← CNBC's "Fast Money"
CNBC's "Fast Money"
Oil The New Gold?… And Microsoft Pushes Back On AI Growth Report 12/3/25
00:43:45
Could Crude Oil be the new Gold? How the commodities rough year could give way for a high energy trade, and replace the glittering gold rally. Plus Microsoft on the defensive, as the tech giant pushes back against reports its lowering AI sales growth goals. Why one top tech analyst is siding with the company, and what he sees in store for the broader AI trade. Fast Money Disclaimer
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A
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Live in the NASDAQ marketsite in the heart of New York City's Times Square, this is fast money. Here's what's on tap tonight. Oil's time to shine. Black gold has been under pressure all year long, but one top market watcher says things could about to change. He'll lay out the case for where things can go from here and Microsoft's ambitions. The tech giant denying a report it is lowering software sales targets. But can the company keep pace with the rest of the hyperscalers? We'll debate that. Plus Nvidia Jensen Huang heads to DC New lacks of standards for auto emissions and a big quarter for Macy's. But the retailer raising the red flag for the holidays. What's it mean for the stock as it trades near 3 year highs? I'm Melissa Lee, coming to you live from Studio B at the nasdaq. On the desk tonight, Steve Rosso Kelly, Karen Feiderman, Dan Nathan and Guy Adami. We start off with what might be an inflection point for the energy trade. WTI crude pacing for its worst year since 2020, trading around the $60 handle for the better part of the year. Energy stocks have also been under pressure. The XLE and Oil Services ETF both lagging the broader markets in 2025. It's been a different story though for gold. The precious metal has soared more than 60% this year, setting 49 record closes along the way. It is pacing for its best year since 1979. Gold Gold miners have done even better with names like Anglo Gold, Kinross, Iamgold and Newmont, all more than doubling year to date. But energy was the best performing sector in the S and P today and leads the gains for the week. Chartmaster Carter Wirth was out with a note yesterday saying oil Prices are going higher from here. So are things about to change in the new year? Could energy turn the tables on gold? Is it so bad it is good to use a phrase from Carter Braxtonworth.
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C
Guy, first of all, people at home should know that you're playing hurt today. I mean, you're not supposed to be here, but you're here because that's who you are. Gamer pro. I think E is the right carved energy. Is the E in Karen's carved. Is that correct?
- [02:42]
And funny you should say that. Pull an OI chart up and look at the move it had just today. I mean, you don't see it move like that over the course of a week, let alone a day. Yet here we are. So what's happening? I think valuation finally is becoming compelling for people where maybe they can, they can't get their arms around some of the tech names. They can definitely get around the energy. And I think they've learned that, you know what, crude oil doesn't matter at these prices. It can go sideways for the foreseeable future. And these companies are run better, their balance sheets are better and quite frankly, valuations are something that compelling. So I think they can continue to go higher from here.
- [03:15]
B
There is a glut though, for oil and if the Ukraine war does end or it goes in that direction, there'll be more of a glut.
- [03:24]
D
Yeah, I think maybe some negative tone about that maybe also partially helped today. Right. But I feel like to me it's similar to the rotation into Big cap pharma or health care. Right. The space was so beaten down, you could. There was still a lot of bearish stories around it and pressure, pricing pressure from the government and a lot of bearish things, you know.
- [03:47]
Exclusivity cliffs, things like that. But it was just so compellingly cheap that money that was looking to rotate just found it. And it seems to me this is a similar type of thing for the reasons that guy talks about.
- [03:59]
C
Right.
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B
But I mean, the valuation. Agree, but these, those pharma companies can buy their way out of a patent cliff. But for oil companies, they can try to.
- [04:09]
D
They can, Right, Right.
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B
But for oil companies, if the underlying is still going to be in, you know, $50 a barrel or they do.
- [04:16]
D
Money though, at that level. And it's not like the balance sheets are in peril as they were in, you know, years past when it was more of a boom and bust. And so I think that it's a similar type of rotation to me, money looking to find a place and a lot of It I always have trouble with the phrase under owned because every share is owned by somebody. But I do think to the extent that there's indexes that are underweight.
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E
So we talk about the underlying commodity as the new gold. Are we talking about the energy stocks? Because energy stocks can rally. But I think oil is going lower. To your point. Oversupplied US Brazil, Guyana, all pumping at record levels. Saudis cutting production, OPEC cutting production. How can it go lower? I mean how can it go higher? I don't think it can. And remember Trump's first presidency, everyone thought it was going to be an oil boom, but oil went down and those stocks went down as well. Biden's presidency, oil went up and those companies went up. So it was counterintuitive to what you thought. I don't think we're to see anything different this time.
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B
So in your view then is there in both scenarios, oil up, oil down, oil stocks are higher.
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E
I think oil stocks to everything Guy said they run more efficiently, their cost of production is lower. They're actually, they have same way that the car companies don't have to do EVs, they don't have to get caught up in alternatives anymore. So I think it's better.
