Closing Bell - Closing Bell Overtime: Dow and S&P Close at Records 2/22/24

Episode Date: February 22, 2024

Both the Dow and S&P saw record closes today following Nvidia’s strong earnings report. CNBC’s Bob Pisani breaks down those big moves in the market. Plus, Jon Fortt caught up with the Nvidia CEO Jensen Huang about the company’s blockbuster quarter. Analyst Dan Dolev from Mizuho gives his instant reaction to Block’s earnings report. And, top technician Jonathan Krinsky is highlighting two parts of the market – outside of tech – that he thinks investors should be watching right now. 

A 2% day for the S&P. First time we've seen that type of move in a year. That's the scorecard on Wall Street. Record closes for the Dow and S&P after NVIDIA's strong earnings report right here on Overtime yesterday. The action, though, is just getting started, and we have more earnings coming up this hour. Welcome to Closing Bell Overtime. I'm Morgan Brennan with John Fort. And we are awaiting those key earnings from Block, Intuit, Booking Holdings, and more. We're going to hear from the CEO of Intuit before he speaks to analysts. Plus, I spoke with NVIDIA CEO Jensen Huang after the earnings call yesterday.

Got some answers on growth that he didn't share with analysts. We'll bring you the highlights of that conversation coming up. And Morgan, that was just such a big report in overtime yesterday. I think technology was the only sector in the red yesterday. And now, you know, today it closes up. Let me take a look here. Four and a third percent for the day. You know, NVIDIA leading on that count.

And right behind it, well, right ahead of it, Supermicro up 32 percent. So that happened back up near a thousand a share. But behind it, you've got CrowdStrike up six percent. It was trading down in sympathy with Palo Alto Networks and sort of that security trade, even though its earnings had been pretty good. CrowdStrike's earnings have been pretty good. And now you see it bouncing back today. Yeah. SMH, the semiconductor ETF, record high. NVIDIA, a record high. Every

sector in the S&P in the green except for utilities. It was risk on today. Let's bring Bob Pisani back in so we can talk about these records that we just hit again for both the S&P and the Dow. And Bob, the fact that the Nasdaq, we didn't get a new record close for the Nasdaq composite, but boy, are we inching closer. It doesn't. I think that we're going to do that, and I'm not at all concerned about it. Scott and I were just talking about this. The NVIDIA earnings was a transformative moment yesterday because it put the naysayers to rest.

I was just at the ETF conference two weeks ago, and the big talk was, we have to figure out a way to diversify out of the magnificent seven because if we don't the downturn the investors are going to kill us and blame us for being over concentrated there is a reason now and everyone sees why these stocks are getting such huge earnings growth huge cash flows and they are justifying their valuations at this point so i think this was a very transformative moment, and the stock market is saying that today. Look, we did have a good day in the market,

but 8 to 5 advancing to declining stocks is not overwhelming. It was chip stocks, as you mentioned, with the semiconductor ETF, as well as some big software companies that really pushed us over the top, and not just on the NASDAQ, but on the S&P 500. So I think we're in a transformative moment, and I still think, look at NVIDIA, 30 times forward earnings. That is not outlandish for a company that's putting up the cash flow and the earnings growth that NVIDIA is putting up. All right, Bob, stay with us for a moment. Intuit earnings are out. Speaking of big software companies, this market cap is up near the $200 billion mark. The initial move is down about,

you know, 3%, 4%. And I'll tell you why. The revenues came in just about in line, $3.39 billion versus that was about what was expected. EPS for fiscal Q2 came in better than expected at $2.63 versus $2.30 expected. The guide is where people might have some trouble. Intuit guiding to a Q3 EPS of $9.34, $0.34 and a half cents at the midpoint versus $9.69 expected. Revenue growth, the guide for revenue growth, 10% to 11% versus 9.7% expected. The full year revenue guide is affirmed. It is in line. EPS guide is $15.89 to $16.10. I did have a chance to speak with Sasan Goddard. He'll get more into this in just a bit. But here's what it is, Morgan, when it comes to earnings per share and costs. They're spending on marketing ahead of tax season and turbo tax the last couple quarters of the year.

They outperformed on EPS the first couple quarters, including this Q2 reported. Now they're going to spend that in the back half of the year, he's saying. Overall, he says he feels good about the business. We'll get more detail on that. Small business continuing to perform. Small businesses outperforming their unit, outperforming the overall U.S. economy because small businesses are seeing the need for software to be efficient in challenging operating circumstances. But these are the numbers we have. We'll have a little bit more detail on that from Sasan coming up. Yeah. And of course, that's a key takeaway, right? It sounds like company making investments that are affecting guidance rather than a reflection of macro economic picture and what that means for small businesses. Looking forward to

that. We've got booking holdings earnings out. Pippa Stevens has those numbers. Pippa. Hey, Morgan, is the top and bottom line beat for Booking Holdings, the company earning an adjusted $32 per share. That was ahead of the estimate of $29.86. Revenue at $4.78 billion. That was slightly ahead of estimates as well. Now, the company did initiate an $8.75 per share quarterly dividend. They also said that total bookings were $31.7 billion.

