Closing Bell - Closing Bell Overtime: Mega-Cap Tech Earnings Parade 2/2/23

Episode Date: February 2, 2023

Amazon, Alphabet and Apple all reported quarterly results in Overtime. Stephanie Link of Hightower, Dan Ives of Wedbush and CIC Wealth’s Malcolm Etheridge give their all-star analysis. Plus, Mike Santoli breaks down all these big reports and what it could mean for the broader market picture.

All right, Sarah, thank you very much, and welcome, everybody, to Overtime. I'm Scott Wapner. You just heard the bells. We are just getting started from Post 9 here at the New York Stock Exchange. Boy, we're going to get right to our talk of the tape, this incredibly important moment for these markets. Earnings from Amazon, Alphabet, and Qualcomm all hitting as we speak. Ford and Starbucks are also imminent. And then the biggie, Apple at the bottom of the hour. That report coming as new questions swirl around the world's most valuable company. Has a supply problem turned into a demand issue? We shall see.

It's hard to overstate the importance of all of this as the Fed-fueled rally, especially as you've seen in tech, rolls on again today. Our reporters are standing by to break in with the results. We'll show you the stock moves as all of this goes down. Our panel at the ready, too. Stephanie Link, Hightower's chief investment strategist. Surat Sethi of Douglas C. Lane. Liz Young is SoFi's chief market strategist.

And Malcolm Etheridge of CIC Wealth. Stephanie and Surat are CNBC contributors. By the way, the results are dropping as we speed. I see that Amazon's out. Reporters are going through it. And, Surat, you've got Amazon. You've got Google. You've got Qualcomm.

Meta gave us a blast off today. Do these keep it going or bring everything back down to earth? Well, I think you're going to have very specific indicators for each one. I think for Amazon, we're going to have to look and see what is AWS doing and how is retail doing. I think for Google, what is advertising doing and what is cloud doing? So those are going to be really great indicators of kind of what the stock's going to do. And really, the calls are going to determine what we're going to hear. Qualcomm's all going to be about the demand.

If demand has fallen off, we know the supply is there. So that's going to be a question of what their operating margin is going to be. Big thing you're worried about with Amazon, if anything, is it the slowdown in AWS, the cloud? Because, I mean, that's where the growth is. That's what you're paying up for. That's where the competition is really coming. It's coming from Microsoft. It's coming from Oracle. Can they sustain the growth and can they sustain their margins? Because that's like the true value of Amazon. Hey, Christina Partsinello standing by. Qualcomm's moving and they are reporting. Christina, what do we see here? Right now we have mixed results for q1 but guidance was a miss adjusted eps of 2.37 cents a share was three cents higher than estimates but revenue fell short at 9.46 billion dollars for q2

though the revenue guidance range was between 8.7 billion and 9.5 billion also a little lower than the street wanted so that means the management is expecting revenues to actually fall about 12% year-over-year in Q2. So what happened? Normally, the December quarter is a strong one for smartphones, but smartphone sales fell 18% during that important holiday season, given Qualcomm is a large supplier for handsets. It got hit by demand weakness and elevated customer inventory levels. Qualcomm, though, echoing other chip firms by saying that short-term cyclical headwinds continue

and that the demand weakness is now broadened to include IoT and industrials. Nonetheless, they, too, expect things to improve in the second half of this year. So it seems like maybe some of this bad news is already priced in because the stock's moving up almost 2% higher on the news. All right. Yep. We'll follow that, Christina. Thank you. You come back with more information as you have it there. We'll follow that, Christina. Thank you. You come back with more information as you have it there. Deirdre Bosa, Amazon is out. What can you tell us? And shares are moving higher by more than 3% after finishing the session up by more than 7%.

It is a beat on the top line. Q4 revenue coming in at nearly $150 billion, $149.2, $145.5 was expected. We're not going to compare the EPS number but on a gap basis that came in at a dollar 39 it's messy we have to sort through the Rivian stake as well as some of the restructuring costs but here's what really matters it is the guidance Q1 revenue guidance estimated or forecast between 121 and 126 billion dollars so on the upper end it is higher than what the street was expecting, which was $125 billion. So shows strength likely in the online sales business, but we're going to look through these more. Operating income guidance, the company is guiding for between $0 and $4 billion. That is not unusual. Amazon often does this. We'll sort through the release, Scott,

and find out what makes that difference. And also if there's some restructuring charges associated with those 6% layoffs in the corporate workforce just a few weeks ago. Supposed to post the slowest revenue growth in some 20 years, right, Dee? I mean, that's going to be what people are keying on is we're worried about AWS and the cloud slowing, as I was just talking with Sarath. That's the reason investors have been willing to pay up, so to speak, for this stock, a higher multiple than some of the others in the mega cap universe. And that's why this was one of the worst sold off mega caps last year. It shed, what, about half of its value. So a lot of this is priced in that slower growth rate, the operating losses. I mean, I got to look through the results, but for the full year, if it's a loss, that's the first since 2014. I'm going to get those AWS numbers as well, but that has been slowing also. And remember that Microsoft warned of that last week. So we're going to see by how

