Closing Bell - Closing Bell Overtime: Dean of Valuation On What Nvidia Is Really Worth; Snowflake CEO On Latest Quarter 8/24/23

Episode Date: August 24, 2023

Stocks sold off into the close today. Advisors Capital Management’s JoAnne Feeney and Wells Fargo’s Darrell Cronk break down the price action. Earnings from Intuit, Ulta, Workday, Affirm, Nordstrom, Marvell, Gap. Telsey Advisory’s Dana Telsey breaks down a busy week of retail and what it says about the consumer. Snowflake CEO Frank Slootman on his company’s latest quarter and demand for AI. Dean of Valuation Aswath Damodaran, NYU Stern School of Business professor, on what Nvidia is really worth.

Well, looks like Nvidia barely hangs on to gains. That's the scorecard on Wall Street. Bit of a surprise perhaps, but winners stay late. Welcome to Closing Belt Overtime. I'm John Fort. Morgan Brennan is off today. Buckle up for a big afternoon, another one of earnings. We've got numbers on the way from retailers Gap, Nordstrom and Ulta. We'll also get a read on credit and payments from Affirm and Intuit. And we'll get results from tech names Marvell and Workday. Plus, you're going to hear exclusively from the CEO of Snowflake about his company's earnings last night and its relationship with NVIDIA and the AI landscape. Well, right now, let's bring in our panel. Joining us now are Joanne Feeney from Advisors Capital Management

and Daryl Kronk from Wells Fargo Investment Institute. Good afternoon, guys. Joanne, NVIDIA had one of the best quarters we've seen in a long time and finished the day barely up at all. I mean, like, basically flat. AMD at the same time was down significantly today. I know that's a stock you're watching. Do you buy anything here or do you just sit on your hands until we get all the way through Jackson Hole? Well, you know, John, clearly today was investors pre-positioning for the Jackson Hole meeting, you know, getting a little bit of risk

off the table. Obviously, NVIDIA's results were stellar, reaffirming the importance of AI to the demand for their high-end accelerator chips. And AMD is thrown into that same bucket because they're about to come out, according to the latest news, with their own accelerator chips designed for the AI world. So investors might be, you know, getting a little bit of risk off the table here in advance of Jackson Hole, but that's no reason to change your overall strategy and what you own in your portfolios. Okay. I wouldn't be changing anything here. I do want to mention Intuit results are out. We are going through them. As we go through that, Daryl, your position, I think, is that stocks are probably going to fall even from here. So do you think investors should sell some, park in fixed income where you make a little

yield and wait for bargains or what? Yeah, we are now underweight equities and have been. We think, John, we've broken through the 20-day and the 50-day on some of the major indices. We've lost the magnificent seven from a technical standpoint. So it makes a lot of sense to play a little more defense here. We think the risk reward starts to flip more positive to equity somewhere around $4,100, $4,200 on the S&P. We're obviously not there yet, but there's big blue sky between the upper bound of the 50-day moving average and the lower bound of the 200-day moving average, which is down closer to $4,100. On some of the tech side, we actually downgraded it in our mid-year outlook in June. We just felt like it was overvalued. I mean, look at NVIDIA today. You're still north of 40 times sales, no matter how good the numbers are, and about 22 times sales next year. Not PE, not

earnings, but sales, right? So the valuations are just so stretched there. It's not mitigating the opportunity. The opportunity is strong, but at some point, valuation does matter there. Well, Joanne, we're a lot farther, really far from 4,200 on the S&P. We're closer to 4,400. So how should investors think about, yeah, I mean, by historical standards, maybe the indices overall are a little richly valued, but then you've got some companies, some stocks whose growth seems to justify it. Yeah, John, so as you know, we invest in individual stocks and bonds for our clients. So that allows us to be selective. We don't want to own the whole market. And so to the question about what the market's going to do between now and the end of the year

it's not as relevant a question for us and our strategy and what we want to do in this situation is in recognition that the market as a whole is is expensive and you know one might argue that Nvidia is expensive but you have to build into the growth outlooks of for these companies and there are some bargains still out there and so our view at this point is sort of take a little bit of a barbell approach, own the companies that you know are going to be foundational to the growth of the U.S. economy, to the transformation of technology and productivity, like in the world of AI, in the world of automation, for example.

