Closing Bell - Closing Bell Overtime: Big Tech Earnings, Fed Insight, and Market Movers 1/29/25

Episode Date: January 29, 2025

It might be the most important hour of earnings season: Meta, Microsoft and Tesla all report their latest numbers — and set the tone for what comes next in the market. Adam Crisafulli of Vital Knowledge and our Michael Santoli kicks things off before we hear from the companies. Key earnings on deck include Microsoft, Meta, Tesla, IBM, and ServiceNow, with exclusive CEO commentary from Jon. Dan Ives of Wedbush joins to break down Microsoft, Meta, and Tesla results. Later, Gil Luria of D.A. Davidson offers deeper analysis on the tech giants' earnings.The Fed kept rates steady and Cecilia Rouse, President of the Brookings Institution, and Apollo’s Chief Economist, Torsten Slok, providing crucial insight on what investors need to know from Fed Chair Jerome Powell's latest.Jon shares exclusive sound from VF Corp. CEO Bracken Darrel on the company's turnaround efforts and Morgan checks in on the transports with an exclusive interview with Norfolk Southern CEO Mark George. 

That's the end of regulation. Brinker International ringing the closing bell at the New York Stock Exchange. Will Dan Group doing the honors at the Nasdaq. Stocks mostly lower in a choppy session as the Fed holds rates steady and signals potential concerns on inflation, while Nvidia pulls back on fresh worries about export controls. Now, attention turns to one of the most important hours of earnings season. That's 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, buckle up for a massive afternoon of quarterly reports that could set the tone for the entire market, headlined by Microsoft, Meta, and Tesla, along with IBM, ServiceNow, and many more. A key focus on AI commentary and spending plans. You're going to have all the breaking numbers and analysis throughout the hour. Plus, we've got a great lineup to dissect Fed Chair Powell's comments, including Apollo's Torsten Schlack and former Council of Economic Advisors Chair Cecilia Rouse. But as we await the wave of earnings results,

let's bring in Vital Knowledge founder Adam Crisafulli and CNBC Senior Markets Commentator Mike Santoli. Great to have you both here to kick off this big hour. Adam, I'm going to go to you first because we finished fractionally lower across the board for all the major averages. We know yields ticked up. The attention is going to turn here to mega cap tech, but we did get a Fed that is sitting on its hands just a few short hours ago. Yeah, so I think the Fed, they threw a wild card at two o'clock with the statement change. And then at 230, Powell kind of disavowed that change. And we got a message that's been very consistent with kind of the last couple of weeks, the last

few months of Fed communications. They're happy with where growth is. They're relatively pleased with inflation. They still see disinflation happening. You know, and it's going to be a couple more months before they move again. So the market was looking for June before this meeting, and they're still looking for June as the next meeting where they will cut. And so it was kind of a wash at the end of the day, I thought, to the overall Fed messaging. Adam, hang on. We've got Microsoft earnings out. You can see right there, shares are lower on your screen. Steve Kovac has the numbers for us. Steve. Yeah, Morgan, these shares are lower despite beats on the top and bottom lines. We're seeing EPS come in here at $3.23. That's a healthy beat over the $3.11 the street was looking for. Revenue,

a slight beat here, $69.6363 billion versus the 68.78 billion expected. And Azure growth was right in line at 31%. Street was looking for 31.1%. We see shares selling off about 5% here. I'm going to keep digging in, find out what's going on, and get back to you. But those are the top and bottom lines for now. We see shares off a little more than 5%, guys. Okay.

Adam, I'm going to go back to you because I cut you off. Any thoughts here on the initial print from Microsoft? Yeah. So, I mean, it looks like the quarter was fine. Remember, Microsoft is one of these companies where you get a lot of incremental information on the conference call, so late in a couple of hours, and that will be key, you know, quantitatively and qualitatively, especially qualitatively, where we hear about CapEx, DeepSeek, and then the relationship with OpenAI. So the quarter seems okay, but just remember there's going to be a lot more to come going forward. Mike Santoli raises the question, these results do, of what role currency's playing for

multinationals. I mean, I keep bringing it up, but I'm curious how much investors are factoring that in before they hear the commentary, how much of this isn't even human beings factoring it in and how careful we have to be about reading through on these numbers, which we're going to hear in the call on a forward-going basis. Yes, the dollar was strong in the last quarter, but I don't think that the full effect would have necessarily played through to the results being reported right now. It has been an overhang over software to some degree, but not really evident in the stocks. So knee-jerk reaction, it wasn't exactly a blow-the-doors-off margin of victory in terms of revenue versus expectations. Maybe that's accounting for the initial setback again, as well as the fact that we do have a relatively richly priced stock where the bull story has been well known for a while. I want to mention Tesla results are out as well. That stock down one and a half,

