Sam Altman Live at OpenAI Dev Day 9/29/26

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1:00Scott Wapner: Carl, thanks so much. Welcome to the Halftime Report. I'm Scott Wapner, front and center this hour. OpenAI, Sam Altman, live on Halftime Report today. The AI trade coming back in a very big way. We also learned more today about Anthropics plans to go public. We're following all of it with the Investment Committee. Joining me for the hour today, Joe Terranova, Stephanie Link, Jason Snipe, and Josh Brown. Let's check the markets. You see what we're doing today. We're mostly red because rates are up yet again. 528 on the 10 year oil obviously being closely watched too. We can show you that as again, we wait for Sam Altman live today with our Kate Rooney.

1:39Scott Wapner: That's ahead of the company's big event today that they're going to have, which we're waiting forward, looking forward to very much. He's going to give the keynote there, but he will speak to us before he does that, there's so much to discuss today. We've got the safety issues front and center. We have news that OpenAI has scrapped the release of its newest AI model over safety concerns. The Congressman Ro Khanna says he's going to introduce a bill to ban self-improving AI until there are guardrails. I think everybody can agree that this whole conversation around AI has taken on a life of its own.

2:16Scott Wapner: Data centers, it's become topic number one at dinner tables, at diners, at town halls and a central role in the upcoming election. Eamon Javers was standing outside of the White House earlier, as you saw the CEOs arriving for the luncheon with President Trump. There are, in many respects, competing agendas, depending on which companies you're talking about. But all of that is the backdrop for what is an event on our program coming up anytime now. And that is Sam Altman live. How are you thinking about all this? I'm thinking about it that that's the fabric of the security blanket we're all clinging to in the market.

2:54It's about technology. It's about AI. It's on the belief that what we're going to hear from these technology, AI-oriented companies in the next 30 days is going to be consistent with what we've heard for the last five or six quarters and has been the catalyst for the bull market, that earnings are phenomenal. The CapEx is present. I understand that guardrails and the conversation surrounding guardrails is going to be the topic today. It's going to be the topic as we approach the midterm election. But I don't know that you get those guardrails on the other side of the midterm election because the partisan legislation probably is not going to be there.

3:31So I'm staying anchored to the thesis surrounding the innovation of technology, the positive effect it could have on the market. And I mentioned it yesterday. I'll mention it again today. cybersecurity is the number one investment off of it.

3:46Scott Wapner: All this is happening, Steph, at a time where the AI trade, in many respects, has gotten rebooted. It's been leading the market when not a lot of other stuff's been working. This has been working. But look at the mega caps over the last two months, just to give you an idea of what we're talking about here. Microsoft up 30 percent. Meta's had a rebirth in terms of its stock. It's up 23 and a half percent. NVIDIA is up 21%. There's news almost every day regarding all of these names. How are you thinking about this? You've got the big CEOs at the White House. You've got Altman joining us ahead of their developer day and his keynote.

4:22Scott Wapner: This is going to be in the news cycle every day, at least until the midterms. And we know well beyond that, too. Yeah, Jason and I were just talking about it, too, how we talk about it every single day. So I think we're seeing better results from the MAG7 mainly because we're seeing better ROIs. So they are spending a trillion dollars this year. That is not going to change. And I think they're going to continue to spend next year and the year thereafter. I think we all believe that. That's kind of consensus. What I do think is that the hyperscalers have not done a very good job explaining why they want to build out data centers.

4:53It's growth, it's jobs, it's tax breaks. And they haven't really come together and talked about that in a big way. And I think they should so that you will have more acceptance. There's only 16. I mean, I say only 16, but 16 states have some sort of pause in play. But the rest of the states are still going to be building. And I think it extends the cycle. And regulation is definitely needed. But that, too, will extend the cycle, in my mind.

5:22Scott Wapner: Yeah, big and populous states, too, or which, you know, the ones at the forefront, whether it's New York or Texas, California, It's really where the center of this debate is. But, Jason, this trade is back, even as, you know, the issue is at our dinner table every night. Investors are leaning in while the public feels like, in many respects, you know, a majority of it, at least according to the polls, wants to lean out. There's no doubt. And obviously, Scott, through this summer, we were talking about the RRSP and the broadening trade, which obviously has taken a backseat over the last month. I think one of the things that is obviously a big deal is what's going on with yields over the last 30 days or so.

6:03I mean, the 10-year is up 50 basis points in the last 30 years. But if I was to tell you on the heel of earnings starting in two weeks, right, that we're going to hit the third quarter in a row of 25 % earnings growth with 12 % of the S &P above their 50-day and 24 % above their 200-day, I would tell you that the setup is solid. I am bullish going into this quarter, just knowing the fabric of the strength of the durability of earnings going forward and what the CapEx and the hyperscalers have been.

6:37Scott Wapner: Josh, you know, we wait for Sam Altman. We're learning a little bit more about his chief competitor, Anthropic, obviously. Reuters getting a look at their S1 and what their business looks like as they seem to be marching towards this IPO. And hopefully we learn a little more from Sam and Kate as to what OpenAI's own timeline looks like. But we're learning from Anthropic, a$42 billion loss in 25, spending$518 billion on cloud computing and infrastructure obligations in the coming year. How quickly their revenues are growing and also the risk factors. Quarter of the revenue came from only two customers.

