Nvidia CEO Weighs In On White House Tech Meeting… And An Ominous Sign For Retail Description 9/12/24

0:01Live from the Nasdaq market state in the heart of New York City's Times Square this is fast money Here's what's on tap tonight. Jensen Huang on the record. All the headlines from the exclusive CNBC interview with the NVIDIA CEO straight from his meeting at the White House. What he had to say about the rollout of their highly anticipated Blackwell chip. Plus, happier meals. McDonald's extending its five dollar value menu until at least the end of the year. What it'll mean for the company and how the competition stacks up. Plus, a Moderna meltdown. The guidance that sends shares to 10-month lows.

0:30Roach's weight loss pill raises some concerns over potential side effects. And is it too early to start the countdown to Christmas? Sure. Never, never, Guy Adami. The latest read on how holiday sales could pan out this year. I'm Melissa Lee coming to you live from the studio of Vietta Nasdaq. On the desk tonight, Tim Seymour, Guy Adami, Dan Nathan, and Steve Grasso. We start off with two big stories tonight. First, McDonald's extending its$5 value meal from the summer into December at most of its locations. The fast food chain looking to win back customers with discounts as diners grapple with persistently high prices.

1:04But we start off with NVIDIA CEO Jensen Huang and other top tech execs meeting with White House officials to discuss AI's energy use. Our own Megan Casella spoke with Huang in an exclusive interview right after that meeting. Megan. Hey, Melissa, that's right. So Huang and other AI executives from Google, Microsoft, Anthropic, OpenAI, they were all at the White House today to talk energy needs for AI. The goal was boosting public-private cooperation here to make sure that energy and then some technical issues like workforce and permitting, that they aren't blocking the build-out of AI infrastructure in the U.S.

1:35When we caught up with Wong after the meeting, he talked about the new industrial revolution that we're in with AI. On energy specifically, he said that while AI models take a lot of energy to train, they can also save a lot of energy once they are in use. We also spoke about the company's Blackwell chips. As you mentioned, listen to this. And so each generation reduces energy consumption, increases performance, reduces cost. And so we're in a hurry to get to Blackwell. We're full volume production of Blackwell. And every company in the world is chomping at the bit for us to ship it. Melissa, I also asked if there was enough money behind AI infrastructure at this point.

2:16And he sort of said, well, if the U.S. doesn't have the money, then he doesn't see any other nation that could take better advantage of this technology. Melissa? All right, Megan, thank you. Megan Casella and NVIDIA has had a nice couple of days here, Guy, and resumed its upward move. Yeah, yesterday we talked about the powerful reversal in the S &P 500. We said, you know, if you see it to the downside, we're going to talk about it. Well, we saw it to the upside yesterday. Steve's been talking about sort of if it got back through 110 and a half, I think that's, I want to say the 100-day moving average.

2:44I might be off by a hair, but, you know, it would be a net place to sort of get back in on the long side. And he's probably want to be in spot on. Jensen's telling a great story. People are excited again. The fact that it held those lows like a champ is encouraging, and it sets it up well. With that said, you know I'm still a bit of a skeptic in terms of a number of different things, not least with valuation. And, you know, I think that SMCI story is still out there in the ether. But right now, technically, it looks pretty good. It's been almost an 11 percent move in the Semiconductors Index, the Sox, the Philly Sox, whatever you want to look at the SMH in four days.

3:18So that's the part of the market that if you are looking for the market itself to pick up and go again, you need to have you need to have that. And I would argue that the CPI number this week and some of the other supporting inflation data is very mega tech friendly. So if it's a little bit hotter, if it's a little less pressure on the Fed, that's actually very good for tech. And I would go back again. I do this a lot. I feel like lately, because that July CPI number, if you look at the underperformance of semis and mega cap tech, a lot of it happened that day, a day when you thought, boy, this gets the Fed out of the way, because, in fact, it was a great inflation number, meaning there was no inflation or there was less inflation.

3:55So it's fascinating. The intraday move from yesterday, guys talking about this is a powerful move. It's 190 S &P points. And it's actually a case where it's largely been tech led, even though I know today you had that breadth. So is the macro enough? And I'll go to you, Dan Nathan. Since you're in San Francisco, you're at the Goldman Sachs Communicopia Conference where Huang spoke just yesterday. Is that enough to offset sort of the waning enthusiasm, it seems, for AI in general, NVIDIA specifically? Barron just had an article a couple of days ago citing how many shares institutions are selling.

