Hey, Fidelity. What's it cost to invest with the Fidelity app? Start with as little as $1 with no account fees or trade commissions on US stocks and ETFs. Hmm, that's music to my ears. I can only talk. [MUSIC] Investing involves risk, including risk of loss. Zero account fees apply to retail brokerage accounts only. Sell or assessment fee not included. A limited number of ETFs are subject to a transaction-based service fee of $100. See full list at fidelity.com/commissions. Fidelity brokerage services LLC member NYSE SIPC. [MUSIC] I've got prostate cancer, but I really wanted to make it to the big game with my grandson. And here we are. >> Go, go, go, go. >> With Erlita, Appolutivide, being there is possible. Erlita is a prescription medicine used to treat prostate cancer that has spread to other parts of the body and still responds to a medical or surgical treatment that lowers testosterone. Erlita may cause serious side effects, including heart disease, stroke, or severe skin reactions, which can lead to death, falls, fractures, and seizure. Seek immediate medical attention if you experience symptoms of a stroke or severe rash. Erlita can cause harm to or loss of an unborn baby. Common side effects were fatigue, joint pain, rash, decreased appetite, weight loss, high blood pressure, hot flash, and diarrhea. Ask your doctor if Erlita is right for you. Or tap this ad to visit Erlita.com, CP439267v1. >> It's Jim Kramer here. You're listening to the opening bell on CNBC's Squawk on the Street. Don't miss a minute of the action. >> Good Thursday morning. Welcome to Squawk on the Street. I'm Carl Kingston, Iowa. Jim Kramer, David Faber at Post Night of the New York Stock Exchange. Future is firming up here as last week's growth scare fades further into view with Walmart raising guidance, retail sales, doubling estimates, best headline print in more than two years, 10 years back above 3-9. Our roadmap begins with that consumer strength and Walmart's big beat. Stock is surging pre-market all-time highs as they raise the outlook, says they see a stable consumer health. >> Another big earnings name to watch, Cisco. Those shares are up this after the company did top earnings and revenue estimates even though they were both down. We're going to discuss the quarter with CEO Chuck Robbins. That'll be later this hour. And Warren Buffett's Berkshire Hathaway builds a new stake in Ulta Beauty. What stock up double digits on that? Burtine F-related news. >> Let's begin with the consumer route. Bunch of names today. July retail sales blows out expectations. Walmart jumps on this quarterly beat. And guidance. Jim, cops 4-2, Sam, Sam's Club 5-2. >> Look, the electronics on this number, up 1.6, building materials, up you wouldn't have gotten that from Home Depot yesterday. The assembly, the mosaic of what's going on at Walmart is extraordinary. You've got overall boxes now deflated. This food's been rolled back, so I know that there's a big move in Washington. Let's go after price gouges. Well, it certainly is at Walmart. Frozen veggies for $1 selling really well. David, listen to this, Reebok, Free Assembly, Chaps, Polo USA all showing strength. It's not just about the basics anymore. If you didn't know anything, David, we were coming out of a recession. Coming out of one. >> No, the way that reads. And yet, I think the question was asked and answered by the analyst just on the end of Squawk there, which is, is it a sign of broad strength or is it coming at the expense of other retailers? And she seemed to believe that it was coming at the expense of other retailers. >> All the targets are huge. It's not coming at the expense of Costco, say check there, it's not. You're getting the same kind of thing in Costco as Walmart. I will say this, if anyone's been to Walmart lately, it's not the old Walmart. Like the fashion side is designed by people from Fashion Avenue here. >> You've been saying this for more than a year? >> My daughter and I go there and it's like the most fun place because the basket of what you buy, I mean, and she's a vegan. They have like, I know this sounds strange, but they're like, they cater to vegans. They cater to anybody, frankly, but their stores are so attractive that they're taking people from dollar and they're taking people from literally any mom and pop. This is a very strong show. And the dot com, they're e-commerce is really strong. >> Digital up 22, General merchandise, positive after 11 quarters, Jim. >> That's fresh. >> I know. And the other side is that we now have Ulta Berkshire, Pershing Nike. That's why a bunch of these names are up today. >> Well, I mean, look, Ulta the numbers are too high and it's been a terrible moment for Dave Kimball, who's a really good operator, but it doesn't matter if it's Ulta. It doesn't matter if it's Ulta, it doesn't matter if it's Ralph, but it doesn't matter if it's Estee Lauder. They're all bad. That category is bad and it's got a lot of China exposure. This is one, you're buying Ulta because of Buffett here. Okay, so what happens on Monday and you buy it again? I mean, think about it. People are buying this up at 40 and there's nothing to sustain it. >> No. >> I mean, Nike, I don't know whether he's like in or out, but we don't know what he's going to do. >> We can talk about Appen and Nike later. I mean, I want to come back to the consumer because, you know, when Walmart says we're not seeing any sign of a weaker consumer, none, I mean, they make it very clear. We aren't experiencing a weaker consumer overall. And then they go on to talk about, of course, the four things that their customer wants which is value, broad assortment, convenience, they want enjoyment, buying them. >> I told you. >> I know you did. You told me. Yes. And they say that's a constant. But it is interesting. And then slightly deflationary overall, again, these are the broader takeaway for what is still. I mean, with Amazon, the most important retailer in the country. >> Well, don't forget Costco because they all rolled back prices. >> Yeah, I won't forget Costco, very important. But, I