13:56
THIS IS "BLOOMBERG BUSINESSWEEK DAILY," REPORTING FOR THE MAGAZINE THAT HELPS GLOBAL LEADERS TO STAY AHEAD WITH INSIGHT ON THE PEOPLE, COMPANIES, AND TRENDS SHAPING TODAY'S COMPLEX ECONOMY. PLUS GLOBAL BUSINESS, FINANCE, AND TECH NEWS AS IT HAPPENS. "BLOOMBERG BUSINESSWEEK DAILY" WITH CAROL MASSAR AND TIM STENOVEC LIVE ON BLOOMBERG RADIO, TELEVISION, AND BLOOMBERG ORIGINALS. PLATFORMS. THIS IS "BLOOMBERG BUSINESSWEEK DAILY" FOR FRIDAY, THE 13TH. TIM: IS SHE GOING TO SAY IT? I HAVE BEEN DOING WITH YOU FOR SIX YEARS.
A FEW FRIDAYS THE 13TH. SHE SAID IT. CAROL: FOR GOES BACK TO COLLEGE. I LIVED ON THE 13TH FLOOR BUT I DID NOT SAY IT WAS A 13TH FLOOR. CAME OFF THE ELEVATOR, PUT A SIGN-UP THAT WAS JUST -- SO EVERYONE KNEW YOU WERE STEPPING ONTO THE 13TH FLOOR. TIM: YOU LEARN SOMETHING NEW EVERY DAY. CAROL: THERE YOU GO. LOOKING AT A MARKET. INVESTORS ARE A LITTLE TIRED. WE ARE DOWN ABOUT 41 POINTS ON THE S&P 500. THE DOW IS DOWN ABOUT 23 POINTS. SOME SMALL POINTS MOVES. NASDAQ 100 CONTINUES TO PULL BACK A LITTLE BIT.
TIM: IS THE SOX. EVERYTHING WAS LOWER. NOW IT IS DOWN ABOUT 4%. STILL UNDER PRESSURE BUT OFF THE WORST LEVELS OF THE DAY. CAROL: WE GOT ANOTHER INFLATION PRINT. EASING A LITTLE BIT. MAYBE EASING CONCERN ABOUT AGGRESSIVE FED RATE HIKES BUT IT IS THE FOCUS ON THE SEMICONDUCTORS AND THE FOCUS ON A NAME LIKE NVIDIA, WHICH IS SOMETHING WE ARE GOING TO BE TALKING ABOUT AS WELL. WE WILL GET INTO THE MOST READ STORY ON THE BLOOMBERG, JENSEN HUANG'S LAST HOURS AS NVIDIA CEO. IT'S BEEN ALL AROUND. THERE'S A LOT OF PICK UP ON THIS STORY.
TIM: YOU JUST HAVE TO SEE IT TAX TO THE BELIEVE THAT HE'S BEEN CALLING HIMSELF IN RECENT DAYS. CAROL: NOT THE JENSEN HUANG WE HAVE SEEN IN PUBLIC FOR THE PAST FEW YEARS. A VERY DIFFERENT SIDE OF HIM BUT WE GET IT. IT IS STILL A KILLER STORY. GLOBAL EQUITY FUNDS DRAWING RECORD INFLOWS ACCORDING TO THE B OF A. WE WONDER HOW THAT NVIDIA STORY IS PLAYING OVERSEAS. OUR BUREAU CHIEF AND SEOUL IN A MOMENT. TIM: AND GLOBAL X ETF SAYS THE GLOBAL TRADE IS NOT DEAD.
MAYBE JUST SLEEPING. CAROL: WE WILL GET INTO IT. SOUNDS LIKE JENSEN. WE HAVE TO TALK ABOUT MICROSOFT. LONGEST OUTAGES. STILL WORKING ON IT. TIM: I'M THE ONLY PERSON NOT AFFECTED IN MY FAMILY BECAUSE I USE THE BLOOMBERG TERMINAL. WE DON'T USE OUTLOOK. WE HAVE A DIFFERENT SYSTEM. SO MANY COMPANIES RUN ON THIS TECHNOLOGY. THEY HAVE BEEN UNDER PRESSURE IN THE LAST 24 HOURS. UNPRODUCTIVE. CAROL: INCLUDING IN THE FINANCIAL SPACES. THEY SAY THEY ARE MAKING PROGRESS. WE WILL UNPACK THAT STORY.
LET'S GET AN UPDATE ON THE TRADING SESSION. HERE IS CHARLIE PELLETT. CHARLIE: HAPPY FRIDAY. FRIDAY THE 13TH. MICROSOFT SAID IT'S MAKING PROGRESS. SHARES UP BY ABOUT.2% ON A DAY WHEN STOCKS ARE SELLING OFF. NVIDIA DOWN ANOTHER 2.3%, WELL OFF SESSION LOWS ON NVIDIA. SOX DOWN BY 3.9%. S&P AS A BASELINE DOWN 41, DROP OF.5%. AGO. RIGHT NOW DOWN BY LESS THAN 1/10 OF 1%. DOW DROPPING BY 18 POINTS. NASDAQ LOWER BY 1%. NASDAQ 100 INDEX DOWN 1.4%. THE S&P 500 INDEX DOWN.5%. IT IS ON TRACK FOR A WEEKLY GAIN, LOOKING AT A POTENTIAL GAIN OF 2.4% FOR THE WEEK FOR THE S&P. SOX DOWN 3.9%.
10-YEAR AT 5.1 4% AFTER THIS MORNING'S INFLATION DATA. GOLD IS LITTLE CHANGED ON THE DAY COME UP JUST ABOUT $1.50. WEST TEXAS INTERMEDIATE CRUDE STRUGGLING FOR DIRECTION. BRENT, $95.92. UP BY ABOUT 1/10 OF 1%. NVIDIA ON TRACK TO NOT TO ITS WORST WEEKEND MORE THAN 18 MONTHS. AT LEAST 13 ANALYST COVERING THE CHIPMAKER HAVE DOWNGRADED THE SHARES THIS MONTH. RIGHT NOW DOWN BY 2.2%. NVIDIA'S BOARD IS SAID TO HAVE APPROACHED ARM CEO RENEE HAAS FOR A POTENTIAL SUCCESSOR TO JENSEN HUANG. THAT'S ACCORDING TO THE FT.
HAAS IS IN NVIDIA LOAN. STOCKS TURNING POSITIVE COME UP BY ONE POINT. S&P DOWN.5%. THAT IS A BLOOMBERG BUSINESS FLASH. THANK YOU'S -- CAROL: THE CHINESE COMPANY DOGGING NVIDIA PROCURED CHIPS THAT WERE INSTALLED IN A ACCORDING TO DOCUMENTS REVIEWED BY BLOOMBERG NEWS. TIM: AND JENSEN HUANG'S AFFAIR WITH ALICE HUANG LED TO -- WE'RE CURIOUS HOW THIS IS PLAYING OVERSEAS. CAROL: GLOBAL EQUITY FUNDS ARE TRACKING RECORD INFLOWS. INVESTOR MONEY HAS BEEN MOVING INCREASINGLY AROUND THE WORLD, NOT JUST THE UNITED STATES. WHAT A GLOBAL VIEW OF THAT STORY AND MORE IS CAP BARTON. -- KAT BARTON.
