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Israel Approves Controversial E1 Settlement Plans In West Bank; Most Children In Gaza Out Of School For Two Years Due To War; U.S., Russia Give Mixed Signals On Putin-Zelenskyy Meeting; Russia Says Talks On Ukraine Security Guarantees Must Include Moscow; Hurricane Erin Poised To Batter The East Coast; The Afghans Left Behind After U.S. Withdrawal; Six States Send Hundreds of National Guard Troops to D.C.; OpenAI CEO warns of Artificial Intelligence Bubble; Civilians Face Cholera Outbreak as Fighting Rages On. Aired 1-2a ET
Aired August 21, 2025 - 01:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
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JOHN VAUSE, CNN ANCHOR: The trauma of growing up in Gaza. Ahead on CNN Newsroom.
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UNIDENTIFIED MALE: Children speaking of wanted to go to heaven because at least they say there is food there.
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VAUSE: For Gaza's children, there is only death, misery and hunger. There is no joy. There is no love.
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UNDIENTIFIED MALE (through translator): Now it is proposed to resolve security issues, collective security without the Russian Federation, this will not work.
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VAUSE: Now the Kremlin wants a veto over security guarantees for Ukraine, what appears to be yet another attempt, a slow walk of peace deal.
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UNIDENTIFIED FEMALE: This is sort of a reality check moment where we've heard a lot from Silicon Valley about how AI is growing exponentially.
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VAUSE: Warnings to investors of an AI bubble which could be exponentially worse than in the dotcom crash 25 years ago.
UNIDENTIFIED MALE: Live from Atlanta. This is CNN Newsroom with John Vause.
VAUSE: Two glaring examples Wednesday of just how little impact international criticism has on the actions of the Israeli government. Controversial plans for an Israeli settlement in the west bank, which have been on hold for more than 20 years, have now been approved.
The E1 settlement sparked global anger when it was first announced because it would divide the West Bank, making a Palestinian state just not viable. On Wednesday, the Israeli government said that was the point. At the same time, operations by the Israeli military began to occupy Gaza City.
Explosions in the night sky show the first stage of a major offensive which Prime Minister Benjamin Netanyahu says will drive Hamas from one of its last strongholds.
Israeli forces are said to be on the outskirts of the city. And despite a shortage of troops, Netanyahu has ordered the military to shorten the expected five-month long timeline. An additional 60,000 Israeli reservists are being called up and service of another 20,000 is being extended.
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BRIG. GEN. EFFIE DEFRIN, ISRAELI DEFENSE FORCES SPOKESPERSON (through translator): We will deepen the attack on Hamas in Gaza City, a stronghold of governmental and military terror for the terrorist organization. We will intensify the strikes on the terror infrastructure above and below ground and sever the population's dependence on Hamas.
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VAUSE: For Palestinians living in what was Gaza's biggest city, this military offensive means packing up whatever they can carry and leaving again.
The U.N. says more than 86 percent of Gaza is already under displacement orders or falls within Israeli militarized zones.
Along with a critical shortage of food in Gaza, aid groups say Palestinians are facing a life threatening lack of shelter. For nearly six months, delivery of shelter materials into Gaza has been blocked by Israel, which claims tent poles can be used in a military purpose. And even after promising last week to allow more tents, aid group say bureaucratic hurdles are blocking delivery. A Palestinian woman displaced from Rafah says she's been living in the same tent since the war began almost two years ago.
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SANAA ABU JAMOUS, DISPLACED PALESTINIAN FROM RAFAH (through translator): My tent is extremely worn out. Tents are torn. My tent is made of torn blankets. My tent is small and we are, it's not enough for my children and me. We need a replacement tent. We honestly need new tents.
ISSA AL-NAJJAR, DISPLACED PALESTINIAN (through translator): If you can't send us back to our homes, just provide us with something in which we can sleep, eat and drink. A life where we can live proper tents like human beings.
(END VIDEO CLIP)
VAUSE: The number of children suffering from malnutrition has tripled in Gaza in less than six months, according to the UN. Life for children there has become absolutely miserable. Over the last two years, tens of thousands of Gaza's youngest have endured trauma from bombings, strikes, drones, lack of food, losing their parents or families.
U.N. says practically all of Gaza's 1.1 million children need mental health support. They've been out of school for nearly two years. All children younger than five are at risk of acute malnutrition following Israel's 11-week blockade of food and aid earlier this year. Nearly one in every three children in Gaza is now malnourished as Gaza City and the head of the U.N. Agency for Palestinian Refugees says, quote, this is not a natural disaster. It's a manmade preventable starvation.
