Closing Bell - Closing Bell Overtime: Nvidia jumps on earnings, Breaking down the Fed minutes, Musk and Gov. Newsom on the record 2/22/23

Episode Date: February 22, 2023

: It was a mixed session on Wall Street following Tuesday’s sharp selloff, as investors weighed the latest comments from the Fed and a number of key earnings reports. Neuberger Berman president Joseph Amato discusses his read on the Fed’s strategy, his outlook for inflation, and his view on the market. Analyst Rajvindra Gill breaks down Nvidia’s results that sent the stock jumping in after hours trading. Bill Perkins from Skylar Capital Management joins with his take on how to play the sharp decline in natural gas prices. Plus exclusive comments from Elon Musk and Gov. Gavin Newsom about Tesla’s expansion in the state. 

Mixed day for the major averages. That is the scorecard on Wall Street, but the action's just getting started. Welcome to Closing Bell Overtime. I'm Morgan Brennan with John Port. And we have got a jam-packed hour of earnings coming your way, including reports from NVIDIA, Lucid, eBay, and Etsy. Etsy's moved more than 9% on earnings every quarter for the past two years. Plus, we're going to break down the Fed minutes and what they mean for your money with Neuberger-Berman president Joe Amato, whose firm has nearly half a trillion dollars under management. But let's get straight to our market panel. Joining us now are Barbara Duran from BD8 Capital Partners and Samir Samana from Wells Fargo Investment Institute. Good afternoon to you both. Barbara, I want to get your thoughts here on

the market levels, given the fact that we started the day with major averages higher, then we dipped lower, and then we ended basically sort of in the middle here with a mixed picture. Are we in the midst of a bear market rally from your take, or is this a sustainable bounce, especially since the Fed minutes weren't as scary as I think some folks had anticipated? Right, right. I mean, that has been the question all along, hasn't it? This January is the beginning of a bull market or bear market rally. I think we are not going to retest the October lows. We've had a lot of weak economic data and good inflation numbers come in. But recently, we've had a bit of a spook with higher than normal jobs than expected. And retail numbers, of course, the PPI

and CPI showed inflation is not going down as quickly as we saw in the last three or four months. So I think the market's had a bit of a fright. I think the market is largely discounting at least the next two Fed hikes of 25 bps. I think a third one, that probability in June is going up. But I still think the Fed has done most of its aggressive easing. And, you know, maybe we have another 75 bps, which is a lot, but they're going to go slowly. I think they know that there is a lag to Fed. But I think one of the things that is off the table, at least for now, is recession talk. And also, I'm wondering if investors will start to think about, hey, earnings may not be as bad as we thought for the last three quarters.

People thought earnings would be a disaster. They've been OK. But Samir, is is recession talk really off the table? I look at Walmart. I look at Home Depot and TJ Maxx this morning. And it seems to me like the consumer is strained looking down market for bargains, right? And TJX said that they might be benefiting from e-commerce players hitting a ceiling on how many shoppers they're drawing. I mean, might that not mean that consumers strained with credit, the savings rate down could take things down sooner than later? Yeah, we are still in the recession camp. It's really just a matter of timing. You've got the consumer kind of burning through their savings, which is kind of

the remnants of what they got in terms of stimulus checks around COVID, et cetera. Once that runs out, they're going to have a pretty difficult time later this year trying to find a new job because you're seeing layoffs starting to tick back up. You're probably going to see job growth slow down at some point, too. And what we would focus on is those typical leading indicators, right? Housing is rolling over. You've got a lot of the cyclical sectors in the markets starting to roll over. You've also got, you know, kind of the yield curve remaining inverted. All that tells us that the recession starts somewhere in the second half of this year. And unfortunately, right now, it seems like it may come amidst the backdrop of higher interest rates.

So, Samir, just to put a fine point on that, it's not the time to broadly buy equities from your standpoint. No, this is the time to be about as selective as it gets. Huh. So, Barbara, what's going to keep you optimistic about this market? How much do the remaining earnings results matter? We're waiting on Etsy and eBay any second now. NVIDIA later in this hour. I mean, how much, if you're watching the markets, do you need NVIDIA, particularly on the NASDAQ side, to have the kind of upside surprise that we got from Palo Alto yesterday? Well, I think NVIDIA is not likely to have an upside surprise that we got from Palo Alto yesterday? Well, I think NVIDIA is not likely

to have an upside surprise. I mean, a lot of watchers of NVIDIA think, OK, gaming is probably bottoming somewhere in here. China's been slow. That's reopening. They could have some positive noises about that. But their big engine right now is enterprise, enterprise spending. And that's a question. You're starting to see some pullback. And so I'm not sure what their forward guidance is going to be all that optimistic about that. You know, but having said that, NVIDIA is a core holding for me. And long term, it's fantastically positioned. But near term, because of the reasons Amir just outlined, there is a lot of uncertainty in the market. I mean, one minute, it's the Fed, it's inflation, it's earnings worries. And I think that volatility

is going to continue. It's going to be very data dependent. All right, Barbara Samir, stick with us. Let's get to our senior markets commentator, Mike Santoli, for a check on two of the best performing corners of the market. What do you got, Mike? Yeah, John, two of the best performers of the last few years, although typically not exactly at the same time. Take a look at semiconductors relative to energy over the last three years. Now, the first part of this phase, it was all semiconductors. It was the virtual economy. It was about the resources of computing that mattered the most. There's semis right there.

