Melissa Lee (3:12)

Mel Mac thanks mackenzie seagallos not much reaction here of course waiting the conference call where we will learn a lot more about what they say about the current quarter about memory prices, all the things that are sort of been overhangs on the stock. Dan, would you make it.

Dan Nathan (3:26)

Yeah, I think all that that you just mentioned, it's going to be something that I think was factored into the stock heading into the print. Right. Far as what the constraints are going to be is certain products memory and like here. So we know that pricing is going to put downward pressure on their margins. I think the services is probably most interesting to me as we get into June's WWDC and I think investors or consumers get a sense of what, what Apple intelligence is, what is the new Siri, what are they going to be able to do or developers on top of that. We've been through this cycle before, right when we had the App Store. I think you have to go back to before Tim Cook took over and that's when things really started to accelerate into the launch of new iPhones going back, you know, again to early 2010s or something like that. So when you think about where the money is going to be made from here on out and the commoditization of the models and the infrastructure build and the like, it's the application layer, right? It's like what are agents going to be doing using the compute on these phones? And we really haven't had any great examples in my mind on the mobile kind of device here that is basically going to be articulating how companies like this are going to get a return on this investment and then really supercharge, let's say services because right now year over year wasn't a huge beat. You know, it's like 15% growth but on a sequential basis, not a whole heck of a lot. So it's really going to be about an application story for my mind as it relates to Apple intelligence.

Melissa Lee (4:42)

We are learning that John Turner is the incoming CEO, will in fact be on the conference call. So it should be a very interesting call, especially as Apple's at this sort of transition period, if you will. Guy, whether it be from the leadership standpoint, but also from the product standpoint, the AI standpoint, a lot of things are in flux in the next year for this story.

Mike Wilson (5:01)

And he's a products guy. Right. So, I mean, that will come up without question. But, you know, so I'll amplify a little what Dan said. I thought the quarter is fine when you have revenue beat, which is a good thing always. But then you look at services now are 27% of overall revenue, which is a good thing. Services growing at about almost 17%, which is better than the street was looking for. Then you look at margins. I mean, services margins are close to 77%. Then you look at operating margins better than the street was looking for 32 and a half percent. So you start to put it together, they're running the business better and they're doing it without the spend of a lot of these other companies. So you can understand why the market's going to reward them with a premium valuation. I don't want to pretend I'm some Apple bull, because I have not been, but I thought the quarter is fine.

Gai Adami (5:41)

Yeah, I think the quarter was fine in terms of the most eventful quarters that they have. This doesn't really rank up there. There's a lot of things that are still on the come for sure. Mild increase in the dividend, modestly $100 billion buyback, which sounds like a lot of money to you and me, but actually to them, not particularly a lot of money. So it's fine. I agree with, with Guy. It's neither here nor there. I do care as a Alphabet holder how Gemini is interpret, has integrated or whatever they call it. I don't know what they'll call that integrated into Apple and see what that does. But that's a couple of quarters off to see how that reacts.

Karen Feiderman (6:17)

I mean, the big question for this stock going forward is going to be, are they going to now start spending money? Is the leadership change going to lead to a different type of strategy? The old strategies were great, right? Capital return, kind of milk, the product suite spend phenomenal. But if they're going to get into the game, they're going to start Investing then it becomes a more interesting stock, more volatile. We'll see. We don't know the answer to that yet.

Melissa Lee (6:35)

Do you want it to? Would you want it to?

Dan Nathan (6:37)

I think so. I mean they're talking about $14 billion, you know, as like percentage of the revenue. And you know, I think that they're going to have to spend, I think they're going to have to figure out ways to actually lead as it looks like, you know, on a device, on a mobile device. And what does agentic I look like. But Mike, let me ask you this. I mean from a macro perspective, you know Meta got nailed today because they're spending 50% of their revenue in 2026 is going on a spend that a lot of folks are kind of trying to figure out what, what the return on that's going to be. So we have Apple on one side that's spending low single digits of their revenue on Capex. And then you have, you know, Metta that has increasingly fund this through debt. We just saw that $25 billion deal. They're doing it like does that factor into like the macro for you? Because it's been a big driver of gdp, no question.

Karen Feiderman (7:22)

Now remember they got hit because it's a crowded space. There are seven of these people trying to do the same thing. But I think what Apple should do is do something different. Okay, don't try to. It's too late to get into LLM game. They're going have to do something more interesting that's unique and they've had shots to do that in the past but they haven't taken those shots. But that's the question as a shareholder, are they going to do that and it becomes a different type of security at that point we don't know the answer. I mean we're going to maybe hear a little tonight. If they're going to do it, this is the perfect time to do it with a new CEO.

Melissa Lee (7:49)

I think that's a really good point about is it going to be another one with another lam probably not. Can it, can it have you know, multiple expansion? Can the stock go higher if it just sort of maintains its hold as a hands down premier device through which consumers experience AI because right now, now it's got that lock. I mean it still has that lock because most people are walking around with an iPhone in their pockets and not glasses on their, on their face from Metta.

