Melissa Lee (2:37)

And also the other thing I would.

Dan Nathan (2:38)

Say is, you know, Oracle is not just in the infrastructure business, we're also in the application business. So we're also consumers of this technology.

Melissa Lee (2:46)

Those comments echo what I heard from OpenAI CEO Sam Altman, who told me that this scale of construction is the only way to keep up with AI's explosive growth.

Dan Nathan (2:57)

This is what it takes to deliver AI AI. Unlike previous technological revolutions or previous versions.

Melissa Lee (3:03)

Of the Internet, there's so much infrastructure.

Dan Nathan (3:05)

That'S required and this is a small sample of it.

Melissa Lee (3:10)

Sam, also telling me that OpenAI's trajectory so far only underscores the need for even more compute.

Dan Nathan (3:17)

With what we see on the horizon for how much people are going to want to use this and what the quality of intelligence, the level of intelligence we can deliver with more compute, we're very confident at this point we're going to need much, much more compute to deliver on that.

Melissa Lee (3:30)

And this comes just one day after the Nvidia open air $100 billion partnership announcement. And yes, Nvidia and Oracle both closed lower. I'm looking at those stocks, they are both moving higher after hours. So really answering that question that yes, this latest deal is looking like it is reigniting that trade as investors chase anything tied to Open Air. Mel, how are they going to power all this? Mac, that's the question I've been asking today. And Sam Altman has long been an advocate of nuclear power. He helped a startup called OCLO go public through a spac. And so that is one option that they're turning toward. But Sam and Sarah Fry are both telling me that more than close to 800 partners across North America have approached them about potential facilities to host them. So here in Texas, we're talking about renewable energy, we're talking about grid power. That is not enough because, Mel, a key distinction here, that's 7 gigawatts we're talking about that is additive to the Nvidia announcement. So we're talking about 17 gigawatts in total. This is an unprecedented buildout that is going to require the kind of power we haven't seen the likes of in a very long time in terms of U.S. infrastructure build. Yeah, that seems like a slight stumbling block to all this. Mac, thank you Mackenzie Segalos in Abilene, Texas. This is fascinating. I mean, as Mackenzie had mentioned, this comes on the heels of the Nvidia Open Air deal. And if you want to think about the circularity of yesterday's deal, then you loop in Oracle and, and OpenAI and Oracle teaming up and it's sort of this big.

Dan Nathan (4:54)

Takes you back to that announcement back at the White House. And that was, you know, we saw those three stocks or those that could trade, excuse me, were out there moving. And yes, there, there are linkages and there's overlap in terms of the ownership. And some of this, a lot of this goes back to Larry Ellison. And look, Oracle has done an amazing job transforming their business. And the question we ask constantly is, is it profitable business? And ultimately. But when you look at where they're going to be spending on datacenter rel to themselves, this capex is bigger than any of the hyperscalers who have announced so far. So no question, the right partners, no question there is demand. The question is really, what's it worth? Open Air is spending a lot of, you know, there's a lot of money being circulated. One has to wonder where it's going to come from. But shelve that for a second. Let's talk about Oracle because they're being rewarded for this revenue and maybe justifiably so, but we still don't know what the earnings are going to be. And if you just do back of the envelope on what expecting earnings are, I mean, you got Oracle trading close to 40 times next year's numbers, which is historic for Oracle and you know, it's somewhat historic for the space in general. If you think about what's going on here now, they might earn their way into that, but that's a big leap to make from where it historically trades to where it's trading now. God, we sound a little pessimistic here because I'm just going to kind of jump on.

Melissa Lee (6:14)

Wait a minute.

Dan Nathan (6:14)

Now you're going to ask the question. So it's the energy that you just asked about, it's the financing, okay, so find these hyperscalers. They got a lot of cash, they generate a lot of cash. They can keep doing 25, 30% of the revenue until things just kind of stall out a little bit. But where does a company like Oracle that is $100 billion in debt and not a whole heck of a lot of cash and really is going to have negative free cash flow for the beginning here to try to build this out? And so you think about this Oracle is actually going to need in video to come in and take a stake so they can buy their chips. Right. So when you think about the CapEx here for all of these buildouts, about 50, 60% of is Nvidia GPUs. Right. And so there's obviously crazy demand for them. We haven't even talked about X AI right? And the demand and some of the things that they're talking about that they're building out. So who's going to finance all this? And so once you get away from the major hyperscalers then you got to tap debt markets and you got to tap you know, a whole sort of just not just public debt but, but private credit, that sort of thing. So at some point this is going to become massively embedded into our economy if it hasn't already. I think there's some estimates that it's 50% of our GDP last year or so. So it will not take much of a hiccup to actually have reverberations throughout the economy, not just the tech economy. And this is one of the similarities. I think you can bring it back to 25 years ago people thought it was very isolated to the Internet and the spend and the fiber that was being laid. But the moment there was not the sort of demand that the build right was expecting, then you had a massive slowdown across the economy. Take that forward into 07, into 08, you know and I don't mean to draw too many lines together here, but the financialization of a whole host of things, the housing market that led to this. So when you think about the interconnectivity, you think about the scale globally but also all of these companies that are, listen, Oracle, they are attached at the hip with open air. Microsoft to some degree is. So there's just a lot of interconnectivity here that I don't think the market whatsoever ahead of, ahead of them in line. Right. I mean in other words Microsoft personally as the first call on some of that capacity and, and ultimately this gets back to where who is benefiting now and where is there really not only a revenue accretion but where there's actually profitability that changes in the face of a lot of this is Capex with the built and the promise on tomorrow and it gets back to that trade right. And we've clearly seen the rotation on the build and the promise for tomorrow over the last three weeks. This has not been about the early players. The first round of this was clearly metta than Microsoft and to some extent some of the other hyperscalers.

