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Halftime Report
Brad Gerstner, Jensen Huang and Treasury Secretary Scott Bessent join us live 2/6/26
00:55:53
Scott Wapner and the Investment Committee are live in Santa Clara outside Levi's Stadium ahead of the big game on Sunday. Altimeter Capital's Brad Gerstner joins us for the hour to discuss the tech & software selloff, the markets and more. Plus, Nvidia CEO Jensen Huang gives us his view of the AI trade, competition with China, and where he sees tech going from here. And later, Treasury Secretary Scott Bessent joins us to discuss the Kevin Warsh nomination to Fed Chair, Trump accounts, the dollar and the markets. Investment Committee Disclosures
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Strayer University Announcer
What does it mean to live a rich life? It means brave first leaps, tearful goodbyes and everything in between. With over 100 years experience navigating the ups and downs of the market and of life, your Edward Jones financial advisor will be there to help you move ahead with confidence. Because with all you've done to find your rich, we'll do all we can to help you keep enjoying it. Edward Jones, Member, SIPC ABC's David Muir.
- [00:32]
David Muir
The most trusted anchor in America, the most watched anchor in America. Thank you for making World News Tonight with David Muir the number one newscast in America. Most trusted, most watched. David Muir on ABC.
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Scott Wapner
I'm Scott Wapner, and you're listening to CNBC's Halftime Report, the podcast the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in. Carl, thank you very much. Welcome to the Halftime Report. I am Scott Wapner and we are outside of Levi's Stadium in Santa Clara. It is the site of Super Bowl 60. And you can bet we're tracking the markets today as well, which are higher, including the nasdaq. Amazon, though, wow, it is getting hammered after its earnings, yet another victim of big spending concerns. And it has been a brutal week for many names, including Nvidia, which was down about 10% over the last five days, though it is getting a very nice snapback today. And speaking of coming up, an interview with Nvidia CEO Jensen Huang right here in the company's backyard. Crypto a focus today as well, Bitcoin's big beat down of late. We will discuss and we'll discuss all of it as well with Altimeter's Brad Gerstner. He is with me for the hour today. Also joining me, the investment committee, Josh Brown, Steve Weiss and Malcolm Etheridge. We do want to begin where we always, of course, do, and that's by looking at the markets which look a lot different than they have for the past few days as we're getting a nice rebound. And Brad, I'll turn to you. I mean, Big Tech had a trillion dollars wiped out on these spending fears. What were you thinking about over the last few days and what should our viewers take from it?
- [02:20]
Brad Gerstner
Yeah, I mean, it surprises me how surprised the market was. I feel like this had been well telegraphed. But you're right, $100 billion of incremental spending by Google and Amazon, above and beyond the consensus expectation that's on Capex is pretty extraordinary. But listen, you know, we're going to hear from Jensen later. 650 billion to 700 billion of spend out of the big five companies in the U.S. and, and they say they're still token constrained. The reality is Andy Jassy said last night that he has demand coming in over the bow. He can't fulfill the demand. It's hot, it's high roi. So he's going to get a big return on this. They need to make the investment. The beneficiaries, I think, are all the people who are building the infrastructure and the chips in order to enable us to advance.
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Scott Wapner
Does the rebound today suggest to you that the. The damage has run its course to this point, or are we just susceptible at any moment with any headline to have the similar reactions that we've had over the last few days?
- [03:21]
Brad Gerstner
Well, listen, you know, one of the themes I think we got to think about is when the rate of change goes parabolic, and that's what we're seeing today with AI, there's a fog of war. And when there's uncertainty in the markets, discount rates go up and multiples come down, people start questioning terminal values. And that's why valuations change even before numbers change. Let's be clear. Google's numbers were spectacular. Amazon's revenue growth, spectacular. Microsoft only missed by 100 basis points and had incredible Azure growth. The world is desiring to consume a vast amount of this AI resource. It's a struggle to keep up building it.
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Scott Wapner
They still got some work to do to get ready for the big game on Sunday. So from time to time, those are the sounds that you may hear outside of Levi's Stadium. But, Josh Brown, I'll turn to you. It's been a pretty brutal week. Yes, we've come back, but the losses are still not pretty to look at for all of these hyperscalers, and in some cases a little bit beyond that. What's your take?
- [04:22]
Josh Brown
Well, first of all, I can't lie, I'm a little bit salty. You and Brad are about to have a way more fun weekend than I am.
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Treasury Secretary Scott Bessant
We.
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Josh Brown
We still have residual ice in the driveway and you guys will be at the game.
- [04:34]
Brad Gerstner
Here's.
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Josh Brown
Here's what I noticed this week. Yesterday. And I was on the show yesterday, adding to some of my software victims. You don't have to buy these stocks, but if you were out there as an active seller yesterday and you did not have a margin call, you're a donkey. I'm not saying it's the low, but consider this. Microsoft was in a 30% drawdown from its high RSI 24, Palantir, RSI 26 in a 40% drawdown. Oracle 61% drawdown. RSI 20, almost in the teens. CRM 20. RSI into you. Intuit 20. RSI. Adobe Applovin, you name it. Palo Alto 20. RSI. For the people that are investors, not traders. RSI is relative strength. 30 is oversold, 20 is. Oh, my God. What the hell is going on? Are we having Covid again? So the sellers Yesterday, I'm not 1000% sure what they were thinking. The only thing I could guess is either a gun to their head from a margin clerk or they have no idea what they're doing. So the bounce today makes sense, and it's across the board. It's gold and silver. It's Bitcoin, too. These things have nothing to do with AI disruption. It was just an absolute puke. Momentum bottomed out. We could sort of rebuild here. So now the question is, did you like every name on your sheet? Like, were you looking at some of these stocks and saying, why do I even own this in the first place? If you're up 10% off that low from yesterday, that tradable low from yesterday, today is a better day to make some decisions. Maybe. I want more Microsoft and I want less Oracle. Okay, it's, it's not ideal, but, like, we should not be selling stocks at 20, 21, 22 RSI. That's just literally giving in to the, to the, the, the algorithms who are probably doing a better job at catching those lows than people are.
