Nvidia Results On Deck… And RFK’s Impact On The Health Care Space 11/15/24

0:00Live from the Nasdaq market site in the heart of New York City's Times Square this is Fast The choice of health care, the little-known siblings that could emerge as a major force in the system under RFK Jr., what they could mean for medicine. Plus, Palantir marks a new milestone as it looks to transfer to the NASDAQ. The chartmaster says it is game on for the uranium trade, and it's fight night on Netflix. What tonight's big boxing match means for the streamer. I'm Melissa Lee coming to you live from Studio B at the NASDAQ. On the desk tonight, Tim Seymour, Karen Feynman, Steve Grasso, and Julie Beal.

0:44We start off with two big stories on our radar. Crypto crushing it this week with Bitcoin back above the 91 ,000 mark and up 35 % since the election. More on that in a few minutes. But first, what else? NVIDIA. The AI darling gearing up to deliver third quarter results next week. And Wall Street is chomping at the bit for another strong report. Analysts upping their price targets on the chip giant ahead of Wednesday's results. Wedbush seeing the stock climbing to 160. Oppenheimer's at 175. Susquehanna, 180. And HSBC is all the way up at 200 bucks. That is 40 % upside from today's close. But can NVIDIA deliver another blowout quarter with expectations so high yet again?

1:25This is not the kind of action, Karen, that you love for one of your stocks going into earnings. Well, yes, I don't like the analyst action. I mean, the bar, just raise the bar, raise the bar, raise the bar. I do like the, you know, down kind of a lot. Yes, the pullback, not just today, but the last couple days. I think it hit 148 or 9 or something recently. And so I like that more. I think, you know, there's this sort of tension of the promise of AI and is it working and what will demand peak and then evidence to the contrary. And then you hear, you know, things like what was 100 ,000 chips today.

2:00Right. So I'm still optimistic on the story. I, you know, I am long. I don't have puts right now. So I don't know. I'll look at something. They're not going to be cheap, that's for sure. But I do think, though, going into the right before it, the skew will be toward the upside. The calls will be more expensive than the puts. So I'll look at that. But I'd rather have it be down a few days. Right. Tim? Well, if you look at the semiconductor group overall, they've been underperforming. NVIDIA has actually been really the stalwart in that space, and I think that's interesting. I get back to what seem to be the major drivers for the stock right now.

2:38Where are we on production with Blackwell? Where are we with hyperscalers and CapEx? We've heard we've had the earnings season where they've given some guidance. That guidance was fine. We've had some other read throughs from other folks that are part of kind of the chip infrastructure space, which hasn't been terribly good. And it gets back to where is the market and where is sentiment? That outperformance I'm talking about in the charts is notable. But I don't get the sense that the street is as keyed up into expectations on this number for some of the things, we've been talking about. And again, we have had the company be very clear to push back on any concerns around production side of it.

3:13So they can't really tell you how aggressively they see demand and they'll do a better job of that here. I'm sure we're not going to hear anything awful on demand. But I think it's a more balanced setup despite the run in the stock, because I just think expectations are lower. Eventually, they have to fail on earnings. Eventually, there's got to be something, right? You don't get to go into Vegas and keep betting on one thing and have the hand perform. But there's still 85 % of the market. Tim said it. Every other stock that you look at in the sector, the chart is horrendous. This is the... Go ahead.

3:52No, eventually you will miss. But I mean, is the miss a function of analysts getting too hyped up over it? And so therefore they're setting the stock up for a miss? If they didn't ratchet up their earnings expectations, they would easily jump over them. Without question. It's the context of that. It's a point of reference. It's where you're coming into it. So Karen's completely right. You would like them to talk it down. The problem is every time they've talked it down in the past, it's leaped over them. And they've looked silly. I'm sorry, when you're saying the analysts talk it down or the company?

4:22They don't really talk it. I'm saying it the wrong way. Whenever the analysts put out their estimates, they've definitely had a lower bar where NVIDIA leaps over it. And they've looked ridiculous. Because who should know? They should know how high that bar should be in theory. And whenever NVIDIA leaps over it, they look silly. So they keep raising the bar. So eventually NVIDIA has to fail. But it's going to be a beat and raise here. I mean, let's be clear. It's just a matter of the degree. It's a matter of the degree. But but again, I think it's it's really about Blackwell ramping and Hopper actually still growing.