But also own some defensive positions because we do know the consumer is vulnerable here. We're seeing mixed results in the retail sales consumers shifting down. To less discretionary items and so you can only TJ Maxx for example- and that's a way of having some defensive positions in a client's portfolio

alongside some of those key growth drivers which will power their portfolio higher over the longer term. Okay well- as you say in that into it earnings mentioned are out Julia portfolio higher over the longer term. Okay. Well, as you say in that Intuit earnings, we mentioned are out. Julia Boorstin has those numbers. Julia. Hey, John, that's right. Intuit earnings beating on the top and bottom lines of the adjusted

earnings per share of $1.65 versus expectations of $1.44. Revenues of $2.71 billion beating expectations of $2.64 billion. You see the stock trading down fracturally right now, and that seems to be due to the fiscal first quarter guidance, the company guiding for revenue growth of between 10 and 11 percent versus an estimate of 13 percent revenue growth. Also want to point out that that 10 to 11 percent would be a decline both from the revenue growth rate of this quarter, but also for the whole fiscal year that was just concluded. And I believe that's why the stock is now trading down about 1 percent. Do want to point out, though, that the the EPS range for the first quarter guidance is stronger than that is on the lower end.

Sorry. Excuse me. The EPS guidance is on the lower end of expectations. But the full year guidance is stronger than anticipated. Back over to you. OK, so some puts and takes there, a little mixed bag. Julia, thanks. Nordstrom earnings, meanwhile, are out as well. Courtney Reagan, you have those numbers? Yeah, I do, John. So for the quarter for Nordstrom, reporting a very big beat of 84 cents. The street was looking for 44 cents.44, so $0.40 above expectations. That's almost double.

Also beating on stronger-than-expected revenues of $3.77 billion. The street was looking for $3.654 billion. It is important to point out that the net sales were down, though, still year over year, down more than 8 percent. Though the company calls out they would have been down just 4 percent if not for the inclusion of the Canadian operations and the anniversary sale shift from from the third quarter into the third quarter from the second quarter. They do also affirm their guidance for the full year, which is interesting because, as I just said, they had a 40 cent beat here, but not moving on that guidance. They're talking about sequential sales improvement during the quarter at both the regular Nordstrom full-line stores and the Nordstrom Rack business.

The Rack business sales are improving, but still down 4%, 4.1%. Nordstrom sales down 10.1%. Digital sales also down about 13%, again, calling out eliminating the store fulfillment at Nordstrom Rack and the Canadian operations as part of that issue. Inventory, like other retailers, down sharply, 17.5 percent. After hours, the shares are up about 6 percent. John, back over to you. Yeah, Courtney, thanks. So a lot to consider here, Daryl.

I mean, over at Intuit Credit Karma, the revenue has been down. Macroeconomic headwinds in personal loans, auto insurance, home loans. We had heard from Macy's earlier in the week about consumer credit being perhaps a drag. But, you know, maybe the bar was a little lower for Nordstrom. But they seem to be clearing it here. What is it telling you? Yeah, I would say, look, on the retail side with Nordstrom, it doesn't surprise me, right? Consumer we know has been strong. You're just getting maybe the beginning of the back to school push, right? That gives you a nice push this time of

year. Seasonally, August is one of the weakest months for retailers. So it doesn't surprise me if you get a little bit of retail softness heading into what will be an anticipation of a stronger December and holiday season type of thing. So I'm not surprised by the retail side. On the technology side with Intuit, you know, it's a long-duration asset. We've got to remember, you know, interest rates, the 10-year is up 100 basis points, John, since the beginning of April to today, right? On long-duration assets, that's hard on them. It's hard on their business model. It's hard on their margins. So I think what the market is really paying attention to there is the lower end of the guidance range going forward,

I think, is what they're not going to like. Okay. And again, as you were speaking, Marvell earnings hit the tape. Christina Partsenevelis has those numbers. Christina? Well, what we're seeing from Q2 results is a beat on the top and bottom line. Adjusted EPS of 33 cents. Street was anticipating 32 cents on revenue of $1.34 billion. The estimates were 1.32, let's call it 1.33. So not a massive beat, but still a beat for Q2. We're talking about guidance, though. The company's EPS guidance was relatively in line, 40 cents.

But Q3 revenue is coming in a little bit higher at 1.4 billion. The company's attributing that growth, the sequential growth, to AI and cloud infrastructure, with the CEO saying, quote, in the press release, demand from AI applications continues to strengthen, driving our overall revenue outlook from AI for this fiscal year even higher than previously outlined. Our strategy to focus on data center or data infrastructure across a set of end markets is serving us well despite the backdrop of a softening macro environment. But you can see shares are off more than 2%, possibly even 2.5% at this point. So I'll have to dig through to figure out why.

Yeah, a lot different from yesterday in the after hours action for sure. Yeah, I'm not saying whoa this time, right? Well, or maybe a different kind for some of these names. Yeah, a lot of content they have in the cloud. And with AI, don't miss our exclusive interview, speaking of Marvell, tomorrow here on Overtime with the CEO, Matt Murphy. Do we have workday numbers out as well? Yeah, tech keeps rolling.

