Amazon CEO, Andy Jassy speaking with CNBC’s Jim Cramer on Mad Money in Seattle, WA. on Dec. 6th, 2023.
CNBC
Amazon CEO Andy Jassy is trying to reassure investors who may be worried about the future payoff of the company’s massive investments in generative artificial intelligence.
On a conference call with analysts following the company’s third-quarter earnings report on Thursday, Jassy pointed to the success of Amazon’s cloud computing business, Amazon Web Services, which has become a crucial profit engine despite the extreme costs associated with building data centers.
“I think we’ve proven over time that we can drive enough operating income and free cash flow to make this a very successful return on invested capital business,” Jassy said. “We expect the same thing will happen here with generative AI.”
Amazon spent $22.6 billion on property and equipment during the quarter, up 81% from the year before. Jassy said Amazon plans to spend $75 billion on capex in 2024 and expects an even higher number in 2025.
The jump in spending is primarily being driven by generative AI investments, Jassy said. The company is rushing to invest in data centers, networking gear and hardware to meet vast demand for the technology, which has exploded in popularity since OpenAI released its ChatGPT assistant almost two years ago.
“It is a really unusually large, maybe once-in-a-lifetime type of opportunity,” Jassy said. “And I think our customers, the business and our shareholders will feel good about this long term that we’re aggressively pursuing it.”
AI spending was a big topic on tech earnings calls this week. Meta on Wednesday raised its capital expenditures guidance, and CEO Mark Zuckerberg said he was “quite happy” with the team’s execution. Meanwhile, Microsoft‘s investment in OpenAI weighed on its fiscal first-quarter earnings released on Wednesday, and the company said capital spending would continue to rise. A day earlier, Alphabet CFO Anat Ashkenazi warned the company expects capital spending to grow in 2025.
Amazon has said its cloud unit has picked up more business from companies that need infrastructure to deploy generative AI models. It’s also launched several AI products for enterprises, third-party sellers on its marketplace and advertisers in recent months. The company is expected to announce a souped-up version of its Alexa voice assistant that incorporates generative AI, something Jassy said will arrive “in the near future.”
Amazon hasn’t disclosed its revenue from generative AI, but Jassy said Thursday it’s become a “multi-billion-dollar revenue run rate” business within AWS that “continues to grow at a triple-digit year-over-year percentage.”
“It’s growing more than three times faster at this stage of its evolution as AWS itself grew, and we felt like AWS grew pretty quickly,” he added.
The Washington Post Building at One Franklin Square Building in Washington, D.C., June 5, 2024.
Andrew Harnik | Getty Images
The Washington Post said Friday that it will not endorse a candidate in the presidential election this year — or ever again — breaking decades of tradition and sparking immediate criticism of the decision.
But the newspaper also published an article by two staff reporters revealing that editorial page staffers had drafted an endorsement of Democratic nominee Kamala Harris over GOP nominee Donald Trump in the election.
“The decision not to publish was made by The Post’s owner — Amazon founder Jeff Bezos,” the article said, citing two sources briefed on the events.
Trump, while president, had been critical of the billionaire Bezos and the Post, which he purchased in 2013.
The newspaper in 2016 and again in 2020 endorsed Trump’s election opponents, Hillary Clinton and President Joe Biden, in editorials that condemned the Republican in blunt terms.
In a 2019 lawsuit, Amazon claimed it had lost a $10 billion cloud computing contract with the Pentagon to Microsoft because Trump had used “improper pressure … to harm his perceived political enemy” Bezos.
The Post since 1976 had regularly endorsed candidates for president, except for the 1988 race. All those endorsements had been for Democrats.
In a statement to CNBC, when asked about Bezos’ purported role in killing the endorsement, Post chief communications officer Kathy Baird said, “This was a Washington Post decision to not endorse, and I would refer you to the publisher’s statement in full.”
The Post on Friday evening published a third article, signed by opinion columnists for the newspaper, who said, “The Washington Post’s decision not to make an endorsement in the presidential campaign is a terrible mistake.”
“It represents an abandonment of the fundamental editorial convictions of the newspaper that we love, and for which we have worked a combined 218 years,” the column said. “This is a moment for the institution to be making clear its commitment to democratic values, the rule of law and international alliances, and the threat that Donald Trump poses to them — the precise points The Post made in endorsing Trump’s opponents in 2016 and 2020.”
CNBC has requested comment from Amazon, where Bezos remains the largest shareholder.
Amazon founder Jeff Bezos arrives for his meeting with British Prime Minister Boris Johnson at the UK diplomatic residence in New York City, Sept. 20, 2021.
Michael M. Santiago | Getty Images News | Getty Images
Post publisher and chief executive Will Lewis, in an article published online explaining the decision, wrote, “The Washington Post will not be making an endorsement of a presidential candidate in this election. Nor in any future presidential election.”
“We are returning to our roots of not endorsing presidential candidates,” Lewis wrote.
“We recognize that this will be read in a range of ways, including as a tacit endorsement of one candidate, or as a condemnation of another, or as an abdication of responsibility,” he wrote.
“That is inevitable. We don’t see it that way. We see it as consistent with the values The Post has always stood for and what we hope for in a leader: character and courage in service to the American ethic, veneration for the rule of law, and respect for human freedom in all its aspects.”
Seven of the 13 paragraphs of Lewis’ article either quoted at length or referred to Post Editorial Board statements in 1960 and 1972 explaining the paper’s rationale for not endorsing presidential candidates in those years, which included its identity as “an independent newspaper.”
Lewis noted that the paper had endorsed Jimmy Carter in 1976 “for understandable reasons at the times” — which he did not identify.
“But we had it right before that, and this is what we are going back to,” Lewis wrote.
“Our job as the newspaper of the capital city of the most important country in the world is to be independent,” he wrote. “And that is what we are and will be.”
Post editor-at-large Robert Kagan, a member of the paper’s opinions section, resigned following the decision, multiple news outlets reported.
More than 10,000 reader comments were posted on Lewis’ article, many of them blasting the Post for its decision and saying they were canceling their subscriptions.
“The most consequential election in our country, a choice between Fascism and Democracy, and you sit out? Cowards. Unethical, fearful cowards,” wrote one comment. “Oh, and by the way, I’m canceling my subscription, because you are putting business ahead of ethics and morals.”
The announcement came days after Mariel Garza, the head of The Los Angeles Times‘ editorial board, resigned in protest after that paper’s owner, Patrick Soon-Shiong, decided against running a presidential endorsement.
“I am resigning because I want to make it clear that I am not okay with us being silent,” Garza told the Columbia Journalism Review. “In dangerous times, honest people need to stand up. This is how I’m standing up.”
Soon-Shiong, like Bezos, is a billionaire.
Marty Baron, the former editor of The Washington Post, called that paper’s decision “cowardice, with democracy as its casualty.”
″@realdonaldtrump will see this as an invitation to further intimidate owner @jeffbezos (and others),” Baron wrote. “Disturbing spinelessness at an institution famed for courage.”
The Washington Post Guild, the union that represents the newspaper’s staff, in a statement posted on the social media site X said it was “deeply concerned that The Washington Post — an American news institution in the nation’s capital — would make a decision to no longer endorse presidential candidates, especially a mere 11 days ahead of an immensely consequential election.”
“The message from our chief executive, Will Lewis — not from the Editorial Board itself — makes us concerned that management interfered with the work of our members in Editorial,” the Guild said in the statement, which noted the paper’s reporting about Bezos’ role in the decision.
“We are already seeing cancellations from once loyal readers,” the Guild said. “This decision undercuts the work of our members at a time when we should be building our readers’ trust, not losing it.”
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Former Post reporters Bob Woodward and Carl Bernstein, whose stories about the Watergate break-in during the Nixon administration won the newspaper a Pulitzer Prize for Public Service, in a statement said, “We respect the traditional independence of the editorial page, but this decision 11 days out from the 2024 presidential election ignores the Washington Post’s own overwhelming reportorial evidence on the threat Donald Trump poses to democracy.”
“Under Jeff Bezos’s ownership, the Washington Post’s news operation has used its abundant resources to rigorously investigate the danger and damage a second Trump presidency could cause to the future of American democracy and that makes this decision even more surprising and disappointing, especially this late in the electoral process,” Woodward and Bernstein said.
Post columnist Karen Attiah, in a post on the social media site Threads, wrote, “Today has been an absolute stab in the back.”
“What an insult to those of us who have literally put our careers and lives on the line to call out threats to human rights and democracy,” Attiah wrote.
Rep. Ted Lieu, a Democrat from California, in his own tweet on the news wrote, “The first step towards fascism is when the free press cowers in fear.”
Trump in August told Fox Business News that Bezos called him after the Republican narrowly escaped an assassination attempt in July at a campaign rally in western Pennsylvania.
“He was very nice even though he owns The Washington Post,” Trump said of Bezos.
Bezos last posted on X on July 13, hours after the assassination attempt.
“Our former President showed tremendous grace and courage under literal fire tonight,” Bezos wrote in that tweet. “So thankful for his safety and so sad for the victims and their families.”
Trump on Friday met in Austin, Texas, with executives from the Bezos-owned space exploration company Blue Origin, among them CEO David Limp, the Associated Press reported
Amazon Web Services CEO, Matt Garman speaks during CNBC Power Lunch on July 1, 2024.
CNBC
Amazon‘s cloud boss on Thursday gave employees a frank message about the company’s recently announced five-day in-office mandate.
Staffers who don’t agree with Amazon’s new policy can leave, Amazon Web Services CEO Matt Garman said during an all-hands meeting at the company’s second headquarters in Arlington, Virginia.
“If there are people who just don’t work well in that environment and don’t want to, that’s OK, there are other companies around,” Garman said, according to a transcript viewed by CNBC. “At Amazon, we want to be in an environment where we are working together, and we feel that collaborative environment is incredibly important for our innovation and for our culture.”
Garman’s comments were reported earlier by Reuters.
Amazon announced the new mandate last month. The company’s previous return-to-work stance required corporate workers to be in office at least three days a week. Employees have until Jan. 2 to adhere to the new policy.
Amazon is forgoing its pandemic-era remote work policies as it looks to keep up with rivals Microsoft, OpenAI and Google in the race to develop generative artificial intelligence. It’s one of the primary tasks in front of Garman, who took over AWS in June after his predecessor Adam Selipsky stepped down from the role.
The move has spurred backlash from some Amazon employees who say they’re just as productive working from home or in a hybrid work environment as they are in an office. Others say the mandate puts extra strain on families and caregivers.
Roughly 37,000 employees have joined an internal Slack channel created last year to advocate for remote work and share grievances about the return-to-work mandate, according to a person familiar with the matter.
At the all-hands meeting, Garman said he’s been speaking with employees and “nine out of 10 people are actually quite excited by this change.” He acknowledged there will be cases where employees have some flexibility.
“What we really mean by this is we want to have an office environment,” said Garman, noting an example scenario where an employee may want to work from home one day with their manager’s approval to focus on their work in a quiet environment.
“Those are fine,” he said.
An Amazon spokesperson didn’t immediately respond to a request for comment.
Garman said the mandate is important for preserving Amazon’s culture and “leadership principles,” which are a list of more than a dozen business philosophies meant to guide employee decisions and goals. He pointed to Amazon’s principle of “disagree and commit,” which is the idea that employees should debate and push back on each others ideas respectfully. That practice can be particularly hard to carry out over Amazon’s videoconferencing software, called Chime, Garman said.
“I don’t know if you guys have tried to disagree via a Chime call — it’s very hard,” Garman said.
The Morgan Stanley headquarters in New York, US, on Wednesday, Dec. 27, 2023.
