Closing Bell - Closing Bell: Nvidia’s Make or Break Moment 8/28/24

Episode Date: August 28, 2024

What’s at stake when Nvidia reports in Overtime? Our all-star panel of Stacy Rasgon, Stephanie Link and Josh Brown reveal what they’re watching from that report. Plus, star analyst Dan Ives says this is the most important earnings report this year. He explains why. And, top technician Jeff deGraaf is flagging some trouble in the charts. He explains what headwinds he thinks the market could be facing. 

All right, Contessa, thanks. Welcome to Closing Bell. I'm Scott Wobner, live from Post 9 here at the New York Stock Exchange. This make or break hour begins with what else? NVIDIA earnings. They are on deck. What star analyst Dan Ives calls today the most important earnings report of the year for the markets by a lot. He'll join us in just a bit to explain further. Take a look at the stock. We're a little more than an hour away from those numbers. The outlook most important, of course. Stock's been down all day, about 2 percent. Else elsewhere, a pretty defensive day as well for the majors. And they've been read throughout the session. We'll watch it over the final stretch, too. Let's get right to it. All that is at stake in overtime tonight for NVIDIA itself and the markets at large. Our panel at the

ready, Stacey Raskin, senior analyst at Bernstein, Josh Brown, CEO of Ritholtz Wealth Management. He's owned shares for as long as I can remember. Stephanie Link of Hightower with us today, too. Steph and Josh, CNBC contributors. All right, Josh, you get the first word because you're my guy on NVIDIA. What do people need to know here? I think the most interesting thing here is that despite the fact that this market cap has grown to the size that it has, the volatility is still with us. That's usually not the case. Usually as companies become larger, we expect a

maturation in their business. And as a result, we're less jumpy about the stock price from day to day. NVIDIA is just a different thing entirely. It's its own self-contained casino in the stock and options market. And this report is no different. NVIDIA is expected to move plus or minus 11% in reaction to the earnings tonight. For the last eight quarters, the average implied move post earnings was plus or minus 12%. So the game is still the game. That's the first thing I would tell you. The second thing, expected earnings per share of 65 cents, just to set the table, that's 138% year over year gain on revenue of $28.7 billion, which is a 113% gain. If you look at the last reactions to earnings from 2023 through today, reactions were plus 14%, plus 24%.

Then we had a flat. Then we had a minus 2%, which is inconceivable, but it happened. Then we had a plus 16, and then we had a zero. So really the average reaction through last quarter throughout 2023 and 24 is plus 10%. But as I've shown you, those results have really been sort of all over the map. We haven't had the big down reaction. That's the one thing we haven't seen yet since the NVIDIA era began. I'm not suggesting tonight will be the start.

Just keep in mind, it is in the realm of possibilities, even though we haven't seen it in this in this time frame. All right. So, Stacey, all eyes on guidance, obviously, as it always is. So near 32 billion, excuse me, near 32 billion in revenues is the guide, the expected guide. How much above that is needed to get what Josh would call a big plus reaction out of the stock? Yeah, yeah. I think the buy side whispers are closer to thirty three, thirty four billion, which would probably imply a thirty billion plus implied data center guide. If you figure the other businesses are a few billion dollars. So they had guided twenty eight billion for this quarter. The streets a little higher than that. They're twenty eight, seven or twenty eight, eight streets around thirty one and thirty one point eight, something close to thirty two for this quarter. The street's a little higher than that. They're 28.7 or 28.8. Street's around 31 and 31.8 something, close to 32 for next quarter. Buy side's probably looking

33 to 34. Are you optimistic they're going to get to that? Yeah, so this is the interesting thing, right? So everybody's been wondering what the Blackwell delays might mean for any of this. And I actually think for Q3, it's probably not much of an issue. There wasn't ever going to be a ton of Blackwell revenues in Q3 anyways. And they're not going to guide to Q4 and beyond. Maybe we'll get some color on that. I think there's still a ton of demand. They're still shipping everything that they can sell. I think that they've been able to backfill some of those. And it's a minor delay with Blackwell, but they've been able to backfill some of those. And it's a minor delay with Blackwell, but they've been able to backfill, I think, most, if not all of it, with Hopper, H200 and the like. I think revenues probably should be fine.

