9AM HOUR: Intel Plunges and Amazon Slides in Tech Sell-off, Starbucks and Chevron CEOs Talk Earnings 10/30/26

0:00This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Schwab Market Update, an original podcast from Charles Schwab, provides an information-packed daily market preview on stock updates, U.S. and global economic news, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash marketupdatepodcast or find Schwab Market Update wherever you get your podcasts. At Jared Jewelers, we know it's about more than fine jewelry. It's the moment they open the box. That smile they can't hide.

0:38Knowing you chose exactly right. Because the right gift can bring a lifetime of meaning. A promise. A milestone. A memory in the making. Make every moment unforgettable. Find great gifts starting at$250. Jared. Make the holiday last forever. Shop Jared Jewelers. Market moving insight and analysis. Join Jim Cramer, David Faber and me, Carl Quintanilla, on the opening bell hour of CNBC Squawk on the Street.

1:13Good Friday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer, David Faber at Post 9 of the New York Stock Exchange. We close out the month of October with some pain in tech. The queues looked open down. More than 2.5 % would be the worst gap on an open so far this year. Intel with what may be its worst session since the 70s. West Texas looking at its highest weekly close since April, above 104 roughly. Brent above 117 within pennies of actually setting some new multi-year highs. Robat begins with a deepening global tech route. Major hyperscalers notching declines, losing roughly$900 billion in market value on these concerns over AI spend.

1:52And Amazon and Intel, the latest to drag the sector lower. Plus, for new signs of the Starbucks turnaround strategy are taking root, we're going to be joined in a first on CNBC by the company's chairman and CEO, Brian Nichol. That's just a few minutes from now. And big oil continues to benefit from the wartime boom, refining profits soaring. High diesel fuel prices also, of course, helping. We're going to break down the quarter with Chevron CEO, Mike Worth. He'll join us exclusively a little later. Let's begin with Intel plunging in the pre-market on track now to open at levels not seen in about six months.

2:27The company issuing current quarter guidance below estimates, citing a slowdown in PCs. This is Liboutin on the call last night. The pace of this PC correction has accelerated over the last two months. as our OEM partners are aggressively managing inventory to match the softer sell-through. We expect the current environment to persist until memory availability and prices begin to normalize. Jim, no question from your post last night, you were disappointed. No. Look, I run a public portfolio, and I have since 2004. And periodically you have mistakes. And you either say you made a mistake or you do the stupid stuff I'd say earlier.

3:21Whatever. I made a mistake here. Now, did I get had? I would argue that to agree of that$95 secondary that was recently done, I did get had. I think that the company was really talking about data center and the strength of data center, how old we were going to be four to one in terms of CPU to GPU. But what was in fact in was this tremendous decline in PCs and also was in fact in his loss of shared AMD. And I come back and say, David, that this company, which was saved from bankruptcy, is not ready to do the things that I thought it was. Really? Yes. You know, all right, we're obviously talking in part the guidance in particular around PCs is what may be responsible for a lot of that percentage decline.

4:12Fourth quarter revenue is seen between 15 and 16 billion. Analysts have been looking for as much as 17.1 billion. One fourth quarter is very strong. The slowdown, they say, in PCs continuing at least through the first half of next year. They're citing, of course, what we all know, higher memory prices, dampening demand as a result of higher prices. But you just said something interesting about market share with AMD on CPUs. I misjudged. I thought that they were stabilizing in terms of what business they have with PCs. They're obviously eroding. It's not holding up. Obviously, it was not emphasized.

4:46But I'll tell you from my work last night and my considerable disappointment, you try to say, OK, well, how did this happen? They're losing twice. Now, one of the things that really hurt was that there isn't a soul, Carl, who believes that the shortage of memory ends in 2027, except for maybe the fool's kiosk who did a lot of deals that were idiotic and that reported a terrible quarter. But if you read what if you talk about what anything that you saw from SK Hynix and a lot of that sort of high bandwidth memory, but there is going to be a true shortage. So the shortage is going to last for two, three years.

5:21So the idea that they're saying it's going to be a half year. I mean, are you kidding me? Absolutely. That's why even after today, B of A cuts to neutral, although their target stays 100. Well, look, I mean, there's going to come a time when we really will have a lot of CPUs in the data center. And I hope that a lot of them will be not just ARM and AMD, but maybe Intel. Intel, the$95 secondary was something that I regard in retrospect a very suboptimal deal where they were ill-advised. They should have talked much more about this. I went through what was being written about the PC during that period, and it was that it was about to have a big decline.

6:00But a lot of people bought this stock because they felt that it was a clean way to play the huge CPU, the wave of CPUs that will be bought by the data centers. And what we didn't realize was that we were buying a second-rate CPU that's not being used that much in the PC. That's rough stuff, man. No, you see, rough stuff has to do with a stock that my trust just lost 20. And people entrust in me, in me, what I do. And I fail here. But I am saying that I didn't just fail here because of my own. You feel like you weren't appropriately, what, appropriately notified by the company? Yes. Okay. Yes. I mean, we knew PCs weren't having a great quarter.

