The Rundown - Nvidia vs. Google: Is the AI Chip Race Winner Take All?

Episode Date: November 30, 2025

Adam Kobeissi, Founder & Editor-in-Chief of The Kobeissi Letter, joins Zaid Admani to break down whether Google’s TPU push is a real threat to Nvidia, which Big Tech giant is most likely to hit a $10 trillion valuation first, whether AI has effectively become too big to fail, and how labor-market weakness is pushing the Fed toward more rate cuts. Kobeissi explains why he thinks the S&P 500 will continue to go higher, and why investors will get left behind if they don't own assets.

Welcome back to the rundown, one of the top business podcasts in the world. Today, we are talking to Adam Kobasi, the founder of the Kobasi letter. The Kobasi letter has some of the best analysis and insights about the market. Their Twitter account is a must follow. So in today's interview, we cover a ton, including why Adam thinks that Nvidia will be the first $10 trillion company, Google's emergence as a potential threat to Nvidia, and some potential headwinds for the market in 2026. It was a great wide-ranging conversation. I think you guys will really enjoy it.

All right. Let's get into it. Guys, I'm really excited to talk to Adam Kobasey today, the founder of the Cobasie letter, a fantastic follow on X. They break down markets really well. Adam, thank you so much for coming on the pot today. Thank you for having me. Excited to be here.

Absolutely. There's a lot going on in the markets. It's a great time for you to come on. I mean, the last couple of weeks have been an absolute roller coaster. What do you make of all this? volatility right now. So look, I mean, you know, I know you follow us on X. I'm sure a bunch of people follow us and you've seen our post kind of all year basically

saying own assets or be left behind. So we've kind of been at the forefront of this like bullish narrative, which is for the better and for the worst, depending on the date. But, you know, I think what's happening right now is a lot of this market is just kind of a product of sentiment. There's no bigger driver of price and sentiment, to be honest with you. Because if you look at the AI trade, it really only. improved over the last two to three weeks in my view especially with those in video earnings

if you look at the earnings that in video posted not only did they beat expectations but they crushed it they're they're going to do at least you know two 250 billion of revenue next year at the minimum and i think what kind of happened was sentiment got to the point where you have expectations for earnings or for anything really i related then you have the beat that is expected already so like you're you're basically expecting a beat. But then if you don't beat the expected beat, then all of a sudden it's like, all right, is this bubble popping? Right.

So it's this binary nature and polarity of market sentiment between is this a bubble or is this the next big thing? You're kind of in one of two camps, I feel like right now it's very hard to find someone in the middle. And what happens is when stocks start turning lower, you see this domino effect type move in AI stocks and tech stocks. just about everything because everyone's saying, okay, wait, maybe we're at the top. Maybe this is a bubble.

But then once they start going back up, everyone starts rotating back in. This is the next big thing. And then all of a sudden, we're back to all-time highs. So I think it's really a sentiment-driven thing. We are, you know, as you know, in the camp that this is not a bubble, that this is really is the next big thing. And I think that a lot of the noise, you need to just ignore it on this bumpy road higher. Is this how we're describing you into 2026?

Yeah, it's just interesting to see how quick the sentiment changes as well. because like it literally went from like the sky is falling, the bubbles pop, we're cooked. And then by Monday afternoon, we're all like, oh, things are going to be fine. Google is hitting all the time highs. Other AI companies bounced back. So the vast nature of how things shift is just so interesting. Yeah. And that's the other thing is like you have to, if you're trading in the market today or investing in the market today, you have to realize that markets have evolved into their most reactionary hyper sensitive form in history.

