Closing Bell - Closing Bell Overtime: Micron, Chips Mania Rolls On 5/26/26

Episode Date: May 26, 2026

Micron powered tech higher and the Nasdaq to a record close as investors continue to pile into the stock. Melius Research’s Ben Reitzes breaks down the market action in the chips sector and his latest move upping the price target on both Apple and Dell. Our Annika Kim Constantino breaks down Eli Lilly’s three new acquisitions then our Seema Mody on the speculation SpaceX and Tesla could merge into a single public company. DataTrek’s Nick Colas on how the public markets are preparing for SpaceX’s mega-IPO. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The bell is bringing in end to the trading day at the NYSC. Goldman Sachs ringing the bell in at the NASDAQ, Isabella Bank, doing the honors here. Welcome to closing bell overtime. We're locked in studio be at the NASDAQ market site. I'm Melissa Lee, along with Mike Santoli. Sox mostly higher the doubt finishing in the red, but the broader indices is all hitting record highs.

NASAC powered by chips and memory again and the Russell 2000 of 1.5%. Those record highs in tech driven, as we say, by the chip and memory space, we will look at whether you should stick with what's working or look for opportunity outside of tech. I would say, Mel, there was some strength outside of tech, but just not enough to really matter on the index level. It just seems like you go up 20% from Micron.

It hits a trillion-dollar market cap. Drags a lot of the other names like A&D along the way, and it sort of consumes a lot of the oxygen. The other piece of it is, of course, these other kind of hot pieces of the tape like Space. The Space ETS are 40% month to date. So you have a lot of this kind of, percolating action at the same time, the overall market's figuring out what it means that oils down a little bit and treasuries are off a bit and we have mixed messages on Iran.

But still, I would have thought that the pressure release on yields was just enough, along with oil prices being where they are, which is levels we haven't seen for over a month, would have been enough to put a little bit of a bit under retail. Yeah. Particularly Walmart, which really got dragged through the mud after its earnings release. Didn't have a bit at all today. And I thought that was sort of very interesting. maybe telltale sign about the concern still being there for discretionary. It is interesting. Costco is also weak.

Now, of course, Walmart Costco also in that kind of defensive staples kind of quality basket. And, you know, Visa was down. So I do think there was a sort of a kind of flip side to the momentum trade, which is anti-m momentum. And that's kind of big, boring, quality stuff that nobody wants at the moment. Well, as we mentioned, another record-setting day for the markets, AI momentum names continuing to lead the way. Christina Partonelis got more on this. Christina. Well, today's strength was driven, of course, you guys mentioned it, easing geopolitical tensions, with markets increasingly pricing in a deal getting done, a resumption of traffic through the Strait of Hormuz,

and continued momentum in the AI trade. You sell that with oil. WTI fell to its lowest level on about a month, dragging down the energy sector, the worst performing sector on the S&P 500, led by Devin and Chevron. Consumer Staples, you guys talked about it, lagged. Kroger, Philip Morris, under pressure, you could say maybe anti-m momentum, but also on concerns about more. margin compression and weakening pricing power.

Keep in mind just last week, Kroger said that it plans to lower prices, so that's just weighing heavily on the space. But AI-linked energy names told a different story. Quantum services, ACHLO, comfort systems, all closing higher. The AI momentum trade, though, was clear as in semiconductors. Marvell on semi-AMD, Texas Instruments, all hitting 52-week highs today. Memory leading the charge. Micron surged after UBS tripled its price target, citing more stable, long-term pricing.

also briefly pushed into the elite trillion-dollar market cap club. Marking it's actually best days since 2011. One Ligert, though. Invita, underperforming the broader semi-group just over the last five business days with the post-earnings, sell the news dynamic, still weighing on shares. Not that much, but it's red compared to the rest. Yeah, for sure. Micron trading, $65 billion worth of shares today, almost twice what Nvidia did.

So that's where all the dollars are being sucked in. Christina. as you just mentioned, Chips, the big movers in the market again today. Micron, now the 11th largest company in the S&P 500 on pace for its best month since 1987. So what's driving this and how long can it keep going? Ben Wright's head of tech research at Mellius joins us now. Ben, let's first hit this area. You've been kind of ahead of the curve on this in terms of feeling as if this is a different kind of cycle, obviously a structural change. Now the market's getting it, right? The market is extrapolating a lot of this demand strength down the, down the line. You know, is it still pulling forward a lot of this good stuff? We can't still talk about single-digit PEs anymore. Yeah, but you can talk about high single-digit

peas for some of these on the real number, and that's still probably too low. I think memory is a critical bottleneck here in AI, and the more memory you use, the better AI gets. And as we move towards AGI, you're going to need more memory because people are going to use AI more. And really it's just a continuous circle here. And, you know, the really the smartest people we know in the business are pre-buying and signing up for LTAs, not for charity. And when, you know, we're seeing 30% or so of bits right now go under contract for long-term agreements, it's going to go over 50%. And that means the multiples go up and start to close the gap with the HDDs a little more. How airtight are those agreements, Ben? Because it seems like a lot of a lot of the sort of re-rating