much I'm looking at it right now, it did come in a little bit shy, that AWS number, $21.4 billion versus 21.9. However, I do think that that's better than maybe some of the whisper numbers. I think it was Bank of America that said that AWS growth could fall into the high teens. I don't think we're seeing that just yet. Although I will say, Scott, that Amazon was up as much as 3.5%. It's now lower by about eight-tenths of a percent, but it did finish the session higher by more than seven. Yeah, they got a lot going on. I know we're going to hear from you throughout our hour. And I'm glad about that. Dee, thank you. We'll see you soon. So we've got Qualcomm dropping. You got Amazon, which is out. We got Google coming up and all the others and Apple again, bottom of the

hour. Malcolm, you are in Amazon. What were you most especially keying on today? Yeah, I was actually interested to hear if Andy Jassy announced anything related to additional cuts. I think shareholders like myself have already heard all of the bad news you expect to hear related to this name. And so they really didn't have anywhere to go except sideways to up. And I think that's probably what we're looking at right now with the results that I did you just reported we're basically getting some of what we knew was coming which is that the cuts seem to be working of the e-commerce business is picking up slightly but it's still got a ways to recover from all the over building that happened and hang in there

with us because AWS is still the most important thing related to this enterprise and we have a feeling that that's going to steady a little bit going into Q2. That's basically what I'm gathering from the early read. And that's essentially what I was hoping to hear as a shareholder who's looking at a company who already got whacked 50 percent last year. See, Steph, these stocks, and I know you're not in Amazon anymore. You're not in Google anymore. You are in Meta, right? You traded Alphabet for Meta, and I know you're not in Amazon anymore. You're not in Google anymore. You are in Meta, right?

You traded Alphabet for Meta, and I know you're feeling great about that. But these stocks need to justify to investors, so to speak, that the worst is over, that the 50% decline in Amazon, for example, last year is the worst that we've seen. And in some respects, the bounce back that we've seen in the early part of this year is justified. I don't know. I mean, it trades at 87 times forward. This is Amazon. It trades at 87 times forward estimates.

You're supposed to beat and raise when you trade at that kind of a multiple. And all throughout this quarter, numbers have been coming down for AWS. AWS was fine. 20% growth. That's pretty much in line. But again, what are you paying for? Why are you paying up so much? And the stock, as you mentioned, had such a nice run, up 31%. I mean, you know, I'm not surprised to see the reaction.

I just think this is kind of a ho-hum quarter, to be honest. Maybe ho-hum's good enough rather than a disappointment. Deirdre Bosa has Google Alphabet, which is out. Dee? I've got another ho-hum quarter, this time from Alphabet. It is a miss on revenue, $76.1 billion versus $76.5, which was expected. In terms of earnings per share for the fourth quarter, that's a 13-cent miss here. So coming in at $1.05, $1.18 was expected. Scott, you might find this interesting.

Remember that Alphabet was late to make cuts to its workforce. And last quarter, Sunder Pichai, the CEO, told us that he would hire maybe 6,000 employees. They added about 3,000 employees in the fourth quarter. So that is less than he telegraphed, but they're still adding employees. So on the call, investors may be looking for some more efficiency measures. Let me break down a few more businesses. Cloud revenue, that is a miss also, coming in at about $7.3 billion. $7.4 was expected. That's probably not a surprise,

given the weakness that we saw at Microsoft and Amazon, Google, of course, being the third hyperscaler. YouTube, this is also very important, and that's a significant miss. The street was looking for $8.25 billion. That's coming in at $7.96 billion. And I believe, Scott, that would be its second straight quarter of year-over-year decline in that unit. But remember, YouTube is more vulnerable to the ad market slowdown than the main search advertising business. We'll continue

to go through this and bring you what we find. I'm looking at the ad revenue, which we know is slowing. I mean, the environment is what it is. $60.4 billion was the expectation, which was going to be down 1.3% year on year, which was only the second ad sales decline since going public for Google. I see a number 5904. So it's a little bit lighter than even some of the estimates were taking into consideration, Dee, where this market is from a macro standpoint. At the same time, the stock isn't moving in the after hours.

It's flat at the moment. I should say it has been moving, but not by a lot, considering that it was up more than 7% in the session. And we know that both Amazon and Alphabet have seen huge gains so far this year. So the reaction from the market I would say is pretty muted considering that these are disappointing results but they're not hugely disappointing so a lot of this has been baked in yeah and a lot can still happen as we've learned our lesson over the reporting periods over the last handful of years D thank you we'll see you again soon sir ah you got Google

alphabet I do and I think it'll be very interesting to see because they already announced the cuts. They're hiring. What are they going to do? Kind of like we go back to the Facebook or the meta playbook. How are you going to get operation efficiency? It's a really high margin company, but there's a lot of costs out of this, too. So I think the offset of do we get costs out, but we also how do we get revenue in the cloud and YouTube? And if those two don't do kind of what people are expecting, I think the stock's not going to go anywhere, at least for the next couple of quarters. I mean, this is another area of key growth for Alphabet, right? You're chasing Amazon and AWS.

You're chasing Microsoft and Azure. And the growth, obviously, has been huge. It's just how fast can they close the gap to those competitors? And I think it's not expensive at 21 times forward estimates, but it also has rallied 21 percent on the year. So expectations were a little bit higher. I didn't think there was anything terribly exciting about this. A total revenue miss, earnings miss. Cloud, about 31 percent growth.

