SK Hynix Debuts on the Nasdaq… And Looking Ahead to Big Bank Earnings Results 7/10/26

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0:40Get this. Discover automatically matches all the cash back you've earned at the end of your first year. Seriously, all of it. And we trust you to make smart decisions. After all, you listen to this show. See terms at discover.com slash credit card. Live from the NASDAQ Market Site, right here in the heart of New York City's Times Square, this is Fast Money. Welcome. Here's what's on tap. An historic debut. South Korea's SK Hynix, the biggest ever foreign stock listing in the U.S. What you should expect from the shares next, and what it might mean for the memory market at large. Plus, all the big bank earnings, they're on deck.

1:19We'll tell you what to expect from the money centers and the investment banks when they report next week. We'll hear from one top analyst this hour. All that and Delta getting grounded a bit after earnings. How options traders are positioned for Netflix's results and more on Meta's big week. It has been far outpacing the rest of the so-called MAG7 all since Monday. Happy Friday. Hello, everybody. I am Brian Sullivan in for Melissa Lee coming to you live from Studio B at the NASDAQ. And on your desk tonight, it's not Friday. It's Guy Day. Guy Adami here on a Friday. Happy to have him. Bono and Iason, Mike Coe, and your guest trader for the hour, that is Joe Ziddle, Chief Investment Strategist at Ziddle Macro Strategy Group.

2:05Joe, welcome. Thank you for having me. Good to see you. Thanks. All right. What do we call him? What? We know we call him on this desk. No. Well, he's Jay-Z. I love it. Well, of course you do. Fantastic. All right. We're going to get to that and SK Hynex in just a few minutes. But we're going to begin with some breaking news on Apple. It just crossed within the last hour. Apple is suing OpenAI over trade secret theft. Let's get more on the story. It's only minutes old. Mackenzie Sagalos has more back. So, Brian, Apple has just filed a federal lawsuit against OpenAI, accusing the AI startup of stealing trade secrets to build its own consumer hardware.

2:46Now, I have the 41-page filing here. Apple writes that, quote, at every level, from members of its technical staff to its chief hardware officer and in coordination with business partners, OpenAI has been stealing Apple's trade secrets and confidential information. Now, Apple says it uncovered a pattern involving former employees who joined OpenAI. The suit specifically names OpenAI Chief Hardware Officer Tang Tan, accusing him of using job interviews with Apple employees to seek details about unreleased products and technologies, and then coaching departing workers on how to evade Apple's security procedures.

3:21The filing also names a former Apple product developer who allegedly brought a stolen laptop to OpenAI and used it for months to download highly confidential documents, including information from Apple's R &D lab. Now, Apple says OpenAI plans to use those trade secrets to commercialize its own consumer devices. Notably, the suit does not name Sam Altman or former Apple design chief Johnny Ive. This is a civil case with Apple primarily seeking damages, plus an injunction to stop the alleged activity. Brian, you know what I'm going to be looking out for is discovery. Yeah, well, OK, so the money aside, they want the injunction.

4:00They want they want OpenAI to stop doing something. You said it's a 41-page release. I know it just crossed a short while ago. And you mentioned it a little bit, but if you had to sort of surmise, what would be the thing they most want OpenAI to stop doing? So they actually went out to OpenAI directly back in February and appealed to them, saying, we know that this is going on, please stop it. Clearly that didn't result in the desired outcome, which, to your point, is all about getting them to stop using protected intellectual property. So they specifically get into details of, there's one here about how OpenAI was working with hardware firms to carry out a metal finishing technique that Apple had invented.

4:40So basically very specific things, also talking about circuit boards and these components that go in to hardware devices. And really, we started to see this rift between the two companies, because remember, they signed that landmark partnership just two years ago. It was ChatGPT that was baked into Apple intelligence. But then Sam decided to get into the game of, Sam Altman decided to get into the game of consumer hardware. And then he brought in Johnny Ive, who's this Apple alumni who was a huge design chief, very important to the iPhone's evolution, who reportedly is working on very similar devices meant for the generative AI era to what Apple's working on right now in-house.

