Power Lunch - Tech Rundown, Retail Media 5/7/24

Episode Date: May 7, 2024

We’ve got lots of huge stories in the tech space today. Apple is making headlines. Washington is targeting tech platforms. And Stanley Druckenmiller has some strong words on AI. We’ll tell you all you that you need to know.Plus, we’ll do a deep dive into the future of the advertising industry – including why Amazon’s approach to retail media could redefine the ad space as we know it. MNTN CEO Mark Douglas will join us to discuss. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to Power Lunch and why am I smiling? Because I'm alongside Kelly Evans. Welcome back. Great to be back. Thank you. It's just like riding a bicycle. Nothing to worry about. I think I can do it.

You can do it. Kelly Evans is back. I'm Tyler Matheson. Coming up, some huge stories in the tech space. Tons of Apple headlines. Washington targeting tech platforms and Stanley, Druck and Miller weighing in on AI. We'll break that all down in just a moment.

Plus the future of the ad space. Why Amazon's approach to retail media could redefine advertising. Mountains Mark Douglas joins us. to discuss. But first to check on the markets, all three indexes up slightly with the Dow higher right now by three one hundredths of one percent. That's 13 points. S&P higher by about one-tenth of a percent or five points. NASDAQ moving the other way by a little down 10 points. Down big is Disney after its results. Streaming showing some improvement. The company's digital strategy may be helping out here. Plus telehealth platform hymns and hers higher after reporting strong revenue guidance. Wow. And on the

Techfront Palantir down big after reporting weaker than expected guidance. Down 15% now. We'll hit that name in three-stock lunch further ahead. And speaking of tech, let's start with a new law aiming to hold tech firms accountable for online child abuse. Emily Wilkins has more. Emily. Hey, Tyler. Well, yeah, President Biden is expected to sign a bill very soon that would hold big tech companies more accountable for crimes involving children that happen on their networks. And these are things like sex trafficking, grooming. enticing kids for sexual acts. Now, currently tech companies do have to report child sexual abuse materials on their website,

but the soon-to-be law would also increase fines for failing to report exploitive content up to $1 million. It would also allow for evidence to be stored up to a year. That's going to allow more time for investigations into these cases, and then allow more cases and evidence to be quickly sent between the National Center for Missing Exploited Children and Law Enforcement. Several big tech companies, including Google, have come out in support of this legislation, but one of the bill's sponsors, Senator Marshall Blackburn, said that social media companies are not doing enough to ensure all forms of abuse are dealt with. They have chosen to just turn that blind eye and not report it and not police it, not clean

up their network. Now, that excuse is taken away, and they're going to have to look for this. Blackburn is also hoping to pass some larger bills dealing with kids' online safety that would require social media sites to develop tools and protections to keep kids safe. But several of those measures are caught up in a wider debate on data privacy laws. And it's just not clear at this point, guys, whether we're going to see some more information this year or if this bill is kind of the biggest thing we can expect Congress to pass in this space. In any case, it seems to be a clear move in one direction.

Emily, thanks. Joining us to talk a little bit more about the regulatory push, Alex Cantorwitz, is the founder of big technology and a CNBC contributor. Alex, just anecdotally speaking, there are events every week in my town that seem to be about kids and technology, teens and social media, anxiety, depression, and you name it. If that's any tell on what's coming, there is going to be a lot more than what we've seen thus far coming at Big Tech. Definitely.

And look, I wouldn't say that Congress is ready to act across the board. They've been talking about the problems with these companies for quite some time, and they've taken small incremental action. But I do like this bill today. I find it to be more cooperative than necessarily antagonistic toward these companies. It's requiring them, for instance, to store this material for a year. So investigators have time to work through it where before it was just three months. So I think this is a really positive step.

And I think if we're going to see more legislation, you know, we're going to see good stuff coming on this front. And I think this is a very good start. When you say good stuff, it's stuff that's supposed to help to protect end users, I imagine. But what are the implications for the technology companies? I think this just sent a clear message that where Congress is saying, look, if you're not going to clean this up on your end, we're going to push you towards it. And I think that it could have been even stronger. The bill could have even been stronger. For instance, maybe it could have mandated that if there are, you know, nudes that are being shared on the platform, that there's no way to forward them. Now the companies are really trying to figure out a way to do that on their own.

