Closing Bell - Closing Bell Overtime: NVIDIA Touches All-Time High After Strong Earnings, Nears $1T Market Cap; NASA Administrator Bill Nelson On Why ‘Space Is The Place’

Episode Date: May 24, 2023

Averages closed lower for the second straight day as debt ceiling talks yielded no deal. NewEdge’s Ben Emons and JPMorgan’s Jack Caffrey break down the market action as volatility increases. Huge Overtime moves from Snowflake and NVIDIA after reporting numbers. Atlas Capital’s Bob Diamond talks the latest Fed minutes release. Needham’s Raji Gil breaks down Nvidia’s huge move after a strong guidance: the company stock touching an all-time high in after hours. Madrona Venture’s Matt McIlwain on the earnings from NVIDIA and Snowflake and what AI means for both companies. NASA Administrator Bill Nelson on the new space economy and the companies at the vanguard of the movement. 

You got your scorecard on Wall Street closing near the lows, but winners stay late. Welcome to Closing Bell Overtime. I am John Fort with Morgan Brennan, and we've got a big hour of earnings coming your way. Growth stories are the theme. NVIDIA and Snowflake. NVIDIA touching 52-week highs a week ago, more than doubling year-to-date. Snowflake trading at less than half its pandemic peak, looking to show its data prowess is still strong. We're also going to get numbers from retailers, American Eagle, and Guess. Reporters are standing by to bring you all of those results. Plus, we'll talk to

former Barclays CEO Bob Diamond about the just-released Fed Minutes, and we'll get his take on the debt ceiling debate. But now let's get straight to the market action. The indices posting back-to-back down sessions and a late-day surge fizzled. Joining us now, Jack Caffrey, Equity Portfolio Manager at J.P. Morgan Private Bank, and Ben Emmons, New Edge Wealth Senior Portfolio Manager with us here on set. Guys, welcome. Jack, first to you, do NVIDIA and Snowflake, which we are waiting for, matter outside of the individual stocks themselves,

especially NVIDIA, given it's a high multiple, big market cap stock. It's got an AI story. There's a lot of similarities with some names out there that have been moving. You know, I think very much so when we consider the relatively narrow breadth that the market has had this year, with so much, 75% to 80%, depending on the day of the s p return really being driven by six generally technology secularish growth stocks i do think there's some shifting under the curve whether those really are secular stories anymore but

nonetheless nvidia plays very much to this theme around ai and whether that is a story which can continue for so many of the other, so much of the leadership. You know, we would actually see a safer market one with a little bit more breadth. But right now, you know, certainly people are willing to bet on the horses continuing to lead. OK, Ben, so what are you reading through to, if anything, out of these earnings, even if it's just sentiment, right, not specific industry. Yeah, I think the sentiment is driven by that AI hype, so to speak, and it's captured the markets.

And it's relevant because if it's something about like a accelerated hype and keeps people sort of in the markets without really thinking it through, that's when you get this sudden sentiment turns. If the debt ceiling, say, becomes worse, and it seems that they're becoming a little bit of a tension, they had a whole, you know, let's say sparkling theme around AI just suddenly disappears.

I think that's what you want to watch for. I mean, the theme really seems to be for the market right now. And yes, we finished the day lower, near the lows of the day, the S&P finishing down at 41.15 with every sector but energy in the red. But it feels like mixed. Mixed is the headline, whether you're talking about the latest debt ceiling headlines, whether you're talking about earnings, whether you're talking about macro data. What's an investor to do here?

That's not an easy one, Morgan. But I think that you want to at least stay invested, obviously. I don't think you should be completely out of it and put all your money into T-bills that are safe currently, because there's some that are not, apparently. Secondly, there's a lot of opportunity, though. I mean, there is opportunity in tech, there's opportunity in financials, for example, or even in defensive, because this is not an economy in recession. It's an economy that's showing, actually, resilience.

And if you listen to the minutes today from the Fed, they have to continue to consider a hike really because the economy is not showing any real slowdown or recession just yet. So I say stay invested, stay involved, because it's not really a market to be really, really bearish about, in my view. OK. Ben, I want to get your thoughts on this, especially when you had Toll Brothers, which was one of those companies that reported results after the bell last night, really strong results. And we have seen this outperformance of home builders in recent days, in recent weeks. What is that

signaling about the cycle we're in in the economy right now? Jack, I'm sorry. Jack, I'm sorry. No worries. Well, I do think, you know, when you take apart the strength in the home builders, it strikes me that you do see a bit of a macro bet being made by the builders, which is that they are buying off on the bar market's conviction that we are going to get lower interest rates sooner rather than later. And I think at the same time, when you look at what has been working, whether it's the consumer staples names, whether it's that high growth technology space, those seemingly all work well when you come back to this idea that inflation will be cured sooner rather than later, but that the cure for inflation will not be the decline into a recession. I do think it's sort of interesting because staples would seem to be late cycle, homebuilders early cycle. The two working together would seem to suggest that, you know, it's not a classic equity cycle unfolding, not a classic economic cycle. And maybe it's one that comes

