← CNBC's "Fast Money"
CNBC's "Fast Money"
Fast Money 10/3/25
00:43:21
Listen to our traders take you behind the money...how to play the volatility...pops and drops and the movers you missed. Fast Money Disclaimer
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- [00:00]
Melissa Lee
Hey Fidelity, what's it cost to invest with the Fidelity app? Start with as little as $1 with no account fees or trade commissions on U.S. stocks and ETFs.
- [00:11]
Tim Seymour
Hmm.
- [00:12]
Melissa Lee
That's music to my ears. I can only talk.
- [00:17]
Tim Seymour
Investing involves risk, including risk of loss.
- [00:19]
Steve Grasso
Zero account fees apply to retail brokerage accounts only $0 commission applies to online US equity trades and ETFs and retail fidelity accounts.
- [00:23]
Tim Seymour
Sell order assessment fee not included.
- [00:24]
Steve Grasso
Some account types and securities excluded. Details@fidelity.com commissions Fidelity Brokerage Services LLC Member.
- [00:28]
Tim Seymour
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- [01:04]
Melissa Lee
Live from the NASDAQ markets at the heart of New York City's Times Square, this is fast money. Here's what's on tap tonight. Bowled up for the broad rally. Stocks closing out the week at record levels and it's not just AI driving the gains. Can small caps, pharma, utilities and more drive this market even higher? We'll debate that plus data center details. We are sorting through the nitty gritty of what actually goes into one of these power providers and the ins and outs behind the AI fuel demand. And later, Dr. Copper makes a house call this week. Metal climb times to two month highs while investors are taking their chips off the table in the casino space and our traders are set to reveal their charts of the week. I'm Melissa Lee, come to you live from Studio B at the nasdaq. On the desk tonight, Tim Seymour, Bono and Ice and Steve Grasso. We start off with a rally that keeps on rolling. Markets shrugging off the traditionally weak season as well as the government shutdown. The Dow and S&P 500 managing to squeeze out fresh record closes. But all three indices closing out the week with solid gains. And it wasn't just the AI and semi surge fueling these gains. The small cap seeing a breakout. The Russell 2000 hitting record levels now up more than 11% in 2025. Catching up with the broader market. Pharma stocks coming back to Life this week. Pfizer Merck, Eli Lilly, all with double digit percent gains. The XPH Pharma ETF up more than 4% this week and nearly 20% over the last few months. Even defensive sectors like utilities and industrials climbing higher. Plus the moves in momentum names not slowing down either. Stocks like Robinhood, Coinbase continuing to run both up more than 20% this week. So does this broadening out mean this bull run could continue rolling on Tim?
- [02:39]
Tim Seymour
Well it was first of all it's a fascinating payroll number this morning. Oh yeah, okay, no payroll and therefore let's just move past that. And so if you think about the broadening of the market I would argue industrials have led the S and P all year. Utilities have been a kind of a go go area to be. But the pharma small caps this week was great. People are looking for rotation, they are looking for opportunities to not be tied to what feels like a frothy trade. But I'm going to get back to I think outside of pharma the big event for me this week were that semiconductors hit all time relative high against the S and P and the deal flow, the dynamics and you know, today we have more data center deals. We're going have a great conversation about data centers later on in the show so stick to that. But you know you have Fujitsu, Hitachi, Nvidia, you have all these guys that are global players getting involved in the data center. You had the open air deal, you had different types of infrastructure investments into a AI so there's nothing about that that's letting up here. It does mean that the frothiness around the trade and the trade today certainly felt like you had the barbell of some of this value stuff. But boy, you know, get into crypto, get into quantum, get into the parts of the, of the real go go FOMO parts of the market and they, they closed basically at their highs.
- [03:56]
Steve Grasso
And what you couldn't do is you couldn't trade off the payrolls number. So you don't have the volatility if you don't have anything to trade off of. So people don't trade off of a dull market. Not to say that this is dull but the consistency of which it's gone up. There's nothing to stick it down now. No, no, no jobs number yields are pretty intact. So the 5 to 10 to 30, we've seen those cascade lower and now we haven't seen them pop. They're not even back to 50% retracement yet. So I think people feel comfortable where the market's at. Someone like me though will say November, December, seasonally. Great months for the market. September, October, not great months. Do we do a reverse now? So now I'm starting to think, does the sell off come later?
- [04:44]
Melissa Lee
Oh, so we're pulling forward basically.
- [04:45]
Steve Grasso
Or has. Or has the sell off just been avoided? With the government has shut down and the market has rallied, we don't usually see that in the first couple of days of a, of a government shutdown.
- [04:57]
Melissa Lee
Right.
- [04:57]
Tim Seymour
Do we throw a flag for a third person reference when someone says, someone like me might have Bob Dole.
- [05:03]
Steve Grasso
Bob Dole made it.
- [05:04]
Melissa Lee
Like Rosso would say.
- [05:06]
Bono
Yeah, like.
- [05:07]
Tim Seymour
Okay, I'm sorry.
- [05:10]
Melissa Lee
What is sort of maybe heartening about this week though is that it's not. It wasn't the Mag 7 that was advancing. Right. I mean, that's basically our point that there's sort of a broader advance going on here and maybe that makes you feel better about the levels that we are at.
