11AM Hour 5/20/26

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Sara Eisen (1:05)

Good Wednesday morning again. Welcome to Squawk on the Street. I'm Sara Eisen with Carl Quintanilla, live from Post 9 of the New York Stock Exchange. Today, Wall Street anxiously awaiting two big tech stories. Nvidia's results and an expected record-breaking IPO prospectus from SpaceX. We'll ask one top strategist how best to be positioned into these big events.

Carl Quintanilla (1:24)

Mercedes looking to fill a void in the high-end EV market. We will ask the company's CEO why the automaker is doubling down on EV demand, even as higher EU tariffs still loom.

Sara Eisen (1:35)

It's a rare public market debut for an investment bank here at the Big Board today. As we await the first trade, we'll be joined by the CEO, boutique firm Liberty International.

Carl Quintanilla (1:43)

Some enthusiasm for equities ahead of NVIDIA's print tonight. We're back above 7,400 on the S&P, Dow up almost 400, VIX below 18

Little bit of relief in yields today, although we'll get a 20-year bond auction at one o'clock. We did roll over to the July contract on West Texas, that briefly dipped below $100 a barrel. Let's start with two big tech stories investors watching today. Our Christina Parts-Nebelos covering Nvidia earnings tonight. And Leslie Picker on the SpaceX IPO, where the company expected to disclose its prospectus as soon as today. Let's begin with KP on today's Tech Check. You've been watching sort of how volatility has been measured in the past, KP.

Christina Peuples (2:23)

Yes, and Carl, before I actually get to that, I just need to get to some breaking news. So Samsung Electronics and its largest labor union just reached a last-minute deal about an hour and a half before deadline, averting an 18-day strike that threatened global memory supply. So it is a big relief for the chip supply chain heading into tonight. And surprisingly, Micron and SanDisk are still holding up strong and positive territory. Now, to your point, to NVIDIA. Nobody's really debating whether NVIDIA beads. They've done it the 18 out of the last 20 quarters. The buy-aside is already running $81 to $82 billion in revenue expectations with a July guide north of $90 billion.

So the beat, dare I say, is relatively baked into the stock price. The problem is the stock hasn't cared. NVIDIA has traded down the day after five of the last seven earnings prints. And heading into this one, shares ran pretty hard. And just over the last seven straight winning sessions through last Thursday, about $900 billion in market cap before pulling back to around $224 that we're seeing today. Deutsche Bank says it's really hard to see new buyers chasing from this point here. And this is the frustration with NVIDIA shareholders right now. The fundamentals are about as good as it gets. Compute potentially sold out through 2027, according to Cantor Fitzgerald. Hyperscalers have collectively raised their CapEx plans to over $700 billion for this year. And CEO Judson Wong put a $1 trillion plus revenue target on just the Blackwell and Rubin chip platforms, not including the CPUs and the Grok chip. The stock though still trades roughly at 26 times calendar year 2027 earnings versus its own five-year average of 34 times, you can see on your screen, and peers roughly at 34 times as well. Bank of America says it's a 30% discount to the S&P 500

This is the world's most important AI company. Trading like the market just doesn't believe the growth will persist. So what actually breaks the pattern? It's shareholder returns. According to Bank of America, NVIDIA has only sent back roughly 47% of its free cashflow to shareholders compared to roughly 80% for its tech peers. That's a pretty big gap on your screen. So if Jensen Long gets more aggressive on buybacks, dividends, that opens the door to a whole new class of income-oriented investors, kind of buyers who have had no reason necessarily to own this stock until now. And that could be what finally closes that valuation gap that has frustrated so many people on our air, so many bulls all year, guys.