Software vs. Semiconductors… And Big Box Battle 7/10/25

0:02Live from the Nasdaq market site in the heart of New York City's Times Square this is fast Here's what's on tap tonight. A major milestone, NVIDIA becoming the first company ever to close with a$4 trillion market cap. But while it leads semis to new highs, the software sector is slumping. What does the divergence tell us? We're going to get some answers. And back on target, the long-struggling retailer has been on a stealthy climb the last few months. But can it outperform rivals like Walmart in the longer term? We dive into the charts to find out. Plus, Delta shares take off after better-than-expected earnings.

0:36S.J. Lauder gets a glow up on a bullish call. You know it from B of A. And we're going live to Lake Tahoe in the American Century Celebrity Golf Championship with seven-time NBA All-Star Grant Hill. The strategy that he's taking off the court with his investments. I'm Courtney Reagan in this evening for Melissa Lee. Coming to you live from Studio B at the NASDAQ. On the desk tonight, we have Tim Seymour, Dan Nathan, Guy Adami, and Carter Worth. Well, we start with that major divergence in the tech sector. As NVIDIA's$4 trillion market cap milestone powers the chip stock, software is slumping. The SMH semiconductor ETF closed at a record and is up nearly 30 % in the last two months.

1:17The IGV software fund, on the other hand, shed 2 % today and is far lagging the chips over that period. Big names like Autodesk, ServiceNow, Intuit, CrowdStrike, and Adobe among the biggest underperformers recently. So why are we seeing the split in the sector and what does it mean for the market? Dan, what do you think? I mean,$4 trillion. We're putting so much credence in this for NVIDIA. Does it matter that much? Does it point us in any direction going forward? Sure. It points in a direction that I think a lot of folks who've been invested in the name for the last three years know that it's been a monopoly.

1:49They have 90 % of high-end GPUs. We know that all of their big customers are clamoring for those GPUs. They've been tripping over each other for years now. And then you have, you know, some of these sovereigns, you know, who might get more exposure to them after we kind of work through some of these export bans. I mean, listen, NVIDIA to me is no longer the story. The story is how it broadens out from some of their customers and then the customers that are basically going to be disrupted by the technology that comes out of the backside of this. Right. So you keep hearing about AI agents. Well, what are they going to do?

2:21They're going to replace a lot of automated tasks. Right. A lot of data entry and that sort of thing. per seat licenses. This has been a huge trend for like 15 years. These SaaS companies, right? And the model has been something that people have really enjoyed. The companies have had higher valuations than lots of other different software models. Well, all of a sudden, if they are basically being attacked by the idea of these AI agents, they don't exist yet. And that's a really important part about it. But if you look at a company like Salesforce, they have severely lagged, right? That's a big component of the IGV.

2:52If you look at like Adobe, I mean, Adobe can't get out of its own way. You know, a company like Figma that they tried to buy a couple years ago is coming at their core competency and they're using a better technology to do it. So that, to me, is what's going on with software. But if you look at semis, it's really being dragged up by NVIDIA and Taiwan Semi. And that's been the story for the last two years. Before I effort to answer, are you familiar, Tim, with the saying, the apple does not fall far from the tree? And I think I know what it means. And I think I know why you're bringing it up. Well, I'm bringing it up because we know Courtney is lovely, but now it's obvious the reasons why.

3:29Because her folks are here, and we had the opportunity to spend some time with Courtney's folks. Yep. And from Ohio. It's a happy day here on the set. It's wonderful to be here. Bring your family to work, Doug. It's wonderful to have you. Yes. Anyway, did you want to go on? I'm happy to jump in. I will effort to answer that question. I mean, first of all, the IGV is basically at all-time highs, and maybe deservedly so. But I think one of the reasons it could potentially roll over here or be underperformed vis-a-vis some of these other things is valuation. is now a problem. As Dan just mentioned, I think Palantir is the third biggest holding.

4:00Microsoft, Oracle, Salesforce, the fourth, and Adobe's in there as well. All those names you could say historically are extraordinarily expensive, especially given some of the runs that these names have. So, you know, I'm not head over here about software or semis here, but I got to tell you, software, I think, has gotten itself a little expensive. And I'll talk kind of the two different things that Dan and Guy have introduced. I think Dan's talked about, you know, big picture thematic dynamics with software and the threat posed by AI and some of the, you know, potentially the obsolescence of some of these companies, maybe not that, but certainly not the leading edge and certainly maybe not deserving of the multiples Guy's talking about.

