Can Oracle Get Shares Back in Rally Mode, and a Trade School on the Netflix/Warner Brothers Deal 12/5/25

0:01Live from the Nasdaq market site in the heart of New York City Times Square this is fast money Here's what's on tap tonight. Reading the Oracle, the software giant has been trying to get its momentum back heading into next week's earnings report. But will the numbers help the stock get back to new highs? We'll debate that and get a read from the options pits. And sealing the deal, Warner Brothers has finally picked a partner for its studio and streaming business. But one of our traders has some questions about the stock move. What's on his mind? How you should play the trade now? Plus, we count down to the last Fed meeting of the year.

0:29Shares have also get a glow up after earnings and mining for gains. what's driving copper companies to record, and how to trade the stocks right now. 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 Mike Coe. We start off with a countdown to Oracle earnings next Wednesday night. The company posted a blowout quarter in September, briefly hitting a market cap over a trillion dollars, but stock has struggled a lot since, dropping nearly 40%, shedding more than$300 billion in value, and concerns over how Oracle will finance its AI build have sent CDS spread soaring.

1:03Still, shares are up almost 8 % since Monday, notching their best week since the fiscal Q1 report. So what do you expect to hear from Wednesday's report and what will it signal for the AI trade? It has been an AI risk barometer of sorts. So, Tim, what do you think? Well, I think for investors that are truly trying to weigh Oracle of a couple months, actually just old Oracle versus new Oracle, and we talk about the difference in the business and the high margin versus the low margin. But really, there is zero open AI in here. And I'm hearing this from a number of analysts around the street. And if you look at where the stock is traded back to and good for Dan Nathan, who talked about a back and fill in terms of some of those gaps.

1:39And I think you have a dynamic here where the optionality is is to the upside for sure. I think the valuation is interesting. I think the company is interesting. I think they're well positioned. I think they're well positioned politically. I think there's a dynamic here, though. It feels a little bit like an NVIDIA moment for the market. And what I mean by that is it's an earnings report that I think is a tell more broadly on what's going on in the space. And we're all here talking for the last few weeks why some of the MAG-7 hyperscalers aren't trading as they did before. And I think the dynamic here is really we want to hear from Oracle just how much CapEx is, how much of a debt chase is there.

2:15Or are they going to kind of meet demand with more debt in CapEx as it goes? Is this just going to be blind investment? I think they're going to have to, and I think they do a very good job on their earnings reports about speaking to the market. And I think they're going to try to allay some of those fears. And I think they probably should. Have we gotten to a point, Karen, where Oracle is an idiosyncratic story? It's more of a story in and of itself as opposed to a barometer of AI. I think it's both. So they certainly sort of took on the mantle of being the proxy for the story after that last quarter.

2:50But I think that, you know, it's interesting. Will this be the first call without Safra Katz? Oh, I'm not sure. Well, that was she was on the last call. That quarter that was just so stunning that sort of ended up fading somewhat. I don't know if that will be a different kind of call. I don't know if you're new. Do you reset at all? I think they're kind of a rah-rah bunch over there in general. But I do think, I mean, the stock has come down a lot. The risk reward has changed dramatically from that 345 or wherever the stock got to. So I don't know. I don't own it. But I was just listening to me on the call.

3:29I think, OK, well, if you if you didn't, you know, if you came to it fresh. Right. Would you buy it here? Yeah, I'm not sure. But it's certainly a much better risk reward here. Right. I think. Yeah. Then when it was at highs, of course. Yes. The other thing, though, in terms of an ingredient to the story is is where the CDS have gone. I don't know if anybody's thinking that Oracle is going to default. But just in terms of a measure of risk surrounding its debt, I mean, it's notable the move that we have seen since even since June, which is when this whole sort of metamorphosis has happened. It reached highs not seen since 2009.

4:05And I think that is their biggest concern, right? I mean, they clearly have the backlog. The demand is not their problem. It's just the build out and what kind of debt that they're going to get in to go into that. And now you're looking at probably a negative cash flow for them when you're looking forward. And you also have they're really dependent on open AI. And recently, one of the other things that's come up is there's a lot of competition with Gemini 3.0. The question is, are they too dependent on that? And do they have this whole build out? And then there's too much competition that comes.