But it's a signal to say, look, you clean it up or we're going to force you to clean it up. Here's step one and wait for step two. How would this apply to websites that may traffic in pornography or grooming or provide platforms for the same that are not based in the United States and are not per se social media companies? Well, it's going to be tough for the U.S. Congress to reach far outside the U.S. Now, look, if you're outside the U.S., let's say you're a telegram, for instance, you might be able to skirt around these rules. But there are also ways for the U.S. Congress to come and sanction these companies. And I think that they are taking this seriously. And I think that if companies try to get cute around these type of things, this is a very serious issue. They'll find ways to punish them.

I suppose if you were the operator of a browser, for example, you could block access to some of those overseas sites. I guess that could be one way you would go about it. What are the likelihoods that these pieces of legislation move through both sides of the House and the Senate and move to the president's desk, Alex? Well, we're already seeing this one that's basically ready to be signed. So I think that's a good sign to show Congress can act in a bipartisan fashion, right? You have Blackburn and also Osaf on the Democrat side that are working to team up to get this thing across. But if you think about the broader package of big tech antitrust and big tech regulation, I think some of the problems we've seen, up until now are still going to fester. And I wouldn't expect a broad package of legislation to hit

these companies. But I have to say, Congress did something. And that's more than it's been doing recently. So I guess you got to hand it to them there. All right, Alex. Let's pivot now to Apple. We want to chat about that with you. The company announcing new tablets today at its let-loose event. There are also reports there are developing AI chips for data centers. Basically, this was a push to get people to come to an updated iPad, a product that has not been apparently updated in a couple of years. How important is this as a revenue stream for Apple, which, of course, makes most of its money selling phones? It's a small revenue, part of the revenue stream, but it's important. And the problem is for Apple that it's been declining, right? We saw in the

most recent quarter, 17% decline in sales year over year. Now, partially that's responsible for the fact that they haven't updated the model in so long. But I think, I think that the iPad is really suffering from this problem, where it's just stuck in this in-between stage. The phone is doing a lot of what the iPad was supposed to do. The actual laptops are doing the more powerful computing. Now, today's event, they tried to show you you can edit movies and do things that you might do on a laptop.

But do you really need a phone, an iPad, and a laptop right now? I think that's a tough sell, and that's why Apple's been seeing the weakness in iPad. And of course, you can equip an iPad with a keyboard quite effortlessly to turn it effectively. into a laptop with a touchscreen. Let's talk a little bit about their chips and how important, I believe it's called an M4 chip, which is supposed to be more accommodating to AI applications. What do you know about that and how important is that for Apple?

Yeah, I think this M4 chip is huge. I think what Apple's doing today is really setting up its WWDC event in June where it's going to tell developers, I believe, we have the best technology to run AI applications on the phone. We just released this M4 chip. If you're going to build an AI app, build it on the iPhone. So it's not the same strategy that the rest of big tech has been taking, which is sell

the picks and shovels, right? Sell the compute power. For Apple, it's going to be an enticement to developers to say, we are going to be the platform that you're going to build this AI revolution on top of. And the M4, I believe, is the beginning of that, right? Saying, you know, this is how we're going to differentiate our operating system, is having the best apps that run AI. Well, there's also the car. Alex, stay right there because we have another report surrounding a

partnership, this time between Apple and Rivian and Phila Bow is here on set with us to maybe talk about some of those details. Well, this came out of Digitimes, out of Asia, said there was talk about a potential partnership. Immediately, Steve Kovac with Apple and me with Rivian, we started running this up the tree. Didn't get any take at all. No take at all. So I don't put any credence to this, but it does raise the question, is Apple completely done when it comes to the auto companies. Remember, they have essentially shut down Project Titan, so they're not going to plan on building a car. Adam Jonas with Morgan Stanley brings up a great point in a note that he put

out today. And he essentially says this. He says, although Apple has confirmed it has nixed its Apple car project, Project Titan, it does not mean there may not be any number of areas where Apple's broader AI efforts could encompass the automotive value chain. Is it possible that somebody at Rivian in Asia is having a conversation? with somebody at Apple, you bet. I would hope they're doing that. That's what auto companies are doing with tech companies every single day. So this report by itself, no reason for the stocks to move higher, though you can bet that when Rivian reports its results after the bell and during the analyst call, RJ Scringe is going to get this question. I was going to say for Rivian's case as well,

weren't they the one who had the Ford investment that kind of went sour? Correct. So I can't imagine they're over-eager to go partner with another major company. And guess who owns a big chunk of Rivian. Amazon. Oh, right. It's not like these guys are, you know, out in the wilderness of Illinois, and they're not interacting with tech companies. They are. So it's just that this report started moving the stocks before the market today. You'll notice the stocks really haven't done much since then because it hasn't been flushed out. There's no there there, if you will. So the idea of the two working together, quote, on a car, no, no, no, no uptake there. But the possibility that Rivian might employ or work with Apple on making Apple software a technology

hub within the car play out there? Yeah, there's car play. Absolutely. Absolutely. Or other products in the future. Look, AI opens up a number of opportunities, not just for Rivian, but other automakers as well. And you can bet that Apple, while it is not doing Project Titan, it is certainly still in communication with auto companies.

