Closing Bell - Closing Bell Overtime: Qualcomm CEO On New AI Mobile Chip; Glossier CEO On Profitability & 10 Years As A Company 10/21/24

Episode Date: October 21, 2024

Qualcomm CEO Cristiano Amon debuted his company’s new AI mobile chip right before joining to discuss the new chip’s performance, the AI strategy, Intel rumors and more. Glossier CEO Kyle Leahy breaks down her company’s sales, its foray into fragrance and if an IPO could be in the future. Plus, Morgan Stanley Global Chief Economist Seth Carpenter on the latest data the Fed is watching.

That's the end of regulation. Banco Santander ringing the closing bell at the New York Stock Exchange. Aspen Technology doing the honors at the NASDAQ. The stocks finishing mixed. Yields moving higher ahead of a huge week of earnings. Tech ending the day as the only S&P 500 sector in the green. That helps power the NASDAQ as well. That's a scorecard on Wall Street, but the action is just getting started.

Welcome to Closing Bell Overtime. I'm Morgan Brennan with John Ford. And coming up on today's show a can't miss interview with qualcomm ceo cristiano amon from the sidelines of the company's snapdragon summit in maui on the company's latest chips and ai strategy plus a rare and exclusive conversation with the ceo of unicorn beauty brand glossier on the consumer and if the company plans to go public. And we are awaiting earnings this hour from SAP, Zions Bank Corp and Nucor. We'll bring you those numbers when they cross. But first, let's get to our market panel.

Vital Knowledge founder Adam Crisafulli and Kestra Investment Management CIO Cara Murphy. Great to have you both here. Adam, I'll start with you because it really does feel like we're in the calm before the storm here. As we know, earnings are going to start to ramp up really in earnest tomorrow. We don't get a lot of macro data this week. That changes next week. But we've got perhaps some profit taking as yields move higher. Your thoughts on the markets here? Yeah, I think today was definitely just an example of relatively normal profit taking. So pretty big moving yields.

I think the big question is whether that's a function of resilient growth, which we definitely have seen, or if it's a function of some fiscal fear starting to seep into treasury markets as we look into next year and the enormous challenges that are going to be facing Washington, regardless of what happens in the election. I think it's a little bit of both. You know, like you said, this will be a very busy week of earnings. We've already heard from most of the large banks and they've given us a pretty good lay of the land as far as the broader macro landscape is concerned. And it's a pretty healthy environment. And I think that's what's driven stocks higher over the last week and a half or so. You know, resilient growth, cooling inflation. We have stimulus with most central banks, any rates plus what China is doing.

And now it's just a question of, again, how high do yields go? Is this is this just because growth is doing better or are markets starting to pay more attention to the fiscal challenges next year? And I think that's kind of a real dilemma, a real question right now for investors. Yeah, it's pretty startling to realize that in fiscal 2024, the U.S. government paid more on interest than on defense. Cara, it does feel like two E's here. You got earnings and election. This week, what's really driving the narrative is earnings. So far, they do seem to be coming in better than expected. But we also know it's a high bar with the S&P arguably richly valued. I think we're having a little bit of a technical issue with Kara.

So, Adam, I'll put the same question to you. Earnings and election, an S&P that's trading at 22 times here. What are you watching the most closely, especially as we do start to dig into some of these different industries and different results this week? Yeah, I think the valuation, you know, it's not prohibitive. It's not necessarily a reason to dump equities wholesale, but it certainly provides a lot less cover for the market to absorb any type of macro setbacks. And like you said, we're moving up towards about 22 times next year's estimate. That's a very healthy multiple. And then as you have yields rise, that just kind of exacerbates that valuation headwind um so

definitely earnings this week i think some of the cyclical companies will be very interesting um you know if they are seeing any type of a rebound in momentum are they seeing any hints of change you know uh out of china given the stimulus steps that they've taken some of the september data out of china last week was uh somewhat encouraging so the cyclical names i'll be watching closely uh you know, capital goods, transportation companies, et cetera. And then obviously as we get into the big tech stocks, just given their dominance of the indices,

they will be crucial as well. Is the AI momentum continuing on the growth front? You know, is there any shift in the trajectory of CapEx on AI? This has been a big controversy now for the last couple of quarters. The ROI on that CapEx is a sustain of all our companies becoming more efficient in how they're spending CapEx. That will

be very important as you listen to the calls from Microsoft, Amazon, Google, etc. Yeah. And, Carol, we're about to get SAP numbers shortly, and that's a very big enterprise software player, big ERP player. A lot of companies spend money on that, trying to get their internal systems right. And I can't help but notice it comes ahead of IBM and ServiceNow in just a couple of days. How important a signal is that going to be in a market where today we saw technology as the only S&P sector in the green? Well, I think the wonderful sign is that we're starting to talk about earnings again, right? I think everybody is happy to kind of start to put the election behind us and focus again