Melissa Lee (8:47)

Right? I mean, but to speak to the rotation that we've seen here, I mean, look at Microsoft, Microsoft since July, it's only up single digits here. I mean, like Julie, where do you stand on, on some of the valuations being afforded to the likes of an Oracle? Let's say the desk here brings up good points in terms of growing into the revenue estimates and growing into that valuation. I think what's really, I agree with Dan. I think the difference with Oracle is now we're talking about debt. And you know that when you're ending in any kind a capex cycle, once you've moved away and you're into debt, that starts to really change the economics and that starts to also really ramp the risk. And so clearly when you see an Nvidia choosing to take this partnership link with OpenAI in order to juice up the demand, that tells you that they recognize that they're going to have to stimulate their own demand. And that's not necessarily a great sign in terms of the sustainability of the growth. And I think that that really reflects this interconnected nature of all of these companies. And, but what it really, really points to is that we have no clarity on what is the revenue potential of all of this investment. It is still completely an opaque concept that we have no real understanding of. Yes, enterprises are moving some of their workloads, they're experimenting with AI to see how it can improve their productivity, but they're not really seeing a lot of the fruits of that labor or investment. And at one point do they start to look back and say, you know what, nevermind, we'll just wait for this technology to mature. For more reaction, let's bring in DA Davidson, Managing Director and Director of Research, Gil Lauria. Gil, great to have you with us.

Dan Nathan (10:23)

Thanks for having me.

Melissa Lee (10:24)

It seems like every partnership gets applauded by the markets. I mean, Nvidia basically hands over a check or chips to open AI and that gets rewarded, Oracle gets rewarded. At what point should we actually scrutinize what this means for each company?

Dan Nathan (10:41)

Well, right now. And you've had a great conversation so far. Let me put it together. There's real companies here. Microsoft, Amazon, Google, they have real customers. Their cost of capital is probably 5%. Since they have cash on hand and very low borrowing costs, they're probably getting 20% return on that. That's great. They have all the customers, they have very low cost of capital. When we start talking about these incremental players, Oracle, Coreweave, etc. We're talking about companies that have to borrow at 12%, maybe 10% and then are getting maybe mid single digit returns. So that's like buying Treasuries on margin. That is value destructive and that's where we have to focus. And what's happened is we started with the core trade which was in video and Microsoft who have done well and captured most of the value and the trade then expanded to these marginal players that are now trading at higher multiples. In what world would or should Oracle trade at a higher multiple than Microsoft? When their economics are flipped? Microsoft is creating value, Oracle is going to be destroying value. In what world should Oracle trade at a higher multiple than in video? Nvidia is going to win anyway. Everybody's going to buy Nvidia chips, it doesn't matter who it is. Yes, they're overstimulating the market by making the deals they've made the last couple of days. But even without that they still have the organic demand for Microsoft, Amazon, Google, Meta Elon, etc. China, when they're able to sell there, doesn't make any sense for these marginal players to trade at a higher multiple than the real companies building AI.

Melissa Lee (12:20)

I'm curious then when you get inbounds about Oracle, let's say, and Oracle, you know, increases their capex, they have debt, but at every step of the way the stock goes higher. What do you tell your clients and what is their reaction? Do they just not want to hear it? Do they just think, you know what, this is a trade that's in front of us and, and we understand that it doesn't intellectually make sense, but it is a trade.

