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♪ good wednesday morning welcome to "squawk alley." i'm carl quintanilla, morgan brennan, jon fortt, both back at post nine. >> yeah. >> good to be back we begin with the story of the morning, apple reclaiming the top spot as the most valuable company by market value. shares up 6% after reporting better than expected earnings. josh lipton sat down with ceo tim cook for his take. josh >> so, jon, tim cook is excited about the trends he's seeing in china. that's what apple's ceo is telling me yes, greater china revenue did drop more than 20% in the quarter, but trends are improving, cook says march was better than the average for the quarter, he said the adjusted price as we got into the quarter, we adjusted it to sort of take back the weakness in the currency and then some. we rolled out our trade-in program that had gotten some success in the united states and the trade relationship, he

said, i don't mean a tariff, i just mean the tone, is much better today than it was in the november, december time frame. i think that affects consumer confidence in a very positive way. i also asked cook about those new services he just announced, so news, gaming. analysts don't think those will have a big financial impact, at least in the near to intermediate term, so what are the benefits then, i asked cook suggesting services that keep his customers happy and loyal and discouraging them from hopping to another platform saying, likely the more services, the more people are happy with the ecosystem and therefore, the churn out of the ecosystem is probably lower. i also would just say, i think everything we've ever done, the majority of people thought that it wasn't going to be very big, so it doesn't bother us to read or hear that finally, we know apple and qualcomm did just end that nasty legal fight, so what changed

there? cook telling me, we came to an arrangement on be three really key things one was a multiyear supply arrangement, the second was a royalty rate and a direct license, which is very important i think for both companies, and then the third thing was to get rid of all that bloody litigation we found the intersection of all those things that would be good for both companies and he says it's good to have that behind them investors clearly applauding the results and guidance this morning. back to you. >> josh, it sounds like tim cook is talking about the resolution of this tif with qualcomm as if it were, i don't know, a conversation about where the fence goes in the backyard, as opposed to the holy war type language he had been using before any explanation or sense from this conversation with him he was the same way on the call saying it's nice to have this behind us. >> i think, you know, listen, you heard what he said there we don't know exactly the details of that contract right, jon. certain details the street would

love to have apple was paying a royalty rate of $7.50 to qualcomm, did that go up, stay the same, down certain details we're still looking for. they seemed to find some common ground it could be at the end of the day both companies just came to the conclusion that their futures are better off not arguing about it, but instead finding common ground. at the end of the day they both need each other for different reasons. >> all right josh, thanks we will keep our eye on this. big panel to talk about this, chris is cowan's apple analyst at post nine, venture firm eric pose here and dcm venture's co-founder david chow who worked back at apple in the mcintosh days thank you very much. you got profit down, revenue down, iphones down and a trillion dollar market cap and investors clearly are learning how to value this company in a different way. >> well, inning investors are

seeing that apple is now in position to exploit. your correspondent was tog about services they have about 390 medium subscribers on their services, music, pay, cloud and so on. it's considerably higher than most other subscription services like netflix which is at 140 so the stickiness of the platform is going to be really proven by the services they've announced games and music and streaming video service, they're going to be very, very compelling in that field. >> david, i wonder, we talk about companies making generational changes all the time, whether it's when facebook went to mobile and now they're going to the future as private moving to a services based model is huge. >> yeah. i agree. i think the movement to services finally really, you know,

extragtsing the true value of the success of iphone and certainly a bright spot with apple watch and the health tech coming around. you know, when you look at, you know, china which is the second single largest country market, you know, the services does not look great for apple there apple news is blocked. apple pay has no chance with ali pay. apple music is not even in the top five and just like netflix, most likely apple's content is going to be blocked on the video side. you know, i think it looks fairly bleak in terms of the international expansion of the services side. >> you have a buy rating on apple, price target raise of $245 a share, the story is at an inflection point we're still waiting on the new streaming services, specifically to launch later in the year. why do you think it's an

