← CNBC's "Fast Money"
CNBC's "Fast Money"
AI Battle Royale… And The State Of U.S.-China Relations 12/19/25
00:43:45
Just a few trading days left in 2025, and there’s an AI battle royale brewing between hardware and hyperscalers. The moves in Micron, Nvidia, and Oracle as Mag-7 hyperscalers largely sit out of today’s rally. Plus A TikTok spinoff deal, and an $11B weapons package to Taiwan. All the headlines swirling around U.S.-China relations, and how it can all impact global markets. Fast Money Disclaimer
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At Capella University, learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the course room to the workplace. A different future is closer than you think with Capella University. Learn more at capella. Edu Live from the NASDAQ markets in the heart of New York City's Times Square, this is fast money. Here's what's on tap tonight. An AI rebound. Tech stocks leading the market to close out the week with micron surging another 7% today. What do these moves tell us about the state of the trade? How should you position going into the new year? And drug price dealing? A slate of pharma companies agreeing to voluntarily lower drug prices. What it means for the stocks in the state of health care. Plus, Nike swooshes lower after earnings. Rivian revs up for its best week of the year in college. College football playoffs kick off tonight. We've got an exclusive look at the most valuable programs in the ncaa, what's behind their growth and why private equity is watching so closely. I'm Melissa Lee. Comedy lack of studio Be at the Nasdaq. On the desk tonight, Tim Seymour, Courtney Garcia, Steve Grasso and Mike Koh. We start off with an AI battle royale. Hardware versus Hyperscalers duking it out in a heavyweight bout into year end. Today it is hardware landing a right hook. Micron soaring another 7%, building on its strong post earnings momentum. Nvidia also getting a nice boost after a bullish note. Bernstein analyst Stacey Raskin who cited an attractive valuation. A hardware infrastructure name seeing some of the biggest gains today. Oracle bouncing back from big losses yesterday thanks to its TikTok deal. Core Weave, Supermicro, Dell all joining the party. Meanwhile, those Mag7 hyperscaler names largely sitting out today. Alphabet the only name with a gain of more than a percent. And on top of everything else, OpenAI may become the next member of the trillion dollar club before it even goes public. So at the end of a week of wild swings, what have we learned about this trade? Or is this just sort of a blip in the bigger trade? Tim, what do you think?
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A
No, look, I think the last month has been important in terms of evaluating free cash flow from companies that that were gold standard by looking at the debt markets, by assessing the Dynamics of does Oracle have funding? Are the blue owls of the world sticking by? There's other folks that are, you know, that's emblematic of a broader story. I do think that hardware, in the case of Micron, they told us that they were actually seeing spot prices that which they could price out 2, 3, 4 quarters. That kind of visibility, the fact that you saw a rebound on a day when you had a triple witching. I know Steve watches this stuff too. I mean you had enormous volume, you had, I'd say, some incentive for where dealers were positioning to be on the right side of the upside today. And I do think that was part of today's move. But if you're, if you're watching kind of the short term between now and yes, dare we use the Santa Clause rally dynamic? I think it feels pretty good. I love this bounce off the 50 day. Nothing to me has changed in terms of the fundamentals. And the key fundamentals are that demand is there, the Fed is your friend and you continue to see investors pouring money into U.S. equities. U.S. fund flows have been great this week.
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B
Yeah. Mike, what was the role of today's huge expiry? 7.1 trillion in notional. And the impact here? I mean it's. You would think that Friday would be quiet because it's the Friday before holiday short and trading week and yet it was very heavy.
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C
Yeah. Well, I think you're right that normally when you're just taking a look at a pre holiday weekend, you're going to see reduced trading volumes. But when you have an expiration like a triple or a quad, which you have a lot of expiring contracts and that often means that you've got positions that need to be rolled to subsequent expirations. And so that tends to fuel a big uptick in volume. We certainly did see that today. But I think the positive I took away from today's activity was the fact that the volatility indices both on the NASDAQ and on the S and P came in pretty considerably. And it was something I was looking at earlier this week that had been troubling me. I think it's looking a little bit better right now, Steve.
- [04:07]
D
I think when you look at this, you have Oracle that everyone was worried about the debt issues. Then you had sort of a reset. All the bloated names, the quantum names, AI names, and everyone wanted a reason to spend again or not spend, but to invest again. So you have the end of the year, you have the Santa Claus rally coming on. You had to get that fluff out of the market. So I think the fluff came out of the market and I think it came out of the market enough so that people can get back to investing. So if they're back to investing, they're going to buy what they know. Again because if you look at energy, energy is not a bigger enough percentage to move the overall market. Industrial is not a big enough percentage. Tech is 40% of the overall market. So if you're expecting the market go up to go up, it's not going up without technology. So people going to go with what the most widely held held names are and what they feel comfortable with, a pullback.