back to more rolling recessions, where we think about the cost restructuring you've seen in so many technology companies. Can that actually take us? And that underpins where the Fed, I think, has its confusion. They're not getting the pushback that they're supposed to see. And so you have that battle to raise or not to raise. Sticking with a big picture perspective, Ben, you say the chances of debt limit negotiations failing, Fed hiking in June, more banks falling into the hands of the FDIC, and a recession hitting this summer, you say all around 30 percent. I think you mean each around 30 percent, right? But the likelihood of one or more of those things happening is probably more than 30 percent. So if these debt ceiling negotiations continue to go sideways, as they seem to be at least today, does that increase the chances of banks failing or of a recession hitting?

And should investors think about this as perhaps more than a 30% chance of things going more wrong than they are right now? Yeah, it's a trifecta, right? It's an issue of, like, say that the debt ceiling passes us by, but the Federal Reserve has made some strong comments about this in its minutes, about, you know, this is an issue

that then gets to the background and the Fed continues to focus on inflation, then, you know, hiking rates will put more pressure on the banking system. Keep that thought. I just want to mention, Snowflake is out. That's why you see it down more than 10% right now. We are going through the numbers. We're going to bring those to you as soon as we can. Yeah, as I was saying, it puts pressure on the banking system because of that ongoing dynamic between deposits and interest, high interest you can get in t-bills or elsewhere in addition that you you do have this

lingering recession hanging there it's i think a psychological issue at this moment given that the data hasn't shown it yet but i do think that if you're getting higher rates as the fat has to get this inflation under control yes it will lead to some point of this risk of recession becoming bigger. And that's your 30 percent or higher that you have to keep in mind. Yeah. Jack, how much hinges on the Fed cutting rates for this market here? Because we continue to hear the Fed speak that it's going to be the message is higher for longer. It's a little bit of a it depends on who who which official talks. But it does seem like it's a little bit of a, it depends on who, which official talks, but it does seem like it's a little bit of a question mark. And yes, I know data dependent in terms of whether we get more hikes or whether we are actually on pause. And yet the market continues to believe that we are going to see these cuts. Who's right?

Well, I think data dependent is a nicer way of saying we don't know. And, you know, from that, I think it comes back to the economic data has been surprisingly well calibrated, the forecasts, and that we were expecting a recession earlier this year. The recession seems to be keeping pushed out. Companies are generally doing a reasonable job controlling their costs and continuing to bring earnings through a little bit better than expected. So I really think if I'm looking through where the stress point might be. It's going to be the sensitivity of lending officers and whether we continue to see credit standards tighten, which they may have to if companies are forced to actually, if banks are forced to actually earn higher net interest margins over what they're paying more for their deposits. But ultimately, waiting for the Fed to

tell me all clear, their forecasting record is, shall we say, checkered at best, or maybe lacking, if I wanted to be a cynical equity investor. But the bond market seems convinced that the Fed will be cutting sooner rather than later. I think the bond market is one that's really the one that we should be looking to, to tell us whether the equity market is right or wrong. We'll leave it there. Cynicism pays sometimes. Jack, Ben, thank you. Thank you. I mentioned that Snowflake earnings are out. Frank Holland is now ready to go through the numbers. Frank? Hey there, John.

You can see shares are falling double digits down almost 12% right now. Miss when it came to revenues. However, a big beat on EPS, 10 cents above estimates. Really what you're looking at here is a miss on RPO. That's a metric for its pipeline. RPO's estimate was at $3.6 billion. It came in at $3.4 billion. Also, when it comes to product guidance for the full year, that's lower. It's below estimates right now. That's why you're seeing the stock fall right now. In the report,

however, the company's CEO, Frank Slootman, really pointing to the fact that there's a big tailwind for this company when it comes to data for AI, saying that data has a gravitational pull and is given the vast universe of data that Snowflake manages. It is no surprise that interest in data science, AI, and machine learning is escalating while its uses are rapidly evolving, but not directly talking about the demand and how it impacts the company. But again, a miss on the top line, a beat when it came to EPS, 10 cents above estimates. However, its guidance, very soft. Shares of Snowflake down more than 12 percent now. Back over to you. Frank, the year over year growth that they are projecting for the next quarter is 33 to 34 percent, I believe.

