Closing Bell - Closing Bell Overtime: Meta Shares Rise In Overtime; Former Fed Vice Chairman Alan Blinder On The Fed’s Decision 7/31/24

Episode Date: July 31, 2024

A double-dose of major market-moving events: Meta earnings and the FOMC’s rate decision. Fed Chair Jerome Powell kept interest rates unchanged but said investors could expect a cut in September if current economic data continues. Meantime, investors cheered Meta’s latest quarterly numbers; top-rated analyst Mark Mahaney of Evercore and CFRA’s Angelo Zino break down the report. Plus, Qualcomm CEO on what powered the chipmaker’s strong quarter. Plus, other earnings from Arm, Lam Research, eBay, Etsy and MGM.

Well, that bell marks the end of regulation, synchrony ringing the closing bell at the New York Stock Exchange. United Way of New York City doing the honors at the NASDAQ. Stocks ending the month of July with a bang, getting a boost as Fed Chair Powell says a September rate cut is on the table, and as tech comes roaring back. That is the scorecard on Wall Street, but winners stay late. Welcome to Closing Bell Overtime. I'm John Fort with Morgan Brennan. Well, we've got another huge hour of earnings on the way,

headlined by Meta, Qualcomm, and Arm, along with Lam Research, eBay, Etsy, and many more. Plus, former Fed Vice Chair Alan Blinder joins us with his first reaction to the Fed decision after calling for a cut at his meeting earlier this week. Well, as we await all of today's earnings results, let's bring in our market panel, Jeffrey's chief market strategist and CNBC contributor David Zervos and Brooke May from Evans May Wealth. Great to have you both here. David, I'm going to have to start with you

on this one because we started the day higher for the major averages, but then we saw that those gains upon gains through the Fed decision, through the comments from Fed Chair Powell. We gave a little bit of it up here at the close. But in general, your takeaway as the message here was really that the dual mandate is in better balance and you have a labor market that is normalizing. Would you say net neutral, dovish? How do you how do you see it? You know, Morgan, I'm glad you brought up the word normalizingizing because I think that was the word that really described this press conference. Jay was using it over and over again to describe the labor market. He doesn't see anything sinister.

He sees a kind of normalizing market. If they see something more sinister, they have plenty of ammo to act and will act. But I think they're in a good place. He said they're in a good place. He doesn't see an economy that's overheating. He doesn't see an economy that's really showing signs of any major dislocations. Sure, there's little pockets of pain in commercial real estate and a few other places. But by and large, I think Jay gave a very balanced and pretty much a continuation, a balanced view and a continuation of what he's been saying. They've been bringing the dual mandate back into balance now for many, many meetings.

And I don't think there was a lot new other than September is definitely on the table. The data are going to determine it. And if they get what they think they're going to get, which is modest payroll growth and, you know, a little bit of continuation on the better inflation data, they're going 25. He would not give us, however, any guidance on the pace he was going to move at once they started moving. Okay, well, hold tight because Qualcomm earnings are out. You can see the stock moving up more than 5%. Qualcomm reporting Q3 beats on the top and bottom lines and a strong guide. Q3 revenue coming in at $9.39 billion versus $9.22 billion consensus. Non-gap EPS is $2.33 versus $2.25 expected. And Qualcomm is expecting, it's guiding to a Q4

revenue midpoint of $9.9 billion. That's in a range of 9.5 to 10.3, well above the streets consensus at 9.7 billion. The EPS guide is to a midpoint of $2.55 in a range of 245 to 265, well above the streets consensus at the low end of that range at 245. And I did have a chance to speak a few minutes ago with Qualcomm CEO Cristiano Amon on automotive, which outperformed here in the quarter, he told me it's a huge deal. 87% year-over-year growth in revenue. So what we like about our automotive story, you know, you see that pipeline, which is being converted to revenue. It's just Qualcomm gaining share. In the quarter, we launched 10 new models with our partners, and we win 10 new designs, which means the pipeline is increasing. Now, Qualcomm

is going to be talking more about plans for industrial IoT on November 19th. On the significance of that, Cristiano Amon said the industrial is next, talking about areas of growth. And you see the next wave of growth. The technology on the edge is IoT industrial. It's moving to our roadmap, which is high performance processing for AI and computing and connectivity. Now, I also asked Qualcomm CEO about China, which has been a strong market for Qualcomm, but has seen some overall consumer weakness. Cristiano Mon telling me it still looks strong for Qualcomm. He said one thing that has happened in China, the premium TAM, that's the total addressable market, extended. I think people

are moving up. So regardless of the market growth, they're moving up into a better device and we are benefiting from that. And you can see the stock now up better than 6% after hours here in overtime on the beat and the raise, Morgan. The industrial piece of this, super interesting, right? Because I feel like we've been talking about industrial IoT and ever-increasing digitization of that sector and that part of the market forever. But it'll be interesting to see how this plays out now from a Qualcomm perspective. Yeah, they're looking to move more strongly into that with some of these edge computing things. We've seen both in automotive and in PC. And we're going to learn more about that.

