9AM Hour: NVIDIA Fallout, Cisco AI Momentum and Hot PPI at the Open

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1:20Learn more at 1-844-COSENTIX or cosentix.com. Don't let mysterious symptoms go unsolved. talk to your doctor about Cosentix. It's Jim Cramer here. You're listening to the opening bell of CBC's Squawk on the Street. Don't miss a minute of the action. Good Friday morning. Welcome to Squawk on the Street. I'm Carl Quintanillo with Jim Cramer and David Faber at Post 9 of the New York Stock Exchange. S &P looking to put the finishing touches on a pretty strong weekly bounce, even with all the NVIDIA drama. CEMI's riding their best five days since 2020. Wholesale Inflation mostly in line, but it is the hottest annual headline read in four years.

1:56And yields are responding. Ten-year gets to 514 today. Brent's near 97. Our roadmap begins with these new developments around Jensen Wang and the NVIDIA fallout. Stock receives another downgrade. We'll get the latest. Plus, Microsoft is scrambling to fix its email and office products issues. You may very well be aware, of course, the outage has impacted millions across the globe. And we've got a big interview coming up with Cisco's chairman and CEO, Chuck Robbins. Of course, a company reported earnings, also raising its AI infrastructure revenue forecast. Much to discuss. Let's begin with NVIDIA this morning, a day after Jensen Wang did step down as CEO.

2:34The Journal today reports he belittled Colette Kress months before she was appointed interim CEO, calling her, quote, a deer in the headlights. Meantime, top White House aides reportedly blaming the Commerce Secretary for the political fallout from the NVIDIA scandal. citing his efforts to stall restrictions on chip exports to China. Here's what the Treasury Secretary had to say in just the last hour on Squawk. I can tell you there was coordination. Treasury, war, USTR and state, they were in favor of putting Megaspeed on the entity list for months. But Commerce has the pin. Commerce BIS has the pin.

3:13And you will have to ask them about their internal processes. So, Jim, we got some interagency friction here going on. Well, I know that, again, judging this is from NVIDIA, and you could say, well, hey, Jim, what is that worth? That's how people almost feel these days. NVIDIA got the big word from Megaspeed in order to build the core weave, the actual term, the core weave of Southeast Asia. So what they did was they went to Commerce to see if it was on the no-fly list or not. Commerce gave them a green light, and they did the deal. Now, that's their view. There's a second story that we obviously hear, which is that the General Counsel pressured them.

3:59But the official view is that they did exactly what you're supposed to do. And as much as that NVIDIA is tainted, that's what they're saying. And I can't. What am I going to say? No, that's why the attention is turning to commerce. And now we know that Howard Lutnick will appear before Senate banking on December 10th. Yeah. Well, I think that it's got to be found out because the linchpin of the whole story is, was it a legal place to send things? Now, we all know, hey, well, you know what, there's an empty office and this and that. But the fact is, is that there if you go over to Corweave's office, it's not like Corweave's office is like 19 story building in downtown New York.

4:36I mean, these are builders, and it's entirely possible that you may think, you know what, who are they to take all these GPUs down? But if they really were going to be the core of Southeast Asia, that's a great business. It could be, except there were no indications, and a lot of the reports are that their own employees were sort of curious as to exactly what was going on. Why would you necessarily go? At Megaspeed and why they would need that much, given where they were. Well, okay. And their knowledge that, look, again, it's all conjecture. Right, well, what I'm saying is— I can't say—we don't know the facts.

5:08Right, well, let's say there's an executive, man or woman, we don't know, who is saying, listen, we need the most because we're going to build a court. I shouldn't—why should I think that there is also a Chinese spy who wants to have a liaison with— I mean, I'm saying that it was a perfectly good idea that maybe someone wants to do that. Perhaps, but, I mean, others would say, well, you had insatiable demand coming from customers such as Microsoft. Right. Or, I mean, name your great company. Why would you? Now, he was very focused on diversifying his customer base. Remember, sovereign, sovereign, sovereign.

5:48Well, suddenly you, I think you're a second-guesser. You know that? Second-guesser. I'm only learning some things that I was not aware of. You're a reporting reporter. By the way, to the credit of the New York Times, which was reporting on this, I believe, in 2025, not to mention this short report. The ninth piece. Not to mention the short report we mentioned on Monday, which came out in May, that none of us saw or at least didn't focus on. There was a lot of attention being paid to this and questions being raised by this previously. As we know also, and we just heard from the Secretary of the Treasury, in the administration.

6:21And the stock kind of had this right. Yes, it did. The stock had it right. But can I just say that, again, NVIDIA, the company, said that they stopped shipping to Megaspeed before the New York Times order. Again, now you can say, how can they tell you? Look, there's a lot of feeling that what you get from the company is no longer as substantive. I'm talking to the same people I've talked to for decades, so I just don't think that they suddenly turned out to me scoundrels. And this is going to move along its own path at this point in terms of the investigations, both that occur prior to the change in Congress and then after the Democrats take control in the new year.

