← CNBC's "Fast Money"
CNBC's "Fast Money"
Intel Earnings Beat…And Yields Spike Ahead of Fed Meeting 7/23/26
00:43:34
The traders talking all things Intel after the company’s second quarter earnings, and what the results mean for the broader tech trade. Then, what a yield spike means for the economy ahead of the July Fed meeting next week. Chief economist at Ernst & Young Greg Daco lays out why investors should not expect a rate hike at the Fed meeting, and what Fed policy could look like in the second half. Plus, Brent topping $100 a barrel on the back of Iran tensions, data on Eli Lilly’s newest GLP-1, and Google and Tesla plummeting on the back of earnings. Fast Money Disclaimer
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- [00:02]
Mazda Commercial Announcer
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- [00:28]
Melissa Lee
any product the board recommends approving.
- [00:31]
Vanguard Advertiser
Regarding that seat on the committee, we're promoting quarterly earnings. Every day shareholders meet to discuss important matters about the companies you invest in. Now you can easily make your voice heard. Vanguard Investor Choice gives you a say in the companies you invest in. With just a few taps you can set your proxy voting preference for your index funds. Visit vanguard.com investorchoice to learn more. Vanguard investors own shares of our index funds which own shares of the companies they invest in. Available for Vanguard index funds that participate in Investor Choice. Vanguard Marketing Corporation Distributor Live from the
- [01:02]
Melissa Lee
NASDAQ markets in the heart of New York City's Times Square, this is fast money. Here's what's on tap tonight inside Intel's big earnings beat profit coming in double expectations. All the details from the chip giants latest report and how to trade the stock right now and oil and rates on the rise. We'll dive into the big moves higher in these asset classes and how the action could impact your money. Plus Alphabet erases $300 billion in market cap. Large cap pharma catches a bid and Lockheed Martin share soar after earnings. Is it time to get even more defensive in your portfolio? We'll debate. I'm Melissa Lee come to you live from Studio B at the nasdaq. I'm the desk tonight. Dan Nathan Gaia Dami Citi's head of equity trading strategy Stuart Kaiser and Katie Stockton, founder and managing partner at Fairlead Strategies. Welcome to you both. We start off with Intel's monster move after the bell. Shares of the chip giant surging after its top and bottom lines crushed. Wall street estimates the company posting its fastest sales growth in nearly 15 years. The conference call kicked off at the top of the hour. One minute in now. CNBC's Christina Parks Neville has got the details here.
- [02:00]
Christina Parks Neville
Don't worry, I spoke to the cfo. So I have stuff that on the call but intel said nearly doubled earnings and raised its forward guidance. I spoke to Dave zisner who the CFO who tells me they locked in 10 plus customers on long term agreements on both price and volume. So these range anywhere between three and five years. They're also Raising their capital spending meaningful next meaningfully next year they're going to actually provide a number in just 15 minutes. They're also committing to ramping 14. That is their most advanced process into high volume production by 2028. So that's new news on the foundry side. The CFO says no new customers named tonight know some analysts were waiting for that, although they did name fortnet earlier this week on Monday specifically for security chips. But the Foundry isn't just about building chips, it's also about advanced packaging and it seems to be delivering lipo. 10 has a line of sight to quote billions of dollars in business there. CFO saying they're already starting to get backlog, backlog there. The stock is trading higher after hours and that matters because TSMC posted its best quarter in history and fell. Asml, TEXN or Texas Instruments raised outlooks and yet their stocks fell. Samsung presented record profit and yet fell. But intel locked in these long term agreements and said quote, they're under shipping for quite a bit well into Q3 and they expect that same scenario for Q4. So just like the memory makers like Micron and SK Hynix, intel now has visibility into demand. They know it's coming and that's why they're raising capex.
- [03:28]
Melissa Lee
In terms of advanced packaging, you said in the past that this is sort of the bottleneck usually in the chip in terms of supply. So when Liputin says he has a line of sight into billions of this into this business, how, how long is
- [03:40]
Christina Parks Neville
the CFO that Bhutan is going to say that on the call I promised you that I would say that he would say yes. I don't know about the exact timing but he's going to announce that advanced packaging, I think that's the messaging is to offset maybe the lack of comments about Foundry customers.
- [03:55]
Melissa Lee
Do you have a question, Sue?
- [03:56]
Guest Analyst (possibly a market strategist)
No, I mean I think you kind of answered it right. You know, why is intel responding so positively relative to how all the other listed companies that you mentioned haven't?
- [04:06]
Christina Parks Neville
It's the long term agreements, I really do believe that and the CapEx that is going to increase and I think that you needed another catalyst for these stocks to rerate. And so for intel now you're at least getting a line of sight into hopefully the next, you know, at least almost year. Whereas when Texas Instruments says that, you know the cycle is improving and they're increasing or they're, you're seeing auto improve, it's not telling us that demand is going to start climbing at least for the next eight quarters. I mean eight months.
- [04:29]
Melissa Lee
It's another catalyst for a stock that is trading at 100 times forward when you factor in this pop in the after hour session. So that's sort of interesting way of thinking. It's a catalyst for something beyond a
- [04:41]
Christina Parks Neville
valuation of 100 average 10 year forward. P E is 25 times.
- [04:45]
Melissa Lee
Right. And it's 94.
- [04:46]
Christina Parks Neville
It's crazy.
- [04:47]
Guy Adami
It's crazy unless you believe the growth. Christine is doing a great job in the space. I'll say this, this is what's shocking to me. Operating margins came in north of 17%. So they're doing something right because the street was looking for about 11 and a half percent. So good for intel. But it's a valuation problem. I know Gene Munster is going to come on, he's going to talk about it. He says this quarter suggests we're still in the early, early innings of AI and he's probably right. But you've got to wrap your head around the valuation. Just talked about Mel.
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Melissa Lee
Christina, thanks. We got to get some breaking news on tariffs. Eamon Jabbers is the details. Amen.
