Tech Earnings Reaction: Amazon's Cloud-y Outlook, Intel Jumps, Snap and Pinterest Plunge 4/28/23

David Faber (0:00)

Market Insight and Analysis. You're listening to the opening bell of CNBC's Squawk on the Street.

Carl Quintanilla (0:06)

Good Friday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer, David Faber at Post 9 at the New York Stock Exchange. Stock's giving back some of yesterday's rally, the second best day of the year.

Amazon's cloud guidance not helping tech, CorePCE was in line, yields are down a touch. A road map is going to begin with big tech caution though. Amazon saying cloud growth is slowing, Intel also a cautious outlook for enterprise and cloud, and Snap saying sales are being disrupted as it makes some adjustments to ads.

David Faber (0:34)

Plus, we'll keep energy in focus. Chevron and Exxon both out with quarterly results. They both beat even as US oil futures head for the longest run of monthly losses that they've seen in more than eight years. Wow.

We'll talk First Republic of course, a bit of a bounce, but we will bring you the latest on what most likely will be an important weekend for that bank.

Carl Quintanilla (0:56)

Let's begin though with big tech earnings. Amazon with that quarterly beat shortly after yesterday's closing that did spark an initial double-digit rally. Those gains though were erased on the company's warning of a slowdown in cloud growth. This is what the CFO had to say about AWS on the call.

SPEAKER_4 (1:14)

Given the ongoing economic uncertainty, customers of all sizes and all industries continue to look for cost savings across their businesses, similar to what you've seen us doing at Amazon.

As expected, customers continue to evaluate ways to optimize their cloud spending in response to these tough economic conditions in the first quarter. And we are seeing these optimizations continue into the second quarter, with April revenue growth rates about 500 basis points lower than what we saw in Q1.

Carl Quintanilla (1:42)

And that was the line, Jim. That's what did it.

Jim Cramer (1:43)

Yeah, and we got to flush it out here because, first of all, there's so many good things that happened this quarter. We're seeing the beginning of the rough stages of the workforce being completely ignored over that one line of 500 basis points, taking the growth from 16% down to 11 It was as high as, you can say, 32 18 months ago. Now, they are trying to say, listen, it's bottoming. And it's bottoming in part because of all the really exciting things that are going to happen with a chat, GBT, with gender of AI. I have to tell you, I'm with them.

I think that there are a lot of people who say that they lost a lot of share. I'm not buying that. There are a lot of people who say this is the beginning of the end of the cloud. Given the fact that 90% of companies are still on premises, I think there's a lot of business. And David, Olsosky is a straight guy.

He's a straight guy. And they're very confident. They are not, and no panic button there. They really think business is fine.

David Faber (2:37)

You know, I heard a relatively positive take on it as well.

Yeah, on AWS. First of all, they came out of the quarter roughly 11% growth rate.

Jim Cramer (2:46)

Wait, the April was 11, the March was better.

David Faber (2:48)

But also it had to do with comps. And the idea that Azure has a much more Fortune 500 customer base.

And CFOs there actually were earlier to start cutting. And if you remember, there was a point at which Azure was decelerating in growth, and now it's re-accelerating.

Jim Cramer (3:06)

Two quarters ago.

David Faber (3:07)

In part because they were already seeing the cuts from CFOs. However, Amazon, the biggest, has a lot more customers who are smaller in some way, or VC-related.

And they've been later to cut costs. They have. They won't comp those until the August quarter. Let's call it August. And so you're just a little later with Amazon in terms of the re-acceleration.

Jim Cramer (3:29)

We're going to be talking about a bunch of smaller public, admittedly.

They're literally the equivalent of.coms, frankly, when I look at it. I'm talking about Pinterest and Snap. And David's just 100% right. This is about, this is just, guys are just cutting back now.

But by the way, can we give them something here? They recognize that they spent way too much. They are rationalizing every one of their businesses, whether it be a grocery, whether it be, you know, just simple one day, same day. And I think that we forget that they have a lot of firepower if they cut, they just cut fat.