6:59There will be no shortage of hearings. There is still going to be investigations. I am sure that Jensen Wang will be spending a decent amount of time with his lawyers at Paul Weiss. Right. The West Coast government. Wherever they may be. But, you know, what's interesting is that there's this backlash. And the journalist is like, there's these people saying the board should not have let him go. Oh, my God. Well, I mean, OK, let me just explain to you the way the world works, OK? You hire Wachtell Lipton and the board's nothing for them. Yeah. You go in and the chairman could say, listen, we need Jensen.

7:31We got these people. And the Wachtell Lipton guy says, you hired us and you should go whatever you're doing in life. Go do that. Go. Well, I don't know. No, no, because Wachtell, you know how it works. I do. I do. And do you think that once you bring Wachtell in, they're a serious firm, that they can argue that, you know what, we need Jensen? We've violated company policy at least once, perhaps more than once. And listen, the company is now in a different place. And we'll see what occurs in terms of what it's got to deal with as opposed to its former CEO. Right, right. Interesting to note, the stock is going to be up.

8:06It only ended down yesterday a little more than 4%. After this time yesterday, looking down as much as 13%. It has had a bad week, yes, but perhaps not nearly as bad as one might have anticipated if I had told you a week and a half ago that Jensen Wong would no longer be the company's CEO. I thought it was going to be, well, remember, it did touch the 150s. It did. And then people said, wait a second, there are a lot of good people who want the CEO job. There are, and people feel fairly comfortable about the order book for 2027, and they look at the multiple. And, of course, we're going to sit here and speculate about the potential people who will take that job, that being the CEO job, whether it be Colette Cress, obviously the former CFO who's now running the company, or come from the outside.

8:52I don't think I think you're looking for someone. We better have someone from the outside, only just because you don't want someone who may have been tainted on the second issue, which is the Kimberly Powell issue. Because we're going to be getting to Cisco in a minute. The week itself, Jim, we forget there was given NVIDIA and the monumental news there. But it was Corweave earnings. Which, by the way, Corweave was very insane. Because there was a time we were meeting. They were down yesterday. We led with Corweave on this show, I think, at least three or four days in a row, a couple of weeks back.

9:22It was the key to this market. Well, it reported earnings, and they were pretty darn good. They were really good. But then Nebius reported that quarter where they had a delay. And then people started thinking that maybe this industry, we can ask Chuck, because Chuck knows this industry, but did that hurt Corweave stock? Yeah. But Cornweave has, there's a piece in the journal that we're talking about is the one which is, I'd say, a little specious, I felt. But it talked about how there might have been an avalanche of chips coming at them. This was in the journal. Yeah, it made it sound. That he was fearing this avalanche of memory and wafers that were coming his way.

9:57Right, and yet I have confirmed from multiple sources that if there were chips, please send them to me. everybody wanted the NVIDIA chip. Everybody still wants the NVIDIA chip, despite the flowers in front of headquarters. There's been no, yeah, nothing this week has indicated any real change in the demand picture. Demand is... You know, I'll go back to the conversation I had with the CFO of Oracle, which, even though the stock went down, seemingly was very positive. Want me to say it again? It was a great interview. And then we got, thank you, and then we got to get ready for Anthropoc, which, by the way, I'm hearing very positive things about it.

10:32I'm hearing now six times, maybe seven times overspread. Oh, yeah. But you know what? Anthropics, when people at home, if Anthropics gets done, then all the things that Jensen did and all the deals are going to be vindicated. Except for the last ones, I didn't know about the son-in-law deals. Right. And I didn't know that Collette reading CFO. You're referring to Jensen Wong's son-in-law. Are we looking for Tom Hagen? We need a wartime CFO? We should spend more time again on the circular financing and what may be at risk or not. Maybe someone said that it wasn't all that great an idea. Maybe you're in the headlines.

11:07You're defending the interim CEO right now. By the way, Anthropik at JPMorgan today. Daria will be there with Jamie Dimon. I think they'll be together presenting to investors this morning. Okay. All right. Later in the morning. All right. CFO also there. I'll focus on that. Yeah, you should be. It's important. I am focused on it. Good. Stay focused. How much did Frazier save? James Frazier said by bringing in Corwin. Go check. No idea. When we come back, Cisco's Chuck Robbins will be with us on the company's quarterly beaten raise, thanks to the AI boom. We'll talk more about the shakeup at NVIDIA.