Gai Adami (8:17)

Well that's what matter is hoping and we don't know yet. Right. There is some momentum there and so that could be that could be something that would be a real threat to Apple. Now Apple could respond with a better glasses. Right, right. As that said, what Apple likes to do, I guess theoretically out there is open AI. They did buy Jony I've company that some sort of device. We don't know what it. It's been a while.

Melissa Lee (8:40)

Like a brooch.

Dan Nathan (8:41)

It's $6 billion. Yeah.

Gai Adami (8:43)

Like a Star Trek. Yeah, yeah. Right. It's been a while that you know that they've had it and we haven't seen anything yet. But so that could be the next giant thing that could theoretically eat into pun intended I guess. Apple's Apple.

Melissa Lee (8:59)

Yeah.

Karen Feiderman (8:59)

What Core iPhone Apple has, the other guys don't have. They have a pristine brand that people actually like.

Narrator/Commercial Voice (9:05)

Okay.

Karen Feiderman (9:06)

These other companies, most people don't like them. You know, I mean the brand they say, you know, but Apple has this brand. Can they take that brand and go into other product areas that maybe are totally unrelated to AI? I mean that's the way I would be thinking if I was going to

Mike Wilson (9:19)

do something aggressive or the waiting game in AI might be the right way to play because if it becomes commoditized and you don't have to pay for it and if some of these places have to pay you to be on their platform, then they win.

Melissa Lee (9:32)

I mean, does anybody have a Sony Walkman anymore?

Mike Wilson (9:34)

I do

Melissa Lee (9:39)

products and they usually do it better.

Dan Nathan (9:40)

You know what's interesting on the hardware front though, they killed Vision Pro. It's gone. I think it's like literally as of this week or something.

Gai Adami (9:46)

Two of the ones in existence.

Dan Nathan (9:47)

I'm sure you spent 3500 on both of them or each of them, I mean. So I think they haven't had a lot of hits if you think about it in the last, you know, kind of 10 years or so. And so it's interesting they do put a hardware head and in charge of this. The one thing that actually sticks out like a sore thumb when we think about all of these frenemies in the space is that Apple's the only company has not invested for the most part in OpenAI or anthropic. We know that Amazon has done it. We know that Google has done it. I mean Nvidia, I mean the list goes on and on. And so they must have a master plan that none of us are actually really sure about or they have no plan and the stock is going to

Gai Adami (10:22)

underperform the ones that you named. They invest in open AI because of this circular relationship. OpenAI needs compute. Right. You think Want access they need data cloud they need.

Dan Nathan (10:33)

But if you're an investor, you're getting access to some of the data like some of the stuff that's going on there. And for them, if they had dropped they just announced a $100 billion buyback and a better bunch of it's going to be accelerated. And you know what, to put $10 billion in either of those rounds as far as anthropic or open air, it might be worth the intel maybe turn

Melissa Lee (10:49)

us will do that. I mean with the new sheriff and

Dan Nathan (10:51)

well he looked like a goofball if he does it at basically a trillion dollar valuation for both of them.

Melissa Lee (10:56)

But whatever hypothetical. All right, let's get more on Apple. Bring in Deepwater Asset Management managing partner Gene Munster. Gene, great to have you with us. Your take.

Gene Munster (11:06)

Well, they kicked off the call of course with Tim and John and John took the mic and said I'm going to be thoughtful and deliberate around financial decisions. He said he understands how important that is for investors. I don't think that really matters one way or the other. And then he jumped to the real question, which is what products are coming. And of course he said I'm not going to answer any of those questions, but given this time we have the most exciting products coming. Now I followed this company for a long time and I've heard comments like that many, many times about these exciting products that are coming. So there's not much to read into that beyond this time. I think he is referring to of course, the AI moment. And when I put all this together, I mean these calls, my mind initially goes to what are the numbers? You know, what's the guy going to be? Of course that's going to be coming up here in a few minutes here, but I think the central question is this. Does Apple continue to have a franchise that has an opportunity to sell more products in a world of AI? I mean that's ultimately what it comes down to. And if John can continue to build off of what they've done and personalized AI has the potential which I believe this company is going to have some great growth years ahead. And I put great growth years, by the way, and the context of growing top line kind of in the 5 to 10% range.

Melissa Lee (12:24)

Tim Cook spoke to Jim Cramer shortly after the release of the results and told Jim that he is very excited about what is going to be launched or unveiled at wwdc. Do you think we'll get any sort of appetizer? Sorry, yeah.

Gene Munster (12:40)

So again, kind of putting this through the how to decode what they're saying. When they say great products are coming, you just take that kind of as like that's the center of the bingo card. Of course they're going to say that. When he said he's excited about wwdc, what he's doing, he's elevating this, they've been continuing to do that. I think if there was any hesitation that he had about what the new series is going to look like, again, it won't be available at WWDC in its full form, but if he had some hesitation around that, it wouldn't make a lot of sense for him to be hyping this up. And so I do think there it was. That did that comment did catch my attention and I think investors should, you know, kind of your anxiety about what does this new Siri, which of course is code for do they have AI competency? That's when we talk about the new Siri. That's really what we're talking about. The fact that he's elevating this in these conversations I think is encouraging about what we'll see.