Right. because not only are we in the midst of the biggest technological revolution since the internet, maybe even bigger than the internet, maybe since, I don't know, the industrial revolution, I don't really know how big this is, but it's big. On top of that, you have a situation where we started the year off of the trade war, which was just a tariff headline nightmare, basically. Like at any given minute, you're ready to not sleep for the night. So, and then, you know, couple this with Trump's tweets or posts on truth social,

It's basically just the most headlines you've ever received in the market ever. You kind of combine those two factors. And capital is always on edge, right? And I think especially now that we have such a high percentage of market volume driven by algorithms by automated trading, you know, actually the majority of market volume now comes from algorithms or automated forms of trading, that only emphasizes and amplifies those kind of domino effect time moves that I'm explaining. So, I mean, look, I think in the short run, if you're a trader,

this is probably one of the best markets of all time. I mean, you're getting some huge swings. Trillions of dollars in market camp moving on kind of honestly, headlines that are not even that material in time. And if you're an investor, just ignore the noise, zoom out and realize that we've gone very far. I mean, this has been a fantastic year. It's been two great years, actually, for AI. A 5% or 10% pullback or even 20% pullback in some of the biggest names is completely

healthy within the definition of a healthy technical pullback in my view. I want to move forward a little bit and talk specifically about Google. Their stock is just up into the right right now. Every single day is 2, 3, 4% moves. On the flip side, you have Nvidia, which is now starting to hit some road bumps here. So Google announced there was a report about Google's TPUs, their in-house AI chips. They're going to start selling them to meta. Is that going to be a real threat to Nvidia?

What do you make of Google's rise now where they went from a company that people thought might get cooked by Open AI and the rise of AI? to now being a leader in that space. Yeah, so, you know, our big call earlier this year was kind of like Google the 300, right? Google kind of coming out of left field and crushing expectations on AI, just as everyone counted them out. That was our big call. Now we're, you know, nearing 330. I think we were above 330 premarget.

It's interesting. You know, I think it's a constant reminder that you cannot get comfortable in the AI world, right? These founders, these, no companies is, quote unquote, safe. Okay. But at the same time, that doesn't mean that it's a bubble. That just means that innovation and there's a lot of innovation is advancing. There's a lot of players in the space. So like the whole TPU versus GPU, I mean, I think it's an interesting, you know, you brought that up. I think it's an interesting situation. It's definitely material. It's definitely worth noting. But I also think that again, you go back to this situation with Nvidia and now down five or six percent on

the day, basically losing close to $300 billion of its market cap on this headline for a deal that I mean, it's probably going to be solidified, but it hasn't even technically been solidified yet. It goes back to that situation. What I was saying is that expectations are so high that really, it's markets are just looking for a reason to say, okay, wait, hold on a second. We need to sell this. We need to make sure that Nvidia isn't above or whatever. But if you really look, again, zoom out like I keep saying, Nvidia controls 90% of the AI training compute globally, right? Compute demand is growing.

in some cases, 70 to 100% per year, even in a bear case, 50% per year. InVitya can't keep up with that, not even close to keep up to that. So it's a huge pie. Even if another big player gets a small part of that big pie and that pie is growing every similar year, I think it's great, honestly. I think it's more of a sign that we're not in a bubble. It's a sign that this is the next big thing. There is a lot of investment and a lot of the, you know, Google obviously has a positive cash flow

is one of the biggest companies in the world. This isn't like an open AI type thing where people are saying, they're announcing all these deals, but they don't have any, they're not profitable or they don't have revenue or whatever. I mean, this is Google. Right. Like these are the, these companies are the biggest companies that are, have proven themselves. So more competition. It's always a wake up call to investors, but I think it's just making that pie even bigger, which if you have a small piece of a bigger pie, that's still, they can still be bigger than a big piece of a small pie. So do you think this reaction by the markets right now, specifically of invidia stock is an overreaction

because, I mean, they've been getting killed over the last few days. Do you think this is a legit threat to Nvidia going forward because it's not just like the Google news but it's also like news coming out the Barron's reported over the weekend that Nvidia had to send out a letter to Wall Street analysts refuting some accounting allegations there's been Michael Burry's been tweeting negative stuff about them and he's he's short on them so do you see this do you see this as an overreaction or a legitimate concern yeah I mean I think the market is going to is going to play itself how I think overreaction or not it's hard to say I think it's it definitely war is some volatility in the stock.

But if you look further out, I mean, my call has been for a long time now. It continues to be the, and video will be the first $10 trillion company in the world. And I think that will still be the case. I just think, again, it's a bumpy road higher. The pie is getting bigger. And these names are, these names have a high beta, right? Like you're going to see big swings in both direct. We've already saw it.

