Closing Bell - Closing Bell Overtime: Mega-Tech Earnings: Investors Cheer Microsoft, Alphabet Quarterly Numbers; T-Mobile CEO On Latest Quarter 4/25/24

Episode Date: April 25, 2024

Alphabet and Microsoft impressed investors in the latest quarter and both stocks moved higher after-hours. Plus, earnings from Snap, Roku, Intel, Gilead and L3Harris. T-Mobile CEO Mike Sievert on the company’s lowest ever churn rate and growing market share. 

A big miss on GDP and downbeat sentiment around earnings, sending stocks tumbling today, yield spiking, but the major averages closing off the lows. That's a scorecard on Wall Street, but winners stay late. Welcome to Closing Bell Overtime. I'm John Hort with Morgan Brennan. Well, it's a monster afternoon of earnings. We've got dozens, literally dozens of widely held companies reporting, headlined by Alphabet, Microsoft and Intel, along with Snap, Roku, L3Harris, T-Mobile and many more. And we will have the numbers in instant reaction, plus an exclusive interview with T-Mobile CEO Mike Siebert before his earnings call. As we await the onslaught of earnings, though, let's bring in our market panel, Wealth Enhancement Group Senior Vice President Nicole Webb and Henion & Walsh asset management president and CIO Kevin Mon. It's great to have you both. Nicole, I'll start with you because, man, did we see a rebound. And I realize that that doesn't mean that we ended with

gains in any sort of significant way here for stocks. But we came so far off the lows. The Dow was down 700 points at one point, all because of that hotter inflation reading within GDP this morning. How does that set us up as we go into earnings when we have seen some of the big tech names sell off coming into this afternoon? Yeah. You know, I think the market went into this week hyper-focused on can the market digest longer and less in terms of cuts? The answer was yes, as long as we had growth. And then there was the shock to the system. What if growth has been disrupted? And a cross current of data around economic growth, stronger inflation, but then a lot of CEO sentiment that the consumer is okay. And so I do think it spooked the market a bit this morning. We also have been trying to

kind of figure out, okay, when these mega cap names are beating to the upside. Nicole, we've got Microsoft. I'm going to cut you off right there so we can get those results and come back. Steve Kovac has the numbers. Steve. Hey, Morgan. Yeah, and it's a beat on the top and bottom lines and a beat on Azure revenue growth. Let me go over the numbers here. EPS is coming in at $2.94. Street was looking for $2.82. Revenues were $61.9 billion. Street was looking for $60.8 billion. And then Azure continues its reacceleration here.

It's a 31% growth. Street was looking for a 28.6% growth. I'm going to go through the numbers here in a minute and see how much of that Azure growth they're attributing to AI. I'll be right back with you, but that's the numbers we've got for now. Stock's up a little more than 5%, guys. All right. Nicole, I'm going to go back to you now that we got those initial numbers from Microsoft and the stock is up 5% right now. And actually, that was the great segue into what I was saying, which was what we saw out of Netflix, what we saw out of Meta, when stocks don't ramp up on good news, there's generally a risk change in risk appetite. And

instead, here you see a beat from Microsoft and the risk appetite is being absorbed. We've seen a lot of that under-turning, that buying up of names beneath the surface, the recovery today. And so we still think this is kind of know, kind of a blip in the radar and probably this morning was an overreaction to that GDP shock. Okay. Kevin, well, I do want to mention Alphabet results are out as well. We're going through those. And Kevin, I might have to interrupt you if we get through it right in the middle of your response. I know you're expecting Microsoft to be one of the winners in the AI race. I wonder if you think the markets overall might react to Microsoft earnings, you know, meta and all that spending certainly seem to get people down. Might some better results from the likes of Microsoft get some people up?

Without a doubt, Microsoft and, of course, NVIDIA, which doesn't report until May, unfortunately. And I think this earnings season for big techs is going to be marked by two things, John. One, AI, and two, CapEx. Microsoft has been very early to the AI game. Well, Kevin, I warn you, and I do have to do it. Let's see. Intel earnings are out.

It's not Google, though. It's Intel. Christina Partsnevel is back with those numbers. Christina? Yeah, it's not Google. It's Intel. We are seeing a beat on EPS, 18 cents adjusted, four cents higher than what the street was anticipating. We'll be right back. Street was expecting $13.6 billion. So that midpoint was still a little bit less. Gross margins coming in at 41%.

You can see shares dropping 5% on this light revenue outlook. And I'll come back with more. All right. That's rough. Don't miss my interview with Intel CEO Pat Gelsinger. You can catch some of that tonight at 7 p.m. on Last Call. Looking forward to that. In the meantime, Alphabet Earnings.

