Closing Bell - Closing Bell Overtime: CEOs of Chewy And Pure Storage; Tom Lee Makes The Case Why Big Tech Is Still Cheap 5/31/23

Episode Date: May 31, 2023

The S&P 500 and Nasdaq closed May higher but the Dow fell over 3%. BD8 Capital’s Barbara Doran breaks down the market action and earnings from Salesforce, Crowdstrike, Okta, Nordstrom, Chewy and Pure Storage. Funstrat’s Tom Lee on why Big Tech stocks still aren’t too rich for investors. Chewy and Pure Storage stocks popped after strong quarterly results. Chewy CEO Sumit Singh broke down the company’s recent quarter and its e-commerce strategy. Pure Strategy CEO Charles Giancarlo on AI and its latest quarter. Plus, why Intel was the top performer today.

We got the scorecard on Wall Street. A lot of earnings to go. Winners stay late. Welcome to Closing Bell Overtime. I am John Fort. Morgan Brennan is out today. We've got a cascade of earnings reports coming your way this hour, including results from Salesforce, C3.ai, CrowdStrike, Okta, Nordstrom, Chewy, PBH, and Pure Storage. We're going to bring you all of those numbers. We're going to speak with the CEOs of Chewy and Pure Storage ahead of their calls with analysts. And, you know, when you look at these groupings that we've got of different types of stocks, you've got a couple in security, right, with CrowdStrike and with Okta. You've got a couple in enterprise with C3 AI and Salesforce and definitely pure storage as well. And you've got a coupling consumer with Nordstrom, right? And then with Chewy, where maybe you're dressing your pet. Your pet is certainly eating. Let's bring in CNBC Senior Markets Commentator Mike Santoli on all of this.

Mike, you were just mentioning minutes ago how stocks, indices overall rebounded from where they were a bit at the beginning of the session. It's hard to know whether we're watching for more debt ceiling data now for investors or whether we're really looking at what the Fed is going to do on interest rates ahead of this jobs report. There's so much for the market to sort of digest and put the finger in the air about every single day. No, there is, John. And I think at this point, the market has placed the debt ceiling situation in the settled file at this point. Obviously, we can get a bad surprise on that.

The market could have to rethink it. But it's moved on to the next thing. And that's both the next thing to worry about and the next thing to potentially hope for. To worry about is this trade tradeoff between the economic growth picture and what the Fed's going to do in response to it. Earnings, we're at the tag end of it, but with some pretty important kind of quasi bellwethers on the macro economy yet to report. And it's been very uneven, but I would say that in general, we're looking at a flattish earnings picture, looking out a couple of quarters rather than one that's really eroding quickly. So you want to see

how the numbers after the close today feed into that mode. And we got a little bit of relief on the Fed speak side today when you did have some officials coming out and more or less handicapping that the likeliest scenario in a couple of weeks in the June meeting is a pause. We'll just skip a meeting and then maybe resume hikes if necessary. A small comfort to the market, which is, let's keep in mind, very much at the top end of its range here at 4,200, with not a lot of stocks participating in that upside in the last couple of months. Mike, was that jolt's number, the job openings, not a surprise? It seemed a bit tighter than one might hope, right? You know, the labor market still kind of tight.

We don't know what that means for wages. We don't know what that means for the overall employment numbers that we're going to get on Friday. But maybe not exciting for the people who are hoping for more of a slowdown. At the headline level, John, yes, it was. It did reflect a little more labor market tightness. There were many more job openings than anticipated. But internally, things like the quit rate, which declined, that's a pretty good sign of whether workers feel like they have power to quit for a better job. That's back down to roughly pre-pandemic levels. So that's more consistent with a decelerating labor market. And it was

interesting that I think the market required Fed officials to come out and sort of render a verdict on how it should be interpreted. And at this point, it was, OK, maybe not so hawkish. All right. Well, maybe that's a good thing, though it's not definitive either way. At least the debt ceiling stuff is moving toward a definitive conclusion. Mike Santoli, thank you. Joining me now, too, is BD8 Capital partner CIO Barbara Duran. Barbara, we got some earnings that we expect to be out any minute now. So, of course, you're watching that data. But what are the most important macro points that you're watching now that the debt ceiling drama appears to be near its denouement? Right. I think the debt ceiling drama is pretty much

over, although we could still have a little, you know, fingernail biting situations. But I think obviously it's going to be looking at jobs and inflation and wages. We're going to get average hourly growth on wages on Friday. People will be watching that. Now, I don't think we're going to see a lot of change. I think this has all been incremental. And I think people have jobs, good wages and also the savings. The savings are still there from the pre-pandemic or from the pandemic and are being will be there likely and through year end. So I think that is good padding. So we're just going to continue now that earnings are pretty much done for the quarter. I'm looking at the things we've been been looking at the entire time. So are we to look for signs of credit tightening, which Fed Chair Jerome Powell said could serve as sort of a quasi-rate hike,

