← CNBC's "Fast Money"
CNBC's "Fast Money"
Stocks Drop In Major Reversal… And Opportunities In A Red-Hot Biotech Sector 11/20/25
00:43:43
An early rally in stocks gave way to a rough sell-off on Wall Street. How Nvidia’s reversal, and a delayed jobs report gave way to a market meltdown, and how Walmart became a bright spot in the down day. Plus, Biotech more than doubling the performance of the broader market, as M&A action lights up the space. Where our next guest sees the most opportunity in the space, and if the biotech boom can continue into year end. Fast Money Disclaimer
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C
Well, let's take a, let's take a step back from that.
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B
Yeah.
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C
And say this has been a historic week here on Fast Money. Jim Cramer came on Monday night, first time ever. More importantly, you're hosting this show. Leslie Picker, and we are thrilled to have you.
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B
Thank you.
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C
Your coverage into financials has been fantastic. So it's great to have you tonight. I will now answer your question. What the heck happened? Well, you know, we've been talking about the volatility index on this show for a while. The fact that on a couple of different occasions over the last month, you've seen spikes the upside. And we thought those were sort of a precursor or maybe sort of rumblings on what was yet to come. What else was going on? You mentioned bitcoin. When the NASDAQ was up at its highest rate, Bitcoin was not moving. As a matter of fact, it was going lower. To me that was sort of a sign that, you know, maybe this rally should be somewhat short lived. I don't want to pretend that I knew this reversal was coming, but here we are. What does it mean? Well, you don't see reversals like this all that often. I think they're very powerful. And Carter can speak to this. You know, if you get a close below 6,500 this month of November, which is now in its 20th day, we're going to start talking about outside reversal month, which rarely if ever happens. Less.
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D
Well, well, that's right. I mean, so to put it in context, obviously there's always the thought that there has to be some news item. Was it Nvidia? Is it the fear? Maybe. In crypto often things just start to sell off and there's something called, hey, get me out. When people are buying, they buy reluctantly. They well, I missed my price, I'll stop. But when they sell, they want to say, and they do get me the out, which is to say they sell without regard for price. So this has a bit of a panic to it. And the question is, is it likely to be contained? And we can talk about this later, but we're now down 5% plus. That's the first time that's happened since the plunge low of April. The tariff low. You get typically 5% plus or minus dips, corrections every two to three months we've gone seven, almost eight without one. And so this is long overdue and I wouldn't think it stops here.
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B
So this is a pretty voracious turnaround though this is especially lacking some sort of a catalyst. So do you think there is some sort of tail technical. You know, maybe it's momentum reversal, maybe it's short covering last night that then kind of reversed itself today. I mean, how do you look at the index level?
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D
It's maybe a bit new, but think about this. In the beginning of the month, right, the S and P was at an all time high essentially. But the constituents Internally of the 500 stocks, the average stock was down some 15% from its own respective 52 week high. So it's been these great winners that have held the whole thing up and now we're seeing some trouble in paradise. So presumptively the index has more to go.
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E
Yeah, so Carter just mentioned reluctant buying and I think that's what you probably saw after the print last night in Nvidia. You know, we're sitting around, this is 24 hours ago, we're looking at what they reported. Everyone expected a better than expected number. They expected better than expected guidance. You look at that margin number and I guess our take at the time was that, you know, great, they have an upside in gross margins. Well, who is that at the expense of? It's expensive, all their customers.
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F
Right.
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E
And so my reaction is like, okay, let's look at the hyperscalers, let's look at the biggest sort of buyers of those sorts of chips and let's see how they act today. And they were starting to give it up really quickly. And then I was looking at some of the component suppliers to the server makers and the servers that go into the data centers. And you saw right out of the gate, memory was weak, storage was weak. You know, those Neo clouds were up a lot. They did not have a hard time giving up all those sorts of gains. So Oracle, one of the biggest customers, that thing got absolutely killed. That was my final trade. I actually thought it would continue to rally in this sort of environment. But this is actually the most vulnerable of the ones. They got all these great contracts, except they don't have the money to pay for the infrastructure build. And I think the market's coming around to that. Even the competitors to Nvidia. Look at AMD and look at how that closed today. That went down fairly quickly on the day and it closed down 8%. But you know, when you look at Nvidia was the largest market cap company on the planet. And the expectations and the focus on it, and you say to yourself, okay, who is the incremental buyer of this on good news. And I think that's really what happened. And when you have a stock like this open on the day at the high of the day and close on the low of the day, you know, the expectation that this is going to turn right away, especially in the environment that we've been in, is probably not a great one. And so to Carter's point, if you see sort of panic selling and guy makes this point all the time, what do they say? They don't talk about it to the upside.
