NVIDIA CEO Fallout, China Chip Scrutiny and the AI Trade 11/12/26

0:00With the Discover Cashback Card, it's payback time when you earn cashback on everyday purchases. Activate and earn 5 % cash back at different categories each quarter on up to$1 ,500 in purchases. That's 5 % cash back at different places each quarter, like grocery stores, on gas, and at restaurants. It pays to discover. Terms apply. See discover.com slash 5 for details. Traders don't need a prettier app. They need a better angle. Schwab's think-or-swim trading platforms were built for real traders like you. They have an insane amount of chart studies. I'm talking over 300 studies for virtually any strategy.

0:39They also have integrated risk management technology and nearly unlimited customization so you can shape the platform to fit the way you trade. And when you do that, you can analyze trades from angles you won't find anywhere else. Go see what that looks like at schwab.com slash trading. The Bells bring an end to the trading day at the NYSE Trinity Capital, ringing the bell and at the Nasdaq, kindness.org doing the honors. Welcome to Closing Bell Overtime. We're live from Studio B at the Nasdaq Market Site. I'm Melissa Lee, along with Mike Santoli. Jensen Huang forced to resign as CEO of NVIDIA.

1:10The stock falling once again today down another 4.5%, but off the lows of the session, down about 11 % this week since the news of his affair first dropped. That's wiped out about$500 billion of market cap in just four days. But the market's doing their best to shake it off. The Dow losing about 200 points, the S &P 500 down a third of a percent. Similar losses for the NASDAQ indices. One reason the damage isn't worse, the markets seem to think NVIDIA's pain will be AMD's gain. AMD up 30 % this week and Broadcom as well, up 25%. But we're seeing some collateral damage. Supermicro hit hard on reports the U.S.

1:45is investigating whether Alice Wong helped smuggle its products. Alibaba also falling today. We'll dig into all the angles of the NVIDIA story from Wall Street to Washington to China. Oil prices moving higher today, up nearly 3 percent after President Trump says no Iran deal is needed, adding, quote, we've got there straight. A big move in rates today as well. The two year yield up 14 basis points, the 10 year jumping 12 basis points and is now at 5.11 percent. And some movement today on the merger talks between Tesla and SpaceX reports saying the negotiations are progressing. And the biggest merger ever season could be announced next month as the board's workout on hammering the details.

2:24We've got earnings reports also due out for more companies, which could tell us about the state of the AI trade, applied materials, Cisco and Cerebris. But we begin with the first take on today's close. Very interesting to see how much contagion there could be from Jensen Huang being forced out. And you did see some concerns about circular financing and sort of the NVIDIA orbit coming into question today. For sure. There's no doubt that I don't think anybody is acting today with any kind of clear conviction about what comes next. What's been fascinating is the market's effort to just sort of, you know, pile up the sandbags and say we're not going to let NVIDIA swamp the rest of the market.

3:00And I don't know if that's a conclusion that says market share will shift to AMD and Broadcom or it says there'll be more supply for the rest of the world if it's choked up to China. And therefore, hyperscalers win and you get a little bit better pricing. Whatever it might be, it is stressing the market's ability, I think, to rotate away from this damage. from this damage. And everybody recognized. I mean, we just went through a crazy news slate in 24, 48 hours. And the market, I don't think necessarily, it's not on tilt, but it doesn't know exactly how it's going to play out. You made the very interesting point with John Ford on closing bell that the market cap lost by NVIDIA was almost precisely AMD and Broadcom's gain.

3:40On a week-to-date basis. It's really remarkable. And then even from the October 6th high, which was the high for NVIDIA and the overall S &P 500, the rest of the market outside NVIDIA has basically been flat, has almost made up the difference. So it is impressive. I still think that we're lucky to keep it that way. And I think it's partly because of what's going outside of tech. We got a washout in semis last week that enabled the rest of the semis to rally this week and yields up, financial conditions tightening. There is that drumbeat of we still have those kind of challenges and offsets to the good AI story.

4:17Let's get the latest news on the Jensen Huang saga. As reports say there is a third woman alleged to have had an affair with him. Megan Casella joins us now from Washington. Megan. Melissa, that's right. A third reported affair now for Jensen Huang and the second one believed to be with an employee. This is according to Reuters reporting. They cite two people familiar with the matter. Now, Reuters did not name the second employee and they say attempts to reach her were unsuccessful. Now, in Washington, guys, the fallout from the news of Huang's affair with an alleged spy is only just beginning.