And that's down a bit from where it's been. They don't say a lot about consumption in this release itself. So do you have a sense of what you might be listening for on the call here? Because Frank Slootman spent a lot of time with us on overtime last quarter talking about consumption trends and how that's different from overall what customers are expected to spend once we get through a difficult economic patch. You know, absolutely. That's really the question. One of the things I really want to note is that generally, Snowflake puts its customer count right at the top of the report. Right now, they're segmenting it out. They're saying customers that are in the global 2,000, you know, not really putting the whole number. So there's a question right there in this macro environment. Also, as we mentioned, they did reduce their guidance when it came to full year revenues for product.

Products really, they get most of their money. It was about 40% before. Now it's going down to 34%. So listening to the call, I really want to hear about their customers, their ability to retain customers in this environment. As I mentioned, their RPO was a miss. And the other big thing to listen for is the potential acquisition of Neva. It's an AI powered search company.

There were reports that it was going to acquire it. We haven't heard a lot about it in recent days, but that's a question if this company is trying to use M&A to really ramp up for the AI race. Indeed. All right, Frank, thank you. Speaking of Frank, so we want to hear from don't miss Jim Cramer's exclusive interview with Snowflake CEO Frank Slootman coming up at 6 p.m. on Mad Money. Morgan. Well, CNBC senior markets commentator Michael Santoli joins us now from the New York Stock Exchange to talk NVIDIA while we await those numbers as well. Hi, Mike. Hi, Morgan. Yeah, just trying to frame out exactly how large NVIDIA has grown, both in just sheer market scale and also valuation against some other bellwether stocks.

Here you see the market cap of NVIDIA once again eclipsing that of Berkshire Hathaway. So NVIDIA here trades at, I don't know, 22 times sales. Berkshire Hathaway is 20 or so times earnings. Clearly NVIDIA growing monstrously faster, but a much smaller economic footprint. So it shows you the preferences of investors right now relative to, you know, old versus new economy, as you might say. It also was a very brief stay at a premium market cap to Berkshire Hathaway back a year or so ago. Now, take a look to evaluation compared to Amazon. Of course, Amazon for decades has defined almost the boundaries of a highly valued

growth company the way you didn't really pay attention to today's earnings because they were understated relative to the global domination that the company was building. And now they're almost exactly in parity. So you see Amazon is in a jagged way, gotten its earnings multiple compressed as NVIDIA has climbed up towards 60. So clearly, look, the hurdle might be surmountable, but it's not low at this point,

guys. It's in a very special place, NVIDIA, isn't it, Mike? I'm looking at NVIDIA versus Tesla year to date, one year, two year, five year. It really started outperforming at the beginning of this year. I mean, Tesla hasn't done quite as well even as NVIDIA has, right? Not close. In fact, even if you go into the fourth quarter of last year, it really does seem to be timed pretty well into chat GPT. And the other thing I keep pointing out is, so this 60 times earnings, it essentially gets it back to that peak right around the NASDAQ peak in late 2021, whereas the overall NASDAq and things like Microsoft are basically halfway back to that peak valuation. So it is a special case along several fronts.

All right. Mike Santoli, we'll see you later in the hour. Up next, former Barclays CEO Bob Diamond weighs in on the debt ceiling and the X state or as the X state gets ever closer. Plus, we're going to bring you those NVIDIA numbers as soon as they cross. And we will ask an analyst if the stock can keep climbing after more than doubling this year, as we just covered. Overtime is back in two. Welcome back to Overtime. Today's FedMinutes showed officials are less certain about their next move due to lags in policy, with some members not seeing the need for more rate hikes. And many officials said it was important to raise the debt limit in order to avoid risks to the economy and

our financial system. But according to House Speaker Kevin McCarthy earlier today, negotiations are still held up over disagreements on spending. So let's bring in Bob Diamond, CEO of Atlas Merchant Capital and the former CEO of Barclays. Bob, great to have you on the show. Thanks for being here. Nice to be here, Morgan. So, I mean, it's like pick your poison on any given day and any given hour. Let's start with the debt ceiling. I want to get your thoughts on this as we do get closer to that June 1st potential X date. Just how real the risk is here for the markets, which, yes, we've seen some gyrations in treasuries, but overall seems to be rather sanguine, dare I say, given how close we're getting to that date. Yeah, I guess I'd say a couple of things on that.

