call >> diana, thank you. speaking of watching, we're keeping a close eye on markets the s&p 500 down to 3,905. 2.5% down. the nasdaq down almost 2.7%. that's going to do it for us on "squawk on the street. time to hand it over to "techcheck." good thursday morning. i'm carl quintanilla with deirdre bosa and jon fortt today, stocks under pressure following that 50-point basis rate hike by the fed elon musk sells another chunk of tesla, one firm says now is the time to buy we'll talk to the oppenheimer analyst who names it a top pick. and can chips be key growth drivers in this market amd, nvidia and marvell are top

picks. we'll begin with markets moving lower. our next guest sees a recession on the horizon and doesn't think the economy can keep up. joining us this morning is sven hendrick great to have you. >> great to be with you. >> so, i know for a moment there there was a period where you were beginning to think about being more constructive. is that gone again now >> we were constructive in october. the technicals told us that the rally was coming in on the s&p, and we got that this week. i'm still kind of constructive, you know, we're entering a positive seasonality period here into year-end and beginning of the year obviously the reaction we saw in the last couple of days is both technical but also exacerbated by the fed's hawkish stance, at least on paper so far.

>> what do you think breaks? is it going to be credit is this going to be a wave of defaults is it more about earnings disappointing? valuations not keeping up with earnings or a combination of all those things >> it's a combination of all of these things in the context of a historic script. the fed funds rate yesterday pointed to 5.1%, which brings it close to the 2007 level highs. keep it simple in 2007, debt to gdp was 60%, now it's 120%. what we're seeing now in terms of the lag effects of the fed rate hikes, we're seeing it in data already industrial production, retail sales, it's all starting to slow down dramatically. in that sense, the rate hikes have the effect. the problem is the fed has not accounted for the lack effects yet, and they're coming in hard. there is no way the economy is -- can sustain an extended period of higher rates at 2007 levels with the debt construct

we have now. government interest payments are going through the roof this is only going to get higher and more stringent next year so my premise on all this is that following the historic script, basically we're going to see rate cuts next year, even though the fed is currently in denial why? because cpi is actually going to come down hard the fed funds rate at 5.1% will mean a 2% to 3% cpi rate sometime next summer based on the year over year rollover math and the fed will look out aggressively and tighten historically, even volcker back in the 1980s, once the economy enters recession, rate cuts are coming and they come rather aggressively >> and then in a sense, if we are in a significant recession, what the fed does perhaps starts to matter less than what the economy is actually doing. i wonder, based on what we saw

from november retail sales and given what you're saying about the fed being behind the curve, what do you expect the reaction to be to december retail sales a lot of people hoping that black friday cyberweek surge that we saw will hold up over the next ten days or so, but i think there are questions about that >> yeah. we can still see a splurge into year-end don't forget, america's motivation to spend is strong. what we've seen this year is an incredible push into credit card debt despite claims that there's all these excess savings, the spending patterns in terms of credit cards, vis-a-vis anything else indicates that a lot of americans are under stress companies are preparing for layoffs. we already are starting to see that process buybacks are coming out. this economy will face a lot more tightening next year in terms of real sense -- keep in

mind, this year the fed had originally forecasted for this year, 4% gdp growth. the median fed funds rate this year ended up at 2%. we ended up 4.25% that means next year we'll be at a fed funds rate on a medium basis 4% to 5%. it makes no sense while we're doubling this. i'm sorry, every fed economic forecast should come with a disclaimer, believe it at your own risk >> but just to push back on that, the fed is looking at wage growth in the labor market, you and others say cpi is going to, as you said, come down hard next year you're looking at commodities, used car inflation but those make up a much smaller proportion than wage growth. you know, what makes you so

confident that we'll see that come down and the fed has room here to reverse course >> i don't think they have room to reverse course. they'll have to reverse course even in the fed'sown forecast, the unemployment forecast for next year crept up a little bit to 4.6%. show me one time in history where the fed has gotten remotely closely to projecting the labor weakness going into a slowdown the answer is zero i would be cautionary here when i hear them say they don't want to have layoffs. corporate profits were at a record high this year on the heels of the stimulus the year before but also passing through inflation-related price hikes. that's all going to come back to an end next year and these margins will come down and companies will do what they will have to do, which is cost