- [06:34]
Scott Wapner
When you do, though, Brad, look at the $650 billion this year that these companies will collectively spend, or at least think they will. We'll find out what the final numbers are, when the final numbers are the numbers. But how much, how much do they need to see that money pay off? You're an investor in many of these companies. You must be thinking about, when am I going to see a return on that investment that's commensurate to the amount that's being spent in the first place?
- [07:03]
Brad Gerstner
And listen, people ask that question to Andy Jassy last night, right? What are the guardrails? Will you spend all of your free cash flow more than your free cash flow? And he said, this is a unique, once in a lifetime moment to fundamentally change the arc of AWB. And mind you, he's grown that business from zero to $140 billion. A business that, you know, most people questioned when Amazon was investing in it 2008, 2009. So when the smartest guys in the world, when Sundar, when Elon, when Andy Jassy when Mark Zuckerberg are all saying we are going to earn a return on this investment, I'm telling you, my bet is on them. They're going to earn this return. They're not going to needlessly spend this money. And if they don't see the return, they'll pull back on the investment. I don't think this is a permanent new normal in the amount that's going to get built, but I think for the next three years, this is like building the interstate highway system. Right? This is significant. It's important to the United States of America. By the way, we have $700 billion of investment going on that is the size of the interstate highway system and it's all funded by profitable private companies in America. And it's great that it's being built here. And I think those are, those are smart investments. But you know, you do have to ask yourself as a stock investor, do you, do you want to own the picks and shovels? Do you want to own infrastructure and chips and all the other things that are going into these data centers and maybe take a little off the table from some of the companies that have to spend all the money?
- [08:29]
Scott Wapner
So, Malcolm, I guess you know, perfectly picking up where both Josh and Brad left off. You are an Amazon shareholder. You bought more on this sell off because you obviously think that it's overdone. Andy Jassy says they have the fastest growth in 13 quarters. This is not necessarily how you would expect the stock to react other than caught up in the whirlpool of spending concerns.
- [08:56]
Malcolm Etheridge
Yeah, it actually is the way that I expected the stock to react before we went into the print yesterday. And I think that one of the things we have to come to terms with is that the market dynamics have shifted since COVID in such a way that retail investors are actively trading a lot more than they used to be. There's a ton more information out there. There are a ton more tools out there. Trading is free. And so the market having this reaction where it sells first and then decides what to do after the fact. I think we have to accept that that really is just one of the dynamics of how the market's going to work. So I expected that this company that I already thought was under owned long before coming into this week. It traded down about 15% into the open this morning after its price print yesterday. I already loved the stock where it was. So it made perfect sense to me that I would want to add more shares now considering all of the things that we've talked about, including the fact that Amazon's got a $200 billion backlog that they're talking about having to figure out a way to work their way through. Well, that explains why it's so important to them to spend so aggressively to ramp up, to be able to meet that and capitalize on as much of that as possible.
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Scott Wapner
Malcolm, hold your thought. And everybody hold yours as well. Let me go to Washington quickly for some breaking news from our Eamon Jabbers. Eamon, what are we learning?
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Brad Gerstner
Scott?
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Eamonn Jabbers
That's right. We are learning now that the White House has taken down that racist social media post from President Trump's Truth Social account. And remember, the post went up shortly before midnight last night. And what it showed was a video about the 2020 elections, which ended with a quick cut to a cartoon image of Barack and Michelle Obama depicted as cartoon apes. It was widely criticized throughout the morning as racist, including Senator Tim Scott, an ally of the president up on Capitol Hill. Now, the White House has taken that image down from the Truth social feed. And the White House says a White House official emailing me a short time ago saying a White House staffer erroneously made the post. It has been taken down. So the White House confirming that that image has been removed from the president's feed and saying that a staffer erroneously made the post. Scott, back over to you after.
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Scott Wapner
It's worth noting, Eamonn, the White House first calling the anger about the post fake outrage. That's right. But it reached, I suppose, a crescendo that they had no choice but to take this down.
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Eamonn Jabbers
That's right. Caroline Levitt put out a statement earlier in the morning saying this is not racist. In fact, all it is is an image of President Trump as the king of the jungle from the Lion King. It's a perfectly fine meme. And anybody who's complaining about it is guilty of, you know, fake outrage. Then you saw Senator Tim Scott, who of course, himself is African American, come out and say this was the most racist thing he'd seen out of the White House and that this post should be removed. Now we see the post being removed notwithstanding Caroline Levitt's statement that it wasn't racist in the first place.
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Scott Wapner
Okay, Eamonn, appreciate the update from you down in Washington as we'll get back to the business at hand. And that continues to be reacting to those earnings and the sell off in Amazon, which Steve Weiss takes me to you because you own the name as well.
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Steve Weiss
I do, I do. And you know, yeah, maybe the selling's overdone let's keep in mind that stocks trade near term on performance relative to expectations and longer term on fundamentals. So even though there is good growth in the quarter, the guidance was a little disappointing. The spend of course was, was much more than anybody was looking for. So that's what's impacting the stock today. This is a stock that underperformed for the last year measurably. So I'm not selling any. It's not one of my larger positions, so I'm not getting hit there. I'm suffering enough pain on my larger positions such as Metta, but not making any changes there either. So, you know, throughout my career, to Brad's point, I've always bought the companies that are the beneficiaries of Capex and come back into the ones that have been the expender of the Capex when that cycle is near an end. The issue here is that we don't know where it's ending. The other issue is that the technology is moving so quickly that we don't know if the money they're investing in the technology today will turn out to be great investments going forward. Now, if you parallel it to what happened with the Internet, that was basically one technology. Sure there are innovations to it, but we didn't see wholesale improvements as we saw with Anthropic this week. That said, hey, what about those decisions are the right ones? I think to some degree Microsoft happens to be, you know, the victim of that now coming into this year and even last year I thought Microsoft would be the number one beneficiary of AI and that that has been wrong. So the stocks underperform. That's the one I'm most uncomfortable with. I'm not uncomfortable really with, you know, with Amazon or the others. And I like the tool belt. I don't know if we'll get to this later but I did sell the remainder of my FTA Aviation. I bought this stock well up about 150% within a year and I bought it as a air, as an engine, airplane engine leasing company. Then they had this announcement. My target was 200 that they're not going to be making generators. And while I think the stock still move higher, that was a tool belt company that I didn't expect it to be. So I thought best, hey, take your profits. But there are others. Caterpillar, a tool belt company.
