tv Tech Check CNBC May 26, 2022 11:00am-12:00pm EDT
crops now that we're going to buy a few months out i don't want to be the bearer of bad news but food inflation may get worse. we'll talk about it tonight. >> looking forward to it >> my husband was born in rock island >> that's going to do it for us. the market is up nicely. let's send it over to tech check which starts now >> good thursday morning today forecast show white snow high gross tech takes another leg lower. both revealing disappointing outlooks
more on that in a moment we'll start with earnings for snow flake and nvidia. the turn around is what's gotten some people's attention. >> neither company made big mace takes in the quarter the stocks are mixed it seemed just a month or two ago that companies had to turn in perfect earnings or they would go down. this wasn't perfect from nvidia in the sense the macro environment was tough gaming in russia and china snow flake, at the same time, it's a consumption is done if it's down in april, then perhaps you don't need as many chips.
snow flake still had a number of big customers that they added during the quarter but this high grower affected by the macro environment. >> you could tell analysts trying to get the root of where con sujs the slowing there's one that came out and said specifically who is it. is it meta, netflix, snap, walmart, thaarget that are slowing. snow flake ceo said it's none of them this is latest group of tech warnings to give below their guidance we spent the last few weeks focused on consumer tech and retailers be now we're looking at semis and networking with
cisco. they are kind of take it in stride the nasdaq got more than 2% right now. >> we always look at the customer olympics, high end, low end, what kind of consumer goes there. that feeds your view of whether or not the future is good or bad. that's increasingly happening in enterprise software especially whn you listen about types of clients that had clower spending can't wait to talk to him tomorrow today's megadeal, broadcom considering the software it made abruptly 25% of total net revenue.
there had been some chatter that we mentioned earlier in the week was this an attempt to get growth boost a bit in the wake of disappointments the guidance itself, at least on two, three, it's not bad there are skeptics out there it was only this week we heard from palo alto sh he seemed throw bit of shade on this deal saying maybe companies want specialization. even more so >> on the question of who else could do this, not a lot i think the market cap on vm w ware is too rich
vm vmware was part of that deal turned tout be around important part of that deal. vm ware keeps getting passed around they took that cash out. now they are somebody else's plan to bulk up. let's stwik that deal. joining us patrick moorehead it's been a while. how does this deal first off change broadcom. now it will be a much bigger part of the company.
they took out ca here we are really going after the broadest base company from an enterprise perspective. i think we have to give credit for the ability to do this it's going to be interesting to see if broadcom runs its typical play book which is doubling, maybe tripling prices, slashing research how that would work with the vm base customer.
>> i wonder what your doing with vm ware versus what you're buying are there efficiencies to be gained here or is this more of a strategy where you got this over here, you got that over there and there's not necessarily place for the train the meet >> i've thought about this a lot i've listened to indications from the company on what it wasn't to do to find strategic value amongst its assets i'm not finding them right now >> we give them a lot of credit or the benefit of the doubt because he's been successful in rolling in software companies to the broader broadcom
i see this going through customers are going to want to get some confirmation that he's not going to come in and raise prices to switch out of vm ware is really lard. >> are you saying it will be too hard for customers to switch and they can raise prices? >> i think he has the ability to raise prices because it's very hard to switch, the time to
stwoic switch to a new virtualization technology >> if that's the case and you think he has ability and people think he will raise prices, do you think someone else could come in here there's opposition from customers to the deal? >> i think there will be customer opposition to this deal but i don't think it could thwart the deal. i think this will move forward >> what does it signal about the value of strong players? we're seeing deals where investors seem to be frightened about where the bottom might be. >> funny, i think valuation based on what private equity is coming in with says that valuations are appropriate.
>> you're also a chips guy we were talking about nvidia earlier. some gaming head winds what was your main take away from that quarter from the technology side and the degree to which they might have a moat? >> there was nothing i saw from last night in the call that leaves me to believe there's even a mid-term change for nvidia they are in markets to continue to grow.
they are in a product cross over they are making ready for their new 4,000 generation product gaming continues to move forward as a market. >> awesome thank you. our next guest cut his target from 320 down 270 still at buy says the chip maker is driving the reset in gaming. >> would nvidia be able to main
that i know their growth in the data center which is most important part of the company and how would their gaming business be impacted the answer is data center is on fire they grew over 80% year on year in last quarter. on top to have the accelerator dominance that they have, they new products which is a 30 billion new addressable market they will going to go after next year we have seen this pulmoback. a number of inverss were waiting for the pull back. s >> it was all the calling card for amd's quarter.
