What made you confident that you could do something that hadn't been done before? I have no fear of failure. Trailblazing women changing the game. One of my favorite pieces of advice, think about what your boss's boss needs. Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just got to think big to accomplish big things. Julia Borsten hosts CNBC Changemakers and Power Players. New episodes every Tuesday, wherever you get your podcasts. Live from the Nasdaq MarketSite in the heart of New York City's Times Square, this is Fast Money. Here's what's on tap tonight. A new number one, at least for a few minutes. Reports after hours Google could be getting a massive order for its cloud chips, sending shares of Alphabet soaring. It briefly had a market cap eclipsing. NVIDIA's will make sense of the moves and break down all the action in semis today. Embrace for turbulence. Flight cancellations are piling up as the Iran conflict continues. the implications as we head into the busy summer travel season and the ripple effects of people aren't traveling. Plus, Meta faces a lawsuit over how it trains its AI. Coinbase drops after announcing layoffs and counting down to Disney earnings. It's the first report under new CEO Josh DiMero. What we hear about layoffs and breakdown of licensing deal with OpenAI and President Trump's battle with Jimmy Kimmel. I'm Melissa Lee. Come to you live from Studio B at the NASDAQ. On the desk tonight, Tim Seymour, Steve Grasso, Julie Beal, and Marta Norton, chief investment strategists at Empower Investments. Welcome, Marta. And we start off with news that made Alphabet, at least very briefly, the biggest company in the world by market cap. The information reporting Anthropic has committed to spending $200 billion on Google's cloud chips. Let's get to Mackenzie Cigalos for the latest and the details on this one. Mac. Hey, Mel. So Alphabet touching a $4.8 trillion market cap after hours, briefly putting it ahead of NVIDIA following that report from the information on Anthropic's Google Cloud commitment. Now, last month, Google said it would supply Anthropic with five gigawatts of server capacity starting next year. And now we have a dollar figure to go along with that commitment. It's 200 billion over five years. Google disclosed close to half a trillion dollars in cloud revenue backlog last week. So this would mean that Anthropic alone accounts for more than 40 percent of Google's future contracted cloud revenue. And remember, Google investing up to $40 billion in Anthropic, $10 billion now with another $30 billion that's tied to certain performance milestones. And then in return, it gets one of the biggest AI cloud customers in the market. It's another example of one of these chip for equity deals. And it comes less than two weeks after Google unveiled its latest AI chips, the TPU, now specially designed for inference and training. It comes as they go head to head with NVIDIA on their in-house silicon. And worth noting here, Mel, across Amazon, Microsoft, Google and Oracle, contracts tied to Anthropic and OpenAI now make up roughly half of the two trillion dollars and reported cloud backlog. Wow. Strong players there. Mac, thanks. Mackenzie Cigalos. Tim, there's so many ways to trade this. I mean, I don't know if you want to go concentration in terms of the backlog to one customer or the fact that what it had been doing for its own business. We saw this with Amazon, too, in terms of its TPU business is now another revenue generating business on its own. I mean, it's just fascinating how it's playing out. Commitment to cloud and chips, which is really important here. And yes, you know, one one customer being 40 percent of the backlog. But but it's probably even going bigger is that between, you know, Anthropic and open A.I., you've got 50 percent of the backlog for all of them. And we've seen where this is in apples and oranges, but with Oracle, some of those commitments tied to the circular trade here are things that have been of concern. What you get to with Google is this is a company that not only continues to evolve, but their former place in search, situated on every handheld or every desktop, continues to ring the register. We saw that in current revenues enhanced by AI. We're giving them clearly a pass on additional spend. In other words, when Meta and Google the same night announced an extra $10 billion each, Google went up 5%. Meta went down 10 to 15. So, you know, the valuation is also not difficult. All these other businesses, we're not even going to talk about YouTube and Waymo, but these are exciting reasons to own Google as well. I mean, the path to monetization for this one is clear. For Meta, as you mentioned, it is not in terms of the spend. Yeah. Marta, what do you make of Alphabet? Well, you know, I think it's a pretty exciting development. And I think what's interesting is how much things shift. If we go back a year ago, I don't know if there was the same enthusiasm around Alphabet. And I think that underscores how much there is this rotating leadership among AI. We simply don't know who the winners are. And I think that justifies a very valuation conscious view where you want to move into these areas when they're cheap and move out of them as they get expensive because things are shifting in real time. Is meta cheap at this point then? Well, it is cheap, but I think there are relative to itself. Exactly. But there's real questions as to, you know, a lot of these companies are able to put their whole infrastructure to work. Meta is putting it to work in digital advertising. And so I think that's a different question for that particular company. So when you look at NVIDIA, when you talk about concentration of revenues for Google or Alphabet, when you look at NVIDIA, they used to have the same problem. They had the concentration of