An AI Realization Ahead Of Nvidia’s Results… And Insurance Stocks Get Hit 11/18/25

0:01Live from the Nasdaq market site in the heart of New York City's Times Square, this is Fast Money. Here's what's on tap tonight. An AI warning. Shares of Amazon sinking as one Wall Street firm raises the red flag on its artificial intelligence ambitions. What stage is that set as we get ready for NVIDIA's earnings tomorrow? And health care headaches. ACA tax credit set to expire in a matter of weeks. Some startling numbers on how much premiums could rise and what's at stake for the health insurers. Plus, a shaky foundation for Home Depot after earnings. Could Eli Lilly be the next trillion dollar company?

0:32and investing in uranium, what to expect from nuclear stocks in the year ahead. I'm Melissa Lee coming to you live from Studio B at the NASDAQ. On the desk tonight, Tim Seymour, Karen Feinerman, Courtney Garcia, and Steve Grasso. We start off with a reality check for a pair of AI hyperscalers on the eve of NVIDIA's latest results. Rothschild downgrading both Amazon and Microsoft, saying generative AI's economics are much weaker than investors realize. Analysts writing that management teams are getting way too much benefit of the doubt and that any missteps in AI deployment can quickly make investments in this massive buildout value negative.

1:07Both stocks were cut from buy to neutral. NVIDIA, meantime, now riding a five-day losing streak into earnings tomorrow. It is down over 14 percent from its record high. So what do we do here? Are these sort of, I don't know, I don't know if they confirm the fears that we've already seen, or is this another reason why we should be bearish? Well, you could take the other side on Amazon. So I can appreciate the fact that we brought this up yesterday when Jim was here about all the different things going on in the market. And one of the things I mentioned is Amazon's out there in the market raising 15 billion.

1:36No big deal, except for the fact that what we've been very concerned about and look at that move in Meta, look at the move in those companies that we think are possibly overspending. I'm not worried about Amazon here, both in terms of valuation or in terms of credit quality. But I am of the view that the street and the market are demanding an answer. In other words, what is profitability? I want to see some vision to profitability. I want to not just be investing to infinity. And then if you look at the market overall, what clearly was a lack of breadth, you combine that with a sense that the Fed is on a slower dynamic and the fact that you've got maybe some weaker job numbers coming out.

2:13You get to this place where now we can all say suddenly we're investing too much in AI. I don't think so. I think that I think this downgrade is interesting. I think it certainly comes at a time when people want to believe that some of these things are themes we should be looking at. I think the most important theme is that companies that were developing free cash flow are now going to be issuing debt, and it's not a one-way street. Yeah, and to that point, I mean, it's a change in the business model that I don't know if Wall Street has completely processed in terms of valuation. Not only is it free cash flow positive to issuing debt, it's also from an asset light to an asset heavy business model.

2:47Well, there are many changes. There are reasons why investors loved this group of stocks. High margins, add that in there, and now those are out. For Amazon, though, being in the cloud business, that is an asset-heavy business already. Already, but this sort of build-out is much more expensive than the previous traditional cloud build-out. And so, therefore, margins are more threatened, and this actually may be value negative because it might not generate as much profits, revenues from this sort of cloud business, given the spend. So I don't know how much of the cloud business is right now allocated to AI, and it's just not called that.

3:23Right. True. True. So I'm not really sure, because the cloud business seems to be doing really nicely. They had really good growth. They had really good margins. Could it all be way too expensive? Yes, that's absolutely possible. I did think it was interesting. There's sort of a little nuance in the note about they're going to a neutral, right? But the price target remains the same. So I'm not quite sure what, you know, why, what that means, actually. We still think it's worth this. Right. But now I guess it's just an extra note of caution. Yeah. Yes. Exactly. I think the major question is, if they're off putting their risk to a different dynamic, then why shouldn't the investor?

