at this point, but it will certainly help in the long run >> and the market activity in july could certainly help things as well. thank you so much. turning to the markets quickly, the s&p 500 up about 1% the nasdaq up 1.4% that's it for "squawk on the street." "techcheck" starts right now. >> good friday morning i'm carl quintanilla, deidre bosa and john ford investors betting on apple and amazon as recession fears rock tech intel getting crushed. ceo pat gelsinger says their own execution issues are to blame. we'll check on that on the passage of the chips act roku shares plummeting we'll discuss what it means for

other advertising-based names like werner, disney and the growth broadly. tgif what an epic week. we start our show with amazon shares they are surmging after reporting better than expected q2 results painting a bright picture against the macro back drop. basic consumer spending has remained strong. management adding overcapacity concerns something that dragged down the stock in the first half of the year are now being solved. they do warn, however, inflationary pressures remain and could be strong in q3. a negative on the quarter, amazon taking a $3.9 billion hit on its investment in rivian which resulted in $2 billion but there was a $12 billion gain a few quarters earlier this is basically the ceo saying, he knows this playbook he watched jeff bezos, figure a lot of the stuff out

amazon went from one of the worst performing mega caps this year to maybe in the best position for the second half of the year and i have to give you credit when a lot of the street was getting bearish on the name or thinking maybe how did these overcapacity issues happen you said maybe they're figuring it out now so they could be better positioned. >> thank you for the credit. i will say, i thought there was a pretty good chance, right, given their scale, given the data they have at their disposal and the experience they have, if somebody's going to be able to recover from this relatively quickly, it would be this company. i think part of the story line we're seeing play out, certainly for amazon, but across this earnings season so far, at this stage, in this economic difficulty we're seeing, that scale players with the healthiest platforms are faring way better whether that's amazon, apple or microsoft or google or even walmart walmart got hit earlier in the

week when they get the warning about inflation. it's almost recovered entirely stock wise from that because at the same time, they're also saying same store sales are actually up. their consumer is returning to them for what they're good at. amazon was saying something similar here, to a better result for them stock wise certainly. >> the other thing i would say, guys, is that now this is one of the few actual reacceleration stories in the market right now. i mean, microsoft and alphabet, they were okay but the reason their share prices rose is because they weren't as bad as people were fearing. amazon and apple were actually good, better than expected we can use that well-used phrase it's a share gainer. in this market, carl, that is a very difficult thing to do amazon took its medicine in the first half they're ready for the second >> yep i wonder, though, what it does to some of the bull stories we talked about before the downturn that were supposedly, jon, catapulted into a different

league same-day delivery, advertising, becoming its own growth business are those things -- have those things been tempered given what we're going to talk about in a minute, which is roku? >> i don't think the advertising piece has. the segment of advertising that's been most affected so far is that auction-based ad model where you're sort of -- it's the performance ad stuff >> you know -- >> what amazon is doing, it's very clearly able to connect through first-party data these ads to results so, i think at least at this stage in the -- again, at this stage in the economic difficulty, this is part of why they're doing well, we don't know what the next stage is going to hold. are they stabilizing are they going to get worse? if they get worse, i think there's a pretty good chance that even these big spaceships with strong shields will start to take on damage, carl. >> guys, let's move on to apple. we have a beat on the top and bottom line. tim cook telling steve kovac the company expects growth to

accelerate despite some pockets of softness. steve joins us this morning. steve, what did you learn last night? >> oh, man let's use tim cook's own words, carl a cocktail of headwinds that apple was actually able able to navigate and perform better than anyone expected. you'll remember a quarter ago, tim cook came out with the warning, covid shutdowns in china will cause a $4 billion to $8 billion hit it was actually you should $4 billion. i tried to push him on what that was but he wouldn't tell me. where are they seeing the biggest problems it's mostly in the mac that business has been screaming during the pandemic. we saw it drop 10% largely due to supply chain issues a little fx headwinds. it's different than what we heard from microsoft on the pc in june they saw the market, quote, deteriorating yesterday on the call tim cook

