Fast Money 8/26/26

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0:49Download the latest episode and subscribe at schwab.com slash market update podcast or find Schwab Market Update wherever you get your podcasts. Live from the NASDAQ Market Sight, the heart of New York City's Times Square. This is Fast Money. Big night. Here's what's on tap. NVIDIA, a big beat. Revenue more than doubling from a year ago, but a double is not a home run. And the stock is mostly flat right now, but we're going to go inside the numbers. We'll get the latest. The conference call about to kick off. And then Jensen Wong with Jim coming up after that. Plus, the Meta's massive settlement, he said.

1:26The details on its up to$17 billion deal, 47 states and the District of Columbia. But the state of Florida, not part of the deal. And that state's attorney general will join us to tell us why not. Later on, just not doing it or doing something. Nike shares falling again. New lows. We'll dig into the charts and whether or not anything can turn around. This mighty footwear and apparel maker will debate and discuss. Hi, everybody. I am Brian, in for Melissa once again tonight, coming as always live from Studio B right here at the NASDAQ. And on your desk on a big night, Steve Grasso, Guy Adami, Tim Seymour, and Katie Stockton, founder and managing partner of Fairlead Strategies.

2:09We're going to get around this desk, but we got to begin with this. The better than expected earnings out of NVIDIA, it reported revenue more than doubled. NVIDIA, though, shares, they're up a little bit. When I say a little bit, I mean like three hundredths of one percent. Christina Partzinevelis, following the numbers, on set with us now, what is the sort of big takeaway? I know we got the call. What's the takeaway so far? Well, they performed the obvious, beat and raised again. Biggest beat in two years, roughly at the pace of recent quarters. But after a run like this, in line just really isn't enough anymore.

2:43The quarter ahead guide came in at 108 billion bucks, comfortably above Wall Street expectations, don't get me wrong, at 104. yet still shy of the buy side whisper number, which is closer to 109. It seems to be more of an emphasis on buy side numbers. The more telling change was in how NVIDIA reports. It splits revenue between hyperscalers and everyone else, like it's AI cloud, industrial, enterprise customers. And that's a way to show growth beyond the big cloud buyers who are increasingly becoming rivals. Hyperscale revenue more than doubled up to 102%. Everything else actually climbed 138%.

3:15So it's showing it's growing at a faster pace. The soft spot, margins. Gross margins guided to 74 percent next quarter, which was down from 75 percent this quarter and just under the 74.7 percent the street wanted, pressured by rising memory and component costs. On supply side, NVIDIA's purchase commitments also jumped from 119 billion to 279 billion, mostly memory. And so the takeaway from that, and I bring that up, is important. Anyone can design a chip, open AI the latest, right? The few can lock up the supply chain to build at that scale. So that is why that number is important. One also to watch, NVIDIA disclosed 15-year data center leases starting in fiscal 2028 and 2029, that it plans to hand off to third parties, a sign of how deep it's wading into the build-out, well beyond selling chips until it reassigns the lease it's carrying that obligation.

4:05Again, raising concerns about what's on the balance sheet. And to your point, you can see on the screen, NVIDIA's CEO will join Jim Cramer on Mad Money in the next hour. All right, so Jim can ask Jensen this, but for now I'm going to ask you this, because you're my Jensen proxy for now, Christina Parts and Evelace. A couple things you said caught my ear. Number one, you talked about increased competition. I know that everybody now sort of seems like they're competing with each other, OpenAI, a customer, but also doing its own chips. Talk to us about competition. Also, gross margins may have been down a touch.

4:36Touch, right? But seven. Steve Grasso, I mean, would you like to have 75 % gross margins? Would love it. But I would take it and I would bank that every other every other company would love. Exactly. Every other company would love to have that. So talk to us. Competition. Is that the risk? Because competition means lower margins normally. That, to your point of the competition, I'll get to you in a second. It's it's NVIDIA. It's the law of large numbers. Like, look, oh, I'm saying it's 74 percent. The street one is 74.7. Oh, no, that's a falling off. So what we'll hear on the earnings call most likely is that they're going to say that, don't worry, this quarter it's down, but look at how many memory chips we've procured.

