Crude’s Crumble… And Why A Market Goldilocks Scenario Is Still In Play 12/16/25

0:01On a night when the Nasdaq set its first record close in more than three months. This is Fast Money. live from the NASDAQ Market Sight in the heart of New York City's Times Square. Here's what's on tap tonight. On After Hours Earnings Palooza, we are dialed into all this evening's big reports bringing you the trades on each of these names. And we're just one week away from the elections. And bond and stock markets seem to have very different reads on what to expect. Who's right? What does it mean for the rest of the year? Plus, D.R. Horton rocks the foundation for home builders. JetBlue shares get grounded after earnings.

0:29And we're counting down to the results from Eli Lilly tomorrow. I'm Melissa Lee, coming to you live from Studio B at the NASDAQ. On the desk tonight, Steve Grasso, Karen Feiderman, Dan Nathan, and Guy Adami. We start off with a massive night of earnings from big tech to big burritos. We've got full team coverage of all of tonight's reports. Stephen Modi standing by on AMD. Kate Rogers has got the scoop on Chipotle. Julia Borson dialed in to a snap conference call. We start off with Dia Drabosa, who's got all the details on Alphabet's latest quarter. She joins us here on set at the NASDAQ market site.

0:59It's amazing. Well, first of all, it's a delight to be here in person. So thank you for having me. I'm listening to the earnings call right up until this moment. And I will tell you that the new CFO, Anat Ashkenazi, is speaking right now. We're expecting to hear some CapEx numbers. So we're watching the stock very closely. It has the ability to move higher or lower based on what she says. So far, though, and I guess maybe the initial takeaway is maybe a sigh of relief for Google investors. What we cared about most was core advertising. Any vulnerability there might have suggested that all of this new competition coming online in a generative AI world is taking market share away from this business that has been so dominant for the last few decades.

1:38So ad revenue beat expectations coming in a little bit better, as did YouTube, as did cloud revenue, cloud important, right? Because that's where a lot of the AI products lie. So there's demand and it was growing, I think, in the 30 something percent. So that was a positive. That said, though, guys, competition, it's only set to intensify in the months ahead for generative AI products and even in ad dollars with the perplexity coming online. We did hear from CEO Sander Pachai on the call. He said that AI overviews, this is sort of Google's AI light for the traditional user, they're reaching more than a billion users on a monthly basis.

2:13He says that's increasing overall search usage. And this is a positive sign that Google is introducing AI search to a wider group of users and doing it successfully, people who may not buy a ChatGPT or an Anthropic Cloud subscription. I thought this was interesting. I just want to mention, he also said that 25 % of Google code is generated by AI, and we did see slightly better margins than expected. So maybe we're starting to see sort of the return on investment from all of the spending on generative AI. That said, guys, I'm going to continue to watch and listen to the call. The stock is now up about 5%.

2:49In terms of the CapEx guide, are we expecting a decline quarter on quarter for the guidance? Well, what Senator Pichai said last time is that the risk of underspending was greater than the risk of overspending. So actually, see, my amazing producer, Laura, just put this number in the doc for me. So I have it for you. The market was expecting$12.65 billion in CapEx,$13 billion. That is not a huge step up from someone who said that there's a risk of underspending. It seems to be mostly in line. So that may be why you're seeing the stock move higher now about five and a half percent. So that is a quarter on quarter decline, though, in CapEx spending.

3:26Right. Yeah. OK. Do you keep us posted? Deidre Bosa here in the Nasdaq. Look, it's amazing. Yeah, definitely. Unbelievable. So real quick. So we get through ads that was in line or better than expected. So a collective sigh of relief. How do we build upon that? Well, if you look, clouds up 35 percent year over year in terms of revenue. That's very good. Even other bets. But this is what I come down. You know, Google breaks the margins down by of gross or of net. And operating margins for both were much better than expected. And at 19 and a half times next year's numbers, that kind of growth in cloud and the fact that ad spend is still there, to me suggests this stock should be trading where we were in July, about 191 or so.

4:09So I agree with everything Guy said. There was a big sigh of relief, right? So we did not. We saw a beat, not a not a miss. That was very good platform. Also, that was good as well. It's much smaller, but a very nice beat there. So there was a lot to like in this YouTube beat kind of across the board and pretty much everywhere. So that was good. We've got to hear the call, though. I don't we talk. They'll talk about CapEx, which we just mentioned. But also, you know, there's a lot of cash flow here, what they plan on doing with it. and we'd want to hear his AI thoughts. But I do still think there's a significant penalty on this stock given the big uncertainties of the legal situations.

