May 23, 2024 • 21 mins
Featuring:
Louis Navellier, Chairman and Founder of Navellier & Associates.
Vlad Savov, Bloomberg Tech Editor in Hong Kong.
Lorraine Tan, Director of Asia Equity Research at Morningstar.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg
Daybreak Aisia podcast. I'm Doug Krisner. You can join Brian
Curtis and myself for the stories making news and moving
markets in the APEC region. You can subscribe to the
show anywhere you get your podcast and always on Bloomberg Radio,
(00:23):
the Bloomberg Terminal, and the Bloomberg Business App.
Speaker 2 (00:27):
Joining us now on the program to take a closer
look at Nvidia is Louis Novellier, who is chairman and
founder of Navalier and Associates. So, Louis, there wasn't a
lot of nervousness leading into this print by Nvidia because
the hyperscalers had already told us that they were buying
big time in Vidia chips. But going forward, is that
(00:49):
still the most important thing to watch or are there
some other metrics that you have that will tip us
on if and when business actually slows.
Speaker 3 (00:59):
Well, certainly, with two hundred and sixty two percent sales growth,
obviously they're not going to be able to sustain that
much longer. Even super microcomputers slowing their sales. They're going
from two one hundred and forty five percent next quarter.
But I the order book is strong, the margins are ridiculous.
The Blackwell chip is finally going to get implemented. That's
(01:22):
a given a nice little turbo boost. It really boils
down to how fast they can put all this in
the cloud and build all these great new data centers
so we can do AI via the cloud. And of
course there's also a rush to boost electricity to fuel
all this, and so there's a lot of plays socio
(01:45):
of AI. But it remains very healthy and we just
went into extra innings on the AI rally today.
Speaker 1 (01:51):
What is your sense on the degree to which AI
is being adopted, how quickly that's occurring. Jensen Wog during
the conference call with analyst was talking about an expansion
into consumer internet companies, enterprise, sovereign AI, automotive healthcare. I
mean it seems to be spreading out. Do you have
a sense of the rate of change or the rate
(02:12):
of adoption?
Speaker 4 (02:14):
Oh, it's unbelievable.
Speaker 3 (02:16):
I think the biggest problem is the way they're doing AI.
Not everybody should do it the really fancy way. I
have friends that are in the chip business and they
build AI chips for samps and things like that, and Essentially,
when you look at everything, you can get errors.
Speaker 4 (02:35):
So you want to look at correlated things.
Speaker 3 (02:38):
And you know, the intelligence community missed nine to eleven,
they missed October seventh. So you can get what we
call garbage and garbage out if you look at too
much stuff. So it's very important when they implement all
this AI that they just put in the things that
are correlated versus the kitchen saying.
Speaker 1 (02:57):
You are talking about the training data that they're using
to create these models.
Speaker 3 (03:01):
Right, correct, correct, And you know I build I built
stock models and I'm very proud of them, and that
they're online free and we great stocks, A, B, C,
D F and and uh so I'm kind of a
programmer to begin with. And but what's interesting is when
you build a model, the more factors you put in,
(03:21):
the more errors you're going to make. So my friends
that are building chips, now it's for consumer products. They're
they're basically chips are mimicking our pets in our household.
You know, our pets plot against us and figure out
who we are and and and then try to condition us,
you know, And so that's what consumer AI will be doing.
(03:44):
You know, the new alexas of the world and things
like that, and I just think it's recording. They don't
go overboard and do it like the NSA or c
i A.
Speaker 2 (03:53):
Let's talk a little bit about some of these second, third,
and fourth derivative place. Probably in the most immediate we
can look at some of the Asian suppliers for sure,
TSMC is a big one obviously, with Strawn and Skix
and Samsung. Are you playing those as well, and if so,
what do you like?
Speaker 4 (04:12):
No, I'm not.
Speaker 3 (04:13):
I'm playing the companies that are built making the electric
demand go up, So that would be something like an
eton An, Mcore, a Quantum Services, Vista Corporation. And I'm
helping companies secure the cloud. That would be things like CrowdStrike,
a New Annex, NTNX, Parsons, and virtual holdings. So it's
(04:38):
all cloud and security. It's that's kind of where we're at.
Speaker 1 (04:43):
So we also got news of a ten for one
stock split and an increase in the dividend of one
hundred and fifty percent is or would in Nvidia be
better served taking that money into plowing it back into
R and D or do you think they're adequately taking
care of kind of what's necessary on on the research
and development front.
Speaker 4 (05:03):
Oh, they spent over two billion dollars on that Blackball chip.
That's why I know we can compete with them.