That's a little bit less than expected, but that's still really a good number, solid number. Nothing to fear there. It's YouTube. YouTube is very disappointing. Is that TikTok? Is that competition? Is that meta? What else could it be, right? I mean, you've been talking for so long now about one of the reasons why you love meta so much is because of Reels with Insta. And I mean, I don't need to tell you what the stock did today. Hello. I mean, and the pickup on Reels has been pretty significant. Well, but it also, going into the quarter, was trading at 13.4 times forward estimates. It was the cheapest of the FANG. The expectations were the lowest.

And they got religion on expenses. As soon as I saw those expense numbers cut, I knew the stock was going to do well. Not 22% well, but I thought for sure that's a sigh of relief. I got Starbucks out, too. Pippa Stevens has that for us. SBUX Pips, what do we see? Hey, Scott. Well, it's a top and bottom line miss here for Starbucks. Earnings coming in at 75 cents per share on an adjusted basis.

That is two cents short of estimates. Revenue at eight point seven one billion, again, short of the eight point seven eight billion. But it really is that global same store sales miss that is weighing on the stock stock here, sending it down 3%. Global comps increased by 5%, while analysts were looking for 6.9%. 7% of that was thanks to an average ticket increase, which was partially offset by a 2% decline in comparable transactions. U.S. sales coming in about in line with expectations up 10%, while analysts were looking for 10.1 percent. But international same-store sales decreased by 13 percent. That was well ahead of the minus 2.7 percent that analysts were looking for.

And in China, Scott, those sales were down 29 percent. So that is weighing on the stock here. It is Starbucks' second largest market. Shares are down 3 percent. Stephanie Link, Pippa is watching this. How do you feel? Well, I mean, the stock is up 52%. Right, with the market, giveth. With meta, it taketh away sometimes. Well, it's not down that much. But honestly, I mean, did anybody expect anything from China with it being closed? No, but international down 13%.

And it was probably all China. If China was down 29%, I was thinking it was going to be down about 10 to 12%. So that is worse. But again, China is reopening. So we have to kind of look through that. I thought U.S. comps of 10%, that's a great number. Their guidance is 7 to 9%. So everything is humming in the U.S. and their pricing and their products, the rewards program as well. It's all helping them on the U.S. side. Now we just got to get China to get fixed, and it will. And so maybe on weakness, I'm a buyer. I mean, the stock was up 30 percent in the last three months. So let's not get too greedy, right? Bear with me a second. Phil LeBeau, Ford, letter F is out. Yeah, and the stock is taking a hit right now. This is a miss on the bottom line, a beat on the top line. We'll explain the miss in just a little bit. Ford earning 51 cents a share. That was shy of expectations by 11

cents. Revenue coming in better than expected at 41.8 billion. So what happened in the fourth quarter? Ford says there were execution issues due to higher costs, lower and lower than planned volume of vehicles sold, although overall volume was up. That caused the Q4 miss, according to Ford. Numbers within the numbers. Free cash flow, $2.4 billion. EBIT adjusted margin of 5.8%. That was actually up slightly compared to the Q4 of 2021.

And then you've got North America EBIT margins, EBIT adjusted margins of 9.7 percent. So just a smidge below the 10 percent that so many people have been focused on. They end 2022 with $32 billion in cash, $48 billion in liquidity. And then for the guidance of 2023, $9 to $11 billion in earnings. That's what they're expecting. EBIT adjusted earnings, I should point out. And 2023 guidance of about $6 billion in free cash flow. They are also issuing a one-time supplemental dividend of $0.65 a share. That is the monetization of their stake in Rivian, which is almost all completely gone. Not 100%, but almost all gone. That's on top of the regular dividend of $0.15 a share. But there you see shares of Ford down more than 8 percent as the company fell well short of expectations, Scott, earning 51

cents a share. The street was expecting 62 cents. Scott, I'll send it back to you. It's an amazing story to me, Phil, that the disconnect between the strength in a market and the weakness in the stocks. Ford and General Motors haven't done anything. They've been a massive disappointment over the last year. And all we hear about is the auto market's been so strong. It's true. And their volumes were up. They're up about 6 percent in North America. But here's the key. The costs were up and they those volumes were still low of what shy of what Ford was expecting to turn for the fourth quarter. So it is an execution issue. Those are their own words.

And that's the reason why the stock's under pressure. Compare that with what we saw from General Motors just earlier this week, which by all accounts, I mean, that was a stellar fourth quarter. They knocked it out of the park on almost every metric. So there's going to be some questions during the analyst call, which comes up in about 45 minutes. Yeah. I mean, the execution, as you said, Mary Barra versus Jim Farley. I mean, we'll see. Phil, thank you. We'll see you soon. I mean, you heard the Mary Barra story firsthand, Mr. General Motors shareholder. No, and I like it. And here's the big difference. Ford for next year brought down expectations. GM is up from this year. So I think investors are looking through

and saying, well, what is the difference of these companies? And it comes down to execution. And we've had this issue with both companies. Last year, GM actually had their own issues in execution. They said they're going to work through them. They have. I think Ford is now hitting them. And I think this is why people are now going to be, they're going to choose. You don't have to just buy the automakers. You can actually say which one's a better run company. And for now, if GM sticks to their guidance and actually hits it, that's the stock you want to own. All right. So Liz Young is also here, ladies and gentlemen. We've been we've been so busy. The numbers are coming fast and furious. It is what it is. But you've had a chance to sort of see what's happened thus far. We're a little more