4:40I think it's a little bit of both. I think it's also just technical dynamics with the market. If you look at it on a one-year rolling basis, software's outperformed the, so the IGV's outperformed the SMH by 25%. Now over the last three months, Semis have come back. They've zoomed to all-time highs. And people typically, if you've been following the market cadence over the last two years, it's semis lead, software follows, and almost everything else from there. We're not necessarily seeing that right now. I think these guys have talked about some places. I mean, the valuation in Paletteer is lunacy if you think about it.

5:13The valuation in Salesforce relative to itself is actually really quite attractive. I like CrowdStrike. I do think that cyber is still a place that at least has carved out more of a moat in a world where AI could be very disruptive to that whole space. Adobe disaster. And again, this is this is a company that is truly right now looks like the Apple of software. And I think we all know what that metaphor means right now. Carter, what about what about you? What are the charts tell you when you're looking at the semis versus the software names or even pull out individual names? if that's what strikes your fancy on these.

5:46Well, Tim makes the good point that it's really what time frame one takes. So on a three-month basis, of course, we know that semis have almost doubled the performance. If you look at the SOX, the SMH versus the IGV. And yet, of course, over time, the IGV is the more enduring asset in the sense that semis are quite cyclical. But what we know today, just here and now, is that the IGV closed on the absolute low and volume expanded, an outlier performance in terms of underperformance versus the market. And it happened, of course, right at its former high. EGV literally returned to the penny to its December 9th high some eight, nine months ago and then hit its head.

6:27I think there's probably more of a drawdown to come based on today's single very poor action. Dan, if you're looking at these names, semis versus software, and you're looking at them as group, and there is some kind of a macro shock or disruption, are you more protected in one than the other? Well, I think semis for now. I mean, I think that there's so few other companies that have actually competed with NVIDIA. If you think about it, AMD has actually been losing share. We don't even know what they're doing and who their customers are and how they're competing one way or another. But AMD has kind of worked higher since the April lows.

7:02So is there comfort NVIDIA? Maybe I think a lot of folks have kind of pointed to the valuation relative to where it was two years ago. But here's a company five years ago that was doing 20 billion dollars in sales and it's up 10x now. I mean, the stock price, obviously, the market cap is up like that, too. You know, this four trillion dollar number. But I think there's probably places within the semis that will play some catch up. I know a lot of folks were kind of into this custom silicon sort of play. This is against NVIDIA and it's from some of NVIDIA's biggest customers. That's Microsoft, that's Amazon, that's Google and Meta.

7:32They're all, you know, contracting with these Marvel and Broadcom to build specific chips for specific tasks. But I think as we get further into this trade, we see where the hyper-stayers are going. We see where they're spending. You know, once these models are all trained up, you know, then you get into this inference phase. And that might be another phase, like the way investors think about valuations in some of these names. So, again, I don't think any of it's safe because what's going on here, make no mistake about it, there is a bubble. And I don't mean like$2 ,000 bubble. I don't mean like, you know, there's all these companies that, you know, were pre-earnings and this and that or whatever.

8:04But there's a bubble in enthusiasm about this theme. And it's yet to really play out, I think, at a broad base. Right. So we're just trading on sort of enthusiasm. But we haven't seen real results. We don't really know what the future looks like. They've been very limited. I'll let you guys kind of speak to that because you guys look at a lot of different industries. The promise is like how it infects other parts. And I don't mean infect, but how it infuses in other parts of the economy. Well, if I think about software as an investment, also in the context of tariffs and also a tax bill, and these are other big things that are going on that are moving the markets in one way or the direction, there are people that feel the software companies are more defensive because they're not as exposed to tariffs.

8:38They feel they're actually better positioned in a tax bill where free cash flows are rewarded with lower taxes. So I've read that, but I still think we're right to be addressing where some of these companies are possibly in the catbird seat in terms of at least being a side-by-side with the hardware and the AI chip world, but also those that really, they have to reinvent their business. And yesterday's software clearly is a very different place. Oracle's might be the greatest example of a company that has transformed itself on the fly. I was just going to say, Oracle's up about 32 % in a month.

