AI’s Next Big Test.. And China Tech Climbs 9/8/25

0:00Hi, it's Melissa. Before we jump into today's show, I've got something exciting to share. On December 11th, we are hosting a special edition of Fast Money Live, trading the holidays right here at the NASDAQ Market Site. You get to watch a live taping of Fast Money, meet and interact with the traders, and, of course, celebrate the holiday season with us. It's stocks and cheers in the heart of the city, Times Square in December. You will not want to miss this. Tickets are available now at CNBCEvents.com slash Fast Money. Live from the NASDAQ Market Site in the heart of New York City's Times Square, this is Fast Money.

0:31Here's what's on tap tonight. AI ambitions, Broadcom's rally showing no signs of slowing, and NVIDIA getting back in on the action. What we know now about investment in AI and how much more it could propel the stocks. And Apple's big reveal, we are counting down to tomorrow's iPhone event in Cupertino. Can the tech giant get investors excited again? And will its focus on hardware over AI get the stock back in rally mode? Plus, trouble for Tesla as the EV company's market share hits multi-year lows. China tech stocks jump to near 52-week highs, and fast food falters. What is behind the indigestion in shares of Chipotle, Cava and more?

1:07I'm Melissa Lee coming to you live from Studio B at the NASDAQ. On the desk tonight, Tim Seymour, Dan Nathan and Mike Coe. We start off with the latest for the AI trade. Chairs of Broadcom continuing their post earnings run, adding another 3 % after the company said last week it scored a new$10 billion AI client. The stock has now gained$185 billion in market cap in just two trading sessions. The move helping the NASDAQ climb to new records today, even NVIDIA, which has been struggling since its earnings report, caught a bit today, rising almost a percent. One big catalyst for the rally, comments from Mark Zuckerberg that Meta could invest even more than the$600 billion he's been talking about lately in AI over the next few years.

1:46But new data from the U.S. Census Bureau suggests AI adoption by the country's biggest companies is actually slowing in recent months. And at Apple's big iPhone launch tomorrow, The tech giant is expected to focus on new hardware rather than its Apple intelligence offering. So how do these factors weigh in on the AI trade and the stocks that have led the pack? But first, let's sort of dissect what's going on with Broadcom, the message it sent, and then that report today that was highlighted by Torsen Slock of Apollo over the weekend. Yeah, a great chart packet there, you know what I mean, about some of the things, the concentration, I think, to some degree today in his note, I think it's the daily spark, just in general of the top 10 names in the NASDAQ.

2:28But the other thing, and this is what you're talking about, I think it was on Friday or so, we're seeing CapEx, which is exploding, and we see, like you just showed that tweet, by all the major CEOs, and it seems like this is the sort of thing that at any point could drop off if you see the adoption of some of these products or you don't see an acceleration in them one way or the other. And I'll just go back to what I think is a really important point. I mean, OpenAI is this customer of NVIDIA, and now it's a customer of Broadcom. I think that was one of the reasons why Thursday afternoon, when the stock really took off in the aftermarket, despite what looked like a good beat and raise, but not an excellent beat and raise, is that now they have a new$10 billion customer.

3:08This is OpenAI, and they're going to be doing custom silicon. And OpenAI was a huge customer of NVIDIA. And that's the story as it's broadening out right there. But OpenAI is expected to lose$115 billion through the end of 2029. The information reported that. So when you think about just those massive sort of losses, at some point, if you don't have the adoption, if you don't have the revenue that is going to justify that sort of spend, that will get pulled back. It's just that simple. And there's a lot of folks in that ecosystem that the stocks have pulled forward a lot of that expected performance one way or another.

3:44Is it early? I mean, I know that people will say, oh, no, the AI trade, it's been intact for three years or more even. But isn't it early in terms of the ways company can actually adopt and use and see the results? I think it is. The question is, where are we in the capex and the build-out period? Certainly for the broader industrial space and for kind of traditional C-suite operational evolution and where that means margin accretion for the rest of the S &P, I think we're very, very early. And I think part of the reason someone like Meta has outperformed here, even on some level, you can make an argument, most of the other chip players other than NVIDIA is because, in fact, they are seeing the benefit right now in their core business and the acceleration and the margin profile.