cutting. that means jobs. that's what we are already seeing in the tech sector. we're starting to see it with banks as well. this is a process. >> i understand what you're saying, in terms of the tech sector, we're seeing those layoffs, those could increase next year, even if it does, that's a small part of the job market, we need to see layoffs at the services level, don't we? >> it's a process. it's coming. i have little doubt about that at the end of the day, all these companies are facing the same issue, which is cost to carry and margin compression earnings estimates are still too high could i be wrong on all this and we have a miracle, shallow landing with no real recession i suppose it's possible.nd ever else at this point into the highest debt construct from a rate hike perspective. i think this is a -- this is a

pretty obvious case in terms of history of -- and we'll find maybe the dot plot by the fed that does not presume any rate cuts until 2024 is going to be seen as much too optimistic on their part >> last thing, sven. you have looked at mdx, the long-term trend which you point out has been defended successfully a couple of times can that happen again? many believe there's plenty of operating leverage within tech to keep earnings strong if they do reduce headcount. >> despite what i outlined, i'm structurally positive here from a technical perspective, at least for a little bit, and to the early part of 2023 the technicals have been so clean this year, the long-term trend has held at the same time, we're forming bullish structures still on s&p and that's despite the weakness

we're seeing now this week, on s&p we got to the down trend line rejected again and the more often you tag a trend line, the weaker is tends to get if bulls can hold the 50-day moving average here on the s&p into next week, i suppose we can still have another crack at this year towards year end and the beginning of the year. but then i suspect any larger rallies into next year will probably present a selling opportunity for an ultimate low around 32, 31 on the s&p, once a recession hits >> interesting, not too far off from what some major desks are arguing about q1 sven, look forward to tossing it around in the next couple weeks with you thank you very much. >> thanks, guys. we have a downgrade of snap this morning also in the ad landscape,

netflix lower following reports that they're letting some advertisers take their money back after missing viewership targets. julia boorstin is here with that what's going on? >> well, let's get a gut check on snap. those shares are down about 9% on the downgrade to hold with a $10 price target the firm saying we believe snap will continue to face headwinds including the iov 14.5privacy changes and intense competition. revenue estimates still appear too optimistic it is worth noting those snap shares are down over 80% year to date now, turning to netflix, the streamer is letting advertisers take their money back after falling short of their ad-supported viewership guarantees that they made to advertisers. the publication reports that

shortfall amounts vary by advertiser, in some cases netflix has delivered only roughly 80% the expected audience that is according to an unnamed executive and cnbc has not yet verified these reports and reached out to netflix for a comment. we have not heard back yet i want to note, somebody who covered the tv industry for a long time, it's not uncommon for broadcasters to deliver what they call make goods to advertisers when viewership falls short, saying you didn't get the viewership you wanted, we'll make up for it somewhere else it's unclear how dramatic these shortfalls are regardless, netflix shares down 8% >> given that this is the start for their ad tier and that were so confident out of the gate about how well they would perform and how popular their content is and how well they target, it seems like they would have underpromised so, is this reflective of an overall possible digital consumption or consumer

slowdown what would you say is the broader lesson here if, indeed, netflix is under -- underperforming. >> this is certainly not a good headline just about six weeks after your launch of an ad-supported service you want to be strong outh many they'll continue to learn and make it better i think there was warnin people in the ad industry say netflix was very bullish on their own capabilities t and reach all these viewers. a lot of it can come down to the weird quirks o trends if there's a show they expect to be a big hit that's less popular than expected or if there's a shift over to disney plus, maybe they lose some kids viewership there's so many factors that could be in play here. i will be very curious to see what netflix reveals about its

ad targeting, but not the greatest headline when trying to launch a new ad-supported product. >> not the greatest headlines. netflix down 8% almost thanks for laying that out with us we'll bring in jeffrey's analyst, brent bell. he downgraded the stock to hold. brent, maybe talk about what she was just laying out in terms of netflix and some advertising challenges could that be a good indicator for snap and other social media businesses >> our view is that we're going into a soft landing. the first thing you do in a hard landing as a corporation is cut your ad spend. it's the first thing that goes, because you can dial it up and down like a knob on your car or at home. right now the knob is turning down as we go into q1, it's important

for consumers that retailers spend less going into q1 we think we have a pocket with no visibility. you sit on the sidelines until the fog bank clears before you can take off again unfortunately we don't see that happening until sometime into the first half of next year with line of sight in the back half of next year the question is, if the recession starts in q3, like jeffries economists are predicting, next year will be a top year for the whole year with line of sight going to '24 numbers. we're in a holding pattern until we get better visibility, i think the whole ad industry is somewhat in a tailspin amazon, google, some of the other proven names, you'll see wallets go from experimental to proven and they'll incrementally