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C
Well, it's funny, we don't talk, we don't use the word panic to the upside ever. When you hear panic, it's usually associated with a sell off. The reality is most of the panics over the last couple of years, you can argue they've been to the upside because to Carter's point, you know, people feel like they're missing. And I don't think today was panic at all. I think it was somewhat orderly. The VIX is telling a little bit of a different story. But the sell off to me was sort of run of the mill.
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B
Yeah.
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D
The internals Also, I mean, 150 stocks in the S and P were up. That's not an over. When it's really bad, you get 490 down. Right. So can there be follow through? That's the real question. Because tomorrow morning you've got to make decisions, each of us and everyone. And the presumption is there's more to come to the downside.
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B
Yeah. What seemed like the decision making that everyone was expecting from last night just totally reversed. Midday today. Mike, what is your take?
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F
Well, you know, it's interesting. We often talk about rallies, broadening, and sometimes I kind of look for signs that maybe some weakness is, is also broadening. If we go back about five weeks or so, there were a lot of high flying, high beta stocks that are probably more speculative in nature. So we're not talking about the Nvidia's of the world now. We're talking about things like Palantir and Hims and hers, those types of names. And a lot of those began to suffer pretty considerably at about that time. And Nvidia Alphabet, these are the types of names that everyone thinks of as the highest quality and so on. And so to me, I think the bloom started to come off the rose when those stocks started to roll over. A little bit of a sign that those who are willing to take the most risk in the market were less willing to do so. And so I'm kind of with Carter on this one that, you know, we often look to the VIX as a potential barometer for when you think things are oversold. But the hazard in doing that is that before you get to higher levels, you must go through elevated levels. That's where we find ourselves. We move from elevated to high, but it could still go a little bit higher. I think we could see a little bit more of flush before it's all said and done.
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B
Yeah. To Guy's point, we talk about panic to the downside, momentum to the upside.
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C
But they both technically work and they feel very right. And it's the same mechanism, it's just different words. So people associate down with bad, up with good, which I totally understand. But panic works both ways.
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B
Yeah. Meantime, one bright spot in the market is Wal Mart ending the day more than 6% higher after beating the street sales and profit estimates thanks to strong E Commerce growth. The big box retailer also raising its full year guidance for the second quarter in a row. For more on the quarter, former Wal Mart US CEO Bill Simon joins us now. He's also on the board of Darden Restaurants and the chairman of Hanes Brands. Thanks for being here. Bill. What's your overall takeaway in terms of the state of the consumer versus some of the strategic initiatives that Walmart has been driving in order to gain share here?
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G
Well, there's a lot of good in that report for Wal Mart and I think for the consumer in general. You know, the first thing that struck me is after really, you know, six or eight months of, you know, us, us hearing about inflation, tariff driven inflation, there's almost no indication of any inflation in Walmart's report. I think they reported about 1.2% inflation and that's really, really a good indicator for the rest of the economy because they're so broad in how they do. So I think fears of inflation and we all sort of were worried what the tariffs were going to do. I think we can put that one aside at least for the, for a little while and see how it goes. The second for me is Wal Mart has such a huge portion of the SNAP, I think about 25% or, you know, almost $25 billion a year in SNAP. And to see, my worry was that they were going to struggle as the SNAP benefits got turned off during the shutdown. We didn't see that, that, you know, if they'd have seen it in November they wouldn't have raised their guidance. So those are two really good indicators that the consumers in, in pretty good shape for me.
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B
Yeah. And you've got some change at the top of both Target and Wal Mart. What do you think that means about their competitive posture at this point in time and how do you kind of assess the changes that are taking place at each of those retailers?
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G
Well, you know, Brian Cornell and Doug both went into the role roughly around the same time. They were, they were, you know, peers at Wal Mart with me at one point. So they know each other really well and you know, they're both transitioning out at the same time and they're both being replaced by insiders. I think in the case of Walmart that's probably a good thing. Maintaining the, the momentum that they have. In Target's case, it's going to be a challenge because they need to make some changes going forward. Anytime there's big structural changes like this, CEO changes and board chair changes, there's a risk in the transition. And I think that's something that they're going to have to both deal with. I think Wal Mart's in a better position to deal with that than Target is, but we'll see.
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C
Well, agree to disagree on the consumer Bill, but thanks obviously for joining us. You don't need to look any further than today's action. Wal Mart are basically at an all time high target at a 52 week low on a day where the market didn't perform very well. People have tried to shoot against Wal Mart on valuation for a long time, unsuccessfully. Does valuation matter at this point or just operating better than everyone else?
