← CNBC's "Fast Money"
CNBC's "Fast Money"
Tech, Software Sell Off… And The Impact On Private Credit 2/3/26
00:43:25
Tech leading today’s sell-off, with investors dumping software stocks as the AI revolution threatens the sectors growth model. The names getting hit, and the latest comments from Nvidia CEO Jensen Huang on the company’s deal with OpenAI. Plus, AMD and Chipotle report results, Bitcoin’s slide continues, and the next move for Novo Nordisk after the stock tanks on a sales warning from the company. Fast Money Disclaimer
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- [00:00]
Melissa Lee
Hey, Fidelity.
- [00:02]
Tim Seymour
Can I get a second opinion on stocks in the Fidelity app?
- [00:05]
Melissa Lee
With Fidelity, it's easy to get an outside opinion from independent experts in a single score. And then when you're ready, trade US stocks and ETFs with no commissions.
- [00:16]
Carter Worth
That's right.
- [00:16]
Melissa Lee
I am always right.
- [00:19]
Carter Worth
Investing involves risk, including risk of loss.
- [00:20]
Tim Seymour
Online US equity trades and ETFs and.
- [00:22]
Steve Grasso
Retail fidelity accounts sell order assessment fee.
- [00:23]
Carter Worth
Not included some account types and securities excluded.
- [00:25]
Steve Grasso
Details@fidelity.com commissions Fidelity Brokerage Services, LLC member NYSE SIPC ABC's David Muir, the most trusted anchor in America the most watched anchor in America. Thank you for making World News Tonight with David Muir the number one newscast in America. Most trusted Most watched David Muir on.
- [00:44]
Melissa Lee
ABC Live from the NASDAQ markets in the heart of New York City's Times Square. This is fast money. Here's what's on tap tonight. A tech wreck weighing on the market. Semi and software stocks both sinking today. What it says about the state of the air trade and is this a sign of a true rotation in the market? Plus the fallout is in the private credit companies. Why? Concern over the software sector is taking a bite out of names like Blue Owl and Aries. The investment thesis for these stocks right now. And Novo loses momentum in a big way. Wal Mart hits a milestone and joins a very exclusive group and a strong foundation for Lennar. The potential plans that had the homebuilder jumping today. I'm Melissa Lee. Come to you live from CDR at the nasdaq on the desk tonight, Tim Seymour, Carter Worth, Steve Grasso and Julie Beal. While stocks was off their worst levels of the day, it was read across the board on Wall street, the Nasdaq leading the losses down nearly a percent and a half as investors swerved out of tech and into safe havens. The trade in particular getting hit hard. Hyperscalers deep in the red today. Nvidia CEO Jensen Huang trying to allay concerns over his company's investment in Open Air during an interview with Jim Cramer this afternoon. Take a listen.
- [01:52]
Tim Seymour
No, there's no controversy at all. It's complete nonsense. We love working with OpenAI. We are incredibly honored and delighted to be able to invest in their next round. And so we're privileged that they're inviting us to invest for each one of their rounds. We would love to be invited and we would consider, of course, investing in it.
- [02:14]
Andrew Davis
This is one one of the most.
- [02:16]
Tim Seymour
Consequential technology companies in history.
- [02:21]
Melissa Lee
Those words. Though failing to stem the Bleeding, shares dropped nearly 3% for a second straight day. Is today's action a sign of genuine investor fear for the future of the AI trade? Are we making too much of this? I just spoke to Jim Cramer in the other, in the last hour and he was basically saying Jensen tells me the truth. He's always told me the truth. So I don't know why we're making such a big deal.
- [02:42]
Tim Seymour
Look, I think everyone who's involved with Nvidia and AI and certainly those companies are very excited about what they're doing and think they're changing the world. They may in fact be changing the world. To what extent? We've priced in euphoria across the entire space to a place where especially in software, you had, you had the group trading on an EV to revenues, not to earnings but to revenues probably north of 30 times before this pullback began. There's a lot of questions about monetization even for some of the biggest companies in the world. We've even questioned even Microsoft's ability to monetize. We've, we've certainly questioned their ability to grow at a multiple that's discerning when they get there. You know, not to pick on Microsoft, which I actually have nibbled at the last couple of days. But you know, Azure decelerating.365 decelerating. So these are things that I think are part of the story and the backdrop. The other side of this is this is a wonderful rotation that's going on across the rest of the market and it's a, you know, we talked about that industrial production number that ism, we talked about the dynamic that it's not just that they're value stocks that look more interesting relative to software names but we truly are seeing, I think an economic expansion in certain parts of the economy that for a long time had underperformed. So 52 week highs and lows across the board, but more positive than negative today in terms of where this tape was. So no, I mean I just think it's a breath. I think semis are making lower lows. I think Broadcom hasn't touched the 200 day. To the downside, going all the way back even a couple of years, you have to watch these things. That's why Carter's here. But I, I guess, you know, I'm not surprised at the euphoria but the violence of, of some of this rotation only is mirroring where we were on the way up in some of this stuff. I don't think it spread, you know, doesn't invalidate what's going on in AI.
- [04:26]
Melissa Lee
I mean we had continued strength in transport. Staples had a great day, utilities had a great day in spite of this sort of, you know, bleeding elsewhere.
- [04:34]
Carter Worth
So just a cliche but it's a stock pickers market because of that. But I mean the important risk here I think for the market is that we know that the relationship between semiconductors and software companies is proved right. They are linked structurally and yet the relationship is asymmetric and cyclical. Short term, long term, they're complementary. The risk, the market is that the euphoria that's in semis ultimately the air comes out of that because look what's happened to semis. We have a spread now. What the SOX is down some, up some 20% for the year, practically six months and software's down 20, you know, 4,000 basis points. That's the real risk that these complementary areas ultimately that the hype, whether it could be precious metal or a bitcoin or a semiconductor stock or software stocks, they were all loved. If the air comes out of that because they are linked, the market cannot endure that.
