Can Tech’s Growth Plans Keep Fueling The Rally? And Losses From California’s Wildfires 1/24/25

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. Marvelous meta shares of the tech giant at record highs as it plans to pour billions and billions of money into AI infrastructure. Is this the kind of spending that will keep the market rally rolling? We'll debate that. Plus, a shot in the arm for shares of Novo Nordisk. The pharma giant seeing its best day since March on positive weight loss drug trials. Is this the start of a turnaround for the company? Still 40 percent off all time highs and later crypto prices trading your records.

0:30We set the table for a very big week of big tech earnings and the long-term impact of wildfires on the housing market in Southern California. I'm Melissa Lee, coming to you live from Studio B at the NASDAQ. On the desk tonight, Tim Seymour, Bono and Eisen, Steve Grasso, and former Bridgewater chief strategist, Rebecca Patterson. Welcome, Rebecca. We start off with a presidential pop for the markets. The S &P 500 hitting another record early in today's session and notching its best first week of a new presidential term since Ronald Reagan in 1985. That's when the musical stylings of Wham! were topping the charts.

1:02Marty McFly was going back to the future in the Dock's DeLorean. And speaking of the future, MegaCap Tech is setting a sight on just that. The group fueling this week's rally as investors bet on continued AI spending this year. Meta hitting a new high today after announcing a plan to spend$60 billion to grow that business. Let's get to Julia Borson with more on that company's CapEx plans. Julia. Well, it's the Meta CEO Mark Zuckerberg pre-announcing its AI roadmap and spending plan for the year, saying Meta will invest between$60 and$65 billion in CapEx this year to drive growth of their AI offerings.

1:39Now, that 60 to 65 number is up from the$38 to$40 billion in CapEx last year and far ahead of the spending in the low$50 billion range that analysts expected. Zuckerberg saying he expects Meta AI to serve more than 1 billion people this year, up from the half billion users that Meta AI had at the end of the third quarter. Zuckerberg also announcing they're building a two gigawatt data center and developing an AI engineer tool. Now, one place they're going to be deploying some new AI tools is the addition of advertising in Threads. Head of Instagram, Adam Mosseri, announcing that Meta will start testing ads in Threads, giving brands AI-powered controls as well as filters.

2:21Now, with this news, Meta is saying Threads has 300 million monthly actives and three out of every four people on the platform follows at least one business that's seen as a good indication of potential for brands. Now, to put that 300 million number in context, startup Blue Sky reportedly has 29 million users. So I'm sure we'll hear more from Mark Zuckerberg on AI, how it's going to impact all the different parts of their business, as well as some more details on threads monetization when Meta reports earnings. That's coming up Wednesday afternoon. Julia, thank you, Julia Borson. So is tech spending like this enough to keep the market rally going?

2:59Because that has always been sort of the key test. Will these giants continue to spend on AI? Will it continue to rally big cap tech? We're going to find out a lot next week. So is this a good indication that the tech span is the race is still on? I think so. I mean, I feel that this this first month of the year has felt a lot like the first month of last year, except for you've moved political overhang and you actually have the rest of the world trying to be more like America. At least Becca's talked to us about Davos because it's fascinating. I think the impact that Trump's having on the rest of the world.

3:29But yeah, I think so. And if you think about Meta, they were the first one really a year ago to get out there and talk about it. It was probably about 18 months ago, but they started to talk about the CapEx plans. And they were in the year of efficiency. It was a question of, well, suddenly the stock that was rewarded for cutting back on CapEx in the metaverse going to be rewarded. And they absolutely have been. And, in fact, they've outperformed the MAG-7 aggressively so far this year. So I like this story. I like the message this week from both the White House and policymakers is we're not even sure who's going to fund this.

4:00We've got a few people that have stepped forward to be shepherds of this process. But it was a week where AI and the prospect of spending and, again, the broadening of that trade. So I think it's very good for infrastructure. I think it's very good for some of the chip players that build the infrastructure. And I think this is a very important announcement. And I think kudos to Meta for getting out there first because I think other folks want to do it as well. It almost felt like, you know, Larry Ellison was up there with SoftBank and, you know, announcing Stargate. And Mark Zuckerberg was like, you know what?