4:48And I don't know how big that is. Is that the bulk of the penalty when it comes to, you know, how it's performed versus peers when it comes to valuation versus peers? I think so. And I actually, you know, the market hates uncertainty. I actually feel like if there were clarity on it. When was there clarity? I guess before the case ever started. I'm just saying that you can always count on one thing with Google, the headwind of this lack of clarity with the regulatory system. So it's never as if you have smooth sailing. Right. But, you know, a verdict against them is something that counts for something.

5:24I'm not disagreeing. But I don't know how much to think about it. But this was very good. I'm relieved and happy. There is the case, though, that even if they had said something sort of favorable about a possible breakup, should the regulatory overhang result in that, that it could be good for the stock. I don't agree, actually. I very, very rarely disagree. I mean, almost never. I don't. You're playing a straw man there. But there are analysts' research notes that I've read about the quarter saying that if they say anything favorable about that, could YouTube be worth more outside? Maybe if you look at a Netflix and put on some kind of multiple.

5:57But I do think the dismantling of the advertising structure as part of a breakup would not be valuable. Yeah, they piece this advertising business in multiple different parts over the last 20 or so years. And so taking YouTube out of that, which is a very important, obviously, search engine for them, would not be a great idea. If you think about what Deebo just said, and I think this is really important. She's been saying this for a while. You know, Google and AI across their products, they have, what, seven, one billion plus sort of users. Some have two billion, you know, that sort of thing. It's kind of like AI for everyone, right?

6:29It's going to kind of be embedded. If you think that all of these models are eventually going to be commoditized, you know, when you think about that CapEx number, maybe they've gotten to where they need to be. They've built out the capacity on Google Cloud. They've kind of trained their models. Now they're going to start integrating it. So maybe they take a little bit of a pause on the spend. That should be good for the stock. If you look at margin expectations for next year, it's a big step down from 68 % this year to consensus at 62 % next year. So if you take your foot off the pedal a little bit on the CapEx and then you start to get more uptake of your products and services, cloud is up 35 percent year over year.

7:01You take some market share. That's how you get the stock going. What do you say, Guy, one ninety or one ninety one? I think that's where we were in July. We are getting CapEx just now from the conference call. They're saying we expect quarterly CapEx in the fourth quarter to be at similar levels to Q3. So roughly 13 billion dollars. And keep in mind, this quarter versus last quarter was a slight decline in terms of CapEx. And maybe that's why the stock is, in fact, up by 6 % or so after our recession highs. They still have market share of over 90%. The last time they were below 90 % market share was 2014.

7:32The problem is they've had such smooth sailing with search. This is the first time ever that we've had AI become a headwind, potentially a headwind. What I mean by that is if you look at Yahoo, Bing, they have single digits in search. But when you have all of these new AI searches, is everyone on this desk searching with AI or just with Google? AI, right? But Google is that now. They're giving a contextual answer on top. They're doing it, but once you start and you download another application on your desktop, you start to use it more. So this is the first time that 90 % is not ironclad, in my opinion.

8:13All right. For more on Alphabet's results, let's bring in Deepwater's Gene Munster for his take. Gene, great to see you. What is your take on CapEx, how it has come down quarter on quarter and now is leveling off? And how do you sort of interpret that and sort of impute that into are we going to see monetization happen? Well, the CFO was just talking about they're going to invest with an efficiency mindset, invest in these growth areas. And so I think you're seeing that in the CapEx numbers. And so I think there is, well, my mind immediately jumps to NVIDIA here, not to get off topic, but ultimately I still believe NVIDIA is in a great spot despite kind of these topping off of some of the, of Google's CapEx numbers.

8:56And so I think that this is, I think it's an example of how Google is growing from AI, at least the infrastructure in a smart way, and of course an impressive number. I want to just jump in because I think there's something that I do want to cover here, Melissa, that is I think really important is that this is probably not because the capex number, but I think this is probably the most important Google report in maybe seven to 10 years, something around there. And the reason is that 10, seven, 10 years ago, there was a lot of debate about how mobile was going to impact the business. And of course, that's been the narrative around Google for the last year is how is AI going to impact the business?

