tv Tech Check CNBC August 16, 2022 11:00am-12:00pm EDT
bath & beyond, gamestop, amc the poster children of the meme trade. down just slightly. >> amazing all it takes is just a filing that shows purchases by a recent activist in a stock, got a settlement three board seats. >> the cost is less than the market cap added for sure. that does it for us on "squawk on the street. "techcheck" starts right now ♪ good morning welcome to "techcheck. today a look at walmart's transformation into a tech company. well, they are pushing into streaming despite a strong consumer as advertised plus, hedge funds hopping back on the tech bandwagon. how berkshire's paramount bet, buffett scoops up more shares of apple, inches from all-time highs. here to help us break to down, hello, tony. joining me here at one market as
guest host this hour welcome. great to have you. let's dive into walmart. after a surprisingly strong quarter, after speaking to the ceo last hour, courtney, a great interview. >> thank you very much appreciate it. we are here in walmart's hometown of bentonville, arkansas the retailer beat expectations for adjusted profit and revenue. of course, those were lowered expectations after issuing a warning a couple weeks ago the ceo told me that inflation is putting pressure on the american consumer and walmart confirmed it's adding paramount plus, that streaming benefit for walmart plus members that's going to happen in septemberism asked mcmillon if it had do this to add this streaming content option to attract or retain those walmart plus members he said it was always part of the plan they haven't given much detail about walmart plus
consumer intelligence research partners estimates it's plateauing around 11 million he said the company doesn't emphasize the program because they don't want to be measured by one metric. walmart's highly prftable albeit small and growing advertising business did see sales grow 30% year over year this quarter. i asked mcmillon does this mean that he is not seeing the same slowdown in advertising spending that other big tech online players are seeing, and he said, look, this just a very small business, it's underdeveloped, and we have a unique proposition. >> we can do a better job than just about anybody of helping an advertiser know if a transaction happens later in a store so having the digital advertising capabilities with our app and website is part of the equation but being able to share data related to how transactions may have followed on from that ad is also a unique position for us.
>> now, walmart's net us e-commerce bid reaccelerated, 12% growth year over year after two quarters of growing 1% at $73 billion in annual revenue, it's just under about 12% of walmart's total revenue so i asked mcmillon if the retailer needed another mark lowry to reinrig rate e dmers, get to the next level. he said he did a great job for us but we are now all e-commerce leaders, all think in an n omni-channel way with physical and digital retail. >> yeah, what's interesting here is that when it comes to physical and digital advertising could be a key way to bridge that those ads are so valuable now. thank you so much for joining us and such a fantastic interview now i'm curious for your thoughts a, how important do you think the subscription service is going to object for walmart's
future, and do you think walmart has chance to be an ad behemoth the way alexander has become one? >> it's interesting, just thinking about the catch-up that walmart has to do. i think with their subscription service, i don't know, maybe they are at 15, 16 million compared to amazon's prime probably 200 million plus or so. there is a little bit of catch-up that has to happen. i think there is an opportunity for walmart to capture a slightly different consumer than what amazon has. so i think the potential is there, but there is a lot of catch-up that has to happen. the most interesting comment was around the advertising business because at the end of the day from an advertiser's perspective, that attribution actually being able to track the impression all the way to the purchase, that is one of the most difficult things to accomplish and if they can succeed in that, then it could be a potentially interesting platform. >> that's what amazon did,
right? their method of advertising and that direct relationship with seeing that purchase go through has helped them. on their last call, that's why it's been faring well in the downturn walmart feels like they are moving upstream. amazon is trying to move downstream they are in greater competition. mark lowry really transformed the e-commerce side of the business can they do that in advertising, streaming, through partnerships, organically or do they need to bring others in? >> i think what's going to be important for walmart is the cultural shift it has to achieve. the ability to be able to talk about all of these different elements i think important at the end day, it's the people that has to make that happen culturally, this will be different. every company is going through this, right? everyone is going through digital transformation mark lowry, the founder of jet.com, which was acquired by walmart, he really did bring a lot of that dna along with the