The World Food Programme says food is spoiling as it sits in trucks waiting for months for Israeli authorities to allow it into Gaza.
Joe English is an emergency communications specialist with the UN's Children Fund, UNICEF. He joins us this hour from New York. Thank you for being with us.
JOE ENGLISH, EMERGENCY COMMUNICATION SPECIALIST, UNICEF: Good to be with you, John.
VAUSE: So, for the children of Gaza, this war has been brutal, according to the UN, in total, more than 50,000 children have been reported dead or injured since October 2023.
[01:05:05]
Thousands of kids have had one or more limbs amputated, the highest number per capita anywhere in the world. Doctors Without Borders described Gaza as the most dangerous place on earth for children. Children always the first victims of famine, which is happening right now, and that's what can be quantified.
But a series of photographs from the European Press Photo Agency which were quite emotional, including this one little boy holding the casing of a spent Israeli shell clinging to it almost as you know, it seems to illustrate how childhood is actually being taken away now from an entire generation in Gaza.
ENGLISH: It is. You know, I think any of us see these kind of images and the images we've seen over the last few weeks of children emaciated, wasting away in their parents arms, you know, and it can't do anything but hopefully drive us to action.
But seen all too often is we've seen these images, we've been out, we've said what we're seeing on the ground as UNICEF and humanitarian organizations in the hope that it will make a difference and we will see increased amounts of aid getting in.
But the reality is that is not the case. The situation is worse than it has ever been. And now what do we see? You know, not talk of an increase in aid getting in, but an escalation in the fighting. You know, children, far too many already have paid the ultimate price and more children will die unless we see an end to the fighting.
VAUSE: And that fighting has resulted in hospitals being targeted and destroyed. Schools also targeted by Israel. According to the U.N., again, some 95 percent of schools have been damaged in the fighting, leaving most children without education for nearly two academic years. Many schools have been turned into displacement camps. So either they've been destroyed or now the housing people have been displaced.
So for children in a place like Gaza, you know, how crucial, how important is it for them to get that opportunity just to attend school? What does it mean beyond an education? What does it mean in terms of hope and dignity?
ENGLISH: It's absolutely huge. You know, in conflict schools can provide a safe haven for children somewhere to escape the chaos around them. And in many conflicts around the world, UNICEF is able to continue supporting children to go to school, to get some kind of education whilst the fighting continues. But that's just not the case in Gaza.
As you say, almost two years now, children have been out of school and that comes on top of the disruptions that we saw from the global COVID pandemic. You know, now any parent will recognize that feeling when you're, you know, were all worried about our children necessarily sort of falling behind or what impact that would have on their future.
Now imagine being a parent in Gaza and seeing that hope extinguished from your children's eyes. And we have to remember that these children are the generation who will have to rebuild Gaza. So what hope are we giving them if we can't provide them with that basic right for every child of an education.
VAUSE: It'll be, you know, staggering to see what their view on the world will be like when they reach that point where they are the next generation of leaders in Gaza and what they will be, you know, their feelings towards Israel and the rest of the world, given what has happened over the last almost two years or so. Here's the U.N. Secretary General speaking last month about the suffering of children in Gaza.
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ANTONIO GUTERRES, U.N. SECRETARY-GENERAL: Children speaking of wanted to go to heaven because at least they say there is food there. We hold video calls with our own humanitarians who are starving before our eyes. And this is not just a humanitarian crisis, it's a moral crisis that challenges the global conscience. We will continue to speak out at every opportunity. But words don't feed hungry children.
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VAUSE: You know, it's a good point. And given that Hamas has controlled Gaza for about 18 years, it seems the ones who are truly innocent here, the ones who are least to blame for the war, are the ones who are paying the highest price. And there's an apathy around the world in all of this.
ENGLISH: That seems to be, you know, I think, you know, we -- how we see the photos and the images and the stories and the words that we are hearing from children, from mothers, from parents. You know, many, many months ago, I was speaking to parents and they were exhausted physically, mentally, emotionally, from the day to day struggle of keeping their children alive, you know, putting their bed, putting their child to bed each night not knowing if they would wake up in the morning and now not knowing if they have enough food to give them.
But it's not even children who are, you know, the youngest children. Now what we're seeing is that pregnant women, new mothers, are acutely malnourished, which means that one in five children born in Gaza now is now either being born early or underweight.
And so it is even unborn children who are paying the price for this war. So we have to see an end to the fighting. We have to see the hostages released, and we have to see, you know, some kind of hope for the future for this generation of children. You know otherwise, you know, what is the point of the international order if we cannot finally say enough is enough and bring this horrific conflict to end.
