Closing Bell Overtime: Big Tech Faces Its Next Test 11/2/26

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1:03The Bell's bringing an end to the trading day at the NYSE Benchmark Electronics. Ringing the bell, the NASDAQ BDC Forum and Small Business Investor Alliance doing the honors here. Welcome to Closing Bell Overtime. We're live from Studio B at the NASDAQ Market Site. I'm Melissa Lee along with Mike Santoli. That ends the regular session, but the after hours excitement is just getting started. We are expecting results from Apple in less than 30 minutes' time. We've got a great panel to break down those numbers. We're also going to be getting results from Palantir on Semi, Clorox and Vertex Pharma, among others.

1:32And it comes on the heels of a mixed session. The Dow gaining 200 points, but the S &P 500 losing half a percent. And the Nasdaq indices could not bounce back following Friday's selloff, fading into the close, losing more than 1 % each. Oil, a big market story today down sharply, back below$100 a barrel. More on that shortly. But we start off with the first take on the close. And it was sort of a crumble into the close. They just sort of collapsed into it and finished at lows on the NASDAQ. And if you take a look at some of the big cap tech stocks, Microsoft down into the close. Google down, I mean, across the board pretty much.

2:05It's a pretty discouraging failed bounce attempt. You had the makings for a rebound. Obviously, tech kind of getting oversold. Friday felt like it might have been one of these selling crescendo days. But you did have Oracle coming out saying they're raising some capital near the open, as did Meta. So they're shopping another bond deal. We expect these things. You know, it's pretty much in the bounds of what people were penciling in. But it's a reminder out there that people are starved for capital and they're going to have to pay up for it. Semis ended at 5 percent below the intraday high. So if semis can't get out of their own way, it's really a matter of defensive leadership.

2:38And you have to ask yourself if you want a market that's being led by Berkshire Hathaway and Walmart every day. And it's kind of what we have at the moment. Yeah. And of course, we have the midterms tomorrow, which throws a sort of an uncertainty around the A.I. trade. And for the first time in I don't know how long. I mean, we've been at this for a very long time. But usually the scenarios are red sweep, blue sweep, mixed, but not a contested election. That's true. That's that's another factor. Yeah. And you can sort of see it. I mean, the volatility index was up almost two points today above 21 when you had really minimal index movement at the S &P.

3:14So you do see, I think, people tensing up. It's not a specific scenario. It's just a what if. And maybe we have to keep open to the possibility. Maybe what that does is set the scene for some kind of relief down the road with a clear result or we get past the actual catalyst. That would be the pattern of past cycles. Only if a clearing event is still a clearing event because we haven't gotten a clearing. It's hilarious. Last week you had both the Fed chairman saying looking for clarity. You had Alphabet saying, oh, we have this year of clarity. It's not really happening. Nope, not at all. Let's get more on today's big move lower in the price of oil.

3:49It's its worst day since July. Pippa Stevens has got the details. Pippa. Hey, Melissa, U.S. oil dropping below$100 the day before the midterms amid renewed optimism around a peace deal between the U.S. and Iran. crude's losses accelerated this morning after a report that Iran's president said the Supreme Leader has granted the government new powers to conduct negotiations. That's according to state media. And that added to resolution hopes, as Secretary of State Marco Rubio said over the weekend, that President Trump prefers not to use military force and would like to resolve the Iranian war diplomatically.

4:20Now, this marks a complete reversal from last week, which was all about escalation. And, of course, we've now seen this many times since the war began eight months ago. As Kepler put it, new diplomacy, old issues, with neither side achieving its objectives since the June MOU collapsed. WTI is now nearing its 50-day moving average of 94.80, the first level of support. Miller-Tobax Matt Maley saying the 200-day is extremely important support to watch at 87, since it's also the 50 percent retracement level from the summer lows to the recent highs. So we're now about$8 shy of that. Guys? Pippa, are you surprised by this dramatic reaction in the price of oil, given how far apart Iran and the U.S.

4:58are in terms of finding a middle ground? I mean, the oil markets really just seem to want to believe these headlines and have really taken it to heart here. It's interesting today because we had seen fewer and fewer dramatic moves of this nature as the headlines like this built up over the course of the last eight months. But, I mean, we saw four straight weeks of gains for oil and kind of that steady move higher with everyone talking about this escalation coming after the midterms. And so, you know, we had seen kind of peak long position and a lot of that started to get washed out and then accelerated.

