← CNBC's "Fast Money"
CNBC's "Fast Money"
Nvidia’s Big Quarter… And Target’s Holiday Sales Warning 11/20/24
00:42:26
All eyes on Nvidia as the AI chip darling reports results. How to trade that name, and how those earnings will impact the whole semi space. Plus Target ringing the alarm bells ahead of the holiday season. Could consumer spending habits be slowing down? And is this just a Target-specific problem? Fast Money Disclaimer
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- [00:00]
Melissa Lee
This episode is brought to you by Merrill with a dedicated Merrill Advisor. You get a personalized plan for your financial goals and when plans change, Merrill's with you every step of the way. Go to ML.combullish to learn more. Merrill, a Bank of America company. What would you like the power to do? Investing Involves risk Merrill Lynch, Pierce, Fenner and Smith Inc. Registered Broker Dealer Registered Investment Advisor Member SIPC Is it time to reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals like business management, strategic planning and effective communication. And you can apply these skills right away. A different future is closer than you think with Capella University. Learn more at capella.edu Live from the NASDAQ market site in the heart of New York City's Times Square. This is fast money. Here's what's on tap tonight. Nvidia in focus. Shares of the semi giant just about 1% lower right now after its latest report bouncing round after hours. The conference call just getting underway. We are dialed in to bring you all the details and all the trades and way off Target shares the discount retailer crushed after posting its biggest earnings miss in two years. Why the company is struggling against Wal Mart and the rest of its competitors and what is the strategy to turn things around plus sell it all. That is a Chartmasters call for this high flying crypto Play the tale of the technicals on MicroStrategy coming up. I'm Melissa Lee, come to you live from studio Be at the nasdaq. On the desk tonight, Karen Feynman, Dan Nathan, Guy Adami and Rebecca Patterson, former chief strategist at Bridgewater. We start off with Nvidia's big Q3 earnings report, the darling's latest quarter crushing. Wall street estimates revenue nearly doubling from a year ago as its chip business accelerates shares which had tripled this year heading into the report, well off their after hours lows. CNBC's Christina Parts Neville is back here with us on set. And Scott, the numbers. Christina, you just talked about it.
- [02:03]
Dan Nathan
94% increase in revenues, 112% increase in data centers just year over year. Gross margin 75%. They beat across all fronts including their categories from gaming. I mentioned data centers and yet the Stock initially fell 2%, then down 1%. The problem is there's been so much of an emphasis on guidance. The guidance came in at 37.5 billion. Slightly higher than what the consensus was, but lower than the whisper number, you know, the number that's provided to clients. And that was the same thing that happened last quarter. We saw the stock sell off 6% the day after. The focus, though, is really on Blackwell shipments. That's the latest iteration of the gpu. And the cfo, Colette Crass, she had some comments on the website and she said, quote, both Hopper and Blackwell systems have certain supply constraints and the demand for Blackwell is expected to exceed supply for several quarters in fiscal 2026. So what is that doing? That is letting us that maybe supply is going to be an issue for several quarters. We were expecting the ramp to happen in this upcoming April quarter and maybe it's going to be pushed out even longer, farther. So that's part of the reason why you saw more of the stock drop, really. That's going to be the focus on the call is Blackwell Chips, the latest iteration, Are there going to be delays, overheating, which a lot of people have already debunked at this point, but is that going to be what's going to hamper the company going forward?
- [03:19]
Melissa Lee
The constraints on Hopper, was that expected? Because there is some thought in the analyst community that if Blackwell was constrained, that Hopper would be able to sort of pick up that demand and sort of offset that negative revenue. Yeah, so this.
- [03:30]
Dan Nathan
That's a very good point. The fact that she's adding Hopper into that sentence, saying Hopper and Black will have supply constraints, where previously on Last Earnings Call, they said that there were no issues. So perhaps that's a good sign that the demand has shifted straight to Hopper right now, but so much so that they're unable to keep up with it. So excellent point that they put that in the same sentence.
- [03:48]
Karen Feynman
So do we know supply constraints are due to the supply not being there or the demand overwhelming the supply?
- [03:55]
Dan Nathan
So, excellent point, because we know in the last quarter, in the summer, it was, you know, they had to revamp the production and change the yields at tsmc. And so that created a little bit of a delay. But according to the company, when I, you know, caught up with them and chatted, it was, it's not a delay, it's just normal process because the latest chip is so complex that you have to change things around and the yield is not going to be the same right away. We don't know yet now, this time around this quarter, if that's the same case, if it's actually issues at tsmc, I'm sure they're going to address it. I'm sure they're going to say no, that's not the case because they're quick to react to this, those reports.
- [04:32]
Guy Adami
First of all, it's great to have Christina back. Course, yes, she's been back for the first time back here. Yes, number one. Number two, so the magnets, this is what I look at the magnitudes of the Beats are getting. Listen, the numbers are huge, but in terms of percentage, smaller and smaller. And this was a $50 stock this time last year. I mean revenues and EPS growth 80% year over year, but the stock has tripled. So any thoughts on that?
- [04:55]
Melissa Lee
Excellent.