7:21Scott Wapner: They talk about that. They warn of a, quote, existential risk to humanity, really a familiar refrain as it goes from Darius Dario Amode, who's been talking about that a lot of late. How are you thinking about all this? Look, I think their investors in the private markets are telling them to spend at that pace. and the signal that they're using to tell them that is continuing to invest at ever increasing valuations. Like they if if they were hearing back from all of the money that's come flooded in to AI in the private markets, if they were hearing from the Saudis, from the Europeans, from Silicon Valley, If the signal was, yo, you guys maybe should chill out, that would be reflected in the valuation that they're getting, the amount of money that they're able to raise or not able to raise.

8:23But they're getting the opposite. They're being told, yes, this is the land grab. You need to add as many users as you could possibly add. And this is what we will reward you for doing.

8:34Scott Wapner: And I think that's what's reflected in what you're seeing in that S1. Coming back to you in a little bit, the moments here. Sam Altman is live with our Kate Rooney. Kate, take it away. Hey, Scott. Thank you so much. And Sam, it's great to see you. Thank you so much for having us here at Developer Day. Thank you for coming to it. It's nice to have an event in San Francisco for once. I love San Francisco. Yeah. Well, no, it's a busy event. We've had people lining up to get in, and there's a lot to talk about. I do want to start on the AI safety debate. There is a ton to talk about, but the latest headline that we have confirmed is that OpenAI essentially abandoned plans to launch a new model because of safety concerns.

9:10If you could walk us through that, but also what has changed? Why do that? And is this different than what you've done in previous models? AI has to be built for people. It has to be good for people. Part of that is it has to be safe. It has to be always under human control. It has to do what people want. And you want to be able to use it and be confident that nothing bad is going to happen. As the models have gotten more capable, the safety cases that we now use have to be held to a higher and higher standard, and the models can do more. So we will have many great new models to come. But what we have said is that alignment, safety, monitoring, security have to stay way ahead of capabilities.

9:47And we have had models in the past where we say, this is not quite at the bar we want. And we'll make another one and fix it and launch it later. But there's clearly more attention on this now. Okay, what about this particular model worried you or freaked you out to the point where you wouldn't launch it? I wouldn't over-rotate on this one thing. It was like, you know, this model was a little bit worse on a few of the evals we look at. This was, think of this in the abundance of caution category. There's not a big scary thing in this case. Does this count as a pause? And I wonder what the president would say in a moment like this.

10:18If he's concerned about slowing down too much, what have your conversations been like? And do you worry that he looks at a headline like this and says this counts as a pause here? again I would put this in like the normal course category of you know often we build a model we test it it doesn't meet our standards we change it we launch it later but as we have talked about we are pacing our progress which includes sometimes not training the model the everybody wants great models well actually not everybody many people want great we want great models. But we have to do these in a way where we can make very confident safety cases and claims so that people don't have a bunch of anxiety and can rely on us for the models we're putting out into the world.

11:07We are now in a period where the models are getting so good so fast that we think it is prudent and wise to make more progress on, since we were talking about safety, alignment, monitoring, so that we can continue with progress. But I think this idea of pacing is really important. It's not just like stop it because, you know, we don't want smarter models. Of course we want better models. It is make sure that we improve the areas we need to confidently and safely continue with progress. So pacing doesn't always mean slowing. And I think that's something that has confused people. Yeah. It means doing it in a responsible way with guarantees that the world can rely on.

11:40Hugging face. We got to talk about that for a second. That was just this watershed moment. And it feels like we've had examples every other day since then. Did you underestimate at the time the depth of these issues? I mean there's been reports that there are thousands of these. Has it surprised you? We're trying to, I think part of the way you want to do this is to really over communicate and be extremely transparent. So there's nothing else that I'm aware of that we're aware of that is as serious as the Hugging Face incident, but we are trying to put out every small or otherwise case we can find and we really, as part of our mission want the world to understand what these models are capable of.

12:19One of the things that's special about OpenAI is we have a lot of breadth. We do consumer, we do enterprise, we do developers, and people have very different ways of thinking about where we are with AI. And we want to make sure that all of these people that are touching our products and living in the world get a sense of where the technology is and what the kind of risks we have to mitigate are. Do you feel like there's just more attention on OpenAI? It feels like others have not had the same level of incidents. That's kind of what I was trying to get there. We just touch so many people and we do so much different stuff.

12:52Okay, so Jensen Wang, NVIDIA's CEO, put out this basically piece of software that he said would have prevented hugging face. And he said it's an engineering problem. OpenAI didn't sign on to that project. Why not? Anthropic and others did. Do you agree with Jensen that it could have been solved? From what I know about it, and I'm not super into the details, I think it's a good thing. I think we are doing similar things. I don't think it's a full solution. And I worry that if we treat AI safety as only an engineering problem, we will miss the very important point that we have a science problem in front of us.

13:28We still have discovery about how to align these models. And we have to solve that scientific problem, too. Okay, at the same time, as we mentioned, we are here at Developer Day. I mean, it looks like hundreds of developers, companies, I would think investors here, too. how are you towing the line between trying to get these people to use your technology, show them how great it is, but at the same time, tell them that it's safe? I mean, I think it's a similar thrust. Like, people want to be able to use this technology and know that it's going to be safe. So I think part of it being great technology is to have it be the safest, most aligned, most dependable AI in the industry.

