Closing Bell Overtime: Big Tech Faces Another Earnings Test 10/29/26

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0:54Mehdi Hosseini: The Bell's bringing it to the trading day at the NYSE. Smart Bank ringing the bell. And at the NASDAQ, Georgia Banking Company doing the honors. Welcome to Closing Bell Overtime. We are live from Studio B at the NASDAQ Market Site. I'm Melissa Lee along with Mike Santoli. Tech stocks getting crushed today following disappointing results from Google and others. The NASDAQ down about 1.4 percent. S &P 500 down a third of a percent. Dow losing about 150.

1:15Tom Forte: Alphabet having its worst day ever. And Microsoft losing its gains. Also closing in the red. It's not just Alphabet weighing on tech. ServiceNow also with its biggest one-day loss ever. That's pressuring other software stocks such as Salesforce. Fortinet, also part of the software sell-off today. Other cybersecurity names, including Palo Alto and Zscaler, down big as well.

1:37Mehdi Hosseini: But today, it's another day. A huge slate of potentially market-moving companies reporting this hour. Our team is standing by, ready for numbers from Amazon, Intel, Sandus, Starbucks, and much more. We start off with the first take on the close. Interesting day, really the tone being set by the massive decline in Alphabet shares. But I feel like the theme here is sort of what does the AI disruption trade mean in terms of Google and its core search business being displaced and then the Saspocalypse scare being reignited?

2:05Tom Forte: Without a doubt. So it's kind of the disruption piece of the AI craze, as well as at least a perception that maybe there's a rethink on some of the pace of CapEx, whether that's by intention or just because it's not getting done as quickly. And you saw various asset markets respond. I mean, Treasury yields were down. That seems to be correlated with this idea that we're going to have a little bit less prospect of an AI CapEx overheat and a real liquidation in Alphabet shares. I mean, I was just saying$60 billion worth of that stock, the two share classes traded today. That's, you know, compared to$10 billion in Apple today, it's off the charts amount of kind of, you know, kind of abandonment of this stock.

2:45Mehdi Hosseini: And you've got to wonder if that's going to be some sort of a low, given just the ferocious selling of the shares.

2:50Tom Forte: Just the amount of shares that cleared. And by the way, just an amazing job of rotation within the market. We're down at 0.3 percent in the S &P, consumer up, and all the rest of it.

3:00Mehdi Hosseini: Intel earnings are out. Let's get to see Modi with those.

3:03Cody Acree: Mike, a solid beat for the third quarter for Intel, but fourth quarter guidance was lower than anticipated. Intel CFO David Zissner telling me that towards the end of August and into early September, what Intel saw was a pretty big fall off in demand due to memory pricing. He says memory has just gotten so expensive. It's making these systems, these PCs so expensive that it's just really hard in a constrained budget environment for all these CIOs to be able to buy any more than you know that they can afford. Intel now sees its fourth quarter revenue between 15 to 16 billion versus the estimate of around 17 billion and earnings of 25 cents to share the expectation, guys, was for 43 cents.

3:43Cody Acree: The stock is responding down about 16 percent. Now, on Foundry, Zinsner telling me that Intel is in the final touches of what will be customer lock-ins and that on packaging, there is clear progress, where he says multiple of billions per customer type of business that he sees coming. On capital raises, Intel did have that$23 billion equity sale that's been raised. Zinsner says Intel does not see a need to raise additional capital. The only deal Intel might entertain is a strategic customer, kind of like what they did with NVIDIA and SoftBank last year, where capital comes with demand for either product or wafers.

4:19Cody Acree: I think the street's focusing on that Q4 guide, guys. The expectation was for a beaten raise.

4:24Mehdi Hosseini: Yeah, that is a massive miss. Seema, thank you. Seema Modi, again, guidance for Q4, 25 cents. Esma is 43 cents at the midpoint of the range, 15 and a half. I mean, that's one and a half off.

4:37Tom Forte: Yeah, without a doubt. And this drop in the stock, if it were to, you know, stay around here, it actually gets you back into this massive gap upside for the first quarter earnings results. Remember, that was the one where it was like, OK, we actually see gangbusters demand going through this year. So you've kind of unwound a lot of that. So there's a lot of this going on. You know, did we actually pull forward too much of the enthusiasm about how much we can realize?

4:59Mehdi Hosseini: Exactly. The commentary about memory price is too very interesting. Amazon earnings are out. Let's get to those. Kate Rooney has those. Kate. Hey, Melissa.

5:06Cody Acree: So it was a miss here on the top and bottom line. The AWS growth number, though, was stronger than expected. On EPS, this was a seven cent miss,$1.89 in the quarter. And revenue also came up light. 201.9 billion. The street was looking for closer to 202 billion there. AWS growth. This is the cloud business for Amazon. Important number here. This came in at 39.3. Street expectations, it's around 38%. So that was better than expected. It was also a miss on AWS revenue. We've got a couple of the segments I'll run through here. Revenue of, it looks like, excuse me, it was a beat on AWS revenue, 46 billion versus around 45.