Invidia fall over 40% in the first half of this year, only to go up another 100, 50% or whatever it was from the low, you have to be able to weather these swings if you're in these big names. And you have to be able to not necessarily look at every headline. We've had, how many accounting scandals has Nvidia had this year? Like 20? I feel like I see one every week, account receivables or China or are smuggling into Taiwan or I don't know what.

All these different things are always coming up. But you shouldn't be blind. I guess you shouldn't ignore everything. But you also can't just be so paranoid that you believe all these headlines. So I think if you look at the numbers, Nvidia is getting cheaper as it goes up. Its forward earnings multiples are only going down. I mean, Nvidia is cheaper than Mulmar on a forward PE basis,

on a 12-month forward PE basis. It's actually cheaper than a lot of that, if you have 100 components, which people consider blue chips or safe names or whatnot. So, you know, look at the numbers, look at the data. And I think this ultimately, if you're saying you look two years out or 12 months out even, this is a great buy right now, my view. So that's very interesting.

You say that how like, Nvidia is considered, is actually cheap compared to like historically and also compared to other S&P companies. But do you think because of market sentiment and just like the vibes right now that like maybe Google could end up overtaking Nvidia when it comes to the largest company in the world? Because I mean, there's just so much momentum behind Google that it just seems inevitable at this point. Yeah. Yeah. I mean, it's certainly possible.

I mean, if Nvidia keeps declining a few percent and Google rises another five, 10 percent, I mean, yeah, they'll both be around $4 trillion. But again, I don't think that's necessarily, that swings in the market, right? Like a lot of these things happen. A lot of these, wasn't Larry Ellison just the richest guy? He was the richest yet. For one day, right? And now the stock is down like 50%, like two weeks later.

So, I mean, there's a lot, there's going to be a lot of fluctuations in the market, but I don't put too much weight on who's the biggest right now versus who's not, and Apple and all these. I think if the pie continues to grow up holistically, that's good enough for me for the bulkies. It is pretty crazy to see, though, like these giant multi-trillion dollar companies have wild swigs, right? 100, 200, 300. They're like adding and subtracting, you know, like a Coca-Cola of every single day, which is crazy. It's insane.

And there has never been a time like this before where so much market cap moves. And also, it's interesting how this is something else I've been discussing is how these, you know, if you talk about AI in the U.S. and basically China, that's it. anything under $100 billion is not a headline anymore. But like you look at Europe and there's headlines about a $1 billion AI investment. Like it really has become the AI arms race between the U.S. and China and in the trillions of dollars of headlines now. We're not even, 100 billion is barely notable anymore. So it's crazy. So I was thinking with that topic of how these numbers have gotten so big, something that you guys talk about a lot is how there's a lot of concentration at the top, right?

Like because of the because of how big these big tech companies have become, you know, Nvidia makes up 7 to 8% of the S&P. The big tech companies are making them a huge chunk of the S&P. Are you concerned about that at all? There's no breath in the market anymore. Is that something to be concerned about for investors moving forward? So, you know, that has been the case for the last few years, and it continues to kind of move in that direction.

Look, in an ideal world, yeah, it would be great to have a market with more breath, where the, you know, the rallies, more prod base. But I just think that in the market that we're in, in the economy that we're in, it's, it's moving in the direction where these large cap companies are really driving most of the output and most of the growth for the economy, for the market and for innovation, right? And so I think the problem is, like, even though it's not ideal that a few names are driving the market higher, the flip side of that is what do you do, right? Like, I mean, if you just take no exposure to equities because of that, then you're basically missing out, you've missed out. you've missed out on one of the greatest rallies of all time and still continues to you, one of the greatest rallies in all time. And then couple that now with, see, this is even more of an argument for the bulkcase in our

review, because if you couple that now with rate cuts, right? So you have this thing where everybody keeps saying the K-shaped economy, right? The consumers are struggling, but AI is booming and Wall Street is booming and the market's up. And what the byproduct edit is, is that the Fed, and I don't want to get too technical, but the Fed basically is being forced to cut rates because the labor market is weak. So Main Street is weakening, right? On the flip side, inflation is still running kind of hot, still around 3%. And no one in the Magnificent 7 needs a rate cut.