4:28I'm in it, too. $100 billion. You know, here I am. And so this comes, you know, there's a series of announcements here, a cadence at this point. So there are any doubts about the AI spend and whether or not that would power the rally? I don't know. Has that been put to bed in your view? I think it's been put to bed. You know, it's always short term. It's always looked through that lens of maybe a month out, maybe two months out. But the good news about CapEx is that it's deflationary. So you have more productivity. You have more efficiency. So it actually brings down inflation. So if we can get CapEx going where we think it's going, inflation should come down as well.

5:08I hear what you're saying. I think there's a time element. I agree with you that if AI and everything related to it can increase productivity, I think that's where you're going. And efficiencies. Right. So that is deflationary. But in the short term, we're building infrastructure. We're building data centers. We don't have enough workers. We don't have enough materials. I see that as being inflationary. So reflationary, right? Good for growth and pushing up inflation. So I'll put a button on this. So if you can increase growth. We're not going to just fight it out all night? No, no, no. Because we're both.

5:41He's like, I'm going to have the last word and I'm going to keep moving on. So if you can increase growth by three to four percent, you could actually bring inflation down ultimately by a percentage point as well. So if you could increase growth to where we need to be with all the CapEx spending, you could get a percentage point out and actually reduce that percentage point in growth that you got to the upside and inflation to the downside. So ultimately, I think it will be deflationary, but I understand your reinflationary worries. Yeah, I think it's just timing. And if we're trying to get interest rates down, because Trump declared that will happen and inflation down.

6:22He knows a lot about interest rates, apparently. I don't think it's going to happen in the short term. More than the guy in charge, I think, is technically what he said. Yeah. Anyway, back to meta. I'm with you, Rebecca, in terms of order of operations. And I do think that is important. It's important in math. I think it's important in economics. And for us to kind of keep in mind how this whole situation functions. Along that same line of thought, I do think that the posturing has kind of shifted to, are these hyperscalers getting too far over their skis in terms of capex spin to now I think there's FOMO in terms of are my competitors going to actually outpace me, outproduce me, outscale me, and reach those efficiencies that Steve was talking about before I do, creating more of a moat for them and a competitive disadvantage for me.

7:11So what point is that a bad thing for the big cap tech trade? Not for a long, long time. I don't think so. And particularly not for the chip makers. I know you're going to ask me about NVIDIA. I mean, I think, you know, the concerns that we've had, you know, the stock popped about 7 % and then has been kind of trading off a little bit. But I think it kind of reinvigorates that trade that perhaps some of the concerns about sales growth going forward perhaps are a bit overdone in the short term, at least. For a name like Meta, we will be able to see those efficiencies, right? We see that. They were the first one?

7:40Exactly. To actually outline, this is what we spend. This is what we get back. For a lot of other companies, we have yet to hear that. So, you know, in terms of your point about there is a time element to it, to the investment, and then what follows, are we going to hang on to this trade during that period? I mean, I guess the question is, what else looks attractive and has a catalyst for growth, right? So these companies are, I think most would argue, richly priced, if not outright expensive, and everyone owns them. So that makes them risky to the downside. But if you put your money somewhere else, where else are you going?

8:15And we can talk about overseas and is this finally the moment or small cap, but it feels like a lot of people want to keep a good leg on this stool, if that makes sense, because long term it still seems like the right play. Yeah, I think Stargate might have bolstered the emphasis on what Meta said today. I think if anyone's earned the right to get out there and say it's Meta, and if you think about the ability that they had first over anyone other than NVIDIA to say, hey, we see a benefit here. And again, if anything, the pushback on the CapEx spend has not necessarily been around the hyperscalers.

8:49It's been around what's the competing factors with some of the biggest players, the hyperscalers, with NVIDIA to develop their own chips. But again, in the short term, I don't even think that's an issue for NVIDIA. I think this is all great for NVIDIA, by the way. It was a week when semiconductors, they had a tough day today. But if you look at the semiconductors trade, semiconductors are doing what they did last year. They're up over 11 percent year to date. the dynamic around those that are really involved in the infrastructure build-out, and it's been broadcom all over again. But I think this bodes very well for next week.

