Reclassify marijuana. What the move means for trading in these names. Im melissa lee, coming to you live from studio b at the nasdaq. On the desk tonight tim seymour, karen finerman, and steve grasso. Stocks closing on a down note, with the nasdaq sinking 2 and the dow shedding 570 points, accelerating the last ten minutes of trading. All three closing near their lows of the session and well in the red for the month. Each ending fivemonth winning streaks. The dow posting its biggest mostly loss since september of 2022. Well dive more into what is behind these moves later this hour, but we have to start off with amazon. Shares are higher, though off their best afterhours highs. The company reporting a beat on the top and the bottom lines and higher ad revenues and sales in aws guidance in q2 though. Kate rooney has the details. Cloud growth was the key story here. Aws sales, thats what folks were watching. 17 growth, better than the 14. 7 wall street was expecting. A. I. Appears to be driving a little bit of that. The company says a. I. Is now a multibillion dollar revenue run rate business. Overall, aws revenue is now at 100 billion in arr. The cfo just on the call with media, talking about what he called the cost optimizations diminishing. He said theres going to be a level of ongoing cost optimization. They think the majority of the recent cycle is behind them and likely closer to a steady state of optimization efforts. You remember, they were talking about aten ewe waiting, so, thats not diminishing. Quickly on capex, as well, he said they anticipate overall Capital Investments to meaningfully increase year over year, driven by higher in infrastructure. Capex to support growth in aws, including gen a. I. , really lines up from what we heard from the best of big tech. 143 billion for amazon, up 13 . The north american business, that was up 12 . Ad revenue, another high margin part of this business. That was stronger than expected, grew 24 . That was double overall sales growth. Advertising came in at 11. 8 billion. And a miss on guidance for the current quarter, guidance was a bit light. Sales are look to be coming in between 144 billion and 149 billion. Analysts were looking for 150 billion. Profitability looking better, Free Cash Flow improved to an inflow of 50 billion, that compared to an outflow of 3 billion a year ago. So, the profitability picture looking better, as well. Kate, when we hear cost optimization, that really means from their customers, correct . Thats right. Ways to save from their customers. Exactly. From their cloud customers. So, there is a little bit of a read through to the rest of the Software Space if you are hearing that from the bigger player out there that, guys, its looking better than it was a year ago, it could be good news for the rest of the players out there. Kate, thank you. Kate rooney, keep us posted on the details. But so far, you mentioned a mixed bag here. What do you make of this quarter . Its a mixed bag, but its amazing how we can applaud the investment in capex as it relates to a. I. And everything else, and yet meta was not. Shellacked. But and yet its so consistent with what we heard from microsoft and from google in terms of their Cloud Business and what this means, and it just i feel like this earnings season especially, i go back to that time when nvidia had the first blowout number and they guided to where demand was and the world woke up, but the Analyst Community, and the street woke up, we woke up, said, theres going to be a capex cycle like you havent seen before. And this was at a time we were worried about growth. This is back whenpeople were very concerned about where there really was growth overall in the economy. But even within the tech sector. So, i love the fact that andy jassy really has been focused on making this company more prof profitable. That operate progress fit comes in at 15 billion, the dynamic, i think, around the core business and the levers that amazon at some point really can pull in terms of profitability thats been something. Its interesting to note after the stock going up 130 , its at the same multiple it was at the low before it made that move. In other words, its growing into a bigger multiple and yet its not a bigger multiple. The bar was high, we had already a microsoft beat, a google beat, when it came to the cloud revenue and here we are with an amazon beat on aws beat on cloud, so that was a big sigh of relief. What do you make of the move here . What is it, in your view . Yeah, i think, well, its bad tape, right . So, nice to hear that pop of good news. There was aws you , certainly, news. It would make sense that everyone elses Cloud Business is really strong, as is theirs, so, thats good. I dont make too much out of the guidance being a little bit light. I feel like i dont know where in the guidance that is, whether thats on the retail side or on the cloud side, it makes a big difference, but i to the extent thats weighing on the stock, i sort of think that it shouldnt. I think its happening under the weight of being last in what has been positive tape for cloud growth and this market today. Yeah, aws, that was fine. The largest player there, so, for that, its just got to keep growing at a certain point. Because then you get to that i hate calling it a law of large numbers, but theyre so much bigger than everybody else. They really need to leave a mark there. And then, how about ads for prime video . They started that in january. I just noticed it, by the way. Thats going to be another revenue generator for them. And they can turn that toggle switch on and off. And prime membership is up to 140. Another thing that i just recently noticed. When you open up your credit card bill. I thought it was still 100 bucks really . It was so long ago 100 bucks. I know. I havent looked in awhile. So, there was a couple things they had to hit. Plus the efficiencies in fulfillment. During the pandemic, they really overloaded in fulfillment centers. They have 750,000 robots in their fulfillment centers. So, their fulfillment costs arent keeping up with their revenue, that increases their margin ability. If you look at the stock price, its fading, 5 , 6 , once they print, and then it comes back. As karen