Like none of these companies at all need a, honestly, maybe a rate hike. It's that hot, right? So, but the problem is the Fed has no option, right? Because Americans need the support as a layer market deteriorates. So now you're adding fuel to this fight. that's already raging and these few names that are driving the market. And I think that only makes this case-ship economy bigger. I think the wealth gap gets wider, as I've been saying.

And that comes back to what I've been saying all year is own assets or be left behind because asset owners will be the ones that reap the rewards of this case-ship economy broaden. So all that to say, you know, the market being controlled by a few names is not ideal, but I think that will actually only result in higher overall, you know, prices for major market indices over the next 12 months call it. What concerns me with all this coming, all the market cap kind of being consolidated to the top is that if we see like a extended period of time where AI stocks continue to take a hit, let's just say meta continues its slide, other Microsoft continues a slide. You move to Q1 and in those earnings calls, if there is a, if they announce an AI cap X cut, like they slow down spending, that could have a cascade. effect on the entire market where like that freaks out investors that freaks out the entire

market i think even i think it was uh a i cz zar david sacks tweeted recently that a reversal in a i spending could lead to a recession given how much ai contributes to the uh GDP growth um so is is AI too big to fail at this point like does a i capex keep does that to keep expanding in order for the markets to keep going up yeah i mean look i think your point about markets being intertwined and all these companies kind of feeding into each other is is absolutely correct. And I think that is why when these stocks turn lower, you see sentiment flips so fast, right? Like you're, it almost, there's days where it feels like it's the end of the world, right? Even in crypto, you see the same thing.

But at the same time, I mean, yeah, it's all about CAPEX. I think CAPEX, we're going to see over, you know, we're seeing over $600 billion a year in annualized CAPEX just in the MAG 7. Cost of capital is going down now. and it's going to continue to go down, especially as Trump now is preparing to play a new Fed-Chairn. So I think over the near term and even over the next year or so, I don't necessarily see that as major headwind.

And, you know, we continue to see the SEP heading higher. At what point are you going to start getting concerned of the AI trade getting out of hand? Is it if Meta borrows, you know, $2 trillion to build more data centers in Louisiana? Because we haven't really hit the debt cycle yet, right? Oracle is pretty much levered up, but everyone else doesn't have too much debt on their balance sheet. Is that the point where things start getting scary? Yeah, I mean, you have to sometimes look at some of the headlines and say, are this is feasible? If it gets to the point where things are not feasible, but even then, right, like, who is the judge of what's feasible?

Because if three years ago, you told us that Chitabit was going to be announced in two weeks or in a week, which is when it was announced three years ago, and then now these companies were going to become what they are today, you would have said that's not feasible. Right. So when you're in the middle of a technological revolution, there's the reason it's called a disruption is because it disrupts things. Right. So you almost have to have things that seem unbelievable for a technological revolution to happen. Now, on the flip side, like, if we're looking out years and there's just no path of profitability, these companies are just kind of announcing headlines and nothing's happening and everything kind of just keeps feeding into. to itself, then yeah, I would start to say maybe this is just kind of all hype, right? But right now, I think all the numbers are there. The investments are there. The CAFX is there.

The demand is there. The revenues, though. The revenues are waiting for the revenues to come. The revenues are coming, right? But I also think, like, governments are also during the AI arms race. I mean, look at electricity demand, right? Look at energy demand. I mean, these are things that you can't refue, right?

So I think, given another 12 months, and you're going to see things really start to continue transforming here. Okay. It'll be, yeah, the next 12 months are going to be very critical. Zooming out, though, heading into the end of 2025, going into the start of 2026, what do you think are the top macro headwinds that you're keeping an eye on for the end of this year and as we get into next year? I think, you know, at the forefront of macro right now is obviously the Fed, right? And what do they do with this kind of stagflation situation we have where inflation's running a little bit hot, labor market is not strong at all? And, you know, tariffs kind of playing in the background.

