SOTS 2nd Hour: Nvidia Hits $4T, The Battle of the Kevins, Exclusive: Snap CEO 7/9/25

SPEAKER_1 (0:01)

Want to quickly create and execute trading strategies to help keep up with the markets? With Fidelity Trading Dashboard, you can access live data, advanced charting, portfolio insights and automated alerts, all on one screen. We streamlined the trading experience so you can build and place trades better. Your Fidelity Trading Dashboard is ready now for free. Visit fidelity.com/tradingdashboard.

Investing involves risk, including risk of loss. Fidelity Brokerage Services LLC, member NYSE SIPC.

SPEAKER_2 (0:31)

Introducing the new Dell AIPC, powered by the Intel Core Ultra Processor. It helps do your busy work for you, so you can fast forward through editing images, designing presentations, generating code, debugging code, summarizing meeting notes, finding files, managing your schedule, responding to Jim's long emails, leaving all the time in the world for the things you actually want to do. No offense, Jim. Get a new Dell AIPC starting at 699.99 at dell.com/ai-pc. How those ahead stay ahead.

Carl Quintanilla (1:02)

Good Wednesday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Leslie Picker and Mike Santoli live at Post 9 of the New York Stock Exchange. Sarah and David have the morning off. NASDAQ's up a full percent. That's a fresh all time high on the composite as Nvidia crosses the four trillion market cap level for the first time, although you can see backing off slightly. Treasuries relatively constructive here. The curve lower across the board. The 10-year back below 439 Today, Snap's CEO, Evan Spiegel, live from Sun Valley, will get his take on some new warnings about the ad market, the latest on the company's AI efforts and more. Plus, the battle to head the Fed. David Zervos and Jefferies will talk to us about new reporting around the top choices to replace Jerome Powell. Let's begin with the markets though. No Tech is clearly leading the charge higher. NASDAQ with a new record high, Nvidia, as we said, the first company to hit a $4 trillion valuation. Mike, we were talking with Cramer about the last big milestone at $3 trillion a couple years ago.

Mike Santoli (2:00)

It's pretty remarkable. And what's more remarkable to me isn't actually how the market is capitalizing this company. It's what underlies it, which means the free cash flow and the actual size of the business. Because this is not one of those things where the market is kind of looking deep into the future and saying this is going to be a massive deal. The rest of the industry is handing its free cash flow to Nvidia. Nvidia has a higher free cash flow yield than Microsoft, than Amazon, than the other competitors that used to actually be the cash cows because they're giving it all to Nvidia. Now, earnings estimates for the current year haven't really changed since Thanksgiving for Nvidia. But people got more certainty about next year. So I think that's an interesting story. Nvidia, by the way, only spends like $4-5 billion in CapEx a year. It's amazing. So that's why the market has decided, based purely on the numbers, not on hopes and dreams, that it's worth this number. Now, we never know what the actual real market cap is in real time. You don't really know the share count in real time. They have a buyback, a $50 billion buyback. They could be buying some in. Doesn't matter. It shows you in broad strokes why we got here. And I think that the reaffirmation of confidence in the AI trade has been probably the biggest single factor besides the realization that, at least it seems, the administration does not wish to undercut the economy with tariff policy.

Leslie Picker (3:20)

And your point about Nvidia being a taker of CapEx that others are spending as opposed to spending its own is a good one. And it begs the question about this flywheel effect that we've seen over the past few years with big tech, those who are spending more on CapEx, how much they're getting rewarded in the market for that AI spending. You look at Google, for example, and Apple, for example, there's been more dispersion, it seems like.

Mike Santoli (3:42)

Right, so the market's making an assessment of whether that spending is defensive, whether it's going to be productive, and whether it's going to be essentially squandered. I mentioned the free cash flow yields, Alphabet's got the highest, right? It still looks pretty cheap because there's not a lot of confidence of the durability of that free cash flow from the search business. So, look, the stuff's not cheap on any measure, but it does show you that, you know, the AI bull market has been the thing that bailed us out of macro uncertainty multiple times over the last almost three years.