and met aa down over 3% one bucking the trend is twitter with elon musk buying ten percent of the company "tech check" starts now. ♪ good wednesday morning and welcome to "tech check." today markets are in the red nasdaq falling more than 2%. chips under pressure is this a positive rally or the sign of a bigger sell-off. uber wants to get into planes and trains

that story in a minute and bitcoin 2022 kicks off this morning. we are live in miami bitcoin is negative on the year. >> let's start with the markets. what is going on are things going in a different direction? that's what mike is looking at this morning >> if nothing else, the nasdaq technology, s&p 500 are doing the same thing which is making use of that little bit of a cushion built up from lows in recent weeks we have a 10% rally on s&p we have repricing amid fedex peck tagss if you look at the s&p it's about cyclicals not doing well, the defensive areas not holding up well. here is about technology within the broader nasdaq you can pull apart the s&p tech

sector and it's almost 80% software and apple you have other tech hardware and ip services. apple is the one thing that's continuing to hold up a little better software has been weak for months semis had been doing a lot of work and there was comfort in the fact there was still a good macrostory there that is no longer the case i think it's touch and go whether this is the start of something deeper or revisiting the lows it has been tech underperformance after tech outperformance for three weeks >> you hear the term bear market rally. what would analysts look for to see if that's what it is >> basically the rally was about as far as bear market rallies go

in terms of we covering half of the ground lost. any rally is anticlimactic i wish there was an answer to decipher it in real terms. in retrospect you can say so and i think it is safe to say that tech and growth have lost the mantle of this default leadership that happened a while ago. i don't think they will recover even if they participate in any broad rebound. >> you mention that apple has held up better, but what caught my eye is how much better apple held up than microsoft now there is half a trillion dollar difference between the two. it looks like microsoft and alphabet are closer together than microsoft and apple any rumblings about why that might be >> it's fascinating.

apple is to have the slowest top and bottom line. it is the one with the most impenetrable balance sheet and buyback story. microsoft has a bigger valuation premium than apple apple got expensive, but it was microsoft that people felt like it was a one decision stock, trading well above 35-times earnings what is going on is compression valuation that has hit the area that had richer areas. >> interesting where that compression hits and when. mike, thank you. let's stick with stock for today's feed next guest saying cash flow is king and queen with names like alphabet and adobe are ones to watch. it's good to see you

why adobe and alphabet in particular is it really the cash flow part or is there something else to it >> john, first, thanks for having me. when we think about what's happening in the economy, all much the doilsials being turnede inflationary environment, the interest rate hiekes upcoming, e feel like that environment has punished the stocks responsible for a lot of the growth, mainly those technology stocks. those are valued more looking ahead to future earnings we feel now is the time to focus in and start to pick certain stocks i think back to your comment about is it time to unbundle i think it represents we can't think of tech as this group anymore. we have to become selective.

our selections are those companies that are benefiting from solid, predictable growth as well as great cash flow two of those that do it well are both adobe and alphabet. >> a couple things interesting about those names are the way they are approaching small business needs small business has seen the need to go digital with an urgency they hadn't before there is a shopify approach. google is mapping the actual world and is able to get insights into where people are gathering and shopping, both in the real world and digital is that valuable >> without question. those are two very good points to make. that highlight adobe adobe not only serves small businesses, but think about

individuals. adobe arguably was the first pure play to be able to benefit from this trend of individuals being able to create their own businesses around themselves, whether freelancing or influencers developing means that is facilitated by adobe this is a market growing at over 30% a year when we look at adobe, great cash flow. you think about the fact that they have a really clean balance sheet. they have almost $7 billion last year in free cash flow 90% of their revenue is recurring and extremely predictable. we like adobe a lot for some of those reasons highlighted on your end >> same with alphabet. having $140 billion in cash.

