10AM Hour: Twilio CEO, AI’s Accuracy Problem, Apollo Face Private Credit Withdrawal Requests 6/23/26

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This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com/marketupdatepodcast or find Schwab Market Update wherever you get your podcasts.

Sara Eisen (0:54)

Good Tuesday morning. Welcome to Squawk on the Street. I'm Sara Eisen with Carl Quintanilla and David Faber. We are live as always from Post 9 of the New York Stock Exchange. Technology stocks are tumbling today with major declines for the chips and AI related names. We'll talk with tech analyst Ben Reitzis about the carnage right now. Plus software is outperforming this morning as the money rotates back into that sector. We'll talk to the CEO of Twilio as they ring the bell to mark 10 years as a public company. Also, SpaceX just turning positive after briefly dipping below its first trading price on IPO day.

What's behind all this volatility that's ahead? And it is one of the final Supreme Court opinion days of the session. We're still awaiting a potential decision on President Trump's authority to fire Fed Governor Lisa Cook. We'll bring you any headlines as soon as we get them. But guys, tech is firmly in focus today and there are questions about how much is overdone when it comes to the AI trade and the tech trade. Barclay is interestingly out defending the rally, defending the tech trade, raising their forecast on the S&P 500 and just wanted to give you a snapshot of what's happened with earnings expectations in this very hot sector. So at the beginning of the year, going into the year, semiconductors were thought to grow earnings 66%.

Today, the expectations for earnings growth this year is 127% for this group. And then you see it trickle down from there, the tech hardware and storage, you know, the Dells and the Supermicros, 39% earnings growth this year expected. And that's more than double what we thought just going into the year. Obviously, software, it's been a story the opposite direction. And so same with IT services, the extensors of the world. But that is a defense. And they say, Barclay says, that earnings estimates for tech over the near term are not overly heroic. So if you want to defend, you know, what's happening with the price action, you look at a chart like that, guys. I guess, David, the question is, how much is factored in, you know, and where does that demand level off, I guess?

The supply is there.

David Faber (2:57)

Yeah. I mean, there's no diminution that we can really identify in a real way. That said, these concerns are going to continue to potentially bubble up around, I don't know what it will be next, around whatever may be concerning. And, you know, but then you get to valuations, Sara, you've talked about this obviously many times, and you can look at some of the biggest companies in the world that are trading at multiples that are just, are not even as high as the market multiple.

Sara Eisen (3:24)

Right. You can look at NVIDIA for one, for that, because, and that is, and what I'm showing you is that the earnings expectations are so high, which is directly to your point, that the multiples, you know, are not, are not crazy even though we've seen this tremendous price run up.

Full year, forward one year PE on NVIDIA right now is 23

David Faber (3:43)

Yeah, 23 times.

Sara Eisen (3:45)

23 times earnings.

Carl Quintanilla (3:46)

Although to be fair, chip names often don't get, never get to market multiples.

David Faber (3:49)

That's a very good point. I mean, I don't know what Micron's multiple is now. I know it's higher than it has been, but it's still obviously well below the market.

That said, the thing does have a $1.2 trillion market value, which is stunning, even with the stock down 9% today. We are going to be hearing from Micron tomorrow.

Sara Eisen (4:05)

On earnings.

David Faber (4:06)

On earnings. And it is important to note that that stock did have weakness. Of course, it made it up very quickly, but it did have weakness following its last earnings report, despite it being incredibly strong.