← The Rundown
The Rundown
Meta in Talks to Spend Billions on Google's TPU Chips, Trump Signs Order to Create a Government AI Model
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Public.com presents the rundown, your daily market update in under 10 minutes. My name is Zaydad Mani and Today is Tuesday, November 25th. In today's episode, we'll tell you why Google could pose a legit threat to Nvidia's dominance in the AI chip space. We'll also tell you about the latest executive order that some are calling the AI Manhattan Project. Then stick around to the end of the show to find out the first healthcare company to hit a trillion dollar valuation. We get a show for you today. Let's go. Well, guys, the stock market had one of its best days of the year on Monday with the s P up 1.6% and the Nasdaq added 2.7%. It was the best day for the S P in six weeks and the best day for the NASDAQ in six months. Tech stocks finally showed some life again. Tech was easily the best performing sector of the day, and all of the magnificent seven stocks were in the green as well, with Google and Tesla leading the pack, each up more than 6%. Other AI names were also up big like Micron, AMD and Broadcom. So shout out to everyone that's been buying the AI dip over the last couple of weeks. It's already starting to pay off. Now zooming out. Remember, the markets got an initial spark on Friday after New York Fed Governor John Williams said in a speech that a December rate cut was still still on the table. Well, to add to the rate cut optimism yesterday, San Francisco Fed President Mary Daly also said she would support lowering rates in December because she's worried about a slowing labor market. So now investors are betting the Fed will give us an early Christmas gift and cut rates at the December 10 meeting. The odds of a rate cut in December is now up to 80%, according to the CME Fed Watch Tool. Just a week ago, those odds were around 40%. So there's been a huge sentiment shift over the last week, and I think that's what's really responsible for this market rally. Now we'll have to see if this momentum holds because a lot can happen between now and December 10th. But it's just great to finally see some momentum back in the stock market. Unfortunately, the same can't be said for crypto. Crypto is still stuck in a slump. Even a rate cut hype wasn't enough to spark a bounce. Bitcoin is still hovering around $87,000 and Ethereum is under $3,000, both at six month lows. Now. It's always tough when crypto dips before Thanksgiving because then you have to have the awkward conversation with your family on why you invested in fake Internet money and why it's probably isn't a scam. Right? As always, we're going to be staying on top of everything happening in the markets, so make sure you guys are subscribed to the podcast and tuning in every day to stay in the loop. Maybe even consider sharing this podcast with someone that wants to learn more about the markets over Thanksgiving. Let's run through some headlines, starting with some AI chip drama. According to a report from the Information, Meta is in talks with Google to buy billions of dollars of Google's in house AI chips called TPUs. So starting in 2027, in fact, Meta might start renting these TPUs from Google Cloud starting next year. Now this is a huge deal because it's the first sign that Google could start taking market share from Nvidia, which currently dominates the AI chip market. Meta has been one of Nvidia's biggest customers, but if they start shifting some of their spending towards Google's chips, it could signal something bigger. Other tech companies might follow. Now Google has been developing these TPUs for over a decade now and customers were always able to rent them via Google Cloud. But but now Google is pushing these TPUs to be used in other data centers. Google is pitching the TPUs as a cheaper alternative to Nvidia's pricey GPUs. Plus, big tech companies don't want to be completely reliant on Nvidia and give them too much leverage. So Google could be a good alternative option. Internally, Google executives think they can take up to 10% of Nvidia's annual revenues, which could be like tens of billions of dollars. Now Nvidia has already taken notice of Google's moves and CEO Jensen Huang has been hustling behind the scenes to lock in long term deals. But with companies like OpenAI and Anthropic, both of which Nvidia has now invested in, essentially Jensen is trying to keep everyone inside the Nvidia ecosystem before Google can lure them away. But yeah, this is turning into a full on AI chip war. I think a lot of people assume that Nvidia would keep the top spot with AMD as a distant number two. But the real second option, or maybe even the first option, soon might end up being Google and their TPUs. The market is definitely taking this threat seriously. Nvidia stock is down 4% this morning and AMD stock is down 6% following this report. By the way, this, this threat from Google isn't the only headache that Nvidia is dealing with right now. They're also having to defend themselves against sketchy accounting allegations. According to a report from Take him at Barron's, Nvidia sent a seven page memo to Wall street analysts over the weekend pushing back on criticism, including claims of accounting malpractice that compared Nvidia to Enron. In this memo, Nvidia basically