Angus Mordant | Bloomberg | Getty Images
This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
Follow Decision Time for the ECB live Market watchers are expecting the European Central Bank to cut rates by 25 basis points at its meeting later today. If that projection pans out, it’d be the third time the ECB’s cutting rates this year. Catch today’s action on Decision Time, CNBC’s live show analyzing the decision, starting 1 p.m. BST.
New support measures for real estate China’s housing ministry said Thursday it’ll broaden its “whitelist” initiative to all commercial housing projects, which aims to complete the construction of unfinished homes. The ministry also announced that bank loans to developers will be speeded up and nearly double to 4 million trillion yuan by the end of 2024, from the 2.23 trillion yuan already approved.
Potential probe of Intel Intel is potentially facing a security review by the Cybersecurity Association of China. Officials allege that Intel’s CPU chips possess vulnerabilities in security management and flaws in product quality. CSAC also accused Intel of using remote management features to surveil users.
[PRO] A shining sector that’s not tech nor utilities Big Tech stocks, fueled by excitement over generative artificial intelligence, have been responsible for most of this year’s rally in the market. Gen AI is powered by energy-hungry data centers, which benefits the utilities sector. But there’s a new group of stocks that’s fast becoming one of the best-performing sectors for the year.
The pullback in stocks on Wednesday was brief, like a marathoner pausing to drink before pounding the road again.
“Yesterday’s weakness does not change the intermediate and long-term uptrends, and we believe it will prove to be just a pullback within the context of a longer-term uptrend,” Piper Sandler said in a note.
After dipping from its 43,000 level on Tuesday, the Dow Jones Industrial Average rose 0.79% Wednesday to break that barrier again, closing at 43,077.70.
Markets are basking in the glow of a positive earnings season so far. Around 80% of the 50 S&P companies that have posted earnings have topped expectations, according to FactSet data.
Morgan Stanley, for one, reported third-quarter figures that surpassed earnings and revenue estimates. The bank’s profit jumped 32% from a year ago, far outstripping the LSEG estimate and topping several other big banks’ income growth.
The investment banking business was a main source of profit for Morgan Stanley. Supported by the U.S. Federal Reserve beginning its rate-cutting cycle, initial public offerings and mergers and acquisitions are emerging from hibernation, injecting fresh life into Wall Street banks.
Morgan Stanley popped 6.5% after results. The SPDR S&P Bank ETF has jumped more than 6% over the past five trading days. In another sign of the rally broadening, the banking ETF has outstripped the S&P 500’s climb of less than 1% during the same period.
“We anticipate the macroeconomic and earnings environments to remain favorable,” UBS says, “which supports staying invested in equities.”
With monetary policy easing, the economy staying strong and inflation cooling — import prices dipped 0.4% for September, according to the U.S. Labor Department — stocks look like they have stamina to keep going higher.
– CNBC’s Hugh Son, Alex Harring, Jeff Cox, Lisa Kailai Han and Jesse Pound contributed to this story.
The Morgan Stanley headquarters in New York, US, on Monday, Oct. 14, 2024.
Michael Nagle | Bloomberg | Getty Images
This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
The pullback in stocks on Wednesday was brief, like a marathoner pausing to drink before pounding the road again.
“Yesterday’s weakness does not change the intermediate and long-term uptrends, and we believe it will prove to be just a pullback within the context of a longer-term uptrend,” Piper Sandler said in a note.
After dipping from its 43,000 level on Tuesday, the Dow Jones Industrial Average rose 0.79% Wednesday to break that barrier again, closing at 43,077.70.
Markets are basking in the glow of a positive earnings season so far. Around 80% of the 50 S&P companies that have posted earnings have topped expectations, according to FactSet data.
Morgan Stanley, for one, reported third-quarter figures that surpassed earnings and revenue estimates. The bank’s profit jumped 32% from a year ago, far outstripping the LSEG estimate and topping several other big banks’ income growth.
The investment banking business was a main source of profit for Morgan Stanley. Supported by the U.S. Federal Reserve beginning its rate-cutting cycle, initial public offerings and mergers and acquisitions are emerging from hibernation, injecting fresh life into Wall Street banks.
Morgan Stanley popped 6.5% after results. The SPDR S&P Bank ETF has jumped more than 6% over the past five trading days. In another sign of the rally broadening, the banking ETF has outstripped the S&P 500’s climb of less than 1% during the same period.
“We anticipate the macroeconomic and earnings environments to remain favorable,” UBS says, “which supports staying invested in equities.”
With monetary policy easing, the economy staying strong and inflation cooling — import prices dipped 0.4% for September, according to the U.S. Labor Department — stocks look like they have stamina to keep going higher.
– CNBC’s Hugh Son, Alex Harring, Jeff Cox, Lisa Kailai Han and Jesse Pound contributed to this story.
Britain’s Prime Minister Keir Starmer delivers a speech on stage during the International Investment Summit, held at The Guildhall, in central London, on October 14, 2024.
Jonathan Brady | Afp | Getty Images
LONDON — The U.K.’s Labour government said Monday that it had secured £63 billion ($82 billion) in fresh investment at the close of a summit aimed at wooing overseas capital.
Finance Minister Rachel Reeves hailed the “shovel ready” spending commitments — from companies including Blackstone, MacQuarie, Iberdrola, Amazon Web Services, ServiceNow and Eli Lilly — which she said would create almost 40,000 new jobs across the country.
“We are bringing investment and jobs back to this country. Britain is open for business again,” she said during closing remarks at the summit.
The announcement comes after Prime Minister Keir Starmer earlier on Monday vowed to slash regulatory red tape to boost anemic investment in the country.
“We’ve got to look at regulation across the piece, and where it is needlessly holding back investment … mark my words, we will get rid of it,” he told delegates at the government’s inaugural International Investment Summit, held at London’s Guildhall.
“It’s time to upgrade the regulatory regime. We will rip up the bureaucracy that blocks investment,” he added.
Starmer did not say exactly which regulations would be changed. However, the government said in a statement that it was “reviewing the focus” of major regulators, with the Competition and Markets Authority (CMA) in particular being charged to “prioritise growth, investment, and innovation.”
The regulatory overhaul is just one part of the Labour Party’s plans to place Britain at the forefront of emerging opportunities.
Last week, it launched a new Regulatory Innovation Office to reduce the burden of red tape for businesses working on “game-changing” technologies. Meanwhile, ministers have been introducing changes to the planning system to boost new building projects.
The prime minister restated that growth was the “No. 1 test of this government,” and reiterated plans for the U.K. to become the fastest-growing G7 economy.
Starmer also outlined stability, strategy, regulation and improving Britain’s global standing as “four crucial areas” in his pitch for Britain.
“Private sector investment is the way we rebuild our country and pay our way in the world,” he said.
Speaking during a panel discussion with Starmer on Monday, Google‘s former CEO Eric Schmidt said he was “shocked” when he heard that the Labour party had become strongly in favor of growth.
Schmidt added that he was waiting to see “how you pull it off,” urging the government to invest further in artificial intelligence to achieve its wider growth goals.
Some have expressed concern over the government’s proposed regulatory rollback, warning that certain measures could risk harming growth and innovation.
“There are regulations that are bad for innovation, productivity and growth and there are regulations that are absolutely necessary for them,” Ali Nikpay, partner co-chair of the antitrust and competition group at law firm Gibson Dunn, told CNBC via email.
“Take merger control: The government wants the CMA to be more hands off. That might give a few sectors a sugar rush in the short run as deals that would have been blocked in the past are cleared. But in the longer run that’ll reduce innovation and growth across the economy,” he added.
Labour has been attempting to paint a more positive picture of the economy after being accused of doom-mongering in its early months in office. It is also seeking to position itself as a reliable partner after years of upheaval — including Brexit — a slew of prime ministers and a bond market selloff.
Opening the summit, Business and Trade Minister Jonathan Reynolds heralded a “new era of stability, of openness, [and] of commitment to use our mandate” to remove barriers to business.
The government on Sunday announced the launch of a new industrial strategy, designed to focus on eight “growth-driving sectors.” Those include the creative industries, financial services, advanced manufacturing, professional services, defense, tech, life sciences and clean energy industries.
Former President Donald Trump and Vice President Kamala Harris face off in the ABC presidential debate on Sept. 10, 2024.
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With the U.S. election less than a month away, the country and its corporations are staring down two drastically different options.
For airlines, banks, electric vehicle makers, health-care companies, media firms, restaurants and tech giants, the outcome of the presidential contest could result in stark differences in the rules they’ll face, the mergers they’ll be allowed to pursue, and the taxes they’ll pay.
During his last time in power, former President Donald Trump slashed the corporate tax rate, imposed tariffs on Chinese goods, and sought to cut regulation and red tape and discourage immigration, ideas he’s expected to push again if he wins a second term.
In contrast, Vice President Kamala Harris has endorsed hiking the tax rate on corporations to 28% from the 21% rate enacted under Trump, a move that would require congressional approval. Most business executives expect Harris to broadly continue President Joe Biden‘s policies, including his war on so-called junk fees across industries.
Personnel is policy, as the saying goes, so the ramifications of the presidential race won’t become clear until the winner begins appointments for as many as a dozen key bodies, including the Treasury, Justice Department, Federal Trade Commission, and Consumer Financial Protection Bureau.
CNBC examined the stakes of the 2024 presidential election for some of corporate America’s biggest sectors. Here’s what a Harris or Trump administration could mean for business:
The result of the presidential election could affect everything from what airlines owe consumers for flight disruptions to how much it costs to build an aircraft in the United States.
The Biden Department of Transportation, led by Secretary Pete Buttigieg, has taken a hard line on filling what it considers to be holes in air traveler protections. It has established or proposed new rules on issues including refunds for cancellations, family seating and service fee disclosures, a measure airlines have challenged in court.
“Who’s in that DOT seat matters,” said Jonathan Kletzel, who heads the travel, transportation and logistics practice at PwC.
The current Democratic administration has also fought industry consolidation, winning two antitrust lawsuits that blocked a partnership between American Airlines and JetBlue Airways in the Northeast and JetBlue’s now-scuttled plan to buy budget carrier Spirit Airlines.
The previous Trump administration didn’t pursue those types of consumer protections. Industry members say that under Trump, they would expect a more favorable environment for mergers, though four airlines already control more than three-quarters of the U.S. market.
On the aerospace side, Boeing and the hundreds of suppliers that support it are seeking stability more than anything else.
Trump has said on the campaign trail that he supports additional tariffs of 10% or 20% and higher duties on goods from China. That could drive up the cost of producing aircraft and other components for aerospace companies, just as a labor and skills shortage after the pandemic drives up expenses.
Tariffs could also challenge the industry, if they spark retaliatory taxes or trade barriers to China and other countries, which are major buyers of aircraft from Boeing, a top U.S. exporter.
Big banks such as JPMorgan Chase faced an onslaught of new rules this year as Biden appointees pursued the most significant slate of regulations since the aftermath of the 2008 financial crisis.
Those efforts threaten tens of billions of dollars in industry revenue by slashing fees that banks impose on credit cards and overdrafts and radically revising the capital and risk framework they operate in. The fate of all of those measures is at risk if Trump is elected.
Trump is expected to nominate appointees for key financial regulators, including the CFPB, the Securities and Exchange Commission, the Office of the Comptroller of the Currency and Federal Deposit Insurance Corporation that could result in a weakening or killing off completely of the myriad rules in play.
“The Biden administration’s regulatory agenda across sectors has been very ambitious, especially in finance, and large swaths of it stand to be rolled back by Trump appointees if he wins,” said Tobin Marcus, head of U.S. policy at Wolfe Research.
Bank CEOs and consultants say it would be a relief if aspects of the Biden era — an aggressive CFPB, regulators who discouraged most mergers and elongated times for deal approvals — were dialed back.