And so you see how far we ran just on semis and the broader NASDAQ. Energy, of course, kicked in. That was a 2022 story. That was after crude made its run. And so that was a real physical resources type of market. Now, it's landed us in exactly the same place. Kind of coincidental, is it a value-based, real economy-type market going forward, or is it still going to be a revival of the long-term kind of secular growth where semis are the raw material of the growing economy, guys? Physical resources, Mike. Both are tied to China reopening.

Both are economic indicators in their own rights as well. So is there that possibility, as we do have this debate about where the economy, not just here in the U.S., but globally is headed, that that is really going, that you could continue to see these two move more in tandem? Right, Morgan, without a doubt, there's no, nothing that says they have to be inversely correlated or that the market is just going to be one type of character or another. So absolutely, in a recovering economy, they both can work. And in fact, you did see it from periods of time in 2020 when they were both on the up to remember when crude went negative briefly in mid 2020. Well, coming off of that, they both did work. So we'll see. It's much

more about investors willingness to extrapolate growth from here. The energy sector has vastly outperformed crude in the last year or two years. So it's not clear to me that you have the makings of necessarily a new upleg just now in terms of the energy stocks. Huh. So, I mean, what does this signal about the capital needs, perhaps, of these two different markets, you think? I mean, this is at a time when investors want to see efficiency and hear about companies spending less. Yeah, John, I mean, I think it's a contrast because in energy, it's been mostly about kind of harvesting the cash flows from the commodity, as we know. Now, there's been plenty of drilling going on, by the way. Domestic crude production is higher now in this year than it had been in any time except for a few quarters like in 2019.

Right. So it's not that they're not drilling, but it's mostly that they're harvesting the capital, investing kind of, you know, with some discipline. Whereas for semis, as you know, multi-year investment mode happening in that industry. But I don't think there's much new about that because it's always been we got to rebuild it every couple of years. So right now, the market views them both as capital intensive, but with a kind of a call option on longer term growth trends, at least when it comes to semis and sum of energy. Great analysis, Mike. Thanks. Meanwhile, eBay earnings are out. SEMA mode. He's got the numbers. SEMA. John, it's a beat on his top and bottom line. $1.07 adjusted versus the estimate of $1.06 for eBay.

Revenue also coming in above expectations at $2.51 billion. And the key metric, of course, for eBay is gross merchandising volume, which, too, came ahead of consensus at $18.2 billion versus the analyst estimate of $17.92 billion. The guidance for the next quarter, $105 to $109 for Q1 EPS, that is the rate, the guidance we were given from eBay was $106. That was the estimate. So basically in line, you'll see the stock up about 2.3%. B of A ahead of the support did raise its estimates, citing the benefits of the weaker dollar and some improving macro trends across Europe.

Of course, we also had that announcement from the company earlier this month that it was laying off about 4% of its global workforce, which Needham analysts said would bring in about $60 million in savings, but we'll need the full story when the company starts its earnings call at 5 p.m. Eastern. Shares are up 2.4%. Morgan and John? All right, Sima Modi, thank you. Turning back to our panel now, Barbara, want to get your thoughts on this and the read-through to the

consumer, especially given the fact that we have had a number of retailers put out results. But it would seem that, at least until this report, maybe not so much e-commerce focused, more folks going in and the foot traffic in brick and mortar. Yeah, well, I think what people are watching on eBay is also how they're holding up with the discretionary items. And I think because we saw these strong retail numbers, it's not a surprise that they've done well there. So I think that that is, it's interesting because they're not seeing, we haven't heard the call, so we don't know the details yet, but it seems they are, things are holding up for them. Problem with eBay overall is they're losing share. You know, it's really a value play. It's a cheap stock. It's under 12. But it's, you know, they're not, they're not doing as well as their, as their peer group.