That was up 16% from the year-ago quarter. Did mention that their business in Israel was significantly impacted by the war. The stock down 3.5% today, although it did hit, right now I should say, although it did hit a record high in regular trading. Morgan? All right. Pippa Stevens, thank you. Shares are down more than 3%. Let's bring in Samir Samana of Wells Fargo Investment Institute. He joins us now. Bob Pisani is still with us. Samir, I want to get your thoughts on this torrid rally that we have seen in stocks really since the end of October. I mean, the S&P has gained more than 22% just since then. And yes, we've seen yields on Treasuries fall over that time period as well. But those have started to take back up

recently, too. And yet here we are at record highs for the S&P and the Dow. Yeah, I mean, that's a great point. But I think those yields that are taking back up will work with a little bit of a lag. And clearly they're going up at a lot slower pace than they came down. So I think that really is the key, though. I think those rates will filter higher as we talk more and more about, you know, whether rates should stay where they are, whether rates should be hiked as opposed to whether rates should be cut aggressively. And I think that's where the disappointment lies in the coming months. Bob, you touched on it before, and I want to get back to it. And that's the broadening out of this rally. We've been talking about it. We've been analyzing it. We've been chewing it over

with so many guests on our air. Today is one of those days where it is, again, Magnificent Seven and the tech names that are driving this rally. But we do have green on the screen for some of these other sectors and some of these other indexes like. Morgan, Home Depot, American Express, Visa that have been moving up regularly. So you're right. It's not just tech stocks. But I think we need to address and be a little bit more comfortable with the concentration risk. Everyone has been freaked out about the fact that 30 percent of the S&P 500 valuation is the Magnificent Seven. And if you throw in the top 10 stocks, add in Berkshire and Lilly and Broadcom, it's about 33 percent. That's historically on the high side, but it's happened many times. And people need to understand that this is what you

get when you have market cap weighted indexes. The winners get very heavily concentrated. This happened in the 1960s with the nifty 50 stocks, IBM and Polaroid and Xerox. There was over 30 percent concentration at that time. It happened in the late 90s when we had the dot com and the Internet explosion. There was 30 percent or so. So it's happened before. Obviously, if you get some quick correction like we had in 2022, those stocks that moved up the most are going to get hit. But with these kinds of earnings that we're seeing driven by AI, these valuations arguably are certainly justifiable. And so I think people need to get a little more comfortable with this.

Oh, we can't handle 30 percent of the S&P in just 10 stocks. All right, Bob, thank you. I know you got to run. Meanwhile, Live Nation earnings are out. Julia Borsten is with us with those. Julia. Hey, John. Live Nation reporting a massive revenue beat, $5.84 billion in revenue versus the $4.79 billion that was estimated. That beat of a billion dollars more than expected was fueled by a billion dollar beat in concert revenues, $4.9 billion versus the $3.8 billion estimated. That tops even the highest street estimates. But the stock is trading down after hours. The company does not report earnings per share, but its adjusted operating income was a bit light, $116.9 million versus the $118.7 million.

That was a street account estimate. And Concerts posted a bigger than expected operating loss of 184 million versus the 167 million that was estimated. And that may be what is weighing on shares right now because the company did share a strong outlook with ticket sales digits and that they have a growing show pipeline with confirmed shows in large venues of double digits with that growth led by arenas and amphitheaters. the next several years but that stock down over four and a half percent we will be talking about this with live nation uh ceo michael rapinoe that's coming up tomorrow in the 1 p.m hour okay julia so ahead of this and forgive me this is an esoteric question so i don't expect you to know the answer to this but with the ticket prices as high as they are and i know not everybody is taylor swift how are they not making money? Is it payroll? Is it security that they have to pay for? Are venues more expensive than they used to be? I do not understand how you can be pulling in that much revenue above expectations and miss on profit. Well, look, there are various

operating costs here that it seems like are on the rise, and that certainly is putting pressure on the bottom line. Now it looks like the stock is down just half a percent in after hours so it seems like the district may be digesting uh some of that big top line beat but we will dig into all of this with michael rapino i'm sure he'll be able to lay it out for us but yes ticket prices are up the attendance is up the numbers are through the roof last year was a record year for live nation so the question is why was that operating loss uh larger than? We'll dig into that tomorrow. That's why we got to watch the interview. Julia, thank you. Samir Samana, back to you on this one. I know that you're saying that equities might be a bit stretched, but after a day like we had,

you don't want investors trying to time the market. So what's the strategy that you go into with this market different from what you might have had in the beginning of the year, end of 2023, that gets you to the balance that you're talking about? Sure. So I think you'll get opportunities like you did in October of last year, like you did at the very start of this year. I think tech was, you know, oversold for about a week or two there. And you mentioned yesterday it was the worst performer on the day. So I think you're going to have to take those opportunities, those pullbacks, to try and position some of these long-term secular growers. But we also like areas like