even if they don't have to hike rates in June? Everything I've been hearing is that, you know, maybe there's some tightening in credit availability, but not that much tightening. No, I mean, that's what we're hearing. I mean, before we had the regional bank crisis, you were starting to see credit tightening a bit. It was still available, but it's more expensive. And of course, we still could have a few things happening in the regional banks. You're seeing deposit outflow slow down, you know, but if rates keep going up, and I think they will, I'm not sure the Fed will raise this time. I think we're pretty near the end, but you're

going to see rates higher for longer because service inflation is sticky. And I think that's going to lead to some credit issues as different loans like commercial real estate, as these loans come due and you have to roll it over at higher rates. I mean, it's going to that is going to affect the credit tightening. We'll see. We got to watch that carefully. I do. Speaking of watching carefully, we are watching these names that are reporting earnings. Salesforce numbers are out. We are going through them right now. It is choppy after hours, but about flat.

Okta numbers also out. Going through those, and our reporters will bring you that information when it's available. That one sharply down in its initial move after hours by, let's see, at the moment, about 12 percent. Mike Santoli, I believe you're still with us. As we continue to watch these earnings numbers, such a mixed bag, I'm really curious about, as usual, the guide, because we're now looking into the second half of the year where so many people have been saying to expect a recession of some sort. We'll see how severe or whether it comes or not. How much are the earnings numbers, if at all, going to point to that?

I mean, I think it has been completely mixed by sector and by consumer group. I do think that in general, it was not as bad as feared because you saw a real wave of negative guidance coming out of the early part of earnings season. It's become a little bit more balanced since then. And I think what's really mostly gone on is analysts are using the first quarter beat to essentially update their full year estimates. And it's kind of netting out to flattish. So it's not really inspiring. It's not making the market look much cheaper. But it's just keeping things from really falling away in terms of valuation. Well, perhaps a little inspiration from Nordstrom earnings.

Those are out. Pippa Stevens has the numbers. Pippa. Yeah. Hey, John. Well, Nordstrom reporting a surprise adjusted profit of $0.07 per share that excludes charges related to the retailer's exit from Canada. Wall Street had been expecting an eight cent loss, but it is unclear if analysts are stripping out the impact

from the Canadian store closures. But when including the company, when including that, the company posted a net loss of two hundred and five million dollars for the period compared to one hundred and nineteen million dollar profit during Q4. Revenue came in slightly ahead of expectations at $3.18 billion. Now, during the first quarter, Nordstrom's sales were down 11.6 percent, with the company attributing the weakness to tough comps coming out of the pandemic. Another area of concern, cuts in operating costs are not keeping pace with the steep drop in sales. The retailer did, though, reaffirm its full-year guidance, noting sales at Nordstrom Rack improved throughout the quarter with the strongest performance in April. Those shares up about 5% now.

John? All right, Pippa, thank you. I mentioned Salesforce earnings being out. Frank Holland has those numbers. And, Frank, this initially popped a little bit on the release, and now it's down a little bit. What do the numbers show? Yeah, we're popped a little bit on the release, and now it's down a little bit. What do the numbers show? Yeah, we're still looking through the numbers right now, John. But as you can see, shares of Salesforce down now more than 3.5%,

despite a beat on the top line and a beat on the bottom line. Profit $0.08 above estimates, looking deeper in the numbers, including the guidance. The company provided Q2 guidance that was above estimates and reaffirmed its full-year guidance. Also looking at some other key metrics including current remaining performance obligation, it beat the guide. It came in at 24.1 billion, the guide was about 23.86 billion. Also beat on margin, operating margin of 27%. Some commentary here in the report from Mark Benioff says we are leading the next

major revolution in CRM, Obviously their key product there, infusing trusted, secure, generative AI across the entire product portfolio. And then the company's CFO, Amy Weaver, basically addressing indirectly some of the activist investor pressure the company faced, saying we took another strong step forward as we accelerate our transformation

and profitable growth strategy. So again, looking deeper into the numbers, not clear right now why the stock is falling, but a beat on the top line and a beat on the bottom line. Profit $0.08 above estimate. The company provided Q2 guidance that was above estimates and reaffirmed its four-year guidance for it to continue looking at these numbers and get back to you. Frankie, I imagine that is a challenge. If you beat in the current quarter and you're guiding to slightly better, but you don't raise your full year, Some investors might be concerned about that, but I know you continue to look through. And speaking of, you're going to get a lot more information about all this from Jim Kramer's

