Welcome to squawk alley. Im Carl QuintanillaMorgan Brennan has the morning off. What a morning it is too beginning with major tech earnings four big one, twitter, amazon, alphabet and intel and intels ceo bob swan will sit down with us as we look at potential datacenter recovery, pcs and unbelievable characterization of what china was like last quarter. Yeah, surprising mix, the pull in from people freaked out about tariffs actually had some benefit, sounds like, for the pc business, of course, there were some problems there as well but interesting stock action this morning. Intel actually a bit in the red this morning it had been up as much as 4 , i believe, at the open and near there. Up kit a bit afterhours and amd higher than intel which is an interesting dynamic that ill want to dig into but, you know, beyond just intel, you have lots of different earnings story, people surprised. Google, alphabet had been in the doghouse compared to peers and a lot of people got surprised by these strong results for both cloud in focus even though the focus for amazon switched to top line revenue grete questions about cloud momentum falling below the 40 growth level for the first time. Can it continue to fund all these expensive forays that amazon is doing . We know one day shipping is going to cost more than that 800 million initially estimated but as the cfo said theyve been down this road before and so have investors which is maybe why youre seeing it only down 2 earlier today was on pace for the best session in a few years for alphabet and Constant Currency website growth up 150 basis points sequentially its the Third Largest going back four years. A week where weve heard reacceleration, best acceleration a number of years for several companies. And we did get that 8 billion annualized runway on google Cloud Business and wondered if you would get more granularity with thomas coming in from oracle with a new team in place reaching out. Talked to him a couple of times. Now were starting to get metrics which will be important. Some metrics. Its amazing we dont know if or how profitable googles Cloud Division is when we do have a lot of transparency into amazons and more microsoft. Josh lipton spoke with the cfo after earnings last night and joining us with more on that conversation josh so, deidre, he is taking a victory lap racing higher. Net revenue jumping 21 so easing fears of slowing growth still there are potential challenges too like increasing regulatory scrutiny. The company has been engaging with regulators saying we are already subject to oversight in a number of areas. This is not new. Whether its competition or copyright or privacy or intellectual property, we have been engaged with regulators around the globe for quite some time what could that mean for google . She says our focus on protecting the security of google users on the millions of existing huawei handsets in the u. S. And around the world today and Going Forward. Its still an open item. Its Cloud Business on track to rake in more than 8 billion annually is the Company Going to do more ago which significants to build out that unit. Purat says we recognize they can be additive and open to them where they make sense but there is a lot we are doing organ organically and excited about the direction we are headed here president trumps tweet about google and his relationship with china. I did ask porat about peter theils comments he reportedly said google should be investigated because its allegedly working with the Chinese Military porat did not respond to his comment. Back to you. And thank you, josh, of course, googles ceo has said thats not the case, them working with chinas military. Moving on Julia Boorstin spoke with 2wi9s cfo and joins us with pore on that julia. Jon, ned seigel telling me the investments getting rid of spam and making it easier to use are paying off with user growth and showing that the service has more room to grow. Our results are a great reminder of how the whole world can benefit from twitter and the work is to help people find what theyre looking for and remind them about events and topics whether sporting event vm or a political event in asia. People all over the world should care about we need to do a better job surfacing the things people are looking for. As for ongoing regulatory scrutiny, segal did not indicate they expected to hamper growth were open to regulation where it makes sense gdpr is a great example of that. As a result of gdpr we worked hard to make our policies really clear and to remind people who use twitter that we view privacy as a basic human right both segal and jack dorsey have focused on becoming more nimble and quickly can adapt to prevent manipulation on it guys, back over to you. Julia, huge story on your beat today as well thanksment for more on alphabet, twitter, amazon and twitter, lets bring in dan niles who joins us on the phone. Good to see you. Good to see you. Dan, on intel, the modem chip deal with apple and sort of your general view having had some information out of the quarter on what hardware looks like now. Yeah, i mean i think when you look at intel, its great that they sold that business off to apple but you have to remember why were in this spot in the first place. Intel bought that business a fair number of years ago, invested a ton and is now selling it for a billion dollars and it really shows that unfortunately intel just not particularly good at doing things outside of microprocessors. Dont forget they sold off mcafee which they had bought as well and figured that it didnt work out either and losing share to amd thats the fact that the stock is down off a beat in raise quarter that came in much better than people thought on revenues and margins. After getting some other names, has the needle changed in semis . I mean as more have come out and tried to call the bottom of the cycle. Yeah, normally i would say, yes, great time to think about being bullish, the problem is is that youve got the semiconductor index, you know, up a lot this year already its up about close to 40 and so its very hard to say, oh, well, great. Its near