← CNBC's "Fast Money"
CNBC's "Fast Money"
Digging in on the first round of Big Tech earnings, and What’s Next for the Fed 10/29/25
00:43:23
Stocks hitting fresh record highs before pulling back as the Fed cuts interest rates for the second time this year. What Chair Powell had to say about the labor market, inflation, and the central bank’s December meeting. Plus, Big Tech reporting results, as Alphabet, Microsoft, and Meta all deliver results. The details from the company conference calls, and what a top tech analyst sees in store for the group post earnings. Fast Money Disclaimer
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- [00:00]
Michael Kantopoulos
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Dan Nathan
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Michael Kantopoulos
Fidelity Brokerage Services, llc, Member nyse, SIPC and now 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.
- [00:48]
Melissa Lee
Live from the NASDAQ markets out in the heart of New York City's Times Square. This is fast money. Here's what's on tap tonight, a $10 trillion night of earnings. We'll dig into the results from a trio of big tech stocks and a bunch of names of others on the move. After hours and the Fed. In focus, the central bank cutting rates as expected, but saying another one this year is far from certain. The impact on markets and what to expect from the central bank through year end. Plus the headline sending Fintech Fiserv to its worst day on record. Caterpillar digs up some big gains after earnings. And Boeing shares grounded after the company takes a massive charge. What it'll take for the stock to get back off the Runway. I'm Melissa Lee coming to you live from Studio B at the nasdaq. On the desk tonight, Karen Feinerman, Dan Nathan, Guy Adami and Michael Kintopoulos, deputy chief investment officer at Richard Bernstein Advisors. Great to have you, Michael. And we start off with that monster night of earnings. From big tech to big burritos.
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Guy Adami
Nope.
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Melissa Lee
Yeah, big burritos. We're watching all the after hours action in these stocks. Julie Warson dialed in on the medical. Steve Kovac has got all the details on Microsoft. Kate Rogers sipping on Starbucks, chomping on some Chipotle. We start off with Alphabet trading at new records after beating revenue estimates. Mackenzie Segalis is digging into those numbers. Hey, Mac.
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Kate Rogers
That's results show clear upside from its AI Push. The biggest concern going in was search its core revenue engine. And a key read on both the ad market and whether Jenny is starting to cannibalize the business. But that segment beat by one and a half billion dollars. Its chat bot Gemini now has 650 million monthly active users, not far behind chat GBT's 800 million weekly. Cloud also showing strength, topping estimates on the back of new AI deals with Metta and OpenAI. Capex is expected to hit 93 billion dol at the high end as Alphabet races to build infrastructure to meet demand and stay competitive with other hyperscalers. Now its backlog, a read on future cloud revenue still trails Microsoft, Amazon and Oracle, but that doesn't yet reflect last week's deal with Anthropic. And Mel. LSEG has just pushed out an EPS comparison for Alphabet that excludes the EU fine impact. It's a beat at $3.10 adjusted versus 233 expected. And the call that's starting in about a half hour from now.
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Melissa Lee
All right, keep us posted. Mac, thank you. Mackenzie Seagalas in San Francisco. Karen, you made the excellent point, as always, that going into this quarter the bar was extremely high in terms of the move in the stock.
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Karen Feinerman
Yeah. So extremely high going into this afternoon. A giant, giant run. And still they managed to beat on almost every metric, which was really, really impressive. I mean, she talked about Mac, talked about the search fear, which was it could still be there for sure, but it isn't happening right now. And in fact, we might even be seeing could this be even better than we thought? So there's that, which is huge, which obviously drives most of the business. Then you had some good numbers from YouTube. We had cloud also. That was very good. And there's still a lot of momentum that is not in the, in this quarter. So I mean, just it feels like, remember two years, was it two and a half years ago? Maybe it was two or three years ago when Microsoft announced the AI partnership. Microsoft seemed to be just, you know, so far ahead of Google out of the gate. And that was the way it was for a while. Now things seem to really feel like they're changing somewhat.
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Melissa Lee
Yeah.
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Karen Feinerman
And so some excellent moment here. It's still not expensive here, I think. Let's hear the call. Let's hear about the spend, but there was really a lot to like here and it's, it's up a lot. But still, if you, if you think about where they are in their evolution and where they are, the momentum that they seem to be having and the multiple that it trades at, all of that is pretty good here.
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Melissa Lee
So that existential threat to the core business of search seems to be at least put, put to the side at this moment. Right. And the gap between it and, and chatbots Seems to be narrowing as well, which is also the concern, don't forget.
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Karen Feinerman
Also about their chip deal.
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Melissa Lee
And.
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Dan Nathan
But here's the thing. They're two very different businesses, right? So Microsoft accrued all that market cap. They deal with open air to the get go. They have an ownership stake of it. They just saw that transfer. And so now it's I think, valued at $135 billion or something like that, which is great for Microsoft. But Microsoft deal with OpenAI was really to leverage off Azure to put their models on there and then create product across their suite of services to upsell enterprise clients. What's going on with Google and Gemini is very different. So two years ago, when they launched Bard, which was the predecessor of Gemini, it was just a disaster. The rollout was horrible. And I think a lot of investors were like, listen, these guys are only going to cannibalize this amazing business, which is, you know, digital ad business. And so now Google Cloud has been gaining on us, which is the number one market share, and then you have Microsoft Azure in the number two spot. But the problem with cloud gaining is that it's becoming a greater percentage of their revenue and at a much lower margin, if you think about it. Right. So that's kind of bringing down the gross margin for this, for this business. But I would say if you're going to Compare it to OpenAI, the way that they are growing users and obviously they are monetizing it very differently than open, I will. OpenAI will have to eventually do it with ads and a whole bunch of other services. So what I think investors have come around to is that they're not cannibalizing that ad business as much as a lot of folks thought. I think there were some analysts that we've had on there and said this is an existential threat. If you look at Google overlays, they're actually a really good way to Google search. So a lot of good things going on there. I'm not sure you run after it. I think Karen's point is that, you know, it trades at a multiple. It's pretty reasonable. I think if you're looking at that versus Matter right now, they trade at similar multiples. And I think what Google has going on is far better, in my opinion, than what Matter has going on.