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A
Yeah, just Carter, what do you say Guy? Longer the base, so that's Louisiana.
- [05:45]
B
The longer outer space, the higher space.
- [05:49]
A
Talk about like legend, Louisiana. Yeah, but Carter is up there too on the, you know, the Mount Rushmore. And so he was talking about the excellent. And to all your guys point, I mean obviously two names, Chevron, Exxon make up 40% of the weight. We talk about the weightings in these ETFs all the time but you know, to get that sort of exposure, if you like all the, the things that these, I don't know what you guys are saying about discipline and all that sort of stuff but if you like the technical setup, you like the valuations, I think actually is the way to play it and play for a breakout in the new year.
- [06:17]
C
Look at ExxonMobil. Since we have the chart up. If you go over the last couple of years we've been flatlining around 1, somewhere between 112 and 115 for quite some time. And again we're right around an all time high. Now you can say, well the S and P is an all time high. It should be. But you know, the energy stocks have been under pressure. Now all of a sudden this to me is on the verge of taking the next leg higher. So I absolutely think you can own the ETFs if you want. I think you own the individual names and look at names like Valero and Marathon, both lower today, but both names recently making all time highs, not just 52 week highs.
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B
Our next guest is bullish on energy calls oil one of the world's cheapest assets. CBC contributor Peter Bookar is the Chief Investment officer at one point BFG Wealth Partners. Peter, always great to have you with us.
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F
Melissa, thanks for having me.
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B
There seems to be an extreme amount of bearishness priced into a barrel of oil as well as oil stock stocks. Is that, is that basically why you think that, that it's due for some sort of a bounce?
- [07:11]
F
Well, that is one part of the story I believe. Another one is sort of what Karen referred to, that the weighting of energy stocks in the S and P is 2.8% I think which is an historic low. But from a fundamental standpoint, I think what the what investors are missing is the influence of US production, call it. Over the last 10, 15 years, almost all of non OPEC plus supply has come from US shale. And there are more and more signs that US shale production is rolling over. In fact, in the beginning of November the Energy Information Administration released a chart that reflected that and with expectations that in 2026 US oil production will actually fall. So while as Steve said, we are getting some production increases in Guyana and Brazil, I think we cannot discount the US which is the largest producer in the world where their main shale basins are tapping out. Now technology constraints can sort of reinvigorate them, but at least right now there is I think a growing supply issue coming out of the U.S. now with OPEC we've seen more than 2 million barrels a day of production increases and quote increases. But the production increases haven't really met up fully with the quotas, which tells me that there's less available excess production supply and it's really only coming out of Saudi and UAE and with the market still holding around 60 after absorbing all that production coming on the market, I think is a fundamental case as well that this commodity is very cheap. And lastly, the gold to oil ratio is at a record high, pointing to how dirt cheap the price of oil is on a per barrel basis.
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B
So is your recommendation sort of like a rotation out of your gold exposure in more towards oil or, or do you own both? You want to own both?
- [09:07]
F
So we own both and but I think going forward from here you could maybe see more upside in oil. But I still think that from an investing standpoint we're holding on to both Positions, both energy and, and the precious metals.
- [09:21]
D
Peter, it's Karen. Thanks for being on. I'm going to ask you a question Melissa asked me at the beginning, which is about Ukraine. And to the extent that there, if there is hopefully there is a end to the war, what do you think that does to the energy trade?
- [09:37]
F
I think $60 a barrel is pricing in almost no geopolitical risks. And I think the market just almost in a way assumes that there's going to be a deal. Now in the meantime, every single day there's a Ukrainian drone that's blowing up Russian shadow tanker. So there is as we speak supply that's getting disrupted by of course tomorrow. If there's a truce then that will go away. But I don't see that market really pricing in really any geopolitical risks whatsoever.
- [10:07]
A
Peter, you know, go back 10 years. The average price of crude oil is 63 bucks, right? And we had that move during COVID where I don't know what you guys call it, there was some sort of Asian that happened and you know, crude went negative, negative or something like that. And then obviously in the beginning of 2022 when Russia invaded Ukraine, you had that move, you know, up above 100. Well, here we are where we were 10 years ago. I mean how much does global growth play into this? Because again, global GDP is expected to be flattish. You know, we don't see a whole heck of a lot of growth there. It's certainly not here. And in China, like is that a factor?
- [10:41]
F
No doubt. But a lot of the demand, the global demand for oil is, is coming from emerging markets. I've seen a variety of estimates in terms of the increase in per barrel per day of growth in oil and it's about a million. But some people think that it's actually greater than, than what is being forecasted. So yes, that is an issue. And even China's growing usage of EVs from a transportation fuel perspective, you know, is, is a bear case. But China's buying, I've seen everywhere from a half a million to a million barrels a day just stockpiling them. And China's got this growing petrochemical business. So I think overall in the years to come, demand is going to steadily increase, but again mostly coming from emerging markets. So if the developed world slowed down, if the US economy slowed down, I think some of that could be mitigated again by emerging market growth. Like in India, for example.