Melissa Lee (13:35)

You know, Apple shares are up about 10% in the month leading into the results. Gene. And part of that's just, you know, a bounce off of lows. Part of it might be increasing optimism surrounding AI and what may come or may not come from @wwdc. I'm curious if you think there is anything in the stock right now in terms of price when it comes to AI or if it is devoid of any AI premium. Dan Ives over at Wedbush published a note this morning saying the AI premium that is not in the stock currently could be as much as $100 a share. Which would be a lot.

Gene Munster (14:09)

Yeah, it would be a lot. And I'm on that same page. I think that, you know, what's the absolute number here? I'd just put it in this context, is that when it comes to Mega Cap, what we've seen over the past day is that their businesses continue to do really well. Just because you're big doesn't mean you can't grow. But if you look at the Mega caps and we've had this conversation, is that the one that has the best opportunity with new CEO devices, their legacy around building great consumer tech devices. The company with the best opportunity to change the narrative is Apple and get a rerating. That's what Google did a year ago. They changed the narrative incompetent to competent. And right now the needle is on incompetency when it comes to AI and Apple. So I agree with Dan Ives. I agree that ultimately that's the real opportunity. That's why we've been adding more to our Apple position is we believe that this company has the, the most ripe opportunity amongst big tech to change the narrative.

Mike Wilson (15:06)

Ian, understanding the answer to this question is historically a little of both. You can't do that though. So the bull case for Apple is multiple expansion on the back of services being a bigger portion and they deserve a 3132 multiple or reacceleration of EPS growth. Which one?

Gene Munster (15:23)

Multiple expansion. That's the real bull case here. The numbers, if you look at next year for the iPhone, looking for plus 5% will be plus 17% this year, but over the past few years before that, 23, 24, 25, it was basically flat. So I think that we've, the, the street has kind of come back to this is, well, the kind of the growth rate. But I think this changing of the narrative, I mean, I think is probably the biggest lever here. And I mean, can you imagine a world where Apple actually has AI products that we can't live without? I mean, that seems like a punchline of a joke right now. And so I think that really speaks to why I think that there's a big opportunity here and the multiple is the big lever.

Melissa Lee (16:06)

All right, Gene, we'll see you later. Thank you. Gene Munster, by the way, the Apple conference call, 15 minutes and approximately. We still haven't gotten guidance. We'll keep you posted on that and any other headlines that come out of that. So far we have is the CEO Tim Cook saying the iPhone 17 family is now the most popular lineup ever. So again, we'll keep you posted. So with Most of the MAG7 earnings in the books for the latest quarter, what have we learned so far? Who is winning the race thus far? What would you say?

Gai Adami (16:37)

Alphabet? I think Alphabet and Amazon both. I mean that call yesterday for Alphabet was really extraordinary and, and they could have, it could have been bigger if they'd had more capacity. Maybe they all would say the same thing, but it's, it's gotten a little expensive, but not crazy expensive at all. Apple and the momentum there seems really good. And maybe there's this Apple thing there to sort of drive momentum, but that's the one that I think has the most going for it. And the valuation is not crazy. It's interesting to compare that to some of the other sort of memory. And you know, those, those stocks obviously trounce what any of these have done, but we know that that's not going to be forever. This I think I like it. If I owned none, I would buy it right here.

Karen Feiderman (17:24)

So I would say within the hyperscalers because I mean to point there's other winners but the big four, I think you can look at it two different ways. I mean Google is the integrated winner. There's no doubt about it. They kind of burned the boats. They said we're going to combine everything and they're doing really, really good things. Metta, however, I would say from an adoption standpoint is winning. Right. So in other words, they're actually using it in their core business. And then if you look at Microsoft, they might be the snake in the grass saying and let everybody else spend the money and we'll kind of tag on later and add services to our core enterprise business. So I think we're see, what we're seeing is a divergence of strategies now a little bit. And of course Amazon is this whole nother animal because they got the AWS business and the retail business. So I think that divergence and the way they're attacking it, it's not just head on with each other. And that's why the stocks are trading differently now.

Dan Nathan (18:11)

Yeah, you know, Google and I think you've been so right about it. It's kind of where I was leaning to I think the vertical sort of nature of this and I think the TPU thing kind of changed the narrative to nine months but today it gained a half a trillion dollars in market cap. I mean just think about that just to put that in some context. And so a lot of folks who are, you know, all in and they just said yes, this has been a great story. I'm going to add to that. I mean I think it's just a difficult spot to do that now. You could have said that, you know, three months ago, that sort of thing. But you know, I think people have to remember that when these stocks sell off they're going to go down one and a half, 2x that of the S&P 500. We saw that when the S&P went down 8, 9% over the last, I don't guess it was April until we bottom that sort of thing. So to me, actually I'm more interested in Apple here and for what, what Gene just said is like, you know, can you imagine if they come up with a product that everyone needs now there is one issue with that. Everyone already has those products. The people that you're going to monetize, there's a two and a half billion dollar billion installed base right now. But it comes back to what we started talking about with services and that sort of thing. And that high margin business is the thing that justifies maybe a 32 times multiple right here.

