Amazon, Apple's AI ventures, Chewy's meme stock status: Market Domination

Can stocks (^DJI, ^IXIC, ^GSPC) hold onto gains heading into the final trading hour of the first day of the third quarter? Market Domination Anchors Josh Lipton and Seana Smith walk investors through the biggest industry stories leading into Monday's market close.

Mizuho senior analyst David Bellinger joins the show to talk about pet retail brand Chewy's (CHWY) new relationship to the meme stock trade after Keith Gill, known as "Roaring Kitty" on social media, disclosed his 6.6% stake in the company.

SEI chief investment officer Jim Smigiel weighs in on the Federal Reserve's greatest "wild card" — whether officials will actually cut interest rates this year or not?

Other top trending stocks on the Yahoo Finance platform include Cassava Sciences (SAVA); Chinese EV makers Nio (NIO), Li Auto (LI), and XPeng Motors (XPEV); and Boeing (BA) and Spirit AeroSystems (SPR) as the former has agreed to buy the fuselage manufacturer in a deal valued at $4.7 billion.

This post was written by Luke Carberry Mogan.

Video Transcript

Hello and welcome to market domination.

I'm Josh Lipton alongside Shana Smith in for Julie Hyman live from our NYC headquarters.

We're giving you the ultimate investing playbook to help tune out the noise and make the right moves for your money.

And here's your headline blitz getting you up to speed one hour before the closing bell rings on Wall Street.

I think it's, it's a diversion.

Number one, Boeing is having a hard enough time handling their own own production.

Buying back Spirit is the guarantee of nothing other than Boeing be managing it.

It has to be more than that again.

You know, to charge Boeing with criminal malfeasance by the government is sort of like a, a fire alarm company suing a building for having had a fire.

Uh We're in a situation here where Spirit is Spirit and there's no guarantee that Boeing will be able to manage it any better than they can manage their own operations.

The Supreme Court has said that the president does have absolute immunity from prosecution for official acts he conducts as president, but he has no immunity for unofficial acts and the court is sending this case back to the trial court where this all began and part of what they will have to do at that trial court is determine what is an official act and what is an unofficial act.

Me all year have been penciling in about two rate cuts from the fed.

So we were way behind when the market was thinking there was going to be six.

And now we, we're thinking that, uh, you know, we're, we're big ahead of the game as the markets pondering whether there'll be any at all.

I still think we're going to see the moderation and inflation necessary to get the fed to those one or two rate cuts later this year.

We've got one hour to go until the market close.

We're taking a look at some of the major averages here, we are treating just above the flat line.

You've got the dow essentially flat on the day, but you've got the S and P up just about 1/10 of a percent, taking a look at today's treating action really struggled for direction shortly after the open.

Although ever since just before noon, we have maintained uh some green here on the screen again up just about 1/10 of a percent for the day.

You've got the NASDAQ and leadership position here among the three major averages.

That's up just about 6/10 of a percent.

The real action though for today is going on in the bond market.

I want to take a look at the 10 year yield because right now when you take a look at that big number here, it's 4.48%.

We're just below that 4.5%.

Now, we have been pushing up against that just two basis, two basis points uh below that threshold right there.

That is something that traders at Wall Street pros have been talking about all trading session.

Now, Wall Street is starting to evaluate what exactly a Trump presidency.

What exactly that means just in terms of spending tax cuts, we're seeing that play out right now in the bond market.

When you take a look at the dollar, we're also seeing that move higher here up just about uh not too much here, just uh still below 106.

But again, this trend to the upside, if we do see a Trump presidency, some of the action that we've seen over the last two trading days kind of point, the fact that we could see more gains here ahead.

And then when I want to take a look at the oil market here because we have seen some gains here today, a hurricane hitting the Caribbean here and that's pushing a crude prices higher.

It's up just about 2% right now.

Also some geopolitical risk is playing into that move that we are seeing higher and taking a look at the sector action here so far today, technology consumer discretion, that's really been the story throughout today's trading day.

They are leading there.

You've got industrials and materials lagging behind and taking a look at some of the technology and leadership that we are seeing play out within the market right now.

Inside the NASDAQ 100 a lot of those larger cap tech names, uh showing gains here today.

You've got Apple up just over 2%.

You've got Amazon right around that level as well and of course, big gains for Tesla as well.

Well, the market is winding down the first trading day of the month, kicking off the second half of the year.

Jared B has a look here at how stocks tend to perform this month.

Jared.

Well, thank you, Shana.

If you're into the NASDAQ, guess what the NASDAQ has been up, something like 10 of the last 11 years.

But today we're going to focus on the S and P 500 which by the way was up 14.5% through last Friday.

That's the first half of the year and that's a material amount.

Now, going back to 1928 there are nine other years where the S and P 500 was able to mount gains of 10% or more.

And I took a look at those and you can see in the chart here, most of those outsized gains are concentrated in the beginning of the year, but not to be left out.

We still have July I'm trying to circle that right here.

So July expected returns down to about 1% from maybe 3%.

And those are just average returns.

But we're also seeing the tendency to close green that's down a little bit.

So we're entering a little bit of a trepidatious part of the year.

Now, Bank of America did their own study.

They looked at the 1st 10 days and the last 10 days, these are trading days of the month and what they found was July is actually the 1st 10 days of July are the best time to be in the market in this specific method.