WE ARE DELIGHTED TO GET SOME TIME WITH YOU. OUR TIME FRAMES DON'T ALWAYS -- THE TIME DIFFERENCES WITHOUT HOW IS THE NVIDIA STORY OF PLAYING AROUND THE WORLD? KAT: IN SOUTH KOREA THEY LOVED JENSEN HUANG. THEY WERE SUCH BIG FANS. HE CAME TO SOUTH KOREA AND HAD THIS BIG SUMMIT WHERE HE SAT DOWN AND DRINK BEER AND ATE FRIED CHICKEN WITH SAMSUNG AND SK HYNIX. AND THEY ARE HUGE CUSTOMERS OR SUPPLIERS. NVIDIA IS THEIR BIGGEST CUSTOMER. JENSEN HAD THIS ROCK STAR WELCOME. PEOPLE WERE QUEUING OUTSIDE THE RESTAURANT TO CATCH A GLIMPSE OF HIM. THE LAST FEW DAYS SINCE THE STORY BROKE THE LOCAL MEDIA COVERAGE HAS BEEN REALLY DISAPPOINTED. PEOPLE ARE LIKE WE FEEL
PASSIONATELY LET DOWN. CAROL: DO THEY FEEL LIKE YOU SHOULD A STATE OF THE COMPANY? CAT: NO, BUT THEY FEEL LIKE A SENSE OF PERSONAL BETRAYAL. WHY DID HE DO THIS? WE LOVED HIM. THE CONCERN IS WHAT IS THE IMPACT ON SAMSUNG AND SK HYNIX. FOR NOW WE HAVE HAD THE MINISTER OF ICT COME OUT AND SAID EVERYTHING IS LOCKED IN. NO SUDDEN MOVEMENTS. IT WILL BE FINE. CAROL: ICT IS? CAT: INFORMATION AND COMMUNICATION TECHNOLOGY. THE GUY IN CHARGE OF THEIR SEMICONDUCTORS AND ALSO A DEPUTY PRIME MINISTER.
YES, DON'T WORRY. THE AGREEMENTS ARE SECURE. WE NOT EXPECTING ANY BIG CHANGES. OBVIOUSLY IT DEPENDS ON WHO THE NEXT NVIDIA LEADER IS. WHAT'S GOING TO CHANGE. TIM: TO WHAT EXTENT IS THE RELATIONSHIP THAT JENSEN HAD WITH THE LEADERS OF SK HYNIX AND THE LEADERS OF SAMSUNG AND THE LEADERS OF OTHER COMPANIES IN THE REGION -- TO WHAT EXTENT DOES THE NEXT CEO HAVE TO CONTINUE THOSE RELATIONSHIPS? WE TALK A LOT ABOUT THE FACT HE WAS THE AMBASSADOR TO AN ENTIRE TECHNOLOGY AND INDUSTRY. IT IS HARD TO IMAGINE ANYONE FILLING THAT PART OF ISSUES.
CAT: HE WAS SUCH A BIG PERSONALITY AND YOU REMEMBER WITH SAMSUNG ELECTRONICS, SK HYNIX, IT IS LIKE THESE BIG FAMILY-RUN -- TIM: CAN YOU EXPLAIN THE SIGNIFICANCE OF THOSE COMPANIES IN KOREA? CAT: THEY ARE HOW THE SOUTH KOREAN ECONOMY RUNS. THEY HAVE DOMINATED SINCE THE 1970'S AND THEY HAVE BEEN RUN -- WE ARE IN A THIRD-GENERATION. SAMSUNG IS THIRD-GENERATION AND THEY ARE RUNNING THESE AMAZING COMPANIES. WITH SAMSUNG AND SK, THEY HAVE COME INTO THEIR OWN IN THE LAST FEW WITH THE SEMICONDUCTOR AI PLAY. THE PERSONAL RELATIONSHIPS REALLY MATTER. WHEN YOU ARE DOING BUSINESS IN ASIA, CUSTOMER RELATIONSHIPS MATTER. THE NEW LEADER WILL HAVE TO COME
IN AND REBUILD THAT. IT IS A TINY BIT EMBARRASSING FOR SAMSUNG AND SK THAT THEY WERE SO CLOSE TO THIS GUY WHO HAS HAD TO STEP DOWN. WE WILL HAVE TO RECONFIGURE. I THINK THERE'S A BIT OF BRIDGE BUILDING. NOT THE LEAST WITH CHINA AND THE SIGNIFICANCE THEY ARE. CAROL: THE GLOBAL AI RACE, SAMSUNG AND SEMICONDUCTOR, SK HYNIX MAKE UP HALF THE KOSPI. MANY TIMES THERE IS CONCERNS IT PLAYS OUT ON THE KOSPI. THE GLOBAL AI RACE, CHINA WAS TO EXPAND COOPERATION IN EMERGING AREAS, INCLUDING AI AND BIOMEDICINE. THE FORD MINISTERS WERE MEETING IN BEIJING. -- FOREIGN MINISTERS WERE MEETING IN BEIJING. HOW IS EVERYBODY LOOKING?
WE ARE SO U.S. CENTRIC HERE IN THE BIG U.S. PLAYERS AND WE UNDERSTAND IT'S A RACE BETWEEN U.S. AND CHINA. WHAT IS THE PERSPECTIVE THAT YOU GUYS DO WHEN YOU THINK ABOUT THE AI AND GLOBAL RACE? CAT: SOUTH KOREA IS ANY UNIQUE POSITION. THEY ARE ONE OF THE ONLY PLACES IN THE WORLD THAT IS ALREADY MAKING SERIOUS, SERIOUS MONEY FROM THIS. IN THE GLOBAL GOLD RUSH THEY ARE SELLING SHOVELS, THESE CHIPS. FOR THEM, THEY WANT TO KEEP EVERYONE HAPPY. IN SOUTH KOREA IT'S EXISTENTIAL, THE U.S. RELATIONSHIP. IT IS THEIR SECURITY. THEY ARE COMMITTED TO WASHINGTON. WHATEVER ADMINISTRATION IT IS, THEY WILL TRY TO MAINTAIN THAT RELATIONSHIP. THERE ARE 27,000 U.S. TROOPS TO PROTECT THEM AGAINST THE NUCLEAR ARMED NORTH.
THAT IS A FUNDAMENTAL THING. ECONOMICALLY, GEOPOLITICALLY. THEY ARE NOT -- THIS ADMINISTRATION IS OPEN TO TRADE. CHINA IS A TRAITOR -- MAJOR TRADING PARTNER FOR THEM. THEY SEE THE AI TRADE FROM A DIFFERENT PERSPECTIVE. IT IS 50% OF THE KOSPI. IT IS A HUGE DEAL FOR THEM. THEY NEED THIS TO CONTINUE. THEY ARE BANKING ON THE EXCESS TAX REVENUES FOR THE NEXT MULTIPLE YEARS. THE GOVERNMENT IS PLANNING TO HAVE A FUTURE DEFENSE FUND AND HOW THEY SPEND THIS TO BRING SOCIETY TOGETHER. THIS IS A HUGE DEAL FOR THEM. IT IS A NATIONAL STRATEGIC ASSET, SEMICONDUCTORS. THEY BELIEVE HE CAN TRANSFORM
THEIR COUNTRY'S FATE AND DO NOT WANT TO SEE IT CRUSHED BY A POWER BATTLE BETWEEN WASHINGTON AND BEIJING. TIM: I WANT TO END ON BEIJING. YOU MENTIONED NORTH KOREA. YOU INTIMATED CHINA AND THE COMPLICATED RELATIONSHIP BETWEEN KOREA AND CHINA. THE SIGNIFICANCE -- WE DON'T KNOW THE STORY OF ALICE HUANG. CHINA IS DENYING SHE'S A SPY. SHE IS ALLEGED TO HAVE BEEN OR TO BE A SPY FOR CHINA. HOW DOES THAT COMPLICATE FACTORS WITH THE JENSEN STORY? CAT: IT IS TRICKY. THERE ARE SO MANY RESTRICTIONS ON WHAT CAN GO TO CHINA. THE MOST HIGH-END CHIPS.