Speaker 3 (05:08):
And I mean if AMD wants to even try to
compete with them, they're not going to. And you know,
Apple and others have announced they're going to get in
the AI chip business. But that's the that's the cheap
AI stuff that it's not as fancy as what Navidia does.
So I think Navidia has a monopoly. They're going to
continue monopoly to the end of the decade. You know,
(05:29):
Jensen said he wants to double the processing speeds every
year and then eventually at the end of the decade
they'll have chips in a basically impliance sized device that
will replace data centers. You know, all these chips have
to be liquid cooled, and.
Speaker 4 (05:44):
They run hot and they suck a lot of electricity.
Speaker 3 (05:47):
So the electricity play is my big play at this moment.
Speaker 2 (05:52):
Yeah, and you mentioned Eating and Quanta Services and companies
like that. What about on the cooling side, which you
just referenced, like Carrier or General HVAC companies that supply
cooling systems to data centers, is that also in your
in your target range.
Speaker 3 (06:09):
Not yet, but I can tell you it's hard to
get air conditioners. I'm in Florida now. We ordered some.
It's going to take a while. Most of them come
from Monterey, Mexico, although the crane ones are coming in heavy.
But the uh, you know, they put the server farms,
a lot of them in the desert so they can
open them up at night and they actually cool themselves
because the deserts get cold at night.
Speaker 4 (06:31):
And you know, I have a home in Reno where
Apple and Google have server farms there, and so it's
but the server farms are always going to go. There's
cheap electricity.
Speaker 3 (06:43):
But no, Navidia and super Micro should be about eighty
percent or AI investments, and those two stocks are about
twenty percent of my portfolio. Not no, no, no, because
they just don't have the results.
Speaker 4 (06:57):
Yeah. Sorry, it's uh.
Speaker 3 (06:59):
I mean, I know they're rallying in the wake of
what Navidia did, but they just don't hit my criteria.
Speaker 4 (07:04):
I'm pretty picky.
Speaker 3 (07:05):
I got to have my sales growth, my margin expansion,
positive anser visions.
Speaker 4 (07:10):
I got a surprise, you know, so they got a
guide hired.
Speaker 1 (07:13):
What about the memory chips that a Micron would develop
to go hand in hand with an Nvidia product.
Speaker 4 (07:19):
Not yet. I have friends and Boise that ex Micron people.
Speaker 3 (07:23):
That's my buddy who's building chips for Samson, and Micron
has not shown up on my radar, although it has
improved dramatically.
Speaker 2 (07:32):
All right, Louis, thanks so much for joining us here
live on the program. Louis Novelier, chairman and founder of
novel Year and Associates. The chip maker in Nvidia announced
revenue up two hundred and sixty percent from the same
(07:54):
quota last year. It also had a big beat on
the bottom line and second quarter revenue will be about
twenty eight billion dollars. Joining us now for some discussion
is Vlad Savov Bloomberg Tech editor, So, Vlad that two
hundred and sixty that means that revenue tripled, more than
tripled from last year, profit tripling as well? Who does that?
Speaker 5 (08:17):
And Vidia? The hilarious thing, Brian, is we're back here
doing this all over again. I mean, three months ago,
we're having a conversation, maybe we're previewing MVDA earnings and
we were saying expectations as sky high. Can Nvidia meet them?
And it did. He's doing it all over again, and
maybe three months from now we'll do it over again.
It's we can't see the top of this cycle. The
(08:39):
thing that's happening right now, it's worth saying. I mean,
I've been covering a Video since it was still a
purely gaming company. Gaming revenue was estimated at two point
six billion. It came in at two point six billion.
This is all about AI. This is all about data centers.
Speaker 1 (08:52):
No doubt about that. And I think we can say
safely that this is pretty much a monopolist right at
this point. There's no chip company that can touch in video.
Speaker 5 (09:03):
That's a bit of a tough time to put in
it because it's not by any sort of unfair competition.
The competition is wide open if anybody wants to compete
with in video, and you can be sure that companies
are trying. AMD is the closest competitor they can try it.
It's just the technology is that clearly ahead. Everybody is
deploying in video's AI acceleration protocols that he has developed itself.
(09:26):
It has developed this with billions of dollars of investment
and over many years, and people have just adopted this
technology because the best that there is out there right now.
Speaker 2 (09:35):
Yeah, there's just so many superlatives with this. It's not
like we're, you know, all pushing in VideA. It's just
one of these things. It tends to be a freak
of nature here at this point data centers. You mentioned
that's the big thing. It's eighty five to eighty seven
percent of total sales. We've seen the stock triple in
a year, and we mentioned that revenue and profit had tripled,
(09:57):
and so it means that the stock is really no
more expensive now than it was a year ago. The
forward pe is thirty five.