in the memory space at least, is predicated on the notion that these contracts are are locked solid and that there is an ability to extrapolate the demand right now into the future without any sort of, you know, overbuild and then underbuild, any sort of, you know, spurts in terms of the AI buildout. Well, we don't have, you know, we don't have the contracts on my computer here where I can see, but the companies are very confident there's financial penalties and that they're enforceable. And, you know, why don't you ask Microsoft when they do their RPO if their contracts are enforceable or Oracle or Google or any of the others? Because there's been a track record that's been established that a lot of that gets paid for it. It gets on the cloud. I think as we see that this is the critical bottleneck, people will go, oh, it is an agreement that makes sense. And that'll help close the multiple gap a little more.

You know, like I said, we just don't ask a lot of other companies that same question when they report an RPO or a contract. And that's because there's been a track record established. And a lot of people are probably shaking their head. What's this guy talking about? Well, it's because these are new in this area. And once it's shown that it makes sense, I think people will, more people will get on board with the concept of a long-term agreement. You say, Ben, that when you, you know, obviously install more memory, AI gets better. It gets better in terms of, I guess, the ability to deliver more in the way of, you know, tokens.

and inference and all the rest of it. Are we still kind of in this mode where everybody is binging to figure out what they're ultimately going to use this for in need? I was interested in Mark Benios' comments on a podcast saying, yeah, we're spending $300 million a year on Anthropic, and a lot of that is probably overspend

or it could be rationalized down the road. Yeah, I mean, all these software companies are running into their token budgets early, which obviously shows that their gross margins are going to be under pressure. And then we're going to see, you know, a lot of their customers start to negotiate back against like CRM and others,

even though they might not see it tomorrow night. Eventually, they're going to get pushed back from customers who are spending so much on Claude that they don't want to spend so much on that, you know, package software. But I think, look, I think that once we see, what AI needs to get to is like how we're talking right now. You see my hands.

You see my gestures. There's an understanding. You're actually looking, listening, and sensing what I'm doing, even though it might not make sense. And you think it makes sense. AI is going to need to do all that. That takes a boatload of processing power and a boatload of memory. We're not there yet. There was a model released by Miramir Maradi's company that kind of previewed this on having microseconds response that are human-like.

Once people get a taste of that, they're going to want more of it. And they're going to want that to be their customer service, their agent, et cetera. It all means more memory and more processing. We're showing just now a graphic of all the price target increases across the chip sector that you did last week. Ben, you have a couple this week today, Dell, as well as Apple. And the common thread here seems to be this whole notion that some stocks need to be re-rated, given the new AI narrative. So can you walk us through your highest conviction price target increase that you put out there? Yeah, you know, we have a luxury here, Amelia, is that we have an AI-first coverage.

So most of the companies, if not all, that we cover, we love. I mean, it's very hard to have a hold-rated company because we've picked them because they're AI winners, other than maybe we have a sell on Adobe and like a hold on a few other software-related names. But the bottom line is we really like a lot of them. Memory is still super high conviction. But today, we and we still really really, like a lot of the semis and AI, I think Nvidia really needs to see some performance makeup here. But today we talked about Apple and Dell. And with Dell, what we think is they're winning

a lot of the CPU rack business. There's this CPU only server that's sort of a new thing. We think they're winning a lot of that and we think they're crushing it. And then we think it's kind of re-rating towards 20 times the real earnings number, which puts it closer to a market multiple. And it could even get a premium to that. We're seeing revenge of the hardware. companies and the semis becoming what software used to be and software getting demoted as it should be to below market multiples. And we're still only, we're not even halfway through this. And then the other one we talked about today was Apple where, you know, we do believe it deserves a premium multiple. And what we see is an amazing event coming up where Siri gets really relevant.

And the key thing that Siri's going to do is that it's going to reignite the app store. it's going to allow you to access apps, in our opinion, that aren't even open, and it's going to know which ones to hit. And agentic AI is about to go mainstream, and investors are about to realize that. And it could be a real shot in the arm for the entire AI ecosystem. So we think Apple's a toll road to AI glory and that the narrative there is, you know, only in the middle innings and early innings. Yeah, I mean, Apple certainly, I mean, already has kind of a premium multiple. But I guess what you're saying is there's a lot of stuff that we're not net yet, kind of putting into the numbers that they're going to be slowly unveiling here? Yeah, absolutely. Because if they fix Siri,

they can launch new products like a home hub, glasses, other wearables, even a pendant, because voice is going to be the next frontier. If you have any kids, they'll, voice is going to be the thing. And that, you know, we'd like to know where Microsoft is on this. Voice is going to be the thing. It's going to be the interface. You may not even need to know how to use a mouse. in the same way in a year or two, because of what we're about to see with agents working behind the scenes based on your voice and other even gestures that allow you to not even have