4:31And then all this debt is not going to be serviced as much as they thought it would. So I think those are the questions that they're going to need to address on the call. Well, that's exactly. I mean, that's where that huge plus 359 percent backlog was. It was all open AI in the end. And that was the problem. But it's not in the share price anymore. Right. You're not paying up for that at this point. You could be fearful of a bigger enterprise value that brings the valuation overall down. But you're not paying for something that's not in the price at this point. Just one thing, in the last couple of days, the CDS actually come in.

5:01It's a little bit cheaper. I guess consistent with the stock going up. But I don't know if we were at sort of peak frenzy in that. Or we'll see. It'll be very interesting, no doubt. I just don't think also we even know exactly what that CapEx number is. In other words, I think they could dial that back without anybody saying that they really dialed it back. It's like, oh, that's not so bad. When you say they are, you're talking about Oracle? You're talking about OpenAI? Well, I'm talking about Oracle and I'm talking about Stargate and I'm talking about, you know, $175 billion in CapEx that maybe is actually over six years, not four, and maybe it's actually$150.

5:32And, you know, we don't have to go that big and we'll go that big based upon the demand cycle. So that's why I think there's room for a lot of relief here. And I'll just, again, I'll say this about Oracle. They're one of the companies that then when they report, they give you the best possible story. I'll just put it that way. I wouldn't call them pom-poms, although I think I have. Well, they were pom-poms in the last quarter. I called them rah-rah. Rah-rah. Okay, same rah-rah pom-poms. Mike, what are your thoughts on Oracle and what are the options telling you at this point? Yeah, I mean, one of the reasons that you had seen CDS sort of climbing steadily is because so is their debt.

6:05I mean, this is a company that's increased their net debt by about$70 billion over the course of the last five years. that's looking like probably another 10 easy next year if you're basing that on call it$35 billion worth of CapEx, which by the way, is a mere fraction of what some of these other hyperscalers are spending. So when you are trying to measure what the net benefit for Oracle might be, just understand that when you look at Alphabet, you look at Meta, Microsoft, Amazon, their CapEx numbers are 3X what Oracle's is. And in many cases, not Meta's perhaps, But in many cases, they are still seeing positive free cash flow.

6:41That said, with this big drawdown, the options market does seem to be looking up, not down today at least. So just looking out to the earnings next week, it's implying a move of about 11%, which is not that surprising considering it's actually averaged about 13.5 % over the last eight reported quarters. Calls significantly outpaced puts today by almost 3 to 1. And the busiest contracts were the December 12th weekly 250 call options. We saw over 6 ,800 of those trade for about$2.70 a contract. More than 30 bucks out of the money seems like it's a long way. But given the kinds of moves that this thing has seen and a more levered equity will do that, you can understand why they're using options to try to make that bet.

7:23Yeah. And at the same time, we're expecting Oracle next week. We've got Broadcom coming out as well, which is another read on the AI trade. So it's actually, even though it's sort of like the off-peak season for earnings, two major ones. No, I think these are really important. And also Broadcom has been in play and has also kind of eased off, although the chart is kind of interesting here. It looks like it's back just off all-time highs. But these are barometers. These are pulse checks for where the market is on what was at least unbridled. Mentioned that you were going to spend more, you were rewarded.

7:54Now it's actually the opposite. But ultimately, it really is about those companies, company specific. And I think Broadcom is the broadening of the trade away from NVIDIA. In fact, I think those numbers are huge. So I'm curious if you get a really great number for Broadcom, does NVIDIA trade up or down? Right. I don't know. I think maybe up because there's strength and demand in the whole space. Right. But one could make an argument that, OK, there's other places to go now. And this lock on the business that NVIDIA has is not as much of a lock. But the whole pie is still growing. NVIDIA is cheaper, right?

8:32Yeah, I think NVIDIA is cheaper by 10 turns. Oh, 10 turns, really? Well, I think NVIDIA is somewhere around 21. I'm not quite sure where Broadcom is. I think it's 40. I think. Don't quote me on that. I don't know if that's off my head. What's your answer to Karen's question? Broadcom posts blowout numbers. What happens? Blow out demand, let's say. Blow out demand. Okay. Blow out demand. Yeah. What happens to NVIDIA? I'm inclined to say I agree with you and that I think it would be a good thing broader for the space. But I think the issue hasn't been demand in the space. I think people know that that's still there.