mean, Walmart says a lot more than Costco, no offense to Costco. >> Sales wise. >> Well, Walmart does more than anybody. >> Yeah. >> I'm just saying that Walmart, Costco, and Amazon, that's the country. >> You're talking about 170 billion dollars in a quarter of the country. >> That's the country. >> So I'm just saying that, you know, Carl, I think you're having some growth with less than inflation. And that's good. We don't want no growth, okay, because then we already know that the Fed's behind. But some growth with declining inflation is Nirvana, that's as good as it gets. Now, I spoke to a couple large investors say who were miserable. And I told them, what am I, I said, listen, this is your own fault. You're miserable, you're rich. Stop it. There's lots to buy who's a kind of disappearing country. >> Well, they didn't agree with you. >> What were they miserable about? >> Yeah. What are they miserable about? >> The market's already too expensive given what I just, the stock and the strategy to slay it out, which is that the Fed's going to cut, whatever, no, like the market's already moved. Like, oh, Walmart, thanks for nothing and did that kind of thing. And I come back and I say, you could have bought Walmart yesterday. You could have bought Starbucks on Monday. You could have bought Best Buy. I mean, don't give me, don't give me that it's like, well, it's expensive. Because what's happened is since the, since the yen carry trade that David does not stop talking about, what's happened is, is that there were great buys. And Jeremy see who came on and he did the five alarm fire, 10 alarm fire, how many alarms takes to get a lot of people over. But this was, we had an opportunity, okay? There was a window and it was created by people who didn't have enough money, who were very complacent. And look what you got. >> By the way, odds of a 50 in September now, I think around 20%. >> Oh, that was the 50. >> Although, JP Morgan's still calling for 50 in September. As to David's point about Walmart's commentary about whether there's further degradation in the consumer, take a listen to the call. >> In the U.S. for both Walmart and Sam's Club, comp sales were fairly consistent throughout the quarter. Food continues to be strong and it's encouraging to see improvements in general merchandise. And our U.S. Health and Wellness business in Walmart and Sam's Club, primarily due to sales of GLP1 drugs, is contributing to our strong comp sales. So far, we aren't experiencing a weaker consumer overall. >> And by the way, Jim, some of their inventory levels seem quite manageable going into the rest of the year. >> Down two percent. >> Yeah. >> If you're a retail and you're doing this, this is about as good as you can get. I mean, McMillan, this is just what a retailer has to do. It's extraordinary. >> And this is extraordinary performance. >> And they have built e-commerce, as we know, and we've talked about it. That was a 21 percent. You know, obviously you can fulfill by picking up at the store as well. And it is worth going back and taking a look at the performance of the stock over time here. I've made this point any number of times through the years. >> And McMillan inherited a company that was in need of new direction, tough decision-making. And it's very helpful when you have a shareholder, so to speak. It's really a Walt Enterprises LLC and the Walton Trust or the Walton Foundation. I don't know if our viewers are aware what their percentage ownership is of this company. Right now. Do you know? >> 10. >> 46 percent, Jim. >> Is he doing that much? >> 46 percent of this company is controlled by the Waltons. >> Well, I'll tell you a name. And so that helps when you're Doug McMillan. You're taking this. >> What was the bottom? >> This is years ago. >> What was the bottom? Do you remember? >> It was when they were raised. >> What's going on? >> Yeah. >> But they raised wages, made everybody pretty happy, and then they started broadening the food. And then they took the price of food down. See, one of the things that bothers me about Washington, I'm not going to say it at which party. As those I say, the food prices are inflated. Okay, well, if you go to Walmart or you go to Costco, they're not inflating. They've been rolled back. Have they gotten the 2019 prices? That's very hard to do. But they've rolled back prices. You just have to go to them. You know, Dollar Tree? Not really. Dollar General. I don't see a big rollback of some of these supermarkets that, you know, they're just like I think Kroger's trying, but they don't have the scale. >> But you would agree that some retailers use the last few years to build margin. >> And I hate that. >> That's what this is all about. >> And I hate that. And these guys are rolling back margins. I mean, look, David, I know that you're being, I know you drink camis. Okay. >> I do like it. Especially the parties that you throw when I can drink. >> No, that was the camis special 40, 40 year event, 40 year. >> I really prefer. >> I had to buy everything from Boston to Baltimore to get that. David, they've got a bottle of camis now cab. >> Yeah. >> 69 bucks. >> Is that a good price, Jim? >> What am I going to do with him? >> Is he asking? Is that a good price? I don't know. >> Educate him. >> I don't know. Is that a good $120? >> Oh, so it's a good price. All right. >> That's what they do. >> Should we buy it there and resell it somewhere else? >> I'm not going to tell you where it is because I'm going to buy every single bottle. I don't need you. >> I've got rich people talking about buying every single NFL team. Can I go buy this camis? >> That's probably why transactions were up, what, three six, I think? >> Yeah. >> Just transactions up three six with the average ticket positive. >> This is incredible. Now, look, I mean, I don't want to just sit here and just say this is the most amazing number. I'm saying that we have this confluence inflation coming down and stores sales like Walmart being so perfect that it might not stop up this much. It might not because it's kind of exactly