November 20, 2025 • 18 mins
Nvidia released its third quarter earnings Wednesday, crushing estimates and easing Wall Street’s concerns about an AI bubble.
On today’s Big Take podcast, Bloomberg Tech’s Ed Ludlow sits down with David Gura to discuss his post-earnings interview with Jensen Huang – what the Nvidia CEO had to say about the company’s breakneck growth, so-called circular deals, and potential expansion into China.
Read more:
- Nvidia’s Huang Says Company Has Plenty of New Chips to Sell
- It's OK, Nvidia Says There's No AI Bubble
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Speaker 1 (00:00):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:09):
In Nvidia just reported earnings for the third quarter, than
to say they were highly anticipated would be an understatement.
Speaker 3 (00:16):
Nvidia earnings was said to be the most important day
of the year for Wall Street.
Speaker 2 (00:21):
Any speculating that these companies' valuations are over inflated, that
the numbers have just got Wall Street has been worried
about an AI bubble, and Nvidia, which is now the
world's largest company by market cap, is seen as a
bell weather for the entire industry. The biggest names in
AI run on Nvidia's powerful chips, its graphics processing units
(00:42):
or GPUs, including its Blackwell model.
Speaker 1 (00:46):
There's been a lot of talk about an AI bubble.
From our vantage point, we see something very different.
Speaker 2 (00:52):
That's Nvidia CEO Jensen Wong on a call with Wall
Street analysts after the company reported earnings that roundly beat
Wall Street's expectations, and the relief among investors was palpable.
Shares of Nvidia jumped by about five percent in late trading.
Speaker 3 (01:07):
There was a lot more anxiety going into it.
Speaker 2 (01:09):
Ed Ludlow is the co host of Bloomberg Tech.
Speaker 3 (01:12):
If you look on social media, which can be precarious
thing to do. There were lots of people saying, you know,
either in Vidia is going to save or crash the
global economy overnight. The stakes weren't as high as that,
but it was serious and they certainly delivered.
Speaker 2 (01:28):
In Video says it expects to generate roughly sixty five
billion dollars in revenue in the coming quarter, and when
Ed sat down with Jensen Huang on Wednesday, the CEO said,
in Vidia is well positioned.
Speaker 1 (01:40):
Sales are after charts for Blackwell and in Vidio GPUs
in the cloud are sold out. We got plenty of
Blackwells to sell you.
Speaker 3 (01:50):
Things seem to have even more momentum than the most
bullish people on the street thought that Nvidia had, and
there is no evidence that at least the most important
customs that Invidia has are reneging on or pulling back
on their spending commitment.
Speaker 2 (02:07):
So in Nvidia has allaid some fear AI is a bubble,
but there are still concern about the circular nature of
AI megadeals, how quickly high end chips to depreciate, and
about the stratospheric valuations of many AI companies, which is
reminding some investors of the late nineteen nineties and says
he's asked executives if there's a parallel.
Speaker 3 (02:27):
I asked the CEOs, and here's their answer, that the
balance sheets now are different to what they were in
the dot com bubble, that they see actually useful software
being sold generating actual revenues. This is existential for many
American companies. They are investing wholeheartedly in AI because they
(02:48):
believe it will define what those companies do going forward.
The idea that there's a bubble is secondary. It is
not true. If these companies need to become AI companies,
you know, it's an absolutely necessary investment. The difference this
time around they have the cash to support that.
Speaker 2 (03:10):
I'm David Gera and this is the big take from
Bloomberg News today on the show Relief after in Nvidia's
latest earnings exceed expectations. How it's eye popping revenue forecast
has quieted some of the concerns about the potential AI bubble,
but the company and its backers still face some big challenges,
as in video races to keep up with global demand
(03:30):
for GPUs. It's not slowing down ed. You've interviewed Jensen
Huang a handful of times now, and I'm curious what
your impressions of him are, what's he like as a leader,
what's his personality like.