We have the numbers. Deirdre Bosa has them for us. Hey, Dee. Hey, the street is very happy with what they're seeing. Shares are up nearly 12% in the after hours. So let me give you those numbers. It's a beat on both the top and bottom line. Revenue coming in at $8.5 billion, $78.6 billion is what the street was expecting. Another beat on EPS, $1.89 versus $1.51 expected. Google Cloud revenue also beating, coming in at nearly $9.6 billion, $9.35 is what was expected. Looks like a beat on YouTube revenue as well. And I always like to look for the total number of employees. Actually, a decrease in this quarter from the fourth quarter of last year at 180,000.

We'll continue to go through this and bring you more as we get it. That's a big move. It's like the other end of meta yesterday. Dee, thanks. Kevin, I got to go back to you and let you finish. Go for it. I think everyone can take a deep breath now, John. The tech trade isn't dead just yet. And if I can go back to Microsoft for a second, I do believe that Microsoft has the balance sheet, they have the expertise, and they have the commitment to be one of the ultimate winners in the AI race. I like what they're doing with Azure from the cloud side. I like what they're doing with their AI-powered Bing deep search, and of course, what they're doing with Copilot. But even more interesting to me, John, is their involvement in data centers. Microsoft announced earlier this week that they're going to build $2.9 billion of data centers in Japan by the end of 2025. This

following their acquisition of Fungible in July of 23 to actually accelerate data center innovations. Data center at the core of the AI ecosystem. Microsoft gets it. They're going to continue to invest in this area. They have the balance sheet to do it. And I'd expect better days ahead for Microsoft, certainly as it relates to AI. All right. Nicole, I want to get your thoughts on Alphabet, which is now up a little over 12%. We saw Google Cloud beat. Also talking about AI in the release and operating margins, despite all of the investment in AI are actually expanding this quarter as well. Yeah, you know, I think there's a lot of great things going on at Alphabet right now. You know, the thing that we are talking about most often is how Google has trained its own chips, not the coveted GPUs that the industry

has scrambled to buy in masses. And so that's very interesting. What they have in YouTube is also really interesting when you think about the size of YouTube as a media company. Seeing them surprised to the upside tonight and the market response is also very favorable. We've actually seen them report earnings, have a drawdown, and then over the coming weeks come back to reach new highs. And instead today, this was digested very well by the market immediately. And so I think that, again, bodes to that comment you made, Morgan, that the tech trade is not dead. All right. Let's see what more we can get on Alphabet. Deidre Bosa has some more. Dee. Yeah, John, this is big news. Alphabet announcing its first ever dividend of 20 cents

per share. You could say maybe this was long in the coming, especially after Meta issued a dividend earlier this year that raised expectations. But here we have it. Google's first ever dividend has a buyback program in place for years. But a dividend is something that Wall Street has been looking for. So shares are up even more now, more than 13 percent. Wow. Look at those big tech stocks, all grown up. D dividends from Meta and now from Alphabet as well. Yeah, going back to Steve Kovach, are we on Microsoft? Steve, what's going on with Microsoft? Hey there, John. Yeah, I wanted to talk a little bit more about this Azure growth and specifically the amount that Microsoft says AI is contributing to it. So they say seven percentage points of that 31% of the growth they saw is

coming from AI. So as you know, John, a lot of the open AI activity and other AI activity running in the cloud, that directly benefits the cloud business. And it's an increase quarter over quarter of the share that AI is making up of that growth. It was six points last quarter in the December quarter, and now it's seven points. So a growing part of the Azure growth is all due to AI, John. Seven points due to AI here in this growth, you say. Interesting. Kevin, I want to go back to you on that because you were talking about expectations that Microsoft's going to do well because of AI. I wonder if this puts pressure on Amazon, not just their overall AWS results, but to give some kind of color on how AI is contributing to them. Certainly on the cloud side it does, but I think Microsoft is a very different type of company as they have their

tentacles in many different areas. I think back to when Microsoft made that first strategic investment in open AI or chat GPT. I think what they've done since that point in time leveraging AI, as I believe that they're one of these software companies within the AI ecosystem, the brains that developed the sophisticated algorithms and machine learning to make AI work. Microsoft is making that work, not just with Azure as it relates to the cloud, but also with Bing and even more importantly with Copilot and what they're doing for security. So I really like the path forward for Microsoft. It looks like the market is receiving Microsoft's earnings well, certainly Alphabet's earnings well. We'll have to see what Amazon says in the not too distant future. We've got Roku earnings out as well. Julia Borson has those for us. Hi, Julia. Morgan, Roku beating on both the top and bottom lines, the company reporting earning revenues of 882 million versus expectations of 849 million.

