Closing Bell - Closing Bell Overtime: Dow, S&P 500 Cap Best Months Since 2022; RTX CEO On Demand For US Supplies 11/30/23

Episode Date: November 30, 2023

Stocks closed out a strong November today – the S&P 500 posted its best month since July 2022 and 10 out of 11 sectors were higher. Our Mike Santoli breaks down the move and what it means. Earnings from Dell, Marvell and Ulta. RTX CEO Greg Hayes on the demand for US supplies around the world in an exclusive interview. Plus, Elon Musk hosts the Cybertruck unveil. 

Well, the Dow is setting a new high for the year on this final day of November in a month marked by a big rally for the major averages. That is the scorecard on Wall Street. The action is just getting started. Welcome to Closing Bell Overtime. I'm Morgan Brennan at CNBC's LA Bureau today. And I'm John Ford at CNBC headquarters. Coming up on the show, another jam-packed hour of earnings from chips to the cloud to retail. We will get numbers from Marvell, Dell, PagerDuty, Ulta, and more. Plus, we'll bring you an exclusive interview with the CEO of $115 billion aerospace and defense giant RTX ahead of the Reagan National Defense Forum kicking off here in California tomorrow. And we begin with the market as we wrap up a stellar November for the Bulls.

Final tally has the Nasdaq up 10 percent, the S&P up 9 percent, the Dow up better than 8 percent. Bond yields fell sharply this month and oil prices pulled back as well. Joining us now is Chris Heisey of Merrill and Bank of America, Private Bank and CNBC Senior Markets commentator Mike Santoli. Chris, this is a big month yes we're above 4500 on the s&p but kind of also right where we were just at the end of august so it was like two months down and one big month up how should investors think about the setup from here sure uh for the for the rest of the year the month of december but even beyond that

so interesting about this is to see how many of the september october this was a very good but for the most part actually for that first half of august we haven't even reached the highs where we were at the end of july there's a lot of time things are a little ahead of themselves just because we had, obviously, one of the strongest months in 30 years, strongest month since a year and a half ago, but strongest Novembers that we can write about. And it all comes down to the recalibration of yield. Why were investors so nervous in 22?

Reserves went down. The level of monica money but way down of a very high level guilt went way up and those are bad comics and then you start to reverse some of that and now but you're speaking

transparently saying they're done and earnings thing in there it could get a really powerful of them uh... my central and we look at the sectors, the S&P sectors, and how they performed for the month of November, how different are we positioned? What's stronger, what's weaker versus where we were three, four months ago? The main difference in November, really in the last couple of weeks,

since that CPI report on November 14th, has been a broadening out of the market, just away from purely technology and Internet related stocks which had carried the way you look at the spreading of the wealth. You know we mentioned that you know down making a new high. That's obviously not purely leveraged to to the big magnificent seven type stocks. Smaller caps participating they've actually outperformed the Nasdaq 100 in the last couple of weeks. So to me, it's about the market getting a little bit more relaxed about how the real economy is going to do. And therefore, we don't have to hide as much in the consensus winners

in secular growth. So to me, that's the key takeaway. The question is, is this going to be an enduring shift? We did have a lot break, right, as Chris said. You know, you had yields falling dramatically from five to four and a quarter almost on the 10-year. OPEC Plus can't even get another production cut through. So we have 2% decline in oil today on top of what we've already gotten. So it really has that feel of the economy holding up better and inflation coming down more than anticipated. So again, the question is always, are we back in a position as we were in late July when people are taking for granted the soft landing and are getting overaggressive in terms of their positioning in the markets? I would argue

not quite yet, not to the degree that we were back in July, but we have to be on the lookout for those conditions. It's like you took the question out of my mouth, Santoli. I mean, look no further than the data we got this morning, right? You have more signs of disinflation with the PCE numbers. You got a two-year high in continuing claims. Upside surprise in regional manufacturing PMI. And, of course, we have had the status quo Fed speak. But it raises the question, you have seen yields come down on this, at least in part, on this softer economic data.

At what point does that stop being a boon for equity markets and start being a problem for them because maybe the soft landing narrative is under threat? Right. If it looks like there's just too much slowdown momentum, look, the Atlanta Fed real GDP now number was revised a little bit lower for the fourth quarter today, down to 1.8 percent from 2.1, I think it was. So clearly clearly deceleration is underway I think when it starts to make its way into earnings warnings and guidance of that sort that's probably when the stock market has to pay attention to it pretty much everyone agrees we got to slow down we're not a five percent growth economy like we were in the third quarter at least statistically uh yeah, that is the big where the suspense lies

next year is does it make its way in an undermining way into earnings? OK, we've been talking about seasonality for really a couple of months now. But when you see a move like you did see this month, it was what the best month for the S&P since July of 2022. How much of the so-called Santa rally that we see at the end of December into the beginning of January has now been pulled forward? History says it doesn't really matter that much how good November was. I mean, obviously, massive month. But, you know, in the past, when you've had a good November, typically you get follow through, although you should keep in mind, as you kind of allude to, the first half of December isn't anything special historically. Mike, I'm thinking about earnings that we've had rolling in all season.