Gai Adami (19:15)

All right.

Melissa Lee (19:16)

Coming up, we are keeping an eye on shares of Apple. We'll bring you all the headlines from the conference call as we do get them. Plus the after hours action in shares of Amjad Roku and more. And speaking of earnings, investors loving on Lilly after its results this morning, what is boosting the pharma giant and just how much its blockbuster weight loss drugs are feeling that surge? Do not go anywhere. More fast money into.

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Melissa Lee (21:11)

Welcome back to FAST Money. Shares of Summit Therapeutics down double digits in extended trading after the company said it would not share interim results results from its highly anticipated cancer drug trial. Those results were set to be released this quarter, but investors will now have to wait until the second half of 2026 when the trial wraps. Elsewhere in health care, shares of Amgen on the move after sales and earnings beat estimates of biotech. Also slightly raising its full year sales outlook. Earlier in the day, Eli Lilly blew past REIT estimates for the first quarter and raised its full year sales outlook by $2 billion as demand for Zepbound and Munjaro continue to soar. The company's newly approved weight loss pill, Fundeo, did not factor into the results, but CEO David Ricks told CNBC this morning that more than 20,000 people are now taking the pill. For more on all of this, Mizuho Securities Jared Holtz joins us now. Jared, great to see you. I want to put you on the spot, but summit, that's never good when they're just going to delay results.

Capital One/Commercial Voice (22:03)

Yeah, I think investors are looking forward to the trial. This is the PD1VEGF combination in cancer and we're just going to have to wait. So I feel like, yes, this is probably it's a near term setback and I think investors come back to it later in the year as they kind of gear up for what still could be a positive trial, but certainly takes the air out of it for a bit.

Melissa Lee (22:21)

Right. If we can go to Lilly now. I mean, the move in today's session is just extraordinary for a company of its size to be up 10%. And I notice in the note you pointed out that basically the weekly scripts numbers are not reflecting the actual uptake. So what is behind that discrepancy?

Capital One/Commercial Voice (22:38)

Yeah, I think there's a little, there's a bit of a reconciliation you have to do between the capture rate and what the actual scripts are. But to the company's point on 20,000, if you, I think the last data set we had was essentially 10 days ago. So it's not in real time. And if you fast forward and you add, call it four to 5,000 patients per week, you get to that 20,000. So I think it was probably a little bit mismodeling on the part of the street and it kind of makes sense. But they're still trailing Novo by a little bit at this point in time. But that was definitely a reprieve. I thought it was a little bit better than I would have thought.

Melissa Lee (23:15)

What also surprised me and I don't this is like a confession. I don't watch tv, so I don't really know about ads and things like that. I only watch cnbc. But they said that the full sort of promotional tour is going to happen in the third quarter when it comes to advertising. So we haven't really seen even the company push this hard.

Capital One/Commercial Voice (23:34)

Right. There's been really very little dtc. I think there's some regulation around marketing and going direct to consumers via tv, commercial, radio ads within a period of time where the brand has just been introduced. So Foundeo a new brand, whereas novo is with WeGovy, not an actual new brand name. So they've been able to push it, I think, a little bit more quickly. There are some spot, I think there was an ad in Times Square today perhaps that showed, you know, the deals that you could get on the new oral, but it's kind of like it's hit or miss. It's not a full fledged launch yet.

Mike Wilson (24:11)

Structured Therapeutics has given back. The entire move from that move was historic. I think it's a G and whatever acronym Aaron has this year, nobody knows, but I think there was a short report out. This doesn't seem. Doesn't make a lot of sense to me because I still think this company gets acquired. Is this round trip an opportunity here?

Capital One/Commercial Voice (24:31)

I think so. I mean, I think what the street is worried about or has a little bit angst over is the fact that the GLP1 market seems to be taken. It's going to be super tough to get in there with Lilianovo absorbing all of this market share and having the power that they do. But the Amblin, which is the lower power weight loss therapeutic that's going to be an oral, I think has a lot of value. I don't really know of that many people that have to lose the 20% of their weight. If this gives you 10%, you know, give or take, but doesn't have the adverse events of the gop. I think it's a very, very interesting drug. Of course, we're all obsessed with the percentage of weight loss. 18, 20, 22, the triple G, Cagrom out of Novo. But a 10% weight loss drug, if it shows good safety, I think could be a blockbuster. So I agree. I think the stock is undervalued so

Gai Adami (25:21)

to that point a little bit. So novo up 5% today, which was nice. I don't know if, I mean, if you're thinking that they're too far ahead, Lilly's way far ahead. And then Novo and this market is so extremely gigantic, though, that you would think Structured Therapeutics would have some interest. It's not that big just in terms of absolute dollars. Or do you think the other two are just too far ahead and the game's over? That seems.