two percent initially. We are going through it. We'll bring you those numbers as soon as they're ready. Adam, Chris, a fully we're not talking about the Fed as much as we used to, I guess, in a way because they're doing what they were expected to do. But the interplay between that and what the new Trump administration seems to want and expect is certainly interesting to watch. Yeah, absolutely. And Powell was pressed on that a lot during today's press conference about the implications of tariffs and how this will affect growth and inflation going forward. And, you know, I think the Fed's in the same position everyone else is. We're all waiting to see. You know, we had actually some incremental news today. Sorry, got to interrupt you again, Adam. Tesla earnings are ready.

Phil LeBeau's got them, Phil. John, this is a miss on the top of the bottom line for the fourth quarter for Tesla. Take a look at the stock. And as it moves right now, you're seeing that earnings per share coming in at 73 cents a share, three cents shy of estimates of 76 cents a share. Revenue, 25.71 billion. That is below what analysts were expecting. They were expecting 27.265 billion. So again, a miss on the top and the bottom line.

We're going to dig into the report, see if we can get you some of the key numbers within the numbers, including automotive gross margins, excluding the zero emission vehicle credits. Guys, we'll send it back to you. All right, Philip. Oh, thank you, Adam. I'm going to kick it back over to you, too. We got shares of Tesla down five percent right now. We also know expectations were arguably elevated going into this. Certainly the stock was it's had a monster run since the election. Yeah, absolutely. So, you know, on the one hand, expectations on the near term business were not too elevated. So we already got deliveries. You know, we know the core auto business is not performing particularly well. There are very elevated expectations around the ancillary businesses. So whether

it's self-driving, whether it's robotics. And so that will come on the call when we hear from Musk kind of describe those other parts of the business which aren't impacting the income statement yet. So it's not going to show up in the Q4 report. But it's all of that intangible aspect, the non-auto parts of the business. And that's really what drives this stock. So if this were just trading as an auto company, it would be a lot lower. It's the other parts that will really kind of determine how this trades over the next 24 hours. Okay. We're still monitoring for some more earnings reports. In the meantime, Mike Santoli, I want to go back to Microsoft with you, because in the release, they're talking about an AI annual run rate being achieved of $13 billion.

That's up 175 percent year over year. And I think it's higher than expectations going into this print. Yeah, I mean, obviously, that's a nice number. It's not necessarily the major swing factor in the near term for Microsoft. But obviously, this has been a market that they were there right at the beginning. And I think there's been general sense of perhaps disappointment or at least, you know, not great enthusiasm about the rate of uptake right now for the current products, the co-pilot that's out there. But there's no doubt they're positioned to capture some of this.

Obviously, again, on the calls when you're going to hear a lot more about what their assumptions are in terms of the pacing of how they come to benefit and when they're going to be getting these payoffs and what they think they're getting for the expected $80 billion in incremental cap-outs. Okay. Our Steve Kovacs got some more on Microsoft. Let's get to him with that, Steve. Hey there, John. Yeah, just some more AI data in here. Of that Azure growth number that I gave you, that 31 percent Azure growth in the quarter, Microsoft is saying 13 percent of that is coming from 13 percent of those points were coming from artificial intelligence services. That number keeps growing most quarters in a row. It was 12

percent last quarter. But one thing that we could talk about why we're seeing stocks down 4% here is sequentially Azure growth overall is down a bit. It was 33% growth last quarter, and we're seeing sequentially here it's 31% for this current quarter. This was kind of expected, but also we're just seeing that slowdown seems to be rattling things here. We're also going to be listening for guidance on Azure growth. There's some expectation that further on into the year, we might see a re-acceleration there. But in the meantime, not liking these Azure numbers right now,

you see the shares down a little less than 4% right now, John. All right, Steve, thanks. Mike Santoli, I know it varies from company to company, but with how rich the major indices are overall, and particularly the mega caps, how does that position some of these stocks reaction-wise? I mean, we're seeing it in Microsoft. I mean, you might argue that given the numbers that came out from Tesla, the reaction might have been a bit muted. Yeah, arguably so. Honestly, John, I don't think we saw enough reductions in analysts forecasts coming into the number to really lower the bar across the board. So, yes, it's going to be company by company. Yesterday, we thought it was kind of a shrug for investors on the Starbucks number and guidance. And then today we heard from the CEO and that stock took flight. So very

difficult to handicap in near term. But I think in aggregate, people expect good things from this market and from earnings. And so arguably, it might be a little bit tougher to really please. Okay. Meantime, IBM earnings are out. Seema Modi's got those numbers. Seema. John, IBM's quarterly earnings coming in 17 cents above Wall Street estimates. So a big beat fueled by artificial intelligence bookings. That's clients looking to IBM to accelerate workflows, lean on AI to bring costs down. IBM's artificial intelligence business has now grown to more than $5 billion. That's $2 billion more than last quarter. CFO Jim Kavanaugh telling CNBC, quote, DeepSeek validates their strategy that open versus a closed model is much more ubiquitous.

