11AM Hour: Chip Stocks Bounce Back, The Two Sides of PepsiCo Earnings & The Top State for AI 7/9/26

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Carl Quintanilla (1:06)

Good Thursday morning, welcome to Squawk on the Street. I'm Carl Quintanilla with Cima Moda here at Post Night at the New York Stock Exchange. Sara Eisen is off today. Chips definitely in focus. Meta reportedly plans to begin manufacturing its custom AI chip by September, and the highly anticipated US debut for SK Hynik. Analyst Stacy Rasgon will join us to break down the sector's moves.

Sara Eisen (1:26)

Plus the US and Iran launching strikes once again. Control of the Strait of Hormuz, a key focus. But what could it mean for future Chalk Talks? We're joined by one top former US diplomat and a key figure behind President Obama's Iran deal. Why he says the options going forward don't look promising.

Carl Quintanilla (1:42)

Open AIs Chief Sam Almond telling us in the last hour that its newest AI model is as good or better than the competition. We're going to dig in to the latest in the AI race. As for the market, some volatility here, but we are soaring just above 7,500. Dow's up 125, kind of a mixed bag on the sector front. Energy is actually down 1%, giving some relief in the wake of those Iranian strikes, and IT up more than 1%.

Sara Eisen (2:07)

But chips outperforming the Semi's ETF, SMH, reversing earlier losses from the weak. The sector getting a boost from news that Micron will accelerate its investment in US semiconductor manufacturing to more than 250 billion through 2035

Stocks like Applied Materials, Kalei 10 Core, AMD trading upwards of about 6%, all of which are names our next guest covers. Joining us now is Bernstein Senior Analyst, Stacy Rasgon. Stacy, it's great to have you on Micron's big investment. Your thoughts on the trickle down effect it could have on the sector.

Stacy Rasgon (2:41)

Oh, I mean, look, memory capacity in particular is very, very tight right now.

We need a lot of it. And the fact that they're building, I think would be great. They're all adding, right? I mean, you know, we've seen memory prices explode to the upside. We're seeing, I mean, these guys are all driving on 90% gross margin, something that it's something that we haven't ever seen before.

AI demand is just exploding. It's driving tons of demand for everything that they're making, and they need to add capacity. They're building the clean rooms, and then they'll be building out that manufacturing capacity over the next several years. And look, I'm happy to see Micron building it in the US, and building it elsewhere, like at this point, I don't really care. We need everything that they can bring to the market right now, probably. And clearly it benefits, you mentioned a number of the SemiCap players applied materials and the like. Clearly, to build out that capacity, they need the tools. In fact, everything we're seeing in AI right now, personally, I think it translates to more chips, more wafers, more tools. And SemiCap clearly has caught a pretty big bid on that theme over the last year to date as investors start to look for this capacity to come online.

Sara Eisen (3:56)

Yeah, the AI ecosystem is growing. You have memory pairs like Micron putting more money to work. But so are the hyperscalers, Meta now designing its own AI chip. How much competition could this new chip introduce to the likes of NVIDIA?

Stacy Rasgon (4:12)

Well, we've known that this is coming from Meta. In fact, as I cover Broadcom, for example, we've been working with Broadcom on these chips. Broadcom has talked about multiple generations with Meta and they're going to start ramping Meta. Even Broadcom said it in a pretty big way in the next year and beyond. So I'm actually happy finally to see the chips announced. That's always a good first step.