>> all-time highs. for one brief shining moment, nobody has a loss in microsoft stock. >> theoretically. >> it's a vote of confidence in satya nadella. >> see you tomorrow. kelly is back here tomorrow as well. that's it for "closing bell." "fast money" starts right now. "fast money" starts right now. live from the nasdaq overlooking new york city's times square, i'm melissa lee. tonight on "fast," media legend and former fox president peter chernin is with us about what he thinks the next big thing in media could be. our traders separate fact from fiction and give you the best move. and stocks falling after a bernie sanders tweet. what other names could be in the senator's sights?

meg terrell is here with a special report. one of the widely held stocks in america hitting all time highs. microsoft surging on a big earnings beat. last time it was at these levels was december 30th of 1999. guy adami was just 15 years old. what does it mean for the rest of big tech earnings? dan nathan, what do you say? >> i think this is pretty microsoft specific. we got guidance from microsoft for q4. we know they had a solid q3. microsoft's çpc-business was down, the other stuff is making up for it. they have two hats, they have the cloud business, which is private and public, and that's growing. the aws piece, azure, excuse me, grew 140%. that's what they want to see. we were all just talking about

it. you own the stock, this is one of the reasons you think it's going to be a $100 billion market. these guys are well positioned behind amazon. >> it's hard to argue with the growth you're getting out of azure and office 365. these guys can now say we've transitioned the company from the dwindling pc business. it gives analysts the ability to forecast their business. these guys say they have an annual growth rate of 12 to 13% over the next four or five years, which is why they get a little bit of a premium. the success of management in turning this boat gives satya nadella and his team a premium that management trades at transparency. thisç stock trades at a premiu. >> stock sounds pretty good. buy at the all-time high. >> trading-wise, today, die buy it up 5%, probably not, i would probably shy away from that. that being said, i would look at

it on a pullback. everything these guys said is exactly what everybody in this market now wants. there's very few stocks out there that have this type of growth, that have a dividend, that have a strong management team. you can probably count them on two hands. microsoft is probably going to attract a lot of investment money. on pullbacks, you can be a buyer. >> i agree with everything brian said. i missed quite a bit here, i don't know that i want to jump in now. it is interesting to note, 60-ish, traded 17 years ago. the p.e. at the time was 72, right? now it's i don't know 18 or so. a lot more attractive here, needless to say. >> he what's kind of interesting about microsoft, we want to extrapolate what this means for the rest of tech and what are the closest comparisons. i think of ibm, not because ibm is executing like microsoft, but because it's a company that really had a legacy business that it needed to get away from.

this last quarter, we all sat around a couple of days ago and said, these numbers are not that bad. >> do you like ibm because you see the same sort of current or does it make ibm look worse? >> it says ibm may start to see traction in their turnaround. >> here's a really important point, microsoft's legacy business was down 5%. intel, what we saw there was, yes, their enterprise business is being cannibalized by the chips they're selling into these services businesses like aws and azure. when you think about it here, there's going to hit a cycle here, in this quarter they just printed $22 billion in sales. $12.7 billion of that was that legacy stuff that declined 5% year over year. at some point you may see cannibalization start . i am not a beyuyer at all-time

highs. >> what does that have to do with anything? why do we talk about all-time highs like it's relevant to anything? >> it spent the last three months consolidating between 56 and $58. i've been on this network on numerous occasions during that point saying, before this cycle is over it's going to go back and hit those highs. a lot of people think about those things psychologically. i've said on numerous occasions, this thing is going back there. >> were you short? >> there's better shorts in the market, okay, and there's better longs than buying something at all-time highs. i don't think that people are underweight microsoft. it's got that great dividend, it trades a little above the market. >> that's why the stock actually traded at a premium. it's also a mega cap name where guys can put capacity when the market doesn't have a lot of places to feel comfortable about value and growth at the same time and a decent dividend yield. >> tim's point, and your çpoin

about ibm looking like microsoft pre-run, i think that's accurate. i would rather ibm over microsoft, based on price only. >> really? what do you think it means for amazon and google? >> anybody with a cloud business. >> anybody with a cloud business. those are the big players. i'm hopeful for google that there is a lot of growth left to be had. >> we'll see next week. both report on thursday. >> i want to make one point about that. microsoft has a little bit of the salesforce.com stuff, a little bit of the aws stuff. when you think about software as a service, the public cloud, and the private cloud. they're much more diversified, you throw in the linkedin, whatever they can do with that, putting these pieces together across selling, more ai, more data mining, that sort of stuff. that's probably some secret sauce we're going to see in 2017 when they close that deal. we know linkedin -- listen, this is a huge money loser on a gap

