And joining us now to see what 2020 has in store is managing director, victor anthony, and Portfolio Manager at needham growth fund, Chris Retzler good morning. I look at the tech stocks that did the best this year, a lot of them were kind of underdogs, roku, top of the list coming into the year, people talked about netflix would beat up on them this year, the narrative seems to have shifted. Apple is another one people thought apple would have a bad year not only trend wise in tech whats important in 2020, are there underdog names you particularly have in mind . Victor well, mostly on small cap large cap, i see amazon, alphabet, google, facebook continue to outperform those arent underdogs. Are they no. Angies Home Services which underperformed significantly in 2019, i think another one, comscore, unforeseen event, management departures, outperformed significantly Online Dating app, the meet group, meet glad it is spelled that way different kind of stock if spelled another way. Up about 10 last year. There were short sellers that attacked the stock, put some pressure on the stock. I think com score and meet are under acquisition rumors. Chris what you need to Pay Attention to is semiconductors, but what is that telling you looking forward. It is telling you that designs are going in and what are they making them for . We see 5g build out continuing, devices as well have more content thats being prepared right now. We have been watching that in the fall the other thing we saw delayed this year, had an inventory work off was data centers were going to see more build out there that will be moving a lot of content around, processing it, storing it. Those would be themes we would be looking for within technology we expect rotation wouldnt surprise is in the First Quarter to see 10 pull back at some point, im not going to say from where it starts clearly theres momentum in the market we have to watch in january how much tax selling of deferred gains will occur as people rebalance in technology. You know, technology is a great area, has good technological moats, can defend on a global basis on revenue and margins, dont think that story is over we think there will be rebalancing in tech. An opportunity to buy, especially 5g, it is expansive quite a number of names that would be potential players in 5g as we see that come to fruition. What are names you like specifically some names that we are looking at, pure storage where it can help manage data behind the scenes we also like one that moves the data around. A lot of security, akamy is a security play. You have to dig deep in some semis, had a good move could see some of them going, but wait to see rebalance. We saw some of the most Disruptive Companies in the last decade go public, jon talked about underdogs, werent always underdogs, but finishing looking like that, uber, lyft, pinterest, wework. Where do they go in the next decade, specifically ones that are now public is uber ever going to be a mega cap . Is this the next year, next decade that we see investors understand their story i think it is yet to be seen on uber. It has a great product, we all use it it is easily build outable does uber have a moat i think it has yet to be determined where, it is a Global Company unlike others that are more local the selling going on with travis had pressure on it also, it is a tax loss for investors year end as opposed to a gain, you could have some of that pressure also from ipo. Longer term, i think the future is yet to be seen. It is like facebook. It sold off when it went public, sat down there awhile, ultimately came through. Victor, whats the defining strategic ability for the Tech Companies starting off in 2020 is it being a Cloud Platform that attracts the most developers is it the highest ai capability . Is it the most international reach, actually having functional data centers around the globe to be able to grow what do you think it is . All of the above. You captured some of the secular trends at play also the fact that they have massive ecosystems, users are captivated, theyre getting more users. There are areas outside of eastern europe, i think it is a huge Growth Market for faang names. Africa is coming into play following indias path i think thats over the next decade, one of the biggest growth engines. What should investors do . Should we be looking at call transcripts to see who is moving in there following jack Dorsey Africa in particular . Sure. Opportunity for payments. Theres opportunity for Internet Access theres opportunity for commerce and ultimately advertising follows. Who is best positioned globally to do that jack dorsey sees the vision there. Facebook, definitely google, alibaba, not forget chinese counterparts, and tencent. They have the best path forward in capitalizing a trend in that continent. Chris, back to the semis, the idea of rotation, it has been a big year in terms of the way the stocks have moved, and by the way, moved in the face of a number of head winds is your expectation that were going to see semis come off in 2020 in the midst of rotation . I think you could see them come off early in the year i think the overall longer term trends are there i think one area hasnt done well is automotive if that came back on a global basis, these are massive computers with wheels. It will be a good area. What does that mean, victor, for 5g this is supposed to be the year after a year of false starts to see it take off. I dont cover Semiconductor Stocks snapchat, i think it is a huge play on 5g next year i think user growth, that benefits advertising as well and ai and Development Capability between the two companies. Thats one stock no one talks about as a 5g play, i think it becomes apparent moving into 2020 cant help but think well talk about gaming stocks as well snap is up 176 this yeare