Closing Bell - Closing Bell: Nvidia; To Trim or Not to Trim? 5/25/23

Episode Date: May 25, 2023

Nvidia shares hitting a new all-time high. So, is it time to trim? Joe Terranova of Virtus, Hightower’s Stephanie Link and Alger’s Ankur Crawford discuss. Plus, Marc Lasry – CEO & Chairman of Avenue Capital – weighs in on the Fed, the market and the debt ceiling duel. And, Bobby Portis from the Milwaukee Bucks joins Marc Lasry on Post Nine to talk investing in sports, financial planning and more. 

Welcome to Closing Bell. I'm Scott Wapner, live from Post 9 here at the New York Stock Exchange. We do have a big interview coming up this hour. Billionaire investor Mark Lazzari is with us on all things markets. He also has a very special guest with him whom you don't want to miss. We'll get to all that in a moment. In the meantime, this make or break hour begins with Wall Street's AI obsession and how long stocks like NVIDIA can keep surging. Those shares having their best day in years on the back of earnings and sending several other names higher as well. Here's your scorecard with 60 minutes to go in regulation. NASDAQ where the action clearly is today as chips and mega caps

get a really big boost. Not so much for other parts of the market, though. The debt ceiling duel continues to be a bit of a drag and rates continue to move higher as well today. Brings us to our talk of the tape. To trim or not to trim? That really is the question as NVIDIA shares hit new all-time highs today. Let's ask our panel then. Joe Terranova of Virtus and Hightower Stephanie Link, both are CNBC contributors. Alger's Ankur Crawford is with us here at Post9 as well. It's great to have everybody with us. Ankur, I'll begin with you because NVIDIA is your third largest position.

When you saw the move in the stock, what was your reaction? And now you've had some time to digest all of this. What are you thinking now? Well, let me start with when I saw the revenue guidance, I almost fell off my chair. And the move in the stock was largely, you know, given the revenue guidance differential, it was to be expected. So I think what we're seeing today is a discovery move in NVIDIA. Oftentimes when you have the discovery move, it is something brand new to the market people are finally understanding the 300 billion dollar town opportunity that nvidia has laid out and how they can get there you know in my opinion like the opportunity is so big it's bigger than you know

any other market that we see today nvidia is not a sale i mean you went in to today joe saying man not not you but I'm saying collectively, man, the valuation looks big. It looks too rich. The stock is more than a double. Heading into the number yesterday was 300 bucks, 300 bucks yesterday at this very moment when we started our lead in to what these earnings were going to be. And it was near 400 after the earnings came out. The stock's cheaper, cheaper today on a valuation. And it was near 400 after the earnings came out. The stock's cheaper, cheaper today on a valuation basis than it was yesterday. But we got exactly what we wanted. We got the guidance that did what? It validated the energy and excitement surrounding generative

AI and AI itself. It placed the stamp on it. It said it's real. We had the evidence. We have statistical evidence now that supports the investment thesis. And it has sustainability, not just in the near term, but in the long term. So what do you do as a shareholder today? And Ankur, I'm going to ask you the same question. You've seen this incredible rise. You see what happened at the reaction that we're still witnessing in the market today. Are you tempted to take some profits? We said to trim or not to trim, that's the question. Because of this move, do you take profits or not?

I wouldn't touch NVIDIA for, I mean, until NVIDIA proves to you that there's a reason to sell it. And I couldn't conceptualize what that reason would be at this point. I would not touch NVIDIA right now if you are along. I would just leave it alone. How do you address that?

I wholeheartedly agree with that, and in part because Jensen cited two things that I think are new to the market. The CEO, Jensen Wang. Jensen Wang, the CEO. Two things that are new to the market. A, they are just not a compute platform. They are a networking compute software platform, which is basically Gen AI in a box. A. B, you talked about a trillion dollar market that is about to upgrade their entire CPU base. That is the discovery information

for the market that is driving the stock today because it gives you duration to the earnings. Yeah. I mean, sort of everybody's kind of thinking the same thing. Is it justified? What's the ramp look like moving forward? Sure, the stock could pull back from here. I mean, that was one of the views of Stacey Raskin, whom we spoke with going into the print and then today on halftime, told us this about where shares can go. At some point, we will probably get digestions. They happen and the stock may react to that. But if you think about where we are on this, we are.

And again, I said this yesterday. We are very early in the trends of both AI and accelerated computing. This is really just getting started now. It's hard to put your arms around that concept. It's just getting started now when you've witnessed, and we all have witnessed these shares in all these kinds of companies go crazy. We did speak about this in prior weeks that we were in the early innings. And think about the competition that these companies have from an investment perspective.

