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Yahoo
7 hours ago
- Business
- Yahoo
CoreWeave leads AI infrastructure stocks poised to surge
You can catch Trader Talk on Apple Podcasts, Spotify, YouTube, or wherever you get your podcasts. CoreWeave (CRWV) is emerging as a major force in the AI infrastructure boom. Michael Lee, founder of Michael Lee Strategy and former Morgan Stanley vice president, says Wall Street is underestimating its growth potential. On this episode of Trader Talk, Kenny Polcari and Lee reveal why CoreWeave and other AI infrastructure stocks could deliver massive gains, how rising demand for compute power is reshaping the market, and why hedge funds may be caught underinvested. They also cover growth versus value strategies, risks from energy grid limits, and the sectors set to benefit most as AI spending accelerates into 2026. Watch more episodes of Trader Talk here. Trader Talk with Kenny Polcari on Yahoo Finance delivers expert analysis and actionable insights, empowering you to navigate market volatility and secure your financial future. This post was written by Langston Sessoms. Welcome to Trader Talk where we dish out the latest Wall Street buzz to keep your portfolio sizzling. I'm Kenny Polcari coming to you live from the Yahoo Finance headquarters in the heart of New York City, a global hub where deals are made, fortunes are built, and the next move is always just around the corner. Coming up, I'm going to share my big tape on the hype around uh the PE ratios. I'm gonna sit down with my very good friend Michael Lee, and I'm gonna share my Jumbota recipe. Now, let's jump into the big you've spent more than 5 minutes around the stock market, you've heard of the PE ratio. It gets tossed around on TV in the headlines and on every stock research site like it's gospel. The stock is cheap, it's PE is only 10% or it's overvalued. Look at the sky high PE. But here's the truth. The price to earnings ratio is a helpful starting point, not the whole what is a PE? It's simple. You divide the price of a company's stock by its earnings per share. If a stock trades at $100 and it earned $5 per share, its PE ratio is $20. On paper, that tells you how much investors are willing to pay for a dollar of the company's profits. A lower PE, the market thinks it's a bargain, or maybe it's a value trap. A higher PE maybe investors believe in massive future growth, or maybe it's a bubble. The catch is that the PE doesn' you why. Sometimes a low PE means the business is in trouble or it's shrinking. Sometimes a high PE implies the company is a proven growth machine and investors are happy to pay for it. The PE ignores debt and future risks. Sometimes accounting tricks or one-time events can distort the PE. Pros know that a PE is just the tip of the iceberg. They compare it to a company's history. They compare it to industry peers and broader market conditions. They the E as much as the P, asking if those earnings are sustainable, repeatable and real. To fill the story, they look at growth rates, margins, debt, and cash flow. The bottom line, don't let a single number make up your mind. The PE ratio is a helpful snapshot, but it's only one lens. Use it as part of the total story, not the whole story. A clue, not a conclusion. Savvy investors realize they need to do the work behind the joining me today is my good friend Michael Lee, founder of Michael Lee strategy and one of the most recognizable voices in financial media regarding markets, policy, and portfolio positioning. Michael brings a wealth of experience to the table, having served as a vice president at Morgan Stanley, where he advised high net worth individuals and institutions during some of the most volatile periods in recent market history. Today,Through his independent advisory firm, he delivers a sharp actual insights tailored for long-term investors focusing on navigating the intersection of macroeconomic trends, political developments and market dynamics. Michael's commentary is consistently direct, informed and grounded in real world application, whether breaking down inflation data, commenting on Fed policy, or flagging risks before they hit the tape. He's a Fox Business and Newsmax and other national outlets, where his no-nonsense perspective on investing and the economy continues to resonate with a growing audience. It is my absolute pleasure to have him join us today. Please join me in welcoming Michael Lee. Michael, it is a pleasure to have you. Thank you for coming in from Connecticut. I know though you live in Florida, but your vacation in Connecticut. Thank you for coming in to spend the day. Kenny, it's my honor to be here, no, no, it's mine, totally. Listen, I want to get right into it because there's so much to talk about and you have a lot to say. So let's talk tech. We're talking all tech today with you. Uh, number one, let's talk about first, is it overvalued? Is it still a buy? Sort out kind of the hype and the fundamentals for us considering, you know, it to be a little bit ahead ofitself. Yeah, so, um, there is this view on the street that the infrastructure needed for artificial intelligence is gonna sort of flatline, or the growth is gonna massively decelerate at some point in the next 1518 months. Um, I, I think that's total and utter nonsense. Um, so if youLook at what AI is. It's taking big pieces of data, organizing it and doing various tasks with it. So you, you, the biggest versions of AI, I think everybody's touched now