11AM Hour: NVIDIA After Jensen Huang: CEO Exit, AI Chips and Washington Fallout

0:00This 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. Computers are getting smarter, Silicon Valley's getting weirder, and AI is taking over. At least that's what everyone keeps telling us.

0:36Welcome to Machine Gods, a new NPR podcast that will be your field guide to the AI-powered future. We're veteran tech journalists with front row seats to the industry. And twice a week, we'll make sure you get smarter about AI, so you know what's real, what's hype, and what might come next. Listen to Machine Gods from NPR on the NPR app or wherever you get your podcasts. Good Thursday morning. Welcome to Squawk on the Street. I'm Sarah Eisen with Carl Quintanilla, live from Post 9 of the New York Stock Exchange. It's the stunning corporate shakeup heard around the world. NVIDIA CEO Jensen Huang resigning following reports of a second affair.

1:12CFO Collette Kress taking the interim role while the board searches for a permanent replacement. We've got the story covered for you from every angle. Shares of the chip giant take a hit, but they are well off the lows. The stock getting at least seven downgrades today and a number of price cuts. We're joined by one analyst who calls it a worst case scenario. Plus author Stephen Witt with us. His latest book, The Thinking Machine, details Jensen Huang's NVIDIA journey. We'll get his thoughts about whether this transition could be a crisis for the AI boom. And could the shakeup reshape the fight over AI chips with a new Democratic majority pushing for tougher export rules?

1:46We're going to check in with former Biden White House AI czar Ben Buchanan. All that said, S &P goes positive here back to 7628. IT obviously had some difficulty at the beginning. Session low on NVIDIA was about 150-ish or so on the news of Wong's departure, but has come back. Take a look at the 10-year as the bond market's back to work. 507 is about a one-month high. Let's get more on NVIDIA, bringing our next guest who's out with a new note. They're calling this a very sad day for U.S. leadership in AI. Maintaining an overweight, though, on the stock cuts its target from 350 down to 250. Joining us this morning, Canter Fitzgerald, Semiconductors Analyst, CJ Mews.

2:25CJ, welcome. Thanks for starting the hour with us. Yeah, good morning. Thanks for having me. Walk us through your thesis at the moment. Well, you know, I think that, you know, it is a very sad day. You know, we are giving up the lead in AI, in my view, to China. Jensen was the most optimistic supporter of AI, obviously created the foundational technology that is enabling frontier models and for the U.S. to be a leader in AI. And I think that him being forced out is a major loss for NVIDIA and also major loss for the United States. So, again, a very sad day for not only Jensen, not only for NVIDIA, but I think also for the country.

3:08Do you think he could have been effective had he stayed? You know, I think that there were shareholders that wanted him to stay and fight. I think the challenge is that, you know, this is probably and I'm making I don't know, but two, three, four month investigations. And I don't think a corporation would allow that type of uncertainty. And so I think because of that and what's likely coming, particularly with the Democrats taking office in January, that that uncertainty and the prolonged kind of investigation made it, I think, incredibly difficult for the board of directors to keep him on, unfortunately.

3:47Yeah. I mean, Warren's already on the tape saying his decision to resign does not absolve him or the company as a whole of responsibility for putting our Nats at risk. They still owe Congress answers. It feels like in terms of the earnings picture that it's really now maybe a question of 28, not 27. Oh, 27 is done. So, you know, they'll earn$16 next year. And for 28, you know, I think that's largely done. I think the question would be how much business into Southeast Asia is embedded in that in that kind of backlog. And, you know, is that at risk? But but otherwise, I think, you know, 28 is going to be another solid year.

4:32We model twenty six dollars in earnings. So I think the real risk is kind of twenty nine thirty. But just to hit real quickly on China, you know, our view, Jensen's view, and I completely agree with him, is that you want to diffuse AI on American technology globally, including China. And so I think the China Hawks have it just dead wrong. We want China on NVIDIA GPUs. And in fact, China realizes this. And that's why the Chinese government will not allow shipments into China. And so I think, you know, Washington, D.C., you know, in terms of the China Hawks, have that position wrong, in my view.

5:10Yeah, I mean, to that point and something you said earlier, I just want to underscore because I think it was important. And you said that this is a competitive disadvantage for the U.S., that Jensen Wang is no longer the CEO of NVIDIA. Why? What do you mean? Why can't someone else do that? Well, I think that, you know, from a frontier model perspective, you know, they they've offered a bit more doomerism. And I think Jensen has had a very optimistic kind of outlook. He's enigmatic. You know, he's he's a, you know, a leader that you want to follow. So, you know, the industry is not going to fall apart.

