Nvidia Reports Results… And The Future OF Fannie Mae And Freddie Mac 5/28/25

0:03Live from the Nasdaq market site in the heart of New York City's Times Square this is Fast money. Here's what's on tap tonight. All eyes on Nvidia. Shares of the semi-giant jumping after its latest earnings report, sending its market cap above Microsoft. For the first time in two months, we are dialed into the semi-giant conference call, bringing you all the details. Plus, a government guarantee what President Trump's plans for Fannie and Freddie mean for the rest of the housing sector. And still too cheap. Shares of Abercrombie and Fitch soaring as much as 36 percent on the back of its results.

0:31But one of our traders says the stock is still Too cheap. They lay out the case for the apparel company. I'm Melissa Lee. Come to you live from Studio B at the NASDAQ. On the desk tonight, Steve Grosso, Karen Feinerman, Dan Nathan, and Guy Adami. And we start off with that all-important earnings report out of NVIDIA. Shares are jumping about 5 % after the company beat both top and bottom line estimates for its fiscal Q1. The company's data center business also growing more than 70 % over the last year. The conference call kicking off just moments ago. CNBC's Christina Partzineblitz has got all the details on the quarter.

0:59She joins us here on set. And then I promise I'll go downstairs and get on that conference call right away. But in terms of the guidance, Q2 guidance is really a big deal for this company,$45.1 billion, which sounds like it's a little bit less than, you know, the$2 billion guide that they always do every single quarter and they've been really great, but it's still higher than a lot of buy side estimates that have come down just over the last little while to factor in for the H20 ban. And speaking of the H20 ban, these are the chips that were geared specifically for China that fell under the U.S.

1:29threshold. The company announcing in this report that they actually took a$4.5 billion write down, which is less than the$5.5 billion they talked about. The reason why it was a$1 billion difference is they were actually able to reuse the materials. And for me, that's a little bit of news because previously so many analysts have said, oh, this is complete wash. Nobody wants these H20 chips because they're so low spec'd. And they actually fall lower than the Huawei Ascend chips, too. So that's for the Q1. And then for Q2, they are also taking an$8 billion write-off for the H20 sales for a total of like 12.5, which is also less than what Jensen Wong said in a Strattekery report recently, about$15 billion.

2:08So those are all good portions of news and gross margins, too. If you don't account for the write-down, came in at 71.5. They were anticipating 71. So could you use a little bit about the$1 billion difference? Is that that they sold that much or that was what the whole 5.5 or 4? It's not sold. It was just the write down. Write down. Right. But so that that was the write down on the entire thing. No. 80 percent from five, five. No, no. They're saying originally they're like, we're going to take five point five billion dollar hit in this quarter. Right. Now they're coming out and saying, hey, we're not going to take down that much of a hit because we were able to reuse the materials.

2:45OK. For some of the chips. So now it's only four point five billion. So 24 Q1. Yes. Okay. So the point that you're making about the revised chip for the China market, which is actually, you know, maybe not as competitive as some of the domestic chips in China. It's not, yeah, especially the Huawei. So is anybody buying those chips? Well, somebody, the choice of words from the CFO commentary was the materials were able to be reused. So certain materials, but not the full amount, right? And I don't know, that's going to come up for sure on the call, which market is going to be buying even lower spec chips, right?

3:19And it would be okay with the U.S. government to do so. And then in context, too, a lot of reports have come out very recently, too, that NVIDIA is still moving ahead with another chip that will fall under the U.S. threshold, maybe the B30, whatever you want to call it. But they've been doing this for quite some time. It's not like they're going to say goodbye to the Chinese market, especially with that new R &D center in Shanghai that they just announced. They're still, you know, really maintaining those relationships with China, with Jensen Wong there not too long ago. So I don't think that door is closed at all.

3:48Yeah, you know, it's interesting. We've been going back and forth about exclusions, right? And I just wonder, Christina, the longer we don't have some sort of resolution with the Chinese, with, you know, the tariff situation, don't you think the risk, like, it extends further, right? So we've had these big write downs. We have one for this quarter, as you just detailed. We have one for next quarter. And you think about, like, China has been about, I don't know, 15 percent or so of their revenues over the last two years or so. I think it like there's risk to that. I mean, analysts are talking a little bit about that because we don't have a resolution with China.

