Big Tech's Big Drag, Boeing and AMD CEOs on Q4 Results, Judge Voids Musk's $56B Pay Package. 01/31/24

Carl Quintanilla (0:00)

Market insight and analysis. You're listening to the opening bell of CNBC's Squawk on the Street. Good Wednesday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla, Jim Cramer, at Post 9 of the New York Stock Exchange. David Faber is the morning off. Final day of January, Fed decision on deck. Some weariness around mega cap tech earnings, but more signs of wage disinflation, and does that build the case for a March cut? 10 year 401 A roadmap begins with tech earnings, Alphabet, Microsoft, Among the Names, Dragon, the Nasdaq, and S&P Lower.

CEOs of Boeing and AMD will join us to discuss their respective results, and a Delaware judge strikes down Elon Musk's $56 billion Tesla pay package.

Let's begin with Microsoft and Alphabet set to drag down the tech sector despite beating estimates, light guidance with strong growth from Azure, while Alphabet's ad revenue came in short of expectations. Here's CFO Ruth Porat talking about the parents outlook on last night's call.

Ruth Porat (0:55)

The step up in CapEx in Q4 reflects our outlook for the extraordinary applications of AI to deliver for users, advertisers, developers, cloud enterprise customers and governments globally and the long-term growth opportunities that offers. In 2024, we expect investment in CapEx will be notably larger than in 2023

Carl Quintanilla (1:20)

Notably larger than 23 when they did 11 billion, this print, Street, was not even at 10

Jim Cramer (1:25)

I hope it's going to be larger. They have a lot to do. They've spent very exciting time, as we'll hear from Lisa Su.

I think that this is a quarter that, suddenly, we didn't care about Google Cloud. I mean, I was just praying that Thomas Curry put up some good numbers for Google Cloud. He puts up great numbers, and then suddenly, we're shadowboxing with other things are doing wrong. They are doing some layoffs. We, yes, do I like how much other bets loses? No, come on, Ruth, let's do better on that.

But now, I mean, look, the stock's down because it went up a lot. I thought it was a very, very good quarter. They don't like to specify how much they made in YouTube, which does bother me. I was hoping they'd give us some granularity on a Sunday ticket. They did not, but this is still a tremendous way to reach customers.

Google Cloud's doing well. If the stock were, if the stock had not been pushed multiple times by people who said this is the cheapest of the significant six or whatever, then this wouldn't have happened. So those who want to sell it now, be aware that there weren't any people on Wall Street that really said, you know, what, sell or downgrade. And one of the things that we've learned from the seven or six or everyone to call it is is that unless there are downgrades, unless people come in and they just say, listen, we're selling, then what happens is you just look at the propensity of raised versus lowered and it's five raised versus three lowered. So therefore it goes hard.

Carl Quintanilla (2:47)

I think it's Bernstein this morning calls all of this the burden of high expectations. Do you think that's what we're looking at?

Jim Cramer (2:53)

Exactly, yeah. I mean, Bernstein actually distinguished itself pretty well in some of these and I thought that that's exactly what happened here. Those who do not, my chapels are so, we sold, I don't want to say a great deal of it, but it's my least favorite of the significant ones. And that was because it ran so much and because I don't like their advertising models, as much as I like Amazon's and I like Metis. But that said, I was also worried about Google Cloud not doing well.

I'm not going to suddenly abandon the thing that drove it down last time, which is Google Cloud being bad. So, Bruce Fine, if you want to sell it, be my guest, it's probably going to be a mistake.

Carl Quintanilla (3:27)

As for Microsoft, Jim, they're really slicing up the cloud revenue, looking at X AI Azure growth and wondering whether or not the push to AI is sort of cutting out other cloud consumption.

Jim Cramer (3:39)

Well, look, I think that they handle themselves very well. They were very methodical.

Once again, I want to use this ratio theory because it's really worked for me over the years.

Microsoft had many, many people who loved it.

We did not get a single target lowered. We had one, two, three, four, five, six, seven, eight, nine, 10, 11, 12, 13, 14 analyst firms raise price targets. They're going to be right. The sellers are going to be wrong. Amy Hood was as confident as I've heard her in many years, the CFO, who is just money. That's her like, they should just change her name to money. And she is saying, look, everything's going well. They low balled how much AI is going to do and their AI, all the different iterations that they're going to do with Co-Pilot.