5:30But clearly this is a very big move today on very little sense that anything has actually changed. It seems the U.S. and Iran are still very far apart. So it's hard to square today's price action with what we're actually seeing on the ground. Of course, everyone is now talking about some of that geopolitical risk premium now unwinding. But even today, you had Goldman saying that next year we could see Brent at$130 or we could see it at$60 between their bear and bull case. So it just shows that there is a really large range of outcomes from here. And clearly today the market is betting on maybe some sort of resolution or just not wanting to be long ahead of tomorrow's elections.

6:07Yeah, for sure. And, you know, it's also deprived the equity market from defensive leadership from energy stocks, which had their week last week. They all reported amazing numbers. And now it's a matter of, you know, what can we project ahead from here in terms of how they're going to do earnings wise, refining margins and all the rest of it. That's right. All right. Expectations were very elevated ahead of all those reports, and we continue to see them print very, very large numbers, particularly when it comes to those downstream results. And we'll get more when Marathon reports this week. They are, of course, the largest U.S.

6:37refiner. So, you know, now it's kind of like, is this as good as it's going to get? And, you know, what are the mid-cycle margins now being priced in? So, you know, unclear if there's more upside here for energy equities, at least for the time being, given that now the earnings catalyst is kind of in the rearview mirror. Pippa, thanks. Pippa Stevens. We've got Palantir earnings are out. Seema Modi's got the number. Seema. Melissa and Mike, strong numbers from Palantir for the quarter. Palantir reporting 44 cents adjusted above the 41 cent estimate. Revenue of$2.3 billion for the third quarter, topping expectations.

7:07In fact, for the first time ever, Palantir's U.S. commercial revenue is surpassing U.S. government revenue with commercial growing 148 percent year over year to$984 million. That is higher than what the street was predicting. CEO Alex Karp telling CNBC, I don't think anyone has had consistent results like this in the history of software AI ever, and that Palantir is able to deliver this type of growth with a limited sales team. Now, when I asked him about Anthropik's growth, it's decelerating due to the rise of open-weight models that Palantir's technology is working on. Karp said, I would tell you in a world where we're doing this well, something is not working as well for everyone else, everyone being the Frontier Labs.

7:46Also, Karp doubling down on his earlier comments that the large language models should nationalize, saying the only realistic way for the Frontier Labs to deal with liabilities is to nationalize their companies, adding that Dario Amadei, the CEO of Anthropic, is one of his favorite and more interesting corporate buddies. Guys, Palantir's government business, worth noting, did see sales grow by 96 % in the quarter. That's higher than the 90 % growth rate it saw in the previous quarter. CARP sees business accelerating. Palantir, in fact, raising its full-year guide and adjusted free cash flow targets.

8:18Mike and Melissa. All right, Seema, thanks so much. We'll see how that stock continues to react. Sometimes it does buck around in different directions. As we mentioned earlier, after trying for a tech bounce at the open, the Nasdaq 100 ending the day lower. That's after a trio of reports that big tech is venturing back into the debt market, keeping cash flow and funding questions for the AI trade front and center. So should investors be factoring in potential capital shortages as a possible stock risk? Joining us now is Brad Newman, director of market strategy at Alger and investment manager focused on growth companies.

8:50Good to see you, Brad. Thanks. So where are we in this, I guess, a little bit of a reckoning in terms of what AI needs in terms of capital to build and how the companies and the capital markets are poised to deliver it. As you look at the different stocks, the way the valuations have been compressed, what do you most come away with? Well, obviously, we're moving transitioning from something that was completely internally financed to something that's much more reliant on external financing. That said, these companies are in much better financial shape than the companies that were building out the dot-com era.

9:25I mean, the companies that were building out the dot-com era, they had leverage of like four times net debt to EBITDA. These companies are barely levered net debt to EBITDA. on every turn they add collectively is like$750 billion. So I think there's a lot more capacity for them to raise money and spend a lot more than they're currently spending. Even if that's the case, so if we're comparing it to the companies building out the Internet bubble, all that tells me is NASDAQ's not going to go down 75 percent, because that's what happened last time. It doesn't tell me today if they're properly valued, if the opportunities have gotten better, and where within it you should focus.

