The Rundown - Nvidia's H20 Chips are in High Demand from China, Starbucks Cuts 1,100 Jobs

Episode Date: February 25, 2025

Stock market update for February 25, 2025.

Public.com presents the rundown. Your daily market update in five minutes. My name is Zaid Admani, and today is Tuesday, February 25th. In today's episode, we tell you why the crypto markets are tanking and the one silver lining for the crypto industry. We also recap Trump's plans to block China's access to AI chips, and now we can have a big impact on Nvidia's business. Then stick around to the end of the show to find out some wild stats.

about Warren Buffett's investing track record. They call them the goat for a reason. All right. Let's go. Well, stocks continued to fall on Monday. The S&P 500 was down 0.5%. And the NASDAQ was down more than 1%. The Dow did squeeze out again,

but nobody cares about the Dow. So. Now, Monday was a pretty choppy day in the markets. In fact, the S&P 500 spent most of the day in the green. But then the markets got trumped, pun intended. The president said that, tariffs against Mexico and Canada will go forward next week. And that comment just tanked the markets to close out the day.

Now, just to catch everybody up, Trump signed an executive order on February 1st, hitting Mexico and Canada with 25% tariffs. But then those tariffs were paused for 30 days because of a deal he was working out with the Mexican and Canadian government. Now those 30 days are about to be up, and it looks like the tariffs are actually happening unless another deal gets done to extend the deadline again. I don't know, a lot of uncertainty right now. And investors don't love uncertainty.

So the stock market's having a tough few days, and that's spilling over into the crypto markets as well, losing more than $325 billion in market cap since Friday. Like Bitcoin right now is trading under $90,000, Ethereum is under $2,500, and Salana dropped under $150, all three of them trading at three-month lows. The crypto market tends to follow the overall stock market,

but things have especially been worse recently. Crypto's been dealing with a lot of turmoil right now. Like a few days ago, the exchange by bit got hacked for $1.5 billion, making it the biggest crypto hack of all time. I feel like that news flew under the radar a bit. And then you had the president of Argentina, Javier Malay, promote a meme coin and then immediately distanced himself from it, which ended up rugging a lot of people for hundreds of millions of dollars.

See, I feel like the vibes aren't great right now with crypto, and that's probably one reason why you have prices tanking. I guess the silver lining in all of this is that the SEC is dropping their lawsuits against Coinbase and other crypto exchanges. This is part of the Trump administration's plans to be crypto-friendly, but that news hasn't been enough to spark a rally. So yeah, I said on yesterday's show that this week could be pretty intense. I didn't expect we'd be talking about tariffs again, or the crypto market to fall off a cliff,

but here we are. Maybe if Nvidia puts up a solid showing tomorrow when their earnings come out, that'll put an end to the market slide. Or it could always get worse. Definitely going to be holding my breath when those numbers come out. I'll be recapping in video earnings and a lot more throughout this week. So make sure you guys are subscribed to the podcast. Consider sharing it with someone who you think might find all this information useful.

Drop it in the crypto group chat. I know we all have one. Not a lot of rocket emojis being shared right now. I still can't believe the president of Argentina just rugged everybody. Let's run through some headlines. Donald Trump is planning to increase export restrictions on AI chips to China. This is according to reporting from Bloomberg. The Trump administration recently met with Japanese and Dutch officials,

and they talked about restricting Tokyo Electron and ASML, two companies that make required technology which is needed to manufacture AI chips from having manufacturing equipment sent to China. On top of the machinery curbs, the Trump team is also considering additional sanctions on Chinese companies and changing the rules of what type of Nvidia chips can be sold and the quantity that can be shipped to China as well. Right now, there are already export restrictions on AI chips

that were enacted by the Biden administration, that might get more restrictive under Trump. Now, Nvidia has tried to find workarounds from these export restrictions. There's like the Singapore loophole where chips are being sent to Singapore and somehow ending up in China. And Nvidia also created a custom chip

for the Chinese market called the H20. It's essentially a downgraded version of the H-100. And the demand for these H-20 chips has skyrocketed in China thanks to Deepseek. The Chinese AI company Deepseek trained their AI model, which is comparable to Open AI's model, using the H20 chips. So now a lot of Chinese companies are ordering these H20 chips to run deepseek's model.

