Berber Jin (2:47)

OpenAI's calculus is that whoever goes out first will definitely benefit from a lot of the attention that will come from being the first generative AI company to be a public company and will be able to access a lot of the public money that is basically just waiting to be put into this new wave of gen AI companies. You have to remember that these businesses lose a lot of money. It costs a lot to build next generation models and to also power chatbots like ChatGPT and Claude. And there's going to be a limit to how much these companies can keep raising in the private market.

Luke Vargas (3:26)

Anthropic expects to break even for the first time in 2028, according to projections shared with investors last year, two years earlier than OpenAI. News Corp. Owner of the Wall Street Journal, has a content licensing partnership with OpenAI. Apple posted record quarterly sales yesterday after the market close, with iPhone revenue jumping 23% from a year earlier to more than $85 billion. That beat Wall street expectations. But as tech reporter Rolf Winkler told me, it didn' of a pop for Apple's shares in off hours trading.

Rolf Winkler (4:01)

What's a company got to do to impress investors is one thing you wonder about this earnings. The stock is flat on this report, which was gargantuan as the CFO put it to me. The company increased its revenue this quarter versus the year ago by $20 billion. People are upgrading to this new iPhone 17 in crazy numbers. For all the hand wringing about, Apple is behind in AI and they don't have this, they don't have that. What this quarter just proved is doesn't matter. People keep buying iPhones. No one's going to buy an Android device because it's got some killer AI feature that is must have and yet the stock's not reacting and Rolf explained this to us.

Luke Vargas (4:36)

It seems like the root of investor concern here seems to be around parts costs and a potential hit to margins as a result.

Rolf Winkler (4:43)

The concern is memory prices and prices for other components. The cost of chips is going up. Apple is no longer TSMC's sole major customer. Nvidia is buying up a whole bunch more of that production, which gives TSMC some leverage. There's other components, specialized glass fiber that is going up in price. So this is all stuff that AI hyperscalers are demanding in much greater amounts and suddenly Apple is not the only Goliath in the electronics supply chain. And people are looking to later this year and thinking that's going to start flowing through their financial statements. What does that mean for the bottom line?

Luke Vargas (5:23)

That was the Journal's Rolf Winkler. According to one supply chain analyst report, Apple may choose not to raise prices for next year's iPhone 18 lineup and instead take a hit to its gross profit margins and earnings. Season is rolling on today with the latest reports from oil majors Chevron and ExxonMobil this morning, along with American Express and Verizon. And we'll also get a reading on monthly supplier inflation with December's Producer price index due at 8:30am Eastern. Coming up, the rest of the day's news, including a deal in Washington to avoid a potential government shutdown. And we'll look at the Americans driving Costco Tourism abroad. Those stories and more after the break.

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Luke Vargas (6:40)

President Trump and Senate Democrats say they've reached a deal to avert a partial government shutdown and temporarily fund the Department of Homeland Security. Our Washington coverage, Damian Paletta says the deal would see the Senate quickly pass a handful of spending bills that have already cleared the House, but only a two week stopgap funding extension for dhs.

Damian Paletta (7:01)

After the killing of Renee Good and Alex Preddy in Minnesota, Democrats suddenly had a tremendous amount of leverage over the White House on the operations of ICE and the Department of Homeland Security. And the Republicans knew this. The White House knew this. In fact, they didn't even try to put up a fight. Now what exactly they end up giving is unclear, and what Democrats ask for is unclear. But they were just out of time on this spending package, so they agreed to this stepgap bill. It's going to probably take a little time to bump through Congress, so there could actually be technically a temporary shutdown over the weekend, although no one will really notice, and then they'll have a couple weeks to figure out what exactly they want to do. Now the Democrats could try to cut a deal quickly just to have some imprint on new policy, or they could go to the mat fight over possibly the removal of Kirsten Noem as the secretary of dhs. And that could be obviously a lot more complicated. So Democrats have to figure out how they want to proceed here, but they're going to have a little time to do that.

