Nvidia Reports Results… And The Future OF Fannie Mae And Freddie Mac 5/28/25
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Live from the Nasdaq MarketSite in the heart of New York City's Times Square, this is Fast Money. Here's what's on tap tonight. All eyes on NVIDIA. Shares of the semi-giant jumping after its latest earnings report, sending its market cap above Microsoft's. For the first time in two months, we are dialed into the semi-giant's conference call, bringing you all the details. Plus...

A government guarantee? What President Trump's plants or Fannie and Freddie mean for the rest of the housing sector? And still too cheap? Shares of Abercrombie & Fitch soaring as much as 36% on the back of its results. But one of our traders says the stock is still too cheap. They lay out the case for the apparel company. I'm Melissa Lee. Come to you live from Studio B at the NASDAQ. On the desk tonight, Steve Grasso, Karen Feinerman, Dan Nathan, and Guy Adami.

And we start off with that all-important earnings report out of Nvidia. Shares are jumping about 5% after the company beat both top and bottom line estimates for its fiscal Q1. The company's data center business also growing more than 70% over the last year. The conference call kicking off just moments ago. CNBC's Christina Parts-Neblitz has got all the details on the quarter. She joins us here on set. And then I promise I'll go downstairs and get on that conference call right away. But in terms of the guidance, Q2 guidance is really a big deal for this company, $45.1 billion.

which

Sounds like it's a little bit less than, you know, the $2 billion guy that they always do every single quarter and they've been really great, but it's still higher than a lot of buy-side estimates that have come down just over the last little while to factor in for the H20 ban. And speaking of the H20 ban, these are the chips that were geared specifically for China that fell under the U.S. threshold. The company announcing in this report that they actually took a $4.5 billion write-down, which is less than the $5.5 billion they talked about. The reason why it was a $1 billion difference

is they were actually able to reuse the materials. And for me, that's a little bit of news because previously so many analysts have said, oh, this is complete wash. Nobody wants these H20 chips because they're so low specced. And they actually fall lower than the Huawei Ascend chips too. So that's for the Q1. And then for Q2, they are also taking an 8.

billion write-off for the H20 sales for a total of like 12.5, which is also less than what Jensen Wong said in a Stratechery report recently, about $15 billion. So those are all good portions of news and gross margins, too. If you don't account for the write-down, came in at 71.5. They were anticipating 71.

So, confused a little bit about the $1 billion difference. Is that that they sold that much, or that was what the whole 5.5 or 4? It's not sold. It was just the write-down. Write-down. Right. Okay. But so that was the write-down on the entire thing, 80% from 5.5?

No, no. They're saying originally like we're going to take five point five billion dollar hit in this quarter. Right now they're coming out and saying, hey, we're not going to take down that much of a hit because we were able to reuse the materials for some of the chips. So now it's only four point five billion for Q1. Yes. OK. So the point that you're making about the revised chip for the China market, which is actually, you know, maybe not as competitive as some of the domestic chips in China. It's not. Yeah.

Especially the Huawei Ascend. So is anybody buying those chips? Well, somebody, the choice of words from the CFO commentary was the materials were able to be reused. So certain materials, but not the full amount, right? And I don't know, that's going to come up for sure on the call, which market is going to be buying even lower spec chips.

chips, right? And it would be okay with the U.S. government to do so. And then in context, too, a lot of reports have come out very recently, too, that NVIDIA is still moving ahead with another chip that will fall under the U.S. threshold, maybe the B30, whatever you want to call it,

But they've been doing this for quite some time. It's not like they're going to say goodbye to the Chinese market, especially with that new R&D center in Shanghai that they just announced. They're still, you know, really maintaining those relationships with China, with Jensen Wang there, not too long ago. So I don't think that door is closed at all.

Yeah, you know, it's interesting. We've been going back and forth about exclusions, right? And I just wonder, Christina, the longer we don't have some sort of resolution with the Chinese, with the, you know, the tariff situation, don't you think the risk, like, it extends further, right? So we've had these big write-downs. We have one for this quarter, as you just detailed. We have one for next quarter. You think about, like, China has been about, I don't know, 15% or so of their revenues over the last two years or so. I think, like, there's risk to that. I mean, analysts are talking a little bit about that because...

We don't have a resolution with China. There's Nvidia, there's Apple, there's Tesla. These are squarely, like, these are leverage pieces for the Chinese here. I like that perspective. And I would say that analysts are not taking that perspective. If anything, they're so bullish now that the Middle East has come forward and promised to buy 18,000, for example, Saudi Arabia, 18,000 chips within the next five years, specifically from Nvidia. UAE is going to be buying billions of dollars more and spending more on U.S. soil as well. The sentiment I'm getting from all...