9:11Yeah, and... But they're not innovating. Let's be really clear. What they're doing is they're fast-following, right? So they got a big contract. They competed on price. OpenAI gives them this$30 billion thing. They already announced this Stargate. So, for instance, they're not doing anything magical relative to what some of the other data center companies are doing. And I think that's a really important distinction. And we saw this going back 25 years ago when we had the last major technological shift. So if Oracle had come out and they had like a deep seek moment about some technology that they had, you know, was proprietary to them and it was going to be able to something that was going to help them take share, that would be one thing.

9:44But the fact here that they have to go spend a lot more than they've been spending on CapEx,$25 billion a year over the last two years, their competitors are spending$80,$90,$100 billion a year. So that's where I come in with the Oracle and the IBM. I don't see them nearly as interesting as the other ones. Well, and we've had the Oracle conversation a lot because this move has been astronomical. And we've pointed out that they're chasing the top line, not the bottom line. They're going after a lower margin business with a much bigger TAM, but maybe not as exciting. I don't know. Guy, what do you have to say?

10:15Well, as Courtney remembers, Oracle was the O in my hope trade. So I saw this coming a mile now. I'm kidding. Real quick, in terms of going back to NVIDIA and some of the semis, you have at this price to sales, which is now north of 16 times next year's revenue for NVIDIA, you have to believe almost by definition that margins are going to hang in there at the levels they are now. Because if you start to see the margin contraction, that price to sales, which clearly nobody cares about right now, I think people start to focus on. Hang on just for a second. We have a news alert coming to us from Washington, D.C.

10:47with Megan Casella. Megan, what's the latest? Hey, Kortso. NVIDIA CEO Jensen Huang is at the White House this afternoon. He had been set to meet with President Trump. We had confirmed that earlier based on a source familiar. Now I think we have some video. Yeah, here he is. Just a few minutes ago towards the top of the hour, he's walking in to the West Wing here. You can see him walking by that Marine. Now, I was not able to get any details on what the two men would be meeting about what the agenda was going to be for this meeting. But it does come, of course, just a couple of hours after NVIDIA closed for the first time above$4 trillion.

11:19And then after later earlier today, the president posted about NVIDIA on Truth Social saying NVIDIA is up 47 percent since Trump tariffs. So tariffs, export controls, the upcoming trip to China. A lot for these two men to talk about this afternoon, Court. I was going to say, you have to at least believe that there was probably a number of items on that agenda. I'm sure when we know more, you'll let us know. Megan, thank you very much. Well, for more on markets in the state of dealmaking, Tusk Ventures CEO Bradley Tusk joins us now. He's known for early investments in Uber, Coinbase, FanDuel, and more.

11:52Thank you so much for being here with us, Bradley. I guess I'd just love to get your take sort of right now writ large on what's going on in the markets And as it pertains to policy, now that we have the president's spending bill that has been signed, we have a little bit more details on what's going to happen with tariffs, at least as some of these countries start getting their letters. How do you think it influences the broader market at this point? Yeah, I think markets like certainty. And so there were three big variables and now kind of one and a half, like you said, are resolved. So the budget is done.

12:25We know what that means in terms of venture. like the new QSBS provisions are really good, so that should be helpful. Two would be tariffs. Some are resolved. Some are unresolved. There's still debate as to what the impact of tariffs would mean if they do go into effect in the way that Trump said they would. And the third would be interest rates, which includes who runs the Fed. And obviously, the venture market, as much as anyone wants to see interest rates cut. We're at an interesting moment in venture where there's been almost no liquidity for four years, and then now things are starting to move.

12:57And I think that the venture world is looking for every possible sign of encouragement to either take companies public or do M &A. We've got a much more friendly FTC right now. So a lot of the pieces are there, but not all of them yet. And so what moves the needle on that? Ultimately, are you waiting for some movement from the administration on potentially deregulation, loosening up some restrictions that everyone's been hopeful for? Right. So, for example, we're investors in Circle. The Genius Act, which is the Stablecoin Act, has passed the Senate, hasn't passed the House yet. It will. But to a certain extent, we'll see if the market's already priced that fully in or if once it passes, the House gets signed by the president.

