Closing Bell - Closing Bell Overtime: Salesforce Disappoints; C3.AI & Pure Storage CEOs On Latest Quarter 5/29/24

Episode Date: May 29, 2024

Breaking down Salesforce’s disappointing quarter as the stock sinks in Overtime; DA Davidson’s Gil Luria on what’s ahead for the Dow component. Plus, C3.AI CEO Thomas Siebel and Pure Storage CEO Charles Giancarlo talk their companies’ earnings in exclusive interviews. Other reports include Okta, Nutanix, HP and American Eagle – and why one space satellite company stock soared 70% today.  

Well, stocks pulling back as yields tick higher with the Dow and the Russell 2000 leading the declines. That is the scorecard on Wall Street, but winners stay late. Welcome to Closing Bell Overtime. I'm John Fort with Morgan Brennan. We have a very busy hour of earnings coming your way, including results from Dow Components, Salesforce, also Nutanix, Okta, Pure Storage, C3 AI, and more. We're going to bring you the key numbers, plus exclusive interviews with the CEOs of C3 and Pure Storage before they talk to Wall Street on their conference call. Because that is how we do it here at Overtime.

But first, let's get to today's action. The major averages all pulling back. Yields moved higher again. We had another weak Treasury auction. The NASDAQ, though, still holding on to gains for the week. Let's bring in our market panel. Yet another weak Treasury auction. The Nasdaq, though, still holding on to gains for the week. Let's bring in our market panel. Nicole Webb of Wealth Enhancement Group. Charlie Babrinskoy of Ariel Investments.

And CNBC Senior Markets Commentator Mike Santoli. Nicole, it's great to have you here on set. The fact that we are seeing this pullback in the major averages today. Got the S&P back below 5,300. 5,266 looks like where we're closing right now. It really does feel like it's AI and everything else in the market, especially when you see in recent days what's been underperforming versus what's been holding up. Yeah, I think there's a couple of things going on. We entered this week feeling like we were going to go into a bit of a choppy spell in the market. A lot of

that being where is the confirmation going to come from that the market deserves the next leg higher? And it can't really all come from technology. And so we knew the bifurcation out of earnings season just closing out a few weeks ago. Now we need, we're in this holding pattern, waiting for the next set of earnings data. Do we really start to see that? We only have about 42% of S&P 500 companies above their 50-day moving average. Small caps aren't going to give it to us unless we get closer to a rate cut. So this confirmation coupled with higher treasury yields is creating some of this instability in the market. And so, you know, it's hard to know where you're going to get that bias

outside of AI right now. And speaking of, we've got Salesforce earnings out. It looks like the stock is moving lower initially. Steve Kovac has the numbers for us. Steve. Yeah, Morgan, it's some mixed results here. Let me just give you the top and bottom lines while we still dig through this report. A slight beat on EPS, $2.44 adjusted.

Street was looking for $2.38. And a slight miss on revenues, $9.13 billion. Just slightly under the $9.18 billion the street was looking for. You see shares down almost now 10% there, Morgan. All right, Steve, thank you. Don't miss Jim Cramer's exclusive interview with Salesforce CEO Mark Benioff. That's coming up at 6 p.m. Eastern on Mad Money. Charlie Bobrinskoy, I'm going to go to you on this one because it does seem like coming into

this hour of earnings salesforce really being seen as more of a macro read on the state of i.t spending given some of the cross currents we've been seeing and hearing from companies that have reported results and a similar situation on the retail side as we await american eagle results too given what we saw with Abercrombie & Fitch today. Yeah, we've got two different things going on. With Salesforce, it's about whether big companies are spending on consulting projects, on AI projects. Frankly, the name we like here is Oracle, which has the database software that should be very useful in AI with companies analyzing their own data.