are like your chat GPT, Anthropic, rock. These are your large language models. OK, so a large language model, um, it, it used the unit of data for that as a token. A token is 3/4 of a not token and cryptocurrency. Just like same thing like a pocket would be for the internet for data. So, um, the amount of tokens we're going to need as models get more complex is gonna skyrocket on an exponential basis. And the next thing to come with AI are agents. So, you know, you take a document, a legal document, throw in chat GBT and it says, hey, you need to make these changes in your organization, agent will go and make those changes and implement it for you. The number of tokens an agent's gonna use versus a large language model is exponentially higher, so the demand for compute, the demand for infrastructure is far beyond what the street is predicting right now. So I would say none of these stocks are overextended. They're far cheaper than they appear, because like a like a Microsoft last night, you know, the street was expecting their to grow at 35% year over year. It's an $80 billion mature business growing at 35%. They grew at 39%, up from 31% in the first quarter. So this is the business is getting bigger than the, um, the growth is accelerating. And so you're, you're getting a higher increasing growth rate on much larger numbers. It's mind-blowing, and I think this continues on for manyyears. Well, listen, I, I with you. I, and it's amazing to see when you when you when you hear from these companies, they're reporting the amount of money that they're spending quarterly, quarterly in the billions of dollars on AI and infrastructure and, you know, whatever it is that they're building, they are just spending massive amounts across the board. All of them, right? I mean, look what happened with Microsoft and Microsoft and Meta yesterday when they reported rushed it, absolutely crushed it. So, so it's, that's a a that's just a great way or examples to bring up because the expectations for Microsoft were sky high. The expectations for meta were sky high. They crushed them. Meta is your use case for AI, and it's quite possibly the best use case in that all they've done is collect every piece of data on you, uh, maybe in some of the most non-scrupulous ways over the last two decades. Well, that, that's, that's what you' to put into these large language models and then the agents to make it work for them. And so, uh, for you, you, you probably noticed in the last 6 months, your Facebook feed is a lot better, at least mine is, right? I was not a big Facebook user and now I'm getting all these random suggested posts and then the ads are gonna get better. So if you're using these platforms more and the ads are better targeted, they can charge more for the ads. It's not right. So listen, it's funny. I don't use Facebook. I never did, but I have I have Twitter, I have LinkedIn, and to your point, yes, I think the ads are getting more targeted, right? The things you read, the things you see. Now, some of it clearly also depends on stuff you look at, the algorithm then sees what you're looking at and then send you more of that. Um, or listens to what I'm talking to other people about or listens, which I think is also fascinating how it listening to, in fact, what we're talking about. But listen, there's, there's, there's a stock that you are just, uh, a really hot on that I think, uh, uh, that I need to learn more about, but I think that the audience would like to hear and it's core weave. So just tell us really quickly what core weave does and where it stands kind of in this whole, whole model. So the growth engine for Microsoft, it's that's their cloud computing platform, um, but so you're kind of buying the whole company and yes, Office 360 and they, you know, the coordination with Chat GBT, yeah, there, there's some value to that, but you're really laser focused on the the cloud growth. Well, why not just buy a pure cloud play and Core weave is one of the first public pure cloud plays. All they do is buy Nvidia, uh, Nvidia GPUs, and they rent them, right? They rent them to Microsoft, they rent them to Google, they rent them to anybody who wants. OK, so this question. Why do they, why doesn't Microsoft just buy them? Why is Microsoft going to Ku Weave to rent them? Well, they're not necessarily for sale, Core Reve, right? Um, it's, it's not, you know, that, that would be a good idea, but, you know, what Nvidia has done is they can't sell all their GP if they wanted to, they could sell every GPU they make to Meta or to Google or to Amazon or Microsoft because from a Nvidia standpoint for every GPU produce, uh, there' for 15. So Core weave, um, so they need to diversify their customer base, and it's, you know, I think Meta and Microsoft may be number 1 and #2. Google and Amazon maybe #3 and number 4, and then you have Oracle and Coreweave maybe number 6 or number 7. Nvidia also has a stake in them and the amount of allocation, you know, it's like when we used to work at the banks, you get an allocation and a hot IPO, um, is that a hot IPO today out there, I think it just opened up at at 30, but that's what these Nvidia GPUs are like, which is the one that came on the New York Stock Exchange today, right? Is that what you're talking about? I, I don'tknow much about the company. I just saw that it was priced at 30 and then it opened at 100. Yeah, yeah, that's a nice trade. Yeah, if you were able to get in. But, but the, the thing with core