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Katie Stockton
Melissa.
- [05:19]
Eamon Javers
That's right. Just a few hours before those 10% global tariffs are set to expire, the White House is announcing a new round of tariffs that will effectively replace those worldwide duties. These new tariffs are being imposed under Section 301 of the Trade act of 1974, one of several trade authorities that the President has used. The tariffs take effect at 12:01am this morning and impose duties of 10 to 12.5% on 60 economies around the world now over what the US describes as forced labor practices. A senior administration official telling cnbc these section 301 tariffs will not stack on top of existing section 232 tariffs. The announcement marks the administration's latest tariff action after suffering a major legal setback earlier this year when the Supreme Court largely struck down President Trump's so called reciprocal tariffs. So Melissa, this is an effort to replace this expiring authority with this new authority. It all happens at the same time tonight am and it's going to generate a lot of revenue for the U.S. treasury.
- [06:23]
Melissa Lee
I mean more than it did before because these tariffs are arguably, you know, in some cases they're going to be higher than what they're replacing. Is there any thought that that these tariffs are more sort of bulletproof in terms of being challenged?
- [06:36]
Eamon Javers
Yeah, I think that the administration feels it's a much stronger legal ground here. They've done all the process stuff on the front end of it and they Feel like with this new authority, they'll be able to do this. Now, that's not to say that it won't be challenged in court. I think we're expecting some court challenges here. And the question is whether the administration's theory of the case is correct. But I think their argument is we've looked at this, we have a new analysis, and we think this one is going to stand the test of legal scrutiny. We'll see where that goes.
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Melissa Lee
All right, Eamon, thank you. Eamon Jabbers in Washington. So tariffs are sticking around. They're not just expiring, they're being replaced at this point.
- [07:14]
Dan Nathan
It's just a really curious way to raise revenue right now at a time where you have a lot of consumers having a difficult time. I think all the analysis or most of the analysis that we've seen based on, you know, who is actually eating these tariffs going back to, you know, April of 2025, when they roll these things out, it's a consumer. It's, you know, a regressive tax. And so at the end of the day, this is politically, I think that the Supreme Court did him the biggest favor by striking those down. You know, as you think about affordability is such a big issue, but, you know, we have nearly a $2 trillion deficit. If you think about the tens of billions of dollars that might come in from these tariffs, it really is a bit of a rounding error. And it's also something that's very antagonistic to predominantly our allies. I mean, when you think about where these tariffs are being levied and, you know, we just saw that 50% tariffs on hockey sticks, which guy was really disappointed about, you know, from Canada. It's just like very odd to me at a time where a consumer or at least a part of the consumer is having a very difficult time. And then we also have, you know, $100 oil as far as Brent and what that means.
- [08:12]
Guy Adami
Yeah, I through the lens of the bond market. We had a conversation last night about this the first or two nights ago. And I said the first thing come to my mind, it's bond market bearish. This is bond market bearish, in my opinion. We were going to talk about it anyway. I'll bring it up now. 10 year yields above 4.7%, 30 year yields at levels we haven't seen probably in what, 20 years or maybe longer than that, 21 years mean. And they're not going up for the right reasons, are going up because I think inflation is a problem, clearly. More importantly, debt is a problem. And as Dan just said, you know, you're looking at now $40 trillion debt sitting on top of maybe, maybe, maybe a $30 trillion economy. And debt to GDP levels suggest that rates are probably going higher from here.
- [08:55]
Katie Stockton
You definitely see it in the yield. It's right approaching long term resistance for the ten year, right around four and three quarters. A breakout above that level would be a big deal on the chart. We already have seen a pretty long term momentum shift suggests it will resolve to the upside. And yet I think this is a secular uptrend that yields are in the midst of. Also, it comes at a time when the market's a bit vulnerable. The S&P 500 has really finally seen a loss of momentum that's meaningful for the first time since bottoming in March to April.
- [09:28]
Melissa Lee
How do you throw this into the mix?
- [09:31]
Guest Analyst (possibly a market strategist)
Look, it's, it's a little bit of we're doing this again frustration I would say on the rate side though, different parts of the curve, you know, probably have, have different messages for the market. I'd be a little more concerned with the 30 year yield just because of the inflation dynamics there and the global spillover risks. If you look at what's happening at, you know, Japanese long and bonds or UK as well, that worries me a little bit more. From a risk perspective. The ten year point, you could argue US economic growth is printing really strong. Maybe that's gotten the yield a touch higher. There is a supply of paper coming around that part of the curve as well. That's sort of a less dangerous reason for yields to be rising. To me that may be what's going on at the 30 year point. Hopefully what we have is equities. Focus on earnings for a bit and we can put this off until August at least.
- [10:12]
Melissa Lee
For more on what this all means for the economy, let's bring in Parthenon's Greg Daco. He is a chief economist at the firm. Greg, great to have you with us.
- [10:19]
Eamon Javers
Pleasure.
- [10:20]
Melissa Lee
What do you make of the recent spike that we've seen in yields? Because it does seem to be inflation concerns. I mean it was precipitated by the spike in oil.
- [10:28]
Greg Daco
Yes, certainly. I think the Middle east conflict is a key catalyst in terms of this upward pressure on yields. But when you look at the broad set of factors that is driving upward pressure on yields, it's largely structural. We are seeing deficits that are structurally higher than they've been over the past few years. And it's not just a US story, it's a global story. We are seeing A lot of appetite for capital that is also pressuring investors when it comes to the AI led investment boom. We're also seeing a lot of inflation volatility because this environment is guided by subsequent layered supply shocks that are affecting inflation dynamics. And then you have a lot of Fed uncertainty. We don't know what the Fed chair is thinking right now in terms of the direction of Fed policy. And that's another layer of uncertainty pressuring up long term yields.
- [11:09]
Guy Adami
Greg, it feels like the market's starting to care about yields at these levels. Where does it really start to care? Is it. Is it? Everybody says 5%. I think we're a lot closer. I think it's closer to then four and three quarters and five. But where do you get concerned in terms of the broader market?
