Nvidia’s Historic Day… And A Changing Tune On Tariffs 1/6/25

0:02Live 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. Chips rip higher. The SMH ETF seeing its best day since September. NVIDIA setting a record close and nearly overtaking Apple in market cap once again. But can the longtime AI darling keep its lead in the space? We'll hunt for some answers. And a potential shift in Trump's tariff policy helping shares of GM rev up today. What's on the table now and what it could mean for the markets and trade? Plus, bank stocks get a boost and we'll see some big tailwinds for one airline's shares and why weight loss drugs may hit a wall just like your New Year's resolutions.

0:36Let's hope not. I'm Melissa Lee coming to you live from the studio of B at the NASDAQ. I'm the Deaths Tonight. Karen Feinerman, Dan Nathan, Guy Adami, and Chris Verone, head of technical analysis at Strategas, a Baird company. And we start off as we return to all-time highs for NVIDIA, the semi-giant topping$150 a share for the first time since its stock split, notching its first record close in two months, the AI darling jumping more than 3 % today and is now up almost 9 % in just five sessions. Today's move coming hours before CEO Jensen Huang takes the stage at CES in Las Vegas. Will he satisfy investors?

1:11The company will keep the lead in the AI race. CNBC's Christina Parts Nevelis is here with more. What can we expect, Christina? We can definitely expect that he's going to build momentum around this stock. And I say that because just last year, the share price of NVIDIA shares actually jumped about 6 % on day one for this company. So what we are expecting from NVIDIA would be it's AI themed from his keynote that is coming out tonight. It's going to be focused on AI specifically for the Blackwell chip. And I say the Blackwell chip because on the last earnings call in November, they said that they were shipping more than they originally thought, but they didn't actually provide concrete numbers.

1:49Investors want reassurance that they can provide and keep up with that demand heading into 2026 especially. actually. And then also within maybe a tease of Rubin, that's the next iteration of the AI chip architecture that's slated for 2026. There's some rumors that maybe it will come earlier this year. And then since we're speaking of AI, we may also get more about the humanoid robots dubbed Jetson Thor launching in the first half of this year. So literally from software to robots, NVIDIA is really positioning itself to sell, quote, what they call the full stack solution. And I know I just talked about, you know, Blackwell, Rubin, these robots, AI getting all the buzz given how much it contributes to revenues.

2:31But gamers are really excited, too, tonight because NVIDIA is expected to release new graphics cards. And then there is some talk right now that NVIDIA might actually jump into the AI PC processor market, which would put them in direct competition with AMD, Intel, Qualcomm. Again, that's just a rumor. The keynote will be a driver for the stock nonetheless. tomorrow's Q &A with investors will also be a big one because that's when they're really going to get, you know, those questions about financial targets, if they get any updates on that, and China restrictions, et cetera. Yeah. The investor call tomorrow seems interesting to really allow the follow-up to this, you know, potentially momentum-building event.

3:07And it's on NVIDIA's website, so it'll be for everyone to see. They'll have access to it as well. And usually that's also a big driver. And the CFO, Colette Kress, will be speaking tomorrow too in an event, a fireside chat. So there's a lot that could potentially move this stock. All right. Christina, good to see you. Thank you. Thank you. Christina Partznevelis. Good having her here. Of course, it always is. Starting the year off on the right. Absolutely. And by the way, I haven't seen you in a while, so happy New Year to you. A long time. Happy New Year to you. Happy New Year. You know, I hate that.

3:32We have it, like, for another day or two, and then no more. You know, Jensen, he does an amazing job saying what the market wants to hear, and I guess it's about four and a half hours from now. I think it's 6.30 Pacific time is when he speaks. We'll obviously learn a lot more. So I'm not concerned about what he's going to say. my concerns continue to be the same thing. Now it's a stock that's trading north of 18 times revenue, which historically is probably twice the valuation that companies like this deserve. At a certain point, they're not going to enjoy the 76 % margins that they currently enjoy, and competition is coming.

