

people but then also expanding and moving up markets slowly. So it's like the early days of Charles Schwab. All right. Well, hey, you're right about PayPal, right about Robinhood. So we've got to listen to you on this one. Dan Dolla, thank you. I don't know if we can put, was that Lyft I saw on the screen? That was up now 50%. Look at that. 52% after hours. You just got to take another look at that. We keep an eye on these things, not just when we're talking about them. That is a monster move, reminiscent of ARM just a few days ago. Got to watch overtime.

Winner stay late. Somebody's winning in Lyft this afternoon. That's right. And it was a very aggressively downed tape today, in my dad. It was. And as Mike Santoli told us earlier, that helps perhaps in some cases like this. Well, we're not done. Chipmaker Global Foundry is beating profit estimates, issuing weaker guidance. Up next, the company's CEO is going to break down the quarter in an exclusive interview with Overtime.

Akamai Technologies falling right now, down about 4.5% in overtime. Fourth quarter revenue coming in light of estimates. The guidance for Q1 about in line, but revenue for its largest segment, and that is security now, came up short of analyst expectations. As I mentioned, the stock down a little more than 4.5%. All right, another earnings mover today. Global Foundries shares ending the day down 2%. The chipmaker out with earnings this morning, beating on the top and bottom lines.

First quarter revenue guidance coming in below analyst estimates, though. Joining us here exclusively, Global Foundries CEO Thomas Caulfield. It's great to have you here. Thanks for being here. Thank you, Morgan. Thank you, John. So let's talk about what you're seeing in the current quarter, given the fact that Q1 revenues missed and that you did talk about remaining cautious on the outlook for 2024. How does it speak to what you're seeing across different end markets, inventory corrections, and other dynamics that are afoot? Lots of impact there. So let's maybe start a little bit with GF. You know, our results are always based on an amazing team we have, especially in the down part of the cycle that 2023 left us with and kind of carries over to 2024. So I'd be remiss if I don't give a shout out to the

Global Foundries team. When I think of 2023, I remember this was a year that everybody thought the second half would be strong and persistent high inflation, high interest rates, consumer spending down, that the year became pretty flat for the industry. If I look at what GF did in 2023, if you look for like for like our peer group, that means semiconductor companies that play in the same end markets with the same technology type of portfolio. We did pretty well. We were on the high end of that performance. We were down 9 percent. Revenue down 9 percent, almost 800 million, but EPS down very modest, right? We still produce about $2.25 versus our peak year in 2022 at $2.38. So really, really gritty performance by our team. So as we head into 2024,

which is to your question, what do we see? The good news is we talked about inventory peaking in third quarter of 2023. And now what we've just seen through a lot of earnings, that inventory started to actually come down. That's the good news. The other end of that is while it's coming down, it's still higher than historical norms. So for us, we think this industry, the semiconductor industry in general,

except for certain pockets, and we'll talk a little bit about end markets in a second, is it needs about another quarter or so to keep working that inventory down and start to get more to the natural demand that's not just working off inventory. And so we see if it's going to be an up year for our industry, then it's going to require a strength in the second half. Get interest rates under control because inflation is under control. Get consumer spending again and keep bleeding down that inventory. I mean, we've also seen, starting to see this shift to more advanced chip making, including in areas like communications, infrastructure, data center.

How does that affect you, given the fact that it's not an area where you're manufacturing? We have tons of our customers that say, I can't afford to be in single-digit nanometer. It's for applications that's all about high-speed digital compute, lowest power per transistor when the transistor is on, the types of technologies our customers need for the end markets we serve. It's how do you minimize power when the device is in sleep mode, when it's waiting, like a surveillance camera, like a chip in a car where power usage and energy efficiency is a premium. And so the market is still heavily dominated in the types of technologies we produce. Your question before that, where do we see strength in markets, is for us, automotive

was a great outcome for us. We went from $320 million in 2022 to over a billion dollars in 2023. Great growth. Even with some of the softness that you hear from others, we still think we'll have meaningful growth this year because of the range of applications we service. And even if units are somewhat soft, content per car continues to grow. What about the macro? Because one of the things that you called out at the beginning of the earnings call was customers grappling with tighter monetary policies and kind of a hope that that would ease up. But then we've got the CPI number today, which is suggesting to a lot of people and to investors that maybe things won't loosen up so soon. So to what degree is that going to affect your outlook for the year? I think that's back

to what I was speaking to. Look, it's good news that it's down to 3.1. It's a little bit higher than kind of the call was around 2.8, 2.9. So it's not way out of whack. It would have been nice if it was a beat on that and coming down sooner. And I think this is really coming down to at what point does inflation get under control so the Fed can loosen interest rates so consumers feel more confident to spend on durable goods? And that's why I think the combination of those dynamics