what you want. And I think a lot of it is they want you to go to the stores. They want people from who do what we do go to the stores because the stores are not what you think. They're not. I mean, they have index, they have things that they once again, like the old days when Sam Walton went still on 46, but when Sam Walton was there, they used to sell, I remember going once. And they had rubber made, I mean, you know, these rubber made coolers that you have when you were like, you know, a coach and soccer and winning, winning every game because it was necessary. And I had that, I had it and it was like 28 bucks and I went and I said, how do you make money on that? I said, we don't make money at all. >> Right. >> It'd be close to 30. >> It gets people in the store. >> Yeah. You got it. That's the cost of loss leader. >> Yeah. >> Yeah. But I didn't, but win leader when it came to soccer. >> Merchandising important. It's always important. All the way at the back straight. >> Yeah. >> Yeah. These are simple lessons of retail. You'd know that. >> Yeah. >> Super funny. Left on the inside. >> Let's get to Cisco up in the pre-market as well. The networking giant announces another round of layoffs as it looks to cut costs and focus on some growth areas, including AI. The restructuring is expected to impact thousands of employees, about 7% of the company's workforce. Also a quarterly beat issues revenue guidance above consensus and we are going to check in with Chuck Robbins right here at Post 9 in about 20 minutes. >> This is a great quarter for Chuck. Orders are good. You're going to tell us a story of great strength. I think there were some people on the call who were saying, "Listen, if it's so strong, why are you laying people off?" The answer to that, we have to ask you again, because I did not get a satisfactory answer. Not because Chuck Dodge, it just was not done right on the conference call. But I will say this, Carl, business is surprisingly strong, again, it's another one where things are so weak, why is business so strong? The orders, it's across the board. The Splunk acquisition is looking really fabulous now, fabulous. Gross mortgage is better. He has a lot of exciting things to say. It was a very good, very good. Orders moving the right direction. >> You mentioned how it came up on the call. He did sort of address what's happening here. You want to take a quick listen? >> Yeah, let's do that. Watch our problems. >> We actually are shifting hundreds of millions of dollars into AI, into AI networking for cloud, into AI infrastructure, silicon, and cyber. So it's a meaningful shift, but we feel like the market is moving so quickly, we have to do that. On the restructure, the answer to that is no, there's nothing else out there. We had tremendous demand across the portfolio. It was very broad-based, and it was very consistent. It really is about ensuring in a rapidly moving market that we serve that we're able to shift resources into the most important areas. >> And what he's saying is, look, we can be meaner. We don't need as many people. Obviously, when you merge with Splunk, you can take the best sales person that you want on different things. Splunk turned out to be much better. Look, I always, I like Aristile. I think it was a really good acquisition. I will say that I never heard Chuck. >> No, it's been years since I've heard Chuck this, excited about where he is, and by the way, he's talking about AI, we left talking about AI, he's a billion dollars in AI, and yeah, he said to Ben Righteous, listen, it's not our partnership with NVIDIA yet, but NVIDIA is moving up, but David, everything is moving up. >> Yeah, I mean, to be fair though, listen, I mean, you'd still have a 12% down top line quarter. That was better than anticipated. >> No, you're right. It's better than fear. That's the better than fear. The better that are playing positive here, up 14%, which did exceed many of the analysts who follow the company's estimates, you can go back though, five years. It's not been a great run. You haven't won at all in the stock, Jim. >> Yeah. >> No. >> No, look, I might have been saying Chuck is, I mean, look, I like Chuck very much. >> I mean, you've got a 5.7% return. >> Look, the one, the one that's been, Aristile, the competitor, Aristis, Aristis killed it. Jason Villeau, Jason Villeau is an amazing CEO. >> That was the tenure. >> But what am I going to say? I don't want that history to cloud what I think might be the beginning of a big move. >> Of a big move. >> Yeah, I think so. Because if the stuff with Chuck and Jensen and Vidia hasn't hit yet, well, it could be really exciting. What he says is, this is what he says in the answer to Ben writes his question from Millie's goes, "I'd sail in Vidia partnership. It's too early. I'm not even in early field trials yet with that solution." So, I don't think there's a lot to share. Of course, we have to ask him to try to get him to share more than he's shared on this call because this is a private conversation among us. But I do think that if you're just now having a billion dollars in AI, we have to. David, that means that there's a future for AI away from just Jensen. >> Yep. >> And they service now because Bill watches and I don't want to make service now. There you go. I did it. The orders of 6x Splunk, I think it's UBS today, investors were short here, so the squeeze makes sense. >> Wow. They were short. What were they shorting it down to 45? What a bunch of idiots. >> I would have been a fear that they'd put an even higher layoff number that would have sent a bad signal around and got a good one. >> I think that one of the things that Chuck has been trying to do is get leverage. If they get a series of orders like they should, this thing's going to have much bigger gross margins and people are going to say, "Why didn't I buy it at 48?" The problem is it's been two steps forward and then two and a half back, and that's how you get to stock where it is, but I like, "Look, short term, you have to like it." What did I say? >> Big morning for macro