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CNBC's "Fast Money"
The Best First Half Ever for Semis… And Nike Report Results 6/30/26
00:44:04
The first half of the year ends with chips and semiconductors soaring and software sinking. How the Magnificent 7 can stay afloat after the major software losses, and if gains in the chip and semi space will continue in the second half. Then, Neuberger senior research analyst Kevin McCarthy lays out what’s next for Nike after its fourth-quarter earnings results, and if investors are running to other discretionaries. Plus, Bitcoin on track for its lowest levels since 2024, the trillion-dollar defense industry, and telecom trading at near-two year lows. Fast Money Disclaimer
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Edward Jones Financial Advisor
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AT&T Business Wireless Representative
SIPC not every sale happens at the register before AT&T business Wireless checking out customers on our mobile POS systems took too long. Basically a staring contest where everyone loses. It's crazy what people say during an awkward silence. Now transactions are done before the silence takes hold. That means I can focus on the task at hand and make an extra sale or two. Sometimes I do miss the bonding time.
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Tim Seymour
Sometimes AT&T business Wireless connecting changes everything.
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Melissa Lee
Live from the Nasdaq MarketSite in the sweltering heart New York City's Times Square. This is best money. Here's what's on tap tonight. A first half chip rip semi stocks soaring but leaving software and some mega cap names in the dust. So will this trend of tech have and have nots continue or is now the time to bet on this year's laggards? We'll debate that and Nike results are out. The sneaker giants conference call kicking off right now. Details and instant analysis straight ahead. Plus, investors keep hanging up on telecom stocks. Crypto's CR crash hits Bitcoin again and is now the time to get into Japanese stocks as the yen hits 40 year lows against the dollar. We'll ask the ambassador. I'm Melissa Lee. Come to you live from CJ at the nasdaq. On the desk tonight, Tim Seymour, Dan Nathan, Steve Grasso and Martin Norton, chief investment strategist at Empower. Great to have you Marta. And we start off with the first half chip rip semi stocks soaring in the first six months of the year with the SMH ETF jumping over 80% its best first half ever while the stocks ETF more than doubling. But the soaring semis seem to leave a lot of tech behind. Check out software stocks. They underperformed in a major way. IGV down 14% so far this year with Oracle, Palantir, Servicenow Salesforce adding to the pain. All down 20, 30, 40%. Some mega cap tech also failing to keep up. Amazon lagging the broader market while Metta and Microsoft pull down the Mag 7 trade. Microsoft in fact having its worst start to a year since 2000. So what do we think will happen for the rest of the year? Do we continue investing this way? It's semiconductors world Tim well investing this
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Tim Seymour
way means also a broadening market and investing this way means lower oil, lower interest rates at least that's the trend coming out. It was actually ended up being a decent quarter for for U.S. treasuries and for rates markets but investing the same way to means also that the broadening of the market that has been banks, health care, transports, industrials is very real and I think we talk about this almost every night. What underpins this is that you've got EPS growth through the second quarter. I don't know 21% full year is expected to be possibly 25% depending who you're talking to. That will underpin anything. We had some decent data today which showed that the consumer both consumer confidence still worse than expected but still better and an improving trend at a time when also the jolts data shows that the labor market is incredibly resilient. You know because we hate the term Goldilocks in the show we never use it. Of course I'm not going to be that guy today. I'm going to tell you that the trends that worked in Q2 I think outside of euphoric or parabolic moves in memory I'm not going to tell you to to stand in front of a memory trade. I'm going to tell you that I think I don't think intel is going to do in 3Q I think I feel pretty comfortable being out there saying that but I do think that the broadening of the market is something to stay with and and it's exciting.
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Melissa Lee
Do you agree Marta?
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Marta Norton
Well, I mean I think the backdrop really is favorable. The earnings are there. The valuations have improved since the start of the year. They're a little bit worse than they were at the start of the second quarter but that has not been the broader market has not been the source of strength that has been the memory area. I guess that does make me nervous. Whether it turns immediately or not, it does feel like there is a reckoning coming not necessarily fundamentally, at least not immediately but from a price perspective we've seen some soaring triple digit returns. It's just hard for me to believe that we're seeing another triple digit return in the near future.
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Angelica Peebles
Right.
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Melissa Lee
I mean to the extent that the hyperscaler stock remains under pressure because of capex spend, you have to wonder whether capex spend will keep up at the pace that analysts are thinking. Morgan Stanley just say raising what they think Alphabet will spend in 2027 to $350 billion. It's doubling what they spend.
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Steve Grasso
Well, I think it's a double edged sword right now. I mean there was times where certain hyperscalers when they were announcing big increases to their CapEx over the last few years they were re and then on other instances and you could use Meta as a great example and Microsoft of late that they're not particularly being rewarded and a lot of that has to do with what are the other products that they are going to leverage off of this huge spend. Right. Matter does not have, you know, a data center business right now. So they're talking about or thinking about it a little but I think by the time they get there I just think that you know, token prices are going to collapse. I think that you know this is something that Torsten Slack from Apollo was referencing today that just the long tail it's going to be for the customers of this technology to get get that return on investment. And you were just talking about it with Mike Santoli in the prior hour here. I mean the thing is, and there's a chart right there, it's just like if you're heavily regulated, we've been talking about this for years now, right. And if there's mission critical sort of data that you have to punch out, I mean if you look at that just the success right now and hallucinations, I think if you're us and you're going to one of these things, you're going to cloud, you're going to GPT, it's fine, it's great. You know there's a whole host of things that it can do really well but if you're thinking about in health care, you thinking about you know, in financials and there's you know, a lot of other industries, it's just not there yet. So the matching up of the spend right now, the cost of compute, the commoditization of the underlying product, it's going to take a bit here. So I think there will be to martyr's point there will be a reckoning at some point because the trade's gotten really narrow. The hyperscalers have all intensive purposes rolled over. If all of your hopes for this trade to continue to play out in the back half of the year into 2027 is in memory and storage I think they priced in a lot of that good news right here.