I'm curious about Rivian as well, as we've talked a lot about Tesla struggles lately, where there's just, it seems not enough demand to meet the supply of EVs that we thought there would be this time of point. But Rivian has also still survived the challenge of higher interest rates and this initial period of a plethora of startups. How does it stand now, competitively speaking? It's number two in the U.S. in terms of pure EV companies. The question becomes, will they have to raise capital between now and when the next product, the R2, comes out, which they're going to build in Illinois? And that's not coming out until well into 26, probably start production late 25, early 26. Then you start looking at, okay, do you have the capital needed?

They've already said they're not going to build the plant in Georgia for now. Eventually they plan to. That's where they are to was going to be built. So it's about cash preservation and getting through this period where demand is just not as strong as many people initially thought it would be. Alex, what do you think of the possibility of Apple working in the car business in some way, if not to manufacture an automobile? Yeah, I think that their project tight and right, the self-driving program that they had, if it was worth anything, it would have been sold already.

I think it was worth so little that they just decided to shut it down and cut ties with it. Now, I could see Rivian seeing the improvements that Tesla's made in its full self-driving and getting on the phone with Apple and being like, hey, Apple, that self-driving thing, is that working anymore? like, well, let's have a conversation about it. And that to me, as far as this probably got. Now, I do think that Apple and Rivian can combine into like pretty impressive partnership if Apple's car play is more deeply integrated into Rivian cars.

And by the way, you know, there's been all this rumors about maybe Apple one day could have, you know, had a conversation with Elon Musk about acquiring Tesla and never did. Is Rivian a target for Apple in the future with all that cash it has and its need for growth? I think that's something to keep thinking about. All right, Alex, interesting thought to leave it there. There on Alex Cantorwitz, thank you. Phil LeBow, thank you, and Emily Wilkins, who has long gone. We thank her as well. All right, sticking with technology, Apple is not the only company unveiling new AI hardware today. Deirdreboza has more in today's tech check. Hi, Dee.

Hey, Tyler. So Google's taking a very different tact. Its latest pixel is a mid-range phone starting at $499 bucks. That's cheap in the smartphone world. It includes some of the Gen AI bells and whistles of pricier models that are becoming a feature of hardware. AI upgrade cycles. But to put this in context, guys, this is very small potatoes for Google and the broader Gen AI race. Pixel devices, they claim less than 5% of the U.S. market. The real batterground, of course, is searched as investors parsed through every data point, every talking point, for signs that Gen AI is weighing on Google's dominance. So speaking of that billionaire investors, Stanley Drucken-Miller's love of AI chatbot perplexity, his comments on squawk this morning, that could be fodder for the Bulls. Have a listen.

I love perplexity, although kids on the West Coast weren't using chat GPT or Google anymore. They were using this thing called perplexity AI. So I, of course, tried it out, and it was just unbelievable. It's an answer machine, but the speed, but the depth of the answers and the quality, and then the fact that they give you the sources, if you want to go deeper, It was nothing like I've ever seen. He added that there's a land grab going on in the answer machine business. I kind of like the ring of that.

And it is, of course, a big test to take on Google. Now, the latest numbers, though, from stat counter, they suggest that Google's pretty resilient. So people like Dreck and, as he calls it, kids here on the West Coast. They may be using Gen. I chatbots over traditional search, but most users are still using Google. And now with a twist, what Google calls search generative experience, which is like a chatbot light and maybe getting traditional users familiar with Gen AI before fully jumping in on the cloud side as well, guys.

I'm told that the reprioritization of work towards AI within the company itself continues that cloud computing unit, adding headcount and building out at sales team. Remind me, Dee, what is Google's principal venture or the tip of its spear into the consumer market with AI? Is it Gemini? What is it? The fact that you are asking that question, Tyler, kind of tells you everything you need to know. It's not obvious. It's not perplexity.