revenues from the hyperscalers. And my problem was the hyperscalers, their biggest clients were making their own chips. Now we're seeing other people go to them instead of NVIDIA. So this, to me, is when you're looking at it, NVIDIA has had more lifelines than you could possibly imagine as a stock. They've been able to diversify away from the four hyperscalers. But this is another sign where you want to be selling NVIDIA. Which is what has actually been happening. It took a long time to happen, but it's happening now. Right. I mean, is this just sort of a rotation within the sector? because we're going to talk about the larger chip rally today. But Julie Beal, I mean, in today's rally, it was notable. I mean, stocks up 4%. NVIDIA was down a percent. The biggest component of that index can be down. I mean, it's really remarkable to think about how, you know, not dominant NVIDIA is for being a dominant player. Yeah, it is unprecedented. But I think it is this reflection that investors generally do not love customer concentration, concentration, particularly when it's your whole raison d'être, it's your whole existence is about this handful of customers. And that's not true for Google necessarily. It is on the chip side, but I think for their broader business, they have some level of insulation. I can really understand and recognize that it's true that we just don't know where the real benefits are going to accrue when we're talking about Gen AI. It feels like right now the easiest place to play it is in chips because they're making the money right this second versus the rest of it still feels pretty unclear. It's hard to recognize how OpenAI and Anthropic are really going to make money when memory is skyrocketing and these types of chips are pretty expensive, too. So I think this is the better place right now, at least the most transparent and visible place. We've seen the semiconductor index go up 46 percent in 36 days, and NVIDIA hasn't really been part of it. Now, this is a day where we're going to at some point, if not now, talk about Micron and Intel and what's going on. Sure, go for it. Go for it, Tim. I'm sorry to be driving this train bus. Anyway, well, it's just an extraordinary day. And it just speaks to where Google is. Google can trade very expensive to itself. And it is, I think it's expensive to itself on recent history just because we know what it's done. But why can't it trade with a 30 multiple in a world where they seem to be the one that's also dictating the terms now? By the way, I mean, how about tax costs for Apple and things that might have changed and actually gotten better for them? So you look at the move today, though, in Micron and you look at memory and the names that already reported and they're getting the second life. Because whether it's Sandisk or Seagate talking about solid state drives, it's really it's a it's a moment where the valuations almost don't matter. Yeah, here's another move higher in the after hours. AMD shares are higher by 5% after the company beat on the top and the bottom line. The conference call kicking off just moments ago. CNBC's Christina Parts Nevels has got the numbers in the latest. Christina. Yeah, well, the story out of AMD is demand, and it's really coming from everywhere. Data center revenue jumped 57% year over year to $5.8 billion. That is the main driver of their business. Server CPU demand was a key driver as well. It lines up with what we heard from Intel just last week and what we're likely to hear from ARM tomorrow. Agentec AI is driving a real CPU renaissance. On the GPU side, though, Lisa Su, the CEO, said customer forecasts for the next generation MI450 chips. These are the next generation GPUs and their Helios rack systems are exceeding initial expectations. One flag worth watching, though, is data center revenue was only modestly higher quarter over quarter, which raises the question of whether TSMC capacity is already acting as a ceiling. Keep in mind, AMD is like 100 percent dependent on TSMC. And Sue even told investors in the press release, quote, we expect server growth to accelerate meaningfully as we scale supply to meet demand. But she hasn't addressed it just yet on the call. It's only just begun on margins. Q1 came in essentially in line with expectations at 55 percent and the Q2 guide steps it up to 56 percent. With a stock price for perfection, investors will want to see that number move a little bit higher as the AI mix scales. And Melissa, just now they posted the full transcription of Lisa Su's remarks. So I'm saying this before she's even said it. They did outline a server CPU market growth at approximately 18 percent annually over the next three to five years. They said that back in November of last year. They're saying, according to Lisa Su right now, based on the demand signal specifically by Agentec AI, they now expect their server CPU total addressable market to grow greater than 35 percent annually, reaching over one hundred and twenty billion dollars by 2030. So that is probably why you're seeing the stock now move higher up to six percent, guys. So now they're seeing it grow double, basically what they forecasted not that long ago. Yeah, it was 18 percent back in November over the next three to five years, not one year. And now they're saying that that's essentially going to double 35 percent. Yeah, that's an extraordinary jump still. Christina, thanks. Keep us posted on that. And this sort of gets to this notion that the AI picture is really evolving every single day and that the confidence with which you CEOs are coming out and saying the pipeline is this demand this much into the future. and that's why we're seeing the re-rating the memory stocks in Intel and AMD. Can you buy that, though? Well, I mean, they buy it, right? The CEOs are putting a lot of conviction behind it and a