Microsoft’s AI Pullback… And Intel’s Semi Shift 7/2/25

Summary

CNBC's "Fast Money" Podcast Summary Episode Title: Microsoft’s AI Pullback… And Intel’s Semi Shift
Release Date: July 2, 2025

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Introduction

In the July 2, 2025 episode of CNBC's "Fast Money," host Melissa Lee and a panel of top traders dive deep into the seismic shifts occurring in the tech and financial markets. From Microsoft's strategic retreat in AI chip development to Intel's potential transformation in the semiconductor industry, the episode offers a comprehensive analysis of the latest market movements and their broader implications for investors.

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1. Microsoft’s AI Chip Scaling Back and Job Cuts

The episode opens with significant news about Microsoft:

• Host Introduction (01:03): Melissa Lee sets the stage by highlighting Microsoft's recent downturn, noting, "Microsoft is reportedly scaling back on its chip ambitions and cutting thousands of jobs."

• Detailed Analysis (02:09 - 03:34):

  • Steve Kovac explains that Microsoft is reducing its plans for AI server chips despite being a major customer of Nvidia. "Microsoft tells me work will continue on its own chips, but this pretty much guarantees that Nvidia is going to have Microsoft as a customer for some time" (02:15).
  • Tim Seymour adds context about the scale of layoffs: "9,000 employees laid off today across the company. That brings the total to 15,000 employees laid off at Microsoft so far this year" (03:08).

2. Market Reactions and Analysis

The panel discusses the broader market implications of Microsoft's decisions:

• Steve Kovac (03:41): Emphasizes that despite layoffs, Microsoft's push into AI continues, pointing out Nvidia's potential to reach a $4 trillion market cap.

• Karen Fineman (05:15): Highlights the resilience in the demand for processing power, stating, "It doesn't seem like the demand part, which would be the real thing that would make the stock turn, is changing at all for the worse. In fact, I think it's getting better."

3. Nvidia's Market Position

Nvidia emerges as a dominant player in the AI and semiconductor markets:

• Steve Kovac (04:00): "Nvidia is going to be competing with them [Microsoft] in data centers too. So it's becoming like a pretty love triangle here."

• Dan Nathan (05:15): Stresses Nvidia's leadership and AMD's unexpected performance, "I like AMD" (05:15).

4. Oracle and Stock Movements

Oracle's stock hits new highs amid positive associations with Nvidia:

• Steve Kovac (03:29): Notes Oracle's surge following Bloomberg's report on OpenAI renting its data centers for the Stargate project.

5. Apple Stock Update

Apple experiences mixed sentiments despite stock movements:

• Melissa Lee (18:28): Reports Apple rising another 2% for its fourth straight day, with Jefferies upgrading the stock to a hold.

• Steve Kovac (19:05): Critiques Apple's lack of an AI strategy, saying, "There’s nothing here we don’t know about this story. There’s a lot of upside to the world's biggest handset maker at a time when AI in your handset is what you're looking for."

6. Tesla's Vehicle Deliveries vs. Stock Performance

Tesla's shares climb despite a decline in vehicle deliveries:

• Tim Seymour (23:37): Explains that Tesla's deliveries were just shy of analyst estimates, yet the stock rose by 5%.

• Steve Kovac (27:02): Points out competitive pressures in China, "They’re competing with BYD, which is the number one EV seller in China. And the ASPs for Tesla in China are nearly double that of BYD."

7. Health Insurers’ Stock Decline

Centene and other managed care stocks take a significant hit:

• Melissa Lee (31:09): Reports Centene plummeting over 40% after withdrawing its 2025 guidance.

• Karen Fineman (31:42): Comments on the widespread impact: "Nothing to love here at all... Centene's mix is the worst of the bunch in terms of all the areas that are hit."

8. Intel’s Foundry Business Shift

Intel considers major changes to its foundry operations:

• Melissa Lee (34:09): Introduces the topic, "Intel shares 4% lower after a Reuters report that the chip maker is considering a major change to its foundry business."

• Stacey Raskin (34:45): Analyzes Intel's struggles with process delays and competitiveness, "They're shipping what's called 7 nanometers now. That was, what they used to call 10, which was supposed to ship in 2015."

9. Trade Deal with Vietnam and Nike’s Stock Boost

A new trade framework with Vietnam propels Nike's stock:

• Melissa Lee (40:23): Shares Nike's 4% jump following President Trump's announcement of a trade deal with Vietnam, "The country accounts for half of Nike's footwear and more than a quarter of clothing production."

• Dan Nathan (41:20): Discusses the symbolic importance of the deal for manufacturers like Nike, "This is symbolic because again, I do think this isn't really what took Nike down."

10. Netflix and Spotify Partnership Talks

Netflix explores partnerships with Spotify to enhance its streaming offerings:

• Melissa Lee (43:02): Reports on Netflix's discussions with Spotify about potential programs like music award shows and live concerts.

• Dan Nathan (43:54): Supports the strategic move, "There's economies of scale in that business model... to become more of a one-stop app."

11. Quantum Computing and Cryptocurrency Market Trends

Advancements and investor sentiments in quantum computing and cryptocurrencies:

• Steve Kovac (33:58): Highlights Cantor's positive ratings on quantum computing firms and the surge in Bitcoin above $100,000, "It's getting a lift when there's a risk-on sentiment in the market."

12. Final Thoughts and Trades

The panel wraps up with final trade suggestions and market outlooks:

• Dan Nathan (45:38): Encourages staying long on certain market segments despite recent fluctuations.

• Steve Kovac (45:50): Mentions Intel's acquisition news, "Datadog is taking over for Juniper Networks, and shares are up about 8%."

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Notable Quotes

• Steve Kovac (02:15): "Nvidia is going to be competing with them [Microsoft] in data centers too."

• Karen Fineman (05:15): "There’s a lot of demand for processing power. It’s getting better."

• Stacey Raskin (34:45): "Intel is behind on process and trying to catch up; it's not a great look."

• Dan Nathan (43:54): "Netflix should leverage their platform to become more of a one-stop app."