5:48That's for sure. You know, there's very smart people. And I would like there's 42000 very talented people at NVIDIA. So I wouldn't give up on NVIDIA also, right? But, you know, he was the spokesperson. He was the most optimistic around a technology that frightens a lot of people. And so it's a loss. Do you think customers, does this give them an avenue to diversify or at least be tougher on terms? Well, you have to think about it, right? Broadening your base. You have to think about building your own silicon. And then I think from a pricing perspective, you know, I do think that I know investors are worried about negative impact and margins.

6:29We'll see if that happens. I think the one critical area to watch will be NVIDIA's positioning getting wafers from TSMC. That remains the biggest bottleneck. NVIDIA is by far the biggest customer at TSM. And so if they can continue to maintain that, you know, fantastic kind of trust and relationship, then they'll be in a good spot market share wise. But, you know, if wafers push in another direction, then that would be your first indication of market share moving the other way. Of would be beneficiaries. And we've had Google, AMD, Broadcom all up today. AMD is a one month high. Who do you think benefits the most?

7:09Well, I think, you know, Frontier Models, building their own silicon, that would be Broadcom. And Broadcom is incredibly cheap. So that would be number one. Number two, AMD. And this stock, as you highlighted, has had phenomenal performance over the last month. And I think you rightfully point out Google, right, as they build their own TPU, you know, through Broadcom. And that's another player. But, you know, in my world of semis, you know, I would focus on Broadcom and AMD. So what's it worth ultimately? You've lowered the target to 250 from 350, took it off the top pick list. How do you quantify the value of Jensen Wong to this stock?

7:49You know, that's the million dollar question. And again, you know, on a positive note, there are very talented people at NVIDIA. So I don't want to discount that. On the other hand, you know, Jensen is one of a kind founder. and I think you can count on your hand the number of people that can build a business like him. And so the key will be how do they maintain their technological roadmap over the coming five years. And if they can do it, then I think that you should put a higher multiple on NVIDIA, but I think the market today will put a wait and see. You know, we said$150 as a floor. You know, that's roughly, I think, nine times what they'll do in 27 earnings.

8:34We'll stick by that. But there's no rocket science around picking that floor. Yeah. Although we got it today and a lot of retail buying in the first half hour trade, one of the biggest first half hours for retail, I think, in the stock's history. CJ, appreciate it very much. Please come back soon. Thanks for having me. CJ Mews over at Canter. Let's talk about the impact of NVIDIA on the AI trade in the broader market. Omar Aguilar joins as CEO and CIO of Schwab Asset Management, because this is an unusual one where it impacts so many different companies, either directly through investments and financing or as partners and customers.

9:12Omar, are you surprised we're not seeing a bigger impact? I think in a certain way, you know, the correction we had in the AI trade last week, you know, gave us a little bit of a pause for the potential impact of the news over this week. But certainly, you know, I would not be as concerned as the large players in the AI space. I would not be as concerned as the hyperscalers or the impact on any of the competitors of the stock. I think it's really more like the ones that are using NVIDIA particularly for their own financing. And I think those smaller players in the AI space are the ones that I will be a little more worried.

9:52What about the AI trade as the driver of the economy? And, you know, I don't have to tell you about how much investment is going into building this whole thing out. And questions first, you know, from the midterm elections to Jensen, I mean, all these potential headwinds when it comes to whether that CapEx can continue. Or do you think it just does? Well, the CapEx cycle, you know, has continued. It's just going to a different year. What we have observed is that there is a deceleration on the CapEx. doesn't necessarily stop, but certainly the amount and the size is decelerating. And I would probably differentiate between, you know, the capital expenditures that have gone into the hyperscalers, that still, we're talking about like around$300 billion that are going to be financed into CapEx going into 2027.

10:41So what is still in a lower gear than what we had before is still pretty strong. Now, we also have to go through the process of the data center CapEx, as well as just the overall cloud infrastructure build out that has gone into that. So I think a little bit of that transition on CapEx is going to go from companies that are the enablers to companies that are the adopters. And I think that component is still going to be playing into 2027. So we wouldn't necessarily discount that the AI overall impact into the economy is done. I think it's just the way that this is going to be distributed across different players.

11:18But does that mean that power generation picks and shovels, that trade is getting a little bit long in the tooth? I think it's just extended, Carl. I think the many pieces that we're still yet to see, especially because of the way that, you know, politics will play and how this is going to go is, you know, there's going to be a little more friction going into this and there's going to be a little bit more delays. I don't necessarily think that particularly when it comes down to capital markets, financing, debt markets, and then going into what that goes is going to be as different as what we have seen.

11:53It's just going to be longer, longer timing. I think what is going to be critical, too, is going into the equity marketing for the first two quarters of next year is going to be that productivity gains that come from the AI capex. And I think we haven't tested that yet. I think that's going to be more critical to watch in the first two quarters of 27. I think the other thing that bodes well for the overall market, Omar, is that even before the scandal, Nvidia wasn't exactly one of the biggest contributors to the market gains. I mean, there was already evidence that the AI trade was broadening and strengthening well beyond the infrastructure trade.

