Closing Bell - Closing Bell Overtime: Scale AI CEO On Latest Fundraising Round; Breaking Down Latest Commentary From Fed Officials 5/21/24

Episode Date: May 21, 2024

Fed officials weighing in recently on the path ahead for rates; Jefferies Chief Market Strategist David Zervos breaks down what you need to know. Vital Knowledge’s Adam Crisafulli and Stifel’s Barry Bannister on the market action, including why Bannister remains bearish on equities. Earnings from Urban Outfitters, Toll Brothers and Viasat. Scale AI announced a $1B raise at a nearly $14B valuation, including investments from Meta, Nvidia, Amazon and more. Founder and CEO Alexandr Wang joins in an exclusive interview to discuss how the company will use the money and how it uses data. BofA analyst Geoff Meacham on what Eli Lilly’s drug approval in China means for the stock.  

Well, record closes for the S&P 500 and the Nasdaq with NVIDIA up more than the averages ahead of tomorrow's earnings results. That is a scorecard on Wall Street, but winners stay late. Welcome to Closing Bell Overtime. I'm John Ford with Morgan Brennan. Well, coming up, the AI story of the day. Scale AI raising $1 billion at a nearly $14 billion valuation, almost double its previous valuation. Big name backers including Amazon, AMD, and Meta. We're going to talk to Scale's billionaire CEO, Alexander Wang, exclusively about the news. And more earnings are rolling in this hour from home builder Toll Brothers, retailer Urban Outfitters, and satellite communication company Viasat.

We're going to bring you those results as we get them. But first, all three major averages inching higher today as Wall Street awaits NVIDIA's earnings tomorrow. Let's bring in our market panel, Vital Knowledge founder Adam Christofouli and Stiefel chief equity strategist Barry Bannister. Guys, welcome. Adam, I guess a bear conversion happening in the markets now. Are we running out of reasons for the major indices to head higher than this? Is there fewer maybe betting against it? Or is Microsoft's record high here on AI news a good sign? No, it's definitely, you know, tech's doing a lot of the heavy lifting.

We've had, you know, for the last two weeks now, several very positive, bullish AI product events. That's helping keep enthusiasm for that segment of the market very strong. So you had OpenAI and Google last week. You had two days now of Microsoft events. And like you just said, we have NVIDIA tomorrow. So, you know, the AI corner of the market is doing a ton of heavy lifting, and that's still working. You know, I think the fundamentals are still relatively supportive, but technical conditions have moved in a less favorable direction just as far as sentiment and positioning, et cetera, in the last month, given the degree of the rally and how many people have been dragged in.

So that part is less supportive. Fundamentals are still relatively healthy, but the setup is not nearly as positive as it was, you know, even just a couple of weeks ago. And Barry, you're ready to say it's over. I mean, you're saying we're going to get a full 10 percent drop in the S&P in the next four months. If so, what triggers it? We're looking at sticky inflation, a lot closer to 3 percent than 2 percent, which is the Fed's goal. And we're thinking the economy is actually doing just fine. It's recovering from what was a de facto recession in mid-22 to mid-23.

The market foresaw that peaking on December 30th of 21 and falling 32% in real terms in 10 months. So after that pseudo recession, we're getting the recovery. We've harvested all of the disinflation late cycle that you would expect after such a slowdown. And now inflation will pick up in the second half and it'll certainly delay Fed rate cuts and maybe even change their views on what normalized interest rates should be. You know, it's interesting, Barry, because we have made a lot of hay about the fact that Mike Wilson over at Morgan Stanley has changed his call. And this idea that it's left Marco Kalanovic over at JPM is sort of the last standing bear on Wall Street. But you sound kind of bearish yourself.

Well, we're very tactical. We look at everything in about six-month increments. I can tell you from experience in the last 40 years that turning bullish in May seasonally is a very dangerous game. It didn't work when I was an analyst for 25 years. Every bad call I ever made was turning bullish in May or bearish in October. So I would be a little skeptical of a bullish conversion in May at this point in time. But in our tactical call, based on macro, we're looking for a pullback in the market. It doesn't mean it can never rise again. It just means that we're looking for a pullback in the market. It doesn't mean it can never rise again. It just means that we're looking for a correction. Adam, I want to get your thoughts

on the flurry of Fed speak we've gotten, especially as we get the minutes tomorrow. It does seem like the message has been pretty clear and pretty steadfast from the many officials we've heard from, yet Waller perhaps getting the most attention, in part because, not because of what he had to say about needing several more months of good inflation data, but perhaps about what he has to say about the economy cooling. Want to get your thoughts on that? Yeah, I thought the most interesting part of his speech today was that there was, you know, a substantial part of the text was focused on indications of slowdown in growth. He noted the ISMs.