4:03All those things are out there. The price action over the last, and Chris can speak to this, since that 128-ish low has been extraordinary, and here we are at all-time highs. Well, Guy, I think we need to remember this is a stock that really all the price progress last year came in the first six months of the year. For a stock that was up nearly 200 % last year, only 8 % of it came after June. So this has been a long consolidation here on NVIDIA. 150 is really the big level. We're right there. I do expect we'll close through it. We did make new relative highs versus the S &P today. So this is still a name that's very much involved in the leadership fabric of this market, as did Taiwan Semi.

4:39But I think almost equally as interesting is some of these beaten, broken-down semis, which have been off the playing field for six, seven, eight months, have woken up here a little bit. AMAT, Lamb Research, I think that's worthy of our attention. Yeah. You're long. I am long. You know, I've often thought that there's two parts to Jensen that are both amazing, both his technical prowess, right, and what they've built, which is extraordinary, and then his ability to guide the street. I don't know what you want to call it. Lead the street. Talk up the stock. Talk up the stock. You could call it that.

5:10He's really good at that. And I think the bar is just getting higher and higher. but he does seem able to leap over the bar. I mean, you know, I'd rather it not be up five bucks going into this presentation tonight, but I'm staying long. I think we'll see February 26th. We'll have earnings, although maybe we will have a better sense even before that. Yeah, and I guess, you know, I got a lot to say about this. You know, the stock's going to continue to work as long as these sorts of events get, you know, investors excited about what the roadmap is. And I think it's interesting that Christina said, all right, we're not even done talking about Blackwell.

5:42We're going to start talking about Rubin. So that's what he's really great at at mapping that out. The flip side of that is, you know, if they're able to continue to guide that 18 times sales that guy just mentioned, probably won't matter that much if they keep raising the bar in the near term. But I'm more concerned about what Microsoft might have to say. They've been kind of loud over the last few weeks or so. If you go back three weeks ago, Satya Nadella was on the BGT pod. That is Brad Gerstner and Bill Gurley. He said that they are no longer chip constrained. They're power constrained. I thought that was really interesting.

6:14Microsoft is a 19 % customer of NVIDIA. We also know that Microsoft is working with the likes of Broadcom to do custom silicon. That's to diversify away from NVIDIA chips, right? I think some of these guys are getting sick of the pricing power. The guys point about 76 % gross margins, right? And then I go to today. There's a story out that, you know, I think it was in information. They're going to spend$80 billion this fiscal year on infrastructure buildup. Now, that's not all chips. That's a whole host of other things, okay? So let's see what that happens. The last thing I'll say is there's also a story that this Wisconsin data center that they're building out for their open AI relationship, they have stopped the second phase of the build out.

6:53Why? They said the recent changes in technology have caused them to kind of reassess the design of the facility. So I guess if you start to see some pushouts in the builds of these data centers, if you start to see a slowdown in CapEx, which we're not going to get until the end of this month, I just think there's a lot of moving parts. But Microsoft is a great barometer at nearly a 20 percent. I have a question for you. So Microsoft saying that they're not chip constrained anymore. Why is that concerning as long as the because Blackwell demand is insane? But it can still be insane, even if Microsoft specifically is not chip constrained anymore.

7:27But others are picking up that demand. They're not chip constrained. Because they can't get the chip. That means that they have the capacity. Well, they're the number one customer, though. So you would think that they would get supply when they want it. By the way, I just said that the stock is going to – if they have this financial update tomorrow, it's basically a mid-quarter update, and things are fine, better than some people expected. To Chris's point, this stock has consolidated for months and months. There's been a move into Broadcom, into Marvell. This is the custom Silicon sort of trade.

7:55That is a diversification against – away from NVIDIA. Or does the consolidation mean that it's going to move higher because it's built that day? Well, it did move higher. It just broke out. That's where I lean. I mean, we've been chopping between 150 and 125 for the better part of six months. I would bet on a breakout. But, Dan, I think you make up a very good point about Microsoft here. Not only is it not involved, it continues to deteriorate. I mean, it's the weakest of this group. 4.15 on Microsoft has been a really big level for basically the last six months. You lose 4.15 on Microsoft, you begin to wonder, is there something going on here that I don't quite understand?