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13:45Despite delivering earnings beat and a forecast for AI infrastructure revenue to double this fiscal year, joining us now, first on CNBC, Cisco Chair and CEO Chuck Robbins. Hey, Chuck, thanks for coming on. It's good to be here. You guys have been bored this week, huh? Yeah, it's been a sleepwalk. Sorry. Yeah, Giants. I watched that game last night. Okay. All right. Go ahead. All right. So I want to start by how your company has done the last two years, and then how good is the order growth that you see in the future? Yeah, Jim, I think, first of all, the team's done an amazing job. And we posted 24 % revenue growth, 40 % EPS growth, and 21 % product order growth at the same time.

14:34And so just an exceptional job. The data point that I really think is important is that if you go back fiscal 25 till the end of the fiscal year we're in now, 27, and the guidance we gave yesterday will effectively add$20 billion of revenue with actually several thousand fewer employees than we had at the beginning of 2025. So the scale and the efficiency of running this business right now through a combination of the scale of doing the business with the hyperscalers, as well as, candidly, AI and the automation and the capabilities that we're running through the company. I haven't had anybody on my team ask for headcount in about a year.

15:11So it's pretty stunning. You talk about a super cycle. I see, if you can correct me, three super cycles. security, AI, and I never thought campus would come back like this. Am I wrong that this is perhaps the single time in your years that all three are headed? All three, plus you didn't even cover sovereign infrastructure or hybrid data center build out. We've had 9 out of 11 quarters. We've seen double-digit growth in our enterprise data center networking business as well. But the campus refresh is on. We're still less than 10 % through the transition on that front, so that's going really well.

15:54The post-mythos AI activity, and we began to see the improvement in that portfolio that we've been talking about for quite a while this quarter. I think it's clear that our customers are working on understanding how they upgrade their architectures to deal with these new threats that are brought forward by AI. and then the hyperscaler activity that we've seen. We've had 18 design wins in the last five quarters and so that continues to be a real bright spot for us as well. Before I give this over to my colleagues, Morgan Stanley has a piece this morning. I'll quote directly and you can tell me how to feel about this.

16:29We expect gross margins to step down in the back half as hyperscaler mix increasingly outweighs the benefit for campus strength. product orders excluding hyperscalers slowed to 14 % year over year from 25%. Now, this is a person, a highly paid person. Meta Marshall. Mita. Mita. Hey, you know what? There's no accounting for names. I'd like to know whether that's right or wrong. I joked with my team the other day. I said, I wish somebody told me five years ago my biggest problem this quarter was going to be that 21 % product order growth wasn't good enough. It's funny, the focus on gross margins, I get it, because it's always been something they care about.

17:14But at the end of the day, operating margins and operating income drives EPS. And so when you see this business and our operating margins are down two to two and a half points from a year ago, something like that, and our operating margins are at record highs. And the reason is because of the scale of this business. And so while the gross margins may be lower, the profitability of this business is incredible. So from a shareholder perspective, if you're looking at just EPS and you're looking at the multiple of EPS, it's great business. And I think it's just taking people time to digest this model because it's counter to what we've done for 30 years.

17:48But we'll get there. We'll get there. We'll just keep executing. Something that also may be giving investors a little bit of pause and the reason why the stock may be down is the guidance. I mean, you talk about a super cycle, Chuck, at the same time you're guiding second quarter revenue, fiscal revenue to$18.1 billion. That's below the last quarter. So why? I think there was some mention of a lack of visibility in the second half. No, it's a linearity thing that occurs almost every year. And our Q4 ends the end of July. So Q1 is a big shipment quarter after the orders from the end of the year.

18:22Q2 typically is slightly lower. It's been this way since, you know, dinosaurs walked the earth. So it's not something that should be. And again, I'm really apologizing for 19 % growth this year. And I think that, you know, it's just there's a lot of nervousness in the AI trade right now, I think we know. And I think they're naturally looking for things that could concern them. Speaking of dinosaurs, I was around in 2000 when Cisco was the most valuable company in the world. I was, too. And, you know, you're talking about SuperCycle again. And I'm just curious, what is different this time than the last time we sort of had that theme?

19:06And obviously, it echoed through the value that the market was willing to give your stock price. Yeah, I think back then, we were very much a much narrower company relative to what was going on. We were in a lot of financing was happening. A lot of companies were building business models that ultimately weren't really viable long term. And so that didn't end well and we've been building back up now. But I think if you look at what's going on right now, I've never seen it where you have the hyperscaler AI activity. You've got the campus refresh that we talked about. You've got the post mythos effect that people are looking at.

19:45You've got this big drive towards sovereign critical infrastructure all around the world, and we have enterprises that are embracing hybrid data centers for AI build-outs. And it's just all of that stuff is going at the same time, and it really represents an opportunity across our portfolio consistently that I've never seen in my career. Will it matter if companies like NVIDIA pull back on their startup funding and their credit guarantees? it won't matter that much to us because we're not that active in that space. You know, our business is really anchored around the telecom providers, public sector, hyperscalers, and enterprise.