on the strength of the American corporation. And I think some of those names that you mentioned are really instrumental in sort of getting a pulse on what business activity is happening. So we'll be following them very closely, not just for what's happened over the most recent quarter, but then their expectations for 2025 and whether that momentum can really carry them into next year. And so, Cara, we saw sort of the market defy the usual September headwinds, and we've got the volatility of an election year and a market that's not cheap. So what do you add to in an investing strategy heading into 2025? Where do you sort of set your compass where you can be pretty confident, at least until some big event

that you're heading in the right direction? There's been an awful lot of focus recently on large cap valuations and looking at the S&P valuation overall. But let's not forget that once you get out of some of the highest valued companies within the S&P 500, valuations and looking at the S&P valuation overall. But let's not forget that once you get out of some of the highest valued companies within the S&P 500, valuations actually look much more reasonable. They're a little bit rich in S&P 500, XMAG 7. And then once you get into things like mid-caps, valuations actually look pretty attractive. So we think heading out, what you can add to a portfolio is start to rotate out of some of those names that have done well over the last 18 months or so and start to dive into those parts of the market that have been largely overlooked for quite some time now. All right, Cara, Adam, thank you both.

I just want to mention while we were talking, those SAP numbers did cross. The stock initially took a dip into the red, but now looks to me like it's in the green by about 4%. We'll get you those numbers as soon as they cross. Meantime, a surprising pair of movers today. NVIDIA hitting all-time highs while the 10-year Treasury yield bounces back above 4.1%. Let's get to Mike Santoli for a closer look at that tug of war in the market. Mike. Yeah, John, NVIDIA, I mean, really did support the indexes from losses beyond what we did get. The S&P 500 obviously really had a minimum move down. Would have been twice as big a drop if not for this move in NVIDIA today.

You see here up 4 percent. And what's more significant is this potential breakout of a four-month range. Back in June, the intraday high was around 141. We did break above that today. Now, obviously, false breakouts are a thing that do happen, but it's not necessarily something you'd want to bet on. Usually, it's pretty powerful if a high-velocity stock like this finally breaks free after this period of time. Obviously, we have earnings, but for NVIDIA, not for about a month.

I put the 50-day moving average in here, too, because it does show that that sort of shorter-term trend has curled higher. So this is at least a bit of support or maybe a little bit of a beacon for the bulls to keep watching as you see if the market can add to these gains. However, pulling against that is this move in treasuries. And you see the yield today really got the equity market's attention in the morning when the 10-year went above about 415. And we've actually closed a little bit above that. That's sort of this level that would represent this downtrend breaking from all these previous highs. Remember those series of lower highs? It's nothing like a magic trigger level or anything like that, but it's something that definitely gets investors' attention. If

it's happening because the economy is good, the Market can make its peace with it. In fact, stocks have been going up alongside bond yields for a while now. And that's usually a good news, it's good news market. But if it's breaking free because of other concerns or it gets disorderly, that's something that you might have to contend with in a market that's already, again, had this nice run six weeks in a row higher for the S&P. Mike, what catches my eye about this NVIDIA move today is a lot of semiconductor names were up as well, but it was up more than those. And then a couple of momentum names were higher. A lot of them were lower. And it was up maybe along with those

momentum names as well. It seems to be performing like a semiconductor stock, but better, and also like a momentum name, but bigger. 100 percent. I think it's really somewhat disengaged from the rest of the group. I've pointed out many times, if you look at just the average semiconductor, the XSD, the equal weighted semi index, it looks nothing like the NVIDIA chart. It really is a little bit of its own species within the market. And you're right in terms of once you get those kind of speculative juices running or at least just some high momentum kind of appetites in the market, it's going to find its way into those parts of the market. I'm not saying that somehow makes

it dangerous, but it's something that shows you that it's not just moving because the entire group has caught a bid because people are bringing earnings estimates up or something like that. All right, Mike, we'll see you again in just a bit. Meantime, we got those SAP numbers. Steve Kovac has them. Steve. Hey there, John. And shares are up better than 4% on these mixed results here. Let me give you the EPS.

That was a slight beat, 1 euro and 23 cents adjusted. Street was looking for 1 euro and 22 cents. And then as for revenues, let's just call it in line here, Eight point four seven billion euro street was looking for eight point four six billion euros. And it seems like shares are up here on some of these guidance commentary here. SAP saying they're going to be raising their cloud and software guidance for the full year. Also raising their non-gap operating profit guidance for the full year. We see shares up just above four percent here. Morgan, I'll send over to you.