And, you know, you have to wait three and a half months, but it's coming. All right. Well, that's a good teaser right there. In the meantime, we do have more semiconductor specifically related earnings. Arm holdings are out. Steve Kovac has the numbers. Yeah, Morgan, this one looks to be a beat on the top and bottom lines. EPS was 40 cents adjusted. Street was looking for 34 cents. And revenue, $939 million. Street was looking for $902.7 million. We see shares down about 4% here. As for Outlook, seeing Q2 revenues of $700 to

$830 million versus $804 million estimated by the street. So that is about the midpoint there. And again, we'll keep digging through this, but shares are down despite these beats on the top and bottom lines. OK, Steve Kovac, thank you. Meta results are out. We're going to those right now. We'll bring them to you momentarily. In the meantime, don't miss Arm CEO Rene Haas tomorrow at 10 a.m. Eastern on Squawk on the street. Brooke, I got to bring you into this conversation here because we just got two semi reports, two opposite moves. It comes on a day where the socks just ripped higher. Thanks in part to NVIDIA. Thanks to AMD. Thanks also to some policy speculation around restrictions or maybe restrictions that won't be so bad for some of the semiconductor manufacturers as well.

Is tech a buy here? It is. We are seeing, we're continuing to see a divergence between the broad market and tech. And when you look, tech earnings haven't been terrible, but they have been priced to perfection. However, the baby's been thrown out with the bathwater at this point. As we've seen companies like Tesla and Alphabet and Microsoft disappoint, a lot of these stocks have traded down. When you look at Arm and Qualcomm, for example, they're both more than 20% off their highs. So right now, even though earnings are priced to perfection, these stocks

have traded down enough that there's probably a decent entry point. These companies' earnings reports aren't terrible. They're just not perfect. Okay. Well, we've got those meta results ready to go. Julia Borsten has the numbers for us. Julia. Morgan, meta beating on the top and bottom lines.

Revenues of $39.1 billion. Beating estimates of $38.3 billion. Earnings per share of $5.16. Far ahead of estimates of $4.73. Now to the all-important outlook. Meta is bringing up the low end of its CapEx range for the year to between $37 billion and $40 billion. That's up from the prior range of $35 to $40 billion. The full-year total expense guidance is unchanged at $96 to $99 billion. And then in terms of third quarter revenue guidance,

it's in a range just ahead of the analyst consensus, the company guiding to between $38.5 billion and $41 billion. That's a midpoint of $39.75 billion. That's just ahead of the $39.1 billion. That's the analyst consensus. We're going to dig back into this report. We'll be back to you with more. Julia, interesting here that they just raised the low end of their capital expense guidance. If I recall and keep me honest here, there have been some reports that Meta was shifting, perhaps pulling back on Metaverse spend in the near term and continuing in AI spend. And maybe that's what helps them be able to be more friendly to investors on the capital expense side relative to the likes of Microsoft. Yeah, I mean, look, last quarter was notable because they raised the capital expense range in general, so pushed up the top end of the

range as well, and they said that was because of AI. They said, we're investing more in AI, this is a long-term investment, and this is part of a bigger investment cycle. So I think there was some concern by investors that they might continue to increase that range and push it up even higher. But I think what we saw now is a narrowing of that range. So, yes, the top end of that range is staying the same, but they're pulling up the bottom end of the range, but not pushing the whole thing higher. All right. And I'm sure there are going to be plenty of questions about this on the earnings call, John. Oh, more than a few, I bet. Julia, thank you.

eBay earnings are out meantime. Kate Rooney has those numbers. Kate? Hey, John. Yeah, so it's looking like a beat on the top and bottom line. And Q3 guidance is also looking better than expected. Let's start with that EPS number. This is the adjusted number.

Beat by 5 cents here. It came in at $1.18. And then revenues as well, slightly above estimates at $2.57 billion. Gross merchandise volume, this is a key metric. The streets watching, $18.4 billion. That was better than expected. And then on that guidance I mentioned, Q3 EPS guidance at the midpoint of the range, higher than expected. Same thing here on revenue guidance as well. Margins looking like they're in the double digits here. Operating margins of 21 percent. You can see shares dipping slightly despite that beat. John and Morgan, back over to you. All right. Kate, thank you.