said, bad tape, but if you look at microsoft, fwogoogl they reported. They skyrocketed, and if you look at the chart, they both came in. So, maybe people are saying, hey, good print, let me let it breathe a little bit, ill pick it up at a discount. Now that weve seen all three of the quarters from microsoft, google, as well as soonlamaz, wh quarter was the best . I think it was google. I mean, they it was an emphatic yes, we are kicking it. So but its fair. Were now were a week into digesting this group of the Largest Companies in the world who we all know are giving us 80 of the Earnings Growth for the s p. We expected a lot here. I just i get back to a company like aws, or, like amazon, but with aws, with the Retail Business in north america, that operating margin up almost 6 . Well above expectation. I mean, i i love the fact that amazon can give you the profitability at a time when theyre investing in their business, and i think, again, they have been investing, they havent fallen asleep at the switch. I think google also. Maybe the expectations were lowest for them, because they have stumbled a little bit, and to just have positive momentum in all the parts of their business, and then also to say, you know what, we hear you, street, were not doing as up as we could, were going to address that, and i hope theres a year of efficiency in there somewhere. Lets bring in brent from jeffries. What do you make of this guide . Melissa, the guide doesnt really matter. They always guide conservatively, so, i kind of wash that out of the mix. I think the most important thing was aws, which is 50 of their market cap, had 17 growth, well ahead. Booking over 40 growth, backlog, youre going to have Revenue Growth reacceleration, so, were seeing aws inflect, were seeing the International Business become profitable, which we were expecting a loss, and then the third is the ad business, advertising was ahead by a bit, so, i think you have effectively a game of inches on the beat. You dont have a blowout here. But you have consistent, steady recovery, and all eyes were on aws, so, thats been phenomenal to see. Now its going to shift to a. I. Where are they at . Theyre behin hhind microsoft. How are they playing catchup . Jassy said this is going to drive billions of dollars, trying to get more color on that. Everyones going to go direct to a. I. , whats the next leg for this . But overall, a really solid print. I dont pay too close attention to the guide. Theyve been blowing out the guide every single quarter and had a really disciplined focus on the bottom line, so, were encouraged by what were seeing. Were not encouraged by the stock reaction, and welcome to be a Software Internet analyst right now, no one wants to talk to us, because Everyone Wants to be a semiconductor analyst, so, thats the only downside right now. Your day will come. Im sure it will. In 20 minutes time or so, what do you want to hear amazon talk about in terms of the next leg for a. I. , instead of just providing the Cloud Services that are needed to support a. I. What do you want to hear from the company . Number one is time to revenue. We are in the biggest type cycle of a. I. When is this going to result in revenue, number one . Number two, what is the differentiation against the rest of the competitors . Third, microsoft is going up and down stacks, security, applications, productivity tools. They have an advantage in the world of a. I. , because they can go up and down. Aws doesnt play in that game, so, how can they enable broader option by these enterprises . Right now, microsoft is running away with the show. So, how do they come up with something thats unique, exciting, interesting, thats going to catch people and right now, i dont think weve necessarily maybe heard that, they probably have that behind the scenes, we havent heard it from them, so, we love to see that. I think it really goes down to the reason why tech investors are so disinvolved or excited about whats happening in the internet and software right now is that hardware, all of the a. I. Is in the infrastructure category. Its in dell, amd, nvidia, and its hard to get the interest of tech investors, because it hasnt come to the Software Layer yet. It will, and so, thats kind of the big question is, when does this actually have a bigger impact on revenue . Thank you for being on today. How do you think about valuing aws, aside from the rest of the business . What are the right metrics, what are the right multiples . So, we do amazons valued by us by sum of the parts. We break all of the businesses apart and apply different multiples. Lower multiple. Aws today, in our view, its about 50 of the market cap of the company. Its the most important business. If you spin off aws into its own side business, you effectively, again, at 100 billion run rate, investors, you know, in software are paying anywhere between i name it 7eleven, anywhere between 7 and 11 times forward revenue, and you could argue, again, maybe its a little lower, maybe its higher, we can look at margins. The margin is one of the largest weve seen of aws at 37 excuse me, 38 for the quarter. So, i think you can look at it from an ebitda basis, on a multiple of revenue, as i said, 7 to 11 is kind of the range. And again, you can start to really look and understand why this business is so important to their overall market cap, if it was a stand alone business. Again, we put a premium on the business, because they are the number one vendor. They are the furthest ahead, if you combine microsoft and google together. They dont equal amazons revenue. So, again, big premium in our playbook. Again, sum of the parts. All right, brent, thank you so much for joining us. Appreciate your take on earnings. Conference call is just about 14 minutes away. Weve got the stock up by about 3 right now. Lets get to another earnings alert on starbucks. A miss on the top and bottom line. The stock touching levels not seen since july of 2022. Lets get to steve kovach with all the details. Steve . Yeah, shares are down about 10 on this. And starbucks missed those expectations on the top and bottom lines following weak demand in the United States and china. Overall, samestore sales were down 4 year on year with a 6 drop in transactions. The company says average ticket price is up 2 . The u. S. Specifically, samestore sales were down 3 . Even worse over in china, with samestore sales down 11 . Now, no guidance here in the release. Thats going to come on the conference call, which kicked off at the top of this hour, mel. Shares down 9. 