10:00Well, we're seeing the cloud services companies accelerate their revenue. Our earnings estimates remain significantly above consensus. We think that they have the opportunity to reprice higher. We continue to see the price for compute continue to rise. You heard SpaceX talk about$50 billion per gigawatt, which is up again, you know, was up the previous quarter as well. Paybacks in under a year. So most people would expect the return on capital for these companies to have declined during this giant investment cycle. has actually risen. So we're pretty bullish on most of the big cloud service providers.

10:36Obviously, some have other businesses attached to them that could go through a period of disruption. You know, they don't call it creative destruction for nothing. There's a lot of value created and there's also value destroyed and investors need to be mindful of that. It sounds like you're talking about Alphabet. I mean, I'm sure a lot of companies fit the bill, but that specifically sounds like Alphabet. And once upon a time, you can make the case that those businesses, those core businesses, were the reason why you were willing to say, you know what, you get a pass on spending because you got this strong core business.

11:04But this quarter, they showed that their core business is under threat. So what is the bull case at this point for an alphabet, let's say? Well, that is one of the large cloud service providers that we're underweight, as opposed to Microsoft or Amazon, where we're more positive on. So you do have to pay attention to the core business that's feeding that investment cycle, and you can't just look at the cloud service piece. But there are still questions about their ability to monetize their core search business as more people use AI queries, and the jury's out on that. So it's a little less clear than some of the other ones.

11:37We got updated numbers from Anthropic in their S1 today, and they continue to show on an operating basis that the growth is pretty impressive and they're somewhere not too far from breakeven, depending on how you calculate it. What do you derive from that in terms of the sustainability of the investment cycle, also whether the base model creators are going to retain really good economics and, I guess, other implications for the ecosystem? Well, when I look at those numbers, it does look like they're profitable. It looks like they're generating cash, which I think is a positive for the whole ecosystem.

12:15They've obviously had tremendous growth. They've gone from a billion to$65 billion run rate revenue in under two years. It took Google and Amazon over a decade to do that. So it's been tremendous growth. They, you know, we won't have tokens from Anthropic and the Frontier models exclusively. We're going to use a lot of tokens from open source models as well and much cheaper tokens, just like you don't need to hire a PhD, you know, to do lower level work at a company. you don't need a frontier model to do everything. So there's a place for these models. But we think that they have a really strong competitive advantage because of the recursive nature of what they're doing.

12:55As software writes software, it's very hard for other people to catch up to that competitive advantage. Yeah, we've seen that within the S1 for Anthropic in terms of Claude and how much code Claude actually writes for Anthropic in and of itself. But in terms of what also came bare in the S1 is the pricing pressure that is being faced by Anthropic, and actually they reduced their third quarter revenue by$600 million because of pricing pressure. They have to compete against the open source models. Are you worried that ultimately it's going to be a race, I don't want to say to the bottom, but it's going to be a tougher business than we think?

13:32Well, a couple comments on this. First of all, I was a wireless telecom analyst in the late 90s and early 2000s, and everybody was very worried about pricing pressure. The price per minute was coming down a lot. And what happened was it was a very high elasticity. As the price per minute came down, the minutes of use increased more than that pricing pressure. And actually revenues went up, profits went up, capital expenditures went up, and it was a good space to be in. And I think what you're seeing now is there's a huge surge in tokens. I mean, we're growing far more than 10x per year. So pricing pressure is okay as long as there's huge volume demand.

14:07That said, we think the pricing pressure will probably let up somewhat as they keep a tighter rein on these models and allow less distillation from Chinese open-weight models. Brad, thank you. Great to see you. Brad Newman. We've got some more on Palantir. Let's get back to Seema Modi. Palantir shares, by the way, up by about 5 percent. Seema. Hi, Melissa. We have some more comments here from Palantir's CFO, David Glazer. I asked him about whether a stock split or dividend or buyback could be in the cars. That's been a big question going into today's report. And he said, we're so busy executing, we don't think we have time to think about that stuff.

14:44So I just wanted to get that commentary in ahead of the company's earnings call, which does begin at 5 p.m. Eastern. And again, we're expecting that topic to come into discussion, come up in discussion. Again, the CFO telling me that we're so busy executing, they don't really see that stock split in the cards. We're watching Palantir here now up around 1%. Guys? Please. Seema, thanks. Seema Modi. They actually also raise our adjusted free cash flow estimate for the year, 4.8 to 5 billion dollars. And their U.S. commercial revenue guide, which is a big driver of their growth right now. Let's dive into the numbers here with Rosenblatt Security Senior Research Analyst John McPeak.