than 10 minutes or so, 13 minutes from Apple. What's the moment going to mean here, given what happened yesterday, the Fed in this nice rally we had, at least in the Nasdaq? Yeah. Well, here's what I will say. These last two days have been really tough. And actually, all of January has been really tough for any of us who were cautious. And this is a day, and yesterday was a day where I felt really wrong. And the market continues to tell me, you're wrong. The data that you're talking about isn't coming to fruition. And what's happened so far is that I figured a recession and earnings recession would be much more obvious

by this point, and it's just not. But some of these results today are mixed and they're not overly enthusiastic, but I think the reaction, aside from a couple of them, just proves how enthusiastic the market still is and that buyers are still there. People are still excited for this and hoping that we can somehow orchestrate a soft landing. And now Jay Powell even said we can orchestrate a soft landing. So people really believe it.

I don't think that this deserves the green light. And I think earnings this entire year, the story is going to be about revenue, not as much about the bottom line. And revenues are dropping. We've heard that from everybody. The guidance on revenues has not been that enthusiastic. And I think that's really what's going to come to fruition by the second and third quarter. You're feeling a little run over today. Absolutely. Absolutely. Yeah. And I mean, that's that's the honest feedback. So then it's you have to think about it one of two ways. I sat with myself last night. I had a one on one with myself last night.

And I said, there's one of two options here. Either I really am wrong and there might be a soft landing and there's no reason to be bearish. Or this is the moment when caution capitulates, where you see the bears and you see the people that are cautious say, OK, I'm questioning my thesis. I'm sharpening my pencil. I'm going to check this again. And maybe that's what we need to get some of this froth that's come in in January to finally flush back out. How do you get cautious, though, when jobs continue to be so strong? I mean, initial claims, a four week moving average is the lowest since what, May? Well, you haven't been a raging bull. Oh, I've been more bullish this year. Yeah, but not like go buy, you know, let's go load up the truck here.

I've been buying all kinds of things. We talk about that all the time, right? Yeah, but you haven't been exactly a raging bull. Well, I don't have to be a raging bull. And I'm not saying you should be a raging bull, by the way. But I do think that this is the worst. We have a lot of cross currents in the economy, right? We have housing is weak.

We get that. Manufacturing is terrible. Got it. But jobs are really impressive and the consumer remains resilient and the savings rate is going higher. Well, I think the consumer stays resilient as long as jobs stay resilient. They're very closely connected. Right. And the jobs market is the thing that when you sit back as a cautious investor and think, what am I missing? Right. Where, how is this still happening like this? It's the leading indicators, which I guess people are now referring to as the soft numbers, right, the soft indicators. The leading stuff is all screaming, this can't end well, right?

But the hard data, the stuff that we're looking at that's coming in real time, like the initial claims data, is still saying, no, challenge accepted, right? This is still great. I think part of it is that we're coming into this with fat profit margins, a super tight labor market. There's still 3 million, there's a 3 million person gap between jobs open and people. That's going to take a while to bake through. And then the caution that I would say too, we heard from one of the companies today that the second half is expected to be better. If the bears were right, they're just early. Then the recession comes to fruition in the second half and the second half isn't better. So that's where I'm still just not ready to give it a green light.

There's a lot of things that would have to fall in place for me. But, yeah, I feel I feel beaten down today for sure. Malcolm, you know, I'm looking at Alphabet and I'm looking at Amazon and I'm not naive to the fact that the stocks are lower, but I can't help but wonder whether this is a Microsoft moment where there's initial disappointment. None of this can be a great shock to anybody. OK, most of these companies have prepared us as the investor for what's here. Right. The macro is a little weaker. Revenue growth is not as strong as it was. But are we going to be talking about these stocks, brushing this off in the days ahead

and doing what a Microsoft did? Microsoft, I think today, is higher than it was after its earnings day. Scott, I'm actually a little bit concerned to hear Liz say that she's questioning her thesis now, because I was actually looking at this and saying, you know, the market seemed to be retreating back to what felt good when the bull was raging back in 2020. And that feels like a bit of a trap to me.

So she was one of the more cautious folks on the panel talking about the importance of sticking to the technicals and the numbers here. And if I'm just looking at the stocks that are leading the technicals and the numbers here. And if I'm just looking at the stocks that are leading the way and the fact that the tech heavy Nasdaq is up, you know, 9, 10 percent or so far this year, I really can't tell if this is investors going back to what made them feel good when things were a lot more speculative or if they really do believe in names like Tesla and Nvidia and Netflix for the long term. Those are all the biggest losers in 2022, basically left for dead. But so far, they're the biggest gainers for 2023.