team that he built but now, you know, every company has to think about themselves if they are in retail, you are an omni-channel retailer accessing customers across all channels. that cultural shift in my mind is key. >> julie, you cover advertising so closely, the prop sigositiont walmart may have, is there a lot of opportunity there >> absolutely. amazon and google search and, yes, walmart, are more valuable in their ability to reach customers. pinterest, people are looking to buy products so the ability to target ads to those consumers is incredibly valuable and i think that this is the category that has an opportunity to really grow, especially during a recession so a lot of opportunity there. remar remarkable to sea that 30% growth theother players, snap and facebook, meta, we have seen their ad growth come to a
screeching halt. lo. >> yeah. you know, the advertising game is tough and when we start to think about the different levers that these companies have to be able to manage to the bottom line, t expenses, i go back to if attribution happens, that's where we typically see a little bit of hesitancy in pulling that lever. now, brand, on the other hand, hard to measure attribution. that's part of the challenge, right? i think that this is a really interesting topic. i think this is the week of advertising-based revenues clearly, right >> yes a different sense, to julia's point, right the e-commerce model versus facebook and snap, even google when it comes to youtube. >> yeah, absolutely. let's stick with walmart but shift gears over to its streaming deal an early member of apple's macintosh team he joins us now
to discuss thank you for joining us you know, this is big news yesterday that walmart was partnering with paramount. from my sources i know they were talking to other companies, including disney as well as peacock. why do you think they decided to go with paramount plus and that $5 ad-supported streaming service? >> well, i can see multiple reasons for that to happen one, of course, is trying to get to a different consumer. you know, with an advertising-supported type of offering, they can keep the price lower than amazon prime and try to get less overlap than they do otherwise. the overlap is as high as 60%. another reason, of course, is who wants to play. it's not clear that the disney, amazon certainly not of course, netflix would want to play you need to find a player with
valuable content and a desire to grow, a strong desire to grow, and i think they found that in paramount and they couldn't find it anywhere else probably. >> certainly having these additional subscribers should help paramount hit the targets or push it in the right direction. i wonder what you think this means about walmart's digital strategy they already have a partnership with spotify do you think they will make other partnerships with other types of content or streaming companies or down the line after this one-year exclusivity and do you think they will add others >> this would be my guess. now, this is only a guess. they are leaving it open, of course so they are creating optionality for them serves, which is wise under the circumstance it feels like the plan could be to become a sort of shopify for video. let others in. a pool of money, proportional to the subscriber base and redistribute that to the streamers. this could be a good strategy
perhaps for walmart. this is a, you know, they could become the marketplace for the tier below the disneys and netflixes of the world that would make sense. >> maybe a good strategy for walmart. talk about the streamer's proposition of paramount what are they giving up in order to bundle their service? they lose some valuable things, such as customer insights, the data, right? >> and it depends on the agreement. it could be data sharing agreements that, you know, we don't know about they could lose some data and some access, but they are gang customers, they are gaining subscribers. paramount is very aggressive targets. they want to triple pretty quickly. so you need to, you know, at some point - >> at what cost though >> well, that's for them to decide i'm not going to second-guess them but, obviously, they must find
it harder than, you know, we understand they have to come to the table you have to have the need and feel the need. especially on a one-year exclusive knowing that walmart could cut more deals in the future. >> yeah. interesting exciting seeing walmart shares up 5.5% on those earnings and that news and paramount shares up fracs alley. thank you so much for joining us today. >> thank you. >> quick one to you. what is the profitability picture look like in a teal like this feels like paramount is trying to -- we don't know the mechanics of the deal. they are clearly a smaller player in the streaming wars what do they have to give up especially when the timie they are looking for profitability? >> it could increase the distribution, giving paramount access to the customer base, increase revenues and sharing some of that with walmart. you know, look, amazon went from spending 1.2 billion in 2013 to now it spends 13 billion in
content. so again i think there is a big catch-up that walmart has to play, and amazon was built from the ground up as a digital native company. >> yeah. remember they had that thing with tiktok, too it's come a long way also speaking of streaming, berkshire hathaway scooping up 10 million shares of paramount one of many headlines from the latest slate of 13f filings. leslie picker, you are still whale-watching you have the latest breakdown. >> i don't have my whale watching outfit on yet still whale watching in spirit berkshire hathaway also boosting its stake in apple during the quarter. $120 billion worth at the end of q2 there major investors sold off some tech exposure. exited stakes in amazon, dell, microsoft. apple loses david tepper as alphabet as well as in alphabet and micron and added to the stake in meta.