Dan Nathan (12:44)

I point them to two things. One is if you go back to the transcripts from Oracle for the last few quarters, you'll see that it's not just the last deal from OpenAI that increased their, their backlog. It's actually been several quarters where it's really open AI that's been driving all of this. And then I point them to the fact that OpenAI, I think you pointed out earlier in your conversation, Microsoft still has right of first refusal on all their computer and then they committed another 25 to core, we have another 100 billion here. They're committing to building Stargate in the UK, Stargate in the Gulf. They're designing their own chips, they're building their own hardware and by the way, they're going to lose more than $10 billion this year. Having that is the only thing that's added value to Oracle is very risky. That's not a customer that can pay all their obligations. They're double, triple booking, maybe quadruple booking capacity. They will not be able to live to those obligations. So if you're adding $400 billion of market cap to Oracle, based on that, I think we should revisit the math. So, Gail, then what are the capital markets implications here? I mean, Oracle is up two and a half times from April. I mean, should, should they try to raise some equity here? Because you talked about a reliance on capital sources that just may not have the capital there. Would you be going to the capital markets? Will any of these folks be going to the capital markets and I mean the public ones? Well, the amount of capital they need to raise is very substantial. They may and they may. Companies like Oracle and Corey may need to go to the market for equity. But as you were pointing out earlier, what they really need to do is raise tens or hundreds of billions of dollars worth of debt. They're quickly going to take over the entire below investment grade category, which is an expensive category. And again, their returns are in the single digits. If they're borrowing high single digits and getting returns in the single digits, that's value destructive. This really should continue to move forward through the hyperscalers that have all the customers that can sell them other stuff, which is why they can get higher margins, which is why they can get returns. And again, their cost of capital is negligible. Gil, the multiplier effect for the stocks is clear, but the return on investment is something that people have been writing about. MIT just had a piece out about ROI for, you know, all the spend in AI. I mean, when does that, when are people going to start to critically look at that and if there is a downturn, start to sort of walk away from it? I think we're all very well aware of the roi. So that again, that's why we focus on Nvidia is getting great roi. Microsoft, Amazon, Google getting great roi. Very few other companies are. But what we also know is that these tools are great. You get people all the time telling you about how they're using the AI tools. We use them ourselves. We know we're going to bring them to work. We're going to bring these tools to work. The MIT study was about companies struggling to implement AI. It's because it's hard. It'll take them a few years to do that. The upstarts will take a few years to mature. But it's not going to take that long for us to use AI because we're going to bring AI to work, just like we brought the iPhones to work. It's not the IT department that gave us iPhones and moved us to the age of mobile. We brought iPhones to work and that made us more productive. It's going to be the same with AI. And again, the tools are getting so good that we do need this. The need for AI. The tools around AI are great. I'm actually here at a conference for Verkada, a video monitoring company. They're implementing AI. All of a sudden you have automatic threat detection and translation and the AI can even warn people to leave. We're going to see this everywhere. It'll take time. In the meantime, our usage of AI is what's going to drive the need for inference, which is real.

Melissa Lee (16:35)

Gil, great to speak with you. We haven't gotten to the power issue, but we'll do that next time. Gil Lauria of DA Davidson. One of the bullet points, one of the points that Gil was making also is that he is worried that Nvidia is becoming the investor of last resort to the AI world with the deal that it made yesterday. And so I'm wondering, you know, how you view that in light of all the billions of dollars swishing around here.

Dan Nathan (16:59)

It's been going on now for, I mean, not that there's anything illeg about it, but vendor financing is something we talk about. And when, you know, you, you invest in a company's and subsequently buy your goods, I mean, that's, that's concerning, it's not problematic. And I think right now the market's clearly giving them a pass. But a couple of months from now, it might have a much different picture. Well, think about this. So open AI, that's the one. I mean, first of all, let's be really clear. Oracle is going to be the patsy in this whole thing. So when we look back in a couple of years, it's going to be on Oracle's footsteps here. And I feel bad for them right now because they're literally chasing this thing in a big, big way. But look at OpenAI is being valued at a half a dollars. That's half of what Oracle is. The company has already told you that they are basically going to lose tens of billions of dollars for the next, I don't know, five or so years. So they're going to continue to actually fund this thing in any way, shape or form. And it's probably going to be, I think at the, I mean, it's going to be a problem for some of their biggest customers eventually. But then OpenAI, they have 7,800 million weekly active users, they have 12, $13 billion in revenue. I mean as long as the private markets, whether it's equity, whether it's debt are going fund that that's not a bad thing for them because there's 8 billion people on the planet and let's just say in five years half of them are going to be using open air technology. So at the end of the day I just think there's going to be obviously winners and losers. The infrastructure guys who are there, the hyperscalers that you guys just mentioned are going to be able to get some return on this investment because they are going to be the compute for the future. Fine, but it's not going to trade at the multiple I think that is being afforded to them right now. And just back from a markets perspective, I mean think of the headlines we've had really since well Nvidia reported, but including that report. But really think about the Nvidia based headlines that have been related to these types of partnerships. Nvidia's underperformed the semiconductor space. Nvidia has actually been flatlining from you know, kind of early August. I'm not saying, in fact I think Nvidia, of all the names we've just discussed I would agree that the, the, the investment thesis around Nvidia is the best. The valuation is the best for the growth. But in terms of what the market is doing with all these headlines, they've helped everybody else but Nvidia.