inflection point now >> absolutely. to your point, services have been growing one of the things that i would highlight you have a couple ones coming up, right the arcade launch in the summer and then the apple tv plus some time in the fall of this year. we'll find out the pricing structure when it happens. what is interesting to your point, they do have a very loyal customer base and in another way, the services opportunities effectively monetizing more with your customers that are loyal to you and we do think that once some of these products or i should say services like apple tv plus start flowing through the numbers, both on the revenue side and the profit dollar side, i think you're going to see a nice inflection. one of the things that i would highlight people always tend to underestimate these numbers when we come in and then ask the companies as they start growing do you realize these are big investment numbers you know, 5 plus billion dollars

is not small for apple from a revenue standpoint but an interesting number from a pure dollar figure. >> eric, we tend to talk about the services business in terms of apple being able to really milk the customer base and get more profit dollars out of them. that's good. i wonder if the real story might end up being keeping people in the cycle so that when they finally do release that 5g iphone you see another iphone unit pop and all that profit dwarfs everything we see from services from now until then is this really about that next 5g iphone even more than it is about the services dollar? >> well, i think you're right. keeping people happy and involved even though there's no major leap in iphone technology until 5g perhaps is really, really important it also, i mean it shows you the strength of the whole ecosystem and they're not the only ones playing the ecosystem game amazon has it with prime, netflix is trying to keep you in their system with more and more great content. disney is going to get into the

act with their streaming service and their incredible library of content. so everybody is trying to keep people in their ecosystem. in the case of apple as you point out, you know, the next generation of phones are 5g phones will be huge for them. >> david, your point about china being a bit of an obstacle, is this sort of in your view state supported resistance to the apple ban? is it competitive reactions from rivals how do they unlock that china puzzle >> well, you know, fundamentally, you know, areas of news, financial services, tv content, those are all traditional areas that china has always blocked whereas, hardware you can sell hardware, you know, anywhere in the world. whereas, you know, when you get into some of these services, again touching finance, touching

news, touching important content, apple is not going to be able to expand on the services side in the global, you know, many countries that are very sensitive to foreign players coming in to those spaces so i think, you know, in the u.s., it might look great, but on the international basis, it's a little more bleak. you know, what could apple do? i think apple could work with the chinese government to get permission on certain kinds of content, certain kinds of services, but, you know, so far it's all talk, no action >> yeah. eric, just to dig too that a little more, is apple spending enough on content right now when you see the big cash pile it's sitting on and another $75 billion worth of share buyback authorizations >> in terms of video streaming we will have to see what they're going to announce, but you're right, they haven't really spent a lot of money in news they're basically aggregating content from the news producers

including cnbc perhaps if they really are going to be serious about streaming, they're going to have to spend $10 billion a year, like netflix, maybe even more, and that's from my perspective, that's a place for them to spend their cash pile that marketplace is inskredsbly rich and will grow very fast. >> how much of the 6.5% move so far this morning is about the results and the guide? how much is about the buyback and the dividend raise >> i would probably say a large part of it is results driven one of the things is that there was a sudden expectation tha the numbers are going to be bad. people have been speaking about a very weak iphone environment for a while. numbers have to come down. i think the expectations are pretty low into the print. on top of it you had these impressive numbers with the company's iphone numbers on the margin or slightly better. china was slightly better.

