← CNBC's "Fast Money"
CNBC's "Fast Money"
Elon Musk Weighs In… And Fed Survey Results 5/20/25
00:43:47
Tesla CEO Elon Musk covering a broad range of topics with CNBC’s David Faber. What he had to say about the EV maker’s planned robotaxi rollout, his stint as CEO, and how DOGE is faring. Plus, stocks may have turned a corner since their lows, but have the odds of a recession done the same? The latest results from CNBC’s Flash Fed Survey, and the outlook for growth, inflation, and more. Fast Money Disclaimer
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Edward Jones
What does it mean to live a rich life? It means brave first leaps, tearful goodbyes and everything in between. With over 100 years experience navigating the ups and downs of the market and of life, your Edward Jones Financial advisor will be there to help you move ahead with confidence. Because with all you've done to find your rich, we'll do all we can to help you keep enjoying it. Edward Jones Member, SIPC.
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Bank of America
As America's leading business lender, bank of America is on your corner and in your corner. With $215 billion in business loans and over 3,700 business specialists across the nation.
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Melissa Lee
We help businesses thrive so communities prosper. What would you like the power to do?
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Bank of America
Learn more@bankofamerica.com LOCALBUSINESS bank of America Official.
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Melissa Lee
Bank of FIFA Club World Cup 2025.
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Bank of America
Copyright 2025 bank of America Corporation.
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Melissa Lee
All rights reserved. Live in the NASDAQ marketsite in the heart of New York City's Times Square, this is fast money. Here's what's on tap tonight, a Tesla turnaround. Shares hitting a three month high as CEO Elon Musk sits down with our own David Faber. All the headlines from that exclusive interview coming up. Plus losing ground. Alphabet shares falling into the red as its Google I O conference kicks off. Why investors weren't excited about the company's place in the air race. And Toll Brothers and Palo Alto on the move after their latest earnings reports. Pfizer incident up to $6 billion deal in the cancer space or counting down to target earnings. Will the company hit the bullseye or will it be a miss for the retail giant? I'm Melissa Lee. Come to you live from Studio B at the nasdaq. On the desk tonight, Bono and Ice and Dan Nathan, Gaia Dami and Julie Beal. We'll get to Alphabet's ambitions in just a moment, but we start off with all the biggest headlines from Elon Musk's big day, the polarizing Tesla CEO said, saying in just the last hour he believes the company's optimus robots will be the biggest product ever. Speaking with our David Faber not once but twice today about everything from Tesla's robo taxi rollout and competition in China to the progress Doge is making in Washington. Musk also saying earlier today he's committed to remain CEO of the EV Maker for the next five years. Our Phil LeBeau has even more on Musk and Tesla stock reaction.
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Phil LeBeau
Phil Melissa, let's start first off with the comments he made regarding the robo taxi development and the service that the company plans to launch starting next month and he gave us a timeline for the robo taxi. Now this is not new, but it is a little more detailed in terms of what's going to happen here. He did confirm that the Austin, Texas launch next month is on schedule. Small number of cars, they're going to start maybe in the 10, 15, 20 range and then ramp from there in a Geo fenced service area within Austin. And these vehicles, while they will not have a driver in the vehicle, they will be monitored by remote drivers. Here's Musk talking with our David Faber.
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Melissa Lee
We'll start with probably 10 for a week, then increase it to 20, 30, 40 and I think by say we'll probably be at 1000 within a few months and then we'll expand to other cities.
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Bank of America
So expand to San Francisco, California.
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Melissa Lee
Los Angeles.
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Bank of America
Is that a real possibility in the.
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Dan Nathan
Not too distant future? I mean Texas is very different, I don't need to tell you, than California.
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Gene Munster
When it comes to regulation.
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Phil LeBeau
We'll see what happens as the rollout develops over the next year, year and a half here. Elon Musk once again reiterated that he sees the potential for Tesla vehicle owners who have the full self driving, unsupervised, full self driving technology within their vehicles to add those vehicles and perhaps your own personal vehicle could be part of the Tesla robo taxi network. But he stressed time and again they are going to go slow in launching this robo taxi network.
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Bank of America
We're going to be extremely paranoid about.
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Melissa Lee
The deployment, as we should be.
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Bank of America
It would be foolish not to be.
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Melissa Lee
So we'll be watching what the cars are doing very carefully and as we.
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Bank of America
Find as confidence grows, less of that will be needed.
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Phil LeBeau
One last thing, we're going to show you Tesla vs byd over the last year. And why are we showing you this? David Faber asked him point blank, what about the competition in China? What about byd? You know what he said, Melissa? I don't watch the competitors. I don't know. You can make your own mind up about whether or not you believe he doesn't watch the competitors because they're certainly watching him and they will be watching him as they launch the robo taxi service starting next month in Austin.
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Melissa Lee
Melissa, if he doesn't, maybe he should. Phil. He also made comments suggesting that Tesla sales are rebounding, which I would have thought would have been better for the stock.
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Phil LeBeau
Yes, but increasingly, Melissa, it seems like the sales of Tesla vehicles, well, they may have an impact when they're starting to slow down as they did earlier this year, especially around when sales are reported, if they're way below expectations, we, we do see it hit the stock, but increasingly this is a stock that is moving on. The optimism that Elon Musk has when it comes to autonomous vehicle technology and the humanoid robots, those two things which he has pounded time and again for the last nine months, that's what's driving the stock, Melissa. So yes, sales may be improving, but the traditional business auto business within Tesla of selling vehicles to people like you and me, that is not driving the stock as much as it once did.