weave is they make 30% a year on these GPUs. The cost of capital is somewhere between 10 and 12%, and it's run by ex- hedge fund guys, not tax guys. So what do you do with the trade where if I can make 30%.And I can borrow at 12. I'm just gonna lever it up to the hill. So it looks like they make no money where in reality they have 65% gross margins. OK, they're gonna do between 5 and $6 billion in revenue this year. I think potentially more. OK, let's take a step back. In 2023, they did $200225 million in revenue. OK. Last year they did 1.9 billion. This year they're going to do between 5 and 6. Next year, somewhere between 11 and then well north of 20 in 2027 at a 65% gross margin. So that type of growth margin with that gross rate, uh, with that growth rate, what kind of multiple are you going to put to it? So to me, I think it's gonna be a $400 stock by the end ofnext year and it's trading where. So right now it's about 117 dollars at what price? Uh it came public, I believe, at 49, onlya couple of months ago. Yes, but you know possibly the worst timing to go public. Yeah, the tariffs were announced Wednesday after the close. Stock went public in April, in April, right, right before the, right before right after Liberation Day. Yes, yes. And so there's confusion about the business model when you look at the numbers and it goes back to my, well, the first thing we talked about in this token demand. So that's the demand for AI and for AI computing and Microsoft's their cloud computing would have been higher had they built data centers quicker. So all of these companies that are competing in the space, they're capacity constrained, right? It's a lot, it's easier to solve, in my opinion, for capacity than it is for demand. And when you have demand running wild the way it is now, and it's, it's really in kind of the infancy, like it's just gonna accelerate again, not in a linear fashion, in exponential fashion thathere we go. So right, hold that thought for a minute. We're gonna take a break. We're gonna come right right, so I want to finish that thought because when you talk about uh the exponential growth of names like Core weave and to your point, you don't see it slowing down. I don't see it slowing down either. But at some point, uh, you know, you look at, you look at, you look at the NASDAQ, you look at the mag into overbought territory on the on the RSI scale. Now I know the RSI scale doesn't tell you everything, but it does give you a sense of when it's gotten a little bit too hot and then it should, it could pull back a little bit and take offagain. You're just teeing up my next one, man. So let's go. Let me know. Are we ready now? Yeah, you're ready. I, I just saw my how my collar was a little, um, OK, yes, they may look a little bit overbought on the RSI scale, but what, you know, what I follow closely is the Goldman Sachs prime brokerage data. And if you look at the net long or the, the, like how long these hedge funds are, not, not gross notional, but long notional positioning from these hedge funds, you're still near five-year lows, and a lot of that has to do with the way long short equity is run in that if, uh, you move outside, when you haveMovements and markets that are multiple standard deviations and you have risk controls kind of blow up in your face, everybody gets a margin call, even profitable price at these hedge funds. So the amount of, of the, like these hedge funds aren't wrong these stocks, OK, they're the exposure to the long side of the market is as low as it's been in the last 5 years, maybe a month ago was a little bit lower, so we could get overbought. You can get wayway over bought because they, because they're so underinvested is your point. Yes. And like these are the investors that move the market. Like it's, you know, you, you, if, if you and I were sitting at XYZ hedge fund and we had a $200 million 200 million dollars of capital, we're leveraging that up to a billion dollars each day, right? That moves the market, right? It's, you know, that takes a lot of Jimmy and Joey in their mom's basement with a $50,000 Robin Hood account to add up to that. And it's not that retail doesn't move the markets the same way. It's just that these guys have missed this entire move from a structural standpoint andNow, and there's also, by and large by the banks, if you look at the estimates for a Morvell for an AMD for a Nvidia, that there needs to be a deceleration in this capital capex investment. And so you were, you were doing a lot more in the 90s than I was. And part of the reason why the internet bubble blew up is because everyone thought that infrastructure built out would just go on forever. And 98, 99, it was already there. So I, I think we're 5 or 10 years away in the AI. At some point, you're the way to think about the way that it was explained to me is that with AI is you have a pyramid, and right now that pyramid is just a normal pyramid where the skinny parts at the top and the fat parts at the bottom. But the fat part at the bottom is where all the money is being made, and that's the infrastructure. And at the top is the software. So like my other favorite name Palantirer, which is, which is super duper expensive at 80 times sales, um, but in a year or two, maybe 3 years from now, that pyramid's gonna get flipped upside down and the fat part's gonna be the so as that happens, I think the market's a little bit ahead of that. I think we, we have way more of these infrastructure names. So