tiger global, coatue sold off many tech names to stem losses in performance during the quarters and for the first half of the year. elliott, which had pushed for changes if you recall at twitter a few years ago, interestingly dumped exposure during q2 shortly after elon musk announced p announced plans to buy the company w he don't know if they hold beneficial exposure in derivatives and so forth they did get out of that exposure during the quarter. michael burry sold out all of his equity positions, including meta, alphabet, warner bros. and discovery and apple. one standout was viking global which went on a buying spree, at least double stakes in meta, block and take two during the quarter. now, important to note as always, these positions are backdated to june 30th they have likely changed since then after so much has mapped in
the market this summer, guys so interesting to look at the fact that berkshire hathaway was buying up paramount and interest in warner bros., is discovery. what is the angle there other than the fact that the stocks have been sold off so much >> i think it's a value play that's all we can glean from the 13f filings. we don't know what the current positions are with regard to media stocks there has been a lot of activism in media as well as i know you and i have gotten to collaborate on in recent years so part of it comes from, you know, hedge funds that are more deeply involved in activism and that has been an attractive sector for that group of individuals. and then part of it is just a value play and, you know, investors seeing an opportunity to really jump in at those levels. >> fantastic stuff thanks so much lo, curious what you think we have the media play and also some of these guys, you know, buying up more meta and others
we saw, tiger global increase it's stake, meta platforms took a stake in alphabet. those were relatively small but we are seeing some of these players see opportunity right now. >> yeah, no doubt. i think not only could we see some of the crossover folks shifting attention away from the late-stage private to all of the these great deals because these companies have just been so beat up in the public markets with the macro is environment, the interest rates pushing down valuation multiples. we have also seen a lot of activity from the private equity folks buying out a lot of tech companies almost at bargain basement type prices i think we will have to keep an eye. this backward looking data we have seen significant rallies. so much for the dog days of summer tech stocks have been up 20% is a bear market rally or true rally? >> that's it yes, they are backward looking you could argue this is maybe one of the most least relevant
set of 13fs we have had because of this enormous rally we have seen the last six weeks. to how much emphasis should we be putting on them it's noticeable that berkshire scaled brach the purchases in the second quarter from the first quarter. what would you be doing over the last six weeks to your point, is this a bear markets rally or are we in a bull market again? >> so hard to tell we have to wait for a little more data to come out. it depends on the strategy as well folks that are very short-term focused have made a decent amount of money the past few weeks. i would say that people that have a longer-term perspective it's important to think about a lot of these stocks by sector. when i think about certain technology stocks just putting meta aside, if i think about folks selling to the enterprise, talked about walmart and their digital transformation, it's not slowing down le fundamentals look good for the long-term prospects for a lot of companies that focus on the infrastructure and software and services needed accelerate
and support that digital transformation. >> right we will continue to talk about these, especially how should smaller investors position themselves in tech joining us now, head of equity trading, so great to have you this morning where do you stand have you been listening to our conversation are we in this bear market rally? you can't help -- i know a lot of people note on this program, too, that the dot-com bubble saw four bear market rallies of 20% or more. each one testing new lows. >> thanks for including me in the conversation this morning. yeah, it's a lot of stuff that came out over the last few days and late last with these 13f filings. net-net as we go through on june quarterly filings showing inventories selling many tech stalwarts and megacaps as this was a source of funds after the selling or grossing down from the high flyers or pandemic winners which occurred mainly q1 of this year so no profit in these unicorns,
sold off first and then the next place that these investors went to were some of these mega-cap stocks which was a source of funds for them an aggregate investment firms decreased tech holdings. that brings us to today where we have positioning remarkably low, flow dynamics have been -- hedge funds, systemic funds, quant eye funds taking down exposure via covering shorts. there has been a lot of nonfundnon nonm nonfundamental buying. and then now more mature stocks with balance sheets. and so investors are now being forced to chase performance, which is maybe some of what we've seen currently, and the squeeze has been real and the pain certainly palpable. just to top things off, we have got the buyback market that has
been very active on the heels of a 1% excise tax coming at us next year. we think this continues into the rest of this year and that, you know, a lot of upside momentum behind tech and this tech move higher as investors just have been underexposed to the group. >> what keeps it going the idea that inflation has peaked and it feels like like the market is baking in that the fed is going to be less aggressive, potentially pausing rate hikes that's not the commentary we are hearing from fed officials we are heading into another earnings where lack of demand could weigh heavily. >> a lot of folks, i believe, on in spread between the ten-year yield and tech funds, the tech index and the ten-year yield, the gap is certainly been narrowing. and as that continues to do so, think tech will continue to work its way higher and i think what also propels