9:08I think it's the debt issue I think people are more concerned about. So I think it'll help in a certain respect, but I don't think it's going to allay all of the concerns either. We're all wrong, by the way. We had four people. It's five higher. It's way more. Many, many more. 20 turns higher. Yeah. I mean, that's a huge valuation discrepancy in terms of Broadcom and NVIDIA. There you go. Well, NVIDIA has never been a valuation concern. And if it is, you need to get out of here in the wrong business because it's not about that valuation. It's a multiple that people really believe they're going to grow at that level going forward.

9:43That valuation right now is well inside the 10-year historical. Meantime, broader markets closing out the week with gains, but off their highs of the session. of the S &P and Dow, both less than 1 % from records. The moves come after the latest read on inflation, a September reading delayed by the shutdown, came in about in line with expectations, all this ahead of this year's final Fed decision next week. For more, let's bring in Andrew Davis, Director of Macroeconomic Research at Bryn Mawr Trust Advisors. Andrew, great to have you with us. Thanks for having me. Great to hear you. In terms of the Fed meeting, I don't know what you expect, and maybe it's more important to think out till next year, we're going to get a new Fed chair, We're going to sort of maybe have a shadow Fed.

10:19Things will be a lot different. Yeah, I think that's the main thing. Look, for 2026, we're looking for a slow stretch expansion. We think that the Fed has a lot of optionality here, particularly with the productivity tailwinds that we're seeing. So I don't think it will be too much of a surprise in this dot plot post GFC world that we live in. Whatever's priced in going into the weekend, the Fed usually delivers. I expect that. But I do think that the dot plot might reveal some clues about what the committee's thinking as a whole. Ultimately, I think predictability maybe comes back in 2026, maybe fits and starts, but the Fed becomes more predictable.

10:56And then that will allow earnings to drive the market, which is healthy. I mean, in terms of the dot plot, it'll be interesting to see who is where. But it also may reveal in terms of when we get sort of the readout, who is where in terms of divisions in the Fed. And so even if you have a Fed chair who is gung-ho on cutting interest rates, you may not have the committee backing that necessarily. So it feels like there could be more volatility that the market might not be pricing in next year. Well, I think that the market will live with this meeting next week. I think that we all understand that the Fed is a consensus institution.

11:33So whoever you put in there is going to build consensus. The dot plots aren't promises, and I think that they'll be working towards neutral, towards 3 % over time. And I think that that would be constructive and healthy for the market. So where do you think they're trying to get to? Yeah, I think that they take one December, markets let them do that. And then we see them cutting maybe in that April window, and then one more time and they're at neutral. We think neutral is right around 3%, so they're not too far off that. And I think that they're just incrementally going to maintain that bias. Andrew, market breadth has actually, I think, been impressive over the last few weeks, and I think it sets up very nicely for 26.

12:11I'm hearing a lot of the strategists from the street echo some of the same themes, but talk about some elements of where we're going to see earnings. I'm just curious what sectors you want to lean into, because banks look great. Consumer and retail has been very resilient for the K-shaped economy. We know tech's tech. Where are you leaning? Yeah, I agree, Tim. I think it's a healthy backdrop, particularly some of the wind that's come on the sales around. I heard you all talking about Oracle. But look, I think that where we want to focus is this value down trade. The consumer is not a monolith.

12:43So it's definitely bifurcated. Earnings calls just this week reiterated that. Kroger saying middle income shoppers acting more like lower income at this point. So we want to look at value oriented plays. And then I think in the AI trade that we're moving towards incrementally stage two, out of the chips, maybe into the plumbing, into the picks and shovels. And so I think those are two areas that have our attention for 2026. How about software in terms of moving away from the AI trade or away from the chips? Yeah, well, I think it's hard to have a view there. I do like that valuations have come in.