5:47Cody Acree: On North America revenue, though, slightly light. So this is the e-commerce side of the business, 112.9 billion, just shy of the consensus estimate. Online sales as well, store sales, 68.4 billion versus around 69 billion that the street was looking for. But you can see the stock reacting sharply to that top and bottom line miss, at least. I think we also, guys, hang on a second, do have some guidance here. It looks like operating income guidance, 28.1 billion. This is light. Street was looking for 26.2 billion operating income. It looks like at the midpoint is pretty much in line. We'll keep digging through here, guys.

6:28Cody Acree: But you can see the reaction in the stock tells tells you the story here. Top and bottom line missed down almost nine percent after hours, guys.

6:35Mehdi Hosseini: All right, Kate. Thank you, Kate Rooney. In the regular session, we should note that Amazon shares were down by about four percent. Yeah, it definitely absorbed some of that bad news from Google.

6:45Tom Forte: It did.

6:46Mehdi Hosseini: And today we have another decline.

6:47Tom Forte: And I have to say this quarter with these big names, a stock that's been down into the number has not meant the lower bar. It's actually meant the market getting anxious and sniffing something out because obviously Google have been an underperformer going into its report as well.

7:00Mehdi Hosseini: Exactly. Let's get back to Sema Modi to take a look at Intel shares and their reaction, the dramatic reaction to this massive mess when it comes to the Q4 guide on the EPS as well as Q4 revenue guide. I mean, they talked positively about some progress being made in foundry, packaging in particular, which is key for the foundry business. I don't know about 14A manufacturing, but clearly this guide and the commentary about memory prices that fall off in demand in August into September, that's going to be key here.

7:30Cody Acree: Absolutely. And just further looking through the release, we have Zinsner and executives saying that they do see the PC slowdown continuing at least through the first half of next year. And Melissa, to your point on memory pricing, when he explained that's one of the reasons they saw that drop off in demand, because more technology companies are thinking through their budgets and more of it is now being sucked by these memory prices, which remain elevated. I asked, when does he see the market ease? And he said that going into next year, memory prices remain elevated. The big question mark is around 2028.

8:02Cody Acree: And what happens then? And the reason this has been such a shock is because for so long, technology companies have been sitting on memory inventory. But now that that has sort of been sucked up by the market, there's a need to go back to the memory manufacturers, buy more high bandwidth memory. And they're now facing this sort of shock in terms of prices. But again, he sees the prices remaining elevated for the next year, which does create more questions, generate more questions around gross margin visibility.

8:30Mehdi Hosseini: All right. Thank you very much, Simone. We should note that the memory stocks, in particular in the after-hours session, they're catching a bit here. I mean, Micron was under pressure. There are some very, very high expectations when it came to Samsung. They had very good earnings, but they sort of held on to their guidance. That was a disappointment for Micron, which was lower in today's session. But here it is higher on the back of those comments about memory.

8:50Tom Forte: Yeah, I also think there's just real kind of positioning pain going on in this whole area here. So people are kind of flailing and selling one thing and maybe picking up another one that's already taken its medicine. But it's hard to see these magnitude of moves in stocks this big and this widely owned and think that it's not creating just a lot of tremors in hedge fund land.

9:11Mehdi Hosseini: Absolutely. Intel shares down about 22 percent right now. Let's get more on that report. Joining us now is Cody Ackrey from Benchmark, a Stonex company. Cody, great to have you with us. This is, I would say, maybe a historic decline for shares of Intel. What do you make of this quarter and this massive guidance miss?

9:29Tom Forte: Yeah, you're right, Melissa. This is unprecedented, down 22 % here, pretty much aftermarket so far. It is a big, big miss, no doubt, 20 cents on the bottom line next quarter, and nearly 2 billion miss on the top. It does sound like it's all memory-related, all PC-related. The data center business was upside this quarter by about$5 billion. The foundry business was up by about$200 million, excuse me,$500 million better on the data center business. And the foundry business better by about$200 million. And so overall, a very strong number for the September print. Revenue was in line. EPS was a bit better, about$0.09 better.

10:14Tom Forte: So September was fine. But as as SEMA was talking about earlier, it sounds like once the inventories, the lower cost inventories were depleted, the OEMs had to go back to the market and pay market rates. And that has impacted what we've seen in PC volumes. We've seen estimates for the market down now between 20 and 25 percent for the overall PC market for this year. So that's a number likely to be ratcheted down with this kind of data coming in. So it does look like this is all memory and we know what's going on with AI. So unfortunately, it just shows that Intel is still largely a PC levered company with AI tangentially and foundry still on the come, but still very PC dependent.