and still being able to grow the business year over year, that's massive. >> two of the more profitable, safe names but with the ten-year yield, is it as simple as buy those names and sell the smaller, unprofitable ones or is there a chance to find the next amazon >> being extremely selective will be important. if we were to look at some of those names beaten up a little bit, those would be the higher growth stories particularly around enterprise software within some of those names we like names like sentinel one and even get hub we were pleased with their reports. they put up solid numbers, showing they don't have too much of a concentrated dependence on

their larger enterprise companies, and their model of giving away the lower inversion and graduating people up is working. we do like some of those businesses when we look at the fundamentals, nothing has changed. you look at the i.t. directors, they are still predicting strong spend on these type of services. >> you are being get lab, right? >> yes i might have said get hub. >> fundamentals haven't changed, but we are going into earnings season and there is talk about lower growth and even a recession. could you expect something less than >> the thing to look for within the upcoming earnings are the ability to be able to lap some strong comps from last year and being able to drill down and dissect three things number one, is the market

available to these businesses. was a really the market or was that a temporary uptick because of covid number two how much revenue was pulled forward that was only short-term how much revenue was pulled forward in 2021 that would have been realized over the next two years anyway third -- and the most exciting opportunities -- some revenue was pulled forward, but mainly around infrastructure and building cybersecurity for defense. those are longer term transitions that companies have to plan for. so for those companies able to pull some forward, we see longer term benefit from companies that still need to implement that type of structure. we will need to watch earnings closely to see how well companies are performing because they are coming up on close comps to lap >> tony, thank you

it's a bird, plane, uber they plan to offer train and bus offerings as early as this summer in the uk perhaps hotels in 2023 they will not provide them themselves, but plan to announce partners as he continues on the super app vision he talked about way back in 2018. we joked that maybe he wants his old job back this looks like an ota or expedia where you go to an app and book all things. they have created value at expedia. at uber there has been a question as to whether it is a disrupter. i think that question was asked

at the ipo and investors have voted by keeping it under its ipo price they uber to the airport, get on a plane and get an uber on the other side. why can't uber keep that in the same experience and get a commission from the travelers in the middle then they just don't have to rely on the end user if they take the eye off the ball and can't solve the labor charges and food delivery, trucking, the complexity could buy them down, but, hey, it makes sense to me. >> in a way this could put uber in competition with air bnb. many years ago i remember talk about perhaps air bnb would get into the flight booking area

those went away. these giga economies, as they delve into, it's interesting what they could get into not the super apps i would think of, maybe the american version air bnb doing this would make more sons it's not like you book a car before you book your flight, but you book your air bnb before you book your flight >> and they go to air bnb to search, there is a big search engine involved. we are live in miami for bitcoin 2022 nasdaq remains down.

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week roku has had a 48% dip and all of the ones among ark's top picks are all down ark is now down 10% since monday's close >> speaking of software, i spoke with scott ahead of his team 22 keynote event which he will be giving today as we end he said because the company makes collaboration software, they have good data on when and how people are working overall since the pan temdemic, are working longer hours prepandemic, but shorter from

2021 >> in 2022 you can see the total amount of time that people are working has decreased as people have worked out how to get that up as a company we have been inspired to build products for our customers that reflect in helping overcome this. >> they have leaned into remote work, which i guess makes sense since it is based in australia with employees all over. he said different employees have moved to different states and that has had a bigger impact on atlassian's new hires. >> when i think about the people we have hired over the last 12 months, 42 or 44% are now

working somewhere more than two hours from one of our office locations. the want for talent is real and difficult to find staff. one in every two of our new staff members would not have been someone we could have hired previously without this new policy >> if you were able to see the graphic, it showed the spread in workers over time. a lot more people moving to the midwest and texas. they are about a $76 billion market cap company it is above where it was 12 months ago >> up over 100% two years ago. google went back to work and there was a great piece on how there was hesitancy. you say people are going in just to sit on zooms all day in the office offices like ours here are equipped for that. but i am skeptical people go all

of the way back. the collaboration that does happen in person that you don't get on a remote, but the talent war is real. for an australian company it's always going to operate a little differently than some of those in silicon valley that talk about hybrid work, but are slowly going back to work like prepandemic. >> and product load growth, that certain software companies can grow quickly and for a long time without spending time on sales and marketing. over time, i'm coming to realize that different companies have different cultures and therefore different needs to feed those. what works for one company does not work for another there is not necessarily going to be a universal rule, that everybody has a hybrid or remote