I think more around commentary. What does this delay actually mean, if anything, as we go into the end of the year and the beginning of next year, as Blackwell was supposed to ramp? Are there any changes to the roadmap that might influence that trajectory? What does it mean for gross margins as they're maybe shifting the roadmap around? That's more qualitative commentary that we may get that may be important and may move the stock one way or the other. But the revenue numbers, I actually think, will probably be fine. So, Stacey, how do we judge whether this company is simply the first mover by a mile, if not more,

or if they really have a moat because their product is just so far superior to everyone else's at this point? Look, I think both of those kind of go hand in hand. How do you create a moat? You are the first mover. That's what they've been doing. Remember, this is not a new thing for NVIDIA. They've been going down this path for 15 years, if not longer, creating that mode around hardware, around software, around systems, around everything else.

And I think that's how they've gotten to the point where they have such a large lead over everybody else in the space, because of those investments creating those modes. So it's sort of synergistic. They go together. I don't know that you have one without the other. They seem to have both. Wow. Interesting. So, Steph, you don't own the stock, but you watch it closely and you do watch for the reaction that it will have and what it means for the overall market. And how are you thinking about that? We have one hour, 14 minutes and 20 seconds. Well, there's a lot of hype here today. I don't I understand this is important, but there's a lot of hype. And I think it's going to be, there's no question about demand.

Demand is going to be strong. The hyperscalers told us that. They spent $54 billion in the second quarter. They're going to spend $224 billion this year. That's up 41%. This is all on AI stuff. And $266 billion next year, which is up 17%. So the demand is definitely there. The expectations are super, super high, up 151% year to date. It is now 7% of the S&P 500 weight, 22% of the SMH weight, and it is bigger than five other sectors in the S&P 500, which includes energy, utilities, materials, staples, even staples, and then, of course, REITs. So it's big. It will have a meaningful impact on the markets overall because of its weighting.

And I think the setup is a little challenging just because it's up so much and the expectations are so high. Ninety percent of the sell side have buys on this thing. So the demand is not the question in my mind. It's can it live up to these very high expectations? They have beaten in the last four quarters their own revenue guide by $2 billion. And, of course, as Stacey mentioned, data center is going to be the focal point. And the whisper numbers are $26 to $27 billion for this quarter and then $26 to $27 billion next quarter. Will they beat that?

They could, but a lot of good news is in it, right? Would you buy it if it does have the upset that who knows whether it's going to happen or not? But if the stock goes down a lot, would you finally buy it? I mean, I guess it depends on how much it's down, but you know what I will buy? I'll buy Broadcom. But see, that's why I'm asking, though. Like, at what point do you say, OK, Broadcom's been great for me? I've been in lamb, you know, like that, but now I've gotten a golden opportunity to get the golden goose and I don't want to wait anymore. Are you thinking about that? Always, always. Um, it's, it's, it's been humbling not owning it, but I've made so much money in

Broadcom and in LAM research to your point, um, that it's been okay. I've been able to outperform, uh, in spite of not owning the best in the breed. Right. I get it. But up 151 percent, Scott, I mean, it's going to have to come down a bunch for me to get comfortable chasing something when I can probably get a Broadcom a little bit cheaper and down a little bit more. So, Josh, I guess when we talk about these incredible gains that the stock has had, invariably we ask the question, what's in the stock already? What is already priced in? How are you thinking about that? So I would love to hear Stacey's take on this as someone who's really covering the tennis match of all the comments being made by NVIDIA customers. But from my perspective, and we made this point on Halftime yesterday,

the companies that matter most to NVIDIA's revenue have all given guidance on CapEx, basically making it clear that they're not backing down yet. And there have been a lot of articles in the press about where's the ROI, what's the killer app, where's the product that's really going to solidify, like whether or not this is a hype or it's the real deal, et cetera, et cetera. So my opinion on that last rhetorical question is that we won't know what this really is worth until we see what Apple does in the space. And it might

take two iterations. So like the definitive answer of like consumer use of AI is probably a year to 18 months from now. And then we'll have a really good idea of what this is worth or not worth. But in the interim, you heard Mark Zuckerberg commit to 42 billion in CapEx. You heard the guy at Alphabet, Sundar Pichai say, the bigger risk is underinvesting. These are companies that are, I don't know, 40 percent of NVIDIA's revenue, all telling you they're not stopping the spend. So, again, I'd love to hear what Stacey thinks. But from my perspective, that's a pretty good feeling going into this number because they are a late reporter having already heard from their

biggest customers. Stace? Yeah, I think that's absolutely right. At this point, spending is not slowing down. I mean, they're in an existential race with each other, these large customers of NVIDIA. You're absolutely right. Sundar did say exactly that. The risk of underinvestment is much bigger than the risk of overinvestment. CapEx numbers are going up this year.