- [05:22]
Steve Grasso
Yeah, I think it's maybe players are just tired of the same thing. Maybe the players are tired of the, the semi space now semis are boom, bust, we've talked about that and they have not been bust in quite some time. So semis could be a valuation play where people want to move away from that. Softwares are a replacement play. Are they getting replaced by AI? By an expensive AI? How long can CapEx stand to where CapEx is right now? I think just, just let's extend that out. How high can CAPEX really go to some target? I'm just, I'm asking a question, I.
- [06:00]
Tim Seymour
Don'T have the number but I hear you and I think again it gets back to this story about companies that were generating free cash flow at will are no longer deserving of the same multiple if they're not. Carter's right. I mean the thing you should be most concerned about is that semis are within 3% of all time highs and yet it feels like death out there now. In fact most of the semis are rallying and that's what I think is, is pretty interesting. I think it's some of the broader tech too that I think when people see a Netflix crack $80 and the move that's been an extraordinary move and other parts of, of even non mag 7 it was a day where we're going to talk about some violent moves and some, some former kind of blue chip tech companies that aren't even anymore but, you know, that's more, I think what we, what we're up against, I.
- [06:43]
Steve Grasso
Think it's the Russell. I think the Russell is the canary in the coal mine is the longest outperformance the Russell over the S and p since the mid-90s. So maybe they think that Wash is going to be more dovish than the market, than the market thinks right now. So this outperformance cannot be swept under the carpet right now. I think people are looking for a.
- [07:04]
Melissa Lee
New horse in terms of specifically the open air trade. Julia, I'm just curious what your thoughts are on this whole, you know, alleged in video OpenAI drama, both of them saying, you know, that they love each other basically. And, you know, OpenAI was saying that yesterday on a post in X and Jensen Huang was saying that today to Jim Cramer. But there is this element of frenemy where OpenAI is not, does not have an exclusive relationship with Nvidia. And Chris Rolland of Susquehanna just said that he believes that OpenAI is working on its own TPU, which could be competitive to Nvidia. So there's sort of this unease here in terms of whether or not these partnerships will actually be, you know, as accretive as we think to these players.
- [07:45]
Julie Beal
I think that that's right. I think it almost feels like Melrose Place. Do you guys remember that show where the interwoven relationships between people and, you know, whether people were friends or foes? It really actually does feel that way. Part of it is I do think that a lot of the buying that's happening in chips and semiconductors is defensive. It's to protect from anyone else getting and being able to fortress your capacity, even if you don't necessarily know for 100% sure you're going to need that capacity. There's really no other explanation for OpenAI's movements. Like, it just doesn't really feel like they're economic. When you compare the revenue base and even their very rosy forecast projections, it's not. It just doesn't really make a lot of sense or pencil. So, to me, it feels like a lot of this is about the posturing and the hype, because that's what we need in order to support the valuations when we're out here fundraising and eventually going public. But I think that Steve's point about the Russell is actually really interesting because I do think that this rotation into small cap is about. Look, I don't understand if AI is good or bad for software. I don't know if it's good or bad. For chips. But I do know that lower interest rates have a really direct impact on the Russell and that at least is something I can have clarity on and get excited about.
- [09:00]
Melissa Lee
Right. And also we don't, I mean I don't know if there's an impact on, on a trucking company or a railroad.
- [09:07]
Steve Grasso
It's positive.
- [09:07]
Melissa Lee
Or Cheetos, I mean take a look at what is moving higher.
- [09:12]
Tim Seymour
Cheetos had a good day, had a great day.
- [09:15]
Melissa Lee
Diet Coke had a great day today.
- [09:16]
Tim Seymour
I think they were, I think they were actually drinking a lot of Diet Coke at 464616 Melrose Place that Julie referenced which was, I mean that was a nice flashback. Absolutely. There's, there's no question and if anything the argument has been made that the rest of the real economy is actually benefiting from AI and from some of the benefits, some of the margin accretion. They have not been asset heavy in terms of how they've had to invest in it. Pepsi for sure. I mean Pepsi gave a great outlook. They gave a guide to their numbers, their snack business also they're actually kind of keeping prices in line and seeing more demand and more price sensitivity there and it's actually working to their advantage. So again, I think the rest of the economy was in full display today.
- [09:56]
Melissa Lee
All right, let's stick with the semi space here. Earnings alert on AMD shares dropping despite the company giving better than expected revenue guidance. Conference call is underway. Christina Parks naval is here on set for the latest. Christine, so we know the numbers you.
- [10:09]
Christina Parts Nevelis
Talked about even with analysts in the last hour, A$53 on revenues of 10.3. But what really I guess took a little bit of analysts by surprise is that it now factors in China sales. And China sales were added roughly 390 million to that revenue number. So if you take out China, the beat wasn't massive. And then for the Q1 guy that we're also seeing for AMD, they also said that they were going to be including $100 million specifically for China. I was able to just ask AMD. Now, does that mean that the US government's getting paid? That hasn't been worked out yet. Recall that the US Government worked out a deal with all the chip makers. They're going to have to pay anywhere between 15% depending on the chip to 25% if it's a more advanced chip. So that could equate to roughly $58 million that needs to be paid to the US government. In regards to the guide though, it was higher 9.8 versus the 9.3 in terms of revenues that the street was expecting. Billion, I should say. And then even for the gross margins number the guide, I guess the concern is China. And then the second concern too is that the guide wasn't much higher than what the street anticipated. But I spoke to one analyst too, just offline, and he was just saying that the product ramp is really going to pick up in the second half of this year. The stock has run up what, 41% just in the last six months. Well, much higher than Nvidia, Broadcom, etc. So that could just be part of.