4:19There's Nvidia, there's Apple, there's Tesla. These are squarely like these are leverage pieces for the Chinese here. I like that perspective. And I would say that analysts are not taking that perspective. If anything, they're so bullish now that the Middle East has come forward and promised to buy 18 ,000, for example, Saudi Arabia, 18 ,000 ships within the next five years, specifically from NVIDIA. UAE is going to be buying billions of dollars more and spending more on U.S. soil as well. The sentiment I'm getting from so many reports is that China's revenue stream is going to shrink dramatically.

4:51But don't worry, the Middle East is here to save the day. And I don't think they're really acknowledging how big of a drop that could be from blocking sales to China in three, four, five quarters from now. And especially when Huawei continues to steal market share. So do you think dollar for dollar the Middle East can replace China's revenues? Because the market share loss in China over the past four years is astronomical. And that's even before these tightened export controls. So they tighten further. They ship these degraded chips over to China that are not competitive. And at some point, they're just going to just lose it.

5:25I mean, it went from 95 percent to 50 percent in four years. But then that's a positive. So now I'll flip it and say 95 to 50 percent. And yet look at the stock. Look at how well they've done every single quarter. And they've continuously lost market share in China. So to your point, if they continue to do so, maybe it won't be that bad. Why? Because they went from 95 to 50 and everybody's still cheering and everybody loves this company. It's so highly held, owned, and in the spider ETF, 6 % weighting, and so really impacts a lot of stocks. I mean, if the hyperscalers keep spending at the rate they're spending, then maybe we can still be hopeful.

5:59Well, Wendy, 95 % of what kind of market there in terms of price is 50 % of a much higher margin. Right, that's true. Is that better? Dollar-wise, it's probably better. But still, you don't want to be losing that much market. That's a good point, especially with the blackwells. And Blackwells aren't there because I would say the average selling price is much, much higher in the margins on that. But it's a very good point. All right. Christina, we're going to let you go because it's 5.06. That call is underway. Somewhere to be. We'll see you later on. Should I just run right now and write us up?

6:31Okay. What do you think? Well, Gene Munster tweeted that, you know, it's actually a lot better than people thought when you back out the China stuff. And he's right. And then Dan's point is at some point you're going to have to say, well, wait a second. You can back out all you want. how long it's going to last. The most encouraging thing to me was margins sort of hung in there for now. You know, that was a surprise to me. I thought they'd come in a lot worse than that. And they didn't. They're hanging around. So that's good. And Karen and Steve were talking about the gaming revenue, which that's sort of old school NVIDIA.

7:00Obviously not as big a deal, but that was an impressive beat as well. It's good enough to get the stock where it is. The question is, is it good enough to get the all time highs of 153 and change? Gaming is still 10 % of revenue. So it's not nothing. I mean, it's much smaller. So you have the China ban, you have competition and the hyperscalers where Christina said, if, when you said if they continue to spend, she said, if. So if you have Google and you have Amazon making their own chips, Microsoft pulling back data centers, there's a lot of ambiguity there, a lot of gray area. I don't think the Saudis replaced that total income.

7:35I'd be a seller of this pop after hours. And I think it was just people were bracing for a lot worse than we got. I think it comes off here. I think you're looking at lower prices tomorrow. Yeah. What do you think, Dan? Listen, I think the story has gotten like pretty much on the equilibrium, right? There's still a lot of uncertainty what we just talked about with the China situation. I think one of my biggest takeaways over the last month or so is that Jensen's literally been on the president's tail no matter where he's going. And I think he recognizes the fact that they have the ability to kind of ramp up and, you know, in the Middle East and there's going to offset a bit of this uncertainty if he remains loyal to the president's causes.

8:10You know, Christina just mentioned the Stratechery interview with Ben Thompson about a week and a half ago. I mean, he went all in. I support the president. I support his vision. I support this or that or whatever. I mean, these guys know how to play this sort of situation. So if they can ultimately get to a place where even if there's not some trade resolution and they get some sort of exclusions, they get some of this business back, they've grown the business in areas like Saudi Arabia. It's not a bad thing. I'm with Steve, though, and I've been saying this for now a while. You know, the CapEx by the hyperscale, it's going to slow down at some point.