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Melissa Lee
All right, Phil, thanks. Phil LeBeau.
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Phil LeBeau
You bet.
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Melissa Lee
And when Phil is talking about driving the stock, the stock is up more than 40% since it reported earnings April 22 here. So what do you make of these comments of the interview? I mean, it was an unprecedented two part interview here.
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Guy Adami
David does a great job. I mean a lot to glean from that. Without question, there's a lot of Hopium. As Dan will tell you, self driving is the way. I mean their head of self driving basically said, I think it was earlier this month, that Waymo is a couple of years ahead of them. So there clearly is competition. But break down, the stock from here made an all time high, close to $500 earlier this year for a lot of different reasons, traded down to that sort of 220 level which we collectively said was support before, should be support again. This bounce that you've seen, and you just mentioned it's a big one, is about a 50% retracement of that entire move. It makes sense that we're here. The question is, do you continue to own the stock on the optimism or do you trade around the edges, which has been an opportunity for the last few years?
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Phil LeBeau
Yeah.
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Dan Nathan
So what's interesting, you asked, is it driving the stock, when you look at Waymo, they probably have 700 cars out there in four different cities right now. They work pretty well. I've been in them. It's a pretty interesting experience. It takes up to four people in those cars. In the Google or Alphabet's other bets last year they lost about $2 billion. Right. So this takes me back to Tesla. Back in the day, the Model S and the Model X were meant to fund what's going on in the lower end, which is the Model 3 and the Model Y. Now those cars have done really well. I think it's a really low percentage of the cars that they make right now are those higher end ones. So if you think about all the losses that Alphabet has just to put Waymo on the streets, until you get some level of scale, these things are not scaling, even the Waymo is not scaling. So when you think about what's going on, they're going to launch 10, maybe 20 of these robo taxis or cybercaps. I think they're two seat cars, which is kind of, you know, it doesn't make a lot of sense. They're two seat cars. And so at the end of the day, if Tesla is going to make these things, then that means that they have to own the fleet. And that's something that we learned this from Uber over the last 10 or years or so. Nobody wants to own the fleet. If you want to talk about losses until something scales, that's the thing. And one last point, when you look at earnings for Tesla, they're expected to do $4 in 2027. They did $4.07 back in 2022. So you got to figure out how to pay for this thing. So if the Stock is up 40% right now, it's got over $1 trillion market cap. I just don't see how it grows into that because Optimus is years away.
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Bank of America
Yeah, I don't really think there's much debate over whether or not, you know, the stock is trading a bit dislocated from the actual automotive business. I mean, if you look at the last quarter's numbers, you had a 20% decline in revenue, a 71% decline in net income. So clearly that coupled with the 40% rally, you see some dislocation there that doesn't really seem to make a lot of sense. With that said, dad makes a good point. If you talk about the fleet, you typically don't see these type of multiples on very highly capital intensive businesses. It just kind of erodes gross margin. You have deferred maintenance, you have Capex, you have all of these things that you have to all an inflated cost basis that makes it very tough to support that type of multiple. With that said, you know, I clearly think, you know, the bulls are all about humanoid robots, full self driving and you really have to get behind that story if you're going to own the stock, particularly at this level.
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Melissa Lee
It has never traded with an auto multiple, it has never traded on sales, it has never traded on all these things that you guys are talking. It's always traded on hope.
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Guy Adami
Yeah.
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Melissa Lee
Adam Jodis and Morgan Stanley makes an interesting point. He says most of the valuation of Tesla is based on products that have no disclosure, little disclosure or far from commercialization. And it has always been the case for Tesla's Valuation that, that has made up the bulk of the valuation. Julie Beal, I know you can't get on board with Tesla, but can you see, can you see why others might?
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Julie Beal
No, not at all. I think the real, the real, I mean, you know, the real thing is that it's all kind of hopes and dreams. Remember the very first time we talked about Robo taxis was in 2019 and Elon was promising 1 million robotaxis by 2020. So I think the credibility gap with the proclamations that we're expecting has always been very wide. There's never really been an ability to deliver. And I think if you look at what the cybertruck really means, it's an inability to recognize product market fit. And I think it's the same with having a two seater for your robot. See, you're really building off of what you think is kind of cool and great. But I really don't have conviction that it's what the market is looking for. And I think that's really what's going to hinder the stock and earnings. Although it doesn't seem to really matter in terms of the stock multiple. But I do think at a fundamental level there's really not enough here to justify anywhere near this level of valuation.
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Dan Nathan
Yeah, I think everything Julie just said makes a lot of sense here. And I just, I'll guess this right here. I think they'll buy X and Xi. The said they won't. Well, I mean he says a lot of things and you know, I mean, but, but think about it. If the autos don't really rebound, they're expected to do 1.8 million units this year. I think some have estimates down at 1.6 million. You're going to have to say don't look here, look there. Especially if Robotaxi doesn't scale because Optimus is years away. But you make the point how disconnected it is. That's fine. A lot of people made a lot of money doing it. But you better believe that all this stuff that Cathie Wood believes that Ron Baron, you know what I mean? Because it just, we've never seen a stock like this in the history of stocks. Like, think about it, how many trillion dollar market cap companies are there? There's probably seven. This is one of them. The others trade on, on fundamentals. This one doesn't. I don't know why it's special.