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VAUSE: Yet thing else for a bunch of kids who have nothing to do with it. Joe, thanks for being with us.
ENGLISH: Thanks so much, John.
VAUSE: Well, it seems that historic face to face meeting between the Russian and Ukrainian presidents might not happen, at least not as quickly as the White House has indicated.
The Kremlin is downplaying the chances of the summit taking place with Russia's foreign Minister Sergey Lavrov indicating that President Putin hasn't actually agreed to the meeting.
Meantime, NATO military leaders met Wednesday to discuss potential security guarantees for Ukraine once the war is over. Lavrov, though, suggests those discussions are meaningless without Moscow's involvement.
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SERGEY LAVROV, RUSSIAN FOREIGN MINISTER (through translator): Now it is proposed to resolve security issues, collective security without the Russian Federation, this will not work. I'm confident that in the west and above all in the U.S. they understand perfectly well that seriously discussing security issues without the Russian Federation is a utopia and a path to nowhere.
(END VIDEO CLIP)
VAUSE: More details now from CNN's Bed Wedeman reporting in from eastern Ukraine.
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BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: The prospect of an imminent Zelenskyy-Putin meeting seems to be fading with a senior Russian official throwing cold water on White House claims Putin had agreed to one Wednesday. Russian Foreign Minister Sergey Lavrov didn't explicitly reject the idea, only saying Russia is ready to raise the level of delegations.
Kremlin speak for perhaps there will be a slightly more senior level official participation in future negotiations, but certainly not involving the Russian president.
President Zelenskyy has made it clear he's ready for direct talks. But Putin has long called into question the legitimacy not only of Zelenskyy as president, but also Ukraine as a sovereign state.
Putin is more than happy to stroll down the red carpet with the likes of President Donald Trump, but not the head of a state he has invaded.
While Monday, European leaders left Washington seemingly satisfied with the consensus they had reached with American officials on the broad outlines of post peace agreement security guarantees. Lavrov made it clear there's no point in discussing those guarantees without direct Russian involvement. And he accused European leaders of aggressively trying to change the position of President Trump after his friendly summit with Putin in Alaska.
All the while, the war goes on. Wednesday, the commander of the Ukrainian Army toured the eastern front, reporting back that his troops remain on the defensive as Russia pushes ahead with its summer offensive. I'm Ben Wedeman, CNN, reporting from eastern Ukraine.
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VAUSE: The U.S. East Coast is already feeling the effects of Hurricane Erin as it moves north through the Atlantic Ocean. NASA has released these 3D models of the storm as it went through rapid intensification. While the strong Category 2 storm is not expected to make landfall in the US. Storm surge high winds and heavy rain have impacted coastal areas in the South.
Erin is forecast to turn into the open ocean over the next few days as it picks up speed. CNN's Dianne Gallagher has the very latest now reporting in from North Carolina as.
(BEGIN VIDEOTAPE) DIANNE GALLAGHER, CNN U.S. NATIONAL CORRESPONDENT: Hurricane Erin comes up the east coast passing the Outer Banks. You can see right now the sort of choppy seas. We're looking at some spicy surge, a little bit aggressive. There are still people who are trying to walk just along the shoreline admiring these waves where Jeannette's Pier in Nags Head, that's about 25 feet above the mean water. We are seeing some of the waves at this point kind of kiss the bottom of it occasionally, but so far, again, just rough surf.
The big concern for the Outer Banks is looking at this potential of up to 4 feet of storm surge and also those big waves. Now, some of it comes from just the geographic vulnerabilities of the Outer Banks. We're looking at about 200 miles barrier islands that are effectively connected by this one highway. It's called NC12. And that is the biggest concern officials at this point.
They are worried about the storm surge potentially washing out or just breaking some of NC12, which will leave people in some of the more southern Outer Banks Islands stranded for a period of time until they can repair that. And they're not sure exactly how long that might take.
They've already shut down roughly 50 miles of NC12 at this point, saying the conditions are just a little bit too rough right now. We have seen some DOT cameras that show overwash at this point, the tide when it came in spilling over those dunes.
We have video from earlier in the day on Wednesday of the Department of Transportation using construction vehicles to try and fortify those dunes to prevent any of that isolation.
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Now there were mandatory evacuations for Ocracoke and Hatteras Island. According to the DOT, more than 2,200 people were evacuated safely through the ferry system. At this point though, as the hurricane passes these Outer Banks, people just are going to have to stay where they are.
The big key in the morning when it is supposed to be the worst here is that people do not get into the ocean because of those very dangerous rip currents. They are worried again about potential for property damage, but they do not want to have to also account for loss of life in Nags head. Dianne Gallagher, CNN. Back to you.