David, I want to go back to you. Yeah, we just got these meta results. We've been talking about big tech AI spend for the better part of a week, week and a half, as we have seen the shifts and the rotation take place in the market. But as you do see the metas of the world continue to spend tens of billions of dollars on this infrastructure build out, how does it position an investor? And I guess, how does it factor back into this rotation and some of these companies that are going to be big beneficiaries? You know, Morgan, I think I'll companies that are going to be big beneficiaries? You know, Morgan, I think I'll take that question back to the macro, which is what,

you know, what I do, because I'm not that guy on the ground looking at each of these individual stocks. But I think from a macro perspective, everything that I just listened to and what I've been watching in tech earnings, and frankly, in most sector earnings, with the exception of a few places like commercial real estate and others, I think this economy looks strong and i think jay said that over and over again today he was just talking about normalizing rates people tried to get him to talk about 50s and what's the pace of rate cuts and i actually listened to the questions over and over again it was such a pessimistic brew at the press talking about why everything could go wrong and i'm listening to a lot of things going right i think things look pretty good on every front that you just reported on and i think that was more of jay's

message we've threaded this needle we got out of a really messy situation with inflation and i think they're they're feeling pretty good about it and And if he gives us twenty five in September, which he, quote unquote, could do, and he laid out how that could happen, it's not the start of some major cutting cycle because things are getting messy. It's just a normalization of restrictive policy in an economy that's doing reasonably well. That should be a good stock story all around. OK, hold tight. Let's get back to Julia Borson as actually NVIDIA is higher by more than one and a half percent, perhaps on that meta spending, capital spending news. With more on meta, here's Julia. That's right. A couple more details here on meta. The company's daily active people of 3.27 billion, up 7% year over year. That's right in line with expectations.

The company's capital expenditures for the quarter of 8.47 billion, it 7 percent year over year. That's right in line with expectations. The company's capital expenditures for the quarter of $8.47 billion is actually below estimates of the $9.41 billion estimated. And while the Reality Labs unit lost $4.48 billion, that's actually less than the $4.55 billion loss for the Reality Labs division that was estimated. One more thing here, because we were reporting yesterday on the settlement with Texas, that record settlement with the state of Texas. The company notes in the footnotes that that $1.4 billion settlement is accounted for in the second quarter and not in the third quarter, even though it was reported in the third quarter. And just a quick note from the Mark Zuckerberg comment here. He leads with

AI. He says, we've released the first frontier level open source AI model. We continue to see good traction with our Ray-Ban meta AI glasses, and we're driving good growth across our apps. You see shares now up about 3% in after hours trading. All right, Julia, thank you. Carvana earnings are out. Phil LeBeau has those numbers. Phil. Morgan shares are up more than 12%. Why? Because of a big beat on the top of the bottom line. Second quarter earnings for Carvana, a profit of 14 cents a share.

The street was expecting a loss of 7 cents a share. Revenue better than expected at 3.41 billion. And then you look at the numbers within the numbers, and it's easy to see why they have the strong quarter. Vehicles sold. Retail vehicles vehicles sold more than 101,000. The street was expecting just 95,000 to be sold in the second quarter. That's an increase of 33% compared to Q2 of last year. EBITDA margin, adjusted EBITDA margin, 10.4%. Gross profit per vehicle coming in at seven thousand three hundred and forty four dollars in terms of guidance. Carvana says it expects Q3 retail vehicle sales to increase relative to the second quarter and for the full year. It is now expecting adjusted EBITDA of

between one and one point two billion dollars. Again, shares surging after a big beat on the top and the bottom line. Guys, back to you. Yeah, it's quite a surge in overtime here, Phil. Thank you. Brooke, I want to close this out with you here. This earnings parade that we've got in these first few minutes, pretty different from the one that we had yesterday. And one thing about it that strikes me is not a lot of exposure in these companies to the mainstream consumer. These aren't restaurants that we're talking about here, by and large, and the top line growth with them is strong. So you put that

together for what we heard from Powell today. And you think what about equities for the back half of the year? We fully expect volatility to continue. We're in a year where there's an election. There are going to be headlines. And we're nearing, though, our year-end price target. Our year-end price target is $5,600 to $5,800. So we're about 2% to 5% from there at this point, maybe even a little less after today. So we do expect the market to grind a little higher, but it's not without volatility. And we're going to need the labor market to hold up, consumer confidence to stay strong for earning to work the feed through to sales and therefore earnings. All right, Brooke, David, thank you both. Curious on some more color on what's happening with ARM here. Boy, it is

tumbling after hours down more than 8%. But let's talk about meta now. Q2 numbers out just moments ago. Shares there are moving higher after beating on the top and bottom lines. And joining us now is Evercore Head of Internet Research, Mark Mahaney, and CFRA Senior Equity Analyst, Angelo Zeno. Guys, good afternoon. Mark, here on Meta, were you surprised at all that they didn't raise the top end of their CapEx guidance and that they spent less CapEx wise in the quarter that they just reported than some had expected? Well, I think there actually is a modest negative here in that they tightened up their CapEx range. So that's implicitly or explicitly raising their CapEx guidance for the year.