4:47We now expect to see him on Capitol Hill next week testifying in a closed-door meeting with lawmakers. There's no confirmed date yet for that appearance, but Congressman Brian Mast, he chairs the House Foreign Affairs Committee, he says Huang has agreed to appear and will likely testify before Congress leaves for the Thanksgiving holiday. Republican Senator Tom Tillis now is also among a growing group of lawmakers calling for Commerce Secretary Howard Lutnick to also testify before Congress, and the top Democrats on two powerful committees, Senate Finance and House Ways and Means, wrote to Lutnik today to say they are launching an investigation into the administration's scheme, as they call it, to approve and tax exports of NVIDIA chips to Chinese companies with links to the Chinese government, military, and sanctioned entities.

5:30And then finally, guys, one last piece. We just heard from Attorney General Todd Blanche on all of this for the first time. In the last hour or so, he told reporters that the Justice Department is looking into Alice Fong, but he says there have been no conclusions reached yet by the DOJ or by FBI Director Kash Patel as to who she is or is not. So he says they're still looking into these allegations of whether she was, in fact, a spy. Guys? Megan, it seems like Jensen Huang and perhaps by extension Nvidia is in the crosshairs of a lot of different committees on Capitol Hill at this point. Is there a sense that with him out, you know, without any connection to the company more, that the company is more insulated from being called up, from penalties, etc.?

6:12It's hard to know. You're right that there are so many congressional committees going after this. It won't stop when the Democrats will only increase, when the Democrats take over in January. But it's notable that there's so much momentum now, even with Republicans still in charge. It's a growing number of bipartisan, growing amount of bipartisan support, I would say, on all of this. What's very clear is that whether or not this was the ulterior motive or this was ever meant to be the outcome of all of this is we are definitely going to see heightened, increased policy, tighter policy, I should say, on expert control front when it comes to China, a much tighter stance in Washington, with members of both parties now wanting to see the U.S.

6:48crack down on all of this much more than we've seen for the past two years. And Megan, you mentioned that a lot of the scrutiny or perhaps criticism is falling on Commerce Secretary Lutnick. He was one who has been reported to have maybe tried to soften some of the restrictions on China's sales. And yet today, I think the president did express his backing for the Commerce Secretary. That's right. There's a lot of this that does center on the Commerce Department. They, of course, oversee the Bureau of Industry and Security, which has power over export controls. And that's really the policy that is most in question here.

7:21Axios had some of that reporting yesterday, saying that a number of cabinet officials, that there was near unanimity across the cabinet, including with President Trump, to authorize a crackdown on some of these sales to China of some of these chips. And that Lutnick, as you said, was the one who stood in the way. Now, I spoke with a White House official earlier today who said that the president had the quote was complete confidence in Lutnick. After I got that statement, Reuters is now out with a report saying that some senior White House officials are considering whether or not Lutnick now should be ousted from his role in all of this.

7:55Now, it's unclear if Lutnick was maybe the only one or just at the center of this. There are questions of whether he might be scapegoated to try to let others avoid some of the blame. But obviously, he's going to be in focus in all of this. Megan, thank you very much. Well, Wall Street was divided over Jensen Wong's resignation, with some welcoming the move, while others questioned if it was the right decision. Analysts were quick to weigh in. Here's what they had to say. T.D. Cowan, we're speechless. But here's a note. Millie's research, words we never thought we would write. And Bernstein, where did he find the time?

8:28Cantor Fitzgerald calling it a very sad day. On the other side, top executives took to X to call out the board on this decision. Binance founder and CEO CZ saying it's a mistake for NVIDIA to let Jensen resign. Elon Musk responding to a user comment asking him to hire Jensen. Elon said, quote, it would be an honor. And Andro founder and CEO Palmer Luckey said, China wants Jensen out, so I want him in. And finally, fans of Jensen Wong took the time to place candles and flowers outside of NVIDIA's headquarters in California, mourning his resignation. So what's next? Joining us now is Bernstein Senior Research Handlist, Stacey Rascon.

9:07He downgraded NVIDIA to market perform from outperform, cut his price target to$200 from$400 and asked how he found the time. Also, here is more insights and strategy CEO Patrick Moorhead as well. Guys, it's really great to have you, Tawai and Stacey. So the challenge is to assess the value of Jensen Wong as the leader of this company, how the business operates under a new leader, TBD, and I guess how much of that the market has already taken measure of. Yeah, and that's the thing. And to be honest, we struggled a lot with this call. I think we debated among the team for longer than it took to write it, right?

9:44Because there's a lot. And I sympathize with the view that one should buy the dip. You could argue it's very, very cheap and a lot is priced in. And I'm not really worried, at least about the near to medium term trajectory of the business on the back of this. Not yet. At the same time, I mean, like, who is the guy or girl that they would hire to replace Jensen who's going to be one that's looking out 10 years and looking around those corners and having the relationships with everybody in the supply chain and the customers and the ecosystem and even the employees? I suspect we're going to keep getting tape bombs like we're still getting them.