All right, Steve Kovach, thank you. We've got more after hours action ahead. Zion's Bancorp just releasing its numbers. We're going through those right now. And after the break, Morgan Stanley's chief global economist, Seth Carpenter, on whether we're in the midst of a soft landing, his reaction to this pop in yields, and the big questions he's hearing from clients around the election and the economy. And later, a first on CNBC interview with Qualcomm CEO Cristiano Amon on the company's just announced new chip, AI strategy, and much more. Overtime's back in two. Welcome back. Zion's Bancorp earnings are out.

Steve Kovach has the number. Steve. Hey, Morgan. Yeah, and shares are up. Beats across the board here for Zion's Bancorp. Let me get you the EPS here. It was a beat at $1.37. Street was looking for $1.17.

Revenue, $792 million. Street was looking for $778.9 million. And then net interest income was also a beat, $620 million versus the $611 expected. Loan loss provisions also better, $13 million versus $27.9 million. We see shares up nearly 5% now. John, I'll send it over to you. Yeah, up a little bit or better than 4%. Seems to be a trend almost here.

Steve, thanks. Well, Treasury yields popping today with a 10-year yield hitting its highest level since July, approaching 4.2 percent. This as investors are paying close attention to the Fed's next move and the outcome of the election. Joining us now is Morgan Stanley, Global Chief Economist, Seth Carpenter. Seth, welcome. So speaking of rates, we got a cut in Europe last week, cut in China earlier. This is we got questions about whether the Fed here might have to slow cuts. At what point does the economic reality behind some of that. When is good good, so to speak? And I think for now, good is still quite good. The Fed is balancing lots of different things in the last data point. And part of what is getting a lot of this market discussion about skipping a cut is from the last jobs report. And that was really good. I think we have to remember, though, that part of what

leaned some of the members of the FOMC to do 50 basis points was the fact that inflation had undershot their estimates. On our numbers, on our forecast, we're still going to see inflation keep coming down. And so I do think they're going to keep doing a string of 25 basis point cuts. And so what that means is as long as we're in that sweet spot where inflation is coming down, sustained growth can be good for risk assets. But Seth, how much of a risk do you see in the market on a shift in sentiment, even if the fundamentals don't shift that much? It seems like there's been a lot of optimism in the market. The market's taken a lot of excuses to move higher and maybe shrugged off several to move lower, though maybe I'm wrong about that. No, I mean, I think

sentiment has been swinging around a lot, right? We got the big market turmoil in August when people thought maybe we were going into recession. That's clearly in the rearview mirror. But if you listen to my colleague, Mike Wilson, our equity strategist, he will tell you consistently that valuations are a bit stretched. And so I think always we get these times where people take an opportunity, take a breath and ask themselves, where are we? And sentiment, I think, can play a role in causing people to reassess things. Fundamentally, though, I do think for the real side of the economy, we're in pretty good shape right now. Seth, I want to get your thoughts. We're two weeks out from this election. You had Kashkari earlier today basically saying if deficit goes to the moon,

rates will be higher. Feels to me like deficits already going to the moon. So do you want to get your outlook on that, but also what gaming out the election outcome can mean, especially when you think about things like trade or immigration or some of these areas that could have some very meaningful impacts on the economy, not only from a growth standpoint, but also from an inflation one? No question. I do think forecasting is much harder right at the moment, precisely because of the election. You mentioned some policies. I think there are three key policy levers that matter at the macro level. You've got fiscal policy, you've got immigration policy, and then, of course, you've got trade policy. I would agree. A lot of the questions that I get from clients are about the inflationary side effects there. I think for agree a lot of the questions that I get from clients are about the inflationary

side effects there. I think for fiscal, one of the key things we have to keep in mind is that it's not just who wins the White House. It also matters what the composition of the Congress looks like. And if we have a split Congress, which is kind of where a lot of polls are pointing, it doesn't give quite as much leeway for a big swing in fiscal policy. I think tariffs, though, are really top of mind for me, for a lot of clients. And there, there's likely an inflationary boost if we get all of the tariffs that have been discussed all at once, then you could get even as much as close to a percent on inflation. However, I think the part that's underappreciated is what we saw in 2018

and into 2019 is that tariffs also produce a real hit to U.S. domestic economic activity. The manufacturing sector in particular can take it on the nose from tariffs. And I think we want to pay attention to both the inflation side of things and the growth side of things. And as we're having this conversation, you're seeing the spread narrow for credit spreads. I mean, the gap between corporate bond yields and U.S. treasuries, it's at its lowest in almost 20 years. Does that continue? So we're pretty constructive in that regard as long as we continue to get this soft landing that we've been looking for. My colleagues in the credit strategy,