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Guy Adami
You know, you mentioned Ron Baron. I mean he is convicted in a major way. We had the futurists from the Ark Innovation, Ark Invest. I think the Day of earnings, you know, he said. I mean, I'm paraphrasing to a point but you know the auto business, sort of a loss leader and you're not focused on the right things. I mean there are people out there and they might wind up being right. To think Tesla, forget about a trillion dollar company, could be the first $10 trillion company and a lot of people, lots smarter than I believe that. Not a high bar I know. But there is the other side of that coin.
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Melissa Lee
Well, if you miss any part of David Faber's interview with Elon Musk, you can catch the full conversation 7:00pm Eastern Time right here on CNBC. Well, another Mag 7 name making headlines today. That would be Alphabet, the stock turning sharply lower as it kicked off its Google IE developer conference today. The company also just releasing new waymo trip numbers. CNBC's Deirdre Bose has got all the details moving the stock Debo.
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Deirdre Bosa
Hey Mel. So Google, it showed off advanced AI capabilities and features, but what it didn't do was answer the biggest question and really the biggest dilemma around its business right now. Is this an evolution of search or is it a replacement? And so the implications of a new landscape on Google's cash cow advertising still not clear despite today's move. Alphabet shares, they have climbed back from the adequate comments a few weeks ago about declining Safari search volumes and viable alternatives to search. And underneath the surface, Google is catching up as it focuses on adoption. But it really needed to tell a narrative today. Now one area where Google is the clear leader is its subsidiary Waymo. Driverless cars. Waymo has just surpassed 10 million fully driverless paid rides, doubling its lifetime total in just the last five months. The Alphabet unit, it hit 5 million rides at the end of last year. And trajectory is set to accelerate as it expands to new cities like Atlanta and Miami. This is a major milestone for the robo taxi race. I know you guys were just talking about it. It's also a direct challenge to tax Tesla ahead of its own autonomy push. I spoke exclusively to Waymo's co CEO to Kedra Malwakana who said that Waymo's approach is about replacing the driver entirely, not just assisting them. So guys, as you talk about Tesla and the robotaxi trade, it is so notable that waymo is at 10 million paid driverless rides, which is just a massive milestone considering that Tesla is going to be putting 10 to 15 out on the road.
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Melissa Lee
Yeah, a very timely update on the way. More business. Deirdre, I'm curious in terms of the AI mode Do they speak exclusively about how they're going to experiment putting in ads? It sounded like they were considering putting ads in, but they haven't reached the point where they will.
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Deirdre Bosa
Yeah, so the key word, as you said, Mel, is experimentation. Right. There's AI mode, which is now going to be a tab, There's AI overviews, and then you've got Gemini. The way that they're incorporating AI into search is exactly how they can figure out how to experiment with ads. And they say that they're actually seeing more engagement in AI mode and AI overview. So that should lead to monetization. That should keep up with sort of the old Search 10 Blue Links business model. But we'll have to see if that's the case. Right, because we know that OpenAI, Perplexity and others are working on their own ad models and, you know, experimenting as well in very different ways.
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Melissa Lee
I guess the question is whether or not this mode will actually replace traditional search and whether it can monetize fast enough in order to make up for the lost business on traditional search. I mean, that's a $10,000.
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Deirdre Bosa
Exactly. And Google's kind of been straddling both. Right. They're not going all in on Gemini. They're having AI mode. So they're having their cake and eat it too. And some might question whether if you don't take a risk on one, do you risk losing it?
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Guy Adami
All right.
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Melissa Lee
Yeah. Deirdre, thank you. Deirdre Bosa from the Google Conference. So is it competitive with some of the smaller upstarts out there? I mean, you've used all of them. Yeah, Flexi, chatbots, blah, blah, blah, etc.
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Dan Nathan
Deirdre had a great interview last week of Dmitry Shevalenko. He is the chief Business Officer at Perplexity, and they are going to be releasing a browser soon. So is OpenAI, and I think that's going to be a huge headwind for Google because a lot of people use Chrome. Most of the people use Chrome. And as a browser, that's the only time I am doing Google searches, when I have my browser, you know, up. Right now I use Perplexity all the time and I'm going to continue to do that. So once the browser comes out, I think it's going to be a huge headwind for Google. But I get it. It's probably years off and I am actually really excited about Waymo. I think you're going to keep seeing investments into that product which will. And this goes for Tesla too, by the way. They don't have a hard time raising money. So if you have private equity or some of these other folks come in and actually fund the expansion of these things, that will be, I think, a big positive for both of those guys.
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Melissa Lee
All right, for more on Alphabet's newest announcements, let's bring in Fast Money friend and Deepwater Asset Management managing partner Gene Munster. Gene, always good to get your take on things. What do you make of of Google's AI advancements? I don't know if you want to call it advancements at this point, Melissa.