6:47We got the IDC data, the Gartner data. It fell dramatically. You could say it fell dramatically in the last two months. And you could say, Jim, what you should have realized was this is really still a CPU company for PCs and that the data center part is, you know, is less. You can say seven billion to eight billion. But I think that the totality of evidence would say that people bought that deal because they felt that there was going to be a sooner pull in to the data center than there is. Now, do I think these people are dishonest? I think they blew it, too. But I would have trusted them to have a better view than HP had, than Best Buy had, than AMD had.

7:27And maybe that was wrong. And I really misjudged. To be fair, we did hear about declining PC demand, even from Microsoft's call. Yes, but you. I mean, it could have been a little bit of a sign. Okay. That's why I'm saying I was wrong, is that I should have been listening to the PC side. Instead, I was thinking about the remarkable resurgence of the CPU. as part of the data set. Well, right, what you're talking about, and we've had guests here as well. We had one on the other day from T. Rowe saying AMD and Intel are his favorite stocks because of CPU demand, because when it comes to inference, as you just pointed out, the ratio of CPUs to GPUs actually reverses, and you buy a lot more CPUs.

8:04And inference, of course, for AI tasks is what is going to dominate. So that's still coming. By the way, there's nothing we have heard this week, guys. It's been an interesting week, starting with the S1. It's been a great week. It's been a super week. Thank you for qualifying. Super. No, it has not been a super week in a lot of different ways. That said, we did get a lot of news that nothing indicates the demand overall for compute is slowing down. You don't think Microsoft's CapEx for the past quarter shows there might be something? I don't know, Carl. I mean, nobody pulled in their CapEx. It met expectations.

8:40Are you saying simply because it didn't exceed them that it's disappointing? Well, they're exercising either a level of discipline or they're going to miss the greatest move ever. I mean, Microsoft didn't have free cash flow of$18 billion. Everybody else has negative free cash flow, right? Amazon certainly deeply negative. Because Amazon has decided that you have to go over the go pattern. They are not three yards. Alphabet negative$9 billion in free cash flow. Because they think it's a go pattern. But all of them are going that way because of the enormous capex spend. Well, then that's why you ought to buy it if that's the case.

9:12Tell me. Intel. And that's how wrong I was. The other thing, Jim, is this long-lasting hope that a good foundry customer would come along. That remains sort of over the horizon. And the Israel disaster of which I found was a disaster I knew was bad. Look, the company may not be—David's engineer, who I greatly respect, the CFO. I think he took a series of ill-advised approaches in a conference call. Because I don't want to ever feel that how could I have been that stupid? How could I have been? I mean, like, didn't I go to college? I didn't go to college. You get stupid. Should the government ring the register on the gains they still have?

9:51When's election day? Tuesday. Okay. Secondary Monday. Let's put it in. I'll do it. I'll do it at 55 right here. 55. I mean, we did talk about it. It was a$600 billion market value. I remember at this desk saying, wow, that's a nice gain. I said they should do it at a hundo. But, you know, you listen to me. I mean, it's a nice gain. Would pay for, remember, we talked a lot about a lot of Patreon missiles that it conceivably would pay for. Yeah. Pay for a lot of things. No, I don't want a 55. Look, it doesn't. It's going to be two years from now. Is the time we have? Are we going to get to Amazon or not?

10:23Well, look, I'll get to anything you want. I just thought it was important to own a mistake that I made. Okay. So we don't have time for Amazon. Because I think that Amazon shouldn't even be down. I'm going to take that contrary position. I'm going to say that Jassy gave you. Come on. What did Jassy do? He did the first prediction he has ever done. He said that you're going to get 40 % growth from AWS for the next two years. I know. He's never offered. He's never offered any guidance. I guess I would only end on the AI discussion pointing out that Google Cloud quarterly revenue was$30.7 billion, 103 % growth.

10:58Azure was$33.2 billion cloud revenue, 48 % growth. And AWS was$46 billion revenue, 39.3 % growth. This is not slowing down. No, it's not at all. 40 % growth. Look at this. We believe that AWS can grow north of 40 % each of 2027, 2028. This guy's never getting you three days' worth of guidance. Right there. Nobody even listened to it. No one listened to him. And yet the AI trade, so to speak, is under significant pressure this week. Well, did you read the piece about N-Scale and AFT? Yeah, you seem to think that was an important piece this morning. I lived next door to the Gowanus for one point.

11:37And, you know, it's always great when you get out there. It's got green bubbles. And now it's a beautiful canal with gondoliers. I know, but you see, that's not going to happen that quickly with big condos. All right. Oh, man. Oh, it says it's. Oh, good. It says that I fell. I did not fall. It's where's the one you're an idiot for buying into. Oh, there it is. There it is. It came up. I think Siri's really good now. That's why Apple was an all-time high yesterday. All right. You got to do Starbucks. All right. Settle down. It was good. Move on. Chevron was good. Come on. Let's go. Right there.

12:08Right there. Okay. Where is the darn hair suit? Oh, shoot. Jesus. I'm sorry, Brian. There we go. That was bad. Starbucks serving up a solid quarter. No, I'm not even going to read that. I don't read that stuff in honor of my late nephew. Starbucks had a great quarter, okay? And Brian Nichols here, and he's going to talk about it. Brian, I'm so thrilled that you're on Squawk on the Street, and I want to congratulate you because you gave me the only thing last night that made me feel like I shouldn't take scalding coffee and dump it on my own. my head. So how is it possible that you were able to beat what's so funny?