saying, we can't even test them, man, because we can't make enough of the macs to see what the demand really is then the demand is totally different on the iphone side incredibly strong. especially in china. they don't have to compete with huawei there so the iphone is doing well. >> apple is also an incredibly, let's just call it smart company, efficient company when you look at the strength of the u.s. dollar and how that hit the other mega caps, apple in particular was able to hedge why are they able to do so much better is that tim cook and luca meistri? >> that was what i asked yesterday on our call. what did you do to mitigate these foreign exchange headwinds? one thing they can do and we've seen them do is adjust pricing they raised the price of the icht iphone in japan, for example, and luca hinted with he might see more price increases as we

see these headwinds. you can't do that on the services side. that's due to the slight miss on the services revenue number they had. it will be interesting to see what tools they have in order to combat foreign exchange headwinds on the services side of the business, which we know is so important to them. >> steve, any color on labor costs and just sort of labor strategy that had been something there was a lot of chatter about a few weeks ago, both when it comes to amazon, certainly, and also to apple. with the stock doing what it is this morning, i'm not sure people are so worried about that. >> that was one of my questions for mr. cook i said, what are you seeing in hiring are you slowing down he wouldn't say we're slowing down he wouldn't use that word. i know that report last week kind of rattled markets a bit. he did say they're going to be, quote, deliberate in how they hire and inflation is hitting them, you know, on hiring, it's hitting them on silicone, all

across the board for all the things they do they'll continue to hire, but again, cook telling me it's going to be deliberate hiring. >> all right steve kovac, thank you >> thanks, guys. now let's get to another earnings mover going the opposite direction that is intel. stock is now down a little more than 10% the chipmaker missing estimates on the top and bottom lines, slashing its full-year guidance, feeling the pain of continued supply constraints really a slowdown in pc demand as well. execution issues, too. joining us now on a first on cnbc interview, intel ceo pat gelsinger. good to see you. boy, ugly quarter. i want to understand better what you see in it and beyond it. so, first, dealing with pc demand overall in your confidence heading into -- i'm going to jump way ahead even to q4 you're drawing down inventory

but you're also expected to raise prices in q4 what gives you the confidence that you can do both at the same time and that that inventory drawdawn is going to happen at the rate that you need, even as demand continues to be soft? >> yeah. thanks, jon. yesterday was an incredibly good day with the chips act passage and also a tough day with the earnings update. clearly, we didn't meet our expectations nor shareholders expectations part of that was driven, of course, by the acute economic swing that we saw. but part was it was our own execution and we're owning up to that as well on the pc side, as you start with we were clearly ahead of the market on our expectations and literally, you know, we've been years of catching up to demand and with this sharp economic swing, all of a sudden we got hit two ways there one was, you know, decline in the consumption rate and the other was an immediate shift on

the part of our oems and channel to adjust inventory. everybody was carrying too much inventory just because of match sets, expanding demand requirements and the difficulties of supply so, at this point, part of what gives us confidence in the second half into next year is our consumption rate is now below that of the end user so, we're clearly drawing down supply it's going to be a natural bounce back as we go into the second half of a stronger year also, you know, the changes were primarily driven on the consumer side, jon. and the strength of enterprise where we have higher market share, higher asps, we continue to see that. we now also have 600 million pcs over four years old. and the usage of the pc in the post-pandemic world remains extremely high we've adjusted our outlook now we took about 10% out of our forecast for the market, but it's still comfortably above 300 million units.

before we were above the market. now we are right in line with the market in our forecast 310 to 325 million pcs we don't see that changing with the replacement rate, the usage rates as we go into next year. now we're right in the middle of the pack the range we gave is consistent with those market characteristics. finally, i'd say, jon, we have our best pc product line in at least five years we're now ramping media to our customers. raptor lake next year, meteor lake a very strong product line we see ourselves as a share gainer even as we go through some turbulence in the marketplace. overall, we're very confident. as we said in the call yesterday, this is the bottom. we're rebuilding from here. >> talk to me about data center. i believe the data center unit was down 23% quarter over quarter, even though a lot of business spending on this sort of thing hasn't fallen off as