Luke Vargas (7:57)

President Trump is increasing pressure on US Allies pursuing closer ties with China, calling out an ongoing trip by British Prime Minister Keir Starmer to Beijing aimed at increasing business between the countries.

Alex Frangos (8:09)

It's very dangerous for them to do.

Damian Paletta (8:11)

That, and it's even more dangerous, I.

Alex Frangos (8:12)

Think, for Canada to get into business with China. Canada is not doing well.

Damian Paletta (8:18)

They're doing very poorly and you can't look at China as the answer.

Luke Vargas (8:23)

Starmer's talks with Chinese leader Xi Jinping follow Canadian Prime Minister Mark Carney's own trip to China, where the country has agreed to reduce tariffs on Chinese made EVs and Canadian agricultural products. That triggered Trump to threaten 100% tariffs against all Canadian imports in event of a free trade agreement between China and Canada, something Carney said he's not pursuing. Last night, Trump also warned that he might decertify Canadian made aircraft and apply 50% tariffs on imports in retaliation for what he described as the country's refusal to certify U S made Gulfstream jets. Panama's Supreme Court has annulled the contract for Hong Kong company CK Hutchison to operate two ports at either end of the Panama Canal. Hutchison can't appeal a Supreme Court ruling, but it can request clarifications that could delay the termination of its operating license. The ruling hands President Trump a victory for his security ambitions in the Western Hemisphere and his desire to dent China's influence there. Meanwhile, the Trump administration has moved to reopen commercial airspace over Venezuela and ease some sanctions on its battered oil industry. That comes as Venezuela's national assembly yesterday approved changes to hydrocarbon laws to allow US Companies more autonomy to operate in the country. And finally, how's this for a pre flight checklist? Passport, boarding pass and Costco membership card?

Damian Paletta (9:58)

I'm in Costco. Iceland. Let's go check it out.

Rolf Winkler (10:01)

My American Costco card works here.

Luke Vargas (10:03)

Merci. Today we're standing outside of Costco, but we're in Spain, Costco in Japan. I'm so excited right now. Journal reporter Stu Wu says that with locations in 13 foreign countries, Costco centric tourism is becoming a thing for the brand's American devotees.

Stu Wu (10:21)

There are these huge Costco fans who will fly to some of the most famous cities in the world, like Tokyo and Paris, and instead of going to the Louvre or some of the other Touristy things you might expect. They take a train or a car and they go all the way to the suburbs and they go to Costco. They go there to see what the locals are buying in bulk and they test out some of the stuff in the food court. If you go to TikTok YouTube, you'll find find these videos of people taking you through the Costco and saying, whoa, they have fish jerky in Iceland. Or look at these pallets of foie gras in France. Or this like kangaroo shaped potato snack in Australia. Like, for instance, I went to the one in Japan. Instead of a chicken bake, they have a beef bulgogi bake.

NetSuite Oracle Announcer (10:57)

Costco in Japan is a wonderland if you love Japanese food and products.

Luke Vargas (11:02)

So far, it looks exactly like an American Costco.

Rolf Winkler (11:05)

Trash bags here cost $40.31 back home, 1999. And do they have the same $50 hot dog or did they substitute it with something French like a Jambombert?

Stu Wu (11:17)

The things are like 90% the same. They got the rotisserie chicken, they got the Kirkland jeans. It's sort of like the 10% where you realize, oh, these things, you know, you wouldn't find in America. So a lot of it is when you step into one of these Costcos, it feels like home, but also you find out what really matters to the locals.

Luke Vargas (11:34)

And that's it for what's news for this Friday morning. Today's show was produced by Hattie Moyer, our supervising producer. Producer was Daniel Bach. And I'm Luke Vargas for the Wall Street Journal. We will be back tonight with a new show. Otherwise, have a great weekend and thanks for listening.