- [11:22]
Greg Daco
I get concerned with the persistence of high yields because the cost of capital is likely to remain higher for a persistently long period of time. And any time we get a shock to the system, whether it's a geopolitical shock or a shock in terms of policy, Fed policy, for instance, that is going to pressure rates from a higher level. And so that's where you start to see the concerns in terms of investment, in terms of the deal market and in terms of consumer spending. That's where it starts to bite.
- [11:45]
Dan Nathan
Greg, where do you see growth at 2%? Ish. Right. That's really what I think is expectations for 2026. And you have inflation expectations that aren't going lower.
- [11:54]
Greg Daco
Right.
- [11:54]
Dan Nathan
And this is something the Fed is particularly worried about. We're going to get a read on that next week. Where do you see growth and how is that shaking out? Because when you see inflation, you see, you know, gas at the pump at four bucks, that sort of thing, you have to think that at some point that's a big headwind to growth.
- [12:07]
Greg Daco
It is a big headwind to growth. And what we are seeing is essentially erosion of growth momentum. The cost of growth is continuously increasing. We were just talking about the new tariffs that are coming online as the old tariffs are expiring. What that tells you is the cost of trade remains higher. The cost of growth in terms of geopolitical conflicts is also rising. And that's a hindrance in terms of consumer spending activity. One thing that we tend to omit is that when you look at income, disposable income relative to last year, it's actually lower. The money we have in our pockets after taxes and after inflation is lower this year than it was last year. That's biting into consumers ability to spend and desire to spend. So you're seeing consumers being more frugal and more careful as to where they put their money. And that's a key constraint in terms of growth potential. The key issue today is what the economy could have been. We could have been in a much, much stronger economy had we not had a layer of supply shocks constraining growth and lifting inflation.
- [13:05]
Guest Analyst (possibly a market strategist)
Greg, you mentioned gasoline, you mentioned wash. You know, what kind of inflation do you care about? You know, there's a lot of ways to define it. It feels like kind of a moving target right now. Is there a particular part of the inflation stack that you're most focused on?
- [13:17]
Greg Daco
Well, what really matters for the Fed is core inflation.
- [13:19]
Guy Adami
Right.
- [13:19]
Greg Daco
We know there's going to be volatility in terms of energy prices, in terms of food prices. But when you look at core inflation, what you're hearing from a lot of Fed policymakers is that they are losing patience in the Fed in the face of what has been a continuous environment of inflation, core inflation being above the 2% target. And that's really the key concern because you can tolerate some supply shocks passing through and leading to a temporary spike in headline inflation. But what you can't tolerate is persistently elevated core inflation that is eroding spending capacity and deterring Americans from spending. That's really what the Fed is concerned about. And that's why I think there is an increasing risk that maybe not at the next, at next week's meeting, we see a rate hike from the Fed and potentially more than one over the course of the next few meetings.
- [14:07]
Melissa Lee
You mentioned that you thought that we are in a structurally higher rate environment. So, so what does that mean and what does that mean for your forecast for GDP growth?
- [14:17]
Greg Daco
I think it constrains the upside in terms of growth. We could be in an environment where we could have growth closer to 3, 3 1/2% with this AI led tech boom that we're seeing with a lot of investment that could support stronger growth. Unfortunately, because of the tariffs that are weighing on growth momentum, that are increasing the cost of growth via higher inflation because of the Middle east conflict that is raising the cost of goods, the cost of transportation, the cost of fuel, we're essentially capping growth. And so when you ask me what are the key constraints on growth, the key constraints on growth is essentially this higher cost of growth. And this higher cost of growth is visible in two areas. One, higher inflation that is persistently above the Fed's 2% target and to a higher cost of capital. Both of these are Constraints on the private sector and constraints on potential growth rates for the foreseeable future.
- [15:07]
Melissa Lee
Great, great to have you with us. Greg Parthenon, first of all he works
- [15:11]
Guy Adami
at Parthenon, which is amazing.
- [15:12]
Dan Nathan
I mean that's Parthen on. He's in the strategist.
- [15:16]
Melissa Lee
Yeah, he of course in the Parthenon. He's on the Parthenon.
- [15:19]
Guy Adami
Have great back for sure. I don't think the Fed is in a position administration is going to lose their collective minds if the Fed raises rates, although that probably is the right thing to do. So I don't think that's off the table a little bit maybe until at least the spring. With that said, the market's doing a form and that's something we've been talking about for a while and this is not an economy and it's certainly not a market that is equipped to handle rates that will go higher from here.
- [15:42]
Melissa Lee
If GDP growth is capped, are asset prices capped?
- [15:46]
Dan Nathan
I mean it could be. I mean going back to tariffs, I mean it depends who's going to eat those tariffs, right? If we start to see pressure on S&P 500 earnings and growth starts to decelerate in a meaningful fashion, I mean I think you have to go back to pre Covid. I mean we had about 2% GDP growth on average per year I think the prior 10 years but we had inflation below the Fed's 2% target. And it doesn't seem like we're getting back there any time soon. So you know, do asset prices kind of like, you know, stall out here? I think it is a function of expected growth.
- [16:17]
Melissa Lee
We've got a news alert on Oracle shares are rising in the after hours on this. Pippa Stevens got the details here. Pippa.
- [16:22]
Pippa Stevens
Hey Melissa. Oracle up about 3% here after the company signed a 10 year software contract with the Pentagon worth up to about $7 billion. So under this agreement Oracle will supply on premise software four branches of the military, the US Intelligence community and the Coast Guard. This of course comes as Oracle has shifted to focus on building out infrastructure with the stock down some 40% this year amid concerns about racking up debt in relation to those data center build out. But you see here now the stock up some 3%. Melissa.
- [16:52]
Melissa Lee
All right, Pippa. Thanks Pippa Stevens. Of course this also comes on the heels of of Oracle stock slump, its CBS spiking. Katie, what do you see for the stock?