5:18Well, did they bring in Ive or did they just pay I've just a quadrillion dollars to lure him in. $6.4 billion. Yeah, in part because of what he knows and what he's working on. We shall see. Very interesting. Mackenzie Sigalos out in San Francisco. Mac, thank you very much. All right, so it's a really interesting story, Guy Adami. Yes, sir. There's going to be a lot in the discovery, who knows what. But do we care about it from an Apple stock perspective? I don't think so. But this is interesting because OpenAI's chief hardware officer, There's a guy named Tang Tan, and that was formerly Apple's vice president of product design.

5:55So this sounds like a little bit of, you know, what they call that sour grapes here as well. So there's a lot of that going on. But we're tasked to sort of talk about the stock and what it means. And quite honestly, I don't think it means necessarily anything. What I do think is interesting is how well Apple's been trading over the last couple weeks. I think it made an all-time high today. If it didn't, it was within the last 24 hours. It was within a sniff of it. There you go. So when you say interesting, why is it interesting? Well, because if you think about how soft some of the other names in the Magnificent Seven, which is a term that I don't like to use, but being that it's Friday, I'll slip it in.

6:25I mean, Apple's been outperforming now for the last couple of weeks. And you say to yourself, right, what's going on? And I think what's happening here, Apple really, if you think about it, they stayed out of that whole spending game. And now companies are being punished for the spend. And the market is saying, you know what? Apple's been right to sort of wait on the sidelines. And I think that's what's going on. Yeah. So Bono and Ison, like, again, Apple's near record high, kind of like one of the great stock runs that hasn't gotten a lot of attention outside of fine programs such as this one.

6:52What's your take? Yeah, I mean, I'm pretty much very well aligned with Guy here. I think it's essentially being used as a free cash flow hedge. I mean, I think it's something to the tune of$126 billion last 12 months in terms of free cash flow, particularly when you have other companies, some of the other hyperscalers, purportedly going to be teetering into the negative free cash flow. They're tapping capital markets in order to fund this capex spinning. I think it's exactly those things. It's being seen as a hedge. I mean, now it's becoming an ever increasingly more expensive hedge. I mean, it's not cheap.

7:26It's not a valuation play, not at this price. But I think the more stretched valuations get within the AI complex, the more logic there is behind looking to hedge here and more sustainable, this valuation actually is through that lens. Yep. And I would also add that, you know, Apple didn't necessarily spend all that CapEx, right? But at the same time, they stumbled into this whole AI thing with their powerful unified memory, right? You think about when OpenClaw came out and all these sort of models where people could essentially just run their own agents at the orchestration level. They download the OpenClaws of the world.

8:03Then they download the local models. And it turns out the Mac minis are incredibly efficient for running these things. So Apple didn't necessarily have a quote-unquote AI offering, as we all know. They didn't spend the money, but they stumbled into this with this unified memory. It's phenomenal. So as you think about these open-source models that are becoming more and more popular, One of the most effective ways to run them is on Mac Silicon. By the way, those three old Mac minis that I have at home that I'm now running for the GPUs. People laughed at me when I bought them. Who's laughing now, Zaitl?

8:32I spent six weeks looking for a Mac mini on eBay just to launch one of these guys. I might have a couple to sell you. Mike Coe talked to us about Apple as well. And also, what are you seeing on the options side? Are you seeing a lot of bullish sentiment around Apple? There is a decent amount of bullish sentiment around Apple, and there has been for quite a while. It traded nearly a million call contracts today, for example. You know, I think what's interesting is, obviously, this is one of the free cash flow monsters, as Guy and Bonoan were pointing out. And, you know, all of these other companies which were have been spending their money, and it's really become more of a hardware story.

9:11As we were just hearing also, they have some hardware strength. The other thing is that this is a company that we thought they have this great installed base of users. And obviously, that's going to be a powerful platform for them going forward. And they were right to wait. But if you just take a look at their operating performance, we're looking at double-digit top-line growth. We're used to seeing good adjusted EPS growth. They've always had good-sized buybacks. But as the company has grown, the relative scale of that declines a little bit. But we're looking at probably somewhere between 13%, 15 % top line going forward over the next 12 months or so.

