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Live from the NASDAQ markets in the heart of New York City's Times Square, this is fast money. Here's what's on tap tonight. Netflix gets chilled. The streaming giant shares lower after earnings. We are dialed into the call to get you all the details and lay out how to trade the name right now. And digging in on data centers, how massive capex is impacting the space and the under the radar names that could benefit from a surge in demand. Plus, Taiwan Semi pulls back after earnings. Eli Lilly gets psychedelic in its latest deal and homebuilders build up some gains even as mortgage rates hit nearly one year highs. What's behind this bump? How long can it last? We'll debate that. I'm Melissa Lee. Come to you live from CDF at the NASDAQ on the desk tonight, Steve Grasso, Karen Feiderman, Guy Adami and our guest trader for the hour, Eli Horton, senior portfolio manager for tcw. Welcome, Eli. And we start off with Netflix shares. They are sinking down almost 8% right now, trading at levels last seen in late 2020. For the streaming giant posting earnings in line with estimates but narrowing its full year revenue guidance saying it will give fewer engagement reports. The conference call is underway. CNBC's MacKenzie Segalos has been listening in back. What's the latest?

F

So Netflix shares down 8% after hours as the company warns of a weaker second half. The streaming giant calling for a sharp slowdown in sales with its Q3 revenue growth rate falling for a third straight quarter. Plus both projected revenue and earnings came in below street estimates. Netflix still leads paid streaming and subscribers and viewing, but its issue has been that growth in both revenue and time spent on the service is not growing like it once was. The the company calling engagement healthy and pointed to live events is a major draw. But viewing hours, while higher than a year ago, rose just 2% in the first half of the year. Even as Netflix argued that was solid given competition from the World cup and Winter Olympics, it will now report that metric only once a year. The bright spots are newer formats. Netflix says that podcasts are helping drive more daytime in mobile viewing, while live programming is bringing in customers beyond its share of total viewing. The company also touting the use of generative AI across roughly 300 productions, saying that AI tools help deliver higher quality output more quickly and at a lower cost. And on the call just now, Mel co CEO Ted Sarando saying they are forecasting content expenses will be up about 10% this year. That is a little higher than the 8% they averaged over the last five years and below the 14% that they averaged over the past decade. So content expenses are going up to make this happen. And then his co CEO Greg Peters also weighing in on the call saying that while live programming accounts for less watch time, it actually helps with acquisition and sign up. So viewing hours doesn't always equal revenue.

E

Mel all right, Mac, thanks. Keep us post on all this. Mackenzie Sagalo so we see Netflix shares sinking. They're now down almost 9%. So higher spend less transparency and sort of in terms of engagement reports that we're going to get, we're only going to get it once a year instead of twice a year.

C

What do you think Guy for number one, great job. I'm back. Number two, welcome. Eli on the desk. And Eli said, man, I was really worried about you. I heard horrible things about Guy. Adam, you see that? I mean that's just, I mean, I don't even know what to say that with that said. So here's somebody who's been wrong about Netflix for a long time. Me, number one. Number two, I think the real takeaway is free cash flow was a disaster. The street was looking for $2.7 billion. It came in at a billion and a half. And that speaks to the cost that Mackenzie was just talking about. What we have said over the last week or so is if you're looking for support, it comes in the form of the old high from October of 2021, if you remember, topped around 68 bucks and then cascaded lower the rest of the year into 2022, I guess. So that's your level. I mean it trades 42 million shares a day typically tomorrow to be a huge volume day. We'll see if you flush some people out. But that's sort of your line in the sand.

E

Free cash flow in fact was $1 billion short of expectations.

G

Yeah, I want to hear the call exactly what that was about because I couldn't quite see it from the letter that they put out. I mean the engagement thing, it's not good. But they did. I mean, engagement for this quarter was okay. It wasn't, you know, it was fine. That won't begin until my understanding is they'll continue to announce engagement till the first quarter of next year.

E

Right.

G

So that's not saying then that okay. Engagement for going right now, it's terrible. We're not going to announce it anymore. They are going to until then. And then from then on.

E

Right.

G

Once a year. We didn't love when they did that with subscribers. Remember that was a big thing. And then that ended up, you know, the street sort of got used to it. But clearly headwinds here that, I mean I've been right there with you the entire time. I've liked it for a lot of points from higher than here. A couple of things stood out to me. One, you know, talking about live, which is expensive depending on what it is, that's 5% of spend but only 1% of viewing hours. I mean if they think that's what attracts people and they stay okay, that's good. The non English content and watch is growing a lot. That tends to be less, you know, not as high revenue as, as North America. So you know, I didn't love it. They have a giant amount of cash left on their share buyback if they choose. It is getting a lot cheaper. I think they have $27 billion left. They could do. They bought 4.7 billion this quarter. I'm not, not delighted as a shareholder. Yeah.