lot of their own money behind it. I mean, some of these companies are gambling their futures on the AI trade being alive and well and a new infrastructure for the U.S. I still think that there's validity to that thesis. I want to be part of the AI trade. I'm less concerned about NVIDIA. I still think there's a valuation opportunity there. There is a lot of kind of questioning around that type of company. So yeah I think there room to be bullish on this Well I think there no question that the street is bullish and there no question that we seeing analysts take a 30 multiple to a 35 36 It how you get from 300 plus you upgrade. You get a beat and a raise. You have Helios coming online second half and actually meaningful revenues in 27. This is what we were waiting for. MI400, what's happening with that? Well, we're now hearing that demand is better. Gross margin comes into 55. You can suddenly throw your EPS at 13 bucks a share at 35 times, you can get to 475. And that's what's happening here. And again, we're not seeing a, it's never been a question about demand on the chip side. We know it's not a question of demand on the memory side, but I'm long AMD. I know it hasn't really made sense, but to this point, this is the rotation that sometimes you're even just lucky to be there. This has been a winner. If you look at year-to-day performance, it blows everyone else away with you look at Texan. Texas Instruments actually is pretty surprising, too, with with their year to date. So it's the ones that you wouldn't think about are having actually a year to date performance. And remember last earnings, it guided it had a poor guide and the stock traded off 17 percent. And it also had a sequential revenue decline and it had a margin step down. Now you reverse that, put it on its head and you have everything that works out for AMD. It was a laggard. Now it's a leader. NVIDIA can't afford to lose the chip war and everyone else. It just helps them. It's a tailwind. It might not. I mean, there's a couple of ways of looking at this. I mean, you can say that NVIDIA is losing to the rest because investors, Julia, at this point, are looking for the rocks that haven't been turned over. And obviously, they're clearly turned over at this point with these runs. But maybe that was sort of why we saw the dispersion away from NVIDIA and into even a Texan, which is really known for industrial applications and all of a sudden has this data center business, which is meaningful to the way investors see that narrative. You see it everywhere. I think it's not even just within the chip sector. I think you're seeing it in electrical companies that have tangential connection to data centers. Right. Everyone is trying to push this trade, I think, beyond necessarily where it makes sense. A lot of those are cyclical companies that don't necessarily have a lot of competitive protections. But I think what's so interesting, right, in this renaissance, particularly on the memory side, is think about Sandisk. Western Digital owned Sandisk, spun it out. They're in that business. They know what the drivers are. They spun it out. And now they're not benefiting from that value. If they themselves didn't know the value, how are most investors going to figure that out? I really think it's this question of people going where the revenue is right now rather than trying to necessarily gauge where it's going to be in the future. For more on all today's after hours tech moves, let's bring in Gil Loria, head of technology research at DA Davidson. He joins us on the Fast Line. Gil, great to have you with us. I'm not sure where you want to start. I wanted to start first with the anthropic and alphabet. You cover alphabet. You also cover the chip space. How meaningful is this for alphabet? Well, if the report is correct and the 200 billion were already included in the backlog that Google reported, it's actually not great news. If you remember, the backlash on Oracle was when we found out that most of their backlog was from one customer, OpenAI. There was even backlash on Microsoft when we found out a lot of their backlog was OpenAI as well. So it's actually not great news that that doubling in backlog that would look so impressive is actually just one long-term deal with Anthropic. Having said that, Anthropic's hot right now, so they'll probably get more credit for it. But realistically, what it means is that their backlog without Anthropic is very concentrated in Anthropic. Without Anthropic, their backlog is actually less than half of Microsoft. So Microsoft, with $630 billion of backlog, has a lot more than Amazon at $460 and Google at $460 that are just as concentrated as it is. So, you know, as we look at this AI trade, what we're seeing is three companies that look very similar in their AI prospects and their growth rates. Microsoft, Amazon, and Google are trading at very different valuations. Amazon and Google are very in favor right now. They're trading at 27 forward earnings. Microsoft at only 21 times earnings on what are really similar prospects. And again, Microsoft even has a lot more backlog, a lot more visibility into its growth than Amazon and Google do. Hey, Gil, it's Tim. So I was going to ask you a different question, but now that you've just said that, it sounds like you're bullish Microsoft over Google. And that's not a consensus call. I'm also curious to hear you think that there are three essentially equal companies when, in fact, part of the part of the story here for Google is that. I mean, this news to me is less about Anthropic than it is about TPUs and the chip business for them overall. So but talk about even drilling into those stocks you just mentioned. So I think all three are going to do very well. Let's be clear. All of AI compute is going to one way or another come through these three companies. They