Semi Stocks Diverge… And Jobs Report Impact On The Fed 9/5/25

0:00Hi, it's Melissa. Before we jump into today's show, I've got something exciting to share. On December 11th, we are hosting a special edition of Fast Money Live, trading the holidays right here at the NASDAQ Market Site. You get to watch a live taping of Fast Money, meet and interact with the traders, and, of course, celebrate the holiday season with us. It's stocks and cheers in the heart of the city, Times Square in December. You will not want to miss this. Tickets are available now at CNBCEvents.com slash Fast Money. Live from the NASDAQ Market Site in the heart of New York City's Times Square, this is Fast Money.

0:31Here's what's on tap tonight. A tale of two tech trades, Broadcom surging while NVIDIA tumbles. What the opposing moves say about the state of the semi-stocks and Canview concern shares the Tylenol maker seeing their worst drop on record. The reports of investors worried and the implications they could have on the entire vaccine space. Plus, the new pay package that could make Elon Musk a Tesla trillionaire. Lulu shares hit their lowest level since the depths of the pandemic. Is there any hope the stock can rebound and a builder boom with a sharp drop in mortgage rates means for the housing trade.

1:02I'm Melissa Lee. Coming to you live from Studio B at the NASDAQ. On the desk tonight, Tim Seymour, Carter Worth, and Mike Coe. We start off with a big divergence in the two biggest semi-stocks in the market. Broadcom surging more than 9 % to a new record after announcing it had received a$10 billion order for AI chips from a single customer widely thought to be OpenAI. The stock was the best performer in the S &P, valuing the company at more than$1.5 trillion. NVIDIA, meantime, moved sharply in the other direction, the stock dropping more than 4 % at its lows, notching its sixth down day in seven sessions.

1:35Shares have now lost more than 8 % since the company reported earnings just last Wednesday. The stock lower as well. So as Broadcom's gains lead to pain for everyone else in the AI trade, I think that's a big question, especially when you see this sort of transfer of market capitalization, Tim. It's fantastic. And I would argue that the numbers, at least outside of the order you just discussed in in terms of where Broadcom has now announced, and it's exciting, is that NVIDIA's numbers were fantastic, but the stock has struggled. And it's struggled, certainly, along with the broader semi-space.

2:07If you look at the broader semi-space, it wasn't a good day for AMD. It was an okay day for Taiwan Semi. And I think some of this differentiation is simply some rotation. I don't think there's anything in terms of the bottom-up stories in both companies that have changed. I think the story in Broadcom is extraordinary. I the price action as a function of that order, I think, is exactly what you wanted to see if you're an investor, because we sat on the desk last night. We looked at those numbers. We looked at some of the dynamics on margin in terms of sales and where they were, their customer base.

2:38And it seemed as if it was set to kind of hold serve. This latest round of news really pushes it higher. Yeah, Bernstein, Stacey Raskin was saying that, you know, on a callback with the company, they basically indicated that the AI spend was actually accelerating. And that's when you'll reach staggeringly large numbers. The rotation, Mike, I thought was interesting, as Tim mentioned, that, you know, we saw that happen today. And yet it is a rotation from NVIDIA to a higher valuation stock. So it's not clear that that rotation should have happened. It does, if you think about it from the growth perspective, I think.

3:12I mean, and this is really a result of NVIDIA's comments when they reported and they basically said that, you know, we shouldn't necessarily anticipate that the pace of growth was going to be continued indefinitely. You know, they hinted that we were hinted. I mean, they outright said it, right, that the growth rate was was going to slow in the future. We should probably have expected that we're getting to a point where the amount that was being invested in their product, you know, Even the hyperscalers run out of money at some point, so the exponential growth was going to have to have some sort of functional limit to it.

3:47Broadcom just had a little bit more room, and the growth rate that they're projecting right now is a little bit higher, and that supports a higher multiple. This is the ultimate, would you rather, in the market today, Carter. The market spoke with the gain in Broadcom, but what do you say? Yeah, well, for starters, on a two-year base, they're about even now, right? So one has come off and one has popped. But the intraday action is, there are two ways to interpret it. A stock that gaps up on news and makes an important advance is, in principle, a bullish thing. But the stock closed on the low, which is, say, intraday, right, it couldn't stick its landing.

