Nvidia earnings, Jamie Dimon weighs in on economy: Morning Brief

The S&P 500 (^GSPC) and Nasdaq Composite (^IXIC) are raring to go as they open Thursday's session higher after Nvidia's (NVDA) more than promising first-quarter earnings reported after Wednesday's market close. Catch Yahoo Finance's exclusive interview with Nvidia CEO Jensen Huang.

The Morning Brief Anchors Seana Smith and Brad Smith walk you through everything Nvidia this morning and how stocks are reacting to the chipmaker's latest earnings beat.

Charles Schwab Chief Global Investment Strategist and Managing Director Chief Global Investment Strategist and Managing Director Jeffrey Kleintop sees market drivers moving out of just the tech sector, as European economic data shows promise, also outlining trade tensions between the United States and China to be possible headwinds for Nvidia going forward.

In other news, the US Justice Department is reportedly prepping an antitrust lawsuit against concert and event ticket seller Live Nation Entertainment (LYV). After the release of the Federal Reserve's May FOMC meeting minutes, JPMorgan Chase (JPM) CEO Jamie Dimon and Goldman Sachs (GS) CEO David Solomon have weighed in on the state of the US economy, voicing concerns for a hard-landing scenario and the Fed's path for interest rates.

This post was written by Luke Carberry Mogan.

Video transcript

It's 9 a.m. here in New York City.

I'm Brad Smith alongside Shana Smith.

This is Yahoo Finances flagship show the morning, a brief nas that futures they're leading the games following invidious goldilocks earnings report.

The poster child for the A I revolution sending chip stocks higher on its Q one performance and video founder and Ceo Jensen H said in an exclusive interview with Yahoo Finance that man for its A I chips remain strong and rates may be saying higher for longer minutes from the fed.

The latest meeting showing concerns about sticky inflation with many officials questioning if the central bank's current policy is restrictive enough.

So the right to the three things that you need to know this morning, your road map for the trading day.

Yahoo Finance is Julie Hyman J and Madison Mills have more.

Thanks so much.

NVIDIA does it again.

Shares of the chip giant are jumping after its stellar first quarter performance beating on every single metric the company sales surging by 262% in the last three months as demand for its A I chips grows.

Here's what NVIDIA founder and Ceo Jensen told Yahoo finance in an exclusive interview.

People want to deploy these data centers right now.

And so so that that demand is just so strong.

Plus Nvidia's blockbuster earnings are also sparking a global rally European markets and Japan's Nikkei pushing higher on the back of those stellar results.

Wall Street is set to open higher this morning as it tries to bounce back to record highs.

We're going to see if the market momentum will continue and it's awfully landing might not be in the cards for us at least.

That's what JP Morgan Chase, Ceo Jamie Diamond says the progress on inflation stalling.

Diamond said in his recent interview with C NBC that a hard landing for the US can't be ruled out.

Meanwhile, Goldman Sachs, Ceo David Solomon says the fed won't cut rates this year as A I powered efficiency is keeping the economy resilient.

Our top story today, Nvidia's booming business.

The A I darling knocked first quarter earnings out of the park.

Ceo Jensen Huang spoke to Yahoo Finance exclusively and had a lot to say about the demand picture.

Copper demand grew throughout this quarter after we announced Blackwell.

And so that kind of tells you how much demand there is out there.

People want to deploy these data centers right now.

They want to put our GP US to work right now and start making money and start saving money.

And so so that that demand is just so strong and the numbers match that narrative record, quarterly revenue more than doubled from a year ago, largely attributable to massive gains in the company's data center business and video.

Also announcing a 10 for one stock split here with more color.

From that exclusive interview.

We have Julie Hy and Julie, you spoke with Jensen, what were your biggest Dan Halley tech editor Dan Halley and I had the chance to talk to Jensen a bit about the uh the quarter that they had and what's coming next and the comments that you just heard him make about Hopper and Blackwell are really key here.

So that's my first take away.

There are no pauses in orders.

This had been one of the main concerns from analysts going into this report with the next generation of chips and software coming out later this year.

Something that video is calling Blackwell.

There was a concern.

Well, would customers put a pause on the so called Hopper chip sets as they were awaiting Blackwell and Jensen pretty much said uh uh that's not happening.

That's why he was careful to say even after we introduced Blackwell, there was still strong demand for Hopper.

So that's takeaway.

Number two, take away, take away.

Number one, I can still count despite my late night, last night takeaway, number two, demand is broadening beyond hyper scaler.

What are the hyper scale?

It's a big cloud companies, Amazon alphabet, Microsoft's Azure.

The company said in its press release, the demand is broadening that they're seeing other industries now like health care start to deploy these chips in their data centers as well.

That said, still 40% of the company's data center revenue did come from the hyper scalers.

But again, Jensen was careful to talk about the other industries that are using this as well.

And then finally, he was also careful to push back another against another concern of analysts and investors.

And that has to do guys with the switch from so called training to inference.