E

And the Context of the 9% move lower is that the bar was already low. I mean bearishness on the stock was super high. The stock has lost about a third of its value in the, in the, during the quarter basically since the last time.

G

I just had one other thing though. So normally I say I don't care what the guidance is because they're not very good at giving guidance. So they always seem to be low. However we're in this, this, they did that last quarter and this was slightly above guidance. It wasn't, you know, so not a lot.

E

Not to like.

G

Not to like here.

E

Yeah. How about you, Eli?

H

Softest weekend of the quarter. I don't think These numbers can do anything to alleviate concerns. And Karen started to hit on this. It's, it's almost what they didn't tell us matters more than what they did. And they basically are starting to pull more and more key KPI metrics. So first it was subs, now it's engagement. And the old Netflix story was this story of penetration, you know of, of cord cutting and penetration. And there still is a long ways to go there but now it's somewhat muddied and by pulling those metrics it casts further doubt and it brings into questions is this an advertising growth led business? Is it a platform or live sports? And it's not as clean of a story.

E

Right. You know the headline here from the conference call was that they only have 5% of share of TV share watching share globally. And once upon a time you would say oh that means their TAM is so much. I mean they get 95% still available to them. That's not, that's not flying.

D

Yes. So I think the number one thing is everyone's touched on it. The cost of cost of content is that, has that peaked? Is their cost of content going up? It sounds like it's going up and their viewers are static. But if you think about it, they've been organic until they started with M and A. And then if you look at the chart when they started with M and A, it falls off. I go back three years if we can get that chart for a three year chart, not a 40 year chart that guy favors. But if we go back to that level, we're back to October 2024 levels. They just broke them. So the next support is like 60. But if you even go back further to guys point this thing can fall out of bed. Having said all of that, this is probably where you want to actually buy Netflix where set them to so bad right now. Could it be worse?

E

Is that we're going to do well

D

not going to do it right now? Yeah, we're going to give it a couple more days but I think sentiment has really needs to wash out next couple of days.

G

It's a piece of just a couple of things on expenses though. So content, so live sports we know is very expensive but I do think they do have some room to improve costs. With a content costs they are lower and I think will help them more in their advertising business which still I think has room to grow. But I don't know. I got to listen to this call later when it's over.

C

You know, it's pretty remarkable. I know you Remember everything. You write everything down. It was sort of July of last year. Tom Rogers came on the show who had been a.

E

It was after this quarter last year.

C

I knew you knew this.

E

Well, he said it on Squawk Box. I happened to be on that day and it caught my attention because he had been a long time Netflix bull and then turned, you know what? It's not looking good anymore.

C

Exactly. And that was, if I may use the balls high of the stock, the all time high of the stock. And he turned on a dime. And then you started getting the M and A and all those different things. And then people realized that organic growth that Steve just talked about wasn't there. So good for Tom. With all that said, I think Stephen, Karen, honestly, there is a level that this makes sense regardless of all the headwinds that we're talking about. And hopefully it's this level that we

E

pointed out as a pm. Eli, you take a look at this and you think what, what would it have to get to. To make you interested?

H

It got a lot more interesting after hours. I think sitting the obvious, you know, look, I really want to see that they've got organic levers. You know, the, the attempted acquisition of Warner Brothers I thought was a bit confusing. I understand some of the strategic, strategic rationale, but I'm not sure you would do that if you had the organic growth levers available to you. So if they can reignite that organic growth engine, it's, it's certainly attractive here.

E

All right, conference call ongoing. We'll keep you updated as we have headlines there. Meantime, shares of Alphabet sharply lower. Midday, Bloomberg reporting the company is months behind schedule and rolling out its Gemini 3.5 Pro production. Google spending time to improve its capabilities, particularly encoding. The company announced the latest version of its AI model at its IO conference in May, saying it was being used internally. Was expected to roll out broadly in June. Alphabet stock closed the day down over 4%. Was not a good day overall for hyperscalers in general. So. But, but we did see that dip

G

unique to them this particular, you know, since. I don't know, is it three years, almost three years ago already that we started talking about this with Microsoft way in the lead and the botched launch of Bard and then they changed the name and so a lot of missteps. I'm optimistic they can get it together. I mean the jockeying for position is happening with greater frequency. Right. Just, you know, OpenAI having a strong, I don't know, two or three weeks and matter. So I don't know I still like the rest of the story a lot. And so I don't know, I don't know if I, if I own none, I would buy some here. But I do own a fair amount already.

D

I think the story is, has changed when, when we look back a couple of years ago, these were growth machines, technology, space hyperscales, growth machines. They had a ton of free cash flow. They had a ton of cash on the balance sheets, ton of growth. And now they've mitigated a lot of those. They're paying for growth. Is it going to pay off? Is the growth going to be there? They're dwindling away. Still a ton of cash on the balance sheet, but they're not using their own cash. So they're crimping their free cash flow. I think the line to take away the whole earnings season is free cash flow. If it's growing, your stock is going to do better. If it's being crimped, your stock is going to do worse. I think spending, if you're spending it, I think that's where everything, no matter what sector you're in, that's the deciding factor.