exclusive interview with Salesforce CEO, Mark Benioff. That's coming up at 6 p.m. on Mad Money. Barb, when you look at Salesforce and you can either and we can talk about Nordstrom, too, as you try to parse out the one-time issues there, do you think it really is the full-year guide kind of staying in line with where it was when you beat this quarter and you're a little bit higher than what you might expect for next quarter? That stock is down about 4% right now after hours. Yeah, I'll tell you, any tech stock reporting this week after the big surge last week, I think is going to have difficulty. If you look at the other names that have just reported, whether it's Okta or CrowdStrike,

they're all down right now. And I think there was a bit of a run-up after NVIDIA reported everybody's playing catch-up. And, of course, Salesforce has AI product. They're integrating it throughout their company, but it's not as pure play as some of these others. So I think there's a little bit of that in there, too. And remember the last quarter, they really blew away the numbers and the stock had a big surge then because it looks like they are finding the right balance between profitability and slowing revenue growth, because that's what investors want to see now is how the margin growth is, since revenue growth is slowing, even though they are dominant player and will continue to be in their space. All right. Mike Santoli, the most interesting thing to you so far out of these Salesforce numbers?

I mean, I do think it is. It is the guy. I was looking right here. I thought they actually did perhaps goose the full year guy, but maybe I didn't have the previous numbers right there. It's probably going to be the call, frankly, and then how they characterize the bigger picture opportunities here. As I was mentioning earlier, you know, this is a company that is really about halfway through a comeback, back to its peak valuation. There's room in there, I think, for the market to get excited about a growth story if they can believe the numbers that they set out for the next few quarters. Yeah. market to get excited about a growth story if they can believe the numbers that they set out for the next few quarters. Yeah, of course, NVIDIA is setting the bar pretty high for everybody in

this environment as well. Hold on. It sounds like we're ready with CrowdStrike results as well. Let's get to our Steve Kovac with those numbers. Steve? Yeah, John. So CrowdStrike shares fallen about 10% here despite some beats in the top and bottom line. Let me give you the results for the last quarter. EPS coming in, $0.57 versus the $0.51 adjusted the street was looking for. Revenue was also a beat, $693 million versus the $676.4 million they were looking for. And guidance looks pretty good. It's also beating expectations on the top and bottom line. So not sure what's sending stock down here, 11%. So I'll

keep digging through the release for you on that. And then let me move over to Okta because that also just came out to their earnings. Shares are also falling with Okta down about 9% here, John. EPS was a beat though, 22 cents versus the 13 cents adjusted. Street looking for and revenue also a beat, $518 million versus the510.5 million the street was looking for. Again, really good results here. Not sure what's ending it down so significantly, but we'll keep digging through and get back to you with updates, John. All right, Steve, thank you. Barb, yeah, it's a bit of a puzzle.

The Q2 revenue guide from CrowdStrike, the range from 717 to 727 million. The street was looking for 718. So the midpoint is definitely a beat. Now, granted, the full year guide might be seen to be a little bit conservative since it's still right around, you know, 3 billion. And that's what the street was expecting, you know, given the the relatively strong guide for the current quarter. I wonder, I mean, you want to say there's a pattern when there's not, but there's some conservatism perhaps shaping up for the back half of the year, which is what we started off talking about, is that people have been expecting some kind of slowdown. Yeah, well, it's interesting. I want to see once we know a little bit more and, as you said, can dig into the details.

For both Okta and CrowdStrike, they were both seeing a flattish customer count growth. And that's what I'm wondering if that improved at all, because that's sort of critical in what we're watching here. And also what they're saying, because AI uptake, I mean, NVIDIA, I think, surprised everybody in how quickly, you know, AI is being taken up. And, of course, both of these have exposure, but it's a question of the guide and what they're saying. Because I think expectations are pretty high, again, after NVIDIA. But it's really, I think, about customer account for both of them. So we have to wait and find out what's going on there. Yeah.

Mike Santoli still with us. How much of this might be because all of tech got a bit of a bid after NVIDIA? I mean, I'm taking a look at CrowdStrike's moves. It's been climbing quite a bit throughout the entire month. And so it falls 10% after hours where it is right now. That takes it right back to around eight days ago level-wise. So do we have to keep this in perspective in what these stocks have been doing up to this point? Absolutely. And yeah, this is the reflex response based on, you know,

the the the machine reading the press release and deciding if it was enthusiastic enough relative to how the stock was priced beforehand. So not to say it's wrong, because sometimes you get follow through. But I do think that you've had a lot of these stocks that have moved a long way in a short period of time. And then on top of it, you've had that kind of enthusiasm wave that I guess had people's eyes grow bigger in terms of every single company being expected to have some kind of step function raised guidance like NVIDIA did because of the AI spend. Yeah, we talk about AI a lot in the product side, but it's easy to forget. We've had algos and AI kind of trading all spend. Yeah, we talk about AI a lot in the product side, but it's easy to forget we've had algos and AI kind of trading all along.