8 . Steve, thank you. Steve kovach. Wow, thats quite a slide in the afterhours. Ill go to you, tim, youve been lamenting for some time about the price, and apparently a lot of others are with you. And the price of the stock and the company is also come into a place where its going to start to get interesting. We can talk about the charts in a second. Its a case where i do think theres a Competitive Landscape, theres a consumer that ultimately is trading down, and even that 4 luxury that was a starbucks, you know, cup of coffee that people were willing to spend for. I think theres a place where youre seeing them run out of gas. They were raising prices for three years, they have higher costs across their business. Certainly in terms of labor and wage and some of the dynamics, even, on some of the cost input. So, i think youre going to own this company cheaper. I think youre going to own it lower. I think its world class. China is an issue. Theyre not getting the growth. The fact that you saw that kind of a contraction in u. S. Samestore sales is almost shocking. And again, we havent seen this in three years for starbucks, so, youre going to get this company lower. Im looking to get it lower, and ill wait. Ceo was saying its a highly challenging environment. Inflation remains high, consumers are still getting used to higher prices. So, even now, they are still getting used to the higher price points. But some of the chipotle, also, right . But doesnt seem to effect their business the same way. Im sort of i know its not the biggest part of the business, but this china miss is so big, i mean i think the analyst, the high and the low was up two, down five. That came in down 11. Whats happening there . And what is the readthrough to other things . I dont know. But this this is definitely a threeday rule kind of thing, if you have any thought of, oh, okay, im going to buy it now maybe longer. Youre not going to miss it in six days. Yeah. Theres nothing here thats going to change quickly. I mean i dont know what theyll say in the call, but the analysts will not be happy with this. Were going to see that downgrade. Theres only so much you can do at this point when it comes to higher costs. Higher costs of doing business. They can try and be more efficient, et cetera, but theres only theyre still going to have you have wage, you have unionized work force, wages are going to wbe an important topic. This stock is in a downward trend for over a year now, with some blips here and there, but you dont really find any real support you and its just a dagger of support, meaning theres no base of it, its just a low, until you get to low 70s. So, you have a little bit more support there, but i think its a wait and see and theres a lot of headwinds, and you can take your time. What is the readthrough . Karen brings up a good point. Is it that, you know, you can either buy a latte or you are halfway to a dinner. I mean, i would do that calculus, right . Liquid diet. Many with a liquid diet. Again, i think youve got on the a place where, thats right a coffee and a doughnut is not supposed to cost ten bucks, and yet it does. And this is a story where i think the Competitive Landscape in the coffee shop world have gotten very intense. International growth has been a big part of this story, and the slowdown, and theyre citing this. Theyre talking about headwinds, the middle east, different parts, not just of china, but other parts of asia, so youre going to buy this company cheap. A pair of semi stocks lower after the results. Conference calls for amd and supermicro both under way. Kristina partsinevelos is on the phone, very confusing here. Two calls at once. She joins us with the latest. I do have my headphones and im listening. And the call is under way for amd. The major focus is on their a. I. Chip. The mi300 series. Amd is saying its the fastest product to break 1 billion in cumulative sales ssales. The Company Estimated they would be 3. 5 billion in 2024 revenue. Right now, theyre bumping that number to 4 billion. Which, i have to say, was largely expected by the street, but nonetheless, that was the number that a lot of people were looking for, possibly adding to maybe some of the reversal in the stock. What really drove the quarter was not only the new chip and server sales, but an improvement in their client business, which encompasses pc sales. That was up 80 . Management says much like intel that the second half of this year will be stronger, driven by that pc refresh cycle and possibly the a. I. Pc, but im skeptical, because we havent seen that gain traction just yet. Expectations, though, were high for this one, as well as supermicro earnings. Im going to pivot right now, the stock is down 7 . This is an a. I. Darling. The stocks been run up for quite awhile. A server assembler. Revenue fell short of expectations. Theres stiff competition coming from hpe and dell. The strong q4 and fullyear revenue guidance they provided, they increased it, was still not enough to impress investors, and thats why shares are down 7 . But big picture, still up, what, 700 in the last 12 months. We have to zoom out. There you go, 657 . I was off a little bit. Down 7 is nothing. Kristina, thank you. Steve . Yeah, thats exactly where i would have went. Its up over 700 on a year basis. And when you look at this group, this is this is you heard brent say it, this is the most attractive, sexiest spot in that universe of coverage. But whats funny to me, amd is the second fiddle to nvidia. Nvidia was down today, as well as amd, but nvidia afterhours is down less than amd is afterhours. So, i think people are still playing this as nvidia has 80 , 85 of the market share. Its theirs to lose, everyone else is a distant second. Coming up, more afterhours action. Pinterest surging. Well dig into their report next. Investors loving on lilly. Shares are soaring after earnings. How theyre packing on the pounds wh