There literally is not any competition. So if you look at where NVIDIA is and you question whether it's the valuation or the ability to keep going higher, the simple analogy I could make is we're in the middle of playoff season for the NBA and the NHL. Would you take Jimmy Butler off of the Miami Heat? Would you take Matthew Kachuk off the Florida Panthers? They're clearly the MVP of both those teams. And that is exactly what NVIDIA is. It is the MVP of the market right now. And the other point on that, which I think is incredibly important, is a lot of growth managers still don't own NVIDIA, Scott. So a lot of the moves that were made in the JOTI strategy,

I'm very satisfied with because we got ahead of recognizing momentum that was building. And we were in there and we were adding names like Adobe and KLA Corp and NVIDIA. When you look at some momentum funds, they don't even own. They don't even own NVIDIA yet. That's not logical to me. See, the big question, Steph, and I purposely have come to you at this moment, is because you are sort of predisposed. You're a value investor.

Yes, you have some exposure to growth, obviously. You like to run a barbell portfolio. But you are a bottoms-up value investor who doesn't own NVIDIA. And how do you think about that today well obviously it hurts today um and it and it's been a great stock year to date um yeah I don't own it but I do have other AI plays and I do have a big position in Broadcom and they have 26 of total revenues in data center and lamb research I mean you're going to need memory like we've never seen before. And both of those stocks are very cheap.

Now, you look at NVIDIA, I wish I owned it, of course. I could make a case, certainly, that it's not that expensive if you're looking at the growth rate. So it's 56 times forward, but the growth rate that they just gave you sequentially into next quarter for data center is 53%. Sequential growth. That's's enormous it's absolutely incredible so i understand why the stock has actually rallied and in fact they estimate they only have about four percent of their one trillion dollar data center cpu uh installed base that is converted to gpus right so they are in early innings so i can make a case to be really excited about it. But you know me, I'm not going to chase.

And I'm trying to find other ways to play the similar theme. Now, that's an interesting point you make about I'm not going to chase. Because if you believe that the upside is as tremendous as some suggest, whether it's Stacey Raskin, Brad Gerstner, then are you really chasing? Number one. And number two, I remember us having this similar conversation years ago at this point, years ago about Amazon, where I remember you telling me, yeah, I can't buy it. The valuation is too big. And then finally, you something to the degree of, the heck with it. I'm not going to miss out anymore. And you bought it. And you bought Amazon at that moment.

Now, what is that moment for you in NVIDIA? Look, I mean, the stock is up over 100% year to date, right? I mean, I just, for me, I think, look, it's a great story. And yeah, there are some new data points and they are going to, and they are definitely going to win. This is a pure play in AI for sure. I just think that there are other places I can make money too, right? I mean, Broadcom is at an all-time high. Lab research has a ways to go, and I think they're both going to benefit. Applied materials is also another one that you could take a look at. I mean, I think that there's a lot of ways to play this theme. So I'm going to

stay patient. If I get an opportunity, Scott, and I change my mind, I can change my mind. But right now, I'm not going to because it's had a heck of a run year to date. And I think a lot of good news is priced in. Yeah, I know. I understand. And you mentioned the other stocks that you have, which sort of goes to the point that Brad Gerson, whom I mentioned was on halftime, was trying to make today as well, that it's not just an NVIDIA story. It's a potentially so much story. Listen to what he said. This is not a fad. AI is not a fad. Every enterprise is going to have to re-architect around this. And what we're seeing in terms of their numbers, I think, is the leading edge of the AI wave. And so start asking yourself, what are the other companies that are going to be beneficiaries? And

what are the other companies that are likely to get hurt by the shift from, you know, the world of Internet to the world of augmented intelligence. And all you need to do is, Ankur, look at what's kind of working in tandem today. AMD is up a lot. Taiwan Semi is up a lot. Names like ServiceNow that you especially like that you're thinking about. Yeah, I think I think there are going to be many ways to play this AI wave. What's most interesting right now is chips, in part because the margin structure and the moats that these businesses have are very high. Taiwan Semi is particularly interesting, in part because people keep saying, are we in an AI bubble? When Taiwan Semi traded 13.5 times street numbers yesterday. Today, it's 15 times street numbers.

When businesses that serve Gen AI and the AI world trade at 15 times, we're not in a bubble, and there's a lot of opportunity ahead. How do you think about this, too? Sort of the other names. The names that maybe haven't been so obvious to people because the Microsofts and the Alphabets and the NVIDIA's and the Meta's and the Apple's, they've sucked all the energy in the air out of the room. But what is being shown to you as an investor today is those are not the only stories.