In other words, right now, we're in the A I training phase, we're starting to get into inference.

But in other words, these large language models are learning for lack of a better term, they're being trained, then they will switch to them, actually working to them making predictions, making links, doing the work.

There had been some thinking that maybe these very complicated, very expensive nvidia chips wouldn't necessarily be deployed for that.

But he said over and over again, our chips are being used for inference now.

So really a lot of what the work he was doing yesterday was sort of pushing back against some of these narratives, which was interesting.

It certainly is an interesting, really great interview there.

It was a lot of great insight and color on the latest quarter and also what they expect to see going forward.

What also stuck out to you was what he had to say about some of those real life U use cases.

And it was actually applauding some of the efforts that we've seen from Tesla.

Right.

Yes, was and within the data center business, aside from the hyper scalars, the biggest industry vertical, if you will, that is using these chips is automotive.

And he called out Tesla specifically because of the training that it's doing for full self driving and particularly autonomous vehicles broadly.

This is what he had to say about that.

One of the things that's, that's really revolutionary about about the, the version 12 of, of Tesla's uh full self driving is that it's an end to end generative model and it learns from watching videos surround video and it, it learns about how to drive uh end to end and genera using generative A I uh uh predict the next, the path and the, and the uh how to steer the uh how to understand and how to steer the car.

So in other words, you know, there are videos that the models are watching.

I mean, we keep using these human words but you know, as though they have eyes, but in other words, they, you know, they scan through these thousands, if not millions of different video scenarios to try to learn what to do in that situation.

These GP US that NVIDIA makes are powering that process at the data center level.

And as he said, you know, eventually we're gonna have a lot more autonomous cars so it's not just be a Tesla, it's going to broaden way beyond that.

Right.

And just coming back to this report here for NVIDIA, I mean, the headlines are still, they're all glowing.

What are you seeing as potential downsides here though?

I mean, even though he pushed back against those various concerns, it doesn't mean that they're not valid, you know, there is still competition coming from some of these hyper skiers that are going to be making their own chips as well as other competitors within the chip industry.

That's something to consider within the report itself.

Gaming reven did miss a little bit.

The company said that had to do with seasonally lower GP U sales for laptops.

So that's something to keep an eye on and then there's just, you know, the bigger they get, the more they have grown, the harder the comparables are going to get on the out years.

So if you compare say the first quarter of this year in which we saw that incredible more than 400% increase in earnings per share, you compare it with estimates for its fiscal first quarter, 2026 which will be this time next year, only looking for a 29% gain.

And then actually that 2027 number should be a decline of 6%.

In other words, um analysts are predicting that growth is gonna get smaller and then a couple of years out will actually flip to a decline, the further away we get, the harder it is to predict obviously.

Um but and him sort of emphasizing that inference will be a key use case for NVIDIA products, maybe changes that narrative.

There are certainly analysts who believe that Nvidia's numbers will be bigger than that.

But, you know, we're just gonna have to see if it can keep growing at this incredible rate.

Incredible.

Indeed.

I mean, it got me wearing the leather jacket today.

I was gonna say Jensen there who wore it better?

Definitely Jensen, definitely Jensen but I tried, I tried.

It's a time to shine.

Hi Julie, thanks so much.

Well, no surprise like we've been talking about Wall Street is bullish on Nvidia's results.

Number of analysts boosting their price targets on the stock this morning including our next guest raising his price target on the back of those results from 1200 to 1300 bucks a share.

We have John Vin, he's keeping capital markets equity research analyst joining us here and John just your first take on the quarter and, and whether or not this was exactly what the street wanted to hear at this point in the story.

Yeah, I believe that they came through in flying colors.

I think the expectations kind of met, kind of the whispered by side expectations right now.

I would say that right now going into earnings, you know, obviously, as you had mentioned earlier, there was a little bit some consternation of uh maybe a demand pause ahead of the ramp of Blackwell.

So the expectations weren't sky high.

But certainly, I think they uh they certainly met the bar there, met the bar and as we're taking a look at shares right now, pre market, they're up by about 7%.

The question continues to be, how do they build on top of this success, John, what, what do they need to continue to, to show the street?

Yeah, so I, I see a couple of kind of key catalysts in, in terms of their financial performance is in the second half, they're gonna start ramping their next generation Blackwell GP US, you know, B 100 is gonna be a major of the volume.

The A SPS on those GP US are gonna be 40% higher.

There's obviously uh also a lot more capacity coming online.

CO S has been uh previously kind of a bottleneck.

There's gonna be a lot more supply coming online as well.

And then as we transition in 2025 NVIDIA announced that their GTC conference, this GB 200 platform and that's gonna really kind of change the game here.

You're gonna go from NVIDIA shipping basically chips to their customers to shipping full service rack solutions.

So you're seeing a SPS go from hundreds of thousands of dollars for these HDX boards to full stack server racks which you know, the A PS are going to be closer to 1.5 to 2 million.

So that's going to be a pretty significant driver in terms of revenue inflection going into next year as well.