That said, you know, you can do that if you put revenue upside and the revenue growth that they did 22 year over year was a couple points faster than people had thought they would do especially after kind of the google youtube softness and a little bit of softness we heard from an advertising softness from names like spotify and from pinterest and what this shows is that meta's got all of its product cycles clicking at this time and the outlook for next year i'm sorry for quarter, instead of mid-teens, revenue growth is kind of high teens on much tougher comps. And so just for those who want to know that this revenue model is sustainable and highly profitable, those margins are super high intrinsically. People come away from this

thinking, yeah, Meta's in a very good place in terms of being able to generate premium ad revenue growth for the foreseeable future. Okay. And Angelo, as we look at what Reels has been doing for Meta thus far, the AI story for them with Llama and how they're applying it internally is seeming to gain some traction. Are there still lingering concerns about TikTok and the Facebook part of the platform being dead or no? Yeah, I mean, listen, I think you always got to worry about the competitive predators that are out there. But as far as kind of Meta is concerned, I think they've kind of really navigated some of the concerns and the storms that we were hearing two or three years ago and executing extremely well, clearly

integrating AI across their ecosystem extremely nicely. And you're kind of seeing kind of some of the fruits of their investments really kind of, you know, play out nicely here. I mean, you kind of look at, you know, the growth rates here for Meta relative to its peers out there. They're kind of really nicely outpacing those of its peers. And you kind of look at the guy here for Q3, you know, we were probably more concerned about meta relative to the others because of those difficult comps. Got the most difficult comps kind of across the space. But you kind of look at how they're performing here in the guidance. I think you've got to be pretty happy with where they're at right now. Okay. So, Mark, when you have the CFO, Susan Lee, saying here in this release that while we do not intend to provide any quantitative guidance for 2025 until the fourth quarter call, we do expect infrastructure costs will be a

significant driver of expense growth next year as we recognize depreciation and operating costs associated with our expanded infrastructure footprint. I realize they didn't raise the upper end of their 2024 CapEx guidance. They did raise the lower. I know you just talked about that. But does that suggest perhaps that we haven't seen peak spending for this AI infrastructure build out? I find that commentary by the CFO to be pretty vague. You could do a lot of things with that. I'll just give you my opinion, which is, no, I don't think they're at peak CapEx related to AI. I think their CapEx is going to rise. Now, I think the street has that in its models. We have it in ours. You should assume that CapEx is going to continue to rise. The question is, are you getting a return on that? And investors

need to know two things. One is that you've already seen a return with Meta over the last two years. I mean, they rebuilt their ad tech stack. Thanks to Apple's privacy changes, they rebuilt their ad tech stack using AI and they changed their user interface and generated a lot more engagement because of AI. And it's showing up in the revenue and the profits now. Last quick point on Meta is, hey, it's not priced for perfection. This thing's trading at 19 times, 20 times earnings for something that we think can sustain 20 to 30 percent earnings growth. I think there's room for the multiple to rise from here. If you're a bull on meta, you should be happy with these results. Got it. OK, Angelo, read through, especially on the digital advertising front. What's the read through to some of the

other companies we haven't heard from? Because so far it's been pretty mixed quarter. Just look at Pinterest yesterday to see an example. Yeah, no, absolutely. I mean, you kind of look across, you know, maybe kind of, you know, Meta, Pinterest and YouTube. And, you know, clearly we're seeing growth rates starting to decelerate here. But, you know, some are definitely holding up better than others. I think at this point in time, it's more of a relative expectations kind of thing. Right. And Meta has been able to kind of sustain their growth rates kind of maybe better than some of their competitors out there but that said i mean the digital ad market still looks pretty healthy to us clearly coming off some of those peak growth rates that we saw earlier this year but remains

extremely healthy and we continue to expect a fairly healthy growth pace no high single digit growth at least in 2025. okay and of course we are seeing some of the other names that are levered to digital advertising move higher in sympathy, perhaps most notably Snap, which is up 3% right now. Angelo and Mark, thanks for joining us. Thanks, Morgan. Earnings from Lamb Research and Western Digital are out. Steve Kovac has the numbers for both. Hey, Morgan. I'm going to start with Lamb Research here. Beats on the top and bottom lines that we are seeing shares down nearly 3%. Big beat on EPS, $8.14 adjusted.