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Guy Adami
I'd agree with that. I think Google's a little cheaper, but I'm with Karen on this one. And the first $100 billion quarter operating margins were better than she was looking for. Yeah, YouTube is still a thing and Dan is Right about in terms of their cloud business. But the cloud business is growing in a way that you want to continue to see. It's been lower left, upper right now for quite a few, a long period of time. I'll say this people are going to start to chase here in terms of analysts. They're going to start looking at the multiple, say you know what, in this environment at 27 times, maybe next year 26 and a half, it's too cheap. You put a 30 multiple on this, there's no reason this couldn't be a $320 stock. I think you start seeing price targets raise on the back of this.
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Melissa Lee
Let's move on to the next big cap tech stock Meta shares. They are sinking in the after hours despite beating street estimates. The mega cap tech is raising its full year capex forecast and saying it expects to spend even more in 2026. The conference call is underway. For more, let's bring in CNBC's Julia Boorstin. Julia, any guidance on 2026 CAPEX? Well, CAPEX is really a big focus of the call right now. CFO Susan Lee talking about it quite a bit. Both she and CEO Mark Zuckerberg talking about why they are raising their capex, saying it's all about investing to drive AI strength and how they need to maintain that position of strength.
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Kate Rogers
So they raised the range for 2025 capital expenditures to a range of 70.
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Melissa Lee
To 72 billion dollars. That from a prior range of 66 to 72 billion. And the company did not share specific guidance for next year's capex.
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Kate Rogers
But CFO Susan Lee just said moments ago on the call about the importance of expanding infrastructure capacity to enable Metta.
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Melissa Lee
To seize opportunities, saying they expect capex dollar growth to be notably larger next year. Saying quote, we are focused on preserving.
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Kate Rogers
Maximum long term flexibility to ensure we.
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Melissa Lee
Can meet our future capacity needs while also being able to respond to how the market develops the years ahead. Now Lee also saying they expect to invest aggressively to meet those needs both by building their own infrastructure and by contracting with third party cloud providers. Now that could indicate more cloud deals ahead.
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Kate Rogers
And Med has done some big recent cloud deals.
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Melissa Lee
A $10 billion deal with Google in.
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Kate Rogers
August, $14 billion deal with Core Weave in September and a $20 billion deal.
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Melissa Lee
With Oracle in September as well. So Melissa, now a new category of stocks that might be impacted by all these investments. Julia, keep us posted on the call which is about 38 minutes in. Julia Boorstin, once upon a time higher CAPEX was rewarded definitively by the Stock market. Have we hit a point, Michael, in your view where we are reassessing, we need to see ROI and, and it is the turn here in terms of Capex numbers.
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Michael Kantopoulos
Yeah, most. I think that's absolutely the case. I think we're going to see more and more of this over the coming quarters. You know, many of these tech stocks, the tech sector in general was so attractive for so long because it was viewed as cap light, Capex light and now it's Capex heavy. You know, it's very similar to like energy and exploration company within the energy space that constantly has to drill new wells in order to realize growth. These guys are all saying we have to invest ever larger amounts of Capex in order to keep up with AI growth. And I think the value proposition once you get to these levels starts to diminish and the return on investment becomes much, much harder.
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Melissa Lee
Yeah, Karen?
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Karen Feinerman
Yeah. So this is sort of what I was afraid of that earlier on Capex was seen as good. What does the word notably mean here? I don't know. I'm scared of a lot. I feel like notably is more than 10%. That wouldn't be notable to you, would it? I don't know, it seems like more than 10, which is. They think the street was looking for maybe, I don't know, a little over 10%. I think it'll be more than that. I mean the underlying business is really doing well. They are getting returns, we see growth there, but I don't know that we're getting the returns on this kind of spend yet. So it's concerning somewhat. I think we'll hear what they, I feel like they should just rip the band aid off. What do you think the number is going to be? What should, they should tell us what they think the number is going to be for Capex.
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Melissa Lee
I mean the backdrop though is that, I mean Matt has always been given sort of the, the luxury, the benefit of the doubt because every dollar of Capex would benefit their own bottom line. But I mean we were talking earlier about, you know, llama for not so great. I mean, so, so what are the results of all the spending?
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Dan Nathan
Yeah, I mean Metta is like a distant behind all those other chat bots that we're seeing right now and they're trying to fix it. They went out to spend hundreds of millions of dollars. They want to do this research lab. They're kind of saying don't look here right now, look there. We want to do super intelligence. And you know, when you talk about what they're getting out of this, obviously like ad targeting has been really good. I think a lot of the metrics are demonstrating that at a certain point you're kind of going to hit a wall and, and then they're going to have a lot of competition. If you think about how is OpenAI going to monetize chat GPT they're going to get in the digital ad game. Like that's going to be a big way of how they do it. So you're going to see pressure around the whole space. But the one thing I'd mention about this build out of these data centers, they're just now starting to hit the debt markets, right? And you think about this deal that Metta just did to build this data center in Louisiana. Well, they're basically taking a 20% stake. There's going to, you know, Blue Owl is lending them $27 billion. It's going to go into special purpose vehicle and you know, it's all this stuff and some of that debt is literally going to be issued at 1% above like it's going to be, Mike can get in here, it's going to be like junk and then it's going to find its way into all these ETFs and all these big, you know, debt portfolios. So all of this stuff is becoming very financialized and we've been talking about this for a couple of years. These companies have been funding this build out through their cash flow and through their large cash balances and now it's hitting a wall because 30% of their revenue, it's got to stop at some point, right? So this is to me the spot and Oracle is in the worst spot of all of them. I think their debt to equities are like 500% or something like that. They're going to be the ones holding the bag. Then the Neo clouds and then these guys because they've done this off balance sheet stuff, it's probably going to end up pretty good for them.