20:25And so when you get into, as an example, the neocloud space, I said on the call yesterday, it's relatively immaterial to us. We have some great customers in that space, but relative to the overall business, it's just not meaningful. Now, let's talk about turning networking wins into security sales. Because what I saw, your firewall orders grew more than 30%. This is the third straight quarter. Last quarter, you told us about a major U.S. bank that ordered 1 ,000 Cisco smart switches, replaced both in its network and supplier. You're getting both now. And that may be Splunk. That may be just better.

21:00You know, your security fellow is doing a great job. You introduced him to us. But obviously, the numbers here are very good for security. Security is beginning to do really well right now. And I think the thing to remember is that when you hear this whole notion of running agentic, running agents in the enterprise, the only common layer where you can monitor and see what these agents are doing is the network. They're going to be moving across the network. So if you aren't doing observability and security at the network layer, you don't have visibility to these things. And so it's a natural thing that our customers are focused on.

21:36And I think over the next two to three years, you're just going to see a continued move to security and networking coming deeply together. Speaking of agents, I mean, you mentioned earlier the huge increase in revenues, I think almost as much as$20 billion, and you have 7 ,000 fewer employees. So what's going on internally? Are you having agents essentially replace the work previously done by employees? Yeah, we actually were one of the early companies. We rolled out a personal agent to every single employee inside the company. So we got 83 ,000 people running this personal agent that our team's built.

22:10And the productivity is incredible. Usually when you do these things, when you're talking to people, you get the sarcastic, yeah, that's really great. Thanks for the tool. This one, I get the most sincere messages about how it's changed their life. When our salespeople are prepping for a meeting the next day and they can go in and just tell it like, hey, here's my customer. Go research what their top priorities are. Map that to our portfolio. Build a PowerPoint presentation for me so that I'm ready for this meeting tomorrow. All that stuff just happens. And, I mean, that's just an example. And it's somewhat simplistic when you think about it.

22:48But I don't know if any of you have been using any of these personal agents that are out there right now. I've started. I've started. But no one's come to us and said, enjoy the tool. I'm impressed. Yeah. It's incredible because it actually, there are simple things that these things are doing right now, but those simple things take a lot of time. And so you get that time back. And so while at a net level we haven't added any headcount, we've been able to move. We've been investing in silicon. We've been investing in security. But at a net level, it's gone down. It doesn't sound like you're going to add any time soon either.

23:20It doesn't seem to be. Okay, so Chuck, in the seconds we have, Colette Crest, NVIDIA Centrum CEO, You work with her, left the plane through the team from Cisco. I did, there was an article today talking about how she's a reporting CFO, whatever. You work right next to her, I understand. How does she do, and how do you think she will do as an interim CEO? I love Collette. She sat next to me for a couple of years before she went to NVIDIA. She actually left and went to NVIDIA from Cisco. And I think she's quite capable. She's a real operator. She's the real deal. When I've heard you describe her this week, I actually have been kind of chuckling under my breath because I'm like, that's the Colette that I know.

24:00And so I think she's going to do just great. And the idea that sometimes she stood up to Jensen and it got heated. You have a couple of CFOs, but there's tension. My CFO would never do it. He better do that. Thank you very much. That's what I'm talking about. Chuck, I thought the quarter was straight. What I care does not matter, but I've seen many Cisco quarters. I knew Mordridge. That's how I am. I am not worried about the two or three bucks going on right now because it was an unbelievable quarter, and our teams are executing like they haven't in 20 to 30 years. So I'm very pleased. Thank you to Chuck Robbins, CEO.

24:40And by the way, Chuck's showing up at bad times too. Yes, he has. But this is not one of those times. Thank you, Chuck. Thanks for flying up to me. You bet. Future is holding in here. We'll get the opening bell in five minutes. If you like YouTube, you'll love YouTube Premium. It's destroying athlete, creator, and YouTube Maxer. YouTube Premium enhances how I use YouTube with awesome features like offline downloads so I can download my favorite training videos before I hit the gym. So no Wi-Fi doesn't turn leg day into loading day. Plus, I get ad-free videos, background play, and so much more.

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25:50Member NYSE SIPC. If you're a parent and want to help set up your child for success, then IXL is a right for your family. As an effective and affordable online learning program, IXL covers math, language arts, science, and social studies using interactive practice problems for kids from pre-K to 12th grade. Listeners can get an exclusive 20 % off IXL membership when they sign up today at ixl.com slash 20. Visit ixl.com slash 20 to get the most effective learning program out there at the best price. There it is. Last mad dash of a somewhat busy week. We've been dashing a lot. NVIDIA has taken up a lot of the time for obvious reasons.

