Nvidia & Walmart Trading At Record Highs, And Trump’s Admin Taking Shape 11/19/24

0:00The super heavy booster at the launch tower. as well as... 9, 2, 7, 6, 5, 4, 3, 2, 1. Welcome to Fast Money. You're looking live at SpaceX's Starbase in Brownsville, Texas. Elon Musk's company just launching its sixth test flight of its Starship vehicle, its super-heavy booster. President-elect Trump among those in attendance, along with Elon Musk. Morgan Brennan is monitoring the flight, and as it gets set to land, she will join us. Fast Money takes off right now. Live from the NASDAQ Market Sight in the heart of New York City's Times Square. Here's what's on tap tonight. Two market heavyweights on our radar today.

0:38Walmart surging to records after its latest earnings. And NVIDIA finding momentum as it gets ready for its report tomorrow. What you need to know about both those moves. Plus, a biotech breakdown. The health care stock's taking a hit on the president-elect's health department pick. But is the sell-off overdone? We'll talk to one top analyst. And later, Netflix and Thrill. Can anything stop the streamer's red-hot run? One of our traders gives their pick for a clean Trump trade. And could Kim Kardashian and her new friend break the Internet? I'm Melissa Lee. I'm going to you live from Studio B at the NASDAQ.

1:09On the desk tonight, Tim Seymour, Karen Feinerman, Steve Grasso, and Lori Calvasina, head of U.S. equity strategy at RBC. Welcome to Lori. We begin with two big stories tonight. Walmart hitting a fresh all-time high after raising its sales forecast for the full year on strength outside the grocery aisle. We'll get more on that in just a moment. But first, NVIDIA shares popping nearly 5 % and closing just$3 shy of its own record. The move comes ahead of its earnings report tomorrow night. Shares are up 17 % since its last report. Should we expect more gains for the AI darling? Wall Street certainly expects more gains.

1:43There have been hiking the price target, hiking estimates going into this number. And look, we have, for Pavlos' dog, we follow this. We've been trained to expect this. The question is how big of a beat. Karen has been saying this. We know it's going to be a beat. I just get back to where I look at the multiple on the stock and where the growth is and where the growth is at least very comfortably to me until the end of 26. Everything we got out of hyperscalers, everything we know about CapEx, everything we've heard the company reassure us. And unless the company who I think at times has been overly conservative, if you think about what they've been telling us each time, why wouldn't you believe them when they talk about production issues?

2:17When you think about where GPU capacity is and ultimately where there is a constraint and where you think about both consumption and where we are in terms of building out power and data in this country, I'm going to just hold my nose and say I think the stock's going to do OK tomorrow. I don't expect it. It doesn't need to rally 10 percent. It needs to hold these levels. White Bush says expect another drop the mic quarter. That's quite a setup, Grasso. Yeah, it sounds like it's set up a little too high bar, I would say, for them. And eventually it's going to not have a great earning cycle. But if you think about it, who are their top five clients?

2:54And I bet you 80 % of those top five or eight clients are making their own chips. You have now a delay on top of a delay. You have an overheating of the Blackwell chip. There's a lot of headwinds that probably can be penetrated. They have 85 % market share still, but it's theirs to lose. So I don't feel comfortable buying it here. I'm going to stay static on that. There have been some doubts about Blackwell and whether or not we're going to see some slippage in the quarter in terms of whether it be production delays or overheating concerns, things like that. Well, Tim talked about that. That's not a problem in that it's the demand that's a problem if there's a problem, which I don't think there will be.

3:37But the bar is getting higher. I would have sort of preferred to have be lower. So on today's strength, I sold some upside calls, used the money to buy some downside puts, just because of the way the skew is that people are far more bullish than bearish. So you could get a put much closer to the money than you can. That sounds so sensible, by the way. Are you kicking yourself at me? Tomorrow morning, tomorrow morning, there's time. You can do it tomorrow. It might even be better tomorrow. I think it went out a little worse than where. Except now everyone's followed Karen into this trade. Right.