13:40There's sort of further movement as a result of that. So on an individual basis, when I look at my portfolio companies, we have another company called Kodiak that's on the screen. they're an autonomous trucking company, they're going public next month. The USDOT has still yet to issue any sort of sensible regulations around how autonomous trucking interstate would work. Something like that would help a lot. So there is definitely, I would say, more activity by the Trump administration around settling some of the regulatory issues. In the Biden world, it was sort of very hands off, which was good in a way, but it was also bad because things that needed to get done didn't really get done either.

14:21But by and large, the one thing that I think investors don't necessarily realize, the vast majority of tech regulation is at the state level. It's not at the federal level. So we all think about the White House and Congress when the word politics pops up to our brain. But most of the time, that's actually not really what matters. Brad, it's Tim. Thanks for joining us. So game on in terms of Trump administration as it pertains to crypto and certainly the regulatory backdrop. You're an investor. You've been an investor. Coinbase, I'm sure, has excited you over the last few weeks. Talk about ancillary plays.

14:55Are some of these companies, and we talk about other ancillary crypto digital plays a lot on this desk, and the wonder is, have the public markets already priced in more than they should? And as someone that's straddling both worlds, where do you see more opportunity? Look, it's certainly, let's just be clear on crypto, So hard to really know because it is the most momentum-based sort of index or commodity or however you want to describe it that I've ever seen, right? So it doesn't totally ascribe to the normal rules of logic and gravity. But I mean, I think what we're seeing here, and some of this is things like the Genius Act, but overall in the Trump approach to crypto at the SEC and CFTC is when it is totally accepted by the federal government and seen as part of the underlying economic system and banks start to get into stable coins, then the question becomes, is this just the beginning?

15:48And is there a lot more room for growth? Or is it priced in? I would say it's probably not fully priced in because we've seen some really proactive positive movements by the SEC and the White House around crypto so far, but there could be more to come. And so, yeah, I would be pretty bullish. A lot to take in there. Bradley Tusk, thank you so much for joining us here tonight. Thank you for having me. I appreciate it. Guy, you know I love to talk about cryptocurrency. It just excites me beyond music. It's your music and cryptocurrency. It's your Ballywick. Yeah. Do you really? No. I don't know.

16:22Did you see that SNL skit? That's sort of how I feel about it. It's not her jam. You mean the one with Elon? No, the one about cryptocurrency or the women trying to pretend to understand it to each other. Anyway. It feels, well, I mean, it's pretty clear to me that market sell-offs are negative for crypto. I mean, if you sort of overlay a crypto chart with the S &P over the last six to nine months, it sort of lines up pretty well. So it shouldn't be that surprising, although it surprises me that crypto is where it is. However, you know, gold still hangs in there like a champ, in my opinion. And I think gold has sort of divorced itself from any market concerns.

16:54I mean, we have one day events, but gold to me is the winner in this entire thing. Gold, I get. Yeah, he's the gold guy. I understand that. One thing I think is important to take away from what Bradley just said, he said for four years they have not had a lot of liquidity. So as a VC investor, what are you looking for? You're looking for M &A, you're looking for IPOs. That was one of the promise of deregulation. And so here we are, we're in the second half of this year, and there have been a couple high-profile, you know, IPOs on the tech front over the last few months. Core Weave, Circle, they've done very, very well, and maybe that's a scarcity thing.

17:21But as we get further into Q3, like, you better see some of these IPOs. You better see some M &A. I was going to say, I mean, where is this? Because a lot of the banks are trading like they're open for business as far as capital markets. So I just think that's going to be something really interesting to track. Maybe we'll hear some from the banks when they start to report, actually. Probably not, because they're all confidential. I mean, like, they don't want to get the cart before the horse, right? But in their guidance. Well, what I think is interesting, Courtney, and as we have this conversation about banks who are reporting next week, I mean, certainly J.P.

17:50Morgan, at the head of the class, has been very dismissive about at least the role of crypto in their future. Having said that, we know that it's, you know, they are actively also engaging in the infrastructure of digital assets and stable coins. And so, I mean, I think we'll get some commentary. And I do think I think Bradley's call is right. I mean, once it becomes part of the system and now that the regulatory framework and the Genius Act is just one of, I think, many, it's very difficult to see how there isn't going to be more ways to play this than just Robinhood and Coinbase and Bitcoin.