industrials, like energy, like materials, like health care, the ones that have maybe kind of been left behind because it has been maybe a little too easy. And some of these, you know, a few kind of handful of names with acronyms I shall not name. So I think once you kind of get away from these trades and they do kind of exhaust themselves, we think some of those other areas will kind of pick up the baton. I think the other thing, too, is as you get closer to the elections, there'll be a source of volatility. So I think you'll get better opportunities, you know, at the market level, probably, you know, as you get closer to the election to kind of pick up equities more broadly. How much of this hinges on a soft landing scenario?

And I asked that on a day where initial and I realize we're coming off of a holiday weekend, but initial jobless claims came in below estimates, continuing claims also light. Flash PMIs maybe a little more mixed, but manufacturing showing some signs of stabilization, existing home sales showing some green shoots, too. I mean, how if we were to get a no-landing scenario and thus perhaps the Fed holding higher for longer, does that change the thesis here? I think that's exactly it, right? So if all those things happen economically, I think you see inflation probably living closer to 3 percent than 2 percent, which is what the Fed says they want.

And then I think you see possibly no cuts as opposed to even the 2 to 3 that the Fed says they want. And then I think you see possibly no cuts as opposed to even the two to three that the Fed currently sees. So I think that's the part of the Goldilocks scenario that at least right now seems most dubious to us right now. OK, Samir Samana, thanks for joining us. Thank you. Square earnings are out. Kate Rooney has the numbers. Hi, Kate. Hey, Morgan. Yes, it was a beat here on the top line for Block, formerly Square. We're not going to compare the earnings number, but there does appear to be a pretty big impairment charge that's weighing on that EPS number. Revenue, though, was stronger than expected, $5.77 billion that was boosted by Bitcoin revenue, which came in at $2.5 billion. Bitcoin gross profit, meanwhile, which is how the company measures it, was up 90

percent. Adjusted EPS, 46 cents. I did speak to Block C, Amrita Hoosier. She told me this was due to a write-down on their investment in Tidal. That is Jay-Z's music streaming company that Square acquired back in 2021. It was a $132 million impairment charge. Amrita Hoosier is saying, quote, it reflects our latest thinking about the landscape in the broader streaming industry, which informs the current value of assets. She does say that does not change the long-term vision for what they think they can build with title, but a quarterly impairment there. Adjusted EBITDA guidance, stronger than expected. Square is raising its full-year profit

guidance. CFO telling me that was thanks to a lot of cost-cutting that we've seen. As she put it, as we head into next year, a lot of the discipline around operating expenses will continue, which Wall Street wants to see. Also, a quote in here from the founder and CEO, Jack Dorsey, about focusing more on U.S. markets and monetizing existing customers when it comes to Cash App. So that does mark a little bit of a strategic change. Strong quarter for Cash App, $3.9 billion in revenue there, up 31 percent year over year. That's really been a growth engine for them.

Subscription and service revenue, services-based revenue up 36 percent, and then strong growth in buy now, pay later. Guys, you can see shares up more than 13 percent here, likely due to some of that cost cutting and optimization and the higher guidance there. Back over to you. Yeah, quite a move getting back toward those highs, Kate. Thanks. Carvana earnings are out.

Phil LeBeau has those numbers. Phil? John, this is a miss on the top and the bottom line with the company losing $1 per share in the fourth quarter. The estimate was for a loss of 89 cents a share, revenue coming in lighter than expected at $2.42 billion, the street expecting revenue of $2.52 billion. So you might be saying to yourself, wait a second, why is the stock up more than 12% if they missed on the top of the bottom line? The guidance, while it's not super specific here, it is relatively optimistic, both in terms of the first quarter and full year. In the first quarter, they expect the units sold to be up slightly year over year compared to the first quarter of last

year. And for the full year, they do expect to grow the number of retail units that are sold, as well as increase the adjusted earnings this year. But again, to grow the number of retail units that are sold as well as increase the adjusted earnings this year. But again, not specific in terms of how much. So again, Carvana, despite missing on the top and the bottom line, up now almost 12 percent. Guys, back to you. All right, Phil, thanks. Up next, we're breaking down Intuit's results. That stock is slightly lower in overtime. Let's see. It's down just under 2%. I caught up with the CEO, Sasan Gidarsi, ahead of the earnings call. I'm going to bring you some highlights after the break, plus highlights from my one-on-one with NVIDIA CEO, Jensen Huang,

following that company's blockbuster earnings report. Overtime's back at 2. Welcome back. Intuit stock trading down. You can see about 2%, but off the lows after trading up 3% today. I spoke with Intuit CEO Sasan Godarzi a few minutes ago about these results and specifically asked about the EPS guy that's light of consensus. Q1 and Q2, we beat quite handily in our operating income. And part of that is platform leverage. The other part of that is some just puts and takes on expenses, many of which we're putting to use this quarter.