4:29Fidelity reduced its stake by 19 percent. Citadel Advisors reduced its stake by 93 percent. T. Rowe, Bailey, Gifford, they all cut stakes as well. Yeah, it's interesting. I think the most controversial thing this week as it relates to NVIDIA is that Jensen Wang at the White House today not wearing the black leather jacket. And what is that saying about the future of this stock? No, I'm just kidding there. It is interesting, though. And I'll just say this as I think about like some of the commentary in and around the conference yesterday and the conversation that he had with David Solomon. I don't think there was that much new there.

5:02If anything, when you're talking about some of the customer demand and the tension that he spoke to about customers looking to get this Blackwell. So from here on out, the story is he just said they're in full production. It's just how much supply they're going to have for how much demand. I think the real story yesterday was the news from the information that Meta, one of their biggest customers of NVIDIA, is working on this 100 ,000 GPU cluster. And it just speaks to and using the H100. So the existing iteration of this GPU, that's what really got NVIDIA going yesterday. Just quickly on some of the commentary, I probably talked about 15 investors into your point, Mel.

5:41Those are large mutual fund complexes that are selling. But the hedge fund people are also kind of skeptical here from what I could take. That was almost nearly universal. That's in the near term until you hear more about use cases and ROI. And so when I look at the chart and I look at the price action, I see a series of lower highs. This might be kind of tapped out in the near term, in my opinion. And so from a technical basis, and then you take the selling by institutions, and then you take the selling by Jensen Wang, and you say to yourself, I don't think this thing is going to make a new high anytime soon.

6:16Grasso, how have you been trading NVIDIA lately? so it was back basically a guy you know talked about that 100 day moving average where i said i would rather not get back in until it was above that average and for me it was a buy above 110 but now that 100 day moving average is 112 not to get too confusing to the people watching but when you trade this much higher this quick you have to look at the other moving averages now so you got the 50 day is 117.75. If you're in it now, you're going to use that as you're out. That should be your stop loss because you've made money from 110 all the way back up to 120.

6:59Now you want to guard those gains. The macro is exceptional right now. The market is doing well. It feels like there's never going to be another down day, but we all know that down day is coming. September, worst day for semiconductors and worst day for the indices. So let's just see how we ride out these last two weeks. But I would keep a short leash on NVIDIA if you're long right now. How are you feeling about it, Tim? Does macro Trump waning AI enthusiasm? I think it does here. I think the Fed's always the most important. I think on a day when you're using the metaphor of the next industrial revolution outside of Washington, that's a metaphor that's for Washington.

7:40and it's not for Wall Street. I mean, we kind of know what's going on, and I don't think there's anything different that the street hasn't, frankly, priced in here. I think, though, NVIDIA still is so far ahead. I think the price action here has been such that clearly there are buyers of dips. But the question about growth, I would bring it back to today, and I realize jobless claims and continuing claims are like microscopic points that are very noisy on the course of judging the labor market, but they don't align with a job market that's printed the last couple payroll numbers on the first Friday of the month.

8:12And I think that's part of where, again, it's the environment that the macro for the market and for the Fed and for, sorry, guys, soft landing, you know, no landing, I believe, particularly by Goldilocks. This is, to me, also the part of the story that's allowed passive investors to pile in. And I think that, you know, today was one of those days. Eight minutes in the show. Yeah. Holiday shopping. Countdown to Christmas, which you love. We could get Hump Day in there, too, if it was yesterday. No, you can't. I've already exercised enough from yesterday's Mets victory. I'll say this quickly, though.

8:44You know, he's telling a great story, he being Jensen. I get it. And yesterday he mentioned how$5 you're going to get back for every dollar you spend. Right now, the best case scenario that I've seen has come from Walmart and Facebook in terms of their ability to monetize. Nobody else has really proven anything yet. So there's still a lot of hopium in this trade. And I think Steve's numbers continue to be spot on. And is anyone really going to give us that number? No. And there are other places that, again, we have tried to peripherally play AI. And the utility sector, I think, is, again, another one of these places where it's alive and well, whether it's WEC, whether it's Southern Co., whether it's NextEra.

