Nvidia Earnings On Tap, Meme Stock Mania & DEI Demands
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They are also the people behind the alternative investment industry's largest and most exciting in-person events. To find out more about iConnections events and members-only platform, visit iConnections.io. Welcome to the Risk Reversal Podcast. I'm Dan Nathan, joined by Guy Adami. Guy, how are you? I'm so well. It smells like spring, although we both know and the entire audience knows that spring

Spring is not as close as we want. I think what Guy's saying to you is that it is a balmy 55 degrees here in New York City. It is also sunny out. I did see this on the internet, so it must be true, Guy, that as of, I don't know, a couple weeks from now in mid-March, the sun is going to start setting after 7 p.m. It's going to do that. I

I don't know, maybe all the way until October. We got that to look forward to, don't we? That's because we have the spring forward now. I thought somehow they got rid of this Daylight Savings Time or whatever they call it, but apparently not. But please...

Yeah, they may do that with getting rid of the penny. I think those things make a whole heck of a lot of sense. All right, we have one job to do today. We want to talk about NVIDIA into the print tonight. That comes out right after the close. We have some dueling headlines that I think are really interesting that might dictate how this stock acts after and the guidance that they give. I also want to talk a little bit about

This is something that we talked about on Fast Money last night. It was really interesting to hear what Rick Santelli had to say and based on what he had to say a few months ago on yields. So we can talk about that. What is the push and pull there? And then the last one is DEI. There's some headlines there. We've seen a lot of major U.S. companies scrapping prior initiatives. One backed by shareholders is kind of sticking with it. Maybe a little pressure from Trump. And the last one, you're not going to believe this. There's a short report out on Apple's

on Applovin. We've been talking about this name a little bit. This was one of the best performing stocks in the market last year. It's down closely 20% today off a couple short reports. We're going to talk about that. All right, guys, let's talk about the NVIDIA 10% implied move in

either direction. I know that everyone's been talking about this. Every single newsletter that I read this morning, every website that I went to, the top story is NVIDIA. You would think that this is like the Super Bowl here. Talk to me a little bit about what you're expecting, because yesterday, you know, we had a 3% sell-off or so, and right out of the gate, today, we're shortly after the opening, the stock's up 3.5%. So at least some investors are kind of getting geeked up into the print. Yeah, it makes sense.

There is a faction of people that clearly don't want to miss the boat if, in fact, they were to beat and raise and have this stock make all-time highs. If you're in this business, if you're a hedge fund manager, if you're a manager of any sort and you're not long NVIDIA and you get a move to that magnitude, you're going to have to answer a lot of questions.

The questions are easy to answer if you're long and it misses and goes down rather than if you're not long and they beat and it goes up. That's just the nature of the business. So I think you're starting to see people square that into the print, number one. Number two, and the thing we should mention is, you know, all the metrics around NVIDIA in terms of the spend, in terms of CapEx, in terms of all the big companies that

that have basically identified and told us what they're going to spend on CapEx over the year. That's in the number. So the question one has to ask themselves, okay, what's left? What could they possibly do to get the juice required to get this stock to make all-time highs? And that's what the rub is. Now, it's going to come in one of two ways. It's going to come in the guide going forward in terms of revenue. We had Gene Munster on Fast Money last night. He thought they would beat

So those are the two things that I think I'm looking for.

Yeah. And 2 billion revenue beat on a 38 billion expectation is 5%. I mean, like you think about that, unless they are able to guide above 5% for the current quarter, I just don't see the stock going up that much. You might see a relief rally because the stock has been down. If you think about it over the last few weeks, um, you know, from that high that it made in January is a brief, brief new high, but we've talked about the chart, a series of lower highs. Um,

in lower lows and the fact that stock has not made any progress since June. I think that's one of the things that you got to keep your eyes open about. Guy, you know, last night on Fast Money, they did a promo a couple times for Jensen Wang, the CEO of this company. Seven o'clock tonight on CNBC. That is like a special, if you will. Like that is like the markets in turmoil hour, right? When we used to have those specials after a big down day. When you see

A CEO like that coming on, really kind of like carving out a white space in the programming for CNBC. Does that make you think, oh, man, you better not be short this thing because he's coming on to talk again? Well, that's exactly right. And I think that's part of this equation as well. You know, people say to themselves, and this is the calculus that people do, and this is somewhat obvious, but I'll say it to the extent that it's not.

