nearly 4%, so, pretty strong result for software after the nasdaq took a beating today. >> yeah, i'm still focusing on ford. they are losing $44,000 per vehicle in the ev unit right now. that's just a huge move lower for that name. one to watch tomorrow. >> indeed. >> all right, that's going to do it for us here at "overtime," where the s&p and nasdaq had their worst days since 2022. >> "fast money" starts now. live from the nasdaq market site in the heart of new york city's times square, this is "fast money." here's what's on tap tonight. tech gets rocked. the nasdaq composite sinking more than 3.5%, it's worst day since october 2022. the s&p 500 breaking its longest streak without a 2% drop since before the great financial crisis. both indices now down in the month of july. where can you find safety in this selloff? we'll try to find you some answers. and french fried. shares of fast food supplier lamb weston posting its worst day ever, delivering a stark warning for the restaurant

industry. is there more heartburn to come for this trade? plus, ford shares hid the skids. and viking therapeutics jumping as it says it will move forward with its oral and injectable weight loss drugs. we'll debate that. i'm melissa lee, coming to you live from studio b at the nasdaq. on the desk tonight -- steve grasso, karen finerman, guy adami, and tim seymour. the nasdaq now more than 7% off of its all-time high, hit just last week. the s&p 500 snapping a streak of 356 sessions without a loss of more than 2%. and the dow falling 504 points. the pull-back comes as the first two mag seven earnings reports of the season failed to impress investors. tesla shedding 12% today, its worst day since 2020. it's now erased all gapes since that better than expected

delivery report at the start of the month. alphabet tumbling 5% after its report. the pain felt throughout the megacap tech space. the mag seven losing $760 billion in market cap during this session. that is almost as big as an entire eli lilly. so, is this just the start of the great rotation out of big tech? how much more pain still could come, guy? >> i mean -- 356, 2% move? see, i thought that would happen 256 days ago, but we're finally -- so, but here we are. okay. >> only off by one. >> a little bit. it's all good. so, you look at a couple things. we traded down today, we held -- we closed right at the 50-day moving average in the s&p 500, which is encouraging. we closed at an uptrend line that's been in tact for a better part of the year. a similar thing happened in april in terms of the 50-day. that's encouraging. here's what's not entirely encouraging in terms of where we traded down. the fact that ten-year yields

went higher today and happened late in the day is something that the market should absolutely look at. ten-year yields closed north of 4.28%. one would think that on a risk-off day like this you'd see a flight to quality in the bond market. you did not. i think it's encouraging we traded down to and held the 50-day moving average. the bond market might be trying to send a warning sign. >> can you just spell that out? >> yeah, i will spell it out. the fact that people -- you talk about the two tens, the inversion, well, i think late last year, it got down to 12 or so basis points and blew out again. i think today -- and again, it's a moving target, but we closed around 15 or 16 basis points. it's not the inversion that gets you, it's the resteepening. and go back and look over time and you'll see that when the bond market, when the twos, tens starts to resteepen is when things get dicey. >> i can't believe it's only that few days ago we were at an all-time high. seems a lot has happened since then. i look at google, which we saw

last night. i was surprised it was down this much, i thought it would be down some, i think during this sort of either side of flat last night. and i guess the sort of read the weight, you know, "the journal" presented and others advertising week. i look at the magnitude of this move in a very small miss, and against the cloud, which i thought was probably better than those two things together, so -- you know, it had a nice run. but i think the valuation here is still very compelling, and i know for some of the real high flyer a.i. stocks, we think of nvidia, of course, the valuation is much higher, and actually that capex spend number proves -- and tesla talking about that, as well, i think seems to be a positive for that story continuing. butchanges, i think it could change back just as much. the move in meta, which is also not expensiexpensive, seemed ve excessive today. >> and that could have been more on the advertising.