John, one of the key takeaways from the earnings print and also from Yahoo Finance's exclusive interview with Jensen.

Following those results was some of the push back that he had just the narrative going into this print was whether or not some of their customers were going to be holding off on current orders waiting for Blackwell chips and more advanced chips uh to arrive here in the future.

He had pushed back on that is that at all still a concern for you.

I I if it ever was um it was uh it was, it was a slight concern.

I think uh they obviously clearly addressed those concerns.

He had said that, you know, each 100 demand increased throughout Q one.

And then he said, you know, hopper demand is going to increase increasingly ramp throughout Q two.

But the one thing I would say is that uh there is a little bit of sensitivity around kind of their China business.

Um You know, we believe that they've been shipping the H 20 which is a compliant GP U to the China market.

Um It, it doesn't require an export license and we, we think that was a meaningful contributor like in the near term to their financial results and obviously a pretty, pretty sensitive topic because you've seen the Biden administration start to come down a little bit more harshly on what can and cannot be shipped to the China market.

John investors, traders waking up this morning and trying to figure out if they didn't already have this as part of their strategy yesterday going into the print or even thereafter, whether now with a split that's announced and ultimately, as that comes forward, it might on cost at least make it look cheaper to a lot of retail investors even out there.

Do they add on NVIDIA to their portfolio?

And and what's the strategy there kind of post split?

Yeah, I mean, we're from our perspective, it split or post play doesn't matter to us.

But I I think there's still very favorable risk reward on NVIDIA here.

You know, we think that they can do close to $50 in earnings and you know, that sort of earnings power, you know, NVIDIA is trading uh very attractively relative to its broader peers, right?

Kind of in the high teens, low twenties multiple, which is very attractive from a valuation perspective.

From our, from our point of view, John, I wanna get your thoughts on what we heard from Jensen about supply, clearly demand is there.

But there are certainly some supply challenges at this point for NVIDIA.

Here's what he had to say to Yahoo Finance last night.

Every, every component, every, every part of our data center is the most complex computer the world's ever made.

And so it's sensible that almost everything is constrained.

So John, what position does that leave NVIDIA?

Because yes, it's a good position to be in to a certain extent you want that demand to be there, but you also don't want it to hinder and way on growth as well too.

Yeah, I think it's gonna be um kind of a near term constraint as they start to ramp Blackwell into the second half.

But um I think NVIDIA has done a a magnificent job of setting up their product roadmap so that it can seamlessly transition um and work through these supply constraints, right?

As, as as the supply chain and as NVIDIA starts to ramp Blackwell into the second half, uh recall that they are also ramping each 200 right?

Which is kind of a next generation H 100 GP U is part of the Hopper family.

Uh that GP U is not really supply constrained.

So as they're ramping that, um you know, we we believe that NVIDIA obviously it's going to be able to work through these supply constraints and ship to volume, you know, probably late this year on on B 100 John Vin, who is the key bank capital markets, equity research analyst, John, always a pleasure to grab some of your insights.

Thanks for hopping on to break down Nvidia's latest financial performance with us.

Thank you.

Well, other big story for the markets here, rate cut risks.

Goldman Sachs, Ceo David Solomon says that the FED won't cut rates this year as A I power deficiency keeps the economy resilient.

And JP Morgan, Ceo Jamie Dimond says a hard landing for the US cannot be ruled out.

That's according to C NBC.

And of course, we have to kind of take into consideration here what the fed meeting minutes are also saying right now and in those meeting minutes in this most recent meeting, they noted the FO MS noted their uncertainty about the persistence of inflation and some of the participants pointing out here, geopolitical events, other factors resulting in even more severe supply bottlenecks, higher shipping costs continuing to put upward pressure on prices and weigh on economic growth right now.

So very much a tone or a vibe in that room, it sounds like that they are definitely not out of the woods as of right now.

And it's still a question mark about whether or not at least among some of the participants, whether or not they should still be hiking or holding for longer, how long they should be holding for?

Yeah, and that's, that's very similar to what we heard from Diamond yesterday.

In his interview with C NBC, it was over in Shanghai at JP Morgan's summit there and he was just talking about the fact that inflation obviously a lot stickier than what many forecasters had anticipated at this point.

Exactly like what you just said what we learned from the Fed meeting minutes yesterday, there's this narrative shift.

It seems like it's happening amongst policy makers.

More and more are starting to take a little bit of issue or more concern with the sticky inflation and questioning whether or not the policy right now at a at its current level, whether or not it is restrictive enough.

And I think that leads us then to the commentary that we got from David Solomon yesterday, when he went on to say that there is that he does not see any compelling data at this point to support rate cuts at this time.

He's talking about the fact that the average American still feeling the pinch from higher prices.

He used, he referenced mcdonald's recent results.

He referenced the recent results that we got an auto zone just showing the fact that consumers are pulling back on spending when you see the inflation levels elevated, still very high from what the fed wants to see clearly a lot higher than that 2% rate that we're at the 2% level that they're hoping we do come back to it.

