Memory Losses Hit Tech… And Will Oil Prices Drop Even Further? 6/23/26

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0:40Get 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. Live from the NASDAQ market site in the heart of New York City's Times Square, This is Fast Money. Big night. Here's what's on tap. Memory loss. Tech tumbling. Names like Micron, Sandisk, Western Digital, all leading the sell-off again. Is this the beginning of an AI unwind or something short-term? It is not just tech. Oil continuing its slide as well.

1:20And billions of dollars worth of Iranian crude oil are now set to hit the market. Could prices be ready to drop even more? Plus, we are all over the after-hours action in FedEx and KB Home. The latest details from those quarters and how your traders are positioning in all those names ahead. Hi, everybody. I am Brian. In for Melissa once again tonight, coming to you live from Studio B at the NASDAQ and on your desk, Tim Seymour, Karen Feinerman, Dan Nathan, and Steve Grasso. Lots to do. Let's start with a bit of a momentum unwind. Investors cashing in on this year's hottest trades. Memory taking a big hit.

2:00DRAM, the Roundhill Memory ETF, shedding 14%. Sandisk, red hot, not today. Your worst performer in the S &P 500. Micron, they report tomorrow after the bell. They lag the NASDAQ 100. The entire broader chip trade also under pressure. In fact, every member of the SOX, the Philadelphia Semiconductor Index, more than down 3%. But some of the most beaten down areas of tech did manage to rebound a bit today. Microsoft rose almost 2%. Salesforce also in the green. And by the way, with that update ended its 14-day down streak, Amazon, fractually higher as well. Other more defensive pockets of the market picking up some slack consumer staples.

2:49Your best performer in the S &P 500 today. Healthcare, higher, some biotech names, which we just talked about on this show last night. Hitting new records. So is this just a bit of a profit-taking in an overbought market? Or Tim Seymour, again, a question we have asked repeatedly, the beginning of something else. Well, it's a combination of things for a market that was definitely overbought. And what was going on overnight in Asia, certainly in Korea, is you had a dynamic where we know how levered up some of the retail players are there. We also know that there's at least there was some commentary that Hynex is actually looking to bring lower price products into the market, that there is some sense that the cycle could be shortened in terms of some new supply.

3:32I think you have a case here where let's not forget that we're now after a 7 percent move in in the socks over or today in today's markets. You're back to where you were late last Thursday. I mean, So this is a move that I don't think anybody's questioning the demand story. The valuations on a forward basis aren't even terrible. But just to put it in context, all we've done for five years is talk about semiconductors. And so if you go back to that October 22 CPI low, which I think was a generational low for technology, et cetera. Since that point to the high yesterday, semiconductors as a group were up 680 percent.

4:09But if you took that same low and brought it just to where we were three months ago, it was only 320 percent. What I'm telling you is that, you know, only 320 percent, but that the move that we've had for the last three months in semiconductors has been beyond extraordinary and unsustainable. So I don't you know, I think the more interesting and probably the more troublesome part of the market is not what memory is doing, is what we talk about all the time with the biggest free cash flow generating companies in the world, Brian, that no longer are generating free cash flow. I think, Dan Nathan, this incredibly important point that Tim Seymour is bringing up.

4:41You know, you look at the South Korean index. You wake up this morning. South Korea was down 10 percent. Yes, it's up 240 percent in a year. The banner there says making sense of today's pullback. So make sense of today's pullback. Well, if you look about just South Korea in general and you could throw Taiwan in there also. So these are economies that are very geared towards those few companies that are driving a lot of the activity economically there. And, you know, you think about the retail investing mania is also attached to it. Right. So you also have these folks, you know, buying a lot of these names.

5:11on margin. And so there's a double whammy that could happen. If you see the slightest pullback in demand, those are going to be some of the hardest hit economies. But you're also going to have a retail investing crowd. And obviously, there's institutional money there, too. They're going to feel that also. So those are things I think to keep a close tab on. Now, here's the other thing. OK, I've been in the markets for a little less than 30 years. I've been trading and watching Micron that entire time. This is one thing I never thought was how I never thought this would have a trillion dollar market cap, never in my lifetime.

