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Let's get down to business and start trading. One of the things that I think is a good indicator today is the significant growth of Dell. If you were going to slow down AI spending, other than GEV Invertive, I would say you should look at Dell and HPE. The fact that Dell is showing good growth indicates that many consider yesterday's events to be exaggerated , but it's 9:55, so who knows if they can turn that around.
Yes, we did get a downgrade on HPE yesterday, Jim. Evercore downgraded it to "at market" after that huge rally. This , I mean, reinforces the argument that if you're going to work on defense and security, it's going to stimulate production. It will be. Look, I'm going to have to ask Shera Freer, when I talk to her , the CFO of Open AI, what does slowdown mean ?
Because if you decide—and I've spoken to many supply chain executives—that you don't need the equipment, it's perfectly available to others, and they'll take it. So I think there's an unnatural belief that if Open AI or Advanced Micro Devices don't want to buy products, then those products will just gather dust on the shelves.
I think Dell's stock movement today shows that this is not the case, and Broadcom's view that there will be no slowdown will become the dominant narrative. This is a good game. This is a good game. Would you like to participate in this Altera IPO? Well , no. I wanted to take this off the agenda. I mean, Intel will do well, but Intel processors...I don't think people are more focused on GPUs right now, like Jensen is, than CPUs, because we're going to have robots and autonomous driving, after all.
David, a good topic for your discussion about the markets with Morgan Stanley outside of healthcare as we follow the IPO pipeline. Jim, see you tonight. Certainly. A six billion dollar buyback, with approximately $4.5 trillion in debt outstanding. It's too much, and he doesn't have enough resources.
It's all a bit silly, is n't it? Although it's less absurd than handing out $ 5,000 to every adult so that Republicans can maintain control of Congress after the midterm elections. That would be another trillion dollars. Mr. Minister of Finance, save your powder. So, with all of that in mind, let 's go back to Goldman and Dave from Delta.
First, we know that stocks are assets, just like bonds. You know that a risk-free bond has a huge yield , and people would rather choose it than a stake in an airline in the form of common stock, especially when airlines are known to be unreliable investments or at least volatile. You value these stocks relative to 30-year Treasury bonds, and right now the Treasury is winning.
If the rates on these bonds are high, it will slow down the economy. Is n't it because oil is so expensive? This is something that really worries the president, otherwise he wouldn't be offering five thousand for parties or anything. If the economy slows down, people will be laid off and expansion plans will be canceled.
Right now, what's keeping the economy going and stocks afloat despite high oil prices is employment, which remains fairly stable. If that changed, you know, people wouldn't travel so much. Airlines will lower forecasts and stocks will fall sharply. This is exactly what these stocks are predicting, beyond the incredibly high oil price , which is hitting earnings hard.
Airlines have to constantly borrow money to buy planes, which is a huge expense for them. We see that Treasury bonds are trading at 5.3%. We must always remember that very few companies have a credit rating sufficient to borrow at nearly the same rate as the federal government. Airlines are stronger than ever, but they are notorious for their inconsistency.
They are forced to pay significantly more than this 5.3% to borrow the money needed to buy the planes. This means they can't expand as long as 30-year bonds behave this way. They can't grow, and people don't like stocks without growth, hence the 7 multiplier on Delta then. We now know that there are many other factors that affect the management of an airline.
We know that some airlines are better than others. Delta has always been one of the best. But the bottom line is not the most important thing, according to "Disco Dave," as I called him, because I once saw him buying a boombox at 47th Street Photo. I know this because I bought a boombox too. This was a year after my Delta fiasco, too close to that whipping.
I came across Dave about ten years later, and at that moment I knew what I would do if someone gave me such a confident, “all-knowing ” answer about the present and the abyss. I would have thrown him out of the meeting and told him to wait in the hallway. So I thanked him, said that, and added that I would hang a huge board in the hall and make that guy write a long bot over and over and over until the meeting was over.
Moving on to Elizabeth in Florida. Elizabeth. Hi Jim, I hope you are doing well. Oh, Elizabeth, that's great. How are you? Great, not bad. OK. I have a very quick question for you. Of course. Um, I saw you liked How I Met Your Mother on September 2nd, and given the recent sell-off on news of companies vertically integrating turbine component casting in- house, do you see any future revenue squeeze that would justify a re-rating of How I Met Your Mother?
Is the market exaggerating as demand remains constrained by supply? No, listen, I'll tell you what the problem is. And I like what we call "How I Met Your Mother," we joke about it, but it's a fastener company, and frankly, it's a very commodity-oriented business for the most part, and it's selling at 44 times price to earnings.
And we don't want to pay that much for raw materials. Even though business is strong, I think people are saying, " Come on, it's too expensive, I'll wait until the price drops." And if you look at the graph, it seems like it's really falling. Moving on to Mike, Mike from Colorado. Mike. Dr. Kramer. Your huge fan from Colorado, I've been listening for a long time, this is my first time calling .
I like what you do. I love how you teach us the inner workings of the markets. That's all. This is not easy. I mean, I have to liven up the class. Before we begin, be sure to subscribe to the channel. If you want deeper stock analysis and exclusive insights, join our channel membership and receive premium stock analysis created specifically for members.
Now let's move on to today's story. There is a fascinating discussion going on around artificial intelligence right now . How far should AI development go? And, more importantly, what happens if the people building this system eventually find that they can no longer control what they are creating? Nvidia CEO Jensen Huang recently discussed just such scenarios during his conversation with Ezra Klein.
His position is interesting. Huang does not believe that AI poses an existential threat to humanity. But he also makes an important caveat . If AI researchers truly reach a point where their experiment is uncontrollable, and these systems can actually cause catastrophic damage, then the answer cannot simply be to continue experimenting and hope that everything will work out.
In this hypothetical situation, Huang says, labs would have to consider stopping the experiment. Because the potential liability would be enormous. Liability to shareholders, civil liability, and possibly even criminal liability. So, while Huang remains generally optimistic about AI, his argument recognizes that there is a point beyond which the potential harm becomes too significant to ignore.
And that brings us to the end of our conversation about Nvidia. Because while people debate the risks of advanced AI, Nvidia chips continue to provide the infrastructure behind much of this technological race. One of the most important developments is currently happening inside Elon Musk's X AI infrastructure.
Musk is actively expanding the Colossus data center complex in Memphis. According to the data discussed, Colossus already contains hundreds of thousands of Nvidia accelerators, including GV200 and GV300 systems. And the planned expansion could significantly increase that number in the coming months.
If all goes according to plan, the total number of NVIDIA accelerators running in Colossus could reach extraordinary proportions. This is important for NVIDIA because it's not just a story about one company buying chips. This is another example of how AI computing power is being built at a tremendous rate .
Now let's move on to in this story—Micron. Micron is preparing an earnings report, and investors are watching this announcement very closely. But an interesting situation arose before this quarter . During the previous reporting period, Micron delivered exceptionally strong results. Revenue was strong, profits were substantial, and the company exceeded some of the lofty expectations set by investors .
And yet, stocks did not react positively. Instead, investors sold stocks, and now the question is, will the market react differently this time? One argument is that the positioning before the earnings report is completely different now. The stock experienced a significant sell-off earlier this year.
Micron and other semiconductor companies have lost a significant portion of their value in a relatively short period. This changed investor sentiment. Instead of entering the reporting period with excessive optimism , investors are now much more cautious. And that's why some analysts believe the strong results could potentially get a different reaction this time around.
But profits aren't the only thing investors watch. Interest rates ar benefit from huge capital expenditures on AI, but this infrastructure requires huge financial resources.
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