No, they're not. I don't know if there's enough of a credible investment thesis surrounding the second derivative trade as there is for the mega caps as there is in the case of nvidia i think nvidia is the clear leader well you have amd i have amd i have amd and and the reason i have amd has a lot to do with the green light being turned on for momentum but i don't view amd as a competitive threat in the generative ai landscape to nVIDIA. NVIDIA is so far distanced themselves from AMD. I'm staying with the AMD trade because the remaining half position that I have, that's the right thing to do. But I think when you look at the second derivative trade,

look at Adobe today, up significantly, up 7%. There's a company called Monolithic Power Systems. It's owned in Jyoti. The ticker symbol is MPWR, right? They provide the electronics to the semiconductor industry. It's up 17% today. So the second derivative story is there. I think if you're going to invest around that, you have to ask yourself the question, where are those companies going to be in three or four quarters? And are they going to be able to do the necessary spending that a lot of the mega cap companies

will be able to do, that NVIDIA will be able to do, to make sure that they deliver the consistent revenue and the acceleration of the AI theme? I'll just ask you straight up, Steph. I mean, as somebody who is, you know, invested in some of these related names, but it hasn't been the core of what you've done. Are you thinking about, to Gerstner's point, other areas that you need to be in related to AI? That you wake up today and you're like, you know what? NVIDIA just confirmed everything that everybody's been saying, and I need to be more invested as a portfolio manager starting today.

Oh, absolutely. You always have to look around and find the derivative plays off of any kind of theme, right? I mean, that's where you make the most money over time. It's kind of the undiscovered names. And the two I mentioned, I think, are not exactly undiscovered, but they are, I think, underappreciated. And I also think that there are places like Meta I'm still in, but I don't I wouldn't be buying that here because it is, again, up 110 percent. But I was buying it all last year and it was painful. So I'm looking for other other areas. We talked about Microsoft over the last couple of weeks and I'm warming up to it

and on a bad day, certainly I would probably pull the trigger there. But I think you don't have to chase in this market, Scott. You really don't. I think you get looks from time to time, especially given what's going on in the macro. And so that's really what I'm doing, trying to find a shopping list. Yeah. Ankur, lastly to you. It's really stark today, the divergence between sort of this trade. It underscores where this market has really been, the top-heavy nature of it.

Does that trouble you? Does it make you more cautious than you otherwise might be? Because, I mean, you do run a fairly tech-focused area of the market, as, you know, the quote-unquote haters are like, it's just mega caps and everybody else, and that's not good. I think what you're seeing today is a little bit of broadening out from the mega caps into all of tech. And, you know, if you look at the rest of the market, there are macro issues that are holding the rest of the market back, whether it's the debt ceiling, whether it's, you know, geopolitical, whether it's China, COVID. So there are a lot of other headwinds. But I think the most important thing to focus on is that some of these waves and these technology waves are independent of the macro economy and will cause moves like this and cause divergences like this in stock performance. And we are seeing that. And by the way, looking at the Dow, which was, you know, down a reasonable amount, trying to work its way back to as we have about 45 minutes to go.

There you see it's only down 30. So S&P nicely positive today. NASDAQ stole the show clearly. But we'll see what the Dow does over the remainder of the stretch here. Guys, thanks so much. Steph, thank you. Ankur, thanks as well, Joe. Always. Thank you. Let's get to our Twitter question of the day. We want to know, are you thinking about buying NVIDIA today if you don't already own it? Not everybody owns it. Head to at CNBC closing bell on Twitter to vote. We got the results coming up a little later on in the hour.

In the meantime, let's get a check on some top stocks to watch as we head into the close. Christina Partsinevelos here with that. Christina. Well, let's start with Elf Beauty trading at all-time highs after smashing earnings expectations and issuing strong outlooks. That led a number of analysts to hike their price targets, with D.A. Davidson going as high as $121 a share. Currently, Elf is trading at $103, up 19%. And talk about a turnaround. That stock is up over 360% in a year. We'll get another read on the state of cosmetics when Ulta reports right after the bell. And Snowflake shares, gotta do it, are melting as the company slashes its product revenue forecast.