C

The report on the 22nd, the setup obviously just got better, I think in earnings. So that's next week. And I think there are a couple of things here. I hear what Steve is saying. They have a moat and they have a lot of other things going from as well. And that in that search business that a year and a half or so ago people were really worried about, it's as robust as it's ever been. And then you throw YouTube in the mix. I mean, I think you got to like Google at these levels. This headline notwithstanding, I mean it had a huge run over the last couple of weeks. Given something back, makes sense.

E

YouTube, of course, a competitor, Netflix as well, right? A major competitor in terms of time spent watching something right at the time is on YouTube. How are you feeling about Alphabet? Does it matter? You know, these sort of the stutter steps in terms of the race to be in front of.

H

Isn't it interesting how fickle the market is with these names? So I think Microsoft was a winner, then it was deemed a loser. Met has gone back and forth. Alphabet was a loser to a winner, now a loser. And Apple has suddenly become a winner, maybe because they're not spending free cash flow. So it's quite interesting. It makes me question sometimes the durability of the businesses, the business model of running one of these, these LLMs, are you only as good as your latest iteration of the model and what we've heard is part of this delay was that Google was short of internal compute. And that's part of the reason why they signed up for $1 billion per month of rent to SpaceX for compute. And maybe that speaks to where the value capture is really happening, which is the infrastructure layer.

E

Right. Which then would play into the hands of Matter of Matter or, or Nvidia. Yeah, right.

G

Yeah, yeah. But not this week. But that's okay. I would be very curious to hear how. We'll see. We'll go back again looking at Google Cloud, Microsoft Azure and

E

US AWS.

G

Yeah.

E

Meantime, shares of Taiwan Semi down over 2% even after the chip maker handily beat Q2 earnings estimates. The world's largest semi foundry raised its capex forecast for the year from 52 to 56 billion to more than $60 billion. It also set a plan to invest an additional $100 billion on a manufacturing facility in Arizona. Other chip stocks falling in sympathy with the Sarah Labs Marvell South Dakota Micro Teradyne leading the SMH ETF to its lowest close since May. So this is just the latest time we get in the memory space in particular good earnings report and the sector doesn't find any comfort in those. Good.

C

Seen it before. We saw with Micron in March I think it was. Remember, I mean that's like sold off about 35% after historic earnings release. And now you're seeing it again with Micron that nobody seems to want to talk about and I'm not sure why, but this was a twelve hundred dollar stock seemingly two and a half weeks ago and look where it's trading now. That's a pretty significant move. So it's not like this hasn't happened before. You mentioned the smh. It's a pretty, I think critical support levels here. And now the market is starting to discern. Wait a second. You know, maybe all this growth that we've been talking about, maybe the valuations seem so compelling, maybe they're compelling for a reason and the cyclicality is making its way back. Maybe. I think that's what the market is sniffing out.

E

Yeah. Eli, what do you make of the sort of volatility in this? And also we should note South Korea halting for the issuance of huge single stock leverage etf, which is, which is enormous actually. There's a lot of that being traded in South Korea.

H

Ton of cross currency.

E

Right.

H

There's, there's leverage in the system, there's a lot of retail selling, there's forced hedge fund deleveraging. If we just keep it to the fundamentals and aggregate first principles for TSM numbers were very strong. Revenue grew 34%. What I think is most interesting is that the numbers actually accelerated through the quarter. So June revenues grew nearly 70%. Reason why is they're starting to produce Reuben and that won't even come on in production scale until the end of the year. And so that's just beginning to ramp TSM seen really good numbers from that. I think the $100 billion announcement on top of previous 165. So a massive increase for new investment in US semifabs I think is is compelling. I think it speaks to the demand and the re industrialization of this country. So a lot of good with TSMC

D

in my best, best quarter ever in history. What are the free cash flow went down. Right. So when you're focused on what's what's going to move the stock from here going forward, it seems like an arms race to me and whoever runs out of money fastest is going to get sold the quickest. And that's what you're seeing in this place right now. Feels toppy to me across the entire space.

E

I also wonder like if you're going to invest more money in chip production here in the United States, can you produce each of those chips with this equivalent margin as what you're producing in Taiwan? I would say probably not. So there's a margin profile change when that production capacity comes online. And so are we looking at peak margins from now until those US fabs are open?

G

Excellent question from very smart looking Melissa today. Those are the Harvard anyway though. But still, you know. No. Excellent question though. I just come back to again what you brought up about South Korea halting new levered ETFs. If you're in a levered ETF there now you have to wonder are they going to maybe you know, do something to restrict my owning that. So that to me is the biggest driver of all of this movement today across any tangent across currents of leverage. Yes.

