Episode 60 | The Race is On: AI, Semiconductors, and Space

In Episode 60 of “Market News with Rodney Lake,” Professor Lake, director of the GW Investment Institute, reviews broad market trends, including strong year-to-date performance of the S&P 500, payroll revisions that signal weaker job growth, the likely Federal Reserve interest rate cuts, and the competitive tech industry. He highlights how AI spending continues to drive markets, focusing on Apple’s lagging AI strategy, high valuation, and whether its loyal customer base and ecosystem can sustain its market position with the iPhone 17 launch. Rodney also examines the competitive dynamics within the semiconductor and satellite industries, discussing Nvidia’s rapid growth, valuation, and ecosystem advantages against rivals like Broadcom, AMD, and Qualcomm. He further explores how Starlink’s direct-to-mobile broadband expansion and Amazon’s Kuiper Project could reshape communications and benefit companies like Qualcomm and Amazon. Throughout, Rodney underscores the importance for investors and analysts to stay attentive to these technological shifts, leverage tools and research, and anticipate how AI, semiconductors, and satellite innovations may drive long-term growth and market opportunities.

Transcript

Thank you for joining “Market News with Rodney Lake.” This is a regular program for the GW Investment Institute where we talk about timely market topics. I'm Rodney Lake, the director of the GW Investment Institute. Let's get started.
Welcome back to “Market News with Rodney Lake.” I'm your host, Rodney Lake. On today's show, we're going to talk about a little bit of everything. And as a reminder, we're coming to you from the heart of Foggy Bottom, right here at the George Washington University School of Business in Foggy Bottom. Duquès Hall. Duquès family studio. This is a show by the GW Investment Institute.
And what we put on here is something, you know, that we typically talk about in class. This is not investment advice as a reminder. This is for entertainment purposes only. What we're going to do today we typically talk about a single company. We're going to talk about a variety of companies today. But today is going to be a real market news with Rodney Lake.
As we do at the beginning of many of our classes or virtually all of our classes where we talk about broad market news. And so we're going to touch on a few companies of note, like Apple, for example, whose big event, the awe dropping event is coming later today as we're recording this on September 9th, 2025. So we'll have to see what's happening there.
But let's talk about some broader, you know, indices, for example, and talk about where's the market going, where do we think the markets, you know, headed in the future here? And again, where September 9th, 2025, this year has been a very good year overall. So we're going to isolate in on the S&P 500. And so if you think about the one month return right now 1.8% to three months 8.6% the year to date, right.
We're obviously about, you know, three quarters of the way through the year here. And now we're at 11.44% on the year to date numbers. And so that's pretty extraordinary when you think about, you know, how, you know, up and down the market has been. And to be close to 12% for a year to date number is fantastic.
And then you look at the one year numbers still very good 21%. The three year numbers, 19% in the five year number, 16%. For any of the active managers, which we are. Excuse me. This makes it challenging to keep up. Our students, by the way, are keeping up and are actually beating, on many of those, timelines.
And so congratulations to our students who are working super hard, to manage our portfolio since we're, again, very grateful for all their hard work now. All right. What does that mean for what's going forward? Now, look, you've already had very good returns, as you can see over the three in the five year period 19 and 16, respectively, and the one year at 21%, the year to date number 11.4%.
These are extraordinarily good numbers. Now, can these things hold in again, the three month number you're talking 8.6% and the one month number at one, 1.8%. Can these things hold? I think it's always difficult to know when it's that's not the business that we're in for the investment institute. And that's not the business we're in for our students.
What we're doing is trying to figure out where we can create an advantage. Let's do the work. Let's do the fundamental or the quantitative analysis and try to figure out where we position our portfolio, how do we allocate that capital in our funds. And so but you know, for today we're just going to talk about a few different companies, and some and some macro things.
So up next, one of the things that just came out, which is a concern, but it's related to some other things, is the US payrolls were marked down to a record 911,000 in preliminary estimates. So this this is a big piece of news. The revision showed the average monthly job growth was nearly, roughly half rather, the initial reported.
So really off, and, you know, Mark down in nearly every industry, in every state. Now this slowdown is obviously giving, you know, the credence for the fed, to cut rates, when they meet on starting on September 17th and the market probably has something like an 80% right now view of that rate, cut 25 basis points at least is coming in in September.
And so you can see that, you know, sometimes the bad news, is good news for the market. The Dow is up today. The S&P is basically flat and the Nasdaq is slightly flat, just down a little .02 percent and .07 percent respectively, for the S&P and the Nasdaq. So the markets seem to think, you know, you know, kind of shrugging this off right now, and expecting that rate cuts are coming.