5:40I would have like bet you my left pinky 25 years ago that this company was more likely to go out of business than have a trillion dollar market cap. Okay. Another thing that I never thought would happen in Micron is that they would have 80 % gross margin. That's what they printed last quarter. So to Tim's point about the demand picture, it's giving them a lot of pricing power, right? So when you hear though, a company like SK Hynance or Samsung is going to try to compete on price with Micron, well, that's not a great place to be, right? And we've talked about the potential for, you know, some sort of competitive situation as it relates to the high end GPUs.

6:11Maybe it's here. Maybe that's one of the reasons why NVIDIA is going sideways. But the idea that this entire semi trade is going to sit on the shoulders of Micron and the guidance that they give tomorrow is kind of a scary place to be, in my opinion. Well, I think I think it's better that it's traded down so much going into earnings as the bar is lower for Micron tomorrow. But I do think just, you know, these are dramatic moves, a whole index to move 10 percent. That is enormous. But in the context of the move up, given what's happened, how could it not have a day or two where it moves down percent?

6:45So even if you have two days in a row of gigantic moves, it still leaves you not far off from where Tim said, a few days earlier than that. I mean, to your point, to your point, I mean, bring that chart backup of the SMH, because I feel like it should be retitled SMDH with that move shaking my darn head. Oh, OK. Because I thought it was something far different. It goes with Dayton's left pinky comedy. It doubled in three months. An index doubled. That we've been talking about for the preceding five years about how it was doing. It doubled from that point. So, yes. It's just, I mean, I think to your point, and Steve, talk about it as well.

7:25If it didn't fall. Right. That's I feel like we should be worried. So I think, you know, it's coming from perception or relative fall. So when Karen talks about it, you know, when I look at that chart and you say it had a fall, you're falling from twelve hundred bucks to a thousand. Yeah. Like it should fall in our world. It should fall to 400. Right. So that's where I think that it really got interesting on that DRAM level or NAND level. It's a commodities-based business. And Dan said they have 80 % margins. What do they have? What's the 10-year average? Below 25, I thought. It's 33%. Okay. Where's the trough?

8:0529%. Where should you buy it? Probably at 29%. You should be selling it at 80 % margins. Maybe somewhere in the 50 % margin range, you could flip a coin. But these are all overbought. But they've been overbought for some period of time. And they still went up even while they were overbought. So they got overbought bought. Correct. Right? And now everybody watching and listening right now is probably thinking the same thing. Okay, well, I liked Mike Grond yesterday. It's down 13%. Is it now a better value than it was yesterday? Well, did you like it yesterday because it had run up 700, you know, 600 %?

8:39And then you felt like, all right, there's some huge momentum here. I'm going to stay on it until that slows down. Has that happened now? I didn't like it yesterday. and I don't think I'm going to like it tomorrow after the close. But I do like the demand story and I do like the move in semiconductors. And let's be clear, they made new relative highs all the way through to yesterday. And I bet they make new relative highs before the end of maybe this week, if not next. I am sure that the growth that's in this sector and there will be rotation and they might go back to Broadcom and Qualcomm. But you can't tell me the demand isn't there.

9:15And I like the market that continues to see relative relative strength supplies is a market I want to own. But is it? Hold on. Is anybody is anybody questioning Micron's core business or just questioning the fact that the stock has doubled in two or three months? And it's not doubled. We're under supply constraints. It's so now, but it's a commodity product. Right. And now it has a trillion supply demand. So I know commodities. I know Dan wants to wrap it up. So what Tim said, there's demands there, but the supply is going to be growing. Therefore, the stock has to come in. Queue up, Dan. Yeah, so I mean, the risk here is that this is a company that had no visibility about demand for their product going back 16 months ago.