And if you look here, you can see the end of September actually the worst, but just going back here to my original chart and kind of putting it together, looks like we might be in some, uh and we're just talking tail winds here, but we might be in some gains for the next couple of weeks.

But then those tail winds that kind of drop off and we're not seeing any uh boost at least by seasonality until guess what, right around even November just in time for the election things pick up again.

So that's the mental, that's the map that we're looking at here.

But again, these are just tendencies.

All right, Jared.

Thank you.

Well, investors prepare for hopefully another strong July ahead.

It still remains on the fed and the path ahead for the second half of the year and joining us now is Jim S Miguel Se I Chief Investment Officer, Jim.

Great to see you.

Good to see you again, Josh Sea.

So we had a maybe some big picture, Jim.

We had, you know, obviously strong first half.

Um What are you telling your clients?

You know, do you think the good times continue?

Do we repeat this in the second half?

We're, we're definitely letting them know that we think the economy has been much, much more resilient than we had expected.

Uh But we also are having them prepare for higher interest rates.

We're seeing that today.

This has been two pretty strong days.

Uh Obviously, a lot of that based may be on the outcome of the uh of the last debate and what that portends for November.

But, but our view has kind of always been and this is being one of our biggest tactical positions this year has been for higher 10 year rates.

I mean, we, we see inflation being stickier than expectations.

The Fed wants to cut.

There's no doubt about that whether or not they should or not, but we think we're only gonna get one this year.

Uh And, and we think the tenure does continue to drift, even drift back up to that 5% level.

We, the, the bigger news last week, maybe even from a debt perspective outside of the uh debate was really the CBO report.

So, you know, we 400 we are, we're gonna add $400 billion to the debt.

Since the February estimate, we're looking at 100 and 22% debt to GDP in the, in the next 10 years interest costs overtaking defense spending.

The picture is not, is not a pretty one and supply and demand at some point is going to matter in the treasury market when you talk about getting back, potentially up to that 5% level.

What does that timeline look like?

How quickly do you think we could re approach those?

We wouldn't be surprised to see that as we approach the end of the year.

So the, you know, the one wild card here is, what will the fed do?

We think we don't have enough time between now and July.

July is off the table and September might just be a little too close to the election.

So again, they want to cut whether or not the data is gonna allow them to do that remains to be seen.

We'll get another picture of that.

Uh This coming Friday with uh NFP.

Uh But this bear steen that we've seen in the curve is something that we expect to continue.

Uh So this could definitely be by the fourth quarter of this year.

We're gonna test those levels.

Again, let me ask you, Jim.

Um another earning season fast approaching here.

I'm just curious to get your take, when you look at earnings expectations, do they look um achievable to you, Jim.

Do they look lofty?

How, how do you think about it?

I'll take the latter.

They look a bit lofty.

Um very optimistic.

Uh I think earning season is gonna be interesting from not necessarily do do companies hit their numbers but how they hit their numbers are we talking about?

Is this, is this micro management, is this expense management and buybacks to get to this number that the street has put uh on each individual company?

Or are we actually seeing kind of organic growth and, and outside of all that, we're really more interested in guidance than we are in kind of the earnings like how, what, how are, what are, how are companies seeing the next kind of six months of the year?

How are they preparing?

What do, what do they see the the economy on that kind of day to day basis?

What does that mean for the consumer?

What does that mean for the business environment?

That's gonna be the most interesting thing?

But the the bar is high, the bar is particularly high in, in mech.

I mean, that's, that's where it's, it's very, very lofty.

So Jim my question to you, if you see yields, potentially the 10 year yield heading back to 5% you talk about valuations right now, maybe some concerning trend just in terms of how high that bar is here for this upcoming earnings season.

Where does that leave us with equities and I guess how much volatility should investors then be bracing for?

Well, it's essential because, you know, volatility is the key metric here in index level volatility has been incredibly low.

You know, we've we've been looking at 11 handles not that long ago.

So a little bit higher today, individual stock volatility of course is always gonna be higher than the index level.

But what's so unique is how high it is with the largest names in the index.

You know, if you look at the the the implied volatility of NVIDIA, it's over 50.

I mean, that's that is that is a really highly volatile name that just happens to be one of the largest companies in the entire world.

So uh so I I mean, our view on what we're telling investors is pretty basic at the end of the day, which is diversify, diversify away, particularly if you're a passive investor, it's worth remembering.

You're a, you're a buyer at any price and about 35 cents of every dollar you put into the market is going into 10 names and thinking about that in a different way, maybe I some active management adding some differentiated beta approaches equal weights or value indices, not a bad time to be doing that to kind of take some chips off the table with this very, very concentrated us large cap market.

And and Jim, you also know earlier, you mentioned the presidential debate, I just want to get your take.

I mean, obviously, listen, we had a debate today.

We had the Supreme Court decision.

Um, how are you talking about this election to your clients?

What kind of questions are you getting and, and what are your answers?

Yeah, I think all of us in this business when we talk about things like politics, we like to speak lightly.

But so, uh, no doubt, look, the, the Betty markets are what they are.

We're pricing in a higher probability of not just uh a win for former President Trump but really a a Republican sweep.

So now you, you're gonna get tax cuts, you're gonna get tariffs.

What does that mean?