- [17:01]
Katie Stockton
It's been pretty rough. A major retracement for Oracle and yet it does show some signs of downside exhaustion and then A move like this will help confirm those signals. They're counter trend signals, short term in nature. Support is being tested by Oracle so it's really essential that it bounces now or it will break down.
- [17:21]
Melissa Lee
What do you make of this news?
- [17:23]
Guest Analyst (possibly a market strategist)
Look, it's good news for Oracle that credit spread, it gotten above 200 basis points. We're seeing credit spreads rise across the entire Mag 7 complex. I think Oracle has always been an interesting test because you might argue it's kind of in that tier two. It's not, it's not one of the Mag seven guys who at least previously had a lot of free cash flow. So it's positive to see the stock reacting like this. But to Katie's point, I mean you're, you're coming off of a low level.
- [17:44]
Guy Adami
Remember the show, there was a, I think a Broadway show years ago, prelude to a kiss. Remember this?
- [17:48]
Melissa Lee
Or no, vaguely familiar.
- [17:50]
Guy Adami
That's. No, just say no, I don't remember it Guy. This is. Now I'm just telling you flat out, first of all, I never thought the stock would get this low. But one thing we've been saying for a while is there's going to come a point in time where you hear something out of administration about Oracle. This is the prelude to that. I believe this is the first time at least since we've been doing the show that remember Oracle getting anything remotely close to a Pentagon contract. And now they're getting it. I don't think it's coincidental. Stay tuned for more.
- [18:19]
Dan Nathan
All right, this is a 10 year contract worth $7 billion. Okay. And you know what it's for SAS, it's for SaaS, applications and professional services. Oh, it's dead. I mean like so think about it. I mean like and in the first five years it's going to be a $3.3 billion revenue. This is a company expected to have $78 billion this year, 110 next year. This is a rounding.
- [18:40]
Guy Adami
I agree with that one. Coming at you about the numbers. It's about what it signals, you know,
- [18:46]
Melissa Lee
in terms of government support, like an
- [18:48]
Dan Nathan
intel esque sort of thing. I get you.
- [18:51]
Melissa Lee
And look what happened to intel. And look what, look what happened Intel. All right, coming up, the earnings overhang sinking Tesla and Alphabet today while the sell offs are so severe. And the next move for the mega cap straight ahead. Plus grocery gut punch to a steel surge. We're breaking down the other big moves today and where the traders are putting their money to work right now. Don't go anywhere fast. Money's Back in two.
- [19:14]
Fast Money Podcast Host
This is Fast Money with Melissa Lee right here on cnbc.
- [19:22]
Melissa Lee
The board recommends approving regarding that seat on the committee.
- [19:24]
Katie Stockton
We're promoting quarterly earnings.
- [19:26]
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Fast Money Podcast Host
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- [20:22]
Dan Nathan
With my Sapphire Preferred card, we took
- [20:24]
Melissa Lee
a trip to a desert Oasis earning
- [20:26]
Dan Nathan
five times the points on Chase Travel, two times the points on all other travel, plus $100 hotel credit.
- [20:31]
Katie Stockton
Chase Sapphire Preferred a car that's preferred for a reason.
- [20:33]
Dan Nathan
Cards issued by JP Morgan James bank and a member FDIC subject to credit approval terms apply.
- [20:40]
Melissa Lee
Welcome back to Fast Money. Rising capex forecast taking a big bite out of shares of Alphabet as well as Tesla today. The Google parent dropping over 7% after raising spending plans to 205 billion from 190 billion. It was the stock's biggest drop since last May. Tesla, which reported a more than 140% increase in capex index, fell over 14%, its worst day in 16 months. Together, the two names lost nearly half a trillion in market cap just today. Obviously, Tesla was challenged also by margins falling short of expectations. There's a whole other brew of things for Tesla, but for Alphabet, what did you mean? It's overreaction or measured reaction?
- [21:17]
Guest Analyst (possibly a market strategist)
It felt like just a little bit of an overreaction just because what did we learn that was new? You know they're going to spend a ton, their free cash flow is going negative, the bottlenecks are still tight. I mean, these all just seem like things we kind of already knew we knew about. Concerns about return on investment. If anything, you know, maybe the fact that how much the curve is flattening out is kind of worrying people a Little bit that, you know, these data centers can't get built not because there's no money behind them but because you can find, you know, concrete and cement and construction workers and power, etc. But I don't know that we learned that much new today, you know, from Google, other than maybe positioning was really long and, and the negative free cash flow I think obviously really got people's attention.
- [21:53]
Melissa Lee
Does look good.
- [21:55]
Katie Stockton
I wouldn't say good. Usually this breakdown, these kind of breakdowns take some time to recover from, but we do watch those gaps. So if it rises quickly into the gap from today, that would be a short term positive. At least it did penetrate the rising 200 day moving average. Feels like a short term issue, not a long term one, but a little work to go.
- [22:14]
Dan Nathan
You know, I just think the assumption that we won't have an economic slowdown, that we won't have pressures on margins, you know, across the the S&P 500, which would be the buyers of this compute for the, you know, negative free cash flow. For a company that has been a darling for 25 years, I guess they went public in a four or something like that, you know, and they haven't had any free cash flow since then, you know. And I say to myself, okay, if that doesn't materialize the demand for that, if there is overcapacity, and let's be clear, at some point there will be an overbuild, it may be next year, it may be five years. I mean these stocks are going to get killed. I mean like, like literally killed. And I just think it's really funny that people have such short memories. Go back the highs in 21 to the lows in 22. Some of your favorite stocks, it was in video or Netflix or Tesla, you know, these stocks went down matter 70%, you know, and you could say, well it's different. I don't know what's different. I know that this is a crowded trade and I know I like it. It was my favorite hyperscaler, that sort of thing. But now it's down 22% from its all time highs. And people were loading into these stocks, all of them, whether it was six months ago, whether it was yesterday and some of these things and that sort of pain is something that is going to be felt. And you could say, well at $300 it's over. You might be saying the same thing at 275, at 250. And that's the kind of the lesson that we've learned about these sorts of Sentiment bubbles and make no mistake about it, it is a sentiment bubble. At some point it's going to be an economic bubble that has existed in these stocks but you know, nobody knows when. But I just wouldn't poo poo this sort of price action when we have these sorts of metrics coming in the way they are and we haven't seen
- [23:47]
Melissa Lee
in decades and we didn't get guidance from Alphabet on the next quarter. So when we get guidance from the other hyperscalers next week, plus potentially Capex raises, it'll be interesting to see if this stock Alphabet trades down again on basically the same.