you're a seeing the services blossoming into the next stage i do believe it does play a big part $10 billion on the buyback, more than the dividend, i would say the buyback does help. you add it with the existing $39 billion left, and has been about $20 billion a quarter in buyback. i would say the buyback does help provide support, but i think the fundamental results do help us turn the tide where some people who are negative in the stock kind of move shorts and then seeing fundamentalists get in. >> really quick to the point about content budget, what's the upside target to what they might spend on original or acquired content? >> sure, absolutely. i think to alex's point they haven't spent a whole lot. at some point it's going to come through, my expectation the back half of this year, and into something next year like a lot more dollars going dropping to like original content or any content for the services side. one thing i would also argue is

that, you know, in the last quarter they did about 63.8% gross margin, but keep in mind as the content starts coming in your revenue is going to increase, with the gross profit dollar, but might see a gross margin come down because some are about to go through. i would say the shift is going to happen once kocontent comes. they will focus on revenue and gross profit dollar. >> it's going to be interesting to see how they play that hand a lot to process thanks so much we'll see you soon when we come back, alphabet shares trying to rebound obviously from a tough start to the week not doing a whole lot. down 1%, facing downgrades on the disappointing revenue numbers. we'll dig into that. hulu the streaming platform added new users and shows. what this means for the future

of hulu and disney akamai's tom leighton will join us to talk about earnings as we teoot the fed decision this afrnn. s&p close to 2950. don't go away. your daily dashboard from fidelity. a visual snapshot of your investments. key portfolio events. all in one place.

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welcome back to "squawk alley. hulu announcing 3 million new subscribers since january bringing its user base up to 28 million. julia boorstin joins us with more on the company's announcements and what the updated metrics could mean for its future hey, julia. >> hulu is doubling down on original content to help drive

growth and it's already growing faster than netflix in the u.s now it's more than half the size of netflix's u.s. subscriber base hulu announcing it added 3.8 million paying subscribers this year that's more than double the 1.7 million paying subscribers that netflix added in the u.s. in the first quarter. now hulu is investing more in original content including two series from marvel that gives us key insight into how disney, which now owns about two-thirds of hulu, will manage that investment universal owns the rest of hulu. hulu announcing today it will create a live action shows around marvel's ghost rider and -- this is notable because it shows is disney shifting its adult themed characters from hulu to netflix. as marvel netflix shows come to an end this year why aren't these marvel shows going to be on disney plus these are targeting a more mature offices than the disney's

services focuses on families this shows how disney is looking to appeal to consumers with content that complements disney plus that includes a new slate of hulu content around food starting with a show from chrissy teigen now another interesting nugget here as hulu looks to maximize the value of its ads which netflix does not have, hulu introducing special ads to target binge viewers and others to play when users pause a show. guys >> this is so interesting. especially to me, the ghostrider and helstrom move. netflix had marvel content including jessica jones daredevil, luke cage does this mean if people want their marvel fix they will have to do disney plus and hulu and does that suggest something about what igor and company might want to do to tie those two things together? >> well, it kind of sounds like it, john i think the marvel content that's more family oriented for younger audiences for probably

age 13, 15 and younger that will really be on disney plus helstrom this is more than pg-13, this could be for the more mature audiences that the kind of audiences that would watch even fx. what we're seeing disney do now they're taking all this more mature content, the fx content not bringing fx on to disney plus, they're going to put that content on to hulu they want disney to be for families we've already heard disney talk about the fact that they may be bundling together access to hulu along with disney plus even espn plus, as well at a lower price point, but they want to make sure that you don't feel like you have to pay for all of these services it's just an option. but jon, if you want the family marvel content you'll be fine with disney plus need all the marvel content you're going to have to pay for both >> yeah. lots of tempting subscriptions will be floating around there. thank you. and on a different topic,

plant-based food company beyond meat expecting to go public tomorrow pricing after the bell today the company is raising the size of its offering giving it a potential valuation of $1.5 billion. the company's backed by the likes of bill gates and it's making its debut as interest in plant-based products is growing. earlier this month rival impossible foods announced a partnership with burger king the impossible wopper. i've eaten those >> how was it? >> tastes like meat. pretty good. we'll see. i haven't tried different fake meat to compare them. >> yeah. full disclosure my dad is a burger king franchisee i haven't tried the impossible whopper yet, i'm suspicious. i want my plant-based foods to taste like plant-based foods but realize there's a big demand here not just burger king but other companies looking to do partnerships with some of these names. one to watch. >> you're supposed to be suspicious >> i don't want it to look like

it's bleeding. >> yeah. >> oh. coming up, akamai technology's higher after reporting quarterly results up just over 2%. the ceo tom leighton is with us, next but first, take a look at the worst performing stocks in the dow so far in today's session. home depot, chevron and 3m among them more "squawk alley" still ahead.