11:06Tom Forte: What are the knock-on implications of what you just said there in terms of the rest of the chip food chain? Well, we've got AMD next week, and they similarly are very PC-dependent. They don't have quite as heavy of a consumer bent, a little more enterprise bent, so they're going to be a little more defensible. They are getting the AI trade as well. They're shipping their Helios product and their MI450. So that is going to be a bit of an offset that Intel just doesn't yet have in scale. But it is no likely, I mean, no doubt that they'll be pulled into this entire PC downdraft.

11:49Mehdi Hosseini: Yeah, we're now seeing micron shares lower along with Seagate. And, Cody, I'm wondering, in terms of the commentary about memory prices and, you know, CTOs, CFOs, companies just reexamining their budgets and deciding what they can afford on memory, how do you extrapolate that comment into sort of into those areas?

12:10Tom Forte: Well, Melissa, I mean, the life cycle of a PC has been extending for years. It's now well over. It's extended down into the three and five year period. And so we've been seeing that as a cyclical trend in PCs for some time. And so if you think that you can delay that next purchase of PCs into next year or maybe into the following year, if you're a CFO, you're probably going to make that call just in the face of uncertain memory prices, just on the hope that maybe next year is better from a supply standpoint. I don't think it's going to be. We're probably going to face this same similar supply demand dynamics next year that we're facing today.

12:54Tom Forte: So I don't think you're going to get cheaper PCs anytime soon. But I can see the rationale for delaying purchase as long as possible. Where does this leave the broader thesis with regard to Intel? I mean, is this just going to be we have to get through this this phase where you're going to have margin sacrificed? What about the implications for the data center and the foundry and all the other elements that had gotten folks excited about it? Well, the data center is still very much on track. We're still seeing a shift in usages towards agentic inferencing. And so that trend is going to be increasingly reliant on CPUs and the core of Intel's business.

13:39Tom Forte: And so we're seeing that in their data center AI business up 500 million versus estimates. And so I think that they're benefiting from that. They just can't fully offset the downdraft that they're seeing in PCs. So the AI trade for Intel is still very persistent and likely to accelerate as a Gentic just becomes a bigger piece of the workload. that with things like Muse coming on and Dot at OpenAI, we're seeing a real consumer trend even towards agentic adoption. And so all of that relies on CPUs that doesn't rely on a GPU. And so Intel's in a great position there, as is AMD. But unfortunately, it's just not offsetting this real downdraft in PCs.

14:27Mehdi Hosseini: It sounds like, though, Cody, you'd be more inclined to sort of look through this. I mean, granted, the conference call starts at the top of the hour. or five o 'clock. There are a lot of questions, but it sounds like, you know, you think, oh, you know, it's understandable that people put off their purchase of PCs. The fundamentals are still good in terms of the demand for CPUs and that the AI story is intact. I mean, are the fundamentals still there in your view, despite this fourth quarter guidance miss?

14:54Tom Forte: Yeah, I think it is, Melissa. I think what makes Intel a hundred dollar stock is exactly that. It's the AI leverage and it's their foundry turnaround. And so it really has never been about PCs. It hasn't been for years. They've been losing share to AMD pretty consistently. And that's just been a cyclical down draft of a space for years. And so that's not been the reason that anyone that's owned Intel, it's the reason to sell Intel today, but it's never been the reason to own it. So the reasons to own it have continued. They're making progress in their foundry business. We've I've been hearing that their engagement at 14A has been expanding in breadth and in pace.

15:35Tom Forte: And so we are a big proponent so that they are likely to become a real TSMC competitor in the future. And that's, in the end, the ultimate reason to own Intel. And then the leverage for the AI CPUs is a persistent theme that's not going anywhere. We're only going to be more agentic in the future. And CPUs are going to be more and more important to the overall AI infrastructure. So the reasons don't intel are there. You're going to have to live through this pain. But I'd be buying here aggressively into this down draft. Cody, appreciate you breaking it down for us on the fly here. Thank you very much.

16:14Tom Forte: Thank you, Mike. All right. Let's get back to Kate Rooney for more on Amazon's quarter. Kate.

16:19Cody Acree: Hey, Mike. Well, part of the Amazon story after hours here is weaker than expected guidance. So Q4 operating income guidance, light at the midpoint. And then there's Q4 sales guidance that also came up lower than expected, again, at the midpoint of that range. Q4 is a really important sales moment for Amazon. It is, of course, the holiday season that is a big moment for retail. And retail sales, that side of the business, despite how much we talk about AWS and cloud still makes up the bulk of revenue. Amazon also did reaffirm, it looks like, its full-year CapEx guidance at$220 billion. Also, a quote here in the release from CEO Andy Jassy, he is projecting revenue growth for AWS of above 40 percent.

17:01Cody Acree: He says that's both in 2027 and 2028. AWS, that growth rate was a beat, but not enough here to offset the top and bottom line miss, plus this weaker guidance that I just mentioned. Shares are paring back some of those losses, though. It was down as much as 8%. It was down heading into the print, down now more than 7 % after hours, guys.