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C
You know, Peter, I know you heard us talk about the oih, the single biggest one day move I'VE seen in a while to the upside. But what's, what's going to be the catalyst? Is it a rotation out of some of the technology names? That's what I think it is. What are your thoughts?
- [11:48]
F
So I think that that is my most difficult question to answer is what would be that catalyst? I mean every Friday we get the rig count. The rig count last Friday hit a fresh low going back to September 2021. That rig count now down is now down about 15% year to date. If that continues to fall, maybe that will reach a point where it matters more. Than half of the basins in the US will lose money drilling for oil below $50. So even looking at this from a risk reward perspective, if my downside is call it 10 bucks in oil $50.
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And I believe over the next coming years oil is going to be $80 to $100 and even 80 to 100 on an inflation adjusted basis would still be dirt cheap.
- [12:37]
B
Peter Interestingly in the notes you say that power demand is coming and that there's a lack of investment in energy. How does that pertain to the oil story? Are you just talking about the oil players that have exposure to NAT Gas specifically or can you explain that?
- [12:52]
G
Sure.
- [12:52]
F
Well two things. Yes, a lot of these oil companies are benefiting from natural gas which is at now $5, which is a multi month high. But the oil industry in totality needs to invest a half a trillion dollars a year on a global basis just to maintain production. And I think there's no question over the last bunch of years there's been a lot of focus on cash flows and dividends and and reigning in capex and that we've sort of under invested. So if that demand continues as I see it, we are going to reach a point where there's going to have to be an increase in investment in order to bring on more supply. But in the meantime you're going to only get higher prices that will eventually and stimulate that new supply.
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B
Peter, great to speak with you. Thanks for your time.
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F
Thank you Peter.
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B
Buck Barr Oil is the next gold. It's a very provocative statement given the run that gold has had. Do you buy that?
- [13:49]
E
No I don't and I'm not taking it away from Peter. Peter said his downside was 10 bucks. I do believe that $50 mark is the make or break. So I'm looking for oil to break 50 to the downside. I think you could possibly see oil in the 30s over the next couple of years not higher than 70.
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B
How about you Karen?
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D
Well the scenario where 30 is a troubling one is a troubling one. A lot of other things are going wrong.
- [14:15]
B
Right. Economically. Yes.
- [14:17]
D
Yes. In that scenario. So I'm not as doomsday or ish. I don't know. I do think that, I do really think there's something to this rotation part of it. Yeah. Why did what is really different right. Today than it was two weeks ago? Nothing. Really.
- [14:33]
B
Yeah.
- [14:34]
D
So I think that that's really what's going on here.
- [14:39]
E
I do believe that. I think you mentioned it. Oil. Right now the barometer is the Ukraine, Russia, war. It's the barometer to that war. So when days when we get further away from peace, it moves higher.
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C
Yeah, maybe. You know, I think to me that's sort of rearview mirror stuff. The Russia, Ukraine. But it's important. I'll say this. $30 oil. Remember during the Trump's first administration, he actually went to OPEC and told them to stop putting oil out in the markets. The price was too low. So there is a sweet spot and $30 oil devastates our shale production or all the US basically pretty much every company in the energy space in the United States. So if we get there, to Karen's point, something bad is happening. I will say this, though. I mean, again, sideways crude oil is not a bad thing for these companies. And if there's going to be a rotation, which I think we're in the midst of now, to Karen's point, there's no reason all of a sudden for this to be happening. I think it can continue early next year.
- [15:32]
B
But to go to the question that's on the bottom of the screen, could oil be next year's gold? I will go to probably the top bull on this desk tonight when it comes to the gold trade. Oh, not be Dan.
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D
So.
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B
A fresh, a new dollar to allocate. Where would you put it?
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C
All right, so if, if, if that's the case. So gold basically doubled this year. So you need crude oil to go from 60 to 120 sometime next year. It's not out of the realm of possibility. Personally, I don't see it happening, but we've seen it before on things that seemingly come out of nowhere. So I think there's a 25 or 30% chance of that happening. With all that said, given the game of would you rather. I would still rather gold here than oil.
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B
How about you, Steve?
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G
Gold.
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B
Gold still?
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E
Yes, still. I don't think it's going to go.
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B
To 30 boys going.
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E
We have midterm election. We have Midterm elections, there's going to be just think about how many bans on offshore drilling on Federal lands and etc. Etc. Trump will be drilling anything that is not tied down. If gold, if oil spikes, he's going to put a lid on it.
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B
Let's get to Nvidia CEO Jensen Huang on Capitol Hill today talking about demand for chips and the need to protect national security. CNBC's Emily Wilkins. Scott, all the highlights. Emily.