Julia Boorstin, you have those numbers too? Yes, that's right. Workday earnings beating on the top and the bottom line. Earnings of $1.43 per share versus the $1.26 that had been anticipated. Revenues at $1.79 billion, just a hair above the $1.77 billion that were anticipated. We see the stocks up about 3% now. That's in part because of guidance for the third quarter. The company is saying it sees third quarter subscription revenues between $1.678 to $1.68 billion. That's pretty much right in line with the estimates, but a beat on the top and bottom line. And the company says they are well positioned going into the second half of the fiscal year. They note not only have they seen subscription revenue increase 18.8% from the year ago period, but they are also seeing

growth in the backlog, saying that they have now 65, excuse me, saying that they, 65 million users under contract who rely on Workday to manage critical business processes. So growing customer base, certainly helping bolster the business here. Back over to you. All right, from Chipson Enterprise Software, now back to the consumer. Affirm earnings are out. Kate Rooney has the numbers. Kate. Hey, John. So it's looking like a beat for Affirm on the top and bottom line. Also, stronger than expected volumes for the quarter. Still a loss on that EPS number, 69 cents in terms of the EPS loss.

Street was looking for 85 cents for that loss. Better than expected there. This was on revenues of $446 million. That was up 22% year over year. GMV, that's gross merchandise volume. This was 5.5 billion for the quarter. A beat on that number, up 25% year over year. Delinquencies, excluding Peloton, declined to 2.3% sequentially, looking better than pre-pandemic levels. Looks like overall delinquencies were actually down. So that's a big line item for the street there.

Revenue, less transaction costs. key metric here for unit economics. This was better than expected at $182 million. On Outlook, John, so they're providing Q1 revenue guidance. That was a beat stronger than expected. They're not giving full-year revenue guidance, it looks like, based on the macro environment. There is a way to back into the EPS guide with a share count, but it's not in the report right away, so we don't have it here. They're giving guidance on GMV, $24 billion for the full year, adjusted operating margins of 2%, a little bit of color here on the debit card as well, and higher transactions per

customer on that, 300,000 users for a firm on that new debit card. There's been some interest there. Finally, profitable on an adjusted operating income basis, not gap profitability, but one metric to measure profitability. So they're making some progress there. John, back to you. That is interesting, Kate. And Joanne, I'll go back to you on this one. 30 basis points lower delinquency here for a firm in this environment, which has been challenging. Max Levchin has told us he's not looking at the financials with a glass of wine over dinner anymore during this period. Stock is up better than 4% at the moment after hours. Might this be a redemptive moment,

Joanne, for buy now, pay later, proving its worth in this economy. Well I think that we need to see a lot more data. I don't think you know a few quarters the early days of buy now pay later in its current incarnation is really enough to tell us whether these companies have a decent handle on how to evaluate the credit risk that they're taking by making these many loans that they make every time somebody does a transaction that's really the question. And I think you know companies that have been in the retail space for longer probably have. Better data on their customers it's not a name were involved in a firm- we prefer. To see

companies like Apple for example with their Apple pay- more established better data on the customers and we're a little bit worried about the credit to quality of a company like Affirm. Yeah. Lower delinquency is better, though. We'll see if they can keep that up. Joanne, Daryl, thank you. Now let's get to our senior markets commentator, Michael Santoli at the New York Stock Exchange.

Mike, what are you watching? Well, I just want to take a snapshot, John, of the markets as they kind of back off from some widely watched levels. First, the S&P 500 did have that reversal today after a strong start. And then we've kind of buckled over the course of the day. You see the 50-day moving average on an intraday basis kind of went right up to tag it. So it seems like we're still in this pullback mode, probably have to chop around at minimum, maybe kind of go further below Friday's low, which was 43.30, maybe to bring in more of a buyer's flush or perhaps just get past tomorrow's Jackson Hole suspense with Jay Powell's speech. But as you see right there, we're sort of in this sloppy zone below that 50-day moving average. Now, take a look at Treasury yields.

This was part of the pressure today was a little bit of an uptick in yields, not really alarming relative to what we've seen recently, but it does push against the idea that perhaps we were peaking out around the same levels as we did back in October. So right here intraday, you got to like 430. So as you can see, we're sort of toying with this area. I think what people maybe are a little hesitant about is the look of this very strong trend higher off of the March lows. So clearly, there's going to be a pain threshold we have to explore on yields, certainly if it doesn't come with confidence that the economy can withstand them. For now, maybe you can squint and say we're at the upper end of the range. Yields topping would be bullish. Now, take a look at oil. A little more definitive backing away from the upper end of a longstanding range, multiple months. The mid-80s has held again. That's probably good news, maybe not as a global growth signal, but this is a