The only reason he would go on is because he knows it's going to be a great quarter and he knows the subsequent reaction in the stock is going to be good. And he wants to be able to talk about that on a television show. I understand that line of thinking. Now, he might believe all those things, but it's really what the market believes, right? So he may think a $2 billion beat and a subsequent $2 billion raise in revenue is going to be enough. And maybe it will be. The market might have other ideas. So

That's what's going to be really interesting for me to see, you know, what the reaction of the stock is in the wake of what he might consider to be a great quarter and a great guide. But the market might not be so enthralled by. Well, that's the most fascinating part about this. So in 2023 into 2024, you know, the beat and raises were just bigger than anyone expected, right? They were bigger than the whisper number. Now, when you say, OK, maybe expectations are low for a 5% revenue beat, that sort of thing.

But the story is very picked over at this point. Like, we can all kind of agree on that. So this is where I want to go. What do you call it on Fast Money where you get two of the – you know, it's usually like Tim and me. We start fighting about something. And what do we say? Split screen. Split them up, right? Split screen. And if you're watching this on YouTube right now, we are all split up here, Guy and me. So I think it's interesting. The split screen right here this morning, Anthropic, okay, they are the maker of Closet.

Claude is one of these large language models and it's an interface that, you know, just like chat GPT or perplexity and the like here. And so here's the headline out of tech crunch. Anthropics latest flagship AI might not have been incredibly costly to train. And they're talking about maybe tens of millions of dollars. Okay. Like, so let's throw that in the kind of deep seek category.

camp. That was one of the headlines three weeks ago that caused NVIDIA to careen lower 17%. The idea is if these, you know, the guys who are making these large language models, they don't have to spend billions and billions of dollars on GPUs and data centers and the like, then this is going to be a game changer for NVIDIA. Then

the idea came around, though, that, well, maybe this is good for NVIDIA because those folks that need to catch up to some of the innovation, you know, they're going to have to spend. OK, the other headline here is from the information. This is Meta. That's the Facebook, as you call it. Meta discusses AI data center project that could cost 200 billion dollars. We'll put the story in the show note. So that's the push and pull here, right? We have this innovation where it's going to be cost much less to train these models. And then once we get in the inference phase, the cost of

compute's going to come down and you're not going to need all of these high-end GPUs throw in the China uh you know uh you know export curbs and everything like that that could all be bad for Nvidia the flip side of it we already heard all of this capex and then you start hearing about meta talking about bigger numbers like that's the push and pull here like talk to me about what you think wins over wins out I think both could be true I think both will be true I think that the

The awkwardization of this space is what we're seeing right now. And I think there was an inevitability to that. That's something that you talked about for the months prior to the deep seek news. So all those things can be true. But to answer your question, and your question is the right one, what's going to win out? And I think it's going to be more the former in the form of, I should say,

It's going to cost a lot less than the market realizes. And I don't think necessarily Nvidia wins to that with 77% gross margins. By definition, it's great for the entire space, but I don't think it's necessarily great for the leader of the

pack. So I think it's going to be great for a lot of other, the after-rans and the third and fourth players in the space, but I don't necessarily think it's a great thing for the leader, especially when the leader trades at the valuations that it trades, it's in the form of price to sales.

and when they enjoy the margins that they enjoy in an arena where almost by definition, if competition comes, those margins are going to be are going to deteriorate. Yeah. And I guess the point is about the guidance, too, right? If they can't meaningfully guide higher, you know, Gene Munster, who's been a great friend of the pot, he comes on Fast Money all the time. He and I talked about it earlier in the week on the Rich Russell pod. I mean, he's still expecting like a

pretty reasonable ramp. We're expecting 50% EPS in sales growth this year. He thinks those are light. If that's the case, then the stock is going to have more room to run. But if you don't kind of continue to beat and raise and you can't get greater confidence in that happening, then the stock is rich to your point. Well, quick, you talked about this on many of your shows and we'll talk about it here. I mean, the beat and raise that really caught everybody's attention

tension was when they went from a $7 billion guide to an $11.5 billion guide. So that's a $4.5 billion beat on a $7 billion number. Now you're talking about a $2 billion beat on a $48 billion number. The math has changed, right?

