Dow Touches Fresh Record To Start 2nd Half… And A Big Bull Case On Strategy 7/1/26

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21:11Karen Finerman:Through innovation, Venture Global is not only building some of the largest energy facilities in the world right here in the United States, but delivering American energy at a fraction of the cost and a fraction of the time. So while others are busy talking, we're busy building. That's Venture Global. that's unstoppable energy.

21:35It's smart to always have a few financial goals and a really smart one you can set. Earning cash back on what you buy every day. And with Discover, you can. Get this, Discover automatically matches all the cash back you've earned at the end of your first year. Seriously, all of it. And we trust you to make smart decisions. After all, you listen to this show. See terms at discover.com slash credit card. Welcome back to Fast Money. MetaShare is surging nearly 9 % after the company announced it is building a new cloud business with plans to sell its excess AI computing power. Julia Borson's got the details here.

22:13Julia. Well, Melissa, sources confirm that Meta is working to build out this AI cloud infrastructure business. But this should not be a surprise since Mark Zuckerberg first talked about this last year in October. And then he talked about it again in a little bit more detail at Meta's annual shareholder meeting, which was in May, when he said, quote, it's definitely on the table almost every week. There are different companies that come to us from outside asking us to both stand up an API service or asking if we have compute that they could buy from us at some premium to what we've bought it at.

22:49Zuckerberg laid the groundwork for this kind of business when he appointed Dina Powell-McCormick as the company's president and co-head of its new Meta Compute division. Meta would be with this kind of business, challenging Amazon, Microsoft, and Google's AI cloud businesses, while selling raw compute would rival AI cloud companies, including CoreWeave and Nebius Group. You see both of those stocks traded dramatically lower today. And for Meta and its gains on the news today, nearly 9 percent, some analysts are bullish on this creating a new revenue stream for Meta, but Truist warns that heading in today, some argued that this would actually be a bearish signal for Meta, as it would imply that their AI projects have not lived up to high expectations.

23:36So this is a bit of a pivot to address that and to deal with all that compute. Melissa? Karen's got a question. Yeah, Julia. Hi, thanks for being on. Here's a question. A couple of days ago, Google said they're capping Meta's Gemini AI due to demand strains. And so I was wondering, all right, did Meta, was that trying to get more, were they trying to get more capacity at Google price, whatever that is, that they could sell for what I assume is a higher price here? Is that what that was about? I don't think that's necessarily what that's about, because this business has not launched yet. This is still very much in the works and in process, and it's unclear when Meta would actually be able to launch this.

24:17I think that right now Meta is deploying, as it prepares to deploy its own offering in the market, is utilizing Google's tools to improve its own AI systems. So remember, Meta has tons of engineers who are using all sorts of AI tools and all sorts of AI compute, and they've been investing in infrastructure, which are really long-term investments, many of them long-term investments. Meta is going to be spending as much as$145 billion on capital expenditures this year. So a lot of this infrastructure play is a long-term one that hasn't actually happened yet. All right. Julia, thank you. Julia Boorstin, what this also tells you is that there's not going to be any abating in terms of the level of CapEx, I would think, if they can fund it in some way.

25:05Well, I just want to add, I do, I know Mike said it on your earlier show about is this really a signal of Meadow recognizing, all right, we need some financial restraint or something like that. I think that's a much bigger message. I think that that, you know, we want to see cash flow here. Right. And so this giant CapEx that we talked about that is just enormous. If they can address that with something that improves cash flow, your glass half full on this. I am because there is a big glass half empty. There is way to look at this whole thing. Well, if the glass half empty gets you to at some point them saying, you know what, we're not going to be spending this much CapEx in the future.

25:45But for now, if they're pulling in whatever it is, a billion a month or whatever the run rate of the business is, for that long, they can spend that much on CapEx also.

25:53Karen Finerman:This isn't the year of efficiency and meta part two. This is, first of all, this makes total sense with their AI ambitions. They're not stepping away from AI. This to me is just about optimizing and ROIC. This is really, you know, I think it's a bigger headline, actually, than it may be, although, you know, strategically, it is a new revenue line. And if anything, it's like, hey, and I'm looking at Jeffrey's report here. They say, you know, Meta's gate crashing the hyperscaler club. So it's really more look out the other four. I don't think this is a core business. I do think it's exactly what he just said.