And so that is what gives me pause here in this moment and says, maybe this sugar high isn't quite what we think it is. And I start to get a little bit concerned. I mean, maybe some of the candy's good. It's giving you the sugar high and some of it is is not. I mean, you really walk me right up to what Brad Gerstner told me today on the halftime report about this very issue, the kinds of stocks, these speculative tech stocks that have really ripped to start the year. Is some of it justified? Maybe. Is all of it? No way. Listen. There is going to be dispersion in this market, right? A lot of pretenders are getting pulled up in the wash here. And, you know, there are very few, like a handful of companies that are NVIDIAs and Metas, like, you know, less than 10. And so if you have a portfolio that's owning all of the junk that's up a lot, you know, good luck.

But I certainly wouldn't want to be hanging out there because I think revenues and earnings are going to be hard to come by. Liz, I'll let you take that, right? Is some of it justified? Perhaps. Is all of it? As a give back to what happened in December, I mean, December, we keep forgetting, December was pretty painful, right? So there was, I think, probably a little bit of a bounce that's warranted. And also just look at what happened in January. Rates came down. Shouldn't be surprising that growth went up. So some of that move makes sense.

This big of a move, though, I mean, if we annualize what happened in January for the whole year, we'd be up 100% this year. That just can't be true in a year where we're worried about a recession and we've got yield curves inverted all over the place. So I think we probably give some of it back in the near term. The real tell for me is, and this is how I would decide if I really am wrong, if the labor market doesn't show cracks by spring, if an earnings recession doesn't materialize, if somehow companies are able to cut costs as fast as inflation and revenues are coming down, I just don't believe that they're going to be able to do that. So I am still cautious, but I will admit that the last couple of days I've looked at it

and thought, all right, but the tape, the tape doesn't lie, right? And you have to respect, there's some, there's some buyers out there. I'm not necessarily one of them yet. I respect the ones who are out there. So Rod, I want to give you, I want you to give me some more on Amazon, you know, to Liz's point about these companies that are trying to rein in costs. And you sort of wonder whether, you know, the growth slowdown in AWS, is it troughing? I mean, the market's going to have to place a bet sooner rather than later whether that, in fact, is the case. This, I know Apple's waiting, and we're about five minutes away, and there are a lot of wild cards there, too, supply versus demand issues, which may be there. But Amazon, right?

I mean, they're trying to shrink the business, OK? The big growth engine is slowing. E-commerce is slowing. We're on the other side of a pandemic now. All this factors in. And that's why I've been cautious on Amazon, kind of wondering what's going to happen. And really, valuation is really going to matter. It's not a cheap stock. And if after the call we kind of see like you are shrinking your way to profitability, there are a lot of other better companies or places to be in. And I think when you've got all these headwinds going with it, with retail, pull in demand, you know, competition on almost all your businesses, it's going to be a tough story, especially for investors to hold on.

OK, we got to move. Liz Surratt, thank you very much. Thank you. All right. Malcolm and Steph are sticking around. We'll see in a little bit. Don't go anywhere, though. We are less than five minutes away from Apple's report. We're going to bring in the numbers, the stock reaction as soon as it crosses. OT is right back. There's the countdown. All right. The moment is almost here. There it is. Just about 60 seconds to go until Apple reports its earnings. Shareholder Stephanie Link and Malcolm Etheridge are back with us, along with star Wedbush analyst Dan Ives.

So it's great to have you here, Dan. Thank you for being here. What are you waiting for here? This is the biggie. Is supply, which has been a problem, now become a demand issue too? I think it's going to be both, for sure. Absolutely. I think they were a beneficiary of stay-at-home trends in a very big way. We know what's happening with the PC market overall. The big question is really going to be margins because they do what they are selling, especially on the iPhone. It's higher end stuff. So we'll have to see there. But overall, I think that product revenues are going to fall. And I think services revenues are going to disappoint only up 4%. That is a dramatic slowdown. And I think at 24 times forward estimates for those kind of results,

I just don't think the market's going to reward it. Dan Ives, we're expected to post the first overall revenue decline in some four years, correct? Yeah, but remember, a lot of supply chain driven. And I think ultimately this is going to be tough on like demand better than feared. That's my view, especially on services and what I see coming out of China. I think that's really going to be here on the top and bottom lines. Let me give you the numbers. EPS coming in at $1.88 versus $1.94 expected. Revenues also a miss, like I said, $117.15 billion versus the $121.1 billion the street was looking for. And it was also by category a miss all across the board except for iPad, which had new models last year that helped sales, and services was actually a beat as well. iPhone revenues, let's talk about that, down 8%, $65.78 billion. That's a miss from the $68.29 billion expected. Services revenue, though, this is that new record they're setting and talking about today, $20.77 billion versus the $20.67 billion estimated. And by the way,

our Robert Holmes, Scott, tells us this is Apple's first earnings miss since the report in April 2016, nearly seven years ago, Scott. All right, Steve, we're going to come back to you in a minute, but I'm going to Dan Ives right here. Humble pie, maybe? What do you think? I mean, Scott, I think 8 to 10 million iPhone units moved out because of the shortages in China with the lockdown. So I view this, especially on the services beat. And I think it's better than even feared whisper numbers. Knee jerk. The stock will be down like we saw in Microsoft. But I believe, especially with commentary going to March and June, much better than feared,

especially given what we saw in China the whole month of December, which basically crushed Christmas. But how is it better than feared? I mean, how's it really better than better than feared? Excuse me, as they missed in so many different categories. I mean, let's let's be honest with ourselves here. Well, first of all, they beat on services. And I think Stephanie talked about that. That's super important in terms of for the narrative on the growth side. And I think it just comes down. That's super important in terms of for the narrative on the growth side. And I think it just comes down to eight to 10 million iPhone units based on our estimates, basically shifted out of this quarter because of the shortages. So I think apples to apples amiss. You're going to look at that knee jerk and call like it is.