Capital One/Commercial Voice (25:48)

Yeah. Well, for the, for the Amlins, if they come in with an oral Amblin, a 10% weight loss drug that they can market as a consumer product. It has a huge potential. If they're going in there as a GLP one, trying to get market share for Lilianovo having to pay for manufacturing and all the spend that these companies had to do. I think the market is basically telling us that they don't really believe there's that much room for other players. Now that's debatable because the addressable market is massive. We know that every other person could use it. But Lily and Novo are very far ahead. Their products are excellent. They were already in the diabetes space to begin with. So it's tougher, especially for a small cap company to come in. That's why I think if there is viability, it'll likely get acquired. I mean, I think it could get acquired for the Amlin alone. But again, that data has not been, you know, fully cooked yet and we don't really know what it is going to look like.

Melissa Lee (26:37)

Doesn't Lilly have an Amylin also?

Capital One/Commercial Voice (26:40)

They do, but other companies don't. And this could be a massive consumer product. I mean, 10% weight loss for I think most people is good enough.

Melissa Lee (26:48)

That's like a vitamin.

Capital One/Commercial Voice (26:49)

It's a vitamin.

Melissa Lee (26:50)

And so that's a whole other market

Capital One/Commercial Voice (26:51)

with all these other probable health benefits that go along with it. I think we're vastly underestimating it, again because of the obsession with the percentage of weight loss and how skinny you can possibly get. But I just don't think that much of the population needs that.

Melissa Lee (27:06)

Right. Jared, thanks. Good to see you. Jared Holz of Mizuho, what do you make of the action today?

Mike Wilson (27:11)

First of all, I still eat my flintstone vitamins.

Melissa Lee (27:14)

Sure you do. Bam. Bam.

Mike Wilson (27:16)

Yes. Funny you should say that's the best tasting one, number one. Number two, I'm with you. Listen, the entire sort of back and fill in GPCR doesn't make sense. Short report, I get it. But he's spot on in this. I mean, this is a 9, $10 billion deal. It's a lottery ticket for these big cap pharma names. I'm with Karen on gpcr.

Melissa Lee (27:34)

Yeah, and that is, that is a. That is in your acronym. And Novo is also.

Gai Adami (27:39)

And Novo.

Melissa Lee (27:40)

Right, Doubling down on.

Gai Adami (27:41)

Doubling down on it. Right. Because so Novo is bouncing back somewhere. But it' really not been a good year so far at all.

Capital One/Commercial Voice (27:46)

For.

Gai Adami (27:47)

For Novo. It started off hot, but I just think of this valuation in this market, even if they're number two and somewhat distant, it's so gigantic and already there. This is where I want to be.

Melissa Lee (27:57)

Coming up, caterpillar and mastercard moving in different directions after their morning reports. What's behind the moves next? And a lot more after hours action to bring you the results. Moving Roku, Western Ditch, SanDisk and more. You're watching Fast Money live in the NASDAQ Markets site in Times Square. Back right out after this.

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Melissa Lee (30:12)

Welcome back to Fast Money. Stocks closing out April with strong gains. The dow jumping nearly 800 points, snapping a five day losing streak. It saw its best month since November 2024. The S& P and Nasdaq both climbing about a percent today, closing at record highs. They both saw their best monthly performance since 2022. Tech stocks also seen big gains in April. Google having its best month since October 2004, two months after going public. And intel more than doubled in the month. Its Best performance since its IPO 55 years ago. We need a 55 year chart guy, not a full back to today's action. We can't drop that caterpillar jumping nearly 10%, hitting an all time high. The stock responsible for nearly 500 points of the Dow's gain. The company topping earnings and revenue estimates estimates this morning. Also raising its annual revenue forecast thanks to its power and equipment. Power equipment and construction units. MasterCard meantime heading in the other direction despite his own earnings beat the credit card company also boosting its 2026 revenue growth outlook. The stock down nearly 12% this year. Do not miss Jim Cramer's exclusive interview with the CEO of MasterCard on Mad Money. That's at the top of the hour. And some more after hours action. SanDisk and Western Digital both lower despite topping estimates, posting better than expected. Expect Q4 guidance of stocks have both soared in the last month. Roku though jumping is the company raised its annual platform revenue forecast. Roadblocks sinking after missing revenue estimates and lowering guidance. And shares of Reddit higher after beating expectations on the top and the bottom line. Cloud company Viva Systems higher on news it will be added to the s and P500 next Thursday replacing Kotera, which is being acquired by Devon Energy. A lot of stock moves to digest there, Karen, but which one would you like to trade?

Gai Adami (31:52)

Oh, let's see. I'll go with MasterCard, whose only problem was reporting today instead of two days ago. I mean it was up, I don't know, 20 bucks yesterday on the heels of Visa. It was a very good quarter. If you liked it before, it's fine now. Nothing's changed. It was a good quarter.