basis, microsoft is a very profitable company. >> we have to ask the question, ifç we'rebulled up on aws, there's a question about what gets to be a commoditized space. you can't have it on both sides. you have got mega cap players continuing to dominate a business. everybody is saying that guy will dominate in a business that ultimately margins will go down. >> does that mean you're less optimistic? >> if that's what you're saying, you extrapolate that prices are going to be -- it's going to be a commodity business and margins will be pressured -- >> not yet. >> you're praising microsoft for that? >> good question. >> we'll see better margins than i would have feared. >> right now i don't think they're in danger of margin degradation. i actually think this could increase margins and market share. but what are we talking about,

two or three or four years out, i'm not going to bother trying to extrapolate that. this is a case where you have to be watching that. this stock right here for this market, at this valuation, for these numbers, can go higher. >> don't you think ibmç and microsoft knows it's going to be commoditized, that's why they have watson, they're giving you tools to build on top of this commodity, they know it's going to be that way. once you build on top of it, it's sticky. it's difficult, once you've built something on top of that cloud, to move it to aws. aws in my view doesn't have the analytic tools the others have. >> you're not buying microsoft. >> no. >> you would rather -- >> i would rather wait for a pullback. >> if you want to talk about the comparison to 1999 and y2k, there was a ton of start-ups, a lot of enthusiasm. when you think about everything as a service and everything in the cloud, there's a huge buildup going on, an arms race going on.

it's google, it's ibm, it's microsoft, it's amazon. think about the supply chain, the component suppliers. it obviously benefitted from this. this is why intel was at seven-year highs or ten-year highs because they transitioned away from pcs that were declining into these server chips. all of this stuff is cyclical. it has the potential toç cannibalize. it has the potential to basically become commoditized too. we have this euphoria in technology, everybody is obsessed with mega cap tech stocks because they offer value and dividends. >> i hear what you're saying, but you're talking about a company trading 50 times. >> that's in line with the market going lower. >> my personal view in 2017, there's going to be much more scrutiny on valuations, even mega caps, even amazon that traded at ridiculous valuation. you'll see value become an issue. then you'll see some margin degradation, deceleration. >> it's a $140 stock.

>> microsoft conference gets under way in just about 20 minutes. ahead, good news for housing turning into bad news for housing stocks. why it has one of our traders so worried. senator bernie sanders's tweet has shareholders in one biotech company running scared. media legend and former fox executive peter çchernin joinss from the vanity fair summit. what he thinks the next big thing in media is. much more "fast money," still ahead. ur order. thank you. thanks. don't you hate that? when they don't tell you how much something costs? and you have to ask? right. i do. maybe that's why i always make sure to... ..."bring up the costs associated with your services." i know. hey, i'm nothing if not predictable. lemme guess, the salmon? being transparent about our costs. it's a big deal. and it's how edward jones makes sense of investing.

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welcome back to "fast money." time for our move of the day. check out shares of bk. bk got worried about this, why? he. >> you had what isç ostensibly very good news for the housing area and all of a sudden, xhb, itb trade off, trade down, close near their lows. for me that says that's as good as it gets. >> you're going to the ford

f-150. >> sentiment reading. >> so what i'm saying is we're seeing cracks in the economy. this is another crack. i shouldn't say it's a crack in the economy. investors are getting ahead of this crack, is what i think. >> it sounds like you've been smoking crack. i actually think the housing market is very slowly building and building at a right pace. if you look at household formation, where we are on supply, where interest rates are, they will get their way into it. lending is only starting to pick up. i think the housing market is one of the gradeat places to be. pulte is the company i want to own. they're buying back stock. they wereç defensive from 2008 through a couple of years ago and have started being aggressive again. >> you have a little bit more money on margins, interest margins. and there's more lending

potential because more people want to buy. >> that would be good. probably not as good for wells fargo as it normally would have been, that was their sweet spot. mortgage activity is a good thing. >> other big moves of the day, rumors on the street, a game of deal or no deal. get your whiteboards ready, guys. at&t sinking, time warner soaring on a report that at&t is considering taking over the media giant. hold up the boards here. deal or no deal? what do you guys say? >> hold on. >> i got deal. >> wow, it's a split. a deal on this, my left. to my right, no deal. our next guest -- >> not why? >> i'm always wondering, why did this leak, what do we know about this, what's somebody's agenda? >> a trial ballo)jñ >> potential trial balloon. >> to see how it's going over? i'm skeptical at this point.