comfortable level, I think, both for energy companies to a degree, decent cash flows, but also for the consumer. Remember, we were much higher levels than this 15 years ago in a much smaller economy. So for now, this is not one of the things to worry most about if you're an equity investor, John. Mike, you are excruciatingly good at having a level head. You know, when some of us try to react to the day's news and the earnings crossing the tape and what must this mean, you're kind of like, wait a minute. So we're right now in the S&P at the levels where we were, what, in June? So what does this moment mean? How similar are we sort of valuation data information wise to where we were in June when we were just embarking

on, you know, getting ready to embark on the second half of the year? Yeah, I mean, John, valuation has moderated a little bit because earnings have continued to be revised higher in terms of the expectations for the next year. So that's less extreme and maybe more palatable. In terms of the technical action, this whole supply-demand dynamic, I think we're in a relatively routine phase. In fact, a lot of people would have predicted that after a strong ramp through July, you'd have a back off period in August. It seems like we're still in the zone of not really thinking it has to be anything deeper than that. So I would also say sentiment is moderating as well. So it sort of dials us back to around where we were in June. Now, I would say late June is the recent lows kind of got us back to that point. So, you know, it's not necessarily the case where we've said, well,

we've wiped away all the excesses. We have a really clean market right now. It's inexpensive. There's nothing to worry about. Not that at all. But we're in the process, I think, of working through some of those concerns and rebuilding that wall of worry. OK, Mike, thank you. Let's see if earnings can put a lipstick on on this pig here. Ulta earnings are out and so is Gap. Courtney Reagan has the numbers. Yeah, I'm back with more as I'm furiously jotting down some numbers here, John. OK, so let's start with the gap. The gap actually turning in a really strong beat for profit. Earnings coming in at 34 cents. The street was only looking for 9 cents.

This looks to be driven, though, more by cost discipline than sales because revenue was lighter than expected, 3.55 billion. The street was looking for 3.57 billion. Comparable sales down 6 percent. Analysts were expecting those as a total to fall a little more than 4 percent. It looks like their online sales were down 11%. Stores down 7%. So again, another quarter where stores actually stronger

than the digital business. Old Navy and Banana Republic down 6% and 8% respectively for comparable sales. Athleta down 7% for comparable sales. And the namesake Gap brand down just 1%. The company talks about prudently planning for the remainder of the year, citing some macroeconomic issues. And again, I'll remind everyone that the new CEO, Richard Dixon, officially started two days ago. I'm told he'll be on the

call. However, this is not a quarter really that he was in charge of in any way other than being a board member since November. Gap shares are down about 3%, although bouncing back here just a little bit, down about 2%. John, back over to you. Oh, wait, I got Alta, don't I? Alta. I got Alta. If you do. Thank you for reminding me. Okay. We'll take it. I've got Alta. Alta is coming in, earnings will be $6.02. That's a strong beat, too. The street was actually looking for $5.85, revenues of $2.53 billion. The street was looking for $2.509,

so that's also a beat. Same store sales coming in up 8% stronger than expected as well. They are increasing their sales guidance, their comp guidance, and a slight increase in the earnings per share guidance for the year. That we have not seen out of many retailers. Most retailers, even with strong second quarters, are holding steady on the guidance, but not true here for Ulta. They do call out, I will note, higher shrink and saying it did have an impact on their margins, which are down year over year, as well as higher supply chain costs. And interestingly, John, inventory for Ulta was up 9%. I think this is the first retailer I've seen with higher inventory year over year,

but they call out that they did that because sales were so strong, and so they were trying to, of course, meet that demand, while others were sort of over-bloated last year. So the comparison's much lower for inventory this time. Ulta Beauty shares are higher by about 2%. John Beck, over to you. I guess they gave that explanation to make up for it. Yeah, thanks. Make up for it. Yeah. Courtney, thank you. All right, after the break, we will talk more about this week's retail roller coaster, including this afternoon's reports when we're joined by longtime analyst and retail expert Dana Telsey and later Wall Street's outspoken Dean of Valuation, Aswath Damodaran, tackles the stock of the moment. Yeah, NVIDIA, he's going to tell us what he thinks it's really worth. You might be surprised. Overtime's back in two.

Nordstrom this hour topping street estimates, reaffirming the full year outlook. The stock moving higher in overtime. Gap also moving higher after a strong earnings beat. And despite missing on revenue and same store sales, Ulta moving higher as well. Joining us now, Telsey Advisory Group CEO, Dana Telsey. Dana, help us make sense of what's happening here with the consumer, with retailers, if we're wrapping in what we've heard already from Walmart, from Home Depot, you know, and now this latest spate of earnings. Who's got discretionary income? What are they spending it on? How much do they have left? So overall, and very good points, John. Thank you so much for having me.

