Yahoo Finance

There's the closing bell on Wall Street, and now it's market domination overtime sponsored by Tasty Trade. Josh Schaffer is here. He's going to get us up to speed on where the major averages ended the session. Another rally here today, Josh. Yes,

Julie, another rally. So 3 days of a rally you're looking at on your screen now. You can see the Dow Jones added nearly 500 points, up over 1.2%. Then you take a look at the S&P 500 rallying over 2%, and then of course the Nasdaq led again today.The Nasdaq composite rising 2.75%. I'm also taking a look at the Wi Fi interactive right now and just looking on a sector basis at what led us. You can see tech leading up over 3.7%. Then you also have materials and industrials outperforming the S&P 500. But I do want to take a look at the 3 day here because I think this 3 day rally is really starting to stand out. So you take a look there, you can see tech and consumer discretionary outperformance.the S&P 500, then you also have comp services about in wine, and we do have Mark Newton here still with us. And Mark, I want to turn to you and just sort of get your take on what this 3 day rally has been. I mean, it seems like for the first day was, OK, do I believe this, the second day, do I believe this? Now we're starting to zoom out. A 6% rally in the S&P 500 in 3 days, given where we've been is pretty impressive, I think at thispoint.

You know, look, my thinking is the lows are in.April and even if we don't go back to highs right away, it's encouraging to see tech rally to the extent it has this week. It is 30% of the S&P, you know, heading into earnings. We don't know what the earnings are going to be, and it's already showing very good strength. So today S&P and Nasdaq and Dow all got above the early highs from April, I believe April 9th. Uh, so for the S&P, that's really good. That means we likely push up to right near 5550, maybe 5600. Uh, for them it's gonna be a tougher road I think heading into May. We probably do get some consolidation, but.Um, you know, breath is the big thing for me. And, and so breath moving up as sharply as it did back on.Not only April 9th but also the 22nd earlier this week, uh, was really a bell sort of ringing that that investors really want to pay attention to. So very

good

sign

and, and I'm curious just as we sort of move forward into this, I guess next month where it feels like it feels like it's been headline driven the past week, two weeks, really month at this point, right? Are we gonna move past that at all you think as far as what the direction is or are we just sort of.In tariff land, and that's what matters is we're in kind of the bulk earnings season.

so much uncertainty and even the companies themselves are not providing guidance, and that makes it really tricky for those who study either the day to day narrative or look at fundamentals to try to make sense of this. So you really have to look at sector rotation and what's happening. We see that sentiment remains extraordinarily negative. Cycles start to turn higher for the market between now and October. That's a good sign.Uh, you know, momentum is under a lot of pressure from February. We're down about 20% off the all-time highs, and that's very difficult to think we climb back right away, but this week is a big boost of confidence, I think, towards saying that, you know, even though we might not go back to new lows, it could be choppy, but we've seen some, some decent progress in absence of, of really any sort of negotiation just knowing there's a pivot in place.The administration is willing to pull back, I think is apositive.

It seems like one of the key things we learned this week, right, is that there is a little bit of a pivot there and that's helpful.

Um guys, speaking of a pivot, I'm going to pivot to Alphabet because Alphabet is out with its numbers now. The cloud number which we had talked about being so important here, does look like it's a little bit light of estimates, although numbers overall beat estimates. Let's run through them. First quarter earnings per share, $2.81. That is 80 cents above.Analysts estimates revenue coming in at about $90.2 billion. That's above the $89.1 billion that was estimated by analysts, and that cloud revenue number at $12.26 billion a little bit shy of the $12.32 billion that analysts have been estimating. But overall revenue X traffic acquisition costs, which is the measure that we look at for alphabet's revenue most closely, $76.49 billion. That is ahead of about 75.5.$4 billion that analysts had been anticipating. I also want to mention ad revenue here because there's been all of this concern about are we going to start to, I mean, you know, Google, like many of these companies we talked about in big tech, are not necessarily directly affected by tariffs, but if there is a decrease in ad demand or demand from businesses in some way, would they see it in advertising? They're not seeing it yet. Ad revenue at $66.89 billion. That is also ahead of estimates.Here, so that's something to keep in mind. YouTube ad revenue pretty much in line with estimates here as well, and the company is announcing some cash return to shareholders, a 5% increase in its dividend, and an increased buyback authorization of $70 billion worth. So pretty sizable addition to that here. The company's first quarter cap should mention $17.$2 billion which was also pretty much in line with estimates. I'm still waiting for the release itself to kind of update here to get some color, but just to get some instant reaction for you guys, Mark, I know you had some pretty big hopes for what we might hear from some of Big Cap tech. In the case of Alphabet, they seem to have