So net-net, I think, strong guidance for the quarter. And we've reiterated the year of 11 to 12 percent. And we're looking forward to delivering for our customers. So should I read marketing spend into that? Because, I mean, TurboTax and making sure with all the uncertainties that people are funneled toward that product, which is having a very important quarter, is that some of where that spend is going? That is for sure an element of it. Because at the end of the day, we manage margins and expenses at the company level. We're always making puts and takes to make sure that we're not only investing for today, but investing for tomorrow. And again, because Q3 is such a big quarter for us, we ensure that we have the program dollars and

the marketing dollars for the quarter, along with some other puts and takes. So that's the way you should think about it. But the net-net is, we feel very good about the year. We feel very good about the quarter and just putting our investments to use. I also asked about small businesses, such a huge part of Intuit's customer base. Sasan told me post-pandemic, they're turning more to AI-enabled software. What you see in our numbers is a reflection of a wave of digitization by small businesses, not the strength of the economy. In fact, when I spend time with small businesses, the biggest thing that they are focused on right now is, how do I ensure I'm organized? How do I get paid faster? How do I

get access to capital? How do I make sure I'm more effective with my marketing campaigns to retain customers and get more customers? And a lot of those capabilities is what we provide on our platform. It's all in one place. And based on all the data that I know about you and our AI capabilities, we're able to automate a lot of that so you can focus on the insights and recommendations versus doing the work. You can catch the full interview ahead of the call with Sasan Godarzi on our overtime LinkedIn page. QR code right there. You can get there and you can follow us for even more exclusive content. And there is a lot of it.

All right. Looking forward to downloading the rest of that then. News of Reddit's IPO breaking in the last hour. Julia Borson is here with the details. Julia. Morgan Reddit filing its S1 to list on the New York Stock Exchange under the ticker RDDT, revealing its finances, $804 million in annual sales for 2023. That's up 20% from the $667 million it brought in the previous year. The company reporting a net loss of $91 million last year compared to a net loss of $159 million the year prior. Now, the company's average revenue per user was $3.42. That was a 2% year-over-year decline from $3.49 the prior year. The company is saying it has 73 million daily

active unique users, 267.5 million weekly actives, and that it's reserved approximately 1.3 million shares of its Class A common stock to fund community-related programs, outlining its current ad business, saying users see Reddit as a trustworthy place to inform purchase decisions. Also saying they have an emerging business in data licensing and a future business in the user economy, which will include e-commerce. Now, among Reddit's risk factors, the company warns that given its high brand recognition and its own subreddit, WallStreetBets, which drove a lot of volatility in GameStop, that WallStreetBets and which drove a lot of volatility in GameStop, that GameStop, that the WallStreetBets and other retail investors could cause, quote,

extreme volatility in Reddit stock for reasons unrelated to its underlying business. John, that's kind of a meta risk factor. Yeah, indeed. We'll see if they have diamond hands over there when it comes to the stock. Now we're getting some news on Capital One and Discover. Kate Rooney has that. Kate. Hey, John. So Capital One's proposed deal for Discover Financial includes a $1.38 billion breakup fee, but that is only if Discover decides to go with another buyer. There is no breakup fee if U.S. regulators kill the deal.

This is according to sources familiar with the matter. Telling our CNBC's Hugh Sun over on digital. Discover cannot actively solicit alternative offers, according to these sources, but it can entertain proposals from other bidders before shareholders vote on that transaction. In the unlikely event that Discover does decide to go with another offer, it would essentially owe Capital One $1.4 billion, roughly. That does align with typical breakup fees in bank deals between 3% and 4% of a total transaction value, according to some of those sources. There's a lot of interest in whether bank regulators

are going to let this deal happen. They have blocked other deals, of course, on antitrust grounds. But again, no breakup fee if the deal is killed by regulators. You can check out the full story on CNBC.com for more reporting by our Hugh's son. Back over to you. Yeah, which I think is a very telling stipulation. And this is going to be a real litmus test for the regulatory environment in a time where M&A is beginning to perk back up again. Kate Rooney, thank you.

Up next, block shares higher in overtime after reporting just a few moments ago. We're going to hear from an analyst, Dan Dolov, with his first take on the quarter and what he's forecasting for the rest of the fintech space this year. That's coming up after the break. Overtime, we'll be right back. Welcome back. Shares of Block are surging after posting an earnings beat. Joining us now on set to discuss Dan Dolove from Mizuho. I think this is another one of your correct calls, yes? Yes, thank you. All right.