From an inflationary perspective?

The one thing that we are reminding our investors of is that it in 11 thing in way, one way in which it doesn't really matter is the debt, right?

No one's talking about fiscal responsibility, no one's talking about entitlement reform.

So, however, we get to an increased debt level, whether it's through tax cuts or whether it's through additional spending.

The reality is we're going to be looking at a still a deluge of government debt coming down the pike that's not changing regardless of what happens in November.

So then what does that mean for the economy?

What does that mean?

Then more broadly speaking for the markets, given that risk that appears to be an over?

Yeah, we, we think it means uh you know, a higher than what investors are used to terminal rate from the Federal Reserve, a kind of a higher inflation rate than what have been used to in recent years.

So that's that in our minds, that kind of plays into this kind of higher for longer type scenario.

Uh because again, supply and demand does matter and we're gonna have a lot of supply whether or not all, all the same buyers are going to be there for the Treasury market kind of remains to be seen.

We're skeptical of that.

All right, Jim, great to have you.

I said thanks for helping us kick off the show.

Thanks for it.

We are just getting started here on market domination and coming up shares of Chewy on a wild ride after the influential meme stock trader known as Roaring Kitty revealed a stake in that company going to speak to an analyst about what it means for the pet retailer and Tesla set to report delivery numbers for the second quarter this week.

Can it match the performance by some of its top Chinese competitors?

Stay tuned much of that much more of that and more.

You're watching market domination.

It's been a wild day for Chewy investors ahead of the open Keith Gill A K A roaring kitty disclosing.

He took a 6.6% stake in the company and it comes after his tweet last week of just a dog which drove shares higher but we are seeing the stock off well off those earlier highs and now down just about 5.5% joining us.

Now we want to bring in David Bellinger.

He is Mizuho's senior analyst, David.

It's good to talk to you.

So it certainly has been a wild couple of trading sessions here for Chuy.

I'm curious from your perspective.

Obviously, when you take a look at the trading patterns of chewy leading up to this most recent news, it had been trading very differently than some of those other meme stock names.

Is that now all about to change or has it now changed because of the activity over the last several days?

Yeah, great.

And thanks for having me on look, this, this is a very odd situation here, right?

We don't think this is an optimal scenario for Chewy shares and just taking a step back here.

This is very much outside of the company's control, right?

Senior management is doing a pretty good job of maintaining and managing the business going forward.

But I think these developments that you've got here today adding a lot of volatility in the stock and from an institutional investor standpoint, I think this could create an impediment to owning shares, right?

You're gonna have Chewy now associated with these meme stocks is gonna get grouped in with gamestop A MC.

We've all seen what happened to those names in the past.

So I, I think from, from here on out this excess level of volatility, this excess news flow.

It's, it's gonna create a, a growing sensitivity to owning shares.

We don't think that's a great development for Chuy David.

I'm just curious, you know, I mean, the meme stock sort of trade theme.

I mean, I'll be honest, David in 2021 I, I did not think, you know, we'd be still talking about this in, in July 2024 but it, it seems like it's here in some form here to stay.

I'm curious just how if at all David, it kind of just impacts and influences your job as a financial analyst.

It's a great question.

I, I didn't think we'd be talking about this either.

But for, for my view, we're looking at Chewy from a pure fundamental perspective, right?

And, and Chewy is a real company, right?

You've got $11 billion of annual revenues.

You've got 20 million active and loyal customers free cash flow is starting to turn positively for Chewy.

It's starting to inflect higher.

Our real concern with the stock has been that, you know, net active customer growth has stagnated.

You, you've had six quarters in a row now with year over year active customer numbers down, that's been the big hesitation for us.

Chuy operates in a great sector.

We, we think that senior management is doing a good job.

The sector overall has been challenged though.

You've got all these inflationary pressures.

It's been holding back pet ownership and new adoptions and we really think that's the key uh next catalyst for Chewy.

But, but now with all this news flow that you've got here and try to track data points across Reddit or Twitter or just somewhere else, it just adds a new layer of complexity to all this 11 that we have to track.

But, but I think from an institutional investor standpoint, it's very easy to just avoid this headache, right?

You, you don't have to worry about this if you're not a holder or if you're not involved in some way.

And I think if you're getting more and more of this news flow and more and more of this fever pitch picking up, you know, that that's gonna make, you know, your your typical institutional investor that much opposed to owning or, or selling the stock and just, just taking more of a view of a neutral and standoffish kind of kind of stance here.

Yeah, I'm curious if you could talk to us a little bit more David just about that fall out.

You mentioned the potential shift that we could see an institutional investor involvement beyond that.

How volatile could this could these next several trading sessions be as a result?

And when you talk about the fact that is trading now much more similar or more similar to a meme stock rather than to fundamentals, you talk about the movements that we could see on the back of earnings, things like that.

How much of that is now discounted do you think?

Yeah, it's highly, highly unpredictable.

And for me to tell you what type of trading range chu will be in tomorrow in the next few weeks is, is near impossible.

But I, I think what you are gonna start to see is the fundamentals start to be decoupled with the way in which the stock is trading, right?

And some of these things like historical valuation parameters, maybe they get thrown out the window, right?

It it makes our job increasingly more difficult.

So we are trying to look at this from a fundamental standpoint if there's an opportunity in the stock.