have all the customers. They have all the enterprise customers. They have all the consumer customers. These three are going to do phenomenally well. I'm just pointing out the valuation discrepancy. Now, on the TPU, and Amazon made a big deal out of its Tranium, Jensen Wang has pointed out that really that's almost entirely Anthropic. So because Amazon and Google are investors in Anthropic, they require Anthropic to use their chip. it's not that there's a lot of other customers for these chips. Now, mind you, the chips are good. GPUs are actually the second best alternative to NVIDIA's GPUs, but NVIDIA's GPUs are still a lot better and a lot more productive, a lot lower cost of ownership if you're thinking about the output level. So not sure we're ready to give Google that much credit, although they're a close second. I think Amazon's a little bit of a pretender with Tranium. I think there was a little slight of hand on the last conference call. But Google does deserve credit on TPU, but only so much credit. Again, comparing how in favor Google is and, again, out of favor Microsoft is. Gil, great to speak with you. Thank you. Gil Loria. Thank you. He basically said Andy Jassy was sort of, I don't want to say lying, but maybe exaggerating the truth. I mean, they said at a $50 billion revenue run rate, it would be the third biggest data center chip company in the world. And Gil's totally throwing shade on Jassy. Nice use of shade. No, that was a well place. I didn't want to say, like, lying. That's too harsh. But the would you rather that Gil imposed upon himself choosing Microsoft over Google was interesting. Would you agree? It is out of consensus. Microsoft has been caught up in the software SaaSpocalypse concern. Yes. Is it interesting? I do think it's interesting. And frankly, you know, I think software generally is interesting. Generally is the wrong word because I do think you have to pick your spots in that space. There's obviously transformation. But I do think Microsoft is one of those companies that strikes me as a company that's nimble enough, has the financial wherewithal to think through how to survive a software AI world. Coming up, copyright complications. Why Meta's AI training methods are coming under fire and can the stock get its momentum back? That is next. Speaking of AI, Coinbase, the latest company to slash jobs as the technology shapes up its workforce. The changes they are making and if more companies will follow, don't go anywhere. Fast Money is back in two. What made you confident that you could do something that hadn't been done before? I have no fear of failure. trailblazing women changing the game. One of my favorite pieces of advice, think about what your boss's boss needs. Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just got to think big to accomplish big things. Julia Boorstin hosts CNBC Changemakers and Power Players. New episodes every Tuesday, wherever you get your podcasts. Welcome back to Fast Money. CBO seeing an odd volatility pattern in the market. Let's bring in Mandy Hsu, the firm's head of derivatives market intelligence. Mandy, great to have you with us. Great to be here, Melissa. What is so odd? Well, when you talk about volatility, generally people associate volatility with market selling off. We generally see high volatility on market down days than up days. But when we look at how the market has behaved over the past two months since the Iran war started, what's been really unusual is that the volatility has come from the upside. So in March, when the market was selling off. It was very modest, very contained. There was very little panic in terms of investor rushing for protection. And then it's really the sharp rally higher that has caught people off guards. And that's what we've seen have people scrambling for options, not put options, but call options to really adjust their portfolio exposure because they were not really prepared for the sharp rally higher. Okay. So is that what you're seeing repeatedly, or is that just what you've seen cumulatively over the past month or so? So I would say repeatedly over the past couple of weeks, especially in April, there were a couple of days where in the S&P more calls traded than puts, which for the S&P index is very unusual because typically people buy index options more to hedge. Right. So and that hasn't happened in many years. So we're definitely seeing it in skew patterns in terms of the cost of puts versus calls, puts getting cheaper, calls getting more expensive. We're seeing it in the volumes and we're seeing the way that the S&P behaves. Do we see these patterns, though, Mandy, at inflections points before something else is about to happen? I guess is my question. And it does seem as if, boy, isn't it a great time to be selling vol if I'm wrong. But I'm more worried about the next move. Yeah, so that's a great question. So in terms of option market positioning, when it gets to extremes, it certainly can kind of flag when positioning gets to one-sided. But when it comes to the kind of the way the market's behaving, where we're seeing more just S&P, bigger moves on the upside to downside, that's only happened once before in the past 20 years. And that's in 2022. If you recall, that was also a large sell-off in the market, down 20%. But it was gradual throughout the course of the year. And it was a very similar environment where there was very little demand for downside protection because people were well-hedged going into the sell-off. And actually, it was the sharp moves to the upside that were more painful for investors. Is there a chance, to Tim's question, if this was so dominated by tech and software and those names that make up that bracket where they were sold off and then were bought back so aggressively, is there a shot that the next leg, instead of an