- [24:01]
Guy Adami
It's a bit of a mystery what the market's rewarding and what it's punishing these days because if you look at the quarter, the quarter I thought was actually very, all the metrics were very good and then you hear the word dramatically. I think that's a word that was used significantly. Thank you. In terms of the spend and you know, you hear a word like that, there's no way to quantify what significantly means. So it's self first asked questions later. I think the Stu's point when you start talking as Dan said, negative free cash flow, spending more, earning less. The market's punishing that right now, which is not particularly healthy. And I think Katie will tell you, I mean this was in a bit of a pennant formation. I thought it was going to break out to the upside. That was wrong. Now it's broken to the downside through that pennant.
- [24:40]
Guest Analyst (possibly a market strategist)
Look, I would just add this to the list that Christine had before. Whether it's ASML, TSMC etc. The bar is extremely, extremely high for these companies. I think what maybe that was more disappointing today was less about Google. It was why didn't the bottleneck stocks and the recipients of that spend actually perform a little bit better. So if there was anything that kind of shot across the bow today I think would be those bottleneck stocks kind of not, not benefiting at their.
- [25:02]
Melissa Lee
I'm glad you brought that up because you did see like a Lumentum and a Coherent and a Celestica. Like they did have small gains early in the session but basically gave them up. So they weren't trading well on this Capex raise either. Coming up on the right track, the railroad stocks chugging higher on the back of strong results inside those moves and more Today's fast movers next. Plus we're diving into the details from the intel call. Gene Munster is breaking down all the key headlines straight ahead. You're watching Fast MONEY Live from the NASDAQ markets at Times Square back right after this. The board recommends approving regarding that seat on the committee.
- [25:40]
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- [26:08]
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- [27:05]
Melissa Lee
Welcome back to Fast Money. Stocks sharply lower as big tech dragged on. Major indices. The Dow shedding 500 points, the S&P losing more than a percent while the NASDAQ dropped by more than 2%. Albertson sinking 22% for its day in almost four years. The company cutting full year guidance as cautious consumers pull back on grocery spending. And with higher fuel costs driving up prices, the company said it is willing to absorb margin compression rather than pass costs on to shoppers. Cleveland cliffs meantime, soaring 16% after giving a strong forecast, now expecting third quarter earnings before taxes to double from Q2 and that the second half of the year would be its strongest in five years. And major railroad operators CSX, Norfolk Southern and Union Pacific all rising to records today, all three posting a second strong second quarter as companies shift cargo from trucks to rail. Katie, which do you want to tackle?
- [27:52]
Katie Stockton
Well, you know, these railroads are really quite interesting. When you pull up the long term charts, the monthly charts, you can see that they've all cleared their resistance from 2022. So if it can, they can hold on to these gains here in the near term, the breakouts will confirm and that acts as a nice long term catalyst for them. So. And there's nothing wrong with new alternatives and highs, which we've caught your eyes to.
- [28:15]
Guest Analyst (possibly a market strategist)
Yeah, I think Albers is probably just, you know, pressure on the consumer. Gas prices now, you know, kind of rising again, affordability from tariffs. I mean it's a, it's a tough environment right now to be doing that. Just very interesting that they clearly see the pressure as so strong that they're willing to kind of, you know, keep price where it is and eat the margin for a little bit of time. So, you know, kind of a troubling, troubling message from them, I thought.
- [28:35]
Melissa Lee
I mean they're seeing the market share leave. I mean the market share is going to Walmart, they're going to dollar stores because they can't afford a regular grocery store.
- [28:43]
Guy Adami
They're also going to say what the administration wants to hear in terms of eating it. But I'll play the game and I'll take Cleveland Cliffs for 500. You're a hockey fan. You are. We talk about hockey sticks. Well, when you score a goal in hockey they say you're lighting the lamp. Well, if you look at this quarter from Cleveland Cliffs, they lit the lamp with this sucker and it was an extraordinary quarter. And Katie can look at this. This is about to break, I think think about a three year downtrend. It's been in and valuation to the extent that it even matters I think is pretty compelling.
- [29:12]
Melissa Lee
You agree with that assessment?
- [29:13]
Katie Stockton
I love these breakaway gaps and it took it right up to the 50 day moving average. So that acts as a positive short term catalyst. You don't see it quite yet in the indicators on a long term basis, but there's hope.
- [29:25]
Dan Nathan
I don't even know what I want to talk about here. The railroads, Cleveland Cliffs or Albert.
- [29:30]
Melissa Lee
It's all not your jam.
- [29:31]
Dan Nathan
Not in my jam. Although Wal Mart remains the worst looking stock in almost the s and P500.
- [29:38]
Melissa Lee
That's all. I mean that's it really is.
- [29:40]
Dan Nathan
Look at how it trades. It was actually the best stock about 2 and a half months ago and now it's the worst.
- [29:46]
Melissa Lee
Coming up, the very latest on Intel. With the call now more than 30 minutes underway, Deepwater's Gene Munster has been dialed in, joins us straight ahead with his top takeaways as the stock gives up a lot of its after hours pop. But it is still up 5% fast when he's back in two. Missed a moment of fast.