Speaker 3 (03:48):
He's incredibly busy, obviously, you know when we spoke to
him in that interview, he'd spent the entire day in Washington,
DC at the US Saudi Investment Forum and then spent
time with the president and managed to pull off an
earning school and then an earnings interview in the same day,
which I'm sure took a lot, but that kind of
speaks to what he's like, as in videos, kind of
ballooned and grown and become so big. He's taken that
(04:11):
in his stride quite a lot. You know, he is
the focus of attention, but I think the first and foremost,
you know, he would tell you that without speaking on
his behalf, that he's an engineer, and so he is
involved deeply in what's going on in the company.
Speaker 2 (04:23):
So ed In Video released its latest quarterly earnings report
after the close on Wednesday. I'm curious what stood out
to you.
Speaker 3 (04:31):
You know, in Vidia beat on the most important segment,
which is data center revenues and compute, but what they
said for the fiscal fourth quarter was really interesting, which
is the quarter ahead the period that we're currently in.
Speaker 2 (04:44):
Yes, I should say, yeah.
Speaker 3 (04:45):
Yeah, sales will be sixty five billion dollars plus or
minus two percent, and that's pretty significantly beyond consensus.
Speaker 2 (04:53):
In Vidia is poised to start shipping a new GPU
model next year. It's called the Reubens CPX, and it's
designed to handle even more demanding tasks like generating video.
Speaker 3 (05:04):
Nvidia does not give guidance. It doesn't give year ahead
forecasts or very long term forecasts except it did you
know on stage in Washington, DC? Curiously, you and I
were both in the city at the same time. Jensen
was doing his PowerPoint presentation with the clicky thing, and
this slide appears behind him, and the slide says, over
(05:25):
the next six fiscal quarters, just from Blackwell Rubin products
excluding China and Video says it will do five hundred
billion dollars of sales half a trillion dollars of sales
over six fiscal quarters. And the street was a bit like, huh,
that's way beyond what we've modeled.
Speaker 2 (05:42):
For This is a basic question. But why isn't video
viewed as a bell weather for AI? Why is it
such an important company for Wall Street to track.
Speaker 3 (05:52):
Really simply, GPUs graphics processing units are chips that can
handle multiple processes at the same time. They're very good
for training AI models, and they're very good for running
the AI models what we call inference. There are many
more options now today than they were at say a
year ago or two or three years ago, but Nvidia
(06:14):
still has a monopoly, a technical monopoly for that market.
And the vast majority of workloads, be they training workloads
or inference workloads, are done using in video gear. So
Nvidia is a bellwether simply because if it's telling us
this thing is happening, it has the best lens into
it happening. The slightly different answer than Nvidia would give
(06:35):
you is that they are, in their mind the only
technology company in history, in fact, the only company in history,
irrespective of what field they're in, that will say to everyone,
their customers, their competitors, their suppliers, the analysts, here's what
we're doing for the next five years from a technology perspective.
And to their credit, they've done that. And so their
(06:57):
argument is that the world that's around them, into apply
chain and their customers and everything that's being built around
data center has had a really good heads up of
what's coming to market, and that's one reason why Wall
Street at least believes what they have to say.
Speaker 2 (07:12):
And what are the indicators that are leading some investors
and analysts to say that if we're not in a bubble,
we're in bubble territory.
Speaker 3 (07:20):
There are two depreciation basically the idea that any generation
of GPU or AI accelerator has a limited shelf life
and therefore, because of the depreciation and its value, those
big customers will have to mark down that value on
their balance sheet at some point, noting that upfront they
made massive commitments to spend on this technology. And the
(07:44):
other is the circular financing thing, which isn't going away.
The idea that Nvidia is the biggest player in the
technology and it gives billions of dollars to an AI company,
a software company, and that software company takes that money
spends it on VideA technology, and thus the circular financing argument.
(08:04):
There's a concern that that is not a strong and
long term underpinning of a market that will keep growing.