interesting. Thanks thank you thank you. Turning focus to apple, the best performing stock, losing steam. The 300 mark in sight next guest says theres room to one, wall street is underappreciating the strength of the wearable segment. Here to explain, senior tech analyst jim suva joins us. Great to have you. Breakdown your bull case heading into 2020 for apple. Well, happy holidays to you for apple, it definitely is also because importantly some of their products are selling out and you have to wait to get them air pods pro are selling out, youre on a several week delay to get them. It is not due to manufacturing issues it is due to Strong Demand where the company cant keep up. If there were manufacturing issues and they couldnt produce them, that would be terrible theyre producing them, running as many shifts as they can with manufacturing partners, still not able to meet demand. The second item on wearables, apple watch series 3 for 199. Not talking series five, which is the newest for 399, but series three for a lot of teenagers, becoming one of the hottest talked about, wanted desired products apple wearables, we see that as the big surprise for apple when they report earnings in the next month or so. Yeah, definitely one to watch. Mike santoli put up a really smart chart friday afternoon, it basically showed the pe ratio doubled from the lows in january of 2019, speaking to the valuation weve seen take place in this name this year, is it getting expensive now . Well, it used to be in the value camp you look at the index owners, it has shifted out of value, more back into growth we see the valuation catching up to the stock the target price is 300 as you correctly stated, but it is rerated higher investors will look at revenues and earnings growth, the core fundamentals of the company, revenues and earnings growth, and less about valuation expansion. The whole market with Interest Rates being so low, a lot of investors dont value putting money into cash. Youre not earning interest on the savings account in the bank. The equity markets overall have seen a boost into valuation and apple participated in it, but yes, you are indeed correct with your statement which is smart about the valuation has materially appreciated, and target price is 300 jim, give me your analysis here when i look at it, i want to know what it means that apple has been able to do this with wearables, talking specifically about watch and air pods as you mention, theyre huge products apple is selling out yet theres practically no competitor thats got anything close to it. Look at google, samsung, they have a wide open landscape in android compatible wearables, but theres nothing. How can that be . Are they technologically blind google is buying fitbit, trying to catch up. How could none of them fill this void well, your comments are spot on and so accurate, it is amazing but it is important to note when apple comes to market, its really about a Premium Experience all of the other competing products and companies out there came to market before apple. However, they failed to generate mass adoption. So when you think about air pods and air pods pro, they work very well for a Consumer Experience thats premium people are willing to pay up for it they dont want calls to drop. They dont want the battery to give out dont want the screen to have broken pixels, dont want a foldable screen that stops working after several hundred folds. They want a product that works with quality apple is so focused on a premium Consumer Experience, thats why theyre gaining so much market share. What im getting at, jim, what if apple pulled an ipod with the products and made an android compatible version of air pods and of apple watch . I havent seen anybody factor in that possibility, but wouldnt that crush that would be a fascinating thing if it did happen, but so far the companys culture has been to support their own operating system so were sticking with them, continuing to have products in the apple ecosystem, not going to android. That being said, the focus has mostly been on iphone. Now wearables are taking off 10 billion in one quarter, just one quarter, what wearables would do what happened in 2020 with 5g coming out, big year of connectivity when apple comes out with more new products, we believe theyll stick with supporting apple ios ecosystem rather than venture to android at this point. Certainly will get updated numbers the next couple weeks with earnings. Jim suva, thanks for joining us, buy rating on apple. Jon, i used air pods with an Android Phone and they work pretty well. I bought someone a pair this year that uses an Android Phone and it was so easy to set up maybe youre onto something. Maybe enhance the software. Lean into it. When we come back, tesla shares under pressure, but up more than 20 in 2019. Well breakdown the companys Growth Strategy and china play, heading into the new year with kara swisher squawk alley is back after this beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Welcome back teslas china play, the automaker rolling out its first china made model 3 sedan from the new shanghai factory, tesla shares on a run, jumping 93 in the second half of this year you can see today it is off a bit, almost 4 joining us, recode cofounder, cnbc contributor, kara swisher kara, happy old year new year is right around the corner. Thank you this is something elon musk was talking about for a long time, ramping up in china, the importance of that market. Does this signal a new era for tesla you think . It is interesting the stock is up. Obviously he has wind in his back with the trial being over that sort of dragged him down a little bit i think he is not tweeting as much, he is tweeting a little about space towers, i dont know if you saw that earlier this week, but i think he is trying hard to focus on tesla