9:55OK, and so you could add all the stock that you wanted at$40, and now the stock is at$1 ,100. OK, so if the company didn't have added people. So have added people. But if the company didn't have the visibility about something that was going to get them from a 30 % gross market, margin, possibly to an 80 percent gross margin, then why would you trust them now with that guidance? And I don't mean that they're going to say anything that's out of school. They have to guide to what they see the demand. But right now, if this is the last bastion of this trade right now, look at the way the hyperscalers, they're the ones who make the data centers, that put the servers in there, that all the components go into, that train the models, and they are basically setting the pricing for compute.

10:31And I don't know if you guys saw Gary Cohn this morning on Squawk and Friends, and he made a really good point, a point that we've been making on this show for a while. I think he's a big fan of the show. He's like, if you think that you can figure out what the pricing is for compute 10, 20 years out based on the investments that are being made right now, then you got another thing coming. Right. And like that's the history of technology. And so what these companies are doing might be perfectly rational for the business and the opportunity set that they see based on the technology. That is the biggest secular change in technology that we've probably ever seen.

11:04But, Sully, I know you want to get it. But it doesn't mean that you want to value these companies on hundreds of billions of dollars of backlog. That all has to come. It all has to come in the future. So before we get to our good friend KP, I just want to ask Steve Grasso, do you think people are buying stock on the core business? And we got the earnings tomorrow night. Or were they buying the stock because, to Karen's point, they liked the chart. They rode the momentum. And maybe that momentum is not broken. And they didn't actually care what Micron did or how much money it made. They were Carter Braxton Worth acolytes trading the charts.

11:38I think they bought it on high bandwidth memory. I think they bought it on that they cornered the market. It's an oligopoly. There's only a handful of players that are in the memory space. So everyone chases all three or four of those players. That's where we're at now. When supply exceeds demand, then it works the other way. It cuts both ways. So is everybody selling the semiconductor index now? Is that what I hear? I'm long in video. I'm telling you, semiconductors are going to continue to outperform the market between now and the end of the year. But you don't like MU? No, but... But the group as a group.

12:13I don't need to rehash the same conversation we just had for 10 minutes. I'm telling you, though, that semiconductors have continued to outperform the market for five years, and I don't think it stops today. Well, guess what? We get to continue this conversation because we're just going to change companies to another one that's a big deal and one whose name I cannot pronounce. Cerebris. That's perfect. This again, like five times. That was it. Shares of the move. The company's first report is a public company. Christina Parsenevilles joining us now on set. And it's hard to make a comparison, right?

12:44Because we don't have anything to compare it to. Precisely, precisely. So I won't compare, even though some are saying it beat on revenue. Revenue specifically came in at$193 million. You strip out the OpenAI stock deal that they had, then it's actually$191 million, which is a little bit higher than what analysts were expecting. They also posted a core gross margin of 47 percent. That's backed by a multi-year deal with OpenAI worth more than$20 billion, plus a partnership with AWS. But we don't really have the financial details of that partnership. But it's the guidance that shows gross margins falling sequentially down to somewhere between 36 to 38 percent.

13:21Perhaps maybe that's why the stock reaction was negative at first. Some are expecting this. to keep up with OpenAI demand, Cerebrus actually has to rent extra space from its partner G42, and that rental cost eats into profitability, hence the drop in gross margins. The CEO saying in a press release that technology, quote, delivers solutions in less time. That's specifically their chip, you know, comparison to NVIDIA, et cetera. And that this, in turn, has created significant momentum with pioneering customers like OpenAI and AWS. It seems to be there are only two right now, and emerging customers as well.

13:53But I doubt we'll get any names on the call. Although this is a growth coming in really at an expense right now. And that's what the market is pricing at the moment. Yeah. Morgan Stanley saying we are not expecting a major surprise. Sounds like we didn't get one. Correct. No major surprise. And Morgan Stanley remains constructive on what they view as a differentiated architecture. That's because we talked about this earlier today on the show. It's because it's a larger chip. The memory is on the chip. Therefore, you think of it like highways, right? Chips talking to each other. sometimes you lose some of that momentum.