>> think back two years ago, we know there was a deal leaked by fox for time warner, they rejected an $80 billion deal, when this deal leaked, it was a $60 billion market cap. time warner is a company that's growing earnings in the mid-teens, it trades in mid-teens. >> it's very attractive. >> unless this is going to be at a major premium. >> look at the changing landscape of the media, look at comcast universal. >> at&t time warner becomes like a comcast? >> i was at at&t the other way, whining about my phone bill. t-mobile and sprint are giving away free iphone 7s. do you know what at&t said to me? if you sign up for directv we will take a hundred dollars off of your bill. they have to go back to bundling. that's why they need the content that time warner çhas.

wireless data pricing is going to zero. >> why doesn't time warner do this deal? everything has its price. right now this company does not trade to the sum of its parts. >> it would have to be over $80 billion. >> why would they sell -- >> the top of the market you're referring to -- >> 1999. >> you should be a buyer here. a buyer of time warner. right? if you really think -- >> on tuesday there was a big roll on the options market. i know friday at 5:30. somebody rolled out -- >> time has expired. >> it was profitable and they rolled out to the january 82 1/2 calls, good size, 12,500, lucky timing? i don't know. >> let's see what our next guest says. mike mccormick has a buy rating on the stock. he put out a note moments ago outlining why the deal is unlikely. thanks for phoning in, mike, i

appreciate it. you do believe the two parties are likely talking? >> i guess i'll try to break your tie here with the noç dea comment. i wouldn't downplay the fact that the two parties are talking, as we all know directv is in the midst of trying to launch over the top products. they do have a relationship with the chernin group. to the extent they want to get into offers of unique video product, i expect they would be talking to folks like time warner. in our view, at&t management has been very clear, the plate is full, the executives are extraordinarily busy on directv. small deals are possible but a large deal like this is not really possible. we can talk about the reasons why. >> i missed what you said, which company has a relationship with the chernin group? we happen to have an interview with peter childrernin group la in the show. >> at&t. >> can you see what the

strategic desire would be for a deal like this? is there a rationale? >> that's the biggest challenge from our perspective. i just don't see any synergy opportunities. they're not going to be able to have exclusiveç content throug time warner. i'm certain that any deal that goes through the sec, if they would approve it, which i highly doubt they would, there would be stipulations all over it saying they can't do things like that. i just sort of fail to see the strategic rationale of combining the two entities. >> you cover at&t, so you're approaching it from that perspective. do you see this as at&t wanting to do a deal, if not time warner, there's somebody else? >> at&t has said smaller deals are possible. and, you know, in their own words, they're saying something south of $30 billion is the more appropriate level to be thinking about. i think if you're looking at the sec and you guys mentioned earlier comcast nbc, in our discussions with the sec, our

takeaway was they wouldn't have approved that deal had they had the chance again today. it's the combination of distribution and content that is i couldn't speaking to the sec. i think at&t will be very hesitant to put anything in front of any regulator unlessç there was complete certainty that they would get approved, after the failed t-mobile deal. >> mike mccormick says no deal. what do you guys say? do you change your mind? >> no. he certainly has a much better read on the at&t -- >> you're like, no, i don't believe mike mccormick. he covers at&t, i don't care what he says. >> he certainly has a better insight into the management than i do. but i think my point would be, at&t needs to make some changes. exactly what dan highlighted when he was complaining, they need to make changes. i think this is one they would do. >> at&t has sold off dramatically before this news on the back of rates rising. they have numbers out next week. you're getting to a place where

the stock looks very interesting. with time warner, we're about 16 times, this is very cheap to the sum of the parts. turner is undervalued. i think you can buy that one on its own merit. maybe you need to do this tomorrow. >> the interview with peter chernin should be interesting. still ahead, check out shares of çmicrosoft, all-time highs in the after-session. we'll hear what ceo satya nadella has to say right after the break. i'm melissa lee. you're watching "fast money" on cnbc, first in business worldwide. here's what's coming up on "fast." ♪ i'm loving it >> announcer: but investors aren't loving shares of mcdonald's. and something happened in the market today that could spell more pain in tomorrow's earnings. we'll explain. plus what one biostock did one day after a bernie sanders tweet. we'll tell you which names he