SAMSUNG AND SK ABIDE BY THAT BECAUSE OF THEIR RELATIONSHIP WITH THE WAS BEING SO CRUCIAL FOR THEM. IT'S DEFINITELY A COMPLICATING FACTOR IF YOU THINK NVIDIA HAS POTENTIALLY BEEN -- WHO KNOWS WHAT COULD HAVE HAPPENED IN THAT SPHERE IS WITH THE U.S. THAT IS THE CASE. CAROL: DIFF THAT WAS THE CASE, WILL THAT TARNISHED NVIDIA'S VIEW NO MATTER WHO TAKES OVER? CAT: THEY COULD PROBABLY -- IF THE COMPANY WERE CAREFUL ABOUT HOW THEY MANAGED IT, YOU COULD CLEARLY ARGUE THIS WAS A PERSONAL RATHER THAN COMPANY FAILURE, ALTHOUGH THERE MIGHT BE SOME NEED TO EXPLAIN. IT WOULD BE PROBLEMATIC FOR SAMSUNG AND SK WHO HAVE TO BE VERY CAREFUL. THEY HAVE OTHER CUSTOMERS AND OTHER INTERESTS THEY HAVE TO LOOK OUT FOR.
NVIDIA HAS BEEN SO IMPORTANT FOR THEIR STRATOSPHERIC GROWTH IN THE LAST FEW YEARS. IT'S GOING TO BE A VERY DIFFICULT RECOVERY PERIOD. CAROL: WE ARE GLAD WE COULD CARVE OUT SOME TIME WITH YOU. COME BACK SOON. CAT BARTON. WE WILL WATCH NVIDIA AS THE HEADLINES CONTINUE AND WE WILL HAVE MORE ON JENSEN HUANG'S LAST HOURS AS CEO IN A MOMENT. WE HAVE ANOTHER NAME ON THE RADAR. TIM: MICROSOFT MAKING EFFORTS TO RESTORE ITS FLAGSHIP OUTLOOK. WE HAD TO THE BLOOMBERG SEATTLE BUREAU AND MATT DAY. ARE WE BACK? MATT: THINGS SHIFTED INTO RECOVERY MODE THIS MORNING. MICROSOFT SEEMED TO NOT KNOW WHAT THE ISSUE WAS IN THE EARLY RECOVERY EFFORTS. NOW THEY SAY THEY ARE MOSTLY BACK AND THEY ARE BRINGING THING BACK IN STAGES THAT WILL NOT
CAUSE OTHER ISSUES. I HEARD FROM A CONTACT AT A SEATTLE COMPANY THEY ARE STILL HAVING PROBLEMS WITH OUTLOOK. THERE'S A LOT OF BACKLOG OUT THERE. WE SHOULD EXPECT EMAILS TO START ROLLING IN TODAY. TIM: WHY DID THIS HAPPEN? MATT: THE VAGUE VERBIAGE FROM MICROSOFT IS THERE WAS A NETWORK CONFIGURATION CHANGE THAT THEY THINK CAUSED THIS. WE UNDERSTAND THAT THEY TRIED TO RUN EXCHANGE, THE BACKEND FOR A LOT OF THE EMAIL SERVICES THAT THEY OFFER AND IT CRIPPLED THE SERVER AND USING ALL OF ITS WORST POWER TO MAKE THE THING UNUSABLE AND WHY THAT WAS THE CASE TOOK THEM QUITE A WHILE. CAROL: IS THAT BAFFLING?
PERPLEXING? THIS IS A COMPANY THAT TONS OF ENGINEERS. THEY UNDERSTAND THE STUFF. TIM: THEY BUILT IT FROM THE GROUND UP. CAROL: WHY DID IT HAPPEN? COULD IT HAVE BEEN SOMETHING THEY COULD HAVE CAUGHT BECAUSE IT BECAME A BIG IMPACT? MATT: BEST PRACTICES FOR CLOUD SERVICES, IF YOU LET ANY SORT OF CHANGE, DO IT IN A CONFINED AREA. YOU WAIT TO SEE IF ANYTHING BREAKS AND THEN ROLL IT UP BROADLY OVER TIME. THAT'S A QUESTION THEY HAVE TO ANSWER, HOW THIS SEEMED TO GO GLOBAL VERY QUICKLY OVER THE COURSE OF A COUPLE OF HOURS YESTERDAY AFTERNOON NEW YORK TIME. THEN IT TOOK THEM SO LONG TO FIX THIS. IT SEEMS LIKE EVERY YEAR WE HAVE HAD A VERSION OF THESE. AWS LAST YEAR, CROWDSTRIKE A
COUPLE OF YEARS AGO. YOU THINK ONLINE HE KNOWS SHOULD BE RELATIVELY SOLVED PROBLEM. I KNOW THAT'S WAY TOO SIMPLE FOR OUR PALS AT MICROSOFT. THIS MORE TECHNICAL STUFF BENEATH THE COVERS BUT UNACCEPTABLE IN THE EYES A LOT OF CUSTOMERS. TIM: IT SHOWS HOW FRAGILE EVERYTHING IS. -- I HAVE FRIENDS WHO WORK IN REAL ESTATE AND FINANCE WHO WEREN'T ABLE TO DO WORK AND WENT TO THE GYM YESTERDAY, A BROTHER IN SCHOOL WHO WASN'T ABLE TO DO WORK, PEOPLE WEREN'T GETTING EMAILS, THEY WERE SUPPOSED TO HAVE EMAILS AND COULD NOT ACTUALLY MEET, THIS IS SO BIG. CAN YOU EXPLAIN THE WAY MICROSOFT TOUCHES SO MANY COMPANIES AROUND THE WORLD? IN OUR PERSONAL LIVES, A LOT OF FOLKS USE GMAIL. THERE ARE THOUSANDS OF ALTERNATIVES. BUT FOR THE CORPORATE WORLD,
MICROSOFT IS THE BIGGEST GAME IN TOWN. 450 MILLION USERS OF THEIR M 300 65 BUNDLE. IT IS JUST PICKUPS, IT IS A HUGE DEAL. THERE IS OF THE QUIP THAT CLOUD IS REALLY SOMEBODY ELSE'S COMPUTER. IN THIS CASE, THAT CLOUD IS MICROSOFT COMPUTER. THE EXCHANGE AND ADMINISTRATORS, YOU REMEMBER THAT JOB, USED TO RUN IN THE BACK ROOM. THAT HAS DISAPPEARED IN FAVOR OF CENTRALIZED OPERATIONS LIKE MICROSOFT. THIS IS A PROBLEM OF THAT. SO MANY EGGS IN ONE BASKET THAT IS MAINTAINED, BUT THERE ARE DAYS LIKE YESTERDAY. CAROL: I'M NOT SURE WHETHER IT
IS MORE PERPLEXING -- THEY KNOW THE PROBLEM, RIGHT? IT SEEMS LIKE THEY FIGURED IT OUT. ONE OF THE ISSUES WAS IT TOOK A WHILE TO DO SO. I WAS WATCHING THE UPDATES ROLLOUT HOURLY THROUGH THE AFTERNOON AND NIGHT YESTERDAY. A BUNCH OF FALSE STARTS WHERE THEY PROPOSED A FIX AND COULD NOT FIGURE OUT IF IT WAS WORKING BECAUSE THAT SERVER WAS PARALYZED, TOO. THEY PROMISED US A FULL AFTER ACTION REPORT TO GIVE FOLKS DETAILS. BUT WE ARE SCRATCHING OUR HEADS FOR NOW. CAROL: WHAT IS TOP OF MIND WHEN WE COME OUT ON THE OTHERS THIS FOR THIS COMPANY?
