Apple Earnings Next Week… And Housing Stocks Soar 7/24/26

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1:09Some$12 trillion worth of companies reporting their earnings next week. What to expect from these results after the volatility that we've already seen this week. And odds of a rate hike steadily rising as oil prices trade near more than one month highs. What the Fed could signal about the future policy next week and how it could impact your money. Plus, Intel's start post-earnings reversal, what Amex results say about the high-end consumer. And is there any hope that SpaceX shares could lift off the latest read on the recent IPO? And why one analyst says the Elon Musk innovation premium, that's already priced in.

1:44I am Frank Holland in for Melissa Lee coming to you live from Studio B right here at the NASDAQ. On the desk tonight, we have Courtney Garcia, Bono and Eisen, Mike Coe, and Katarina Simonetti, executive director of Morgan Stanley Private Wealth Management. And we start with what could be a make or break week for the markets. Big tech names like Microsoft, Meta, Apple and Amazon, all of them set to report their earnings next week. We're showing it right there. Apple seeing some solid gains today ahead of that report closing just a half a percent away from a record high. Investors will be keyed in for indications of how much CapEx these companies are planning for the year ahead.

2:18After all, news that Alphabet expects to spend more than originally forecast, it really sent those shares plunging yesterday. So next week's results kind of ease investor concerns where they cause the recent sell-off to gather even more steam. Courtney, I'm going to start with you right here. What do you think? We've got some big names coming up, and I want to point this out. Microsoft actually reports on the day of the Fed meeting, and as we know, interest rates all of a sudden, that's a big part of the big tech story. Correct. Yeah, and I think CapEx, that's really what investors are worried about right now.

2:47Because you're seeing if Alphabet is any sort of indication, they increase their CapEx year-over-year 101%. And then you saw Tesla come out, and they increase it by over 140 % year-over-year. And you're just seeing this huge race toward artificial intelligence. And no one really knows when that's going to become profitable for these companies, even though their core businesses are profitable. And Alphabet actually had a negative cash flow. So I think you're really just starting to be concerned about this. And I think if it's any indication, if that continues for these companies next week, they probably are going to get hit.

3:18And that's where Apple may be interesting because they're one of the few who hasn't had this huge CapEx spending that a lot of their competitors have. So absolutely something to watch this week. But it is a concern, especially because they all said that they are going to substantially increase their CapEx in 2027. And what that means, we don't know yet. Katarina, are you sure on those concerns? I mean, we're talking about CapEx, but I also want to go back to Alphabet because we mentioned it. Huge growth in their cloud business. And also, I just want to talk about earnings for a second. LSE came out with the numbers.

3:45Earnings for the quarter are going to be 38 percent higher. But if you look at tech, up about 66, 67 percent. Communication services, up about 112 percent. We're talking about earnings growth. So should we be focused on the CapEx or these other factors that can move the market? Well, I think most importantly, investors are starting to really care about CapEx. And we went from the momentum where, like, we were talking about picks and shovels and building up infrastructure. And now it seems that the focus has shifted to monetization. What is demand for your services? What is the competition? Can older type of AI can be used because it's cheaper or this newest top edge technology has a demand and you will be able to place it?

4:28But most importantly, at what point all these investments that they're making in their businesses is going to turn into earnings? And that is top of mind for investors. Yeah. A lot of people talking about CapEx might go. A lot of people talking about this other phrase, return on invested capital. That's exactly right. Yeah. Yeah. You know, it's interesting. I would probably just draw a little bit of a distinction between companies like Tesla and companies like Alphabet. You know, Courtney was talking about the fact that some of the CapEx coming out of Tesla was a little higher than expected. But in terms of orders of scale, it's really quite small compared to some of the other names we're talking about.