The company also reporting a loss of 35 cents per share. That's better than the loss expected of 61 cents per share. The company also saying that it's streaming households. This is now how it's characterizing what it previously called active accounts, increased 14% year over year, streaming hours, 23% year over year, and platform revenue of 19% year over year. You see the stock is now up about 7.5% on those better than expected results. Back over to you. All right, Julia, thanks. Meantime, Gilead earnings out as well. Angelica Peebles has those numbers. Angelica. Hey, John. Gilead beating on the top and bottom lines, the company reporting a loss of $1.32 a share, and that's narrower than the $1.49 a share loss that analysts were expecting. And the

majority of that loss is coming from the $4 billion charge related to its acquisition of Sema Bay. And the company is saying that it reported $6.7 billion in the quarter, and that's better than the consensus estimate of $6.3 billion. And that is in large part due to its HIV drug Bictarvy and also its cancer drug Yaskarta. Those are both in line with expectations. And for the full year, Gilead sees earnings per share of $3.45 a share to $3.85 a share. Analysts are looking for $3.93 and the company is reiterating its sales guidance of $27.1 billion to $27.5 billion. The stock is about unchanged right now. John? All right. Thank you, Angelica.

Also, welcome back. Good to see you back on Overtime. Snap earnings, meantime, are out. Julia Boorstin has those numbers. That stock up more than 20% in Overtime. Look at that. Yeah, that stock is shooting higher after the company beat on both the top and bottom lines,

reporting earnings of $0.03 per share rather than the $0.05 per share loss that analysts had been anticipating. Revenues of $1.19 per share rather than the $0.05 per share loss that analysts had been anticipating. Revenues of $1.19 billion coming in ahead of estimates of $1.12 billion in revenue. That is growth of 21% in the quarter. It's a serious acceleration from the 5% revenue growth that Snap showed in the fourth quarter. Now, for the first time, Snap is giving a full year operating expense outlook, guiding to OPEX for the full year between $2.425 and $2.525 billion. The company also reporting that its daily active users grew faster than expected, 10% to 422 million.

And Snap hit 9 million subscribers for Snapchat Plus. Snap also giving some official guidance for the second quarter, all of it coming in ahead of expectations, guiding to revenues with between 15% and 18% growth in Q2. That's ahead of the consensus estimate. Also guiding to adjusted earnings of between $15 and $45 million, well ahead of the $15.5 million consensus estimate. Also guiding to daily active users, a million ahead of expectations. The company is saying it's focusing on diversifying and also accelerating revenue growth. There's going to be a lot to talk about here. I think that expense guidance is key, showing that they have some insight into what's going to be going on in terms of their costs in the coming year. Now, we're going to be talking about all this and more with Snap CEO Evan

Spiegel. We have an exclusive interview with him tomorrow morning in Money Movers. Back over to you. All right. We'll definitely tune in. Julia Borison, thank you. Shares are up 25% right now. Kevin, here's my big takeaway. Whether it's Alphabet, which is shooting higher today, whether it's Snap, which is breaking

a string of disappointing quarters now with these results, or even Meta yesterday, this was overshadowed by the spending and the guidance picture. Digital advertising is doing well. Yeah, absolutely. And digital advertising will be key for these companies' bottom lines going forward. I can't reiterate enough, Morgan, how important technology is for this earnings season. As it stands right now, according to facts that the S&P 500 is only expected to grow earnings by one half of one percent this quarter. Yet the technology sector is expected to grow by 20 percent year over year. We need these companies to continue to drive earnings forward because they're the rising tide that will lift up the rest of the market due to so many individual investors and so many fund managers holding technology names, specifically

those Mag7 names. All right. It looks like, John, it looks like Alphabet also, an additional $70 billion share buyback initiated as well. Yep. Did we mention that already on air? I don't think we did. You just did.

All right. Nicole, Kevin, thank you. My pleasure. Thank you. For much more After Hours action coming your way, including beats from Microsoft and Alphabet, and news about Alphabet's first ever dividend and a buyback, you've got to stay with us. But first, T-Mobile just out with results as well. Earnings topping estimates at $2 per share. The street was looking for $187.