the bottom but, you know, things are still pretty bad. And the stocks are near alltime record highs and the multiples and as youd expect with estimates coming down and the stock is up 40 the multiples have gone incredibly high. Semis is one of those areas i have to admit im just sitting here scratching my head going, okay, if people want to keep buying nails when the estimates keep going lower, have at it its not something im interested with stock, the index up 40 year to date. To close out on semis and intel specifically, that idea of losing share to amd isnt new, but intels results are. So why down after results . Well, i think its what we just talked about. Intels stock, if you go back through its history, it always struggles when amd is gaining share. And i think the problem right now is amd is coming it a really low level, obviously its 5 market share in the Server Market and if you go back to history theyve gotten up to 25 before so when youre looking at that, it implies a lot of price pressure and, you know, you think about next year thats when things are really going to get a lot more competitive and youve heard about intel supposedly cutting prices to try to compete with amd and i think thats the real issue between the two of them because it really is a duopoly obviously and so amd share has to come out Going Forward and thats why youre seeing this im definitely surprised intel stock is down today because relative to expectations which has been sort of the name of this earnings season, you know, i would argue the revenues and earnings are much better surprisingly investors are actually thinking forward and going, yeah, but my real problem is how much share is intel going to lose in their most profitable Division ServersGoing Forward and thats why you see the stock reacting the way it is yousef, i want to turn to amazon with growth in its Cloud Business coming down a little bit, is it time that perhaps wall street should be questioning some of amazons high, very high spending and still unproven businesses such as groceries or this one day shiping . It seems like the street accepted that costs were going to be higher and profits lower. Yeah, so whats impressed us yesterday with amazon is actually the reacceleration in both unit and recovery growth and a big part was this one day shipping which they had just introduced in the quarter. To your point about expenses, it did come out higher. They wouldnt quantify how much. Initially they said 800 million. We think it came closer to 900 million. I think theyre testing and learning themselves. But remember back in 2005 when they launched prime twoday shipping, it did have a negative impact on margins but then what it did over the following ten years it had dramatically expanded and reaccelerated growth and thats what well probably see right now. Youssef, are the challenges this time around different theyre under far more regulatory scrutiny and have a number of challenges internationally. Is it different than in 2005 when they began prime twoday shiping . Im not sure its that different. I think theres clearly more regulatory scrutiny but its very hard to make a case that amazon is a monopoly if you look at their penetration of even online commerce, its about 30 , 35 if you look at their penetration of retail in general, its mid to single high digits so there are a whole number of other players, smaller players that are being very successful online, particularly in the dtc side so, yes, regulation, i think is something to keep an eye on but it has not gotten reflected in the numbers yet and we dont think its going to get reflected in the numbers youssef, on alphabet, google, how did so many get it wrong theyve been in the doghouse for at least a quarter and here they come charging back reminding everybody what theyre good at. Well, well blame it on the lack of aclear explanation for what happened in q1 when their growth rate went from the low 20s, about 22 down to 19 and thats 300 basis points is a big, big drop for a company like google or alpha set, excuse me and i dont think management did a great job explaining why so linear thinkers as we all are we assume the rate of growth is going to continue to decelerate. Some channel checks we did throughout the quarter implied about 100 basis point decel and lo and behold they nieced a nice reacceleration mobile search did it well and even desktop search which is 20 years old is also, you know, still growing. It was the large thirdest contributor to growth. Thats basically what happened and then gcp at 8 billion, that was pretty impressive. About 18 months ago it was at about 4 million. So over 18 months it grew at about 100 which tells you theyre actually gaining a little bit of share from aws and from azure. I wonder if you think managements lack of wonder unwittingly created basically some relative value in tech over at alphabet . Absolutely. I mean, i think, you know, i said this to you, i think when you had me on after they reported the prior quarter i hate investigating in black boxes and that that was the real problem. The business decelerated last quarter by from 22 to 19 Revenue Growth and the Biggest Issue it wasnt the fact it decelera decelerated. They didnt tell you why and didnt tell you all quarter and quite honestly we still dont know and so, you know, that really is the issue with google is that black box. Now, the nice thing is they gave you more disclosure this quarter and getting more shareholder friendly and thats the big positive out of the quarter. It disclosed the fact that you have their Cloud Business reaching a 2 billion quarter per run rate havent given you disclosure on that for 18 months and gave you 25 billion stock repurchase so thats good and reminds me when apple started initiating their big buybacks and dividends way back when and the stock outperformed over the last year for apple with their big Dividend Increase and buyback even though they have the first negative preannouncement in over a decade so it tells you that that stuff is really important. Youssef, i want to sneak one last one in on twitter and snap. These guys are both