take market share in the short-term obviously netflix is early in their transformation i think we're pretty bullish about what they can do overtime. short-term, they're trying to get that off the ground. >> we have seen some notes this morning that mention the ad space. one argues that ad markets have been deteriorating for most of the year actually it has added to that deterioration -- accelerated to that deterioration really in the past month does that fit your checks? >> it does you're seeing broader corporate america lose energy and steam across many subsectors it's the first thing that can get cut. it's not a requirement yes, everything will continue to go digital yes, we're bullish about the long-term trend. the short-term, you don't have visibility if you look at snap's numbers in the last three, four months,

when they talk about the variability they saw in their core business, and then you see weakness in salesforce.com and their commerce cloud, you've seen weakness in adobe's marketing cloud, you see it everywhere, in software, digital advertising. it matches what we've historically seen when markets go into a recession. again, we believe we're in for a hard landing, and it's the first thing that goes. it will come back, it will be one of the first areas that comes back when the world recovers i think right now that recovery is uncertain and doesn't happen in '23 >> speaking of adobe, we expect to get more insight from their report this evening. it's kind of one of those off-cycle, late-cycle reports. interesting to hear what they have to say about marketing

cloud and i'll speak to the ceo tomorrow exclusively on that what's happening are you watching digital consumption? roblox is down 16.5% on missing the bookings number, just as we're getting this report about netflix as well. then questions about snap and the digital ad market. is there something here? is there a thread, a line to be drawn through the weaker november retail sales, digital consumption slowing down and digital advertising also slowing down because of an overall economic slowdown? also perhaps because there's less activity out there for advertisers to take advantage of >> i think we're in a broad slowdown we're going into a harder landing. if we're in a period where this is where advertisers want to spend because they capture us in the critical holiday period and they're pulling back the

throttle what will they do in q1 it's going from 8 on the throttle down to 2 i think q1 isgoing to be a ver dark period for advertising in the short-term and the question is how long will that last we've seen this on adobe they lowered numbers last quarter. they brought the number lower. the question is when there's one rat in the kitchen, is there another rate, meaning do they have to cut again? certainly we have heard they're in a great fundamental position, but no one is immune to what's happening, google, adobe, salesforce, all these companies are seeing the same thing. it's not like we're picking up one data point and saying it's a one off and somebody is taking massive share, that's not happening. everyone is getting hit. in the short-term, it's the best advise, just to sit out the storm and wait for it to clear before you get back in >> thank you we're seeing more selling pressure the nasdaq down 3% the s&p 500 losing that 3,900

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charges in the u.s., other ftx executives could fall. ryan salame told the bahama authorities that two other executives were responsible for covering funds lost by alameda the ftx drama continues to ripple across the industry bankman-fried and ftx had paid binance between 2 billion and $3 billion to buy out their stake in the team. here's what he had to say. >> we're financially okay. >> including you have $2.1 billion to give away if somebody came to claw that back >> we'll let the lawyers handle it we're financially strong >> that's one of the most

interesting things there was a lot in that conversation he said we don't rely on trust, we verify but when on to say that nothing is verified we do not have a complete picture of proof of reserves we do not have an actual audit on pressed on whether he has $2 billion in the bank, he said we're financially stable are we supposed to trust that? at least with coinbase, we know they have $5 billion in the bank maybe that's the only thing we do know, we don't know anything. >> he's in a tricky position yeah, there are a lot of auditors who don't want to touch this with a ten-foot pole. what's the upside to pitting your reputation to signing off on crypto firm stability now i mean, why not wait until halfway through 2023 and see how this shakes out? do you really need that contract right now? at the same time, that sends a message to everybody in crypto who is invested, hey, got to be

careful on the regulatory side, got to be careful on the balance sheet side and the faith in the crypto market side for those exchanges who do need people to believe and don't have those reserves as much as we would hope >> i would love to see what some of the audit firms think about the fact that -- or the argument that they're unable to evaluate some of these companies. kathy woods-arc buy more coin last night >> auditing should be straightforward. we should be able to see what they have in the bank like coinbase we've been hearing from major players in the cryptocurrency industry that audits are possible tether told me they were months away from an audit a year ago and that's never materialized. a lot of questions remain. it's not surprising that auditors don't want to touch it, but you have to ask why. >> yeah. coming up, elon musk selling

another huge chunk of tesla. despite that oppenheimer names tesla a top pick saying the stock can get back to $400 a share. we'll check in with that analyst in two minutes

