Oracle Hits A Snag… And How Prime Day Could Boost Retail’s Slump 10/7/25

0:01Live from the NASDAQ market site right here in the heart of New York City's Times Square this is fast Here's what's on tap. A warning sign from Oracle. Shares are down, but for an interesting reason. Is it a storm brewing or maybe just another head fake? Fire up your credit cards. It's Amazon Prime big deal time, whatever that is. We're going to talk about what's at stake for Amazon leather retailers. Plus, how a devastating fire could impact Ford's supply chain for months. The White House policy that may hit housing and gold. It keeps shining bright, hitting another big milestone. Hi, everybody.

0:40I am Brian, in for Melissa again tonight, coming to you live from Studio B at the NASDAQ Market Site. On your desk, Tim Seymour, Karen Feinemann, Courtney Garcia, and Steve Grasset. Welcome, everybody. All right. We start with what might be a sign the red-hot AI trade may be showing some cracks or not. Oracle shares down today. It was on a report that its margins may be lower than thought because of some NVIDIA-related accounting. Oracle, which briefly flirted with a trillion-dollar market cap after earnings last month, got down about 18 % from its record high. It's complicated. So let's make sense of the story and talk about what it may or may not mean.

1:24Joining us on set, our friend Seema Modi. Brian, thank you. It's great to be back. And a big story today. We saw Oracle move as much as 5 % on this report from the information that alleges that Oracle's cloud margins, which is tied to the build-out of AI infrastructure, will be lower than what Wall Street is currently predicting. And that's due to the cost of buying NVIDIA chips, the capital-intensive nature of building out data centers, whether it comes to the power issue or also labor. What's important to note is that this concern around long-term profitability is not new. Even when Oracle came out with that blockbuster report last month and came out with that mega backlog of cloud contracts up 529 percent, also known as RPO, which is what sent the stock higher by as much as 40 percent.

2:09Even then, analysts who covered the stock raised the concern about visibility. What is the what is the return on investment? What is the long term profitability picture look like six to 12 months out? And I think this report is now showcasing some of those concerns coming back to light. What we do have is in less than a week, Oracle World kicking off in Las Vegas, where we will have the two new co-presidents alongside Larry Ellison, the founder of Oracle, who will be on stage discussing the Oracle build out of data centers, the growth opportunity. And after that will be the Thursday Analyst Day where the financially motivated questions around profitability, what the tenure of this open AI partnership looks like, will likely get addressed and will obviously be market moving, given that there are now these concerns around what the picture looks like for Oracle.

2:55Well, one would hope that whomever might be at that Oracle world in Las Vegas will ask either one of the two CEOs or Mr. Ellison where they're going to get the power. That aside, this was a funky report, Seema, because it came from a tech research publication, The Information. I was trying to figure out sort of what it meant. Like, what was the reaction to this report? Like, was it like, oh, Oracle has accounting shenanigans or this is kind of how we do it? I think to your point, this is just a pay to play move for companies like Oracle that are seeing themselves as a key enabler in the whole AI workload space.

3:32and therefore think that they need to continue to increase capital expenditure to be a critical player in this whole AI story. And so a report that suggests that maybe margins are going to be a little bit weaker than expected in the short term. But the big question is, when does that profitability picture improve in the long term? And that's what's being sussed out by the street right now. I think the power play story is going to be interesting. You know, right now, yes, there's a learning curve around building data centers and understanding the capital intensive nature of power. But over time, you would hope that that would be commoditized and become less of a concern.

4:05It feels funny to be poking at margins when we knew the margins weren't going to be good. Right. And so if you talk about a gross margin and this this report referred to 900 million in sales and 125 million in profit. So about 14 percent gross margin. What I've seen the market do for the last three weeks and this is like open to anybody. But I mean, it feels like no one has paid attention to margins. No one's cared. Why do we care about it today? And so I think it's dead on. I think we've worried about the profitability of all of Oracle's business. In fact, the story for Oracle has been this transition from highly profitable software business, you know, margins in the 60s to 70s to OCI, which is in the mid 20s at best.