- [04:55]
Dan Nathan
Well, that just means everybody's getting a lot smarter. Right. And realizing a year ago I think it was a 20% magnitude difference and now it's what, 5 or 6%. And hats off again, I said this earlier to retail traders because 48% of the daily flow is retail traders for the last five years, which means that they understand the fundamentals of this company and they have stuck with it. I think we need to eventually come down. You can't keep climbing at that same magnitude, which is what we're getting with Colette with these comments. Right. She's letting us know, you know, setting the tone that, you know, we can't keep going at that magnitude. We're doing well. Demand is insane. As Jensen Huang has said in this report too. He said the age of AI is full steam. So there's all these wonderful flowery words to describe demand for these chips. But I think at one point there's not necessarily going to be a plateau, but we can't keep going at that increment.
- [05:44]
Melissa Lee
To your point, at the same time though, Dan, if I told you what the quarter was going to be and what the guidance would be and I said guess what the stock reaction would be, would you guess down half a percent?
- [05:53]
Rebecca Patterson
I would have thought down 5% or so. I mean, I think to, you know, Christine, her point is that, you know, estimates or expectations were high that, you know that whisper number that is among the buy side. Right. So they put it out there, they get a sense for what consensus is and they think this is the number that they have to kind of get above. Again, you know, it just shows you that investors want to be exposed here. There's very few ways in which to do that. We'll talk about little bit about their major customers in a second. But do you take anything away? You just said that demand obviously is there. They keep talking about capacity constraint, but at some point isn't There going to be a quarter where their biggest customers actually guide Capex down a little bit. And that's like that would be my fear if I'm long the stock.
- [06:33]
Dan Nathan
Yeah but then that's like I guess a year and a half or more out. Given what we saw from all of the hyperscalers right now and the massive increases in all their spending, that spending is going to be reflected for several quarters. For Nvidia a positive but no doubt this can't keep continuing. And then you can argue like look at AWS creating their own chips, they're going to compete with them directly and that's going to be an issue with Nvidia. But then Nvidia will say well we have Cuda, we have software, we have networking. Right. Networking is a big portion. Gaming is 10% of revenues. So it's not only just about these particular GPUs which go into racks. So it's a lot more complicated. They're providing the whole kit and caboodle.
- [07:12]
Melissa Lee
As opposed to just end to end.
- [07:13]
Dan Nathan
Yeah, there's a way.
- [07:15]
Melissa Lee
Good to see you. Welcome back. I appreciate that on the conference call. Yeah. Christina Parts Nevillas. We were talking in the green room before the show about how important this one stock is to a constellation of trades that make the stock market go higher or lower.
- [07:29]
Christina Parts Nevels
You know it's hard to think back over literally centuries and find a single company that had so much sway over the global economy or the global financial markets. I don't think there is one that hasn't had any backing per se from a government even like British in 1990. Not as big as this, relatively speaking. So it is incredibly important not just for the people trading the tick by tick right after the earnings and the call, but also when you take back a step and think about the macro picture and honestly this is the heart of US exceptionalism. When we talk about why the US outperforms for decades or more, this is it. It's tech dominance. It's the weight of tech in our equity market. It's the fact that we have companies. The Mag 7 over the next 12 months will invest half a trillion dollars in Capex and R and D. So put that in context. Chips and Science act was 52 billion. So this is many multiples of that. So it's just the scale of our dominance and Nvidia is the, is the cornerstone of it. So whether they disappointed or not, to me it's the fact that you have this structural advantage.
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Melissa Lee
Right.
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Rebecca Patterson
Let me make one point about that. I think that's really interesting. That's the estimate for a half $1 trillion in capex in R and D over the next. What did you say?
- [08:43]
Christina Parts Nevels
Next year? Next year.
- [08:45]
Rebecca Patterson
Okay, so if it comes in at 450 or just think about that, what happens to these stocks? Like they're going to go down a lot and you know what I mean, it wouldn't incrementally take because estimates are going up. And the one thing I'll just say, if you go back to Microsoft, they're 19% customer of Nvidia, right. And we talk about Capex, how much it went up, it didn't go up that much right after they reported. And so we're not seeing the sort of step functions that we saw, let's say three quarters ago and that sort of thing. They also talked about being capacity constrained. One of the reasons why they didn't have higher revenues. Now their cloud business is growing 31% year over year, which is fantastic. They're taking market share from aws. I just kind of feel like we're going to go from capacity constrained to capacity over built, that sort of thing in the not so distant future. And so when you're coming in and you're beating these numbers just by a hair and the stocks are still sticking around, it shows you that investors still want the exposure. But sooner or later I think it's going to be like one of those things where you're going to start seeing a couple quarters of declines by not just the picks and shovels but also the hyperscalers.
- [09:42]
Karen Feynman
I think that's a ways off though. And I think the hard part of owning Nvidia is if everybody knows, all right, six quarters from now they're going to have slower growth. When do you exit? Now you want to exit before all the other people decide to exit. So I don't know, that's. There's the rub.
- [09:57]
Melissa Lee
All right, for more on Nvidia's report, let's bring in Susquehanna's Chris Rowland. Chris, great to see you. What do you, what do you, what do you make of the comments about being supply constrained not just in Blackwell but also in Hopper?
- [10:10]
Chris Rowland
Yeah, I think that the Vegas line here was probably 38, 39. They missed slightly but that supply constraint comment, that probably means they probably could have done 40 or maybe even more. We don't know what the supply constraint is of late, whether it's memory or still, cos my guess is memory as they move from H1 100 to H200. But I think clearly in video could have shipped More here had they had.