And that's sort of what's happening when the software is reading these releases, got to listen to the calls, which is why, of course, we've got fast money and beyond. Mike, we'll see you in a bit. Barbara Duran, thank you. Thank you. And as you can tell, we've got a lot more action ahead on the show, including interviews with the CEOs of Chewy and Pure Storage before they speak with analysts on their earnings calls.

And up next, Fundstrat's Tom Lee joins us on this final day of May with his outlook for stocks into the summer. Overtime is back in two. Chewy earnings are out. The e-commerce pet supply and service provider has reported. Pippa Stevens has the numbers. Pippa. Hey, John.

Yeah, that stock is up 13% right now after the company beat top and bottom line estimates for the quarter. Chewy earned 5 cents per share while analysts were looking for a four cent loss. Revenue coming in at 2.78 billion, slightly ahead of the 2.73 billion forecast. Q2 guidance was a little bit ahead of expectations while full gear revenue guidance was in line with analyst estimates. Now, the company did say that net sales were up 14.7 percent year over year, and that their net sales per active customers hit a record high during the quarter. The company also said that their active customers were at 20.4 million, which was down about 1% year over year. Again, that stock up 13%. John? All right. Well, that dog will hunt, as they say in Indiana, where I went to school. Coming up, Chewy's CEO is going to break down those results with us. That is a first on CNBC interview. It was a mixed picture for markets in May,

the Nasdaq posting its third positive month in a row, while the Dow was the biggest loser out of the major averages. Let's bring in Tom Lee from Fundstrat Global Advisors. Tom, I love to have you on. You've got a bold perspective that you always bring. How much higher can the S&P go throughout the year now that we got this debt ceiling issue mostly taken care of? What is the catalyst to move up? John, I know it's a key question because the stock market's up about 10 percent right at the midpoint. And everyone's asking the exact same question. You know, is this a good time to put money to work? Can I make money in the next six months?

I think there are some reasons for stocks to actually advance probably another 10 percent at least into year end to get towards the old highs. First, I do think inflationary pressures, even though it's a mixed picture, are really in a sustained path downward. We're getting sort of like fluky data. But, you know, this week, the used car data really pointed to inflation cooling. You know, that's a huge weight in the CPI. Right. And advanced auto parts suggested that as well. Right. And Home Depot as well. When you got, you know, the auto part prices and the lumber prices kind of hitting them in a way. That's exactly right. And even if this is not showing up in CPI yet, all of the commentary from the CEOs and even the Beige Book support that picture of like future inflationary

pressures are diminishing. Now, that's important because that means the Fed doesn't have to hit the market as hard as it did last year. I mean, that's what made last year so tough. But now we got a Fed that's slightly less hawkish. Now they have to worry about regional banks. So there's a temporary put there. And then we have to layer in the fact that there's a lot of cash on the sidelines. And I think a lot of cash on the sidelines. And I think a lot of guests today talked about that. There is an enormous amount of cash that's unallocated. Part of it is the debt ceiling. Part of it was people waiting for the Fed. But we know as a percentage of market cap, we're almost back to dot com levels. So at the nadir.

But Tom, why shouldn't I believe that the optimism that you're expressing now about why the market could move 10 percent higher is the reason why the market is up 10 percent so far already? And that cash on the sidelines, cash does a lot more on the sidelines than it used to. So why should we assume that the market deserves it? That's a great question, John. Like, you know, how much is discounted? Just like last year was a 27% decline discounting a lot of the hiccups in earnings now. Fundamental investors are going to start to become a little more constructive because when you look at earnings revisions, they have bottomed, not just tech only, but rest of the market.

And when we look at things like technicals, such as price to 20-day or price to 200-day, more stocks are beginning to participate. So even though breadth hasn't been great, I think there's now a chance for investors to say there's a catch-up trade coming. Now, that could come from the autos or it could come from the financials or discretionary industrials. I can't tell you it's decisive yet, but that's really why I think Fang has led. They were the first to peak, first to bottom, now really leading year to date, up nearly 50 percent. I think the second half is a story of a lot of other sectors catching a bid. Well, is it Fang? Because remember that N in Fang stands for Netflix, not NVIDIA. And NVIDIA has just been an amazing mover this year. I mean, I don't even

know how many, I stopped counting really at 150%. It's up in, you know, it's up a lot. And AI has been a big mover in general. So is it, the big stocks have continued to do well, Apple, Microsoft, et cetera, but this AI trade has been crazy. Might that argue that there's enough enthusiasm in the market already and there might not be that much more? Yeah. Well, it's a great question. But, you know, keep in mind, NVIDIA wasn't even heavily shorted into their earnings print and they revised forecasts really by 30 percent. And that's the stock move. AI is something the Fed would like to see continue to actually expand because that contains inflationary pressure. It's like, you know, if you think about the Fed being hawkish and what they're worried about, they're not really worried about AI growing because AI takes away inflation pressures. I almost think that the Fed doesn't't mind that fang stocks are rising I think stocks like