Back to the numbers, total revenues for the quarter did come in line. Software grew double digits and now represents about 45 percent of total sales. Gross margins worth noting better than expected. Currency was a headwind. But for 2025, when you look at free cash flow, they expect that to increase to 13.5 billion. It was in the 12 billion range in 2024. And shares are responding positively, John, which shares up about 9% here in overtime. Yes, indeed.

Seema Modi, thank you. I did also speak with IBM CEO Arvind Krishna about these results. I want to bring you some of his commentary on the software business. He said software did double digits, 11%. Great performance in Red Hat, which I know you still follow in the corner of your heart. commentary on the software business. He said software did double digits, 11 percent. Great performance in Red Hat, which I know you still follow in the corner of your heart. So Red Hat did 17 percent. And we kind of like said that, look, 23 was going to be a trough. They're going to improve to 2024. But we did even better than I think we were expecting. He also talked about the consulting business, which has been a tough go.

They're operating a little bit, a couple points below the market when it comes to growth. But he said the good news there is we had an outstanding signings quarter. We did $9 billion in signings in the fourth quarter. We're entering with a great book to build. When we look at that, it kind of points to recovery will happen. But I'm not going to look at you and say recovery is going to happen in the first quarter. We also talked about those currency headwinds that Seema mentioned. He said, actually, currency is probably going to be more like two and a half. That's points of headwind, I think, as opposed to just two. So it is significant. It's going to cost us a lot. That's mostly the top line. We're not looking to say that our bottom line cash flow

earnings get overly impacted because we can go manage that depending on where the costs are and how we get things. Now, I also talked to Arvin about DeepSeek and he, similar to the CFO, talked about it being a validation. He said, I think the last time I talked to you, I said, look, I think small models are going to be the winner, not just big models. And I believe that we need to drop the cost of both training and inference, I believe, to three percent of the current number, one over 30. I think DeepSeek was just a proof point of the journey that we have been on inside IBM. And as we look at how those shares are doing so far in overtime, where are they? Now up 11.5%. Big move for Big Blue. Yeah. More on the call, I guess. Yeah. Mike Santoli,

want to get your thoughts on this? Because this has been a turnaround story over a number of years. Sure. And, you know, IBM is getting credit for the tangible progress it's making in being a participant in all these big, important trends. Obviously, a lot of hard work in kind of hiving off some of the slower growth assets. It now has a valuation that's basically at a 20-year high. It's above 20 times earnings. But if it's an AI play in some measure, that's not very expensive in the current market. Oracle's well higher than that right now, even after Oracle was was quite cheap. So it feels like things, you know, IBM is finally able to tell this story that they are, in fact, in the parts of

the business that you'd want to see. For years, I've said there's kind of an Accenture inside of IBM. If people wanted to recognize it, you mentioned consulting is not that strong, but Accenture trades even higher at a valuation than than IBM. So it feels like the street is comfortable giving them credit for it. Duly noted. And in the meantime, ServiceNow results are out. That stock is lower right now in overtime by, let's see, about 9 percent, perhaps a little bit more than that, but it's moving around. ServiceNow reporting Q4 numbers in line on the top and bottom lines. Also a strong dollar story here to be aware of. Q4 revenue was $2.96 billion in line with consensus. So is non-GAAP earnings per share $3.67. Now looking forward, ServiceNow saying it's making some significant

adjustments in how it sells software, moving to some elements of a consumption-based model for AI and data solutions. That's going to mean giving up some initial subscription revenue to drive adoption. It means investors are going to have to factor that into the guidance number. ServiceNow is saying to expect Q1 subscription revenue between $2.995 and $3 billion, which would be slightly below the expectation of $3.03, but you'll want to factor in this new revenue model. I did speak with CEO Bill McDermott about these results and this consumption shift. He said on consumption, talking about how that's factored into one of their higher tier plans already,

as they, that being customers, consume them, we give them a very nice allocation for how much they can consume, talking about the AI capabilities, and only when they go above that metered level does the consumption pricing kick in. Also, which is a win-win, because they wouldn't be using it a lot if they weren't getting a lot of value out of it. I also talked to him about the impact of this strong dollar of currency, ServiceNow being a global company as well. Similar to IBM, he said, it's currency, John. The FX headwinds are pretty dramatic. It's a couple hundred million dollars. It's obviously coming from EMEA.