these things even higher is that technically the backdrop here has shifted. if we look at the broader market, you know, we are still within this bear market. tech specifically is changing course when we look at tech and the s&p tech index, we are breaking above key bearish resistance lines. and as we break above these, i think this will only foster more and more money to come into the area and, you know, when we take a look at a sector rotation chart, tech sectors is the only s&p group that is in the leading quadrant now >> so give us some of your specific picks i know you like microsoft and some of the cybersecurity names. what are the names you like and why? >> sure. thank you, julia so microsoft, as you mentioned, we have been very -- on this this is part of the theme of strong fundamental stories
cyber. we think cyber is in a great area of more and more cash flows. but i'll just introduce another name micron in am set semi space. this is one of the most economically sensitive areas last week micron came out saying they will invest over 40 billion in the next eight years because of the chips and science act that was recently passed they did lower guidance, 2023 capex down demand ways for chips and pcs and smartphones. you know, the expectations for negative free cash flow in the quarter similar to nvidia, we think much of this is now priced into the stock we think the forward risk is out of the numbers stock trading around 35 times above book value 12 months from now, stocks higher than where it's trading today. micron is one area we like going forward. and in the cyberspace, you know, palo alto, they report next monday just another one that we're very
bulled up on as the shift to cloud is a massive tailwind for palo alto and the companies in a good spot to benefit from a multiyear cybersecurity enterprise spend going forward. >> always great to get your insights thank you. >> thanks for having me. >> amazon is facing off with the ftc. por on the company's 49-page petition to regulators and why they claim the group is disrupting business operations that's next. "techcheck" is just getting started.
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zoom, shares getting crushed after citi downgraded the stock to $91 a share they say the post-covid was challenging but they now see new hurdles emerging, including rising competition from microsoft teams and a weakening macro picture. the stock 70% off the highs, down 5.5% today. amazon on the announcement to buy irobot. a new story analyzing who can be
next a note from morgan stanley, keep an eye on consumer hardware names drug lower by revaluation reset. guys, amazon historically hasn't been especially inquisitive. whole foods by far the largest one. but there is an idea of build first, buy later amazon likes to try to do things themselves, put a lot of money into it. get to know the market and then buy i thought one of these picks was interesting too. love sack, a furniture retailer, down 47% for the year, market cap 528 million, a tiny little accusation for amazon. i don't know if it would move the needle a huge amount when you think about twitch, right, what they were able to get that at, turn it into something really quite grand they make the little d to c acquisitions. >> that's an interesting one we see that amazon continues to
expand out, especially around things that go into the home right? so seonos was interesting to me it's digital it has a lot of data amazon loves data. they say they don't do anything with the data, but i don't know. i have a roomba and i can see them understanding how my house it mapped, right at the end of the day these are part of a grander scheme even though they may look very small, think amazons that a bigger grand vision for how these fit together. >> it's so interesting and don't forget they also bought mgm and many would say they paid too much for it or more than they should have for it, but it's so interesting lacking at all of these different species and nhow they could integrate with the alexa go pro and how you could put the cameras on a roomba to map the home or whatever it may be, but also this idea that they want to really own everything about how you do things inside your home, whether it's, you know, giving
commands to your alexa or cleaning your rug and so so much potential there. i agree. sonos. think about the ability to integrate with alexa there. >> it's been combative towards amazon and google. they are not exactly friends i wonder if that would happen. i don't know if he would like this. >> at the right price. so many of these have fallen so much. >> right now, on the other side of the coin, amazon facing increasing regulatory pressure, afusing the ftc of harassing top executives, including jeff bezos and andy jassy in a filing out late last night arg august the agency has, quote, in legitimate reason for their testimony as they continue their probe of the sign-up and cancellation process for amazon prime. what do you think? is this company being unfairly targeted because of lean a caan's history of examining amazon as an antitrust risk? >> you know, it's interesting to
think about this from the perspective. we were talking about this she brought up a great point around an aggressive or offensive strategy around pr i think there is something to be said about that. look, the ftc is always playing catch-up the best and the brightest minds don't tend to go to the ftc. the best and brightest minds go to large tech companies or start their own companies. and these folks are pushing the boundaries on these laws that always need to catch up. and so i don't disagree that a lot of this does to me feel a little bit onerous and over the top. we'll see how it plays out >> i mean, it kinda makes me laugh a little bit jassy and bezos, they can handle it, right? it feels like an offense push here not unwise they are getting ahead of it with so much more scrutiny you mentioned the mgm deal that went through. so i wonder if they are sort of, i don't know, pushing the buttons a little bit we'll see. meanwhile, if you own an iphone
