Google’s Pre-Earnings Win Streak… And Sarepta’s Dismal Outlook 7/21/25

0:03Live from the Nasdaq market side in the heart of New York City's Times Square this is fast money. Here's what's on tap tonight. Go, go, Google. Shares of Alspeth quietly pulling off a nine-day rally as it gets ready to report earnings. How much higher could it be heading and what will results mean for its run? And heading to zero, that's a call from one analyst after Surrepta's most recent drop. Can the company's entire value really be wiped out? What's it mean for the other drug development moonshots? Plus, the land of the rising yen, what Japan's election means for investing in the country. Can you hear me now?

0:34Verizon shares jump After earnings and Cleveland Cliffs climbing, shares of the steel manufacturer hitting their highest level in nearly five months. Can the stock keep its momentum up? We'll debate that. I'm Melissa Lee. Come to you live from Studio B at the Nasdaq. On the desk tonight, Tim Seymour, Karen Feinerman, Steve Grasso and Guy Adami. We kick things off with Alphabet's mighty winning streak. The tech giant locking in nine straight days of gains, its longest run since 2019. One more update would tie its best streak ever. That stock up about 9 % during its recent rally, all ahead of what could be a pivotal earnings report.

1:08Alphabet releasing results Wednesday afternoon along with Tesla and IBM. Investors will be keyed into any updates on its AI progress. The company has struggled to impress on that front so far. While the broader Nasdaq said another record closed today, Alphabet is only just positive for the year. Will the tech stocks' momentum continue through Wednesday's report, or will the run come to an abrupt halt? Halt. Karen, how are we setting up with the nine-day winning streak going in? Well, I can't speak to whether it will go up tomorrow, but I like it. I haven't changed my position. There's a lot to like here.

1:42One of this thing, when something's going on is just catch-up, right? It has really been the laggard, and there's a lot of things to like. Obviously, the valuation, I think, is not in any way stretched at about 19 times, and there's Waymo, Right. You see that there's a big valuation for Tesla's robo taxi, whatever it however it might grow into. I don't know. But Waymo, I don't think you can't tell what's embedded, you know, how much for each. But that's something. Also, we talked a lot about as we talk about Netflix, YouTube. And so how valuable that is. And then there's the search business and the cloud business.

2:21And the search business, we all know, has been under attack. We'll see. We'll actually get it. The search is overwhelmingly the most important thing in this business by far. Recently, though, it does seem like their AI efforts have been more promising. So that's good. So it still is well below market multiple. So there's a lot to like. I don't think anything's really changed. The big concern is what is the ultimate, I guess, how are they going to address the Justice Department's issues? On the one hand, right, they talk about a monopoly in search. But on the other hand, we're seeing the market evolve in a way that doesn't speak to a monopoly in search.

3:02So I don't know. That is a big question mark. Well, it's funny with Google because we talk about the expensive market. It doesn't seem to matter. So an expensive market doesn't necessarily limit you to the upside. So the question is, does it help you to the downs? In other words, does it give you support? And is it a rallying cry for a company that is cheap relative to itself? Google's probably one and a half to two turns cheap on a forward basis. and that's for a lot of the reasons that we've talked about. So again, relative to itself, not the market. So it's even cheaper to a market that's more expensive relative to itself.

3:30But I think the things to be excited about is that the core search expectations out there are somewhere between 8 % and 10%. I think that's going to be great. What you hear from the street are that channel checks and the check-in on search so far are really quite positive. YouTube, I think, is going to be a standout to the upside, and I think it's underappreciated by the street in addition to the Waymo. And I think that's really what the call here. I think the bar is actually quite low. I think the comps are quite easy relative to what we've seen before. I'd skew long. Yeah, if you don't believe there's an existential risk in terms of search, it's absolutely cheap.

4:00Karen just said 19 times she's right. YouTube, 12 and a half percent now. I think they dominate. You know, it's YouTube's world and Netflix world. So everybody else is sort of vying for second and third place. But the technical setup for this one is interesting. If you go back to this time last year, we topped out at 190, sold off. Then we made an all-time high earlier this year, sold off. Here we are at 190. So for you head and shoulders fans out there, the formation of the shampoo. No, Tim, I've never had that problem. I don't have a dry scalp. You brought it up. By the way, I think Selsun Blue is actually a better product, but I digress.