And that's what's seemingly driving the market, at least in the short term. And of course, the biggest news for everything really is the AI spend all the money that's being spent on artificial intelligence, continues to really drive the market, continues to really put, you know, upward pressure. Let's see, let's say on the companies that are involved in this play.
Now, one of the companies that's in our portfolio that's relevant for today. And we'll get back to some of the other companies and talk about them on the artificial intelligence play. The AI play is Apple. Now, lots of people have said, okay, well, Apple has really missed out on what's happening. In the, you know, the AI play like what's going on.
The AI boom is just passing Apple by. And they're, they're really, you know, kind of left along side of the road and they're really not doing as much as they can do about this. And that, you know, that I think that could be a fair assessment of what's really going on with Apple in the short term.
Now, we don't know all the things that Tim Cook and company are doing behind the scenes, but we do know that at least in the short term, they're probably a laggard. And I would say they're a laggard in this game.
So for this you have to really think about okay, well what are they going to do to to catch up or position themselves. Now Apple has, you know, kind of famously not been the first for the iPhone as an example or the tablets and then went on to dominate the space, especially in the iPhone. And then all the ecosystem that surrounds that.
Excuse me, an Apple has a big event today, as I mentioned before. And so this is where the iPhone, will drop the 17, and lots of people have been waiting for this refresh cycle to come out the iPhone 17, you know, what the Pro and the slim versions, as well. Now they're changing.
Also, the modem chips in the slim version, not the others. The snapdragons will be included. And so they're starting to phase out of, of using, Qualcomm's chips, and those in one device. And so we'll see how that plays out. Now, the camera supposed to be one of the big upgrades, for this and obviously the artificial intelligence, that's been promised, we'll have to see that, we don't have that news yet, but certainly those those, you know, three, you know, people have talked about and it's seemingly that they will come out, today and we'll get a preview of those, later today when that event happens now and we'll
provide an update, when that does happen. But Apple's one of our largest positions, so we care deeply about what's going on at the company. And we have to really decide, you know, are we going to continue to own Apple? Should we be repositioning this company somehow? Is there something that we should be doing different, about this position other than obviously right now monitoring it very closely and really trying to understand, okay, if Apple is really not going to catch up in this game, in the short term, what is the plan for the medium and long term?
Now, you had the ruling, from Google. They're not going to have to sell Chrome. And maybe there's some knock on impacts that helps Apple. Because Google continues to control that system. Now they have to be more open. And if you saw the news from Google, when they got the ruling that they don't have to sell the Chrome browser, but there's other remedies that they do have to do to be more open about the data and sharing with competitors, who are legitimate competitors.
You know, Apple got a rise out of that, too. And so I do think this is a situation that is evolving very quickly on the AI front, evolving very quickly. How these companies are going to continue to compete against each other. But let's just take Apple and we'll talk maybe a little bit about Google two more than we have already and look at the metrics.
And so one of the criticisms for Apple, that we already mentioned here is around the AI strategy or lack thereof. It's not clear. Some of the things that they had promised have not come out yet. And that's a big concern. And if you look at the valuation, the valuation still remains relatively high. So you're at 32 times.
So that's not that doesn't necessarily make you super comfortable. Does definitely doesn't help you sleep at night. Having such a high valuation for a company that you feel like maybe is a little bit lost in the woods on the AI front. Now the installed base, over a billion very loyal customers, huge moat around that business, huge moat around the ecosystem, and people tend to not switch out of that.
That remains the case, at least for now. For love to hear from any of the iPhone users. Are they frustrated? Do they feel like they're going to switch to the Pixel 10, which Google just recently launched, as an example? Are they willing to go out of the ecosystem, or is the ecosystem so powerful? You're locked in. The switching cost is too high.
You feel like the privacy is, you know, something that you value, excuse me? And is there for you so that I think that is something that, is really important. And I think that's something that's, you know, consumers obviously will, you know, decide how that goes. But as analysts, business people, as investors, we really need to understand what's going on with Apple.
And we need to really understand how this landscape is going to play out, or we have to try to work on that. Now, we don't know. Nobody knows what's going to happen. But as analysts, we we have to try to start making some, you know, guesses, first, but really informed decisions about what we think, the future may look like and really try to back into, like, where we need to position that portfolio now, getting back to specifically Apple, in that case, Apple being a larger position across multiple of our portfolios, our analysts definitely need to spend time on this this fall.