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Michael Kantopoulos
Yeah, this is, this is where you get the parallels to the late 90s and early 2000. You know, you had a tremendous amount of debt issuance going to build out basically the fiber optic network that became FiOS and everything else. Now you had, in fairness, you had companies doing this that really had no business levering up their balance sheet and ultimately went bankrupt. I don't think we're worried about that with respect to the Mag 7 and some of these larger tech companies. But the story still rhymes and you are starting to see a lot of decisions. You're Also starting to see guarantees now from some of these players to smaller, you know, infrastructure companies, construction companies, etc. And that's a new thing that we're seeing in the debt markets. Guarantees by Google for someone to build out a data center and issuing debt in order to do that, that's has never been done. That always makes me a little bit nervous.
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Guy Adami
So they took a $16 billion charge. So if they had not taken that EPS would have been probably 10% better than expected. Been seven and a quarter. The street was at about 665. They beat revenues by about, I think 4% better than the street was looking for. Margins are now north of 40%. I get it that people concerned about the spend where they go from 69 to 71 billion. I mean, to me that's a bit of a rounding error, but I understand this level that we're looking at now is where we traded down to at the end of July and held. So I actually think you buy Facebook here.
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Karen Feinerman
I think the scare of the spend isn't this year, it's 2020, 26, but I hear you, I think, do you remember that was, I don't know, two, three years back when it was the Metaverse spend. And so the street gave him some leeway for a while that, you know, he deserved it. Efficiency and then it was the year of efficiency. I don't know if the year of efficiency awaits us.
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Melissa Lee
Doesn't sound like it's in 2020.
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Karen Feinerman
I don't think notably that is. Yeah, I think not.
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Melissa Lee
All right, let's get to Microsoft now. Shares are dropping despite the company beating top and bottom line estimates. The conference call kicks off later this hour. For more, let's bring in CNBC Steve Kovac. Steve?
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Michael Kantopoulos
Yeah, on the surface here you got beats across the board, Melissa, but you see the stock still down. EPS was a beat, revenue was a beat, and even Azure cloud growth was a big beat here. 40% compared to the 38.2% expected. But it's really unclear what's dragging the stock lower. Intelligent cloud only beat by a tiny bit. Perhaps also a run up of the shares into earnings. They hit that $4 trillion market cap as well this week. Maybe beating expectations, but not annihilating them was part of the thing here. Now look, we get the call at 530, we get guidance, we get CapEx spending estimates for the December quarter and a read on when Microsoft is going to catch up to AI demand. That was supposed to happen by the end of this year. One other interesting nugget here guys, to talk about the open air stake that resulted in a $3 billion negative impact to net income. So the losses at OpenAI are starting to drag even more on Microsoft's net income, guys.
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Melissa Lee
All right, Steve, keep us posted. Thank you. Steve Kovac. This is the trick with Microsoft. The call doesn't start till later. We don't have guidance. So I don't know how we treat it. But Guy.
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Guy Adami
Well, there's nothing not to like here. I mean it's a tremendous quarter. I mean, I just think it came down to valuation. Not good enough at this valuation to get the continued move to the upside. People will point to the technical levels that we just stopped. That was a prior high. We saw a few a month and a half or two months ago. So technically maybe it sort of made a bit of a short term double top. But you know, again, it's a valuation thing. It's not anything to do with the quarter because I think the quarter is very good.
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Dan Nathan
Yeah, you know, we go back to last quarter and the stock had a huge gap. It just looked like you could not find anything wrong with that quarter. The Stock opened up 8% the first tick the next day was that all time high. And then it closed that day on the low. And then for the next, you know, I want to say a couple of weeks it just didn't see an uptick and then it consolidated. So we had this recent run and I got to tell you, the recent run over the last week or so really felt like a bit of a blow off top. Some of the names that we've seen just blow out that are just down the stack as you think about, you know, generative AI and some of these larger ones are getting harder to push around. Ex Nvidia, I guess because that didn't have a hard time. 78 days between going from 4 trillion to $5 trillion in market cap. So, you know, pretty astounding. I also mentioned that Nvidia with all this stuff is not up, it's just trading flat and it was having a good day this morning. It traded, you know, closed pretty well. So Nvidia to me is going to be a really interesting one to watch because if you're looking at Microsoft, you said I can't find too much to pick out here and it's down a little bit. At some point, you know, something's got to give. In the video, the bar was not.
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Melissa Lee
High going into this quarter for Microsoft necessarily. I mean it wasn't ramp higher or anything like that into earnings.
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Karen Feinerman
Right. I Just want to talk about something Dan brought up. So Nvidia is actually a little bit lower, AMD is a little bit lower, Oracle's a little bit. So I don't know if they were front running. This expectation of all this additional spend and the idea of it doesn't matter who gets a new deal, everybody trades up now. Right, we saw that with amd. That's sort of an interesting phenomenon that I actually find a bit troubling.
