Chip Trade Rips… And Global Stocks Rally On Mideast Developments 5/6/25

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1:15We'll debate that. And going global, it's not just U.S. equities in rally mode today from Germany to Japan to China. We dig in on the international moves and where you can find opportunity right now. Plus, shares of Novo Nordisk hit nearly three-month highs. A solid start for Disney's new CEO. and counting down to McDonald's earnings. Will investors be loving on the burger chain results tomorrow? We are heading to the options pits to find out. I'm Melissa Lee. Come to you live from C. Duby at the NASDAQ. On the desk tonight, Karen Feinerman, Steve Grasso, Mike Coe on set for the hour. And surprise, surprise, a pop-in from Gene Munster, Deepwater Asset Management.

1:49He was in town visiting, happened to come through the NASDAQ, and now he's sitting on set with us here on Fast Money. Welcome, Gene. Great to be here, Melissa. Markets in rally mode once again today with the Nasdaq and S &P 500 notching another set of records. Dow adding more than 600 points, briefly trading above the 50K mark for the first time since February. The latest move coming as oil prices continue to pull back. WTI crude falling below$90 a barrel at its lows on hopes of resolution to the Iran wars in sight. We'll get more on that in just a minute. But we start off with the latest tie-up, sending chip stocks higher.

2:21NVIDIA announcing it will invest half a billion dollars in Corning. The news sending the fiber optics maker to record highs, giving NVIDIA more than 5 % bump. It was NVIDIA's best day in three months, but interestingly, only gets it back to where it was last week. The chip giant, in fact, has been underperforming the broader semi-space mega cap tech and major indices over multiple timeframes. It's gained in the past month less than half that of the SMH, even though it's got market cap of$5 trillion, so the biggest company in the world. At 25 times forward earnings, NVIDIA is actually cheaper than the likes of Intel.

2:54AMD and Broadcom. So is today's move a sign? The stock is finally catching up on this chip rally. How do you trade the name right now? Karen, what's your answer? Yeah. So I'm long. I've been long for a long time. I actually bought some butterflies today, some sort of bull butterflies. Mike would probably maybe have been the seller, in which case that wasn't good. So good for me. But anyway, I mean, I agree. It's just sort of absurd that everything around it, everything it touches trades at a wildly different level of hype or a much higher P.E. And, you know, two weeks from today, we'll see. They'll report.

3:28I'd rather they go in with somewhat subdued performance, right? The blower the bar, the better. I think the quarter will be enormous. That won't be shocking to anyone. But it's very odd how it trades this way, given, you know, it is the center of everything. Now, what is your take on what is going on here? I think the issue is what next year is going to look like. And the street right now is looking for CapEx and the hyperscalers to be up 10%. NVIDIA talked about a 40 % growth rate for next year. That's what Jensen's comments were recently at their developer conference. And my take, Melissa, is that I think the issue here is that it's just hard for investors to get over this hurdle that the party's going to end soon.

4:09And so we actually, we're big believers, and we're still early second inning of AI. but we actually sold some of our NVIDIA recently just because we felt like the news is going to be great, but there's always this next year, next year, next year. We don't know what's going to kick that. One last piece. When we think about our investments within MegaCap, we look for companies that can have a changed narrative. And NVIDIA, there's no opportunity for them to change the narrative. Apple can change the narrative to be incompetent in AI. And in the case of NVIDIA, the narrative is very positive. It's just hard to get that incremental turn on the multiple.

4:45Whereas like an Intel, CPUs are now important and in shortage memory. It's now subscription memory. So that whole model has changed. What's your take? Yeah, I mean, we own NVIDIA. We continue to. We have it in several funds. You know, we have not been adding to it of late. You know, it's not expensive in my view. And I kind of feel like you sort of have to stay in it. They've got proprietary technology is our thinking. There's a lot of other things that if you simply looked at the multiple, you would say, oh, these things look very cheap, but they have typically been commodities. So we have exposure to other areas as well, including Intel and Taiwan and all the rest of it, and Micron even.

5:25But I think that NVIDIA's proprietary technology is the reason we stay in the name. So who would be the buyer if this thing is going to go higher right now? Everyone who wants to own NVIDIA? Well, if it gets cheap enough. I mean, because you have some large institutions. So I traded for 55 of the largest institutions most of my career. If they own it, they're slow to sell it. They're not quick to buy more. Right. So, yes, if it gets cheap enough and it loses a certain percentage in their fund, then they're going to buy it. I don't I don't think that's the case at this point. We haven't seen that.

5:59You see the retail investor buy it. They're not enough to move this ship where where it is. I think Gene touched on it. The run in the stock has already been there, right? In 2022, the stock was trading at$16. So when you look at it, when you think of it as a gaming stock, and then they did morph into recently with the sovereign investments. So they have changed it. And then the investments all around the street. So everybody who they're investing in hasn't popped yet. That's where the alpha is going to be. So you're going to leave. Everyone NVIDIA is investing in hasn't popped yet? Did Corning?