5:15We've increased prices. Those margins are going to stay in the mid-70s level. So that's what we're going to need to hear from the CFO reinforced on the call. In terms of competition, just the breakdown, they'll probably speak more to the increase from sovereign AI, from enterprise customers, et cetera, that would be the other bucket within the data center revenue, which is climbing 138 % year over year versus the 102 % for just data centers. Christina breaking it down like she always does. So I watch just like your seventh show today, I believe-ish. I'm warmed up, baby. I'm ready to go. No, I know this.

5:45I'm going to end with a little Adami. But you had a really interesting conversation, as you always do. And the obvious question is, with all the numbers, I mean, this is a$5 trillion company growing revenues north of 100%. It's a staggering thing. 75 % gross margins we can equivocate if we want. But there you have it. Why is it trading at 17 times next year's numbers? That's the question you have to ask yourself. You're saying meaning it's too low. Given the metrics that we've been talking about now, what Christina just broke down for the last four minutes, what we've been talking about for weeks, yeah, that multiple doesn't make sense.

6:18So you ask yourself, why is the market, and the market understands this, the market sees what's going on. I see the market trading higher now in Viddy in the after hours, but even with this move, why is it trading at a trough multiple to the broader market? Forget about its peers to the extent that it even has peers. Well, something has triggered buyers to come in, because as you were talking, Guy, Dami, the stock, I mean, it's not soaring, but it's up 3%. It's a$5 trillion company, Christine. It's the biggest company by market cap in the world. So a 3 % ad on$5 trillion, that's a lot of billions.

6:52I'm just throwing that out there. I don't want to do the math on live TV. The stock fell, though. With the exception of just yesterday, the stock fell over the last seven days. You've seen it, what, up 13 % year-to-date versus the stock's up almost 70%. 70%. So perhaps this is buyers. Okay. Getting in like it's the margins are decent. The beat was really good. There's no, you know, dramatic news or anything like that. So perhaps that is what we're seeing. Or maybe the CFO just sharing what we reiterated because I had the notes. It was posted on the website. Well, is there any worry out there? I'm not trying to like throw water on NVIDIA, but NVIDIA has had a good year.

7:23It's up 14 or 15 % this year, but it's not up like a lot of other names that are sort of AI. She just said like the Sox is up 70%, right? I mean, But I don't – Semis. 15 % gain is still not a bad year. I mean, I wouldn't be disappointed with that. But is there a view that the numbers are – the company is so big, the numbers are so big that they're just – the growth is going to be so hard. When you see growth spart, are you asking it to Christina? I'm asking it to anybody because the guy – What were you going to say? What were you going to say? We were doing a Broadway show there. So let's do this.

7:54What were you going to say? I know you have to join the call. So answer that. Then I want to hear your take and, Katie, your take and Guy's take. But I know you've got to go jump on that conference. Well, but that's part of the reason as to why you've seen the stock fall off. And everybody keeps complaining, to Guy's point, you know, valuations are lower than AMD, than Marvell at almost 50 percent. Why is that happening when this company is at the heart of AI? And the problem is people don't see enough of a catalyst to re-rate the stock higher. So why get in when all of these other players like Marvell tomorrow could see a bigger bump or with their October 6th investor day?

8:25So I think that's more the mentality. And then, of course, the circularity debate and what is that risk on their balance sheet, which they're going to prove otherwise on the call. And Tim Seymour, we're getting some comments from the CFO. Again, the call just started. Christina, thank you very much. I know you've got to hop on that call. We'll probably see you later on this hour to get more on what they said. One thing the CFO did say is that they expect to grow revenue at 70 percent in fiscal 2028. I mean, these numbers are big. Yeah. And so the analyst community is trying to really look to 28 to figure out where we can be.

