Semis At An Inflection Point… And Navigating An ‘Expensive’ Market 9/18/26

22:57Yeah, I mean, at least one. No, probably just probably just one and and probably not waiting for the foldable. And probably, you know, as much as that's going to be cool, I think it's probably time to head to the store this weekend. I think the more interesting thing really on this release is China and other parts of Asia. So China's not I think they're 25 days out, 26 days out. Japan is probably, you know, 15 to 20 out. I want to see where demand really is in the markets. Certainly China, which could be a lot more price sensitive and has a very different competitive landscape. The valuation in Apple hasn't really mattered for a long time.

23:33I think it's given the benefit here of both being defensive at a time when also balance sheet does matter. And at a time, this is the first time in a long time there's really a growth story here. I think the lead time, you know, the Wall Street community likes to kind of geek out on lead times and what that means for real demand. As we've just heard, this time is out the window. So I'm pretty excited. When you look at the stock price, stock price is probably 2 % off all time highs basically around here. and everyone was worried about the cost of the phone. But the cost of the phone has been eaten up by the subsidies by the carriers.

24:03So they're taking some of that hit. And then you get your trade in. And then everyone does this on a zero interest monthly payment anyway. And the last reason why I think it's a buy still here is that we have services, 75 % margin on that business, and it's 42 % of the business and growing. I think it's still a buy. Well, I mean, the margins, though, on these phones are in question. We'll see about them when they report earnings. But there is a question regarding memory prices, but also for the duo, whether that margin will actually be higher, higher selling price, but at the same time, more materials that go into that phone, which could eat at margins.

24:37Correct. And I think that's exactly what we need to see. But I think that the idea is that if they can pass at least some of this on to consumers, and I think the idea is, at least based on what we're seeing today, that is hopeful that that's going to happen. It shouldn't weigh as much on their margins as I think people were fearing. But I do think they're doing a lot of things right here. Like people were really questioning their AI story for so long. We're now seeing that they want to have compute on device, and they're starting to make this a lot more safe in this environment, is their speak.

25:00But I like that they're spreading out the iPhone cycle. This isn't going to be so chunky now in one quarter. You're going to be seeing this get spread out. But I do agree. My biggest concern with Apple is nothing they're doing strategically. It's just the multiple on there. And I think it's just getting priced to perfection. So we own it. We will still own it. But I wouldn't be adding a ton more at these levels. I think you just want to continue to hold it. I mean, Apple here is more. And granted, it has had a premium multiple. but it is more expensive than almost every AI stock that we talk about.

25:28Look, it's multiple relative to itself has gotten kind of silly. I just, I don't know, I kind of feel like when we talk about margins and we talk about what's going on with memory prices, I also think at some point that's going to be a tailwind. I realize we have to look out, you know, maybe two or three years, but at some point memory prices will come down and Apple's proving that they have pricing power and this is where they'll actually maybe even be in margin story, but you're right, it's expensive. There's a lot more Fast Money to come. Here's what's coming up next. A seat at the table. All the industry leaders joining next week's state dinner with the Chinese president and how AI could take center stage at the summit.

26:06Plus, navigating an expensive market, one money manager's playbook for investing amid the recent volatility and the areas of the market where she's putting cash to work. You're watching Fast Money live from the NASDAQ market side in Times Square. We're back right after this.

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28:00Welcome back to Fast Money. We are getting new details on who will attend next week's state dinner between President Trump and Chinese President Xi Jinping. CNBC's Megan Cassell has got the latest. Megan. Melissa, that's right. It is turning into quite the CEO-studded event next week. So far, CNBC has confirmed that NVIDIA's Jensen Huang, OpenAI's Sam Altman, Jamie Dimon of JPMorgan, and Citigroup's Jane Frazier are all expected to be in attendance at the dinner Thursday evening. Now, ultimately, we expect many other big-name tech CEOs to also confirm their attendance as well. Remember, Jensen Huang attended the state dinner that she hosted for President Trump in China back in May.