14:03One question on liability. So if something does go wrong, so say one of these startups here builds a great app using OpenAI and something goes terribly wrong. Whose fault is that? The liability framework is being debated a lot in the world right now. I suspect, like other industries, there will be a sort of multi-level thing. Like if you think about the auto industry, for example, if there's faulty parts, you know, you can be liable in some ways there. If the car manufacturer puts them together in a way that's outside of the spec of what they're supposed to do, then the car manufacturer could be in.

14:33If someone's driving drunk, it's their fault. So, you know, depending on whether the fault as in the model and how it's used, or someone misusing it intentionally, I assume we'll have like a, you know, a new liability framework. What is your pitch today to developers? Cost seems like it's been a big theme for you guys, but what are you going to tell people on stage in terms of why OpenAI, why ChatGPT, in your mind, is the best option for these guys? We have more than 20 announcements today, so we'll be telling them a lot of things. Give us a flavor, by the way. What are we going to hear? I mean, new ways to use AI, new sort of like new ability to have AI systems working for you and helping you all the time.

15:10New models. We'll talk about the cost issue. We really, and you know, a lot of new tools for developers. It's really a lot of, I think, exciting stuff. It is cool to see all of this come together and the degree to which I think we just have the best offering for developers across the board. Cost is such a central topic here. And we've also talked before about the issue of distillation. I mean, some of the open source models that are cheaper, you and Anthropic have accused of basically copying your technology. How are you feeling about distillation and those models? I think we have the best models to offer at every price point.

15:43And I don't think, like, you know, people do talk about open source, but I don't think there's any open source model out there that you can run that beats us on a cost-price comparison. And speaking of cost generally, come watch. We've got some cool stuff. Okay, well, agents as well. So Mark Zuckerberg and Muse have made a lot of progress. It seems like in agents, in hardware. What do you make of Muse? Have you tried it at all? I've tried it. It seems like a nice product. Are you threatened by Zuckerberg at all? No. Not at all? Well, I mean, he's like a very impressive person, and that company has great resources, but I feel very good about it right now.

16:14He's also showed what's possible with hardware. Where's Johnny Ive? I don't want to spoil your surprise, but I think we will have something that's worth waiting for. Today we may have some hardware news. Is that what you said? Okay. Well, what is the plan in hardware, and does it put more pressure to have an even better product if Mark Zuckerberg seems to have kind of gotten out of the gates first, even though maybe some of their stuff is still in the works? I am not worried about being first with new hardware. New hardware is very hard to do. Like, new computing form factors come along very rarely, and the quality bar that we want to hit for something that, like, you will love and really be a key part of the way you interface with AI, that's going to take a while, and we're going to do that at a high level of quality.

16:54I also want to ask about the perception. We were just talking about the SNL weekend update. There is obviously a movie about you. I don't know if you've seen the trailer. There's some issues in terms of public perception. And just this thought that maybe you, maybe Dario Amadei as leaders don't have the best reputation right now. I mean, I think everyone doing something this important to society deserves great scrutiny. I did see the movie trailer. I mean, it looks like an awful movie, but I appreciate people's creativity. And I really do support that. So I hope they have a fun time with it.

17:31But this is like a big thing, and I get why people have anxiety. And also, if they need to project that anxiety on someone or have a little bit of relief and poke fun at me, it doesn't bother me. I know we've got to go in a second, but Greg Brockman, one of your co-founders, is in Washington, D.C. today. You were there at the state dinner last night. What is your expectation of what's possible in D.C.? And what have the conversations looked like behind the scenes, especially on international coordination?

17:57I don't want to be too optimistic because I have been wrong before when I thought something was going to happen in D.C. and, you know, it didn't. But I do feel like people are taking it seriously this time and I'm optimistic. In spite of previous experience, I'm optimistic. Okay, IPO timeline. I know you don't like to talk about the IPO, but you said it's ill-advised to go this year. Is anything going to change next year? I mean, the safety debate, will that be in the rearview mirror when you go out potentially in 27? I don't have a particular timeline in mind. Once we have run a few safety cases, once we feel like we understand how to contend with this next level of AI and do it safely, I think we could.

18:36But our mission first is about benefiting people with AGI and helping and making sure that we can ensure safety and barreling forwards with an IPO while I think things feel so in flux and I really want to be able to just focus on the mission and not with all of the maybe challenges of being a newly public company. I just don't want to do that. I really think this is a time to put safety and mission first. Fair enough, Sam. Well, we'll let you get to your keynote. We will be tuning in as well. We really appreciate your time. Thanks for coming. Will do. All right, Scott, back over to you. Thanks so much.

19:08Scott Wapner: Kate, I'd love to just have a little bit of a back and forth with you regarding some of the things that you guys just discussed. if you can stick around for a moment. Sure. What really seems to be at the center of the debate, which Sam opined on, the idea of self-regulation versus government guardrails versus progress. They just pulled a model in the name of safety, as Sam was telling you. But it's a balancing act between all three of those, in some ways, competing interests. You're right. And we also have to let Sam go. I know he's going to sneak off the set here. We're going to talk to Scott for a second.