10:18They're going to be coming both from internally inside the company as well as from externally with investigations and this and that. And I just don't see – it feels like tough to own it, I think, in front of that. And look, I love Jensen. I love the company. I'd be more than happy to upgrade it again at some point. I'm happy to miss the first 25 % if I have to, given all of this. I think it's going to be a while, though, before we can sort of get conviction as to where they're going. So it's tough. But this was a tough one. Yeah. We're going to pause for just a sec. Cisco earnings are out. The stock is higher by about 5.5%.

10:58Seema Modi's got the number. Seema. Hey, Melissa. Cisco reporting better than expected earnings. It's a$0.07 beat on its bottom line. But perhaps most notable is networking revenue, which came in at$11.13 billion. That is much higher than the$10.7 billion estimate. Revenue also ahead of consensus for the quarter at 18.52. Gross margins in line at 65.6%. It's enough here with the stock up about 5 % in overtime. Let's take a look at applied materials. Also coming in better than expected,$4.16. That's non-GAAP. That is well ahead of consensus. Revenue above the street estimate. And even if we look ahead to Q1 guidance, that is better than what the street was modeling here.

11:40Gross margins look strong as well at 15.6%. We have comments here from CEO Gary Dickerson of Applied Materials saying we are on track to grow our semiconductor systems business more than 40 % in calendar year 2026. Again, that's for Applied Materials. Guys, back to you. All right, Seema. Thanks, Seema Modi. I want to go back to Stacey Rasgin and Patrick Moorhead and resume the conversation. And I'm just wondering, I'm sort of curious, Patrick, because so many analysts, and I believe you included, but correct me if I'm wrong, At the beginning of this, maybe even on Monday, you saw the likelihood of Jensen Huang being out is relatively low.

12:18And it did feel like the analyst community was really reluctant to say that he should go or that that this is going to happen. And I'm just wondering why it almost it almost feels like a period of mourning on Wall Street. And so what what is behind that? Why are so many analysts saying, you know, we're so we're sad to write this. We didn't want to write these words, et cetera. Well, there's a couple of things going on. First of all, very low odds on Sunday. First of all, nobody knew who this woman was and was she a spy? And we're even questioning that today. And you can't get fired for having an affair.

12:54But after the second reported relationship with somebody in the chain of command who worked for Jensen, I gave it a 95 % chance that he's out. And when you tie the two together, what was going on with the affair partner in China, what was going on with the direct report, and combine that with all the heat that is going to be put on NVIDIA on Capitol Hill, it was better for Jensen to step down in this case. And I think people are mourning, particularly on the financial side, because of all the energy and value that Jensen helped create. He bet the farm on AI. He bet his company on it, a maker of graphics cards, who has essentially kicked off the entire AI boom and everything that it brings with it.

13:52I think people are sad about what it could mean in the future. So, Stacey, I guess among the myriad of questions here is we do have the interim CEO. It's Kaleke Krest. She's been the CFO. They're going to be looking for a new leader. There's a lot of discussion and assumption that whatever shakes out, it's going to lead to tighter export control. So China might not be as big a market or Asia in general, however it might play out. And then you have this notion of he had 60 direct reports. He was kind of a singular, all-encompassing leader. You know, we also have a lot of this information about how half NVIDIA employees are worth$20 million or more.

14:37I mean, it just seems like there are a lot of things involved to try and get this company, keep it motivated, keep it focused. and somebody who can also have the connections with the Taiwan manufacturers and all the rest. Yeah, no, that's absolutely right. So, I mean, we're clearly going to see more sanctions. That may have been the whole thing that kicked all of this off anyways. I mean, even if even if he was still there, it'd be impossible for him to be a voice of like China policy anymore. So that may have may have been the goal. Like, who knows? But they clearly like can't can't be lobbying on that front anymore.

15:10And then you're absolutely right. a lot of the supply chain relationships and things that they built, a lot of that is Jensen himself. I mean, a lot of it's on a handshake with him, frankly. And he really has sort of bet the farm and given folks in the supply chain the confidence to make those investments. And you have to ask yourself, would a different CEO be as successful with that? I don't know. And then you bring up a great point with the employees. Again, I can't remember what the percentage is, but you're right. A tremendous number of them have net worths that are eight, nine figures, even higher in many cases.

15:41They presumably don't need to work. And they're there presumably because they want to work with Jensen. And if Jensen's not there anymore, like what do they decide to do? I don't know. Well, especially if so many of them, if some of them thought they were in line, they might not have a reason to stick around anymore either, which could cause that brain drain. There you have granite shares ringing the closing bell at SIBO in Chicago, marking the end of the regular trading day. Patrick, I'll go to you here in terms of, you know, what could be next for the company. And, you know, just because Jensen is gone doesn't necessarily mean the company is out of the penalty box.