4:05Right. So not to make it any more complicated. They're not using cash. They're using bond sale. Why should we look at it any better? It's got to be worse, right? If they're not taking the risk with their cash or if it is that does that make sense? It is. But they're doing a bond sale versus using free cash, using free cash. So I so I think that still an obligation on cat. I mean, I hear what you're saying. There's no free lunch. But I mean, it's better than them actually issuing equity for it. I mean, it's not dilutive. Better, better. But what is it better when you look at a stock to do it the way they used to do it?

4:38Well, I mean, the stock, as we've all just said, wants to see free cash flow to infinity. I mean, I'm looking at a report from Wolf Research where they're actually pointing out on Amazon that they actually believe that there's, based upon the AWS acceleration driven by Project Rainier, that there's an upside to revenue and EBITDA, which means that there could be a multiple enhancement from this. And yet there's arguments in the other direction. Yeah, and I think really investors are just finally waking up to this idea that there's been so much CapEx. We just really need to see a return on that.

5:07And you're seeing this risk being taken off kind of across the board. This is happening in AI. When you look at the bonds that are getting issues, there's a wider spread there. People are demanding a higher yield for those bonds because they are starting to question at what point in time are you actually going to get paid out on that? So I don't think this is the bubble bursting. I don't think this is the end of that. I think this is a pause that people are taking. I do think NVIDIA tomorrow is going to be something that's very closely watched to see what does that demand look like? Are these chips, you know, do we still need the most expensive chips?

5:34Are people doing them in-house? What does this mean for the overall AI story? I think tomorrow is going to be a bigger story. Right now, it's just sentiment-driven more so than any actual data. In terms of the spreads. You're just showing me the charts. Yeah, we're talking about the core weave spread blowing out. I'm not troubled by Amazon issuing debt. I do think there's a lot of debt coming to market in the same space, right? So if you're a debt investor who wants exposure to this area, wouldn't you rather be in Amazon than core weave? Than core weave. I mean, at some point, you know, the risk score makes CoreWeave sort of like the Walmart target of it.

6:09And at some point you might say, all right, well, I'll try the I'll try the, you know, potentially high high return one. But to me, it's not a problem at all for Amazon's balance sheet. It's more of the market for these kinds for this kind of paper in general. They're going to be they're going to be fine. Absolutely fine to be able to do whatever they want. But does it make the story more compelling? when we're worried about return on invested capital, when we're worried about that dynamic. I think this is more of a headwind than a tailwind for the story. So you're saying it's less attractive because of the issuance of bonds.

6:45Yeah, I think we've opened Pandora's box. I think now this is another layer for the analysts to sift through. It's not going to be positive, in my opinion. All right, all this going on. And what does Jensen Huang say to him? I mean, he's got a lot of handholding that he's got to do with the street. I mean, he laid out a clear plan, a clear sort of backlog at GTC. That's not enough, apparently. So what else? Well, we need to better understand NVIDIA as an infrastructure, AI infrastructure company, as opposed to a semiconductor company with, you know, essentially a platform moat around their business, because that's all the last six months have been.

7:22It's all been about NVIDIA as an infrastructure play, investing in five companies who will invest in them and the turnaround. I think the market just wants to know more. Again, we had another announcement today with Microsoft. And you've got a dynamic here where it's no longer juicing the stocks. It's actually I think the market is concerned and market is actually looking at the circular nature of all this. So I think NVIDIA has done a great job of giving as much information to the market here. I think the market also I'm not so sure NVIDIA China is that rosy right now in terms of export dynamics.

7:54I think NVIDIA is doing everything they can to play it perfectly with the White House. And I think the White House is probably very happy that they're doing that. But uncertainty around China, bar is incredibly high. I don't think there's anything about 2026 that we should be worried about. I think 2026 is done and dusted. The question is, is the street priced in too much? The China aspect, though, that's not in the model at all. So anything would be upside, right, if they had anything positive on China. But also, it's down like 13 percent from that peak right after that, you know, the very rosy projections.

8:26So is that enough? I don't know, but I would, sorry to would you rather again, but I would rather it be here going into earnings. You're the only one that gets away with this, Karen. I mean, you know. You've got to repass. I'd be thrown off the desk right now. All right. Let's move on and talk about shares at Home Depot. They dropped 6 % after the company missed earnings estimates for a third straight quarter. Cut its full year outlook as consumers put off home improvement projects. High mortgage rates, a murky labor market, weak housing market, all weighing on demand, most notably in the pro segment where you need contractors to complete projects.