9:45And that's really solid. So this is actually more of a growth story, I think, than some people imagined. All right. Now to that highly anticipated offering from SK Hynex. It is a chip manufacturer and it priced its ADRs, American Depository Receipts, at$149 a share last night. They opened right at$170, but they closed the day just below that at about$168. Still a very good day, very good and very big debut. I think Christina Parsonovos, who has been here covering the story all day, the biggest ADR or foreign stock offering in American history. Biggest and the second largest share offering after SpaceX, especially a big win for NASDAQ because both were here.

10:28But that's 168 close puts the U.S. shares at roughly a 16 percent premium to the exact same stock in Seoul. So you need 10 U.S. shares to make one SK Hynix sole share if you want to convert. American investors are definitely paying up for the purest play on high bandwidth memory. You're seeing that premium, the memory that feeds AI chips and NVIDIA's main supplier. Micron, SanDisk and the SMH ETF have seen volatility just over the last two weeks as investors really look for sources of funding. Some see that as maybe money rotating from one memory name to another, but the demand data may tell a different story.

11:05So you've got, first, for example, a headline, all the chip guys are talking. DigiTimes reports high bandwidth memory prices could more than double in 2027, thanks to NVIDIA's latest platform, the Rubin, and then long-term contracts. All of these memory CEOs are talking about locking up capacity. SK Group Chairman Che told me he's doubling capacity within five years, and customers say, man, that's still not enough. And then there was even a Jeffrey's note today saying hedge funds remain very long with memory. One thing to watch, though, at least half a dozen leveraged products tied to SK Hynix launch next week, some Tuesday, delivering twice the daily move.

11:39They rebalance actually every single day, which can amplify swings in both directions. But it seems right now like the big picture holds. Big tech is set to spend$1.5 trillion on AI infrastructure in 2027, And Bank of America estimates anywhere between 35 to 40 percent of that goes directly to memory itself, especially because prices are so high. So it appears that there's plenty of demand to go around to go a little bit wonky in this. So today was the day the ADR is traded, but the full stock trades Tuesday. So it's when issued. That's why there is a V at the end of the ticker today. That V will disappear as a Monday.

12:16They priced last night when you read that. And so it's T plus three days for it to settle. So it'll actually show up in your account on Tuesday. So if people are looking to go on cbc.com, whatever, they're looking for that ticker, the V goes away. Yeah, it goes away automatically. And it's just something that happens with ADRs. And because it's South Korea, it's a little bit longer. Sometimes it's two days or the weekend, et cetera. But that would mean that we could see some changes on Tuesday. And I don't think anybody made mistakes with the ticker or anything today. It's good to know. And it's a story you've been on all day.

12:47and KP, we appreciate it. Thank you. Thank you very much. Bono and Iason, your take on SK Hynix, the company and its reaction on Wall Street. Listen, it's hard for me to buy into this IPO euphoria. I mean, and that's across the board. It's not necessarily only applicable to SK Hynix. I just think it's a peak euphoria trade. So in terms of participating, I tend to wait for these things to kind of have their run. And then, you His story tells you that with these IPOs, there tends to be a drawdown, more than 50%. So the odds are in the favor of waiting on these. With that said, there is no pushback to the super cycle that we are super cycle, if you will, in terms of demand for memory, particularly high bandwidth memory.

13:31So clearly, there's momentum behind the trade. It's just a matter of positioning and the price paid for what is a tremendous business. This is still cyclical in nature, and I think investors cannot lose sight of that. A few things. I'm sure that Hester Prynne would have hoped that her scarlet letter A would have gone away as quickly as this V is going away. But unfortunately for her, it did not. Are you familiar with that tale? Yeah, of course. What's wrong with you? Who isn't? Who isn't? I'm a student of the classics. No, I understand this. But you look troubled. No, no, I'm good. Bonoan brings up, that's Mike Coe laughing, by the way.

14:05Bonoan brings, as usual, he is. Great point. And I have people laughing to my left. I'll say this. You know, the Micron sell-off over the last month or so maybe was in anticipation of what we just saw today over the next couple days. So one of two things is going to happen. Either that move we saw over the last couple months marks some sort of turn on the back of this, or this sort of a by the rumor or by the event type of thing. If you believe that there's some secular shift going on, you buy Micron with both hands here because on valuation is cheap. If you think the cyclicality at some point comes back and now the competition for stocks is now one more with SK Hynix, you've got to be really respectful of this price action over the last couple of weeks.

