SpaceX Earnings Report… And What’s Next for the Pharma Trade 8/4/26

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24:24Welcome back to Fast Money. We've got breaking news on new cyber incidents with OpenAI models. Mackenzie Sigalos has got the details. Matt. It's about OpenAI is disclosing two more incidents in which its models cross the boundaries of cyber security tests and reach the public Internet, including one case where a model exploited a website. Now, the incidents happened during capture the flag exercises with normal safeguards removed. OpenAI says those conditions do not reflect its publicly available products. Now, one of the tests was actually run by the U.K. government and also involved Anthropix Claude Mythos 5.

24:57Regulators say that both companies' models engaged in sustained potentially harmful activity involving real people and organizations after they were deliberately given Internet access. In the case of OpenAI, GBT 5.6 Sol used an exposed GitHub credential, created outside accounts, and then briefly made malicious code available online. Now, that attempt failed and officials found no evidence any real system accessed it. And then in a separate test, an OpenAI model exploited a real website. The evaluator says that any impact appears limited to that site. And crucially, neither incident involved a model escaping a secure environment.

25:34that makes them less severe than the earlier hugging face breach, where OpenAI says its models broke out of a restricted test environment using a previously unknown vulnerability. Mel? Mack, thanks. Mackenzie Cigalos. Let's get to an earnings alert on AMB. Shares are dropping even after the chipmaker beat sales and earnings estimates and said data center revenues doubled. Conference calls underway. Christina Partinevels is here with some details. Christina? And I was just listening, but when good is just not good enough. AMD delivered record earnings, as you pointed out, revenue up 50 percent powered by data centers.

26:04And CEO Lisa Su even teasing more on the call, saying data center sales should accelerate in the back half of the year. She expects data center segment revenue specifically to more than double year over year in 2027. The stock, though, got hit after climbing 7 percent into the print. The overhang, the guide just came in only a touch above what the street wanted, and margins aren't expected to improve from here, staying at 56 percent sequentially, given the higher cost to ramp up those MI450 GPU chips, as well as the racks that go with them. Then there's the spending. CapEx hit roughly$808 million, nearly three times the estimate.

26:40The read-through maybe is that investors want proof that AI spending is turning into revenue. That said, AMD is a fabulous chip maker, so the jump is likely a one-off. And you can bet it definitely comes up on the call. The questions just started now. The CEO did pledge a new AI rack every year and talked up the next chip. So this was what helped the stock just within the last 20 minutes or so, the MI500. She called customer interest strong and said it would be the biggest generational jump in the company's history, part of a push to really lift AI performance more than, quote, 2 ,000 times in four years.

27:15So bottom line, strong quarter, but against a stock that's up at, whatever, 140 % year to date versus the SMH at just 60 % expectations were definitely high, of course, going into the print. And for more on that quarter, we will have at 9 a.m. Eastern an exclusive interview with CEO Lisa Su. All right, Christina, if I got this wrong, just correct me like most people will. But I saw CapEx almost triple what the street was expecting. Were you listening? Yeah. Yeah, but that is no, no, no. But that to me is staggering for a company that doesn't seem to need CapEx in the way some of these other companies do.

27:49So that's why it could be a one off. And so I'm 100 percent sure it's going to be asked on the call because immediately Melissa was speaking to Stacey Rasgon in the last hour. So I immediately emailed him afterwards. Did you see this number? And he said that it's got to be a one off because it's going to come up. It's very rare. But this could also point to we're not rewarding spenders anymore. Right. Which was just last week we were talking about that. You know, some of the CapEx numbers really affected the hyperscalers. Now it seems like AMD is in the mix and I'm sure Nvidia, too. So is that going to be the same reaction in that stock price?

28:19But good point. When do you make the quarter? Well, I tell you, for a company that is supposed to be growing north of 50%, this just wasn't good enough. But, I mean, I just think this is a function of trading from, you know, 420, 430 into the print. And my guess is this is not indicative of a now new wave of selling across summies. I think this is a case where the company was priced to perfection. I think everything that Lisa Su said about where they are with the with the MI450s. And again, those three or four key clients are very much intact. It gets back to if you think that those that, you know, that compute power is something that that demand stays and that these guys can pay for it.

28:58Then AMD still looks interesting. Solid, but unspectacular was one analyst headline that I saw after. It's good. I mean, you know, typically companies like this, I think two percent of revenue is like CapEx. This is, as I said, three, four times. So are they changing the fundamental makeup of the company? And I think that's something, like Christina said, it's one off. I'll take them at their word. And, Christina. Well, I don't know yet. I'm guessing it's based off of speaking to an analyst. We'll see, because if this is a change, then it's something to actually take a look at. Yeah, there's something sort of funky.

