WSJ What’s News - Nvidia Delivers Strong Quarterly Earnings as Stock Falters

Episode Date: August 28, 2024

P.M. Edition for Aug. 28. The AI chip maker’s profit more than doubled amid jitters over the sector’s staying power. And the Treasury Department puts in place new rules to combat money laundering in real estate and investments. Reporter Dylan Tokar tells us how this will impact those industries. Plus, U.S. missile silos need an update but there is growing concern about how much it will cost and how it will impact rural communities. Tracie Hunte hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

What does possible sound like for your business? It's having to spend to power your scale with no preset spending limit. Redefine possible with Business Platinum. That's the powerful backing of American Express. Terms and conditions apply. Visit amex.ca slash business platinum. NVIDIA delivers a strong quarter amid investor jitters over the AI boom staying power. And the US's nuclear missile silos need modernizing, but they're concerned about the cost and the impact on local rural communities.

They're now in this kind of world of uncertainty as to when literally the construction trucks are going to roll up. And some of these communities, you know, ultimately their population could double or triple as the construction workers arrive and then work their way around the silos. Plus, the Treasury Department publishes new rules to crack down on money laundering through investments or real estate. It's Wednesday, August 28th. I'm Tracy Hunt for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today. First up, Nvidia reported its eagerly-awaited

second quarter earnings after the close. The AI chip giant delivered strong quarterly revenue growth and a robust financial outlook. Sales in the three months through July more than doubled from a year earlier to $30 billion. NVIDIA's profits also more than doubled to $16.6 billion. NVIDIA's stock, which is up sharply this year but has been turbulent in recent months, gyrated following the results. Warren Buffett's Berkshire Hathaway closed with

a market cap of more than $1 trillion for the first time, joining an exclusive club that currently includes just six companies in the U.S., all big technology businesses. And we exclusively report that OpenAI is in talks to raise several billion dollars in a new funding round that would value the startup behind ChatGBT above $100 billion. According to people familiar with the matter, venture capital firm Thrive Capital is leading the round, with Microsoft also expected to put in money. In US markets, stock indexes closed lower today a day

after they eked out small gains. The NASDAQ led the way lower, losing 1.1%. The S&P 500 shed 0.6%, and the Dow fell 0.4%. The Treasury Department has finalized regulations that extend anti-money laundering measures to certain investment advisors and real estate professionals. One rule requires certain categories of investment advisors and real estate professionals. One rule requires certain categories of investment advisors

to screen for and report their client's suspicious activity. Another requires at least one party in a residential real estate sale to file a report when the purchase is made with cash and when the recipient is a legal entity or trust. Wall Street Journal reporter Dylan Tokar joins us now to break all of this down. Hi Dylan. Hi, thanks for having me. So what's the aim of these new rules? What has changed?

A lot of areas of the US economy that deal in money and moving money already have anti-money laundering obligations. You can think of banks, money services, businesses, casinos, and normally what that entails is know your customer type obligations and reporting suspicious transactions to the government when they come up. These rules take aim at parts of two industries that have largely been exempt from these measures for quite some time, but which have nevertheless been sources of money laundering concerns. The Treasury's Financial Crimes Enforcement Network, which is known as FinCEN,

has pointed to examples where Russian oligarchs have used US venture capital funds to invest in US companies and startups. Some of the big trade groups push back on FinCEN's use of those examples, saying if that's your concern, this would be entirely redundant to the sanctions that the US has placed on Russian oligarchs following the invasion of Ukraine.

Yeah. So the Treasury Department actually loosened the rules it originally proposed. Why did they do that? So it's pretty common for the Treasury and for other agencies to sort of soften or change parts of a rule that they proposed when they finalize it. You did see the Treasury responding and trying to soften these rules in a way that struck a balance between the overall burden that it's going to impose on the industries and at the same time trying to limit the number of ways that criminals can continue to find

loopholes to launder money. So what's been the reaction from real estate agents and investment advisors? These are very big final rules. It's going to take some time for industry to sort through them and settle on what they do and do not like about them. So far, since the final rules were put online today,

I've had some back and forth with different industry groups. And I would say that they're cautiously optimistic, but they're still going through it. And these are going to take some time for people to make up their minds about them. That was Wall Street Journal reporter Dylan Tokar. Coming up, why a much needed upgrade of the nation's land-based missile silos keeps getting pricier. That's after the break. a taxi for 10 p.m. with alerts. Voila. I won't be getting carried away and staying out till 2. That's Stop Loss Orders on Kraken, an easy way to plan ahead.