That's really what AI is all about, is analyzing data to perform better. And we think Oracle has the better software to be positioned. But there's no doubt that I haven't gone through the Salesforce report yet, but we were hoping for an uptick in spending in this space, and it doesn't look like we got it. American Eagle is going to be different. American Eagle is about the shape of the consumer. There's been a lot of signs that the lower tiers of the consumer are getting kind of soft. But there have been some signs that the middle and upper tier are doing pretty well. And so Amber Carmody and Fitch came out with great numbers. So it may be a case that there's real

softness in the lower end consumer, but that the higher end is hanging in there. Yeah, hopefully we hear a little bit more from Steve Kovacs soon. It's the guidance that looks particularly concerning on Salesforce. Looks like Okta earnings are out as well. Julia Boorstin has the numbers. Julia. Okta beating on the top of the line. Adjusted EPS of $0.65 per share is $0.11 better than what analysts anticipated. Revenues of $617 million, beating estimates of $604 million estimated. The company also guiding to Q2 revenue between $631

million and $633 million. That's ahead of the consensus estimate for Q2 guidance of $616 million. And just to look at what the CEO says here in the press release, they say we remain well positioned to advance our market leadership and win more of the massive opportunity in workforce and customer identity markets. The stock was negative. Now it's in the green of about two percent. Back over to you. Yeah, it looks a little different from Salesforce there, Julia. Thanks, Nicole. I wonder how much of the market is hinging perhaps on technology with so few clear guideposts here. You talked about how we're sort of trying to figure out where to head. But if a stock like Salesforce, right, which is in the Dow, introduces doubt, does that potentially have wider implications?

Yeah, absolutely. You know, the thing that is most interesting right now is yields push higher. What we are waiting for is also this confirmation that GDP is pushing higher. So we saw some of those down revisions. We're hearing whispers that maybe we're pushing for forging ahead. And so you have this coupling of, yes, you have implications of technology, the tech sector, productivity through AI. What's that next leg of AI, especially when you think about adding an overlay and monetizing that to the likes of CRM? And then adding into that the confirmation, which I do think will be the next leg of this bull market, which is we are getting growth.

So even as we continue to see the 10-year pushing this 4-6 number, you're seeing a little bit of wobble underneath the market. Can we get that confirmation? And does that help bring that other half of the market back up towards those 50-day moving averages? And our bet is yes, as you're starting to see some of that underlying data. And while we're hearing the likes of a Walmart saying, yeah, you have the high-end consumer trading down, on the flip side of that, you have a consumer that is actually still spending on full-price items like Ralph Lauren, saying that the best performing part of their portfolio is actually the full-price clothing. And so you just have a really interesting

society trend when it comes to spending. And I think that you're really watching that play out here too. And a lot of new competition, especially when you think of clothing companies, especially Athuleisure, some of these trends that were really born out of COVID. So all of that really playing out all at once. Yep. Okay. And of course, we're waiting in Capri numbers as well, which will speak to that. Kovac, Steve Kovac, you have more on Salesforce. Yeah, it really seems, Morgan, to be the guidance here that's driving shares down. Now it's down 11%. For Q2, they're expecting $9.2 to $9.25 billion.

That's pretty significantly less than $9.37 billion in Q2 the street was looking for. And then EPS guidance also a miss. They're only expecting up to $2.36. Street was hoping for $2.40. And you see it just continues to slide here on that weak guidance to what you guys were talking about. Really got to show an AI monetization strategy here, guys. Mike Santoli, I want to bring you into this conversation as we do see shares of Salesforce now down about 12% in overtime. You know, the bar had been very low just a couple of

quarters ago. We knew cost cutting was really the focus where Salesforce was concerned, the focus on growing margins. What is today's results and specifically the guidance piece of this? Tell us. The story seems to be a little bit stuck right here. It has been an underperformer relative to all of tech. I mean, there's a certain maturity of the business combined with their focus on, you know, harvesting cash flow that seems to be, you know, a narrative shift going on. So it's not so much sort of the go-go top line growth. They did pretty much maintain some of the operating margin guidance for the full year, trying to meet the operating cash flow guidance for the full year. Stock's not as expensive as it used to be. So I just feel like it's a little bit more of a kind of what you see is what you get type story at 28 times earnings as opposed to super expensive stock for rapid growth.

So we're still in that mode right now. I think there's a sensitivity to anything that suggests, you know, bookings rates are going down across the enterprise, that there are net losers to this heavy corporate investment into into AI capabilities. This probably exacerbates that. I always point out, though, you know, we're going to hear from Benioff. He always kind of gets pretty rah-rah about things and focuses people or tries to on kind of the big picture opportunity. We'll see if that that works this quarter. Indeed, Mike, speaking of sensitivities, Nutanix earnings are out. That stock down about eight and a half percent right now in overtime. Temptation to draw a parallel

between Salesforce Guide and Nutanix Guide, but there are some nuances here. Let me give you a little bit on that. Nutanix beat on the top and bottom lines for Q3, but the headline revenue number for Q4 is going to give some people some pause. Revenue for this hybrid and multi-cloud software provider came in at $525 million. It's higher than the 516 consensus. Non-gap earnings for share, $0.28 versus $0.17 consensus. Annual contract value billings came in at $288.9 million versus $272 expected. But on the Q4 guide, the midpoint of the range is $535 million, which is short of the $546 expected. And that comes despite the fact that ACB Billings' guide for that quarter are higher. The guide on gross margin, operating margin, also higher.