Revenue came in light at $19.59 billion versus estimates of $19.81 billion. But postpaid net customer additions beating $1.22 million. That was better than street consensus of $1.12 million. CEO Mike Sievert joins us next exclusively to break down the quarter and more before he talks to analysts on the earnings call. Other side of this break, overtime's back in two. Welcome back to overtime. T-Mobile slightly lower right now despite a beat on earnings and net customer additions and reporting record low Q1 churn. Revenue did come in below estimates. Joining us now is T-Mobile CEO Mike Sievert. Mike, it's great to have you back on the show. Walk me through the quarter, especially as you did grow your net additions and revenue did come in a bit light. Your postpaid additions and revenue

did come in a bit light. Well, it's just another great quarter for us on growth. The total revenues that you're talking about include phone sales, and they were suppressed a little bit just because upgrade rates are lighter, and that's actually a good thing. So in our industry, investors look to service revenues, and service revenues came in very solid, 3.5%, easily the best in the market, more than double the rate of growth of our benchmark competitors. And our 1.2 million net additions was, again, double the combination of AT&T and Verizon. So this consistent, reliable growth machine at T-Mobile just continues, and it's resulting

in best-in-industry EBITDA growth and cash flows up nearly 40% year over year. Okay. I am curious if the boundaries are blurring, though, because the competitive landscape seems to be shifting here. Obviously, you just had this announcement earlier this morning about a joint venture to buy more fiber. We've seen some of the cable and broadband carriers starting to expand into wireless and wired offerings in a bigger way as well. How are you thinking about that competitive landscape and the fact that you did just strike a deal for fiber? How does it speak to that? Well, our confidence in 5G home internet really gave us, our success in that area really gave us

the confidence to get involved in fiber. You know, we've been outgrowing the entire market, including the cable companies, the fiber companies, with 5G home internet for two years running now. And now we have more than 5 million broadband customers and a lot of know-how. So for us, getting into fiber is purely an opportunistic financial and customer experience play because we think we have more to add here than a disinterested investor. We have a huge brand, massive distribution, tens of millions of customers, and a proven track record of being able to satisfy people in broadband. So it's a logical extension for us.

Mike, break down a little bit the growth that you saw in the quarter. How much of it was in smaller markets? What's the status on fixed wireless? It's really interesting that a lot of people thought that our growth would come principally from smaller markets in rural areas, and we're firing on all cylinders there. But we're also extending our lead in the top 100 markets where we've always had an advantage. And then over on the business side, we're growing across the segments, enterprise, small and medium business. And that's really great to see governments growing. We had our best enterprise quarter ever this quarter. So these

are things that are resulting in our share of postpaid net additions being actually higher than year ago benchmark quarter. And so this growth machine at T-Mobile that a lot of people wondered as the industry begins to slow down, what will happen? In fact, our share of total nets as the industry growth slowed down only increased. I wonder what your perspective is on what's happening with TikTok from the sort of government standpoint, but also what's happening with Reels. It's starting to make Facebook some money. Meta did talk about that in their earnings call. How much of your consumer activity from T-Mobile subscribers is coming from dealing with that kind of thing? And how do you think newer phones might influence people's desire to use

sort of those higher dollar all-you-can-eat plans? Well, consumers have insatiable demand for what we and all of our app partners offer. You know, connected life is so important right now, and all of those platforms are growing. And so, you know, for us, that's really gratifying. And in order for those videos to scroll immediately and without latency or hesitation, you need a great network. You know, and 75% of our customers now actually are on 5G devices, experiencing a total connectivity across all forms of devices and networks that's about double the speed of the average networks of our competitors nationwide. And so T-Mobile's got a really differentiated experience at just the moment that people

are consuming all of these videos, you know, like never before. It looks like you're raising metrics in your guidance, too. What gives you the confidence to do that as you look through the rest of the year? It was just another strong quarter where growth came in exactly like we expected, maybe even better in some areas. And so we decided to just edge up our guidance to make sure that we're keeping investors, you know, targeted on our most contemporary views of how our year will unfold. Last year was the greatest growth year in our history.

We're on track for just another fantastic year. And that's what we are expressing in our guidance. Well, I know you got to get to that earnings call, Mike. Thanks for joining us first on Overtime. Thanks for having me. Up next, longtime tech analyst Dan Ives is going to give us his first reaction to Alphabet's print, including news of the company's first ever dividend and a big buyback as that stock continues to be up better than 12 percent in overtime. We'll be right back. Welcome back to Overtime. We're seeing some headlines just crossing on Walmart. The company says it's nominating Chipotle CEO Brian Nicol, you might remember from Overtime yesterday, to its board. Morgan.