Speaker 5 (10:04):
You're right, Bran. I was just looking at our charts
on the terminal and one of the things that stands
out is that the quarterly sales now are bigger than
the videohead annual sales as recently as one or two
years ago. It really is just a skyrocketing of sales.
And it's worth saying. I mean, we keep talking about
AI on a daily basis, is the predominant topic in tech,
(10:24):
and one of the highlights actually for me from Video's
earnings is that still about forty percent of these sales
are coming from the biggest US tech companies. You're talking Meta, Google, Microsoft,
all the ones that have said AI is a big priority,
big thing that we're doing, and they're investing most heavily
in video chips. If you want to have some sort
of balance here, there is a question to ask, when
(10:46):
will those companies say we have enough of these chips.
When will those companies start tapering off that spending and
start investing in more software investments.
Speaker 1 (10:54):
Well, look at the story earlier in the week with
Amazon delaying the purchase of the last the most to
let me call it, the recent generation, in favor of
withholding fund so that they could buy the next generation
of these chips. So there's going to be this constant
cycle of upgrade and that's going to be driving a
lot of the sales growth going forward, I would imagine.
(11:16):
But you know, Okay, so maybe the company is not
a monopolist in the strictest sense of the term, but
if you dominate the market to such an extent, you
do have enormous pricing power, right, and so they are
in a position to raise prices on the next generation
of these advanced chips in a way that is going
to continue to feed that revenue growth.
Speaker 5 (11:38):
That's right, perfectly fair to say. One of the things
that CEO Jensen Wang did say after the earnings is
that the company is trying to broaden out is customer base.
You've got to keep in mind we're here in Hong Kong.
Asian companies are just as eager to get hold of
those chips. I mean, the situation right now is Nvidia
has far more customers than it has chips to supply.
(11:59):
When you talk to TSA and seeing the likes, there
is still some constraints in advanced packaging to put these
chips together. So Nvidia is very much in an enviable
position today.
Speaker 2 (12:09):
Yeah, I heard Mike Wilson from Morgan Stanley say that
the only thing about AI is that, you know, we
haven't really seen it in the sales outside of Nvidia.
I'm not sure that's really true, because you are seeing
a lot of companies report higher revenues and stronger growth
as a result of let's say power supply or cooling
(12:31):
systems or whatever. But how long is it before this
really does trickle down to the average Joe.
Speaker 5 (12:37):
Honestly, it really is a matter of the software side
of things. We just saw Microsoft announce it so called
co pilot plus PCs. Those are based on Quotcom chips
almost entirely. That's one aspect of the chip market where
Nvidia is not a player. Quotcom is trying to get
in on Intel's turf and basically takeover is the leader
in PCs, because when you think of PCs, it's really
laptops nowadays, that's the leading thing. They are the ones
(13:00):
that are going to show us over the next few
weeks and months how competing the AI features are going
to be for end users. That part really hasn't come
to fruition yet because it's still really early. Everyone is
just buying the immediate chips to train stuff. But the
next the next wave of innovation and the next wave
of chip buying, as far as Ahi goes, is going
to be in the end devices, the stuff that Quocom
(13:21):
is setting.
Speaker 2 (13:22):
Yeah in Frience Flat, Thanks very much, Flat Salvov, Bloomberg
Tech Editor with us. We are joined online by Lorraine
Tan who's director of Asia Equity Research at morning Star
on the markets. So at the moment, Lorraine, we're not
(13:43):
seeing this huge follow through from the optimism surrounding in
Nvidia to the broader markets in Asia, but it shows
you these are big markets and there are a lot
of factors.
Speaker 6 (13:56):
Yes, that's right, so you know, while you know Nvidia
does provide some relief that at least that's not a
risk trigger. I think the broader events are the ones
that is going to drive Asian market direction. And first
and foremost is people are still wondering when the Fed's
going to cut, what the inflation numbers are going to
look like coming up that would allow for that. So
(14:20):
I think that still tends to be a key factor
that the markets are looking for in terms of direction.
Speaker 4 (14:25):
Lorraine.
Speaker 1 (14:25):
One of the big ideals here in the States after
the bell was obviously the Nvidia earnings shattering on estimates
for sales. I mean, so the guidance here are very
positive for the current quarter. This is something that is
really kind of a revolution in the US. I don't
know how you're seeing AI play out in parts of
Asia China. Let's put that aside for a moment. We
(14:46):
can talk about what you're maybe seeing in Singapore, and
if you could tie in the issue of energy, because
I know you spent a number of years over the
course of your career focusing on energy and utilities, and
we know that AI generally speaking is very energy intensive.
