10AM Hour: AI Leaders Call for Slowdown, President’s Trump’s Response, CEO of the AI Chip Firm Challenging Nvidia 9/14/26

0:00Introducing Fidelity Trader Plus. With customizable tools and charts you can access across all your devices. Try our most powerful trading platform yet at fidelity.com slash trader plus. Investing involves risk, including risk of loss. Fidelity Brokerage Services, LLC. Member NYSE SIPC. Welcome to the circle. In this game, you never meet the other players. Your goal is simple, become the most popular. But should you play as yourself or catfish as someone else? With the new host, celebrity contestants, and this time, audience voting will influence the game. You decide who has what it takes to win.

0:34Watch the Hulu original series The Circle on November 17th. Streaming on Hulu and Hulu on Disney Plus for bundle subscribers. Terms apply.

0:51Good Monday morning. Welcome to Squawk on the Street. I'm Sarah Eisen with Carl Cantini and David Faber. We are live, as always, from Post 9 of the New York Stock Exchange. Stocks are getting hit to start the week, though off their worst levels, as AI fears boil over, with investors keying in on what a slowdown in development could mean for spending and for the IPOs in the pipeline. We'll discuss with tech investor and early anthropic backer Byron Dieter. Plus, we'll talk with the CEO of one company that's taking on NVIDIA by unveiling what it calls the fastest chip for agentic AI. We'll also get to the latest in the Middle East as oil prices jump again, fueling more concerns around inflation ahead of this week's key Fed decision.

1:30But guys, with the concerns around AI front and center, I thought we would look at, you know, lately some of the concerns have been around safety, but there's still this overarching concern around jobs, AI taking our jobs, right? You see it in all the surveys and the poll data. NBC News has one that shows 70 percent of people are worried that AI is going to take their jobs. We don't know exactly what's going to happen with AI and jobs, but there is some early evidence. And I just wanted to point you to a few key charts from the New York Fed, for instance, about what's really happening when it comes to AI and jobs.

2:02Thank you, Apollo, for highlighting this New York Fed survey, which shows, it was carried out in August, 34 percent of service firms, 22 percent of manufacturers are using AI, are retraining staff, Well, only 4 % and 0 % actually report layoffs. That's good news. It means that those that are using AI are retraining their staff to use AI, and they're not replacing them. Apollo says it's consistent with their core view that AI is putting downward pressure on wages and AI-exposed occupations without a significant negative impact on employment, which could be one thing. There's an even more optimistic ramp paper, David, on AI that companies that are investing heavily in AI are actually growing their headcount 10 % over the last two years following adoptions.

2:49Entry-level hiring grew even faster, up 12 % over the past two years after these companies that made the biggest AI investment actually worked it out. In other words, they're getting more productivity. And instead of firing workers, they're actually hiring workers. So those are two, I think, positive data points on the whole AI is taking our jobs doomsday. Yeah, without a doubt. That's a positive. I mean, we're almost four years in now since the introduction of ChatGPT and the beginnings, at least, of sort of that conversation around what will the advancement of this technology mean. That said, we're only at the very beginning of sort of this greater intelligence revolution where the models will be able to do seemingly all work and do it at a level that is perhaps higher than many or if not all humans.

3:40Right. And with Dario Amadei's warning today over the weekend and pacing the frontier, it is worth noting that he and their papers that they put out continue to be very pessimistic on the jobs front when it comes to AI. their paper shows that knowledge worker jobs unemployment rate could go up to 18 percent by 2030. This is unemployment? Yeah. Yeah, that's an extreme scenario. Unemployment, that's bad when it goes up. And 18 percent is certainly ugly for knowledge workers. But the optimists, I mean, those who paint the very positive picture for what AI will mean for our society over the longer term, talk about a world of abundance.

4:17But oftentimes that world of abundance goes along with people not working. Yes. Yeah, it's an abundance of leisure time. Correct. Yes. And abundance of leisure time as a result of incredible GDP growth because of everything and the profitability that is going to accrue to so many of the companies that are not going to necessarily be employing more people. By the way, that positive scenario, which is talked about a lot by those, I still think that's going to bring significant societal change. No kidding. I don't quite know how we're all going to share the wealth, for example. I don't think you even really need surveys at this point.

4:50I mean, look at what information services job growth has done really for a year and a half, right? It's been a consistent decline. If it hadn't been for education and health care, job growth would be minimal overall. I don't know how much of that we pin to AI adoption in those companies or what exactly isn't causing it. But just on what you guys are talking about, like the AI binary scenario, Wolf Research had to make this chart because it was just hilarious. put out this binary outcome on U.S. GDP. Basically, we either have the end of scarcity, what David said, when none of us have jobs, we don't need money, all of that.

5:28There's GDP. We're doing all day, but okay. There's the orange GDP. And the trend is just trend GDP, right? It's right in the middle. And then there's the end of humanity, where GDP basically goes to zero. Well, you mean that the agents are not going to be generating their own economic activity? I don't know. How are they going to measure all of that when they're out there? collective. We should point out, of course, we've been talking all morning about the latest warnings around the technology and what seems to be at least some unanimity in terms of leaders saying maybe there is a slowing or a pacing that could take place.