4:28Back to Broadcom, part of the story here, and I think this was part of the conversation we had on Friday, and to remind, which is that Broadcom truly by name is not just purely a semiconductor chip in the form of large language model and all that has been at least driving a lot of the NVIDIA. It is in wireless. It really is part of a data center play. And that's part of why I think the sense was, at least for the market that wanted some rotation into a more expensive company, by the way, that's part of the sustainability here. But I think we are early. And I think I know it was, you know, wherever we all were on that day of deep seek.

5:02Was that January? I forget when that was. Last week of January. But it was something that was profound because that was the moment we questioned whether all this CapEx made sense. And until we know otherwise, we do know that it's at least$500 billion from the hyperscalers. They alone, let alone everybody else. So, you know, again, I think there are different winners and losers along the road at different periods here. But the market right now, and we'll get to this, and my final point is that I think this is the last couple of days. It's all about the Fed. It's all about interest rates. But to make that point, Tim, on the AI, I mean, Friday was a great split screen.

5:34You had Broadcom that gained$150 billion in market cap, or actually more because of this huge order that they had relative to CapEx. On the flip side of it, if the next trade, before we get to the rest of the S &P and what they are going to do to monetize whatever spend or the uptake that they're going to have for AI tools, Salesforce was down 10 % or something at one point because they are not able to articulate how their customers are using this technology, right? And so when I think about, you know, CRM has a$240 billion market cap. That's almost equivalent to what, you know, Broadcom has gained in the last week or so.

6:11And so if you are going to start to see companies that are going to accrue that value or see an uptake from their customers, it should be in this application layer. And that is Salesforce. And they're getting it, I think, from productivity within their own company, but they're not getting their customers to spend or to pay up from their existing services. Mike, where do you fall on this? I mean, the four largest hyperscalers are more than tripling their CapEx between 2023 and the end of 2026. And I think the point that Dan is making because OpenAI's losses, I mean, obviously, they haven't figured out a way to monetize all of this.

6:43The four biggest hyperscalers are profitable, but their revenues aren't growing as fast as their CapEx spend. So we can't expect that to be sustainable. You know, look, it's a very good time to be in that space. That much is clear. A lot more money is going to be spent. That is also very clear. but the pace of growth is going to have to slow sooner or later. You mentioned the Fed, and I think that's a key point in terms of lower rates. I mean, we're at 4.07 percent or so on the 10-year yield. I spoke to Dan Niles earlier on the exchange today, and he basically said we're in an era of easy money.

7:17I mean, the Fed is easing, and so, yeah, keep investing. And so, you know, the higher growth companies, especially the ones with less profitability, the ones where you're discounting farther out in the future, I mean, lower rates, this is a bonanza. And financial conditions, I think, are wild. And I don't, you know, that's a little scary, but it's not necessarily time to pull back. And, again, I think if you just get back to, I mean, like a Salesforce and getting into, like, the haves and the have-nots in the AI trade, Salesforce has been a have-not for five years. Oracle has been a have, and yet Oracle is spending a lot of money on the low margin trades.

7:54They're growing revenues, big deals. So the market is rewarding, I think, the incremental growth. And again, back to Broadcom, the fact is that 60 percent growth in AI was exceeded and then they drop in the new customer and then it's a broader play. So I'm not going to, you know, don't fight the Fed. Don't fight necessarily some of these trends here in terms of the spend, but in terms of at least where we have it. I'll say this. I know I've said this 50 times. Here's 51. The sovereign AI trade has only begun. Think of all the countries around the world that are so slow to actually build out and the kind of cap backs and the support they're going to need on the private sector.

8:31And that private sector, a lot of it's in Silicon Valley or other parts that have a similar address to all the companies that we're talking about right now. So I think we are early. And I think the valuation dynamic is important. But as we've said many times, valuation is not going to knock these stocks down. Tech companies are like commodity companies. You don't buy them when they're cheap. You buy them when they're expensive. Yeah, well, I think I could take the other argument about sovereign AI right here. You saw what happened last week with China, with India, with Russia. I mean, the list goes on and on.

9:03I mean, I think that whatever that forum was or they put that committee together, I mean, that is like 35, 40 percent of the world's population. So if we're starting to see this sort of fracture between, let's say, the east and the west, and we're going to have a bipolar world. And if you think about the Belt and Road that China has instituted for the last 20 years, they're going to have a digital Belt and Road. I mean, that's happening right now. So the opportunity for a lot of our companies that are very innovative here, make no mistake about it, to have access, let's say, to the Chinese markets.

