Wednesday's Final Takeaways: Biohub's GOOGL, META, U.S. Partnership & Cautious 2027 Outlook

Marley Kayden (0:02)

Welcome back to Market on Close. I'm Marley Kayden here in Chicago alongside Sam Vadas at the New York Stock Exchange. Some final thoughts on the session today. I chose two stories that weren't widely covered, but I think have the potential to be impactful. Google has been ordered to halt its work on two data centers in Finland until environmental impact assessments are completed. This marks a notable setback in a country that has emerged as a major destination for AI infrastructure. Finland has been dubbed the Texas of Europe for its abundant land and power, but the move shows that data center expansion is increasingly running into local environmental and infrastructure concerns even outside of the US and the NIMBY movement. Google has committed $15 billion to AI infrastructure in Finland. So if permitting and environmental reviews become more difficult, that could slow the massive build out needed to support the AI boom and raise the cost of adding capacity. The bigger question for Google and META and the other hyperscalers is whether resistance like this becomes a growing global constraint on the data center expansion their AI strategies depend on.

Also tying in here, Mark Zuckerberg's Biohub, partnering with Google, META and the federal government on a $1.8 billion effort to build a universal virtual cell using AI and vast amounts of biological data. The goal is to let researchers test potential experiments virtually. This would make R&D faster and less expensive by identifying the most promising experiments before they ever even reach a lab in human hands. META and Google are each investing in this effort, giving them access to cutting edge biological data and research with commercial partners receiving a one year exclusive window before the data is made public. For the broader R&D market, the project could mark a new era where AI doesn't just analyze existing research, but it actually helps generate and test scientific hypotheses, potentially accelerating drug discovery and other areas of biological research. I do want to note Biohub is a non-profit that is separate from META. It is not under the META umbrella. Those are just two stories we hadn't talked about, Sam, that stuck out to me, but what caught your eye during the session?

Sam Vadas (2:07)

What caught my eye was just a handful of high-profile warnings on the AI trade today. We woke up with headlines around Ray Dalio thinking that AI is a classic bubble that's close to popping. He points to the enormous amount of debt being taken out to fund AI right now. Dalio says that we're in the part of the cycle that comes before bursting point, but he believes we're close to it perhaps as rates continue to climb. He sounded the alarm on that earlier.

Tim Massac, CIO, that's the investment company over in Singapore, said the unwinding of the AI trade is the biggest risk for markets. He doesn't see it as imminent, but also expects there to be possible bumps next year. His other concern is around inflation. Similarly to Dalio, the rates environment, which could potentially raise the risk of breaking point in the equity market. And I also spoke with veteran Jim Poulsen today, who told me he thinks sentiment towards tech is perhaps too complacent and expects a more difficult stock market moving into 2027

He says there's been great success by being overweight tech over the years. But he questions how sustainable it is, particularly in light of those rising rates and inflation. Poulsen doesn't expect a bear market but a correction in the next six months. So certainly some food for thought today, Marley. But heading into tomorrow, what are you going to be looking out for?

Marley Kayden (3:27)

Tomorrow morning, we'll get earnings from PepsiCo. I had a really great chat with Michael Aaron Flicker on our Market Matters podcast this week about how GLP-1 usage is really changing the game for these companies. And we'll get a closer look at the consumer, at those changing habits tomorrow morning, specifically from Pepsi. Wall Street expects EPF growth to be flat, about $2.29 on sales of $24.88 billion, which would be up close to 4% year over year. But any look at the consumer is helpful, Sam. What will you be watching?

Sam Vadas (3:56)

Yeah, casting my eye overseas, as KG pointed out, I said I was obviously going to be looking at Samsung out with preliminary Q3 results tonight before a more detailed report later this month. We're looking at ninefold surge in operating profit to roughly $79 billion. That's the expectation. We've also got the Mainland China markets re-opening after the Golden Week, as I mentioned with my last guest. I mean, a lot of validation for some of these companies. So let's see how things open tonight, Marley.