12:28It's Apple, advanced micro AMD, Amazon, Microsoft, Eli Lilly, Johnson & Johnson and Chevron. Those are some of the biggest contributors to the S &P's gains. So I do wonder if this just sort of accelerates broader leadership. Absolutely. I think, you know, we have gone into these phases and we have discussed this component. You know, again, the biggest thing to consider is that the hyperscalers and what we call those enablers that included NVIDIA, obviously they have used their free cash flow power to be able to finance and continue that capex cycle in a certain way. That has been, you know, a significant portion of earnings growth in the S &P 500 and a significant portion of, you know, just GDP growth over the last 18 months.

13:15When we go to the next phase, which is these adopters, you know, going back to your point, we've seen this rotation going beyond those enablers into the adopters that are not necessarily in the technology space. We've seen adoption going into healthcare. We've seen adoption going in industrials. We see industrials in materials. So those sectors have started to just become that extending that capex cycle in a different place. Omar, thank you very much for weighing in on the broad market impact. Omar Aguilar from Schwab Asset Management. A lot more still to come on Jensen Wang's resignation coming up.

13:48We'll talk to Stephen Witt, author of Jensen Wang biography, The Thinking Machine. And we'll get former A.I. Zarr Ben Buchanan's reaction, why he believes NVIDIA will continue to be a, quote, central fulcrum of A.I. progress. We're back in a moment. Hey, what's up, guys? It's Haley Bailey. Okay, I need to tell you about something. I just got YouTube Premium. It's got tons of awesome features like offline downloads so I can download my favorite videos before I travel and watch them whenever I don't have Wi-Fi because we all know airplane Wi-Fi is the worst. I get ad-free, I get background play, and there's like a ton more in there.

14:20You should try it. If you like YouTube, you'll love YouTube Premium. Try it now for two months free at youtube.com slash premium. Trial eligibility varies. Terms apply. Cancel any time. That's a mouthful. Traders don't need a prettier app. They need a better angle. Schwab's think-or-swim trading platforms were built for real traders like you. They have an insane amount of chart studies. I'm talking over 300 studies for virtually any strategy. They also have integrated risk management technology and nearly unlimited customization so you can shape the platform to fit the way you trade. And when you do that, you can analyze trades from angles you won't find anywhere else.

14:57Go see what that looks like at schwab.com slash trading. AI is here, transforming how we work, live, and lead. And the women I talk to aren't waiting for the future, they're shaping it. I'm Julia Boorstin, Senior Media and Tech Correspondent at CNBC. This is CNBC Changemakers, where I talk with the female leaders transforming business as AI reshapes the world. Follow and listen to CNBC Changemakers, Women Leading in the Age of AI, wherever you get your podcasts.

15:31We've got some new breaking details from Washington on Jensen Huang. Megan Casella has the story. Megan. Sarah, amid so many questions right now about when we might see Jensen Huang on Capitol Hill, a key Republican has just told CNBC that Jensen Huang has agreed to show up on Capitol Hill probably next week. This is coming from the House Foreign Affairs Chairman Brian Mast. He's a Florida Republican, and he was one of three key Republicans who had last week written to Jensen Huang asking him to testify behind closed doors on Capitol Hill. Mast saying to CNBC just a few minutes ago, he, as in Jensen Huang, has agreed to come.

16:04We're in negotiations for which day. Now, the original day they had asked him to appear was next Wednesday, November 18th. Mast says it's likely not going to be that day, but he does think it would be before Thanksgiving. Next week is the last week that Congress is currently scheduled to be here in town before Thanksgiving. So we do expect him to be here sometime before the 20th. That's next Friday. Now, as for the actual format of the hearing, whether it would be public or not, Mast is saying that it's likely going to be under oath and transcribed with multiple committees, likely behind closed doors.

16:35He says there could be some public hearings for other people or other things down the road. So for now, no further details as to what exactly this format will look like. But we do expect now, according to a key Republican, that we'll see Jensen Huang on Capitol Hill next week. Wow. Between that, the earnings, the Anthropic IPO deal book next week is going to be crazy. Megan, thank you. Megan Casella. Let's get to Sima Modi for some more details on NVIDIA's interim CEO. Sima. Carl, we've learned that interim CEO, Kolek Kress, is wasting no time here. We're told by a source familiar she'll be meeting with high-level executives today at NVIDIA's headquarters this morning to discuss leadership, continuity, the most pressing matters at hand.

17:16These are the same executives who convene with Jensen Wong on a regular basis. Remember, we had reported that Jensen Wong was in the office on Monday and Tuesday taking those same meetings. Crest now will be convening with high-level executives and taking those meetings today as we learn more about what is discussed. We'll be sure to bring it to you, Carl. OK, thank you, Seema. Keep us posted. NVIDIA's stock is taking a hit today, but well off its lows as CEO Jensen Wang resigns following a scandal surrounding two extramarital affairs. Our next guest wrote a biography about Wang that won the Financial Times Business Book of the Year award in 2025.