I think it is a topsy-turvy retail season. We have a cautious consumer, really in all income levels. You can certainly see the categories. I mean, you saw it Nordstrom today, active and beauty led the way. You certainly saw it at Gap. It's the expense reduction. So retailers are navigating. I think there's more margin clarity than sales clarity, given the fact that you have lower freight costs everywhere. There's been surprises. You look at Abercrombie yesterday. What's interesting about Nordstrom today, they beat the number, but they maintain the guidance for the year.

So let's see what they say on the call about the back half of the year. I think on gas, it really was about the expense control that led it. And at Ulta, beauty is a beautiful thing given the categories where we've seen increases. How much of that bottom line discipline that we're seeing is the result of what we all learned during the pandemic and certainly what these retailers had to deal with with the supply chain issues. And when does that benefit? If it does, run out. So with this year being more margin clarity than sales clarity, we should continue to be able to get lower freight costs, maybe through the first quarter of 2024. Then you're going to need to see sales take over

and drive top line. And the other thing you're seeing is return to stores. And typically, store sales could be very productive and very profitable. When are we going to know, or at least get the first signals of what the holiday season is going to look like? And of course, this is an omni-channel world we're living in now. It's not just showing up in stores. It's also what gets ordered online. With the questions about how much discretionary income the consumer has left, it would be nice to get some clarity there. I totally agree. I'd love to see some more clarity, too. Keep in mind, we're going to have student loan payments coming up. And with the average household having monthly expenses of $6,200,

and you look at the student loan payments adding anywhere from 3% to almost 8% to those monthly expenses, you're going to need to get through part of October and see what those expenses are doing to the low- to middle-income consumer. Plus, we're going to have another prime day. So we'll get to see what the power of how consumers are thinking about their spend. To me, it's middle of October. OK, so let's talk Nike before you go. It's been stuck in the mud under 100 bucks a share, but you like it. Why has it been trading so poorly and what turns it around? You mentioned Nike, right? I just want to make sure I heard you. Nike, I think keep in

mind what we've seen you see new brands pick up like on and hoka they're gaining distribution you're seeing overall puma and adidas lately they just reported their results and you're definitely seeing a little bit of a more challenging environment i think what turns nike around after the multiple days now the downturn with the distribution that you're seeing and newness, and obviously a boot locker and Dick's miss, I think what turns Nike around, it's innovative product, and we're going to need to get discretionary spending out there. It's important. They need to create that newness to drive demand. I would have confidence that a brand like Nike with global reach has the collaborations and appeal and innovation to do that over time.

All right. Let's see if we can get that. And the situation in China, I'm sure, weighs in there too. Dana, thank you. Thank you. Still ahead, Snowfall's cloud computing company Snowflake pulling back today with a lot of tech after last night's earnings report. We're going to hear from CEO Frank Slootman about how artificial intelligence has impacted his company's business and why Snowflake is stockpiling NVIDIA chips. We'll come right back. Welcome back. Snowflake traded lower today with much of the rest of tech after reporting earnings yesterday in overtime that topped expectations. After the analyst call, I spoke with the CEO, Frank Slootman, about how the enterprise spending environment has stabilized since the negative shock late last year.

A couple of quarters ago, you know, we were sort of living through, you know, a bit of what I might call a reset, you know, where the dominant theme of conversation with customers was, hey, we need to fit within our contract, make it last, figure out how to do it. So very much conversations with unnatural acts. Obviously, that's not the most pleasant time to be in business, but we have really seen that turn around. That conversation seems to sort of have

subsided. People are, you know, moving back to, you know, projects, use cases, applications, and obviously, you know, AI is at the leading edge. Everybody is sort of beginning to figure out what do I have to do with my data organization. So AI is a force here where customers know they have to get ready for it, experiment with it, and that means they have to have their data in the cloud and with the right safeguards, which is a good argument for Snowflake. Now, I pressed Sluipman on the question of whether the demand we're seeing for AI right now is steady and reliable, like the demand for NVIDIA chips. Does that reflect the economic value companies are getting right now? He said not yet.

AI is not going to be cheap. I mean, somebody is paying for these wonderful NVIDIA results. There needs to be a business model that's associated with the technology. One of the great things about search when it showed up was not only that search was great technology, but they also had a business model to pay for it, right? We need that here as well. Otherwise, it's fun and game and just an expensive hobby. And that's not going to last. You know, we're going to get disillusioned very, very quickly. So all of these things are going to have to get sorted. And we are going to sort of super confident that we will. I'm wondering to what degree people might be stockpiling chips and demand being pulled forward. I'm wondering to what degree people are experimenting versus starting to ramp on a steady, more predictable growth state of AI investment.