E

Coming up, a mind bending move. Eli Lilly making a big bet on psychedelics to treat mental health conditions inside the company's latest multibillion dollar deal and the prognosis for pharma stocks next. Plus we'll bring you the very latest headlines from the Netflix call. A top analyst will join us with his biggest takeaways. Don't go anywhere. Fast money's back into. Mazda has been named Consumer Reports safest new car brand. It starts with our approach. Every Mazda comes standard with proactive safety features.

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Welcome back to Fast Money. Eli Lilly gaining 1% after announcing a deal to buy psychedelics drug maker Atai Beckley. The transaction, worth up to $3.8 billion is the latest sign of momentum in the quickly evolving landscape for mental health treatment. Angelica Peebles spoke with Lilly's chief scientific officer her earlier today. She joins us now with the details. Hi Angelica.

I

Hey Melissa. Well this deal gives Lilly a DMT like drug that's already in phase three and that's being studied for treatment resistant depression. And it also gives them a whole pipeline of psychedelics. So the lead DMT based drug, it's a nasal spray that produces a hallucinogenic trip that lasts for about half an hour and it requires two hours of monitoring at a clinic. And Lilly's chief scientific officer Dan Skavansky says that he thinks that that fits into people's lives better than some of the other psychedelics where trips last for hours and that this one will likely just be taken a few times a year.

H

In the past Psychedelics have had a stigma and parts of the scientific community may not have looked at them as carefully. I don't see that as necessarily a problem. Actually.

C

It's attractive to me to work on

H

things that others may be overlooking. A lot of the diseases that we've worked on in the past have been stigmatized. And then over time we bring science to bear and people understand, well, this is, this is biology or chemistry in

B

the brain and we can change it

C

and make people better and the stigma can go away.

I

And, you know, Lilly, of course, is a very big company and so we'll have to see if other pharma companies follow suit.

E

Guys, Johnson Johnson does have a nasal spray as well, Angelica. How does it compare in terms of the indications these drugs might treat? And also you mentioned the length of the trip, but also the length of the monitoring is different.

I

Yeah, so Spravato is also, it's currently approved for treatment resistant depression. And same idea. This is a nasal spray that's actually administered in a clinic. And so you're monitored for a few hours at least. And so that one is indicated for at least two hours of monitoring. And this could be shorter. So up to two hours. There might be some nuances there. You know, we'll have to see exactly how that plays out in terms of the length. But what's interesting is that, you know, jj, this drug has been on the market for years and they've spent time, you know, building up the infrastructure for these clinics. Bloomberg actually had a really good story detailing what they've done to help build out that infrastructure. So the same idea here, but, you know, this dmt, like drug, it's a different experience. I mean, this is a full, full blown trip. I was joking with Joe earlier this morning that it's, you know, it's a pretty potent drug. And so that's something that, you know, we'll have to see if people are interested in. I asked Karmaski, do you think that this will be widely used? You know, do you think there are that many people that want to go through this? And he said, we'll have to see, but he does think that this could have some big potential.

E

All right, Angelica, thank you. Angelica Peebles. And of course, the stock going up, pretty good indication in terms of what people think about this acquisition. It's actually Lilly has either announced or closed 17 deals in 2026, just this year, and it's only July.

C

And that's what the success of their currency, their stock, were able to do for them. I mean, they're in the driver's seat. So they're the large stack at the poker table and they're using their chips. Good for them and they should. This to me speaks to again M and A in the space which will continue. There's somebody I follow on Twitter, guy named Chris Irons who's been writing about psychedelics. If you want to look at an etf, look at Advisor shares have something called psil. I can't speak intelligently about the components, but if you want to be in a space in a broad way, that's one way to play it.

E

We had a number of big movers in pharma today. Merck was another one on the approval FDA approval of its once daily cholesterol lowering pill.

G

That's supposed to be better than right?

E

Which is.

G

Yeah, I mean those are generics have been around a really long time, the statins. But this was interesting. So that was a nice move there. To Lilly though, this was a cash deal. The stock moved the value. The stock is up by $12 billion. The purchase price was, you know, 2 and something. Right.

E

Tiny.

G

Right. So good for them.

E

Where are you in health care if anyone?

H

So admittedly I'd never heard of a Ty Beckley until today, but I did a little bit of reading and what I think is interesting is it's very much a capital allocation story. So this speaks to the power of scale and competitive advantage and they're taking that the growth market of obesity and GOP1s and redeploying that cash at a long duration growth asset which I think is interesting. These guys are skilled capital locators company earns a 30 plus percent return on US capital. So you know, strategic level makes sense.