delivered. Look, Alphabet has had 8 straight quarters of revenue beats and make this number 9. So it's pretty impressive that they continue to operate at a very high.Level 281 versus 201, we haven't had time to dig into the numbers all that much yet, but that's a pretty impressive beat on, on the, you know, looking at not only revenues and earnings at a time when arguably the market made a short term minor breakout today. So being that, you know, Google is, is 5% within QQQ given the A shares and the C shares, I mean that that's pretty encouraging, I think, for, you know, potentially what futures could do as a result of this. Yeah,

it'sinteresting to see sort of the 5% pop off these numbers because I think one of the big questions with alpha.Back just reading through different analysts commentary on the street ahead of the release was there was definitely a growing fear that maybe the numbers come in mind or potentially even miss it seemed like some of those whisper numbers were actually lower than sort of what consensus estimates were. And so I think when you sort of make sense of how the numbers came in versus that, it's a good read. Also Julie, you had highlighted that cap X number and to see the cap X number slightly above expectations versus being below, right, of course cap X being a big part of what we're talking about with these companies. I don't think we got.CapEx guidance yet I think that comes on the call and that's sort of kind of the looming big question here I think right is if that if Capex comes down later this year from whatthey were prior to

and one of the other big questions around Alphabet around all of these big tech companies is how are their customers using AI? Are they paying for it? What are they doing with it? We got a little bit of commentary around that from CEO Sundar Pichai here in this statement. He talked about search seeing continued strong growth. It was.Boosted, he says by engagement we're seeing with features like AI overviews, he says that has 1.5 billion users per month. It's funny. AI overview. I never, I don't know that I ever opted into it. I just, it comes up every time I Google, so I guess that's why it has so many users per month. But he also says YouTube and Google One have surpassed 270 million paid subscriptions. So that's something to highlight as well. So interesting here again on the call we'll get more.Around Capex and around AI and what's going on there. But of course we also have to talk about the other large cap tech company reporting smaller cap than it used to be. Intel is what we're talking about here. The company is confirming that it is making some changes to personnel and its numbers are missing estimates pretty much across the board here, particularly when you're looking forward. Adjusted earnings per share in the first quarter did beat estimates. It looks like adjusted earnings per share.13 cents analysts were looking for nearly break even on that basis. Adjusted gross margin in the first quarter 39.2%. The estimate was for 36.1%. But the second quarter forecast is for revenue of at most $12.4 billion. Analysts had been predicting $12.9 billion. And here too, I'm looking at the statement. Lip Bhutan, the CEO who's just been in place for, you know, what about six weeks or something.Thing, and he talked about the first quarter being a step in the right direction, but he says, quote, I am taking swift actions to drive better execution and operational efficiency while empowering our engineers to create great products. And then they talk about in the statement here streamlining the organization, eliminating management layers and enabling faster decision making. So, um, the company's cutting its non-gap operating expense target to about $17 billion.This year it had been $17.5 billion that they were targeting and they're targeting an operating expense target again on a non-gap basis of $16 billion for 2026. So really focusing on this efficiency trying to right the ship here, but it is interesting, you know, investors in Intel have already been so very patient, right? They waded through the Pack Elsinger era for them to turn things around. Now they've got a new.CEO, how much time are they going to give him to now turn things around judging from the reaction here, not maybe not a lot. Well, as

I like to talk to investors about, look, it takes a long time to take a stock that's at 52 week lows and think that it can immediately start to climb back. You have a well respected leader like the Potan from Cadence, and so he's executing his own version of Doge now, not only with employees but also expenses. So I think there's reasons to be encouraged in terms of cost cutting steps and things he's doing to try to turn things around, but it's going to take time.I mean, Intel is a is a classic underperformer and a real laggard within the space and for those that are looking for immediate results, you know, you don't get rich trying to buy dips. You buy things that are at or near highs and stocks like Nvidia, which have led, you know, all the semiconductors outside of, uh, you know, TSM and Broadcom over the last 12 months. So you know those are areas that that make a lot of sense for me. Intel, it's gonna take time and there's nothing, you know, it's.My thinking is it's difficult to put a lot of money into the stock at at at historic lows and and you just have to be very, very patient unfortunately that means you have to wait till the stock almost gets above 24 and, and you have to wait until you see real proof and then you can start to put more money to work.