>> absolutely. which, the magnitude of the meta move versus the magnitude of the going being a tad light i thought was very, veryterms of trade, the a.i. narrative in the market, it felt like alphabet gave enough for you to believe that capex spending would continue, that there's no sort of pull-back there, that capex spending would be at least where it is or higher and there's more risk of underinvesting than overinvesting. so, i would think that's a good thing, even though other parts of the quarter were not fantastic. >> yeah, i think that everyone wanted to sell the market, right? so, when you have consensus be a little bit negative, and let's remember, historically, the seasonality of it, the first 15 days of july are overwhelmingly positive for the market. the second 15 days have a shoddy record. that's what we saw this time. when you get to august, it's a crapshoot. it's half/half. so, what do we think we're going to get in august at this point?

it's a 50/50 shot. but what's not a 50/50 shot, september is universally negative for the markets. so, when guy talks about the 50-day moving average, i'm looking for a test of the 200-day moving average. that's another 400 points lower from here. is it something that the market can tolerate? i think the market hasn't tested the 200-day in a long enough time that we need to test it. so, it's more about consensus, more about the way people feel about the market, versus what are the innards really telling you? might not be that bad, but the market is prime for a selloff. >> so -- yeah, you're saying the rotation out of technology will probably continue. >> i'm saying -- >> your bottom line? >> yeah. i will continue and the russell is not enough to keep the market up. >> tim, your thoughts? >> ah -- innards, wow, that conjures up a bad visual. i mean, i think, first of all, fortunately, we're a business network, and this is a business program, and it's not a political network or political program. and because i'm going to tell you that this move in megacap

tech and the markets happened on a cpi. it's all about the fed. it's all about the dynamics around interest rates, and certainly it's about whether we're actually in a slowing growth environment and whether the fed's overstaying their welcome. so, the dynamics here, i know today's the day to talk about the biggest, you know, the biggest cap companies in the market, but i would just say, and we're going to talk about chipotle, we'll see where that settles in, but i think we're legging the next leg lower in a bunch of consumer and discretionary names that tell you a lot more about the market on some level, and the economy than where the megacap tech companies are, so, important day, everyone's highlighting good, you know, or important dynamics around performance. semiconductors have now underperformed the s&p by 11% since that cpi number. and i call it less about rotation. the outperformance, though, of the s&p equal value, or equal -- value, or the s&p equal weight. small caps were down 2% plus

today, but they're outperforming on the way down. so, that is a dynamic that i think is probably going to continue. guy's right to point out interest rates are higher, although we're in this mini downtrend from, you know, that 460 move, so, let's watch what interest rates do. we had some flash pmis this morning that were horrible. you know, again, the macro data is not terribly good. earnings are going to tell the story. we've been waiting for earnings, and back to google and the capex spend, and, yeah, i'd rather overspend than underspend. that's exactly what the market is reacting to. the market knows $13 billion from $12 billion, what's the big deal from google on a quarterly basis, but it is a case of, we still can't totally measure what the result of that spending is, and that's why the market is pushing this stuff around. >> it is amazing that it's, you know, they expect the return on investment to show up so quickly when it cops to an investment in a.i. there's not a lot of time here in terms of the time where they said we're going to spend this much on a.i., to win, they expect an r.o.i. to be produced

for an investor, that's not a very long time. >> immediate, you mean? >> one quarter. it seems unreasonable. >> the billion dollar additional spend, say it's times four, annualized rate, the magnitude of the move in the stock is far, far, you know, just ridiculously high. i think -- i thought for a long time, we're still in early innings of a.i., and the stocks won't exactly track the productivity of a.i. they'll be well below, well above, but i think the trajectory is higher. >> interesting, i think you are exactly right to bring it up. goldman sachs brought this up a week and a half-ish ago. same day, roger talking to david faber about the r.o.i. on the spend. no one is denying the spend. it's the return on investment that people are starting to realize, maybe it's not going to come as quickly as the market thinks. so, that's part of it. and technicals weigh into this. and i hammer this home all the time, but if you want to play a game tonight, go back and look at what happened on march 8th in

