Good morning.

Uber (UBER) spent Wednesday explaining that its problem was never the cars. Chief executive Dara Khosrowshahi told staff in a memo obtained by Bloomberg News that the company is cutting about 3,300 jobs, roughly 10% of global headcount and its deepest reduction since 2020, to strip out management layers and redirect the money into ridesharing, delivery and robotaxis. The overhaul leaves 20% fewer managers and halves the count of "micro-teams" in which a manager supervised one or two people.

Somewhere in that org chart sat a manager with a single direct report, and both of them were spending Tuesdays aligning. The autonomous future, it turns out, begins by removing the human in the middle of the meeting.

Semiconductors

When your chip supplier starts talking like a lender, check whose balance sheet is doing the lifting.

On the numbers, Broadcom (AVGO) turned in something close to a flawless quarter. Third-quarter revenue rose 86% to $29.59 billion, AI semiconductor revenue grew 221% to $16.7 billion, net income more than tripled to $13.09 billion, and free cash flow hit $13.7 billion, or 46% of revenue. Adjusted earnings of $3.32 a share cleared the $3.24 LSEG consensus.

Then chief executive Hock Tan handed over the figure the Street had spent a full quarter demanding. Broadcom is now aiming to double fiscal 2027 AI revenue to about $115 billion and double it again to roughly $230 billion in fiscal 2028, Tan said on the call. Three months ago the same company reiterated a target of merely "in excess of $100 billion" and watched the stock fall about 15% the next day for it.

The more revealing disclosure came later, and it had nothing to do with silicon.

Custom accelerators have been the one corner of the AI trade that needed no financial engineering. Broadcom designs the chip, a lab buys the chip, cash moves. Wednesday put a hairline crack in that arrangement. Finance chief Amie Thuener told analysts the company is working to bridge the distance between its two largest lab customers' current cash flow and the upfront investment their businesses require, and that Broadcom may extend residual value guarantees that would sit on its own books as contingent liabilities. Tan's gloss was blunter: it makes economic sense, he said, to invest and enable them.

By the numbers: Anthropic is expected to deploy 5 gigawatts of TPU 8i chips in 2027 with line of sight to another 10, and OpenAI's custom Jalapeno part is penciled in at a 1.3-gigawatt deployment next year against visibility above 5, per Tan's remarks. Tan also put fiscal 2028 earnings above $30 a share, against an LSEG consensus of $25.86. Against all that, Broadcom guided fourth-quarter revenue to about $34.8 billion, a hair under the $35.03 billion analysts wanted, and shares edged up in extended trading.

Store Credit: Broadcom has spent this cycle as the sober alternative to the AI trade's more baroque structures, selling picks to prospectors and banking 46% cash margins. Offering to underwrite the residual value of hardware your customer cannot yet afford is a different business, and it is the same business the rest of the complex has been quietly drifting into. The company that wins the custom-silicon war may end up holding paper on the people who fought it. Worth watching in the 10-Q, where contingent liabilities have to be spelled out.

Artificial Intelligence

The company that sells everyone shovels would now like to own the market where they meet.

Nvidia (NVDA) is in advanced talks to acquire Hugging Face in a transaction that may total about $14 billion, Bloomberg reported Wednesday, with an agreement possible this week and roughly $1 billion of that earmarked as a retention package. It would be by far Nvidia's largest acquisition, and it is not a chip company.

Hugging Face is where open-source AI keeps its stuff. Developers post models there, companies pull them down, and the platform has served for years as the neutral clearinghouse for everything the frontier labs do not keep behind an API. Nvidia is already an investor. No final agreement has been reached, and terms could still move.