Okay. Sticking with e-commerce, Etsy earnings are out as well. Julia Boorstin has those numbers for us. Hi, Julia. Hi, Morgan. That's right. Etsy earnings missing estimates. The company reporting 70 cents in earnings per share compared to the 81 cents that analysts had anticipated. Revenues, though, beating estimates coming in at $807 million. Analysts had been looking for $752 million. We see shares are up nearly 5% on this news. Want to give you some insight into guidance here. The company says it sees first quarter revenues of between $600 and $640 million. Analyst estimates were right in the midpoint of that at $622 million. Also just want to point out here that the company says that it added nine and a half million new buyers in the fourth quarter. And while new buyers declined year over

year, new buyer acquisition was up 60% from the fourth quarter of 2019 to those pre-pandemic levels. So I just want to point that out there as the stock is up now about 5%. Back over to you. Yeah, pretty big move, Julia. I'll go, Samir, back to Barbara on this one, because I know you don't like to talk about individual stocks. So Etsy doing what Etsy tends to do. Pretty big move, though not quite in the 9% range yet. The EBITDA margin guide from Etsy looks pretty good, 26% to 27%. The street was looking for something in the realm of 27%. Might that pretty strong growth on top of pretty decent cost control

be the reason why, at least for the moment, no call yet. So we've got to be careful, of course, after hours. But for the moment, investors seem excited. Yeah, it's very encouraging, I have to say, because they, with the pandemic, they were able to double their user base for obvious reasons. People locked up looking at gifts and it may have reached the inflection point because the hardest thing for them to do is really to get repeat buying because they have so many sellers on there and they're all small and they're all unique. And so to do the search optimization, they've been really spending a lot of money on that. Plus cleaning up their operations. They put that in the cloud. They've

been doing a lot of major initiatives. And it looks like the big question is, though, can they get the repeat business? But it sounds like they are really driving new people to the site, too. So it's very encouraging. I can't wait to dig a little deeper into the numbers here. Yeah, we're going to be awaiting those calls. Samira, finally, you talked about before the fact that it's important to be selective right now. I realize you can't name names, but when you talk about being selective, what are the areas of the market where you would be making a buy right now? Yeah, so the two areas, you know, we like three sectors. We like energy,

we like healthcare, and we like technology. I would say technology has had a pretty good start to the year, but energy and healthcare have been left way behind, and you've got some really good durable demand for both those goods. Again, from the standpoint of commuting and driving on the energy side and then health care, clearly with, you know, kind of the pandemic still lingering out there, you know, we've got some good legs with respect to kind of, you know, state and national spending. We think both those areas provide some good income, good yield. And those are probably areas that we would look to to do better kind of in the coming quarters. All right. Next time, I want to talk munis with you a little bit because we don't talk about fixed income enough. Samir, thank you. Barbara, thank you as

well. Breaking news now on Moderna. Our Meg Terrell has details. Meg. Hey, John. Well, Moderna and Merck saying that the FDA has granted breakthrough therapy designation for their personalized cancer vaccine in combination with Keytruda in high-risk melanoma. This, of course, comes after those really promising data reported in December that showed this combination could prevent recurrence of melanoma or death, reduce that risk by 44 percent compared with Keytruda alone. Now, breakthrough therapy designation is essentially a way for the FDA to sort of speed potentially getting a drug to market,

increasing the communication that's going on between companies and the FDA and potentially shortening the regulatory timelines. You are seeing Moderna up there 1.8 percent in the after hours. This, of course, seen as a really important platform to expand Moderna beyond just the covid vaccine for mRNA, along with other applications of mRNA and vaccines. This one really the start of something potentially very exciting. Guys, back to you. All right. Thank you. I know you'll keep us honest on how much investors should be thinking about that, Meg. And after the break, we are reading the latest signals from the Fed. We're going to talk to the president and chief investment officer at Neuberger Berman about today's minutes and how

he's thinking about the Fed's rate hike path. And we're minutes away from NVIDIA as well. Overtime, we'll be right back. Welcome back. Fed minutes showed nearly all the Fed officials agreed at the last meeting to slow the pace of increases to a quarter point and continued hikes would be warranted until inflation is under control. Earlier today on Squawk Box, St. Louis Fed President Jim Bullard weighed in on that inflation fight. We're trying to make good policy for the economy as a whole. I think that means get inflation down in 2023. Let's get this down, put this problem behind us, get back on the balanced growth path. Joining us now,

Neuberger Berman's president and chief investment officer of equities, Joe Amato. Joe, what about this inflation? Is it under control enough for investors not have to worry about it and just pay attention to these fundamentals and results? Hi, John. Good to be with you. Look, we think that inflation continues to be a real challenge i think the inflation data points that came through over the course of the last uh you know a couple of weeks suggests that while inflation's coming down at a pace that is important uh for the long term it still is proving to be a bit stubborn and our own work that our teams have done suggests that inflation is going to be at a higher level exiting 2023 than the market's

assuming right now. Our expectation is that you're going to be more in the three and a half percent range for inflation. I think that's one of the reasons why the Fed minutes and the commentary from the Fed is consistent with our view that, you know, the Fed is going to be higher for longer because inflation is proving to be a bit more stubborn. So how should investors adjust given that and considering the big move down we saw in the market yesterday? Are you kind of buying dips? Are you looking at a particular sort of value to get into? We certainly think that the market is going to remain quite volatile here over the course of the next couple of quarters as they continue to recalibrate, whether it's the earnings picture or whether it's the rate path and policy rates for the Fed or monitoring where