you may start seeing more ads. that and a lot more. apple shares, they are just 5% off of their all-tame highs after the break we will talk more stayitus wh in order for small businesses to thrive, they need to be smart. efficient. agile. and that's never been more important than it is right now. so for a limited time, comcast business is introducing small business savings. call now to get powerful internet for just 39 dollars a month. with no contract. and a money back guarantee. all on the largest, fastest reliable network. from the company that powers more businesses than anyone else. call and start saving today. comcast business. powering possibilities.
good morning here is your cnbc update for this hour. the judge who signed the mar-a-lago search warrant scheduled a hearing for thursday whether to reveal why the government thought fbi agents needed to go into former president trump's florida residence. several news organizations are asking that judge to unseal the affidavit. the justice department filed with the court to support its request for the warrant. trump says it should be released prosecutors argue it shall remain secret to protect witnesses and an ongoing investigation. explosions in russian occupied crimea moscow says are the result of sabotage an selectcal substation caught
fire and ammunition depots exploded in northern crimea. ukraine neither admitted nor denied involvement. after a deday over china's military drills around taiwan the united states tested a minuteman 3 intercontinental ballistic missile today. the military says tests like this are not uncommon and not tied to any specific global event. that's the latest. back to you. >> thank you. apple the latest tech name pivoting away from remote work, telling employees in santa clara county it's time to head back to the office employees had been required to come in two days a week during the summer but starting in september they will be expect today choose an additional third day for in-person work apple representative declined to comment on the announcement. lo, i wonder whether you think remote work will be a competitive advantage for some of these tech companies or whether it's just back to work, maybe three is the new five? >> three is the new five i like that. i to think there is some something to be said about the intense level of competition for
employees, especially around tech employees and the ability to be able to offer a benefit like remote work, i think, is important. look, plus the genie is out of the bottle everyone that was a denier of productivity had to make that move because they had no choice. and so i think -- but there is something to be said about the ability to be more productive, have things move a little bit quicker, have the serendipitous moments in the office as well. >> someone said to meet key was during the pandemic there was nothing for anyone else to do when they were at home except work now that, you know, everything is opening back up, you can pretend you are working. so it has changed the environment. but you are here with me at one market the building is still pretty empty. you will see what you walk out as well. meanwhile, apple sitting 5% off the highs. the company reportedly planning to put more ads on your iphone including apple maps and other
books and podcast apps in a move that would expand apple's ad business that already generates $4 billion annually. small in terms of the grander picture. morgan stanley analyst eric to discuss. talk about the opportunity here, but also we talked about this yesterday, sort of the balance that apple has to strike because it's doing all of these things, done all of these things in the name of privacy and now it wants to grow its own ad business. kinda feels like it's at the expense of others. >> thanks for having me on you're right apple does have to walk a fine line here. what we ultimately know is apple leads with hardware vertically integrated hardware is where apple does best, but it found ways to monetize the install base this just another way for apple to do so they had their app search for business for a number of years it's grown rapidly and, obviously, they see the opportunity or potentially see the opportunity to do more in
the ad space and so you're right. they have to walk a fine line. but apple has walked a fine line in other end markets before. i am sure they will find a way. >> feels like the market is saying that. i am sure they will find a way to do this again meanwhile, as we talked about, 5% off the all-time high making up a bigger percentage of the s&p, 7%. such an important leader what are the risks here? it comes oz a time when app store growth is decelerating. >> why does the market kind of think that apple can just keep chugging along what are the chances and what are some of the risk factors in your mind? >> it's a great point. i think we are seeing a period of time now where we're coming off of the pandemic and some spending trends are normalizing. app store is one of them something that i just point out now that we are most of the way through earnings season is if i lack at consensus estimate revisions for apple post-earnings they are
relatively unchanged et resignations of the consumer hardware universe, revenue estimates for calendar 23 down 8%, profitability about down 14%. we are seeing that apple has more staples like products the iphone, obviously, the key there and in the current spending environment users are still spending on apple. 1.1 bill of us are attracted the macro is still a risk. high-end consumer spending is still a risk something we feed to be could be any zendt of ap , arguably, it's still a challenge. >> looking at the doot devices, services what's your outlook for services revenue great considering all the macro factors as well? >> so have services revenue growing, call it double digits