inflection point, the next step up can be the other 493 stocks or the other groups or Russell names or anything else? Yes, certainly. And that's one thing we've noted is just how concentrated this rally has been in the tech names, right? The chips names, you know, tech is up, I think, almost 20 percent over the past month. But if you look at the other sectors, I think five of the sectors in the S&P are barely changed, like flat over the past month while the market has rallied. Another way you can look at it is the equal weight S index is still below the February highs while S the market weight is obviously making new all time highs So certainly I think in terms of the next leg higher would be a healthier rally to me if we start to see that broadening out. We saw that trade in February, people rotating to the other sectors. You haven't seen that yet, but if you're a bull or if you're looking for that reason to get bullish, I think that could be the next leg, certainly. Mandy, thanks. Good to see you. Mandy Hsu of SIBO. Do you want to see that broadening out? I mean, what we haven't seen in particular, I mean, financials, financials have sort of been left out there. Well, it's fascinating because what people say makes a healthy market is a broader market. And we have seen small caps participate, but I would argue that's partly an AI trade, right? It's energy, it's industrials. A lot of those are related to this broader AI build. I guess the big question I have for people when we think about the broadening out, a lot of that was predicated on fiscal stimulus, monetary stimulus, fiscal stimulus in play. but offsetting higher gas prices, monetary policy stimulus. Is that still in play? And so I guess I just I still think that we could see broadening out on the margin. But in the main, it is still an AI world. Julie, your thoughts? I completely agree with everything that she says. It's really important that we see broadening because it just creates a much more stable market. When we don't have that, then we have these major reversions where people suddenly get anxious about AI. And I think when you have any technology transition, you have those moments where suddenly people really don't believe in it and then people believe in it again. And it just creates a lot more volatility that needs to be there. She's absolutely right. Small caps right now, it's not been a quality rally. There's a huge gap in ROEs. Companies with higher ROEs and small cap have been totally forgotten versus these very, very cyclical, lower ROE companies are the ones that are really coming to the fore. I don't think that's a very sustainable trend. For me, it's nice because mostly these are premium companies that are typically expensive for me to buy and they're cheap right now. But it is an unusual and not very sustainable pattern. There's a lot more fast money to come. Here's what's coming up next. AI taking another toll on the workforce. The latest company slashing jobs in an effort to cut costs and the impact on the job market as the AI revolution picks up steam. Plus, jet fuel prices taking off, and that could stop your next flight from doing the same. The broad impact of rising cancellations ahead of the busy summer travel season. You're watching Fast Money, live from the NASDAQ market site in Times Square. We're back right after this. What made you confident that you could do something that hadn't been done before? I have no fear of failure. trailblazing women changing the game. One of my favorite pieces of advice, think about what your boss's boss needs. Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just got to think big to accomplish big things. Julia Boorstin hosts CNBC Changemakers and Power Players. New episodes every Tuesday, wherever you get your podcasts. Welcome back to Fast Money. Shares of meta platforms under pressure today, the social media giant facing a lawsuit over how it is using copyrighted material to train AI. CNBC's Julie Borson's got the details there. Julia. Melissa, that's right. Meta is being sued by a group of publishers over copyright infringement. They allege that the tech time used their books and articles to train its AI model llama. Now, the plaintiffs include big publishers such as Hachette, Macmillan and McGraw-Hill, along with author Scott Turow. The class action lawsuit claiming that Meta and CEO Mark Zuckerberg, quote, reproduced and distributed millions of copyrighted works without permission, without providing any compensation to authors or publishers. Going on to say Zuckerberg himself personally authorized and actively encouraged the infringement. Meta responding to the lawsuit, saying in a statement, quote, AI is powering transformative innovations, productivity and creativity for individuals and companies and courts have rightly found that training AI on copyrighted material can qualify as fair use. We will fight this lawsuit aggressively. Now, this is not the first time Meta has been sued by authors for copyright infringement as it relates to AI training. Just last year, a federal judge ruled in favor of Meta in a similar case. But there is also precedent that rules in favor of copyright holders. Last fall, Anthropic agreed to pay a $1.5 billion settlement to authors and publishers whose books were used to train its AI. So, Melissa, it's going to be fascinating to see how this one shakes out. It will. Julia, thank you. Julia Borson, as you saw there, the stock today, in response to the news, didn't really move much. It hasn't really moved much, though, since the earnings drop. It has remained basically where it is right now. It hasn't caught a bid higher or anything like that. So, we were talking about that earlier. Is that fair? Well, it's funny because you contrast it with the prior earnings season, and Meta was one of the companies that people rewarded