- [12:23]
G
Well, I think they're operating better than everybody else. You know, valuation is really something that I think Walmart's been concerned about for years. You know, they were built as a brick and mortar retail capex heavy asset heavy and they're valued that way now. They're valued at the top end of a, of a retailer, but that's sort of at the bottom end of a digital company like Amazon. And I think this move to NASDAQ is their effort to try to get more of a digital valuation into the company than, than a brick and mortar valuation. So they're concerned about valuation. Otherwise I'm not sure why they'd be doing what they did.
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E
Hey Bill, help us think about Costco. And when you think about their business and you think about just the stock performance over the last few months or so, it's really underperformed that of Wal Mart. Wal Mart as we just Said is trading very near those all time highs. But even before that it's just been facing for a while. Right. And so what is the investor dislike I guess about Costco and what's going on there relative to Wal Mart?
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G
Yeah. In the brick and mortar retail world, Costco is honestly as good as it gets. They've been able to put up really strong, consistent numbers for years. Their merchants are superior than really anybody else and they've got a model that allows them to retain their, their, their key people. I think they're very undervalued. There's some structural issues in the club segment. You know, Sam's is doing okay. They're sort of coattailing on, on the Walmart valuations. But I think, I think that there's some structural issues. You know, the family size and the quantity size isn't really lending itself towards, towards the big club business as much as it might have been at one point. And I think they don't benefit as much from the growth in snap at Costco as say Wal Mart does.
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D
Huh.
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B
Interesting points. Bill, thank you so much for your time today. Appreciate it.
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G
You bet.
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B
Carter, your take on Wal Mart.
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D
Well, I mean Dan makes this point. So Wal Mart after one of its great advances over two year period is sideways for now, almost 10. So that's what is a breakout candidate. You go up, you rest and then in principle you reassert yourself to the upside. Just now breaking out real quick.
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C
Don't under Bill, sort of, he didn't gloss over, he mentioned it. That's a big deal. Wal Mart coming to the Nasdaq. It's the biggest move ever from one exchange to another exchange. Courtney's coming on, she can speak to this. I think it's their way of saying, you know what, we're a retailer but we're technology focused retailer. That's a big deal for the Nasdaq and for Walmart as well.
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B
Well, yeah, signal for their, their digital franchise. They're sticking with retail. You mentioned Courtney. We have an earnings alert on Gap shares. They're higher in the after hours after the company reported its best same store sales growth since early 2018. The conference call started at the top of the hour. Courtney Reagan joins us now on set. Shares up 4.3%.
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A
I know it's a really good day for retail that we didn't start out strong but it's ending that way at least right now. And I do want to start with those comparable sales because in total all the Gap brands together up 5%. As Leslie said, that is the strongest non pandemic comp since the quarter ended January 2018. So that was also a holiday quarter. Gap itself up 7%. That was twice as good as expectations. Old Navy up 6%. Banana Republic up for athletic. It's the smallest but we have to mention it because it was down 11%. A lot of work to do there. Now earnings of 62 cents that was stronger than 59 cents. Revenues also stronger than expected. Gap raising its full year net sales outlook to that upper end of the previous range and then increasing its full year operating margin guidance. I spoke with Gap CEO Richard Dickson who's on the call right now getting ready to take questions from investors and he said Gap is exceeding expectations. We are winning with all income cohorts with equal growth in low, middle and high incomes. Dixon has seen consistency and strength in our customer behavior. CFO Katrina o' Connell explained that the tariff impact estimate is unchanged. And while it did have a 190 basis point hit to gross margin, the stronger sales with less discounting offset almost all of it. So it left gross margin down just 30 basis points from last year. And Dixon acknowledges disappointment with athletics performance as I mentioned. But he says that he believes the new President, she's just 90 days in, is taking the right steps. He is confident that the brand will re emerge. And Gap CEO Richard Dixon will be joining Jim Cramer on on mad money at 6pm for an exclusive interview. So we'll get to hear more from him directly when he does get off this call with investors.
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B
Well, yeah, it feels like the brand is re emerging. What, what have they been doing to try and win back that that brand equity? Because those numbers the best in eight years for comparable sales growth. I mean that's, that's nothing to shy away from.
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A
Right. So Gap is doing what I think Target wants to do. They're trying to get back that cool factor. And the CEO always talks about trying to be back in the cultural conversation. I don't know if you've seen any of the ads but they've had up Parker Posey in recent ad and she had a lot of hit with a lot of success with the White Lotus hit. They just had this other campaign that's sort of kicking off the holiday season that has really gotten a lot of people talking. The CEO says that it has sort of reignited the past Love some nostalgia from some of us that might have shopped at the Gap in high school with our restaurant paychecks. I don't know who that was but. And then also sort of reintroduced the brand to Gen Z. He's really trying to mesh music back with fashion. And it's an easy thing to say, it's a hard thing to do. But two years in, it does look like it's starting to take off.