THIS IS A COMPANY WHO UNDERSTANDS THIS WORLD, AND I UNDERSTAND PROBLEMS HAPPEN, THAT IS THE DIGITAL WORLD. WHAT WOULD BE THE NUMBER ONE QUESTION YOU WOULD ASK THEM? YOU START TO WONDER HOW MANY CAN THEY TAKE? THESE -- IT IS NOT JUST THESE INCIDENTS, THEY'VE HAD SECURITY INCIDENTS. GO BACK A NUMBER OF YEARS, ISSUES WITH UNAUTHORIZED FOLKS GETTING ACCESS TO GOVERNMENT EMAIL SYSTEMS, ALL MAINTAINED BY MICROSOFT. THE STOCK HASN'T MOVED A WHOLE LOT TODAY. THERE IS A BIG MOAT AROUND MICROSOFT OFFICE GENERALLY. AS THESE EVENTS PILE UP, YOU WONDER WHEN BIG CORPORATE I.T.
BUYERS ARE GOING TO MAKE OTHER CHOICES. THERE IS NOT A SUITE AS COMPREHENSIVE AS MICROSOFT, BUT THE BIG QUESTION IS WHAT ARE YOU DOING TO PROVE THE VALUE OF THIS SYSTEM THAT IS SO RELIABLE? IS THERE AN OPPORTUNITY THERE FOR COMPETITORS? CAROL: MICROSOFT SHARES WERE DOWN AS MUCH AS ONE POINT 8%. THEY ARE UP ABOUT ONE THIRD OF ONE PERCENT TODAY. THANK YOU SO MUCH. THAT IS MATT DAY, BLOOMBERG NEWS TECHNOLOGY REPORTER. TIM: ACROSS THE BLOOMBERG TERMINAL, THREE PEOPLE FAMILIAR WITH THE MATTER THAT KEVIN HASSETT IS EXPECTED TO DEPART THE WHITE HOUSE IN THE COMING WEEKS.
THIS IS BLOOMBERG. ♪ CHARLIE: IT'S 2:21 P.M. ON WALL STREET. WE CHECKED MARKETS ALL DAY LONG. THE DOW JONES INDUSTRIAL AVERAGE SWINGING BETWEEN GAINS AND LOSSES. RIGHT NOW LOOKING AT A DECLINE OF -- FLAT ON THE DAY FOR THE DOW. S&P 500 INDEX DOWN.50%. CHIP NAMES HIT HARD. MASTEC 100 INDEX DOWN 1.2%.
THE PHILADELPHIA STOCK EXCHANGE SEMICONDUCTOR INDEX DOWN BY ANOTHER 3.4% OFF OF SESSION LOWS. NVIDIA DOWN AGAIN. SHARES TRADING LOWER. NVIDIA DOWN BY JUST ABOUT 2.1%. THE 10 YEAR CURRENTLY YIELDING 5.15% HEADING INTO THE WEEKEND. 30 YEAR, 5.47 PERCENT. THE TWO-YEAR, FOUR POINT 86%. GOLD, LITTLE CHANGE. WEST TEXAS INTERMEDIATE CRUDE DOWN.20%. A BARREL OF BRENT 95.79, DOWN UNDER.10 PERCENT. NVIDIA'S BOARD HAS REPORTEDLY APPROACHED RENEE HOSS IN HIS SEARCH FOR A POTENTIAL SUCCESSOR TO JENSEN HUANG.
SHARES DOWN BY 4.4 PERCENT. ISABELLE LEE CAUGHT UP WITH THE PERSHING SQUARE CAP MANAGEMENT CEO AND SAID IT IS SAD TO SEE JENSEN HUANG DEPART THE COMPANY HE COFOUNDED. AMAZING CEO, SET TO SEE HIM LEAVE. NVIDIA WILL SURVIVE. THE COMPANY WILL DO GREAT. CAPITAL CEO BILL SPEAKING WITH BLOOMBERG. SHARES DOWN BY 2.8 PERCENT. STOCKS LOWER, S&P 500 DOWN FIVE.1%. PHILADELPHIA STOCK EXCHANGE TRADING LOWER, DOWN BY 3.5%. I'M CHARLIE PELLETT.
CAROL AND TIM. CAROL: THE MOST READ STORY ON THE BLOOMBERG TODAY, JENSEN HUANG'S LAST HOURS AS THE CEO OF NVIDIA, HOW IT EVENTUALLY LED TO HIS GETTING TO THAT POINT, BECOMING THE FORMER CEO. BASICALLY HOW HE RESIGNED TO RESIGNING. IT IS A BLOOMBERG EXCLUSIVE THAT HAS BEEN PICKED UP BY MANY ON SOCIAL. HERE TO TELL US ABOUT IT, IAN KING IN THE BLOOMBERG SAN FRANCISCO NEWS BUREAU. THANK YOU FOR JOINING US. I KNOW YOU HAD A BUSY WEEK. WHATEVER, I DON'T CARE, AND WORSE. THESE ARE UNUSUAL WORDS FROM AN INDIVIDUAL WE USUALLY SEE BEING VERY DIRECT, FULL OF ENERGY, CHARISMATIC, A TAKE CHARGE KIND OF GUY.
WHAT LED TO THE GIVING UP OF JENSEN HUANG? YOU GUYS HAVE INCREDIBLE REPORTING HERE. THE SITUATION HE PUT HIMSELF IN AND THE SITUATION THEY ARE FORCED TO DEAL WITH WAS SUCH THAT THERE WAS NO CHOICE. THERE WERE RUMORS AND SPECULATION OF ADMISSION OF AN AFFAIR WITH SOMEBODY WHO WAS A CUSTOMER. WHEN YOU FACTOR IN AN AFFAIR WITH SOMEONE WHO ACTUALLY WORKS FOR THE COMPANY, SOMETHING THAT IS EXPLICITLY NOT PERMISSIBLE UNDER THE COMPANY STATED RULES, THEY WERE IN A POSITION WHERE THEY HAD NO CHOICE BUT TO BRING THIS TO HIM. HE HAD NO CHOICE, THERE WAS NO WAY AROUND IT.