“It certainly helps if the president is Republican, and the odds tilt more favorably for the industry if it’s a Republican sweep” in Congress, said the CEO of a bank with nearly $100 billion in assets who declined to be identified speaking about regulators.
Still, some observers point out that Trump 2.0 might not be as friendly to the industry as his first time in office.
Trump’s vice presidential pick, Sen. JD Vance, of Ohio, has often criticized Wall Street banks, and Trump last month began pushing an idea to cap credit card interest rates at 10%, a move that if enacted would have seismic implications for the industry.
Bankers also say that Harris won’t necessarily cater to traditional Democratic Party ideas that have made life tougher for banks. Unless Democrats seize both chambers of Congress as well as the presidency, it may be difficult to get agency heads approved if they’re considered partisan picks, experts note.
“I would not write off the vice president as someone who’s automatically going to go more progressive,” said Lindsey Johnson, head of the Consumer Bankers Association, a trade group for big U.S. retail banks.
Electric vehicles have become a polarizing issue between Democrats and Republicans, especially in swing states such as Michigan that rely on the auto industry. There could be major changes in regulations and incentives for EVs if Trump regains power, a fact that’s placed the industry in a temporary limbo.
“Depending on the election in the U.S., we may have mandates; we may not,” Volkswagen Group of America CEO Pablo Di Si said Sept. 24 during an Automotive News conference. “Am I going to make any decisions on future investments right now? Obviously not. We’re waiting to see.”
Republicans, led by Trump, have largely condemned EVs, claiming they are being forced upon consumers and that they will ruin the U.S. automotive industry. Trump has vowed to roll back or eliminate many vehicle emissions standards under the Environmental Protection Agency and incentives to promote production and adoption of the vehicles.
If elected, he’s also expected to renew a battle with California and other states who set their own vehicle emissions standards.
“In a Republican win … We see higher variance and more potential for change,” UBS analyst Joseph Spak said in a Sept. 18 investor note.
In contrast, Democrats, including Harris, have historically supported EVs and incentives such as those under the Biden administration’s signature Inflation Reduction Act.
Harris hasn’t been as vocal a supporter of EVs lately amid slower-than-expected consumer adoption of the vehicles and consumer pushback. She has said she does not support an EV mandate such as the Zero-Emission Vehicles Act of 2019, which she cosponsored during her time as a senator, that would have required automakers to sell only electrified vehicles by 2040. Still, auto industry executives and officials expect a Harris presidency would be largely a continuation, though not a copy, of the past four years of Biden’s EV policy.
They expect some potential leniency on federal fuel economy regulations but minimal changes to the billions of dollars in incentives under the IRA.
Both Harris and Trump have called for sweeping changes to the costly, complicated and entrenched U.S. health-care system of doctors, insurers, drug manufacturers and middlemen, which costs the nation more than $4 trillion a year.
Despite spending more on health care than any other wealthy country, the U.S. has the lowest life expectancy at birth, the highest rate of people with multiple chronic diseases and the highest maternal and infant death rates, according to the Commonwealth Fund, an independent research group.
Meanwhile, roughly half of American adults say it is difficult to afford health-care costs, which can drive some into debt or lead them to put off necessary care, according to a May poll conducted by health policy research organization KFF.
Both Harris and Trump have taken aim at the pharmaceutical industry and proposed efforts to lower prescription drug prices in the U.S., which are nearly three times higher than those seen in other countries.
But many of Trump’s efforts to lower costs have been temporary or not immediately effective, health policy experts said. Meanwhile, Harris, if elected, can build on existing efforts of the Biden administration to deliver savings to more patients, they said.
Harris specifically plans to expand certain provisions of the IRA, part of which aims to lower health-care costs for seniors enrolled in Medicare. Harris cast the tie-breaking Senate vote to pass the law in 2022.
Her campaign says she plans to extend two provisions to all Americans, not just seniors: a $2,000 annual cap on out-of-pocket drug spending and a $35 limit on monthly insulin costs.
Harris also intends to accelerate and expand a provision allowing Medicare to directly negotiate drug prices with manufacturers for the first time. Drugmakers fiercely oppose those price talks, with some challenging the effort’s constitutionality in court.
Trump hasn’t publicly indicated what he intends to do about IRA provisions.
Some of Trump’s prior efforts to lower drug prices “didn’t really come into fruition” during his presidency, according to Dr. Mariana Socal, a professor of health policy and management at the Johns Hopkins Bloomberg School of Public Health.
For example, he planned to use executive action to have Medicare pay no more than the lowest price that select other developed countries pay for drugs, a proposal that was blocked by court action and later rescinded.
Trump also led multiple efforts to repeal the Affordable Care Act, including its expansion of Medicaid to low-income adults. In a campaign video in April, Trump said he was not running on terminating the ACA and would rather make it “much, much better and far less money,” though he has provided no specific plans.
He reiterated his belief that the ACA was “lousy health care” during his Sept. 10 debate with Harris. But when asked he did not offer a replacement proposal, saying only that he has “concepts of a plan.”
Top of mind for media executives is mergers and the path, or lack thereof, to push them through.
The media industry’s state of turmoil — shrinking audiences for traditional pay TV, the slowdown in advertising, and the rise of streaming and challenges in making it profitable — means its companies are often mentioned in discussions of acquisitions and consolidation.
While a merger between Paramount Global and Skydance Media is set to move forward, with plans to close in the first half of 2025, many in media have said the Biden administration has broadly chilled deal-making.
“We just need an opportunity for deregulation, so companies can consolidate and do what we need to do even better,” Warner Bros. Discovery CEO David Zaslav said in July at Allen & Co.’s annual Sun Valley conference.
Media mogul John Malone recently told MoffettNathanson analysts that some deals are a nonstarter with this current Justice Department, including mergers between companies in the telecommunications and cable broadband space.
Still, it’s unclear how the regulatory environment could or would change depending on which party is in office. Disney was allowed to acquire Fox Corp.’s assets when Trump was in office, but his administration sued to block AT&T’s merger with Time Warner. Meanwhile, under Biden’s presidency, a federal judge blocked the sale of Simon & Schuster to Penguin Random House, but Amazon’s acquisition of MGM was approved.
“My sense is, regardless of the election outcome, we are likely to remain in a similar tighter regulatory environment when looking at media industry dealmaking,” said Marc DeBevoise, CEO and board director of Brightcove, a streaming technology company.
When major media, and even tech, assets change hands, it could also mean increased scrutiny on those in control and whether it creates bias on the platforms.
“Overall, the government and FCC have always been most concerned with having a diversity of voices,” said Jonathan Miller, chief executive of Integrated Media, which specializes in digital media investment. “But then [Elon Musk’s purchase of Twitter] happened, and it’s clearly showing you can skew a platform to not just what the business needs, but to maybe your personal approach and whims,” he said.
Since Musk acquired the social media platform in 2022, changing its name to X, he has implemented sweeping changes including cutting staff and giving “amnesty” to previously suspended accounts, including Trump’s, which had been suspended following the Jan. 6, 2021, Capitol insurrection. Musk has also faced widespread criticism from civil rights groups for the amplification of bigotry on the platform.
Musk has publicly endorsed Trump, and was recently on the campaign trail with the former president. “As you can see, I’m not just MAGA, I’m Dark MAGA,” Musk said at a recent event. The billionaire has raised funds for Republican causes, and Trump has suggested Musk could eventually play a role in his administration if the Republican candidate were to be reelected.
During his first term, Trump took a particularly hard stance against journalists, and pursued investigations into leaks from his administration to news organizations. Under Biden, the White House has been notably more amenable to journalists.
Also top of mind for media executives — and government officials — is TikTok.
Lawmakers have argued that TikTok’s Chinese ownership could be a national security risk.
Earlier this year, Biden signed legislation that gives Chinese parent ByteDance until January to find a new owner for the platform or face a U.S. ban. TikTok has said the bill, the Protecting Americans From Foreign Adversary Controlled Applications Act, which passed with bipartisan support, violates the First Amendment. The platform has sued the government to stop a potential ban.
While Trump was in office, he attempted to ban TikTok through an executive order, but the effort failed. However, he has more recently switched to supporting the platform, arguing that without it there’s less competition against Meta’s Facebook and other social media.
Both Trump and Harris have endorsed plans to end taxes on restaurant workers’ tips, although how they would do so is likely to differ.
The food service and restaurant industry is the nation’s second-largest private-sector employer, with 15.5 million jobs, according to the National Restaurant Association. Roughly 2.2 million of those employees are tipped servers and bartenders, who could end up with more money in their pockets if their tips are no longer taxed.
Trump’s campaign hasn’t given much detail on how his administration would eliminate taxes on tips, but tax experts have warned that it could turn into a loophole for high earners. Claims from the Trump campaign that the Republican candidate is pro-labor have clashed with his record of appointing leaders to the National Labor Relations Board who have rolled back worker protections.
Meanwhile, Harris has said she’d only exempt workers who make $75,000 or less from paying income tax on their tips, but the money would still be subject to taxes toward Social Security and Medicare, the Washington Post previously reported.
In keeping with the campaign’s more labor-friendly approach, Harris is also pledging to eliminate the tip credit: In 37 states, employers only have to pay tipped workers the minimum wage as long as that hourly wage and tips add up to the area’s pay floor. Since 1991, the federal pay floor for tipped wages has been stuck at $2.13.
“In the short term, if [restaurants] have to pay higher wages to their waiters, they’re going to have to raise menu prices, which is going to lower demand,” said Michael Lynn, a tipping expert and Cornell University professor.
Whichever candidate comes out ahead in November will have to grapple with the rapidly evolving artificial intelligence sector.
Generative AI is the biggest story in tech since the launch of OpenAI’s ChatGPT in late 2022. It presents a conundrum for regulators, because it allows consumers to easily create text and images from simple queries, creating privacy and safety concerns.
Harris has said she and Biden “reject the false choice that suggests we can either protect the public or advance innovation.” Last year, the White House issued an executive order that led to the formation of the Commerce Department’s U.S. AI Safety Institute, which is evaluating AI models from OpenAI and Anthropic.
Trump has committed to repealing the executive order.
A second Trump administration might also attempt to challenge a Securities and Exchange Commission rule that requires companies to disclose cybersecurity incidents. The White House said in January that more transparency “will incentivize corporate executives to invest in cybersecurity and cyber risk management.”
Trump’s running mate, Vance, co-sponsored a bill designed to end the rule. Andrew Garbarino, the House Republican who introduced an identical bill, has said the SEC rule increases cybersecurity risk and overlaps with existing law on incident reporting.
Also at stake in the election is the fate of dealmaking for tech investors and executives.
With Lina Khan helming the FTC, the top tech companies have been largely thwarted from making big acquisitions, though the Justice Department and European regulators have also created hurdles.
Tech transaction volume peaked at $1.5 trillion in 2021, then plummeted to $544 billion last year and $465 billion in 2024 as of September, according to Dealogic.
Many in the tech industry are critical of Khan and want her to be replaced should Harris win in November. Meanwhile, Vance, who worked in venture capital before entering politics, said as recently as February — before he was chosen as Trump’s running mate — that Khan was “doing a pretty good job.”
Khan, whom Biden nominated in 2021, has challenged Amazon and Meta on antitrust grounds and has said the FTC will investigate AI investments at Alphabet, Amazon and Microsoft.
A worker prepares packages at an Amazon same-day delivery fulfillment center on Prime Day in the Bronx borough of New York, US, on Tuesday, July 16, 2024. Amazon.com Inc.’s Prime Day sales rose about 13% in the first six hours of the event compared with the same period last year, according to Momentum Commerce, which manages 50 brands in a variety of product categories. Photographer: Stephanie Keith/Bloomberg via Getty Images
Bloomberg | Bloomberg | Getty Images
Amazon’s checkout function encountered technical issues on Friday, keeping customers from completing purchases. The e-commerce site displayed error messages with photos of dogs during the outage as people posted about it on social media.