E

Coming up, no easy way home for the housing market. Inside the latest data painting a tougher picture for buyers and why homes that are stocks seem to be defying the headlines. You're watching Fast Money live in the NASDAQ Marketsite in Times Square. Back right after this,

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U.S. mortgage rates hitting nearly one year highs. According to the latest Freddie Mac data. The average rate on a 30 year fix is now 6%.55%. That's up from 6.49% just last week. Despite this data, homebuilder stocks actually catching a bit today. Pulte KB hometold Brothers among the names in the green. I mean it takes a while for the mortgage rate to actually reflect higher treasury yields. So it could be that yields have come down.

C

But you know, you also know the mortgage rates are going to stay sticky for a while. He was just, he just pointed out to me in the break and we can pull up a chart. I mean there are a lot of these names look exactly like Pulte Homes, Toll Brothers, a lot of double and potentially triple tops from a couple of years ago. I'm not exactly sure what the market is focused on here because the labor market, although the unemployment rate is fine, people are worried about their jobs, rates are going higher, consumer is spent up. There are a lot of reasons to be bearish to the homebuilders. Yet here we are. A lot of them are approaching all time highs. It doesn't really make a lot of sense.

D

And I don't think these guys are selling homes. They're buying buyers.

A

Right.

D

So that we've heard that story already. They're discounting the homes. They're actually lowering the mortgage rates. Until mortgage rates drop to five and a half percent. You're not going to see this, this sector explode. They're crimping their own margins. There's very few of them that could make money in this type of environment. Guy said Pulte if you look at Dr. Horton or toll Brothers, the rest are garbage. The other, I mean that in a nice way. I don't, I don't want to get email.

E

Right. But to that point, I mean the upper, the median home sales price is actually higher. So I mean the K shaped recovery is happening or the K shaped consumer, whatever you want to call it, is also in the housing market in that the higher income people are buying homes they might be buying for cash and not dependent on a mortgage. And that part of the market is okay, are you.

H

Home affordability is rough. It's the worst it's been in 25 years. Median price up rates at the highest they've been in quite some time. Look at the Atlanta, Atlanta Fed. 45% of median income is what would need to be spent on the cost of homeownership on a monthly basis. Since 2021, monthly mortgage payments would be 85% higher. That's five years. We can't afford that. I would prefer not to own a home builder. I think something more like a Ferguson would be interesting because they've got more exposure to the remodel community which is the better end of the K consumer. And then also they have exposure to infrastructure on the waterworks side.

E

Coming up, Netflix this conference call just wrapping up. Lightshot Partners. Rich Greenfield will join us next to dig into all the headlines. Moving the stock back into. Welcome back to Fast Money. Stocks ending the session lower. The Dow shedding 100 points. S&P off a half a percent. The NASDAQ leading the declines down a percent and a half. Some big earnings movers during the session. JB Hunt surging 8%, reporting higher profit in the second quarter as revenues grew, grew across nearly all business segments. UnitedHealth up a percent after the insurer raised a 2026 profit outlook on the back, a better than expected quarter, although it had been up more than 10% at its highs. And GE Aerospace dropping 4% despite strong results after management warned of ongoing inflationary pressures and supply chain constraints. Meanwhile, another bad day for Space x, now down 14% over the last five sessions. It closed under its initial offering price of the $135 a share for the first time. And Apple rising almost 2% to close at fresh records. It is inching closer to unseating Nvidia as the world's largest company, just about $100 billion in market cap shy of that title. And Coca Cola lower in extended trading. The company announcing a data breach impacting its Fair Life business segment, resulting in a temporary pause in operations. The stock is down a little more than a percent after hours. Let's take another check on Netflix shares. They're down by over 8% right now. The CO C CEO saying he expects content spend to increase 10% this year, will expand live programming to regional events as well. Rich Greenfield joins us now, fresh off the conference call. He's co founder of LightShed Partners. So rich, what do you think? I mean, investors were like peak bearish going into the quarter. So now what?

A

Look, Melissa, this is fundamentally investors believing that Netflix has gone ex growth. Like I think they are just projecting out and saying engagement isn't really growing much. You know, it's up 2% over the first half of the year, year over year. And I think they're going, God, it's up 2%. This thing's going to start to slow even more revenue growth, which was, you know, going to be 12% for the year ex currency. They're going that's going to be the single digits pretty soon. And so they're literally just looking at this company as like this has two people have already texted me saying this is now a legacy media company and like good luck streaming instead of the old good Luck bundle. I mean people are just, this is what feels like peak bearishness. People just don't believe that there is growth left in streaming, which I think is fundamentally incorrect when you look at this, especially on the advertising side and how fast that ad business is growing, how early it is. But honestly, Melissa, there's no way to disprove it other than just time. And investors right now have no patience for this company and they're just puking it.

E

Do you think that's the right thing to do, Rich, or do you say no? You know, with peak bearishness, the stock down additional 9% on top of being down 40%, 30% going into the court. You buy it, you do.