prints. We got Philly, Empire, retail sales, and now IP and NaHP. Let's get to Rick Santelli. Hey Rick. >> Yes, industrial production expected to be down for the month of July and the vicinity of down three tenths of percent doubles that down six tenths, down six tenths of percent. That's the weakest level in industrial production since January, second weakest of the year, and if we look at utilization rates expecting 78.5, big miss here, 77.8, 77.8, and 77.8 is the lightest going back to April, and there are some revisions. Last month's industrial production gets shaved from six tenths to three tenths, so not good news here on the manufacturing front by any means, and capacity utilization also diminished from 78.8 to 78.4 last month, so weak numbers this month, bigger negative revisions, and get this. A two-year note yield right now is up, 14 basis points higher than before the 830 Eastern data. The 10s are up, 10 basis points basically since then. They were both hovering right around unchanged at 830 Eastern, dropping claims, strong retail sales, and squawking on the street will return after a short break. I've got prostate cancer, but I really wanted to make it to the big game with my grandson, and here we are. Go, go, go, go. With Erlida Apoludivide, being there is possible. Erlida is a prescription medicine used to treat prostate cancer that has spread to other parts of the body and still responds to a medical or surgical treatment that lowers testosterone. 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Start a 30-day free trial at walmartplus.com. Paramount Plus a central plan only, separate registration required, see Walmart Plus terms and conditions. My dad works in B2B marketing. He came by my school for career day and said he was a big row as man, then he told everyone how much he loved calculating his return on ad spend. My friends still laughing me to this day. Not everyone gets B2B. But with LinkedIn, you'll be able to reach people who do. Get a $100 credit on your next ad campaign. Go to linkedin.com/results to claim your credit. That's linkedin.com/results. Terms and conditions apply. Linked in the place to be. To be. Pretty nice run here for the market. It's going to continue today with the S&P futures up almost some 46 points. A lot more squawk on the street when we come back and Kramer's mad dash as well as we count down to the opening bell. Go anywhere. Walmart Plus members save on meeting up with friends. 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Go to linkedin.com/results to claim your credit that's linkedin.com/results. Terms and conditions apply. Linked in, the place to be, to be. Alright, let's get to a mad dash. Got an opening bell. About seven minutes from now. I got a little bit of time here. Let's talk, Prinker. We talked about the decline in the stock yesterday after earnings. The CEO joined you on Mad Money last evening. What do we make of this? He had the best com store sales number of anyone. One of the things that Kevin Hoffman is trying to do is get away from the episodic nature of good times for chilies. What he's saying is, "You know what? I'm going to spend a lot more than people think in order to create and use this word a dynasty. In order to get a dynasty, you've got to hire more people, you've got to refurbish. I wanted to put up many more stores. He won't do that yet. But he said that if he just kept things the same, he would not be able to handle all the people who come in and they would start being one of these problems where not a yogi bara problem. It's so crowded nobody goes. But where he would disappoint people, and he said he wasn't going to do that and he didn't care that Wall Street didn't care for the fact that he's spending, that's what you do in order to become a great company. I listened to him and I just said, "It's a clinic." He put me through a clinic that will want to do when you have a successful restaurant chain, which is you've got to take a hit and make it bigger and better because you've got so many people coming and you don't want to screw it up. He has that 1099 meal that's the Smash Burger. I just say, listen to this soft spoken gentleman who knows how to run a company. He's not Brian Nichols, not the only one, although I actually think Brian is great. So you're a believer in the strategy, not a concern about the move down yesterday without increased investment. You think it's going to pay for itself. Absolutely. He has to do that in order to create a dynasty. And obviously the stock has had a very good move. But it's been the best year. But it's been the best year. And he's been the best food because he offers real value. But what really matters is that he doesn't want the customer to start having a big line and therefore being unhappled. Unhappy. So you got to redesign, you got to make things bigger, you got to hire more people. And everybody treated him like he was like, "Are you kidding me?" No, he doesn't want to become one of these stores, one of these restaurants where the service is bad and people don't really care to go, he has to build something bigger and better. And he's doing it. He's a great CEO. All right. Keep an eye on shares of Branker. We're also going to keep an eye on shares of Cisco. Why? Well, Chuck Robbins is going to join us right here at Post 9. He is the company's CEO. Don't go anywhere. China's economy is in focus today. July retail sales up 27 was slightly above forecast, but industrial production did come in shy, up 5-1. Meantime shares of e-commerce giant Alibaba moving lower on a quarterly miss as sales were impacted by Chinese consumers tightening their belts. Jim home prices there in July, a nine-year low. Yeah. It's so far, any stimulus they do is not working. I noticed Alibaba was down three at one point and started to come back. June quarter results, there's really nothing to write home about. Every company I deal with that has China issues, has China, has China issues. Well, the Chinese are not willing to do the major stimulus that many would want them to. You've got a lot of the municipalities