6:03The president has weighed in. I assume you guys have seen the latest social media posts from the president. The only controls or guardrails that AI needs is strong and smart. A high IQ president in the USA has that in spades. He goes on to say the Trump administration has stopped AI people, and it seems to be including Dario Moday, of course, the CEO of Anthropic, as one of those people who's not pretending to be a perfect little angel. We will continue to do so. We already have tremendous criminal and regulatory power of these companies. There is a sick conspiracy going on against AI and data centers.

6:39And the only one that's happy about it is China. Whoever wins, AI wins. He goes on to say, we're leading China and all others, and we will continue to do so. Conspiracy theorists, treasonous traitors and leakers, beware. He goes on from there. So I think the president making it pretty clear where he's coming down. There is, there is, and many people believe there has been a campaign on the opposition to data centers front by China to have bots and the like that have tried to sort of create a groundswell of opposition. And now AI development as well, I think, is grouped into that. Yeah, but I don't think Dario is a Chinese agent.

7:16No, and what about Elon Musk and Sam Altman endorsing what he's written? Yeah, I don't believe any of them are. They're seeing it real time. Some people say, you know, Sam Altman and Dario endorsing, you know, like the regulatory capture, like creating a duopoly would be very good for their business, ultimately. That has been right. David Sachs has talked about that many times, of course, the former AI czar in terms of regulatory capture. That said, I've talked to enough people who are close to these companies, close to some of the researchers who are genuinely fearful. There's no doubt, and you've seen some of it in the public statements.

7:54But their whole business model is plowing ahead. So it is this sort of hard contradiction that they're grappling with. Capitalism says plow ahead. Plow ahead. But the U.S. also, you know, if this technology is so dangerous, do we want China in control of it? No. Do we want to pace ourselves so much that China wins? Like, that's, I think, something that the president is getting at. And it's tricky. And Dario Amode did address that in his piece. He said there are tangible things you can do, like don't sell them the advanced chips, for instance, and go after the distillations on the open source models.

8:26But maybe easier said than done. Well, the distillation of their models by the open source models. Yeah. they continue to make advances in places like DeepSeek and Kimi. Without a doubt, with huge parameters. That latest Kimi model had something like 2.8 trillion, I don't know, crazy number of parameters. All right, let's get a deeper dive here. Joined by Seema Modi now, who can weigh in on what the slowdown is going to mean. Obviously, you cover the chip sector closely as well, Seema. What are we hearing? Well, David, Sarah, and Carl, the slowdown, how that could manifest for chips, that is really front and center this morning.

9:02And the note that's getting a lot of attention is the one from Morgan Stanley. Analysts there believe that slowing frontier AI labs actually won't lead to semiconductor orders declining. They're pointing to the quote from Anthropics CEO Daria Amadei, who says pacing AI does not mean halting model training. Yet the market still thinks it will with NVIDIA. The entire semi-sector trading down today, off by 20 percent from their recent high. The larger concern is that a slowdown will lead to a delay in data center. the timeline there, higher inventory of GPUs, ultimately increasing the cost of the built-out.

9:34Now, that's actually playing out with the neoclouds. Reminder that Oracle just reported earnings. And when asked about the pipeline, executives there did not see any impact. GE Renova CEO Scott Strasek will need to address similar concerns when he speaks at the industrial conference on Wednesday for Morgan Stanley. That company, along with Caterpillar, Vertiv, Eaton, all of these that are tied to the AI CapEx boom you can see are trading down at this hour. We spoke to two bankers who are expecting more debt sales in the coming six to eight weeks from the hyperscalers. Case in point, Amazon just raised another$6 billion in debt last week, testing the European market, which Google did as well a couple months ago.

10:11The expectation, guys, is that the rush to secure more debt is motivated in part by politics, yes, but also the speed at which Treasury yields have risen. Now, you guys talked a lot about some of the names that are up today, the potential beneficiaries of an AI slowdown. And worth noting, software, the IGB up about 3 % right now. Salesforce ahead of the Dreamforce conference kicking off. And Palantir, remember, this is a company that saw a 150 % increase in its commercial business. It works with companies to build their own AI-native solutions. If their frontier labs are slowing down, this is seen as one of the bright spots, one of the beneficiaries.

10:48Seema, if we do see a pacing of the training of frontier models, Do we have a sense, though, in terms of inference and this idea that, in fact, you're actually going to not have to move to a next generation of chips as quickly, but the last generation will depreciate at a slower level? Is that a possibility? And who are the beneficiaries? So the depreciation part is a really interesting one. Oracle's co-CEO, Clay McGurk, who you sat down with many times, he actually addressed this point on the conference call last week. They're sitting on GPUs, so many, that they're actually now starting to sell them out.

11:18And they're selling them at a 20 % premium to what they bought them at. So that's actually raised some questions about whether that depreciation risk really is out there or not. To your point, though, if the timeline gets extended, if these companies and the hyperscalers are now sitting on mountains of GPUs, which, by the way, is their biggest expense when you look at the AI buildout, that could potentially change that whole equation. Yeah, interesting reaction today. Nabeas has cut its opening losses in half. And Court Weave off the session, Lowe's. Seema, thanks. All of this talk regarding an AI slowdown, sending odds for an anthropic IPO announcement before November 1, down to 54 percent.