Are we on that steady growth state of the AI portion yet, or is that still getting filled out? Not in my view at all. I mean, there's a frenzy out there because everybody believes that the hardware is very, very scarce. And it becomes scarce the more people think that it is scarce because, as you said, they start stockpiling it. We are actually part of that equation as well. We will literally buy, you know, GPUs, you know, whether we can use them or not, because we think we will be using them, right? But we're speculative and we're ahead of the curve. So we absolutely have not settled into some semblance of stable demand. We're nowhere close to that at this point in time. Wow. Now, this doesn't necessarily mean we're going to end up with a big supply overhang in AI chips. NVIDIA's CEO said last night that they see demand continuing at least into 2024.

Maybe it stays strong enough that it chews through the current oversupply and then some, but it is a factor for investors to keep an eye on. We're going to get AI software announcements from Google in a few days, from ServiceNow in a couple weeks. It'll be fast ramps in those kinds of workloads that'll have to keep this story going if it does keep going. All right. Cue the QR code. Speaking of artificial intelligence, don't miss the latest installment of my On the Other Hand newsletter,

where I tackle whether or not AI is in a bubble. I argued it on Squawk Box this morning. Both sides, sign up now to get it in your inbox. There's a QR code right there on your screen. Or you can type in cnbc.com slash O-T-O-H. All right, now time for a CNBC News update with Bertha Coombs. Bertha? Well, on the one hand, John, and the other hand,

the Pentagon announced that the U.S. will start training Ukrainian pilots to fly F-16 fighter jets in October. Spokesperson said the training will begin in Arizona after the pilots receive English language training next month. Denmark, Norway and the Netherlands have all committed to donating F-16s to Ukraine, fulfilling a repeated request from President Volodymyr Zelensky. The Spanish Football Federation president announced that he plans to resign after FIFA opened an investigation into his unsolicited kiss with player Jenny Hermoso. He kissed her, Hermoso, on the lips while handing the team their medals after Spain beat England to win Women's World Cup. The kiss sparked outrage with Hermoso saying such acts should never go unpunished, leading FIFA to open a probe. Police officers in Florida are handling some serious monkey business.

Officials are warning residents to keep their distance from wild monkeys spotted around Orange City, just north of Orlando. Police departments said one of the monkeys was identified as a rhesus Mohawk monkey native to Asia, Florida fish and wildlife conservation commission warns that the species can be aggressive when people approach them, especially if they try to feed them. A little scary there, John. Indeed. Bertha Coombs. Thank you. After the break, forget about the monkeys. The bull gets a health check. Dr. Mike Santoli diagnoses what's going on with the longer term market rally. And if history can give us any clues about what comes next. We'll be right back.

Welcome back to Overtime. Time to check back in with Michael Santoli. Mike. Yeah, John, you know, in a couple of months, actually a little less than that, it's going to be one year since the stock market bottomed back in October. Of course, that was a bear market of sorts, 20 percent plus on the downside for the S&P 500. Well, what typically happens in the year following? Here it is from Luthor Group. The blue line here is the average path of previous bear markets not associated with an immediate recession. So this is a bunch of years in the 50s, 60s, 1987, 98, 2011, 20 percent-ish declines. What happens next?

We see we're right on target on the average path. In fact, this is from a couple weeks ago, so we're probably more like right there. Now, there's a lot of span of experiences within this average, including the best of these years, around 40 percent up. The worst was about a 10 percent. So no saying that this is going to be deterministic. But I really pointed out to suggest there's nothing odd about the fact that the S&P 500 was on pace for a 30 percent up year after we got one of those 20 percent lower resets without a recession coming along with it. Of course, we haven't called off the vigil for a potential recession. We still could get there. But if we do, I don't think last year's decline was the thing that was pricing it in. I mean, could one argue

that if anything is odd, it's that we spent so much time below that line of the average? I think if there's anything that's really odd, well, yes, first of all, yes, because it was a very unimpressive rebound. If it's a new bull market, it was not an overachieving one, that's for sure. Also not a very broad one. So you can see that sometimes when you haven't had a real flush, when you haven't had a recession and the Fed starts cutting rates and all that kind of reset of a cycle, sometimes the bull market is relatively modest relative to the past. So we'll see how it goes. I think the more surprising thing is that we're right on the average as opposed to deviating from it by more.