14:25No latency. Yeah, but let's not use those terms, right? Why? Because not everybody understands those terms. I feel like often we... No delay. Exactly. Yeah, exactly. So no delay. Big chips. When you have big chips, you have it all on one chip, and therefore you may not lose as much information because they don't have to travel back and forth talking to each other as much. You get it? Yeah, I do. I just feel like we wasted 15 seconds talking about the definition of latency, which I find ironic. We spend like two seconds. We can go back to Micron if you want to. I can chime in on that. Tim doesn't want to go back to the actual conversation.

14:56I know. I'm going to say that. You know, one of the stories of this whole GPU trade over the last few years has been just customer concentration, right? And then, you know, demand versus supply. Is this being viewed as like a decent or reasonable second source, let's say, to some of the GPUs that NVIDIA are making? And I've read every single note. No one actually makes that comparison just yet. If anything, they're just talking up about the deal with OpenAI. And I thought you were going to ask me, what about the customer concentration with OpenAI, considering that's over, you know,$25 billion of backlog from one company.

15:30Nobody seems that worried. Perhaps in the inference stage, as we push into it more, Cerebus will be a bigger player. But I haven't seen as many comparisons coming from experts, with the exception of Cerebus' CEO itself. He was even on stage at Computex making that comparison to NVIDIA, essentially saying that they're better. But we know the giant won't agree with that. That's like a multi-hour chart. Let's bring up like a one-month or a three-month chart. I know the stock has been trading that long, Dan, but the reality is most people have probably lost money on this stock. It's down$100 a share from where it was a month ago.

16:08Yeah, I mean, that IPO price,$185. It'll be interesting to see how some of these IPOs, obviously, this is a much smaller deal than the SpaceX. But like if they can hold those prices, I think that'll have a lot to do with sentiment as it relates to new issues coming to market. What if it breaks below it? I mean, listen, I don't think it's a proxy for anything. And I think to Tim's point, I mean, he's a buyer. I mean, he thinks that the semis are going to outperform from a tax 31. I just say one thing, though, this is their first conference call as a public company. It's really important that they try to set the right tone.

16:41And I'm sure they're very prepared. But you've got to listen to the call. It's really important. Well, that's a critical point. We're seeing Lori Calvacini here. So just follow up on that. Forget about the name. Forget about the company, right? As a longtime fund manager, when you have a first conference call, there's sort of the CEO and CFO and IR people, they're kind of on display. Absolutely. Is this a test of sorts? Yeah, they're on the firing line. Yes, the hot seat is better. Right, it is a test for sure. And we'll see what the analysts ask them. I think this concentration thing is really that's going to come up again and again.

17:16If they have something new to say on that front, that would be a great thing. We'll see. All right. So for more on the markets next move, let's bring in the aforementioned Laurie Calvacina, head of U.S. equity strategy at RBC Capital Markets. And I believe, Laurie, if I am not mistaken, that back in May, which is over a month ago, mid-May, I think it was, you sort of flagged some profit taking in the semiconductors. semiconductors. That was a great call. Yeah, so Ms. Calvacino went to Zurich in London, and essentially I spent the entire week talking to investors who did not want to talk about where the broader U.S.

17:51equity market was headed. What they wanted to talk about was positioning, and so I went into meeting after meeting after meeting where people said, can we just run through the sectors? Can we run through industries? In London in particular, what we found was I I talked to a number of investors who said, I've been in the AI trade. I've been in the U.S. I believe in the AI trade. I believe in the fundamentals. I've done pretty well. Let's go look through other sectors and other industries. And they didn't specifically tell me they were looking to take some money off the table. But that was the implication was what are asking about other things.