But, but in terms of, you know, day to day volatility, some of these squeezes higher, they they screen as potentially good exit opportunities.

You, you had a big number one shareholder in Chewy private equity firm BC partners, they're already selling their stake, right?

Chewy bought 500 million worth of shares directly from them.

There was a filing late last week that they used that meme strength uh later in in the period to to sell additional shares, 100 and $55 million worth of shares according to that filing.

So you, you may see more and more of this as the volatility plays out, but it's something to keep an eye on from the from the fundamental standpoint as well as just this, this day.

To day volatility.

Uh final question, David, you know, and, and here's probably one of your more comfortable, you know, answering as a financial analyst just what are, you know, you're on the sidelines, David, you got a neutral, what do you need to see?

I mean, take roar and kitty out of it.

What do you need to see here before you would be comfortable telling your clients say, listen, this one's a buy.

Yeah, absolutely.

The, the number one element here and the number one catalyst is growing active customers in a sustainable way.

It chew.

We went from about 13 million active customers in 2019.

You know, the whole pandemic surge, the shift online spending.

That number ratcheted up really quickly to about 20 million.

We've sort of been stuck here, right?

And the, the, the the company has had some mixed guidance on when and just how quickly you know, that those numbers just start moving higher, last earnings call with Q one results definitely a better than feared print.

And you did have some green shoots coming out of adoption numbers starting to pick up relinquishment data, starting to get better on the pet side.

But it was pretty clear to us that we, we can't fully underwrite this, you know, one quarter doesn't make a full trend here.

And I I think you might see numbers fro from at least a pet sector begin to improve slightly, but with all these cumulative effects of inflation.

Ju just that clear path to a sustained upward move and active customers, especially for a growth stock like this.

That's what's being uh held back in our view.

And with that, that's the next catalyst and the most consequential data point we're looking at from a fundamental perspective, David.

I appreciate you coming on taking all, talking all things chewy and roaring kitty.

We appreciate it.

Thank you.

Let's get to some trending tickers now, ev stocks trading higher today.

It's after Chinese automakers reported better than expected deliveries for June and Tesla also riding a rally as the company is preparing to announce delivery results tomorrow.

So Tesla in the green here, Sean, it did seem like, you know, it it was that news from Chinese ev makers, Neo and others, they report some uh ev delivery data for Juno Q two was obviously well received.

Of course, Tesla there as we said, they're gonna be announcing their Q two deliveries not, has not been an easy 2024 for Tesla.

We know that stocks out about 15% so far this year though, I will say Bloomberg pointing out the move here.

We're seeing Shana Mark's uh fifth straight day of gains for Tesla would be the longest winning streak in almost about a year.

Yeah, straight back above the 200 day moving average, I believe for the first time since January.

So we talk about the sentiment shift, maybe that we are seeing surrounding Tesla, you've got the news out uh from some of those uh Chinese uh ev makers earlier today, that's obviously adding to that bullish sentiment that has been surrounding Tesla as of late.

Although I should caution that with or maybe um cushion that with the fact that many on the street are still a bit skeptical about what Tesla's quarters are going to look like.

At least in the immediate term when you talk about the fact that they've had to resort to price cuts just in order to boost demand.

Wells Fargo was out with a note today saying that, hey, taking a look at the moves that we have seen in Tesla, it's really hard to argue that we are going to see a meaningful move to the upside when it comes to volumes that they actually called out the fact that they expect to see quote diminished returns on some of those price cuts here.

They expect the autos gross margin X credits to drop by 210 basis points on a year over year basis.

So there's certainly a lot to be, I guess, maybe cautious of when it comes to Tesla in the near term when you take a look at just the fundamentals and what Wall Street is expecting.

But despite that, you take a look at investor sentiment and they're still finding to buy Tesla.

No, he's not cautious long term, Dan Ives and Wedbush, here's what he had to say, we believe that China growth piece, he's talking about Tesla's numbers that are coming.

We believe that China growth piece for Tesla is slowly turning around and saw a mini rebound, mini rebound in Q two which should help Tesla come close.

He says to the streets, 435,000 units estimates still outperform target 275 bullish Dan Ives.

When we get those numbers later this week, we'll see uh what Wall Street's reaction is to that exactly what the numbers are that Tesla puts out.

All right.

Well, shares of Boeing on the rise today, the jet maker announcing that it will buy back supplier Spirit Aero Systems for 3725 a share of the deal uh just around $4.7 billion.

Now they're doing this just about 20 years after the spin off from uh Spirit Aero Systems here.

So I think the question that Wall Street is asking right now is how much of an overhang, maybe this removes when we talk about the turnaround, a picture that's taking place of the turnaround story right now of Boeing, what Boeing needs to do in order to really regain some of that momentum, win back trust, not only of its customers who are flying on airplanes, but obviously the airlines themselves, maybe this move is going to be enough here in order to regain some of that trust, get a little bit more of a better handle on the manufacturing side of things that maybe eliminate some of the issues that have plagued here over the last several years.

But again, analysts at least early reaction do remain cautious on what exactly or how big of a catalyst this is going to be for Boeing, at least in the media, uh I guess in the near term, near to medium term.

And on top of that, we had, so that's one headline then, I mean, there's a lot of Boeing headlines.

We had a lot of then we had reports that you saw Sean Doj plans to charge Boeing with criminal fraud.