It really seems like efficiency has been the name of the game. Sure, there have been some outperformers to the upside, but even just looking at what happened in overtime yesterday with Salesforce, the revenues were just about in line. It was the earnings that really impressed. We saw something similar from NetApp. How long, how many quarters can you have that are so efficiency focused versus top line focus? Does that sort of depend on the global macro context or no? the. The elements of the bear case right now is. You know overall GDP growth is going to be slowing down to the point and revenue growth has already

decelerated. So how can we possibly get to double digit consensus earnings growth. For twenty twenty four if the top line doesn't look like it's going to be able to. Be you know be an easy win. We don't know exactly that but I will

say. That the S. and P. five hundred revenue growth tends to grow faster than nominal GDP growth. We still do have 2.5% to 3% at least top-line inflation. If the economy is growing at all, we're talking about something close to mid-single-digit nominal GDP. It's not weird if companies manage to nudge a little bit of revenue growth out of that. Margins, obviously obviously case by case but you know we we've gone along long stretches of time when you didn't have great revenue growth and companies especially those who've been you know expecting a recession for over a year uh we're efficiency minded and

we're trying to preserve margins all along yeah and it's such a key point because with companies if they can continue to offset those costs with higher prices, it's actually a good thing for them. We're starting to get some of those earnings results. PagerDuty earnings are out. Julia Boorstin has the numbers. Julia. Hey, Morgan. We see PagerDuty shares moving higher in after-hours trading on revenues that beat estimates coming in at 108.7, or it looks like actually it's unchanged, 108.7 million versus 100.7 million.

The company reporting a loss of 16 cents per share. It's unclear if that's comparable to estimates, but want to give you a sense of the company's outlook here. The company's fourth quarter outlook guiding to a growth rate of between 8% and 10% for Q4, saying the outlook for non-GAAP net income would be between 14 and 15 cents. And also just pointing to some of the comments here from CEO Jennifer Tejada, noting that the results were in the quarter above the guidance range with 15% revenue growth and a non-GAAP operating margin of 14 cents. Now we have the chart up and the shares are up over four percent. Back over to you, Julia. Thank you, Mike. PagerDuty is a smaller name, but this is one of those kind of cloud operations names. It's like the smoke detector

in the house. If something goes wrong, it's going to alert you and alert the right people so we can be fixed. This is cloud week. Got to mention that we are getting closer to the end of it. These efficiency players have been doing OK. Exactly. There's been a little bit of a rediscovery going on of, you know, all of these companies and there were dozens of them, you know, in various parts of cloud software that made their name and got people excited in 2020, 2021. And the stock's down as a group, probably 70 or 80% high to low.

They've been rebuilding off of that. And then people are kind of learning again why the business models of those that have something can really be very profitable. They've also been advancing over hardware type names as the inflation story comes down. They're kind of disinflationary companies in general. And so you've seen some outperformance. I also would always say Microsoft, like the big guys are the defensive plays when people get more comfortable with how the macro looks and how customers are behaving. Then, you know, the money flows toward

the more expensive but faster growing names. Yeah. I mean, to that point, Mike, how I mean, we talk about the big the big tech companies. But when you talk when some of these smaller names and especially with yields coming down the way they have. I mean, is this really seem to be the area market that is getting the most love right now, especially when you look at some of those growthy names that have really particularly surged in the month of November. Yeah, it has been pretty tricky in terms of figuring out the relationship in terms of yields and all kinds of tech stocks, because we see the Magnificent Seven, you know, back in 2022, early part of 2022, people assumed they'd be the worst victims of yields going up.

Yields kept going up this year, and that's been the source of all the upside in the market because they were defensive, because they have lots of cash on the books. But less profitable tech or unprofitable tech does seem as if it moves a little bit more with yields. And I think, again, it's an inflation story. If we're having a disinflationary environment, that's where they can actually distinguish themselves, a productivity minded, you know, corporate sector. I think that's the bull case for those types of companies. Okay, we're going to stick with tech here, but specifically on the semi side. Marvell and Ambarella earnings are out.