The number is half is what it was, but it's against 7x of what it was originally in terms of the base. So I mean, that's just the math around it. So a $2 billion beat seems like a lot, but against the scope of what we saw a couple of years ago, it's really what we're seeing is a deterioration in terms of the

percentage of the beats. Yeah, you know, it's interesting. That was May of 2023. It caught everybody off guard. The stock was $32 split adjusted into the recent highs. The stock gained 400%. Okay, so like we get it like the, you know, investors have been all in. It's been a very narrow trade. And I think the concentration of it as a pure play is one of the potential issues. If again, if those beaten raises continue to get smaller and smaller on a percentage basis. All right, guys, let's talk yields for a second here. The 10 year. Okay, so let's say

who cares about the price? Okay. Let's talk about why we think it's moving. So we've just at 4.8% in the 10 year. Now we are at 4.3%. I go back to in the spring and, you know, we were at 4.8% back then Rick Santelli, who we both respect a lot. He's probably forgotten more about the macro space and treasuries and yields and the things that move them. Then, um, you know, I will ever know.

But back then, we were talking about this 5% threshold and establishing a new range above it and the new normal and higher for longer. And he was saying that, and he wasn't saying it today, tomorrow, next year, but he can see double-digit yields at some point in the future.

Well, we know what happened. This is the Carter Braxton Worth mantra. Once you start hearing too much of that, that's the top. And it was the top. Now, we started working higher over the last call a year or so because of stickier inflation. That was your call. You were spot on. So the question I have right now,

The move from 4.8 to 4.3, does it have to do with the fact that folks are talking about the R word again? We have not heard the fear of recession in a very, very long time. Maybe back in September when the Fed cut 50 basis point, but that really seemed very, very preemptive. I don't think anyone thought we were on the footsteps or on the doorstep of a recession. Or is it just a reaction to this momentum unwind that we have seen over the last couple of weeks and

And therefore, as you've called just a flight to, and I'm doing this in air quotes, quality, if you will. That's the old playbook. But the only thing I'll just say about this is the S&P is still up 2% on the year. The NASDAQ's flat on the year. So the idea of a flight to quality because of momentum unwind seems kind of funky here. So thoughts, what do you think wins out in this debate?

Seems very funky without question. But you have to also throw into that equation the fact that Bitcoin, one of the risk assets that sort of entered the fray, it's gone from $106,000 or wherever the recent high was down to about $86,000 as well. So I think that's part, you have to throw that into the cauldron as well. Here's where I come down on it. I think it's in terms of lower yields, it's

almost be careful what you wish for. And this is something that Danny Moses talks about as well. So yields are going down, in my opinion, for the reasons you cited, a flight to quality off a market sell-off, which has been benign. So that doesn't really make a lot of sense. But I think that to a certain extent of what's going on. And I think in addition to that, a flight to safety in the form of

a recession or a slowing economy or consumer confidence, which was the worst number yesterday that we've seen in a couple of years. I mean, that surprised people as well. So there's clearly something going on on the economic front that people don't want to acknowledge, but it's happening again right below the surface. So I think yields are going down, not because the Fed or somebody seemingly has their arms around this. I don't think that's what it is. I think it's going down because, again,

You know, there's been this flight to treasuries on the back of what's going on in crypto and some other risk assets. Also because of what we're seeing around the consumer, consumer confidence, and potentially how it could seep into the broader economy. Stick around after the break, we'll be back with a split screen on the DEI and a few short reports out there on a beloved, see what I did there? Beloved name, the app, love it.

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iConnections is the world's largest capital introduction platform in the alternative investment industry. They bring the asset management community together through a membership platform that lets allocators and managers meet and connect both physically and virtually. Over 3,000 allocators and 600 managers are part of the iConnections community, overseeing nearly $48 trillion and $16 trillion in assets, respectively.