4:06So, you know, I hate when the bar goes up. But I do still think we're in early-ish innings. Not that there couldn't be some sort of hiccup. That's only up 200 % for the year. It's not a lot, right? Yeah, it's nothing. I mean, the story is still very much intact. I don't know what ends up being the right valuation. But even with that option trade, net-net, I am long going into this. Right. How important is this for the overall market? It's very important. I think it's very important. And look, you know, like I think a lot of other people, you know, Recently, I've been sort of inclined to look for the broadening trade and fade some of these big names.

4:40I will say with these big names, I am trying to sort of look through any one earnings print. What I am generally seeing in my data is that even though the value trade kind of fights back, the mega cap growth names keep coming back and showing their earnings dominance. And, you know, I started to get questions on stagflation recently as people have sort of been debating, is inflation coming back? We're starting to get some concern that the Fed's not going to cut quite as much tariffs, et cetera, et cetera. And these mega cap growth names, you know, go to secular growth when cyclical growth gets stuck.

5:11And so I can see sort of the macro, you know, sort of tailwinds coming back to these secular growth. Oh, so the defensive trade comes back into play, the defensive element of these larger cap names. I think so. If you think, you know, we're sort of looking at interest rate pressure and inflation coming back, typically when GDP is sort of squishy. So not negative, but below 2 percent, that's when growth and large cap tend to outperform. So, you know, macro tailwinds could be returning to these, despite the fact, you know, the crowded positioning and the valuations don't look great. We have to take the growth, not just in terms of the revenue and the addressable market that we all know is going on, both in their core, you know, in the AI world, but also their core GPU.

5:46But think about this was a company that made 39 cents a share in 22. So the final full year number was 39 cents and they're expected to grow at five bucks a share in 27. So the profitability of this company is not only up more than, you know, what is that, 14-fold, 15-fold, but it's a dynamic where I think we get the sense that their ability to hold margin for the next few years is there. That's why when I look to the out year and I see a 30 times multiple and I look at it relative to the peers, peers within that semi group, I mean, if you're going to own semis, which one are you going to own?

6:18I mean, really, I mean, I think a lot of other boats have been pulled up by this tide. And I wouldn't be, you know, I certainly wouldn't be chasing some of the ones that we question whether second or third place. And we know who's, you know, not even in third place anymore. And it begins, their ticker begins with an I. So I just, I like the earning story. I like the multiple, but I like the margin story to be something that can hold here relative to the peers. Incremental dollars at this point, Karen, to NVIDIA or to a Dell? Dell. Dell, yeah. Yes. Just, I mean, the valuation differential is so big.

6:51although clearly they are very correlated. All right, here we go. Back to our breaking news, we mentioned at the top of the hour, SpaceX attempting its sixth test launch of its prototype Starship vehicle. SpaceX CEO Elon Musk is being joined by President-elect Donald Trump. Morgan Brennan is with us now as the rocket gets set to land right now. Morgan. Hi, Melissa. That's right. So this is the sixth test flight of Starship. And what you're seeing on your screen right now is that super heavy booster, which is part of what makes the Starship system the most powerful rocket system to ever fly, coming back to land at Starbase in South Texas.

7:31Now, what's on your screen right now is the Starship vehicle, which is doing a suborbital flight, and it's going to test some different maneuvers. It's going to test a Raptor engine in space and do some other experiments before it lands in the Indian Ocean. That's what's on your screen right now. But the other piece of this, and very signature to SpaceX, is this testing of reusability. So for the super heavy booster, we were looking for a landing there. I don't see it on the screen.

8:04But that was a key part of this test as well. So, of course, as you mentioned, President-elect Trump is on site in Starbase for all of this, which really signals how this incoming. And there he is. You can see him on the screen with Musk. And actually, that is General Chance Saltzman, who heads the Space Force side of President Trump as well, the U.S. Space Force. They are on site. It really signals what the space policy push is potentially going to be under this incoming administration. The fact that there is an expectation that national security from a space standpoint is going to ramp, that the Artemis lunar program is now going to ramp to bring astronauts back to the moon, and that potentially we see a plan to go to Mars within this next four-year term, too.

8:59So that is Starbase on your screen right now. And it looks like I'm doing this in real time, but trying to assess here the landing of the booster. But I will if you want to come back to me in just a moment, I'm going to listen in. Yeah, it looks like something landed in the water would have been the super heavy booster that would have splashed down in the ocean, presumably, Morgan. But, yes, it's a difficult thing to decipher real time as the shots keep switching back and forth. Presumably, Morgan, though, I mean, given that Elon Musk is so within Donald Trump's orbit, if you will, SpaceX will benefit and could increase its government contracts.