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Dan Nathan
I think it comes down to the capex reconciliation of how that ends up and it does feel like we're at peak investment and that usually rolls over, so the ROI is not going to be there. So if you look at Morgan Stanley on Alphabet, they're investing right now a ton of money growing in single digits. There's no way that you could keep that up. So I think it looks great right now. And Dan used the meta analogy, I think that's awesome. Met has been rewarded and then Metta has been, has been punished. And I think where we're at with the market right now is capex is probably going to be punished at this point.
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Melissa Lee
I mean I think that this is a really good debate to have because what do you consider as a return on that investment? So in this Morgan Stanley note, annual raises because it came out today and they outlined what they get in terms of revenue growth for cloud versus revenue growth overall. So the CapEx increases to 350 and 2027. Revenue growth overall is up 4%. Right.
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Tim Seymour
So, so talk. I think we had this conversation last night in terms of you bring in a weighted average of what the gross margin looks like, it takes it down. Okay. The fastest growing business has actually got a low margin profile and it goes down. So yeah, I mean it's right to be skeptical. The good news though is that Microsoft's trading at 21 and a half times. I mean Google's, Google's trading at 22 times and Google was a rocket ship, haha on a relative basis to these other things. So I'll just say I don't think the semi trade is going to slow down. I think it's going to rotate a little bit. But again, I continue to expect semiconductors are going to make new relative highs to the S and P between now and the end of the year doesn't go on forever. But again, the fact that this was the best quarter ever for semis and all we do is talk about semis for the last three years, I don't think it's ready to end. I also think that if you're a market player and you're just playing the indices and a lot of folks at home are smart by the way, to just go with ETFs and things that actually give them some of that exposure, it's hard not to feel good when Microsoft's down 23%. Matters down 15%. Amazon, you know, these, these names that are still the lion's share of the index have had such poor first halves. Apple's flat. So again, I think the themes that are here, the secular themes are alive and well. Everybody's right to say these things don't go on Forever. But the market right now had an extraordinary quarter by the way, risk adjusted returns. It wasn't a great quarter. We had a lot of chop, we had a lot of volatility and I bet a lot of people got chopped up. But if you stay in the game, I think it's going to be okay.
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Steve Grasso
Yeah, I wonder how much is window dressing. If you just look at the semi equipment stocks and the way they moved over the last couple of days and they've gone up in a parabolic manner and you know, you think about this, these are all down the chain of a data center, right? And if you think about what we heard from Apple last week, raising prices, this is obviously consumer oriented, but raising prices to deal with these rising memory costs. I mean, ultimately it'll go down the chain. It'll go down the chain and we'll just get to a point where these commoditized businesses for the most part, you know, if the idea, if you start to get worried that there's going to be this overcapacity in a year or 18 months, you're going to start selling these stocks. I mean that's how it goes in semiconductors, semi equipment, memory storage, that sort of thing. So to me, I just think that when you see these parabolic moves and Intel's a great example, here's a company, it's all in the come. I mean it's all on the come, what they're going to be able to do. And to me, if you're buying this thing into Martin's point up, you know, 300, 400%, just kind of doing it
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Melissa Lee
wrong, it's up 279% year to date. I mean that's a stocks double and
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Dan Nathan
you're buying, and you're buying a commoditized product. So I know we talk about that with the memory stuff, it's easier to see, but these chips are going to be cheaper, more efficient going forward and they're buying everything that they're investing in it. Now that to me is idiocy.
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Melissa Lee
So what do you do? Let's say you want to say, do you rotate into some of the Mag 7 names that have underperformed and arguably have better valuations today than they did three months ago?
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Marta Norton
Well, it's that word, it's the valuation word that I think we want to introduce to the conversation. And I do think, I mean when we're talking about memory and semi, we're looking at cyclicality. We know that denominator is moving around. But when you look at Some of these hyperscalers or some of these Mag 7, it's hard for me to believe that some of that skepticism isn't already in the price. And so if you're looking, hey, how do I get a piece of this AI trade? I don't think it's an unreasonable choice. Think I can do this with some of these big names at the top of the food chain because of where their prices are today, I think they've discounted a lot of skepticism.
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Melissa Lee
Well, let's bring in Dan Ives, Wedbush Securities Global head of tech research at wedbush. Dan, we know you have a new call out on SpaceX which we do want to get to, but we want to sort of fold you into this conversation that we are having. Since we are at quarter end, we're at, you know, first half end. What do you foresee in terms of the second half of the year? Do we still see the semi trade went out? Do we still see the software trade as a losing one? I mean, where do you think are the best opportunities in tech?