26:34You want to end your week with it too? Well, there was an article in the Wall Street Journal which talked about Jensen Wong calling Colette Crest, a gear in the headlights at a meeting, and a reporting CFO, which I guess is different from a wartime CFO. Okay, Jensen, I don't know if people knew that, Jensen Wong, he could be angry. You know, he wasn't just as funny and delightful. He'd be an angry, tough guy. I would assume when you create a company like this that you have to be tough at times as well. And so the CFO is going to push back. There are a lot of things that were being done that people didn't even like.

27:07You know, this alleged circular, you know, deal with, no. But she, that was not, I don't think they did that. You know that. But there were rumored, hidden battles over capital allocation. And I think that given the fact that CollectCrest did all the financials, for instance, anyone who covered the company was told, listen, you want to talk about the financials? Don't go to me. Go to Collect. I think it means that there better be hard discussions given these investments. I repeatedly pressed her, would you please do a buyback like Luca Maestri at Apple? She said, listen, we go to war every day about this stuff.

27:43So I'm saying that the idea that he may have blurted out something. Yeah, we raised this yesterday, Jim. I mean, all of the investments, whether there'll be follow-up, whether it's$2 billion for Nebius,$2 billion for Synopsis. Whoa, whoa, whoa.

28:01They rang the bell way early. Yes, I'm just saying that the idea is that you just took Chuck. You just took Chuck. And he had three feet of moon. They battled over time. All right. All right.

28:27Okay. All I'm saying, David, is the idea that Colette crashes a deer in the headlights. Well, you know what? You know, maybe at times he was stopping. Maybe he was stopping. There's the opening bell, by the way, at the big board on Wall Street. It's Swiss dental startup Vavardas celebrating an IPO. At the NASDAQ in Times Square, it's Windward Bio, a developer of antibodies for respiratory and dermatological diseases, celebrating an IPO. And at SIBO in Chicago, it's the NASA International Space Apps Challenge, World's largest annual hackathon as we are on the lookout for a starship heavy flight tonight Jim yes and I've got to tell you next week between that and Anthropic is going to be the most it may be the most exciting week of many years I think Anthropic is going to come and what's going to happen is that we're going to realize how much money is really being made in this industry and how important it is.

29:30And David, I think that you know there are still questions about whether compute is worth as much as we think. Are the disanthropic going to be at that kind of revenue ramp? I think you'll agree with me that the more we get closer to this, the more it's likely that this thing is bigger than we think. I think it well may be. At least that has certainly been the conversation that began on Monday, at least, in terms of, well, it's going to be priced between$1.3 and$1.4 trillion, but there's still an expectation that prior to when that pricing occurs next Wednesday after the close, it will be higher, and that then the aftermarket performance will be quite strong, given conceivably— 7 percent.

30:09Of course, given the demand for the anthropic shares. Are you worried about the multiple tranches? Are you worried about the multiple tranches of stock afterwards? It's even worse than SpaceX. You mean in sellers, you mean? Yeah, many issues. Yes. I mean, it's always an issue, but in SpaceX, it didn't seem to really impact the stock price. SpaceX is a cult stock. This is not a cult. It is in a 40 % drawdown from the highs. True. Like most... SpaceX. Sure, like most... This was a$2.25 name. They moved up SpaceX in the middle of the night. There were a lot of ways that they moved up SpaceX. They were trying to make it into a meme stock.

30:43I'm not kidding. They didn't have a meme stock attitude. No, it's still... I mean, it's a$1.9 trillion company. But they told so little. Well, there's a lot more of it out there now. At least it stayed above its IPO price, given all of the supply that has come with the given lockups that have expired since the IPO. But will you give me that if an anthropic deal does well, there are a lot of things that can happen that are positive to the AI world that are counter to the things that have happened in the last few weeks, particularly to Invidic? Yeah, I think that's a fair point. It doesn't mean that there aren't any number of questions that will continue to have to be answered by Anthropic, namely pricing power for their models, the threat of open source, what that will mean.

31:26Now, we've talked about perhaps it being a positive for them with Jensen Wang no longer being the chief proponent of open source and whether there will be a bit of a crackdown, which conceivably would be a positive for the frontier models such as Anthropic and OpenAI. What are they really going to do when it comes to biotech and drug discovery? Are they really just going to let somebody pay them$8 million worth of tokens when they discover the cure for cancer? I mean, now by the way, David Rick saying that's not going to happen. I know, but you're right about whether they move into IP and pharma, whether or not they start offering cyber products of their own.

32:03Exactly. And cyber would seem to be certainly an open field for them in terms of the latest models are the ones you would use to find out all of your vulnerabilities. Why not build a business around that? Well, they're talking about the cybersecurity business again. I think that they're partnering with George Christian Brownstrike, but I think you need an outside cybersecurity company just to get the insurance. I think the liabilities are my biggest worry. There could be big liabilities from AI that they may be able to look for. Well, the risk factors in the initial S1, which everybody should still read, are voluminous.