- [05:23]
Bono
Well, I think that's definitely constructive when you look at the multiple of the overall S and P. So if you're seeing a broadening out away from just the Mag 7, away from just AI and datacenter plays away from just the adjacent utility plays away from crypto, which as Steve had mentioned earlier, has been quite volatile itself, I think that's actually supportive of expecting to see larger forward returns. So I think from that point of view it's constructive. Listen, you're moving out of some of the bad, some of the beta now, but when you're moving into IWM names like that, even on, even on a relative basis, I get that it's playing the catch up trade and has now hit this new all time high. But I still think on a relative basis, if you want to kind of move away from the very concentrated tech part of the S and P, maybe you look at RSP Steel gives you a nice broad type of exposure, but you're not completely abandoning what has gotten you here to this point.
- [06:16]
Melissa Lee
Some would say though that for small caps, I mean they're trading at such a discount to the S&P 500 that it is a sector that you should look at. Now, I'm going to misquote you, but I know that at one point Tim said I hate small caps. I don't know why we talk about them. Yet here we are talking about record highs.
- [06:33]
Tim Seymour
We don't use the H word in my house. Okay, so we dislike, dislikes. And I think I said something maybe even more insulting, which was there's no Reason for small caps. So, yes, I think it's great. I think what's happening in a week like this, we're talking about the broadening of the market, at least the price. This is a week that makes a lot of portfolio managers and probably a lot of wealth managers and advisors feel better because the rsp, the ETF that Binoin is referencing is a very common allocation. It's, it's the equal weighted S and P. And after a couple of years of the outperformance and growth, there's a lot of people that were scared to allocate towards the growth of your parts of the market. So, you know, this is kind of a relief for a lot of people that want to be invested but haven't had, you know, been out there and never wanted to be over their skis. So I think it's an interesting week. Remember, we've also talked about how banks have struggled a little bit this week. But the places where if you were not invested into the growth year parts of the market and you were invested in banks and utilities and even certain parts of discretionary, you've had a fantastic year. And those aren't big weights though. I mean let's, let's be financials are creeping up there, but health care's underperformance is something that's really, you know, makes this week feel better for a lot of people, myself included. I have a lot of allocations there.
- [07:49]
Melissa Lee
Yeah. I mean Pfizer almost single handedly helped reverse the health care trade at this point. Is that an area that you're interested in?
- [07:56]
Steve Grasso
Yes, only because of the underperformance that you see. Because if you crown it to those same names who have been producing the profits for the overall market, you wind up not thinking you're going to gain as much of a profit going forward. So that's why people go into the Russell. Russell is 40% unprofitable. Is that number down to 20% now? 30%. But you're buying something that is definitely reliant on floating weight interest, floating rate interest charges. So they borrow short term, they don't borrow long term, they can't finance borrowing long term. So if you don't believe that rates are going to come down precipitously, then the Russell is not going to outperform. So people will go right back into mega cap tech right after they're in this.
- [08:39]
Melissa Lee
Right. I guess the question here is are you looking at this point in time, at this phase in the market to allocate to things that have been underperforming allocate to sort of the turnaround stories in the market allocate to the less popular areas.
- [08:53]
Bono
Sure. If you want to kind of draw down your beta, protect your portfolio a little bit. I actually think that we're kind of looking through this possible government shutdown being a bit more protracted. So if you have a bit more pessimistic lens, you think perhaps, you know, the Fed chair says, okay, well actually we're data dependent, but we don't have any data to depend on and therefore we need to either pause or pivot or we actually don't know what to do. We're not really able to make any kind of forward looking predictions. Yeah, well then I think you do draw down and you look for some of those, catch some trades. In fact, you've seen a name like Moderna actually kind of start to reverse. So there are little pockets of that happening. I just question whether it has the capacity to move from Mag 7 names or S&P top 50 names into some of these smaller pockets. I just, I just think that leads to volatility and increases drawdown risk.
- [09:38]
Melissa Lee
We do have a news alert on a hotly anticipated AI company scratch scrapping its IPO plans. Mackenzie Seagal's got the details. Mac. Hey, Mel.
- [09:47]
Emily Wilkins
So AI chip maker Cerebrus is pulling its IPO in a filing with the sec.
- [09:51]
Melissa Lee
The company saying it no longer intends to move forward with the deal at this time.
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Emily Wilkins
Now, it had originally filed last September.
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Melissa Lee
But faced hurdles including regulatory scrutiny and.
- [10:01]
Emily Wilkins
Questions over its reliance on a single customer.
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Melissa Lee
Now, the move also comes just days after Cerebras raised more than $1 billion.
- [10:08]
Emily Wilkins
In private funding at an $8 billion valuation.
- [10:12]
Melissa Lee
Buying it more time to stay private. Mel. $1 billion raised. Mackenzie. Thank you. Mackenzie Seagullis. No reason to go public. This is that kind of money in the, in the private market.
- [10:23]
Tim Seymour
It sounds like, oh boy, this is a week where open. I got a $500 billion valuation in the private markets by raising $6.6 billion. So no, we talk about this all the time. And private markets are providing another opportunity at least. First of all, companies are staying private longer. There are opportunities, there is liquidity, there are opportunities for investors, for retail investors, for high net worth to have access to these markets. And, and I think that is a dynamic though that is very much indicative of the kind of liquidity that's overall out there in markets.
- [10:52]
Melissa Lee
Well, one of the market's biggest underperformers may soon join the rally. CNBC's Peter Book contributor Peter Bocvar is behind that call. He's the Chief Investment Officer at one point, BFG Wealth Partners. Peter, great to have you with us. Read your note this morning as I normally do, and you highlighted some comments from ConAgra. So there's both the trade related to ConAgra which you have, but also the commentary that you pulled out of the conference call. I want to start off with the commentary and what it tells us about the consumer because management sounded very downbeat on consumer sentiment, on the ability of households to deal with rising costs. And it also raised its cost estimates in terms of tariff exposure and raw material exposure.