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VAUSE: Torrential rain has triggered flooding in parts of western India with evacuations ordered in at least two cities on Wednesday. You see residents walking through floodwaters which submerged some buildings as well as temples.
Still to come on CNN, the dangerous reality of life in Afghanistan four years after the U.S. cut and run.
(BEGIN VIDEO CLIP) UNIDENTIFIED FEMALE: Every week the de miners collect unexploded ordnance and explode them.
UNIDENTIFIED MALE: Three, two, one.
UNIDENTIFIED FEMALE: But invading countries have left more than just bombs in their wake here.
(END VIDEO CLIP)
VAUSE: By many Afghans who worked for the United States during its 20- year long war now feel abandoned.
Also ahead, boos for the vice president and other key members of the Trump administration. We'll explain why in a moment.
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VAUSE: Four years ago when U.S. forces suddenly withdrew in chaos from Afghanistan, thousands of Afghan nationals who worked with the United States were left behind. They were abandoned, left behind to face the Islamic fundamentalist rule of the Taliban.
Now it's even worse. The Trump administration has a travel ban. And at CNN's Isobel Yeung reports there are fewer opportunities to leave and lives are still being lost in bomb riddled battlefields. Here she is.
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ISOBEL YEUNG, CNN CORRESPONDENT (voice-over): Here in Afghanistan, the remnants of war are everywhere.
YEUNG: These guys are trying to clear this whole field of landmines that have been left by decades of war. Just got to watch where we're stepping because anywhere beyond these red flags is still potentially contaminated and could have unexploded ordnance.
YEUNG (voice-over): Deminers work around the clock.
KHALID SAMIN, DANISH REFUGEE COUNCIL: There were three accidents, civilian accidents in this year happened in the post.
YEUNG: Oh, wow. And how often are civilian accidents happening in Afghanistan A monthly basis?
SAMIN: On a monthly basis, we have witnessed more than 110 people, most of them as children, involved in the accident, Unfortunately.
YEUNG: Wow. So over 100 civilian accidents every month?
SAMIN: Monthly basis. Yes.
YEUNG: Wow. It must be dangerous work.
SAMIN: Yes. This is the reality of Afghanistan.
YEUNG: This guy here just found some sign of metal, so they're digging a little further to try and find out whether that's a mine or not. Very hot, dangerous work up here.
YEUNG (voice-over): Every week the deminers collect unexploded ordnance and explode them.
UNIDENTIFIED MALE: Three, two, one.
YEUNG (voice-over): But invading countries have left more than just bombs in their wake here. Hundreds of thousands of Afghans worked with the U.S. government during their 20-year war here as translators, drivers, civil society workers and doctors.
Following America's chaotic withdrawal under the Biden administration in 2021, the U.S. set up a refugee program that would provide a path for Afghans to move to the U.S., a lightning rod for many Republicans.
STEPHEN MILLER, NOW-WHITE HOUSE DEPUTY CHIEF OF STAFF: The United States of America never ever made a promise, written or unwritten, to the people of Afghanistan that if after 20 years they were unable to secure their own country, that we would take them to ours.
YEUNG (voice-over): When Trump returned to power this year, he cancelled refugee programs, dismantled the office dedicated to helping Afghans relocate and barred them from entering the U.S. altogether.
YEUNG: We've been speaking to a lot of those individuals across the country, but still, sadly, because of security concerns, most of them we're having to speak to on the phone.
YEUNG (voice-over): On paper, the U.S. says they are still processing cases for people who worked with the U.S. military directly. But many, like this man, are stuck in Afghanistan, living in fear. We've disguised his voice.
UNIDENTIFIED MALE: I know that the Taliban is searching for me. I'm hiding. If I come outside freely, if they find me, I'm confident that they will imprison me. They will torture me. They will kill me. Donald Trump become U.S. President. He signed the executor order and all our cases stopped. We stood with the U.S. forces side by side for a long term, but now they bound us. Why? Where is the justice?
YEUNG: So we've been in touch with one woman who has agreed to meet with us. She says that it's very risky, that she risks running into the Taliban, she risks traveling by herself, and she's very scared. But she says it's worth it because she really needs to share her story.
YEUNG (voice-over): As a doctor, this woman worked for American charities. With recent U.S. aid cuts, she lost her job. She now feels that her relationship with U.S. organizations has put her and her family's life in danger.
YEUNG: You're clearly terrified. You came here. You're shaking. [01:25:04]
UNIDENTIFIED FEMALE: Yes. During that way I saw many Taliban and I'm very afraid from them.
