Nvidia Investigation, AI Stock Rally and Data Center Power Demand

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1:02Stocks are surging on Wall Street, even as NVIDIA falls more than 5%. I'm Kelly Evans, and welcome to Power Lunch. Brian Sullivan will join us in just a moment. Stocks are near session highs this hour, and the S &P is on pace for its best day since April. The big story, NVIDIA's board launching an investigation after CEO Jensen Wang acknowledged a relationship with a business executive whom U.S. intelligence reportedly suspects of spying for China For a company worth more than$4 trillion, the questions now are about governance, national security, and investor confidence. But this drama is not weighing on the tech trade overall today.

1:38The semis, the memory, the NeoCloud names are all higher, including names like Coherent, Monolithic Power, and AMD. AMD, by the way, potential rival benefiting from the sell-off in NVIDIA. Plus, Brian is live at the Edison Electric Institute's annual conference, which brings together leading industry executives who are shaping the future of power. An important topic these days. He's got two exclusive interviews with Patti Poppe, the CEO of PG &E, one of the largest utility companies in the United States, and Bob Frenzel, who is the CEO of Accel Energy. That's coming up later this hour. But let's begin with NVIDIA.

2:10Off-session lows, it was down 8.8 % earlier, down more than 5 % still, which is a cool$200 billion or so in market cap, after the company opened an investigation into the CEO's relationship with an alleged Chinese spy. Just a couple of years ago, China was nearly 25 % of NVIDIA's business. Let's get the latest from Sima Mode. Sima? Kelly, we've been talking to a number of people this morning, and it shouldn't come as a surprise that CEO Jensen Wong admitting to an intimate relationship with a business executive who is reportedly linked to Chinese intelligence has come as a shock to Silicon Valley and Wall Street.

2:43The key question is how this relationship with Ms. Alice Wong influenced CEO Jensen Wong's push to sell more chips to China. short seller Culper Research alleging back in May that Nvidia actually derives a greater share of its sales from China supported by Intermediaries in Asia that circumvent US export controls China matters because it represents a growth market and Huang has always said that if the US doesn't sell its chips there Beijing will get better at building its own AI ecosystem Nvidia sales in China as you pointed out Kelly have fallen sharply in recent years at the peak Bernstein estimates sales made up about 20 percent of total revenue.

3:19But as Beijing turned inwards, developed its own chips and tensions with the U.S. grew, sales started to dry up. The board investigation has been initiated. In the meantime, earnings are about one week away. And on its last earnings call, it's worth noting that Chief Financial Officer Colette Kress said shipments of data center hopper products to China during the quarter were less than one percent of data center revenue. Following earnings, then it's the House Republican Committee briefing and then the company's annual GTC conference in early December Kelly, but now given the revelations over the past 24 hours, the street wants to know just how active Jensen Wang will be at all of these specific events.

3:56That's right. Their earnings are on the 17th because I believe those are also the dates of the China trip, but the earnings are going to be obviously completely overshadowed by this now. Go ahead, Seema. Their whole communication strategy around earnings, I imagine, is going to be so top of mind in the coming days, how they address not just the numbers of financials, which is so critical to Wall Street and the company's performance, but also how they address leadership, the transition period, succession, all of that, what that entails is certainly going to be top of mind for investors, and they're going to have to figure out what they communicate next Tuesday.

4:30Yeah. Seema, for now, thanks. Seema Modi, appreciate it. So much is levered directly to NVIDIA and its linchpin role in the AI ecosystem. Here on set with us to discuss is Roundhill Investments Chief Investment Strategist Drew Pettit. Roundhill has NVIDIA and a number of its ETFs, and Yorkville Ives and co-partner, analyst, and senior managing director, Dan Ives, who is keeping his outperform on the stock, but you called this a black-eye moment. I guess the question now is, what happens to him? How's your thinking evolving on this, if it is? Yeah, I mean, look, Jensen was the gold standard, not just in terms of AI and tech.

5:06I think he brought a market as a CEO, but this is a black-eye moment for Jensen, a black-eye moment for NVIDIA. And we assign, there's probably about a 15 % chance, I think the market's assigned that he no longer CEO. I think if it was something more significant, you see the stock down a lot more, and I'd say the broader tech sector. Look, this is the central nervous system of the AI revolution. And I think when some say, who could replace Jensen? There's no one internal that's going to replace, or even external. I think that's some of the concern. And that's why for investors, it's sort of Pandora's box that opens up, not just in terms of the congressional and the regulatory scrutiny, but it's exactly what you did not want to see, especially post-bluetidal wave, more focus on regulatory for AI and tech.