Street wanted $7.58. And revenue, a slight beat here, $3.87 billion. Street wanted $3.82 billion. And as for guidance for the current quarter, pretty much in line there. But we're still seeing shares sell off here. Keep in mind they had a huge rally today along with other chip names. Let's move over to Western Digital here. Also, some beats here on the top and bottom lines. EPS, $1.44 adjusted. Street wanted $1.17. And revenue, $3.76 billion versus the $3.74 billion. So just a very slight beat there. Revenue was a little light. That

seems to be weighing on shares here, down 4%, guys. All right. Steve Kovac, thank you. Etsy earnings are out. That stock, I think, is a little higher. Julia Borson has the numbers. Julia. Etsy beating in terms of revenues, but earnings missing. Etsy revenues of 648 million dollars ahead of the 630 million dollars estimated earnings coming in at 41 cents adjusted per share that's four cents light of the 45 cent per share estimate um just a quick note here from the CEO in the earnings release he says while this is a challenging environment for our type of goods we are focused on reigniting Etsy Marketplace growth and gaining market share one other thing to note, the company's CFO announcing that she is stepping down, retiring after 40 years in strategic finance roles.

Rachel Glazer, CFO, is leaving. She's been at Etsy since 2017, and they say that she will stay on until her replacement is named. But that is some leadership changes at Etsy. Shares are up about 1%. Back over to you. All right, Julia, thank you. Meantime, Kindrel earnings are out. Kindrel Holdings spun out of IBM not too long ago, reported a mostly in-line quarter and a raised full-year outlook slightly.

Revenue was in line to a little shy of consensus, although that's partly because Kindle is shedding a low margin consulting business. EPS did beat. Revenue came in at $3.74 billion versus $3.79 consensus. On EPS, the analyst consensus was $0.03. Not sure which number analysts were using, but Kindle reports $0.05 gap and $0.13 non-gap here. On the guide, management is nudging the EBITDA margin target to 16.3 percent from 16.2, but also hiking the full-year adjusted pre-tax income target to 460 million from 435. All right, well, we've got MGM Resorts earnings out as well. You didn't think we were done, did you? Kate Rooney has those numbers.

Hey, Morgan. Yeah, so it was beat, looking like across the board, a beat here for MGM on earnings revenue. And then most of its regions came in better than expected on EPS. This is the adjusted number here, a 24-cent beat, 86 cents adjusted on revenue of $4.33 billion. That was also better than expected. And then all of those regions I mentioned, Las Vegas, regional overall, and then China, were all ahead of expectations. If you look at EBITDA, China in particular was up 40% year over year. They talk about market share remaining in the mid-teens there, guys. But again, a beat for MGM. Back over to you. All right. Kate Rooney, thank you. After the break, former Fed Vice Chairman Alan Blinder, who called on the Fed to cut at today's meeting on the new rate path signals that we got from Chair Powell and the central bank. And much more on all of today's earnings action, including the

chips, which jumped in the regular session, led by a big rebound for NVIDIA, continuing here with Qualcomm over time. We'll be right back. I think they should have cut today, quite frankly. I expect the Fed is going to cut rates in line with what the market is predicting. And if I had to take an under and over, I would think the Fed is going to cut rates more than the market thinks over the next. I think we have 150 basis points of cuts coming, but certainly by a year from now. All right. Well, that was double lines. Jeff Gundlach last hour on closing bell saying he thinks the Fed should should have cut today. It's an opinion shared by our next guest, as outlined in The Wall Street Journal op ed last

weekend. Joining us now is Alan Blinder. He is the former vice chairman at the Federal Reserve. It's great to have you back on. Yes, you you published this op ed over the weekend in the journal, but you were on CNBC back on June 13th making the same case. You said nobody's talking about it at all, a cut in July, but that you thought it should be on the table. You'd like to put it on the table. I realize we didn't get it today, but the fact that Fed Chair Powell said that officials had a, quote, real discussion about cutting rates, your thoughts? Well, I think they should have. Look, I don't think this is a grotesque mistake or anything. They signaled and the market reacted that a rate cut is on the way. I think it would have been

smarter to do it today and get it done before we get too close to the election. I mean, one of the questions that the chair fielded today was about, you know, politics and the election. I mean, one of the questions that the chair fielded today was about, you know, politics and the election and rate cuts. And he gave the right answers. The Fed is not political and is not trying to engage in any, on either side of the election. But as it gets closer to the election, central banks in general like to keep their heads down. And now they're going to be doing it most likely late in September. So this idea of 100 basis points that was just laid out by Gunlock, I mean, is that realistic? Because he got a lot of questions, repeated questions in the press conference, Powell

did, and he refused to outline what that path could look like. 25 basis points symbolically may mark a shift in policy, but doesn't actually do very much. No, but it marks a shift in policy and it does a lot psychologically. Look, just the slightest hint that it was coming today did quite a bit of good for the markets. 25 basis points was once called peanuts by some, not by Jerome Powell, by another monetary policy maker. And it is. It won't only be 25 when it starts.

I don't think it's going to come in an avalanche, like we're going to get 100 this year or something like that, because the timing is very different. Remember the November meeting. Let's suppose they cut 25, the first cut in September, which is what everybody is supposing. The November meeting is the day after the election. I think the Fed will want to keep its head down.