14:46And there's one other thing I would take from this conversation, right? If there's any debate whatsoever whether AI is inflationary or not, this SK Hynix story, I think, puts that debate to bed, right? High bandwidth prices are set to double, according to the report that we just heard. This manufacturing is locked up for years. They're investing billions of dollars in additional manufacturing, and it's still not enough. I think that's one of the things that people are sort of missing about this AI story. The$1.5 trillion in estimated CapEx that's going to be deployed in 2027, that means you're moving dirt.

15:22It is commodity intensive. It is labor intensive. And those are things that are all undersupplied in the United States. But Joe, to Guy's point, do you think the reaction or some of the news around SK Hynix is a direct play on Micron? Yeah, I would think so. You've just got more ways to access this. It is to access this theme. There's probably going to be some volatility, some cyclicality. I am a long-term bull on this AI theme. I think there will be stumbles. There will be some mistakes made along the way. But in terms of this AI build out, I think this is going to go down in the history books, comparable to things like the railroads in the 1870s, 1900s.

16:01We've already exceeded the CapEx spend that was deployed in tech and telecom in the late 1990s. I think this is going to go down as one of the truly most revolutionary things that we've seen in the last 150 years. I think we're still in relatively early days on that spend. Wow. Big statement there. I like it. We just tied the scarlet letter to Idaho gold because Mike Brown was funded with potato money. For more on all of today's tech news. Wait a second. What? I knew that, actually. What was the family? I forget the family name. It was all the French fry potato money. Yeah. Now I can't remember.

16:36Bring Dan Ives, tech strategist. Maybe Dan knows. Dan may know. We're not going to put you on the spot, Dan Niske, if you remember the name of the family that helped fund Mike Brown. But it was potato money. It's not whatever your take on SK Hynix, what it might mean or what it may not mean. Maybe it means nothing for technology and the memory space in particular. Yeah, I think the watershed day, I mean, not just for SK, but I think for Korean tech and in terms of what you see in terms of the memory market, because it speaks to our views. Some like myself spend so much time in Korea, equilibrium demand spot.

17:13It's not happening for another two years. So we're going to continue to be in this call 12 to 15 to 1 type of demand supply environment. And that's what you see now. The AI revolution spreading continues to be third inning, one out relative to this AI game. You were first inning not that long ago, Dan. So now you just said third inning. So what's what's still to come then? Take us to the rest of the game. What are the plays? What are the companies and stocks to watch? rest of the game i mean like you will talk about apple in a second but like now the consumer ai revolution starts it's going to go through apple they're going to be the toll collector and then you look at the enterprise use cases that's where software we look at names like palantir snowflake and even though right now i got to talk about microsoft oracle and others it's it's time for them now to get into that game in terms of monetization it's a very very important earnings season in terms of 2Q, that spreads cybersecurity as well.

18:15It speaks to our view. This now spreads, whether it's in Korea, whether it's what we see in software, whether it's chips, and that is what makes us continue to be bullish. All right, Dan, since you brought it up, Oracle, which has been now horrible since September, you remember, I know you remember, the stock went up 40 percent on the back of that announcement. It's been horrible ever since. They report in September, so we're obviously a ways away from that. We're through things. What's going to be a catalyst here? Because it's pretty clear to me that Larry Ellison has pushed the chips all into the middle of the table.

18:48Hey, look, and it comes down to, obviously, on a CapEx perspective, they've got to show, ultimately, conversion on RPO, not just in terms of on open AI, but in terms of more and more of those deals. I think that's going to give the street more comfort. Because, look, New York City cab drive right now is bearish and oracle i mean they are as much in the pound the box as anyone but i think that's ultimately the wrong move because they will be able to monetize and it's just like what's happened with microsoft it's what happened with so many of these other names now to prove it next called three to six months well people dan are worried about oracle's balance sheet they're worried about the debt levels i mean that's that's really what it comes down to i think with oracle yeah but i i think to that point if you look at their debt load it's still a small piece relative to their overall capital structure.