8:40And, you know, like the rate of change over the last year or so has slowed down a good deal. And so we haven't reached that digestion phase. So that's likely to come. No one can put their finger on it. But NVIDIA hasn't done anything in a year. OK, it's like literally the same spot it was a year ago. And I think that's telling you enough. There's probably better ways to play this theme right now. Although since the last earnings report, it's about 12 percent versus the semiconductor ETF, which is three percent, basically flat. I mean, that's an interesting context in terms of going into this quarter.

9:07There's every reason to find fault with this quarter. But investors are liking it. They're bidding up 5 percent. And maybe that also has to do with the sentiment in the markets at this point with the narrative that the worst of tariffs are behind us. The magnitudes of the in terms of the absolute dollars, the dollars are staggering. The percentage beats, though, get less and less seemingly each quarter, which, listen, there's nothing wrong with that. I mean, that's just the nature of the beast. I mean, that's the natural progression. But they're being rewarded for what I think are still beats from three or four quarters ago.

9:39And that to me is not the price to earnings valuation, but the price to sales. So a couple of things. The margins being good, which you talked on, is really important. That earlier in the year was a big question mark, right? They talked about, oh, when we scale up, we're going to see our margins improve. Maybe we'll see them improve maybe even a little bit more quickly. So that's good. But you get to – I mean, the AI story now does seem to have legs again. It really didn't about three or four weeks ago. And so I think that that Middle East trip was huge. We remember we had Elon Musk talking about 100 ,000 GPUs.

10:14And so all that having said, that's great. I do agree. It's sort of had an extraordinary run from, what, 93, 90-something? What are you doing with your position? Well, I collared some. So that's sort of that. So it is going to be smaller. So I'll probably do nothing then at the moment. Yeah, just on a price action standpoint. I mean, you think about this huge basis, and maybe they can give it on a one-year basis. I mean, Mel, to your point, yeah, it's up 12 % or so from that last quarter, but the stock's been all over the place within this fairly wide range. And the thing you have to ask yourself is, was there anything in the quarter that you can kind of expand or the guidance that they gave that's going to cause this stock to kind of re-rate and establish a new range?

10:49I don't think it's there, and I think we're likely to see a continuation of this sort of range that goes from really 100, let's take out the April lows, to this kind of$150 level. Just one last thing. You know, I always say you've got to listen to the call. This call, you've really got to listen to it later. There's going to be so much nuance in there that the numbers only tell half the story. Yeah, Christine is on it. We'll get to all the headlines as they come through. And also don't miss NVIDIA CEO Jensen Huang on Mad Money tonight for her first on CNBC interview. That is at the top of the hour.

11:18Well, stocks closing around session lows with the major indices selling off in the last hour of trading. Earlier in the day, the Fed released minutes from this month's meeting saying it may face, quote, difficult trade-offs if President Trump's tariffs rekindle inflation. Treasury yields higher on the session. For more, let's bring in Michael Schumacher, head of macro strategy at Wells Fargo Securities. Michael, great to have you with us. Thank you. Where are we in this market run? So as far as the Fed goes, the Fed's really concerned about uncertainty regarding tariffs and trade, etc., also spending, thinks inflation could stay high a bit longer than the market anticipates.

11:49You put it all together, the Fed's going to sit. There's no reason whatsoever for the Fed to move anytime soon. And I think what that means is if you're buying treasury bonds or treasury securities, you can't expect the Fed to come in with a big rate cut to give you a big capital gain. You've got to be comfortable with yield levels and just wait for Jay Powell and friends. What do you anticipate for yield levels here in the United States, given the lackluster Japanese auction for longer dated treasuries there? It's a tale of two bond markets, Melissa. So you think about the shorter term bonds, five years and in, pretty comfortable.

12:21We think yields falls slightly there. The longer term stuff, whether it's Japan, there's not much appetite for 30 to 40 year debt. U.S., people are very concerned about the big, beautiful bill, lots of spending, et cetera. Not a big appetite for 30 years here either. I'd avoid the long end. I'd buy three to five year securities. So you talk about waiting for Jay Powell and friends. When do you think they come to the party in a significant way? Yeah, Karen, I think what happens there is it's late this year. So the Fed's incentive now is to wait, wait, wait. They'll probably go big when they eventually go, but probably fourth quarter, that type of thing, it's not going to be really soon.