So what's with this revenue number? I'll have some color from CEO Rajiv Ramaswamy for you in just a few minutes. Meantime, C3 AI earnings are out as well. Back to Julia Borsten with those. Julia. That's right. C3 AI beating on the top and bottom line. The company reported reporting an adjusted loss of 11 cents per share. That's better than the expected loss of 30 cents per share. And revenues coming in just ahead of expectations at 86.6 million versus 84.4 million estimates. They're just a hair ahead of expectations. The company's guidance for its next fiscal quarter, so that's the fiscal first quarter, in a range of 84 to 89 million. That's pretty much in line

with the midpoint of 86 million. But just looking at the company's press release here, they say they are raising their guidance on increasing revenue growth. That's raising their guidance for the next fiscal year. Back over to you. Yeah, $3.7 to $3.95 for the fiscal year. Pretty solid. And we'll get to get to talk more about that with C3 AI CEO Tom Siebel. Going to talk about those results exclusively here on Overtime before the earnings call, Morgan. Yeah, we've got pure storage earnings out as well. The parade continues. Pippa Stevens has the numbers. Hey, Morgan, it's a top and bottom line beat for pure storage.

EPS coming in at an adjusted 32 cents. That was 11 cents ahead of estimates. Revenue at $693.5 million ahead of the $681 million analysts were looking for. Adjusted gross margin and adjusted operating margin both coming in ahead of estimates. Q2 revenue guidance at $755 million, a little bit above the $750 million the street was looking for. And the company said gave guidance that their full-year revenues will be largely in line with expectations. The stock down about 1%. Morgan? All right. Well, coming up, Peer Storage's CEO will break down those results exclusively with us before he too dials into the analyst call. Yeah. Lots of talk to him

about, especially given the shift toward flash storage in the AI era. You got to be able to take some of that legacy storage data and have it readily available to train some of these models. I mean, I know, Nicole, that you're not specifically focused on these companies, but sort of a mixed bag here in the various signals about the future. I mean, C3 AI, a lot stronger versus expectations than, say, a Salesforce. Yeah. You know, I think peer storage is really interesting, as is the monolithic. So when we think about, and the visual I took away from the NVIDIA call was this idea behind AI factories. And so it's kind of a way to visually represent the growth and the demand of what we're creating.

And when it comes to the likes of peer storage, and I'll focus on them on the heels of their earnings, you're looking for that fast, energy efficient, cost efficient memory, the ability to recall instantaneously so much data and information and then scale that down to a size that we believe is more repeatable as we think about sustained growth. And so there's some of these niches inside of building out those AI factories that are really interesting, especially on the heels of knowing that there's almost an arms race to sovereign AI production or chip production. And so while there's been over the last decade and a half a consolidation in chip manufacturing, what we're seeing now is the ventricles, the supplying, and how we actually build out the end point towards this. Because you have to think about AI like the Internet.

It is going to become table stakes for business. And so when you think about the future of investing in AI, there's this first leg of it, which is the actual creation. The second leg, which is the enterprise adoption, which is the table stakes nature. And then who is set to really win on the backside of it? And what's interesting is when we think about advancements in technology, it's at the point we're at today that we don't really know the economy of scale that comes on the backside. And yet, yeah, investors have to try to figure that out. Mike Santoli, how much room is there for nuance, right? Investors have to try to parse through these top line numbers. I mean, I'm thinking about Nutanix, for example.