Both ISMs are below 50. He noted the recent cooling in retail sales. And then also some of the labor numbers as well are coming off the boil. I think the Fed is speaking from a relatively consistent script. The bar for incremental hikes is extremely high, very unlikely to be reached. They are not comfortable with talking about rate cuts in the immediate term. And the market isn't pricing that in either. So there isn't a real discrepancy in that front. The market's looking at September for the first cut and only about a cut and a half of this year. So there aren't aggressive cuts being priced in. So the market and the Fed are

on somewhat of the same page. I don't think that the risks to the market really are inflation on the upside. I think the risks really are inflation on the upside. I think the risks more are growth on the downside because you have had now several weeks of downside data on manufacturing, on services, on labor, on retail sales. So to the extent that continues, you know, I think that's really where the risk to the current narrative lies. It isn't so much an upside inflation risk. Speaking of market risk, Barry, what about politics? We are about six months out. I know you like to look six months out. We're six months out from the elections. And I wonder, with this really contentious presidential election, strong feelings about the economy

that aren't necessarily in step with stock movements and macro data as much as usual, do you expect that to factor into equity movements between now and then? Yeah, obviously the presidential election is going to matter quite a bit, but so is the House and the Senate, because without both, you can't get bills through on spending. You can't really do very much other than regulatory or foreign policy. But Trump is no stranger to debt. I would expect very similar policies in terms of big spending, a more inflationary bent to that spending if Trump wins. And depending on the House and Senate, if Biden won, we would have the same massive spending. Remember, it was the

$1.9 trillion March of 21 stimulus bill that created this money illusion, which caused a burst of inflation. That might have just been a warm up. And Adam, what comes after NVIDIA, right? I mean, I guess the guidance there is really important since there's still this this pent up bullishness and expectation around AI. But given that the Fed seems to be sort of in wait and see mode, no hikes coming anytime soon, but not necessarily any cuts either. Are we back to watching for inflation signals, looking at labor reports, that kind of thing? I guess for the next couple of weeks, you know, I guess there's three kind of main buckets of catalysts that I'm looking at.

You know, obviously, economic data, especially on the labor front, given some of the numbers we've seen in the last couple of weeks, if that continues to see a further softening of labor momentum and then the inflation figures, we have the April PCE as a final inflation number of this month. So that's one bucket. The other one on AI. So after NVIDIA, the next big catalyst would be the Apple Worldwide Developer Conference keynote, at which they are expected to, you know, unveil a series of announcements, one of which is likely to involve some type of a partnership with OpenAI based on media reports. And then the third one, you know, related back to the election, you know, you have two major events happening by the end of June that could be decisive for

the election, one of which will be a decision in the New York City trial. It looks like their jury will go into deliberations next week. And then the first debate, which is at the end of June. And so those are going to be critical catalysts for what happens in November. So those kind of three buckets looking out over the next couple of weeks for events. All right. Adam and Barry, thanks for kicking off the hour with us with record closes for the S&P and the Nasdaq. We have our first earnings report out. Viasat results are out. And I'm going to take you through those numbers right now. We got a loss for fiscal Q4. These results are we have a loss of 80 cents per share. So wider than the 63 cent loss that was expected. Revenue a beat one point one five billion dollars

versus estimates of one point zero nine billion dollars. It looks like full year revenue guidance, though, is coming in flat versus estimates of up eight point two percent here. In terms of the commentary in the shareholder letter, they say they remain focused during full year 2025 on building a solid foundation for sustained growth, sees attractive opportunities in large and expanding defense and enterprise global mobility markets that are driven by benefits of constant connectivity and environment of steadily compounding increases in bandwidth demand. A very big trend that we have talked about many times on this show. Nonetheless, you can see those shares are down pretty dramatically right now,

9% on mixed fourth quarter results, and that revenue guidance for the full year, that is much softer than anticipated. Yeah, wow, 10 now. Well, heading in the other direction, Urban urban outfitters. Those results are out. Pippa Stevens has the numbers up 7%, Pippa. That's right, John. The stock is higher after top and bottom line beat for urban outfitters during Q1. Adjusted EPS coming in at 69 cents.