said they're not Enron because they're not hiding debt or inflating their revenues like Enron was using sketchy shell companies in the Cayman Islands. They also address concerns about stock based compensation and how customers depreciate Nvidia GPUs saying the criticism is exaggerated and that their hardware holds economic value far longer than the skeptics claim. This is something that big short seller Michael Burry has brought up recently. So, yeah, Nvidia is dealing with a lot right now. They're facing competition from Google. They're having to reassure investors, but they're still putting up huge revenue and growth numbers. But it does seem like all the hype around AI has fully gone to Google. And I wouldn't be surprised if Google overtakes Nvidia to be the most valuable in the world in the next few weeks. In fact, with the way things are going right now, it might happen before the end of the year. Now, sticking with the AI theme, let's talk about a new executive order that President Trump just signed called the Genesis Mission. And the White House is framing this as the next Manhattan Project, but for AI, the executive order calls for the creation of a federal AI platform led by the Department of Energy. And the idea is to pull together the enormous amount of data the government already sits on, like health, energy, engineering, materials science and more. This, I could use all that data to speed up scientific breakthroughs. Officials say this will shorten the timeline for major discoveries in fields like materials engineering, health science, and clean energy. You know, the federal government has already made some key infrastructure moves to help develop its own AI infrastructure. And this order is expected to spark more public private partnership with AI companies. Now, some AI executives, like Palantir's Alex Karp, have been calling for this kind of government AI Manhattan Project for months. Now. Alex Karp wants the US to become the dominant AI power on a global scale. And this executive order could be the first big step in that direction. Let's talk about some stocks making moves today. And we're talking retailers, starting with Abercrombie. It's up more than 17% today after delivering a record third quarter. Net sales for the retailer grew 7% right in line with expectations. But the real star was the holiday Hollister brand which saw sales surge 16% thanks to strong back to school demand. Crazy to think that Hollister is still doing its thing all these years later. This is now the third straight quarter that Abercrombie has posted quarterly sales growth and the company has been returning cash to shareholders, buying back $100 million in stock last quarter and over $350 million year to date. Next up we have Kohl's. Their stock is also up big after raising their full year earnings guidance. Now Kohl's has seen revenue declines for years now. Sales were down another 2.8% in Q3, but their margins did improve by 51 basis points which is like half a percent thanks to successful cost cutting measures. Kohl's has been on a multi quarter turnaround mission under new CEO Michael Bender and this quarter's beat shows progress. As a result, the stock is up more than 20% this morning. Now on the flip side, Bender Burlington stock has taken a hit this morning after the company missed their Q3 sales estimates. And what's funny is the company is blaming the warm weather on the miss. Turns out it's hard to sell coats when it's 75 degrees in October. Now Burlington did say things began to pick back up in mid November once the weather got colder and it's held up through the first three weeks of November. Despite the sales missed though, Burlington actually raised their full year earnings outlook. But that wasn't enough for investors and the stock is down more than 5% today. Let's wrap the show with the fun fact. Eli Lilly has become the first healthcare company in the world to hit a trillion dollar market cap. In fact, Eli Lilly is only the second non tech company in the U S to ever cross the trillion dollar mark. The other one being Warren Buffett's Berkshire Hathaway. Now Eli is riding high off the backs of their super popular GLP1 weight loss drug, Zepbound and Manjaro. And what's interesting here is that Eli Lilly wasn't even first in the space. Their main rival Novo Nordisk was the first one to gain traction with Ozempic. But now Eli Lilly has taken the majority of the weight loss market share. And they're also working on GLP weight loss pills too. So you can see why investors are pretty hyped about the company. And it goes to show you that being first doesn't always matter. Now I really wonder if Novo Nordisk is ever going to catch up at this point. Well, all right guys, that's the rundown for today. Hope you guys enjoyed today's episode. If you did and you have like five extra seconds, consider giving us a five star rating on Apple, Spotify, YouTube, wherever you listen to your podcast. And if you are listening on Spotify, don't forget to vote in today's Spotify poll. Leave us a comment on Spotify. All that engagement really does help us out and it helps other people find the show. Thank you guys so much for listening, watching and commenting. Shout out to Mike and Connor for all the work behind the scenes and we'll see you guys back here tomorrow.
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