15:21He's got a buy rating on the stock, raises price target to 260 going into earnings. John, great to have you with us. Your initial take on the quarter here. It checks all the boxes. These guys are accelerating at incredible scale from 93 % to 96%. Top line, I think it's germane that you're talking to them about returning cash when most major enterprise technology companies are burning cash as they fund the AI revolution. So, you know, we saw U.S. commercial accelerate by, let's say, 1 ,100 basis points sequentially to 148 percent year over year. These are just really strong numbers. It's pretty much been strong numbers, has been the pattern for most of Palantir's time, certainly the last couple of years as a public company.

16:17Yet the stock just kind of swings wildly all over the place. And it's always been chalked up to, look, it's very expensive. I mean, even right now, it's like 50 times, you know, current year sales or something like that. So how do you orient investors toward what a proper way, you know, to value the business as you see the business growing from here? Yeah, it's a great question. I think if you look at the EB to sales number, it is mathematically high. but you have a company returning 50 % of every sales dollar in the form of free cash flow. And EPS is around that range as well, or EBIT, I should say.

16:54So if you look at the growth rate here, even excluding the leverage they're getting through the operating model, it's trading at well less than one times its growth rate. At my target of$260, which is 60 times EPS out one year. So I think, you know, this is an old fashioned earnings story, not not a sales multiple story. And they are delivering earnings and free cash flow in spades. I haven't seen the most recent cash on the balance sheet numbers here for for this third quarter. But as I understand it, they had nine billion on their balance sheet in total, John, roughly. And I'm wondering what you think they should if they're not going to return it and they don't really make many acquisitions.

17:39What should be what should they be doing with that? Well, like any technology company to incent their very talented employee pool, they give them options. I think step one would just be to bring the share count to flat, possibly, with some kind of a buyback. And then from there, I think, you know, relative to managing taxes, institutional investors typically prefer a buyback over a dividend. And, you know, relative to their market cap, I think the dividend would be modest, but it would be able to grow in line with free cash flow, which would be positive. How do you assess Palantir's franchise in terms of it being defensible against what is going to be developing from here in terms of AI capacity and what companies want to do with it?

18:29I know, you know, CARP has a view that, you know, they're going to be protecting the data and doing the mission critical stuff and they're going to be crucial. But do you think that holds up? I do. I think they are the arbiter of all these LLM's functions and they can optimize the enterprise AI deployment for privacy. Sovereign AI is a big theme that they talk about. So making sure that the frontier models aren't training their systems on your data. But then also for token expenses. I heard the prior guest talking about frontier models versus open source, open weight. And they can put the right model to work inside their foundry system.

19:17And also integrating all those siloed data sets and applying that AI. I think they have a very defensible platform. John, great to speak with you. Good to get your take. Appreciate it. John McPeak. Thanks for having me. Well, tech continues to struggle. The XLK losing 8 % in just the past three sessions. Can the consumer come to the rescue of the faltering tech trade? That's coming up on Closing Bell Overtime.

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21:32Consumer discretionary was today's top S &P 500 sector. Big drop in oil prices helping the travel names. Marriott moving higher on an earnings beat and raising full-year guidance thanks to improving revenue per available room, especially in Asia, and that Consumer Relief also helping the credit card issuers. Visa and MasterCard both hitting all-time highs today. Obviously, oil prices down, bond yields are in check. Maybe you've gotten even fewer Fed rate hikes in the mix here. So it does seem as if it's encouraging that flush of money into an area that really hasn't been leadership for the market for a while.

22:06Even lodging has been strong for a little bit. Today you did also see airlines get bummed tired. I also think Visa and MasterCard ended up just being these kind of steady quality attributes as opposed to a consumer play. I mean, they're the processors. They don't carry any risk. For Marriott, it was interesting because they did highlight when they reported today the transient traveler, so the personal traveler and how in-person experience. We've heard this time and time again, but they're actually seeing this payoff in U.S. and Canada, which saw up 9 % for RevPAR as well as North America in general.