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Melissa Lee
Yeah. You look at these earnings that we have so far, Michael and I know the conference calls aren't complete, they're not ongoing, but what is your takeaway at this point in terms of big cap tech? The ability to lead the markets here?
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Michael Kantopoulos
Yeah, I think. Listen, much of what we've seen over the last three or four months for me has not been earnings driven. It's been more liquidity driven than anything else. And so now earnings have to basically catch up to this massive liquidity driven rally that we've seen. And so regardless of the expectations for earnings, I think it's actually because the price appreciation has been driven by so much liquidity. Almost have to be the liquidity expectations in a way. Right. These new expectations set because of liquidity and that's going to be really, really hard to do going into this earnings season. I think the number 1 mag 7 last 12 month net income year on year growth guy was number 75 or something in terms of S&P 500 companies. There are a lot of other companies growing more than mag 7 and I have a suspicion that after this earnings season we're going to see a continuation of that broadening in earnings growth.
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Melissa Lee
All right, coming up, will it be keeping an eye on all the big tech movers? After hours, Google and Microsoft's calls kicking off in just a few minutes. The headlines from those plus the numbers out of Chipotle and Starbucks, that's next. And it's not just earnings. Another rate cut from the Fed today. What it did to stocks and what Chair Powell had to say about the central bank's future plans. Don't go anywhere. Fast money is back into.
- [18:39]
Steve Liesman
When work gets crazy, I like to stop by the bar after, have a few cold ones.
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Karen Feinerman
I don't drink at all until 4 o'.
- [18:46]
Steve Liesman
Clock.
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Gene Munster
We limit ourselves to one bottle of wine a night.
- [18:51]
Guy Adami
Excessive drinking has a way of sneaking up on us. A few drinks a few nights a week, it can add up and suddenly.
- [18:57]
Steve Liesman
We'Re at greater risk for long term.
- [18:59]
Guy Adami
Problems like heart disease, cancer and depression. Reason enough to rethink the Drink more@rethinktodrink.com.
- [19:05]
Michael Kantopoulos
NoHE initiative 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&T5G requires a compatible plan and device coverage not available everywhere. Learn more@att.com 5G Network.
- [19:38]
Melissa Lee
Need to restock inventory, cover seasonal dips, or manage payroll. OnDeck's small business line of credit provides immediate access to funds up to 200,000 doll exactly when your business needs it. With flexible draws, transparent pricing and full control over repayment, you can tackle unexpected expenses without missing a beat. Apply today@ondeck.com and funds could be available as soon as tomorrow. Depending on certain loan attributes, your business loan may be issued by Ondeck or Celtic Bank. Ondeck does not lend in North Dakota. All loans and amounts subject to lender approval. Welcome back to FAST money. More after hours action, this time in the restaurant space. Chipotle and Starbucks both on the move following their latest report reports to Kate Rogers been locked in on the conference call. She joins us now with the latest wow on cmg.
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Kate Rogers
Kate, I know a lot going on here. Melissa, we'll start there. So those third quarter results essentially in line for Chipotle, but you saw the stock moving lower by 13%. The company lowered its full year. Same store sales guidance now for the third quarter in a row it now expects low single digit declines versus a prior forecast of flat. CEO Scott Boatwright telling me in a CNBC exclusive interview that macro pressures were part of that guidance cut. Take a listen.
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Guy Adami
We've seen about two or three really macro step downs which accounted for about two or 300 basis points of growth. And so we think that we may be in another cycle of a step down here with what's going on in.
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Dan Nathan
The economy right now.
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Guy Adami
You have to look no further than.
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Dan Nathan
You know, what the Fed chair was.
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Guy Adami
Saying just as early as this morning around, you know, wage growth as well.
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Dan Nathan
As jobs, markets cooling and then the.
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Guy Adami
Government shutdown certainly isn't helping things.
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Kate Rogers
Now he tells me the company plans to lean further into messaging around its value proposition, which Boatwright says is still around $10 for entrees, which is a value in this market and MELISSA Moving on to Starbucks, it did have a mixed quarter. EPS missing but revenues a beat its same store sales, though big news turned positive globally. They were flat in the US up 2% in China. Key for investors though comps turned positive in North America in September, remained positive in October, executive said A reminder for those paying attention, comps have been negative in its key US Market for the last six quarters and while again they were still flat in this most recent quarter, that trend of turning positive in September and October is meaningful. Melissa, back over to you.
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Melissa Lee
Kate. Did you get any color from Boatwright about the specific macro pressures and which demographics are being hit specifically?
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Kate Rogers
Something he said that was really interesting is that the 100k and under cohort between mid 20s and mid 30s in terms of their age range, Melissa, are dining at home more. He doesn't suspect that they're losing market share to any of their competitors. He just feels that those younger consumers that are making less than $100,000 a year are eating at home more. Again, not going elsewhere. But that's a really key demographic for Chipotle says they're still gaining share with that crowd. But that's something that they did notice in this quarter and that some of those macro pressures he suspects will continue into the first half of next year, but then hopefully things will turn around again. He also said they're going to be really conservative on pricing and try to not pass on tariff pricing in particular to consumers, which I thought was interesting.
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Melissa Lee
Kate thank you. Kate Rogers, do you think things are going to turn around, Michael, after the first half of next year?
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Michael Kantopoulos
Well, that's still a long time from now, Melissa. You know, nine months. Who knows what's going to happen. But I think between now and then there's certainly, you know, we're living in this K shaped economy where the lower end consumer is having a really difficult time. They're having a hard time finding jobs. You're seeing that with recent college graduates. You're seeing it in the subprime auto space. You're seeing it time and time again. And discretionary has taken a hit because of that. I mean, I think what discretionary is up maybe 4% year to date, something in that in that neighborhood. So yeah, I think you're going to continue to see a bit of difficulty here with the consumer. I think we're starting to see similar to the markets, right? You have the large mega cap growth doing well and a lot of other stocks not doing nearly as well. It's the same thing with the population.