How do we figure out, you know, what's the situation with Apple? What's happening, with the company? Are there things that we should be, you know, really concerned about? Are there things that we should not be concerned about? Do we just need to have some patience with Apple? Right. They certainly don't lack resources. They don't lack talent.
They don't lack engineering. They don't lack know-how, they don't lack scale. They have all these things, but they currently have not delivered, at least to this point, I think on the promise of what you would think the market leading at the time, tech company, they're no longer, I would say the leading tech company. I would say the leading tech company right now is is Nvidia and Broadcom.
To mention another company that's come up very fast. Broadcom recently announced earnings and and you know beat and they're saying that you know not the demand is insatiable but certainly demand is accelerating. And that's something that we need to pay attention to. That's something that, you know we need to pay attention to across the spectrum for, you know, that's in the semiconductor space.
What's happening in that world. Apple's developing its own chips that the chip that's going into the phone, the A19, they're doing a great job with that. And it's, you know, the specs are supposed to be very good. And again, we'll see today when the iPhone 17 comes out with the A19 chip. So we gotta we'll have to wait and see, for that.
But again, taking it back to Apple, we gotta we gotta stay focused on that. What's happening around the business? Obviously, there's also been, you know, some, I would say consternation about Nvidia people. You know, people are a little bit concerned on Nvidia. What's happening. You know, what's been the what's you know, what's been going on. With Nvidia, they certainly have had a huge run year to date, 20 almost 25% up.
You know, and it's been up and down like, like many of the other companies. But the if you look at the year to date, number 25, if you look at the one year number 57, but people are worried companies like Broadcom are going to come in and possibly eat their lunch a little bit and chip away at their lead.
And you had a deal between Broadcom that was announced between Broadcom and ChatGPT or OpenAI. To do this co-design chip that's going to be you know used for their training. And so that that's something to pay attention to as well. Now because the pie is growing for all of these things, it's important for us to watch that.
Excuse me. It's important for us to really watch what's happening, across the space, because obviously, one impacts the other. If people are using the Broadcom chips, maybe they're not using the Nvidia chips. But at the same time, because things are growing so rapidly, maybe the pie's growing fast enough to really capture all of that demand. Now that's something that we don't necessarily know in the short term.
And even the medium term can be hard to predict because things are changing so quickly and certainly in the long term very challenging to understand. But if you look at a company like Nvidia, the forward PE on Nvidia, 37 times for a company that's had this has this much potential, that that's not some sort of incredible, PE certainly there are companies that trade much higher, multiples than that, that you would say maybe you'd be less optimistic about.
Now, I think one of the, the anchors on the PE right now is just the overall market cap for Nvidia. You're at $4 trillion market cap, which is a very large company, the largest publicly traded company in the world. Can they sustain this type of growth? Can this market, sustain this, this type of expansion? Overall? I think that's the open questions and a lot of questions that people are asking about what's happening across.
I you know, Nvidia is the lead in this. Nvidia is continuing, to show great promise moving forward. And if you think about Nvidia's its own ecosystem, when you talk about Apple's ecosystem, Nvidia has its own ecosystem called Cuda combined with its chips. And when you have those together, it's very challenging in the short term for people to compete.
Even people like AMD and the company in that race, which has released some very compelling hardware. Now, excuse me, when you have the hardware and the software combined, though, I think Nvidia is still remains far ahead of AMD now. Will it stay that way forever? Probably not. Businesses don't stand still. Nvidia won't stay in the same place, AMD won't stay in the same place.
And so that race will continue. Now, how that race plays out over the next three months, six months, one year, 18 months, 24 months, we are all going to be watching very closely and again, as businesspeople, as analysts, as investors, we need to really pay attention, you know, sharpen the pencil, shout out to Mark Shenkman and make sure that we're doing our homework.
Read the article in the GWToday if you don't know what I'm talking about. Mark Shenkman, alum.
It's up to us to really figure that out. Right. And so can we. Can we spend the time? Yes, we can spend the time. We can figure that out. Obviously we have all these AI tools that can help us, do that analysis, as well. But really the race is on. And how this is all going to play out is not predetermined.
And you certainly have big leaders Nvidia, AMD, Broadcom in the semi space, that have been out there. And I mentioned Qualcomm too. Qualcomm I think it's interesting to think about and talk about you just had this deal with Starlink and EchoStar. It getting some of its spectrum. And now Starlink is going to have the ability to do direct to consumer, you know, mobile devices.
And so you're going to have broadband direct to mobile. They were leasing through T-Mobile before, and had a partnership with them. And now they're going to be able to compete in that market directly, effectively. Excuse me. Using their satellites, the Low Earth Orbit, LEOs, as their cell towers and they, you know, move into position, low latency, I think, 22 nanoseconds, which is very different than the geostationary, you know, you're something like, you know, 320 miles versus, you know, 22,000 or 30,000 miles above Earth.
