Closing Bell - Closing Bell: Time to Take Some Profits? 1/25/24

Episode Date: January 25, 2024

Is it time to take some profits in some of the market’s biggest winners? Light Street’s Glen Kacher maps out his market strategy. Plus, Hightower’s Stephanie Link and Virtus’ Joe Terranova break down their market playbooks. And, star chip analyst Stacy Rasgon reveals what he is watching ahead of Intel’s report in Overtime and what he is expecting for the stock this year. 

For The Closing Bell, I'm Scott Wapner, live from Post 9 here at the New York Stock Exchange. This make or break hour begins with the state of the rally and whether the market is once again too crowded at the very top. Simply too much money chasing too few names. And whether it is going to have an unhappy ending. We'll ask tech investor Glenn Kacher of Light Street. He's going to join me momentarily in a Closing Bell exclusive, and he can't wait for that. In the meantime, your scorecard was 60 minutes to go in regulation, and it does look a little bit different than it did a while ago.

Yes, we're green across the board, but some of the wind has come out of the three major averages as the day has progressed. In fact, the NASDAQ was negative, and as you see at the bottom of your screen there, it's barely positive now. There's no debating what Tesla's doing today. It's having an awful day following its earnings report. That stock, by the way, no longer one of the so-called

Magnificent Seven because as its market cap continues to shrink, it's dropped out of the top 10. Humana, another of the day's worst S&P stocks, and that after its guidance came in very disappointing today. We're watching yields, too, following that much better than expected GDP report. You see the 10 years at 413. So we're watching all of that. It does take us to our talk of the tape, top heavy tech and whether it is time to take some profits in some of the market's biggest winners.

Let's ask Light Street's Glenn Kacher. He does join us now live. Welcome back. Happy New Year. And it's nice to see you again. Nice to see you, Scott. Thanks for having me on. So so how about that that question, whether there's just simply too much money in too few names in this market, what looked like broadening out really isn't materializing and we're right back to where we

were. What do you think? Well, I think you have to ask yourself what's driving the market. In our view, the most important trend in technology is the move to artificial intelligence and the importance of the GPU compute infrastructure getting built out over the next five to ten years. That's a really lasting, long-term push by the big platforms and tech, and so there's a lot of opportunity for some of the largest market cap companies. The question, I guess, as people would, I'm sure, agree with you, because you're in a lot of these names, NVIDIA, Meta, Microsoft, Alphabet, AMD. I mean, these are among your top 10 holdings. The key question, of course, Glenn, is what multiple do you pay for that?

Now, how do you respond to those who would say, look, I agree with everything that you said. It's transformational technology, but the multiples have just gotten too stretched. Well, I think there are cases where some of them are stretched when you look at the compare, you know, those fundamentals to the growth that these companies are seeing. I'd say within the Magnificent Seven, I'd say Apple sticks out as a company whose growth is moderating dramatically. And I'd say the other would be Tesla, as we're seeing today in the market. So those are two where I think the fundamentals have slowed down. At the same time, I look at what's happening at Microsoft and NVIDIA and AMD, and I see faster growth happening. And you look at NVIDIA, it hasn't really been cheaper than this for a long time. And there was a lot of skepticism built up by investors worried that, well, it can't

get any better than this. Well, it is getting better. And this is the time to invest. And these are the companies that are powering the move to AI, which is what all the large platforms want to deliver to their end customers. So I'm going to get to Tesla in a moment because I do want to talk to you about it. And I did mention that you, of course, own it. But I want to sort of hone in on this idea of, you know, whether it's time to take some profits in some of these names, whether they're overbought. I want you to listen to what Josh Brown told me earlier today, Glenn, on the Halftime Report about selling AMD, a stock he only got into around Halloween. But it's gone crazy since then. So he sold it. Here's what he said. And then I want your take on the other side, please. This is a stock that's up 81 percent. AMD hit 78 relative strength index. It's 33 percent above its 50 day moving average. It's 60 percent above its 200 day moving