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welcome back to "fast money." we kick off the second half with all the afterhours action. microsoft jumping, advanced micro devices sinking. josh lipton gearing up for the microsoft call report in a few minutes. deirdre, we'll kick it off with you and paypal. take it away. >> that's çright, melissa, payl reported earnings in line with what the street was expecting.

we did see the stock fall initially because investors were a little bit disappointed because of a miss on total payment volume. that came in at $87 billion versus $88 billion expected. but the stock has of course changed course, now up slightly. markets were able to digest its forecast. the margins story is a very important one because of its recent deals with visa and mastercard. while these partnerships will help paypal move deeper into the payments ecosystem and achieve some scale, investors were worried they could dilute earnings. the ceo spoke about the benefits of these partnerships on the earnings call just moments ago. >> along with our agreement with visa, the deal with mastercard exempts paypal from current or future digital loss fees and provides cost certainty for years to come. thanks to our agreements with visa and mastercard,ç paypal n

has a seamless, quick, and simple way to activate paypal payments at the point of sale. >> now, active users, as well as the growth of its venmo app, the app processed nearly $5 billion of paypal's total transaction volume. that is up 131% from the year-ago period. it's a money transferring social network that all the young kids are using, at least that is what my friend told me today when he asked me to venmo him money for baseball tickets. >> that's a millennial. >> he wishes. >> shares of microdevices are down after hours despite beating expectations driven by sales of custom chips. fourth quarter guidance a bit

disappointing. they announced their partnership with alibaba cloud to deploy services across data çcenters. let's put this into perspective. shares are up about 120% year to date having to do with its turnaround efforts. plus the consolidation we're seeing in the broader semi conductor space, melissa. >> thank you very much. we'll check in later this hour with satya nadella, microsoft's ceo. paypal. >> i'm not as concerned about mastercard and visa. it basically sounds like they're hedging, locking in market share. this is such a secular story in terms of digital payments. the growth in emerging markets is extraordinary. 21 times for a company that actually is not spending a ton of cash. they're focusing on buying back stock. >> it was spun from ebay last summer.

you're right on valuation, you're talking about eps growth and high single digit sales growth over the next couple of years. the deal they did with mastercard and visa areç great. the venmo part, the peer to peer thing, that will only be growing. they talked about mobile payments, point of sale. this is ail strong secular shift. i think you want to stick with it. >> i agree, the venmo part is very interesting. it's not what right now is moving the story. the rest is not a crazy, expensive price. the whole space is interesting. i kind of like it. i don't know enough. >> i like it too. it's more than just venmo. they got venmo when they bought braintree, call it the moonshot type of thing. i think there's a lot more coming out of that. that growth is unbelievable. 100 plus percent in a year. that's incredible. >> the alibaba deal is

interesting. china cloud is one of the legs of the alibaba story. >> it's an exciting story. you wonder whether these guys are truly going to be let into that business. >> let in meaning it's a u.s. chip company supplying to a chinese company in china? >> yes. >> that was my first reaction when i heard that. >>ç optically that's a graeat l for them. they just raised a billion dollars in early september. they wanted to retire some debt. so they're getting their balance sheet in order. they know the stock is up 150% or something like that. in the near term that $6 level is probably something you could trade against. i think they sold maybe about a half billion dollars' worth of stock, at 450 it converts. >> the point is tim was skeptical that they would be allowed to supply chips to china. >> they're going to be an agency. i don't think this is a deal

that's going to bind them. the premium and the name is also something that's -- how much more can you put into this name? this was a $2 stock in the lows in february. a developing story in the biotech phase, senator bernie sanders and representative elijah cummings sent a letter to ariad, questioning the price increase for one of its drugs. could be next. >> senator bernie sanders sending out a tweet today to illustrate this letter they sent to ariad. tweets are never good for the biotechnology industry when they come from politicians, death by a thousand tweets for the biotech industry. the tweet says, ariad's outrageous sales tactics indicate it is more concerned with its profit than with its patients. looking at their cancer drug iclusig which raised the price to $199,000 per year, it was