And Julie, it feels like a couple times over the really the last couple of quarters I feel like we've been talking about this name after earnings. We talked to an analyst and they say.Not quite yet on Intel, right? It's I'm talking about chip chip specific analysts, right? They're always sort of saying, well, that's probably a story that might materialize a year or two down the road, right? And so I think we're just quarter after quarter continuing to see that and essentially confirming that whenever the turnaround story is fully happening, yes, they're starting the process now, but we're just really not quite there, right? And it feels like it, it's something very off in the distance and in the future that is.It isn't quite tangible yet. Obviously they're trying to restructure. You can see the efforts going on, but until you get a little bit more tangible evidence to Mark's point, it feels a little bit hard to get excited about the story

overall. Yeah, I want to get some more perspective here on these tech giant earnings. Let's bring in CFR Research, CFRA research, senior equity analyst Angelo Zino and DA Davidson managing director Gil Laria. Both of them joining us now.With more, I want to start with the alphabet here because this is the one that we are seeing move higher after the company came out with estimates with earnings that beat estimates by a pretty wide margin, revenue beating estimates as well. Gill, I want to start with you here because we did see these numbers very strong. The cloud revenue number may be a little bit light, but it doesn't seem like investors are perturbed by that. What did you make of it?

Well, there's two things to like. One is the search business is still growing. That's, that's what we're always bracing for here with Google. We know that everybody is now Chad GPTing instead of Googling, so there's this expectation that we're gonna fall off a cliff. That may not happen until Chad GPT and OpenAI start selling ads. So for now the digital advertising dollars are continuing to go to Google backward looking, that looks great. The other thing to really like is how much Google has cut costs.Costs they beat on the bottom line by the most and that's the relief that you're sensing here today, even though the cloud, uh, let's call it, um, was in line, which again is a deceleration from last quarter, which was a deceleration from the quarter after that. So what we like is search still growing, very profitable, uh, even though cloud was just in line.

And Gil, what do you think about the regulatory overhang that that most of these companies still have to go through the antitrust concerns? Is that, is that something investors should still, uh, be concerned about?

Absolutely, the Department of Justice is hell bent on Google not having a monopoly going forward, so breaking up the three monopolies that it says Google already has in order to prevent Google from having a monopoly going forward with chat. So instead of Google dragging its feet, which is what it's been doing so far, we think Google would be better.Of being proactive spinning off these businesses, it would probably release value to shareholders and uh but it doesn't look like that's what they're doing. It looks like they're gonna fight back, drag this out, which is going to continue to be a drag on the

business. Angela, I want to bring you into this and circle back around to Search and Chad GBT's role in Search here or.Those AI summaries because as I mentioned earlier, the company bringing up how many people are using those AI overviews, 1.5 billion users, but as I said, I mean like I, it just comes up when you Google. It's not like you opt into the thing. So I wonder how much added value that is bringing and how much that is really sustaining growth and search.

Yeah, I know, so I, I think that's a great question. And, you know, I think it's definitely gonna get asked on the call and, and, and also gonna want more clarity in terms of the AI monetization across Alphabet's overall business, right? Whether it be AI overviews, which is, you know, a clear, um, emphasis of this company here over the last couple of quarters, especially on the search side of things, or whether it be, you know, Gemini across.Its ecosystem and how they can monetize, uh, Gemini. But, you know, our view as far as Search is concerned is, and the numbers were, you know, really good in our view. You talking about growth of 10% on a top-line basis, um, for Search as well as on YouTube. So it looks like at least in Q1, the advertising side of things looked fairly healthy. We'll see if that can hold up through the rest of the year. My guess isYou're gonna start seeing some, um, some deceleration across the advertising landscape as we progress through the year. That's, um, so we'll, we'll kind of see how that plays out. But ultimately, um, you know, we do think they're gonna find ways to monetize this stuff. We wanna see, you know, where AI overviews plays in terms of the role here, but, um, at the end of the day, I, I think, you know, search here looks pretty good.

So let me ask you, Angelo, so a lot of these companies have reaffirmed their their capX we heard from Alphabet, I guess we'll know more at the call, but both Amazon and and and uh and Alphabet seem to be very positive and really ignoring a lot of the effects of potential tariffs. Is that your view that that these companies are sort of just keeping their eye on the ball and, uh, you know, can they afford not to be more pessimistic about what's happening or do you think they're, they're still, uh, you know, doing the right thing?