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welcome back to "squawk alley. akamai technologies pulling back a little bit after popping higher on its quarterly earnings beat trading up 2.5% the company saying increased demand for its cyber security systems helped lead to strong revenue for the quarter. joining us now to discuss, akamai co-founder and ceo tom leighton good to have you with us >> good to be here thank you. >> so security gets a lot of focus but that's still a relatively small portion of akamai streaming got a lot of mentions on the call. i'm wondering, between forth knight and a pecks legends and

the gaming side of it and all of the over-the-top subscription services which is driving the business more? >> they're both driving the business a lot you got a lot of ott traffic, very exciting to see that. we talked about hulu just a few minutes ago. and you have a lot of gaming activity and software downloads associated with that and both of those drove really very high traffic growth on our platform, the akamai platform, in q1. >> when you're preparing for future traffic you've got apple's arcade launching later in the year, but you've also got disney plus, the shows coming to hulu that we were just talking about, you've got other streaming services coming out. which one are you having to prepare more for is it just the raw video streaming or the interactivity that comes from gaming >> you know, the streaming itself of the video is huge. especially as people watch at higher quality levels. there's a lot more traffic needed to make that really nice picture on your screen and

you're right, there's a lot of ott offers in the works and you know, we think that could add a lot of traffic on the platform it's always hard to know for sure, but we're building out a lot more capacity, so we're buying more servers to be able to be ready to support a lot more video watching on-line. >> how much of that is happening here in the u.s. versus international? especially when i see revenue numbers like here in the u.s., more broadly for the company and the quarter, down 1%, but international up 17% and 24% when adjusted for foreign exchange >> you know, the video watching is on a global basis, and we're seeing really very strong growth in the asia pacific region that's across the spectrum of our business there is video watching and media and gaming there, obviously, but also the security business growing very rapidly in asia pacific. >> cap you explain the security portion of it? it's across both of your segments, two-thirds in one, a third in the other, what exactly

are you securing across the multiple products that you have and which security area is growing the fastest? >> yeah. you think about security, obviously banking is a big target, so all the major banks use akamai commerce companies care a lot about security you don't at first think about it with media but we're seeing large-scale theft of video accounts, gaming accounts. you're playing in a game and racked up some nice, you know, things, toys, weapons, whatever and those are getting stolen and the -- >> stealing your actual digital stuff? >> they sell it because it has monetary value your ott accounts, people are stealing those and, you know, monetizing it on a large-scale basis. media companies increasingly care about account takeover and security. >> in terms of 5g, it's a conversation we have a lot on this show. greater connectivity, greater speeds, but also it seems greater security implications. do you think infrastructure and

the way companies are thinking about the deployment of 5g is going far enough >> 5g is great for akamai's business first it creates a lot of demand, as you get more last mile capacity, more people are going to watch more, play more games, do more transactions over the 5g network and that's exciting and there are a lot of security implications there you know, as you get the internet things now gets connected and those devices aren't secured and they get taken over at large volumes and they can do a lot of bad things. so security becomes really important in this world. >> the qualcomm chief on set a couple weeks ago and he argued that of all the gs, 5g is the most important do you go along with that? >> 5g is a big step forward. a lot of increase in last-mile capacity not just here but you look at large portions of asia where literally you can have billions of people can be coming on-line now with an intelligent device and start to access the internet