12:42Okay, you are doing things like you're back to the way it was. We are now in a position where maybe you can disagree with me. You are no longer running a turnaround. You are now running a high class growth stock that's putting up numbers that look like what I expected in 27 right now in 26. Well, look, I'm excited to talk about coffee and people with you guys. after listening to a little bit of that banter. But thanks, Jim. Yeah, really proud of the quarter that we just had. You know, we think it was a terrific quarter. We had a great year. And I think you're exactly right. We're now onto our growth plan.

13:19And, you know, the thing that's really exciting is these results were driven by us really operating the fundamentals really well. So as a result, we ended up with more customers coming more often into our stores and experiencing the Starbucks experience, which has always been the brand's promise, right? A great cup of coffee, customized the way you want it, in a great third place. And that's what our barista has delivered, frankly, this quarter and this past year. Now, I think it's fair to say that under the Howard Schultz here and the best part of it, you had a four-hour morning, and then I think you slipped to a three-hour morning.

13:54Are you back to a four-hour morning where people are not even just buying coffee, they're also buying pastry, and that has to do with tremendous margin improvement that you're giving us? Yeah, that's exactly right. You know, so we talked a little bit about this on the call. I really am excited about all the growth that we still have in front of us. You know, we've gotten focused on winning the morning again. And the way we, you know, get into the operational side of that is making sure that we execute a three-hour peak with excellence. We've done that. So now we're extending that into a four-hour peak.

14:23So that gives us another growth opportunity to drive more transactions. And then in those transactions, because we've elevated the food, the modifiers, right, like the cold foams, et cetera, people are adding the pastries or in some cases breakfast sandwiches to their drinks. So it's a real growth opportunity. The same thing is going to happen in the afternoon. We're just getting started with redefining that peak. And then as we get that peak under kind of delivering on the performance, we'll extend the afternoon peak. So tremendous opportunity still to be had within the business. I want to talk about something.

14:55We talked to David Ricksham from Lilly. GOP-1 has a negative impact on pretty much every single food there is, except for one, which is coffee. I'm looking at your refresher in the afternoon. I'm looking at the idea of a decaffeinated, light green coffee that people like. And I'm saying to myself that there is something about coffee and, of course, the share that you're taking that may be defeating the GOP-1. because it's good for you. Are you seeing any correlation with the idea that these actual GOP is actually possibly giving you better sales? You know, look, we're definitely well aware of the trend.

15:36And as a result, we've focused our food innovation on making sure that it's kind of like snackable, poppable, the way, frankly, people want to eat in these smaller meals and more protein forward. And then, you know, we've definitely seen that, you know, Everybody enjoys the ritual of coffee in the morning, whether that's an energy refresher is how they get their caffeine or the ritual of an espresso drink in the morning. And then, as you mentioned, Jim, in the afternoon, the ability to have now zero caffeine refreshers and then also give people these experiences with protein. We'll be doing some other functional benefits in these drinks in the afternoon.

16:12That resonates with GLP One users and frankly, all customers. When it comes to food, Brian, where's the line between offering new and exciting menu items and kitchen complexity, so to speak? Yeah, I mean, look, this is one of the things we keep a really close eye on is we have to make sure we can execute this within our operating standards, specifically the service standards. So whatever food we bring onto the menu or whatever beverage we bring onto the menu, sometimes we have to remove things to create the space to do it. Or other times we make sure that it's just standardized with the way that we already do the build or the way we cook items.

16:50And so that's how we really approached it. And I think we've been rewarded nicely. Right now, I don't know if you've tried it, but we have this great black venti chocolate chip cookie. It looks amazing in the pastry case, and it's super easy for our teams to execute. And it goes really well with coffee or the black cat frappuccino that we've got going right now. Send me a thought. us right now. Brian, it's David. A quick question on U.S. comms. They were 7.7 percent last quarter, obviously very large, but you're guiding 4 percent for the year. So why is that? I know your CFO may have talked about a 200 basis points coming from closing stores and customers moving to nearby ones, but can you give us a little more around that?

17:32Yeah, look, our original long-term guidance was three or better, and we definitely see the strength in the business that gave us the confidence to say, okay, we're going to guide now around four. And if you look behind those numbers too, the thing that's really exciting is we are now earning more on each of the transactions or the sales that we're capturing. We had our margin expand by 450 basis points in the fourth quarter. And so it's a difficult consumer environment. We wanted to be prudent in the way we approach our forecast going forward. But I think the thing to take away is we're ahead of schedule.

18:08You know, if you look at what we basically said we were going to do in fiscal year 28, we're already delivering on the low side of that guidance in fiscal year 27. So we feel really good about where we are. And, you know, look, there's nothing better than beating the expectations that we've set. No, I get that. That's what we set out to do. I do wonder, though, are you leaning more? Are you saying in a way you're not relying on new customers as much as you are on increasing price on existing customers? No, actually, what's happening is we're still seeing more customers come in. So you probably saw this even in our rewards program.