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Dan Ives
I mean, it starts off in our checks from Taiwan and Korea. They're showing demand accelerating. So I actually think going into this earnings season it's going to be a catalyst for the hyperscalers relative to what we see from a cloud growth perspective. And then I think it spreads the software. When I look at names from Palantir to some of the cybersecurity names and especially names like Microsoft, Oracle, I think Alphabet terms of the way it's sold off here, those are the names where I would rather be focused. Now. I still believe chip names continue to go higher just because the demand supply is 12 to 1 and those numbers will continue to go higher. Memory that's obviously sort of foundational to everything we're seeing, but we are very bullish going the second half of the year.
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Melissa Lee
All right, let me put the question this way. Is there, is there?
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Tim Seymour
Sounds like your answer.
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Melissa Lee
No, no, no, it's not. But is there a subsector in tech that you don't like? I mean, are you just bullish across the board? Because it does feel like you come on, you're like, I love this. I like software, I like chips. Chips will go. I mean, what do you like the least?
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Dan Ives
To me it's really within software and Adobe like that. I think it's more stock. Have you had stock specific? Is names like Adobe into it? I look at names like on the wrong side there's some of the IT services players because I view those, essentially those are shared donors. So to me, it's very hard to just say, okay, I'm negative on software because I actually view that that will be some of the hearts and lungs of the trade. It's really a stock picker's market to some extent when you actually buy.
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Tim Seymour
So that's, I think it's fascinating to, to bring up software because we know they've been in the eye of the storm and at different times and suddenly that, that, that market, that that sector had a lot or subsector had a lot of volatility. But talk about Adobe, because Adobe has been dead in the mud for four years or at least depending on where you're picking your chart. I would make an argument that they didn't even get thrown out the minute software stocks got thrown out. They got thrown out two years ago and it became an underappreciated stock. Is there something that you think Adobe has intrinsic to? You know, they have a very wide subscriber base, but it's not growing very fast.
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Dan Ives
Yeah, but you can be going 30 miles an hour in the right lane. And the reality is strategically you've had some change in terms of CEO. They need to do some major strategic changes whether it's acquisition or selling off piece of the business. I think until investors see that. Wow. They said they're melting ice cubes and I think that's the reality versus, let's take a Microsoft. Microsoft. That's an example, I think Street's way mispricing what Azure growth is going to be.
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Tim Seymour
I'm sorry, so you said you didn't like Adobe?
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Dan Ives
No, to me, Adobe is one where that is hard to bring up a scenario where I see Adobe in a positive way.
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Steve Grasso
Are we going to do a little who wore it best or no?
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Melissa Lee
I mean, I know, I think that's.
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Tim Seymour
We could put them up a split
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Dan Ives
screen, throw Nathan in that.
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Steve Grasso
But someday. All right, so let's go back to the semi trade. We see the parabolic nature and then ones that we really haven't seen the products yet, we haven't seen the build out yet, we have seen the orders and people are taking that to the bank and they're giving a multiple to those orders. But when you look at Nvidia, you look at Broadcom, I mean these stocks are massively underperforming.
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Brandon Gomez
Right?
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Steve Grasso
The stocks and also the broad market. And so what does that say about it? Because those, those, they're defensible. I mean those valuations, that sort of thing. So. And Nvidia's numbers, they're just going higher. And they keep getting revised higher but the stock can't get out of its own way.
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Dan Ives
That go back to like Alphabet's narrative a year ago. Right. Like it's done. DOJ is going to ruin search now look at this year Nvidia is one like we're only halfway through where I believe the Godfather Jensen is going to take it because physical AI, there's one, there's one chip in the world fueling the revolution and it's in video. And I think that is not factoring the street numbers now investors clearly discounting it. You see how the stock trading I think we look out the next two, three quarters. I think it's a different story for Nvidia and I do think memory obviously I spent a lot of time in Korea that has gotten maybe a little ahead of itself just given what we saw. But it doesn't speak to where we are. We're still third inning, one out in a race.
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Marta Norton
How do custom chips eat away at Nvidia GPUs?
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Dan Ives
I mean look, I don't see that that's something that would really be a threat for another three to four years now at one point it will. You're seeing the arms race, you'll see the competition but for now, I mean that's why even in China they would rather have a third rate in video chip is still a year and a half, two years ahead of Huawei. And I think they right now the competition will continue to increase. But the spillover effect for AMD just like we see with Alphabet and I think that's going to continue to play out. But in terms of the revolution only 15% through overall spend.
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Melissa Lee
I do want to ask you about Space X your initiating coverage outperform rating $190 price target at least in the first few paragraphs you don't mention Mars. It's all about being a hyperscaler. So how do they compete against the ones that exist?
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Dan Ives
Look, I mean we view it as a sum of the parts valuation. When you look at on the compute side to space it's much more of an AI play. And that's our whole view. From a data perspective this is one like today from a revenue is this super expensive? Of course when you go out next two or three years if they execute I can argue this becomes one of the best plays in the market. And that's why we're bullish here. I think you guys see around the corner rather than just looking at valuation over the next 612 months.
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Melissa Lee
Dan, great to see you. We have to leave it there. We got some breaking news. Appreciate it. Dan Ives of Wedbush breaking news on President Trump's latest financial disclosures. Eamon Javier's got the details.
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Scott Cohen
Amen.
