First Apple Earnings Report Under Ternus… And Data Center Buildout Backlash 11/2/26

Apple

Across the shows: 32 speakers in other episodes, 21 bullish and 24 bearish calls, past 30 days

• Guy Adami · CNBCBearish

  Apple's valuation looks hard to justify and could draw scrutiny if the defensive premium fades.

  Services grew to about 27.5% of revenue, which is a trend in the right direction and helps rationalize the multiple, but he says that does not mean Apple deserves the multiple it gets. He argues Apple trades as a defensive, passive-investing favourite. If valuations start to matter, or if Apple fails to hold up as a defensive stock in a sell-off, investors will look more closely at the valuation.

  “The problem is, I think, if valuations ever start to matter and if Apple does not become defensive in a market sell off, then I think people will look a little closer”at 3:49

• Dan Nathan · RiskReversal MediaBearish

  Apple is fully valued and not a defensive play; its Siri and AI execution risk is unpriced.

  He says Apple's defensive rerating does not make sense. Microsoft and Amazon are spending heavily to build for an AI future, while Apple is not spending hundreds of billions on models that may be commoditized. He is concerned about China and about AI touching services, and says Apple has not built a product integrated with its hardware and is nowhere near that. He thinks it is fully valued and that the price does not reflect any misexecution on Siri AI, so he would rather buy a beaten-up name like Alphabet.

  “This one doesn't make a whole heck of a lot of sense to me... I do think it's fully valued, and I don't think it's really priced in any mis execution as it relates to Siri AI.”at 3:57

• Tim Seymour · Seymour Asset ManagementBullish

  Apple's valuation is meaningless given its free cash flow, while peers burn cash in the AI build-out.

  Services are annualizing at about $125 billion and the top line is strong, with Apple delivering despite having nothing from Siri or AI. Gross margins fell 210 points, but he thinks Apple is the company most likely to squeeze the most out of them. In a risk-off market, valuation matters less for a company that generates free cash flow, while other AI spenders are drawing down cash.

  “So, just think these numbers why would the valuation matter now at a time when people are running for safety? ... if anything, that valuation is meaningless for a company that's generating free cash flow, while all those other oranges are not generating any.”at 6:02

• Bo Nunnally · CNBCBullish

  Apple's hardware upgrade could make it the interconnected layer of the AI build-out, less exposed to commoditization.

  He argues Apple's hardware upgrade cycle may position it as the interconnected piece of the whole AI build-out. With CapEx under heavy scrutiny, and the risk that AI models get commoditized, the most valuable place to be is the company sitting in the middle connecting the dots. He says that positioning is part of why the stock is being bought.

  “the hardware upgrade might be setting them up to be the interconnected piece of all of the AI build out... you kind of want to be the person that's sitting in the middle of that connecting those dots.”at 7:51

• Gene Munster · Deepwater Asset ManagementBullish

  Mac demand is set to beat expectations, with a multi-year hardware upgrade cycle driven by AI readiness.

  Mac revenue rose 24% against a Street expectation of 15%, with a 22% price increase helping. The Street expects only 6% Mac growth next year, but he thinks it will be 15 to 20%. He believes Apple is entering a three-year hardware upgrade cycle because customers want Macs ready for AI.

  “MAC was up 24%. The street was looking for up 15%... Next year, the street's looking for 6% growth in the Mac. I bet it's gonna be 15 to 20%. I think we're in a three year upgrade cycle around hardware that's gonna benefit Apple.”at 11:10

• Gene Munster · Deepwater Asset ManagementUncertain

  Apple's AI pivot to personalized agents may shift the goalposts; subscription cuts could offset Google search risk.

  Most mega-cap companies led their opening comments with personalized agents, while Apple led with the new Siri. He fears that once the chatbot-style Siri ships, the bar will move to personalized bots and new ways consumers integrate with devices. He notes that a shift away from search could hurt Apple's high-margin Google search revenue, but that personalized bot subscriptions would earn Apple a third cut, so the outcome is unclear and offsetting.