and the local governments that take in on significant indebtedness, and they've done that in part because they thought they'd be able to pay that back by property sales. Those sales are not happening as a result of really the collapse of the property sector in the country. We've got a lot of people who were never able to get into apartments that they had already paid for because they were never delivered. That does a lot to influence confidence as well in the country. That said, consumer was actually a bright spot, a bright spot, not for Alibaba perhaps as much, but for the economy. For the economy. David, I think that you lay out a story of people at home like say, "Why don't they do it?" One theory is that it's such a big problem. They don't mind them. They refuse to do it. Seven, eight trillion dollars, if people say. It could be a big number. A lot of that. It's harder. The transparency is not as strong as you'd like in terms of understanding at the local level of the amount of indebtedness. Right, and there's like two back resistance. Yeah. There's a lot of problems. Yeah. Whoa. We do. And in our own interiority complex, we do need to think that the Chinese have everything together. Let's get the opening bell checked out right here at the open, so we get at the big board in the United Community Banks, celebrating its transfer to the NYC from the NASDAQ and NYC Second Chance Rescue, rescuing critically injured dogs and cats. Jim, we're in the midst of the best seven day run for the S&P since November. Yeah. I mean, a lot of it. It still harkens back to what happened with the carry trade and people getting scared and blowing out stops. And also, shorts coming in, I was thinking about, well, what stock does fit that depiction of short? Look at deer. If you did all the work on the grain complex, you would say, "Well, wait a second. You must really be hurting." Deer is going to absolutely implode. Well, no. I mean, deer just kind of was better than fear. And you're up. And you make a quick six. We're in one of those moments, Carl, that people at home, they want to make some money. This is it. Right here. Amazon went down to 162. It was an incredible buy. Go parse that quarter. It was not nearly as bad. But, you know, people just came up and they shouldn't have given up. Yeah. Yeah, revenue beat, construction, forestry beats, reiterates the guide, kind of a nice midwestern quarter. Yes. I mean, it's funny because, again, I look at Home Depot and they did not say that that particular end was strong. So you another area where the hedge funds are so smart, they were probably shorting deer because Home Depot didn't say that area was strong and the grain complex is bad. And David, normally that would do the job. But not in this case. No. People had a pretty decent quarter as well. Yeah. Yeah. Now I'm. Oh, look. The industrials are getting there. There is a lot of people feel there's an industrial recession. I would say that it's almost impossible to find an industrial that didn't do really well. So what does that mean? You know, what does that say about the overall sense of the economy at this point? A lot of students money. Yeah. A lot of them. I mean, I have Jacobs on site. The old Jacobs engineering. I mean, these companies just got huge checks from the government. One of the reasons why the deficit requires the interest in the deficit requires the largest part of the deficit is because the amount of money that came from stimulus is just now getting in. By the way, that said, I mean, it's a good point. My understanding is, for example, the allocations from the chips act that we've talked so often about have yet to be made at all like they have not seen the money. Well, a lot of us getting challenged. Yeah. They have not seen any of the money yet. Well, when I had Secretary Mondo, one, I think that some of them have seen some of them. Have they? Yes. I'd like to actually see what some of the actual numbers are because my understanding is, for example, in the case of my understanding, Intel, yet that the commitment's there, but the money hasn't actually just broke field in Apollo, we'll have to learn how to make chips. Remember, the other partners, and I don't know if you watched it, if you read the story about my son abandoning his work with Intel because they didn't have the money to do what he wanted. And to your point, Brookfield and Apollo have both partnered with Intel in terms of new fabs. Right. 49% partners, where obviously they also get the actual revenue that comes from it, but Intel doesn't have the capacity dollar-wise to actually do that on its own. No, it doesn't. But it's doing it and it's doing it with partners. But in other sense, the U.S. government is going to be its partner. Oh, no. The biggest thing is that that will be used. I've questioned whether they were the company to partner with, given the fact that they're balanced. She doesn't that good. And Carl, when I read this morning, the piece in the FT about how a soft bank doesn't want to be with them, it's a reminder that it's not an even comeback. Speaking of comebacks, back about 5,500, S&P almost erasing its losses for the month to date, Walmart, the best down name, Jim, and I think it's the best day in about four years. That's incredible. Well, look. I thought that it couldn't have a day equal to how much it already moved up because it's been such a horse. But again, I do think that the big thing is the merchandise. You've got to go. The merchandise is so superior, including the new food line that is very inexpensive. The apparel being amazing. The fact that they gave the managers much more say over their area. So if you go to a neighborhood, they actually reflect the neighborhood. These are things that McMillan has done. They keep refining the model, refining the model, and the e-comm is really terrific. And the deal, the deal with e-comm, I mean, it's just great, the advertising. They have the flywheel. We didn't think they could do the flywheel, but that was because people misjudged them. They're much better than people think. Stock