and that's an exciting prospect. >> we see results from apple and the domestic market for them actually grew a bit, whereas emerging markets were weaker and that story repeat across a number of hardware-focused companies it seems, based on the way the economies are performing, and yet, in streaming, and some of your results, international is stronger in the mix between hardware spend and content available, services spend, what's happening? >> i think we're seeing really strong growth in the emerging markets led, you know, by asia obviously china is an enormous internet market, probably the largest internet market in the world. you have several major companies -- countries in asia where why have you large numbers of people coming on-line and that drives the need for akamai services security is also a huge issue there, which, you know, is a growing part of our business now well over a quarter of our revenue is security. >> so they're just doing it on

cheaper hardware >> absolutely it's cheaper hardware and you need that to support the hundreds of millions of people and billions that will come on-line. >> so i guess the challenge is to see if the likes of apple can get them to trade up over time or if they're going to stay streaming all of that content that's good for you, but actually for hardware. >> thank you. >> about 11:30 here. the overseas markets largely closed today in asia and europe. london was open where stocks closed with a mixed day after eurozone gdp figures beat estimates. ftse down 0.5% one notable mover apple slyer ams -- supplier ams, stock up 20%. european resources stocks with a heavy exposure to china led some losses glen corp not a good performer trading almost 3% lower. when we come back, shares of apple are up about 6% right now. there we go, almost 7%, after reporting better than expect earnings, reclaiming the top

spot as the most valuable company by market value. back over the trillion dollar threshold. more on what this means for the broader markets when "squawk alley" returns. >> the cnbc trend tracker live data board is brought to you by the cme group. ♪ feel that? that's the beat of global markets, the rhythm of the world. but to us,

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welcome back, everyone i'm sue herera here's your cnbc news update at this hour. attorney general william barr is appearing before congress speaking for the first time since the release of the redacted report from special counsel robert mueller this after last night's report that mueller wrote barr a letter saying barr's account of the report was causing public confusion. >> on thursday morning i received a letter from bob, the letter that's just been put into the record, and i called bob and said, you know, what's the issue here are you -- i asked him if he was suggesting that march 24th letter was inaccurate and he said no, but that press reporting had been inaccurate. and that the press was reading

too much into it >> police and protesters in paris have clashed during mayday marches. more than 200 have been arrested as tens of thousands of people marched under tight security in the french capital. nasa said tuesday a pair of failed missions were caused by a nearly two decade's long aluminum scam. employees at facility of extrusion maker tweaked failing tests so materials appeared to pass that's according to the justice department. you are up to date that's the news update at this hour i will send it back downtown to you. >> thank you very much as you know by now, apple has retaken the trillion dollar valuation as the stock moves higher, shares up 35% on the year but the is the stock cheap or expensive santoli is here with analysis on that. >> it's less cheap than it used to be. i don't know that you would call it expensive relative to apple's trend over the past five years it's gaining a little more of a valuation this is the forward p/e of

apple, based in the next 12 months earnings forecast it is in the 17s just over 17 pretty much at its five-year high it was really in here when it was 14 and 13 that pretty much the mantra on apple was it's really cheap even if you don't deduct the cash holdings this is as earnings growth has flattened out. maybe the market anticipated earnings are not going to keep growing and now getting higher valuation services helping this valuation. look at the p/e relative to the s&p 500. it is close to a market multiple one would be it it's the same forward as the s&p 500 it got over there briefly late last year. the market is warming to the idea that the business maybe is a little less hit driven, a little more durable, and can be valued as something other than a gadget company. >> cramer this morning saying it deserves a staple's like multiple does that get your blessing? >> i don't know, maybe we're on the way to something like that

we do have the consumer staples sector etf trades at a premium, always traded at a premium i think one of the distinctions you buy staples every week to the extent you still need to have the apple upgrade cycle replenish you need a big ticket decision more often. if it becomes a platform type company, really the app store and sfrtsz basically are kind of this self-growing organism the market loves those things. i like nike as a comparison by the way. it trades at a big premium, it's a global brand, you have to decide to buy it. >> a board member in common. >> the prices are than the competition and always have been for the new stuff, and so, you know, i wonder if that ultimately down the road is how you can look at it >> yeah. >> that's an upside case the downside, it kind of languishes and doesn't get credit >> put a request in for one of your future charts to show apple stock and nike stock maybe historically. >> we'll show it nike is close to 30 times