11:55It was about 75 a week ago, according to Calci. Joining us this morning is Byron Dieter, a partner at Bessemer Venture Partners and an anthropic investor. Byron, good to have you with us. Always great to be back. Thanks for having me. What's your general take on all of these discussions over the weekend? It's been wildly entertaining. The AI doomerism stunts and clickbait continues, but I think there's been a constructive dialogue at the core of it. You know, we all have anxiety about the rate and pace of the technology and what's ahead. There's a lot of excitement. It's solving 200-year-old math problems.

12:31It's helping to proactively address diseases that have been incurable, and it's helping build the economy. but fundamentally we need to be responsible in how this technology is rolled out. And I think the critical terminology that the industry is adopting is this notion of pacing and the idea of inspectors and transparency. And I think that those actions are very different from some of the extreme notions of pause and criminalize and halt and these sorts of things, which would be bad policy both geopolitically and economically. But the pacing thing you find legitimate and sincere? I do. And I think what you see is the industry coming together on this.

13:11And so the statements, not only by Dario, who led the cause with the essay, but Sam Altman at OpenAI, Elon Musk at SpaceX, and some of the team members, Demis at Google, we hope and expect someone like Asundar would come in shortly on behalf of Google as well. Microsoft has said some positive things that have some of these themes. We see these public-private partnerships a lot. We saw it in COVID with the pharma companies. We see it now with defense tech and oil companies working together. Back in the global financial crisis, we saw it with banks, where the industry can come together in important, critical times, work with the government in constructive ways, keep the pace, do what's needed, but make sure, first and foremost, that the public is safe.

13:52The things you mentioned have historically involved some government ownership. Is that what you envision this time? I don't envision government ownership. I envision government oversight and deep engagement. And we're going to see more regulation here. What it can't do, and this is where I agree with the president in the statements today and over the weekend, is yield national leadership here. It's critical that this continues to be an area that the U.S. leads, not only within private industry, but globally. For national security, it is imperative. And so those are the bounds we need to play with it.

14:26don't put the public at risk, but continue to push the frontier for all these positives and for our own defenses. But Byron, as an investor in Anthropic, you don't have a problem with what Dario is leading the charge on it. Isn't it directly contradictory to what an investor would want to see in terms of higher returns in an IPO and more growth? I think it's a long-term view versus a short-term view, which is that long-term responsible pacing will yield great outcomes and will also do it in a responsible way so that we don't have these fits and spurts and a need for a stop. I think the worst thing would be to sprint into this and then have to do a hard stop because things get out of control.

15:07If we tap the brakes, this is the car going into a corner, where you tap the brakes, you're able to enter in a responsible way and accelerate faster on the back end. I think that's what the industry is doing right now. We have to make sure that the industry works together here because you bet our adversaries are not going to embrace it in the same way that we are. And those are the balances. But I think giving up a little bit of short-term economics makes not only prudent sense for humanity, but also long-term business sense to do it in a responsible, managed way that enterprise customers are going to trust and that the government will trust you can help partially self-regulate and not completely seize the industry.

15:42Byron, you mentioned China. Of course, not all the open source models are from China, but there are plenty. And it's not as though open source has not already been something that investors have been trying to understand the implications of for the likes of anthropics, future business or open AIs. How do you see it, particularly given this potential for pacing? I think we're going to continue to have a world where the frontier models drive the majority of the leadership and capture the majority of the economics, but the open source models are going to have a critical role in this ecosystem as they have in prior software waves.

16:14And so the important thing there is for the US leaders in open source models, such as the effort that NVIDIA is doing and many of the private businesses, they need to join the same mindset. They need to have the same responsible guardrails and they need to be subject to the same transparency and engagement. It's highly unlikely that in the final pillar of Dario's essay, the globalization goals are met. We do not reasonably expect China to voluntarily back down from their attempts to leapfrog us. And so those are going to be the balances that we need to be very aware of and and track very closely.

16:47The other thing is that this technology will help to manage and govern and police. And so having multiple agents, multiple platforms is good, not only for competitive markets, but also for competitive insights and for some notion of group policing, which I think will happen in a rational way. When Altman says no IPOs this year and that it would be ill-advised given the safety concerns, you think that was ever the plan? I don't think many people are surprised by the fact that they're not going public this year. They're not ready for many reasons. And so it's just it's amusing that he's trying to then throw a wrench in anyone else's plans by extension.

17:27But the transparency argument is exactly backwards. Going public forces transparency, reporting and accountability. That's why many companies have stayed private longer is they've wanted to avoid that. And so I see going public as a positive step in this notion of letting the public see what's happening, letting the government be more involved, being subject to immense reporting compliance, regulatory oversight. But Byron, I'm sorry to cut you off, but what kind of narrative is it sending to investors, a company about to go public, that without more oversight, we can't necessarily control the pace of what we're doing?