29:29They're talking about an increase of revenue pretty big, but yet margins staying the same. 56%. Right? Now, we know that some of the cost of goods going into those products are, There's higher. But you would still think there would be some additional leverage, something that would get higher margins. So I don't know what's going on. How CapEx, I don't know if that goes into cost of goods sold. That's a different accounting. I wonder what the gross margins for the quarter that 56 % just has to do with the ramp really coming after that. So maybe the benefits of ramping a product, economies of scale, et cetera, are not going to be felt.

30:02And it's still very expensive to make these Helios racks, which are massive. I don't know why I have to do these. You're miming. It almost hit me. Sorry, I didn't mean to be rude before. No, not at all. Thank you, Christina. Christina Parsonopoulos. There's a lot more Fast Money to come. Here's what's coming up next. Caterpillar's earth-moving surge, the blowout earnings driving the industrial giant higher, and whether the AI build-out can keep the bulldozers rolling, plus a tough pill to swallow, why investors aren't buying Novo Nordisk's upbeat outlook, and how to size up the weight loss drug competition now.

30:40You're watching Fast Money, live from the NASDAQ market side in Times Square. We're back right after this. The board recommends approving... Regarding that seat on the committee, we're promoting... To boost quarterly earnings... Every day, shareholders meet to discuss important matters about the companies you invest in. Now you can easily make your voice heard. Vanguard Investor Choice gives you a say in the companies you invest in. With just a few taps, you can set your proxy voting preference for your index funds. Visit vanguard.com slash investorchoice to learn more. Vanguard Investors own shares of our index funds, which own shares of the companies they invest in.

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31:48There's only one Ozempic. When you partner with CDW, you get more from your devices with solutions that take modern work to the next level. CDW experts are delivering powerful productivity with Lenovo AI PCs, helping users block out distractions, access virtual support anytime, anywhere, and share content seamlessly between devices. Make amazing happen. Learn more at CDW.com slash Lenovo. All fun and games here on set. Welcome back to Fast Money. Stocks surging for a fourth straight day. The Dow adding 900 points to close at records. The S &P rising nearly 2 % for its first close above 7 ,700 and the Nasdaq surging 2.5%.

32:35Caterpillar popping more than 12 % at its highs of the day after the industrial giant beat profit estimates for its latest quarter and raised revenue guidance for the year. The company is seeing strong demand from the data center build out. And some more after hours action to bring you Arista soaring on strong results and guidance that blew past estimates thanks to AI data center demand. Wynn Resorts jumping up to the casino operator reported strength in both the U.S. and Macau, booking holdings higher on better than expected results and Pinterest shares lower despite top and bottom line beats.

33:04Revenue guidance lighter than expected. By the way, you can catch Pinterest CEO Bill Reddy on Mad Money. That is tonight, 6 p.m. Eastern time, right here on CNBC. You want to trade Caterpillar? Well, yes, Caterpillar, we've seen the same thing over and over. This time it's Caterpillar. It was, you know, GE Vernova, and it was United Rentals, and Quanta Services, and Eaton, and all of that. It's the same trade over and over. Still very strong demand. Strong demand, but first of all, it's a great quarter. But look at the sell-off this stock has had over the last month, month and a half. It's Bloom Energy.

33:38We've seen similar. So, yes, it was a significant bounce today off a great quarter. But if you look at it in the context of where it was a month and a half ago, it looks like a blip on the screen. Coming up with the prognosis for big pharma. What earnings so far signaling about the health of the sector and whether Eli Lilly can deliver a big dose of good news tomorrow. Fast Money is back right after this.

34:01Welcome back to Fast Money. Novo Nordisk dropping 6 % after releasing second quarter results ahead of schedule. Top and bottom line beats in improving sales outlook, but lighter than expected revenues on the Wagovi pill. For more on the implications, let's bring in Portal Innovations founder and CEO, John Flavin. John, great to have you with us. You know, I'm wondering what your take on the quarter is, but Novo Nordisk in general, I mean, it's had one of the most successful drug launches in history with the Wagovi pill, and yet it doesn't get any credit. Yeah, and even deeper than that, you know, as I look at the launch in greater detail, anecdotally hearing from physicians a preference for the pill, It's cheaper than a shot.

34:42The physicians do like the brand of Wegovi, and so they tend to favor it when prescribing. And also the notion when compared to the recent launch of Fondeo, the Lily's drug, it looks like the pace of growth by Novo is quite substantial. They're winning a race at two to one at this stage. Now, they had an earlier head start, but the molecule in the pill for Wegovy is the same as in the shot, whereas with the pill for Foundeo, it's a different molecule than Zepound. And so I'm hearing that little nuance as being a factor. So for the appreciation from the street perspective, it's a whole different story, of course.