- [11:32]
Peter Bocvar
Yeah, this has been a multi quarter, even almost going back to 2024. About this. They refer to a barbell economy and something we've heard time and time again from a variety of different companies where that lower income consumer is value, is, is enabling value seeking behavior. And then on the other side of the barbell, of course is the upper income spender where the cost of living is not an issue. And because ConAgra caters to that lower income consumer via their frozen food business, their snacks business, they've been challenged. On top of a seven plus percent increase in costs. About half of that is rising prices of certain commodities that they rely on like turkey and beef and pork, and then the rest being tariffs with respect to packaging, steel and aluminum that negatively impacts them. But if you take this further, because they're frozen foods, take a frozen meal that you would find in a supermarket, if you can get a meal for five, six bucks, you know that's going to become more enticing. So actually their frozen food business is growing. And on the snack business, interestingly enough, snacks are considered a discretionary item right now. But one of the items of snacks that they're doing well in is beef jerkies, their Slim Jim Bram, which they call their meat snacks. And that actually rose 4% in a corner, but very much a mixed bag for sure in terms of business. But these stocks have gotten so beaten up, so destroyed across the entire consumer products and food business because of all that commodity pressure, because of the volume pressure. But the stocks are so cheap with very generous dividend yields that I, we've been buying them and I find them very attractive in a highly valued market.
- [13:20]
Melissa Lee
Right. So staples look good, look poised for turnaround. But in terms of what I, I coined this off of your note, the Slim Jim indicator, Peter. I mean what this is telling us about how, you know, the difficult times the consumer is facing, they're projecting that these sort of value oriented Choices are going to persist for the rest of the year. So what does that tell you about the strength of the consumer, the strength of the economy?
- [13:44]
Peter Bocvar
Well, if you listen to the Michigan consumer confidence number, if you own stocks you're doing fine. If you don't, you are really stressed. And a lot of conagra's customers don't own stocks. They're lower income consumers living paycheck to paycheck. But they do provide a lot of value to that consumer. Again, if you can buy a meal for $6, that's attractive. If you can buy a Slim Jim for a dollar and a half and get your daily protein, that's really attractive. So they're trying to cater more to that value customer and they actually said if the economy was better, if that lower income consumer was healthier, they would provide more premium type products. But because they're not, they know they really have to hone in and get that value seeking customer.
- [14:33]
Steve Grasso
Peter when you look at the economy right now this looks like a I'm reading the tea leaves or I'm reading through your statement is this a recession call on your part or is this just where we're at right now with things being so expensive because obviously Staples and utilities until recent recent past have been sort of your recessionary defensive plays. Is this a defensive play worrying about the economy 2 months, 3 months, 6 months or is this where we're at right now with prices being too high?
- [15:04]
Peter Bocvar
Well it's number one highlighting how mixed and uneven the US economy is. Number two, I'm calling out a tremendous value in the market. Now granted these stocks are cheap for a reason, their businesses has had been challenged. But if the economy continues to slow, if this labor market continues to slow, the market may shift back to health care and Staples as more defense supports of the economy. I mean if you take out this entire air buildout, first half GDP would be about flat. I mean the US economy and the US stock market is all in on this tech trade. So if there's any wobbliness to that, that will affect the economy in terms of the build out, affect the stock market in terms of upper income spending. The defensive areas of the market like Staples where if you don't include the tariff sell off in April, these stocks are back to where they were last January. It's a cheap part of the market but again I acknowledge the challenges of their business but the stocks already reflect that.
- [16:04]
Melissa Lee
Peter thank you. I never give up an opportunity to.
- [16:07]
Tim Seymour
Talk Slim Jim, Slim Jim indicator.
- [16:08]
Melissa Lee
Peter Bocvar but just to underscore or score the point. I mean, it is staggering to what Peter just mentioned. If you strip out AI, GDP would have been flat. So what happens if there is a hiccup to I, I, Are you positioned for that or you don't think it's going to happen?
- [16:26]
Bono
I'm not positioned for that because the opportunity cost to being positioned for that has been too high. And at the end of the day, any money manager has to really compare itself to whatever that, whether it's acqui or S and P, whatever that that benchmark index is going to be or else you forego new investment. That's, that's the situation that we're in. I think the concentration risk, I think the performance of this very concentrated trade supports that notion.
- [16:52]
Tim Seymour
When I think about investing. Well, let me say one thing. Peter Bockvar is always right. But I have to push back on Slim Jim's being cheap. I mean, last time I checked, Slim Jim's aren't cheap. And try to buy like a, that two ounce pack of beef jerky. Like the peppered beef jerky you like.
- [17:07]
Melissa Lee
Mel, you like the organic, the good seasonal beef jerk. Well, like the regular.
- [17:11]
Tim Seymour
Because I'm on.
- [17:12]
Melissa Lee
Yeah.
- [17:12]
Tim Seymour
I mean healthy beef jerky is an oxymoron. Having said all that, I mean, I could order a steak at Smith Lenski is cheaper than buying a bag of beef jerky anyway. When I think about investing, I think about investing for clients. I think more about where I'm relatively overweight or underweight. I don't think about all in on, I don't think about. And I think there's been an opportunity to have exposure. Remember, if you look at just the weightings of the S and P and companies in the S and P. Amazon is not a tech company. Matter is not a tech company. They're communications companies. There's this, there's that. So you have to think about both weightings and where you are relative to a benchmark. What Peter saying about Staples is fascinating. They've underperformed the S and P by 41% since the end of December of 22. Some of these companies are not cheap. Some of these companies have been beaten up. Some of them have more exposure than others. This is a great opportunity for stock picking in a place where I think you're supposed to always own some Staples. It's just a question of which ones.
