Arm Holdings Slides, Warner Bros. Discovery Misses, Airbnb CEO Talks Earnings and "Icons" 05/09/24

Carl Quintanilla (0:00)

Market Moving Insight and Analysis join Jim Cramer, David Faber and me, Carl Quintanilla, on the opening bell hour of CNBC's Squawk on the Street.

Good Thursday morning, welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer, David Faber at Post 9 of the New York Stock Exchange. Futures are a bit red as the Dow looks to snap the longest winning streak of the year, so far at least. Lots of earning movers, Bank of England holds steady. Jobless claims popped to the highest level since August. A roadmap begins with a potential crack in the AI stock boom. Arm Holdings, notching a surge in profits and sales, but shares under some pressure on weak guidance.

David Faber (0:40)

Plus media moves, Warner Bros. Discovery, missing estimates, despite streaming growth, ad sales fell 11%.

Airbnb shares are also falling ahead of the open. The company sees robust demand for travel, but its guidance disappoints investors. CEO Brian Chesky, he'll be joining us in just a few minutes.

Carl Quintanilla (0:58)

Let's begin with some of these momentum names today, including one of the beneficiaries of the AI boom, and that's Arm Holdings. Down sharply as full year sales guidance comes in below consensus, overshadowing a quarterly beat, but shares of the chip design are still up 90% from the September IPO, price of 51 a share. Jim, revenue up 47, licensing up 60

Jim Cramer (1:18)

Yeah, look, I think that Renee Haas will be able to tell a good story, that there was really one question on the conference call by Goldman analysts, who were very, very good, which knocked the stock down, which is, explain to me the down 7% sequential problem when it comes to some of the royalty arrangements. They were basically saying, David, that it was Internet of Things and automotive. Now, that is not unusual. That is what everyone has been saying, like an ON Semi has been saying that, Texas Instruments has been saying that. So they do have this component that is not wizardry.

Wizardry was very strong, if you want to know the truth. Wizardry being AI.

David Faber (1:57)

Yeah, explain, wizardry is AI, is what?

Jim Cramer (1:59)

Well, it's the, I don't know if you caught it.

David Faber (2:01)

Or generative AI and what they're.

Jim Cramer (2:03)

Right, I don't know if you caught the excellent interview John Forte did with Jensen Wong, but he loves Arm. Obviously, he tried to buy Arm. Rene Haas, the CEO, is from NVIDIA, but I just think that this is one where people wanted to sell it, they were looking for a reason to sell it, and they got a reason. And I don't think there's more to it. I really don't. I don't think this was that bad. When you see those numbers that you just mentioned, David, people kill for it.

So a sequential down.

David Faber (2:30)

And I'm reading Morgan Stanley Note here, like a lot of others. Well, they say with a weak Q1 guy that you're referring to with that down 7% in terms of guided royalties, we think management may have flushed out some of these near term concerns.

Jim Cramer (2:42)

I think that's true.

David Faber (2:43)

So they're positive.

Jim Cramer (2:43)

I think that if you would stay close to the company, you would have gotten that. But the people who didn't stay close to the company weren't rigorous and therefore they got fooled.

It had to do with rigor. It did not have to do with reneged.

David Faber (2:54)

When you back up though, I have to admit, sometimes I forget, and I don't mean this in a negative sense, but this doesn't have that much in revenues. I mean, the multiple of revenues for this thing is pretty darn high, Jim.

Jim Cramer (3:06)

That's a great issue because what's happened is that Blackwell, which we now know is kind of like, Blackwell is kind of like Godot for some people.

Blackwell includes ARM, that's the CPU, okay, and the GPU is Nvidia.

And that's going to be the biggest combination that's ever hit. That's the Industrial Revolution combination that Jensen Wong keeps talking about. And so Carl, you get to a situation where you're thinking about what's going to happen in September, October, you realize that ARM's taking share, and they've got phone, they have PC, they have the world. They're going to be the CPU company, even though they have a deal with Intel. I think they're overrunning Intel. So I like their situation very much because you got to be thinking about next year at this time. And the billions that are being spent on the data center, when you go into the data center, you got to look at what's in, what's in, Vertiv's in there, Eaton's in there, okay, but then of course, Grace Blackwell's in there, which is Nvidia, and Arm's in there.