8:56Those projects were suppressed or on the sidelines. That was supposed to be an area of strength. Courtney, what do you think of this? I mean, I don't know if you're expecting this kind of weakness or not. Yeah, and I mean, we just had a really tight housing market, which is everybody is hoping that that's going to have some sort of relief. And even though rates have come down a bit, you're not seeing any movement in the housing market. And that is when most people make big projects in their houses, is either when they're about to sell their house or when they're buying a new house. And so that's when you're likely going to see a lot more of a move here in Home Depot.

9:24I also thought it was interesting. They noted that there were less hurricanes, which I think is a good thing environmentally, but it's a bad thing for Home Depot, which I thought was kind of interesting there. But I think, really, you need to see mortgage rates probably come, like, around 5%, if not lower, to see, like, a real movement in the housing market. And I think that's probably going to be the next catalyst in Home Depot, especially the fact that rates probably aren't coming down here soon. I don't know when that's going to happen. You know, when you look at Home Depot, we've all talked about it.

9:4850 % of sales is from the professional. Lowe's has more of the do-it-yourself person, maybe Tim, probably more of a customer of Lowe's, right? I mean, I DIY all day long. I mean, Karen's seen me on my tractor. I've plugged. It's actually a country song. Go John Deere as well. Stock just went higher. So I think when you just look at both of these things, Lowe's is more of a cyclical exposed name because it's more consumer-facing. Home Depot is more of the professional-facing. I think you're going to need lower rates to make either of these work. But I would buy Home Depot based on lower rates coming sooner rather than later.

10:24I mean, the commentary was very interesting in terms of our customers are homeowners. Homeowners are seeing more declines in housing markets around the country. They're more worried about their jobs. And lower rates, they're not going to solve these two issues here immediately, not at 5%. I think they're worried about their customers. And as much as we, as you've said, Pro's been resilient. What Courtney said is funny. I thought the same thing. Like, hey, less storms. Sorry. You know, it wasn't so great a quarter. Not enough masking tape and plywood. I think you're going to see downgrades. I think 26 is certainly put out there as being more in question.

11:01And a company that I want to own cheaper, I'm probably going to own cheaper. So one thing, their inventory was high. The quarter wasn't terrible. But the you know that it not what not getting better isn't great. And I think also the idea of home prices coming in if you're that homeowner. Yeah. Right. Is is of concern. So Lowe's fared better for the reasons you said. It's a different mix there. I'm long Home Depot. Not delightful. I mean, I'll stick it out. But we've been hoping this inventory overhang would be lifted somehow for a while now. Doesn't look like that's happening anytime soon. All right.

11:35For more on the markets and tech rotation, Natixis lead portfolio strategist, Jack Genesiewicz, joins us here on set. Jack, great to see you in person, IRL. Thank you for having me. What do you make of it? So basically, there are concerns about the AI narrative. There are concerns about the consumer that we were just talking about in the A block. What is there for the markets to hang their hats on at this point? Sure. But I think if you kind of step back and look at the bigger picture backdrop, you know, the economy is still doing okay. I mean, I think you can make some points where you see the labor market is slowly cooling.

12:06The risk is obviously that that picks up and accelerates at a faster pace where we start to lose jobs. But, you know, I think the bigger picture level is still decent, right? You still have people are still spending money. The consumption numbers are still strong and the credit card data is still strong. Look at earnings. Earnings are still moving up and to the right. Margins are still expanding. You know, I think we've heard a little bit more questions maybe being raised during third quarter earnings calls about the health of the economy going forward. And I don't think we really heard that. So I think moving back and taking a big picture view here, the economy is still in decent shape.