35:27And everybody's anticipating what Lilly's earnings look like tomorrow to get more clues around how their pill rollout is going. John, if obesity wasn't a term on the line item, and it was just, if you just talked about diabetes, would we look into this company differently? Because their diabetes business is spectacular. Yeah, again, I continue to feel that Novo is undervalued. I mean, there's been setbacks at the wrong time. So, of course, they had the recent cardio late stage phase three trial failure, which was a disappointment. But it was more of an optical disappointment. And certainly it would have had financial impact, but was not really a major piece of analyst models going forward.

36:11So it's more the optical setback that they seem to have associated with their valuation when compared and contrast to Lilly, which goes in completely the opposite direction with regards to their scale. And I think that's really what the street is looking at is, you know, it's more the forward looking strength and scale of Lilly. and they match that up with, you know, what is the diversification strategy at Novo? How is that going? But from the standpoint of execution around the core business, Novo's done a nice job. Hey, John. So, yeah, I wanted to bring up cardiovascular, too. And as a shareholder, you know, I almost feel like we didn't even have that business.

36:54And so this is, again, it's part of the same question. But do we need to worry about diversity beyond diabetes and obesity? And again, when you're talking about the dominant player out there. Yeah, again, I look at it and just if you look at the core business, I still believe it's being undervalued. You know, when you get to Lilly's scale, diversification becomes critical. Their acquisition strategy tells that story. You know, the bigger the beast gets, the more you've got to feed it. And so I think they have that burden, if you will, and are executing well against it, of course. But I think over time, you know, that will play out with regards to their ability to keep that scale and keep that trillion dollar valuation.

37:37Everybody else is trying to figure out how do they get in the game? The recent, you know, merger rumor around Bristol and AstraZeneca is a clue toward what are other companies doing to get to scale? John, it's Karen. Thanks for being on. I'm a sad Novo holder for a long time. I'm wondering, so looking at these earnings and then thinking about what Lilly reports tomorrow, I'm wondering if Lilly reports something good, Novo will trade down. And if Lilly reports something not so good, Novo trades down. Would you agree that that is likely to happen? Yeah, I mean, I will. I will agree to that. But it doesn't change my outlook or view toward this disconnect that I think has been going on for quite a while.

38:26If you want to value the core business, I think that there's not enough respect going to what Novo has been able to achieve under their leadership with Dutster and his forward-looking execution around the plan. Now, will that play out in the market tomorrow? Yeah, it's probably more likely the story that you're telling. But I would have to believe that over time there's going to be some recognition for the execution around the rollout of the pill. There's certainly debate around, you know, what's happening in the next generation. Of course, with Lilly, their update on their Triple G when compared to Kagra Sema.

39:03You know, there's debates around what does the pipeline look like as you look at Novo's capacity to continue to grow beyond the Wagovi pill, for example. And that's where I think a lot of attention is being paid right now. Thank you, John. Good to see you. My pleasure. It's not just the obesity pipeline. I mean, I think that there's a perception that Lilly's obesity pipeline is superior because it's got a red is true tide versus Cagrosan, as John had mentioned. But also the outside pipeline, outside of obesity, it is also superior. So why do you hold on to Novo? Because I just think on valuation, it's a much more interesting story at this point.

39:41I also just think you've had a lot of management turnover. There's been a very poor communication from management. I think the management team is discounted heavily. And I think there's an opportunity there because I think ultimately we still haven't really seen the change in the team. Agree. Just valuation. Coming up, a bite-sized earnings beat the mixed results out of McDonald's, leaving investors hungry for more answers. And the other consumer bellwethers making moves today when fast money returns.

40:16Welcome back to Fast Money. A couple of consumer-facing stocks catching our eye today. First, McDonald's ending the day up a percent after reporting mixed results this morning. The company announcing a new head for its U.S. business, which saw a drop in foot traffic. Shares of the burger chain down more than 12 percent this year. What do you make of the results? I mean, in many ways, like, there's probably some encouraging stuff there. I mean, it doesn't speak that well for a lower end consumer right now. But, you know, some of the kind of explanations that they gave is top comps versus a Minecraft, you know, campaign last year.

40:49And then, you know, World Cup didn't do that well this year. It looked like there were bigger ticket items despite them pushing some of the value stuff. But comps, you know, were lower. Traffic was lower. So, again, this stock actually feels like it's trying to make a bottom. I don't think expectations were particularly high heading into the print. Seems like mis-execution was a big problem for the quarter. Well, it's a company that is not often accused of that, especially when it comes to price wars and them blowing the competition out of the water. And apparently the Grimace, though, has got some news.

41:18The Grimace in Europe was a big driver of international sales. There is Grimace. Yeah, I mean, the Grimace looks hungover or something. See, all the things are purple. We did some research, actually. I should say the crack staff at the office because I said, you guys, what is Grimace? Grimace apparently is a purple taste bud. A purple taste bud. So that's, by the way, that's a picture of the Grimace. Grimace is a body part. That's the Grimace on the field at Citi Field when he was the catalyst to the Mets going on one of the best all-time tears in their history. And I just, you know, I have a special place for the Grimace.

