Meta’s Big Beat, Rates Remain Unchanged, Chips Dip 8/1/24

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 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 solid, coming off the best session for S&P NASDAQ since February. Ten-year, awfully close to 4% as jobless claims come in highest in a year. Our roadmap begins with Metta's big beat. Stock is surging on its latest results, revenue up 22, following that aggressive AI strategy.

David Faber (0:32)

Plus, the Fed holding rates steady, but Chair Powell is saying the central bank could cut in September if data continues on its current path. We also have two bigger earning interviews coming up in the next hour or so. CEOs of Carvana and Arm Holdings. Stocks moving in opposite directions, at least in the pre-market.

Carl Quintanilla (0:51)

Let's get to Metta jumping on this Q2 beat and issuing a better than expected forecast. Gains in the digital ad market, raising their spending guidance for its AI infrastructure. Jim, CapEx guide is pretty interesting. Came in a little bit below, but raising for the full year.

Jim Cramer (1:07)

I love this. The amount of compute needed. This is for next year. This is Mark. To train Lama 4, that's a large language, David, will be 10 times more than what we use to train Lama 3 Okay, so that's writing a check to Jensen Wong for a huge amount of money. But the ROI is so clear here because Mark Zuckerberg told you that Meta AI, which I use, and I find whimsical, is the number one. It's going to be number one. Number one in the GPT sweepstakes.

David Faber (1:37)

Number one in the sweepstakes? Well, wait, AI is clearly also benefiting their advertising business.

Rick Santelli (1:44)

Oh my.

David Faber (1:45)

But you're talking about two separate things here, correct?

Jim Cramer (1:47)

Yeah, conflating greatness, David. I'm conflating greatness. If you go and listen to what he has to say, with Mark, about advertising, I love this, is AI also going to significantly evolve our services for advertisers in some exciting ways? It used to be advertisers came to us with a specific audience. Okay, now they know the audience better than the advertisers. Soon, all that will happen is that advertising will basically just be able to tell us a business objective, a budget, and we'll do it better than they can. So it's the end of a huge part of the economy, the people who figure out what to do.

David Faber (2:17)

Figure those things out, but that is being powered by AI, which is making ad buys more efficient, more effective, and that's obviously helping what was a top line that was very strong. But to your point, spending also ramping up sharply in terms of cap.

Jim Cramer (2:32)

He has to meet the demand as opposed to... Well, look, I keep coming back to Alphabet saying they have to be defensive in spending. Zuckerberg is offering, Carl, the best soup to nuts I've ever seen, advertising targeted to exactly who you want, created by them, by machine. That's productivity. That's the beginning of what I say. Okay, that's clear. There are companies that you used to go to with this, and those companies right now are shaking. The people who work with them, they're shaking.

Carl Quintanilla (3:00)

We're starting to get some clues about that, given today's productivity print and unit labor cost print. Maybe early, but who knows?

Jim Cramer (3:07)

Nope, that's why I brought it up. I think we're beginning to see the change in the economy. Lisa Su said it to us, the CEO of AMD. We're beginning to see solutions by machines that are better than humans. David, this is not Starlink or whatever you're going to bring up to me. This is just a very good way to do business.

David Faber (3:25)

What? Starlink? What are you talking about?

Jim Cramer (3:28)

Whatever it is, whatever he's using now to describe it.

David Faber (3:31)

Who knows?

Jim Cramer (3:32)

Remember seen in Terminator 2 where Wolfie, he says Wolfie and it's not the real name of the dog?

David Faber (3:36)

Oh, you mean my end of the world scenario.

Jim Cramer (3:39)

Yeah, the end of the world scenario is not happening. What's happening is that you can sell them, listen, I want to sell chocolate, which by the way, Hershey's better do because they didn't. So do it better than I can. I want you to target all the people like Hershey's Kisses. Then what happens is that in 30 seconds, they have a better commercial than you've ever seen. Zuckerberg is so confident of this that it read like Roman Conqueror.