12:55How important bond auctions in Japan? Last week, they had the worst one since the late 1980s. How important is what's going on to what's going on here potentially? I think it's a big deal, actually, because when you think about governments globally, the common thread is more spending, whether it's Japan, whether it's here, whether it's Germany, whether it's Canada. Bond markets have to absorb that. And people are saying, you know what? Yield levels aren't that great, generally speaking. We're not getting compensated. To me, it's a bad omen. So if yields go higher here on the 10-year, at least, is that a cap for the markets?

13:28I think it restrains markets to some degree. And we're not saying yields go crazy. And I think it's really more the back end, like the 30-year stuff in particular. But it's a headwind. I think that's pretty clear. So, Mike, when you look at all this, when you digest it all, what do you think about inflation? What do you think about unemployment? Is the economy so the the takeaway flip flip the whole conversation on its head and say, what does everything that you just said say about the economy now? Where are we? How good are we? Where are we in the in the cycle? The markets are telling this really nice story.

14:03If you look at inflation swaps and that sort of thing, inflation is going to be high for about a year and come back to a pretty normal level in the U.S. It seems awfully optimistic. That's what I got from the Fed minutes. That's what we get as well. You wouldn't need much of a lingering effect in inflation to make people pretty nervous. So I think things are priced a little bit too nicely for inflation. Mike, you just mentioned that when the Fed comes in to cut, they're going to go big, right? And so when they cut in September is the first cut really since COVID, right, going back to 2020. And they went big, 50 basis points.

14:33I think it surprised some folks. What do they go big for? Is it because the data is weakening? That was the reason why the Fed cut. They were worried about the jobs market back in September. Or is it because they can? So really, I mean, it's soft landing versus worries about a harder landing. I think it's two things. One is because they could. If you look at Fed funds, still very high, above 4%. And the second thing, which Powell has talked about a fair bit, is he says, look, real yields are still very high. So what I think he and the committee want to see is evidence, not that inflation is low, but that it's peaked.

15:02So we get this surge from tariffs, wait three, four, five months, and it comes down a little bit. The Fed says, aha, that's a good thing. Now we can actually be afford we can afford to be a little bit more aggressive here. We can come in. We can try to get some easing. And how does your view, if at all, change if the Fed doesn't move because inflation hasn't shown that it's peaked because tariffs remain in place for much longer than anticipated and or inflation is stickier than anticipated? I think in that case and also, I guess, the other scenario I throw in there, Melissa, is the idea that spending is high.

15:32So think about the Senate tacking on more goodies to this huge bill and the Fed sits. then what? Yields go up somewhat, probably not catastrophically, but you're looking at the 30-year yield probably in the mid to high fives, something like that. 10-year, five-ish, something of that sort. So unpleasant, but not really awful in the bond market. All right. Mike, always good to see you. Thank you. Michael Schumacher, Wells Fargo. We had a conversation last night that you could have bond yields higher and the stock market higher. I think Michael's, he's not wavering in that, but I think he's in some agreement.

16:02I'll say this. The TLT to me is headed to levels we We saw in October of 2023, which is like 82 and a half. Back of the envelope gets us about four and three quarters, 480 in a 10-year. And I just don't think the stock market is going to like it. By the way, he's a very fit man. If you had to guess how many marathons he's run. Four. That's four New York. Yeah. Fifteen total. He was holding out on us a little bit. Fifteen total. Fifteen total. Schumacher. How about that? Good stuff. I got nothing else to say. That's it? Yeah, I'm just really excited for that. I thought that was amazing. News you can use.

16:33You know, when Scott Besson talks about how the Treasury secretary, how high or how tight the monetary policy is, he states the two year and the Fed funds rate, the gap between. Mike said what to Dan's question, why are they cutting? He said because of where the Fed funds rate is. The Fed is tight right now. They could be cutting if they want to. There's going to be a massive amount of cuts. It sounds to me like a Fed put. Oh, so you're you're. He said the economy is OK. Real rates are high. Real rates are high. Right. Which would be a reason. So you're constructive on the markets. But you think NVIDIA is going to fail.