You don't know what's going to happen. So I think that's at the forefront. That's definitely a big headwind. As well as, you know, I guess, I guess with, you know, geopolitics and kind of like what's happening around the world, that has been a headline or headwind, but I feel like that's something that's kind of pairing back, which has been favorable for markets, specifically because Trump wants to be this, like, peacemaking president, right? So I think we find some relief there. Also, I'm kind of watching this government shutdown thing again. I mean, this could flare back up in the beginning of the year. And I think the government shutdown is not material for markets in the long run,

but more so for like this economic data blackout that we had. And I think markets don't like a period of time where we don't have information, right? And that's kind of why we saw volatility return in November, in late October, early November. And now the Fed is going to be cutting rates most likely again into another basically data blackout because a lot of that data is not coming until after December. But yes, I think a lot of 2026 will be the year of the Fed. I think earnings will continue to be in the spotlight. I think earnings growth will remain robust, but obviously expectations are rising.

A headwind there could be, you know, expectations rise too high, right? And this market is a market of expectations, of course. Do you think the tariff story is fully done, though? You think the tariffs aren't going to be a headwind at all. Everyone's has kind of moved on, price it in, we're good to go. I think it will continue to have. have these like episodes of kind of flare-ups, kind of like what we saw on October 10th with the 100% China tariff thing, right? But I think tariff headlines are generally a great

buying opportunity. I think, I think we, if you, we put out something called a tariff playbook when that happened where we basically like outlined the four to six-week process of how this works. It starts with Trump, you know, threatening some country in a post and then later that day, a big, scary headline comes out, 100, 200% tariff, basically something that would halt commerce completely. And then it kind of over the weekend things develop. You start hearing something, you know, by Monday morning, Secretary Besson says maybe, you know, well, we'll push back or everything's going to be okay. And then eventually a few weeks later, trade deal comes out, etc., etc. I think when markets are kind of gets to the point where the terrorists are fully

priced out, which you seem to happen a few times, those headlines had the ability to cause five or 10% drawdowns in some of the big names, but they almost always get bought. They have almost gone, they have always gotten bought purchased since, basically since April. So I think that continues to be the case. But I see that as like a mild headwind, but not something that leads us back to the low is that we were in April 2025, not at all. I think maybe just small brief outside of downturns. Yeah, I'm just curious to see like what, what's going to happen with tariffs? Are they going to eventually be passed along to the consumer? Are they, our corporations is going to continue to eat it? Are more trade deals going to get worked out? So I think we're kind of like

people aren't freaking out about it. I think we're kind of like in the middle innings of it, but I don't think the full story has been, it has been cold. I think what happens with that is it's kind of like a partial, I think it's going to be partially passed down to consumers. It already kind of is in a one-time inflationary type of hit. So most brands are like, you know,

if you look at, I don't know, luxury watch brands or vehicles or whatever, they're all kind of doing the same thing. They're saying, you know, we're going to split the tariff with the consumer. We'll raise price to buy 10 or 15 percent. and we'll eat the other half of the tariff. And it's like a one-time inflationary type of thing.

So I think that's generally what's happening. You're already just kind of seeing that. But it's probably not something that leads to like some huge surge in inflation back to six or seven percent CPI or anything unless tariffs continue to rise. Again, it's not part of our thesis. Yeah. Well, we'll end with this question. The Fed, right?

So the Fed meeting's coming up in December. I think that's the only thing the markets focus on right now. There's so much optimism around a rate cut because a couple of Fed governors said they're going they're going to push for rate cuts. What do you think the Fed should do? And what do you think they're going to do? And what do you think they should do? Yeah. So I think another 25-bips rate cut is coming. You know, that's kind of been our view for the last few months. I think, look, I think the Fed is kind of forced into this situation, which is unfortunate, to be honest with you, but they have a dual mandate, right? They need to maintain price stability, but also need to contain unemployment, right? Maintain maximum

