Nvidia’s Bounces Back… And GM Staying Plugged In 10/8/24

0:00Live from the Nasdaq market site in the heart of New York City's Times Square. We're back. This is Fast Money. Here's what's on tap tonight. In the chip, shares of NVIDIA riding high again, up over 6 % to start the week and surging nearly 30 % in the last 30 days. The move handily outpacing the rest of the AI names. Can you still ride this rebound? We'll debate that. Plus, bracing for impact. Hurricane Milton closing in on the west coast of Florida. How much damage will this once in a lifetime storm inflict on residents there? We've got a live report. And later, China's surge loses steam. Is the Beijing boom over Inside Jam's analyst day with the stock stuck in neutral?

0:38And a look under the trading hood over at Robinhood. I'm Melissa Lee coming to you live from Studio B at the NASDAQ. On the desk tonight, Steve Grasso, Karen Feinerman, Courtney Garcia, and Guy Adami. We start off with two big moves in today's markets. China ETFs pulling back in a big way as that country's market reopens after a week-long holiday. And NVIDIA closing back in on record highs and reigniting expectations for the AI trade. The chipmaker's 4 % gain today, coming after Foxconn announced plans to build the world's largest super chip factory for the company. But the stock has been steadily rising over the past month, up nearly 30 % in that period, far outperforming its MAG7 peers.

1:15So we're concerned over the end of NVIDIA's run. Greatly exaggerated, Guy. Good to be back here in New York City, NYC. We had fun yesterday. Back in EC. Well, I mean, when the stock goes back to NVIDIA, I mean, after June 20th made an all-time high, 140 and change. When it was down 35 % on September, I believe it was August 5th, a lot of people looked at it and said maybe this stock had seen its better days. Now, it's climbed back since. Steve will talk about this, but technically this pennant formation that's been in for quite some time has finally been broken. And it appears as though it's broken to the upside.

1:52With that said, now it's got to recapture that 140 level. We report earnings, I believe, on the 14th or so of November, so you have some time. But the bulls have acquitted themselves well. Now it needs to close above that prior high. We should note there are also some comments from the Hanhai CEO saying that demand for Blackwell was much stronger than they had thought. And so that was positive, especially on the back of the comments last week from Jensen Huang saying demand for Blackwell, the newest chip, is insane. Yeah, insane. That word sort of stood out. I mean, he does two things very well.

2:20obviously created a, not monopoly, but a very, very strong number one position in chips. And the second is managing the stock, which he's just extraordinary at, I think. So we're not going to, as you said, late November, I think we're going to see earnings from them. But I think, you know, all this money going in, we have AI, the new valuation of, right, open AI. Just money just pouring into the space. And where does that money go once it gets into the space? You've got to buy chips. or maybe you could make your own. We saw last week's IPO. So is it Cerberus? Is that right? No, that's not right.

2:59It's not Cerberus. I know that. Cerebrus. Cerebrus. So I think, I mean, it's taken a while. I did touch 140 at the very high several months ago. I don't know. Maybe it gets back there. But I think at some point this has been a really nice move. I've got to look at selling some upside calls. 140 was the level it hit on that famous outside reversal day, June 20th. Heavy volume, record high, and then closed on lows. Hasn't recovered since. So that was a day worth noting in the record books, so to speak. Pay attention. Cheapest thing you can do, and you're right. And it's the same type of thing we saw back on March 8th, if you remember, that stock made an all-time high.

3:39That day had an engulfing pattern within a month and a half for two months. It had sold off some 35%. So it was the identical type of thing. But, you know, Steve and Courtney can talk about this. They've both been steadfast. I mean, now it's when it needs to prove itself in terms of the upside. I mean, but I think, as I said, November 14th-ish for earnings, you've got some runway until then. I've been a little less steadfast on this last run. I thought it was going to retrace and get back down to below the 110 level. That was where I thought it should have had support. It did. But when you look at the other chip companies, they don't really have the explosiveness, to Karen's point.