So many reports is that China's revenue stream is going to shrink dramatically. But don't worry, the Middle East is here to save the day. And I don't think they're really acknowledging how big of a drop that could be from blocking sales to China in three, four, five quarters from now. And especially when Huawei continues to steal market share. So do you think dollar for dollar, the Middle East can replace China's revenues? Because

The market share loss in China over the past four years is astronomical. And that's even before these tightened export controls. So they tighten further. They ship these degraded chips over to China that are not competitive. And at some point, they're just going to just lose it. I mean, it went from 95 percent to 50 percent in four years.

But then that's a positive. So now I'll flip it and say 95 to 50 percent. And yet look at the stock. Look at how well they've done every single quarter. And they've continuously lost market share in China. So to your point, if they continue to do so, maybe it won't be that bad. Why? Because they went from 95 to 50 and everybody's still cheering and everybody loves this company. It's so highly held by China.

owned and in the spider ETF by 6% waiting and so really impacts on the hyperscale keep spending at the rate they're spending and maybe we can still be hopeful when 95% of what kind of market there in terms of price is 50% of a much higher margin right much more is that better dollar wise is probably better

But still, you don't want to be losing that much market. That's a very good point, especially with the black wall and the black walls aren't there. Because I would say the average selling price is much, much higher in the margins on that. But it's a very good point. All right. Christina?

We're going to let you go because it's 5.06. That call is underway. Somewhere to be. We'll see you later on. Should I just run right now and write off that? Okay. What do you think? Well, Gene Munster tweeted that, you know, it's actually a lot better than people thought when you back out the China stuff. And he's right. And then Dan's point is at some point you're going to have to say, well, wait a second. You can back out all you want. How long is it going to last? The most encouraging thing to me was.

Margin sort of hung in there for now. You know, that was a surprise to me. I thought they'd come in a lot worse than that. And they didn't. They're hanging around. So that's good. And Karen and Steve were talking about the gaming revenue, which that's sort of old school and video. Obviously not as big a deal, but that was an impressive beat as well.

It's good enough to get the stock where it is. The question is, is it good enough to get the all-time highs of 153 and change? Gaming is still 10% of revenue, so it's not nothing. I mean, it's much smaller. So you have the China ban, you have competition, and the hyperscalers where Christina said, if, when you said if they continue to spend. She said if. So if you have Google and you have Amazon making their own chips, Microsoft pulling back data centers, there's a lot of ambiguity there, a lot of gray area there.

I don't think the Saudis replaced that total income. I'd be a seller of this pop after hours. And I think it was just people were bracing for a lot worse than we got. I think it comes off here. I think you're looking at lower prices tomorrow. Yeah. What do you think, Dan?

Listen, I think the story has gotten pretty much on the equilibrium, right? There's still a lot of uncertainty, what we just talked about with the China situation. I think one of my biggest takeaways over the last month or so is that Jensen's literally been on the president's tail no matter where he's going. And I think he recognizes the fact that they have the ability to kind of ramp up and

you know, in the Middle East, and there's going to offset a bit of this uncertainty if he remains loyal to the president's causes. You know, Christina just mentioned the Stratechery interview with Ben Thompson about a week and a half ago. I mean, he went all in. I support the president. I support his vision. I support this or that or whatever. I mean, these guys know how to play this sort of situation. So if they can...

ultimately get to a place where even if there's not some trade resolution and they get some sort of exclusions, they get some of this business back, they've grown the business in areas like Saudi Arabia, it's not a bad thing. I'm with Steve, though, and I've been saying this for now a while. The capbacks by the hyperscale, it's going to slow down at some point. And, you know, like the rate of change over the last year or so has slowed down a good deal. And so we haven't reached that digestion phase. So that's likely to come. No one can put their finger on it. But NVIDIA hasn't done anything in a year.

OK, it's like literally the same spot it was a year ago. And I think that's telling you enough. There's probably better ways to play this game right now. Although since the last earnings report, it's about 12 percent versus the semiconductor ETF, which is three percent, basically flat. I mean, that's an interesting context in terms of going into this quarter. There's every reason to find fault with this quarter. But investors are like, yeah, they're bidding at five percent. And maybe that also has to do with the sentiment in the markets at this point with inflation.

the narrative that the worst of tariffs are behind us. The magnitudes of the in terms of the absolute dollars, the dollars are staggering. The percentage beats, though, get less and less seemingly each quarter, which, listen, there's nothing wrong with that. I mean, that's just the nature of the beast. I mean, that's the natural progression. But they're being rewarded for what I think are still beats from three or four quarters ago. And that to me is not the price to earnings valuation, but the price to sales.

So a couple of things, the margins being good, which you talked on, is really important. That earlier in the year was a big question mark, right? They talked about, oh, when we scale up, we're going to see our margins improve.

Maybe we'll see them improve maybe even a little bit more quickly. So that's good. But you get to... I mean, the AI story now does seem to have legs again. It really didn't about three or four weeks ago. And so I think that Middle East trip was huge. We remember we had Elon Musk talking about 100,000 GPUs. And so...

All that having said, that's great. I do agree it's sort of had an extraordinary run from what, '93, '90-something? AMY GOODMAN: What are you doing with your position?