9:46Potentially, I think you're going to see that happen with all of commercial space as space policy is expected to, you know, sort of. And by the way, that's particularly on the national security side, but that is a process that's been going on through a number of administrations now. It does look like, to your point, yes, the super heavy booster has splashed down in the ocean. So this was not a successful catch by those metal chopsticks at Starbase. But keep in mind, this is a test flight. This is a sixth test flight. And what Musk and SpaceX are doing with Starship is basically unheard of. So this is a vehicle that is very, very powerful.

10:20It's been designed to be fully reusable, which is the holy grail of spaceflight. Nobody's been able to do that before. And when you see these attempts at landings, no one else is doing these types of attempts at landings with rockets. We obviously know the Falcon Heavy does them regularly. We know, I mean, the Falcon 9 as well as the Falcon Heavy. So it doesn't look like that part was successful. But now you've got to watch Starship itself and see how those tests in space go. from here. But all of this is part of that iterative process that SpaceX goes through as it does designing vehicles. All right.

10:57Morgan, thank you. Morgan Brennan. Let's get to Walmart now. Shares ripping to another all-time high today. The retailer lifting full-year revenue guidance after being top and bottom line estimates in its latest quarter. Walmart seeing gains in discretionary spending and home deliveries and even saw a bump from holiday shopping for more on Walmart's strength. Let's bring in Bill Simon, the former Walmart U.S. CEO. He is now on the board of Darden Restaurants. Bill, great to see you again. Hi, Melissa. How are you? I'm good. By all accounts, this is a strong quarter across the board. And what was, you know, interesting was the continued gains in the higher income household.

11:31I remember you saying way back when that those gains might be difficult to hold on to as the economy improves, as shoppers return to their normal habits. Could it be different this time around? You know, you're right. I mean, historically, you know, they keep a percentage of those customers they gained, the high-income customers, but the vast majority of them sort of migrate back to service and, you know, it's kind of a premium product when the economy allows them to. So the fact that they're sticking now sort of suggests one of two things. One, that they're not ready to move back yet, or two, that Walmart got a good shot at them and kept them happy.

12:12And that would be a real monumental positive change for them if that would be the case. Bill, it's Karen. Thanks for being on today. So furthering that point, the e-commerce sales were really strong. And I didn't see the data. I don't know if you would know the data or take a guess of how much of those e-commerce sales are from that wealthier shopper, which I think it might be stickier once you sort of are used to doing it and it maybe maybe replaces Amazon or you do it alongside. Do you have a sense of how that shopper figures into e-commerce? Yeah, I read through the report. It didn't give you that data point specifically, but it did say that much of their gains in e-commerce were from an improvement of the grocery home delivery business.

13:01That's debatable whether it's going to be the high end customer or not. I mean, it's primarily a price-driven customer, but so many more of their customers, as they indicated in the report, are paying extra money for premium delivery service, which would support the point that higher-end consumers are behind more online from Walmart and maybe providing Amazon with a little digital competitiveness. business. You know, Bill, one of the reasons why we love to have you on is because one might think that you would be biased to Walmart, always preferring Walmart over Target, but that has not been the case.

13:35And so I'm wondering, when you think about Walmart's valuation, and you think about historic PEs, do you say Walmart is much more expensive than it has been historically? Or do you say, you know, Walmart isn't a different business model now. It's got Walmart Plus, it's got subscription revenue, it's got advertising revenue, it's got a DTC business. And so therefore, the valuation should be higher. We have to re-rate Walmart and stop comparing it to the historic PEs. I think you're right, Melissa. I mean, like if you just evaluate them as a retailer, there's no reason that the valuation that they're holding currently would apply.

14:08You know, in fact, they mentioned again in their report, probably the third or fourth time, that they're approaching profitability on their e-commerce business, which means they're still not profitable. And so they've been pumping money, capital, CapEx, operating loss into this business for going on 10 plus years now. And maybe they're starting to see some of that impact. And the valuations of a digital company, a digital business are substantially higher than the physical businesses. Because if you compare category by category, Walmart's physical retail performance to Target, they're not dramatically different.