Speaker 2 (08:10):
In Vidia says software updates extend the life of its GPUs,
but those circular deals are giving some investors pause. In September,
the company announced a one hundred billion dollar investment in
open Ai to support new data centers and AI infrastructure,
which will be equipped with in Vidia's advanced chips. Since
the start of the year, in Vidia also inc deals
(08:32):
with dozens of other companies, including Microsoft and Nthropic. You
asked him about the circular nature of these deals as well.
You had a wonderful way of putting the question to him.
You asked about all that open ai is committed to buying,
and you said, effectively, are they good for it? How
do you know they're good for it? And what was
his response to that question?
Speaker 3 (08:49):
Yeah? No, I literally said, how do you know that
they're good for it? The way that Jensen described it
in the interview is that their partnership with open ai
is what he called disciplined.
Speaker 1 (08:59):
Well, we're thought, along with open ai, thoughtful in aligning
on and taking into consideration visibility of demand and their
financing capabilities. All of that has to be in accordance,
has to be aligned, has to be coherent before we
start to build out. And so I think the ambitions large,
(09:21):
but the execution is disciplined.
Speaker 3 (09:24):
Previously in countenance to the circular financing discussion or debate,
Jensen has said that nothing is a quid pro quo
when they make an investment in open Ai, for example,
there is no mandatory requirement that open Ai takes that
money and uses it on Nvidia GPUs. They could use
(09:45):
it to buy someone else's But there are plenty of
case studies where that just simply isn't true. Right this
week alone, you saw the Nvidia investment in Anthropic, a
big rival of open Ai, which also included one of
the other cloud provider, And in that case, in Vidia
makes an investment in Fropic, and Fropic gets money, and
(10:06):
it does use that money to invest back into capacity
that relies on Nvidia chips. He didn't really answer the
question as it comes as it relates to open Ai.
He just said that they're not concerned about it.
Speaker 2 (10:19):
In the run up to the release of these earnings,
these in video earnings, you saw some big shareholders offload
a sizeable amount of stock. You saw a SoftBank do that,
Peter Thiel's hedge funded it. You've seen bets against this
company as well in the options market. What does that
tell us those kind of sizeable moves we've seen from
some pretty key investors.
Speaker 3 (10:37):
What it speaks to probably is where people think the
next opportunity is in video. Does face increase in competition.
There are other players that are working on GPU specifically
for use in AI data center, but we also have
A six and custom chips like Google's TPU. There are
more options now, and part of the argument that Jensen
(10:58):
Wang and the other video executives make is like this
is broadening out. They love to see it, but it
also reflects the anxiety that we had going into this Earnings.
Speaker 2 (11:09):
After the break. More from Bloomberg's interview with Nvidia CEO
Jensen Huang. Now, the company is navigating the ongoing trade
tensions between the US and China at the two big
global competitors in the SAI race, or the US and China,
(11:31):
and Nvidia plays a central role in that competition. In
Nvidia is now allowed by the US government to sell
some of its chips to China, but interestingly, China doesn't
seem to be buying those chips from Nvidia. Here's what
the CEO of in Vidia, Jensen Huang, told you about that.
Speaker 1 (11:44):
We would love the opportunity to be able to re
engage the Chinese market with excellent products that we deliver
and to be able to compete globally. The Chinese market
is very large this year, my guess is probably about
fifty billion dollar. It's great for the American people that
we're able to compete in the Chinese market. It's great
(12:05):
for the China market that we're able to provide and
Video's technology to them. It's great for the rest of
the world, as Chinese software companies and Chinese open source
models lead China and are used all over the world.
And so I think it's fantastic that we're able. It
would be fantastic if we're able to participate in the
China market, but for now we should just assume and
(12:27):
Video's forecasts for China market is zero.
Speaker 2 (12:32):
Jensen Huang very focused on the way China is growing
its AI capacity and capabilities. What is China's approach to
the buildout and adoption of AI in complement or contrast
to what's happening in the US.
Speaker 3 (12:45):
China wants to win the AI race as well. That
much is clear. Let's start with the basics of what
Jensen reiterating the interview, which is base case scenario right
now is Nvidia does not derive any revenues from China.