because they could see a through line to monetization. I like these unfair moments because they create opportunity from a valuation standpoint. I think there are legitimate questions, though, in terms of how Meta ultimately puts all of its spending to work. Well, I mean, look, their first quarter numbers were excellent, okay? They beat expectations and they've kind of dominated and helped a handful of companies really dictate this almost clownish EPS number that we have for the overall market. I mean, it's extraordinary. And Meta's right there. The history on Meta is they kind of apologize later. They kind of like to break stuff. This is not uncommon. I think the market recognizes that. And they've largely rarely really been hurt in terms of market cap historically. I mean, you have those recent child safety rulings against them as well, which are not over and probably will pick up some steam. But this wouldn't be a reason for me to sell Meta. See, I don't like the fact that they knew. There's going to be plenty of stuff that you don't know. They allegedly knew. So they allegedly knew. But it looks like they knew, even though they allegedly knew. It looks like they just lean that way. So let's just say there's stuff that you can know and steal and don't worry about it. And there's a bunch of stuff that you're not going to know you're stealing. What kind of stuff do you know and steal and think it's okay? And know that you're kidding. I'm talking about AI. Yeah, I'm talking about an AI. So when you're using copyright stuff, there's going to be enough of these minefields. I think that you have to stay away from things that are copyrighted already. But this is not just a meta issue. This is an everything and AI issue. Coming up, a cruel summer for airlines, how carriers are dealing with soaring jet fuel costs and just how bad it could get this travel season. That's when he's back in two. Welcome back to Fast Money. Stocks getting a boost as oil pulls back, the Dow climbing more than 350 points. The S&P and Nasdaq both closing at fresh record highs. WTI crude down about 4%, settling above $102 a barrel. Shares of PayPal dropping nearly 8% despite topping EPS and revenue estimates. The fintech reportedly plans to cut 20% of its staff over the next few years as PayPal looks to reduce costs and turn things around. Shares down 85 percent from its all-time high set back in 2021. Coinbase shares in the red today after saying it would lay off about 14 percent of its staff or about 700 employees. CEO Brian Armstrong attributing the decision to AI disruption as well as market volatility. The company reports earnings on Thursday. And some more after hours action. Arista Networks dropping despite topping EPS and revenue estimates. Gross margin coming in a little light. Klaviyo dropping after giving weak outlook. Also announcing its CFO is stepping down. And super micro higher after beating earnings expectations, posting better than expected guidance. Meantime, jet fuel prices have nearly doubled since the start of the Iran war. And higher costs are causing airlines to cut thousands of flights. This morning on Squawk, we sat down with Kepler's director of commodity research, Matt Smith, who said it could get worse before it gets better. Asia is not getting the crude that it needs to refine into the jet fuel. And so they're trying to meet their domestic needs and they're struggling to meet the export needs as well. And so it is a series of dominoes that are falling here. And so Jet is the first one to go. Asia is the first region. But it's going to spread across the globe and it's also going to spread across the products as well. For more on the state of airlines and what it could mean for your future travel plans, let's bring in Managing Director at Jeffries, Sheila Kayalu. Sheila, great to have you with us. Matt also went on to say that there will be more flight cancellations beyond the ones that were already announced. We'll see them. We're seeing them in Asia. We're seeing them in Europe. But there will be more that it is a car wreck happening in slow motion. Those were his words. Would you agree? And how much of this is priced into the stocks, if at all? Sure. Thanks, Melissa, for having us. I would say we're going to see more cuts. A lot of the airlines have sold out their schedules three months in advance. So what we're seeing for the month of May is capacity is flat versus last year. But we are seeing capacity cuts into the second half of the year. For instance, United was going to grow the number of flights they had 5 percent year over year. Now they're talking about 1 percent, same with Delta. So we're seeing capacity only increase about 1 percent versus the historical 3 to 5 percent capacity growth. And that's what's happening in the state. So we're going to see capacity come in, which means prices are going to go up because there's limited seat availability. So, Sheila, when I look at this, I quantify and tell me if this is the way you quantify or if this makes sense. So UAL has the most Asian legs. So if I'm looking at it that way, they're going to be under the most pressure. Delta has its own refinery. No one else hedges. I should say the U.S. carriers don't hedge. European carriers still hedge. This is an Asia problem. This is a European problem. It's not a huge problem right now for domestic airlines. And when you look at the performance, Delta is outperformed. Am I looking at it the right way on legs or refineries or jet fuel? I'm actually surprised at the strength of the airline performance versus the commercial aerospace manufacturers I cover. The reason the airlines are outperforming the OEMs right now, it's because there's limited capacity. So they're passing through price increases in the realms of 20 to 30 percent. At some point, there'll be demand destruction because