Christina Parts Nevelis has those results for us. Christina. Yeah, so for Marvell, we're seeing a top and bottom line beat, but not by much. EPS earnings per share coming in at 41 cents, revenue 1.42 billion. What is a little bit lower is the full year guidance at one point. Just sorry for full year. We're seeing that a little bit lower as well. Keep in mind, Marvell designs and produces circuits for data storage and competes directly with Broadcom. So shares were a little higher, but we're showing Ambarella right now. So I'll switch over to that just now. Ambarella makes chips for video compressing, image processing. So what we're seeing with

Ambarella specifically is a miss on the top line. So they lost, it was a negative $1.04. And then revenues did beat on 50.6 million. It is a smaller company. And I just want to read one particular line from the CEO for Ambarella saying, our customers appear to be making progress with their inventory reduction efforts, and we expect to return to revenue growth in fiscal 2025. That positive reaction adding to the stock increasing 4% after hours trading. Guys? All right. Thank you for that, Christina Partinellas. Also, as Christina was talking, Samsara results have passed. That stock is up about 10% at the moment in overtime. Big beat on the top and bottom lines. Guidance also above expectations. I should mention Samsara bills itself as the connected operations cloud.

Think about logistics, Internet of Things. The ticker is IOT. Annualized recurring revenue crossed a billion dollars for the first time there, by the way. Let me go through the numbers. Revenue came in at $237.5 million versus $224.7 expected. Non-GAAP EPS, $0.04 versus a penny expected. Non-GAAP gross margin at 75% versus $73.4 expected. Non-GAAP operating margin at 5% versus negative $ 2.2 expected. Adjusted free cash flow, 8.5 million versus 1.3 expected. Look at the guidance. Samstar is guiding to revenue of between 257 and 259 million. That's 258 at the midpoint versus 250.4 expected. Also guiding to an operating margin of 2% versus 1% expected. I'll mention here,

co-founder and CEO Sanjit Biswas is going to join us tomorrow on overtime. And, you know, efficiency, we were talking about it earlier, that appears to be part of the theme here as well. Now let's get to some more earnings. Dell earnings are out. Back to Julia Borsten with those. Julia. John, that's right. Dell shares moving lower in after hours trading on a revenue miss. The company reporting $22.25 billion in revenue versus the $23 billion estimated. Earnings did beat estimates, though, at $1.88 in adjusted earnings per share versus the $1.47 that analysts had anticipated. But what we're seeing here is a revenue miss on weakness in the PC recovery and the hardware recovery. The company pointing out that they have proven their ability

to generate strong cash flow and they're looking towards the future. I just want to get to one key comment here is that the infrastructure solutions group had revenue down at 12 percent year over year. But they say that the servers and networking business was up 9% sequentially and heading into fiscal 2025. They expect revenue growth given the tailwinds to our business. So we're seeing weakness in hardware and in PCs in Dell and shares down about two and a half percent. Back to you. Okay. Julia Borsten, thank you. Ulta earnings are out. Courtney Reagan has the numbers. Court. Hi there, Morgan. Yeah, so Ulta beating on earnings per share coming in at 507.

The street was looking for about 497 there, so a nice beat. Revenue is also slightly better than expectations coming in at $2.488 billion. Comps up 4.5%. That is also better than expected. There was an increase in transaction but a slight decrease in average ticket. The company is updating their guidance for the full year, so with one quarter left to go, increasing the low end of their sales guidance

still within analysts' expectations, increasing their comparable sales guidance and increasing the low end of their EPS guidance as well. They do talk about continued strong traffic trends. We know that makeup, cosmetics, beauty, this has been a really strong category for some time. And early indications for the holiday season is it is continuing. You can see shares here higher by 9 percent.

One other note, the company is announcing that their current CFO will retire in April. He will be succeeded by the woman that is the current vice president of finance, Paula Ogibo. Back over to you. Courtney Reagan, thank you. Thanks. I'm going to send it back over to Mike Santoli. I mean, this is a week that has been really characterized, at least after the bell, in terms of earnings. Tech, which we were talking about a few minutes ago, and then retail,

as we do try to parse the tea leaves on the state of the consumer right now. I mean, for what it's worth, and Ulta is certainly showing this with the stock up 9% right now in after-hours trading, beauty has been pretty beautiful this year, despite some of the pain in other areas. It has. Now, you know, this quarter's estimate for Ulta, it started at the end of July at like 528. It got whittled all the way down. So this is a beat. But I think it shows you it's much more relief that things were not necessarily as tough as expected there also I think has been a little bit of noise around the sector because Estee Lauder's had such an awful