32:42Yes. And by the way, Dario, who will be again at J.P. Morgan a little later this morning with Jamie Dimon, the same way that Elon Musk join, remember, for the SpaceX IPO, has been the chief, I don't know, worrier? Yes, I'd say that, chief worrier. About what AI will bring. And it's not as though those worries have gone away, guys. Well, I'm the chief warrior of Nvidia stock that was up three and is now down. Okay. Wasn't enough? All that defense and collect crests? Got to just keep it going. I'm doing my job. I'm not saying you're not. I'm just telling you, you know, keep it going. We haven't talked about the Outlook outage, Jim, which I know frustrated you at 3 o 'clock this morning.

33:31Well, okay, so my guy that I use say, look, it's a hack. And my problem with that is that, you know, you can claim that it's a hack. I have to tell you that I thought that Microsoft, this was happening, and I didn't feel like that there was as many people telling me that it wasn't just my machine as I would have liked. And I thought it's like I must have rebooted 20 times because I don't think it was as well known. But, David, you can tell me. Yeah. Got the Microsoft. Well, I was, you know, I was worked up all night trying to help them with it, of course, as you know, given my deep understanding of I don't even know.

34:11By the way, this name was at all-time highs last week and is a very quick 10 % correction off of that high. It is scary in the sense of you wonder immediately, is this a hack or is this some sort of an internal malfunction? A lot of people feel they were hacked. I don't know the answer. They did say they don't think it's malicious activity. Right. Well, I mean, again, there were cascading failures here is what I'm told. And it's hard to tell. You know, some people are saying they never got the Russians out of their system. I don't know about that. But some people are saying that, too. Jim, we mentioned— People get angry.

34:46Sorry? They say a lot of things. They get a little angry because, you know, my wife says, do you even care about me? And I'm like, huh? Who? People get divorced about this stuff. My wife says, do you even care about me? Well, she didn't get any of my emails. Oh, don't you text? Don't you have her phone number? I was using email. Why did you email with your wife? I was trying to send more thoughtful things. You're trying to what? Thoughtful. I was trying to be more thoughtful. Oh, you can be thoughtful in text. You can. You can call her. Who knew that she wasn't getting there? Who knew? Guys, can we talk a little about Applied Materials?

35:20This$300 billion market cap company, the stock of which is down about 30 % over the last three months, reported earnings. And as you might expect, of course, record fiscal year 2026 results, AI being a big impact. Management does expect another record year next year. Overall, capacity plans, they target doubling systems output from the fourth quarter of 2026 levels by 2028 and more than doubling manufacturing and lab capacity by 2030. Stock go down, Jim. Yeah, and the complex is more related to that than anything else. Micron, you know, AMAC analogy is down 15 and falling heavily after having a pretty good week.

36:06Well, Micron going into this morning's open was up 16 % in five sessions. Sergeant Marochis, he sells at four times earnings. Everybody is struggling to get enough of all of his chips. Because, you know, I'm talking about everybody is waiting. There's so many long-term agreements to make it so much of a stuff is sold out. But it doesn't matter because people are looking for it. Well, oil knives are out for the group, and Applied Materials, which is a really fine company, is driving down everything, including video. It is. You think Applied Materials is driving down in video? Yes. Yes. Because it implies a slowdown.

36:46That isn't true. Well, their guidance... I mean, they're looking for Q1 sales of 11 billion. The estimate was 10-9. But there are people who have incredibly outsized expectations for KLA, for this company, and for Lamb that I just don't think they can possibly do. I mean, there's just a lot of numbers that are very high. There are. Don't you think NVIDIA may simply be a fact that there is still... I mean, it's been an incredibly tumultuous week. There's been so much coming at investors trying to understand all the implications of what has occurred. It's going to take a little while. Yes, but I am saying that Micron, which I believe is doing incredibly well, is getting slaughtered today.

37:28And I just say that that is a very big deal. Sandisk is getting clobbered today. Western Digital. These all don't have a problem with Chinese agents, David. That I know of. That you know of. That I know of. That we know of. We learned a lot this week. We did, didn't we? Well, maybe, Jim, maybe part of it is with the 10 years back to 516. Williams, who's normally pretty dovish, says there's more work to do. B of A today adds, I think, a fourth hike, meaning three more 25s from here. It's like someone wants to be the high. Someone's taking me over here on these sites that you like. I'm sorry, what?

38:14Gambling sites. I know you sit in your basement and gamble all day. The basement I don't have? I'm like one of those guys that's described by the, you know, sits there. Did you see the numbers out of J.P. Morgan? Living off the government. Did you see the numbers out of J.P. Morgan that they had? No, I don't know what you're talking about. And I don't gamble at all, actually. No, no, they put out some numbers about the real problems of younger people gambling. Yes. That really were devastating. What, like 5 % of all accounts make money? No, no, about how much kind of addiction they're in. Oh, yes, yes.