17:50Let's bring in Stephen Witt, author of The Thinking Machine, Jensen Wang, NVIDIA, and the world's most coveted microchip. It's great to have you, Stephen. You wrote the definitive book on Jensen Wang. So I've been eager to ask you, is NVIDIA NVIDIA without Jensen? No, it's like the bulls without Jordan. I mean, I don't know how they're going to replace this guy. You know, Jensen was NVIDIA. He understood every part of it. He was a terrific world-class computer scientist. He was the guy who could close a deal with a mega customer. and he was the guy who'd get on the phone and scream at Taiwan when the chips were late.

18:27All in one guy, all in one person, right? It's very hard to find that combination of people. Colette, I think, is an excellent executive, but she's not a world-class computer scientist. She comes from a finance background. Jensen could take a diagram of NVIDIA equipment, an exploded diagram, and draw it by hand from memory. It's going to be very hard to replace it. I know. And we're all getting so many reactions to this, obviously massive story. And I'm hearing from so many other CEOs that knew him well, knew him personally, and everyone's just kind of sad and surprised that someone so brilliant could do something so dumb.

19:06I mean, are you surprised? Yeah. You know, I've been hearing rumors this year, so I'm not totally surprised. I am very disappointed. You know, it's just a classic tale of masculine hubris, right? Classic tale of overconfidence and believing that you can get away with everything until you can't, right? Jensen and the people around them, he had made the people around him so wealthy. And so they were very incentivized to protect him and to not really give him any kind of like pushback or anything. And I think it just got to a point where no one could say no to him anymore. And that's what made this happen.

19:43Yeah, I mean, we've been going into some of it is a crisis of the board's making, not having a succession plan, for instance. The structure, I think, is coming under a lot of scrutiny. The 60 direct reports, like, was that an asset or ultimately a liability? Well, it was an asset when it became the most valuable company in the world. Nobody was complaining then. Like, you know, it looked like something that this superhuman guy could manage and make work. But I guess part of that was this kind of toxic self-regard and extreme self-indulgence that he could also just get away with anything as long as he was doing this.

20:18You know, several members of the board here themselves are NVIDIA billionaires, guys like Tench Cox or Brooks Sewell. They've been with Jensen since day one. They've been with Jensen for 33 years. And if NVIDIA stock goes down, that costs them real money, like a lot of money. So they face this very tough calculus. Remember, the board's job is not to be the morality police. The board's job is to try and decide what the best decision that will make the stock price go up is. And so they have to ask this very difficult question. Is this company worth more with a very tarnished CEO that's ridden by scandal in charge, but he's good at his job?

20:59Or is it worth more if we just cut ties with this person and go find someone else? Do you think they made the wrong call? it's hard to say i think there's more to this scandal coming i think that and the board sensed that and they were trying to get ahead of it uh you know jensen can be very reluctant uh it's not so reluctant sorry intransigent very stubborn and it may be the case that he wasn't listening to them you know i wasn't there i don't know uh you know i imagine maybe they offered him a package step away for a while and and maybe go to therapy or something and then maybe we'll revisit in six months.

21:30But I can also just see Jensen rejecting that package completely, saying it's me or nothing. It's all or nothing. So, you know, it may be the case that it was just two very stubborn objects pushing against each other. And ultimately, the board had the final say. Well, the board taking a light touch over the years is one thing. Commerce and the U.S. government taking a light touch on regulation to chip supply to China is another. Singapore is on the record today saying that the U.S. has not been helpful in its investigation of Alice Wong. When you say you think there's more coming, I assume you mean that's going to be more of a D.C.

22:05story than an NVIDIA story? Well, I certainly wouldn't be shocked if another woman came forward. So I think that's part of it. In fact, I'd be almost surprised if that didn't happen. But on top of that, yeah, Jensen's out there in Malaysia having a romantic affair with this woman who appears to just be a smuggler, right? If you believe current reporting, something like$7 billion worth of chips from NVIDIA made their way into mainland China. $7 billion. That's not some small amount. That's not a handful of chips. That's industrially organized smuggling. And Jensen appears to be having a romantic affair with the woman who was making that happen.

22:44So it's very hard for him to say, well, I didn't know that was happening or plausible deniability. You know, I think these congressional grillings are going to be really tough, especially after the Democrats take control. They've never cared much for Jensen. So this could be Elizabeth. Although China hawkishness is a bipartisan pursuit, you would admit. That's true. But those ones will be closed doors. And so I think that makes it a little easier on Jensen. I'm sure that Rubio and the other guys are very, very happy about this because Jensen was such a dove. He really wanted to create a free flow of exchange information and equipment with China.