18:40Our rewards program went up to 36 million people. We continue to have transaction growth to this date. And what's definitely happening, though, is customers that are coming in are increasing their ticket because they're choosing to add food or they're choosing to add cold foam. So we're seeing both things occur right now where it's really exactly what you want. You've got more people coming in more often. And then we also have those people that are coming in. they're deciding to experience more of the Starbucks menu. Brian, just to close things out, I started by saying it's now a growth company.

19:13What kind of space do you have to add stores in the United States, Mexico, Latin America, Europe, Japan, Asia? Because a real growth story is one that has multiple years of opening stores. How can you give us a roadmap that's really important? Yeah, look, this is what's really amazing about Starbucks. and I've been with the company a little over two years. First of all, the brand is beloved around the world. And what I can tell you is outside the U.S., I'll start there, we've got tremendous growth opportunities. Today we have 22 ,000 stores outside the U.S. There's no reason why we can't double that.

19:50And you see line of sight with our China business. I think we're seeing tremendous opportunities in India. We're seeing tremendous opportunities in Latin America. Frankly, across our entire Asia-Pacific business, You mentioned Japan, South Korea. So there is a lot of growth opportunity to be had outside the United States. And then when you talk about the United States, you know, or Canada as well, North America, we see at least 5 ,000 stores in our future. And we're going to get back to building in a meaningful way in the U.S. And we're going to build on the momentum outside the U.S. You know, our international business, we didn't talk about it much.

20:24But if you exclude China, the shift that we had with the sale, our international business was up 5 % in revenue. and they grew new units at a really significant clip. And we're really excited about where we go from here. Well, Brian, I think you're now, people want to own consumer product good stocks. They want to own consistent growth, get away from tech. They want to own Starbucks. Congratulations on the turn, Brian. Really great job. Send a dozen of the cookies to me. I need maybe two dozen. We'll get you that cappuccino, venti, and some chocolate chip cookies. That will turn your day around.

20:58It's my morning order. The protein at 2 o 'clock is what saves me, Brian. Thank you. We'll get you the protein then. All right. I appreciate it. Cheered me up. Thank you. Good to see you. Take care, guys. Thank you. Speaking of cheering up, we'll get an exclusive with Chevron's Mike Wirth on the company's quarterly beat. Some of these diesel refinery runs. A lot of names are actually higher pre-market, like to Jim's point, Mondelez, Gilead, Rivian, Regeneron. Even with the Qs, looking to endure some pain at the open. Stay with us. Legacy Credit Scores only look at a brief snapshot in time, and that limited view often leaves millions of qualified credit seekers out of the picture.

21:37Vantage Score is changing that by modernizing credit scoring. Vantage Score uses 400 % more credit and alternative data to create a fuller picture of financial behavior, including trended credit data, rental payments, and timely utility payments. Vantage Score safely broadens access to the credit economy and brings 5 million mortgage-ready borrowers into the market. That's why top lenders like Rocket Mortgage, as well as nine of the top 10 banks, rely on Vantage Score 4.0. With higher predictability and greater access to credit, everybody wins. Get started at VantageScore.com. This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab.

22:17Schwab Market Update, an original podcast from Charles Schwab, provides an information-packed daily market preview on stock updates, U.S. and global economic news, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash marketupdatepodcast or find Schwab Market Update wherever you get your podcasts. at Jared Jewelers we know it's about more than fine jewelry it's the moment they open the box that smile they can't hide knowing you chose exactly right because the right gift can bring a lifetime of meaning a promise, a milestone, a memory in the making make every moment unforgettable find great gifts starting at$250 Jared, make the holiday last forever shop Jared Jewelers

23:14All right. A little more than six minutes before we get started with the final opening bell of the week. What do you got for Matt Dash? I don't know if you caught that a bank market down. It took Apple off its one. Okay. And look, I want to talk about this as a strategy. Here's the stock yesterday all-time high, okay? It's selling 40 times earnings, which is a very high multiple. When stocks get to 40 times, it has not been to 40 times. When it's Walmart, it got to 40. It didn't work. that I'm not saying that this is, I'm saying that this is a downgrade where typically you don't get a whole move and catch a good move and ring the register.

23:52I think this is a shrewd downgrade from the point of view of what an analyst can do. I still say own it, don't trade it, because Apple, you have to go through, you're going to get too old. But I just want to point out that that's a call. The guy's, you know, look, made a lot of money for people and wants to go home, and it's totally unreasonable. It's not what I would do, though. As we get towards the final couple of months of the year, Apple is the clear winner amongst the mega caps. And don't forget, the end of October, mutual fund fiscal year ends October. Yeah. You know, and take the gain.

24:23I don't want to do it, but I am pointing out that I like this kind of thing. That's actually smart. Caught the big move. I get it. I get it. 40 times earnings. And that multiple gets high. All right. We've got an opening about five minutes from now, followed by a live interview with, Are there any other kinds of interviews? I guess they're taped. They're taped interviews. But on this show, I don't know. Do we need to tell people we're live? This show is too live. All right, we are live. This is too live. We swear. And he will be too. Buscas un regalo de Navidad que van a apreciar? Cuenta con Nazaro.