up 40% year to date, the company's market value now approaching $600 billion. And as I mentioned earlier, just because I do think it's interesting, 46% of the shares, least by the latest calculations I have from our data providers, controlled by entities associated with the Walton family, which would, if it were its own entity, be the rich, they would be richer than Musk, for example. Well, there you go. You know what the dividend payments are each month of the grandkids? Oh, the coupons? The coupons? The coupons? I can't see the prices enough, because when I go there with my fashion-oriented daughter, we get the combat boots for like 12 bucks, and she's like doing some influencer thing. And people want to know that you should pay like 500 for the boots, another from Walmart. I mean, it is every bit of the treasure hunt that Costco is. It's so electric to go. It's incredible. Anytime Farm is a big story, we're going to hear from the president today talk about these negotiated prices of 10 very common drugs. They include, I think, Eliquis, Jim's in there, Embril, Genovia, some of the savings they're talking about as it was off. This is part of the Inflation Reduction Act. Right, it is. And if you take a look at Merck, which is such a great company, I mean, Merck has just been, I think, really got that, and it got whipsawed by, I think got whipsawed by the Chinese too. And Merck has a very inexpensive stock. Now it's a 2.7% yield. It's come down. You know that Rob Davis doing a fabulous job there. But it does matter. So your concerns, I mean, key truth, it's such an important component over all of their sales. It does come up, Pat. It's a number of years from now. That's not the idea. They've got rushed after earnings, as you know. I know. And they also did surprise us the Chinese story. And you can see that. Jay's still stuck with cow, and they have a lot of drugs that are, you know, they have drugs that are part of this. A Jay and Jay is the cheapest I've seen it, but it doesn't matter, because it's got talent and it's got the government. So let's, you know, let's not forget that this is this industry in the election year has historically been very tough. There is a halo from Walmart, it extends to Target, which is up almost 5%. Even now, you know it's zero sum. Right. It may very well be zero sum, and Amazon is up another 2.6%, again, I would assume that's just on basically the idea of the strength of the consumer that was expressed during their conference call. Absolutely. And I've got to tell you, go back on the conference, but people don't understand. The conference call was very good. They made a comment how the Olympics have hurt. You're talking about Amazon now. Yeah. And they're conference call. Right. Yes, because we were mesmerized by the Olympics. No, in the middle of the woman's volleyball, I just said, you know what, it's time for me to buy a fan at Walmart. How many are you kidding me? That stuff was so great. I know CEOs, prominent CEOs who stopped and looked at the Olympics and took them seriously and enjoyed them. Hey, Chuck, are we going to bring them in now? We're going to bring them in. We already have. She's a real person. Let's get started. We have a real CEO who had a really good story to tell, and I am so thrilled about that. I don't know. I shouldn't be rooting. I know that that's push-ling, but Chuck Rob is a good quarter and is optimistic for Cisco. We have to touch with the layoffs, obviously, because a lot of people be laid off, but Chuck, I have to tell you, it's been a while since you just told me, you know what, the customers are buying. They need our stuff and we're ready. This was you at your most upbeat, Chuck. Yeah, Jim, first of all, thanks for having me. It's good to see you guys. You know, if you really step back and think about what's happened over the last four years, it's really hard to believe, but this past quarter is when we just exited the overall impact from the pandemic, the supply chain shock, you know, we went through this phase where our customers, they were absorbing all this equipment, we shipped them, and we finally got through it. I mean, we were talking about it yesterday, and it's hard to believe this thing's been going on for four years, but we said two or three quarters ago, we thought that would end at the end of Q4, which it did, and you know, the order growth was great. We saw the demand return. We saw it across the board, and if you look at the last two years, the last two years from a revenue perspective have been the two highest years of revenue we've had in the history of the company. So, we had our best gross margins ever during the quarter. We had the highest sequential order growth from Q3 to Q4. We've seen it over 20 years, so it was pretty solid. There were people who told me, "Chuck made a mistake buying Splunked." I happened to love CEOs, Splunked, I happened to love what he was doing. And I said, "I think this is one of the greatest acquisitions, because security's really important, but more importantly, they were not able to get enough." They needed more scale, and you gave them scale. This Splunked acquisition is well ahead of where you thought at this point. It is ahead. And you're right. A lot of the things that we bring to them, number one, is the scale of customer reach. They were very concentrated in a certain set of customers, geographically providing international reach, the partner community that we have that they really hadn't established. So we have all of those opportunities. And we saw during the quarter, we saw roughly 10 deals that we've now closed with the teams working together. It's only four months in. So we got to remember, we didn't even expect to close this deal until September, and we closed it in March early. So it's running ahead of where we thought. I don't want this question before we give it up to everybody, but I was not shocked that you had to lay off people. You made a giant acquisition. You don't need three people covering one account. I mean, this was not a sign of weakness. I thought it was done