They are also the people behind the alternative investment industry's largest and most exciting in-person events. To find out more about iConnections events and members-only platform, visit iConnections.io. I want to hit the split screen here. You see the theme here, Guy, that's going on here? So this DEI, okay, diversity, equity, and inclusion, this is something obviously the new administration has had their sights on, whether it be in government, whether it be in the private sector.

it's kind of one of those weird ones to me i don't know about you you and i obviously have our own company here we have a great small group it's not something we think about if you're at a big company these are themes that have kind of been playing out over the last few years some people are resentful of it other people you know have benefited from it that sort of thing i just find it an odd thing to be so focused on it feels like a bit of that culture war sort of stuff but you

You know, and we saw this and we spent a lot of time talking about these big tech CEOs who got and did about faces on a whole host of things. And they found themselves donating to the new administration and being up there in the dais at the inauguration and changing some policies. So we've already seen that. But this is interesting to me. A lot of the banks have pulled back on these DEI sort of policies. They were probably some of the first ones after tech to do it. The headline I saw, I guess, last night was that Bank America pulls back on DEI investments.

in efforts to appease the Trump administration, that sort of thing. OK, the flip side of it this morning, I wake up and I see Apple. I guess this was last night to Apple shareholders at a shareholder meeting they just had earlier in the week. They vote to keep the eye in place. The headline this morning is that Trump is putting pressure on CEO Tim Cook from Apple. Now, there's lots of puts and takes here and we don't have to get into all of them. But when you think about trade war, you think about tariffs, you think of these deregulation and tax.

There's a whole host of things that a lot of these CEOs are hoping for. One of the reasons why they got by this pro-growth agenda of the administration. So what do you think about this? Is this something that we're going to continue to see play out? Because again, I don't think the administration is going to drop it until they get everybody in their camp on this sort of stuff. But it does suggest that there's going to be winners and losers in the private sector picked by the administration. And I think you have to keep your antennas up about that if you are an investor.

If that's exactly right, through the lens of how you trade, how you invest, you have to be aware of what's going on. And, you know, you mentioned Bank of America. Bank of America was singled out by I think he was President Trump at the time. I don't think he was candidate Trump at the time at some meeting when he basically said that Davos and right after he looked at Brian Moynihan and he talked about how, you know, they weren't being fair to Republicans. And I'm paraphrasing to a point, but that was clearly out there. So

I think what we're seeing here is you don't want the crosshairs of this administration on your back. And if you can do things to get them off, then it makes your life a lot easier as a CEO who, by the way, when you are a CEO, you have a fiduciary obligation to not only your employees, but

but to your shareholders as well. And I think in the form of Apple, you know, they just announced a big spend, I think in the state of Texas, in terms of an investment in plants and what have you, I think it was to the tune of $400 billion, which clearly, you know,

it lines up with what the administration wants. So in terms of DEI, clearly that's become a bit of a four letter word for this administration. And to the extent that you can sort of, again, get the crosshairs off you, you're gonna do what you can in order to make your life a lot easier. Now, I'm not debating whether or not that's warranted or whether that's good business.

Personally, I don't think it is. If you look historically, I mean, diverse companies seemingly do better than other companies. And quite frankly, in terms of investing, when you have a diversity of thought and the diversity of people on an investment team, you typically do better as well. With all that said, I mean, that's obviously what's going on.

Yeah, it just seems deeply cynical, in my opinion, you know, for these companies that champion these ideas over the last few years or so. And I think it was one of those things from, you know, from their stakeholder perspective, it was something that was celebrated, right? Whether you were an employee, whether you were a customer, you know, maybe from a fiduciary standpoint, it didn't really matter until now, until you're on, you know, in the crosshairs. And the reason I bring this up is that, you know, Apple was down 2%.

you know, on the opening based on this headline. That was the only headline. All right, really quickly before we get out of here, you know, we had that kind of really nasty day in the market. It didn't look so nasty if you were just looking at the major indices. That was yesterday. But some of the like the big leaders or the prior big leaders, we can call them meme stocks, if you will, you know, really took it on the chin yesterday. The

big one was obviously Tesla. At one point it was down 10%. We don't have to go through all the reasons. We know that again, sales are dipping in places where Elon Musk has tried to put his, um, you know, thumb on the scale of politics and the like, and that includes here in the U S and we know they have a lot of issues with China. And so here it is guy, it opened up a little bit, uh,

on the opening today, and now it's down 2%. It's gone through yesterday's lows. It's down almost 40% from those recent highs. And I just, before we get to all, you know, here's one, Applovin, what we just talked about is one of the best performing stocks, I think in the last couple years or so. It's down nearly 20% today on a short report. You ready for this? Here are the names of the short reporters. One of them was Fluffman.