Netflix and even Amazon which have been sort of tail end of the fang. Are also the parts of the thing that could really start to power. A bigger move in tech and discretionary I mean I think they're starting to look. Like even Tesla like

they're beginning to participate and again. That would strengthen and add Brett to the market. Sure would well I love to participate. And again, that would strengthen and add breadth to the market. Sure would. Well, I love to hear your pure perspective on what could go right here. Tom Lee, always great to have you. Thank you.

Thanks, John. Speaking of pure, pure storage, earnings are also out. That stock is jumping more than 7%. Earnings doubling estimates at $0.08 per share. Analysts were expecting $0.04. Revenue also topping expectations, coming in at $589.3 million. Second quarter revenue guidance also ahead of FACSAT's estimates. And we are going to talk to Pure Storage's CEO, Charlie Giancarlo, about those numbers in just a few minutes. And meanwhile, PVH earnings out as well. Pippa Stevens is back with those numbers.

Pippa? Yeah, John. Well, the company that is the owner of Calvin Klein and Tommy Hilfiger, among other brands, beating top and bottom line estimates during Q1, earning $2.14 per share. That was $0.20 ahead of estimates. Revenue coming in at $2.16 billion, slightly ahead of the $2.14 per share. That was 20 cents ahead of estimates. Revenue coming in at $2.16 billion, slightly ahead of the $2.13 billion forecast. The company does see second quarter revenues in the low single-digit range against expectations for 3.3 percent. The EPS guidance, though,

coming in a little bit light here. They forecast that at $2.08 versus street expectations of $2.26. That stock modestly lower right now. John, back to you. Yeah, just fractionally lower. Of course, we'll await the call on that. Pippa, thank you. Now after the break, we're going to talk to the CEO of Chewy about his company's results, which are sending that stock sharply higher.

And we're going to ask what he's seeing from the American dog parent and consumer when we come back. Welcome back. Chewy earnings crossing the tape just moments ago, beating on the top and bottom lines. Q2 guidance a bit ahead of expectations. The full year guide in line. Shares surging up about 15%. Joining us now, Chewy CEO Sumit Singh. Welcome. So last quarter, you talked about a slight decline in active customers because of some macro headwinds. This quarter, you're talking about a Canada expansion. What's happening with active customers and spending patterns in this inflationary environment? It's consumer. Okay. Can you start again? I just got your audio. Yep. Yep. Yep. It's nice to be here, John. Good to see you. What we're seeing, John, is an engaged consumer, right? Our

platform and the value proposition that we deliver is resonating loudly. And so you asked me two questions. One, active customers. Our active customers are steady. You know, we're acquiring customers higher than on a gross ads basis, higher than what we were during the pre-pandemic times. And our large cohorts that we acquired during the pandemic, we're seeing steadying, you know, from an attrition point of view. So overall, we're seeing steadying active customer base, which is a great sign for us to be observing right now. And at the same time, when you look at customer engagement as measured by share of wallet or net sales per active customer, that number is up 15% year-over-year, crossing the $500 mark. So what you're seeing is a large base of customers

consolidating their wallet share to a platform like Chewy. And the proof point is in the 15 percent year over year growth, John. When you look at the pet category, the category grew at about 7 percent and we grew at more than two times that rate taken market share. Well, I've got a cat that we got during the pandemic and we're keeping her. Right. But I'm concerned about some of these other people who might've picked up pandemic pets thinking they were going to work fully remote, especially dogs. And now, you know, that might not be panning out. What are you seeing in this newer cohorts behavior? Are they staying steady in what they're purchasing? Are they trading down to more affordable brands? Are you needing to expand into areas like insurance to

get the most value from your customers overall? Yeah, so we're seeing tremendous levels of engagement, John. So if you look at our revenue, it's comprised of multiple categories, consumables and health, which are non-discretionary categories, which is like food and your healthcare needs, comprises roughly 85% of our revenue in Q2. And those are tremendously resilient categories, which we fulfill with great deal of joy and pride to consumers. There, we're seeing no trade down at all. So to the extent that consumer stickiness is concerned, both on the platform and across these categories, we're seeing tremendous resilience. At the same time, you mentioned insurance. So we have a growing portfolio of healthcare ecosystem. And this quarter, we're announcing the expansion of our insurance plans

with two-scale providers. We're bringing on Lemonade, and we already had Trupanion on the platform. So what that means is, you know, we are now commercially even more ready to go to market with greater price points approaching a wider range of customers. So overall, you know, the proposition of competitive pricing, great assortment, delivery convenience, and the personalized service that we take to market is very much intact.