plus bleeding off inventory means this is really a second half of 2024 for our industry, kind of writ large in the broad range of our industry. So when we look at microchip, when we look at J. Bill, we're both talking about similar sorts of, well, demand questions overall for the kinds of sweet spot, not the leading edge manufacturing, but that core stuff that you guys make. Is that a decent proxy for also how you're looking at the market? I think it's a little bit broader than that set, but there certainly would be in their Jables a little bit different. They do assembly where microchips, more of a manufacturing company and a semiconductor company. They would be a subset of a bigger group of, say, 15 stocks that I think's a good proxy

for where we are. Sure. Quick question for you. Chips Act funding, we're starting to see more of it come down the pipe. Your trusted foundry expectations that you're going to see some sort of funding here this year? Look, I think global foundries plays an important role in the world semiconductor industry and in particular here in the U.S. And it's important that we participate in a program like that. These programs are under confidentiality, so we can't talk about it. But I would tell you,

I'd stay tuned on that one. I think the White House wants to start getting this money deployed so that the chip industry can come back home. Yeah, of course, you know, semiconductors are a proxy for geopolitical dynamics, something we've talked about in the past. Great to have you here on set, Thomas Caulfield of Global Foundries. Thank you for having me. We have a news alert, a 13F filing from Baupost's Seth Klarman and Leslie Picker has those details. Hi, Leslie. Hey, Morgan. Yeah, the first notable 13F filing as of the fourth quarter. Bow Post in its filing disclosed that the firm pared back a stake in Alphabet, this is Class C shares, by about 23%, selling about 882,000 shares during the quarter. The value as of the end of the year,

about 416,000. That stock was up a little bit during the fourth quarter, up about 7%, I believe. We don't know kind of how it's shifted in the six weeks since, how the position has shifted in the six weeks since. 13F filings are as of the end of the quarter, but still interesting nonetheless. Ballot Post selling down about 23 percent, about a quarter of its stake in Alphabet. Morgan. OK, Leslie Picker, thank you. We've got to add that to the list, the 13F filings and whale watching. That we're going to be doing this week.

The market selling off after the 10-year Treasury yield spikes following a hotter-than-expected inflation reading. Up next, Mike Santoli on how that could impact the outlook for interest rates in the market. Plus, what a lift for Lyft. It hasn't been in a $20 a share territory for about 18 months. Those shares are skyrocketing after a profit beat better than expected booking guidance, but that looks like a short squeeze to me. Overtime, we'll be right back. The blame or credit for today's sell-off, depending on how your position goes to the hotter-than-expected inflation print for January, up a bit over 3% from last year. Most of that gain coming from shelter prices. And Mike Santoli is back with a look at the reaction in treasuries.

Mike? Yeah, John, it was dramatic. And let's map it according to where the 10-year treasury yield has been up to this point. We got up to 4.33 or so. Four and a quarter was sort of the upper bound of this range since the December Fed meeting. It's going to be blue right above that. So it brings us back to the very end of November. What I find interesting about that is the S&P 500 was way lower, like 4,500, you know, 5, 6 percent lower.

So it shows you the stock market can, over time, you know, try to make its peace with a given level of yield, even if it does mean that the Fed is not going to actually be as generous. In fact, back here, when we were popping above 3%, that was really tough for the market to handle, the stock market to handle. So this is definitely a test. We'll see where it goes from here, but still well below those levels from last fall. Didn't want to highlight the chart of progressive. This is a big auto insurer. It's been one of the strongest non-tech charts in the market.

Why? Because 20%, that was the annualized increase in motor vehicle insurance prices in today's CPI report. It's been one of the fastest gaining areas of prices. Hasn't calmed down. Now, the question is, how much of this has already worked through? How much is left to go? That's a big part of the services inflation, guys. Yeah, strong green flow in that progressive stock chart. So I got to go back to the markets overall, because, Mike, you've been telling us for weeks now that once we get above that 5000 level on the S&P, it would be natural to expect a pullback. This I mean, it was an exciting day, but it doesn't feel necessarily like in and of itself. It's the scale of pullback that counts as a pullback.