4:22A great gymnast trips and then lands versus wobbles. It wobbled badly. The volume was heavy, about$26 billion in value traded. My hunch is that it will fill this gap that it left behind from today's news-related pop. Long way to answer which one here now still a Vago because at least it's doing something positive. Nvidia has broken trend. And finally, let's just say this. And Tim makes this point. The Sox still has not exceeded its July high. That's a problem. What's left? News from Avago? Well, that's out. News from Nvidia? We heard from Nvidia. What is it that pushes semis higher now below where they were from July of a year ago?

5:01And I think that you could even pose that. You flagged the semiconductors a lot. But when you take a look at today's action, it wasn't just NVIDIA. Microsoft also had a very difficult day. And so, you know, I don't know if there's a broader question about this trade that had been so good. The AI trade, which, you know, maybe that was a different phase of the AI story. Well, at some point, labor weakness starts to you could bleed it into enterprise weakness and you can bleed it into this place that I think certainly Microsoft has been very comfortable. and the research into Microsoft to make new relative highs was something also that we'd been waiting for.

5:35And it was part of, I think, at least the most recent move in markets higher along with NVIDIA. But again, Microsoft, which had been dead money for a year. And so some of the dynamics, I think, around the core business, around the margin profile of the company, I think people were able to get comfortable with. I just think today's price action is tricky because today was such an important day in terms of how people perceive the impact of the payroll number, which has been diced and sliced all day. They will spend a little time on it. But ultimately, what it means for interest rate sensitive is what it means for the growth trade.

6:03What it just simply means for market dynamics, which which had to take a breath, which this has been the probably of all the Septembers we've come into. Boy, I feel like this is the one where we expected that September pull back more than any. The fact that the biggest stocks in the market have taken a breather for a couple of days. I'm not ready to call it a trend change. But I do think, again, back to we're coming off of Broadcom numbers where 20 billion in A.I. revenues is more than people expected to see. You've got a multi-year growth story. And I don't think we have less than a multi-year growth story at NVIDIA, but we're a few, you know, we're now a couple, we're 10 days removed from that number.

6:37Just getting into the granular, since we're speaking, Microsoft, on the day that it gapped up on its news, it closed literally on the low, and that was the high. It's been drifting down since that point. So intraday action, exhaustion is what it's called, where you have this euphoria, a lot of money, and then all of a sudden there's no one left to buy. There's a silence. That's not good, and that is what happened right today with Vago. I love how he calls it a Vago still. Because you forget that the ticker, you know. A, B, G, O. Where did that come from? Did we say Alphabet or Google? I still say Google.

7:08I know. Me too. Okay. How about Facebook? Exactly. There are a lot of them. We have to have, I mean, we will dice and slice the jobs report, Mike. But in terms of the story, the narrative of lower rates, good for growth, good for tech, or are you worried about growth and which is the winner when it comes to driving the tech trade higher? Well, I mean, it's interesting because, you know, when I was on the floor of the NYMEX and we used to just trade commodities strictly off the price action, really, you know, one of the things that you didn't like to see was when you opened at a new high and then ended up closing lower.

7:47That was kind of an unhealthy intraday pattern. When I look at the S &P today, one of of the things was that, you know, I looked at the jobs number, I saw the S &P ups, you know, 40 handles or whatever. I thought, OK, that makes sense. Got on a call, came back and I said, wait a minute, it's down 20 or 30 now, which means that people were starting to say to themselves, wait, there is some weakness in the labor market. It's not hugely pronounced. The unemployment number isn't really terrible. But you know, when the Fed has to cut rates, maybe earlier than they want to, you can't get overly enthusiastic about it.

8:20And I think that's what the intraday price action reflected. For more on tech's outlook and what to expect from Apple's iPhone event next week, T. Rowe Price's Tony Wang joins us now on set. He manages the firm Science and Tech Fund, whose top holdings include NVIDIA, Apple and Broadcom. Tony, great to have you with us. Welcome to the Nasdaq Market site. In terms of the action that we saw today, maybe not surprising that we saw AVGO go up so sharply, hitting a new high, actually, in today's session. But in terms of the market capitalization transfer from NVIDIA to Broadcom, or what looked like to be a transfer from NVIDIA to Broadcom, what do you make of it?