22:36And then Asia, it's intra-regional mostly. So that was interesting. And luxury. So, again, that K-shaped consumer, Hong Kong and Taiwan were real strong points there. And so that feeds right into pricing and all the rest of it. Exactly. Well, Goldman Sachs reportedly limiting the use of AI tools by traders and bankers. According to Bloomberg, tools such as Anthropics Claude are now for engineers only. Traders have been using the tool for monitoring client accounts and market positions. The move was reportedly made after Goldman reviewed productivity and risk concerns. and it feels like this is going to happen time and time again, especially as the security concerns grow around.

23:13Sure. I mean, obviously you want to see the sort of cost effectiveness of having, you know, AI models do the work that, you know, could basically be a Google search or something else. But also I have wondered about specifically investment banks and commercial banks where it's such a compliance culture and everything has to be kind of built here and vetted and you can't have everybody off doing their own thing in terms of interacting with data. Yeah, particularly proprietary data or client account when agents can go out of sandboxes with no notice. That's a real concern. Well, North Korea is behind last week's record crypto heist, according to the FBI.

23:49Up next, the latest details on that hack and how important cyber theft has become for North Korea, plus instant reaction to Apple's earnings, which are just minutes away. Closing Bell over time. Be right back.

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25:19You give it a project, close your laptop, and when you come back, the job's finished. No matter your industry or role, your agent has the skills to help every team stay in their flow. Seriously, make work less work with Gemini on Google Cloud. Check response, subscription required.

25:48The FBI is blaming North Korea for last week's record$6.3 billion crypto hack of Binance. AI has now provided the country with a new tool for its hacking, which has become one of its most important revenue sources. Eamon Javers has got the latest on the story. Eamon. And Melissa, that's right. The FBI over the weekend officially did name North Korea as the culprit for last week's massive crypto heist from Binance in a statement they released in conjunction with the U.S. Secret Service and the IRS Criminal Investigations Division. The bureau also released a list of hundreds of crypto wallet addresses that are holding the proceeds from the hack.

26:23North Korea has a reputation in cyber circles as being especially good at crypto crime. And although this theft is the largest of all time, it does have certain similarities to other heists that have been attributed to the rogue nation. Now, those cyber skills are driven partly by desperation. One commonly cited statistic holds that as much as 50 percent of North Korea's foreign currency income comes from cyber and crypto crimes. And that revenue helps the country feed its military weapons programs. Meanwhile, Binance began allowing trading again over the weekend. And on social media, the platform said it had already covered 95 percent of the impacted funds.

27:03And then it was working on sourcing crypto tokens for the remaining amount. Earlier today, Binance posted a warning to its customers, though, that opportunistic scammers may try to take advantage as the company resumes these withdrawals. So customers should be on the lookout for phishing or other scam emails about their accounts. Melissa, back over to you. All right, Eamon, thanks. Eamon Javers. You bet. Well, Apple earnings are moments away. Joining us now is Brenda Vangelo, Chief Investment Officer at Sandho Global Advisors. She's an Apple shareholder. And Amit Dharianani from Evercore ISI. Amit, real quick, what would you be first looking for here in these numbers?

27:42You know, with every Apple, pretty focused on the iPhones. So you start with the iPhone, see what demand looks like, especially given how much the price is. That's going to be number one. The second is going to be services and see how big is the deceleration that's driving it. I think those are two numbers. iPhone demand and services, diesel or not, are the two things investors will focus on. How about you, Brenda? I mean, interestingly, it'll be John Turnis' first time at the conference call. So it'll be really interesting to hear how he talks about products and about services and margins, et cetera.

28:13Absolutely. I think that's going to be an important differentiator this time around. If it's a conference call, it's going to be more important as Wall Street really looks to glean any sort of insight into how he is going to lead the company and what his priorities are going to be. We know that he has a background on the device side. So the question is, is he push more innovation on the device piece? But I think for me, the biggest piece is really understanding AI and, you know, AI Siri is in the beta form. We've heard some feedback so far about how that's going. But I think that remains the biggest opportunity for the company really to spur more of a replacement cycle over the long intermediate term.

28:50Amit, is your sense that, you know, the market might be hard to please here simply because Apple's built up such a sort of safety premium over the course of the last few months? Yeah, listen, there's two ways to please the markets with Apple right now. The AI trade keeps going south, which helps Apple, and that's been the narrative. I do think if the numbers are good and there's a positive information update on the personal AI agents, C &E AI from Apple, that could keep the sentiment more positive for Apple versus not. So I do think with a valuation basis, any commentary on personal AI, what they want to do with C &E going forward would be really critical.