do you think that when Liberation Day hit and the market started selling off and everyone panicked all this stuff, do you think that a lot of the, the, the, the smart money, the hedge fund money actually went short, some of these names, and now they had to turn around the cover? Yeah, well, I, I, I think, uh, most, most of these guys that run the long short equity world are, are, you know, they're long two names and they're short 5, or they're short 3 and long 2, and it's all about price dispersion, but like when everything moves so wildly, so fast, you know, our 200 million that we lever up to a billion is now 100, we can lever up to 3. And so they just got out of the market and the snapback was so fast that they missed it. So I,I don't, like that's a problem for them, you know, and like, it's a problem for them, but what it does is it talks about future demand, right, especially as we go into the end of the year. Yes, to me, the trade is in these infrastructure names because the estimates need to go through an entire re-rating. So when you talk about price to earnings multiples and how this market is being rich, um, I think thatThat what you're looking at on a full multiple basis is not the case, right? That we're, we're looking at 24, 25 times earnings. In reality, it's probably which is not cheap, but the realization that it's 1924 is gonna pushstocks ways. So let's talk about as we move into the end of the year because we're now we're, we're, we're moving into August. We are clearly in the second half of the year. So let's talk about growth versus value, right? In the NDA. Where do you really think is it, is it, is it, tell me where you think we're gonna be. So likethis growth versus value debate, and I don't know that value is dead forever, but like I'm.I'm not wasting my time outside of this AI trade because it's just like, you'll have pockets where there'll be good names that start to take off, but that's a very select stock pickers' market, whereas, uh, we have a once in a lifetime growth trend right now. In absolute dollar terms, right? If you take 1990s numbers, this AI infrastructure build out is 5 to 10 timesthe size. 100%. No, I think it's very much still in its infancy stages. So it's got room toRun. But again, you know, you have to be smart as an investor. You can't put all your eggs in one basket either. No, um, so like, look, I, I think you can be overweight, but you can't be 100% in one basket. I mean you can, but yeah, so for me in my positioning right now, I'm like 35% tech and like 32% in communications and that tech, I, I may be underweight in tech at this point after Microsoft last night, and they, I'm way overweight in I, I have been that way because, uh, you know, Google, uh, was super cheap. So Google's moved from a buck 50 to almost $200 in the blink of an eye. Obviously, I'm looking very smart after the meta move last night, which make up the bulk of that sector. So what are the other sectors you're looking at? You know, I think, you know, there's all this drama with poll and he certainly didn't cut interest rates yesterday, but let's look out a year. OK, there's going to be a new Fed governor. If you look at where inflation is trending, right, which is 2% or sub 2%.That the next venture is probably gonna get to neutral pretty quickly. So a year from now, you could see the front end of 224. OK, so let's I because I tossed this out to I talked to Adam last week. So let's just toss this out. Do you have an opinion on who you think the next chair is gonna be? No, that's, that's a tough question because there's, you know, obviously Kevin Warsh, Kevin Hassett's less. The two Kevins. Yeah, um, like I, I think they're gonna all be on board that like we're gonna get to neutral or like slightly restrictive very quickly because right now we, the Fed is more restrictive than they've been this entire Fed Fed cycle, and inflation's trending down. So a year from now, it's not outlandish to think the front end is gonna be at 2 or 2.5%.And so bringing that back to stocks, you just had the big beautiful bill passed, so we got fiscal, we got fiscal stimulus, we're gonna get monetary stimulus. You have the largest, largest investing trend in history. So, so if you're saying 2 to 2.5%, that's a 200 basis point over some period of time, within a year, within a year. OK. OK. I, I, I think that's a tad bit aggressive, but look, that's what makes the market, right? Buyers and sellers. Let's just talk about risks on the radar. What could derailWhat we're talking about this current bull market, uh, it's so it's like I think exogenous events are what's gonna stand in our way, right? So, uh, something going off with Russia and Ukraine geopolitical, yes, geopolitical, yeah, and like the, the, the bear case for is not that it's a hyper, it's a bubble. It's that the energy grid can't support these data centers. And, and that is also an issue. But if you look at what's happening in the utility sector, utility sector, I think, is up 11, almost 12%, I think this year. I think that's all in anticipation of the demand that's going to be needed from these utility companies, right? Sowhat I could see happening is like a core weave, a Google, a Microsoft at this 69 months from now, 2 to 3 quarters away having a disappointing number because they're just at the and meta because up against it, they can't build the data centers because they can't get the energy gridavailable, right. Let me ask you one other question before we, before we