28:38Elon Musk and Tim Cook were there at the time as well. So we'll see who gets added to this list and whether any Chinese executives join the rakes as well. Now, the U.S.-China events around the state visit really kick off in earnest this weekend. That's when Treasury Secretary Scott Bessent will be leading meetings with his counterpart. I'm told those talks will focus on AI, trade, rare earths, and other economic issues, and that those working-level talks could continue into Monday. So that's where we expect any major deliverables to mostly be hammered out. That would be ahead of the leaders meeting.

29:09Based on my reporting so far, though, Melissa, expectations for major announcements from the summit are pretty muted. We could see things like an extension of the trade truce, possibly the establishment of an AI safety dialogue. So that's the sort of thing we'll be watching for next week. Melissa. All right, Megan, there's also been some developments on Greenland in just the past few minutes. What do you know there? Yeah, just in the last few minutes, It's the president posting on Truth Social about this. He says that the United States has entered into some sort of a new security agreement with Denmark over the security of Greenland.

29:41He says it will give the U.S. permanent control over security in Greenland and that it means no adversary can have a military presence there. He says this will also be at no cost to the United States. Just breaking here, so we will definitely need more details to find out what, if anything, will actually change in practice. We also need to hear from both Denmark and Greenland on this. I'll say, Melissa, for now, given that the president does say in this post that this arrangement will satisfy the concerns that he's had, it could at least mean the president will stop trying to annex or purchase Greenland or at least stop talking about it quite as much.

30:13Melissa. All right, Megan. Thank you. Megan Casella. It doesn't sound like anything at least considerable will come out of the summit. But at the same time, we are looking at sectors, ag, chips, as you mentioned, tech. I think the ag gets a benefit because China walks into this thing with the biggest trade surplus they've ever had. It's a bit ironic, right? This is what all we're talking about in terms of the trade front. And China's never had a bigger portion of global GDP at this point than they have now, but also on just the surplus front. I don't think they're going to get anything done on AI.

30:46And therefore, I think that underpins the argument in favor of the demand side. I do think there are stories that can be worked out. I think the thing I feel good about both geopolitically and otherwise is I think the diplomatic channels between the U.S. and China are as open as they've been in a long time. And I wouldn't say that about their core trading relationships. So I think it's I think it's generally bullish. I do think that there's dialogue there. I think China's always done what they've wanted to do with intellectual property. And that's not going to change. I would just quickly jump over to Alibaba, which is really underperformed in China tech today.

31:18Yeah. Yeah. I mean, in a nice little breakout. And the story around their cloud monetization and their AI growth and certainly their open source models is one that's, to me, so bullish relative to the stock performance that, you know, you have to scratch your head. I just think trading around China tech is something that's not always based on fundamentals. But some of this could be a trigger for China tech. Julie, what do you think of China tech here? Yeah, I agree. I think that the more I learn about how they're approaching AI, I think the more we could really learn from it. They have been really careful and thoughtful about their regulation in terms of what they allow as far as deep fakes and CSAM.

31:57They're really trying to be thoughtful about it in terms of using it as a tool that helps rather than gets rid of people. I think they've really demonstrated an ability that's thoughtful. So I think it'd be a great opportunity to learn. I don't think we will. But I think that, you know, any kind of discussion about what are possible safety approaches would be great. But, you know, I just don't think this administration is interested in that. Coming up, finding opportunity in the market swings where our next guest is putting money to work, heading into Q4 and her playbook for navigating the AI and tech trades.

32:29Don't go anywhere. More Fast Money in two. Missed a moment of fast? Catch us anytime on the go. Follow the Fast Money podcast. We're back right after this.