much as consumers. you've already said your data center business overall, at least in the near term, is going to grow slower than the market but how much of this is execution issues that you think you can take care of in a quarter or two, and start to see some improvement there >> overall, some of the data center was driven by the market in economics and part was driven by our execution and the biggest factor there was our sapphire rapids. we did find an issue before ramping that into production, as we expected. we're re-establishing the quality bar people would expect of intel maybe that would have been the case in the past, but it will definitely be the case going forward. we're going to ship our customers high-quality products and rebuild their confidence thus, we delayed some of the high-volume scus of rapid which

hurt inventory, which will reverse as we go into production of that product. i would also say, jon, the road map is healthy sapphire rapid is going to ramp as we finish the year. emerald, about to start sampling to whichers and we're about to power on our 24 product line, granite rapids this quarter. the road map gets better our deepening of our customer relationships. you know, we announced expanded mu multi-year supply relationships with amazon and with meta. and our market share losses that we had in data centers, it's in a few places we're going to fight for every customer, every socket, every workload as we get more focused on these better products coming in i would say we've had some great successes in the quarter here i have our gowdy ii this is almost 2x higher than

any other ai processor when we went to production in the quarter. we also have our ipu, where we're doing offloading and new capabilities for that. we intoed our arctic sound product line, our first gpu. the strengthening of the product line, the deepening of the customer relationships and having gpus and ai processors. we're getting our mojo back. this was a tough quarter we have to rebuild from. >> is part of that rebuilding, you also said you're going to reduce capex by $4 billion, which is a lot but you're spending a lot, more than $20 billion overall. how do you reduce capex by $4 billion but still stay on pace for what you say you need to invest in order to execute this turn-around? >> and this requires just a bit more explanation because our gross capex, we only reduced by $1 billion

and, you know, essentially that's equipment, supply delays, just as we're working with suppliers. but the net capex, the offsets that we're getting is what we call our smart capex strategy. where we're leveraging government incentives. this is eu and the u.s. chips act that just passed yesterday customer prepays as they want us to build capabilities for them, particularly in the foundry business new financial partner. the net capex went down by $4 billion, but most of that was driven by overachievement in these capital offsets, our smart capex area so, we are on track for our overall capital build. that is something that is essential to the ibm 2.0 strategy that we've laid out so, you know, very little change in the real capital build plans we have. you know, we've really overachievement and capital offsets we've now been able to build into our plan, that's

something we talk about in our analyst meeting earlier this year smart capex, being able to leverage multiple pools of strategically aligned capital will enable us to go effectively into the future. >> so, just to clarify, you're only doing $1 billion less in terms of capital projects, but you're having to spend a lot less than that got it >> yeah. the net capex by four but the total of the gross capex only down by one. essentially that's only delay in equipment spend and those supply chains have been very challenging. we're struggling to spend as much as we want with our equipment suppliers. >> thank you for being with us after such a tough quarter can you level with our audience. they don't want to hear things overachievement. when you took the job 18 months ago, you did the due diligence you had to have known how bad

things were. why have you been so bullish since day one? why have you put out unreachable targets or have you misjudged the company? >> when i took the job, i said this is a five-year assignment to turn the company around a number of years ago i climbed mt. kilimanjaro just like the first day of the climb. days two and three are hard. you go through the saddle, as they call it your head hurts, your feet hurt, your acclimating to altitude four and five you start getting altitude and getting to the peak we're in the saddle. we're in this period of time where it's challenging we're rebuilding the execution machine. many good areas of progress we're seeing in technology, our manufacturing. but many of the products were years in the making as i showed up. >> pat. >> we always expected this would be more challenging and we're under way of rebuilding that team now we set the bottom and in

yesterday's announcement, we weren't expecting such a sharp economic swing let's say we miscalculated that. part of this was our own execution. >> right pat, though, when you climb mt. kilimanjaro, you have to set your expectations. you have to save oxygen for the top. i just wonder, have you done that for arkets? you you lost credibility what grade would you give yourself 18 months into the job or this portion of the mountain, if you will? >> yeah. clearly, hey, we missed yesterday. we own that. and a lot of that was the economic and a lot of that was us in our execution. we're firmly accountable for that to our shareholders at the same time, we would also say, we made a lot of progress our process technology we're seven nanometers shipping. four nan mow meters getting great reviews. by 2024 we are competitive with the best in the industry