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B
Yeah, the marketing push with Gap, American Eagle. I don't know if you've looked at.
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A
Old Navy, but their kids clothes are really cute and the prices are, they're compelling but without having to discount so much. And that's how they're pulling in that lower income consumer and really being able to hold onto those margins even after the pressure from tariffs.
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B
Yeah, we had to make a pit stop there on the way to your son's birthday party, so we did.
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A
Yeah, that's right.
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B
That Old Navy experience, unexpected but still worthwhile, still productive. Mike, what's your take?
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F
Yeah, I mean, look, Gap stores was trading at about 10 times next year's full year adjusted EPS estimates. And that was on, you know, very narrow margin expectations. Actually narrower than what they had been experienced over the trailing 12 months even before these results came out. And when you put that together, basically the better the top line and the better margin picture that they just articulated, you know, the move that you're seeing after hours here, I think could be just the start of something a little bit better because I mean, I don't see any reason why this couldn't trade 14 times and that's, you know, a meaningful 30% premium to where the stock's trading right now.
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B
Yeah, it definitely feeds into this whole. Brands from the 90s and early 2000s are just making their way back to the forefront of the cultural consciousness. Coming up, it wasn't just earnings impacting the markets today. How the long delayed September job jobs report factored in as well, and what it means for the Fed's next rate decision. One top central bank watcher weighs in. Plus Netflix, Spotify, DoorDash and Uber all getting hit hard. In today's sell off, we dig into the charts to see if the carnage will continue. Don't go anywhere. Fast money is backing through. For 140 years, MultiCare has been in Washington prioritizing long term solutions, partnering with local communities and expanding access to care. Together, we're building a healthier future. Learn more@ multicare.org at Capella University, learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the courseroom to the workplace. A different future is closer than you think with Capella University. Learn more at Capella. Edu.
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Welcome back to Fast Money. The much delayed September jobs report showing better than expected payroll growth for that month. 119,000 jobs being added though the unemployment rate ticked up hitting its highest level since October 2021. But with no jobs data coming for October and November, that November report delayed until after the next Fed meeting. How is the central bank looking at this data? Let's bring in Ben Emmons, Founder and Chief investment officer at FedWatch Advisors. Ben, it's good to have you. There is such a a data vortex right now. How much stock should we put into the September report, the revisions from August and net net what that means for the Fed?
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I
Hi Leslie. Well I felt it was a bullish report because as you mentioned this unemployment rate rising was really for the good reason. You know the report showed there was about 4,75,000 people coming back in the labor force and then there were actually people they were long term unemployed. There's actually a few of them now long term unemployed. One other so tippet in that report. So I thought it was a really good report for the Fed to vindicate their view that this labor market may have had softening and that's what those revisions from August show. But that is not falling off a cliff and that's what this report actually shows. So the market actually responded to this with rate up probabilities dropping really sharply because yes, the Fed doesn't have a reason here to cut rates immediately because there's no alarm on the labor market.
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B
Yeah, odds now sitting around 40% chance of a cut in December. Do you think that's the right likelihood?
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I
I think so. I mean we talked about it previously that this Fed seems to be willing to stay on hold simply for the reason that they do feel that this labor market is deteriorating and but they're dealing with this inflation picture that's not cooperating direction that they want to. You know Beth Hammock was talking to Steve Liesman earlier today. Do you can get a Pretty strong case there like we have dealing with elevated prices, you know. And it's funny that that's against the Wal Mart earnings that show that, you know, there's not much pass through coming to their earnings there. But you know, overall the inflation picture isn't really what the Fed wants it to be. So I think these properties probability will stay low. There's always a chance that they will go for it if anything changes. But I think they are on hold for December and go forward with generating potential.
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C
You know, Ben Carter correctly has pointed out that the bond market is really nowhere over the last year and a half. We're waking up, it's 4.1%. We've been here before. I still think rates are going higher. I'm not suggesting I'm right. But what do you think is going on here in the bond market? I mean, this is probably best case scenario for the market. There's no bond volatility.
- [23:12]
I
That's right. I mean, you know, you and I both want to show long term, show the. So I share this view that rate should be significant, significantly higher. This is an economy, it's so much like stimulus coming in over the course of next year with all this investment, you know, you should actually see yields more closer to 5%. But I think what's happening is that there's some, I think hedging some diversification against this equity market and I picked it up from client conversations that bonds do look a little bit more attractive in that respect. And secondly, we don't have really any major surprises from the Fed. And on one way or the other which kind of keep that volatility lower. And then it's about sort of the situation where who's going to be the next, next Fed chair, what are they going to do from there? That I think does play a role because we saw from the comments from the President the other day they really want to bring rates down. I think that sits in the market's mind since February to try to jawbone it down. And I think that's why you see some buying flows and bonds even though yields should be higher because of a good economy.
