The Rundown - Google Unveils New AI Products, Nvidia's CEO Criticizes U.S. Chip Export Restrictions

Episode Date: May 21, 2025

Stock market update for May 21, 2025.

Public.com presents the rundown. Your daily market update in under 10 minutes. My name is Zadadmani, and today is Wednesday, May 21st. In today's episode, we'll tell you why investors are getting worried about the bond market. We'll also recap all the AI announcements from Google yesterday and why investors weren't so impressed. Then stick around to the end of the show to find out why Calorna lost nearly $100 million in Q1. We got a great show for you today. Let's go.

Well, guys, the wind streak is over. Stocks finished in the red on Tuesday, snapping a six-day rally. Both the S&P and NASDAQ dropped around 0.4%. And honestly, there wasn't a lot of drama or big-name moves. It was another boring kind of day. You know, these days, most of the drama is happening in the bond market. Investors are keeping a close eye on the 10-year and 30-year U.S. Treasury

yields, especially after Moody's downgraded, the U.S. credit rating last week, which is starting to push up treasury yields. In fact, the 30-year treasury is now above 5%, the first time since November of 2023. And the 10-year treasury yield is now above 4.5%. Now, the reason this matters is that rising yields makes borrowing more expensive. Higher treasury yields, especially the 10-year treasury, it means higher mortgage rates and car loans and credit card rates, and that has a ripple effect across the economy. In fact, the average 30-year mortgage rate is now back above 7%. And high mortgage rates is one of the reasons why the housing market is frozen right now.

And that has an impact on companies like Home Depot. We actually talked more about that on yesterday's show. So go check that out if you missed it. So yeah, that's why people are paying more attention to the bond market these days to see how much higher these yields are going to go. So I'll keep you guys in the loop of any major developments. I'm also keeping an eye on the crypto market, especially Bitcoin. It continues to march towards all-time highs.

Bitcoin is currently trading around $107,000. And I should mention a quick correction from yesterday's show. I said that Bitcoin's all-time high was $107,000. Yeah, that was my bad. Bitcoin's record high is actually $109,000, which was set back in January. So Bitcoin is now less than $2,000 away from setting a new record high. And with the way things are going, it could happen this week. Let's run through some headlines.

Starting with Google. Google kicked off their I.O. developer conference yesterday. I actually watched the keynote and they brought the AI sauce on this one. The company showed off a ton of new products including a next-gen search engine called AI mode. It's a chat box style interface that ditches like the classic list of blue links in favor of conversational answers. They give it like chat GPT but infused with Google juice. It's already live and I've tried it. It's pretty great. I don't think I'll be doing a regular Google search after using AI mode. Google also showed off V-O-3, which is their upgraded AI video.

generation model. I mean, some of the examples they were showing were just mind-blowing. And if that wasn't futuristic enough, Google's working on these 3D video conferencing tools called Google Beam. Imagine like FaceTiming someone but seeing a 3D version of them. Google is partnering with HP to release that product and they're also working on smart glasses in partnership with Warby Parker. That announcement sent Warby stock up 15% yesterday. But there was a catch. If you want access to Google's most advanced AI toys, you're going to have to subscribe to their AI Ultra subscription, which costs $250 a month. That's more than what my electricity bill is every month. So yeah, that was a bit of a sticker shock to me. I guess maybe even Google can't afford to eat the cost of running these models.

Despite all these major AI announcements, the market wasn't so impressed. Google stock dropped around 2% after the keynote. And I think it might be because investors are worried that this new AI mode search feature could end up cannibalizing Google's traditional search ads business, which is a cash cow. So despite Google probably taking the lead in AI, if they can't monetize it in the same way they monetize search, this could ultimately end up hurting their bottom line down the road, which might be what's making investors kind of nervous. All right, let's keep it rolling and talk about the king of AI,

NVIDIA CEO Jensen Huang. He took some shots at U.S. policymakers this week calling America's chip export restrictions on China, a total failure. He made these comments while speaking at the Computex Conference in Taiwan this week. Jensen said these export restrictions haven't stopped China's AI development. In fact, they're actually accelerating it. See, Nvidia used to own 95% of China's AI chip market. That number is now down to 50% because Chinese tech companies are turning to Chinese AI chip makers like Huawei to fill the gap. Remember, the US government has blocked Nvidia from selling their most advanced