- [10:41]
Melissa Lee
All the components in terms of how we're supposed to dissect that supply constrained comment, part of it is understanding what was going on with Blackwell and whether or not there was a shift to Hopper in the light of a supply constraint situation for Black for the Blackwell chip. Have we gotten anything, any commentary about the overheating issue? Is that part of it?
- [11:08]
Chris Rowland
I don't think that that's part of it at this point. They talked about a successful new mask set helping yields for that product. So I'm not sure it's that chip. I think it could be an additional component like memory. It also could be these racks that are incredibly complex. We don't know about transceiver availability. We don't know about all the other thousands of components that are going into these racks. If any one is constrained, it could constrain shipments overall.
- [11:42]
Guy Adami
Chris, I'm going to tweak a little math here just to make it easy. So they're going to do about $190 billion of revenue next year. That's sitting on top of a company is basically trading, you know, $3.6 trillion market cap. You know, their earnings are great but they seemingly they're out earning their revenue. My point is like when does that catch up? Because either they're going to grow into that price to sales, which I'm hard pressed to believe they can, or something's got to give probably on the margin front of the earnings front. Thoughts on that?
- [12:12]
Chris Rowland
Yeah, I think first of all will be will shake out north of 200 for next year. Secondly, the you have to look at gross margin for this company in the mid-70s. It's truly incredible when you look at let's say EV to rev, it really doesn't get more profitable than in video.
- [12:36]
Melissa Lee
Taking a look at some of the line item beats, I mean obviously all eyes is on Datacenter, Chris, but automotive was one of the biggest beats and I'm wondering just in terms of, you know, trying to extrapolate that trade, was that Tesla basically that was definitely.
- [12:52]
Chris Rowland
Well, I think auto is really more about the vehicle itself as opposed to in Tesla's data center. And Tesla does their own. I think this is somebody else. Maybe it's an early ramp with Mercedes for example. But Collette did talk about self driving as the huge motivator there as opposed to infotainment or consoles. So they are moving to the AI portion of their auto story.
- [13:25]
Karen Feynman
Chris, thanks for being on. Another question about.
- [13:30]
Melissa Lee
The.
- [13:31]
Karen Feynman
Sorry, I just lost my train of thought for a second the competition, who do you think is how far actually in front do you think away are we from real competition? How long are you going to have this market to themselves?
- [13:44]
Chris Rowland
Well, Amazon sounds like they're ramping supply. AMD had a hot start. They're still going to have growth year over year, but that seems to at least that really high end. 12 billion kind of number for next year seems to have faded. So it's a mixed picture out there. I would say that this pie is growing very quickly for all and that I think in video can still grow. Even with guys like Amazon, guys like Microsoft doing more themselves, they can still grow meaningfully even into this diversification.
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Melissa Lee
Chris, great to get your take on the quarter. Appreciate your time.
- [14:27]
Chris Rowland
Thanks guys.
- [14:29]
Melissa Lee
Chris Rowland Nvidia shares now down about 8, 10 of 1%. Not too bad of a reaction considering the ramp going into the quarter as Dan had said you would have expected. Down, I don't know, a few percentage at least.
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Guy Adami
Well, I think Dan can speak to this, but I think the market vis a vis the expected move was expecting a $300 billion move one way or another. Obviously that's not taking place now. But just for some perspective, I think There are only 35 companies in the world that are that big in the first place. Bank of America for example, like a $310 billion company. So the fact that the market was expecting a move of that magnitude and not getting it, you know, a lot of people are sucking wind on some options. So we'll see how that plays out as well.
- [15:07]
Melissa Lee
Yeah. What do you think?
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Karen Feynman
I got to wait for the call. I feel like there's so much nuance there that we will start to get that I would doubt we end up here flat ish. At the end of the call.
- [15:18]
Rebecca Patterson
Mel, your, your question about Tesla is really interesting. One you guys remember like two or three quarters ago Tesla diverted, let's say a half a billion dollar worth of Nvidia GPUs over to AI which kind of makes a lot of sense if you think about what they've been building. You saw Xi was just valued at, you know, $50 billion. I think that's today. But think about now why Tesla has rallied so much over the last couple of weeks or so. It is for the idea that you're going to have regulation pulled back for full self driving and then autonomy. They're going to rely dramatically on building out data centers, you know, to train those cars. So that's probably something that could definitely be a bit of a tailwind for Nvidia especially as you see maybe some of these hyperscalers, I think pull back as we get into next year.
- [15:58]
Melissa Lee
Well, think about the full self driving federal framework, which could be a boost. And then the crypto trade, remember we used to be a crypto play that could be a boost. And then you have the AI stuff going on too. So, you know, a lot of different areas Nvidia can really capitalize on.
- [16:13]
Karen Feynman
It's not like there are, there are many examples though, productivity gains. Right. We keep talking about is the, is the, you know, the promise of it there. And I think we're early in seeing those productivity gains. So if those accelerate more, I think that would help as well.
- [16:28]
Melissa Lee
All right. Meantime, the dollar strengthening over the last several weeks, especially against the Japanese yen. Rebecca, is this is something that you flag to us? So you're watching the potential parity against the euro. We've been hearing more and more about that too.