average. What do you do with that? Sure. Specifically on AMD, I think you're seeing them move into a period where they're going to take a tremendous amount of market share in the GPU business. And specifically at the network level, not for gaming. And so that's a big opportunity for the company. And I think looking at a stock on what it's done over the past 100 days or 200 days or whatever the time frame you want to pick is a very limited way of doing stock analysis. If you want to think about the future and where the stock's going to go in the future, you need to look ahead. You need to look ahead to what the future fundamentals are and what you're paying for them. So while AMD might look expensive today, they are, as I said, seeing major growth. And I think the company's kept a lid on expectations

for the MI300 chip shipping into customers like Microsoft and the other hyperscalers. I think in terms of other stock in the Magnificent Seven, we have taken profits. I mean, we did sell our Tesla before the end of the year. We sold our Google as well. And so we have taken profits in places. We don't own Apple and haven't owned it for a while. So at the same time, you know, I think I still feel great about Meta, feel great about Microsoft, NVIDIA, AMD. Those are a few. I'd say, you know, people talk about the Magnificent Seven. Maybe it's time, frankly, that we move on to something new. And whether that's the Core 4,

the AI5, you know, whatever you want to call it. But Microsoft, NVIDIA, AMD, TSMC, and Broadcom would, to me, be the key five names in AI. So there's your AI5. Yeah, interesting. We may take you up on that. We'll give you credit. Don't worry if we do. I do want to talk about Tesla, right?

You just said, you just told our viewers that you no longer own it, I believe. You're out completely. Let's just make sure I'm with you. You're out completely? Yeah. Okay. So what are we to make today of this dumpster fire around the stock, which really it is, and just how we're supposed to assess where this company is now and where the stock may go from here. Well, we have to have a little perspective. I mean, they do make the best selling car in the world in the Model Y. And it's on a gross margin basis and an operating and cash flow basis. It's been a very profitable automaker, which a lot of its competitors especially traditional OEMs can't brag

about that so it's a company that is still well positioned for the future I think the question is we've seen a slowdown in the overall auto market that's hit both EVs and traditional ICE cars and so but you know when you see that happen it's a lot harder when you're coming from a position of having a 50 times PE as opposed to a 4, 5, or 6 PE for the traditional OEMs. So, there's the opportunity for multiple compression is really there for a standout company that's been on a tremendous run like like Tesla has so you know we're seeing a reset here I think in the long term they're still going to be you know the number one or two and depending on the battle with BYD in the future maker of EVs globally and we do believe long term that that the shift to EVs is still occurring and it's occurring

on an S-curve trajectory for the overall industry. Yeah. What about Alphabet? Why did you sell that at the end of last year? Yeah, I think that, you know, the cost of them adopting AI is significant up front. It's not clear to us that the adoption of AI into their search business really enhances the revenue per search in the near term and the ability to match ads more efficiently. And so at this period of time, we just wanted to have bigger positions in the companies where we see

really established business models with high margins and low multiples, like NVIDIA specifically and TSMC. Yeah. Palo Alto, you're in as well. You mentioned Taiwan Semi, whose own market cap is now elev're in as well. You mentioned Taiwan Semi, whose own market cap is now, you know, elevating high as well. Microsoft, three trillion dollars in market cap. Did you in part as well with yet in AI particularly, but the race that Microsoft has won very clearly over the last 30 years is in productivity applications.

And you look at the way the average business uses Microsoft and how important it is to them. Their email is coming in, they're creating documents whether it's Word, Excel, PowerPoint and other applications and we look at forward and think that AI, every piece of data that comes into your organization is going to go through AI and that's going to happen at Microsoft on their servers as you're using Office 365 and then to the extent you're sending out information that's going to go through AI and it's really going to guide the worker today the knowledge worker on how to spend their time and what to

focus on and the potential value add for Microsoft is tremendous I don't think that value add for Microsoft is tremendous. I don't think that value add has really shown up yet in their earnings estimates. And so we think that the stock is, while it's not necessarily cheap for the growth, we think that the growth in the coming years is going to be far higher than what people are looking for today. Let's talk about a couple of stocks that are not usually on our radar, but are certainly on yours because they are among your top 10 holdings. GitLab, GTLB. Why do you like it? Yeah, I mean, it's been a very important platform for companies building the next generation of applications. And so when we're looking at software companies, we want to invest in companies whose products are really critical and necessary and can't be turned off.