Melissa Lee (19:04)

Yeah, but before we leave this conversation, I do want to get back to Microsoft just briefly because of the noted underperformance relative to the other MAG7 stocks and in this game Gil mentioned it, Oracle, Microsoft's economics are flipped. So why is Microsoft just sort of, you know, stuck in the mud and Oracle soaring?

Dan Nathan (19:21)

I think part of its evaluation thing as well. I mean Microsoft was reasonable at a certain point, then got I think expensive again, historically expensive and clearly expensive to the broader market when it had that huge run up a couple months ago. I think right now it's just a valuation reset.

Melissa Lee (19:37)

Meanwhile, major indices retreating from record highs today as Fed chief Jerome Powell raised concerns over market valuations at a special luncheon in Rhode Island. CNBC's Eamon Jabbers has got the highlights here. Hi Eamon.

Dan Nathan (19:48)

Hey there Melissa. Well, a lot of analysts suggested that Jay Powell didn't say anything today that he hasn't really said before. But in the Q and A part of the conversation Powell laid out his view. What's happening in the labor market. And he called it a low fire, low hire environment. Here's how he explained it. We all see the data that it's just gotten tough for people just entering the labor force to be hired. But remember, the overall national aggregate hiring rate is at very, very low level. The layoff rate is also at a very, very low level. You're in a low fire, low hire economy. And it feels like companies are just, they've kind of stopped hiring or slowed down their hiring because they want to see how this all shakes out. He also talked a little bit obliquely about all the political pressure that's been on him as the Trump administration. President Trump himself has been bashing Powell and demanding that he lower interest rates. Powell not specifically referencing President Trump here, suggesting that in the post Covid era, post financial crisis, institutions broadly have lost a lot of confidence. Here's how he described the moment. Often things are seen through a lens of, is it good for this party or bad for this party or this politician? We're just not looking at things that way. We're looking at what's the best thing for the people that we serve in the medium term, what's the best policy? And no one, many people don't believe us because they think, come on, oh, come on, you're really political. But the truth is mostly people who are calling us political, it's just a cheap shot. So Powell there, not saying that Trump is guilty of a cheap shot here, but Trump is the person who's calling him political. Right. So you can sort of read between the lines there. Meanwhile, the President still continues to call Powell too late. Powell and Treasury Secretary Bessen told a few of us yesterday that he is continuing to interview candidates for Powell's job. Up to 11 candidates now, he said by the end of next week, he'll have interviewed 10 of them. No word on who's in the lead. Guys, back over to you.

Melissa Lee (21:50)

All right, Eamon, thank you. Eamon Jabbers. I thought what was also interesting out of this speech that in Q and A that Powell did was that he basically said forecasters is a very tough job. No one can forecast the economy beyond three months. That's sort of the economy that we are in right now. And so that sort of underscores a predicament that the Fed is in in terms of reading the data and. And charting a path.

Dan Nathan (22:11)

Yeah, I mean, he used the term this is a complicated situation, and again referenced inflation. Also referenced markets that were fairly highly priced, which I think is fascinating because they are fairly highly priced. But there was, I don't think there was anything that should make you should make an investor miss or interpret last week's Fed meeting any differently. But I do think some of these comments point out that the Fed is not run away cutting rates.

Melissa Lee (22:37)

Julie yeah, I agree. I think that, you know, he's really trying to build in enough flexibility that if we have a suddenly weaker employment report or that inflation really spikes, you know, you're going to he has the flexibility to move the way he wants to move. Chair Powell is one of the ones who's paid the most attention to how immigration is impacting the labor force and how that actually could create more structural inflation. And so I continue to pay attention the most to that segment of his comments. Coming up, high energy moves in the oil patch, the bounce in crude and the stocks coming along for the ride. But first, some after hours action which here's a Micron on the move. The numbers and details from that quarter. Next, next. Don't go anywhere fast when he's back in two.