I just want to give you some props there. What was the biggest upside surprise here in this? Last time we checked, I think it was up like 13%. I don't know if that's holding. I think with the market, it's a great quarter. I know there's been some misses and some beats, but what I want to focus on is a couple of things. The monetization rate, sequentially up five basis points, that's huge. So it's how much they can charge people on the app as a percent of volumes. It's at 148 versus 143 before. Inflows are really strong sequentially up. So people are flowing more money into the Cash App and they're guiding EBITDA higher than the high number that

they guided before. So kind of checking all the marks here, it looks really good. About 10 years ago, Venmo was the thing that young people were using for digital money. Cash App has sort of taken over. Why is Cash App a better model than Venmo? Because I know you don't like PayPal, which owns Venmo, and the idea is that there's very little business structure around Venmo. Why is Cash App different? I think there's more focus, and it's more viral, and it's kind of sexier, right? So Jack Dorsey turned it into a really sexy product.

There's music that bears the Cash App name, et cetera. So people like it, and it sort of naturally grows. You don't need to advertise it, and that's what makes it so great. I mean, the company is raising full-year profit guidance. We know there's been a lot of cost cutting at this company, and it sounds like, based on the CFO comments that were given to Kate Rooney, that financial discipline is set to continue. How much can this company, I guess, continue to pull these levers to realize greater profitability in this environment? There's a ton more. So if you go back to their 2017 analyst day, they could do like 40, 45, 50 percent adjusted EBITDA margins. So way higher than what they're forecasting right now. So the machine has the opportunity to generate really, really high margins once you get the scale. Bitcoin. We're going to talk about it. Jack Dorsey, sort of one of the fathers or

proselytizers of the cryptocurrency. It's in the results again here. How to think about that where this company is concerned, especially as things like profitability start to take on greater significance? Yeah, it's a great story, but it doesn't. It used to be very correlated with Bitcoin and it sort of lost that correlation if we go back to like 2018, 2019. So for anyone that's kind of bullish on Coinbase because of the Bitcoin correlation, you know, look at what happened to Square. So it's a great story, but it doesn't drive the story anymore. So what drives it is profitability, inflows, all the products in the Cash app, as you mentioned. Those are the things that make Square so great. What about afterpay? I'm reading some places that

downloads have slowed down faster than other buy now, pay later offerings. So is there trouble there in their being able to build a customer base and the right kind of volume and data knowledge that they'll need for that to be successful? Yeah, undoubtedly. It's, I would say, a weaker link here in this whole story. It's not the best part of the story, and I still have to dig through the numbers. But you're seeing companies like Affirm, which I like a lot. The execution gap has gotten really wide. But, you know, there's, you know, it's okay to be not the number one in a great secular story.

All right, Dan Doliff, thanks for joining us. Thank you. It's time now for a CNBC News Update with Bertha Coombs. Bertha. Morgan, President Joe Biden had an unscheduled meeting with Alexei Navalny's widow and daughter earlier this afternoon in California. The White House said Biden told Navalny's widow that his administration would announce new sanctions against Russia tomorrow in response to her husband's death. AT&T says service has been restored for all customers affected by its earlier outage. Customers were unable to send texts, make calls, or even contact emergency services for much of the day. The FBI, Homeland Security, and the FCC are investigating, but the company says the cause was not immediately clear. And former talk show host Wendy Williams has been diagnosed with the same type of dementia

as actor Bruce Willis, according to a statement from Williams' caretakers. Williams has been transparent about her health problems, ending her show back in 2022 after being diagnosed with Graves' disease and lymphoedema. Back to you. All right. Bertha Coombs, thank you. Up next, NVIDIA shares are shooting higher today. CEO Jensen Huang giving us an inside look at last night's report. What he had to say about the quarter, the future of the company's growth,

and so much more with this tipping point in generative AI. Can't wait to hear it. On the other side of this break, John, we'll be right back. tipping point in generative AI. I can't wait to hear it on the other side of this break, John. We'll be right back. Welcome back. NVIDIA was the story of the regular session today after the earnings report was the story of overtime yesterday. After the analyst call, I spent some time on the phone with CEO Jensen Huang talking about whether growth can continue from here.

I asked how AI apps like OpenAI's Sora, which generates video from text prompts, will drive demand. The ability to go from words and scenarios to describe video that is generated, these models all require enormous and more enormous infrastructure to train because you're training not from words but you're training by watching video literally you're gonna see a lot more modalities of these you're gonna see text with images with sound with video all being trained at the same time and so today notice most of the most of the videos are silent but in the future,

the words and the video will be registered perfectly. And not only will you generate video, you'll generate the associated and appropriate sounds that go along with it and vice versa. I also asked him about this idea out there that the AI marketplace is about to shift from training AI models to using them, what's referred to in the industry as inferencing. Some competitors have suggested that when that happens, NVIDIA will lose some share. Jensen said, not necessarily. The goal of inference is application reach. It's no different than the goal of writing an application for a mobile device is application reach. You prefer a phone with the largest install base. It is fundamentally