they talked about gaining share points is it a two hours race and how much is there to go around between the two in. >> sure. i think the big picture view is that the semikwukerconductor coe are doing is they are expanding the size of the silicon pie. even if the size of the market doesn't change, they have that great ability to take market share away from intel and despite the growth that amd has had over the last few years, their total value share today against intel is less than 20% we think their value share is more than double over the next few years even if the size of the market doesn't grow.
i think both are complimentary in their own way >> we've never sewn a real extended slow down if we're seeing an economic slow down in the cloud and hyper escscaler ea i wonder if the chip makers are able to tell how they might be affected if that happens how exposed are they to some large customers that might decide we got enough chips from now. full thank you. >> every time we forget social security cyclical, it has a way of rudely reminding us that it
it adds very secular growth to these companies. i think there's an element of secular growth and productivity that adds a level of resilience of demand to these companies >> that's a great point. >> on the crypto side it's, we have to go back to the 2018, '19 cycle when nvidia was impacted by the crypto cycle.
low? >> i think we have learned this year not to call anything the absolute low because the market has its own dynamic. if we think they can maintain this 20 plus sales growth then the stock trading anywhere between 25 to 50 times, we think is in that zone of what is the right valuation range. it's as close to a valuation bottom absolutely >> really appreciate it. good stuff after the break, alibaba is
skoo soaring. we'll talk opportunities and risk when tech check returns after this another crazy day? of course it is—you're a cio in 2022. so what's on the agenda? morning security briefing—make that two. share that link. send that contract. see what's trending. check the traffic on your network, in real time, with the next generation in global secure networking from comcast business. lunch? -sure. you've got time. onboard 37 new people, with 74 new devices. does anybody have any questions? and just as many questions. shut down a storm of ddos attacks. protect headquarters and the cloud. with all your data on the nation's largest ip network.
the tstock is up big today. it was the slowest revenue growth tough macro conditions repeated out break of covid. the company will not issuecominr shares are up nearly 14% guys, the nasdaq is up more than 2% it's getting bounce here the cloud datas was pretty concerning despite covid lockdowns that should be good for the business
revenue decelerated from 12% we have to remember the bike dance part of the picture. >> a couple thoughts here. one is it's a big bounce today but it's a big bounce that takes us back to the level ov three weeks ago, right that kind of puts into context what kind of moves this stock has had. then it wasn't too long ago that some people were talking about china stocks as being uninvestable the policy has turned more accommodative now but what happens in quarter or in a year.
>> not telling the party line. what would it mean was it all that bad if you reverse some of these lockdowns could you have wound up with a much better quarter. >> we're all the waiting for more stimulus. we don't know what that looks like on that point, john, we got to note that analyst changed his tune only a few weeks after and said buy the chinese stock after the break, a lot more on snow flake most recent quarter. the dow is up more than 500 points down less than 1% for the month. don't go anywhere.
it's a pretty nice mix here of some retail, china tech you have some technology in there. amd along with travel. marriott and some others we'll keep an eye on all of that let's get an update here >> good morning. the u.s. committee contraction in the first quarter of the year was slightly worse than initially reported this morning the government second estimate of the nation's gross domestic product this winter had it falling at an annual rate of 1.5%. the unusual report was a decline of 1.4 consumer spending was revised upward but that was offset by decreases for business and
what you looking for from them in this difficult moment for all of tech? >> first of all, thanks for having me. really excited to be here. in terms of snow flake, this is a great company. in terms of how we read through the management team transcript and what they have said, what i look for is we try to understand what tough decisions they making in this market abdnd try to thi about how that applies to other companies as well. one of the big refrains is how do you focus on profitability growth in this kcontext is you'll see snow flake add a lot of head count. that to me is the tough decision that great management teams make we're trying to extrapolate that to how other teams should be operating in this environment. what you have seen are companies flush with capital the last few years who have spending in this way that promote growth at all
costs. there's a rot of busin-- lot of business positive returns. the question we look at is does that increase long term profitability or not >> we talked about there earlier in the week but snow flake, a big cost stock based compe compensation if they are hiring that amount, is that shareholder friendly doesn't that dilute the existing ones at a time when investors are looking for profitable growth there's two ways the look at it. i think what a very common refrain will be is, what can we do to slim down our spend, focus
more on profitability in the short term i think investors are looking for that stability what we're hearing here in snow flake as well as other companies involved with on the public and private side is there's opportunities in this market to take advantage of the slowdown of others in terms of their spend and in return you're focusing more on long term, long term competitive advantage to the business model that on three, five year plus view, those are the things that will generate real returns for us >> i think that's important. >> top line growth is all that matters. that seemed to be driving a lot
of the technology market now there's a shift toward near term profitability is all that matters. in case like snow flake still growing more than 80% year over year, a slow down from more than 100% if your model working, if you got cash and they have plenty of that, why not invest to support it as you said during this period >> here is what we're seeing in the private world where we have very detailed conversations with cfos as they think about this environment. we're seeing a pretty big transition where they were investing lot more in marketing without a strong focus on when and how that turns profitable. i think what you're seeing the market reward now is a lot more of these rule of 40 companies.
