Nvidia: Boom or bubble?

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1:13From American Public Media, this is Marketplace.

1:27I'm Kyle Rizdahl. It is Wednesday today, October the 29th. Good as always to have you along, everybody. The headline at a J-PAL's press conference today, you know already, because it was, as market traders like to say, priced in. The price of money in this economy is just a touch cheaper. Now the central bank's target range for the interest rate that it controls, which is called the federal funds rate, is now 3.75 % to 4%. That is a half percentage point cut in the past couple of months. But and however, nothing with the Federal Reserve is ever simple. So the way we have been thinking, the way I've been thinking about it is the risks to the two goals.

2:14Remember, since their last meeting in September, Powell has been talking a lot about risk and how there is no risk-free path for managing this economy right now. For a very long time, the risk was clearly of higher inflation. And then that has changed now. Changed specifically by the labor market. And as we saw, particularly after the July meeting, we saw downward revisions and job creation, we saw a very different picture of the labor market and suggested that there were higher downside risks to the labor market than we had thought. Again, risks. And that suggested that policy, which we had been holding at a, I would say, modestly, other people would say moderately restrictive level, needed to move more in the direction over time of neutral.

2:59The difference between modestly and moderately, by the way, I don't know. Anyway, remember, the neutral rate is the sweet spot, an interest rate that's not holding the economy back, but also not giving it too much gas. If the two goals are sort of equally at risk, then you ought to be at neutral because one of them is calling for you to hike and one is calling for you to cut. So what I hear you ask happens next. Well, for the Fed, next comes in December. They're meeting on the 9th and 10th, where in ordinary times, Powell would say something, something, something about wanting to see more data.

3:32These are not, however, normal times, as you know, see also the government shutdown. So in terms of how it might affect December, it's really hard to say. December's, you know, the meeting's, I guess, six weeks away. We just don't know what we're going to get. If there is a very high level of uncertainty, then, you know, that could be an argument in favor of caution about moving. But we'll have to see how it unfolds. We will indeed. Traders today did not much care for what Chair Powell had to say. They didn't hate it, but they didn't love it. We'll have the details when we do the numbers.

4:30There are, we are told, new trade agreements with Japan and South Korea. President Trump will give the two countries special breaks on his tariffs in return for them making hundreds of billions of dollars of investment in projects here in the United States. As with all things, though, it is in the details of how those investments are going to be made and who's going to decide where the money goes where things get interesting. Marketplace Supri Beneshawar has that. South Korea would invest$350 billion. Japan would invest$550 billion. The Japanese agreement is the more fleshed out of the two. the U.S.

5:05has already listed the kinds of places it wants that money to go. Strategic vital sectors. William Chu is a senior fellow at the Hudson Institute. Things like semiconductors, critical minerals, shipbuilding, pharmaceuticals, AI infrastructure, energy. He says Japanese firms would be doing the investing using loans from Japanese government-affiliated banks. Japan maintains its side can refuse any project. the actual deciding will be done by the White House. Christy Govella is a senior advisor at the Center for Strategic and International Studies. There is an investment committee that consists of representatives from the U.S.

5:43government. It would be led by Secretary of Commerce Howard Lutnick. There would also be a group of Japanese advisors who offer their thoughts. And so between these committees, they will assess potential projects and come up with good candidates that will then be recommended to President Trump. and President Trump will have the ability to select them. This is not normally how private investment decisions are made. This is totally unprecedented. Gary Huffbauer is a senior fellow at the Peterson Institute for International Economics. It's a venture into state capitalism. You could say it's Chinese capitalism with American characteristics.

6:21He says historically, democracies that get involved in industry don't always decide productively. In a democratic country, the government is inclined to protect losers. That is, companies that maybe should not survive. The Biden administration did offer billions to largely competitive chip manufacturers, and various government agencies do routinely invest in startups. But rerouting private investment by Japanese multinationals that normally base their decisions on competitiveness is different, according to Matt Slaughter, dean of Dartmouth's Tuck School of Business. If you start to constrain the business choices of these companies for whatever political or policy reasons, you run the risk of actually dampening the productivity and innovation that these companies bring to America.

7:06Whether this all works or not, we won't know for many years. In New York, I'm Sabri Beneshwar for Marketplace.