I well, I collared some. So that's sort of that's so it is going to be smaller. So I'll probably do nothing then. Yeah. Just on a price action standpoint. I mean, you think about this huge basis and maybe they can give it on a one year basis. I mean, Mel, to your point, yeah, it's up 12 percent or so from that last quarter. But the stock's been all over the place within this fairly wide range. And the thing you have to ask yourself is, was there anything in the quarter that you can kind of expand or or the guidance that they gave that's going to cause this stock to kind of re-rate and establish a new range? I

I don't think it's there. And I think we're likely to see a continuation of this sort of range that goes from really 100, let's take out the April lows, to this kind of $150 level. Just one last thing. You know, I always say you've got to listen to the call. This call, you've really got to listen to it later. There's going to be so much nuance in there that the numbers only tell half the story. Yeah, Christina Zahn, we'll get you all the headlines as they come through. And also don't miss NVIDIA CEO Jensen Huang on Mad Money tonight for her first on CNBC interview. That is at the top of the hour.

Well, stocks closing around session lows with the major indices selling off in the last hour of trading. Earlier in the day, the Fed released minutes from this month's meeting saying it may face, quote, difficult tradeoffs if President Trump's tariffs rekindle inflation. Treasury yields higher on the session. For more, let's bring in Michael Schumacher, head of macro strategy at Wells Fargo Securities. Michael, great to have you with us. Thank you. Where are we in this market run?

So as far as the Fed goes, the Fed's really concerned about uncertainty regarding tariffs and trade, etc. Also spending thinks inflation could stay high a bit longer than the market anticipates. You put it all together, the Fed's going to sit. There's no reason whatsoever for the Fed to move anytime soon. And I think what that means is if you're buying Treasury bonds or Treasury securities, you

You can't expect the Fed to come in with a big rate cut to give you a big capital gain. You've got to be comfortable with yield levels and just wait for Jay Powell and friends. What do you anticipate for yield levels here in the United States, given the lackluster Japanese auction for longer-dated treasuries there?

It's a tale of two bond markets, Melissa. So you think about the shorter term bonds, five years and in, pretty comfortable. We think yields fall slightly there. The longer term stuff, whether it's Japan, there's not much appetite for 30 to 40 year debt. US, people are very concerned about the big, beautiful bill, lots of spending, et cetera. Not a big appetite for 30 years here either. I'd avoid the long end. I'd buy three to five year securities.

So you talk about waiting for Jay Powell and friends. When do you think they come to the party in a significant way? Yeah, Karen, I think what happens there is it's late this year. So the Fed's incentive now is to wait, wait, wait. They'll probably go big when they eventually go, but probably fourth quarter, that type of thing, it's not going to be really soon. How important, bond auctions in Japan, last week they had the worst one since the late 1980s. How important is what's going on to what's going on here potentially?

I think it's a big deal, actually, because when you think about governments globally, the common thread is more spending, whether it's Japan, whether it's here, whether it's Germany, whether it's Canada. Bond markets have to absorb that. And people are saying, you know what? Yield levels aren't that great. Generally speaking, we're not getting compensated. To me, it's a bad omen. So if yields go higher here on the 10-year, at least, is that a cap for the markets?

I think it restrains markets to some degree. And we're not saying yields go crazy. And I think it's really more of the back end, like the 30-year stuff in particular. But it's a headwind. I think that's pretty clear. So, Mike, when you look at all this, when you digest it all, what do you think about inflation? What do you think about unemployment? Is the economy, so the takeaway, flip the whole conversation on its head and

and say what does everything that you just said say about the economy now? Where are we? How good are we? Where are we in the cycle?

The markets are telling this really nice story. If you look at inflation swaps and that sort of thing, inflation is going to be high for about a year and come back to a pretty normal level in the U.S. It seems awfully optimistic. That's what I got from the Fed minutes. That's what we get as well. You wouldn't need much of a lingering effect in inflation to make people pretty nervous. So I think things are priced a little bit too nicely for inflation.

Mike, you just mentioned that when the Fed comes in to cut, they're going to go big, right? And so when they cut in September, it was the first cut really since COVID, right, going back to 2020. And they went big, 50 basis points. I think it surprised some folks. What do they go big for? Is it because the data is weakening? That was the reason why the Fed cut. They were worried about the jobs market back in September. Or is it because they can? So really, I mean, it's soft landing versus worries about a harder landing.

I think it's two things. One is because they could. If you look at Fed funds, still very high, above 4%. And the second thing, which Powell has talked about a fair bit, is he says, look, real yields are still very high. So what I think he and the committee want to see is evidence, not that inflation is low, but that it's peaked. So we get this surge from tariffs, wait three, four, five months, and it comes down a little bit. The Fed says, aha, that's a good thing. Now we can actually be afford, we can afford to be a little bit more aggressive here. We can come in, we can try to get some easing.