It's coming from the U.K. It's coming from Japan, also Australia. You have a strengthening dollar since October, which is absolutely creating an FX headwind. If you look at CRPO and RPO, those are pipeline measures. You're talking about a couple of percentage points that would be tied up in FX. I was asking him there if there's a growth slowdown or if this is an FX headwind that we're saying. And he's saying it's FX. Also, a Google Cloud partnership announcement here.

I asked him more about what that's about and what it brings to customers and potentially revenue. He said, basically putting ServiceNow on the Google marketplace, and we're focusing on things like simpler procurement, faster deployment, and compatibility with all the native GCP tools and infrastructure, and providing agentic AI out of the box. This is going to drive a no-swivel-chair world of complete automation in the enterprise, and this will be big in both the public and the private sector. Also, a partnership with Oracle that they're announcing here.

Talk to him about DeepSeek as well and what he sees this meaning for service now. McDermott says, these models are being commoditized at a faster rate than anybody could have possibly dreamed of. I met with one of the founders of the most well-known one, and he said the price this year is one-sixteenth of what it was last year. So the overall trend is super good for platform and application vendors since the differentiation will happen at that level and not at the LLM level, Morgan. So he's saying it's going to be good for ServiceNow. Stock now down about 8.5% on overtime. We'll see how investors digest this partial consumption model shift and the FX as well. Adam Christofoli, I want to go to you on this one, too, because ServiceNow has been one of the real software high flyers in the AI space.

And it's taken a bit on the chin, at least initially here. Yes. I think the change in the pricing structure is significant. And this has been a concern for software investors now about how they will incorporate AI. Not only how will they incorporate AI into their products, but then how will they charge customers for it? Usually it has been on kind of a per seat basis, but in theory, AI will disrupt that and mean fewer seats. And so they have to kind of change how they're pricing the product. And that can create some near-term disruption in the income saving. And we're kind of seeing that to an extent with service now.

And then also, like you said, FX is definitely going to be an issue for a lot of international companies, including software. But for me, it's the consumption, the pricing change on consumption versus seats. That's definitely significant. That can reverberate throughout all of software. All right. Adam, thanks.

Mike, I'm sure we'll see you in a bit. We're just getting started here on Overtime. Up next, Wedbush analyst Dan Ives joins us here on set with his first take on the Mag 7 results so far from Microsoft and Tesla. We're still awaiting results from Meta. And Apollo's Torsten Slocke and former Council of Economic Advisors Chair Cecilia Rouse will be with us to break down Fed Chair Powell's message to the market. What a day it's been and we're still going. Overtime is back in two. welcome back tesla out with results at the top of the hour let's get back to phil aboe with more from the report phil a couple of nuggets from within the report and the conference call coming up at 5 30 is really where we're going to get greater detail on a number of things energy

storage which has really been a growth area for this company, up 50% is the expectation for 2025. More affordable models, they've talked about this for some time. They are reiterating that they expect to begin volume production in the first half of 2025. And then cyber cab volume production, that is expected to start in 2026. That's a reiteration of where they've been before. Again, shares of Tesla down a little over 2% following a miss on the top and the bottom line. Guys, back to you. All right, Phil, thanks. Now let's bring in Dan Ives, Webber Security Global Head of Technology Research, more on Tesla and Microsoft as we're still waiting for Meta's results. Meta's late, but Dan Ives, Tesla is here,

and it's way off the lows here, now down just 2% after missing on the top and bottom. Is it about these cheaper vehicles? Yeah, I think there's two key things here. One, committing first half of the year that they're going to produce those. I think there was a lot of concern that they weren't, this potential could push out in 2026.

They doubled down there. And then the other thing that's important in terms of cyber cab and Autonomous basically saying robotoxy you'll start to get parts later this year full volume production 2026 that look 90% of the story right now. It's about AI Autonomous cyber cab what I believe is that. Obviously, numbers itself a little sort of soft, but that's the key. And there's probably a stock that's going to be up tomorrow. Microsoft's also off the lows. What matters here, particularly in the commentary, this is a earnings call where we get a lot more on guidance. Yeah, of course.