7:39The formula for market capitalization, how much the stock market thinks a company is worth, is share price times the number of shares outstanding. You do that math on the AI chip design company NVIDIA today. And by the close, the most valuable company on the planet had gotten a bit more valuable,$5.03 trillion with a T dollars. Obviously, the artificial intelligence boom is driving that, but NVIDIA is driving the AI boom itself too a little bit by making a slew of investments in other AI-related companies. This week, it was Nokia to the tune of a cool billion dollars. That deal making has gotten markets excited, obviously, but it also has people muttering about a bubble.

8:24Marketplace's Megan McCarty Carino has more on that one. NVIDIA has made dozens of investment deals just this year. $100 billion in open AI, $5 billion in Intel, and reportedly$2 billion in XAI. It's funded cloud providers and AI application startups. They're all over the place. Analyst Stacey Rasgon at Bernstein Research says NVIDIA is making so much money, it basically just has piles of billions of dollars sitting around. So why not use that cash to grow and support the ecosystem of users and applications and everything else to help ensure that there is a flywheel here, that there is widespread adoption?

9:04I mean, it makes sense to me. He says NVIDIA is seeding a diverse customer base that ideally will keep buying chips. But that is what has some people concerned, says analyst Jay Goldberg at Seaport Research. The flip side of that is that it goes too far. Basically that NVIDIA could end up creating kind of an artificial demand for its chips. Are you investing money now because you're just financing a deal like you're just a bank? Or are you getting these customers to buy stuff they wouldn't otherwise buy? If companies are buying NVIDIA chips with the money that NVIDIA gives them, but they don't have enough customers for their products or services, we could end up with a finance crunch, like what happened in the telecom crash of the late 90s, early 2000s, says Jeffrey Sonnenfeld, a management professor at Yale.

9:55The capacity was mushrooming, but the use wasn't. They got way ahead of it. The equipment companies were lending money to telecom startups to turn around and buy their products, an arrangement called vendor financing. So that it had an illusion of a surge, but it was really much more of a bubble. When it popped, dozens of companies went bankrupt, and the glut of fiber optic infrastructure took more than a decade to be utilized. I'm Megan McCarty Carino for Marketplace.

10:52On the 18th of November, Merriam-Webster is going to publish the 12th edition of its iconic Collegiate Dictionary. It's their first new edition in more than 20 years. It features more than 5 ,000 new words and 1 ,000 new phrases and idioms, among other language-related developments. But here in the 21st century, the company whose business is language is staring down the barrel of artificial intelligence and large language models and the threats that they pose. Greg Barlow is the president of Merriam-Webster. Welcome to the program. Good to have you on. Good to be here. Would you do me a favor?

11:26And this is going to sound like a stupid question. Would you tell me what your company does, please? Sure. Merriam-Webster creates definitions. That's good. That's way less than five words, which is my go-to for CEOs when I ask them what they do. Here's the follow-up question. We are, you know, 20-ish years into the internet and online life and nobody actually having a dictionary on their desk anymore. How are you running your business here in 2025? It's actually a little bit of a misconception. We actually sold about one and a half million dictionaries in the last year. and the year before, we sold about one and a half million dictionaries.

12:07But your point is well taken. Of course, the print dictionary is a pretty small part of our business. It's quite important to us, but the business is by far online. Just in the last 12 months, we had about 1.2 billion visits to Merriam-Webster.com, and that's really what our business is based on. Let me go back to the beginning for a second and ask you about your business and definitions. I I wonder if a broader way to say that, and look, I'm not telling you what your job is. Your job fundamentally is language, right? And language changes, and you are in that sweet spot. Absolutely. Definitions, synonyms, but also language as an industry, right?

12:48We have millions and millions, hundreds of millions of sessions to our website every year for people who are playing language-based games or word games or people who are reading our language-based newsletters and really people who are learning language through articles we publish. Things like why irregardless is actually a word. Wait, no, wait, is it really? Yeah, irregardless has been a word for decades and it's actually a word for the same reason. Every word is a word, which is people use it. People think that Merriam-Webster prescribes definitions to people, but that's not what we do. We're a descriptive organization.

13:28We chronicle language of how it's used. And if people use irregardless to mean regardless, millions and millions, about hundreds of millions of times over decades and decades, well, our job is to make sure that it's chronicled in the book so everybody knows what everybody means. Are you a word and language guy from way back? Is this kind of the dream job for you? The answer is yes and no. It is absolutely a dream job of mine. No, I did not have a language background. I came up through the business world. I worked at the Wall Street Journal for years on the business side, and then I spent a few years in private equity.