18:25Right. A year ago, my guess is the same people in London and Switzerland and whatever. they were saying, Lori, tell me all about AI and micron and semiconductors. Now they're saying we want to move on. And the market has reflected that. Right. And what they were what they were struggling with is if we want to move on, what is the next thing that we look at? So we would talk about, for example, the financial sector. And I talked to a number of people who are like, I've tried the banks or let's talk about health care. OK, I've tried that. It hasn't worked. What we talked about with health care. And I would say this kind of conversation continued after I got back to the States, was if you're looking at health care where the valuations are reasonably attractive, earnings revisions kind of go back and forth into whether or not they're strong or not.

19:07But if you look back since October, when tech outperforms, health care lags. And when tech's had its wobbles, health care tends to outperform. So we started talking about health care as a hedge within your portfolio for those moments when tech might take a bit of a breather. And it was really interesting, Brian, because when I started to talk about it that way, and I'm neutral the sector, right? We're not sitting there pounding the table on it. But when I started to talk about its function in the portfolio that way, you could sort of see people's, like their eyes kind of lit up. They got excited to have that conversation because it was the reframing of the sector and let them understand it might not work every day.

19:42But if I'm interested in this, it can play this role for me. So, Lori, when you look at it, though, earnings always shock the investor. Yeah. Earnings put it on the forefront. So everyone sells these stocks off. You pummel them. and then are earnings going to make them whiplash and say these guys can still make money? Well, here's the thing that we also we were pointing out in Europe and we've been pointing out ever since. If you look at the rate of upward revisions for semis and we do an FY1 and FY2, so this year and next year, this is a good gauge of earnings sentiment. Other people call it earnings breadth, but it's just what's the pace at which we're taking numbers up?

20:14That stat has been very, very high for the semiconductor and semi equipment group. If you look across the Russell 3000. It's at peak levels. Now, in and of itself, you look at that chart like, oh, that's a little scary. That's a little squeamish. The thing I've emphasized to people is you need to see a deterioration in that before you have, you know, sort of a real repudiation of the group. Because if you look back historically, and we, I forget if our chart is 20 or 30 years, you can get stuck at peak levels of upward revisions for multiple years in a row. So, you know, we've told people if there's going to be another sort of leg to this selling, we might see evidence of that if we start to see a downtick in revisions.

20:49We haven't seen it yet. Now, that doesn't mean you get downward revisions to earnings. You get a slower pace of upward revisions. It's the second derivative. All right, good stuff. And by the way, great call. Beck had made the power of travel, the power of getting on a plane and human beings and sort of reading between the lines. And listening to people, frankly, like not just talking at people, but listening. What's that? Oh, it's good advice. Yes, perfect. I like the way you played that. Yeah, it's right up there with the latency joke. Corey Calvacino, who we always listen to. Thank you. Good to see you all.

21:18You're very welcome. Have a nice day. Sorry. Coming up, speaking of non-AI names, Dan, how is FedEx doing? The details from their latest quarter with Frank Collin Next Plus. Buyers, they're back into SpaceX, at least today. So what now? And gold, will anything stop it from keeping going down? We are back right after this.

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22:46And 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. All right. Welcome back to Fast Money, everybody. It's not just all about technology. FedEx shares, They're down 6 % right now, despite the fact that the company beat on both the top and the bottom line. So let's bring in Frank Holland to try to figure out what's going on here.

23:22Frank. Hey there, Brian. Those beats were strong, but there was also a pretty big miss. That was margin for FedEx Express. That includes ground and air delivery. Margin came in at 8.9 % compared to the estimate of 9.2%. And margin is proxy for network efficiency. Investors may also be trying to figure out the guidance provided by FedEx as it transitions to a fiscal year that matches the calendar year. The guidance provided for essentially the last seven months of the year post FedEx freight spinoff is 1690 to 1810. Our data team says that's not comparable. At least we're not comparing. I know you have analysts coming up.