First of all, you know, I've seen this movie many times. You know, we play this political game leading up and into the limit i think there's no question that it would be a terrible terrible terrible decision uh to default for the dollar for u.s treasuries for a brandon reputation i think the chances of that happening are extremely light um i also think that the june 1st deadline morgan is probably can be extended pretty easily. I think originally, Treasury Secretary Yellen talked about January, and then there were a number of things you can do around payments and other things to extend it to June 1st. If we can extend it to June 15th, we have corporate tax payments coming in. We have personal tax payments coming in. So I think

the deadline's a bit artificial. I don't think people should worry about June 1st as much as they're saying. But Morgan, here's the rub in my mind. Think of the deficit. When President Trump came into office, the deficit was 20 trillion. Since then, during the Trump and Biden administrations,

it's now 31.4 trillion. I almostations, it's now 31.4 trillion. I almost can't say that. 31.4 trillion. So the deficit has grown 63 percent during the Trump and Biden administrations when we've been in pretty much Goldilocks economy and Goldilocks Fed policy and stimulus. So what's going to happen in the tougher times, which we all know are coming with higher interest rates? And I think I think it's perfectly OK to be talking about reducing spending as part of this this agreement. And and I think I think it's wrong to say that should be off the table. Yeah. I mean, we did have a pandemic thrust in there. But but your point, your point is a very good one.

And, of course, when you do talk about higher interest rates, you are talking about a higher cost of servicing all of that debt as it continues to grow as well. So it brings us back to the Fed. Data dependency seems to be the theme, and this idea of higher for longer where interest rates are concerned. But then you had Waller earlier today basically saying that he doesn't support stopping rate hikes unless inflation cools. And we know it's moving in the right direction. It's still much too high compared to that 2 percent target. But but your thoughts on that, especially with something like PCE, which comes out on Friday, is lagged. Listen, we feel inflation has clearly peaked. It's moving in the right direction.

It's slipped under 5 percent recently. We believe that if by the end of the year inflation is between 3 and 4 percent, the Fed will be absolutely delighted. And I know people talk about this 2 percent target, but I don't think they should be thinking about that. The 2% target, I think, is a very academic exercise. It was only put in in 2012 by Chairman Bernanke. I think both Chairman Volcker and Chairman Greenspan, who kind of had more of a markets orientation, worried much more about stability than the magic of 2%. In fact, when Chairman Volcker left in 1987, inflation was above 4%, and he was lionized as the man and the chairman that tamed inflation. So I think we're going in the right direction. I think the phrase you used is correct. I think there'll be data dependent

on whether or not there are more increases. And unless the data is very strong in terms of inflation, I think they're going to pause. They're going to watch. But on the other hand, I think the barrier to cutting is much, much higher. And I think the markets are expecting 50 to 75 basis point in cuts this year. My view is we're not going to get any cuts this year. I can't envision a scenario where the Fed would reverse course. I do think they paused, but I don't think they'll reverse course, reverse. I do want to mention American Eagle numbers are out. We are going through them. The stock is down about nine and a half percent. Nvidia is out as well. I haven't seen how that stock is moving yet,

but we're going to put it on the screen and show you in just a moment. Bob, I want to ask again about the debt ceiling, not so much about the chances of default, though I wonder if you do think that we're more likely to default based on the house setup and the speaker's precarious position than we have been in other crises like this, but on its potential to change market sentiment, right? Even if the fundamentals don't change as much and we get through this, does it suck hope out of the market and make people more fearful? And do we get stocks, equities perhaps repriced? I don't know. And I think it depends on what the agreement is. And, John, we need to we need to pause or reduce spending. There's no question about it. This year,

you know, the recent debt all came out at very, very low interest rates. So forget the five, five and a half percent. But we'll pay six hundred and forty billion dollars in interest this year in the United States. Wouldn't you love to have that $640 billion to spend on education programs and other things that we want to invest in in this country? So I think we have to be hyper-focused on reducing spending. And I would sense if we don't focus on that, that would be impactful in terms of equity prices in the markets. So but I got to ask, first of all, I want to mention that NVIDIA, which you've been talking about as a big potential deal here. We're going through the numbers. Christina Parts Nevelis is going to bring them to us.

But it is up more than about 10 percent right now. Hold on. We are ready with that. Bob Diamond, thank you for joining us. Christina Partsenevelis, hey, some traders are excited about these numbers. What do you see from Nvidia? That's because there's so much of a retail flow in this stock. But what we're seeing is adjusted EPS of $1.09, which is a beat. The street was anticipating $0.92. That's actually up 24% from the previous quarter. So 24% quarter over quarter. Revenues for Q1 came in at 7.19 billion, also higher than what the street anticipated at 6.5 billion. In this earnings report that we're getting right now, the focus,

the two simultaneous transitions that Jensen Wong is talking about is accelerated computing and generative AI. So that is their focus, our entire data center family of products. They list them. And so that's what they're, we are increasing our supply to meet surging demand, which we know. And so if we were to go a little bit further down

just to catch up on some data center revenue, which I think I'll have to get back to you on just because it's not popping up right now. But we have a beat on the top and bottom line for this company. And it sees Q2 revenue of $11 billion versus the $7.15 billion estimate. So again, Q2. Q2 is higher. Q2 gross margins of 68.6% to 70%.