Sumit, what does that do to your overall customer loyalty and churn numbers? When you get people across multiple product and service categories, they're buying food, maybe they're buying some furniture, I don't know, clothes even, but they're also buying insurance. You know, Amazon, the likes of them, have talked about how Amazon Prime and those subscription services drive product purchases. Are you seeing that kind of pattern as well? We absolutely are. If you look at, let me share two data points with you. So here's what happens at Chewy. So we have, you know, our subscription product is called Autoship. And this quarter in Q2, nearly 75% of our revenue went through this recurring repeatable

subscription service, right? And Autoship program has higher average order values because the attach rates that we see with Autoship, with people combining food and meds and other like toys and treats, it's just higher relative to, you know, the non-Autoship members. That's one. Two, John, what's helpful to understand about Chewy is that our customers, you know, over a period of two to three years end up consolidating their entire

share of wallet over to a platform like Chewy. So year one, they'll spend consistently about $100, $150. Year two, that jumps sharply to close to $300. Our oldest cohorts that are from 2011, 12, 13, they're spending north of $1,200 on the platform right now. So when you combine that statement with the power of the fact that our average share of wallet is $500, and we have over 20 million customers on the platform spending an average of $500, but the oldest cohort spending nearly $1,200, with the lifetime value being closer to $1,400, $1,500, $1,600, you can see the massive amplification that is just built into the platform as customers

consolidate share of wallet. That's one of the prime reasons why Q2 revenue is as strong as it, or Q1 revenue was as strong as it is. Okay. Doesn't hurt. My wife keeps buying cat toys from you as well. So you're welcome. Sumit Singh, CEO of Chewy.

Thanks for being with us. And now we've got a news alert on the debt ceiling bill. Kayla Tausche has details. Kayla. John, lawmakers have cleared a key procedural hurdle to advance the debt ceiling and budget deal struck by President Biden and House Speaker Kevin McCarthy. Just a few moments ago, a rule allowing the House of Representatives to vote on that bill cleared the House. The vote was 241 to 187. That will set up a vote that's expected to happen later tonight, currently scheduled for 830 p.m. And House Speaker Kevin McCarthy is going to hold a press conference after that vote. John, back to you. All right. We continue to look forward to that. Kayla Tausche, thank you.

Up next, this earnings parade rolls on. We're going to talk to the CEO of Pure Storage about his company's numbers and the read on enterprise tech spending when we come right back. Pure Storage earnings out moments ago, as I mentioned, shares popping after earnings doubled estimates, revenue topped expectations. The company also guiding ahead of estimates on second quarter revenue. You can see it there up more than 7.5% at the moment. Joining us now, Pure Storage CEO, Charlie Giancarlo. Charlie, good to see you. So tell me what is driving the upside here right now.

I know that you are a part of Meta's AI supercomputer announcement. AI has been on the lips of everyone who's trading over the past few days. To what extent is that driving any interest in filling your pipeline? Good to see you, John. It's great to be with you again. You know, AI has become a necessary part of almost every earnings call now, no matter what business that you're in. You know, we started our efforts in the AI space now over five years ago, and that has continued to pick up momentum for us. Meta, which you mentioned, the largest AI supercomputer in the world. You know, just offhand, I can think of a half dozen or so AI wins that we've gotten over this last quarter. But the AI wins are across the board, you know, pharma, healthcare, high finance. We're in 10 of the largest self-driving car initiatives in the country. So AI continues to drive the business. What I would say, though,

is, you know, on average, enterprise and enterprise spend is still challenged, but enterprises will still spend if they see their ability to save money in the medium term. And that's an area where we've really put a lot of effort. OK, now, I was just talking to the CEO of Fivetran yesterday, and they're involved in data movement. And of course, if you're moving data and you want to move it quickly, the sort of storage that Pure makes is important. A point that he was making to me is that data is a huge market right now. Lots of people moving data, but not mostly for AI purposes. It's still a niche. So what kind of context would you put this AI excitement in, in terms of the percentage of business that it really is right now and where you expect it to be in a couple of years? AI probably represents about 10% of our overall sales. And I would say it's less than that on average in the storage market, but it is growing. But where AI makes a difference is in two areas. One is that

it's a high performance, it represents an area of very high performance, which means, you know, products that tend to be much more performant and therefore much more expensive. But the second area I think is even more important. And that is that more and more data is going to need to be what we would call warm data, data that can be accessed very more data is going to need to be what we would call warm data, data that can be accessed very rapidly for analysis. And the majority of data today that most customers have is cold data. It's there. It takes a long time to access and so forth. So as data shifts from cold to warm, it's going to drive a lot more momentum towards products such as ours that are high performance

