Video: Sticky Inflation, AI Chips and Apple’s Foldable

Markets are pulling back as investors digest sticky inflation data and look ahead to several potentially important catalysts.

Those catalysts include Nvidia (NVDA) earnings after Wednesday’s market close, quarterly results from Marvell (MRVL) on Thursday night, comments from Fed Chair Kevin Warsh and Apple’s (AAPL) September event. There are also developments in custom AI chips that should have investors listening in to comments from Nvidia CEO Jensen Huang even more so than usual. We also discuss initial expectations for Apple’s first foldable iPhone and what history may say about that.

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Transcript

Hey everyone, Christopher Versace here. It is Wednesday, August 26th. Just about a month until my birthday—happy birthday to me in about four weeks.

As you can probably see, the market is trading off today, partly in response to the July PCE data. It showed not so much that inflation was hotter than expected, but rather that it continues to be sticky. Most of the data points contained in the July PCE report matched expectations. I think there was one that ticked up slightly relative to what Wall Street was expecting, but on a sequential basis it was actually flat. If you look at the year-over-year data going back three or four months, you’ll see that it has really settled in, giving rise to the notion that inflation is rather sticky.

Where this gets a little interesting is what we’ve talked about in our opening comments this morning: oil prices are coming down, and the market is getting a little more energized—or re-energized—by the potential for a peaceful solution that will allow more oil to flow through the Strait of Hormuz. We will have to see what happens.

Given what it saw in the July PCE data, the market is probably taking another look at what perhaps Fed Chair Kevin Warsh may say later this week at Jackson Hole. I continue to think that Warsh really isn’t going to say a whole lot. We do have a lot of other data coming before the Fed’s September policy meeting, including the August employment report. And if you remember the data that we got in the July report, with the downward revisions and the negative print, odds are he’s going to keep his cards—or I should say, continue to keep his cards—close to the vest. So I’m not really expecting anything big out of him.

We are, however, also waiting on quarterly results after today’s close from NVIDIA. We talked about that a little bit yesterday and again this morning. I don’t have much incremental data to add to that, other than the fact that, to the extent that there is a decent-sized pullback in the shares, which are cheap on a price-to-earnings-growth, or PEG, ratio basis, they will become even more so. That might give some folks an opportunity to snap up shares.

We’ll be eyeing that tomorrow morning with you in mind, but we’ll also be breaking down what is said on the call and what we think could be some of the more important things regarding the forward view shared by CEO Jensen Huang. And remember, too, recently announced price increases should be positive—not only for the revenue guidance that we get, not so much in the back half of the year, but really for 2027—but also potentially for margins and EPS. So we’ll have to be navigating all of that.

But I also want to talk about a few other things in chip land. There was a report out yesterday by SemiAnalysis, which some consider the gold standard when it comes to chip-related research and analysis. It said that OpenAI’s custom-designed AI inference chip, named Jalapeno, shows industry-leading speed and energy efficiency that outperforms current NVIDIA hardware.

This is an interesting development for us because we know the competitive landscape is always going to continue to move forward and tighten, and from time to time companies will move forward while others will have to catch up. In this case, this OpenAI custom AI inference chip, Jalapeno, is one that it has developed with Broadcom.

To me, this sets the bar a little bit higher and makes the comments that Jensen Huang might have to share tonight all the more interesting. So that’s another reason for us to pay attention, but it’s also another reason for us to remain bullish on the shares of Broadcom, given the relationship with OpenAI, as well as the expected ramp in the custom silicon business.

We’ll be talking a little more about this, most likely recapping some larger thoughts once we have NVIDIA’s earnings tonight and Marvell’s earnings tomorrow night, or Thursday, after the close. So stay tuned for that.

Generally speaking, we continue to remain bullish on the chip sector as it relates to AI and data centers.

I also want to talk a little bit about Apple. Apple has formally announced that it will have its next event in early September, on September 9th, with, I believe, the tagline “Rise and Shine.” This is where Apple is expected to take the covers off and unveil its next round of iPhones, maybe a couple of other devices.

We’ve been hearing some chatter on the internet between yesterday and today about a number of other products that Apple will be unveiling in the coming weeks and months, kind of refreshing its product line. I would argue that, based on what I have seen, there’s a lot of upgraded products or next iterations of existing products—not exactly a whole lot of brand-new innovation coming out, in my opinion.

But as it relates to the September event that we know about, “Rise and Shine,” what are we likely to hear most about? The new iPhone 18 Pro and Pro Max models. We’re also going to see Apple’s first foldable product, and speculation is that this is going to cost somewhere between $2,000 and $2,500 a pop, which tells us it’s really going to have to wow.

Some early reviews seem to suggest that it’s a pretty compelling device with a nice form factor. But again, we’ll have to see a little more about this once it’s unveiled, what the actual price tag is, and what consumer reception is.

I will share with you that there are some folks out there, including IDC, that are saying it sees Apple delivering about 10 million of these foldable devices in the first year. I would argue that that’s kind of small potatoes, but I would also share my personal opinion when it comes to Apple devices: typically, the first ones are very small in terms of volumes shipped. It’s usually not until the second, really the third iteration, that Apple really works the kinks out and we start to see the volume really ramp on this type of device.

We can use the initial iPhone and the subsequent iterations as one case in point. It really wasn’t until the 3G version that it really started to take off. Same thing with the Apple Watch—not until the third iteration, which actually included cellular service, did it really start to take off.

So we’re cautiously optimistic on this. Again, for us, it’s going to be determining the vector of the velocity of the iPhone upgrade cycle once Apple not only brings these devices to market, but also ships the first official version of its new software platforms, iOS 27, iPadOS 27, and the like, that bring Siri AI and the improved Apple Intelligence, arguably AI, to the masses.

So we’ll have to see what happens on that.

Not a lot that we’ll be doing today. We’re kind of in a little bit of a holding pattern, waiting for those NVIDIA results, waiting for what Kevin Warsh has to say, and waiting for those Marvell results.

What will we be doing while we’re waiting for these events to happen? We are going to continue to keep a close watch on some of those technical levels that we’ve shared with a variety of stocks in the portfolio.

We’ll also be doing a little bit of work on the August monthly roundup, which will be coming your way after the close on Monday, August 31st. Why not Friday? Well, we’ve got one more day. We want to make sure that we encapsulate the month in full. As a result, there will not be a weekly roundup this Friday. That would seem a little redundant to have a weekly roundup on Friday and a monthly roundup on Monday.

We’re going to take our time and do a little bit more work, not only on that roundup, but also try to kick over some potential new candidates for the bullpen as well.

As always, given the market environment and a lot that’s going on, please be sure to check your emails and your alerts. We want to make sure you get our latest thoughts, and if we have to make any moves with the portfolio, we want to make sure that you are right there with us.

Thanks for watching.

At the time of publication, TheStreet Pro Portfolio was long AAPL and NVDA.