9:33We don't have any digital companies in China. Just think of all these massive, you know, tech companies that we have. I mean, yeah, we have Apple and, you know, Microsoft has had a huge issue with technology transfer and all those sorts of things for years. So there's a scenario where sovereign AI does not play out for the companies here that are building these sorts of chips. Look what's going on with these export bands that we have, you know, with NVIDIA. You can take both sides of it, but there is a chance that Huawei is innovating at a pace that they're going to be a great competitor to some of the chip makers that we have.

10:03So I think geopolitics has the potential to play a big role. Well, it has a huge, I mean, and that's why the China trade is really important. And China is a different place. I mean, the Russian economy is the size of Cleveland. I mean, I don't care about Russia. I don't really care about India here. And I care about U.S. companies that have continued to dominate global tech and I think are going to continue to dominate. And I'm sure China is going to be an adversary. I'm sure they're driving a wedge. But that's part of the story that I think around the biggest tech companies in the world, why we have been concerned about Apple in China.

10:30We have been concerned at least about a couple other players. But a lot of the other guys aren't even really counting China outside of NVIDIA and Apple. So we'll see. Well, investors are still closely watching the Apple event, how Apple incorporates AI into its newest devices at tomorrow's big event. Craig Moffitt is partner and senior managing director at Moffitt Nathanson. He's got a neutral rating on Apple, upgrading it from a sell rating last Thursday. So incrementally, I guess, less bearish on the name. Craig, it's always great to speak with you. Good seeing you, Melissa. I feel like we're counting down.

10:59We had a countdown clock on CNBC earlier, you know, 20 hours to this event. But I almost feel like this is the most inconsequential Apple iPhone launch in a long time because it doesn't have it. It's so ordinary. It's so pedestrian in terms of new hardware upgrades, you know, new new camera, better battery, thinner. You know, of course, it's got it. I mean, it's going to have a new phone. It's got to be thinner. It's got to have a better battery. It's got to have a better camera. Absolutely right. And in fact, the fact that you were able to just recite that litany of what we're going to see tomorrow tells you that we already know what we're going to see tomorrow.

11:34So it's almost impossible for this to be a meaningful event for the stock tomorrow. We know what we're going to see. We're going to see a thinner iPhone. That'll be probably more expensive. It's also not clear that people are going to want the thinner iPhone because coming with a thinner iPhone is less battery life. And I'm not sure people are going to be all that eager to make that trade-off. So at the end of the day, as you said, it's just not a terribly consequential day for Apple. At the same time, Craig, what is factored into the valuation, which is granted, you know, I guess you can look at it as expensive for a 10 percent revenue grower.

12:14You know, the P.E. is more expensive than a Meta or an Alphabet or a lot. It's not close to a 10 percent revenue grower. OK, so not even even worse. But you make my point there, Craig. I mean, what is factored in here? Is it enough that there is a normal upgrade cycle that people like me with an iPhone 11 will upgrade the phone because I have to? It's got a cracked screen. Or do we have to have that super cycle? Is that what is priced in? that's what's priced in melissa and that's exactly the problem look i love apple as much as everybody loves apple i'm a devout apple user the products are great i sometimes hear this straw man argument when i'm posed as being hyper bearish and by the way i'm not particularly bearish um i i just i just think the stock is is somewhat overvalued um but but i i keep hearing people say you're crazy, no one's going to switch from Apple to Android.

13:09And of course, they're not going to switch from Apple to Android. That's not the point. The point is, unless you get faster revenue and earnings growth, the stock at 31 or 33 times earnings right now is too expensive. And ultimately, it's going to underperform over the long term because other things will grow faster. Even the rest of the S &P 500 is going to grow faster. So what was priced in, and especially, by the way, the peg ratio at Apple compared to the rest of the Mag 7 is moonshot, right? So what was priced in a year ago when everybody got all jazzed about the Worldwide Developer Conference was a super cycle.