Speaker 6 (15:05):
Yeah, so I think there's a little bit of a
difference here because in video is benefiting because it's got
the platform to really extract the value from all the
AI activities that are going on. So you've got obviously
some fall flow through to the chip companies, but really
(15:26):
the chip cycles are going to be driven by the
broad industry, and for us, we do like that space,
but it's going to be partly driven by the handful
replacement cycle that we expect in twenty twenty five. So
there are slightly different nuances there. In Asia, I think
it's harder to pinpoint specific companies that are going to
(15:47):
benefit from what's going on in AI. So even within
let's say China, when we look at what's going on
in a cloud space, it's really the national telephone telecommunication
companies that are benefiting. But even then the percentage of
to their revenue is not as huge as what we
(16:08):
want it to be. Obviously, for by DO, this will
become a gross driver for them in the future, but
it's still not quite it's still not you know, as
the significant or it's harder for us to tell whether
they're going to be able to make a profit out
of it so soon.
Speaker 2 (16:26):
We've looked a lot at some of these derivative markets
and areas sectors. Electrification is a big thing, the independent
power producers in addition to the actual utilities themselves. And
then you have you know, the HVAC companies, you have
industrials generally, and a lot of the enthusiasm has spread
to a lot of different sectors. But investors are still
(16:47):
looking for companies like Snowflake that stumbled at one point
in the future and are undervalued. Are you finding companies
that are undervalued or are you sort of swamped by
all these markets with all these games.
Speaker 6 (17:00):
Actually, we're still looking at we still see value in
the markets even within the US that we think is
slightly overvalued. You know, we're you know, we're looking at
things like even Fortunate that we have a by call on.
You know, these are stocks that are laggered and but
we think that they're still upside potential for sure. Even
(17:23):
healthcare names that are not within the that haven't benefited
from the BCD drug run up, you know, there's still
value there that would come back to the broader farmers
space as well. Within Asia, definitely. You know, we've seen
value China remains in our views, somewhat undervalued despite the
recent run up. Probably would be a little bit more
(17:44):
cautious in jumping into more real estate China real estate
names that have come up the from the bottom. But
definitely we still like the chip sector for the most part.
In Japan, we'd like the lagging factory automation names. They
also benefit from basically a cyclical improvement, basically inventory levels coming.
Speaker 1 (18:07):
Back to normal, So chips. I'm also thinking South Korea
and we just had to be okay raising growth it's
growth forecast for this year to a level of two
and a half percent, up from two to one. The
last projection was made in February. How are you feeling
about the South Korean market, particularly the chip makers like
Samsung and sk Heinex.
Speaker 6 (18:29):
Yeah, we do like Samsung. I think we still have
a bikon on Samsung, but we are more so focused
on the laggards regardless of where they are. So even
within that space industry leader TSMC, we we think they're
still upside potential there. Media tech on the Taiwan side
(18:49):
is another name that we prefer. I think overall, we
probably see a little bit more value in some of
the Taiwanese names on the chip side relative to let's say,
specific to Japanese or Korean chip makers at this stage.
Speaker 2 (19:06):
And you know, we've talked a lot this morning about
b HP and Anglo and uh, it's interesting that you
know b HP is looking at copper mining but not
wanting to do it itself. But buy buy it, buy Anglo.
I'm curious what your thoughts about M and A. He's
been picking up a little bit here of late. What
what sort of message does it send?
Speaker 6 (19:29):
I think when I think, what it means is that
for companies still having holding a lot of cash, and
I think that's across the board the number of companies
that we see and for those you know where you
have equity values also be at relatively low levels. That
(19:49):
probably means it's a good time to look for acquisitions
and and we do expect that to you know, basically continue,
particularly for those companies that can that do have the
cash flow to afford it. Definitely, you know, debt levels
of debt servicing is a little bit tougher now and
(20:10):
obviously getting funding is a little bit harder now. So
I think where you're probably seeing a little bit more
appetite for by some companies to consolidate.
Speaker 1 (20:20):
We were just talking here in New York about a
Report City Group considering reducing some of its office foot
print in Singapore. Remote work is obviously gaining traction. How
is the commercial real estate market there in the Line
City very quickly?
Speaker 6 (20:37):
Tier one basically the top grade real estate is still
highly demanded. If you look at the CBD areas, occupancy
rates are still high at about nine so we don't
actually expect any decline in rental rates unfortunately for US.
Speaker 2 (20:54):
Laurene, thank you so much for joining us. Lorraine Tan,
their director of Asia Equity Research, Morning Star.
Speaker 1 (21:04):
This has been the Bloomberg Daybreak Asia podcast, bringing you
the stories, making news and moving markets in the Asia Pacific.
Visit the Bloomberg Podcast channel on YouTube to get more
episodes of this and other shows from Bloomberg. Subscribe to
the podcast on Apple, Spotify, or anywhere else you listen
and always on Bloomberg Radio, the Bloomberg Terminal, and the
(21:24):
Bloomberg Business app.
Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg
Daybreak Aisia podcast. I'm Doug Krisner. You can join Brian
Curtis and myself for the stories making news and moving
markets in the APEC region. You can subscribe to the
show anywhere you get your podcast and always on Bloomberg Radio,
(00:23):
the Bloomberg Terminal, and the Bloomberg Business App.
Speaker 2 (00:27):
Joining us now on the program to take a closer
look at Nvidia is Louis Novellier, who is chairman and
founder of Navalier and Associates. So, Louis, there wasn't a
lot of nervousness leading into this print by Nvidia because
the hyperscalers had already told us that they were buying
big time in Vidia chips. But going forward, is that
(00:49):
still the most important thing to watch or are there
some other metrics that you have that will tip us
on if and when business actually slows.
Speaker 3 (00:59):
Well, certainly, with two hundred and sixty two percent sales growth,
obviously they're not going to be able to sustain that
much longer. Even super microcomputers slowing their sales. They're going
from two one hundred and forty five percent next quarter.
But I the order book is strong, the margins are ridiculous.
The Blackwell chip is finally going to get implemented. That's
(01:22):
a given a nice little turbo boost. It really boils
down to how fast they can put all this in
the cloud and build all these great new data centers
so we can do AI via the cloud. And of
course there's also a rush to boost electricity to fuel
all this, and so there's a lot of plays socio
(01:45):
of AI. But it remains very healthy and we just
went into extra innings on the AI rally today.
Speaker 1 (01:51):
What is your sense on the degree to which AI
is being adopted, how quickly that's occurring. Jensen Wog during
the conference call with analyst was talking about an expansion
into consumer internet companies, enterprise, sovereign AI, automotive healthcare. I
mean it seems to be spreading out. Do you have
a sense of the rate of change or the rate
(02:12):
of adoption?
Speaker 4 (02:14):
Oh, it's unbelievable.
Speaker 3 (02:16):
I think the biggest problem is the way they're doing AI.
Not everybody should do it the really fancy way. I
have friends that are in the chip business and they
build AI chips for samps and things like that, and Essentially,
when you look at everything, you can get errors.
Speaker 4 (02:35):
So you want to look at correlated things.
Speaker 3 (02:38):
And you know, the intelligence community missed nine to eleven,
they missed October seventh. So you can get what we
call garbage and garbage out if you look at too
much stuff. So it's very important when they implement all
this AI that they just put in the things that
are correlated versus the kitchen saying.
Speaker 1 (02:57):
You are talking about the training data that they're using
to create these models.
Speaker 3 (03:01):
Right, correct, correct, And you know I build I built
stock models and I'm very proud of them, and that
they're online free and we great stocks, A, B, C,
D F and and uh so I'm kind of a
programmer to begin with. And but what's interesting is when
you build a model, the more factors you put in,
(03:21):
the more errors you're going to make. So my friends
that are building chips, now it's for consumer products. They're
they're basically chips are mimicking our pets in our household.
You know, our pets plot against us and figure out
who we are and and and then try to condition us,
you know, And so that's what consumer AI will be doing.
(03:44):
You know, the new alexas of the world and things
like that, and I just think it's recording. They don't
go overboard and do it like the NSA or c
i A.
Speaker 2 (03:53):
Let's talk a little bit about some of these second, third,
and fourth derivative place. Probably in the most immediate we
can look at some of the Asian suppliers for sure,
TSMC is a big one obviously, with Strawn and Skix
and Samsung. Are you playing those as well, and if so,
what do you like?
Speaker 4 (04:12):
No, I'm not.
Speaker 3 (04:13):
I'm playing the companies that are built making the electric
demand go up, So that would be something like an
eton An, Mcore, a Quantum Services, Vista Corporation. And I'm
helping companies secure the cloud. That would be things like CrowdStrike,
a New Annex, NTNX, Parsons, and virtual holdings. So it's
(04:38):
all cloud and security. It's that's kind of where we're at.
Speaker 1 (04:43):
So we also got news of a ten for one
stock split and an increase in the dividend of one
hundred and fifty percent is or would in Nvidia be
better served taking that money into plowing it back into
R and D or do you think they're adequately taking
care of kind of what's necessary on on the research
and development front.
Speaker 4 (05:03):
Oh, they spent over two billion dollars on that Blackball chip.
That's why I know we can compete with them.
Speaker 3 (05:08):
And I mean if AMD wants to even try to
compete with them, they're not going to. And you know,
Apple and others have announced they're going to get in
the AI chip business. But that's the that's the cheap
AI stuff that it's not as fancy as what Navidia does.