It's not chat. G.P.T. It's not Claw. The answer is it's Gemini. But, and this has even tripped me up, SGE search generative experience is separate. That goes into their search engine. Gemini is something different. They're different teams within the organization.

And that there is part of the problem is that doesn't really have this cohesive message with one chatbot that people know and use. Dear Jay, is the SGE thing when you are asking, were you Googling something? And now it has all these drop-down arrows after the- Yes. So that- You're trialing it. I don't know, Kelly, if you had to opt in or not. But this is like how they're getting people to get used to the chat box.

Yeah, no, and it's so funny. It's uncanny you say that because I've been using it lately. And it's like, I ask it, it's usually for like recipes. And I'll say, you know, give me some in cornbread. And it'll say, well, are you asking about it? And it's kind of prompting me through it. And I'm thinking this, I don't remember it being like this in the past. Kelly, here's an important question for you.

Are you seeing advertisements? No. Actually, I don't know. I try to ignore, you know, condition to ignore them. But I use perplexity all the time as well. And the only, I love it. I reckon it was exactly right. But the only friction I find is opening the app.

And so you just wonder at some point, if I could just ask Siri, if my hands are busy, you know, I'm so defaulted to going to Google. It's just, it's hard to untrain myself. No, and everyone now is starting to get their go-to chatbot. You love perplexity. I'm chat GBT4, gal myself. I know lots of people who love Claude. The battleground's being drawn right now.

Yeah. No, my husband uses Chad or Caleb or so. I don't know. There's so many of them. Deirdre, thank you. We appreciate it. All these people, Caleb, Alexa, Siri. He would laugh and be like, there's a name for it.

I can't think of it. Speaking of AI, Morgan Brennan just sat down with Honeywell, CEO, Vimal Kapoor. He weighed in on how he sees an impacting jobs in the industrial sector. Take a listen. When we talk about AI, it's a revenue generation for, our customer, not cost elimination. Because for them, lack of people mean revenue risk, when they can't produce something more, they can't maintain something properly. Potentially, they have a risk of production loss or operations loss. And this really, you know,

mitigates as risk for them. So for us, it's a top line and not a bottom line reduction strategy. More of that interview is coming up on closing bill overtime at 4 p.m. Eastern. And meantime, coming up right here, Bernstein's sober thoughts, the firm out with a new note explaining why Gen Z tends to gravitate away from drinking. But first, as we head to break, a quick power check on the positive side, Consumer Health Company Kenview. Company planning to cut costs says it sees ample runway for its China business. On the negative side, meantime, Builders First Source,

reporting a 22% decline in first quarter profit. That is your power check for this hour. We'll be right back. Welcome back some new exclusive CNBC data showing younger generations are not very optimistic about the economy. Our youth and money survey in the U.S. found that 44% feel pretty bad about the job market. Sixty-eight percent say homes are available but not affordable, and they're being hit hard by inflation, with 54% saying they'll feel it the most when purchasing basics like food. Well, one thing younger Americans are not apparently

spending as much income on is alcohol. Inflation could be partly to blame, but Bernstein says there's more to it. Laying out a few reasons. why Gen Z is drinking less in a new note, is the analyst behind that research, Nadine Sarwatt, who joins us now to discuss. Nadine, welcome, good to see you. How much less are Gen Z people drinking? And is there any suspicion that once they pass through this phase of dryness, let's call it, they might return to what we would say, more traditional drinking patterns? Thanks for having me. That is the question on every investor's mind at the moment. So what does the data tell us on drinking? Well, the first thing is that underage drinking has been falling in the

U.S. for decades. This is great from an ESU perspective, but it's not new and shouldn't be what investors focus on. So what is new is that over the last few years, 21 to 22 year olds have been seeing modest declining alcohol consumption. Yet, over that period, the frequency of drinking amongst 23 to 30-year-olds has held constant. So crucially, this implies, once younger consumers enter full working adulthood, they appear to revert to historical trends in consumption patterns for now. So let's ask, what is, if anything, replacing traditional alcohol as the intoxicant of choice, if anything, or is this more a movement toward, I want to take care of my body?