everything is going to be more expensive and they'll have an inability to do that. But right now, the winners like Delta and United are winning. In terms of global capacity, taking a quick step back, we're seeing further capacity cuts in Europe. We have a real-time engine utilization proprietary data set. That's down 5% year over year in the month of April in Europe. Asia's down 1%. U.S. is actually growing capacity up one and a half percent, so nothing to write home about. But the winners are going to be who could pass price through and who's going to be in the best competitive position. From a fuel perspective, none of the U.S. carriers are going to face a big fuel shortage It going to be more of a concern in Europe and the lower cost carriers in Asia that have some credit risk In terms of that point of demand destruction though Sheila I mean it seems like that point will be reached faster just given the structural issues surrounding jet fuel and the need to cut capacity which will then drive that level higher, plus the weight on the consumer of the inflationary pressures that are being felt, particularly in the regions that have the shortage of jet fuel, like Asia and Europe. Yeah, but not in the U.S. The U.S. carriers, we heard them report in the last two weeks, they're adamant. They're seeing the price increases pass through. And part of that is Air Force have been a deflationary product. You haven't seen them grow as a percentage of GDP. They haven't really grown in real terms. So this is their heyday, and they're taking advantage of it, especially the ones that could operate at a premium. And the ones who aren't are being eliminated, as obviously we've seen Spirit Airlines shut down. Sheila, thanks. Great to see you. Sheila Kiyalu of Jeffries. Julie Beal, are you booking your flight to Asia anytime soon? Not to Asia, but it is a really interesting dynamic for airlines because it's really true that when you get these oil shocks, they tend to really pull back on their capacity. And that leads to immediate improvement in their profitability because suddenly pricing is so much firmer and they actually become more efficient. So in a strange way, oil prices can be really positive and beneficial for their investor base. For us as consumers, it's not great news, but it really will depend on do you have the kinds of business customers who aren't going to notice that your ticket price has increased. What's helpful for them is we all see the price at the pump as we go work and go do everything else. And so we can recognize, yeah, it makes sense that my ticket is more expensive. Oil prices have gone up. Yeah. By the way, Spirit Airlines going out also has an impact on the industry, which we haven't sort of factored in. Yeah, some capacity cuts. I mean, I saw system capacities down about 310 basis points since the Iran war started. So as everyone has kind of said here, falling capacity, rising rising revenue per available seat miles, also known as RASM. So it's good for airlines in the short run. I totally believe there will be demand destruction. In fact, my wife doesn't know this yet, but I think we're probably not going to fly down to the in-laws for Thanksgiving. News flash, Leah. Just kidding. It's a rough way of finding out. Don't want to be you when you get home. Coming up, driving the narrative. Our Protagonist Therapeutics is shaking up the biopharma space with their recent drug approval. And if the stock can keep climbing after more than doubling over the past year, the CEO will join us when Fast Money returns. Welcome back to Fast Money with Big Pharma racing to replenish pipelines. Protagonist Therapeutics is among the biotechs that have stayed independent while prioritizing licensing deals with the likes of Johnson & Johnson and Takeda. Shares have more than doubled over the past year. The company just reported first quarter numbers, a loss of five cents a share in revenues and more than 56 million. Those results are not comparable, though, to estimates. Shares up about 2% after hours. For more, protagonist CEO Dinesh Patel joins us now. Dinesh, great to have you with us. It's such a pleasure and honor to be invited on the show. Really appreciate it. We'd love to hear about Icotide, which is your FDA-approved treatment for psoriatic arthritis, excuse me, severe plaque psoriasis. Get that straight. Indeed. Johnson & Johnson is projecting that it's going to be a $10 billion drug at peak sales. Help investors understand, because this is a very interesting model. This is licensing, and so you're going to get payments, which will enable you basically to fund your future pipeline. Can you walk us through what the assumptions are and how much money you'll have? Yeah, absolutely. So Icotide is a very unique drug. It's a first and only of its kind in the space. And just to explain briefly, it's an IO23 blocker. And typically, that mechanism has been dominated by, you know, blockbuster category drugs like Skyrizi and Tramphia. I mean, there are a lot of TV commercials around those kind of drugs, but those are all injectables. Whereas what we have done is created an innovative peptide, which could be taken as an oral pill once daily. So our drug combines both the efficacy as well as amazing safety of the injectables, but with the convenience of a once daily oral pill. And if you look at the market projections of drugs like Skyrizi and Tromphaya, they are north of 20 billion and 10 billion, respectively. So, of course, with icotide, it's no surprise that, you know, estimates over 10 billion are a normal belief. And we would say, you know, this is just the first innings. It has been approved for psoriasis. But if you look at the history of our 23 blockers, they also typically seek approval in psoriatic arthritis, ulcerative colitis and Crohn's disease. So those phase three studies