- [14:34]
Josh Brown
So that's how I look at the world.
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Scott Wapner
All right. I think we need to address what's been happening with software because it's been dramatic. We've Seen stocks that are good companies.
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Brad Gerstner
Yeah.
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Scott Wapner
Widely held. Yes. Come down by significant amounts. If you look at the year to date for many of the. The biggest and best names, everything's red except for like zoom right on the. Literally right. Why is this happening to the degree it is, as we've discussed on numerous occasions. Is it overdone at times you've said? Yes. The last time we were together, you said something like 90% of the companies, the software companies that were down the way they are deserve to be. Those, I think, were your. Your exact words. Where are we?
- [15:18]
Brad Gerstner
So when you and I were together on January 6, I said, you have to understand the difference between earnings and revenue and stock price. Okay. And what's happened in software is hard for people to get their head around because the stocks have been cut in half. And I said on January six, they're all down and you can't invest. They're not investable. And here's the reason why. I will stipulate all these companies. Atlassian, last night, hit their numbers, beat their numbers. And when all these companies report, they'll do great. But that's not what the market is discounting, Scott. The market is looking into the future and saying in the past three years ago, I could, I could buy 35 years worth of. Of Salesforce's free free cash flow into the Future, give them 35 times free cash flow. Because I had that level of predictability. It was like a government bond. It was a sure thing. You definitely were going to get those. And then we have. I do what I's done over the course of the last several months and people just said something very rational. I can't see as far into the future. So I'm going to pay less for the terminal value. I'm going to pay less for those future free cash flows. I'm not penalizing them because they're missing their numbers today. I'm just putting it in the too hard bucket because I can't predict those future numbers. So the only way that reverses, Scott, is those companies have to accelerate their core revenues and show that they are beneficiaries of AI. The companies that do that, Databricks is accelerating their core revenues. I think this quarter they grew over 60%. Snowflake, clickhouse. These are companies that are accelerating their core revenues because AI relies on them. I think they'll do fine. But application software, where I can't see into the future, they're going to have lower multiple.
- [16:55]
Scott Wapner
I'll tell you, this week was especially acute in some of the moves on the news of this updated tool from Anthropic, which you're an investor in, of course, that speaks to me of the marketplace and the investment community doesn't necessarily know even yet how to assess the level to which software is going to be disrupted and by whom and by how. And even a simple, what appears to be a simple update or an upgrade from an Anthropic causes software names to go down. It causes private credit names to go down because they're exposed in their loans to software businesses. We're still trying to get our arms, it feels like, around this exploding technology and the impact it's going to have, right?
- [17:43]
Brad Gerstner
And it's exponential the rate of change, the rate of improvement of these models. We had a step function improvement in the first or second weekend in December and now we just had release Yesterday, open air 5.3 Codex. That was the first model that was trained on Blackwell chips that we'll hear from Jensen about. Another big step function. So when you're in the middle of exponential change, investors just say, hold on a second. Fog of war. I can't predict 35 years into the future of those free cash flows, so I have to pull it in a little bit. The stock price comes down and people say, hey, why is the stock price coming down? They're not missing earnings, they're not missing revenue today. But I'm telling you, that's why, because investors have a much harder time, you know, giving them credit for what's going to happen in the future.
- [18:30]
Scott Wapner
I feel like, Josh, you and I think we did this, did we not? Yesterday, looking at the destruction that's happened in some of the software stocks, you knowing the businesses that you own extraordinarily well and deciding that I may not be buying perhaps at the bottom, but I'm buying more of the names that I like the most, still willing to place those bets and not stay away entirely. Why?
- [18:54]
Josh Brown
Yeah, this is the difference between having investments versus being long PLTU, which is the 2x Palantir ETF. If you're trading PLTU or your trading strategy to X Long, you really have to nail the timing and you really have to be picking up on, you know, watching the vwap and understanding what other traders are doing. And that's a completely different game and I'm not good at that game. If you're an investor and you already know, I think that there's like a five or ten year period where this company carves out a huge piece of the, of the territory and ends up with all the cash flows in this space because they build this competitive position, this moat, this capacity of clients, etc. And you just say to yourself, I loved it at 32. Now it's 27. Because it's in some basket that's being liquidated by a margin clerk somewhere or a hedge fund that's looking to cut exposure or whatever. You sort of have an advantage in markets like this week. It doesn't feel like it in the moment, but if you're not highly dependent on nailing the perfect timing, you can rationally and calmly lower your average cost in select stocks or add to things that you've been up in that you thought you'd never get a chance at those again. This is not, this is not news to people. But it's a good reminder. A day like today, things don't yet eight straight days down for the IGV, it's in a 20 some odd percent drawdown. So at a certain point you just have to say, I like this company. I get that it's under pressure.
- [20:37]
Scott Wapner
That's right. This is not an exercise or a game in trying to pick the exact moment. It's trying to anticipate something that may come to pass and trying to get ahead of that. Appreciate that conversation. I've got to go back to our headquarters now. Dom Chu has a market flash for us. Dom?
- [20:53]
Brad Gerstner
Yes, sir. Scott, what we have right now are homebuild stocks on the move to the downside in a fairly significant fashion Intraday. And this is all due to a Bloomberg report citing people familiar with the matter that the Trump administration and officials are exploring possibly opening up an antitrust investigation into US Homebuilders. This all amid a push by the White House to bring affordability back for Americans. This report goes on to say that the Justice Department could open the probe in the coming weeks. According to people familiar no, a decision has been made and that the administration may abandon the effort without launching an actual investigation. But that particular move and those headlines are causing those homebuilder stocks, as you can see, names like KB Home, Lennar, Dr. Horton and others, as well as many of the big Homebuilder ETFs like the Spider Homebuilders ETF and the iShares Homebuilder ETF all kind of moving to the downside, as you can see intraday. So we'll bring in more details as we know more here. But that's the reason why, Scott, those homebuilders stocks are on the move. I'll send things back over to you guys all right?