So I think Navidia has a monopoly. They're going to
continue monopoly to the end of the decade. You know,
(05:29):
Jensen said he wants to double the processing speeds every
year and then eventually at the end of the decade
they'll have chips in a basically impliance sized device that
will replace data centers. You know, all these chips have
to be liquid cooled, and.
Speaker 4 (05:44):
They run hot and they suck a lot of electricity.
Speaker 3 (05:47):
So the electricity play is my big play at this moment.
Speaker 2 (05:52):
Yeah, and you mentioned Eating and Quanta Services and companies
like that. What about on the cooling side, which you
just referenced, like Carrier or General HVAC companies that supply
cooling systems to data centers, is that also in your
in your target range.
Speaker 3 (06:09):
Not yet, but I can tell you it's hard to
get air conditioners. I'm in Florida now. We ordered some.
It's going to take a while. Most of them come
from Monterey, Mexico, although the crane ones are coming in heavy.
But the uh, you know, they put the server farms,
a lot of them in the desert so they can
open them up at night and they actually cool themselves
because the deserts get cold at night.
Speaker 4 (06:31):
And you know, I have a home in Reno where
Apple and Google have server farms there, and so it's
but the server farms are always going to go. There's
cheap electricity.
Speaker 3 (06:43):
But no, Navidia and super Micro should be about eighty
percent or AI investments, and those two stocks are about
twenty percent of my portfolio. Not no, no, no, because
they just don't have the results.
Speaker 4 (06:57):
Yeah. Sorry, it's uh.
Speaker 3 (06:59):
I mean, I know they're rallying in the wake of
what Navidia did, but they just don't hit my criteria.
Speaker 4 (07:04):
I'm pretty picky.
Speaker 3 (07:05):
I got to have my sales growth, my margin expansion,
positive anser visions.
Speaker 4 (07:10):
I got a surprise, you know, so they got a
guide hired.
Speaker 1 (07:13):
What about the memory chips that a Micron would develop
to go hand in hand with an Nvidia product.
Speaker 4 (07:19):
Not yet. I have friends and Boise that ex Micron people.
Speaker 3 (07:23):
That's my buddy who's building chips for Samson, and Micron
has not shown up on my radar, although it has
improved dramatically.
Speaker 2 (07:32):
All right, Louis, thanks so much for joining us here
live on the program. Louis Novelier, chairman and founder of
novel Year and Associates. The chip maker in Nvidia announced
revenue up two hundred and sixty percent from the same
(07:54):
quota last year. It also had a big beat on
the bottom line and second quarter revenue will be about
twenty eight billion dollars. Joining us now for some discussion
is Vlad Savov Bloomberg Tech editor, So, Vlad that two
hundred and sixty that means that revenue tripled, more than
tripled from last year, profit tripling as well? Who does that?
Speaker 5 (08:17):
And Vidia? The hilarious thing, Brian, is we're back here
doing this all over again. I mean, three months ago,
we're having a conversation, maybe we're previewing MVDA earnings and
we were saying expectations as sky high. Can Nvidia meet them?
And it did. He's doing it all over again, and
maybe three months from now we'll do it over again.
It's we can't see the top of this cycle. The
(08:39):
thing that's happening right now, it's worth saying. I mean,
I've been covering a Video since it was still a
purely gaming company. Gaming revenue was estimated at two point
six billion. It came in at two point six billion.
This is all about AI. This is all about data centers.
Speaker 1 (08:52):
No doubt about that. And I think we can say
safely that this is pretty much a monopolist right at
this point. There's no chip company that can touch in video.
Speaker 5 (09:03):
That's a bit of a tough time to put in
it because it's not by any sort of unfair competition.
The competition is wide open if anybody wants to compete
with in video, and you can be sure that companies
are trying. AMD is the closest competitor they can try it.
It's just the technology is that clearly ahead. Everybody is
deploying in video's AI acceleration protocols that he has developed itself.
(09:26):
It has developed this with billions of dollars of investment
and over many years, and people have just adopted this
technology because the best that there is out there right now.
Speaker 2 (09:35):
Yeah, there's just so many superlatives with this. It's not
like we're, you know, all pushing in VideA. It's just
one of these things. It tends to be a freak
of nature here at this point data centers. You mentioned
that's the big thing. It's eighty five to eighty seven
percent of total sales. We've seen the stock triple in
a year, and we mentioned that revenue and profit had tripled,
(09:57):
and so it means that the stock is really no
more expensive now than it was a year ago. The
forward pe is thirty five.
Speaker 5 (10:04):
You're right, Bran. I was just looking at our charts
on the terminal and one of the things that stands
out is that the quarterly sales now are bigger than
the videohead annual sales as recently as one or two
years ago. It really is just a skyrocketing of sales.