To run its website, Amazon relies on its own data center infrastructure. But the company’s Amazon Web Services division was not reporting any technical issues while the checkout feature wasn’t working. AWS downtime can lead to problems across the internet because so many companies rely on the market-leading public cloud.
An Amazon spokesperson did not immediately respond to a request for comment.
In the run-up to the long weekend in the U.S., Amazon has started promoting discounts on products as part of a Labor Day sale. But people weren’t able to purchase discounted products because of the glitch, as some people pointed out on the X social network.
The Amazon Help account on X replied with a recommendation to contact the company.
Amazon has warned investors that technical incidents can lead to lower sales and a worse perception of the company’s products and services. Sales are healthy at almost $148 billion in the second quarter.
Timothy Armoo, co-founder and former CEO of Fanbytes.
Timothy Armoo
Timothy Armoo is a 29-year-old millionaire who became rich by selling his influencer marketing firm for eight-figures, but the young, Black entrepreneur had to beat the odds to find success.
Armoo, the co-founder and former CEO of Fanbytes, hails from what was one of the most impoverished areas in south London and as a teenager lived with his dad on a fourth floor council estate — public housing — on Old Kent Road in the borough of Southwark.
“It was the poorest place,” Armoo told CNBC Make It in an interview. “It was at the peak of when Peckham, Brixton and Old Kent Road were having their beef [British slang for conflict] so it was in the middle of the gang warfare. Between 2005 and 2012 was the peak of the South London gangs.”
Trust for London names Southwark as one of 19 boroughs that have “significantly” higher levels of poverty compared to England as a whole.
Armoo knew he was poor, but he had a keen entrepreneurial spirit and managed to cobble together some money by starting his own tutoring business at 14-years-old.
He taught fellow students math and as more students approached him for help with other subjects, he started connecting them with tutors he knew and took a cut of the fee.
“I remember very specifically the first time I connected these two people,” he said. “Jane needed some help with chemistry, and I connected her to Harry, and Harry helped her, and I got £5 (around $6.6) in commission for connecting them, because [the business] charged £15 an hour.”
It was only when Armoo received a scholarship to go to a private boarding school when he was just 16-years-old to complete his A-Levels — equivalent to the Advanced Placement program in the U.S. — that his entire view of wealth changed.
“I remember one day this kid got picked up in a helicopter,” he recalled. “It opened up my eyes that there is a way to build wealth and you don’t have to be Richard Branson. There’s a whole world of people in between there.”
He started to realize that “money was a tool” to change his life and the fastest way to escape poverty was to start his own business.
“When I was growing up on that fourth floor council estate, I would always say to myself ‘This is temporary. This is temporary. This is temporary,'” he said. “I didn’t get to choose the circumstances I was in at 10 years old … but at least I got to decide what ends up happening.”
Here’s how Armoo went from living in a council estate to starting his own business and then becoming a millionaire before the age of 30.
Armoo was 17-years-old and still completing his A-Levels when he sold his first business, an online blog called Entrepreneur Express, for £110,000, after only 11 months of running it.
“Everyone’s aspiration was to go to Oxbridge [The Universities of Oxford and Cambridge] and mine was just ‘I want to make money and I want to get out of my s—ty situation,'” Armoo said.
The 29-year-old interviewed high-profile figures for Entrepreneur Express from the likes of Virgin Group co-founder Richard Branson, the face of the British TV show “The Apprentice” Alan Sugar and actor James Caan, but making the blog profitable was a challenge.
Initially he had a print version of the blog ready to be taken in by university society groups but as the deadline drew closer, he realized he didn’t have enough advertising to sustain the print publication.
The young entrepreneur then turned his attention to placing advertisements on the online blog. “This is where I had my success,” he said.
He said his “hack” was the distribution of content from the blog via viral social media accounts on Instagram and Facebook such as meme pages and feel-good quote pages.
Armoo would package the articles into social media posts with a hook like “10 quotes to…” and this would drive people from the post to his site.
“The way that we made money was by two things: one was programmatic advertising — so just banner ads, but I would also then sell sponsored slots to tax firms, law firms, and accountancy firms so they could get a direct ROI [return on investment.]”
Armoo said your first business doesn’t need to be “a billion dollar idea.” Instead “your first business should just get you on the first money ladder.”
He echoed the advice of the late investment guru Charlie Munger who said that making the first $100,000 is the hardest “but you gotta do it.”
Armoo agreed saying: “If you optimize for that first £100,000 … you slog, and you go crazy for it, life just becomes easier, because then you know a bit of the playbook… now, at the very least, you have a financial cushion to make choices which are not as risky.”
Armoo co-founded Fanbytes with Ambrose Cooke and Mitchell Fasanya in 2017.
Tim Armoo
Armoo considers himself an early pioneer in the burgeoning creator economy industry because he co-founded the influencer marketing firm Fanbytes in 2017 with Ambrose Cooke and Mitchell Fasanya.
Fanbytes’ goal was to connect brands with influencers to create advertising campaigns — a popular marketing strategy at the time as companies transitioned from traditional advertising to using influencers on social media to sell products.
Their strategy worked as Fanbytes amassed a notable roster of clients from Nike, Samsung, Amazon and ITV, Armoo said.
One 2016 study by TapInfluence found that social media influencer marketing was 11 times more effective than banner ads on a website, which is why brands were flocking to influencers, according to CNBC reporting.
“I saw the rise of influencer marketing in the U.S.,” Armoo said and he decided to replicate the idea in the U.K.
You don’t always need to invent something new as an entrepreneur, instead you can “service existing demand,” Armoo advised.
The company was “raising dribs and drabs,” across different stagesbefore ultimately raising £2 million in funding.
“First ever bit of investment was like 15 grand, then 40 grand, and then 120 grand, and then 300 grand, and then 600 grand,” Armoo said.
His work with Fanbytes landed him on the Forbes 30 Under 30 list in 2021, and soon after in October that year, offers started rolling in from people wanting to purchase Fanbytes.
He then appointed a bank to coordinate deals for the company which went on to find six companies interested in acquiring Fanbytes.
Armoo, who was 27-years-old at the time, and his co-founders sold Fanbytes to Brainlabs, a global digital marketing agency, in an eight-figure deal in May 2022, which made them all multi-millionaires.
“The aim was always to build something that could be sold,” Armoo said. “I spoke to this guy once when I was pretty early on in my journey, and he said that you can make money while running a business, but you build wealth by selling the business.”
Armoo always knew that he didn’t want to run Fanbytes for the rest of his life.
“Fanbytes could have been selling shoelaces to frogs and I still would have been passionate if I thought this is a business we are building and it has the end goal of being something that can achieve financial security,” he said.
Armoo and his co-founders sold Fanbytes to Brainlabs in May 2022.
Timothy Armoo
Black founders often struggle to raise capital. In fact, Black-founded startups in the U.S. only raised 0.48% of all venture dollars allocated in 2023, per Crunchbase data previously reported by CNBC.
This follows a decline in funding being given to Black-owned businesses since 2020, after the murder of George Floyd and the social justice movement that followed his death.
Meanwhile, 87% of non-white founders said they faced more barriers to fundraising compared with 79% of white founders, according to Atomico’s State of European Tech Report 2023.
Armoo says it was all about perspective and believed that being Black didn’t hold him back.
“Everyone remembered the bearded Black guy in a room full of white people. Everyone remembers that and so for me, it increases how memorable you are,” he said about his experience of going to events to meet investors.
He explained that you can either walk into a room and feel insecure because there aren’t that many people that look like you, or you can believe that that factor will help you standout.
“I never saw myself as a Black entrepreneur. I always just saw myself as an entrepreneur,” he said.
“I think maybe I’m too logical for my own good. I was like ‘investors want to make money. This business is going to make them money. I’m going to show them how it makes them money.’ That’s it. I didn’t really think they cared if it was coming from the mouth of a white guy or a Black guy.”
Now, as a 29-year-old millionaire, Armoo is confident that this world view has “served him well.”
Real estate stocks have been lagging the market, but here is one corner in particular where Janus Henderson sees an underappreciated opportunity. Overall, real estate stocks have started to rebound, with the S & P 500 real estate sector rallying 10% over the past month. However, it is one of the worst-performing sectors in the index year to date, up about 5% compared to the S & P ‘s 19% gain through Thursday. Still, there is one area that has fared worse than many of its counterparts: industrial real estate investment trusts. Greg Kuhl, a portfolio manager in Janus Henderson’s global property equities team, thinks that is going to change. “Supply is going to be falling off really dramatically towards the second half of this year and into next year — and it seems like demand in the right product types and the right submarkets is holding up just fine,” he explained. “There’s some really interesting opportunities.” REITs can also pay out attractive dividends. .SPLRCR YTD mountain S & P 500 Real Estate Sector year to date As its name implies, industrial REITs own, manage and rent out space in industrial facilities. The benchmark Janus uses for the overall REIT sector is the FTSE Nareit Equity REITs , which tracks commercial real estate across the U.S. The index has seen a total return just north of 7% year to date, as of Thursday. However, its industrial REIT index has a total return of -0.75% so far this year. The industry took a hit in April after industrial property giant Prologis cut its full-year outlook , citing economic uncertainty and delayed leasing decisions. However, in July, the company raised its full-year guidance . Meanwhile, construction data shows that supply will be diminishing, Kuhl noted. That said, he is being selective within the subsector. “In our view, supply/demand fundamentals are more favorable in the Sun Belt and Midwest markets today as compared with coastal markets, especially California,” he said. California is the largest industrial market in the U.S., he added. One of his largest industrial overweights is EastGroup Properties , which has exposure to the Sun Belt. The company, which has a dividend yield of 2.69%, owns smaller building sizes. “Some of the Sun Belt markets, as we all know, there’s population growth and the product that EastGroup group owns, you could call it ‘last mile industrial’ — closer to where people live, they’re smaller — there’s a lot of demand for that,” Kuhl said. “You’re not just trying to lease to Amazon or FedEx … you can also lease to lots of small businesses that are based locally.” EGP YTD mountain EastGroup Properties year to date Another name Kuhl likes is First Industrial Realty Trust , which has national and coastal exposure and is trading at a significant discount to its peers, he said. The stock has a 2.69% dividend yield. While the company has a lot of properties in California that are not yet leased, it has an advantage in that the buildings were done at a really low-cost basis, he noted. “They can go out and charge a market rent for a building that’s currently vacant and, all of a sudden, it’s generating income for them,” Kuhl explained. “We don’t think that’s priced into the stock.” FR YTD mountain First Industrial Realty Trust year to date He is also encouraged by the initial public offering of Lineage , which started trading July 25 on the Nasdaq. It is the market’s largest IPO so far this year. Lineage, ranked No. 46 on the 2024 CNBC Disruptor 50 list, is the largest temperature-controlled warehouse REIT in the world. “Cold storage is a specialized area within industrial that we like and where supply/demand fundamentals are also more favorable than coastal traditional industrial,” Kuhl said. The stock is up more than 10% from its $78 IPO price, as of Thursday’s close. “This is a positive sign for industrial REITs and just REITs in general,” Kuhl said.
Republican presidential nominee and former U.S. President Donald Trump walks off stage after speaking at a campaign rally at the Van Andel Arena in Grand Rapids, Michigan, on July 20, 2024.
Anna Moneymaker | Getty Images
NASHVILLE — Former President Donald Trump said that if he were returned to the White House, he would ensure that the federal government never sells off its bitcoin holdings. But he stopped short of proposing a formal federal reserve of digital currency.