And so even light is super fast. You got to really reduce that distance. If you're going to have, low latency. And if you're in LEO versus Geo geostationary versus LEO, that the satellites move around, but they're much lower, in orbit. But you have this constellation right now, Starlink has 6000 plus satellites, and they send them up on SpaceX X rockets, Falcon nine pretty readily right now, 90% of the mass of, that's gone into orbit this year is all SpaceX and a lot of that are those satellites.
And so what's happening there, I think is is interesting to watch. And that kind of may reshuffle, what's happening in the mobile business. And if you think about in the semiconductor business, well, who amongst those competitors are likely to benefit from that. That's Qualcomm, and their modem chips. And so with 5G and they really own that space and they remain the leaders.
Now it's early days there. That deal was just crafted. We'll see. SpaceX does move, pretty fast overall. So I think that's something that's in the private markets. That piece of it with Starlink that I think you should be paying attention to. And as a corollary to that, something that I think you should be paying attention to, is what's happening with the Kuiper Project that Amazon is running?
They're quietly been adding satellites, to their constellation for low Earth orbit. And, you know, they're getting their New Glenn rocket going. And right now, they're typically using United Launch Alliance and the Atlas V rockets. But they're getting their own rockets. You know, more ready, and the cadence will likely pick up for them.
And so we'll have to see how that plays out. But I think, you know, the competitor in that space for the low-Earth orbit satellites at scale, to Starlink, which is the far and away leader right now, is going to be the Kuiper Project. And that is part of a publicly traded company called Amazon, which I'm sure you heard of.
And we have covered, on this show. And that is one of our holdings and across our portfolios. And so I think it's really important for all these new technologies as an analyst, as a business person, to think about as an investor, to think about what are the implications, where are these things going when you hear this deal for what's happening in the satellite space, what's the impact or the publicly traded companies, they're going to be impacted by that.
In this case, we mentioned Qualcomm. We mentioned the Kuiper Project, which is owned by Amazon. And really start to think about what are the opportunities? And as a business person analyst, investor, those are the kinds of things that generate new ideas. Those are the kinds of things that maybe where you get more confidence in existing ideas. So maybe you own Amazon and you start spending time on, hey, I want to spend a lot more time thinking about how, you know, this fits into their portfolio of offerings.
And maybe this, you know, when they're thinking, okay, well, there's only so many warehouses we can have and efficiencies we can have, you know, what are the next growth drivers? AWS obviously is been pushing that forward, but maybe the Kuiper Project and the things that are attached to that enable all these other things to enable, you know, better processing, across with more reliability for AWS and also offer better logistics, and coordination amongst, you know, maybe their drone deliveries and other things, that could be coming in the future.
Those are the things that we have to think about again, as business people, investors and analysts. And I challenge you, you know, our audience, to get out there and do that. And one of the things, the sort of the Peter Lynch style, one up on Wall Street, you know, what's in your refrigerator, watch the news. What are you using?
You have a mobile phone, presumably. Start thinking about those businesses. Start there. And build yourself up from there, especially as an analyst, and really try to understand what's happening and you can create advantages certainly for yourself. Again, educational purposes only here. Excuse me, but you can create advantages for yourself. But it takes time, it takes energy, it takes effort to put that in.
But I encourage you to do that and we've covered a variety of different companies. Obviously, most of the tech I think the world is all tech right now. You're just a company, you know, and you're doing technology. And if you're not doing it, you're probably going to get run over. So that's something, as an analyst, you should be thinking about if a company seems to be a little too old school and they're not really deploying, technology, in their operations or everything else, maybe the front end of what they're doing, is something pretty simple, selling chewing gum as an example.
But how they, you know, manage all that, how what are the logistics? How do they get the best pricing, all of these other things, they can be enabled by AI, better, you know, operational systems. And so as an analyst, I think you should be thinking about that. In sum, you know, again, let me just go back to the market data points for the year where we are again, September 1.8 for the month, 8.6 for the three month, Year-to-date, 11.4 for the one year at 21.7, the three year at 19.2, the five year at 16.
These are very, very strong numbers. You just had the job data, come out 911,000 revised down, pretty significant 80%. But now that you know, the market, is expecting that the fed is going to lower rates starting September 17th this month in their next meeting. So we'll see what happens there. Pay close attention and we'll see you back here on the next episode of “Market News with Rodney Lake.”
Thank you.