19:48But Sam, we'll try to sneak him into the keynote. Scott, I think you're right. I mean, it is a tightrope that all of these companies have to walk. And Sam, as we just heard, told us that right now, not a lot is happening in D.C., for better or worse. I mean, they need to take on the responsibility. There's a liability question. But they are taking this into their own hands, whether that means slowing down a model for safety issues. But it is really up to their judgment. And there's a lot of trust put in these AI labs to say, if it's not safe, we're not going to launch it. And that is the state of things right now.

20:17That's where Sam Altman just told us that is the decision that they're making internally based on what they are seeing.

20:23Scott Wapner: I mean, also the idea of and I think Sam used the words liability framework because he almost the way he talks about that, assesses it as a gray area that exists that, you know, we may not be fully liable depending on how the model is used and by whom and what happens, et cetera. Critics at the heart of this debate right now would say there is no gray area at all. You all, Sam, Dario, and anybody else creating any of these models that are going to be widely used are unequivocally responsible for the products that they put into the marketplace. And that's why they argue that we already have existing laws on the books from a federal standpoint to protect consumers from products that are put in front of them.

21:14No, you're right. I mean, you heard his example. There is this technology in so many ways is so unprecedented. Altman used the example of a drunk driver. You know, if somebody builds something dangerous, whose fault is that? But there, from what I've heard, there will be no sort of Section 230 blanket protection for these companies at this point because the takeaway from enterprises is that we are trusting you. We're buying your technology and you need to promise that it's safe. And the bar for that is extremely high when these guys are partnering with banks, with some of the biggest governments in the world.

21:49There needs to be a sense of trust. And that is the issue for Sam Altman and Dario Amadei right now. As we talk about these safety issues, they've tried to be transparent about it. But at the same time, there's a lot of attention on OpenAI, every time they disclose one of these issues, it becomes a major headline. And so there is a moment where they want to be transparent, as Altman just said, but every time they talk about it, it is in the headlines. And one of these enterprise customers, we talk to a lot of them who say, I cannot risk that things go rogue and something goes wrong. And we think about the trading issue.

22:21We talk about brokerage firms using AI agents. They don't want to have something hallucinate or in the worst case scenario, you know, run off with your money. And that is, I think, one of the biggest themes and really underlying issues that these companies have to deal with. There's the headline risk, but enterprises, the sensitivity of some of the data, some of the just protections that they need to have in place to actually trust these companies as they're going public, too. I mean, it's a big revenue driver. They want to win enterprises. That's the sticky part of the market, the high margin part of the market that they really want to win.

22:51Trust is number one there. I mean, the technology has got to be good. It's got to be affordable, but you got to make sure it's going to work.

22:57Scott Wapner: I also like to get your insight on the fact of your conversation as long as it was, the idea of safety and security coming up numerous times from Sam himself. He and Dario are obviously reading the room on at least where the public seems to be on this issue. Whereas before it seemed like it was all about progress. Now it's all about safety, whereas critics of that perspective would also come back and say, we can't slow down because China isn't slowing down. These folks only want to impede their competitors by urging a slowdown overall, and that it's one big grab for regulatory capture. How would you assess all of that?

23:46One of the things that's interesting, Scott, they are playing to multiple different audiences. Obviously, there's the public pushback on moving too fast and causing potential, we are talking about extinction level risk when we talk about the worst case scenario, which some have said is overblown and there's the doomsday fears. So they have to answer to that audience and say, hold on, we're going to make sure we launch these products safely. But then on the other side, you've got to think the president might be watching any interview that you do. So if you say, hold on, we're slowing down our technology and we're going to make sure we do this safely.

24:18That is the elephant in the room for Sam Altman and Dario Amadei, that they have to think about what the administration is thinking and how they're going to perceive any sort of slowdown. And so it was interesting to hear Altman say, well, we're pacing, it's not necessarily slowing, and there's so much nuance behind it. So they are just speaking to multiple audiences here. And right now, as I mentioned, it's just on the companies. They're going to have to be the ones putting up guardrails. It was interesting to hear his take on Jensen Wong and NVIDIA's move to sort of embed software in all of this.

24:47Can't say that he, you know, it didn't seem like he was totally in touch with Jensen on it or that he was enthusiastic one way or the other. But in some ways, it is a software issue, and they've got to figure out a way to do this safely. But also, it's a bit of a black box. I mean, as these AI models get better and better and better and more capable, there is this thought of they're a little bit more unpredictable. So I think there is still this outlying question of can you build a technology that's safe, that you also in some ways simply don't understand, because that is the nature of these technologies.

25:17As they get better, they're just harder to predict, and they're powerful, and they're building themselves. There's this thing called recursive self-improvement. As they start to build more of themselves, it's getting harder to police, and I think that's the moment that we're in right now. There's been this safety debate for more than a decade. Yes, it's potential, but now it's getting real, and that's really what you hear out here in Silicon Valley.

25:36Scott Wapner: Lastly, before I let you run, what did you make of his response to your question about Metta and Mark Zuckerberg when you asked whether he was worried about it. And he said flatly, no. To me, what that just underscores for everybody is the intense competition that exists between all of these leaders within tech, but also the competing interests that each has versus what the other is building and how their companies are perceived. Yeah, he didn't stutter, Scott. He said no. And I followed up and said, you know, really? Like they just came out with this mind blowing AI product at a time when OpenAI is really trying to show that it's ahead, especially in consumer.