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Gene Munster
We actually, I think we learned a fair amount today. And we learned first that the landscape's changing more fast than what they had expected. They're opening comments around search. They said it's been a profound change over the past year. Second, we learned that their answer is AI mode. And third, and basically what AI mode is, think of it as AI overviews or just a generative search result that has ads wrapped around it. So it's not the peer kind of GPT. Simple answer. And then the third piece that we learned was that Google's not willing to rip the band aid off. And not that they should, given that they've got 2.2 billion people that use search 20 plus times a day. I mean, just huge muscle memory there. But that's something that really stuck out. And I think that's what investors were hoping was that they would be a little bit more aggressive. Effectively. What Google is telling those users that really haven't got the bug related to generative AI yet is just trust us, we're going to have a great experience. No need to look over here. My sense is that over time, people will just still find their way to these more simplified results. But I think we learned a lot and we learned that Google understands there's a lot at stake here.
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Guy Adami
Gene, obviously your take is extraordinarily important, but you know, Ben Wright, I think it was the end of March or early April, and I don't think he made this comparison likely, but he sort of compared. He didn't sort of. He compared Google with Eastman Kodak, which again, he obviously thought about that. Thoughts on the potential for them to become as irrelevant as Kodak did seemingly overnight.
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Gene Munster
So my version of that isn't quite as harsh. It's that they're the next ebay. And I don't know how long it took Eastman Kodak to wind down, but I was recently looking at how long it took Netflix for their DVD business. And by the way, we recently had a conversation about outerbox. Same thing. Redbox is that it took 16 years from the time that Netflix announced that they were going to effectively focus on the, in 2007, on the streaming business. They shut it down in 2022 or 2023. 2023. So what does that tell us is as we think about that Eastman Kodak or that ebay is that this is going to take a long time. And despite the fact that things are moving at a profound speed and I'm a person who I just quick jump forward 1, 2, 5 years and kind of think down there and the reality is, is that Google is going to have a good search quarter between here and there and the stock's going to skyrocket and then it's going to kind of drift back down until they really answer that question. A true offering that competes with these other generative, very simple answers. I think that's ultimately what they need.
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Melissa Lee
Well, are they moving fast enough to answer that question, Gene? Because I think, I mean, if the stock is going to be caught in a range because of that, the lack of an answer to that question, then it's, it's, I don't know, it's not a holding that you hold and, and you said and forget it kind of thing.
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Gene Munster
Definitely don't hold and forget it. And they've got time here. I mean, again, muscle memory. 20 times a day, 2.2 billion people use their product. I mean, that is just unprecedented. And that gives them room to figure this stuff out. And those people, like, we obsess about this, but the average person just likes Google and they find ways to use it. They don't want the band aid to get ripped off. And so I think that they do have time. And right now, my sense as an investor, I don't have time for this. We don't own the stock anymore. But I think that for as we kind of move forward, they're going to still have good pockets here. Then investors are going to say it's not happening as fast as we thought it will be. And so you just kind of have this bumpy road down. Definitely don't want to rule them out. I mean, make no mistake, they got an incredible brand, but they probably need to, they do need to innovate beyond what they're showing with AI mode.
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Melissa Lee
But I'm curious though, because as they continue to push AI mode and tabs to the, to the average, you know, Google search person, and let's say more and more people use those tabs, but they're not monetizing. They can have a good search quarter, but advertising wise, it might not be a good quarter.
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Gene Munster
Well, basically why they did AI mode is because they still have search shots on. Net. I mean, it will show you a generative result, but at least. I watched the demo twice. There's basically paid links on the bottom and the side. And so what's unique is you can keep going down a thread, which you really can't do with AI overviews to today. It doesn't allow you to keep going down there. So that's something that definitely is better. But to answer your question, they promoted this 10% increase in search and there's more usage and that's just shots on Net. So that's how they can kind of keep moving along here, is that as more people do it, they can, they can capture those blue links.
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Melissa Lee
Gene, thanks. Always good to get your take. Gene Munster, Deepwater Asset Management. Julie Beale how are you feeling about Alphabet?
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Julie Beal
I just think they're in such a difficult position. You know, if you think about how much they're going to have to do, how much they have to overcome, people have already decided. It feels like the ChatGPT is the winner. There are inroads for them. I think if they can really make inroads in terms of getting into the iOS system so that it's not just ChatGPT, but they have a shot there, I think there's opportunity for them. The thing is, is that, you know, if you think about the Internet writ large, right. We made a decision at the very beginning that the way we were going to frame, fund all of it was through advertising. And advertising is its own form of cocaine for capital markets. It's what's kind of supported Netflix through its last transition. And I think what's really difficult is what we're trying to do. It feels like with a lot of these AI models is do freemium or subscription models, because you get a better multiple on those, for sure. And I just think that they are really trying to sit in the chasm of being able to have it all. They really are going to have to compete it one way or the other. I agree there's a lot of inertia for most people, but for investors who are really seeing what's out on the horizon, it's just not good enough.
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Bank of America
You know, I'm of the opinion, I think Deep Sea kind of informed us all that I'm of the opinion that they have to get it right, but they don't necessarily have to get it right right now. And I don't believe that search is going away for me. They really need to be able to produce a premium offering. And as we start to see inference and innovation over time, the lapse between being able to come up with something and bring it to market, that time is going to shrink. So I'm still of the opinion that they can continue to use ads to fund, to fund that business and that growth model. So yes, I think investors are a bit uneasy that they don't have a solution right now. But I'm, I'm a bit hesitant to kind of pull the ripcord because they don't have an answer yet. Being that we've seen how quickly, you know, a new innovation can come to market.