Find the company violated a 2021 deferred prosecution agreement.

This was tied to uh two previous fatal crashes.

So a lot going on and on top of all that, of course, what you're wondering who's actually gonna be leading this company because you have the Ceo Dave K and we know he's resigning at the end of the year.

So who takes that big chair?

You have heard folks kind of asking could it be Pat Shanahan?

See of spirit arrows systems is, is that the guy we wait and see.

Meanwhile, Cassava Science is announcing today it's forming a committee to investigate two senior employees.

This coming days after a researcher connected to the company was indicted on fraud charges that researcher allegedly submitting fake data to the National Institutes of Health related to an experimental Alzheimer's treatment.

The stock was also temporally halted Friday due to volatility after plummeting more than 40%.

So this one is a it's a complicated one show, I mean Cassava, it's a small company market cap of around 600 million, but it was making headlines.

Um and per reports, you did have this advisor to the company indicted by a jury.

The allegation is submitting it fabricated falsified data to secure this I guess 16 million grants from the National Institute of Health.

Um in a statement to the journal, the company would say, listen, this person is no longer a paid advisor to the company hasn't been involved in late stage testing for this drug in question.

But certainly getting a lot of attention is getting a lot of attention.

Now, doubts surrounding this drug first started just about three years ago here, followed by that investigation by the SEC in November of 2021.

So we have been talking about this now for a bit of time now because Sava Sciences to their defense, they added that this doctor had no involvement with the late stage trial.

So trying to reassure some of the skeptical investors out there just about the impact that maybe he had had on some of those later stage trials here.

But again, lots of uncertainty.

They did also say that they terminated their consulting relationship with the doctor prior to his indictment.

But clearly, it's a note I reached out to the analysts at HC Wainwright because they cover the name bottom line.

They did downgrade the stock, the new to neutral, they did not assign a price target, tell their clients who was the quote.

We believe this controversy could be a significant long term challenge to realizing upside in Cassava stock and a top trending take here on Yahoo Finance today.

Well A I related companies notching market cap wins in the first half of the year.

Amazon the latest to reach a milestone hitting $2 trillion in market cap for the first time.

This all while Apple Microsoft NVIDIA battling it out for the title of the most valuable company here with more on what may be in store next for these mega cap names we wanna bring in Tom Forte.

He's Maxim Group's managing director and senior consumer internet analyst.

It's great to talk to you here.

So here we are set it set up for the second half of the year.

We certainly have seen this massive run up once again.

I mean, the story is very similar going back to 2023.

It's all about a handful of tech names.

Who do you think then Tom is best positioned at this point here for the remainder of the year?

Yeah, so I like Amazon.

So at some point when you think about artificial intelligence, uh it's been dominated today by chips, but at some point, the chips or pictures, picks and shovels are gonna have to result in actual gold.

And I think for Amazon, they're well positioned to explore A I, not just at the cloud computing level with what they're doing with Aws, but what they're doing at the fulfillment center level to the extent that they can increase their automation and reduce their cost to serve.

So I think Amazon is well positioned in the battle of the A I titans Tom.

When you think about, you know, a Amazon, you think about these key drivers, right?

You know, it's ecommerce, it's cloud, uh it's advertising also the the moves they're making in health care.

Tom, I'm interested to get your take there.

How excited do you think investors should be about that opportunity?

So when I think about Amazon hitting two trillion market cap, uh I think there's an opportunity that their health care initiatives can help them hit the three trillion mark.

Uh More likely it'll be as you pointed out advertising e-commerce, cloud computing growth, I think they're very early stage in their efforts.

Uh But I do think there's a potential given that it's a huge total adjustable market and maybe one that's potentially ripe for disruption, but it's something that I guess I'm taking a wait and see attitude to see how their health care efforts ultimately affect their top and bottom line and market cap.

Tom Amazon able to reach this milestone at a time here.

Obviously, when they're under uh under a tremendous amount of scrutiny from antitrust perspective.

I'm curious, not only for Amazon but really what we're seeing from a number of those larger cap tech names.

Should investors be viewing any sort of regulatory crackdown or any sort of regulatory uh criticism here as just noise?

I I don't, I think investors are viewing it as noise but I don't think they should view it as noise.

Uh If I do a compare contrast though, on companies that are being sued for antitrust, I think Amazon is better positioned than Apple to the extent that if Amazon were separated into three different companies, a first party retail company, a third party retail company and a cloud computing company, you can make argument that those three individual stocks are worth more than the collective whole today.

I don't think for Apple, the same can be held true.

Meaning if the company is charging too much of a fee on the app store and has to lower its fee, I think that would be, you know, wildly negative for the stock, you know, Tom stick with Apple.

I mean, it's had, you know, I just looking nice run here Tom recently.

I mean, um you're still neutral.

What, what do you need to see Tom to get off the sidelines?

What do you need to see to, to move to a buy on Apple?

So if you look at Apple, it has had a really nice run.

First, they announced $100 billion buyback, then they announced Apple Intelligence and all their strategies surrounding A I the stock that is trading at north of a 30 times forward pe multiple.

If they do as well with an A il uh upgrade cycle for iphones, we're looking at 9 10% EPS growth next year.

That's still a pretty high peg ratio of call three.