Was interesting part of your question on the earnings call
the CFO collect Cress had to address the China issue,
(13:06):
right because you know, everyone knows that it's going to
be asked by the analyst anyway. And your interpretation of
and I mean that with respect the word interpretation of
what she said was they were allowed to sell H
twenty in the quarter, but there wasn't any demand for it.
What they're not allowed to do is sell blackwell the
(13:26):
kind of current generation architecture, even a deprecated version into China.
So those distinctions are important. And where we left it
with Jensen in the interview was they want to be
able to do that in China and they will work
with both the United States government and Chinese government to
find a solution. But base case of zero, there is
a wider political discussion. Jensen Huang is in very close
(13:47):
proximity to this administration, right.
Speaker 2 (13:49):
He was interesting when you talked to him, and he
was in DC when you talked him the time before that.
Speaker 3 (13:53):
And in both of those occasions, the President of the
United States was part of the newsflow commenting very positive
about Jensen Wang and what in video is doing, and
in the context of the day of the interview in
the US Saudi Investment Forum, the President asked Jensen to
stand up to a standing ovation. But the reality from
(14:14):
video is that they right now have no access to
a market that one time was twenty five percent of
revenues and is the world's biggest end market for data centers. Probably,
but more academically speaking, Jensen Wang has been very consistent
that more than half of the world's AI engineers are
either in China or they're Chinese national citizens, and so
(14:39):
Americas should want its leading technology to be the gold standard,
the default that those engineers use to develop artificial intelligence,
noting fully that there is of course geopolitical and national
security considerations that come with that.
Speaker 2 (14:56):
Ed if you talk to our colleagues who cover tech
in China, do they say that there is as much
of a fear of there being an AI bubble there
or the circumstances just entirely different.
Speaker 3 (15:07):
The circumstances are different in so far as there is
less red tape in China and more direct government support
or action in favor of something. It's not the same
level of anxiety in China because they have a different
system of government input or support. Their domestic industry on
(15:29):
the infrastructure side is nascent.
Speaker 2 (15:32):
What if Jensen Huang is wrong and we are in
a bubble and that bubble bursts, are we likely to
see a crash? Are we likely to see consolidation? As
you talk to your sources, how do they think about
the way in which that might play out? Given the
rapid breakneck growth we've seen the size of these valuations,
(15:53):
the money that's been poured into this and taken from
one pocket to another, what would a bubble bursting look
like when it comes to AI.
Speaker 3 (16:01):
Well, in order to look at what a bubble bursting
looks like, I guess you have to set the state
of play and the state of players that you know
in twenty twenty five and videos up about forty percent,
and of course in video accounts for eight percent of
the S and P five hundred anyway, so in equity
markets there's a lot at stake. The leverage side of
this is really fascinating as well. Debt Oracle, for example,
(16:23):
is very, very involved in the AI infrastructure build out
in the United States, and it has been able to
raise massive amounts of debt and also get investors to
raise debt for some of its projects. Where Oracle doesn't
hold the debt on its balance sheet, it's just able
to get someone to do it on its behalf. But
the worrying indicator there is that Oracle swung to negative
(16:45):
free cash flow for the first time since nineteen ninety
two this year. And so the confidence that investors had
was that this is early innings. The AI infrastructure build
out is early. The figure that is common between say
Gens and Water and other chip CEOs is there's a
four trillion dollar addressable market for AI data centers in
(17:07):
the next say, three to five years, and that is
all built on capital expenditures of the big hyperscalers, cloud
computing companies and also like Meta Elon Musk's Xai, et cetera.
And everyone is working in good faith that those capital
expenditure commitments that are forecast they go through with them.
If they don't, you can kind of see the trickle
(17:27):
down effect that I'm painting here. That's why going into
this Innverdia earnings print, the anxiety was high. You know,
if you look at the options market or wherever your
indicator is, there was potential for this to go either way,
and at the time you and I are speaking, it
went positively in the market.
Speaker 2 (17:50):
This is the Big Take from Bloomberg News. I'm David Gerret.