That's overshadowing a beat on the top and bottom lines. Shares are having their worst date on record, down 17.5%. Scott. All right, Christina, thank you. We're just getting started. Up next, Avenue Capital's Mark Lasari joins me right here at Post 9. We get his take on the Fed, the markets, the debt ceiling duel, and more. Don't go anywhere. We're live from the New York Stock Exchange, and you're watching Closing Bell on CNBC. Welcome back. Mining for opportunity in distressed markets is our next guest's area of expertise, and he says there may be more stress in store.

Let's bring in Mark Lazzari. He's the billionaire chairman and CEO of Avenue Capital with me at Post 9 once again. It's good to see you again. It's great to see you again. So it was recently where you said rates will come down in the next six months. Mark my words. Within six months, rates will start coming down. They've been going up lately again. Why are they going to come down? Fed's going to cut. We're going to have a recession. What's what's your view? It'll happen in six months because the Fed does have to cut. Like right now, what you're seeing is what was the Fed worried about? Inflation, right? Well, that worry is going down. Now, what are you worried about? Recession. That's all everybody's

talking about. How bad is the economy? What's happening on the real estate side? So Fed will start lowering rates. I think they start lowering it at least within six months from now. That's being priced into the market. Yes, they may raise rates a little bit more at the next Fed meeting. But from that moment on, it'll be flat or it'll start coming down. You can't keep having higher rates because if you do, then you will be in a real recession. Do you think there's going to be a recession? You said, I don't know, in one of your prior appearances with me that you thought it was all but guaranteed. Do you still? I think you're more nervous about what's going on because of what's happening on the real estate side.

And I think you are going to have a bit of a recession. I don't think it's long-term. I think it'll be short-term. But what you have out there right now, the reason there's issues, think of all the regional banks. They're not lending what they were lending before. So there's less lending going on in the system.

We're lending more money. You can't have businesses borrowing at 12% to percent. That's not a long-term solution. It's short-term, and that's what's happening. But sooner or later, businesses have to borrow somewhere around sort of 5 to 8 percent. 12 to 15 is just not a model that people can really follow. When you say you're because you're more worried about what's happening in real estate, you're alluding to the commercial real estate issues that some suggest have barely even come home to roost yet. I agree with that. You talk to a lot of developers, I'm sure, and you're probably friends with many of them here in New York City. What do they say? They have no choice. They're going to have to keep extending. I mean,

rates have gone up. They can't refinance that debt today. So the banks will end up extending and delaying it. And what does that do? That just means there's less money in the system. Right. You're not making new loans. You're you're going to start having issues. But the biggest issue really is just that banks are lending less because the Fed has made it more difficult for those banks. Well, obviously you're picking up the slack. I mean, others in the so-called shadow banking system, people who are lending at high rates of return, your business is picking up there as it already had been going well. I would tell you every month is better.

I mean, it just is. You've got more and more to do, and that's actually great. But we're seeing it in Europe. We're seeing it here in the U.S. There's just more and more opportunities because there's more issues. Are you surprised that the U.S. economy has been as resilient as it has appeared to be, and consumers as well? I think that's great. It's great for the economy.

I mean, it's great for people. The last thing you want is to be in a real recession, Right. That's not positive. But the economy has been resilient in in in spite of what the Fed has done. And that's actually why the Fed has kept on raising rates. But the Fed wants to end up curbing inflation. And that's happened. Right.? We're not focused on it as much as we were before because it's gone down quite a bit. They just want to make sure it's lower. What if it's sticky, though, at this point, much more so than people think? It came down from 9% to 5%. But what if it takes a long time to get from 5 percent down to the target goal of 2 percent? OK, well, that's a great goal. But if you're in a recession, what is your focus? Is your focus 5 percent inflation and a recessionary environment?

Or is your focus 5 percent inflation, but we can't be in a recession? And I think sooner or later, the focus of getting out, especially in a presidential year. Think about it for next year. The one thing you want to do if you're Biden, the one thing you want to do if you're Trump is talk about how we've turned things around and things are starting to come back. You can't say, oh, we're going to keep raising rates for you. We're going to make your life absolutely difficult because we want inflation to be lower. You're suggesting it's not going to be politically tenable for either. It can't be.

You've already named the nominees? No, no, I'm just saying. That's who you're expecting? No, I just think right now it looks like those are the two, but it's a long ways off before you end up having, whether it's Trump, DeSantis, or anybody else. You mentioned the regional banks and you mentioned real estate, you know, the most acute, I think, place to look for commercial real estate issues would be in the regional banks.