17:09I think NVIDIA is a stock specific. We look at when you look at the chips, they're boom, bust cycles. We're pricing NVIDIA as a growth company to perpetuity. So that was the A.I. kicker. It's getting priced into infinity now for growing. I think that's a mistake. OK, I guess my question was, can the markets go higher without NVIDIA? Can you be a disbeliever of the NVIDIA story, but a believer in the markets? You know, it's funny. We had that conversation about Apple a couple of years ago where an Apple did not trade particularly well. The stock market went on its merry way. So probably the same thing can happen here.

17:49I'm with Steve on NVIDIA in terms of look, I think the Fed could Jerome Powell could call us right now and say we're cutting rates 50 basis points. And I still think senior yields are going higher from here. All right. Coming up, we're keeping an eye on NVIDIA as the company conference call gets underway. The latest headlines from that and where a top chip analyst sees a stock heading next. And there's even more after hours action to bring you. Shares of HP and Salesforce on the move after reporting. The details and the numbers from those quarters next do not go anywhere. Fast Money is back in tune.

18:18This is Fast Money with Melissa Lee right here on CNBC.

18:33Welcome back to Fast Money. More after hours action to bring you shares of HP getting hit hard and Salesforce also reporting results. Steve Kovacs got all the details on both. Steve. Hey there, Mel. We're going to start with Salesforce here. We're seeing that stock pop after hours from strong guidance for the rest of the fiscal year. For the current quarter, EPS beat by four cents. Revenue beat by about eight million bucks. As for that strong guidance, driven in part by currency tailwinds with the dollar weakening, of course, Going to want to listen into the call for more commentary on artificial intelligence.

19:00Agent Force, that's their big product, still in its early days, but looking for more signs of momentum. Now let's switch gears over to HP. Tariffs are the culprit behind these results. Look at those shares down 15%. EPS missed by$0.09 at$0.71 a share. Revenue just a slight beat, and guidance is way off expectations. I talked with CEO Enrique Lourdes on these results. He says tariffs are really the culprit here. told me it's going to take until the company's fourth quarter to fully mitigate tariff effects. And they're going to do what Apple's doing, moving production to Vietnam and India from China for all the products they sell in the United States.

19:36And, of course, they're going to have to raise some prices on products to keep their margins in order here, Mel. All right, Steve, thanks. Steve Kovac. Karen, you thinking about Dell? Yes, exactly. Thinking about Dell, on the one hand, you'd think the NVIDIA move would be nice for Dell. Maybe it is. However, on the other hand, the HPQ, I mean, you know, a lot of Dell's business is, you know, PCs and so monitors and whatnot. So that's not great. I don't love that. Yeah. There was a Dell upgrade earlier this week. I guess it was yesterday. But Salesforce, real quick, I actually think it's OK. I mean, they beat the full year guide was commensurate with the beat.

20:13That's good. Next year, we're looking at 22 times next year's numbers. Not expensive. I mean, the stock has sold off a lot. I think it's actually okay here. Yeah, I'm with Guy Adami here. The one issue I have with this acquisition of Informatica, and I can't speak to the strategic nature of it, but from a financial standpoint, I mean, Salesforce has like higher expected EPS growth, higher expected sales growth. They have a similar margin structure. I know that they want to get into some of the businesses that obviously Informatica has. But when you think about, you know, this sort of M &A, I just don't know what this does for it because, you know, you're talking about single digits growth for both, what is it called?

20:49Informatica. Informatica, yeah. both sales and revenue growth. And I don't know. I mean, I like Benny Oss strategy. It's gotten him this far. But to Guy's point, 22 and a half times for next year seems pretty reasonable if they do what they've done with the integrations of these last sort of acquisitions. So I think it's fine here, too. Yeah, I think the investment in AI, to Dan's point, you're betting on, I say this all the time, you're betting on the CEO. He's one of these CEOs that always seems to pull a rabbit out of a hat. And another one is Bill McDermott. And when you look at the service now and you look at Salesforce, a lot of enterprise clients have both.