All right. Well, we've got more earnings to bring you. L3 Harris earnings are out. For the defense contractor, it looks like a beat on both the top and bottom lines. So $3.06 adjusted per share is what they're posting for the first quarter versus estimates of 2.9. Revenue of $5.21 billion, also better than what the street had been anticipating, represents an increase of 17 percent in sales or up 5 percent organically. It's slightly raising the full year revenue outlook at L3 Harris sees $20.8 billion to $21.3 billion. That is a little bit better than the midpoint and what the street was expecting, but also raising and posting strong full-year adjusted EPS guidance, $12.70 to $13.05 per share, better than what the street was forecasting as well along those lines. Also raising segment, adjusted segment operating margins for 2024. That guidance is increasing from 15 percent to greater than 15 percent. That's something that investors in defense

stocks look for. So you can see those shares up about 1 percent right now. CEO Chris Kubasik is going to break down those numbers and more with us in an exclusive interview tomorrow right here on Overtime. Looking forward to that, of course. In the meantime, Alphabet still surging in overtime, up better than 11 percent after beating estimates on the top and bottom lines. And also big news, the company announcing its first ever dividend, 20 cents per share. Alphabet also announcing an additional 70 billion dollar buyback. Joining us now to discuss is Dan Ives of Wedbush Securities. Dan, I know you were expecting good things here. I don't know if it's more exciting to talk about Google Cloud turning in this nine and a half billion plus revenue number or YouTube continuing to be strong. But the names in advertising reporting today, Alphabet and Snap,

performing better than Meta did. Look, I mean, this is a quarter that they should frame and put in the loop. Because if you look across the board from a search perspective, from YouTube, then you'll get cloud. Some of the parts, my colleague and I, Scott Devitt, we think this could be $30 to $40 per share incremental to Google's valuation. There is nothing in here that I view as a negative. The bulls are going to sleep well at night with this quarter. Let's hold on just a sec, Dan. Let's go back to Deirdre Bosa, who's got more on Alphabet. Dee?

Hey, John. I just got off the phone with CFO, CIO, and President Ruth Porat. I asked her about what they're seeing in terms of ads and generative AI queries. She said that they're encouraged with what they're seeing in testing. They're pleased with the ongoing strength and resilience in search. She pointed to that search ads number beat. And she's also said she's excited about what generative AI can add to the user experience. On that dividend, she said it further strengthens their overall capital return program and capital allocation framework remains the same. They continue to invest aggressively in

the business. And finally, on that cloud growth, I know you were just talking about it. She said they're seeing increasing contribution from AI solutions, and the results reflect broad strength across industries. She also mentioned that Google Workspace was driven by an increase in average revenue per seat. She was also asked about the CFO question. When are they going to find her replacement? She had no comment there. All right. For now, she's got multiple jobs.

Dee, thank you. Dan, back to you on some of this. Ruth Porat mentioning AI there, but contrasting with Meta, is it possible that Google's under-investing in AI if investors aren't mad at how much they're spending compared to the reaction to Meta yesterday? Look, I think it's a stark change to what you saw 24 hours ago. But it comes down to they have a gold mine of AI engineers and data. And now they're starting to monetize it. Clearly, six months ago, nine months ago, back was against the wall. But this is really this is a new Google. I mean, you're seeing massive not just from an investment perspective, but the growth's there. And this could be next six to nine months what really starts a goldmine situation for them on AI.

It's not just Microsoft, but in this AI revolution, Google is going to be a key player. The fact that you now have Meta paying a dividend, you have Microsoft paying a dividend. I know that's been going on for a while. You have Alphabet paying a dividend. I mean, is this going to force the hands of the other mega cap tech companies that are already highly profitable to do something similar? And I guess just as importantly, when you see some of these companies initiate these dividends, does it actually widen the investor base? Morgan, that's a great question. I think it's taking a page out of Apple's playbook. You know, if you look back over the years, these companies, they're generating more cash

than some countries. And that's not going to stop. And what it's doing here is from a capital allocation perspective, they're still going to be aggressive on M&A, dividends, buyback. These are the smart moves. And I think that's why we are just in the early stages of this next tech bull market. You look at these numbers. I think it's just showing the monetization of AI cloud is actually accelerating. Unless you have