- [11:25]
Melissa Lee
The reason to the product ramp when it comes to data center versus traditional cpu.
- [11:30]
Christina Parts Nevelis
I mean so cpu to your point, it's called the EPYC processors. That's a CPU stuff that actually was really great and it's part of the data center revenues. They even said that they had a very strong demand in regards to the product ramp. It has to also do with their GPU chips. So the next iteration and their Helios rack, which includes a much bigger piece of equipment, 72 GPUs, a bunch of CPUs and similar to what Nvidia is doing. And so that is scheduled for the second half of this year. There's a lot of hype around those racks as well. So that's why what he meant in terms of just, you know, the product acceleration in the second half of this year.
- [12:03]
Melissa Lee
All right, Christina, thank you. Christina. Parts Nevelis, what do you make of the quarter?
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Tim Seymour
The quarter was fantastic. Again, it's all about relative expectations. And everything we're hearing on the tape is AMD is doing their best to get in there and say, hey, by the way, you know, I'm reading this coming across the tape here. Eight out of ten of the biggest companies are using Instinct chip to power their production and their workloads. They're talking about modernizing of data centers. We know AMD has owned the data center space, has stolen it from other places, especially from, from, from Intel. So I think these numbers are great. I'm not surprised in the tape that we have that people wanted to see a little bit more. But the question has always been where are they closing the gap? Where are they filling a niche within at least 30 the the AI chip space that Nvidia is either avoiding or is not or they can take a little bit of market share. We're still waiting for that.
- [12:52]
Melissa Lee
Carter.
- [12:53]
Carter Worth
Well, again, I would just refer to it. There is no such thing, right as good or bad results. There are only results. And it's how the market reacts. So if the stock is down, it is. The results are bad. Is there any other way to interpret it?
- [13:09]
Melissa Lee
No.
- [13:10]
Steve Grasso
The market is the arbitrator of good or bad or market direction. But when you look at AMD, they have a $10 billion buyback, they have roughly 8 to 10% market share. They're shooting for 20% market share. It's a question to, to Carter's point, is the market tired of semis? Market's telling you it's tired of semis when you have that type of print. They're up 30% year to date. Micron is up over 40%. So that shift has already taken place. You're looking for where Tim said truckers. It does help AI. So you're looking for those efficiencies to spread out to areas where the market has not valuated yet.
- [13:46]
Melissa Lee
All right. And do not miss an exclusive interview with AMD CEO Lisa Su. That is tomorrow, 9:00am Eastern Time on Squawk on the Street. Meantime, investors dumping software stocks today. The IGV ETF dropping nearly 5% a sixth straight day of losses. It is now lost 19% this year. The weakness sparked by fears AI could dramatically alter software's well established growth model. Among the big losers today, Vertex Alchemy. Akamai Technology. No, it's actually Alchemy Alchemy Technology Intuit in Salesforce. How much pain could still be ahead here? And Julia, you see it sort of rolling through sectors because we had a general malaise in software for quite some time. But more specifically, you know, when Microsoft reported earnings and you saw that big sell off, you thought, oh wow, this, this sell off is real. Then we saw Project Genie disrupt some of the gaming stocks. And then today Claude Code released new tools that could potentially displace the legal industry. And you just wonder, where does this end?
- [14:45]
Julie Beal
It feels pretty endless, right? But I think there's a disconnect between the reality of think of your enterprise IT departments. They are not really that excited about Jim in marketing vibe coding a new CRM platform. So I think you have to be able to really separate the types of companies that have a data advantage, have a workflow and are also important enough that an IT department isn't going to be that enthusiastic to have different tools coming into play that haven't been rigorously tested and that don't have the kind of qualifications that some of this software does. That said, I think there is a lot of optimization automation software that can be very easily replicated at low cost where you don't have a big problem. It's not a big deal if it hallucinates or if the note taking app makes a mistake. It's not a big deal deal. It's just you have to look at these kind of one by one to see what can be replicated very easily and what's going to be much more difficult and costly if there's an error.
- [15:47]
Melissa Lee
But the best in class, I mean the ones, Julie, I think that you're referring to the likes of a Microsoft, the likes of a ServiceNow salesforce of the world even they are being sold off as if they could be replaced tomorrow. Even though to your point, the IT department is probably not going to say we're going to get rid of 365 entirely. And yet that's the way the market is is positioned.
- [16:07]
Tim Seymour
Again, revenue in their two core businesses is actually decelerating. I mean it's still impressive. I mean as you're at 37, 37 and a half, 38. But again I say a Jefferies note that I saw was, was really fascinating. I mean they say that more than half of the sector has decelerating revenues which tells you and again we're talking about multiples that at their peak were 50, 60 times EV to sales. The entire sector is even pulled down to, you know, sentiment is as bad as it is. And again according to Jefferies, as it was in the the bottom of the financial crisis and the dot com bottom in software and yet multiple has not dropped and there's a view that it could go lower.
- [16:45]
Steve Grasso
Yeah, when I, when I look at these, you've heard me always say that I buy or I sell CEOs when I look at a service now that's down 40% in three months. I don't want to sell a Bill McDermott. I don't want to sell A CRM that's down 25% in three months. So I think the market overreacts on both sides. It definitely feels that they've overreacted to the downside. I'd be a buyer of software here.
- [17:10]
Carter Worth
Again, I would say is the extreme oversold at this point. Move in the group weakness to nibble at and or to pair against the extreme strength right in semis. And I would say that probably is a smart play here to sort of be contrarian and anticipate some give back or a lot of give back in semiconductors and some prospective bounce in these very beaten up software names.
