Will a U.S. Nuclear Deal Push Saudi Arabia to Recognize Israel?

President Trump sends a landmark nuclear accord with Saudi Arabia to Congress. Plus, Darlene Graham wins a tight run-off in South Carolina, and it's the Super Bowl for AI investors, as the world's most valuable company prepares to report earnings. If Nvidia were to report a disappointing quarter that could have a cascading effect not just insofar as the stock market could stop going higher, but also it could ripple through down to consumer spending and have a larger impact for the U.S. and global economy. It's Wednesday, August 26. 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. We are exclusively reporting that President Trump has sent his nuclear agreement with Saudi Arabia to the U.S. Congress. Lawmakers there are expected to spend months debating the deal, which attempts to promote the U.S. nuclear industry without sparking wider nuclear proliferation in the Middle East. Rwanda Maya is a senior analyst for the Middle East in North Africa at Oxford Analytica. Rwanda should say that journal reporters in DC say it's going to be hard for lawmakers to block this deal, regardless of any misgivings they may have about it since that would require a joint resolution and a two-thirds vote to override a potential Trump veto. However, I still think there's some value in looking at the open questions around this deal, or at least two of them. The first being, is Saudi Arabia going to normalize relations with Israel? This is a condition that President Trump announced actually last month after the deal had been negotiated and signed. What are we hearing from the Saudis on that? I think first it's quite important to say that there is quite a bit of domestic U.S. opposition to the deal once it was announced. And so once Trump came out with that condition it felt more as if it was a knee-jerk reaction wanting to temper down that opposition. So that makes a question as to how far would the administration be willing to apply that condition? How stringently is it going to apply it? We've seen the administration try to in a way sell the deal by playing up sort of the benefits to U.S. companies, to U.S. jobs. So that for me brings out the question of whether if that condition will in fact be applied quite stringently or not. But we have to also bear in mind that Trump was not the first person to come up with this condition. So this idea of having a whole grand bargain between Saudi Arabia and the U.S. It goes back to the Biden administration at the time. They were discussing this idea of having a nuclear civil program enhanced security guarantees from the U.S. Access to US technology and Saudi Arabia in return would move towards normalization with Israel. But even then it would also be contingent on Israel moving down taking steps towards a reversible path to a Palestinian state. Obviously since then the circumstances in the region have changed fundamentally. The Gaza war has suspended progress on normalization talks. Israeli actions in the region be it in Lebanon or Syria, the attack on Doha in particular in September last year, Saudi Arabia since then has really recalibrated or has it thinks differently about security in the region where the sources of threats and risks are with Israel, you know, sitting alongside potentially Iran as to where those threats lie. And since then, Saudi Arabia has really adopted a very different approach and how it seeks to uphold its security. We've seen it really broad in its regional partnerships, deep in its defense agreements with different partners. The recently declared my agreement with Turkey and Pakistan. These are two states whose relationship with Israel are not necessarily good either. So it wouldn't necessarily be pushed into making a deal here out of necessity. No, not necessarily at all. This is our country that has a diverse and deep defense and security partnerships across the region. And so Israel is not the only state that is sort of available for that sort of relationship. It's not going to go down the UAE path in terms of doubling down on ties with Israel. Rwanda switch to looking at another thing lawmakers will likely be considering, which is whether or not the Saudis receiving nuclear fuel making technology is then in turn going to encourage other countries in the region to want to go nuclear. Have we seen any evidence of that? Look, I think the point about the steel is that Saudi is not going to be subject least to my understanding to IAEA monitoring under the additional protocol. And it leaves open the prospects of domestic enrichment. But there are two confidential sign letters that have been signed. And if we take sort of what the Energy Secretary has said at face value, he did say that the agreement does uphold the highest standards of nuclear safety and non-proliferation. So I think that at this point without further details or information available, I would be hesitant to say that this is going to pose a risk as such. Now we've seen other countries in the region that are interested in nuclear energy. The UAE has preceded with its own nuclear power plant, and Egypt is currently constructing its own nuclear power plants. But neither are preceding the domestic enrichment. And we haven't had any indications that states are looking towards that, at least not as of yet. That was Rwanda Maya, a senior analyst for the Middle East in North Africa at Oxford Analytica, which is a part of Dow Jones, the publisher of the Wall Street Journal. Rwanda, thanks so much. Thank you. South Carolina is truly drop country. That's South Carolina Senator Darling Graham, after winning a GOP runoff for her late brother Lindsay's seat last night. Graham, who was endorsed by the president, narrowly managed to hold off a challenge from Republican representative Ralph Norman. Graham will now face Democrat Annie Andrews, a pediatrician and gun safety advocate in November's general election. South Carolina hasn't elected the Democratic Senator since 1998. Well, in another sign