26:16I mean, as he mentioned, they are doing so much, and I think that's one of the risks to OpenAI. In some ways, it's a benefit because, obviously, the business is wide. They've got this natural hedge of enterprise and consumer. But when you're competing everywhere, it can be a bit of a game of whack-a-mole. So if Mark Zuckerberg all of a sudden is laser-focused on consumer, he's coming out with this amazingly capable AI agent in news and hardware on top of it after they paid about$7 billion to buy Johnny Ives' piece of hardware. I mean, he said it's not changing the way that we think about things.

26:46We're not going to be rushed. But you've got to think that that, plus there's other buzzy agents like Instinct that are starting to make waves in a way that, I mean, he said he's not threatened. But I think it's got to be something that they take into account as they think about how quickly they want to move and get certain products out. But on the record, he said, no, no doubt about that.

27:05Scott Wapner: Nicely done. And you got a lot in in a fairly abbreviated period of time. So we appreciate you for that. Kate, thank you. It's Kate Rooney in San Francisco. We've told you the big tech CEOs are gathering right now at the White House for a meeting on AI with President Trump. Eamon Javers has been outside watching the arrivals. It's been fun to watch. What more have you learned? Yes, Scott, all of the major tech CEOs in Silicon Valley who are not named Sam Altman are here. And we've seen most of them come into the building here just within the past half hour or so. I would say Dario Amadi was here.

27:39Satya Nadella was here. We saw a whole range of top CEOs. But the one that struck me as the one who was the most chatty was, I think you can only describe him as a very jacked-up Alex Karp of Palantir, who was the one who did want to stop and talk. And a little bit confrontational, a bit of a strange conversation, Scott, because we do these all the time where we ask CEOs, was, you know, what are you going to say in the meeting? How's it going to go? Those kinds of things as they're on their way in. And Karp really was kind of aggressive in his response and got kind of nose to nose with me. I mean, you know, inches from my nose as we were talking out here on the sidewalk.

28:16I asked him what his message was for the president. He said he's not going to answer that question. Take a listen to that exchange. Do you think I'm the village idiot?

28:25Scott Wapner: I'm asking. OK, exactly. So I'll give you a question. I gave you a question that was. So this is a question I could answer. All right. What do you believe about AI? Let's do that. What do you believe about AI? AI has to work for the warfighter, has to work for enterprises. It has to be safe, has to be powerful. And there's only one country in the world that has this kind of AI stack, both the people and the products. Palantir and other companies are leading on the battlefield and leading. And the questions Americans have are, does it work for me? Is it just a bunch of unpleasant people getting rich?

28:58so alex carp they're clearly wanting to make his point and not answer any other questions on any other topics he was very sensitive scott about any questions about what he's going to tell the president does he differ in any way with the president and obviously as a company that is a huge government government contractor you can understand why he might not want to answer those kinds of questions we also saw some of the top figures in the industry here mark zuckerberg we saw from a distance. Jeff Bezos we saw from a distance out here. Elon Musk, we believe, is in there, but we did not see him. And we got this seating chart from the White House just a short time ago, and it shows the proximity to power.

29:34And you can really see it on the screen if you take a look at the chart, because the interesting thing I thought looking at this chart was you see Jensen Wang sitting directly next to the president of the United States, Elon Musk on his other side. And I think Jensen Wang being sort of the voice of go fast, don't slow down. We don't need as much concern about AI safety as some of these other CEOs like Dario Amadei are voicing. That's interesting because that is the position that the president has staked out. Also, Scott Besson, the Treasury secretary, has said that the president is in lockstep with Jensen Wang on this issue.

30:08And to see him sitting side by side with the president, you do get the sense that they are locked at the hip on this issue. And some of these other CEOs are going to have a little work to do in this room, Scott, if they're going to try to persuade the president of their view that this AI could be dangerous and could be something that they need the government to step in and intervene on. So a fascinating moment of power, proximity, technology and government all in one room. And we'll wait and see if any of them are feeling a little bit more chatty on their way out, Scott.

30:40Scott Wapner: Yeah, a lively lunch on tap. We we can surely bet on that. And we hope to see you again. Nice work from you as well. Eamon Javers outside the White House for us. I'll just come back now that you had a chance to hear the interview with Sam. And as we said with Kate Rooney, the, you know, the competing sort of interest. I wonder if you all think if there's any, you know, trade risk, AI trade risk to what transpires ultimately on the idea of regulation, whether it becomes a self-regulatory issue at the end of the day, whether the government in some degree, whether it's, you know, whatever, you know, level of guardrails end up in play, whether that has an impact on progress, on anything that would be, I think, of notable news for investors to consider.

31:29Scott Wapner: All right. So here's the way that I understood that conversation, a very powerful one. I don't think in any regard the market is messaging to us that there is immediate concern. In fact, I think, as I said before, the opposite. I think it's the security blanket of the market in an environment that appears to be more challenging than maybe six months ago. If there is going to be a risk, I think about the nature of the circular financing for open AI. and you ask yourself the question, if there is a significant redirection in capital towards a security effort, what does that mean for demand for chips that we've been relying on over the last multiple quarters?

32:11I also think it's very clear that there is a significant hesitancy on the part of Sam Altman to IPO, which is uniquely different than what we're seeing from Dario Amodei.