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H
Hey, Melissa. Well, yeah, Jensen Huang, he's coming to the Hill after the Senate really just did a 180 on semiconductors. You know, just a couple of months ago they passed a provision as part of a larger package. It would have restricted chip exports. But now that same provision is being removed from that package after Nvidia and the White House lobbied against it. Jensen Wong said that he does support exports, export controls, but said that the private sector is already ensuring that most advanced chips are going to US Companies. He also weighed in on another hot button debate around whether state AI laws should be overwritten to help ease the regulatory burden for companies.
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C
State by state regulation would, would drag this industry into a halt and it.
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F
Would create a national security concern as.
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G
We need to make sure that the.
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F
United States advances AI technology as quickly as possible. A federal AI regulation is the wisest.
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H
Now, Huang's meeting was with Republicans, but we're now hearing some blowback from Democrats who were upset that they were not included in the meeting. Senator Elizabeth Warren is now out with a statement criticizing the meeting, saying that Huang is sneaking in to meet with Senate Republicans behind closed doors and, and saying that he should be brought in to testify publicly and under oath, not pushing his agenda in secret meetings. In addition to that meeting with Senate Republicans, Wang also met with Speaker Mike Johnson as well as President Donald Trump. He told me that he and the president did speak about export controls, but he's not expecting any new announcements anytime soon. Melissa?
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B
Emily, thank you. Emily wilkins.
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So there's nothing in Nvidia's forecast about China right now.
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G
So.
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B
So it would be major upside if there were to be some relaxation of the export control.
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A
Yeah. And also comes at a time though where China's placed import controls for all intents and purposes, encouraging their companies who are buyers of these chips. You've also seen these companies stockpiling these chips, accessing them through places like Singapore, training their models outside of the US having access to these H1 hundreds or H2 hundreds, which are obviously scaled down versions of the of the Hoppers. I'm not so sure if you think about the timing of this is like, okay, we've been spending a lot of time talking about Google. TP is. We've been talking about Asics, we've been talking about training from Amazon. There's just all of a sudden a lot of competition. And I think all of these potential buyers are thinking, am I going to buy these, these chips for all these years? Right. At the expense of my margins for their margins? Right. And I think this is all happening at a time where I don't think Jensen really has a choice other than to push for this. Despite the fact that there is national security concerns on both sides of this. He is on one side of it. But the irony is that he's going and doing these backdoor meetings with, with Republicans and this is fair weather federalism. Isn't the Republicans the ones who actually want the states to regulate everything, not the federal government? And it just seems like this is a very opportunistic move by Jensen.
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D
Well, a number of things. I do think the, the in practice of having every state have their own regulations is crippling. Yes. When you think about interstate banking and how ridiculous that was and how it just created layers and layers of regulation and the benefits seem to be very small. So I think that this is similar to that. And I of course understand why he would want it or any player in the space would want one regulation. So there's that, I think. I mean, the stock was down, I guess, on the Microsoft thing. We'll get to that later. I do agree with you, Dan, that there are sales to China. They're just not directly there.
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B
Right.
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D
I don't know how significant that is, but I do think that's happening. So.
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I guess I don't know that it matters so much though, if you, if the models all show no China sales, then that's what we're looking at still. The demand is huge, but there's just a big overhang in the space. And the debt issues of building all these data centers still hangs out there.
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C
And is big Queen Gertrude familiar? You went to a good college, Hamlet.
- [20:52]
B
Oh, I thought you meant a real queen. Okay, yes.
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C
No, I don't know if there is. There might be a Queen Gertrude somewhere, but in literature. But, and we've said this, the lady doth protest too much, methinks. He's been talking a lot over the last few months and you have to wonder, you know, what is he so concerned about? If things are as rosy as they portray, he's out there talking a lot about competition all these other things that would be concerning. And I'll say this, there is competition coming I think in a meaningful way and 75% gross margins are not going to be enjoyed in perpetrator.
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B
I mean Marvell Technology raised their forecast on this notion that they have this huge contract with Amazon for Trainium TPUs, Trainium 3 and 4. So to the concern about competition that really underscores that.
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E
Well, Nvidia has been at a declining trend line for the last month and I do believe that their four to six main customers are going to be their main competition. Every time he goes to D.C. he tries to pull a new lever. I think he's out of levers right now. And the stock goes lower.
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B
Coming up, all the after hours action. Salesforce, Snowflake and more reporting results tonight. The details and the numbers out of the reports next. And speaking of earnings, Macy's riding a roller coaster today after its own report. What's got the company cautious heading into the holiday shopping season? Don't go anywhere. Fast money's back in two.
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- [23:57]
B
Welcome back to Fast Money. We've got a double dose of software earnings to bring you. Salesforce shares jumping after the company beat on earnings and hike guidance while Snowflake is lower despite reporting earnings and revenues ahead of Wall street estimates seem Modi has been dialed into the call. She joins us to here with the latest Heisma 2 calls.