sort of when we go back and forth around our forecasts, point out that one of the things that credit markets like the best is a lot of moderation. And so we are looking for, absent any of those big jolts from policy, we're looking for gradually, slightly slower growth, the Fed continuing to lower their policy rate, but for the economy to continue to grow. And that kind of sustained moderate growth with receding inflation and falling policy rates, that really does look like the sweet spot. So even if credit spreads are a bit tight now, those heights can actually be pretty well justified. OK, Seth Carpenter, great to get your thoughts. When we come back, the CEO of unicorn beauty brand Glossier joins us with her read on the consumer and if the company is any closer to going public.

And we are just moments away from a first on CNBC interview with Qualcomm's CEO. That stock up double digits this year, but pulling back a bit today as the company hosts the Snapdragon Summit in Hawaii. We'll be right back. Welcome back to Overtime. A spate of warnings in the beauty sector lately. Cody L'Oreal, Estee Lauder and Ulta Beauty all warning investors in recent weeks about a sales slowdown. We'll call it cautious commentary. Meantime, DTC pioneer Glossier just celebrating its 10-year anniversary its CEO said recently the company's profitable so joining us now in an exclusive interview is Glossier CEO Kyle Leahy Kyle it's great to have you here

on set welcome so nice to be here Morgan thanks John so I do want to start with that the the cautious commentary regarding a slowdown in in beauty spending by consumers are you seeing that well we're happy to be celebrating glossies 10-year anniversary this year with incredible resilience for the brand. And while it certainly is a dynamic and very challenging consumer marketplace out there, we are continuing to see nice improvement in our business. We're at record high revenue levels.

We've shown 80 percent retail sales growth over the last three years and, as you mentioned, are now profitable. So continuing to see, I think, the most momentum we've ever seen for the brand. And I think we've done that because we have diversification in our business. We're a multi-category beauty brand, so we have makeup, skincare, and fragrance, which gives us that diversification to really play into where growth is happening into the marketplace and be able to mitigate risk and drive growth go forward. As well, it's an omni-channel strategy that we've activated over the last few years, which also creates that level of diversification from a channel perspective.

Yeah, you sell into Sephora brick-and-mortar stores as well. You just mentioned fragrance. Your first fragrance was a smash hit. You've just launched two more in the last couple of weeks. How's it going? Yeah, it's been an incredible, record-breaking launch for us in our new fragrance, Impressions of You. So Glossier is unique at this size and scale for us to be a multi-category or multi-acts brand. We have makeup, skincare, fragrance, burgeoning body business, merch. So in many regards, we serve as a lifestyle brand in beauty. And our fragrance, Glossier You, launched in 2017. So we've had a nice runway of success building in that fragrance over the last few years. When we launched at Sephora last year, it was the number one fragrance at Sephora and continues to be so.

We see a bottle of Glossier You sold every 20 seconds. So we saw that there was a true indicator of demand for this fragrance. And I think it's not by accident. It's truly a skin enhancer, so it smells a little different on everyone. And I think when you look at this high growth segment of the market, fragrance has been one of the most resilient and highest growth pieces of the market in the last few years. Plus what's happening culturally and generationally, Glossier You really fits into that. So we've expanded upon that fragrance portfolio with the launch of two new scents. Ten years into our brand, we're now seeing that this

was the most, the highest record-breaking product launch for us as a brand, 50% above forecast. And we're seeing 25% new to brand consumers. So a lot of pent-up demand. We saw the majority of that happen actually between midnight and 9 a.m. So a lot of consumers looking for fragrance from Glossier. And we have a lot of runway for growth into the future in fragrance. It seems like the only thing the American consumer loves more than a takedown is a comeback story. looking for fragrance from Glossier and we have a lot of runway for growth into the future in fragrance. It seems like the only thing the American consumer loves more than a takedown is a comeback

story. And it seems like you might be in that space right now. You had a hard time a couple of years ago, lay off social unrest and pivot away from that more crowdsourced and D2C approach. You came from Cole Haan and sort of had that background in mature retail. Tell me about TikTok's role in propelling this latest phase of Glossier U's success and what you're learning from it. Yeah, well, I think one of the things I'm so proud of that I think we've seen in this brand is the resilience and longevity. To have a non-celebrity driven beauty brand be 10 years in