People are going to look at the guide versus Salesforce. There might be some different detail here, maybe some opportunities. Certainly different detail, also different setup. I would argue Nutanix has really been on a run in terms of the stock. You know, Salesforce, I do think it's sort of just not where people have high conviction or excitement. The narrowness of the way the market has behaved, whether you look at, you know, NVIDIA and its tight orbit of other companies, you know, building what they're building relative to everything else shows you there is a scarcity of conviction that there are going to be kind of a broadly inclusive group of winners. So I would just take the market almost at its word in terms of feeling of, you know, where the safer bets are and be alert to the idea that the market

tends to overpay for the things that are perceived to be sure things eventually. Yeah. Charlie, I'll give you the last word here, especially as you have this conversation about the so-called picks and shovels of AI and what has been outperforming in this market as of late, because that has extended to some industrial companies. It's extended to some energy companies. But we have to put this entire conversation in context amid a rising yield backdrop right now. I think that's temporary, Morgan. I think we've got a very temporary indigestion for some big auctions. I think we're going to get decent inflation numbers. I'm of the camp

that CPI has been overstating inflation because the government figures don't properly account for rents and home prices. I think we're going to get better news even as early as Friday. And when we get that, we're going to have lower short-term rates, and that's going to be very good for some parts of the economy, particularly housing and auto. So let's not forget that, in general, first-quarter numbers beat, came in ahead of expectations. Corporate profits have been pretty strong. There are obviously pockets of weakness. And unemployment is low and wages are high.

There's an awful lot to like in this market. Yeah. Maybe we're finally getting a little of that sell-in-may softness, even though we're still higher for the month so far on the averages. Some great context and insights from our panel, Charlie Babrinsko and Nicole Webb and our own Mike Santoli, who we will see in just a little while again on the show. We've got HP earnings out. Steve Kovac has those numbers. Steve. Yeah, Morgan, a beat on the top and bottom line here for HP and guidance. Also beating estimates as well. We got EPS at 82 cents adjusted. Street was looking for 81 cents revenues, 12.8 billion versus the 12.6 billion expected.

And then I was able to catch up with CEO Enrique Lloris on these results. And he told me that PC growth, PC has returned to growth, rather, after all that pandemic buying, you know, and we've seen PC sales just crater in recent years. And also talking about the AI PC boom here, he told me that he sees 10 percent of PC sales in the back half of the year will be AI PCscs and that will grow and three years from now he sees up to 60 percent of hp sales uh being aipcs morgan interesting okay well shares are up about one percent steve kovac thank you after the break we've got much more on the big pullback for salesforce as we count down to the earnings call at the top of the hour plus two big interviews

you don't want to miss ceos of C3 AI and Pure Storage will join us exclusively to break down their quarters before they talk to Wall Street analysts. Overtime is back in two. It was a rough day for the Dow. Well, now American Eagle and Capri Holdings earnings are out. Pippa Stevens has those numbers. Pippa. Hey, John, both of those stocks are lower.

So let's start here with American Eagle Outfitters. It was a mixed quarter earning 34 cents on EPS. That was ahead. That was six cents ahead of the expectations. Revenueues at 1.14 billion. A slight miss. Wall Street was looking for 1.15 billion. Now, comps were up 7 percent ahead of the 5.5 percent that Wall Street was looking for. Now, moving over to Capri Holdings, it is a top and bottom line miss for that company. EPS at 42 cents adjusted, well short of the 65 cents Wall Street was looking for.

Revenue at 1.22 billion, also short of the 1.3 billion expected. The company said that it continues to be impacted by softening demand globally for fashion luxury good. And they also said that trends slowed in Asia and that wholesale remains challenged. Now, the company is not giving guidance amid that ongoing battle with the FTC over the proposed Tapestry merger. That stock now down 3 percent. Morgan. All right. Paints a very different picture to the 24 percent gain we saw in Abercrombie and Fitch during today's session and how, I guess, picky consumers are in terms of what they're buying right now. Pippa Stevens, thank you. Shares of Salesforce are falling sharply in overtime after reporting earnings moments ago. Revenue coming in light. Revenue and earnings guidance for the second quarter was light as well. Other software names like Oracle and Adobe are

actually moving lower in sympathy. You can see Salesforce right now, though, is down 15 percent. Let's bring in Gil Luria of D.A. Davidson to discuss. Gil, this is a very steep move for this blue chip name. Is it warranted? It appears to be warranted. They just guided for single-digit growth, 7% to 8% growth for the quarter we're in. That's the first time in Salesforce's history that they will only grow single digits. Below expectations, a significant deceleration, and an indication that organic growth is going to be very hard to come by for this company, which would then lead to a

conversation about what do they need to do in M&A, and that will cause further concern. So what do they need to do with M&A then to jumpstart top-line sales growth, or do they need to steer clear of that and just invest internally? So investing, they've already invested internally and they will get some benefit from AI down the road. And we could talk a little bit about that more because I think there's an insight beyond Salesforce today.