“For too long our government has violated the cardinal rule that every bitcoiner knows by heart: Never sell your bitcoin,” Trump said during his keynote speech at this year’s Bitcoin Conference in Nashville, the biggest bitcoin conference of the year.
The former president’s remarks cameas the race to capture the votes and the campaign cash of America’s frontline fintech adopters takes center stage in the 2024 presidential contest.
“This afternoon I’m laying out my plan to ensure that the United States will be the crypto capital of the planet and the bitcoin superpower of the world and we’ll get it done,” Trump said.
But Trump’s pledge to simply maintain the U.S. government’s current bitcoin holdings was a less radical pitch to the crypto crowd relative to other proposals at the conference.
Third-party candidate Robert F. Kennedy Jr., for instance, during his Friday Bitcoin Conference speech promised to launch a reserve of 4 million bitcoin, starting with the bitcoin holdings that the U.S. government already has stockpiled from criminal seizures. Kennedy said he would mandate the government purchase 550 bitcoin a day until the reserve reached 4 million.
Shortly after Trump’s speech, Sen. Cynthia Lummis, R-Wy., read out her own legislative proposal to amass an official U.S. federal reserve of 1 million bitcoin over five years.
“It will be held for a minimum of 20 years and can be used for one purpose: Reduce our debt,” Lummis said.
The price of bitcoin briefly dipped during Trump’s speech, but recovered and was up slightly for the day, as of 5:15 p.m. E.T.
Throughout his remarks, the former president worked to draw contrasts between the Republican Party’s growing embrace of crypto versus the hardline regulatory approach that has characterized the Biden administration.
“The Biden-Harris administration’s repression of crypto and bitcoin is wrong and it’s very bad for our country,” Trump said. “Let me tell you if they win this election, every one of you will be gone. They will be vicious. They will be ruthless. They will do things that you wouldn’t believe.”
Trump went on to list a series of crypto-friendly promises to a crowd of cheering bitcoin supporters, promising to dismantle what he called the “anti-crypto crusade” of President Joe Biden and Vice President Kamala Harris.
“On day one, I will fire Gary Gensler,” Trump said, referencing the Biden-appointed chairman of the Securities and Exchange Commission who has taken an aggressive approach to crypto regulation.
The president does not have the power to fire appointed commissioners. Even if Trump were to appoint a new SEC chairman, Gensler would remain a commissioner on the independent agency.
The former president also pledged to create a “bitcoin and crypto presidential advisory council.”
“The rules will be written by people who love your industry, not hate your industry,” Trump said.
The Republican presidential nominee also held an accompanying fundraiser in Nashville, with tickets topping out at $844,600. In June, BTC Inc. CEO David Bailey, who organized the conference, pledged to raise $100 million and turn out more than 5,000,000 voters for the Trump re-election effort, as the bitcoin sector increasingly turns to the Trump camp for support.
Trump taking the main stage to directly address the bitcoin community is the latest in a months-long campaign to appeal to the crypto contingent, including accepting donations in virtual tokens, pledging to end President Joe Biden’s “war on crypto,” and advocating that all future bitcoin be made in America. It is also quite the about-face by the Republican presidential nominee.
Trump very publicly dismissed bitcoin when he was in the White House. In July 2019, he said he was “not a fan” of bitcoin and other cryptocurrencies. He said that tokens aren’t money, that their value was “based on thin air,” and warned that unregulated crypto assets could help facilitate the drug trade, among “other illegal activity.”
“Bitcoin just seems like a scam,” he told Fox in a phone interview in 2021. “I don’t like it because it’s another currency competing against the dollar.”
“I want the dollar to be the currency of the world, that’s what I’ve always said,” continued Trump in his conversation with Fox.
But five years, a lost presidential election, and millions of dollars from the crypto lobby later, the Republican presidential nominee sung the praises of the digital currency at the biggest bitcoin conference of the year in Nashville, which kicked off on Thursday.
“Bitcoin stands for freedom, sovereignty and independence from government coercion and control,” Trump said during his keynote speech.
Trump’s shift on bitcoin comes as the Republican Party pledges to lift the red tape of the Biden-Harris administration, working to turn crypto regulation into a voting issue for November, especially as inflation consistently ranks as a top voter priority in polls.
As crypto lobbyists and supporters become more of a presence in Washington, it raises questions on whether the Democratic Party will dig into the hardline regulatory approach of the past several years or ease its position.
“Every presidential candidate needs to understand, digital asset, pro-innovation voters are here to stay,” Democratic Rep. Wiley Nickel of North Carolina told CNBC in an interview, adding that crypto regulation should not become a “partisan political football.”
“I want to keep this as a bipartisan issue. I don’t want Donald Trump to politicize this issue,” Rep. Nickel said.
Rep. Ro Khanna, D-Ca., echoed Rep. Nickel’s sentiment, saying that crypto should not turn into a partisan talking point but will require regulation like any technology.
“I don’t really see why it’s partisan. Being against bitcoin is like being against cell phones. It’s like being against AI. It’s like being against laptops,” Khanna told CNBC. “It’s a technology. Have thoughtful regulation on the technology, but it’s a technology that has appreciated from about $10,000 to $80,000.”
Reps. Khanna and Nickel were two of the only Democrats to attend the Bitcoin Conference.
Bitcoin 2024 conference organizers say they were briefly in talks to have Vice President Kamala Harris appear at the conference, though she ultimately declined. But billionaire businessman Mark Cuban posted on X that the Harris campaign had reached out with questions about crypto, so it appears the vice president is looking into this space and potentially figuring out where her policies, if elected president, could land.
“I think we’re going to hear from Vice President Harris soon on this. And I’m very optimistic we’re gonna get a reset. And that I think, will matter in a major way,” Rep. Nickel said. “This issue isn’t going anywhere. And we’ve got to make sure we continue to embrace this in bipartisan way.”
Harris’ team has already begun to reach out to people close to crypto companies to set up meetings, the Financial Times reported on Saturday.
The recent thaw in Trump’s sentiment for the digital asset space has coincided with a sudden influx of interest and cash from the country’s top tech talent.
He has raised more than $4 million in a mix of cryptocurrencies, including bitcoin, ether, the U.S. dollar pegged stablecoin USDC, and various memecoins, with contributors hailing from 12 states, including a few battlegrounds.
Crypto billionaire twins and venture investors Tyler and Cameron Winklevoss led the charge, each contributing 15.57 bitcoin, or just over $1 million at the time of their donation, according to a filing with the Federal Election Commission — though they received a partial refund, because contributions surpassed the $844,600 limit.
There are a number of other venture capitalists who are pro-crypto, and they’ve pledged millions to the Trump campaign, as well.
Venture capitalists Marc Andreessen and Ben Horowitz told employees of Andreessen Horowitz (a16z) that they plan to make significant donations to political action committees supporting Trump’s campaign. The partners of Sequoia Capital are backing Trump, as is venture investor David Sacks, who helped the former president raise $12 million at a fundraiser he hosted in his San Francisco home. The chief legal officers for centralized crypto exchange Coinbase and blockchain giant Ripple were both there.
These members of the tech elite are also heavily contributing to pro-crypto super PACs like Fairshake, which has raised more than $200 million dollars to elect pro-crypto candidates up and down the ballot, and on both sides of the aisle.
But reporting from NBC News finds that the vice president’s team is looking to win over support from some of big tech’s undecided donors, many of whom remained on the sidelines while President Joe Biden remained in the race. Their tune may be changing now that the vice president is the de facto nominee for the party.
It helps that Harris has a long track record in California.
She has been fundraising in the tech community for years, including from those working at Amazon, Alphabet, Microsoft and Apple.
“The pivot that has occurred in the last three days is dramatic,” Steve Westly, a venture capitalist and one-time gubernatorial candidate for California, told NBC News. “I don’t think I’ve ever seen such a surge of enthusiasm in any campaign I’ve been involved with.”
This comes as Trump’s running mate for vice president, JD Vance, is set to hold a fundraiser of his own in Palo Alto on Monday.
— CNBC’s Rebecca Picciotto contributed to this report.
It’s been another great run for stocks since the Club’s last monthly meeting in June. The likelihood the Federal Reserve will lower interest rates sooner than later after recent upbeat inflation data pushed stocks to new highs over the past few weeks. Traders now see the odds of a rate cut by September at 100% , according to the CME FedWatch tool . The Dow Jones Industrial Average reached an all-time intraday high on Tuesday, while the S & P 500 did the same Monday. On July 11, the Nasdaq Composite hit new a new high as well. Taking advantage of the overbought market, we’ve executed a series of trades. The Club offloaded shares of TJX Companies on Friday in order to raise some additional cash. Before that, we made sales of Meta Platforms and Palo Alto Networks on July 8, locking in massive gains of 150% and 94%, respectively, since we first purchased both. On the flip side, we’ve looked for opportunities during the tech pullback. We started by initiating a small position in Advanced Micro Devices , a stock we most recently owned in the summer of 2023, and bought more on Tuesday. Through all the portfolio action, a key theme has emerged in the stock market, especially over the past week. Investors are jumping on the chance to get in on sectors outside of Big Tech. The Russell 2000 , which measures the performance of small-cap U.S. stocks, jumped nearly 11% in the past five sessions. Meanwhile, the tech-heavy Nasdaq edged 0.18% lower over the period. Case in point: Some of our biggest winners in 2024, mega-cap stocks like Amazon , Alphabet, Meta and Microsoft posted losses since our last meeting. Amazon is still up 27% for the year, while Alphabet and Meta jumped 31% and 38%, respectively. Other losers included our stocks with heavy ties to China: Wynn Resorts , Starbucks and Estee Lauder . All said, 12 of the portfolio’s 34 stocks were in the red. We see the market rotation playing out in our top-five performing names as well. From the June 27 close through Tuesday, only one company is in mega-cap tech. Here’s our top five and what’s driving the gains for each: 1. Ford Motor: 17.7% There wasn’t a single catalyst for Ford Motor’s outperformance. Investor sentiment, however, looks to have improved on signs that sales are picking up. Shares of the automaker rose on July 3 after the company said hybrid vehicle sales surged 56% in the second quarter, which set a new quarterly sales record for the segment. On July 11, the stock jumped again after June’s consumer price index (CPI) print indicated easing inflation and strengthened the Fed’s case to lower rates — an environment that could lead to more consumers buying Ford’s vehicles. The stock reached a 52-week high of $14.43 apiece on Monday. 2. Morgan Stanley: 10.9% Would a second presidency for Donald Trump benefit big U.S. banks? Investors in Morgan Stanley seem to think so. Shares advanced after President Joe Biden and Trump squared off during the June 27 presidential debate , which many viewed as a big win for the former president. Morgan Stanley’s momentum continued into July and hit an all-time high of $109.11 on Tuesday after the bank posted a largely better-than-expected second quarter report . We raised our price target to $120 from $98 apiece after results. 3. Stanley Black & Decker: 10.5% Stanley Black & Decker shares surged on recent signs of forthcoming monetary policy easing, which could spur housing market activity because of lower borrowing costs. More homeowners means more demand for the DeWalt parent’s offerings as buyers look for tools needed to fix things around the house. This, along with investors looking for pockets outside of Big Tech, have sent the stock higher since July 1. Shares of the company climbed 3.5% on Tuesday, and the Club capitalized of the stock’s advance, trimming our position in the afternoon. To be sure, we still see long-term gains ahead once the Fed starts to cut. 4. Apple: 9.7% Apple hit a record high of $237.23 apiece on Monday after Morgan Stanley listed the stock as a top industry pick. The Wall Street analysts said that the company’s artificial intelligence efforts will cause a much-needed upgrade cycle for the company’s flagship iPhone. Morgan Stanley also hiked Apple’s price target to $273 apiece from $213, a more than 16% upside from Tuesday’s close. It’s not like the stock was stalled: Shares have been climbing for months on excitement about Apple’s AI plans, which were recently unveiled at the company’s worldwide developers conference on June 10. 5. Dover: 7.3% Dover began its ascent higher on July 9 as capital rotated into sectors that benefit more from interest rate cuts. Dover is an industrial name, producing thermal connectors that are used in one of the fastest-growing end markets: data centers. This makes Dover a great under-the-radar AI play. “Dover is going to be a big name for me,” Jim said recently. Shares hit an all-time high Tuesday of $190.54 each, and closed the day nearly 3% higher. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
A trader works, as a screen broadcasts a news conference by U.S. Federal Reserve Chair Jerome Powell following the Fed rate announcement, on the floor of the New York Stock Exchange in New York City, U.S., June 12, 2024.