multiples. >> yeah. it's interesting, mike o'rourke over at jones trading pointed out in his note last night in terms of apple this time a year ago the stock settled at 169.10 and as of last night trading after market it was trading around 211, so 24% higher but that when you actually looked at the numbers, apple's guidance for the upcoming quarter a year ago, revenue of 52.5, gross margins 38.25, the revenue in the same quarter in 2019, 53.5 billion gross margins and 37.5%. look at the numbers and a chart like this i can't help but think that services is playing a bigger role in where the stock is trading right now. >> in the eye of the beholder situation, right the more that investors decide to focus on that part of the business, it's still only 20% of revenue thereabouts right, growing as a percentage, i also happen to think that the way they've now conditioned people to buy phones, contribute to that steadiness idea when you'll know it's more of a consumer staple type of story is

when they stop having a cryptic announcement they're having a new do event in cupertino and we have to be there. >> that's fair, although you say you buy groceries every week, the receipt from apple seems to come in every week. >> that part of the business, right. you don't necessarily get summoned to cincinnati for new and improved tide. it's a little bit of a sense of exactly how the product fits into your life. >> of the trillion dollar contenders, microsoft and amazon being the other two. >> yeah. >> how cheap is apple compared to those >> significantly cheaper microsoft as an eye catching p/e above 25 and really gets the benefit of being kind of steady and this entry call piece of this ecosystem and the platform is wait to think about it. >> good stuff. that was nice. mike santoli. facebook's push into

privacy. a series of new policies being rolled out by the social media giant as you know. we'll get a lot more on that when we come back. dow up 87. back to 2952, sticky today rick, what are you watching? >> you know, i'm watching the markets in general it's been a great run for equities and thinking about all the people that want more stimulus in the economy. they must all be fans of the fast and furious hit the nitrous, hit the nitrous. we're going to talk about imatn tethbrk.stulioafr e ea - did you know that americans that bought gold in 2005 quadrupled their money by 2012? and even now, many experts predict the next gold rush is just beginning. (upbeat music)

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here's what's coming up on the halftime report. the apple aftermath as that stock reaches a trillion dollars in market cap. top analyst tony will weigh in on what to do with those shares now. plus, how far can the fangs carry the market we'll debate what's ahead for facebook, amazon and the others. our call of the day, questions whether the golden arches are ready for a rest it's all coming up on the half at noon. seema, see you in a few. >> let's take a look at shares of hilton. hilton earnings driven by higher revenue from licensing and credit cards, growth in hilton's loyalty program continues to fuel bookings and issuing strong guidance the stock at an all-time high and investors excited by its buyback strategy in the first quarter. hilton repurchased 3.9 shares, up from 2.9 million shares in the prior quarter. another travel stock moving to the upside royal caribbean on pace for its best day since

october 2018, better than expected earnings driven by higher on board spend, net yields up 9.3% in the face of a stronger dollar and higher fuel prices and a dry dock accident last month in the bahamas, royal up 7%. back to you. >> thank you i will take it and then hand it off to rick santelli at the cme. he has the santelli exchange rick >> thanks, jon you know, i've always been a huge fan of fed days haven't missed any in literally decades and decades. this time is definitely different than many past times but not maybe in the way one would think. i brought up a few minutes ago fast and furious you know why those nitrous setups on those little car engines that give it so much more horsepower and very concise period of time, you can only hit them for a few seconds why is that? i mean, if it makes it go so fast why don't you just tape the