26:25Karen Finerman:And if you think that they don't have capacity and ability to mark this up and improve ROIC, I think you're crazy. So I'd be happy with your 8 % move today. I don't know that this changes the narrative in the short run, but I think it's my glass is half full. Yeah. How are you feeling on the hyperscalers in general? I mean, look, I think you take away from this the bottlenecks are real and they're really long and they're not going anywhere and you have to own them. And these companies are trying to get really creative about how to deal with it. So if anything, to me, it just kind of reiterates, at least for the next, I don't know, 12, 24, 36 months, these bottlenecks are hard to resolve.

26:57I mean, our folks have U.S. public spending on CapEx at a trillion dollars next year. a trillion and a half out to 2030. And you'd have to argue the risks are to the upside to those numbers. So the bottlenecks are real. The spending is happening. People are getting creative with how to deal with them. And I think that just means pick your favorite bottleneck. We like PowerGen, but pick your favorite bottleneck and on it. I mean, it's another player, though, with supply into this bottleneck. And yet the other hyperskillers, to your point earlier on our conference call, they went higher today. I mean, you saw Nebius and Corwe go down on that front in terms of sort of the commodity aspect of cloud compute.

27:33But for the hyperscalers, it's not seen as a threat in any fashion. Not this particular thing. I mean, what's happened to the hyperscalers recently is this idea of the price of tokens and how much that's fallen. So you want a different bottleneck. You can start at TSMC and ASML and work your way down. Somewhere along the line, I think the bottlenecks are good to own. I don't own any micron, though.

27:58Karen Finerman:I wanted to do a segment on Stu's PowerGen bottleneck picks. I mean, that sounds interesting. Yeah, we should deliver that. We take requests. Coming up, permanent focus as a payment player doubles off its 52-week low. Can shares keep charging higher? We'll debate that straight ahead. You're watching Fast Money Live from the NASDAQ Market Site in steamy Times Square, 100 degrees here. Back right after this.

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29:13Welcome back to Fast Money. Our firm shares climbing back to their January highs. The fintech company surging nearly 100 % off their 52-week low in March. analysts at Citi hiking price target on the stock to$115 from$100. Karen, you flagged this. You're in this one. Yes. I mean, it's been kind of a wild ride. In many ways, it mirrors some of the other ones we've looked at, sort of credit cards, which I know this is different. They don't carry the debt. A firm does carry some and not others, and it sells securities to hedge funds and to have more money to lend. So I like it, though. So I like, I think the oil price coming down is very good for the consumer.

29:54I also think it's just, I mean, this is a popular way to buy now. And for the, you know, every two-week payment, two-week payments, four of them, where there isn't interest, I think that's just a smarter way for some people to manage their payments. And so I like the space. It was here at the beginning of the year and went all the way down to 42. Now it's back up to the very beginning as if nothing has happened at all. And yet I'm still long. I do like it, though. But this is not nearly as cheap as it was. Bonoan? Yeah, it feels a little stretched. I mean, when you have essentially a 50 percent drawdown and then a beat and raise, I mean, they came out with pretty strong operating margins, I believe, just south of 30 percent.

30:36I think it sets up for the type of price action that they've had. So there's not very much for me to argue there. It's really now at this point in time that it's recaptured essentially all of that round trip. Is it worth, you know, investing the incremental dollar? And I do question that. The Ford P.E. is one thing. The other is, I believe, Walmart switched from Affirm to Klarna. And so I just start to question some of those vendor relationships and whether or not that might be the canary in the coal mine in terms of those not necessarily being as strong as bulls might argue. All right. Coming up, stocks ready for royalty.

31:12The company is being deemed dividend kings after hiking pants for more than 50 years. The names are traders are igniting when Fast Money returns.