To get more from The Big Take and unlimited access
to all of Bloomberg dot com, subscribe today at Bloomberg
dot com slash podcast to offer. If you liked this episode,
make sure to follow and review The Big Take wherever
you listen to podcasts. It helps people find the show.
Thanks for listening. We'll be back tomorrow.
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:09):
In Nvidia just reported earnings for the third quarter, than
to say they were highly anticipated would be an understatement.
Speaker 3 (00:16):
Nvidia earnings was said to be the most important day
of the year for Wall Street.
Speaker 2 (00:21):
Any speculating that these companies' valuations are over inflated, that
the numbers have just got Wall Street has been worried
about an AI bubble, and Nvidia, which is now the
world's largest company by market cap, is seen as a
bell weather for the entire industry. The biggest names in
AI run on Nvidia's powerful chips, its graphics processing units
(00:42):
or GPUs, including its Blackwell model.
Speaker 1 (00:46):
There's been a lot of talk about an AI bubble.
From our vantage point, we see something very different.
Speaker 2 (00:52):
That's Nvidia CEO Jensen Wong on a call with Wall
Street analysts after the company reported earnings that roundly beat
Wall Street's expectations, and the relief among investors was palpable.
Shares of Nvidia jumped by about five percent in late trading.
Speaker 3 (01:07):
There was a lot more anxiety going into it.
Speaker 2 (01:09):
Ed Ludlow is the co host of Bloomberg Tech.
Speaker 3 (01:12):
If you look on social media, which can be precarious
thing to do. There were lots of people saying, you know,
either in Vidia is going to save or crash the
global economy overnight. The stakes weren't as high as that,
but it was serious and they certainly delivered.
Speaker 2 (01:28):
In Video says it expects to generate roughly sixty five
billion dollars in revenue in the coming quarter, and when
Ed sat down with Jensen Huang on Wednesday, the CEO said,
in Vidia is well positioned.
Speaker 1 (01:40):
Sales are after charts for Blackwell and in Vidio GPUs
in the cloud are sold out. We got plenty of
Blackwells to sell you.
Speaker 3 (01:50):
Things seem to have even more momentum than the most
bullish people on the street thought that Nvidia had, and
there is no evidence that at least the most important
customs that Invidia has are reneging on or pulling back
on their spending commitment.
Speaker 2 (02:07):
So in Nvidia has allaid some fear AI is a bubble,
but there are still concern about the circular nature of
AI megadeals, how quickly high end chips to depreciate, and
about the stratospheric valuations of many AI companies, which is
reminding some investors of the late nineteen nineties and says
he's asked executives if there's a parallel.
Speaker 3 (02:27):
I asked the CEOs, and here's their answer, that the
balance sheets now are different to what they were in
the dot com bubble, that they see actually useful software
being sold generating actual revenues. This is existential for many
American companies. They are investing wholeheartedly in AI because they
(02:48):
believe it will define what those companies do going forward.
The idea that there's a bubble is secondary. It is
not true. If these companies need to become AI companies,
you know, it's an absolutely necessary investment. The difference this
time around they have the cash to support that.
Speaker 2 (03:10):
I'm David Gera and this is the big take from
Bloomberg News today on the show Relief after in Nvidia's
latest earnings exceed expectations. How it's eye popping revenue forecast
has quieted some of the concerns about the potential AI bubble,
but the company and its backers still face some big challenges,
as in video races to keep up with global demand
(03:30):
for GPUs. It's not slowing down ed. You've interviewed Jensen
Huang a handful of times now, and I'm curious what
your impressions of him are, what's he like as a leader,
what's his personality like.
Speaker 3 (03:48):
He's incredibly busy, obviously, you know when we spoke to
him in that interview, he'd spent the entire day in Washington,
DC at the US Saudi Investment Forum and then spent
time with the president and managed to pull off an
earning school and then an earnings interview in the same day,
which I'm sure took a lot, but that kind of
speaks to what he's like, as in videos, kind of
ballooned and grown and become so big. He's taken that
(04:11):
in his stride quite a lot. You know, he is
the focus of attention, but I think the first and foremost,
you know, he would tell you that without speaking on
his behalf, that he's an engineer, and so he is
involved deeply in what's going on in the company.