17:20Tom Forte: Yeah, Kate, I mean, the reported growth rate for AWS, 39.3%, as you mentioned, beat the consensus. But Morgan Stanley's, you know, kind of handicapping of it this morning said that the buy side was looking for 44 % and for revenue for the quarter, 205, relative to the official forecast of 202. So clearly, investors were expecting a lot more than the stated consensus.

17:41Cody Acree: The whisper number moved up, Mike, and Microsoft is a huge part of that. I mean, they had a blowout report with Azure. They beat expectations by three percentage points. You had Google Cloud more than doubling in terms of that growth rate. So the bar did get higher for Amazon heading into the print. So, you know, a beat by a percentage point, secondly a beat. But you're right that most of the street was looking for a more solid beat. And then I would also say the guidance here. You know, we talk, as I mentioned, it's a tech company in a lot of ways, but it's sort of similar to Alphabet and that you have to show in the near term that your core businesses are doing well and really performing in order to get the hall pass to spend big on AI and CapEx.

18:20Cody Acree: We'll see how Andy Jassy, the CEO, sort of navigates that on the earnings call coming up.

18:24Tom Forte: Yeah, absolutely. Big, a big reset of expectations all around this quarter. Kate, thank you. Let's dig more into this move lower. Joining us is Tom Forte, senior consumer Internet analyst at Maxim Group. He has a buy rating and a$350 price target on Amazon. So, Tom, you know, top of mind, what do you think is most relevant? Is it just the shortfall versus buy side expectations we were just talking about?

18:48Cody Acree: Yeah. So, Mike, I think the big challenge for Amazon is the company's heading into its fourth quarter. As you've already highlighted, the fourth quarter is the big retail quarter. So even though it looks like the fourth quarter is setting up for what would be the seventh consecutive quarter of accelerating revenue growth for AWS, we can't hide behind the fact that it's still an important retail quarter and that it looks like Amazon is starting to get affected, or at least its consumers are getting more affected by higher gas prices, a challenging macroeconomic environment. So I think that the way that I look at the quarter is very good performance from AWS.

19:28Cody Acree: Maybe expectations got a little ahead of themselves, but some concerns heading into the fourth quarter, which is the big retail quarter for Amazon.

19:37Mehdi Hosseini: So in your view, this decline of about 6 percent is really driven by weak retail in the fourth quarter.

19:45Cody Acree: Absolutely, Melissa. And I do think this may be one of those times that as we go through the earnings call, get additional details on what's going on, both the good at AWS and maybe some of the near term challenges on the retail side. I expect the stock to rebound over the next trading day.

20:04Tom Forte: There were some folks trying to draw a line during the regular session move in Amazon to the DoorDash Instacart planned merger. Does that have implications for Amazon?

20:18Cody Acree: Implications to the extent that I think it makes a stronger combined company versus perhaps two weaker competitors. So the way I see it, if you're interested in delivering to the consumer and you're a retailer and you're not comfortable using Amazon, you may be more comfortable using the combined DoorDash, Instacart, Costco being a good example of that. So to the extent that maybe there was less of a chance that individually two weaker companies becoming less competitive threat for Amazon. But I see them kind of as the alternative for delivery for retailers who aren't comfortable using Amazon.

20:54Mehdi Hosseini: I know we didn't have many weeks of Muse, but do you think that there could be a Muse impact? I mean, the fact that you can do commerce on Muse, but you can't buy something from Amazon on Muse. And could we see that amplified in the fourth quarter?

21:09Cody Acree: So, Melissa, that is something I'm hoping for additional details on the earnings call. Amazon, as you know, blocked Muse. Are they going to continue to do so? I think the big challenge for these agentic e-commerce opportunities is the trust factor. So will the consumer be happy giving their credit card information, their bank information, things of that nature, in this case, to Facebook? And I think it remains to be seen. But I don't know that Alexa, you know, shopping by Alexa is an amazing agentic app within Amazon. So that's something I'm looking for additional details. But right now I say that I'm still not convinced that consumers are comfortable giving all of that information to Facebook.

21:53Mehdi Hosseini: All right, Tom, great to have you with us. Thanks, Tom Forte. Sandisk earnings are out. Let's get to those. Seema Modi's got the numbers. Seema.

21:59Cody Acree: A strong set of numbers for Sandisk for the quarter. Melissa, reporting earnings that came in well above the street,$49.51 adjusted. The street was looking for$46.22. Revenue beat at$11.03 billion. The street was predicting$10.64 billion and even non-gap margins, gross margins of 84.6 % above the 84.1. This is the sixth straight quarter of beats from Sandisk and the stock is up fractionally here. There is an eight for one stock split of its common stock that it says will be made into effect in November. It will make the stock more accessible, including to employees. Melissa.