13:50And that depended on people taking the promised AI Apple intelligence and needing better hardware in order to run it. That requires that it runs on the phone. What we're getting closer to finding out is that Apple's gonna do really well in AI probably, but more likely if it's by partnership, it's not gonna run on the phone as likely as it is running in the cloud. And while that's great for consumers, it probably doesn't drive a super cycle. So you're left with a great company with a great consumer franchise. But as you said, with people upgrading on a normal pace of upgrades rather than a super cycle, that's probably not good enough for what's priced into the stock.

14:37So, Craig, we just talked about the hyperscalers and the amount of capital that they are spending right now and what is expected over the next five years or so. There's some estimates that like in 2029 alone, there's going to be a trillion dollars of spend. And, you know, you think about that right now, 25 percent of sales for those major companies, they are spending on the build out right now. Apple, I think it's low single digits. So as an analyst and you look at that and based on what you just said about their inability to probably have this sort of technology on their phones, has this been a massive, massive misstep on their front?

15:10And is it the sort of thing that will keep them in the penalty box for a long time? Well, you can see it both ways. I mean, right. One of the things that was appealing about Apple for a while was they weren't spending the same kind of CapEx and therefore you have a good free cash flow story. I do think that, you know, and Tim Cook has essentially said so, that we're going to have more CapEx and they're going to have to invest more aggressively in going forward on AI. And so will it start to look like meta and the kinds of chat GPT types of numbers? Of course not. But it is likely to be substantially more spending than what we've seen in the past.

15:54You know, I don't know. Is that enough to really make it an AI growth story? I'm not sure. It's certainly not going to be in that league. But the people who have said Apple's really well positioned for consumers to to get their AI on Apple devices are absolutely right. I mean, it is. Again, it's just just a question of what's priced into the stock. Craig, always great to speak with you. Thanks so much. My pleasure. Good to see you, Melissa. All right. Mike Coe, options market, options flow, mostly bullish here on Apple? Yeah, I mean, it was mostly bullish today. We did see calls out facing puts by a little bit more than two to one.

16:33You know, I will point out there were a couple institutional prints, but most of this flow is really retail and going into the event. And people will still have an opportunity, of course, because it's going to be an intraday announcement. So there is that. It's end of week activity that we're seeing the 240s, 242 and a half and 245 calls all expiring this coming Friday that are seeing the most activity. Those 240s traded about 80 ,000 contracts or so at about two bucks a contract. But I think to everybody's point here, I mean, they would essentially exhaust all of their free cash flow to catch up on the CapEx side to, say, Amazon.

17:07So they have a lot of work to do, and their top line growth is about 4.5%. 240, 245, those are key levels of the stock. Mike's pointing out from the options market, they're important for the stock because that's really where you get to, you know, back to more or less kind of this key resistance level that I think you get through. It should be noted Apple's outperformed the S &P since late May, early June. And I realize, you know, I'm picking some spots here. A lot of that has to do with the China overhang and some of it. But that's kind of my point even, is that Apple starts to outperform as you all the stuff that's priced in that's bad, that's not happening.

17:41We know that. The fact is the Google antitrust dynamic revealed a couple of things. First of all, defaults are allowed. And so therefore, that 20 billion payment remains. The exclusivity is not allowed, which means that Apple every year plays gatekeeper and can renegotiate every year. None of that's in the stock price. If you can't, I mean, this is where I'll save the righteousness. I just, it's what we've all been saying tonight. Apple is the gatekeeper in terms of how people are using AI. That's most people on the small screen. The same thing we were saying about the small screen when it was time to do everything else on the small screen.

18:15So sitting back, it's not what we wanted for Apple as shareholders, but it doesn't mean that 95 % margins aren't theirs for the taking on tack. Yeah, well, the one thing I'll just say, if there's no iPhone super cycle, right, then you have to go back to services. And services going forward is going to be driven by AI on the phone. If that is in the cloud, then that's the thing that is not particularly difficult to replicate if you are any other phone maker. And so that is an issue in China where they are losing market share right now. Right. And so when you think about how the Chinese operate on phones like this for services, Apple's service revenue grew 13 percent last quarter.

18:55It's 24, 25 percent of their total revenue. I don't think that sort of growth in a higher margin business. Right. Is the sort of thing that justifies probably the multiple it is right here. So to me, if it's not a growth business, then it doesn't deserve to trade at a growth multiple. And so I don't know. I think it's really a wait and see. You know, we were saying that last year, 2024, WWDC, this is going to be a 2025 story. If they could ever fix out Apple intelligence, it really feels like it's a second half 2026 story right now. All right. Well, shares of Amsterdam based AI cloud company Nebius surging after saying it has inked a nearly 20 billion dollar AI infrastructure deal with Microsoft.