9:40And what we saw in their U.S. business, that is where the AI overviews saw the first full quarter. The expectations were that it was going to grow at 12 percent, it grew at 19 percent. And I think that this is the first evidence. And the call has just been a chorus of commentary about how AI overviews is having a positive impact on the business. Now, we're not out of the woods yet, Google investors. But I think that this is a most encouraging data point after a lot of hand-wringing over the last several quarters. Hi, Gene. Thanks for being on. This is a very small part, but I'm interested. Waymo gets, I guess, I don't know, no-ish credit.

10:19What do you think it should be? Well, the reason why it doesn't get credit is that it's just such a small part of the business. We're doing some of the numbers on it today. They're doing about$30 million. they didn't report this but you can back into it about 30 million a year in revenue. So it's it's like a spec of revenue and if it grows a lot it's still gonna be relatively small and so I think this probably ends up better as a standalone company and where investors Google investors may benefit 5 or 10 percent from Waymo but I'm just unfortunately given the size and having a really nice growth but just given the size of it it probably isn't gonna have a big impact.

10:59I wish it was different but I don't think it's going to have a major impact on the stock. Hey, Gene, it's Dan. Nice call. I know this is kind of exactly what you laid out here. And, you know, that's what's playing out. And when you think about low expectations, and to Guy's point, the stock should probably work back towards the July highs. Look at the valuation. Quick one. Why is consensus for gross margins a huge step down from like 68 % to 62 %? And will that be somewhat, you know, maybe conservative if you start to see capex slow down a little bit. So gross margins then we'll hopefully get some commentary on the call but gross margins are impacted by traffic acquisition this has been just at the center of the whole regulatory conversation they have not commented on it as of the first two questions it hasn't come up yet but I think that that has an impact another piece to it is content costs related to YouTube and so I think that we'll see how those two levers play out I think that if it does see a dip based on that efficiency commentary.

11:56That, of course, is a magical word for investors from the CFO. I think that we should see some margin improvements down the road. Gene, there are a lot of overhangs over Alphabet at all times, regulatory, but then there's also the legal overhang as to whether or not there needs to be some sort of payment to sites that it's, you know, it's Gen. AI assistant points users to in order to answer queries. And I'm wondering how you start thinking about that. Because if you think about, you get the answer. You don't click through to the site. That site sees a decline in ad revenues. That site then doesn't advertise as much either.

12:33So it's sort of this vicious cycle that can start. So there's some similarities between what happened with when Google was just emerging, 2005 to 2010, publishers taking issue that they're essentially scraping traffic from them. We're seeing the same thing now. And ultimately Google did deals with these publishers. We've seen a handful of them on the AI front with Reddit and OpenAI doing deals. And they tend to be kind of in the 50 to 100 million dollars a year right now. So if you're going to put it in a context about what could Google potentially spend on some of these licensed deals, could be in upwards of a billion dollars a year.

13:10It's a big number, but I think that in the grand scheme of things, the squeaky wheel gets greased from these publishers. And I think a billion dollars goes a long way to kind of make sure that everybody's playing fair. All right, Jean, great to speak to you. Great to get your take. Appreciate it. As always, Jean Munster, Deepwater. Karen, as an investor, what are the remaining questions you have? Well, just let me back on that one for a minute, which I think is really interesting. Who has more money than Google to pay whatever? Right. You feel bad for the small guys. Yes. Right. Right. It's harder for them, although any of them can raise money now.

13:41It's seemingly, you know, infinite money, I guess. But I guess it's are there any cracks here? This was a really good quarter. There's nothing to think about this quarter. It's about what are they seeing. And so I don't think that we should think, all right, the all clear. There is no threat to Google search. I don't feel comfortable taking that position. So that's what I want to hear about. That's probably softer, more commentary, not numbers. So this is not the quarter in which you re-rate Alphabet shares to match the multiples of its peers or more closely align. I mean, you put two quarters like this together.

14:15The one thing I'll say is that I think is a big opportunity is Apple. You know, when Apple did that deal with OpenAI, they did speak to the fact that they are probably going to include Gemini. And so when you think about the exclusive placement that they have on iOS devices in Safari, they pay Apple$20 billion a year for that acquisition. So that's what he's talking about is the cost of that traffic going up. Maybe there's some sort of deal with the iOS 18 that really does benefit them in the quarters to come. All right. Conference calls underway, as we mentioned before. We'll keep you posted on that.