what you're seeing now in realtime fashion are cfo's do a reforecast that are focused on these rule of 40 metrics you're having very strategic growth as being a top of mind attribute. companies like snow flake and others that are well above that rule of 40 metric. companies like that can go on the defensive. they can make strategic investments and sales on market. we're seeing that across the board in our private portfolio for companies that are well
above that rule of 40 metric ta a they are on the offensive. >> do you think the color they gave us on client spend spreads to others that we are going to hear from soon i'm thinking of sales force. >> these are all fair questions. one refrain you're hearing across the board is the note of caution. i think in this environment things are choppy where you have some data points that are real positive some data points that are less -- i don't have a necessarily read on what another company is going to forecast in a few weeks. what i will say is that this is a time where there's iddata points in one area you're seeing really strong growth. what we're seeing is the stent of the enterprise still. we haven't seen enterprise spend
slow down much. we're seeing a lot of mixed signals. the key for any investor now is to focus on a company kind of a bottom up spaces to see what exactly is happening to that company versus assuming what you see is one company will happen to another >> we have snow sfflake ceo joining us we'll have what it meansor f tesla shareholders as well stay with us
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for twitter and tesla shareholders >> twit r ter shares are up. musk reporting that he's increasing his total funding commitment to the deal to 33.5 billion dollar that's up from 27.25 billion this after a margin loan commit m expired with tesla shares down 3 34%. he will no longer be borrowing against his tesla ownership take to buy twitter he's talking to dorsey and others about retaining their stake in the company following his take over that that would be replatsi replacin that financing commitment.
twitter shareholders voted not to reelect to the board egon durban twitter paid $115 million to settle a lawsuit filed by by the doj realleging twitter misrepresented to its users. >> this is all interesting but especially to me this part about trying to get existing share olders to hold onto their stakes first he says i'm going to give you 54.20 a share. you'll probably like that's a
lot of money an especially happy about it now he's saying, no, too many bots i'm not sure by the way, will you not cash out at all and i think it's worst less than what i promised to pay you any sense of what i might go for? >> what i think was interesting is twitter shareholder meeting yesterday, they wouldn't answer any questions about the deal all they said is we are moving forward with the terms originally discussed he's just trying to figure out the financing for him having jack sdorsey hold on the his shares he gets jack dorsey feeling invested and partnering with him and whatever changes he wants to
nasdaq up. how about that more than 2% at the moment streets all oaf the place on this stock out perform rating, a price target of 85 they can do that because they initiate it. earlier this week we had on lisa ellis. she had turned bearish on the stock but a target of 200. bear up but up 3x from here. stocks lost three quarters of its value since the start of the year today trading just under 70 which is about where it was two weeks ago. >> yeah, we're watching crypto as well. after the break we'll talk about
amazon and their plan the lose profits. we'll discuss what that means for shareholders as we are holding onto some etprty decent gains circling around 40.50. wean across your full financial picture. a plan with tax-smart investing strategies designed to help you keep more of what you earn. this is the planning effect. at adp, we use data-driven insights to design hr solutions to provide flexible pay options and greater workforce visibility today, so you can have more success tomorrow. ♪ one thing leads to another, yeah, yeah ♪
effects on shipping saying we're working hard to mitigate the costs. he confirmed reports that amazon intends to shed the access capacity and a first new building activity. he had an interesting note arguing it values aws at a investors are getting the e-commerce subscription, advertising, logistics, business for free, guys this argument has been made for some time. fact is, amazon sisn't expecting -- he was on the defensive a little bit you're not used to hearing things from amazon focused on profitability, not during bezos' era. things changed so much that's what investors are looking for, even from amazon. >> in a way. bezos' time has been long there. we have seen a lot of cycles
it is important for investors to remember amazon is making mega bets on people and logistics and what are the costs that are out of control now labor and gas. so they've been caught holding the bag here but they're still making investments in people and logistics, carl, at a higher rate than others you have to wonder how much is it worth if amazon is right, how much are you willing to bet if amazon is right. >> with every additional headline, bloomberg has on the tape microsoft will slow hiring in windows, office, teams chat and conferencing software groups, citing to realign staffing priorities. they are the ones that have been most aggressive on the wage front at least >> absolutely. >> at what point does that dynamic, calculus tip into the caution side >> good question we should remember, too, aws was built when investors said scale back on costs, ended up being