- [30:01]
Fast Money Podcast Host
Catch us anytime on the go Follow the Fast Money podcast. We're back right after this.
- [30:18]
Melissa Lee
Welcome back to Fast Money. Another look at shares of intel, the chip maker, still up in extended trading, though well off its after hours highs. Gene Munser has been dialed into the conference call. He's managing partner at Deepwater Asset Management. Gene, good to see you. They talked about 14A. They've talked about capex. What are your takeaways here?
- [30:34]
Gene Munster
I think the first takeaway, if you're an intel investor, you got to be counting your blessings. Even with the stock up 5% here, understand that they guided revenue up 11% for the September quarter. And there's a lot of good news around 14A which is a driver in 2028. But objectively they just raised capex from 15 billion where the street was at for this year to 20 billion. They said next year will be significantly higher. That has been the tagline for stocks going down. You saw the stock start to trade down in the after hours in anticipation of those comments and it's kind of hanging steady at that. So largely I think that, that this company still is moving in the right direction, but there's just so many better companies to invest in the infrastructure. The other big takeaway here outside of the call is just, just the big picture here is this is yet another statement about how early we are in AI. And I just want to kind of frame that in is what intel basically does is they sell accessories to the AI infrastructure build. These are CPUs. This is old technology. They've been updating it, but it's still old when it compares to GPUs. And the hottest segment, their, their best performing segment, that Data center and AI segment is 1/13 the size of Nvidia's GPU business. It grew at 56%. Nvidia is going to grow their GPU business at 96% in the July quarter. So Melissa, when I just put all this together, I'm surprised that the stock's up, call it 12% over the past week. Google's down 8% and the NASDAQ's down 1%, it just feels like a gift.
- [32:11]
Melissa Lee
And throw in the fact that Nvidia trades at a fraction of the Ford PE that Intel is trading at right now. Now to add insult to injury, I mean, but Gene, when you, when you think about why intel is not going down on significantly higher CapEx, I mean the takeaway here is that investors believe that the dollar spent by intel is going to have a bigger or faster return than the dollar spent by Alphabet. Do you think that's the correct takeaway?
- [32:36]
Gene Munster
I think it's the right takeaway that they're a dollar spent in capex is going to be a beneficial. I've been applauding the the rise in Capex over the past couple of years. I've been puzzled by the market's reaction to what we saw last night from Tesla and Google and just broadly so I think it is. I don't think these companies should be penalized for this Capex spend and part of the reason is if you believe like I do that we are still so early in the third inning infrastructure is going to be a competitive advantage. So are they. I don't have a good answer of why investors are believing that they're going to be a better fiduciary of Capex versus Google for example, but I think the whole concept of more capex for these companies that are leaders and intel still is at the little kids table by the way. They haven't really graduated to the big boys table, big table, the adult table. But nevertheless I think that this is still the right move for them to invest in that capex.
- [33:33]
Guy Adami
Mel brought it up. Gene, why does Nvidia, given all the metrics you decided, why is it traded? I mean it trades at less than a market multiple and obviously a lot cheaper than to the extent that even has peers. Its peers.
- [33:45]
Gene Munster
Yep. So to just frame that in on the 2027 numbers, intel trades at 61 times and you have Nvidia trading at 17 times. AMD is a point of reference, trades at 31 times. And guy, the reason is, is that's at 13x number that I gave that business is 13 times bigger even though it is growing faster. When you have numbers that are just that staggering it is almost impossible for investors to get over that. We're going to see a big slowdown at Deepwater. We sold Nvidia a couple months ago. Big believers in all they're doing. But we just felt like this was going to be continued beats but the stock would not be rewarded and I think you're seeing that in Nvidia shares and maybe that's what's going on with intel here is it's still a relatively small business and directionally has probably more room for upside. That's why you pay that higher multiple.14A is going to be a big deal. That's a 2028 driver and you can sleep well at night. As an intel investor, knowing there's a big catalyst coming a couple of years down the road.
- [34:41]
Melissa Lee
Yep. Jean, thank you. Great to see you.
- [34:44]
Gene Munster
Thank you.
- [34:45]
Melissa Lee
Monster. But again, Gene says there are better places to invest in the trade.
- [34:50]
Dan Nathan
Well, I just think, you know, the jury's still out on this one, right. And there's a lot of things that this company has to do that they haven't been doing well over the last 10 years. And, you know, I go back to 10 years ago, this company that had 63% gross margins this year expected to be 40%. And we're talking about growing off a very low base. And Gene just said that they're at the little kids table here. And, you know, the technology that they're selling into the server market are CPUs. That is a very commoditized sort of business. They're using clusters of those, so maybe it's a lot of them, but again, this is a much lower margin business. You look at Nvidia, you know, you'd still want. Given their growth, given the durability, you'd probably want to be there. Well, before you.
- [35:25]
Melissa Lee
But the chart, I mean, still, I'm not attacked.
- [35:28]
Vanguard Advertiser
She's the.
- [35:28]
Melissa Lee
Okay, well, okay, well, it turned it to you then.
- [35:30]
Katie Stockton
Well, you know, looking at it until. Well, I think what we're not talking about is that it was down 37% over the course of 12 trading sessions ahead of this news. So just a rebound. It's not even back above the 50 day. So I wouldn't say that it's an overwhelmingly positive reaction. It was more like, you know, the investors were anticipating something worse.
- [35:50]
Melissa Lee
We've got a newsletter here we want to get to on the Paramount Warner Brothers merger. Julia Borson's got these details. Julia.
- [35:56]
Julia Borsten
That's right. More news on the state agency lawsuit attempting to block Paramount's acquisition of Warner Brothers Discovery. The judge is extending the temporary restraining order on the deal by two weeks. So now the earliest the deal could close is August 17th. Now, that is getting closer to the September 30th date, after which Paramount would have to pay a ticking fee to Warner Brothers shareholders, effectively increasing the cost of the deal. The judge saying the delay is due to the need to resolve multiple issues, including the party's disputes regarding the schedule. This does come after yesterday the European Union allowed the deal to move forward, clearing that hurdle now. Now they're really just looking at this key issue of the state AG's lawsuits. Take a look at those stocks. Certainly a lot to watch coming up here. Melissa.