13:18And if you take a broader lens at the U.S. tech sector overall, valuations really haven't drifted higher. It's been earnings driven. We look at the earnings growth profile for 2026, healthy kind of low double digits growth. And if the Fed kind of gets out of the way of the market, macro starts driving it a little less. Earnings can can drive the market. Yeah. And I think that would be constructive. Andrew, great to see you. Thank you. Thanks for having me. What do you think happens next week? I think the Fed is going to deliver a cut where they're trying to stress that, you know, a PCE, which we could talk about from today, but was largely could have been hot if you wanted it hot.

13:57If you believe 2 percent is really a target. But I think it's a Fed that is divided. And I think that will be some of the messaging. Part of the markets rally over the last three weeks is some of the most important people in the Fed that are not Jerome Powell made it clear that the cut was coming. and that, if anything, the vote could be tilting that way. Every strategist is basically saying their upside and the delta to their call to the upside is a function of Fed dovishness. No surprise, but I think there's still a lot of, we're speaking of optionality, I mean, I just think there's so much around the Fed here for next year.

14:30Yeah. Mike? Yeah, I mean, I think actually it was Tim that has been saying it all along. I mean, the cut we're going to get is, in a real sense, probably not that meaningful. But I just think in terms of the sentiment that it delivers to the market, it's sort of a needed tailwind. And, you know, I actually am in favor of it here. Yeah. Courtney? Yeah, I mean, I think at this point it's very likely, I mean, it's not 100 percent certain that a cut is happening. I think the question is, is it a dovish cut or is it a hawkish cut? I think that's what people are going to want to see. But ultimately, I don't know how much that matters because we are going to have a new Fed chair next year.

15:05So even if there aren't those future cuts that the markets want, those probably will happen at a certain point in time. So I think the cut's coming, and I don't think there's anything that's going to scare the markets. I agree with you. I think it's the rhetoric. So even if there wasn't a cut, I think it's still the rhetoric, right? We say, all right, we're not cutting this time, but, you know, it's looking like we should or something like that. But I don't know if this is already priced in the market. Which is why we are here. Have we front run the cut and a dovish rhetoric from the power? If one is a contrarian here, though, and sometimes we all pick our places to be one, I just I feel like all I'm hearing from the street right now is a bullish call for 26.

15:45Yes, based on Fed dovishness. EPS expansion in percentages that we haven't hit in a long time. And I'm talking about 12 to 25 percent. Pick your strategist. And again, there's a Fed predication. There's a resilient consumer. There's nothing changes in the A.I. trade. And it just, you know, it does seem to be a bit of a broken record. And we have to be careful about that. Yeah. Coming up, Ulta's beautiful day. The cosmetic retailer putting up glamorous gains on raised guidance. Just how much this name can glow up from here. Next. And a high-flying defense stock taking a dip today. CEO Waheed Nawabi joins us for more on where his company is heading.

16:21It's AVAV, Air Environment, right after this. This is Fast Money with Melissa Lee right here on CNBC.

16:37Welcome back to Fast Money. Ulta popping almost 13%, closing at a record after last night's earnings report. The beauty retailer handily beating top and bottom line estimates, raising its full-year outlook for a second consecutive quarter. On the call, CEO Keisha Steelman said they were pleased with Black Friday and Cyber Monday performance and are ready for the shopping season. Shares are up 38 % this year. Courtney, you flagged this on the call today. Yeah, I think what's been really important to see here is we have a consumer that everybody's questioning, right? Like we don't know, is the consumer doing well?

17:05Are they not doing well? Clearly certain segments are and aren't, but people are having to choose where they're spending money. So the fact that they raised guidance here, I think is really optimistic. They're showing we're so far having a good holiday season. They're optimistic people are going to keep spending there. And I think all of that is actually a really positive sign for Ulta companies specifically as we look forward. They did talk about how beauty brands are going to start raising prices to account for tariff effects. And so you got to wonder like what that impact will be on a tube of lipstick or a jar of cream and what that impact will be on the consumer.

17:35And also how they'll work their way through the income statement in that some of their costs may go higher. Right now, there are blended costs, so it's actually a little bit lower, so it could end up being a little bit higher. However, that being said, Keisha Steelman is fantastic. I love an under-promiser over-deliverer. She is very much of that ilk. Her last conference call was so great. She was trying to say, it's not as great as, you know, we've got to still be cautious. No. I mean, this was a really, really excellent quarter. I mean, they higher average ticket, higher number of transactions.