- [16:41]
Christina Parts Nevels
Yeah. So the euro is down about 4% against the dollar since the election or. Yeah, just around the election, which is a pretty big move in such a short period of time. And when I think about where it goes from here, you know, the market has removed some Fed cuts for the U.S. the Fed is looking for more rate cuts from the European central banks. That rate differential, you could argue that's priced in. But if we get some of the policies from President Elect Trump, whether we're talking about the tax cuts, deporting immigrants, tariffs, all of those things are inflationary. So that could remove even more Fed cuts from expectations. So right now we have three. Between now and the next year we could go to 1 or 0, depending on whether or not those policies lead to greater inflation and inflation expectations. So that's a biggie. Europe is just a hard time getting out of first gear. Germany is going to have two years in a row of negative growth. So there's not a lot to pull capital into Europe right now. And then of course, they're a lot closer, sadly, to the Europe, the Ukraine, Russia situation. I'd say the one positive catalyst on my radar screen for the euro will be in Q1 next year, and that is we're going to have an election in Germany. And the potential new Chancellor Mertz is talking about a little less fiscal austerity, actually spending money in Germany, which would be a big deal. And that could be a catalyst given valuations actual.
- [18:03]
Karen Feynman
Well, they don't call it that.
- [18:04]
Christina Parts Nevels
No, no, no. They call it less austerity, more German. But, but if we don't get that, you know, I don't see a lot of bright lights anytime soon. So I do think parity is not a crazy thing to happen in the next few months.
- [18:17]
Karen Feynman
Okay, how about I hope it's not an outlier, but if the Ukraine situation is resolved, I would think that would be a positive for Europe.
- [18:26]
Christina Parts Nevels
I would hope so. I would hope so. I think a lot is going to come around. What does that peace or resolution look like? Are sanctions lifted? Is Germany allowed to start buying cheap Russian gas again or does it do a deal to avoid tariffs and it's buying more US Gas? I think there's a lot of questions around what that landscape looks like that tells me where we're going from here. For Europe, there's going to be a lot of money that needs to be invested in Ukrainian reconstruction too, which is good for Europe growth, but it's a big expense and they don't have the money.
- [18:56]
Guy Adami
Dan channels his godfather to I noticed something interesting.
- [19:01]
Rebecca Patterson
Yes, Michael, down in Cuba, yen has.
- [19:03]
Guy Adami
Been weakening at a pretty significant rate while 10 year yield like Japanese bond yields are going higher. There's something amiss there and I think markets are focused on here. Clearly. I think they're focused on it. Over their thoughts on that?
- [19:15]
Christina Parts Nevels
Oh, absolutely. I mean in Japan the large corporations really want currency stability so they can plan their expenses, their investments. So when we get the gyrations that we've had this year in currency markets, it really slows down longer term spending for Japanese companies and that does eventually feed through into their earnings. So they want to avoid that. So I wouldn't be surprised if we see more intervention, verbal or actual intervention from Japan again in the coming months just given the speed of this move. And obviously Japan is very exposed to the United States and if we do have a trade war, they're going to get caught in that crossfire.
- [19:51]
Melissa Lee
Coming up, Microstrategy shares hitting record highs today. But the chartmaster isn't loving the technicals. Why he is hitting the sell button on this one. Ahead but first, major moves in media. CNBC parent company Comcast set to spin off its cable businesses. The details and whether it could spark any more M and A action don't go anywhere. Fast money is back into slowing growth, geopolitical uncertainty, shareholder unrest.
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Kate Rogers
That's right, Melissa. Well, one source telling me that Comcast spinning off its cable networks isn't the end, but rather the beginning as the new company called Spinco for now looks for new deals and new revenue streams. The spinoff includes cnbc, which is where we're on right now, and msnbc, along with channels with sports rights USA and the Golf Channel and entertainment assets usa, E, Sci Fi and Oxygen. Now sources tell me that Spinco will want to buy other cable networks networks potentially looking at Warner Brothers Discoveries, tbs, tnt, HTV or the Food Network. Other potential targets, AMC Networks and Stars, which is about to complete its own spin from Lionsgate. Now consolidating cable networks would help SpinCo have more scale to better negotiate higher retransmission fees. But this new company could also license its networks beyond Peacock to all the other streaming platforms like Hulu or Mac. And sources tell me that this new company will look for new revenue streams such as paid events. Now, meanwhile, Comcast is expected to look for more opportunities to grow Peacock, which will benefit from having NBA rights starting next year. Now, this deal is set to close in about a year, and in the meantime, we'll see what commercial arrangements that these two companies decide to strike. Melissa?
- [23:41]
Melissa Lee
Julia, you know, for a long time, we've always thought about, you know, Peacock is part of the family, our content appears on Peacock, etc. Etc. So under this new arrangement, where does Peacock get its content? Because for so long it's drawn on its cable networks as a source of content. And could that actually Prevent this new SpinCo from licensing its content to these other cable companies like a Paramount or Warner Brothers discovery?
- [24:03]
Kate Rogers
Well, look, we have to remember that all of these media companies are frenemies. They all compete with each other and also license content to each other. NBCUniversal has a TV studio that sells content to other networks. Networks. But when it comes to Peacock, we have to remember that Comcast, NBC Universal is retaining NBC as well as Bravo. NBC has NBA, NBC Sports, which includes the NFL, and now NBA rights starting next year. And then you also have all that reality TV content from Bravo. So traditional regular NBC, including NBC News, is going to remain part of this original company. The companies that spin off from that, including cnbc, may license back content to be on Peacock, but they might also now have more flexibility to license elsewhere as well.