5:03We're really looking at a little over$5 billion in CapEx, and they ended up with about a negative billion for the quarter in free cash flow. In the case of something like Alphabet, number one, I think they actually have a way to monetize all of this. I think that is a positive. The second thing is that a lot of those companies, like the Alphabet's of the world, Microsoft, Amazon, when they spend big, if it turns out meta, I should also add, if these companies spend really big and it turns out that they're not monetizing as effectively they are very good organic free cash flow generators on their own so you know i think alphabet and amazon and meta all have a way to monetize this and the worst thing that could potentially happen is that they overspend a little bit it's companies like oracle and tesla where it's a little bit harder to see how it's going to work in oracle's case obviously the the news between open and microsoft this week was a little bit troubling because it makes you wonder where those dollars are going to come from that they have contracted with OpenAI.

6:01You know, Bono, when Mike's saying, you know, it'd be bad if they overspent a little bit, but I think there's so many concerns about that return on invested capital, all the way going back to when Alex Karp was right here on CNBC, actually here at the NASDAQ on Squawk Box, just talking about a lot of companies that are not only concerned about their return on capital, but they're concerned about losing their IP, which may just kind of lead to a longer-term disruption in this whole AI trade. Yes, I mean, that's a great point. Mike did a great job kind of juxtaposing some of the different cohorts.

6:28One name that was left off was Microsoft, so I'll call attention there. I think there's two drivers there. One, you know, if Alphabet is any indication, you would expect there to be robust cloud revenue growth there, right? So that's one vertical that they have. And then you mentioned IP and kind of connectivity within the enterprise cohort. And I think Microsoft is really there. The third thing that I'll mention is just the price action leading into an earnings print and quarterly results. So Microsoft has been a laggard. A lot of us has mentioned it. Bellwether, nonetheless. And I think that perhaps the price action leading into the quarter may actually serve them well.

7:09I mean, it's tough to kind of call it. I think you can't ignore Alphabet's results. Clearly, CapEx is going to continue to accelerate. And you're in a situation now where you're in more or less of an arms race where you can't afford to fall behind. I would say Apple has kind of bucked that trend, but that is not a hyperscaler. It's a MedSupps 7 company, but its business model is strategically very different than the rest of the groups in the name. All right. Thanks, Bono. I just want to come back to you and let you respond. One other factor in Alphabet, I don't know if you mentioned it here on a previous show, but they also issued about$40 billion in new equity.

7:46So that's certainly another factor when it comes to the stock. But I want to go back to Microsoft as well. Reports on the day of the Fed decision, that could also be a factor. But what about Bono's point about Microsoft that maybe it's a favorable entry point into the print? Yeah. And I do think you want to look at it. I don't think this trade is over. I just also don't know if this is going to outperform the way it has been, because you're seeing this cash flow is moving from the hyperscalers into the chip makers. And I also think you're seeing things like your mid caps and your small caps. Those forward earnings are also reaching all-time highs.

8:16There's so many areas of the market that you want to take a look at. So, yes, I do think these can be entry opportunities when these pull back, because this trade isn't over. But I don't think you want to ignore the rest of the market, because this broadening that has happened, I think, is going to continue. And today is a really good example of that, where you're seeing the equal weight S &P is outperforming the S &P 500. So even though we talk about these exciting hyperscalers and the more sexy names, there's so many other ones that are doing really well right now. And I don't want to ignore that either.

8:43Yeah, broad-end trade has been kind of outperforming the market cap weight of S &P for quite a bit. But I want to turn back to Apple for a minute. For more on what we can expect when Apple reports on Thursday, I want to bring in our Mackenzie Cigalos. Mac. So, Frank, it is a hugely symbolic quarter for Apple. Tim Cook's final earnings report as CEO after 15 years at the helm. But Wall Street, its focus is really going into this print on whether Apple can use price increases to lift earnings even as unit growth slows. Morgan Stanley expects a modest June quarter beat, but sees more upside in September as higher prices across devices and services offset slightly lower unit sales.