29:25Brenda, do you think Apple's too expensive here or getting expensive? I think it is expensive. It's held up remarkably well, especially in a week like last week. But I think what needs to happen is we got Apple earnings. We want to go straight to Mackenzie Cigalos with the numbers. Matt. Hey, Mel, we're seeing Apple shares about a percent lower. It's a beat on revenue coming in at one hundred and fourteen point four eight billion versus one hundred and thirteen point three nine billion dollars expected. That's up twelve percent year over year, despite those supply constraints. Now, EPS, it's coming in at two dollars and ten cents, which is up 14 percent from a year ago.

29:59That includes a five cent benefit from tariff refunds. At this point, we're not comparing that to estimates. Looking at iPhone revenue, of course, this is Apple's biggest business. It counts roughly half of revenue, and that's a beat, coming in at$57.58 billion, which is against an estimate of$56.54 billion. That includes only eight days of sales of that iPhone 18 Pro and Pro Max. Now, services. This is, of course, the high-margin growth engine for Apple, coming in just slightly light, $31.57 billion versus the$31.58 billion estimate. It's up, though, 10 % year over year. In terms of greater China sales, of course, that's been a bright spot over the last year.

30:40It is up 21 % to$17.54 billion in the quarter. Looking at gross margin, so a sense of profitability here, we're not going to be comparing it. It's at 47.9%, but again, that includes favorable impact from those tariff-free funds. That cash-on hand pile,$136.94 billion. CapEx at$2.24 billion, historically a light spender there. Now, in terms of product categories, Mac again outperforming. We're seeing a beat here of$10.79 billion. That is up 24 % year-over-year, really crediting MacBook Neo and Pro Sales. They've never sold more Macs in a fiscal year than they did in 2026. That's a beat against a$9.61 billion estimate.

31:22But iPad and then that wearables home and accessories category both coming in light. Of course, they just made that push in the home category with the home view. I was just back there at Apple Park talking to John Ternus, his first quarter as CEO, asking him about duo demand. Of course, we've seen that that supply is not available until the end of January. He said duo remains constrained today, but he said that the ramp is going well, that they're working hard to get more of them into customers' hands. but at this point, not able to predict when supply and demand will be in balance. And then on the Siri AI strategy, we asked whether or not they're looking to diversify their partners beyond Google, especially as Gemini falls behind on some of these leaderboards.

32:03Turner said they're not. The teams are working very well together, very proud of the work that they've done, building the models that power Siri AI and Apple intelligence that he feels really good about this roadmap ahead. So many of the new products that have come out under him, of course, are powered by Siri AI. And then finally, in terms of how they're thinking through Siri AI and monetizing that, I asked whether or not that was something that they're looking at to do with the services segment. He said we're thinking through many different avenues where Siri AI can make us money. And then one example of that is on the hardware side, that it offers this compelling reason for upgrading or switching.

32:37Of course, the earnings call starts at 5 o 'clock. That's when we're going to get the all-important December guide, which is when they come up against very tough iPhone 17 super cycle comps. And guys, those shares down around 1 % now. Yeah, down around 1.8 % during the regular session, just slightly below that. Mac, thank you so much for running through all that. So, Ahmed, it would seem like most of the key areas more or less kind of checked off the boxes. But what other elements strike you? Yeah, listen, the iPhone numbers look pretty good, almost a billion upside, especially given the fact they only had eight selling days left.

33:13I think you take that along with the strength in Macbook. This is early, but it almost seems like there's very limited demand destruction. Apple is seeing on their hardware products despite having raised prices. That's probably a net positive for them. Gross margins, again, my rough math right now, if you take the tariff benefit they had, this is still 40, 50 basis points, better gross margins, worse than what they're expecting. So I think both those things are pretty good. Services looks a bit weaker. And I think folks will dig into this a lot in terms of what's driving that shortfall. Is it cyclical?

33:44Is it secular? The other part of the watchword is how do they guide services for December? Does the diesel sustain or does it stabilize at least 10 percent levels? So just to understand, Amit, you think even with the tariff refund impact, the gross margins came in above, and it does look like adjusted EPS even when accounting for tariff refund impact is also a B. Is that correct? Yeah, that's my impression. I've got to scrub these numbers out, but I think what Apple had initially said was 50 basis points of benefit on the gross margin line from care. So if you take that out of the 47.9, I think it would apply 47.3, 47.4, something that's good.