It, it is getting tougher for policymakers to make the case and even for many of the forecasters out there to feel confident maybe at this point that we are going to be getting multiple rate cuts here before the end of the year.

Yeah, absolutely.

Well, uh if we don't get any of those rate cuts by the end of the year.

Then the fed will have accomplished its job and looking a political, at least to look at it.

We are just getting started here on the morning brief.

Coming up live Nation is the latest target for the justice department which is planning an antitrust lawsuit against the ticketing giant that could come as soon as today.

According to several reports and video share is getting a boost this morning after another record breaking quarter, we're looking at the fact that it could open just above 1000 bucks a share.

Plus that meeting minutes showing that members are growing increasingly concerned about the lack of positive inflation out of the lack of improvement that we're seeing on inflation.

We will speak with one economist who says a September cut could still be in play all that and more.

You're watching Morning Brief.

The Justice Department is seeking to launch an antitrust lawsuit against live Nation, the owner of Ticketmaster as soon as today.

According to several reports, shares are falling on the news and the suit will accuse the ticketing giant of illegally monopolizing the live entertainment industry.

Yahoo Finance's Alexandra Canal has the detail for us.

Hey, hi, Brad.

And this is something we knew would be coming.

There have been multiple reports leading up to this after the Justice department launched a two year investigation into the company.

According to these reports, the DOJ is expected to sue live nation over its anti competitive business practices alleging the company has weakened consumer choice in the process.

The DOJ just announced a press conference at 11 a.m. Eastern where it is expected to make a quote antitrust announcements.

We will likely see the specific claims in the coming hours but zooming out here, the federal government did approve the live Nation Master Me back in 2010 since then.

Though the company has been at the center of antitrust concerns including accusations of sky high fees.

A lot monopolistic practices and anti competitive behavior.

If you recall the Taylor swift ticketing fiasco back in 2022 that set off quite a few alarm bells with the Senate judiciary committee holding a hearing at the start of last year.

Now, at that hearing, there were multiple calls to break up company.

Although experts that I've spoken with have told me that wouldn't necessarily solve the problem surrounding the unregulated secondary ticket market.

So lots of moving parts here and analyst previously told me that Live Nation would quote, be a shell of itself without ticket master since that's the entity that makes the bulk of the profits again.

A lawsuit expected by the justice department in the coming hours.

Shares are down more than 5% just before the opening bell.

All right, thanks so much for breaking that down for us.

Wanna get to another top turner here on Yahoo Finance and that is Snowflake.

We've been talking so much about NVIDIA Snowflake also impressing the street here with its latest earnings report.

The company boosting its full year outlook now sees $3.3 billion in product revenue.

This is the company's first report under its new CEO.

You're looking at adjusted eps of 14 cents.

So coming up just a bit shy but the street was looking for there.

It's on your screen, but revenue coming in exceeding expectations and certainly when we talk about the story surrounding snowflake, a lot of that having to do me the story having to do with A I the growth that we are seeing there.

So what exactly this looks like here going forward?

Now, this is a stock.

We're not seeing too much movement here, at least over the last three months of that longer term chart.

You have been looking at losses of just about 27%.

So analysts certainly have taken issue on some of those initiatives, some of the growth that we had seen from Snowflake here in the past.

But again, when you take a look at the street's reaction to this Evercore saying that the results are gonna do help illustrate that the business remains unquote, stable footing while new A I products remain a call option for the second half of the year.

You're looking games here just about 4% re yeah, really interesting here.

I mean, they, they said the magic word or two words or even acronym in A I and so, yeah, you get the check mark on that one.

What's also in interesting is how they're talking about the A I budgets right now.

They're saying their A I budgets modest in the scheme of things and being creative and how they develop these models and something that the team comes to naturally expect.

But it's interesting because analysts actually did poke at that just a little bit more.

It sounded like on the call yesterday after these results were dropped, trying to get a good sense of how much spending this company is going to be continuing to do on some of the development of their own services, especially given the kind of customer landscape and the demand profile that we're seeing right now, that's led a lot of other companies to announce just how much their capital expenditures may look like here going forward.

And so if Q one truly is the low point of some of that spending for companies who are looking at where they can be beneficiaries to their bottom line of generative A I then going out from here, investors are gonna be keeping close tabs on just how much money is going into bringing some of these products to life here.

And ultimately what they're able to charge and market too here for snowflake.

Certainly.

All right, let's take a look at another mover here this morning and that is Taiwan Semiconductor now, forecasting revenue growth of 10% in the global semiconductor industry for the year.

That's excluding memory chips.

Now, the company's senior vice president calling this a golden age of opportunity with artificial intelligence.

And the difference here is the slight like tweak in the language, but it is significant because their previous guidance had said that the growth would be around 10%.

Now they feel a bit more confident that we are going to see revenue growth of 10% here for the industry.

So it was a subtle change, but it was a positive adjustment here in terms of that outlook.