CapEx numbers are going up next year. I think it's even wrong to say that we don't even know the return. We're starting to see evidence of returns. We've had companies like Walmart that have started to talk in public about what they're doing with LLMs and generative AI. Tesla's talked about this. I think Klarna is talking about reducing headcount in call centers. It may not be revenues that are driving returns. It may be driving efficiencies, which are harder to measure outside in. But I think we're already starting to see evidence of end user, like enterprise customer returns on the back of this. And given that the

hyperscalers are sort of in this fight with each other, none of them can afford to back off at this point. I think that spending continues. And then when you ask about like what's... Yeah. No, I'm sorry, Stacy just let me just ask you real quick, because it leads to the question. Like, I wonder at this point whose guidance is more relevant to NVIDIA story. The others, the others or Microsoft NVIDIA. Yeah, it's funny, we get to do more than one, sort of more than one earnings with NVIDIA every quarter because the large hyperscale prints are probably just as important for NVIDIA stock as NVIDIA's report is. So that just is how it is. It's something we've got to pay attention to. And that's not uncommon in semis, by the way. There's always a read across. But this one's pretty

important for NVIDIA. But I mean, when you think about it in that context, then, Stacey, you know, barring some significant belt tightening from the hyperscalers, there's no reason that it sounds like in your mind to have any bit of concern of a meaningful nature about NVIDIA, even if there's a modest delay in Blackwell. Well, so it's from the demand side. I'm not worried at this point. And we'll see what if there's a delay, if that causes issues. And hypothetically, let's just say we roll into the end of the year and it's not as strong because you're pushing Blackwell the next year. It actually just makes next year look better. And like as long as that demand for Blackwell is there, I think if there was any weakness on the stock at that point, it would probably get bought. I think the danger

is if the demand signs start to lag, if one of these large hyperscalers at some point blinks, I mean, clearly that would be a problem. I don't think we're anywhere near that. Clearly, we're not anywhere near that right now. And then finally, I wanted to say, everybody asks what's pricing. And I keep going back. I think Josh and I've talked about this here before. I know everybody argues about NVIDIA's valuation. The stock is not expensive if the numbers right now are anywhere close to being right. And as I always say, it's much cheaper today than it was a year and a half ago when all this started, right? The stock's gone up a ton. The earnings have gone up a lot more and the stock's actually gotten cheaper, much cheaper than it was before all this started. You know, Scott, when you talk to CTOs, they'll tell you

they're spending in two places, AI and cybersecurity. AI because they don't know what AI is for their business and they're learning it real time. They can't afford not to. Hence, the hyperscalers fighting it out in terms of the CapEx and OpEx and all that. And then on the cyber side, they're afraid of losing their business overnight. And that is so it's so so clear that you're going to continue to see spend here. I just go back to the expectations are super high. And so I think you just want to make sure you know that the risk reward is not nearly as good, at least in the short term, just given the 151 percent move year to date and 26 percent up in the last four weeks. But you're not just talking about sort of price action of

an elevating price of a stock. It's, you think it's expensive, right? I mean, Stacey would say, and he just did, that it's not. The stock is not expensive. It's 47 times. You've made a significant position in Amazon, right? What's that trading at? Well, that's, yes, but it's trading down. It's trading at 13 times EBITDA, and it's down from 17 times EBITDA.

So and there's a lot of story. There's a lot of ways you can win in Amazon. I'm not saying you can't win in NVIDIA over the long period of time. I'm just saying, like today, it's not the most important thing on Earth. That's number one in terms of this report. Number two, the expectations are just really high. So wouldn't be surprised if you see a pullback. If you see a pullback, I suspect that most people will be buying it. Those that own it, they'll buy more. Maybe I will, too. We'll have to see. Josh, I mean, when you look at the greater context of the other side of the coin here, of what it really means to the overall market, maybe this answer would have been different had we still been in some sort of pullback period like the one we saw on August 5th. Well, we've had a good rally back.

So does that increase the stakes even more for the market itself? Well, look at that period, because NVIDIA this year has been in a 20 percent drawdown. And how many people who said, oh, I'll buy it, I'll buy it in the next bear market, I'll buy it in the next correction. You didn't have long. You had like a couple of days. This stock has given people plenty of opportunities to change their mind. And I think one of the reasons why people are anchored to it being, quote unquote, too expensive for the last, I don't know, 4000 percent it's gone up in 2020. This was a video game software and and chip provider effectively and the analysts covering it were covering take two like the same person covering nvidia like stacy's probably chocolate