23:23And there were people on the right who just didn't like that at all, including Rubio. And in fact, I think that's partly why Jensen got taken down here. It was a power play in some ways. It was intelligence that came from the White House. He had multiple affairs. I mean, he spent so much time with the president. He's hopping on Air Force One. He's at every single tech conference as a main speaker. He's doing deals and relationships and then CNBC interviews constantly about those deals and running this almost$6 trillion company. How did he do that? I don't know. I mean, this was the thing, even without the affairs, I didn't understand that there was enough minutes in the day to do what he did.

24:01This is what makes him so hard to replace. I mean, you need three people to do the job that he did. You know, you would need someone to yell at Taiwan. You would need someone to cut the deals. And then you would need somebody to be the technical expert, the more class computer scientist. And then on top of that, he's, you know, marauding around with women. And also, I mean, how many people in the world, he had no political relationships at all. None. How can he go from that to being the top advisor to the president of the United States in the span of about 12 months? That's extraordinary. Well, when you have the most valuable company in the country with the leading edge chips, you know, it's amazing.

24:40There's a case to be made that this is not in NVIDIA's best interest to do this. I do think the fear of continuing scandal and the toxic fallout that that would cause and the cloud that that would put over the company, that's the justification for this decision. Stephen Witt, thank you so much for joining us. I'm sure your book is getting a nice second life here. I got to read a sequel. Yeah, clearly. You couldn't even make this up for a Hollywood movie. You know what I'm going to call the sequel? Yes. I'm going to call it the What Were You Thinking Machine. There you go. Stephen Witt, thank you very much.

25:17Still to come, we'll take a closer look at how Washington is handling NVIDIA and Megaspeed following his resignation. Plus, how the potential for new export controls on China is impacting AI stocks in the country right now. We're back in just a moment on that angle. If you like YouTube, you'll love YouTube Premium. Hi, I'm Sean Evans from Hot Ones, and I want to tell you about YouTube Premium. It has offline downloads, so you can watch without Wi-Fi. Background play, so you can lock your phone, and it still plays, baby. Oh, and it is completely ad-free. Yes, I said it, ad-free. Try YouTube Premium for two months free at youtube.com slash premium.

25:58Trial eligibility varies, terms apply, cancel anytime. Traders don't need a prettier app. They need a better angle. Schwab's think-or-swim trading platforms were built for real traders like you. They have an insane amount of chart studies. I'm talking over 300 studies for virtually any strategy. They also have integrated risk management technology and nearly unlimited customization so you can shape the platform to fit the way you trade. And when you do that, you can analyze trades from angles you won't find anywhere else. Go see what that looks like at schwab.com slash trading. AI is here, transforming how we work, live, and lead.

26:36And the women I talk to aren't waiting for the future. They're shaping it. I'm Julia Boorstin, Senior Media and Tech Correspondent at CNBC. This is CNBC Changemakers, where I talk with the female leaders transforming business as AI reshapes the world. Follow and listen to CNBC Changemakers, Women Leading in the Age of AI, wherever you get your podcasts.

27:02I'm video. The stock of the moment down now less than five percent. It was off a lot more than that earlier this morning. Time now for a news update. Contessa Brewer has it for us. Morning, Contessa. Hi there, Sarah. A suspected shooter at a gym in Washington, D.C. shot and killed himself after the attack, according to police. One person was killed in that shooting and four others injured when that gunman started firing in and around the gym in D.C.'s trendy Logan Circle neighborhood and then barricaded himself in an apartment building. Investigators say it's too early to identify a motive, but they say the gunman had a conflict with that building.

27:35And there was a building collapse in Brooklyn that killed eight people yesterday. Authorities say six bodies were removed from the rubble. Two people died at the hospital. The building collapsed into a construction site. New York City's Department of Buildings has now launched an investigation into the cause. And U.S. negotiators Steve Witkoff and Jared Kushner held talks today with Russian President Vladimir Putin. They met in Moscow following peace talks led by the U.S. in Abu Dhabi this week. No major breakthroughs, though, in those talks. as Witkoff and Kushner are pushing Russia to allow European leaders to join those negotiations to end the nearly five year war in Ukraine.

28:15Sarah, that's the news now. OK, thank you, Contessa. When we come back, Chinese A.I. stocks taking a hit amid worries that the U.S. will now tighten controls of exports after the NVIDIA news. We're going to bring you a live report from Beijing next. Plus, former AI czar Ben Buchanan will join us, why he believes NVIDIA will continue to be central to AI progress, even without Jensen Wang, when we're back in a minute. Welcome back. Chinese AI stocks are lower today amid concerns the U.S. could tighten export controls now. Eunice Yun joins us from Beijing with the latest. Eunice, fascinated to hear about the reaction there.