- [17:36]
Melissa Lee
For more on what this all means for the markets, let's bring in Andrew Davis, director of macroeconomic research at Bryn Mawr Trust Advisors. Andrew, great to have you with us.
- [17:44]
Andrew Davis
Thanks for having me.
- [17:44]
Melissa Lee
What's your take on what's going on in tech since it's the biggest chunk of the markets here?
- [17:50]
Andrew Davis
Yeah, hard not to notice. Look, I think it's interesting to me right now that software really mirrors what we're seeing in the broader macro data. Right. Slower hiring, a lot of questioning of discretionary spend. And so for us we're focused, laser focused right now in selectivity in this market.
- [18:09]
Melissa Lee
Okay, so selectivity like specific stocks or. I mean, right, you're sort of, you're the macro guy. But what sectors are you looking at?
- [18:16]
Andrew Davis
Yeah, well I think more from a market cap perspective, something that's really interesting is you look at like small caps and m off to the races, phenomenal January. And we certainly don't want to fight momentum here, but we would just push back gently on. The market's really in love with this pickup in growth story. And yeah, I think it's, it's right to have a little bit of caution around that.
- [18:40]
Tim Seymour
I agree. And I was looking at your notes and you say the story is is still looks like cooling, not collapsing. But I think what you're saying, because I think the economy is expanding and my view is despite, you know, one member, maybe a couple of members of the Fed that seem to be rubber stamping stuff, it's impossible for the Fed to be avoiding inflation here. And seems to me it's a market that was expecting a lot more Fed. So as you look at the investment landscape, how much do you think less Fed is also an issue for markets here because if anything, what we're getting from the economy is stuff that is not indicative of, hey, we should be in a massive cutting cycle.
- [19:16]
Andrew Davis
Well, it's interesting because the bottom's not falling out. And you go back to small caps, that performance that we saw in January, how much of that rate sensitive segment of the market is really betting on lower rates? If the market hangs in here, kind of the slow stretch expansion that we're seeing in employment light expansion. Still think the Fed has a rate cutting bias, but I don't think they need to get there too urgently.
- [19:39]
Melissa Lee
What if growth doesn't reaccelerate and it just goes flat because you say that's the biggest risk in the markets. What do the markets look like with that scenario?
- [19:48]
Andrew Davis
Yeah, I think that's spot on because the risk really isn't a recessionary tale. You look at kind of the what the market, the tape's been telling you and it really is pricing in this reacceleration. Now, maybe one healthier thing. We've seen small caps stretch positioning there on the longs, short positioning starting to bubble up. So that tells me that the market is loving this reacceleration growth story. But they're also maybe starting to hedge in case the data doesn't follow through.
- [20:15]
Melissa Lee
Which sectors are overweight in your view?
- [20:17]
Andrew Davis
So we're more focused on kind of at the market cap level. We like quality. We like take for instance, like a Russell 2000, that small cap index versus an S&P 600 where you can pick up a little more quality, a little more solid fundamentals. Again, kind of just back to is the market a little over its skis here? Not pushing back on the momentum story broadly, but just being cognizant of this asymmetrical return opportunity.
- [20:43]
Melissa Lee
All right, Andrew, great to see you. Thank you.
- [20:45]
Andrew Davis
Thanks for having me.
- [20:46]
Melissa Lee
Andrew Davis. All right. What do you, what do you make of the call on small caps?
- [20:50]
Steve Grasso
Well, I like the call that he made taking S&P 600 over, over, over the Russell because you do get over 40% are unprofitable companies with S&P 600, I got to assume that's above 60%. I don't know if anyone knows that number. It's probably closer to 80% are profitable companies. So you've done a lot of your guesswork and a lot of your risk taking out of the market and you don't have to worry about the Fed as much with the S&P 600.
- [21:14]
Carter Worth
I mean, the real question is, is it about the denominator? Right? I mean, alpha is generated by choosing something among other choices. If small caps really outperform, it's been nascent so far on a more enduring basis, two, three years. Is it because they're doing greater? Is it because the denominator, the market dominated by large cap is struggling and that we are actually heading lower? That's the real risk independent of the absolute judgment to buy small cap.
- [21:37]
Melissa Lee
Coming up, the latest headlines. Tanking shares in Novo Nordisk, what sent the stock into the red for the year? And the other pharma news on our radar, that is next. Plus $1 trillion milestone for Wal Mart. The ripple effects of the crypto carnage and a major drop in PayPal after CEO shake up. Don't go anywhere. Fast money's back in tune.
- [21:57]
Steve Grasso
Hey, Fidelity, how can I remember to invest every month?
- [22:02]
Melissa Lee
With the Fidelity app, you can choose a schedule and set up recurring investments in stocks and ETFs oh, that sounds.
- [22:10]
Steve Grasso
Easier than I thought.
- [22:11]
Melissa Lee
You got this? Yeah, I do. Now, where did I put my keys? You will find them where you left them.
- [22:20]
Carter Worth
Investing involves risk, including risk of loss.
- [22:22]
Tim Seymour
Fidelity Brokerage Services, LLC member NYSE SIPC.
- [22:27]
Steve Grasso
ABC's David Muir, the most trusted anchor in America. The most watched anchor in America. Thank you for making World News Tonight with David Muir the number one newscast in America. Most trusted, most watched David Muir on abc.
- [22:43]
Melissa Lee
Oh, could this vintage store be any cuter? Right, and the best part, they accept Discover. Except Discover in a little place like this? I don't think so, Jennifer. Oh, yeah, huh? Discover's accepted where I like to shop. Come on, baby, get with the times. Right. So we shouldn't get the parachute pants. These are making a comeback, I think.