by 2025, unquestioned leadership key milestones that we're gaining evidence for new product lines that we're launching and accelerated computing, our nex business had a best ever quarter. these are solid milestones our capital offset, clear milestones of progress i would say it's a very balanced view yes, i need to do better we need to do better and we will do better. >> pat, you mentioned sort of the balance between capex and investing in the future and shareholder returns. you're kind of in the same boat, i would argue, as some oil companies are. you press so hard for something in the national interest, which was the chips act, which got done even despite the skepticism of many and yet optically capex isn't booming and the dif dind is still huge would you ever consider

funneling some of that return into capex >> we have very healthy cash flow from operations, even as we've reduced our numbers. clearly, we've asked shareholders to go on a multi-year journey with us in this recovery plan with that, we've consistently reaffirmed our commitment to a healthy and growing dividend we've heard clearly from shareholders that they appreciate the clarity of our commitment there our smart capex program gives us capital leverage from other pools of strategically aligned capital so that we can continue that very aggressive capital buildout and as we describe with the chips act passing, i'm looking forward to having a big party in ohio coming up soon with our groundbreaking ceremony there. we're going to build more capacity for the future. it really is a balance of the use of capital for it and we laid out a smart path from a capex that we were able to

achieve this quarter i feel even more confident we're able to keep the dividend as well as continue an aggressive capital build plan >> finally, pat, you mentioned recessionary possibilities on the call how well positioned is your cost structure should some of the not so great case scenarios play out with domestic and global economy? do you have enough flexibility or are you at risk of being caught in a bad position >> we're pretty comfortable with the path that we laid out. we assume multiple quarters of poor economic performance from the markets overall. this really is acute it's in u.s. with inflation, europe with the ukraine war and china with covid and shutdowns so across the world. good companies embrace bad times and they get better because of

it as i said on our call yesterday, a bit of aus sterity we had a number of things we were doing over a period of time that weren't the best uses of our operational investments. and, you know, i've ended six businesses since i've been out with the company yesterday announcing the closure and our sale of the drone business so, we're making the steps that i think give us the flexibility, but also allows us to take our resource and put them right where we need them, executing the ibm 2.0 strategy, the business buildout we described >> all right pat gelsinger, intel ceo, thanks for being with us first on cnbc on "techcheck". >> always appreciate it. thank you tree. meantime, roku shares down after that earnings miss 63 is a long way from 475 at the

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meta, apple and amazon from their portfolio. jeffrey's data shows the total investment in names like faang, now just 16%, down from 23% prior. that basket of stocks collective weighting in fund manager's portfolio is 10 percentage points lower than their weighting in the s&p, which is a long way of saying that hedge funds think the biggest gains for the year will come from stocks outside of that group jpmorgan agrees, suggesting a pivot to growth over value or defensives and to buy the dip on some names like zoom, snap and uber, names that have fallen 12% from their 12-month highs. that's a bit of a pivot in sentiment and strategy from where we were, say, in april, may and june. >> if you're looking to take big swings, i mean, there's some big swings in those growth names for sure you know, but microsoft hasn't gone down enough, i guess, to give you a really huge return to the upside

i'm sure there are some people upset they missed what happened this week. >> and this month. >> yeah. >> look at the nasdaq, guys, it's on pace for 3.5% this week. more than 11% on the month what a turn-around it's been meanwhile, roku shares another picture, falling off a cliff down nearly 26% after reporting earnings yesterday afternoon it was an ugly quarter we know by now, however, that not all advertising is created equal. >> that is true. and roku right now, though, is trading at its lowest level since march of 2020. even worse than the fact that roku missed on top and bottom line estimates was the fact that the company's guidance for the third quarter for revenue was about $200 million less than analysts had been forecasting. and roku did withdrawal its full-year outlook. roku is suffering from what you might call a perfect storm of an ad recession hurting its ad business, pullback in consumer