Brendan Mcdermid | Reuters
It’s been another great run for stocks since the Club’s last monthly meeting in June.
Artificial intelligence has been a big boon for San Francisco real estate. But not enough of one to make up for the broader struggle across the market.
The vacancy rate for San Francisco office space reached a fresh record of 34.5% in the second quarter, according to a report Monday from commercial real estate firm Cushman & Wakefield. That’s up from 33.9% in the first quarter, 28.1% in the same period a year ago and 5% before the pandemic.
Meanwhile, the average asking rent dropped to $68.27 per square foot in the quarter, the lowest since late 2015, down from $72.90 a year earlier and a peak of $84.70 in 2020.
San Francisco is reeling from the twin challenges of bringing people back to the office after the Covid pandemic and a slowdown in the tech market that’s led to mass job cuts across the industry. Tech companies have laid off more than 530,000 employees since the start of 2022, according to the website Layoffs.fyi, with major downsizing at Alphabet, Meta, Amazon, Tesla, Microsoft and Salesforce.
Softening the blow of late has been the soaring popularity of generative AI and the decision by fast-growing startups to open large offices in San Francisco.
OpenAI, the market leader with a private valuation that’s topped $80 billion, announced in October that it was leasing about 500,000 square feet of space in the Mission Bay neighborhood, the biggest office lease in the city since 2018. Robert Sammons, senior research director at Cushman & Wakefield, said OpenAI is continuing to look for more space in the city.
Also last year, OpenAI rival Anthropic subleased 230,000 square feet at Slack’s headquarters. And in May of this year, Scale AI signed a lease for a reported 170,000 to 180,000 square feet of space in Airbnb’s office building.
“San Francisco is certainly the center of AI, but AI is not going to save the San Francisco commercial real estate market,” Sammons said. “It will help.”
While richly capitalized AI startups are signing large leases for new space, the bigger trend is that tech companies, law offices and consulting firms are looking to reduce their footprint when existing leases come up, Sammons said, reflecting the widespread move to hybrid work.
In many cases, companies are looking to relocate to higher quality space in more desirable parts of the city, because prices have come down and employers need to be near restaurants and shops to get staffers to come back, Sammons added.
“The best quality trophy space continues to perform well, because tenants want to be in the best locations with the best amenities around them,” Sammons said.
Some of the city’s top employers, including Salesforce, Uber, Visa and Wells Fargo, have brought employees back to offices for part of the week. That’s helped in the financial district, where the vacancy rate is still 34.2% on the north side and 32.7% on the south side at the end of the quarter. In SoMa, which historically was a popular area for venture-backed startups, the vacancy rate is almost 50%.
SoMa is further away from mass transit options and has also been hurt by large retail departures. Vacant office space across San Francisco for the quarter totaled 29.6 million square feet, Cushman & Wakefield said.
The firm said in its report that there are positive signs in the market, with absorption poised to improve in the second half and office job numbers stabilizing following a steep drop-off. But Sammons said it looks like there’s more room for rents to fall and for vacancies to rise. Uncertainty surrounding the upcoming presidential election may be a factor delaying new leases, he said.
“Sometimes tenants postpone making decisions when there are major elections,” he said.
Amazon will double the value of credits it offers some startups to use its cloud infrastructure, CNBC has learned, as the company faces heightened competition from Microsoft in artificial intelligence services.
Starting July 1, startups that have raised a Series A round of funding in the past year will be eligible for $200,000 in credits through AWS’ Activate program, up from $100,000 before, the Amazon cloud unit said in an email to venture capitalists this week. Seed-stage startups will still be eligible for $100,000 in credits, AWS said.
Two people briefed on the changes confirmed the credit increase, though they asked not to be named because the information is private.
Matt Garman, who was recently promoted to CEO of AWS after running sales and marketing, was meeting with founders in Silicon Valley this week, the people said. Garman told the execs that collaborating with startups would always be a primary focus, one of the people said, adding that Garman described AI companies as AWS’ ideal customers.
An AWS spokesperson confirmed the increase in credits and Garman’s visit to Silicon Valley. The spokesperson added that in the past, the $100,000 would expire in one year, while the $200,000 credit will now expire in three years.
Amazon, which is best known for its massive online retail operation, derives most of its profit from AWS, a business it launched in 2006, well before rivals Microsoft and Google hit the scene. AWS leads the market, with $25 billion in revenue in the first quarter, up 17% from a year earlier.
But Microsoft Azure and Google Cloud are growing more quickly, and are benefiting from rapidly advancing AI models. Backed by Microsoft, OpenAI launched ChatGPT in late 2022 on Azure, and has since attracted a wave of AI workloads to Microsoft from companies big and small. Google has a number of large language models, most notably Gemini.
Amazon has been trying to catch up in generative AI and has poured billions of dollars into OpenAI challenger Anthropic.
Last month, AWS CEO Adam Selipsky announced his resignation after three years running the business, with Garman named as his successor. During Selipsky’s time at the helm, Microsoft and Google increased their share of the cloud infrastructure market. One analyst told CNBC that Microsoft “ran laps around” AWS in generative AI.
Startups have long been fertile ground for cloud infrastructure companies, as they try and lure ambitious founders who could be building the next multibillion-dollar business.
In November, Microsoft announced a partnership with Silicon Valley accelerator Y Combinator that would provide participating startups with $350,000 in Azure credits and access to graphics processing units (GPUs) for training AI models, a spokesperson said. Microsoft has since extended the $350,000 credit incentive to other accelerators, including the AI Grant.
Startups enrolled in Microsoft’s Founders Hub program, which doesn’t require previous venture funding, can receive up to $150,000 in Azure credits over four years.
In addition to its Activate offering, Amazon has a new 10-week generative AI accelerator program. Participants will be able to access up to $1 million in cloud credits, according to the website.
Earlier on Friday, Amazon’s head scientist, Rohit Prasad, told employees that the company has hired David Luan, co-founder and CEO of AI startup Adept, along with some of Luan’s colleagues. “Amazon is also licensing Adept’s agent technology, family of state-of-the-art multimodal models, and a few datasets,” Adept said in a blog post.
A trader works on the floor of the New York Stock Exchange (NYSE) during morning trading on March 4, 2024 in New York City.
Angela Weiss | Afp | Getty Images
This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
Micron slides Shares of Micron fell almost 8% in extended trading on Wednesday as its revenue forecast failed to top analysts’ expectations. The computer memory and storage maker expects revenue of $7.6 billion in the current quarter, in line with estimates. Micron’s shares have doubled in the past year as its most advanced memory is needed for AI graphics processing units. CEO Sanjay Mehrotra said the company’s AI-oriented products were likely to increase in price and its data center business grew 50% on a quarter-to-quarter basis.
$2,000,000,000,000 Amazon‘s market capitalization surpassed $2 trillion for the first time on Wednesday, joining the ranks of tech giants like Apple and Microsoft. The surge in megacap tech stocks has been driven by investor excitement around generative AI. Amazon’s stock has risen 26% this year, outpacing the Nasdaq’s 18% increase. The stock rose 3.9% on Wednesday. Separately, CNBC’s Annie Palmer reports Amazon plans to launch a discount store in bid to fend off Temu and Shein.
Southwest cuts guidance Southwest Airlinescut its second-quarter revenue forecast due to difficulties adapting its revenue management to recent booking trends. Despite the revised outlook, the airline still expects record quarterly operating revenue. Activist investor Elliott Management reiterated calls for leadership changes, “Southwest is led by a team that has proven unable to adapt to the modern airline industry.” Higher costs and increased capacity have impacted fares and profits across the industry, while competitors like Delta and United have benefited from the return of international travel. Southwest shares fell 4% before recovering to end the session just 0.2% lower.
Asian stocks fall, yen weakens Japan’s export-heavy Nikkei 225 and the broad-based Topix fell as the yenweakened to a 38-year low against the U.S. dollar, raising the prospect of intervention. Finance Minister Shunichi Suzuki warned the country was “deeply concerned about FX impact on economy,” per Reuters. Elsewhere, Hong Kong’s Hang Seng index led the rest of the Asia-Pacific region lower, tumbling 2%, and mainland China’s CSI 300 was down 0.6%. Australia’s S&P/ASX 200 dropped 0.58% and South Korea’s Kospi dipped 0.37%
[PRO] Investing in India India’s unexpected election results haven’t dampened Causeway Capital Management’s bullish outlook. Although portfolio manager Arjun Jayaraman predicts modest short-term returns for the BSE Sensex index, he suggests ETFs that could benefit from higher returns.
There was a surge of activity in the auto industry that may have been overshadowed by Volkswagen's $5 billion investment in the loss-making EV maker Rivian. While VW makes solid cars, its electric vehicles are plagued with glitchy software. As CNBC's Sophie Kiderlin notes this investment will take years to yield returns. Analysts, however, are wary of the current "EV winter" marked by tepid demand and increased competition. Despite these challenges, Rivian's stock surged 23%, reflecting investor optimism.
Elsewhere in the industry, Waymo, Alphabet's self-driving car unit, expanded its robotaxi service to all users in San Francisco. Meanwhile, General Motors's Cruise autonomous vehicle division appointed former Amazon and Microsoft executive Marc Whitten as its new CEO. This leadership change follows a series of collisions that led to investigations and the suspension of Cruise's license in California, heightening public skepticism about driverless technology.
While Waymo is steadily rolling out its services and Cruise is restarting its operations, Tesla has yet to introduce its long-promised robotaxi. Elon Musk's projections for a 2020 launch and fully autonomous driving by 2018 have yet to materialize. Nevertheless, Musk envisions Tesla as a potential $7 trillion robotaxi enterprise. The unveiling of Tesla's robotaxi on Aug. 8 will be closely watched to gauge its competitive edge.
Rivian shareholder Amazon joined the exclusive $2 trillion market cap club, alongside Alphabet, Nvidia, Apple and Microsoft. This milestone comes as Amazon aggressively cuts costs.
While enthusiasm for AI remains high, Wall Street experienced a more measured session as investors sought to lock in profits from the Nvidia-driven surge. Despite the current optimism, strategists caution that the S&P 500 might face a correction over the summer. CNBC's Sarah Min explores the factors behind Citi's projections and a series of recent upgrades.
— CNBC's Hakyung Kim, Brian Evans, Alex Sherman, Samantha Subin, Annie Palmer, Ece Yildirim, Michael Wayland, Sophie Kiderlin, Spencer Kimball, Leslie Josephs, Sarah Min, Sheila Chiang and Lim Hui Jie contributed to this report.
Nvidia CEO Jensen Huang attends an event at COMPUTEX forum in Taipei, Taiwan June 4, 2024.
Ann Wang | Reuters
Nvidia, long known in the niche gaming community for its graphics chips, is now the most valuable public company in the world.
Shares of the chipmaker climbed 3.2% in mid-day trading on Tuesday, lifting the company’s market cap to $3.33 trillion, surpassing Microsoft. Earlier this month, Nvidia hit a $3 trillion market cap for the first time, and passed Apple.
