Detailed Summary of CNBC's "Fast Money" Episode: Big Tech Reports… And Opportunities in Private Credit
Release Date: January 29, 2025

Hosted by Melissa Lee alongside a panel of top traders, CNBC's "Fast Money" delved into the latest earnings reports from major tech companies, analyzed Federal Reserve policies, explored cryptocurrency trends, and uncovered opportunities in the private credit market. Recorded live at the Iconnections Global Conference in Miami Beach, the episode provided comprehensive insights for investors navigating the current financial landscape.

1. Show Overview [00:38]

Melissa Lee kicks off the episode by highlighting a significant night for earnings reports, with nearly $6.5 trillion worth of companies—including Microsoft, Meta, Tesla, and IBM—announcing their quarterly results. The episode promises in-depth analysis of these reports, the interplay between President Trump's comments and Federal Reserve policies, and the latest developments in the cryptocurrency space.

2. Microsoft Earnings [02:38 - 07:00]

Speaker: Steve Kovac [02:55]

Steve Kovac provides a detailed analysis of Microsoft’s latest earnings report:

• Earnings Per Share (EPS): $3.23, exceeding expectations by 22 cents.
• Revenue: $69.63 billion, beating the street forecast of $68.78 billion.
• Azure Growth: Slight miss with 31% growth versus the expected 31.1%, down from 33% in the previous fiscal Q1.
• Artificial Intelligence (AI) Revenue: 157% year-over-year increase across all cloud services.
• OpenAI Losses: $2.29 billion attributed to OpenAI investments, higher than the projected $1.5 billion.
• Capital Expenditures (CapEx): $22.6 billion this quarter, nearly double last year's quarter, raising concerns about future spending sustainability beyond the projected $80 billion through June.

Notable Quote:
"Microsoft is seeing a 157% increase year over year for artificial intelligence revenue across all cloud, not just in Azure." [02:55]

3. Meta (Facebook) Earnings [07:00 - 11:16]

Speaker: Julia Borson [07:00]

Julia Borson discusses Meta's quarterly performance:

• Share Performance: Up approximately 2% following a Q4 earnings beat.
• Revenue Growth: Accelerated instead of decelerating as analysts had anticipated.
• AI Focus: CEO Mark Zuckerberg emphasized the transformative potential of Meta AI, aiming to reach a billion users.
• Capital Expenditures (CapEx): Increased to $119 billion for the year, up from $65 billion previously.
• Daily Active Users: Growth stronger than expected at 5%.
• Reality Labs Losses: Less than $5 billion, better than the anticipated $5.4 billion.

Notable Quote:
"Mark Zuckerberg is on the call right now talking about his focus on AI and in particular how the company's AI assistant called Meta AI will be transformative this year." [07:00]

4. Tesla Earnings and Stock Reaction [11:16 - 15:55]

Speaker: Phil LeBeau [11:29]

Phil LeBeau outlines Tesla’s earnings:

• Earnings Per Share (EPS): 73 cents, below the expected 76 cents.
• Revenue: $X billion, missing estimates by $1.5 billion.
• Production Guidance: No specific delivery guidance; expected growth in the automotive business for 2025.
• Margins: Automotive gross margins excluding zero-emission vehicle credits at 13.7%, below the expected 16.3%.
• Bitcoin Gains: $600 million from digital asset gains, unusual for Tesla.

Market Reaction: Despite missing key metrics, Tesla’s stock surged by approximately 2% in after-hours trading.

Discussion Highlights:

• Cult Stock Phenomenon: Dan Nathan and Guy Adami describe Tesla as a "cult stock," reacting positively regardless of fundamental performance.
• Concerns Raised by Melissa Lee: Missing key metrics, challenges in the Chinese market, price wars, and regulatory uncertainties.

Notable Quote:
"This was messy, I think. ... it's a cult stock." [17:41]

5. Nvidia and AI CapEx Trends [15:55 - 22:00]

Melissa Lee and Gene Munster discuss potential tighter US export controls on Nvidia’s AI chips to China:

• Regulatory Scrutiny: Reports indicate the White House may impose additional restrictions on Nvidia’s H20 AI chips.
• Market Impact: Such restrictions could affect Nvidia’s sales to China, though the company expresses readiness to collaborate with the administration on AI strategies.
• CapEx Trends: Continued high capital expenditures from companies like Meta and Microsoft signal sustained growth in AI infrastructure, benefiting hardware providers like Nvidia.

Notable Quote:
"Commerce Secretary nominee Howard Lutnick did today say in his confirmation hearing that he will be very strong and rigorous in his approach to export restrictions toward China in order to ensure that the US remains a leader on AI." [16:56]

6. Federal Reserve Policy and Market Impact [22:50 - 31:37]

Key Topics:

• Fed Decision: The Federal Reserve paused interest rate cuts, maintaining rates at 4.5%. Fed Chair Jerome Powell adopted a cautious tone, warning of persistent inflation.
• Presidential Reaction: President Donald Trump criticized the Fed on Truth Social, claiming their policies failed to curb inflation and promising that his administration’s measures would restore financial strength.
• Market Analysis: Elizabeth Burton and David Zervos from Goldman Sachs discuss the implications of the Fed's decision, noting continued volatility and uncertainty in the markets.
• Deregulation Impact: Phil LeBeau emphasizes the potential positive impact of deregulation under the new administration, which could bolster equities despite ongoing inflation concerns.

Notable Quote:
"Fed Chair Jerome Powell striking a more cautious tone, warning of sticky inflation and signaling that the committee is not in a hurry to cut rates." [23:00]

7. Stock Movements: Alibaba, IBM, Las Vegas Sands, Whirlpool [32:10 - 33:46]

Highlights:

• Alibaba: Shares surged nearly 12% following the release of a new AI model outperforming competitors like Deep Sea.
• IBM: Stocks jumped after surpassing EPS and revenue expectations.
• Las Vegas Sands: Sharply higher despite an earnings miss, indicating strong investor confidence.
• Whirlpool: Declined due to disappointing revenue figures.
• ServiceNow: Fell as results met expectations without exceeding them.