So that brings you to December. Are they going to cut 75 basis points in December? I certainly don't think so. So how much, Alan, how much risk do you think there is that the Fed is waiting too long to cut? It sounds like you think it's not a catastrophic decision that they didn't cut today. Yeah, a little bit. I would think it more if I saw the economy weakening more than it is. It's simmering down. You don't see in the labor market or in consumer spending the kind of, shall I call it, rational exuberance that we were seeing a few months ago. It's calmer now, but it's still pretty good. You know, we have an unemployment rate of 4.1. That's not 3.7, but it's still pretty good. As

Chair Powell said today, the consumer is holding his and her own. So it's not like we have indicators that the economy is sliding downhill. If that was the case, I'd be, no, I was going to say I'd have my hair on fire. I don't have any hair. I'd be gesticulating more on television. It doesn't look that way. It's okay. It's okay not to have any hair, Alan.

So the consumer softness that we see, particularly with the working class, just in credit somewhat, and then in spending at places like McDonald's, At what point does that become a broader concern? Yeah, I mean, these things are quantitatively. The longer it lasts, the deeper it gets. The more people that get involved, the more the Fed has to worry about it. So far, I think they should be worrying a little. I mean, you pointed out that I was advocating for a rate cut today. I'm obviously a bit more worried about it than the average on the Federal Open Market Committee,

but it's only a subtle difference of opinion. All right. Alan Blinder, always good to have you. Good to be with you. Well, Teladoc earnings are out as well leslie picker has the details there leslie hey john yeah take a look at shares of teladoc currently down more than 13 percent on earnings posted a short while ago the street was expecting 35 cents per share a loss of 35 cents per share uh the company, we are not comparing to those estimates. They reported

a loss of 492 per share, but that included a very sizable non-cash goodwill impairment charge representing about $4.64 per share, as well as some other special items. But the top line was indeed a miss. The company reporting 642.4 million, whereas the street was expecting $649.7 million. Teladoc also announcing it's withdrawing the financial outlook for the full year of 2024 for its consolidated operations, as well as its better help segment that was last provided at the end of April. And it's also withdrawing its three-year outlook on its consolidated operations and its operating segments that it had last reaffirmed on April 25th. However, they did provide an outlook for its integrated care division, expecting the full year there to be revenue growth of low single digits to mid single digits.

But you can see the street reacting negatively with shares down nearly 14 percent in after-hours trading. Guys. All right. Leslie Picker, thank you. It's time now for a CNBC News Update with Emily Wilkins. Emily. Hey, Morgan. United Auto Workers Union endorsed Vice President Kamala Harris for president this afternoon.

The endorsement was expected. Union President Sean Fain has been an outspoken Trump critic, and the UAW's umbrella organization, the AFL-CIO, previously endorsed her. Arrests at the U.S.-Mexico border fell in July to a new low during President Biden's tenure. That's according to the Associated Press, who quoted sources and Customs and Border Protection. The U.S. Border Patrol arrested 57,000 migrants this month, which is down 30% from June and would be the lowest tally since September of 2020. And as tensions in the Middle East escalate,

United Airlines announced it is suspending flights to Tel Aviv due to security reasons. The Chicago-based airline said it will start with tonight's flight from Newark as it evaluates next steps. U.S. carriers previously suspended flights to and from Tel Aviv in October amid the ongoing conflict between Israel and Hamas. Back to you. All right. Thank you. Up next, a chips expert breaks down results from Qualcomm Arm and Lamb Research after a standout session for at least

some of the semiconductor stocks. And later, market expert Richard Bernstein joins us with a warning for Mag7 investors as we await earnings tomorrow from Apple and Amazon. Welcome back to Overtime. Shares of Arm are in the red, pretty much erasing the day's gains despite beats on the top and bottom lines in their results. Meantime, Qualcomm shares markedly higher, more than 6.5% after beating on the top and bottom lines and guiding Q4 revenue above consensus. Those moves come after a blowout day for chips overall, led by NVIDIA. And joining us now is Ben Beharin of Creative Strategies. Ben, good to see you. So start with

Qualcomm. I mean, the automotive and IoT segments, growth segments did quite well, especially automotive up 87% year over year. How much strength do you see in Qualcomm's product portfolio to maybe keep this going? Yeah, I mean, I think there's a lot, right? One of the interesting things about their automotive business is it isn't just dependent on EVs. And I think if you look at how they've been a standout performer compared really to the rest of the industry, where even last quarter, there was enough data points to concern that automotive as a whole had some worrying points, but Qualcomm did really well in last quarter in automotive. That momentum continues this time.