And we're seeing that reflected in a number of these chip names.

Obviously, the sector also getting a boost and the heels of the blowout report here that we got from NVIDIA.

But again, a similar type of story when we're talking about chip demand and clearly, we're seeing more upside movement here for these players when you take a look at a number of those competitors as well.

Yeah, I mean, this comes after the company had already put out a a revenue report earlier in the month of May as well here, talking about revenue from for January through April as well here that increased by about 26.2% compared to the same period in 2023.

So continuing to ride some momentum here for TS MC, for sure, it's a larger kind of question of when you see more fabrication processes for for wafers come online how much that does impact them.

But that's still years out from now.

I mean, we're talking about plants that are literally just getting ground broken on as of this juncture.

I'm looking at you intel, but particularly going forward from here.

Uh TS MC as at least as of right now, we were taking a look at shares a moment ago.

Uh shares reacting to this 10% annual revenue growth here.

All right.

Well, coming up, we've got the opening bell on Wall Street again.

We are looking at gains here across the board at the open.

It's all about NVIDIA.

We've also got NVIDIA set to open the day above 1000 bucks a year.

We'll break all that down.

What's ahead for the broader market next?

All right, we're counting you down to the opening bell on Wall Street and in midtown, Manhattan.

Well, everywhere bells are wrong here in New York City.

Ultimately taking a look at some of the major averages, the futures here.

Uh, we had those up a second ago.

Anyway, let's just go to the opening bell here.

That's a lot more fun.

Anyway, you got some great folks ringing the opening bell at the NASDAQ.

They get some fun.

Fetty.

Hit the button.

All right.

Bowhead specialty.

Reeling the, uh, ringing the opening bell at the NYSC with the whale.

My goodness.

Uh, that's not a crypto company, I don't think.

But anyway, that aside, we're taking a look at the major averages here out of the gate this morning.

The Dow and the NASDAQ in negative territory.

You just barely here.

Actually, we're gonna wait for that NASDAQ to Calibrate for a hot second.

But anyway, the dow right now is down by about 100%.

There we go.

The NASDAQ did not fail me.

Here.

It is.

It's up by about 1.1%.

I'm sitting here scratching my head.

I'm like, even with these gains from NVIDIA can't be.

It's up everyone.

Well, let's talk about why it's up so much.

Am I ever seeing really the out performance within the NASDAQ?

And that has to do with what you are looking at on your in the chip stocks and we've got NVIDIA Brad, you're right to point that out just about 7% right now.

You can see it.

I guess this is an intraday chart here, but we take a look at the year to day climb.

We're now looking in gains of 100 and 6% here on the back of that stronger than expected and very, very bullish quarter here that we just heard from NVIDIA Jensen Wong joining Yahoo Finance in an exclusive interview, talking about that growth and the demand that they have been seeing here for their products and also the fact that demand continuing to outpace supply and exactly what that means.

Longer term story for that name.

And you can see NVIDIA as we see that move to the upside of nearly 8% gain opening above 1000 bucks this year.

You're also seeing some gains across the board.

When you take a look at Broadcom, take a look at Taiwan Semiconductor.

We were talking about the name earlier in the trading day.

Even a at here, Mike Ron opening to the upside here.

So really adding some life and excitement here throughout the chip sector, bro.

Yeah, I know.

I, I'll tell you what we've run through.

So many of the numbers here on a video, I'm just gonna talk about vibes here.

It feels a lot like Steph Curry putting the team on his back, Davidson back when he was in March madness.

They went through Gonzaga, they went through Georgetown, they went through Wisconsin.

Why do I mention this?

It feels like every time we're going quarter after quarter here with NVIDIA saying they can't possibly deliver another bang up report or performance, they do it again.

But why?

Well, even like Steph Curry at Davidson back then he was just getting started, getting started.

That's a great, I like that.

You know, you're gonna come with us Sports ball.

All right, let's continue our coverage of the opening bell on the street.

Jared is standing by with a closer look at some of that movement that we're seeing, Jared impressive board there.

But let's broaden the lookout to the S and P 500.

Guess what today is the 1/100 day of trading of the year.

And here's Ryan Dietrich.

He has some stats for us.

He said you want some more bullish vibes tomorrow.

And that's today is a 100 trading day of 2024.

When the, when the S and P is up 10% year to date like this, the rest of the year is up a median of 10%.

The average 8.8 and it's higher 80 85% of the time.

This is much better than an average year.

He points out past nine times.

Eight times, saw double digit gains.

Those are the stats can't read them.

So I'm just going to move on here.

I do want to talk about the energy situation here.

Now, not talking about traditional energy.

We saw that XL E had the worst day in a couple of weeks recently.

That was only yesterday.

But today I want to talk about solar energy and clean air.

Uh First solar had a huge, huge breakout day yesterday.

I'm going to show you the two days and it's not just for solar.

We're seeing other entries into this market just flying high max in up 15%.

Uh Here we have another one up about 15% and you look at the year to date.