That was 17 cents ahead of estimates. Revenue at $1.2 billion ahead of the $1.175 billion that analysts were looking for. Now, same-store sales at Free People and Anthropologie beat expectations, although same-store sales at Urban Outfitters itself decreased more than expected. Now, the company said that customer demand remains robust for their spring and summer fashion, which they said bodes well for continued sales growth. In Q2, the stock up 8 percent. Morgan? All right. Pippa Stevens, thank you. Two big moves here. Let's turn now to CNBC senior markets commentator Mike Santoli for a look at what markets are

pricing in as investors digest fresh inflation data and commentary from Fed officials. Mike. Yeah, Morgan, I mean, increasingly positive things seem to be the baseline assumption in the markets. You look at the capital markets sector. This is an ETF that covers asset managers, investment banks, brokerage firms, the securities exchanges themselves. So it's the part of the market that's most directly dependent on the market behavior itself, trading volumes, inflows, things like that, IPOs. And you see this really strong outperformance, things like Goldman Sachs really powering this. And we saw it similarly kind of going into the ultimate highs into 2022. So when it's outperforming, it's generally a positive thing.

It tells you there's a pretty good sort of risk tone in the market. Obviously, it doesn't give you necessarily a big warning of when it's about to end. But this is not sort of extreme outperformance that we're seeing just now. Now, take a look at this Goldman Sachs gauge of investor risk appetite. These are market based measures. So it's multiple factors about exactly how risk is being priced and how much people are willing to shoulder at the moment. You see this current level, it's kind of bumping up against this post 2021 range, let's call it. We were pretty giddy there, if you remember, going into 2021. That was the

meme stock frenzy. And that was when you had a lot of money just sort of rushing back into the markets. But it shows you here that essentially risk exposures are already relatively high. It doesn't mean you can't go higher from here. And a lot of this, Goldman says, is coming from the credit market conditions. So very, very tight corporate credit spreads and things like that suggest really low macro risk. And so right now it's not about things like heavy inflows into equity ETFs or anything like that. So something to just keep an eye on. I mean, what's so staggering to me about this chart, though, Mike, is the fact that when you compare it to 2021, we had interest rates near zero in 2021. And the fact that we're talking about tight credit spreads and we're talking about this risk on appetite when we have, you know, five percent plus and and and signs that

the Fed is not going to cut probably before fall, depending on how the data shakes out here over the next couple of months. I mean, it's pretty remarkable. Thank you so much for an opportunity to reiterate that zero interest rates were not really what that all was about, because in the late 90s, you had rates at five and six percent. We had the biggest bubble of all time. So there's a sort of general crowd psychology in this idea of, you know, look, if the markets are doing well, it finds a way. Now, some activity obviously has been kind of muted based on where rates are right now. I mean, actual bank lending is very weak.

You start to see some consumer credit fray around the edges. And also, the unprofitable tech stocks are not exactly soaring right now. So there have been nuances and differences. But investors, if they feel as if there's a comfortable backdrop, John, they're willing to keep their risk balances pretty high. You always bring it back to the 90s, you Gen X-er, you. Listen, it's the decade of my 20s, Morgan. I'm kind of living there half the time anyway. Both of you. Yeah, I was in my 20s for part of the 90s. It was a good decade.

All right, after the break, new clues on the Fed's rate path. FOMC voting member Christopher Waller telling Steve Leisman his latest thinking on policy earlier on CNBC. You never say never as a central banker, but I don't think we're going to need to raise rates. Up next, Jeffries chief market strategist David Zervos is going to join us from the Atlanta Fed Conference with his take on policy and the fight against inflation. Overtime is back in two. I don't think there's a lot of upside risk. And like I said, things could change and rate hikes could be on the table under some scenarios in the world. But right now, I don't see that as the case.

More likely we stay where we're at for months. And then if we get enough data going the right way, then we can think about cutting rates later this year, beginning of next year. That was Fed Governor Christopher Waller speaking with our own Steve Leisman earlier today, tempering fears of a raid hike, but not ruling them out completely. Joining us now from the Atlanta Fed Conference to discuss all of this and so much more, David Zervos from Jefferies. David, it's always great to have you on, whether it's those comments from Waller, whether it's what you are hearing from the flurry of Fed speakers that we know are coming from the conference you're at right now. Sort of the key takeaway, what you make of some of these comments, because, I mean, we sort of knew hikes were off the table,

but we also know the market's priced in fewer cuts starting later in the year. That's right, Morgan. I think the Fed's gone out of its way to really cut that tail off to rate hikes. Jay did it in the press conference. We're now seeing Chris do it and others are really, really pushing that way. So I think it's the mantra here and what I hear everywhere is, look, we can just hang out a little bit longer at what we think is restrictive policy. And that should give it time to have some of those housing related effects and other OER related effects in the CPI take take effect and give them the direction for the CPI that they want. I think they were encouraged by the last inflation report. And he did, you know, it's not an unequivocally bullish story. He's still saying several, which is probably three more inflation readings before he's comfortable.