I don't want to put things into it that potentially could damage my body. Yeah. I'm not sure I would say intoxicant of choice. I like to usually say social lubricant of choice. Just fine with me. It's a great question. What's driving the reduction in that 21 to 20 year old cohort? A couple of things to highlight. First, the awareness about risks of alcohol has increased over the last decade. And that's especially driven by younger consumers. But the data is mixed. And we found conflicting views depending on what survey we looked at. And remember, just because perception of.

risk increases, it doesn't mean we actually change our behavior because of it. Now, the second thing, to your point, substitution, we've seen a rise in legal cannabis in the U.S. as an alternative to alcohol. So according to our analysis, legal cannabis could be impacting U.S. beer volumes by about 75 basis points as a headwind in states where recreational cannabis is legal. 50% of the U.S. population lives in the state with legal recreational cannabis. So at the national level, that would be about a 30 basis points headwind. But what else is going on? You know, I think it's important to highlight that consumers drinking less could simply be a byproduct impact.

Right. In other words, consumers' attitudes towards alcohol might be unchanged, but macro headwinds are affecting the occasions that alcohol is usually consumed in. And in the chart that was shown prior to me being on just then touched on a lot of those. The economic burden on young Americans has increased significantly, whether from inflation or the rising student loan debt burden, the nature of socializing has dramatically changed for young Americans. Those under 22 are spending less and less time interacting with friends. Also, we see that more young Americans are living at home than ever before. And my hunch as consumers are far less likely to want to drink and entertain their friends or partners when they're.

living with their parents. And finally, and let's remember, you know, today's young consumers came up age during COVID. Many schools did this virtually. They missed out on crucial years of social bonding with peers, bars and restaurants were closed. And so it's really a once-in-a-lifetime external disruption that we're seeing for young consumers today. Niddy, we have to go. But of the companies you cover because you cover all of the major ones who would be affected by this, are they seeing it firsthand?

Not yet. The impact is slow. And I'd say we've had a lot of corporates and investors. Yeah. Reach out to us for the fact-based element of our analysis that they appreciated since we dug into the facts. But nothing so far to cause huge alarm. All right. Maybe because they're reverting back, you know, as they get a little bit older for now. Nadine, thanks. We appreciate it. Thanks so much, Nadine Sarwap. For their head, even as restaurants struggle during earnings, they are seeing one bright spot chicken sales. No alcohol, but lots of chicken. We've got details in Power Lunch returns.

Welcome back to Power Lunch, everybody. Treasury's on the move. Rick Santelli, tracking the action. Hey, Rick. Hi, Tyler, indeed. We're seeing more buying than selling, pushing rates down. But as the session goes on, seeing a little bit less buying and a bit more selling pushing yields towards the higher end of today's range,

especially in short maturities, like the three-year note, which we just auctioned off 58 billion of to kick off. off the first leg of the May refunding, which would total 125 billion threes, tens, and 30s. And as you look at that chart, you can see that we are now back to the yield levels that we had about 9 o'clock this morning, but we didn't get a whole lot of volatility at 1 Eastern. Post-auction, we're seeing some of the gains in the equity markets slip away in the Dow and the S&P. NASDAQ has had some red. Now, if you open the chart up for three-year, for one month, something interesting shows up.

We are on pace for the lowest yield close in the three year since the 9th of April. As a matter of fact, let's throw the whole cast in. Tomorrow we have tens, Thursday we have 30. So let's show three's tens and 30s all on one chart for one month. They're all on pace for the lowest yield close since the 9th of April. And the reason? Because on the 10th of April, we had CPI for March. And that, of course, put yields up because it was warmer than expected.

So it's very unusual to have the whole curve comping to the same point in time, but it does underscore how important those numbers are. And we have both PPI and CPI coming out next week. Kelly, back to you. Rick, thank you very much, Rick Santelli. Turning our attention to commodities now Pippa Stevens has the energy check and net gas. Catching some attention. Exactly. It's hovering around its highest level since January, meaningfully above that 220 prem and BTU level.

However, it is a little bit of an uptrend in a down market in the sense that inventory still. about 35% above the five-year average, so that has to be worked through before they can be a meaningful breakout. However, in the short term, a couple catalysts are driving this according to EBW analytics. They said production cuts as well as building heat across Texas in the southeast, as well as maintenance on the Permian Highway pipeline, and then also finally just the return of LNG feed gas. Now, backstopping all of this, of course, is what else but data centers and AI,

and the power demand there, and we did hear from Chevron's Mike Worth yesterday, who told CNBC that he thinks that gas is going to be a big part, of that going forward, given that it can provide base load power, which is what data centers need. And he said that he thinks that demand for natural gas is likely to be higher than what people have been estimating up until now. And that, of course, a common theme throughout earnings season from both the upstream producers as well as the pipeline companies. So interesting. It's going to be just a country of data centers. Yeah, pretty much. Driving down the highway. It's all turning into data centers.