Also higher than the 66.6% estimate. So top and bottom, I'm beat. You mentioned data center revenue. I'm seeing $4.28 billion on that. So that's also higher because we were estimating $3.9 billion. So already a beat there for that. So that's strong because a lot, AMD and Intel, both saw data center revenue decline double digits in their quarters.

Not the case here for NVIDIA right now. Now, when I'm talking to infrastructure players, Christina, right now, I'm hearing about a rush, an AI rush. That is probably what NVIDIA is going to talk about a bit. That's, in a way, similar to the crypto rush that we saw a couple years ago. Maybe it won't be as short-lived because we've got a whole lot more companies in the technology ecosystem talking about the long, the long strategic importance of AI. But we were just talking about the importance of this stock now up about 14 percent after hours to investors being able to believe in long bets and in technology changing things,

despite this rocky macroeconomic environment. What do we usually hear from NVIDIA on the call that fills in more details about the quarter? What do you be listening for? Well, to your point, NVIDIA is the one that can actually back up all of this AI hype because of their H100 chip. So we're going to be focusing on that particular AI chip. We're also going to be focusing on whether there's a drastic amount of decreased demand from China, especially with the export restrictions. But to your point, a lot of this valuation, a lot of this stock was riding on the near-term demand driven by AI. And we're seeing through the Q2 revenue

guidance thus far that they're anticipating it to continue to climb. And to your point, this rush of like what we saw with gaming, well, we see this rush and hoarding with these H100 chips. So what does that mean for supply going forward? What does that mean for any shortages when it comes to silicon, which is required for those chips. So those are just some of the few things, but a lot of it, a lot of it is riding on not only H100, but the software that is around that chip to make it work with everything else in the motherboard and data center. So interesting, Christina. As you said, gaming revenues might be down 38% year over year for Nvidia, but they're

up 22% quarter over quarter and automotive more than doubled year over year for NVIDIA, but they're up 22% quarter over quarter. And automotive more than doubled year over year. Looking forward to hearing that call. Thanks for bringing us the numbers. Up next, we're going to get an analyst's first take on these NVIDIA results that, again, have the stock up about 14% after hours. What he wants to hear from CEO Jensen Huang on that earnings call when we come back. Welcome back to Overtime. American Eagle and Guess earnings are out. Courtney Reagan has the numbers. Hi, Courtney. Hi, Morgan. Yeah, so let's get started here with American Eagle. It is an inline report when you're looking at earnings per share coming in at 17 cents, adjusted

on revenues of $1.08 billion, slightly higher, but about in line there with the analyst consensus. Merchandise margins did improve thanks to lower cost of transportation and freight, which is what we heard from other retailers, though partially offset by increased markdowns. The guidance, though, is really looking what it's pulling down the stock. The second quarter revenues are now being expected to fall about low single digits down. And the analysts were looking for an increase of 1.6 percent higher. Store revenues up 5 percent. Digital revenues, though, declining 4 percent. Again, in line with what we've heard from other retailers, a stronger store, weaker online. Aerie comp sales increased 2 percent. American Eagle

comp sales declined 4 percent. And if we can move on and check out Guess. Guess is reporting a loss of $0.07 per share on revenues of $570 million. Those are not necessarily comparable to estimates, as we have fairly thin analyst coverage for that name. However, the company did raise its dividend, also raising its full year guidance for earnings and revenue, and pointing out that the international business was stronger and helped to offset some of the weakness that we've seen in the America's business as a result of some slower

customer traffic in its stores. John and Morgan. All right, Courtney, thank you. Well, we got to get back now to NVIDIA, that stock hitting all time highs after hours after beating on the top and bottom lines. You see it there up nearly 15%. Let's bring in Needham Global Semiconductor Analyst, Raji Gill. Raji, I guess it's the data center number here in part. I mean, we saw Intel and AMD lower on that score. It just seems to indicate that the AI demand for NVIDIA, which it staked out early, is really setting it apart from its

semiconductor peers. Is there some other way to read this? And do you have concerns about whether that demand continues? I mean, without a doubt, I mean, if you look at their guide for July, it's 11 billion. That's 4 billion over the street. I thought it was a typo when I first looked at it. It's a massive guy up. Some of that might be higher pricing for their H100, but generative AI or chat GPT is driving a step function increase for inferencing deployed in data centers. And we're seeing that impact on the data center business.