4:47And this is below that. And I think that's that's the point is that it was I think it was the separation between the 70 percent that people thought it was and the 14 percent that it is. I think it was just a separation. They knew it was low, but I don't know if I think that caught a lot. The stock fell 7%. It was like Steve Grasso dropping a penny on the street. It's like a stock that's gone from 100 to 284, whatever it is. Right. Let's not make too much of this report. I understand that. It did move the stock. It was a compliment to Steve Grasso. Was it a lot or a little? I don't know. It was a little.

5:15My point is the stock moved a tiny bit in relation to how it's moved the last year and a half. It wasn't like a catastrophic fall for Oracle. No, but I mean, remember when that sort of stunning RPO report came out, right, of this giant, giant backlog? There was, at the time, a discussion of, I mean, basically it was some wholesale business, right? So that was a kind of much lower margin business that would be low single digits. So, I mean, that's not new that some of this, there would be a margin hit here. I think it's more the idea of the market is getting concerned about, you know, we see tons of just giant deals.

5:52To your point, how will they happen? When will they happen? Will they ever reach the promise of these very, very huge headline numbers? And so they're sort of wondering, all right, well, let's see how it actually plays out. We haven't really seen that yet. We do see NVIDIA's numbers because that's revenue now. But we don't see yet. They've talked about$3 to$4 trillion over the next few years. We haven't seen that yet. There just seems to be, I think, cracks in the belief that this is going to keep going gangbusters and ultimately it's all going to be worth it. It's not all going to be worth it to everyone who's involved.

6:26So I've actually been paring back somewhat on anything that has exposure. I feel like I got to just take some money off. You were part of that seven percent today. Not an oracle, not an oracle. Very mysterious. Seema Modi, it's great to see you. Thank you. Courtney, and I think to Karen's point, I want to be very clear with the audience, too. I feel like that a lot of these we're getting 10 to 15 years of deals announced now. There's no way. And I'm going to just say it. There's no way the pace of any of this can continue in perpetuity. I feel like we're getting all the deals announced now that may drive earnings for years or decades to come.

7:07Fair or foul? Yeah, and that's what I think the markets are really trying to suss out here, right? Because I think realistically, you're seeing people are just pouring money into the AI trade. A lot of people are starting to compare this to the tech bubble because things are starting to get expensive, despite the fact that there's still a lot of nervousness in the markets. But people just want to be part of this trade. But at some point in time, I think Karen brings up some really good points here. You want to see that revenue that's actually going to be generated. And so as much as we're optimistic about the demand, can they actually monetize it?

7:35Yeah, that's it. And we'll see. Meantime, Jim Cramer held his monthly investment club meeting and a rather special guest joined. That is NVIDIA CEO Jensen Wong. In addition to meeting club members, Wong also talked to Jim about his partnership with, you guessed it, OpenAI. This is a partnership that for the first time, OpenAI is going to buy directly from us. Usually, a cloud service provider buys from us, and they rent from a cloud service provider. And so now it's going to be a direct partnership. We're going to help them build an AI infrastructure that they operate themselves and really set them up for five years out when they're going to operate their own cloud anyhow.

8:22There you go, Tim. He said, set you up five years out. Is there anything to what I'm saying or is it just total nonsense that all this stuff that's happening right now is for five and 10 years out? There's no way this pace can keep up. Maybe there is. Not only all that we do is talk about a bubble. By the way, Ed Yardini, who's been doing this a long time. I don't know. Maybe someone else said this, but he said we have a bubble in bubble talk, which means actually things are OK. But OpenAI, a trillion dollars of deals. As you said, we've put it all on the table now for a company that won't be profitable probably until the end of the decade.

8:59The thing around NVIDIA is if this was six months ago, one of the questions for investors was, what does NVIDIA do with all this free cash flow they're generating? How are they going to be reinvesting? Well, there's no question we've gotten our answer in the last couple of weeks. They are an AI infrastructure company, and they are going to they want to be the bottom line de facto. A couple of great reports out there, one by Piper that also headlines this. I think this is part of both the excitement and the challenge about investing in NVIDIA here because people have that concern. All right. So let's stay on that topic, because certainly over the last few weeks, folks, everybody and their mother and their mother's financial advisor seems to have started talking about AI bubbles.