I think the opportunity right now is too great for you to kind of take, you know, the, the foot off the gas on the AI side of things. So, uh, I think Alphabet earlier this month did reiterate their $75 billion capex plan. I think you're gonna hear them reiterated it again here on the call. Um, I don't expect any change whatsoever in terms of some of these hyperscalers, um, for 2025. I think where the, the issue is at hand is clearly as we go into 2026 and beyond, I think that's really the risk for many analysts.The street out there. And literally, I, I think, you know, what's gonna be important here is the digital ad side of things, right? If that slows or rolls over here over the next couple of quarters because of macro uncertainties, the street is gonna get very concerned about the sustainability of CapEx going into 2026. And that's where you get the fear of potential cuts, and that's where it, it potentially kind of rolls over into areas like semiconductors and provides downside on that side of things as well.

Um, and Gail, um, I'm curious how concerned you are about that aspect, right? We, I mean, you know, if you tune into Yahoo Finance or really anywhere over the past several weeks, it's tariffs, tariffs, tariffs all the time, and we see that in a lot of the survey data. We see it in polling, we see it as a concern and so is it inevitable that a company like Alphabet is going to feel a hit from ad revenue at some point?

It is inevitable. The consumer was slowing down, let's not forget, before any of this stuff happened. Then we piled on Doge, which means a lot of federal employees are going to lose their jobs. Then we reduced immigration, which was a driver of consumption as well. And then we put in tariffs which is gonna create some ripples in the economy even if we don't follow through with new tariffs from this point on. So none of that is reflected in the back.Backward looking results we're already hearing technology companies say so far things are good, but we can, we know and we feel that things are slowing down. You're especially hearing it from IT services companies that are saying their projects are being blocked, their projects are being held, and advertising is relatively early cycle.So once all these brands and and companies realize that the consumer is slowing down, the first thing they do is pull back on advertising spend. That's why the March numbers are almost irrelevant for for advertising. It's what are they gonna say going forward, and they may not even know. I mean, we're just 3 weeks into, into this tariff conversation. They're likely to be more cautious on that and they're likely to be even more cautious next time and to Angelo's point.I'm not signing CapEx data center deals 2026 with this level of uncertainty. None of these companies are. They're gonna follow up on the commitments they've already made for this year. They already have the construction in place. They put in the orders, but to take on new investments with this level of uncertainty, highly unlikely.

So letme ask you a question. I mean, the stock was already.Down about 20% from all-time highs. So at what level would you say that the uncertainty is already very much priced into the stock? You know, it seems pretty compelling. They continue to beat numbers every quarter now 9 straight quarters. I mean it seems like the stock technically has started to really make a move for the upside. Uh, is it right to continue to concentrate on on those concerns, or do you just think the company has it figured out?

As long as Google stays as one company, it will continue to trade on its most at-risk business, which is search.Again, we are constantly in fear that those results will fall off a cliff as chat migrates traffic elsewhere, which will bring advertising revenue elsewhere. The best thing Google can do is lean into what the Department of Justice asked him to do and spin off these businesses. WeA will trade like Tesla. YouTube will trade like Netflix. Google Cloud will trade like a high growth software company at 10 times revenue.Right now they're they're holding all this value hostage to a business that is very much an existential risk.

Really uh interesting there, Gay. I, I wanna turn to to Intel because there obviously is also a really fascinating story here and Angelo, um, we'll get you to dig into to Intel here for us. The company is confirming that it is cutting some jobs, removing management layers in the words of CEO Lihuan, but what I keep coming back to is this is a company that still is just not delivering what investors want. When will it be able to do that?

I mean, I, I think the quick answer is that not in the next 2 years, um, and, and maybe never, right? So you kind of look at the company here, they've really kind of missed out on the AI boat. I mean, the world has completely changed over the last 3 years. They didn't have the right products out there. The emphasis was on manufacturing. It was on, uh, building, um, you know, that, that foundry, uh, initiative out there and, and not necessarily, you know, the end of the world or something that's not gonna come to fruition, but when you.Kind of look at, you know, them kind of missing the boat on the AI side of things, it's gonna be almost impossible for them to catch up here, given the competitive pressures out there, specifically in Nvidia. So, um, when you kind of look here, um, what they, they're essentially kind of caught now doing is continuing to lose market share in the, the core data center side of things and probably also on the PC side of things as you've got new emerging competitors on that side of things. And ultimately, what they're gonna have to continue to doContinue to right size the cost, uh, the cost side of things, right? So you saw, you saw a 15% cost reduction last year. You're, you're gonna see more cost reductions this year. And they really do need to at this point in time, if you're a Li Bhutan, you need to focus on kind of getting to positive free cash flow. And that's gonna mean doing a lot of, um, hard work on the cost side of things. And, you know, right now, streets looking at that happening in 2027, but you need, you need to see that happening quicker.