The non-GAAP gross margins were also 70%. So this is 400 basis points above the street. So you have a company that's doing now $11 billion a quarter of revenue. That's the highest quarterly revenue in the history of the company at a 70 gross margin um so they're clearly the beneficiary you know as you said in in the past you know semiconductors are the picks and shovels of ai and nvidia is clearly the biggest pick and shovel amongst the semis in this space yeah um gaming which i know is a smaller segment but but still one of the bigger ones for the company, is down 38 percent versus a year ago. It's up double digits from the previous quarter. How much does that matter to the broader outlook for the company through the

rest of the year, especially as China does have this reopening? So data center is clearly the focus, but gaming is also an important part of their business. Gaming on a year-over-year basis is down, as you noted, as a company has kind of gone through this inventory correction in gaming last year. But on a sequential basis, it's up, and it's now returning back to kind of its normal run rate, which is about 2.5 billion a quarter. And so if you recall, last year they undershipped the channel in order to clear out that excess inventory of gaming cards because of a slowdown in China, because of a slowdown in consumer

spending. That all happened last year. They cleared that out. They got the market ready to upgrade to their next generation gaming architecture, which is the Lovelace. And so that appears to be on track. And so gaming seems to be quite strong as well. Watching this stock move after hours, it is now up almost 17 percent.

And I want to remind everybody we had Jensen Huang here on Overtime just last week talking about AI. And I got some Twitter eye rolls based on what he said. Take a listen. It can do anything it's instructed to do. It's a new type of computer. That's why I called it the iPhone moment. We've taken IT and we put it into the hands of literally every single consumer in the world. This is such a big deal. Talking about AI there, if you were short, I'm sorry this evening. Raji Gill, what does this signify for the rest of the sort of high valuation stocks? What does it signal also for the rest of

the semiconductor market that has some IP related to AI. We saw a little, a slight move higher in Microsoft, not a semiconductor stock after hours, but it does have an AI play. Is this an NVIDIA tide that could lift some more boats? Yeah, I think so. I mean, if you beat the guide by $4 billion, you're going to see a 17% increase in the stock and the aftermarket. I mean, it's a massive guide up. And some of it, again, might be because of premium pricing, maybe kind of a rush for orders. But it's not like the crypto kind of impact, which was not their main part of the business

at all. It represents a true demand. You're seeing significant uptick in demand for the H100 in the hyperscale area. You're also seeing inference being adopted by folks like Google Cloud. And we're seeing, you know, verticals, whether it's financial services, consumer internet, you know, retail, oil and gas, start to adopt generative AI inside their businesses. And that means, you know, natural language processing, processing voice, processing images. Now, this trend is not slowing,

it's not going to slow down. I think it's going to speed up. You know, in terms of the overall semi-cycle, I mean, we're still somewhat cautious on the cycle. But the AI kind of base plays, whether that's NVIDIA or AMD or even Micron on the memory side or Marvell on the processor side, I think are going to continue to benefit and enjoy this swing in the AI business. I just want to note, Morgan, this stock is now up about 19 percent after hours. This is a market cap that was already like three quarters of a trillion dollars. You don't see that every day. Yeah. We were talking about earlier on the show, right, that it's bigger than Berkshire Hathaway

and that when you talk about what we have seen in the market resilience and the moves for the S&P year to date, it's really been seven stocks that have kind of led the charge here. And NVIDIA has been one of them. Raji, you have a buy rating on the stock. It's more than doubled since the start of the year. That's even before the move we're seeing here after hours. Given the earnings report we just got, given the conversation about AI, do you buy in at these levels or do you wait for some sort of pullback at some point in the future? I mean, I think, you know, in terms of timing, that near-term tactical timing, that's something that, you know, it's going to, depending on how folks want to look at it. But if you look at it long-term and if you look at the potential earnings power that

the company can generate, you know, the company could double the earnings, you know, $10, $11 EPS over the next two to three years. And, you know, we believe that NVIDIA will be the first trillion dollar market cap company for semiconductors, will be the first trillion dollar semiconductor market cap company, and it has the numbers to back it up. So, you know, whether you want to rush in now or not, you know, that's that's really not the big main issue. I think that the bigger picture is what is the earnings power of the company and the fact that it's tied to these large trends. The gross margins are 70 percent on a 11 billion a quarter revenue business. So that's quite a profitable business. And let me correct my, Raji Gill, thank you. Let me just correct myself. We're up 150% now with

these moves after hours since the start of the year. And we're closing in on that trillion dollar market cap, more than $900 billion in real time right now. Yeah. I mean, up about 20% would I think be around $150 billion worth of market cap on paper. We'll see how it trades tomorrow, of course, but wow. Wow. And you know what? Wow. Just in terms of the conversation you did have with Jensen Huang last week and how much of a scene setter that was essentially for the numbers we just got here. Well, got to watch overtime.

All right. Well, we're going to talk more about this big spike for NVIDIA throughout the show as we count down to the earnings call. Overtime will be right back. Welcome back to Overtime. NVIDIA shares hitting an all-time high after hours, surging after a strong earnings report just moments ago. Let's bring in Mike Santoli. Mike, want to get your thoughts on this?