- [23:06]
Tim Seymour
Discover is accepted at 99% of places that take credit cards nationwide, based on the February 2025 Nielsen report.
- [23:14]
Melissa Lee
Welcome back to Fast Money. Shares of Novo Nordisk dropping midday to close 14.5% lower. The drugmaker warning that sales could fall between 5 and 13% this year versus 10% growth 2025. The company grappling with a more competitive US drug pricing environment. Plus Ozempic's loss of exclusivity in several countries this year. Shares of Novo now negative for the year. For more on the impact, BMO head of Healthcare research Evan David Segerman joins us now on the fastline. Evan, great to have you with us.
- [23:43]
Evan David Segerman
Thank you for having me.
- [23:45]
Melissa Lee
What was interesting about today's decline was that it was a decline across the board for all of the obesity drug makers. What's your interpretation? What was sort of the read through for the sector?
- [23:55]
Evan David Segerman
Great question. So first off, we got the Pfizer print where they released the initial kind of long acting data from their product. Disappointed. And when I spoke to management catching up with them after the call, they highlighted that they couldn't give us all the information that folks wanted. So I think investors couldn't actually determine if it was competitive to the offerings of Lilly and Novo. And then of course, kind of surprise, midday, Novo released their earnings a day early. What happened was when they realized that there was such a divergence between what they were printing, where consensus was, they had to go up per Danish law. So they surprised us at about noon today.
- [24:31]
Melissa Lee
Okay, so, but yeah, Pfizer, I mean the Metsera thing, that's, that was sort of a hope. Okay, so you're saying that we don't have enough information, but for Novo, that really seemed to be what hit the group. So is it the notion that sales, that there's going to be less demand, that they're going to make less money, even though they have this first entry in the oral GLP1 space. I mean, what is it about the story that is now impaired?
- [24:58]
Evan David Segerman
That's fair. It's a very sorry.
- [25:00]
Steve Grasso
Yes, exactly.
- [25:01]
Evan David Segerman
So I think with this kind of guidance, the thing that really stood out to me was the pricing headwinds we're seeing in the United States. We all know about that. But the fact that it's really cutting sales and profits so much for Noah is really spooking investors. Of course, there is strength from the Wegovy pill and the hope was that that would be enough to kind of overcome any headwinds. Beyond that, we have Lilly printing tomorrow and they're unlikely to include significant credit for or for clip on in their guidance. So folks are concerned that that could be somewhat squishy as well. So I think that people are taking pause. Some of the pricing headwinds are coming. You know, it's coming to be. And then you need to see those volumes pick up. They just haven't yet.
- [25:39]
Tim Seymour
Evan is Tim, thanks for joining us. I got the sense that just the guide on the oral pill and some of the recent sales also just didn't live up to the hype. And, and I also get the sense that it's really the US Market, not what they're doing globally, that had people most upset. Can you talk about that?
- [25:57]
Steve Grasso
Most definitely.
- [25:58]
Evan David Segerman
So, you know, the pill is early days. I mean, we've only had it out for a few weeks and the scripts that we're tracking are incomplete. And I think that they want to be conservative there. When you look at the United States, you look at the scripts for Novo Nordisk and kind of they've been flatlining. So where is that volume coming from? That's the key question mark. You are correct us, you are seeing a pickup in prescriptions for both the Novo products and the Lilly products in the cash pay segment. But still, the United States is so important for any player in this space. And when you have these massive kind of like moments where there are such big concerns around pricing and profitability that spooks folks.
- [26:33]
Melissa Lee
Are you More worried today vs 24 hours ago or 48 hours ago about the element of pricing? I mean, what was notable also in today's sort of moves within the sector was that, you know, a structured therapeutics, for instance, that also was sold off to a certain extent. Is there just this fear that even if you come on with a new entry that the pricing dynamic is such that it's going to be difficult for, for so many players to be in that same market.
- [26:58]
Evan David Segerman
For the long only investor really long term they know that it's a volume play. And that's still my thesis. So that hasn't changed. I think the near term kind of headwinds are sweeping folks and, and you know, it's been so tenuous. Right. We want to see these do well and something like this that just comes out of left field, that's the real issue. So people kind of panic old. You know, Lilly has a decent print and kind of okay guidance. I think that stabilizes things on structure. What that means to me is that, you know, a buyer is just concerned that or, you know, basically what that means to me is that a barrier may not be able to get as much value for a structure asset as they would have been able to. A lot of things going on. I expect things to stabilize though.
- [27:41]
Melissa Lee
Evan, thank you for phoning in. Always good to get your. Thank you so much David. Bmo we also have the element that Novo has a new CEO and so part of this could be communication. Doesn't right set the bar real low.
- [27:54]
Tim Seymour
Here for 20 and the communication wasn't good before. So I mean part of what was announced is, is they're, they're guiding basically a 26 outlook that was, you know, around 8% below consensus. And some of that is communication, some of that is just inconsistency. I don't think, you know, things are, I think things were misguided.
- [28:12]
Melissa Lee
Julie?
- [28:14]
Julie Beal
Yeah, I agree. It's being able to manage expectations is very, very difficult, especially when you have this much hype because we can all recognize the size and the scale of the market that they're selling into. But the minute price really starts to come into the equation, that means your earnings visibility kind of disappears and you have no sense of what the profitability, the underlying profitability, the earnings of the business is. And that makes valuation really difficult. You have to trim, you have to take away.
- [28:40]
Melissa Lee
How do these stocks look?