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H
Melissa. Let's start with Salesforce because CEO Mark Benioff providing a really encouraging update. He really talked about Agent Force and the metrics there that show that not only are customers signing up but they're integrating agents. Salesforce revealing a 70% increase in accounts in production. So that shows that clients are moving from pilot phase to deployment. That number also up from 60% in the last quarter in total revenue for AgentForce was over $500 million in the third quarter. That's up 330% year over year management highlighting its current remaining performance obligations of 29.4 billion being fueled by this powerful pipeline that the company has. Looking into the future. Benioff will be joining Jim Cramer on Mad Money tomorrow. Software appears Snowflake moving in the opposite direction after hours bucking what has been an otherwise strong year. Shares are lower. Despite that earnings beat its outlook for the fourth quarter. Specifically margins came in weaker than expected. Expected product growth decelerated slightly. Also noting a new $200 million partnership with Anthropic. The stock is still up about 65% this year.
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B
Seem I'm curious if because Benioff is known to slight other companies, talk freely about other companies. Sure. If he addressed that Microsoft report today because as one of the few companies that actually report AI revenues as a breakout, people really looking to this report to either confirm or or dispute that Microsoft report.
- [25:35]
H
Yes, specifically around agents. No mention yet of Microsoft on this earnings call but it is underway. Just started 20 minutes ago. And he led the call talking about how AI agents, this is a real thing there you have clients who are not just signing up but they're moving into deployment. They are finding ways to use these agents to automate tasks. But we'll keep you updated on what he says on Microsoft if it comes up.
- [25:56]
B
All right, Seema, thank you. Sima Modi, where do you want to go?
- [25:59]
C
Slight revenue miss but I think the guidance was good. I think the quarter was good. Margins were better than expected. I think that's really important and we've Talked about this 2:30 level there was a low last June. We held, we traded down there a couple of times this year. We held bouncing. Now, I think you can stay with this. I mean, valuation is not ridiculous. And I think you're going to see a relief rally over the next couple of weeks.
- [26:19]
A
So the information thing, I know we're going to talk about it later, but one of the things I took out there was an example in there how Carlyle, which is the large private equity firm, was using Copilot Studio, which is a Microsoft offering, and they kind of scaled back. So this is they scaled back the use or paying for these things. And the one example the article gave is that they're having problems with applications in this Copilot operation working with customer relationship management software from companies like Salesforce. Right. So if you're having those sorts of interoperability problems. Right. Companies who are using this technology are going to take a step back. And that's probably one of the reasons why Benioff has been talking about agents. The year of agents, I think that was 24, then it was 25 and now it's going to be 26. And they're not, I mean, maybe some of this, these metrics are demonstrating that, but it hasn't been so far in the last couple of years.
- [27:10]
B
By the way, we should note that Microsoft has denied that report from the information. So let's make that clear here. We'll talk about a little bit more later on in the show. Meantime, there's a lot more fast money to come. Here's what's coming up next.
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F
Macy's momentum.
- [27:22]
A
The retailers turnaround plan seems to be taking hold.
- [27:25]
F
But is there a majority miracle on 34th street coming this holiday season?
- [27:29]
A
The latest read on the consumer next. Plus, a mixed message on Microsoft, what.
- [27:35]
F
The company is saying about its AI sales targets and why one top analyst is not concerned. You're watching Fast Money live from the NASDAQ market site in Times Square.
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E
We're back right after this.
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- [28:22]
B
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B
Welcome back to Fast Money. Macy is beating top and bottom line estimates for its Q3, posting its strongest sales growth in more than three years and raising its full year. GUIDANCE despite the seemingly good news, the retailer was cautious on consumer spending during the holiday. CEO Tony Spring saying on the call consumers are more discerning about how and where they spend their dollars. Shares down today, but up over 30% this year. It seemed like it would be merited to be cautious at this point in time.
- [29:36]
D
I think so. I think the thing, you know, the cautious choiceful consumer, we've heard that phrase a lot. And then also they said guidance expect comp sales decline. That was the part that I think people were unhappy with. I mean it was a very good quarter. There was a lot to like here. I don't own the stock. The multiple of 10 is not demanding as you would say. Guy. They've done a very good job of fixing up their balance sheet. And their strategy, which I was really thinking was is a difficult one of shrinking to have a better business is working.
- [30:08]
B
Yeah, closing underperforming stores.
- [30:10]
D
But then you've got it. You've got all that overhead that you still need to absorb. But it seems to be working. So I think they're doing a good job. I don't own it, but 10 times it's not crazy. And I think they're probably being overly cautious. As a guy, as guidance as well as the consumer, I would say their.
- [30:26]
E
Strategy is a bold new chapter. I think you would buy it on this dip at closing underperforming stores is a good thing. I think there's a lot of noise in the numbers but I think ultimately if you buy a dip, you're going to be rewarded.
- [30:37]
C
We're in a 10 year downtrend. You go back to the high of 2015 and we're right up against it here in order to break out. In my opinion, you need to close above 24. We're close. So I know it sounds ridiculous. I'd rather buy the breakout, which we're not at yet, than to buy it here and hope it breaks out.