nvidia, and then by the middle of april, look how much that stock fell, fell 24%, i think, peak to trough, i think the broader market was off 5%-ish. june 20th, same exact price action. you mentioned broadcom. nvidia has never recovered from that. look at where it closed today, look at what the high was. so, there's more pain in this, just on a technical basis. >> and you have to think about what a.i. people are going to demand. people -- what consumers, what a.i. they're going to consume. so, we could have those high b bandwidth memory chips, but maybe we don't need them. so, there's going to be a differentiation from the tech companies that are actually producing -- there's going to be winners and losers, but i agree to karen's point, too early to figure -- this story is not over. it's got a lot of innings left. we could separate the winners and losers years to come. >> okay, so, how, tim, do you

think about this rotation, how then do you think about positioning right now, let's say for the next couple months? do you start re-examining some of your tech trades? i know you've been in utilities. do you look more at the so-called safety trades? >> yeah, i mean, i think, especially -- and as i think about it for my clients, allocating across the market really means making some sector calls where you want to be overweight or underweight, but ultimately, you're trying to own the market. i think utilities have given a backdrop, even some earnings that we've seen recently, but whether it's renewables business and some of the niche-y parts, those that have exposure to data center, but i think even still, what's been some relative underperformance in the peak in rates. i like energy here, i love utilities.

banks, as good as the story has been, there's been a couple of worrying things. deutsche bank today, our old friend, guy loves to talk about it, you have to be a bit concerned about some of the price action there, even though some of this was related to just a loan loss provision that they put in there -- excuse me, even a lawsuit provision that was in there, but they referenced u.s. commercial real estate. blackstone referenced u.s. real estate in their mortgage trust. there have been mentions here of dynamics, so, i think, as much as i still like banks, i still like the money center banks, they've had a heroic move, you can own banks through this, but these are the conditions that we're watching. it is also nice to have exposure to things like gold. it's nice to also feel that maybe you can push out a little bit on the yield curve. we talked about the two-year note and how well received that auction was yesterday. i think investors are finding comfort, and i think they should, in kind of the short to the belly part of the curve, where i think they are interested in locking in some yields. so, there's been some sense here that this market could go lower. i kind of believe that it can, as well. i think the dynamic around earnings season, when there's

been so much good news priced into a handful of these stocks, i think it sets thor ba extremely high, into this earnings season, so, i don't think you have to overreact. >> okay. for more on today's tech selloff, let's bring in dan niles of niles investment management. dan, great to get your take. you were worried going into this reporting season, just about what we were talking about, and that is sort of the investor expectations around an a.i. spend. so, in your view, what did we get from google, and do you imput that on all the rest? >> yeah, so, we've written over the last month, we thought earnings season investors would start to focus on return on investment. and that was the problem with google, is that when you look at what was happening with their margins, which is the one thing that people seem to be glossing over, their margins go down. the top line estimates and the future go down. the margins go down. and eps go down. not a lot. but a little.

and so, i think what you heard from google today is what you're going to hear from a lot of these other companies going forward, which is, we're spending a lot on a.i., but we're not sure when the revenue's going to show up. what was a little scary about yesterday was the fact that google said on their call, look, we'd rather overinvest than underinvest, which to me implies, well, they know they're overinvesting. so -- and by the way, meta said that, as well, their ceo, as well. so, then the question becomes, okay, if you know you're overinvesting and doing it because everybody else has to, then what happens if you're not getting the returns and when do you cut back? my assumption before yesterday had been, you know, we're going to see a slowdown in spending on a.i., but nvidia won't see a down sequential quarter for many years, much like cisco didn't see one for many years during the tech buildup. now, i'm wondering if we do get

a down quarter at some point next year, because these big massive tech companies are admitting that they are probably overbuilding right now. >> well, the comps for nvidia are going to be insane next year, so, that -- that's working against it, as well. i mean, that sort of underscores there is to some degree at least a pull forward in terps of the ordering of chips, et cetera, and/or a bubble. which do you think it is? >> well, it depends on how you define bubble. if you're saying, is there a bubble, because china is overordering everything over the planet potentially before we have a change in administration, absolutely, 100%. that's the rational thing for china to do. and if you look at some of the cap equipment companies that are reporting, china's close to 50% of revenues. so, you're going to have a falloff sometime next year in cap equipment that's going to be horrific because of that. now, when you just talk about a.i. in total, the thing you have to ask yourself is, don't forget, you're spending money, expecting a return.