- [24:13]
B
I know you've studied what's going on in private credit quite closely. That was an area of concern for several Fed officials this week as well. We saw the Blue Owl merger get terminated amid concerns there, which is all playing into this broader market sentiment surrounding business development. Companies that have exposure to private credit which have sold off. You know, how do you think that all plays out.
- [24:40]
I
Leslie, what you saw today was Lisa Cook with a speech out putting a specific section on private credit and then mentioning there that is drawing their attention because it's grown so fast so quickly and there's now some stresses building there. And this Blue House example is one other example of that. That although not falling apart, I don't think there's a financial contagion playing out here just yet. But they are getting the attention of the fact. And I think the Fed will go from here with the sec, the fsoc, which are bodies to start looking at private credit more specifically and saying what can we do here in order to not let this morph into another subprime example. So I think that's what's playing out here. And this negative headline coming from that does affect markets because people don't like the opacity of private credit. This idea that money's tied in there as illiquid and we actually don't know what the marks really are. That was an example blew out too. So it will stay a bit with us. And what the Fed is really going to do as we go from here sounds like from Lisa Cook speech that they're paying real attention to. So we should, we should really keep an eye on this.
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B
All right, Ben, thank you so much. Appreciate your time this evening.
- [25:51]
I
Thank you.
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B
Carter, what's your take?
- [25:53]
D
Yeah, you know, I mean Guy refers to. Think about it. We are basically at 4%, right? And we were at 4% three years ago. So if you look at the autumn of 2022 to right now here, the autumn of 2025 rates have done absolutely nothing. The highest they've been is 5%. The lowest three and a quarter. We're sitting at the midpoint. It is the reason that the so called Goldilocks narrative has been okay, we can have any multiple we want because we don't have to worry about a spike in interest rates. I'm in the lower yields camp. And so that's on the opposite side of Ben and Guy. But that's what makes a market. I am a buyer of Treasuries.
- [26:23]
B
At the same time, there's tighter funding conditions for credit right now. Are you surprised or do you think there is a risk that we see more volatility seeing?
- [26:31]
E
Yes. In a name like Oracle and I know a lot of folks were kind of pooh pooh it a week ago. You know, you look at this deal that Metta has done with Blue Owl and KKR to get this financing for this Louisiana data center off their balance sheet. I mean there's a lot of stuff going on and it's not nearly, I guess, as transparent as some of the other lending that we see. So you might see tighter spreads right in some of the stuff that's being quoted in the public markets. But you don't know what's going on I guess in the private market too. So, you know, there's stuff going on here. And you know, Oracle was one of the first companies, the first stocks to go down today. It's already sold off about 40% from those highs post that open air contract and it closed down six and a half percent, a huge reversal, 10% intraday. So again, you could say this is just fundamental. There's some technical things at stake and there's some other things that are going on that a lot of folks are not going to be able to put their finger on until we look at it, you know, after the fact, I guess.
- [27:25]
B
Yeah, it's just a tremendous amount of debt being issued over the span of two months essentially. And the market's just trying to digest it. There's a lot more fast to come. Here is what's coming up next.
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G
A few green arrows in today's sea of red. The restaurant stocks bucking the downtrend and whether our traders are biting into them. Plus biotech M and A action shaking up the healthcare space this year. Will that lead to bigger gains? Where our next guest sees the most opportunity? You're watching Fast Money live from the NASDAQ market site in Times Square.
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We're back right after this.
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- [28:59]
B
Learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the classroom to the workplace. A different future is closer than you think with Capella University. Learn more at Capella Edu welcome back to FAST money. Some restaurant stocks buckling, bucking today's sell off and giving investors something to bite into. Kate Rogers has the details. Kate, hey.
- [29:24]
J
So a lot of red across the sector but a few names ending the day green fast food names, Yum Brands and McDonald's up around a half a percent today. Restaurant Brands International, Burger King's parent company also up around a quarter of a percent to end the day. All three of those names also among the only positive sector performers year to date in this really challenging environment for the restaurants. Jack in the Box, which reported earnings today with tough same store sales comps and an update on its turnaround plan. The stock actually climbing nearly 8% to end the day. We should note though, it is a small market cap name of just under $300 million. Finally, coffee company Dutch Bros. Climbing about one and a half percent today. The biggest restaurant sector loser on the day, Kava, that stock down over 4%. It's interesting to see that some of the names that would cater to a lower income consumer did wind up performing better today, particularly those fast food names. As we get more details on consumer sentiment with retail earnings in focus right now. Leslie, back over to you.