9:16And remember, Meta's out on the 29th, and they will tell you a lot more about this and the profitability. So then, therefore, this should bode well for the markets overall. Yeah, I think, well, the markets are reliant on MegaCap tech and Mag7. So whichever way they go, ultimately the market goes. But to your question, Google has a path for the spend. Amazon has a path for the spend. Apple has a path for the spend. There's only those tertiary names that don't. So you can make a case that they're just fostering. If the market is reliant to the tune of 40%, 30 to 40%, resting on the back of the workhorses, which are mega cap tech, this is good news for the market.

9:57This is good news for the tech sector. So which of the big cap tech companies is your favorite at this point? I still think it's NVIDIA, particularly after this news. And I think they're squarely—I mean, I know they've been knocked down to what is a third now, but I think that they still are the engine that is leading to this growth. I will admit that, yes, you worry about the hardware. I do think they've integrated themselves so that there's really a programmatic build-out around that. But at least for the time being, I do think NVIDIA, to me, has the most upside. When you think about what's going on in the ad world and the ad revenue world, it just comes back to Google and Meta.

10:39And if you think about what Meta is going to report next week, streets somewhere around 40 to 42 billion, 43 billion on first quarter revenue. That's going to be up 15 percent on a huge number. And again, off of really difficult comps, if anything, these Q1 comps are part of what's going to hold these companies back because they're going to be really tough to beat. This is where I just think you have to get back to the names that it's very difficult to argue with the multiple that you're investing in these companies at at this point when they are so well positioned to see their business broaden.

11:05And the thing with Google, and we started to have this conversation on our call today, so a little insight into our production call, is that there is a report out there saying that maybe Google is the sum of the parts argument that we've all talked about. There's been corporate governance dynamics. There's certainly been regulatory governance dynamics around Google. But ultimately, there's so many levers that they can pull, whether it's YouTube, whether it is core search, whether it is what they're doing in AI. So these are the two names going into next week. I mean, these are the names that I think have the most opportunity for runway in a world where others are a little bit challenged.

11:34And are the lowest PEs, lowest valuations. Meta has outperformed, I think Tim just said it, Meta has outperformed the rest of the group by and large, by a large extent. And Julia said that they were servicing 500 million users. Now they're preparing to service a billion. That's why the spend is double. WhatsApp, Facebook, Instagram. No one has the product lineup that Meta has. And it's clear, it's concise, and it's direct. And I think that's your best bet still. All right, let's get more on the impact of Trump's policies. Rebecca, what are you—we were just discussing how this week feels like an exhausting week even those four days, just because of the whirlwind of news that we're all digesting coming from the White House.

12:16Right. Well, we knew that a Trump 2.0 would hit the ground running. They were much more prepared. They had lots of policies and people planned. So we knew it would be a tsunami, and it has felt like a tsunami this week. I'd say my biggest takeaways from it, I'd say the biggest takeaway is that you need to focus on what you know for sure that's lasting. And all the headlines and the noise, you have to find a way to process it and then just put it in a box. and just say, I'm going to come back to that and know the timeline. So what do we know for sure that's going to last? The consumer is still very strong, especially at the upper end.

12:52We've seen that in earnings this week. We see that in data. We know that business investment, especially in the big tech space, is incredibly strong. I mean, think, the Chips and Science Act was$60 billion,$50,$60 billion. This is multiples of that going into the economy. We know that the job market has moderated but is strong. Inflation is sticky. We have a Fed on hold. So these are the components that I'm going to stay focused on. And all the Trump headlines, I'm going to know what he's saying, what could happen. But I'm not going to overreact to each headline because I know tomorrow it could go the other way.

13:25But how much of what the market has done is because of what is in that box as opposed to what we actually know? Because I feel like a lot of it is based on the hope. And a lot of those bank CEOs were talking about on their calls, the euphoria, you know, the distinct sort of improvement in confidence since the election specifically. Well, I mean, since we've had good data in the 1950s, every single election cycle, as soon as you get through the election, whether you like the candidate or not, you have certainty of knowing who the person is, what the policy is, and then you can plan more or less.