TIM: CAN YOU DESCRIBE, AND YOU DO IT IN THE PIECE YOU WROTE SO WELL WITH JAKE BENNETT, THE THREATS THAT EMERGED IN THE LAST FEW DAYS, THE DISCUSSIONS HE HAD WITH CONFIDENCE AND MEMBERS OF THE BOARD, AND HIS DEMEANOR, THE WAY HE WAS TALKING, VERSUS THE JENSEN HUANG THAT FOR SO MANY YEARS YOU COVERED, THIS PERSON WHO BECAME KNOWN AS THE CENTRAL BANKER OF THE AI INDUSTRY. WE HAVE ALL SEEN HIM ON STAGE, AT EVENTS, ON TV, APPEARING WITH THE PRESIDENT, AND THERE WAS NOTHING APART FROM ABSOLUTE CONTROL OF HIMSELF AND THE MESSAGE. THE BRILLIANCE, THE HUMOR, CHARISMA, CONFIDENCE, AND ABSOLUTE DRIVE TOWARDS THE SAME GOAL. AND WHAT ACCORDING TO OUR REPORTING HAPPENED IN THE LAST FEW DAYS IS HE TRIED TO CAUTERIZE THE WOUND'S, ACCEPT
RESPONSIBILITY. IN HIS LETTER INTERNALLY, HE TOOK RESPONSIBILITY FOR HIS ACTIONS AND APOLOGIZED. BUT IN THE END, THAT WASN'T ENOUGH. HE WASN'T ABLE TO REMAIN IN CONTROL. HE WAS REDUCED TO BECOMING SELF-CRITICAL, TO RESIGNATION. CAROL: IT CERTAINLY SPEAKS TO HIS STATE OF MIND. ONE CAN UNDERSTAND WHY. I'M ALSO CURIOUS AS YOU REPORTED THIS OUT, HOW CONFLICT AT BOARD WAS -- HOW CONFLICTED THE BOARD WAS? IT WAS HIS BOARD, AND ANYONE WHO HAD BEEN AT THE COMPANY A LONG TIME ONLY KNEW JENSEN HUANG AS
CEO OF THE COMPANY. SEVERAL MEMBERS OF THAT BOARD HAVE LITERALLY BEEN ON THE BOARD FOR THREE DECADES. THIS IS NOT A BOARD OF PEOPLE WHO HAVE BEEN BROUGHT IN TO HOLD HIS FEET TO THE FIRE AND TO CONTROL A COMPANY THAT WAS IN TROUBLE. EVERYONE HAS BEEN ALONG FOR THE RIDE, WHETHER IT IS EMPLOYEES, BOARD MEMBERS, THEY HAVE ALL DONE VERY WELL, THEY HAVE NO REASON TO BE EXPOSING HIM TO SEVERE SCRUTINY BECAUSE THIS COMPANY HAS DONE EXTREMELY WELL. I THINK WHAT MATTERS NOW THAT HE'S NO LONGER A PART OF THAT COMPANY IS HOW THE BOARD WILL PROCEED AND HOW THE PEOPLE WHO USED TO WORK FOR HIM VERY CLOSELY RESPOND TO THIS.
WHETHER THEY GROW, WHETHER THEY SHOW UP IN A WAY THEY WEREN'T PREVIOUSLY ALLOWED TO. WHETHER THEY CONTINUE TO BE THE WORLD CHAMPION ENGINEERS, BECAUSE THEY ARE. THAT IS GOING TO DETERMINE WHAT NVIDIA'S FUTURE LOOKS LIKE. TIM: I WANT TO TALK ABOUT MORE ABOUT THEIR FUTURE IN A MINUTE, BUT JENSEN HUANG'S FUTURE, HE'S HIRED A HIGH-POWERED LAW FIRM AT THIS POINT. WHAT HAPPENS NEXT FOR HIM? BECAUSE OF THE NATURE OF SOME OF THE REPORTS, THE NATURE OF THE INTEREST THAT HAS BEEN TAKEN IN THAT POLITICALLY, AND FROM A LEGAL PERSPECTIVE, HE'S GOING TO PROBABLY FIND HIMSELF IN FRONT OF COMMITTEES, IN CONGRESS, OR FIND HIMSELF FACING POTENTIAL SUBPOENAS AND LEGAL ACTION. HE'S GOING TO HAVE TO NAVIGATE
THAT PROCESS. THAT IS PERSONALLY IMPORTANT FOR HIM, WHETHER HE EVEN HAS A FUTURE IN PUBLIC LIFE OR IN PROFESSIONAL LIFE. HE'S GOING TO HAVE TO REACH AN ARRANGEMENT OF SOME KIND WITH HIS FAMILY WITH HOW THEY FEEL AND HOW THEY ARE GOING TO REACT TO IT. ALL OF THESE THINGS ARE IMPORTANT. ALSO IN THAT PROCESS, WILL PEOPLE WHO CURRENTLY WORK FOR NVIDIA BE EXPOSED AS HAVING TAKEN ACTIONS THAT WERE NOT AGAINST THE INTERESTS OF AMERICA OR THE COMPANY? CAROL: THAT IS WHERE I WANTED TO GO. ANY FEEL FROM YOUR REPORTING THAT IN TERMS OF THE SCOPE OF THE PEOPLE WHO MIGHT HAVE BEEN AWARE OF JENSEN HUANG'S INDISCRETIONS, OR MIGHT HAVE BEEN AWARE OF ANY CONCERNS AROUND NVIDIA'S RELATIONSHIP WITH MEGAN SPEED?
I THINK THE ONLY REPORTING WE HAVE DONE THAT WE HAVE PUBLISHED HAS CONCERNED THE GENERAL AND HIS POTENTIAL ROLE WITH OVERSEEING OR TRYING TO BROKER A RELIEF TO TRY TO LESSEN THE SCRUTINY THAT COMPANY WITH BEING PLACED UNDER. THAT IS OUR REPORTING AND WHAT WETIM: IT IS -- ONE THING THAT CAME ACROSS IN YOUR PIECE WAS THE DISTINCTION BETWEEN THIS MAN WHO'S BEEN TRAVELING AROUND THE WORLD ON BEHALF OF THIS COMPANY, ON BEHALF OF THE UNITED STATES AND ON BEHALF OF AN ENTIRE LAYER OF TECHNOLOGY THAT ASSERTED -- THAT IS SORT OF UNDERGIRDING THE FUTURE OF THE GLOBAL ECONOMY. A LOT OF PEOPLE NOW HAVE A DIFFICULT TIME UNDERSTANDING THE DEVELOPMENT OF THAT WITHOUT HIM.
CAN YOU HELP US MAKE SENSE OF THAT? IAN: WHEN A BAND LOSES ITS LEAD SINGER, PEOPLE SAY THE BAND CANNOT GO ON. THAT IS THE ONLY ANALOGY I CAN THINK OF. VERY FEW BANDS ARE ABLE TO DO THAT, ABLE TO REPLACE WHOEVER IS THE PERSON UP THERE ON THE MIC AND THAT HAS BEEN HIM. WHETHER IT IS LOBBYING POLITICIANS, CAJOLING OTHER COMPANIES, PUBLICLY SHOWING UP AT EVENTS AND SAYING HERE IS SOME MONEY. WHETHER IT IS HIS OWN EVENTS. HIS RESPONSIVENESS TO WHATEVER THE ZEITGEIST, WHICH DIRECTION THE WIND WAS BLOWING IN TERMS OF PUBLIC OPINION IN TERMS OF THE INDUSTRY'S OPINION ABOUT WHERE AI HAS BEEN GOING, HE'S THE PERSON EVERYONE TURNED TO.
HE'S NOT IN A POSITION TO DO THAT ANYMORE. IS IT A GOOD THING? WE WILL SEE. GOING FORWARD I MORE FOCUSED ON HOW THE COMPANY RESPONSE. HOW THESE PEOPLE REACT. CAROL: I AGREE. NOW WHAT? SPEAKING OF NOW WHAT, THE FINANCIAL TIMES IS TALKING ABOUT THE POSSIBILITY OF RENEE HAAS WHO SPENT TIME.AT NVIDIA -- SPENT TIME AT NVIDIA. TIM: THAT SHOULD NOT SURPRISE PEOPLE. CAROL: YOU ARE RIGHT. THE NAMES ARE KICKED AROUND UNTIL THEY ARE NOT BASICALLY. I THINK ABOUT -- WE HAD ON CAT BARTON FROM BLOOMBERG NEWS AND -- IN SEOUL, SOUTH KOREA.
