Tech earnings take center stage

back. Joe Turnov, I want to turn to you

with that. I was just looking at the

things that are the names that are

having the biggest negative impact on

the S&P. It's not surprisingly Meta and

Microsoft, but it's Nvidia, it's AMD,

it's Oracle. It's all those names that

have been powering the market higher so

far this year. Is this a meaningful

inflection point or is this just a

reaction to some earnings and people

deciding, I guess, to to put their bets

in different places?

>> No, I I do not believe that this is an

inflection point. And I think this is

just a return to a degree of normaly off

of what has been a really strong

outperformance from the segment of the

market that you just identified. MAG 7

AI adjacent. Keep in mind the

significant underperformance of the S&P

equal weight. Over the last several

days, we were citing statistics that the

differential in performance between the

S&P and the S&P equal weight was the

largest that we had seen since the

1990s. So if you run an equally weighted

strategy, I'll raise my hand. Okay. When

you run that equally weighted strategy,

a day like today offers a degree of

relief. S&P equal weight is up about 40

basis points. So you're kind of getting

a little bit of a return to normaly more

than anything else. We'll dig into the

numbers as it relates to the three mega

caps that reported. There was some good

there, there was some bad there, but I

think the commonality of all of it was

about okay, what's your cloud revenue?

because that's how we're going to see if

you're monetizing the AI spending and

what are you thinking about looking

forward in terms of your AI spending and

where's that capital going to be coming

from.

>> All right, speaking of commonality,

Microsoft and Meta, they have one thing

in common taking that charge. Now,

investors don't seem to like surprises.

Other than that, they seem like pretty

good reports. Um, other than raising the

capex, were there something else in

those two reports that you didn't like

that you think justifies these downside

moves? No, I thought these quarters were

both of them were very good uh expenses.

That's the that's the sensitive point

for all of these stocks. How much are

these companies spending? We know they

were going to spend $400 billion in

capex, the the big ones, the big names

this year. Uh now it seems to be even a

little bit more. So for me, I looked at

Microsoft and I was I'm not I was not an

owner yesterday. I am now an owner today

because I'm I'm looking at this report

and they beat in all three segments.

They grew, they beat revenues by 3%.

They had commercial bookings up 111%

year-over-year. Their RPOS grew 51%.

That's future look at revenues to come.

Azure, I know everyone wanted 40% Azure

growth. They got 39%. I think that is

silly because it expanded to 200 basis

points, but that was the the sticking

point. Uh they wanted a clear beat. I

think that still is very very positive.

And so to me down 3 and a half 4% when

it opened this morning I I uh started

adding to a position.

>> You know in all fairness that 40% was

kind of the whisper number. They did

actually beat the estimates according to

street account but 40% was kind of that

number out there in the street lurking.

I want to go back to that RPO. I was

actually talking to the team about that

up 51% year-over-year about $300 billion

and it doesn't account for open AI. So

it could be even bigger. We made such a

big deal about Oracle and their RPO. Why

do you think investors are just

shrugging off Microsoft's RPO? They're

just look the stock was up 28% headed

into the print and they were expecting a

a big beat a bigger beat in Azure really

that was really the the the story the

last couple of quarters the company has

been able to beat their Azure numbers by

300 and 400 basis points. So this this

only 200 basis point beat is the reason

why I think you're just seeing a sell

the news. There's nothing in here that

is alarming whatsoever. And if you want

to go into meta, we can go into meta

because that quarter

>> you let us there, Steph. You must go

there. I'm gonna go there because I

added to that this morning, too, because

I think down 12% is absolutely silly.

Look, I mean, I I was not happy that

expenses went higher. None of us are

happy that expenses went higher, but the

higher expenses are leading to very

strong growth. You're going to see 21%

growth this year in total revenues,

operating margins at 40%. If you look at

what they actually reported in the

quarter, they beat revenues by 400 basis

points and grew 26%. Operating margins

also beat at 40.1%.

The family of of apps that actually beat

as well. So you see the revenue is

coming in in uh better than expected.

And so the spend is working and also by

the way they're seeing ad impressions up

14% and price per ad up 10%. They're

seeing monetization. That is exactly

what I wanted to see. So, not happy at

all about expenses, but down 12% after

you see this kind of growth. So, you're

now at 21 times forward estimates for

21% plus growth.

>> Steph, you came ready to talk about met.

You had all the metrics right at the tip

of the tongue there. Jim, I don't leave

you out of this one. You own Alphabet. I

mean, everything was pretty good.

Everything was pretty good. One of the

things I that really stuck out to me was

the Gemini numbers, the monthly numbers.