8:57Can we be at 20 bucks a share in EPS? And the numbers that they gave you today in terms of the 20s, in terms of the 3Q guide, and which was, by the way, a little bit light to what at least the buy side was at, these numbers were largely out there. But I think it's extraordinary. I actually think the stock, this is a huge relief. I think this is, given the pessimism going in here, the market is focused on the numbers, not on the things it can't quantify. As I was saying yesterday when we had the same conversation, which is that the analyst community doesn't really, who knows this company really well, doesn't know what they're supposed to do with the ROI concerns or the credit concerns because they're not really in the numbers.

9:37And the central bank of the tech sector is something that just clouds the picture. The picture is this company, those margins are fantastic. We've just gone through this. And I think the underperformance of 25 % or so to the stocks over the last six months, but flat to the stocks. In other words, I think it's been churning around. You know, Katie's probably got a strong view in terms of what some of that could mean, certainly better than my view. I think this stock is underwhelmed, underperformed. And I think this is a relief. I think it's a setup where the stock can digest these numbers and find buyers.

10:12Okay. With that in mind, so Steve Grasso, again, we're getting these live comments from the CFO who's speaking on the call right now. I just relayed the numbers. We expect to grow revenue approximately 70 % in fiscal 2020, 28. But adding this is a supply constrained outlook. So I'm sort of semi speculating here. The idea that they could grow faster if they could make more that they just simply can't manufacture enough. 70 % revenue growth still seems like a pretty good number, but I don't like supply-constrained outlook. What's your take? Yeah, and their competition is growing as well. And every one of their main buyers, the hyperscalers, they're building their own chips.

10:55And Broadcom is actually helping them build their own chips. So they have a lot of competition, and it doesn't help when your main competition are your main buyers. But when you look at 70%, market will go back and say, what were they growing their revenues by a year ago, two years ago? And when the market hears margins of 74 % and they're down a percentage point or whatever the number is, they hear 60%. They don't hear where it's at now. And when they hear revenue, they want revenue to be 20%, 30 % above whatever they report. So they're in a no-win situation. I'll tell you what it is, though.

11:32It's what Christina said and what you said. The market came in today with earnings where the stock was being sold off. That is a good setup for earnings. Six out of the last eight quarters, stock has fallen on an average of 4.8 % follow through. Everyone was betting on the same thing happening again. The market always sets up to hurt the most amount of people at any given point. That's why you see it up. It'll probably extend gains tomorrow. Yeah, and by the way, the stock is extending gains right now. It's up 4.5%. It was flat. That we started to show. So, Katie Stockton, whatever the CFO is saying, the market seems to like, at least for now.

12:10Do you like the chart on NVIDIA? I like it short term. Longer term, there is deterioration. But I think to your point that the pullback that was in advance of this report sets it up much more favorably for a positive reaction. So it came off about 9 percent. And that downdraft did regenerate short-term oversold conditions for the first time since late July. So at a very minimum, it does suggest that we'll see an oversold bounce, perhaps when that's tradable with support nearby at the 50-day moving average. That oversold bounce emerged from the 200-day moving average in late July. And of course, the 50-day moving average is higher.

12:49So we are seeing a potential for a higher low, and that could carry over to the longer-term indicators. There's about 12 % upside to the highs as next resistance. I don't know if we talked about it yesterday or if you talked about it on one of your many shows today, but, you know, Sam, open AI, talking about a chip three and a half times faster than NVIDIA's chip at a lesser cost. So to the original sort of point as to why potentially it trades at a discount, because competition might be out there in a meaningful way. And I think that's one of the reasons the market is not rewarding them the way it probably should.

13:22By the way, the average price target, I think, on this stock with analysts is$100 higher than we're currently trading. You can do that math. I mean, the market has another 40-something percent to the upside, given where we're trading now. Yet we're still trading at this trough multiple. So somebody's trying to figure something out, clearly. So just quickly, before we get to our guest on that guide, I'm going to see you and then I'll add this. Not raising, except price targets. Aha. So your average is 3 whatever it is. 317, I think. There's a$500 price target on NVIDIA, and the low is 180. There's a$320 difference between the high and the low.