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Conclusion

The July 2nd episode of "Fast Money" provides a thorough examination of critical developments in the tech and financial sectors. From Microsoft's strategic recalibrations in AI to Intel's ongoing challenges in the semiconductor race, the episode underscores the dynamic nature of these industries. Additionally, the discussions around Tesla, Nike, and the evolving landscape of health insurers offer investors valuable insights into current market trends and future opportunities.

For listeners seeking a detailed analysis of today's most impactful financial news, this episode serves as an indispensable resource.

Transcript

[Melissa Lee]

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[Steve Kovac]

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[Melissa Lee]

Life in the NASDAQ markets in the heart of New York City's Times Square. This is fast money. Here's what's on tap tonight, an AI pivot. Microsoft reportedly scaling back on its chip ambitions and cutting thousands of jobs. In the meantime, what it means for the tech giant and the future of the hyperscalers and a foundry shift for Intel. The chip maker may be shaking up its contract manufacturing business. One top semi analyst will weigh in on what it means for the future of the company. Plus, Tesla shares jumped despite a drop in deliveries. Ascension's guidance pull up and manage care stocks sinking and Nike continues its post earnings run thanks to some good news on trade. We'll break down the headlines on all those moves. I'm Melissa Lee. Come to you live from Studio B at the nasdaq. On the desk tonight, Tim Seymour, Karen Feineman, Dan Nathan and Bono and Isaac. We start off with Microsoft pulling back again today, now down 2% from the record hit earlier in the week. Today's action comes amid a report that the company is scaling back plans to develop AI server chips and and news that it could cut as many as 9,000 jobs in its biggest round of layoffs since 2023. For more, let's go to Steve Kobach who's got all the details. Steve?

[Tim Seymour]

Hey there, Mel. Let's start with that chip story.

[Steve Kovac]

This is coming out of the information.

[Tim Seymour]

Reporting that Microsoft, which by the way.

[Steve Kovac]

Is one of Nvidia's top customers, it's slowing down plans for its own AI chip. It's already been in development. They've been deploying it a little bit. Now Microsoft tells me work will continue on its own chips. But this pretty much guarantees that Nvidia is is going to have Microsoft at as a customer for some time now. By the way, Nvidia closing in on that $4 trillion market cap. That would be the first company to hit that milestone. Also, a new fiscal year for Microsoft right now just started on July 1. We should get some more detail on the Capex spending for the next 12 months. Microsoft has already said it's going to grow capex from the 80 billion last fiscal year, but at a slower pace. Meantime, Oracle hitting new highs today after Bloomberg reporting OpenAI will rent its data centers as part of that Stargate project. More good news for Nvidia there outside.

[Tim Seymour]

Of chips and AI though, Microsoft still cutting costs.

[Steve Kovac]

9,000 employees laid off today across the company. That's less than 4% of overall employee base. That brings the total to 15,000 employees laid off at Microsoft so far this year. This would be the biggest cuts at Microsoft since 2014, 2014, when Microsoft laid off 18,000 mostly from the Nokia acquisition.

[Tim Seymour]

So lots going on at Microsoft there.

[Steve Kovac]

But still moving forward on AI. Mel.

[Melissa Lee]

All right, Steve, thank you. Steve Kovac coming to us on Microsoft. What do we make of of this news?

[Steve Kovac]

Well, I think more importantly than the layoffs because they've been laying folks off and this is what you would expect to do especially as you're maybe getting better productivity from some of these applications. You know, I think the pushing out the chip designs, right. And so we know that again, like all of India's major customers which are meaning to be their major competitors at some point, the fact that they are doing that just tells you that the capabilities internally are probably not the sort of thing that investors who've been buying like stocks like Broadcom, you know, would think, right. So some of those tams that we heard from Broadcom late last year and reiterated by Marvell, you know, earlier this year, maybe they're not there for them, right? Maybe it is the sort of thing that Nvidia continues just to dominate. But at the end of the day, I think about Nvidia and I think about the customer concentration and you know, Microsoft's their biggest customer and you know, Nvidia is going to be competing them with them in data centers too. So it's becoming like a pretty eventually, I mean, but you know, it's all happening. So it seems like there's a little bit of a love triangle here. It all points to probably pretty decent, decent news like that for Nvidia though. But then you say to yourself Kovac just said it. $4 trillion in market cap. Who thought Nvidia would be that one? Right. And so it's kind of all happening there. I'd go a different direction because I think all of the news and the names that we know are getting a little exuberant. I start to look at some of these chip manufacturers, like I would look at not tsm, but I'd say the suppliers of that would be an AMAT or something like that. Those guys are coming off the chip equipment provider. So I think you got to kind of go further afield at this point because I think those names are kind of.

[Melissa Lee]

Doesn't this show you that it's much harder than you thought to compete in. In database chips? I mean, the bread and butter of Nvidia and then maybe in videos mode is actually pretty decent at this point, even though there are all these reports that Amazon and Microsoft and Google, they're all making their own chips.

[Karen Fineman]

Yeah. Well, it sounds like Amazon is well on their way to making chips that they use and that. But it also speaks to the demand for power, for processing power. Right. And so, you know, within video being right in the center of the picks and shovels, we talk about it all the time. It doesn't seem like the demand part, which would be the real thing that would make the stock turn is changing at all for the worse. In fact, I think it's getting better.

[Dan Nathan]

Yeah. I think it does bode well for the supply chain, the infrastructure. So I like TSM for this and their advanced packaging capacity. And they talked about how that's actually gotten. Gotten stronger over the last couple of months. An aam. I think some of these players are ones you want to hold here. And I do think that there's. You could look at it from both sides and just say people are kind of slowing down on Microsoft. But I think Microsoft's got their hands full in a lot of places and a lot of interesting places, and I think that's maybe just good news for everybody. I don't think this is a signal that there's less demand in terms of AI and in terms of chips and building up those. Those reservoirs of capacity. But I. I do think this obviously does underscore Nvidia's leadership. I think it's also proven that that AMD has had a pretty good month, and there's a reason they've had a pretty good month, because I think people underestimated where the 350 and the 400 chips have been. They've given some announcements in the last month that have been bullish. I like amd.