8:57Should we draw out a bigger story based on this? Yeah, I think, you know, the price action makes sense, I think, in the near term. Essentially, Broadcom is expanding its customer list. You know, I think a few years ago, only Google was the custom player, and then now they're going to four players with OpenAI. And so I think that naturally they're coming off of a smaller base. They're growing. They're accelerating. I think that makes sense. But if you take a look at the longer term picture, I do think the TAM is expanding. Essentially, we're moving from one shot kind of chat to be T models to now long reasoning.

9:29And so it takes longer. It takes more compute, but you have better answers. And so I think overall, that's like very TAM expansionary. If you look over, we've had this debate, right, like over the last five, 10 years. And both stocks have done really well as leaders in the market. Okay, so the TAM expanding, meaning the total addressable market expanding, lifts all boats, lifts NVIDIA and Broadcom only. I mean, how should we look at that? Is the TAM expanding specifically for Broadcom? Yeah, I think it is lifting like a lot of boats, I would say, but increasingly the computer is getting harder to do.

10:00And so it really plays to the number one in GPUs and I think the number one in overall custom ASICs. And so those are the two players, I think, that benefit from the scale and R &D in the flywheel that goes with it. So that's, Tony, great to have you here. And let's drill deeper into this whole idea of addressable market, because one of the things that I sense on a day like today is when we talk about Broadcom, we're talking about not just AI and deep learning, but we're talking about data center. We're talking about wireless. We're talking about this is a more diversified chip play, right? And after the kind of move that's been so AI-centric on a day when people are starting to question at least some broader elements of the economy and the market.

10:41I'm not sure that we're supposed to do a whole lot more than just think about them on a payroll day. I don't think the world changed today. But is that the story? Is it that Broadcom really is broader? And will this give more sustainability to this relative value trade today that's not really relative value? Yeah. So I think that Broadcom has a lot of different businesses. They're very broad based. And you're seeing the broad based business also recover, too. Meanwhile, AI is actually accelerating. So you have these two growth engines that are probably working in a good way over the next 12 months.

11:13But in terms of what's really breaking the stock out, I do think it's the AI number. I mean, Hawk over the years has been pretty like, you know, he's been, he doesn't like to get you too excited about like semis all of a sudden growing. But like here, I mean, I think that growth is real. And so, you know, with AI adding a leg of growth here. It does sound like, according to the analyst's notes that I read, that he was very positive, very sort of guiding people higher. Have you talked to Hawk? Is that the message that you're getting even away from the earnings call? Yeah, absolutely. So, I mean, Hawk has been incrementally bullish, I would say, every quarter over the last couple of years.

11:49And usually, Hawk tries to keep us pretty tempered in our expectations. but I do think this is a change of tone just because it's become such a big market and they are so well positioned with custom. And on a day when we are seeing the markets cope with the possibility of a growth scare, how do you factor that in? How does that change your view of tech? Is the AI trade defensive or will that be caught in a growth scare? Yeah, I mean, I think that's a great question. Essentially, I think that, you know, August and September are always seasonally kind of strange and like, you know, there's always positioning.

12:21And I do think that position could have gone a little extreme in some pockets. But I think that is just short-term noise. And if the numbers continue to be good for AI, I think that people want to own that. These are like quality companies that are really compounding. And for the growth you're getting, it's actually not that expensive. I know a lot of people make comparisons with the tech bubble, but this is largely numbers-driven if you look at it. And then just in terms of semis versus tech overall, if you had to just, would you rather, for the next 12 months, general tech or semiconductors.

12:50We know that semis' relative performance to the tech sector peaked in 1994 incredibly. They've been a very poor area of the market versus all tech because tech has big winners in it, like Apple and Microsoft. If you had to make a one-year bet, semis bet one or tech ex-semis bet two for the next 12 months, which would it be? Yeah, I think we're still in the build-out phase for AI infrastructure. And semis essentially is the backbone of technology. And what's been amazing in semis is that Moore's Law has been slowing. You know, especially before kind of 2012, semis were so easy to make. You know, you got free performance productivity because you could shrink them really easily.