- [23:11]
Melissa Lee
Coming after last week's trade talks with China Move the needle on recession odds. The latest results from from CNBC's Flash Fed survey is coming up. But first, shares of Toll Brothers and Palo Alto Networks both on the move after reporting results, details and numbers from the quarters. Next, don't go anywhere fast. When he's back into.
- [23:31]
Dan Nathan
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- [23:59]
Gene Munster
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- [24:16]
Julie Beal
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Edward Jones
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Dan Nathan
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- [24:49]
Melissa Lee
Welcome back. We've got a news alert on the FAA and the issues at Newark Airport. Philippeau is back with the details. Phil.
- [24:56]
Phil LeBeau
Melissa, after meeting with the airlines last week and after saying on Friday that it planned to make a proposal for 28 arrivals and departures per day at Newark and then 34 after June 14 per day. That's what the FAA has just instituted, announcing just a few minutes ago that until June 15, when one of the Runway's under construction, most of that work will be finished. It'll be 28 departures and arrivals per day out of Newark. And then after June 15th until October 25th, it'll be 34 departures and arrivals per day. So the schedule has been reduced officially by the FAA at Newark International Airport. Melissa, back to you.
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Melissa Lee
All right, Phil. Thanks, Bill. Abo meantime, we got an earnings alert on Toll Brother shares of the luxury homebuilder jumping on an earnings and revenue beat. Toll also reaffirming its full year guidance. CB's Diana Oleg's got all the details. Diana beat on the top and bottom lines. Toll's adjusted gross margin came in at 27 and a half percent in line with expectations slightly higher. Home deliveries were up 10% year over year, well above expectations. And the average price price of those homes was $933,700. That was below estimates of 954,200. Toll's CEO Doug Yearley noted a softer demand environment in the release part of.
- [26:13]
Deirdre Bosa
That likely due to rising mortgage rates.
- [26:15]
Melissa Lee
During the quarter and the big swings in the stock market after the tariff announcement in early April. But he added that given the shortage of housing and favorable demographics, we continue.
- [26:25]
Deirdre Bosa
To believe the long term outlook for the new home market remains positive, particularly for our luxury niche.
- [26:32]
Melissa Lee
And this goes along with what we've.
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Deirdre Bosa
Been seeing in the overall market, which is much more activity on the higher end where buyers are not so sensitive to mortgage rates. Melissa?
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Melissa Lee
Diana, thank you. Diana Olek on Toll. The expectations going into the quarter were kind of low. I mean, analysts are expecting softness in the luxury market. They're expecting some volume and margin softness as well.
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Guy Adami
Correctly so. And they beat it. It's a good, it's a good quarter. The average price is concerning, not so much. I mean, the high end is gonna be the last one one to feel it. But look, Mel, this is stock that went from 170 to 90, not in a straight line, but pretty much in a straight line. So you see how when things start to soften, things slow down, these are going to be affected. If you think rates are going higher, which I do, and if you think the unemployment rate is going higher, it's really hard to get your arms around these homebuilders despite the fact that it's rallying here.
- [27:19]
Bank of America
I tend to agree, but I would just say that I Don't think the home builders are a monolith. I think toll is probably your most defensive just because you don't have the same rate sensitivity, you don't have the same employment sensitivity, you have a much larger cash buyer cohort. And then if you kind of look around some of the earnings, you look at Beezer, you look at Hovnanian, you look at, you know, these sub $3 billion revenue companies which, which kind of just don't fit the bill in terms of, you know, really applying to the, the upper consumer. So I think dhi, if you're looking for kind of scale and scope, I think they do about the $35 billion in revenue toll and then I think KB Homes and I think you will see a separation between those three and the, and the other constituents of the.
- [27:59]
Dan Nathan
Yeah, just say this, the average 30 year mortgage right now is 7%. The low over the last 10 years was 2.65 back in 2021. If you think about all those folks that are locked into those, you can tell me that $1 million buyer is not sensitive to mortgage rates. I don't really buy it. I think if you're doing or considering a trade up and you have a 2, 2.75 mortgage, you're just not doing it. And if you are, you probably have to put 20 or 25% down right now. And the tariff thing is a problem for these guys. Their input costs are going higher. We have a shortage of people to build these homes. Okay. So there's a whole host of things that I just don't think this lines up particularly well for right now.
- [28:36]
Melissa Lee
Coming up, more after hours action to bring you shares of Palo Alto Networks on the move after reporting the details and the numbers from the quarter. Next, you're watching Fast Money live from the NASDAQ Marketsite in Times Square back right after this.
- [28:51]
Dan Nathan
Are you still quoting 30 year old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide. And every time you make a purchase with your card, you automatically earn cash back. Welcome to the now it pays to Discover. Learn more@discover.com creditcard based on the February 2024 Nelson Report.
- [29:19]
Gene Munster
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- [29:37]
Edward Jones
Switch upfront payment of $45 for 3 month plan equivalent to DOL month required intro rate first 3 months only then full price plan options available, taxes and fees extra fee full terms@mint mobile.com.
- [29:54]
Julie Beal
Welcome.
- [29:55]
Melissa Lee
Back to Fast Money, an earnings alert on Palo Alto. Network shares lower despite beating top and bottom line estimates. Pippa Stevens has got the details. Hey Pippa.