34:18That is better on an Apple-to-Apple basis, no pun intended there, to what Apple was expecting. And, Brenda, obviously how this iPhone upgrade cycle proceeds from here is probably the most important incremental data point. But in terms of the AI strategy and what you would hope to get clarity on about how it's going to be implemented and how the products are ready for it, what would you be most interested to hear? Yeah, I mean, what I'm most interested in hearing is, is this product compelling enough to force the 1.3 billion devices out there that are part of that installed base that does not have technology that's able to utilize Siri AI?

35:01is it going to compel those people to upgrade their phone? Because I think that would be, at least to start, the biggest monetary benefit to Apple would be a really enormous upgrade cycle. We've seen a great cycle already with the iPhone 17, no doubt. But I think this would be, you know, even multiples on top of that, potentially better if there really was an incredibly compelling reason to upgrade. Amit, I don't know if you got a chance to look at the China line, 17.54 billion, up 21 % year on year. How does that size up to your expectations? And does this tell us anything about uptake of the new phone over there?

35:43Yeah, I want to say that number is very close. I think folks are looking at 17.1. 17.1 looks slightly better than what folks are expecting on China. Again, the hard part with Apple, I think right now, might be, is this telling us that there's better unit demand, or pricing is just slowing through the model in a really good way. I think the China numbers are a few hundred million better than expected. And again, that data point is in line to iPhones doing better than what sleep is expecting as well. Yeah. Mike, you're making the point that in the regular session, Apple is down like 2 % or 1.5%, something like that.

36:14And it's down less than a percent at this point. And compared to all the other mega cap tech stocks, I mean, this is sort of, it's doing quite well. Very well. I mean, it's obviously expanded its valuation at a time when most of the mega caps have had theirs. I'm impressed. Although I was just looking. One of the reasons for that is, of course, it's not spending as heavily. So it's preserved its free cash flow margins. The gap between Apple's free cash flow yield and the Nasdaq 100 has really narrowed as the Nasdaq 100 has gotten killed. So I think maybe that's sort of, as days go on, a less compelling new reason to sort of give Apple more credit.

36:49All right. Brenda, when I interrupted you for Apple's numbers, you're talking about how you thought Apple was expensive, given the quarter that they posted? Do you still believe Apple is expensive? I think it is. But I think if we look just simply at revenue growth over the last 12 months for this company, it has been nicely in the mid-teens. That is a significant change from where it was the prior couple of years, where we had pretty anemic top-line growth. So the fact that growth has ramped up nicely is a great thing. And probably helping that multiple along with just the fact that this company has a pristine balance sheet, not spending billions and billions on AI infrastructure relative to peers.

37:31But I do think in order to get the stock moving even higher, I think we need to learn that maybe that 10 percent revenue growth number for next year is too light. And I don't know if we're really going to learn that. Of course, some of the things we were talking about earlier, especially with the Siri AI capabilities spurring some kind of replacement cycle, that would certainly help. Although I question, you know, given the company's supply constraints, would it be possible to really fulfill demand in that kind of scenario? But I think we would need to learn that those numbers for next year are a little light in order to really get the stock moving materially higher from where it is today.

38:10Ed Ahmed, do we have a strong sense of the economics of Siri AI for Apple? Yeah, there are none right now is maybe the real answer, right? I mean, the question eventually, I think Brenda had this point earlier, which is, can Siri AI be attractive enough for me to go out and buy a new iPhone, right? I mean, that would be one of the ultimate scenarios that Apple works in a big way. As Siri AI scales up, I do think the model Apple is going to look at is the iCloud model, which is, hey, can I give you a base Siri AI for free and then charge you premiums the way I do for iCloud? I think that's what you could see Apple eventually go to.

38:46But step one, it has to do things that resonate that I want to use on an everyday basis. And I think that hasn't quite gotten there yet. But I think I thought like business models where you'd eventually see this thing evolve towards. Amit, you're going to join the call in about 20 minutes time. So what's your first question to turn us? You know, if I get to ask the question, it will be around personal AI agents and what and how can they do to compete in that space. given what you're seeing with instinct and news. I think that, along with what's happening with supply and demand, will be the big topics of the world.