12:36It's not terrible. It's not great. But it's not rolling over to a point where it's hit the eject button and start selling everything. So I agree on the market. Sorry, the macro assessment. But the market's rolling over. So what do you think it is, Jack? I mean, because is it is it the sense that suddenly the Fed is not as much of your friend? Because we all would say you would say 25 bps one way or another in December doesn't change what the market should do, those earnings numbers. So what has been that proverbial straw on the camel's back? I think it's a combination of a few things, right? It's the reset of the narrative on the AI trade.

13:09You know, it's no longer giving a free pass to the capex spenders. But there's also things like a data vacuum going on right now, right? The big thing for the markets with regard to the Fed, where do we stand on inflation? You know, where do we stand on the labor market? We don't really have the top tier data that we've been used to having. So we're sort of flying blind there looking at second and third tier data. And as a result, markets really not sure how to price the Fed. And you've seen the VIX move up a little bit. You've seen the move index push higher. So you're getting that repricing of the potential for the Fed cut.

13:38Maybe it's 50-50, a little less. You know, those questions all on top of leveraged trades that are now starting to unwind because of the pickup in vol. It's not surprising that these crowded trades are putting a little bit more downside pressure. Now we suddenly just have a, hey, let's just risk off, deleverage. And this is now all of a sudden we're talking about a proper correction in the marketplace. Now, when we're looking at the labor market, I know there's a lot of concerns that this is weakening. but I think we look a lot at the different types of consumers. We talk about the lower income versus the higher income consumer, but I don't think what's talked about enough is the baby boomers hold a majority of the wealth of this country who aren't as affected by the labor markets changing.

14:10So how much should we be worried about a weakening in the labor market versus the overall consumer who may not be in the labor market? And this is playing right to that two-speed economy, right? And who's really supporting the consumption right now? It's sort of that higher income band, which are the income cohorts you're just talking about right there. So, you know, if you look at who's doing the bulk of the spending, it's really the 40 percentile and up quartiles that are spending the money. It's the ones that are getting pinched, that lower income cohort. But on a net basis, they account for almost less than 9 percent of total personal consumption expenditure.

14:41So at the margin, they're getting squeezed, but they're not really the ones that are driving consumption here. It's still the upper incomes that have access to the stock market. They're getting that wealth effect. They've locked in those mortgage rates at lower levels. So they're not getting impacted from higher interest rates, that sort of thing. And they're the ones that are benefiting from this. And they're the ones who continue to spend. So if you're taking a step back and taking a look at the economy as a whole and just sort of taking it all in, given the market valuations here, Jack, I'm wondering if we are headed for some sort of a downshift in the economy, then what would that correction look like?

15:12And when because it feels like the markets want to sell now and ask questions later in terms of preparing, as you mentioned, deleveraging, preparing for some sort of a step back on the economy. Is that what we are in fact seeing? Because then shouldn't we be paying attention, saying, you know what, even though things may be OK, we have to prepare for what's happening six months out. Sure. And I think if you even look out to six months or more, you know, again, go back to the Fed cycle. Maybe we get a cut December, maybe we don't. But the market's still looking at two more cuts by summer of next year.

15:43So I think the bigger point there is that financial conditions at the margin are still probably going to be supported because the Fed is not hiking. A pause, a cut, very different than a hike, and we still see the Fed easing as we start to push into the beginning of next year. And then you're going to get the bump from some of the tax rebates that are kicking in from no taxes on, tips, overtime, that sort of thing. So I think there's reasons to have a little bit more optimism as we rolled in the beginning of next year. We just got to kind of get through what we're seeing today. And it's, I think, more of a technical trade, if you will, more than anything else.

16:11So what are you doing with the AI trade at this point? You know, I think the big one here is simply if you've got to look at a portfolio, You don't want to be over leveraged to the MAG7 per se. And you still also want to play that capex spend game, right? As we like to say, you know, one company's capex spend is another company's earnings. And I think we've got pretty good visibility between now and the end of the year and into the end of next year that the capex numbers from the hyperscalers are still going to be very strong. You may not like the fact that they're spending because you don't have clarity on that ROI.