4:34We're in the midst of one right now. So how do you play this? This thing closes above 195. I think it's going to take that prior all-time high. I am concerned about search. I think YouTube is your tailwind. And you have cloud as your tailwind. I think there is an existential reason to be worried about search. Why? Perplexity, chat GPT, AI. I mean, do you? I don't normally search through Google anymore. Do you? Yes. Yeah, I still do. I do. I use perplexity. I use Grok and a bunch of other. But my first go-to is still Google. I find that maybe it's the younger generation that's searching more with AI.

5:14Kids are searching now through TikTok. So they search through their social media platforms. When I'm looking for things or restaurants now, I actually look through perplexity. And then you can see where it's sourced. But I think that's the real risk. And if that's 86 percent now, where does it go in the next five years? I mean, it's down dramatically in the last couple of years. Doesn't it have any sort of inherent advantage in that it has this, quote, unquote, I mean, if you value the install base on Apple, Doesn't Google in and of itself have a sort of installed base as well? I mean, the default for a lot of people is Google or is Chrome.

5:53You have Gmail. I mean, there are a lot of things that are sort of built into this ecosystem that people are part of already. Well, one of the potential remedies is Chrome being sold. That would be that would kind of be a big deal. I guess. Yeah. And maybe this is a lot about how I search, but I'm not asking search open-ended questions that require a lot of theory. I mean, I'm asking search. I mean, if you garbage in, garbage out. I hear you. Even the ones that don't need a lot of interpretation, I find, are even better because they give you such a drastic amount more of search, and you could figure out, it lists where it comes from.

6:32So even if, as I said before. I think Google's doing that for me right now. Yeah? Yeah. Yeah, and they've made changes, and they're changing on the fly. And I think Google's changing with me. In other words, I don't feel like I'm left out. Yes, I use perplexity. And yes, every once in a while, I'll really ask those very difficult questions of life in an AI format. But most of search really does end up looking for a specific answer. And it doesn't mean that the credibility of the answer isn't critical and the sourcing of the answer isn't critical. But I agree with your point, which is the same reason also, though, I'm bullish on Apple, because I don't think there's anything that's been priced into Apple's role in AI either.

7:11The fact that we're having this debate, though, and that we have revealed that all of us use other search engines in addition to Google suggests that maybe their dominance is, in fact, being chipped away, right? I mean, and that there is a chance that that dominance will continue to be chipped away with every search that we put into a grok or perplexity or, you know, chat GPT. The ultimate test of that would be if Guy Adami is using another. He hardly uses the interweb, so I don't know if that's a good test. Ten years ago, revenue from search was 70 % of their revenue. Now it's 56%. And they're filling it with cloud.

7:45They're filling it with YouTube. But the numbers don't lie, right? Their revenue had a bigger portion of search in it. Again, if you don't believe there's this, and people have talked about it. I don't know where I come down because I think Google will figure it out, and YouTube is a monster and don't sleep on Gemini. But if you don't believe that there are risks in front of them, then it's ridiculously cheap. And again, you get a close above that$195,$200 level, and it's going to be off to the races to new highs. A couple things. To your question, I think people do believe there's an existential threat.

8:17So this 19 times, you back out the cash, is what? Should it be at least a market multiple? I think it should. So that would say if the market's trading at, what, 23 times now? The biggest car of their business has an existential threat facing it. Right. It should trade at a market multiple. No, I'm saying without that existential threat, it absolutely should be a market multiple. Let's just say 25 times, but it's 19 times. So there's six multiple turns that I think are speaking to that. We don't know what the remedies are going to be, the uncertainty of it and how onerous could it be. I think one thing they could do, and I don't think they will do it, is find a way to unleash, unlock the value of YouTube and see what is that really worth.

8:56I don't think they'll do it, but that would be an interesting exercise. But what is the multiple if it had to divest its search business? Well, divest its search or dismantle its search somehow? Yeah, some way where it loses it. We don't know. I don't really know what the hell. But below 19. Yes, I think so. Yeah, okay. But how much below? I don't know. Right? So if we could do that rough math and say, all right, there's six multiple turns of concern here. Yeah, yeah. Right. But if forced to divest, isn't this getting you into a place where you're finally having a proper and a real moment in time to have a sum of the parts conversation about Google's valuation?