9:20The bank's revenue and EPS forecasts for next year are 8 % above consensus, and it raised its price target to$364, about 9 % above where shares trade now. Apple may also be making those increases easier to absorb. A new upgrade program reportedly launches two days before earnings, letting customers spread a higher sticker price across the monthly payment. The tradeoff, of course, is margin pressure. Component costs are rising quickly, and Morgan Stanley estimates that Apple may need to charge$200 more for the iPhone 18 Pro just to preserve a 40 % gross margin. But China again expected to be a bright spot, with demand improving and July iPhone sell-through back to double-digit growth.

10:01Baird also raising its price target, saying it expects iPhone revenue up 22 % this quarter. But at roughly 34 times forward earnings, there is little room for disappointment as Cook rounds out his tenure as CEO. Frank. All right, Mac, thank you very much. our Mackenzie Segalos, the very latest on Apple. Bono, I want to come over to you. What is your take on this Apple report coming up next week? Even the price action that we've seen in the other large technology names, the fact that Apple hasn't invested so heavily in CapEx, I think, sets up favorably. I can't argue against evaluation. 35, 36 times forward is tough.

10:38But if you look at that last quarter, we're talking about 16, 17 percent top-line growth. And I believe it was 20 to 22 percent expected on the bottom line. The argument against Apple is that it's been a bond like compounder for so long and hasn't had that growth. So as long as it can continue to do that and can continue to expand margins as it's done last quarter, I think there is still an argument to be made that it is viewed as having a higher margin of safety in an AI related or tech related sell off. Katarina, coming over to you, Apple trading about 34, 36 times forward earnings, as Bono mentioned.

11:11mentioned, by the way, the market's trading at about 20 times forward earnings. So it seems like that's a pretty high bar for this earnings report. Well, the question is, as Courtney said, it's not where the valuation is currently. Can it actually continue to grow at the level it has been and setting realistic expectations? Because over the last couple of years, what we're seeing is overcrowding in one security, overcrowding in one space. And while we still like our hyperscalers and we like the tech, you know, we're by no means are saying that we need to abandon the sector. How much of it is appropriate for a well-balanced portfolio, portfolio that is not only managed for growth, but also for risk?

11:52All right. Huge earnings week coming up next week for the MAG-7. UPS as well. By the way, I'll be talking to the UPS CEO next week as well. All right. Now turning to the oil market, WTI crude retreating 3 percent. This total below 90 bucks a barrel, the latest move amid reports that Pakistan is looking to restart talks between the U.S. and Iran. Our Eamon Javers joins us with the very latest on this story. Eamon. Yeah, Frank, and the big question here is, will we see more negotiations or will we see more intensified military action over the weekend? We just heard from the president in the Oval Office the past hour.

12:23He was asked about comments he made to Axios saying he's considering a massive attack on Iran that would be like nothing they've seen before, a military escalation. And his answer, you know, he he certainly doesn't deny it. He says he's ready to go, but doesn't say what exactly he's decided. Here's what he said. We are talking to them right now. Look, there are two ways I consider that the smarter way, but the other is probably the easier way doing what we're doing. And we can take that to a much higher level if you want to. You know, we're prepared to do that. As you know, we're locked and loaded.

12:58We're locked and loaded and ready to go. So, Frank, you hear the president there saying that the United States is locked and loaded, no indication of what he's decided yet. So we'll watch that over the next 48 hours. The other big question on a lot of investors' mind is the Saudi nuclear deal. Remember, the president, his administration signed off on the Saudi nuclear deal earlier in the week, signing an agreement with the Saudis to allow civilian nuclear power in that country, not military. And then we saw the president the next day come out and say, well, actually, no, there's some conditions on this deal.

13:31The Saudis have to sign off on the Abraham Accords and recognize the nation of Israel in order for this deal to go through. The problem was the deal had already gone through. It had already been signed. And there's really not a way, as far as we can tell, for the president to claw that deal back unless Congress is to override him. So the president trying to put some conditions retroactively on the deal. He was asked about that in the Oval Office today. I, you know, I reread the transcript of his answers. It's not clear whether he's withdrawing that condition or not. Seems like maybe he might be, but really not clear where that one stands right now.