16:14I mean, there could be tighter export controls. They could be cut off from doing business in Southeast Asia and China entirely. And I'm wondering how you start to think about what that would mean for the company going forward if they were, for some reason, not able to sell into China at all. Smuggled chips or licensed chips? Yeah. So first off, you know, Collette Kress brings in a steady hand that Wall Street trusts and customer trust. And she was also, of course, in approval of all of these neocloud investments. And I think that the first thing before people get confidence here, particularly the street, is going to be them getting a new CEO.

17:03Now, directly related to Southeast Asia, the only business that I see that could be at risk is if they pass the AI Overwatch Act, which would essentially cut off remote use of China to, let's say, Malaysia or Singapore-based data centers like Megaspeed. like Megaspeed. We haven't sized that yet as a company, but it's still dramatically lower when you look at than, let's say, North America and even Western Europe put together. It's not nothing, but it is something. And Jensen already zeroed out China almost to 0 % on the data center side, a little bit of gaming. So I'm not convinced that it's going to leave that big of a mark.

17:56All right, we're going to leave it there, guys. Thank you, Stacey and Patrick. Thanks. Cerebris earnings are out. Let's get to Seema Modi, who's got the number. Seema. Hey, Melissa. So it's next third quarter results from Cerebris, but strong guidance, and that seems to be what is fueling the stock here. First of the quarter, core revenue of$231 million. That was well above the street estimate of$215 million. The company did not provide a per share figure, but it did report an adjusted loss of$33 million. for context here. That is more than double the loss from a year ago, a quarter. Guidance, though, the AI chipmaker is seeing strong guidance.

18:32Fourth quarter revenues of$310 to$330 million. That's well above the estimate of$271 million. And also just an impressive gross margin forecast coming in at 47 to 49 percent. That's far better than the 42 percent forecast here. Stock up about 12.7 percent. Melissa and Mike. All right, Seema. Thank you, Seema Modi. Well, NVIDIA's drop this week as Jensen Huang revelations continue to trickle out is only part of the story. The stock was already well off its early October highs, along with a lot of the rest of tech before this week. So if his resignation gets the markets past the saga, what's on the other side for stocks as we head into 2027?

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20:41The tech sector lowered today, but one of the top performers on the week is the NVIDIA scandal overshadowing a durable bounce back in the AI trade. Joining us now is Nelson Yu. He is head of equities at Alliance Bernstein. Nelson, great to have you with us. Thank you for having me on. I want to ask you to a point about NVIDIA and what happens there. But in terms of the impact on the AI trade, how do you view this? Because what we saw this week was, you know, NVIDIA's market cap goes to AMD and Broadcom. That's right. But longer term, what will we see? You know, I think today and this week has been a really good reminder of the importance of two things.

21:13One is corporate research and bottom-up company research and also the impact of diversification. I mean, you talked about NVIDIA. Just a month ago, NVIDIA was over 8 % of the S &P 500, and now it's at 6%. And so just putting so much of your eggs into that one basket can really hurt your portfolio. But the second part is, if you think about company research, it's so important to be doing that corporate governance research, really thinking about the strength of management, really thinking about the credibility succession plans. This is stuff that we think about all the time for all of our companies.

21:48So do you think that, you know, NVIDIA would have been kind of a yellow flag just on that basis a month ago? The NVIDIA was a very high quality company. Yeah. Right. It was generating lots of profits. Cash flows were really strong. The question was about the financing and the circular financing. But we were really worried about concentration. And that was something that I think has been, you know, really has come through. You know, we talked about, you know, and your question was around the AI trade. I think actually if you think about how much concentration was in that AI trade, Indexes were moving in perfect correlation to whatever AI was doing that day.

22:27And I think it's so important for investors to think beyond this trade. Right. But when you're talking about corporate governance, it almost makes it seem like everybody should have known that this could have happened or that the outcome of Jensen-Wong leaving would have been really detrimental to the company because of the way the board was, because of the flat management structure, et cetera. But yet it didn't sound any alarms. Maybe it's almost a shame on all of us for not seeing that. I mean, do you feel that a little bit? Because I would imagine that your funds still held NVIDIA at least market weight and that there wasn't an issue on that front.

23:01Well, I would say it is a flag that we go through when we talk about our corporate research. And we think about, well, what's the quality of the cash flows? What's the quality of the balance sheet? What's the quality of management? And these are things that we check through. NVIDIA wouldn't have gotten full marks because of that. Where is the work taking you bottom up at this point in terms of outside the AI trade? What seems to make sense? How much of it is dependent on, you know, the macro environment into next year and how much of it is not? So I think, you know, before we go into that, I think it's really important to set up what's the backdrop.