And if you're a developer of software, whether it's GitLab or whether it's JFrog, these are incredibly important pieces of technology and infrastructure for building your core business applications that you're sending to customers and maintaining. And so those are the kinds of critical applications that we want to be investors in. You own the JFrog company that you just mentioned too, correct? It's Frog is the ticker. We do, yes. So let me ask you more broadly about your market view. and I want you to react to another sound bite if you would

It's from you know, the very well-known market watcher ed yard any who is as bullish as as anybody Okay He came on with me the other day and just sort of wonders out loud whether there's too much Exuberance in the market right now and if we're at the start of something that could get a little dangerous later, listen. Look how much the market has come up since October of last year, which I think is roughly when everybody concluded that the Fed was done raising interest rates. And then suddenly the conversation became about lowering interest rates. Imagine what could happen if the Fed actually starts lowering interest rates. That's what I'm concerned about, is that that could

spark a melt-up in the market. You share Ed's thoughts, Glenn, or no? Yeah, I think we're always cautious about stocks going up too fast and over representing the current case for their earnings or for market multiples. So I think when we put our macroeconomic hat on, we're looking at that. That said, I look at 2024 and I see a marginally improving economy. I see pretty strong government spending that's unlikely to be pulled back in an election year. And I feel like things are pretty good. And I think the market has responded to that, though, at this point. So you have to say, hey, do you want to buy, load up your portfolio today after a strong

end of last year and beginning of this year and certain names that's that's for you to decide there for the investor to decide for themselves you know dollar cost average into sit into opportunities but when I put on my long-term hat in our sector and I say you know what's really happening in technology, the investment in AI and the infrastructure underneath of AI. We're building the bridges, the tunnels, and the railroads for information over the next decade.

And it's a race. There is a race aspect to it for the big companies that already have a lot of customers, customers, data, and capital, they don't want to lose that race. They want to provide their end customers with solutions, with AI solutions. And in order to do that, Microsoft and Google and Facebook and Oracle, they need to spend SAP. So you're seeing them spend dramatically on AI infrastructure. And you're starting to see, you know, real anecdotal information about success with AI investment, whether it be from SAP or ServiceNow. And I think it's still early at Microsoft, but you're going to see real value being added to their end customers. I'm going to welcome in a couple others in just a second, but quickly, just to tie this up,

what does your overall exposure look like, just so I have an idea of how long you are, where you currently are positioning here in this market? Yeah, I'd say we're at the high end of our normal ranges. We do have a hedge fund product. We have also the long-only products. The long-only products fully invested in the hedge fund products at the higher end of the net exposure category. I think the most important exposures is our exposure to semis and then to hyperscalers in the sector. That's where we want to focus our capital.

I got you. Let's welcome in Joe Terranova now of Virtus Investment Partners, Stephanie Link of Hightower, both, of course, CNBC contributors. Steph, I'll go to you first. I know you listened to the conversation with Glenn. Just give me your thoughts on where he is in the market whether you agree with it you may not be as uh overweight some of these hyperscalers if you will in in ai but he laid out a number of reasons in terms of why he thinks these are the stocks that are going to do best sure well i mean we always talk about total addressable markets and i think the discussion was really about that um you you have to be though diversified and you know that I am not in a lot of the Mag7,

but I am playing some of the themes, same themes within technology, just with different names that are not as owned, right? So I do, you know, I do own Amazon. That was a big purchase. You know, I was recently buying Broadcom. That was a big purchase. But in terms of the other Mag7s, I only really own Alphabet, and I'm slightly underweight. So I think there's other ways you can win in technology, again, with the same themes. As I mentioned, Broadcom, certainly it's the data center, cloud, AI, networking, and it's cheap. It's not expensive at 24 times, given the growth. But I also own other things.

We can talk about IBM. That's very under-owned, and it was a solid quarter, but really good free cash flow. CDW, I'm playing a bottoming in the PC cycle. And Lamb Research, I'm playing the wafer fab equipment spend, and that's increasing. And the company raised their guidance on wafer fab equipment for the third time in the last three quarters. And so I think there are places you can be in tech. And the company raised their guidance on wafer fab equipment for the third time in the last three quarters. And so I think there are places you can be in tech. But I also think that just given the Goldilocks number we saw today in GDP with better growth and lower inflation, that is going to translate into a broadening out of better earnings across a lot of different sectors.