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B
Right. But within that trade, I mean it's a huge group of stocks here we did see distinctly today hardware names do better, in particular semiconductors. Was Micron's guidance enough to make you think maybe the safer, quote unquote safer area within the air trade would be the areas the companies that have visibility for the next two years. I mean the guidance that Micron gave was phenomenal in terms of how much demand there is for the next two years.
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E
Correct. And the demand is a huge part of that. But also they're in a really good position to be able to pay down their debt. When you look at their cash flow, I think that's a big part of this because I don't think the trade is over by any means. But people are really starting to question the companies who don't have the cash flow to support all of this build out that's going on. So I think that's we're going to see this bifurcation happening in 2026 is the companies who have the cash flow to support it and those who don't. Because I think investors are becoming increasingly wary about that. And you bring up a good point. I mean when you look at tech and information services, that's over 45% the S&P 500 now there's a lot of concentration risk and I think a lot of people are really waking up to that and realizing that. So I think you want to start to look elsewhere. I don't think this trade's going anywhere. But is it going to have the kind of outperformance it did in 2025? I don't know.
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B
Do the companies, according to the companies that have that are going to be issuing debt will lean on the debt markets but also have free cash flow? Do they get dinged next year? Tim? And I'm thinking of like, you know, the meta of the world.
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A
And I think well, not only do they. They have.
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B
They have. Yeah.
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A
And that may be an opportunity because I do. You can make an argument from a cap structure perspective that there's a better return on investment in terms of where they might be going if they, they certainly, you certainly don't want them to issue equity here. You certainly as a debt investor. We've heard that on this show from folks that we reach out to when it's time to evaluate credit and they've said, hey, you might actually have a great opportunity to be investment, to be investing in triple A or alike in the form of Metta or Microsoft or an Apple and take advantage of it in terms of that yield pickup on the fixed income side, credit side. I'm not worried about matter. I do think that the valuation has already been pushed down.
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B
All right, Mike, how are you thinking about the trade in terms of the distinction that we saw at least for today, between hardware and specifically semis and the others?
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C
Yeah, I mean, well, it's interesting just taking a look at the others and maybe the worst performing of the others coming into this week. We had a short on Oracle for some time which we actually did cover this week. So I think that maybe the worst damage in Oracle has already been done. Look, the Micron situation, you know, this is not a company that's very expensive at all. There are some other companies that are. But you know, now that you have some visibility on pricing, which I think is the point that Tim was making. Now this was a name that we were long. We actually did parrot in one of our discretionary portfolios this week. But I expect, you know, with these upgrades that we're sort of seeing in the, in the forecast EPS and revenue numbers that this is something that we're going to hold in something besides our semiconductor portfolio where we still continue to own it.
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B
That forward P on Micron, I almost had to do a double take. Seven. It is seven. I mean it's, it's very cheap.
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D
Yeah.
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A
Based upon, based upon what they've told you and imputing out there. That's part of the reason. And the demand is, is absolutely there. You know, it does. I kind of feel as if the hardware names are rallying, then the software names will follow. I mean that's what we've seen. And I still don't think that the semiconductors rally is something that we should be that concerned about. I don't know what's going to get in the way of it. I actually think Broadcom may be the most interesting in terms of the pullbacks and what we've seen in terms of the custom space, I just think more broadly too what's, what's been important about this move is if we're having a market conversation, it's not just about tech. And it really has been a week where banks have exploded and again exploded to fresh new all time highs on the view that the yield curve is steeper, that you have a lot of different dynamics in terms of their core business. You've got a probably a Fed. That's your friend and I like that about this week. That's the other part about what I think is really fascinating and what will be the next two weeks.
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D
You know, when you look at memory though, first of all, to your point, Micron's up 260% this year with, with the valuation still being extremely easy. When you look at DRAM, DRAM 77% of their revenue base, NAND is 23%, HBM is 15% of the 77 and they're the third player. So you have Samsung and SK Hynix. So you have the three players that really have a monopoly on this and their money will continue to come in. But what I'm nervous about is what happens if that Capex spend isn't what we think that Capex spend is supposed to be next year because it's a commodity based business, right? Boom, bust. Why do we not see cheaper prices? I know we had the deep seek scare. I know we have the whole issue of they could do it for X. It doesn't matter if deep seek is a lie or a fake. There's got to be some commodity element to this that the, the market's going to start sniffing out. Do you really need 100 billion?
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B
The CEO of Micron will be very concerned. I mean to go that far out in terms of the guidance, you've got to have a degree of.
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D
I'm not talking about Micron, I'm talking about the rest of the other. The rest. Because I think Micron, to your point with valuation, I think, I think Micron is still in the, in a, in a very good spot because you haven't seen the run up. Even with the stock up 216% you haven't seen valuation get bloated. Where a lot of these names you're going to start to start to say okay, well what's the return on investment capital? How much am I getting back from it? Who is spending it efficiently? We've seen Metta do this a couple of different iterations. Whether they're spending money, whether they're getting it back on it and the market's going to start to sniff out who is doing it most efficiently. It's not going to be as easy as let me dump 100 billion anymore and I'm going to get it right back.
