Wall Street awaits Nvidia's earning report for clues about the chip giant's future

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Morning! Retired Navy SEAL Jocko Willink sometimes works out for three hours a day, but some of the most effective exercises don't require much equipment and can be done right at home.

In today's big story, all eyes are on Nvidia's earnings report after the bell and what it says about the chip giant's future.

What's on deck:

• Markets: Trump's pick for commerce secretary is a familiar face for Wall Street.
• Tech: Internal documents and insiders revealAmazon's desperate attempt to save Alexa with AI.
• Business: Joining the president's Cabinet comes with a little-known tax break that can save appointees millions.

But first, we've saved the best for last.

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The big story

A juggernaut reports

Earnings season is wrapping up, but the stock market's biggest member still needs to get a say.

Nvidia reports its much-anticipated third-quarter earnings after the bell today. It's been a while since one company held so much sway over the stock market.

The Magnificent 7 member has become a party of one this year, far outstripping its peers in performance. Nvidia shares are up more than 200% this year, en route to becoming the world's most valuable company.

But today's earnings report is about what's to come as opposed to what has been. Specifically, Wall Street wants an update on the demand for Nvidia's new Blackwell GPU, writes Business Insider's Matthew Fox.

The highly anticipated chip is important for more than just Nvidia. As the world's top provider of AI chips, demand for Blackwell is a bellwether for the industry's appetite for continued investment in AI.

Blackwell's arrival also coincides with questions about whether AI models are hitting a performance wall.

Nvidia CEO Jensen Huang seemed to address some of those concerns on Monday. He said computing power — which plays a key role in helping AI models level up — was already seeing a "fourfold" increase annually.

Nvidia's new chips won't be foolproof, though.

The red-hot chips are literally red-hot. Reports of Blackwell chips overheating spooked the market earlier this week. BI's Emma Cosgrove spoke to one of the top chip analysts, who said the issues are "overblown."

Still, Blackwell customers need to invest in liquid cooling solutions to ensure they operate as efficiently as possible.

It's another cost companies investing in AI chips need to consider in addition to the energy required to fuel them, which has been a headache for tech giants.

There's also the fear that what you buy won't last you long, as Nvidia has pledged to release a new chip every year. (Keeping that promise hasn't been easy.)

The aggressive product roadmap might be a win for Nvidia investors, but it poses problems for everyone else. The constant release of new, better chips could seriously strain budgets.

It complicates how firms account for their investments. A faster depreciation means customers won't be able to spread out the cost of the chips across several years.

Some analysts are already taking notice. Barclays trimmed earning estimates next year by as much as 10% for some of the biggest buyers of AI chips, like Meta, Amazon, and Alphabet.

News brief

Top headlines

• Trump taps Dr. Mehmet Oz to lead Centers for Medicare and Medicaid Services.
• SpaceX launched its Starship mega-rocket for the sixth time, but the main event was canceled.
• Ikea group CEO tells BI that shoppers are trading down to save money.
• Cathie Wood's Ark pitches mom-and-pop investors on exposure to Elon Musk's startups.
• An AI startup CEO on a Forbes '30 Under 30' list has been charged with defrauding investors out of $10 million.
• Photos show Donald Trump and Elon Musk's post-election bromance.

3 things in markets

1. Trump taps billionaire Howard Lutnick for commerce secretary. If confirmed, Lutnick, the CEO of Cantor Fitzgerald, will be in a pivotal position to deliver on one of Trump's campaign promises: the economy. Here's everything you need to know about the New York financier.
2. Tiger Management is beefing with one of the hedge funds it initially backed. The late billionaire founder Julian Robertson seeded Hound Partners in exchange for a portion of the fund's performance fees. Now both firms are suing each other. Hound's lawsuit says Tiger hasn't provided marketing assistance in recent years, which was part of the agreement. Tiger's suit claims Hound is using Robertson's death to get out of its agreement.
3. A Goldman exec talks through the spike in corporate borrowing that signals the return of M&A. Companies raised over $50 billion in debt capital since Trump's presidential victory last week. Vivek Bantwal, Goldman Sachs' global head of financing, talked to BI about what's fueling the surge and how the bank is looking to compete in the debt market.

3 things in tech

1. Product managers: purposeless, or just misunderstood? Product managers began to populate Silicon Valley in the mid-2000s, and they've often drawn the ire of their coworkers. As the tech industry faces contraction, the usefulness of their roles is under scrutiny — as are their futures.
2. Alexa needs an AI knight in shining armor. Amazon is trying to save its voice assistant with new generative-AI powers, but its rollout has been stumped by a slew of problems. Hiccups with partners like Uber and Ticketmaster, compatibility problems, and accuracy issues have delayed the release of Alexa 2.0.
3. Google's antitrust loss could cost Apple billions. Every year, Google pays Apple $20 billion to make Google the default browser on iPhones. That deal was the crux of a DOJ antitrust case Google lost earlier this year. The government is expected to ask a judge to ban those payments, but it might not be the end of the story.

3 things in business

1. Trump's cabinet could be the wealthiest in history. They could get richer in office. Some of Trump's picks had long careers in the private sector where they earned billions of dollars. When they transition to the public sector, they can delay capital gains taxes on the assets they're required to sell by taking advantage of a little-known loophole.
2. Out with the old, in with the new. X just signed a new adtech partner in hopes of boosting ad revenue, which has been down since Elon Musk's 2022 takeover. The platform also added a new defendant — the Amazon-owned streamer Twitch — to its lawsuit against advertisers, which it accuses of colluding to withhold ad spend.
3. Career advice for government workers trying to dodge the DOGE. As the threat of government cuts loom, some career coaches told BI they're already hearing from federal workers looking to beef up their résumés and explore the private sector. But they might have to tap into the "hidden job market."

What's happening today

• Target reports earnings.
• Former FTX CTO Gary Wang, who testified against Sam Bankman-Fried, is sentenced after pleading guilty to conspiracy charges.
• Secretary of Commerce Gina Raimondo and Secretary of State Antony Blinken host the inaugural International Network of AI Safety Institutes in San Francisco.
• Archegos Capital Management founder Bill Hwang is sentenced after being convicted of securities fraud by federal jury.

The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York. Grace Lett, editor, in Chicago. Ella Hopkins, associate editor, in London. Hallam Bullock, senior editor, in London. Amanda Yen, fellow, in New York. Milan Sehmbi, fellow, in London.