bring this on in. Talk about AI regulation. Where do you think that that is going to potentially either help or hurt? Kenny, I'm like too stupidfor that. I hear you. Yeah, yeah, that, that's, that's like beyond, like that's like I'm just looking at, I've got this little trade where the market's expectations are way off from reality. And so in that pocket, there's a lot of money to be made as to how we need to regulate the 4th turning of.I play rugby, man. Yeah, no, I hear you because, because I think that's going to be clearly part of, part of, you know, the time bombs along the way is how are they going to regulate it. Who's gonna have control of it, who's not gonna have control of it, what that's ultimately gonna mean and ultimately, you know, cause.I mean, look, we all know that AI can can clearly spin out of control if it's not properly regular. we've already seen it, right? You've seen some of these some of these deep fake things that end up being created by AI. I like, I'll, I'll leave that to like the deep thinkers and the smart people like Kenny the other one, I don't know how you feel about it is gold. Gold has these trends where it went from like, uh, you know, like 2, 200 to 400, 400 to 800, 800 to 2000. And then now I think we're in a 2000 or 5000 type move. I think, you know, there's a gold, gold trading, I think 30, 350 or so today, right? Uh, it's been it's been jumping around. I think it's between this 3350, 3450 trading range at the moment until it kind of figures the Fed is going to be, where rate's gonna be, where a tariffs is gonna be. And so I think gold is gonna continue to kind of just churn in there. You could cause this, this, this,this debt, this deficit. So even if, even if the even if Bassett and Trump are right and we get this deficit of $1 trillion right? Like you're still gonna have 38 to $39 trillion out there every time we get there. So I think gold's on its way to $5000 gold. I own utilities. I own financials because I think going back to the the banks, I will really benefit from that steeping the yield curve because just because the front end drops, that doesn't mean the 10 years is gonnamove very agree agree. I listen, we've run out of time for this one. I want you to come back, you know, 34 months or maybe towards the end of the year, and we're gonna talk about kind of where all this went. In the meantime, I want to introduce you to my recipe of the day, which is Jumbota, right? Now, Jumbota is a rustic homestyle Italian stew, really rooted in southern Italy, particularly in regions Batoliata and Sicily. The name likely comes from the Neapolitan dialect where jumbota loosely means like a mixture of mishmash of stuff, which is fitting because the dish was designed to use whatever vegetables were in season or on hand. Traditionally made in late summer when the gardens are overflowing with eggplants, zucchini, and peppers and tomatoes, Jamota truly celebrates the abundance and simplicity. It reflects the frugality and Italian home cooks, especially in working class and rural communities, where nothing was wasted and every ingredient had its place. Over time, families began personalizing the dish, adding potatoes for more substance or meat like sausage or chicken to turn it more into a hearty main course. Today, Jumbota symbolizes Southern Italian soul food, warm, nourishing, endlessly adaptable and consistently you can scan the QR code on the screen for the full recipe and you can thank me later. In the meantime, that's a wrap for today's Trader Talk, but the conversation continues. Subscribe on Apple Podcasts, Spotify, Amazon Music, or wherever you get your podcasts. You got a question or topics you want covered? Email us at tradedertalk@yahoo because we're always listening. Until the next time, stay sharp, stay disciplined and stay in touch. Take good content was not intended to be financial advice and should not be used as a substitute for professional financial services. 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Fox News
11 hours ago
- Business
- Fox News
Business Rundown: Great Expectations Ahead of the Fed's Jackson Hole Meeting
Federal Reserve Chair Jerome Powell will speak Friday at the annual Jackson Hole Symposium. This is a huge event where investors and Fed watchers get train to gain insight into the direction of the Fed. The big question top of mind–will there be a rate cut next month? FOX Business correspondent Lydia Hu is joined by Slatestone Wealth chief market strategist Kenny Polcari to discuss expectations of a rate cut from the Fed, the latest boost to the healthcare sector, and making sense of mixed inflation news. Photo Credit: AP Learn more about your ad choices. Visit
Yahoo
4 days ago
- Business
- Yahoo
Why Trump might push for a US gov't. stake in Intel