24:57The most wanted odd de Parfum Intense empieza con notas de cardamomo, con un toque de la dulzura del toffee y ámbar cálido con notas amaderadas. And if you know someone who needs something stronger that goes with your personality, look for the Most Wanted Parfum or the Forever Wanted Elixir. Buy it already at Macy's and go to explore. Azzaro. Introducing Fidelity Trader Plus, the next generation of advanced trading from Fidelity. Customize your tools and charts and access them seamlessly across desktop, web and mobile. For faster trades, anywhere you go. Try the all-new Fidelity Trader Plus. Learn more about our most powerful trading platform yet at fidelity.com slash trader plus.

25:41Investing involves risk, including risk of loss. Fidelity Brokerage Services, LLC. Member NYSE SIPC. At Jared Jewelers, we know it's about more than fine jewelry. It's the moment they open the box. That smile they can't hide. Knowing you chose exactly right. Because the right gift can bring a lifetime of meaning. A promise, a milestone, a memory in the making. Make every moment unforgettable. Find great gifts starting at$250. Jared, make the holiday last forever. Shop Jared Jewelers.

26:20In recent weeks, our customers began signaling a PC slowdown based on the memory prices and availability. Year-to-date system endpoint prices have increased significantly, placing additional pressure on already limited IT budgets. Intel's Liputan on the call last night elaborating on the PC slowdown. Jim, the pre-market declines, we've seen a number of examples where a name will be down 20 plus percent IBM, now Intel. Yeah, I think that the, and by the way, there, what Liputans really is being about is demand destruction. We finally got to the point where there is demand destruction. You've got to be careful if you're a memory company that you can't take prices up forever.

27:11That hurts. That's why Mike Rimes down 52. I would say that there was a program yesterday in the last half hour of get out of tech, could be related to the end of the fiscal year, and get into everything that has, I have it in my hand. Four-letter symbols. Get out of those. Get into Mondelez, which has a solid 2.3 % growth. Colgate, 4.6. J &J, 5.9. Proctor, 4. This is what you're getting into. Time to get into Twinkies, plus 5. Hershey, plus 3. General Merle's, negative 3. This is what people are buying. They're getting out of things that were holy grail, and they're getting into things that are 3 % and 4 % growth because they feel great about it.

27:53That's what's being bought. We're going to get to some of the names. And Staples, by the way, second-highest TV among the S &P 11. One of my largest additions to my travel truck is Kimberly Clark. Why? Because it was so bad that it can only go up. Let's get the bell here and put October to bed at the big board on Wall Street. It's OPEI. A fintech focused on EM, celebrating an IPO. At the Nasdaq and Times Square, Bamboosa Therapeutics and Biotech, developing antibodies for immunology and inflammation, celebrating its own debut at CBO in Chicago. It's the floor operations team, Jim. Yeah, you see, we had T-Mobile on this week.

28:32Mark Casper, he said these biotechs, it's a floor. We had Thermoelectron, T-Mobile. Yeah, you said T-Mobile. No, T-Mobile, I said. Oh, T-Mobile. That's like with the Google and the ATM, remember? It's the old channel, too. You think I don't go home with that? Listen, sometimes it's hard to hear. Well, that I don't like. You're talking that way. That's true. Okay, I owe you one. Just making sure. I owe you one. Just making sure. Okay, Mark Kass was saying that the number, the amount of orders they're getting from all these new biotechs is extraordinary. So when you hear one, almost every day now, the NASDAQ that has a biotech, and that's orders to TMO.

29:12Right, TMO is the symbol. I get it. Yeah, TMO. Yeah, yeah, yeah, I know. And you're going to remind me of the fact that you knew that Google had an ATM and I didn't. For how long is that going to go on? A long time? A long time. TLDR, my friend. Meanwhile, not to ruin your day again, but yeah, to your point, Intel did sell$23 billion in stock. It's true. Yeah. But you had to bring on. Yeah, yeah, yeah. Well, you know, I'm going to fight back here. We had a good interview with. But that's such a cheap shot. No, it's not a cheap shot. Let's go to Carl. Let's go to Carl. How about, can we talk about Amazon, guys?

29:42Because we haven't really gotten to it. Yeah, why not? That's not personal. Let me tell you something. You moved that Prime Day, it's 400 basis points. You know, you have to use operating income now. You've got to use the$28 billion. You can't use any other than I'm free. They're trailing 12-month free cash flow as negative$42 billion. But they've taken the building. Because they're spending$220 billion on CapEx this year. They think that this is the moment. When you speak with them, they say, listen, Microsoft, Jim, your view of Amy Hood, that she's too cautious. No, Microsoft. They don't think that.

30:14They think Microsoft's too cautious. But its operating profit, to your point, was$28 billion. And that's the highest margin they've also had in their history. I know. So why is the stock down? Well, because it had a miss and a miss. That still matters. But I think you buy Amazon here. I think you buy it because, in truth, if you think that the data center team is not going away, they, not Alphabet, not Alphabet, not them, these guys are the guys that are going to prevail. They're going to have to use a neocloud, one or two. You know, 30 % right off the top if you use one of those neoclouds. I mean, what's remarkable is it's flat for the year.