- [24:48]
Melissa Lee
Do you get the sense that. That this was really put into motion in a very sort of more directed way after the election, seeing that there might be fewer regulatory barriers to, you know, combining these cable companies?
- [25:02]
Kate Rogers
Well, look, there are no regulatory issues to the split. There's no regulatory challenge there. And I think that's why they floated this well before the election. I also think that in splitting off these cable networks, the new company, the SpinCo, is small enough that they could do acquisitions that probably wouldn't have been really problematic in the prior administration. Though it is true that the Trump administration is expected to be a lot more flexible with M and A and bigger deals. So I think this is something they've actually probably been working on or thinking about for quite a while. But it is pretty remarkable that they first floated the trial balloon left than three weeks ago and then just announced it today. And of course, in the interim is the election. So it makes sense to think that might, that might have accelerated things a bit.
- [25:44]
Melissa Lee
Playing the role of skeptic, Julia, does it? I mean, are we just staving off the inevitable in terms of cable companies combining in order to gain some leverage over retransmission fees? I mean, the way of the world is going away from cable. That is the ultimate problem.
- [25:59]
Kate Rogers
It's true that. I mean, in fact, that's why they're spinning off these cable networks. So what's remaining in the studio, in the theme parks is not going to be weighed down by the challenges of the linear TV ecosystem. That's what's happening. Cord cutting is hurting the linear TV ecosystem. But the fact that Brian Roberts is going to remain a controlling shareholder of this new co, as he is of Comcast, the fact that he's going to control a third of all the shares indicates that he has some confidence in this. They also could have spun off these assets and immediately sold them to private equity. That is one scenario that could have happened. But instead they said we're going to spin them off and we're going to operate it as a separate publicly traded company down the line. Could they decide that this is a losing game and they want to sell it off? That's definitely an option. But it sounds like for now they'll try to figure out if there are more efficiencies, more opportunities to sweep in some of these other assets and perhaps get a good deal on them. This is going to be a well capitalized company.
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Melissa Lee
Right, Julia? Thank you. Julia Boorstin. The optimistic take on this is that it shows that Comcast, the parent company, the main company, shows that it wants to focus on growth. And so therefore it is a good thing for Comcast shareholders specifically. Comcast stock though, did not respond so robustly yet.
- [27:17]
Guy Adami
So a week ago, there was. A week ago, David Faber did a great interview with John Malone. I don't know if you saw it or not, but he was comparing and correct, John Malone was comparing Netflix, which I'm going to round again. They're going to do about $40 billion of revenue next year with Warner Brothers Discovery, who's going to do about $40 billion. The difference is Netflix will do $24 of earnings against that and Warner Brothers will lose money. So, you know, people are coming to the realization that, you know, it's Netflix World and we have to do something. You know, that it's the old saying goes, best time, the planetary was 20 years ago. The next best time is today and today is that day.
- [27:50]
Karen Feynman
I think so much of it depends on the structure, right? How much debt is going on with this, if not a lot, then you could see this as a cash flow machine. Remember we talked about AT and T going to zero? Well, that didn't happen. Right. So I'm not as maybe pessimistic as you sound. Although I think mom and dad are getting divorced. They just wanted to spin it a different way.
- [28:11]
Melissa Lee
It's going to be great.
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Karen Feynman
We'll have two Christmases, one here, one there, and it doesn't work out that way.
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Rebecca Patterson
When were you going to tell us this was it?
- [28:17]
Karen Feynman
They kind of hinted a few months ago.
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Christina Parts Nevels
Like, you know, at least it would.
- [28:22]
Guy Adami
Have been nice to get through the holidays with mom and dad.
- [28:25]
Melissa Lee
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Chris Rowland
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Melissa Lee
Cities of Success Salt Lake City premieres December 10, 10 Eastern CNBC, SiriusXM112 welcome back to Fast Money. MicroStrategy soaring 10% for its third straight day of double digit gains. Trading now at record highs. The stock benefiting from the post election crypto surge having more than doubled since then. But the chartmaster thinks the top could be in. Carter Worth is out with a note today saying directly, pointedly, sell it all. Carter, what are you seeing?
- [29:44]
Carter Worth
Yeah, I mean look, this is a very unusual circumstance and before we look at the charts, we know that it has a relationship with bitcoin. But therein is the issue. Here's a five year comparative chart. Just to think since the August low, that was the low for the S and P, the low for Apple and NASDAQ. Since the August low, this stock is up 5x. Bitcoin has simply doubled. It's diverging to the point where regardless of what it is, it's no longer tethered to what is the story? Apparently bitcoin. But let's look at two charts of MicroStrategy. Here is a five year chart and it's log scale because you wouldn't be able to see it if it was arithmetic how much it's moved. Second and final chart is with the 150 day moving average, the smoothing mechanism. And it is basically as far above trend as you're going to get. And so listen, steep and uncorrected can always get steeper. But parabolas, parabolic things typically and the same way, which is out of nowhere you get a shocking drop in gap. And I would say that's the kind of thing that happens here and now.