5:02And I don't you know. Yeah. Yeah. Julie, I mean, you know, Jensen Huang has had multiple opportunities to sort of talk down Blackwell, talk down the demand, talk down the production issues, whatever. And not one opportunity was taken. Yeah, it sounds like he's very, very confident about the outlook. look, I think it's interesting to me in reading some of the research reports that we've been talking about. I read one today that was like, well, we expect them to beat by their usual$2 billion on the top line, which is an astronomic number just to beat by. I mean, as a small and mid-cap investor, I could only dream, right?

5:39But what I think is important is exactly what everyone is saying, which is this relationship between expectations and execution. And so far, they have been on the right side of that battle between those two. But when you have analysts just so regularly expecting this big beat and raise, it does create this challenge, this tightrope walk that they have to do. I think the demand is fine, and I think the production is fine. What I think is kind of an outstanding question for the long term, and this is where guidance will really come into play, is what is pricing going to look like over the longer term?

6:14We know that these hyperscalers are starting to recognize that they need to be able to create an economic model around this investment. And that's still a little bit uncertain. And so, you know, we kind of wait and see. So, I mean, I think I agree with the a beaten race, but a beaten race can still trade down. Right. We've seen that before. There's no there's no floor that's guaranteed under there. But Jensen-Wong, beside running this company and being at the forefront of AI, is also a master at expectations of Wall Street. And, you know, what else can he introduce? Remember, it was, well, we're going to have a new chip every year.

6:49That was something. Locking them in with the software. I mean, he's really good at sort of moving to the next chapter of the story. And we'll see if he does it again here. The bar is high for him. I mean, there's also, I mean, you mentioned the hyperscalers and their guidance, which does confirm the NVIDIA story. I mean, there's nothing that we got from the earnings report that leads us to believe that spending is in jeopardy for NVIDIA chips. There's also the other side of sovereign AI, which we haven't even talked about. I mean, I think as demand, demand in terms of all the sovereign money out there, particularly in the Middle East, who are going to build their own AI.

7:24I think that's important. I think we know that there is a kind of GPU demand is supply constrained here for cloud growth. It's just that simple. And so I think that's the story. But I do think it really is going to come down to what you're willing to pay for this company. And I think the growth is probably forget on a price to sales. But, you know, I think on a P.E. basis, I think there's something here that's actually at least defendable if you're out there right now. Long and video. Yeah, it looks like. Like, so it's hard not to be bullish on NVIDIA, right? We've been talking about this for a couple of minutes.

8:00It's hard not to be bullish on NVIDIA. But one of those days, it's not going to be a beat and raise. And to Karen's point, you can have a stock fall off. Time out. There we go. Look out, Steve. You sold NVIDIA right now. I feel like it was pulling me in. You sold NVIDIA. I did. Did you get back in? No, I might be waiting for a sell-off. You're the one. Get back in, Melissa. You are feeling like you missed it. Yes, I definitely missed it from 110 to where we're at right now. And you're waiting, and you're waiting for that sell-off to get back in. Let me ask you this. Let's say you had gotten back in at 112.

8:35What would you do right now? Sell? Yeah, I'd be a seller. That chart does look like it's rolling over. And when you start to see 80%, 85 % market share turn into 70%, 75%, I don't know if we're there yet. I think you've got to start saying, all right, maybe there's other opportunities. I want to get out of the way and have Julie pile on Steve, too, so all the ladies can really get after her. Come on in, pile on Steve. No, I agree. I mean, I absolutely agree. I think that's right. It's really, really hard to feel like this can continue forever into infinity. These gross rates are not sustainable forever, forever.

9:07I think, you know, we've owned in other portfolios NVIDIA for more than 10 years, right? And I think all of us at the firm are looking at this very large now position and wondering, what do we do with this, right? We recognize that it's a market leader. Our cost basis is very low. It's really hard to feel great for new clients coming in and buying our portfolios. They're buying at this price today. And that's where it starts to really not feel great as a portfolio manager. You really have to be thoughtful about, do I still feel great about the valuation right now? Would I buy this position right now?