18:03So I think it's saying both, which is we are open to the transparency of public reporting. which is by definition more oversight. And we are leading the industry in self-reporting transparency inspectors and oversight. And so I think it's openly embracing more oversight in both areas. And I welcome the rest of the industry to do the same. Well, you know, it's going to be interesting reading the S1 from Anthropic when it comes to the risk factors and what's included there, I would think. I'm just curious from your perspective as an investor, Has this changed anything in terms of your approach, what we've been seeing over, let's call it, the last five, six days?

18:40Yeah, the competitive dynamic continues to heat up. But I think you combine a lot of what's happening in the foundation model with the activity in the application and platform stack. And I think that's excitement. We continue to believe that there will be a thousand flowers that bloom on top of these great foundational layers. The world is not going to consolidate around two or three model providers. You've seen a little bit of a resurgence in the software index, which shows that people once again think that systems of record and vertical businesses and API businesses have fundamental value, that they may have been a little aggressive in their overselling.

19:12And we believe that fully. We also believe that we're going to see this next wave of AI-powered applications that build on top, and this agentic world becomes available to businesses and consumers in a really powerful way, and fantastic businesses are going to be created as a result. Yeah, I mean, well, a lot, you know, Meta's Muse has been incredibly popular. I've been getting the instinct is another one. Are we going to see more of those? Those are on consumer front, but these agents doing all sorts of things for you? We are, you know, perplexities in that world as well. This idea of how do you unleash this power for individual use?

19:50How does everyone have an assistant in their pocket? How do you have, you know, the power and promise of technology actually coming to you? Apple's upcoming release promises to have much more capabilities here. We do believe these agents and this human-machine pairing, to tie it back to your earlier job statement as well, we're seeing job growth in these leading companies because the combination of what people can do with this technology is the future. We think that's not only in medicine and fields where you have the human touch at the end, but it's also in knowledge working places where you're unlocking the power of research and you're unlocking the power of capability for these individuals.

20:26Byron, appreciate it. A lot more still to come. Want to get you on this on-premises push as well, as some may want to keep some data to themselves. Byron Deeter, we'll talk soon. Thanks. Lots ahead. Always fun. Cheers. Just want to point out to everybody that the 10-year Treasury yield has hit 5 percent. Big, big round number, which I think speaks to this sort of relentless rise we've seen in recent weeks of Treasury yields. Bonds selling off, Yields going higher. It is sparked in large part by oil, which continues to move higher. Oil prices, again, Brent at 109, the latest catalyst. They're still fighting between the U.S.

21:04and Iran. And now the Houthis are involved. And this critical east-west pipeline that the Saudis have been using to ship oil also remains challenged because of some of these Houthi attacks. Oil prices higher. Inflation expectations go a little bit higher. And also expectations for more Fed rate hikes get priced in, which is a big part of the story. You know, now the market is expecting like more than 85 % odds that the Fed hikes interest rates, raises rates this week. That was 35 % odds two weeks ago. So a lot's changed, including. Yeah. And not to mention the cost of capital for many of the companies that we're talking about that are still aggressively funding a huge build out and borrowing to do it.

21:45It's not as though you can't have a boom at 5%. We've seen it. Obviously, during the dot-com boom, we had rates that were above this. But it does make it more expensive, and it does change your return calculations a little bit. Yeah, remember Rishi Sharma of Rockefeller came on and said 10-year 5 % bust the AI trade. Yeah. There's a lot piled into that one. But we are seeing some of these AI names, especially the chips down today, NVIDIA, Micron, AMD, maybe less on rates, which isn't helpful, but also on this pacing of the frontier models. Here's our roadmap for you for the rest of the hour. After the break, should you ignore the AI noise?

22:19One market expert says the S &P 500 could easily push to new highs here by year end. Plus, we will be joined by the CEO of a private AI company, Samba Nova. It is taking on NVIDIA with what it calls the fastest chip for agentic AI. And how much higher will oil go? We'll get the latest developments in the Middle East that are sending crude sharply higher to start the week, up some 55 percent in about 10 weeks. Squawk on the streets. Back in a minute. Legacy credit scores only look at a brief snapshot in time, and that limited view often leaves millions of qualified credit seekers out of the picture.

22:57Vantage Score is changing that by modernizing credit scoring. Vantage Score uses 400 % more credit and alternative data to create a fuller picture of financial behavior, including trended credit data, rental payments, and timely utility payments. Vantage Score safely broadens access to the credit economy and brings 5 million mortgage-ready borrowers into the market. That's why top lenders like Rocket Mortgage, as well as nine of the top 10 banks, rely on Vantage Score 4.0. With higher predictability and greater access to credit, everybody wins. Get started at VantageScore.com. Hi, football legend Clay Matthews here.

23:37Caesar's Sportsbook has completely transformed their app. better design new ways to bet like flex parlays more rewards smoother ui it's barely recognizable so bet with caesar sportsbook the app that's been nipped and tucked to perfection must be 21 if you or someone you know has a gambling problem crisis counseling and referral services can be accessed by calling 1-800-GAMBLER hey fidelity can i get a second opinion on stocks in the fidelity app with fidelity it's easy to get an outside opinion from independent experts in a single score and then when you're ready trade u.s stocks and etfs with no commissions that's right i am always right investing involves risk including risk of loss zero dollar commission does not apply to customers designated by fidelity as a professional equity trader a limited number of etfs are subject to a service fee of 100 see details at fidelity.com slash commissions fidelity brokerage services LSE, member NYSE SIPC.