- [30:53]
Melissa Lee
Is there a support level for microstrategy?
- [30:56]
Carter Worth
Well, not particularly. Right when you're literally, I mean here's the expression. It's going up and to the left and think about every day you got to put the bar out to the right. When you have a bar chart, it's literally going to fall in on itself, so to speak. And I don't know what's driving it. Perhaps you all have talked about that or have the answer. But you know one client, this is, you know, a big institutional client, he heard this. Literally the more expensive the stock gets, relative bitcoin, the more money they can raise and then buy more Bitcoin. Like a flywheel effect. That's insane.
- [31:29]
Melissa Lee
Before we let you go Carter in video, what do you see here?
- [31:33]
Carter Worth
Yeah, well it's a non event it turns out and obviously in a way that's important because it's not so much if it had done yet another good quarter, if it had missed and done bad things post trade I would point out, and this is important at least by my work here is a one year chart of Nvidia and you'll see two moving averages. There's the smoothing mechanism. 150 day and the stock is touched to the penny three times. Hasn't touched the 200 day once.
- [31:58]
Melissa Lee
Carter. Thank you Carter. You've been worth worth charting back to microstrategy Briefly it up the size of its convert of course the money to be used to buy bitcoin.
- [32:07]
Guy Adami
Carter makes listen Michael Seller say what you want, I mean brilliant. But with that said, I mean this was a hundred dollar stock in September. Last I looked it's November. It has gone from 100 to 500. You can do that math. Bitcoin has not had that magnitude of a move. My point is if Bitcoin would have turned even in the slightest, MSTR is going to take a hit. Not an indictment on the stock, just an indictment of the move.
- [32:30]
Melissa Lee
Coming up, shares a target plummeting as the retailer rings the alarm bells ahead of the holidays. What it's telling us about consumer spending habits and whether the entire retail sector will get. Ho, ho, ho.
- [32:41]
Guy Adami
No.
- [32:45]
Melissa Lee
He's back into. Welcome back to Fast Money Stocks closing mix today. The Dow climbing 139 points. The S and P virtually unchanged in the NASDAQ lower by about a tenth of a percent. Some more after hours movers here. Palo Alto Networks lower despite beating expectations. The company also announced announcing a 2 for 1 stock split. And Snowflake jumping after exceeding EPS and revenue expectations. Product revenues also up 30% year over year. Shares of JP Morgan lower in the regular session. Oppenheimer downgrading the bank to a market perform from an outperform rating saying the stock is now fairly valued. And shares of Williams Sonoma surging to record highs on the back of its results this morning. The home goods retailer beating earnings and revenue expectations, raising its full year revenue and operating guidance. That stock is up more than 73% this year. It's like an AI stock virtually. Here is the secret for the quarter and for Williams Sonoma in general in terms of its run. It's selling more full price items. Go figure.
- [33:43]
Guy Adami
It works it and it will. Talk about Target, I'm sure and I know you talked about Wal Mart, but it juxtaposed everything you heard on the other side of the equation and it makes sense. Tim has talked about WSM for quite some time. Listen, it might be getting itself a tad expensive and it probably had an 8 times normal volume day today, which suggests a bit of upside capitulation. But I mean they're just operating better than everybody else in the space.
- [34:05]
Rebecca Patterson
Yeah, we're also talking about two different economies in America which is very, very clear. Look at Kohl's making new multi year highs right now. Obviously Dollar General is making like 10 year lows. Oh, by the way, coal is making low, you know, the same thing for some of these other department stores. So it's just kind of weird. I mean like I get it man, go buy all your, what do you call them, Dutch ovens. That's the thing.
- [34:26]
Guy Adami
Well, everybody needs a Dutch oven right.
- [34:28]
Melissa Lee
At the fall season when it's cold out, there's nothing better. Yeah, a braise.
- [34:33]
Rebecca Patterson
But you know, one last thing. The way some of these stocks are moving up 27%, you know, target down 21%. A lot of weird action. I mean I don't think that sort of single stock volatility speaks of a very healthy market.
- [34:44]
Melissa Lee
Well, speaking of Target in freefall down 21% for their third worst day on record. The retail giant posting its biggest earnings miss in two years slashing full year guidance before the bell. It was just three months ago that the company was raising its forecast. Target though struggling to bring traffic despite steep discounts and early holiday sales saying it now expects fourth quarter same store sales to be flat. This morning's numbers come just a day after its main rival Walmart beat expectations hiked guidance hit fresh all time highs. It really underscores the differences between the two. It got saddled with inventory. They wanted to buy a lot ahead of that port strike to be better positioned. It cost them a lot of money to carry that.
- [35:24]
Karen Feynman
Right. So in their gross margin which was the problem here, what is that? That cost of shipping and so that's, that's hard when you lose that, you know isn't kind of a fairly sizable loss on gross margin. The operating expense were fine in line but relative to Walmart, I mean the execution really was not nearly as good. Also some of the categories that are really more important to Target that didn't do as well. I'm intrigued though by the magnitude of this move down now it's a three day rule kind of thing. I wouldn't look for another two days but I mean it is getting very inexpensive even with a mission. This idea of the multiple that Wal Mart trades at versus Target, to me it's sort of an interesting Paris trade. I do have some Wal Mart. It's not cheap. They're executing great. Everything's. I mean that was a great report yesterday. It's just really expensive for itself and compared to everything else as well.