so, if you go back, and i -- i wrote about this earlier, but if you look at salesforce, workday, snowflame, mongodb, which reported about a month ago, all of the four estimates came down. now, these are all names that talk big about how a.i. is going to help their business, but at the end of the day, the estimates go lower. so, you look at google's estimates edging down, tesla's estimates edging down, and at a certain point, your investors want to see some kind of return on this, and that's the problem, so, you have two separate things going on at the same time. china, which is obviously politically driven, and then, you have the spend on a.i., which is a different issue, but again, if you are saying, hey, we'd rather overspend than underspend, then, you know, we're probably going to have a bigger problem when this eventually does happen. >> so, is the down -- a downside that you are sort of forecasting at this point for these a.i. names, particularly in nvidia, for instance, is that compelling enough for you to be short?

how are you sort of positioning for this continued rotation out of technology? >> yeah, so, if you look back at history, you look at the internet buildout, you can look at cisco. didn't have a down quarter in six years. sequentially, i'm talking about. the stock went down 26% late '95. i went down 38%, and these are entry year moves lower, it was as up every year, but it was down 38% in 1997, and then was down 37% at one point in 1998, intrayear. and that's without a down sequential quarter. so, if you look at the moves lower in the a.i. names now, they're nowhere near those levels. so, the downside is a lot more in the short terp. if you are talking longer term, i still believe, and i said this, as well, when i warned about this quarter, i think we've got multiple more years before this hits a, you know, sustained peak or whatever you want to call it. and so, you just have to live through this period of time,

much like you had to live through three horrific drawdowns in cisco on the way to the stock being up 4,000%, but each one of those drawdowns, you had people say, you know, we knew the internet wasn't real, i remember one nobel prize-winning economist in '98 saying, when this is all done five years from now, we'll find out the internet had no more impact than the fax machine. right? so, you're going to always have that going on, and when stocks are falling, everybody panics, and that's when, i think, for us, we're going to get interested in buying stuff. to answer your question on the short side, you know, we covered one of our mag seven shorts today, which got crushed. but in general, we're still looking more on the short side, apple is our favorite. it's not as big as it was before, partly because they haven't spent a lot in a.i., and so, there's not a lot they have to cut. their revenue growth has been horrible for three years, so, you know, an upgrade cycle will really help then. for the other names, we're looking more on the short side than we are on the long side, because of what we just talked

about, and, you know, the way the market reacted to google tells me that people are finally starts to wake up to the reality of, yeah, at some point, we'd like to see revenues for all the spend. >> dan, thank you for your time. appreciate it. dan niles. >> thank you. >> so, we're just talking about apple, we were showing the chart. apple got that nice lift recently on the ocean that it is an a.i. play, it is the undervalued a.i. play. one that has not participated, though a.i. is going to be a major force behind the next upgrade cycle. and here we are questioning a.i. how much should apple give back then? is it the most vulnerable, perhaps, at this point? >> the most vulnerable, no. i would still submit in terp! tf stock, nvidia is most vulnerable. apple started at 193 the day of that announcement, traded up. it got up to $237. 193 makes sense. you made a great point, though, the comps are going to be difficult. the question is, at what point, does the market start to stiff

that out? how forward-looking is the market going to be? you have to take that into consideration. it's not about the spend, it's about r.o.i. if the double ordering has been going on, the margin contraction, i think, will surprise people. >> i think it is going to be a massive upgrade cycle for apple. but where -- it's the obvious, it's the $200 price level in the stock, on a technical basis, big, fat round number, and it should get there, if the market starts to sustain some hits and some bearishness going forward for the next couple of weeks/a month or in and out, then you showed test that 200 and maybe we get back to where it all started. if we think the market's coming in -- like i do, eventually, you are going to have that test of the 200 day, you could see below the 193 level. >> when you ask, which one has the most downside, i have to agree with you, nvidia. just, you know, that which rose the most must have -- and it has the most sort of demanding, but not crazy pe multiple. when -- you know, when they all