Blackwell AI chips to China. And then on top of that, the Trump administration shocked some people by recently blocking the export of the H20 chips, even though that chip was already a scaled back version designed to meet previous export restrictions. And that resulted in Nvidia taking a $5.5 billion

hit. Jensen said the U.S. thought these rules would protect America's lead in AI and hurt China, but all it's done is push Chinese firms to double down on building their own hardware. And I think I'm with Jensen on this one. And I'm not just saying that because I'm an NVIDIA shareholder. I think these export restrictions might be hurting more than they're helping. But let me know

what you guys think in the comments if you guys are pro or against export restrictions. NVIDIA did get a bit of relief this month, though. The Trump administration is rolling back the Biden-era AI diffusion rule, which would have restricted AI chip exports based on a country's relationship with the U.S. So rolling that back is going to help NVIDIA. But I wonder what NVIDIA's stock would do if NVIDIA got full access to the Chinese market again. It might be too late for a video to recover that market share that they've lost to Huawei. Let's talk about some stocks making moves today. Low shares are rising this morning after the home improvement giant reported mixed earnings.

The revenues slightly missed for the quarter, they did beat on earnings for Q1, but more importantly, the company reiterated their full-year sales guidance thanks to solid demand from professionals. That's making up for the lackluster demand from DIYers who've been holding back on doing major improvements, because of the frozen housing market and higher interest rates. This was the same story we heard from Home Depot this week on their earnings call. Lo's shares are up north of 1% this morning in reaction to their earnings. By the way, are there any Lowe stands out there? Because I know that Home Depot has like a cult following,

but what about Lowe's, man? I feel like they deserve some love. Now, speaking of loyal fans, let's talk about Target. They also reported earnings this morning, and their shares are dipping after the retail giant missed on sales estimates for the quarter and cut their full year sales guidance. Comparable sales dropped 3.8% from a year ago, and Target is now expecting sales to decline this year

after previously forecasting growth. Executives are blaming everything from high interest rates and tariff uncertainty to weak consumer confidence. I think the bigger issue here for Target is that they rely heavily on discretionary categories like apparel and home goods, which makes up 65% of their sales. Nobody's going to Target to buy groceries.

And with shoppers pulling down, back on non-essential items, that's a tough spot for Target to be in. And as a result, Target shares are down more than 6% this morning in reaction to these earnings. And finally, shares of VF, the company behind brands like Timbalin, North Face, and more are seeing their shares nosedive this morning after providing weak earnings guidance. They're dealing with tariff issues because the company makes 85% of their products in Southeast Asia and Latin America, which means they're going to have to start paying tariffs. VF says they're taking advantage of the 90-day tariff pause and try to to import as much as they possibly can. But if tariffs stick around, it's going to have an impact on

their business, which is why VF stock is down about 15% this morning on this news. Let's wrap the show with a fun fact. The Buy Now Pay Later company, Kalarna, lost nearly a $100 million last quarter. That was more than double what they lost in Q1 of 2024. And one reason for this loss is that people just aren't paying back the Buy Now Pay Later loans. has been expanding like crazy with partnerships with Walmart, eBay, and even DoorDash. And there was a lot of jokes and memes about people buy now pay latering a burrito. But giving more people access to their buy now pay later service means that more people aren't paying them back, which means more losses for Kalarna.

By the way, Kalarna was expected to IPO earlier this year, but they put that on pause after the tariff dramas last month caused a bunch of volatility. And they didn't give any updates on when they're going to move forward with the IPO. And after reporting $100 million loss in Q1, I don't know what kind of. of excitement there is going to be for their IPO. Also, another interesting tidbit from this Kalarna earnings call. They used an AI avatar of their CEO to present the earnings. That was a little weird. Not going to lie. But maybe that's the future of earnings calls. It's going to be an AI avatar of the CEO answering questions from AI reporters. We might not be too far away from earnings

calls being AI slop. Well, all right, guys, that's the rundown for today. I hope you guys enjoyed today's episode. It's been a relatively quiet week so far, not a lot of drama. Bon markets are pretty interesting and Bitcoin is getting close to all-time highs, which is nice to see. But the stock market has stayed pretty quiet, which means we're probably on the verge of getting some major news. So yeah, stick around with us and we'll keep you guys in the loop. And next week, we're getting earnings from Nvidia. So that should be a good one. By the way, if you guys enjoy listening to our show and have like 10 extra seconds, consider giving us a five-star rating on Apple or Spotify. And if you're listening on Spotify, don't forget to vote in today's Spotify

poll, leave us a comment on Spotify, all that engagement really does help us out and it helps other people find the show. Thank you guys so much for listening. Shout out to Mike and Connor for all the help behind the scenes and we'll see you guys back here tomorrow.