13:26And now it's like an inflating cost curve and things are getting harder to make. And meanwhile, performance demands are increasing. So I think that's a very attractive setup in the industry overall. Tony, thanks for stopping by. Great to see you. Tony Wang. Thank you. Mike Coel posed that very same would you rather that Carter posed to Tony. Tech, ex-semis or semis? 12 months. Well, you know, I mean, as I was just hinting before, you know, my attitude about Broadcom is that, you know, I understand why it performs so well when you see the growth, basically, that they're getting. And that growth also, it comes from differentiated product.

14:02It's not commoditized that you're dealing with here, which is one of the reasons why the margin forecast, the net income margin forecast for Broadcom is over 50%, which a few years ago was inconceivable for any business. NVIDIA has shown us that this is possible, that you can get those kinds of margins net of taxes on top of exceptional growth. And the other thing is that it is not as easy. You know, once upon a time, we thought about these as commodities. But now, you know, you build your infrastructure, you build these big platforms and data centers on this technology stack. It is not so easy.

14:32It's not like you can just simply pivot off of one technology hardware technology stack to another. And so they do end up getting a little bit of, you know, the benefits of scale and a little bit of a moat around them as well. All right. Meantime, the world's richest man could be in store for a trillion dollar payday if Tesla's board gets its way. It is asking investors to approve a plan that would give Elon Musk more voting power and potentially by far the biggest executive payout in history if it hits some, if he hits, I should say, some ambitious targets. The$975 billion package would include 423 million additional Tesla shares on top of his 13 % ownership stake, but requires the company reach a market cap of$8.5 trillion.

15:13Musk is also still in the legal battle to secure the$56 billion pay package that was originally granted in 2018 before being struck down by Delaware courts. We should also note that it's not just a market cap target, but it's also specific targets when it comes to number of vehicles delivered, number of robots delivered, number of robo-taxis delivered. So it's not just a story about let's get the stock up to a certain point. Let's actually deliver on certain numbers. Well, fortunately, I think corporate boards have gotten a little smarter in terms of how they're trying to incentivize the C-suite, and in this case, the CEO.

15:46And it's not just about market cap, because goosing a stock higher has in times been a recipe for a lot of things, including poor corporate governance. But I think this is a particularly interesting case of, again, those targets in places like Robo. I mean, Robo is the kind of what seems like the eternal, slightly moving target, even though we are getting closer and closer. So shouldn't be surprising to hear that this board may be consolidating more power in the hands of Elon starts to make you wonder who are the people that were appointed. And we've had different points over the last couple of years to look at the board members, how well they're compensated, where they come from and question some of the independence.

16:26But for here today, if you're a Tesla shareholder, the question is, is more Elon power and more consolidation a good thing? So far, that has been the case for shareholders. I mean, let's not argue. There's no question that giving this man more control of this company has led to more share gains in the past. And maybe that is why we saw shares of Rivian and Lucid also trade sharply higher. Maybe it is this notion that, you know, the last eye-popping targets that were set within Elon Musk's pay package were actually hit, even though at the time the pay package was passed, it seemed nuts to think that he would hit those targets.

17:00It seemed inconceivable. There were so many hurdles that he had to hit. So as Tim was pointing out, it wasn't just about market capitalization. He had revenue targets, he had volume targets, and then of course he had the market cap target. And each of those on its own seemed hard to fathom. And yet he managed to hit all of them. I think there was 12 in total in that last pay package. This would make Tesla the largest company by a factor of more than two based on current valuations. Eight and a half trillion, you figure that NVIDIA is roundabout four. It's hard to imagine that this could be done, but there really are only two companies in history that had the kind of growth trajectory that Tesla achieved for his first pay package.

17:45Tesla was the first, Broadcom was the second. Over that period of time, that kind of geometric growth that you saw over that period, those were the only two companies that managed to achieve it. So I think if you're going to try to do that again, you have to pick the person who's at the helm of one of those two businesses, and he's already at the helm of this one. Well, just to put that$8.5 trillion in context, in the 1987 peak before the crash, the total market value of the S &P was$2 trillion. And at the dot-com peak, it was$11. It's a big number. I would say maybe so, but I doubt it. All right.