- [30:02]
Edward Jones
Hey Melissa. While a margin miss and guidance that didn't blow investors away seems to be behind the weakness, the company sees Q4 EPS between 87 and $0.89 a bit better than forecast with its revenue guide.
- [30:12]
Melissa Lee
Toward the higher end of estimates.
- [30:13]
Edward Jones
The call is underway now with the company saying the urgency around AI is omnipresent for Palo Alto's customers, which is creating a higher sense of urgency to undertake technology transformation and that traditional IT architectures weren't built for the scale, speed or complexity of AI. All of which is good news for cybersecurity CEO Nikesh Arora, adding the company's XIAM product is now its fastest growing product ever, saying it has the potential to be a game changer for Palo Alto Networks now. For more on the quarter, be sure to catch CEO Nikesh Arora tonight on Mad Money at 6pm Eastern.
- [30:44]
Melissa Lee
Melissa all right, Pippa. Thanks. Pippa Stevens. Julie Beal, what do you make of this? Sort of a stealth I play.
- [30:51]
Julie Beal
Yeah. I think the real challenge with them right now is that whether or not they can really get this kind of platform strategy to work and sink in and I think investors are probably concerned. Are they going to have to discount to make that happen? What they're trying to do is really be your one stop shop for security. Part of the way that they're approaching that is just by having a great AI solution and I have confidence that they can do that. The real trick though is being able to maintain that strong pricing and drive growth. Security is always a tricky place to be investing and you really have to have a lot of expertise and know what the movements are going to be like. And the other thing is that in general most companies, they won't switch out their security vendors, they'll just layer them on top of each other. And I think by trying to be the platform it's a bigger lift for them, but there's more reward as well.
- [31:39]
Guy Adami
Quarter is fine. I think we all agree revenue is up 16% year over year. The guide was in line and you can't in line guide with that kind of valuation. But we've seen this before with Palo Alto a number of different times with a report, earnings, stock sells off and a week and a half, two weeks later it's back to new highs. I think that's sort of set up. We're in right now, by the way. I think there might be a conference call in a few minutes. You got to wait and listen to that.
- [32:00]
Bank of America
Technically speaking, they are bumping up against short term resistance. Long term. I mean, I'm just a buyer of the space in general. I think as we see, you know, we were talking about it with, with Google and Alphabet. As we see the shift towards more AI generative type things, you are going to need more security. So long term I'm a player. I do think, you know, technically they're a bit challenged in the short term.
- [32:20]
Dan Nathan
Near term you're a player.
- [32:22]
Bank of America
Long term I'm a player.
- [32:22]
Dan Nathan
No, but near term you are. You know, where is that? A couple of your panelists and you're a player. Yeah, I just want to say really quickly, companies growing earnings and sales 15% over the next few years and you know, 60 times not particularly interesting to me.
- [32:39]
Melissa Lee
Coming up, markets may have rebounded from their April lows, but have recession odds really come down? The Latest read from CNBC's Flash Fed survey and the outlook for growth, inflation and more. Fast money is back into. Welcome back to Fast money. Stocks closing the day in the red. The S and p snapping its six day winning streak. The Dow falling more than 100 points in the NASDAQ down nearly 4.10of a percent. Meantime, CNBC went back into the field after the US And China reached a deal to temporarily cut tariffs to find out if recession expectations had changed. Our Steve Liesman joins us now with the findings. Interesting. Steve, what you find?
- [33:21]
Dan Nathan
Yeah.
- [33:21]
Steve Liesman
Hey, Melissa. After that agreement, the US And China, a trade agreement of sorts. We went out with our CNBC Flash Fed survey. What's happened is respondents have dialed back their inflation and their recession concerns, but both remain elevated and policy uncertainty is very high. Here's the data. We came up with. 34 respondents, including fed fund managers, strategists and economists put recession probability at 41%. That's down from 53 in April following the massive tariffs imposed by President Trump. But concern about a recession, it remains nearly double where it was in January. So 41 or 42 is pretty elevated compared to March. The growth outlook a touch better at 1%. Still weak though. Inflation forecast a little Bit better, but still high at 3.1% year over year. And unemployment four and a half percent better than the prior forecast, but higher than the 4:2. Right now, forecasters have almost no confidence in their numbers. More than 80% said they were uncertain about the outlook for tariffs and uncertain about the economic impact of tariffs. The average respondent sees a 3.9% funds rate by year end, so about two quarter point cuts and another two next year, which is to say the Fed remains restrictive or you can see they're above that 3.3% terminal rate for a couple of years yet 70% of forecasters say proposed deficits were larger than previously expected, while a 36% morality said this tax bill now working through Congress actually makes them more optimistic about the outlook, but about two thirds say it makes no difference or actually makes them more pessimistic. So, Melissa, you know, it's not all better, but it's a little bit better than it was.
- [34:56]
Melissa Lee
It's a little bit better, but with the asterisk that nobody's really confident in the little bit better either.
- [35:04]
Steve Liesman
Yeah, no, it's a huge asterisk because people just aren't confident that. For example, some of the commentary talked about the 90 days, like what happens at the end of that. Can I make my forecast based on that? So they're not as confident. They're not as confident with the mechanisms and they're not confident with the outcomes here.
- [35:20]
Guy Adami
Steve, great backdrop. I hope you're fishing later. Here's a bit of a curveball, but I know you're well suited to hit this one. One Japan decided their worst bond auction since like 1987. And it's been concerning how quickly their yields are going higher. I know the Fed watches everything, but is this something you think that concerns them or is this just a bit of an anomaly here?