And so you know that I have been very much diversified in spending my time and and energy on other parts of the market, because I think that's where the value really is. Yeah. Joe, I mean, Glenn's really in the epicenter of this AI revolution. You are in many respects, too. What do you make of what he said? be today, January of 2024, without the revelation in 2023 of this advancement of innovation from artificial intelligence to generative AI. I couldn't possibly imagine where the capital markets in fact would be. I think it's something that we need to embrace. I think Glenn is spot on. You have to think about this innovation with a mindset of where will we be three to five years from now. You have to understand that the companies that are spending, they are the world's financially strongest corporation. And that should give you the confidence that innovation is real. The innovation extends. Really, the sweet spot is

the semis. And we've talked about that at length. I agree with Stephanie. I think Broadcom is such a fairly valued and an ideal way to play the growth of generative AI. But you could also look at cadence design systems, which we really don't talk about very much. But think about the software that's needed to actually develop the semiconductor. And that's, in fact, what CD&S is doing. So you have to think about the long term. As it relates to near term, Scott, look, the market had a very powerful breakout that was built upon systematic buying last Friday. We went from 4,800 up to 4,903 as I sat here with you yesterday on halftime very quickly. It appears to me that systematic buying has kind of disappeared. I don't think you can expect that you're going to see that buying present on breakouts anymore.

I think what's critical in the near term for the markets is the buy-the-dip mentality still there, and the buy-the-dip mentality appears to still be in place. Hey, Glenn, let's talk cyber for a moment, because an area that everybody in this conversation is in, but me, of course. You got Palo Alto. Steph plays it through Fortinet. Joe's got CrowdStrike. Why do you play it the way you do? Yeah, I don't own Palo Alto anymore. I think, you know, that sector had a tremendous run last year. Yes, it did. CrowdStrike was up almost 200%, and the whole sector was up 80% to 100%. So that's a sector we have pulled back from, even though those companies, the leaders, are likely to be able to adopt AI and utilize that in their business.

That's great. But for now, I prefer to own the core infrastructure names, Microsoft, NVIDIA, AMD, TSMC, and Avago, rather than one of the companies like Palo Alto that might be able to apply some of that learning. I want to just own those core infrastructure names in AI. Glenn, it's Joe. We're using this word euphoria quite a bit in the last several days. Would you assign the word euphoria to the investment thesis surrounding cybersecurity? Because myself personally, I'm pretty heavily invested there. Scott mentioned CrowdStrike. I also have Palo Alto and we do have Fortinet in the ETF.

I don't know that I would use that word. I mean, this is a sector that's been incredibly important. If you do any survey of CIOs, it's in the top three and has been for the last decade. So this is not a flash in the pan. This is not a euphoric situation. You've seen over the years the news stories around vulnerabilities, break-ins to companies and then holding companies hostage over the weekend and having them pay with crypto to free their data so that their businesses don't get interrupted. Those are all very real threats and risks,

and companies can't afford to have those situations happen. So they're doing everything they can to prevent them from occurring. And so I like the sector. It's just I like the core semis better than the application group of network security. These are those critical decisions, Steph, that you all as investors have to make, whether it's, you know, Josh selling AMD, whether it's Glenn selling Palo Alto, whether it's you selling Meta. There are a select group of stocks that I guess you all have determined have just gone up too much too fast. But there are many others who are in similar standing. These are I don't know how you come to the decisions that you do to pick one of those names and decide, you know what, enough, enough is enough. And we may be at the point now where investors are assessing their own portfolios and their gains in some of these

stocks. And they're like, I don't really know what to do. The hardest thing to do is selling a stock. It's much easier, in my opinion, to buy a stock. But I think when you have a stock that's up 175, 80 percent, you have some of these stocks that are up 200 percent. I mean, you just can't be that greedy. It doesn't necessarily mean you have to sell the entire position, but I think you have to right size it. At one point last year, Meta was 9 percent of my portfolio. I'm not comfortable with that. Some people are, but I'm not. And I think that that stock now, by the way, trades at 27 times forward estimates.