- [21:56]
Scott Wapner
Appreciate you, Dom. Appreciate you flagging that for us as well. Our thanks of course too to Josh and Steve and Malcolm today. Coming up next, we do have a halftime exclusive. Nvidia's founder and CEO Jensen Huang, he is here with us live. And later on Treasury Secretary Scott Bessant joins us. He'll discuss the Invest America Trump accounts, the markets and much more. We are back in Santa Clara right after this.
- [22:26]
David Muir
ABC's David Muir, the most trusted anchor in America, the most watched anchor in America. Thank you for making World News Tonight.
- [22:34]
Brad Gerstner
With David Muir the number one newscast in America.
- [22:37]
David Muir
Most trusted, most watched. David Muir on abc Comcast Business helps retailers become seamlessly restocking, frictionless paying favorite shopping destinations. It's how nationwide restaurants become touchscreen ordering quick serving eateries and how hospitals become the patient scanning, data managing healthcare facilities that we all depend on. With leading networking and connectivity, advanced cybersecurity and expert partnership, Comcast business is powering the engine of modern business, powering possibilities, restriction supply.
- [23:10]
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- [23:54]
Scott Wapner
Good light.
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David Muir
That's my camera right in front of me.
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Scott Wapner
The super bowl here in Santa Clara, right in Nvidia's backyard. And we are joined now by the company's founder and CEO Jensen Huang. Brad Gerstner is of course still with us as well. And I can't tell you how happy we are to have you. Thank you.
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David Muir
Thanks. It's great to be here. Welcome to Santa Clara. This is our backyard a mile up the road.
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Scott Wapner
Yeah, I was going to say you couldn't actually walk over here. You're here. And you said you've never been here before.
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David Muir
Well, I've been. Not like this. Not like this. Look at all these tents. It's incredible. It's going to be a festival.
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Scott Wapner
So it's an interesting time to have you, obviously, which any time is, but especially given what's been happening within the market today looks a lot different than the last couple of days. Have the market obviously concerned with what's happening on the spending side of the hyperscalers and this big build out in AI what's your take from that? The way the market continues to react.
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David Muir
To it is demand is sky high. And there's a fundamental reason for that. We're in the once in a generation infrastructure buildout. This is the largest infrastructure build out in human history and there's a fundamental reason for that. Artificial intelligence is going to fundamentally change how we compute everything. Everything from database processing, the way we do search, the way we do recommender systems that you shot, the way you watch movies, and of course these new agentic systems that are being developed and evolved. Last year, this last year, we saw an inflection point in AI. AI became super useful. No longer hallucinating, it's generating informed content, it's reasoning, it's thinking, it's doing research, it's able to use tools. All of a sudden AI over the last couple of years went from being curious to super useful. The inflection point also came, came with it, profitable tokens. Anthropic is making great money. OpenAI is making great money. If they could have twice as much compute, the revenues would go up four times as much. I mean literally, these guys are so demand, so compute constrained and the demand is so incredibly great. The number of enterprise users, the number of consumer users, the number of startups are being built on top of these companies, it's just going through the roof.
- [26:05]
Scott Wapner
So when you see numbers that are frankly remarkable, that $660 billion this year will be spent by the hyperscalers as we continue to learn, like we did from Amazon last night, you sit back and think to yourself that's completely justified.
- [26:21]
David Muir
Based on what you see, it is appropriate and sustainable. And the reason for that is because all of these companies cash flows are going to start rising. You know, people are comparing it to cash flows. One of those numbers are wrong. It's just the cash flow is wrong. We are addressing the largest software opportunity in history for the very first time. Software is not just a tool. A tool is like Excel. Now software uses tools, so these AIs use Excel. And so I think the opportunity for this new era of software is incredible. And we're seeing, seeing it already moving the earnings of Meta. Nobody uses AI better than Meta. And so if you look at the way that they're using AI, AI went from a rec, a classical recommender system running on CPUs to now a generative AI agentic system that is making recommendations. Everything from the way the social media works and the way they recommend ads and help advertisers create, create content has fundamentally been changed. And Their earnings show it. And that's the reason why they're investing so hard. They see just a much larger future potential for it. And that's just one company this is going to affect. AWS is shopping and the way they recommend goods. This is going to affect how Microsoft's enterprise software works. Every single company sees the same inflection point and that's why everybody leaning in so hard.
- [27:44]
Scott Wapner
I feel like that's the point that you were. It's an interesting point. It sort of turns the way you need to think about these businesses on its head that if you're just fixated on the spending side as you were talking earlier about, oh, they're spending such a huge portion of their free cash flow, you're kind of missing the story. The market needs to get its arms around that you as well as an investor.
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Brad Gerstner
Yes. If you turn the clock back, Scott, to 2008, 2009. Right. Amazon could have taken their profits and sent them back to us by way of dividends. Instead, Jeff Bezos said, I'm going to invest in this thing called us. Think of it as digging a gold mine. You have to spend a lot of money to dig the gold mine before you get the money, before you get the gold out. These guys are digging the biggest gold mine in the history of software.
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Scott Wapner
Right.
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Brad Gerstner
But it costs something up front. Now the question is, do you believe Andy Jassy and Mark, you know, Mark Zuckerberg and soon Dar and Jensen that this opportunity is that big or do you have a special insight that causes you to understand there's no gold in the bottom of the gold mine? As an investor, I'll just tell you this. I want my personal net worth. I want my funds net worth levered against AI because all human progress is going to be derived from machines helping humans think and augment human thinking. And so whether it's owning Nvidia, which is our largest public position, or whether it's anthropic or OpenAI, all of these companies are going to be tremendous beneficiaries business and they're doing it at scale. There are increasing advantages to scale. Right. And so I think it's hard for people to get their arms around now just like it was in 2008 and 2009. But thank God Jeff Bezos did that. Now it's $140 billion business generating 30 billion a year in annual profits that people criticized him for investing in back then.
