Fast Money Podcast Summary: Nvidia Reports Results… And A Big Move In The Pharma Space (02/26/25)

Release Date: February 26, 2025
Host: Melissa Lee
Participants: Tim Seymour, Steve Rosso, Dan Nathan, Guy Adami, Christina Parts Nevelis, Chris Rolland, Phil LeBeau, Angelica Peebles
Location: NASDAQ Marketsite, Times Square

Nvidia Delivers Strong Earnings Amid Margin Pressures

Overview:
Nvidia's recent earnings report has captured significant attention on the podcast. The company surpassed both revenue and profit estimates, leading to volatile but ultimately positive stock movement. However, concerns loom over potential margin contractions in the upcoming quarters.

Key Points:

• Earnings Performance:
  Christina Parts Nevelis highlights that Nvidia exceeded expectations in both revenue and profit, with a particular emphasis on the data center division, which remains the company's "cash cow" generating over 80% of the revenue. The latest GPU architecture, Blackwell, contributed $11 billion in Q4, marking the fastest product ramp ever for Nvidia [00:01:54].

• Guidance and Margins:
  Despite the strong performance, Nvidia's guidance indicates a slowdown in growth. Chief Financial Officer Colette Kress mentioned, "with the launch of new chips comes pressure on Q1 margins coming in below analysts expectations at 71%" [00:11:10]. This aligns with management's previous warnings of margin dips before a recovery to mid-70s later in the year.

• Market Reaction and Analysis:
  Guy Adami observes, "the stock is up. That's fine. There's nothing to not like about the quarter other than the fact that if margins start to decelerate, that's when these stories typically get long in the two" [00:03:18].
  Tim Seymour expresses skepticism about catalysts for further stock appreciation, noting, "Nvidia hasn't gone anywhere in eight months... What is going to be the catalyst to get re accelerated? I'm not so sure right now" [00:04:38].
  Dan Nathan counters by highlighting Nvidia's valuation advantage, stating, "If you're worried about Nvidia relative to anyone else in the world, it's not even close. And to me the stock's not expensive" [00:05:15].
  Contrarily, Steve Rosso warns of potential revenue declines if top hyperscalers reduce their commitments, emphasizing the volatility ahead [00:05:56].

• Expert Insights:
  Susquehanna senior analyst Chris Rolland affirms the strength of the Blackwell revenue, stating, "11 billion for Blackwell. We were thinking it was going to be five or six. So this is a very healthy, good number" [00:10:35]. However, he also underscores investor concerns around the timing of Nvidia’s next-generation products and the potential margin implications [00:12:25].

Notable Quotes:

• Christina Parts Nevelis: "AI is advancing at light speed, which may be easing some concerns about supply issues and show that demand fundamentals are still in play" [00:01:54].
• Dan Nathan: "This stock should re rate. I understand that there are headwinds that are going on in the auto space, but this stock should be rerating and clearly should trade." [00:05:56].

General Motors Accelerates Shareholder Returns with Dividend Hike and Buyback

Overview:
General Motors (GM) made significant moves to boost shareholder confidence by increasing its quarterly dividend and initiating a substantial share buyback program.

Key Points:

• Dividend and Buyback Details:
  Phil LeBeau reports, "GM is raising the dividend by 25%, jumping it up 3 cents to 15 cents a share" and details the $6 billion stock buyback, including a $2 billion accelerated stock retirement program set for Q2 [00:20:40].

• Impact on Shares:
  Following the announcement, GM's shares surged nearly 4%, reflecting investor approval of the company's aggressive shareholder return strategy [00:20:24].

• Market Analysis:
  Dan Nathan praises GM's strategy, noting the company's extraordinary free cash flow and historical profitability, stating, "This stock should re rate" despite industry headwinds [00:21:45].
  Steve Rosso highlights GM's strong services business, contrasting it with Ford's performance, "when you look at it's basically 25% of the vehicles that can have that service plan that are on the road right now" [00:22:26].

• Concerns and Counterpoints:
  While some traders question GM's focus, Dan Nathan defends the move by emphasizing GM's consistent profitability and strategic capital allocation [00:21:45]. Steve Rosso counters bearish sentiments by highlighting GM's superior market position and services offerings [00:22:26].

Notable Quotes:

• Phil LeBeau: "They have an outstanding balance in terms of total shares of about 998 million, maybe a billion Shares, roughly speaking" [00:20:40].
• Dan Nathan: "We're not talking about one or two quarters. We're talking about four years coming out of COVID. This is a company that obviously... the profitability we've seen on free cash flow is extraordinary" [00:21:45].

Madrigal Pharmaceuticals Soars on Robust Q4 Results and Promising Trial Data

Overview:
Madrigal Pharmaceuticals experienced a significant stock surge following impressive Q4 results and positive outcomes from recent drug trials, solidifying its position in the pharma sector.

Key Points:

• Financial Performance:
  Madrigal's Q4 results exceeded expectations, driven by the success of its drug Rezdifra. CEO Bill Sibolt states, "In just our third quarter of launch, Q4, we exceeded $100 million, which when you compare against any launch, that is about as good as it gets" [00:33:03].

