Microsoft CEO Satya Nadella attends the US Senate Bipartisan Artificial Intelligence (AI) Forum at the US Capitol in Washington, DC, on September 13, 2023.
Stephanie Reynolds | AFP | Getty Images
Top 10 things to watch on Wednesday, October 25
1. Microsoft (MSFT) The quarterly earnings release was simply amazing with nothing wrong with this club name. Maybe take a big share of the alphabet (Google). The software giant has already been proven to be one of the strongest players in the AI arms race. An incredible quarter from all sections from PC to gaming. Will artificial intelligence conquer the personal computer world with chips from Advanced micro devices (AMD) this winter? MSFT shares rose about 4% in the premarket.
2. Alphabet was mailed an unsatisfactory quarter with no real explanation for the slowdown in its cloud business, which fell short of Street estimates, and a truly paltry analysis of its NFL Sunday Ticket. Management talked about how much the NFL liked him. Well, no kidding. The NFL received $2 billion for the rights. What will the league do, complain? I also thought the AI discussion was lame, and overly focused on Bard’s chat-based tool. Shakespeare at his worst? He’s still very good on a club contract, but it certainly wasn’t explained in the call. The stock fell 6% in pre-market trading. We had an excellent note on Alphabet last night, as well as a separate analysis on Microsoft. I don’t want to criticize the club too hard, but our analysis was correct.
3. Texas Instruments (TXN) The post-earnings discussion was an example of conference call at its worst. As usual, complete disdain for analysts. But what’s worse is that the semiconductor company’s previous industrial work was terrible. Communication is an ongoing bad topic. I was impressed by how full the channel was with chips. These people are still spending a lot of money in plants and equipment, and the chip law represents a windfall. Shares fell more than 5% before the bell.
4. Why the heck? visa (V) down more than 1% this morning? The key metric here is cross-border volume and it has been very good. Payment volume increased by 9% during the quarter. Management announced a $25 billion buyback program and raised its quarterly dividend. I started last night’s show with the idea that even good profits can be outperformed by the bond market. You see this now.
5. An embarrassing amount of attention directed at him pop (SNAP), a defunct company. SNAP is a $15 billion company. META platforms are worth $800 billion. BTW, YouTube Google was the lone star in an incoherent conference call. Snapchat’s parent company had positive growth of 5% but was still losing money: a loss of $368 million versus a loss of $360 million a year ago. However, shares rose nearly 3% in the premarket.
6. Geopolitical risks are rising. The United States has drawn two lines in the sand. Red Line No. 1: We will “act quickly and decisively” if Iran or its proxies attack American personnel. Red Line No. 2: The United States renewed its warning on Monday that it would defend the Philippines in the event of an armed attack under a 1951 treaty after Chinese ships intercepted and (deliberately?) collided with two Filipino ships in the South China Sea. Some in Manila have sought US military support as incidents mount. Will Chinese President Xi Jinping pull the trigger?
7. Where will Nvidia Will NVDA chipsets go to China? How about going back to the US to get a share of AMD’s Intel Corporation (you are K). This is the most likely scenario.
8. Does gold explode? It will be the biggest winner Barrick (Gold), which is dirt cheap. The copper byproduct is “free”.
9. Otis around the world (OTIS) announced big quarterly numbers. What drove the industry was record margins of 16.9% thanks to a 90 basis point improvement in service. Organic elevator sales are light but what matters is the strength of the Chinese service, refurbishment and safety business.
10. Is the Fed starting to win the war on inflation? Used car sales are down, and housing cancellations are up.
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