to click a mouse and interface with things like you thought you had to in the past. And Apple's going to be at the forefront of that. I think they get it. And if that, and they run away with that, that could be really one of the next eye-opening things that we're not going to go to a PC and open it up and use it the same way. We're going to use our voice. There's going to be an ambient intelligence

that knows what we're going to do before we do it. And Apple's actually going to have a big say in it, along with Google. And it's going to be interesting to see how that plays out. And, you know, I'd love to hear from Microsoft. My phone is right here. Give me a call. Let me know how you're going to deal with voice. All right. Maybe we'll add our request to yours to hear what they have to say about, Ben. Thank you so much. Really appreciate the time today, Ben writes us. Z-scale earnings are out. Seema. How many, half the number, Seema. Hey, my third quarter earnings and revenue came in above estimates, a dollar eight adjusted.

That is seven cents above what analysts were expecting. Two reasons the stock may be moving lower here. Third quarter annual recurring revenue came in line with estimates. Perhaps some analysts were hoping for a beat. And then if you look to Q4 guidance, weaker than expected Q4 revenue guidance, perhaps also in play here with shares down another 17 percent. And even going into today's report, the stock was down about 40 percent from its recent high on these broader competition concerns in the cybersecurity space.

We'll wait for the call to start. Comments here from Jay Chowdrey, the CEO who says Z-Scaler is ideally positioned as a cybersecurity platform for the AI era. More on the call as we get it. Melissa? Seema, thanks. Keep us posted. Seema Modi.

Z. Z.Kaler down about 17% right now. Sticking with technology, you can now add the Pope to the list of people voicing their concerns about AI. He urged governments to regulate AI systems in his first encyclical, which he presented alongside in the United. anthropic co-founder Christopher Ola. He calls for a more active political involvement that is capable of slowing things down when everything is accelerating. On the other end of the spectrum, OpenAI C.O. Sam Altman says AI is unlikely to lead to a jobs apocalypse, as he had initially feared.

Speaking at the Commonwealth of the Bank of Australia, Altman said he was delighted to be wrong about this. I thought there would have been more impact on entry-level, white-collar jobs being eliminated by now than has actually happened. I think the Pope's comments were very interesting, echoing other comments from religious leaders, but really opening sort of the door by inviting the Anthropic co-founder to a dialogue instead of just a statement about where the Vatican stands on AI. For sure. And Anthropic has been pretty consistent in trying to kind of remain on that talking point, that we have to be careful here. Part of that was seen as a little bit of self-serving and saying like, oh, this stuff is so powerful. We don't even know what it can do. and it's going to run away from us.

But yes, definitely the idea of, interesting, too, that it's coming at a time when the public in general is quite skeptical about going fast on all this stuff. So we'll see if that filters from both directions into what governments do to treat this. And skeptical about the leaders of these AI companies.

And we saw from the Open AI trial that jurors in general did not like Sam Altman or Elon Musk. And so that's a really good read. And, you know, with Altman's comments on Huawei, I thought there would be even more job. At some point, I think there has to come this kind of toting up of, okay, what's the opportunity? What are you displacing with all this spend?

And if it's not, you know, we just had Ben on, Ben likes to say the total addressable market is labor. Like what the world spends on labor? Well, it's not eating into it as much as maybe we thought it would. Good news, but what's to spend all about. All right. Oil moving lower today, despite another potential flare-up in fighting between the U.S. and Iran, Pippa Stevens has more.

Pippa. Hey, Max. So we did see a bit of a divergence between WTI and Brent because WTI did not settle today, yesterday I should say, but Brent did. And so Bren was actually higher today and at points traded above $100 per barrel after the U.S. military struck sites in southern Iran and what was self-defense. That's according to U.S. Central Command, targeting vessels reportedly deploying mines as well as missile launch sites. Iran later said it would retaliate, which throws into question progress on deal talks. Oil dropped yesterday on reports. the two sides were nearing a deal.

Now, keep an eye on aluminum because it did hit a four-year high today as supply disruptions from the Middle East drive concerns in a market that already looked tight prior to the war. Emerit's global aluminum, saying that its smelter that sustained significant damage could take up to 12 months to restore. The UAE, Bahrain, and Saudi Arabia have become key smelting sites thanks to their access to cheap energy. City saying that aluminum has the most bullish setup in more than 50 years

with the next stop 4,000. $1,000 per ton. The firm said spare capacity is near zero. Inventories pre-war were already at all-time lows, and the cost of substitutes such as copper and plastics are extremely high by historical standards. Producers Alcoa, Ria Tinto, Norse-Chydrow and Century Aluminum, all rising on the day. Melissa. Pippa, thanks. Pippa Stevens. Now let's get to the bond markets as Treasury yields pullback today. Rick Santelli joining us from Chicago. Rick. Yes, Melissa Lee. You know, we're playing catch-up a bit. We were closed yesterday. If you looked at yields from Friday to Monday, we saw that whether it was the UK or the EU yields fell, and it's because of oil.