So barring any major catastrophe on the labor side, you know, I think the summer we kind of shut the door on the Fed and we revisit it right around election time or after election time, probably after election time. So if this inflation cycle was in fact, we can say it was in fact triggered by supply shocks and not a reflection of a surge in demand. What does that mean for this disinflation narrative and this stickiness that's being debated around the so-called last mile to get down to 2%? Well, I think it really just comes down to kind of almost splitting hairs, Morgan. You know, we're not talking about 9% inflation like in the beginning of the summer of 2022. We're talking about 3.4 to 3.5 on CPI, 2.8 in PCE. These are numbers that are

all within spitting distance of where we need to get to, and we've come a heck of a long way. I mean, this is something we should probably be celebrating. And I think the Fed did a little early celebrating in December. Both Chris Waller and Jay were probably a little too optimistic in terms of how they reflected their views. Maybe in retrospect, they should have been a little bit calmer and they've had to temper those back a little bit this quarter. But they deserved a victory laugh. I sort of give it to them. I think what they did was fine. The markets got a little ahead of themselves and had to back it up. But I mean, at the end of the day, I'm still of the opinion that this has been managed extraordinarily well. I know that's not a common view. Lots of people get on here and like to talk about why the Fed failed and missed and was too late or did this

wrong or did that wrong. The bottom line is this was the biggest inflation shock of most everybody's career that watches this show. And it came out of it with inflation expectations completely anchored in the long run. I mean, the breakies, the surveys tell you that, the curve tells you that. Looks pretty good now, for sure. So Waller also said he expects continued high rates will continue to slowly ground down the economy, grind down the economy, but not throw it off a cliff. And it feels fine if you own a bunch of stocks or if you own your home with a mortgage at around three and a half percent. But the working class is hurting. So does this potentially at some point show up, these continued high rates, hurting that segment of the economy? And how will we know?

You know, John, I think there's a lot of transfer going on here, transfer of wealth, transfer of benefit. And there's winners and losers when inflation spikes like this and when rates go up to fight that inflation. So you're going to have a lot of places where you can point to negatives. In our world, the institutional investing world, commercial real estate, they fed at the trough of zero rates. Unprofitable tech, they fed at the trough of zero rates. Private equity fed at the trough of zero rates. They're all in trouble.

They've all been marked down. They all have problems. And there's parts of the weaker parts of the consumer sector. Yes, for sure, the inflation hits them harder. Their basket is more affected by this, but also their real wages have been up more. So there's at least a silver lining there. But against every one of those, there's a couple of positives that you can throw against it. Corporate pension plans are all basically solvent again after being insolvent. You've got insurance companies, endowments, everybody that had a long-term liability looking at that long-term liability

and going, wow, it's a lot less than it used to be. I'm in a good place. And then you've got the boomers who are all sitting on 5% CDs going, this is pretty good compared to zero. So I don't think we can make a macro statement about the negatives here. I think overall we get some aggregate demand slowing from these higher rates, but I think there's a lot of transfer. And that probably means there's a lot of sectoral work to do for people who want to pick winners and losers across various stocks as well as various sectors in the stock market. All right. Well, you have to come back and dig into that a little deeper with us at a future date.

David Zervos, thanks for joining us. Always a pleasure. After the break, the billionaire at the helm of Scale AI, the startup that just raised a billion dollars at a nearly $14 billion valuation, is going to join us exclusively to talk about the funding round from big names like Amazon, AMD, and Meta. That's a lot of billions. And speaking of billions and AI, tomorrow, right around this time, we're going to bring you instant analysis of NVIDIA's earnings

and what they say about the outlook for the fast-growing AI industry. Full coverage starts tomorrow, 4 p.m. Eastern, right here on Overtime. Be right back. Welcome back to Overtime. Fundraising in the AI sector is moving at a dizzying pace. Nineteen point four billion dollars raised in twenty twenty four for so far. That's according to Crunch based data.. Some of the latest high-profile examples, Anthropic and CoreWeave, fetching nearly $20 billion valuations. Cognition, a company without any meaningful revenue and a product less than a year old, reportedly looking to be valued at $2 billion. The latest is Scale AI, announcing a new funding round today, raising a billion bucks at