Now, this is a very volatile sector and you can see it's down 24% when the average when the general market is up.

So they definitely have underperformed but just going back to our sector action right here, I'll show you that before leave today.

Tech is just the clear winner.

We do have some losers today.

It looks like Staples is the worst off guys.

All right.

J Thanks so much for bringing that down.

Let's talk about what we are seeing here at the major averages here are mix.

You got the dow under just a slight amount of pressure here, but the S and P and the NASDAQ are moving to the upside.

Why a lot of that has to do with NVIDIA.

The results that we got after the bell yesterday, you're looking at the NASDAQ, the out performer of the bunch up just about 1%.

And we take a look as to why we, we're seeing this movement, the chip giant already accounting for a large portion of these major averages here.

So here to talk a little bit more about that.

We wanna bring in Jeffrey Kleintop.

He's Charles Schwab's Chief Global Investment Strategist Maning director, managing director is here, Jeffrey.

It's great to have you here.

So let's talk about NVIDIA in the context of the broader market when you see this type of growth.

What does that tell us about the excitement surrounding A I and how big of a driver that's going to be for the broader markets going forward?

You know, it's not easy to find any negatives for the market in Nvidia's earnings.

But I found one that might be increasingly important to the market.

We know A I is a huge and rising theme for the markets.

But so are trade tensions.

One element in Nvidia's earnings report that left a mark on an otherwise bright picture was the drug in Nvidia's data center revenue in China, a country that's accounted for 20 to 25% of its data center revenue in recent quarters.

And of course, that's the result of a US ban on selling high performance chips to China.

The tech giant is introducing alternative chips that don't require a special license from the US.

But those don't appear to be catching on data center revenue in China was quote down significantly from the level prior to the imposition of those new export control restrictions according to NVIDIA CFO on yesterday's call and that is going to become a bigger issue and not just for chip makers in the coming quarters as trade tensions continue to climb.

Wow.

Ok.

So I mean that kind of spells out some some larger threats that are outside of even Nvidia's control here.

But the the markets have looked to NVIDIA as the pulse of where they feel comfortable moving here.

How how long can that continue to be the case?

Well, it's a, it's a safe place to find growth in a global economy that's been struggling for the past several quarters, but maybe that's not the case anymore.

I'm I'm arguing for a broadening of market performance outside of the tech sector, outside outside some of these A I darlings, you know, this morning we got the PM I data uh from Europe and it was booming.

In fact, Europe is really coming out of the recession that it experienced last year and that means better growth for more cyclical sectors.

In fact, the May survey uh of of the PM I uh showed really strong growth.

In fact, Germany is seeing the strongest uh activity here in over a year.

So this is suggesting that earnings growth in Europe may actually exceed earnings growth in US in the second half of this year.

That's what analysts are now forecasting and some of the state is supporting that.

And that means broader performance just outside of the US tech sector, Jeffrey when we got the big news last night, that the time for one.

So but and NVIDIA, I bring that up because there has been some chatter this morning, whether or not that makes it a more likely candidate here for the Dow in the future.

Do you have any thoughts on that?

I don't really, I mean, you know, I index indices are important in the sense that they uh impact how we look at the markets.

But the truth is the Dow has really adapted a lot over time in terms of what are the types of companies that are in that index?

I look at much broader indexes like the S and P 500.

For example, there is a lot of different sector exposure in it.

Uh That's what I'm looking at and usually use that to compare it to other markets around the world.

And interestingly, China is outperforming the S and P 500 so far this year.

And that's something that might catch a number of investors by surprise.

We, we ultimately here as well.

We spoke to NVIDIA founder and Ceo Jensen Huang yesterday about robust demand for its A I chips.

I wanna get you to take a listen here and we'll get your reaction on the other side.

Copper demand grew throughout this quarter after we announced Blackwell.

And so that kind of tells you how much demand there is out there.

Every part of our data center is the most complex computer, the world's ever made.

And so it's sensible that almost everything is constrained.

So the demand picture that we've continued to see spelled out by NVIDIA there and then by some others who've kind of added on or next themselves on to the generative A I conversation.

I mean, at some point, it, it feels like the spending that corporations are doing at least in the B to B relationship for the these products and services.

It, it's gotta dry up at some point.

Right.

Yeah, I although we're in the early stages of it, you know, if you, if you take a look at the ramp up and spending around things like the.com.

I know that was a while ago, but many of the uh new technology that have taken place over the last 20 years did take a few years to really ramp up as companies try to figure out how to implement these technologies and these solutions.

And so I still think we're fairly early in it.

If you look at corporate cap X on software and hardware, it's still barely ticking up.

So I think we've got a ways to go here.

The real issue may be supply constraints from TS MC, the maker of those chips for NVIDIA who's having trouble cranking out enough chips to meet that demand.

That might be the binding factor here rather than corporate budgets.

Jeffrey Kleintop, Charles Schwab, chief Global Investment strategist and managing director.

Great to see you, Jeff.

Let's serve me on, we've got all your markets action straight ahead.