JENSEN'S LOOKED AT BY A STAR. SO CRUCIAL TO THE GLOBAL CHIP STORY AND HOW JENSEN MET WITH THEM, HAVE A WITH THEM -- HAD RELATIONSHIPS WITH THEM AND THAT IS IMPORTANT TO ANY ASIAN COMPANY. YOU HAVE TO WONDER WHAT HAPPENS NEXT. CAN THERE BE SOMEBODY -- IS IT RENEE HAAS? HOW DO YOU THINK ABOUT WHO NEEDS TO BE THE NEXT LEADER OF NVIDIA? IAN: IF HIS RELATIONSHIPS WITH TSMC -- WE KNOW HE WAS A FRIEND OR CONFIDENT OF LAURA'S CHANG. IF THE RELATIONSHIP WITH TSMC WENT THROUGH HIM, IF THE RELATIONSHIP WITH SAMSUNG AND SK WENT THROUGH HIM -- I HAVE BEEN IN A ROOM WITH THE LEADERS OF THOSE AND JENSEN AND SEEN THEM INTERACT. IT IS CLEAR THERE WAS A RELATIONSHIP AND HE WAS THE FRONT MAN. HOW QUICKLY NEW RELATIONSHIPS CAN BE FORGED OR NEED TO BE FORGED IS GOING TO BE PROBABLY
ONE OF THE TOP PRIORITIES OF WHOEVER THEY BRING IN TO REPLACE HIM OR FOR COLETTE KRESS AND THE TEAM PICKING UP THE PIECES, IT'S IN EVERYONE'S INTEREST. NVIDIA IS STILL THE KING WHO HAS THE BEST PRODUCTS TO STAY WORKING WITH THEM FOR THE TIME BEING. THEY HAVE TO KEEP PROVING IT. THEY HAVE TO KEEP EARNING IT. THERE IS NO SALESMAN FOR THEM RIGHT NOW. TIM: THERE IS STILL ONLY ONE SELL RATING ON NVIDIA TRACKED BY BLOOMBERG. WHAT IS THE BULL CASE IN RECENT DAYS THAT STILL EXISTS FOR NVIDIA?
IAN: JENSEN DID NOT DESIGN THE CHIPS. JENSEN DID NOT INVENT THE OPERATING SYSTEM. JENSEN IS NOT THE PERSON WHO HAS BUILT THE DATA CENTERS. JENSEN DID NOT DESIGN THE RACKS OF SERVERS. HE WAS A FRONT MAN FOR THE ROLLOUT BUT THERE MUST BE A COMPANY. THE ENGINEERS AT GOOGLE AND MICROSOFT ARE NOT IDIOTS. THEY WOULD NOT BE BUYING NVIDIA PRODUCTS UNLESS NVIDIA PRODUCTS WERE THE BEST. THIS IS NOT A DEFAULT STATUS. RIGHT NOW AND PROBABLY FOR SOME TIME TO COME NVIDIA WILL HAVE THE BEST PRODUCTS OUT THERE.
HOW THE ENGINEERS REACT TO THE CHALLENGE THEY ARE FACING WILL DETERMINE THAT. CAROL: WE TALKED TO IAN FOR A LOT OF REASONS. HE'S IN THE ROOM WITH JENSEN AND THAT HAS A TMC, ALL THE KEY PLAYERS. THANK YOU SO MUCH. ♪ CHARLIE: IT IS 2:40 ON WALL STREET. THE DOW HIRED. LITTLE CHANGED. UNDER 1/10 OF 1% BUT THE AVERAGE REVERSING EARLIER LOSSES. UP BY 13 POINTS. THE S&P 500 INDEX HIGHER -- LOWER BY.5%. DOWN 37%7 POINTS. NASDAQ DOWN.9%. NASDAQ 100 DOWN 1.3%. THE PHILADELPHIA SEMICONDUCTOR INDEX IS LOWER BY 3.7%.
10-YEAR, 5.14% RIGHT NOW. GOAL LITTLE CHANGED. -- GOLD LITTLE CHANGED RIGHT NOW. EVERY RETREAT FOR CRUDE. WTI DOWN.2%., BRENT $95.77. NVIDIA LOWER AGAIN TODAY, DOWN 2.2% RIGHT NOW, OFF SESSION LOWS BUT HIT BY WORRIES ABOUT ITS FUTURE AFTER JENSEN HUANG'S OUSTER. WE HAVE BARCLAYS REPAIRING SOME JOB CUTS, ROUGHLY 200 POSITIONS ACROSS ITS INVESTMENT BANK BEGINNING NEXT WEEK. ADR DOWN BY JUST ABOUT 1/10 OF 1%. BARCLAYS WILL BEGIN CUTTING JOBS OF VARYING SENIORITY IN NEW YORK AND LONDON AS EARLY AS TUESDAY.
ASTRAZENECA IS CUTTING ABOUT 600 JOBS FROM ITS RESPIRATORY AND COMMERCIAL TEAMS IN THE U.S. AS PART OF HIS COST-SAVING PROGRAM. ASTRAZENECA UP BY.3%. DOW INDUSTRIALS UP TO POINTS RIGHT NOW. THE SOX IS DOWN 3.7%. THAT IS A BLOOMBERG BUSINESS FLASH. CAROL: THANK YOU SO MUCH. GOLDMAN SACHS STRATEGISTS ARE BULLISH ON U.S. STOCKS 427. EVERYONE IS PUTTING OUT THEIR OUTLOOKS. TIM: DID ANYONE SEE THE NVIDIA THING COMING? CAROL: THERE WAS. TIM: THAT ONE GUY. WASN'T IT AT A YOUNG INVESTOR?
SOMEONE IN THE NEWSROOM. MOST PEOPLE, NOT SO MUCH. GOLDMAN IS OUT. THERE S&P 500 PREDICTION, THEY SAY IT WILL ADVANCE AFTER A SELLOFF IN THE BIGGEST TECH COMPANIES LEFT THEIR VALUATIONS HISTORICALLY CHEAP. ONE THING THEY ARE HIGHLIGHTING IS CHEAPER HYPERSCALER VALUATIONS. WE SEE TECHNOLOGY AND THE HYPERSCALERS AS RELATIVELY DEFENSIVE. THE BIGGEST COMPANIES HAVE TURNED TO CASH FLOW NEGATIVE BUT BALANCE SHEETS MEASURES SUCH AS NET DEBT AND EQUITY REMAIN HEALTHY. TIM: I WANT TO BRING IN LIS AGOSTO. THE NVIDIA STORY HAS BEEN BIGGER THAN JUST NVIDIA. CERTAINLY CHIP STOCKS THIS WEEK
AND WE ARE SEEING THAT PLAY OUT IN THE MARKET TODAY. HOW WOULD YOU DESCRIBE WHAT YOU HAVE SEEN IN TERMS OF INVESTOR ACTIVITY AROUND THIS NARRATIVE THIS WEEK? LIS: IF WE THINK THROUGH THE LONGER-TERM VISION WHERE WE STAND FIRM ON, A LITTLE BIT OF NOISE, LITTLE CONCERN AND RIGHTFULLY SO. QUESTIONS AROUND MONETIZATION AND REVENUE GROWTH BUT ONE PARTICULAR PERSON DOES NOT DEFINE NVIDIA AND NVIDIA DOES NOT DEFINE THE BROADER ECOSYSTEM. IT IS ONE OF THE THINGS WE HAVE BEEN PAYING ATTENTION TO, HOW BROAD THE ECOSYSTEM ACTUALLY IS AND TO SOME EXTENT UNDERAPPRECIATED.