YEUNG: What is it like as a woman living in Afghanistan right now?
UNIDENTIFIED FEMALE: The situation is very bad for the Afghan woman and we don't have any job. Going to the bazaar, not going to the shopping. We can't. Everything. Just we are in the home and we are afraid from every second of the like we are spending is very dangerous.
YEUNG (voice-over): Her communication with the State Department has stopped. The last email she got was in January, just days before Trump returned to the White House.
YEUNG: How did you feel when you saw the news that Trump was cancelling these programs?
UNIDENTIFIED FEMALE: All the night we are crying. It was very difficult to accept like this.
YEUNG: You felt like this was your lifeline.
UNIDENTIFIED FEMALE: Yes, yes. It broke our head.
YEUNG: President Trump has said that he needs to protect the borders, that he needs this America first policy to ensure that it's not dangerous, that no one dangerous enters the US.
UNIDENTIFIED FEMALE: No, I'm not agree with this. They broke his promise to Afghan women in Afghan grils.
YEUNG: What does it feel like?
UNIDENTIFIED FEMALE: We feeling bad because we trust on it and we working with them as 20 years and they promised us to -- we must be moved from here to America.
YEUNG: What is your message to President Trump?
UNIDENTIFIED FEMALE: Please, please, please start the cases again. And also, please support the Afghani girls or women because now it was very difficult for us. It was very dangerous and I'm not feeling safe in here.
YEUNG (voice-over): The U.S. State Department told us they're unable to comment on individual cases or internal operations of refugee processing and that the president is quote, committed to helping those who helped us but that their first priority is always the safety and security of the American people. Isabol Yeung, CNN, Afghanistan.
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VAUSE: Just ahead on CNN, is AI feeling a frenzy and speculative investment? OpenAI CEO Sam Altman once we're actually in an AI bubble right now.
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VAUSE: Welcome back, everyone. I'm John Vause. You're watching CNN NEWSROOM.
For a third time, a federal court has denied releasing grand jury documents from the Epstein investigation. The judge ruling the Department of Justice, which made the request, failed to overcome long-standing precedent to keep those records sealed and noted grand jury transcripts pale in comparison to the 100,000 pages of material currently in DOJ possession.
President Trump is under growing pressure to honor a campaign promise for greater transparency in the investigation into the sex trafficker and pedophile.
Texas another step closer to changing its voter maps to help Republicans pick up as many as five congressional seats in next year's midterm elections. The Texas House easily passed the redistricting into law Wednesday with a vote of 88 to 52.
This comes just days after Democratic lawmakers ended their two-week standoff to keep the bill from advancing. It now goes to the Senate where the Senate there is also expected to pass it.
Now to Washington where prominent members of the Trump administration were publicly heckled and booed on Wednesday.
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CROWD: Boo. Get out of here.
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VAUSE: That greeting was for the Vice President J.D. Vance, Defense Secretary Pete Hegseth and White House deputy chief of staff Stephen Miller as they met with National Guard members.
Vance lashed out at them calling them crazy and communists. Miller referred to the hecklers as elderly white hippies (ph) saying without evidence that they're not part of the city.
This comes as six Republican-led states deployed National Guards troops to the U.S. capital and CNN's Brian Todd has details.
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J.D. VANCE, VICE PRESIDENT OF THE UNITED STATES: Hey, guys. At ease.
BRIAN TODD, CNN CORRESPONDENT: While Vice President J.D. Vance and Defense Secretary Pete Hegseth visited National Guard united deployed to D.C.
VANCE: You guys busted (INAUDIBLE).
We're all grateful for everything you guys do.
TODD: And shared lunch at a local Shake Shack.
VANCE: You can actually bring law and order to the communities. You just got to have the political will and power to do it.
TODD: Around the same time Washington D.C. Mayor Muriel Bowser was holding a news conference.
MAYOR MURIEL BOWSER, WASHINGTON, D.C.: My plan is to represent the (INAUDIBLE) so we can navigate us out of this emergency, the president's emergency.
TODD: Bowser also addressing the Justice Department investigation into whether the D.C. police department manipulated data to make crime numbers appear lower.
[01:34:46]
BOWSER: We know that crime has gone down in our city, and it has gone down precipitously over the last two years because of a lot of hard work.
We know that those facts don't comport to what some people are saying. But those are the facts.
TODD: While the mayor has criticized President Trump's takeover of the D.C. police, she and D.C. Police Chief Pamela Smith met with White House deputy chief of staff Stephen Miller and DEA administrator Terry Cole Tuesday.