Yeah, it seems like there's only so much they can do, right? They're cutting 20% of the workforce and, and they're gonna do all they can to cut costs, but if they've missed the AI boat, I mean, what steps can they do to participate and regain leadership again? I mean, it seems like the, the stock has been range bound for almost, you know, 8 months now, right near $20. You know, what can they specifically do to change that in your view?

I mean, I think the hope is eventually you kind of build up some business on the foundry side of things, right? You're, you're moving to 18A here in the second half of the year into 2026. Trump is almost kind of giving you somewhat of a gift here by by essentially throwing tariffs on semiconductors at some point later this year. So the hope is they get some sort of momentum and, um, you know, upside on the foundry.Side of things and ultimately, the hope is you maybe you could spin off that foundry business and then you can unlock the potential gross the margin side of things on the product side of things. But again, you need to have some of those right products here um be developed over the next 18 or 24 months.

Angelo Gill, thank you so much for that instant reaction to those big, big numbers. Really appreciate it.

Thank you. Thank you.

And you can scan the QR code below to stay up to the the second with all of Alphabet's latest moves and to listen into the tech giant's latest earnings call. And by the way, if you take a look at Yahoo Finance.com, we have a new feature. You see the little blue box here that highlights it, and that is that you can listen to earnings calls.Right through Yahoo Finance's website. So if you want to hear what Sundochai has to say on the call about Capex, about AI, about cloud, well, you can do it straight through the website here, and that call will start in just a little bit, and we're going to keep going. Stay tuned, more market domination overtime still to come.Time now for what to watch Friday, April 25th, sponsored by Tasty Trade. Starting off on the earnings front, we'll be getting some more corporate earnings to round out the week, including ABY, Colgate, Palmolive, and Schlumberger. ABY will announce results for the first quarter before the markets open, and analysts expect another strong quarter of sales driven by its top two drugs, but weakness in its aesthetics business could weigh on the company's overall performance.Colgate Palmolov also reporting first quarter earnings in the morning. Analysts anticipate President Trump's tariffs will increase costs and likely hurt profit margins in the first quarter, but the company could get a boost from expanded production of its Hill's pet nutrition brand. Turning to the economy, the final consumer sentiment reading for April, it will come out in the morning. Economists forecast that number to dip slightly from the previous reading to 50.6%.Not a sharp shift, but signaling that sentiment is still stuck at historically low levels. We still have Mark Newton with us of Fun Strat and before we let you go, Mark, I want to dig into something that you said. You said you don't get rich trying to buy dips and you know, given that so many of our viewers and users are retail investors who have been trained to try to.Do just that. In other words, buy the dip, right, has been a meme now for a long time. Why as a technical strategist do you not want to try to always buy thedips?

Well, because momentum, uh, you know, in the words of my great great grandfather Isaac Newton, momentum continues until something pushes it hard enough so it'll change directions, right, in the opposite direction.Uh, look, it's tough. It's human nature. We all want to buy low sell high, but in actuality, when you look at the stock market, it's almost always better to to buy high, sell higher, use a momentum-based approach. It's worked for the last 1520 years as the number one factor in the stock market. So, uh, trying to buy things that you think are good value that have hit new 52 week lows is extraordinarily difficult to to to make work. And so I think that.You know, for me, if I want to invest in semiconductors, I wouldn't look at Intel. It had dismal results and, and the stock has done nothing in 8 months. I would rather look at the Nvidias, look at the, look at the broad coms, look at the, the TSMs of the world, look at software stocks which are acting a lot better than many semiconductors.Look for signs of sexual rotation. That's the whole key. You want to be where the strength is marry the technicals with the fundamentals. No need to try to be the hero and buy dips. I know it feels good when you buy dips, but honestly it's so tough to do. There's countless examples of the last decade of things that are down at lows, and you think it's they're, they're value traps. They just don't work, yeah, so, so let the stock prove itself and, and latch on as the technicals start to marry with the fundamentals and in my view that's.A road map for success.

Well, it's worked out for you so far, yes, Mark Newton, thank you so much for being here. This was really fun. Appreciate it. On the other side of the break is asking for a trend. I got you covered with the latest and greatest market moving stories so you can get ahead of the themes affecting your money. Stay tuned.