- [30:52]
A
Yeah. On the consumer, we talked a little bit about the CFO Proctor last night. He made some comments that seemed a little cautionary about the consumer, especially when you're thinking about consumer staples. And I'm looking at a quote here from Wal Mart CFO the other day at a conference says we're seeing wallets have been stretched and more money is being spent on necessities versus discretionary. So you think about he's saying this is Wal Mart saying we're seeing more staples being bought and then the CFO of the biggest staples company in the world saying they're having a tough time. You just have to put those things together. And it speaks again to this higher earner consumer really powering a lot of this. And if you look at some of the Data, I know MasterCard puts out data, you know, year over year, there were not big increases when you think about Black Friday and such. So I think all of it speaks to, to your point, Mel, a consumer that is generally pretty strapped.
- [31:42]
B
Coming up, Microsoft under pressure. Shares dropping on a report of missed AI goals. But a top tech analyst is not so worried where he stands now on Microsoft when Fast Money returns.
- [31:58]
Welcome back to FAST money. Stocks closing higher after a softer than expected ADP report. Major indices up seven of the last eight sessions. The Dow jumping 400 points. The S&P closing just a percent from its record. And the Nasdaq up about 2.10 of a percent. Shares of Alexandria Real Estate dropping more than 10% today after the REIT said funds from operations would come in below estimates. Remember, activist investor Jonathan Litt has been short Alexandria for the last few years. He's been doubling down on his call just last month when he joined us on Fast Money. Shares of Netflix also lower, dropping nearly 5% as the streaming giant prepares a bid for Warner Brothers discovery assets. The stock now at its lowest level in more than seven months. And some more after hours action five below and both topping EPS and revenue estimates. Well, Microsoft ending the day two and a half percent lower even after pushing back on a report from the Information that said it's lowered AI sales growth targets as customers resist new products. Those are the words of the information. Microsoft out with a statement today that the report inaccurately combined the concepts of growth in sales quotas and that aggregate sales targets have not been Lowered for more, let's bring in Jefferies analyst Brent Thale. He's got a buy rating, a $675 price target on Microsoft. Frank, great to have you with us. What do you make of the report?
- [33:11]
G
I think it's a data point. And everything we're seeing in our Microsoft work, and I'm at the Amazon conference in Vegas, is suggesting that demand is accelerating. You saw it in snowflakes numbers, you saw it in Salesforce numbers. You're seeing it in thousands of people here in Vegas walking around talking to end users that the area era of AI is continuing to pick up and agents are going to go live and those agents are going to create more workloads for Microsoft and that's going to influence the adoption of the entire portfolio. We do not see a slowdown. They just put up 50 plus percent RPO backlog. They've said that they cannot keep up with demand, that they don't have enough supply. And so I think, I think it's a data point. I think if you wanted to take the information article and say a lower target, the way you would look at this is that Amazon said this today at their conference that AI agents are like teenagers, we call them infants in a crib that are still have diapers on and a bottle and they're throwing toys out of the crib. They're really, these apps are really young. And I think that the software industry needs to go generally to a lower pricing model to get agents live. And once they're live, then that influences the adoption of more agents. So I think there's a silver lining in the report which is that many of the companies came out of the gate. Salesforce, pricing was too high. Atlassian, the whole industry priced AI too high. And so I think that from our work away from this Microsoft event is that pricing needs to come in a little bit to get adoption higher. Remember, all these products for the enterprise are less than a year old. And the running joke at Microsoft for years has been, you know, the first product is rough, second one gets a little bit better and the third one is where they nail it. And that can be a one to two year cycle. And so again, if you take this, if I'm just playing the independent research analyst, it's going to take time for these to build. And we're very bullish on the 26 rollout of these agents. And so we spoke.
- [35:19]
A
So if your point is about lowering pricing to get greater adoption. Right, that's going to suffer or at least margins are going to Suffer a little bit and just, you know, I know you've been covering the space for a long time. What do you think the pricing power these companies will have to kind of, you know, gain more margin of it with increased adoption? Because there is an argument to be made that a lot of these agents or the technology that powers them is going to be commoditized to some degree by the time we get mass adoption.
- [35:46]
G
I think that, again, I'm not suggesting Microsoft is doing this. I'm just suggesting what we're finding our, in our work. But what, what I'd say is I think that you can't walk in any new product and effectively just charge a premium. And so I think what we're hearing is these agents are all about to go live. There are a lot of the agent builders. There's dozens on the showroom floor over at the Venetian at the US Conference. And I just say I think there's going to be a battle for who builds these agents. Everyone has an agent builder. And to your point, there will be commoditization. We are not there yet. These are, we're way too early and everyone is quoting. They're going to be billions of agents that are out running. Instead of having, you know, 10 workers would probably have seven workers and a bunch of agents doing work for us. So I don't think we're at a worry of being commoditized yet. Yes, that will happen. But I think the big platform companies, it doesn't matter for Amazon, Google and Microsoft, because they have the infrastructure. The agents have to have a home and they have to be fed and watered and those platforms will work. There'll be agent builders themselves that, that get commoditized and don't make it. And, you know, this is reminiscent of the Internet and cloud SaaS boom that we've watched over the last 30 years. So it'll, it'll happen, but I don't think we're anywhere near that, that level yet in terms of commoditization.