- [18:03]
Melissa Lee
Yeah, which ones? Grasso.
- [18:04]
Steve Grasso
Well, what he brought up Conagra brands. Look at the yield on Conagra. It's over 7% and you don't buy something for the year because that yield could be wiped out with one day sell off. But to Peter's point, if we're going into a lower rates environment and you're looking for something where people are going to be buying Slim Jim's and food and they're going to have their protein fix a lot cheaper. Conagra is a great Patel.
- [18:26]
Tim Seymour
Have you ever had a Slim Jim?
- [18:28]
Melissa Lee
Of course I have. I mean fabulous, fabulous food and my human nothing wrong. That's Slim Jim.
- [18:35]
Tim Seymour
It's great to know we're all, we're all weak in our own way.
- [18:38]
Steve Grasso
We're on the road.
- [18:40]
Melissa Lee
Now to the latest on the US government shutdown and how much longer it could last. CNBC's Emily Wilkins has a developing story from Capitol Hill. Emily? Hey, Melissa.
- [18:50]
Emily Wilkins
Well, yeah, Congress at this point is.
- [18:51]
Melissa Lee
Locked in a stalemate as the shutdown is set to go through the weekend into Monday. Just a little bit ago, the Senate tried again and failed a fourth time to open up the government.
- [19:02]
Emily Wilkins
And you've heard from now both Speaker.
- [19:04]
Melissa Lee
Mike Johnson as well as Senate Minority Leader Chuck Schumer.
- [19:07]
Emily Wilkins
They are both betting that the other side is going to be the one to cave first.
- [19:14]
Steve Grasso
We have troops and TSA agents and.
- [19:15]
Tim Seymour
Border Patrol agents who are working without.
- [19:17]
Steve Grasso
Pay, protecting the country.
- [19:19]
Melissa Lee
And you have FEMA services, health insurance.
- [19:22]
Bono
Policies, for example, that are being stalled in the middle of a hurricane season.
- [19:25]
Tim Seymour
Because the Democrats want to play political.
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Melissa Lee
Games.
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Andrew Oban
As people get their new health.
- [19:34]
Tim Seymour
Care bills and they see how much.
- [19:37]
Andrew Oban
It is, it's shocking how much it is.
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Tim Seymour
And they go and say who did it? And we Democrats are going to be there day in and day out and say the president and the Republicans did it.
- [19:49]
Emily Wilkins
The Senate will return next week, but the House will be out after Speaker Johnson canceled the House's session next week to keep the pressure on the Senate to pass that bill that, as you remember, has already cleared the House but still has yet to get the 60 votes that are needed for passage.
- [20:04]
Melissa Lee
Melissa? Emily, thank you. EMILY wilkins, Obviously, this all happens. The midterm elections are coming. Who's going to own this, do you think?
- [20:12]
Steve Grasso
Well, that's the tug of war here. So both, both of them are pressing that the other side is going to own it. They seem dug in. They seem as if the Republicans are going to let and you've noticed a lot of the press conferences now are trying to come out and basically say they're to blame, they're to blame and they're going to keep doing this. So the longest shutdown was 35 days. Second longest was 21 days. I don't think it'll be that long, but I don't think it's going to be resolved in two days, three days. I think we're going to take the weekend and we might be shocked sometime in the middle of next week.
- [20:47]
Emily Wilkins
All right.
- [20:47]
Melissa Lee
We do have some breaking news we want to get to from the White House on President Trump's proposal for peace between Israel and Hamas. Eamon Javors has got the details. Eamon?
- [20:55]
Tim Seymour
Melissa, we've got a new statement here from President Trump on social media responding to the Hamas statement a short while ago. The president here putting a little pressure on Israel. He says based on the statement just issued by Hamas, I believe they are ready for a lasting peace. Israel must immediately stop the bombing of Gaza so that we can get the hostages out safely and quickly. Right now, it's far too dangerous to do that. We are already in discussions on details to be worked out. This is not about Gaza alone. This is about long sought peace in the Middle East. That's the statement from the president responding to Hamas, which in their statement suggested they were willing to, to turn over all of the hostages alive and dead, tragically, but also putting some conditions on that. So it sounds like Hamas is taking a step toward negotiations and the president is welcoming that step with open arms here. No indication of when that hostage exchange might take place, but you can see from the president's statement there that he's already thinking about the technical details of how you get those hostages out in a very, very dangerous place, part of the world, given everything that's going on there. We're also told, Melissa, that the president is working on a video statement in the Oval Office and we should see something on camera from him at some point this evening as well.
- [22:11]
Andrew Oban
Back over to you.
- [22:12]
Melissa Lee
All right. Amen. Thank you, Eamon Jabbers. Coming up, copper's big week. What the resurgence in the metal means for the miners and the global economy. And a quantum leap for the quantum stocks. Can you still jump into this trade or should you sit this one out? We'll debate that. More Fast Money in two.
- [22:32]
Tim Seymour
This is Fast MONEY with Melissa Lee right here on cnbc.
- [22:41]
Andrew Oban
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- [23:38]
Tim Seymour
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- [24:03]
Bono
What have you got to lose?