- [36:45]
Melissa Lee
All right, Julia, thank you, Julia Borsten. And you think about the delay to this deal and you think about Netflix being left out, I guess walked away from it maybe for the better, but the stock is no better.
- [36:58]
Guy Adami
No better because the market is concerned. And we talked about this. I've been wrong by the way. The organic growth is where the concern and maybe rightfully so. But I think going back to Katie again we flagged 68 bucks. I mean that was the prior all time high I think in 2021 that we traded down to and seemingly have held. Now we're not bouncing off in a meaningful way. But I think that's sort of your line in the sand. Mel.
- [37:19]
Melissa Lee
Yeah. You think it holds here?
- [37:20]
Guest Analyst (possibly a market strategist)
Netflix Alex TBD I would say with a lot of this stuff, to be honest with you, especially in this environment, I don't think there's a whole lot of tolerance for any risk at the moment.
- [37:30]
Melissa Lee
Coming up, the next shot for Eli Lilly as its next gen weight loss drug clears another key hurdle. How to play the farmer's strength and the chart levels. Katie Stockton is watching with fast Money returns.
- [37:44]
Katie Stockton
I do that.
- [37:45]
Melissa Lee
Welcome back to Fast Money. Eli lilly up nearly 2% after its experimental GLP1 drug Retit succeeded in two late stage trials drug delivering significant weight loss and improvements in blood blood sugar. The company though slightly pushed back its timeline for applying for FDA approval from the end of this year to Q1 of next year mainly because it's applying as a biologic. So that takes a little bit longer in terms of process but it would give them more patent protection longer term. The chart was good today. So what do you make of it?
- [38:13]
Guy Adami
Because world everybody's living it but it was just not Lilly. Today was big cap farm as well. I think Merck traded above 130 today for the first time in a while. Bristol Myers getting off the mat and some of these other biotech stocks. Even structure which is round turn that entire move From December from 50 to 100 back to 50 now the space is in play and if you ever see a rotation out of semis and storage, it's going to find its way into big cap pharma.
- [38:37]
Melissa Lee
Well, oftentimes we do see a market hiccup when in technology you do see that flow into health care.
- [38:42]
Guest Analyst (possibly a market strategist)
Yeah, I think it plays in the idea. Everybody wants any trade idea that's not correlated to assets, even if it's your second tier idea. And I would, you know, we will put large cap banks in there but I would also put kind of rotation within health care in that in that category as well. GOP 1 and the large cap pharma. If you look at today, price momentum was actually up today. It all came from capital goods and pharma and biosciences to drive that. So I do think if people are a little worried about some wobbles on the side, this is a non AI trade that I think people will embrace.
- [39:09]
Melissa Lee
Well, the broader pharma sectors you mentioned continue to climb. IShares IHE ETF up 20% this year trading your record. So Katie, what are you seeing in the technical side?
- [39:18]
Katie Stockton
You know the momentum is obviously there short term and long term and now we're seeing the relative performance break out. So when we look at IHG versus the S&P 500 index, not only is a 200 day moving average pointing higher for that ratio, but we have a breakout that acts as a positive catalyst for more outperformance. The likes of Lilly Merck, they have very good long term momentum, no sell signals, they don't appear overstretched. We can even find some turnaround plays. Look at Bristol Myers from a long term perspective it starts to look like a big cup and handle formation. So if it can break out above resistance, that would be a major long term catalyst for that stock. Johnson and Johnson, very good momentum as well. So the momentum is there. The relative performance has been on the mend. Not just recently since the sentiment shifted behind the trade, but longer term.
- [40:09]
Dan Nathan
Stu, you just said, you know, clients, customers, institutional, they're looking for trades that are not correlated to AI. Is there going to be a trade maybe the back half of this year, which we're in into next year where you know, folks are looking for trade ideas or sectors that are going to benefit from the spend and especially if COMPUTE comes down. And I would think maybe xlv, I've never heard of this one but it looks pretty good too. What is it? Ihg? I mean is that like, is that going to work its way into some of these other sectors?
- [40:36]
Guest Analyst (possibly a market strategist)
I think those sectors are, you know, can you implement this and then what does it do to your profitability outlook? So you know, people would love that, right? You know, anything that demonstrates a return on investment related to AI is going to be very, very well received. I'd say right now it's more, it's banks, it's affordability. People really want to have an affordability trade on into the election. The tariffs as you mentioned earlier probably don't, don't play into that well and then I think health care would be the other one. Biotech is Considered a big beneficiary of AI. So I think within health care the biotech is the trade and the pharma is kind of the, the GLP one and the not AI, you know category
- [41:09]
Melissa Lee
of stuff Right now even within health care more broadly we've seen sort of a rotation, I mean from earnings season, insurers, hospital stocks have been troubled, Medtech has been very troubled and overcrowded trade there. But this pharma looks strong to the
- [41:23]
Guy Adami
extent that anybody cares. I mean Katie brings up ihe the two top names, Johnson and Johnson and Lilly or 40% of this ETF which you typically don't see. But I mean those are great stocks to own obviously. But yeah, I think your point is well taken. It's not, it's not pharma across the board or health care across the board. It's very specifically they think the names we talk about.
- [41:43]
Melissa Lee
Yeah. So XLV chart looks different from IHE a little bit. Yeah.
- [41:47]
Katie Stockton
Because of that heavyweight exposure to the big pharma names. But you can find other great charts. Amgen for one that's a very steady longer term uptrend with a positive intermediate term set up as well so we can dig a little bit deeper. Even the med device names dare I say seem to be stabilizing.