a valuation of nearly $14 billion. The company helps train AI systems across various industries, with customers ranging from the U.S. Army to Microsoft and Meta to other AI companies like of nearly $14 billion. The company helps train AI systems across various industries, with customers ranging from the U.S. Army to Microsoft and Meta to other AI companies like OpenAI. Joining us now in an exclusive interview is Scale AI founder and CEO Alexander Wang. Scale was named, just named, to our CMC Disruptor 50 list in the number 12 position last week. Alex, it's great to have you on the show. I do want to start with this latest funding round. It nearly doubles the valuation of the company. What does this capital enable now? Yeah, well, we're incredibly excited and great to see you. You know, we're, Scale is the trusted data foundry for AI. Our data engine generates nearly all of the data necessary to fuel the leading large language models in the industry today.

And looking forward, you know, the AI industry has very major requirements to continue scaling and having the impact that I think we all know it deserves. If you zoom all the way out, AI boils down to three pillars. There's data, compute, and algorithms. Folks like OpenAI and others help solve the algorithmic problems. Folks like NVIDIA help solve the compute problem. And our role in the ecosystem is to help solve the data problem for the rest of the industry. Our vision is that one of data abundance. We think we need to ensure that we have more than enough data and the means of production of continue producing more data to scale frontier large language models and

frontier AI systems to be incredibly performant and scale us all the way to AGI. It's interesting to hear you say this because we talk a lot about the cost to train these large language models. We talk about possibility of regulation. We talk about infrastructure and power needs. All of these as possible roadblocks in terms of a broader, more aggressive adoption of generative AI. Are you arguing that data could actually be one of those things that holds up that broader adoption? Exactly right. I mean, I think if we do nothing and if, you know, at scale, we don't continue innovating, we're likely to face similar bottlenecks in data like the ones that we see in computational capability

and chip production or power or data center buildouts. You know, these are all the fundamental bottlenecks in the supply chain of AI development and deployment. And so, you know, our mission, our goal is to build this data foundry to increase the means of production, basically increase the capacity of the overall AI supply chain to ensure that data doesn't become one of those bottlenecks. I think even more than that, we sort of think that there's three principles that have to uphold the future of AI data for AI systems. The first is data abundance. I think we need to make sure that we have an era of data abundance rather than data

scarcity. The second is frontier data. I think we need to make sure that we're continuing to produce data that's sufficiently complex, sufficiently advanced, that's able to actually push the boundaries of current AI capabilities towards complex reasoning, agents, multimodality, multilinguality, and more.

And then the last is measurement and evaluation. I think that to properly build confidence into these AI systems, we need to make sure we have an evaluation system that actually enables us to constantly measure the capabilities to ultimately drive further adoption and scale impact. All right, so just today, the Commerce Secretary, Gina Raimondo, released a strategic vision for AI safety,

has announced this plan for global cooperation among AI safety institutes. When I look at the release here today with the funding, you talk about how the abundance of frontier data will pave our road to AGI. So walk me through that road to AGI and perhaps just as importantly, the way you're thinking about how you're protecting the data, securing the data, who owns the data and how you grow that data. Yeah, exactly. And I think, by the way, I think the vision that, you know, Commerce Secretary Raimondo put forward is one that I think is incredibly exciting. You know, we believe a lot in the need for the necessary testing regime and evaluation

regime to ensure that we're actually able to safely deploy this technology more broadly throughout the world. And it's exciting to see such a global consensus around this between the US, UK, and many other countries. You know, I think as we think about the road from the road forward in AGI, you know, one of the ways we think about this is what are the data bottlenecks that are holding us back from GPT-10? So in the road from GPT-4 to GPT-10, what is the necessary data production that we need to get there? And the key that we really see is this concept of frontier data. I think that the initial phase of AI technology was built around training these models off of all the data on the internet. But what we're quickly seeing is that the internet, while great, does not have the quality

or complexity or the level of expert data that's actually needed to continue pushing the boundaries of these AI systems. What we need is complex reasoning data from the world's experts. We need complex agent data. We need multimodal data that encompasses video, audio, text, like many of the launches that came out recently. There needs to be a continual expansion of the complexity, the advancement of data to ensure that we actually continue developing more and more advanced models. But I guess, is this the moment that investors are hoping it is, is the question. I mean, we've got Microsoft Build News today, Microsoft clearly trying to make AI an essential part of productivity software.