spending and supply chain constraints, and there's the fact that growth in this category was pulled forward into the pandemic writing roku is locked in what they call a three-sided war battling amazon, alphabet and other tv manufacturers for connected tv market share, fighting nearly every streaming platform for audience impressions and now facing off against the likes of netflix, disney, amazon, youtube. the list goes on and on and on for streaming tv ad dollars. now, here's the part that could bode poorly for the other ad-supported companies that have yet to report. that includes warner brothers, discovery and paramount. they both report next week disney comes the following week. the company said that despite record up-front ad sales, they see a dramatically weakening ad market in the so-called scatter market those are the more last-minute ad sales we're watching to see if those factors hurt the other ad-supported players as well

guys >> julie, i wonder what you -- just taking the weakened stock roku is the story today, but meta is out of the top ten list of market caps on the s&p. i mean, if we're really in the midst of the beginning of a dramatic ad slowdown, who has more to lose >> oh, look, there's so many different factors at play here i mean, i think what's really interesting is that for roku, the ad business was a relatively new business for them and it was growing very quickly for them, they're competing against the other streaming ad players. along with disney plus and netflix that are now jumping into the game, and along with the paramount pluses and peacocks of the world, trying to convert advertisers over from traditional tv advertising so, we hear anthony wood try to strike this optimistic long-term note of saying, long term he believes all tv ad dollars and all tv viewing will shift over to streaming meta has its own perfect storm of challenges right now.

and that includes for meta this issue of the apple operating system changes that make it harder to target and measure the targeting of ads but i think some of these companies, i mean, i think for instance, the tv guys have more of their ad dollars locked in. it's more of a question of the last-minute scatter market so, we'll see. i think direct response does seem to have an advantage because you can really measure the impact of the advertising. but if all brands are taking a pause right now, that would have an impact pretty much across the board. deirdre did hint at the fact that google's search advertising is better insulated there. >> thank you that's exactly what i was getting at amazon, right, the cfo said their advertising results would have been even better, better than the previous quarter, if prime day was included let's stay on instagram/meta, another challenge are the changes. we talked about this earlier in the week the kardashians raising the

profile. they walked that back a little yesterday. >> that's right. change is hard change is hard, guys so, what happened here is that instagram was starting to put not only more videos that you didn't follow into your feed, algorithmic videos, but the question was whether or not they were changing instagram to be more like tiktok we talked about the importance of reels and that format the kardashians said they wanted to see photos of their friends, not videos of people they weren't following. adam mosari walked this back saying they were going to take a beat, learn from their mistakes and try to figure out this balance of how to get more video into your feed because that's clearly what's engaging, but how to do that in such a way that it doesn't annoy their users. i like the quote he told our friend, he said, we need to take a big step back and regroup. this is the challenge right now. mark zuckerberg talked on the earnings call how 15% of the

content their users see is chosen by algorithms and that will increase dramatically we'll have to see how they can do that without annoying their users. >> man, first apple hits their ad business. then the cashkardashians. that's tough. after the break, a series of price target hikes for amazon. is now the time to get in or add to your position yesterday would have been great. we discuss don't go away. i was having relationship issues with my old bank. it was just take, take, take. so i moved to sofi checking and savings. get 1.50% interest, and earn up to $300 when you set up direct deposit. sofi get your money right.

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welcome back i'm bertha coombs. here's your news update at this hour the annual increase -- the largest annual increase in 40 years for the inflation gauge favored by the federal reserve

policymakers, personal consumption expenditures price index increased by 6.8% in june compared to the same month last year and it was up a full percentage point for may. the biggest one-month gain since 1981 crude is up 5% this morning in u.s. trading. putting it back above $100 a barrel if that price holds t will be the -- up 7% for the week. it's the biggest gain since mid-april. and crude is getting a boost today as exxon and chevron report continued strong demand for fuel helped produce record profits that are well above what wall street had been expecting chevron shares are up more than 8% exxon is up almost 4%. deirdre? prices are coming down at the pump, but they're still high i guess we're all still driving. >> even higher here in california thank you. we're going to turn back to amazon the stock's still rallying now up nearly 11%.