And how does your view, if at all, change if the Fed doesn't move because inflation hasn't shown that it's peaked, because tariffs remain in place for much longer than anticipated and or inflation is stickier than anticipated? I think in that case and also, I guess, the other scenario I throw in there, Melissa, is the idea that spending is high. So think about the Senate tacking on more goodies to this huge bill.

and the Fed sits, then what? Yields go up somewhat, probably not catastrophically, but you're looking at the 30-year yield probably in the mid to high fives, something like that. 10-year five-ish, something of that sort. So unpleasant, but not really awful in the bond market. All right.

Mike, always good to see you. Thank you. Michael Schumacher, Wells Fargo. We had a conversation last night that you could have bond yields higher and the stock market higher. I think Michael's, he's not wavering in that, but I think he's in some agreement. I'll say this. The TLT to me is headed to levels we saw in October of 2023, which is like 82.5%.

Back to the envelope gets us about four and three quarters, 480 in the 10-year. And I just don't think the stock market's going to like it. By the way, he's a very fit man. If you had to guess how many marathons he's run. Four. That's four New York. Yeah. 15 total. He was holding out on us a little bit. Oh, 15 total. 15 total. Schumacher. How about that? Good stuff. I got nothing else to say.

Yeah, I'm just really excited for that. I thought that was amazing. News you can use. You know, when Scott Besson talks about how the Treasury Secretary, how high or how tight the monetary policy is, he states the two-year and the Fed funds rate, the gap between. Mike said to Dan's question, why are they cutting? He said because of where the Fed funds rate is. The Fed is tight right now. They could be cutting if they want to.

There's going to be a massive amount of cuts. It sounds to me like a Fed put. Oh, so you're you're he said the economy is OK. They're higher. Real rates are high. Right. Which would be a reason. So you're constructive on the markets. What do you think? NVIDIA is going to fail. I think NVIDIA is a stock specific. We look at when you look at the chips, their boom bust cycles. We're pricing NVIDIA as a growth company to perpetuity.

So that was the AI kicker. It's getting priced into infinity now for growing. I think that's a mistake. Okay. I guess my question was, can the markets go higher without NVIDIA? Can you be a disbeliever of the NVIDIA story, but a believer in the markets? You know, it's funny. We had that conversation about Apple a couple of years ago where an Apple did not trade particularly well. The stock market went on its merry way. So,

Probably the same thing can happen here. I'm with Steve on NVIDIA. In terms of, look, I think the Fed could, Jerome Powell could call us right now and say we're cutting rates 50 basis points. And I still think 10-year yields are going higher from here. All right. Coming up, we're keeping an eye on NVIDIA as the company conference call gets underway. The latest headlines from that and where top chip analysts see the stock heading next. And there's even more after-hours action to bring you shares of HP and Salesforce on the move after reporting. The details and the numbers from those quarters next. Do not go anywhere. Fast Money is back in two.

This is Fast Money with Melissa Lee, right here on CNBC. Let's say your small business has a problem. Like maybe one of your doggy daycare customers had an accident. You might say something like, Doggone it! Hi, Chihuahua! Holy schnauzers! But if you need someone who can actually help, just say, Like a good neighbor, State Farm is there! And get help filing a claim from your local State Farm agent. Woof!

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Welcome back to Fast Money. More after-hours action to bring you shares of HP getting hit hard and Salesforce also reporting results. Steve Kovacs got all the details on both. Steve. Hey there, Mel. We're going to start with Salesforce here. We're seeing that stock pop after hours from strong guidance for the rest of the fiscal year. For the current quarter, EPS beat by 4 cents, revenue beat by about 8 million bucks,

As for that strong guidance driven in part by currency tailwinds with the dollar weakening, of course, going to want to listen into the call for more commentary on artificial intelligence. AgentForce, that's their big product still in its early days, but looking for more signs of momentum. Now let's switch gears over to HP. Tariffs are the culprit behind these results. Look at those shares down 15 percent. EPS missed by nine cents.

at 71 cents a share. Revenue, just a slight beat. And guidance is way off expectations. I talked with CEO Enrique Lores on these results. He says tariffs are really the culprit here. Told me it's going to take until the company's fourth quarter to fully mitigate tariff effects. And they're going to do what Apple's doing, moving production to Vietnam and India from China for all the products they sell in the United States. And of course, they're going to have

to raise some prices on products to keep their margins in order here, Mel. All right, Steve, thanks. Steve Kovach. Karen, you thinking about Dell? Yes, exactly. I'm thinking about Dell. On the one hand, you'd think the NVIDIA move would be nice for Dell. Maybe it is. However, on the other hand, the HPQ, I mean, you know, a lot of Dell's business is, you

you know, PCs and so monitors and whatnot. So that's not great. I don't love that. Yeah. There was a Dell upgrade earlier this week. I guess it was yesterday, but Salesforce real quick. I actually think it's okay. I mean, they beat the full year guide was commensurate with the beat. That's good. Next year, we're looking at 22 times next year's numbers.