and to show the power and the momentum of this brand shows incredible resilience and incredible longevity for our brand. And I think what gives brands, we talk often that we're at year 10 of building a hundred year brand. And I've been lucky to be a part of brands that have had that decade long trajectory and they share a few things. They are multi-generational and we see that in Glossier. We launched of the millennial generation. Now we resonate deeply with Gen Z and I'll talk about TikTok and how that relates to that. And now Gen Alpha in our store. So we have that multi-generational connectivity because we connect on aho store, we had consumers lined up at 1 a.m. outside for a 10 a.m. opening in February in New York City. So there's that incredible emotional connection to this brand,

to consumers wearing the sweatshirt of the beauty brand, to now participating in our fragrance. So for us, that gives that longevity and resilience that this brand has shown over 10 years. And we saw that and we've continued to build on that by saying our brand will endure, our values are true, and we'll continue to build on that by saying our brand will endure, our values are true, and we'll continue to build upon that connectivity. But we needed to evolve. So we evolved our business model and we evolved our strategy. The marketplace is dynamic. Consumers

are changing very rapidly. We need to continue to involve our business model to meet our customer where they were. So that led to opening in Sephora and bringing more Glossier to more people, replatforming our tech stack and our website to Shopify to give us a scalable platform for growth and opening up retail stores that are profitable for us, but also these experience centers. the tenets of Glossier's brand, which is about you look good and about beauty in everyday life. And those values are enduring. Yeah. And staying true to some of our social connectivity in places like we were born on Instagram and now we've moved to TikTok. And we continue to see that virality and that connection with our community. It was core to Glossier at the beginning and continues to be very true to how we connect with our consumers. So you're 10 years in.

You're still growing revenue very strongly. You're profitable. Is there a path to IPO here? We've created incredible opportunity for the brand, I think through both showing the resilience of this brand and showing the potential in this business. And we have incredible runway for growth, multi-category, multi-channel, and we're just getting started in international arena, having launched in the UK and Australia, but still 98% of our business still done in the US and the UK. So incredible potential and runway for this growth that I think will give

us that decades of potential. And so we have lots of options to think about what that might look like in the future. So maybe possibly going public, but you're not really answering, but maybe. Lots of options. I think we have that opportunity to continue to be able to bring this brand and more people around the world. And we've built the business and we've shown that this brand can show the resilience that is not of the moment. And it has incredible potential. And we're excited to continue to pursue that. All right. Kyle Leahy of Glossier.

Thanks for joining us. Thanks for having me. Great to have you. All right. Well, still ahead. Qualcomm hosting its Snapdragon Summit in Maui with announcements on chips and AI. The company's CEO will join us in a first on CNBC interview to break down how today's news fits into the broader strategy. And some news in the

cybersecurity world today. Sofo says it's buying SecureWorks for $8.50, a share in cash. That's a deal valued around $860 million. Dell had acquired SecureWorks for just over six hundred million dollars in 2011, listed it in a public offering in 2016. Overtime will be right back. Welcome back to Overtime. New core results are out. The initial move is fractionally higher, but we'll get to those numbers in just a moment. For now, time for a CNBC News update with Pippa Stephens. Pippa. Hey, John. Nike and the NBA announced just minutes ago that they're extending an exclusive partnership with the NBA and the WNBA through 2036. Nike will be the global outfitting, merchandising, marketing, and and content partner and will also be in charge of designing and manufacturing uniforms,

other on-court apparel and fan merchandise. The Defense Department wants to recruit Silicon Valley's top talent to join the reserves. The department's head of human resources tells the Wall Street Journal these reservists would be asked to help with short-term projects in cybersecurity and other areas. If the plan is adopted, it would be the first time the military brings in private sector tech executives as reservists to tap into their know-how. And one of the last Navajo code talkers who helped secure an allied victory in World War II died peacefully in his sleep at the age of 107. John Kinsel Sr. served in the Marines and transmitted key messages in unbreakable Navajo code in the Pacific. Navajo Nation officials announced his death

over the weekend. With Kinsel's death, only two code talkers are still alive. Morgan, back to you. All right. Pippa Stevens, thank you. The S&P 500 retreating today, but valuations again on the rise as major averages sit near record highs. Mike Santoli is back. He's going to break it down for us. Hi, Mike. Hi, Morgan. Yeah, this last push higher in the S&P 500, even with earnings estimates rising, has gotten us back to about a 22 times forward P.E. multiple for the S&P 500. You see it here over the last 10 years. It's only been higher in those pandemic years when we were surging in the stock market and earnings arguably were a little bit depressed. And, you know, we were above this level back in the very late 90s into 2000.