8:26Yeah, and to Chris's earlier point, the SMH probably topped out in the middle of July, and it's been trading lower to sideways since. It's back on the horse now for obvious reasons. But, you know, you mentioned energy. So Dan talked about, Chris talked about energy use. I mean, VST, pulpit chart in this, had that huge move earlier, well, not earlier this year, late last year, sell-off. Now we're right back to prior all-time highs. And, you know, oddly enough, they report the same day that NVIDIA does at the end of February. So this is, if you want to sort of go downstream, this continues to work.

8:55All right. Well, Bernstein Research reiterating NVIDIA as a top pick. Analyst Stacey Rasgen has a$175 price target on the stock, which implies a 17 percent gain from today's close. He joins us now. Stacey, what are you expecting from Jensen tonight? Yeah, as you said, Jensen puts on a pretty good show, right? It'll clearly be all around AI. We'll see if we get updates on the data center side of things, Blackwell, Rubin. But at the same time, this is also the consumer electronics show. We'll hear about gaming probably. We'll probably hear about automotive. We'll probably hear, as you mentioned, rumors maybe that they're pushing into the PC space.

9:27We'll probably hear a lot about robotics and AI at the edge. I think he's got plenty, plenty to talk about and plenty for people, I think, still to be excited about. How much is it, is the story going to also be what is being announced around NVIDIA, not just NVIDIA specific, but sort of just the whole ecosystem of AI, this becoming, you know, now the mainstream. It's not just corporations building up data centers, but it's a consumer product at this point, or we're entering that phase. Yeah, I hope we're entering it. And we had some updates today, some keynotes from Intel and AMD. And they both talked a lot about AI PCs, where we have yet to see that driving a lot of incremental strength in the PC market.

10:05But I think there's always hope. Qualcomm, the same thing around AI smartphones. So certainly, the technology is the point where it's starting to get in consumers' hands. I think we'd love to see it start to drive actual upgrades of devices on the consumer level. I don't know that we've necessarily seen that yet, like in any sort of like large amount. But, you know, we're all hopeful. We're all hopeful. Stacey, you've been bullish in NVIDIA probably 90 % of the time, and you've been right to be bullish. Here's my question. If there is a competitor out there that concerns you, who would that be?

10:37What company is it? Yeah, you know, so if I think about long term, how does this market shake out? I think GPUs are very important. But I'm not actually convinced at the end of the day it's like two GPU vendors. I cover Broadcom, for example, who does ASICs. And I actually do think the ultimate shakeup, it's probably NVIDIA GPUs. And then for captive workloads at hyperscalers, it'll likely be ASICs. They're all working on their own. And I suspect ASICs, frankly, will probably outgrow in the sense that they're coming from a much smaller base. But you can do the math today. If I was, you know, it's a little bit of monkey math.

11:12But I bet ASICs, relative to GPUs, ASICs are probably low double digits, 10%, 11%, 12 % of the spend today. Could that number be 20 % of a much bigger pie in five years? Yeah, I think it could. But my guess is that's the likely competition. Now, yes, does it worry me? It doesn't really worry me at this point because I don't think we're on the saturated part of the S curve. Things are still growing. So right now, I think that the question asked is, is it a big market or is it not? But if it's a big opportunity, I think there's room for everybody. If it's not a big opportunity, then everybody's in trouble, right?

11:46So I think that's the question that you want to have confidence one way or the other. I'll worry about competition later. I don't think it's the time to worry about it now. Stacey, it's Karen. Thanks for being on tonight. So if you have a$175 valuation, how do you get there? What are the metrics that you think are most important here? Yeah, it's earnings and multiple. I'll be honest. I can't actually remember what multiple we're putting on it right now. but I don't think it's egregious. The stock today, as of today's close, is trading at about 38 times forward, which is kind of right in line where it's trading.

12:18If you look at the five-year average or the 10-year average, that's kind of where it is. And I've made this point on the station before, but as strong as the stock has been over the last year, or I guess two years as this has gone, it's actually cheaper today than it was before it started, right? I mean, as much as the stock has gone up, the earnings have gone up even more, and the multiples actually come down. And the multiple day, if the numbers are anywhere even close to right, the multiple is not egregious at all at these levels. Hey, Stacey, broadening it out, I guess, more to Guy's question.