out of, I know one's to lose your job, and you don't like to lay off the other. But it was not out of strength that week. Yeah, we never liked to do this, Jim, as you said, but I mean, this is about investment efficiency. I mean, as I said on the call, we shifted hundreds of millions of dollars into these fast-moving markets. I mean, if you look at what's happening in the web-scale space with their demands, every customer has a different set of features they want. Every customer wants a different silicon to be designed. So we had to invest more in silicon to run parallel PAP development. We've had to invest more in software development for the different features that each one might want. We're working on the NVIDIA solution that you talked about earlier that's not in market yet. Cybersecurity stuff that I said three quarters ago was going to ramp in the second half. We saw high single-digit growth in Q3. We saw double-digit older growth in Q4. That's without Splunk. And I said in 25, it's going to really start to kick in. And I think it's happening the way we expected, and security was strong, and so it was -- right now we feel like we're past the pain points that we've experienced, and demand should be normalized. So you don't think there'll be future layoffs? Well, it's really hard to say, David, what might happen in the future, but that would be our intent and our desire would be that we have to have. Well, you talked about it as a reallocation as opposed to really cost of being driven by cost savings. At least that's what you said on the call. But I'm curious if you can sort of give us more sense there, because conceivably you could reallocate manpower without laying them off, couldn't you? And we will do that. We will do that. We have a whole process that we'll go through where we'll do skills matching. Some of these people that are in that 7% actually won't leave the company. They'll actually be -- they will move into some of these roles if the skills match. We built this process over the last seven, eight years to try to make sure we're doing that. So that is the intent. You're chair of the Business Roundtable, yes? Yes. You talked to everybody with pretty high frequency. Do you think we're on the cusp of some broader layoff trend or cycle? I don't think so. I don't think so. I think that, you know, the big question that we talked about going into this is, is everybody going to think that this is AI driven, right? I do think that the G&A functions can become more efficient. You can use that using automation systems. There is an aspect of AI that will go into that. But I don't think this is a sign of a bigger trend. You talk about customers upgrading for AI, and you'd be becoming a beneficiary. I'm just wondering if you could explain. When you say they're setting aside for money for AI, they actually spend it on modernizing their infrastructure. What does that translate to when you modernize your infrastructure for Cisco? Yeah, we heard us for the first time this quarter. We had customers telling us that they were actually upgrading their switching infrastructure, their enterprise routing infrastructure, their wireless. The data points we gave them a call, a high single digit growth in enterprise switching enterprise routing, double digit growth in wireless, million dollar orders in wireless was up 20% year over year. So they're just basically, they know that when they build these applications, they're unclear about what the traffic flows will be or what the traffic demands will be. But they're pretty convinced that whatever happens, I need to have the latest and greatest equipment in my infrastructure, and that's what we're starting to say. Well, let me ask you Chuck, I've been asking all CEOs this question. Which one do you use? Are you on Meta? Are you on Claude? Do you use Gemini? Do you use Chad TPT? And how often do you use them? Oh, well, if you look at what we've done, we actually are using a lot of different ones. We created this billion dollar AI investment fund and one of the things that we did differently is, in addition to investing in some of these players, we also wanted to build strategic partnerships with them. So we looked at them and said, what is your unique differentiation that we can actually go? So some of them might be better at helping us run language models that apply really deeply into customer service, so we have investments in partnerships with Mistral, with Cohere, with OpenAI, with ScaleAI, so we're using all of them depending on what area of expertise they really have. Okay. And you mentioned that you're still not there yet with Jensen and NVIDIA. Now, is that because they're using more of their own and they're not using you yet? No, I think we're on the same timeline. We always have been. We were supposed to go into early field trials in the fall, which we're on schedule to do. Well, because that's what it's going to be. This is in Blackwell Delays and one of those things. No, no, no. That's not really impacting us. This is our normal cycle of development. And enterprises are still very early, super early in what they're going to do. And this is, we had lots of enterprises say, I'm not even sure what those AI applications are going to look like, but I know when they get here, I need to be ready. So yeah, I'm curious as to how you characterize it early. I mean, I don't do the baseball thing, but it just, are we just at the beginning here? Do the football thing. You don't like baseball? I love baseball. I'm like, I'm like, most of the country. That's right. That's right. It doesn't matter, right? And you can be in the fourth place. Watch it. Watch it. Oh, that was, that was uncommon. Oh, no, not unprecedented. Tom Brady did remind me of that recently. Yeah. You have a tight end. I'm going to pick up. All right. Any sports analogy you want? Where do you think we are when you look broadly speaking? It's the very beginning. It is. The beginning of the enterprise AI movement, I mean, they're, and as I said on the call, I think over time it's going to become increasingly