inflation is. So, you know, I think it pays to be cautious here. You know, we have been underweight equities for a while. We've remained in that view. That doesn't mean that you're zero weight equities. We think there are opportunities. And certainly as things dip into correction territories, then it pays to add a bit more risk. And as they get a little ahead of themselves, as maybe, you know, we saw a couple of weeks ago, you take a little bit of money off the table to be a bit more careful. So, Joe, the last time you and I spoke, which was the end of last month, you were cautious on equities then, too. And I asked you this question, and I'm going to return to it. And that is,

what is the data that's going to turn your opinion and make you a little more bullish here? Well, I think it's a combination of the Fed and where inflation is, and then thirdly, earnings. I think those three things remain the most important elements. You know, right now the economy is proving to be more durable and more resilient than many have expected, right? So that's going to lead the Fed to be that much more strenuous, if you will, in keeping rates at a higher level. We think that earnings need to come down. We think they're starting to come down. Fourth quarter earnings were generally in line. But if you exclude the strong energy sector, earnings were actually down mid to high single digits in the fourth quarter of last year. So, you know, we think there's more adjustments to be had. So as you

start to see earnings recalibrate, that I think will put pressure on equities, but then that also creates an opportunity to add risk. And that's going to be likely coincident with the Fed pausing on its rate hikes. Are you as cautious on international markets and international equities as you are on domestic? Well, you know, our view is that the economy's going to slow down because the Fed and other central banks are going to be pretty consistent with keeping financial conditions tighter and tighter. And economies outside the U.S. are more cyclical.

Like, if you look at the European indices, for instance, they have a lot higher proportion of financials and industrials and a much lower portion of tech and health care. So they're going to be more vulnerable to the ups and downs that we're likely to see over the course of the next few quarters as the economy slows to ultimately get inflation under control. So, Joe, I got to ask you about the consumer, particularly this week. What we heard from Walmart, what we heard from Home Depot and then TJX this morning. And now, hey, the online players after after the market closed today, they're moving after hours. eBay and Etsy particularly higher. Like, does that tell you anything about the health of the consumer despite extended credit despite the savings rate coming down how confident are you that the consumer can hold this economy up um into the end of the year so the consumer is certainly proving to be pretty resilient you saw that in some of the earnings

releases and some of the data that that you cited the retail sales number that uh that came out recently showed a pretty strong result for January. And I think that's creating this resiliency and durability of the economic environment that we're seeing today. You know, we do think at some point the consumer is going to slow down. We think there are certainly signs of cracking. But when the labor market is strong, historically, consumers tend to be confident in their spending. And it's common sense, right? If you're confident in the current job you have or your ability to get a job, you're

going to be more willing to spend dollars. And I think that's part of the conundrum that the Fed's facing right now. So soft landing, hard landing, or no landing? Our sense is there is going to be a landing. The no-landing scenario we think is just delayed. The more that you're seeing a landing scenario, the more the Fed's going to be more aggressive and that ultimately will prove a landing.

We don't think it's going to be a deep recession, but we think it's going to be a mild recession. But more importantly than whether you technically get to a recession territory, it's really the earnings outlook. And that, you know, that we think needs to come down over the course of the next few quarters. All right. Great insight, Joe, into how we should be thinking about these results and these Fed rumblings.

Joe Amato, thanks for joining us. Thank you. Well, we're still awaiting NVIDIA's results. We're going to break them down with an analyst who sees a lot more upside for the stock. Plus, we're going to look at the company's growing market cap lead over rival Intel. And later, Elon Musk and California Governor Gavin Newsom meeting today to discuss a Tesla expansion in the state. Not in Texas. We're going to hear what both had to say about on Overtime. Welcome back. With Intel's announcement today that it is cutting the

dividend by two-thirds and NVIDIA's surge to start the year, we find ourselves at a rare moment in the chip market where NVIDIA's market cap at around half a trillion dollars is nearly five times Intel's at just over $100 billion. NVIDIA CEO Jensen Huang's advantages are pretty well understood in the market, with NVIDIA's Fabless model, its strength in PC graphics chips, data center workhorse chips, and technology for machine learning and AI. And Intel CEO Pat Gelsinger's disadvantages also clear, with a weak PC market, bloated chip inventories, and a chip manufacturing business that has badly stumbled. But this might be the year when we get a clearer sense of whether NVIDIA is going to get a growth

boost from the AI revolution and whether Gelsinger's turnaround strategy has any real chance of success. So what are the odds and how does that translate into the multiple investors might pay. Morgan, I think we ought to ask Mike Santoli how investors should think about the value here. So let's bring him in. Mike, thoughts? Yeah. I mean, look, John, first of all, there is one of these principles of tech investing that deep value investing is not necessarily as effective in this area as others. You do have these shifts where you have former leaders and bellwethers that recede to a point where the stocks look really cheap, but it's because they're kind of on the outs for the current frontier of where technology is going.