But in terms of M&A, don't forget, their strategy used to be to go for the most exciting, highest growth companies, Slack, MuleSoft, Tableau, pay up for those companies and integrate them. Activists came in and asked them to stop doing that. So now they're looking at slower growth legacy companies like Informatica, a deal which won't happen, could be financially accretive, but isn't the exciting high growth type target. So they have to decide which way to go. And investors are going to really be focused on can they make both accretive acquisitions, but also still buy category

leaders that can contribute to picking up organic growth. Gil, I thought this was supposed to be fixed, right? I mean, if it opens tomorrow at around these levels, we've lost not only all the gains for 2024, we're back to late November levels on this stock. So are we actually back there as far as the questions about Salesforce, given all the excitement around AI and given what Benioff had said about AI driving the future and revenue of this company. Yeah, here's where we're at on AI. We have to start connecting the dots between Snowflake and Workday and Salesforce, companies that we expect, there's best-in-class companies that we expect longer term to benefit from AI. This year, AI is a headwind for all these companies because enterprise spend isn't

picking up but the portion going to AI is increasing whether to AI projects that don't relate to these companies or buying up the capacity at Azure and AWS to be able to train and develop new AI tools. That spend is going away from these companies and that's become a headwind this year. Whether that reverses next year, we'll see. We believe that it will, but right now, these companies are actually hurt by the shift to AI. Alright, we'll await that explanation from Benioff on Mad Money. Gil Luria, thank you. Well, the tables have turned with this one.

C3 AI jumping on its results, but it had been a rare underperformer in the artificial intelligence space this year. It was down double digits heading into today's print. Up next, CEO Tom Siebel is going to join us exclusively to discuss the quarter and what he's seeing from enterprise customers. We'll be right back. Welcome back to Overtime. Shares of C3.ai are popping up better than 9% here after beating on the top and bottom lines. The company also raising its guidance for the next fiscal year. And joining us now is C3.ai CEO, Tom Siebel. Tom, you said the world was coming your way.

It looks like it from these results, but give us some sense of what's built into this guide and the extent to which excitement for your product is following this overall market attention to AI. Well, we're clearly seeing a massive expansion in enterprise AI, John. And we've been working, preparing for this now for the last 15 years. We built the C3 AI platform, now 90 turnkey enterprise AI applications. So the market is very much coming our way. And we did a transition a couple of years ago to conception-based pricing, which depressed our revenue growth for a while.

And now our revenue growth has been, you know, accelerating for five quarters now. I think subscription revenue growth last quarter was 41% year over year. Top line revenue growth was 20% year over year. So it's, you know, we're exceeded in cash, exceeded in earnings, exceeded in virtually every metric that's out there. So business is good. The enterprise AI market is growing very rapidly. And we're in a position to serve the needs of that market. What about the government portion of that? I remember from ServiceNow's results that the federal business was particularly strong for them. And I know they've been focused

on AI. How is the AI momentum with government? How should investors think about the difference in trajectory in AI adoption between government, which isn't always the fastest, but happens to be strong for you and enterprise as well? Well, our federal business grew over 100% year over year. So that is a very healthy segment. We're very active in the defense community, very active in the intelligence community. And it's a privilege to be able to serve. And with the Department of the Air Force and others, we are deploying some of the largest and most complex enterprise applications on Earth to enormous economic benefit.

Our predictive maintenance application for the Air Force called Panda is the only AI system of record that I'm aware of in DoD. We increase aircraft availability for the weapon systems we cover by 25% on any given day. Twenty-five percent at the scale of the United States Air Force is pretty substantial. So the federal business is growing. It is our most rapidly growing business. So where do you see the biggest opportunity moving forward then, Tom?