So I'd be more interested in the stock where the valuation uh more to my liking either because the earnings growth is better than I expect or the near term multiple is lower than it is today.

Tom, what do you think that demand is going to look like?

Obviously, we've been reacting to the news that we had gotten out a few weeks ago when it comes to their A I initiatives.

Is that going to be enough?

Do you think to really spark some of that demand that the street's been trying to figure out what more specifically that's going to look like?

So I have become more optimistic in an A Il um recycle for Apple.

Uh The challenge though we did some analysis when we compared it against five G. I don't think there's nearly as much pent up demand for an A I enabled smartphone as there was for a five G one.

In addition, you're looking at Europe and China with regulatory challenges for Apple.

Europe's about 20% of Apple sales.

China is about 10%.

So they're not going to be able to roll out Apple Intelligence in September in those markets uh as of today.

So I think it's an upgrade cycle but not as good as the five G upgrade cycle.

All right, Tom Forte, always great to have you.

Thanks so much for making the time to join us here today.

Thank you.

Well, still to come, Morgan Stanley raising its price target on NVIDIA.

We will dive into the note and check in on some of today's top analyst calls when market domination returns, Apple is launching its next generation A I centric iphone in September.

But some analysts say the company's new Apple Intelligence platform may not be enough to spark sales in 2025 for more.

We have Yahoo Finance's very own.

Dan Howley Dan.

That's right.

David Vaught at U BS Global Research is essentially saying that uh Huawei's push in China and its growth uh resurgence really after it was uh the US tried to kneecap it in 2019 is really putting a governor on Apple's ability to grow in 2025 and that the Apple Intelligence platform may not be what it's uh not necessarily cracked up to be, but may not be the kind of uh offering that really pushes consumers to get out there and buy similar uh to five G. Obviously, we just heard Tom Forte talking about that uh a second ago that five G was really uh kind of a a cycle change.

Uh We went from uh four glte to five G faster speeds.

I'll be honest with you, if I'm streaming stuff on my phone, I really don't see that much of a difference but whatever it was, you know, cool marketing, I guess uh Apple Intelligence uh is kind of a, a new means of getting people to buy uh smartphones.

It's similar to what we're gonna see from uh Google and their upcoming pixel phones that they're gonna launch uh in August as well as uh from Samsung, which is going to announce new phones uh this month.

Actually, uh they're expected to announce new phones uh this coming uh uh next week.

So uh we're expecting to hear more and more about A I but, you know, with that, you would expect it means more iphone sales.

Uh According to uh David Vault though, it may not be this big push that Apple hopes it will be.

Yes.

So my question to you is they're up against some stiff competition.

They also the fact that in China, at least the consumer a cooling just a bit.

So what's the thought out there from the street as to what Apple needs to do in order to regain some of that lost momentum?

Well, they're trying to do that with, with deep uh uh cuts on s uh uh prices right there.

They're doing a lot of sales uh in China trying to get more people involved obviously, uh earlier last week.

Uh Bloomberg had reported that there was a 40% jump in my iphone sales in China.

Uh after a 50% jump in sales uh in April.

Uh but there's there's mixed kind of uh messages out there.

We saw uh counterpart research.

Uh uh David actually citing it.

His note saying that sell through was relatively low for apple year over year.

I think it was nine basis points versus a larger growth of I believe around 11% for the broader market in China when it comes to smartphone sales.

So, you know, it's Apple doesn't give us insight as far as the number of devices that actually sells, they stopped doing that a long time ago.

So now it's basically best estimates as to what users are buying.

Um And so, you know, it could be that the sales are working, they're helping Apple.

Uh but it doesn't mean that Huawei is going to sit idly by and allow Apple to just, you know, discount its phones and win in that way.

So Huawei obviously doing similar things uh to its own credit and then they're also rolling out uh foldable phones which are larger uh in China, they, they uh that's a market that's really kind of interested in those kinds of products as well as some area of Europe.

I've seen a lot of people uh walking around recently with Samsung's foldables.

Um and so in China, there are foldables uh from the likes of Huawei and Xiaomi and such.

So, uh that, that's kind of a means that Apple could use perhaps a new form factor to get consumers more interested.

I think uh generally, it's about they have 2 billion users right now or give or take.

It's all about the, the software strategy and, and getting people hooked into subscriptions, which has been, it's kind of uh modus operandi for some time now.

All right, Dan Halley, great stuff.

Thanks so much.

Let's stick with tech and talk about NVIDIA.

It's time now for some of our calls of the day, Morgan Stanley raising its price target on NVIDIA following positive data points and a compelling A I narrative to put in their words, Nvidia's price target now at 100 and 44 bucks a share that's up from 116 per share.

All right, Josh, let's talk about why Morgan Stanley is raising its price target here when it comes to NVIDIA.

They're still very bullish here on this name or bullish on this name.

Positive maybe is a better word considering that their new price targets just about 17% higher from where the close was on Friday.

But a couple of things, they just had a recent trip to Taiwan, a recent trip to China that they're saying left them very confident in the near term numbers.

They also were talking about the fact that that strong demand that they have seen has removed any concern and that Morgan Stanley did previously have about the pre Blackwell pause.

We know that that was something that was top of mind here for analysts heading into the la the last earnings print.

A lot of that fear had been subsided or at least eased just a bit by some of the commentary that we, that we did get from nvidia's executives on that call.