our next guest is getting more bullish, up ping -- its price target up to $180. joining us is ubs analyst lloyd wamsley. it was a good quarter. everyone seems to agree on that. however, once again, wall street doesn't care about amazon's profitability. two straight quarters of a loss and this quarter at the low end, operating income could be zero dollars. is that risky? if markets turn again, they value value more, could that be a leg down for amazon in the back half of the year? >> i think the trajectory here on amazon is definitely higher in terms of margins and profitability. they've been going through a really tough period in terms of really absorbing a lot of the inflationary costs, passing less than a typical company would along to consumers or businesses we're starting to see them rationalize capacity volumes will grow into the fourth quarter i think the profit outlook here is actually -- looks a lot

brider ahead than what we've been battling with for the last several quarters >> lloyd, amazon did a lot better than some folks expected in this quarter. but i wonder from here, especially as we look to q4 and beyond, is a bet on amazon also a bet that we get either a soft landing or just a very short mild recession >> look, i think the retail business clearly has a lot of exposure to the consumer but keep in mind, recessions in the past have been good for amazon the prices are great you don't have to get in your car and burn gas to drive to get something, so they tend to pick up share in downturns. and then if you look at the aws business, which is driving most of the profits of the business, they're firing on ail cylinders. we came into the quarter a little worried about what we might hear from them there and they checked every box on the

aws business revenue is great the backlog now, $100 billion of backlog in the cloud business, growing 65% year over year a enormous scale it's extraordinary so, i think on that business, which the big profit driver, things look fantastic. >> i wonder what you think the bigger pushback is on the macro consensus. aaws on the notion of enterprise softness or consumer softness? >> it's a great question there's been concern on both sides. i think what we've detected over the last few months is more marginal concern on the cloud side everyone knows, obviously, amazon retail is exposed to the consumer, but the question of the enterprise exposure has been a newer one for investors to be focused on, and we've definitely picked up some cracks in the cloud story.

talking to migration consultants and people in the cloud industry, but when you look at the results out of amazon, they put a lot of those concerns to bed. there may still be some lingering concerns, but between, again, the revenue and the backlog numbers and the tone out of the conference call, we feel a lot better on that risk coming out of the quarter than we did going in >> microsoft put some of those concerns about cloud to bed. lloyd, thank you very much we'll talk to you again soon lloyd wamsley, ubs. >> thanks for having me. after the break, apple could be headed to 200 bucks a share we'll be right back with that. (ted) after talking and texting for years, we got married... for the family plan. (jane) and then we really expanded our family... for the wireless savings. (ted) it seemed like the responsible thing to do. (jane) and then, just yesterday, my sister told me about visible. (sister) yeah, get unlimited data for as low as $25 a month.

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take a look at the ark innovation etf it's on pace for gains for more than 10% for the month of july, breaking an eight-month losing streak, despite some big hits to some of its favorites in the industry teledoc and roku down, and a huge loss on ark's coin base trade. and tonight we'll talk to katcathie wood about all of these stocks do not miss "the tech trade" at 6:00 p.m. eastern. we'll do it right here in san francisco. that's 3:00 p.m. local we'll be right back. finding the perfect project manager isn't easy. but, at upwork, we found him. he's in adelaide between his daily lunch delivery

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let's get back to apple's quarter. one piece we haven't talked about yet is china revenue there declined 1%. that was seen as a major win considering the covid shutdown related challenges there eunice yoon is live in beijing looking at the shutdowns giving what we're hearing from everybody else, seems like the brand is pretty strong there >> reporter: it is apple does have its die-hard

fans here. scalpers said they are taking preorders for iphone 14, charging $400 over whatever the phone will be in the u.s apple's also topic of discussion today among chinese consumers because it's overing a rare discount on its products reducing the price of its iphone 13 pro series for the next four days by about $90. overall, apple sales have been doing pretty well in a very poor performing market. ibc says q2 iphone shipments were down 17.4% in china due to the covid lockdowns as well as the slowing economy, high unemployment the apple numbers, though, were looking pretty good. apple outperformed with

shipments slightly from a year ago and expanded its market share. things were looking better on the supply chain side. thankfully we do not see, at least for now, super harsh lockdowns as we saw in shanghai. that was a particularly vulnerable place for apple, which has about half of its chinese suppliers in shanghai and surrounding area shanghai has mandated there's going to be closed loop or basically forcing your workers to live on site in certain logistics firms. there's always a big question as to when and how -- or when and where, really, the next lockdown is going to be just this week shenzhen, a home base for another fox con factory mandated 100 big companies would have to operate in a closed-loop system fox con said that won't have a big impact on its business, but at the same time, there's always