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A different future is closer than you think with Capella University. Learn more@capella.edu welcome back to Fast Money. Let's get to an earnings alert on Micron Shares are up more than 2% right now. After hours of the memory chip company posting better than expected revenues and earnings in its latest quarter, the stock has been on fire to say the least. Properties up about 40% in just this month. CNBC's Christina Parts nebulous got the latest from the earnings call. Christina, you're commenting that it's 2% higher but it's actually coming down from just when the earnings came out. And maybe this is a sell the news type of event because the stock has doubled just in the last year and just climbed dramatically and it was managed to beat EPS estimates even though they preannounced back in August which is incredible because for the last 11 quarters Micron has beat estimates. Now to the call. The most interesting thing is high bandwidth memory which is really important HBM for, for the more advanced AI accelerators that are coming out next year primarily for Nvidia and there was concerns that you know, they'd be losing some share to Samsung and concerns about pricing and so on the call he did say this is the CEO that they were going to sell out 2026 HBM supply in coming months. So I saw that as maybe a bullish comment but then I was texting with an analyst, I'm like why is the stock not higher? And he said perhaps that that wasn't fast enough. So that could be one angle in terms of capex that was another big barometer for, for some because you need to put your money where your mouth is and show that the memory cycle is not cyclical. So you're spending capex for Q1 is coming in at 4.5 billion. If you multiply that by four it's higher than what some buy side estimates were. So that seems to be strong to me. And then overall he spoke positively about traditional servers because we always focus on AI. But you got to think about the other side of the business. Traditional servers strengthened significantly and then and for the AI servers he said things are doing well with the agents. They're driving demand, driving workloads and then even PCs the, the Windows 10 expiring and I should say end of Windows 10 he's seeing greater adoption of AI enabled PCs and that's driving PC demand too. So a lot of bullish comments. Perhaps a sell the news type of event right now. Right. I mean I know that a lot of the focus was on hbm but in terms of DRAM because there's a lot of expectation that that market will be tight. They are commenting in the last quarter when they raised their forecast that DRAM pricing was improving. Are we seeing. So they did he literally right before coming on set he did comment again that DRAM supply would remain tight into next year. I think that is going to be a major issue. He did say that NAND supply. So when we're talking about dram, that's dynamic memory. When you turn off a system, the memory just disappears. The stuff that you saved is gone versus nand. It's more permanent, it stays on. And so he was just saying that the NAND margins are improving and so that's helping overall gross margins which is why they were able to beat expectations at 51.7% and he believes that that will continue throughout the year. But yes, supply still remains tight, especially when they need to get the ball rolling and building capacity here in the.

Dan Nathan (27:48)

US they announced this Taiwan semi partnership that seems like it's sort of a big deal.

Melissa Lee (27:52)

Yeah, they did announce that, that they're going to be working on the HBM. So high bandwidth memory 4 with a TSMC and so that could be perceived as a strength but also as a negative. Like why aren't they able to do it on their own like Samsung? Song yeah Christina. Thanks Christina. Parts Neville so you see there Micron is up at 3%. Western Digital, which has also been on a tear alongside Micron is up just over a percent in the after hours.

Dan Nathan (28:15)

That was leading a little bit too if you look at Western Digital over the last couple of months or so. You know one thing I'll say about Micron is that revenue guide was not substantial but if you look at it and you were just talking about, Christine was talking about the margins there, I mean look at they were expecting $3.05 in earnings in the quarter. They guided to 375. So when you think about that they're getting that sort of leverage. Well, when you talk about the HBM demand, I mean that's really the story and if you think about and TD has a great note out where they're talking about the length of this cycle and what it means in terms of rerating and what Micron typically does in a cycle and it tends to outperform, you know, by three to four times the stocks and that the view here is that even on price to book, while somewhat expensive, that this isn't about PC demand. It's obviously about hbm. I think that's overdone. I think some of that is, is, is less exclusive, more ubiquitous than the world that Nvidia operates and certainly tsmc. But anyway that's the view on this that this cycle could run longer and hotter than people think.

Melissa Lee (29:10)

By the way, do not miss Micron CEO. That's tomorrow 9am Eastern time. There is a lot more fascinating to come. Here's what's coming up next.

Dan Nathan (29:18)

A fueled up rally as crude cruises higher and energy stocks follow suit. The names soaring into the green and what's behind the pump higher. Plus late night drama. Jimmy Kimmel may be getting back on air, but not everywhere. The rising tensions between Disney and two TV station giants and what it means for the state of media. You're watching Fast Money live from the NASDAQ market site in Times Square. We're back right after this. And now a next level moment from AT&T business. Say you've sent out a gigantic shipment of pillows and they need to be there in time for International Sleep day. You've got AT and T5G so you're fully confident, but the vendor isn't responding. And International Sleep Day is tomorrow. Luckily, AT&T 5G lets you deal with any issues with ease. So the pillows will get delivered and everyone can sleep soundly, especially you. AT&T5G requires a compatible plan and device coverage not available everywhere. Learn more@att.com 5G Network.