9:42circular money, and even the old vendor financing fears from 25 years ago. Now, worries about energy? Suddenly the hot new thing. That's great. But your first guest today says you need to stay calm and look through some of the scary stuff. Morgan Stanley, Private Wealth Management Executive Director and Private Wealth Advisor Katerina Simonetti joins us on set. You know what I mean. Suddenly it's become very in vogue to talk about AI bubbles and the lack of energy. He's a guy that's been talking about it for a while. I kind of like it. feel complimented by it. What are you talking about with clients, however?

10:16Brian, thank you for having me on the show. And it's a very fair question because you see this barbell happening with AI conversation. On one side, you have this core AI names that everybody is following. On the other side is the search for almost the next big thing, this micro caps that is not productive. And I think that the core advice that we can give to our clients and investors right now is to broaden our look at AI. Like just go at it from, you know, 10 ,000 foot view and look at the companies that participate in the buildup of infrastructure, of the data centers. Look at the companies that are going to give us energy, the nuclear, and these more portable type of stations.

11:00Anything from wiring to also the key participants and companies that are going to benefit from AI implementation like healthcare, like financials. And if we look at it that way, that's when the AI story becomes a true story because we compare AI a lot to internet, but I think it's more like electricity. Yeah. And I love that because I was talking to a former banker today and he made a great point. He was saying basically that we treat AI like a monolithic thing. Like it's like, this is AI and everything. No, it's going to be AI for apps, for everybody's going to be using AI for whatever they do.

11:34CNBC will use it. Utilities will use it. Clothing companies will use it. It'll kind of get spread out. So it sounds like you're saying there's a lot of opportunity all along sort of that sprinkled margin. Absolutely. And the key is to understanding AI and understanding the profitability and the expansion of the pricing power that it can bring. So going away from it's the next best thing and accepting it as the key core component of our life that is not going away, that is going to drive this market to the new levels of growth. So we do not think that we're in a bubble. We think there is a lot of opportunities in the sector.

12:10We just need to get a deep understanding of what it is that we are buying and owning. So when you think of, first of all, thanks for being here. Nice to see you in person. When you think about the industries that would be really effective in a positive way by cutting costs like banks or something like that, beside banks, which we can really see the promise there, what are the other types of industries that will really be the beneficiary of the efficiency they can gain? Well, absolutely. And first of all, I would say probably every industry, right? Like I cannot think of the industry that would not, but the top of mind is healthcare.

12:42When we think about the clinical trials that used to take years, with AI right now, we can narrow down the list of potential candidates, patients with certain traits, the outcome. They can analyze the data so quickly right now. So things that would take years are not going to be significantly more efficient when it comes to, you know, clothing. Right. Like choosing clothes and styles and, you know, figuring out where you're going to shop. Or neckties, Brian. Exactly. That's a very, by the way, that is a fantastic tie. Thank you. AI simulated. I want to say that is just you have style and class.

13:16Steve Grasso. So, Katarina, for clients, when you want to get them out of tech or more diversified and you talk about utilities or you talk about industrials, industrials are only 9 % of the S &P. So, it's hard to get a lot of attention there. Do you get pushback there? Do they want the shiny thing, the new thing? Not at all. It's hard to argue with industrials being up 17 % this year. And in our view, industrial is not only a key component of the AI story, but also the buildup of the infrastructure in this country, our roads, our bridges, our energy infrastructure. I mean, everything, single thing really relies of us having a strong core industrial base.

13:55And again, it's understanding how it really is the glue that ties everything together. And it's also a great defensive sector. It doesn't feel defensive at being up 17 percent, but it is a key component of investment. But your point at the top, and I think this is a critical point, I think, that there are a lot of stocks that are small caps that are up a couple hundred or a couple thousand percent this year. Nobody had ever heard of them before five or six months ago. They got AI in their story now. And I think, is it investors? Is it gamblers? I don't know. But I feel like there are a lot of stocks or companies that may not be around or what they say they are in a couple of years.

14:39Is that a fair statement? That is an exact fair statement, because the first thing we explain to investors is the core difference between gambling and investing. And we want to understand at all times what it is that we own, the competitive advantage that company has, the possibility for the growth, the free cash flow that it brings, how exactly how it can benefit from AI. Just having AI in the name of the company or having it loosely affiliated or something that somebody next door tells you like the next thought thing absolutely has no role in the portfolio. If we don't understand what it is that we own and the possibility in the future and exact positioning of the company, it has absolutely no role in anybody's investment.