[Melissa Lee]

Was this good news or bad news for Microsoft ultimately Bono in I think it's one.

[Tim Seymour]

I think it's more neutral, frankly. I would have been more concerned had they essentially conceded that they were having these design issues and continue to push forward spending money that you're not going to get an RI on. I think that's where you would have seen probably declined double of what we saw today. Like the rest of the group, I definitely think it's a positive for Nvidia essentially the complexity around the design and manufacturing process. We're going to hear about intel later like clearly that that is something that probably wasn't yet priced into the stock. I know a lot of us were looking out to 26 numbers and saying okay, that's probably where the extent of the visibility. I think this probably buys you another 12 to 18 months in terms of understanding that that revenue level will probably remain where it is.

[Melissa Lee]

Does the Microsoft news change your view at all, positive or negative when it comes to Oracle, which has seen a massive run as Steve pointed out?

[Dan Nathan]

Not really. But I think Oracle on its own in that move and that valuation is something you had to question even though again I think Oracle has done a great job of articulating a strategy that is higher on the top line, lower on the bottom line. We talked about that. That's not great. I think it's also interesting to know if you go between, if you go look deeper into this Microsoft announcement, a major part of this cut is coming at Xbox to the gaming side of their, of their business. It almost seems as if that was really the takeaway I would take from this. So I mean Microsoft didn't announce, excuse me, didn't present themselves as a chip manufacturer yesterday. They're not today and they're no worse off. They're very well positioned in AI. They're the one that really does have a high margin business that if anything is growing slow and steady.

[Steve Kovac]

Yeah. I just mentioned though, the last time we've seen major cuts from, you know, companies of this size was in the lows in 2022. Right. And you think about where these stocks are, you think about where the sentiment in the market, you think about valuations are and that was really an unlock. You think about like some of these names like Meta started cutting people. Microsoft did in a meaningful way to cut costs. Now look at how far these stocks have run over the last three years or so. And I think it's really interesting to also fourth quarter of 2022, when all these folks were down for the count, these stocks and they started cutting costs. That's when Chat GPT was launched. And that was really the sort of thing that has kind of brought this thing full circle in a way. And you think about Microsoft's relationship with Open Air that is fraying right now. So Azure has been great. They've been spending a lot of money. They went from like $55 billion two years ago to $84 billion last year. We know that that's going to slow down a little bit at some point. Other than their actual cloud business, they're going to have to be able to articulate some sort of meaningful growth as it comes to co pilots across the enterprise. Right. And then we're going to start thinking about, you know, agentic, you know, sort of operations. That's the sort of thing that's going to be like the unlock, I think for their profitability. And they're basically, you know, just their demonstration of all that investment that they have made and the partnerships that they've made, what they start to get from their own customers. Because as of now they're not seeing.

[Karen Fineman]

A huge uptake with the meta thing. I mean I would say I think they could do a lot more in the efficiency, on the productivity of their own employees. However, if you spend several billion dollars for one that's going to, you know, you've got a lot of overhead, right that, you know, clearly Zuckerberg's taking a huge bet. I still think there's a lot of efficiency to be had. We haven't even begun to see it. And I also think that's sort of part of the story in the banks where you will really see efficiency and we haven't really begun to see it at the companies themselves.

[Melissa Lee]

I was talking to a bank analyst this morning from TD Cowan when I was in squawk box and he was all bowled up on the banks said JP Morgan can be go even higher. Could be a 3 price to book ratio because of the power of AI. And I thought that was really interesting to go out there and actually put a valuation number to that cost efficiency.

[Tim Seymour]

I think that's probably the next industry to get disrupted A three times book value seems high aggressive. You know, I know that there is a cohort that typically buys at 1 or sub 1 and sells north of 2. So you just may have some of those systematic tradings that trading strategies that put a cap on, on its ability.

[Melissa Lee]

I guess he's saying that you can't have a historic. There's no historic multiple for this time which is not a, you know, it's something new, this age of efficiency.

[Dan Nathan]

I just, I just think the, the momentum in the banking sector is extraordinary in terms of the capital markets stuff. We spent a ton of time talking about JP Morgan, you know, is their buyback is going to be 66% bigger than it was last year, etc. But 100% agree. I and even Cowan had a note. I forget what they about stablecoins and how it relates to banks. And it was something along the lines of banks are ready to disrupt themselves. If you think banks are not going to be exposed to stablecoins and have a big exposure. If that's actually infrastructure that's being used to settle trades and, and be available for industry specific. I mean I just think financials here and I said this yesterday, but I think it's important to think about where we were with the banks before sbb, before Silicon Valley blew up. Banks were rerating quickly and we, we had to take a year and a half off or maybe two years off. But their ability to buy back stock and grow earnings even through that is impressive.

[Steve Kovac]

I think it's worth noting that 25 years ago we heard a lot of the same arguments about the Internet and what was going to happen. It goes back to obviously that very famous quote from Bill Gates is that we kind of overestimate the near term and we underestimate the long term. And I think that's what's kind of going on in the markets right here. And so I think it's just important to kind of recognize the fact that yes, a lot of these companies are trading at high valuations and we know that AI is going to do a whole heck of a lot for productivity. We just haven't heard a lot about it and it better come soon because where the valuations are right now, I mean, you're talking about JP Morgan three times book. I mean because of. I like. That's the reason.

[Melissa Lee]

One of the reasons.

[Steve Kovac]

Yeah, yeah. I mean that doesn't make a lot of sense.

[Melissa Lee]

Stocks mostly higher today with the S&P 500 and NASDAQ closing at records as President Trump announced the framework of a trade deal with Vietnam. The gains coming despite some weak jobs data. ADP private payrolls unexpectedly fell by 13,000 in June. The Labor Department jobs report comes out tomorrow morning. For more on what it all means for markets and the Fed, let's bring in Jack Genesiewicz, lead portfolio strategist at Natixis. Jack, great to see you.

[Jack Genesiewicz]

Thanks for having me back.