We pressed the mayor on whether any new agreements were made or if they discussed coordination between agencies, but she only said this.
BOWSER: We discussed shared priorities.
TODD: Meanwhile, some in D.C. have taken to the streets in protest. With roughly eight in ten residents opposing Trump's federal takeover. A new "Washington Post" Schar School poll finds, with protesters even at times drowning out Vance's remarks on Wednesday.
VANCE: And I think you hear these guys outside here screaming at us. Of course, these are a bunch of crazy protesters.
TODD: And while President Trump has claimed D.C. restaurants are booming.
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: And the restaurants the last two days were busier than they've been In a long time.
TODD: We found that restaurants are feeling the impacts from Trump's federal surge. Open Table tracks reservation data for the city and says that while the annual summer restaurant week is bringing more business this week, dining was down 7 percent last week from the week before.
Some establishments along the 14th Street corridor told us there was a huge drop in weekday business during the law enforcement surge. Low even for a typically slow August, with residents there saying the increased police presence is causing new issues.
MARA LASKO, WASHINGTON, D.C. RESIDENT: I don't think that they're actually doing anything productive to make our city a safer place.
TODD: The general manager of nearby restaurant Ted's Bulletin told us that while he hasn't noticed a huge change in diners, there have been some positive changes.
GIOVANNI BALBUENA, GENERAL MANAGER, TED'S BULLETIN: I do see less homeless people. Walking into my business.
TODD: During her news conference, Mayor Bowser and Police Chief Pamela Smith were asked about criticism from some members of the public of the fact that some federal law enforcement agents have been seen wearing masks during operations in D.C. during this surge.
Chief Smith said she hasn't received any guidance on why these law enforcement agents are wearing masks. And then the mayor jumped in and said emphatically that she does not believe that in this urban environment, there's any reason for a law enforcement agent to wear a mask.
Brian Todd, CNN, Washington.
(END VIDEOTAPE)
VAUSE: A long-standing requirement for immigrants to be of good moral character to become U.S. citizens is being expanded by the federal government. Now, those applying for citizenship must affirmatively establish that they're worthy of naturalization. For example, by paying overdue taxes in full rather than using a payment plan, as in the past. Critics say all of this just adds a new burden to the overall process.
Despite all the A.I. hype talk of a brave new world, the future is now, it seems corporate investment in A.I. is yet to pay off, with one survey finding no ROI or return on investment for 95 percent of companies.
Tech CEO Sam Altman believes we're in an A.I. bubble. The head of OpenAI told reporters he believes investors are overly positive about A.I. development. He said when bubbles happen, smart people get overexcited about a kernel of truth. And we are in a phase where investors as a whole are overexcited about A.I. he asked, and his answer is yes.
More now from CNN's Clare Duffy.
(BEGIN VIDEOTAPE)
CLARE DUFFY, CNN TECH REPORTER: I mean, really stark results from this study, especially because we keep hearing, including from leaders of this industry, how every enterprise needs to have an A.I. strategy, needs to be adopting this technology. And yet, according to this study, only 5 percent of the companies that have rolled out A.I. pilot programs are actually seeing meaningful increases to their revenue.
And certainly, I do think that Sam Altman might have a point, given that we've seen so many A.I. Startups raking in these huge valuations, often with only two or three people, a handful of people running the companies, before they even make a profit, they are raking in these huge valuations. It's likely that not all of those will succeed.
But I also think it's worth noting in terms of this enterprise adoption, this study finds that often the problem is not the quality of the A.I. model, but rather that companies don't yet really understand how to implement this new technology, how to update their processes to really make the most of A.I.
This is sort of a reality check moment where we've heard a lot from silicon valley about how A.I. is growing exponentially, advancing exponentially. And yet, I think what you're starting to see from this study and from what companies are saying about their use of these systems, is that this adoption and the development of A.I. is not actually going to be that linear.
Something that I long have just sort of personally thought watching this space is that we're going to see a lot of companies looking to outsource some of their work to A.I., laying off workers, only to realize that computers can't necessarily do the job in the way that humans do, and maybe having to bring some of those folks back.
So I won't be surprised if we do see a bit of a boomerang here, as companies try to figure out what to do with this technology.
(END VIDEOTAPE)
[01:34:46]
VAUSE: And joining me now is Mike Isaac, technology correspondent for "The New York Times". It's been a while. It's good to see you.
MIKE ISAAC, TECHNOLOGY CORRESPONDENT, "THE NEW YORK TIMES": Hey, thanks for having me.
VAUSE: Always a pleasure. Now, from tulips to real estate, the rules of economics do not change. When the price of something is driven by speculative investment and it goes way beyond its intrinsic value in cost, eventually, the bubble will burst.