the profit engine to your point. jon, public companies aren't the only ones cutting costs. sequoia warned its companies to tighten belts. kate rooney has more what it means for the market we have seen it from a number of vc companies sequoia has a history of warning and building during these times. >> absolutely. had the black swan memo we talked about a couple years ago. advice to founders this time, preserve cash and cut costs or you're not going to make it through the slowdown got a copy of the 52 page presentation to founders people pay attention to memos. it is one of silicon valley's most successful investment firms. sequoia calling this a crews bell moment for founders doesn't see the economy bouncing back anytime soon, warning startups to tighten their belts in the meantime. some of the partners talk inflation, geopolitical conflicts, limiting what policy
makers can do to step in unlike 2020, the correction won't be followed by a v shaped recovery sequoia warns of what they call a death spiral, referring to companies that grow too fast without slowing spending growth at all costs they say is over investors are now rewarding discipline it is the latest sign of austerity in tech. had meta, uber, freezing hiring, netflix as well. and job cuts are piling up at private companies. bolt and klarna this week. spoke with michelle bailey she said their advice doesn't mean 100% job cuts, could mean less r&d some should keep their foot on the gas pedal. she said the playing field is tougher but can be an opportunity. >> we heard that today with maverick ventures. he said some companies are able to be offensive in the environment. on the offense, not the defense.
and that depends how much they built up during times being good you have some of the big companies like uber and lyft didn't get to that level of profitability. >> you have to be careful, carl. there was a black swan memo and there are companies that cut back at the start of covid startups and wished they hadn't because you did have a v shaped recovery vcs aren't always right. what seems to be clear, the underlying message from sequoia, don't expect much money from us, entrepreneur, unless operations look like this that should tell investors about what the ipo market will or won't look like the next 12 months >> indeed. generating cash. that's the bottom line from all of their deck. fascinating. if you missed part of the show, follow and subscribe to our podcast. listen anytime, anywhere, wherever you download podcasts tech check is back in a moment you're a one-man stitchwork master.
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microsoft may be looking to slow hiring steve kovak has more >> here's the news out of apple this morning apple is raising starting pay for retail workers to $22 an hour, increasing pay budget for all employees globally apple telling me in a statement starting wages for retail are up 45% in the last four years alone. and carl, there are lots of reasons it is happening. historically inflation, combined with the tight labor market and the stock price of apple raising wages helps them retain talent microsoft raised wages for similar reasons earlier this month. finally the big one, unionization efforts in retail are a week away from the first vote at the apple store in atlanta, and second store in maryland will vote the following week so far we know about four stores
are at stages, and the retail boss sent a video message to employees yesterday saying you knows will make it difficult for apple to be nimble and give employees what they want $22 a share is close to what a lot of union organizers i talked to have been buzzing about, but then there's a grand central store, organizers are asking for a whopping $30 an hour apple says starting pay may be higher for some areas but weren't specific what starting pay is and which regions it applies to now we wait and see if this puts a wet blanket on the union efforts in atlanta and maryland, guys >> meanwhile, steve, the pileup of headlines regarding apple and production, looking to diversify out of china it is potentially about keeping phone production flat for the year. >> that's right, carl. i always listen to morgan stanley katie hubert on this stuff. yesterday we had that nikkei
report saying it is delayed and she threw cold water on that we may be flat keep in mind, coming off the super cycle from the 12 and 13 this lull was kind of expected >> steve, thanks for that. watching apple closely on a day we were surprised to get back above 4k now halfway between 4k and 4100. let's get to the half. thanks so much welcome to the halftime report front and center, stocks on track to break the longest weekly losing streak in two decades. how sustainable is the bounce. is one name in particular holding the key to that question we'll explain and debate it with the investment committee jason snipe, josh brown, jon najarian, founder of market rebellion.com, jenny harrington, and also for the a block, an as tash a omarosa good to see you in the h