up after earnings and google and facebook are up after earnings. Have we finally moved beyond the stage where theyre being compared to their bigger rivals and theyve sort of got a space in air own right yeah, i think youre right. Both twitter and snap which are hold rated stocks for us mostly on valuation, went through a period where they effectively had to justify their existence i dont think thats the case anymore. I think clearly snap is the best play to or the best place, social place to focus on the 13 to call it 34, even much more so than instagram i think twitter with the numbers they put out this morning showing resecret sell race in ndu or daily average users monetizable. The rate of growth there accelerated and so, you know, people are effectively getting to the realization that these two platforms, while theyll never rival a facebook in terms of size, they still are very valuable for advertisers and, you know, and indispensable for their users. Youssef, dan, a big day for those who lover to cover tech. Thanks see you soon thank you coming up weve been talking bit. Intel out with an earnings beat and optimistic guidance yet the stock still down the company also soing off the majority of its smartphone and modem business to apple. S. B swan joins u dont go anywhere. Driverless cars. All ground personnel. Or trips to mars. 4. 95. Delivery drones or the latest phones. 4. 95. No matter what you trade, at fidelity its just 4. 95 per online u. S. Equity trade. No matter what you trade, at fidelity mno kidding. Rd. But moving your internet and tv . Thats easy. Easy . easy . Easy. Because now xfinity lets you transfer your Service Online in just about a minute with a few simple steps. Really . Really. That was easy. Yup. Plus, with twohour appointment windows, its all on your schedule. Awesome. Now all you have to do is move. That thing. [ sigh ] introducing an easier way to move with xfinity. Its just another way were working to make your life simple, easy, awesome. Go to xfinity. Com moving to get started. Shares of intel fractionally lower after an initial pop on an earnings beat and improved guidance and selling out the majority of its smartphone modem business to apple. Joining us is intels ceo bob swan bob, good morning. Good morning, jon how are you . Im doing well. I hope you are too so, i want to dig right in to what really surprised you in this quarter because you were talking about this data economy being strong despite head winds but we knew that already so was it the pull in on pcs because of the china headwinds that caused a bunch of that outperformance what specifically was it. A few things. First and foremost saw much stronger demand for our pc business and higher end High Performance products which gave us a higher asp in the quarter secondly our iot business continues to perform very strong third, datacenter was basically in line with kind of what we expected, 90 days ago. And, fourth, pricing in the memory market continued to be a little bit worse so take that altogether and we outperformed our expectations on a top line by 900 million. Part of that was driven, we believe, jon, from a bit of a pull in from the second half to the first half in light of anxieties around incremental tariffs in china which as you know is a big market for us so all in all, Strong Quarter and sets us up well for raising our guide for the full year going into the second half. Yes, and you also said you expect the cloudy hand to pick up in the second half after theyve been sort of digesting a bunch of that capex they did earlier. I wonder how much of that is showing us a new collude cycle, i mean certainly we saw microsoft with their capex projection for the next fiscal year significantly higher. I guess thats what youre benefiting from. What does the cloud cycle look like and how should investors factor that in well, cloud has been a bigger and bigger part of our business over the last several years as weve had very good momentum what were dealing with right now is remember last years growth for our Cloud Business was up 40 so what happens is the cloud players acquire then they digest so expectations coming into the year is the first half for cloud would be more of a digestion period and given their end demand continues to be relatively strong that then they would come back and start purchasing in the second half of the year thats kind of how we thought the year would set up. And thats our expectations as we go into the second half i do want to go back to pc demand because you guys mentioned that particularly in commercial, it was strong and i wonder what youre seeing specifically driving commercial demand for pcs especially because there was sort of this narrative out there a couple of years back that lower performance was going to be required in the future because so much was happening through the web. You know, weve had a dramatic transformation of the company where pcs used to be 70 of the business, a relatively short period of time ago and to your point pc demand has come down for several years by roughly 5 to 6 a year. Over the last couple of years, weve seen some real stabilization and we think its a function of several things one, just continued good products getting out into the market that are being adopted. Number two, we still are in the midst of the windows 10 refresh cycle. So were seeing demand last year and this year to try to contemplate for that reset cycle. So those two things High Performance compute driving higher asps and the refresh cycle is whats been a fairly constant but strong commercial environment thats offset a more weaker consumer environment. Hey, bob, its deirdre i know you said the tariff threats actually helped sales this quarter but i wonder about the longer term do Chinese Companies like huawei ultimately become less dependent on u. S. Chipmakers and not only that but do you believe they can create chips that could eventually eat away at your business well, first i would say were somewhat encouraged that the two sides are going to sit down again next week as we understand, see how they can talk through how to get more normal g