Dan Nathan (32:08)

Let's do SanDisk here.

Melissa Lee (32:09)

Sure.

Dan Nathan (32:10)

The problem is up like a thousand percent a year. It's got $165 billion market cap and they just approved a $6 billion buyback. Now, now, okay, let's throw that $6 billion, just sell it to the people they want it. Just do a secondary, okay, let's put them a billion and a half in cash on their balance sheet. They have no debt. Or let's figure out a way to invest that $6 billion to get more capacity to make the thing that they sell a lot of. I mean that. I know it sounds very cynical and it's meant to be, but I just don't understand that. It doesn't mean just because they announced the buyback they got to do it, but it just seems.

Melissa Lee (32:45)

Seems goofy, right? We do want to point out shares of Apple moving to after our session highs Right now up by just about 3%. The conference call is about 34 minutes and we'll try and get you the headline behind that big move higher that we just saw in the past few minutes. Coming up, stocks are all taking a leg higher as crude holds above $100 a barrel. At Morgan Stanley's Mike Wilson sees in store for markets rates and why he's not so bullish on oil. That's when he's back into

Dan Nathan (33:13)

missed a moment of fast. Catch us anytime on the go follow the Fast Money podcast. We're back right after this.

Melissa Lee (33:26)

There you see it, the pop in the after hours session on Apple stock up 4% right now. Getting more from the conference call. Let's get to Mackenzie Sagalis with that Mac.

Mackenzie Segalos (33:35)

Hey Mel, so we saw that stock pop right as we heard that at Q3 revenue they're guiding to 14 to 17% year over year growth. The street estimate was for 9 and a half percent. They're also expecting services revenue to grow at a year over year rate similar to what they reported for the March quarter. So that is 16%. Finally they're expecting gross margin to be in a range of 47 and a half to 48.5%. We also heard from John Ternus right off the top of the call brief appearance where he praised him Cooking Cook's leadership and promised continuity but also teased what he called the most exciting product and services roadmap of his 25 years at the company. Last thing I'll say, Tim Cook did bring up a revitalized personalized Siri, but he's his wording was that he was looking forward to it coming this year appears to signal it might not necessarily be coming as soon as their developers conference in June.

Melissa Lee (34:25)

Mel Mac, thanks Mackenzie Seagalos. We should note too that from the conference call the CFO is saying that the current quarter guidance factors have and supply constraints. So presumably that guidance number, that gross margin number that we got in terms of guidance that does reflect any sort of memory pricing issues and that had been a major concern of analysts. Let's bring back Gene Munster of Deepwater Asset Management. Gene, what do you make of the guidance?

Gene Munster (34:48)

Well I'll just add one thing to that. Well first the guidance I think shows we're in the midst of a super cycle. This they're probably going to come in above the 17%. I mean she was at nine. I mean this is phenomenal. Under any normal circumstance the stock would be up a lot more than it is now. And the issue is that investors are looking already past partially looking past all the goodness that's going on in the business and kind of thinking about what next year looks like. But I want to just one more fine point on this guidance. They also said they're Mac constrained. They will be Mac constrained for this quarter, the majority of this quarter. So that probably adds another 1%, 2%. So the guidance could have been even better. But again doesn't that doesn't change what the bigger picture here which is what is this growth rate of the company and I to want I would emphasize this. These super cycles are so much fun. Anticipation of them are a lot of fun and fun for investors. And the bigger the cycle this we're going to feel this benefit. It's a long ways down the road but two, three years down the road we're going to see the benefit of everything that's going on. So this is not for nothing all the goodness. I think that's my first reaction. One other piece Mal, that I picked up on the call and the first question also started to dig into this a little bit but they changed their language around capital return. They continue to reiterate how important it is to return capital to investors. But they just added a little nuance that analysts picked up on which was they said that the business needs come ahead of that. I can't remember them ever talking about that first. Which of course opens up the question is Apple going to enter into some sort of a capex race? I think the answer is no, but that's going to be part of the conversation.

Melissa Lee (36:25)

Sure, Gene. Thanks. Gene Munster I mean I think it's not just capex on there, but I mean it's his new CEO. They can be making acquisitions. I mean we don't know what we

Gai Adami (36:34)

they haven't ever really made a big one.

Melissa Lee (36:36)

Right.

Gai Adami (36:36)

But I sort of think it always goes without saying that you need to address the business first before you do anything else with the capital.

Melissa Lee (36:44)

Coming up, where oil is heading next and why Mike Wilson sees bond volatility as a bigger risk than corporate earnings. Stay tuned. Welcome back to Fast Money. Brent crude hitting a four year high before sharply reversing course during the day. The initial move coming on the back of an Axios report that President Trump was being briefed on potential military action in Iran. Trump yesterday posting on Truth Social that Iran quote better get smart soon about signing a nuclear deal. WTI and Brent crude both snapping three day winning streaks today, but both are up about 60% since the war began. Turning to the broader markets, our guest trader here, Mike Wilson sees bond volatility as a bigger risk than corporate earnings here. So the that I mean we've seen very strong earnings so far this season particularly from the MAG7. But bond volatility, it seems like the 10 year yield though at least saying kind of tame given what's going on.