So you put that out there as a disclaimer. But clearly, when the market goes down, when a stock goes down, when it's been forced to conserve cash by cutting its dividend. It's been kind of de-risk to a degree. In other words, low expectations. Nobody's expecting too much from it. So I think that's the backdrop here. I don't think it's an either or. You know, it doesn't have to be if NVIDIA continues to perform well, then somehow Intel can't.

It's a tremendous amount of revenue. And by the way, Texas Instruments, Qualcomm, Broadcom all have bigger market caps now than Intel, which is a bit jarring. Yeah, it is. And I go back with this one to Microsoft and Dell, which were on the road. I mean, Microsoft, Dell and Intel, those were the winners, right? 20 years ago. But both of those were on the ropes and people wouldn't touch them with a stick. Right. And those two at least managed to come back. So it's not like buy or don't buy. How do you as a smart investor kind of calculate the odds and whether it's worth taking a gander? I think it's it's really about having some clarity on the path back to when this is now a free cash flow story again. You know, they had been for a very long time and the market refused to pay up for it because there was a sense out there which has now been confirmed.

The company was kind of over earning to a fair degree. So I think that you have to make a call about whether Intel's franchise is translatable in a big way to whatever investing is right now. I would add HP to your list of Dell and Microsoft, John, in terms of, you know, being leaders 25 years ago in this area. Now, it's still a viable company. It's also a chronically cheap stock. So that tends to be what happens. It's about nine viable companies.

Yeah. I forget that I'm sitting here among two Gen Xers, too, who can speak very fluently to the tech bubble and burst of 20, 25 years ago. Absolutely. OK, broader market implications for Intel, Mike, because Intel's, what, 25 and change right now is where it closed today. It is by far the lowest priced stock in the Dow. We know the Dow is price weighted. Is there a real possibility that you could see it swapped out for something else?

It wouldn't be shocking, Morgan. As you mentioned, it has almost no impact on the Dow itself because it is a price weighted index, even though there are much smaller market cap companies still in the Dow. Right. I mean, Walgreens, Travelers, 3M is even a lot smaller than Intel at the moment. So I don't think there's a hurry to eject Intel because it still has such a central place, you know, in the PC economy, so to speak. But yeah, you wouldn't be surprised to see them refresh the index at some point and maybe look elsewhere for something like this. And just to, you know, to play off of your age jibe there about Gen Xers. I mean, I remember when Intel and Microsoft went in in October of 99 and they were the first Nasdaq stocks to go in. Everyone was saying for years, when is the Dow finally going

to add something from the new economy in there? And guess what? It was like four or five months before the market peaked out and the Nasdaq was set upon to crash 80 percent. Right. So it's not like the Dow is going to be the leading indicator of exactly what's a good investment. By the way, those that are kicked out of the Dow often outperform for a period of time once they are. Yeah. I think of GE, speaking of another name that has cut its dividend. It was Westinghouse and Woolworths when I got into this business. See, now you just called yourself out there, Mike. I know, I know.

Montgomery Ward, you going to talk about that one next? Come on. Slightly before my time. Mine too. out there mike i know montgomery ward you're going to talk about that one next come on slightly before mine too all right well mike santoli thank you natural gas rallying after hitting the lowest level since september of 2020 up next the top energy trader whose fund rallied more than 200 last year explains why he thinks prices have further to fall. And do not forget, you can catch us on the go by following our podcast on your favorite podcast app. Overtime, we'll be right back. Welcome back to Closing Bell Overtime. Check out NatGas prices. Those are rebounding in today's trade after the March futures contract the front month dip below two bucks today lowest level since september 2020 like other commodities it's been a

wild year for nat gas since russia's invasion of ukraine 12 months ago prices are down 50 but take a look at the chart because that was after a drastic spike peaking at 968 last summer so the question now where does it go from here? Joining us, Bill Perkins, CEO of Skyler Capital Management. His energy fund returned more than 200 percent last year. It's up big again to start 2023, 40 percent as of the end of January. Bill, it is great to speak with you. It's a very volatile market, NatGas, and particularly this time of year. We know we've had a warm winter. Is that the reason we've seen that gas prices under pressure? Where does it go from here? Well, it's one of the reasons. We've had Freeport, the export facility, out of commission for about six months, and it's just

starting to the process of restarting. So that put a lot of gas on the market. And also, producers are pretty good at their job. They produce produce and they've been growing relentlessly to meet future demand in terms of LNG exports. But as we know, this demand and supply, they don't necessarily match up equally all the time. And so with a warm winter, Freeport being offline, producers growing supply, we're starting to see elevated storage levels where we need it most, which is in the South Central. And when we head into injection season, there may not be enough room in the inn. Enough room in the inn, meaning that all the storage capacity is gobbled up? Yeah, basically the effective storage capacity. We need to reserve some storage capacity for no-notice storage injections. What if an LNG facility goes down?