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a number of economic reports raising recession concerns and pressuring stocks this morning retail sales reversed last month's rise and fell 0.6% the drop in part due to lower

car sales, lower auto production, also a surprise drop in industrial production the federal reserve surveys from new york and philadelphia posting weak numbers for orders and shipments in manufacturing activity and weekly jobless claims fell to 211,000, the lowest level in nearly three months. in europe, central banks are raising rates. the european central bank and the bank of england raised rates by a half a percentage point the ecb says they expect to raise rates significantly higher because inflation remains far too high >> thank you the largest tech companies continue to be in the thick of today's sell offs. steve has a beat check on some of the hardest hit names >> shares of the five mega cap

tech names falling apple down 3.5%. this week, bloomberg reported that apple is allowing to work third party app stores on the iphone in compliance with the new laws in the eu which go into effect in 2024 if similar countries do similar regulation, apple's advertising revenue could take a hit amazon is down, off about 4%, it's the two names relying on the digital ad market that are getting hit the worst. meta and alphabet are both off 4% perhaps a sign that investors are more worried about the ad-supported social media companies in this group. we'll stick with the selloff and joining us now on the phone, is dan niles i know you are up on the year.

you've been calling a lot of this, where do we stand now with the nasdaq down nearly 3%? >> unfortunately, i think that -- [ inaudible ] this morning in their statement, the thing that stuck out was the sentence of we can expect interest rate increases for a period of time and we have longer to go you combine that with some of the fundamental news we got this morning and more importantly how the stocks are reacting to it. netflix and the ad dollars to advertises because they're not getting the viewership -- >> dan, i think we're having

audio issues we'll get that sorted out and come back to you we'll go to a quick break. up next, exclusive results -- we'll stay here, actually carl, as we noted, the s&p breaking that 3,900 levels i heard art cashin tell you earlier that that could be a key one to watch >> definitely in line with what dan was saying we'll work out the audio in a moment the commentary out of europe and the ecb, the notion that the market is underestimating their resolve. at the time we talked to art, we were above 3,900 he warned about breaking that level. also ndx below the 50-day for the first time since november 10th, that's getting some attention. also the idea that there's few places to hide we talked about the add market, financials getting hit on the credit card delinquencies, semis obviously challenged on some research, travel downgrades. it's a lot >> there's a lot

there's a real economy underlying all of this, which is so important to remember sometimes we see that reflected not only in things like the retail sales report that we got today for november, but also in some of these earnings reports intuit, it was interested to hear about credit karma being hid because the loan industries are less willing to deal with the subprime market. you line that up with people are feeling more stretched and savings are getting extended then you look at what's happening in consumption roblox again down more than 15% this morning because the bookings are not holding up. so when you look through all of that and we're in that stretch ten days before christmas where the consumer needs to show up and there's all these signs of fatigue across physical and digital, you got to question what that means for positioning heading into '23

again, we'll get a little more data out of adobe. big picture on ad spending, the health of e-commerce and whether that continued after that big launch week after thanksgiving that, to me, underlying it is what a lot of this is about. >> yeah. ab adobe is so important. i think we have dan niles back with us. hopefully fixed the audio issues dan, jon has been talking about the consumer side of this picture, but looking to next year you think enterprise could be the next shoe to drop >> absolutely. jon's right. you have to go back three years. so covid hits, everybody gets on the internet, they have to get their businesses on, so they buy a lot of enterprise software, hardware, services, everything they need. you're sitting at home, buying all these consumer kids. as jon talked about, now you're seeing the giveback from that. consumer demand is falling off

because what are people doing? now they can go out. they're going to restaurants, hotels, vacation, doing all this stuff. so the revenge spending on these experiences, they bought all the goods they needed. they bought the smartphones, the pcs, the peloton bikes what you'll see going into 2023, as all of these companies are setting their budgets for 2023, they're saying, well, we'll have less employees, we need less software to support them, less hardware to support them, less cloud services because we don't have as many people using it when companies report the fourth quarter and guide for 2023, that's when things will get ugly the enterprise companies is where all the high multiples are. the high multiples are not sitting in hp or dell. they're sitting with the software vendors where people made the assumption that they're immune and now they're getting a