And then as earnings started to crash in the early 2000s. So not a lot of history of markets from this point on expanding the P.E. in a sustainable way, which means, of course, if nothing else, that it will rely more on earnings growth itself for further upside. On that score, things look OK in the near term. Take a look at how stocks have been responding to earnings beats in particular. If you beat both on revenue and earnings, according to this Bank of America analysis, see this shot higher in these top. The ones that are beating on both have really been rewarded by the market. That suggests that expectations were kind of lowered enough.

And essentially, we think maybe some of these earnings increases are sustainable. So that's all to the good. And then even on the misses, it's not they're not being punished as badly as they sometimes are in the past. Of course, you see this goes all the way back to 2000. So it does suggest maybe earnings can can take the baton from here. Although, of course, a lot of debate today about exactly what we're priced for in terms of likely forward returns over multiple years. Morgan. All right. Mike Santoli, thank you. We've got new core

earnings out. I'm going to take you through the numbers right now because it it's a beat on the top and bottom lines. But keep in mind, this is a company that issued a warning just over and cut its guidance just over a month ago. So EPS adjusted coming in at $1.49 per share. That was two cents better than estimates. Revenue of $7.44 billion. That was better than expectations of $7.28 billion. Those net sales, though, do represent an 8% drop quarter on quarter and 15 percent year on year. Now, for Q4 guidance, the steelmaker is guiding Q4 gap EPS to be down sequentially versus Q3.

You're looking at earnings per diluted share of a dollar five. Oh, no. Excuse me. Just gap EPS down sequentially versus Q3. And what they're saying is the largest driver for the expected decrease in earnings in the fourth quarter is the decreased earnings of the steel mill segment, which is caused by lower average selling prices and decreased volumes. You can see shares are down a little less than 1 percent right now for Nucor. All right. Well, up next, Qualcomm CEO on his company's AI strategy and new mobile chip just announced at the Snapdragon Summit in Maui. It's a first on CNBC interview you don't want to miss. And check out shares of consumer health company Kenview, the big winner in the S&P 500 today. Maker of Tylenol and Band-Aid rallying on news activist Starboard has taken a large stake in the company.

Although the exact size, we couldn't confirm it. Don't miss Squawk on the Street's interview with Starboard CEO Jeff Smith tomorrow, 930 a.m. Eastern. Maybe he'll tell us. We'll be right back. It was a wild day of trading for Lumen Technologies, the communication services company getting a big pop at the start of trading today after teaming up with Meta to expand the social media giant's AI network capacity. But the stock sinking into the red shortly thereafter after Raymond James threw cold water on that partnership, saying it is likely related to Lumen's announcement in August that it won $5 billion in AI-related business. An announcement, by the way, that was discussed here on Overtime, noting there does not appear to be anything new in today's headlines. You can see shares of Lumen, which is a smaller company, finishing down about 2.5% today. Indeed, indeed. All right, well, Qualcomm kicking off its Snapdragon Summit today in Maui. Company unveiling its latest flagship mobile chip called a flagship.

I guess that works. The Snapdragon 8 Elite, alongside improvements in performance and efficiency, would allow for personalized multimodal generative AI directly on phones. Joining us now fresh off the stage there in Maui, first on CNBC is Cristiano Amon, the CEO. Cristiano, always good to see you. So now you've got these Orion CPU cores that you were talking about last year in laptops coming to smartphones. What does that do for the phones that use the highest end Snapdragon chips? And it's a category that's done particularly well for you across the board and in China lately. Well, first of all, it's great to talk to you, John, and you, Morgan, here from the Snapdragon Summit. We need to get you to report from Maui on the Snapdragon Summit.

This is incredible. A lot of excitement here with new technology on Snapdragon. But to answer your question, we're very excited. I want to remind what we have done when we entered the PC and we announced the Snapdragon X Elite. We restored the performance leadership back to the Windows ecosystem. Snapdragon X Elite was the fastest processor with the fastest Orion CPU. And what we're doing here at the show, we're announcing 8 Elites, which is the next edition of Snapdragon for smartphones. And the same thing we did in PCs, we're now doing in phone. We're restoring the performance leadership back to the Android ecosystem. Snapdragon X Elite has our second generation Orion CPU, and it's now the fastest mobile processor out there. But what's also exciting, what we're

doing with AI, we have conviction that we're going to see applications changing with AI. We show this new vision of the future, how apps are going to change with AI, especially because computers now understand human language. And StepJargon 8 Elite for mobile is one of the fastest engine to run those large language models, large visual models, multi-billion parameters running on a device and start enabling this future. Exciting time for Snapdragon, exciting time for Qualcomm. And software, as you mentioned, is a key component here because it doesn't matter how fast your chips are in isolation, they've got to run something faster. So there's this lag between Apple announcing Apple intelligence

