Yahoo Finance anchors Dave Briggs, Seana Smith, and Jared Blikre discuss the market's reaction to this week's tech earnings.
DAVE BRIGGS: It's been a busy week with earnings over the last several days, Amazon, Alphabet, Apple, all forecasting a slowdown in various parts of their business. Apple missing revenue estimates for nearly every product in its lineup, with CEO Tim Cook highlighting a challenging economy. We're going to get into all of our big takeaways about the week in big tech. But overall, when you step back from the ledge, it was a very ugly day yesterday.
But when you look at all these stocks-- Google, Apple, and Amazon all up for the week, and Meta up big time for the week. But my takeaway, generally speaking, is Apple. I said leading in, I thought this might be a little bit like the Philadelphia Eagles loss in mid-November to Washington because it's just a speed bump on the way to the Super Bowl. And I think that's largely what investors are digesting today.
Yeah, it looks like more of a supply issue for Apple than it is truly a demand issue. And when all the smoke cleared, guys, I feel like the number that you cannot ignore is 2 billion active devices. When all is said and done, that number was 1 billion in 2016. That is a rocket ship that had a rough quarter due to the China COVID slowdown. And now that is largely in the rearview mirror. Probably a speedbump was the quarter.
SEANA SMITH: Yeah, I certainly think it was a speed bump. I mean, you don't have to look any further than this desk right now to really just get a grasp on the strength of Apple's ecosystem, how many products people buy once they just enter it and just get one. The iPhone leads to many, many purchases. Clearly reflected in that 2 billion number, Dave, that you just referenced. Certainly, you can't bet against Apple, and you're looking at the gains today. And that is just proof of that.
My big takeaway was Meta because I was very, very wrong about this. Meta blew it out of the water. It's down today, but on a weekly basis, we are still in the green. On Wednesday, after the report, we certainly saw the reaction in the stock this week. It registered its best intraday performance that we have seen in nearly 10 years when it comes to Meta share.
Shot higher on those cost cutting efforts, on the revenue guidance, on that massive buyback in addition to the buyback that they did announce coming off the worst year on record. Certainly seems to be that a turnaround story has certainly been underway and is brewing here. Certainly on a strong start off-- to a strong start for the year. And you're looking at the analyst reaction, Jared-- a number of upgrades on that name.
JARED BLIKRE: Yeah, I was looking at upgrades on a number of names here, and especially Amazon and Alphabet with respect to the cloud. You take a look at the margins for these big tech companies. They've been under pressure, the same as the margins of the brick and mortar stores. And when it comes to AWS, it's a twofold thing. AWS-- or Amazon, it's a twofold thing. AWS, which is Amazon Web Server, the cloud, that's been facing some pressure, and also, their retail business.
So here's what RBC is saying, Brad Erickson, that this is a second half story, given the myriad of crosscurrents. So basically, wait for that third quarter, or two quarters away. Heavy focus on improving retail margins this year is a positive, but AWS missed revenues and margins and guided lower for the first quarter with an acceleration not beginning until the third quarter. So we'll see if that happens here. And I'm looking at the YFi Interactive. Amazon down 8% today.
We also have another headline. This came in a few hours ago. FTC preparing possible antitrust suit against Amazon. That's according to a couple of different sources right now. And not a big surprise, but look at Alphabet as well. The two stocks most heavily levered potentially to the cloud that just released earnings down a bit.
But I think somebody-- I think you mentioned this, Seana. Everything up on the left side of the board here, the megacaps green for the week, and even Amazon up by 8/10 of a percent. I want to get to Alphabet really, really quickly. Some interesting words from Citi-- though Alphabet's results were mildly relatively in line with expectations, demand for search, YouTube, and cloud hit by macro challenges. Also, they're saying that a reengineering of the cost base can improve margins over time. So lots to sink into there.
And with this big tech growth slowdown, what does Jerome Powell and the Federal Reserve going to be do? They've been waiting to see as they continue to hike interest rates. And here's what the Fed Chair said about their progress way back on Wednesday.
JEROME POWELL: We think we've covered a lot of ground, and financial conditions have certainly tightened. And I would say we still think there's work to do there. We haven't made a decision on exactly where that will be. I think we're going to be looking carefully at the incoming data between now and the March meeting and then the May meeting.
I don't feel a lot of certainty about where that will be. It could certainly be higher than we're writing down right now. If we come to the view that we need to write down to move rates up beyond what we said in December, we would certainly do that. At the same time, if the data come in any other direction, then we'll make data dependent decisions at coming meetings, of course.
JARED BLIKRE: You know, my big takeaway from the Fed is the same it's been for the last, what, four meetings now that Jerome Powell says something, and the market doesn't really believe him, although the price reaction Wednesday, they really did not believe him because we saw stocks go up, even though he said we have a lot more work to do on the inflation front. So I don't think the market is getting this one right, but we'll have to see, Dave.
DAVE BRIGGS: I believe him. Senator Kennedy from Louisiana said he is as serious as an aneurysm on national television earlier this week. And he genuinely proves to be. So I don't think there's been any fluctuation from the beginning of this tightening cycle from Jerome Powell. He's proven to be a man of his word. Look, clearly, he was late. We all acknowledged that. That's well in the rearview mirror. I see no reason to not believe him.
But I can't help-- and we're going to talk about the jobs report in a minute. I couldn't help, this morning, wonder, how is Jerome Powell watching this jobs report? And how would the reception have been different? How would Wednesday have been different if they had known what this job report was going to show? Would it have been a 50-point increase? One would have to imagine and certainly his commentary would have been dramatically different had he known this monster was coming.
SEANA SMITH: Yeah, youve got to ask yourself, what exactly the Fed is doing when they're looking at this number and how it really changes their outlook, the implications there in terms of policy, because you would think more rate hikes would then be on the table.
DAVE BRIGGS: Can he slow the labor market?
SEANA SMITH: Well, that's a big question.
DAVE BRIGGS: I don't-- it doesn't appear--
JARED BLIKRE: Oh.
DAVE BRIGGS: --that--
JARED BLIKRE: Give him a little time. Give him a little time. Wait for March, April, May. There are four or five different indicators. I follow the Macro Compass. That would be Alf Peccatiello on Twitter. He's laid this out, four or five different indicators, macro indicators, saying that we're in for a major slowdown that we're not seeing in April, May. So second quarter this year could come like a ton of bricks. You know what? I'm not seeing it in the stock charts right now. Admittedly, there's a huge, huge disconnect between the fundamentals and technicals. And we're going to get to that.
SEANA SMITH: A massive disconnect.