Karen Feiderman (37:38)

I think there was a more interesting call a month ago because people were questioning the earnings story still because of the spike in oil and all the stuff that's going on. But now that's sort of consensus view. I still probably are way above the street on earnings growth for the next 12 months. That's why we stay bullish. The risk is bond volatility. Now I think the treasury and Fed have got their hands around, around this. If you look in late March we wrote about this at the time, as soon as the fed funds pricing change, bond volatility went up and some of that was oil price spike. P. ES went down right with it and then the treasury did record buybacks over three or four weeks and Powell started talking a little bit more dovish at the end of March and that calmed bond volatility. So I don't think it's a problem right now. But if that were to pick up again into the, you know, the war confirmation of transition and, and sort of the anxiety around that, that would be. That's worth 5%, it's not worth another 10 or 15% correction. But that's a bigger risk now to me than earnings because that's, that's well known at this point.

Gai Adami (38:31)

What about corporate bond volatility? I mean that's more of a rates thing. You're talking about rates, right? Not. But do you foresee. I mean we've seen just tons of debt issued, tons of debt related to AI that was a thing a while ago, remember? You know, CDS blew out.

Karen Feiderman (38:47)

Absolutely.

Gai Adami (38:48)

And that also weighed on the market. Market. Do you foresee anything like that happening?

Karen Feiderman (38:52)

Yeah, we're pretty, we're pretty mellow on the credit issue being a systemic problem. There are credit issues, there's always bad underwriting and I think the market is very judiciously handled that. But as a systemic problem, we're not worried. You know spreads have come in pretty rapidly even for high yield and the issuance has been sucked down pretty easily. So we continue to see issuance. It's going to get sloppier probably towards the end of the year. But I don't think that's an issue for 20, 20, 26.

Dan Nathan (39:15)

Mike, for a couple of years you've had this kind of Call about these rolling sort of recessions but they're in separate sectors.

Karen Feiderman (39:22)

Right.

Dan Nathan (39:23)

And you've actually said the same thing within the stock market. How does that play out right now? Because you're talking about earnings growth. We know that a lot of that growth at least in this quarter for the balance of year is coming from mega cap tech and if you strip out some of that I was looking at some fact set numbers earlier today. I mean you have non tech growing at like 6% or something like that.

Karen Feiderman (39:41)

That.

Dan Nathan (39:41)

So where do you see the sort of rolling recessions of the rolling bear markets right now?

Karen Feiderman (39:45)

Yeah so what I would say is it's all about earnings and so earnings for the median stock within the Russell 3000 now is growing double digits. First time we've seen double digit growth in that group for, for three or four years. Going back to Mel's question earlier what I liked about today's action Lilly Caterpillar. I mean that's what drove the Dow and the mega caps were basically flat to down. Yeah, that's good. That's, that's a healthy dynamic that I think we're going to, I think is going to happen for the rest of the year. We're going to see this broadening out just trade again to areas that have underperformed.

Dan Nathan (40:12)

What about banks not participating? Haven't confirmed the new highs in the S and P?

Karen Feiderman (40:15)

Well they haven't confirmed new highs but there's, there's divergence there. Right. Some of the large banks, the capital market stocks are doing just fine. I mean the regionals are very idiosyncratic. The credit cards have been mixed although I agree with Karen, I think they're fine here and then the alt managers I think are still troubled. You know so it's a more of a mixed bag there and I, but I think there's, there's a lot of strength. Loan growth is breaking out right now and the financials are still one of

Mike Wilson (40:36)

the favorite groups for the slow creep in the 10 year where does the market care?

Karen Feiderman (40:39)

Well has historically carried at 450. I'll take credit for putting that line up there three years ago and people watch that now. It's not a coincidence that at 440 it's been defended gets back to the treasury buybacks gets back to some other things that are going on in that regard I think we're fine as long as bond volatility stays sort of below 80 we can probably go to 450 even 460 without causing a real ruckus coming up.

Melissa Lee (41:02)

The CEO of engineering company Plexus joins us next to dig into its latest earnings report. What is driving the 70% gain 7,0 in the stock this year and what he sees in store in the tech space on Fast Money returns. Welcome back to Fast Money. Electronics manufacturer Plexus beating top and bottom line estimates for their most recent quarter. Shares up nearly 70% this year. To discuss the quarter and what is next for the company, we're joined by Plexus CEO and president Todd Kelsey. Todd, great to have you with us.

Todd Kelsey (41:36)

Thank you, Melissa.

Melissa Lee (41:37)

What a stock? Performance industrial is one of your biggest segments. Also health care, you actually have exposure to data center, is that right? I mean, we do, yeah, we, we do.