environment or everybody is coming back to work. apple especially is still working through that we are going to turn to miami and crypto miami is the unofficial crypto capital of the u.s but new york reign supreme when it comes to total dollars. and even houston but miami is growing where else would you be, kate, but in miami i love the way you described it this morning miami gets most improved player. >> most improved player. we call that the mitt versus the mvp. the city unveiling the crypto version of the wall street bull behind me. the industry is the center of the tech game here in miami. i spoke to investors who have

moved here recently and businesses who are taking bitcoin for every day payment. it is becoming more of a status symbol and prove you belong to this growing crypto crowd. at a bar he said there was demand to pay in crypto. he said the group tends to be younger and he said they tend to spend more >> i think it's a cutting edge thing. just like ten years ago when somebody would pay with a black am >> people in south florida are buying more expense itch items in crypto as well. a man who sells yachts said he has sold more than a dozen in bitcoin, half last year. >> there are more let's get out

there and do things with the crypto crowd we have we love to see people take a yacht and go places exciting than hanging out at a marina >> so risk takers? >> yes, younger, more adventurous and doing things that haven't been done before. >> and this might look like your average pickium basketball game, but you have to own a certain crypto currency to get in. the sunday game is where networking and deal making happens. when it started the price was $200, but it is now $1200. people have compared this to silicon valley a couple decades ago. one investor likened it to freshman year of college there is excitement and people are open to making new friends

but the other part of silicon valley that may sound familiar, a bubble >> you hear about that over the last year the industry has become divided you have the maximalist, jack dorsey versus horowitz last year dorsey and elon musk were there how is that playing out on the grounds this year? >> anybody coming to this conference behind me is a fan of bitcoin. last year i was told there was something in the language or speakers agreement that you couldn't talk about any other currency than bitcoin. it has grown immensely this is a convention for max mal maximalists who believe in bitcoin. there is even the idea of

tokenizing a bpickup basketball league a lot of people here have come to events and to network so it is a place to come to network and go to as many meetings as you can. >> and the crypto parties. be sure to check out our digital show on all things crypto. i don't know, it seems more like vegas than silicon valley coming up, nasdaq is still down 2 1/3%. we will be right back. we are worried the market has maybe 5% upside should we be gngoi into recession?

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back to "tech check. we continue to keep our eye on the markets. the dow is off a little less than 1%, but salesforce, microsoft and disney leading that to the downside the biggest laggers on the nasdaq 100 this week time for our news update here is what is happening at this hour. shares are being cut by jetblue after being bought by spirit airlines frontier, the airline that agreed to merge with spirit is down about 10% we were told last hour that a merger with his company will be

better >> when you scratch behind the surface and see what regulators are trying to do, which is to make sure the fares go down, we believe jetblue/spirit combo will have a better effect. tilray shares jump after a surprise quarterly profit. and they announced an exclusive deal to sell hemp powders and whole foods. and a key index is down another 6% application volumes are down 41% over the last year back to you. >> thank you as we look at the nasdaq, it is down 2.4% in a significant pullback for tech stocks what is moving in that sector?

>> we are seeing the tech stocks are extending yesterday's declines you have growth and value. investors are waiting to hear. you have apple, meta, alphabet, all about 2% lower amazon and netflix trending well more than 2% lower and twitter still trending higher after elon musk admitted his 9% stake in twitter is not passive. and you have a low hit we haven't seen in about a month. and investors are dealing with not only cyclical concerns, but you have the fears of inflation

weighing on that nvidia in that group and wisdomtree down. and shopify is down more than 50% this year. fed tightening, inflation, valuation compression, all factors for the sell-off back to you. >> although tech is sharply lower, our next guest is upside in the long-term noting that tech companies generate more cash flow by twice as much as the west of the s&p. jonathan, good morning we talked about the large and mega cap companies where in tech do you see the greatest, not just safety, but opportunity?