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Melissa Lee
Right.
- [23:36]
Guy Adami
Where'd you go to, you went to that Harvard place, right?
- [23:38]
Melissa Lee
Exactly.
- [23:38]
Guy Adami
Harvard Business Review online.
- [23:42]
Melissa Lee
Harvard College.
- [23:43]
Guy Adami
Nothing wrong with that by the way. But they do the Harvard Business Review, they do these studies.
- [23:47]
Melissa Lee
All sorts of things.
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Guy Adami
All sorts of things. Chipotle will be one of the things they talk about. And here's the reason I think we've actually done a decent job on the way up. When comps are continuing to grow and margins are doing well. Nobody, nobody fricking cares about valuation. When the comps start to flatline and go the other way, everybody looks at valuation. So go to December of 2024 when they were growing and then it stopped. And look what the stock has done since. I guess if there's good news, $34 should be a level that was the 10-20-23 low. But now valuation is going to start to be under the microscope and it's.
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Melissa Lee
Still expensive here, still at 33.
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Guy Adami
Mm. Ask Karen, she's looking at it.
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Karen Feinerman
Yeah, look at, I think it's still up three handle even with for EPS for price earnings. I mean this is a difficult quarter and it doesn't seem like the moment. He doesn't. You don't get the sense that the momentum is going to stop.
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Guy Adami
Right.
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Melissa Lee
They're cutting quarters in a row.
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Karen Feinerman
Right.
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Melissa Lee
Not momentum. It's the opposite.
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Karen Feinerman
It's the opposite. And you know, I was just looking briefly at Cabo which is down, you know, maybe 4 or 5% similar cohort. I think that 25 to 35 year old difficulty.
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Dan Nathan
Yeah. You know, it's interesting speaking to what Michael just said, I mean as the consumer, I mean one of the areas in the market today was the weakest was the XRT was retail. And so you know, and I know we're going to talk about the Fed in a few minutes there but you know, that not guarantee of a December cut. I mean what does that mean for consumer. The long and variable as it means nothing. Right. If you think about it near term. So I just think it's interesting that retail traded so poorly. And another thing is I saw this in the Wall Street Journal. I think today we're talking about consumer confidence as it relates to, you know, party lines.
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Steve Liesman
Right.
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Dan Nathan
So Republicans are like up here and Democrats are down here. But the important part is that the independents are catching up with the Democrats. And if you think about that, if you were to take the entirety of it and take the politics out of it, you probably see that tracking, you know what I mean, like what's going on in the economy to some degree and we still have GDP that's expected to be under 2%. And we also have inflation that's still at 3%. And one of the things I take away from the Fed meeting today is that the Fed is worried about inflation rising and unemployment going lower, unemployment going higher, but the labor market weakening. And that just doesn't speak well for a burrito company that sells them 15 bucks.
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Guy Adami
Let me just say this though, before.
- [26:04]
Melissa Lee
We everybody at this point. But I had, I had a burrito.
- [26:09]
Guy Adami
Last night and it was extraordinary.
- [26:11]
Michael Kantopoulos
Was it from Chipotle?
- [26:12]
Melissa Lee
It was no tomato.
- [26:14]
Guy Adami
Why would you put tomatoes on extra chicken?
- [26:17]
Melissa Lee
People do.
- [26:17]
Guy Adami
No, they sent me a T shirt. Chipotle with my order on it.
- [26:21]
Melissa Lee
Coming up, a ride for Can View today as new comments from Health Secretary RFK Jr. Move the stock. What is impacting this name next? You're watching Fast Money live for the NASDAQ markets in Times Square. Back right after this.
- [26:35]
Michael Kantopoulos
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@att.com 5G Network.
- [27:05]
Melissa Lee
OnDeck is built to back small businesses like yours. Whether you're buying equipment, expanding your team or bridging cash flow gaps, OnDeck's loans up to 250,000 doll help make it happen fast. Rated A Plus by the Better Business Bureau and earning thousands of five star trust pilot reviews, On Deck delivers funding you can count on. Apply in minutes@ondeck.com depending on certain loan attributes, your business loan may be issued by On Deck or Celtic Bank. On Deck does not lend in North Dakota. All loans an amount subject to lender approval. Welcome back to Fast Money. A volatile session for Tylenol maker can be spiking nearly 4% midday but closing more than a percent lower. The moves coming after HHS Secretary Robert F. Kennedy Jr. Said there isn't a definitive link between Tylenol and autism, but that some studies appear very suggestive now. Last month, the FDA initiated a label change advising pregnant women to avoid the drug in most scenarios. Canvu shares have lost nearly a third of their value since reports surfaced of the Trump administration's push to link Tylenol to autism. Obviously there are a lot of other class action lawsuits type of things going on in the courts prior to J RFK Jr jumping in on this and this also this, this proves the damage that has already been done to the brand guy 100% regardless of how he tries to walk it back.
- [28:20]
Guy Adami
Now you get an analyst I think Canaccord just downgraded the stock from $26 price target to 15. You could start to look at valuation. You could start to look Today it traded two times normal volume. I think they report on November 5th. Don't at me if I'm wrong but I tell you if you can see continued weakness here you get it down to 13 and a half which is not implausible. I think you buy the stock in earnings is anything on the margins it's positive the Stock goes up 15, 20%.