18:19Coming up, mortgage rates seeing their biggest drop in a year, the implications for the home builders in an ever-evolving housing market. That's next. The first Tylenol maker, Kenview, having its worst day ever after reports the HHS is set to link the drug to autism. Former FDA Commissioner Dr. Scott Gottlieb will join us for a look at what it could mean for America's vaccine policy and its impacts on innovation in the pharma space. This is Fast Money with Melissa Lee right here on CNBC.

18:57Welcome back to Fast Money. The Wall Street Journal reporting today that HHS Secretary Robert F. Kennedy Jr. is set to release a report linking autism to pregnant women's use of Tylenol. That news sending Kenview, the maker of Tylenol, down over 9 percent. Its biggest drop since spinning off from Johnson & Johnson back in 2023. Kenview standing by its product saying in a statement, It continues to believe there is no link between the drugs used during pregnancy and autism. For more, let's bring in former FDA commissioner Dr. Scott Gottlieb. He's also a CNBC contributor and serves on the boards of Pfizer and Illumina.

19:28Dr. Gottlieb, great to have you with us. Thanks a lot. This is a report that he's been promising for months. He said by September we will finally reveal what the cause of the autism epidemic is. Do you believe, based on what you have seen, because there have been other studies on this, that this could be the cause of the uptick in autism cases we've seen in recent history? Yeah, well, I certainly don't. And even the way it was reported by The Wall Street Journal, they reported that this is going to be one of the things that he suggested that may be a link between this product and autism. I suspect there's going to be other things in that report as well, including perhaps some vaccine ingredients.

20:07This has been a very carefully studied question, including a study that was done in JAMA in 2024, I believe, that looked at 2.48 million children. They looked at families, so children and their siblings, and established no causal link between Tylenol use and pregnancy and autism. But it is a subject of a lot of litigation. There is a case pending right now in the Second Circuit that involves 550 families suing for hundreds of millions of dollars. And if that case does prevail, and perhaps if HHS makes a pronouncement like that, that could weigh in favor of the plaintiffs in that case, the litigation would expand dramatically.

20:38I do think that there is, you know, some pattern here where we see the secretary getting behind some of these issues championed by the plaintiff's bar. The other one was talc. If you remember, there was some panels that they held trying to look at a link between talc and certain chronic diseases early on. They were held by FDA, and HHS was involved in those as well. Those stopped, and you haven't heard a lot of the discussion around that. I believe that's because, from what I'm told, there was a lot of lobbying at the White House by various parties that used talc, including makeup manufacturers, and they backed away from that.

21:10So you could see something similar here where there's, you know, some concerns and an outcry raised around this, and they try to take a more careful, deliberative process. What do you make? I mean, there's so much going on, let's put it that way, at HHS and its various agencies that fall underneath it, the CDC, as well as the FDA, which you used to head. in terms of the confusion that it may be causing amongst Americans and the doctors who treat them. Senator Cassidy at the RFK junior hearing earlier this week cited a letter that he got from a doctor friend saying, we are not sure who we're supposed to give a vaccine to.

21:45And I'm wondering, as a doctor yourself, if if all of this sort of activity has caused this confusion as to what the guidelines should be for the American public. Yeah, not just confusion around the guidelines, the clinical recommendations, and there's certainly a lot of confusion around that, but also friction in the marketplace. I think there's going to be a lot of pharmacies and doctor's offices that are unsure how they could dispense these products. There's about two thirds of the states tied decisions around dispensing and pharmacies to the FDA decision. So now that the COVID vaccines in particular, I think that's what we're referring to, have been approved by the FDA for the season.

22:21Presumably, those states can provide the vaccine at the point of the pharmacy. But about a third of the states rely on ACIP recommendations, so recommendations from the CDC. And those haven't come forth yet. They're not going to come forth until the end of the month in a best-case scenario. And there's a lot of speculation that ACIP is going to come in with more restrictive guidance than what FDA put out. So that could imperil access in those states. Now, you're seeing some states move forward, like Massachusetts, Colorado, for example, trying to obviate their existing statute that ties their decisions to ACIP to try to create more flexibility to pharmacies.