- [24:04]
Tim Seymour
Head to Bluehost.com to start now.
- [24:08]
Melissa Lee
Clorox toilet wand it's all in one. Clorox toilet wand it'S all in one. Hey, what does all in one mean? The Caddy, the wand, the preloaded pad. There's a cleaner in inside the pad. So Clorox Toilet Wand is all I need to clean a toilet. You don't need a bottle of solution to get into the solar revolution. Clorox Clean feels good. Use as directed. Welcome back to Fast Money Copper with its biggest weekly rally in over a year. As the supply disruption and the weaker dollar put put a charge into the price of metal miners rallying on this new southern copper free port support Lundin Mining and MP ending the week in the green. Is there more room to run in this mover Obviously was the FCX mudslide incident that sort of crimped supply, which.
- [25:02]
Tim Seymour
Is one of the largest in the world and force majeure. And typically copper mines are in places where there's a lot of political instability, especially Indonesia, parts of Latin America. And so what's been going on with copper though? And if you, if you look at certain futures, they've told you we were already at highs, they've been extremely volatile. If you look at 3 month LME futures, we're at 16 month highs. If you, if you look at where we're trading in the US here, we're essentially at the highs from back to the summer. But the dynamic is we will Be at least according to, you know, folks within the industry at a deficit in copper. You add that to the fact that China continues to at least invest in their electric grid. The other thing that we're not talking about, if we're looking for AI trades and datacenter trades, copper is a major, major input in the build out of electricity and power grids. So. So if you want to think about the demand side of the equation and just say I can't get really excited in the supply disruption side because that doesn't work for oil. Well, it does work for copper, but it will work even more. So yes, I like that. I like the trade. I even like that copper chart going all the way back similar to when gold really started to take off. I think that uptrend in copper is alive. Freeport Southern Copper. I like BHP and Rio Tinto because they're more integrated. But yes, I like it.
- [26:18]
Melissa Lee
The biggest supply deficit since 2004 according to SOC Gen. Remember also bank of America earlier this week upgraded FCX on the back of what. What has gone on at the Grasberg mine saying, you know what supply demand is so tenuous that you just take one mine offline for a little bit and completely, you know that mine is.
- [26:35]
Steve Grasso
That mine is 3% of the supply. So everything that Tim said, you also have environmental causes, you have that mine and then you have the, the demand is through the roof and the supply is cratering. I bought fcx. I was long into that sell off and I wound up buying more as it started to round off the bottom on the horrific headline that we saw.
- [26:56]
Bono
I also, I also look at fcx but I want to kind of look at this a different way. Tim mentioned the data centers. I think that's where you might want to drill down on. That's what we kind of open the show with. That's where we've seen a lot of the volatility and it's not necessarily the pure play. It might fly under the radar there. But if you look at some of the producers, the components therein, you might see some margin compression there. So if you are in fact worried about this trade, now might be the time to take some chips off there, let that breathe and then re engage.
- [27:21]
Melissa Lee
All right, there is a lot more fast money to come. Here's what's coming up next.
- [27:26]
Tim Seymour
A quantum leap forward for quantum computing stocks. What's behind the monster weak for this group? We'll go inside the numbers plus a deep dive on the darling data center trade. What the latest blizzard of blockbuster deals is telling our traders about the state of AI. You're watching Fast Money live from the NASDAQ market site in Times Square.
- [27:48]
Bono
We're back right after this.
- [27:53]
Melissa Lee
At 1-800-FLowers.com. we know that connections are at the heart of being human. Whether celebrating life's joys or comforting during tough times, 1-800-Flowers helps you express what words can't for nearly 50 years, millions have trusted 1-800-Flowers to deliver thoughtful gifts that help create lasting bonds. Because it's more than just a gift. It's your way of showing you care. Visit 1-800-flowers.com sxm and connect today. That's 1-800-flowers. Com sxm. What made you confident that you could do something that hadn't been done before?
- [28:28]
Emily Wilkins
I have no fear of failure.
- [28:31]
Melissa Lee
Blazing women, changing the game.
- [28:33]
Emily Wilkins
One of my favorite pieces of advice think about what your boss's boss needs.
- [28:37]
Melissa Lee
Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just gotta think big to accomplish big things. Julia Boorstin hosts CNBC Changemakers and Power Players. New episodes every Tuesday, wherever you get your podcasts. Welcome back to Fast Money. Quantum Computing stocks making, well, a quantum leap forward. Just take a look at some of today's biggest movers. Quantum Comput D Wave Rigetti Ionq making big splashes in the market for the week. The gains are even more eye popping. Then you zoom out on the returns for the year and those numbers are off the charts. D Wave nearly quadrupling. Steve, you've been a proponent of this group. When did you get in? How do you think about it at this point with these huge gains?
- [29:22]
Steve Grasso
I'm up 100% in D wave. So I did, I felt late and when I went in I felt stupid.
- [29:28]
Melissa Lee
How do you feel now?
- [29:29]
Tim Seymour
Good.
- [29:30]
Steve Grasso
Less stupid. Okay, so, but I still, but I still don't know whether this is the time to get out. This is the time to add more. The run up we saw in the last week was from Q U B t doing a $500 million private placement. If the market shows that you could raise 500 million like that in what Jensen thought was going to be 15 years away has now got pulled forward to two to three, five years away, max. This is going to be an area that's going to be very lucrative going forward. I'm staying along. I actually bought more this week. I'm not saying that's the best thing to do, but I did it and I think that I'm going to roll it a Little because I think this is, it's going to go from AI to Quantum.