38:48And I'm talking about even suicide. So JP Morgan numbers, I'm not allowed to use them. I don't have them. But I saw them, and they were devastated. Guys, can I make a little diversion here back to the old world economy? No. I'm just taking a look at shares of Berkshire. We don't talk about it that much. No. $1.3 trillion,$1.24 trillion market value. You can do BRK.A if you want. Right. That stock has had a nice move, have you noticed? While, of course, the AI trade has come off. Yes, yes. And it's worth noting, far outperforming now the S &P for the year. Wow. That is very interesting because they do.

39:30People are thinking about them as the buyer of Google and how that was a bad idea. Well, maybe there's more to Berkshire than Google. And obviously they have a lot of cash as well and they're buying back. Are you saying realists? Are you saying shirts? I'm proing it to you, my friend. And, you know, I don't know. Yeah. But it is worth noting that move, much of which has occurred, as you see, just in really the last number of weeks. Pipelines are doing well. There's a lot of good businesses. Well, I know you wrote about their Alphabet purchase not too long. Alphabet's still red for the year, Jim.

40:01Right. Alphabet's the one I think that's most in trouble. I'm telling the members of the club that I think we have to lighten up because I can't distinguish Gemini from search. And I know YouTube is doing fabulously. And I happen to think that they're doing a lot of good stuff with just regular Google, you know, and Waymo is doing very well. The most impressive thing, of course, is Google Cloud. Does Berkshire still own Coca-Cola? They have forever, right? Big position in Narkin Express, too. I mean, Coca-Cola is up 40 % this year. Because I've got to tell you, I spent a lot of time with them in the last couple of years.

40:40Tell me. You know, they just pulled ahead like you wouldn't believe. And, you know, GLP, they're not talking GLP. They're talking world dominance. Coca-Cola, guys. This guy, Enrique Braun, you will love him. Well, between Coke and Apple, those are two good winners for Berkshire. That's an all-time eye on Apple. And then Quincy's did a remarkable job. Quincy totally unhurried, I think, in Coca-Cola versus how amazing he was. I think that Enrique Verona is going to be absolutely incredible. If we put up the chart at Coca-Cola, this is what a hyperscaler should look like. This is my kind of hyperscaler, Coca-Cola.

41:18Maybe put the chart up. Yeah, they don't seem to want to put up KO. It's KO, guys. KO. There you go. Look at that chart. That's a hyperscaler. That is a beautiful thing to look at, isn't it? They are so well-run. They are. Sure. They're just, they're an engine. What a great stock. Yeah, it kind of brings to mind dollar, Jim, having its best week in a couple of months here. Yen testing 160 again. That's in addition to the rate backdrop. Oh, that's, look, it's a shame that we're caught up in so much of the scandal. There's a lot going on. You know, look, a lot of the Amazon in the world making a big move.

41:59There's a lot of really terrific sectors that we don't talk about that are doing well. This health care move has been extraordinary. Health care tech has been nothing short of just unbelievable. Biotech has been amazing. There are regenerons in the world. Look at Cardinal Health. Can they give them CAH? Do you think they can call them CAH? Sure, they can. Look at Cardinal Health. This is the best stock, I think, in the book. CAH. Really? That's Regeneron. That's Regeneron. Yeah, that's been a really nice move. Yep, Amgen has had an amazing... There's Cardinal Health. Look at that, look at that.

42:31By the way, that puts me in mind of CVS, which, of course, announced its decision to break apart and did not do particularly well on day one. Amgen's still the best Dow stock of the year. Amgen is amazing. And they do have something. As much as my childhood trust zone is Lily, the only one that I think could possibly arrive on them at GLP.1 is this Maritime that they are developing. This Repatha is really coming on. I think there's a possibility that everybody in America will take their path. There's no same thing as through cholesterol. You know that. I know. Believe me. I stuck one in my stomach last night.

43:06I did it. Does it hurt again like it hurts for me? You know, it usually didn't, but it hurt a little yesterday. I don't know if I did it right now. You got it to a bit more here than here. To your point, and of course, we're at a certain age, so my cardiologist is like, no cholesterol. I want it to be zero. My doctor will not let me, he doesn't want me as a patient unless I take LePath. I don't want to go out in the pool. I don't want to be like done one day. They're not talking about the plaque issue, but I think it's good for plaque. You do? Yeah. And not the tooth plaque. But you don't, not that you know anything.

43:37Is that based on your good medical opinion? You know, he insults me and he insults me. You set it up, man. I mean, I don't know. Jim, we haven't done Cerebris. We're going to hear from them later this morning. Microsoft, big order. Yes. Are we going to get clarification on that next year, the Microsoft move? I just know that right now there's a lot of people saying a lot of good things about them. By the way, they were never as bad as the stock. The stock just got so darn high, it is driving me crazy. Wait, what did? Cerebris? Do you know how many people are texting me right now that they're on Repathin?