9:41Have you trimmed at all your position in NVIDIA? Not in a long time. No, I haven't. I just made the bet. But, you know, but to Julie's point, you know, I always say if you went home long. Right. You bought it at this price. Sure. So I'm affirmatively saying, all right, I will continue to be long. Yeah. Yes. Right. Well, and if I can go out to four, I can go out to 25 and at least a couple of places that have put some some recent upgrades. And I can I can get a a low 30s P.E. multiple on a stock that I think is growing. We know about the growth. But I mean, again, I look within that peer group and NVIDIA doesn't feel expensive to me.

10:14So I would bring it back to valuation. I would bring it. It's not going to go on forever. But by 25, and certainly based upon the growth we're imputing until then, 32, 33 times. It works. All right. Our next guest is concerned about NVIDIA ahead of earnings. Mark Yusko is CEO and chief investment officer at Morgan Creek Capital Management. His firm is one point nine billion dollars in assets under management. Mark, always good to see you. As I understand it, Mark, you'd personally sell NVIDIA here. Why? Well, a couple of reasons. I mean, one, all the things that the crew was talking about. It's hard to stay on top when you're on top.

10:54I'm old enough to remember that Intel stock went up 20 fold over 10 years because their chip was going to revolutionize AI in 2000. And today, That stock is 63 % lower than it was 24 years ago. So you don't stay on top forever. And NVIDIA came along and invented GPU. And now we've got TPUs and VPUs and LPUs. So I think innovation will keep rolling. But the thing I'm most worried about with NVIDIA, their third largest customer is about to get delisted. That's a big story. So you're referring to Super Micro. Yes. Yes. So how does NVIDIA get caught up in this? Yes, Supermicro can be delisted. How does NVIDIA, how does that tarnish NVIDIA?

11:39Well, if it's your third largest customer and they actually haven't, they don't have the capacity to continue to be your third largest customer, what happens to your revenue growth and profits growth? You know, we've seen this move before with Nortel and Cisco back in 2000, 2001. So I don't know. That makes me nervous. Hi, Mark. It's Karen. Thanks for being on. I hear you. Let me just push back a little bit. To the extent that there is a supply constrainment here, not a demand constraint, right? So with the customers, if you look at what's happening to Dell and some others, there's the belief that those customers are going elsewhere and that that demand would still be there.

12:17Is that – do you – does that make sense? I think that's a great – that's a great story and possibly is true. Look, they're the third largest customer for a reason, and that's real for me. But I totally agree with you that there is a demand story today. I think the thing that's not being talked about enough is GPUs are really good for training. They're actually not really good for inference. Inference is the next level. So companies like Grok and others do. And the next layer of huge demand in semiconductors, I believe, is going to be for inference-focused chips, new designs, new innovations. And I think the tech debt at NVIDIA is going to cause some stress.

13:05Now, could they go out and buy some of these innovators and take over those markets too? Maybe. Hasn't historically been the way it's worked out for other people who are on top. But look, I'm a huge admirer of NVIDIA as a company. I think they have great products. I just think it's a little overpriced here. You make a pretty strong case against NVIDIA, Mark, but as you know, your clients still own it. So how do you, what's that conversation like when you're telling? Or what's the conversation going to be like on Monday when they start calling you saying, you said to sell because they're going to lose their third biggest customer and all sorts of other things.

13:43And it's in my portfolio. So a couple of things on that. One, you know, I spend most of my time now in venture capital. I do venture capital in the digital asset space. We own things like Bitcoin and companies like Coinbase. I still have a business that focuses on hedge funds and we allocate capital to hedge funds and then we supersize their 20 best ideas. So one of those 20 best ideas happens to be NVIDIA still. So it's a 5 % position in that half of the portfolio. And I trust the process. Those managers still have faith in it, just like a number of the people you were just talking to. If it were me and I were the portfolio manager, which I'm not, I would be a seller.