32:46Welcome back to Fast Money Stocks, wrapping up a volatile week with the Dow down 1.7 % since Monday, its worst week since March. The S &P 500 with a small gain today, but virtually unchanged for the week. NASDAQ and NASDAQ 100, though, logging gains, each posting their third positive week in four. And crypto cruising higher today. Bitcoin trading near$81 ,000 despite the recent failure of the Clarity Act in the Senate and the Fed's rate hike on Wednesday. What do you make of this run here? Yeah, so it's all about inflows and outflows. And in June, they had the biggest outflow in a while with about$3.5 billion coming out of the Bitcoin complex as far as ETFs are concerned.

33:22Then August reversed that. So you had$3.5 billion coming into it. And September's been actually positive. So Clarity is coming. It's just when does it actually officially happen? But the tailwind has been the inflows in the ETF market have been great net net for the year, though. Outflows still about one billion coming out of it. So I think you want to be hesitant around the eighty thousand dollar price target for Bitcoin right now. Wait till it proves itself to adding new money. All right. For what is next on the markets and rates. We are joined by Katerina Simonetti. She's executive vice president of Morgan Stanley, private wealth management.

33:59Katerina, great to have you with us. You think this market's expensive and potentially brutal and too concentrated, but you're constructive. What else is new? We love AI. We hate AI. We love data centers. We hate data centers. I think that the one constant that investors need to focus on is that this is our reality and we have to function in it. And within this uncertainty of the market and these high valuations, we need to find not only value, but also quality. And it's this quality and broadening diversification, not only within sectors or regional, but also within technology itself. It's what's going to get us through the volatility and allow us to truly take advantage of the opportunities in this very uncertain time that we live in.

34:53Which sectors do you think are most overvalued at this point? When we look at tech, it's not necessarily being overvalued, because of course it is. It is being enamored with these large 7-10 names, and it's the concentration risk. And in our view, what we tell investors, that this is not the time to chase these mega performers. This is the time to know what we own and being very, very selective, whether it's technology, whether it's financials, whether it's health care. It's owning companies that are positioned for durable growth and that also have the trend not only to show positive earnings, but also have positive earnings revision and have this competitive positioning.

35:37Katarina, so you're talking about asset allocation. You're definitely talking about diversification. And that's I'm sure your posture as an asset manager. You really don't want to lean too heavy into almost anything. And it doesn't mean you're you're you're copping out and you're hedging yourself. I mean, that is what what wealth managers do. And I think it's I think it's it's smart. What do you think technology should be as a as a waiting? I understand all clients have different risk profiles, but if the S &P is 40 percent tech when you add an Amazon and meta, just, you know, in I assume you want to be less than that.

36:08Can you give me some idea where wealth managers think about how much technology they want to have in a portfolio in today when we know it's already overweight, even if you just own the market? Well, it's a very fair question. And I think it's not as much about the weighting. It's about what we own, because we're going from the A.I. enablers to A.I. implementers. We're looking at this monetization story. So it is OK to own tech. And if it is OK for S &P 500 to be overweight in tech, it's certainly it's normal for investment portfolios to have a good representation or a larger, large representation in technology.

36:45It is about being diversified within technology and being very selective about the companies in terms of are we do we own software? Do we own semiconductors? Do we own AI users or the companies that are going to pave the way in how our health care companies and financial companies and industrials are going to use AI? That's the question is being diversified, not broadly as a general term, but being diversified within technology and within each sector. Now, one thing that's weighing on investors' minds this week is the Fed has raised interest rates. And I think at this point, they're digesting that pretty well.

37:19But now the concern is, do they keep hiking from here, right? Because can we handle one rate hike? Or are we looking at something like we saw in 2022, where you're seeing multiple rate hikes and equities don't like it as much? So what is your position here on where are rates going? Is this something you should be concerned about from an equity perspective? Are you changing any of your allocation based on that? It absolutely is a concern. While we don't see a repeat of 2022 where there's going to be this broadening hike cycle, this is definitely going to be data dependent. In our view, it's not the story of the rates.