6:34Right. So Corning, I'm talking about that investment right now. Like anyone that's going to that you're really going to see that like Caterpillar is an A.I. stock now. So that's going to rally even though it's been rallying, but it's going to rally on the A.I. data center build out. Corning is going to be rallying because if they put them in their racks, you throw out the copper, you put in the fiber. Now, that could be exponential changer for a Corning. Isn't it exponential changer for an Nvidia? No. So that goes to James theory, you know, that that it's the narrative that's not changing for NVIDIA back in the time that you're saying.

7:07Yeah. When it actually wouldn't remember when they had that huge revenue increase. Right. And that's that's when the narrative change for that stock. That's where the the best gains for NVIDIA happened after that time period. And so now, yeah, to your point, it's not. But everybody else's narrative is changing. Everybody else's narrative is changing. I would say that there's an important dynamic to all this, too. And I still think NVIDIA is a great company. But the one narrative that is consistent but still underappreciated is how early we still are. And I just want to quickly mention the anthropic news last night.

7:38That was huge news relative to this deal with Google. And then separately, what they just announced tonight with SpaceX about more compute. Why is that happening? The reason why that's happening is the demand for these models. We're using them is going up exponentially. And so I think that there is a narrative around the broader AI trade that is going to be consistent, but even get stronger. And it comes to NVIDIA. I just think that wall of worry is just going to nag the stock here. But think about in the early innings, right, in the early innings of this, NVIDIA had no competition. Now they have all of their clients are their biggest competition and they've got the normal competition that's out there.

8:17No one would have ever thought AMD is their competition. Now AMD is in their lane. So they went from in the early innings, zero competition to a herd of competition in the later innings. Could it still run? Yes. Is it going to run the same way it did? I don't think so. The next incremental dollar that comes into the market, where does most of it go? Most of that is going into NVIDIA. I mean, capital inflows into the market are going. But I mean, look at most managers. I mean, I think the closet indexers. I mean, if they go into SPY, if they go into the S &P 500, the incremental dollar goes more into NVIDIA than anything else.

8:54First of all, Corning is up, what, fourfold in the last 52 weeks or so? So, I mean, I would have to disagree that that hasn't seen a run. I mean, it's run a lot more than NVIDIA has. Compared to NVIDIA from the beginning of this, from a teenager, from all the hype. I'm just talking about the last 52 weeks. Okay. All right. Let me have one other perspective here. Two years ago, the issue with AI, with getting this going, was all about capacity and GPUs. And that's what NVIDIA, the breathtaking move in the stock was. Now it's about power. It's about infrastructure. It's about optics. Like that incremental dollar, to your point, like the incremental dollar, NVIDIA is getting it.

9:29But that's not where the majority of those incremental dollars are now going to this other, this infrastructure around it. I think there's still a big opportunity relative to that infrastructure trade. So when we take a look at the disparity between the valuation of NVIDIA and the rest of the semi-trade that has been re-rated higher, are those re-ratings in process? I mean, is there still more upside to go? I would just say, like, I'll leave with a couple of fun predictions here. One is that we're still grossly underestimating how big this whole AI trade is going to be. A second is like one little flavor around that.

10:05is just to let's look at Apple. Let's make the prediction that next year it's going to be hard to get a MacBook. I think it's going to be hard. I think what people are doing with co-work and codex on their laptops right now, I think those are types of ripples that the market's not quite thinking about right now. So then my next question, and I'll pose it to you since you're next to you. Why not? If the AI trade is getting stronger in terms of memory, I mean, is the inverse trade, software will die again? Like, will we be in that sort of, you know, paradigm again? Because what we saw in today's session was semis very strong, particularly these areas that are viewed as shortages or constraints or bottlenecks or whatnot.

10:49And then we saw software just flat, weak, Microsoft weak. I mean, it continues here. I think so. I mean, I think part of the part of the cesspocalypse theory is fewer seats, for example, fewer, less pricing power. And I think that there absolutely is going to be survivors, but I do think those things will weigh on the industry for a while. So that I think is here to stay. The thing though, I want to also say about NVIDIA though, it's not, it's all upside right now at the moment. Everything's frenzy. The more hype you can get, great, the better. If that turns around, I would rather be in NVIDIA than everything else.

11:29And one other thing that Lisa Su, I'm sure you all saw her piece today with Jim, talking about the monumental change in what they thought the ratio of GPUs to CPUs was, right? And, you know, I think that NVIDIA could absolutely participate in that as well. So I'm a little perplexed that it's not trading better. I mean, if you look at software, just how the stocks are performing, names like Microsoft are still well off their highs. They're still well below their long-term moving averages. This is an area that continues to be, even though they got a little bit of a bid today, continue to be under some pressure.