31:40Welcome back to Fast Money. Stocks kicking off the second half in the red. The Dow hitting a fresh all-time high in today's session, but ending the day virtually flat. The S &P with a small loss down about a quarter of a percent. And the Nasdaq falling more than half a percent. But the S &P and Nasdaq both pacing for their best weeks since gold started in July with a gain of 1%. I think we're missing a word there. But still down nearly 6 % for the year. Crude oil settling below$69 a barrel. WTI is still up nearly 20 % in 2026. Meantime, hear ye, hear ye. All rise for the dividend kings. Where are the dividend kings?

32:18Well, these are stocks that Barron's recently highlighted as companies that have raised their annual dividends every year for at least the last 50, 5-0, that is right, 50 years. There are more than 50 companies that made the list, including Procter & Gamble, Lowe's, Coca-Cola, and Altria. So we thought we'd ask for traders who they would crown as their dividend king. Karen, start us off. And I know that you guys don't necessarily invest for dividends. OK. But this is just sort of an interesting screen in terms of who can continue raising the dividend for that long. Well, OK. As you prefaced it, yeah, the dividend was really, really, really the tail wagging the dog.

32:58Still an impressive. You can do anything for 50 years in a row. Yeah, that is impressive. But to me, in the short term, it is fast money after all. I chose Lowe's. And the reason is I do think the housing bill will pass. And I know it won't be a quick fix to get so much more new supply. But I do think the market's reaction to if that happens and the expectation of more and more homes being so. This is great for a Home Depot and a Lowe's. So Lowe's. 65 years of dividend increases for Lowe's. I didn't even know Lowe's was here for 65 years. I know. It's fascinating. It's a fascinating list here.

33:35Bonwin, who is your king? My king is Johnny John. And really, the quick explanation is, if I am going to be deploying capital for dividends, my primary concern is making sure that that dividend is, in fact, going to remain intact. So I'm not looking at based on valuation. I'm not looking based on growth metrics, things of that. Clearly, you do get a mid-teen compounder here. But it's a diversified med tech and pharma company that has diversified revenue streams. It's a massive, large cap in a ton of portfolios. And quite frankly, a lot of health care is underweighted within the portfolio. So it's slow, boring, if you will.

34:14But I'm not worried about this dividend going away. And if I'm going to invest for the dividend, I want to make sure it's there tomorrow. It actually hit a fresh all-time high just yesterday. I mean, Tim, you were talking about a lot of the clouds clearing off of Johnson & Johnson.

34:27Karen Finerman:I'm with this Johnny John. Good for you, by the way. Nice call. I'm fired. Stuart, do you have a king or what's your theory about? I'm going to say, similar to what I want to say, I think if I'm going to invest in this right now, I'm invested in dividends. I think they're going to grow. And frankly, you know, I'd probably go into utilities. You know, I mentioned PowerGen before. You're getting the dividend. You're probably going to get some, you know, some ROE type expansion, you know, for that part of the market related to PowerGen and the AI build out. So I didn't see any utilities on that list.

34:56But I think that type of story where I'm getting a little juice from the prevailing theme in the market, plus I'm clipping a div of, I think, about 2.7 percent for that sector, I think makes a lot of sense. That's not bad.

35:06Karen Finerman:Tim, your king? Altria. Altria has been my king for a long time. And it feels like a utility. And it also feels like all we do is talk about the decline of the cigarette industry. And all they do is continue to talk about less of a decline than you thought and price realization that changes and ultimately a multiple that around 12 times forward paying almost a 6 percent dividend yield. Not the reason to go buy a stock, but it is a reason why I own this company that I think has very predictable earning stream. And I'm I'm seeing anywhere from kind of two to six percent EPS growth over the last five years.

35:39Karen Finerman:And I think that's kind of where they're modeling out. So I like this name a lot. I think they've done very interesting things with how to invest some of their non-cigarette cash as well. And I feel great about this, Div. Coming up, a new bull call on strategy as a Bitcoin proxy looks to bounce back after its brutal June drop. The analyst thinks there could be a 500 percent increase in current levels. He'll join us next when Fast Money returns.