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Eamon Javier
Melissa that's right. The financial disclosure is just out within the past couple of minutes and we are going through them, 927 pages here of documentation. So it will take a while. But a couple of tidbits just so far that we and other reporters going through this have discovered. One is that President Trump is reporting receiving over $500 million in proceeds from crypto token sales by World Liberty Financial. That's one line item in here. He's also reporting over $80 million in income from settlements with media firms, which is obviously a point of interest for us and others. And another item I found in here, Melissa, he's under the heading for gifts and travel reimbursement. The president is reporting a gift from FIFA lead Gianni Infantino and he's been given 10 tickets to the World cup finals. That's valued at $15,000. So I guess we are assured here that the President is going to go to the final.
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Melissa Lee
The 10 tickets total are worth 15 or they're 15 grand each.
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Eamon Javier
It looks like the 10 tickets total are being valued at 15 grand. It's an interesting valuation question because I'll
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Tim Seymour
buy them for 20, Eamon. I'll buy them for 25.
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Angie Hicks
How about that?
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Eamon Javier
I bet you could resell tickets in Gianni Infantino's box for a lot more than $15,000 each.
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Melissa Lee
We'll see that in the next disclosure. Eamon thank you. Keep going through 927 pages. That's a big job ahead. Let's get to an earnings alert here on Nike. Shares down over 3% in the after hour session. The company beat on the top and the bottom lines. There is continued weakness in China. Cautious commentary about headwinds ahead. The conference call kicked off at the top of the hour. CNBC's Brandon Gomez is here with the latest.
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Brandon Gomez
Brandon hey there, Melissa. Yeah, down even further 7% now. EPS coming in at $0.20 ahead of the $0.13 expected now. That's excluding a 52 cent gain related to expected tariff refunds. Revenue was at 10.97 billion, down a percent from the year prior. Also a beat. But remember, expectations were significantly slashed. Now. Gross margin increased 8.9 percentage points during the quarter. That was largely due to an expected tariff refund of nearly 986 million. North America short of expectations. That's weighing on shares here too. As for greater China revenue beating estimates at 1.3 billion, but that's still a 12% drop year over year. The call is just getting underway. CEO Elliot Hill kicking it off, saying some of the highlights you already mentioned overall the results aren't there yet. He says, he says we know we're not living up to our full potential. Seeing more pressure on traffic, discretionary spending challenged sell through trends affecting current discounting, future orders and bookings. No guidance quite yet on the call. We'll see how that impacts shares. But right now down, I think it was around 7% last I checked. Melissa?
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Melissa Lee
Yeah, Brandon, thanks. Brandon Gomez, we have more analysts reaction on Nike later on in the show as the conference call continues. But meantime, your initial, I mean, I don't know what there is to like in this quarter at this point. Tim.
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Tim Seymour
Well, but the thing that concerns me about Nike is what should really have you concerned if you own anything else in the space because you know, added pressure on discretionary spend and traffic is not a Nike story. Only I understand Nike. This has been a disaster. And this is now this almost feels, but I'm not going to tell you, this is the day, this almost feels like washout day, especially because you actually now even have a somewhat interesting valuation. It wasn't interesting yesterday. I mean, you know, yesterday, even before, after all this move, it was trading somewhere around 26 times forward. So I just worry about discretionary. I worry about athleisure, I worry about all those sneakers damn buys. I worry about, you know, the dynamics here that, you know, I think are left over from COVID and I don't think they're coming back anytime soon.
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Melissa Lee
Yeah, Lulu cited weakness in North America as well. So then you have to wonder when you put the two together, what does that say about North America in terms of just being inherently a weak market at this point? Again, does it speak to the consumer here?
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Marta Norton
Yeah, I mean it's a multivariable analysis. There are company specific issues. There's a secular fashion trends that are occurring as well. But I do think today serves as something, as a, of a consumer checkpoint. And when we have things like Nike that suggest weakness and traffic and then we combine that with I think a resilient labor market, but not necessarily something that's accelerating. When you take a look at say quits and the jolts data today, I mean, I think there's a sign that the consumer is, you know, maybe not necessarily putting its pennies to work in the, in the, in the market.
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Melissa Lee
Yeah, it's down 10% right now. As we are, as we are Talking. We were talking to Barclays analysts Adrian Yee yesterday and closing bell overtime and she had actually upgraded the stock in March, which is terrible timing. But she was saying that on three different fronts. Nike's facing very stiff competition from three different players in Europe, in China as well as in North America.
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Dan Nathan
And there's a lot of players that that doesn't cost them a lot to get on the same stage with. Nike used to just be Nike or Adidas. Lulu is the only chart that makes Nike chart look good. It's a bifurcated retail market. Look at Tapestry. Look at Ralph Lauren. Those are outperforming. Look at Raw stores. TJ Max. If you look at all these names, Nike has to do something where they can scale that others don't compete in. Maybe more technology. Maybe more technology with the shoe they've got. There's too many people who can make a shoe and put it on social media and be on the same stage and compete with Nike. They need a fresh brand, they need a fresh edge.
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Melissa Lee
Guidance is going to be key. Josh Brown was making the point earlier today that Nike has beaten in eight of the last quarters and the stock has done nothing because of the guidance. And here we are awaiting the guidance at this point.