13:59And so what we've seen historically consistently, for example, IPOs go up roughly 15 percent in post-election years versus pre-election years on average. I think this year could be the same or even higher, depending on what happens with regulation. You see more M &A activity. So this is not surprising that people are more confident. I think that one of my boxes is tariffs. I think that's the biggest, most important box or downside risk. And we know nothing's happening until February 1st, maybe Canada, Mexico, maybe China. But the big one is April 1st because a lot of the investigations are going to be announced, the outcomes of those then.

14:39So if we're going to get tariffs, it's a little surprising we didn't get them day one because that's what he said he'd do. And that's some of the euphoria this week. But it doesn't mean it's not coming. It's coming. We just don't know exactly what it's going to look like. But I would feel confident it's coming. Well, and what's fascinating, Rebecca, is that this was a week also that the rest of the world actually outperformed the U.S. And there's a lot of there's a lot of rhetoric emanating out of Davos that that, again, Trump's influencing the world. It's not just the story here, but it's a sense.

15:07And I don't think they would be admitting this in public. And maybe this is, you know, what people over here want to believe. But the sense that the regulatory handcuffs that have been on a lot of the European companies and the European economy over the last decade or something that European leaders are looking forward to loosen up on. So there's some sense the outperformance is coming from also, frankly, a weaker currency is great for export markets. It's been a week when actually that's been highlighted. But the DAX has outperformed the S &P significantly. So I'm just curious your view on the rest of the world.

15:36I would say this week the rest of the world is outperforming in part because they didn't face tariffs immediately. China, Europe, Canada, Mexico, et cetera, would have gotten hit so much harder if he had followed through on that day one pledge. Some of that bad news was baked in when it didn't happen. you got a bit of a relief rally. Now, I think there are some green shoots to watch. In China, the housing market is still slowing, but it's starting to slow at a slower pace, right? So second derivative is improving. And we've seen in some of the earnings this week, especially in some of the luxury makers, that the Chinese are starting to spend a little bit.

16:11I would call China a trade, not an investment, because I think tariffs are still coming for China. It's just a question of when. But to the degree, you know, the ECB, the European Central Bank, will probably cut rates next week. So there are some reasons why some of the overseas stocks could have some legs for a few weeks. Again, I just I wouldn't count on it to be the trade of 2025. I'd still be happier in the U.S. Coming up, Novo Nordisk shares surging on brand new weight loss drug trial data. The skinny on whether the biotech stock's latest effort could tip the scales in the obesity drug war next.

16:43Plus, the crypto craze scores one against the SEC inside a major rule change that could transform the industry right after this. This is Fast Money with Melissa Lee, right here on CNBC.

17:06Welcome back to Fast Money. Novo Nord is surging 8.5 % for its best day since last March. The company out with positive trial results for its amicretin weight loss injection, targeting the same gut hormone as Novo's existing obesity drug, plus amylin, a pancreas hormone affecting hunger. Patients on the highest dose losing an average of 22 percent of their body weight after 36 weeks. From Warren Mizuho, health care strategist Jared Holes joins us here on set. Jared, great to have you with us. And for a long time, you know, we thought maybe NOVA was out of the game, you know. But here it is. And at the same point in time, terzepatide had less efficacy than this new drug.

17:45So that's promising. At the same time, there are a lot of big questions about this early stage trial. So what are some of the doubts in your mind still? Yeah, for sure. Thanks for having me. Yeah, there are a lot of doubts. There are a lot of opportunities when you kind of coalesce all of the data that we got today. And it was unexpected. I think that's the first thing. We really didn't know we were getting this early. So I think there's some upside surprise. That's why you saw the stock do pretty well. And, of course, it faded throughout the day, but still a decent day. We just don't know what the endgame is for this drug, right?