32:27Scott Wapner: There you go, the headline there. I don't have a particular IPO timeline. Uniquely different. And in the filing that we got the other night to hear, I'm going to read it, catastrophic or existential risk to humanity. Wow. That's a powerful statement to be reading in a regulatory filing. So I think it's clearly OpenAI has got the perspective of a wait and see approach. Where does this conversation go surrounding security? Anthropic on the other side, I think they're stepping forward. They're coming out first. But I don't see the market as troubled by this at all. I think the market still embraces it.

33:05Scott Wapner: You're going to want any of this Anthropic IPO, Stephanie Link? Yes. I don't know. I'm not sure. Why are you hesitant? I'm kind of surprised. Because you weren't hesitant at all around SpaceX, which was, you know, up until when Ananthropic goes out was the largest. And this is going to look like this is going to top that. There's a lot of ways to win with SpaceX. We've talked about that a lot. They only have to win in one of the segments. And I think the stock could be much, much higher. What's the hesitation here? A quarter of their revenues are from two customers. That bothers me. Of which they stayed in the S1.

33:37Scott Wapner: Again, according to reports by Reuters, they say not only that, that many of its largest clients were not locked into long-term contracts and could cut or stop spending. So, yeah, so there's that. And then I put on the positive side, I love that they're going to spend$518 billion on cloud and infrastructure. So that makes me feel even better about the whole food chain. So why don't I just own the food chain and see how this thing settles out? I'm not going to rule it out, Scott, but I think there are other places to be in this whole theme. What do you think? Yeah, no, I think it's super interesting.

34:11I think the major thing, to Joe's point, the competing interests, right? China, we have to outpace China.

34:19Scott Wapner: But from a regulatory standpoint, if you're talking about, again,$900 billion in CapEx and planned$1.6 trillion next year, if that is directed somewhere else, that is going to be a challenge. How do you think about the IPOs? Yeah, I think they're—so I would be interested in Anthropic. I, you know, part of like even how I thought about NVIDIA early on is the architect, the godfather of AI and looking at the last couple of quarters and how they are starting to diversify their revenue mix. I understand the challenges around Anthropic, but I think they could be able to do that as well. Josh, you know, we had to cut you short as we were getting to our interview.

34:58Scott Wapner: So, you know, based on what you heard, what are your thoughts on all the things that Sam had to say? that was an amazing interview it's amazing how much was condensed into a short conversation um i think a couple things sam altman is getting media training thank god for all of us some of the things that this guy was saying on podcasts as recently as six months ago were extremely troubling and now it looks like they've kind of gotten control of how they want to come across what they don't want to say, more importantly. And I think that's really important just because of how horrible the optics have been and how much the American public has been turned against this technology before it's even had the impact that we're hoping it can have.

35:46So that's the good news. The bad news is you asked the question earlier of Joe, is there a trade risk here? I sort of think we're seeing it play out in the utilities. If you guys want to give me the XLU, Just a one-year chart is fine. This is in a pretty big drawdown relative to, let's say, the rest of the sectors of the market. I think investors are now pricing in a little bit tougher sledding for some of these projects going forward. They are politically unpopular, and it's a little bit unclear. We know that there's going to be this electricity demand as far as the eye can see. It's a little bit unclear whether or not these are going to be the companies that are going to benefit the most.

36:28We've seen a resurgence in the chip stocks. I want to pull up this chart of NVIDIA. I think it's more important than anything that Anthropic or OpenAI are going to say publicly. This is it. Like, this is the breakout. It is, I don't know, seven months in the making. This is a stock that we've been told is too boring to even talk about. Nothing they say moves the needle. Investors don't care about the story anymore. OK, all of that narrative is going to get thrown out the window if this stock breaks out of 235, which is the high from April and just keeps going. We've had substantial multiple contraction for NVIDIA for all of the names, frankly, in the chip business.

37:12But like this has been the poster child. And if this thing goes, you're going to hear people talking about whistling a much different tune. I actually think it will. I'm positioned for that. And I think it's going to make people's heads spin, given the amount of market cap that would be added here if and when it finally takes off.

37:32Scott Wapner: You guys see this story in the in the FT today regarding NVIDIA turns to insurers to spread the risk of the A.I. build out that NVIDIA has approached insurance companies about a range of structures that could shift some of the risk of capital intensive semiconductor financing to insurers. One idea under discussion is insurance against losses on loans to upstart cloud computing companies or neoclouds as they default. And the NVIDIA chips pledged against their debt cannot be resold for enough to repay lenders. We can do like write CDS against chips instead of mortgages. That's the first thing I thought of.

38:09Yeah, no, I understand that. But I also understand the approach on the part of NVIDIA. They have a very strong relationship with Wall Street. Let's remember the relationship they have existing with Goldman Sachs and Blackstone and others. So it's logical to me. Why wouldn't they go out and do that? I understand the nature of it and the hesitancy. Isn't that what you think of? I'm in a little bit of a different position hedging my risk than they're in. But it makes sense to me. It's logical. It's good business. Steph? I don't know. It's kind of confusing. Would the insurers actually do it? That's the bigger question.

38:50They could profit. Of course they would. If they can, I don't know. Hey, Judge. If you have companies that go belly up, I don't know. Yeah, Josh? Look, people are like, oh, it's circular financing. NVIDIA is giving people money who then turn around and turn that money into revenue for NVIDIA. Look, this is a company that just did$96 billion this year in free cash flow. Next year, that number could be$375 billion in free cash flow on$680-some-odd billion in revenue. Think about that number. What is he supposed to do with the money? Employee pizza parties? So they should be making these investments if they want to build out a world where the entirety of the Internet and AI is not reliant on the whims of three companies.