12:49You just mentioned AMAT and some of these equipment makers here. You look at an ASML, it had a huge day today, up 7.5%. This is a company about a month ago that gave horrible bookings, right? And so this stock was not trading particularly well over the last few months or so. And then a micron, which about two weeks ago gave not great guidance. Now, the stock today fills in the earnings gap. You know, I think the stock was down 10 % or so. Is this more investors looking for other opportunities to kind of broaden out this trade? Because some of the narratives in and around AI for these other names have not really played out.

13:21It's been a very narrow trade in the semi-space. It really has. It's kind of been NVIDIA and Broadcom and more recently guys like Marvell again on the ASIC side. Other names where people have high hopes like AMD have actually been disappointing. And not that AMD was necessarily bad in their AI performance, but expectations were much higher, and they were not able to meet those expectations. I think on the semi-cap side, you're right, people have been concerned about new export controls and limits on these guys' abilities to further ship into China. And in fact, we even took our semi-cap wafer fabrication equipment numbers down on those China risks back in December, so a few weeks ago.

14:04But yeah, today it wasn't just the semi-caps. It was everything, I think, running. There were some comments around the Trump, potential Trump tariffs, and just some other broader excitement around semis and CS that I think took everything up. I don't cover ASML. It's a colleague of mine, so I'll refrain from commenting specifically there. But all the semi-caps were up quite a bit, as well as a number of other names in the space today. Stacey, always great to have you on. Thank you. Yeah, you bet. Stacey Raskin. By the way, Citi upgraded semi-cap equipment stocks, so that's part of the reason why they were up today.

14:33I mean, when you hear somebody who's very bullish, clearly, been bullish for a long time, but continues to say things like, we don't have to worry about the competition right now. And he's been right to point that out. I mean, it's probably not a concern right now, given the head start that they have. He also addressed the size of the addressable market out there. If that's not a concern, that they can continue to grow. I get all those arguments. I mean, my concern has been and will continue to be valuation, not on a price to earnings, but on a price to sales, which is a company. Listen, if you think that it go from 200 billion dollars to somehow north of 600 over the next three years, yeah, they can grow into that price to sales.

15:07If that's the case, if it's not the case, it's a very expensive stock. I don't know. I'm still long. I do think that the stock will peak before the actual earnings peak. So the question is, when does that happen? I don't know. I mean, Stacey has been right for so long on this stock. So I do sort of take some comfort in the idea that he's like, you know, for right now, it's not crazy. It's not expensive. They're growing. He talks about the S-curve. I mean, maybe there's a lot of room to go still. So I'm staying in long, even though as a value girl, it's not so easy to do. Yeah, I mean, he's right.

15:41I mean, it is cheaper than it was in May of 23 when they gave that first guidance. And I guess it really does come down to a few things. CapEx, and we're going to get a good sense of that over the next few use cases. Okay. That's going to be really important as we think about that. So it's less concerning about valuation as it relates to NVIDIA. Broadcom, with that 25 % gap, that got pretty expensive. And so when you think about the guidance that they gave about their custom kind of business between, I think it was$60 and$90 billion by the end of 2027. That was a few weeks ago. That caused that move.

16:11I mean, I think a lot of things are kind of getting ahead of themselves because that's kind of pie in the sky sort of guidance. And so, again, I think if some of the use cases become clearer, I think if some of the CapEx is better than expected, then this stock is going higher. And to your point about consolidations, that's been the story for the last two and a half years. Gaps consolidates more gaps. We're still on stock as well. I think if you're playing this from a trading perspective, traveling stop at 140 makes sense. I think if you're a longer term player, 125 has been long term support on the stock.

16:39I think those are the two levels as we start a new year that you have to be very disciplined about. All right. Meantime, the big bank's getting a boost as the Federal Reserve's top banking regulator, Michael Barr, announced he'll resign from his post next month. The news coming amid speculation that President-elect Donald Trump would seek to replace Barr. Investors betting this could pave the way for some wheeling and dealing in the space, could also mean maybe less strenuous capital reserve requirements, Karen, a lighter regulatory touch, more friendly banking regulator, all of the things that would theoretically be amazing for stocks like a city, by the way, which hit a new high today.

