00:00 Speaker A
Big tech earnings this week to test the market as the S&P 500 and Nasdaq composite recently touched all-time highs.
00:08 Brooke
Laffer Tangler Investments CEO and CIO Nancy Tangler joins me now for the earnings report brought to you by EY. Nancy, first I want to talk about just this pullback that we are seeing in big tech. It it seems like you already had called a bottom prior to this. So what do you make of this pullback?
00:23 Nancy Tangler
Yes. Well, it’s not too dramatic, Brooke. I mean we we spent 42 days going straight down uh and then we took 11 days to recover those levels. Uh I think it’s expected with, you know, the headlines. I mean that’s the world we live in now. The algorithms read the headlines, the hedge funds jump in once the algorithms start buying or selling and it exacerbates volatility. Uh we used the period uh in early April as an opportunity to buy names like Micron at 366 or I saw, you know, he was just talking about Nvidia. We bought it at 173, added to it, we already owned it. Uh and and the stock’s trading at 213. That’s a big move in in three weeks. So uh there there you could cite a number of the technology names where that was the case. They got oversold and now, you know, they’ve had a big bounce back.
01:13 Brooke
Yeah, Nancy, actually it was interesting because ahead of this, City actually put in their report. They said that Nvidia and Micron both reporting, they’re ultimately driving the most earnings a growth here. They’re going to account for nearly half of the total index growth. So I guess now with Micron already having reported, uh Nvidia is set to report late May, so maybe one of the last ones, how should an investor be positioning themselves over these coming days?
01:34 Nancy Tangler
Well, you’ve got the the big the big five reporting tomorrow. So uh and then Apple on Thursday. So I would watch that. I mean, I don’t know that I would jump in front of it. I don’t trade a lot during earning season, uh unless we have to, but uh, I think you want to watch and see what kind of guidance they give because earnings are backward-looking and and guidance obviously is forward-looking. And so we want to hear from companies what they’re saying, what are the backlogs uh for the the picks and shovels guys. Uh are they increasing? And then what about margins? Because margins are at historic highs. So we we want to see those continue to expand or at least maintain current levels. So those are what what we’ll be watching.
02:08 Brooke
Those companies reporting includes Amazon, we have Microsoft, we have Meta, we have Google. I’m like, how do you keep up with all these reports after the bell tomorrow? When you think about what you were just saying, looking out for margins, looking out for how much they’re spending.
02:22 Brooke
I mean, what do you want to hear? Because we already know that they’re spending billions of dollars to build out these data centers, to invest in AI. So what makes you tell, what tells you now in these early innings that all their spending is working out for them?
02:37 Nancy Tangler
So, I think what dinged Microsoft last quarter was they didn’t grow Azure at 42%. They grew up 41 or whatever the numbers were.
02:46 Brooke
Right, and that has to be, but that’s just goes to show like how exact investors want you to be in this market right now.
02:51 Nancy Tangler
Right. And the reason they cited was they were capacity constrained. So it had nothing to do with demand. So what we want to see is are are companies able to are they becoming able to keep up with demand? Because that will be become that equates to monetization of AI, and we want to hear that. But then you just have to step back. We listen to every single company call, the companies we own or ones we’re watching. And you just take a company like GE Vernova, a huge beneficiary of the AI spend, but what they talked about on their call is, we’re using AI to drive margins and we don’t want that to be lost on investors. So it’s not just the participation in the trade, but how are companies utilizing it to improve their margins or generate growth or develop new products.
03:22 Brooke
So should you be looking outside of these big tech names right now? Like infrastructure, maybe even a consumer discretionary name. We did see a bit of a pull back as Jerry was noting today.
03:32 Nancy Tangler
Yeah, so we are overweight industrials, which would include the infrastructure names. Uh, we recently added to some of those names, uh, well, in early April. Uh, and then we’re overweight consumer discretionary and a and a an overweight to tech and then a a little overweight to financials.
03:49 Brooke
What did you make of Coca-Cola this morning?
03:50 Nancy Tangler
It was awesome. Yeah. And I’m I’m eager to hear what Starbucks says any minute, so…
03:54 Brooke
Right. Right.