Is there any reason why the A.I. tech companies and those companies benefiting from the A.I. boom will be any different?
ISAAC: I mean. It's a great question, it's an open question right now. If you come out here and ask any Silicon Valley CEO, all of them are basically convinced that this is the next era of the Internet. And once we get to building enough data centers and making powerful enough A.I. models, then the money will start flowing in. But, you know, I think it's also a pretty good marketing line and a
way for them to continue to spend enormous amounts of money without really getting punished quite yet by Wall Street. Although the past day or so, they are just starting to feel a little bit more heat as their -- as Wall Street is getting more impatient.
VAUSE: Yes, I guess that price to earnings ratio just doesn't ever really go away at the end of the day.
Microsoft's stock price --
ISAAC: Yes.
VAUSE: -- is one of the big winners from this A.I. frenzy, with the company forecasting $30 billion in capital spending on A.I. investment, record sales in Azure, its cloud storage business.
And this surge in the share price means Microsoft is now valued at $4 trillion, increasing in value by $1 trillion in a year and a half. And it mainly does that while what, selling shovels during a gold rush. And they're not the only ones.
ISAAC: No. You're exactly right. And I think like, there's a few companies that I think are really at risk. And those are the OpenAIs of the world that are, you know, that are not profitable, that are continuing to raise money and that have to sort of bet on an eventual day where they can turn a profit.
Or let's say Meta, where they're definitely profitable company and continue to sort of make a lot of money on their other products, but none of what they're doing in A.I. as far as consumer A.I. apps are making money.
But if you're a Microsoft or an Amazon, any company that has like a cloud business where you're essentially selling servers and what's called compute processing power to power these A.I. programs, you're making money. As long as other companies are spending money to build this stuff, you're making a lot of money.
So honestly, I think Microsoft is a big beneficiary of this and still happens to have a good business even if all of this goes to heck overnight.
VAUSE: Well, if you do look at the old, you know, the 25 years ago, the dot-com bust, there was some good which came from that, and it was an end to commercials like these.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Just hit the buzzer, Andy. I brought something for you from pets.com.
UNIDENTIFIED MALE: I'm here to play with the tabby cat. I'm not going to tell you what it is but it makes you crazy.
One, two, three. Oh, sorry. UNIDENTIFIED MALE: Pets.com because pets can't drive.
(END VIDEO CLIP)
VAUSE: Seriously -- so annoying. Pets.com, the poster child of dot-com crazy.
What is interesting though, according to one analysis, pets.com once valued at $410 million at its February 2000 peak, collapsed within a year, ultimately filing for bankruptcy and liquidating all its assets. Compare that to Coreweave an A.I. Infrastructure company, which went public in March. In just two days, its share price plunged 33 percent, erasing $24 billion in market value, 60 times the peak capitalization of pets.com. And Coreweave stocks right now are trading at around $100 and are still overvalued.
So the point being made from all of this is that when the bubble bursts with A.I., it will make the dot-com crash look like a teddy bears picnic because the huge losses will permeate all through the economy and it won't be like the dot-com days where we can recover fairly easily. This will be big.
ISAAC: I completely agree and like this is a it's a mature ecosystem. You know, back in the dot-com days, I still think that those stocks, those sort of web stocks that were acting kind of like meme stocks now in like crypto land, were still pretty speculative.
I think, they're nowhere near baked into people's 401(k)s or pension funds now. You know, like if you have to remember, like a lot of the Dow is propped up by the health of the tech stocks that are performing, right. Like -- and sometimes the market trends with whether they're doing well or not.
So I do -- I think you're exactly right. Like it's this thing where were all kind of yoked to the fate of these tech companies in a way that I think should be making us increasingly uncomfortable.
So let's see if they can get their spending in line or something, I don't know.
VAUSE: And when you look back, though, you know, it seems obvious now with 25 years of hindsight, you look back at the ones that went bust, like pets.com.
[01:44:43]
VAUSE: But the ones that survived Amazon, you know, Facebook, Microsoft, all kinds of stuff -- they were the healthy companies that had a good business plan, which really was kind of obvious when you think about it. But, you know, hindsight is 20/20.
Is there -- it seems like a similar situation is developing now and we just don't know it?
ISAAC: I think you're totally right. You always have to look at the fundamentals. I mean, this is a very sort of trite investor saying, but I really do think the fundamentals matter.
And like, is there a business there? You know, is it not just like all hype and marketing and chasing AGI, superintelligence, these sort of far-flung ideas of you know, what people out here call like this god in the computer, you know, like at the end of the day, are these, like, healthy, functioning businesses?