[Melissa Lee]

Where do you stand on, on where we are in the markets right now? Fully, fully valued, overvalued.

[Jack Genesiewicz]

You know, I think the big risk going forward here over the next couple of months really comes out of that labor market and that's why I think tomorrow's payroll print will be somewhat turning point here. You continue to see ancillary data showing potential weakness coming out of that jobs market and the Fed seems to be at least sitting on their hands in the interim. And so you could get a little bit of a weakening in the labor market, the Fed a little bit maybe slow to react to that and as a result maybe you get a repricing in the near term here, knee jerk reaction of maybe the growth scare kicking in. As a result, maybe we get a little bit of a sell off in the interim from.

[Melissa Lee]

Oh, I would have, I would have gone the other way, Jack. And I guess this is sort of like a Rorschach test. If, if the jobs market came in weaker that would underscore the need for the Fed to actually cut and so therefore the markets would like that.

[Jack Genesiewicz]

Yeah, I think there's a timing mechanism there and I think longer term I think that's probably the right, the path to take. And I think before, you know, we went to break there, Mike Sentinel, he was sort of walking through the same case that we were outlining. So my guess would be that maybe the knee jerk reaction, we're off the battle in a weaker payroll print would be a sell off. But again the market would start to probably reprice in higher rate cuts going forward and so give it a little bit of indigestion in the interim and you're probably looking for a pretty good setup into the end of the year.

[Dan Nathan]

Jack, I saw from your notes that you're neutral to slightly underweight on the equity side. What about this rotation of this week though, at least is encouraging to you. Does that is, you know, do you believe that there's opportunities in some of these sectors that have had a pretty good week and have not been the obvious. Mag 7.

[Jack Genesiewicz]

Yeah, I think it's a little tricky because you're looking at, you know, the quarter end potential rebalancing here. And so, you know, we certainly saw yesterday it was sell the winners, buy the losers. You got a little bit of that pull through even today. You know, you've got small caps which were doing well on the back of higher rates. So that kind of makes you squint and say I'm not really sure what's going on. There. So, you know, I still think it's more the same. You're going to have the growth complex likely continuing to lead going forward. And I still think, you know, and you guys were just talking about this, the tech complex, the comm service complex, and even maybe outside of that, the financials continue to sort of be the leadership as we continue to push into the end of the year. So, you know, I think it's still more the same in here.

[Tim Seymour]

Jack, continue along the theme around equities. Can you kind of speak to how your balance between US Domestic and international stocks. We've seen quite a bit of a rotation or broadening out, if you will, from US Domestic to more Eurocentric or international stocks. Can you kind of give us your view on, on what that proper balance is and you know, where you start to see money flows going into the second half of the year?

[Melissa Lee]

Sure.

[Jack Genesiewicz]

And I know we've had a pretty good rally in European equities, for example, and I think a lot of that was just a function of positioning. Right. You've had some pretty big overweights that probably got extended because the, the tech trade has really been that leadership factor going forward for at least a couple of years now. And so a lot of investors probably overweight where they probably would like to be from that perspective. And given the sort of the Trump news and off of Liberation Day made some sense, I think, to rebalance back to something more normal. But I'm not sure that we're having a dynamic change underneath the surface here where you're going to see Europe continue to lead. Where do you get growth in earnings coming from? It's still coming from that tech complex. And when you just look at the constituents within the indices there, that still favors the U.S. equity market. And so we're not necessarily buying into this idea that, you know, you should start to be allocating and this is sort of Europe's time to shine, so to speak. We still think it's a US Story and the growth, that backdrop is still supportive for US Equities. So still overweighting US equities and underweighting international in our portfolios.

[Melissa Lee]

Jack, good to see you. Happy 4th Jackson, Texas oh, Tim, time is running out for Europe. Your meager trade.

[Dan Nathan]

I mean, so look, Jax, I think what he's saying is suddenly Europe overnight doesn't become this incredible growth story. He's absolutely right. If suddenly overnight there's an assessment that foreign investors are significantly overweight the U.S. relative to historic benchmarks. So in other words, U.S. at 22 to 25% and peaked at 30% in December. That's part of my view. The other part of my view is that I think dollar weakness is something that at least we have for a reasonable amount of time. But more importantly I look at the ability of Europe relative to itself to be able to stimulate its own economies and I talk about how Germany, that's a historic move in terms of deficit spending and rearming Europe and also deregulation. So these are all things you don't go out and get 50% Europe or international on your portfolio suddenly but a little bit and 15 years of underperformance means this isn't a 15 day trade either. This is probably a period to be putting more on.

[Melissa Lee]

Do you still want to be more levered to technology and to growth in the second half of the year as opposed to playing the broadening of this rally RSP versus SPX, let's say. I mean that sort of.

[Tim Seymour]

I like that. No, I still like the growth year names. I think if we were to get a hiccup, I think there's an argument to be made that there is still a level of certainty and protection within that MAG7 and so even if you're not really stepping out on the risk curve per se, I still think you can play those tech names from a more defensive posture.

[Karen Fineman]

Yeah, I agree. I think there's also the growth is there but I also think there's some protection. Some of them don't have some of the tariff or any of the logistic issues, supply chain things like that that I find interesting and I don't know, I love those asset light some of those businesses really great.

[Melissa Lee]

Let's turn out to Apple rising another 2% for its fourth straight day in the green. Jefferies upgrading the stock to a hold with analysts writing that the company could top June quarter estimates thanks to better China iPhone sales. Still, they cite long term risks with investors underpricing the impact of tariffs. Their updated price target of $188 a share implying 12% downside from today's close. Of course this is a move from sell so it's not exactly a pound the table upgrade here but it is interesting it times also with the call from Carter which is a reversal of him saying sell Apple what 3 years ago yesterday he said it's a buy for the short term.

