Meg terrell is here with a special report. One of the widely held stocks in america hitting all time highs. Microsoft surging on a big earnings beat. Last time it was at these levels was december 30th of 1999. Guy adami was just 15 years old. What does it mean for the rest of big tech earnings . Dan nathan, what do you say . I think this is pretty microsoft specific. We got guidance from microsoft for q4. We know they had a solid q3. Microsofts cpcbusiness was down, the other stuff is making up for it. They have two hats, they have the cloud business, which is private and public, and thats growing. The aws piece, azure, excuse me, grew 140 . Thats what they want to see. We were all just talking about it. You own the stock, this is one of the reasons you think its going to be a 100 billion market. These guys are well positioned behind amazon. Its hard to argue with the growth youre getting out of azure and office 365. These guys can now say weve transitioned the company from the dwindling pc business. It gives analysts the ability to forecast their business. These guys say they have an annual growth rate of 12 to 13 over the next four or five years, which is why they get a little bit of a premium. The success of management in turning this boat gives Satya Nadella and his team a premium that management trades at transparency. Thisc stock trades at a premiu. Stock sounds pretty good. Buy at the alltime high. Tradingwise, today, die buy it up 5 , probably not, i would probably shy away from that. That being said, i would look at it on a pullback. Everything these guys said is exactly what everybody in this market now wants. Theres very few stocks out there that have this type of growth, that have a dividend, that have a strong management team. You can probably count them on two hands. Microsoft is probably going to attract a lot of investment money. On pullbacks, you can be a buyer. I agree with everything brian said. I missed quite a bit here, i dont know that i want to jump in now. It is interesting to note, 60ish, traded 17 years ago. The p. E. At the time was 72, right . Now its i dont know 18 or so. A lot more attractive here, needless to say. He whats kind of interesting about microsoft, we want to extrapolate what this means for the rest of tech and what are the closest comparisons. I think of ibm, not because ibm is executing like microsoft, but because its a company that really had a legacy business that it needed to get away from. This last quarter, we all sat around a couple of days ago and said, these numbers are not that bad. Do you like ibm because you see the same sort of current or does it make ibm look worse . It says ibm may start to see traction in their turnaround. Heres a really important point, microsofts legacy business was down 5 . Intel, what we saw there was, yes, their Enterprise Business is being cannibalized by the chips theyre selling into these Services Businesses like aws and azure. When you think about it here, theres going to hit a cycle here, in this quarter they just printed 22 billion in sales. 12. 7 billion of that was that legacy stuff that declined 5 year over year. At some point you may see cannibalization start. I am not a beyuyer at alltime highs. What does that have to do with anything . Why do we talk about alltime highs like its relevant to anything . It spent the last three months consolidating between 56 and 58. Ive been on this network on numerous occasions during that point saying, before this cycle is over its going to go back and hit those highs. A lot of people think about those things psychologically. Ive said on numerous occasions, this thing is going back there. Were you short . Theres better shorts in the market, okay, and theres better longs than buying something at alltime highs. I dont think that people are underweight microsoft. Its got that great dividend, it trades a little above the market. Thats why the stock actually traded at a premium. Its also a mega cap name where guys can put capacity when the market doesnt have a lot of places to feel comfortable about value and growth at the same time and a decent dividend yield. Tims point, and your cpoin about ibm looking like microsoft prerun, i think thats accurate. I would rather ibm over microsoft, based on price only. Really . What do you think it means for amazon and google . Anybody with a cloud business. Anybody with a cloud business. Those are the big players. Im hopeful for google that there is a lot of growth left to be had. Well see next week. Both report on thursday. I want to make one point about that. Microsoft has a little bit of the salesforce. Com stuff, a little bit of the aws stuff. When you think about software as a service, the public cloud, and the private cloud. Theyre much more diversified, you throw in the linkedin, whatever they can do with that, putting these pieces together across selling, more ai, more data mining, that sort of stuff. Thats probably some secret sauce were going to see in 2017 when they close that deal. We know linkedin listen, this is a huge money loser on a gap basis, microsoft is a very profitable company. We have to ask the question, ifc werebulled up on aws, theres a question about what gets to be a commoditized space. You cant have it on both sides. You have got mega cap players continuing to dominate a business. Everybody is saying that guy will dominate in a business that ultimately margins will go down. Does that mean youre less optimistic . If thats what youre saying, you extrapolate that prices are going to be its going to be a commodity business and margins will be pressured not yet. Youre praising microsoft for that . Good question. Well see better margins than i would have feared. Right now i dont think theyre in danger of margin degradation. I actually think this could increase margins and market share. But what