Qualcomm looking to leap into laptop relevance on the back of AI. So second half of 24, first half of 25, mass market must have traction, or is there possibly a trough of disillusionment uh... you know when we when we look at the technology level and we looked at in our work with many of the the leading developers of the technology such as met on microsoft open and others uh... i think we see really uh... no limits to the technology itself i mean the the continued advancement in the field

has been really staggering. And I think even the, you know, a lot of the announcements that came last week from many of the large labs are a testament to the fact that the science and progress is continuing pretty well. That being said, I mean, I think there's a lot that we need to build as a society and frankly, as an industry to ensure that, you know that these AI systems actually, A, have the impact that we know they need to have, and also B, that we're able to build the confidence in them. So I think it's a combination of both data and measurement. We need to both ensure that we're able to continue fueling the progress of these models and fueling the

development of these models with more and more advanced data. And by the way, I think that that's going to yield incredibly powerful AI systems that are going to be very useful and great for humanity. But we also need to back that up with continuing to ensure that we're measuring them, we're valuing them, and we make sure that AI is not used in any harmful or unintended consequences

in ways that we don't intend. Alex Wang of Scale AI, thanks for joining us. Thanks so much for having me. Well, I just mentioned Microsoft and the Build Conference. Well, Microsoft CEO Satya Nadella just gave his keynote address there today as the company's stock touched record levels. Let's get to Steve Kovach in Seattle with highlights.

Steve. Yeah, John, a new all-time high for Microsoft off this flood of AI announcements coming out of the Build Developers Conference. Some new features for AI Assistant Copilot, access to the latest technology from OpenAI, and a new partnership with one of the buzziest AI startups out there. Lots more, but lots of wonky developer stuff I just won't even talk about. Let's start with Copilot, though.

OpenAI, the biggest part of the show and CEO Sam Altman made a surprise appearance at the end of the presentation, fresh off a string of controversies over the last couple of weeks, the departure of our co-founder disbanding that high profile safety team. And of course that Scarlett Johansson debacle that happened last night. Altman didn't address any of that, but just kind of talk broadly about the Microsoft and OpenAI partnership. Microsoft's offering access to GPT-4.0. That's the new version it showed off last week. It's what lets you interact with chat GPT over text, video, and audio, and have that sort of natural conversation with the assistant. And there's also this new partnership here with Cognition. You mentioned that in the last segment here. That's a buzzy AI

startup backed by Peter Thiel, only a few months old, already fetching a $2 billion valuation. It makes an assistant called Devin that does all the coding for you. You don't need any technical expertise. Overall, though, Microsoft benefits from all these AI partnerships and development. It's all happening on that fast-growing Azure cloud, John. All right, Steve Kovach, thank you. And let's get a CNBC News update now with Contessa Brewer. Contessa. John, the Pentagon said that aid for Gaza is now moving from the pier to warehouses in the war-torn region. At a news conference this afternoon, the Pentagon said new routes were actually created to help move that aid into Gaza. The World Food Program told the Associated Press none of the 11 aid trucks that left the pier over the weekend actually made it to a warehouse because people looted much of the aid and left one Palestinian man dead.

An anti-affirmative action group is suing Southwest Airlines to end its free ticket program for Hispanic students. The plaintiffs allege that the program violated federal civil rights laws by excluding non-Hispanic students from being eligible for the free tickets. It is seeking an injunction to block the airline carrier from using the eligibility criteria. Southwest did not respond to questions about that lawsuit. And Donald Trump's presidential campaign is now accepting crypto donations. The campaign said starting today, donors can contribute on the campaign's fundraising page using any cryptocurrency accepted through Coinbase. So that really opens it up because I think there's something like 11,000 at this point. Morgan. All right. Contessa Brewer. Thank you. Toll Brothers earnings are out. Diana Olick has the numbers. Hi, Diana. Hey, Morgan. Yeah, nice beat in Q2 for Toll Brothers. EPS came in at $4.55 a share versus

estimates of $4.14. Revenues of $2.65 billion compared with estimates of $2.53 billion. And those are based only on revenue from home sales. I want to note that. Toll is, of course, a luxury builder. As I said, their average sale price was $1 million in Q2. That's up slightly year over year. They did raise their full year guidance slightly. And they noted CEO Doug Yearley in the commentary in the report said that the lack of supply and favorable demographics continue to benefit Toll Brothers as they continue to benefit all the home builders. They also said, though, that they're building more spec homes, that is, homes that haven't been sold yet. And that helps them with their timing to be able to offer homes more quickly than some of the other builders who aren't doing spec homes. So, again, luxury builders still