$115,000 when it entered the market. you look at the price increases, they really increased a lot over the last few years. here we're looking at what could be the next targets in the industry, because ariad isn't a company like a valeant, like a turing. what folks in the pharma industry are worried about is more traditional companies seeing pressure, areas like multiple sclerosis, insulin, where we've seenç large price increases on drugs made by biojen, eli lily. >> that had been the line in the sand, a company like a valeant or these other alleged price gougers out there, they acquired a lot of the drugs and jacked up the pricing, but there was a line in the sand, that biotechs need to develop their own drugs, they sort of had a right to have high prices. now that whole thing, that whole notion is being questioned. >> that's right. and that's what people are

really worried about here. even hillary clinton in some of her plans that she's laid out, a lot of people took solace in the fact that it seemed like she was targeting older medicine that had seen drastic price increases. some of these companies have done that with older medicine, even if they didn't acquire them recently. ariad developed this drug. it makes the point it's invested more than $1 billion in r&d. it has accumulated losses since its founding of more than $1 billion. its argument is it needs to recoup that investment. >> with hillary clinton at the moment seeming to be theç like winner, how much damage do you think there still is to potentially be done if she gets her way and the u.s. government is able to negotiate over drug prices? >> that's the main prices. people are not so much worried about hillary clinton becoming president but about the house turning democratic or having democrats in control, they're

nervous about the idea that medicare could negotiate drug prices. if it seemed like legislation could get pushed through, there could be more to go. people are nervous about that, and we're seeing people on the sidelines. after the election, if that doesn't happen, if democrats don't take over the house, people expect there may be some upside at the end of the year. >> meg, thank you. any reason to step into biotech right now? >> i don't think so. prop 61 out in california is going to be on the ballot. and what that does is essentially lowers the price of all drugs. that could be a precedent i would stay far away from. >> i would just say this, i said it about biotech last night, i do believe hillary clinton is bernie sanders. elizabeth warren. both of these sectors, if you're worried about what happens when she becomes president, you shouldn't become worried. >> the sentiment is terrible. at some point, even if it's so bad, it has to turn, like the surers did when obamacare came.

>> you don't want to pick it company by company. your stop is 245 if you want to play it here, it's pretty well proven. ahead, peter chernin joins us to tell us what he thinks the next big thing in media is. plus does he think at&t and time warner will strike a deal? and the trade or sink has a lot further to fall. what has got them so nervous, next. much more "fast" straight ahead. , unless you're a barista. cdw implemented dell poweredge servers with intel xeon processors to allow people to work from anywhere, so lucky me. so nobody wants coffee?! hey, can i get a couple copies? enhanced mobility by dell. i.t. orchestration by cdw.

welcome back to "fast money." cnbc has been speaking with the biggest names in media. the vanity fair summit in san francisco, our own john ford is standing by with a special guest. >> i'm here with peter chernin, chairman of the chernin group with broad experience in media. first off, there's news, perhaps, rumor out there that at&t is looking to perhaps combined with time warner and at&t as a partner. of course you know the content business well. feel free to share if you know anything about the possibility of this deal specifically. but what it be a good idea, given the trends in media distribution right now? >> i don't know anything about

the deal. i do have a partnership with at&t. you know, what i would say is two things. first of all, they are great partners. they're visionary, they're terrific to workç with. i think as much as any distribution, they understand the content business, they've now had directv for a year, and our venture is about 2 1/2 years old. again, i can't speak to this deal. it's the biggest content company on earth, time warner. if you assume the world is going direct to consumer, it probably has the largest direct to consumer presence than any media company because of hbo. they've got great sports rights, cnn, a competitor, still a valuable asset. again, i may not have read what you guys have read. they're both great companies.