in fiscal 22 let's call it mid-teens in 2023. and you have to remember there is a lot of different businesses underlying apple so this is business app store is just one that gets a lot of publicity. but apple tv is doing fantastic. apple music is still a key streaming service. apple pay we are using increasingly in the world today. it's not to say that it's risk free we do have to continue to watch. and my team tracks app store spending effectively weekly. apple is diversified and right now we are seeing some slowdown in app store spending but of the rest of the business is picking up the slack. >> to tie it back to the original question about advertising, i have to wonder if you think advertising has potential down the line to be really, really meaningful for this company apple has been so cautious and it sounds like will be so careful and slow about how it
rolls out ads. but a couple of years down the road do you think testimony be a different story? >> it can be you know, we've seen apple services, the app store one day was zero dollars now it's a $25 billion business. so i think it's a longer-term bet. that's for sure. i don't think this is a near near-term needle mover if we say what will this look like three to five years down the line, it could be a potential large opportunity. look at companies that benefit from the large digital advertising market today apple could enter that three to five years down the line we 'see. i think it could be an impressive opportunity for apple. >> eric, as always great to get your insights thank you. lo, quick take from you here apple, you know, regained its -- never lost its leadership in the market but even the china picture, right, which is so key to the story
story. surprise rate cut yesterday. the economy is not firing on all cylinders. this is a risk factor that maybe investors are overlooking? >> i saw something that said is china the new japan, thinking back to do how-gentljapan's groh slow we looked at the demand for products like the macbook pro. the good news is the demand was there but the issue was around supply chain and a lot of the components and manufacturing done out of china. that is a major risk i want to go back it this services piece as well as advertising. i think what's interesting, i don't know, apple services probably like a $60 billion business for them. icloud even is probably a $5 billion business. although the advertising business at 4 billion is very small, less than 10%, i think the head of advertising now reports to eddie cue, who runs services so that speaks volumes about where apple sees the shift obviously, their changes in privacy capped their rivals and
increased the pie for them. >> it makes it look a little, yeah, interesting for sure, the push that they are making at this time. julia. >> yes, indeed it will be a topic we will be talking about a lot. meanwhile, having a hard time making money in crypto bear markets? arinasore cmils that story is after the break. don't go away.
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continue to hurt investors there may be a silver lining a similar fall in smaller crypto crimes kate rooney joins us with the numbers. >> it's not just investors crypto criminals are having a tougher time making money in this year's bear market. according to a report from, the total volume is down 15% from a year ago that comes as overall crypto volumes have fallen 30%. first the blockchain data firm found a significant drop in scams. it was 65% below the levels through july this time last year these are typically those get rich quick schemes think of those fake investing opportunities you have seen out there promising enormous returns. those tseem less believable wit prices down now and fewer people seem to be falling for it. then dark web revenue, down 43% from a year ago. tracking higher until april. that's when hydromarketplace, a prominent hub for drug sales, stolen data and money-laundering
services was shut down a bit of a reversal will there and one area booming, hacks and stolen funds topped $1.9 billion so far this year that's up 58% from a year ago. this is mostly in defy, decentralized finance. that open source code can make it uniquely vulnerable it's used by developers, and also being used and exploited by hackers. we talked about the solano wallets getting hacked, the ronan hack the biggest we have seen this year and half of that total has tomorrow from north korean groups which with taken home about $1 billion in stolen funds. illicit activity less than 1% of crypto's total activity but the hacks have weighed on investor confidence and seen as a drag on on an industry looking to become more legit in the eyes of investors back to you. >> kate, thank you very much for it that. i don't know if these stats do make the case stronger or not. i mean, i know someone would still has their money tied up in
celsius. >> yeah, look, i think what we saw was just the level of wanting -- people wanting to get rich quick they you a the saw the tiktok vs that lets people have their guard down a little bit. not to mention, it is very easy to move money around without being traced that's the prim he is, right. >> laying the groundwork for the next crypto boom or whatever it is, julia. lessons will be learned. sort of like the internet in the early days you get shakeout next time businesses come around people will be wiser to it. >> wiser and maybe the whole industry will be a little bit safer. fascinating. snowflake warnings on wall street this morning. more on those calls and why citi thinks the stock is high rk isat these levels that's next. we're back in two.