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Melissa Lee (30:39)

Welcome back to Fast Money. Rising crude prices sending the Vaneck Oil Services ETF, the OIH, to its highest level since April 3, easing concerns of oversupply. That's helping fuel the rally here. Halliburton leading the S and P today with names like Texas Pacific, Land Neighbors and Liberty Energy, all seeing significant gains as well. Guy, you are among those flagging this.

Dan Nathan (30:59)

On the call today, as Tim has been as well. I'll just say this. I mean, the refining margins continue well, they're not improving like they were, but they haven't abated. And that's why you look at names like Marathon Petroleum, Valero, all making significant moves to the upside. Until that turns you stay with it. And I don't know what Karen's acronym I love. You know, I love Karen Carbed carb. So the E in carb, I guess is the OIH is energy.

Melissa Lee (31:22)

Yes.

Dan Nathan (31:22)

So she might catch a break here late in the year as well. More people realize the valuations are still compelling. And so if you break it down to the different pieces of of say where these companies operate. Valero completely on the downstream. And that's what that's been the place to be. As much as I have love Schlumberger and I've loved it really since COVID and there has been some recovery. We have not seen the type of offshore drilling volumes it's stabilized. It even has dropped rig counts over the last year have not been your friend. Valero meanwhile has traded almost in 8 in inverse correlation to the sector. I think you do stay long this space.

Melissa Lee (31:54)

All right. Coming up, a late night boycott. Why two TV station giants are snubbing. Excuse me, snubbing his decision to put Jimmy Kimmel back on the air and what it can mean for the broader media space we are back into. Welcome back to FAST money. Stocks pulling back today after Fed chair Jerome Powell expressed concerns over the market saying stocks are highly valued. That the Fed's rate cutting path will was unclear. The Dow dropping 88 points. The S and P down half a % snapping a three day winning streak. And the tech heavy NASDAQ leading the losses down nearly 1%. Shares of Alibaba hitting their highest level since November 2021 before pulling back. The Chinese tech giant is up more than 90% this year and shares of win up again today. The casino stock now up nearly 93% since its April lows. Well, Jimmy Kimmel Live is coming back to the airwaves tonight, but the nearly 70 ABC affiliate stations owned by Next, NextAR and Sinclair are still planning to preempt the show. Disney shares down almost 3% since suspending the late night program last week over comments tied to the death of Charlie Kirk. Needham's Laura Martin joined us on the exchange today arguing that by shutting down abc, shutting it down, not selling it and focusing on its other businesses, Disney could create $20 billion in added value. We're arguing that nothing else in the Disney empire is regulatable. So if you actually just shut down abc, basically the couldn't stop you from doing things. And that's increasingly valuable in a generative AI world. For more on where Disney goes from here, we are joined by LightShed Partners co founder and analyst Rich Greenfield. Rich, great to have you with us. You're smiling. You heard what Laura said. I mean, I think, I mean here.

Dan Nathan (33:39)

Literally the absurdity that comes out of her mouth, it just makes me laugh. I'm sorry but like I should Disney spin off.

Melissa Lee (33:46)

The point is that you want to escape the purview of the FCC here.

Dan Nathan (33:50)

Sure. Look, and we've been arguing Literally since Bob Chapek even before Iger, that Disney should spin off ESPN and abc. And I actually think looking at the recent ESPN NFL deal, which may actually have played a role in how Disney position this because they do need regulatory approval for that. But we really believe that NFL deal is the precursor to in a post Bob Iger era, which is only really 18 months away, that Disney is going to pursue the exit of ABC and ESPN and sort of focus on those core businesses that really drive the Disney flywheel. But look, Disney's in a tough spot. Melissa, like there is no easy answer here. Remember, you know, more than half the country voted for President Trump. I'm sure a lot of them are applauding what the broadcasters are doing. And remember, Disney has to fill its theme parks, they have to fill its cruise ships. Like so, you know, remaining quote, unquote, apolitical is really important if you're the Walt Disney Company and they're sort of in a very difficult position as a company. And so this is not easy. I just think that, you know, the irony here is more programming, more high quality programming or notable programming moving off of broadcast television actually isn't good for the broadcasters that are boycotting today.

Melissa Lee (35:03)

So apolitical means returning Jim Jimmy Kimmel Live to the air. I mean, you can argue that being apolitical is taking him off there because he made political, political comments or comments that could be viewed as political. I mean, it's a very, very tough spot to be in. And I think the question here is at what point, you know, for an advertiser who's placing an ad on Jimmy Kimmel Live, does this property become less, you know, is there less return on that investment in terms of the commercial, the ad space? If 70 some markets are major markets, some markets are mid market, mid sized markets are not seeing those ads. Ads.