>> you have great insight into the classic media business and you're big in streaming with this partnership with at&t and of course your work at hulu. what's been the impact of streaming? it's killed the dvd business for all intents andç purposes. does it get to a point where it's as big as or bigger than that business was? >> streaming overall is already bigger. >> for the content folks. >> for the content folks, writ large, it's probably also a little bigger. if you take the money that netflix is paying in television license fees, that amazon is paying, dvd revenues have declined 50%. and movie digital reverence aren't quite as high. overall, the digital businesses is the by far driving growth in the media business and will be the significant growth driver for the next ten years, which is

clearly why i spend most of my time in streaming media. >> you've got insight into the asian economy in part through your investments in streaming and content there. what's your sense of the health of that consumer right now and the hunger for content consumption through these newer technology needs? >> our asian media is focused in two areas,ç india and indonesi. both of those economies are doing really well. the indonesian economy dipped and has come back pretty well. both of those countries, you have tens, hundreds of millions of people entering the middle class, highly educated, very young, and all of a sudden having access to vast amounts of content that they never had before. we obviously believe they are fruitful areas for investment. >> melissa? >> peter, thanks for joining cnbc here. i want to go back to the reports of the at&t/time warner deal.

i understand you're limited in how much you can say or know, but as somebody who has been in this business for a long time, should there be mergers of content developers and the distribution mechanism, the broadband provider, for instance, do you see more of those deals happening? >> so first of all, i am limited by what i know. that is my limitation. but yes, i do see more of those deals happening. i thinkç in my mind, arguably e biggest trend in the technical busine technology business over the last three or four years has been this huge pivot toward media. if you look at the facebook timeline, five years ago it was a way for your friends to get in contact with you. then it became a way to share photos. then it became a way to share articles. it's now primarily driven by video. you look at the impact youtube has on google, the impact that

itunes has on apple, how many money amazon is investing into prime. i think what you're seeing is all of these formerly distribution players beginning to realize that media is the key differentiator, what drives usage. so i think that my guess is you probably will see more mergers like this. >> say, a comcast/nbc universal which tied up distribution along with content, is that what you mean? >> yes. >> okay. >> ironically, i spent -- go ahead. >> no, go ahead, i'm sorry. go ahead.ç >> no, i was going to say, i was close to comcast during that merger. so i spent some time, they hired me as an adviser on that merger. i obviously believed in it then. >> all right. i want to ask you, you're a former board member of twitter. twitter has certainly seen its share of ups and downs, more downs lately, bidders seem to

have walked away from the company. what do you see as the future for a media property like a twitter? i don't know if you would even consider it a media property. >> well, first of all, i am a general believer that these distinctions end up being a little phony. you know, things are platforms. they're delivering things. i think twitter is both a platform, a technology platform that delivers media, 140-character media. i'm not sure it's a distinction that's one versus the other. i think the issue for twitter, which is a great platform, i use it every day, it's phenomenally valuable, i think they're wrestling withç a big growth multiple and are having trouble justifying that growth multiple. but it's an extraordinarily valuable service. >> peter, you used to run news corp. fox news, which is a very profitable property, is in a state of transition, roger ailes

being out. if your last name were murdock, what would you do right now with that? >> i would largely do what the people whose last names actually is murdoch are doing. i would try to stabilize the position, which i think is what they're trying to do. >> does that mean keep megyn kelly? >> absolutely. >> pull out all stops? >> absolutely. where roger was at his best was he was extraordinarily good at developing talent over time. and i would pay a lot of attention to what the talent pipeline looks like over the next three or five or seven years. rupert is as smart at this stuff as anyone i know. >> would you be worried about trump tv ? >> no, not even remotely. >>ç wish we could go more into that but we'll toss it back to melissa in new york. >> our thanks to peter chernin.

interesting comments here on time warner. >> can i go to twitter? >> go ahead. twitter. >> they're talking about this valuation thing, right? enterprise value is $10 billion, it was just bought out at 6 1/2, it's trading four times. to me, there's a lot of ways you can justify a higher price for twitter. you talk about it's delivering media. it delivered a guy to the top of the gop ticket. when you think about it, without twitter, trump wouldn't be where he is. >> he might be winning, we don't know. i'm connect some dots, that he was an adviser, right, in the comcast/nbc universal deal, which means he believes in this model happening, which would effectively be an at&t/time warner-like model. >> it makes sense and validates netflix's model. they're not necessarily the pipe, but they are certainly a conduit and a way to getç the streaming directly with their own content.

time warner has tremendous content. hbo on its own is worth a lot more than where it's trading right now. >> bad news on buzzfeed. >> a year after making an investment of $200 million in buzzfeed, nbc universal is doing it again, investing in another $200 million into buzzfeed, the digital publisher, at a valuation of $1.7 billion. this according to recode. as a disclaimer, nbc universal is a parent company of cnbc which also has a minority investment in recode's parent company. >> thank you very much, seema mody. next, we'll hear from microsoft ceo satya nadella. plus mcdonald's one of the worst performing stocks this year, there could be more pain ahead. we'll explain why. you're watching "fast money" on cnbc, first in business worldwi worldwide. rldwide.