5:54Yeah, jump in here, Drew, because this is what Dan said, which is it's not just a big AI company. It's like his genius met the moment for the AI build-out, scaled it, had the chips, is continuing to invest, to kind of push to make sure the U.S. is at the forefront. So you see rivals like an AMD rallying sharply today. You see even a broadcomer, maybe a Google with its TPUs can step in, but it feels like in many ways, even though people like Dario Amadei have gotten more press, he's kind of the real leader in a way. To me, it feels like of a lot of this AI build-out. Yeah, look, financing backend is huge here.

6:29And it's funny, if this was more of an issue, like Dan was saying, you wouldn't just see it in this stock, you'd see it in the neoclouds too. Like, I think that's kind of like the first people kind of go to trade, a lot of beta there. And it's funny, I think the one stock you kind of left out that's doing well with this news is Tesla. Because it's funny, think of key person risk at a company. You haven't really thought about that when it comes to NVIDIA, but I'm sure analysts have thought about that when it comes to Tesla. And that's trading up because in this political change in this environment, this might take a little bit of heat off Elon.

7:03So he might actually be benefiting from this. And I would say Tesla stock is today. What else are you watching in this? And, you know, Dan put the odds of him actually being ousted at this point, maybe 15 to 20 percent are saying that's kind of what the market reflects with a 5 percent drop. But if this drumbeat picks up and it starts to feel we all have seen these narratives before, you can kind of tell when it's going one way or the other. If the momentum to replace or oust him picks up, what's going to happen to Nvidia share price? You are not going to get the leverage to the beats and the raises.

7:35That has really been the story of NVIDIA stock. When you like really zoom out from like the technical aspect, this stock has done really well in the market kind of believes the follow through in the outlook. They post a great quarter. They move guidance higher. They talk about the AI trade. The market believes it, believes it, believes it. The more they worry about him at the helm and how much he can really influence the ecosystem, you might not get that leverage to the upside that you've had before. And I'd say to Drew's point, if Jensen's no longer Nvidia, stocks down 25%, 30%, I think first trade.

8:07And then you could argue in terms of the broader tech trade. Unless it's, by the way, priced in by that point. I mean, if we sell off 5 % sessions here and there while the techs come out and while the calls to go appear, it could be priced in, but it could be a sell the rumor by the, but it's that magnitude. You think 25 % to 30 % is probably what it would trade down ultimately if he were out. If he was out. But I think the broader worry is that if he was out, what separates the U.S. from China in the AI revolution, a big part of it is Jensen and NVIDIA. You take Jensen out of the mix, that gap narrows significantly.

8:44And then it goes back to regulators focused on should they restrict in terms of U.S. So that's why this almost creates a perfect storm, and it's a tightrope to see how it plays out. But when it comes to Jensen, he is that integral. And I think that's the bigger concern for the broader tech trade. And there could be a fight here that in the country between you. I don't know if you heard Bradley Tusk last hour. I mean, giving voice to the populist antipathy for AI and maybe for someone like Jensen. You know, we're always looking for a scapegoat in any kind of big societal thing like this. If he becomes that scapegoat, you know, even while U.S.

9:20administrators know the importance of him literally to the company and to our relationship with China, they're going to be caught between, well, the public wants one thing, but But we kind of know what we'd be doing here. We know the risks. I don't know how they would respond in that situation. And then all in that perfect storm is what we're seeing in terms of D.C., blue tidal wave, anti-data center, anti-attack. So it's coming at the worst moment. And look, no one, Jensen was held, he was put at the top, top of the mountain. Not just from the CEO, the face of AI globally. And the fact that this, it's mind-boggling to many investors that have known him, that have watched, that were in this situation.

9:56What would you add, Drew? It's funny, this comes at an absolute terrible time for NVIDIA from a stock perspective, because anything that hasn't been perfect is slowly becoming a show me story in the AI trade. And this is another example of something not being really perfect when, I wouldn't say we're priced for perfect anymore. We've worked a lot of that out in the last month, but you got Anthropic coming soon. And any excuse to raise some liquidity, raise some cash ahead of that, Well, guess what? To the tune of 5 % today, NVIDIA shareholders have that excuse. I often think of NVIDIA as a key part of the open AI story and ecosystem.

10:33Are they as crucial for Anthropic as well? I'm thinking more from like a market liquidity perspective, right? Because we know that's coming. We heard investors like talk about like, how am I going to raise cash for a SpaceX coming on? Well, if everyone's selling. Here's like, you know, if I got to find some cash, you know, this is an easy place to, you know, just, I would say, take profits. And like technically, there's less support here too. So I got some losses. I'll monetize some losses ahead of, you know, an impending IPO. Like easy trade to make right now. And also a big part of the ecosystem in tech, you talk about circular financing.