24:34Welcome back. Ten-year treasury yield just hitting 5 percent. First time we've seen that since 2023 as oil prices rise and AI fears ramp up. We are joined here at Post 9 by Bespoke Investment Group co-founder Paul Hickey. Welcome. It's good to have you. What does a ten-year at 5 percent say to you? So I think rising borrowing costs are, you know, are problematic for the market and oil prices, which you mentioned. We refer to it as the three-headed monster oil 10-year yield in the dollar. And when they're all rising in unison and near 52-week highs, you start to see headwinds for equities. And we're seeing the 10-year is closer to a 52-week high right now than crude oil is.

25:10So they're both way up high in their 52-week range. 10 years right near 52-week high, crude oil is like 80th percentile of its one-year range. And the dollar index is elevated, but not as problematic. But that's a headwind for stocks. It is. But on the flip side, and this is where you've had this interesting push-pull tension, is that earnings growth has been so good. So do these three things signal that that can't last? No, no. I think it's a short-term headwind here. I think that's the thing. We're past earnings season right now, and we don't have the earnings news to prop the market, not necessarily prop the market, to support the market here.

25:48And it's a lull. We're in a very seasonally weak period of time, and the Fed's coming up this week and all signs are they're going to point to, you know, they're going to hike rates. So I think there's just a lot of headlines for investors to focus on right now and not to mention the AI news over the weekend. All this stuff is just, I think, just caused people to want to take a step back and reassess things. But, you know, once we get through the middle of September, that's the seasonally week period. And if you don't see, if you see the market hang in here, like right around now, I mean, we're way off the lows from today.

26:20So I mean, And that tells me that the fears of earlier this morning and last night about the AI trade aren't as significant as people think. Because you don't think it'll happen? Or if it does, it won't have much of an impact? I think the investment's going to keep going on. I mean, we were just talking before we came on that the interest rate's going up. If we're really concerned, if AI spending was really going to slow down and the investment was going to slow down, it would have lower pressure on rates, not only because of the borrowing that we've seen, but also AI has been a big economic driver.

26:52So if we're going to see that slow down, that would also be a headwind because of being slower economy, lower rates. In other words, this doesn't change the CapEx assumptions of the markets. I don't think so. I don't think so. I think, I mean, we're some of these fears of these end of the world fears, I think are a little unfounded. You know, it's still in the digital world, AI is rampant, but in the physical world, there's no AI in the physical world yet, really. And so I think it can cause problems. All these new technologies, as you hear time and time again, cause problems, but there's more benefits than negatives.

27:26We are in a weird place where we have to debate the future of humanity to figure out what the stock market should do on a given day. I mean, the traffic was so bad here today, I thought it was rogue AI agents gone wild. But, you know, coming up with the Fed this week, you know, you see we saw the headline Friday, lowest core CPI in five years. And then right after that, odds of a rate hike surge. When in your life did you think you would see that five year low in inflation and rate hike odds surge? I'm not saying that a month to month number was a little hot. Month to month number. But we've we've been consistently improving the core CPI numbers coming down.

28:02So, you know, that just seems to be, you know, you do lose patience at some point. But it's just such a these headlines and all these headlines, like you just said before I started talking about, you know, we have to worry about AI ruining ending the world. And that's not really if we're going to take the promises of abundance seriously. We need to take some of the downsides seriously, don't you think? Yeah, no, there are going to be concerns. And you do have to focus on this. But the headline, there's more than the headlines. You know, there's these aren't all altruistic motives, I think, by the in unison of all three labs coming out right at once saying we need to slow things down.

28:36There is some benefit to them from this. And we still have to sort out what the legal implications are going to be of when AI does go rogue, who's at fault. But end of the world, I don't think so. You know, Art Cashin would always say, don't bet on the end of the world. I wonder what Art would say. So don't bet on the AI ending the world because it only happened once. I am a day's blog. It's not about gunfire. It's about the Internet breaking down. No, no, no. Not yet. Not him. But these other headlines that we saw last week that, you know, four years, 10 percent chance that we're going to. I mean, I think that's a little bit of fear mongering.

29:09I miss our cash in. Thank you, Paul. All right. Thanks. Good to be here. Good to have you. I'm bespoke. Still to come this morning, the chip startup taking on NVIDIA. We're going to talk with the CEO of Samba Nova about what they call the fastest agentic AI chip. And then the president saying he is not in favor of any AI slowdown. We'll talk about his fears about China when we come right back.

29:33Hi, football legend Clay Matthews here. Caesar Sportsbook has completely transformed their app. Better design, new ways to bet like flex parlays, more rewards, smoother UI. It's barely recognizable. So bet with Caesar Sportsbook, the app that's been nipped and tucked to perfection. Must be 21. If you or someone you know has a gambling problem, crisis counseling and referral services can be accessed by calling 1-800-GAMBLER. 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.