12:08What do you think about the software sector? Pretty negative on software. I think, Karen, when you said that, you know, the headcount, less knowledge workers. By the way, when we talk about less knowledge workers, let's just not talk about them, about students in college going to the workforce. It's people like me who's at risk care, too. And there are going to be a lot of jobs that unfortunately are going to be lost. If we look at the ADP numbers from today, 109 ,000, 64 ,000 for education, health care, 25 ,000 construction and transportation. The growth is not coming from knowledge worker. And I think that's the most basic piece.

12:42It's hard for me to imagine these software companies working if we have less knowledge workers. All right. Well, let's get to back to the rally in the broader markets on potential progress in an Iran deal. CNBC's Megan Cassell has got the very latest there. Megan. Melissa, there's reason for optimism here today that the U.S. and Iran could be moving closer to a peace deal, as the Iranians say they're evaluating a 14-point proposal from the U.S. Now, the details of the proposal aren't entirely clear, but the gist of it, according to reports, is that it would center on a one-page memo to end the war and then would launch 30 days of negotiations on the more difficult issues, including Iran's nuclear program.

13:17Now, President Trump said today that the U.S. would get Iran's highly enriched uranium as part of this plan and and that Iran would stop operating its underground facilities, enrichment facilities, missile storage, that sort of thing. Axios and others have also reported that the deal includes a reopening of the Strait of Hormuz, and that the U.S. would then lift sanctions and release billions of dollars in frozen Iranian funds in exchange. But two big caveats here. Iran has not yet agreed to any of this, and some of it, including the export of highly enriched uranium, has been a red line for them in the past.

13:46President Trump has also long been critical of the loosening of sanctions and the unfreezing of funds dating back to the Obama deal, So we'll have to see the details of that piece of it as well. I'd sum it up this way. The president said today that he feels optimistic that the U.S. is closing in on a deal. But he also said that he's felt that way before. So he said, quote, we'll see what happens. Melissa. All right. Megan, thanks. Megan Casella. Crude oil prices dropping more than 7 percent on hopes of an Iran deal. But our next guest says don't expect a return to$64 oil anytime soon. CBC contributor One Point BFG Wealth Partners Peter Bookvar joins us now.

14:19Peter, great to have you with us. Hi, Melissa. First, I just want to get your take on the market. I mean, I was sort of joking with Mike Santelli the last hour, you know, what's going to happen when the war actually ends? And we said probably fall. I mean, I don't know. What are your thoughts? Well, the war is going to end trade really started in early April and then was furthered by the actual ceasefire and has just obviously been roaring ever since, of course, helped by the AI trade, particularly semis. I mean, I'm just in awe of this move in semis. I look at my crunch from a technical perspective, having no opinion on the stock here, trading at 135 % above its 200-day moving average.

15:02The SOX in March 2000 peaked at 100 % above its 200-day moving average. The NDX, the 14-day RSI, closed at its highest level since 2024. So it's just been unbelievable. And I guess that begs the question, OK, when the war actually does end and there's confirmation in the street reopens, do we just keep on going? Yeah, I guess that's a big unknown. Peter, I'm just wondering, I mean, you're a smart market guy. We've known you for a long time. I mean, are you skeptical of the AI trade or do you believe in it? Because if you believe in it, then why is it so unfathomable that micron trades where it trades?

15:43And do you think that the oil situation in terms of if the war ended today, we'll still be in shortage in terms of we'll have to restock reserves? There's going to be an amount of time before production gets back to where it was. I mean, there's a sort of recovery time that maybe we're not factoring in here. Does that A.I. trade get dismantled or disrupted because of that? So with six hundred and eighty billion dollars expected to be spent this year on A.I., it's for real. However, the one thing that I would caution here is from what I am hearing in all the PMIs, I particularly heard it from CDW today, whose stock fell 20%.

16:24This company sells software, hardware, services throughout the entire tech ecosystem. They specifically said they are seeing their customers front-running orders ahead of price increases and worries about supply shortages. So I'm pretty confident that you are seeing a lot of double and triple ordering on fears that companies are not going to get what they need. Now, the market is not thinking that right now, but that's the one caveat I have to this move higher in this trade. Are you thinking that, Gene? I'm curious. No, I'm not. I'm just, from my perspective, it comes down to what's the utility of AI today?

17:06How many companies can tangibly say that this is having a big impact on their business? And there's two. It's Google with search and outside of the cloud, and it's meta with their advertising businesses. And when the argument that we're somehow reaching a top here just doesn't jive with what we're seeing in the pace that these companies are trying to implement and the fact, the reality of how early. Again, come back to if we look at one example, physical AI piece. Autonomous ride shares between Waymo and Tesla, Lyft and Uber, it'll be 2 % of the total miles driven this year. I mean, we're still scratching the surface.