But I believe as we go into March and June, that's actually going to benefit the March quarter and June quarter. And that's what I expect to hear from Cook. Caution with some optimism. And I think it's going to be similar as Microsoft. I think this is a stock that over the next 24, 48 hours is in the green despite the knee jerk here. Malcolm, what do you think about what Dan has to say about what this company delivered? He makes good points, right? Some of the fear was that even if there is a demand issue because of supply concerns, et cetera Some of the fear was that even if there is a demand issue because of supply concerns, et cetera, that the March quarter is going to be,

they'll pull it all forward to the March quarter, so don't be too upset about it now. Yeah, I think from an even bigger perspective with Apple, we may be setting up to find out just how impactful they still are with respect to the broader market, right? If Apple releases lackluster results again next quarter. Right. I'm answering the question sort of that you asked me earlier about Microsoft, but applying it to Apple. If their shares sell off over the next couple of quarters, but the rest of the market continues to rally,

that could be indicative of things to come throughout the remainder of the year like you're talking about. So it could matter in the short term. Right, how much they're missing those iPhone sales units. I don't think there's really a substitute for the iPhone. I think either the recession is hitting you, you're pinching your pennies and the replacement cycle for the iPhone might be a little bit longer than it has been in previous years because people don't have the cash to throw at another device that does the exact same thing. But I don't think that there's a substitute for the iPhone. So you're not trading down to something else necessarily. So I think we're finding out right now over the next six months, let's call it, or through the remainder of this year, if Apple is going to continue to be as impactful for the broader

market, the S&P specifically, or if we're rotating to someone else becoming the more dominant leader. Steve Kovach, I'm coming back to you. You just caught up with CEO Tim Cook. Is it supply, supply, supply, as has been the refrain in recent quarters? Yeah, I got some commentary from Mr. Cook for you on that, Scott. So look, overall for the miss, he told me some of the factors to blame for it were, of course, foreign exchange, which has been a problem for Apple for a while. And in fact, says sales would have grown on a constant currency basis, but the FX really hurt them there. Also, there's production delays that we know about in China. That was a big headwind for them. And then just overall macroeconomic factors, he said, were another thing. Now, let's talk about

those production delays and demand. Here's what he told me about the production delays in China. Quote, in terms of production today, it's back to where we need it to be. And so that problem is behind us. Now, I pressed him on that, you know, production's where you need it to be. Does that mean it's back to 100 percent? He wouldn't necessarily say, yes, it's up to 100 percent, just that their production is fulfilling the demand they have right now. So not super clear on where the demand stands for iPhone, but definitely some more color there from Mr. Cook. And then also on cost cutting, I asked him about that as we see layoffs and cost cuts across the big tech. Here's what he told me, quote, we're cutting costs, we're cutting hiring, we're being very prudent and deliberate on people that we hire.

And so a number of areas in the company are not hiring at all. And then others are hiring that are associated in engineering primarily. And quote, so engineering, so a lot of hiring going on. But for the first time coming out saying we're cutting hiring before he was a little bit more muted in the commentary on that, Scott. Yeah. All right, Steve, we'll talk to you in a few. So Dan Ives, quote unquote, macro factors cited by Tim Cook to Steve Kovac. Of course, we're going to read into that at this moment and say, is that code word for demand slowing? Look, I think it depends on what part of the iPhone we're seeing on 14 on the base model.

We've seen that slow. But on 14 Pro, that's actually been strong. And that's important for ASPs. And Cook's clearly going to use the macro card. And I think that's a smart move here. You want street numbers to ultimately come down. But in my opinion, going into March, June, you have 225 million iPhones that haven't upgraded in four years. And that fundamentally is why there's a rock of Gibraltar stock. Services beat.

And I believe the reaction from the stream is digested. It's actually going to be positive. Yep. Stephanie Link, you've been writing down numbers fast and furious. I've seen you out of the corner of my eye. But first and foremost, everybody's getting hit from currency. So that should not be. Which we haven't even mentioned yet.

By the way, the dollar obviously is way down from where it was. Sure. So maybe that will help in the latter part of the year. You know, I've been arguing for that, right? That's why I think kind of overall earnings might hold up a little bit better. But everybody has a currency problem. So I'm not even going to, we just, let's move that along. Production delays getting fixed.

That's good. But we obviously don't know anything about demand. So now we have to wait until next quarter or the quarter thereafter to see about the demand side of things. Macro. Yep. You mentioned it. Everybody's seeing macro and services. I don't really think that that was a huge beat. 20.7 when the street was at 20.67. That's 4 percent growth. That's still slow down from from double digits just a couple of quarters ago. But maybe as Dan would suggest to you, it's better than feared. Right. The bar is I feel like the bar is is still pretty

low. Now, granted, these stocks have had a nice run since the beginning of the year, but the bar itself to hop over, as we've seen in earnings as far as kind of low, isn't it? For some. Well, I'll tell you that it's much lower for semiconductors than it is for these companies. I think people are still very much involved in these names. You know, I only own a one percent position in Apple in all three portfolios. So at 24 times forward estimates for 4% services growth that everybody got so excited about, to me, I just don't find that compelling. You know, Dan Ives, I spoke with Brad Gerstner today. As I mentioned earlier, I'm not going to play the sound because we don't have time to do it.