- [30:20]
B
Kate. Thank you. Guy. What is your take about kind of the bifurcation we're seeing and when growth.
- [30:28]
C
Stops in restaurants and kicking talk and it happened in Chipotle, it's happening in carbon now. Nobody looks at valuation on the way up. When you have comps growth and when it stops and turns the first thing that people look at and then you're done. And that's what's happening in those names. Flip side of the coin. So McDonald's is sort of the Wal Mart in the space if you look at it slow and steady making all time highs coming off a quarter that wasn't great but people are saying it 23 times next year's numbers. They can get their arms around something that really seems to have some granular hold on the consumer in a pretty meaningful way.
- [31:00]
B
Yeah, there's a key advantage to being the biggest to having that scale in this environment. Mike, what's your read?
- [31:06]
F
Yeah, I think you could also take a look potentially at Yum Brands. So Yum Brands also is sort of occupying that same segment. You've got Burger Habit and Pizza Hut and Taco in there and this one also trading around 22 times forward and we're probably looking, my guess is adjusted EPS. I think it's a relative conservative estimate at about 9% year on year growth and maybe even slightly better top line growth than you're getting out of a McDonald's. So I think this is another place.
- [31:34]
B
To look good flag there. Coming up, a booming year for biotech. More than doubling the performance of the S and P P and now even outperforming the Mag 7. Our next guest sees the most opportunity and the M and A action heating up the space. Fast Money is back in to welcome back to Fast Money. Another check on today's major market reversal. Stocks rallying early in the session but losing steam quickly as Nvidia gave up its post. Earnings pop, the Dow closing the day down nearly 400 points, the S&P falling one and a half percent and the tech heavy NASDAQ leading the losses down more than 2%. Bitcoin also dropping hard, falling below $87,000, hitting its lowest level since April. And some more after hours action into IT and Ross stores both topping EPS and revenue estimates. And check on shares of Citigroup CEO Jane Frazier announcing that finance chief Mark Mason will transition out of his role in March of next year, being replaced by Gonzalo Luchetti. Frazier also announcing a reorganization of Citi's personal banking business, which Gonzalo led, making its consumer cards unit a standalone business. Biotech not immune to the sell off today though the sector is still up about 22% so far this year as measured by the IBB. The group getting a boost after several years of underperformance thanks in part to a big pickup in M&A. 18 deals worth $1 billion or more have been struck so far in 2025 as Big Pharma looks to replenish their pipelines. Early stage startups also benefiting from the deal flow. For more, let's bring in Portal Innovation CEO John Flavin joining us here on set, the venture firm provides funding and lab space to early stage life science companies. It is really wonderful to have you here because this has been such a big move for an area that was really left for dead for the better part of the last few years. Do you attribute it all to kind of the sentiment shift surrounding M and A ipos? I guess to a certain extent. Maybe when that window opens back up in 2026.
- [33:49]
H
Well, you touched on a really important topic. You know the patent cliff that faces Big Pharma. They need to be replenishing their pipeline and thankfully one of the things that I think is driving evaluations in the space is science. There's transformative therapeutics being developed that are creating better outcomes for patients across a range of different therapeutic Areas including neurology, disease of the brain, cancer, autoimmune diseases. I think that's had a profound impact. And acquisition has picked up with acquisitions. Now at 100 billion for the year, it's over double what was seen last year. When that happens, you know, the venture investors that put the money in in the beginning reap strong returns. They're able to recycle that money and put it back into the next generation of innovative companies. So the funds flow and the juices are finally back in the system after several bad quarters coming out of that nuclear winter that you just talked about.
- [34:41]
B
Also drives up potential acquisition targets as people start to figure out who might be next. How does all of this change? Maybe net net for the better, Net net for the worse. Given what we've seen with nih, cuts, overhauls at the fda, other regulatory change in Washington, do you see that all being more of a tailwind or headwind for the industry?
- [35:03]
H
Well, I think we entered the year the industry was very concerned about the administration's changes. And some of those changes still are overhangs on the sector. But there's been some bright spots that have occurred that have provided some assurance to investors that, you know, the FDA is open for business. Dr. Makary has ambitious plans to accelerate drug approvals. The stats don't show that yet. It's actually shown more rejections and a slower pace of approvals. However, some bright spots they did pass the recent plausible mechanisms pathway for rare disease drugs. This is a really important breakthrough for especially rare diseases where there's very few patients that have this particular indication. The big breakthrough happened using a tool called crispr or gene editing a few months ago with baby KJ Muldoon with physicians at University of Pennsylvania Hospital that cured this fatal disease. And so with the FDA passing that legislation that allow more developers to use gene editing almost like as a new form of surgery to fix some of these rare genetic diseases. I think that will open up new business models and continue to help innovators thrive.