and spacex, which i think are his two principal businesses you know, it is still a challenging business, any car business is challenging business, but people love the product. The stock market, i cant comment on, it is quite a high price for that company but at the same time, it is a product people love, like a lot of other things elon does, it is exciting in that regard. I think hes still going to have doubters no matter what he does, what he is trying to pull off is really difficult hes probably going to face challenges in the next year about that, but i think delivery of more trucks, not trucks, cars in more markets is critically important for teslas future. I wonder, has tesla reached a sort of apple stratosphere, people wondered about the fundamentals, underpinning of the business, but it could sort of get through tough times because of the strength of the brand, loyalty of users. I was just in Southern California last week around laguna area, saw a lot of teslas, driven by a lot of rich people probably a good sign well, yeah. If they can get more Affordable Cars out there, it is critical they can stay at the top end of the market, but more Affordable Cars, when people consider buying them, theyre not affordable by affordable standards, but in terms of reaching down to a larger market is really important to them, and getting cars to other places, people using them is very important. My brother bought one and loves it, never stops talking about it they have this fan base thats very loyal in a similar way to apple. But it is a lot harder to make cars than computers and phones and things like that, although it is difficult to make those, too, but it is a massive level of difference in terms of selling and servicing them after. Execution is so much a part of this i think creativity is huge, but execution will still be the most important for tesla. This is great that theyre manufacturing, that they reached this milestone i cant help but wonder if in 2020 a bigger piece of the conversation around tesla will finally be competition because it would seem that in terms of electric vehicles in general, youve got Something Like ten new models from different auto manufacturers poised to launch it seems like it will be a Tipping Point for the ev market. I wonder what it means for tesla longer term. You can almost compare it to netflix. Netflix made nine laps around the track before anybody else caught up finally this year. And well see what happens you dont think of any other car when you think of buying an ev i dont think when my brother bought at the thought of buying others, he moved immediately to tesla. Thats where competitors have to figure out what could compel people to buy it over a tesla. In that regard from a brand point of view, people that are interested in it, tesla is at the top of the line for most of those people. At the same time, one of the biggest complaints i hear from tesla owners is in some ways the operating system you have the apple car play and other vehicles that work well, do you think that works as competition ramps up, tesla has to bring other software into its vehicles i dont know about that i think it works beautifully i have been in many cars, i have not heard complaints about the software i think it is quite i dont want to say beautiful, but it works beautifully compared to other cars i rented a car this week and i cant get it to work you know what i mean i think it does well on the software it is like an apple product in that regard, you dont think about it, it works beautifully, but i think the competition is going to be the one thing that people should be watching out for. That said, it is still the brand to beat in terms of consumers mind of what an electric vehicle should be, what kind of service it should deliver. Thats table steak to be as good as tesla. Speaking of competition, the new year bringing major battles between some of the biggest names in tech. Josh lipton joins us now with one of those josh reporter so jon, one of the big fights in 2019, and it continues in 2020, the battle over jedi. Remember, in october, microsoft secured the new massive Cloud Computing contract with the pentagon, and it certainly surprised some Amazon Web Services was a frontrunner. It is worth up to 10 billion over ten years microsoft is already now recruiting people with security clearances to work on jedi, according to sources amazon is contesting the pentagon decision, saying in a lawsuit that President Trump launched repeated attacks to steer jedi away from aws in order to harm jeff bezos amazon pulling no punches in the lawsuit, jon, saying basic justice requires revaluation of proposals and new award decision the pentagon counters the dod is confident in the award question is more about money on the line after all, aws generated revenue last quarter of 9 billion, and microsoft azure business, estimated 4 billion. So it is more about bragging rights securing jedi is a potentialwa to secure more cloud contracts, both through the u. S. Government and other industries and companies that host Sensitive Data the winner can tell the companies from banks to hospitals that if our tech is good enough for the u. S. Military, it should be good enough for you as well guys, back to you. Thanks, josh. Kara, look at this battle, the cloud battle between amazon and microsoft. Right. Does it get nastier from here does marketing ramp up after a moment like jedi when the underdog scores a big one . Well, you know, in this case i dont think it is miekds versus amazon, it is amazon versus President Trump, you know, in terms of President Trump in terms of what he said about jeff bezos i would be surprised if they didnt fight it. It seemed as if there was putting a thumb on the scale against amazon not to say microsoft wont deliver a great contract, but if i were amazon, this