That's basically where it's traded at its historical average. I was buying it when it was at 13 times. And so, yeah, you have seen these multiple re-ratings on these stocks. And I understand, again, the total addressable markets are real. They're big time. But I'm trying to find maybe either some laggards or some less popular companies. I'm going to stick with something like Fortinet just because you guys were just talking about cyber. It's a trillion dollar total addressable market. And there really are only five big, big players that I think are going to ultimately be the winners. Fortinet was a horrible stock last year. And so I'm playing for mean reversion. It trades at half the multiple that to Palo Alto and the group.

And it really has lagged again year to date. So I'm thinking that the trends are going to continue to be very powerful in cybersecurity. I'm trying to find a laggard, a reversion to the mean story, a turnaround story. It's definitely a show me story. But I do think I'll make some money in that because I like the end market as a whole. Glenn, last word to you. Base case soft landing. Is that where you're at now? I'd say so. Yeah. We reevaluate at the end of the year, you know, post the election. But we feel strong about the economy and even better about the investment, the core semiconductor universe. Good stuff, everybody. Appreciate it, Glenn. Your time very much. Thank you. We'll talk to you soon. Glenn Kacher, Light Street. Steph, thank you. without a driver,

hit a pedestrian in San Francisco, ultimately dragged the pedestrian about 20 feet. Well, ultimately that led to an investigation by regulators in San Francisco, and they were not happy with the response of the cruise management and executives to their inquiry. So GM has done an outside investigation of what happened. Did we give the right information to the regulators in California? And the outside firm has completed a report saying that the cruise officials, executives who were meeting with California regulators, They did not intentionally mislead regulators, but they did not do a good job in terms of being as forthcoming and volunteering what information

might help the regulators as they were determining what was happening. Bottom line is this. They have decided there was no intent to mislead regulators, but that could have been done far better. Remember, the crew's CEO was dismissed. A number of other executives were let go. And General Motors is going to use this report.

Just put out a statement saying this is not how we intend to do business. They're going to use this report as they discuss and decide what's the next step in terms of when to potentially return to service with cruise autonomous vehicles. That's the story as you take a look at shares of GM. Scott, back to you. All right, Phil, I appreciate that very much. Phil LeBeau with the latest there. We're just getting started here on Closing Bell. Up next, Intel reporting results in overtime. We will hear from Starship analyst Stacey Raskin with his expectations for the numbers. He says it's a make or break year for that company. We're live at the New York Stock Exchange, back with Stacey after this.

We're back. Let's send it to Christina Partsenevelos now for a look at the biggest names moving into the close. Christina. And I'm going to start with the world's largest equipment rental company. Leading the S&P 500 today, United Rentals is up about 13% after upping its 2024 guidance. Management citing broad-based demand across end markets. United Rentals also plans to purchase or repurchase 1.5 billion

of common stock this year and up its dividend by 10% to $1.63. And of course, investors love that. And right behind United Rental in the top gainers club is American Airlines. Its 2024 profit guidance beat Wall Street expectations, with the carrier citing strong demand over Thanksgiving as well as the holiday season.

And they also saw a big bump in international travel, as more Americans consider overseas travel. And you can see shares up almost 10%. All right, Christina, we'll see you in just a bit. Thank you, Christina Partsenevelos. Intel reporting earnings in overtime today. That stock sharply underperforming the semi-surge this month. Our next guest has some key questions for the company this quarter that could reveal whether a turnaround is in fact in the cards.

Let's bring in Bernstein senior analyst Stacey Raskin. Good to see you. Welcome back. Good to be here. You call this a make or break year for this company. So does it begin with a bang or a thud? No, I actually think they're going to miss the guide in Q1. Now, I think most people expect them to miss. Q4 PCs were not so great, and you have to remember, they still fully consolidate Mobileye.