15:19Katarina, we're going to say thank you. You should just capitalize the A and the I or one of them in your name. And then you'd have that because you can't spell Katarina without A.I. Katarina Simonetti. Thank you. See what he did there. He's pretty good. I'm not bad. I mean, I know this is what this is what I do. I think the point is well taken. I hope, Courtney, that just I would imagine you would agree. Be careful out there. There's a lot of money going to a lot of things. That's gambling. It's not investing. It is. And I think you're really seeing this over concentration right now. The more it happens, you get this like fear of missing out.

15:52And this is one of the most concentrated markets we have seen since the tech bubble. So it's not that this can't continue to run, but it is just a good reminder to clients like start to take some profits, broaden out your exposure. So I don't want to get out of the names. You just don't want to be overexposed because maybe Oracle is a crack. I mean, at some point, if you're going to see a pullback, you just don't want to have everything all in one. Yeah, well, I mean, the NVIDIAs and Oracles and Microsofts, whatever they are, they have real earnings. There's a lot of small cap companies that are up 1 ,000 % in a year.

16:20No one's ever heard of. What's a good way to do it? Make sure they have free cash flow? Make sure they have sales? How do you screen for companies to make sure that they are what they say they are? Yeah, and I think that's where it's tough in small caps because a lot of small cap companies aren't profitable. And especially in a market like this, where you look at those valuations, that does get tough. And I think making sure you're well diversified. So if you have some of those in there, also have some of your profitable companies that will offset that risk. I think that's how you want to quote the great Tim Seymour last week.

16:48I don't even know why we're talking about small. Well, that was, you know, again, that's mean spirited, Tim, sometimes. But I think the conversation we were having about the broadening both of the market and the margin profile of, you know, kind of old economy sectors. We had a fascinating conversation about utilities and, you know, an industrial analyst from Bank of America who has been in the middle of the old stodgy industrials for a long time. Couldn't be more excited is also covering names that are the key part of the data center play. What we're going to see, what we've already started to do this for banks.

17:21We've started to do this with banks because, you know, essentially fintech and because of efficiencies that had to happen anyway, because of blockchain, because of digital. Well, this is the part of the economy. And as Katerina pointed out, industrials had outperformed the S &P for most of the year and probably still are by a small amount. So it's not as if they weren't part of this trade. I think the message for investors is look for valuations that make sense. Look for companies you can go to sleep on and look for companies that I think are interesting to buy here. All right. Well said. Meantime, President Trump making more headlines.

17:51He met with Canadian Prime Minister Mark Carney today. And like we do tend to get from the White House, there was more behind the story. Eamon Javers at the White House with details. Eamon. Yeah, Brian, it was really a convivial atmosphere inside the Oval Office here for the two countries, which have really had significant tensions during the course of the year over trade and tariffs. And of course, the president's comment that Canada should become the 51st American state. You know, the Canadians did not like that. And there's been real popular upset in Canada over all of the U.S. attitude toward that country.

18:24But today, you know, you wouldn't really pick up on much of that. Both leaders very much making an effort to paper over some of that disagreement. And the president in the Q &A session here making a comment that I think really goes to his frustration about global trade and why he's pursuing the tariff course that he's pursuing. Here's what he said. We're the king of being screwed by tariffs, just so you understand. And I'm not talking about with Canada. I'm talking about with countries all over the world. When you look at Europe, when you look at China, when you look at all of the, almost every country charged the U.S., we didn't charge them.

19:06Brian, that kind of sums it up, right? The president's attitude is that his tariff agenda is a defensive one, and the rest of the world might see it as offensive. But he feels that countries have had tariffs in place against American goods for a long time. And he's simply sort of righting the ship in terms of making that tariff back and forth a little bit more even. That's why he says he's putting in the tariffs. And Mark Carney here saying that he's going to make the best deal he can for Canada, but not necessarily agreeing to anything in the room. And, Brian, we haven't had any readout from the White House after Mark Carney left a little bit later this afternoon to indicate that anything in particular was agreed to here.