seeing strong demand. But I would note Toll has reported in the past that 25 percent of their sales are all cash. So the To toll buyer is not as dependent on mortgage rates as some of the other builders. Back to you guys. And that's got the stock up more than 1% in overtime. Thanks. Well, coming up next, Mike Santoli is back with a look at the bullish swing among Wall Street strategists and if it can actually be a not so bullish sign for the market. We'll be right back. Welcome back to Overtime. We have seen some high profile strategists boosting their S&P 500 targets lately. So does that mean this is maybe as good as it gets? Mike Santoli is back. Mike, what do you say? You know, the equation doesn't

work quite as perfectly as that, John, but it is time to take notice of the fact there has been this big upgrade in collective analyst forecast for the S&P 500 strategist on the sell side. So this is from Renaissance Macro. What this shows on the bottom is the 12 month change in the strategist forecast collectively. So it's gotten up to this 90th percentile line. So it's pretty heated in terms of people trying to catch up to the market. So let's see other times when we kind of went to that line. Well, yeah, the market has kind of flattened out or corrected some of those times, but not all of them. You see right here, you're sort of in mid bull market. So I think that the actual target matters here, too. Right now,

according to the CNBC strategist survey, 5300 is the median forecast on the street. That's where we're trading right now. In fact, it's half a percent lower from here. So I don't see it necessarily as everyone's too bullish. Be careful. But again, it means there's not quite as much of that wall of worry in the market as there has been recently. But when you put that together with the risk appetites being up, which you showed us earlier, and the indices being relatively expensive, does that mean anything? It could mean something, John. I think what it mainly means is that the bull case is pretty well articulated, pretty well understood, and people are positioned for continued generally good news.

Does that mean that we go down straight from here? No, because in bull markets, you need people to be bullish to sustain them. And tops are much tougher to call based on contrary sentiment in the market than bottoms are when everybody seems to liquidate and panic at once. So you can maybe be reassured of that.

All right, Mike Santoli, thank you. Well, the weight loss wars are heating up as Eli Lilly's diabetes drug wins approval from Chinese regulators, and that as Eli Lilly's diabetes drug wins approval from Chinese regulators. And that's helping Lilly shares close at a new high. Investors, at least, have an appetite. Up next, a top analyst on what he thinks this stock can rally. He thinks another 20 percent. Stay with us. Welcome back to Overtime.

Shares of Eli Lilly closing at a record high, up 2.5%, and it comes after a regulatory win in China. The pharma giant received approval for its GLP-1 drug. Its competitor, Novo Nordisk's drug Ozempic, won approval in China in 2021. Joining us now, Bank of America's Jeff Meacham. Jeff, Lilly stock has quadrupled in three years, doubled in the past 12 months. Are GLP-1s just now the iPhone of Lilly? How people feel about that? Has an outsized impact on where this goes? Thanks for having me, John. Yeah, great question. And by the way,

I think you should add it to the magnificent seven, maybe make it the magnificent eight at this point. You know, the story I would say with GLP-1s for sure is that we're early, early innings in the broader adoption in obesity, and we're still very early innings, obviously, in diabetes as well. We don't view China as a huge market currently. I mean, keep in mind that it's approved, but that doesn't mean that Lilly is going to launch it. I don't know if Novo Nordisk has launched either. They can really keep up with the demand in the U.S. Okay, so at the $1,000 price target that you have on Lilly,

it would be right at about a trillion dollar valuation. And that makes me wonder, what is it that Lilly needs to do with this currency that it has, the stock currency, to justify this, take best advantage of it going forward? What's the new sort of ecosystem that they need to build to belong permanently in that mega cap rank? Yeah, great question. Yeah, I mean, there's a lot to go that's going on with respect to clinical development. So, you know, it's not just diabetes, obesity. There are new indications to come. Cardiovascular disease, including heart failure, you know, sleep apnea. You know, there's tons of other indications where weight's not the only

component. And so I think that's the main objective here is just to put money back into R&D, develop even next gen assets in metabolic disease. I don't think Lilly needs to go out and do a mega deal just to kind of spend the currency, if that's your question. But I'm not sure buybacks and dividend hikes are that exciting either. So I think a big step up, you know, in kind of in the pipeline probably makes the most sense here. I mean, speaking of pipelines, Eli Lilly is more than just the weight loss and diabetes, the metabolic pipeline, as you as you, you know, sort of just highlighted. I mean, they're in cancer drugs. They're working on Alzheimer's. Yes, I realize there was the postponed approval decision back a couple of months ago. But how

much is the rest of the portfolio getting overlooked here and how much, I guess, upside potentially is there as you see some of those drugs make their way to market? Yeah, for sure, Morgan. You know, the Alzheimer's program, I think, is underappreciated. I mean, we're only modeling, it's sort of funny to say only, but, you know, $7 to $8 billion at the end of the decade, and that's kind of consensus for Alzheimer's. Given the size of the population and a much higher price point, that could be an area that they could really start to allocate capital towards. Also keep in mind that other pharma peers have done deals in the neuropsychiatry space. That could be something of interest.