time now almost all of it is about the global business is a lot of the the sales channels in China but it did seem to weigh a little bit on an investor sentiment toward Alta, which was, you know, kind of beaten down going into this. So some relief right here. I think the theme has been if you've had low expectations, look at Foot Locker's move to the upside the other day, then you have managed to actually beat. And it's not about customers abandoning these concepts. It's just about, you know, exactly how it comes in relative to expectations. So far, so good. Okay. Mike Santoli, thanks for kicking off the hour with us. We'll see you in a little bit. When we come back, we'll speak exclusively with the CEO of RTX about the demand landscape for

defense products as geopolitical tensions flare around the globe. Plus, oil on the move today as OPEC gathers today for its delayed meeting. We'll talk to Bank of America's Francisco Blanche about his outlook for crude after this month's pullback. Overtime, back in two minutes. Welcome back. Yesterday, I sat down with the new chair of the Joint Chiefs of Staff, General C.Q. Brown, in his first broadcast interview for a wide-ranging discussion at CNBC's CFO Council Summit. We discussed the current geopolitical landscape and how, as the top military officer in America, he is balancing the need to modernize the military for the future with the demands of the operational force, especially as U.S. weapons

stockpiles have been drawn down amid wars in Ukraine and now the Middle East? If you have consistent, steady funding, it's easier for you to write contracts, bring on workforce, build out facilities to bring capability, not just for us, but also for allies and partners. I think the one thing that I've found is that a lot of our allies and partners like U.S. equipment. That depends on the U.S. defense industrial base, and that's also.S. equipment. That depends on the U.S. defense industrial base, and that's also dependent on constant funding. Well, RTX is one of the largest defense companies by sales, and CEO and Chair Greg Hayes joins me now exclusively ahead of the 10th Annual Reagan National Defense Forum, which kicks off here in Southern California tomorrow. Greg, it's great to have you on the show. Welcome. Thanks, Morgan. And great job with that interview. The Swamp Thing story I thought

was fascinating with CQ. So great reporting there. I appreciate that. So I do want to start with that comment we just shared from the chairman. Get your thoughts on it, especially as the U.S. does continue to operate under a continuing resolution right now? Look, I think General Brown has it exactly right. As we think about the defense industrial base, we have to really start thinking about it very, very differently. And it starts in Congress, where each year we get an appropriation. We go out, we sign a contract for a year, and we do that year after year. And some years years we get CRs which slows the process down. If we really want to make sure that we've got the deterrence necessary to fight both

conventional wars like we see in Ukraine and future wars like in the Asia-Pacific region, we have to fund things differently. And I think again this is where the DOD has done I think a good job of thinking how do we change our behavior here? It's going to have to start with Congress. But if we can think about keeping production lines open, even when the demand isn't there, that's what's going to allow us to flex when we do have a need that becomes apparent that we didn't think we were going to have. And, of course, we do see that need now.

You and I have talked about it before. The surge in demand for, for example, RTX products, whether it's missiles or missile defense systems or munitions or some of the other weapon systems and deterrence products that you make. Walk me through demand as we have seen sales move higher. We've seen the backlog move higher as well. And how quickly you can meet that increased demand. Yeah, so Morgan, if you think about it, our Raytheon business has a backlog of about 50 billion. There's another 25 billion of defense backlog on the Collins and the Pratt Whitney side. So it's a huge backlog, $75 billion. And that is going to continue to grow. As we think about the next couple of years, we see huge demand, especially, as you said, for Patriot air defense systems.

The U.S. has about 60 of them deployed globally. We know with our 18 partner countries that there is going to be more demand. It's going to take an all-out effort. Right now, if you want a new Patriot system, it takes two years. And we have to think about, you know, how are we going to increase production on Patriot? But it goes beyond Patriot. It goes to Standard Missile 6. It goes to a whole range of products, Stingers and Javelins. All of these things are, the demand again far exceeds our capacity in the short run. And so we're going to have to address that through capital additions, but also through, I would say, some novel contracting with the

government. But we're working on it. And again, shout out to Bill LaPlante, who's head of acquisition and sustainment at DOD. Bill gets it, and he has been working with the defense industrial base over these last couple of years, and I think making some real progress. Even as we have this conversation, you're targeting strong expansion in your margins within the defense business over the next couple of years, very robust margins from an industry-wide standpoint. As we have this conversation, as you continue to navigate some of these supply chain issues and issues around building up that defense industrial base, how do you get there? You know, Morgan, it's a great question. And I think as we go out and talk to investors, it's their biggest question. Because I would tell you, margins have been disappointing on the defense side for the last couple of years as we have fought through both inflation and some significant supply chain challenges. The other piece of this, of course, is as we're transitioning to some of