Speaker 2 (04:23):
So ed In Video released its latest quarterly earnings report
after the close on Wednesday. I'm curious what stood out
to you.
Speaker 3 (04:31):
You know, in Vidia beat on the most important segment,
which is data center revenues and compute, but what they
said for the fiscal fourth quarter was really interesting, which
is the quarter ahead the period that we're currently in.
Speaker 2 (04:44):
Yes, I should say, yeah.
Speaker 3 (04:45):
Yeah, sales will be sixty five billion dollars plus or
minus two percent, and that's pretty significantly beyond consensus.
Speaker 2 (04:53):
In Vidia is poised to start shipping a new GPU
model next year. It's called the Reubens CPX, and it's
designed to handle even more demanding tasks like generating video.
Speaker 3 (05:04):
Nvidia does not give guidance. It doesn't give year ahead
forecasts or very long term forecasts except it did you
know on stage in Washington, DC? Curiously, you and I
were both in the city at the same time. Jensen
was doing his PowerPoint presentation with the clicky thing, and
this slide appears behind him, and the slide says, over
(05:25):
the next six fiscal quarters, just from Blackwell Rubin products
excluding China and Video says it will do five hundred
billion dollars of sales half a trillion dollars of sales
over six fiscal quarters. And the street was a bit like, huh,
that's way beyond what we've modeled.
Speaker 2 (05:42):
For This is a basic question. But why isn't video
viewed as a bell weather for AI? Why is it
such an important company for Wall Street to track.
Speaker 3 (05:52):
Really simply, GPUs graphics processing units are chips that can
handle multiple processes at the same time. They're very good
for training AI models, and they're very good for running
the AI models what we call inference. There are many
more options now today than they were at say a
year ago or two or three years ago, but Nvidia
(06:14):
still has a monopoly, a technical monopoly for that market.
And the vast majority of workloads, be they training workloads
or inference workloads, are done using in video gear. So
Nvidia is a bellwether simply because if it's telling us
this thing is happening, it has the best lens into
it happening. The slightly different answer than Nvidia would give
(06:35):
you is that they are, in their mind the only
technology company in history, in fact, the only company in history,
irrespective of what field they're in, that will say to everyone,
their customers, their competitors, their suppliers, the analysts, here's what
we're doing for the next five years from a technology perspective.
And to their credit, they've done that. And so their
(06:57):
argument is that the world that's around them, into apply
chain and their customers and everything that's being built around
data center has had a really good heads up of
what's coming to market, and that's one reason why Wall
Street at least believes what they have to say.
Speaker 2 (07:12):
And what are the indicators that are leading some investors
and analysts to say that if we're not in a bubble,
we're in bubble territory.
Speaker 3 (07:20):
There are two depreciation basically the idea that any generation
of GPU or AI accelerator has a limited shelf life
and therefore, because of the depreciation and its value, those
big customers will have to mark down that value on
their balance sheet at some point, noting that upfront they
made massive commitments to spend on this technology. And the
(07:44):
other is the circular financing thing, which isn't going away.
The idea that Nvidia is the biggest player in the
technology and it gives billions of dollars to an AI company,
a software company, and that software company takes that money
spends it on VideA technology, and thus the circular financing argument.
(08:04):
There's a concern that that is not a strong and
long term underpinning of a market that will keep growing.
Speaker 2 (08:10):
In Vidia says software updates extend the life of its GPUs,
but those circular deals are giving some investors pause. In September,
the company announced a one hundred billion dollar investment in
open Ai to support new data centers and AI infrastructure,
which will be equipped with in Vidia's advanced chips. Since
the start of the year, in Vidia also inc deals
(08:32):
with dozens of other companies, including Microsoft and Nthropic. You
asked him about the circular nature of these deals as well.
You had a wonderful way of putting the question to him.