Are you, are you worried about more significant problems related to the banks? Well, I've said this before, and here's the issue. If you're the CEO of a company, right, and you've got money in a regional bank, what is your worry? Your worry is that there's issues and you're not guaranteed. So what is your fiduciary obligation? Your fiduciary obligation is to make sure there's no risk whatsoever, which means that you may end up moving your money from a regional bank to a money center bank. So if you're a regional bank, right now, a lot of what regional banks are doing is not lending. What they're really doing is keeping money in T-bills because they don't know when they have to access that capital. So it's just there's a chill on lending.

That's the opportunity set for us, but it's making it harder for small businesses. How are you thinking about AI since it's dominating almost all parts of conversation? And, you know, it's what we started our show with, and we've probably started our show almost every day with it for obvious reasons. How does somebody like you think about that? Somebody like me is trying to figure it out. Are you investing in AI related things? No, we're not. I mean, it's not what we would do. I think we're all fascinated by it because of what the effects it can be and the effects that are, how's it going to affect our business, other businesses?

You know, I was reading the last couple of days that one of the biggest job opportunities right now is can you be a prompter for AI? Like, do you understand how to prompt and make sure you're asking the right questions? I think there's so much for us to keep learning. I think it's going to affect us first on the personal side, then it's going to be on the business side. But for our business, I mean, that's still a couple of years away. Are you thinking in any way, at least about the kinds of industries and businesses that will be disrupted that could eventually be in your target world of saying this is going to be distressed because it's going to be disrupted by the very nature of this transformative technology we're talking about?

I wish we could figure that out today. I think you're absolutely correct, by the way. I think it is going to have a whole bunch of issues. I think for us, the market will let us know, right? As you see the bonds coming down, we'll have plenty of opportunity to end up shorting those bonds or making money on that. I think it's hard today to try to figure out the exact industries. It's a bit early, but I think you're going to have huge opportunities in that. All right. So let's do this. Let's take a quick break. If we could, we'll come back. We will talk about what I think is no doubt the trade of the year in sports. We'll explain more. Plus, we have a special guest joining us as well.

Professional basketball player for the Milwaukee Bucks, Bobby Portis. There he is. We're going to get his take on investing in sports and elsewhere just ahead. All right, we're back with Mark Lazzari. He recently made what we're calling the trade of the year in sports, selling his stake in the Milwaukee Bucks. We're also joined by Bobby Portis. He plays for the Bucks. We're excited to have both of you here. Welcome. Appreciate you.

First time to the New York Stock Exchange? Yes, sir. What do you think? Man, it's great, man. It's a beautiful atmosphere in here. Happy to be here, man. Yeah. Wait till you see the closing bells.

It's pretty special. So this trade of yours, I know you've discussed it before. $550 million is what you bought it for in 2014. The sale closing at the valuation of $3.5 billion. That's amazing. And now that you've been out of it for a little bit, playoffs are still going on. Do you miss it already? Yeah, I know. It was a big part of my life. It really was. I mean, for nine years, sort of went to every game or tried to go to every game, watched almost every game. It was a big part of my life, my family's life. We absolutely loved it.

Yeah, so you sell the team, but you keep an interest, so to speak, in players who played for you, like Bobby. Do you have an interest in investing, and are you leaning on Mark, his mentorship to help sort of guide you into the next stage of what you'd like to do? Absolutely, man. I think the main reason why I'm here in New York is because of Mark, man, just establishing relationships, having a guy like him who can, you know, help mentor me in different ways to be successful with, you know, investing and just, you know, building generational wealth. That's what I want to do. That's what I'm leaning towards. And I think everything in life is just all about learning and, you know, building generational wealth. That's what I want to do. That's what I'm leaning towards. And I think everything in life is just all about learning. And, you know, what better way to have, you know, what better way to have someone than Mark to learn from? Yeah. And

how has the way that you've thought about money changed over the last few years? You signed, you know, a great contract, a deal, almost $50 million over four years, and you just signed it, I think, last year. Yeah. Has that forced you to think about money in different ways than you did prior? Yes and no. I think just coming into the league, you know, coming from situations like I have, you know, coming from Arkansas, not really coming from a money family, being one of the first, you know,

people in my family to really have money, getting to the league, not really knowing what the league is going to bring you. So you have a few headaches down the road that you go through, and then once you start to get older, start to get mature, you start to get a lot more smarter with your money, start to get a lot more smarter with how you're investing your money, how you're spending your money and what you're doing with it. And having guys like Mark around that's constantly on me, constantly in my ear about certain things that I spend money on, whatever