Stay tuned.

You're watching the morning brief NVIDIA, Ceo Jensen Wong, giving credit to the EV maker Tesla.

The CEO telling Yahoo Finance Tesla is best positioned in self driving technology.

Take a listen, Tesla is far ahead in self driving cars.

Um But every single car someday will have to have autonomous capability.

Uh It's, it's safer, it's more convenient, it's more, more fun to drive and in order to do that, uh it is now very well known, very well understood that learning from video directly is the most effective way to train these models, we used to train based on images that are labeled.

We would say this is a, this is a car, you know, this is a car, this is a sign, this is a road and we would label that manually.

It's incredible.

And now we just put video right into the car and let the car figure it out by itself.

And for more, let's bring in auto blog editor in chief Greg Migliori for his reaction, Greg, great to see you.

So, I mean, NVIDIA is perhaps one of the biggest bellwether for the market right now.

But uh Jensen also having some high praise for Tesla there.

Hey guys, good morning.

Yeah, he is clearly bullish on Tesla's approach to self driving cars and just the entire business model which you know, many people, including many investors are, I would raise a little bit more skepticism.

I I think while many cars will have self-driving capability at some point in the future, I think what we've seen is consumers have been slow to adapt to it even slower than perhaps embracing evs and hybrids.

I think there's some pretty, you know, significant skepticism in the market for autonomous vehicles.

There's going to be a significant learning curve and Greg tell us a little bit more about that just in terms of when we talk about A I in the auto industry, what is a more realistic viewpoint, then I guess from your perspective and then ultimately, as maybe as we take a longer term approach, what you think that growth and demand is going to look like for some of these chips that obviously are necessary in order to um are critical for these automakers A I goals.

Yeah, I think that's a great question.

I, I look at it more of like a 5 to 10 year sort of time frame where we'll see these chips and then the technologies that they can power phased into different vehicles.

And I think you'll see existing autonomous driving systems like Tesla's full self driving as well as other programs.

Like General Motors has a feature called Super Cruise.

I think you'll see those systems get increasingly more powerful and then you'll see some of the features.

They're a little more basic things like keeping assist, blind spot monitoring, automatic braking, uh those features that are a little more like tertiary but still important, get more powerful and more helpful to the consumer.

And I think it'll be a longer runway.

I think listening to the, the comments there, uh that's a very bullish view and I I don't necessarily think that's going to happen in the near term Tesla has perhaps been cementing itself as one of the de facto full self driving or autopilot um for autopilot plays right now, but the stock has had a rough time this year to say the least.

So how quickly does all of this need to materialize for Tesla for Elon Musk to be able to reap some of those longer term benefits that they continue to sell to investors out there.

Yeah, I think this needs to come to fruition uh at least details of the plan and he's going to reveal some of that as soon as August apparently.

So I think if he can articulate his vision for this in a more concrete way by the end of the year, I think investors and consumers will be reasonably patient with him.

I think the reason he took so much criticism earlier in the year is there is skepticism around self driving cars.

I've driven many of them and they are great.

I think they just have very specific use cases and I think Elon is trying to bring this to the masses, which is a much tougher case to make great.

Let's take a step back and just look at Tesla overall right now, we got the European sales numbers out earlier this week showing a decline in demand.

And this comes on the heels of the recent data that we got out from China.

Just give me just your sense of what that demand picture looks like and whether or not Tesla is really out of the woods yet when it comes to some of those challenges that they have been up against now for quite some time.

Yeah, so I think Tesla is the, I think they're at a pivotal moment this year.

I think they really need to, uh again, articulate what they're doing with autonomous vehicles because they've made that a pillar.

I think consumers in the market were more willing to accept just details on the model too or a lower cost model, which is in my mind, kind of a safer play.

It's like just a lower cost car, something perhaps below $30,000 25,000 dollars that people are familiar with, that's what people were expecting.

So, I mean, naturally Elon Musk does something totally different.

Let's make the cars drive themselves, right.

So I think uh he needs to kind of bring together all these parts of his plan in the next probably 6 to 8 months.

Uh And, you know, sort of explain himself, I think right now, uh he has sort of thrown out some crumbs, you know, he revealed earlier this week that they're doing more uh advancing the semi program, which is significant.

He mentioned earlier this year about the Tesla Roadster.

It's going to be even quicker than he mentioned.

The 0 to 60 time is just a crazy figure.

So he's sort of giving us little nuggets little breadcrumbs.

But I think in the next year he needs to really bring it all together because the results, the sales figures, they've been pretty uneven.

Yes, nuggets, bread crumbs and cloaks over top of yet to be announced.

Vehicles, Greg Miglio, we've got a lot for Tesla to ultimately deliver here going forward.

I appreciate you hopping on with us, Greg.

Thank you.

Awesome.

Coming up everyone.

We've got much more of your market's action.

Straight ahead.

Stay tuned.

You're watching morning brief fed.