4:14It's a monopoly. 70 % to 95%. It's not a true, true monopoly, but it's pretty damn close. They have a very good moat. Let's put it that way. They have a good moat. And when Jensen says that the need and the want for their chips is outsized, Guy, remember the DOJ inquiry in the stock? It was a couple of weeks ago. Then what was the other thing? They can't make enough chips. Then there was another headwind that these chips are too far sophisticated that no one needs that type of chip. So we keep going this roller coaster, and at the end of the day, we still wind up with the same thing that NVIDIA is the only player in the space until further notice.

4:55Well, it's the only player, and that is the only player we know will get the dollars. All the money being spent on AI, we know that it's going to be spent on chips in some way. In terms of the other spend, we don't know if it comes and goes based on monetization. That story has yet to play out. But this is the one name that has been steadfast in terms of being able to gain on this AI story. And I think really what's going to be crucial to them is that Blackwell chip is going to be expected to have in the billions of revenue in 2025, right? So I think the idea is, and we're still looking out to next year, if demand is likely going to still outstrip supply, which it is expected to be so, especially after you're getting good news from Foxconn and Supermicro, that the demand is still there, that is a positive for them.

5:34And I think it's going to continue to be. I think especially when you look at some of the market moves today, you're seeing that that risk on trade is still there. People are not just getting out of this AI or this tech trade right now, even with valuations higher. I mean, you're going to continue to see some of that money go in, and I don't think the story is ending here. We did mention, though, that compared to the other AI-adjacent names, right, NVIDIA has done far better. The other names have not caught up yet from there. Because it's actually scary. It actually is starting to scare me six minutes into the show because that's exactly what I was about to say, and this is what I will say.

6:08There are three A.I. adjacent names that we all talk about. Look at Micron. Obviously had the huge move after earnings straight up to about 115. Look at it since. It's back down to 102. No bounce. And the trend has not been good now for four or five months. Look at Dell. Same type of things. Round trip the entire move from last fall. Bounced a little bit. Not great. And look at today. Saved the best for last. Look at the move in Supermicro today. SMCI. Open on the highs. Closed on the lows. That stock has been awful for quite some time. You know, at some point where there's smoke, there's fire.

6:38But right now it's NVIDIA's world. So you touched on Dell. I have a reasonable size position in Dell. I mean, it's obviously, it's different. It's certainly related and correlated to NVIDIA. But it's, you know, it trades it 15 times, 15, 16 times. It's a, you know, there's a hardware, right, element to it and some software. But I sort of think it's well positioned. It did have that ridiculous run from about 85 to 180, which was just way too high. But I think we'll see. Even in late November, we'll see how they're doing. But I think it's going to be a good quarter. Also, though, if this is a market call as well, right?

7:14So if we think that the market, I don't think that the market can turn around and head lower and not take NVIDIA with it or vice versa. Right. So NVIDIA is the market. The market is NVIDIA. So you have to believe that the market is OK at these levels. I guess I'm asking, and I think a lot of people are wondering, what happens to the AI adjacent names, the other AI players, as people were searching for alternatives to NVIDIA. If the market goes higher and NVIDIA goes higher, that's a fair argument. What happens to the other ones? Do they also go higher or do they continue to fall by the wayside?

7:50I don't know. Go ahead. Go ahead. Well, really quick. Guy brought up Micron. Micron's a great play, right? Because the more AI you need, the more storage that you're going to need. So that's why the stock took off. But the stock is also down 20 % in the last three months. So these are where NVIDIA seems to be bulletproof. The adjacent names seem to be taking all of the hits when the market sells off. So I think if the capacity expands such that the pricing frenzy can actually be moderated somewhat, that's probably not so great for NVIDIA. but you could see it as because the demand is still there that the adjacent names could do well, right?

8:32Like a Dell. And one other thing I just want to add about Dell is the PC refresh. And they will be the beneficiary of that unrelated to NVIDIA. Yeah. What's your guess on this one? Yeah. And I think, too, when you're looking at NVIDIA, we're talking about, OK, is NVIDIA the market? Can it do good with or without that? I think what's kind of interesting and I don't want to get lost in this is we're talking about what's happening today. But when you look at like over the last three months here, NVIDIA has actually significantly underperformed the most boring stocks out there like utilities because rates are coming down and you're seeing some of those cyclical stocks do well.