>> daiwa preferring papal. feeling that while the environment is clouded, both paypal and block could be bottoming are and may not be good bets for the long term. on the other hand, they downgrade visa and mastercard to neutral. they feel any potential spending rngst is over and they will see eain up with more potential. "tech check" will be back in a few minutes.
a chilly forecast for snowflake, the stock down 5% as citi and ubs taking the bear cass on the former darling ubs downgrading the stock to neutral after doing their own gut check with snowflake partners and customers finding that some are looking to cut their data spending or spread it out across other providers such as data bric they keep the company in a buy and opens a negative catalyst watch on the stock given macro
spending headwinds citi calls it a good bull market stock but with snowflake having lost half its value it could be a cold winter ahead. my question to you is how discretionary is spending really on stocks -- on companies like snowflake? >> yeah. we were just talking a little bit during the break about how i like the usage-based model when things are going really well, because as a customer it's very easy to ramp up usage and scale up flip side, it's also very easy to ramp down usage if i'm looking to cut costs, so, you know, that's the dual-edged sword. i'm a bull long term without question as digital transformation continues we are only going to have more data across all types of companies, but there is just a little bit of turbulence and some headwinds for snowflake and the like. >> we have this conversation, a similar conversation yesterday
somebody not very bullish. seeing so many of these companies have gone public you've got snowflake, octoa, data dog, the bundle, we talked about that during the break as well, the bundle, what microsoft and google and others are able to offer while not keeping up, don't have to have that same aim at profitability because they have very profitable businesses elsewhere. does that hurt some of those companies? >> without question, it puts an extreme amount of pressure i've even heard rumblings from people i've talked to that the microsoft sales team is being told to push aggressively to go after other companies where some of these other companies might be vulnerable. some of the other players want great services if you want a world class, you know, data storage and network, you're going to use snowflake. if you're very into analytics and have a huge data science team you'll look at a solution like data brics.
these are great solutions but it's just the fundamental business models that they have, they are flawed at the moment. long term, again, i'm very bullish. >> best of breed but in a cost-cutting environment who knows. coming up, how much sway do tim books and others have over markets? more than you ghmit think. don't miss that coming up next stay with us
"one more thing" before we go big tech has never been bigger apple and microsoft now make up 13.4% of the s&p's market cap. that's a record amount of influence and the most since two years ago when the two stocks held 13.1% of the index. strategis says microsoft has been part of a power couple like this in the past, 30 years ago when it held 5% of the s&p along with general electric. catch the full write-up on cnbc pro. lo, want to give you a final thought here are the companies too big, or will they just attract more antitrust scrutiny >> that is for sure, but we're starting to see this become as tech goes, so the market goes. >> yeah. critical, especially lots of, seasons. there were fears earnings would be really bad but leadership
going forward, lots to talk about as we did during the show. with apple near all-time highs can the rally keep going >> let's hope so bring me back on, and maybe i'm good luck. >> there you go. we'll see. we have lowe's, target to report and retail will be a catalyst for the market in the near future the nasdaq clearly underperforming while the nasdaq is higher on the walmart and depot results. let's get to "the half." >> thank you very much, deirdre bosa i'm dominic chu in for scott walker today the slow meltup in stocks is picking up steam is this the start for a new cycle for the market or just maybe another bear market rally? plus, retail, sky-high inflation and the state of the consumer. what the latest earnings report from walmart and home depot are possibly signaling our investment committee today is jason
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