14:00Now, wipe those out because I normally never go by the lows or the highs. That is bonkers. By the way, Chris Rowland, Senior Semiconductor Analyst, joining us right now, as a matter of fact, from Susquehanna. And Chris, I know you're trying to track the call. We appreciate you making some time. CFOs making comments about their new product ramp being the fastest in company's history. Amazon Web Services got a bigger and bigger partnership. And they see their new chip, Vera Rubin is what it's called, deployed by every hyperscaler. What do you think is moving this stock up a couple of percent after hours?

14:36Yeah, it's that 70 percent number year over year. I think the street was under 50. So this clarity and upside with clarity is getting the stock moving. I think that was the big change after hours. And she really said that demand is indicating a full doubling, if not for supply constraints. So that 70 percent is after supply constraints. It's a pretty nice place to be. I do not know the CFO. Her name is Colette. I do not know her. You probably do. Is she seen as a conservative CFO? And I'm asking that because if she is, there's probably a bet that the 70 number could be beaten with just a little more oomph in the supply.

15:26I think that's right. She is conservative. We would deem her as conservative. And they have a very good relationship with TSN. So we'll see how that ends up. But on the face of it, 70 percent is just a lot of upside that we weren't really anticipating. So it's important. So you said at least your average or the street average was right around a 50 percent revenue jump from now until the same period next year. Correct. But we're getting 70 percent. So it's a little 20 percent. A little VIG, I think, would be throwing a little icing on that cake with potential for more. Is the supply constraint 100 percent on the Taiwan semi side, Chris, or is there other factors that play into that?

16:13Yeah, that's a great question. We know memory is constrained as well. So I would not say it's just TSM. There are many places that this could actually be impacting. We did see their pre-purchases go from about$120 billion to$280 billion. That's in a single quarter. And they did say that that was primarily related to the procurement of memory. So they're buying that ahead to help mitigate some of this on the memory side. But, yeah, there could be shortages in other components just beyond front-end TSM. Chris, I think your 275 price target suggests basically lumping on a market multiple. My math is right, but it's around there-ish.

16:59My question is the original question I asked, why does it trade currently at such a discount, forget about the broader market to some of its peers, with growth rates that none of these people enjoy? Yeah, I think just as it's the largest market cap company out there, there's just limited amounts that even large fund managers can allocate towards. And so it's keeping a cap on it here. And then there are some bear cases that have emerged. I don't think it fully accounts for that as well. But that might be keeping a cap on it as well. Chris, when you look at the whole complex, commodity pricing has to come back at a certain point.

17:39I get the supply-demand issue. But when you look at tokens, I believe you stated this as well as one of your points, down 40 % year over year. Does that affect the story in AI and chips in the semiconductor space? I'm unfamiliar with tokens down 40 percent. And in my estimation, we're just up and to the right. So I'm a little unclear on that. OK, I'm going to withdraw the question then. So how about this? to supply demand. Is that the canary in the coal mine? Because obviously free cash flow doesn't work with NVIDIA because they're the recipient of other people's cash flow. Well, not so much. There were some actual revelations in this report talking about some vendor supplied financing.

18:30And it sounds like that is going to continue or even accelerate from here. And they've started to disclose that. So maybe cash flow is moving to some of these other guys out there. But in terms of the supply and demand question, I think they answered it with demand doubling and supply perhaps just 70 percent year over year here. So there's still a gap to total demand here. Wrap it up with this one. Is China an opportunity, a threat, or both? It's a very good question. We're still waiting to hear about shipping to China meaningfully. That would be the opportunity, but for some reason we wait. My guess is that maybe even And on the provincial side in China, they have a soft ban on NVIDIA.

19:28But beyond that, there could be a small threat from Chinese infrastructure grow or build out in China. But it is limited by pretty much seven nanometer capacity, maybe five nanometer. We're not at all close to three or two the way we can see in the West. Chris, really appreciate your as it happens insight. Might check in with you back a little bit later on. I know you also want to listen to the call. We appreciate that. Tim Seymour, your comment on everything you just heard or something else? Well, first of all, you guys need to work on your math because 70 percent isn't 20 percent more. It's 40 percent more than 50.