16:38But from a perspective of somebody else's earnings, that's still pretty strong. So maybe you're looking at not quite the same exposure to the Mag-7, but the broader tech complex is still going to be beneficiaries of the spend, which I think we still have pretty good clarity on. You like the takers? Yeah. Okay. Jack, thank you. Jack Janosiewicz, Natixis. And that's one way of looking at it, right? I mean, the ones like an NVIDIA, for instance, which we're preparing for tomorrow, the ones that take the checks in versus ones that write the checks that go out in terms of investing. No question. And, again, there's different parts of this even whole AI build out.

17:11look at data center, build out, and we've kind of dissected on this show and looked at the different pieces and whether you're talking about HVAC or whether you're talking about different pieces of warehousing. I agree with that. I also agree with the point you're getting to, which is that the market seemingly is getting ahead of these growth concerns. And there's zero growth slowdown priced into this market, really. And in fact, Home Depot is a good example of a name that probably trades back to 240 before you even think about really assessing growth. Right. And if we don't get 25 basis points in December and we get 50 next year, is 50 going to do it?

17:47I mean, right. There's a number of questions that you ask after that. Are rates actually going to come down? Are mortgage rates actually going to come down? Is this going to actually help the labor market? I mean, it's a blunt instrument. We don't know if the impact is going to be as much as we hope when we have a downshift in the economy. We also don't know why would it why would they pause and only do 50? Is it because the labor market is stabilizing and they want to focus more on inflation? Is it even if a bad labor market inflation is really running hot? Maybe they can't. Although I think once we get to May, we're going to have a I think we'll have it.

18:19We'll have a dovish almost regardless. Yeah. All right. Coming up, reports of another bid sending Warner Brothers stock jumping today with the company had to say about the latest rumors. Plus, love it on Lilly. My analysts are feeling good about the pharma giant and where they see shares heading next. Do not go anywhere. Fast Money is back in two.

18:38This is Fast Money with Melissa Lee right here on CNBC.

18:49Welcome back to Fast Money. Warner Brothers Discovery shares whipsawing today and reports of a new bid for the company. According to Variety, Paramount Skydance is preparing a$71 billion offer in partnership with several Middle Eastern sovereign wealth funds. Warner Brothers surging more than 6 % at its highs, but giving back some of those gains after Paramount refuted the report, telling our Julia Boorstin that the information is, quote, categorically inaccurate. I mean, there were a lot of details in this report, which made it very interesting that it was categorically incorrect. They named which sovereign wealth funds.

19:21They said$7 billion apiece are going to go in. They didn't want to be part of a Comcast bid because they thought that Trump didn't like the CEO of Comcast, which is our parent company right now. So there's a lot in there for it to be categorically incorrect. There's a lot in there for it to be categorically incorrect. There's a lot in there that gives you some sense of where the media industry is going and what side you want to be on. Who's actually bankrolling this? Also, when there seemingly are no other bidders out there, this is fascinating. And it does also, I think, ultimately speak to the intrinsic value of some of these underlying assets.

19:59So what was once seemingly the Ellison family bidding for WBD is now truly paramount and paramount, which has been going through a massive amount of restructuring and certainly has made it clear that the creative parts of these two empires that go all the way back, that are some of the most story. They are all of those storied assets in Hollywood history are going to remain intact. And that it's about then bringing the efficiencies that come with everything else that seemingly make some sense in a new distribution model. Fascinating. And again, in a new media world. I read this and I thought immediately about Oracle and why Oracle would need help bankrolling this thing when it was always thought that they had the deepest pockets because the Ellison family.

20:42And then you think, oh, Oracle's stumble from the open A.I. announcement. It's round trip completely that move. So then I, oh, maybe they need some help making this bid. Or maybe they think it's risky. Even if they can't afford it, that doesn't mean you want to buy all of it or take down all the exposure. I don't know. I feel like also this is a little bit of gamesmanship between the bankers and the companies. And I'm not exactly sure. I don't know. Categorically, what was it? Categorically inaccurate? Inaccurate. Some categories were accurate. categorically inaccurate. Almost like technically you've got something wrong, but it's not, you know, thematically it's not inaccurate.