Nvidia shares are up more than 170% so far this year, and took a leg higher after the company reported first-quarter earnings in May. The stock has multiplied by more than nine-fold since the end of 2022, a rise that’s coincided with the emergence of generative artificial intelligence.
Nvidia has about 80% of the market for AI chips used in data centers, a business that’s ballooned as OpenAI, Microsoft, Alphabet, Amazon, Meta and others have raced to snap up the processors needed to build AI models and run increasingly large workloads.
For the most recent quarter, revenue in Nvidia’s data center business rose 427% from a year earlier to $22.6 billion, accounting for about 86% of the company’s total sales.
Apple shares were down about 1% during trading on Tuesday, giving it a $3.28 trillion market value. Microsoft shares slid less than a percentage point, giving it a market cap of $3.32 trillion.
Founded in 1991, Nvidia spent its first few decades primarily as a hardware company that sold chips for gamers to run 3D titles. It’s also dabbled in cryptocurrency mining chips and cloud gaming subscriptions.
But over the past two years, Nvidia shares have skyrocketed as Wall Street came to recognize the company’s technology as the engine behind an explosion in AI that shows no signs of slowing. The rally has lifted co-founder and CEO Jensen Huang’s net worth to about $117 billion, making him the 11th wealthiest person in the world, according to Forbes.
Microsoft shares are up about 20% so far this year. The software giant has also been a major beneficiary of the AI boom, after it took a significant stake in OpenAI and integrated the startup’s AI models into its most important products, including Office and Windows. Microsoft is one of the biggest buyers of Nvidia’s graphics processing units (GPUs) for its Azure cloud service. The company just released a new generation of laptops that are designed to run its AI models, called Copilot+.
Nvidia is a newcomer to the title of most valuable U.S. company. For the past few years, Apple and Microsoft have been trading the title.
Nvidia’s ascent has been so rapid that the company has yet to be added to the Dow Jones Industrial Average, a benchmark of 30 stocks that’s historically included the most valuable U.S. companies. Alongside its earnings release last month, Nvidia announced a 10-for-1 stock split, which went into effect on Jan. 7.
The split gives Nvidia a better shot at being added to the Dow, which is a price-weighted index, meaning that companies with higher stock prices — rather than market caps — have outsized influence on the benchmark.
In February 2020, as Disney’s head of streaming, Kevin Mayer, was in the line of succession for CEO. But Mayer, seen here on Sept. 29, 2022, and colleagues were stunned when Iger announced Bob Chapek would replace Iger immediately.
Bryan van der Beek | Bloomberg | Getty Images
Former TikTok CEO and Candle Media co-CEO Kevin Mayer says that the hype around artificial intelligence has reached a crescendo, with company valuations looking “astronomical.”
Speaking to CNBC’s Karen Tso at the VivaTech conference in Paris on Friday, he said that there’s underlying value in AI, as seen in previous innovations like the metaverse and Blockchain — but warned of a coming “stabilization” for valuations.
“AI provides capabilities that have not yet been seen and are very valuable. But the hype cycle has been dramatic,” Mayer said.
“I think we’ll see a peak of that, of the hype within AI, the valuations, and everyone talking about how it’s gonna disrupt every single corner of our economic universe and personal lives.”
Ever since OpenAI’s ChatGPT was first introduced to the world in November 2022, regulators and tech leaders have become increasingly worried about the risks surrounding advanced AI systems. At the same time, the space has generated buzz from investors and brought valuations significantly higher in some cases. Companies like OpenAI, Anthropic, Cohere, and Mistral have raised billions of dollars from venture capitalists — along with attention and investment from large tech firms, such as Microsoft and Amazon.
Some high-profile voices have backed the technology and its surge in interest. JPMorgan Chase CEO Jamie Dimon is among them, telling CNBC in February that AI is not just a passing fad and is bigger than just large language models such as the ones that underlie ChatGPT. He also compared the current moment favorably to the tech bubble that emerged around the start of the 21st century.
But Mayer told CNBC Friday that it’s “vastly overhyped already.”
“Too many companies [are] bringing in too much capital at valuations that are way too astronomical. So there will be a stabilization. There’ll be a realization of the benefits of AI in many many industries, but I think the hype is at an all-time fever pitch right now.”
—CNBC’s Jesse Pound and Arjun Kharpal contributed to this story.
In what was the most anticipated quarter this earnings season, Nvidia far outpaced lofty expectations on the top and bottom lines. Even better was a big revenue guide and a broader vision from CEO Jensen Huang that reinforced the notion that companies and countries are partnering with the AI chip powerhouse to shift $1 trillion worth of traditional data centers to accelerated computing. Revenue for its fiscal 2025 first quarter surged 262% year-over-year to $26.04 billion, well ahead of analysts’ forecasts of $24.65 billion, according to data provider LSEG, formerly known as Refinitiv. The company had previously guided revenue to $24 billion, plus or minus 2% — so that was a huge beat. Adjusted earnings-per-share increased 461% to $6.12, exceeding the LSEG compiled consensus estimate of $5.59. Adjusted gross margin of 78.9% also beat the Street’s 77.2% estimate, according to market data platform FactSet. The company had guided gross margins to 77%. plus or minus 50 basis points. On top of the strong results, Nvidia announced a 10-for-1 stock split. Although stock splits don’t technically create value, they do tend to have a positive impact on the stock. The company said the split is to “make stock ownership more accessible to employees and investors.” We commend Nvidia for doing this and will continue to press other companies to do the same. Nvidia most recently split its stock in July 2021 on a 4-for-1 basis. In after-hours trading, it was little surprise to see Nvidia shares surging. Nvidia Why we own it : Nvidia’s high-performance graphic processing units (GPUs) are the key driver behind the AI revolution, powering the accelerated data centers being rapidly built around the world. But this is more than just a hardware story. Through its Nvidia AI Enterprise service, Nvidia is in the process of building out a potentially massive software business. Competitors : Advanced Micro Devices and Intel Most recent buy : Aug 31, 2022 Initiation : March 2019 Bottom line What air pocket? Coming into the quarter, it sounded like the only thing that could hold Nvidia back was a product transition-related slowdown from customers delaying orders of the H100 and H200 GPUs (graphics process units) in anticipation of the superior Blackwell chip platform. As you can see from Nvidia’s big beat and upside guide, that was far from the case and demand is expected to exceed supply for quite some time. Should this narrative form again, here’s a good thing to remember for next time so that these concerns don’t shake you out of a strong long-term thesis: Jensen explained on the post-earnings conference call that customers are still so early in their build-outs that they have to keep buying chips to keep up in the current technology arms race. And technology leadership is everything. “There’s going to be a whole bunch of chips coming at them and they just got to keep on building and just, if you will, performance average your way into it. So that’s the smart thing to do,” the CEO said. More broadly, we didn’t hear anything Wednesday evening to change our long-term view about how Nvidia is the driving force behind the current AI industrial revolution. Here’s how Jensen explained the shift that’s happening: “Longer term, we’re completely redesigning how computers work. And this is a platform shift. Of course, it’s been compared to other platform shifts in the past, but time will clearly tell that this is much, much more profound than previous platform shifts. And the reason for that is because the computer is no longer an instruction-driven only computer. It’s an intention understanding computer.” Jensen went on to mention how computers not only interact with us, “but it also understands our meaning, what we intend that we asked it to do, and it has the ability to reason, inference iteratively to process and plan and come back with a solution.” The billions and billions of dollars being spent on accelerated computing is why we own Nvidia for the long-haul and are not trying to trade it back and forth on every headline. By the way, another bearish narrative we often hear is that the custom chips all the big cloud companies are making are a threat to Nvidia’s leadership. Jensen doesn’t see it that way because his platform system has the highest performance at the lowest total cost of ownership. It’s an unbeatable value proposition. NVDA YTD mountain Nvidia YTD The strong results and outlook, upbeat commentary, and stock split were sending Nvidia shares roughly 6% higher to above $1,000 per share for the first time ever. However, we don’t think the gains end here. We’re increasing our price target to $1,200 from $1050 and maintaining our 2 rating , meaning we view it as a buy on pullbacks. Quarterly Results Growth was driven by all customer types, but enterprise and consumer internet companies led the way. Large cloud companies represented a mid-40% of data center revenue in the quarter, so when you see companies like Oracle and Club names Amazon , Microsoft and Alphabet raise their capital expenditure outlooks, understand that a lot of those dollars will flow Nvidia’s way. And, there’s a good reason for it. On the call, Nvidia CFO Colette Kress estimates that for every $1 spent on Nvidia AI Infrastructure, a cloud provider has an opportunity to earn $5 in GPU instant hosting revenue over four years. One customer call out in the quarter was Tesla , expanding its training AI cluster to 35,000 H100 GPUs (graphic processing units). Nvidia said Tesla’s use of Nvidia AI infrastructure “paved the way” for the “breakthrough performance” of full self-driving version 12. (Full self-driving, or FSD, is the way Tesla markets its high level of driver-assisted software.) Interestingly, Nvidia sees automotive as a huge vertical this year, a multi-billion revenue opportunity across on-premise and cloud consumption. Another highlight was Meta’s announcement of Llama 3, its large language model. It was trained on a cluster of 24,000 H100 GPUs. Kress believes that as more consumer internet customers use generative AI applications, Nvidia will see more growth opportunities. The Tesla and Meta clusters are examples of what Nvidia calls “AI Factories.” The company believes “these next-generation data centers host advanced full-stack accelerated computing platforms where the data comes in and intelligence comes out. Nvidia also pointed out that sovereign AI has been a big source of growth. The company defines sovereign AI as a “nation’s capabilities to produce artificial intelligence using its own infrastructure, data, workforce, and business networks.” Kress expects sovereign AI revenue to approach the high single-digit billions of dollars this year from nothing last year. Looking ahead, Nvidia sees supply for the H100 improving but is still constrained on the H200. Even with the transition to Blackwell, Nvidia expects demand for Hopper for quite some time. “Everybody is anxious to get their infrastructure online, and the reason for that is because they’re saving money and making money, and they would like to do that as soon as possible,” the company said. In other words, customers will take whatever they can get. But look for Blackwell revenue later this year, perhaps in a very meaningful amount. The company explained manufacturing of Blackwell has been in production and shipments are expected to start the fiscal 2025 second quarter, ramp in the third, and customers will have full data centers stood up in the fourth quarter. Software was mentioned more than two dozen times on the conference call. And taken together, Nvidia said on the prior quarter’s call that its software and services reached an annualized revenue rate of $1 billion. They are high-margin, recurring revenue businesses, which continue to be key watch areas in future quarters. As for China, the company said it started to ramp up new products specifically made for the region that don’t require an export control license. The U.S. government has put restrictions on sales of the fastest chips for fear they will be used by the Chinese military. However, it doesn’t like China is expected to be a driver of revenue like it was in the past because the limitations to Nvidia’s technology have made the environment more competitive. Guidance The company’s fiscal second quarter guide should dismiss the market’s concerns that some sort of AI spending “air pocket” was forming. For the current Q2, Nvidia projected revenue of $28 billion, plus or minus 2%, above consensus estimates of $26.6 billion Adjusted gross margins are expected to be 75.5%, plus or minus 50 basis points, above estimates of 75.2%. Capital returns Nvidia increased its quarterly dividend by 150%, which is nice but the annual yield is insignificant to the investment case. More impactful is the $7.7 billion of stock the company repurchased in fiscal Q1. (Jim Cramer’s Charitable Trust is long NVDA. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Jensen Huang, co-founder and chief executive officer of Nvidia Corp., during the Nvidia GPU Technology Conference (GTC) in San Jose, California, US, on Tuesday, March 19, 2024.