wake-up call, well, you know, growth at salesforce slowed, you will see it across the board those guys are the bellwethers and the ones to pay attention to >> we've been treated with analogs all year long, charts to look at, s&p performance after the fed pauses i wonder why you think the market doesn't feel like it's going to agree with a lot of those analogs. >> because people are looking at the wrong analogs. they're not looking at the analogs from the 1970s, that's what you need to look at the last 50 years looking at any of that data after 1980 is irrelevant 1970 is when you have high inflation. if you look at that, you needed rates coming down before the market bottomed in 1982. they were coming down for a year the reason is you have high inflation that you need to kill

off and the problem is that you have 4 million more job openings against people unemployed at 6 million. everybody is so focused on the layoffs at the wrong company you take all of the publicly traded companies in the united states together and they're less than 25% of all jobs in the united states. those jobs are sitting at small and medium business. the thing is we're all going out and consuming all of that stuff. we're going to hotels, restaurants, pizzas, movies, et cetera it's going to take a much harder recession to kill off the jobs in the small and medium business sector, that's what's driving inflation. that's why all of those analogs you have people coming on talking about, they don't make sense because those were in periods of low to declining inflation. you're dealing with really high inflation, which you got a decades worth of data. nobody wants to look at it

because for obvious reasons, it's depressing. you have pe multiples going from 20 times to 12 times on a trailing basis to the s&p. you have high inflation. you had volcker who didn't want to raise rates to where he did he cut rates and then was forced to raise them again. nobody wants to be the bad guy >> do you think that morgan stanley, jpmorgan,calls for s& 3k to 3,300, is that a legitimate reset could it be more dramatic than that or should it be more dramatic than that >> you have to remember, carl, we came into this year saying we thought the s&p would be down at least 20%. we were pretty early on this when the market was hitting all-time record highs. in may we said down 30% to 50% is what we revised it down down 50% is about 2,400 on the

s&p. that's not an aggressive downside the reason i say that is if you say, well, during a normal recession, you have 20% reduction in eps estimates eps peaked at 215 in july, down to 235 i think it goes to 200 you say if cpi is over 5%, the trailing pe multiple on the market over 70 years worth of data is at 12 times. 12 times 200 in earnings, that gets you to 2,400 which is where we get the down 50% from its peak that's why we -- yeah, it could undercut that, but 3,000 is the estimate we've had since may >> so, cash here we're down about 750 on the dow right now, on the s&p we are right about at that level, that art cashin was talking about

is it worth staying long here for some folks for that 10% upside when you see potential 20% or more down side from here? i know you've had some -- you have done a long/short thing throughout the year, bias to short but expecting post earning earnings october and an earnings pop. is this enough >> it's a complicated answer to your question. here's the thing, you touched on this earlier netflix -- i think you touched on netflix, they had to return money because they were not getting the viewership necessary. that's a fundamental data point, stock down 7%. roblox not hitting numbers for the bookings for the quarter, obviously stock has gotten crushed, down 17% on top of the beating it's already taken so the fundamentals are poor they're going to get worse

i think you'll see a wave of pre-announcements. apple, i'm waiting for them at the end of the quarter or early next year. they pretty much told you their numbers are too high and that sitting at a 23 pe and the s&p is at 18 you combine earnings going down with multiples still really high, and you don't want to try to pick up pennies in front of a steamroller. that's what i would tell you going into the end of the quarter. because now you have to fess up. you have to actually report your numbers and tell people how you're doing when the rubber hits the road. that's not going to go well. looking how stocks are reacting, it's not like roblox is up today. >> yeah. >> it's not like netflix is up today. that tells you there's still more downside. >> i don't think you're alone in terms of thinking that earnings expectations are still too high. dan niles, thank you. coming up next, exclusive results fromhe c tnbc technology council survey