A

I mean this is when you find the bottom right is like when you see everyone who literally there is just hatred and everyone is going, there's no belief. I mean think about it. They're growing revenues at 12%, margins are expanding meaningfully, they're buying back a lot of stock. They have true conviction in how big the, I mean Greg, Peter said it right on the call. We are still very early in our growth as a company. But investors are like, investors don't care. And so that's the opportunity. The company's buying the stock they believe and I think this is now going to become a show me stock over the next year. They have to prove that there is growth. And you know, one thing that isn't really being talked about, there is less competition. You know, Hulu's basically being sunset by Disney hbo. Assuming the Paramount deal eventually goes through, we'll see how fast it goes through with the regulatory battles. But eventually HBO is going away and is going to be folded into Paramount amount plus. And so the competitive dynamic is actually becoming a lot easier I think over the course of the next 18 months in terms of how many different services are out there. But again, none of that matters today. Right now it's just fear. On the engagement report, the company even said, oh, we're not going to report their engagement numbers on a six month basis. We're going to. Every year like any time you pull numbers or pull information, investors think you're hiding something. It doesn't matter whether it's impacting revenues or earnings. People are just nervous and I think they have lost investor confidence and it's going to take time for Netflix to demonstrate and prove to people that they can grow earnings high teens towards 20%. Until they do that and put that on the board, people are going to be nervous.

D

Rich. So I agree with you. It's Steve, I agree with you. I think peak bearishness is when you want to buy this stock. I'll give you two reasons. I think costs are probably rolling over, if not coming down, and then the ad tier. I don't think anyone gives it any credit for ad tier. It's still the best streamer out of all the names that you had mentioned there. It lifts all, all boats. So when I look at the chart, I think this is a chart I want to buy, I don't want to sell. Just talk to me about the ad tier. Are people leaving out on the side of the road?

A

You know, this is an ad business that's growing 50 or, sorry, growing 100% year over year, basically doubling from one and a half to 3 billion. But the 3 billion is still a tiny number. Like when you look at the amount of time spent on Netflix by the ad tier members, that 3 billion, I think even if they never grew engagement, you know, something they don't talk about, if they never grew engagement again, that 3 billion could be multiple times higher than where it is today. I do think that they're doing a lot of things to accelerate engagement in terms of going into shorter form programming, building out video, podcasting. Like, there's a lot of things that they're doing. And, you know, I think the most interesting line of the release that nobody really paid attention to was that they said all of the new forms of content they're adding, whether it's, you know, the Jay Shetty show or Jake Shane, like those types of things, they're actually finding people are watching, not in the evening, they're actually watching during the day. And so they think it's incremental viewing. And so when you think about how that sort of compounds over the course of the next 12 months, I think there's actually reasons to believe engagement gets better. And that's obviously important longer term for the advertising business because obviously eyeballs equal advertising opportunities. And so there's no doubt that the advertising is being overlooked. Nobody cares about it right now. It's just, hey, engagement is bad. We're going to sell this stock, Rich.

E

We got to leave it there. Thanks. Thanks for your take. We do appreciate it.

A

Thanks, Melissa. Like big opportunity.

E

Do you agree with Rich?

C

Big opportunity here because they're still the best in breed here. I mean, again, forget about the total addressable market. Although they're talking about it now, they've only reached 50% or less than 50% of what they believe their audience could be. There are a lot of reasons to like it. But the reasons not to like it, as Steve pointed out and as we talked about earlier, is the fact that vis a vis free cash flow and other things, the growth is not there and they're spending more money than the market wants them to and that's why we're at these levels. But you get it at a valuation, it's not ridiculous. Again, the best in breed in terms of what they do and they dominate the space. So I don't know what to tell you. I get it though. Peak bearishness is feels really bad.

E

Yeah. Eli, what do you think?

H

I agree with most of what's been said. Peak bearishness sentiment is it's a hated stock at the moment. You have to like that. I do question what my thesis would be like. I mentioned earlier, I do think that the thesis has changed here from penetration and where Netflix is on the S curve to now it's the advertising business or perhaps live sports. I'm not sure those deserve quite the same multiple and so I'm a little skeptical on that dynamic.

G

So just to the multiple though, the multiple go down tomorrow, right? Because the stock is down I don't know what 8%. So it'll be a high teens multiple with a great balance sheet and you know I've owned it for a long time from higher than here, but I'll be looking to buy more.

E

Coming up, powering the AI build out a look at the picks and shovels of the trade and the under the radar names our traders say are worth a closer look. Stay tuned. Welcome back to Fast Money Energy. Names tied to the data centered buildout dropping today. Bloom Energy, Vista, Constellation, ge, Vernova, all taking a hit. Our guest trader here has a way to play the rising demand. So Eli, which names do you like here?