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All right, let's Our next guest expects the trade to shift from broad enthusiasm to a more selective environment in the new year. Wall street legend Rick Shurland is founder of Sherlyn Partners and recently joined Wedbush Investment Banking as a senior advisor. Rick, great to have you with us. Nice to see you, Melissa.
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F
Thanks for having me. And I should caution you that I no longer wear the analyst hat, so I'm going to be ducking some stock questions.
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B
Probably that is fine. We want to get into your head, Rick, in terms of how you're thinking about this trade. So when you say shift from broad enthusiasm to being more selective, what do you mean? And you know, what we saw today in terms of the enthusiasm behind the hardware names versus some of the others, you know, does that play into your thinking?
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F
I think this year has been one of kind of a monolithic trade. People think of the Max 7, it's now about 35% of the S&P. But I think 2026, you're going to see that trade broaden out very substantially. You've got a whole universe of SAS companies that the Street's kind of looking beyond right now. There are some issues with respect to is the architectural architecture flexible enough to accommodate AI? Is the business model at risk? So they've been out of favor. But I do think you're going to see some of those come back where they've made good progress on both sides of adopting AI and the business model changes. You'll see a very robust IPO market because there are a lot of the private AI companies that have gotten to scale and some of the SaaS companies that didn't get out in the peak of the market in 2021 will likely be coming coming to market where they've made good traction on AI and the business model shifts. M and A, of course, is going to be a big thing next year. All the big enterprise companies need to add AI into their own architecture, and an easy way to do that is through acquisitions. So I think that all the derivative beneficiaries of AI the streets and you guys have been looking at pretty closely. I think there's a lot more of that that we'll see next year, not just within software, but broadly across the economy. So go ahead.
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A
Yeah. Sorry, Rick. Sorry to cut you off because that's exactly where I wanted to go and to better understand your thoughts and I'm not going to ask you to pick stocks here, but when you talk about enterprise adoption and really, really the follow through from the Are we talking though about the industrial sector and people finally or you know, banks, places that have had a great run. Industrials have rallied all year I think on some level because they were already running their business more efficiently. Are you really talking though about the platforms a little closer to home, especially whether you are talking about the hardware names. I certainly agree that software has underperformed here as people have been concerned about the hardware and I think you'll get follow through. But please just clarify this, this enterprise adoption dynamic sector wise, if you can.
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F
Yeah, so a couple thoughts. You know, AI has been a novelty for consumers with chats and a lot of knowledge workers have gotten big benefit out of it because they're very good at researching and summarizing content for knowledge workers. But after three years on the market now it's finally becoming part of business process and workflows how a company actually conducts business. So this involves the use of agents or Agentix and how they collaborate and do complex workflows. As a result, the amount of inference that's going to be required is going to explode. You know, a single call to a chatbot means it's one call to the LLM to give you the answer for inference. If it's a workflow related question, particularly for complex workflows, it could be 10 or 50 trips back to the LLM. So LLMs are going to really be stressed by enterprise systems systems we've got reasoning we're asking these models to do. Now they're not built for reasoning so they just kind of throw a lot of weight into this GPU saying give me 100 answers and I'll pick the best one. So I think for all these reasons, you know, the inference is going to be the heartbeat of American, well, global business. It's how it runs. So that's going to create enormous demand for data centers. So the data center trade, you know, I'm not worried about it, we're going to have so much more demand than we have supply of data centers given all the constraints on data centers, the capital, the GPUs, memory, etc. So the question would be, and I think this has been forefront in people's minds is well, is the business model there to support the financial commitments that are being made? And I think people look to the LLM market and this, the leadership in LLM changes over more times than a, you know, a close match basketball game. You know, the score just keeps going back and forth. So the Chinese have open source models, you've got Meta and Nvidia with open source models. So the LLM business is going to be a very competitive business, but I don't see the leaders in that market saying, we're going to make all our money on LLMs. What they're going to do is what Microsoft did with Windows and go up the stack. They're going to do what Oracle did, put them in the database and move up the stack. So it's going to be about to do the tooling. They have the APIs, the programmatic interfaces, so people can build their software, their applications on top of your LLM and drive demand for LLMs through the entire stack. So it's very sticky. And so the economic model is not selling LLMs, it's building a whole new tech stack. And that's where the battle is going to be fought. And so that's a very different economic model than saying, will my LLM allow me to generate the cash flow to pay off my commitment? So I, I don't worry as much about it. I think, you know, I don't know if the Chinese are thinking about building a whole tech stack, but certainly the leading US manufacturers are thinking much broader than just an LLM.
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B
Rick, it is great to get your thoughts. Thank you so much. Do appreciate it. Rick Shurland, now, Wedbush, an advisor there. How do you think the trade will change in 2017?