I mean, tra trailing OpenAI by a lot. it

was 650 million uh a month compared to

like 800 million a week. So there's a

big gap there. But is that encouraging

when you're seeing that growth from

Gemini? At the same time the search

numbers beat expectations.

>> Yeah, the search numbers beating

expectations is very encouraging. So is

the fact that the cloud services Frank

are up 34% and YouTube's doing well etc

etc. I mean basically this is a

multi-cylinder engine that is firing on

all cylinders. I I think what is

intriguing though is where you started

which because if you go back five months

ago we had a big controversy in the

markets about what exactly was going on

with the search business at Alphabet at

Google and you'll remember Eddie Q uh

senior vice president at Apple was

testifying that uh on Safari they were

seeing Google search uh queries going

down that evening just to remind

everybody that evening Google came out

with a press release saying hey we're

seeing search queries going up including

on Safari now that I I have been unable

to square those two facts, those two

statements since then. And what we've

had in addition since then are two

earnings reports from Alphabets that

that clearly shows the search business

is growing really quite well. And they

they've figured out how to use

artificial intelligence, whether it's

the AI overview, Gemini, they have many

uh different ways that they are figuring

out how to monetize and use AI. So I

think in this controversy, this this

conflict that I can't resolve, it's now

clear that Google Alphabet was right and

the search revenue is going

terrifically. Let me go also to the

cloud business. As I said, up 34%

increasing margins. Uh you've got a huge

backlog. I think the backlog was up 45%.

A lot of that coming from companies like

Anthropic. Um so there's just a lot of

things going right at Alphabet. Steph to

what you said about Meta and the

valuation. Totally agree. I'm not in

that stock, but the valuation, you know,

where it is on Alphabet is similar,

meaning that there are probably future

gains ahead. I will say this regards to

the overall market, whether it's Meta

down, Microsoft, look, the markets don't

go up every day. You know, the last

several days, we've kind of gotten

accustomed to Nvidia, I know we haven't

talked about it, but Nvidia adding $200

billion of market cap a day. Guys,

that's not going to continue every day.

Let's take a breath here.

>> If I could react a little bit first, I

think Meta now is actually cheaper. Yes,

it is.

>> Then then Alphabet

>> 21 times versus 24 times.

>> Alph Al Alphabet's quarter, Jimmy,

you're I mean that was a fantastic

quarter and the strength of YouTube is

is remarkable. I heard David Faber on

the network talking about this with Mike

Sani. If you think about YouTube, the

valuation's probably right now rivaling

Netflix.

>> That's why I was about to say

>> it's right there. So, it's it's

remarkable what they've done with

YouTube. Steph, I just want to ask you

is because some people have said to me

this morning, well, okay, why is Meta

utilizing the debt market and any any

reference, any uh engineering of

utilizing debt from these mag seven

companies is something that the the

marketplace is going to frown on and

say, "Okay, here we go. We're going back

to the '9s."

>> We're not going back to the

>> I don't think we are, but I know I know

what you're getting. I know what you're

getting at. I don't really care how they

>> Well, clearly you don't care. You bought

more. Well, of course,

>> but is it concerning for them to take

out uh $25 billion in bonds? And if this

is concerning, why wasn't it concerning

when Oracle did? Oracle issued some

concern when it is. I mean, the day that

Oracle made the announcement is the

high. The stock has has not traded

higher. That was it. It went parabolic

and it has gone down. So, no, Oracle

loves debt.

>> Not to the degree that that u Meta is

not to the degree that Oracle is in

terms of its endearment of utilizing

debt, but I don't know. You just look at

you say to yourself well why is Meta

have to

>> why are they issuing debt

>> right why do they have to issue 25

billion

>> because they probably well they do see

growth I mean to raise the expenses from

114 to 116 billion up to 11618 billion

just this year alone and then they said

next year is going to be noticeably more

than this year I mean that is huge these

are huge numbers

>> these are huge numbers

>> but they're but my point is is is that

while I'm disappointed in it

>> they're seeing results like the family

of apps right 25.9 9% growth. It

expanded 410 basis points sequentially.

That's crazy growth for a company of

this size.

>> So, you think we could trust management

more than we were uh years ago when they

were spending money and we were like,

"Wait a second."

>> Cuz we weren't seeing the results.

>> See, we are seeing the monetization here

and the price per ad tells you that at

10%. That's very impressive. And they

were one of the first to see

monetization and so they obviously see

it. They want to build momentum off of

it and they want to they're going to

increase expenses as a result. I look

again for the third time. I'm not happy

that they're spending more, but if it

wasn't leading to results, that's where

I would actually sell the