As we touched on before the break, I mean, this has been one of the stalwarts of the market in terms of leading the charge for the gains for the S&P and the Nasdaq since the start of the year. Yeah. And one instance, Morgan, where the market clearly was seizing upon whatever inputs they could grab to say what this revenue guide was going to look like for the second quarter. It's just a stunning dollar amount, raising guidance for the coming quarter, the current quarter, by $4 billion relative to the $7 billion forecast, almost to the point, and this is a minor issue, almost to the point where you wonder why they didn't pre-announce, because that's the magnitude of this kind of beat. So what it's going to do, we just talked to you about the P.E. 60 times forward. going to do. We just talked about the P.E.

60 times forward. Well, it's going to knock down that P.E. radically the easy way by having everybody jack their earnings forecast in the for the year to come. This was supposed to be a lull year in terms of profitability for the company was a real step back as they cut numbers last year. And now it's ramping right back up. So to me, it says corporates have a massive kind of buying panic in AI related computing capacity. And NVIDIA is collecting it. Mike, why is this happening? Is it was there a short interest that had built up in this name in particular because of the massive run it has been on this year when's the last time we saw a move like an after hours move uh in minutes yeah this big on a market cap this huge it's not common i want to say the recent meta quarters have seen comparably enormous moves

uh whether it was on the report or on some of their layoff announcements. But that was usually with a depressed stock, you know, one that was kind of reversing trend. This is really continuing a trend. So, you know, in terms of where it's coming from, I don't necessarily think this is a particularly heavily shorted stock. It's a massively liquid name. It trades enormous volumes. But you can make the case that people are going to feel underexposed to it. All the very large index names and now pushing a trillion dollar market cap is going to be top five market cap in the U.S., in the S&P 500 with this after hours move. Almost

nobody owns, you know, enough of it to necessarily keep up with its role in the benchmark. Now, that math can't last forever. It's not like it's open-ended kind of self-perpetuating gains that happen with that. But that, to me, explains, you know, the fact that people were bracing for this idea that it had run too far too fast. The numbers maybe couldn't please everybody because expectations had gotten too high. Well, obviously, that was the wrong bet. The math is adding up this afternoon. Mike Santoli, thank you. Let's bring in another voice on this. Matt McElwain, he's the managing director at Madrona Venture Group, had planned to talk to you about Snowflake.

But I've got to talk about AI in general. There are software plays here that are just mainly software. And then there's NVIDIA, which is across semiconductors, software, you know, making a platform play here. How are you distinguishing between the companies that are benefiting first in this AI wave, companies that might benefit later? Well, that's a great question, John. And you and I talked a little bit about this back in January. And what's happened now is AI and generative AI in particular are relatable to everybody. I'm willing to guess that every Fortune 500 CEO has said the following thing to their executive team.

What is our generative AI strategy? And generative AI starts at the bottom of the stack, and that's the chipset. And that's what NVIDIA dominates today. Now, the question is, will they be able to dominate it forever? Because every one of the cloud service providers has their own capabilities, whether it's tensor processing units at Google, whether it's Microsoft with some things that they're working on that they'll, I'm sure, talk more about soon, or AWS with things like their own Inferentia chips. So the positive here is that it all starts with

NVIDIA chips today. There's a diversity of those chips that are coming out in the future. And then NVIDIA has to move up the stack into the models because the models and the data that trains the models that gives you the ability to generate something, we are really just getting started on it. And it's not at all clear that, you know, NVIDIA can eat up the stack from where they've been historically, which is at the chip layer and at the software, the low layer software, what they've got, what's called CUDA, that enables the models to be built. I mean, you look at this, then you look at Snowflake, which is also down

pretty big after hours. And it sort of speaks to this fact that you're seeing belt tightening in terms of some of the spending, some of the enterprise spending that companies are doing right now. But AI seems to be the one area where it is. I mean, we talk about this AI arms race, but where the money is still flowing, whether you're a business making investments for your company or whether you're an investor as well looking for the next big thing. I wonder how you think about that and what that means in terms of more companies adopting more capabilities more quickly right now in this uncertain macroeconomic environment. Well, like I said about the Fortune 500 CEOs, they're all asking this question. But what's also happening is early stage venture folks like ourselves are backing some of these

great next generation companies, companies like a Runway ML, for example, other companies that are helping you build up the layers of the stack like a fixie. And those companies are going to enable both gen native applications and gen enhanced. What has Satya been talking about all week at the Build Conference? All the ways that Microsoft is enhancing existing software applications whether that's github or that's microsoft office or even now windows with generative enhanced capabilities so for microsoft this is being yet another major transformative moment it's going to ultimately become a transformative moment for every single company in the world. All right, Matt, thank you.