THE APPLICATIONS WE WOULD EXPECT TO SEE, THE INFRASTRUCTURE AND RESOURCES THAT UNDERPIN ALL OF THAT IS WHAT WE ARE PAYING ATTENTION TO NOW. THE STORY IS UNCHANGED LARGELY. CAROL: NOTHING HAS CHANGED WITH JENSEN HUANG OUT? HE IS THE CENTRAL BANKER TO THE AI WORLD. HE IS THE CHIEF CHEERLEADER AND HAS BEEN. IF YOU THINK ABOUT WHOSE UNDERPINNING THIS IN SO MANY WAYS, NOT JUST CHIPS BUT THERE IS INVESTMENTS IN OTHER COMPANIES THAT ARE PART OF THAT AI SUPPLY CHAIN OR PART OF THAT INFRASTRUCTURE BUILD. YOU REALLY DON'T THINK THERE'S THAT MUCH OF A DIFFERENCE? LIS: NOT REALLY. IF WE THINK REVENUE-WISE FOR LONGER-TERM, LARGELY UNCHANGED.
CAROL: WHAT IS LONGER-TERM FOR YOU GUYS? LIS: THE NEXT YEAR OR SO. FROM THERE WE DON'T EXPECT TOO MUCH CHANGE IN TERMS OF THEIR ROLE IN THE INDUSTRY. WE MIGHT HAVE QUESTIONS AS TO HOW THAT MIGHT PLAY OUT IN THE NEXT FEW WEEKS AND MONTHS. EVEN EARNINGS IN THE NEXT WEEK BUT AS WE THINK THROUGH WHAT THAT MIGHT LOOK LIKE, THE REVENUE VISIBILITY IS REALLY STRONG AND NOT NECESSARILY SOMETHING WE WOULD POTENTIALLY REVISIT OUR CONVICTION AROUND SEMICONDUCTORS AND AI. IT -- IT IS NOT GOING TO CHANGE HOW MUCH YOU AND I USE AI.
CAROL: DOWN ABOUT 3.7 PERCENT. WE HAVE TALKED ABOUT IF YOU GET IT TO LOAD. IT WAS DOWN MORE. BUT I THINK ABOUT FROM THE RECENT HIGHS. WE HAVE TALKED ABOUT IN OVER 30% CORRECTION BEAR MARKET. CALL IT WHAT YOU MAY. THERE HAS BEEN A READ FROM INVESTORS PULLING BACK FROM THIS SPACE. IF YOU CAN ROLL OFF NVIDIA, CAN YOU BLOW THAT OFF? THAT IS A GOOD QUESTION. WE'VE HAD CLIENTS COME TO US AND SAY WE SEE MARKET CONCENTRATION BEING REALLY HIGH LARGELY BECAUSE WE SEE NEWS FLOW, THE S&P 500 TRENDING, AND IS IT BIGGER THAN THIS? WHAT IS THE POTENTIAL RISK OF AI LONGER-TERM? WE HAVE BEEN ENCOURAGING CLIENTS
TO THINK OUTSIDE THE BOX, SO MANY AREAS BEYOND SEMICONDUCTORS THAT UNDERPIN THIS TREND. THAT IS WHERE WE SEE THE CONVERSATION GO IN. IT IS ECHOING WHAT WE HAVE LONG THOUGHT ABOUT THE OVER INDEXING. CAROL: WHAT IS OUTSIDE THE BOX? IT IS ALSO CONNECTED. TIM: DEMAND ENERGY IS SO BIG. CAROL:CAROL: IF DEMAND DOESN'T CONTINUE, THE BILL DOESN'T CONTINUE, ANYTHING THAT IS IN SO BULLISH, THE POWER NEEDED IS IN SO BULLISH. IT IS JANGO. DOWN. IT IS A GREAT QUESTION. AS WE THINK THROUGH THE INFRASTRUCTURE, THE ENERGY, THE RESOURCES NEEDED FOR AI INFRASTRUCTURE, AI IS ONE OF MANY. EVEN IF WE MOVE THE DATA CENTER CONVERSATION, THE ENERGY PIECE LOOKS FAVORABLE.
A HISTORIC LOW WHEN WE THINK ABOUT ENERGY. WHETHER IT IS THE GRID THAT CONTINUES TO HAVE INVESTMENT COME THROUGH, NATURAL GAS, DIVERSIFICATION OF THE ENERGY GRID, ALL OF THESE STAND FOR LONGER TERM. SAME WITH COPPER. WE EXPECT THE GREATEST GROWTH OF PROPERTY DEMAND FOR ELECTRIFICATION IN THE GRID. HOW MUCH OF THAT IS BECAUSE OF DATA CENTERS? A SMALL PART. IF WE LOOK AT WHAT THE DEMAND WILL LOOK LIKE IN THE NEXT FEW YEARS, WHAT WE EXPECT IT TO LOOK LIKE, ONE TON OF COPPER IN THE AD DATA CENTER MIGHT HAVE ABOUT 1.8 TONS OF COPPER FOR THE GRID. THE MAJORITY WILL BE COMING FROM
X A AGRI-DEMAND. AS WE THINK ABOUT THAT, IT DOESN'T CHANGE THE INVESTMENT IN COPPER FOR EXAMPLE. TIM: WE HAVE BEEN TALKING IN THE CONTEXT NEWS OF NVIDIA, TALKING ABOUT THE DEMOCRATS SWEEPING THE MIDTERMS AND THE PUSHBACK VOTERS HAVE HAD OVER DATA CENTERS. TO WHAT EXTENT IS THAT A HEADWIND? IT IS GOOD FOR INVESTORS AND FOLKS FUNDING DATA CENTERS TO BE ASKING THEMSELVES. IT HAS BEEN -- THE BUILDOUT HAS BEEN QUITE QUICK. WE SEE THE QUESTION AROUND WHAT IT LOOKS LIKE, WHAT COINVESTMENT WE MIGHT NEED FROM DATA CENTER PROVIDERS TO BUILD OUT THE GRID FOR THOSE COMMUNITIES, HOW MUCH CONVERSATION PER ZIP CODE OR
AREA MAKES SENSE LONGER-TERM. SO HAVING THOSE IS A REALLY GOOD PAUSE FOR BROADER BUILDOUT. WE BELIEVE THE BUILDOUT WILL HAVE TO COME. IT IS EASY FOR US TO ENVISION A WAY TO DIVERSIFY FROM JUST TEXAS OR JUST VIRGINIA INTO OTHER POCKETS THAT MAY NOT HAVE HAD ENOUGH BUILDOUT. THE CURRENT DATA CENTER CAPACITY REALLY FAVORABLY. RATES ARE UNDER 1% AT THE MOMENT. WE HAVE SEEN THE RATES INCREASE. WHAT IS CONNECTED, IT HAS POWER AVAILABILITY, BECOMES MORE FAVORABLE. BUILDOUT WILL CONTINUE. CAROL: ABOUT 30 SECONDS LEFT.
THE XAI, DOWN ABOUT 12% SINCE EARLY OCTOBER YEAR TO DATE. 100 COVER, ETF, YOUR PERCENT DOWN 6% SINCE OCTOBER. INVESTORS, WHERE ARE THEY TAKING MONEY OUT? OR ARE THEY PULLING OUT MONEY IN THE COUPLE OF WEEKS? TO SOME EXTENT RETHINKING THAT EXPOSURE AND THINKING OF OTHER POCKETS TIED TO THE AI TRADE. PULLING MONEY OUT OF THOSE FUNDS? NOT THAT WE HAVE SEEN SIGNIFICANTLY. WE CONTINUE TO SEE SOME SIGNIFICANT INTEREST. WHERE ARE WE THINKING OF BROAD AI, POTENTIALLY THINKING OF THOSE DATA CENTERS FOR EXAMPLE. COME BACK, THANK YOU.