36:18Welcome back to Fast Money Strategy. Catching a bid today, bouncing 7%, though it's lost more than a third of its value over the past month. Earlier this week, the Bitcoin Treasury unveiled its digital credit capital framework, giving it more flexibility to manage its balance sheet amid crypto volatility. It's a move which has our next guest doubling down on his bull case for the stock. Mark Palmer is a senior analyst at Benchmark StoneX. He's got a buy rating and a A street high price target of$570 a share. Mark, great to have you with us. Thanks for having me. $570 seems nuts from where the stock is right now.

36:51So how do you see getting there? It's really not all that difficult. Now, part of that, of course, we do need to see some appreciation in the price of Bitcoin. Right. That goes without saying. But strategy's capital structure is set up so that if we do see a move, let's say from 60K to 95K at the end of this year, then we're going to be well on the way to achieving the price target that I lay it out. Why is that? Because strategy is effectively a levered play on Bitcoin for good or ill. And I think what we've seen of late has been for ill. But that can switch very quickly, either due to improving macro conditions, ones that are more conducive to Bitcoin's price being higher, or regulatory changes.

37:36We still have the Clarity Act, which would create a regulatory framework for crypto in the U.S. before the U.S. Senate still has to come to a vote. But if that vote does occur and there's a possibility it could happen in July, we could see a real boost for Bitcoin and by extension for strategy. Thanks. Thanks for being on. I'm not a not a Bitcoin bear. I've been along for a long time. But to get to address your 570, how much of that is a NAV appreciation that, you know, has changed dramatically? It's not so much an NAV appreciation at this point. The reality is the premium. I'm sorry, the premium.

38:15Again, you know, it's not really about, you know, because when you look at the way in which digital asset treasury companies are measured, it's typically on what's known as MNAV, which is a multiple of the net asset value. Right now, strategy is down at about 1.07 in that measure. I am not expecting that MNAV itself is going to be the driver. If the price of Bitcoin were to appreciate, then the company's existing Bitcoin holdings would be the driver. So strategy is just in a remarkably strong position if we were to see an increase in the price of Bitcoin. The moves that the company made earlier this week should alleviate some of the concerns about its capital strategy, particularly with regard to stretch, which is the perpetual preferred stock that it is using as the primary means to raise capital to buy more Bitcoin.

39:13So bringing confidence back to that instrument, particularly by addressing investor concerns, they pump the dividend rate on that instrument from 11.5 % to 12%. More importantly, they ring fenced the cash that has been set aside, a cash reserve specifically to address the dividends on that instrument. So if you're buying it for 12 percent yield, that's great. As long as you're comfortable that those dividends are going to be paid. Now, those investors can be more comfortable that they will be because the cash has been set aside and ring fenced.

39:47Karen Finerman:Hey, Mark, I guess part of this for me is I really don't feel like I'm smart enough to understand this because it just seems simple. there's asymmetric risk for strategy. If Bitcoin goes to 90 ,000, that's great. So I own a levered Bitcoin. But what happens if Bitcoin goes to 40 ,000? So, I mean, to me, I'm just trying to understand where there's more upside on a 30 % upside or more downside on a 30 % downside. So it just seems to me, again, the leverage inherent in their balance sheet scares me more now than ever rather than the upside of an upside moving Bitcoin. Yeah, I think the concept of being scared by strategy, I think, is a lot of the reason why the company rolled out the plan that they did.

40:29Again, part of it was about addressing investor concerns as it pertains to the stretch preferred in particular. But you also saw the last three parts of that plan. One was giving the company the flexibility to buy back stretch. If they've got a billion dollars, they can buy that back to support its price. They've got a billion dollars set aside now where they could buy back or authorized where they could buy back their common stock. And finally, the company for the first time has officially made it the company's policy that it can sell up to one point two five billion of Bitcoin if it needs to to support its corporate activities.