30:14and 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. What happens when you combine a cozy night in with the whole family in matching Old Navy jingle jammies? It's a holiday moment of joy, at least for the time it takes to snap a picture. Shop a plethora of prints this year in jammies for everyone. Adults, kids, toddlers, babies, and even pets. Grab matching sets and classic plaids, whimsical designs, and even Disney-themed prints.

30:51Plus, they have coordinating graphic tees, sweatshirts, cozy socks, pet sweaters, and fleece blankets. Get more Mary for your money at Old Navy this holiday season. Welcome back. Let's get a CNBC News update. Contessa Brewer has that for us. Contessa. Hi, David. L.A. Clippers owner Steve Ballmer is apologizing nearly two weeks after the NBA suspended him for a year. The league also fined the Clippers$30 million and forced the team to forfeit its next five first round draft picks, all for violating the NBA salary cap rules. In a social media post, Balmer apologized to fans, employees and fellow owners.

31:29He says the team is complying with the penalties, paid the fines and is moving forward. Novo Nordisk believes shorter is better. The Danish drugmaker behind the blockbuster weight loss treatments of Wigobi and Ozempic is shortening its name to just Novo. It's losing weight, so to speak. It's working to win back market share. The company has faced stiff competition from rival Eli Lilly and pressure from shareholders to deliver new products. And Practical Magic 2 topped the weekend box office, but a$30 million domestic take was below estimates. Still, the long-awaited sequel ended the six-week reign of Spider-Man brand new day atop the box office.

32:07According to Variety, Spider-Man is on track by today to become the highest grossing movie in domestic box office history. That is quite an accomplishment. All right, Carl, I'll send it back to you. Yeah, Tom Holland is doing OK this year, Contessa. Thank you. When we come back, the president responding to the AI industry's call for a slowdown, why China's top of mind. And we'll talk to Ben Reitz as Amelius, who is warning the biggest concern for the AI trade is the politics that could lead to what he calls stifling regulation and AI backlash in just a bit. Welcome back. We're Washington racing to set up these new AI guardrails.

32:45But the president just doubling down on his call against a slowdown. Megan Cassell is in D.C. with some details. Morning, Megan. Carl, good morning. The president is defending his approach of minimal regulation despite all that we heard from AI leaders this weekend. He says the race against China is paramount and that he doesn't want to do anything that would hinder the U.S. in that competition. So just in the last hour, the president posting on True Social that the only control or guardrails that AI needs is a strong and smart, high IQ president. And that the U.S.A., he says, has that in spades.

33:14He says the Trump administration has stopped AI people from doing bad or potentially bad things like Dario of Anthropic. He says Dario is now pretending to be a, quote, perfect little angel. He also says that the White House already has tremendous criminal and regulatory power over these companies. He went on to write that there is a sick conspiracy going on against AI and data centers. And the only one that is happy about it is China. Now, guys, that came after the president on Sunday was already adamantly dismissing these concerns over AI. He told reporters that negative voices were bringing up things that won't happen.

33:48And now just in the last hour, we also just heard from the vice president on this for the first time, J.D. Vance, saying the administration is concerned about the risks, that they want to be thoughtful about them and that Americans should not be scared. Vance also said he found it, quote, a little bit weird to see frontier AI companies asking the government to regulate them. Now, that echoed what we heard from AI advisor David Sachs over the weekend as well. Sacks saying that he supports Sam Altman's and Dario Amadei's decisions to be responsible if they want to slow down, but to stop pretending like you need anyone else's permission.

34:19Guys, a long post there, but essentially he was giving cover to Washington to say they can sit this one out. Guys? I mean, it feels like, you know, there are some in Washington who want to ban it and stop it. And then there are some that just want to keep going because we have to compete with China. Is there anything in the middle? because, I mean, clearly what we need is a little bit more nuanced response when it comes to government guardrails. That's right. We need to end up somewhere in the middle. That was part of Sachs' point. He said we need to do something better than Bernie Sanders' burn-it-all-down approach and stop everything from moving forward.

34:48There's a lot of talk on Capitol Hill about needing to do something. And Vance actually did say that what they need is the best approach would be to work between Congress and the White House. But the White House is really leading on this, and they don't want to do much here. Guys, it was less than two weeks ago that I was down in Chapel Hill for the G20 Innovation Summit led by the Commerce Department. We had a lot of coverage from there. There were AI leaders and tech CEOs there as well. And what they settled on was a very much a light touch regulatory approach. And they got so many countries to sign on to that, including Europe, including China.

35:19The idea being that they were going to reserve new regulations only for novel technologies, but to mostly sit back and let it move forward. That's really the baseline right now. and even amidst all this new talk over the weekend, that's still the baseline, clearly, based on these latest comments that the White House still thinks they can sit back. And if the companies want to regulate themselves, they can. But this administration doesn't really have the appetite, at least at this point, to do much about it. Yeah, I did take note of Mike Rogers' tweet over the weekend running for Senate in Michigan, Megan.

35:48My experience as Intel chairman told me the time to stop a crisis is yesterday. The first role of our government is to keep us safe. So there's some high-profile Republicans who might not see eye to eye with the White House. It's interesting that this is all happening in election season, because we are starting to see comments like that, even Republicans willing to push back on the White House a little bit and get something done. It also means that this is not exactly the time for Capitol Hill to be very focused on this. Speaker Johnson seemed to be dismissing the idea that Congress would need to stick around and do anything.