it is, being smart with it is always great to have. Have you tried to mentor guys who've played for you in different ways and smarter ways to think about spending money and saving money and trying as bobby says to build generational wealth it is i mean i think part of it is you know we grew up in an environment that was different and i think for bobby um i think once you sign these contracts you've got all this money and the goal is where should you invest it and that's that's a lot of it i think when bob Bobby and I talk or any of the other players it's here's opportunities of where you can invest there's this thing called T-bills you know you can make five percent which is a lot of money and now let's go from there that's

the safest thing if you want to try to make ten percent you want to make 20 percent so we try to go through a lot of those things what I also noticed from doing some research is that you're thinking about the next generation and how they should be thinking about their money. Keep it a buck. Do you still have the podcast? Yeah, kind of, sort of. We started that a couple years ago, kind of getting from that lane a little bit, kind of focusing more on my craft and more on money management and things like that.

I want to put my time towards things like that. Like I said, that's a big reason why I'm here with guys like Mark. But you're thinking though, it really goes back to sort of financial literacy. For sure. Whether, you know, we're talking about athletes themselves. I had many conversations with athletes in many different sports who were thinking about that, but also trying to impart it on the next generation, right? Yeah, it's a big thing, man. Sometimes in school, they don't really teach you about these certain things, you know, when you get to real life situations. I think life in

general is the best way to gain experience, to gain teaching lessons and things like that, hitting your head on the wall a couple of times, you know, going that third time, I think you're going to do something different. You know, it's funny. I don't know if you heard my conversation with Mark earlier about AI, which we're talking about all the time. And there's this thing called chat GPT. Have you used that yet? Not yet at all. I saved you that effort then, because I asked chat GPT, OK, I said, what is the best part of Bobby Portis's game? All right. I'm going to tell you what it said. If you want to see how intelligent artificial intelligence allegedly is, here's what it said. Bobby Portis is known for his versatility and energy on the basketball court.

One of the best parts of Portis' game is his scoring ability. He has a solid offensive skill set with a knack for scoring in various ways. He can shoot from mid-range and beyond the arc. That's the three-point line. And he also has a decent post game and can finish at the rim. He brings a high level of intensity and hustle to the game. That sounds like the Bobby Portis I know. What do you think about that?

I like that. That's computer-generated, by the way. Yeah, that's computer-generated? Yeah. Oh, man. Shout-out to the computer there, man. Shout-out to the computer. What do you think about that?

That's pretty amazing, isn't it? It actually is. And, look, you know, the one thing it didn't say is the heart that Bobby has, what a great person he is, just as an individual. And it's actually one of the things I've been a massive fan of Bobby ever since he ended up coming to the box. But it is amazing that Chad DBT could do that. Yeah, it finished by saying he's willing to do the dirty work

and make the hustle plays that can energize his team. I think really that's what you have become known for. And you're playing for Team USA this summer? Yes, sir. Best of luck to you. Appreciate that. Where are you going to travel to? Man, we're going all over, man.

It hasn't been officially released yet, but I don't want to speak out of turn, but it's going to be great, man. It's going to be a big opportunity for my family and myself. Well, we'll be rooting for you and your teammates for sure. Bobby, thanks for being here. Yes, sir. Mark, thanks as always. Always.

All right, that's Mark Lassery with us. Once again, up next, we're tracking the biggest movers as we head into the close. Christina Parts and Novelos is standing by with that. Christina. What do a rat infestation and thieves have in common? A low-cost retailer and its shares are falling right now. I'll explain right after this short break.

Welcome back. Illumina shareholders voting today to install one of Carl Icahn's board nominees and oust the current chairman in what's been a contentious proxy fight. That's just one of the stories captivating Wall Street recently involving Mr. Icahn. His firm IEP has also been targeted by short seller Hinden involving Mr. Icahn. His firm, IEP, has also been targeted by short seller Hindenburg Research. IEP shares have fallen more than 60 percent since Hindenburg's report was released publicly a few weeks ago. At least one interested bystander, Bill Ackman, weighing in on some of the short seller's allegations on Twitter last night in a lengthy post. Ackman ending his tweet with the following, quote,

Icon's favorite Wall Street saying, if you want a friend, get a dog. Over his storied career, Icon has made many enemies. I don't know that he has any real friends. He could use one here. We're neither long or short, just watching from a distance. As you might imagine, that didn't go over very well with Mr. Icon. And I asked him if he had any reaction to that, which he told me the following, quote, taking advice from Ackman concerning short selling is like taking advice from Napoleon or the German general staff on how to invade Russia. Acquiring minds, obviously wanting to know if there's going to be an Ackman Icahn part two.

