Tim Cook Took Apple to $5 Trillion. John Ternus Must Win on AI.

The SEC probes whether firms promising pre-IPO shares in hot companies actually hold those positions. Plus, Tim Cook hands over the reins of Apple to John Ternis and the Trump administration dials up its crackdown on immigrant truck drivers. Companies good companies who are hiring drivers, who don't speak English or didn't go to a well-qualified school, watch out. It's Tuesday, September 1st. I'm Luke Vargas for the Wall Street Journal, and here is the AM edition of What's News, the top headlines and business stories moving your world today. The Securities and Exchange Commission is turning up the heat on investment firms promising access to highly sought after private startups. We're exclusively reporting that money managers have been asked to prove that they actually hold shares in companies like SpaceX and Stripe. Journal Finance Editor Alex Frankos joins me now to break down this story. Alex, first off, we should give a shout out to our colleague Corey Dreebush for breaking this news. What exactly is the SEC examining here and why? Yeah, they're looking at these things called SPVs or special purpose vehicles that these companies set up and say that they've gone and acquired shares of companies that haven't gone public yet. So SpaceX or some of the big AI companies, then they go to investors and say, hey, you want an early piece of this before the IPO happens, you can buy into our SPV, and then when it goes public, you'll get a lot more money back. There's been some big problems with these, namely that some of them didn't have the underlying shares in there. They're basically promising to have them and not having them or they sold them before the IPO happen. So this is like a classic case of alleged investor fraud where investors are being told they're buying one thing and it's not actually there. Investors should be paying attention to this because notably we have this anthropic IPO coming up and that company has been warning folks that it's not going to honor just any old share that a company says it has an anthropic, right? Well, right. I mean, what they're concerned about is that shares are getting sold through these SPVs and that people might think they're buying shares and anthropic, but in fact, there's no underlying shares. So they're warning people to be careful of this sort of thing. This is in a way a reflection of this moment, of this hyper excitement over this new industry, this new possibility. Everyone has, you know, FOMO fear of missing out that they're not going to get a piece of AI early and when investors are desperate and in that kind of media, that some people think the market is now over AI, then you know, people take risks that they shouldn't take and people will exploit those risks by trying to sell them things that don't exist. That was journal finance editor Alex Francois. Alex, always thanks for breaking this down for us. Thanks, Luke. It's the start of a new era at Apple. John Ternus is taking over as CEO today, closing out Tim Cook's reign in which the company grew to nearly $5 trillion in market cap and saw yearly iPhone sales more than triple. Tim Cook's biggest success over the years he was CEO is just the amount of value he created for Apple shareholders. General reporter Rolf Winkler. So increasing volumes like that, hitting these annual release dates like clockwork, minimizing risky capital investments and at the same time, he returned more than a trillion dollars of capital to shareholders through dividends and buybacks, which is a truly amazing number when you think about it. Then by the way, on his watch, there was the Apple Watch and Apple now sells more watches in Switzerland and also AirPods. It's something that people don't think about as a major product, but it's as big as majorly baseball, my revenue. Rolf says that investors will want to see that John Ternus can leave his mark with equally innovative devices until face the added challenge of doing so when Apple is no longer the biggest company in town and comes to sourcing components across highly competitive supply chains. This was a huge secret of Tim Cook's tenure is procurement. They could just buy all of the things they needed at very cheap prices, maximize their profits because they were the biggest and they're not anymore. AI hyperscalers are buying the same kinds of components that Apple needs, memory, storage, logic chips, and Apple can no longer throw its weight around the same. And then another thing that he really has to keep his eye on John Ternus will be AI. They have a new Siri coming out this fall and it's definitely better. Is it as good as Chachi Petit or Anthropic or Claude it is not and it's slower. So he's got to speed it up and he's got to convince app developers that they need to open up their apps on the iPhone to this new series so people can really drive their phone experience with the Siri chatbot. Ternus looks likely to notch one early win when Apple releases its first foldable iPhone in the coming days, which analysts expect to capture 40% of the foldable's market by the end of 2027. She-in is officially a publicly traded company. The fast fashion giant made its long-awaited debut in Hong Kong today with shares initially tumbling as much as 10% before clung back most of that lost ground. Analysts have cast some doubt on whether the company's next act will look the same as its first when cheap cross-border shipping enabled a rapid global rise. Since the EU scrapped its duty exemption on small