And I think because it's digital, it's not just relative to EVs, but traditional powertrain as well. You're seeing more and more adoption of those auto companies within their IP, which makes me believe that that's going to be a consistent growth area. Now, this does raise some questions about Apple, doesn't it? Because Qualcomm has a lot of IP in Samsung phones. Samsung did quite well. The premium tier, Cristiano Amon was telling me ahead of the call, people are shifting into that. But there seemed to be some share gain for Qualcomm and Android versus Apple in China. I don't know what you've been seeing or hearing in that arena since then. Yeah, I mean, they're definitely seeing that momentum, which again happened last quarter. More of that premium share being picked up largely in China. I think, again, that's a good sign.

Yes, you're right. I think there are some worrying concerns just in terms of a couple quarters in China. I think that being said, there's still a lot of optimism for Apple on the back of Apple intelligence driving more of a cycle coming into this year. And you're seeing that with some of the underlying suppliers have some strength be guided into next quarter as well. But again, good for Qualcomm that more of that premium tier is coming up because they're going to get more ASP for those parts as it grows. And that's just, again, a whole testament to the product story and the execution that they're having on the mobile side of their SOCs. OK, Ben, speaking of China, U.S.-China relations, you got reports just today that the U.S. is weighing new rules, new export restriction rules tied to semi-manufacturers and their export equipment to China.

Reuters actually reporting you could see some exceptions to that for allies. It sent shares of ASML and a few others higher. Here's what a commerce spokesperson said to me about this today. He said, quote, the U.S. Department of Commerce is continually assessing the evolving threat environment, updating our export controls as necessary to protect U.S. national security and safeguard our technological ecosystem. We remain committed to working closely with our allies who share our values. So neither denying nor confirming some of those reports we got. But could we see these dynamics continue to ramp here in the coming weeks, in the coming

months, and if so, winners and losers? Yeah, I mean, I think it's really hard to predict. A, there's a regime change coming. I think you've seen a lot of speculation about what happens in our elections. And does that ease some of those tensions or does it continue to double down on some of those restrictions? I think the reality is that the U.S. is not going to let China have access to cutting edge or leading edge IP on the semiconductor side. This effort feels very, very focused on just keeping them behind the game when it comes to AI. And I know from a lot of Chinese companies, that's, again, their concern, and that's what they're feeling. Obviously, we want our companies, especially our U.S.-based tech companies,

to be able to service China with products. And I think until we have clarity on what that is, it's going to be really hard to predict that. But obviously, if ASML, if our other chip vendor products, or anybody else that's in EDA or tooling and supplying a manufacturer can at least know that they can bring some products there, that's going to be a good sign. But I think with this regime change, a lot of that's still really going to be a big question mark. OK, we'll continue to watch it. Ben, thanks for joining us. Yeah, thanks for having me.

Up next, Richard Bernstein on why he thinks a big investor shift involving the MAG-7 is on the horizon. Overtime. We'll be right back. Welcome back. Meta becoming the fourth MAG-7 name to report results out this hour with a beat on both the top and bottom lines. Those shares of about four and a half percent. Tomorrow, we'll get numbers from Apple and Amazon. But our next guest says the group could face a shift in investor sentiment later this year. Joining us now is Richard Bernstein, CEO and CIO of Richard Bernstein Advisors. Richard, it's great to have you on today. I want to start right there because you say that the recent volatility in the MAG7 is not unusual. It's following historical precedent. What does history tell us? So, Morgan, you know, we're at

a point where profitability in the United States overall is starting to rev up. In other words, the profit cycle is troughing. And historically, when the profit cycle troughs, investors literally become comparison choppers. They say, if everything's going to grow, why would I pay a high price for growth? Now, we know the valuations of the MAG-7 are pretty extreme. And so the question is, again, if everything's going to grow, why pay a high price for growth? One has to remember last quarter, 160 S&P 500 companies grew earnings 25% or more. That number is likely to increase this quarter. So there becomes a real

question of what's so special about the Magnificent 7, especially at their valuations, when you can get growth at a much, much cheaper price? We know that so much of the earnings growth for the broader S&P up until at least now has been driven by these biggest mega cap tech names. The fact that you have lofty EPS expectations into the back half of 24 and looking to 2025 then, are you saying that the other 493 stocks are going to kick in and start growing more aggressively here? Yeah, even more than that, Morgan. And it's not just us. I mean, you can see this in the consensus forecast as well, that by the end of this year, early next year, both small caps and mid caps, world global equities, excluding the mag seven and emerging market equities are all forecasted to have stronger earnings growth than the mag seven.