and it actually being available, especially in languages other than English. What kind of an opportunity does that present for your ecosystem, right? And what software needs to come to market for you to really benefit? You know, what is really exciting, we're making Snapdragon an open platform. Remember, it was kind of a year ago that we started talking about Gen AI models running on devices at the edge. We did it before it was popular. And fast forward one year, if you look at some of the video appearances I had at the keynote, I had Satya from Microsoft, Mark Zuckerberg from Meta, Sam Altman from OpenAI. In all of those companies, what they're doing with Gen AI models,

whether it's the Microsoft Copilot, Lama, the OpenAI ChatTPT models, they see the potential of making this available across all the computing devices and, of course, mobile. And the exciting thing about what we're doing, we're making this an open platform that everybody can come in and help design this future. It's not about one killer app. It's actually how about you're going to change all apps with GenAI. And I think that's the opportunity we have for Qualcomm, for our partners, and for the Android ecosystem. Okay, let's talk M&A for a moment. There are rumblings that you at Qualcomm are considering making a bid for Intel, possibly sometime after the election.

Are you? For some reason, I had a feeling you're going to ask this question. Look, we don't comment on rumors. I'm telling you what we're up to. We're incredibly busy diversifying the company. I'm on that mission that I told you before we're going to do. We're going to change Qualcomm from a mobile communications company into a connected computing and AI company. And we're on this journey like crazy. One of the things we're announcing at the show

is the continued progress we made on PCs, especially after our competition launched new products to catch up with Qualcomm on AI PC. We had the battle of the benchmarks here at the show, and we actually show that Snapdragon X Elite is still the performance king of the aipc we're busy trying to build that business for the company and it's incredibly excited about the traction we're getting with pc oems with pc channel partners and i think that's going to be a big

business for qualcomm in november we're going to have an investor day that's the first time we're going to provide financial metrics of how we think that business is going to grow. But that's where we're busy doing right now. Okay, so you're not going to comment on the Intel rumors. But, Cristiano, I am going to ask you, when you talk about diversification, that could still come in different ways. And I wonder if that means you are potentially at least acquisitive. Look, here's our strategy for diversification. And we have been very clear, and I'll walk you to the science behind the madness. The first thing we did was automotive.

We picked that industry. We built Snapdragon digital chassis. We now have a pipeline that grew substantially, $45 billion. Actually, one-third of that is ADAS and autonomy. The second industry we picked was PCs. We saw two intersection points, conversions of mobile and PC, and PC becoming an AI device. We're doing that. And the next one is what we're doing with spatial computing.

We always believe that. If you look at our partnership with Meta and Gen AI starting to enable smart glasses to get traction, we're very happy with the traction that we're having with the Meta devices on smart glasses. The last one is what we did a couple of weeks ago. We announced a new product suite for industrial. We believe that we're going to see a new wave of growth in industrial as AI is actually going to run at the edge. That's our strategy. We had outlined that strategy. We've been executing to it, and I'm actually hopeful to provide metrics like we did for all those new business in November. Yeah, and I know with the handsets and the PCs, it's very much seen, at least by the Wall Street analyst community,

Qualcomm as an edge AI play. But you just talked about industrial too. So I wonder how you see this edge AI play, this trajectory actually unfolding here. How much of this actually depends on upgrade cycles? Yes. So obviously, when you think phones, you think upgrade cycles. And one of the things we did at the show, we show a vision, and that's why I'm super excited about the number of partners and CEOs for some of the leading AI companies that were part of the event

showing how the smartphone experience are going to change with AI and how that's going to translate into business. That's going to create a new upgrade cycle. Obviously, the question that everybody asks, when is it going to happen? If I knew it with precision, I think we'll be making very bold projections. We don't know.

What I can tell you is, for sure, five years from now, this is going to be very different, and we're going to see the full transition to an AI smartphone. How fast is going to happen between now and then? We just need to keep building new applications and services. When you think about automotive, when you think about compute and think of industry, all new growth markets for Qualcomm, those are industries that we're growing share and we see this tailwind enabled by AI. Gen AI experience when you're behind the wheel is going to transform how you think about automotive

as a computing space. When you think about what we're doing on PCs, that's our entry point, the transition to AI. And then industrial is one that we're actually very excited about it because enterprise digital transformation, you see now a number of use cases how they can use AI to change how they run their business. We have some examples. We recently announced for energy and partnership of Aramco, and I think that's a sign of what we're going with this technology. Cristiano, quickly, we're going to hear more next month around analyst day around the server strategy and how AI continues to fit into that. We look, I won't I won't announce it today, but we're going to definitely make investor day exciting.