Hardware stores are converting the data centers. Pippa, thanks. Well, let's go over to Bertha Coombs now. Now, CNBC News Update. Bertha. Hey, Tyler. The White House is pushing for a ceasefire deal between Israel and Hamas. Israel sent a negotiation team to Cairo today to consider the proposal from Hamas but said it was far from meeting Israel's demands. Meanwhile, Hamas officials said the agreement represents the minimum it would accept. Still, the White House claims the gaps can be closed.

It comes as Israel forces seize the main border crossing between Gaza and Egypt, escalating military operations in Rafa. U.S. power use is forecast to hit record highs this year and next year. According to the U.S. Energy Information Administration, power demand is growing from what else data centers and for people using electricity to heat their homes and power their cars. And Toronto police say a shooting outside of Drake's mansion this morning left a security guard seriously injured.

Representative for the rapper says he, was not injured, but it's not clear whether he was actually home around 2 a.m. when the shooting occurred. Police say the shooting was caught on video, but they don't know yet how many suspects there are or what kind of car actually drove off from the scene. Tyler. Well, you've been following, but he is in a rather acrimonious dispute. Yeah, although that's kind of like a rap battle. I would hope it didn't get violent. Yeah, let's hope this was a random matter. Thank you, Bertha. Coming up, Disney's mission to make streaming profitable remains no easy fee. Shares lower, despite nearly turning a profit across all three streaming platforms we will discuss with Mountains. Mark

Douglas next. Welcome back to Power Lunch. Two big headlines in the media world today. First, Disney, it topped earnings estimates as it mirrors full streaming profitability, but soft guidance has sent shares down nearly 10%. They also reported a decline in ad revenue for its linear networks. And speaking of big changes in the ad market, Barclays is out with a new note today saying retail is the future of advertising.

Amazon, the top contender to dominate Instacart up there as well. For more, let's bring in advertising expert and Mountain CEO Mark Douglas. Mark, how much do you know about grocery shopping advertisements? I know a fair amount. I will say that what Amazon is doing and what everyone else is doing is quite a bit different. Amazon basically turned the homepage of website

into a big search engine, and then the 13th most popular website on the Internet, so they have the volume. Everyone else, they just don't have that volume. They're in a different game, more data-centric than actually doing search advertising like Google. I guess to sort of ask the question a little bit differently, and I wonder as I read through the note,

and I think we're talking about a lot of times, pushing products and kind of getting the online store to be more like the traditional bricks and mortar shopping store. But is there a sense in which kind of streaming media has reached saturation or something to that effect? Or maybe it's too expensive. And there's the rise of these other platforms now. I even think of Uber. Yeah, I mean, I don't think that's occurred at all.

I mean, obviously, there's still a lot of people moving over the streaming. Also, the prices on, like, social, like Instagram and on search, you know, we're talking about Amazon and Instagram and stuff like that. The prices are not actually that much cheaper. So it's really about finding the right consumer and getting them right at the moment when they may be interested in buying. That's what makes it valuable is for Amazon and for some of these other players. They're hitting them right at the moment that they're expressing interest in making a purchase, which is obviously going to be very valuable to them and other retail. Where and in, I guess my basic question is where and in what kind of media is advertising going to grow the fastest and where is it going to shrink?

In other words, as a piece of the whole advertising pie, is television, whether it is traditional linear television on the cable or over the air or television that I stream, is that going to be a smaller piece of the pie and something else going to take its place? If so, what? Well, television, if you think of brand advertising, that's been slow growth for a while, one percent annually. The growth has come in, you know, performance television, what mound does. and what even Amazon is doing, which is bringing direct response marketers in the TV, what's going to shrink is display advertising on like publisher sites, like the New York Times or, you know, any other site where you read content. That form of advertising is going to really, really struggle.

And that those dollars are going to go in the retail media or in the television, but the performance TV, not the brand advertising TV. Why is that? I mean, what changed where we all used to go to NYTimes.com or WSJ.com and no longer? Where did all of those eyeballs go? Well, essentially what's changed is that the retailers got much better at figuring out who their consumer is. And when you go to the New York Times, one, you don't have the same kind of targeting capabilities using them as an example. And two, you're not catching the consumer necessarily at a moment where they're engaged.

In other words, the consumer is not there to shop. They're there to read an article, and they start to become what we call ad blindness. They just start to ignore the ads, but it's really hard to ignore a 30-second TV commercial, and it's really hard to ignore the search results on Amazon.com or an Instacard or websites like that. And so you're seeing that direct response to advertising make up the gap and display advertising, which is what publishers rely on, you know, kind of where you read content, they're the losers in this. And they've been losing for a while.