14:46In fact, they're really quite similar. The differences in their result are Walmart has a much more substantial digital business. It has a much larger food business than Target, which is growing at a higher rate. And Target, when they did their deal with CVS a few years ago, kind of really got out of the pharmacy business, so to speak. So those three categories are providing substantial growth and value to Walmart now and Target's lagging. Hey, Bill, it's Tim. And so but I that's kind of where I wanted to go with this, because that lag in Target seems like an opportunity to me. I mean, ultimately, what we're seeing from big box is an opportunity to re-rate.

15:26And we're seeing it. I mean, Target hasn't had the ability and they certainly haven't made the same investments in DTC and digital, but they've made many. And to the extent that we're looking at a multiple for Target, that kind of is historic, as in in line with history, 15 times forward, maybe maybe, you know, typically is traded 12, 13. But ultimately, this is a stock that still, I think, has been a prove-me story. And so get back to your bullish target view. And on relative value, I want you to weigh in again then at this point, because I feel like Walmart is pulling everybody up, even though Walmart is the one at the head of the class.

16:03I love Target. Target's a great company. They always have been. When I was competing against them, they were great. Brian Cornell over there done a really terrific job in a difficult circumstance over the last couple of years. One of the most optimistic things and the thing I'm going to be looking forward to at their earnings release tomorrow is, you know, Walmart and, by the way, Sam's Club reported for the first time, I think, in 11 quarters, some buoyancy in the general merchandise side of the business. And Target has traditionally dominated that segment. They provide a better quality product.

16:37Their margins are better. just in general. And that business has been so tough all across the retail landscape. If we're starting to see a rebound in these discretionary general merchandise categories, and we see that in Target's business tomorrow, then we'll know it's really, really broad in its application across the market. If Target doesn't deliver that tomorrow, and we continue to see what we've seen from Walmart, then I would say Walmart's really separating itself from Target. But I believe that you're going to see Target grow, show some general merchandise growth. And I do think that that means them a relative opportunity in the market.

17:14So one word answer, Bill, would you rather Walmart or Target? Oh, that's such a loaded question today. I mean, on the heels of those results from Walmart, it's hard. There's literally nothing that you could dislike in that, except maybe some, the inventory thing, which I thought was a negative inventory. They're so good, and they're so well-valued, and they're doing so well. I'd have to go with Target because I think there's a bigger opportunity there right now. Very good. Bill, thank you. Always great to see you. You bet. Bill Simon. All right, Grasso, same question to you. Always nice to hear what Simon says.

17:51Go ahead. What? Walmart or Target? Target is up 10 % for the year, and Walmart's up 65%. The catch-up trade is going to be Target. Obviously, Walmart is the one that you put at what a PK used to say, put it in your sock draw, put it in your top draw, put it wherever. Keep it there. That's your forever trade. Target's probably catch-up. It's interesting to me that normally Walmart reports earnings and Target sort of follows along. The stock does. Today, actually, Target closed down. So it's maybe that question that Bill's talking about, is Walmart keeping that customer from Target? But, oh, my God, the valuation dispersion now is so wide that it sort of makes me feel like a target.

18:31That wasn't a one answer. He did not give you a one answer. It was not one answer. But, you know, it's his bill, so I allow it to happen. Respect that. You don't have to answer the question. I'll mark it down on my notepad, so next time I'll keep him to it. But just quickly, Lori, does Walmart tell you about the health of the consumer, or is it sort of an outlier because it's such a good executor? It feels like an outlier to me. I mean, we had other retailers that reported and didn't see, you know, sort of the same spectacular resilience. And I think, you know, as I'm sort of going through some of these today, I'm just wondering when and if we get tariffs, how are companies going to be able to navigate through those?

19:04And what does that do to the health of the consumer then, right? Does it keep these consumers that have migrated, you know, to these places where the costs or the prices are going to be lower or do they just stop spending altogether? And I think that's kind of the big question on my mind. Doesn't answer your would you rather question. But, you know, it does sort of make me think about the next part of the story. And I don't know that we got a lot of color on that today. Coming up, taxing issues, the headlines that had tax prep companies into it in H &R Block sinking today, and what it could mean for you on April 15th.