Not expensive. I mean, the stock has sold off a lot. I think it's actually OK here. Yeah, I'm with Guy Dami here. One issue I have with this acquisition of Informatica, and I can't speak to the strategic nature of it, but from a financial standpoint, I mean, Salesforce has like higher expected EPS growth, higher expected sales growth. They have a similar margin structure. I know that they want to get into some of the businesses that obviously Informatica has.

But when you think about, you know, this sort of M&A, I just don't know what this does for it because, you know, you're talking about single digits growth for both. What's it called? Informatica. Informatica. Yeah. Both sales and revenue growth. And I don't know. I mean, I like Benioff's strategy. It's gotten him this far. But the guy's pointed 22 and a half times for next year seems pretty reasonable if they do what they've done with the integrations of these last sort of acquisitions. So I think it's fine here, too.

Yeah, I think the investment in AI, to Dan's point, you're betting on, I say this all the time, you're betting on the CEO. He's one of these CEOs that always seems to pull a rabbit out of a hat. And another one is Bill McDermott. And when you look at the service now and you look at Salesforce, a lot of enterprise clients have both. It's not a winner-take-all game. So I think there's enough for both of them to survive. I would like to say I'm a seller of CRM, but I'm afraid of Benioff.

Meaning I'm afraid of what he's going to do. What do you think about, I know I'd be interested to hear Benioff talk about Microsoft.

Right. Oh, right. Yeah. Yeah. Microsoft's up a couple of bucks, but yeah, a little. I just want to say one thing about the Oracle. Oracle did this, and Benioff comes from Oracle. And for a long time, Oracle traded at a real big discount to a lot of its other peers because of the roll-up, how they gained sales. And the last thing I'll just say is this is a $1.7 billion revenue company compared to Salesforce without 40. So this is one that I don't think you should expect to have a material financial –

you know, impact one way or another. But I think Salesforce on its own looks pretty reasonable right here. Coming up, a few stock moves catching our attention in today's session, why Eli Lilly and an electric air taxi company made some headlines. You're watching Fast Money Live from the Nasdaq Market site in Times Square. Back right after this. Let's say your small business has a problem. Like maybe...

One of your doggy daycare customers had an accident. You might say something like, Doggone it! Hi, Chihuahua! Holy schnauzers! But if you need someone who can actually help, just say, Like a good neighbor, State Farm is there! And get help filing a claim from your local State Farm agent. For your small business insurance needs, like a good neighbor, State Farm is there!

Are you still quoting 30-year-old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide. And every time you make a purchase with your card, you automatically earn cash back. Welcome to the now. It pays to discover. Learn more at discover.com slash credit card based on the February 2024 Nelson Report.

Welcome back to Fast Money. Stocks closing near their lows of the session today. The Dow falling nearly 250 points. The S&P and Nasdaq both dropping half a percent. Eli Lilly agreeing to buy privately held Site One Therapeutics in a deal worth as much as $1 billion. The acquisition giving Lilly access to an experimental non-opioid pain drug.

and shares of electric air taxi company jobi aviation surging nearly 30 percent this after receiving a 250 million dollar investment from toyota the payment is part of a previously announced deal to support joby's certification and commercial production and after hours tesla shares up one percent the company reportedly targeting june 12th to launch its much

much-awaited, long-awaited robo taxi service in Austin, Texas. That is according to Bloomberg. And shares of Birkenstock and Wilson parent Amer Sports down after hours. The companies both announcing secondary offerings in the face of tariffs.

Grosso, you mentioned Joby. Yeah, so there's two Evital companies, Joby and Archer. Joby, and it's extremely cost, what's the word I'm looking for? Burned, high cash burn. They burn $500 million per year. They have about $1.3 billion.

I think the partner with Toyota, huge on the manufacturing side, deep pocketed, but Archer, a lot of partners as well, and they burn less cash. So you have two choices. I think either one probably sees the future coming quickly.

Guy, what would you like to trade? I was just looking at that as well. But what was the other one you mentioned? Eli Lilly. Thank you. If you put up a chart since November, 7.15 has been support now three different times. But as Carter Worth will say, even Louise Yamada, the more times you test support or resistance, the more inclined you are to break through. I mean, there's been really no meaningful bounce here in Lilly for a while. That, to me, is somewhat concerning. That's interesting. I have a comment, not about an individual stock. Okay.

Just in general, just life. I do think it's interesting that we're seeing companies raise cash

in the face of tariffs and the uncertainty of it. And I think that's a smart thing. You know what I mean? You just talked about two companies doing that. So I wonder if some of these companies that are worried about raising prices to kind of get in the ire of the White House, maybe they just raise some cash and try to weather the storm a little bit. Maybe they are worried about the markets in the future. They're willing to access cash in the future. Well, I think, well, Birkenstock, I don't know, it doesn't look like they need the cash. Sounds like a good time. I mean,

It's done well. It's a good excuse is what you're saying. Exactly. That's what I'm saying. Exactly. All right. Trying to be a little more nuanced. But anyway, I didn't mean to be. There's no nuance here. You know that. Exactly what I meant to you. You didn't expect it. Coming up, we are keeping an eye on NVIDIA after hours. The company conference call well underway. The headlines from that and what one chip analyst makes of the quarter. Fast Money is back in two. Missed a moment of fast? Catch us anytime on the go. Follow the Fast Money podcast. We're back right after this.