14:04Yeah, a lot of questions when it comes to the straighter four moves in just that entire area. Our Aemon Javers, thank you very much for that report. Mike Coe, I want to come over to you. Yeah, it's interesting on the back of that. Obviously, we did see oil sell off a little bit. If we take a look at the options markets, you know, you've got WTI up. I think maybe Brent is probably the better analog for what's going on. And the most active contracts there traded about 20 % above average put volume. It was the SEP 85 and 82 strike puts that were trading in Brent. Some people are betting that there could be further downside.

14:38The problem with these negotiations, though, seems like there's multiple factions there. And you can maybe agree with one or two of them and still have another three that you have to contend with. So I'm going to wait and see before I really start pressing shorts on crude here. Yeah, looking at Brent crude right now down about two and a third percent. All right. Now to a developing story. Paramount Skydance down over three percent late in the day after agreeing to delay its planned merger with Warner Brothers Discovery. Our Julia Borsten joins us now with the details. Julia. That's right, Frank.

15:10Big news here. Paramount has agreed to delay the Warner Brothers merger until June 1st, 2027, unless a judge issues a ruling before then. This means that the ticking fee that Paramount agreed to pay to Warner Brothers shareholders if the deal closing is delayed beyond September 30th is likely to go into effect. Now, Paramount has agreed to pay the equivalent of about$7 million a day starting after September 30th, which means by June, end of June, Paramount could be paying an additional$1.7 billion for Warner Brothers' discovery. Now, despite that additional payment, Paramount calls this clarity a win.

15:48Paramount saying in a statement, quote, Today's agreement is a significant win because the result is exactly what we have sought from the outset, a direct path to a trial based on the evidence. This is the fastest and clearest way to prove that this transaction is good for competition. Now, New York Attorney General Letitia James also calls this a win, saying, quote, Halting this merger while our case proceeds is a critical victory in our efforts to uphold the law and protect the film and television industries. Paramount is paying over$110 billion for Warner Brothers Discovery, including debt, before any ticking fees.

16:25If the deal falls apart, Paramount is committed to paying a$7 billion breakup fee. And remember, it paid a$3 billion breakup fee to Netflix. So, Frank, this is one to watch as this trial progresses. Yeah, certainly want to watch. We're looking at Paramount's guidance shares pulling back about 3%. Julia, thank you very much. Bono, I want to come over to you. Your take on the idea of this delay and kind of an increased cost to acquire Warner Brothers if the deal does go through. I think considering the debt that the new entity would have, I yes, I can understand that getting a clear path to a resolution going through the proper legal channels is considered a win on its front.

17:04But I think if I'm purely focused on the quantitative metrics, essentially paying, what is it, 15 to 20 percent of what the breakup would be breakup fee would be as a ticking fee. I don't know how I can see that as a marginal positive. All right, Courtney, your take on this. Obviously, this asset, Warner Brothers Discovery, Netflix wanted it. Then Paramount, Skydance basically fought them for it tooth and nail. Now they're on the path to having it, but it just could be more expensive. Yeah, I mean, I think looking at these kind of fees and the fact that it is stalling, I don't think this is something that I'd be jumping into from a stock perspective.

17:36I don't think this is going to create some sort of catalyst of a reason to be in there. So I think it's something to follow, absolutely, because you're right. This is like a jewel that everybody wanted and was bidding over. But with these kind of fees, I would hang tight here and watch this. Yeah, by the way, since Paramount Scott Dance reached the deal to get Warner Brothers, those shares are down more than 25 percent. All right, coming up, a semi-stumble. Intel giving up its post-earnings gains. What changed after last night's results to send those shares sharply lower, plus a hard landing for SpaceX with the stock closing at fresh lows?