14:30But I trust the process on the other side of the house. Let's get to Bitcoin, since that is your core at this point in time, Mark. Where do you see it going here? It's above 91. And I think that's that's more than where you see it being a fair value. No, you know what I'm going to say? This is almost our five year anniversary, a little more than our five year anniversary of when we were together in 2019. And, you know, while I was on the show, I think Bitcoin crashed like 10 or 15 percent. And, you know, what should we do? I said, buy it. And you're like, well, you always say it. Well, no, I do buy it today, buy it tomorrow, buy it next week, buy it next month.

15:04I don't think you should buy it all at once. I think you should continue to accumulate the greatest, most powerful computing network the world has ever seen. And it is changing the nature of how we transact value. So I think that fair value today, as we're sitting here talking, is in the high 80s. So we're right around fair value. That fair value will continue to accrete as we go forward, as new people get involved. There's been a huge game changer in the last week. We now have a president-elect who has said he's pro-Bitcoin. He has Senator Lummis, who is amazing, saying that she's going to sponsor a bill to create a strategic Bitcoin reserve, and they want to accumulate 1 million Bitcoin.

15:49Let's just let that number hang there for a second. There are only 21 million that could ever exist. It's really closer to 18 million because there's about 3 million that have been lost or stolen. So you're talking about about six percent could be taken out of the supply. Plus, you have people like Michael Saylor going to raise$42 billion to buy more. So talk about unlimited demand and finite supply in the chip business. You can make more chips. In Bitcoin, there's only so many you can have. Yep. All right, Mark, good to see you. Thank you. Thanks, Melissa. Great to be with you. Mark Yusko, in case you didn't catch that graphic, he says 100K by Thanksgiving.

16:29That wouldn't shock me, actually. It does feel like there's this gravitational pull towards 100. It broke 90 the other day, traded back under, and I would have thought that's an opportunity for it to sell off it was really going to, and now it's right back up against there. So Thanksgiving, I don't know. How far are we away from Thanksgiving? Not far, like 10 days. I don't know. Gobble, gobble. But in that, call it some holiday this fall, this fall winter. I would not be surprised. All right, coming up, Palantir Pops, the soaring software giant, Right now, the top performing name in the S &P 500 this year.

16:59And that's not the only move it's making. The details next. Plus, it's fight night on Netflix. Mike Tyson takes on Jake Paul. What the bout will mean for live streaming on the platform. More Fast Money after this.

17:19Welcome back to Fast Money. Palantir jumping to a new all-time high today after announcing it will transfer its listing from the New York Stock Exchange to the Nasdaq on November 26. The company also expects that it will meet the eligibility requirements for the Nasdaq 100. Today's 11 % pop also rockets it past Vistra Energy, making it the best performer in the S &P 500 so far this year. NVIDIA is now all the way down at number three. But this is a huge jump after lots of huge jumps, particularly after its last earnings report. Yeah, believe it or not, I actually nibbled a little bit more today to a position I've been long and I can't justify the valuation at all.

17:57It's probably 35 times sales. It trades probably two times. Brent Hill, I'm looking at his note here. He says it trades two times what CrowdStrike trades at. So in terms of a multiple, in terms of a sales multiple. So I think it's a combination of the success they have going here. This is we're talking about, you know, three, maybe four, maybe even five successive quarters where they've shown pretty incredible growth. That's part of the story here. Part of it also is truly where they seem to have the inside track on some of the choices contracts in the world. And I do mean the government contracts.

18:29And I do mean the sense is that these are also some of the smartest guys in the room. So I hate the multiple. I've been lolling the name for some time. I actually traded out of it a little bit after second quarter earnings and lamented every bit of that. And I've been trying to get myself back to where I was. Well, they're getting two index boosts, right, because it was added to the S &P 500 in September and now to the Nasdaq 100. So there's a little bit of just the technical aspect of the run, Julie, but there's also the huge fundamental government contracts to mention, huge, but also the unrelenting demand for AI, which is what Alex Karp, the CEO, has talked about.

19:04I mean, that's a big part of this. Yeah, I think that's the narrative around that for everyone who missed out on NVIDIA. Everyone is looking for the opportunities around AI that have been overlooked. And this no longer is one of those plays. I would argue that there are probably plays that are better for AI than this. But what I think is in the note that Tim was referencing is in this valuation embedded is that this company can grow for several years at 40%, which is an acceleration from where it is right now, and still hold a 12 times sales multiple, which is high. That's a lot of good news that's priced in there.