Welcome back to Fast Money. Another look at NVIDIA shares. After our session, highs now up by almost 4%, about 30 minutes into the conference call. Susquehanna Senior Analyst Chris Rowland is here to give his reaction to the results. Chris, great to have you with us. And I'm just reading through some of the comments that are coming across right now, specifically about the China market, which, of course, is a big part of the

of Nvidia's quarter here. The CFO saying the company is still evaluating limited options to serve the Chinese market and losing access to the Chinese market will have material adverse impact on Nvidia's business. How should we view, if the export controls remain in place, how should we view the China market and what it will be to Nvidia in a couple years?

Yeah, so I think the big revelation about Q2 is that they were planning on shipping 8 billion, probably almost twice as much as we were anticipating they would actually ship.

China in the second quarter- so this was turning out to be. A very large blockbuster product for them it is unclear at this point- exactly how they're going to side set step the restrictions and exactly how powerful. And how valuable this will be to Chinese customers- so it is a TBD.

So how do you put that TBD in your model? I mean, you could put TBD in there, but it won't calculate anything. So how do you view that? I mean, once the chips are throttled to a certain extent, they're just not competitive anymore. I mean, the market really diminishes pretty quickly from there. So how do you view that? And how do you view NVIDIA's presence in the Chinese market in even two years, given that they've lost so much market share in just four years without even the strictest of the export controls that we're seeing now?

Yeah, Melissa, you got all the moving parts right. In terms of my model, it's not going in it until there's some sort of clarification here. And interestingly, Jensen on the call called out Trump's restrictions here and controls and saying they are counterproductive. So it was interesting to see him actually vocalize his objections.

Chris, it's Karen. Thanks for being on. Do you think that was theatrics? He's playing just to the president? I think he is angry. And I also do believe he thinks it's counterproductive. And he's worried that other platforms like Huawei, for example, are going to capture that market in the race for AI. So I do believe he's angry and probably with justification.

Chris, at the top of the show, we pointed out the margins actually hung in there pretty well, surprisingly so, at least for me. But what are the thoughts back into the year? They promised a reacceleration. What are your thoughts on that? Yeah, I think if they're on track this quarter, they're probably going to be on track for the rest of the year. And I do think they can get to that mid 75 that they've talked about.

In your model, Chris, dollar for dollar, can the Chinese revenue be replaced by sovereign AI revenue from the rest of the world, from the deals out of Saudi, from the increases or assumed increases in CapEx by the hyperscalers?

think in the second quarter guide- that was better than we were expecting and that was minus eight billion of potential Chinese revenue. So that backfill is absolutely happening right now with Blackwell.

Hey, Chris, when you look at AI, it seems like everything the best case scenario is priced in with NVIDIA. What makes the bears right? How does that story really 90 percent of the analysts that cover NVIDIA are bullish? There's only one analyst that's negative on the name. How does this story come apart if it can come apart?

Yeah, sentiment is high, but so is execution. And in terms of valuation, if you look at it on almost any metric in terms of profitability, it's not actually that extended. So those are our points there. If you were to paint a bear case

for this, it would probably be hyperscale development of their own ASICs. And we're seeing that with guys like Marvell and Broadcom, guys like Microsoft, Amazon, Tranium, Google TPU. These things are coming and these are going to be million XPU clusters by the time we're done here.

Chris, it's Karen. So I get that that could go elsewhere. But in terms of the AI demand, the story more generally now, do you see any signs of this slowing? It seems to be accelerating somewhat.

and yes it is indeed accelerating if you look at for example hyperscale capex numbers- we're up I think thirty five percent year on year that was up from thirty. Were our estimates a quarter ago-

could hit this AI thesis I think if these million X. P. U. or G. P. U. clusters start coming to market and there's no performance increase in these L. L. M. S. that might be a sign of worry but so far we're seeing the scaling laws intact- and that's going to mean bigger and bigger clusters. Chris you're gonna have to let you go thanks so much for joining us we appreciate your analysis.