Dan Nathan (35:39)

Look, this is probably the first time in a decade, I'm sure a lot of people are going to watch Jimmy Kimmel tonight. And so there is a fundamental problem with late night television ratings that isn't, you know, this is not just a Jimmy Kimmel issue, a Stephen Colbert issue or even a Jimmy Fallon issue. In fact, you know, Melissa, like the big question is, is like, you know, on your, you know, parent company, like, how does Saturday Night Live work in a world where you can't make political statements like what is snl? I mean, if you think about how they've lampooned, you know, people in power for many years, it's hard to imagine what these shows look like. And it Just, it begs the question, should Disney move Kimmel to cable networks and streaming, like beyond Hulu exclusively, or should SNL only be on Bravo or only be on Peacock? Like, maybe it just means more and more programming should leave broadcast television if you're going to take controversial views. Because again, once you're on cable, whether it's Fox News or msnbc, there's nothing the government can do. They don't regulate those businesses the way they regulate. There's no public interest test or mandate the way there is for broadcast television. And so I fear that the irony of all of this is that you see a greater departure of programming that leaves broadcast television, which is already suffering from a lot of entertainment programming, has shifted to cable and now to streaming. I think you're going to see more talk, whether it's daytime talk or nighttime talk talk. I think you're going to see more of that shift over to other platforms because broadcast television is just not a safe place for that programming. It's too dangerous for these larger companies. You know, Rich, it seems interesting you just mentioned snl, and I kind of feel like that Lorne Michaels could be the hero we need right now. That guy's not going down with his ship. I could see him really standing up one way or another. But, you know, you just mentioned this, like, if Jimmy Kimmel, let's say, you know, you put them on ESPN plus or Disney plus or Hulu plus, whatever the heck it is. One of the pluses, right? Like, is that enough to appease the fcc? I can't imagine it would be. They probably see as a bit of a technicality. There's nothing they can do about it. I mean, they don't regulate. The FCC has no authority over Peacock. They can't control that content. You know, obviously the president, you know, he sued New York Times. He can certainly if he doesn't like or he thinks he's being libeled. Anyone can sue anyone in this country. It's America. But the rules and the risks that you run that, that, you know, are certainly that govern the very unique rules around broadcasting are unique. And so I actually do think you are going to see Dan, more programming shift away because it's just too difficult. And look, we all know streaming, all of these streaming platforms need more exclusive content. Maybe some of this is part of that answer over time. Now, the risk is when Melissa pointed this out, and I think it's a really important point, you lose reach, like the reason you want to be on broadcast, the reason NBC is getting the NBA back on Sunday night is these platforms want reach. And so putting content on smaller reach platforms like Peacock or even Bravo like that is the fundamental challenge is that you're losing reach. The beauty of broadcast is you reach, you know, virtually with antennas every home in America in theory. And so there is that danger for advertising that makes all of these shows that much more difficult long term if you don't have that broadcast reach and that impact.

Melissa Lee (38:56)

If there is a shift of late night tv, talk show tv, you know, whatever you want to call it that might have political views on to a streaming platform and there's less quality content or less of that unique programing for affiliates and for the other channels, how do you impute that value then? I mean what is nextar worth what you know, how do you value Comcast or Versant?

Dan Nathan (39:21)

Well, we'll think about for nextstar and Sinclair. I mean just think what's happened on Thursday night, right? Thursday night television, you know, or Thursday Night Football used to be on broadcast tv. It was on Fox most recently and then it shifted over to Amazon. You know, more and more content is shifting off of broadcast television. You probably can't name a show on, you know, pick an ABC show on Monday or on Tuesday night, like I'm sure you can't name one anymore the way you used to years ago. And so all of that entertainment, high quality programming has shifted to streaming. I think this is just the next step of more and more content probably accelerates that shift in content. And I will take a little different view from Dan on Will Lorne Michaels try to go hard at this? Because I think the challenge for, for, for NBC is they might want to go out and try to buy WBD or who knows what the longer term ambitions are of Comcast and NBCUniversal. And I just don't think you want to put yourselves even more in the governmental crosshairs than some of these big media companies already are. And I think that's part of what you're seeing over the last week.

Melissa Lee (40:24)

Rich, great to see you. Thanks for joining us. Rich Greenfield, LightShed partners coming up, the weight loss drug race is slimming down more than just your waistline. The impact on restaurant stocks and fast money returns.

Dan Nathan (40:40)

December 11th. Join Melissa Lee on 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 fastmoney.