  “led by personalized agents. And my fear is that as soon as they get the chatbot, the new Siri right, that the goalposts have shifted to the personalized bot”at 11:53

• Gene Munster · Deepwater Asset ManagementBullish

  Apple is managing memory-cost margin pressure well through price increases, though it is the most difficult margin period yet.

  Apple has raised prices, including a 22% increase on Macs and about 20% on iPads at the end of June, to offset memory costs. iPad revenue fell 10% against a flat expectation, which was a negative. Even so, demand has held and margins have stayed largely intact. He has followed the company for a long time and calls this the most difficult period it has ever faced on margins, but he thinks management is doing a good job.

  “Factoring price increases, keeping demand at a point, keeping margins kinda largely intact... this is the most dicey period that they've ever had to navigate when it comes to margins. And I think they're doing a good job.”at 13:01

• Dan Nathan · RiskReversal MediaBearish

  Apple's iPhone margins face pressure from Duo yield problems and tight memory supply.

  Apple is having yield problems with the foldable Duo, and it is being pushed out from the iPhone 18 lineup. Yield problems mean lower margins on the higher-priced phone, and that weighs on iPhone margins generally, before even counting memory costs. Memory makers say capacity will be tight for about two years. Fiscal 2027 gross margin is expected near 47.5%, so if margins do not improve, the stock should rerate lower.

  “So they're having yield problems with the Duo... that means the margins are going to be less so for this higher priced phone, and it's going to weigh on iPhone margins in general.”at 31:18

• Bo Nunnally · CNBCBearish

  Apple's gross margin compression and price increases will pressure the stock in the near term.

  He says that whenever margins are degrading, the stock faces pressure. Apple's guidance shows margin compression alongside price increases, and he is surprised people are not already building this into their models. The two effects together make for a tough aftermarket setup, though he is not reading too much into the after-hours trade.

  “anytime you're seeing margin degradation, there's going be pressure on the stock... those two things in parallel make for a tough aftermarket setup”at 33:38

• Gene Munster · Deepwater Asset ManagementBullish

  Apple's margin dip is manageable via price increases; demand, not margins, is the real question

  Munster says the gross margin guidance is the more solvable part. He expects Apple to raise prices and eventually stabilize margins. The harder piece is demand. He doesn't understand the aftermarket selloff and expects shares to recover the next day. Combined with the revenue guidance, he sees the report as more positive than the stock reaction implies.

  “I think the margin piece, they're gonna figure out, they'll raise prices, that eventually will get some form of stabilization, but the demand side is the harder piece.”at 47:25

• Gene Munster · Deepwater Asset ManagementUncertain

  Apple dodged analyst questions on personal AI agents, a negative signal for its AI strategy

  Munster notes that analysts asked the personal-agents question twice on the call, and that Ternus evaded it with vague comments about a platform, privacy and security. He reads this as a negative that Apple does not want to discuss how personal agents will affect its business. He does not want to over-read it, though, and says it is outweighed by the margin and revenue guidance.

  “Turnus dodged the questions, not even gracefully”at 48:05

• Tim Seymour · Seymour Asset ManagementBullish

  Apple's margin miss is offset by stronger revenue guidance, and Seymour expects revenue to make it up

  Seymour says the gross margin guide is about 80 basis points worse than expected for fiscal Q1. Revenue guidance, however, is about 240 basis points better than the midpoint of the prior range, which he uses to justify a revenue-led offset. He believes Apple can make up the margin shortfall through higher average selling prices. He frames this as a growth story and a continuation of the prior trend.

  “it's about an 80 basis point, at least for the fiscal Q1, worse than expected. But if you look at what they're guiding on revenue, it's two forty basis points better... they're gonna make this up on revenue.”at 48:46

Alphabet

Across the shows: 50 speakers in other episodes, 39 bullish and 28 bearish calls, past 30 days

• Dan Nathan · RiskReversal MediaBullish

  Alphabet is a buy on dips: Gemini distribution and enterprise agents are underappreciated.