button down and call it a day? because it overheats parts and tends to explode big boom well, is the economy really that much different listen, i think many in this administration's policies have been really good for the economy and i am in the minority of people that believe that there's three and four handles on quarters of gdp yet that lie ahead. but at the end of the day, mr. president, why do you want to hold the nitrous button down i just don't understand the calls for super liquidity, more easing, to make the economy run faster, hotter, longer, when it seems to be doing okay as it tries to grab back its original personality that was lost after the crisis the long and the short of it is quite simple, boom bust. boom bust. boom bust. don't they go well together. they do go well together

and i think that the president and his advisors and many believe that that's what they prefer, but history dictates and ben bernanke said on the stage not that long ago, that many of the expansions get murdered and it's usually murdered by bad policy central banks always have leverage, but without a doubt, the lever that's as tall as the empire state building has a big "e" on it, the ease lever, the ease lever's way bigger than all the other levers and in the end, are we really worried that should there be a hiccup that jay powell and company won't use one of the nine quarter points that they have as insurance to ease back i think i'm pretty confident they will. as a matter of fact, the real issue is, for them to keep their powder dry and not get faked out because the pavlovian signals the market has learned so well of late is if they get nervous the fed will ride in on the

white easing horse at the end of the day the fed isn't going to do anything today and i hope they do a lot less in the future because we're humming along pretty well. let's not go to the nitrous button too soon. morgan, back to you. >> rick santelli, thank you. i'll be seeing a lot more of you as this fed day unfolds. appreciate it. up next, shares of alphabet lower again today after a number of downgrades on the stock that's coming off of an ugly trading session yesterday. we've got more on fangft a icbrk. aer sfx: [phone ringing] you still have service? call the insurance company it's them, calling us. it's going to be a week before they can get through on these roads shhh, sorry, i didn't catch that. i said ask how soon they can be here not you. right now? what's now? he says they're surveying our property now they're probably at the wrong house i don't see any hovering his name is hovering? look up? by using machine learning and analytics to automate claims,

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i know that we don't exactly have the strongest reputation on privacy right now to put it lightly. >> that was ceo -- facebook ceo mark zuckerberg zuckerberg atteo joke about the company's privacy issues at its company's f 8 developer conference yesterday as it launched a redesign of the entire platform. shares up 1% right now elsewhere in the f.a.n.g. world, though, shares of alphabet are trading lower again today, coming off the worst day since 2012 joining us now to break down these different names, internal analyst scott, who recently downgraded alphabet to a hold. where do we start here let's start with that downgrade for google, for alphabet, and why you're doing that now. >> i think the challenge that alphabet has is slowing growth this is an industry that's maturing facebook and alphabet combined are about $200 billion in revenue in 2019 and make up

almost 3/4 of the industry online advertising as an industry itself is 40% of total advertising, so, you know, numbers are harder to get by percentage growth is more difficult to achieve and at the same time, you have amazon that's growing into this industry as well and so it looks like at the moment, alphabet's the odd one out in terms of growth >> so when you mention amazon, is the -- is the implication here that amazon is taking some of those ad dollars directly from alphabet? >> that's certainly happening to a certain extent, but to be fair, amazon's maybe 4% to 5% of the market at this point in time facebook is a $70 billion business, you know, now as well and i think they're also having an effect on google's advertising revenue, and then finally, you know, alphabet's been cleaning up the youtube site from a distribution standpoint and that's had an effect on growth as well >> okay. you just mentioned facebook. we just played some of that sound from yesterday from the f8

developers conference from mark zuckerberg this shift towards more privacy, towards more messaging, a bigger focus on groups, what did you think of the details we got? >> i think it's good, you know, always staying one step ahead of the law. you know, the company has so many different government regulators in the u.s. and elsewhere after it for its existing business model that it probably makes sense to pivot. the question's going to be, you know, how aggressively the company does pivot and if it goes, you know, all in on private conversations, it's a different monetization model and that will have risk with it as well we think you'll see a hybrid where they're still at a public conversation which is more easily monetizable and then the integration of services that are more protective from a consumer standpoint and the company will have to modify the way that it monetizes those users in ways that some of the asian companies like we chat do. >> you mentioned the youtube clean-up over at alphabet.