products. That is a really important point that I hadn't thought of is so much of that legacy data that you need to train stuff is in cold storage and you got to get it warm before you can actually use it to train and get more out of it. The last question I've got for you is about the enterprise in the second half. There seems to be a bit of a bifurcation between the excitement about some of these higher end use cases where you certainly play and then the general enterprise demand, which seems to be a bit weaker based on what we saw from HPE's results yesterday. How would you categorize or characterize if you do see that difference, the bifurcation, the difference between the general demand and then the high-end demand? Well, I think on a medium to long-term basis, the excitement and the overall productivity

wrapped around technology is still very high. And so enterprises are still leaning forward around technology. But on the other hand, the macro does matter. And so we have to get through what we all feel is a short to medium term set of macro challenges. And as we get through that, I think we're going to see technology continue to be a growth element for the world's economy. All right. We'll watch every day how that pans out. Charlie, thanks for being with us. Thank you, John. CEO George. Great to see you. Up next, Mike Santoli's back to look at whether advanced auto parts earnings disaster is a warning sign for its rivals, which have been significantly outperforming that stock for years.

We'll come right back. Welcome back. Take a look here at C3 AI. Based on this after hours move, you might think that the earnings were out, but they're not. All of this volume and all of this move is still ahead of the actual report, which we are still awaiting. We will bring that to you when it crosses. We do, however, have advanced auto parts numbers from earlier today, and it posted its worst day ever after this morning's disappointing first quarters earnings report. Mike Santoli back with a closer look at that stock. Mike? Yeah, John, real disastrous earnings shortfall, big guidance write down, as well as a dividend

cut on Advance Auto. Now, take a look at how it's been really underperforming well ahead of this report. The rivals AutoZone and O'Reilly. In fact, AutoZone and O'Reilly, two of the strongest retailers of any kind for years right now. They've considered to be these compounders. They have good execution, buy back a ton of stock, especially AutoZone. And you see, based on a five-year basis, advanced auto parts now down 40 percent. Part of the issue here sector-wide is that auto parts essentially enjoyed a lot of pricing power because inflation was up in that category for years, as we would not be surprised to hear coming out of the pandemic.

You had part shortages that has flattened out. If you take a look at the CPI for this entire category of auto parts and components, it still looks like it's on the upswing. But from right here on, that's like November of last year. You've essentially flattened out after a huge something like 20 percent move over the course of about a year and a half. And so that's creating a little more competition in pricing, pinching margins and also bigger questions about used car values and whether, in fact, some of these companies have catered more to the trade to actual professional mechanics might be suffering a little bit more as the economy slows down, John. Mike, does this perhaps illustrate how, you know, the slowest gazelle in any given category, the one that was having the most operational difficulty with inflation, perhaps topping out

when it comes to some of what they're selling, but labor costs still being high, it's getting harder? Absolutely. You can see it actually going through pretty much every sector. It's the largest companies, the ones with the most defensible franchises have been far outperforming the average one, especially in this kind of a category here where, yes, it's growing, but it's not as if the pie is getting bigger at a very rapid pace. All right. Let's talk about another category, Intel spiking today after bullish comments from a rival CEO. Up next, we're going to tell you who is praising, in a way, the chipmaker and whether Intel's recent attempts at a turnaround are for real. We'll come right back.

Intel was up nearly 5% today, the S&P 500's top performer. Part of the reason why? Well, Jensen Huang, CEO of rival NVIDIA, which has lately taken the crown of the world's most valuable chip company. He had something nice to say. Jensen got a sample of the kind of chip Intel could produce if it were manufacturing for NVIDIA, and Jensen said, quote, the results look good. Now, here's why investors should care. Intel CEO Pat Gelsinger is trying for what I've called the turnaround attempt of

the decade, and revamped chip manufacturing is at the heart of that attempt. It's a tough, expensive slog. Last quarter, Intel reported its biggest ever loss. Investors right now are betting that Pat's going to fail, but there's a non-zero chance that he'll succeed. And Mike Santoli, I don't know how much of that is priced in. Yeah, there's not a lot priced into the stock based on current earnings power. It really is about, OK, it got very washed out. The stock's been trying to base way below the prior trading range it had been in for years. And I think a lot of investors have been viewing Intel as kind of being out in the cold on the newer trends, the newer sort of waves of energy running through this industry. And remember, Intel spends 20 billion a year in capex. I mean, it's a lot of money, a lot of capital to consume

to essentially stay still. So if there's this idea out there, and of course, you know, Jensen Wang was essentially saying that we need a resilient supply chain. Intel could very well be a part of that. And that's kind of one of the things, at least, Intel is counting on to kind of create this new version of its future. Now, also today, the CFO was speaking at a conference, talked about manufacturing, but also said that the current quarter's revenue should come in at the high end of the range, which I guess bolsters the idea that Intel gave us last quarter, that with this inventory flush out, even with a tough economy, things might look better.