All right. Well, we'll be paying attention, of course. Enjoy the weather out there and the technology. Cristiano Amon, CEO of Qualcomm. Thank you. Hope to see you here next year. Up next, all the overtime earnings movers that need to be on your radar as we count down to SAP's analyst call. Plus, Boeing having its best day in months after tentatively agreeing to end the machinist strike. Find out how the deal will impact Boeing's production and cash crunch coming up on Overtime. Be right back. Welcome back. Let's check in on today's overtime earnings movers.

SAP getting a boost after beating on earnings and revenue, raising its full year cloud and software revenue guidance as well. You can see shares are up more than 4 percent. Zion's Bank Corp beating on earnings and revenue as well. Net interest income was also above analyst estimates. Those shares are up 2.5 percent. And Nucor topping earnings and revenue expectations, though, saying it expects fourth quarter gap earnings to be down sequentially versus the third quarter. Those shares are down about 2%. Now, Boeing reaching a tentative deal to end its machinist strike after more than a month.

Up next, find out what's in the agreement and what it could mean for Boeing stock. And check out the aerospace and defense ETF hitting an all-time high today, thanks in large part to Boeing. This as investors get set for a flurry of defense earnings this week, starting with Lockheed Martin, RTX and GE Aerospace tomorrow. Welcome back to Overtime. Boeing shares taking off today. The aerospace giant reaching a tentative deal to end a more than month-long strike with its machinists union. Phil LeBeau has the details for us. Phil. Morgan, Wednesday is when we'll find out if the machinists approve this new offer.

This contract is the second one that's been offered to the machinists. Remember the first one that was offered back in September? Roundly rejected by the machinists. The key change from that contract to this contract, a big bump in the wage increase over the next four years. Previous offer was 25%. This time the offer is 35% over four years. The vote is on Wednesday. You need 50% plus one in order for it to pass.

But remember, the last offer was rejected by 96 percent of the nearly 33,000 machinists who voted on that contract. Since then, which was 38 days ago, we have seen max production halted. Also, some of the other models' production halted as well. But max is really the bread and butter for Boeing. It is the cash generator. And the strike cost, the impact now is estimated to be about $1 billion a month. Separate from the strike, Boeing has a lot of other issues. Yes, the strike is huge. They want to take care of that. But beyond that, cutting costs and programs, fixing a defense and space business that is just a mess over the last several years, and then ramping commercial production. They have to increase max production

beyond the 38 per month, which is what the limit is right now. They're not even close to that at this point. Don't forget, Wednesday morning is when we will get the Q3 results from Boeing. Guys, back to you. Yeah, Phil. In the meantime, you're also going to get GE Aerospace's results tomorrow. It'll be interesting to see what kind of commentary we get from Larry. Guys, back to you. Yeah, Phil, in the meantime, you're also going to get GE Aerospace's results tomorrow. It'll be interesting to see what kind of commentary we get from Larry Culp, which makes engines for some of these Boeing jets. And to your point, $15 billion reported worth of equity and equity link security is expected to be sold here as the company looks to raise money. I want to go back to the defense piece of this for a second, which we've talked about before. But Jeffrey's writing today that they call it a, quote, risk factory. And yes, it's a very small piece of the business,

this digital receiver technology, which makes wireless equipment used by intelligence services. But I do wonder whether this signals a bigger, broader willingness to start to try and exit more of that defense and space portfolio, at least perhaps some of the underperforming parts of it? I think they will. I think Kelly Ortberg's message when he said that the company is going to cut 10 percent of the staff and not be as extended as far, that was the beginning of him saying, we've got to figure out what we do, what we do. We have to do it well and we need to streamline. We cannot be everything that we have been in the past. And some of that cut, some of those cuts, by the way, it's going to have to be within defense and space. Now, it doesn't mean wholesale shutting everything down, but it does probably mean that they're going to be selective about what they're going to be bidding on in the future.

All right, Philip. Oh, thank you. Well, John, we do get many more earnings tomorrow, as you mentioned, quite a few industrial plays tomorrow as well. We also get Norfolk Southern. Speaking of freight, we're going to speak exclusively with new CEO Mark George. That's going to be happening right here on Overtime. This is his first interview since taking the helm as CEO of Norfolk Southern last month. So that's going to be one to watch. For sure. And then the day after that, I mentioned it earlier, we get IBM, we get ServiceNow,

two very different enterprise software names at sort of different stages of their journey. But both, you know, there's eyes on them to see if their momentum can continue. Yeah, especially when we talk about a day where the NASDAQ was slightly higher in large part because another record high for NVIDIA as investors continue to focus on picks and shovels of AI. Yeah. Well, with all that, we've got tomorrow to look ahead to. That does it for us here at Overtime. Fast Money starts now.