And this is one you always really have to wait till guidance. But $13 billion in terms of that AI trajectory. I mean, that's really what the streets focused on, because I think the conference call is going to be bullish. They doubled down on the $80 billion in terms of cap back, especially this week, you know, here with DeepSeek and everything else. I think this is another one. I look at this numbers. I feel more bullish because that ultimate AI number, I mean, that's really the lotto ticket right now if you own Microsoft. I want to go back to Tesla for a second. How important is it, given everything that he is focused on right now, including in Washington, for Musk to be on the call? And when you do think about something like robo-taxi and autonomous driving, especially on a day where Waymo is announcing that it's going to expand its own taxis to 10 new cities, How much now hinges on that policy green light happening with this administration? Yeah, I mean, look, it comes down to the deregulatory environment,

the Musk bet on Trump, Trump, you know, in terms of the bet for the ages. Now you need to see it in terms of the autonomous roadmap from a federal perspective. It is important. Obviously, Musk is on the call, talks about robo-taxi. He talks about, ultimately, the timeline there, the view of autonomous, unsupervised FSD. Look, Morgan, these are really the things that are going to drive this stock. I mean, look, earnings itself are important in the next quarter or two. But I believe when you look out, I believe the AI autonomous story, that's worth a trillion dollars alone. That's really going to be front and center on this call, along with John asked about first half of the year, making sure doubling down. These lower cost vehicles are out there. That's how you get to 20, 30 percent type of volume

growth in 2025. Given the fact that we had this deep, deep seek shakeout in the market to start the week, we just got some comments from some of the CEOs, tech CEOs that John just spoke to with earnings. We're still waiting on meta. Zuckerberg just earlier this month actually had some interesting commentary on the Joe Rogan podcast about deep seek. How to think about what this does to drive down costs and who the beneficiaries are going to be, because there are going to be beneficiaries. Just thinking about some of the comments from ServiceNow, for example. Yeah, and look, I mean, it comes down to that 65,

60, 65 billion, they're going to reiterate that probably three times in terms of capbacks for Meta and Zuck, 80 billion from Microsoft. Look, DeepSeek, it was a scare, but all, and I continue to view it, it's bullish for the overall AI revolution because going back to ServiceNow, Palantir, Salesforce.com,

it's the use cases. It's software. That's not slowing it down in terms of what we saw in DeepSeek. And I think if you look at that, it was a shot across the bow. But ultimately, what we're going to look out in the next week or two in terms of earnings, the AI revolution is actually accelerating. And I think that is really going to be sort of a narrative that we hear even tonight Meta's teasing us It's way late. What do you want to hear from them? Maybe even when it comes to llama and its deep-sea commentary Yeah, I think three things you want to hear one 60 to 65 billion just that reiteration just showing the confidence to Zuckerberg and meta from a cat backs perspective to Talking about all three billion plus DAUs. How are you going to monetize that?

Showing the strategy from an AI perspective. And then, of course, advertising. High team growth. Our checks here at WebBush continue to be much more bullish when it comes to what we're seeing on the advertising side. They're in a position of strength. And I think you've seen it with Zuckerberg in some podcasts and even when he's talked about, this is a comment

that's on the offensive. They know that they're in a position of strength. Now show it, monetization. Obviously, they want to be on this conference call. I think it's really an important one, probably one of the most important ones in the last four or five quarters.

And we know, at least from what we heard from Meta last week, that the CapEx continues at up to $65 billion this year. Yeah, look, deep sea, we continue to view it. It's going to be just a small blip in what's going to be a multi-year AI revolution. It is not changing, and you're going to see that tone from these tech CEOs tonight. Okay. Dan Ives, great to have you here. Thank you. Okay. Dan Ives, great to have you here. Thanks. Well, we have much more reaction to the MAG7 results ahead as we do continue to wait for those meta results. Come on, meta.

After the break, a check on retail. CEO of VF Corp., which owns brands like Vans and North Face and Timberland, is going to join us fresh off earnings. We'll be right back. Welcome back. We're still awaiting Meta's results, which we had expected at the top of the hour, but some other headlines on Meta just crossing related to President Trump. Let's get to Julia Borson with the details. Julia. Morgan, that's right. I'm here awaiting those Meta earnings. But in the meantime, the Wall Street Journal is reporting that President Trump has signed an agreement calling for meta to pay $25 million to settle a 2021 lawsuit that Trump brought after the company suspended his accounts. This was following the attacks on the U.S. Capitol

back in 2021. Now, according to this Wall Street Journal report, $22 million of that will go towards a fund for Trump's presidential library, the rest going to legal fees and the other plaintiffs who signed on to the case. We reached out to Meta for comment. They say they are neither confirming nor commenting on this Wall Street Journal report, but we are still just awaiting the earnings results, which should have been out about a half an hour ago. Metashares have been trading around the flat line. Back over to you. All right, Julia Borsten, thank you. Meantime, we have Levi Strauss earnings out. Pippa Stevens has the details. Hi, Pippa. Hey, Morgan. Well, Levi Strauss is following here on Like Guidance,