20:16So it was an extraordinary beat. And I also just think we've heard what we needed to hear about the Rubin Ramp. We've heard what we wanted to hear about non-hyperscalar client. And I just, you know, I think the stock was almost hated coming into these numbers. That's fair. By the way, you are correct on the math. I did the simple subtraction. Sorry, sorry. I was looking at you. Which is just trying to host a live TV show up here and do math on the fly. It's not my strong point. Tim, you know my strong point. Looks. I'm a mathlete. Charisma. Also, humility. Humility is one of my definitely top three strength.

20:57I'm pretty strong. Humility. That said, guide out. We'll get to more on this coming up. We got a lot more to do because, folks, it is not just about NVIDIA. It's not just about the 40 % estimate jump in revenue from where Wall Street saw. you know that 40 % guy is bigger than 20%. You've got Salesforce also on the move after hours. In fact, Salesforce is booming. Jim Cramer talked to Mark Benioff in the last hour. We'll hear more about that, why Salesforce is rocking. NVIDIA is on the move up. We've got a lot more to do. Stick around.

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23:04All right, welcome back. We've got a big earnings alert on Salesforce. Salesforce up almost 13%. Company beat revenue estimates. It raised its full year outlook. A lot of AI traction there. Salesforce are also announcing a new expanded partnership with Anthropic in just the last hour. Kate Rooney joining us now. Kate, I know that Jim Cramer, a colleague and friend, he just spoke with Dario Amadei and Mark Benioff. I didn't get a chance to watch the whole thing because I was prepping for the show. Kind of what's going on. Well, lucky for you, Brian, we'll bring you over some highlights and some sound from that interview.

23:38I will say also the Salesforce beat in the quarters, lifted the stock. And then this Anthropik deal also sort of added to that momentum. But Salesforce beat expectations in the quarter. Also notched a massive investment gain from its stake in Anthropik. Plus, as you mentioned, this new partnership with that AI giant. CRM beat on some of the key revenue segments as well. subscription and support, as well as Billings. And then CEO Mark Benioff did join Jim Cramer alongside Anthropics CEO Dario Amadei to talk about this partnership. They're calling it Claudeforce. They both called it a win-win. And when you take Co-Work and then you're able to put it right on top of Salesforce, it's able to bring the data, the applications, the semantics, the agents themselves, and build complete applications, a total user interface to let you get all the value out of Salesforce that's been trapped.

24:31So customers have put hundreds of billions of dollars into Salesforce. You know, there's a huge amount of value that can be unleashed through this combination. Brian, both of the CEOs brushed off concerns as well about this so-called SaaSpocalypse. Jim asked both of them. He said, essentially, Anthropic, I thought, was going to put you out of business, talking about Salesforce. Amadei taking that question said, we're not interested in destroying anyone. And that Anthropic, he really put it, wants to try to empower customers to, quote, share some of the gains. So the opposite of some of the narrative we've seen.

25:05And some of the fears and what has really weighed on software so far this year, both of them dismissing that. And we, you know, Kate, one quick thing, and I'm going to sort of opine here, is that, you know, we're a visual medium. And I think the idea with Mark Benioff with Anthropics CEO, when people thought Anthropic or AI might kill or crush Salesforce, I thought that was a powerful visual, that they were together. I'm guessing that wasn't lost on them. I think you're right. I think the message from Anthropic was, we come in peace. He's sitting next to a major SaaS software company CEO saying, saying we're going to respect your data.

25:49That's been another knock on Anthropic. And what they've had to prove to enterprises is that enterprises can trust Anthropic and work with them, especially to have an IPO. They're really trying to underline that, saying we're a good partner and it benefits both of us. We're not trying to steal your business. We don't want to become a CRM. We can partner here. So it's strategic for both of them. And then Salesforce says it's a win-win. And in some ways, it was interesting to see the street reaction because Salesforce has been hit in the past because of its AI strategy, and the street really seems to like this and think that it is a win-win.