Intel (INTC) stock is popping following reports that the US government is considering taking a stake in the legacy chipmaker after Trump's meeting with Intel CEO Lip-Bu Tan. Slatestone Wealth chief market strategist and host of Yahoo Finance's Trader Talk, Kenny Polcari, and Yahoo Finance Senior Reporter Allie Canal join Opening Bid to take a closer look at what the reported government partnership could mean for the US, Intel, and the evolving chip landscape. To watch more expert insights and analysis on the latest market action, check out more Opening Bid. All right, let's fire up, uh, my stock of the day. The Trump administration is reportedly in talks with Intel to have the US government take a stake. Uh, Intel declined to comment specifically on this to me, but they did say this, uh, quote, Intel's deeply committed to supporting President Trump's efforts to strengthen US technology and manufacturing leadership. Uh, the questions here are many though. One, why would the administration even want to stake in an Intel that is scary behind chief rivals Nvidia and AMD? President Trump has interacted a lot with Nvidia CEO Jensen Huang and has got a taste as to what it means to be a leader in semiconductors. Two, why would Intel want to get in bed with the government at a time in which CEO Lipu Tang and the board must act quickly to reorganize the company. I find it hard to believe the government will be a quiet minority shareholder. There's a lot of stake here, as Intel is and should be a beacon of US chip making, not the punching bag it has become. The company's financials have taken a major hit with sales down for more than three straight years and earnings evaporating in the process. A lot going on there. Still with me, my round table, Kenny, Paul Kerry, uh, Slate Stone Wealth chief market strategist, David Seif, Nomora chief economist, and Yahoo Finance reporter, senior reporter, Allie Canal. Kenny, I want to go over to you. Um, any interest in going long in Intel on news like this, uh, even in the, uh, keeping the back of your mind, or maybe just putting the front of your mind that this is a fundamentally, uh, just wrong company. I mean, nothing's going right for them. Uh, uh, agree. So Intel's not a name that I've ever owned, uh, and we don't own it here. But look, I it's certainly has a pop because of the news. But is the pop temporary? I'm not even sure. And I agree with you. Why would you want to get, why would the government want to now be partners with Intel? Why would Intel want to be partners with the government? And what does that say about future opportunities? Is the government now going to start this Trump going to start the stick his hand in other companies? Kenny, it's like the auto bailout. I mean, it reminds me of when they took a stake in GM, what, 15, 20 years ago. 100%. And so I'm a little bit I'm a little bit confused about that. But Intel's not a name that I ever owned at all. I think there's other places to put your money in the space. But so this news does nothing in terms of getting me excited about, oh, I got to jump on this Intel bandwagon. I do not. David, does the, does it benefit, um, the US economy to have a healthy Intel? Or at this point, the semiconductor industry led by Nvidia, AMD, and of course, Taiwan semiconductor, they have just passed this company by, and our economy can go chugging along relying on chips from these three companies. Yeah, I mean, you know, I don't have much to say about individual companies, but certainly, um, you know, the US has a multi-century track record of doing well by sort of not sticking its nose into things and allowing, allowing the private market to go where it may. Um, to the extent that Intel has been lagging behind, uh, it it may be the best thing for the economy to simply allow it to, uh, continue to either wither or sink or swim, so to speak, um, and allow the current leaders to continue to lead and only lose their lead if they actually get out competed. Uh, Allie, uh, we're just about almost two weeks away from that Nvidia earnings report. And it will look starkly different to what Intel put up a few weeks ago. And it's night and day. I mean, these are, these companies both might be making computer chips, but they couldn't be more different. Couldn't be more different. And Intel, I just feel like it's too late for the company to really catch up to AMD, to Nvidia. Of course, for the Trump administration, they're viewing this as an issue of national security, that they really want to make sure that Intel can survive through this volatile time. We did have the that CEO meeting with President Trump, and really we've seen that across the board of big tech, right? Apple CEO, Tim Cook, met with Trump recently. And then out of that meeting was a $100 billion investment in the US. So that is President Trump's goal. He wants to bring manufacturing production, all the things, including all the chip makers back onto the domestic soil. But they also have other types of agreements that they're rolling out that are very unique and really unprecedented. One of those being that revenue share agreement with Nvidia and AMD. They're letting them sell some of their chips to China for a kickback, for some of the revenue to the federal government. So there's just a lot of moving parts and moving pieces to this. It's still an unconfirmed report. Intel did say that they are looking forward to working with the government, but they didn't confirm whether or not this was actually happening. So it feels like the US is just going to continue to be involved in some of these companies, at least throughout the term of Trump's presidency. What ultimately comes from that and the legacy that leads and how it really changes what we view the the chip supply chain as at this current moment, that remains to be seen. Related Videos How Trump's meeting with Putin impacts investors Buffett's Berkshire Hathaway sold Apple shares. Should you? Intel Soars as Trump Considers US Stake in Chipmaker 3 AI chip stocks that are best positioned right now Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
4 days ago
- Business
- Yahoo
Buffett's Berkshire Hathaway sold Apple shares. Should you?