i can't see you stacy the person covering this name was also covering like the grand theft auto launch you also had these maniacs who were valuing it based on how many GPUs they could sell to Bitcoin miners. It was like talking to people in an asylum. The reason the stock got re-rated is because all of a sudden, the technology wave made it so that all of these CPU architecture based data centers effectively had to rip that equipment out and put in GPUs for parallel processing. Understand, data center revenue since August of 2021, so that's three years, has grown at a CAGR of 110%. NVIDIA's gaming business has only grown at a CAGR of 14%. So there's a lot of people who were covering this stock a couple of years ago who are still anchored

to this concept of, oh, they have like a gaming business and professional visualization, and they have a little bit of automotive. No, it's a data center company, the fastest growing in the world, the most essential software and chip combo, and everybody needs more than they have today. That was the turn that you had to make to pick up what was really happening with this story. They were not involved

to any extent in AI data center build outs when I bought the stock in 2015 because nobody was in that business. So there's been an evolution in the story here. And the valuation has certainly grown. But honestly, it was more expensive two years ago because people understand the past earnings are not the thing. The thing is, what are the future earnings? And this story caught everybody by surprise because of this technological revolution. That's what hasn't changed.

Stacey, you want to address that? Because the arc of this company has been remarkable. Yeah, you bet. And by the way, the Stux, it's 38 times forward. It's not 47. So it's not as expensive. Even cheaper. Even cheaper.

No, so look, the data center story has always been the future story of the company. But Josh is absolutely right. In 2020, it was primarily gaming was driving it. And frankly, it was cryptocurrency. It was Ethereum and Bitcoin and everything else. And that kind of crashed out and actually took the stock down with it when it happened. But it kind of cleared the path. This hope, this data center-centric story, this has been the hope of the stock. It's certainly been the hope of

Jensen for many, many years. It's only in the last year and a half, two years, where it's really finally come into its own, with the advent of chat GPT and generative AI and everything else. And it's finally now becoming clear, I think, the potential of this market. And this was something that I think the bulls in the stock always had this as their long-term thesis. But it is finally playing out now for everybody to see. It's not just the bulls in the stock always had this as their long term thesis, but it is finally playing out now for everybody to see. It's not just the bulls in the stock that can imagine this now. It's happening like in front of everybody today. Yeah. Stacey, I really appreciate your time. We're going to see what happens. And I know we'll hear from you on the other side. It's going to be exciting.

I'm going to say goodbye to you because I want to continue the conversation with Josh and Steph about CrowdStrike, which, oh yeah, also reports. And there's a lot on the line here too, Steph. You know, Josh owned it for a while and you're reasonably new to the stock. You think the worst is in? Priced in works both ways. Yeah, you're right. Well, I started buying it when it was down 41% from its highs and it went from 22 times EV to sales to 13.6 times EV to sales. Not cheap, but for the number one player in the security market, I thought that was very interesting. I think the quarter is going to be very strong, but I think the guide is the key. What about costs? What about discounts? Churn? I think churn is actually contained one, two percent. And I just think that the most important number out there, I think it's troughing, is the net new annual recurring revenue. That number is one hundred ninety six million expectations for the quarter.

I think you're troughing maybe maybe one more quarter about the same level. But that's what people are going to be focused on, as well as, by the way, do they take a charge? So there's a lot of moving parts. I don't even think it really matters on the earnings per se. It's all these other things. Josh? There's a guy at Piper Sandler who covers the stock. I forget his name. Very handsome. And so he had downgraded CrowdStrike in July. Rob Owens. Shout out to Rob. So had downgraded CrowdStrike and Rob Owens. Shout out to Rob. So he downgraded stock in July before the big I.T. outage. So he ended up looking really smart, but by accident. But he just upgraded it in early August to an overweight.

And the title of his note was, this too shall pass. And I just want to read people one sentence from this, because I think it really encapsulates the story here. Given the strong cash flow generation, over a billion in trailing 12-month free cash flow, and the potential monetary example of Delta, plus the fact that Crowd carries insurance for this type of incident, we have little concern about the cost side of the equation. However, at some level, this will impact numbers through new business, renewals, churn, and discounting, not to mention a seemingly more challenged current backdrop. So that's the thing here. We know there's going to be charges, obviously, like everybody knows that. The stock fell 200 points.

We also know that it was probably more difficult during the course of the rest of the quarter that we're in right now and will remain difficult to close new business. What you have to ask yourself, if you're making an investment, not a trade, an investment, is that sufficiently discounted? And if it's not, how much more potential downside could there be? So I'm with this analyst and many others who have remarked, there's no reason for management not to be conservative when they give guidance for the rest of the year. That should be your expectation. The question is, okay, but then what is the worst over? And my answer is yes, it probably is.