Thanks, guys. Chris Roland of Susquehanna. How do you feel about NVIDIA seeing some headlines from the call? Yeah, I mean, the scaling laws, that's a big one, right? And so if they hold up, as Chris just mentioned, and I know Gene Munster has been talking about this, then the stock has legs because especially if that custom silicon thing doesn't really materialize in the way that some folks don't.

don't think it's going to, especially when you think about like the way this computing is going right now, the cycles being extended to some degree. I'll just say this, though, when we talk about like what is the thing that could cause this stock to re rate higher? Everyone says it's cheap and may establish a new range and kind of get going the way it has after

The last few years, it's gone through these consolidation periods and breakout. And I'd say it's the taco trade. And I know that that's something that we heard about today. Which stands for? Trump always chickens out. And we have lots of examples about that. So if somebody like Jensen Wang is starting to push back a little bit, then maybe that is the thing for the fourth time in two months that causes them to chicken out. And that is the thing that probably gets invented. That means if they get some sort of exemption or something. OK. All right. He's got a 180 price target.

Chris. Chris. You know, let's get to 153 first. That was the all-time high. Again, I'm sort of with Steve on this one. It's a fine quarter, but the magnitude, the absolute numbers are bigger. The magnitudes of the beat percentage-wise are smaller. How do you view the China market when you think about NVIDIA and what it's worth? It's an excellent question. I do sort of think this will work. I think this...

Jensen, I mean, I always think he's great at two things. One, the engineering, the chip part of it. The other is sort of mastering the street. And this, I think, is sort of part of that, this jaw-boting right now. Managing the expectations. Managing expectations. The message. Everywhere. Yes. I think Jensen got the stock to where it is. But if you just ask yourself, is the hyperscalers, is there going to be more demand or less demand from the hyperscalers? Even Chris, who

who's bullish on the name, said that the hyperscalers are actually making their own chips, developing their own technology. Are the hyperscalers gonna demand more from Nvidia going forward or less? I'm gonna say it's probably an easy answer, it's less. So you have competition, you have China, God bless you. - Thank you, sir. - You have competition, you have China, you have people going away from Nvidia. I think it's an easy sell at this point. Can it go a little bit higher?

Of course it can, but I'm looking for the stock. This is where the rain should be coming in. Yeah, so Karen, I just say, not just managing the street, but also managing the tech narrative going forward. He's convinced the whole tech world that this is a new form of computing that's got lots and lots of legs. Coming up, mortgage maneuvers out of the White House. President Trump weighing whether to end Fannie Mae and Freddie Mac's conservatorship, the impact it could have on the housing market when fast money returns.

Welcome back to Fast Money. Over-the-counter shares of Fannie Mae and Freddie Mac surging today and renewed hopes around President Trump's plans to take the mortgage giants public. The two have been under government conservatorship since the 2008 financial crisis. The president writing on Truth Social last night that he will continue to oversee the company's once public and that they will retain their U.S. government guarantees. For more, Structured Finance Association CEO Michael Bright joins us now. He also served as Ginnie Mae's chief operating officer.

from 2017 to 2019. Michael, great to have you with us. Thanks for having me. Good to see you guys. So when you think about this plan to bring to return them to the private sector, what are your biggest concerns? Because you think of a company being publicly traded and you think about the things that they do to juice returns, to return more money to shareholders. And those may not necessarily align with keeping the mortgage market safe.

Yeah, no, that's exactly right. I mean, that's really what we had as a model in the lead up to the financial crisis. And, you know, it contributed to the demise of these companies. And so you really want to make sure that if they are removed from conservatorship, that you keep in place some guardrails and some protections to ensure that they are focused on their core mission. That's really the long term return that you would have with moving them out of conservatorship.

What's the benefit for, I guess, the investing public for them to go back into a publicly traded company? Talk through the whole, I don't know, the mechanics of it and why people would want that. You know, I guess.

It's hard to know exactly what the benefit would be without seeing the structure, you know, the overall structure. All we've seen so far is a couple of posts by the president. So there is an argument to be made and reform efforts in the past have attempted to separate the government's role in ensuring liquidity in the mortgage-backed securities.

From the risk taking role of private enterprises that could potentially go insolvent and undergo some sort of a resolution mechanism, be it a Title II, Dodd-Frank type resolution or something like the FDIC would take a company into receivership. But in most reform plans that are comprehensive, you have a very clear backstop that the government would provide liquidity to the MBS so that the mortgage-backed securities holders aren't taking on the credit risk of the underlying companies themselves.

Thus far from the administration, we haven't seen any details. We don't really know what the government would do with the stake that it has. That's a hugely important question. And really what would need to happen is the government would need to clarify when and under what circumstances it would step in so that the bond market can price certainty, not speculation. It's Karen. Thanks for being on. So much has been talked about, explicit, implicit, you know, the government backstop. How much does that actually matter to the

to the rate of a standard mortgage? Hugely. It's very, very, very important. I mean, agency mortgage-backed securities, so Fannie, Freddie, and Ginny MBS, trade very tight to treasuries. So that is in price on the bonds, which lowers the rate that borrowers actually pay for their loan. That is

largely a function of the fact that the government has a very clear legal relationship with the companies right now. It allows banks to put them on their balance sheet with very low risk weighting, so low capital requirements. Foreign central banks can buy it. Our central bank buys these mortgage-backed securities in times of crisis and to lower interest rates.