14:44In the meantime, the shares are at after-hour session highs, up 6-plus percent. Earnings alert here on AMD. The chipmaker tumbling to after-hour session lows despite beating revenue estimates. That conference call is just underway. Seema Modi's got the very latest. Seema. Melissa, AMD's fourth-quarter revenue guide failed to meet some of the more optimistic targets on Wall Street. That's why the stock is down. And while its data center revenue did climb 122 percent versus the same quarter a year ago, gaming sales dropped 69 percent, which the company says is primarily due to a decrease in semi-custom chips that go into Microsoft and Sony game consoles.

15:19But a weakness typically expected during this time. CEO Lisa Su referring strength in data center products, robust demand for its Ryzen PC processors. She also just said that Microsoft is now using its latest AI processor broadly for multiple co-pilot services. So far, no AI chip forecast for 2024. The street will be waiting for that. Bernstein's Stacey Raskon says his concern is that there isn't a lot of room for upside on AI with strength in PCs. with its losses that it's seeing right now after hours. Melissa, shares of AMD have now pretty much erased its gains, still up about 4 % for the year, underperforming, of course, its biggest competitor, NVIDIA, but outperforming the likes of Intel year-to-date.

16:00And we will be looking for Lisa Su to join Squawk on the Street tomorrow for more questions on its growth in AI, Mel. All right, Seema, thank you. Seema Modi, Stacey's basic point was the quality of the beat was a low-quality beat. It wasn't in the areas you want to see. And as Seema had mentioned, we are still looking for that AI, you know, GPU revenue number, which should be more than$4.5 billion. They're going to be looking for a while. I mean, Dan talks about this all the time. But since March, I mean, this has been in a series of lower highs. It's been in this downward sloping trend line.

16:30And we did not break out of it, number one. Number two, I think when you get a quarter like – forget about the quarter. The quarter is okay. The guide scared people. And when you traded this valuation with no AI components, people are going to sell first, ask questions later. Now the issue is where do you buy the stock? So it's probably trading about, what, 155? I think we got down to 130 at one point this year. I don't think it gets down there. But, you know, 145 to 150 has been support before. That feels like it's where it's going. It just seems a combination of the run-up going into it, right?

16:59And the, I mean, Corey was okay. Gaming was very weak, but that is the smallest component. So I wouldn't really put too much of a hit on it for that. It's just the valuation. You get to your point exactly. Exactly. It's already pricing in a lot of really good things that we need to hear really good. And we haven't heard that yet. Guys probably familiar with the saying Enzo Ferrari, if you're not first, you're last. Sure. So that's what it feels like with AMD. They're not Nvidia. So everyone treats them as a distant, distant stepchild that no one really wants to take care of. Right. I know it's mean.

17:32I'll get something at me on this. But I think there's going to be a bifurcated market. There's going to be really contextualized chips. And then there's going to be really sort of just average chips. And I think you're going to see the average chips from AMD and Intel and everyone shooting for the NVIDIA chips are the elite chips. Go ahead. I'm more hopeful of AMD. And then even the mediocre chips. I mean, you got like Broadcom today, you know, a partnership with OpenAI to make its own chips. That was your point for a long time. All these guys are going to be starting to make their own chips. They're designing their own.

18:06They're partnering with some to create them. They all want a second source. And that was the promise of AMD and a lot of the guidance that Lisa Su gave. I give her a lot of credit. She always comes on after every quarter, good quarter, bad quarter, that sort of thing. She's facing the music. She talked about$4.5 billion in revenue. They just did upside that. Just the last thing, the trade is getting narrower and narrower in the stock market. We saw, obviously, Dell, Micron, Supermicro, AMD all go out of the wayside. 40 % of NVIDIA sales. They're all reporting this week. And the CapEx numbers are going to be very important to watch.

18:36If there's one person that can do it, though, it's hard. We've been doing this show a long time. Oh, so long. What do they call it when you dox people? If we make it to January. 18 years. But you're using it wrong. Well, about a week and – no, not necessarily, because like a week and a half ago, we turned around. That was cool. And we were all like – oh, wait, we were like starstruck. We were. It was like Gwen Stefani was here. We were trying to call her over. She was like, no thanks. Yeah, she's like, quiet period. Yeah. That was pretty cool. Coming up, we've got a lot more earnings action to bring you.