So we are at what I would call dangerous levels in terms of the level of storage that we have. You know, the market is working. We have gas burns. Instead of burning coal, they're burning gas in order to provide some support for gas prices. But I do not believe that will be enough once we head into shoulder season and we have mild temperatures. OK, Bill Morgan, basic question time here for me. What's the 200 percent last year? Wow. Impressive. What's the way that the investor at home could have played similarly without like straining something? What you know, how do you play? There's some There's some ETFs out there that people like

to play. They're still dangerous because they're leveraged ETFs. If you're bullish, there's one called BOIL, B-O-I-L. And if you're bearish, there's one called K-O-L-D, KOLD. I think they're not appropriately named. They should switch those names. But in any case, in any case, if you're bearish, you would be long the coal stock, which is a double levered, basically short natural gas product. The problem is, is that they need to catch a trend. The market's going up and down and being choppy actually reduces their their nav. It's pretty expensive. But when you catch a trend, it's great. And so if, you know, my friends call me and they're asking a thousand questions, I'm like, listen, just buy cold. You'll be fine. And they've done well with that. But they are dangerous products.

So so now gas has has fallen pretty dramatically here in the U.S. We've seen prices fall in Europe and other parts of the world as well as the gas crisis, can we safely say that the gas crisis in Europe is over? We can say that for the short term. Obviously, there is some black swan events that could happen that would, you know, put us back on edge. But the winter has really helped out Europe and the United States of America in terms of, you know, not having enough gas, not having enough gas in storage, not being able to replenish storage. That story has largely evaporated. And so now we're heading into the refill season for Europe with a healthy amount in storage. Behavior has changed. The residential and commercial users have reduced their consumption of natural gas and responding to higher prices.

Go figure. And so we figure that instead of having a shortage, Europe may be looking at a glut by the time we get to August or September. And as one trader told me, I've never seen a shortage that does not lead to a glut. And I thought about that and I was like, he's right. Wow. Bill Perkins of Skylar Capital Management. Thanks for joining us today. Thank you. Thanks for having me. And for more, check out the latest episode of my podcast, Manifest Space, in which I speak with Bill Perkins about a contributor to his trading success, and that is satellite data. So last month, he launched the SkyFi app to make satellite imagery more affordable,

easier to access. And you can listen to the episode, which is part of the Closing Bell Library now, anywhere you get your podcasts. All right, we got manifest space in the trade. I like it. Yes, and speaking of space, you didn't think I was done there. Here's a chart I want to show you. This is Intuitive Machines, ticker LUNR. Take a look at that. Space startups up 116 percent in today's trading. It went parabolic in what may have been a short squeeze. Intuitive Machines is contracted with NASA to transport cargo to the lunar surface. It's poised to potentially become the first U.S. private company to land on the moon when its mission launches this summer.

Intuitive Machines went public via SPAC on Valentine's Day. Since then, get this, stocks up more than 600 percent. Yeah. To the moon, John. Investors showing it some love. Valentine's Day. And we're not teasing you. NVIDIA is actually not out yet.

It's taken a while, making us wait. Meanwhile, up next, hear what California Governor Gavin Newsom says about Tesla possibly expanding its operations in the Golden State. Didn't think that was going to happen. Plus, Elon Musk himself on whether he's reversing course on his criticism of California. Be right back. As I just mentioned, we are still awaiting NVIDIA's results. Massive company, massive market cap, half a trillion dollars, lots of questions about whether enterprise buying perhaps held up. We know that the cloud, the hyperscaler cloud providers, have maybe slowed down on their build-outs.

We know the PC market is in the dumps, but can Jensen Huang and the rest of NVIDIA somehow gain share beyond that and paint a better picture? AI. What's going to happen with AI? How quickly does that actually translate to sales for this company? We are waiting. When we have the results, we will bring them to you. Absolutely. And meantime, Lucid earnings are out, and that one is moving. Phil LeBeau's got the numbers. Phil? John, it's moving lower because this is another quarterly loss for Lucid, a loss of 28 cents a share. It's thinly covered, so the estimates are all over the place. Revenue, however, is below what expectations were on Wall Street.

Revenue coming in, $258 million. The street was expecting just over $303 million. The numbers within the numbers everybody is focused on, production and deliveries in the fourth quarter. And when it comes to production, yeah, it's an improvement over third quarter, but they're still trying to get these production challenges corrected. Just under 3,500 produced, delivering just under 2,000. For all of 2022, they delivered just under 4,400 vehicles. By the way, their guidance for production last year was between 6,000 and 7,000 vehicles. They did hit that target. And for this year, they're expecting

to deliver or build between 10,000 and 14,000. I talked to Peter Rawlinson, CEO of Lucid, just a few minutes ago. He believes they have the production cadence in place to succeed. And he also believes that the key now is to increase sales. He'll be leading that effort, a renewed effort to boost sales. Do they have enough cash on hand? They've got $4.9 billion. And John, they say that is enough to get them at least into the first quarter of 2024. Back to you. So since we're sticking with semiconductors this afternoon, has that been part of the production situation, part of the issue there for LucidF Part of it, part of it. But it goes much broader than that. It comes to actually standing up the entire production line.