28:50Thanks, Sarah. Well, the expectation is growing that the U.S. is going to look to squeeze China's access to NVIDIA chips even further because of Jensen Wang's affair to an alleged Chinese spy. The Chinese government had flagged this concern when asked today what the potential impact the scandal could have on U.S.-China relations. The foreign ministry said the U.S. side should stop fabricating so-called spy narratives to find excuses for imposing science and technology blockades. So the scandal is already disrupting the underground NVIDIA chip trade. I was speaking with some traders who said that their work has been paused into the next week because of the scandal, but also because of the expected greater U.S.

29:37scrutiny with President Trump coming to China for APEC. Shenzhen is the host city for the Asia Gathering, and it's also a city that's very well known to be a hub for the NVIDIA chip smuggling trade. The traders have been telling me that the price of a set of eight Blackwell B300 chips for a server is now at nearly$3 million. This is up five times from May and nearly six times higher than the official U.S. price of$550 ,000. But traders told me that they expect the demand to stay strong, potentially the prices to go even higher because they are starting to see hoarding. Sarah? What are folks in the media saying about the spy allegations, Eunice?

30:24Or is it not spoken about? No, people are talking about it. But in terms of the official line, there's just denial that this is a spy, that this woman is a spy. and the Chinese government has been calling it a smear campaign against China. But I think what's interesting is the reaction tonight. And we are already seeing people joking that maybe Jensen Wang should move to China and start a company here. But the official spin is interesting because basically the line from one former Global Times editor is that, oh, look at what happens when a person of Chinese origin becomes a huge success in the United States.

31:10This is what happens. That was one line that we're seeing. Another one is this is what happens to the American dream. So you could already see sort of the propaganda machine trying to use this to say China is the place to be. China is a place where you should have talent as opposed to the United States. Yeah, I think that the sentiment may be similar in Taiwan, where, of course, he was a hero, but that American influence might have been might be seen locally there as having corrupted his judgment in China. I mean, that's the story of Jack Ma, isn't it? That's not the story of America.

31:48Eunice, you got us. Oh, sorry. I thought you guys were talking to each other. talking to each other. Yeah, no, I mean, a lot of people look to the United States, including in the tech industry, that Silicon Valley, this is the place to go if you want to make big bucks, if you want to have big success. But more and more, the government here has been trying to kind of change that narrative and spin it, turn it on its head. And I think we're starting to see a little bit of that tonight. And it'll be interesting to see what happens as the kind of story evolves tomorrow. Eunice, thank you. Eunice Yoon in Beijing tonight.

32:27Let's keep the conversation going on in video and the impact of Jensen Wong's departure on America's dominance in AI. Ben Buchanan joins us today, former White House special advisor for AI under the Biden White House, also author of the new book, The Bitter Struggle, Superintelligence, Superpowers, and the Fate of the World. Ben, appreciate it. Good to see you. Thanks for having me. What are the important lessons that you've been seeing so far? And I guess what do you hope gets answered in the weeks and months to come, specifically around the administration's stance on regulating this supply, this smuggling?

33:03This case shows how important AI chips are. The products that Inmedia makes are fundamental to the global economy and to America's national security. Our posture in the Biden administration was that these chips were too powerful to be sold to China, or they could be diverted to the Chinese military. The Trump administration has, in key respects, walked back a lot of the export control policy. And I think this moment is one where we're hearing bipartisan calls to say, no, America must be more aggressive once more in denying China access to this powerful technology. So you think the Hawks win from here?

33:35Certainly, it seems that way in the Congress. There's building momentum, again, from both sides of the aisle. Folks like Senator Kramer from the Banking Committee, a Republican, Senator Banks, another Republican, are saying, look, this is a reminder of how powerful this technology is. Let's see what Congress does. But this certainly, I think, should be another call to action. Why don't you buy the idea that Jensen pushed that we should have China's AI built on American technology, that that is in our national security interest? I mean, there are plenty of experts who agree with that. I think there's two things here.

34:11The first is I'm not sure we want China's AI to be that powerful in the first place. There's never been a Chinese AI system trained on Chinese chips. So it's a choice to sell China chips and let them in the game at the frontier of AI development. I'm not sure we should make that choice, including for national security reasons. The second is China is desperately trying to get away from American chips and has been since 2014, long before the export controls were in place. Xi Jinping in 2014 announced a more than$100 billion effort to indigitize chip production in China. The pedal is to the metal on indigitization in China long before either the Trump administration in its first term or the Biden administration in our term took any action.

34:50What do you think this does to open source? There's still a lot of advocates of open source who are sort of mourning Wang's departure today. I expect NVIDIA will continue to be an advocate for open-way models. And certainly they were before. I imagine that will continue to be the company's strategy. So I expect that will still be the case. And I think in many respects, that's a good thing. And we certainly took no action to restrict open weight models and the Biden administration to that point in our four years. Do you think the United States became too dependent or dangerously dependent on one company for winning the AI race and potentially one man?