- [36:17]
C
John, in terms of your business, you're probably in the sweet spot now. You're starting to see some M and A pick up. But the other side of that coin is harder to find deals at the valuations that you want them at. Is that somewhat accurate?
- [36:29]
H
Yeah. And again, I think what we've also seen here is there's been a cleansing of the public stocks. You know, 2021 was a very frothy year coming off of COVID a lot of those companies that couldn't survive. You know, again are kind of out of the system. So I think there's a real quality factor that's out there. And to your point, as M and A happens, as more money is made by venture capital firms, they're looking for quality opportunities and pharma typically is only getting the game with late stage assets. And so as those assets dry up in terms of just scarcity, it bids up the value of the company. So yes, but you know, we're still at a part of the cycle where you know, our thesis has been, you know, continue to be, you know, buying in the nuclear winter so that, you know, as the sun rises we get the benefit of the upside.
- [37:20]
B
Yeah. One thing that stood out to me that was interesting in the producers notes from you was this idea that Texas is leading the way in terms of state funding and innovation. Usually when I think of biotech, I think of Boston or San Francisco or New York to some extent. What is Texas doing differently and do you see this as more of a model for other cities and states?
- [37:40]
H
I think it's a model for other cities. I think what you've seen is, you know, for the last 50 years, the primary centers of biotech innovation have really been concentrated in Boston and the Bay area as universities have recruited very innovative faculty as their business model has changed. So the business model of top research institutions today, it's almost like an innovation arms race. They're all trying to build a Division 1 innovation program attracting these faculty that are very good inventors. They're going to other places now. They're not only going to Boston and the Bay Area, as that happens, they're going to places like Texas. Texas has a very friendly state for biotech investment. They have a taxpayer bond funded program, $6 billion called the Cancer Prevention Research Institute of Texas that invests directly into companies. We've had a couple companies that were just announced, got $25 million, part of our portfolio that are based in our Houston location and follow on to that. They have now just passed legislation for the Dementia Prevention and Research Institute of Texas. Taxpayers allowed and we'll fund $3 billion to go into neurodegenerative disease research. So states, you know, Rhode island is doing the same thing. We're partnering with them and Brown and University of Rhode Island. Really cool science that's coming out on both the RNA side of things as well as neuro and even infectious disease. And so resources being made available by the state as the FDA and the NIH pull back is where the innovation action is happening.
- [39:13]
B
Yeah, you don't typically associate State funding with biotech, but I guess that's a, that's changing these days. Thank you, John. Wide ranging and interesting discussion there. Coming up, Internet issues. Netflix, Spotify, DoorDash and Uber all getting hit in today's market reversal. Is the pain only temporary or do the charts point to more trouble ahead? Fast Money is back in two. Welcome back to Fast Money. Big losses today on the consumer end of the tech trade. Netflix, Spotify, DoorDash and Uber all dropping today. While all are still up solidly for the year, they're down double digits from their 52 week highs. Dan, you mentioned these moves earlier. They tend to get lost in the trade conversation, but clearly there's a second derivative play here.
- [40:05]
E
Yeah, it's been building for a while and I think one of the things that Guy said, he respectfully disagreed with Bill Simon about the consumer. I mean these are largely consumer facing companies, right? And they've kind of been rolling over now for the last couple of months or so. And so to me, I know Carter will talk about the technicals. I mean I would think they'd be acting okay here. Some of the valuations in space are far better than that in the air sort of trade. And I also say that these are companies that should be benefiting from some sort of spend as it relates to AI, at least in their businesses. And some of them are ad supported. We know that was a big case for meta. So to me I think that you're losing legs of the stool of the tech trade and the semis, I think for all intents and purposes are probably the last leg of that.
- [40:46]
D
Yeah, and some of the idiosyncratic big names that are still holding out like it like a Google. But the common circumstance with at least a couple of these Netflix and Spotify is that they peaked months ago. Both of those two stocks peaked in June. Remember the stock market only just now in the past two weeks has put in a high. And so it's a testament to respecting relative strength or poor relative strength. These have been topping and rolling and each one qualifies sort of officially, if you will, as a bullish to bearish reversal sell.
- [41:14]
B
Yeah, I was looking at Spotify. It is 45 times forward earnings. So these aren't cheap by any measure. Guy.