And it's worth saying. I mean, we keep talking about
AI on a daily basis, is the predominant topic in tech,
(10:24):
and one of the highlights actually for me from Video's
earnings is that still about forty percent of these sales
are coming from the biggest US tech companies. You're talking Meta, Google, Microsoft,
all the ones that have said AI is a big priority,
big thing that we're doing, and they're investing most heavily
in video chips. If you want to have some sort
of balance here, there is a question to ask, when
(10:46):
will those companies say we have enough of these chips.
When will those companies start tapering off that spending and
start investing in more software investments.
Speaker 1 (10:54):
Well, look at the story earlier in the week with
Amazon delaying the purchase of the last the most to
let me call it, the recent generation, in favor of
withholding fund so that they could buy the next generation
of these chips. So there's going to be this constant
cycle of upgrade and that's going to be driving a
lot of the sales growth going forward, I would imagine.
(11:16):
But you know, Okay, so maybe the company is not
a monopolist in the strictest sense of the term, but
if you dominate the market to such an extent, you
do have enormous pricing power, right, and so they are
in a position to raise prices on the next generation
of these advanced chips in a way that is going
to continue to feed that revenue growth.
Speaker 5 (11:38):
That's right, perfectly fair to say. One of the things
that CEO Jensen Wang did say after the earnings is
that the company is trying to broaden out is customer base.
You've got to keep in mind we're here in Hong Kong.
Asian companies are just as eager to get hold of
those chips. I mean, the situation right now is Nvidia
has far more customers than it has chips to supply.
(11:59):
When you talk to TSA and seeing the likes, there
is still some constraints in advanced packaging to put these
chips together. So Nvidia is very much in an enviable
position today.
Speaker 2 (12:09):
Yeah, I heard Mike Wilson from Morgan Stanley say that
the only thing about AI is that, you know, we
haven't really seen it in the sales outside of Nvidia.
I'm not sure that's really true, because you are seeing
a lot of companies report higher revenues and stronger growth
as a result of let's say power supply or cooling
(12:31):
systems or whatever. But how long is it before this
really does trickle down to the average Joe.
Speaker 5 (12:37):
Honestly, it really is a matter of the software side
of things. We just saw Microsoft announce it so called
co pilot plus PCs. Those are based on Quotcom chips
almost entirely. That's one aspect of the chip market where
Nvidia is not a player. Quotcom is trying to get
in on Intel's turf and basically takeover is the leader
in PCs, because when you think of PCs, it's really
laptops nowadays, that's the leading thing. They are the ones
(13:00):
that are going to show us over the next few
weeks and months how competing the AI features are going
to be for end users. That part really hasn't come
to fruition yet because it's still really early. Everyone is
just buying the immediate chips to train stuff. But the
next the next wave of innovation and the next wave
of chip buying, as far as Ahi goes, is going
to be in the end devices, the stuff that Quocom
(13:21):
is setting.
Speaker 2 (13:22):
Yeah in Frience Flat, Thanks very much, Flat Salvov, Bloomberg
Tech Editor with us. We are joined online by Lorraine
Tan who's director of Asia Equity Research at morning Star
on the markets. So at the moment, Lorraine, we're not
(13:43):
seeing this huge follow through from the optimism surrounding in
Nvidia to the broader markets in Asia, but it shows
you these are big markets and there are a lot
of factors.
Speaker 6 (13:56):
Yes, that's right, so you know, while you know Nvidia
does provide some relief that at least that's not a
risk trigger. I think the broader events are the ones
that is going to drive Asian market direction. And first
and foremost is people are still wondering when the Fed's
going to cut, what the inflation numbers are going to
look like coming up that would allow for that. So
(14:20):
I think that still tends to be a key factor
that the markets are looking for in terms of direction.
Speaker 4 (14:25):
Lorraine.
Speaker 1 (14:25):
One of the big ideals here in the States after
the bell was obviously the Nvidia earnings shattering on estimates
for sales. I mean, so the guidance here are very
positive for the current quarter. This is something that is
really kind of a revolution in the US. I don't
know how you're seeing AI play out in parts of
Asia China. Let's put that aside for a moment. We
(14:46):
can talk about what you're maybe seeing in Singapore, and
if you could tie in the issue of energy, because
I know you spent a number of years over the
course of your career focusing on energy and utilities, and
we know that AI generally speaking is very energy intensive.