the newer products, those are going out with lower margins. As we go through 24 and into 25, I really believe most of the supply chain issues will be behind us. Rocket motors continue to be a problem. But electronics and all those things that we've talked about for the last three years, really almost back to normal. Inflation also looks like it's coming down from last year's elevated levels. 4% is a lot better than 8% or 9%. But still, it's a problem with margins, especially when you have multi-year fixed price contracts. So, the folks on the Raytheon side are laser focused on margin expansion. It's going to take cost reduction. We're going to have to figure out with our suppliers how to take cost out of the product. We're going to have to take structural costs out. And again, that is just going to take us some time. 25 is the goal to see margins back up in

the kind of 11 to 13 percent. And it's going to be a tough road. Okay. I would be remiss, speaking of investors, because they have been focused on this, given the fact that you've taken charges earlier this year. It has weighed on the stock. But on the Pratt & Whitney side, the geared turbofan engine recall, how is that progressing right now? And I guess over the near and longer term, what does that mean in terms of being able to hold market share against your peers? So, you know, Morgan, I would tell you there's no news to report there. I would tell you that we are continuing to make progress on the engine inspection regime. We're making progress on ramping up parts production.

So no news there. But again, it is causing a lot of consternation with our customers. And our focus right now is helping our customers through what is going to be a very, very difficult six-month process. Greg Hayes, appreciate the time and the insights today. CEO and Chairman of RTX, thanks for being with me, head of the Reagan National Defense Forum. Thanks, Morgan. Take care. And of course, tomorrow, as I just mentioned, I will be coming to you live from that conference,

that major conference. It's in Simi Valley, California. We're going to hear exclusively from Palantir CTO, Shyam Sankar, Global Foundry CEO, Tom Caulfield, Andral Industries founder, Palmer Luckey, and then U.S. Commerce Secretary Gina Raimondo over the weekend. I'll be sitting down with her exclusively as well. And a few other names that we'll be bringing you throughout the next 24 hours too, John. Looking forward to that. Strong defense from Morgan Brennan. You know, our earnings have also been out from Elastic. That stock is jumping. You can see it up 14%. Search and software company reporting a loss

of 25 cents a share, not comparing that to analyst estimates because of some one-time items. Revenues beat the street, coming in at $310 million versus an estimate of around $304 at the midpoint. CEO Ash Kulkarni singling out the power of AI in the release, saying generative AI is driving a resurgence of interest in search. Their subscription business in particular beat here. The subscription was expected to come in at around 269 million, came in closer to 288 million for subs.

And the guidance, again, it was expected to be around $319 million came in, $320 for Q3. That's stock 14.5% higher in overtime. Up next, Tesla holding its Cybertruck delivery event today. It's one day after Elon Musk made some spicy comments at the Dealbook Summit about Sam Altman's OpenAI. I'm going to bring you the latest on those stories next. Breaking news on Disney. Julia Borsten, what's going on? Well, Disney is reinstating its dividend, announcing a cash dividend of 30 cents per share in respect to the second half of the fiscal year payable January 10th, issuing a statement along with this. Of

course, this is very relevant to the proxy fight with Nelson Peltz saying, quote, this has been a strategic, there has been a year of important progress for the Walt Disney Company defined by a strategic restructuring and renewed focus on long-term growth. This is said by Mark Parker, chairman of the board, going on to say, as Disney moves forward with its key strategic objectives, we are pleased to declare a dividend for our shareholders. So this is obviously a key move here as this battle with Nelson Peltz heats up. In the last couple of days, we heard from Nelson Peltz today that he will be nominating at least two board members

for Disney's board. And then the window for those nominations opens on Tuesday. Morgan and John, back over to you. Julia, do we know if this is a quarterly dividend, semi-annual? Well, so this is 30 cents for the second half of the fiscal year. I will be digging into this more, but I think this is going to be, you know, this is for the second half of the year. I will be digging into this more. But I think this is going to be, you know, this is for this is for the second half of the year. So it seems like they will be renewing the dividend. They had a dividend and then they paused it. They said they were going to be bringing it back. And this seems to indicate that they are there. They're back with the dividend. And we can come back to you with more. OK, Julia Boorstin, thank you. Well, Disney was

a big winner this month and so was Tesla. But the stock pulled back today as the company hosted its Cybertruck delivery event in Texas. Phil LeBeau has the latest for us. Phil. Morgan, this was vintage Tesla in terms of a delivery event. Plenty of fans, plenty of workers who are on hand as the first Cybertrucks were handed over. They handed over about 10, maybe 12 to the first customers who drove off away. You know, there you see them coming down the main tunnel there before they drove away from the Austin Gigafactory. Elon Musk touting the Cybertruck and all of its features, a 2500 payload. The fact that it has bulletproof panels. It's the pricing that a lot of people are focused on. Take a look at where the base prices are. Now, the Cyber Beast, and we

believe those are probably the ones that were delivered, those are at the top end. The Cyber Beast and all-wheel drive, those will be delivered in 24. The base model, that's not coming out until 25. By the way, remember back when Elon Musk said, I think we're going to start at 39,000? Yeah, that ain't happening. 60,990. And the Tesla website, they are clear in saying these pricing, what you see as the prices, those are estimates at this point. In terms of annual deliveries, this is not going to move the needle much this year.