Officials are growing increasingly concerned about sticky inflation minutes from the fed's latest meeting showing that members have seen equal lack of further progress towards reaching that 2% goal.

And a number of officials are now questioning whether or not the current policy is restrictive enough.

Despite this hawkish tone, the C Me Fed watch tool still showing about 50% of traders are expecting that first cut in September.

We wanna bring in Tom Porcelli.

He is Pin's fixed income chief US economist Tom, it's great to have you here.

So talk to me just about how you were looking at the minutes that we got LA uh yesterday here from the Fed and, and what that means in terms of your projections for Fed policy going forward.

Good to be with you.

And I would ask for the minutes.

I would call them incredibly stale.

Basically happened before we got the, the last CP I report which you know, most Fed official saying they gushed over is maybe too strong of a word, but I think they were really pleased.

So uh I, I think that um you know, hold due respect to the MITS.

Uh I think, you know, it's I think still pretty fair for the market to hang on to this idea that, you know, you'll see cuts over, uh, over the balance of the year.

Tom.

When do you think we'll see that first cut?

Are you in the September?

Yeah.

It, it's, it's complicated.

So, here and, and, and, and look, I stick my neck out there every day.

I'm happy to do that.

I, it's very easy to say that you could see one in December.

So we have one cut for the year.

That's our forecast.

What I would say is I think how desperately wants to get in a second cut if he can, the data allow for it.

And I think that that would then mean September.

So if they're gonna go, it's gonna be like September, December, I would stress November.

Sort of interesting.

I think sort of is aware that this is an election year and that the fed, you know, may be loath to adjust policy at the November meeting.

But here's the thing, history is littered with examples of the fed actually adjusting policy during and around elections.

Usually data have to demand that the fed just raise to do something around an election.

I actually think that hurl is probably a little bit lower this old round just given the fact that I think Powell had an opportunity to sound really at the last F MC, right?

The data allowed for that.

Um But he didn't, he said, uh, decided to sound much more.

Do I think that necessarily for me, meet the hurdle is probably a little bit lower.

So I don't think September is not out of the question.

I just think the data have to allow for it and if it doesn't, then I think they cut in December.

Yeah, Tom, I'm, I'm kind of zero in on this one part of the meeting minutes.

A number of participants noted uncertainty regarding the degree of restrictiveness of current financial conditions and the associated risk that such conditions were insufficiently restrictive on aggregate demand and inflation, which kind of comes back to what you were saying.

And I hate to be the Debbie Downer of this conversation.

Is there still a hawkish risk that is in, in play right now?

I I don't, I think, I think a hawkish risk is an incredibly high hurdle at this point.

And then Powell has been pretty clear on that and he said it multiple times now where he thinks policy is restrictive enough at its current level that that could actually help if inflation did sort of sort of accelerate modestly from here.

I think the idea of inflation accelerating though, I think that that's that in itself is actually a pretty high hurdle and I would be very clear on something everyone should just sort of stick this idea in their back pocket.

I think as we roll into the second half of the year, the the the year ago, CS right are gonna become very unfavorable, particularly from a core P ce perspective.

If you think about all of the second half of last year, month, on month gains in core P ce were like 1/10 right?

It averaged about 1/10 month on month.

So if you don't average 1/10 or less, um, let me, if you average a 10, if you average more than 1/10 that necessarily means that the year on year pace will accelerate.

Now, I don't think, I think the Fed is acutely aware of this.

I think what the Fed is really gonna be looking for is are you seeing an acceleration in the month on month pace in inflation?

So that's a really important idea that I think is probably not getting enough attention.

Um But again, having said all of that, I think there really is a real acceleration in inflation and actually, I can say one more thing on that just keep in mind something if you look at inflation, if you look at like um you know, we've broken inflation down into core discretionary inflation and core staples inflation.

If you look at core staples inflation, right?

Like the everyday things that, that that people would buy, right?

Like uh like or or that they have to buy health insurance, auto insurance.

Um Again, it's core so it doesn't include food, that is what's doing all of the I hate the term sticks to be totally honest as it relates to inflation.

But for a better word.

Let's use it.

Um, that ST the, the stick is that we're seeing it's all because of staples.

It's not discretionary.

If you look at the discretionary components of core, uh, um, CP I, that is actually an out right.

Deflation.

I think it's a really interesting way thinking about it.

Why, you know, the fed has very limited ability to control staples inflation, right?

Monetary policy is too blunt of a tool to work that much precision.

It's an interesting way of slicing up the inflation backdrop.

Great insight, a really important point there, Tom Porcelli.

We love having you.

Thanks so much for making the time to join us here this morning on Yahoo Finance.

Thanks.

Well, coming up, it's all about A I darling.

In video, we will talk to a shareholder about the company's explosive growth.

You're looking at shares trading above 1000 bucks a share plus a fresh read on the economy.

We will break down and the global flash services and manufacturing PM I exactly maybe how that's factoring in to the feds fight to team inflation.

We've got that for you.

Coming up next on catalyst.

We'll be right back.