23:37We've got a backdrop where a lot of growth has been driven by AI. So you really need to have things that can grow independently of AI. The second part is you are in a higher cost of capital environment because of the rising rates. So I think the way that we look at things is you need to anchor in quality. Companies that can generate durable profitability, you know, ahead of their cost of capital. You need to think about diversification. And you need to think about how do I reduce volatility? And so when I think about those things, that leads me to you have health care that has actually been able to generate returns, generate continued earnings growth because of aging demographics.

24:16And actually, it's a beneficiary if AI works out. It actually works at a really good hedge if technology falters. You've also got, if you think globally, in Japan, you've got stories like this corporate governance reform. Again, focusing on company profitability. Companies that can commit to raising their shareholder returns and raising profitability have seen tremendous returns. Right. You also mentioned companies that thrive in rising rates. You said European banks. That's right. But not U.S. banks. Is that a vote on valuation here? That's really more towards valuation. And what I think of is in Europe, you've got a set of banks that are very high quality.

24:55They've really boosted their reserves. And with a rising rate environment, that's a benefit to the European banks. And just quickly, do you expect rates to continue going up, either pushed by the Fed or market yield? next year? To be honest with you, I don't have a call on macro rates, but I do think that this cost of capital is going to be higher. This is really more towards what normally we see. I think what we saw over the last 15 years was more abnormal in terms of the low rate environment. Yeah, as the cycle matures. Yeah. That was great to see you. Thank you. Thank you for having me on. Nelson, you from Alliance Bernstein.

25:32Many people around the country haven't received emails all afternoon due to a Microsoft outage. We'll get the latest next on Closing Bell Open. Did you know that psoriatic arthritis may progress over time and could cause permanent joint damage if left untreated?

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26:54That's 5 % cash back at different places each quarter, like grocery stores, on gas, and at restaurants. It pays to discover. Terms apply. See discover.com slash five for details. Traders don't need a prettier app. They need a better angle. Schwab's think or swim trading platforms were built for real traders like you. They have an insane amount of chart studies. I'm talking over 300 studies for virtually any strategy. They also have integrated risk management technology and nearly unlimited customization so you can shape the platform to fit the way you trade. And when you do that, you can analyze trades from angles you won't find anywhere else.

27:32Go see what that looks like at schwab.com slash trading. Microsoft experiencing a major outage today. Kate Rooney has the stories if there weren't enough going on, Kate. I know, Mike. busy day. Well, on top of everything else going on, there is an outage across Microsoft right now. It's hitting Outlook, among other apps. So if you can't access your email, that might be why these issues are also being reported with Teams and the AI assistant co-pilot from Microsoft. Company says it's investigating the issue. And in a tweet says they are aware of this outage and have, quote, validated an alternative service health, excuse me, service health check method, which allowed a subset of affected servers to successfully return to service.

28:15They say they're now applying this change more broadly and are preparing automated recovery systems to continually detect and restart unresponsive servers. No timeline for when this is going to be back online. We haven't seen shares react much to this news. I mean, they're pretty much fly right now, guys, but we'll let you know if and when Outlook is back. All right, Kate, thank you, Kate Rooney. Time now for a CNBC News update with Mackenzie Sigalos. Hey, Mel. Steve Wyckoff and Jared Kushner are in Ireland right now to meet with Ukrainian President Vladimir Zelensky. It comes just hours after they met with his Russian counterpart Vladimir Putin at the Kremlin.

28:52Wyckoff said Putin agreed to give European leaders a seat at the negotiating table for the next round of Ukraine peace talks. More people were arrested and deported during the last fiscal year than at any time in the 23-year history of immigration and customs enforcement. That's according to new data from ICE, which says it deported 483 ,000 people during that time. That's roughly 10 percent higher than previous than the previous record high, nearly 80 percent higher than the last year of Joe Biden's presidency. And a rare midterm election flip for Republicans. The Associated Press projecting today that Paul Lepage, the former governor of Maine, will be elected to the U.S.

29:29House of Representatives for Maine's second district. LePage once described himself as Donald Trump before Donald Trump became popular and supported him in the 2016 election. Guy is sending it back to you. All right, Mac, thanks. Mackenzie Sigalos. Up next, the web around the woman at the center of the Jensen Huang scandal continues to grow. What CNBC has learned about Alice Huang and the company she may have been working with. Closing Bell Overtime, be right back. Shares of NVIDIA closing lower, but only by about 4 percent. The stock closing around$166 a share, but its low of the day was$148.

30:02a level not seen since June 2025. And the stock market continues to digest new details on the scandal, including those about the suspected Chinese spy at the center of all of it. Eamon Jabbers has exclusive details on her connections in the Chinese tech world. Eamon. Melissa, that's right. CNBC has learned of a surprising connection between Alice Wong, the Chinese tech executive at the center of the NVIDIA sex and spying scandal, and Huawei, the Chinese tech company that's NVIDIA's biggest competitor in that country. Now, Alice Wong may have simultaneously owned stakes in companies up until 2024 that benefited Huawei, even as she was having an affair with Jensen Wong of NVIDIA, according to the private intelligence firm Tesari.