37:50It's a story of the price of oil and inflation. And there are a number of factors that are going to go into the Fed decision, including the fact that they don't necessarily think that inflation is going down to that 2 % target rate that they have. And there is so much geopolitical risk. So assuming that the Strait of Hormuz situation gets resolved and we get some positive development and price of wealth starts coming down, maybe we're going to see the end of the hiking cycle way quicker than we think. But if it doesn't happen, it absolutely presents risk to equities. This is going to affect them in the negative way.

38:24One thing I do want to hit quickly is cash. You like cash. I mean, there's yield now. Yes. I wouldn't say I like cash, but I love the fact that we can now invest in short-term bonds. We can invest in three-month paper, six-month paper, you know, year in municipal bonds, in corporate bonds, and actually get some yield out of it. And this is a, you know, perfect story of making lemonade out of lemons, right? You know, on one side, of course, existing bond portfolios are going to, you know, feel the pressure of rising rates. But existing investors, people that are looking to place cash or diversify it out of equity risk, higher interest rate also present incredible opportunities.

39:04Katerina, great to see you. Thank you. Katerina Simonetti. How do you stand on CDs, short-term bonds, cash? You know, I actually think this is something investors want to be looking at because you bring up a good point where anybody who's in bonds right now hates them, right? Because what's happening is rates are going up, bonds are going down. Everyone's saying, why do we own these bonds right now? There's actually a really good time to be taking some profits off the table, off of your equities, which are doing really well, and be buying into some of these bonds, especially locking into some of these rates, which, you know, maybe we are assuming rates stay higher.

39:32And if that doesn't happen, you want to lock into these rates right now. So we're actually really looking at this opportunity, especially some of those high-tech states like New York and California. Munis are really attractive right now. We've got a news alert on Anthropic. The Wall Street Journal is reporting the company is shifting its planned IPO to November. Anthropic was reportedly expected to make its debut in October. The reported delay comes as the AI industry grapples with how to handle concerns about the speed of development. According to Kalshi, the probability of Anthropik announcing its IPO by November 1st has fallen to 6 percent.

40:05It will be interesting to see what the disclosures are in the S1, Julie, when your founder warns about the dangers to humanity and the economy, et cetera, of AI, of the very product you're making. I really have enjoyed all of the risk sections. the SpaceX risk section is absolutely worth taking a look at, because they're actually quite even-handed and honest about some of the risks to any of their forecasts. For sure, it's going to be a pretty central topic, but I think what everyone is the most interested in are going to be the unit economics. I think there's a lot of talk about the company's ability to be profitable on inference, and that's fine, but there's really no world, I think, in the near term where training isn't extremely expensive, so to not count it is weird.

40:53So I think looking forward, I'm dying to see this as swans. I'm disappointed that we have to wait a little longer. Coming up, a sneaker selection impacting two footwear giants in very different ways. A French soccer star is kicking Nike to the sidelines and what it could mean for the stock long term. That is next when Fast Money returns.

41:17Welcome back to Fast Money. Nike shares getting tripped up after a French soccer star player, Kylian Mbappe, pulled out of his long partnership with the shoemaker in favor of Swiss rival on-holding shares of Nike trading at more than 12 months. Excuse me. I gave it the benefit of the debt. No, 12 years lows. And on Monday, it will be kicked out of the S &P 100. Barron's also put out an article yesterday saying the stock's 13-year stay in the Dow could be in danger as well. Well, and yes, we know money is largely not indexed to the Dow at all. But just in terms of it representing great American companies, this really shows how far Nike has fallen.

41:54Yeah. And the time to buy Exxon was when it got kicked out of the Dow. But I mean, it's often indicative of really a point where things have, I don't want to say, bottomed out. And in Nike's case, the problem here is, to me, it's ubiquity. And where are the brands right now? I still want to say and I believe that Nike is the most influential athletic brand in the world. And I think they have a substantial lead. Having said that, there's an element of what's going on with the Nike shoes, whether they're going into the famous footwear or, you know, what happened to Under Armour is kind of what it feels like is going on with Lulu and Nike here, because the competition in more exclusive brands or brands that actually aren't available in straight retail.