parcels, she-in's daily active users in Europe have fallen roughly 45%. Novartis is hitting pause on clinical trials of an experimental therapy targeting auto-immune and neurological disorders after the deaths of three patients. The experimental treatment is a form of cell therapy called CAR-T, in which a patient's own immune cells are removed, engineered and alabbed to destroy malfunctioning cells, and then infused back into the body. In company materials, Novartis has long touted the promise of the technology. Unlike conventional medicines, that often need to be taken over long periods of time. Cell and gene therapies are designed to be one-time treatments. It's a new era in medicine. Novartis said it's working with independent safety boards overseeing each of its eight paused studies, and sharing what it knows with regulators, fellow drug company Bristol-Myersquib, said it's pausing similar trials aimed at autoimmune disorders as a precautionary measure. Both companies have similar one-time cell therapies on the market to treat cancer, each of which costs more than a half a million dollars. Coming up, we'll look at why doctors don't want patients to read their test results with AI, though good luck stomping them, that and more after the break. Army Secretary Dan Driscoll has resigned following months of friction with defense secretary Pete Hankseth over the direction of the surface and broader defense policy. The resignation follows the ouster of numerous senior army officials and leaves a critical vacancy atop the army as it navigates ongoing modernization efforts and shifting global security demands. Driscoll didn't respond to a request for comment. Commercial truck drivers are the latest target in the Trump administration's immigration crackdown. "Every single illegal driver on American roads, we're going to come for you. So maybe it's just better off cut up your commercial driver's license and find something else to do." Transportation Secretary Sean Duffy heard there announced yesterday the closure of nearly 300 driving schools that he said were failing to certify drivers properly, the latest step in a push that's involved stings on interstate highways and demanding licensing data on immigrant truck drivers. And 200,000 immigrants hold licenses in the U.S. that allow them to haul freight professionally. Licenses that are available to drivers who aren't citizens or lawful permanent residents. The crackdown has contributed to a nationwide driver shortages, leading some freight companies to step up recruitment efforts, including by raising salaries. Hollywood is a complete and total disaster. That's part of the message that President Trump posted on Truth Social yesterday, as he endorsed the idea of federal tax credits to support film and TV production in the U.S. That follows a year of lobbying from studios, labor unions and members of Congress, who argue that tax credits of 15 to 20 percent could boost in industry that's lost a huge amount of business to foreign countries. Studio executives and entertainment unions must now lobby a divided Congress to pass the bipartisan legislation. And finally, Americans have been turning to search engines for years to get answers about illnesses and ailments. And with the advancing power of AI and easy access to personal health data, more and more of us are now turning to chatbots for guidance. It's pretty widespread. Many patients are turning to AI chatbots for health advice. In fact, roughly a third of them are already doing that, according to a poll from Health Policy Research Nonprofit KFF, but even more specifically, almost 20 percent are using AI specifically to interpret lab results or medical tests. That's journal Health and Wellness Reporter Alex Janin, who says that with so many people using AI for health advice, doctors are worried about distorted answers from chatbots. Thanks to a legal provision that went into effect in 2021 to help patients get more immediate access to their medical results. Students are just taking those results sometimes that's complex medical imaging, sometimes it's blood test results, and just pasting it into chatgbt or another AI chatbot. And they are doing that before doctors or nurses, call them. And some clinicians are worried about this. - OpenAI says that more than 300 million people ask health-related questions on chat GPT each week. And Thropics Cloud can connect to some users, medical records, and the AI companies say that more data will help. - The idea here is to give the AI more context, right? Years of private medical data and information. Some of them are allowing users to connect their wearables through features like Apple Health or others in addition to the results from your electronic health record like your chronic illnesses, what medications you're on. They also say that the bots are getting more and more accurate. And of course, some doctors say that they can be helpful tools for patients, especially in interpreting complicated medical jargon, as well as in brainstorming questions to ask your doctor. - Meanwhile, more and more Americans are also using AI for their mental health. A topic that we covered on our recent podcast series, The AI Therapist. We've left a link to that in our show notes. And that's it for what's news for this Tuesday morning. Today's show was produced by Hattie Moyer and Daniel Bach, our supervising producer, is Sandra Killhoff. And I'm Luke Vargas for The Wall Street Journal. We will be back tonight with a new show. Until then, thanks for listening. (upbeat music)