Warren Buffett's Berkshire Hathaway (BRK-B, BRK-A) sold 20 million shares of Apple (AAPL) in the second quarter. Slatestone Wealth chief market strategist Kenny Polcari, Nomura chief economist David Seif, and Yahoo Finance Senior Reporter Allie Canal join Opening Bid host Brian Sozzi to discuss whether investors should follow suit and sell their Apple shares as well. To watch more expert insights and analysis on the latest market action, check out more Opening Bid. Warren Buffett's Berkshire Hathaway sold 20 million shares of Apple during uh the period according to uh new 13F filing. Berkshire's Apple holdings remain its largest equity stake by market value despite it dropping by about 9.2 billion dollars in the second quarter. So, my question is this, if the legendary Warren Buffett is selling tech titan Apple, should you, Kenny? 100% absolutely not. You're not going to make a decision just because because you have to look at what he's selling, where does he own it. Look, when he sold Bank of America back when it was trading at 39 and 40, everyone was going, oh my god, he sold Bank of America, I have to get out of my Bank of America. Bank of America is trading at $48 now. You have to look at where he bought it. He bought it at five during the crisis. It hit his price target, so he started to sell it out. That's not necessarily your price target unless maybe you bought it at five as well, and then you decide you want out. But, I would not be making a decision to own or not own my Apple based on what Warren Buffett's going to do. Like you said, it is still the biggest piece of his whole portfolio. So, I am not selling my Apple. All right, Kenny, you're clearly fired up on this. Let me follow it on with this one. Have we reached the moment where the average investor should ignore what Warren Buffett is doing? Well, listen, I think what the average investor has to do is, they can't necessarily think that they are the same as Warren Buffett. They shouldn't be planning their life around what Warren Buffett's doing. He's got a very different company. He's been in for a lot longer. Your situation is different from his situation. So no, I was never in the camp that you're going to build a portfolio around what Berkshire Hathaway's doing. So, I was never in that camp. So, no, I don't think you should. Uh David, um on Apple. Now look, they, they did warn in this current quarter, they might see a $1.1 billion hit because of tariffs. How concerned are you about the third quarter uh tariff impact and what it is going to do or may already be doing to the financial statements of corporate America? Well, you know, I I think it it's still unclear who exactly is paying the cost of these tariffs. I mean, we could easily be collecting 300, 400 billion uh dollars a year in uh in tariffs, and uh you know, it's a substantial amount, but it's got to come from somewhere. Uh we're not really seeing it all that much at least as of yet in the uh consumer price index. So, um consumer might be paying a little bit of it, but certainly not much. So, the question is, how much of it is uh domestic companies, and how much of it is is foreign companies? And and in the case of Apple, yes, it's a domestic company, but since it's producing uh overseas and then selling it here, uh if it's not the consumer, then it's got to be uh Apple in some form. So uh and and and not just Apple, but sort of, you know, companies in general. So, certainly it looks as though um given that we're collecting a lot of money and prices haven't gone up that much, um this is something where um it is going to hit the bottom line of companies in general. Ali, uh Kenny brings up a great point. Um we may think we could pick a stock like Warren Buffett, but at the end of the day, we're not Warren Buffett. We don't have his billions. Maybe Kenny has his billions, but we don't have his billions. We can't move markets like he does. So, maybe we should just stop following them. Well, you know, look, Warren Buffett is such a loved investor, and people have really looked at Berkshire as a a guiding light on how to guide different types of investment strategies. And Warren Buffett, one of his philosophies is, buy what you know. What do we do? We are constantly on this phone every single day. So, you are exposed to Apple. You see what it does, the innovation that it brings. Now, the ironic part about all of this is that's why the stock has been struggling. It's because the innovative side, the AI side of the equation just has lagged a lot of those competitors. But Apple historically, they're not the innovator, right? Other companies innovate, then they come in, and they just build and make a better product. And for Apple, the AI story is going to be more of a consumer story, and I just don't think we're there yet at this point. Right now, it's more focused on chips. It's more focused on B2B. Of course, the large language models at Chat GPT, that's something that everyday consumers are using more and more, but I think there there's still a lot more of the story to come when it comes to AI and how Apple can really utilize that in the future. Right now, it's not there for investors. That's why the stock is down about 7% since the start of the year, but you know, it's still something that you need to watch because I do think Apple can maybe surprise in the next year or so. So Ali, what you're telling me is I need to go out and buy some Tyson Foods because I eat a lot of chicken. Brian, let me ask you one thing. If people want to play that game, and they want to do what Warren does, just go out and buy Berkshire Hathaway, and then you're going to do exactly what Warren does. My favorite panel of the week. I mean, you guys killed it.