17:10Right. All of the things would be amazing for all the money center banks. I think that this is not new. I mean, this particular bar is new. But the idea that it would be a more friendly regulatory environment, that maybe there's some capital issues that are improved things. The M &A environment will help all of the big money center banks and the asset wealth businesses are doing well, given the market so high. So there's a lot to like here. I think there's a lot to still like. To me, the story changed only a tiny bit today. It was already pretty good. Well, I think it's important the stocks live up to the news because the news from the election to this news has been bullish.

17:48So the stocks have to justify that. They largely have. They've been a very important part of the leadership fabric of this market for, let's say, the last 18 months. So if we're going to continue to kind of operate in the status quo, the uptrend in the market, the bank leadership, I think it's important they respond to good news bullishly. They did today. I like Wells. I like Citi. I like Bank of America. Yeah, it is interesting the names that you just mentioned, that they're probably going to benefit most from that. J.P. Morgan closed down on the year. I just think it's on the day. I think it's really interesting that investors are excited about this.

18:17What happened when we saw rates go up precipitously in early 2023? We saw regional banks fail, right? And so when you think about higher for longer, you think about loosening up regulatory as it relates to, you know, asset. I just don't see that as a good deal. These stocks trade well. They're trading at valuations they haven't in a very long time. And the BKX has just come off. I think about 7.5 % from those recent highs. I just don't see a reason for excitement around a better regulatory environment as it relates to the banks. One thing about Citibank, you said all-time high. Remember, there was that 10-for-1 split about 15 years ago that they never got close to being.

18:53That's true. But in the modern era of post-GFC. No, 52-week high without question. And I'll say this. This is one thing we've been consistent on. I mean, their book value of the stock in October, they announced, was 101. And we said, look, it's probably not going there, but 80 percent of book value makes sense. I can do that math, Mel. And we've said$80 is a landing spot. And I'll stand by that. It continues to sort of levitate towards that. Coming up, full stream ahead. Shares of Fubo TV tripling today after announcing a merger, how its content is coming together with Disney and what more media mergers could be on the horizon.

19:25That is next. Plus, planes, trades and automobiles like Uber and United Airlines were in the green today. and if those modes of transportation can bring your portfolio to its destination. Don't go anywhere. Fast Money is back in two.

19:44Welcome back to Fast Money. A big announcement in the streaming world. Disney combining its Hulu Plus Live TV service with Fubo. That stock more than tripling in value on the news. Julia Borson's got all the details. Hey, Julia. Melissa, Hulu Plus Live TV and Fubo together have 6.2 million live streaming subscribers. That puts the combined company behind only YouTube, which had 8 million as of its most recent announcement. Now, Fubo and Hulu Plus Live TV's deal is a testament to the pressure to scale. And of this new company, Disney will own 70 percent and Fubo shareholders will own the remaining 30 percent.

20:20Now, both services will be available to consumers separately, and Fubo will create a new sports and broadcasting offering featuring Disney's networks, and will be able to offer some new skinnier sports bundles in the future. Fubo, in expanding its offerings, will have more leverage in carriage negotiations, while Disney gets greater distribution and more streaming ad inventory. Under this deal, Fubo has also settled litigation with Disney and its partners in sports streaming service Venue, apparently clearing the way for Venue's launch. Venue's co-owners Disney, Fox and Warner Brothers Discovery will pay$220 million to Fubo.

20:59The combined company will be cash flow positive at closing and projects$7.5 billion in revenue by 2028. And all of this comes ahead of Disney launching its ESPN flagship subscription later this year. Melissa? Julia, does this pave the way for more deals? I mean, how should we look at this in terms of all the offerings, the sports offerings? And you mentioned scale, so combining in theory would be more advantageous. But it seems like there are a lot of different offerings from the consumer standpoint to wade through. A lot of different offerings. I think consumers are going to have increasing amounts of choice.

21:35And I think a lot of that choice will be around bundles. We may see a lot more consolidation this year. But I think a lot of that will depend on how the regulatory environment actually ends up being for deals. So while that's still a little bit more uncertain, I can say for sure that we will see more bundling. There are so many options. These companies understand the benefits of coming together and bundling their offerings to make it easier to navigate and also to remove churn, reduce churn. For Hulu and Fubo, they will have a lot lower churn if people aren't just signing up for Fubo to watch a season of their favorite sport and then dropping it.