But in terms of what lies ahead for these stocks, have they re-rated enough? Did they overshoot too much? We have a tailwind on multiples for all these stocks, he said, speaking of the mega caps. Secondly, we have a re-acceleration of revenue growth at Google, at Meta. And third, we have these companies acknowledging that they have the opportunity to be more efficient. We mentioned the job cuts that have already happened. Tim Cook telling Kovac, cutting costs, cutting costs, cutting hiring. Your reaction here? I think this was set up. You had Armageddon fears going into tech earnings season,

and you're starting to see semi-Goldilocks. You cut numbers, ripped the Band-Aid off. New York City cab driver was bearish on tech coming into earnings, and I think that's how this is all going to play out. Malcolm, how about you on Apple? As we said, you're a shareholder here, too. Are you comforted by what you got? The stock's down 3.3% here in overtime.

It's down $5. But what are you hanging your hat on right now, if anything? I'm not necessarily comforted by what I got, but I also wasn't scared away from the name. I don't have any plans to trim it or even sell it in the near term because I still believe in the company's ability to innovate. I also believe in the company's ability to keep their cult-like following happy for incremental increases in the abilities of their devices. And so I just think, one, we'll have to wait and see if China coming back online really does help those numbers this quarter specifically and maybe even into next quarter, that could make a difference.

The same way supply is down from factories in China not being able to build phones. We also weren't able to see what numbers would look like if Chinese consumers could get out and shop and buy the next iPhone the way that we intended they would before the mass lockdowns happened. So I just think, you know, with with Apple, it's a wait and see story. It's not so much a freak out moment for me the way Alphabet might be for some shareholders. And so I still I'll give them a pass here. And I will also look to next quarter to find out exactly where their numbers are going to be, rather than freaking out here and saying there's got to be something better to hold in my portfolio than an apple. Dan Ives, I got to run, but I want to give you the last word here. Cook on the call in about 20 minutes or so. If you get a question, if you

had one, what would you ask him first? I think it's really about the China demand story. If that holds, the stock goes, you know, continues to go higher. And I think that's ultimately the key. That's the hearts and lungs of this growth story. The semis of disaster on supply chain. It's all about demand in China. All right. Thank you, everybody. Stephanie Link, of course.

Thank you. Malcolm Etheridge. And as always, Dan Ives of Wedbush joining us here with the Instant Reaction. We want to get back to Deirdre Bosa, who has more for us on Amazon as we continue to go through this report. Dee? Yeah, Scott, we just want to correct something that we said earlier. The earnings per share coming in at three cents a share. So Amazon earnings per share, three cents.

And Scott, we're on the call right now with the CFO. We'll bring you headlines when we get them. All right, good stuff, Dee. Thank you very much. Deirdre Bosa coming up. We're tracking some other big moves. Believe me, there are other big moves in overtime. Christina Partsenevelos is standing by with that. Christina.

There are tons. And today it's going to be all about pricing. One cloud provider is struggling to get customers to pay more for its services, while the many price hikes for disinfectant wipes helping Clorox's bottom line. More overtime movers after this break. Been a busy afternoon for earnings. As you know, we are tracking some big movers in overtime. Christina Partsenevalos is joining us back now with that. Christina? Well, let's start with Gilead Sciences, the biotech firm crushing fourth quarter expectations and issuing an unexpectedly bullish outlook. CEO Daniel O'Day is saying the company hasn't seen growth this strong since 2015. So the stock is moving only slightly right now, up by 2.4 percent, and that could be part of the in-line guidance. So we were expecting a little

bit higher, but you're seeing it at 2.5 percent almost. Surprise jump in sales for Clorox, not because of a higher demand for its cleaning products, but because of higher prices. The CEO telling Reuters no more price hikes planned for the rest of this year, though. Clorox did increase its full year sales and earnings per share guidance, and shares are up 3.5% right now. And let's end with Atlassian, cloud provider under serious pressure right now, missing Q2 estimates on revenue, but topping the street on earnings. The company's saying customers are showing hesitancy in upgrading from free to paid products and expanding paid products at a slower pace.

The stock is down 12 percent, over 12 percent right now. Scott. OK, Christina, thank you. Christina Parts and Novelos keeping up to date on for us with everything other than those major earnings that dropped to top of the hour and throughout this session here. Up next, inside Amazon's quarter, our own Deirdre Bosa getting some insight from the CFO directly. We're going to bring you those breaking headlines coming up next. All right, let's get to our Twitter question. It's not too late. The question of the day. We want to know, will the Nasdaq outperform the S&P 500 this year? Want to know what you think. Head to at CNBC Overtime on Twitter to vote.