>> there are so many things to unpack over the last year the mega cap, you talk about the largest five days, you talk about better improvement margins and better stock multiples. so to the extent things get dicey, those things look attractive as you know the valuations -- and they are not all the same -- the valuations on some of these names are reasonable if you look at the rest of the tech universe or smaller names, they have had a hard time. slightly weaker revenues and margins and multiple contraction. i think the big story is how all of these names do if we either go into reception or perhaps what i think is a more likely case, that the economy runs hot

for the next while on inflation and the fact that the fed is not doing enough to bring it under control and how to think about t tech in that context >> data dogs is one of the biggest laggarts this week but what does it tell you about some of the smaller names. >> i can't speak to the name and i don't cover the stock. it is clear that not only in general are the smaller names being weaker, but the multiples are contracting on them. the smaller companies that are putting up numbers in terms of earnings, that they are getting grouped together with other tech names that are under pressure, especially those that have perhaps have weaker earnings or

what have you. i think the key is to look for revenues one of the things that had made those bigger names so much stronger all around is that they are delivering faster topline growth there are a lot of things you can fake, but growth is harder that's important to look at. >> jonathan, i want to stay close to getting you to talk about an individual name without talking about an individual name facebook's parent meta is down 27% over the last 12 months. it suffered worse than others. has something fundamentally changed in tech stocks or perhaps has the disappointment in one or more of those names

been overdone? >> as you know, one of the things that makes technology so more exciting than investing in, say, energy or something else, is that these names are incredibly idiosyncratic and unique in their business models. you could have a lousy tech environment and pick winners that could do incredibly well. if the price of oil goes up or down, it will dictate the whole sector if you look at the natural pairing, it's a social media company, what is it most closely grouped with and yet its stock price may be very different. if you look at the top five tech plus names, it's surprising to me that nvidia has replaced facebook by market cap given the other performance. when we are looking at

characteristics, it's a moving target facebook, it's not the whole story. there is a lot going on. >> tell me what you are doing that c that consumer behavior changed, migration to the cloud, so many valuation benefit, that companies saw benefit to that, has now been erased. is it time to bargain hunt on that thesis or do you rethink that thesis altogether >> what we are spending most of our time as strategists, right now we have a strange threat where half of the world is convinced we are going into a recession, and half of the world thinks we have an inflationary problem. my personal view is that this

inflation is going to run high in many ways, what you find in the tech space, for good and for bad, is that they are not a big winner or loser for an economy that does better or worse. this is the most idiosyncratic space. if you love looking at individual stories, this is the place to do it in. if economy runs hot, semiconductors are clearly the big win overall. if you believe that things are going to soften up on the economy, we are going to move towards a recession, then you definitely want to be rotating towards larger cap names and semi -- and software names if you think things are going to really rip on the economy, you probably are going to want to buy some of those companies that have weaker revenue growth or no profit and hope for a turn

around in a really strong market we have been doing a lot of work we published a report only a couple weeks ago what is the list of companies within every sector, but including tech names, for a recession ri outlook, what are the wins for one that avoids recession. we are stress testing that with our analysts >> thank you after the break, let's talk tech trends, tiktok versus others and investment advice. stocks are lower as we mentioned. nasdaq down 2.5%

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if you are looking for what is next, ask a teen. they look at crypto adoption, m metaverse and who is spending the most time on it. >> two slices of this survey stuck out to me and it doesn't look good if you are a meta fan. tiktok is the new favorite app for teens, passing snapchat for

the first time instagram commands the most attention with more engagement than senatechat and tiktok but it explains why meta hired a consulting firm to plant bad stories about tiktok on the metaverse front -- this surprised me -- more than 25% own a virtual reality headset. but only 5% say they use it every day. it tells me it may excite the younger crowd, but interest burns out quickly. >> steve, it's interesting mark zuckerberg is not young anymore. he has kids who are young.

i don't know any young people that excited about metaverse they are excited about playing minecraft and roadblocks maybe it's for millennials >> what is considered a vr device i can't imagine 25% of teens have a headset >> occulus from meta was one much the hottest things under the treat on christmas morning there is evidence that people bought a lot of these, but the usage shocked me more. >> spoiled teens there they get a headset for christmas and barely use it. >> something tells me they under undersampled certain neighborhoods. >> as we head to break --

shipments suspended to customers winding down operations attempting to minimize disruption of global supply chain.

day three of elon musk and twitter. stock is up about .9%.

the edit function may become a reality if you haven't heard if you are on the platform you probably have. the company claims they have been working on the feature for months it just took elon musk taking a 9% stake and tweeting. some folks talk about the dangers of an edit button which seemed clear i don't know how seriously to take this. it has been a running joke but in the future -- i don't know if it's the far future -- you may see a twitter unblock chain, a way to edit >> it doesn't seem like it should take that long. >> i don't want one, for the record i may be the minority. >> we will save that for another day. up next, a check on the semds

conductors that has been hit hard, reapproachinit20 ls.g s 22ow we will be right back. ( ♪♪ ) i call it the wheel. okay. this is a miss. edison, can i be honest with you? i-i-i-it stinks. (speaking japanese) like i was saying, it's ftx. it's a safe and easy way to get into crypto. ehhh, i don't think so.

and i'm never wrong about this stuff. never.