19:37And they've already talked the$45 to$50 billion, how they're going to raise it. Now, clearly, they're going to have to do more. But I think, Brian, if you look out, you've got to look at these stories over the next 12, 18, 24 months. That's the key. But for all the ones that are ultimately funding the AI revolution, they're in the penalty box, Oracle, Microsoft, and others. That's why there's a very important earnings season to start to show monetization, start to show that trend change. Dan Ives. Dan, always a pleasure to have you on, my man. Thank you very much. Have a great weekend. Talk to you soon.

20:08Listen, Mike Coe, I mean, there's some worries out there about balance sheets, some worries about open AI, some worries about debt levels, some worries about AI becoming some sort of commoditized product. And so some companies, I think to Dan Ives' point, some companies are being penalized for this. Well, I think they're being penalized because everybody realizes that the total addressable market for these businesses is enormous. But you have a lot of businesses that think they're probably going to command a larger portion of it than all of them will. And what that means is that in a competitive marketplace, some are going to win, some are going to lose.

20:43Those that are in a better cash position are obviously able to fight that battle a little better than those that aren't. So I'm inclined to say that I think the trade is still on, I wouldn't go after the players that are probably weakest. And as you point out, would you buy Oracle? No, no. Would anybody on the desk, Ronald, Joe, Guy, would anybody buy Oracle right now? You know, a jump ball in television when you don't identify a person to speak can be extraordinarily awkward, which is why I'll jump in here. But also incredibly helpful as a television vehicle to engage the entire team. No, that's fair.

21:18Now, what if we all started talking simultaneously? And like a basketball team, there are five of us right now on the court. So, would, and we all know the tallest. Yes, and you know, you are. Yes, I am. And probably the smartest and best looking. And Hans, thank you. You know what? I take back everything I said about you earlier. So, would you buy a one? Yes, and you know why? Because I'm pretty convinced that you're going to wake up one day and Oracle's going to be the next stock that the administration talks about in glowing terms. In the same way they talked about Intel and Dell and Micron and some of these other names.

21:47I think that I know historically that's a dumb reason to buy something in today's world. That is an absolute reason. You know what? I don't think it's that dumb. Bono and listen, there is there is a White House headline reaction on a lot of these stocks. If the president comes out and says, well, I like Dell or I like this. The stocks move. I don't think Guy Domi is that crazy. Honestly, I was going to make a use case, but I wasn't going to go that route. that that's a very compelling case. It just simply is. It's like you have to observe what drives price action. Another reason why I would actually support buying it is I do think a very small position of your portfolio should be alpha generation.

22:27And I'm talking about small single digits. So if you're going to size it according to that and you have a portfolio that largely consists of indexes, ETFs, blue chips, there's a situation where you take one or 2 % of probably one or half percent of your portfolio and you look for moonshots. This is this is perhaps a generational opportunity. And I don't think that you can completely eschew that despite the negative price action that we've seen. All good points and an interesting take on Oracle. All right. Coming up, a little bit of headwind for Delta Airlines and earnings beat, but not enough to lift the stock today.

23:07We'll talk about the warning signs you are not ignoring. Plus, oil breaking a five-week losing streak, tensions with Iran reigniting. How do you position now in energy? We'll talk about that and more Fast Money back in two minutes.

23:26Soccer teaches us lessons we can take with us long after we leave the field. That's why Bank of America and U.S. Soccer are committed to helping bring soccer to every school. Raise your hand to help at bofa.com slash soccer at schools. It's smart to always have a few financial goals. And a really smart one you can set? Earning cash back on what you buy every day. And with Discover, you can. Get this. Discover automatically matches all the cash back you've earned at the end of your first year. Seriously, all of it. And we trust you to make smart decisions. After all, you listen to this show. See terms at discover.com slash credit card.

24:05Hey, Chicagoland, the Wayfair store is in your neighborhood at Edens Plaza and Wilmette. Finally, you can feel the fabric, sit on the sectionals, and even open the refrigerators. Plus, our in-store designers will help you bring it all together with free one-on-one design support for any project on any budget. Yep, we said free. Oh, and did we mention the cafe? So what are you waiting for? Come see all that's in store. Visit the Wayfair store today at Edens Plaza and Wilmette. Wayfair, every style, every home. All right, let's talk airlines. Delta stock a bit lower today, even after earnings appeared to beat the street.