I'll step the last word because, I mean, there are two sides to every market. Redburn today, they reiterated their sell and they talk about AI. Yes, it's contributing a short term acceleration of demand rather than a sustainable trend. They say the recent outage cast additional pressure on top line with potential risk of increased churn and recourse from customers. So whereas one analyst suggests, look, they'll get through it. It's not that big of a deal. This one suggests it is. Right. And so you asked me before, are the expectations low enough?

I don't know. thought down 41% for the best in breed, best management, best product in the industry where what I just said earlier, CTOs are spending their money. I thought it was an opportunity. I would love for them to really just sandbag guidance going like horrible stock falls down. Then I buy more because it's only a small position for me. But whenever I can get the number one or number two company on sale, really big time sale and a big D rating in the valuation, I think it's worth a shot. All right, guys, that was fun. I appreciate it. Josh, thank you, Steph. Great having you here. Post nine as well to Pippa Stevens now for a look at the biggest names moving into the close. Pippa. Hey, Scott, shares of Chewy are jumping after better than expected Q2 earnings and upbeat profit guidance.

Net sales per active customer grew with CEO Sumit Singh telling CNBC the company's investment into a better customer experience is paying off and that pet household formation is normalizing, which is a positive sign. And AeroVironment up double digits after the maker of unmanned aerial vehicles secured a $990 million contract from the U.S. Army for loitering munition systems. Barrett upgraded the stock to outperform on the news, saying the contract locks in visibility for the product through 2029. Those shares up 9 percent. Scott? All right, Pippa, thank you. That's Pippa Stevens. We're just getting started. Up next, top technician Jeff DeGraff is back. He's flagging some trouble, uh-oh, in his charts. He's going to reveal the headwinds that he is seeing for this market. We're live at the New York Stock Exchange. You're watching The Bell on CNBC. sb 500 trading just shy of a record high our next guest sees some potential headwinds brewing under the surface as we head into september joining me now jeff de graff renaissance macros chairman

and head of technical research welcome back what are these problems where we need to be aware of well i think it's really the characteristics of the market and the leadership. We've seen a distinct shift away from tech and towards more defense. I mean, we could get even more broad and say defense versus cyclicality. And it's happening right at a point where the seasonals tend to, particularly for an election year, tend to soften. So the September,October period during election years is pretty tumultuous. Whether that's before the election or not, it generally tends to be a pretty tough environment. But the other thing I think is important, Scott, is when we went back and looked at the first Fed rate cuts in every cycle, and there's been 15 since the inception of the S&P 500, you're talking about roughly a 50-50

shot at the market being up over the next one to three months. But I think what was really interesting in our study was that tech really takes it on the chin. Tech underperforms about 80% of the time after the first rate cut. So there is a decisive move towards defensiveness once you get that first rate cut. And usually that's because it's not one and done. And the economy ends up being weaker than what the expectations are. And it requires additional fuel from the Fed to get things going. So I think we've got a little bumpy period here that we're we're staring right down the barrel at. I would only suggest that maybe this time actually is different, dare I say,

because how many of those periods in which you looked was the Fed cutting because they wanted to, because they could. Not because they had to. They're just normalizing rates. Their rate, as I suggested yesterday, relative to where inflation is, just makes no sense. And the economy is just fine. Well, the economy is fine as we see it today. Right. But the data, remember, we're going to be getting data out three and six months from now. That's really a reflection of where the economy is today. And I think that's important. The other part, too, and maybe this is what you

alluded to yesterday, did not catch it, which is the spread between the Fed fund and the two-year right now is roughly 135 basis points. And that's a pretty good proxy for where the Fed should be, the policy rate versus the market rate. And that differential, when it's this inverted, and by the way, this is the most inverted it's been since 2007, right? And so that obviously was a policy mistake that undid a lot of leverage in the system. And I'm not saying that we have this housing crisis or the same pillars of sand that we had back then. But certainly, there are areas of the market that probably need to be liquefied and will be because of this extreme.