Is it on the federal side or on the government side, or is it on the enterprise side? And I ask that given the conversation we just had with Gil Loria about Salesforce and some of the headwinds that are being seen in enterprise for some companies where AI adoption and an actual realization of return on investment is concerned? Well, I think when you have an enterprise application software company where you built the software stack, it may be, you know, 14 years ago, this would be organizations like Oracle, SAP, Salesforce, and others. And you can't just in 2023 put AI in the box and expect the market to believe

it. So I think for them, this probably is a headwind. We are a native enterprise AI company. I've been talking about this now. I mean, we started this company before Google Cloud existed, before the GPU existed, before Azure existed. You remember 2012, 13, 14, 15, 16, 17, 18, I was the only person in the world talking about enterprise AI. So we did a couple of billion dollars of work and we are very much AI native and we're deploying some of the largest, most successful AI deployments on earth. So what is a headwind for, I think, many traditional enterprise application software companies presents very much a tailwind for us. So what do you do to take advantage of that? I mean, we've talked about partnerships in the past, you guys and

Google Cloud as one example. Are there further software company or platform partnerships that you do now to try to continue accelerating this revenue growth? We have very close partnerships, particularly with AWS and Google Cloud. We do a lot of work with Azure. And so we're very much compatible with the hyperscalers because we're providing applications that work on top of their platforms and utilize their GPU and CPU and storage resources very quickly for these large enterprise applications. So growth markets, state and local government, huge manufacturing, agribusiness has become huge,

health, financial services. I mean, there's no aspect of the economy that's not revolutionized by AI, and now particularly with generative AI. I mean, this thing of generative AI, it's just staggering. And the problems that we could solve there are really remarkable. So there's nobody who isn't interested,

nobody who won't take a meeting. And as it relates to budgets for AI, there doesn't need to be a budget. There's the level at which we're doing the decision in the CEO's office, and he or she just makes the budget happen and brings the system live. So what does that mean in terms of the trajectory for profitability? And do you see this quarter then as an inflection point? No, I think this is a continue. I think what's happening, Morgan, is exactly what we said would happen in terms of this return to growth. We were, you know, significantly cash positive this quarter. We currently plan to be cash positive next year. We'll cross into profitability next year.

At the same time, you know, I have been investing in growth. And I made that a couple of quarters ago. We've been overwhelmed with interest and in the last quarter, we had, I think, almost 50,000 inquiries from 50,000 executives, 3,000 companies, over $500 million in revenue inquiring about our generative AI products. $50,000. $10,500 in 28 days in February alone. This quarter, I'm anticipating almost $100,000 such

inquiries. We've never seen anything like this in the history of enterprise software. If I need to invest in market share to gain market share and establish market leadership, we will invest. All right. And I'll also point out, you were a lone voice in the wilderness a couple of years back saying you were going to require employees to be in the office. A lot more trying to sing that tune now, especially in the earlier stages. Tom Siebel of C3.ai with a stock of about 8.5% in overtime. Thanks for joining us before the call. Thank you, John. Thank you, Morgan.

I also spoke with Nutanix CEO Rajiv Ramaswamy about the quarter and the Q4 guide. You can see that stock now down almost 15%. Here's what he said about how a surprising influx of large deal activity is having a temporary negative effect. We are seeing a much larger set of engagements with our customers, including some of the world's largest customers. And these include deal sizes that are generally larger as well. We've seen an uptick in terms of large deals that are coming our way. Now, these deals typically are taking longer than expected to close for a variety of reasons. One is, of course, that they are large deals. There's, you know, the nature of very large deals is they require more approvals, et cetera, from people. There's also tied to hardware refreshes in the case of people

trying to move off one of our competitive, you know, positions that they have. And it's a very dynamic situation in the market from a competitive perspective as well, because our competition is actually just evolving and trying to adapt to this changing environment. So those are the reasons why some of these larger deals are taking longer to expect, you know, to close than we expected. Well, that stock is taking a big hit in overtime now, down 18 percent, with the CEO saying it's a large deal and share gain story under the covers. We'll see.

It's a big move. Well, we have two more earnings reports to bring you, UiPath and Agilent, and the stocks are tanking. Pippa Stevens has the numbers. Hey, Morgan, UiPath down more than 30 percent here on some really disappointing guidance, but let's start with Q1 results. It was a top and bottom line beat. Adjusted EPS of 13 cents.