That's not new. They sure have. This sounds like another nail in the coffin of traditional print media, basically, is what we're talking about. Whether the print is displayed on your iPad or the print is displayed on a sheet of paper. Right, because they might migrate content over, as I've seen, Mark, to Instagram or two other social media platforms. And then guess what? They don't get the ad dollars when users engage with it there. Exactly.

Yeah. Well, I guess that... Yeah, exactly. And they've even been court cases over that and they've lost them. Very interesting. You know, Instagram. Yeah, yeah. A parting word.

We're out of time. Disney, thumbs up, thumbs down. What do you think about the quarter? I think for the court, well, I'll give me a summary. I don't think it's a good idea for this streaming business to become profitable yet. Because if it becomes profitable, they're going to underinvest in content and it's going to stall their growth. They need to keep investing to really build scale on a Netflix side. So I think people should be booing the profitability and sharing for more losses for another year.

The investors are going to be booing you if they hear this much more. Focus for the long run, I think. Mark, thanks. We'll let you go ahead. We'll appreciate it. All right ahead. We're going to reveal the lone bright spot in an otherwise rough quarter for the restaurant sector. We'll be back in two minutes.

Welcome back. Restaurant names like McDonald's and Yum warning about the lower-end consumer in recent earnings reports. but results did reveal one bright spot for some chains. Chicken. Kate Rogers didn't balk at that story at all. She has the details. That's right. Hi, Tyler.

So as mentioned, this was a rough quarter for a lot of the big restaurant chains, but chicken really was a bright spot for some restaurants that had strong quarters this season. Chipotle had both better than expected comps at up 7% and traffic growth as well due in part to the return of chicken Alpast store. In fact, it was such a success that the company said it issued an internal. message for corporate and in-restron employees to temporarily select another protein for their meals to preserve supply for several days. Wingstop also had a huge quarter. Same store sales up 21.6 percent with traffic growth there as well. CEO Michael Skipworth said all they need is more chicken to support their growth. They've got no throughput issues and guests are really treating

themselves to Wing Stop. He says, seeing it as a special occasion in a challenging environment. Pop-I's was another success story. Same store sales growth up 6.2 percent and a boost. Thanks to the introduction of wings to its menu in recent months. Analysts have pointed to the relative lower price point of chicken and the fact that Gen Z loves it for some of the sustained success that brands have seen since the big chicken sandwich wars you may remember of several years ago. But on the point of pricing, chicken prices actually increased more than beef per CPI data in the latest report.

This comes after a drop of nearly one and a half percent from January into February. Back over to you guys. All right. So what about chains with more challenging quarters? Did chicken help them at all? Yeah, so we talked about McDonald's. They did see some success with their chicken nuggets. Those are kind of a core menu item and a staple on the McDonald's menu, and people do tend to kind of flock to those. They tend to be a lower price point. So that was one bright spot for them. But you also mentioned YMbrands. KFC was challenged, and its CEO, David Gibbs, of YMbrands overall, which owns KFC, did mention that there was a lot of discounting and competitiveness in terms of pricing back and forth in this quarter. And so that was one of the reasons that they pointed to for a little bit less than stellar quarter there on that one brand. All right, Kate, thank you very much. Kate Rogers, reporting. And Palantir, getting crushed on lower than expected guidance despite

posting a sixth straight quarterly profit. Should you buy the dip with the shares down 14 percent? We'll trade it in three stock lunch next. Time for today's three stock lunch. Kelly, you remember this segment? Three stock lunch? Yes. Yes, rings about. Three. There's three. We have when we talk about the stocks. Here with our trades, Courtney Garcia, a senior wealth advisor at Payne Capital Management, at CNBC contributor, Courtney, welcome. Let's talk first about Palantir falling on weak guidance. Shares were actually up 8% during yesterday's session.