So it goes well beyond just the chip issues, Morgan. OK, Phil, stay right there. Let's get to Yasmin Corum with a news alert on Tesla. Yasmin. Hey, Morgan, Tesla is increasing its footprint out here in California, opening an engineering headquarters in Palo Alto. They're taking over the old HP building in what Elon Musk told me is a poetic transition of Silicon Valley power. I asked him about Tesla's renewed presence in California after, we all know, the very public exodus to Texas.

California, Texas company. Right. OK. We're trying to emphasize that,odus to Texas. California, Texas company. Right, okay. We're trying to emphasize that actually. Okay, and just a question. We're kind of a dual headquarter company. Okay, so is this kind of like HQ2 now?

Well, I don't wanna use those words. Okay, not those words. One other question, are you kind of perversing your stance? It is effectively a headquarters of Tesla. Musk also told me that while California is Tesla's home state, lawmakers there don't always make it easy doing businesses in the golden state. I think California should be cautious about having taxes and regulations go too far. I'm not anti-California.

I think one has to strike a balance here and say, like, there are a lot of good things about California and then there's some challenges. And, you know, California, I think, could make it easier to do especially manufacturing than is currently the case. But, you know, I would encourage legislators to consider their actions, you know, in the long term. I also sat down with California Governor Gavin Newsom exclusively, who has formally said that Tesla doesn't exist without California. Thanks to over $3 billion in subsidies over the last couple of years, I asked him about what exactly brought Elon Musk back. Listen to this.

We're all talking about chat GPT. We're all talking about AI. Look around. Where is it all happening? They're no longer talking about engineers anymore. We're talking about elite engineers. We're all the elite engineers. They're all right here. It's unclear how many jobs will be added in this deal, but it's worth noting that nearly 40 percent of Tesla's global workforce is already here in California. So despite everything we hear about this contentious relationship between Musk and California, Tesla's footprint today is only getting bigger out here. Amazing work getting both the governor of California and Elon Musk on the record there. We want to talk to you more about that. But, Philip, keep us honest here. Come on. Isn't this a different Elon Musk

line on California? He says he's not anti-California. Over the past couple of years, he sounded pretty anti-California. But now it's a dual headquartered company. He's not even willing to call California HQ, too. Why all the California love. Why wouldn't you give the California love? Look, if you were expanding your presence, if you're Elon Musk, this is one of those win win days. California feels good. He feels good. In a week, John Morgan, we both know what could happen if a legislator in California comes out and says, you know what? I think that we need to have X, Y, Z regulation. Elon Musk would waste no time blasting that legislator or blasting the state of California.

So I took his comments today as saying it's a good day for everyone. I feel good. Let's celebrate the fact that we're going to have this engineering headquarters. I'm not surprised he doesn't like the term H2 HQ, too. I mean, because that was kind of coined by Amazon, right? And his, dare I say, nemesis, Jeff Bezos over there as well. And we know there's a healthy rivalry between those two, particularly on the space front. Yasmin, maybe I missed it, but just walk me back to, are there incentives or any sort of government something tied to this in terms of Tesla making this now a second headquarters again? I did ask Governor Newsom about that. There are no new incentives with this new deal,

but they are hoping to attract a lot of new talent out here. And they think that by being in Silicon Valley and, you know, taking over this building and attracting engineers, they're going to be able to get out in the forefront of it. A lot of other AI companies out here, we've been talking about ChatGPV, MetaAI, Google AI, all of them are here. So there's a big pool of talent here that is going to be mutually beneficial as the governor told me. Yasmin, great work and great discussion, Yasmin, Coram and Philip Oh. Okay, well up next, round up today's big after-hours earnings movers. That's what we're going to be doing. NVIDIA, if you're out there, call us. We're still waiting.

We'll be right back. Welcome back. NVIDIA is finally out. We're combing through the results right now. In the meantime, you can see shares are up 7% right now, popping. We're going to get to a couple earnings movers while we await all of the details of that report. So first up, Bumble. That stock getting a nice pop in overtime after topping estimates on revenue and giving some strong guidance.

It's not popping. It's down 7% right now. It did pop, but now it dropped. Look at that. Teladoc going the 7% right now. It did pop, but now it dropped. Yeah. Look at that. Teladoc going the opposite direction right now, off some 8%. That's despite topping revenue estimates. That company posting a loss per share of $23.49. Wow. That includes a $23.26 negative goodwill impairment charge and another negative $0.30 related to amortization. Guidance also looks to be weak there. Steve Kodak has those NVIDIA results.

Steve. Yeah, we see shares popping here, John. It's a beat on the top and bottom lines. EPS coming in at $0.88. That's down 33% year on year, but a beat of the $0.81 the street was looking for. Revenue coming in at $6.05 billion. Just a slight beat over the $6 billion the street was looking for. Still down 21% year on year. And of course, we can't talk about this without talking about AI. Let me read you a quote from CEO Jensen Wang. Quote, AI is at an inflection point, setting up for broad adoption, reaching into every industry. From startups to major enterprises, we're seeing accelerated interest in the versatility and capabilities of generative AI. I expect to hear a lot about this on the call, John, which starts in seven minutes. I'll have updates right after that. They're playing it close, Steve. Thank you. You got it.