22:39Mehdi Hosseini: All right, Seema, thank you. Seema Modi. Up next, look at analysts' reaction to the Sandisk report after this quick break. And we want to show you return-stacked ETFs, bringing the closing bell at SIBO in Chicago, ending the regular trading day for options there. Stay tuned.

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24:39Mehdi Hosseini: Starbucks earnings are out. Brandon Gomez has the numbers. Brandon.

24:42Cody Acree: Hey, Melissa. Stock's been hopping around, but immediate reaction was negative. It was a mixed quarter with adjusted EPS coming in better than expected at 80 cents a share compared to 72 cents estimates. Revenue, however, weaker than expected, down 4 % year over year to$9.14 billion below the$9.23 billion expected. And I want to look at global same store sales as well. That was a beat up 7.2 % as the U.S. turnaround continues to take hold. North America really carrying the weight there. Comp sales in the home market up almost 8%. And international comparable sales were also positive, but well below expectations, up less than a percent there.

25:18Cody Acree: All that lending to mixed guidance as well, guys. Fiscal year EPS range above the street estimates, while revenue is now expected to decline one percent compared to up one point four previously guided. You can see shares there hovering around the flat line, but still in the red.

25:32Mehdi Hosseini: All right, Brandon, thank you. Brandon Gomez. And don't miss the first on CNBC interview with Starbucks CEO Brian Nickel. That's tomorrow, 9 a.m. Eastern time on Squawk on the Street.

25:41Tom Forte: Well, Sandisk reporting earnings just moments ago. That stock moving higher right now. With us now is Mehdi Hosseini, senior equity research analyst covering technology hardware at Susquehanna Financial Group. He's got a buy rating on the stock with a price target of$27.45. Mehdi, great to see you. I guess, you know, given, I guess, the sell the news responses we've seen elsewhere in the AI food chain, This is OK in terms of it holding its value after the print. What are your main impressions of the quarter?

26:14Cody Acree: First, thanks for having me on the program. And no, this is not still on the news. And if you think about the AI for a big picture, and as we look into 2027, it's actually going to get more exciting. We're migrating from training to inferencing. And in my opinion, inferencing will require more storage. And the kind of storage you need is a flash-based SSD. And 27 actually could create an opportunity for us to differentiate SanDisk. And in that context, I believe in an annualized earning power of$250 pre-split. So there's still plenty of upside from here.

26:49Mehdi Hosseini: I know, Mehdi, that not all storage is created equal. But in terms of Intel's comments about memory prices and the fall off in demand at the end of August going to September because of high prices and a reluctance to make purchases at that point. How do you interpret that onto the memory space?

27:05Cody Acree: Yes, fair question. And for disclosure, I don't cover Intel, but I cover foundries. I cover TSMC and Samsung foundry. In my opinion, there's still no viable competition to TSM, and TSMC continues to be the primary leading-edge foundry. And perhaps this is where you can use a PC as a cover or higher bomb costs, preventing adequate PC sell-through. But in reality, Intel was supposed to offer a viable foundry solution. And I just don't see any customer working with Intel for wafer loading one or two years from here.

27:51Tom Forte: Now, in terms of what we talk about after the report, the Sandisk up a little bit, but it has really come down like 40 percent from its highs. What is it going to take for investors to get a little more convinced that there is durability in this cycle and Sandisk is going to have a spot at the center of it?

28:09Cody Acree: So two things, two factors. First, we have to be able to differentiate the semiconductor content and to that extent, memory requirement for inferencing, which in my opinion will be different than training. For instance, HBM may not sustain the growth in 28, but SSDs will continue to grow at the same pace. And number two, that yes, not all the memories are the same. And flash will be the key critical component part of the inferencing and perhaps more so than hard disk drive. Yeah.

28:41Tom Forte: And I guess there's some signs of differentiation is happening here in the market. Mehdi, thank you so much for the time. Thank you.

28:49Mehdi Hosseini: Coming up, we've got more earnings reports and big movers to get to, including Reddit and Pinterest, both down more than 9 % right now. Stay with us.

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30:31Mehdi Hosseini: Reddit and Pinterest earnings are out. Julia Borson's got those numbers. Julia? Let's start with Reddit. Shares are down about 10.5 % right now, despite beating on the top and bottom lines. Revenues of$895 million ahead of the$878 million estimate, while EPS of$1.40 beat by$0.05 per share. But daily active users were$3 million lighter than anticipated at 130.3 million daily active users. Now, Q4 revenue guidance is also a bit lighter than expected. Here's some big news out from Reddit. A big change here. The company announcing it will no longer allow logged out users to access its content. People will need to sign up and log in to access the platform.

31:14Mehdi Hosseini: CEO Steve Huffman telling us that Google search referrals continue to be down, saying AI is, quote, just not a traffic driver and that the relationship between Google and the rest of the Internet is evolving. And so for us, this means just a continued focus on our core users that come to Reddit directly. Meanwhile, shares of Pinterest down about 11.5 % right now on a top and bottom line miss on 10 % now. EPS of 46 cents, 2 cents short of consensus. Pinterest revenues of$1.17 billion, below the$1.21 billion estimated. The company's fourth quarter revenue outlook is also below the estimate. Now, this shortfall in terms of revenue comes despite reporting record monthly active users of 661 million.