19:33Shares of Nebius already up 130 percent this year before the news. shares in Microsoft at last check, not really moving on this, but obviously Nebius is a smaller company of the two. Meantime, coming up, a check on the China trade, the group on the move with tech leading the charge, the names in the green, despite some disappointing data out of the mainland, plus Robinhood and Apple oven surgeon on news of their S &P inclusion, what the addition will mean for names in the long run when Fast Money returns back in two.

20:09Welcome back to Fast Money. Shares of Tesla down about a percent today after new data showed the EV maker's U.S. market share dropped to its lowest level since 2017. According to Reuters, the company, which once owned more than 80 percent of the country's EV market, held less than 40 percent in August. The drop comes as rivals roll out new models and Tesla focuses on other businesses like robo taxis and humanoid robots. GM, for one, has increased its share in EVs. Tim? I mean, I don't know if you see this as a huge deal because most of the market valuation of Tesla is not in vehicles. And most of the market share of GM is in ICE cars and or at least, you know, I don't know what to make out of it other than this is exactly where we said it was going to be.

20:55And if you value these things as auto companies, they're both mismarked. GM is wildly cheap. Tesla is even more wildly expensive. And the argument for Tesla bulls continues to be it's all these other businesses that continue to not happen. So there's no question BMW is making a superior luxury, at least as you get into the EV space. There's no question the mass market that Tesla has created, it hasn't really created. That said, Tesla has been by far the leader, is by far the leader. I'm just not buying the stock. I tip my hat to what they've done in the EV space. Yeah, do you tip your hat to what they've done in the Optimus space and the robots or the, you know, the robot taxi?

21:41I mean, we don't know, right? So it's a$1.1 trillion market cap company. And I think what's interesting here is that the Tesla bulls now agree with the Tesla bears is that the best days for their EV business are behind them, right? And it really is all about these new technologies, which is why you are starting to hear the potential for Tesla to buy XAI, right? We know that they want to invest in it. We also know this proposed plan for compensation for Elon Musk is like, okay, he could make a trillion dollars if he doubles the market cap. Well, how do you do that? It's a bit of a shell game right now.

22:11He's also got to deliver robots and robo taxes and commercialization. So he's going to make the case right now why XAI deserves to be part of this company. The problem is they're losing a billion dollars a month in XAI. What would shareholders like? They'd have to be crazy to agree to that sort of thing. And why buy the cow when you get the milk for free? One of the reasons why is I think he wants to just. I've heard that before, by the way. That expression. There was a time. There was a time. Yeah, but my point is, is like he could have access to XAI's technology. I mean, like, you know, and not that they could just like.

22:43But look at how this company has operated for years and years. They bought SolarCity years ago when that thing was not doing particularly well. So to me, this is like going to be a big mashup. And it's going to be one of those things that it's going to be really hard to tell what is driving the valuation. But make no mistake about it, their EV business is kaput. All right. Let's get to Robin, to each's opinion, right? Robin and Apple 11 both soaring to record highs today on news. They'll be joining the S &P later this month. Both stocks have already solid returns this year. But will inclusion in the benchmark keep those gains coming?

23:13Mike, what kind of activity have you seen in either of these? I mean, a lot of activity. I mean, there was a big pickup in the options volume of both of these names, unsurprisingly. I will say this was a happy surprise for us. We happen to have fairly big positions in both of them. So that was good news. Somewhat unexpected, I would say. But look, I mean, you know, what's going to happen is this is essentially going to get absorbed. And then it's just going to be back to whether or not you happen to like the companies. I think Robinhood's really been doing a great job with their business. I haven't followed it quite as closely, but I will say that, you know, once you get inclusion, then that sort of one trick pony is over.

23:54So I think we've probably got about three days of catch up going on and then it's going to be, you know, back to fundamentals. All right. Coming up, descending summit. Shares plunging as the biopharma stock hits a snag with its lung cancer drug study. The results from around the world, what it means for the stock's next move. You're watching Fast Money Live from the Nasdaq market site in Times Square. Back right after this.