Tech Giants Face Pressure, Here's What's Coming Next

We're going to focus today on the state of the tech trade. Apple and that new uh intraday high it is approaching. SK Heinix is now open for business at the NASDAQ. A lot of focus on what's been happening in tech. I've got Steve Weiss, Jenny Harrington, Bill Baroo, and Kevin Simpson alongside today. We do have a a mixed market picture. How do you see things? Again, I'm going to break away at any moment here uh for this uh interview that we're waiting for, but you want to just give me your opinion on the markets while we wait for this? >> Yeah, I think look, it it's at this point it's got to be catalyst driven in terms of the tech stocks, in terms of the AI stocks because there seems to be a propensity to take some profits and the uh and that goes back to MU. Now, we see Nvidia finally breaking out above not breaking out but above 200 and that again is news-driven. Apple trading lower. That's news driven. So I think that's where you are that it's tough finding the marginal buyer to come in at these levels to drive these meaningfully higher. So it doesn't mean the story's over. It means that the market's nervous about when the story ends and particularly nervous about anybody comes any of those companies that are the big spenders in AI coming on their call and saying we're slowing down. I think it'll be okay for Meta to say that because they found another use for the compute that they're buying and they're building another business as well, but the others that could really take the trade down quite a bit. Kev, tech is the top sector this week. So, the dip buyers, they showed up. You figured they would. You didn't know exactly when, but you figured they would, and they did. Michael Hart at Bank of America says the MAG 7 is still the key to this overall rally. He says, "So long as the MAGS, that is the MAG 7 ETF." Let's show it to you because he needs it to hold the 200 day moving average 65. Okay. As long as it holds 65. Can we see that, please? Can we see the MAGS uh ETF? Investors will likely reload longs or bullishly rotate rather than retreat from risk risk assets. So, there it is. 6753 needs to hold 65. >> How do you see this? It's the right place to be because these are the companies. They're gravitate gravitating towards the companies that will deliver earnings. And I agree with everything Steve said about the setup because it's not just about whether or not companies beat whether they beat by a penny, whether they beat the whisper number. I think everything comes down to guidance, what the expectations are. And if you don't deliver, we saw this with Samsung already this week, you're going to get slammed. So, it'll be interesting to see which of the mag seven embrace the earnings reports and flourish and which ones suffer, but we know we'll get a little bit of both. >> I I agree totally with what Hard's saying and we've been saying it for a couple of weeks. In fact, right after that Nvidia earning I mean Micron's earnings report um you remember the day after you saw all the spenders they were getting tagged as Micron was up and memory was running for us. I looked at that as capitulation on the fear of capex. Not saying that capex on the next earnings report is in its higher than expected is not going to derail a name. Meta was our biggest concern out of the mag 7. We've seen really that capitulation on the capex story has has made a U-turn and we've seen the mag 7 really outperform since then. Our our base call in the second half of the year is Mag 7 is going to outperform. I love what we're seeing in a name like Nvidia waking up right here. I mean it's it's basically maybe up 10% on the year flat over the last month. It hasn't done anything. It's can digesting holding the 200 day moving average really constructed this week. Apple making highs. You know, we're we're getting cash to work for for new clients that have come in and new monies that are coming in. I'm I'm trading the target. Nvidia, Broadcom. I think these are buys right here and it's going to run >> well. There is a lot of money that continues to flow into tech. More from the flow show from Bank of America, almost 19 billion into tech, which is on track for a record. I don't think that's going to surprise anybody. But you have had as these stocks have pulled back, you have had some money uh going back in there. You're on target for $183 billion in inflows in 2026. As I turn to you, Jenny, you know, the makeup of the market's been changing. I think that's been obvious to everybody, but this week was a reminder that it's not going to change fully, right? >> You look at the equal weight, which has been setting new record highs almost weekly over the last month, is down a half a percent this week. It's not a surprise that technology is leading as a sector. And then you have the equal weight which is off. So how do you see it here? >> Well, I think Weiss is exactly right that from here on it's got to be news driven. So I just finished writing our quarterly letter and what I was talking about was for the second half of the year everything's supportive, right? You've got these unbelievable earnings growth that we just had. Interest rates are pretty visible. There's a favorable regulatory environment. And so so I think we need to wait for the news of earnings to come in to see which way we go from here. So, we're up 10% on the year and do earnings then boost us to up 20%. Or do they just support a plateau? And I think the challenge, Scott, of all that good news is we need to remember that Q1 earnings came in at plus 29% growth year-over-year. Expectations had been for up 13% growth. So, now we ask ourselves the huge move that they had in Q2. Is that anticipating another total blowout? >> Yeah, we're expecting 24 and a half% earnings, >> but it's already there, right? So now we're expecting 24%. Don't forget, we were expecting 30, 13, we got 29. Now we're expecting 24. If we get 36, does it blow it out? Or if we get 24, are people like, "Hey, yeah, we expected that." And that's why these these prices already ran up. So, do we plateau