9:20I mean, I think the utilities in terms of those that are best positioned and actually have a role in data center demand, that's been a great trade. All right. Meantime, McDonald's loving it. The fast food chain extending its value meal for a second time. The deal was originally slated to expire in August, but now will go until the end of the year for$5. Customers can get a McChicken or McDouble, four-piece chicken nuggets, fries, and a drink. Yuck. That's a lot of— Why yuck? Why yuck? Don't be a hater. America loves McDonald's. CNBC's Kate Rogers is more. Hey, Kate. Hey, Melissa. As you said, McDonald's will be extending that$5 value meal through December in most local markets.

9:56The company said now roughly 80 % of local markets are extending the meal deal, which, as you said, includes that McDouble or McChicken sandwich, small fries, four-piece nuggets, and a small drink, all for$5. Votes on this meal extending are still ongoing, so there's the potential to see additional participation from franchisees confirmed in the coming weeks. Joe Erlinger, president of McDonald's USA, said in a statement, quote, Together with our franchisees, we're committed to keeping our prices as affordable as possible, which is why we're doubling down with even more ways to save. Value, as we all know, has been a key focus and theme across the restaurant sector this summer, with companies from Burger King to McDonald's, even Starbucks, getting in on those$5 bundles to caption the attention of consumers.

10:36Starbucks had that pairings offer. That was for a limited time this summer. Burger King's runs through October. Taco Bell also has a$7 meal box that's available. After a challenging second quarter in July, McDonald's executives told restaurant operators and analysts post-earnings it would be refocusing on how to recapture consumers with deals as they push for an extension of the$5 meal platform. And as you said, now this is the second time that they've done that through the end of the year. Back over to you. Kate, in general, Once a player like McDonald's extends to December, is the pressure on for the rest to keep their value meals in place?

11:08Certainly. And I think, you know, in just about a month when earnings season kind of kicks off for the restaurant sector, we're going to find out, you know, who's really nailed it here and who's working in terms of the$5 platform really resonating. McDonald's did say earlier in the summer in a memo that we obtained that this was testing well with the low-income consumer, and that is the cohort that they were losing and really need to get back. So we'll see if it's working. All right, Kate, thank you. Kate Rogers in San Francisco. Let's bring in now Wedbush Securities, Nick Setien. Actually, we don't have Nick quite yet.

11:36Okay. But we will talk. I like Nick. I know you're disappointed. I am disappointed. We can do this here. We can do that for now. We're fine. Because it's been quite a bounce in shares of McDonald's. It's been an 18 % bounce, I think, in 35 some odd sessions. And if anyone is surprised that they extended this$5 meal is crazy. I mean, this is what they do. This is the program. And the sense is I'm getting from the analyst community, and we'll hear this from Nick soon enough, is to what extent are July and August same-store sales comps out there for the street too conservative? Plus, throw in, guy, you're a big Crocs wearer.

12:06Apparently, starting in two weeks, there's going to be a Crocs keychain's promotion in your Happy Meal, which many people believe is going to drive traffic. I know it's certainly going to get the Adami family there. You're going to get Happy Meal now? That's projection. That's the highest level of projection, number one. There's nothing wrong with, like, a Crocs keychain. It doesn't like a Happy Meal or a good keychain. Listen, you know my order at McDonald's. We've talked about this a number of times. What is it? Is it a cheeseburger? Five cheeseburgers, large fry, medium Coke. Five cheeseburgers?

12:31The pickles are fine. Come on. What do you mean, come on? What are you, 20? Come on. No. If you go back and look, this is one I actually think we did a good job. You know, in January it topped out. As it started to decline, we said, okay, you know what's in line? That October low. Put up a chart from last October. You see 245. Look at where we traded down to on July 1st. Look at where we held. The problem, of course, now is we're right back to those prior all-time highs. So now the stock needs to prove itself, which I think it will do in the earnings. I think they release third week of October, something like the week before Halloween.