They might deliver a few more between now and the end of the year. They're still targeting 1.8 million vehicles being delivered this year, and they probably won't move the needle in terms of deliveries for 24. 25 is when they believe they could get the max production to 250,000 annually. If you take a look at shares of Tesla, keep in mind that the Cybertruck, the goal here is not necessarily to help the bottom line, guys, because almost everybody agrees that's not going to happen anytime soon. This is to reinvigorate the brand.

And certainly, it's a polarizing vehicle. And this will make people talk as if they don't already talk enough about Tesla. They will talk when they do see the Cybertrucks. There are not going to be a lot of them out there, but when you see one, I'm sure you will talk about it. Yeah, people are already talking. Phil LeBeau, thank you. Looks like nothing else. Speaking of EVs, my On the Other Hand segment today

focused on whether slowing demand for electric vehicles is just a speed bump for the auto transformation or a real wake-up call for the industry. You can read both arguments by signing up for the On the Other Hand newsletter. You can use that code on the screen, the QR code, or you can type in cnbc.com slash O-T-O-H. Gets you also easy access to a poll on LinkedIn. You can let me know which side you agree with more.

Speaking of Elon Musk, and we do speak of Elon Musk a lot, his comments on stage at Andrew Ross Sorkin's dealbook conference last night caused quite a stir. He weighed in, Musk did, on the turmoil at OpenAI, where he was a co-founder and initial board member before resigning in 2018. Here, Musk is talking about their chief data scientist who voted to oust Sam Altman earlier this month. I think Ilya actually has a strong moral compass. He thinks about, you know, he really sweats it over questions of what is right. And if Ilya felt strongly enough to want to, you know, fire Sam, well, I think the world should know what was that reason. Have you talked to him? I've reached out, but he doesn't want to talk to anyone. Have you talked to other people behind the scenes?

Is this all happening? I've talked to a lot of people. Nobody, I've not found anyone who knows why. Have you? I think we are all still trying to find out. I mean, look, one of two things things is either it was a serious thing and we should know what it is or it was not a serious thing and then the board should resign. The company's new board takes the reins this week.

The person that Musk was talking about will not be a part of it going forward. Microsoft, though, will, according to OpenAI, with a non-voting observer position. I asked CEO Satya Nadella, Microsoft's CEO, last week about the board crisis at OpenAI, and he said changes needed to be made. SATYA NADElla, CEO, Microsoft, At this point, I think it's very, very clear that something has to change around the governance, and if that's sort of—you know, and we'll have a good dialogue with their board on that, and we'll, you know, walk through that as time evolves. I also asked Satya whether Microsoft needed a board seat.

Now they kind of have one. Now OpenAI's largest investor has a seat at the table. Steve Kovach, not a voting seat, but I'm not sure that matters so much because it keeps them from being blindsided and influence can be just as important. It keeps them from being blindsided, but still they have just as much say, Microsoft that is, in OpenAI and the way that company is governed that they did two or three weeks ago before this whole mess started. I'm curious for your take on this too, because I thought last night the silence from the Microsoft side after OpenAI announced this spoke volumes because up till now, every decision, even the flip-flopping

we saw over the last week and a half, two weeks, Microsoft praised every move. We're really excited to partner with OpenAI. We're happy that Altman is coming in to work at Microsoft. Oops, no, now we're happy he's back at OpenAI. So you you know, you talk to Satya more than I do. I'm really curious if you think he would be satisfied with this outcome, not having any say. It does sound like they are going to work on the governance a little bit more. They're leaving room open for more board members. Doesn't mean Microsoft won't. But, I mean, the fact that Microsoft isn't kind of praising this move, I think, speaks loudly about they don't think it's done yet. I don't, I don't know if that's what it speaks to.