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as part of the cnbc technology council survey, we asked executives about how they plan to make their companies stronger with mass layoffs on the horizon. frank holland has some of those re >> i do. layoffs in the broader economy on the minds of these tech leaders, ctos and cios and more than a third say right now, today, we're in a recession. we'll show you the numbers in a second another third believe we could be days away forecasting a recession in the first half of 2023 we see 13% optimistic. they're saying there's no sign of a recession on the horizon. our survey began on october 18th we were in the middle of a wave of layoffs at tech companies an estimated 50,000 in november alone with some signs that more layoffs could be on the horizon. it was in that environment that 57% of tech leaders in our survey believed the layoffs are

an opportunity for their company to bring in top-level talent while 35% said they expected to face issues keeping their top-level talent due to those same layoffs and job cuts. 9% believed their company would not be impacted. another snapshot of the job market, 43% said finding qualified talent was about just as easy as it was in the same time period of 2021. 35% saying it was more difficult. 13% saying it was easier while companies are searching for talent they're looking to spend more on new technology over the next 12 months, three quarters say they'll spend more on new tech, new hardware and software, a quarter saying they'll spend just the same. this survey raises questions about the it spending slowdown that we're hearing so many companies talking about. >> yeah. then again, last month feels like a year ago. frank holland, thank you tesla is one of the few stocks in the green on the

nasdaq 100 today, now about flat, that's after news last night that elon musk sold another 22 million shares worth north of $3 billion. that stock having a rough run now, down 55% this year. 30% since musk's twitter deal closed investors concerned with twitter's impact on tesla shares alongside other challenges including macro headwinds. joining now is ibrahim al husseini, and colin rusch, who just named teslaa top pick for 2023 welcome to both of you ibrahim, start with you. how much of a concern is this tesla selling, you think, especially that it's paired up against twitter, which is in such a different industry and in such need of capital >> hi, john. good to be back and good to see you. i don't -- so, tesla is a brand.

that brand is being tarnished on the daily because of musk's behavior publicly on twitter you buy cars, i buy cars, we know that a car is a cornerstone of a consumer's identity, at least for a large subset of consumers. traditionally tesla said i'm a technology-forward, environmentally conscious global citizen. that is no longer the case now it is a confused brand where it is, you know, that brand is associated with a founder that attacks fauci. he promotes characters that are antisemitic. and it has really turned off a lot of buyers. i remember when we used to talk about how proud we were of owning a tesla and now if you look at social media, the biggest thing you see are people taking screen shots of them

canceling their order. this brand is tarnished. >> colin, some of the bulls like to say the fundamentals have not changed that much given his distraction with twitter what was laid out there, the brand, that feels fundamental. >> i agree with it you know, it's a real concern and it's happening in realtime right now. what we've been looking at is on the technology side where tesla continues to strut out in front of competitors and it is being underappreciated for the innovation they've done within the ev space and the material space. the brand issue and the long-term impact of that is a concern. beyond that, the debtload that you were talking about earlier from twitter impacting tesla shares because of the selling is a concern. as we start to get more clarity on that, we think there's some support for tesla. from a fundamental perspective on the technology side, we feel good about this. the premium that tesla has gotten in the market from a pricing perspective is

potentially at sisrisk one thing we have not seen the company do is spend abit on marketing. at the point we see that, that could be a signal on the challenges for the sell-through for the vehicles >> i wonder if you think that perhaps people are reading too much into what's happening at twitter. when you look at tesla, yes, it has fallen significantly over the last few months, but really it's come in line with the rest of faang and big tech losses over the last year, year and a half >> yes, except its pe ratio is trading after a 58% drop in the price of the stock it's still trading at a 50 times multiple on its pe, while alphabet is in the mid 20s, gm is something like the single digits i think the days of elon musk performing for his vast retail stockholder base is behind us. that's what he's been doing for

a long time. tesla uniquely has something like a 42 -- like 42% of their stock is held by the -- by retail investors while an right here is at, you know, retail investors are at 18%. he can get a -- at least he used to be able to get away with things based on who is holding the tesla stock. i think those days are over because he, as a -- i guess as a market mover has lost a lot of credibility. remember, a lot of those retail investors only entered the investment space in the last 14 years where we've seen growth, growth, growth this is the first time they've been confronted with a recession. we lived through many of these this is when you actually know yourself as an investor or not it's through these hard times, not when the market goes up for 14 years straight. >> colin, is tesla --