44:13It's magic, it's terrific. Really? I mean, nobody on NVIDIA. Now I mention Repathin, it's blowing up. It's an expensive drug, by the way, Repatha. Well, that's a big problem. I'm shocked that our insurer actually is paying for it. It is expensive. Don't worry. Everyone's going to be on it. But, yeah, I do think that Cerebra shouldn't have been as low. I do think that they have more game than I thought, admittedly. But I still think it's NVIDIA, then it's, you know, way up here and Cerebra. Yeah. Cerebra is just down here. Again, just in case people didn't understand. Microsoft was announced as a new customer.

44:50Yeah, but I'm saying that was a big win. No, of course. I just want to make sure people understand what we're talking about. NVIDIA and then where do you take the shot? We move very quickly. What? NVIDIA is up here. Yeah. Where do you take the shot? It's down here. Yeah, I do it right here. I do it right in the back. I'm telling you this, Repat. Now, by the way, I tried to get Bob Bradway, who's a fantastic agent, CEO, to be somewhat as enthusiastic as I am. He's not like... Boy, he's been CEO of that company for a long time. Very long time. I see you got to talk over a path then, Jim. Very long time.

45:22He's a banker, you know. He's not a doctor. Unlike Len Schleifer, a generalizer of doctors. Len Schleifer, good Queens guy. Love the Queens guys. But he lives in Westchester. Well, I know, but I think he grew up in Queens. But he lives in Westchester. Sounds just like Christopher Walken. He lives in Jabbokwa. Another Queens guy. Jesus. You know, even though you're born in Queens, Queens, by the way, if you go east, you'll hit Queens. I know you've never actually been in the borough, but... My wife's from... You don't live that far away, do you? Did you hear him just imitate my voice? Did you hear that?

45:56I couldn't help it. I'm sorry. It was terrible. I apologize. You know, Alex Carpe has to fill up the accent. You know I love him. He's worse than mine. Yes. And I think he's going back to his roots just refreshing. Alex Carpe has? Yeah, his accent's horrible. What's he saying? His accent's like my mom. He's talked to Politico this week. Yes, yes. Oh, did he? Haverford's finest. As we go to break, watch bonds here. As we mentioned, yield's a little bit elevated as there's increasing odds of maybe another hike coming in the spring and that PPI number, although roughly in line, year-on-year headline, 6.5, still the hottest since 2022.

46:34We were just mentioning Costco. We'll get a bunch of retailer earnings next week. But 11.05, this was an 8.95 name at the end of September. Very quick 25 % gain, Jim. They have been a vanguard of deflation, and they also offered that special dividend that we like so much. And I think it's been a reassertion of their pricing. It's gotten much crisper in the last three months. Really good. Gary Miller Champ has gotten control, the CFO. He's doing a wonderful job, and I really like the way that they have cut prices for a lot of people. They are a check on inflation, there's no doubt. And we'll get Walmart, Target, and Depot next week.

47:15Stop Trading with Jim is next. It's time for Jim and Stop Trading. Some of the theme of the NVIDIA coverage is that basically things are slowing. There's chips all over the place. I think that's hurting not just NVIDIA, but you take a stock like Broadcom is down very badly today. Broadcom is doing very, very well. And I would tell you that everybody is on allocation from NVIDIA. You can't get NVIDIA. I talked to several customers who just said, listen, if it's so bad, why can't I get any chips from NVIDIA? Because the theme is that you had to go to China to get rid of them. No, you didn't. And I just want to assure people that business from the hyperscalers, and you've heard it from Chuck, is monumental.

47:54And if you're selling these because you think that there's too many chips available from Vidya, you're a fool. People, great accounts, both of them we've known and had on air, can't get enough chips. So let's take that off the table rather than just be freaky out about that. Will it, do you expect one day to learn that they were booking more revenue in Asia than they let on? No, I think that they, I do believe that there was a couple clients, maybe not just this one client, that were doing a lot of business. And I do believe that China is behind a lot of it. And I just think that people don't understand that China can flood electric cars into an area.

48:38They can get chips, and people, I think, should be more focused on how nefarious China is than they have been so far. Because they are creating companies to get as many chips as they can, because there are no NVIDIA chips to get. Yeah, definitely going to throw a new wrinkle into the APEX Summit next week. It should be more talked about. They really sink the spiral in one of our great, but now, of course, maybe he was susceptible. But the fact is, is that China's trying to get everything they can. And there was a reason why Alibaba's sock was down. And it wasn't because there haven't been. Jim, have a good weekend.

49:14You guys come in fresh on Monday. I will try my best. I will try and refresh. You too. You've been listening to the opening bell on CNBC's Squawk on the Street. 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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