So my concern is actually, if this spread were 50 basis points, no big deal. But this is going to take five cuts from the Fed just to get us back on sides. And that means it's going to have to be pretty persistent and pretty aggressive. And I'm not sure the Fed's ready to do that. Clearly, they're on the right path and they're talking a good game, but we're going to really need to see some action to avoid some of this. But what if I also suggested what was viewed as defensive in the past isn't necessarily defensive today. Utilities, for example, because of the power generation required for AI, maybe we're playing a little offense there in ways that we didn't before. And maybe in healthcare, where we thought these were

defensive yield type plays, now we're talking about GLP-1s and we're talking about transformational change in health care like we are in technology. I will say the data, so forget where we are today and this time is different, but the data is very clear, which is if I were to just use the history of the data, I'd be selling tech and buying health care. No doubt about it. That really is a standout in terms of what happens historically around the initiation of a Fed easing policy. So whether that's because they're more defensive and less prone to revenue swings, unlike what you see out of tech, I'm not sure. My gut says it's probably something. we can start stacking on some of the Ozempics and some of the new technologies that we see around health care on top of that. But I do think that

there's probably an underlying bid because of the consistency that you see in the defensive nature of health care. I would just add as well that health care looks the least attractive in the U.S. It looks most attractive in the APEC Pacific Rim. Even in Europe, it looks better than it does here in the U.S. So I actually look at that as a bullish phenomenon for the U.S. because you've actually got some pull horses that are stronger in front of us than the horse that we're riding right here. And how would you address, lastly, the issue of, we sit here and we say, well, the market's not broad. It's all tech heavy. Now it's actually broadening. And now we're trying to decide we don't like that either because, well, tech is, you know, weakening lately.

But the slack is being picked up elsewhere. How can we have it both ways? Well, you can't have it both ways, right? There's no doubt that you've got this improvement broadly, and that's good. I would actually add to that that the financials are one of the kind of secret weapons here in terms of leadership in the market. So the broadening has actually led to strength. And we're seeing strength in utilities, as you mentioned. But we're also seeing it in REITs. And we're also seeing it in regional banks. And we're seeing it in areas,

obviously, they're interest rate sensitive. There's no doubt about that. But I think the good news and what keeps us away from thinking that this is a balance sheet recession, which is a disaster, into something that's more palatable and probably more of a soft landing and viable correction in the market on a consolidation is that you do see the strength of financials, which means that you probably don't have impairments of write-downs and the assets. You do continue to see really stability in the BBB spreads versus Treasury. So the credit markets are still relatively healthy. So I actually think we're in an OK spot. I just think that we're going to see some vulnerability here in the very near term and some turbulence. And that'll set up, hopefully, for a decent 2025. But I just think it's really

important because there's a lot of bullishness around the first Fed rate cut. And we think, really, the curveball here is probably that that rate cut means things that you would otherwise expect to go up aren't going up. And you have to have a little different flavor in the portfolio to manage through that. Wow. We didn't even mention Vidya. Didn't even mention it once. What's that? It's incredible in and of itself. Exactly. Oh, we didn't even mention video. Didn't even mention it once. What's that incredible in and of itself. Exactly. Oh, we'll talk about it next.

Don't worry, Jeff. Thanks. We'll see you soon. Thank you, Scott. We'll do it next because star analyst, Dan Ives,

he's the one who said in videos report, the most important of the year. He's going to join us next. We're back with shares of Nvidia dipping ahead of the company's Q2 earnings report just after the bell. My next guest calling it the most important earnings report for the stock market this year. He's Dan Ives of Wedbush joining us here at Post 9. I don't think many would agree. I mean, it's obviously important.

The most important thing you're watching for is what? It's really about what Jensen, godfather of AI, talks about in terms of demand. Because there is no better perch in terms of from an AI chip perspective than from what NVIDIA sees. So I think it's not just about October quarter. It's really going into the next, call it, six months. But, I mean, we've talked about everything we're seeing from an Asia supply chain perspective. I think it's a drop to my performance tonight. What about the possible Blackwell delays and getting more clarity on exactly what that is?

Because when you say, well, you'll hear from him on demand, we already know demand's great, right? We already know that. We heard from the hyperscalers. We know that revenues on CapEx are up 40, 50 times, 50%, I mean, over the period of a year. What about Blackwell? Well, I mean, I don't view that, even if we're talking about two, three months, anything that moves out of the actual October quarter. When we look at it from a CapEx perspective, when you look at Blackwell, if you could guide up, call it $1 to $2 billion with a delay in terms of where the trajectory here.