H

Well, first of all, just on the thesis, I think we have a very strong view that the infrastructure layer, the power infrastructure layer is constrained. It's a bottleneck. We're seeing acceleration of electricity demand in this country for multiple reasons, which is important. It's not just data centers. It's reshoring and manufacturing. It's the electric electrification of our economy. Electrification, transportation that's driving more robust demand than sometimes these stocks get credit for. We see evidence of this in a number of ways. The pjm, which is the largest utility region, just had yet another power price auction that hit the cap. New York State put a one year moratorium on data centers. I think that's the wrong move. I think it doesn't encourage competition and business to come to the state. I think the right solution there is to what we call bring your own power and data centers, building their own power behind the meter, not connected to the grid. A company like Powell Industries, which we own, Bloom Energy, they both fit into that mold or that thesis quite nicely.

C

Let's talk about Bloom Energy real quick because it made an all time high, I think less than a month ago, 350ish. It's trading just north of $200 now. There was a short report, I think a week and a half or so ago. Ish.

E

Or this week?

C

Was it this week? I lose track of time, but whatever. I mean the point is now people are shooting against it. They report, I think next week or the early in the following week. Thoughts on what to expect in the earnings.

H

So, so that report was focused around their ability to source a certain critical material that goes into solid oxide fuel cells. And we've done our work on that. We spoke to the company. We don't think that's an issue at all. Bloom has really found a sweet spot with these fuel cells and there's no better proof point than Oracle, which is building an entire gigawatt scale data center entirely on Bloom. You would never have done that before. It was redundancy, it was backup. Now they're, they're treating that as prime power. So, so really, really interesting value proposition that companies bring to the market.

E

One of the arguments in the short report specifically about that critical material, scandium, is that Bloom, that there's only so much scandium in the world and that Bloom would need more than what is available in the world in order to actually complete its backlog.

A

Right.

H

And we, that's exactly what the report says. We started looking into this several months back and we found a different conclusion.

E

So there's plenty of scandium.

H

That's, that's what we found.

G

You just got to know where to look.

E

You got to get a guy, you know.

A

Right.

G

I mean I have some tangential plays that might fall into, you know, Qanta Services, which actually has a university, creates their own electricians, which is a good thing to have. And United Rentals, as you know, these giant projects are there absolutely agree.

H

I mean Quanta plays on yet another bottleneck. These bottlenecks are like whack a mole right now. They're just popping up in the industrial economy. But skilled labor is hard to come by. And so Quanta or Comfort Systems, they have these skilled technicians and they're hard to come by. So better pricing, power, less competition.

D

I bought my wife's Engagement ring with scandium was way, way out of watching right now.

E

Yes.

D

The problem that I'm seeing is what Eli just, just mentioned. What happens if New York is the first state to start doing this. And the moratorium isn't just about bring your own power. It's about you're not building anything here. So that actually could be a tailwind to hyperscalers because they can't spend the money that they want to spend.

E

So it's more constrained.

D

More constrained. They don't have. They can't. They have dollars chasing nothing at that point. I mean, this is. This is sort of the next derivative play on it. But I agree. The Bloom Energy chart and the Powell Industries chart, they look identical. And those are the two best plays probably in that area.

E

Comfort systems caught my eye because once upon a time, Karen, I were riding home together in our Uber and we were talking about stocks and. And areas that cannot be disrupted by AI guys laughing. Because actually, this is actually what we talk about.

G

I know that we complain about our husbands or I do.

E

I actually.

D

Do you complain about Karen's husband.

E

Yes, Everybody complains about that. That's the labor. That's a skilled labor. Right. To build the data centers. That can't be. I mean, it's interesting because they build the data centers, but they won't be disrupted.

H

Yes, Skilled labor. There's Halo. These places where you don't have to question terminal value. The markets, obviously not the past month or so withstanding. Found comfort in those. And no pun intended on comfort systems, but found comfort in this business.

C

Before we leave for commercial, let me just say that both Karen and Melissa have amazing husbands in Ben and Lawrence. And although they may complain, they do it lovingly.

G

I'm with Lawrence. She's with Ben.

E

Coming up, a pulse check on the retail trader, how they are navigating market volatility and where sentiment stands for the second half. Investor Feeding Editor in Chief Caleb Silver will join us next with his findings. More Fast Money in 2020. Welcome back to Fast Money. Investor PD's latest read on. Investor sentiment is in. And despite apparent re. Escalation of the war in Iran and inflation concerns, traders remain cautiously optimistic. Joining us here on set is Caleb Silver, chief business editor of People, Inc. And the editor in chief of Investopedia. Caleb, great to have you with us. 44% cautiously optimistic, but right underneath that is skeptical.

D

Yeah, and for good reason.