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Well, I'm going to be presumptuous and I'm going to say I'm going to pull forward. The next thing you're starting to see these hyperscalers actually spend money on quantum names and they're kicking the tires. The next natural progression is going to be AI to quantum because you need faster inference, you need faster data sets. So I think 2026 could be, and maybe I'll have my acronym be something to do with that.
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B
Oh, that's quite a tease. Just thinking of acronyms, we think about them all the time.
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E
In fact, I think one thing you brought up, which I very much agree with, is that we're probably going to see this broadening out here. And I think what you want to start to look at as we look into 2026 is rather than the companies who are spending on AI, you want to look at the companies that are adopting AI. So those companies are going to increase their productivity, which is essentially the other 493 rather than just the Mag 7.
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So we finally gotten to that tipping point. We're starting to see that.
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E
Yeah.
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Mike, how about you?
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Yeah, I mean, it's interesting that Steve references Quantum, although I think we're probably a little way off of that. I mean, what we're talking about here are some of these NP hard problems that's, you know, in inference and optimization, that's often what you're dealing with. And, you know, you can have, you know, some software solutions like hybrid algorithms that can help solve those types of problems. But, you know, it is basically in incredibly chewy when it comes to the technical requirements to solve problems that big. And that's, that is obviously the next big area.
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B
All right, meantime, several of the world's largest pharma companies agreeing to lower drug prices and invest in the US in exchange for reprieve from President Trump's tariffs. Shares of Gilead, Roche, Bristol Myers, Namjen all rising on the news. Emily Wilkins got the details here. Emily?
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E
Hey, Melissa. Yeah. As you said, President Trump, he announced agreements with these nine pharmaceutical companies to, to lower these drug prices. And that, of course, as you said, includes Amgen, gsk, gentech, and Merck. The company is also committed to bringing more of their manufacturing and production to the US and the Trump administration, they've now struck agreements with 14 of the 17 major drug makers that Trump initially asked to lower prices. And Trump said he expects to make additional announcements with drug makers in the next week. He name dropped Johnson and Johnson during today's presser and said he'd be involved. But he also announced today that he would be meeting with insurance companies in the next week to see if there are ways they can reduce prices for Americans. Now, as you can see here, insurance companies stock took a dip after the news. Politically, Trump's announcement comes as affordability around health care is taking center stage in D.C. and Congress is debating whether to extend those Affordable Care act tax credits that have helped keep the cost of premiums low for millions of Americans.
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B
Melissa and just quickly, Emily, where do we stand on that?
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E
So at this point, this issue is being kicked until January. There's still bipartisan partisan discussions going on. We're expecting to see at least one vote in the House, but it's not clear that there's one bill that can actually get the support needed from both chambers and be signed into law. And I think that's part of the reason why you saw Trump make that.
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B
Announcement today with the insurance companies. All right, Emily, thank you. Emily wilkins, okay, so pressure on the insurance companies, pressure on the pharmaceutical companies. Is there a sector here that you say they will take the pressure and I don't want to be part of it.
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A
I'm more worried about insurance than I am the drug companies at this point. And I think we've priced in.
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B
People hate insurance.
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F
Yeah.
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A
And I think we priced a lot of pain into the drug companies. I actually think the insurance companies have had a pretty good run here on the whole considering some of the risks around this. I also think that a lot of the drug companies had already begun to cut deals, especially related to Medicare and Medicaid. I think the dynamic around the kind of most favored nation status that the US Is seeking, why not? I think it's good politics. I think it's good for the drug companies. So if anything, I kind of like the tailwind from this to continue for what I think has been a very solid run for pharma.
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D
And when you look at it's going to be dealing directly. So the PBMs are going to be out of the loop on that. Right. So. And then you'll give a generic. Drug makers probably reap the benefits of this. But I think with the insurance companies, the health care companies, what Trump is trying to do is take that money and give it directly to. Who knows how the ACA is going to play out, but he wants to take that money and then give it to the individual who gives it right back to the health care company. So I think we probably carved out way too much in stock price of these. They're probably buys at these levels.
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B
Yeah.
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E
And I think, you know, it is still a little early to say so on the full terms of this deal to see exactly how it's going to be impacting these companies. But I think as we've seen with some of the deals in the past, that there is going to be some, some benefits that they are getting.
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G
Right.
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E
I mean the administrative is giving them something to lower these prices. So I actually completely agree with Tim here. I think it's the insurance companies you want to be a little more wary about here than the drug companies.
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B
Coming up, Morgan Stanley in orbit. The potential big win for the bank as the IPO market kicks into high gear next year. Plus another prediction market pop Robinhood. The latest name getting in on the mania, how it will impact retail investors and what the charts say about the stock's next move. Don't go anywhere. Fast money's back in two.