13:04So I think you ride the momentum here in MCD. All right. Now let's bring in Wedbush Securities' Nick Setien for more. He covers the restaurant space. Nick, great to see you. Thanks for having me. When you heard that McDonald's was extending, did you get more optimistic about earnings and revenues for the year? Or what was your initial reaction? Because there's a sort of a give and a take, obviously. I mean, I would imagine that the margins would be thinner, but they would increase traffic. You know, it's not a surprise. I think it's not the perfect solution. They are working on a better solution that will probably come out in early 2025.

13:41So this is a stopgap measure until then. But, you know, certainly the context is that there's just been too much inflation in QSR, McDonald's, you know, over 40 percent versus 2019, grocery much less. So the third of the customers that are direct meal replacement, you know, they don't care what brand they're buying from. They just want the cheapest price. They move to grocery and convenience, and McDonald's has to, you know, regain some of that share. This is their answer. It's not a perfect answer, but it is a stopgap until they figure out a better answer, probably in, you know, one age 25. Has it always been the case that McDonald's customers aren't necessarily brand loyal, that they just wanted the value for their money?

14:22because that seems like a bigger problem. If there's not actually inherent loyalty to this particular brand or these particular meals, it's just how cheap can you get it? Then that's a very difficult field to compete in. I'd say about a third of the customers, if you think about that lower, the very low-income customer, the value menu customer, has always historically used McDonald's and other QSR peers as direct meal replacement. And that's always been the case. McDonald's has always been a value leader because of that. And they've always garnered success because of that. But Nick hates Tim. Sounds to me when I hear$5 meal and I hear extension, I hear that the drivers that you just talked about, I hear margin pressure.

15:04And I wonder what multiple you think about McDonald's in context. And maybe if you can compare that to maybe how you were thinking about that multiple two years ago or four years ago or even pre-COVID, because we know the world has changed in terms of those cost inputs, the labor cost inputs. That, to me, is where you get to with McDonald's, because I think the brands there, Crocs, Key Chains, or not. You know, remember, McDonald's is a primarily franchise concept. So at the end of the day, what you care about a lot more is the top line and the bottom line. And the franchisees are the ones that are dealing with the margin pressures.

15:39At the end of the day, investors, really, all we care about is the royalties. Now, they do have a company-owned portfolio, but it's a very small percentage of the overall system. Nick, I'm wondering, from your standpoint, when you take a look at sort of the macro backdrop, do you agree that the consumer will continue to face challenges the same that they're facing right now or increase challenges going to the end of the year? Because what this is implying in terms of extending that$5 value meal is that that is the case, So that is the macro backdrop that things won't improve necessarily for the consumer.

16:16You know, I'm pretty optimistic at the end of the day. You know, to me, this is more about just bringing pricing in line with grocery. If you remember, we had another price war back in 2016 and 2018. You know, we were in a recession back then. Right. It's just that we had another extended period of restaurant inflation led by labor inflation at the time. That was, you know, over and above grocery inflation. So you see these cycles from time to time. So to me, it's not necessarily that it's a consumer slowdown issue. It literally is just that in the near term, we've had some share shift away from QSR and McDonald's towards the grocery, particularly value grocery and convenience stores.

16:58And so McDonald's, to me, is, in my opinion, is doing the right thing by making sure that gap versus grocery is going back in line with what it has been historically. All right. Nick, great to see you. Thank you. Nick Zetian of Wedbush. So it's right sizing the pricing. They took a lot of price at the beginning of inflation. They got to give it back. They did. And they got they got penalized for it. And remember the commentary a couple of quarters ago. But then you look at the second quarter, they reported, I think, in July 29th or so, whenever it was. That seems to be the turn because it wasn't as bad as the street was looking for.

17:33Remember where the stock was at the time. Now I think the turn's in place. Now the momentum that they had four quarters ago seems to be back in McDonald's. And you could say stretched on valuation, but they always seem to figure it out. And I think that hiccup notwithstanding, they're in pretty firm footing right now. Steve? Yeah, to Tim's point, I'd be first worried about the margins on this. But when you look at the chart, the 50 moved up through the 100 day. It's not the golden cross, but it's positive. I think they could manage to hold on to share. But when I when I look at other names in the space, Brinker International blows away the entire quick serve place, a space.