Mobileye had an enormous negative pre-announcement. I had to take hundreds of millions of dollars out of my Mobileye numbers for Q1, so they're probably going to miss Q1. I don't know that that's where people are looking at. Like I said, there's a lot going on with Intel this year. I do think it's a make or break. Lots of different events. They're going to start splitting out their manufacturing business

and the FPGA business as separate segments in Q1. They've got new data center products coming out, like especially into the back half with Granite Rapids. And we'll see if that starts to reverse the share loss trends that we've had, which have actually been accelerating in recent quarters. We'll see if there's anything behind their AI narrative. Clearly, like there are other players where the AI narrative seems to be stronger. I think the PC trajectory should be better year over year, but still open for debate They've got a bunch of cost reductions they're trying to push through. We'll see if they can still execute on process and foundry.

There's just lots going on this year. It's going to be an interesting year. But, I mean, you just said that the PC thing is still up for debate. I thought we had decided that PCs have bottomed. Are you questioning that now? They probably have. Again, year over year, we're looking better. And they were flushing out inventory in 23.

So it should be better year over year in 24. But I think in the near term, it doesn't look quite as strong. Like I said, the numbers that came out in Q3, they were down a bit sequentially, a little below seasonal. Still way up year over year. But, like, on a relative basis in the near term they maybe weren't so great um you get into the second half and people start to look at their I don't know if AI PCs are going to do anything but you'll have that and you got the there's a Windows end of life that'll be coming up next year that may start to drive demand in the back so we'll see how it goes it should be better this year than last

year but I mean if you if we'll see I'm confused i mean if you expect a miss and i mean you know this company better than anybody why is the stock up 50 in three months yeah that's a great question you know so i don't exactly know why it went to 50 i'll be honest um i do think that a miss on the guide for q1 is is widely anticipated though i think people are and that could be part of it right you figure you kind of clear the deck and again if you're positive on these other trends like going forward you know they've got other events happening q1 they'll have a foundry event and a bunch of other stuff um maybe people are are looking for hope you know we had the foundry announcement with umc this morning they've been talking like really good things in general about the process roadmap and

all of that so they're still giving you little nuggets you can dream about if you want to dream i look at it though i'll be honest and again i've said this but we me they're still giving you little nuggets you can dream about if you want to dream. I look at it, I'll be honest. And again, I've said this before, we mellowed on it a little bit. We did upgrade it last year. Fine. Somewhat reluctantly. Somewhat reluctantly. I mean, as upgrades go. Look, this year, there's a lot going on. They need to execute on all of it. And the stock's like 26 times earnings. It's not like that there's a ton of valuation support. And I suspect numbers are going to come down before they start going up. So I'm very comfortable right now being on the sidelines with it.

All right. We'll see you soon. Stace, thanks. That's Stacey Baskin. Yeah, by the way, don't miss John Ford's first on CBC interview tonight with Pat Gelsinger. You'll hear part of that conversation 7 o'clock Eastern time as part of Last Call. All right. Up next, Apple making some key changes to its overseas app store.

The details and what it could mean for the future of Apple services growth just after the break. Closing bells coming right back. All right, we're back. Apple announcing some major changes to its app store and other services for consumers in Europe. Our Steve Kovach is here with the details. What's this all about? Apple announcing some major changes to its app store and other services for consumers in Europe. Our Steve Kovach is here with the details. What's this all about? Yeah, there goes the wall guarded, at least in Europe, Scott.

This is some huge changes and anticipated changes coming from Apple. This is all in compliance with what's called the Digital Markets Act, also called the DMA for short. That's going into full effect on March 7th in Europe. And these changes Apple's making is basically opening up the iPhone for a lot of different things. That includes allowing alternative app stores not operated by Apple. And it also means a lowering of fees in its own app store and across the board in general. That 30 percent fee that we keep talking about, that goes down to 17 percent. A lot of businesses will also end up paying just 10% for smaller apps. And so there's a lot of actually confusion going on right now in the app developer community

over there about what this actually means. But the bottom line, what people need to understand here is Apple has found a way to continue to collect revenue from their services business, despite the fact that they have to kind of tear down this walled garden in some respects and allow different payment processors on their platform, which they wouldn't get as much of a cut from and so forth. They really threaded the needle here, let's call it, Scott, in order to comply with this DMA law and also protect their high services margins. But at the same time, this is just happening in the EU. It's not happening in the United States or other big markets. But all those markets at the same time

are also considering similar regulations. And of course, we have that looming DOJ antitrust case against Apple that plays into all of this. That could impact them as well. Yeah, Apple's negative on the day, you know, modestly, obviously. But we have had some wind come out of the sails of mega caps. I want to steer you and see if you can, you know, just give me sort of your insights into these reports about the FTC. And, you know, that they want to scrutinize Gen A ideals more closely. What do you make of that? Yeah, this is the whole idea that and first of all, we should clarify that with the FTC doing, this is very initial. They're not putting any kind of regulatory impact on any of these companies.