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Steve Weiss
How?
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David Muir
It's just, it's incredible that open air and anthropic are 20 billion dollar run rate companies. Prof. Generating profitable revenues and accelerating growth all at the same time. These are extraordinary things and it makes perfect sense from where we sit.
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Scott Wapner
How can we be so certain that the amount of compute we think we'll need and that we continue to hear from CEOs like you that we will need is actually going to come to fruition? Isn't it inevitable that we're going to, at some point overdo it, but we're not going to know that until it's too late.
- [30:04]
David Muir
It's not like roads, roads. Once you lay it down, it stays fairly useful for a long time. The way computers work is you build up the infrastructure, but then you start replacing it five, six, seven years later. And so I think it's going to take us some seven years, eight years to build up to the level that we have to sustain. And after that we're going to be refreshing and slightly growing. And so we've got several years of build out ahead of us. The important thing is this, you have to go back to first principles. Computing has fundamentally changed. It used to be pre recorded Excel and PowerPoint and all these tools and all the software is pre compiled, they compiled it and they sent it to us. The way software works now because it's contextually aware, every single time you use it, it takes into consideration the context, who you are, what you're asking about, what's happening to the world, what other information you give it, the context. And every single context is different and every single response is different. So from now on, every single pixel, every single beep of a sound, every video that comes out of the computer is generated in real time. And that's the reason why we need computers to operate the software at such a large scale going forward. And all these tokens are what we call intelligence. And for the first time we have, we're generating something of tremendous value, intelligence as numbers and these things. As I mentioned earlier this last year, we went through an inflection point because these tokens became profitable. And so we just have to make more of it.
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Scott Wapner
Can you blame, in some ways investors who have PTSD from the last time tech went through this revolution and evolution at the same time, for seeing certain things that remind them of then and worry that they'll happen again.
- [31:53]
David Muir
It's good to always reflect on history. History informs us, but history doesn't repeat. And so you have to take into consideration what's actually happening. Always go back to first principles and think about what is actually happening right now. The fundamental difference, a huge difference between now and some things that happened in the past with the Internet, there was a ton of dark fiber. There is no, there are no dark GPUs. 100% of the GPUs are rented. In fact, GPUs that we sold six years ago, the prices are going up. It's not like it's antique. I mean, it's incredible. It's like a fine wine. The demand is so high. The GPUs I sold six years ago are going up in price. And so I think the demand is just incredibly high for the reasons that I just said. One, we went through an inflection point. AI has become useful and very, very capable to the adoption of it is incredibly high. And three, because these AIs are thinking the amount of computation it needs is great. And so to the extent that people continues to pay for the AI with, you know, and the AI companies are able to do generate a profit from that, they're going to keep on doubling, doubling, doubling, doubling.
- [33:03]
Scott Wapner
You get asked about the bubble question all the time. But to Jensen's point, back then, you know, you're wrapping fiber around the earth five times and you realize, well, that was a little too much. How are you thinking about that question relative to how we answered it?
- [33:16]
Brad Gerstner
It turns out that fiber had 7% utilization. We called it dark fiber because we knew when they were putting it in the ground, it was, it was dark. It wasn't. We're building for the future and we were borrowing money to do that. And we only had 30 million people connected to broadband Internet. Today. We have billions of people who are using, using this, getting benefit daily. But, but one of the things I would say, Scott, is one of the questions here, Jensen is, okay, if you accept that all of this needs to be built. There's a lot of chatter. Andy Jassy said last night on the Amazon call. Yeah, but we have an inference chip that's 40%, you know, cost 40% less. There's a lot of talk about all these other chips. So how are you confident that Nvidia is going to continue to maintain your share? Right. The leadership position in terms of all of this build out as you look forward.
- [34:04]
David Muir
Nobody develops the technology more advanced than ours at a pace higher than ours and at a scale as large as ours. We have the largest supply chain of any computing company in history. We have a giant supply chain that. And so our technology is the best. Now, that translates to the lowest cost tokens, because when your performance is 10 times, your cost is 30% higher than your token cost. Is maybe 1/5. And so that advantage is the reason why people adopt our technology, our demand. Nvidia's demand in AWS is incredibly high. And so we're, we're just super excited about the build out that we're doing with them. We're going to have a very significant build out this year, in the next couple of years. AWS is doing great. They're a great partner of ours. Consumption. Nvidia through AWS is gigantic.
- [34:59]
Scott Wapner
Brad raises a really interesting question as this. These relationships are so unique in that these companies that are spending all of this money, they are customers of yours and they're competitors of yours. And they continue to make it clear that they want to be bigger competitors of yours. Andy Jassy and Brad was alluding to what he said on the call, Quote, customers are starving for better price performance and typically and understandably the dominant early leaders aren't in a hurry to make that happen. They have other priorities in Alphabet's making its own chips too. These companies love you, they need you, but they're coming after you too.
- [35:39]
David Muir
It's okay. You know, none of that bothers me. We're the only company in the world that takes our roadmap and all of our secrets and we share it to our customers who are also building their own chips internally. That's how much confidence we have. The reason for that is because Nvidia is the only platform and software likes platforms. Software are built on platforms. If it's built on Nvidia, it runs best on Nvidia. There are tens of thousands of startups around the world, developers all over the world, who build on Nvidia. And so by definition, it runs best on Nvidia. We're the only architecture that's in every cloud. We're in aws, we're in Azure, we're in oci, we're in gcp. We're everywhere. We're exposed to AI that is well beyond just the things that we're talking about here. Look at the stuff that we're doing in digital biology and life sciences. Our big partnership with Lilly, they're building a supercomputer, the physical AI. We're the only company really addressing all of the world's autonomous vehicles and, you know, all the robotic systems and all the physical sciences. The world of AI goes well beyond language. It represents, you know, probably 60% of the world's AI activity. The rest of the other 40%, that's practically all Nvidia. And so our exposure to AI is one broad. We're on every single platform. We're in the cloud, we're on the ground, we're in autonomous vehicles. I mean, we're just simply everywhere. And the key is just we have so many developers. When it's built on Nvidia, it runs best on Nvidia.