- [28:42]
Carter Worth
Well Novo in particular of course is the one that parted ways with Lilly long ago and has been trying to base and bottom. But this is a bad setback. I would call this a failed bearish to bullish reversal. I would abandon it.
- [28:53]
Melissa Lee
There's a lot more fast money to come. Here's what's coming up next.
- [28:57]
Tim Seymour
Walmart joins an exclusive club. The bitcoin blowout ripples through the crypto space and a fintech flop for PayPal. More on today's biggest moves next. Plus the software slump hitting another big sector. Why big AI investments have private credit Feeling the pain? You're watching Fast Money live from the NASDAQ market site in Times Square. We're back right after this.
- [29:23]
Steve Grasso
ABC's David Muir, the most trusted anchor in America. The most watched anchor in America. Thank you for making World News Tonight with David Muir the number one newscast in America. Most trusted, most watched David Muir on abc. Thy ticket lady, Jennifer of Coolidge.
- [29:42]
Melissa Lee
Well, many thanks, good sir. Here is my Discover card. They accept Discover at Renaissance Fairs. Yeah, they do here. Discover is accepted at the places I love to shop. Getth with the Times.
- [29:56]
Wilma Burdis
With the Times.
- [29:57]
Melissa Lee
You're playing the lute. Yeah, and it sounds pretty good, right?
- [30:02]
Tim Seymour
Discover is accepted at 99% of places that take credit cards nationwide, based on the February 2025 Nielsen report.
- [30:10]
Melissa Lee
Strayer University, we help students like you go from is it possible? To anything is possible by offering access to up to 10 no cost gen ed courses so you can reach your goals affordably and fast. Visit strayer. Edu to learn more. No cost gen EDS provided by Strayer University affiliate sofia. Eligibility rules apply. Connect with us for details. Strayer University is certified to operate in Virginia by Chev and has many campuses including at 2121 15th Street north in Arlington, Virginia. Welcome back to Fast Money. Stocks falling today but closing well off their lows as investors rotate out of tech stocks. The Dow hitting a fresh all time high this morning but dropping 166 points to end the session. It had been down 575 points at its lows. The S&P down 8.10 of a percent. And the NASDAQ leading the losses falling about one and a half percent. Wal Mart bucking the trend and joining the $1 trillion market cap club. The move fueled by the growth of e commerce and new digital businesses. Wal Mart up more than 28% over the past year. Bitcoin meantime continuing its slide. The Token hitting a low in the 72K range, the lowest since November 2024. Robinhood, Coinbase and MicroStrategy falling in sympathy. And PayPal dropping more than 20% today after missing earnings estimates. The fintech company also giving a disappointing profit forecast for 2026 and announcing a new CEO. Shares have lost more than 86% since hitting a record back in 2021. And some after hours action here take 2 higher after beating revenue expectations. Mondelez and Match Group both topping estimates on the top and the bottom lines. Mondelez flagging profitability, headwinds coming from Cocoa Costs and Clorox beating revenue expectations but coming up short on eps. Carter, you've got some intelligence on bitcoin.
- [31:55]
Carter Worth
Well, let's see some charts. Yes, so. Well look, look, the burden of proof is on, on the bull the slippage continues and the question is just how much more unknowable. But let's look at two charts and maybe we can figure out the way forward together. So this is a sort of 1, 2, 3 year chart and we of course have broken trend that took place about three or four weeks ago. So that's an important circumstance and it's a negative one. If you look at a longer term chart we also have a decade long trend line and that also has been breached. So typically that doesn't just well end up being a small thing, it can be quite a bit more. It's not a casual event and I think again buyer beware.
- [32:36]
Melissa Lee
Aggressive.
- [32:37]
Steve Grasso
Yeah, I mean there's a host of things. It could be quantum that's affecting it, it could be geopolitical, could be people pulling big Gold has become the new Bitcoin. Right. So Bitcoin was the new gold that's obviously switched gears at this point. You never know until you know and I think there were a couple of hacks people are worried about their wallets. So you never know what the true sell pressure is. The charts indicate that there's more weakness to come but there will be some bottom fissures and the the owners have a different mix to them. There's a lot of more institutions.
- [33:10]
Melissa Lee
Right.
- [33:10]
Steve Grasso
There's a lot more ETF owners so we'll see how it plays out. Unfortunately I along with many are getting hurt on the crypto collapse.
- [33:19]
Melissa Lee
Coming up, the knock on effects from the software slide. Why the AI funding rush has taken a toll on private credit. The details from Fast Money returns. Welcome back to Fast Money Private Credit. Now companies like Blue Al, Aries, TPG slumping today as concerns grow over the exposure alternative asset managers have to the AI disrupted software industry. Our next guest says the fears are overblown. Raymond James. Wilma Burdis joins us now. She's the director of equity research there. Wilma, great to have you with us.
- [33:50]
Wilma Burdis
Thanks for having me.
- [33:51]
Melissa Lee
When you hear about a Blue Owl, all these names having you know, 10 to 20% exposure to the software industry, there is fear. Walk us through what, what the risk actually is.
- [34:01]
Wilma Burdis
If there is the risk is really quite limited. When you look at the loan to values they're about 30% and so you've got 70% equity layer that helps protect them from actually having any losses. And then they are fee based companies, so they don't have balance sheet exposure to these loans. In addition to that, they're great underwriters. And so really they've been very selective on software for the last several years, anticipating AI to come through.
- [34:29]
Melissa Lee
But with the declines that we've seen, and we, we saw in one of Blue Owl's vehicles late last year where there was an unusually high request for redemptions and that can sort of feed a spiral. Is there that concern on your part that with this fear, with the declines that we're seeing in the equity side of things, that there was going to be more redemptions and things create that sort of vicious cycle?