9:34Where, you know, if we're doing Google's it's a holding company. I know there's a core part of it and there's a core business there, but it's a holding company. Holding companies trade cheap to the sum of the parts. If we start breaking it apart and chiseling off the pieces and spinning them out, it's going to be worth more than it is today. And I think, you know, we speak a tail risk to me. What is that? Maybe a 10 to 15 percent chance of that coming to fruition. I do a certain extent. That's what it's pricing in. So there's clearly a lot to like here. If you think Google's the next Eastman Kodak, then you sell it with both hands.

10:03If you think they're going to figure it out, it's dirt cheap. All right. Meantime, the S &P and Nasdaq both closing on records. Again, the S &P above 6 ,300, while the Nasdaq briefly topped 21 ,000 during the session. Our next guest believes a rally can keep going. Megan Horniman joins us now. She's the CIO at Verdans Capital Advisors. Megan, great to have you with us. Thanks. How are you? You know, it's funny because I actually, when I read the notes, it sounded like you were maybe concerned about the tariff deadline, which you don't think will be extended. So what happens with the markets there?

10:33We're still on track to go even higher? Yeah, I think, again, longer term, still optimistic. Think that we're not in a bear market here. We think this bull market could continue. But there's a lot of volatility in what we're concerned about, complacency entering the market, especially ahead of these August 1st deadlines. So what are you doing? Because we have volatility very low. We have markets high. And you suspect that markets are in for trouble. So how are you sort of preparing for that patch of roughness? Yeah, so first of all, make sure that where you're positioned is where you want to be for the longer period of time.

11:07So rebalancing may be necessary, especially after you look at such a rapid increase that we've seen since Liberation Day. So make sure that you're allocated appropriately. Look at some of the areas that are not pricing imperfection. So I think that, you know, there's a lot of talk on this call about technology. I think technology growth, some of these sectors are pricing imperfection. They're not considering the risks that are out there. When you look at multiples high, you look at some of the—whether it's technicals, looking at overbought conditions. These are things that we think might upset the rally that we're seeing here.

11:42But we still would view any pullback in the market as a potential buying opportunity because, again, long-term we're positive. But in the near term, be very careful. This market is pricing in the perfect situation from a tariff perspective as well as the Federal Reserve perspective. Megan, when you look at diversifying away from the U.S., there's only been a handful of times where international has outperformed the U.S. for extended periods of time. Do you think this is one of those times right now? I think there's room for catch up. I mean, it's been a very long time that the U.S. has just been completely outperforming the rest of the world.

12:16I think there is room for catch up. So if you don't have international stocks in your portfolio, I think it's always a good time to have that diversification add in. I'd warn that right now they're expensive from a valuation perspective, cheap compared to the U.S. However, the U.S., as I mentioned, especially in that large-cap growth area, is expensive in our opinion. But I do think there is room for the longer period of time that there can be some catch-up. They've been under love for way too long, and I think you're seeing some of that rotation just begin. I think that can continue. Megan, the Fed risk that you speak of, is that Jerome Powell getting blown out, or is that the Fed not cutting rates in the way the market's anticipating?

12:53Not cutting rates. We originally, coming into this year, thought the second half of the year would be when they would start cutting interest rates. We said September. That was pretty much our case. But now, I think there's less than a 50 % chance that they can cut in September. Let's keep in mind, inflation is stuck. I know that everyone talks about how good inflation is going. Yeah, of course, it's gotten much better. But it's stuck here and actually not necessarily moving in the right direction. And the Fed's just not going to have enough information by the September meeting. Even if we go in and put all the tariffs back in place on August 1st, that's not going to really show into inflation until whether it's October, November, maybe even December.

13:33So what's the rush for the Fed? They have the flexibility. The economy's not completely tanking. The labor market's okay, not great, but it's not tanking either. What is the rush? Because the White House wants lower interest rates. Every president wants lower interest rates. So we think they have the flexibility to just remain on hold, see what happens. Megan, in terms of the market, there was a monolith and you've talked about the risks and we've had a conversation about the world out there. Today was a really important day, not just because the S &P went above 6 ,300, but the NASDAQ 100 on a relative high has made a fresh relative high to the S &P for the first time since last July 10th.

