OpenAI Proposes 5% Government Stake, Apple Turns to Blacklisted Chinese Chips

**Zaid Admani** (0:00)
Public.com presents The Rundown, your daily market update in 10 minutes. My name is Zaid Admani, and today is Thursday, July 2nd. In today's episode, we'll break down the weak June jobs report and what it could mean for the Fed. We'll also tell you why Apple wants to buy memory chips from blacklisted Chinese companies, and why Sam Altman wants to hand the US government a 5% stake in OpenAI. Then stick around to the end of the show to find out how much more your 4th of July cookout is going to cost you this year. We got a great show for you today.
Let's go.
The stock market kicked off the third quarter with a weird mixed session of trading on Wednesday. The S&P 500 fell 0.2% while the NASDAQ dropped by 0.7%. Now here's the thing, the majority of the stocks in the S&P actually went up yesterday, but the index still finished in the red because chip stocks dragged things down. The Semiconductor ETF fell more than 6% on Wednesday. And the catalyst for this wipeout was the news that Meta is planning to build their cloud business to sell off excess AI computing capacity. And this news sent shock waves through the market because of what it signals about AI. Meta, as you guys know, is one of the biggest buyers of AI infrastructure out there. They're spending hundreds of billions of dollars building AI data centers. So if Meta, of all companies, suddenly has more compute than it needs, maybe it means the supply of AI computing power is finally catching up to demand. And if that's true, the narrative about compute being supply constraint and endless demand that's been powering this chip stock rally recently starts to look shaky. So I think that's why the whole sector sold off yesterday, especially Neo clouds like CoreWeave and Nebius, which were down double digits. Now the other thing the markets can be watching closely is what the Fed decides to do with interest rates. And we just got some data this morning that could impact the Fed's decision. The June jobs report came out this morning and the numbers were weaker than expected. The US economy added just 57,000 jobs in June. Wall Street was expecting around 115,000 jobs to be added. And to make matters worse, the jobs data for April and May combined were revised lower by 74,000. So this was a disappointing jobs report, but what's funny though is that this might be a case where bad news is good news for the market because a weaker labor market means the Fed has less reason to hike interest rates. The next Fed meeting isn't until July 29th, so we have some time between now and then. We'll see how things shake out in the markets over the next few weeks. And remember, the stock market is closed tomorrow for the 4th of July, so no show from us and no deep dive as well. But we'll be back here on Monday, getting ready for earnings season and everything else happening in the market. So if you're new here, definitely get subscribed to the podcast and tune in every day to stay in the loop.
Let's run through some headlines. Starting with Apple. Apple is reportedly trying to buy memory chips from two Chinese companies that are currently on the Pentagon's blacklist to help ease the supply shortage on memory that forced Apple to raise prices last week. Now we talked about this last week, did a whole deep dive on it. AI has caused a global memory shortage right now. AI data centers need massive amounts of high-end memory, so memory makers like Samsung, SK Hynix and Micron have shifted their production to serve AI customers who are willing to pay higher premiums. That's resulted in a supply squeeze of regular memory that goes in computers and phones, and that's resulted in higher prices across the board. Apple actually raised prices on MacBooks and iPads and other products last week as a result of this memory shortage. Well, now according to Bloomberg, Apple is in talks to buy memory components from two Chinese chip makers, CXMT and YMTC to use for devices sold in China. But Apple has a political problem here because both of these companies are on the Pentagon's list of companies believed to support the Chinese military. Now, technically Apple doesn't need formal approval to buy memory from them, especially since that memory is gonna be used in Apple devices sold in China. But Tim Cook has been personally appealing to Trump administration officials, including Treasury Secretary Scott Bessent, to soften the political backlash if Apple went forward with this. There's already been some members in Congress raising red flags about this. And that just tells you how bad the memory shortage has gotten and how desperate Apple is right now. By the way, the reporter who broke this story for Bloomberg, Mark Gurman, I actually interviewed him this week about this topic and all of things Apple, including the price hike. This week's interview was very insightful. Mark dropped some interesting nuggets. So you're definitely gonna want to listen to that one, especially if you're an Apple shareholder and a fanboy like me. So keep an eye on your podcast feed for that over the weekend.