a telescope, it's hard to find a recession. I think it's just Amazon left, Morgan. Yeah, I think you're right. Yeah. And then, I mean, if you want to. Yeah, I guess so. That says that. Listen, I know you don't cover Snap. We're seeing a huge move in those shares, Dan. And we're talking about a little bit earlier, but, you know, it does speak to some of these earnings we've gotten in the last, say, 24 hours, 25 hours. The fact that digital advertising is strong, you're seeing increasing green shoots where that is concerned. What are the read through to some of the other companies we haven't heard from yet? Yeah, I mean, we did a survey, you know, over the last month at Webhooks,

and that's exactly what it showed. I mean, we were seeing not just green shoes, I think actually a significant rebound. That's not priced in to what we're seeing in terms of the whole broader space. This is just the beginning of this digital advertising rebound. And that, even though enterprise has been strong,

cloud, that has not participated. That's going to be another missing piece of the puzzle that what I believe we're going to just see a massively strong tech earnings season. Tonight, it's a pound-the-table moment for tech relative to 24 hours ago, little white knuckles from the meta spending like a 1980s rock star in AI.

But where's that money going to? Microsoft, Google, Amazon. Dan, how do you connect the dots here with the macro? Because we're just wringing our hands, some people anyway, as the market was opening over that GDP read. But there's so much indication that consumers are continuing to spend and that advertisers are at least spending to benefit from that. Yeah, John, I think that's what's really starting to happen is that we're seeing this rebound digital advertising. And despite even some of the GDP numbers, I could tell you from an enterprise perspective, I mean, this is something that reminds me of 1995, not 1999, because we're in a fourth

industrial revolution and the beneficiaries are tech and now the second third fourth derivatives of this ai revolution we're going to see it across software infrastructure consumer enterprise it's just started this is a get out the popcorn moment to where i think we're going in tech all right dan. Dan Ives, thanks for joining us. Thank you. We're seeing Intel under pressure, but we'll get back to that in a second. Capital One earnings are out. Kate Rooney has the numbers. Hey, Morgan. Yeah, so it was a mixed quarter for Capital One for Q1. Loan loss provisions also look a bit larger than expected. The adjusted EPS number, bottom line, that was a miss by $0.10, $3.21 adjusted.

That excludes the FDIC impact. Revenue of $9.4 billion. That was stronger than expected. It was down 1%. Provisions for credit losses decreased to $2.7 billion. Still a 60 cent dividend for this name. That was unchanged. And then delinquencies are also down sequentially. So 30 day delinquencies, 3.4%. That was down from 3.7% in the prior quarter. Expenses are also down. It looks like down 10%, that non-interest expense. Deposits did increase. And then there's a quote here from the CEO. Richard Fairbank talks about the results being driven by stabilizing consumer credit and then balance sheet strength as well. Of course, Capital One did announce $35 billion

blockbuster deal to buy Discover. The CEO highlights that One did announce $35 billion Blockbuster deal to buy. Discover, the CEO, highlights that as well in here. Guys, back over to you. All right. Kate Rooney, thank you. I was just going to say Intel's under pressure, but AMD and NVIDIA are both trading higher right now, perhaps unsurprisingly. All right. Lots more after the break. We're going to talk more about Microsoft's beat with an analyst who said

it was his highest conviction call in big tech heading into earnings. What he has to say now. Stay with us. Let's get another check on Microsoft. It's popping up better than 4% in overtime after posting a beat on the top and bottom lines with Microsoft's cloud revenue up 23% year over year. CEO Satya Nadella saying in the release that. How big of a deal is that to you? you know, relatively in line where we expected, but you kind of look at the trajectory here over the last couple of quarters, right? Six percentage points last quarter, three percentage points a quarter before that, and, you know, one percentage point three quarters ago. So the trajectory is definitely going to the right side. You kind of just continue to get more of those GPUs kind of getting installed across their ecosystem, and they're able to charge more for those kind of, you know, next-gen NVIDIA GPUs. And that's allowing them to really kind of continue to scale up on the cloud side

of things. So we don't think that changes here over the next couple of quarters. And as a result, you're going to continue to see an increasing amount of that revenue on the cloud side of things really come from AI. Angelo, investors might be scratching their heads about how to digest the idea of big capital investment necessary to win in AI. On one side, you've got Alphabet, Google, initiating a dividend. And then yesterday we had Meta, you know, Zuckerberg saying, hey, we spend tens of billions, I mean, on AI, essentially. So some investors were disappointed. What should investors expect companies to do who are hyperscalers, who are mega caps to win in the AI era?