>> i'm going to disagree with that -- >> is tesla with an asterisk then as long as elon musk stop doing the brand damaging things he was doing and starts focusing on the fundamentals? of like zuckerberg with meta, as long as he stops spending so much on the metaverse, the core business is actually doing well. >> i'm going to disagree with some of the fundamental here tesla's earning power when you look at the company executing against the 50% growth metric, getting an enormous amount of operating leverage off the platform we see the company earning 18 to $20 as they reach 5 million vehicles a year. with the growth metric they've talked about as their target that's 2026 so from a multiple perspective we're not concerned so much atthese levels especially that the multiple is too high

what we're worried about is that there's larger backlash around musk and his behavior. yeah, there's a point around musk doing damage to the tesla brand, but from an earnings power perspective we think there's a lot of up side here from the current estimates out on the street. >> yes, how much does all of that, though, effect the growth projections for 26 given we're going to have some kind of a landing, soft, we'llsee. thank you. tesla one of the rare bright spots today because nasdaq down almost 3%, and you can see we've definitely lost 3900 s&p we'll be right back. with inn ovau customize interfaces, charts and orders to your style of trading. personalized education to expand your perspective. and a dedicated trade desk of expert-level support. that will push you to be even better. and just might change how you trade—forever. because once you experience thinkorswim® by td ameritrade

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let's get a check on the markets. the major averages deep in the red right now. we've got the dow down more than 800 points the s&p down below, a key 3900 level. also down more than 2.5%, and the nasdaq faringworse of all, down more than 3%. with that, let's get to chips. we've got a payer analyst out with their top ideas for 2023.

morgan stanley bullish on amd. let's bring in matt ramsy and joseph moore you have it up 30% from here does that factor in some recession of some sort, or do you think nvidia is immune >> hey, thanks for having me on. good to see you. we definitely named nvidia as our top pick we factored in a lot of things in our analysis, john. the fact the market and russia is now zero for a lot of these companies, some turbulence with china and some of those permanently gone from the revenue streams and inventory collection and gaming. and they felt a lot of the pain already. and around the corner in product

cycles are their biggest businesses a brand new hopper product cycle with significantly higher prices, a new gaming product which is a new gaming gpu. as the channel clears through their january quarter i think we're going to see a pretty big rebound in the gaming business as a huge investment for the company in autonomous driving, chips and simulation in the data center that's just now starting to come to revenue we factored in a lot >> joseph, when it comes to md is your argument that their either pc exposure is not so extreme that the consumer slow down is going to significantly hit them, or do you think the holiday season is going well enough there won't be a significant inventory overhang going to haunt them into the new year >> look, i think there's some near-term risk for amd and most

of these stocks and semiconductors this is in the context of a relatively cautious industry preview. i would say the two stocks we're talking about here are the two stocks i feel best about achieving consensus numbers next year the pc market is meaningfully derisked amd's business is down close to 60% in climate i think that's enough to burn off inventory and get a recovery next year even though the full-year number is down and data center is weaken in their term as well i feel good about next year's targets. you're looking at very strong share gains. you're looking at a cloud market while there arecuts amd taking a hilar percentage of that, and i think with enduring strength in those markets and this is the worst performing large cap semiconductor stock in 2022, so i think they've executed very well their competitor has stumbled on the server side. so i would say you need to be

using this period of weakness to build positions especially relative to this group >> i wonder a lot of the negative commentary we get about the space overall is that the weakness in say phones is not going to be offset by any acceleration own channel clearing in gaming or certainly in autos i wonder if you think that's fair >> the group overall one thing i've noticed over the last year or so as we've gone through some of the pain for the sector there's not just one semiconductor cycle. the cycle in pcs and gaming is very different than the cycle in memories, the cycle in automotive the two-cycles we're talking about here is one that went into some of this pain earlier, some things that happen from exclusion of being able to sell their ai products in china amd may be what happened in the pci market earlier and there's catalysts for both companies in terms of selling prices, margins, share gains

that are coming into next year but there's some pretty market specific things for both nvidia and amd we're fired up about, very, very different than what's going on in the smart phone market >> joseph, we're almost out of time but let me briefly ask you what kind of recession does your model factor in and did that change this week and powell's presser? >> we're certainly looking for weaker marketing this week >> i have amd's business closer down to 50%. what's interesting that implies a significant sequential recovery from the levels of q4 they're not immune by any means, but i think i continue to be optimistic that consensus estimates are achievable even in a tough economic environment >> guys, appreciate it very much obviously it is -- i would argue, john, definitely one of the hardest spaces to read right now given the fact there are so many cycles within a cycle >> yeah, you've got that

enterprise consumer split and you've got what's in data center this is happening on the client side and all affected by the macro. >> meanwhile pronounced weakness and tomorrow goldman saying that's going to be the biggest opex in two years. the dow down 800 let's get to the half. welcome everybody to the half time report here at the stock exchange front and center this hour inflation fears and what that all means in the months ahead. let's check the markets. we're just about theow