32:01Mehdi Hosseini: That's five million more than projected. CEO Bill Reddy telling us that three percentage points of Pinterest revenue deceleration are the result of European regulatory changes that impact cross-border sellers. Reddy telling us that those regulatory changes will have a fourth quarter impact a bit as well. Now, Reddy did say notably that the rise of agentic tools are not negatively impacting Pinterest traffic. We see shares now down 13 or 12 percent moving all over the place here, Mike.

32:31Tom Forte: Yeah, Pinterest market cap down to about$10 billion. Interesting. Julia, thank you. Time for a CBC News update with Pippa Stevens. Pippa.

32:38Cody Acree: Hi, Mike. The Justice Department is reportedly issuing a new wave of subpoenas in its investigation to the Alaska Senate race. According to ABC News, the new subpoenas are targeting Democratic officials who allegedly recruited a candidate with the same name as Republican incumbent Senator Dan Sullivan in a bid to confuse voters. Democratic nominee Mary Peltola's campaign denied involvement. Patrick Stewart, the legendary British actor known for his roles in Star Trek and X-Men, has died. Stewart got his start at the Royal Shakespeare Company before pivoting to television and film in the iconic roles of Captain Jean-Luc Picard and Professor X.

33:15Cody Acree: According to his spokesperson, Stewart died from Alzheimer's disease and Lewy body dementia. He was 86 years old. And the Atlanta Dream forced Game 7 in the WNBA Finals with the win today against the Golden State Valkyries. The potential championship clinching game had a controversial start time because of scheduling issues. It tipped off midday on the East Coast and at 930 a.m. on the West Coast. Golden State will now host the first Game 7 in WNBA history. Michael, send it back to you.

33:45Tom Forte: All right, Pippa. Exciting. Coming up, much more on this huge drop in Intel shares following its results. Closing Bell Overtime. We'll be right back. Welcome back to Closing Bell Overtime, live from the Nasdaq market site. Tech stocks hit hard in the regular session as Alphabet had its worst day ever, down 12.5%. The Nasdaq 100 pointing to a lower open once again tomorrow. Amazon down 5 % after an earnings miss. Intel down 15 % on weaker-than-expected guidance, seeing fourth-quarter revenue of$15 to$16 billion, at least a billion short of estimates, claiming weakness in the PC market, which it sees continuing throughout the first half of next year.

34:25Mehdi Hosseini: Let's dig into that huge drop with Bernstein's Stacey Rasgen. Stacey, great to have you with us. Good to be here. Thank you. What do you make of the drop? Is it warranted?

34:37Tom Forte: Well, probably, yeah. I mean, look, people have been very excited about CPUs, and they've been excited about Intel's more structural changes, looking for growth in foundry business and packaging and all this stuff. That being said, they still have a lot of PC exposure, And I suspect that's where the weakness is. The quarter actually was fine. The quarter itself was pretty good. Cutting in line on revenue was above on margins. The guide is extremely weak, though. They guided$15.5 billion. The street was at$17 billion. I personally have been worried about the PC client market. We've been of the belief that CPUs have been overshipping for the last several quarters relative to PCs.

35:18Tom Forte: And if you look at the PC numbers themselves for Q3, they were absolutely horrendous. for PCs probably in at least 20 years. And I suspect that is what is driving the weak guide is there's probably a pretty sizable flush of the client business into Q4. But I would also say like even, I'm just trying to work through what's implied in the numbers here. And I mean, to get there, I've got to have client revenues probably down at least 20 % sequentially in Q4. But even with that, data center would probably be up 10%. I'm not actually convinced that would be enough even if client was fine. And I think in the press release, they talked about trying to bring on supply to meet extraordinary demand for data center.

35:59Tom Forte: They will probably talk about supply constraints. I think it's just taking longer, presumably, to ramp that stuff into production. It just takes time. I also think people are probably looking for more upside maybe from pricing, particularly in servers. They're guiding gross margins to 38%, which is like 400 basis points below where the street was. It's probably a combination of process mix and lower revenue. But it doesn't seem like if they're getting any pricing, it's enough to help gross margin. So all in all, given given these rules, I'm actually not surprised at the move aftermarket right now.

36:29Tom Forte: And Stacey, I mean, worth probably mentioning the context and why perhaps there's been so much downside. The stock was down 35 percent from the highs because the valuation just got so dislocated really from the business. Right. So, I mean, it went from 20 when the U.S. government bought a stake,$20 a share, up to 140. and even with the decline, it's at 40 times, you know, so it's sort of been an odd spot. Yeah, I mean, to be fair, it's probably a different company now than it was when the government took the stake and the balance sheet's in a better spot. And the server market, even though maybe people wanted more, but the server market is saving them, right?