[Steve Kovac]

Yeah, and he said a short term buy up to that Moving average about 223is a good call. I mean it really held that $200 level. I think that there's not a lot of Catalyst right here. And I think you could say, well, the sentiment's really bad when you have someone like this guy who's one of like five sells on the street, which is kind of weird for Apple by the way that it has five cells. You look at the rest of the MAG7, I think like 90% of the ratings are buys on all of them. So, you know, kudos to this guy. Depending upon where he put it on, there's going to be a pull forward. I mean the Q2 for a lot of these companies is going to be better than a lot of folks thought in early April, right. When they're selling stocks or tripping over themselves to do so. But the back half of the year for a company like Apple is going to be a problem. They still don't have an AI strategy. So that means that a product that has not been growing for the last three years is not going to grow again. I mean like literally they're going to miss an entire year of a product cycle. So I think there's probably better growth here, places to be.

[Karen Fineman]

So I find myself agreeing with Dan, you know, which is obviously. Well, he is ray of sunshine, so I like that. So great call by Carter. Also Katie Stockton as well. But just in the last thing we just talked about asset light and some of the other problems that they don't have. When you think of who has a supply chain issue the most out of the Mag 7. Right. And you know, tariff issues and they're just in the crosshairs of that. Not my least favorite, I think of the mags.

[Tim Seymour]

Another element is just the service revenue slowdown or threat. That looming threat, whether it be regulatory or just in terms of like gross dollar amount, I think that's really what's concerning because I think at least from my vantage point, that's really what gives it the premium multiple. And so unless we continue to have momentum where it's strictly about allocating, but Apple specifically, I think that is the looming threat that I see.

[Melissa Lee]

That's a big reason why Craig Moffitt is still at a sell on this one. But you're a little bit more bullish.

[Dan Nathan]

I tend to be more glass half full on this one than the folks around me. And it's because I just don't think Apple's priced in anything other than a services business that's made the multiple overall very expensive. Expensive. But there's, there's no, there's certainly no valuation to AI in here. There's no ability to say that they've really rallied on what's been the driver for tech for the last two years. There was some, there were some headlines. They also that the Chinese are bringing home some of the developers from India, which is going to complicate Apple's plans to actually be able to to really outsource a lot from China, India, who knows. I still think we've priced a lot of bad news on China. The biggest issue with Apple, the biggest issue is it's multiple and that that should be enough for most people. But again, there's nothing here we don't know about this story. There's a lot of upside to the world's biggest handset maker at a time when at some point AI in your handset is what you're looking for.

[Melissa Lee]

Coming up, Tesla deliveries in reverse but shares still charging higher. The latest numbers from the EV maker and why investors are breathing a sigh of relief. That's next. Plus a managed care meltdown sentience warning hitting the group hard. The prognosis for the insurance space is coming up. Don't go anywhere fast when he's back in two.

[Steve Kovac]

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[Tim Seymour]

And whether you're expanding to new cities.

[Steve Kovac]

Or growing your loyal following of light loving fans with questionable taste, Square is with you every step of the way. Square helps you tackle today's to do's and bring that big light bulb idea to life tomorrow. Literally. Go to square.com go fastmoney to learn more. That's sq u a r e.com squarespace square meet you there. The potentially pivotal June jobs report. What will the data indicate about the strength of the labor market, implications for the economy and the Fed employment numbers and analysis Squawk Box tomorrow, 8:30 Eastern and streaming on CNBC. Plus.

[Melissa Lee]

Welcome back to Fast Money. Tesla up 5% today despite reports of a bigger than expected drop in vehicle deliveries for Q2. But even with today's pop, shares are down 22% this year. The worst performer in the so called Magnificent Seven. Let's get more on the latest numbers with CNBC's Phil LaBeau.

[Tim Seymour]

Phil and Melissa, the reason Tesla shares moved higher after these numbers came out today, and look, they weren't great numbers, but there were some analysts who thought, look, we might see365,360,000 in terms of total deliveries. Yet when you look at the final numbers for the second quarter, came in at 384, 122, about 2000 or 3000 shy of the estimate of 387,000. 13.5% decline compared to the second quarter of 2024. First half deliveries coming in at just over 700,000 vehicles. 702,000 or 720 803. If they are going to hit the number of vehicles delivered last year, they're going to have to deliver just under 1.1 million in the second half of this year. Not impossible, but they're certainly going to have to increase from where they've been in the first two quarters of this year. And remember, these shares are under pressure in part because it's not just deliveries in the US And Europe, but also in China. There was a bit of good news there. In June, sales were up 1%. 1% may not sound like a lot, but remember, they had five straight months where sales were down year over year. There is some hope that perhaps this is a stabilization in terms of the Chinese market. Quickly want to touch on Rivian also reporting its Q2 deliveries today, 10,661 vehicles. It has affirmed its 2025 delivery guidance of between 40 and 46,000 vehicles. We will get their numbers in terms of second quarter performance in early August. Production number, by the way, 5979 vehicles. That is down compared to what many people might have expected. But they are transitioning from model year 25 to model year 26. So they expected production to slip as they were moving some of that production and shifting their production schedules. And finally take a look at shares of XPane. Their Q2 sales up 242% in China. Keep in mind they are coming off of a low base. Melissa and even though they have already outsold all of what they did last year, they still are a ways behind the market leaders when it comes to electric vehicles in China. Nonetheless, that attention or that headline is getting a lot of attention today for expand. Melissa, back to you, Phil.

[Melissa Lee]

How are you? How are analysts, how are Tesla watchers thinking about sort of the chess pieces moving on the board, so to speak, with Elon Musk now being in charge of European sales on top of being CEO Tom Zhu of China Taking over global operations. I mean this all at a time when, when Tesla really has to execute in the back half of the year.

[Tim Seymour]

I know a lot of people have said, and I've read a lot of the commentary today and they've said, look, it's not good for a CEO and a founder to have to step back in and then have more closely or more closely supervise operations, say in a market like Europe, that is competitive. I understand that philosophy, Melissa. Having said that, I also agree with those who have said if you look back historically at Tesla, when Elon Musk's back is against the wall, when he needs to improve the performance of the company, he has generally been able to get Tesla to the point where it needs to be. Will that happen again? We'll see far different market now than the last time that he was more actively involved in day to day operations. But that is a track record worth noting.