- [41:22]
C
Now when things are going well again, people will sort of say, you know what, valuation will sort of put that on the side until people start to look at valuation on sell offs and all the names you mentioned, even Uber you could say is a little bit expensive. But Dan, I think Hit the nail on the head. These are consumer facing stocks, stocks that are rolling over and Carter said it for a while now, that is concerning. And again, to respectfully disagree with Mr. Simon, I don't think the health of the consumer is nearly as robust as he does.
- [41:47]
B
Mike, what do you take, what's your take on this whole thing?
- [41:50]
F
Yeah, I mean, Netflix is a name that I've liked for a long time, but the trend is certainly extremely worrisome. The valuation is not particularly worrisome. And I think what the trend is telling us is that the forecast right now for close to 30% year on year adjusted EPS growth might be a little bit ambitious. So this is a name I would definitely take a look at, but I certainly wouldn't start adding to it right here. We have a position in it already, but I'm not going to add to it until we start to see this thing level off and actually start breaking above some of these downtrends.
- [42:20]
B
All right, thank you. Coming up, another data center deal. The latest Open Air move to fortify the US Supply chain, who they're partnering with to help with the hardware more intense.
- [42:31]
F
You.
- [42:39]
B
Welcome back to FAST money. We have a news alert on a new partnership between Open Air and Foxconn. Mackenzie Sagalos has the details. Mac another day, another ideal indeed.
- [42:51]
J
Leslie OpenAI is deepening its US Infrastructure push, this time teaming up with Taiwan's Foxconn to develop and manufacture AI data center hardware in America. Now, this deal gives OpenAI early access to evaluate and potentially purchase the server systems at Foxconn Designs. So really this is about OpenAI trying to speed up the deployment of the $1.4 trillion worth of compute commitments it's made in the last two months. Foxconn. It will make AI server racks with OpenAI and manufacture key components like power, cooling, networking and cabling systems at its U.S. factories. Now, they have incest specified which site, but we know that they are already building AI servers in Houston. Even though it's best known for assembling iPhones, Foxconn is now the world's largest maker of AI servers and a key Nvidia supplier. Now, this deal adds a manufacturing layer to OpenAI supply chain and helps them localize production. It also comes as part of a big hardware push by OpenAI CEO Sam Altman. He signed that $10 billion deal with Broadcom to make AI chips that would ideally rival the Nvidia GPUs that could currently train and run OpenAI's models. And you'd have to think that Foxconn would be building the racks to hold those new chips.
- [44:01]
B
Leslie, Mac, where did they previously build those components for data centers? Were they in other parts of the us Were they using someone other than Foxconn or was it abroad?
- [44:13]
J
So to this point, OpenAI has exclusively been using Nvidia's GPUs. And so Nvidia does the. The server systems themselves, the NVL72. But what we've seen, notably in the last few months, is this push to potentially have OpenAI diversify away from Nvidia's models. They signed that deal with AMD and then they signed that deal with Broadcom to build their own chips. And so that's where a partner like Foxconn would be so crucial, because they need a server rack to hold it, so they could use specs that would be specific to what they're building out with Broadcom. And I will say this, this also comes after, you know, earnings after the bell yesterday, where in the SEC filing, Nvidia said there's no assurance that they will enter into definitive agreements with respect to the open air opportunity. They're referring to that $100 billion deal.
- [44:56]
B
Right? That's a good flag there, Mac. Thank you so much, Dan.
- [45:02]
E
Yes. I mean, some of the contract manufacturers here, Celestica, J Bill, they did not trade well today. And again, you know, who knows? It's hard to break these things out one way or another. But Foxconn is obviously trying to make big inroads here in the U.S. right? And as Mac just, first of all, she just surrounded that trade, by the way. You know, it's just another one of these stories where open air, you can say, well, this is a totally legitimate deal. I mean, they need folks to build these racks that go into the data centers that power their models or train their models. But, you know, this is assuming that all of that one and a half trillion dollars is all going to get funded. It's going to get spent, it's going to get built out.
- [45:36]
B
Yeah. Going back to your earlier point about accounts receivables. Up next, your final traits. It's final trade time, Mike.
- [45:49]
F
Yeah. Respectable results. Buy right. Gap stores Harder smh.
- [45:53]
B
Sell short guy.
- [45:55]
C
You're coming back. Leslie, this was great having you.
- [45:59]
B
I haven't scared you off yet?
- [46:00]
C
McDonald's? Not at all.
- [46:02]
B
Not at all. All right, well, thank you for watching. Watching Fast Money. Mad Money 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 fastmoneydisclaimer@ Capella University, learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the courseroom to the workplace. A different future is closer than you think with Capella University. Learn more@capella.edu.