37:06Tom Forte: And look, take lucky that we're good, like over the last year or so, like it's fine. So they're in a different spot. But that being said, you're right. I mean, the valuations have gone up. It's very expensive on earnings. People are buying it now. We're not buying it for the earnings over the next year. They're buying it for a structural change over the next five years as they ramp third-party foundry business and everything. And I think people in their heads have much higher earnings power potentially in a few years than they have right now. But that's still up in the air. It's still speculative.

37:39Tom Forte: The actual hard earnings that we can sort of see right now on that basis, yeah, the stock is extremely expensive. It has been.

37:45Mehdi Hosseini: The cure for high prices are high prices, Stacey, right? That's what the saying goes. So in terms of what their commentary is on memory prices, how do you sort of extrapolate that across your coverage universe and maybe even into some of the other ones that consume memory?

38:00Tom Forte: Well, I've been actually very nervous about PCs and smartphones. And actually, frankly, even in our preview for Intel into the quarter, this was the biggest risk. We were blowing in Q4, not this far below, But this is directionally consistent with what we had thought was going to happen, but it's much worse on a magnitude basis. And the reason PCs are so weak is not because PC demand is necessarily – it's because there's no memory. And you can't build the PCs. We'll probably see the same thing on smartphones, frankly, or in broader consumer electronics. I've been very nervous about things like PCs and smartphones.

38:33Tom Forte: And you look at the shipments. I mean, PCs in Q3 were – just look at the third-party data sources. they were down 20 % plus year over year. And they were down double digits sequentially. They're usually up, you know, potentially double digits sequentially. So this was actually the worst sequential quarter for PC shipments literally as far back almost as I have data, certainly over the last 20 years. And I'm already, I already am concerned. I felt that we've written this and talked about, I've been worried that the PC CPUs have been overshipping PCs for the last several quarters anyway. So my guess is this is a combination of a weekend market because of these memory dynamics coupled with probably an inventory flush that's hitting it into Q4.

39:15Tom Forte: But the memory situation may not resolve for a while. And I mean, even Intel in the release said they thought that the PC dynamics would last at least through the first half of next year. We'll have to see how it goes. Given this retrenchment you've seen across the group, Stacey, I mean, what makes sense in terms of finding relative value here? Obviously, the things like NVIDIA has been the defensive quality name and it's held up better. But what do you think is timely at the moment? Yeah, I mean, look, we've liked the NVIDIAs of the world. They are very cheap. And frankly, on all the AI bullishness, presumably none of it works.

39:50Tom Forte: Ultimately, if they don't, they're driving it. The other one that we've liked, frankly, is semi-cap. And frankly, all of these shortages, there's no memory. I mean, they are adding capacity now to make more of it. But it does take time to add that capacity. But, I mean, it's the tool vendors that are sort of at the forefront of that. And we had some names report over the last couple of weeks. KLA reported last night, for example, and we're starting to see this. So we like semi-cap as another way to play this.

40:17Mehdi Hosseini: All right, Stacey, thank you. We'll let you go. The Intel call kicks off in just about 15 minutes' time. It does. Up next, Fast Money's Tim Seymour and how he is trading the big names that just reported earnings and are moving in the after-hours session. As we head to break, take a look at some of the S &P 500 stocks hitting new highs. Amgen, Quest Diagnostics, MasterCard, Emerson Electric, and United Rentals. Closing bill overtime. Be right back. Let's get another check on Amazon, down about 5.5 percent, about 13 minutes before the conference call starts. Well off the worst levels of the after-hour session after reporting earnings earlier this hour.

40:49Mehdi Hosseini: Joining us now, Tim Seymour of Fast Money, also Seymour Asset Management, Chief Investment Officer and CBC contributor. So what do you make of this quarter?

40:57Tom Forte: I think the expectations around AWS were like, hey, this went from, We weren't getting a lot of growth until now was actually something that really was expected to drive it. I hear the retail myths. As an investor, to me, there's nothing existentially wrong with their retail business. In fact, if there's cyclicality in it, so be it. Also, just around CapEx, we've gotten really comfortable with Amazon over the years, over investing in building out for the future. So I don't the CapEx number I thought was maybe the most off sides of the most grotesque of CapEx that we've gotten so far. But I just think and I heard you talking about this earlier, Mike, that there was an expectation on AWS that had whispered this thing up into almost mid 40s and that the fourth quarter is going to be, you know, mid to high 40s.

41:44Tom Forte: And that's a that's a big bar. You know, there's a there's a sense out there in the market that it wants to reward restraint on CapEx. We talk about Oracle saying they're not going to raise that much more money. And today the market rotated all the way into the consumer side of things. Right. Right. So that's what seemed to be like the other end of Amazon saying maybe the economy gets balanced out. We're not going to be so A.I. CapEx centric. I know that's a huge leap based on a couple of days activity, but it feels like that's what the market wants to hear is a little more discipline. I think the market wants to hear it.