Fuzzy Panda, this is not a joke. The other one, Culper Research, that seems more reasonable. And the other one last week was The Bear Cave. All three of these companies have come out with short reports. The stock is down more than 40% from its recent all-time highs here. And this is the sort of thing that happens in these sorts of markets. The other one is Palantir, and we talked about this. This opened up a little bit, had a really bad day yesterday, and now it's barely up on the day.

But Tesla is the one that I think is most interesting because we can tie it together with a bunch of the other themes that we just talked about. Right. So Elon Musk, he's in, you know, in the president's, you know, he's right there next to him on his hip, that sort of thing. You would think that all this stuff that we've been talking about would benefit Elon Musk and his ability to kind of manage this.

through a really complicated, uncertain sort of environment. But again, it became a meme stock. The stock nearly doubled from the election to its recent highs, right? And so when you think about this, he's messing around with his Doge thing. I think by most accounts, they're really gonna accomplish very little. So he's doing this useless work as it relates to the government.

And he's twiddling his thumbs as Rome is burning. His house is burning right here. So thoughts on this one, because I do think this is a poster child for the Trump trade. Also, on top of what you just mentioned, the Bitcoin, which is also broken down. Yeah. I mean, the pushback will be there obviously going to be as many people that think it's, you know, in terms of what they're going to be successful with the Doge deal.

in terms of their not being able to success. I think there are a lot of people that think, you know, they're basically uncovering things that I think we've all probably thought all along in terms of government

government waste and stuff that needed to be done. But I understand what you're saying. Maybe his focus is not on his company, but I don't necessarily think the move in Tesla is on the back of his lack of focus. I think it's the fact that, you know, the company's coming to the reality that things are slowing down. And if you look at that last quarter that they reported, you know, in terms of margins, it's the worst margins we've seen there in five years. And at the time, if you recall, the stock was trading about $400 or so, and the stock rallied on the back of that quarter on the hope of,

full service driving in these robo taxis, which they've been promising seemingly for years. The move in the stock in terms of where we are now actually makes sense if you just look at through the lens of fundamentals. And quite frankly, here below 300, I think there's a real chance to revisit 245 or $250, which was the level we peaked out at a couple of years ago. So for me, it's fundamentals taking over. Quickly, in terms of Applovin, in terms of what you said,

I mean, this is interesting. And I'll read. The firm alleged, and this is, I think, one of the short culper research, alleged that the AI-driven ad platform Axon 2.0 is largely a, in quotes, promotional tool designed to obscure the actual mechanics behind its mobile gaming and e-commerce businesses. So,

You know, there are a lot of people that are going to look at stocks like this. And by the way, you need short sellers to point out the potential flaws and the kinks in the armor, because without them, these stocks can continue to seemingly go up in perpetuity until everybody gets smoked. So, you know, I'm not saying they're right, they're wrong, but there's a level of just absurdity that you get with some of these stocks. I mean, at its peak, I think it was only a week or maybe it was on Valentine's Day that

Applovin was a $500 stock and it probably had a market cap north of $150 billion. And even with the move down to 310 here, you know, on a number of different metrics, it's probably still expensive. Yeah, you know, another name, you know, and I know this is one you've looked at in the past is the Trade Desk. So this is also an ad tech business and it's a platform they've been talking about AI and, you know, in the like here. And that stock's been cut in half, you know, in the last month or so due to a bad print. And so maybe that gave some of those short reporters opportunity

a bit more of enthusiasm about getting their word out. All right, well, listen, guy, we covered a lot of ground here. You and I are going to be back on the Risk Reversal Pod tomorrow morning. We're going to be breaking down what we heard.

from nvidia uh on their conference call and what jensen wong had to say uh to our main man john fort on cnbc um at 7 p.m and again let's see if it kind of realizes that 10 move in either direction i just don't see um you know the stock's about 131 here i'd be shocked guy if we take out those prior highs where was that like 145 or 146 153 i think was the all-time high but yeah

Yes. Listen, I think if it were to pop, Guy, I think it gets sold. Like, I really do. I think you sell any move unless they literally have a blowout sort of guide, which I'm not expecting. But again, that'll be interesting to see. You and I are also tracking the Bitcoin because we think from a sentiment standpoint, that one is really interesting. So again, a lot going on here. The Super Bowl, the NVIDIA, that's it. If you're a tech investor, it's happening today after the close. We'll see you all back tomorrow morning. Thanks, Guy.