- [34:53]
Wilma Burdis
OWL is great at fundraising and many of these companies are, and really for Q25 was a record for OWL as far as fundraising. I think that you see some, some different pressures potentially, but there's so much demand for these types of products and they have great underwriting. So I think you'll continue to see strong demand.
- [35:12]
Tim Seymour
Wilma, great to have you. Bifurcation across credit though, does seem to be kind of the story and yet people tend to lump it all together and then they'll look at, look at a Blackstone or a KKR and they'll look at those charts and say something's going on. And so can you try to break it down? Because it does feel that the, the bottom up is not pricing at all the same way. But it does seem as if that there are those subsectors that are doing just fine and those that are bubbling up a little bit more than others. Where are you concerned? And again, as we look at some of the mega cap, you know, credit players, alternative players who have a lot of exposure here. Is the market overreacting?
- [35:52]
Wilma Burdis
I think the market's absolutely overreacting. I think to your point, there are some, some funds that have not performed as well. You're seeing a little bit of divergence. But really OWLS Credit's been great. The underwriting on most of these big companies you mentioned has been, has been pretty strong.
- [36:06]
Melissa Lee
When you take a look though, at the concerns about just the infrastructure build out and whether there's too much and when, if the demand is going to keep up. And these players also have that exposure in terms of loans to, to finance the build out of AI, is there any worry that some of these loans are being made for, you know, demand that is projected that might not come to fruition?
- [36:28]
Wilma Burdis
The companies write pretty strong contracts in order to protect themselves from losses and so the way I see it, most of these loans the worst case scenario would be something like a high single digit type return. If there's actually more demand for data centers than expected. It could even there could be quite a bit of upside to that. So I think that they do a good job protecting themselves in underwriting.
- [36:49]
Melissa Lee
You seem really like no concerns about the sector at all. Is that a fair characterization?
- [36:55]
Wilma Burdis
I think to your other point there's been some diversions but I think that the strong players are doing quite well.
- [37:01]
Melissa Lee
Okay, so buy.
- [37:03]
Wilma Burdis
Absolutely. Buy. Absolutely.
- [37:06]
Melissa Lee
Wilma, great to have you with us. Thanks for joining us.
- [37:08]
Wilma Burdis
Thank you.
- [37:08]
Melissa Lee
Appreciate it. Wilma Burdis, Julie Beal Would you buy?
- [37:15]
Julie Beal
I have some hesitation. I think it's hard underwriting some of these projects when we don't have a lot of representation of how they're going to pay out. The deals are very complex. I think most of them are probably going to be fine but I don't know how much any kind of default is priced in there and we know that that's always a risk risk. It would be the very first time in any kind of technology transition if there weren't overbuilding of capacity and assets. It would be the very first time. So you have to assume there will be some and hopefully the largest, most well capitalized players who have been doing this a long time will be fine. But I do think that there will be some heartache on the way.
- [37:50]
Carter Worth
Well the first thing is the word steadfast came to mind as I was listening to one of that was very common and reassuring. But let's go to maybe price. These are the most cyclical assets there are. I mean every one of these stocks from Ares to Blue, Al, kkr, Powell just during the sell off of of tariffs they lost 40% plus not a one was down less. During the bear market of 2022 all lost 50%. Something's wrong. They're in trouble. I would not step in the way right here.
- [38:18]
Steve Grasso
Let's go back to the cockroaches comments all all over the. You could, you could use that analogy anywhere but there's plenty of things that have been down 40%. I'd rather go with Carter's and say it's a no touch than to look under the hood. I could trade these technically but you have no idea what financial or fundamentals are under the hood in these. If you don't know you don't buy it.
- [38:41]
Melissa Lee
I guess you know it's sort of if you take a look at Oracle and the CDS and the concern about Oracle's ability to pay, you know, to pay its debts. And then you have this sort of, it seems like if you have a concern about that then there should be some concerns about the loans and extended to fund the build out. And I get that they can have very tight and high underwriting standards but I don't know how the two things can, can.
- [39:04]
Tim Seymour
Well, and that's the point. So. And where are the spillovers into leveraged loans and other parts that I think are all affected here? There's no question that Oracle seemingly has funded 20, 26 CAPEX, who knows about 27 CAPEX. I'm not saying that this is a company that's going anywhere but you know, it's an enormous amount of money, it's enormous amount of funding. And I still think that even before any of this people had a question that there are certain parts of the credit world that have grown, especially middle markets that have been wild in terms of the growth. And the view is that somewhere there is a shock that would cause a couple of dominoes to fall. That's, you know, that's the word.
- [39:44]
Melissa Lee
It sounded like you would be inclined though to pick up some KKR or some of that, that that's been sort.
- [39:50]
Tim Seymour
Of thrown out I think. I think KKR and Blackstone are always the smartest guys in the room. And so you know, my guess is the diligence that's going on in terms of the underlying measures but flows in terms of liquidity are sometimes things they cannot control. And that's some of the cyclicality in the asset management business we've seen.
- [40:08]
Melissa Lee
Coming up, more after hours action. Shares of Chipotle. The numbers from the company's latest quarter in the headlines from the conference call. That is next. And check out some stocks trading at records even in today's sell off. Cisco at the highest level in its 35 year history as a public company. Caterpillar closing at its best level since its 1929 IPO. And ExxonMobil and Coca Cola trading at their highest since hitting the market more than a century ago. Don't go anywhere. Fast Money's back into. Welcome back to Fast Money. An earnings alert on Chipotle. Shares down despite a beat on the top and the bottom lines. They had nearly clawed back break even before falling again down 7% right now. Kate Rogers has the details. Hey Kate.