You asked about all that open ai is committed to buying,
and you said, effectively, are they good for it? How
do you know they're good for it? And what was
his response to that question?
Speaker 3 (08:49):
Yeah? No, I literally said, how do you know that
they're good for it? The way that Jensen described it
in the interview is that their partnership with open ai
is what he called disciplined.
Speaker 1 (08:59):
Well, we're thought, along with open ai, thoughtful in aligning
on and taking into consideration visibility of demand and their
financing capabilities. All of that has to be in accordance,
has to be aligned, has to be coherent before we
start to build out. And so I think the ambitions large,
(09:21):
but the execution is disciplined.
Speaker 3 (09:24):
Previously in countenance to the circular financing discussion or debate,
Jensen has said that nothing is a quid pro quo
when they make an investment in open Ai, for example,
there is no mandatory requirement that open Ai takes that
money and uses it on Nvidia GPUs. They could use
(09:45):
it to buy someone else's But there are plenty of
case studies where that just simply isn't true. Right this
week alone, you saw the Nvidia investment in Anthropic, a
big rival of open Ai, which also included one of
the other cloud provider, And in that case, in Vidia
makes an investment in Fropic, and Fropic gets money, and
(10:06):
it does use that money to invest back into capacity
that relies on Nvidia chips. He didn't really answer the
question as it comes as it relates to open Ai.
He just said that they're not concerned about it.
Speaker 2 (10:19):
In the run up to the release of these earnings,
these in video earnings, you saw some big shareholders offload
a sizeable amount of stock. You saw a SoftBank do that,
Peter Thiel's hedge funded it. You've seen bets against this
company as well in the options market. What does that
tell us those kind of sizeable moves we've seen from
some pretty key investors.
Speaker 3 (10:37):
What it speaks to probably is where people think the
next opportunity is in video. Does face increase in competition.
There are other players that are working on GPU specifically
for use in AI data center, but we also have
A six and custom chips like Google's TPU. There are
more options now, and part of the argument that Jensen
(10:58):
Wang and the other video executives make is like this
is broadening out. They love to see it, but it
also reflects the anxiety that we had going into this Earnings.
Speaker 2 (11:09):
After the break. More from Bloomberg's interview with Nvidia CEO
Jensen Huang. Now, the company is navigating the ongoing trade
tensions between the US and China at the two big
global competitors in the SAI race, or the US and China,
(11:31):
and Nvidia plays a central role in that competition. In
Nvidia is now allowed by the US government to sell
some of its chips to China, but interestingly, China doesn't
seem to be buying those chips from Nvidia. Here's what
the CEO of in Vidia, Jensen Huang, told you about that.
Speaker 1 (11:44):
We would love the opportunity to be able to re
engage the Chinese market with excellent products that we deliver
and to be able to compete globally. The Chinese market
is very large this year, my guess is probably about
fifty billion dollar. It's great for the American people that
we're able to compete in the Chinese market. It's great
(12:05):
for the China market that we're able to provide and
Video's technology to them. It's great for the rest of
the world, as Chinese software companies and Chinese open source
models lead China and are used all over the world.
And so I think it's fantastic that we're able. It
would be fantastic if we're able to participate in the
China market, but for now we should just assume and
(12:27):
Video's forecasts for China market is zero.
Speaker 2 (12:32):
Jensen Huang very focused on the way China is growing
its AI capacity and capabilities. What is China's approach to
the buildout and adoption of AI in complement or contrast
to what's happening in the US.
Speaker 3 (12:45):
China wants to win the AI race as well. That
much is clear. Let's start with the basics of what
Jensen reiterating the interview, which is base case scenario right
now is Nvidia does not derive any revenues from China.
Was interesting part of your question on the earnings call
the CFO collect Cress had to address the China issue,
(13:06):
right because you know, everyone knows that it's going to
be asked by the analyst anyway. And your interpretation of
and I mean that with respect the word interpretation of
what she said was they were allowed to sell H
twenty in the quarter, but there wasn't any demand for it.
