The Rundown - OpenAI Builds Its Own AI Chip, Wall Street Braces for Nvidia Earnings

Episode Date: August 26, 2026

Market update for Wednesday August 26, 2026Check out the Public app for incredible investing tools and to support the show (LINK)Follow us on Instagram (@TheRundownDaily) for bonus content and instant reactions.In today’s episode, Zaid covers:OpenAI’s new Jalapeño chip and why the company says it can outperform Nvidia in certain testsNvidia’s massive earnings report tonight and why expectations are so highAbercrombie’s earnings beat and Intuit’s disappointing outlookWhy LeBron James borrowed nearly $300 million against his future endorsement income

Public.com presents the rundown. Your daily market update in 10 minutes. My name is Zaid Admani, and today is Wednesday, August 26th. In today's episode, we'll break down the fresh inflation numbers that just dropped this morning and what it means for the Fed. We'll also tell you about Open AI's new Halapeno AI chip and preview Nvidia's earnings that are coming up. Then stick around to the end of the show to find out why your life insurance policy,

might have lent LeBron James $300 million. We got a great show for you today. Let's go. Stocks were back in the green on Tuesday with the S&P 500 gaining 0.3% while the NASDAG jumped 0.7% led by a rally in chip stocks. I think stocks also got a boost yesterday from Treasury yields pulling back and oil prices dropping. The 10-year Treasury yield had its biggest one day decline yesterday since, of June following to around 4.64%. And Brent crude fell nearly 4% yesterday after reports of

negotiations between Oman and Iran about reopening the Strait of Hormuz. So there was some good news to hit the tape yesterday, and that brings me to inflation. We just got the PCE inflation report for July this morning. This is the Fed's preferred inflation gauge, and the numbers weren't so bad. The July PCE report showed headline inflation running at 3.7% year over year, slightly harder. than the 3.6% economists expected, but core PCE, which strips out food and energy and is probably the number the Fed cares about the most, that came in right in line with expectations at 3.3%. Now, keep in mind, this still means that inflation is running above the Fed's 2% target. You know, inflation has been stubbornly sticky in the 3% range for a while now, but I guess at least it's not getting worse.

I think this report basically gives the Fed zero reason to do anything right now when it comes to interest rates. You know, inflation is still too high to start cutting rates, and I don't see the Fed hiking rates either given the recent soft job market numbers. So we'll see what Fed share Kevin Warsh has to say about all this. Remember the Fed is gathering in Jackson Hole this weekend where Kevin Warsh will give a keynote speech on Friday. So really looking forward to seeing what he has to say. We'll continue to stay on top of all this. So definitely get subscribed to the podcast if you haven't already and tune in every day to stay in the loop. Let's run through some headlines. Starting with Open A.I. Open A.I. Open A.I.

announced that their in-house-built AI chip can outperform Nvidia in certain tasks. Their new chip is called Halapeno, which honestly I kind of like that name, and according to Open AI, it definitely brings the heat. This chip beats Nvidia's Grace Blackwell Ultra AI chip in two areas, how much AI work it can handle per unit of power and how quickly it responds. So that's a pretty impressive feat by Open AI, but there are two important caveats here. Halapeno is mainly designed for inference work, which is the part of AI where a model is already trained, and it actually answers your questions. This chip is not optimized to train massive AI models, though.

That's still an area where Nvidia dominates. The other caveat here is that OpenAI didn't test Halepenio against Nvidia's latest system called Vera Rubin. That ship just started the ship, so Nvidia didn't test it against that. So I wouldn't call Halapeno an Nvidia killer just yet. In fact, OpenAI's chip chief Richard Ho said that Nvidia remains a key partner, and that Open AI still needs a lot of Nvidia chips, so I wouldn't panic if you're an Nvidia investor just yet. But I do think big picture, this has to be kind of concerning for Nvidia.

Because some of their biggest customers, including Google and Open AI, are all developing their own chips to reduce their reliance on Nvidia. Now, both Google and Open AI have partnered with Broadcom to help develop their own chips. So Broadcom has become one of the big winners here. And, you know, it's easy to see why these companies are developing their own chips. You know, running AI products like Chat ChpT is insanely expensive and requires a ton of Nvidia chips. And right now, Nvidia is able to charge a premium for their chips and make a large margin because

they have the best product. But if OpenAI can move more of their inference workloads onto their own chips, that could eventually save the company a ton of money and reduce their reliance on Nvidia. OpenAI said they plan to start using their jalapeno chips later this year to run some of their AI models. So, Nvidia has to be a little bit nervous. And you know, for OpenAI, I think what they're trying to do is vertically integrate, kind of like how Apple is.

Open AI already has one of the best frontier AI model, but they also want their own chips and their own data centers. And who knows, maybe their own hardware devices too. So we'll see if that strategy pays off. By the way, somewhat related here, the executive who has been overseeing Open AI's data center buildout Chris Malone just left the company last week. So I got to say, there's a lot of turnover at Open AI these days. He is now the latest senior executive to leave the company.