39:19Got it. Brenda, what's the burning question you have? I think we're just, you know, I don't think he's necessarily going to answer this, but maybe in so many words, but just really understanding his longer-term vision for the company and whether the growth trajectory is going to be any different from the way it was under Tim Cook in terms of incremental changes to hardware and the services offering, or if he has bigger changes in mind on that front. Yeah, who knows? Maybe they'll think about M &A in a way they never did before. It could be a whole break, but maybe not. Thank you so much, Brenda Vangelo and Amit Dharianani.

40:01We've got much more on this busy hour of earnings when Closing Bill Overtime returns.

40:14Welcome back to Closing Bell Overtime live from the NASDAQ market site. Tech unable to rebound from Friday's big loss. The NASDAQ faded into the close. End of the day down more than 1%. S &P 500 losing half a percent. Dow, however, gaining 213 points. Checking in on some of the other after-hours movers on semi lower despite beating by two cents on earnings and a few million on revenue. Fourth quarter earnings guidance seen at or above the current estimate also raising its long-term data center revenue target and acquiring a private company, which it says boosts those data center revenue opportunities.

40:44Shares of Clorox are higher after hours, adding to the strong gains we've seen in the stock and other consumer staples recently. The company reporting earnings of$1.55. That is 48 cents ahead of the estimate. Sales growth and margins also better than expected. But inflation weighing in the company's guidance, it now sees earnings toward the low end of the previous range, which is what analysts were expecting anyway. All right, up next, we'll look at the potential impact on Wall Street if Democrats take control of one or both houses of Congress following tomorrow's midterm elections and whether divided government is really good for investors.

41:24The U.S. midterm elections are tomorrow, and if the polls are to be believed, we are looking at two years of divided government in Washington. Megan Cassella looks at how that outcome could impact economic policy and Wall Street. Megan. Melissa, so gridlock is expected to dominate, but there are going to be some areas where the parties will have to work together. So first, a look at the basics. A Democratic House will gain investigative and oversight powers, and a Democratic Senate would have the power to confirm or reject nominations, most notably to the Supreme Court and to the Federal Reserve.

41:53And as for legislation, Democrats have been clear about their priorities. They include reversing Medicaid cuts, extending Affordable Care Act tax credits, and limiting the president's tariff authority. And there could be some room for dealmaking here. Republicans, for example, have been asking for tens of billions of dollars more in Iran war funding, so Democrats could trade that for a win on health care. And then there are some pressure points on the calendar where we'll have to see some deals. So December 11th is the current deadline to pass a budget. Lawmakers might sign just a short-term extension, which would then set the new Congress up for a possible shutdown soon after getting seated early next year.

42:29The second deadline is the debt ceiling. The government is expected to hit that sometime next summer. That deadline will likely lead to some short-term instability, but it also presents an opportunity for both sides to notch some legislative wins. Guys. Megan, given those legislative priorities that you mentioned there, it seems like all roads lead to a little bit more spending, right? So some domestic spending putbacks, and then maybe they trade some higher defense, you know, expenditures for that. So that would work against the conventional wisdom, I guess, that split government often kind of stymies the fiscal impulse.

43:06It's an interesting point. I was reading a lot of analysis about how a divided government is the best for markets. I will give one caveat, which is I was reading some analysts talking about if Democrats win in a major blue wave, there could then be some market reaction if it starts to ignite some fears about just how blue 2028 might look. If we then see, you know, more tax cuts and that kind of thing, more tax hikes, I should say, and that kind of thing. But it is true that it's not clear in all of this yet how either party is going to pay for any of this. Democrats want to see things that would cost a lot more money, reversing some$1.2 trillion worth of Medicaid cuts, for example.

43:42And because the president would maintain his veto power, there's not a lot that they could do to reverse some tax cuts in the one big, beautiful bill, for example. So we're at a bit of a standstill there. Things like the debt ceiling being on the legislative calendar for probably next summer, you know, those forecasts do move. That will be something that forces both parties to sort of look at the reality of this and find a way to move forward while also, of course, claiming victory for what they want to see happen. Yeah, that's a pretty reliable prediction. Thanks, Megan. We'll talk to you plenty in the next day or so.

44:15Much more on today's after hours earnings action as we count down to Apple and Palantir's earnings calls, plus the big reports on tomorrow's calendar. And as we hit your break, here's a check on some S &P 500 stocks hitting new highs today. Hilton Marriott, Nucor, NASDAQ, and Berkshire Hathaway's Class B shares. Closing bill overtime live from the NASDAQ Market site. We'll be right back.

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