30:52Coke's up 33 % for the year. I mean, J &J, you name it, UNH, Merck, Amgen. Those are already... It's a different kind of market. It's been a bear market for five months. We're just aware. So you're a buyer of the stealth bear market idea. Yeah, it's been a bear market. Almost two-thirds of the S &P down 20%. Yeah, because I held on to some of these. Not all of them. I got out a lot of them. But I sold Corning and I felt like a complete bozo. In retrospect, that was a really good trade. I sold Marvell. I don't know, David. You sold Marvell. Why? Because I made so much money for my trust. I have a bit of an update on Marvell and momentum.

31:31It's going to be, if it gets announced, one of the largest deals we've seen in tech in a very long time and would rank up there. As I sort of indicated yesterday, what I am hearing is it's going to be all stock. Not a surprise there for Marvell potentially buying. Lumentum, of course, say again. After that unbelievable move in stock, that's a currency and a half. Yeah. So you can take a look there. Marvell is down. Lumentum also down. You know, I am hearing that they more or less had already reached a deal on value and that it is not at a big premium. People are going to care about hearing that.

32:05But we'll see. Perhaps we get a deal as soon as midweek next week. But again, I always caution people things can change. You see it happening right now. the market changes, you need a shareholder vote, all sorts of things there. Remember, Marvell has appeared out of the bid mentioned as a company issue by this or by that. They had that unbelievable analyst meeting. I think that what matters the most is the logic behind it is superior. And you think it's superior. It's a fantastic logic. You know, I mentioned yesterday when we were talking about it, Jim, the antitrust here, not a question. Maybe China, given the optical transceivers that are used components from both companies and are assembled there, could be an issue for the Chinese.

32:41But again, that does appear, at least based on what I'm hearing on track, all stock deal, not that large a premium, and maybe as soon as next week. Moving on to this week, guys, to just come back to it. I just wrote down, you know, Anthropix S1, when it comes to the AI trade, Anthropix S1, generally a positive, a lot of blanks yet to be filled in, but seen as a positive. Oracle, in their investor day, and the fact that they're talking to$30 plus billion in In fiscal year 29, cash flow has to be seen as a positive, doesn't it? The CapEx cycle, all right, Carl brings up Microsoft, but generally you saw acceleration in revenue growth at all the major clouds, Azure, Google, and of course AWS.

33:25And then Microsoft's still able to put up over$18 billion in free cash flow. Why is that not winning the day as opposed to a PC problem at Intel? Google not monetizing search when it comes to AI as well. You want to throw Caterpillar in there? You want to throw Boeing in there? And ServiceNow and SquareNet. Why is that more taking the narrative over than those other things? Well, because a lot of people feel this is peak. And at peak, you don't buy Micron. This is the problem why I have Micron. It's three times earnings. At peak, SK Highest is two times earnings. You know that because people feel the earnings are going to fall off dramatically.

34:02One of the reasons why I like Amazon is because it has a lot of businesses that are away from that. That's the thing. The argument for Amazon is it doesn't have a core problem like you might say Alphabet does. Right. I think Alphabet, there isn't any way. Look, I look at surveys to say that Gemini is just no longer, you know, it's bottom of mind. But the idea that Western Digital and SanDisk and Seagate can keep going up because they're not building factories fast enough and because they have people in allocation, that does not jive with the PC. Look, if PCs are really in a secular decline, then all those companies are at peak earnings.

34:43And so that's what people think, David, that's peak earnings. Some of these are Google, change of algo. Well, you know, when it comes to Alphabet, a pretty stunning loss of market value yesterday today with the stock down over 10 plus percent, loss of almost half a trillion dollars in market value. David, even YouTube is not good. You pointed that out. Even YouTube is not good. Well, YouTube is not good versus what people expected. It's still dominant. It's still growing faster than any other media company. But look, I just feel like that search is in question. I don't feel that retail and Amazon Web Services are in question.

35:17I do think that Amazon said, listen, we're going to spend the armies, but don't worry, late 27, we're going to start seeing some great money from semis. That has to happen, Carl. That has to happen, or we're going to be talking about that company as being more than spending much. By the way, yesterday, you and I, I thought, did a patting something back. We covered a lot of names with earnings. We missed Merck. And by the way, that stock was up yesterday sharply. And I noticed Farmer Today has a really strong bid as well, Merck leading. Well, between AZN and Regeneron. AZN has the most drugs in front of the FDA of any pharmaceutical.

35:55The numbers from Lenz Schleifer, Regeneron, they were classically great. That's a two-year high on Regeneron, by the way. Regeneron had just a fantastic set of numbers. So AMGEN has been consistent. So what you look at is you say, why do I need Western Digital or why do I need Intel when Len Schleifer is putting out these numbers and the P in multiples is a 15. That's where the money's going, man. Sorry, literally also up another 4%. The money's going there, yeah. What's not helping the tech vibe, though, Jim, is this Binance hack and the notion that maybe the North Koreans got away with$6 billion in theft.