• Trial Data and Market Penetration:
  The company reported positive trial data showing improvements in patients with more advanced liver disease. Despite only 4% market penetration, Sibolt remains optimistic about future growth, "We're very comfortable in the context of the 315,000 diagnosed patients. But if this market expands as we think will happen... we're also in a position to win" [00:35:02].

• Growth Prospects:
  Sibolt emphasizes the potential for market expansion, particularly as awareness grows and more patients are diagnosed. The high discontinuation rates of competitor drugs like Novo's Wegovy present opportunities for Rezdifra to capture market share [00:35:02].

• Trader Perspectives:
  Guy Adami notes, "The loss they reported was much better than expected. Suggests that their path to profitability is a lot faster than people think" [00:37:11]. Dan Nathan concurs, highlighting Madrigal's solid financial position with $1 billion in cash relative to a $7 billion market cap [00:37:29].

Notable Quotes:

• Bill Sibolt: "We're making progress along kind of really three key fronts... number of prescribers, patient numbers, and payer coverage" [00:33:14].
• Phil LeBeau: "This is the best launch that I've been associated with... exceeding $100 million in Q4" [00:33:03].

Salesforce Faces Revenue Miss and Guidance Concerns

Overview:
Salesforce's recent earnings report revealed a revenue miss and cautious guidance, leading to a notable decline in after-hours trading and raising questions about the company's growth trajectory.

Key Points:

• Earnings Snapshot:
  Shares of Salesforce dropped up to 10% after hours following a revenue shortfall and light guidance for the upcoming quarters [00:24:51]. Despite launching their agent business in October 2024, the company reported modest growth in paid customers and AI product lines.

• CEO’s Commentary:
  CEO Marc Benioff remains optimistic, highlighting customer enthusiasm for their AI offerings and low deployment costs. He asserts, "Customers, he says are telling them that they are light years ahead of others" [00:26:00].

• Market Reaction and Analysis:
  Steve Rosso points out vulnerabilities in Salesforce's strategy, noting that a large portion of their clients are small businesses, which are sensitive to economic shifts [00:27:09].
  Guy Adami raises concerns about Salesforce's high valuation, stating, "it continues to be an expensive name" [00:27:39].

• Trader Insights:
  Dan Nathan suggests that while Salesforce presents challenges, the cautious guidance may not drastically alter the company's long-term potential [00:28:34]. Tim Seymour advocates for watching CEO Benioff's upcoming interview for further clarity [00:26:09].

Notable Quotes:

• Marc Benioff: "Our AI product line is a multibillion dollar product... delivering at this level" [00:26:00].
• Guy Adami: "It has been and continues to be an expensive name" [00:27:39].

Market Sentiment and Broader Economic Indicators

Overview:
The podcast delves into the broader market dynamics, highlighting fluctuations in major indices, cryptocurrency, and commodities, and discussing the implications of these movements on investor sentiment.

Key Points:

• Stock Indices Performance:
  The S&P and NASDAQ ended a four-day losing streak, with minor gains, signaling a potential shift in market momentum [00:15:57]. The Dow showed resilience with early gains but closed nearly half a percent down [00:29:03].

• Cryptocurrency Trends:
  Bitcoin declined to an $82k handle, its lowest since November 11th, raising concerns among traders about volatility and market sentiment [00:30:18].

• Commodity Movements:
  Gold experienced minor pullbacks, but analysts like Guy Adami maintain that the gold trade remains intact [00:18:38].

• Volatility Index (VIX):
  The VIX is showing signs of potential upward movement, indicating increased market uncertainty [00:18:14].

• Trader Perspectives:
  Tim Seymour emphasizes the importance of monitoring economic indicators like the 10-year yield, suggesting potential impacts on market behavior [00:16:08].
  Steve Rosso and Dan Nathan discuss the implications of Bitcoin and gold movements, debating whether these reflect broader market fears or isolated trends [00:16:49].

Notable Quotes:

• Tim Seymour: "It's going to be really interesting to see where the 10 year yield has gone over the last few weeks from 4.8 to 4.3%" [00:16:49].
• Guy Adami: "If the average price of Micro or Strategies holdings get to the point where bitcoin is trading... we have to watch" [00:18:14].

Applovin Under Fire from Short Sellers Amid Allegations

Overview:
Applovin's stock plunged significantly following allegations from short sellers Culper Research and Fuzzy Panda, accusing the company of fraud and unethical data practices. The CEO vehemently denied these claims, defending the company's technological advancements.

Key Points:

• Allegations by Short Sellers:
  Short sellers accused Applovin of "illegally tracking children across apps" and "stealing data" to enhance ad targeting, intensifying scrutiny on the company's business practices [00:38:30].

• CEO’s Defense:
  Applovin's CEO responded in a shareholder letter, stating, "it's disappointing that a few nefarious short sellers are making false and misleading claims aimed at undermining our success" [00:38:30].

• Market Reaction:
  The simultaneous reports from multiple short sellers raised questions about potential collusion and the veracity of the claims, leading to a sharp decline in Applovin's stock price [00:39:00].