Todd Kelsey (41:46)

So when I think about AI and our play in AI, there's a revenue component to it which semiconductor capital equipment plays really nicely. But also in data center, where thermal management, power management, we also leverage AI quite heavily internal to Plexus as well. So we have a team of data scientists and programmers that are solving enterprise level problems and providing solutions. Things like procurement of low dollar parts as well as production scheduling. We're also deploying it to everybody's desk. The tools.

Mike Wilson (42:19)

You're at the epicenter of three great industry segments. It's amazing. Margins are the key, right? And you've been inflecting in margins over the last couple quarters.

Todd Kelsey (42:28)

We have. Have been.

Mike Wilson (42:29)

That's a huge driver for you guys. Can you speak to that?

Todd Kelsey (42:32)

Yeah. So one of the things, and it goes back a bit to our air efforts as well as automation and just getting leverage through the top line growth that we're seeing. But we've been able to expand margins. Our plan is to continue to expand those margins as well. Right now we have a target of 6% which we've been hitting consistently right now. And we're likely to take that up at some point.

Melissa Lee (42:55)

Looking across your businesses is, is data center, is AI going to be a bigger part of your business? Not just the internal use, but in terms of customers and what they're building?

Todd Kelsey (43:04)

Yeah, I think in general. So we, we don't contract out to the hyperscalers directly. It's all through the next tier of suppliers. But within that power management, thermal management, we have a great funnel, over half a billion dollars within that space. We announced a new win in power solutions that impact the data center this quarter. We have a couple other early stage programs that we're in the pilot phase on right now. So we see that continuing and even they're great revenue opportunities as well too.

Gai Adami (43:35)

So what's happening for your business on the cost side.

Todd Kelsey (43:38)

Pardon me?

Gai Adami (43:39)

What's happening for your business on the cost side? I mean I know you have a lot of different businesses.

Todd Kelsey (43:42)

Yeah, well I think in general costs have been reasonable. I mean from a standpoint a lot of our cost is labor and labor's been relatively stable across the globe. I mean of course we see a little bit of higher inflation in the APAC market than we do in the US but generally relatively stable costs have been fairly good. Now from a standpoint, when we think about inflation and like inflationary pressures, our business model is a cost plus model. So that passes through to our customers. But we're always concerned about the demand side of that and what would the

Melissa Lee (44:17)

impact be be to the demand side on the side. Can you give us an idea of some of, of the names of some of your customers? I mean how do we think about like when we see a bloom energy spike on earnings or a Vertiv or I mean how, how should we think about your business and how it can benefit from this demand that we're seeing elsewhere?

Todd Kelsey (44:34)

Several of them aren't announced yet, we're not able to talk about publicly. But one that I can is GE Vernova. So we actually want a supplier award from GE Vernova just this past year.

Karen Feiderman (44:44)

Year.

Melissa Lee (44:44)

Wow. So what is next in terms of growing aerospace? For instance, the aerospace defense is a smaller part of your business. Health care is at 41% of revenue and industrials 41. Airspace defense is the rest. Are you seeing benefit from the ongoing conflicts around the world?

Todd Kelsey (44:59)

Yes. I mean so we're excited about or I'm excited about all our markets. I think they're all double digit growth. But I would say if I was to pick one, Aerospace and defense has the most growth potential right now. And there's some secular factors, things like the increased defense spending that's going on within the US and Europe. There's also a leadership position that we have in low earth orbit satellites which is part of that sector, unmanned systems and then finally commercial aerospace. The backlog with a Boeing and Airbus are 10 plus years.

Melissa Lee (45:28)

And have you seen any sort of hesitation on the part of customers given what is going on with the war, given maybe concerns that they might have to pare back their workforce or anything like that?

Todd Kelsey (45:38)

No, none at all. The demand environment is really strong for us across all our markets right now.

Melissa Lee (45:43)

Todd, great to see you. Thanks for joining us. Appreciate it so much. Melissa Plexus. What a monster of a chart.

Mike Wilson (45:47)

It's, it's a great company And I want to be honest, you know, I I've never really heard of until recently and we met up a months ago at the Nasdaq and I said this is a story we need to get out. So if you want to think of a company like J Bill, think J Bill, but think a more diverse and cheaper valuation company than J Bill in three different business segments as opposed to Jabil sort of one, one and a half. So great story that more people should know about.

Karen Feiderman (46:09)

This is exactly the kind of stock that was probably forgotten two years ago because we had this sort of, you know, low volume economy. As Todd was saying. It's he's now seeing it across all these different business lines. So he has exposure into this recovery that people don't believe, number one. And it's just getting going. So I think this is pretty exciting.

Melissa Lee (46:27)

Up next, Final trade. Apple shares holding on to gains after our Tim Cook saying he expects significantly higher memory costs in fiscal Q3 and a bigger impact on business from those costs. But the guidance we should note did include those supply constraints. Final trade time Mike Lilly Karen, thanks

Gai Adami (46:51)

for walking three blocks to be here.

Dan Nathan (46:54)

Amazon Apple right here, right now. Most interesting mega cap tech story structure

Melissa Lee (46:59)

Therapeutics thanks for watching. Fast Mad Money starts right now.

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