- [30:16]
Melissa Lee
What if there's a stutter step in AI? What happens to Quantum?
- [30:18]
Steve Grasso
Yeah, I think people are going to, as we started off the show saying that people are looking to make some profit profits in things that haven't run as far. These things have run really far, but they're unprofitable. Could you imagine the headlines when these start getting contracts and become profitable or on the precipice of becoming profitable. I think those, that's the next thing that you're looking for. When you start to see either military contracts, IBM contracts and IBM was at the head of AI, they're at the head of Quantum, they don't get the credit for it. All these smaller names that are becoming very big very quickly are actually starting to get the investors attention.
- [30:57]
Melissa Lee
There's also the possibility of these, these companies that have multibillion dollar market caps at this point and you know, triple digit, triple digit million or. Yeah, six, six digit million. Profits, revenues, I should say not profits, not profits, not profitable at all.
- [31:14]
Steve Grasso
Right.
- [31:15]
Melissa Lee
Not getting any contracts and then seeing the headlines about how far they will tumble because they're going to give up all the gains. If you get you this for you this was like the area that got away.
- [31:24]
Tim Seymour
Yeah.
- [31:25]
Melissa Lee
And how are you feeling about it now?
- [31:26]
Bono
You've asked me before like I'm definitely a proponent of the trade but when we kind of harken back and we're saying, okay, is this again a bubble? Is this again similar to 99, 2000, the pre revenue, pre profitability, that's what truly scares me me now clearly I've been wrong. These have. Steve's done incredibly well here. But this is the area that really gives me concern only because if you don't, if the, if the, if the music doesn't continue to play, if you're not able to continue to raise and I do think there will be a handful of these names that are actually the winners. But I don't even have enough information to determine which of these will be the winners. So you buy them all or you buy none or you wait.
- [32:04]
Tim Seymour
Yeah. I just think this week highlighted that this sector has been about capital markets and visibility. And if you look at Rigetti, part of the move higher this week was the, that they were using their stock as currency to go buy some, some other systems and also begin to look at acquisitions. So that makes a lot of sense if your stock's overpriced. But I think that's really what this Week characterized by.
- [32:23]
Melissa Lee
Coming up the data center names our next guest says are set to rip higher as the deal making the infrastructure trade heats up. That's right after this. Welcome back to Fast Money. A pair of new record closing highs to end the week. The dow gaining almost 240 points for its sixth straight gain. The S and P barely eking out its own record, close by the finest of margins. And the Nasdaq taking a breather, down just over a quarter of a percent. But it was a strong week for all three major indices, all up more than 1% since Monday, their fourth positive week in five. Meantime, some of the companies behind the air rush, Nvidia Core weave have soared 20 to 200% this year. So we want to take a peek under the hood at what goes into the data center beyond those names. B of A's Andrew Open wrote an in depth note on the space. He joins us now on set. Andrew, great to have you with us. I read this note. I was so excited to get you on. You are the senior industrials analyst. So you cover what in a nutshell.
- [33:20]
Andrew Oban
Basically the old economy, you know, which.
- [33:23]
Melissa Lee
Is now the new economy.
- [33:25]
Andrew Oban
That's exactly right. Ge, Honeywell, Eaton, Parker, Rockwell. Yeah.
- [33:31]
Melissa Lee
Okay, so all the stuff that, that you need to run the data center, effectively build the data center. So a lot of these have already been hot trays. And I guess what we're trying to figure out at this point is what hasn't run or if it has run, how much more is there? So are there certain parts of the data center, certain stocks that you see fit that category?
- [33:51]
Andrew Oban
So look, I think what the street is missing is that before, right, the electrical stuff, the cooling stuff, they were basically commoditized, right? Generally you go, 10 years ago, average data center was maybe, I don't know, 10 megawatts, right? And it was running at 12 volts. And you had an H vac system, you had electrical system off the rack. The big guys really wanted that reliability so they would go to top player. But the reality is nobody thought about it. Now an average data center is around 100 megawatts. The cost per megawatt is 50 million. So that's 5 billion enterprise. And all of a sudden, because Nvidia has accelerated its product cycle, all of a sudden they started to do something very different with the rack. So all of a sudden the H Vac system, the cooling system that you had before is not going to work. All of a sudden the electrical stuff, when they going to go to the Kyber rack, you Will effectively will have to rip out all your electrical stuff inside the data center and put in brand new electrical equipment. You're going to go to direct current architecture running this stuff at maybe 800 volts, 400 volts versus 12 volts. The problem what Nvidia is doing, they completely re architecting the rack and all of a sudden H vac and electrical which was an afterthought. Rubin Ultra is not going to work if you don't have the right cooling and if you don't have the right electrical connection. And just to give you a sense, we estimate roughly an average cost for data center maybe 50 million per megawatt. So thinking about it, electrical maybe 1.9 million out of that per megawatt cooling 1.4 million. You mess that up right. $40 million worth of chips per megawatt are pretty much burned within 30 seconds.
- [35:46]
Melissa Lee
Wow.
- [35:46]
Andrew Oban
So that's the big difference. All of a sudden this has become the technology bottleneck. Tech without which in various plan doesn't work.
- [35:54]
Melissa Lee
So let's take for instance the poster child of cooling stocks and that would be vertive. I mean it's already seen a massive run. But from what you're describing it sounds like the demand is going to be to the sky if you believe this trade is going to continue.