But there's more to this story. The bond market has an opinion here. If you look at where we closed one week ago, the 19th, open the charts up and you'll see whether it was two-year or tenure, we closed at the highest yields since early 2025. But since then, something has changed. If you look at twos and 10 since the 19th, two-year yields are mostly sideways, and the high-yield close of 412 is very near where we're currently trading. But on a 10-year 467 high close, here we sit at 448, almost a 20 basis point drop. And remember, before the war started, on the 27th, we saw that yields were in the mid-390s. So the glide path of inflation was known to the market, and yields were still down.

question is, what are yields going to do and where is oil going to be when this thing ends? Our crude oil price is right. Well, the 10-year thing's so because that would it seems to be following. Two years following the Fed, the long ends following oil futures. Mike, Melissa, back to you. Rick, thanks, Rick Centelli. Another record closed for the NASAC and the dot-com bubble talk is once again popping up. But coming up, we will tell you where to find opportunities outside of tech. Plus $4 billion, that's how much Eli Lilly is betting on expanding its back. vaccine business details when closing bell overtime returns. Welcome back to overtime. Eli Lilly is making a $4 billion bet on expanding its infectious

disease prevention business. Annika Kim Constantino joins us now with all the details, Anika. Well, thanks for having me today, guys. So this is Lilly's power move into vaccines and a new opportunity for the company to really expand beyond obesity and diabetes. And so Lily is going to spend up to $1.5 billion to buy a company called Cureevo, which is developing a shingles vaccine that Lilly hopes will be as effective as the current standard of care with fewer side effects, so that could position Lily to better compete with GSK, which has the only shingles vaccine on the market. And Lily's also going to spend another $780 million to buy Limitech, which is developing multiple vaccines against bacterial pathogens,

such as the ones that cause gonorrhea as well as chlamydia. And lastly, Lily's also spending another $1.55 billion to buy vaccine company, and that company's developing shots against Epstein-Barr virus. And as a reminder, there are no approved vaccines for this specific common viral infection, which is associated with things like several types of cancer as well as multiple sclerosis. And so what's important to note here is that a lot of these shots are still an earlier stage development. So it's going to take some time before they enter the market. But Lilly goes back to this idea that, you know, the main strategy behind these deals is that it's really trying to prevent the source of disease rather than to treat its long-term consequences.

And where a lot of these shots have in common is that they really address an unmet need here. And we were just chatting in the break, Anika, But it was interesting because when Peter Marx is hired from the FDA by Eli Lilly, everybody was sort of scratching their head, like, what will be next? And I guess we have a view here as to what the grand plan was. Is it presumed that Peter Marx has seen some of the phase one and phase two trial data of these particular companies that Lilly's buying? Yeah, we're not exactly sure. Of course, that's not something that Lilly has disclosed. But Peter did join the company around the fall, you know, after he departed the FDA under, you know, under the Trump administration.

And so we just assume that, you know, analysts that do say that, no, this is definitely reflective of his new leadership here at Lilly. And this just makes sense that they're sort of building this vaccine landscape for him. And are they buying these individual products and development only or are they're kind of platforms? I know that was like the talk for a while, that this is a whole approach that could represent a sort of new platform for vaccine development. As of right now, all we know is that these are specific assets that they're buying from these companies. And, you know, a lot of what we learned about today were kind of the lead assets that they have at each of these companies. But that's not to say that there's other things in the pipeline that they don't have going on as well. Right. And clearly, this is just the latest of all these sort of smaller acquisitions, Mike.

And I know you've noticed this, but, I mean, the performance of the XBI versus the IBB, which is XBI is equal weight. Sure. Ibb is market cap weight. There's a real difference because XBI, those are the targets. Those are potential targets, for sure. Yeah. I mean, it's sort of a play on big pharma desperation in a way. Exactly. The padd cliffs out there.

They are the beneficiaries of it. Anika, great to see. Thank you. Well, the stock story of the day, Micron soaring, passing the $1 trillion mark, and a big name coming in the process. We'll have much more on Micron's massive move coming up on overtime. Shares of Intuit, the worst performing stock of the NASAC 100 today. The stock not recovering following disappointing results, down 23% in a week.

Shares of MongoDB also lower. It reports on Thursday. Wed Bush expects the company to outperform conservative guidance. Cantor and Rosoblat, also out with notes on MongoDB, both maintaining their bullish ratings ahead of the results. Those declines adding the massive split we've seen this year between software and chips. And Mike is taking a look at one of these high-flying chip names, maybe the most high-flying chip name right now. For sure. So Micron keeps kind of blasting through these barriers to the upside here.