39:44Like, I don't think we want there to be three hyperscalers and then like whatever they say is is the pace of development. So I understand the investments in the neoclouds. I'm not saying they'll all turn out to be great investments, but they have the free cash flow. There's a limit to how much stock they can even buy back. They just raised the amount of – they're now, I think,$230 billion authorized. It's the biggest stock buyback in the history of planet Earth. Should they go to$400 billion just because they can? So I like the investments. I also like this idea we're thinking about compute as an asset class.

40:22We already know the private equity and private credit guys want to think that way. why shouldn't there be an insurance component to this where it's like, look, we have made these investments, but we don't want to sit forever with all of the weight of these investments. We know some of them won't be great investments. So I like the instinct. It's just incredible to hear people second guess Jensen Wang, who's built a company that could generate 400 billion in annual cash flow. Oh, no, no, no. I have a Twitter account. I know better than you do about capital allocation. As a shareholder of NVIDIA, I trust in the vision of the company.

41:01Scott Wapner: You know, you obviously heard the exchange between Kate and Sam about Meta. I'd like to just come back to you because the focus of your best stocks in the market is Meta today. Is that right? And I think Meta, is this the first time that it's made the list? Yeah, it's been a terrible stock for over a year now. and it was catapulted on the list based on technicals. It had already qualified on a lot of the fundamental metrics like earnings growth and quality and blah, blah, blah. The stock shot up and the first line of my column is I'm not telling you to buy the stock here. But what I wanted to get across was this is a new company now.

41:45If they are now going to be a direct-to-consumer product that's got built-in immediate revenue possibilities in the form of advertising, which let's not forget, they were the best in the world at monetizing AI via advertising. We can't think about this as the same company that it was six months ago when we were all sitting here like, hey, I love the ad business, but what is the ROI on all this spending? We have a better idea now what the ROI on this spending might be. I think what we said in the column was if you're already long the name, and we're not encouraging people to buy it at, you know,$750, If you're already long the name, I think 685 is where the risk management is.

42:28That was the ceiling in April and July, as you can see on this chart that's next to me. A close back below puts it back in the old range, and then maybe it's less interesting. I want to let the RSI cool down towards 60. I like this dip. It's constructive so far. And for longer-term investors, I think we want to still use the 200-day, which is 626. If those are your risk levels, I think it could be long here. All right.

42:54Scott Wapner: We'll step away for just a moment. A reminder, though, join us this Thursday for our second annual AI forum. It's in Dallas. I'll be there speaking with top business leaders and entrepreneurs on the booming AI market. So the conversation continues. For more, you can scan the QR code or visit CNBC events dot com slash AI. We still have Micron. The earnings are tomorrow. We'll kick that around when we're back after this.

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45:06Scott Wapner: All right, welcome back tomorrow morning. That is when Micron reports. Joe and Steph, I want to hear from you both as we sit here and talk about the AI trade. Hanging in the balance with this one tomorrow? Yeah. So just in terms of the portfolio, the JOT ETF, I need the semi cap equipment names to have this rebound and recovery. And the catalyst for that rebound and recovery is going to come from hearing that the CapEx spend from Micron remains robust. Every expectation that what we hear from Micron is that the revenue is going to be historic, that the margins are going to be in the mid-80s. I'm not as confident what the reaction to that earnings report is going to be individually for the Micron stock price.

45:55I said yesterday, I still really believe this. I think it's a great read into what earnings and the reaction to earnings could look like in the next two or three weeks. Give me one month on this one. You've had a little bit of a rebound. It's still below its June 25th high at$1 ,255. But it's the semi-cap equipment names where I am really looking for the derivative trade that benefits my portfolio most.

46:23Scott Wapner: All right, we're working on that. There we go. There's a look at what the stock is rebounded to. But it is still down 12 % from its highs, right? And I think that the ASPs for DRAM and NAND are going to be amazing. Last quarter, they were up 60 % for DRAM, 80 % for NAND. They have pricing power. Demand is exceeding supply. They had$100 billion in contracts between today, this year, and 2030. So I think the visibility is going to be there. Gross margins are going to, I think, blow it away. I think it's going to be a great report. It's up 270%, though. That's the only problem. Everyone expects that.

46:59Scott Wapner: All of that's in the stock, right? Maybe. Maybe they have more contract signings, which I think that they will. I don't know how they can't. And the stock is not expensive. If it pulls back, I would absolutely buy more. Yeah, and I'm with you there. And I think from a longer-term investment perspective, we are neutralizing the narrative that I heard earlier in the year. Give me the forward P, guys, please. That this memory business is cyclical. I think that that is not the story here as it relates to Micron. I mean, it always has been. OK, yeah. In the past, it has been. This is a secular shift.

47:32This company has$40 in earnings power. That's pretty astounding. That is an amazing growth. Again, stock is up a lot. I don't know why you would sell it, because I just don't see that the demand is falling off anytime soon.