- [36:26]
Melissa Lee
What Target said about the consumer is really interesting. Rebecca and I wanted to get your take on that in terms of the consumer will come out but is very careful and they cited Circle week. Circle week was the biggest Circle week on recovery record but there is a noticeable dip in sales prior to Circle Week and after Circle week. So consumers are really sticking to their budgets in this environment.
- [36:45]
Christina Parts Nevels
Yeah, I mean Dan said we have a bifurcated consumer. So if you own a home, if you own lots of stocks, you're feeling pretty good. You're buying your gravy base. At Williams Sonoma if you don't have lots of stocks and you don't have a home then you're being very nervous right now. And I think that's probably going to get worse next year because a lot of the policies that are going to get initiated if the proposed becomes reality tend to work against the lower income consumer more.
- [37:10]
Melissa Lee
Yeah, you can never have Too many gravy bases.
- [37:13]
Christina Parts Nevels
They're really.
- [37:13]
Melissa Lee
No, I buy it every year.
- [37:15]
Christina Parts Nevels
It's good.
- [37:16]
Melissa Lee
No, it's a good, it's good.
- [37:17]
Guy Adami
Since I'm not looking to make any friends and that's been, I mean, I'll just flat out say it. They're horrible operators and that's been going on for a while. I mean, pull up a chart. This was a $260 stock three years ago. It's been cut in half. Look at what Wal Mart sun over the same period of time. Now you can say it's different consumers. Yeah, not that different. I mean, look at their inventory. They zig when they should zag. It's just been a disaster. I think Deutsche bank just lowered their price target, downgraded the stock $105. And it feels like it's going there. I mean, they're in this period of time. We can. Karen's right to bring up valuation. That's been a story for the last year and a half, two years, and it hasn't worked.
- [37:53]
Melissa Lee
Coming up, Commerce Secretary Gina Raimondo giving CNBC her first interview since the election. What she had to say about the CHiPs act funding and the current administration's race against the clock. That is ahead. But first, McDonald's looking to bounce back from its recent E. Coli outbreak with a new offering for the new year, the McValue deal, coming in 2025 and whether it's enough to lure back customers. We'll talk about that right after this. Welcome back to fast money. McDonald's preparing a Mik value offering for the new year, an attempt to appeal to customers grappling with high cost. This is a company looks to bounce back from its recent E. Coli outbreak. Kate Rogers has got all the juicy details. Kate?
- [38:32]
Dan Nathan
Hi, Melissa. Yeah, I reported earlier today that McDonald's is working on that new MikValue approach for next year that involves keeping the $5 value meal offer at launch this summer on the menu for the first half of the year, along with introducing a buy one, add one option for a dollar more. Now, that option includes a double cheeseburger, a McChicken sandwich, six piece nuggets and a small fry. Or then breakfast options of a sausage McMuffin, sausage biscuit or sausage burrito and a hash brown. That is according to a person familiar with the matter. Now, operators are still voting on these 2025 value offerings. The initiative, though, looks likely to pass. That's according to two people familiar. Now, in a statement, McDonald's said, quote, we and our franchisees have heard customers loud and clear when it comes to keeping prices as affordable as possible. From the popular $5 meal deal to numerous local and in app offers on the food they love, we went big on value this summer and fall, bringing fans even more ways to save when they visit McDonald's. And as we look to 2025, we're cooking up something even bigger. We can't wait to share what is in store. So executives obviously have been talking about this value platform and expanding upon it for the new year. So that reporting, giving a first look at what looks to be on the table for 2025. And McDonald guys, back over to you.
- [39:44]
Melissa Lee
All right, Kate. Thanks. Kate Rogers, so more value meals. The McRib is coming back in December. Something new coming in 2025. Guy, everything's coming up roses.
- [39:54]
Guy Adami
Well, it's good for them by the way. They handle that whole. When it happened October 25th or so, the stocks traded down to 290. They reported earnings a few days later. Earnings were okay. Some analysts raised their price target. I think the average price Target now is 322. The good news is it hasn't cratered. The bad news is it really hasn't rallied. But I think you can actually own McDonald's here against that recent low we made was a two and a half three weeks ago. Mel.
- [40:18]
Melissa Lee
Coming up, the Race to Distribute Chips act funding. Commerce Secretary Gina Raimondo just sat down with our own Kate Rooney in San Francisco to discuss her read on that AI and much more. Straight ahead. More Fast Money into welcome back to FAST money. Commerce Secretary Gina Raimondo hosting a global air safety summit today featuring leaders from both public and private sectors. Raimondo also making some comments about the state of the CHIPS act funding. Our Kate Rooney sat down with her in the last hour. She joins us now with more. Kate.
- [40:48]
Dan Nathan
Hey, Mel, great to see you. So, yeah, Secretary Raimondo took the stage here in San Francisco. She warned about air safety in particular, talked a little bit about the upside, things like curing cancer, for example, and then did also talk about the downside, talked about extinction level risks here. We also did talk about the CHiPs Act. I asked her about that. She says she does not expect that to be repealed in the Trump administration. Also says despite some fears on Wall.
- [41:11]
Melissa Lee
Street, thinks that intel, the American chipmaker.
- [41:14]
Dan Nathan
Is going to get that funding. Take a listen.