Your trade on Palantir. Yeah, and first of all, Kelly, welcome back. Congratulations on number five. It's great to see you here. To get to Palantir, I actually would stay on the sidelines here. This is something that I would really be cautious of. They did come in with some really strong earnings, but the big problem with them is where they are going forward,

and is that momentum slowing? So even though you saw corporate revenue growth is at 40%. That's down from 70% the previous quarter. This is a company that trades at a premium to its peers. You're also seeing things like the U.S. government and even European government contracts are slowing. So though they have done very well, the bar is set very high over shares have tripled over the last year with excitement over artificial intelligence. But just with where valuations are and a slowing growth momentum, I would actually stay on the sidelines here. On the sidelines are on Paladier, quite a year it's had two.

too, but I guess that's your point. Courtney, what about him's and hers? It's off session highs. They surged after that second quarter revenue guidance top estimates. It was all to chat this morning. What would you do with this stock? This one, I actually think, is an interesting opportunity. Again, they also had really positive earnings that just came out, and they're showing 46% revenue growth year over year. And I think just looking at their revenue growth and their margin expansion is very impressive. And it's why you can look to them as an opportunity. They've really shown a good brand loyalty here. And I think one interesting thing to look at is they've also stated that they're going to have some GLP1 products, hopefully later this year.

Now, take that with a grain of salt because some of that's probably already in the forward guidance. There may be some issues with the availability of those. But I would make sure you keep your ears on that because that could be a further positive catalyst for them as well. So take the GLP ones with a grain of salt and chase it with water. All right. Finally, City upgrading Gap on consumer demand and trends from City. shares are higher today by more than 1% your trade here on the gap. I would stay on the sidelines here.

This is a company that's really been in transition right now. They're having to close a lot of their less profitable stores. So think of their gaps in their Banana Republics as opposed to their old navies, which is where a lot of their revenue currently comes from. But that discount retailer space of the Old Navy, you're seeing a lot of competition there. Just bigger picture of what's happening in the retail space is consumers are really strapped with inflation.

So you are having to choose and be very selective of where you're spending their money. I don't think they've really been able to demonstrate that their brand loyalty is enough in this kind of environment that they are going to keep that consumer there. And I think Athleta has really been their bright spot in the leisure space. But that's really it's less than 10% of their revenue. And I don't think it's going to be enough to carry them through here. So I would stay on the sidelines for the time being. That's interesting.

In my town, the Gap store converted to an Athleta. And it is much more crowded than the old Gap ever was. Courtney. It makes very much. Appreciate it. Courtney Garcia. And be sure to join her and our lineup investing experts at the next CNBC Financial Advisors Summit on Wednesday,

May 22nd. They'll discuss the current bull market, whether it'll last and so much more. Scan the QR code on your screen to register or visit cbc events.com slash f a. And remember, if you miss the show, if you just want to listen to it again, catch the podcast. You can follow it right there on

CNBC podcast and even listen at 1.3X. We'll be right back. Welcome back, little less than three minutes to go. here several more stories to cover. Let's get right to it, starting with the so-called great wealth transfer that's reportedly underway. The baby boomers are passing on more than $68 trillion to their fortunate children. But studies show there's a wide disconnect between what millennials and Gen Z actually expect to inherit, what their parents actually plan on leaving them. A survey by a lion credit found 68% of younger folks expect to receive $320,000 or more. Geez, 55% of boomers

plan to pass on less than 250 million. There's a gap there. Yeah. The reasons for that are longer life expectancies, rising health care costs, and growing financial insecurity. Very, very, very interesting there. I am always suspicious of these big mega trend ideas that all this money is going to transfer. It just doesn't. Never feel like we've seen that. You never feel like we've really seen that. Yeah. All right, speaking of Gen Z, new data from TransUnion found younger Americans are starting out with more credit card debt than any generation before them. Average card balance for 22 to 24-year-olds was $2,800 in the last quarter of 2023, a near $600 increase. And yes, that is adjusted for inflation from the same period

10 years before in 2020. I suppose no surprise. Balance that they are carrying. Yeah, you never want to carry it. That's, you know, obviously that's where everyone's watching. Delinquency rates, signs a problem, that sort of thing. And finally, one of America's biggest gym chains is leaning into the country's fastest growing sport, lifetime fitness, expanding its pickleball offerings, including a new partnership with Lulu Lemon to sell pickleball apparel. I didn't know there was such online and at its clubs and adding pickleball courts to many of its nearly 200 locations.

That is a game changer in the gym space. Pickleball, of course, is. I think Andre Agassi is one of their connections. You're right. Watching it grow, now there's like junior pickleball. Why do they need specialized clothing? It is also a growth industry for orthopedic surgeons, by the way. The number of people I've known, first.

who have had a pickleball injury. Achilles, knees, shoulders. Hamstrings, hamstring, the whole thing. But enjoy the pickleball. It's good, social game, lots of fun, easier than tennis. Thanks for watching, Perilmuch. Great to have you back.

Great to be back. Thank you. Closing bell starts right now.