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Edu and now a next level moment from AT&T business. Say you've sent out a gigantic shipment of pillows and they need to be there in time for International Sleep day. You've got AT and T5G so you're fully confident, but the vendor isn't responding and International Sleep Day is tomorrow. Luckily, AT&T 5G lets you deal with any issues with ease so the pillows will get delivered and everyone can sleep soundly, especially you. AT&T 5G requires a compatible plan and device coverage not available everywhere. Learn more at att.com/5G Network.
- [23:23]
B
Welcome back to Fast Money. Shares of Morgan Stanley More than 2% higher today. The bank reportedly leading a leading contender to serve as a main underwriter in Space X is expected IPO next year. Reuters reporting the bank's close ties to CEO Elon Musk could give it an edge in his decision. We were just mentioning this, the tailwinds to banks going into next year and.
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A
This has been IPO M&A bonanza year. In fact I think we're we're through the record all time and we know and we've heard this from the earnings calls that the banks just gave us just how strong IB was Morgan Stanley all the way back to the 2010 IPO of Tesla, the financing of the Twitter deal, which was not easy. This is going to be a very complex transaction. The lead, the lead left designation is, is a very sexy one for maybe the most important IPO in a long time.
- [24:11]
B
Yeah. When do we get concerned about valuation if we do, Steve, I think they're.
- [24:16]
D
Sucking up all the oxygen in the room between Open Air and Space X. They've really gobbled up a lot of the investment dollars in the room. But getting back to Morgan Stanley, when you look at how much money they will bring in to have a lead position this everyone is struggling for an allocation to want to one of the biggest IPOs in history of the, of the markets. So they will actually get a ton of business before that IPO even takes place because people want a better allocation. That's the way Wall street works.
- [24:45]
B
I mean, to be fair, probably every single bank on the street will be part of this huge ipo. Lead is different, lead is different. That is true. Or there could be co leads with three co leads and I mean like that's how this thing works, Mike. So, you know, when you take a look at this, it's not just space X, there is anthropic, there is open air potentially and a host of others. Along with all these other deals, we've seen a lot of deal making really perk up, up in biotech and pharma this year, which did not happen the year before. So what do you think of banks in terms of valuation here?
- [25:15]
C
Well, I think the valuation of Morgan is still quite reasonable and there's a virtuous cycle I think that exists for them because of course, you know, if you compare them to Goldman, you know, these two were the two big white shoe investment banks. And Morgan has more recently pivoted more towards asset management. You know, probably 60% of their revenue is coming from that side of the business now, although they're still obviously very big in investment banking. You know, I think this is a real positive sort of speaking to that allocation issue. Although, remember they were the lead on the Facebook ipo and you know, that was not a, that was towards the tail end of that whole process when they had a like $15 billion raise on the Facebook situation, they basically, it was not necessarily so important to get an allocation at that point. In fact, you'll remember it traded on the syndicate bid that first trading day. So we'll, so we'll see what happens here. If I was looking to do an issue based on how well they performed in raising the money and the valuation they got for that one, I could put Morgan Stanley at the top of the list.
- [26:13]
E
And I think looking into next year, I think we probably are going to continue to see this big market when it comes to the IPO market. So I do think looking at investment banking is something to look at here and I do think there's going to be some tailwinds, probably Goldman Sachs, the more pure play to play there. But then they have a lot more of a diverse side business, especially like the wealth management space. So depending on how you play that, I think they both look good here.
- [26:33]
B
There's a lot more fast money to come. Here's what's Coming up next.
- [26:37]
A
The next retail trader battleground companies rushing to get into the prediction markets. How Robinhood is looking to parlay its newest feature into more gains for the stock. Plus the latest on US China relations as a TikTok deal gets signed. What's at stake and who will come out ahead? You're watching Fast Money live from the NASDAQ market site in Times Square. We're back right after this.
- [27:05]
B
At Capella University, learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the course room to the workplace. A different future is closer than you think with Capella University. Learn more at Capella Eduardo and now.
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A next level moment from ATT Business. Say you've sent out a gigantic shipment of pillows and they need to be there in time for International Sleep day. You've got AT and T5G so you're fully confident, but the vendor isn't responding. And International Sleep Day is tomorrow. Luckily, AT&T 5G lets you deal with any issues with ease. So the pillows will get delivered and everyone can sleep soundly, especially you. AT&T 5G requires a compatible plan and device coverage not available everywhere. Learn more@att.com 5G Network.
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Whenever I need.
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- [28:42]
C
Yeah, we do. What do you do? I mean, well, we haven't done anything with it yet. I mean, look, this is, you know, one of the best growers I think in the space right now. They traded a premium to the group, but they deserve to. We're looking at better than 50% year on year EPS growth. And you know, I have to say I did attend the Hood Summit and this is a dev team that's really enthusiastic about what they're doing. And you know, their customers are very enthusiastic I am very enthusiastic about the things they're doing as well. Has had a great year though, let's be honest. And of course, because now that they've had the addition to the index, I'm not 100% sure whether that's sort of that last boost and tailwind that might encourage somebody to start paring some. We haven't yet.