But this is looking at Microsoft, Google, Amazon that made big investments in companies like OpenAI and Anthropic in order to run those services on their cloud, have a big stake in these generative AI startups. And look, this is FTC chair, Lina Khan. She's been talking about this stuff forever and worried about nipping these kind of problems in the bud and making sure the incumbents don't necessarily get to maintain their, you know, big control over these nascent technologies

that it appears they, you know, might be able to do by these big investments they're able to make in these hot startups that are kind of ushering in this next part of ai so it's early stages nothing uh tangent or tangible is going to happen yet scott uh but it is something to watch because it is uh another example of that heavy-handed ftc looking into just about every tech deal imaginable yeah and others uh outside of tech too uh steve thanks Good to have your insight there. That's Steve Kovac. Up next, we're tracking the biggest movers, as we always do, heading into the close. Christina Partanelos back with that. Christina? Well, investors are not impressed by PayPal's new AI initiatives and shares of Humana are plunging. I'll explain why after the break. just about 15 from the close let's get back to Christina Parts of Novelist now for the stock

she's watching. Christina. Well, Humana, one of the worst performers on the S&P 500, shares are down about 11% after the health insurer guided lower than anticipated. Many older adults put off procedures during COVID and are now playing catch up. Those higher costs will likely pressure Humana again in 2024. And you can see also UnitedHealthcare is down about 5% in sympathy. Investors aren't impressed by PayPal's newly announced AI product, which includes one-click checkout that should make checkouts 50% faster

and new cashback options as well. Mizuho recently downgraded PayPal because they say that the company has not addressed share loss to Apple Pay as well as share loss on how to cater to the younger demographics right now. You can see shares are down 4 percent. Scott. All right, Christina, thank you. Christina Parts and Nevela still ahead. Your earnings set up T-Mobile is among the big names reporting in overtime. We're going to tell

you what to watch for when those numbers hit the tape. We are going to take you inside the market zone. All right, we're now in the closing bell market zone. CNBC senior markets commentator Mike Santoli here to break down these crucial moments of the trading day. We are watching two earnings releases out. No T. Kate Rooney on Visa and Julia Borsten on T-Mobile. Mike, I go to you. Nice little move here. Thank you, at least in the Dow for certain. Thank you, IBM. Sure. And Goldman and JPM. And, you know, three to one up versus down stock. So it's not all that narrow today. You know, we have a market that got itself priced for a very favorable economic backdrop that keeps getting evidence of a very favorable economic backdrop. GDP you're referring to.

Yeah. And the modest inflation indicators in there too so. It's not enough for anybody to say I'm having to rethink. My upbeat view of what the economy can deliver right here earnings very noisy there's always stuff you can point to to say it looks like it's

cautious or possibly- you know under promising but for now until we get to the real heft of the market cap of the index reporting- we can we can sort of live with it we're over bought real heft of the market cap of the index reporting, we can sort of live with it. We're overbought. We're up 20 percent in three months in the S&P just about. But that can stay that way or even get more stretched in the short term. You alluded to it, you know, mega cap earnings. Those are going to be really critical. I mean,

you've got a Fed meeting and all that, too. But in terms of where the money has been flowing back recently, back towards quality, back towards mega cap. Yep. That's the test. It's the test. And that's how this market kind of protects itself when it has even an ounce of uncertainty or it's just clenching up for something. The PC inflation number tomorrow does matter because inflation going the right direction is the thing that kind of is the escape hatch

from worrying about the economy getting too strong. So we're in a decent spot right now. We'll see if it can carry forward. All right. Kay Rooney, we're watching Visa. I mean, we know what happened with PayPal today, but we're still talking payments just from the letter V. Yeah, exactly. So this kicks off sort of the credit card cohort in terms of fintech. So watch for any commentary around consumer spending and then the health of the consumer. Visa executives have used the word resilient in prior quarters. We're going to see if that