• Trader Opinions:
  Tim Seymour questions the simultaneous nature of the allegations, pondering potential collusion [00:39:31].
  Steve Rosso highlights the broader implications for tech companies, suggesting increased public scrutiny over data practices [00:40:32].
  Guy Adami comments on the ironies of the situation, noting the contrast between Applovin's branding and the severe allegations [00:39:36].

Notable Quotes:

• Applovin CEO: "Rather than acknowledging the sophisticated AI models our team has built to enhance advertising for our partners" [00:38:30].
• Steve Rosso: "It's going to bring up a big dialogue over what I can you steal... what it was all about" [00:40:32].

US Steel's Acquisition Drama and Market Implications

Overview:
US Steel's stock experienced a downturn amid confusion over its acquisition by Nippon Steel, with geopolitical tensions influencing the deal's progression.

Key Points:

• Acquisition Status:
  Reports indicate Nippon Steel plans to meet with US officials to revive the acquisition deal, conflicting with President Trump's claims that the company intends to invest in US steel rather than purchase it outright [00:43:33].

• Trader Insights:
  Steve Rosso views the acquisition saga as a barometer for political influence on the market, asserting, "it's another barometer for President Trump's success" and predicting potential stock price increases [00:43:52].

Notable Quotes:

• Steve Rosso: "I think the stock goes higher in an overwhelmingly amount of different possibilities" [00:43:52].

Final Trades and Market Predictions

Overview:
In the closing segments, traders share their final investment traps and predictions, focusing on General Motors and US Steel as key opportunities amidst ongoing market volatility.

Key Points:

• Final Trades Highlights:

  • GM Investment:
    Tim Seymour and Steve Rosso recommend GM, highlighting its strong performance and strategic buybacks.
    Dan Nathan suggests entering a position at $30 [00:44:48].
    Steve Rosso advises buying US Steel at $38, referencing the Nippon deal's potential [00:44:54].

• Market Outlook:
  The panel anticipates continued volatility with upcoming economic indicators and corporate earnings reports influencing market direction. There's optimism about certain stocks breaking out of previous ruts, but caution remains due to overarching economic uncertainties [00:45:09].

Notable Quotes:

• Dan Nathan: "If you buy GM at Guy's 46 level, I think you're getting long here" [00:44:48].
• Steve Rosso: "Steel Letter X trades at $38 right now... it's going to work its way back to that level" [00:44:54].

Conclusion and Upcoming Highlights

Overview:
The episode concludes with a preview of upcoming market actions, including continual monitoring of Nvidia's performance, upcoming earnings for Salesforce, eBay, Paramount, and significant developments in the pharma sector with Madrigal Pharmaceuticals.

Key Points:

• Upcoming Reports:

  • Nvidia: Continuing discussion on earnings call and potential impacts from CEO Jensen Huang's interview.
  • Salesforce, eBay, Paramount: Further analysis expected on their earnings and guidance.
  • Madrigal Pharmaceuticals: CEO Bill Sibolt to elaborate on drug trial data and future plans [00:37:08].

• Trader Sentiments:
  The panel emphasizes the importance of staying informed and vigilant, given the dynamic nature of market movements and corporate performances [00:44:20].

Notable Quotes:

• Dan Nathan: "It's going to be a fascinating interview. It's probably a must watch because I think the dynamics on selling some of these pieces of uncertainty together" [00:15:33].
• Guy Adami: "If you think about it, this has been a dead trade like no one needs to point this out. This has been obvious and in fact it's underperformed" [00:05:56].

Notable Quotes with Timestamps

• Christina Parts Nevelis [00:01:54]: "AI is advancing at light speed, which may be easing some concerns about supply issues and show that demand fundamentals are still in play."

• Tim Seymour [00:04:38]: "Nvidia hasn't gone anywhere in eight months... What is going to be the catalyst to get re accelerated? I'm not so sure right now."

• Dan Nathan [00:05:15]: "If you're worried about Nvidia relative to anyone else in the world, it's not even close. And to me the stock's not expensive."

• Phil LeBeau [00:20:40]: "They have an outstanding balance in terms of total shares of about 998 million, maybe a billion Shares, roughly speaking."

• Bill Sibolt [00:33:03]: "In just our third quarter of launch, Q4, we exceeded $100 million, which when you compare against any launch, that is about as good as it gets."

• Applovin CEO [00:38:30]: "It's disappointing that a few nefarious short sellers are making false and misleading claims aimed at undermining our success."

Conclusion

The February 26, 2025 episode of CNBC’s "Fast Money" delved into significant corporate earnings, market movements, and strategic business decisions shaping the investment landscape. Nvidia's robust earnings and strategic challenges, General Motors' shareholder-friendly initiatives, Madrigal Pharmaceuticals' promising developments, and Salesforce's cautious outlook were key highlights. Additionally, the episode covered market sentiment indicators, Applovin's short seller allegations, and US Steel's acquisition drama, providing a comprehensive overview for investors navigating the volatile financial markets.

For more detailed analyses and ongoing market updates, listeners are encouraged to tune into future episodes of "Fast Money."