- [28:44]
Karen Feinerman
Do you know what it was that made him. What. What was it that he found that was. That was a suggestive but earlier he thought was definitive.
- [28:51]
Melissa Lee
There were studies but also you know the, the criticism was that he cherry picked some of the data from various studies and put it together. Obviously the medical community, you know said pushback of evidence suggest that there is no link and it's not a danger.
- [29:07]
Karen Feinerman
It's interesting. I doubt they would do this but you know the damage has been done. Like you said, if you're can be. Do you think about suing? No you don't because you can't. Right. But it is interesting. The damage has most definitely been done.
- [29:22]
Melissa Lee
Coming up, all the details from the Fed's rate decision today. How markets reacted to the cut and what Fed chair Jerome Powell had to say about the central bank's next move that money's back into. Welcome back to Fast Money. Stocks mixed after the Fed cut interest rates this afternoon. All three indices hitting intraday records early but only the NASDAQ say it in the green. The S and P nearly unchanged. The Dow down more than 70 points. Nvidia making history becoming the first company to hit a $5 trillion valuation. It is up nearly 15% in just the last five trading sessions. Gold meantime settling back above the $4,000 level today but pulling back in the last few hours. Shares of Adidas dropping more than 10% on weak sales in North America. The CEO saying nervous US retailers were ordering less product up front as they waited to see the full impact of tariffs. And some more after hours action. MGM missing earnings estimates. EBay lower after topping EPS and revenue expectations but cutting Q4 earnings estimates and carvana dropping despite a revenue beat. Well, Fed Chair Jerome Powell throwing some cold water in hopes of a December rate cut if economic uncertainty remains high. Traders now pricing in a 30 plus percent chance that rates say unchanged at the central bank's final meeting of 2025. Let's get to Steve Liesman in Washington D.C. for more on the decision today. Steve?
- [30:41]
Steve Liesman
Hey Melissa. Yeah. A divided Fed cutting rates by a quarter point to a new range of 375 to 4% as expected. But Fed Chair Powell disappointing markets in the press conference by signaling a far more neutral stance on a December rate cut than had been priced in.
- [30:57]
Dan Nathan
In the committee's discussions at this meeting, there were strongly differing views about how to proceed in December. A further reduction in the policy rate at the December meeting is not a foregone conclusion.
- [31:10]
Michael Kantopoulos
Far from it.
- [31:12]
Dan Nathan
Policy is not on a preset course.
- [31:15]
Steve Liesman
That comment triggered an immediate sell off in stocks that had barely moved from the statement a half an hour earlier. And also a surge in bond yields as markets repriced for the chance of no December cut. The chance of that cut falling from 84% before the press conference to around 67% now, but the probability that it happens in January rising from 42% to 80%. So the direction priced in from markets that remains intact. The pace is in question. The Fed noted the lack of data resulting from the shutdown but seem more focused on the data it does have showing reasonably strong economic growth, a booming stock market and no acceleration in the softening of the job markets that they can tell the vote coming with two dissents won by new Fed governor Stephen Myron. He once again wanted a 50 basis point rate cut. And from the other side by Kansas City Fed President Jeff Schmidt sticking out of hawkish position favoring no rate change. It's unclear right now what the default position is. If the alternative data continues to show no change in the current rate in the economy, the Fed may take a Christmas break from cutting. Melissa.
- [32:18]
Melissa Lee
Yeah, it was also interesting to me. Steve Powell made it sound like the lack of government data is also an argument to stay on the sidelines to not move. So he was almost throwing it back to Trump saying this shutdown is going to make me stand pat.
- [32:32]
Steve Liesman
I think that's part of it. But it's also interesting to see the listen to what he said about the data he does have. We do get those weekly jobless claims. I'll bring them to viewers on Friday morning. They really showed no acceleration. There's also some data on job openings not getting much worse. So the real question being asked in monetary policy terms is has the Fed taken out enough insurance against a potential weakening in the job market, not an actual weakening.
- [33:02]
Karen Feinerman
Steve, it's Karen, thanks for being on how much dissent could there be versus what you've seen historically and that they would still move forward. Is it just a simple majority or how does, and what if you have dissent on both sides and you don't get a majority? How does it work?
- [33:18]
Steve Liesman
It's a great question and I will point out that as I reported all day today, that the market may end up being disappointed with the guidance that reporting came from the comments of Fed officials, in fact, Fed presidents who are voters, many of whom wanted to be cautious. So we have to listen to what people are saying rather than seeing what we want to see. And I think the market has a predilection to do that every now and then, which is it wanted to cut it one of the guidance for December. And so it thought it was coming and kind of ignored some of the cautionary signals that were out there that maybe we weren't going to get that guidance that we that the market had wanted. So I think Fed Chair Powell has engineered his committee with far fewer dissents than Bernanke or Yellen ever did. It's something that he seems to strive for. He wants to bring the committee together around a consensus with a couple dissents on the side. And I think you're right to ask this question precisely, which is this notion that once dissents get too high, I think the Fed chair would probably, if it's not in favor of a cut, he would back off of it.
- [34:27]
Melissa Lee
Steve, thanks.
- [34:28]
Steve Liesman
Pleasure.
- [34:28]
Melissa Lee
Steve Liesman. Michael, I seem to remember conversations in the past about the markets being disappointed because they were baking in all these cuts and they may not happen. And here we are at that precise moment.