So what I'm saying is by the end of this year, early next year, the mag seven will actually be inferior growers. So not only will they be expensive, but they'll be inferior growers. But Richard, here's a wrinkle that that I see. Tell me if I'm wrong here. There's more than a quarter point cut right now priced in for September as far as what the Fed is going to do. But the Fed's in a challenging spot in an election year or whatnot. If the Fed doesn't cut this year as much as expected, won't it be the small caps that get hurt more than the mag seven? Well that's that's right john i mean there's a couple of things people always forget that small caps have greater

financial leverage that's what you're referring to but what they tend to forget is that they have stronger operating leverage they have more operating leverage as well and every time the cycle turns and every time interest rates start having an upward trend to them, what you get is a tug of war between financial leverage and operating leverage. This is the same thing you see in junk bonds, by the way, right? Every time interest rates go up, junk bonds tend to outperform quality bonds. Why? Yeah, they have more financial leverage, of course, but the companies underneath have more operating leverage and their earnings and cash flows improve and actually credit quality improves in a rising rate environment. Okay. Richard Bernstein, thanks for joining us.

Sure. Thanks. With the major averages all finishing up today and the S&P and Dow finishing up on the month, since we are at the end of July, up next, all the earnings movers that need to be on your radar as we count down to Meta's analyst call. And before we head to break, our colleagues from Squawk Box are in Paris as the Olympics heat up on NBC and Peacock. Check out some of the highlights from a special edition of Squawk Box at the Olympics. It is day five of the Olympic Games. Yeah, the action here has been amazing.

There haven't been any disappointments. What are you learning while you're here? They did a great job of creating iconic venues and having full venues. And so there's a lot to learn from how they did that. Do you guys want to rate us here, rank us? 10 out of 10. It's a great long-standing partnership. It's an opportunity to celebrate

the greatness of the event. It's the world's largest event, but also the incredible human drama that happens every day. Can you stack the deck in your favor or are you never sure, even no matter how much you do it? When you get to that point at the Olympics, I think you need a little bit of luck because sometimes fluke things happen. Coverage from the Paris Olympics continues all week on CNBC. Welcome back to Overtime. Here's a look at the big earnings movers this hour. Arm holding sinking despite beating on both lines.

The bottom end of Q2 guidance, though, was below estimates. You can see those shares are down about 7% right now. Carvana, different story, reporting a surprise profit of 14 cents per share. Analysts were expecting a loss of 7 cents. You can see those shares are at 14%. And transportation and logistics company C.H. Robinson turning in a mixed quarter, missing on revenue but beating on the bottom line. That company saying full year capital expenditures are expected to be toward the lower end of previous range. And you can see those shares are popping 10 percent right now. John. All right. Well, cuckoo, cuckoo, CH Robinson, Apple, Amazon, Intel.

Oh, my. Up next, the key numbers to watch and what will be another wild hour of overtime earnings tomorrow. We'll be right back. Well, tomorrow is going to be another massive hour of overtime earnings when Apple, Amazon, Intel, Block, Roku, Booking Holdings, Coinbase and Snap report. Steve Kovach and Kate Rooney rejoin us for the key numbers to watch for the two largest, Apple and Amazon. Let's start with Steve on Apple. Steve. Yeah, John, I'll make this really easy for you. The most important thing to watch is if this iPhone sales slump is finally over.

Look for any guidance on iPhone sales for the September quarter. We're expecting the iPhone 16, of course, to launch in the second half of September. So that quarter is going to reflect at least several days of new sales for the iPhone lineup. Now, many on the street expecting this to be an AI-driven cycle. And this is going to be our first hint from Apple itself whether or not that's going to happen. Does Apple see demand resurging finally for iPhone? John, we'll find out tomorrow. All right. And we know you're going to bring us those results. Shares of Apple up one and a half percent ahead of time. Let's get to Kate Rooney and the key number to watch when Amazon reports

results. Morgan, so for Amazon, the number one thing investors are going to be watching is that AWS growth rate, the number to beat 17.6 percent growth there has been reaccelerating in recent quarters. And that cloud business makes up less than a quarter of Amazon's revenue. But it's really important is this higher margin side of the business. And then AI is going to be key. So watch for any commentary around its actual financial impact that could be in the form of spending and then how they're actually going to monetize it. Executives on the last earnings call said AI was a multi-billion dollar business when it comes to ARR, annualized run rate. And then on the e-commerce side, cannot forget about that. It's going to be all about margins, guys. All right. Yeah. Thank you. Kate, Morgan, I am looking forward to tomorrow. There's so much going on. And the contrast, perhaps, at least a comparison, between Qualcomm, right, which is up here in overtime, and what do we get from Intel?

Yeah, that is going to be key, especially as you do have reports about cutting some costs there as well. I also think it's going to be very interesting to see what AWS posts, too, because they're obviously the market leader. But we've seen strength in Google Cloud. We saw softness versus investor expectations in Microsoft's Azure and at least a little bit of deceleration in the growth there. What does Amazon put up? A couple of months ago, Matt Garman, the new CEO of AWS, did tell us, yeah, there's going to be continued spending on things like infrastructure, but they are trying to be disciplined as well. And then, of course, we've got the holiday quarter coming up. Yeah, all the major averages higher today, but the Nasdaq finishing for the month of July lower first time since 2014.

That does it for us here at Overtime.