30:44Now, the firm, analyzing Chinese corporate records and news articles, concludes that the complicated tangle of interlocking corporations connected to the alleged spy ultimately provided computing power to Huawei in China. Now, Huawei is considered a key part of the Chinese government's push for global technological dominance and is closely linked to the Chinese Communist Party. Tesari shared its findings exclusively with CNBC. Tesari provides intelligence research to private companies and to the U.S. government. This activity, which surfaced through our analysis of Alice's network, warrants a national security counterproliferation investigation.

31:23That's from Brian Anderson, Tesare's vice president for national security applications, and himself, a former supervisory special agent with Homeland Security Investigations. If the Commerce Department's Bureau of Industry Security and Homeland Security Investigations found evidence that anyone transferred controlled equipment to Huawei without authorization, potential charges might include export control violations, conspiracy, and smuggling, according to Anderson. Now, according to documents reviewed by CNBC, at the end of the chain of companies here is a data center in Shenzhen, China, which was part-owned by an Alice Wong entity and received loan guarantees from a firm that was tied to her.

32:06That data center's key customer was Huawei Cloud, a subsidiary of the broader company. And we've reached out to Huawei, NVIDIA, and the corporate entities that are associated with Alice Wong for comment, but so far, we've not heard back from any of them. Melissa, back to you. I'm just curious, Eamon, in those records, I mean, does it actually say her name? I mean, I imagine that she would have sort of shell companies of her own that would not be traceable back to her. It does. I mean, her Chinese name is Huang Li. Yeah, not Alice, but that name is listed in these incorporation records of a number of these entities.

32:42And then you can see each entity owning a share of the other entity. It's the sort of Russian nesting doll. And when you get to the end of it, what you see is an investment in this mainland China data center. And you see the only customer on the document listed for that data center is Huawei Cloud. Eamon, how does how do these details inform, if at all, the assessment of whether Alice Wong is was truly a Chinese intelligence asset? we keep saying alleged spy, did she just come to the attention of the Chinese intelligence authorities through her connections to Jensen Wang? Because there's a lot of these kind of conflicting definitions.

33:21Sure. Yeah. I mean, so the term spy is sort of a broad term, right? It refers to anybody who's gathering intelligence and passing it to a country, right? That could be somebody who's a trained intelligence officer who went to the academy and learned, you know, climbed ropes and did all the things, or somebody who an intelligence service just kind of optimistically recruits out in the wild and says, hey, we need you to go gather some stuff for us. If they do that, they're a spy, but not necessarily an intelligence officer. And that's what a lot of former CIA officials I've talked to over the course of this scandal have said they think happened with Alice Wong.

33:56She's what they would call at the CIA a co-op-tee or an access agent. The idea is that the MSS, which is China's big spy service, would have sort of opportunistically seen that this is a person who could get access to some of the information they needed and maybe encouraged her career, gave her financing, that kind of thing, and helped her maneuver into a position where she could be really useful for them. We don't know the full detail of how much help she got from MSS and how much of that would have allegedly been planned in advance or MSS swooping in at the end and saying we're going to take advantage of an already existing relationship.

34:32And I think, Eamon, what's being lost a little bit in this whole conversation about Alice Wong is that any citizen of China, according to Chinese laws, will be compelled to help the Chinese government gather whatever data or information they need or want. Right. And so anybody could be an asset. You don't have a choice. Exactly. And so for somebody, a U.S. tech executive, to get entangled with a Chinese citizen is automatically putting you in that danger. Right. And there are all sorts of ways that the Chinese government can use leverage over Chinese citizens to force them to spy, even if maybe they didn't want to in the first place.

35:08One of those, you know, in this case, you'd look at Alice Wong's husband, who is also a business executive, and they trade ownership of some of these entities. It's very, I can tell you, I've spent a week on these documents. It is very complicated. But the assets are transferring back and forth between her and her husband. Her husband at some points, you know, is under scrutiny from law enforcement for various things in China. You know, that's the kind of thing that the MSS could use and say, hey, look, we're going to drop the hammer on your husband unless. Right. So it could be coerced. It could be voluntary.

35:42She could be doing what she sees as her patriotic duty. We just don't know. Right. And we don't know what information was gotten if it was just to actually procure these chips and all the rest. Eamon, thank you very much. Let's head to Beijing for more on this NVIDIA story. Yunus Yun has a look at the impact on the underground NVIDIA chip trade. Yunus. Thanks, Mike. Well, there's growing expectation that the U.S. is going to look to squeeze China's access to NVIDIA chips. The Chinese government has hinted that this was a concern, saying that when asked about the impact on the scandal on U.S.-China relations, The foreign ministry said the U.S.