are also ongoing. So when you combine all this, it creates a wonderful partnership where pharma does what it is very good at doing, which is developing drugs and commercializing them. And a biotech like Protagonist does what it is very good at doing, which is innovating new medicine. And early on, we were able to structure a very nice deal with them dating all the way back to 2017. Gives you an idea of how long it takes, right? And it's a win-win situation. So with the revenue forecast that we have with the 6% to 10% royalty in mind and $500 million plus in additional milestones, it's going to be providing us with a very steady stream of revenues for more than a decade at least. Yeah. And that's not it. We're not even talking about Resvertide at this point, which is that you have in partnership with Takeda. What is the timeline on that in terms of FDA approval? Because that could potentially be another cash source for further funding of the pipeline. And also shareholders will be interested. You've already said that you're going to return capital shareholders. So all of that funding. Yeah, we're kind of a unicorn in our space because this is very unusual for biotech to getting one drug approved and Rasputide, which is a rare blood disease drug partnered with Takeda. FDA has granted us priority review. And hopefully if all goes well, that drug will also be approved in the third quarter of this year. So protagonists could be having two drug approvals under its belt this year. And when you look at the normal statistics, right, there are about 40 to 50 drugs approved by the FDA in a typical year around the entire pharmaceutical sector. So clearly, this is going to be a landmark year for us in that regard. And I refer to both Rasputide and Iquotide as, you know, something where we did, which is very necessary in our industry, meaning partnership with pharma. I refer to it as symbiotic relationship. One needs the other, right, and vice versa. So, yeah, rosveratide itself, you know, we recently opted out of the commercialization, right? So now we will be focused on garnering 14 to 29 percent royalty from rosveratide cells if it gets approved. So very steady stream of revenues from two products, basically. Yep, that's unusual to hear from a biotech. Dinesh, great to have you with us. Hope you come back and keep us updated. Yeah, it was my pleasure. Thank you. Coming up, Disney earnings on deck. But can the media giant bring a touch of magic to the report as shares continue to struggle this year? What do you expect? Welcome back to Fast Money. Disney on deck to report earnings before the bell tomorrow. It's first earnings report under Josh DiMero, who took over from Bob Iger, CEO in March. Disney faces a slew of challenges early in DeMaro's tenure, from layoffs to a breakdown in its licensing deal with OpenAI's Sora video-generating feature, to a battle with the FCC stemming from Jimmy Kimmel's criticism of President Trump. Tim, what do you want to hear from Disney? Well, I guess I still want to hear where the profitability is on DTC, but I think the focus will be on the summer box office. And certainly, you know, we had that conversation with Wendy Feinerman yesterday. I mean, Disney, in terms of sequels and some of their ability to kind of roll the machine out, that was the term she used, and she was really impressed by it, I think is going to continue to pay dividends in terms of that flywheel. The problem is it's been very difficult to move the stock. And even a company that under Bob Iger a year or so ago gave us incredibly detailed three-and-a-half-year projections on growth, I think the market still needs to see it. Yeah. Julie, your take on Disney? Yeah, I think it's really dependent on the content that is the moat around this business, right? We just had this copyright lawsuit. And I think it's still unclear how they are really leveraging that scale and that content in order to drive better results, especially in streaming. So that's the place that I'll probably be paying the most attention to. Yeah, I mean, parks have been strong for Disney. It'll be interesting to see how that has changed, if at all, given the circumstances during the quarter. Yeah, I think there are some consumer tells that we can pull from Disney. especially given concerns around airlines, concerns around just the consumer pinch that they're feeling. So we'll get a read on that discretionary. Yeah, there's got to be a clean beat or a clean momentum with streaming, and parks have to still show some sort of a tailwind to it. But we did that airline spot. If people are cutting back or flights are getting canceled and they're too expensive, you might see that be a little squishy. Right. New CO2 kitchen sink is a possibility. So, yeah, that should be interesting. Up next, final trades. Final trade time, Julie Beal. Hinge just reported some really solid results. It's worth looking at. Marta Norton. Mag 5, AISG. Tim. Nice to have you, Marta. Great to have you here. And I'll say J&J, the licensor of that protagonist. Steven. I think if you go down the rabbit hole on airlines and jet fuel, you'll find that the one that is the best position is Delta. Right. Marta, it was great to have you. Hope you'll come back. Marta Norton. Thanks for watching Fast Money. See you tomorrow back here at 5. 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 forward slash Fast Money Disclaimer. What made you confident that you could do something that hadn't been done before? I have no fear of failure. Trailblazing women changing the game. One of my favorite pieces of advice, think about what your boss's boss needs. Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just got to think big to accomplish big things. Julia Boorstin hosts CNBC Changemakers and Power Players. New episodes every Tuesday, wherever you get your podcasts.