9:02So I think this is something where I don't think it's over. I don't think NVIDIA is going anywhere, but I do think there are a lot of other opportunities in this cyclical trade. I think that's something you don't want to get lost in there. I'll effort to answer your question, Mel. I mean, some of this is just how many investment dollars are there to go around. And if you think about what happened to software and the whole software segment, when all these AI stocks did extraordinarily well, they were sort of left by the wayside. One, because the CapEx dollars weren't going there, and two, because the investment dollars weren't going there either.

9:30And I think to a certain extent, you might be seeing it some of these AI adjacent names. So if NVIDIA wins, it could very well mean that some of these other names will not. Well, we are talking about China. We're going to talk about China and the fizzling of the rally that we've seen on the first day of trading there. But these are sort of like two sides to one coin in terms of the trade. We saw money come out. I don't know if it was a coincidence, but you saw money come out of MAG7 names. You saw money, a lot of money going into China. Right. And we saw that reverse today. Right. A very seemed to be a very clear, direct reversal.

10:02I mean, almost I don't know if every MAG7 was up, but a very strong day there. I think are we getting to China now? Are we going to get to China now? But, I mean, do you think if this rotation continues out of China, that's enough to help the MAG7 names? Yes. Yes? That's my vote. Are we going to do a headcount? Go ahead, Karen, you're up. Well, I think China will rebound. You're in both. You're in both. You're in both. Yes, I am in both. All right. I am in both. All right, let's talk China now. The Hang Seng Index plunging more than 9 % overnight. It's worst day since 2008 after China failed to announce any major stimulus plans on the first day of trading after a week-long holiday.

10:41Our next guest thinks retail investors should completely avoid China. CNBC contributor John Rutledge is chief investment strategist at Safinad. John, always great to see you. You think this whole thing was a head fake? You don't believe the stimulus will have any effect? No. Li Zhang is trying to hit their 5 % growth target. They're not going to make it. They have terrible real estate problems. Pay offers are going down. Home prices last month fell 5%. biggest number since 2015, they have to find a way to stop that real estate deflation. And without that, all they can do is small moves from the central bank, half a point on the interest rates and a tiny move in the reserve requirement.

11:25And they're throwing half a trillion RMB, which is like$30 billion at the problem, just not enough. And an investor to me is someone who's hanging in for the free cash flow stream, not for the moment. And so that free cash flow stream requires you to own something for more than a year. More than a year means you're only going to get the dividend in the next year, the rest of it, your hopes and prayers. I think that as long as Xi Jinping is running the place, he'll keep teasing investors with bring your money, and then he'll do something to drive them away again. And they're doing that right now.

12:03What do you think is the hardest part about the real estate market to fix? And the thing that maybe is the most misunderstood by Western investors. I mean, I'm wondering, because, you know, you think about, for instance, the ghost cities in China, and a lot of those apartments were paid for in all cash by average people who are looking to invest. They're empty. They're still empty. There's no infrastructure around these apartment complexes. But what can be done to make people feel like that investment has paid off or is gaining in value? I mean, it's just an asset that's sitting out there that can't be liquidated.

12:36It's a great question, Melissa. Their wallets are empty, too, their bank accounts. And so there's nobody out there to buy them. In the announcements they made week before last, the central bank announced they were going to do something to allow first-time homebuyers to have a lower down payment, 15%. They were doing something to allow local governments to help people buy houses, first-time homebuyers. But those are tiny things in a market that's vastly overbuilt. And those apartments are not going to go away. So when you build an economy based on purely real estate inflation, it takes a long time to unwind it.

13:11And during that time, I don't want to own Chinese stocks partly because of that, but mostly because Xi Jinping can wake up in a bad attitude one morning and take it all away from you by picking up the phone. That's not a place I want money. So, John, with that backdrop, what are the likelihood of something bad happening with the Philippines, which has been in the news recently, and or Taiwan, which has clearly been in the news for the last three years? Well, Guy, you know, Taiwan's the big question. Nobody knows the answer. But Xi Jinping wants to get that done while he's still alive, and he's an old guy, you know, so he doesn't have too long to make it work out.