- [37:09]
Scott Wapner
Who do you consider to be your biggest competitor?
- [37:12]
David Muir
Well, the thing that we worry about most is just making sure that AI is effective. It has to work. The technology is, has great promise. Some enormous breakthroughs. Chat CBT was a breakthrough. OpenAI's 01 was a breakthrough. This last year, just recently. Cloud code is an inflection. And then now ChatGPT 5.3 Codex, another inflection. You know, we want to make sure that AI continues to be incredibly effective. We want to make sure that protein, AIs, chemical, AIs, physical, AIs, robotics, AI self driving car, ISE, open model, AIs. All of these different AI industries have to flourish because the world is gigantic. Remember, AI is not a technology only. It's a five layer cake. It's, it's energy, its chips, its infrastructure, its models, and ultimately its applications. We need to make sure that all of the world's applications are revolutionized because of AI. When that happens, the demand will continue to grow and we would be successful in helping the world reinvent computing for the first time. And so our focus, you see, my focus, all the investments that we make, all the partnership that we make, it goes across all five layers of the cake. It goes across all of the different domains of applications. Because you know, it's going to take the whole planet to change the computing infrastructure for the world.
- [38:37]
Scott Wapner
Okay, speaking of that, the whole planet. Are the Chinese competitors? They're, they're customers, they want to be customers. You'd like them to be bigger customers than they are now. Aren't they competitors of ours?
- [38:50]
David Muir
No doubt. I think the, the way to think about that is that we got competitors. The United States has competitors all over the world. And if you break down AI and think about AI as a five layer cake, the US has to win at every single layer. We have to win at the energy layer. This is an area that quite frankly, we've got a lot of work to do. And we're going to have to work hard to make sure that we win the energy layer, the chip layer. We have to make sure that every software company in the world uses American tech stacks so that our chips are the best in the world. We have to win at the model layer, we have to win at the application layer. So on and so forth. Every single layer has a battle and nobody could take it from the granted. Everyone, every one of the layers had to go win on their own. We want to win, win together. But every layer has to go win.
- [39:39]
Scott Wapner
Do you worry about Brad? Another deep seek moment that the Chinese, to Jensen's point, they're not sitting back idle and suggesting, okay, us, you win. We're playing now for second place. They're playing to win.
- [39:52]
Brad Gerstner
No, for sure. And in fact I hear disturbing things all the time about the Chinese stack of making great inroads in the Middle east and in the southern hemisphere, etc. Because frankly they're working really quickly to put their chips and their models, their open source models, Deepsea, Kimmy, K2 Quinn, etc. And exporting those to the world. So Jensen was an important part with David Sachs are putting forth an American agenda to accelerate the American AI stack around the world.
- [40:23]
Scott Wapner
World.
- [40:23]
Brad Gerstner
We're still not going fast enough. We need to accelerate and make that go faster. You're absolutely right about that. And I think with respect to China, listen, there's a lot of fear that why would you give China any chips? Why would you? They already have chips. They already have incredible AI. The US wins when the world runs on American technology. And I think we need to focus on running the fastest race we can possibly run. Right. And if we do that, then just like the Internet, our value values will be embedded and imbued around the world in the, in the US stack. But, but make no mistake about it, I think the Chinese are out in front and we got to up our game. We've got to get faster in Washington and we got to get out there and thank God we have in video and the leading technologies in the world in the United States. Right? That doesn't happen.
- [41:07]
Scott Wapner
Right.
- [41:08]
Brad Gerstner
We create the culture and the climate for innovation and entrepreneurialism. We're sitting here in Santa Clara. AI has occurred in San Francisco, in Santa Clara because of the great innovations we have. We got to make sure we protect that and accelerate.
- [41:21]
Scott Wapner
You mentioned some of the criticism that's been around. Should we sell chips to the Chinese because they, they want to kick our butts in AI to that China is.
- [41:32]
David Muir
A very large market. It makes no sense to forfeit, to concede a large market. If you would like to win globally, the American chip industry should do everything we can to win all over the world, including in the Chinese market. We have to compete. It's their home turf. They got all kinds of advantages and so we have to go compete hard. But there is no question conceding half of the world's markets make no sense if you want to win globally.
- [42:02]
Scott Wapner
So when someone like Dario Amode from Anthropic says it's crazy, those, that's his word, for the US to allow companies to sell there, that they're an adversary, you wholly disagree with that?
- [42:12]
David Muir
I completely disagree with that. Of course we would never allow Chinese military to use American technology, but that's that that export control is well established. Of course we would like to then go and compete in the marketplace. We want, of course, also for Anthropic and OpenAI and all of our American companies to succeed. They've got to work hard, they've got to to go run fast. We make sure that we offer them the best of all of our technologies, we give them all the advantages that we can. But in the final analysis, we've got, while we're helping them succeed, we've got to go win around the world and not forfeit markets to anybody.
- [42:50]
Scott Wapner
You mentioned open AI, and I got to ask you, because this has been a week, hasn't it, with the back and forth of, you know, some of the criticism that had allegedly come from the OpenAI side about you and maybe some about from you about them in a couple of reports which you've addressed and you did the other day with my colleague Jim Cramer. But are we really to believe that there's no there there, that there's no friction between the two of you? There's really no drama between the two of you in any point?
- [43:19]
David Muir
No, there isn't. Yeah, there just isn't. The new AI models at OpenAI needs a lot more compute capability than our last generation hoppers, that is for sure. The amount of computation it needs, the model is 10 times larger the amount of computation it thinks 10 times longer. And so it needs a lot more computation than our last generation. Which is exactly the reason why Grace Blackwell NVLink 72 was invented and their latest generation model, 5.3 Codex, revolutionary trained on Blackwell and V Link 72. And so they need our new generation of technology. That, that goes without saying. And that's the reason why Nvidia is moving so fast. You know, every single year we're coming up with 5x10x more capability. And we just got to keep that pace going. Nobody else in the world could do this like we do, because, as you know, these are not chips only, these are AI infrastructure. And we're revolutionizing, innovating AI infrastructure at a scale nobody's ever seen at a Pace nobody's ever seen. And all because the amount of computation necessary for AI is growing so fast. But otherwise the rest of that stuff is just fake news.