36:22side should stop fabricating so-called spy narratives to find excuses for imposing science and technology blockades. The scandal is already disrupting the underground NVIDIA chip trade. I was speaking with some traders who told me that their work is being paused for the next week because of this news and also because of an expectation of greater U.S. scrutiny due to President Trump coming to China for APEC later next week. Shenzhen is the host city for this Asia gathering. It's also known as a hub of NVIDIA chip smuggling. In fact, traders say that the price of a set of Blackwell B300 chips for a server is now at nearly$3 million, This is up five times since May and nearly six times higher than the official U.S.

37:15price of$550 ,000. But traders told me that they still expect the demand to be strong and for the prices to be what they said eye-catching because they are seeing hoarding. Guys? All right. Eunice, thank you. Eunice Yoon in Beijing. The NVIDIA fallout is spreading well beyond one company with new scrutiny on how Chinese firms are getting access or will get access to advanced U.S. chips, either by renting compute from overseas data centers or through alleged chip diversion via third countries. Alibaba fell sharply today on concerns about access to NVIDIA chips, while Chinese chipmakers rallied as investors bet tighter U.S.

37:54controls could accelerate China's push for homegrown AI chips. So how much does this all reshape the U.S.-China tech war? With us now to discuss is China expert David Riedel, founder and president of Riedel Research. David, great to have you. Good to get your thoughts on a day like today. We mentioned the decline in Alibaba shares today. They declined yesterday as well and the day before. And I'm curious, you know, as an investor in China, do you think Alibaba is now hamstrung because it won't have access to NVIDIA chips as it did before? Not only that, they're going to be front and center in all the U.S.

38:28investigations. The FBI is investigating. Congress is clearly going to investigate. And Alibaba is going to be named in these investigations. So I suspect there's going to be some pressure on Alibaba going forward. So I would be very cautious being around the name. I don't think it has a huge impact on NVIDIA's business. The demand for their chips, as you heard from the black market prices, remains very, very strong. But for the Chinese, for Alibaba in particular, it's very bad. So demand's strong. I mean, I don't think that's been really in question. I guess the question might be access. And do you think, bigger picture, this changes the pace at which China can advance in AI in the way that it's been doing?

39:11I think it does. There were some huge loopholes that the U.S. administration was turning a blind eye to in terms of these rental compute things in Singapore and Malaysia. I mean, Megaspeed, of course, was at the center of all that stuff. I mean, establishing a data center of NVIDIA chips in Singapore and then having Alibaba engineers log on from China gives them access to the NVIDIA chips. And I think you're going to see a lot of those loopholes closing in the coming weeks and months. Chanson Wong has been an advocate for looser export controls. He's also been an advocate for open source. And I'm wondering if that will, in your opinion, you know, basically cut off the use of open source models here in the United States.

39:49Yeah, I think it will. I think that people are going to be very concerned by this. I think Jensen was, you know, he was advocating for his company, and he really thought that they should be able to export more chips. And I think he realized that they were getting them anyway or got access to them anyway. And so I think that you're going to see people, I think, pulling back from open source because the competition is real, and this makes it much more significant. And what about the, I guess, domestic semiconductor food chain in China? I mean, are they seen as net beneficiaries? Has the market woken up to that?

40:23Absolutely. I mean, they can't make the chips of the quality that NVIDIA does, but they're working on it. They're really trying to get to those two micron chips and so on and so forth that the global players have been able to make. And Beijing is going to triple down on their investments in that sector. So I think the market's right to reward some of these domestic chip makers. And anyone in that supply chain is probably going to have tailwinds for a while. What happens to U.S.-China relations, especially as we head into the APEC meeting next week? This is not good. I mean, Beijing was caught red-handed.

40:55If what has been reported since summer of last year, that this woman was a Chinese intelligent asset, proves to be true, or even if it doesn't, I think that China's got egg on its face, and that's going to be bad. We'll see how the administration responds to it. I mean, if they really try to close loopholes and really try to support keeping these chips and access to these chips out of Chinese hands, that's going to upset Beijing. And it's going to make it harder to get concessions and other cooperation in other areas. And I guess on a relative basis, if, as you say, disadvantages the open source development, I mean, we're a week away from Anthropics IPO.

41:36I guess it's going to help those, the higher end model makers. Absolutely. It puts a big moat around those existing players and those guys that have these closed ecosystems. I think it's very good for them. David Riddle, really appreciate your perspective today. Thank you very much. Thank you very much. Much more on the NVIDIA shakeup still to come. Up next, we'll discuss what it could mean for the future of the AI build-out trade when we're joined by the CEO of AI data center power supplier, Oklo. Closing bill over time. We'll be right back. The AI trade has been suffering big losses for the last three months, following concerns about CapEx spending, data center backlash, new congressional leadership, and now NVIDIA's CEO scandal.