And now for a closer look, let's bring in Needham & Company Managing Director Raji Gill for reaction. Raji, it looks to me like data center is the hero here. Fourth quarter revenue, 3.62 billion, up 11% from a year ago, down 6% from the previous quarter. But, hey, up 11% from a year ago. Some pretty good news. Yeah, good news. I think there was some concern heading into the print that there might be an inline guide. They clearly beat on the top line, came in about 200 million above the street numbers about 500 million above our numbers there was concern that there was a slowdown in hyperscaler spending a

slowdown enterprise spending so they seem to buck those trends i think some of the the reasons for that there is a significant upgrade cycle that's happening to their hopper architecture. So that could be bucking some of the overall slowdown in the overall data center market. We're seeing a rebound in the gaming segment after the segment cleared out a lot of that channel inventory the last two or three quarters. So overall, a fairly strong quarter and beat and kind of given the fact that the expectations

were pretty elevated heading into the print the stock's up you know 40 odd percent here today um you know we're pleased with with these numbers and this guide all right so just to dig into the gaming piece of the puzzle a little bit more i mean revenue there was still down what 46 percent year on year um but at 1.83 billion you're saying still still not as bad as feared right i mean so they've telegraphed that the the gaming segment um what was going to decline um in 2022 as they under ship uh the channel market or to clear out all that access inventory that was built up in gaming for the last couple years so they've been under shipping what true demand demand is for gaming in order, number one, clear out that access inventory,

but number two, to get the gamers ready for their new Lovelace architecture, that's the new GPU. And so that strategy is happening. And I think gaming segment based on these numbers are going to be up sequentially, and data center is going to be up sequentially. If you look at the guide for Q1, typically both segments are down sequentially, particularly gaming. So it looks like both segments will be up sequentially and a seasonally down quarter. Raji, the gross margin guide also caught my eye. Gap and non-gap. Gap, 64.1%. Non-gap, gap 64.1%, non-gap 66.5%, plus or minus 50 basis points. That speaks to the idea that they're not having to discount, right? That their technology, relatively speaking, is strong even as

they seem to be able to ship plenty of product into the data center. Exactly. So, you know, gross margins were 66.5 percent on a non-GAAP basis that actually beat the street by 20 basis points. And, you know, last quarter was 66 percent. So, you know, after the inventory, the charge that they took last year related to gaming, related to China data center're they've recovered the gross margins uh pretty strongly back to kind of where they've normally been is in the 66 range but yeah number one i think it speaks to um uh the the the premium pricing they can get um for their data center products but also i think it all it also reflects um uh the gaming segment that they're selling a lot of high-end gpus the enthusiast gamers that comes with a higher asp typically that they're selling a lot of high end GPUs,

the enthusiast gamers that comes with a higher ASP. Typically, when they roll out a new gaming architecture, they'll target the very high end enthusiast gaming segment first. Okay. So you're also taking a benefit of that. So pricing power both on gaming and data center continues to be quite strong. Stocks looks like it's up around 223 or so. So it's pretty good. Okay. And so we know that we're going to get that call in just about two minutes. But quick

question for you here. We've seen the stock double since last fall. You like the valuation here? Valuation is rich. It's been our top pick for this year, and so it is up 40 percent year to date. That's triple that of the SOX. It's double, as you said, since October. I think with these numbers, you could start to see calendar 24 numbers start to get rolled out. So, you know, we're looking at a valuation based on calendar 24. We're looking at evaluation based on calendar 24 we're looking around a little over five dollars and you know if if we're now in a recovery year in gaming and then data center continues to be strong then i think you're going to see an expansion in the multiple maybe back to 45 50 times earnings and then you'll look to see upside to that $5 plus number in calendar 24.

So you could be looking at maybe $6 in EPS. So you could see continued upside in the shares. NVIDIA, as you know, always trades at a high valuation, but the valuation multiple has come in relative to historical patterns. Okay. Raji Gill, thanks for joining us. Thank you. We have 45 seconds left. Stock's up 7.5% right now. Yeah.

Anything you're, I mean, you know this sector well. Anything you're going to be watching for particularly closely? Beginning of the show, Barbara told us, don't expect a lot out of NVIDIA. I was asking, hey, does the NASDAQ sort of need another Palo Alto in order to feel good about things? Well, maybe folks weren't expecting a lot. And, hey, they made us wait. But, my goodness a what a quarter especially on that gross margin line considering what else they turned in yeah and it's going to have outsized impact on the estimation of course we know semi's big part of the broader market too so this is a story that'll continue tomorrow

that does it for overtime yeah and quite a fast money given these nvidia numbers which they made us wait for to the last minute that fast money begins right now