Of course, we mentioned across a trillion dollars in market cap for the first time. Also overtook Walmart in total market cap as well. It's actually not that far below Berkshire Hathaway, which is maybe, you know, less than $100 billion above it right here. Micron was under $200 billion, really not that long ago. So whether you want to do a multiple of sales, Micron's way, way above its norm for any of that. But clearly we're talking about regime change. Because we all have to become experts in index construction here, I always like to point out,

Micron now has almost twice the influence on the S&P 500 as Walmart does. And that's because the Walton family still owns 45% of Walmart. Only public shares get counted in the index. And that's going to come into play as we start talking about SpaceX going in potentially and all these other low-float mega-IPOs. But for now, you know, Micron really steering things in terms of index performance today. I'm curious because we talked to Ben Wrights of Melius. And I asked him about the contract aspect. I said, I don't have the contracts in front of me, but we don't ask about the RPO's for Oracle or Microsoft.

When actually we did ask about the RPAs, particularly when it came to Oracle, and we questioned that. That's right. Is that really money-good revenue in the future that we can count on? So, yes, these are all an answer question. I think people are feeling like until the earnings estimate stop going up, until it seems like the memory shortage eases at all. And by the way, the Korean market always follows memory. It is absolutely going vertical right now as well.

So people are getting certainly overexcited, whether it's, you know, coming up to a peak, we have no idea. Yeah. Time now for a CNBC News Update with Leslie Picker. Les. Hey, Mel, the Justice Department has filed a new lawsuit against the University of California accusing the university, of creating what it calls a hostile environment against Jewish and Israeli students.

The new lawsuit expands upon a previous lawsuit against UCLA for not doing enough to curb anti-Semitism on campus. The U.S. Supreme Court has declined to hear Mehta's challenge to a lawsuit brought by Vermont's Attorney General over what it claims is Instagram's addictive technology. The justices are allowing the lawsuit to proceed in a lower court after rejecting Meta's argument that the Vermont courts lacked jurisdiction in the case. And Vice President J.D. Vans with some rare praise for Pope Leo over his comments about artificial intelligence. In the new letter, the Pope warned about the impact of artificial intelligence build out on jobs and urged world leaders to regulate the technology. Vans a devout Catholic convert and frequent critic of the Pope's critical comments about the president, President Trump,

told NBC News that what he has read of the Pope's document is, quote, profound and quote, the sort of thing you would expect and hope. from a leader of the church. Mel, I'll send it back to you. Leslie, thanks, Leslie Picker. The SpaceX IPO, creating a lot of excitement around stocks in the space industry, big gains today in Firefly, ASD Space Mobile, among others, but is too much of this trade dependent on Elon Musk. That is next on closing bell overtime. Welcome back to closing bell overtime live from the NASDAQ market site.

The Dow losing 118 points today, but the broader averages, all with gains, the S&P 500, NASDAQ and Russell 2000, all closing at record highs. Micron, the big story, closing up nearly 20% on the day, sending its market cap above a trillion dollars. Z-scaler down big after hours, though. Most of its numbers were slightly better than expected. Earnings revenue, earnings for next quarter, the one number coming up short. Q4 revenue, $875 to $878 million.

Guidance was slightly below the current consensus. Z-Scaler shares off 17.5%. Wall Street's anxiously awaiting SpaceX's IPO, but many investors are also starting to wonder whether Elon Musk will eventually merge Tesla with SpaceX. Sima Modi's got the details. I mean, Wedwish already said it outright that that's in the cards. That seems to be what could potentially happen after this IPO. What we're hearing is that Elon Musk has engaged in some of these thought experiments around growing SpaceX's ecosystem by acquiring Tesla due in part to synergistic opportunities. First and foremost, Tesla and SpaceX share talent. Musk is CEO both to board. with SpaceX board members previously sat on Tesla's board.

Another key figure is Charlie Kuman, who serves as vice president of materials engineering for both companies. He's known for playing a central role in troubleshooting key design issues for Starship rockets, as well as electric vehicles. In fact, we're told engineers from SpaceX and Tesla often collaborate on solving issues related to energy, GPU constraints. Both companies are spending a lot on AI. In fact, three quarters of SpaceX's $10 billion in Kappex in the first quarter were tied to AI. and Tesla said in its latest earnings report that Cappex will roughly triple this year, topping $25 billion. So there's a lot of money being poured into the AI infrastructure from both companies.

And with 85% voting power, it's really up to Musk on whether this merger happens, guys. I mean, I'm trying to map out where the incentives lie. Let's say this all happens post-IPO for SpaceX. Musk's wealth and his influence is going to be far greater in SpaceX. So in terms of which shareholders are treated better or worse in a potential merger, You have to wonder how that would play out, even if there is some kind of grand strategic rationale behind it. Sure. I mean, we spoke to two legal experts who said that, you know, this won't spark any type of antitrust concerns. It really comes down to shareholder valuation and return.