David Paul Morris | Bloomberg | Getty Images
In what was the most anticipated quarter this earnings season, Nvidia far outpaced lofty expectations on the top and bottom lines. Even better was a big revenue guide and a broader vision from CEO Jensen Huang that reinforced the notion that companies and countries are partnering with the AI chip powerhouse to shift $1 trillion worth of traditional data centers to accelerated computing.
Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. (We’re no longer recording the audio, so we can get this new written feature to members as quickly as possible.) Market check: Stocks surged Wednesday afternoon after the Federal Reserve held interest rates steady at the end of its latest two-day meeting. According to their post-meeting statement, central bankers noted a “lack of further progress” in bringing inflation down to their 2% target. Fed chief Jerome Powell reiterated that concern at his news conference. Powell said that rate cuts would be considered when the Fed feels inflation is on its way to target. “We feel our policy stance is in a good place” and appropriately restrictive, he added. Early in 2024, expectations in the market were for as many as six cuts. Now, there are questions about whether there will be any cuts this year. April, which has historically been one of the stronger months of the year for the market, was rough. Monthly declines in the Dow , the S & P 500 and the Nasdaq broke five-month winning streaks for the three major stock benchmarks. While April overall was terrible, there were some big winners in the Club’s portfolio, including Alphabet up nearly 8%. Before last week’s strong quarter, CNBC learned that Alphabet’s Google had laid off hundreds of employees from so-called core teams. The reorg includes moving some roles to India and Mexico. Crude sinks: U.S. oil prices sank roughly 3% to under $80 per barrel Wednesday. That’s about a seven-week low on West Texas Intermediate crude . The reasons: stockpiles surged on lackluster demand as the U.S. and its international partners continue to push for a ceasefire between the Israelis and Hamas in Gaza. WTI has fallen 9% from its intraday high for the year of $87.67 per barrel. Our lone oil-and-gas stock, Coterra Energy , was down 2% on Wednesday. It’s set to report quarterly results after the close Thursday. Cruise IPO: Viking Holdings shares rose 10% in its debut as a public company Wednesday. The cruise line company Tuesday evening priced roughly 64 million shares at $24 each — toward the higher of the expected range. Viking is the latest in a recent revival of the long-dormant initial public offerings market. The IPO comeback of late has boosted the investment banking arms of Wall Street banks. Morgan Stanley is one of the lead underwriters of the Viking offering. Last month, the Club name delivered a much-needed rebound quarter . Investment banking revenue at Morgan Stanley rose 16% year over year, driven by IPO business. These deals must succeed to entice more private companies to become public, which is crucial to Morgan Stanley. Biggest winners: DuPont was the Club’s biggest winner Wednesday, jumping more than 7% after the chemicals company beat on quarterly earnings and raised guidance. DuPont’s semiconductor business rose 10%, and we see plenty of runway for growth next year thanks to artificial intelligence. GE Healthcare was next, rising nearly 2% after Tuesday’s 14% earnings-driven decline , which we thought was an overreaction. Amazon was our third-best stock, gaining more than 1.5% Wednesday following the e-commerce and cloud giant’s great quarter and what we think was conservative guidance. “There’s no incentive in giving some pie in the sky number,” Jim said during the Morning Meeting . Biggest losers: Starbucks was our biggest loser Wednesday following the terrible quarter and outlook that was out the evening before. Jim blasted the Starbucks CEO in a morning CNBC interview, saying he was “stunned” by Laxman Narasimhan’s lack of awareness of how bad things are at the coffee giant. Estee Lauder was next, dropping 14% after light guidance and worries about China overshadowed quarterly beats. Nvidia was our third-weakest stock Wednesday, dropping more than 5%. The AI chip giant enjoyed a 15% bump last week on all the spending plans from Big Tech. While inching higher Monday, Nvidia also was down 1.5% Tuesday. Club earnings : In a busy week with quarterly reports from 12 portfolio stocks, Thursday brings morning earnings from Linde , Stanley Black & Decker and Bausch Health . After the bell Thursday, Apple is out with its quarter following a bump earlier this week tied to an upgrade from the often-skeptical Bernstein analyst Toni Sacconaghi. Apple has had a rough year, but Sacconaghi sees the pullback as an “attractive entry point.” Jim said the call is ill-advised, and we must wait for the release to see where Apple might go from here. As mentioned earlier, Coterra is also out with earnings Thursday evening, but the post-release conference call won’t be until Friday morning. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. (We’re no longer recording the audio, so we can get this new written feature to members as quickly as possible.)
Customers shop in a Walmart Supercenter on February 20, 2024 in Hallandale Beach, Florida.
Joe Raedle | Getty Images News | Getty Images
Walmart’s majority-owned fintech startup One has begun offering buy now, pay later loans for big-ticket items at some of the retailer’s more than 4,600 U.S. stores, CNBC has learned.
The move puts One in direct competition with Affirm, the BNPL leader and exclusive provider of installment loans for Walmart customers since 2019. It’s a relationship that the Bentonville, Arkansas, retailer expanded recently, introducing Affirm as a payment option at Walmart self-checkout kiosks.
It also likely signals that a battle is brewing in the store aisles and ecommerce portals of America’s largest retailer. At stake is the role of a wide spectrum of players, from fintech firms to card companies and established banks.
One’s push into lending is the clearest sign yet of its ambition to become a financial superapp, a mobile one-stop shop for saving, spending and borrowing money.
Since it burst onto the scene in 2021, luring Goldman Sachs veteran Omer Ismail as CEO, the fintech startup has intrigued and threatened a financial landscape dominated by banks — and poached talent from more established lenders and payments firms.
But the company, based out of a cramped Manhattan WeWork space, has operated mostly in stealth mode while developing its early products, including a debit account released in 2022.
Now, One is going head-to-head with some of Walmart’s existing partners like Affirm who helped the retail giant generate $648 billion in revenue last year.
Walmart’s Fintech startup One is now offering BNPL loans in Secaucus, New Jersey.
Hugh Son | CNBC
On a recent visit by CNBC to a New Jersey Walmart location, ads for both One and Affirm vied for attention among the Apple products and Android smartphones in the store’s electronics section.
Offerings from both One and Affirm were available at checkout, and loans from either provider were available for purchases starting at around $100 and costing as much as several thousand dollars at an annual interest rate of between 10% to 36%, according to their respective websites.
Electronics, jewelry, power tools and automotive accessories are eligible for the loans, while groceries, alcohol and weapons are not.
Buy now, pay later has gained popularity with consumers for everyday items as well as larger purchases. From January through March of this year, BNPL drove $19.2 billion in online spending, according to Adobe Analytics. That’s a 12% year-over-year increase.
Walmart and One declined to comment for this article.
One’s expanding role at Walmart raises the possibility that the company could force Affirm, Capital One and other third parties out of some of the most coveted partnerships in American retail, according to industry experts.
“I have to imagine the goal is to have all this stuff, whether it’s a credit card, buy now, pay later loans or remittances, to have it all unified in an app under a single brand, delivered online and through Walmart’s physical footprint,” said Jason Mikula, a consultant formerly employed at Goldman’s consumer division.
Affirm declined to comment about its Walmart partnership. Shares of Affirm climbed 2% Tuesday, rebounding after falling more than 8% in premarket activity.
For Walmart, One is part of its broader effort to develop new revenue sources beyond its retail stores in areas including finance and health care, following rival Amazon’s playbook with cloud computing and streaming, among other segments. Walmart’s newer businesses have higher margins than retail and are a part of its plan to grow profits faster than sales.
In February, Walmart said it was buying TV maker Vizio for $2.3 billion to boost its advertising business, another growth area for the retailer.
When it comes to finance, One is just Walmart’s latest attempt to break into the banking business. Starting in the 1990s, Walmart made repeated efforts to enter the industry through direct ownership of a banking arm, each time getting blocked by lawmakers and industry groups concerned that a “Bank of Walmart” would crush small lenders and squeeze big ones.
To sidestep those concerns, Walmart adopted a more arms-length approach this time around. For One, the retailer created a joint venture with investment firm firm Ribbit Capital — known for backing fintech firms including Robinhood, Credit Karma and Affirm — and staffed the business with executives from across finance.
Walmart has not disclosed the size of its investment in One.
The startup has said that it makes decisions independent of Walmart, though its board includes Walmart U.S. CEO, John Furner, and its finance chief, John David Rainey.
One doesn’t have a banking license, but partners with Coastal Community Bank for the debit card and installment loans.
After its failed early attempts in banking, Walmart pursued a partnership strategy, teaming up with a constellation of providers, including Capital One, Synchrony, MoneyGram, Green Dot, and more recently, Affirm. Leaning on partners, the retailer opened thousands of physical MoneyCenter locations within its stores to offer check cashing, sending and receiving payments, and tax services.
But Walmart and One executives have made no secret of their ambition to become a major player in financial services by leapfrogging existing players with a clean-slate effort.
One’s no-fee approach is especially relevant to low- and middle-income Americans who are “underserved financially,” Rainey, a former PayPal executive, noted during a December conference.
“We see a lot of that customer demographic, so I think it gives us the ability to participate in this space in maybe a way that others don’t,” Rainey said. “We can digitize a lot of the services that we do physically today. One is the platform for that.”
One could generate roughly $1.6 billion in annual revenue from debit cards and lending in the near term, and more than $4 billion if it expands into investing and other areas, according to Morgan Stanley.
Walmart can use its scale to grow One in other ways. It is the largest private employer in the U.S. with about 1.6 million employees, and it already offers its workers early access to wages if they sign up for a corporate version of One.
There are signs that One is making a deeper push into lending beyond installment loans.
Walmart recently prevailed in a legal dispute with Capital One, allowing the retailer to end its credit-card partnership years ahead of schedule. Walmart sued Capital One last year, alleging that its exclusive partnership with the card issuer was void after it failed to live up to contractual obligations around customer service, assertions that Capital One denied.
The lawsuit led to speculation that Walmart intends to have One take over management of the retailer’s co-branded and store cards. In fact, in legal filings Capital One itself alleged that Walmart’s rationale was less about servicing complaints and more about moving transactions to a company it owns.
“Upon information and belief, Walmart intends to offer its branded credit cards through One in the future,” Capital One said last year in response to Walmart’s suit. “With One, Walmart is positioning itself to compete directly with Capital One to provide credit and payment products to Walmart customers.”
A Capital One Walmart credit card sign is seen at a store in Mountain View, California, United States on Tuesday, November 19, 2019.
Yichuan Cao | Nurphoto | Getty Images
Capital One said last month that it could appeal the decision. The company declined to comment further.
Meanwhile, Walmart said last year when its lawsuit became public that it would soon announce a new credit card option with “meaningful benefits and rewards.”
One has obtained lending licenses that allow it to operate in nearly every U.S. state, according to filings and its website. The company’s app tells users that credit building and credit score monitoring services are coming soon.
And while One’s expansion threatens to supersede Walmart’s existing financial partners, Walmart’s efforts could also be seen as defensive.
Fintech players including Block’s Cash App, PayPal and Chime dominate account growth among people who switch bank accounts and have made inroads with Walmart’s core demographic. The three services made up 60% of digital player signups last year, according to data and consultancy firm Curinos.
But One has the advantage of being majority owned by a company whose customers make more than 200 million visits a week.
It can offer them enticements including 3% cashback on Walmart purchases and a savings account that pays 5% interest annually, far higher than most banks, according to customer emails from One.
Those terms keep customers spending and saving within the Walmart ecosystem and helps the retailer better understand them, Morgan Stanley analysts said in a 2022 research note.
“One has access to Walmart’s sizable and sticky customer base, the largest in retail,” the analysts wrote. “This captive and underserved customer base gives One a leg up vs. other fintechs.”