That was a penny ahead of estimates. Revenue at $335 million, slightly ahead of the $330 million Wall Street was looking for. But once again, it is that guidance. They see Q2 revenue between $300 million and $305 million. Wall Street was looking for $342 million. The company says it saw increased deal scrutiny and lengthening sales cycles for large multi-year deals. Now, also, the CEO is stepping down effective June 1st. And Daniel Dines, who is the founder and former CEO of the company, will come back and once again take over as CEO effective June 1st. Now moving over to Agilent because that stock is also down

some 16 percent. EPS coming in at 122 adjusted, three cents ahead of estimates. But revenue did miss 1.57 billion, slightly below what Wall Street was looking for. Now it's also a guidance story here. They see Q3 revenues between 1.53 billion and 1.57 billion, short of the $1.72 billion. They also cut their full-year guidance, although they did announce a new $2 billion stock, billion-dollar stock buyback. Those shares down 14%. John? Yeah, rough on the guides in OT today, Pippa.

Thanks. Well, we've got much more after-hours action coming your way. Ahead, the CEO of Pure Storage. That stock's up about 5%, 6%. And over time, he's going to join us before the call with Wall Street as that stock, as I said, moves higher. And up next, Mike Santoli looks at two parts of the tech complex that have benefited from AI hype. And one of those sectors is pulling ahead. Stay with us.

Welcome back. We've got some big swings in AI-related names here in overtime regarding earnings. And let's get back to Mike Santoli with a look at how the AI hype is driving up the valuation in one particular part of tech. Mike. Yeah, Morgan. So the action we're seeing after these earnings reports pretty much fits into a pattern, which is software businesses being viewed by the market as a little bit more vulnerable than promising in this current AI investment wave. Here you see the semiconductor index relative to the software index. Now, if you remember back in pandemic time, 2020, 2021, it was software considered to be the more reliable source of stable revenue and very high cash flows.

Right now, it is semis. The build out of AI is driving almost all of this. And in fact, even the socks right here is a lot of that is NVIDIA and Broadcom to a lesser degree. AMD, the equal weighted version of the semiconductor actually has not done quite as well. Now, the valuation we see here relative to expected free cash flow, you see semiconductors also have pulled ahead again. That's a switch. They used to be seen as more cyclical, less deserving of a high multiple software basically being seen perhaps as disrupted more than anything else at the moment. We know moods swing in the other direction eventually in the markets. We'll see if that hits these groups as well, John. All right, Mike Santoli, thank you. Well, it was already at all

time highs, but here's a pure storage popping after strong earnings and guidance. Up next, the company's CEO is going to discuss those results with us before he dials into the analyst call, which kicks off the top of the hour. Be right back. Welcome back to Overtime. Over time, shares of enterprise data storage company Pure Storage moving higher, almost 9% at the moment after beating on the top and bottom lines and reporting Q2 revenue outlook numbers that topped analysts' estimates. Joining us now for an exclusive interview is Pure Storage's chairman and CEO, Charlie Giancarlo. Hey, good to see you. Strong move here for the stock. You talked about these three categories where you see AI and even though AI is just a small part of what your business is right now, I'm hearing this message across the enterprise about modernization and the drive for companies to get ready to make those AI

investments. How is that influencing the activity that you see in this quarter and the one ahead? Yeah, that's exactly right, John. The three areas that we see are storage for training AI models, storage for using AI models against existing data, but then a general uplift of the environments that existing data lives in so that it's available for AI, serving real-time information from the vast variety of different storage systems and compute systems that customers have to also feed an AI engine that's there. We're seeing activity in all three of those spaces. And we're very much looking forward to the fact that we alone, of all the competitors, are able to do so with a single operating environment. And that allows our systems to really interact and

interoperate with one another. Whereas storage generally consists today of multiple different operating environments, even by the same vendor. And we're the one vendor in the world that actually has one operating environment for all of customers' storage needs. So do you see any speed bumps ahead and do you feel that your sales and marketing motion, particularly the sales force, is ready for the demand that you see ahead? Great. It's a great question. I don't know that anybody's sales force is ready for this next stage. There's going to be a lot of work for training, a lot of work to understand the new customer environments and concerns that they're going to have going forward. We started that work at the beginning of last year, so we feel like we're well along,

but still unquestionably a lot more work to do. When you just zoom out, you look at the broader macro environment, what are you seeing for storage demand trends more broadly? And at a time where there is this narrative out there that companies are putting lots of money to work in AI and tightening their belts elsewhere in the tech ecosystem. Are you seeing that too? There's no question that, you know, the spend that's going to take place on AI will put pressure on other parts of the budget. We do think that storage is relatively safe in that, in that they also have to upgrade their storage as well. So I do feel fairly good

about the overall IT environment for storage, but there's no question that AI is going to put some pressure on other parts of the budget. And so therefore, is guidance a challenge because of the different buckets of customers and customer needs that you have and how they're moving money around? Or are you seeing enough strength from storage in general and the transformation away from more traditional means toward your flash technology that it makes up for it? Well, you know, our flash, we're the only company that doesn't use SSDs. We use raw flash. And as such, we have a huge competitive advantage, both on the cost, but also on the power, space, and cooling side.