11:08It's because of Jensen. Those relationships, what Jensen's built, he's the architect of it. So you can't all of a sudden, if Jensen's no longer there, okay, we're going to bring on this other person. And then you could argue Invidio would have to simplify their infrastructure. infrastructure with circular financing. They're already under pressure from investors. I think the investors just give him the benefit of the doubt. But what about if it were the CFO, who's also a really known quantity to the investing community? Could she at least kind of keep that going for a while? And she's one of the best CFOs, I think, not just in tech, but in terms of public companies.

11:43But then it comes down to like the Jensen premium, as Drew was talking about, like the Musk premium. I mean, we're talking enormous in terms of many people buy NVIDIA because of Jensen. Yeah, it's funny. I don't think anyone steps in the same way because it's funny. We're talking about NVIDIA like an AI stock today because it is, but it hasn't been. The beauty of what he's done is he's taken the narrative from gaming to Bitcoin to this. So there's some kind of beauty in the pivots over time that NVIDIA has been able to do. And even if you have a great CFO, probably not a strategy person, I think that's what drives the premium.

12:24So yeah, it probably comes out pretty good on a quarterly earnings call and you can talk to the street and analysts, but I don't think it's going to excite the buy side and retail investors that have definitely liked the stock for a long time. What happens between now and November 17th when they report earnings? I mean, I think it's earnings, but then as more comes out in terms of Commerce Department, DOJ, every reporter in the world's focused on this. More information will come out. It speaks that 15 % chance that he no longer is CEO of NVIDIA. As more information comes out, does that go to 25%, 30 %?

12:59Then the stock goes down accordingly or maybe smaller. That's really, I think, the key. Yeah, I'm trying to think what could make that risk seem diminished. Should they take a more sudden near-term move to get ahead of it? Well, they have four to six weeks. In my opinion, the board, maybe even to do the investigation, have to make a decision. Yeah, I don't know. This is going to lead to a really stressed out compliance person in the background. And I think a lot of reading the cue cards for earnings season. Finally, Drew, just before we let you go, is there anything as you look through, you guys have ETFs that represent a lot of these core AI trades, maybe the NeoCloud ETF as well.

13:32Correct me if I'm wrong. You have DRAM, you have a bunch of these different. How would you just describe the mood and the trading activity. Now we've seen kind of this wash out from the highs. I'm just curious, where do we stand? Because otherwise, the market is actually having a really good day. Yeah, I think a lot of people are now getting into the weeds a little bit. There was not a lot distinguishing the AI trade on the way down. Look, the sell first, ask questions later, you're starting to see some differences in how like neoclouds and even like photonics behave. So I think you're going to see some differentiation on the way up from here.

14:03But what we're actually telling people in all of these ETFs, whether it's DRAM, NeoCloud, Lite, you want to tactically rebalance these a lot more than you have because with stories like this, a lot more show me stories where you're going to have to build on positive fundamental momentum to get people back in these trades longer term. All right, we'll leave it there. Guys, thank you. Really appreciate it today. Drew Pettit of Roundhill Investments and Dan Ives of Yorkville Ives. Speaking of Anthropic, we do have a news alert. Kate Rooney joins us from San Francisco. go. Kate, what's the latest?

14:34Hey, Kelly, well, Anthropic just announced new versions of their most powerful frontier AI models. We're talking here about Mythos and Fable. The new version is 5.2. So Fable, you've heard of this. It's broadly available. And then Mythos, the other version here, is still restricted to only vetted organizations in areas like cybersecurity and biology. So Anthropic executive Diane Penn told us that these versions excel at things like solving the hardest math problems in AI and generate outputs about 30 % faster. Kelly, this is not the everyday AI model you might be using to write an email, for example.

15:09It's by far the most expensive version out there, therefore not as widely used for Anthropic, but they are slashing prices as well by about 20 % here. It is the first frontier model this company has announced since CEO Dario Amadei called for pacing the technology. That was earlier in the fall. Diane Penn told us that they called for pacing, not pausing here. So Anthropic also told us they did work with the government and get approval to launch this. Wow. And Anthropic is still expected to start its IPO roadshow. Is it tomorrow? Yeah. Well, speaking of, no, you're right, Kelly. So Anthropic is expected to kick off that IPO roadshow as soon as tomorrow.

15:46So that's what we're hearing. They do not really need to walk this tightrope as well of news like this. They need to pace these models while also competing and dealing with potentially new commercial pressure as a public company. It's also very much a test of a new asset class. You know, it's going to be the first AI lab to go out there and go public. Here's what David Solomon, CEO of Goldman, told our Leslie Picker about the IPO earlier. The market is calibrating risk slightly differently than it was a couple of months ago. But that doesn't change the fundamental interest, you know, in this technology, in this infrastructure, et cetera.