Well, I think it's clear what's happening right now, right? I mean, I think if you're a cloud player, you're able to monetize AI a lot quicker than other companies out there because you're able to kind of, you know, instantly get those kind of, you know, the hardware on that side of things as well as the software. And you can charge up for that, you know, to the enterprise space and they're willing to pay for that. I think if you're someone like Zuckerberg out there on Meta's side of things, you need to continue to, you know, to pay up and invest heavily in order to kind of throw out some services and new capabilities out over the next couple of

years that will hopefully allow them to really monetize and generate, you know, more revenue via AI. So, you know, you kind of look at who's got the leg up right now or kind of, you know, what the template we think right now is in terms of kind of, you know, benefiting from that AI play absolutely on the cloud side of things. And, you know, again, you kind of saw Alphabet's number in terms, I think it was a growth number of about 28% on that side of things. My guess is you're going to see some nice acceleration on, you know, on Amazon side of things. So really, that's kind of the play right now where some of those other mega cap tech names are going to have to wait and see in terms of the AI monetization. It's like you took the question out of my mouth, Angelo, because Amazon's up 3% right now after

hours on pretty heavy volume, presumably because the read through here is that rising tide lifts all boats after two strong reads for clouds with both Alphabet and Microsoft today. I also wonder, we were just talking about it before with the initiation of a dividend at Alphabet, whether Amazon sort of being the lone ranger to not do that, whether that's factoring in or not. Yeah, no, I think definitely investors were pushing for Alphabet to really kind of announce a dividend here. And they kind of, you know, met that expectation. I mean, it was a very small dividend. I mean, really kind of they're just, you know, they're throwing an olive out there to investors. It's really not going to move the needle much out there.

But, I mean, it does get some new investors out there, and I definitely think it helps the sentiment out there for Alphabet. I think kind of the biggest takeaway, I think, you know, between both these results here, look at the operating margin expansion that you kind of saw from both, you know, Microsoft and, more importantly, from Alphabet. I think, you know, their services business, you know, operating margin of about 40% versus 35% a year ago. That's some really kind of nice expansion there that they're seeing as they kind of, you know, manage those costs pretty tightly. We haven't even talked about PCs

and rebound in PC demand and the read-through that we're getting to that and the rest of the ecosystem from Microsoft either. Yeah, no, I mean, and hopefully that's more of a second half thing. And, you know, clearly when you kind of think at the, look at the calendar here, right, going into May, I mean, May is going to be an important month because you've got Google I.O. on May 14th, but you've also got Microsoft Build Conference on the 21st. And you could potentially kind of get some clarity in terms of kind of what's in the pipeline on that side of things as we go into the second half of the calendar year. But I think stay tuned on that side. There is going to be potential needle drivers there.

OK, Angelo Zeno, thanks for joining us. Shares of Microsoft have 5 percent right now. Alphabet almost 13 percent. Sketchers earnings are out. Kate Rooney has those numbers for us. Hi, Kate. Hi, Morgan. Yeah, this was a pretty strong beat for Skechers in the quarter. You can see shares up more than 7% after hours. EPS, 23-cent beat there on EPS. Street was looking for $1.10. It came in at $1.33. Revenue was also stronger than expected.

That was driven by record sales for Skechers, also lifting the outlook. CEOs saying in the release they're confident Skechers is going to have another record-breaking year. Q2 in terms of guidance is pretty much in line. A little bit light, but full year is really strong here. Full year EPS guidance at least. The midpoint of the range was stronger than expected, but you can see all of that is helping shares here after hours, guys, up more than 8% now. Back for you.

All right. Kate, thank you. Inflation fear is helping sink stocks today. Coming up, what to expect from tomorrow's key inflation reading and what it could mean for the Fed and your money. Plus, shares of Microsoft backed Rubrik, a bright spot today after launching its IPO. Up next, the company's CEO on the huge opportunities he sees in the data security industry. We'll be right back. Welcome back. Plenty of upside movers in overtime, but it was a rough day on Wall Street. The Dow falling 375 points. Caterpillar and IBM were the biggest drags. The Dow had been down 706 points at the lows.

But check out the QQQ ETF, which tracks the Nasdaq 100 getting a big pop in extended trading as Alphabet and Microsoft jump. Well, Microsoft backed cybersecurity data management company, really backup and recovery company Rubrik, making its New York Stock Exchange debut this morning at a $5.6 billion valuation. Shares jumped as much as 25 percent in its trading day debut, sort of bucking the trend. End of the day, up 15 percent. I spoke to CEO, chairman and co-founder Bipol Sinha in a first on CNBC interview earlier today. He talked about how Rubrik's reframing the market's transition and growth around cybersecurity services, backup and recovery, and how Rubrik's differentiated product sets it apart from other players.