17:43And so I understand that's a well-traveled topic. We're still scratching the surface. But I think it's actually contrarian right now to be bullish on the AI trade. So, Peter, back to you. You don't have—it sounds like you have questions about how solid the AI trade is, and it's obviously right now a big driver of the market. So are you skeptical where the markets are right here in terms of valuations, in terms of level, and are we just destined for a sort of reckoning? I mean, a market that's led by semis, eventually you do hit a reckoning. But for all I know, it can be 2027 before that actually happens.

18:25I mean, the market is differentiating amongst the tech trade. Gene talked earlier about weakness in tech. I'm sorry, weakness in software. We're seeing a bifurcated MAG-7 because the excessive spenders like Meta, for example, are getting hurt while the receivers of that spend are benefiting tremendously. So it's sort of like this three-pocket tech trade. And it depends on which that you're in will determine how your stock is going to trade with the obvious beneficiary, those that are saying, OK, show me that$680 billion. They're doing the best. Now, of course, we'll overdo it. And I mean, I've been doing this long enough to know that storage and memory are the most cyclical parts of the market.

19:12And I know people are telling me, oh, well, this time is different. It's an oligopoly. And maybe maybe the case. I just know that it's a commodity that they're selling. Eventually, this will hit a wall. But right now, it's party on. Peter, always great to speak with you. Thank you. Thanks, Melissa. Peter Brookbart. Peter mentioned Meta. Meta has also been sort of sitting out of this party. Karen, Meta is a large position of yours. It is. Google and Amazon are larger now, both from decreasing Meta, but also Meta decreasing itself, which isn't delightful. But, I mean, if they were to come out tomorrow and say, that's it, we give up, right?

19:52Does the stock rally? Absolutely. It goes nuts, I think. So I understand what he's saying. Although Google, you could say they are, I mean, they're both. They're spending and they're growing and it's worth it. And they're selling chips and they're selling cloud. And I come back again and again to Andy Jassy talking about, this is not a hypester kind of guy, talking about the extraordinary opportunity. They've never seen anything like it. I want them spending that money. We know that it's working for the underlying part of Meta's business, right? The advertising is doing great, although that's kind of tempered guidance for the next quarter.

20:25But, you know, there's a fear. There's so many giant spenders out there. Not every single one is going to get the return on capital that they need. Right. Gene, quick last thoughts on Meta. Meta, we recently sold out. We still own Google, Amazon, Apple. and from our perspective, it's just that incremental piece wasn't there. 33 % growth down to 28%, like you mentioned. Better places to be. All right. Gene, it's great to see you in person. Thanks for having me. Super fun. What a lucky coincidence. You happened to walk through the NASDAQ. We thought it was just AI. We didn't think he existed. It's a real Gene Munster here.

21:01All right. See you next time, Gene. Who else is downstairs? I don't know. We'll find out. Coming up, a touch of magic for Disney. The results feeling the media giants jump today and the stage it set so early in Josh DiMero's tenure, plus shares of Joby taking off all the details from the eVTOL company's latest report and when you can expect to catch a ride, if you want to catch a ride. Don't go anywhere fast when he's back in two.

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22:27The Second World War is the largest event in human history. A 20-part documentary series with Tom Hanks. No part of the globe was untouched. No life unchanged. Experience the ultimate account of World War II. Every single person had a story. These are the stories that make us who we are. World War II with Tom Hanks. New episode, Monday at 8. Part of History Honors 250. Only on the History Channel. Welcome back to Fast Money. Disney shares leading the Dow today, jumping almost 8 percent. The media giant posting better than expected revenues driven by strength in its parks and streaming businesses.

23:07It was the company's first earnings report under new CEO Josh DiMero. CNBC founder and current contributor Tom Rogers joins us with his reaction. Tom was the first president of NBC Cable and is now senior advisor to CNBC's parent company, Versant Media. Tom, always great to have you with us. Thanks for having me. So a great first quarter for a CEO. He didn't kitchen sink it. Did you like his message that he wants to be more impactful when it comes to the fans who come to Disney? You can't disagree with the message. Of course, they want the company to be more impactful. I think his idea of having Disney Plus serve as a broader portal of some kind to share the wealth of Disney across all the individual silos it has to bring people in to experience more of Disney than they may currently do.

23:57But that's a building process. They first got to get the putting together of Disney Plus and Hulu right to make sure that those two sites coming together as services really have the kind of personalized recommendation and user interface that it needs. They've had some success bringing ESPN into a bundle and lowering churn for all the Disney services, which was not very enviable when they were all man for themselves with each service. But I think they've got to do better than that and really show how sports contributes to making a family bundle of Disney general entertainment, kids entertainment, sports all in one in a cohesive way that really shows that it's a destination in the streaming world that you want to stay at.