19:40And so it's hard to feel confident saying, yeah, I would recommend stepping into this right now. I'm in the Julie Beal camp on this one as well. Let's think about, you know what didn't come up? The Department of Government Efficiency, Doge, didn't come up here. 56 % of their revenues is from the government. Do we think that revenue is going up or down or getting haggled? Do we have a person like Elon Musk who was a tech savvy guy? Is that where they're going to be cutting, though? I mean, I would think if anything, that's an area where Doge would say, hey, wave some more in. Or maybe you're doing it for X and maybe you've got to do it for X minus 20%.

20:16I don't know. It's just something. Things look pretty peachy when I look at the chart and all the aspects of it. That would be the headwind I'd be worrying about. I agree. I mean, I don't know that it's, you know, just the math. I can't get around. There's a lot of things where I can't get to the math and it ended up being great at every step of the way. But this is one that's, I mean, if you want to do the value play in video, I guess, relative to this. So that's for you. All right, coming up. Netflix is ready to rumble. The stakes for the streaming giants move into live sports as Mike Tyson and Jake Paul get ready for a major showdown in Texas.

20:49Plus, a brother and sister duo that could be about to shake up the American health care industry as RFK Jr. gears up to serve as health secretary under President Trump. The stakes for the biggest names in the space right after this. You're watching Fast Money Live from the NASDAQ Market Site. More after this quick break.

21:15Welcome back to Fast Money. Ring the bell. Former heavyweight world champion Iron Mike Tyson going fist to fist tonight with social media star turned boxer Jake Paul, 31 years his junior. The event marks Tyson's first professional fight in almost 20 years and has already broken the record for the biggest boxing gate outside of Las Vegas. No matter who comes out on top in the bout, Netflix shaping up to be the real winner. The fight is available to all of the streamers, 280 million plus subscribers for no additional fee. A welcome change for boxing fans who would usually have to shell out for pay per view.

21:47But this is, of course, one of Netflix's strategy, live sports, live entertainment, I guess is what they call it. They don't have to pay for rights and it can attract a lot of eyeballs. This is going to attract a lot of eyeballs. And they're doing this to putting a push into the NFL as well. And I think by not charging you something is the way to garner those eyeballs. We were talking about it. I would hope that you could see the fight at a normal time, not 11 or 12 o 'clock when they first come on. But I think this is a home run for Netflix. And it actually, when I look at the chart, you could have said this was Toppy months ago.

22:25If they can accrue some ad dollars based on this and the NFL and live sports, probably still worth a shot. Well, there's all that, plus the content slate. They've got season two of Squid Game. They've got this Keira Knightley series coming out, Black Dog. But this recent run, I think, is a lot on this. You know, I always buy the rumor, sell the news, and I always use the, all right, let's say a new Star Wars is coming out. The very next one, people get all excited. The box office is going to be gigantic. It almost doesn't matter how gigantic the box office is. Ultimately, it's a little disappointing.

22:54So I'm long. I'm not going to trade around it just because I think it's a little ahead of itself. But I think that's what's happened in the last ten days or so. Well, and I would argue that Star Wars has more fiction in it than this fight will. So, you know, it doesn't really matter. Again, this is entertainment. Call it what it is, that's what I'm going to call it. And I love the fact that Netflix is throwing themselves in the ring on this one. I do think that Christmas Day NFL football is a huge thing for Netflix. And I do think that they have multiple levers to pull. And, again, we don't even really talk all that much about gaming and some of the other dynamics.

23:25I think Netflix, when we and we spent a lot of time this week talking about a great week for Disney and a peculiar but extraordinary three year outlook that they gave with a lot of detail. And when I go out to 26 and I see Netflix making 30 bucks a share to Disney's 650 at probably half of the revenue. And so a much more profitable business that I think possibly has more scale. This is what you're excited about with Netflix. This is why the stock has moved. Doesn't mean I don't like Disney. I like the week Disney had. We're not talking about Disney. We're talking about Netflix. And it just gives you some sense on where they are in free cash flow and how far ahead.