41:11So what you see, I think, is strategy maturing as a company, evolving as a company, and putting itself in a position that if you do see declines in the price of Bitcoin, the company doesn't have to just sit there and absorb the impact of that. It can actually take corporate actions that will put it in better position and ultimately put shareholders in a better position. Where are we in terms of the average price of Bitcoin that strategy has bought at? Yeah, we're underwater right now, just the tune of something like$16 billion. What I think is crucially important, though, is that the price of Bitcoin would have to drop to something around$8 ,000 and stay there for an extended period of time before the company would be in any, quote unquote, trouble in terms of being able to address its obligations.

42:02So what you have is a tremendous amount of optionality that's been preserved simply because the company has so much Bitcoin that it can dip into if it needs to. And it also has all of these other tools that its board recently authorized. I mean, that's a fundamental case. I mean, dipping down to 8 ,000, but there's going to be a lot of pain in the stock well before 8 ,000 is reached. Well, that's an extreme case. You know, I'm addressing the extreme case. We're now to a point where anyone who's looking at these instruments is going to want to understand their downside before they look at their upside.

42:32The upside could take care of itself in terms of, you know, a Bitcoin appreciation. Again, we could see a legislative catalyst with the Clarity Act. So what people want to understand, though, is, you know, is this, you know, we've heard people say, is this another Terra Luna type of situation where you saw the collapse of an algorithmic stablecoin back in May of 2022? Luna went to zero. Right. You know, as I have said, you know, comparing strategy to Terra Luna is like comparing lightning to a lightning bug. They are completely different. Strategy has real assets supporting its instruments and ultimately supporting its stock.

43:10And that can translate into as much liquidity as they need. What are we talking about? The company has 51 billion in value in its Bitcoin holdings. Its annual dividend obligation is about 1.76 billion. So, you know, what are we talking about? They've got$2.6 billion or so of cash sitting there specifically to address dividend obligations. And if they needed to, they could sell some Bitcoin to keep doing that. That is not a story of a company that's going to zero. That's a story of a company that's preserving optionality. Mark, great to speak with you. Thank you. Of course. Coming up, what is wrong with Walmart?

43:47The big box retailer getting hit today, continuing its recent drop. The next move for that stock when Fast Money returns.

44:01Welcome back to Fast Money. Walmart closing out the day down nearly 4 percent. The stock posting a six straight day of losses down nearly 9 percent of that time, falling more than 18 percent since its peak this year in May. What happened, Karen? What do you think? What do I think? I think the main thing that happened, it was too expensive. That is a big thing. So in the 140 range and I'm long, I've been long for a really long time, including, you know, If you went home long, it's the same as bought at the closing price. So this is a really big move down. Tim's team, the T and Tim's Timbo target doing very nicely.

44:36I don't know. I do like Walmart. I think they're doing all the right things. I think the valuation part was the overwhelming problem. I do still think there's they're very well positioned, no matter how the customer does. Bonoan. Yeah, I mean, I tend to agree with Karen. I mean, I think it's a great stock. I mean, if you look at, you know, some of their Walmart plus businesses. The issue is that higher margin segment still doesn't make up the bulk of their revenue. And then you have some of the tariff overhang. But all of that aside, I really think when it was at 47, 48 times forward, it's just tough for a name that doesn't grow at 20 percent and that has a beta that's relatively muted.

45:14So I think this is more of a price reset as opposed to a significant sell off. And I'd likely be looking for a reentry point around here?

45:23Karen Finerman:It's hard to argue with the valuation because everything else Walmart's done, they've made a lot of investment in their technology. It is a margin expansion story. Therefore, it's a multiple expansion story. But it had that. I think there's rotation. I think people absolutely were buying Target. I think they absolutely were rotating back into some home improvement. There's a lot of crossover there. Home Depot got really cheap. I think there's nothing wrong with Walmart other than that move. Up next, Final Trades.

45:52Final trade time. Bonwin. JP Morgan. Stu.

45:58Karen Finerman:Angaro XHP. Timbo. Let's go USA men's soccer tonight. Nice. Let's go Altria. Karen. Yes. So, okay, I'm not on the opposite side of where Bonwin is on JP Morgan. I do like JP Morgan. However, running up into earnings with JP Morgan is never something that I like. So I'm selling JP Morgan upside call. All right. Mad Money with Tim Kramer starts right now.

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