LISA GUSTO, DIRECTOR OF PRODUCT RESEARCH AND STRATEGY JOINING US RIGHT HERE IN STUDIO. WHEN WE COME BACK, CHECKING ON TRADING. ♪ THIS IS BLOOMBERG BUSINESSWEEK DAILY. TELEVISION. CAROL: COMING UP TOWARDS TRADING THIS FRIDAY -- ALMOST THERE. TIM: WHAT IS GOING TO BREAK OVER THE WEEKEND? FORTUNATELY, DAVID GURA AND CHRISTINA RUFFINI WILL BE HERE ALL WEEKEND, 7:00 TO 10:00 A.M. MOVING AROUND. POTENTIALLY MOVING AROUND, WASHINGTON, THE NVIDIA STORY WILL CONTINUE TO BE POINTED OUT. AS WE GET READY FOR A BIG WEEK THAT WILL BE NVIDIA EARNINGS, THE ANTHROPIC IPO, I'M SURE I'M MISSING SOMETHING.
GRAND THEFT AUTO. TIM: I CAN'T BELIEVE YOU FORGOT THE ONE THAT IS IMPORTANT TO YOU. CAROL: THE APEC SUMMIT. TIM: YOU KNOW WHO IS ALWAYS ON, TATYANA, MARKET STRATEGIST FOR BLOOMBERG, JOINS US IN THE BLOOMBERG BUSINESSWEEK STUDIO. I WANT TO TALK A LITTLE BIT ABOUT NEXT WEEK AND NVIDIA. YOU HAVE A CALLING OUT ABOUT HOW COSTS WILL SHAPE CAPEX OUTLOOK. IN THE CONTEXT OF NVIDIA EARNINGS NEXT WEEK AND WHAT WE HAVE HEARD FROM ALL OF THE HYPERSCALERS THUS FAR AND THE CONTEXT OF WHAT WE HEARD FROM NVIDIA'S BOARD YESTERDAY, JUST BEFORE 9:00 IN THE MORNING, WHAT DOES IT MEAN? FOR HYPERSCALERS, LET'S NOT FORGET THESE COMPANIES ARE ALSO WORKING ON THEIR CUSTOM CHIPS. SO THEY HAVE THEIR OWN SILICA AND IN-HOUSE, WHICH IS STARTING
TO BECOME A BIGGER BUSINESS FOR THE LIKES OF ALPHABET AND AMAZON, POTENTIALLY SELLING THAT EXTERNALLY. THIS IS TURNING OUT NOT TO BE A BIG NEGATIVE FOR THEM. THE COST STORY REFERS TO THE GENERAL COST OF CAPITAL THAT HAS BEEN RISING FOR THE HYPERSCALERS. YOU THINK THAT IS BECAUSE OF THAT. THAT IS ACTUALLY BECAUSE OF EQUITY. IT IS ACTUALLY THE ANALYZE RATE OF THE RETURN INVESTORS REQUIRED TO HOLD THESE STOCKS. RIGHT NOW THEY ARE NOT DOING VERY WELL ON THAT METRIC. BASICALLY THE METRICS FEEDING INTO THIS ARE YOUR BENCHMARK YIELD RATE WHICH KEEPS RISING,
WHICH HAS AFFECTED BY THE EARNINGS VOLATILITY. ALL OF THE SHARES AROUND THE AI TRADE IS PUSHING UP THE COST OF CAPITAL FOR THESE COMPANIES. AT THE TIME ONE RETURNS ON INVESTMENT ARE NOT SHOWING AN IMPROVEMENT, WHICH I THINK CUTS TO THE CHASE OF THE AI ANXIETY. THE COST OF CAPITAL IS GOING UP OR THE COST OF ACCESSING THE CAPITAL, OR THE RETURN ON THAT INVESTMENT CAPITAL IS COMING DOWN, WHICH IS NOT WHAT YOU WANT TO SEE AS AN INVESTOR. I'M CAROL MASSAR WITH TIM STENOVEC. STOCKS ON THE MOVE ON THIS FRIDAY BECAUSE IT HAS BEEN AN INTERESTING DAY. TATYANA IS WITH US. WE ARE GOING TO BEGIN WITH A NAME WE HAVE TALKED ABOUT SO MUCH.
NVIDIA. IT BEARS REPEATING, DOWN 2%, WRAPPING UP THE WEEK OF A 13% DECLINE. THE WORST WEEK SINCE THE TARIFFS SELLOFF OF APRIL 2025. THE STORY IS ALL ON THE ANR, ANALYST RECOMMENDATION PAGE ON NOW. CAROL: AND HE SELLS? TIM: ONE. BUT THERE ARE NO NEW SELLS ON IT. IT HAS BEEN CUT TO A DOWN HOLD. EVERYONE HAS TO PAUSE AND ASSESS WHAT IS GOING ON. THE LATEST CAME FROM HSBC CITING LEADERSHIP UNCERTAINTY, SAYING INVESTOR CONFIDENCE HAS BEEN SHAKEN DESPITE FUNDAMENTALS. WHAT CAUGHT MY EYE WAS PRICE TARGET TO 100 $70 FROM $365, WE ARE BELOW THAT. THAT TELLS YOU THAT THE MASSIVE REASSESSMENT THAT WALL STREET
HAS DONE THIS WEEK AND WHY IT IS SO HARD TO FIGURE OUT WHAT IS NEXT FOR THIS COMPANY. WE DID SOME WORK ON MLIV, AND IT IS A TOUGH ACT TO FOLLOW FOR ANY CEO BECAUSE NVIDIA'S EXCESS RETURNS UNDER LEADERSHIP AMONG THE TOP FIVE HISTORICALLY. CAROL: WHERE WERE YOU WHEN THE STOCK WAS AT 239? IN JULY WHEN IT WAS AT 190? TIM: I WAS SITTING HERE WITH YOU. BOUGHT THIS STOCK IN JULY OF 2025, YOU ARE IN LUCK BECAUSE IT IS AT THAT LEVEL. CAROL: LET'S GO TO CEREBRAS. WE GOT EARNINGS LAST NIGHT. THIS NAME IS ACTUALLY IN THE GREEN, 12% AFTER BEATING ESTIMATES ACROSS MEASURES AND TOUTING NEW DEALS WITH HYPERSCALERS LIKE ORACLE AND MICROSOFT.
THIS IS ONE OF NVIDIA'S COMPETITORS. SO IT COMES AT AN OPPORTUNE TIME FOR THEM, FOR THE COMPETITORS TO SHINE. IT MAKES LARGER PROCESSORS DESIGNED SPECIFICALLY FOR AI AND SELLS CLOUD ACCESS. THEY SAID ON THEIR EARNINGS CALL THEY CANNOT FIND ENOUGH CLOUD CAPACITY AND THEY ARE RUNNING BEHIND SCHEDULE. BUT THEY PUSH BACK AGAINST SPECULATION THAT THERE IS A DELAY IN THEIR CONTRACT WITH OPENAI HELP SENTIMENT FOR THE NAME. CAROL: IN 20 SECONDS, CAN WE DO CISCO SYSTEMS? DOWN 6% AFTER MIXED EARNINGS ORDER GROWTH DISAPPOINTED. THEY SAID IT ONLY WILL 21%, BUT ANALYSTS WERE WAITING FOR A LOT MORE.
THIS IS A REAL TURNAROUND FOR THIS COMPANY CAROL: AT 24%. THANK YOU SO MUCH. ON APPLE, SPOTIFY, OR, WE DO UPDATES THROUGH THE DAY. THAT WOULD DO IT FOR THE FIRST DOWN I COMING BACK ON RADIO. THE CLOSE STARTS NOW ON TV.