- [35:42]
Steve Liesman
Only as you might expect, to the extent that there is, it's a symbol or symbolic or emblematic of, of any broader systemic risk in global markets. I think the Fed was probably much more more concerned about the recent decline in the dollar along with the decline in bonds and decline in stocks. Those three assets moving together was a cause of concern as well as some stuff that was going on inside financial markets that were reasons for concern before the president, you know, backtracked on those tariffs on April 9th and then again helping out on May 12th. So I think it's something worth watching. I'm not sure that there's a reason to think about. There's an analog to that. What's happening Here. But there is the issue, you know, if we're going to try to reduce our trade, we're reducing the amount of money available from overseas to finance our deficits.
- [36:32]
Melissa Lee
Steve, thanks. Steve Liesman joining us from Arizona.
- [36:34]
Steve Liesman
Pleasure.
- [36:35]
Melissa Lee
For the CNBC CEO Council is being held. Today's market action was kind of interesting in that and I know guy was watching this and Julie, I'm sure you're watching this to the 10 year yield going above 54 and a half percent. Once again testing that level yesterday, it made sense. It was moving on the Moody, Moody's downgrade of the US credit rating today, just for the heck of it, it was pushing up against four and a half percent.
- [36:58]
Julie Beal
That's for funsies, right? We're just having like a great old time trying to figure out where this thing should go. And you know, I think what everyone is really wrestling with is what level of growth are we going to have? Are we going to be able to attack these deficits? And it feels like the question is we're not going to be able to really attack these deficits. And that really has major ripple on effects for the rest of the economy, particularly small cap, my little land. I think broadly speaking though, the level of uncertainty is still there and I think that that still makes it very, very difficult to do any kind of capital allocation and any kind of inventory management. There's like a great port optimizer tool that you can look at that shows you what's coming into the ports of Los Angeles and you see the volatility in the ports that's happening. It creates volatility for the rest of the country in terms of the shipping and logistics that we're having. And so all there's going to be is just like a lot of noise like the toddler variety, which is a lot.
- [37:54]
Melissa Lee
And you know that.
- [37:55]
Bank of America
Well yes, coming from someone who is bothering a toddler right now, that is not making, that's not the most constructive setup. With that said, listen, I think we're through the bulk of earnings. I just think there's like less to focus on. So clearly now you recently have the Moody's downgrade, you have the comments out of the White House regarding Huawei and China's pushback. You know, we, you know, spoke about the correspondents about their level of certainty in terms of forecasting the path forward and I think the volatility in yields is just, is just echoing that, that you know, we no longer have economic data to focus on, we no longer have corporate specific data to focus on. And now we're sitting here trying to understand is what's on going, going to happen over the, over the course of the next three months. And I think that volatility lends itself to translate into the bond market.
- [38:41]
Melissa Lee
Coming up, the latest pharma deal for Pfizer, how the company is trying to tap the China market and how much of the leg up it could provide the details when Fast Money returns back into. Welcome back to Fast Money. Pfizer gaining over 2% after inking a deal to develop and commercialize a novel cancer drug from China's 3S bio. The deal, worth up to $6 billion, is the latest sign of big Pharma's push into China to replenish drug pipelines. Angelica Peebles joins us now with all the details. Hi, Angelica.
- [39:33]
Edward Jones
Hey, Mel. So Pfizer is striking a deal with China's 3S bio to get its hands on arguably the hottest cancer technology of the moment. The drug targets PD1 that's similar to Merck's blockbuster Keytruda as well as VEGF. And the thinking is that going after two targets will better attack cancer than going after just one. And the excitement behind that idea started taking off last year when a similar drug from Summit Therapeutics began beat Keytruda in a head to head study. The first time that any drug has bested Keytruda. Mel, you've talked to someone and you know how confident they are. Biontech is another name to watch in this space. And even Merck's in the race thanks to its own licensing deal and Pfizer paying the biggest price TAG so far, $1.25 billion upfront and up to another $4.8 billion for the rights to develop and sell this drug outside of China. That's roughly double what Merck paid. And like Merck, Pfizer is going to China for this asset. And we've talked about this trend before. So far this year, 42% of big pharma deals with at least $50 million upfront came from China. And that's already topping last year's record. And that's according to data from Deal Pharma. So another big trend to watch, Mel, there.
- [40:43]
Melissa Lee
There's also some news from the FDA regarding vaccines that helped lift some of these vaccine makers, including Pfizer.
- [40:51]
Edward Jones
Yeah, that's right. The FDA saying that it now will want to see randomized placebo controlled studies for boosters in people younger than 65 and for people 65 and older, as well as people with health conditions that put them at higher risk. For Covid complications. They will continue to accept studies that show that those vaccines can elicit an immune response. And it sounds like it's restrictive because it really is saying that no longer will the FDA except boosters for all. At least that's what it sounds like. We still need to figure out some of the details about what it means for fall boosters. But at the same time, people maybe were expecting a little bit more of a restrictive policy. You have this whole idea that this administration doesn't like vaccines. You have this push, whether it's on the Hill or some of these other groups saying that they don't want MRNA at all. And so perhaps this is a little bit less restrictive than what people were thinking. And that's why you're seeing some of that reaction today, I think. Mel, Angelica.