19:03shares of Chipotle, Snap, Caesars, Visa, all on the move after reporting results of details from all the quarters ahead. And speaking of earnings, D.R. Horton dropping hard on the back of the results this morning. The shaky foundation that could be eroding in the home building space. Don't go anywhere. Fast Money is back in two.

19:28Welcome back to Fast Money. Shares of Chipotle pairing losses after hours of fast food giant beating earnings expectations but missing on revenues. CNBC's Kate Rogers has got the latest. Hey, Kate. Hey, Melissa. So, as you said, mixed third quarter here for Chipotle. Beat on EPS. Slight revenue miss. It's first since July of 2023. Same store sales, also a slight miss. They grew 6%, a little lower than estimates of up 6.3%. The company grew traffic again in the quarter by more than 3%. It also got a boost from smoked brisket, which surpassed expectations, according to interim CEO Scott Boatwright.

20:01He anticipates it will last through the fourth quarter on the menu. But Chipotle did see some increased costs for food and beverage and packaging year on year, noting inflation in a few key ingredients here, mainly avocados and dairy. Also had higher usage of its ingredients as it focused on ensuring consistent and generous portions. Remember, that was an issue last quarter. This increase partially offset by the benefit of menu price increases. Chipotle's honey chickens also been testing well, Boatwright said, passing the stage gate process, ready to roll out nationally. He told us on closing about overtime, the consumer remains extraordinarily resilient and it's still seeing growth from all income cohorts.

20:38That's a real rarity in this environment. Sales were soft coming into the quarter, but Chipotle said they saw a strong acceleration as it went on. Melissa, as you can see, the stock is down by 4 percent, but it was down by more than 7 when this report crossed the wires. Back over to you. Theoretically, Kate, chicken offering should help margins, right, because chicken is lower cost. I mean, that's what we heard from McDonald's and the Chicken Big Mac. Yeah, definitely. And one more note just on those menu offerings, Melissa, both the smoked brisket, which, as you note, is a more expensive offering.

21:06And then this chicken menu addition, the limited time offers, Boatwright said, have been surpassing their expectations, right? So they're performing even better than the company had anticipated. So that could wind up boosting earnings and revenues in the quarters to come. We'll see. All right. Kate, thank you. Kate Rogers. Normally, you'd think 6 % same-store sales. That would be a pretty good number for anybody else, except for Cava. That would be a terribly disappointing number. But, I mean, it's just, to me, just, you know, it's a victim of its own success. The valuation is just too high. The quarter wasn't bad.

21:38I mean, it wasn't as good as people hoped, but it wasn't bad. No, no pun intended, but we're in the digestion portion of the trade with CMG. You know, we have not said all night, 24 minutes. Burrito blowout. Now we have it. I might say I'm on my way home tonight, I might say. But right now, no. But to Karen's point, I mean, 6 % comp's great. But you go back a year and look at what the comps were compared to what the street is looking for. And then you saw the growth. Not so much now. And margins have been not decelerating, but it's not really as robust as they were, which suggests this company is getting mature.

22:11It happens. But where do you buy the stock? Not where you sell it. It's had a runoff of 49 to current levels. You know, maybe it gets back down to sort of 54.5, 55, and you buy it again, Mel. It still is. an international growth story, though. Ninety-eight percent of the stores are here. So that premium that you're looking at valuation, yes, it was a Brian Nickel premium. And that one, you'll see Starbucks and those two compared for the foreseeable future. But it's still a growth company. I think you're paying for international growth. To another after-hours mover, Snap shares of Snapchat parent jumping after-hours on a profit beat.

22:45CNBC's Julia Borson's got all the details. Julia. That's right. Shares higher after Snap's third-quarter results beat on the top and bottom line with the company's 443 million daily active users, more than estimated. Now, in terms of Snap's guidance, its outlook for fourth quarter adjusted EBITDA is a hair of estimates, though its revenue guidance range of 1.51 to 1.56 billion is mostly below the 1.56 billion analyst consensus estimate. Now, Snap also announced a stock repurchase program of up to 500 million dollars of Class A common stock. And Snap also showed that its efforts to diversify its ad business are working, saying ongoing momentum with its direct response products and growth in its small and medium-sized businesses contributed to total active advertisers more than doubling from the year earlier quarter.