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Tim Seymour
Well, I mean, I think I know where the guidance is going and I again, I heard about traffic concerns and discretionary spend trends. So I will say they should be hurt the most on some level if they are the biggest. No one's even close to the size of Nike. I mean, and I still think they have an enormous brand power. And maybe I'm wrong, but I'm not looking for a technology company in my sneaker. I mean, I understand innovation is important in running shoes. By the way, I think they've taken a lot of market share back there. I think this is a macro story as much as this has been. What happened?
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Dan Nathan
35% though. I get what you're saying, but it's down 35% at this point. They've got to throw everything out, rip up the script, start again. China's pushing their home domestic brands. There's too many brands here. Airbirds. Would you ever think 15 years ago, airbirds, all birds that. Well, yeah, yeah, no, there's actually. There's a new one. Airbirds was the video game that anybody can compete with Nike. Now they've got to do something where they corner the market in something that others can't do. Very deep pockets. Use the deep pocket.
- [23:16]
Melissa Lee
We're getting the comments from the conference call. The CFO is saying that they saw a deceleration in mid April after a strong start in March. So something happened where the consumer got weaker. He also says Nike's consumers are under pressure around the world. Certainly these are not comments that are positive in any way in terms of a backdrop or turnaround. This is perhaps why we're seeing the stock pretty much trade right now in the after hour session lows.
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Steve Grasso
Yeah, we might see that right. As we get into earnings season for us multinationals. But if you go back here, I mean you think about what happened to a gallon of gas at the pump.
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Tim Seymour
Yeah, that's what happened in April.
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Steve Grasso
Right. And so, and, but you know, this is not just domestic. I mean think about China. We saw Apple, they were up 20% plus year over year in China. Right. And this is down 12%. And so, you know, if China has been a big growth area, it's not anymore. And the fact that it's, you know, declining double digits is a real problem and it does speak to whatever they have going on relative to let's say Apple. But, but we're going to see probably those price increases are not going to be just here, they're also going to be around the world.
- [24:15]
Melissa Lee
All right, we will keep track of what's going on in the conference call, bring you up to date. Meantime, the shares are down about 8% right now. Coming up, Anthropic's bid to win over Big Pharma inside the company's brand new Claude Science product and how it could shake up the drug discovery space. Plus Bitcoin's brutal start to the year. The crypto putting in its third straight losing quarter dragging proxy trades down with it what it needs to reignite the rally straight ahead. Do not go anywhere. Fast money is back into.
- [24:45]
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- [26:02]
Melissa Lee
welcome back to Fast Money Anthropic, the latest innovator looking to get in on the AI drug discovery gold rush. The company today unveiling Claudia Science, its first dedicated product for scientists. Angelica Peebles joins us here on set with all the details. This is fascinating, Angelica.
- [26:16]
Angelica Peebles
Yeah, it's really interesting, Lisa. You know, they had this big event today, and what's happening is that Anthropic is calling this an AI workbench for scientists. And this platform connects to tools like research databases and it actually analyzes data with specialties like genomics and structural biology. And the idea here is to use AI to accelerate drug development. So making drugs, drugs, making drugs better and making them faster. And Anthropic was rolling this out, like I said, this event today in San Francisco, and they had executives announcing that Anthropic is also going to start its own drug discovery program. And the executives were careful to position this as a way for Anthropic to make sure that it's building the best models, tools and products for the drug makers that it's trying to sell the Clod Science product to. And they said that Anthropic will focus on neglected diseases that traditional biopharma companies wouldn't find attractive and that this will be an early stage preclinical work. And what happens if they actually come up with a promising drug? Well, we asked Anthropic and they said that they're at the early start of this and that they will share more as the work progresses. But that's the question, right? And we've seen plenty of other tech companies try to get into health care. You have Alphabet, Amazon, Apple, all those come to mind. So it's not unusual. But this certainly could be an interesting one to watch, guys.
- [27:29]
Melissa Lee
So does Claude Science, is it a tool of, let's say, Merck scientists to discover, do they license the model? And you, I mean, how does it model?
- [27:39]
Angelica Peebles
So it's a product, so it uses its existing models, but basically it has everything you might need. So it has, you know, the databases of the existing studies that are out there that you can, you know, reference, but then you can also Take your data, plug it in, look, you know, analyze it, how is it binding, what's actually happening? So they think that that'll make, you know, make it easier and faster to see what you're building and how it might work.
- [27:59]
Melissa Lee
You know, what we saw with so many different cloud releases is you see an entire sector just immediately react. And so when I heard this news, I immediately went to the likes of a Charles River Laboratories and there was no reaction pretty much in the stock. Does this displace anybody?
- [28:14]
Angelica Peebles
You know, I don't know if it displaces anyone. We'll have to see. I mean, I think they actually had a bunch of companies there. So they had the CEOs of Bristol, they had the CEO of Novartis, who's also on their board, and they had all of these other companies, I was told in the audience. And so I think you're seeing a lot of interest from pharma. Is anyone doing that today? It's hard for me to say, you know, some of those CDMOs, but clearly I think the part about them actually wanting to get into drug development is interesting. And I too thought maybe we would see some more reaction. And so we'll have to see tomorrow if anything happens. But remember, Amazon wanted to get into health care and all of the noise around that and people wondering. So it'll be interesting to see how this conversation takes shape.
- [28:50]
Melissa Lee
That's true, but I mean, it's always. I mean, health care is always a space is named. It's one of the biggest potential beneficiaries of AI without question.