Discussion Highlights:

• Undervaluation Concerns: Analysts suggest Alibaba might be 40-50% undervalued based on its strong performance and AI advancements.
• Market Sentiment: The contrasting performances underscore the market's varied reactions to company-specific news and broader industry trends.

Notable Quote:
"Shares of Alibaba up again today, bringing gains over the past week to near 12%... Vinnie and Porter and they think Alibaba's probably 40, 50% undervalued." [33:13]

8. Private Credit Opportunities [35:16 - 37:57]

Speaker: Armen Pannojian, Co-CEO of Oaktree Capital Management

Armen Pannojian explores the private credit market amid a high-interest-rate environment:

• Market Conditions: High rates present attractive spreads and contractual returns in private credit, making it a lucrative option compared to the uncertain equity markets.
• Borrower Profiles: While subprime consumer borrowers face elevated delinquencies, corporate borrowers with fixed-rate debt remain strong.
• Investor Appeal: Private credit offers high yields—high-yield bonds at 7%, syndicated loans higher, and private credit close to 10%—making it appealing for income-seeking investors like pension funds.

Notable Quote:
"It's a great time to be in credit... the prospective returns on credit are far more attractive because there's a contractual rate of return." [37:57]

9. Starbucks Earnings and Turnaround [39:58 - 40:38]

Highlights:

• Earnings Performance: Starbucks reported strong earnings, with shares climbing nearly 2% to a two-year high.
• Turnaround Strategy: The company announced plans to reduce 30% of its food and beverage offerings by year-end to streamline its menu.
• Market Response: Despite the positive earnings beat, analysts caution about underlying challenges such as declining growth margins and the complexities of implementing successful turnaround strategies.

Discussion Highlights:

• Growth and Valuation Concerns: Dan Nathan highlights potential obstacles, including ongoing growth challenges and diminishing market margins, questioning the sustainability of the turnaround efforts.

Notable Quote:
"It's slashing 30% of its food and beverage offers from the menu by the year end. It was the best stock, the stock's best day I should say since last August." [39:58]

10. Cryptocurrency Developments [41:20 - 44:02]

Speaker: Steve Kurz, Head of Asset Management at Galaxy Global

Steve Kurz discusses the evolving cryptocurrency landscape:

• Institutional Adoption: Increased interest from institutions, pensions, and high-net-worth individuals driven by regulatory advancements and a stable one-year track record of Bitcoin ETFs.
• Market Dynamics: Bitcoin has surged nearly 50% since Trump's re-election, positioning itself as a "store of value." Stablecoins are expected to grow significantly due to their cost-effectiveness and faster settlement times.
• Regulatory Framework: Emphasis on establishing clear market structures and defining securities to facilitate broader crypto adoption and innovation.

Notable Quote:
"We just need to know for the price of bitcoin we need a framework around market structure and we need an overall what is a security, what is not a security that's going to help bitcoin, that's going to help the other coins." [43:45]

11. Final Trade Highlights and Market Sentiment [44:12 - End]

Speaker: Gene Munster

Gene Munster provides updates on Tesla’s forward-looking plans:

• Robo-Taxi Service: Launch planned in Austin by June, earlier than expected.
• AI Infrastructure: Anticipates a $500 billion investment in AI infrastructure by 2026, positioning Tesla for significant growth in autonomous driving and AI applications.
• Stock Performance: Tesla’s stock rose approximately 5% in after-hours trading, reflecting optimistic investor sentiment despite recent earnings misses.

Discussion Highlights:

• Long-Term Optimism: While short-term earnings were underwhelming, long-term strategic investments in AI and autonomous driving are driving positive investor outlook.

Notable Quote:
"Zuckerberg's comments about spending hundreds of billions on capex is really reassuring." [44:12]

Conclusion

The episode of "Fast Money" provided a comprehensive analysis of the latest earnings reports from major tech giants, highlighting the dynamic interplay between AI investments, capital expenditures, and market valuations. Discussions on Federal Reserve policies, the burgeoning cryptocurrency market, and lucrative opportunities in private credit offered listeners valuable insights into navigating the current investment landscape. Notable quotes from industry experts underscored the key takeaways, emphasizing the resilience and strategic direction of major players amidst evolving economic conditions.

Key Takeaways:

• AI and CapEx Growth: Continued high capital expenditures in AI by companies like Microsoft and Meta signal sustained growth, benefiting hardware providers like Nvidia.
• Private Credit Appeal: The high-interest-rate environment and attractive yields make private credit an appealing option for income-focused investors.
• Regulatory Shifts in Crypto: Enhanced regulatory frameworks and institutional adoption are driving significant interest and growth in the cryptocurrency space.
• Market Sentiment: Despite mixed earnings reports, strategic investments and long-term growth prospects are fostering optimism among investors.

Notable Quotes:

• "Microsoft is seeing a 157% increase year over year for artificial intelligence revenue across all cloud, not just in Azure." [02:55]
• "Mark Zuckerberg is on the call right now talking about his focus on AI and in particular how the company's AI assistant called Meta AI will be transformative this year." [07:00]
• "This was messy, I think... it's a cult stock." [17:41]
• "It's a great time to be in credit... the prospective returns on credit are far more attractive because there's a contractual rate of return." [37:57]

This detailed summary encapsulates the critical discussions and insights from CNBC's "Fast Money" episode aired on January 29, 2025, providing a clear and comprehensive overview for those who did not tune in.