- [41:48]
Melissa Lee
Thanks, Angelica. Peoples, we've talked about Tim and Karen's Pfizer for a long time being in a funk. Let's just call it what it is. Is this deal going to make a difference?
- [41:58]
Guy Adami
A funk is. Yes, that's a good way to put it. I mean just recently made a 13 year low in the stock. Think about that for a second. Will make a difference. I think it'll keep it from trading back to those levels. But it's going to get up to a $30 stock. I don't think so. Flip side of that coin is Gilead, which is by, by the way made its way into sort of big cap pharma in a major way. Spoken in RBC conference today that stock sold off, bouncing again. I mean, if you want to be someplace, Gilead works here.
- [42:23]
Melissa Lee
Julia, Julie, do you want to be someplace in pharma?
- [42:27]
Julie Beal
In. In pharma? No. I think that right now there's just too much uncertainty that's happening. I'd much rather be around the companies that help pharma companies develop their drugs. Something like a certain is more appealing to me because the binary risk of it is too, too difficult. And also while I can see that so much development is really happening in China, when you have an administration that is this kind of bold up against it, it makes me really nervous.
- [42:51]
Melissa Lee
Coming up, in major need of a bull's eye, Targets quarterly results due out tomorrow. As the big box retailer lags far behind the competition, what investors need to hear for that stock to play catch up Next, more fast Money into. Welcome back to Fast Money. Target scheduled to report earnings tomorrow and investors will be keyed into any comments about price hikes due to tariffs. Target shares are down 27% this year. Far underperforming rival Walmart which has gained 8% in the same period. Last week former Walmart US CEO Bill Simon told Fast that while his former firm may be better positioned to handle tariffs, Target stock is more attractive long term.
- [43:33]
Guy Adami
Best to whether the tariffs will be Walmart best. I think from an investment standpoint, Target's so beat down. They're so beat down and they're such.
- [43:42]
Dan Nathan
A good company they're not going anywhere.
- [43:44]
Phil LeBeau
You know, I think if you could.
- [43:46]
Dan Nathan
Find a way to, you know, sort.
- [43:48]
Phil LeBeau
Of stomach a long play on Target, you'll do really well.
- [43:52]
Melissa Lee
Stomach a long play. So would you rather Bill Simon said target guy, I remember when you played.
- [43:58]
Guy Adami
The game though, so respectfully. I mean we could have made that. Target made its all time high in the summer of 2021. It is now May of 2025. The stock was 220 something dollars. That argument could have been made dozens of times since then, respectfully and it has not worked. Now is it due for bounce? Absolutely. Do you sell it if it does bounce? Absolutely.
- [44:17]
Melissa Lee
They are in a tough spot though because they know that they cannot really talk about price hikes because of tariffs and they are in a very tough spot because they sell a lot of general merchants merchandise stuff that is imported mostly and we'll see higher prices.
- [44:31]
Bank of America
You know, I'm wondering, we've seen companies in tough spots kind of kitchen sink it. I wonder if the, if the, the setup is so poor now and the sentiment is so poor that you just go on ahead and rip the band aid off. They're not in the same situation situation as Wal Mart where they can say we're just not going to, we're not going to move forward with price hikes. They can't really comment around it clearly. It's just, it's so central to their business that they're able to retain some margin on, you know, the type of inventory that they hold. I don't think they're in the same position. I think maybe you just kind of kitchen seeking and move forward.
- [45:05]
Dan Nathan
Yeah, I think that we learned over the last week that CEOs are not going to come out and make big proclamations about what they're doing with price. And I think there's way for them to raise prices and you know, not absorb too much of the, you know, against their margins and you know, the price increases, input costs, the whole sort of thing. And we're going to see it. It's going to happen over the next 90 days but you're just going to keep your mouth shut about it. There's no reason to put a sign up there.
- [45:28]
Melissa Lee
Up next, final trades, final trade time.
- [45:37]
Julie Beal
Julie Beal FICO is under pressure today when Bill Pulte was criticizing them for how much their reports cost. It's a couple couple of dollars right on the weekend.
- [45:46]
Bank of America
Finally I think you've got a tremendous run up addition to the index. I think you cash in coin.
- [45:52]
Dan Nathan
Dan yeah, Carter Braxton worth of worth charting. He likes the Pepsi Massive double bottom. I think from a technical perspective you take a shot here.
- [46:02]
Melissa Lee
This is like an ode to cbw.
- [46:04]
Steve Liesman
Oh my.
- [46:05]
Melissa Lee
The back half of final trade.
- [46:07]
Guy Adami
Well, yesterday we talked about a bearish to be bullish reversal in Dollar General. Well, look at it today. That's going to happen again.
- [46:14]
Phil LeBeau
Melissa that's exactly.
- [46:16]
Guy Adami
I know.
- [46:17]
Melissa Lee
Thanks for watching. Fast Mad Money starts right now.
- [46:23]
Deirdre Bosa
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.
- [46:34]
Melissa Lee
Television, radio, Internet, or another medium. You should not treat any opinion expressed.
- [46:39]
Deirdre Bosa
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 andor 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 Introducing CNBC, the.
- [47:06]
Dan Nathan
New streaming platform from the number one source in business news. Watch live or on demand. Access any market, anytime, anywhere. Start Streaming. Go to cnbc.com stream now.