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4 days ago
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How Trump's meeting with Putin impacts investors
US President Trump is set to meet with Russian President Vladimir Putin to discuss Russia's ongoing war in Ukraine. Slatestone Wealth chief market strategist and host of Yahoo Finance's Trader Talk, Kenny Polcari, shares his expectations for the meeting and how it could move markets, while Nomura's chief economist David Seif examines the potential economic impact of the meeting's outcome. To watch more expert insights and analysis on the latest market action, check out more Opening Bid. Kenny, I want to go over to you here. This is a market that is still inclined to trade on economic data rather than geopolitical events, but this meeting between President Trump and Vladimir Putin could that change the tone of the market, do you think? Listen, it can change the tone temporarily. Geopolitical stuff can cause chaos, short term chaos in the market because it doesn't really price stocks in the long term. So on a day like today, everybody's gonna be paying attention. They want to see how long Trump stays in the room or not in the room, right? He's already made it very clear. If he stays in there less than five minutes, there's no deal, he doesn't want to talk about it. And there's going to be more more threats and sanctions on Russia. If the if the if the meeting goes longer than five minutes, then we can all assume that maybe they're making some progress. And that should help to settle things down. So yes, while it's not gonna price stocks in the long term, people should be paying attention although it's not going to hit until 3:00 this afternoon just because of the time difference. So the market may not have a lot of time to react. David, good to see you here this morning, David. What What Hey, how are you? Good. What are the economic ramifications of a meeting like this? Well, you know, I think that the the Russia Ukraine war, of course, is is sort of a travesty, um, from a humanitarian basis. It's not a first order importance to the United States. And I actually think that if there were to be some sort of a solution, either coming out of this meeting, or or in the near future, uh, one of the biggest beneficiaries at least in sort of the developed world would actually be Europe. Europe has this war on its on this war on its doorstep. And, um, solving it would unlock a lot of the potential that, uh, or undo a lot of the hit that occurred in 2022 when the war began. Uh, In addition, I think other countries could benefit such as India because that would allow them to avoid these, the the tariffs that Trump has talked about from trading with Russia. And so relief from those could also be a benefit to, uh, to India in particular, which is is one of the main trading partners with Russia that's also been a historic US ally. Ali, I've been making the argument all week, the market has totally forgotten about geopolitical risks, so focused on corporate earnings, what's happening with interest rates, but look, any bad headline from this meeting will likely dent stocks. Full stop. Look, Brian, geopolitical risks are always lurking around the corner, and you often don't know when they're going to hit. And I referenced earlier that Israel-Iran escalation, and that really took markets by surprise. We saw that intense spike in oil. We saw equities fall. There was a lot of concern whether we could be heading into a World War III situation. So that's always something that you have to keep in mind. But I totally agree with you. There's just a lot of momentum in stocks right now. There's a lot of risk trading. We are looking at Big Tech cap companies continuing to outperform. Crypto stocks have surged. And like you were saying, earnings have really been a big driver for that. And across the board, we've seen analysts raise their forecast for the S&P 500, specifically citing earnings. And it's not just earnings expectations for 2025. It's really for 2026 and beyond as well. So that is where the optimism is stemming from that this rally has legs and that it can also continue to trade higher from here. And I've been speaking to a lot of sources about whether or not we are overbought in this market. And they tell me no, that we're really at a fair value considering where earnings are and how the fundamental story has largely remained intact. Of course, we saw those hotter than expected inflation reports this week. TBD on the impact of that will have on the Fed and equities and trade policy moving forward. Kenny, I originally met you eons ago down the New York Stock Exchange trading floor. So let's pretend we are back there right now. What trades do you put in or put on going into the close, knowing that this meeting with Trump and Putin will happen likely 30 minutes before the market closes? So I think you have to decide on where you stand, right? I'm more optimistic. I actually think that there's going to be a deal. So if that were the case, then I'm gonna I'm going to go long the market, right? I'm going to be I'm going to buy bets. I'm going to be in the market. If you're on the side of the case that you think there's not going to be a deal and the market's going to back off, then you want to get short the market or at least maybe you want to get short parts of the market, right? You'd want to go long oil. You'd want to go long gold if in fact, you think that there's not going to be a deal. So it depends on who you are is gonna dictate how you set yourself up or how you how you get ready for what this may be. I'm optimistic. I think there's going to be a deal. I think oil's going to go lower. 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