We'll share the results coming up before we end our show here in overtime. Up next, well, Santoli's last word is still coming up. And at the top of the hour, Apple and Amazon's conference calls are kicking off in the 5 o'clock hour. You can't miss that, nor what the fast money traders think about those reports and the calls we're back into. I want to give you a quick roundup now. The mega cap earnings movers, Apple missing on the top and the bottom lines with the company posting its first earnings miss and its largest year over year revenue decline since 2016. There's a stock down three and a third percent.

Amazon shares, there they are as well, down more than 3% too. Falling after AWS revenue missed estimates along with first quarter revenue guidance, slightly below analyst expectations. And then there is at the bottom of your screen there, Alphabet, down 3% really across the board as you can clearly see there. That after reporting a top and bottom line miss. YouTube and Google Cloud revenue coming in a little lighter than expected. Deirdre Bosa is back with more on Amazon and Alphabet's report. Dee?

And Scott, over the last hour, I've spoken to the CFOs of both Amazon and Alphabet, and there was a common theme from both of them. Both of them talked about greater efficiencies and optimization, echoing what we heard from the Meta CEO yesterday, Zuckerberg. Ruth Port, the CFO of Alphabet, said that they're meaningfully slowing the pace of hiring, but we should note that the workforce did increase year over year this past quarter. She also said that they're using AI and automation

to improve efficiency and optimizing how they work, slowing their expense growth. Brian Oselsky, that is the Amazon CFO, he said that they're focusing on driving cost efficiency in 2023. And I asked him about AWS growth. I asked him if it continued to slow in the first quarter. He said, yes, it has. And he expects slower AWS growth rates for the next few quarters.

And that's interesting, Scott, because that means that we could see AWS growth fall into the high teens, a place that I don't think we've been since I started covering this company. Wow. Yeah, we'll have to keep an eye on those shares in the hours ahead and certainly in tomorrow's session. Dee, thank you. That's Deirdre Bosa wrapping it all up in a very, very busy overtime for us. Santoli will do the same in his last word next. Let's get the results now of our Twitter question. We asked you, will the Nasdaq outperform the S&P 500 this year? The majority of you, well, I guess you believe in the earlier

hype. You say yes. Wow. Sixty five percent. All right. Mike Santoli here with his last word. I think it's an up year. It's a decent bet. But I think a fair amount of people are believing the hype. Are you? Well, I wouldn't say believing the hype. I mean, obviously, today you did see people give up the effort of fighting it to some degree. You saw a massive speculative call option buying. People really felt as if there were risk in betting against the other big Nasdaq stocks. You saw the gains in Apple, Amazon, Alphabet during the session. What's interesting about the after the close moves here is they're almost all in the range or less than the gains for today. Right.

So in other words, you're just kind of giving back what you what you got during the regular session. So it's a time to take a beat, figure out if we've gotten ahead of ourselves. I think it's pretty unlikely that this whole move has been a pure head fake. You're seeing too much in the way of actual real money demand in certain stocks. I think some of the economic indicators imply at least we're pushing off that sort of, you know, recession, you know, the clock strike that people were fearing. So, you know, obviously there's a pullback ahead of us at some point. We're at a place on the chart where it seems like it's a logical time to take a rest. But I do think that you saw some bull market stirrings in the action of the last few weeks.

I feel like what you're essentially saying, it's not going to surprise you if we wake up tomorrow morning and the three stocks that we just showed you are green. It wouldn't shock me. I wouldn't necessarily say that's an odds-on bet. Oh, I'm not either. What I'm simply saying is that if these were that disappointing, the stocks would probably be down more. And as I said earlier, I'm just thinking of what happened with Microsoft. Declines that looked similar and then evaporated, and it's higher today than it was then. Right. And look, I mean, there's a lot of index money kind of sloshing in.

And, you know, look, I think you have to say we're up 8 plus percent year to date S&P 500. You're compounding this year at an annualized rate of 120 percent. That doesn't continue. It's running a little hot. The action got a little bit grasping in midday. And I think that's why you see people watch that and they say, OK, take some off. And that's just the tactical side of things. I think longer term money, you can still make the case that people are under committed to the market. Oh, sure. If things don't really get bad on the economy. On the other hand, not as much as you could have said that two months ago, because I think that there's a little more of a balanced risk reward and a balanced risk appetite out there

than there was that. I wonder what the jobs report is going to suggest about the current strength of the labor market, which has been the principal reason as to why the economy is hung in there to the degree it has. Starting to see people who are maybe just for statistical and seasonal effect reasons, thinking there could be upside to the payroll number. We're now fixated on wage growth. I think it's a matter of is there a number that's going to be so far outside of the expectations that it changes the equation for Powell from what he said two days ago? It's hard to think so. I can't imagine that would be the case just so quickly after what he said. Not a single number, but again, you know,

once you've been kind of moved over to this side of the boat and said we don't have to worry about inflation in the Fed anymore, it doesn't take a lot to rethink it, at least in the short term. Nothing either to really upset the quote-unquote animal spirits in the speculative stocks, right? Not yet. Not yet. You know, although you did see things like, you know,

Carvana and stuff have these massive intraday reversals to the downside because they've just again become video games. So hopefully that kind of burns itself out, and the other more substantial parts of the market can take the lead. All right. We'll see what happens with the jobs report. We'll see how we end the week. It's so good to have your insight.

That's Mike Santoli. He'll be back, of course, for his last word of the week tomorrow. As will I. Fast Money is now.