18:23And I think there's more coming. Courtney, this is not a trick question. What was Brad's last name? I didn't hear it. Was it Tusk? Tusk. Are you joking? Thoughts on that album, Tim? 79, I believe. I think the USC marching band is what made that whole video. It was the video, and I think it made the album. I'm a rumors guy. 1979? I wasn't even born then. Okay. That doesn't mean okay. Great. Tim and I were both in high school. I mean, if you're going to throw it out, I am too. Coming up, Delta soaring after earnings. The details from the quarter and what the CEO had to say about the airline's outlook.

18:57That's next. Plus, a major mining move. Shares of MP materials jumping 50%. how a rare earth push from the Pentagon is boosting that stock and what it will mean for the company's next move. Don't go anywhere. Fast Money is back in two.

19:17Welcome back to Fast Money. Delta shares flying 12 percent higher after earnings this morning. The airline seeming to bounce back from a turbulent first quarter and reinstated its 2025 profit outlook. CMDC's Phil LaVos spoke with CEO Ed Bastian earlier today, and he has the details. Hi, Phil. Hi, Courtney. You know, Ed Bastian and Delta, they said three things today that really made investors say, OK, I like where this company is positioned, especially as we head into a busy summer. And then let's see if we can write out what might be a little patchy in the fall in the fourth quarter. First of all, Q2, numbers came in better than expected.

19:53It wasn't a huge beat, but the premium revenue, that's where they continue to make their money and continue to do well. It was up 5 % year over year. But here's the key. They said what investors wanted to hear. Capacity cuts are coming. How much? Still unclear. May not be huge, but it'll happen after the summer, in part because main cabin revenue, the people who are going for your basic economy ticket, that revenue is down 5 % year over year. And they are planning, once we get past the summer surge in travel, to start dropping their low-profit flights. Think early morning, think late at night, think those routes that just don't sell as well as your high destination markets.

20:35And Mondays and Tuesdays, really the weakest times off peak, if you will. Here's Ed Bastian talking about what they're seeing with the consumer now. The main cabin is down 5%, and that's where you have your most price-sensitive customers. You'll see post mid-August is you'll see industry capacity, particularly in the main cabin, domestically coming down significantly. Delta is doing that. I think all the other airlines are doing some level that we actually expect to see domestic seats in the main cabin negative starting in August. For the industry. For the industry and Delta. All right, we'll see who else is cutting capacity, whether it's this summer or more likely in the fall.

21:20Next week, we are going to hear from United Airlines. And then the week after that, we hear from American, Alaska and Southwest. Bottom line is this, guys. Capacity has to come out. There's just too many of the basic economy seats that are out there. And it's perhaps the industry waiting to see how much of that comes up with the struggles at Spirit. You know what's going on with Frontier as it's trying to, you know, build out a business because that basic economy business is just not strong right now. And at the end of the day, we are a society, at least here in the United States. We are paying up, whether it's paying up to get more leg room, get on first, whatever it is, premium is selling.

22:00And Delta has, you know, you can see that in the Q2 numbers, Courtney. That's why Delta had success. Yeah, absolutely. I mean, Phil, I don't mean to throw this out of left field, but I know you're going to be ready for it no matter what. With the changes that Southwest has made sort of to its strategy, are we seeing any impacts? I know it's early on, just a couple weeks into it, for the other major carriers. Too early to say. Too early to say. And in terms of the bags fly free and the change there to charging for bags, I don't think you're going to see much impact at all. You know, I have a couple of very, very close friends who are loyal Southwest flyers.

22:35They're not happy. But when I say to them, who are you going to fly instead? Well, I guess I'll still fly Southwest. You know, that's just the way it is. And it was the same thing with the legacy airlines when they said, look, we're going to start charging for bags. There was grumbling from the core constituents of a particular airline. But ultimately, most people are going to stick with that airline. Fair enough. I just like having an assigned seat. The Southwest seating policy stresses me out. It's kind of a food fight when you have to get after that. I don't care. I don't care. Well, you will like the changes then.