The strategic logic is easier to see if you stop thinking about chips. Nvidia's revenue is concentrated in a handful of hyperscalers that are all now designing their own accelerators, and Broadcom's Wednesday guidance was a reminder of how fast that alternative is scaling. Broadening AI adoption beyond that cluster means broadening the pool of buyers, and the open-model bazaar is where the next thousand customers are browsing. Bloomberg Intelligence's global head of technology research, Mandeep Singh, framed it on Tuesday's show as Nvidia declining to remain merely a chip provider and reaching up the stack toward the layer everyone standardizes on, the way Intel once did in PCs.

Square Deal: The tension is structural rather than regulatory. Hugging Face's value rests on being the place nobody owns, which is exactly the property that disappears the moment somebody owns it. Nvidia will presumably promise neutrality, and will presumably mean it, and rivals building competing silicon will presumably build somewhere else anyway. Watch whether the model repositories start quietly mirroring elsewhere. That, not the antitrust filing, is the number that will tell you what the $14 billion actually bought.

International Economics

The harvest is spectacular. That is beginning to be the problem.

South Korea shipped a record $46.65 billion of semiconductors in August, up 209% from a year earlier, and those chips accounted for 47.5% of the country's $98.25 billion in total goods exports, the Ministry of Trade, Industry and Resources reported this week. Overall exports climbed 68.7% to a record, per the Korea Times, on hyperscaler capital spending that Seoul singled out by name.

Asia's fourth-largest economy has effectively become a leveraged position on global AI capex. That works beautifully in one direction.

The concentration is the story. Jeff Ng, head of Asia macro strategy at Sumitomo Mitsui Banking Corporation, told CNBC that chips alone accounted for nearly 80% of August export growth, which is another way of saying everything else Korea sells the world contributed almost nothing at the margin. Underneath the headline, the traditional economy is visibly straining: automobile exports fell 29.8% year over year, a drop the trade ministry attributed largely to holiday timing and partial strikes, while non-semiconductor exports still managed 20% growth. Meanwhile the Bank of Korea raised its base rate to 3% in August, a second consecutive hike, with core inflation elevated.

That combination is what has economists uneasy. Dave Chia at Moody's Analytics argued a gradual slowdown would be manageable but an abrupt stall would not, because the economy already runs at two speeds and the sectors that would have to absorb the shock are the ones under pressure now. Homin Lee, senior macro strategist at Lombard Odier, was more relaxed, declining to call it over-reliance and sketching 2% to 3% real growth even if chip momentum fades, provided other cyclical sectors hold up.

Crop Rotation: Korea's export data has quietly become one of the better real-time reads on whether the AI buildout is still accelerating, which is useful for everyone and precarious for Seoul. The uncomfortable arithmetic is that the same memory shortage lifting these numbers is the one HPE cited on Wednesday for missing its own revenue conversion. Scarcity pays the exporter and taxes the customer, and the exporter has no say in how long the customer keeps paying.

Crude Awakening: Chevron (CVX) committed more than $7 billion over five years to roughly double output at its 49%-owned Petroindependencia venture in Venezuela's Orinoco Belt to about 600,000 barrels a day, as US Energy Secretary Chris Wright signed a slate of agreements in Caracas; Bloomberg senior oil reporter Kevin Crowley cautioned on Bloomberg Intelligence that the heavy barrels will arrive gradually and delivered no price relief on the day.

Break-Up Letter, Returned to Sender: Judge Leonie Brinkema declined to make Google (GOOGL) sell its AdX exchange, imposing behavioral remedies that rewrite the open-web display auction instead, and the stock barely twitched.

Cloud, Nine Digits: Microsoft (MSFT) will begin disclosing Azure revenue quarterly and collapse three reporting segments into two, revealing along the way that Azure grew 42% to $29.42 billion in the June quarter.

August payrolls land Friday, inflation follows on Sept. 11, and the FOMC meets on Sept. 16 having been talked into something by the futures market. Broadcom just promised to double twice and volunteered to help finance the customers doing the buying. Somebody funds that difference, and the people who set the price of money are not currently in a generous mood.

That's the tape. We'll see you at the open. — AllThingsWallSt