None of that can happen if they're just purely private companies and the market's supposed to anticipate that they would always get bailed out. Asset managers, insurance companies, a lot of that capital will need to be reallocated. And so right now, the investors of all these MBS is looking through their agreements and trying to decide whether this would be a credit investment or an interest rate investment.

It's unclear to me how the twin goals of spinning them out of conservatorship, absent clarity around the government's role, while also not impacting mortgage rates to borrowers, they seem to be saying they want both of those things to happen. But a lot of work needs to be done in order for that to work.

I mean, it sounds like a huge mess if MBS were viewed as a credit, right, as opposed to Treasury-like investment. So what can the government do to actually say, you know what, we are going to backstop to the degree where MBS should be just as safe as they are today with Fannie and Freddie privatized?

Well, the best thing would be for Congress to get involved and to clarify what the government's role is going to be. And they could put congressional stamp on it and then investors know what they're getting. That's exactly what you have with Gini's. And when I ran Gini Mae, I would go around the world and talk to central banks and go around the country and talk to investors. And they all knew that the government's role was very clearly defined. And this is, Gini didn't even take any losses during the financial crisis because it was a backstop that was deep in the capital stack.

Without Congress, without something like a Ginnie Mae, I mean, they would need to do some sort of machination where they would have a very strong government preferred share purchase agreement, the PSPAs, which they have right now, and some sort of arrangement between Treasury, I guess, and the enterprises, saying that Treasury would always backstop them. But you're pulling out a thread, and it's not really wise to do that all administratively. So it would be good to have it explicit. It would be great to have Congress involved.

All right. Michael, thanks for joining us. Appreciate it. Michael, there are some notable investors in Fannie and Freddie, Bill Ackman being among them. Ten percent, I think, of a stake. This is just, you know, Karen, I'm sure has more thoughts on this. But to me, if it's not broke, don't fix it. I mean, things seemingly are going OK. You just said it. I mean, it creates a whole sort of can of worms are going to open up. And I don't know how it sort of resolves itself. There's sort of that moral hazard issue, right? If it's if it's.

Right. It has to maximize profits in theory. Yes. Yeah. But right. So, I mean, it's already moved tremendously on the hope of this. I would think this sort of risk reward now is less compelling. Coming up, a major move in retail as Abercrombie & Fitch surges even after slashing its profit outlook. Why one of our traders says the stock is still cheap at these levels. That is next. More Fast Money in two.

Welcome back to Fast Money. Shares of Abercrombie & Fitch surging nearly 15% after quarterly earnings and revenue beat estimates. Investors seemingly unconcerned that the company slashed its profit outlook, saying tariffs will cost it $50 million. Karen called the results spectacular on her noon call. Yes, so two parts of the business. No, there's Abercrombie & Hollister.

Abercrombie was the what weighed down this company and weighed down these earnings, which would have been spectacular if we'd only look at Hollister. So I think they're working through the Abercrombie issues. They had more inventory than they hoped to have. That weighed on the margins. Hollister, completely different story. Gigantic same store sales beat. Huge momentum there.

No price pressure there. So it has a blended multiple, sort of the two together, of, you know, eight-ish, eight and change.

a spectacular balance sheet they bought they they bought 200 million dollars worth of stock at about 76 so i think it's just too cheap because i do think the abercrombie turn is happening while hollister is on fire yeah this time last year it was too expensive this time this year it's too cheap and you know it might have gotten cheaper to karen's point and you look at it and say okay a lot of the bad news has been priced out over the last year now it's just a valuation play and

I think in just terms of them being able to perform well, I mean, it's just seen this was a turnaround story last year. I don't think that's changed. I think it's going to be a reacceleration of that. I mean, if you look at the bottom, it definitely looks like it's rounding on a technical level. To Guy's point, it was $190 a year ago, basically almost to the day. But there is slowing growth. Operating margins by their own guidance seem to be coming in.

This is a stock you could never get right. It's for me, at least. I think this is a great entry point. I don't own it because I've never I've never traded it right. We have a lot of other retailers report today. Macy's cut its outlook on tariffs. Dick's reaffirmed its full year. So, no. Well, we talk about all the time. All retailers are not created equal. Again, it still comes down to if you really want to play the game, it's still Walmart's world. Up next, final trades.

Final trade time, Steve. I love the E.D. Tiles story. I'm going to play it with Archer Aviation. Karen. Yeah, so if A&F was good enough for the F block 20 seconds a minute ago, it's good enough for the final trade, A&F. Dan. It traded really poorly today, despite the gap. I just want to say it closed on the lows, right? And I just don't think there's too many interesting retail stories out there right now, maybe one-offs like this, but I think you sell the XRT. Guy. How you doing there, Mel? Good. Good.

I like new money. I like the way it closed today. Take a look at that. Thank you for watching Fast Money. We will see you back here tomorrow at 5 for more Fast Mad Money starts right now.

Thank you.

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