42:16Advanced nuclear technology company Oklo, which sells power directly to hyperscalers, is at the center of it. The stock is down 45 percent in just the last three months. Today, it announced a new partnership with Centris Energy to secure the nuclear fuel for its planned Ohio reactors with Meta's help in funding the project. Joining us now exclusively, Occultively, Oklahoma CEO Jacob DeWitt. Jacob, it's great to have you. Let's just start with the big picture. I mean, I would add to all those things, you know, SoftBank reported to have canceled some turbine orders. Has anything changed? You're playing a long game here.

42:49Has anything changed about the overall trajectory of demand and the infrastructure build out? I mean, no. I think we see an appetite for more sooner, and that's what you kind of see happen today. I mean, that was a big deal for us to work with Centris and put together one of the the biggest, you know, long lead fuel purchases, basically procurements using Meta's prepayment in there as part of this partnership to bring that supply chain forward to get more power online, you know, ideally as quickly as we reasonably can. More sooner, and yet your Aurora plant is not scheduled to put out its first power until September of 28.

43:26And I'm wondering, you know, given the delays and the cost overruns that we've seen in other sort of first of its kind SMR projects like the G. Brunova Hitachi reactor in Ontario. What can you tell us about that? I mean, obviously, with first-ever projects, there's always the cost overruns and delays to be expected to some degree. Yeah. I mean, this is the exciting thing we're in nuclear now is we're actually seeing building happen in basically multiple ways. I mean, we turned our first reactor on for the isotope side of the business back in August. We built that in 11 months. We did that for$75 million.

43:59Commensurate sort of examples out there are hundreds of millions of dollars in years in the making. And why? It's because this is what's exciting right now. There's actually a flourishing of innovation happening in the nuclear ecosystem where you can change how we think about what it takes to build nuclear reactors in terms of time and cost. And then you learn by doing so. We're actually in an iterative state. And what's really exciting on the Oklo side is we're capitalized fully to build. We have actual construction happening at the Idaho site. We already turned on a reactor. We are in a great trajectory to actually build, learn, and build again, and learn, and build again, and learn.

44:31That really hasn't happened in the nuclear landscape, arguably, maybe since the 60s. And I would contend that in this world, in the modern world, and with private capital here driving these things, it's never been like this before. So we're actually seeing an unleashing of nuclear flourishing about to happen, and we're in the early stages of it. So we're very excited about the progress. I mean, we set a world record in what we did the first time, as far as we could tell. And I think we're working to be on pace to do that again for a fast reactor built in the Western world here with our Aurora plant in Idaho.

44:59So I think the other factor I'll just point to is, you know, nuclear is at this moment where we're getting to build and learn by building. And that's going to actually see those things drop, right? The Vogel plants, obviously, were notoriously expensive, but the cost dropped on the second. And that's what you're going to start seeing happen, except with better starting points, I think. We were just showing a roster of some of your partners. That includes NVIDIA. Is there anything that's gone on now? It's going to have new leadership at that company that causes you to wonder if they're going to have the same appetite for investing across all these different areas.

45:29Yeah, I mean, you know, obviously there's a lot of moving parts about different things going on. I think what we're excited about, though, is we don't see the demand moving in these places. But also for those who are worried about that, let's understand a couple of big macro trends. We've been on the verge, another verge, we've been on the precipice of significant electrification trends in the U.S. as a whole. We see on top of that a big reindustrialization effort on top of the AI boom. And what happens with that is you have factories coming back in that need that baseload steady supply of power that nuclear is so well suited to do.

45:57So we see a continued surge of interest on the AI side. People are hungry for power to drive these chips. And we see an appetite to sort of, I mean, right now, I think we just see this massive shortage between what can be built and what's going to be needed, which is a great room to grow into. And it creates that fertile ground to be innovative and think about how can we build nuclear timescales and cost scales that were otherwise unimaginable. And we have proof points that we can do that. Right. That's what's so exciting right now. And I think, you know, right now during this kind of time of, hey, where are all these things stacking up and lining up?

46:28Nuclear is in a good position to scale and win in the long run, too, because of its inherent advantages. Right. It's clean. It's scalable. You have incredible material and energy density. So that all positions it really, really well, especially as you look at what happens in the 2030s and beyond. Sure. Jacob, great to talk to you. Thank you. Jacob DeWitt of Okolo. All right, so. NVIDIA tomorrow. I mean, it is worth noting at the opening purge, it was below 150. It closed around 166. I'm not saying that's a low, but it took you back two and a half years. So how it trades as we rethink and maybe brace for more headlines is going to be interesting tomorrow.

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