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our next guest is bullish on names like nvidia rating all three of those a buy, needham analyst joins us now good morning to you. we were just talking to jonathan gala at credit suisse saying they should sell chips in a slowing economy and we spoke to ceos and long-term investors who say this could be a good opportunity because of the secular shift and the rise of iot. >> yeah. definitely i think the buy side sentiment and the investor sentiment is far, far more negative than the sell side estimates i've spoken to are expecting some sort of impact with respect to inflation and affecting consumer demand and the secular growth or cloud or high performance computing. so there is a kind of a disconnect between what the

companies are saying and the outlooks they're providing which have pretty much have been beaten and raised quarters and what the estimates are modeling in the last year, sell side has increased 6% over the last few months for 23, yet the price to earnings multiple has contracted almost 40% and that really reflects investors who are quite nervous, quite concerned about the fact that we are potentially late in the semiconductor cycle and if demand starts to slow down because of inflation or higher interest rates that we could be in an overcapacity situation in 2023 or down the road, and that's what's been pressuring the shares of late. >> speaking of that, how are inventories looking? >> so, it's an interesting story. i think you have to get behind the huddle a little bit.

finished inventory at internal chip companies is actually reducing it's declining we are seeing some signs of increase in inventory and things like work in progress or raw materials as they set up to make new chips and accommodate for new production down the road, but the finished inventory for chip companies is being sold anything -- whatever is being built is being sold and is being consumed by the consumer, and so inventory levels whether it's at the chip company, at the distribution channel is still at very record low levels and all of the companies i talked to who are outsourcing their foundaries, capacity conditions will remain tight for until another 12 or 24 months. most of the companies are talking about not bringing on new capacity until late 2023, if not further. and so if demand continues to

hold up driven by a lot of the secular growth trends and talk about edge computing and cloud infrastructure and high performance computing then demand will outstrip supply for at least another 12 to 24 months and that dynamic is not at all reflected in the stock prices or currently reflected in the valuation multiples. >> that's interesting. it's a tricky balance that so many billions and billions of dollars is earmarked in investment that will take three to four to five years to show up do you think that that stays in place? >> i think that there is a push to build domestic semiconductor manufacturing. obviously, the u.s. government, the house of representatives and the senate, they passed the chips act which is a $52 billion act and we're waiting for that to be funded and a good chunk of that money is allocated to

building manufacturing here in the u.s. so that's a positive in the long term and it emphasizes the importance of semiconductors to the digital economy and ramping those will take quite some time. >> right. >> and the conditions will remain tight -- >> raj, we have to leave there, but thank you for the insight. rajvindra gil. >> a headline on amazon that might surprise you is next don't forget to check out the techhe pca cckodst we're back in a moment you can watch movies through your phone? and y'all got electric cars? yeah. the future is crunk! (laughs) anything else you wanna know? is the hype too much? am i ready? i can't tell you everything. but if you want to make history, you gotta call your own shots. we going to the league!

one more thing or two. amazon hr exec pam grier part of the team tanked witsked with th employer, is leaving, here's something else linkedin named amazon one of the best companies to work in the united states. how corporations perform on the publicly priorities ranking amazon lower for how they invest in employees and how much people want to work there go to cnbc.com to read more

about that, d? >> amazon is famous for those six pagers at the corporate level. everything has to be not on a powerpoint presentation, but the six-pagers the nasdaq down about a third of a percent. we have banks kicking off next week and techs after that. we'll get to it all. >> welcome to "the halftime report" i'm scott wapner that brainard bombshell still reverberating and what if a rougher road is indeed ahead we'll debate that with the investment committee, jenny harington, sarat sethi, joe teranova, and that's for the first time since march the 2