  He says buying Google on downdrafts has paid off over the last two years and the company has figured things out. He thinks Sundar Pichai's enterprise agentic AI push is underappreciated and could offset some consumer search deterioration. He points to Gemini embedded in Chrome, which has about 70% global browser share, and to Android. Search is in the penalty box for now, but he sees many ways Alphabet can win.

  “One of the things I think was underappreciated on the Google call is that Sundar was talking about enterprise agentic AI... it really feels to me that Gemini embedded into Chrome that has 70% market share globally”at 8:16

• Gene Munster · Deepwater Asset ManagementBearish

  Alphabet faces unique search headwinds that will not go away anytime soon.

  A threat to Google search would be very bad for Apple, because Google search revenue is an extremely high-margin part of Apple's business. He thinks Google is facing unique headwinds in search, which are not going away anytime soon. He also says that if personalized agents erode search, Apple could gain subscription revenue from them, so the net effect on Apple is not yet clear.

  “Google is facing some unique headwinds here that are not going away anytime soon.”at 13:59

Comfort Systems USA

• Tim Mulrooney · William BlairBullish

  Comfort Systems' revenue is shielded from data center moratoriums for one to two years.

  Comfort Systems is an MEP contractor that fits out empty data center shells with mechanical, electrical and HVAC work. The work it is doing today was permitted two to three years ago, so a governor moratorium after the election would not hit its revenue over the next year or two. The real exposure is around 2029 and 2030, when capacity could move elsewhere.

  “The interesting thing here is that the stuff they're working on today was permitted two, three years ago... we wouldn't expect essentially any impact to their revenue over the next year or two.”at 26:05

APi Group

• Tim Mulrooney · William BlairBullish

  API Group's revenue is shielded from data center moratoriums for one to two years.

  API Group is one of the MEP contractors that builds out data centers with mechanical, electrical and HVAC work. The projects it is working on today were permitted two to three years ago, so a governor moratorium after the election would not hit its revenue over the next year or two. The real exposure is around 2029 and 2030, when capacity could relocate.

  “The interesting thing here is that the stuff they're working on today was permitted two, three years ago... we wouldn't expect essentially any impact to their revenue over the next year or two.”at 26:05

EMCOR Group

• Tim Mulrooney · William BlairBullish

  EMCOR's revenue is shielded from data center moratoriums for one to two years.

  EMCOR is one of the MEP contractors that comes in to bring empty data center shells to life. The projects it works on today were permitted two to three years ago, so a governor moratorium after the election would not hit its revenue over the next year or two. The bigger risk is in 2029 and 2030, when capacity could move elsewhere.

  “The interesting thing here is that the stuff they're working on today was permitted two, three years ago... we wouldn't expect essentially any impact to their revenue over the next year or two.”at 26:05

Caterpillar

Across the shows: 6 speakers in other episodes, 3 bullish and 4 bearish calls, past 30 days

• Tim Seymour · Seymour Asset ManagementBullish

  Caterpillar's margins are near record highs and its multiple is not demanding.

  Caterpillar reported last week that its gross margins are at or near all-time highs, rising from the mid-teens to the low 20s. He argues the valuation is not demanding given that margin profile, so he sees upside from here.

  “Caterpillar reported last week their gross margins are kind of near at least all time highs. They've gone from mid teens to low 20s. The multiple is not demanding.”at 29:02

Palantir Technologies

Across the shows: 9 speakers in other episodes, 7 bullish and 2 bearish calls, past 30 days

• Dan Nathan · RiskReversal MediaBullish

  Open-source models probably help Palantir a great deal as it makes bigger enterprise inroads

  Nathan says that Palantir's agnostic stance on frontier labs and the rise of open-source models give enterprise customers more choice, and that this probably helps Palantir a great deal as it makes bigger inroads in enterprise. He ties this to a stock that was already up about 30% after the prior quarter and that he thinks has much of the good news already baked in.