- [29:24]
B
We should note that Carter Braxton Wirth, otherwise known as the chartmaster of Wirth Charting, says that he is a seller here. He has a chart out and it looks to me like a double top. If we can put that There it is. See the two little humps there? With an hour going down, I don't know. How do you feel about the charting versus the fundamentals?
- [29:44]
A
Well, charting just in the broader picture, charting to me is a guidepost. It's not the absolute rule. Whereas Carter would call it fundamental funny mentals and I respect that. I think the fundamentals around Hood are interesting. It's, it's not cheap. It's growing. The asset base has grown dramatically. The product innovation is extraordinary. And let's just say, I mean they're at the front of the class class in terms of providing kind of the financial services super app that I think a lot of investors and I would just say a younger demographic absolutely want, like they have won. And therefore it trades at a premium.
- [30:20]
B
Coming up, the latest on US China relations. A tick tock deal just in the nick of time. Also, things heating up between Beijing and Washington over an arms deal to Taiwan. We'll get the latest read on China when Eunice Yun, the Beijing bureau, joins us here on amen when Fast MONEY returns.
- [30:39]
A
Missed a moment of fast. Catch us anytime on the go. Follow the Fast Money podcast. We're back right after this.
- [30:54]
B
Welcome back to FAST money. Stocks notching back to back gains to wrap up the week. The Dow climbing 183 points, the S&P up nearly 0.9% and the Nasdaq leading the gains up 1.3%. Shares of Lamb Weston dropping 26% today. The frozen French fry maker topping earnings and revenue expectations but warning of profit pressure, citing continued discounts to win back business and rising international production costs. Shares of rivian charging nearly 11% today and jumping nearly 22% just since Monday, notching its best week since June of 2024. Wedbush lifting its price target on the ev maker to 25 bucks, up from 16. Analysts citing bullishness surrounding the R2 model launch in 2026. Meantime, a slew of developments this week that could impact the state of U S. China relations. Last week's news. Last night's news on TikTok. Signing an agreement to create a new US Joint venture follows an agreement for the US to supply an arms package to Taiwan. So where do things stand between Washington and Beijing now? Let's bring in CNBC's Eunice Yun, who is here on set live. Welcome, Eunice. You've actually been here for two weeks, but we will welcome you here as if this is the first day you're here. Thank you. So what it's interesting, the response from China, not surprising when they say you must abide by the one China principle here because you are not by selling arms to Taiwan. How do you think this raises the temperature between the two countries?
- [32:16]
G
Well, the. The intelligence community has been saying that they believe that China has been preparing for some type of invasion by 2027. It doesn't necessarily mean that they are going to invade, but we do know that the Chinese have been building up their military. And I think that there are kind of two theories about what's happening. One is that president Xi Jinping wants to be seen as the great communist hero. So in that respect, taking Taiwan would be one way that he could really solidify his position. But on the other hand, there are a lot of people who think that President Xi doesn't necessarily want to take on the risk. There are a lot of things going on in the economy, and if politically it doesn't actually work out for China, then that could be seen as very detrimental to the communist party.
- [33:02]
B
I know you're on the China side, but in terms of how it's perceived by President Trump in the context of trade deals, does this sort of set that back?
- [33:12]
G
Well, I think what's interesting with Taiwan is that because right now the U. S. China relationship leadership seems to be, from the Chinese perspective, going their way a little bit because President Trump seems to want to prioritize a closer relationship with China, that there is some big debate going on right now in China if in 2026, China will and President Xi would if they feel more emboldened to do something more because they feel like they're in a stronger position. There's a lot of confidence right now among officials that they are able to take on more influence with President Trump. And I think that what we see with the TikTok deal is consistent with that. That at the end of the day, it looks as though the Chinese are willing to kind of give up something that they don't think is so strategically important for them. But potentially could get some other gain.
- [34:05]
A
And how important, Eunice, is, say, us at least siding with China and Japan, you know, flare up. And there does seem to be in a chess game. I mean, Trump seems to be doing a pretty good job or his advisers are doing a very good job on this. And so I'm curious if you think that that has helped assuage some of the dynamics. And I guess it comes down to though, this question. What do you really think Xi's view of this relationship at this juncture? Is it as calm and as amicable as Trump wants us to believe that it is?
- [34:34]
G
I think that right now we're in a period of stabilization and that we've moved past escalation. And from the US Perspective, it looks as though President Trump, for whatever reasons, wants to have a closer relationship and feels as though that if he has a meeting with President Xi or that he's, he'll be able to, to do what he wants to do. But with the Chinese position, I think that the hostility is still there. I don't think that we haven't seen them stop harassing Taiwan, for example. We haven't seen them back off on Japan. If anything, it's kind of gone even harsher with, with Japan. So from the Chinese perspective, I think that it feels more like they're in a status, kind of like in this stalling position to try to be able to take care of issues that they think are important, such as the economy.
