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It is Bloomberg Business Week. Let's get a check on Intel, Carol, because this is the stock to watch in the after hours right now. Shares just absolutely creatoring the companies Wow down eleven percent. A series of what we call red stickies here, this company suspending its dibben end. The revenue outlook missed. It's a third quarter revenue come in third quarter revenue. The outlook goes from to twelve point five billion to thirteen point five billion. Estimates were for fourteen
point three eight billion. They're implementing a more than fifteen percent headcount reduction. They've announced a ten billion dollar cost reduction plan, and they've suspended that dividends starting in the fourth quarter of twenty twenty four.
Looking at our Ian King, who follows the sevenconductor space out with his story on the Bloomberg about Intel. He talks to us. It reminds us at CEO Pat Gelsinger, despite a massive spending plan to restore Intel to industry prominence, is struggling to improve the company's products and technology fast enough to retain customers. And so this is part of
the problem. Right. They've been trying to do this turnaround, and it's been imperative for Pat Gelsinger and the company to show that they are having some progress on this. This is not necessarily a quarter that shows any kind of progress. If anything, that shows that they've got to continue to kind of rein in costs and try and figure this out.
Okay, well, let's see what James Chalkmok has to say about this. He's a technology analyst over at Clockwise Capital. James, good to have you with us. We love talking to you around earnings. You guys have the ticker time is your ETF. I don't see Intel in there. This is a company though I know you followed in the past.
Tell us your reaction to this huge news out of Intel with this cost reduction plan, suspend the dividend in the fourth quarter of twenty twenty four and then also these thousands of layoffs.
Yeah, I mean they have to do something right.
You know, they have to write the ship somehow because the growth is just anemic. And one way to do that is to find a way to grow, grow again, or you can.
Fix things on the expense side.
And it looks like they're giving up on the former and going toward the ladder, and you know, we're turning slightly more cautious on standings. More broadly, we've been cutting our exposure there across the board. We're basically just now left with Navidia, a little bit of SMCI on the data center side, and GeV on the utility side.
So you know, we're rotating the portfolio.
When we think that this rotation out of tech is going to be more prolonged and not just kind of the last two weeks that we.
Saw, why are you rotating out of Socks? We talked about this with our Gina Martin Adams, who follows the equity universe for US are you know, chief equity strategist here in the US. I mean, the Socks is up about sixteen percent this year, but we've had two volatile days this week of a big sell off and then a big rally or big rally and then a big sell off if you will, it's seen that as a
leading indicator. You're saying that in terms of the semi cycle, that you're seeing retrenchment, that there's we're going to see a pullback.
Well, i'd say across large tech more broadly, we've been really borrowing from twenty twenty five returns. You know, you am, Apple and Microsoft are probably the poster childs of pulling from twenty twenty five forward. A lot of hype obviously around AI and chips and what that means for the industry, but a lot of that is increasingly priced in. So and on the backdrop, you have a weakening economy, you
have uncertainty as it related to the presidential election. You have now fed swaps pricing in three rate cuts by the end of the year, which to us is somewhat absurd.
You know, so the likelihood of the probability.
Of negative surprise is outpace the ones of positive surprise. So I think you got to be more balanced, you know, look more value names, small cap names.
So we've been diversifying out of large.
Cap tech and broadening out the portfolio to the sectors quite frankly, really aren't part of the innovation tilt that we have all.
Right, always You're always come on on days where Snap reports earnings, and I know you don't own Snap. I know you covered Snap from the beginning when at ICI owed you and I spoke years ago, James, you changed your tune on this company. Shares are down twenty two percent right now. The company forecast to justin Ibada for the third quarter of the guidance missed the average analyst estimate. What is going on with Snap?
I mean, I'll say the same thing I tell you every time. I mean, it's when I when I first started. You know, they had Van Stiegel laid out the vision. You know, it was a sound one, but they had an identity crisis where they don't really know what they need to be. You know, you can either be an ad platform that serves everybody and go large, or you can be super niche and drive engagement.
And monetization on a per user basis. They're doing neither of those.
And I just think that there's just kind of lost and uh, you know, we're you know, in this market is one that's rewarding companies that have failed in recent quarters because they've been beaten down too much.
Snap I definitely wouldn't put into that bucket.
Let's go to Amazon. Obviously, we've talked a lot about, you know, the companies that are reporting today, Amazon and Apple in particular, and how they can shape sentiment when it comes to the Nasdaq one hundred. Amazon's down more than four percent as we speak. A lot of it has to do with the outlook. See three quarter operating income of eleven and a half to fifteen billion. That is shy the street estimate of fifteen point sixty six billion,
So the outlook not very upbeat. Second quarter or AWS net sales always important in terms of profitability at this company twenty six point twenty eight billion, So that was actually better than the street estimate of twenty five point ninety eight billion. Yeah.
I was just going to add in for James that it's the sixth biggest holding in your clockwise Core Equity and Innovation ETF. So it does make up about four percent of your portfolio. What's your reaction to the numbers that we just got.
Yeah, it's four percent now six percent a week ago. So you know, we cut exposure into the print. Worried about really the softening consumer and the implications for retail revenue as we look forward into the second half of the year. Obviously CAPEX was a big question, but I think Microsoft kind of muted those fears. But you know, a lot of the hype around the operating income leverage, you know, there was a lot of hype around it, quite frankly, and it's happening, which is good, but you know,
they need the revenue to keep up with it. On a positive note, AWS is doing quite well.
That was slightly better than expected.
So all in all, I'd say it's a it's a pretty good quarter, but you know it's it's one that was certainly we'll see what they say on the call.
But I think this falls into my.
Comments earlier about big calf Tech just can't be overweight these names to the same degree as you look into the second half as we were in the first half.
So James, So the selling that we're seeing in the aftermarket, I mean, this is Amazon is up twenty one percent so far here in twenty twenty four, and you know, I know there's a lot of metrics in how we do it. I'm just going to go basic. You know, your forward pe of about forty But is this just a case of the fundamental story we're at Amazon, you still like, but maybe valuation wise, maybe that is some of what we're seeing in terms of the selling.
I think, I mean, they ultimately missed numbers, right, so you Ago is coming yeah, and the ALOGO is coming in exacerbating.
The pressure.
But you know, they could walk it back on the call, provide more colored commentary.
I got to look at you see exactly where the weaknesses were.
But that being said, you know, I think it's just I think you got to take this into the context of what happens the big tech from here, and.
You know, a lot of these have had remarkable runs.
Will they be able to perform in the second half the same degree that they were in the first half?
We just don't think so.
Okay, So what does happen to big tech here? I mean, in videos, you're top holding it's a five percent of your portfolio.
Yeah, well it was four yesterday and then uh then it went on it was like four point three and then went up for five.
Yes today's movement. Yeah, we got to evaluate Navidia.
But that's the only one really that we have no problem kind of.
Maintaining that more sizable weight.
It's really the other companies within the semi space that we're we've shed from the portfolio and really we're just.
Limiting it to.
Navidia, SMCI and GeV as we think about the data center.
All right, well, there's a lot going on, and the earnings continue to cross the Bloomberg termin looking at DraftKings down about eight percent, us coming out with a little bit of a forecast. We'll break down some more of those numbers. James chock Mak, thank you so much. Busy earnings day and you walked us through at he's tech analyst ever at Clockwise Capital