start to go down, or when this one goes down, others will. i think of google differently. >> when it comes to nvidia, google's already said that the risk is in underspending. so, they're still going to write the checks to nvidia. so, that danger doesn't happen immediately, because these companies are committed, or, it seems like they're committed. >> right. >> to spending now. until the end of the year. >> until you get one little whiff of, you know, a second derivative that isn't as robust as the street thinks. look, and i'm long nvidia, i sold a little bit, i have some puts, but i am long, days like today, or this past week, are very painful, but i think that one is, to me, where the most downside is, not a google, not a meta. quick programming note, as big short week will continue here on "fast money." steve eisman will join us tomorrow with his take on the market selloff and positioning in the second half. you won't want to miss that one. meantime, we have an earnings alert on ford. shares dropping after it

reported a big miss on earnings per share. revenues came in above expectations. ford's conference call kicking off at the top of the hour. phil lebeau has more details on the quarter. phil? >> melissa, we are listening to jim farley, he's talking about the quarter and where he believes ford is going, saying, this is a much different company than three years ago. that doesn't matter right now, because the stock is getting hammered as the company once again shows it has problems when it cop comes to warranty costs. they missed on the bottom line. 47 cents a share. the street was expecting 68 kren cents a share. revenue coming in at $44.8 billion. commercial vehicles -- this is the key to ford having profits right now. they continue to kill it when it comes to commercial. $2.56 billion in profit. $1.17 billion in the internal combustion engine business. and evs, a loss of $1.14

billion. after the first quarter, they said, they're losing $130,000 a quarter. it's now just a loss of under $44,000 per ev sold in the second quarter. now, let's talk about the guidance. in the -- ford is cutting its 2024 profit forecast for the internal combustion engine business by a billion dollars because of the growing cost of warranties. they said on a call earlier that it was because of vehicles engineered before 2021. that may be the case, but it's copping back to bite them right now. they are raising their commercial profit vehicle guide from $9 billion to $10 billion. free cash flow is going up from $7.5 billion to $8.5 billion. ford saying they're going to earn between $10 billion and $12 billion. melissa, i can guarantee you that when they get to the analyst questions, there's going

to be questions about warranty costs. we have heard this time and time and time again from ford over the last several years that it will do better, it will get its arms around these warranty problems -- and yet here it is. and i know they're going to say, it's pre-2021 engineered vehicles. i haven't gone back and checked their conference calls back in 2021, but this is a constant problem for ford. and jim farley has said, we will do better, and they cite some of their current metrics that they are doing better, but that's the reason the stock is getting hammered. >> phil, thank you. phil lebeau. the stock is down 10%. gm is down a percent, though it reported earnings yesterday. tim, what do you make of this quarter? >> i think it's an overreaction. i'm long gm, i have a position in ford. i think the dynamic around profitability for ford and gm is something that we haven't seen in a long time. ford underbly trades at a discount, because it should, for the reasons that phil pointed out. this is a company that's had efficiency issues, had operational issues.

seemingly tells us, forget warranty dynamics, just talking about their structure. we hear about this all the time. detroit is very profitable right now, and i think that ultimately is going to be what the dynamic is. we're not hearing about pricing issues. not necessarily hearing about demand issues. we knew they weren't making evs very profitably, so, i don't think i learned a whole lot new here. for ford, it's had a 40% move off the lows. gm's doubled that. so, that move off of october of last year. gm's the place you want to stay, but this is an overreaction in my view. >> all right. coming up, we are far from done tackling all the afterhours action. chipotle, ibm, and viking therapeutics on the move. all the details on the reports, right after this. this is "fast money" with melissa lee right here on cnbc. to help you see untapped possibilities and relentlessly work with you

to make them real.