- [41:18]
Melissa Lee
Intel has struggled for years, you know, not just since the CHIPS act, they lost their way, but they're finding their way, you know, and they're making incredible progress. It is an American champion and I'm counting on them and believe in them to be a leader in making AI chips in America, making leading edge chips in America.
- [41:44]
Dan Nathan
And Mel, I also asked her about the timeline. Companies have been complaining that they have not gotten the money yet. Here's what she said about that.
- [41:52]
Melissa Lee
Obviously these companies wish that we would just hand over all the money, no strings attached. I can't do that. You know, I have to protect taxpayers.
- [42:01]
Dan Nathan
President elect Donald Trump also nominated Howard Lutnick as his commerce secretary. Raimondo telling me she called him yesterday and she says she wished him good luck, said she's there if he needs it. But interesting stuff. Guys, back over to you.
- [42:14]
Melissa Lee
All right, Kate, Thanks. Kate Rooney. So sort of dispelling those fears regarding intel, which some have said is too big to fail. If America is going to have supremacy at all or leadership in chip manufacturing, intel has to work. It seems like Raimondo thinks Intel is finding its way. Wall street does not necessarily think intel is finding its way given its decline.
- [42:35]
Rebecca Patterson
Yeah, I thought this one, you know, you kind of like washed out a little bit. I think the commentary at a Qualcomm a couple months ago thinking about possibly and they actually kind of referred to the rumor or they actually spoke to it. They said we're going to wait until there's a new administration if there is going to be one. And then you look at Qualcomm, you look at their guys guidance today it got nailed. I mean I don't think that deal is going to happen anymore. I thought intel was setting up for a good move into the CHIPS act cash, but who knows.
- [43:00]
Christina Parts Nevels
Yeah, I want to go back to the beginning of Raimondo's comments on the Air Safety Institute. I think people who haven't bothered to dig into this seem to think somehow it's just regulation slowing innovation and that's absolutely incorrect. So they are trying to partner with private sector companies and other governments so they collaborate and they can share leading edge technology. They can make sure they're talking with each other so it goes faster. So they support innovation. The safety part of it is as they said on the clip, it's really to avoid the massive fraud, massive hacking, exploitation of minors. So if we think that's bad and we want to get rid of it, I'd like to have that conversation.
- [43:41]
Melissa Lee
There's not that much time left for this administration to get this CHIPS act funding done.
- [43:45]
Karen Feynman
No.
- [43:45]
Melissa Lee
Or anything else for that matter.
- [43:47]
Karen Feynman
Right there's the question. So even if, you know, she talked about we can't just write a Check.
- [43:51]
Melissa Lee
Yeah.
- [43:52]
Karen Feynman
They have to prove they're worthy of the check. I don't know what happens at the 11th hour if they haven't paid the money yet.
- [43:58]
Christina Parts Nevels
Again, it seems unlikely that President Elect Trump would get rid of that. It benefits the economy. It benefits a lot of red states as well as blue states. He's pro innovation, but it's offering which he likes.
- [44:10]
Karen Feynman
It is, but you could also put it in the Doge Department of Government.
- [44:14]
Melissa Lee
Efficiency, maybe no handouts kind of thing.
- [44:17]
Karen Feynman
Sort of, yeah.
- [44:19]
Melissa Lee
But if you think about it, intel may be too big to fail. Right. It could be one of those industries, one of those sectors too big to fail, too important to national security.
- [44:27]
Guy Adami
Too important.
- [44:28]
Melissa Lee
Too important.
- [44:29]
Guy Adami
Yeah.
- [44:29]
Melissa Lee
It has to be.
- [44:30]
Karen Feynman
Actually not too big anymore.
- [44:32]
Melissa Lee
Right. Not too big.
- [44:33]
Karen Feynman
Right. It's not too big. Right. I understand. They absolutely want it to succeed. That would be fantastic.
- [44:37]
Melissa Lee
Right. But the notion that it can't fail, I can't.
- [44:40]
Guy Adami
Yeah, too important. And listen, maybe Qualcomm's out there in the new year with different regulation and different, you know, allowing for M and A. We'll see.
- [44:47]
Melissa Lee
Right, up next, final trades check on Nvidia, the company saying it will deliver more Blackwell chips and previously estimated this quarter and demand exceeds supply. Shares are down by just about one and a quarter percent. We'll see how it trades in tomorrow's session. Time for the final trailers around the horn. Rebecca Patterson I'm going to look for.
- [45:07]
Christina Parts Nevels
The Euro to head towards parity next year so I'm going to be bearish. Euro.
- [45:10]
Melissa Lee
Great to have Rebecca here.
- [45:12]
Karen Feynman
Karen yes, the IBB has bounced a little, but I still think there's room to go on the upside.
- [45:16]
Rebecca Patterson
IBB Dan I think up this Nvidia could sell the smh, but gold is.
- [45:22]
Guy Adami
Turning mel, which means Newmont Mining should as well.
- [45:24]
Melissa Lee
All right, thanks for watching Fast. See you back here tomorrow. 5 more Fast all opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of cnbc, NBC Universal, their parent company or affiliates, and may have been previously disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Fast Money participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy and it should not be relied upon as such. To view the full Fast Money disclaimer, please visit cnbc.com fastmoneydisclaimer first and foremost, the thing that powers your business is power.
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