because things are truly great or do they exceed? And that that news that news is going to start flowing in the next two weeks. Um, I'm kind of excited, you know, I'm excited to see what comes our way. >> I think earnings are going to be great. I think, you know, Steve's right and and I think, you know, it's it's not going to be a shock to anybody in the fact that, you know, unless the hyperscalers suggest they're cutting back their spending, which is not going to happen. You're not going to be an Amazon and go now to the debt market and then come out and four weeks, 3 weeks later and say, "Well, we're going to slow down the throttle on the the spending." There's no indication whatsoever that Meta is going to do that either. It's the best mega cap month to date. It's up 19%. It's the top S&P gainer today, up some 6%. It leads me to Kevin Simpson. First to Kevin Simpson, then somebody else who's making a move here, too. But you bought Meta today as a new buy, correct? >> We added this to the growth portfolio. We have not owned Meta for some time. And for the past two years, it's been a constant criticism of their AI spend. And I think what's the pivot was this week for us is that now they're going from just blindly spending to to a path at least for how they can produce revenue within this AI, you know, ecosystem that they're building out. So I like a lot of the things that they're doing. Whether or not the the the Muse Spark 1.1 is anything that really translates to profitability, I don't know. The fact that they're able to to sell some of their space within their compute makes them a competitor to some of the things that we're seeing with Google, with Amazon, and it's not just a media company or an advertising company. They're branching out a little bit. And I like what we see. >> Yeah, that's how Zuckerberg sees it, and he's saying as much. He tells an interview I think as a backs stop even if for whatever reason we don't need all the compute ourselves or for any number of reasons there's a very large amount of demand that I think you could sell it long-term like AWS or Azure or Google compute he sees what they've done they don't have a cloud business at Meta and he says I want a piece of the pie and you're buying into that vision >> I think it's a great idea now the only thing that would scare me a little bit is why do they have extra compute because of all the spend that they've But I like the fact that they're branching out. I like the diversification. I like what they're doing with hardware. This is a neat company. I'm happy to be back in it. >> Yeah, >> they're they're on the verge of of that bottom of the ninth inning comeback right here. I mean, the they just needed to deliver and execute and finish the job here, but they're on the verge of doing it. I mean, from a PE standpoint, they're at the lowest level since late 22, early 23. So, if they can deliver here, I mean, it it could really be a great one. I was going to come to you off the top of the story because you flagged that you had bought more meta uh and then we got the news from Kevin that he established a new position. So it sort of took a little bit of precedent. But what about your theory behind why you just did this? >> Yeah. So as you recall I bought more early in the week when it was down. I texted you guys last night after the close and said I bought in the open I when the shares were down I don't know if it was in the open just before but the shares were down eight or nine bucks which made no sense to me. So it was a good opportunity to pick up more. Now, this is a monster size position. I don't think I've ever had this size position. So, I'm going to cut back on what I've added recently. But the reason I was perplexed is because let's look at it this way. U of the Mac 7, who are the visionaries there, right? The CEOs that have come in to Apple, to Microsoft, to Alphabet, they've come in as managers. You've got Zuckerberg who was the visionary, right? So that visionary in my view is going to be ahead of the others as they innovate with AI. And what he's saying is not that we bought too much, but that if you're worried about it, I'm looking at other uses for it and I paid so low for it that I can sell it at a premium. So that's phenomenal. So one of the big, you know, I'd say clouds over the stock. It's been okay. We don't see how Meta is going to make money off AI. Well, he's just told you how he's going to do it. And there's so much need for cloud. there's so much need for compute. They're going to be right there front and center. So, look, I don't want to say he's playing chess and he is playing checkers because they're brilliant CEOs in their own rights. But that's why I bought it. In addition to >> I think that chart, excuse me to interrupt you real quick, I think the chart is uh representative of investors trying to figure out what he is playing. >> Yes. >> Whether it's chess, checkers, or some other game. Yeah. >> Well, I that's what the chart has. >> I don't think that's what the chart I I I think that chart has more to do with like the big flows in and out of Tekken. And I don't know that it's that specific. You know, we added to this two weeks ago at $555 and we weren't saying like, oh, hey, investors have lost faith. We've said, hey, the broader markets pulled all >> No, no. I think I'm going to stop you. I I think there have undoubtedly been instances in time in this name where investors have questioned the faith and their belief in where they were deploying the amount of capital that they were spending. I don't think that's even debatable. >> Okay. Agree. And and like you know I've said many times way back when we were entering the stock several years ago and it was like sub 100 and we were saying hey that this year of capital efficiency is coming. Yeah. All of that. All I'm just saying is like the last two months, I don't know that it's as stock specific as it's been market specific because we've just seen huge swings. >> Oh, sure. And I and just to be clear, I'm not addressing the last two months. I'm looking at that chart of a of a year-to- date at minimum.