welcome back to "fast money." chipotle shares initially surging, initially burrito blowout, after they beat estimates and said it saw rising traffic at its restaurants, but giving back a lot of that blowout in the last few minutes. kate rogers has all the details. >> hey, melissa, we'll get to

that point, but we'll talk about rising traffic first. that helped to drive same-store sales growth, up 11%, better than expected, along with top and bottom line beats. in the face of a lot of value competition in the fast food space, brian nichols says they are not seeing consumers trade down and are growing with all income cohorts. take a listen. >> the value proposition for chipotle really hinges on, you know, great culinary, providing great customization, with terrific speed. >> now, he also addressed on the conference call the social media push-back the company has seen on serving sizes, saying there was never a directive to provide less to our customers. generous portions is a core brand equity of chipotle. he's adding that they're re-emphasizing training and coaching for skicr consistency. the stock gave up gains on

margin pressures, saying it's seasonal, temporary, or can be addressed through efficiency. the company left full-year guidance in tact. back over to you. >> did they add color on the margin pressures? they talked about the wage increase, which was 6%, because of the california increases, and then some analysts are saying their channel checks indicate that chicken and beef prices were actually rising through the quarter, and so that could be a headwind. doesn't sound like something you necessarily invest in and it goes away, though maybe it's seasonal. >> you mentioned wages. that's part of it. definitely prices for beef and pew pouille try there. and they talked about investing in serving sizes. this is part of the brand, we are going to give these generous serving sizes, and that's something that i think factors in there, as we. >> so, when they say invest in serving sizes, that means make them bigger and pay for it yourself without taking price? without making a price increase? i mean, that's what investing in a serving size means, right? >> correct. >> and they had a price increase

last october that will roll off this fall. >> right. all right. kate, thank you. >> thank you. >> kate robgers. i love how they spin it, investing in the serving size. >> and take price. >> and take price. >> you give it to me. >> exactly. it's a little confusing. but i got it. all right. >> it's just amazing how it's continued to -- i mean, margins are fantastic, even though, i think tran actions were down a little bit, but the same-store sales numbers are just amazing. yet they continue to do it time and time again. i think, over, 45 times, that's really too expensive -- it's not expensive for what used to be hundreds of dollars presplit. still, i can't get there. >> when you look at the lookse on the last decline. the story about this is, it's very immature, meaning there has so much international growth that is going to be coming on in the next couple of years.

don't be spooked and look at the stock now and think, oh, my gosh, i can't rush in, i can't buy it now -- this is a great discount. great company with a lot of years of growth ahead of it. >> i know that brian niccol talked specifically about gaining share across income cohorts, which is amazing, especially considering what is going on in the landscape. think about what happened with lamb weston today, right? maker of french fries and tater t tots, they sell to the industry. they got skewered today. >> sliced. >> grated. whatever potato metaphor you want to make. terrible stock action today and they cited terrible traffic trends. >> you know, cmg is in a really unique space, without question. they've done extraordinarily well. karen just mentioned the fact that, you know, comps, 11.1%, i mean, they continually beat off really tough comps. and they're stextraordinary at . the margin pressures over the next couple of quarters, i think

that really spooked the market. it makes sense. for the first time in awhile, people are looking to valuation. but to steve's point, trying to find a place to buy this, not sell it. it's had a deep decline. but the story, i believe, is still in tact, mel. coming up, gilead. what has this name bucking the blood bath in today's action? that's next. plus, heavyweight headlines out of viking therapeutics and the company's latest earnings report. the skinny on their weight loss drug plans right after this. more "fast money" in two.

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welcome back to "fast money." earnings alert on viking therapeutics. the stock surging after reporting q-2 results and announcing it will advance its injectable glp-1 to phase three, and oral glp-1 to phase two. let's go to angelica peebles with more. >> they are saying after talking to the fda, they feel confident to move their shot into phase three trials. now, as you guys know, there was some talk about whether they would be able to make that move, or whether they would have to do more phase two testing.