of the power of the president's endorsement, businessman Mike Maisy won a separate Republican runoff last night, as he hopes to become Oklahoma's next governor. Trump and recent days dialed up attacks on Maisy's opponent, state attorney general Gentner Drummond, calling him a fake Republican and joining a telephone rally that Maisy heard here courtesy of the Oklahoma Senate helped to push him over the finish line. He had 38,000 Republicans on the line yesterday with me. Many of you enjoyed that. Primary season is now starting to cool off with only Massachusetts voting next Tuesday, followed by New Hampshire and Rhode Island on September 8th and 9th. Deloitte has agreed to pay around $21 million to settle allegations that it defrauded the federal government by continuing to consider diversity in its hiring, promotion, and staffing decisions. It is the latest settlement stemming from investigations that the Trump administration launched last year. The Justice Department has been arguing that federal contractors that considered DEI and their employment practices are committing fraud because government contracts require companies to promise they won't discriminate based on race, gender, or background. In a statement, associate attorney general Stanley Woodward said that the deal was another example of how the department was "aluminating woke, unconstitutional practices from American workplaces." Deloitte said it was pleased to have resolved the matter, quote, to avoid the cost and distraction of protracted litigation. Coming up, investors are on edge, ahead of Nvidia's earnings later today, and another top executive leaves open AI, those stories and more. In markets news, investors are waiting with baited breath for Nvidia Chief Executive Jensen Huang to step up to the mic for the company's earnings call after today's closing bell. Well, this isn't just a tech story. At this point, it's increasingly a financial story. That's journal reporter David Uberty, who spoke to our tech news briefing podcast, after 14 straight quarters of profit beats, David says the $5 trillion chipmaker is facing sky high expectations. The current projection is annual earnings growth of 95 percent this quarter, so all they have to do in order to beat expectations is post $51.5 billion worth of net income, which for any other company in the stock market would just be insane to think about. But the funny thing about Nvidia is that traders typically sell off Nvidia even after it beats earnings expectations, so in at least the last four quarters Nvidia stock has fallen after it reports these sort of blockbuster profits. So it's not just that Nvidia has to beat expectations. It also kind of has to beat the whisper number. At the same time, mounting public pushback to AI, rising dead amongst hyperscalers, and concerns around AI revenue streams. Investors will be scrutinizing Nvidia's recent investments, and it's $500 billion financing deal with Wall Street firms. I think there will be a lot of questions about this growing web of financial schemes Nvidia has sort of thrown into the marketplace. There are a lot of unanswered questions from both Nvidia itself, as well as some of these Wall Street firms that it's partnering with. Who is actually going to get its money? How much will Nvidia be on the hook for if some of those loans turn out to be bad? And the sort of underlying question there is if Nvidia has to invest in order to create demand, where does that leave the market as far as what the actual demand is? And will it be able to continue growing if Nvidia itself can't throw money at some of its potential customers? Meanwhile, billionaire Bill Gates has issued a stark warning about the risks that AI poses to employment, global security, and human relationships. And at 12-page essay published on his website, Gates argued that leaders are failing to prepare for the disruption while companies are barreling ahead of the technology with no plan for the upheaval it'll cause. He urged governments globally to collaborate on regulations specifically between the US and China, and also called for taxes on AI tokens and bots, which he argued could delay companies rush away from human labor and fund a social safety net for retraining people whose jobs won't exist. Gates said he would bring those concerns directly to one. Washington in order to advocate for stronger safeguards before "public trust" has eroded. Another top executive is leaving OpenAI, head of the company's potential IPO next year. Chris Malone took over as OpenAI's head of data centers in early 2025 after the company announced its ambitious Stargate project to build data centers with Oracle and SoftBank. In addition to stumbles at Stargate, OpenAI has since shifted towards signing deals with cloud providers, rather than developing facilities itself. In recent weeks, OpenAI's chief revenue officer, chief operating officer, and Sam Altman's second-in-command Fiji Simo have all left the company. We've talked here before about Tesla's humanoid robot ambitions, which Elon Musk has told investors could print infinite revenue for the company, while Chinese EVMaker X-Pung is making its own humanoid bet, with co-founder Brian Goo predicting that the margins of its robotics unit will one day eclipse its core vehicle's business. The hardware is already much higher than the automotive business. In addition to that, we think there will be significant opportunities to add future AI model training, upgrade, software capability, related revenues, which is much higher margin as well. Earlier this week, X-Pung's robotics unit raised more than $900 million, which is said was a record single-round private capital raise in China's so-called "embodied AI industry." And that's it for what's news for this Wednesday morning. Today's show was produced by Hadi Moyer and Daniel Bach, our supervising producer, his Sandra Killhoff, and I'm Luke Vargas for the Wall Street Journal. We will be back tonight with a new show, and until then, thanks for listening. [BLANK_AUDIO]