18:17It's an additive to semaglutide. We know that. We know it gives you a couple percent better efficacy over less than a year. So it looks like this could be Novo's best injectable, but they didn't include a lot of data. We didn't see patients that may have dropped out. They were kind of not cagey necessarily, but they did not include every patient from the trial, only the ones that had stuck through the entire 36-week time frame. So there are some reasons to be skeptical, but the drug looks good. So we don't know anything necessarily about tolerability at this point. And that seems to be the biggest question mark, given that the company had released the initial oral data for the same drug and it was greeted with fanfare.

18:58And then months later, they came out and released the tolerability profiles, which were horrible when it comes to nausea and vomiting. Right. So is there any extrapolation that we can make or is this completely different and an injection makes it more tolerable, et cetera? I think what we've seen out of the injectables is that they seem to be more tolerable than the orals when you look at them head to head. Now, apples to apples trials we haven't really seen. But when you kind of take into effect what we've seen from Novonordix, what we've seen from some of these other companies, Pfizer is looking at, you know, dose discovery and just trying to figure out, is there a dose that they can put forward that is tolerable?

19:33There have been a lot of abnormalities with what we've seen. The injectables do look better. And I think the company was fairly, you know, you've got to take them at their word to some extent, where they said that the tolerability profile of this drug is similar to what they've seen with some. So, like, that's kind of what we have to go on here. I don't I don't based upon the reports I read today, it seemed like most people on the street said, I mean, the tolerability is similar or in line with other GLP ones. So therefore, it brings it back to me, the great pairs trade, which which side do you want to be on at this point?

20:03Because ultimately, you know, Novo has been destroyed over the last six months. And again, this there's certainly enough evidence in today's release that this is a best in class drug. And yet they've not been treated as if they're even close. Again, yet they were last year. So I'm just curious, you know, what you do now, you're not a trader, you're an analyst, but I think there's some sense of where there might be more of an opportunity in catalysts. Yeah, listen, I agree. I think the way the stock has traded over the past six months is, I think, just a pure reflection of negative headlines or certainly headlines that did not live up to expectations.

20:38So I think it's less about the numbers. Yes, you could argue that the quarters haven't been pristine. They have not. But to see 40 % degradation in the value based on the oral GLPs not being what we thought they would be, I think that's a little bit severe. They're definitely in the game. I mean, I've said it multiple times over the past month. I think we sit here even in five years, and this is a two-player race in injectables. I just think it's too cumbersome, too expensive to get into this market. So they don't even have to be best. They're there. They've got the patient population wrapped up.

21:11So I think this is a duopoly between them and Lilly, and you're going to have to trade around them for the next couple of years. So I think at one point you had said something like, do we need another injectable on the market? You know, is incremental weight loss? Here we are. We're cheering or investors have cheered Novo Nordisk for precisely that. So do you think that, I mean, has your view changed? I mean, there is still room. I mean, feasibly, this comes or will come just in time as semaglutide comes off patent. Yes, I think there's room if you are there and they are certainly there. So the fact that they are improving on their existing portfolio, I think, is important.

21:53if it were a newcomer and we saw 22 % versus 20, but it was kind of, it needed to be supported by billions of investment that wasn't already, you know, lined up. I think it's very difficult. And that's why I think if you're Amgen, if you're Merck and AstraZeneca, whomever, very difficult to say that you're going to be a real player. You could generate revenue, but you may not make any money. That's what I think. Even more difficult today, based on this data, than yesterday? Well, certainly. I mean, this data looked like it could be close to best in class. But as every day goes forward here, I think it's more difficult if you're not an incumbent.

22:31Jared, great to speak with you. Thank you. You too. Thanks. Speaking of being a player, how about those specs on Jared? I know. That's fine. That's fine. The best and the specs. He's not asking the guests. The guests is goodbye. He's just stating the guests. He's stating the guests. There's always room for a compliment. Eli Lilly or Nevo? So I don't think it's a duopoly. I think it's a monopoly. But when you look at it, Lilly is up in a one year performance is up 24 percent and Novo is down 16 percent. So you can't have a duopoly when only one person or one thing benefits from it. I think the next stage in this is Lilly actually runs that entire sphere.