- [28:57]
Tim Seymour
And what I'm understanding is that, you know, a I at least driven Phase 1 trial success rates are so much higher than what they have been historically. Right.
- [29:04]
Dan Ives
So.
- [29:06]
Tim Seymour
And it depends on what it is for. But that to me already has some, you know, proof of concept, but I think the efficiency just in terms of R and D alone for big Pharma, I mean, this has to be major margin improvement in the short term, even without success, right?
- [29:24]
Angelica Peebles
Yeah. And you're already seeing it, whether it's, you know, this model today. One of the companies we talk about all the time, Lilly, I mean, they've been all over AI. You talk to anyone there and they say they use it throughout the business, whether it's R and D, whether it's, you know, different parts of the business. And again, these companies today, Bristol, talking about manufacturing. And so there could be so many place, so many pieces where they could use it, but will they use cloud science? Tbd.
- [29:46]
Melissa Lee
Right, Angelica. Thank you, Angelica. Peebles. Coming up, Bitcoin bruised and battered. But does a reversal of misfortune lie ahead in Q3? Will debate positioning in the crypto complex next. And later, what Nike's results are signaling about the consumer. Top analyst will join us straight ahead with his takeaways from the conference call. You're watching Fast Money live from the NASDAQ market site in Times Square. Back right after this.
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Scott Cohen
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Scott Cohen
And with three times the points on dining, we ordered a Wagyu steak dinner.
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And that pistachio gelato was too good.
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Scott Cohen
So where should we go next year?
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Scott Cohen
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Tim Seymour
AT&T business Wireless connecting changes everything.
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- [31:50]
Melissa Lee
welcome back to Fast Money. It has been a brutal first half of the year for Bitcoin. Same for Ethereum, Solana and a host of other stocks, cryptos and stocks in the crypto orbit. Since peaking last October, Bitcoin has now been cut in half. Crypto proxies dropping as well. Strategy shares dropping more than 40% since January. Coinbase down 35%, Robinhood off around 11%. Steve, what do you do now? You've been active in the space?
- [32:13]
Tim Seymour
Yeah.
- [32:13]
Dan Nathan
The problem is there's not the environment is so negative for bitcoin and with IPOs coming out use as an ATM to get money out of that into whatever they want. As an ipo, there's not a lot that has to go right. There's a lot that's been going wrong. So rates they'll tell you. But if you just watch the ETF market, the June was the biggest month for net inflow outflows by a large margin and it's all from ibit. So I don't know what you make of that. It's a bigger ETF but it's basically 75% of the outflows. Maybe hedges against positions, but it's a circular weakness where people sell that then they have to sell the actual. So I think for the you need rate cuts I would assume, but you have mega IPOs that are coming down the pike that are still going to create a sense of cash. People look at their eth, their eth or their bitcoin and say I'm down 50, 60% I could buy this IPO and be up 20, 30, 40% or buy a 10 biotech name, small cap biotech name and be up 100%. So there's a lot more places that are a lot more accommodative for your money in a quicker turnaround than the Hodlers had with bitcoin.
- [33:28]
Melissa Lee
Well, speaking of hodlers, the ultimate holder is saying that they're going to sell or they are going to be allowed to sell potentially. And we're talking about strategy. I mean it feels like until that stock has some sort of stability, you're not really going to see stability in the bitcoin trade.
- [33:42]
Steve Grasso
It feels like there is an FTF next moment coming and there's no reason for these treasury banks. Well, I mean, but there's no reason for these treasury companies to exist. If you look at the biggest ones, I mean they're down $10 billion on their holdings and the market caps are getting low. They have all these creative financing things. They own a bunch of crap that is worse than what they are, you know. And so like I think about it, I say to myself, this can only go one way. And then I think of bitcoin in general and I say to myself, okay, what is the only thing that's working right now now? Stablecoins. Maybe they are, I don't know. I feel pretty well banked. I don't need a stablecoin right now. And so I just think all these conversations about defy and you know, Tom Lee is on the network a lot. I mean, you know, he's the chairman of bit mine. He's been making the case that, you know, there's still this staking opportunity. That's one way that they take this asset that they buy, they lever it up, that sort of thing. But at the end of the day, if you're down a lot in the underlying that you're levered up to kind of get that upside return and it's not working, working, sooner or later it's going to really, I don't know, it's
- [34:37]
Kevin McCarthy
going to come apart.
- [34:39]
Melissa Lee
Coming up, Nike shares are still down in the after session of the conference call. About 30 minutes underway. We'll talk to one analyst who says the sportswear giants rebound still has to prove itself. We're back in two. Welcome back to FAST Money. Stocks adding to yesterday's gains as the second quarter comes to a close. The Dow rising 130 points, closing at records it posted its best first half in five years. Shares up almost 9%. S&P gaining nearly a percent today, now up nine and a half percent year to date while the Nasdaq rose by a percent and a half, leading the major averages this year with a near 13% gain since January. Johnson and Johnson hitting fresh records, going all the way back to its IPO in 1944. Even with a 2% pullback today. It has climbed 23% so far this year. And Constellation Brands on the move after earnings. The beverage company beating top and bottom line estimates that conference call kicks off 8:00am Eastern Time tomorrow. I saw that J And J. Statment. I thought of you.