- [34:40]
Michael Kantopoulos
We are. We absolutely are. And I think the message was loud and clear. Unless the data changes meaningfully and is meaningfully weaker, they're not cutting in December and with a 70% chance still priced in that they're going to. I don't think the market quite realizes that yet. You know, the Fed has done a really hard job to justify cuts. Inflation still high. Core PC is going up. Yeah, sure, inflation missed expectations by like a tenth, but we're going up. We're going the wrong direction. We've heard transitory a million times and since 2020. And I'm not convinced at all that tariff inflation is going to be transitory. And the Dallas Fed themselves just came out with a paper saying the neutral rate of employment is basically printing 30,000 jobs a month and where are we at 50? That's weaker of course, but it's actually above the Fed's own estimate of what you need to basically keep printing in order to stay neutral on the jobs market. I see no reason to cut in December. I don't think they're going to do it market and that's the biggest risk to markets right now.
- [35:42]
Guy Adami
That would be a risk. I would say this, you know, the not foregone conclusion. I think that was the headline. But I think the market wanted to hear the end of Kutty immediately and they got it in December, which is still a month earlier than I think everybody in the aggregate was expecting. But I think some optimists thought it would happen now. So I think that's sort of the offset of this entire.
- [36:02]
Dan Nathan
It's funny, our friend Peter Bocvar, he had this, he wrote this this morning and over the last week that this is exactly what was going to happen. I don't know why this was kind of a big surprise the fact that December was pricing in over 90%. Obviously this was a foregone conclusion today, the end of Kutty and some of these sorts of things. So you know, yes, it was out there and smart people were talking about it. The market, the stock market's reaction was pretty fascinating. I mean it just wasn't bothered. If you had told me that a week and a half ago, I'd say we're down a few percent.
- [36:30]
Melissa Lee
Exactly. So what does that tell you about where we are here in terms of the markets is make you feel better about the levels we are at and put in layer in also the earnings that we've gotten tonight where you have some questions about story.
- [36:42]
Karen Feinerman
That's the part that's sort of because I has really been driving I think the momentum in the market which is spread out beyond AI but that's the driver so I'm concerned.
- [36:52]
Melissa Lee
Coming up, we are keeping an eye on all the tech news after hours of Google and Microsoft's conference calls just getting started. We're heeding hearing from those and what Fast Money friend Gene Munster makes of the latest numbers. Fast Money is back in to. Welcome back to Fast Money. We've been keeping an eye on big tech's after hours earnings moves. Microsoft dropping despite beating estimates. Alphabet shares still up and Metta still sinking despite the quarterly beat calls from Microsoft and Alphabet both kicking off just a few minutes ago. Fast Money friend Gene Munster has been listening in. He's the managing partner at Deepwater Asset Management. Gene, I want to start off with, with Metta. So you think that you figured out why it is down? Why?
- [37:30]
Gene Munster
Yes, Melissa, I guess the answer was clearly in front of us when those numbers came out, the stock gapped down. It's just a simple dynamic between revenue growth and expense growth. And if we rewind to the past two years, Meta has grown revenue faster than expenses by a wide margin. 2024 revenue growth about 23% expense growth about 18% the first two quarters of this year, revenue growth 2022% expense growth 12%. They report their September quarter with 23% revenue growth, but expense growth of 32%. And throwing insult onto that is the commentary about the third party CapEx spend for next year. And this aggressive is the word that they're spending substantial increase expenses related to that. We're probably going to see something like 18% revenue growth for next year for the top line. The street's at 16 right now, but probably 18% and probably expenses growing north of 30%. And so essentially the script that we've seen with Meta over the past two years got flipped. And I think it's just that simple. If you look across the board at Zuckerberg, ambition around AI, what he's trying to accomplish, look at their engagement. I mean just like profound engagement growth, accelerating engagement growth. 43% of the world uses their products on a daily basis. Those rate of usage is accelerating. So it was a great quarter with the exception of that dynamic, Melissa. And I think it really stung investors.
- [39:04]
Dan Nathan
You know, Gene, this is one again. I saw your notes earlier. You're kind of confounded Microsoft soft similarly, you know, when I look at the downtick in earnings growth though for 2026 for Metta, I mean, isn't that the sort of thing that you would probably expect for the stock that's outperformed pretty dramatically, you know, over the last two years or so to kind of take a pause.
- [39:25]
Gene Munster
Well, a pause is understandable, but I think that that, that shift, that expense shift, that was something new. Like a pause to me is they've got good numbers. They beat the numbers at one time charge that people are talking about. That $15 billion tax charge, that was, that's a nothing, just throw it out, doesn't matter. But so I think, Dan, that it's, I'm trying to look at like what was incremental. I could understand if the Stock was down 3% on Good News. That's to me taking a breather, but down 8, 9, 10%. Investors are trying to Just recalibrate I think something bigger. And again that dynamic around them going more to cloud. Now I'd also point out like around the ambitions and around AI. And I'm all in on this being more transformative than where I think high expectations are. But Zuck basically is setting himself up to be the most optimistic of any of the big tech CEOs as evidenced by their increase in capex. So it's going to be up. The street's looking for 40% growth right now for 26. They didn't give detailed guidance around that but it's probably going to be up more than 60% and if you look at what Google just guided up their capex and imply that to for next year they're going to be up like 25% and Microsoft and Amazon around that. And this one comment kind of stuck out to me. He said we're building our AI infrastructure for the most optimistic. That was his word, the most optimistic case for AI. And I think that's the right thing to do. But that is a little bit unsettling when he talks about the most optimistic case we're building for. And so I think Dan, I think that's kind of playing into it. I think it's more than just had a good run and kind of taken a breather. I do think that ultimately he's on the right track. Like I fully support everything that's going on. I think that the stock is going to reverse these losses in the weeks to come.
- [41:17]
Karen Feinerman
Gene, it's Karen, thanks for being on. How quickly does the street need to see a return and how big does that return need to be to justify the spin like this?