- [44:32]
Brad Gerstner
You know, I think there was a moment, Scott, when everybody thought that there was going to be like exclusive partnerships like Amazon was going to be Anthropic and, you know, Microsoft was going to be open AI and Nvidia would say stay in one of those lanes and pick a winner. It's too big. Everybody's going to be everywhere, right? These guys are going to, you know, be have open AI models, they're going to have anthropic models, they're going to have deep SEQ models running on, you know, on their chips. And I think when you look at this next round of funding, right, Nvidia and Microsoft just invested in anthropic, right? OpenAI probably is going to get investment. There's a lot of rumors out there from, you know, from Amazon or others, like, none of that should surprise anybody. If you want to be in the game of AI, these are the two frontier labs in America, two leading labs. Put X AI in there as well. It's going to be fascinating what they do with starlink and data centers in space. And you're also a big investor, also big investor and partner and partners there. So I think you should expect that as the new normal. And you know, like, we like to make a lot out of these things because of course they're competing, competing. Everybody's competing to make sure they're the lead in those investments. But I think, here's the thing that I think it tells you. Everybody had this idea the last couple of months. OpenAI's dead and anthropic to the moon, right? OpenAI just launched on another incredible model yesterday with Codex. They're going to raise a lot of money, I can tell you. There's a lot of money that wants to invest strategic money, financial money, etc. And the good news for your, for your viewers is both these companies are going to be public over the course of the next 12 to 18 months and retail investors are going to get to participate.
- [46:04]
Scott Wapner
This is an interesting.
- [46:05]
David Muir
Imagine being large early investors in Google, Amazon and Meta Insane. And that's what we're looking at.
- [46:14]
Scott Wapner
That's a perfect place to leave it, as we said, in your backyard here in Santa Clara. I can't thank you enough for spending time with us. Jensen, thanks so much.
- [46:20]
David Muir
Thank you very much.
- [46:21]
Scott Wapner
Pleasure. And Brad, you're going to stick around. We have more work to do. So you're not going anywhere. We're going to take a quick break. We'll come back with Treasury Secretary Scott Besant.
- [46:34]
David Muir
ABC's David Muir, the most trusted anchor in America, the most watched anchor in America. Thank you for making World News Tonight.
- [46:42]
Brad Gerstner
With David Muir the number one newscast in America.
- [46:46]
David Muir
Most trusted, most watched David Muir on abc Comcast Business helps retailers become seamlessly restocking frictionless paying favorite shopping destinations. It's how nationwide restaurants become touchscreen ordering quick serving eateries and how hospitals become the patient scanning data, managing healthcare facilities that we all depend on. With leading networking and connectivity, advanced cybersecurity and expert partnership, Comcast business is powering the engine of modern business powering possibilities. Restrictions apply.
- [47:19]
Strayer University Announcer
At Strayer University, we help students like you go from will I to why not? For over 130 years we've been innovating higher education to make make it more affordable, accessible and attainable so you can reach your goals. Go from thinking can I? To Yes, I can and keep striving. Visit strayer. Edu to learn more. Strayer University is certified to operate in Virginia by Chev and as many campuses, including at 2121 15th Street north in Arlington, Virginia.
- [47:57]
Scott Wapner
Sam.
- [48:28]
Brad Gerstner
This year every American child gets an investment account and millions will be pre funded. That's free money. We can all expand. American dream. Sign me up.
- [48:43]
Scott Wapner
That was a clip from an ad that will run during the pre game for the super bowl for the Invest America Trump account, a program pioneered by Brad Gerstner and championed by the Trump administration. On that note, we're joined now by treasury secretary Scott Bestin. Mr. Secretary, it's great to have you. Welcome, Scott.
- [49:01]
Treasury Secretary Scott Bessant
It's good to be on with you.
- [49:04]
Scott Wapner
We just showed the ad that's going to run during the pregame as we said. And Brad has been such a champion of this, but so has, as I said, the administration. How is the rollout going? From what we saw was already more than 1 million families who've signed up.
- [49:20]
Treasury Secretary Scott Bessant
It's going fantastic and I want to give a shout out to your parent company, Comcast Senior management there has been very helpful helping us place this super bowl ad and we couldn't be more excited. We had last Wednesday here in D.C. wednesday, 10 days ago, the big kickoff where well over a million visits to the site. We'll roll it out July. The accounts will go live July 5th and we'd encourage everyone to sign up in advance. Trumpaccount.gov.
- [49:57]
Scott Wapner
Truly, how large do you think this could grow to?
- [50:01]
Treasury Secretary Scott Bessant
Well, Scott, currently 38% of Americans have no Household exposure to equities. And the real goal is to make sure that every child, every family, every household gets to participate in our great growth engine in the American economy. You just, just had Jensen on. So companies like, companies like Nvidia, companies like Wal Mart, great American success stories. And everyone, everyone should have a share of that and understand how the economy works, how the companies interact with the economy and what it feel, feel what it's like to be a shareholder and participate in that.
- [50:45]
Scott Wapner
And Mr. Secretary, you know that I have Brad Gerstner sitting next to me quite obviously. And Brad, there are more companies that, that you want to tell us about that are getting on board already, right?
- [50:56]
Brad Gerstner
I mean, we had announcements today. It's great to see you. You know, Mr. Secretary, we had announcements today. The NFL is going to match for the kids of their employees. Comcast, like the secretary mentioned, the city of San Francisco, somebody's going to adopt a match for the kids in the city of San Francisco. Mayor Lurie, you're going to have on later today, is going to talk about that. It just shows the art of the possible. Michael Dell tweeted earlier today, he says this changes everything. You can give money directly to America's kids. No middleman. And it's all enabled by the vision and the leadership of Scott Bessant and the President, who said, we're going to create an investment account for every child at birth. Every child is going to have on their phone an app. They're going to see they own a little bit of Nvidia, a little bit of Walmart, a little bit of Microsoft. Imagine that. Scott, the President said last week, 20 years from now, there will be 100 million kids and families that have 3 to 4 trillion in wealth that would have otherwise had zero because they start off with $1,000 and we add money to those accounts.