And right now, the Microsofts of the world, the Amazons of the world and the Googles of the world are and to the degree that Meta is not in the A.I. land, they are too. But like as far as startups go, its more risky is what I would say.
VAUSE: Yes, it's always been a bit of a gamble, a bit of a casino sometimes with the -- with the booms. But you're right, it's a good business at its core. It should be fine. We'll see what happens.
Mike, thanks for being with us.
ISAAC: Thank you. Always a pleasure. Thanks for having me back.
VAUSE: We'll take a short break. When we come back another threat for those who fled their homes because of civil war in Sudan. How the fighting in seasonal rains have now led to a deadly outbreak of cholera.
[01:46:05]
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VAUSE: Sudan is dealing with a rapid spread of cholera, fueled by a deadly combination of factors. A civil war has forced 12 million people to leave their homes. More than 7 million are internally- displaced, many living in refugee camps where food, water and sanitation are scarce. Add to all of that it's the rainy season.
Here's CNN's Lynda Kinkade.
(BEGIN VIDEOTAPE)
LYNDA KINKADE, CNN CORRESPONDENT: In a country torn apart by war, the most immediate threat at this makeshift clinic in Sudan isn't combat but cholera. Rows of patients lie sick on cots, weakened by the waterborne disease that has quickly spread through the Tawila displacement camp in Northern Darfur.
MOHLA IBRAHIM, CHOLERA PATIENT: I had something Like dizziness, and there was diarrhea. I was brought here. I was somehow better, but I became very sick when I came here. I've been here for four days.
KINKADE: More than 300,000 people have fled to Tawila to try to escape the fighting between Sudan's army and the paramilitary Rapid Support Forces or RSF.
But it's rainy season in Sudan which is making it more difficult to get clean water in the camp. The Norwegian Refugee Council reports that only 10 percent of people in camps there have reliable access to water, and even fewer have access to toilets -- conditions where cholera thrives.
The international aid group Doctors Without Borders says it's the worst cholera outbreak the country has seen in years. In just one week, its team saw 40 deaths from the disease in the Darfur region alone.
AHMED DAFALLAH, DOCTOR (through translator): Currently and over the past few days, the number of cholera patients is increasing so much. In a single day, we would receive 50 or 60 patients.
KINKADE: Aid groups are ramping up efforts to curb the outbreak, but the ongoing fighting has choked off access to critical supplies and the crisis is deepening faster than they can respond.
TEDROS ADHANOM GHEBREYESUS, DIRECTOR GENERAL, WORLD HEALTH ORGANIZATION: People are dying from a lack of access to health services and medicines. Ongoing fighting has displaced more people than any -- in any other crisis in the world. Health facilities are either out of service or only providing limited care.
KINKADE: Experts warn the window to contain the outbreak is closing fast. In neighboring Chad, more than 400 suspected cases have been identified since mid-July, most in Sudanese resettlement camps, a deadly threat for those who have already endured so much.
Lynda Kinkade, CNN.
(END VIDEOTAPE)
VAUSE: Still to come, a terrifying experience for some passengers on a Delta Airlines flight. They noticed the plane's wing was broken. Oops. More on that in a moment.
[01:53:34]
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VAUSE: It seems that Kiruna Church in Sweden has actually made it home just a few kilometers down the road. We've been following the translocation of this 130-year-old church from its current location to this new place. It was forced to move because the ground underneath the building was starting to collapse.
It took two days. They moved it inch by inch, a five-kilometer journey. They will now try and place the church on its new foundations, and that will take a couple of days. And the bell tower expected to be put in place in the next couple of days as well.
All of this should be done and finished maybe by late next year or early 2027.
This is not exactly what passengers want to see just before landing, a flap on a Boeing 737 dangling from the plane's wing. The passenger who recorded these images says the plane was shaking badly just before landing in Austin, Texas. The FAA says it is investigating the incident.
China held a large parade and gala in Tibet Wednesday, marking 60 years since it was declared an autonomous region. Chinese President Xi Jinping and other prominent communist party officials attended the festivities in Tibet's capital, Lhasa.
Tibet was proclaimed an autonomous region in 1965, 15 years after Beijing launched a military invasion. But the Tibetan government in exile still operates in India.
Thank you for watching. I'm John Vause.
CNN NEWSROOM with the one and only fabulous Rosemary Church next. See you tomorrow.
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ROSEMARY CHURCH, CNN ANCHOR: Hello and welcome to our viewers joining us from all around the world and to everyone streaming us on CNN Max. I'm Rosemary Church.