- [41:27]
Gene Munster
Well, we go through the recalibration and that's what's going on now and will happen tomorrow. And then they need to see it in the December quarter in the form of whatever that revenue growth rate is to be higher, a little bit higher than what people are thinking and then expenses to be hopefully a little bit lower than what people were thinking. And so I mean there's you know, this is a long term thing, long term opportunity that they're investing into but they are being marked every quarter. And so I think that they do need to show some improvement. And I think I'd kind of, I mentioned earlier this 18% growth for next year for the top on the streets at 16 for Meta. I mean it probably needs to be something like 20% and them showing that in fact this is driving revenue just like their AI. It's been the best example of any Company at scale using AI to accelerate revenue growth.
- [42:21]
Michael Kantopoulos
Growth.
- [42:21]
Gene Munster
And they need to continue to show that in the December quarter.
- [42:25]
Melissa Lee
Gene, always great to get your take. Thank you. Thank you, Gene Munster. Coming up, a number of big movers from today's regular session including a massive hit to Fiserv and a big surge in Caterpillar of the headlines. Behind all the pops and drops. That's next. More fast money into.
- [42:42]
Dan Nathan
The lorster.
- [42:43]
Melissa Lee
Welcome back to Fast Money. A couple of big movers catching our eyes today. Let's start off with Fiserv losing nearly half its value. By far its worst day on record. The fintech slashing full year revenue growth forecast from 10% to between 3 and a half to 4%. Blaming its Argentina exposure, the company also shook up its leadership team, naming a new cfo, making a slew of board changes. They had to look at. They had to take a very rigorous look at their balance sheet. Everything happened in the third quarter, apparently. I mean, I don't know. I don't think you could think of anything worse. It is of things to happen to a stock.
- [43:16]
Karen Feinerman
It is pretty bad. So this is a relatively new CEO, right? We always talk about the kitchen sink. This is a kitchen sink, I think. Let's hope. I mean if you were he right, you would kitchen sink everything you possibly could and throw it into this.
- [43:30]
Melissa Lee
Oh, he did a good job.
- [43:32]
Karen Feinerman
I hope so. I don't know. I mean, this sort of move scares me. I don't think the ship is right. People work there, they freak out. I mean, there's a, you know, a lot of uncertainty. I wouldn't be, I wouldn't. Wait, wait. You want to buy it? Wait.
- [43:47]
Melissa Lee
All right, well, Caterpillar meantime, surging more than 11% to a record high after a stronger than expected third quarter. The company saying strong demand for a data center power generation equipment more than offset tariff headwinds. It is a, an I play. Michael.
- [44:02]
Michael Kantopoulos
Yeah. What isn't?
- [44:03]
Melissa Lee
Caterpillar.
- [44:04]
Michael Kantopoulos
I know it's, it's infiltrating everywhere in the economy. And Caterpillar is obviously one of those traditional industrials where you're seeing that. I mean, listen, for now it is an economy. The question is just how long is it going to last? And you know, we're not convinced it's going to last forever. And we'll see what happens.
- [44:21]
Guy Adami
I agree with that. But valuation, it's still not ridiculously expensive. Caterpillar. And if you look at the backlog, margins are improving. I mean, they're doing everything right. Huge move today on Big volume. I don't think you chase today, but I don't think you run away from this stock.
- [44:34]
Melissa Lee
All right, up next, final trades. Welcome back to Fast Money. Another check on how big tech is moving after the latest earnings reports. Alphabet is holding on to its gains, up by about 6% right now. Microsoft still trading lower, down 5%. That conference call is underway. I think we're still waiting for guidance there. Take a look at Metta also. It is down by 8.6%. And Chipotle. Wow, that is a burrito blowout, as we say to the downside, of course, down 15% or so. Time for the final trade. Let's go around the horn. Michael Kantopoulos of rba.
- [45:12]
Michael Kantopoulos
I think the liquidity bubble is poised to pop and we're going to short momentum here.
- [45:18]
Melissa Lee
Karen.
- [45:19]
Karen Feinerman
I'm moving away from for the day anyway. Citigroup, I like it. It goes back north of 100.
- [45:26]
Melissa Lee
Dan?
- [45:26]
Dan Nathan
Yeah, I'm with Michael. I think obviously the poster child for momentum is Nvidia. I think you avoid this thing. I think it's going to be below 200. Not so disappear guy.
- [45:35]
Guy Adami
I want to wish a very happy birthday to Handsome Mike. Handsome, of course we have a couple mics, which doesn't speak great about the other one.
- [45:41]
Melissa Lee
However, I don't know, how about this Mike here? Is he.
- [45:43]
Guy Adami
No, this mic. Well, you know, October 14th.
- [45:45]
Michael Kantopoulos
It wasn't that long ago.
- [45:46]
Melissa Lee
Yeah, just checking PSX.
- [45:49]
Karen Feinerman
All right.
- [45:50]
Melissa Lee
Thank you for watching Fast Money. Happy Birthday, Mike. Mad Money with Jim Cramer starts 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.
- [46:39]
Michael Kantopoulos
When the flu.
- [46:40]
Steve Liesman
Is keeping you up at night, don't.
- [46:42]
Michael Kantopoulos
Try to tough it out.
- [46:43]
Steve Liesman
Knock out your flu symptoms with NYQUIL Intense Flu.
- [46:46]
Gene Munster
You got this.
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Michael Kantopoulos
It provides powerful relief of your flu symptoms so you can sleep well through the night. It NYQUIL Intense Flu, the nighttime sniffling, aching, aching fever. Best sleep with a flu medicine.
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Melissa Lee
Use as directed keep out of reach of children.