Love a good chart. Tell us a good story. Mike, thanks. Thanks, John. And when we come back, the Dean Evaluation tackles the question that's on many investors' minds. What is NVIDIA really worth? He will give us his analysis when Overtime returns. Coming up, a rundown of the biggest after-hours movers that should be on your radar. Plus, will tomorrow's speech from Fred Chair Powell move the needle for investors? We'll head out to Jackson Hole for a preview when Overtime comes right back. Well, after that monster beat yesterday in overtime,

Nvidia closed well off the highs, basically flat, barely avoiding a dip in the negative territory, up 47 cents on 471 bucks a share. But still, it's been a great run for the stock, which is up more than 220 percent, more than tripling this year. Numerous analysts upgrading their price targets today. But is the valuation out of control? Joining us now, Aswath Damodaran, NYU Stern School of Business Professor of Finance. We like to call him the Dean of Valuation. Aswath, what is NVIDIA worth? Now, my estimate, it's worth about $240 a share.

But, I mean, let's start with the good news. I mean, this is an amazing company. It's a company that's managed to find markets just ahead of growth and kind of dominate those markets. Gaming, crypto, AI. At this stage, you've got to view them as an opportunistic company, a company that manages to do this over and over again. It's not just lucky. That's the good news. The bad news is when you're pricing NVIDIA at $450, $500 per share, you're not just assuming that they will dominate the AI market, even if it's a big market. But there are other markets

out there that we don't even know about yet that NVIDIA will find a way to dominate. Could that happen? Yes. But I'm not going to pay up front a premium price on the assumption that they will find markets that aren't discovered and dominate them. At the same time, though, you're not selling all your NVIDIA stock, right? No. And I think that reflects the mixed feelings I have about the company. I mean, I was lucky enough to get in at the right price. It's made me more than enough money for me to view it as a great investment. But at the same time, there is enough of a tail on the distribution, a chance that they will pull off this, you know, with this exceptional drop that might make them

worth $600 or $700. I wouldn't buy them at today's price, but to the extent that you bought them way back at the right price, if you have them in your portfolio, I wouldn't argue with you if you said I'm going to let the stock run. So that's an important distinction, right? Because I've been bringing up earlier this week,

Apple, more than 10 years ago, when people were saying, hey, this doesn't pencil out. Here's how many iPods they would have to sell, how much they'd have to dominate the digital music market for them to be worth, and not just digital music, all music, for them to be worth this much. I mean, they didn't see the iPhone coming. NVIDIA is in a similarly unique position to become a game-changing tech player. And if you believe they could do that, then it's worth more than this, right? It's already a game-changing tech player. They don't have to wait to get there. A trillion

dollars is a special number. And they've become pretty close to a trillion-dollar company. I think the question is whether they can take the success they've had over the last decade, being in the right place at the right time, and continue to play it out on other markets in the future. There's a chance they can do it. And I think that's why I'm holding on to half of my holding. But I think also you've raised the ante. Now others are aware of the payoff for being in that right place at the right time. So the question is, can they keep off the AMDs, the Intels, and the other players who are going to try to come after that over the next decade because

the game's just starting okay what was the number you gave 210 a share was that what you said 240 240 240 okay that's i guess that's better so but even 240 a share that's like down almost 50 percent from here so that's my challenge i understand you say you wouldn't buy it here, but you seem to be saying even if it went down to 300 a share, people shouldn't buy it. Like, OK, you're good. You had it. You've had it for a long time. You're in the money. But what kinds of calculations can or should an investor who doesn't feel like they have enough NVIDIA use to justify buying it before it gets down to 240? Now, that's a good question. I think it really depends on how you see the AI craze playing out and how dominant you think NVIDIA will be in that space. The larger the potential AI market and the more likely it is that NVIDIA will dominate the market,

the higher the number becomes. 240 becomes 280, becomes 320. And I think that's a judgment you've got to make. But this is a stock that's had near death experiences. I mean, sometimes companies, investors look at companies like NVIDIA and say, I could never buy a stock like this. It's so richly priced. I mean, this stock was $30 six years ago. So and it's had near death experience of its drop 50, 60, 80 percent. Now, these are companies where the momentum shifts. You can very quickly see a route in the other direction. You've seen this on Tesla. And I think you could see this in NVIDIA as well. So if you haven't been lucky enough to add NVIDIA yet, I think that there will be a point

somewhere in the next year or two when fear is greatest. You will not feel comfortable buying NVIDIA at 150 because everybody's going to be fleeing. These same equity research analysts who put out buy recommendations with stock at 470 are quick to put out sell recommendations with stock at 150, which makes you wonder why bother with equity research in the first place. You will be buying in a moment of fear, but I think there will be moments with NVIDIA where it will become a good investment again. How different is it from Tesla? And I think it's interesting you talk about them in the same light. In their public personas, Jensen Huang and Elon Musk almost couldn't become, couldn't be more different, right?