36:35Well, I do think that you'll see money. Look, we don't even know what kind of cybersecurity those companies have. We do know that the North Koreans are very sophisticated about using our technology. They are. I mean, I'm only reading the reporting. It does appear to be sort of more, not an AI, necessarily AI tools, the new tools hack, as much as old-fashioned getting a hold of some person's developer's laptop and getting in. Not that that should give people comfort, but it's a big number. Look, there's no FDIC there. No. It made me feel like, ooh, I love FDIC. I know. Strategy down 11 here on a BTC yield that disappoints.

37:19Yes. That's a multi-month low. And, of course, Bitcoin itself below$78K. Yeah. And Robinhood quarter really wasn't that great. It was much too much Bitcoin and much too much option. The zero-day option phenomenon, unfortunate. And then, of course, hey, let's talk about polymarket for a second. Okay, there. I said it. Chevron just delivered a monster quarter.

37:44How about these guys that we have on today? We've got Starbucks, we've got Mike Worth from Chevron. Mike, I don't know how you're doing it, but you seem to be the person who's most taking advantage of the higher oil prices. Welcome to Squelp on the Street. And I think you're pulling it off, Mike. Well, good morning, guys. The headline was another quarter of outstanding operations, disciplined execution while we're investing to grow future supply. In the U.S., our oil and gas production is up 27 percent over the last two years, more than two million barrels a day. For the fifth quarter in a row in the U.S., the Permian Basin was over a million barrels a day.

38:21For the sixth consecutive quarter, we had a record in the deep water Gulf of America. In our refining business, we had record U.S. crude throughput. We increased our diesel and jet yields by more than 10 percent. And we're investing to grow in places like Venezuela, Argentina, Guyana. So strong operations today and investing for future supplies that the world will need. Let's talk about Venezuela. I was surprised in your commentary, your deck, you're right out there. I know even maybe five months ago you weren't certain. You probably spent more time in Venezuela than any of the American executives.

38:56But this growing supply, does it not exceed what you thought could happen there? We've got three joint ventures there that will invest over$7 billion over the next five years. Production will grow more than two times to roughly 600 ,000 barrels a day out of those ventures by 2031. And we market 100 percent of that crude oil, the majority which comes to the U.S., including our refineries, which were designed to run this crude. So we've seen real progress in Venezuela in terms of the fiscal terms of the contracts. And we're committed to investing to grow supply to bring to the United States. All right.

39:37Let me ask you about a political issue that involves your company. The European continent is obviously very short natural gas. You have a property that may be the largest Leviathan off the coast of Israel. Is it possible, given the state of Israel and the conflicts that we've seen, that these countries in Europe would be able to work with you to take natural gas that is off the coast of Israel? We're growing the Leviathan production. We just brought a third gathering line on this year. We've got an expansion project underway, which will increase capacity even further before the end of the decade.

40:18Most of that gas today goes into regional markets in Israel, Jordan, Egypt particularly, and the growth market is Egypt. We've had discussions to try to get this gas to Europe. We would need to get it liquefied and on an LNG carrier, or potentially to see a large pipeline built from the eastern Mediterranean into Europe. That would take several years and a significant amount of capital. But we're in discussions to try to help Europe meet its energy needs. Investment in European energy has been declining. The policies there have discouraged investment. And so increasingly, Europe is exposed to a need for imports.

40:57And we're looking to meet that with LNG and other types of energy supply. Thank you. Before I give over to my clients, to my customers here, David and Carl. Your colleagues. We're not your customers or your clients. There's something I wanted to ask you, Mike, which is that there are two disparate areas. But New Mexico and Iraq are two of the least exploited areas in the world. It seems like New Mexico could be the next big part of the Permian. And you threw out Iraq in here as being a place that you think there's growth. These are areas that I didn't know about. Can you tell us about it? Sure.

41:32New Mexico is actually the western part of the Permian Basin. It's a sub-basin called the Delaware Basin. And it's where most of our investment activity is underway. We've recently piloted some new technology and we're rolling it out now at full scale. Some specialty proprietary chemicals, which have shown up to a 23 percent increase in 12 month production out of a single well. And so that's a significant improvement in productivity that we see in New Mexico. A big focus of our capital program going forward will be the development of our resources in New Mexico. And in Iraq, we're in discussions to enter a very large existing field and to do some exploration in other areas that are very prospective.

42:17For a long time after the war, the fiscal terms in Iraq did not generate returns on investment that would compete with other options that we have within our portfolio. That is changing. And the negotiations we're involved in offer more attractive returns on investment. It's a very large resource area. And we're optimistic that we'll successfully conclude these negotiations and establish operations in Iraq as early as next year. Mike, it's David. I wanted to ask you about capital allocation. I think you're generating more cash than you have at any point in many years. But your buybacks, you know, are running at about$2.5 billion a quarter.

42:57That's actually lower than a year ago. And I'm just curious why you're not buying back more stock. David, we've got a set of consistent financial priorities that are focused on capital and cost discipline. We've raised our dividend for 39 consecutive years at a 7 % compound annual growth rate for the last 25 years. We've repurchased shares 19 of the last 23 years through cycles, both up and down cycles. And we try to stay steady through the cycle, not really step things up in a pro-cyclical manner when the stock prices reflect current commodity markets. And likewise, during 2020, when we saw negative oil prices and most people turned their buyback program off and stock prices reflected the uncertainty in the environment, we actually repurchase shares in 2020.