[Melissa Lee]

Phil. Thank you. Phil LeBeau, how you think about Tesla these days? Dan?

[Steve Kovac]

Well, I think it is interesting the way, the way it was laid out. I mean some of the expectations for deliveries was getting down to like 350,000. So they came in right near where the analyst consensus was. So it does make sense that the stock rallied a little bit. They're going to report on July 23rd. I think what Phil says, really interesting that the bright spot, or maybe a bright spot was China growing 1% year over year. The only problem with that is they're competing with BYD, which is the number one EV seller in China. And the ASPs for Tesla in China are like nearly double that of byd. So it's pretty astounding. And some of the cars, they've been much, you know, refreshed much sooner, that sort of thing. So China is going to be a tough one for them, in my opinion.

[Melissa Lee]

I would think that if the ASP is, are that much higher than byd, then they have more ability to cut price to compete.

[Steve Kovac]

Do they? I mean they've been, they've been cutting price for three years in China and you know, so like literally a lot of analysts are looking at this company, this is Tesla, and they're saying they're breaking down profitable sales versus unprofitable sales. They've been buying down rates for years. They've seen, you know, undercuts. You just said xpeng you think they're competing on price with Tesla? Of course they are. So to me I just think that they have been in a death spiral with pricing. So have a ball, you know, try to kind of lower them to kind of get back.

[Melissa Lee]

It's like a drinking game.

[Steve Kovac]

Have a sit, have at it, have at it. I mean, have a ball. Trying to play that game in China right now because it just doesn't seem to be working for you.

[Dan Nathan]

Drinking. I like that you played a lot of that. A lot of beer pong for you.

[Steve Kovac]

Mountain College.

[Dan Nathan]

Sure.

[Tim Seymour]

You know, for me this is just further confirmation that the delivery numbers, the car sales, the price point, it just doesn't even matter. This is really a robotics robo taxi, FSD type of story. And I think that that story hasn't changed for me, frankly. I can understand. We often talk about the sentiment around, okay, things being so bad that you marginally beat them and it's a positive. But at some point, this story seems to be too iterative around Tesla and, you know, unless you can wrap your head around just buying into the future and really believing in Elon, I don't think the car company metrics even matter anymore.

[Melissa Lee]

All right, we've got a news alert on a new addition to the S&P 500. Let's get back to Steve Kovac for the details. Steve? Hey there, Melissa.

[Steve Kovac]

That would be Datadog and shares are up over 8% on this news. It's replacing Juniper Networks which became part.

[Tim Seymour]

Of Hewlett Packard Enterprise today. They closed that acquisition earlier this morning.

[Steve Kovac]

So now there's a free spot in the S&P 500.

[Tim Seymour]

We see Datadog, the software and services.

[Steve Kovac]

Company, taking over for that up. And now we see shares up about 8% on this news.

[Melissa Lee]

Mel. All right, Steve, Thanks. Steve Kovak. There's a lot more fast money to come. Here's what's coming up next.

[Steve Kovac]

A rough prognosis for health insurers. Shares of Centene tanking after pulling guidance and taking the rest of the space with it. How to manage your exposure to the managed care sector, plus a chip change for intel, how the company could be shifting its foundry business, and whether the semi shakeup can attract more customers. You're watching Fast Money live from the NASDAQ market site in Times Square. We're back right after this.

[Tim Seymour]

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[Steve Kovac]

Which American states are driving business surviving and thriving. America's top states for business is back.

[Melissa Lee]

Which state will take the honors this year?

[Stacey Raskin]

The list revealed July 10th and streaming on CNBC Plus.

[Melissa Lee]

Welcome back to Fast Money. Shares of health care provider Centene plummeting more than 40% after the company withdrew its 2025 guidance last night, saying recent data shows lower enrollment rates several states. The news hitting other managed care names hard. Humana, UNH sharply lower Elevance, Oscar Health and Molina, all with double digit declines. We should also note that they also talked about medical costs being higher. So sort of a, a double whammy of bad news. A triple whammy. And so you know, unh, which has fallen again and again on higher medical loss ratios, fell again on this.

[Karen Fineman]

Nothing to love here at all. Right. So medical loss ratios, put that aside. Side just talk about Medicaid and also about ACA and you know, just blindsided by all three. This is really not good for any of them. You know, I'm long elevance. I've done a poor job of just still being long in spite of a lot of headwinds more broadly and some specific to them, but I don't know, really just not a lot alike here. Centene's mix is the worst of the bunch in terms of all the areas that are hit. Medicaid, ACA Elevance has much less exposure but doesn't really matter. I mean, this is a, this is.

[Dan Nathan]

Really not a good day because they left so many open questions. I mean, you know, pulling, I mean, it's just, it seems so momentous in a business that at least historically was actually so predictable. You know, that's obviously a negative headline. But, but the valuations are at a place where you really, you've, you've taken major, major haircuts here. So it felt like we were getting a bottom maybe. You know, this is obviously putting more uncertainty on the period for the bottom, but I think it starts to get interesting and I think the worst of this is behind us.

[Melissa Lee]

All right, coming up, intel rethinking its foundry business yet again. And the news made it one of the few semi stocks in the red today where our next guest says there is no guarantee that going back to the drawing board will lead to gains. That's when he's back in two. Welcome back to Fast Money. The S&P 500 up a half a percent, closing at fresh record highs ahead of tomorrow's jobs report. The NASDAQ also at a record up nearly A percent. The Dow down just slightly. Quantum stocks jumping today. Analysts at Cantor initiating both forgetting computing and D way with overweight ratings. The firm saying quantum computing is still in its infancy, but that it's quote, one of the most highly coveted technical milestones with enormous economical implications. And Bitcoin climbing above $100,000 today and bringing the rest of the crypto space with it. Etherium, Solana, Ripple also jumping as well as crypto related names like Strategy and Coinbase. So it does seem like, you know, it's getting a lift when there's a risk on sentiment in the market.

[Karen Fineman]

Yeah, it's a little late. I've been talking the last few days about how I've been so surprised that it hasn't sort of joined the party. But now it seems to be coming back to life, although it's not at its highs, which I would have thought it would be with all that's going on.