Now, sticking with the AI theme, let's talk about NVIDIA and do a quick preview of their earnings report, which drops this afternoon after the closing bell. And as usual, expectations are sky high. Wall Street is expecting NVIDIA to report revenues of around $92 billion, which would be nearly double from a year ago. And you know, what's interesting is that NVIDIA stock has actually dropped the day after its earnings report for four straight quarters now. And a big reason for that is because investors already expect NVIDIA to crush expectations. so just having a great quarter isn't enough anymore. I think the bigger question here is do invidia earnings even matter that much anymore when it comes to the AI trade? You can make the case that the memory and storage companies like Micron and Sandisk are now the face of the AI trade.

And if you look at Nvidia's stock, it's not a high flyer anymore. It's up only 12% this year and up only 17% over the last 12 months. You know, I think Nvidia's numbers are going to crush it as usual, but I'm really curious to see what Nvidia has to say about their outlook and what Jensen Wong says on on the earnings call. Like, can Nvidia's customers keep spending at the pace they were in the past? And will that spending keep coming from the hyperscalers? You know, here's a fun fact.

Roughly 55% of Nvidia's data center revenue over the past year came from the hypers like Amazon, Google, and Microsoft. And as I just mentioned, these companies are starting to prioritize building their own chips. So we'll see if Nvidia is seeing any weakness there because of that. The options market is expecting some fireworks here. They're pricing in a 5% move up or down. on the stock after earnings.

That would be a pretty big move for a company this size. We'll see that ends up happening. We'll break down the report and all the numbers on tomorrow's show, so definitely tune in for that. Let's talk about some stocks making moves today. Abercrombie shares are jumping this morning after the clothing retailer reported better than expected earnings and raised their outlook for the year.

Revenues last quarter grew 5% to $1.27 billion, while adjusted earnings came in at $4.17 a share, both those metrics beating estimates. I do want to point out, though, a big chunk of that beat came from the roughly $100 million in tariff-free funds the company got. But overall, though, these earnings show that consumers are still buying clothes. In fact, management now expects four-year sales to grow about 5%. And that's why Avedromby stock is up more than 10% this morning in pre-market trading. Now, on the flip side, Intuit stock is getting hammered this morning, despite the company

beating earnings. Intuit is the software company behind TurboTax and QuickBooks, and they saw the revenues grow 14% last quarter to $4.35 billion, and their adjusted earnings came in at $4.3 per share, both those metrics beating estimates. The problem for Intuit, though, was the outlook. The company's starting to feel pressure from people just using Chat, JPT or Claude to do their taxes, so they're considering dropping prices on their software or even offering free products. Investors didn't love the sound of that. Inuit's stock is down around 10% this morning. and pre-market trading.

Let's wrap the show with a fun fact. If you have a life insurance policy from a Midwestern insurance company, there is a chance that some of your premiums went to LeBron James. This is a very interesting story. So Bloomberg reported that back in 2018, a company that LeBron controls

literally called King James Funding LLC, borrowed almost $300 million from two life insurance companies based out of the Midwest. The two companies were Midland National and North American Company for Life. On a side note, these life insurance companies have terrible names. Anyways, this loan that LeBron got was backed by his future earnings outside of basketball. So think like his endorsement deals and licensing income and money tied to his lifetime contract with Nike. LeBron essentially turned himself into a bond. Now, the reason LeBron would do something like this is pretty simple. Instead of waiting

20 or 30 years for all that endorsement money to come in, he just turned some of that future income into a $300 million pile of cash in 2018. And then he can use that cash for whatever he wants. Personally, I wonder if he was making this move to buy a team back then. That's just my guess. Or it's possible that he just wanted to lock down a loan at a low interest rate back then. The loan that he got has a 4.8% interest rate and runs all the way to 2049. Now, on the surface, it might seem a bit odd or concerning that a life insurance company is taking the premiums from regular people's life insurance policies and lending it to an athlete, but insurance companies actually love to make long-term investments. You know, if you think about how a life insurance company works, they collect money today, but they may not need to pay claims or annuities for a couple decades. So they want their assets and the money they collect to generate income over the long term.

Now, there's some rules and regulations on what these life insurance companies. companies can invest in. In the past, they would typically invest in boring government bonds and municipal bonds. But these days, these insurance companies are starting to get more creative to earn a higher return. And, you know, lending LeBron $300 million seems like a pretty safe investment to me. In fact, these loans to LeBron were classified as top tier. Now, where this deal gets a little bit weird, though, is that Guggenheim was the one that helped arrange this LeBron deal. Now, if Guggenheim sounds familiar, that is the company owned by Mark Walter, who would end up buying the Los Angeles Lakers back in 2025,

and then he's shockingly sold the Lakers a couple weeks ago because he's under investigation by federal regulators for shady practices. But to be absolutely clear, this LeBron loan has nothing to do with the federal investigation. It is kind of crazy how all of this is tied together, though. And big picture, it just goes to show you that the life insurance world might not be as boring as it seems. Make of that what you will. Well, all right, guys, that's the running.

down for today. Hope you guys enjoyed today's episode. Thank you guys so much for listening, watching and commenting. Shout out to Mike and V for all the work behind the scenes. And we'll see you guys back here tomorrow.