- [42:06]
Melissa Lee
Coming up, playing offense with defense with Lockheed and RTX told investors that sent the group higher today and whether there's still time to get in on the rally that is next more fast money into. Welcome back to fast Money. Defense stocks in rally mode today. Lockheed Martin having its best day since 2020 flying 10% higher while RTX jumped 7%. Both companies beating earnings estimates this morning and raising forecasts on strong Pentagon spending. Guy, you've been tracking the sector for a while.
- [42:37]
Guy Adami
Raytheon's the name we talked about. I guess it's called RTX now and that's actually been lower left, upper right for a while. Lockheed Martin obviously ran into some difficulties around the doge time but but it's gotten himself off the mat. So this was a great quarter and it's a valuation that I think you can get your arms around. So I like Lockheed here.
- [42:53]
Melissa Lee
Yeah. What are the charts look like?
- [42:54]
Katie Stockton
I like it too. I love gaps as you know. So Lockheed does look like a good turnaround and it had come right into some longer term support. If you look at the broader sector. HLD is a good way to do that. An ETF also had come right into support and to your point about correlation and people may be seeking non correlation into the S&P 500. It's a great space for that.
- [43:15]
Guest Analyst (possibly a market strategist)
Yeah, they reported at the right time too. I mean Iran's, Iran's heating back up oil prices higher. You know, just you just said has good testifying. You had the bill passed. So I think they, it's, it's all coming together for them the timing is perfect.
- [43:28]
Melissa Lee
Yeah, but Lockheed versus a Boeing. Boeing is half defense.
- [43:33]
Guy Adami
Yeah, but yeah, and I think it's half defense. I mean they can't get out of their own way. A lot of Boeing's problems are self, you know, self control inflicted wound bowing problems and it's a cash flow problem that they seemingly figured out. But if you're asking me to play the game of would you rather.
- [43:47]
Melissa Lee
Which I. Yeah, sure, let's, let's do it.
- [43:52]
Guy Adami
We play this game from time to
- [43:53]
Melissa Lee
once in a while.
- [43:54]
Guy Adami
If the two stocks, Boeing and Lockheed, Lockheed Martin at these levels given the fact that we held valuation wise. I like lmc.
- [44:01]
Melissa Lee
How does Boeing look to you?
- [44:02]
Katie Stockton
You know I like it. It's a little bit of an out of consensus view but if you reference it versus our monthly cloud model, it actually looks like it's broken out from this long term range. So it might be a sleeper.
- [44:15]
Melissa Lee
Are your clients clamoring for defense in this environment? I mean we mentioned these two but there's a wide range, particularly like drones and sort of the higher tech defense names.
- [44:25]
Guest Analyst (possibly a market strategist)
Yeah, you know I would say it comes and goes, you know, with Iran in particular. Right now I think people have their hands up in the air and they just don't know how to, how to deal with it. Is this something that's going to be going on for the next 18 months? Is it going to be over in four days? Because we, you know, we get, we get a memory memorandum of understand standing. So I think it's just been a really hard trade to have on because of this instability of the headlines coming out of that space. SpaceX also in a lot of cases is covered by our aerospace and defense folks. So that's probably absorbing not only a lot of time but also a lot of investment capital which either could be good or bad for the space that we could. That would be a longer debate I think.
- [44:58]
Melissa Lee
Right up next, final trades. Let's take another check on shares of intel now higher by just about 6% in the after hours. It was as high as plus 10% in the conference call. They're talking about 14 customers lining up. Even though that is not going to ramp production, not going to ramp until 2028. And also CapEx going up significantly but. But still the stock managing to hold on to gains at least for now. Your predictions for tomorrow for intel unchanged
- [45:33]
Guy Adami
on the day, if not slightly lower.
- [45:35]
Melissa Lee
Okay, time now for the final trade. Let us go around the horn. Stuart Kaiser of Citi.
- [45:41]
Guest Analyst (possibly a market strategist)
I'm going to go with our favorite 9 trade which is large cap banks KB.
- [45:45]
Melissa Lee
Katie Stockton a fair lead.
- [45:46]
Katie Stockton
I'll go with Bristol Myers. BMY looks poised to break out.
- [45:51]
Dan Nathan
Dan, you didn't ask me on Intel.
- [45:54]
Melissa Lee
What is your prediction for intel tomorrow?
- [45:55]
Dan Nathan
I think it's going to be down at some point, Mel, probably by noon. And I think the smh. I think you sell rallies for the rest of earnings season.
- [46:03]
Melissa Lee
Oh, that goes hand in hand with your intel call. Nice guy.
- [46:06]
Guy Adami
You know Natalie's worked here for how long?
- [46:09]
Melissa Lee
A long time.
- [46:10]
Guy Adami
Long time.
- [46:10]
Pippa Stevens
Yes.
- [46:11]
Guy Adami
What do we learn tonight? Member of our team, Integral member of the team. We learned that her father's a fan.
- [46:16]
Melissa Lee
Yes.
- [46:16]
Guy Adami
And we just.
- [46:17]
Guest Analyst (possibly a market strategist)
It's incredible.
- [46:17]
Dan Nathan
We've been watching for 20 years.
- [46:18]
Guy Adami
By the way, the interns this intern season, Trillium Trading are here. Look at this group. It's a good looking group. Now you notice they're all wearing the same shirts. You would have thought they would have brought us shirts.
- [46:27]
Melissa Lee
We think.
- [46:28]
Guy Adami
Well, you would have thought. Did they?
- [46:30]
Guest Analyst (possibly a market strategist)
No.
- [46:31]
Guy Adami
Fail on behalf part of them. But that's okay. I like Lockheed Martin here.
- [46:35]
Fast Money Podcast Host
Melms.
- [46:36]
Melissa Lee
All right, Stu, Katie, thanks for joining us. Thanks for watching. Fast Mad Money with Jim Cramer starts right now.
- [46:44]
Fast Money Disclaimer Narrator
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- [47:23]
Melissa Lee
a month on auto insurance when they switched.
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