- [36:06]
Andrew Oban
Well not. Not even to the sky. But we think the mode is going to get bigger. So what you had our observation as you recently rolled out. There was a lot of talk about liquid cooling last year. And what happens liquid cooling as we go to shows what we're finding the industry turned out really struggled was rolling out the liquid cooling product. And if you think about the liquid cooling product, it's a pump compressor, it's a heat exchanger. 70% of the you know this cooling unit is really off the shelf components. And then Nvidia gives you a pretty tight parameter how to put it together. You would think you know as commodity product as they get right. Well it turns out people when you put it in people don't put in the right pipes. They don't install it right. They put the filter right. And that's. You know you don't do that right. You know your uptime in your data center on all these pricey chips, you know they don't work as well as you thought. So and the view is as you're going to do more cooling, more electrical. Right. What the lesson people learned it's such a small part of the overall data center cost. You better get it right because if you don't get it right, the rest of it doesn't work.
- [37:11]
Tim Seymour
Okay, so, and this is fascinating, so great to have you here again. Thank you. This whole report is report is, you know, let's take apart the data center, who makes what, who and you're talking about bottlenecks. So to me I'm thinking about two things only to oversimplify this, I'm thinking about who's got capacity that they can ramp of these input players. Who's got capacity that they could ramp immediately, who's got the ability to meet this demand or accelerate quickly and who's got the highest point margin.
- [37:37]
Andrew Oban
They don't. That's, you know, the industry is busy adding capacity and people complain about capacity. Industry is charging premium to sell to the data centers. Look, the lesson is what we keep hearing, the industry will go to the winners, the biggest suppliers with the best reputation. In our coverage it would be Vertif, Eaton and obviously on the cooling side, the big players, the likes are jci, Carrier, Trane. People are really worried about the sector being disrupted. We don't think it's going to get disrupted. We actually think the moat is going to get bigger because what really matters, you have to understand it and it's really services. Right. We talked to Eaton, we talked to Vertif. When they take on these big contracts, what they really care about will they be able to hire people to support the infrastructure once it's out there. That's the moat and that's who has.
- [38:36]
Melissa Lee
So that's the recurring revenue aspect. They're not just installing the system.
- [38:39]
Andrew Oban
Correct.
- [38:40]
Melissa Lee
They're maintaining it. How about the power aspect of this all? I mean, to cool, to run. Especially as, you know, as inferencing gets more advanced and more widespread. It consumes more power.
- [38:51]
Andrew Oban
Yes, it does. Well a nobody knows how the industry is going to meet the demand. Right. Clearly we covered G Vernova when they got spun out of ge. You know the thought we had a big debate whether the stock was going to worth 10 billion or 20 billion. You know, it's a multiple of that. Part of what you have to understand is that actually AI demand is relatively small percentage of the overall electricity demand growth in America. It's actually a bit of a perfect storm because we have reshoring, we have local regulations that drive, you know, all the buildings have to be electrical now. So it's a significant part marginally. These are the guys who can pay. But yeah, no, you're right. As I said, I started out by saying GE, Vernova, EBITDA is basically going to double between 25 and 27. Right. And the industry once again services installation. That's what really matters. So these are the big winners and we think they're going to make more money than the street realized, actual services. Because even though the bottlenecks are getting the new turbines out of the door, you can operate the existing turbines, you can make them a lot more efficient. So we think there's going to be a lot of that happening. And our colleagues have sort of written about the other aspects of the market, maybe smaller turbines that will come and play as well. So it's all of the above.
- [40:18]
Melissa Lee
Andrew, thanks so much for coming by fast. We hope you'll come back.
- [40:21]
Andrew Oban
Thank you.
- [40:21]
Melissa Lee
Andrew Oban, bank of America Coming up, casinos getting crushed. Wynn, Las Vegas, Sam's Melco and MGM among today's very worst performers, thanks to headwinds in Macau. What's next for these names? Next.
- [40:38]
Tim Seymour
December 11th, join Melissa Lee and the team of traders in New York City for an all access celebration live and on air. Fast Money Live trading the holidays. Get your tickets now at CNBC events.com/fast money.
- [40:56]
Melissa Lee
Welcome back to Fast Money. Investors folding on casino stocks. Names like Las Vegas, Sands Win and MGM among the worst performers in the S&P 500 today. For more on what is causing this dip, let's bring in CNBC's Contessa Brewer.
- [41:07]
Emily Wilkins
Contessa, you can blame it on the rain. Classic Milli Vanilli.
- [41:12]
Tim Seymour
Yeah. Yeah.
- [41:12]
Emily Wilkins
First concert ever.
- [41:13]
Tim Seymour
I knew that.
- [41:14]
Emily Wilkins
Okay, well, here's why. Yeah, here's what happened. There was a, there was a typhoon in September that really hit the growth trajectory. They were expecting 12 or 13% year over year gross gaming revenue growth. Instead, they got 6%. Nothing to shrug off. But the typhoon in Hong Kong and Guangdong, big theater markets to Macao really mattered. Now it's Golden Week.
- [41:37]
Melissa Lee
Yes.
- [41:38]
Emily Wilkins
They're expecting 150,000 visitors to turn over every day.
- [41:42]
Melissa Lee
It's a big deal.
- [41:43]
Emily Wilkins
Except there's another typhoon that's off on the west coast of the Philippines. Will it get close to Macao? Could it disrupt this trajectory for Golden Week? We'll see. But right now, like Melco, off 12% week to date, you've got Vegas Sands off five and a half percent. It's a big hit.