- [40:50]
Kate Rogers
Hey Melissa. So the company closing out a tough year as you said. Beats on the top and bottom lines this quarter but a drop in same store sales of two and a half percent that was a bit better than analysts had projected. Traffic, though, did decline for the fourth quarter in a row. Chipotle also had its first full year same store ales contraction since 2016. Last year, it's projecting now 2026 comps to be about flat as executives pointed to guests placing heightened focus on value and quality and pulling back on overall restaurant spending. CEO Scott Boatwright called the backdrop dynamic and fundamentally different than it was a year ago. The company also said margins will be pressured, particularly in the first half of this year. The stock, as you said, did reverse some of its losses as Boatwright laid out the recipe for growth strategy, which will center on menu innovation, reinforcing value, developing talent, expanding internationally, and leveraging technology and AI to improve throughput in the restaurants. Chipotle is also searching for its next chief marketing officer and plans to hire a chief digital officer and VP of emerging technologies as it focuses on both marketing and tech to move the needle this year. One more interesting nugget from this conference call. They did note that the protein offerings that they put forth have had a really outsized impact on the younger consumer.
- [42:05]
Melissa Lee
Melissa.
- [42:05]
Kate Rogers
And that that trend kind of really has a hold on that group and that's a group that they're looking to try and bring back in their stores. So we'll see if it works.
- [42:12]
Melissa Lee
Back over to you, Kate. Thanks. Kate Rogers. We haven't, we haven't said it yet.
- [42:16]
Tim Seymour
I was going to say this almost feels like a burrito blowout. And they can go both ways.
- [42:21]
Melissa Lee
It can go both ways. And we can say with the stock down 7%.
- [42:24]
Tim Seymour
Glad we got.
- [42:25]
Melissa Lee
In terms of bringing about the younger consumer though, this is the cohort that is hit the most in terms of trying to find a job. It's very difficult for college grads. And so that's going to be add to pressure here for its demographic.
- [42:39]
Steve Grasso
Yeah, I think the demographic that that's a wall in front of it also. It's 100% domestic, basically. So there is an opportunity to grow international. That's going to cost money. I get that. The big push is the digital sales. Right. So we all know why. Because when you go to a Chipotle, it's difficult to order more. The number one complaint for Chipotle not to get too much in the weeds here. You've been there is trying to order multiple things at once with a line of people behind you.
- [43:08]
Tim Seymour
So you're that answer, huh?
- [43:10]
Steve Grasso
You're that no, I don't do it. I don't do it. So I would order more. I have A family of six, I'd order more but we have to do it digitally. You can never do it in person. That's a flaw.
- [43:19]
Melissa Lee
You'd order more but you unless you order digitally.
- [43:22]
Steve Grasso
So they spike themselves out of sales. They've got to figure out that it's.
- [43:26]
Carter Worth
Assembly line so you're not getting what you want.
- [43:29]
Steve Grasso
Look at the Sebastian Maniscal coming away.
- [43:31]
Melissa Lee
On Chipotle pressure progressive. All right, coming up, home sweet Trump builders getting a boost on reports of some deals with the administration. What's in the works and what it could mean for the for housing affordability. More fast money into. Welcome back to fast money. The ITB Home Construction ETF rising over 2% today as Bloomberg reports reports that homebuilders are working on a housing affordability plan dubbed Trump Homes. The program calls on builders to sell entry level homes in a path to ownership program funded by private investors. Lennar and Taylor Morrison said to be among the companies drafting the plan. Paltier Horton, KB Homes also firmly higher today. Will this last this bounce?
- [44:13]
Steve Grasso
Steve it remains to be seen. I think the biggest thing is going to be interest rates, the path that we find on mortgage rates. But this is a win win for housing stocks because the builders are not putting up the capital. It's private funding. It's not government funding is private funding. So I do believe until we get some of the details sorted out, you buy the homebuilders.
- [44:33]
Tim Seymour
Tim I guess I'm a little concerned. I think the homebuilders have had a lot of good news over the last couple of months and certainly you know, you're not terribly far off of those 52 week highs here. I just think the multiples are somewhat difficult at some point. I also just think there are other places in the housing trade I would much rather own Home Depot. Sorry for doing that.
- [44:52]
Melissa Lee
All right. Julie Quick just did something.
- [44:54]
Julie Beal
Yeah, no, I agree. I think I would rather own some of the tertiary players. I hate the exposure that you get from single players so I'd own a Simpson over that.
- [45:03]
Carter Worth
Okay Carter, I concur as I say a word. Owned a better here the homebuilders the chart of the ITB pair to all.
- [45:12]
Melissa Lee
Right next final trades, Final trade time.
- [45:24]
Julie Beal
Julie Beal, Jack Henry reported good results today and as much as I love cloud code, I don't see it replacing banking course anytime soon.
- [45:33]
Tim Seymour
Tim Seymour, I feel pretty comfortable nibbling back into the software part of this trade as Carter said. I mean if anything, you know, put a little something long against whatever might be happening in semis but Microsoft we're.
- [45:44]
Carter Worth
Going Carter Braxton Worth Semis and software are structurally late. Sell semis extended Stephen felt like it.
- [45:54]
Melissa Lee
Was a quick show.
- [45:55]
Steve Grasso
Does that mean it was a good.
- [45:55]
Tim Seymour
Show or does that mean how do.
- [45:57]
Melissa Lee
You do to me?
- [45:58]
Steve Grasso
No, I think I did it. Other than a Chipotle thing, I think I was okay. Q2 holdings is the way. I'm taking a risk here. Please use a stop if you buy the stock.
- [46:06]
Melissa Lee
Thanks for watching F.A.S.T. see you tomorrow. Closing bell Overtime 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 or its 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 introducing fidelity trader.
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