- [35:23]
B
And what is the status of the economy. Earlier this week, when we had retail sales, we had fixed asset investment, all those numbers were terrible. There was some talk that maybe there would be some stimulus, but. But I don't. I don't know if that's ever coming.
- [35:34]
G
I know. I mean, the Five Year Plan has been talking about how consumption now is going to be a priority, but then to your point, at the same time, they're saying that high, like advanced tech, advanced manufacturing and tech development are a priority. And what we're seeing is that the Chinese government is really pushing a national agenda for tech development and for AI, as you guys were talking about, to the detriment, I think, to the everyday life of a lot of people within the economy.
- [36:04]
B
Eunice, great to see you. Thank you for coming by. You're always welcome.
- [36:07]
G
Thank you for having me.
- [36:09]
A
And don't wait two weeks. I mean, you know, if you've been in two weeks. Come on, you got to come over.
- [36:14]
B
Thank you, Eunice. Safe travels, Eunice. Yoon. So emerging market specialists, what do you make of the China trade here?
- [36:20]
A
Well, I think if you look at a number of the China proxy trades and whether you are trading the tencent or alibabas of the world or the kwes ebbs, I think you've had a significant drawdown from where sentiment was. I mean, you can make an argument that China here is bouncing right at that 200 day. I think the stage is set next year for emerging to outperform. I think you're going to see a dollar that could go closer to 90 than it would go to 105 on the Dixie. And I think it sets up very well from what had been, you know, frankly, after all we did was talk about is China uninvestable? It became very investable and I think it's time for it to bounce again.
- [36:58]
B
Coming up, big cash in college football, the surging valuations for some of the country's largest athletic programs and the teams topping the roster. CNBC is 2025 official college sports evaluations list is next. Back into. Welcome back to FAST money. College sports valuations are soaring, fueled by massive media deals, expanded playoffs, conference realignment and the rise of nil deals. The top 75 athletic programs are now worth a total of $51.2 billion, up 13% from 2024, based on CNBC's official college valuations list that is out today. The University of Texas at Austin tops the list, valued at almost 1.5 billion, followed by the Ohio State, Texas A and M, University of Georgia and the University of Michigan. Joining us now are the folks behind the list, CNBC's senior sports reporter Michael Ozanian, and Jason Belzer, publisher of Athletic Director youth. Gentlemen, great to have you with us. Mike, I'm going to start it off with you. How what's behind the list? How did you create it?
- [38:00]
A
Well, the list right now is basically being driven by the TV deals. You see that with the top of the list, the athletic programs in the Big Ten and the sec, those conferences have the biggest TV deals in college sports. University of Texas usurped Ohio State, who is number one last year. University of Texas has the highest revenue of any athletic program. They had a huge surge in donor money last year, which was a big reason why their revenue went up.
- [38:29]
F
Hmm.
- [38:29]
A
Mike, as you look at the college football landscape and the amount of money that's being put into the nils, it's almost seemingly changed the landscape of the game and it seems to be growing. In fact, many of these college athletes will make more money in college than they could ever dream of making in the pros. Who are some, I would just say unexpected winners here. Is it, is it going to continue to be the student athletes or is it going to be some of the schools that maybe never got into the top five who now have repositioned. I mean, and maybe that means winning on the, on the playing field. I mean, look at Vandy this year in the sec, who never was there but now suddenly is. And that's a self fulfilling monetary payoff. Yeah, the player portal, right, where players are changing schools every year. I was an offensive tackle for one school, now he's playing for another school this year. A lot of that's driven by NIL money, as you just mentioned, Tim. And I think, you know, look, my daughter's a freshman in Indiana University, right? So for her, three years ago they weren't on the map as far as college football. Now they beat Ohio State, they're ranked number one going into the playoffs. That's the dynamic you're seeing here among college athletic programs, principally football. Because of what you just said, Tim.
- [39:40]
D
Jason, when you look at the conflicts of interest. Interest or potential conflicts of interest, when you look at these NIL deals and the boosters tossing money in there, does that have any issue with inflating a lot of these teams perceived valuation? When you, when you do your grids on these teams, the answer is no.
- [40:00]
A
We take a very objective approach to valuing these businesses. We look at their actual revenues, media rights, ticket sales, sponsorship. NIL does get factored in, but the rules have changed substantially. Starting this past season, universities can pay student athletes directly and there is a, essentially a hard cap that's in place of approximately $20.5 million this year. There are some ways to get above that cap, but the reality is that technically Ohio State and Indiana are paying their student athletes the same amount of money. That being said, and as Mike kind of pointed out, there is a tremendous arbitrage opportunity. The reason why Indiana is ranked number one going into the playoffs, the reason why they had a Heisman winner, is because of nil. And there's a huge opportunity for an institution to be able to boost its value if it can deploy its capital right to their student athletes.
- [40:55]
B
Jason, private equity is very interested. Is that going to be a good thing or a bad thing?