What do you say? Right. If it were just this, it's going to just be like a blip. If it's just, you know, less than 2 percent down. Obviously, nothing goes all in one direction. You might find us find our footing here. But, no, that's right. I mean, I think it's logical to expect when the market gets as overbought as it did and you start to come into a tougher seasonal period late in February, at minimum, you know, three to five percent pullbacks happen really for no reason

at all sometimes. And now we might have some reasons. So we'll see if that's where it goes. A five percent drop would just bring us back to sort of where we kind of broke out in January in the S&P 500. So it wouldn't be a big deal. But again, along the way, it sometimes feels like it's tough to handle. I believe it was Tracy Chapman who said, give me one reason to stay here. There you go. Yeah. And of course, we're only back to levels of about a week ago on the S&P after today's move lower. Mike Santoli, thank you. Check out Upstart. The stock was halted earlier. It's reopened. It's now down sharply in overtime after reporting weak guidance, down about 23% here. And coming up next, OpenAI Chairman Brett Taylor on his new startup

and the biggest opportunities in AI right now when Overtime returns. Welcome back to Overtime. Well, you might know Brett Taylor as the former co-CEO of Salesforce alongside Mark Benioff, or the former chairman of Twitter who negotiated the sale to Elon Musk, or as the new chairman of OpenAI installed after the Sam Altman boomerang week back in November. Well, today, Brett Taylor is announcing a $110 million round of funding for AI startup Sierra, which he co-founded alongside former Google Labs chief Clay Bavor. I spoke to him about the startup coming out of stealth and why he joined OpenAI's board.

Well, I'll start with just the personal. I, like so many others in the technology space, was just really worried about OpenAI that weekend. Clay and I left our jobs to work in this space because we're so passionate about the potential of this technology and you have this incredible mission driven nonprofit and it felt for a moment like it might not exist so you know I chose to take on the role of chairman in large part just out of a sense of open eyes mission being so important for the world and at Sierra you know we're we're building a solution for businesses. So we actually build on a variety of different models. And in fact, if you chat with the Olakai agent to

exchange your shoes, there's probably four or five different AI models that are invoked to decide what to do at that point. So what does Sierra do? Well, it helps businesses set up their own conversational AI models to interact with their customers. Now, he says it could be a bigger shift in user interface than the Web 2.0 work that he and Clay were doing at Google 20 years ago. I would argue it's actually even more significant than Web 2.0. We think that the impact of conversational AI on consumer experiences will be on par with the internet. You know, fundamentally, in 1995 you needed a website if you wanted your business to exist digitally. Maybe in 2005 you needed a profile page.

Maybe in 2015 you needed a mobile app. Well now, every company in the world needs an AI agent, because your customers just want to have a conversation with you. And what's so interesting, if you saw, you know, ChatGPT was the fastest consumer service in history to get to 100 million consumers. It's because we're building on all of these previous technology trends. And we think that the adoption of conversational AI will dwarf them all. The three of us also talked about Sierra's culture, led by founders very familiar with Google Docs, Google Meet, Salesforce's Slack.

Clay told me it's an in-person workplace, though. We are proudly based in San Francisco, and we are an opinionatedly in-person company. Brett and I felt from the earliest days of the company, building a new company, a culture, and everything that comes with that, that it was really important to be together in person. And so we are. Our employees love it. We in fact have lunch together every day as a team. It's one of the things that I think we both really look forward to in a given day.

And so we're very much in person. Well, John, I think there's really a difference between science and engineering, you know, and sometimes when you're building software, you know how to do it. And as an old boss used to call it, it's a simple matter of programming. You just need to get it done. What we're in with AI right now is true science. We're building new capabilities

that really fundamentally didn't exist before. We have a lot of researchers on our staff. We have an old Princeton professor who's leading our research team right now, and we're really inventing new ways for companies to interact with their customers and how AI agents are built is a fundamentally new concept and new technology and you know it's not one of those things that we felt you know you could do just over Slack we really felt like that congregation around the proverbial water cooler the whiteboard the lunch table is really necessary when you're doing pure invention.

Mentioning of what Adobe CEO Shantanu Narayan told us at the beginning of the pandemic, if you're just continuing a project or executing, then remote is fine. But if you're looking to build something, invent something new, you need to get together. Yeah, it makes sense. I mean, I don't think we're talking enough either about what AI agents are going to mean in terms of disruption to outsourced call centers in other parts of the world as well. Yeah. One to watch. Well, up next, we are counting down to the earnings calls from Robinhood and Instacart, which kick off at the top of the hour. Stay with us. Let's get a quick look at shares of Lyft, which are now up only 21%. Lyft's CFO correcting the press release saying

adjusted EBITDA margin expansion will be 50 basis points, not the 500 that was in the release. I mean, if you had a position in that stock one way or the other, you've got some questions and some feelings right now. We can see that continuing to come down right now and over time. All right. It was a lot of movers in general, though, today. And of course, we're going to get more tomorrow, John, including Cisco after the bell. Yeah, you never know what to expect. That's for sure. For now, that's going to do it for overtime. Fast money begins right now.