36:18And is that because he really doesn't want to see Congress do anything? Or is it also because he wants his lawmakers to have a chance to head back to their districts and keep campaigning. The timing is such that perhaps it's a little bit of both. So, you know, maybe after we get through the midterms, then we'll start to see some sort of a stronger response from lawmakers. But for now, they're distracted. But that does mean that they're listening to voters. And the president might think this is a sick conspiracy, as he called it, against AI and data centers. But there's no denying that is a huge, huge issue this campaign season.

36:48Yeah. And meanwhile, the technology keeps moving apace. Megan, thank you. Megan Casella. When we come back an AI chip challenger looking to take on NVIDIA, already working with the likes of Intel and SoftBank. We're going to be joined by the CEO of SambaNova. That'll be next to you. SambaNova, one of a growing number of AI chip companies, think the likes of Cerebris as well, that are looking to challenge NVIDIA's dominance. The company makes AI systems designed to help entrepreneurs or enterprises, I should say, run large language models and other AI applications at scale with a focus on fast inference and, of course, as low a cost as possible.

37:24Joining me now in a CNBC exclusive is Rodrigo Leong. He's the co-founder and CEO of Soundvanova. Nice to have you here. Thanks for having me. On an interesting time as well. I want to talk a lot about the company, but I'm curious as well, investors this morning trying to understand a world in which perhaps there's a pacing of the large language models training for at least the frontier models. But others telling me, well, it's only going to be good for inference. That's the center of your business. What is your take on sort of the current moment? Yeah, well, what an important time for us to be in this industry.

37:53I think these frontier models, and it's great that it's getting the attention, security, incredibly important. And as we've talked about, infrastructure is also another big challenge. Inferencing is going to be the center of the AI economy. And so here we need to tackle the power issues, the cost issues. That's something that we can all agree on that as we move into inference, the cost has to come down. Speed is obviously key here, and there are any number of challengers to NVIDIA I just mentioned. What about your product that you can cite that actually we can believe makes it perhaps the fastest in terms of these workloads?

38:29Look, I think speed is going to be something that everybody's going to be racing towards. But ultimately, like I said, I think cost structure of that speed is going to be incredibly important because we want to democratize this. We want to make this available to everybody. And so being able to drive good payback in order to allow companies to actually make money on an inference is going to be incredibly important to actually do a sustainable business in inference. So what does that mean when you talk about cost? I mean, it's not just speed. What are we talking about? We're talking about six months.

39:00Six months, that's the amount of time on Salmanova that it takes you to pay back for the infrastructure invested in. Today, most companies are taking 12, 18, 24 months before they can actually make their money back. So for companies to be able to achieve sustainable growth, sustainable investments that allow you to make your money back, you've got to find a way to get your money paid back in a quick enough time because technology is moving really, really fast. Yeah. And of course, a company like yours also needs capital. You've been raising a good amount at it. I think July 8th, you raised a Series F billion at 11 billion post-money valuation.

39:35But you also, Rodrigo, talked about a second close coming. Has that happened? We're almost finished on that. Really excited to see a number of really excited investors to come in. As you're seeing, more and more of the public investors are coming into the private round. And so we're excited to actually share those shortly. But look, it's going to be incredibly important for us to continue to bring in great investors that bring the company into a broader and broader visibility. What's your relationship with Intel? Because Lipu, I think, is executive chairman. There's rumors that they might buy you.

40:04Yeah, one of the great things about Lipu is you have known Lipu for 25 years. He was our chairman long before he was actually CEO of Intel. And so over the years, he's been incredibly supportive of the company. With Intel, we've actually signed a multi-year relationship where we're developing products together. We're actually going to market together and really driving this notion of lower cost of inference, driving that cost structure down so that everybody can be part of the AI economy. So what are your expectations then if we can measure sort of the cost of inference now and where it's going?

40:35Can you give me some sense as to the expectations in terms of the reductions? Well, if you've got to look at where things are today, it's a combination of speed, power, data center. And one of the things that's incredibly important with some of the technology being a much, much lower power, we can actually use existing data centers. No more build outs. Brownfield data centers that exist today with existing power, existing cooling, we can deploy into those environments. If you do that, cost of inference is going to drop 10x. 10x. Do we measure it on a revenue per gigawatt basis? How do you actually, and what are the metrics that are important here?

41:10Cost per token served. And so if you think about every token that we issue, we want to actually see how much did it cost in terms of the cost of acquisition chips, data center, power, cooling, all those things together. What was the total cost? And so when you drive power down, when you drive speed up, when you drive concurrence up, many users at the same time, you can actually then generate a much, much higher output for a fraction of the cost. But you're bringing up an interesting idea here, which is the advances in the technology you're going to make it so that perhaps we don't need as much compute as we thought previously?

41:40Or am I not getting the right conclusion here? Because I just heard you talking about existing data centers as opposed to new ones. Yeah, exactly. And so there are lots of data centers in the world today. The problem is that most of the new technologies need liquid cooling with much higher power outputs, much larger infrastructure in order to actually deploy these large existing clusters. If we can find a way to actually reuse existing data centers, brownfield data centers that are air-cooled with the power already allocated to it, then you don't have to do that. But that's where some of it fits.