One's a lot quieter. One's a lot more bombastic. I think the big difference is a lot of investors in Tesla are buying Tesla for the emotional dividends. It's not even financial dividends. They're emotionally so invested in the company that's almost impossible to move them from their position. NVIDIA is more of a financial investment. That's why I think it's more likely to see corrections happen quickly if there's a surprise on revenues or earnings. And right now, people are building an expectation of such amazing things happening at the company that you're setting

yourself up for disappointment, if not in the near future, at least in the far future. I'm guessing you don't know a lot of gamers, Aswath, if you say that they're not emotional about NVIDIA. I mean, there's some folks who've been ride or die with that company for a long time. But not as many as the Tesla is true emotional stock. I mean, it's a stock where, you know. Absolutely. Point taken. Oswalt and Motoren, appreciate it. The Dean evaluation. Up next, will Jerome Powell be able to thread the needle? We will preview what you should expect from his speech tomorrow in Jackson Hole when Overtime comes right back. Welcome back to Overtime. Let's look at a couple of after hours movers. Buy now, pay later company or firm jumping. Wow. Up more than 10% after topping estimates on revenue. The CEO saying in the shareholder letter, we exceeded our outlook across all key

metrics. Meanwhile, Marvell Technology moving the other way. That's despite its earnings, revenue and outlook all in line with the streets estimates. CEO Matt Murphy saying growth is being driven primarily by AI and cloud infrastructure. Demand from AI applications continues to strengthen, he says. And we're going to hear more from Matt Murphy right here on Overtime when he joins the show tomorrow. All right. Wall Street will be laser-focused tomorrow. Before that, on Jackson Hole, where Jay Powell is going to speak in the morning

at the Fed's annual Economic Policy Symposium. And Jackson Hole is where we find our senior economics reporter, Steve Leisman. Steve, what do you expect tomorrow? Hey, John, yeah, you know, a somewhat divided Fed gathers in the mountains this year. You've got one camp advocating for continued rate hikes, another for a wait-and-see approach. And the question is, where does Fed Chair Jay Powell land between the two? Philly Fed President Patrick Harker in a CNBC interview this morning, he put himself firmly in the wait-and-see camp, saying he doesn't see a need for more rate hikes this year, and

there could even be cuts next year. We see us staying steady throughout the rest of this year. Then we'll see how the data evolve. If we see inflation coming down quicker than we expect, again, this is what I'm hearing from the soft data I'm getting from my contacts, then we might cut sooner rather than later. But I think we have to let that play out. Sooner being the first half of the year? We'll see.

Harker expressed concern about the economy, saying his business context suggests some consumer slowing and some loosening of the job market. Now, Powell may adopt some of that outlook in his speech tomorrow, almost certainly suggesting that risks are more balanced than they were when the Fed met here last year in the mountains. Inflation has fallen sharply since then, but the unemployment rate hasn't budged a bit, and growth is running above trend quite a bit stronger this quarter, too. I'm going to listen closely to Powell about,

do you see the strong growth numbers as a problem, a reason for tighter policy, or if he's more concerned about the rise in rates? It's clear that the better inflation numbers, though, meaning it doesn't have to be as hawkish this year, could suggest risks, John, are more balanced. Steve, listening to the Fed chair reminds me of when the kids were little and we would like need to get something in their room and they were napping, try not to wake the baby. It's like he's trying not to wake the baby. What could you potentially say that would wake the baby, you think, in this market?

Well, you know, I love the analogy. I think the idea is he's going to tiptoe around higher rates. I don't think he wants the bond market to go much higher than it's been already. He might even welcome where it's done so far. That would be one aspect. I also think he wants to tiptoe around this idea that the Fed may be cutting sometime soon. So the analogy is right. He doesn't want to wake the sleeping baby on the cut side or even wake it so much on the hike side.

I think he wants everything to be quiet, wants the market and the expectations to nap, John, until he has to make a decision come probably November, but not necessarily in September. What about the credit availability question that months ago he laid out an argument that the pullback and availability of credit was going to act as an additional drag on the economy? Is he going to give an update, you think? Is that happening enough? Well, I think if he does update, it'll be a sign that he's more or less concerned about it. It was a huge concern, as you said, in the wake of Silicon Valley Bank. And then it kind of fell off the radar screen. Now we're hearing more and more talk about this, John, with interest rates on mortgages up near 8 percent,

with some of the other interest rates we're seeing in the market. The rates that business pay are now going up, and they're a problem right now. So we'll see how much concern he has for that. It may not have been like an event, but more of a slow bleed in terms of the impact on the economy. And I think that's what we might be seeing right now. All right. We'll see what kind of lullaby the Fed chair can sing. We know you're a musician, Steve, so you'll be a good critic of that. Steve Leisman, we appreciate that. We've got to continue to watch all this market action this week. It has been something that's going to do it for overtime. Fast Money starts right now.