  “I think open source probably helps them a great deal, especially as they're making bigger inroads in enterprise. It just gives more choice.”at 37:30

Mastercard

Across the shows: 1 speaker in other episodes, 0 bullish and 1 bearish calls, past 30 days

• Bo Nunnally · CNBCBullish

  Mastercard is the cleanest way to play nominal consumer spending without credit risk

  Nunnally picks Mastercard as a final trade. He says that whatever one thinks about real spending, Mastercard offers the cleanest exposure to nominal spending, which is the growth in dollars spent, and it avoids the credit risk that card lenders carry.

  “Regardless of what you think about real spending, I think this is one of the cleanest ways to play nominal spending without the credit risk.”at 49:27

AI infrastructure & data centers

• Dan Nathan · RiskReversal Media

  Hyperscalers keep spending despite negative free cash flow; cheaper AI drives consumption and monetization.

  Amazon, Microsoft, Alphabet and others are raising money to build out AI infrastructure, and free cash flow has turned negative across the group. He says Microsoft could pull back on capex and still be cash rich, and that it can monetize AI. He cites Jevons paradox: falling prices for AI should drive more consumption, so more agents mean more usage, which is how these companies make money.

  “These guys are raising money, hand over fist so they can build out this infrastructure. Free cash flow has gone negative for everyone.”at 9:14

• Tim Mulrooney · William Blair

  Governor moratoriums put only about 9% of planned AI capacity at risk, and much of it could relocate.

  William Blair's analysis finds only eight states where a candidate or governor on the other side of the election is pro-moratorium, which is about 9% of planned AI capacity. Four of those states already have such governors, so only four are incremental. He calls 9% the worst case, and says much of that capacity could relocate, so the impact is smaller than the headlines suggest.

  “So worst case, about 9% of planned AI capacity at risk here. And we think much of that could relocate it if needed. So the overall impact probably different than what you might expect if you're just reading the headlines.”at 25:03

• Tim Mulrooney · William Blair

  Skilled trades labor, not local permitting, is the bottleneck for data center build-outs.

  Loudoun County, Virginia, has paused data center construction. One large builder told William Blair it is sending its electricians and skilled trade workers to Richmond, Virginia, to keep working while Loudoun figures things out. He says the current bottleneck is skilled trades workers, so builders can shift people to where work is allowed while local governments sort out their rules.

  “We're just sending our electricians and our skilled trade workers down to Richmond, Virginia... Right now, the bottleneck is skilled trades workers.”at 27:45

• Julian Emanuel · Evercore ISI

  A capex pullback would slow economy-wide GDP enough to hurt markets, despite helping AI stocks

  Emanuel says a capex pullback might help AI-related stocks by easing their valuations. However, AI buildout drives so much GDP growth that a cutback would have knock-on effects, slowing growth economy-wide more than the market would be comfortable with. He ties this to 2027 risks.

  “from a CapEx perspective, if you pull back a little bit, it might be good for those stocks. But... The GDP growth attributable to is so significant that you are likely to have a knock on effect that causes growth economy wide to slow more than the market would be comfortable with.”at 43:02

• Bo Nunnally · CNBC

  AI data center buildout is a large GDP share and the main medium-term focus for markets

  Nunnally reads Julian Emanuel's note as keeping the focus on earnings growth. He argues that because AI data center buildout is such a high percentage of GDP, it is the focal point for the medium term and the thing he is most focused on. He downplays a disputed election as a bigger scare.

  “being that AI data center related build out is such a high percentage of GDP, it seems to be that that is at least the focal point within the medium term”at 45:16

US stock market outlook

• Julian Emanuel · Evercore ISI

  Expects volatility around midterms, then a fourth-quarter rally on undisturbed earnings and cheap valuations

  Emanuel expects volatility into the midterms as active managers de-risk, with the VIX at 21 and a sector pattern of energy and tech leading while consumer discretionary lags. He argues the earnings-growth trajectory with valuation compression is intact and politics is unlikely to disturb it. He adds that an expected IPO in late 2026 or early 2027 could push the Nasdaq higher, as a June IPO did, and that Nasdaq and S&P 500 valuations are about as cheap as they have been in a decade. He concludes the setup points to a fourth-quarter rally.