Rubrik is leading that market transition. And whenever you have market transition, not all the legacy player or old players make it. And that's why you see consolidation in our market, because the use case of this product has changed. We are telling our customers that cyber is the biggest risk and how do you continue to operate the business? It's a very large market. According to Gartner, in the next three years, it's upward of $50 billion market. Bipple's an interesting guy. He didn't go to like one of the top high schools in India. So in order to get into a great school, he found his own test prep materials and prepped for the test and tested into a top school, which like you're not supposed to do, but he

figured out a way. So he wants to figure out a way to take over the cyber security market as well. All right. So so bet on this guy is potentially is what you're is what we're saying, or at least the personal aspect of it. I'm not saying don't bet on the others or anything. I'm just saying he's going to give it his all. Yeah. I do wonder, though, if it sheds more light on this part of the cyber industry in general when I know we've got Commvault earnings next week as well, which is another name that you follow closely. Yeah, it's the closest direct comparison.

I mean, Bipple would call them legacy, but Sanjay Merchandani over there has been sort of turning that around. And Compout was actually up today fractionally in a rough day for the market. So we'll be interested in seeing what they've got. All right. Well, in the meantime, up next, all of the other overtime earnings movers you need to keep your eye on as we count down to the analyst calls from Intel and Microsoft. And there are many names. Stay with us. Welcome back to Overtime. Check out shares of Atlassian, ticker TEAM, T-E-A-M, falling in overtime down 6%. That's despite a mostly strong quarter by the numbers, including free cash flow of $555 million, up 59% year over year.

But the company is saying that one of its co-CEOs and co-founders, Scott Farquhar, is stepping down. The other co-CEO and co-founder, Mike Cannon-Brooks, will remain as the sole CEO of the company. Meantime, Boston Beer, ticker SAM, up 2%. The company posting earnings when the street was expecting a loss. Management citing growth in Twisted Tea as a major driver of sales. Intel under some major pressure right now, down 9% in overtime. Q2 guidance for both revenue and earnings. Let's see. Well, revenue coming in light of what the street was expecting.

The loss was a little narrower. Data center revenue down 18% year over year. Clearly a lot to talk about here. So don't miss more on the corner in my interview with CEO Pat Gelsinger. That's tonight, 7 p.m. on Last Call, Morgan. We could call it overtime on overtime because also on Last Call, don't miss my interview with Andral founder Palmer Luckey following his company's new Air Force contract for autonomous combat jets. They're moving forward with the development of basically fighter drones. Yeah, it's 4 p.m. Pacific, so it's like 4 p.m. Eastern

to 4 p.m. Pacific. That's, you know, last call. Up next, much more on today's sell-off and how another key reading on inflation could impact trading tomorrow. And check out a tale of two aerospace and defense stocks. North of Grumman surging on an earnings beat as sales and operating margins grew. Textron sinking on disappointing results and announcing it will cut roughly 1,500 jobs. The takeaway from both of these, though, robust demand for defense.

Stay with us. We'll be right back. Take another look at Snap. It is up 27% in overtime after the company posted earnings of $0.03 a share. The street had been looking for a loss of $0.05. Revenue guidance also came in above estimates. And Snap CEO Evan Spiegel is going to join money movers tomorrow, 11 a.m. Eastern, in an exclusive. We've got more earnings coming your way tomorrow, too. ExxonMobil, Chevron, AutoNation, AbbVie are all going to report earnings before the bell.

And Wall Street will be closely watching tomorrow's inflation data after GDP missed the mark. The latest PCE print coming at 8.30 a.m. Eastern with expectations of a rise of 0.3% month over month. One word that sent stocks lower and yields higher today, and that was stagflation. Yes, and we're not done with today yet. It's take our kids to work day. workday some junior members of the overtime team are here at cnbc headquarters in england cliffs with a special delivery for our very own morgan brennan because aside from just being take our kids to work day it's also morgan's birthday i was very very great job carrying that cake all by yourself that was that was my most nerve-wracking part of the show, despite all those earnings coming in. And you delivered in overtime.

Oh, well, thank you. I can't think of a better way to celebrate my birthday than with you and my overtime family, and actually our real family, too. Remy, and it's so good to have you guys here on set. The next generation. Absolutely. The next generation of financial wizards. They're ready right now.

She said she's a grown-up on the way and proved it by carrying that cake better than Gernon did on the way here. She was like, let me take that. I'll take that from you right now. It's all those muscles. She got to see her hero Charlotte Flair at Stockdraft today. So she's been working out. That's going to do it for us here at Over Time.

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