But you're totally right. It's not just diabetes, obesity. You have oncology. You have inflammation. You have neuroscience. So a lot of unmet needs and a lot of, I think, very differentiated drugs. But I think that's probably 10 percent of our conversation on Lilly, really. I mean, the vast majority of the talk, you know, of the discussions are really

obesity. Yeah, we saw it with the stock moving hims and hers yesterday and then even Hershey today announcing a line specifically for folks on GLP-1s. The list goes on. Jeff Meacham, thanks for joining us. Thank you. Well, speaking of, do not miss last call's interview with Eli Lilly, CEO Dave Ricks. That's going to be Friday, kicking off at 7 p.m. Eastern. Up next, all the overtime movers that need to be on your radar as we count down to Urban Outfitters, analyst call. Oh, and did we mention NVIDIA is a big name on tomorrow's earnings calendar? Coming up, the key number to watch when that red hot stock reports. We'll be right back.

Welcome back. Let's check on some overtime movers. Viasat shares losing altitude down 12% after the company missed bottom line estimates and gave soft full year revenue guidance. Urban Outfitters, on the other hand, moving the other way, beating on both lines with same store sales, beat at its free people and anthropology brands. And Toll Brothers beating on both lines as well, raising full year delivery guidance up about a percent, Morgan. All right. Well, I just want to correct the record real quick because I said Hershey before for GLP-focused line of foods.

It was actually Nestle. Meantime, the countdown is underway to NVIDIA's earnings during overtime tomorrow. Up next, the key numbers you need to watch in that report. Stay with us. Welcome back. NVIDIA shares nearly doubling in 2024, and investors are hoping tomorrow's earnings report will spark the next leg in that rally. And Christina Parts-Nevelis looks at key numbers that Wall Street will be watching for. Christina. Well John, each of the last two quarters Nvidia beat initial revenue guidance by almost $2 billion and Wall Street is expecting much of the same with Q1 total revenue estimates

of $24.6 billion. That's triple the amount last year at this time. Buy side numbers, they have more sway and Bank of America says total revenues should be closer to actually $25.5 billion. So look for that number on the right-hand side of your screen. The debate, though, this quarter has been around any potential air pockets or demand lulls between the current GPU chips already on the market and its faster next-generation chips that are going to be out later this year. For example, today the FT reported that AWS was pivoting its orders from chips already on the market to the upcoming

Blackwell chip. So it's waiting. NVIDIA shares initially sold off because that would imply a demand lull. Analysts, many of them argue that if a company were to wait, they would lose their spot in line for those newer chips. Even if it's not the case for AWS, demand is still expected to remain sustained by sovereign wealth funds and corporates all around the world. And couple that with the increase in CapEx spending promised from Microsoft, Meta, Google, AWS, and NVIDIA looks poised to continue its beat and raise pattern, hence why you've seen the stock just continue to climb into earnings. Yeah, Christina, even if it's technically a demand lull,

it seems like NVIDIA is going to be able to explain perhaps that really demand is carrying over, right? So do you think that analysts are looking out for that detail as well? Yeah, they're going to explain it for sure and say that they're getting so much demand from the corporates, from the sovereign wealth funds, from CapEx. And so just those drivers alone should be enough to offset any type of slow, little lull, which really, you think about it, you have the H100 chip that's available, H200 in the next two months, and then they switch over to the Blackwell. So it's just like, bam, bam, bam. It's nonstop items that are available on the market, and everybody's still trying to

get their hands on chips, which, by the way, the supply has improved thus far for these H200s. Lead time is down to like 10 weeks or something like that. So overall, I think the lull won't be a major problem on the earnings call tomorrow. The NVIDIA is going to say otherwise for sure. All right. Christina Parts Nevelis, we'll be covering it with you tomorrow. 420. Yep.

We have instant analysis and reaction to those results from NVIDIA tomorrow at, as you heard Christina say, 420 p.m. Eastern. Options primed for an 8.5% to 9% swing in either direction by Friday, according to options analytics firm TradeAlert. This would be a market cap of a $200 billion swing that's larger than the market cap of 90% of the S&P 500 companies. You wonder what else swings with it besides semis. All right. Well, that's going to do it for us here at Overtime. Fast Money starts now.