and they're meeting with the agency later this year to talk about what exactly that trial will look like. on a call with analysts tonight, they were saying it's too early to discuss details, what the dose will be, the triation schedule, and the granular details, but they still feel confident enough to bring that forward. now, they are saying that the fda guidance requires two phase three studies, with a minimum of 4,500 people in those trials, and they say they could cost $300 million. now, they haven't been shy about looking for a partner. and analysts were trying to ask them how they feel like this update will mean in terms of their -- their possibility to find partners, maybe get bought, and there's been so much talk from pharma companies, saying they want the next generation, they're not interested in this current generation, they want what's next, but they're saying that they feel like their drug, this shot, is a good backbone, and they have more in the pipeline, like that pill that could help them have abroad

portfolio. melissa? >> angelica, thank you. angelica peebles on viking. we should mention that eli l lilly, down 2%. got a new price target, $1117 from wolf. this is really interesting, because if it goes to a phase three on the injectable side, this could mean it's the third to market on the injectables. which would be -- >> okay, but when you say to market, the time between now and then, assuming -- >> it is the most advanced in terms of the next injectable to come. >> they're still behind. >> exactly. >> so, it could be the third to market at this point. >> i don't know -- even if -- >> even if it works, i think they get bought. >> oh. >> right. good for then. they raised $600 million, $85 a share, good for then. >> right. >> buys them all kinds of type. so, they can advance the ball. may they aren't the ones to market it. >> i see what you're saying. they have $960 million in cash right now and angelica said $300

million is the cost for phrase three. >> let's play it out. jared holz was just here. and as horrible as i am, this is one we've done a great job on, i think. when it had that huge runup, we cautioned about getting in. said there would be a pull-back, you saw it, jared was on last week, we said viking is interesting here. you're seeing the move now. i'm not going to say it's going to get bought, but this is probably a $10 billion deal that somebody out there is eyeballing right now, which gets the stock probably north of $110, which is exactly the price target that morgan stanley just slapped on it a month or so ago. so, this is one, as volatile as it is, you have to play it from the long side. >> jared holz said that the requirements are real, and they will probably have to raise money or find a partner/get bought, tim. but this really shows you that perhaps there is hope for some of the other sort of laggard pharma companies, if they want to, you know, cough up the cash and make an acquisition. >> right. and this isn't good news for

lilly's valuation or novo's valuation. that's the whole point. we've treated it like it was really a two-horse race, and obviously lilly's had other good news in the last couple months around alzheimer's, so -- the more we recognize that glp-1s and that addressable market that we've assigned to two companies is not going to be two companies. and so, every day, we get a little bit more news, and it seems like the headlines have a bigger impact in the price of lilly. we shall see. but there's no question -- i agree on viking. i have a small position in viking. expect it will get taken out. more earnings still to come. ibm jumping on the back of its latest report. inside the numbers coming up. but first, our next guest says the russell's recent rally is no accident. we'll dig into the small cap comeback and figure out just how high this group can fly, right after this. missed a moment of "fast?" catch us any time on the go. follow the "fast money" podcast. we're back right after this.

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welcome back to "fast money." small caps not immune to today's selloff. the russell 2,000 dropping 2%, but managing to post a smaller loss than the nasdaq and the s&p 500. the small cap index still outperforming its larger peers,

up 8% in that time, as investors rotate out of megacap stocks. our next guest thinks the group is poised for a durable rebound. mike rohode is with us. >> thanks, melissa, great to be here. >> we talk about small caps like a monolith, but they are really very different in terms of whether some are profitable and others are not, in different sectors. where are you looking within small caps? >> yeah, from the asset class as a whole, what you have today is an inexpensive asset class trading below its average valuation over the last 20 years. the spread between large caps and small caps is the lightest it's been in decades. the ownership in the market is nearing all-time lows, as well. but what you have are some great growth drivers, fundamental growth drivers over the next five to ten years that are going to drive earnings growth higher, cob census estimates are expecting earnings growth for small caps to be higher than large caps for next year.

you are also going to benefit from a steepening yield curve. and finally, reshoring, i think, is a great driver of earnings growth for the next, again, five to ten years. we're seeing it here, i'm coming to you from kansas city, there's a small town called desoto, kansas, 30 minutes from here, and they are building a $4 billion panasonic electric vehicle battery facility. going to employ 4,000 workers, and really change the landscape of this small kansas town, and this is happening all over the country. so, yes, it's going to benefit the companies that are selling equipment into the building, but also, the companies that are building restaurants and housing, banks that are lending into that community. so, there's really a multiplier effect from this reshoring trend. and i think that's going to help drive small cap growth over the next five to ten years. >> mike, it's karen, let me ask you something. there's been a lot made of this shift to passive investing over the last few years, and the iwm