this uncertainty, carl, about what and when these lockdowns are going to affect overall business it really weighs on people's mind the mandate in shenzhen is supposed to end this weekend will it? nobody really knows. >> it is amazing, eunice i would say every time we wake up on this side of the planet, we look for headlines on how lockdowns or lack of lockdowns are progressing where you are. thank you. eunice yoon in bay eijing chris, you mention supply chain shortages are getting a little better iphone pretty resilient. the macro affecting services of those three areas and dynamics, what's the most important? >> carl, thanks for having me. two things i would mention, number one is clearly iphone is the biggest driver for revenues. so, that has been really resilient despite all the

weakness you're seeing in consumer spending. service is very important because it's a high gross margin aspect that's something you notice where the guidance for gross margin is a little lighter it's because some of the services aspect like digital add ver advertising are slowing. i would say iphone is very important followed by services, than the rest of the product hardware lines the iphone was young during the financial crisis so, it was growing on of a very small base what's your expectation on how smartphones, particularly the iphone, will perform versus overall consumer electronics and, say, pcs, which have had a bit of a resurgence. >> sure, jon you know, so far the demand has been -- weaknesses in the low-end smartphones, not the

high-end iphones we do see a slight downtick in smartphones. you have lik downtown mid-single digits you could probably be down more than ten person. and to your point earlier, i think any consumer spending weakness, it's something worth keeping your eyes and ears open to >> finally, krish, we came into the quarter talking about to what degree the dollar would be a headwind we had a discussion this morning about how well apple did on that front. but do you think that kind of performance can be continued >> yeah, you know, at this point, i would say it's about a 600-basis points headwind to margins. and what i would say is let's

say the u.s. dollar remains flat, right now, all the way through end of the year, expect another 600-basis point compared to a year ago. that's the way to think about it they do hedge pretty well, but it does have some modest impact. >> we'll watch that. obviously, huge ramifications go well beyond apple. krish, thanks so much. good to see you. >> thank you well, did you miss part of the show or do you want to relive a wild earnings week? follow and subscribe to our podcast. tech check is back in a moment

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one more thing this morning. we're going to get more tech earnings next week some key ones we're watching, uber, airbnb, we'll get dash in there, lift on thursday, john, along with the likes of starbucks and under armour and marriott and caterpillar, ism, and a jobs number on friday. >> i think inflation, particularly when it comes to uber, for lyft and door dash, and whether consumers are willing to pay higher prices as that feeds through will be key here how long can some of these companies absorb that. are they absorbing it? are they able to pass it along

>> if this week was the super bowl of tech earnings, then next week is like the mini one. but sadly i'm away for my little brother's wedding. however, when we talk about uber, there was just this headline out this morning that said it was in merger talks with an indian ride hailing company uber tells me that they are not and have never been in merger talks. i also spoke to a source familiar who said that dara khosrowshahi met with the ceo of ola, but it was not about merger talks, it was about evs, guys. and also, remember, last time daraa was on our air, he said that uber was recession-resistant. we'll see if that's the case >> we will and our congratulations to the little bro >> thank you meantime, mark down october 17th on your calendar. we learned this morning haas when elon musk and twitter will begin their trial in delaware court. they've been going back and forth on not just the date, but the duration of this first round. >> i'm sure it will be very boring and we won't talk about it at all.

>> get the popcorn ready >> i highly doubt -- hey, we went to town on musk's tweet about inflation last night so you can imagine, we'll be watching his feed very closely overall, guys, we have been holding 4,100 for most of the morning. i would point out, the ten-year yield has been moving dramatically, 2, 6, 3 today is going to take you back to april. enjoy the weekend. let's get to frank collin and "the half. >> thanks a lot, carl. welcome to "the halftime report." i'm frank collin in for the judge, scott wapner. front and center, stocks are on pace for their best months since 2020 the numbers are coming in a lot better than expected so what is your next money move? we'll debate that with the investment committee joining me for the hour today are jason snipe, rog sneechen and rob