35:30No, I think there's good competition in the industry. NVIDIA, of course, makes exceptional products, but Google and Microsoft and Amazon also design their own chips that are competitive and increasingly used. And I don't think by any stretch is this the end of NVIDIA. I think NVIDIA's got a lot of very talented people, very talented engineers. And as long as they continue to make great products, they'll still be absolutely one of the key pillars of the AI ecosystem. them. Fascinating exchange overnight between a quote of Dario Amode about basically making Alzheimer's and cancer and heart disease relics of the past, in Amode's view, in the next decade, and then the CEO of Lilly responding, yeah, that would be amazing, but I don't think that's likely.

36:15Where are you in sort of these moonshot promises right now? Look, I'm a national security person through and through. So it's my job to help America manage the risk of this technology so that we can harness the benefits. How soon those benefits come, I'm not sure. I would love to have all the upside come really soon. I tend to think the world is a messy place. The clinical trials take a long time and it will take time to get there. But AI has shown enormous promise in things like biology. I suspect it will take AI companies working with pharma companies to make that promise real. Ben, appreciate it.

36:50Obviously, we're going to learn a lot more next week when some of these hearings get underway and maybe the reporting around it. Please come back. Ben Buchanan. Thanks for having me. Meantime, we're looking at some of these other affected stock shares of Nebius are sinking this morning. On the heels of a weak forecast, Seema Modi joins us with more. Seema. This is a notable move. Nebius not able to ride the success of its competitor CoreWeave, which saw its stock surged about 20 % yesterday. We're watching Nebius down about 15 % after reporting earnings earlier this morning. Top and bottom line were not the problem here.

37:20It's the forward-looking guidance that is weighing on shares. On the earnings call, Nebius executives said they were being, quote, very conservative about their guidance and said they took into account potential delays in new capacity coming online. They said that if they were able to deliver on time, revenue should come in ahead of guidance. Worth watching is the fallout from Jensen Wong's resignation at NVIDIA. Nebius earnings call did happen before that news broke this morning. The two companies do have a close relationship. In March, NVIDIA invested about$2 billion in the neocloud to enable the rollout of more than 5 gigawatts of NVIDIA systems by the end of 2030.

37:57It remains to be seen how new leadership at NVIDIA may affect ongoing deals. I know that's been an active discussion this morning. Neoclouds as a whole, again, they did very well yesterday, but struggling year to date, losing nearly a half of their value over the past three months, guys. Yeah, what's not helping is that borrowing costs are on the march higher again. I mean, that was the whole problem to begin with. For sure. Higher cost of capital, certainly an issue for the neocloud sector as a whole. But I think the executives on Nebius' call, a very different tone than what we heard from CoreWeave CEO Mike Intrader yesterday, who joined you guys on set, where he had delivered really a dose of optimism about the future.

38:40And it's also said that data center capacity remains intact. Seema, thanks very much. Yeah, core weave yesterday, second best day for the stock since the IPO. Still ahead, we'll take a closer look at how Washington is reacting to Jensen Wong's resignation. Stock is well off the lows of the day. We're back after a short break. Longtime NBC sports commentator Dan Hicks passed away last night. His wife, ESPN's Hannah Storm, says he died unexpectedly following an acute illness she called the loss immeasurable. The two sportscasters were married for more than 30 years. Hicks joined NBC in 1992, covered the Olympics, led PGA Tour coverage, and was the play-by-play announcer for Notre Dame football on NBC.

39:22Mark Lazarus, CEO of our parent company, Versin Media, was a longtime friend and colleague of Hicks. He called him the very best at what he did, as well as a loyal friend and a devoted husband and father. Dan Hicks was 64 years old. Welcome back. Let's get a closer look at how Washington is handling NVIDIA and Megaspeed. following Jensen Huang's resignation. Megan Casella has some new information. Megan. Sarah, the fallout over all of this is only just beginning in Washington. I just got a copy of a letter that will be sent later today to Commerce Secretary Howard Lutnick, or maybe it's already been sent, but it will be publicly released shortly.

39:58It's to Howard Lutnick from the top Democrats on the Senate Finance Committee and the House Ways and Means Committee. And they're informing the Commerce Department that they say, and I quote, they're beginning an investigation into the Trump administration's scheme to approve and tax exports of advanced NVIDIA AI chips to Chinese companies with concerning links to the Chinese government, military and sanctioned entities. And they're asking Secretary Lutnik and the Commerce Department to preserve all records focused on three things, which shows us what they want to zero in on. The Section 232 tariff investigation into semiconductors is in their focus, as is the department's consideration and approval of export license applications submitted to NVIDIA and any communications within the department with and regarding Jensen Huang or NVIDIA.