42:35I just think that right now Nike is not out of the woods and it's not cheap. But dropping out of the Dow almost makes me want to buy it. Yeah, I don't think dropping out of Dow has any threshold of pain for you where you should say, OK, it's dropping out of the Dow, so I have to exit it. As you said in the lead up, there's a lot less passive money in the Dow chasers than there is in the S &P. So it stays in the S &P. It's symbolic. Sentiment. And it's sentiment to just look at the chart. So the chart from 2021, it's in a declining trend line. It's got a host of reasons why it used to be king of the hill, and now it's having trouble being relevant anymore.

43:15So they're still massive. They're still the biggest out there. But the problem is the market's so fragmented, and there's probably three or four things they can do to turn around, none of which they've done. Coming up, Disney looking for some AI magic, the new hire they're making, and what it means for the changing media landscape. More fast money, too.

43:41Welcome back to Fast Money. Disney announcing it is hiring its very first chief technology officer, the latest move by new CEO Josh DiMaro, to expand its tech and AI footprint. Julia Borson is here with more information on this story. Hey, Julia. Well, Melissa, Disney is creating a new role of chief technology officer, which will report directly to CEO Josh DiMaro and is hiring for this new position, Karam Deep Anand. Until now, he's been the CEO of Character AI, which is a platform for talking to fictional and custom bots, with some of his team joining with him as well. Now, he was formerly at Brex, Meta, and Microsoft.

44:17This move by Josh Amaro, who's been a CEO for six months now, speaks to the value he places on technology as a growth driver for Disney and also to the power he sees in AI in particular. Amaro is saying, And quote, Karen Deet brings a rare mix of experience across infrastructure, consumer technology and AI, saying as we further our three priorities, great storytelling as our North Star, technology in the service of creativity and operating as one Disney. Now, this all plays into DeMauro's plan that he's talked about to use technology to deepen Disney's direct relationships with fans with Disney Plus as what he calls the digital centerpiece.

44:58Melissa. So, Julia, didn't Disney at one point have some sort of partnership and explored characters using AI and the ability to interact with them and then decided to back away? Well, so it did have a very big deal with Sora, which was OpenAI's generative AI platform. Sora was going to be licensing Disney characters and enabling people to create content with them. Sora then shut down. And so what that means for Josh tomorrow is probably a good thing. It means he can create his own tech vision, his own AI plans from scratch. Now, given how much DeMauro has talked about really driving people to be engaged on the Disney Plus platform, now that they have the character AI folks, I can imagine that they'll have the ability to talk to Mickey Mouse or Elsa from Frozen or any number of their characters directly on Disney Plus in a controlled environment.

45:53So certainly seems to be a lot of opportunity there for DeMauro's vision. And I bet parents will pay extra for it, too. Julia, thank you. Julia Boorstin, you've got young kids, so it sounds like an interesting thing. Do you want to talk to Elsa? I know. My kids love going to Disneyland and meeting Lightning McQueen. If they could talk to him every day, yeah, I'm sure I would pay for that. Absolutely. But I do like, I mean, this is really additive to their flywheel business. That is what they do is they find these characters, they license them, and they figure all the different ways that they can get to, whether it's merchandise, whether it's streaming, you know, whatever it is, this is additive to that, which I think is great.

46:26Up next, Final Trades.

46:56and it should not be relied upon as such. To view the full Fast Money Disclaimer, please visit cnbc.com forward slash Fast Money Disclaimer. Never bet against American grit or American energy. Through innovation, Venture Global is not only building some of the largest energy facilities in the world right here in the United States, but delivering American energy at a fraction of the cost and a fraction of the time. So while others are busy talking, We're busy building. That's venture global. That's unstoppable energy.