the reason why Apple is so successful. In our case, inference, anybody who's developing an application to run inference is going to prefer NVIDIA first. And the reason for that is because the CUDA install base is so large. It is the only acceleration platform that has a giant install base. It is in every single cloud. It is growing incredibly fast and it's available on-prem or in the cloud. It's available all the way out to the edge for robotic systems. And so this architecture being so pervasive and because we have the discipline of protecting it and maintaining it for 30 years, this architecture is now literally everywhere. And if you are somebody who is developing an application for inference, targeting NVIDIA

gives you the largest possible reach. And finally, software. I mentioned this on Overtime yesterday that while it's natural to think of NVIDIA as a chip company, the moat that protects its ecosystem is software. I asked Jensen about NVIDIA AI Enterprise, which is a services business at about a billion dollar annual run rate, where NVIDIA is helping customers keep their AI software optimized for NVIDIA's platforms. Similar to Apple's App Store-driven services business that grows with the iPhone and iPad install base, he says he sees big potential. For most of the enterprises and enterprise software companies, they simply don't have the large and deep expertise in accelerated computing at this point. And so we'll do it for everybody. We'll optimize it for everybody. We'll create these stacks for everybody

and with everybody. And we'll make it run in every single cloud for everybody. And the way that we monetize it is through this engine, this NVIDIA AI Enterprise engine, which is essentially an operating system for NVIDIA's AIs and NVIDIA's enterprise and acceleration algorithms. And you pay for it per GPU per year, just like an operating system, and you can run everything that NVIDIA creates and enables. And so as we grow into enterprises, we grow into enterprise software, as we grow out to the edge, this is going to be a very, very significant opportunity for us. And so Morgan, between Sora and apps like that, inference and services, you can build a case, at least Jensen did, for continued growth. Yeah, he certainly makes the

case right there in his interview with you. Just the fact that I've seen so many Wall Street and investor notes today talking about AI inference, I think kind of tells the story, to your point. I mean, that's not a word that was being thrown around by investors in a bigger, broader way even 24 hours ago. I'm curious what he had to say about some of the new product launches that are coming, like the new AI chip B100, which I realize maybe we get more on next month at their special event, and about demand still outpacing supply and the fact that it's not even just companies, but it's nations as well that are looking for these chips. He did talk quite a bit about that on the call. He didn't get into the product stuff that, as you mentioned, will come at GTC.

I really wanted to get to that growth story issue because that's the question so many people have had. It's like once you're beating at this level over time, once people have the chips, well, then how do you grow? Sure, new chips, but what else? And I think that's when you get into the inference question and into this services business. My question continuing from here, and it's not one that can be answered, is how fast does that grow off of the installed base? Because NVIDIA is going to be charging per GPU per year, right? Once you start getting a lot of GPUs out there, that number could grow substantially. Could. Is AMD or Intel building out a similar type of software services business?

They are. The question is, how durable is NVIDIA's moat going to be? Because it got such an early start and because Jensen had this vision for what he wanted to be so early on. It's another thing, if you're playing catch up, right, and you have your software idea, that's great. Can their ideas be great enough and different enough from NVIDIA that it fits into the workflow of these companies that are already getting started on CUDA? Time will tell. Meantime, this was a tide, a rising tide that lifted all boats, at least for the semiconductor stocks today. NVIDIA's halo effect took the whole market higher, leading to a Dow and an S&P record close. Joining us now, Interactive Brokers Chief Strategist

Steve Sosnick. Steve, last week you were on our show. You warned viewers of the risk that NVIDIA's earnings could derail the rally because the expectations were so high in the market coming into these results yesterday. What do you say now? They blew everything out. This is actually quite the inverse, right? Because the numbers were so good, it drove the market higher. So this was a matter of risk management. We actually saw this call when I spoke to you last week. No one was talking about it. By yesterday, everyone was talking about the possibility that this could upset the apple cart for the entire market and as a matter of fact we saw nvidia fall 10 from the open on friday to the to sort of just before the close yesterday when it had a little bit of a rally so my feeling here is it's always

you need to always stress test your models you always need to to manage your risks and when you have insurance you don't want your insurance to pay off. You actually, you know, you have fire insurance. You're not upset that your fire insurance premium was wasted. And so this is why I think it's important. It verified the premise that NVIDIA is all important to the market. Fortunately, the numbers from NVIDIA were so good, it brought the whole market up in its wake rather than down. Is that a dynamic that you expect to continue based on trading activity you're seeing on the platform right now and all of your kind of metrics that you watch?