Don't count on it. I guess you never know, but don't count on it. Let's get back to Christina for a look at the key stocks we're watching. Christina. Let's start with Dish Network jumping in a Wall Street Journal report that the company is in talks to sell wireless plans on Verizon's website. Details of the new phone plan could come as early as June once regulators confirm that Dish has met certain network coverage milestones. So we aren't yelling, can you hear me now? You can see Verizon and T-Mobile

moving in the opposite direction. Shares of Dollar Tree are down right now after missing earnings and slashing its full year profit outlook. Legal costs from a rat infestation, yes, rat infestation, a shift to lower margin food, and an increase in shrink, an industry term that refers to theft,

all contributed to that weakness, which is why the shares are dropping about 11 percent right now. Walmart, Target, Home Depot have all cited shrink problems as well. All right. All right. Christina, thank you. Christina Partsenebulas. Last chance to weigh in on our Twitter question. We asked, are you thinking about buying NVIDIA today? If you don't already own it, you can head to at CNBC Closing Bell on Twitter. The results are right after this break. Well, one of the great New York City traditions is underway as you speak to coincide with Memorial Day weekend. It is Fleet Week in New York. And there you see the servicemen and women

making their way to the podium. They're going to ring the closing bell today, led by the Secretary of the Navy, Carlos del Toro. You see him. You see him. He's going to be in overtime, by the way, for an interview with Morgan and John, which we're very excited about as well. He served this great nation for more than 20 years, and he'll have the honor today, again, with some of our servicemen and women,

to ring the closing bell here at the new york stock exchange he's trying to rally his troops as well as you can hear which he has done a fabulous job of and we're thinking about all of you thank you for all of your service and it's great to have you here let's get the results now of our Twitter question. We have about 10 minutes or so to go before the closing bell. There you go. Are you thinking about buying NVIDIA if you don't already own it? Two-thirds say no. No, not after this big run, 68%. 30% though say yeah. Yeah, don't want to miss out perhaps on what might lie ahead. Up next,

a retail double play. Costco, the gap reporting in just a few moments we're going to run you through the key metrics when those numbers hit the tape also in overtime that and much more when we take you inside the market zone all right we're now in the closing bell market zone cnbc senior markets commentator mike santoli here to break down the crucial moments of the trading day. Plus, Victoria Fernandez of Crossmark Global, on which tech stock she prefers to NVIDIA. Courtney Reagan on the rush of retail earnings out in overtime today. Mike, I begin with you. All AI, all the time, for better or worse. It is.

And, in fact, you see the action in the disruptors and the potential disrupted, right? Intel down 5% today. Outside of AI, you know, this move, potential move of selling cell service that Dish is talking about. It's got AT&T down a few percent. And then in the middle, it's like it all kind of cancels out into, again, a range bound index market. You did see in the afternoon a sense out there that there's also upside risk in this market. If overnight you get a dead a sense out there that there's also upside risk in this market if overnight you get a debt deal, if there's a little bit of an exhale from all of this tension that we've been dealing with for a while. And actually, who knows what

the ultimate market impact of a debt deal is going to be, let's say, over weeks or months. But there's a sense out there that, you know, the most of the market outside the AI plays have been resetting lower and kind of taking some of their pain and front loading. Yeah. Shortest end of the curve backing off a little bit. The one month and the three month, which have been among the parts of it, the epicenter really of fears and worries about the possible default. It's where it's most visible. And, you know, it's honestly just about, you know, we don't want to have the headache of a missed payment. To me, it's kind of technical in that sense, which is why all the comparisons to,

oh, you have these AAA-rated corporate companies that can borrow at lower rates short-term than the U.S. government. It's just a kind of policy glitch, hopefully, and it doesn't kind of, you know, go beyond that. But, yeah, at this point, I think it's one more reason for people who are not really inclined to take huge risks ahead of an uncertain Fed outlook, ahead of what we still think is a softening up in parts of the economy to take that risk right now. Yeah, a quiet 1% move higher near that for the S&P today when all the action's been

all about the NASDAQ. Microsoft and NVIDIA is essentially all of it, yeah. Yeah. Victoria Fernandez, which stock do you prefer in technology other than NVIDIA? Yeah, so, Scott, I mean, obviously no one's going to deny the great report that we saw from NVIDIA, but it just has made its valuation so rich. Two months ago, it was trading at 75 times trailing. Now it's 175 trailing. So we look at other names in the space like AMD.