42:11That's part of the solution. It's not the entire solution, but part of the solution to actually take your technology and actually deploy where the data centers already exist, where the power already exists, and that allows you to drive the cost structure down, allows you to make inference where everybody's already at. Do you have any safety concerns? Look, I mean, when it comes to models, it's incredibly important for us to be talking about safety. I think it's great that the world's coming together and thinking about that. I think it's less about the slowdown, but the acceleration of the thinking around safety.

42:41What do we need to do? And some of the banks, for example, some of our customers have already taken steps towards it where they bring the AI on-prem, bringing the AI inside their own infrastructure to protect the data of their customers. And so this is really exciting about kind of what customers like JP Morgan is doing exactly that. Let me bring it safe, make my customers' data safe within my own firewalls. And that's one way that people are starting to think about protecting the data so that you can actually feel good about this transition. This is the big discussion now among law firms. You mentioned banks.

43:13But, yeah, after it solved a math problem using data from some other mathematicians, maybe some want to keep this entirely on-prem. Yeah? Yeah, we're seeing this thing. We're calling it repatriation of infrastructure, where you have all this infrastructure going towards the cloud. It's more open. And now people are starting to realize for a class of use cases when it comes to AI, that data is so important to protect. And so why don't I bring it back, repatriate into my own firewalls, something that I've tested for 25, 30 years, protect it in the way I've always protected my data and still get the benefits of AI in a way that allows you to actually safety make that transition.

43:51But to Sarah's question, I mean, you've been a semiconductor engineer for, what, 20 years or 30 years. That's why you look far younger than the years would suggest, Rodrigo. Are you concerned, though, and just in general as a citizen of this planet in terms of the advancement of this technology, the way some of those at the forefront are? Well, look, I mean, it's an important topic. The AI genie is out of the bottle. I think one of the things that we have to think about is how do we use it safely? Now, you have the models on one side and infrastructure on the other side. And so that's why I said there are two sides of the challenges and where there are safety issues that we need to be very, very thoughtful about.

44:32Same. We have energy issues, energy crisis, data center crisis on the infrastructure side. And we need to be attacking both of those. And our solutions are really focused on the infrastructure and making it much cheaper, much more sustainable, much more cost effective. How are you seeing the future of the company? We've heard OpenAI is probably going to go public next year. Would your company go public as well next year? Is that a possibility? Look, I think we'll see. We'll do it when it makes sense for the company. We just closed, like you mentioned earlier, a billion-dollar raise. And so we're in a good position to continue to invest in the technology to drive this goal of ours, which is dropping the cost of serving, and actually get infrastructure much, much cheaper.

45:12And so if that makes sense for the market, it makes sense for the company. Where did the capital from that billion largely go? Look, we're continuing to build out infrastructure. We're buying supply. You know, as you know, supply chain is another challenge that, you know, there's long lead times. And so we're investing in that. So that allows us to actually make sure that we have chips and infrastructure when the customers need them. Rodrigo, appreciate it. And we'll keep keep track of your progress. Thank you. Yeah, thanks for having me. You're welcome. All right. After the break, what the options market is signaling about this AI driven volatility today.

45:44We're going to head to the SIBO in Chicago next. Welcome back. Volatility index jumping here as investors navigate these rising AI fears. Let's get to Oliver Rennick at the SIBO in Chicago with a look at what the options market is actually signaling. Oliver. Hey, Sarah. Market makers and options got knocked a bit off balance at the open this morning as the S &P 500 dropped right to last week's lows. And the strikes with heaviest volume shifted down about 50 points from last week to 760 in SPI today, which looks like a very crucial level we need to hold. One analyst described the potential volatility if we crack that area as perilous.

46:19Now on Friday we saw a notable crush in VIX which erased two days of gains before the weekend. But we immediately recovered that this morning and traders did have a strong knee-jerk reaction to buy VIX calls. More than 200 ,000 call contracts in VIX traded in the first 45 minutes compared to just 40 ,000 puts. That's more than twice the 30-day average volume in VIX that is heavily skewed towards calls. The two most bought contracts this morning were the 23 and 35 strike calls expiring Wednesday, which are nickel and dime flyers on a huge spike in vol around the Fed. But what's key to note here is that when we left on Friday, options were pricing a below average move in the S &P 500 compared to other weeks around Fed meetings.

47:05So arguably vol was cheap. And the message might be that stocks can withstand interest rate volatility on its own. But if combined with AI uncertainty, that is a reason to buy insurance. Back to you guys. We potentially have both this week. Busy week for you with Triple Witch, Oliver. Thank you, Oliver Rennick. When we come back, how the AI industry's doomsday warning might impact the IPO timelines for Anthropic and OpenAI. That's after this. All opinions expressed by Squawk on the Street 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.

47:42You 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 his opinion. Such opinions are based upon information Squawk on the Street participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Squawk on the Street disclaimer, please visit cnbc.com forward slash Squawk on the Street disclaimer. This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab.

48:12Schwab 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.