With NVIDIA now hitting a record high today, is this a dynamic where as NVIDIA goes, so goes the market maybe even more greatly than 24 hours ago? Absolutely. You know, it's a little tough to garner because I haven't seen at the end of the day numbers, you know, from our shop. But just these are these are the type of things that this is all everybody's talking about now. And it's brought, you know, brought up AMD in its wake. Among the most actively traded stocks are not only NVIDIA, which is, you know, sort of surpassed Tesla at our shop. But also, we see people trading AMD. We see people trading SMCI. All these stocks are moving along with Nvidia. It's a big halo effect. It is

a lot of concentration. Bob Pisani mentioned it earlier that we've seen this before. Unfortunately, it works until sometimes these things unravel when they end. But we're not at that point, certainly right now, because this verified the thesis behind NVIDIA and the AI enthusiasm that we're seeing. How, for you, does the Palo Alto Network's move fit in? It also brought down Sentinel-1, CrowdStrike, Zscaler. CrowdStrike and Zscaler both up better than five and a half percent today, presumably helping to get lifted by NVIDIA. So does it say something about other stocks' presence and influence over the market versus NVIDIA? Absolutely, John. I mean,

I think what happened was, you know, the Palo Alto story was in many ways bad for NVIDIA? Absolutely, John. I mean, I think what happened was, you know, the Palo Alto story was in many ways bad for NVIDIA. One of the reasons that stock fell a couple, you know, over the last, earlier this week, you know, Tuesday and Wednesday. And I think that now, you know, NVIDIA sort of put this halo over basically all of tech today, but certainly anything that even could be remotely associated with AI. And so, you know, Palo Alto certainly didn't come anywhere close to getting back what it lost yesterday. But you can make a case that CrowdStrike might be on its own, or certainly AMD, you know, is brought up by NVIDIA, even though it's a direct competitor. So, because Jensen Wang's story is

about the market growing and growing in different ways. And of course, you would need cybersecurity if you're going to start to deal with AI in a comprehensive way. Absolutely. Well, Steve, thank you. Thank you so much. Speaking of NVIDIA and Palo Alto, the overall growth trade, you can check out QR code there. This week's On the Other Hand newsletter, where I argue both sides of whether the growth stock narrative is collapsing, Palo Alto side or not, on the NVIDIA side. Again, there's the QR code, or you can type in cnbc.com slash O-T-O-H, subscribe there. You can read both arguments just like the captions from Jensen's interview last night.

Well, up next. Searching for opportunities. Star technician Jonathan Krinsky is breaking down the charts, highlighting two under-the-radar parts of the market he thinks investors need to be watching. Over time. We'll be right back. Welcome back. The countdown is on for intuitive machines, Odysseus Lander, as it orbits the moon and prepares to touch down near the South Pole successfully what's called a soft landing at 624 Eastern tonight. If it pulls off this feat, Odie, as it's called, will become the first commercial spacecraft to ever land on the moon and the first from the U.S. in five decades since Apollo 17 in 1972. Stakes are high. Success rate

to soft land, it's only about 50 percent. On board, six NASA payloads and six private ones, including insulation material from Columbia Sportswear. The plan conducts tests for seven days before lunar night sets in and the spacecraft is put to sleep. Mission cost, $118 million. That's actually just a fraction of what a similar mission would have cost decades prior. Shares of Intuitive Machines, as you can see right there, are up about 13.5% here in overtime after falling today. They've more than doubled since the launch just a week ago. Keep in mind, though, stock is still drastically off its highs from a year ago after it went public via SPAC. But it's trading right now just under that SPAC price when it did go public.

I spoke with the CEO of Intuitive Machines before the launch last week. And you can scan the QR code on the screen right now and sign up for my podcast, Manifest Space. You can catch that entire interview, plus a new one that is out today with the director of space commerce that's focused on space regulation. So going to be watching that tonight, John, and covering it on last call that landing. Looking forward to it. Now I'm thinking about good night moon because of Lunar Night and going to sleep. Looking beyond now, big tech, while most people have been focused on the mega caps, top technician Jonathan Krinsky is flagging two sectors where he sees opportunity right now,

and he's going to make his case next on Overtime. Welcome back. Record closes for both the Dow and the S&P today. The Nasdaq moving closer to one, as Nvidia reported much stronger than expected earnings results yesterday. Joining us now to discuss the rally and share where he is finding out opportunity outside of the mega caps is Jonathan Krinsky, chief market technician at BTIG. Jonathan, it's great to have you on the show. What do you like better than the Magnificent Seven and the MegaCap tech names right now,

given the fact that they are continuing to power so much of this rally? Yeah, I mean, it's hard to take your eye off that shiny object, right? But, you know, two areas that we think, and they're very small sectors in the S&P, so not a big weighting, but that we think offer more timely opportunities. The first was materials. I think a lot of people, when they think of resources, they go immediately to energy, but materials, the XLB, it would be the sector ETF. It's been in a very wide trading range, just starting to break out, actually hit a new high

today. So you have kind of this 18-month trading range that's just starting to poke its head out above that. That's the type of setup that can be early momentum. And we think that's an opportunity. You look at some of the chemical names like Dow and LYB, the chemical index really started to break out in the last couple of days. So we think that's a, you know, a nice attractive opportunity. You also have the dollar rally starting to fade a little bit and, you know, a moderating dollar should be a tailwind for materials as well. The second sector are the REITs. And they did very well off the October bottom when the market was thinking rate cuts were being pulled forward imminently. They've since cooled this year. They've kind of consolidated those gains as rate cuts have been pushed out. But I think it's notable. They've been actually holding in okay on a sector basis, despite the latest push