Morgan, Microsoft talked a lot before anybody at OpenAI was saying much. Now maybe they have an advantage in staying quiet. They've got their influential position. Sure, they don't have one vote that comes with that, but you need more than one vote to win the day in any particular issue. Maybe Microsoft is just in a better spot actually simmering down for a bit letting other people including even elon musk yeah they will pick up flat-footed which is which we know from all the reporting

is something that seems to have happened in this broader shakeup that was so surprising over the weekend a couple weeks ago when all this drama erupted uh... c co back out i wonder what your senses or I guess I'll put it to both of you. What your sense is, you have a three-person voting board. You have Microsoft as an observer.

Is the expectation now, because there's been a lot of chatter that this could be the possibility, that the board is, that the stage is set, but it's going to grow from here? That's exactly right. That's my interpretation of what they said. And also Altman gave an interview to The Verge last night and basically said it's not over yet. What we heard last night was kind of formalizing everything that happened, formally putting Altman back as CEO,

formally getting Helen Toner, who was one of the Altman antagonists, let's say, off of the board and kind of formalizing where we're at now with Larry Summers on the board and Brett Taylor leading the board. First of all, this investigation has to happen. And the idea that they're still not answering why Altman was fired and Altman himself won't even comment on it when he was asked multiple times and repeatedly last night why he was fired. He won't say anything, punting that to the board. So they're going to do this investigation. I don't know why they need an investigation, but they're going to do it. And hopefully there's an answer there. And then that kind of informs where the board grows and how it changes and the structure changes. I mean, we've said this on the

network, this network, I don't know, for the last two weeks that this can't be a nonprofit anymore. It doesn't feel like it's a nonprofit anymore with the way it has to operate moving forward. We have a tender offer coming up. We have a lot of people are going to get rich, these OpenAI employees. And on top of that, you have investors who were ready to sue if it didn't turn out the way it turned out. So luckily they landed the plane,

but they still have a lot of changes to make. This is just the first step, I think. Yeah. Okay. We'll continue to follow this story as it unfolds in real time that you two have done such an incredible job reporting on. Steve Kovac, thanks for joining the set with John Ford. Coming up, the winner take most market. Mike Santoli looks at the biggest gainers this year, including NVIDIA,

and how far winners are pulling ahead of their pair of groups. Stay with us. Welcome back to Overtime. It is time now for a CNBC News update with Bertha Coombs. Bertha. Hey, Morgan. The Israeli military just announced that hostages were, six hostages were just handed

over to the Red Cross and are on their way to Israel. The Israeli government said earlier that the truce will be extended at least one more day. Secretary of State Antony Blinken is back in the region today, saying the U.S. remains committed to supporting Israel, but urged the government to protect civilians if it restarts military operations. White House National Security Spokesman John Kirby said this afternoon the U.S. is working to strengthen Ukraine's air defense and harden critical energy infrastructure, all in preparation for an expected attack by Russia. Kirby says the U.S. expects Moscow will try to destroy that energy infrastructure this winter. U.S. sea player Bronny James is cleared by his doctor

for a full return to basketball. That from the James Family Foundation today. LeBron James' oldest son went into cardiac arrest during a preseason practice last summer. Family says he'll have his final evaluation by USC staff this week and will resume practice next week. Certainly wish him well. Back over to you, John. All right, Bertha, thank you.

Let's turn now to a big cloud winner of the day. Nutanix delivered a beat and raise in overtime yesterday. The stock ended the day up better than 3%. I spoke with CEO Rajiv Ramaswamy about enterprise demand and why his tone was so much different from other cloud players like storage companies NatApp and Pure. Ramaswamy said it's partly because he's been taking share from them. What we do at Nutanix is replace those three-tier architectures with something much simpler with HCI. We bring together compute and storage together, manage it all in a software defined way, somewhat like what the cloud players do. And so it's a different dynamic. So we've been,

HCI has been growing at the expense of three-tier for quite a long time now, for many years, and that continues. An example of the different growth story is federal. Rajiv told me they have a strong quarter in federal, including first sales of what they call GPT in a box. It's an AI offering. He said an unnamed federal agency is using it for things like document processing and analysis, though he couldn't get too specific, as you might imagine, Morgan. We're still ahead. Ulta surging after turning in a

beat on the top and bottom lines. We'll break down what those results tell us about the broader consumer landscape and another check on Disney near its post-market highs after the company just said it is reinstating its dividend. Shares are about 1%. We'll be right back. Welcome back to Overtime. The final scorecard is in, and the top three Dow performers in November were Boeing, up 24%, Salesforce, of 23%, helped in part by that move today, and Intel, up 22%. Intel? Well, there you go. Let's get back to Mike Santoli now, looking at some other big winners this year. I like how surprised you were about that. Well, you know, kind of surprised, but kind of not. And the outperformance versus peers. Mike? Yeah, John, it's obviously been kind of a top-heavy market overall, but also within sectors.