But again, they're still seeing still finding reasons to say here that the catalyst path remains strong and they're still positive, still bullish on where this name is going to head.

Yeah.

So Morgan said I really likes NVIDIA, pretty much everyone on the street really likes NVIDIA.

Nearly 90% of analysts think you should buy it here at these levels.

There's exactly one cell on NVIDIA.

Um I like this line in particular.

We aren't pounding the table of these levels.

They say given the sharp appreciation since the last earnings report, but this remains the analyst says the most compelling narrative in the A I semi space.

We did get that by the way, she mentioned that other headline we saw today which French antitrust enforcers are getting ready to charge NVIDIA with allegedly anti competitive practices.

That is per Reuters.

We'll, we'll see how that one plays out.

All right, moving on Goldman Sachs, kicking off its coverage on us Telecom services names with a bullish tone.

So he was there, they kind of initiate us telecom service Infra Infrastructure sector, their body by ratings, Sean say they reflect stocks where we believe the market does not fully appreciate the sustainability of growth the company can deliver across the cycle or where the pace of potential cyclical recovery in fundamentals is being underpriced.

So what are those names, Sean?

They give you a few buy ratings according to Goldman, they would say Verizon AT&T digital realty, Equinox T, Mobile, American Tower and Frontier all buys according to Goldman.

Yeah, they're pretty bullish on the sector overall.

Just in terms of the opportunity, the growth opportunity that they do see for a number of the names you have Verizon on your screen, they have a buy rating of $50 price target there.

What also caught my attention was that within this?

No, Goldman was naming some of the catalysts here just in terms of what they see driving some of these names higher.

And they talked about A I and they said the A I represents quote an important opportunity here for the sector.

They also went on to say that they see this backdrop, driving healthier growth margins potential here for significant capital returns.

When they talk about the fact that both competitive, intensity and capital intensity are moderating Simon spontaneously.

And they're doing that here, at least for, for what Goldman says is for the first time.

So again, they're bullish on uh Verizon.

Like I just said, when you talk about uh AT&T, they're saying that some of their cattle is there?

Fiber broadband, leadership growth and wireless franchise and then t mobile broadband, driving that next chapter of growth.

They don't like everything, they don't like everything.

We, we, we mentioned the CS um charter communications.

All these lumen technologies, Coleman says, no thanks.

They're moving on.

You're gonna leave us there on that.

Everyone's on the edge of their seats.

We wanna know why.

All right, let's talk about travel, socks are sliding today as Hurricane Barrel hits the Caribbean, the category four storm making landfall today causing issues for cruises and for air travel.

When you take a look at the travel stocks, almost everything seems to be in the red.

We have a heat map there that will show you, uh, that has stocks under tremendous amount of pressure today.

But we've got the cruise lines on your screen right now and you're looking at pretty significant drops region of just over 5.5% Royal Caribbean off 1.5% of this coming simultaneously as you have the price of crude rising here on the threat of the hurricane.

Just exactly what the damage could look like, what exactly the threat here could be to the US going forward.

And then more specifically how many delays or cancellations this is going to cause for so many of these travel names is the real reason why we have a tremendous amount of pressure on this sector today.

Yeah.

Hurricane I read reports today saying we could be looking at 1 billion in damages.

Um And remember, car, what's interesting carnival only recently boosted its full year earnings outlook we talked about on the show.

The stock popped on that headline.

I think it was some, you know, enthusiasm for that.

What said about demand.

But you're right to point out, you know, a number of names they did slip in today's trade on that coming up, streaming stocks are in focus for today's investor playbook.

We're taking a look at which names are best positioned.

The second half of 2024 that is next on Marcus Domination.

Paramount is searching for a streaming partner.

That's according to a new report out from C NBC.

Now, the entertainment giant is reportedly looking to merge its Paramount Plus service with another platform.

The news coming after previous merger talks had failed to materialize in the first half of 2024.

Now with the second half of the year in focus, we are discussing how to navigate the big picture for streaming stocks more broadly with the Yahoo Finance playbook.

Now joining us now we have Jamie Lumley, a sector analyst at Third Bridge Group, also Santos Arrau, head of research at Manhattan Venture Partners.

Great to see both of you, Jamie.

Let me start with you this new report that we're getting out here from C NBC when we talk about the streaming space in the second half of 2024.

I think a lot of people, their first thoughts is going to Paramount.

Exactly how that is going to play out.

What do you think is the most likely option or end game here for Paramount at this point?

It's a really good question.

And with Paramount, I mean, it's been a whirlwind of a year for them.

It seems we have a different headline each week about what might be the future for this company.

But if we think about the future of purely paramount plus and where they're at and streaming right now, a lot of people when they hear paramount plus, it's not really on the top of their list of must watch streaming platforms in terms of his business fundamentals.

It's at considerable scales, just up to 71 million subscribers is making improvement on profitability, but it really hasn't gotten to the same size, the same profitability metrics like a Netflix or where Disney is now with their direct consumer business to really make it uh a mainstay in that top tier of streaming players.

So to think about what might be the future from them, they could look maybe out of Warner Brothers discovery, perhaps a max might be a good partnership to really build out the offering they have there or perhaps a peacock is over at Comcast, they're still trying to figure out what the best route for it is for that platform.