- [35:39]
Tim Seymour
Yeah, I've been long JJ For a long time. And this is a stock that took a long time to get going. And it's going for I think three reasons. One is that I think the talc overhang, this is litigation. It's a big deal. It should be a big deal. But there's actually been developments that I think are very company friendly in the last week or so. I think that's actually what really took it to the all time high. But, but there's excitement around product and pipeline and there really is a pharma story here. There's an oncology story. I think the consumer product story and kind of the innovation there is something that's been steady as she goes. So the valuation is not cheap on a relative basis. But it is a case where it's taken a long time to get this thing moving. I think you can still own it and I think you can own it based upon the strength of pharma.
- [36:23]
Melissa Lee
Let's take another check on Nike here. Making a bit of a comeback now, down under 4%. We're just getting guidance performance on the conference call. Neuberger's Kevin McCarthy joins us now. He covers Nike. Kevin, great to have you with us. I'm sure you saw this guidance coming out of the call. Now expect revenue to be down low to mid single digits. Q2 having a sequential deceleration from Q1. What do you make of this all?
- [36:46]
Kevin McCarthy
You know, I don't think the results in and of themselves were Nike ask. They, you know, essentially hit or beat everything modestly. Revenue kind of on the good end of the down 2 to 4%. China a little bit better. Costs were contained, margins kind of stripping out the tariff was, was fine. So. But you know, but clearly not a beaten raise. That's not what we're playing for. We're looking for a stabilization that sits above the pnl and I think that still is taking a lot of time. The consumer is, you know, as they said, the call was about halfway through, but they did cite a kind of a deterioration in the overall consumer backdrop around mid quarter. So I think there were some redeeming aspects, but they still have some work to do.
- [37:43]
Melissa Lee
They also said we're not expecting the environment to improve meaningfully over the next six months. Is this a Nike specific consumer that's feeling pressure or is this a consumer in general that is feeling pressure?
- [37:55]
Kevin McCarthy
Share.
- [37:55]
I'd say this about Nike. Nike still dominates Mind Share. You know, they went from five years ago, 60% mindshare to the low 40s last year and that's stabilized. That's, that's kind of in the, in the mid-40s now. So I think we're talking about a bigger macro concern here. But there were some redeeming aspects, some idiosyncratic redeeming aspects about what they were doing in terms of, you know, the inventory situation. This is a company that in the 18 months that Elliot's been there, really hasn't been able to string together two proof points to suggest that their win now strategy is taking root. They did that with running now they're now, you could argue that they've done that with the inventory situation. And an important nuance here is that what we saw is we saw that units were up dollars flat. Why that matters is because you're not seeing fire sales, you know, clearances. To me that that suggests that they can go on the offense now. Stock down $3 right now to $2 or so. I Get it? You know, if we're looking at the guidance for next quarter, probably suggest a little bit of a shortfall there relative to consensus, but that's not the story. The story is once they lap the tariff fully next quarter, then we start to see the margin. This is a margin story and you obviously have a new CFO in there. So he's a very cost minded individual. So I think that's what, that's what it's about.
- [39:34]
Dan Nathan
Kevin When I look at China, China's headwinds seem to be increasing, not decreasing. So this is going to more and more progressively become a North America story. When you hear them report, I get all the stuff about inventories. Are we past the point where a new CEO helps? Is it a strategic shift? Where I said before, Nike has deep pockets. They can go on a different segment that no one else can compete on with Nike. What do you think about that?
- [40:04]
Kevin McCarthy
Well, so first answer your China piece. I think that you know, 15% of overall earnings right now, but a higher percentage, but they've seen the margins go from, you know, cut 50% there. I think that there's going to be more changes coming there. They cited some proof points about some of the doors that they have touched up on seeing kind of high single digit increases in sales. But I do think the overall size of their, kind of their points of distribution need, need to be cleaned up a lot as far as management in of themselves. You know Elliot is a tremendous asset in terms of really bringing enthusiasm to the overall organization. With the new cfo I think you bring along some kind of cost discipline that's needed. Remember this is a company that has got five and a half percent EBIT margins, you know, roughly half where they were several years ago. So I think, I think the focus is really going to be on that.
- [41:17]
Melissa Lee
Kevin, thank you. Kevin McCarthy. Nike stock up paring its losses in the after hours by about half. It's now down 4%. Coming up, we're counting down to CNBC's annual list of top states for business. And this year the booming defense industry is taking center stage. Scott Cohen is live in New Mexico with the look of at the latest wave of innovation. Hey Scott.
- [41:37]
Scott Cohen
Hey Melissa.
- [41:38]
Kevin McCarthy
Yeah.
- [41:38]
Scott Cohen
The Trump administration wants one and a half trillion dollars for defense. Even if they get just some of that, it's going to lead to more situations like this and a new front in the battle between the states that we chronicle every year. On top states for business we tell you about what one consultant calls the spacexification of defense with fast money Repair.
- [42:06]
Melissa Lee
Welcome back to Fast money. The Trump administration's defense buildup, which includes a one and a half trillion dollar budget request, has opened a new front in the battle between the states for business and jobs. CNBC's Scott Cohen is in New Mexico as we prepare to unveil this year's CNBC Top States for Business. Scott?
- [42:24]
Tim Seymour
Hi Melissa.