unemployment. When both ends of those of that mandate are moving in opposite directions, it's what you call the Fed's worst nightmare, right? Like you really can't win and you have to give up on one side of the other. Right now, and I view it as a scale, right? So right now I view the scale of inflation versus employment. The unemployment side of things is definitely much heavier than the inflation side of things, and it's a bigger problem. Specifically because- Despite unemployment rate being at record lows and, you know, the job numbers haven't shown any major concerns just yet. So, yeah, I mean, I would say, look, unemployment's up to now above, you know, close to

near 4.5%. So it's not at the record, though, it's near it. But you got to look beneath the surface a little bit here. Like if you look at underemployment, underemployment's near 9%. If you look at youth unemployment, like college graduates, almost one in 10 college graduates is now unemployed. I think that's above the 2008, 2008. high. And then also, you know, their wage growth is not keeping up with inflation. So there are

like things under the hood that are much weaker. Even private payrolls this morning we saw in the four weeks ending October 8th, private payrolls lost around 13,500 jobs per week off from $2,500 per week in the previous period. So there's a lot of signs of things start in the weekend. And the problem is the Fed cannot wait and say, yeah, okay, maybe once an unemployment hits 6% will move. Like they need to be ahead of. the curve ideally. Right. So ironically, too, President Trump was kind of right back in earlier this year when he

was calling for rate cuts. Even though no one knew in the data, I guess the labor market kind of did top earlier this year. But all that's to say, I think they will cut rates again. And again, it's unfortunate, but I think this will actually only fuel the case-shaped economy. I think this will fuel markets, but also kind of leave people who don't own assets behind because they're not going to have a hedge against inflation that's going to also.

moderately tick up probably as financial conditions get easier. And also, you know, there's this whole thing about who's the next Fed chairman and the Fed governors are kind of playing into that too, right? So you see this whole, like, very divided Fed right now. You either want Thrift the dips cut or you want rig hikes. Like, it's not even like some consensus, whereas everything before this year was a unanimous decision by the Fed, or they said it was at least. So I think that also plays into the devilish narrative.

So I definitely think we get another December rate cut. I think from there, you need to wait for some more data and you kind of go meeting by meeting, but probably another couple of rate cuts in 2025 or 2026 at the minimum. Yeah. I mean, regardless, it's going to be a wild few weeks as we enter the next year. I mean, so many things up in the air right now. So I'm going to be looking forward to your tweets, breaking it all down. Adam, I appreciate you coming on.

Everyone go follow the Kobesi letter on Twitter. Is there anything else you want to plug? Just check us out. You know, I appreciate you having us. We're at Kobasi on all platforms, the cobasidator.com, if you want to read our research. And I think, look, we're, I think we're really in some of the most exciting times ever for investors. I know people, people don't always love the volatility, but for me, that's what keeps me going. So let's keep it interesting, you know, why not?

Making an exciting market. I'm 100% with you. I think we need that a little bit. You know, we need a little bit of volatility to get the bloods going. Absolutely. And it feels good. Even if our portfolios are down, it feels good when there's a little bit of up and down. So fantastic stuff.

Adam, thank you so much for coming on. And everybody go check out the Kobasey letter on all platforms. Thank you for having me. Of course. Well, all right, guys, hope you enjoyed that great conversation with Adam Kobasi. I think the most shocking part to me was when he said that in video would be the first company to hit a $10 trillion valuation, especially given all the challenges they face today. But we'll see what happens.

I do agree with Adam, though, that regardless of what the market does in the short term, it's going to be important to hold assets and stay invested for the long term. So thanks again to Adam for coming on the podcast. Everyone go follow the Kobasi letter on Twitter. Honestly, it's one of my favorite follows. If you guys enjoyed today's conversation and have like five extra seconds, consider giving us a five-star rating on Apple, Spotify, YouTube, wherever you listen to your podcast.

And if you're listening on Spotify or YouTube, don't forget to leave us a comment. All that engagement really does help us out and helps other people find the show. Thank you guys so much for listening, watching, and commenting. Shout out to Mike and Connor for all the work behind the scenes. I'll see you guys back here on Monday.

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