With NVIDIA still up more than 19 percent after hours. Morgan, I will note Matt was just talking about NVIDIA needing to move into models. I'll note that's exactly what Jensen Huang was talking to us about here on Overtime last week, and that partnership was serviced now. We're going to keep you updated on this huge spike for NVIDIA as we near the earnings call at 5 p.m. Eastern. And up next, NASA Administrator Bill Nelson on the future of human spaceflight after a slew of space news over the past week. Welcome back to Overtime. There's a lot going on in the space space.

On Friday, Jeff Bezos, Blue Origin, winning a multibillion-dollar contract with NASA to develop a crewed lunar lander that can deliver astronauts to the moon's surface, becoming the latest company working on the Artemis program. Meantime, SpaceX on Monday delivering the American and Saudi astronauts of startup Axiom second all-private crew to the International Space Station for an in-total eight-day mission. And bankrupt Virgin Orbit shutting down this week as its assets and tech are sold to companies including Rocket Lab. Joining us now is NASA Administrator Bill Nelson. Administrator Nelson, great to have you on the show.

I do want to start with the future of human spaceflight. Between the $3.4 billion contract to Blue Origin on Friday, and then, of course, as I mentioned, this all-private mission to the ISS. Walk me through how NASA is thinking about the possibilities of bringing more astronauts, more people to space in a more meaningful way. Well, we're going back to the moon in a different way this time. It's not just the U.S. government. We're going back with commercial partners and we're going back with international partners. And that's what we've done down in low Earth orbit. We've done the same, already done it successfully. And you just pointed out last Sunday we launched a private astronaut crew to the International

Space Station in order to be able to get them ready to take over low Earth orbit for commercial space station. Yeah. It speaks to the commercialization of low Earth orbit and all of these private space stations that are now under development, including from Axiom. I guess walk me through what these business relationships are going to look like now. Well, if they are working with us, of course, if it involves humans, NASA is going to be all over it to make sure it's safe for astronauts. But if you are, say, a commercial space company like Rocket Lab

that is launching a NASA instrument of which there is a private startup company that's in lunar orbit right now getting ready to characterize the orbit that we're going to put our lunar space station in just depends on the mission as to how involved NASA is going to be yeah and of course we talked about this ax2 mission it's SpaceX that's involved SpaceX is also developing starship what hat which had its first orbital flight attempt not that long ago that is the other lunar lander that is under development and contracted with NASA alongside Blue Origin.

Just, I want to get your thoughts on everything that is afoot at SpaceX and your action to that Starship launch attempt. Well, it was, in fact, successful by SpaceX's terms. What they are, they have a lot of hardware. They fly it. When something goes wrong, they figure out what it is. They fix it, and they fly again. And they keep doing that until they perfect it.

And they've done it very well, and the proof's in the pudding. In low Earth orbit, the SpaceX Dragon to and from the International Space Station. Very successful program. We had news yesterday that Virgin Orbit is closing down, that its assets are being sold to a number of other companies in the space industry. Virgin Orbit had been a contractor with NASA. We've seen some issues with some of the other space startups that have been contracted with NASA in recent years, like Astra, for example.

I just wonder, as you get more and more creative with your partnerships, with industry, when we've seen some of these companies go public, we see their stocks trading markedly lower than where they went public right now, maybe some of them facing cash crunches, how you're assessing the financial fitness of this new space industry? We are a capitalist economy. People take risk. Often where there is risk, there is high reward. And so too in the space investments. And we've seen a number of these investments

be very successful. I think we've come through a period in which it was kind of the flavor of the day that subsided a little bit, but it's coming back. Because space is the place, space is hot, and it will continue to be as we go on to the moon, on then to Mars and beyond. Well, Administrator Nelson, we appreciate the time and the wide range of coverage right now. So thank you for being on with us, Bill Nelson, the NASA Administrator.

Have a great day. For more on investing in space, check out my podcast, Manifest Space. It is available wherever you get your podcasts. And we have a new episode. It's a juicy one. All right. Yeah, looking forward to that. And up next, final thoughts on NVIDIA's spike and the other big after-hours movers. Surprisingly, some of them didn't have earnings. Some of them were moving in response to NVIDIA.

When we come back. Welcome back. Let's check on some of today's big after hours movers, and it is all about NVIDIA surging to an all-time high after beating across the board. Second quarter guidance very, very, very strong as well. That call kicks off at the top of the hour. Some names to check out moving in sympathy. AMD, which you know. Marvell, which has a lot of cloud chips. Supermicro, which makes server and storage systems that include a lot of NVIDIA chips moving about six and a half percent higher, Morgan. Yeah, I mean, just incredible moves after the bell. Obviously, NVIDIA getting all the attention right now, but even the other earnings movers, a lot of double digit moves. That's going to do it for us here at

Overtime. That's why you got to watch Fast Money, which starts now.