18:05We're going to dig into one bold, variable Wall Street call that any good news might already be priced into this one. Don't go anywhere. Fast Money's back in just two.

18:17You're watching Fast Money here on CNBC. We'll be right back. The board recommends approving. Regarding that seat on the committee, we're promoting... ...to boost quarterly earnings... Every day, shareholders meet to discuss important matters about the companies you invest in. Now you can easily make your voice heard. Vanguard Investor Choice gives you a say in the companies you invest in. With just a few taps, you can set your proxy voting preference for your index funds. Visit vanguard.com slash investorchoice to learn more. Vanguard Investors own shares of our index funds, which own shares of the companies they invest in.

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19:32And with Discover, you can get this. Discover automatically matches all the cash back you've earned at the end of your first year. Seriously, all of it. And we trust you to make smart decisions. After all, you listen to this show. See terms at discover.com credit card. And welcome back to Fast Money. Shares of Qualcomm dropping over 2 % today. The company reportedly warning customers that prices could rise by double digits due to higher input costs. The change will apply to products shipped after September the 1st, and that's according to the FT. Qualcomm reports earnings on Wednesday after the bell.

20:08Shares are down 35 % from their 52-week high. Corp. What I find interesting about this is you've seen the same thing from Apple with their memory chips, where this actually could be one of the causes of inflation. So we're talking a lot about oil prices and that that may be spiking inflation. You bring up that the Fed is meeting next week. So if we see oil spiking, you also see AI inflation. This could be a reason why the Fed either can't lower rates or may have to raise rates in the future. That's why you're seeing those expectations of Fed rate hikes actually rising here. I don't think they're actually going to rise this week, but I do think all of these inputs, the more you hear this, the more it makes the Fed's job a little more difficult.

20:43Mike, over to you. Yeah, I mean, as far as Fed rate hikes are concerned, I think if anybody is looking for a barometer on whether that's likely or not, probably the best indicator you're going to get is the same one that we've had for the last quarter of a century now, which is the two-year Treasury. So the two-year Treasury has been ticking up consistently since the strikes in the Middle East. And I think the chances of any kind of a rate cut this year are essentially nil. And the chances of a rate hike at this point are actually quite good. So, you know, I wouldn't hold out any hope that the meeting is going to deliver any good news for investors on that front necessarily.

21:18Now, of course, a lot of these inflationary pressures are idiosyncratic, though. And so I'm not exactly sure what a Fed rate hike would actually do to resolve them, particularly those inflationary pressures that are driven by higher energy costs. Yeah, absolutely. Also, we get PCE next week after CPI previously a couple of weeks ago. Kevin Wors said it's not mission accomplished. It was at three point five. So we'll have to wait and see what he says this time around. All right. Meantime, a big reversal in shares of Intel today. The stock was up double digits last night after earnings. It actually ended the day down nearly 8 percent, despite posting its best revenue growth in nearly 15 years.

21:52The stock now down five weeks in a row and has lost 35 percent since hitting a record high last month. Bonoan, over to you. In all cases, I think you really need to kind of focus on where the stock is coming from, as opposed to in a particular vacuum. And as you mentioned, the stock has had a tremendous run. There is no argument against the tremendous quarter that they had. With that said, they have, again, committed to reigniting CapEx. And I think that the concerns around BAB still persist. I think that one investor cohort takes this CapEx spending as confidence that they are seeing the customer acquisition, the customer expansion, the TAM, all growing.

22:36On the other hand, it is not immune from the same criticism that the other hyperscalers are facing in terms of overspending capex. And they simply don't have the same fortress balance sheet position that those other capex spenders are coming from. So I expect this to come under quite a bit of scrutiny. Katarina, coming over to you, your thoughts about chips in general. I often at least call the hyperscalers, the check writers, these guys are the check cashers, but they've been under some pressure. And it's also is the case of selling the news at some point because the overall news is positive.