Tesla shareholders certainly want to know if this is going to be one to one. And for SpaceX investors, they'll want to know if they're overpaying. One thing's for CERN, as we saw on the S-1, there are certain milestones attached to this potential performance bonus for Elon Musk. One is getting that market cap up to $7.5 trillion. if you were to take Tesla's current market cap at 1.6, added to the reported $1.5 trillion for SpaceX that gets us to north of three. So it's slowly getting to that 7.5 market cap. Of course, there's the other milestone he needs to achieve as well in regards to Mars. For sure. A lot there. That's all. Just the one regards to Mars. I can't imagine financial incentives

could matter once he's worth multiple hundreds of billions of dollars, even if they do nothing. But who knows? He wants to win. Seema, thank you very much. sticking with SpaceX is part of the trillion-dollar valuation to dependent on Musk himself. Joining us now is Nick Kohlis, co-founder of Datatrek research. Nick, good to see you. Good to see you. It's real fascinating because we've had this real-life experiment in Tesla in terms of what that company gets valued at and what you might say is truly tied to the business as it exists right now, the auto business. What's your work suggests looking at the SpaceX S-1 about how this could prospectively be valued

and how much credit Musk is getting directly for that? Sure. It seems like he's getting as more credit in Tesla than he will in SpaceX. Okay. SpaceX has some really important and viable businesses. The rocket launch business, fantastic, the satellite business, even better. So there's real assets there, and you can kind of gin up at least a half a trillion dollar valuation just from those. So at one and a half to two trillion, it's not as big a premium as Tesla.

Oh, so you think Tesla right now, you think the auto business for Tesla is worth less than, you know, like a few hundred billion dollars, right? Well, the auto business right now will generate about a buck 20 earnings for the year. Yeah. Maybe two bucks normalized. Right. Stock trades 400. Fair enough. End of the story.

We were talking, though, about how you're trying to think about the impact of SpaceX to the indices, because I think that is a chatter across Wall Street. Because how will it impact ATFs? Which indices will it go into? We know it could go into theoretically the NASDAQ 100 off the bat, you know, day one, day two, whatever that is. But in terms of the weighting on the NASDAQ, what's your back of the envelope? calculation. Back on the envelope, and it's important to put this in context, the purpose of an index is to get all these companies into one basket that investors can own for the long term. And the math historically shows that only one or two percent of all the companies in an index

generate all the value over a multi-decade period. So an index constructor has to get as many companies as possible in there and let the market figure out which one's going to be valuable because 98% of them are wasted time. This is probably one of those companies that you have to include. It is just systematically way too important. As far as the index weightings, my math says roughly 0.4% of the NASDAQ 100 out of the box, maybe 0.5%, because it's a very small float. S&P is a little trickier because they might not let it in for six months and we'll see what the waiting and the value is then, but roughly 0.2% as well, because again, the float's not going to be there to substantiate a larger weighting off the top of the deal. But over time, as they

issue more stock, as more stocks becomes public, those waiting just grow and grow and grow. As those weightings grow, and, you know, we're going to get Open AI, presumably, and the rest of it. Maybe Anthropics are going to show a bottom line profit. But there's so much market cap being added to the public indexes, potentially here, that if nothing else, it would change seemingly the kind of fundamental and volatility profile of the indexes, at least at the margin. Absolutely. Well, right now, between tech and big tech that's not in the tech sector, we're roughly 52% of the S&P, 52.

52.7, we're going to get to 60 just with these companies and given enough time. Right. So eventually the S&P is going to be this very innovation-heavy, forward-looking index. It's not going to be sort of the classic thing that we all grew up with, some industrial, some utilities. It's going to be tech and disruption and little else. But at least for the initial six months, there could be a big discrepancy between the NASDAQ and the S&P 500 in terms of how it trades. I mean, the volatility that's going to be introduced to the NASAC theoretically, we've much great. greater, maybe the gains will be much greater, too. I mean, we don't know how it's going to go,

but investors should brace for that, that there's going to be a wider, sort of dispersion between the two. Yes, and I think no one's always talking about the sector ETFs either. Right. Which sector is it going to go in? What classification is it going to get? Is it communications because of satellites, it's an industrial, because of the military contracts? And the ETFs will really be the impact. And they could have a much bigger impact much sooner on those sector ETFs is a lot of people on. You know, this whole kind of way of splitting up the potential value. First of all, the $1.75 trillion, I mean, it's a big premium to the last private valuation that SpaceX got. But the way that the market has valued Tesla, it's almost as if

the less you have in terms of here and now fundamentals, the better the stock trades. Because that means it's all about the future, the promise, the Mars, you know, the data centers in space, and all these things that by definition are years away, at least, if they're ever going to happen. And so therefore, you can always kind of say someday. It's funny because I think of Tesla is more of a near-dated Musk option than SpaceX. Because we'll know if there's robots on plant floors in 24 months. We'll see some of that progress. So that's kind of a short-dated version of the muscle.