41:53I always will love the Grimace. A lucky taste bud. Guy, you love Mary McCheese, don't you? Of course I do. The Hamburglar is one of my all-time favorites. How about that? I have a great McDonald's story that I probably can't tell here. You probably don't have time either. I will say this. It was good enough. The margins, they basically, the guidance for the rest of the year margins was not as disappointing as I think the street was looking at. I think valuation is reasonable here. The stock should bounce, I think. Coming up, Disney's next act. What to expect when the media giant reports tomorrow morning and whether results can bring some magic back to the struggling stock.

42:26More Fast Money in 2.

42:31Welcome back to Fast Money. Disney on deck to report earnings tomorrow morning, the second report under CEO Josh DiMero. Investors will be watching growth in the company's streaming business, as well as for any reads on the consumer from its parks division. Disney shares down 3 % since the last report, nearly 14 % this year. What do you want to hear from Disney? I want to hear more profitability in the DTC business, because that's ultimately what they're going to be paid for. That's something that I think has actually outperformed expectations over the last multiple quarters. This is also a company that, if you remember, about three quarters back, they gave us unbelievably detailed guidance about the next four years or three plus years at least.

43:11And in fact, there's some numbers that need to be held to. So I think their parks business is fine. I think it's cyclical. And unfortunately, I don't see a catalyst here. Is the streaming overhaul, their words, not mine, is it actually working right? because you've got to reignite subscriber growth, which they haven't seen. And if Netflix is any indication, I'm hard-pressed to believe Disney's going to actually beat the metrics that people are looking for. Yeah, I agree with that. It's not a crazy price, though. I mean, we've seen it much more expensive. The balance sheet has been slowly getting repaired over time.

43:44But I don't know. Given what's happened with Netflix, I'm not that optimistic. Not long. Meantime, let's get to some home furnishing stocks that surged today. Wayfair up 30 percent its best day since 2020 after reporting its strongest U.S. growth and best free cash flow since the pandemic. RH and Williams-Sonoma coming along for the ride as well. And I guess it's the upper K. So maybe no surprise that these stocks are working at this point. Interest rate relief here probably helping to juice this a little bit. And certain parts of the discretionary trade have been on fire. I think speaking of fire, speaking of warm, obviously, as William Sonoma, we know what you would be heating up, Guy, right?

44:24I mean, it's something. Well, of course, we know this. It's a Dutch oven. It's a Dutch oven. That's where you go to get them. Well, no, you don't have to go to William Sonoma to have a Dutch oven. I mean, you could, but it's not. You don't need to. OK, let's depart from this conversation. Well, Wayfair, one thing definitely worth noting, short, the short interest here, right? They had 13.27 percent. That is a big amount. So if you get some good news, and this was legitimately good news, then you can start to see some. I have to think that's part of what happened today. Yeah. But what is a read through?

44:56I mean, what is a read through this sort of price point? I mean. Well, real quick. I mean, I'll be serious for a second. Restoration Hardware, RH Corp, I guess they call it. It's been a disaster now for three and a half or four years. And you don't see this that often. Bank of America reinstated, underperformed. I mean, when was the last time you heard something like that? This is a stock, by the way, that's been more than cut in half over the last couple of years, significantly so. So they have a$156 price target going into earnings, I believe, on September 3rd. So buyer beware. You know, forget the price point.

45:27Look at the price action. I mean, up 30 % at a clip. This is a$15 billion market cap company. Obviously, it was much less yesterday. And you talk about short interest. But look at Palantir. I mean, Palantir today was up 30%. It gained$100 billion in market cap like this. And, you know, Guy talks about what's going on with the semis and the memory. It's not normal price action. And, you know, I know the S &P made new highs today. It just doesn't feel bullish to see that sort of chase, that sort of FOMO. Up next, final trades.

45:59Last check on SpaceX before we go down 7.4%. Elon Musk saying Starship likely will be safe for humans by the end of 2027 and that there's a non-zero chance the company hits a trillion in revenue in 2029. Time for the final trade. Let's go around the horn. Timbo. 4 % dividend yield for Novo while you're waiting for this thing one to turn. I think I feel okay with that. Karen. Yes. So the energy trade, even on daylight today where oil really took a hit, like the XLE or the O8. Dan. Yeah, Mag 7 ran too far too fast. I think you sell the Mags. There's a non-zero chance I play tight end for the Giants this year, Melissa.

46:37CLF. All right. Thanks for watching Fast Money. Mad Money starts right now. All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by them on television, radio, internet, or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Fast Money participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such.

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