difficult, more difficult to measure what is attributed to AI from a sales perspective because, I mean, if I have to upgrade my network to accommodate an AI app, is that AI driven investments? You know, we'll have to see how it goes. Right now we're sticking with the pure definition that we've had as we've been reporting this over the last month. Cisco is the biggest beneficiary of the internet. I don't know if that would be the case this time. Are you doing the 1999 thing? We just want to be a beneficiary, David. Well, Jim mentioned Splunk, and I know you're still absorbing that, but do you think the ground for M&A gets more fertile from here? And does that get you more interested in that net? I don't think it changes how we think about M&A. I think we're really pleased, you know, it's, it's, it's interesting when you do a really big deal like this, you're probably more focused on the successful integration than you might even be on a smaller one. So Gary Steele's done an amazing job. He's personally leading the integration for us, and he's also taken on the president of GoToMarket for the, for the whole organization, just doing phenomenal. We've done a bunch of technology integrations already, which we've announced. We had our first deals that we've, we've sold cross selling between the Cisco and the Splunk sales teams, which is encouraging, and we're just going to stay focused on them. And you're, you're cutting out of them 51% on subscription. You say you do it? You do it. You go over it. And so it's, I mean, this is renewing, which to me says is much more sustainable than some of the, the bears who are into me who don't know anything, hard knocks coming for those bears. It's, it's a, it's a hard long journey to shift from a net 30 business model to get the 56% of your business coming from subscription. That's true. That said you don't, you have a tough compare coming up Q1 fiscal year 25 versus 24, right? Well, last Q one a year ago was when we unloaded all the backlog. So, you know, you were talking earlier about the negative year on years and it's really comparing against just, as supply chain started to clean up, we just started shipping like less. I think Q1 a year ago, we were, we think we shipped about $4 billion more than we normally would ship the customer. So the compares are horrendous. That was, I remember that day because we talked about how this generation of CEOs has been through ringer after ringer. Remember that? Yeah. And how much that fed their sort of bed of knowledge. And I think that's why we just keep moving through these crises. Don't, and don't say we're going to stop or what we're going to do. That's why I think they continue to invest. Well, I'll tell you what, I'm going to let you play a lot of golf this weekend. You celebrate your sport. Thank you very much. All right. I'll let you some of the great, the best clubs. How about that? All right. You're going to connect me right now. Yeah. Oh yeah. Absolutely. Because I think you're just coming out of the tunnel when it comes to the facts. Thank you. So there's no disappointment yet. All right. Fair enough. Let's see how it goes. Chuck Robbins congratulations on a great quarter. It comes, by the way, when things are bad, you're still there. Oh, I can't. He's a rainer. Shine. He's a rainer. Shine. Guess we love that. That's why it shipped it. Markets doing very well here. Dows up 400 after reclaiming 40k yesterday. All sectors green, except for utilities. Vicks below 16. Don't go anywhere. Take a look at the S&P this morning being led by two groups. That would be the consumer and technology, the best performing sectors and sort of encapsulated by the results out of Cisco and Walmart, the two best down names of the moment. Speaking of the Dow, we're up 408. Squawk on the street continues in just a minute. Let's get to Jim and stop trading. Of course, I'm going to show you mentioned stocks that are short. People are covering. A lot of covering today. Altas was heavily shorted. Align. Tech has been heavily shorted. Bath and body. Dollar Tree has been shorted. I want to come to Lulu. Lulu is a company of people who have given up one. I feel it's just way out of line in terms of the price it has. There's a lot of competitors and has a big short position and that is up 5% today. What's happening is I think the shorts got put on after the yen carry trade and those people have made a lot of ill-advised decisions. We didn't even mention tapestry. Dillard's was sort of the outlier than the downside. Tapestry was, I was surprised. That was just playing out better and you know, it happens. Did you think of it happen? Jim, we'll see you tonight. Yeah. He's an exciting time. It really is exciting. David, you're a little excited. I'm very excited. I know you can't tell but I'm excited. He's super excited. It's on the inside. Wow. Mad money. Six PM Eastern. You've been listening to the opening bell on CNBC's Squawk on the street. All opinions expressed by the Squawk on the street participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal, or their parent company or affiliates and may have been previously disseminated by them on television, radio, internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy but only as an expression of an opinion. Such opinions are based upon information Squawk on the street participants consider reliable but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy and it should not be relied upon as such. To view the full Squawk on the street disclaimer, please visit cnbc.com/squawkonthestreetdisclaimer. I've got prostate cancer, but I really wanted to make it to the big game with my grandson and here we are. Go! Go! Go! Go! Go! Go! Erlida is a prescription medicine used to treat prostate cancer that has spread to other parts of the body and still responds to a medical or surgical treatment that lowers testosterone. Erlida may cause serious side effects including heart disease, stroke or severe skin reactions which can lead to death, falls, fractures and seizure. 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