- [41:00]
A
I think it's a good thing. We saw the first private equity deal get announced about a week or two ago at the University of Utah. Michigan State just took on a $400 million donation. But 100 million of that is actually really an investment. The Big 12 is in negotiations and of course, the Big 10 with their UC Regents negotiation. The reality is that a lot of these universities are still being operated the same way that they were 20 or 30 years ago and private capital is finding ways of coming in and professionalizing an operation. And the reality is you don't have to look any further than the LSU situation this year where they fired one coach, paid them more than $50 million and then go hire another coach. It's not a good way to run a business if you're paying your top employee $50 million to not work.
- [41:47]
B
Yeah, that is true any business. Mike, in terms of putting the list together, I don't know if you have preconceived notions going in and then you do the calculations with Jason. You're surprised. Were there any surprises this year?
- [41:59]
A
I think one of the things that's really surprised me is the year to year swings in donations because last year was the first year we did this and I didn't realize how big a component that was and how much it could change year to year and why. So for example, talk about University of Texas being number one. They've deployed a lot of their money the last few years to renovating their stadium. You know, and talk about the pros like die hard Ranger fan right here, you know about the premium seating, the luxury suites. Yeah, I can't afford that stuff. And all this stuff. I thought you would invite me maybe. But you know, this is, this is sort of the getting to be a little bit of the pro model when it comes to generating stadium revenue. And that's one of the reasons why these teams are maybe taking on more private equity capital in the future because they want to deploy that not just in players, but to building better stadiums and stadiums that generate more revenue.
- [42:52]
B
We got to leave it there, Mike. Jason, thank you so much for joining us.
- [42:56]
A
Thank you.
- [42:57]
B
Be sure to check out the full list, cnbc.com/sport. Coming up, Nike's China problem. Plunge in sales weighing heavily on the stock today. More on that and just how much tariffs are still hitting the sportswear giant. More fast money into. Welcome back to fast money. From swoosh to swoon. Nike shares sinking almost 11% to hit its lowest level since May. A big drop in China sales and shrinking margins overshadowing the company's top and bottom line beats in the latest report. Nike also giving disappointing guidance for the current quarter more than a year into CEO Elliot Hill's turnaround efforts. Could this be a buy here? Courtney?
- [43:38]
E
I do think there were some positives here. I mean I think if you're going to believe that the turnaround story is happening, looking at the sales here in the US I think actually was really positive 9% sales growth that was clearly more than offset by the decline that you saw in China. So I think the question is like, why is that resonating here in the US and it's not abroad, which is going to be a really big growth story for them in the future. So I think that's something you have to keep your eye on. And the tariffs were also a really big part of it. I mean, that's a lot of the big reason that their margins weren't where we wanted them to see. So I do still think you could potentially see a turnaround here. I think there are some, some, you know, buried in there. I think there's some, some good information. But, you know, there was a big sell off and as I think if anything could be an opportunity to take advantage of.
- [44:17]
B
Yeah. How about you, Mike?
- [44:19]
C
Yeah, I mean, this is not a name I've been very enthusiastic about because I think there was a lot of basically the margins that enjoyed sort of during that post pandemic period where you were seeing low double digits like 11, 12% net income margins that were just not going to be sustainable and then a lot of this notion that they were going to see the same kind of growth that they had. But now I'm kind of with Courtney here, I'm actually kicking the tires on this one because even if you go back to 2019 numbers and relatively modest margins like 8 and a half, 9%, you start to say, OK, that plus a little bit of growth and the valuation is beginning to look, look interesting.
- [44:56]
A
So I actually think this is an overreaction. There are certainly analysts on the street that do to Jefferies has a. No doubt that says we'd back up the truck. You know, green shoots, maybe not really, but this is, this, this thing is priced as if they're slowly looking like Lululemon and they're not.
- [45:13]
F
Yeah.
- [45:13]
D
And when you look back on, if you look at our chart, it should stop here. So this is back to the June lows. If it doesn't stop here, you get another leg down. I've been bearish on Nike. I don't, I don't feel anything hopeful in the stock right now. It's got to prove itself.
- [45:26]
B
Up next, final trades, Final trade time. Mike Poe.
- [45:36]
C
Yeah, Top line, bottom line and free cash flow all growing faster than the market overall and yet it trades at a market multiple. I like Amazon, Tim.
- [45:44]
A
Good to have Eunice here inspired me on my Baba trade.
- [45:48]
E
Alibaba Courtney we were talking about IPOs potential M& A activity. I think Goldman Sachs is worth a look here.
- [45:54]
D
Steve GM is an incredible chart. I think it still can go higher.
- [45:59]
B
Thank you for watching Fast Money. Have a fantastic weekend. Mad Money at Jim Kramer starts right now. All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal, 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 the Fast Money 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 Fast Money disclaimer, please visit cnbc.com fastmoneydisclaimer@ Capella University, learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the courseroom to the workplace. A different future is closer than you think with Capella University. Learn more at Capella Eduardo.