16:19And so the market is open. Transactions are occurring. And, you know, we'll see, obviously, if this IPO moves forward, how it all plays out. And Kelly, NVIDIA's leadership crisis, as you've been talking about, also does add even more noise for Anthropic as it launches that roadshow. Anthropic has been trying to sell its growth story. It's going to be trying to sell this at the same time as the industry's most important partner is now under investigation. So a lot of implications for the partners here, at least maybe on market sentiment and mood around this day. Kate, thank you. Kate Rooney, we appreciate it.

16:53The AI trade is still charging ahead today. And our Brian Sullivan is at a major conference to find out what it really takes to power that continued build out, Brian. Yes, the EI electricity conference. But here's the thing. If AI is driving the market and data centers are driving AI, and we can kill the music, guys, and energy is driving data centers, then all stories are just energy stories in disguise. And every CEO here at EEI, we're asking the same question. Has, after the election, their estimates for power demand growth changed at all? I asked that question of Drew Marsh, the CEO of Entergy.

17:32I had kind of a back and forth with him. Here's what he said. Certainly not at this point. Nothing? Nothing. Do you expect that to change? We were seeing incredible demand for traditional industrial growth as well as data centers. Those conversations are continuing on. The needs for the economy are no different. So the data center boom is not over. We don't believe it is not in our service territory. And by the way, Kelly, I'll tell people at the end of the show why energy may be very uniquely positioned literally geographically around that story. But coming up after the break, we're going to talk California.

18:12We're going to talk data center demand. We're going to talk grid resiliency and$1.4 trillion in total investment into utilities. Partly, Patty Poppy, CEO of PG &E, next, right here on Our Lunch. This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Schwab Market Update, an original podcast from Charles Schwab, provides an information-packed daily market preview on stock updates, U.S. and global economic news, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash marketupdatepodcast or find Schwab Market Update wherever you get your podcasts.

18:57Which NHL teams are scoring big off the ice? CNBC Sports' Michael Ozanian has the numbers. If a dive margin in the NHL is right there with the NBA. Official NHL team valuations revealed Friday in Squawk Box on CNBC. All right, welcome back to Power Lunch. We are here live at the 61st, believe it or not, EEI, Edison Electric Institute Financial Conference. 30 plus CEOs, 200 plus analysts, 300 plus bankers, and pretty much everybody who is anybody in the energy world is here, including your next guest. That is Patty Povey, the CEO of PG &E. Patty, good to have you on the program. Thank you very much for joining us.

19:36Thank you, Brian. Great to be here. Asking every CEO the same question to start with, particularly after the election. California, new governor, change on some federal levels. any lowering of demand growth estimates from PG &E on electricity? I don't see that. We definitely have bullish forecasts on growth. We are the home of the tech industry of the world, and we get to power the largest state for manufacturing in the nation. We have more manufacturing jobs and more manufactured products. We have data centers. We have all of the tech industry serving all of the technology needs of the world in my service area.

20:16Growth is on the horizon. Do you think you have fewer data centers than originally planned? Do you think this will actually affect the build-out, at least in California? You know, Brian, I like to say we have Goldilocks data centers. We have over 300 data centers already, but they're smaller. We don't have the big, giant projects. We have compute centers that are providing compute capacity to all of the tech companies, to small startups, to the medium-sized tech companies, to the larger tech companies. So I see that continuing. I don't see the tech industry slowing down in our service area. And so we're going to continue powering their ability to do what they do.

20:57And that's exciting. Yeah, and you guys are a little bit different than some of the companies here. A lot of the CEOs, I'm almost entirely just asking about data centers. There's a lot else going on at PG &E, right? You talk about wildfire risk. You talk about investment grade. How important is it, how critical is it for your investors for you guys to get back to investment grade, and how do you make that happen? Yeah, look, we have one gating item that prevents us from being the investment grade company that powers one of the greatest economies in the world. And that gating item is wildfire liability reform.

21:30We are really hopeful that the legislature will continue to take action to make sure that our victims of wildfires have speedy claims recovery and ability to rebuild their homes and their lives. That our customers are not paying an outweighed price for the liability risk of wildfire and that our investors can trust the California construct. And right now, higher cost of capital makes electricity more expensive. Legislative reform can make electric bills go down. And listen, I've been as critical on the utility industry. I did a little mini documentary on wildfire risk in California. I grew up in California.