That's a name that we own that we would rather have based on the valuation that we're seeing. It's trading about half the valuation on next 12-month earnings versus NVIDIA. It's not that we don't have NVIDIA in our portfolio. We do in our large-cap growth strategy. It's just an underweight for us. You talked about a little bit earlier today,

at these levels, this is actually a period where if we had a neutral weight or an overweight, we would be trimming that. Since we're underweight, we're not trimming, but we're adding to other areas like AMD. We actually added to Meta a little bit as well, trading at about 30 times forward earnings. So I think you can have some other names that have a better valuation, but still will gain some of the upside from the whole AI component.

Speaking of, I mean, if nothing else, does this report from NVIDIA confirm the move in MegaCapTech, NVIDIA included? Well, I'm a little cautious on this. It has been such a big run. The leadership is so narrow to just the small group of names. I have to think that at some point we're going to see that leadership either broaden out, which means these names will probably come back a little bit, or we'll see a rotation in leadership with a pullback here. So for a short-term trade, maybe you can get in and take advantage of some of these. Again, we would look at valuations first on to choose where to go. But I think we have to be cautious for a long-term run of this magnitude in these names.

All right, Victoria, thank you. Good to have you today, Victoria Fernandez. Courtney Reagan watching for retail in overtime. What should we be watching out for? Yeah, Scott, so you know Gap Inc. has been struggling, frankly, And as Courtney Reagan watching for retail in overtime, what should we be watching out for? Yes, Scott. So, you know, Gap Inc. has been struggling, frankly, under the weight of some inventory missteps, consumers spending less money on apparel in general, which, of course, is their bread and butter. Comparable sales for Gap Inc. expected overall for the company to be down a little more than 2 percent. Old Navy, Banana Republic are expected to be down more than 4 and 5 percent, respectively.

It's also been operating under an interim CEO since July of 2022, and shares actually have shed a third of their value since it last reported, so definitely under pressure. Costco is the last big retailer, though, Scott, that releases monthly sales, so we do have pretty good insight into what that quarter is going to look like when we hear more about it here after the bell. Sales strengthened in April from March. But like Target and Walmart sales of those consumable products, the more staple items,

those are stronger than discretionary higher margin goods. Guggenheim points that it costs that Costco shares have one of the highest EBITDA multiples among large cap retailers. Though, if you look at the chart, it's down just about a half a percent since it last reported earnings. So these shares don't typically move a whole lot on the earnings report, but it's a very important, very large retailer in the space. We'll see what happens. Yep. Courtney, thank you. That's Courtney Reagan.

All right, Mike, I turn back to you. It might get loud around here, and that's just fine with us. We must be sure, yeah. Absolutely fine with us. So NVIDIA, the other part of the story is who hasn't taken advantage of this. And that's Cathie Wood at ARK Invest. And I think if nothing else, it shows you how difficult it was to kind of look at where the numbers went in terms of earnings estimates. You look at the sheer liquidation that the stock underwent last year and to say, I'm gonna remain firm about the long term.

I said it yesterday after this report, you know, the fact that so many people are covering and owning this stock and wanting an edge in the stock and the market was acting like the numbers were way too low and still the sell side had a revenue estimate for a quarter that's half over that was $4 billion off. It's hard to keep up with that level of a fundamental acceleration even if you're looking for nothing but technological disruption

you need some water or something i mean it's a little bit it's a little bit loud you have a little crowd you have a little sip we'll talk about what's happening here as we obviously watch for a possible debt deal perhaps over the weekend see if we have some relief in the bond market as a result of that. And then who knows, really, what the stock market's ultimate reaction is going to be. Some say it may be negative, even if you get a deal. But we're going to find out in pretty short order.

Or maybe it's that this is one potential negative or crisis that gets removed or deferred or whatever it is, and we're still left with what we had before, which is an incredibly bifurcated market, lots of the market already pricing in in some kind of economic slowdown. The rest of it, very narrow. If you look at the prior periods when you've had this type of radical outperformance by, let's say, a half dozen stocks relative to the average stock, you find some major blow-off tops, like March of 2000 or summer of 2020, but you also find some bear market lows,

when most stocks had really been obliterated and just got washed out in some kind of a crescendo. We're going to have to broaden out at some point if this market's really going to go anywhere. Yeah, either you broaden out by having more re-rotation back towards cyclicals and small caps and financials, or you get a final flush and then things can rebound together. That's, you know, it doesn't really help you to say it's one or the other. But, yeah, usually you're going to have convergence, you know, before very long. All right, well, we're going to let the men and women of our military take us out today as we look ahead to that interview coming up in overtime with the secretary of the Navy.

I'll catch everybody tomorrow.