And hopefully we'll see if there's actually self-driving cars all over the place before that, but maybe not. I'm looking out on the traffic in Times Square. I don't see it. Yeah, exactly. But SpaceX is a much longer-dated set of options. So it's funny thinking about a merger, like, do you really want to merge the long-dated and the short-dated optionality? or leave them separate. That's interesting.

Nick, great to see you. Thank you. Thank you. And sticking with space, do not miss the NBC's full interview with Amazon executive chair and blue origin founder Jeff Bezos that airs tonight 7 p.m. Eastern time.

It was all over the place. I mean, it really got a lot of traction, a lot of fascinating comments. So if you miss it the first time, you can catch it tonight, 7 p.m. eastern. The tech sector has been blowing away the rest of the S&P 500 this year. Up next, we'll break down

where to find the next big opportunities outside of tech, plus AutoZone, the worst performer in the S&P P500 today. The company blaming the weather. Is that a valid excuse? We'll have the details in closing bell overtime returns. Welcome back to closing bell overtime. AutoZone, the worst performer in the S&P today on the back of results. The company reported better than expected earnings, but disappointing global growth, the CEO saying domestically both do-it-yourself and commercial sales grew impressively this quarter, while international sales continued to be

challenge. Mexico and Brazil were the particular weeks box. The retailer also said there was a late quarter slowdown in sales due to unseasonably cool and wet weather, which dampened consumer demand for things like air conditioning. I think looking at some of the cell site commentary, the kind of currency adjusted comps were well below expectations. And then those expectations were kind of raised a bit by competitor reports recently, like O'Reilly and Advanced Auto. So also, investors seem to have a very, very, very, low tolerance for any disappointment in chain retail. They just kind of assume things aren't going right. We didn't really hear whether too much as being an excuse among other retailers,

which is sort of interesting. And to hear it out of auto zone of all the retailers was a little surprising. It was also interesting that they saw traffic go down, but their ticket, the average ticket was up because of inflation. Price is, yeah. So prices went up. I mean, tariffs, 25% on auto parts. So that really played a role. I mean, look, I guess if you had an unusually cold spring and you don't realize your air conditioner's broke. I mean, I think you have to believe all that so you don't go in to get a fixed. But don't worry, a hotter summer can cure old things. On the way, yes.

Well, we know Chiffs and Tech Trade have been ripping higher these past months, weeks. Where can you look for some opportunities outside of the Red Hot Tech area? Joining us now on set is Karen Feinerman, Metropolitan Capital Advisors, co-founder and CEO and a fast money trader in CNBC contributor. Welcome, Chairwoman. Thank you, Melissa. So banks, so it's interesting because we did see Goldman's. Sacks performing very well of late, new high in today's session.

Right. And so we're seeing certain areas here. Yes. Pockets. I mean, clearly they're not as exciting. The growth potential isn't there, but I think the valuation is still attractive. They do, of course, have some tech exposure, right? They all have investment banks that are very tight into the markets.

But if you look at sort of a JP Morgan, which is my go-to bank, Citibank also, though, they have some other businesses that are more mundane that are really doing nicely. So, J.P. Morgan, the consumer and commercial bank, that's their biggest contributor. Also, though, you have all the banking and investing and all of that has been good. And then asset wealth management, even though it's not directly an AI trade, all the assets are going up. That's good. And then the other, you can't get away from it. I know you're trying to get away from it. You can't get away from it. I think the AI potential for improving efficiency at banks, is one of the biggest, to me, like, you know, the most easily accessible you can see where that could really be profit driving. Because margins aren't great. And if you can approve them some, that's a huge bottom. It was a fascinating story today, I think, literally, about these firms that go in and train your employees how to better use AI. $25,000 a day for these guys. And it's the banks that seem to be the best customers for that kind of thing. Because there's thousands of jobs that, you know, you can see that could be helped or eliminated, right, or disrupted.

Yeah. So I like them. I like the space. I like City. I like J.P. Morgan. I have to be elsewhere, which I do. I feel like I can't be all in. There's just no way would I do that. And so is there anything else that you felt it feels really being left behind by the rest of the market? Energy. Energy for, I mean, we talked about this a number of times on the show. I just feel like already before any of this, I felt like energy was just sort of forgotten. And it is really small allocation to S&P of, you know, three something to four percent. And now the game has changed a lot. We've talked about this a lot. I don't think we're going back to $65 oil.

I think, you know, the strategic petroleum reserve is about half of where it should be. And I think around the world, everybody's going to want to own more, have their own SPR that's bigger. So regardless of how this ends, I do think that this set up for energy itself is good. The balance sheets are in great shape. The cash flow is there. They can grow. But also the allocation of indices around the world, I think, will start adding. Or investors around the world, I think will start adding.