18:08They did. It was a big spending year. So their expenses were actually higher. But they raised, they still raised their guidance. We're going to have, I think it's in March, their investor day. She sounded very confident about their business. it's not cheap, but it's not crazy expensive, particularly for a company that's been executing as well as they have. They've been gaining share across markets in terms of mass as well as luxury and prestige. Good for Karen, because she's definitely been in this name. And I think she's been in this pretty tactically, too, even though I know she's been in it long term.

18:43There's another beauty name out there that I've always liked. EL. EL, which is actually outperforming Ulta this year. And it's a lot more expensive. But the message from Ulta is good for Yale, which is that beauty is alive and well and strong. And after a little bit of a hiccup and some concern about Asia, some of these trends are back. Yale also has slightly new channels, distributions of big Amazon presence and 11 to 12 brands on Amazon that are really working, including on TikTok. And a dynamic where there's a change in management, which people feel actually is good for this company that needed some change.

19:18Yeah. Mike, are you in the beauty trade? I'm not. I had a pairs trade on where I was actually long Elf short Estee a while back ago. It's interesting that Tim brings this up. Elf has been very hard hit, and this is a name that's actually growing the top and bottom line significantly faster than Estee Lauder is. It's not terribly cheap even given the discount here, but this might be one where one could consider kicking the tires. You know, and on the retail trade just generally, since November 20th, you know, this XRT is up about 12%. That's actually one of the strongest two-week periods that it has seen since it was introduced 20 years ago.

19:56This is a really remarkable boost that we've seen in a lot of retail names. And I think it speaks a little bit to what Courtney was just talking about, that maybe the consumer is not as hard up as we have been thinking. We do have a news alert here. We've got a trio of new additions to the S &P 500. Carvana, building materials company, CRH, and HVAC Maker Comfort Systems will enter the benchmark on December 22nd, replacing LKQ, Solstice Advanced Materials, and Mohawk. So take a look at those pops in the after-hour sessions. There's a lot more Fast Money to come. Here's what's coming up next. Netflix, rolling out a$72 billion red carpet for Warner Brothers Discovery as the media bidding war reaches a climax.

20:38But can a deal get done? And how do you play the stocks now? A deep dive next. But first, we're live from the Reagan Defense Forum with the CEO of an upstart defense company with a parabolic chart. He'll break down what's next for this high-flying aerospace stock. You're watching Fast Money, live from the NASDAQ market side in Times Square. We're back right after this.

21:07Welcome back to Fast Money. We've got breaking news on the government's antitrust case against Alphabet. Eamon Jarvis has got the latest on this. Eamon. Yeah, Melissa, that's right. This is the Google search case that's been proceeding along in the U.S. District Court in the District of Columbia. This is final judgment now from the judge on what the remedies should be. Remember, a long time ago now, the judge found that Google was a monopolist on these issues. And now what we're seeing is the judge issuing final judgment on what the remedies should be. And this is a problem for Google in the sense that there's a lot of paragraphs in this document that begin Google shall not Google shall not Google shall not including Google shall not take certain actions around generative AI.

21:51Now, Google had wanted to keep a wide range of options available to it on how it could price and package its generative AI products. The judge here appears to be limiting this. Now, I say all this, Melissa, with the big caveats that I'm not a lawyer and I'm not a technologist. And this is a 35 page complicated document that just was filed a couple of moments ago. But in looking through it, it looks like what had been happening here was both sides were arguing around the margins of a lot of technical aspects of how these remedies against Google would be imposed. And now we're getting the decision from the judge on how those are going to be imposed going forward.

22:29A little too early for me, certainly, to say, you know, whether this is tighter or looser than what Google expected. Certainly the outcome was going to be to the negative for Google, given that they'd already lost this case. But they'd been fighting about a lot of the definitional things, a lot of the technical applicability things. And now the judge has made his ruling. Melissa, back over to you. Thank you, Eamon. Eamon Javers from the White House. Again, this is, you know, 40 pages worth of documents to go through. But at the same time, Google is just sort of getting hitting its stride when it comes to the notion that it is a viable AI player here with Gemini 3.