18:15If I wanted to buy something and say, OK, can McDonald's go back to the old stand standby, the old guard? I think you're OK. If I want to make more money, I think I stay in EAT. All right. Coming up, Adobe on the move after its latest earnings report. The numbers behind the after hours action is next. Plus, investors sprinting out of Moderna shares after its latest guidance raised concerns. The headlines hammering the stock right after this. This is Fast Money with Melissa Lee right here on CNBC.

18:58Welcome back to Fast Money. We've got an earnings alert on Adobe, the software company's stock plummeting after disappointing Q4 guidance. The CEO just spoke exclusively to CNBC in the last hour. And our Julia Borson joins us now with a recap of the interview and the breakdown of the results. Julia. Hey, that's right, Melissa. Shares are now down about 10 percent in after hours after Adobe's fourth quarter revenue guidance missed estimates. The company forecasting revenue $5.5 to$5.55 billion, but slightly lower than the street expected. Now, despite that disappointing outlook, when CEO Shantanu Narayan joined closing Bell overtime in the last hour, he said he feels good about Adobe's future.

19:36Most people would characterize the economy as either, you know, a little bit slow or stable. We have seen stability in our business. I think we're all probably looking forward to seeing what both the Fed says as well as what happens in the elections. But if you look at our fundamental long term trends and the ability for technology to continue to drive even more value, we're bullish. Narayan also says he's bullish in the company's AI initiative, saying he does not think there's another company that's demonstrated the amount of innovation that Adobe's AI assistant has so far. But John, I'm sorry, excuse me, Melissa C shares now down 10 percent.

20:17And Shantan Narayan did that interview with our colleague, John Ford. Julia, thank you. Julia Borsten. Dan Nathan, I go to you on this, this 10 percent decline. What do you make of that? Well, really interesting. And I also think it's fascinating that in that interview he speaks of the macro. And, you know, like that's something that you wouldn't expect for like a creative suite of products right now, that it would probably weigh too much on that. You know, last summer we are spending a lot of time. This is summer of 23, kind of figuring out who is going to be the early beneficiaries of generative AI.

20:47You would have thought that SaaS sort of companies like this would have done that. They announced this Firefly product. This is generative AI across their creative suites and Adobe Acrobat and the like here. And the market has just not appreciated whatsoever. So when you have a miss like they've just guided to on net new digital media, this is ARR, You know, that's the sort of thing that investors are just not going to be that patient about right there. So is it deservedly down 10 percent? I'm not sure. But if you think of 2025 and you think of earnings estimates expected to be up 13 percent, sales estimates to be up about 11 percent.

21:22This is an 89 percent gross margin company, which is fabulous. Right. But they're not demonstrating the sort of growth that justifies nearly a 29 multiple on 2025 numbers. So, again, down 10 percent seems a little curious. The stock was down about 2 % on the year, really underperforming many other names that have been talking a big Gen. AI story for the last year or so. I feel like often in the after-hour session on the back of Adobe's results, there is a sharp decline in the shares. And then what – I'm in your brain tonight. You're channeling my – It's crazy. But it's true. We've seen it quarter after quarter.

21:57Three out of the last four, they've dropped a donut. A what? Dropped a donut. That sounds disgusting, Tennessee. It's fine. I mean, I don't know about dropping donuts on Sam &C's fast money. This time, is it warranted? To the extent that it's sold, no, I don't think it is. But I'll tell you now, when you guide lower in this environment with that valuation, that's what's going to happen. With that said, take a look at where it traded down to on August 5th. I think you got down to about$509 or so. That's your crosshairs. That's where you get back into stock because, yes, it's expensive. A stock that probably made its all-time high, I want to say, in 2021.

22:31This is a fabulous company with, as Dan mentioned, incredible margins. You're trying to find a place to buy this stock, and I think it comes in the form of 510. And I would lean towards the buy, because that guide, which is, those numbers were fine. It was the guide that was, I think, about 15 million light on 550. So what's that, 3.5 %? I mean, I guess, you know, it depends on how you believe any relative miss how important it is. I don't think that's a game changer for a company that I think was starting to put it back together. So I think this is weakness you're buying. There's a lot more fast money to come.

23:03Here's what's coming up next.