- [41:59]
Tim Seymour
So part of the problem and frustration for me invested in Melco, in Las Vegas Sands and other gamers in that part of the world is that a typhoon shouldn't be the issue that derails this story. And it's taken so long for the for the recovery in GGR and we've actually had trends, you know, June, July were very, very good. Should, should investors be throwing this headline out the window?
- [42:19]
Emily Wilkins
Yes, I think it's irrelevant. Just like a. If it doesn't damage the infrastructure, if it doesn't tear down the bridge that is the Hong Kong to Macao bridge, then it doesn't matter. It doesn't really matter. I think it's the back to back thing and also because Golden Week is so pivotal for this quarter. But I'm going to Macao. I know Sunday very so we're going to come back, we're going to talk about whether these non gaming amenities, you know, fountains and gardens and dining and shopping, can that bring in the kind of spending that the junk gets used to?
- [42:51]
Tim Seymour
Well, it certainly works in Vegas and it has worked in Macau. So that's being questioned.
- [42:58]
Emily Wilkins
I mean everybody who's been to Macao says they come, they gamble, that's what they do. That's where the money comes from. Can you still maintain those kind of margins on non gaming amenities?
- [43:08]
Melissa Lee
Meantime, let's talk about the Downdraft and Draft Kings this week. There's this perception that Kalsi is sucking up all of the betting air.
- [43:16]
Emily Wilkins
Well cow she launched bet build your own combo option. Don't call it a parlay because parlays were the purview of the sports books but in fact that's what it is and as soon as that happened DraftKings down more than 16% this week. FanDuel's parent company Flutter also. But they have the international hedge so they did not get hit quite as hard. I do wonder whether this is overblown because it's still in play. The courts could come in and say Kalshee doesn't have the right to offer this and the CFTC have the right to offer and regulate sports as events contracts.
- [43:56]
Melissa Lee
Contessa, safe trip to Macao.
- [43:58]
Emily Wilkins
Thank you.
- [43:58]
Melissa Lee
Contessa Brewer. Coming up, big moves this week catching our traders attention, what they see in the charts and why they are so fired up about this trio. That's next for Fast Money into. Welcome back to Fast Money. After a record week on Wall street, we wanted to ask our traders what their standout stock of the week is. So we start off with Tim Coinbase.
- [44:23]
Tim Seymour
And it's certainly in line with the move we had in digital assets and all the craziness we talked about in that corner of the market, the digital market. Coinbase to me is a combination of the flywheel between the trading business but also the platform that allows people, you know, trade fi all the dynamics that to me are the infrastructure of where this is going. So it's not just they're going to be obsolete because people are going to be trading elsewhere. They're making a ton of investments into this and I think they're going to be there.
- [44:48]
Melissa Lee
Bono and what's yours?
- [44:49]
Bono
Vertif stocks breaking out to new highs. You know I've always been in the camp of picks and shovels of the data revolution. So if Nvidia is what I was supporting before, remember that for every dollar spent on silicon I believe it's 3 to $4 spent on power and cooling. So I like those, those odds there.
- [45:05]
Steve Grasso
I always love that. The dollar thing.
- [45:07]
Bono
Exactly. You're able to extract multiple of what's being spent.
- [45:11]
Steve Grasso
Stephen Mine is Anders Steven It's a joy. I am in trouble.
- [45:15]
Tim Seymour
It's.
- [45:15]
Steve Grasso
It's a drone company. They were up 28% this week. Quantum stocks all up in the twenties. This one's this a moonshot type event. Don't look at the valuation on this one. This, this one's a little drastic too.
- [45:27]
Melissa Lee
But what is the valuation on this one?
- [45:30]
Steve Grasso
200 times EV to sales.
- [45:31]
Melissa Lee
Oh, interesting.
- [45:33]
Tim Seymour
That's all.
- [45:33]
Melissa Lee
Okay.
- [45:34]
Tim Seymour
That's it.
- [45:35]
Steve Grasso
And they had a military contract and we heard Elon Musk say that the new warfare is going to be drones. I'm not afraid of the valuation. I would like to see them sign more contracts. I'd like to see them become profitable. I'm already in and I'd get bigger.
- [45:49]
Melissa Lee
Why this and not air environment?
- [45:52]
Steve Grasso
I wanted it smaller. Aero environment is a $18 billion. $18 billion market cap company things I've never said $18 billion company. This one's a 3 billion dollar company. This one could grow a of lot lot more aggressive than Arrow.
- [46:08]
Melissa Lee
All right, up next, final trades, final trade time.
- [46:16]
Tim Seymour
Tim Another thank you to Alexa the incredible page that is saying goodbye today. Las Vegas fans final in picks and.
- [46:23]
Bono
Shovels of the picks and shovels trade.
- [46:25]
Steve Grasso
VRT Steve Data centers Digital Realty Trust. Andrew maybe think about this during that fascinating interview and I think they're underappreciated.
- [46:34]
Melissa Lee
Alright, thanks for watching Fast Money. Have a fantastic weekend. Good luck Alexa. Mad money starts right now. All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal, their parent company or affiliates and may have been previously disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Fast Money participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Fast Money disclaimer, please visit cnbc.com fastmoneydisclaimer Taylor Swift just came off her record breaking Eras tour.
- [47:24]
Tim Seymour
What can she do to top it?
- [47:25]
Bono
The pop superstar announcing a brand new album.
- [47:28]
Melissa Lee
Literally everything she touches.
- [47:30]
Tim Seymour
People won't know about the Swift effect. Cnbc premieres Saturday, October 4, 10 Eastern.