47:46Scott Wapner: I mean, it's a question for those who don't own it, like Jason Snipe. can you buy it up where it is if you're as bullish as these guys are on the fundamentals of the business, which are obviously robust. Nonetheless, the stock is up a lot. Yeah. And to your point, Scott, I mean, these stocks have always been cyclical. They're not longer. I think there is a structural shift. But I think Steffi's point is so important here. $40 worth of earnings is significant with no slowdown, with continued acceleration. So it's something we have to look at. I think the forward P was like seven times forward. I mean, you know, it's cheap, right?

48:28So I think that's something that we have to value it.

48:30Scott Wapner: Well, I mean, what if it's still a cyclical business? It's just the cycle is elongated. The cycle is elongated. Then it becomes secular. It is elongated. It depends on how long you're talking about. So once the supply demand finds an equilibrium, does that change? Yes, there's a retracement for sure in pricing. That I will agree with you. But I think there's enough of a runway in between that you're going to have a very successful experience on your P &L owning this name. You have$100 billion in RPOs. So that's bookings. That's visibility right there. That is elongated. That goes until 2030. So it's long.

49:10Scott Wapner: So let's hit a call or two, if we could, because we talked a lot about Disney and Netflix this week. The Chapek book out was on Squawk yesterday. Netflix has had more bad news than good, I think is fair to say, of late. Josh, the stock did get upgraded today to a buy from a hold at Deutsche. The target goes to 95, though, from 100. So they were pretty exuberant about it. Tempered a little bit. $95.95 valuation now offers an attractive entry point. That maybe is the bottom line. And they think it can leverage AI in multiple ways. What do you think about the way that this thing has traded lately?

49:52No one on the show has been more wrong on Netflix than I have. I started buying it last summer. It had come down from$130 to$100. I said, everybody's so worried about this Warner Brothers thing. You know what? I'll take the risk. I bought some. I bought some more in the 90s. I bought some more in the 70s. I think my average cost is low 80s at this point. I just feel like an idiot because I had multiple chances where it was an obvious sell. And I just I didn't take those. Now, at this point, the stock owes me. So I don't think I'm going to see 100 bucks out of this. I think that's that's a stretch.

50:30I do think it's way too cheap. It is now 20 times forward versus 40 where it was in June of 05. And maybe the truth is somewhere in between. This is still a very dominant business with a nascent ad platform that is growing in strength every passing week. The live events are tremendous and the churn is really low. They're doing a great job. They've raised prices and held on to subs. It's just right now it seems like dead money. Every time it gets going, another wave of sellers comes along. I would not pound the table for people to get involved until this stock shows us something. I'd almost rather buy it above 80 than below 70.

51:11Scott Wapner: I thought you were going to say I'd almost rather buy Disney as if you were conceding defeat. I got time on that. It's the first to 120. Neither of us won yet. So I got time on that. And I know Jimmy's watching third round of job cuts at Disney. Back to our conversation yesterday. That's cost cutting. That's financial engineering. What do you think about Netflix, Jay? It's painful, man. Obviously, it's 25 % Jordan so far this year. And to Josh's point, I think that the foray into live sports is great. It's expensive content, right? I think that's part of the deal. You know, we talk about engagement.

51:51You know, this call, this particular upgrade, is talking about engagement internationally, which is going far better than what's going in the U.S. I think for me, the deployment of their AI strategy and in terms of targeting for ads is accretive to their business longer term.

52:06Scott Wapner: So that's where I'm focused. All right, we'll bounce. We'll take a break and we'll come back. We'll do finals.

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53:12Scott Wapner: Computers are getting smarter, Silicon Valley's getting weirder, and AI is taking over. At least that's what everyone keeps telling us. Welcome to Machine Gods, a new NPR podcast that will be your field guide to the AI-powered future. We're veteran tech journalists with front row seats to the industry. And twice a week, we'll make sure you get smarter about AI. So you know what's real, what's hype, and what might come next. Listen to Machine Gods from NPR on the NPR app or wherever you get your podcasts.

54:04Are you following the Halftime Report podcast? What are you waiting for? Look for us in your favorite podcasting app. Follow the Halftime Podcast now.

54:16Scott Wapner: We'll see you on the bell at 3 o 'clock Eastern time with another big interview. The OpenAI CFO Sarah Fryer joins Kate Rooney from the same event that you just heard from Sam Altman earlier. So find out what transpired there. Get her own thoughts on their IPO timeline. No doubt about that as we're learning more today about Anthropics' own plans to go public. So I hope you'll join me then as we kick that around. We'll also watch the markets closely, as you know, given what's happening in the bond market right now. Guys, take a look at what's happening with yields. The 10-year obviously continues to back up.

54:49Scott Wapner: Last I saw was 528. Are we still around that? Let's throw that up if we can. There it is, 528, the 30-year now at the highest level since 2002. So that remains a considerable story in this market. And what many suggest is just a continuing headwind, at least in some respects, for stocks. Follow all that. Thanks for pointing that out. What's your final trade? Final trade is Eaton. I think it's in a position right now where you have a low-risk buying opportunity industrial name that benefits from what we're seeing with AI. All right. Linkster. SpaceX. Stock is still down 26 % from its highs, and I think there's a lot of ways to win.

55:27Connectivity, space, and AI compute.

55:29Scott Wapner: Jason Knight. AbbVie. They continue to diversify the business. All right. And Josh Brown, finally. AMD. We are long in our porterhouse portfolio. Another best stop. Good stuff. Good stuff. With a deal today, too. I'll see you at three. All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by them on television, radio, internet, or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of opinion.

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