up higher on 10-year yields. So we think that's a slight bullish tell. And as we get, you know, closer to the spring and those potential rate cuts, I think, you know, REITs will kind of reassert themselves and provide some opportunity. And, you know, ultimately, these are just much more timely sectors than parts of technology, which have kind of just been straight up into the right here. Yeah. I mean, how much, though, when you talk about materials or REITs, for that matter, how much of this hinges on an economic environment that remains favorable, whether it's domestic or global? Yeah, I mean, I think that's part of the reason why generally there's been this dispersion,

you know, small caps in general have not really, the market hasn't trusted them to break out because there's still kind of this, you know, what happens if the economy rolls over. And so, you know, I think as we get closer to those potential rate cuts, if they're cutting rates because they can and not because they have to, that's probably a good economic backdrop. And that's where I think we'll get the acceleration. But again, you're seeing investors start to, you know, especially the materials are, like I said, they broke out today a bit. So I think money is starting to notice that. But, you know, it's something you have to watch is that economic backdrop for sure.

Jonathan, often in the past, the companies that were big in the prior era are ill positioned for whatever is driving the next era of innovation. But in this case, as we look at AI and some of the related things, some of these big names, NVIDIA, of course, we've been talking a lot about, Google, Apple, Amazon, they seem to be positioned fine. So maybe there's a reason why these tech names and these large names are doing better, and it's dangerous to get too far away from them. What's your argument against that? Yeah, look, I mean, they've continued to do nothing wrong. And if you're a pure trend or momentum trader or investor, whether you're talking technicals or fundamentals, the momentum is certainly there, and it hasn't broken yet.

I think what concerns us a bit and gives us a little bit of pause, if you look at something like the S&P 500 Semiconductor Index, for instance, that's now up 26% on the year. We're not even through February. And that's on the heels of last year's 97% gain. So that two-year cumulative gain, we're talking about 123%. The only other time in history we've seen anything close to that was 98, 99, when you had a 130% gain over two years. So, you know, we're hitting some historic milestones. As you said, there's, you know, there is some fundamental support for that. But I think, you know, some of these positions are just getting a little stretched.

And then the other thing, if you look at semis relative to the S&P, that ratio, when it peaked in March of 2000, it just now is getting back to that all-time high peak. So on a relative basis, you know, it's come a long way. You know, even if it's not going to do what it did in 2000, I think just some pause consolidation is healthy and that, you know, hopefully could allow some of those other sectors to kind of reassert themselves. Jonathan, the fact that this is typically seasonally, the second half of February, one of the weakest times of the year, and that's not how it's playing out as we do talk about record highs for the major averages. Is there a possibility that that starts to roll in here? Are we bucking a trend? Yeah, I mean, the seasonal pattern has worked

very nicely over the last 12 to 16 months. You go back to last March, you had kind of a March washout. Then you had the rally into the summer, fall sell-off, rally into the end of the year. And so we started off this back half of February earlier this week, and it was a little weak. And then obviously, NVIDIA pushed us to new highs. So I don't think that that means we're just going to be all clear into the end of the month. But certainly, it could be a bit choppy. But it's also not the bad down 3%, 4%, 5% back half of February that we've seen in years past at this point. So I still think it's a little choppy. But certainly, AI is bucking the trend here. It is indeed. Jonathan Krinsky, thank you.

Thank you. Now let's take a look at some overtime movers. Intuit shares are in the red, but well after their overtime lows. You can see it there, down 1.3%. That conference call underway. The company beat on revenue. Guidance was disappointing. Booking holdings also under pressure. That conference call also going on right now. CEO Glenn Fogle saying their business associated with Israel was significantly impacted by the war there.

And Morgan, it's been a roller coaster week. And I mean, but really this time. Right. Especially that Palo Alto to NVIDIA dynamic after all of the macro data that we've seen. Yeah, we did. We saw a lot of de-risking in the market ahead of the NVIDIA report. Right. We certainly covered it. We talked about it with a number of guests. And then perhaps it, as Steve Sosnick just pointed out, sort of left us more spring loaded for a much better than expected result, which we got in NVIDIA after the bell yesterday. Hence the stock shooting higher today. Yeah, and it leaves a lot of people wondering, what do you do? But at least on a stock-by-stock basis, looking at those fundamentals,

you can see where the market overall is going, just at that micro level. That's what we do here on Overtime. Well, we're going to keep talking about chips, because tomorrow we have Commerce Secretary Gina Raimondo joining us here on Overtime, too. That's exclusive. Commerce Secretary Gina Raimondo joining us here on Overtime 2. That's exclusive. It's going to do it for us here at Overtime. Fast Money starts now.