14:05And about 15 years ago, 2009, so a little bit longer, I joined Merriam-Webster in Britannica as our chief marketing officer, left the company. And about four years ago, after a bit of a stint without a president of Merriam-Webster, I reconnected with the management team and the owners and I got that. And here you are. Here you are. You're right. On the language thing, I do have to ask you about the current rage in language now, which is, of course, large language models and artificial intelligence. Where is that on the scale of monsters under your bed in terms of a threat to your business? It's something we think about.

14:45Absolutely. AI can offer a lot to a lot of different companies, right? And it can offer us along as well. There's also a threat to lots of companies, right? Which is, you know, can AI replace my business? Now the dictionary, it's not, it's not much of a threat. And the reason is AI is amazing. It's amazing in all sorts of ways, but we know it can't always be trusted. And Merriam-Webster can be. And of course, when it comes to words and what they mean and how they're understood, the definition really needs to be perfect. And remember, AI tries to figure out what the definition is. Well, Merriam-Webster, we actually write the definition, we create it, we invent it, so it can't be wrong.

15:37And like you, like everyone, we all have that anxiety of writing a text where maybe the word is wrong, maybe it's spelt wrong, Am I using this one right? Is it right homonym? You really don't want to mess something up, especially when the answer is on merriamwebster.com. So it's not much of a threat to us, especially given all of our other business lines. So last thing, and then I'll let you go. In, say, 10-ish years, are you still going to be selling a million and a half dictionaries a year, do you think? Man, I hope so. Again, I hope so. And that's coming from, and I mean this, it's coming from my heart.

16:15It's a insignificant portion of our revenue. Absolutely. It's a very, very small amount, but people love the book. They like the feel of it. They like browsing. They love the thumb notches and they love seeing it on their bookshelf. If you asked me 10 years ago, would I hope that we're still printing and selling a million and a half dictionaries 10 years later? I would have said, absolutely. I'm going to stick with that story now. I somewhere in my house have the dictionary my parents gave me when I graduated from high school. So I hear you. I hear you. I think it's time to buy a new one. The new edition is coming out.

16:52The first edition in almost 20 years. And it's wonderful. I will go looking. I will go looking. Greg Barlow, he's the president of Merriam-Webster. Mr. Barlow, thanks for your time, sir. I appreciate it. Thank you.

17:32Coming up. So, yeah, you know, my customers always end up becoming my friends. And that, gang, is how you get a discount. But first, let's do the numbers. Dow Industrial's off 73 points today, just shy of two-tenths of 1%, 47 ,632. The NASDAQ climbed 130 points, almost six-tenths percent, 23 ,958. The S &P 500 basically flat, 68 and 90 there. General Motors is laying off 1 ,700 workers at EV-related production locations in Michigan and Ohio. OGM slowed 1 % today. NVIDIA, as we talked about with Megan McCarty Carino, the world's most valuable company, accumulated 3 % today to get over that$5 trillion market cap.

18:17Boeing says it's not going to be able to deliver the first of its 777X jets until early 2027. Planemaker is taking a$5 billion charge because of those delays. Boeing descended 4 and 4 tenths percent today. The Kraft Heinz company slipped 4.5 % after cutting its sales and profit forecast for the year. The company said demand for its higher priced snacks and pantry condiments is sluggish. Vita Coco reported that demand for its coconut water beverages is strong somehow because coconut water is gross. Also better than expected quarterly results. Vita Coco bubbled up 7.2 percent. Today you're listening to Marketplace.

19:06This is the story of the one. As a custodial supervisor at a high school, he knows that during cold and flu season, germs spread fast. It's why he partners with Grainger to stay fully stocked on the products and supplies he needs, from tissues to disinfectants to floor scrubbers. All so that he can help students, staff, and teachers stay healthy and focused. Call 1-800-GRAINGER, click grainger.com, or just stop by. Grainger, for the ones who get it done. This is Ira Glass, the host of This American Life. So much is changing so rapidly right now with President Trump in office. It feels good to pause for a moment sometimes and look around at what's what.

19:47Just try and do that. We've been finding these incredible stories about right now that are funny and have feeling, and you get to see people everywhere adapting and making sense of this new America that we find ourselves in. If you haven't listened in a while, I honestly think these are some of the best stories we've ever done. This American Life, every week, wherever you get your podcasts.