- [37:05]
C
Very clearly, by the way, Brent, and real quick, do we have to recalibrate our brains in terms of what valuations are in today's world? I mean, is 32 times this generation sort of low 20s for Microsoft?
- [37:20]
G
Well, software has been for sale, and as you know, semis are ripping. Semis are where all the excitement is. And so I'd say that many of the software companies are undervalued from our perspective. If AI really takes off in our theme of 26, 27 is the year of enterprise AI, then that's when revenue inflection, we're going to see an acceleration. We're seeing already seeing an acceleration in Amazon and Amazon's business, Google's business, the Azure back end for, for Microsoft is accelerating. So I think that we can argue that multiples are pretty stable here and in our opinion should go higher. I mean, look at Salesforce multiple. I mean it's like the application stack. All these apps names are down 30% year to date. Semis are up 60. You know, it's like, I mean, I feel like I'm a garbage man right now with covering my space because everyone hates software. So I think multiples actually have room to go higher across many of our companies. We cover.
- [38:20]
B
Brent, great to have you. You're not a garbage man to us. Brent, thank you. Of Jefferies. So let's talk about the notion of a transfer of market value of valuation from chips from the hardware to software is an interesting one. At some point it should theoretically happen. It's just a matter of when. We saw briefly that deep SEQ moment in January of last year when it was thought that all these chips, all this can be done for cheaper and that software would be the benefit. We saw that like as a flash in the pan. We had a glimpse of what that would look like. But in theory it should happen in a more lasting way.
- [38:55]
D
Well, also then there's the. Okay, let's. I agree with that. And if you take that theory though, is everyone now going to be a winner here? Is there enough room? Right. Who will be, who won't be?
- [39:08]
I don't know, it might be too. The whole thing might be too early to figure out. Software, hardware, all of it too early to know. But.
- [39:16]
I'm more in the Dell video and then the hyperscalers, Google, Metta.
- [39:23]
E
Yeah, I think the others can be lifted up. Nvidia, it's going to be at Nvidia's expense. And I think out of the ones that Brent was looking at, Alphabet's chart looks the best to me.
- [39:34]
B
But to your point, in terms of pricing, you think about Nvidia's 59% margins. I mean, at some point, if prices have to be lowered on the consumer level, on the enterprise level, the user level for products, there should be some pressure on Nvidia as well.
- [39:48]
A
Yeah, no doubt. I mean, there's a couple of ways to think about this.
- [39:51]
C
Right.
- [39:51]
A
So OpenAI has 800 million users, right. And the bulk of their revenue comes from consumers paying $20 a month or in some cases $200 or so. Is that going to be behavior that continues? They also have revenue coming from companies who kind of tap into their API. So at the end of the day, like, I think about all this behavior and I say to myself, where is the value going to be added? Well, if there's this agentic ecosystem within, like, you know, open, I like that's going to be great for them in the long term. In the near term, it's going to be really hard. And especially like to your point where everyone's looking around and they're saying those 75% gross margins, they're coming at our expense. And sooner or later, a lot of this will be commoditized and maybe deep seek. And some of these models that are being chained trained at much cheaper levels that are open source, maybe they also put downward pressure on this. So I agree with Brent. I agree with a. Karen just said, you've got to own this cloud business. If you don't like your Metta, this is going to be very expensive in the not so distant future.
- [40:50]
C
Igv, if you want to be one place, if what you're saying Karen saying is right, igv, it's expensive because of the way it's constructed, but that's the place to be.
- [40:59]
B
Coming up, changes to fuel economy requirements, how the Trump administration's latest announcement will impact the auto industry, what it could mean for car prices and the stock, some fast money returns.
- [41:15]
Welcome back to Fast Money. President Trump announcing earlier this afternoon new relaxed standards for auto emissions. Philippe's got the latest.