but let's start with the Q4 results for their EPS. It was 50 cents adjusted. That did beat estimates by two cents. Revenue coming in at 1.84 billion. That was also ahead of the 1.73 billion that Wall Street was looking for. But again, their guidance not great with the company noting a hit due to FX. So they are being impacted by a higher dollar for the full year of 2025. They see net revenue down 1 percent to 2 percent versus expectations of up 3.7 percent. Now, one quick note here. this is their Q4 results, so it's through December 1st, meaning it does factor in Black Friday, but not the entire holiday sales season. The stock here down some 5 percent. Morgan? All right, Pippa Stevens,

thank you. Don't miss Jim Cramer's exclusive interview with Levi's CEO. That's coming up at 6 p.m. Eastern on Mad Money. And sticking with retail, quite a ride for VF Corp stock today. The owner of brands including North Face, Timberland and Vans reported Q3 revenue and EPS this morning that beat expectations, made a new 52-week high at the open, but shares dropped during the day, perhaps because of the Q4 revenue guide. Q3 revenue was $2.83 billion versus $2.75 expected. Adjusted EPS, $0.62 versus $0.34. The Q4 revenue guide was to about a midpoint of $2.12 billion versus $2.25 expected. I spoke with VF Corp CEO Bracken Darrell exclusively this morning about his progress turning the company around.

We've reduced the non-lease debt by about 40% in the last year. We've put the global operating amount in place that's taken... We had two years of... It was two years ago, the last time we saw growth in the Americas, we saw growth this quarter. You know, we've got, as you said, we've got two of our biggest brands are growing. So we're really getting there. But it's a long-term play. And I really want to make it something that's big and long-term growth sustainable. We also talked about how much of the turnaround is left.

Vans has an overhaul coming soon. And VF Corp's major brands have new executives leading them. The cost work, Darrell told me, should flow into upgrades in how all the brands operate. I think that the cost alignment is kind of an outcome of something else, which is where I'm really trying to put an upgrade to all the processes we have in this company to best in breed. And we certainly weren't that when we started. We're on our way there now. When we do that, we're then going to standardize a lot of these prices in the company, not centralized, but standardize them so that we can take the creativity out of that and put it on the products

that are coming out, as you said, and the marketing that we're doing. Trying to put the focus on keeping the brands independent, reinvigorating them. Today's dip in the stock takes it back to about last week's levels. All right. Well, it's time now for a CNBC News update with Angelica Peebles. Angelica. Hey, Morgan. A Manhattan judge just sentenced ex-New Jersey Senator Robert Menendez to 11 years on bribery and corruption charges. Menendez was found guilty in July of extortion and acting as a foreign agent for accepting bribes, including gold bars and cash, in exchange for using his influence to help the Egyptian and Qatari governments. President Trump announced this afternoon that he plans to sign an executive order directing the federal government to prepare the U.S. Navy base at Guantanamo Bay to hold up

to 30,000 undocumented immigrants. The president made the announcement just before signing the Lakin-Riley Act into law, which requires undocumented migrants be detained if charged with certain crimes. And Amazon was sued today by consumers for allegedly tracking them through cell phones without their permission. In a proposed class action suit, consumers allege Amazon secretly tracked their movements by giving developers a code to embed in their apps and sold the collected data, which included sensitive information such as religious affiliations and sexual orientation. Amazon has yet to respond. Back over to you guys. All right. Angelica, thank you.

We've got much more ahead on all of today's After Hours action. Tesla turning higher. We still want to see those results for Meta. And after the break, Apollo's Torsten Slocke and former CEA chair Cecilia Rouse is going to join us to dissect Fed Chair Powell's message today and what he said about how Washington policy could impact the Fed's goals. Be right back. Welcome back. The Fed keeping rates unchanged and raising some inflation concerns in its statement. In his news conference, Chair Powell was asked by our Steve Leisman about President Trump's demand to a Davos audience that the interest rates drop immediately,

saying he wouldn't comment on it, but noting he's had no contact with the president. Meantime, President Trump just posting on Truth Social, blaming Powell and the Fed for failing to stop inflation. Well, joining us now is Torsten Slocke from Apollo Global Management and Cecilia Rouse from the Brookings Institution. She is the former chair of the Council of Economic Advisors. It's great to have you both here. Torsten, I'm going to kick off this conversation with you because we went into this meeting. We knew that the Fed was probably going to hold its price into the market, that we're