So we think that regardless of the environment, that is the IT spending environment, we're gonna get an outsized share of this. We're also quite confident that we'll start to penetrate hyperscalers for very much the same reason, higher performance and lower space power and cooling. And storage is either the number one or number two demand for power and cooling in data centers. And so we require about one-tenth

the space power and cooling. So it's a dramatic reduction. And that allows large organizations and hyperscalers to be able to invest more in the AI space that is a power hog. Yeah, that cooling issue, I'm hearing more and more. It's going to increasingly be a concern. It sounds like you're positioned well. Charlie Giancarlo, CEO of Pure, thanks for joining us before the call. Thank you. Goes back to that AI infrastructure talk discussion we've been having day in, day out.

Well, shares of AST SpaceMobile rocketing higher. After announcing another partnership with a telecom giant, we've got those details. Look at that. Sixty nine percent on your screen when Overtime. AST Space Mobile launching today, up almost 70%. Verizon, the latest to strike a partnership with a small-cap satellite operator, which is building a constellation for space-based broadband service, which is going to be accessible to unmodified mobile phones. The deal includes a $100 million commitment for AST,

including prepayments and a debt investment by Verizon. AST Space Mobile CEO and founder Abel Avalon says the company has 45 agreements, and this builds on a business model that's been in part enabled by longtime investor and partner AT&T, which announced a commercial deal earlier this month and actually welcomed today's deal news involving its rival. They provide the spectrum. They provide their customer base, billing, all the back office, all the marketing and infrastructure. We provide the, what in essence is the space infrastructure to enable any phone to connect to it, regardless of where people are. It's all about spectrum. AST will launch its first five operational satellites,

which will be the largest spacecraft in low-Earth orbit behind the International Space Station this summer. Continuous service will come by 2026. Speak to the growing demand for continuous connectivity in an AI and autonomy-enabled world. Connectivity is required everywhere. I mean, connectivity is now not only connecting people, but connecting machines, and then interconnecting them in an intelligent way that you can predict what things will happen, how traffic will flow, where people will be, and how all of that interconnect to each other. It is a massive opportunity. AST is on the forefront of this nascent directed device communications market, which also includes Starlink as SpaceX partners

with T-Mobile. And as Apple spends heavily on its Global Star-enabled emergency SOS service. It has a big retail base, AST Space Mobile, arguably acting like a meme stock. Shares, as I mentioned, up almost 70% today. They're up 305% just since the start of May. They have quadrupled. You can catch more of my conversation with AST's CEO on my podcast, Manifest Space. Scan that QR code. It'll be

available starting this evening. We get into all the details, John. All right. Look forward to that. Up next, all the big overtime earnings reports that need to be on your radar tomorrow as we count down to those analyst calls from Salesforce and C3. We'll be right back. Welcome back. This overtime earnings parade shows no signs of slowing down tomorrow. We've got Dell, NetApp, Marvell Technology, MongoDB, Costco, Gap, Nordstrom, and Ulta Beauty all reporting. It's a lot. It is a lot. Tomorrow's economic calendar,

also busy. Investors are going to digest the latest reading on first quarter GDP. That's expected to be the same as the last reading. Weekly jobless claims report, which we know have stayed pretty tight and pending home sales data. John, I'm also watching the two-year treasury yields. We know we're just below that 5% level. That's sort of key technical juncture that if we were to pierce above it, I think a number of strategists believe you could see further headwinds for the S&P. MongoDB results, I think, are going to be particularly important in their guidance in light of what we just saw with Salesforce down so heavy in overtime. I mean, they're trading at the low end of the range for the year, back around late 2020 levels. Dell, too, especially after HP's comments on AIPCs.

So much. That's going to do it for us here at Overtime. Fast money starts now.