19:33But first, we're biting into food stocks as Health Secretary Pick RFK Jr. advocates some big changes to big food. The proposals he's looking to make and the names getting crunched don't go anywhere. Fast Money's back in tune. Welcome back to Fast Money. Netflix hitting yet another all-time high today. As the company said, 108 million people worldwide watched Friday night's Mike Tyson-Jake Paul main event. Viewership peaked at 65 million concurrent streams, globally making it the most streamed sporting event ever. Wow. And look at that stock. Despite the technical glitches, Karen, despite the concerns that this will plague also the NFL games on Christmas.

20:13Stock doesn't care. No, it doesn't care. It was down briefly the day after when the talk of the technical issues and that the fight itself wasn't particularly. Although that undercard with the women, I never watched women's boxing. I happened to watch that. That was kind of crazy. But I'm long Netflix. I sold some calls against it, which turned out to be a terrible sale. I really the valuation is very stretched, but I love their competitive position. It's so good. I mean, if even with the streaming issues and it not being great, this is the response. I mean, this is something powerful, live sports, or entertainment, as you pointed out that it was.

20:49Sports entertainment. They've also got the extra booster of a very strong content slate towards the end of the year. They've got Squid Games 2. I know that's your favorite, Tim. Yeah, I'm all about squid. And I think the fact that we just set some records, whether we're calling a sporting event or not, it shows you the power of the platform and where that platform can draw people in. And we haven't even begun to scratch the surface of what Netflix can do. But what we've just begun and we are well into is the cash flow generation ability of this company and the fact that they're going to earn 30 bucks a share by the end of next year, which is five times what Disney's going to do.

21:24And I realize it's apples to oranges at some point. But right now, the margin on that business, they're doing it at such a higher margin than everybody else. As the top line grows, the profitability grows. At some point, they're going to start giving money back to people. They don't need to have the same content investment. They don't need to have the same investment in their infrastructure. And I think it's actually going to be a yield play. And the ad tier expected to be the primary revenue generator by 26. That's huge. You know, the biggest takeaway for me is they didn't charge you for the fight.

21:50Do you remember when we were growing up, you had to pay 60 bucks, 70 bucks, whatever it was. HBO. For 90 seconds of a Tyson fight when he fought Spanx. And this one, everyone's cord cutting. This is becoming your cable. You don't need anything else. So you have, if they put in now local news, they have live sports, they have streaming, they have everything else. They have the ability to raise prices yet again. It's very hard to sell a stock with that type of launching pad. Meantime, President-elect Donald Trump's pick for health secretary could have a big impact on the food industry. A number of those stocks hitting 52-week lows today.

22:28Robert F. Kennedy Jr. has proposed restrictions on additives like artificial dyes and high fructose corn syrup. He has also opposed sugary drinks being included in school lunches and food stamp plans. Bernstein analysts now listing a host of companies that use food dye in their products, from Kellogg's and General Mills cereals to Kraft Heinz and Hershey's snack food. Soda makers like Pepsi and Coke also coming under some pressure. The stock's all down since the RFK Jr. announcement last week. And what's interesting, Lori, to me is that this had long been, you know, a staple sector. It is the reliable sector, and here it is being under assault.

23:02Yeah, and look, I think this is a sector broadly, and an industry in particular, that's just had a lot of problems. And, you know, it's been cheap on my model for quite some time. At some point, staples got down to two standard deviations relative to the S &P. And I've been staying very close to my food analyst, Nick Modi, on this one. And he's been very negative on the fundamentals. And I think they've just been completely, you know, sort of out of sync with what's going on in this country in terms of pricing, just really, really tone deaf in terms of continuing to just jam pricing down. And, you know, this is just the latest thing to come in and hit it.

23:33So it's a cheap sector, but I think it's cheap for a reason. And I think this just adds to uncertainty in a place that's been pretty difficult. To Laurie's point, General Mills peaked in September. That's a long way away from the election. So they had a host of problems prior to RFK. And if we're going to the European model, there's a lot of things that could be sold in the United States that aren't sold with the same ingredients in Europe. So this is not Armageddon, but they've had a world of problems already way before the election. By the way, I just, you know, if we're going to the European model, isn't that a model with a lot more government and a lot more intrusion?