22:13I've seen it all. I understand it. You guys and Edison International and Sempra in San Diego, you're not regular companies. You're regulated by the state. The state pretty much approves everything you guys do. You're sort of quasi, I mean, you are utilities, but you're quasi public service companies. Do you think there's an acknowledgement, Patty, in Sacramento with the leadership that you're not, you guys are not just normal. You're not McDonald's, right? That every customer in the state is also a beneficiary of the product. How do you balance that out and run a business? Yeah, I just believe there's not a zero sum game here.

22:51We can serve California. We work to our triple bottom line serving people, the planet and California's prosperity. I agree with you. We power the economy of California and we need to be a high quality investment grade should be. We meet all the criteria to be investment grade. We've got this gating item. And I think we just need to continue to work to gain the trust of our legislators. They represent their constituents. Their constituents have a voice. We want to make sure that we're advocating for their constituents who are our customers, that a healthy utility means lower cost for customers and a better, safer, more resilient grid.

23:28And we think we can do that. I believe in this. We have a mantra, performance is power. We need to perform. We need to follow through on our promises. We've been doing a great job of that over the last six years. We need to move into proving that. Because I assume what you mean is if we have 75-year-old power lines, They're subject to things going horrifically bad. If we invest in data centers and the new grid, better power lines, right, stronger power lines, that data center investment could help accomplish two goals, power data centers, but also make sure those things don't have catastrophic problems, I assume.

24:05Yes, there's no doubt. The investment is not just in AI. The investment is in keeping power on running safely. I think this is a really missed message. You nailed it, Brian. We have the opportunity, this new tech investment for their growth is also tech investment in the resilience of the U.S. grid. This is everywhere in America. This technology investment is new revenue. In the absence of that growth, the rest of us are paying for it. So this is an infusion of capital into a more resilient U.S. grid and U.S. infrastructure that can lead the world. And there is no doubt that California is the home of this industrial movement.

24:49And we can leverage the tech industry to power California's progress and, frankly, the world's technology stack. Well, keep us informed about the wildfire legislation and about the Investment Grade Act because these are critical to your investors. And also the stakeholders that get the power because they want to pay as little as they can. And that will reduce your borrowing costs, I assume. Yeah, well, reducing our borrowing costs reduces bills for customers. We've lowered rates five times in the last two years. While we've improved reliability by 30 percent, lowering investment costs makes that an even better story to tell.

25:23Howdy, Poppy of PG &E. Really appreciate your time. I know. Very busy conference. Thank you very much. So, Kelly, you know, they may not do the gigantic data centers in their area, but guess who does? Excel Energy, talking about Minnesota, making a big deal with Google. We're going to talk to Bob Frenzel. He is the CEO of Excel in a few minutes about data centers, power demand, and more. Yeah, she said they've lowered bills five times in the last few years. That caught my attention. Brian, thanks. We look forward to that. Brian Sullivan. Still ahead, a broad-based rally with AI-related names leading the charge.

25:54A closer look at the biggest session winners after the break.

26:07Schwab provides an information-packed daily market preview on stock updates, U.S. and global economic news, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash market update podcast, or find Schwab Market Update wherever you get your podcasts. Which NHL teams are scoring big off the ice? CNBC Sports' Michael Ozanian has the numbers. If a Dow margin in the NHL is right there with the NBA. Official NHL team valuations revealed Friday in Squawk Box on CNBC. Welcome back. We're actually seeing a lot of green in the stock market today, boosted perhaps in part by a drop in oil prices.

26:51Also comes after a tough week last week. The Dow's up almost 1 ,100 points right now. The AI trade is still front and center after last week's decline. Many of the AI build-out names like Vertiv, Lumentum, and Coherent are all seeing a relief bounce, and renewable energy stocks like Oglo, Constellation, and Bloom are jumping again after surging after the midterm results last week. Meanwhile, the Treasury market is in somewhat of a wait-and-see mode ahead of tomorrow's inflation data. Economists think the CPI will rise three-tenths of a percent in October from the month before, but there's a catch.

27:22Because the Bureau of Labor Statistics didn't publish October 25 CPI, it won't release year-over-year changes for most CPI measures this month, those the most widely quoted. The Fed will be watching the data closely with its next rate decision just a month away. Fed watch pricing in about an 82 % chance of a hike and less than an 18 % chance the Fed simply holds steady. Let's get to Mackenzie Sigalos now for the CNBC News update. Mackenzie. Hey, Cal. So Republican Representative Thomas Massey introduced impeachment articles just moments ago against Defense Secretary Pete Hegseth. The resolution is privileged, which means that the House now has to vote on the matter within the next two legislative days.