14:09I think this is a very big deal for the direction of the market, not necessarily because individual companies underneath it are ones we're going to make a call on today, but because the market itself at this point with, I think, a lot of institutional investment not fully invested is now making a new relative high, at least the growthiest part of the market. What do you think about that? I'd be careful of the growthiest part of the market right now. Long term, of course, technology is going to benefit from the AI evolution that we're seeing here. But in the near term, are the valuations fully reflecting that the upside?

14:41I think they are at this time. I think there still is room for evaluation correction. I think that, as we mentioned, that some of these growthy areas with the high PEs are just pricing in way too much expectation for Fed rate cuts. Once we see that that might be priced off the table, coinciding with the fact that we're not quite sure what's going to happen with the tariff perspective, I think you can see a bit of a evaluation correction. And you mentioned that you're seeing institutional buyers, everybody jumping on this bandwagon. Is that a momentum trade as well? And we've seen what happens with momentum trades.

15:13Megan, great to see you. Thank you. Megan Horniman. Thank you. Burden's Capital. You think we'll go higher ultimately? I mean, rough patch near term? Yeah. And I think that seasonally, the obvious is August through October is the rough season for the overall market. So you have October, August 1st being that tariff deadline. So maybe you see a little bit of back and fill on the run that we've had. But seasonally, just be careful throughout that period. Megan, her points are well taken. I mean, it is momentum. Retail, a lot of people spoke over the week in the amount of retail driving this market now.

15:48So just in terms of valuation alone, things have gotten a tad further here. In the meantime, the Japanese yen strengthening against the U.S. dollar after the country's ruling party lost its parliamentary majority in the upper house election. That is after the party lost control of the more powerful lower house last year. Japan's prime minister vowing to stay on despite his party's defeat. And that's why the yen had that move today. But, Tim, ultimately, what does this mean? You are an international investor known as the ambassador to us here on the desk. I think less ability to push around the bond market and do yield curve control, YCC, in other words, target the long end of the curve.

16:24The BOJ has been very aggressive. So in terms of policy and in terms of also within the government, the support for that is something that I think the market should be wary of. And I think ultimately what does it translate to for us? It translates into higher U.S. yields if JGB yields go higher. You know, this is a case where I think around the world there are similar trends going on, although this is one where there had been the kind of a support. I think this was an expected outcome, but I do think we still expect. I think this was a somewhat expected outcome. But I think the uncertainty really is what's going to happen in terms of the approach to JGBs and how they're going to control that.

16:59And what's interesting, too, is that the stock market is closed. So we don't really have a good read on how it's going to affect asset or how the what the reaction is in asset prices in Japan yet. Yeah, I agree with that. But, you know, I continue to be focused, maybe unjustifiably so, on the currency, which, again, one and a half big friggin' move in dollar yen is nothing to sneeze at. We're seeing it seemingly once or twice a week. And JGBs, I think, 10-year yields are the highest since 08. I think 30 - and 45-year yields are the highest ever. Our market is not pricing any of that in. We've got a news alert here on a potential deal for rail operator CSX.

17:33Morgan Brennan has got the details. Morgan. Hey, Melissa. So not clear whether it's CSX or Norfolk Southern. What we do know, and this is according to a report from Semaphore, that BNSF, the railroad that is owned by Warren Buffett's Berkshire Hathaway, is apparently working with Goldman Sachs to explore a takeover of an East Coast rival. That's according to people familiar with the matter in this report. I've reached out to BNSF, waiting to hear back, reaching out to the other railroads as well. But, of course, this comes on the heels of reports that Union Pacific, which is BNSF's most direct rival in the western U.S., is also working on its own deal to try and acquire perhaps Norfolk Southern to create what would be the first transcontinental U.S.

18:16railroad. So perhaps if you're seeing one look to engage in a deal, the other is also considering that possibility here as well as we see M &A come back perhaps to the rail industry. I'll note that we do get earnings results this week from CSX and from Union Pacific Norfolk Southern next week. In the meantime, shares of Norfolk Southern are up slightly. CSX is up about 4 percent on this report. All right, Morgan, thank you, Morgan Brennan. And when the report initially came out last week on UNP for NSC, it was thought that this could push Berkshire into pushing for a bid for CSX, which would be expensive for Berkshire Hathaway.