What they're not allowed to do is sell blackwell the
(13:26):
kind of current generation architecture, even a deprecated version into China.
So those distinctions are important. And where we left it
with Jensen in the interview was they want to be
able to do that in China and they will work
with both the United States government and Chinese government to
find a solution. But base case of zero, there is
a wider political discussion. Jensen Huang is in very close
(13:47):
proximity to this administration, right.
Speaker 2 (13:49):
He was interesting when you talked to him, and he
was in DC when you talked him the time before that.
Speaker 3 (13:53):
And in both of those occasions, the President of the
United States was part of the newsflow commenting very positive
about Jensen Wang and what in video is doing, and
in the context of the day of the interview in
the US Saudi Investment Forum, the President asked Jensen to
stand up to a standing ovation. But the reality from
(14:14):
video is that they right now have no access to
a market that one time was twenty five percent of
revenues and is the world's biggest end market for data centers. Probably,
but more academically speaking, Jensen Wang has been very consistent
that more than half of the world's AI engineers are
either in China or they're Chinese national citizens, and so
(14:39):
Americas should want its leading technology to be the gold standard,
the default that those engineers use to develop artificial intelligence,
noting fully that there is of course geopolitical and national
security considerations that come with that.
Speaker 2 (14:56):
Ed if you talk to our colleagues who cover tech
in China, do they say that there is as much
of a fear of there being an AI bubble there
or the circumstances just entirely different.
Speaker 3 (15:07):
The circumstances are different in so far as there is
less red tape in China and more direct government support
or action in favor of something. It's not the same
level of anxiety in China because they have a different
system of government input or support. Their domestic industry on
(15:29):
the infrastructure side is nascent.
Speaker 2 (15:32):
What if Jensen Huang is wrong and we are in
a bubble and that bubble bursts, are we likely to
see a crash? Are we likely to see consolidation? As
you talk to your sources, how do they think about
the way in which that might play out? Given the
rapid breakneck growth we've seen the size of these valuations,
(15:53):
the money that's been poured into this and taken from
one pocket to another, what would a bubble bursting look
like when it comes to AI.
Speaker 3 (16:01):
Well, in order to look at what a bubble bursting
looks like, I guess you have to set the state
of play and the state of players that you know
in twenty twenty five and videos up about forty percent,
and of course in video accounts for eight percent of
the S and P five hundred anyway, so in equity
markets there's a lot at stake. The leverage side of
this is really fascinating as well. Debt Oracle, for example,
(16:23):
is very, very involved in the AI infrastructure build out
in the United States, and it has been able to
raise massive amounts of debt and also get investors to
raise debt for some of its projects. Where Oracle doesn't
hold the debt on its balance sheet, it's just able
to get someone to do it on its behalf. But
the worrying indicator there is that Oracle swung to negative
(16:45):
free cash flow for the first time since nineteen ninety
two this year. And so the confidence that investors had
was that this is early innings. The AI infrastructure build
out is early. The figure that is common between say
Gens and Water and other chip CEOs is there's a
four trillion dollar addressable market for AI data centers in
(17:07):
the next say, three to five years, and that is
all built on capital expenditures of the big hyperscalers, cloud
computing companies and also like Meta Elon Musk's Xai, et cetera.
And everyone is working in good faith that those capital
expenditure commitments that are forecast they go through with them.
If they don't, you can kind of see the trickle
(17:27):
down effect that I'm painting here. That's why going into
this Innverdia earnings print, the anxiety was high. You know,
if you look at the options market or wherever your
indicator is, there was potential for this to go either way,
and at the time you and I are speaking, it
went positively in the market.
Speaker 2 (17:50):
This is the Big Take from Bloomberg News. I'm David Gerret.
To get more from The Big Take and unlimited access
to all of Bloomberg dot com, subscribe today at Bloomberg
dot com slash podcast to offer. If you liked this episode,
make sure to follow and review The Big Take wherever
you listen to podcasts. It helps people find the show.
Thanks for listening. We'll be back tomorrow.
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