Speaker 6 (15:05):
Yeah, so I think there's a little bit of a
difference here because in video is benefiting because it's got
the platform to really extract the value from all the
AI activities that are going on. So you've got obviously
some fall flow through to the chip companies, but really
(15:26):
the chip cycles are going to be driven by the
broad industry, and for us, we do like that space,
but it's going to be partly driven by the handful
replacement cycle that we expect in twenty twenty five. So
there are slightly different nuances there. In Asia, I think
it's harder to pinpoint specific companies that are going to
(15:47):
benefit from what's going on in AI. So even within
let's say China, when we look at what's going on
in a cloud space, it's really the national telephone telecommunication
companies that are benefiting. But even then the percentage of
to their revenue is not as huge as what we
(16:08):
want it to be. Obviously, for by DO, this will
become a gross driver for them in the future, but
it's still not quite it's still not you know, as
the significant or it's harder for us to tell whether
they're going to be able to make a profit out
of it so soon.
Speaker 2 (16:26):
We've looked a lot at some of these derivative markets
and areas sectors. Electrification is a big thing, the independent
power producers in addition to the actual utilities themselves. And
then you have you know, the HVAC companies, you have
industrials generally, and a lot of the enthusiasm has spread
to a lot of different sectors. But investors are still
(16:47):
looking for companies like Snowflake that stumbled at one point
in the future and are undervalued. Are you finding companies
that are undervalued or are you sort of swamped by
all these markets with all these games.
Speaker 6 (17:00):
Actually, we're still looking at we still see value in
the markets even within the US that we think is
slightly overvalued. You know, we're you know, we're looking at
things like even Fortunate that we have a by call on.
You know, these are stocks that are laggered and but
we think that they're still upside potential for sure. Even
(17:23):
healthcare names that are not within the that haven't benefited
from the BCD drug run up, you know, there's still
value there that would come back to the broader farmers
space as well. Within Asia, definitely. You know, we've seen
value China remains in our views, somewhat undervalued despite the
recent run up. Probably would be a little bit more
(17:44):
cautious in jumping into more real estate China real estate
names that have come up the from the bottom. But
definitely we still like the chip sector for the most part.
In Japan, we'd like the lagging factory automation names. They
also benefit from basically a cyclical improvement, basically inventory levels coming.
Speaker 1 (18:07):
Back to normal, So chips. I'm also thinking South Korea
and we just had to be okay raising growth it's
growth forecast for this year to a level of two
and a half percent, up from two to one. The
last projection was made in February. How are you feeling
about the South Korean market, particularly the chip makers like
Samsung and sk Heinex.
Speaker 6 (18:29):
Yeah, we do like Samsung. I think we still have
a bikon on Samsung, but we are more so focused
on the laggards regardless of where they are. So even
within that space industry leader TSMC, we we think they're
still upside potential there. Media tech on the Taiwan side
(18:49):
is another name that we prefer. I think overall, we
probably see a little bit more value in some of
the Taiwanese names on the chip side relative to let's say,
specific to Japanese or Korean chip makers at this stage.
Speaker 2 (19:06):
And you know, we've talked a lot this morning about
b HP and Anglo and uh, it's interesting that you
know b HP is looking at copper mining but not
wanting to do it itself. But buy buy it, buy Anglo.
I'm curious what your thoughts about M and A. He's
been picking up a little bit here of late. What
what sort of message does it send?
Speaker 6 (19:29):
I think when I think, what it means is that
for companies still having holding a lot of cash, and
I think that's across the board the number of companies
that we see and for those you know where you
have equity values also be at relatively low levels. That
(19:49):
probably means it's a good time to look for acquisitions
and and we do expect that to you know, basically continue,
particularly for those companies that can that do have the
cash flow to afford it. Definitely, you know, debt levels
of debt servicing is a little bit tougher now and
(20:10):
obviously getting funding is a little bit harder now. So
I think where you're probably seeing a little bit more
appetite for by some companies to consolidate.
Speaker 1 (20:20):
We were just talking here in New York about a
Report City Group considering reducing some of its office foot
print in Singapore. Remote work is obviously gaining traction. How
is the commercial real estate market there in the Line
City very quickly?
Speaker 6 (20:37):
Tier one basically the top grade real estate is still
highly demanded. If you look at the CBD areas, occupancy
rates are still high at about nine so we don't
actually expect any decline in rental rates unfortunately for US.
Speaker 2 (20:54):
Laurene, thank you so much for joining us. Lorraine Tan,
their director of Asia Equity Research, Morning Star.
Speaker 1 (21:04):
This has been the Bloomberg Daybreak Asia podcast, bringing you
the stories, making news and moving markets in the Asia Pacific.
Visit the Bloomberg Podcast channel on YouTube to get more
episodes of this and other shows from Bloomberg. Subscribe to
the podcast on Apple, Spotify, or anywhere else you listen
and always on Bloomberg Radio, the Bloomberg Terminal, and the
(21:24):
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