43:49So we have a steady through-the-cycle approach to returning cash to our shareholders through both steady dividend growth and a rateable repurchase program of our shares. All right. I mean, your net debt's like 0.4 times cash flow. You got 13 billion in cash. I just, I get it, but I am curious as to whether shareholders may say, come on, can't we get the next dollar? Well, a strong balance sheet is never a bad thing in a cyclical commodity business. The one thing we know for certain is on the other side of an up cycle, there's usually a down cycle. And a strong balance sheet is your friend. We had over 100 companies in our industry declared bankruptcy in 2020 during the pandemic.

44:29And many of them did not have the balance sheet strength to weather the cycles of this industry. And so over time, that cash comes back to shareholders, as I said, in a very rateable and disciplined and reliable manner. And we're proud of our track record on both the dividend and the share buyback. Mike, you've been pretty plain spoken about the duration risk to the economy. If energy prices has remained this high back in September. You said a lot of those buffers were played out. I just wonder how you think about that risk now, given some of the levels we're seeing in strategic reserves all around the world.

45:05Well, we certainly see elevated prices for both crude oil and for refined products around the world, reflecting those lower inventories. The greater costs that we're seeing, particularly in transportation, where shipping costs have reached all-time records by orders of several multiples. And crude flows and product flows remain at risk. So the system is under stress. The environment in multiple regions, both the Strait of Hormuz and the Gulf, the Red Sea with the conflict between Saudi Arabia and the Houthis, and in the Russia-Ukraine conflict are having real impact on the flows of energy into markets.

45:48They've constricted both production and then the ability to export. And the market prices those in, and we remain in an environment that is fairly fragile. Mike, do you think, after all the things that you've seen in the U.S., because you've been unbelievable there, that maybe we can have much more oil per day in this country? Can we ever get to something like 20 million? Well, we were down around 5 or 6 million barrels a day in the 2000s. And the conventional wisdom at that point is we were going to continue to see that decrease. Today we're, you know, 13 point something on the weight of 14 million barrels a day.

46:33So a significant change really driven by the shale revolution. 20 million barrels a day of oil production would be a significant step up from where we are today. But I've learned, after 45 years in this business, to be pretty humble about predictions because most people didn't see the U.S. being the largest producer in the world ever again. And, in fact, we are. And so I think the industry will respond to the demand signals that we see in the marketplace. The U.S. is blessed with an abundance of resource. I'm very encouraged by the permitting reform bill that is moving its way through Congress and hopefully on its way to successful passage and being signed by the president, which I think would be a big boost for all types of energy in this country, renewable energy, conventional energy, infrastructure, which would allow us to invest in the resources we have and generate more supply.

47:28All right. Well, Mike, congratulations on another great quarter. I love your globe-trotting. I think that the way you've learned to get tired and still deliver, I think is amazing. Mike Wirth, run Chevron. Thank you, Mike. Good to see you. Good to see you. As we go to break, watch Bonds. Just got Chicago PMI a couple of moments ago. 55-3 is a miss. We were looking for 56. But that 10-year got down to 4-9-1, almost a 7 or 8-week low. There we go. Go by Hershey. Yep, there is some silver lining there. We're back in a minute. There's a look at the NDX. It's going to take you back a few months, down a little more than 2.5%, lowest since August 3rd.

48:09Intel opens down about 29%. It's a crescendo give-up with some of these. Wow. Crescendo give-up. Yep, as we close out October. We'll be back in a minute. Jim, let's get stopped trading. Carl, we have a stock called FedEx Freight Holding for the Travel Trust. It's just better for FedEx, and it's been doing great. It's one of those things they've got laser focus. A lot of companies say, listen, we have line of sight. I heard a guy say, I have line of sight to who's going to win Powerball tonight. Well, these guys actually have line of sight because they're doing so much better separate from FedEx.

48:41They're in a whole new group of verticals. They're in food, defense. And what they've done is they've renegotiated contracts much higher. So congratulations to them. Now, they have a big chunk of stock that's owned by FedEx when that trades. Yeah, UPS as well. Three-month high, Jim. Watch tonight. No, my name's Intel. I'm an Intel a-holic. I got to tell you something. I need you to be quickly. We will stay on top of Intel. There it is. A 30 % drop. That is the worst day on record if it stands. We're back in a minute. You've been listening to the opening bell on CNBC's Squawk on the Street. All opinions expressed by Squawk on the Street participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by them on television, radio, internet, or another medium.

49:28You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Such opinions are based upon information Squawk on the Street participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Squawk on the Street disclaimer, please visit CNBC.com forward slash Squawk on the Street disclaimer. Hey, Fidelity. How can I remember to invest every month? With the Fidelity app, you can choose a schedule and set up recurring investments in stocks and ETFs.

50:05Oh, that sounds easier than I thought. You got this. Yeah, I do. Now, where did I put my keys? You will find them where you left them. Investing involves risk, including risk of loss. Fidelity Brokerage Services, LLC. Member NYSE SIPC.