what's the likelihood that in two or three quarters, we see engagement and ad growth respond to a cleaner site? >> it's possible, but i think, you know, i think youtube is one component of what's happening at alphabet right now that, carl, very much could respond positively once you get through the clean-up period, but the broader issue that, you know, alphabet faces, i think, is this market size constraint, and the fact that dollars have to be traded between networks given how big these networks now are in the overall ecosystem >> scott, whether we're talking about alphabet, facebook, amazon, i would even throw apple in there, even though one of those things is kind of not like the others, it seems like we're facing slower revenue growth, at least in core businesses, margin pressure from buying content and from policing that content, and yet valuations are at the high end of their historical ranges, so how long can that keep up

>> well, you tell me how long the ten-year treasury can stay at 2.5% and that may answer the question but i think that, you know, we are going through a maturation phase, and a heightened regulatory phase as well, which, with a longer duration perspective on these companies, you think would constrict multiple and so we have over 20 companies under coverage that i lead coverage on we only have five buy rated stocks so we're quite cautious in the current environment >> that really puts a fine point on it. scott devitt, thanks for joining us today >> thank you meantime, in a bid to diversify its economy, saudi arabia's been making some big investments into tech, including uber through the sovereign wealth fund. it also has close ties to soft bank those investments have come under scrutiny following the killing of journalist jamal khashoggi. >> totally different than left of course it's a ride sharing

company but it's a ride sharing company not only in the u.s. but all over the world lyft was the pioneer and paved the way for all the other companies who are doing ride sharing. ride sharing is not the only thing that they do that's one of their businesses uber eats is amazing thing and it's, i think, when we got in, the it wasn't even in our valuation. att, which is the autonomous vehicle, that was nothing in our valuation. so, if you add them all up, i think it's going to be a really great, great company >> what's next for the public investment fund? what are we going to see >> nothing will stop us, i can tell you that. so we're opening up. as i said, previously, we're opened up in new york and london, san francisco, now i'm thinking seriously even to accelerate the asia office because we see a lot of potential over there >> fascinating interview

center of attention has been not just the saudi ties to soft bank but the saudi ties to silicon valley, the influence of saudi money in silicon valley. >> and yet the volume on that seems to have gone down a bit, at least from where i sit. i wonder if many of the investors who were calling for companies, for vcs not to accept saudi money are going to keep up that drum beat even after the uber ipo because i haven't continued to hear it as much >> yeah, it will be interesting to see how uber is valued, how its shares are priced, how it begins trading, which we're expecting next week, especially given those comments, you know, we've heard and we've seen that lyft is a much more pure play ride sharing, especially here in the u.s., north america, type of company, but those comments on uber eats and the fact that it is really a company that has built out, essentially, a transportation conglomerate is going to be interesting to watch and see how investors value some of those different businesses. >> yeah. meantime, dow hanging on to some nice gains here. obviously another record

intraday high for the s&p as we're near 29.53

welcome back organizers of the last year's google's walkout are organizing

a sit-in protesting action by executives employees walked out in protest of the company's handling of sexual harassment allegations. the walkout did push google to change a number of policies. however, organizers say since then, they have faced retaliation in the workplace it's a quieter scene today outside google in new york, maybe just a sit-in is a little less visual, but one to certainly keep an eye on today >> judge is back home. let's get to the half. all right, carl, thank you so much. i'm scott wapner, called the apple effect, that stock surging the s&p hitting another new intraday high today. the question today, how high can the flying f.a.n.g.s carry the record setting rally it's 12:00 noon, this is "the halftime report. >> did apple just silence all doubters the number one rated analyst on the symptom, tony, is with us live and exclusive to give us his first reaction