 Welcome back to the watchlist. We're taking a look here at IBM also Netflix too But really a look at here at IBM first as the company is due to report earnings We have the pros in here Dan Morgan's with us vice presidents in your portfolio managers to know this trust company and Melissa Armo founder owner of the stock swoosh. Thank you both for being with us Dan We've seen an AI boom when I think of IBM You know we all remember Watson it feels like they knew something was brewing some time ago now It's Watson X where do they stand in the AI initiative and the battle? Very right Nicole I mean they were one of the first companies along with Metta who was very early in on AI and you know, they have their Watson X Probably most of their AI initiatives will be kind of spearheaded through their consulting group Bear in mind that IBM derives about 75% of their revenues from software consulting But unfortunately Nicole IBM has not gotten the AI multiple that some of these other stocks have especially Nvidia Some of the chip stocks like Marvel and Broadcom We haven't really seen a much of an expansion in multiple in terms of IBM or enthusiasm around the stock The stock is actually slightly down for the year where a lot of the big tech stocks are way up So it'll be interesting on this call Nicole to see if we start to get some sort of discussion from management to kind of create a Clear path that IBM is going to follow to participate To become more of an AI play, but they definitely have products out there. They're definitely a player They just haven't really seemed to get the lift that other AI companies in the tech space have in terms of their multiple Yeah, and as you talk about the software growth, I mean red hat a big part of that that growth In the quarter so we'll be watching for that in the meantime how the company is facing the backlash over some of the new source code policies that are Reportedly making it somewhat difficult to create operating systems that are compatible with red hat Melissa good afternoon to you wanted to get your thoughts on IBM which actually unlike tech in general This is a loser year today It's definitely a huge loser year today And when you look at the overall market and you compare IBM with the overall market It looks terrible quite frankly because the market's been rallying since January 1st And on top of that the last time the stock may brand new all-time highs was 11 years ago And we had a very bullish market in 2021 and even then IBM couldn't get a leg up So IBM for all its worth as far as a long-term play people like it the dividends everything else Even if it has a good earnings, even if we ask positive to their earnings tonight I'm not so sure if it's really gonna go anywhere It hasn't seen two hundred dollars a share in a long long time And you know final thoughts here down on IBM before I get to Netflix Yeah, I mean I would agree with Melissa I mean IBM has really turned into kind of a cash flow dividend stock. They're yields about 4.99 We come into the second quarter both revenues and earnings are expected to be flat I think consensus estimates for fiscal year 2023 are looking for about sixty two point five billion in revenues, which is only about a three percent growth rate So at this point they have been kind of missing out on this big bull market in tech You have Amazon and Microsoft and others in the world of competition for the different businesses, right? Let's get to Netflix, which has been a winner Melissa your thoughts on Netflix Well, Netflix had a massive rally yesterday if you happen to capture that yesterday Stop right up more than twenty dollars And I don't know if that's gonna screw up whatever it does tonight on the earnings because to have a rally like that 24 hours before the earnings yesterday really looked like an earnings day, but it wasn't so you know I think the problem is for Netflix again Netflix isn't a downtrend while it's been trying to make a comeback It had it is still in a downtrend remember when we had that crater gap in Netflix It was like more than a year ago was in the beginning of 2022 when it had earnings I think it was April 2022 the stock really hasn't recovered since that and again the last time this stock may brand new all-time highs Was years and years and years ago So while the overall market's a problem with the market I was saying it's really quick with the market the market's round. Yes, we're up for the year But you're you're not seeing the same type of rally and bullish market We've seen in the past where you have this sector this sector this sector You have everything going together. It's this new video is up and you have Apple up and they have some banks of good Some banks of bad like not everything is really going It's like you're trying to push some of these stocks up the hill and some of them just don't want to get going Netflix has to be Netflix has to be up a lot Netflix has to really get going tonight for me to want to buy it tomorrow Right and you make a good point it went from in six months It went from seven hundred dollars in the month of October and then had that big gap down in April of 2022 In fact, it went from seven hundred dollars down to one hundred and sixty two dollars. It's been creeping back But certainly not back to those new highs. It's at 478 today Dan, what do we need to see from Netflix? I mean we know that they've been cracking down on password sharing They've had the ad here system and they're reducing at least in part to make money And a call obviously Netflix is going to trade on subscriber growth the consensus for the second quarter is 1.8 Million new subscribers. They're expected to do 4.7 million in the third quarter So everyone will be paying attention to the guidance that management gives for the upcoming quarter Also, we want to learn more about their basic with advertising initiative We think there's about five million subscribers that have signed up for that. That's their six ninety nine a month service where you Have a you know lower cost average membership Associated with getting the feeds, but you're getting advertising on top of that So there's a lot of enthusiasm that maybe a year from now they could start to kind of monetize More of these subscribers that are currently getting a reduced a membership with advertising So I think that's where the streets going to focus also going to get a million questions of coal I heard you talking about before it came on about the writer strike We know that Netflix management has come out said that they don't expect to have a material impact for fiscal year 2023 into 24, but let's face it if this strike goes on for a sustained period of time You're gonna have to start to wonder whether Netflix in terms of all those streaming shows They have are gonna start to be impacted So I think that'll be a big question that's gonna be on a lot of analyst minds In 10 seconds, Dan, would you own either or both these two companies? We own IBM and our equity income model for the dividend yield Netflix is a stock that is on our hold list But not on our buy list So those are two stocks, you know, that's what we're active in right now No one IBM Netflix needs to get over 500 if it does that then I'll look at it as a long Yeah, I'm sorry to step on you guys But I just really wanted to get both your viewpoints here on whether these were a must-owns or maybe wait and see Dan Morgan's the Novus Trust company Melissa Armo of the stock swoosh. Thank you both. I'm Nicole Petaligh These things for being with me every single week day 11 a.m. And 2 p.m. Right here on the TD Ameritrade Network Keep it right here all over Renek market on clothes next