[Melissa Lee]

Meantime, intel shares 4% lower after a Reuters report that the chip maker is considering a major change to its foundry business. CEO Lip Bhutan reportedly exploring a shift away from the company's 18Amanufacturing process due to fears that it cannot compete with Taiwan Semi's offering. Intel would instead focus on its own 14, a process which it hopes will be more competitive in luring new customers. Stacey Raskin is Managing Director, Senior Semiconductor Analyst at Bernstein's. Got a market perform rating and a $21 price target on Intel. Stacey, great to see you. Is this basically a write down of 18 and do you think this would be the right move?

[Stacey Raskin]

Well, we don't know what this is yet. Right. This is a news report. It actually suggested that the board would be thinking about these sorts of decisions at a forthcoming meeting in a few months, which maybe makes sense given the gravity of such a sit. You know, the whole concept of intel, you know, being behind on process and trying to catch up, I mean that was, you know, Pat Gelsinger, the former CEOs, that was his entire mandate, his whole. He talked about five nodes in four years accelerating their process roadmap and they were kind of betting the farm on 18A, which is their next generation process, which theoretically is supposed to be shipping for their own products sometime near the end of this year. It was always questionable though, like how much interest there would be from customers for that process. And this article suggested that maybe there's not a whole lot of interest and you know, they're maybe pushing out to the following node, which would be 14A. At the same time, I would say that the whole like Five nodes in four years. You know, Pat sort of, you know, screamed till he was blue in the face about how great that strategy had gone for them. I'm not convinced that it really went all that well. I mean, they're shipping what's called 7 nanometers now. That was, that's going okay, but that was the former, what they used to call 10, which is supposed to ship in 2015. They have Intel 4, which is one product, that's Meteor Lake that nobody seems to want. They actually said on the last earnings that nobody wants their new client products that are built on that. They got Intel 3, which is a server product, Granite Rapids, that was supposed to stem the share losses, which it clearly is not. 20A was, was the next one. They actually canceled that process already. And then 18A, the first product on that, they actually delayed it by year. That was something called Clearwater Forest. They pushed it from the first half of 25 to the first half of 26. And they blamed a packaging issue, not process. But I mean it's not a great look. And so would I have any issue like, like believing that they're considering yet one more delay? That wouldn't surprise me at all. I mean it would be par for the course at this point.

[Steve Kovac]

Stacy, you've been covering Intel, I want to say, for a couple of decades. Is that fair to say? I'm not trying to age you quite.

[Stacey Raskin]

A couple decades, but almost a couple of decades.

[Steve Kovac]

All right, so Flash flashback. If you think about Cisco nearing its all time highs from 2000, IBM, Oracle, then look at Intel. I've never seen the sentiment so bad for a stock like this. 6% of the analysts and there's 50 that cover the stock, have a buy rating on the stock. Give me a sense of the sentiment when you're talking to investors. Is this thing very soon so bad it could be good?

[Stacey Raskin]

I mean the thing is that that's been the story on it for a long time. It's even us, we've got, you have to, I think my career being negative on intel, right, for, for well over almost 15 years now. We're neutral on the stock right now. Like I know I upgraded it to neutral always probably two years ago when they cut the dividend because there's like, well, how much worse could it get? Actually it can get worse. It got a lot worse since then. And that seems to be the story. Like every time people think that it's gotten absolutely as bad as it can get, they managed to surprise us. And so at this point, I look I'm not even saying that the strategy that they were following was necessarily wrong. This whole idea about focusing on Foundry and getting processed, I mean, that all makes sense, but it's just. I think it's a slog. It took 10 years to break it. Like, why would it take less than 10 years to fix it? They laid out a strategy even before Pat left. I'm kind of laid out. It was sort of like a 2030 Horizon. And I'm not even convinced that those targets are even meaningful anymore. Like, and things have gotten worse since then. But it's probably the right time frame. Like, call me in 2030. It's probably about how long it'll take before we know if it works or not.

[Karen Fineman]

Stacy, it's Karen. Let me ask you a question now, before 2030, we had talked earlier today about Microsoft scaling back their AI chip ambition. I want to know what you think of that. Who wins, why they do it.

[Stacey Raskin]

Yeah, I don't cover Microsoft. However, the whole concept of large hyperscalers working on their own AI chips is very well known, and every single one of them is working on it to some degree. Some are further along than others. I mean, this is Microsoft's sort of first effort, and I'm not necessarily surprised that it would take some time to get it right. I mean, to be honest, really, the only large hyperscale that's shipping these things in very sizable volumes is Google. And they work with. With Broadcom and, I mean, they've been working with Broadcom and stuff for over 10 years, and they've kind of got it down. Now. Microsoft, you know, is their first gen. The stuff's hard. And you have to remember in video themselves what you're competing against. With Nvidia, it's a moving target. Like, Nvidia is not standing still. So you have to make sure that what you're developing today is actually be competitive with whatever Nvidia has when those products come out. And because Nvidia is moving so quickly, it makes it very difficult. So it wouldn't surprise me. I don't have any, you know, intrinsic knowledge of what's going on over there, but it wouldn't surprise me.

[Melissa Lee]

Stacey, always good to speak with you. Thank you.

[Stacey Raskin]

Yeah, you bet.

[Melissa Lee]

Stacey Raskin. Do you think intel is so bad? It may be good.

[Tim Seymour]

I thought it was. I thought so, and then I thought so again. But, you know, if I kind of just go back throughout time, I look at their competition versus AMD in terms of design, and they fell down there, and now it's Foundry versus Taiwan Semi. I just have no reason to believe that they're, that they're ultimately going to get, get this right and all of that amidst a massive strategic shift. So I just, it's just hard for me to buy in.

[Melissa Lee]

At the same time, the political winds may be helping them and we, we've cited that for a while, but maybe even more so now. I mean within the tax and spending bill there is a chip tax credit. And then also this is basically the nation's chip maker.