42:14Tom Forte: And and I bet if if Amazon cut their CapEx, it would be OK. I think we we appreciate the dynamic. First of all, the growing margin story at Amazon, I think, is underappreciated. The operating margins are good. There's an argument that on the retail side and Anthropics growth is Amazon's gain. So I just think this is a case where people are very concerned about capex. Amazon has been range bound for a year and a half. I mean, we've had these kinds of responses. In fact, it's arguably very cheap relative to itself. And it's also one of the more interesting of the bold bracket, the mega caps, where the analysts are.

42:50Tom Forte: Where should Amazon trade? You've got a 30 times multiple out there. You've got people with a 21. I think people really don't know what to do with the business, even though we've always always over rewarded AWS. So if you want to look at today and just the way we've we've valued the stock in the past, a miss on an expectation on AWS is all this is, in my view.

43:11Mehdi Hosseini: What do you think we've learned about the A.I. trade and where it is now, given what we've heard from all of them so far? And then in today's session, we saw, you know, software selling off. We see weakness and semis continuing from the regular session into the after hour session.

43:25Tom Forte: I think in the investor community, as we've all been trying to do for a long time, is trying to understand, did the pie get that much bigger for everybody? And so what we're learning are that those folks who have a core business that's being challenged and Google is the poster child over the last couple of days and continues to be and probably will be. But if the core business is intact and able to kind of move forward, I mean, Microsoft seems to me the one that is the easiest invest here, given both valuation and the core business and what's truly slowly happening with Copilot. So I think we have just as many questions.

43:59Tom Forte: I think this earnings season was hoping to alleviate. It really has every other earnings season. Earnings has this has been a catapult for the market, and it's gotten us past some of the dynamics we've worried about with an overspend. We're not getting at this time. I mean, the week starts with Anthropics S1 somehow laying some fears about, you know, the financing pipe. And then we quickly went to, you know, maybe there's just not enough to go around for all of these investments. I again, I don't know where the revenue pie changes that much. And so when you have a revenue miss in certain places here, it's something that has people wondering the return on equity return on investment for Amazon.

44:41Tom Forte: I am less concerned because their core business and what's going on for AWS and cloud really, to me, is going to be supported by the world we live in. All right. Thank you, Tim. Thanks. Up next, much more on today's after hours earnings as we count down to the analyst calls for Amazon and Intel. Shares of Roblox also getting hit hard. The company posting a loss. It beat on revenue, though. Engagement numbers fell. Average daily users and engagement hours. And for the current quarter, the company is expecting another loss on an adjusted basis. Analysts were predicting a profit. The shares indicated down 18 percent.

45:19Tom Forte: So you're watching Closing Bill Overtime live from the NASDAQ Market Side. We'll be right back.

45:23Mehdi Hosseini: Mondalee is moving higher after hours. Brandon Gomez got the numbers. Brandon.

45:26Tom Forte: Hey, Melissa. Yeah, it's a mixed quarter here, but only slightly.

45:29Cody Acree: EPS was a beat at 78 cents ahead of the 71 cents, a revenue slightly weaker than expected. $9.97 billion compared to$9.98. North America revenue, though, did come in line. Organic net revenue up 2.1 percent was also a beat. And volumes up 1.8 percent. You can see now shares up almost 3 percent. Melissa?

45:49Tom Forte: Brendan, thank you very much. Let's get you set up with tomorrow's trade today. Before the bell, we'll get earnings from Chevron, ExxonMobil, AstraZeneca, AbbVie, and AutoNation. We'll also get results from Colgate-Palmolive, Church & Dwight, Capri Holdings, General Dynamics, and Exelon. So plenty to contend with before the open. It's including the, obviously, reactions to Amazon and Intel. Today's broad market performance, pretty remarkable given the pressure from Google. We'll see if they can turn that trick again. The rotations have become pretty desperate as things have gone along here.

46:23Mehdi Hosseini: But you could make the argument, of course, that we're at the tail end now in terms of hyperscalers and tech reporting earnings. And we see these huge declines, huge reactions, stock after stock. And so it doesn't feel like it's sort of flushed out yet.

46:38Tom Forte: No, it doesn't. And yet the volatility kind of doesn't completely kind of blossom into the rest of the market. So we've had this ability to kind of suppress the volatility and pick our spots. We'll see if that continues. I mentioned again, consumer really strong today, but we'll see if that was a real trade or just a quick one. That does it for overtime.

46:56Cody Acree: It's the holiday season at House of Burl, which means that it's the perfect moment to review some key rules. Rule number five, more style means more celebration. Number four, buy gifts, but remember to treat yourself too. Number three, there is no dress code, but always leave them talking. Number two, show off different outfits. No party remains unattended. And rule number one, have it all without spending it all. Happy holidays from House of Burl, Burlington. Thank you.