by its nature needs to be a little more actively managed to really get to some of the most interesting stocks in there. do you feel like there's any shift back? >> ah, you know what, i think so. there should be. if you look at active versus passive performance, active managers have, by far, the highest success rate of beating the russell 2,000 or their benchmark net of fees, because, as you mentioned, small caps are a little bit like the wild west. it's highly inefficient. there's an average of six sell side analysts per stock versus google or apple that have 75 and millions of eyeballs on those companies. so, you know, good active manager can identify when there's a change, before the rest of the market and capitalize on that. you know, the index also is -- there's a lot of money-losing companies, as well. there's about a quarter of the russell 2,000 that are not profitable today. about half of that is bio tech, happy to talk about that, because i think that's where we

see a lot of alpha generation opportunities. but yeah, good active managers should help you as an invest avoid the money-losing companies, and again, over time, active management has really worked in small caps. so, there should be, and hopefully there will be a shift, because it really makes a lot of sense. >> mike, thank you. we have to leave it there. mike rode, appreciate your time. >> thanks. >> small caps in your -- is that s in scheme or no? >> i don't have scheme -- >> oh, oh, sorry. >> that's all right. >> scheme is courtney. you are helm. >> i'm help. >> i'm confusing you with the other terrible acronym. >> that's all right. i'm sticking with it. >> when you look down at the breakdown by the russell and you look at the great breakdown by sector, you have industrials, health care, financials, so, the big push that we've seen off of the trump trade really helped to facilitate that rise in the russell. i think you're going to see a

leveling off. they're just not big enough to really move the needle. and he said a quarter of them are unprofitable, i thought the number was over 40% are unprofitable. so, i think it's a host of reasons, the passive investing, the unprofitable companies, but they need lower rates. that's what really kicked off that surge into the russell and until we get the rate cuts, i think you're going to have to really start to roll the dice on it. coming up, ibm on the move after reporting second quarter results. we'll dive into the numbers and the stock's reaction, next. t-mobile's 5g network connects a hundred thousand delta employees so they can make every customer feel like they've arrived before they've left the ground. this is how business goes further with t-mobile for business.

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welcome back to "fast money." earnings awlert on ibm. shares are higher by almost 3% after the company reported a beat on the top and bottom line. conference call is just wrapping up. seema mody has the details. >> the ceo on the call says the enterprise a.i. strategy is resonating with clients, with the company's book of business related to generative a.i. standing at greater than $2 billion. ins the mix is roughly one-quarter software and three-quarters consulting. this business directly competing

with aeccentric. consulting was in line. analysts say they'll be watching if consulting can see stronger growth in the back half of this year. and given today's broader move in tech, i asked ibm's ceo about the i.t. spending environment. he was very positive on the macro, said spending is dynamic. he is seeing some customers reallocate spending to growth and making decisions about trading off discretionary base spending. we're looking a at shares of ibm higher in afterhours. >> all right, seema, thank you. seema mody. and that exactly was a concern of investors about this discretionary spend. a.i. sucking all the spend out of the room, so to speak. >> gross margins and software crushed, and by the way, if you are running linux, you did not fall under sort of the purview of that crowdstrike droppage last week, so, there might be a move over to linux over the next couple of months. i still like ibm here. up next, final trades.

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♪ final trade time. tim seymour? >> mets look to sweep the yanks tonight. nextera energy, best member of the xlu. 10% div. >> all right, karen? >> yes, so, vix has just had an extraordinary run higher as the market has gone lower. if we see one more big prove tomorrow, i would look to buy

some qs on that. >> steve? >> ethereum grayscale mini came out, that's the way i'm playing. >> guy? >> it is the mets world series after all. general dynamics, gd. >> thank you for watching "fast. "see you back here tomorrow at 5:00. >> my mission is simple. to make you money. i am here to level the playing field for all investors. there's always a bull market somewhere and i promise to help you find it. mad money starts now. >> hey, i am kramer. welcome to primerica. i am just trying to help you save some money. call me at one 807 43 cnbc