40:43So guys, with so much happening now inside the company, Washington is really just gearing up to start investigating the administration's role in all of this, what they knew and when. I will also say I spoke with a White House official just earlier today about Secretary Lutnik, who increasingly is at the center of these reports. And the White House official told me that President Trump was continuing to stand by Secretary Lutnick. The quote was that they had the president has complete confidence in the secretary. But very clearly, as soon as Democrats take these gavels on Capitol Hill, we are very likely to see him asked to testify on all of this.

41:16The other piece that we've heard from the White House today, just to pivot here, guys, is President Trump saying earlier today that now that NVIDIA CEO Jensen Huang is out, he says there's only one man to take his place. And that's Tim Cook of Apple. So obviously the president paying attention here, and we'll see if that has any hold here. But Trump, as you can see on your screen, saying a legend replaces a legend. Guys. Yeah, we had a discussion about that earlier this morning. I'm just trying to keep a list, Megan. Finance, tax, foreign affairs, the select committee. Who has the juice on the Hill right now regarding these probes?

41:53Don't forget the Senate Banking Committee, which has oversight over commerce, and the Bureau of Industry and Security, which handles export controls. Senator Elizabeth Warren likely to take over banking. And I think what's crucial, too, I mean, one is that there are so many committees involved here, as you say. This is going to cross any number of them. There are a number of committees that have investigative powers as well and subpoena power as well. So we're going to see this cross so many different jurisdictions on Capitol Hill. But what's also key is that it's not just Democrats that we're hearing from on all of this.

42:22Crucially, it's also Republicans. That's why we're starting to see momentum even just in this lame duck period with Republicans and Democrats in leadership in both parties Saying they're interested in putting some sort of chip export control into this must-pass defense policy bill that we expect before the end of the year So even now with Republicans still in control, we're likely to see some action And then let alone we're just going to see so much more once Democrats take the gavels I mean, it's it's there's a lot of people looking into this, but Megan ultimately we don't we don't know I mean the board is still investigating has an independent investigation going about the links to this alleged Chinese spy and what sort of secrets or motivations.

42:59This is all pretty much speculation, right, and reporting about what kind of policy might have been influenced. That's absolutely true. And this letter in particular is very much based on the public reporting that we've seen in The New York Times and the FT and everyone who's broken bits of this this week. What lawmakers are most focused on is not necessarily the depths to which Jensen Huang's affair went or how many affairs there were, any of that. It's that he's really been such a champion in Washington, has been so close with the president. I've been told a top advisor on AI policy, maybe the number one person the president was looking to on all of this.

43:34So the question is really what motives did Huang have and what motives did anyone in the government have? Was this negligence and not paying attention or was this willful because somebody believed there were profits to be made. One of the things the letter gets into is that they're arguing here that some of these tariffs were put in place to make it harder for other companies to compete. And then there were licenses granted to NVIDIA to put NVIDIA on some sort of a pedestal making more profits. That's what's alleged by the Democrats in this letter. That just gives us some sense of what they're trying to do.

44:07I think one really key piece here is that there are a lot of people who were in Jensen Huang's camp on this that believe export control policy should be loosened that now think all of this is just a sideshow. NVIDIA has been jeopardized when they still believe in the ultimate policy of a looser expert control. Yeah, it's going to get complicated and ugly. Thank you, Megan. Megan Casella. I think it just only highlights and underscores, Carl, the difficulty of the job now to replace Jensen Wong. Because if you think this is not your ordinary find or replacement for the CEO, you need someone who has that kind of statesman like character, right, both domestically and internationally.

44:47Remember the Taiwanese media when he would go into these street markets and they focused on everything he was eating as someone who advised the president? So it's someone, a statesman, a technologist, you know, a lot has been talked about, about his own engineering chops, a leader and, you know, someone who can understand NVIDIA's culture. I thought John Fort made a really good point about why Tim Cook might be ridiculous because the culture, you have to be a culture setter to keep those talented engineers there. And you have to be a leader where people want to follow. Not to mention a financing whiz.

45:17And we've talked a lot about the scaffolding that they've built around the ecosystem. I mean, there's reporting out today that suggests that CollectCrest tried to maybe push back on some of Jensen's aggression in that area. What that would mean for the future is hard to say. And whether that ultimately is a good thing or a bad thing for NVIDIA or for the entire ecosystem. So that's, you know, challenge next is finding who will replace that. For now, NVIDIA shares down 5%. You might have expected them to be down more, although they had been falling really ever since the news of the first affair.

45:47Yeah, a remarkable show of resilience in terms of the market today. 76-33, VIX below 18. Of course, a lot's headed our way next week with NVIDIA earnings in Disney and Target and Palo Alto. But quite a showing in the wake of Wong's departure. 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. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion.

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