[Dan Nathan]

Yes, they, they are our, our national championship company. Haha.

[Melissa Lee]

Along with Nvidia.

[Dan Nathan]

Yeah, yeah, yeah. But in terms of Foundry, that, that's kind of been the story and it's right. If you're scrapping 18A, you know, what, what do you do? 14A was supposed to be built off of some of that success. Lipu. I still haven't heard really the AI strategy except we give them credit for kind of from his background for knowing what it's going to be. That's important.

[Melissa Lee]

Coming up, a trade deal swoosh. Nike running higher after President Trump announced a framework for a trade deal with Vietnam. What it means for the retailer and whether shares can keep climbing. Fast money's back into. Welcome back to Fast money. Nike shares jumping 4%, the biggest gainer on the Dow today. The move coming as the president announced a trade deal had been reached with Vietnam. The country accounts for half of Nike's footwear. Excuse me. And more than a quarter of clothing production. Excuse me. Stock up more than 25% in the last week. Tim, what do you guys.

[Dan Nathan]

Let's jump in on.

[Melissa Lee]

Take it away.

[Dan Nathan]

It is something that would cause some indigestion if you think about where we were and you know, for markets today, doing a hallelujah because we got a Vietnam deal. I'm sorry, I'm not doing it. But if I'm Nike and I'm apparel makers, this is symbolic because again, I do think this isn't really what took Nike down. But if you look at where Nike was in the lows after Liberation Day and you look at a stock that's now well above where it was pre Liberation Day, this is important. And I, you know, so again, Nike's not tethered to what goes on in terms of Vietnamese production. But I think the story was really more about the earnings call we had three days ago.

[Steve Kovac]

Can we talk about this deal though? Right. So since COVID we've been talking about diversifying away from China supply chains. We've seen a whole host of US Multinationals do this. So we have a trade deficit of $123 billion with them. Okay. So we ship them 120 or 30. Some billion or excuse me, they ship to us. Okay. And we ship 12 to them. Well, think about that. They make all our crap, they sell it to us because it's made pretty cheap over there, I think.

[Dan Nathan]

And use crap three times this week. I'm counting down. But you know, I think this week.

[Steve Kovac]

No, so, so my, my point is, is like they are, you know, doing a lot of the manufacturing that we used to have in China made over.

[Melissa Lee]

Here and do higher value. So what are they going to buy from us?

[Steve Kovac]

You know what I mean? Like this goes on and on again.

[Dan Nathan]

Services.

[Steve Kovac]

Well, okay.

[Dan Nathan]

No, I'm agreeing with you.

[Steve Kovac]

Yeah, not much.

[Tim Seymour]

Yeah.

[Melissa Lee]

But right, that goes to the. You know what? Who cares if we have a deficit?

[Steve Kovac]

That's what I'm saying.

[Melissa Lee]

You know.

[Steve Kovac]

But did you see Nike Intraday sold off first, then it rallied. You know what I mean? It was just kind of weird.

[Melissa Lee]

Just quick, fun one.

[Tim Seymour]

Yeah, I mean, I just think you need to factor in GDP per capita when making these calls. Right. Like the capacity to pay.

[Melissa Lee]

Right. Coming up, Netflix's new venture. The latest push from the streaming giant and the potential partner that could bring the sights and sounds to viewers. The details next, more fast Money into. Welcome back to Fast Money. Netflix reportedly looking to expand its streaming offering by exploring a return to the core cable bundle. According to the Wall Street Journal, the streaming giant has held talks with Spotify to partner on programs like a music award show or live concerts. The report failing to boost the stock either way today though both are up sharply this year. Dan, years back you said Netflix and Spotify should do something. You're thinking more of an. Of M and A. But this is interesting.

[Steve Kovac]

I mean, ultimately this is the idea, right? So like to kind of expand horizontally a little bit. Both of them dominate their spaces. And you know, again, it got to a point where Spotify became such a big market cap and they've been so dominant, they probably don't think they need to do that, but I don't even think they need to do this right now. Netflix has been so good at creating their own content and going into live, that sort of thing. I don't know what Spotify really does for them.

[Melissa Lee]

I thought it was interesting that it was a. They're also talking about like a reboot of Star Search, like all the different ways Netflix is sort of creating its content, its unscripted, sort of reality based, lower cost to produce kind of content.

[Dan Nathan]

And I think that's great because there's economies of scale in that business model and that's, that's why it's a free cash flow machine. I do think they have this platform they should be leveraging and whether they want to create a lot of this themselves or partner with other people, they, you know, I know this is like the Uber term, but to become a little bit more of a one stop app outside of just all the stuff they've created, that makes sense to me.

[Melissa Lee]

Yeah.

[Karen Fineman]

Karen. No, it makes sense to me too, I think. I mean, right now we sort of give them the benefit of doubt on any idea they have. Must be good because every idea they've had pretty much has been good and they've been some big ones. So I mean, this is, you know, just incremental. The smallest amount doesn't make up for that multiple, which is very high and.

[Melissa Lee]

But you were still long.

[Karen Fineman]

I am still long.

[Melissa Lee]

All right, up next, final trades, final trade time.

[Dan Nathan]

Tim, how about this resurgence in the E in blycep? I realize I'm like 15 months too late, but I'm gonna stay long.

[Melissa Lee]

Better late than never. Yeah. Okay.

[Karen Fineman]

Great letter. Citibank. It is. It's not an all time high because remember There was that 10 for one reverse split, but it is in the modern era high and still less than one time.

[Melissa Lee]

Dan.

[Steve Kovac]

Yeah, send me equipment names, amount breaking out with.

[Tim Seymour]

Yeah, I'm not sure we get to three times. It's really not that far off. But JP Morgan still think has a little bit of.

[Melissa Lee]

All right, that doesn't fast for the this week Happy 4th, everybody. Mad Money Jim Cramer 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 in other media. 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 the potentially pivotal June jobs report.

[Steve Kovac]

What will the data indicate about the strength of the labor market, implications for the economy and the Fed employment numbers and analysis Squawkbox tomorrow 8:30 Eastern and streaming on CNBC.