Go to kraken.com and see what crypto can be. U.S. nuclear missile silos need an upgrade, but lawmakers are balking at the price tag. The Pentagon says refurbishing hundreds of land-based nuclear missile silos could cost $141 billion. That's $30 billion more than an estimate provided in January. The Congressional Budget Office has estimated the long-delayed nuclear arms makeover will cost at least $1.5 trillion over the next 30 years. But some lawmakers now question whether there's a need for land-based nuclear arms alongside

ones carried on new submarines and bombers. My colleague Francesca Fontana spoke to WSJ reporter Doug Cameron and asked him why the cost of the upgrade has increased so much. The problem is the initial estimates were made with basically very little knowledge. It's 40 years since the US previously looked at both refreshing the actual missiles as well as the silos and all the command control control the wires that go between them in these five states in the Great Plains. Now the 141 billion is just the latest best estimate. Most of this work has not even started, wouldn't start for years. So this is just almost the best guess right now to kind of right the ship after the previous best guess proved

to be way off. What makes it so difficult to renovate these missile silos? There's three main elements to what is called the Sentinel program. First is new missiles, which will replace the sort of 50, 60 year old Minutemen III missiles that are in these silos. The second is there are 450 silos spread across the Great Plains. They're going to be refurbished. And then there are dozens of underground command and control modules, basically. It's a huge construction job. It's a huge infrastructure job to link

them. And then there's this technology job with the new missiles themselves, which that part of it is actually going relatively okay. And these are all located in largely rural communities. How are they being affected by all of this? When the construction trucks rolled into these communities in the late 50s and early 1960s, it was kind of a different political climate. The Cold War was at its height. This was a huge national priority and they just kind of sucked it up and took the money and

jobs that came with it. Move on 50, 60 years. Yes, there are still rural communities, but they're now in this kind of world of uncertainty as to when literally the construction trucks are going to roll up. And some of these communities, you know, ultimately their population could double or triple as the construction workers arrive and then work their way around the silos. You're looking at strains on the existing retail infrastructure, the entertainment infrastructure, and of course, the, you know, the roads and other pieces around what is often farming land. What are these rural communities? How big of a haul do they expect this project to be? When you talk to community leaders and residents as well, they just think some of the initial

plans are a little bit unrealistic compared to how they go about their own lives and how the community's economies have developed. To sort of plump three to four thousand people in a community which probably has a population of ten thousand spread over hundreds of square miles, it's just a huge strain. So that will be part of the sort of re-planning process now the Air Force is not going back to the drawing board but at least going back to think again of can they do this in a better way and also a more affordable way. That was Wall Street Journal reporter Doug Cameron speaking to my colleague Francesca Fontana.

A conservative legal organization is accusing a 35-year-old federal program for low-income students of racial discrimination. The McNair program offers some $60 million to prepare students for doctorates in research-intensive fields like chemistry and math. Students qualify if they're the first in their families to earn bachelor's degrees, or if their family's income falls below a certain limit.

But students from underrepresented groups can apply even if they don't meet that criteria. That includes black, Hispanic, American Indian, and Native Hawaiian students. White and Asian students are eligible only if their parents don't have bachelor's degrees or meet the low income requirements. The Wisconsin Institute for Law and Liberty

filed this lawsuit against the US Department of Education saying the racial criteria violate the Constitution's guarantee of equal protection. The agency says it doesn't comment on pending legislation. The lawsuit expands a broader fight over programs that take into account race in school admissions, employment, and other decisions. And French judicial authorities have brought preliminary charges against Telegram founder Pavel Derov for a host of crimes, including complicity in distributing child pornography, illegal drugs, and hacking software on the messaging app. Advocates for free speech online, such as Elon Musk, have rallied to his defense since

he was detained in France on Saturday night. Deroff's lawyer couldn't immediately be reached for comment. How can we make our job easier? Many school districts around the country are banning cell phones in classrooms. If you're a teacher, does it make your job easier or harder? What questions do you have about the new policies? Send a voicemail to wnpod at wsj.com or leave a voicemail with your name and location at 212-416-4328.

We might use it in the show. And that's what's news for this Wednesday afternoon. Today's show was produced by Pierre Beyanime with supervising producer Michael Kosmitis. I'm Tracy Hunt for the Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.