- [41:21]
I
Phil and Melissa, the big question I've gotten from people today is, well, how much lower will the fuel economy standards be miles per gallon than the current rules that have been in place since the Biden administration. Here's what the president is proposing and here's the comparison with what's expected under the current rules, which in theory will be done away with currently 30.4 miles per gallon. By 28, it ramps up to 34.2 miles per gallon. Under President Biden's rules, 47.4 miles per gallon was the expectation. And the big change is by 2031, 34.5 miles per gallon under the new rules that are being proposed. That's about 40% below the current Biden administration guidelines rules of 50.4 miles per gallon. It brings up the question, well, what does this do for the automakers? In theory, it should save them about $109 billion. At least that's the estimate from the Trump administration between 2026 and 2031, because there will be fewer regulations. They won't have to do things like pay for zero emission vehicle credits. That works out to about $1,000 per vehicle in cost savings. The Trump administration is already positioning this that, hey, you could save $1,000 on a new vehicle. If these rules go into place and you see automakers start to deal with less onerous restrictions, will that really happen? Currently, the average transaction prices, you take a look at the automaker stocks, the current average transaction price for a new vehicle is just under $50,000. The question becomes if there are savings on the cost side, how much of that will filter down into what you and I see in showrooms and what we ultimately pay. These are some of the questions we have for the Secretary of Transportation, Sean Duffy. We will be in Washington tomorrow. We will talk to him about these new regulations and about the president today, Melissa saying, why don't we have these microcars that you see in Japan and South Korea change the rules, let them be built here, let them be driven here. We'll talk about that tomorrow morning.
- [43:28]
B
Microcar even smaller than a smart car. Those are pretty small.
- [43:33]
I
Yes, yes. Very small. They're very small. But the rules here say you can only go up to 25 miles per hour on some of these vehicles. That's why you don't see them around.
- [43:42]
B
Right.
- [43:42]
I
Could that change?
- [43:43]
B
Well, thank you, Phil LeBeau. Should be an interesting interview where the real savings is. I mean, my guess, it's just me. Zero. You'll see zero of that $1,000 reflected in the price of an automobile. The real savings though, gasoline, $3 a gallon, the lowest level since 2021. That's a real savings.
- [44:03]
E
Yeah. Americans want big cars and Ford and GM now get to make the cars that they, that people are buying. So I think you buy both of the automakers. I think it's a, it's a tailwind for both of them.
- [44:13]
C
Guy, I was actually just going to Borg Warner chart going a little down. You see what I did. Haven't done that in a while. And you know, listen, the valuation is going to be compelling across the space, but you know, there's some air initiatives. This should actually be a bit of a tailwind. BWA is a symbol.
- [44:29]
B
Coming up, the fast movers catching our attention in today's session. What's behind the pops and drops in Uber and PayPal more fast money into.
- [44:44]
Welcome back to Fast Money. Shares of Uber jumping 3 1/2% as a ride share company partners with autonomous vehicle makers Avride to roll out a commercial robotaxi service in Texas, Dallas, specifically. Uber saying rides will start with a human driver behind the wheel, but it plans to both expand the operating territory and go fully driverless in the future. I feel like this is a Dan kind of trade.
- [45:07]
A
We're talking Uber.
- [45:08]
B
Uber, yes. Thanks for playing.
- [45:10]
C
Paying attention.
- [45:11]
B
I mean, the cheapest thing you could do.
- [45:13]
A
We were in Austin a couple of weeks ago and we called up an Uber and the only way to get a Waymo is through Uber. So Uber is going to do a lot of really innovative deals. Right. To get folks comfortable with that idea. Guy would not have gotten in a Waymo. I had to kind of hit a different button. But it is the you and your tube. And I think that they have done extremely well here in North America. A lot of folks are having a hard time with that delivery business. They're doing really well.
- [45:38]
B
Yeah.
- [45:39]
C
Well, you know what I feel about the Uber is not traded well since earnings, but it's getting back on the horse.
- [45:43]
B
Melissa, get back on the horse. Yeah. Where do you stand on Uber?
- [45:47]
E
Well, autonomous is the biggest tailwind for it. It's going to. It's going to increase their margins by 50%. It's going to decrease their cost by 70%.
- [45:55]
B
Theory.
- [45:55]
E
So if you. In theory, if you believe in this, you buy Uber. I do like Lyft, but I think Uber is the way you play it.
- [46:02]
B
Or you buy Google for Waymo.
- [46:04]
C
But.
- [46:05]
D
But that's the tail wagging the dog sort of. There's so much other risk you're taking. I like Uber. Long Uber.
- [46:10]
B
Up next, final trades.
- [46:17]
Final trade time.
- [46:18]
E
Steve, General Motors.
- [46:20]
B
Karen.
- [46:21]
D
Yes, Ulta. Last quarter they had blowout earnings and they could barely contain their enthusiasm. They tried to sandbag. They're reporting earnings tomorrow. I think they're going to be very good.
- [46:30]
B
Yeah.
- [46:30]
A
Netflix was last night down 5%.
- [46:32]
C
Today, shout out to the Aubes. I work with Bob at the Goldman Sachs. His daughter Nicole is here. His wife is not. She was invited. She didn't want to come. Pwa. Mel.
- [46:41]
B
What's up with her? Thank you for watching Fast 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 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 forward/fastmoney disclaimer with stays under $250 a night, Verbo makes it easy to celebrate sweater weather. Book a cabin with leaf views or a home with a fire pit for nights with friends. With stays under $250 a night, find a home for your exact needs. Book now@verbo.com.