Yes, and that exactly, this morning when those comments did hit the tape, it did drive a further pop in Intel shares. So clearly there was at least a little bit of concern along that front that was taken care of with those comments. Well, I'm going to be in Santa Clara at Intel tomorrow, the memorial service for the legend Gordon Moore of Moore's Law. I'll see how much intelligence I can gather there. All right, yeah. Up next, a top analyst reacts to Salesforce's earnings,

tells us what he wants to hear on the company's call, which kicks off in just a few minutes. We'll come right back. Welcome back. Breaking news on J.P. Morgan. Our Eamon Jabbers has the details. Eamon. John, CNBC has obtained a copy of the transcript of Jamie Dimon's testimony in the lawsuit involving allegations that J.P. Morgan enabled Jeffrey Epstein, the sex predator, to commit his crimes by keeping him as a client of the bank. Now, in that deposition, which occurred on Friday, there's really some debate here about who ultimately at J.P. Morgan had the authority to kick Jamie Dimon out of the bank, if anybody.

At one point, I want to bring this to you, Jamie Dimon is asked about this, and he says it was Stephen Stephen Cutler who was the then general counsel of J.P. Morgan. He says Mr. Cutler had the ultimate authority to kick him out if he thought it had gone that far. He was delegating reputational decisions to somebody else. So Dimon there saying that Cutler was the one who had the authority to kick Epstein out of the bank. But we also learn in this deposition that there was an email sent by Cutler back in 2011. Here's what that email says. He says, I would like to put it and him behind us, not a person we should do business with, period. So Cutler in 2011 is expressing that he doesn't want to have Epstein as a client of the bank. Nonetheless, Epstein remained as a client of the bank for a couple of years after that. So a real question here about why that happened.

If Cutler was the one who had the ultimate authority to kick him out, why? If Cutler says in an email he doesn't think he's a person J.P. Morgan should be doing business with, why then is Epstein still inside the bank? Also, we've got some interesting back and forth here on this question of should J.P. Morgan apologize? Jamie Dimon has asked if the bank owes an apology to some of the victims of Jeffrey Epstein's sex trafficking. Dimon issues a long response. It's worth reading in its entirety, but I'm just going to give you a little bit of it. He says, I wouldn't mind personally apologizing to them, not because we committed the crime, we did not, and not because we believe we're responsible, but that any potential thing, what little role we could have eased it or helped catch it quicker or something like that, or get it to law enforcement quicker or get it to law enforcement to react to it quicker, which they obviously didn't, you know, I would apologize to them

for that. Yes. So Jamie Dimon here taking a little bit of blame on himself and on the bank for not getting information to law enforcement faster in terms of information that J.P. Morgan had about Jeffrey Epstein's sex trafficking. A lot of detail here to go through, but we've just obtained this document. It's 418 pages long, John, and we're going through it now. We'll bring any other news as soon as we have it. All right, Eamon Jabbers, thank you. Now I want to get to our Steve Kovach on C3 AI results, which have finally crossed. Steve? Yeah, they just got it in two minutes before the earnings call. It is a beat on the top and bottom line, John. We have a loss per share coming in at 13 cents versus the 17 cent loss adjusted the

street was looking for. Revenue, a slight beat there as well, $72.4 million versus $71.3 million expected. Now, the guidance is a little light. That could be why we're seeing the stock go down a bit. For the full year guidance, they're predicting $295 million to $320 million in revenue. That's versus the street expectation of $317 million. That's a little light, but we did see shares going down significantly even before this report came out. I think I saw it down as much as 12%, 13%, and it's down 13% now, John. Yeah, 14% I saw at one point. So in a way, it's steady from where it was before the report actually came out. Perhaps the commentary matters here, Steve, but maybe given the short interest

in this stock and just the huge volume around it, it looks to me like three times more shares are trading in it versus even Salesforce after hours. It's just, you know, it's just added. I was watching the volume go up like crazy just waiting for this report to come out. I think I saw 7 million in volume or something like that. So, yeah, the call is going to start here in 30 seconds, so we'll get some more clarity on all this. Yeah, and, of course, that stock by market cap nowhere near the size of Salesforce. Salesforce more than $200 billion.

C3 not quite $5 billion in market cap. It just goes to show all of the heat around AI, whether you're talking about NVIDIA, which we got a few days ago, big upside surprise to the guide, or on the software side, C3, which has moved around quite a bit. That's why you've got to watch Overtime. And that'll do it for Overtime today. Fast Money begins right now.