not really expecting the Fed to do much in terms of rate cuts until summer, if indeed the data warrants it. Your thoughts on the change to the statement and then Powell's, I'll call it maybe a little bit of a walk back on the change to the statement. Well, he did say very clearly, Morgan, that inflation was indeed at a level where it's a little bit more worrying. Inflation was, in their language, no longer making progress and moving towards the 2 percent target. He did step back a little bit and say that this was not intended to send a signal. But if we take it in combination with the four policy areas where we don't know and which you also recognize what's coming, namely tariffs, immigration, fiscal policy and regulatory policy. Some of these policies could be quite inflationary, in particular tariffs, but also restrictions

on immigration. So that's why they really took a much more policy driven approach here instead of being data dependent. They're really more becoming policy dependent. Cecilia, I want to get your thoughts on these comments from the president, because the first thing he says in this post is that because, quote unquote, because Jay Powell and the Fed failed to stop the problem they created with inflation, I will do it by unleashing American energy production, slashing regulation, rebalancing international trade and reigniting American manufacturing. Just in terms of what that does do to the economic picture, especially since some of those things like deregulation could actually be deflationary. So what the president says in that statement, we already have energy prices are low, which is why or have been coming down, which is why we see that overall inflation is actually lower than core inflation. But, you know, the bundle of—it's not just that

bundle of potential actions. When you combine it with the potential tariffs and the uncertainty that's created there, the immigration actions and some of the uncertainty that's being created there, the reforms to TCJA or the extensions that they're proposing, a lot of that really has a potential to be inflationary. So I think there's a lot of uncertainty. And that's how I interpreted the Fed's actions today, which is suggesting we still have a labor market that's doing very well. We have consumer spending that's doing very well. We have inflation that hasn't gotten to where they would like you to see it. And there's a lot of uncertainty. So they're just going to hold. All right. Well, I want to mention better late than never. Meta's results are out. The initial move in the stock is down about he says is going to make the economy better

and I guess be deflationary. But clearly that won't happen immediately. Well, as we're discussing here, I mean, the factors that go into thinking about the outlook is always a list of bullet points that have different implications. For example, if you do tariffs, of course, by definition, the vil bygget være højere, og derfor vil inflationen af definitivt være højere. Uanset om du gør det i én gang, eller om du spreder det ud over tid. Ligevel vil restriktioner på emigration også forhåbentlig løfte vægterne, i hvert fald

i de tre sektorer, hvor ufattelige emigranter normalt arbejder, nemlig i konstruktion, de arbejder i agrikultur, de arbejder i servicen, til sidst på grund af Pew. Så de forskellige politikker har forskellige implikationer, så det er meget svært for in construction. They work in agriculture. They work in services, at least according to Pew. So those are different policies, have different implications. So it's very difficult for the Fed, and that's also what Powell was saying today, to come up with a very clear answer to what does the outlook look like at the moment. So that's why I think the conclusion for markets is that the Fed has just almost stepped back from saying we are not really relying on a forecast, but they are more relying on what's coming on the policy front. Well, sorry, we've got to cut this short. Torsten, Cecilia, Meta is moving. We've got to get to those results. Thanks to both of you. Julia Borsten,

you got those Meta results. The stock was down and then it was up a little bit. Now it's down a little bit again. John, Meta beating on the top and bottom lines with earnings of $8.02 per share. That's higher than the $6.77 estimated. Revenues of $48.39 billion, beating estimates of $47.04 billion. Daily active people, that's all the people who are using all of Meta's apps, $3.35 billion. A hair ahead of the $3.32 billion estimated. But if you want to look at why the stock is trading lower, it seems to be based on the first quarter revenue guidance. The company guiding to a range of $39.5 billion to $41.8 billion. That compares to an estimate of $41.7 billion. So this means

that the midpoint of the range is well below analyst consensus estimates. And then they reiterate the CapEx in the 60 to 65 billion dollar range, as Mark Zuckerberg announced last week. Stock is bouncing around. We're going to be digging into this report and we'll be back to you with more. A lot of bouncing, Julia. Thanks. Up next, live reaction to Meta and Microsoft's results and what to listen for on those earnings calls. Be right back. Meta results just came out. The stock right now down fractionally. Let's bring in D.A. Davidson Managing Director Gil Luria. He's got a buy rating on Meta, also covers Microsoft with a hold. Gil, big beats on the top and bottom here for Meta in Q4. Q1 guidance looks like a miss until you factor in currency with the strong dollar three-point headwind. How do you see it?