I mean, you're going to start looking at what ultimately would be $5, $6 earnings power for NVIDIA when you look out here. And I think the most important thing is here, you have the pieces of the puzzle. This Rubik's Cube. You have the CapEx players that we've seen from big tech. You have names like Palantir, ServiceNow, and others. But as the godfather of AI speaks tonight, this is the final piece that shows that this AI party we've talked about, it's 9 p.m. and it goes to 4 a.m. Okay. Speaking of, hang on just a second. Speaking of AI, Kate Rooney has some news for us regarding OpenAI. Kate? Hey, Scott. So a source telling me that

OpenAI is raising another round of funding. This is going to be led by Thrive Capital. It puts the AI startup's valuation at roughly $100 billion. According to this source, Open AI and Thrive did decline to comment, but a source close to the matter telling me that Thrive is going to be putting in $1 billion. The Wall Street Journal first reporting this and also has some other details here saying that Microsoft is also expected to put in some additional funding. And this would be the biggest round, Scott,

since OpenAI and Microsoft and that deal back in January 2023. Microsoft invested around $10 billion. Of course, there's been this arms race in Silicon Valley in terms of spending. This is expensive to run one of these large language models. They really are building a war chest here.

So $100 billion is just a massive number, puts it near the likes of Stripe, SpaceX, some of the most highly valued Silicon Valley companies out there, Scott. But the latest in the AI arms race. Back over to you. Yeah, Kate Rooney, appreciate that timely report. Obviously, having Dan Ives sitting next to me. You want to you. Yeah, Kate Rooney, appreciate that timely report. Obviously, having Dan Ives sitting next to me. You want to comment on this? I mean, we have a trillion dollars of CapEx, of AI that's coming down the road. You look at OpenAI's position, that's the golden child in terms of where I view AI. And I think this is just the start.

We talk about valuations that continue to increase. It's a scarcity value, no different than NVIDIA. What you see on the private side, when it comes to open AI, Nadella and Redmond continue to sort of win that race. So greater picture for mega cap tech itself off the back of whatever NVIDIA delivers is what? I mean, I believe it's going to be bullish. This is what I believe is the start of tech that rallies into year end, led by big cap tech. You got the AI revolution coming to Cupertino, as we've talked about in terms of iPhone. This is the start. We believe it's not just about NASDAQ 20,000. It's about big cap tech.

This is just the beginning of the next phase of the bull market. And I think it all starts tonight. OK, you're optimistic, it seems, from your notes on Salesforce, which also reports in overtime. You say that this is, you expect the start of an AI era from Benioff, Mark Benioff and company. What have they been spinning their wheels to this point? I mean, the stock has done nothing. Year to date, they've underperformed, obviously, the rest of tech and the NASDAQ. What's been the problem and why are you optimistic now? Sure. It starts with our multiplier. I mean, for every dollar spent on a video chip,

we think $8 to $10 multiplier across the rest of tech. You look at Salesforce and how Benioff had their position. They haven't benefited yet. But we look out in the next 6, 9, 12 months, this is going to be a massive talent for them from a cross-sell perspective when you look at their install base. I think it's going to be a slight bounce back quarter, but this is a name that I think is going to be in the start of a renaissance of growth. And that's everything we see from our check showing. It's about the install base, no different than Oracle, no different than what we see with McDermott and ServiceNow.

Benioff and Salesforce will be next, despite some of the headwinds. I got another analyst I'm looking at right now at Oppenheimer who says of his own field checks, they weighed slightly negative for Salesforce's business activity and operating environment. Quote, we don't anticipate estimates to change material after the earnings update. Just fundamentally disagree with one view versus yours? Yeah, well, first of all, there's been a lot of skepticism on Salesforce, even going back to the Elliott activism. Many thought stock would be so much lower than it is today.

I think this is a quarter not expecting any major fireworks, but I think the story in Salesforce, it's not about this quarter. It's about where this is going the next six, nine months. And I believe there's a stock that could be up 30%, 40%. I know, but why isn't it getting any credit as the market looks ahead six, nine months traditionally? All these other companies are getting credit for the AI deliverables that we assume are going to take place. Why isn't this one? It's a great question.

Just like the street missed Palantir, I think many missed Oracle. I think they'll miss Salesforce. I think Salesforce, we're talking about a stalwart. Benioff, if I have a CEO that's flying a plane, he's going to be one of the top in terms of in tech. And I think this will be the next phase, despite many

of the bears right now out there in Salesforce. All right, we'll leave it there. I appreciate you, Dan. Thank you for being here with us at Post 9. Up next, we track the biggest movers into the close and we head back to Pippa Stevens for that. Pippa. Two retailers are down double digits despite top EPS estimates. What's driving those moves? We've got the 15 from the close. Back to Pippa Stevens now for a look at the stocks that we need to keep our eyes on. Hey, Scott, shares of Abercrombie & Fitch are tumbling. The retailer beat second quarter results

and raised its full year sales outlook. But CEO Fran Horowitz warned of a quote increasingly uncertain environment as macro conditions worsen. Foot Locker is also under pressure after reporting a five cent loss for Q2 with the retailer also largely maintaining its guidance. Evercore ISI saying that while the print is supportive of the longer term thesis, international will be a source of Q3 weakness. Those shares down 11 percent. Scott. Well, all right, Pippa. Thank you, Pippa Stevens. Still ahead, CrowdStrike reporting its first quarterly results since triggering that major global outage. We're going to run through what to watch for when the bell comes right back.

