This podcast episode, published on 2026-09-29, features host Tyler Crowe with Rachel Warren and Lou Whiteman, delving into current market events and industry insights.
The episode opens with a discussion on NVIDIA's recent announcements, including a $150 billion share repurchase agreement, touted as the "biggest in history," alongside a press release on AI safety. Crowe immediately offers a "hot take," calling the repurchase "way too small," despite it adding to a total of $250 billion for buybacks. He argues that $150 billion represents only about 2% of NVIDIA's market cap, asserting that to truly "wow investors," it should be "at least triple this," or around 5% of its market cap, suggesting a $500 billion buyback given the company's $134 billion in free cash flow.
Rachel Warren points out that the $150 billion figure, while historical, needs to be "right sized" for NVIDIA's immense market capitalization. She notes that NVIDIA is generating "tremendous amounts of cash flow" and has more capital than it can reinvest in R&D, making the buyback a natural outcome. The timing of the AI safety announcement alongside the buyback is seen as deliberate, "to help the medicine go down" for investors. NVIDIA is addressing AI safety through an open-source framework called OpenShell and a hardware watchdog named Sentry, aiming to establish a "universal industry standard for safety" to prevent regulatory freezes on autonomous AI.
Lou Whiteman suggests that NVIDIA has "run out of ways to wow the market," and the stock has been stagnant "since the spring," despite strong earnings. He views the buyback as "another maybe failed attempt to say, hey, remember us?" The discussion then shifts to potential hidden risks for NVIDIA. Rachel Warren highlights "circular funding," where NVIDIA acts "essentially like a central bank for a lot of the AI industry," with 13 public stakes, over 200 private stakes, and $20 billion in data center lease commitments, which could be concerning if the AI build-out slows. She also questions the assumption of constant multi-billion-dollar GPU upgrades, noting that if older GPUs are "perfectly adequate for 80% or more of enterprise inference workloads," NVIDIA could face a "slowdown in growth" if "the existing hardware works too well."
Lou adds that "the best is now behind them for the AI cycle," citing major tech companies like Google, Amazon, Microsoft, Meta, and OpenAI developing their own chips, increasing competition. He also questions if "frontier models don't matter as much," whether the latest, most expensive chips are truly necessary at the expected scale. He points out NVIDIA's historical cyclicality, noting earnings per share was "under a dollar per year" as recently as 2023, now at $8, raising questions about the sustainability of current earnings levels and its seemingly "cheap" price-to-earnings ratio.
The conversation transitions to the defense and security industry, focusing on a new wave of companies going public via SPACs, such as Red Lattice, a cybersecurity firm expected to merge with Bold Eagle Acquisition Corp. for $1.25 billion by the end of 2026. Lou Whiteman, drawing on his experience, explains that SPACs allow early-stage companies to discuss future prospects more freely than traditional IPOs. He cautions investors that the Pentagon is difficult to access for new companies, recommending looking for "on-ramps" through "primes" like Lockheed Martin. He warns against "novel tech" that might already be classified and under development by established contractors, emphasizing that due diligence is challenging due to classification. He stresses the need for leadership with government experience and employees with security clearances to navigate government bureaucracy.
Rachel Warren adds that successful prototypes don't easily convert to official military programs, with long waits for funding often burning through a firm's capital. She also notes that a defense company's most profitable segments are often classified, forcing investors to model revenue "blind to the exact contract terms, customer identities, underlying unit economics." Specific companies like Anduril and Shield AI are mentioned as potential IPO candidates, with Anduril highlighted for its impressive operations and recent $20 billion U.S. Army contract, though Rachel suggests a public debut might still be pushed back.
Finally, the mailbag addresses Cam's question about Klarna, which saw its stock drop 20% despite a seemingly "blowout quarter." Rachel explains that while Klarna reported record revenue ($1 billion, up 30%) and a surprise net profit ($9 million), the company lowered its full-year revenue outlook significantly below consensus. Management cited a "major slowdown in discretionary consumer spending in Germany," Klarna's largest and most profitable region, a $600 million foreign currency headwind, and the unexpected departure of both its CFO and CMO. Lou adds that the "buy now, pay later" industry has not been tested by a "real downturn," making its long-term viability uncertain until a full market cycle plays out. He also expresses skepticism about Klarna being his first choice among BNPL companies. Crowe concludes that the increasing competition from traditional banks and other fintechs like NewBank and Revolut will make customer acquisition and growth harder for Klarna.