That's exactly right. I think the knee-jerk initially was to the guidance being lower than consensus. Once you factor for the currency, the guidance is good. If they hit the high end of that guidance of 11 to 18 percent constant currency growth, investors will be very happy this year. We'll make this probably the fastest growing mega cap this year. So if they can give us those kinds of numbers and give us visibility into that and how investment is feeding into that, I think investors will be happy. You're doing double duty tonight, Meta and Microsoft. What do you want to hear from both of those calls? And given the results we just got from both of those names,

how compelling are they at these levels? So Meta stayed on track. And again, assuming they don't say something negative about the rest of the year, they should be in good shape. There will be a conversation about CapEx and how the increase in CapEx is gonna drive that core business. That's a unique situation for Meta. For Microsoft, it's absolutely critical that they guide to an acceleration of revenue in Azure

for the second half of the year, as they've said before. Because if you look at this quarter, what happened is they decelerated again. Azure missed expectations in spite of that heavier capex the reason Microsoft has been the underperformer in the mega cap space is that they increased investments hugely and yet are seeing revenue deceleration that needs to reverse itself or they need to talk about how they're gonna rein in CapEx and rein in this investment.

They had 29% decline in free cash flow in the quarter. They can't keep doing that without having a drag on margin. So they need to give us an acceleration in revenue and or tell us that CapEx is going to moderate. Okay. Gloria, appreciate it. Shares of Microsoft down 1.5% and Meta are up about 2% right now. Up next, much more on all of the overtime earnings action, including some under-the-radar names that are making big moves. Stay with us. Welcome back to Overtime, and let's get back to Julia Borsten with more on Meta's report. Julia?

Digging into Meta's numbers here, Meta's revenue accelerated to 21% growth in the quarter. That's up from the 19% growth they reported in the third quarter, and analysts had been expecting revenue growth to actually decelerate. But Meta did guide to decelerating revenue growth in the first quarter, saying that revenue growth would be 8% to 15% year over year, 11% to 18% on a constant currency basis because of those FX headwinds. They don't give full year guidance, but they did say this. They say, we expect the investments we are making in our core business this year to give us an opportunity to continue delivering strong revenue growth throughout 2025. I'm sure analysts will be parsing what strong revenue growth means.

I also want to point out here, John and Morgan, that daily active people growth of 5 percent that was consistent with the growth of Q3. That growth was expected to slow. And then one last thing, the reality labs losses much less than anticipated, about half a billion dollars less than anticipated. Back to you. All right. Julia Borsten, thank you. We've got a number of transport stocks just reporting results as well. That's after Norfolk Southern reported this morning. So up next, Norfolk CEO tells us exclusively what drove the railroads earnings beat. And a few weeks ago, I reported on a story about a tech startup, Toptal, and its legal battle with one of its Silicon Valley financial backers. We've got some updates and clarifications on that story, which you can check out at cnbc.com slash Silicon

Valley battle. Be right back. Shares of Norfolk Southern ending the day higher after reporting an earnings beat this morning. Welcome back. Shares of Norfolk Southern ending the day higher after reporting an earnings beat this morning. The railroad is a turnaround story, and investors are focused on its ongoing efforts to boost service, efficiency, and in turn, profitability. Mark George, the CEO, telling me in an exclusive interview he expects the momentum to continue this year, in part because the railroad is taking market share, but also because the economic backdrop is, quote, supportive. It's a little bit of both. I think the consumer remains strong. We're seeing that in our intermodal volumes. But at the same time, we know we're recapturing share because of our improving service product. So I'd say on the merchandise side or the industrial product side, we're finding more and more opportunities to take back some share that we had lost after a couple few years of weak service.

And on intermodal, it's a combination. We're taking share off the highway as well as we're taking basically growth that's in the marketplace. Now, intermodal has been a bright spot for rail results really across the industry this quarter, even as volumes of some goods tied to the industrial part of the economy have been soft. I asked George if he expects industrial activity to begin to recover this year. I think there's a good chance that we start to see even more activity this year. I mean, we had, gosh, 149 active industrial development projects happening on our network this year. These things take a time. They take time. I'm sorry for them to really start to gain traction and

manifest into a live factory with volume. I think that activity is picking up for sure. Now you can watch more of my exclusive interview with the CEO of Norfolk Southern at CNBC.com. And we will have much more on transport's earnings and what they're signaling about the economy tomorrow when I speak with UPS CEO Carol Tomei in a first on CNBC interview. That is going to happen on The Exchange at 1 p.m. Eastern. Interesting tape. I mean, breathless, right? Meta made us wait.m is still up about eight and a half percent here in overtime i didn't mention it but i also talked to arvin krishna it's been

five years since he was named ceo he didn't start the job officially until april but he was named in january 2020 the stock is flirting with levels up near 250 here in overtime that would put it back more years than this five-year chart will tell me. Yeah, it'll be interesting to hear what guidance is from Microsoft on the call. We had major averages fractionally lowered. This time tomorrow, Apple results as well. That does it for us here at Overtime.

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