Have your big earnings set up. Coming up, we're going to run you through what to watch for from CrowdStrike, NVIDIA, and more inside the Market zone next. 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 this trading day. We are on earnings watch as well, of course. Steve Kovach on what to expect from CrowdStrike, which is coming up. Seema Modi on the must-see report, which is NVIDIA.

Speaking of, Mike, how should we take this day in the context of where we go from here? I'm very interested to see whether it's a ripple just for NVIDIA or if, in fact, it's somehow a clearing event. For the psychology around the growth stock trade, which has really lagged this comeback. You know, as Jeff DeGraff was talking about, it has been an unusually defensive rebound from a correction. You know, we sit here at 5,600 exactly almost on the S&P 500. That is the post we've been leashed to for almost two weeks right now, about a half percent either way. But within it, it's been, you know, relatively cautious.

You have Berkshire Hathaway, JP Morgan and Big Pharma holding up the S&P today. So I do think it's a little bit of a test of nerves for the long term story, you know, whether they can start to address the idea that they're hogging like a ridiculously huge percentage of all this massive capex that's going into this area or if it's just kind of steady as she goes, pencil in fiscal 2026, you know, growth rates as we have them now. That we'll see. I do think the market has been a little bit edgy and uneasy and maybe a little bit too fickle day to day, even within this range. So I'm not sure if we have to sort of test some levels lower on the indexes before we know

if this rebound was for real. All right. We'll be back to you in a minute. Steve Kovac on CrowdStrike, important as well. Yeah. And it's not just Nvidia today, but these CrowdStrike earnings are going to be overshadowed by that huge IT outage back in July. Since that date, CrowdStrike shares, they're down more than 20 percent. So there are going to be lots of questions here. What's happening next, including that fight with Delta, which is asking Microsoft and CrowdStrike for $500 million in damages. One thing that we do know about, though, Microsoft is going to be hosting CrowdStrike and some other cybersecurity firms at its headquarters on September 10th to figure out a plan forward. In the meantime, we're expecting the call after the earnings comes out

to focus on how much this fallout is ultimately going to cost. CrowdStrike, by the way, we're going to hear from CrowdStrike's CEO, George Kurtz, tomorrow night on Mad Money with Jim Cramer. Scott. All right, Steve Kovach, thank you very much. Okay, Seema, you can take this wherever you want to. Can you feel the excitement, Scott? We're about 20 minutes away from the biggest chipmaker reporting earnings in NVIDIA and the broader chip sector trading down right now.

Two things we'll be looking for. You've been talking about it, a window into big tech's capex spend for 2025 and beyond. Mizuho writing that clients are struggling to get overly bullish on the stock without any guidance on just how much the hyperscalers plan to spend on the future, plus an updated timeline on when NVIDIA expects Blackwell to be shipped out to customers and how its gaming business is holding up. Options market predicting a 10% move in either direction. That's about a $300 billion swing, Scott. Stock trading at $125 and change. All right, Seema, we'll see what happens, and we'll see you again soon.

That's Seema Modi. Mike, back to you. I mean, Vic's up a little bit today, to your point. I mean, market's a little bit on edge. Yeah, just clenching up just a little bit. Again, we didn't really, you didn't get back to the old highs. I mean, that's one of these sort of silly tactical things. We stopped within less than a percent of the July 16 highs in the S&P 500. And there is a leadership transition that seems to be underway. It doesn't mean it has to be

anti-tech that works. But what you have with NVIDIA is almost the exception to the rule in the sector. The average semi-stock has been lagging pretty badly at this point. And I do think that macro hovers above all of it, not because it's going to affect Nvidia's numbers or valuation so much, but because the broader market wants to know if we can kind of sound anything close to an all clear on the soft landing story. We got really comfortable with it on Friday. I think it's natural to start to rethink that. And, you know, to your note, I'll keep pointing to it. It's suggesting it's time to get going on cuts.

Maybe we're late. Maybe we're on time. Jobs number next Friday. A lot of things filtering in, I think, to the psychology in any liquid week with a ton of air pockets and not a lot of volume. All right, we'll see what happens in a few moments, obviously. The bell's going to ring. It's red today.

But there's a lot ahead. Don't go anywhere. It's been just an overtime with Morgan and John.