18:54Yeah, without question. And you should pull up a Berkshire Hathaway chart. Talk about a stock that's underperformed since April for a myriad of different reasons. However, I mean, the deal, all these deals sort of make sense. I mean, you think about it. Rails have been in play for quite some time. But pull up an NSC chart since Morgan led with that. I mean, we're approaching levels that we last saw four years ago into earnings after having a big run. I mean, this could be the news that sort of sell the news event. We might be looking at it right here. So, right, we might have been the kickoff for consolidation in a prior administration or maybe partially in this administration.

19:27I think at some point that would have been thought of as not doable. Getting a deal, a railroad deal done in any environment is difficult. But but maybe they all think, OK, game on. If you look at transports more broadly, I mean, this has not been this has been awful. This has been ugly on a relative underperformance basis. I think you're at 10 year lows. I think the bar going into the 2Q for the rails is one where I think, look, they didn't have the worst case impact of tariffs. Right. So maybe there's some bit of relief here. I think some of the stocks have reflected that. But I don't know that there's anything that exciting here in terms of the real trends now.

20:03He who controls the rails controls the country. That used to be the saying before we had flight. But now when you look at this administration who's looking inward, trying to build up manufacturing, these could be more important than they've been in decades. Coming up today's biggest market movers, the headlines pushing Verizon, Pinterest, and Cleveland Cliffs into the green and why one analyst says Serebda could head to zero. But first, shares of NXP semi on the move after its latest earnings report. The details and numbers from that quarter next do not go anywhere. Fast Money is back in two.

20:41Welcome back to Fast Money. We've got a news alert on OpenAI. Julia Borson's got the details. Julia. Hey, Melissa. SoftBank and OpenAI's$500 billion AI project called Stargate is struggling to get off the ground, according to a report in the Wall Street Journal, which just posted. Now, the journal is saying that the partnership that these two organizations created to supercharge to the U.S.'s AI capabilities has been sharply scaled back. Now they are aiming to build a small data center by the end of the year, likely in Ohio. We've reached out to the two companies and have not yet heard back. But it's worth noting that this partnership between OpenAI and SoftBank comes after SoftBank committed$30 billion to OpenAI earlier this year.

21:24And remember, this was all announced in a very high-profile event at the White House. Back over to you, Melissa. Julia, thank you. Julia Borson of Note 2. Oracle is down about 2 % in the after-hour session. Of course, Oracle has been bid higher on this hope that it's going to be part of this massive build-out, including as part of the Stargate project. So we're going to put up a longer-term six-month chart of Oracle. It's remarkable what it's done. And it got from being relatively reasonable on valuation to it's hard to make a compelling case for it unless you believe all the hoopla going forward.

21:57So this move absolutely makes sense. It's interesting and it's ironic because one of the reasons that I think Google looks better than it does is some of the insight we've gotten from Oracle. As we've talked about multiple times in this move, almost parabolic for Oracle, the focus on the lower margin mass market TAM business versus the higher margin software stuff, good and bad. Meantime, shares of NXP Semiconductor sinking despite the company beating estimates on the top and the bottom line. Investors cautious on the auto chipmaker amid tariff uncertainty. CNBC's Christina Pertzinevitz got more on these numbers.

22:28Christina. Well, like you said, NXP posted an earnings beat, guidance beat, gross margins beat, and still shares are falling more than 3 percent after hours. Investors are really hoping for a stronger rebound, but Q2 sales dropped 6 percent. And then the midpoint of its Q3 outlook was 3.15 billion. And that's still below last year's levels. CapEx and free cash flow also came in slightly lower than estimates. NXP makes analog chips and gets more than half of its revenue from the auto market, a segment really feeling the pressure from President Donald Trump's tariff push. Those trade uncertainties have hit customer orders and weighed on the stock, which is up just, what, 5 % this year to date as of right now, compared to a 20 % gain for the SMH ETF.

23:09The earnings call will be tomorrow, though, for more details on just what's really hurting this stock. Yeah. Christina, thank you. Christina, parts nebulas. I mean, some of the areas that are hurting, like auto, that's sort of expected. We've heard that from other chip makers here, so I don't know if it's entirely. But the hopes, that's important if it's not matching what people thought. This guy didn't sound so bad, but there's no question Internet of Things and mobile were kind of bright spots here. And should anyone have expected auto to be a bright spot? I don't think so. So I'm a little surprised by this reaction.