And together they might have a bit of a broader reach.

But as we've seen for the last few months, nothing is set in stone for Paramount and where they exactly end up is still anybody's guess Santosh, I want to bring you in here as well.

Same question, Santosh Paramount Paramount.

Plus, what do you see as the future there?

Yeah, I mean, this flows right into my theme that there is a transition going on.

Uh and consolidation needs to happen and this is the right thing to do.

Uh they're on their own, they're just not going to be able to make it.

Uh We have the undisputed champ which is Netflix out there.

Uh And uh Disney behind them.

So I think these, these companies need to consolidate, need to get together and put up a fight, so to speak, they are way behind.

So you're going to see a lot of this.

Uh it is required, it's healthy for the sector.

And uh I think you're gonna see that that's going to be the theme going forward as we move out of this kind of slump.

So to speak, in the media space, we need to get out there and uh with a better, better alignment of companies in this space right now, there is uh there's not much scale in these two companies on their own.

Jamie, what do you think?

Do you agree that consolidation essentially needs to happen?

And is this potential paramount outcome here?

However, this ends up just the start of what is going to be a larger trend.

Well, it's interesting because there's been consolidation discussed for a while.

At this point.

As we think over the last few years, this streaming space overall has lost billions and billions of dollars.

And it's clear that while there might be some companies here which can reach profitability, it is unlikely that all of them will be able to rebuild these streaming companies or these streaming businesses to offset for the traditional media companies, the declining revenue and earnings that they had on the traditional linear businesses.

So if we look over some of the smaller players, we could very well see some consolidation.

But one thing which is interesting is before we talk really about consolidation, we're seeing a lot more of aggregation and just working together amongst these different platforms.

We have lots of new bundles to talk about.

We have Disney with Warner Brothers, Discovery Netflix, with Comcast and Apple.

There are different ways looking at building strong relationships with consumers and dealing with another real hurdle that these businesses have been facing, which is serial churning behavior by audiences.

Once they are done with the platform, there's no qualms for most viewers of cutting their subscription and jumping to another one.

And then coming back when there's a new show they want to watch.

So finding new ways to manage some of these viewership and just consumer behavior challenges is also these businesses are trying to do while they sort out some larger issues of how did they exactly either find a good partner uh from uh an M and a perspective or find a really good path forward to become profitable and also a strong business to offset the continuing declines in linear uh TV.

Santosh, you know, it's interesting consolidation.

I I get, I get the reasoning Santosh because you listen, streamers want to get profitable and linear TV is shrinking.

And so you can certainly make the case strategically and financially Santosh, but there are, there are also challenges, right?

Including most obviously the regulatory backdrop.

Those trust busters in Washington have a much more skeptical eye toward consolidation.

Unless Santosh, what you're saying is you're suggesting that maybe there's a change in the White House and the administration coming and we maybe get a more friendly regulatory backdrop.

Yeah, I think the consolidations that I'm talking about is not going to be a threat.

There's no, there's not going to be a monopoly of such.

It's it's sustainability and these companies, they just not last.

So I think it's going to be healthy for the industry and the and the regulators are not against that and it's, they're not just against consolidation for the sake of being against it.

There's a reason behind when they are against something.

So in this case, I think it's a healthy thing.

The consolidation needs to happen in many sectors.

I've been following the telecom sector for a long time.

I've been a telecom analyst and I've seen a lot of acquisitions and M and A activity there.

So there are, there are areas where the regulators do agree.

So all this is going to happen in the face of consumer is slowing down.

Consumer preferences are changing.

So it's not just uh there's not enough to go around.

The consumer doesn't want already.

The average consumer is spending about 60 bucks on streaming service.

This is according to one data from one of the services.

So I think that has to come down.

So the demand for all these services is going to come down.

It's going to consolidate in few companies, good companies that have depth and to have with and have a global presence.

So I think uh distributed presence.

So I think you're going to see a lot of things playing out.

Uh Consolidation is the healthy part, but it's not just someone just taking out competition, it's coming increasing competition and making the competitive landscape much more healthier.

So Jamie given the consolidation that maybe we could potentially see the changing dynamics within the streaming space.

Who do you view then as best positioned right now in streaming?

Well, for the players who are best positioned, they're likely the ones who probably don't need to do any consolidation if we've looked at uh there was just the Nielsen data shown right there, Netflix Amazon and Disney are all commanding very substantial numbers in terms of market share.

And when we look at each of these players, Netflix, larger scale of any streaming platforms out there, they've already cracked the profitability.

They continue to bring hits uh to their platform.

Bridgerton is doing quite well right now, you know, if you think about where they are today, it's quite healthy as they continue to also build out other revenue drivers such as their ad supported tier.

If you look over at Amazon, while they're dealing with certainly a different uh business model, they don't have to break even or be profitable within their streaming.

They have this new really exciting business with their introduction of ads and combining that with their much stronger live sports uh segment two.

There's a lot of opportunity over the next couple of years to drive growth and Disney continues to really drive strong market share when it comes to viewing.

So they definitely stand out in front of the pack today.

All right, Jamie Santosh, great discussion guys.

Thank you both for joining the show.

Thank you.

And while we're wrapping up today's market domination, don't go anywhere.

We've got you covered with all the action following the closing bell.

Stay tuned for market domination over time.