The Chinese tech giant Tencent is testing deep seek on its Wii chat platform, and smaller companies are buying servers with deep seek models attached to it, along with H20 chips to run the model. So if Trump does end up banning the H20 chips from being sold in China, that could be a setback for the Chinese AI industry. And it could also end up hurting NVIDIA's business as well. So we'll see if NVIDIA's business as well. So we'll see if Nvidia ends up commenting on this on their earnings call this Wednesday.

Now, shifting gears, let's talk about another company that's struggling in China right now. Starbucks. As a result of their recent struggle, Starbucks announced that they're cutting 1,100 jobs. This move is an effort to improve efficiency and reduced redundancy. Now, to further this strategy, Starbucks is also cutting a ton of menu items that don't sell well. So a ton of these frappuccinos are going to be cut from the menu, including the Java chip frat. Not going to lie, I haven't had that one before, but I've heard good reviews on it. But yeah, Starbucks's new CEO, Brian Nichol, is trying to turn around the company, and unfortunately, that includes cutting jobs. We'll have to see how it all plays out.

Let's talk about some stocks making moves today. Shares of Lee Auto are jumping this morning after the Chinese EV company unveiled its first EV SUV called the Lee I-8. Kind of looks like a Prius. Now, Lee Auto has been known for their plug-in hybrid cars, but the Lee I-8 is the first fully electric. SUV. Lee Auto also announced autonomous driving software last month, so all that is making investors pretty excited, and shares of Lee Auto are up more than 12% on this news. Competition for the EV market just keeps heating up in China. Now, on the flip side, shares of Hymns are falling sharply after the telehealth provider raised the alarm on its ability to continue selling the generic

branded weight loss drugs. In a regulatory filing on Monday, him and hers said that it can't guarantee that it will be able to continue offering these products in the same manner or at all. And that's because Nova Nordus, we govy and Zempig are getting removed from the FDA's shortage list. In fact, Novo Nordis says it has the supply to meet or even exceed demand. When these drugs were on the shortage list, compounding pharmacies like Hems are legally allowed to make a copycat version of the treatment at a lower cost. But now, they're not going to be able to do that. Compounders have 60 to 90 days to stop making the drug. And that is, like, likely going to hurt Hymns bottom line. Shares of Hems and hers are down more than 15%

this morning in reaction to this news. I mean, this stock was on fire this year, up more than 100% as of market close yesterday. So it looks like it's cooling off a bit. Let's wrap the show with a fun fact. And we're going to talk more about Warren Buffett today. A lot of people call Warren Buffett the goat of investing. And he has the numbers to back it up. Warren Buffett discloses his annual performance and his shareholder letter every year and his track record is insane. Berkshire Hathaway's compounded annual gain since 1964 is 19.9%. That's nearly double the S&P 500 is 10.4%. And Berkshire has outperformed the S&P 19 out of the last 30 years. Just to put it another way, if you invested $10,000 in Berkshire in 1995, you would have more than $330,000 today.

If you had put that money in the S&P 500 instead, you'd have around $22,000. Now, unfortunately, Unfortunately, I was only four years old in 1995, so didn't really have $10,000 back then. Parents just fumbled a bag, you know. Well, all right, guys, that's the rundown for today. Hope you guys enjoyed today's episode. If you did, and you have like 12 extra seconds, consider giving us a five-star rating on Apple or Spotify. Leave us a comment on Spotify, vote into a Spotify poll. Follow our Instagram account for bonus content and clips of this show.

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. I will see you guys back here tomorrow. This is the rundown, your real-time resource for news events and trends in the markets. All views presented in the show reflect the opinions of the guests. You should not take any mention of a publicly traded security as recommendation to buy, sell or hold that security. Run-down guests are not financial advisors and are not affiliated with public holdings or its subsidiaries.

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