20:32households paying for it is decreasing. So says a new report from the Bank of America Institute. As Marketplace's Carla Javier reports. The number of households making monthly child care payments is down 1.6 percent from last year, according to Bank of America Institute economist Taylor Boley. Fewer families with multiple paychecks are making child care payments, especially in lower income households. So that kind of suggests to us that one parent, and frankly, it's often a mom is stepping out of the workforce to take on caregiving full-time. We know these costs are going up for families. They're also going up for child care programs.

21:12That's Daniel Haynes with the National Association for the Education of Young Children. His organization surveyed child care providers earlier this year. Labor, he says, is a big expense. You need really small staff-child ratios where individual educators have a lot of time with individual children. And other costs are rising. One in three programs reported higher rent and nearly half said insurance is more expensive. Some states, including West Virginia and New Mexico, have stepped in to use taxpayer money to help families with the higher costs, says Taryn Morrissey at American University. States across the political spectrum have really recognized that early childhood is kind of a no-brainer in terms of investment because if you get children, young children in particular, into high-quality educational settings, that's going to pay off for the workforce of the future.

22:07Morrissey says if providers and families continue to be squeezed, kids might be less prepared for school, and the broader economy might suffer. Because, she says, Reliable, affordable childcare helps parents get to work. And if more mothers drop out of the workforce because they can't afford childcare, she says that's going to widen the wage gap. I'm Carla Javier for Marketplace.

22:54The holiday season is peak time for retailers of all stripes. bakeries included. All those extra desserts for holiday dinners and parties and gifts, too. That makes this a good time to hear from Rita Magaldi. She owns Shear Ambrosia. That's a bakery that specializes in baklava in Salt Lake City, Utah. In the five plus years that we've been talking to her, she's gone from running the business out of her home to opening up a commercial kitchen. I'm good. I'm really good. I'm a little anxious as we gear up for the holiday season. because of the economy and all of the price increases everywhere I turn.

23:34Every single time I go into Costco, I'm spending at least another$300 or$400 more than I used to. Back in June, Nordstrom's reached out to me and said, hey, we would love to have you come and do a pop-up at our Nordstrom's in the Fashion Place Mall in Murray, Utah. And of course, I said, absolutely. You just tell me when and I will be there. And we ended up selling out. We set up two other times for me to come in August and then September. But at any rate, you know, we were just really making headway in the community and people were starting to come to the bakery. So I reached out to the mall and I said, okay, I don't want to sign a big long lease.

24:30I'm scared to do that. But they do have a way that you can rent a kiosk during the holiday season only. So November and December. And so I'm going to go for it.

24:45There's a couple, they walk the mall and we ended up becoming really good friends. And I had them over at my house for dinner. So, yeah, you know, my customers always end up becoming my friends. And here's something really cool. So my friend, Adrienne, she's my friend now, but she's been buying from me since 2020. She's actually donating her time. She refuses to let me pay her. She is a retired nurse practitioner, and she says she needs something to do with her time. So she's going to be helping me at the kiosk. I a thousand percent believe that slow and steady wins the race. I'm not trying to be a hair over here.

25:32I'm not trying to be a multimillionaire and overnight. I just, I love my business and I want to be able to have enough to pay my bills and have a retirement one day and to maybe one day be able to go on a vacation. but weathering the storms of the economy right now means more to me than getting to go somewhere. It's the long game that's going to grow this business, not short-term gratification.

26:11Rita Magali, Shira Ambrosia, Salt Lake City, Utah. Baklava for everybody.

26:37This final note on the way out today in which uncertainty rears its head once again in somewhat personal terms. There's new research out from the Transportation Institute at Texas A &M, its 2025 Urban Mobility Report, that shows we are spending more time in our cars getting to and from work than at any point since 1982 when they started keeping track. For the average commuter, 63 hours a year in traffic. Here, though, is the kicker for which I can personally vouch. Pandemic-induced disruptions in how and where we work means it's harder to predict where and when you are going to get stuck. Our media production team includes Brian Allison, Jake Cherry, Justin Duhler, Drew Dostad, Gary O 'Keefe, Charlton Thorpe, and Juan Carlos Torado.

27:23Jeff Peters is the manager of media production. And I'm Kai Rizdal. We will see you tomorrow, everybody.