- [42:25]
Scott Cohen
We'll see where New Mexico winds up in our rankings this year, but the state won a big prize here. This is a thousand acre site about 30 miles outside of Albuquerque where a startup called Castellian is preparing to build hypersonic missiles. Castellion was founded by three former SpaceX executives trying to do for weapons kind of what Elon Musk's company did for space that is producing fast, affordably and in big numbers. And one of the first orders of business was finding a manufacturing site.
- [42:55]
Kevin McCarthy
Where can we move fast? Where can we secure a large site because we need a lot of space to do this sort of scale manufacturing? And where can we find the right talent, the right workforce that can staff this site and bring us to scale quickly?
- [43:12]
Scott Cohen
And New Mexico really checked all the boxes. They say not only did it have this shovel ready site and a very cooperative state government, it also had talent from the nearby national labs. And site selection experts say this is going to be the kind of opportunity that comes up again and again and it's the things that we measure in America's top states for business. You can follow our journey, read more about Castellian and everything about competitiveness and find out where your state ranks and what is the top state for business. We will reveal it next week, July 9th.
- [43:44]
Melissa Lee
Melissa is there thinking, Scott, that once Castellian goes there and builds that it's going to start a whole little sort of mini space economy in New Mexico.
- [43:57]
Scott Cohen
Well, there's some of that and they have some of that here. But it's also really just a matter of getting up and going and going fast and at scale. And that's the really impressive thing here. They only broke ground here in January and they already have 15 buildings that are built and they're well on their way to getting production done. And that's the change. It's not anymore the, you know, find the defense contractor, give them a fixed thing and let them build their costs and everything and subcontract and take their time. That doesn't fly anymore. This is sort of the new model that the Pentagon is putting into place. And so yeah, more economy certainly here in New Mexico and maybe in other states as well that will Try and get it on the act. By the way, the website topstates.cnbc.com we
- [44:44]
Melissa Lee
look forward to seeing where you'll end up next. Scott, thank you.
- [44:48]
Dan Ives
Okay.
- [44:48]
Melissa Lee
SCOTT cohn, Coming up, more pain for the yen as the Currency slumps to 40 year lows against the dollar. Whether intervention is in the cards and what it all means for investing overseas, that is next, more fast money into. Welcome back to Fast Money. The Japanese yen tumbling to its lowest level against the dollar in 40 years, its lowest level since 1986. That's when the movie Top Gun hit the box office. The yen has been on a steady decline for over a year. So is now still a good time to jump into Japanese stocks, which of course is they benefited from this weakening currency.
- [45:24]
Tim Seymour
I think it is. And just before we talk about Japan, you know, 45%, we're talking about the year to date, second quarter, 45% of all global indices in local and local currency terms hit all time highs in the second quarter. This trade and this first time since 2007, which was really the last great golden period for international investing. And I think we're in the earlier stages of it. I run an international ETF Japan. The government is investing in strategic sectors growth but also other parts of the technology chain.
- [45:54]
Scott Cohen
Very important.
- [45:55]
Tim Seymour
Government's also incenting local retail to invest in their own equity markets. I think there's a lot more of that to go. Corporate governance and corporate reform as geared towards governance has been a big deal in Japan over the last decade and it's paying fruits now on the EPS side. I understand it could be scary to be investing there. I think the BOJ has to raise rates. It's one thing to intervene in markets. I think they have to hike rates and I think they already have and I think they need to go again and I think that's something that will drive the equity market higher.
- [46:23]
Melissa Lee
All right, up next, final trades, Final trade time.
- [46:38]
Tim Seymour
Tim, International investing. And because I think it would be tacky to Recommend My own ETF, Ideal, I'm going to tell you to buy ACW X.
- [46:45]
Melissa Lee
It was IDevo, you said.
- [46:47]
Marta Norton
Yes.
- [46:48]
Kevin McCarthy
Yes.
- [46:48]
Marta Norton
Marta Hyperscalers for the patient. Long term investor.
- [46:52]
Steve Grasso
Dan, I'm going to check out this Ideal etf. Yeah, sounds an interesting way to play international.
- [46:59]
Tim Seymour
It's the I and Timbo I D V. There you go.
- [47:02]
Brandon Gomez
Nike.
- [47:02]
Steve Grasso
I'm not sure there's anyone left to sell this stock. And maybe it's so bad that it's starting to be good.
- [47:07]
Dan Nathan
Steve I'm gonna give a hat tip to Scott Cohn. I'm gonna go with Lockheed Martin. Stay in that defense complex.
- [47:12]
Melissa Lee
Thank you for watching Fast Marta. Great to have you. Mad Money Jim Crane Research Right now
- [47:19]
Fast Money Disclaimer Narrator
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 this year's girls
- [47:51]
Scott Cohen
trip to Telluride was the best. We one upped ourselves with my Sapphire Preferred card and with 5x points on Chase Travel plus 3 times points on vacation homes with top brand we got this incredible cabin.
- [48:03]
Chase Sapphire Preferred Cardholder
It was a mansion and with three
- [48:05]
Scott Cohen
times the points on dining, we ordered a Wagyu steak dinner and that pistachio
- [48:08]
Chase Sapphire Preferred Cardholder
gelato was too good.
- [48:10]
Scott Cohen
So where should we go next year?
- [48:12]
Chase Sapphire Preferred Cardholder
I've got ideas.
- [48:13]
Scott Cohen
Chase Sapphire Preferred the card that's preferred for a reason. Cards issued by JPMorgan Chase bank and a member FDIC subject to credit approval terms apply.