19:47But tonally, this was a better meeting between the United States and Canada. I see a little peace with Canada. We like our friends. We love our friends. It's more than light. Come on. Right? They're going to beat the Yankees tonight. We like, you know, Eamon Javers. Big fan. Thank you very much. Appreciate that. Go Blue Jays. On deck. Oh, a story that came out of nowhere. Why Ford production may be in trouble. And really, it has nothing to do with Ford Plus. gold soaring is 5 ,000 an ounce, 6 ,000 an ounce. Inevitable? Yes. Thank you.

20:32All right, welcome back to Fast Money. A surprise story around Ford involving a big supplier and a fire. Phil O 'Boa has more. Phil. And there's two parts of this story, Brian. And one is what this fire, which happened at an aluminum plant in Oswego, New York, three weeks ago, what the supplier now having to adjust and what Ford has to do, how that impacts production. Keep in mind that this supplier, Novellis, makes aluminum not only for Ford, but for other automakers and parts suppliers in the U.S. Ford, for its part, when we reached out to him today, said, we are pursuing other suppliers. Most I've talked to in the industry have said, you know, Ford's going to be able to work around this.

21:12And in some capacity, you're not going to see F-150 production fall off a cliff. What you will see potentially is an impact on the bottom line. Why? Keep in mind that the F-Series is the number one selling vehicle in the world, or in the United States, I should say. Number one selling has been for about 39 years. They've 800 ,000, roughly speaking, F-Series. So you look at that and you say, well, what are they making per truck? Most believe it's between$10 ,000 and$15 ,000 per truck in terms of profitability. If they have to source aluminum, let's say from Europe or from other suppliers overseas, tariffs are factored in.

21:52That could potentially have an impact on the bottom line. That's why as you take a look at shares of Ford, almost everybody I talked with today said, you're still going to see the F-150 in showrooms. They're not going to stop production. What you may see when Ford reports its results on October 23rd is potentially some type of an impact on the bottom line. So that's why Ford shares down more than 6 % today. Brian? It's kind of crazy. I mean, how important? I know you kind of laid it out a little bit, Phil, but we're going to have F-150s in the showrooms. How significant is this factory by itself to Ford?

22:29I mean, can they get the aluminum somewhere else? Well, most believe that Ford will be able to do a workaround and source aluminum from other facilities. Maybe they'll have to do it from Europe and bring some of that aluminum in here. You've got to make sure it's the right specifications, et cetera. That's where the higher costs factor in. It's not that you're going to see Ford say, well, we get no aluminum. We're sourcing from this place in New York. A good chunk of the F-150 aluminum comes from there. That's down. Therefore, we're not going to make F-150s. Almost nobody I talked with said that's the case.

23:03By the way, there are other automakers who are supplied by this plant. And I've talked to executives at those automakers and they've said, yeah, it's it's a challenge. We think we're going to be able to work around this, but they're not as exposed as Ford. Phil O 'Bell, interesting, a little bit of weird story there as well. Phil O 'Bell, thank you very much. Steve Grasso, Ford kind of, I mean, out of the blue, the fire. What do you make of it? I always look past these type of issues. And I look I think it's going to be a good year for both Ford and GM. You're not going to have the EV mandates.

23:36They both both lost a ton of money with EVs. They're going to be have relief status on tariffs. If you look at both companies, they both perform. And I think you're going to perform it, barring any recession, which I don't see a recession happening. I think they're going to actually make cars and forget the story. Not that not anything against Phil, but I think, you know, I want to look past this event and look towards a profitable. Yeah, and I do think those short term it will have an impact because clearly they're going to have to source aluminum from other places like the F series for their trucks is their most profitable.

24:13But there's a 50 percent tariff on foreign aluminum. Right. So, I mean, there's going to be a real impact there if you're looking at getting it abroad. So I think this is something they've got to figure out. And I agree. I think this is going to be a short term problem. I think they will get this figured out. But that is going to be something in the short term. In the current market we have with the White House dictating not only policy that could, in some cases, obviously, it sounded with auto tariffs and the tariff dynamic is really auto negative at one point. But now I think support for GM, first of all, we talked about the lithium deal, but I think for Ford as well.