28:01Massey previously attempted to force an impeachment vote for Hegseth, but it was procedurally blocked. Hegseth is holding a press conference on the impeachment push tomorrow and said earlier today that he's not worried about it. The Polish authorities say the man who killed six people in a shooting in Krakow over the weekend has died in a hospital. He had been in critical condition since the attack on the city's Old Town after he got into a shootout with police. Poland's Interior Minister says the man had ultra-nationalistic views and was very radical. And a huge shakeup at DC Studios ahead of Skydance earnings after the bell.

28:37James Gunn and Peter Safran are stepping down after four years as the heads of DC. The company says Marvell Studios veteran Jeremy Latcham will take over as the president and chief creative officer of DC Studios. Kel, back to you. All right, Mackenzie, thank you. Coming up, Jensen Wang's affair with the suspected Chinese spy is raising questions in Washington. What happens next? Former DOJ antitrust chief Jonathan Cantor joins us next. Jensen Wang's close ties to Washington are facing a double threat now, a Democrat takeover of Congress, and some congressmen have already called for him to testify.

29:13Let's get to CNBC's Megan Casella with more this hour. Megan? Kelly, that's right. Lawmakers in both parties are calling for congressional investigations into NVIDIA after Jensen Huang admitted to this affair. Texas Republican Senator John Cornyn posting simply this morning, congressional oversight investigation needed. Now, a group of lawmakers have just wrapped up a briefing with the CIA Director John Ratcliffe and Jay Clayton, the Director of National Intelligence. This was initially scheduled on threats from Iran, but NVIDIA did come up and lawmakers do not seem happy. Congressman Jim Himes, he's the top Democrat, on the House Permanent Select Committee on Intelligence, just told reporters, why were we not informed of something that could be a very serious threat to our national security?

29:52There's a bipartisan push to get Mr. Huang in front of the committees to actually explain what he did, of course, but we start with the proposition that this was a very big story, that none of us had any clue was out there, and that's just not acceptable. And Kelly, beyond investigations, this has also ignited a fresh push for legislation that would limit chip sales to China. There is bipartisan support for that in both chambers, even though the Trump administration has resisted it. But we likely won't see more movement on that part of things until next year. Kelly. All right, Megan, thank you.

30:21Megan Casella. The political pressure is mounting on NVIDIA, but the legal fallout could be even bigger with questions about potential criminal liability, Wong's obligation to NVIDIA shareholders, and broader antitrust concerns surrounding the chip giant. Joining us now is Jonathan Cantor, former assistant attorney general of the Department of Justice. It's great to have you here. And what are the dominoes that you think could fall now? So I think the dominoes are going to fall in two vectors. The first is the criminal investigation and exposure for Jensen Huang himself, which is going to be everything from potentially being an unregistered fraud agent to disclosing confidential information to a hostile authority, in addition to other kinds of violations.

31:05The second is his liability to shareholders and the company's liability for misleading shareholders and for having an undisclosed relationship with a customer who turns out to be potentially a honeypot for a foreign adverse nation. So those are the two kind of directions that this could travel. What do you think is potentially the more significant or damaging? So they're going to compound one another. The criminal liability exposure here is actually quite significant. The fact that he was aiding, potentially aiding and abetting a foreign agent in figuring out how to smuggle, in effect, unauthorized advanced chips into China, not only circumvents U.S.

31:54law regarding shipping chips to China, but also aids and abets a foreign agent. So the potential criminal exposure here is quite significant if the Department of Justice decides to have a thorough investigation and finds wrongdoing. Do you think they will, given that it's still the Trump administration? Well, that's the question here. And I think this is where oversight and what happened in Congress is going to be quite significant. If the Trump administration does not investigate and does not investigate both Jensen Huang and the company with sufficient rigor, then Congress is going to use its oversight authority over the Department of Justice and the administration.

32:35But it is unclear. I mean, according to reporting, the Trump administration or the president himself had taken steps to include Jensen Wang in a trip to China, include him in a visit from the leadership of China, notwithstanding knowledge of this potential wrongdoing. Yeah. And then that gets back to is the company itself significant enough to be in the U.S. national interest? I mean, should that be a consideration on the table for what happens here? Well, I think this is the part that we haven't heard as much about today, but is likely to be important fallout going forward, which is that this company is so big and the economy is so dependent on NVIDIA that there is a world in which NVIDIA has grown significantly through acquisition, through vertical integration, through circular financing and interest in a lot of the AI economy.

33:29There is a concern, there should be a concern that NVIDIA is too big to fail and that we need, in order to improve resilience for the U.S. economy, more competition. And NVIDIA should be held to a higher standard with respect to future acquisitions and future growth potential, including vertical integration. So I can see today's events or this last week's events resulting in stepped-up antitrust enforcement and calls to rein in the power, authority, and significance of NVIDIA. Does this delegitimize their chip sales to China and any of its pass-throughs now and potentially bring a halt to them altogether?