- [51:56]
Treasury Secretary Scott Bessant
And Brad, Mr. Secretary, Brad, your vision. Michael Dell piling on and then the President's leadership in putting this last July 4th into the one big beautiful bill is what is making all this possible. And the President's done peace deals, trade deals deals and tax deals. The peace deals will obviously be enduring for decades to come. But I think there's a chance that these Trump accounts may be his greatest legacy. Because I think that the children who are born, born last year, over the next couple of years, in 18 years, those will start rolling off. Or it may be that the individuals who get these accounts and everyone can create one for their family, for children up to age 18. Only these four years will be funded with the $1,000 seed from the government. But as these accounts mature when you're 18, they can be rolled into a retirement account. So the full effect of these may not be felt on our national psyche for 20, 30, 40, even 60 years. But I, I am convinced that this will be a real time experiment in financial literacy and financial education which we here at treasury support every day.
- [53:18]
Scott Wapner
We, we're going to continue to follow it, obviously, because it was quite literally birthed. The idea was on CNBC with Brad and me, had had a conversation about it years ago. Mr. Secretary, I hope you'll oblige me. I'd like to ask you some, some, some business stuff if I may, because we haven't had you on since, since Kevin Warsh was nominated to be the next Fed Chair. You had a bit of an eventful day yesterday on the Hill with the back and forth between yourself and Senator Warren, who asked you regarding alleged joke that the President had made about firing Mr. Warsh if he didn't cut interest rates. You responded to Senator Warren by saying that, well, that's up to the President. A comment like that would likely have some wondering about Fed independence yet again. What did you mean?
- [54:09]
Treasury Secretary Scott Bessant
Well, first of all, I tried to explain to Senator Warren, who seems to have no sense of humor, that it was a joke. And the President also made a joke about her not having reservations. So we know what that's a reference to. And again, the President has great respect for the Fed, for the Fed's independence, and Kevin Warsh is his choice. Kevin I've known for decades, brings great credibility to the job, great skills. I think that he will be a fantastic leader on monetary policy and on regulation and indeed the entire Federal Reserve System.
- [54:55]
Josh Brown
Sir.
- [54:56]
Scott Wapner
Senator Tillis, as you know obviously by now, said he won't take up the nomination until the investigation into Chair Powell is over. Some of the senators on the Republican side have already suggested that no crime has been committed here should this investigation end now.
- [55:12]
Treasury Secretary Scott Bessant
Again, that will be for Jeanine Pirro to decide. And if you look closely at the text from the senators, they said no crime was committed. But it's also not a great book because they said that the chair was incompetent. So no crime, but probably guilty of incompetence.
- [55:37]
Scott Wapner
Let me ask you as well about the dollar, which you have said in the last week or so as we've watched the $1 weaken up until, you know, of course, the events of the past few days, that the US has always had a strong dollar policy. The President has called the weakening dollar great.
- [55:55]
Treasury Secretary Scott Bessant
Which is it again, I think that that's, that's a false choice, that the dollar going up and down on a screen. I traded currencies for 35 years. The strong dollar policy is are we doing the things to create a strong backdrop for the dollar? So our tax policy, our trade policy, our deregulatory policy, our energy policy, reasserting our sovereignty in critical minerals. Are we making the US the best place for capital in the world? And I think no one's done that better than President Trump.
- [56:38]
Scott Wapner
Mr. Secretary, I can't thank you enough for spending the time with us. Appreciate it very much and we'll see you soon.
- [56:43]
Treasury Secretary Scott Bessant
Good to see you, Scott.
- [56:46]
Scott Wapner
That's Treasury Secretary Scott Bessant joining us here as part of our coverage. We've got about 90 seconds left as we wrap things up. You feel pretty good about where your exposure is to the market.
- [56:57]
Brad Gerstner
Yeah. I mean, listen, you got to give a lot of credit to Secretary Besant. He's right. The flight path for the United States looks great. Right. We've got GDP accelerating, we got inflation well anchored, you know, coming in below expectations. You've got tailwinds coming from AI investment tailwinds coming from the reindustrialization investment, you know, that's occurring across the country. And so like the economic backdrop is really strong for the United States and on a relative basis, around the world, world, I think one of the strongest places we've ever been. And then we have, you know, all the stuff going on in earnings and you see the earnings numbers, they're great. So, you know, the market is selling off, Scott. Multiples are now well below, you know, their average. And I think it's creating some really interesting buying opportunities. Yeah.
- [57:46]
Scott Wapner
And on the new Fed chair, you happy with the selection?
- [57:49]
Brad Gerstner
Yes. I mean, listen, I think that Kevin Hassett would have been a great suggestion, a great choice as well. But there's no doubt in my mind that this Fed will be independent number one. And number two, they're going to follow the facts. Kevin Warsh said if inflation goes up like it did In June of 21, he would have raised rates. Now he's going to cut rates because inflation's anchored and we're in a place we can do it.
- [58:10]
Scott Wapner
This was really fun today. I can't thank you enough for bringing by some friends, too. That's Brad Gerstner of Altimeter joining us. See what happens on Sunday as well. I'll see you on the closing bell. You've been listening to CNBC's Halftime Report, the podcast you can always catch us live weekdays at 12 Eastern only on CNBC.
- [58:32]
Strayer University Announcer
All opinions expressed by the Halftime Report 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 opinion. Such opinions are based upon information the Halftime Report 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 Halftime Report disclaimer, please visit cnbc.com halftime reportdisclaimer@ Strayer University, we help students like you go from Will I? To why not? For over 130 years, we've been innovating higher education to make it more affordable, accessible and attainable so you can reach your goals. Go from thinking can I? To Yes, I Can and keep striving. Visit strayer.edu to learn more. Strayer University is certified to operate in Virginia by Chevinous. Many campuses, including at 2121 15th Street north in Arlington, Virginia.