B

We're exhausted. In six months, we've had like six years worth of news and individual investors have been through a lot not knowing which kind of way to go. So they've just kind of gone with the trend and the trend has been up. Not a lot of movement. When you look at what individual investors are doing with their trading activity. I was looking at Vander Trax study there a lot of movement in some individual names but by and large volume way down. So a lot of people just saying, I think it's going to be okay. I'm going to hang in there.

E

Market is in a bubble. Is this, is this percentage higher than in the past?

B

Yeah, it's right around where it's been in the past and they really haven't come off of the air is in a bubble thing. That's the part of the market they think is in a bubble. But everything is associated with that now. So by definition most things are in a bubble. If you talk about how individual investors feel, they're not stopping what they're doing. Maybe leaning more into ETFs than they have in the past just for the diversification and chasing single stocks has been dangerous for individual investors and they were chasing, if you look at what they've been buying, Space X and others and it hasn't worked out well, you've been

C

coming on a long time. We love it. Here's something I haven't seen. Oil and energy stocks.

B

Yeah, yeah, welcome to the party. They're back into oil and energy stocks and some international stocks late to it as well, but without any guidance on where to go in terms of tech stocks and seeing a lot of their favorite stocks sell off 15, 20, 25% they're looking for other places to deploy money. Now it's not a large movement of money and it's not most of our readers and most of our survey respondents. But it's some saying I think it's time to unwind some of these trades that have made me so much money over the last few years.

D

Caleb, when you look at these stats and this data and the percentages, Melissa said right underneath that there's another group that believes the 180 degree difference is going to happen. What's the Dakota ring when you've been doing this for so long, when you see everyone push to the bullishness or push to the bearishness, where do you say, okay, this is the percentage where we're on the precipice of something changing. Yeah.

B

What if you add up the cautiously optimistic with the optimistic? We're talking about 60% optimism and that's even more than a I or or other reads on that. So I look at individual stock buying. How much of that activity is happening right now that shows risk? Also the $10,000 question that we love, that shows you where the appetite is and you can feel it pulling back a little bit just because there's some exhaustion going on and there's been some wild swings in these individual names.

E

Yeah, ETFs is number one. Number one, it had been individual stocks.

B

So it's been back and forth between individual stocks and ETFs and after enough chasing and getting burned by it, they're back trying to diversify and playing it a lazy and a lot more choices now if you want to access the market with ETFs, it looks like they're

E

giving up on Mag 7 at this point. I mean, slowly rotate. What?

B

Slowly rotate.

E

Where are they going to at this point?

B

Yeah, well, they've done some chasing on things like Space X and they did some chasing in semis right now. But when you look at what they're buying, some Microsoft, some Intel, they're going where the money is going. And of course SK Hynix was a big buy for individual investors. But again, the rotation into energy and other places that have seen some upside, that's been significant. In the last, I would say two

C

to three weeks, bond yields have been going higher. Your, your viewers, your readers are very in tune with what's going on. Any comments on that?

B

Yeah, there, there are equity investors. They like the stock market and want to stick with it. That's where the wealth has been created. Now you can tell who the older cohorts are. Cohorts are depending on what they answer. So bonds, but I think they would take something like a Berkshire Hathaway or a JP Morgan before they started deploying a lot of money into the bond market.

E

At Investor pd, you can also track what people are searching. So where does this prediction markets, does that fall into a top search?

D

Absolutely.

B

And more and more people are trying to figure out how those work and how they will ultimately affect the equity market. But I think a lot of people have been getting educated in things like green shoe and lockup expirations because they've been chasing individual stocks. So it's so fun to watch people educate themselves about what's happening. Maybe they already bought the stock and are now like, wait a minute, what's a lockup? What's a green shoe? Where did all that stock go? So they're getting smarter about it, but sometimes it takes a little losses to make them go back to the drawing board.

E

And just quickly the word Cloud Nvidia is the biggest, still the biggest holding,

B

still the biggest stock in the market. I think people may let go of a little bit of that, but it's made them a lot of money. So it's hard for individual investors to completely depart from what got them here.

E

Caleb, always good to see you. Thank you.

B

Thank you.

E

Caleb Silver, investor PD up next, final trades, Final trade time. Eli oh, that's me.

H

You emerging from four year freight recession, Union Pacific.

E

Great to have you, Eli.

D

Steve so one of my best investments that's under radar, slow steady SL green prime properties centered in New York. It's been slow and steady and I love Erin.

G

Yes. So last night I said I'm going home with the girl that brought me, but I was going home with option trade with a call spread. I'm going over there again. Maybe three day rule on Netflix guy

C

In unrelated news, Matthew Liberto, the CFO of SL Green, is a huge Fast Money fan. Gilead sold off is enough.

E

All right, thanks for watching. Fast Mad Money with Jim Cramer starts right now. All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Fast Money participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy and it should not be relied upon as such. To view the full Fast Money disclaimer, please visit cnbc.com fastmoneydisclaimer which are America's

D

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C

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D

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