So for a lot of reasons, I like energy. I'm surprised that we haven't seen. I thought oil would move more today. We had West Texas moving one way and Brent moving the other. Yeah, I mean, we talk about this all the time in terms of the need to refill the SPR and how other countries will think about their own SPRs. And how structurally there will be a higher demand for oil in the future. And yet we don't see that play out in the markets.

I mean, how do you think about that? The OIH is probably up 10% of this started, even though. So I think there's a lot more to go there. And I think it was just sort of left for dead. The valuations are really attractive. And at some point, the rest of this mania will cool elsewhere. And so I've been allocating a lot more to energy. Okay.

Nice to see you. Nice to see you. See you in about 12 minutes. All right. Looking forward to it. All right. Fast money, of course, top of the hour. I will be digging into Micron's rally today with Morning Stars, William Kerwin.

He has the cell rating on Wall Street, the only one. So we'll ask him why he's a doubter. That's next on Fast Money. Well, the New York Knicks, incredible run to the NBA finals for the first time in 27 years. It's giving an alley-up to shares of MSG sports. Up next, we will discuss what that could mean for the company's plans to split up the NICS and the New York Rangers into separately traded companies. And as we head to a break, check out some S&P 500 stocks hitting new highs today.

Delta, J.B. Hunt, New Corps, Steel Dynamics, and Bank of New York Mellon. Closely Bell, Overtime. Live from the NASDAQ market side. We'll be right back. Welcome back to Overtime. The New York Knicks are heading back to the NBA finals for the first time since 1999, and that's giving an assist to shares a parent company MSG Sports. And it's recently announced plans to split the Knicks and the New York Rangers into two

separately traded public companies last month. Guggenheim hiked its price target on the stock to $401 from $355, citing optimism about the NICs' playoffs and expectations the company would separate its NBA and NHL teams at some point this year. In this year's NBA valuation list, the NICs are worth $10.1 billion, the second highest in the league, and a 35% increase from last year. The Rangers were valued at $3.8 billion last year, second highest in the NHL. percent increase from 2024 based on CNBC sports valuation estimates there.

And, you know, the public companies are always going to trade at a discount to these private market values. But there's definitely a boost here to this idea, not just that you go deep in the playoffs, it raises the value of the business, but that the split could also isolate these teams and maybe lead to a sale that's been kind of like the investors who are in this stock believe ultimately that's what happens. A Dolan family sells the Knicks, if not both teams. And by the way, there's a tax change coming next year.

Charlie Brinzegro talked about this this afternoon, Powell Lunch, Jonathan Boyer-Boyer Value Group. Basically, the top five paid employees in any public company, you're not going to be able to deduct their comp. Starting this coming year, next year. Now, the top five paid employees for the New York Knicks are players that make a collective like a couple hundred million dollars. It's like all their cash flow.

So it might just be an extra little boost to the idea that maybe it's time to sell. Interesting. And the discrepancy between the team. combined the valuations versus the market cap of MSG is what like eight and a half? Right, eight and a half. I mean, you probably have to adjust that for ultimately capital gains taxes and other stuff are along the line. But yeah, there's definitely still a bit of a gap.

All right. Well, from sports to gambling, the New York Times reporting the Commodity Futures Training Commission suspended and investigated officials raising concerns about the agency's regulation of prediction markets specifically involving companies with ties to President Trump's family businesses, Polymarket, Crypto.com, and Gemini, the acting CFTC chair at the time reportedly intervened to help those firms, despite red flags, such as unfair betting practices and weak fraud protections, and those concerns about the CFTC's decisions are not being resolved because of the current chairman, Michael Selling, is the only commissioner on the job. President Trump

left all the other seats vacant. And of course, the CFTC overall, not just on the committee itself, but, you know, all the back off, like, there are a lot of vacancies at that commission. Yeah, I mean, and that's kind of the channel through which all the approvals of prediction markets, considering them futures contracts and all the rest of it. I think it really nets out to, this isn't anything goes financial market right now. I mean, I think that's what the regulatory regime is saying. You just kind of let people do what they're going to do. Losses will happen.

Lots of questions on things like polymarket, how those disputed contracts. are resolved and all the rest of it. And it seems like at this point, we're just going to kind of let people try it out and see how it goes. It's a good thing that those applications for the ETFs tied to predictions, which are tied, which are political, you know, in nature. But the SEC has said, you know what, we're going to open

this to comment because we need more information about this. Also worth noting, I believe Minnesota has just actually banned prediction market trading in its states. So the states are maybe trying to push back on some of this stuff. And by the way, the vast majority of the volume still is sports. So it's still kind of a workaround beyond the legalized sports gambling state-by-state regulation there. So look, we'll see.

As for tomorrow, CRM is going to be a big one. CRM, and we'll see if there's another 20% in micron because it goes up every day. As people say, if there's still a shortage, yes, there is. We'll see how that goes then. That does it for overtime. Fast money begins right after this break.