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welcome back to "fast money," i'm josh lipton. microsoft's stock surging in the afterhours. ceo satya nadella taking a victory lap on a conference call, pointing out the success that his company is having in

the cloud. take a listen to what he's telling financial analysts. >> customers continue to choose the microsoft cloud to help transform their businesses and organizations. our commercial cloud annualized revenue run right now exceeds $13 billion. we remain on track to achieve our goal of $20 billion in fiscal year '18. once enterprise customers choose one of our cloud services, they continue to adopt more services. >> it's not just the growth and momentum in the cloud business. it's also that improving profitability. the company's cfo pointed out the commercial cloud gross margin percentage clocking at 49%. in the previous quarter it was 42%. the cfo has not yet given the company's guidance. we'll keep listening for that and bring you the headlines when they come. melissa? >> thank you, josh lipton. aftersession highs here but no guidance still. >> he's saying that the

commercial cloud is going to grow 38% by 2018. they're doing it right now, margins are going higher for now. at some point they come under pressure. but we're not seeing that. >> you wouldn't buy it? >> not only because it's up 5% in afterhours at all time highs. that does matter. >> to tim's point, what does it matter if it's at an all-time high? >> when i buy low and sell high is when i make money. >> it's not going to go higher. >> you could buy high and sell it higher, çsure. odds-wise, i would rather wait for a pullback to buy it, that's all. >> wait for the guidance. i mean, come on, people. >> well, yeah. >> to me, the size of this company and the ability that people have to throw capacity into this, i'm talking about big funds, means more people will be able to pile onto this thing with confidence. >> there are x many shares. somebody owns them.

i mean, index funds need to own them. i don't get that argument. >> we'll stick with earnings. mcdonald's reporting before the bell tomorrow. there are some bearish people in the options pits. >> mcdonald's reports tomorrow before opening, stocks down 6% on the year, down 16% from its all time highs. the options market for earnings is a little below 3%. the average of the last four quarters is 3.5% or so. they're coming up with the anniversary of their all-day breakfast menu change which saw a decent surge in earnings. valuation, trading about 20 times. it's got a 3.4% dividend yield. here's the kicker. we know the dollar has had a very nice boost over the last couple of months here. with the anniversary of those menu changes and of the

restructuring, the stock has kind of come down here a little bit. it's been in a well-defined down trend, right here at very important technical support. this was the gap last october when it broke out. it went up almost 30% on a lot of the changes that they made. i would keep an eye on the support level i'm talking about. a little bit of an air pocket down to the low 100s. that's where it broke out last year. if it gets a gapfill on depressed guidance, that's probably a good entry point, near 104. >> thanks, dan. check out "options action" tomorrow. next, final trade. stay tuned. hey nicole. hey! i just wanted to thank your support team for walking me through my first options trade. we only do it for everyone gary. well, i feel pretty smart. well, we're all about educating people on options strategies. well, don't worry, i won't let this accomplishment go to my head.

i'm still the same old gary. wait, you forgot your french dictionary. oh, mucho gracias. get help on options trading with thinkorswim, only at td ameritrade.

what's critical thinking like? a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley hey, jesse. who are you? i'm vern, the orange money retirement rabbit from voya. vern from voya? yep, vern from voya. why are you orange? that's a little weird. really? that's the weird part in this scenario? look, orange money represents the money you put away for retirement.

save a little here and there, and over time, your money could multiply. see? ah, ok. so, why are you orange? funny. see how voya can help you get organized at voya.com. final trade time. tim? >> paypal secular growth in the valuation and the chart. you can buy. >> also with growth, valuation, google. >> the rails look very shaky today. sell the transports. >> dan. >> microsoft, let's not get too deep, all-time highs, a $460 billion market cap here.

>> come on, man, make up your mind. >> thanks for watching, i'm ç medic melissa lee. ma'am money with jim cramer starts now. my mission is simple, to make you money. i'm 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'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends. i'm just trying to make you some money. my job is not just to entertain but to educate and teach you. so call me at 1-800-743-cnbc or tweet me @jimcramer. don't overstay your welcome. don't dig in your heels and