continues today. This quarter will include that holiday shopping season, which could bode well for payment volume and processed transactions. Analysts are expecting to get U.S. volumes for at least the first three weeks of January, so that could give us a glimpse into how the current quarter is trending. Also watch cross-border volume. That's a key higher-margin part of the business for Visa. It's held up pretty well in recent quarters with travel rebounding. The analyst community has revised their earnings

estimates up by almost 10 percent in the past week or so. Expectations are pretty high heading into today's print, Scott. Yeah, Kate, thank you. We'll see what happens. Mike, I mean, stock's up 15 percent over the last few months. Yes, it's like a $540 billion market cap right now. It's actually not that much smaller than Tesla, given how Tesla's backslid this much. And in terms of its valuation, it has been more expensive at times based on earnings and cash flow, but only really during the pandemic period when anything, e-payments or digital disruption, was getting a premium. So clearly the hurdle is relatively high here. But if you talk about it being a quality market and people wanting the reliable kind of network effect type profitability,

that's why that's why Visa trades work. Visa 547 billion, Tesla 581. Wow. I mean, it's a trillion dollar company. It was a one point two trillion dollar company at one point. That's incredible. Remarkable. All right. Julia Borsten, T-Mobile, what are we looking for? Well, Scott, after AT&T earnings disappointed yesterday and Verizon's earnings beat expectations on Tuesday, analysts are hoping that T-Mobile will follow in line with last quarter's earnings beat and guidance raise. Now, analysts are expecting revenue to fall three percent from the year ago quarter, while earnings are projected to surge by 61%. But a key number to watch here is postpaid phone net ads. It's expected at nearly 900,000, which would make T-Mobile the industry leader in that key metric. Now, the mobile carrier is also expected to keep

postpaid phone churn below 1%. Another key metric there. Now, with the stock up less than 10 percent in the past 12 months, analysts are overwhelmingly bullish. Eighty nine percent have a buy rating on the stock. Seven percent have a hold and just four percent have a sell. Scott. All right, Julia, thank you. Julia Boyce, I'm just looking down to see. I mean, this nice move here into the close, more records falling to Dow's almost now Dow's better than 200 to the upside. And you've got the S&P once again closing in, trying to close at 4,900. We've round-tripped from the open just about. Now, today, the high and low in the S&P 500 have been entirely inside yesterday's range. It doesn't really mean anything, but it can sometimes mean it's a little bit indecisive.

Yesterday's, you know, afternoon sell-off, though, did not carry through, which I think isn a net positive. It feels as if people are willing to at least be aware of upside risk as well when you talk about the big macro numbers and the fact that the tape itself has acted pretty well. Rate's not up today on that GDP report. It cleared the way for stocks to hang in there. You know, it seemed like there was no reason because of what the inflation numbers did within the GDP report for bonds to get worried about, you know, the Fed changing its story. And, you know, 2 percent core. Now, tomorrow we get the December PCE inflation number. That's the more fresh, detailed number of what the Fed's target is based off of. But yeah, so far, the

rates market's been OK. It still just looks like profit taking after a huge fourth quarter rally in bonds. You know, we've gotten down from whatever, 3.8 on the 10 year to 4.1. And it's still in this zone where we've proven that the economy clearly did not have trouble swallowing that brief period of 4 to 5 percent 10 year yields and 7 percent mortgage rates. CPI was a surprise to the upside last time. So we'll see what happens. I mean, you never know. This obviously the PCE has been really trending in the right direction. It's very Fed friendly. And you do have a lot of investor confidence that it's going the right way. So even if it goes the right way, you may come in one of these days and say, yeah, we knew that. And we're not going to use it as an excuse to rally off the same information multiple times. So far, so good.

They say 4,900. Right around 5,000, you have to start to say, we're 20 times a really good earnings number. Do we want to buy them here or not? Yeah, we're about a handful of points away from 4,900 on the S&P. Maybe get there tomorrow. I'll join you then in the OT with Morgan and John.