Tuesday's Top Takeaways: AVGO CEO Compares AI Investors to Gamblers, Mixed Healthcare Earnings

Marley Kayden (0:01)

Welcome back to Market On Close. I'm Marley Kayden here in Chicago, alongside Sam Vadas at the New York Stock Exchange. Here's some final thoughts on this session today. First, getting word from Anthropic. It is going to give potential investors a fresh look at its financial performance as the AI startup prepares for a highly anticipated IPO. Now the move comes as the economics of the AI boom face greater scrutiny following that Financial Times report last week of a $20 billion discrepancy in OpenAI's financial figures. Anthropic has seen explosive revenue growth fueled by demand for its cloud models, but that growth comes with enormous computing and infrastructure costs. Investors will be watching closely to see whether Anthropic can translate that demand into sustainable profits, particularly given its significant financial commitments to cloud and computing partners. This disclosure could, though, also help set expectations for other AI companies that are considering going public as investors weigh the sector's massive growth potential against rising costs, questions around financial transparency, and uncertain profitability. And as we were just talking about, we saw healthcare under pressure today, the worst performing sector on the day, as Johnson & Johnson pulled it lower. But United Health Group ended the day just below the unchanged line after raising its full year profit outlook, following stronger than expected third quarter results. The healthcare giant's turnaround efforts appear to be gaining traction, as EPS came in at $4.69 per share. That beat estimates looking for $4.14, while revenue totaled $112.7 billion.

That was slightly below the year ago levels, but it was ahead of Wall Street's expectations. The company's medical care ratio also improved to 88.4 percent from 89.9 percent a year ago, meaning that it likely collected more premiums than it paid out in benefits, although membership continued to decline, and medical expenses remained elevated. UnitedHealth now says it expects its full year adjusted earnings to be at least $20.50 per share, up from its previous forecast of $19.50 to $20. The company also announcing it is rolling out AI-powered listening tools to reduce physicians' administrative burdens and free up time for patient visits. Much in line with what we were just talking to Anne Ball about, Sam, but we'll cut your eye during the session today.

Sam Vadas (2:13)

As I mentioned earlier, I mean, it was really Broadcom CEO Hock Tan getting a lot of attention today for comparing AI investors to casino gamblers. He suggested some of them have little understanding of what they're betting on. And what financial commentators talking a lot today was this came from a chip industry leader rather than a prominent investor. And this is someone who obviously sits at the forefront of designing chips, which are critical to the AI build out. So that was interesting. And I spoke to Lizanne Saunders about this, who has raised concerns herself about the casino-like nature of these markets.

Really driven by speculative retail trading. And she believes it's really just the nature of the high-frequency trading community, which tends to pay off each other's positions. Now, away from that, Visa actually was one of the winners on today, up 1.7% after getting the green light in China to set up a bank card clearing business. It is a big step for Visa in a country that has a very tight grip on the financial sector and also cross-border capital flows. Mastercard and American Express already got their approvals in recent years, but it comes ahead, of course, of another meeting between Presidents Trump and Xi next month in Shenzhen, so maybe laying the groundwork when it comes to corporate ties ahead of that. But heading into tomorrow, Marley, what are you going to be looking out for?

Marley Kayden (3:27)

Well, we were talking to KG about it, but we'll get the September CPI report. Wall Street expecting headline inflation to rise about a half a percent month over month. That would push the annual rate to 3.6% up from 3.4% in August, as the surging energy prices drive costs higher. Core CPI, which then removes food and energy costs, is expected to slow despite accelerating overall inflation. Economists are looking for a modest 2.1% increase down from August 3.1% increase, with the annual core rate holding steady at 2.4%.

This data, along with this week's producer price index, will be the Fed's last look at inflation before its meeting at the end of the month. Markets are expecting rates to hold steady, but if we get a hotter than expected reading, it could revive speculation about another rate hike coming before the December meeting. How about you, Sam?

Sam Vadas (4:14)

We're going to start getting some tech earnings as well. So this is going to be the next test for the chip trade that's coming from ASML. It's obviously in the business of the chip equipment making. So this is going to be really interesting as far as what they're telling us about demanders at the moment. We know that it's there, but looking at those net sales, looking at those gross margins, obviously, net bookings and that forward 2027 outlook coming from this company, that will certainly be a prelude to TSM the following day, Marley.