13:50there's discomfort inside the party among the older members of the party for that. And the military is not really very tightly organized at the moment. We can see that from the people that they've pulled out of key positions. So they're not in a spot where they can do that. The Philippines, they can make a lot of trouble there and all over the South China Sea. And there's not much we can do about it because we're stretched between Ukraine and Israel. And we're not paying much attention to what China's doing out there. John, what we saw today also is sort of China's response to increasing tariffs being put on their products around the world.

14:26We saw them put retaliatory tariffs on brandy, for instance, out of Europe in response to Europe's taxation of EVs. How far along does this go and how do you see this playing out next year after the elections? Because both either administration looks to have sort of a very tough view on China. Absolutely. You know, the economists has put out estimates of the amount of tariffs you'd get from these two candidates, and they're both really big. Trumps are even bigger. And they put a real dent in trade. To that extent, they put a little bit of upward pressure on prices here, but they also reduce growth there.

15:04And so I think that tariffs are going to be in the news big between now and November 5th. But after that, they're going to recede a little bit because the political payoff for We're rattling the cage on the tariffs. The weight is much lower after that. But trade with China is going to be tough, and the tech trade especially, because the more we worry about national security, the less we're willing to sell them these fancy chips that you folks were talking about. All right. John, always great to speak with you. Thank you. Great to see you, Melissa. John Rutledge of Safanad. You have a toe or half a toe?

15:38I have two toes now. Two toes now in China. Okay, so you bought some more. Yeah, I bought some more today. not it's a tiny bit higher but not significantly from where I put the first toe in I just think that so people got really excited and then it pulled back but I do think this is a much bigger change than this where China was uninvestable right for for me so millions of people institutions and and just there was no way you could do it because you didn't know what you had this is a very different message they don't have the same foreign direct investment that they used to have, right? So it's got to come from within.

16:15And I think that the valuations, even having moved a lot, are still incredibly attractive. So I'm two toes in now. All right. If you look at the machinations that we've seen over the last couple of days, this exchange was closed. This one was open. This one just caught up. This one sold off. Look at Alibaba. The stock went from$85 to$120 basically pulls off. So if you're using that as your barometer, Xi Jinping really wants to be successful going into our elections. Where is competition? I think he's going, to Karen's point, put the pedal down as long as he possibly can. Now, he might just run out of gas, but he's going to do whatever he can to keep his markets going.

16:59So you think that there will be more stimulus to come? I think there's going to be more stimulus to come. I don't think anyone opens up with their best offer first in any country. Yeah, and I actually, I'm on the same page with you here. I think some of this pullback here, some of this is going to be profit-taking after a huge move you've seen in China. But I don't think this is something that just this news is saying, okay, we're going to completely get out of China now. I mean, I think there's a lot of opportunities. And Karen, I think you bring up a lot of really good points that I agree with.

17:23And I think as an investor, you need to realize how volatile this can be. Because yes, whatever it is, the Chinese government's going to say, it can swing very wildly. So yeah, you shouldn't go all in on China, put all of your money there by any means. but as the second largest economy in the world, you want that opportunity. And you see how quickly it can go on the upside. Last couple of weeks are a great reminder of that. I'll say this. Hashtag smooth and I were sitting. That's Tim, by the way. Yes. That's a great. Isn't that a great nickname for him? You think it's great because you made it.

17:49And Tim said last night that he was selling upside calls on Alibaba against a long position. And we talked about the levels made a lot of sense. You know, it traded up to a prior high around 123 or so. It should have pulled back. I didn't think it would do it today to the extent that it did. But here we are. So I'm with everybody here. I think you still got to trade this around on the long side. And, you know, if you're looking for FXI, 32-ish, prior resistance should be support. We're getting close. Coming up, a financial payers trade out of Wall Street. Why analysts are passing on Amex and grabbing hold of a firm.

18:19The details on that call next. And we continue to monitor the progress of Hurricane Milton, the latest on the storm getting stronger again, and how millions of Americans are prepping ahead of landfall. Don't go anywhere fast when he's back in two. This is Fast Money with Melissa Lee right here on CNBC.