34:07Well, that's exactly right. And I think that's going to be an adverse effect, not just for NVIDIA, but for the industry as a whole. NVIDIA has been out there in front arguing that we should tolerate greater shipment of chips to China, including lobbying directly with the administration, reportedly, and also shipping chips abroad more liberally. That is now going to raise questions about whether we should tighten the screws here and prevent chips from leaving the United States. One, to ensure that we have adequate supply. Two, to ensure that these are not pass-throughs to get around these chip diversion restrictions.

34:44So there is likely to be fallout, again, not just for NVIDIA, but for other chip companies who are relying on shipping overseas. Which is a great point. On a day where we're seeing all of these names, the semis are up 5 percent, the Nasdaq's up 3 percent right now. So if you're right, that would perhaps put a dent in their growth rates. Jonathan, thanks for now. We appreciate it. Jonathan Cantor, former assistant attorney general. Before we go, a quick check on the markets. Have stocks at session highs? The Dow's up more than 1 ,200 points, almost 1 ,300 right now, with that 3 % rally, as I mentioned, for the Nasdaq.

35:14Ahead, Brian Sullivan is bringing us another big guest from the Edison Electric Institute. Excel Energy CEO Bob Frenzel joins us exclusively next. All right, welcome back to the EEI 61st Financial Conference. We're joined now by another CEO and chair. That is Bob Frenzel. He is the CEO and chair of Xcel Energy. Eight different states. So you're in it. You're Minneapolis, Minnesota-based, but you're all over that entire region. Two nuclear reactors in Minnesota. You're doing a deal with Google for power. They need your power to build this giant data center. Get to that in a second. First question, same question to every CEO, Bob.

35:50any change in your power demand growth estimates since the election last week? No, I wouldn't say we have any changes, Brian. I think that we see a long duration, both AI data center driven and economically driven growth in our service territories. Let me give you an example. We serve the panhandle of Texas in eastern New Mexico. That's the Delaware Basin and the Permian Basin. That is oil and gas country in the United States. We've seen incredible demand from our oil and gas customers to continue to mine and mine with electricity. So we're seeing electric jack-up rigs and electric compression.

36:27That's good demand for us. And it's great growth for the oil and gas industry. That demand is unabated. In fact, it's accelerating. It's accelerating. And so those electric factories, they're not spewing diesel fumes into the air. That's the positive. Yeah, correct. So over the last three to five years, you've seen large scale oil and gas companies and even E &P companies try to get their scope one emissions down to zero. And so we use electric jackup rigs, electric compression to move the gas through the through the pipelines. That's been good growth for us. And it's been good emissions reduction for those those oil and gas companies.

37:01I want to be clear, Bob. Nobody in the last five days, six days has called you and said, hey, Texas changed. Shut it down. No, the fact about Texas is that, you know, Texas had 400 gigawatts of data center development demand. We were never going to build 400 gigawatts of data centers in Texas. The whole country needs somewhere between 150 and 200 megawatts of gigawatts of data centers. And so the fact that Texas might slow down means that maybe 50 or 75 or 100 get built there, not 300 or 400. And that's probably no surprise to the data center development team and no surprise to people who provide them electricity.

37:36By the way, it's like something like a 30 percent of data centers are canceled even before the election anyway, just because there's too many. To your point, you guys, Google wants to build a big data center, 780 megawatts. That's a that's a lot of power using power that you would provide any change to that project. What is the status of that project? No, that project is incredibly well received in our state. Think about data centers done right. We think we can responsibly develop data centers. The Google data center that you mentioned is going to show up with air-cooled, even the land of 10 ,000 lakes.

38:10We're going to do an air-cooled data center. We're going to power with wind, solar, long-duration energy storage, all paid for by Google. They're going to pay for the substation and the transmission interconnection they need. And they're going to pay full property taxes and full transmission rates. It ends up being about a$1 to$1.5 billion customer benefit over the life of a 15-year contract. That's a 1 % to 2 % cost benefit to our residential customers in Minnesota. We had this thing called the election, Bob. I don't know if you saw it, but a lot of the ads, because I got to see a lot of local ads too, they were all about data centers jacking up electricity rates.

38:45Now, the Washington Post had an article Saturday, a couple days ago, that data centers were not jacking up electricity rates, which I thought was an interesting twist, given that a lot of people in the country, that's all they heard, for months. What is the real story? How do people know what to believe? So we operate in an integrated rate regulated state. When a data center shows up, we go to our public utility commissions. We affirm that we have a large load contract with them that is a net benefit to our customers. And so we think we can build, they'll pay for all the new generation they need.