Melissa Lee (41:00)

The popularity of weight loss drugs of some diners trying to make healthier choices about their food intake and that is having an impact on restaurant stocks. For more, let's bring in CNBC's Kate Rogers. Hi Kate. Hi Melissa. BTIG's Peter Slay out with a new note today on GLP1s and the restaurant industry. BTIG surveyed more than 1,000 GLP1 users in the U.S. to figure out how they're impacting consumers eating habits, finding that lower income consumers making less than 45k a year accounted for roughly a third of GLP1 users. 44% were upper income making over 75k a year. The balance were middle income. Quote Digging deeper, our work indicates that that 70% of GLP1 users are visiting restaurants either less or much less since starting the medication. And users were most commonly reducing consumption of carbonated beverages, pizza, burgers and alcohol. So to reiterate that 68% have reduced intake of carbonated beverages, 67% said they reduced pizza intake, nearly 60% reduced burgers. Snacking was also greatly reduced which is really interesting. So not one specific day part there, just snacking across the the board. All of this. Melissa Key as many names are looking to court the lower income consumer right now with value offerings. And again that group makes up 1/3 of GLP1 users. Fast food stocks like McDonald's and Yum are up on the year. Wendy's much lower. It's facing challenges and some executive changes there. The pizza names are also slightly higher on the year too. One more thing I would bring up. We've talked a lot about the crash in casual names. This note actually says that names like Chipotle, like a Sweetgreen, like a Panera Acava are a little bit better insulated because of course they do offer what's considered to be some healthier options for diners. Back over to you Kate. Thank you. Kate Rogers. We should note that a lot of the value offerings also are sort of smaller in size. Like the value menu. For instance at McDonald's there's a snack wrap. Julie so they do sort of get at this notion that people are, you know, consuming a little bit less when they actually go yeah, absolutely. And I think it really depends on the restaurant concept that you're talking about. When you are exposed to lunch, it's really a function. It's a commodity event. When you are dinner, it's more of an entertainment kind of a thing. And so I think those that are focused on that, they're probably going to do a little bit better than ones that are strictly I'm here just to eat. And it's a utility. If I think about the dinner only concepts like a Texas Roadhouse, I think they're better positioned. The important point and the important caveat is that alcohol sales are declining not just as a result of GLP1s, but also younger people are choosing to drink much less than previous generations. And that's critical for the bottom line because alcohol sales are so much more profitable than food. So I think that's something to also keep in mind.

Dan Nathan (43:39)

By the way, Guy Roadhouse with Patrick Swayze, Sam Elliott, they were both good. But I get back to CMG and I mean, I look at some of the fast casuals, A fair amount of this segment is under a lot of pressure and it's independent of Joby. You could make an argument CMG would probably be on the healthier side, but look at Coca Cola. This is a stock. This is stuff that most parents are saying don't drink for their kids. This is a stock you want to own.

Melissa Lee (44:04)

Coming up, stretch thin. The latest call on Lululemon and whether shares can pick back up after a downward dog kind of year. We got the details. And fast Money return. Welcome back to Fast money. Call of the day here. Bear downgrading Lululemon to a neutral from outperform and cutting its price target to 195 from 225. Analysts not confident in the Athleisure name's growth or margin trajectory. Shares of Lulu have been cut in half since the start of the year, down about 54%. So what can turn Lululemon around? Remember, they were promising bringing all sorts of innovation to their product line in the spring of 26. And this analyst is saying that's all fine and good, but there are no guarantees it's going to be successful. And in the meantime, there is a lot of competition.

Dan Nathan (44:51)

Well, you know, this is, I'm not sure what this downgrade does for me. I mean, this is a company that's been destroyed. Thanks for the look. I understand it's a tough job. And at some point you do need to remark to market a lot of your models and the assumptions here. The problem here is that the margins continue to degrade trade. And as much as I think the next real call on this one is a buy, it's not time. I think they're late to the game. Without question, 195 is still considerably higher than we're currently trading. And I do think we put listen, I think the company has issues. They have margin issues. They have competition issues that we've talked about for the last year here correctly. But I think the stock is setting up for a pretty decent bounce. Are you still wearing their yoga pants? I wear their underwear.

Melissa Lee (45:32)

Underwear?

Dan Nathan (45:33)

Please.

Melissa Lee (45:33)

Come on.

Dan Nathan (45:34)

Really? Well, you asked me. Want to know the side of mine?

Melissa Lee (45:38)

Up next, Final trades, final trade. Julie the one and only good thing happening at the FDA is they're phasing out animal testing and Sertara as a bio simulation player should benefit.

Dan Nathan (46:04)

Tim this was a fun circus today. Mel. Nice job.

Melissa Lee (46:08)

GDX goes higher 3 ring Dan yeah.

Dan Nathan (46:10)

Russell 2000 late to the party. Massive triple top. I'd be a seller of the IWM guy. You are extraordinary, Mel. And the people on Twitter say it each and every day.

Melissa Lee (46:20)

Very kind of them.

Dan Nathan (46:21)

Marathon Petroleum. It comes on npc.

Melissa Lee (46:23)

Thanks for watching. Fast 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 Is it time to reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant.

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