18:47Welcome back to Fast Money. Let's get to our call of the day. BTIG downgrading American Express in upgrading buy now, pay later stock, Affirm. The firm lowering its price target on Amex to 230, saying the company will likely miss the street's 2025 expectations as fundamentals worsen. Meanwhile, BTIG giving Affirm a$68 price target. Analysts bullish on its path to profitability and accelerating growth as it continues to take share from big name credit cards. Specifically, Capital One Financial and Synchrony were mentioned in this note as giving up share. Yeah, I actually thought that Capital One, they thought, if they were able to close the Discover merger, then that would be good.

19:25I thought it was a really interesting piece. AXP, though, I mean, many times I've thought they're topped out. This is, you know, the high end spender has spent too much. And and then it ends up not being the case. This might be the case this time. But I think those the other part, the affirm part is really interesting to me. And that last quarter was just so phenomenal. I got to think they're still on a upward trajectory that's pretty strong. Interestingly, though, I think starting tomorrow and the next day, J.P. Morgan will no longer allow their cards to use affirm. Oh, interesting. Yes, I believe that's right.

19:59at me if that's wrong, because, I mean, this is going to be a race now. Who told you? Who's it rhymed with? I read it. It wasn't from Jamie. It wasn't from Jamie, basically. Yes. Well, sorry to hear that. You and me both. Yeah. Down for him to sell ahead of earnings on the 18th. Yeah. Now, I think credit card debt in the United States is approaching$1.4 trillion. I think delinquency is the highest levels in 13 years, north of 7%. And the rate now, the average rate is north of 23%. I mean, that's not a healthy mix. So American Express is a Teflon brand without question. But at some point, this factors into what they do.

20:36And that's exactly what they said. Revenue growth, build business. They said credit trends. All of those things will worsen. And they'll be the, so to Guy's point, Karen's point, they're the last one to go, right? They're the last one to fall. But when you look at it, they've outperformed MasterCard. They've outperformed Visa. and a firm, if you're just playing this bounce where it's a pair straight, I don't disagree. It's a good strategy, but I think it's going to be short-lived. I think AXP still performs. Yeah, and I think they've been in a really good position because we talk a lot about the different consumer, right?

21:13Like the high-income versus the low-income consumer, and that high-income has been better positioned. They specifically have the really young, high-income consumer who tends to elevate their spending at higher rates. They are happy to pay subscription fees and cards for credit card fees. And I think that's really been able to insulate them a lot from this. I do think they've done very well this year. They are starting to get expensive. So I think just purely from a valuation standpoint, I get where this is coming from. But I think of all the card companies, like they are better positioned than many of them.

21:38Coming up, a few stock moves catching our traders' attention today. The reasons behind those moves straight ahead and the latest on Hurricane Milton's path and how millions of Americans are preparing for landfall. You're watching Fast Money Live from the NASDAQ market side in Times Square. Back right after this.

22:01Welcome back to Fast Money. Preparations and evacuations happening at a feverish pace in Florida as millions brace for a direct hit from Hurricane Milton tomorrow. NBC meteorologist Angie Lastman joins us for more on the path and the power of the storm. Angie, what's the latest? Hi there, Melissa. We've got a now Cat 5 Hurricane Milton. This is new from that latest update. winds coming up to 165 miles per hour. You might remember yesterday it was a category 5 storm. It had a little bit of weakening. Now it's moving northeast at 9 miles per hour, and it is expected to maintain that 5 strength here as it approaches the peninsula of Florida.

22:35Now, landfall a little later than we initially thought, a little farther to the south. We're talking maybe midnight to 3 a.m., somewhere between essentially Tampa and Fort Myers. It looks like the average point in there is about Sarasota. So we'll see a Category 3 maintaining its major hurricane strength potentially here as it moves a little farther inland. We'll see it Cat 1 by the time we get into the Space Coast, but still wide range of impacts. Specifically, storm surge here is one of our most concerning things that we're looking for. 10 to 15 feet of storm surge, where the center of that system comes onshore is going to be where we really focus in on the right side, the south side of where we'll see some of the worst of that storm surge, potentially talking about places like Lido Key.