39:18They're going to pay full rates for transmission. That's a net benefit to customers, not a net cost. And you can do that when you're doing an integrated rate regulated utility. It's a little bit more difficult to do in a deregulated part of the country like PJM or maybe an ERCOT. A little bit more difficult. But in our region of the country, we can make it a net benefit for our customers. Well, Kelly and I both live in a PJM district, New Jersey. Feel free to come that way and help us out a little bit. Bob Frenzel, chair and CEO of Accel. Also, Kelly, as I just found out, a former nuclear engineer on an aircraft carrier, the Dwight D.

39:52Eisenhower. So he knows his nuclear. And we appreciate your service, Bob Frenzel. Thank you very much. The kinds of people that you sit down with, the kinds of people, it's a good reminder, running these companies, a nuclear engineer on an aircraft carrier? Yeah. The Dwight D. Eisenhower is pretty cool. Wow. All right, Brian. But I'm a Navy geek, so my dad was Navy. Go Navy. Yeah, he's just more of a geek than I could ever be, so kudos to him. Coming up, NVIDIA's CEO, Jensen Wang's headlines, putting the company's options in play along with the stock price today. We'll look at the trading opportunities that some are seeing after the break.

40:27The controversy swirling around Jensen Wong isn't stopping one trader from making a massive bet on NVIDIA today. Oliver Rennick is following the options actions at the SIBO. Oliver? Hey, Kelly. Among six million contracts and three billion dollars of options premium in NVIDIA today, one very big trade stands out. It stretches across$100 million of options and involves someone closing out one bullish position in exchange for an even more aggressive one. First, the trader sold out of a$42 million, 210, 255 strike call spread expiring February 19th. Then they put on a bigger spread at lower strike prices, buying pricier contracts in order to increase the sensitivity of the trade to price movements in the stock.

41:15The main piece of the new trade is an almost$60 million,$57 million purchase of more than 50 ,000 195 strike calls on NVIDIA expiring February 19th, which is currently the second biggest trade in the entire market today. And this time, the traders sold the 245 strikes against it, lowering the cost of the trade by$10 million, leaving them with a roughly$47 million trade, which for the price they paid, needs NVIDIA to rally about 15 % to 206 to break even. By mid-February, so they've got some time. Oliver, thanks. Let's get a quick check on the airlines now. They are taking off as we see another leg lower in oil prices and pressure on jet fuel cost ease.

41:59Crude is sliding on hopes of de-escalation in Iran. Some headlines from the Middle East on the wires to that effect. More power lunch after this quick break. On a big market day, let's check back in with Brian at the Edison Electric Utility Conference in Phoenix with some final takeaways for our audience, Brian. Yeah, I would say, well, the utility stocks are almost all universally higher, as is the entire AI and data center complex today, minus this one company called NVIDIA I think you guys have talked about a bit. All right, here's a couple of final PowerPoints from this conversation. Number one is every CO you've heard of yourself, there's no demand growth slowdown estimates.

42:34Not one person we've talked to has said demand growth is going to slow down. Not happening. The data center boom, it's going to continue. And by the way, if let's say Texas, which you might have heard about how to change in the statehouse there. If Texas has any change, I can tell you firsthand that Louisiana and Oklahoma, they are more than ready, willing and able to bring those data centers just across their borders. I know the governor of Louisiana has been working the phones and we talked to the CEO of Entergy, the big Louisiana based power company. They said we got spare capacity. We got lots of gas.

43:07They are more than willing to bring that power and those data centers from Texas to Louisiana. Very quickly, I know there's a change. The governors will have some power. Federal officials like elected senators have almost no power. So who has the power in Texas? We talked about a little bit last week, Kelly, if you remember, get to know the names. Thomas Gleason and Brooke Popp. Who? Well, those are the two that run the Public Utilities Commission and the Texas Commission on Environmental Quality. That's the air and water regulators. Those are the two that were appointed by Governor Abbott that are still in their terms, have time left.

43:43Those are the ones that are going to actually make the decision. And then you heard me reference it earlier. I thought it was kind of interesting, getting a lot of attention. But over the weekend, there was a study out. I think it was from Harvard or MIT or both. The Washington Post picked up on that. Credit to them. And it was basically like, everyone blames data centers for high electricity prices. But these are the real reasons. The study finds data centers had only a marginal impact on residential electricity prices. That marginal impact, according to a study, Kelly, was 2%. So if it's not the data centers, what is it?

44:14It's probably policies. Right. Or everything else that goes into the cost of fuel. Speaking of which, Brian, you've got to get back here because we have some headlines, some stories to monitor. let's say from Iran and the oil price is dropping. It's been a great show that we appreciate it. Brian Sullivan. Thank you. Thanks for watching Power Lunch. Closing bell starts right now. 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.

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