are we talking about, two or three or four years out, im not going to bother trying to extrapolate that. This is a case where you have to be watching that. This stock right here for this market, at this valuation, for these numbers, can go higher. Dont you think ibmc and microsoft knows its going to be commoditized, thats why they have watson, theyre giving you tools to build on top of this commodity, they know its going to be that way. Once you build on top of it, its sticky. Its difficult, once youve built something on top of that cloud, to move it to aws. Aws in my view doesnt have the analytic tools the others have. Youre not buying microsoft. No. You would rather i would rather wait for a pullback. If you want to talk about the comparison to 1999 and y2k, there was a ton of startups, a lot of enthusiasm. When you think about everything as a service and everything in the cloud, theres a huge buildup going on, an arms race going on. Its google, its ibm, its microsoft, its amazon. Think about the supply chain, the component suppliers. It obviously benefitted from this. This is why intel was at sevenyear highs or tenyear highs because they transitioned away from pcs that were declining into these server chips. All of this stuff is cyclical. It has the potential toc cannibalize. It has the potential to basically become commoditized too. We have this euphoria in technology, everybody is obsessed with mega cap tech stocks because they offer value and dividends. I hear what youre saying, but youre talking about a Company Trading 50 times. Thats in line with the market going lower. My personal view in 2017, theres going to be much more scrutiny on valuations, even mega caps, even amazon that traded at ridiculous valuation. Youll see value become an issue. Then youll see some margin degradation, deceleration. Its a 140 stock. Microsoft conference gets under way in just about 20 minutes. Ahead, good news for housing turning into bad news for housing stocks. Why it has one of our traders so worried. Senator Bernie Sanderss tweet has shareholders in one Biotech Company running scared. Media legend and former fox executive peter cchernin joinss from the vanity fair summit. What he thinks the next big thing in media is. Much more fast money, still ahead. Ur order. Thank you. Thanks. Dont you hate that . When they dont tell you how much something costs . And you have to ask . Right. I do. Maybe thats why i always make sure to. Bring up the costs associated with your services. I know. Hey, im nothing if not predictable. Lemme guess, the salmon . Being transparent about our costs. Its a big deal. And its how edward jones makes sense of investing. The es and es hybrid. Its your daily retreat. Get up to 5,000 customer cash on select 2016 models. See your lexus dealer. On a perfect car, then smash it into a tree. Your Insurance Company raises your rates. Maybe you shouldve done more research on them. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. And if you do have an accident, our claims centers are available to assist you 24 7. Call for a free quote today. Liberty stands with you™. Liberty mutual insurance. Welcome back to fast money. Time for our move of the day. Check out shares of bk. Bk got worried about this, why . He. You had what isc ostensibly very good news for the housing area and all of a sudden, xhb, itb trade off, trade down, close near their lows. For me that says thats as good as it gets. Youre going to the ford f150. Sentiment reading. So what im saying is were seeing cracks in the economy. This is another crack. I shouldnt say its a crack in the economy. Investors are getting ahead of this crack, is what i think. It sounds like youve been smoking crack. I actually think the Housing Market is very slowly building and building at a right pace. If you look at household formation, where we are on supply, where Interest Rates are, they will get their way into it. Lending is only starting to pick up. I think the Housing Market is one of the gradeat places to be. Pulte is the company i want to own. Theyre buying back stock. They werec defensive from 2008 through a couple of years ago and have started being aggressive again. You have a little bit more money on margins, interest margins. And theres more lending potential because more people want to buy. That would be good. Probably not as good for wells fargo as it normally would have been, that was their sweet spot. Mortgage activity is a good thing. Other big moves of the day, rumors on the street, a game of deal or no deal. Get your whiteboards ready, guys. At t sinking, time warner soaring on a report that at t is considering taking over the media giant. Hold up the boards here. Deal or no deal . What do you guys say . Hold on. I got deal. Wow, its a split. A deal on this, my left. To my right, no deal. Our next guest not why . Im always wondering, why did this leak, what do we know about this, whats somebodys agenda . A trial ballo jn potential trial balloon. To see how its going over . Im skeptical at this point. Think back two years ago, we know there was a deal leaked by fox for time warner, they rejected an 80 billion deal, when this deal leaked, it was a 60 billion market cap. Time warner is a company thats growing earnings in the midteens, it trades in midteens. Its very attractive. Unless this is going to be at a major premium. Look at the changing landscape of the media, look at comcast universal. At t time warner becomes like a comcast . I was at at t the other way, whining about my phone bill. Tmobile and sprint are giving away free iphone 7s. Do you know what at t said to me . If you sign up for directv we will take a hundred dollars off of your bill. They have to go back to bundling. Thats why they need the content that time warner chas. Wireless data pricing is going to zero. Why doesnt time warner do this deal . Everything has its price. Right now this company does not trade to the sum of its parts. It would have to be over 80 billion. Why would they sell the top of the market youre referring to 1999. You should be a buyer here. A buyer of time warner. Right . If you really think on tuesday there was a big roll on the Options Market. I know friday at 5 30. Somebody rolled out time has expired. It was profitable and they rolled out to the january 82 1 2 calls, good size, 12,500, lucky timing . I dont know. Lets see what our next guest says. Mike mccormick has a buy rating on the stock. He put out a note moments ago outlining why the deal is unlikely. Thanks for phoning in, mike, i appreciate it. You do believe the two parties are likely talking . I guess ill try to break your tie here with the noc dea comment. I wouldnt downplay the fact that the two parties are talking, as we all know directv is in the midst of trying to launch over the top products. They do have a relationship with the Chernin Group. To the extent they want to get into offers of unique video product, i expect they would be talking to folks like time warner. In our view, at t management has been very clear, the plate is full, the executives are extraordinarily busy on directv. Small deals are possible but a large deal like this is not really possible. We can talk about the reasons why. I missed what you said, which company has a relationship with the Chernin Group . We happen to have an interview with peter childrernin group la in the show. At t. Can you see what the strategic desire would be for a deal like this . Is there a rationale . Thats the biggest challenge from our perspective. I just dont see any synergy opportunities. Theyre not going to be able to have exclusivec content throug time warner. Im certain that any deal that goes through the sec, if they would approve it, which i highly doubt they would, there would be stipulations all over it saying they cant do things like that. I just sort of fail to see the strategic rationale of combining the two entities. You cover at t, so youre approaching it from that perspective. Do you see this as at t wanting to do a deal, if not time warner, theres somebody else . At t has said smaller deals are possible. And, you know, in their own words, theyre saying something south of 30 billion is the more appropriate level to be thinking about. I think if youre looking at the sec and you guys mentioned earlier comcast nbc, in our discussions with the sec, our takeaway was they wouldnt have approved that deal had they had the chance again today. Its the combination of distribution and content that is i couldnt speaking to the sec. I think at t will be very hesitant to put anything in front of any regulator unlessc there was complete certainty that they would get approved, after the failed tmobile deal. Mike mccormick says no deal. What do you guys say . Do you change your mind . No. He certainly has a much better read on the at t youre like, no, i dont believe mike mccormick. He covers at t, i dont care what he says. He certainly has a better insight into the management than i do. But i think my point would be, at t needs to make some changes. Exactly what dan highlighted when he was complaining, they need to make changes. I think this is one they would do. At t has sold off dramatically before this news on the back of rates rising. They have numbers out next week. Youre getting to a place where the stock looks very interesting. With time warner, were about 16 times, this is very cheap to the sum of the parts. Turner is undervalued. I think you can buy that one on its own merit. Maybe you need to do this tomorrow. The interview with Peter Chernin should be interesting. Still ahead, check out shares of cmicrosoft, alltime highs in the aftersession. Well hear what ceo Satya Nadella has to say right after the break. Im melissa lee. Youre watching fast money on cnbc, first in business worldwide. Heres whats coming up on fast. Im loving it announcer but investors arent loving shares of mcdonalds. And something happened in the market today that could spell more pain in tomorrows earnings. Well explain. Plus what one biostock did one day after a Bernie Sanders tweet. Well tell you which names he could go after next, when fast money returns. 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Com and get up to six hundred dollars. Bill ly joel is fine. Were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. Welcome back to fast money. We kick off the second half with all the afterhours action. Microsoft jumping, Advanced Micro Devices sinking. Josh lipton gearing up for the microsoft call report in a few minutes. Deirdre, well kick it off with you and paypal. Take it away. Thats cright, melissa, payl reported earnings in line with what the street was expecting. We did see the stock fall initially because investors were a little bit disappointed because of a miss on total payment volume. That came in at 87 billion versus 88 billion expected. But the stock has of course changed course, now up slightly. Markets were able to digest its forecast. The margins story is a very important one because of its recent deals with visa and mastercard. While these partnerships will help paypal move deeper into the payments ecosystem and achieve some scale, investors were worried they could dilute earnings. The ceo spoke about the benefits of these partnerships on the Earnings Call just moments ago. Along with our agreement with visa, the deal with mastercard exempts paypal from current or future digital loss fees and provides cost certainty for years to come. Thanks to our agreements with visa and mastercard,c paypal n has a seamless, quick, and simple way to activate paypal payments at the point of sale. Now, active users, as well as the growth of its venmo app, the app processed nearly 5 bil