  “But the earnings growth is likely not to be disturbed by politics and we do think you set up for a fourth quarter rally.”at 40:27

• Julian Emanuel · Evercore ISI

  Evercore expects 2027 S&P earnings growth a bit below the 15% priced in, still double digits

  Emanuel sees the market pricing about 15% earnings growth for 2027. His firm's forecast sits somewhat below that but still in double digits. He names this gap as a likely challenge for 2027 stocks, which he sees as the main risk to the earnings trajectory beyond the year-end rally.

  “when the market is pricing 15% earnings growth for 2027, we're a little bit below there, still double digits, that becomes a challenge.”at 43:28

Market sentiment, positioning & volatility

• Tim Seymour · Seymour Asset Management

  Markets look technically damaged and skittish, with institutional risk-off and deleveraging by levered funds.

  Semiconductors closed decisively below their 200-day moving average, which has happened only a few times in recent years, including September 2024 and Liberation Day. An 8% drop in oil should have pushed the VIX down about 15%, but it moved the other way, so he calls markets very skittish. He reads the day as an institutional risk-off session, linked to outside money pulling back from levered funds, and expects risk management to keep markets skittish.

  “semis closed below decidedly below the two hundred day. They've only really done that once, I think September 2024 and then Liberation Day... I think the markets on a technical basis are still very, very skittish.”at 17:27

US consumer

• Bo Nunnally · CNBC

  The discretionary rally looks unsustainable; consumer spending is starting to come under pressure.

  Consumer discretionary rose about 2.25% in the session, but he would have faded it. He sees the oil decline as a head fake, and says a discretionary rally would only hold if the pullback in oil were sticky. That matters because discretionary spending links directly to real consumer spending, which he says is already starting to come under pressure.

  “you wouldn't expect to see that discretionary follow through if you don't think that that's actually sticky... that has direct translations into real consumer spending, which I think we're all seeing is starting to come under pressure.”at 19:12

Nuclear energy

• Tim Seymour · Seymour Asset Management

  Nuclear stocks sold off amid data center backlash; investors should add to them as a long-tail trade.

  He says nuclear has sold off in the middle of the data center backlash debate, even though people would rather have a data center than a reactor in their backyard. He sees nuclear as a much longer tail trade with lumpy demand cycles, but he thinks investors should be adding to it. He says he has been talking about nuclear for a long time and that it is now about 40% higher than when he first discussed it.

  “I think while it's a much longer kind of tail trade and there's certainly a lot more lumpiness in the demand cycles. You should be adding to nuclear.”at 28:52

AI bubble & tech valuations

• Tim Seymour · Seymour Asset Management

  Software multiples must eventually give if semis break down on capex, financing costs and funding strain

  Seymour asks whether a semis breakdown should push money into software, then points to CrowdStrike and Palantir, two stocks he is long but has trimmed in size. He argues a breakdown would trace back to capex spending, the cost of financing, and funding strain, and that even if demand holds, software multiples have to give at some point. He says the market is already griping about Apple's multiple while its growth does not justify it.

  “if we are starting to see a breakdown that's going all the way back to both CapEx spend, cost of financing, and tapping breaks, even if demand's not an issue, the multiples in software to me at some point have to give.”at 38:26

Middle East & Iran

• Julian Emanuel · Evercore ISI

  Kinetic escalation with Iran could push the market down 5-10% from current levels

  Emanuel lists Iran as a key swing factor around the midterms, alongside election disputes and AI. He says some scenarios will be benign, but kinetic escalation with Iran could drive a 5-10% market drop from current levels.

  “particularly if we get kinetic escalation with Iran, that could send the markets down, you know, five to 10% from here.”at 44:18