It's starting maybe to change just a little bit. Here's Microsoft on a year-to-date basis relative to the overall software index, of which Microsoft is about 10%, a huge part. And then that's more the equal-weighted average software company performance. And you'll see, obviously, a big gap opened up, but we do see some acceleration here, even as Microsoft itself has sort of flattened out just a little bit. Now, NVIDIA, much more dramatic relative to other semis, obviously because of the magnitude of NVIDIA's gains year to date over 200 percent. But you see here, NVIDIA is something like, I think, 7 or 8 percent of that ETF and then the equal weighted ETF again just starting to curl up.

But there's plenty of catch up to be done if it's going to happen. Banks, really profound. J.P. Morgan has been the only bank that folks felt safe to buy this year. And look at that outperformance. Now, the XLF is so much more than banks. Banks are only one quarter of that. Berkshire Hathaway is 13 percent. Visa, MasterCard, S&P Global, all that stuff in there. It's very non-bank. And plus, insurance has been strong. But here you see the actual core S&P banks ETF has curled higher as well. That's probably a real positive for the overall market, brokers and asset managers, too. So things moving in the right direction, still not an inclusive market on a year-to-date basis, John.

Great breakdown, as always, Mike Santoli. Thanks. Up next, much more on today's after-hours earnings movers. Overtime's back in two. Welcome back. Check out some of the biggest earnings movers this hour. And there's a lot of green on the screen, as you can see right there. PagerDuty, Umbrella, Samsara, and Elastic, all higher on results. And with Samsara and Elastic up double digits right now.

Yeah. Check out Ulta shares on the move after earnings at the top of the hour. We're going to talk about the read through there for the consumer landscape heading into this key month for retailers. And tonight, 8 p.m. Eastern, don't miss a special hour dedicated to Charlie Munger. Becky Quick hosts a life of wit and wisdom right here on CNBC. We'll be right back. Let's get another look at Ulta Beauty. Those shares are soaring after beating estimates,

raising the full-year outlook. Joining us now, Susan Anderson from Canaccord. Susan, I'm particularly interested in loyalty here. It's an area strategically they focused a lot on. It looks like they gained about a half a million loyalty members since last quarter. They had last quarter been up 9% year over year. Is that good enough? Yeah, so their loyalty card, I think, has been a big driver of sales for them.

They ended the quarter with 42.2 million in loyalty members. Really, one of the largest loyalty card programs behind Target is probably the largest out there at 100 million. And it's really been a big driver of new customers for them because once you're a loyalty member, you continue to want to keep going back and buying more and spending more with Ulta to get the points to get dollars off or get free hair services in their salons. So Susan, in the release, Dave Kimball, the CEO, basically said that for beauty products, that the future is bright. And I just wonder why we're seeing so much stickiness for consumers around this specific part of the market, even as some others have been areas where consumers

have lost interest. Yeah, beauty has really been a bright spot going into the holiday season. We think it performed very well over Black Friday, Cyber Monday. It's a category really that consumers don't really want to come back on. It's one of the last things they cut back on. And sometimes it's even used as a tool to have little, you know, areas where they can spoil themselves even during tougher times where maybe they're cutting back in other areas. So we think beauty still continues to be a hot area where consumers want to spend. You know, we are seeing normalization of sales. They're not the double digits that we had been seeing during COVID, but it's still very strong mid-single digit sales growth. And we expect that to continue through the holiday season. Susan, i'm hearing in the technology industry that driving

repeat customers in this economy is particularly important why is ulta better at it yeah so i think the loyalty card program that they have is you know really brings the customers back they want to get those points to get the dollars off or to get free salon services i think that's a huge part of their business that's bringing those customers back. Also, I think of Ulta as kind of the target of beauty. So they have half their business is mass, half their business is prestige. They really cater to everyone. So, you know, consumers can shop across categories. They don't necessarily just have to shop mass or just shop prestige. They can really look at across categories and pick and choose

where they want to purchase. Okay. Susan Anderson, thanks for joining us with the stock popping 10% right now on those results. Thanks. John, as I spoke about earlier in the hour, I'll be joining you tomorrow from Simi Valley, the Reagan Library for the annual Reagan National Defense Forum. It's one of the biggest conferences for national security of the year. Bring some guests into the show and across CNBC programming writ large. Really looking forward to that. Also tomorrow, of course, we're going to have the CEO of Samsara.

Efficiency play, kind of a cloud for logistics. That stock up double digits after hours. Curious how energy plays into that as well. You know, it did last quarter. We'll see. That's going to do it for overtime. Fast Money starts right now.