November 20, 2024 • 19 mins
Nvidia, the chipmaker at the heart of an artificial intelligence boom, delivered a revenue forecast that failed to meet the highest expectations, suggesting that the company’s dizzying growth run has its limits. For reaction and analysis, Businessweek hosts Carol Massar and Tim Stenovec speak with Bloomberg Technology cohost Caroline Hyde, Bloomberg Intelligence senior semiconductor analyst Kunjan Sobhani, Bloomberg News equities reporter Ryan Vlastelica and Bloomberg News earnings reporter Redd Brown
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news third.
Speaker 2 (00:07):
Quarter adjusted earnings per share coming in above estimates at
eighty one cents. Estimate was for seventy four cents. Third
quarter at revenue coming in at thirty five point one
billion dollars. Estimates were for thirty three point twenty five
billion dollars third quarter data center revenue. This is what
everybody wants to see that coming in above estimates thirty
point eight billion dollars. The estimate was for twenty nine
point one four billion dollars. Carrol Nvidiac's fourth quarter revenue
(00:30):
at thirty seven point five billion plus or minus two percent.
The estimate was for thirty seven point one billion dollars.
Speaker 3 (00:35):
Gotta say, initial reaction, folks, not an upbeat one. Kunjan
Zabani of our Bloomberg Intelligence Senior semi conductor team, he's
an analyst. And then we're going to want to bring
in another guest to kind of give us some more
thoughts about what we got from video today.
Speaker 2 (00:48):
Yeah, Caroline Hyde, who hosts Bloomberg Technology on Bloomberg TV,
is joining us now. She's got our eyes closely watching
everything happening over ed in video that forecasts failing to
meet the loftiest estimates for the company cheers in the
after hours right now down about four percent, so they're
off of those lows, Caroline, But is this just about
high expectations, very high expectations and in Nvidia coming out
(01:09):
and saying Okay, we're almost going to meet them, but
not quite.
Speaker 4 (01:12):
And a very high market valuation that is the most
valuable in the world, that has seen a run up
of almost two hundred percent so far in the years.
So maybe some profit taking when you are seeing, Yes,
Luke Capital, if you dig into the analysts expectations for
the fiscal fourth quarter or twenty twenty five, Luke Capital
had it at about forty four billion dollars as the
highest realm.
Speaker 5 (01:32):
Then you had few one and securities at about forty one.
Speaker 4 (01:34):
Billion, and then you get into the thirty seven billion
dollar range with the likes of Craig Hullum and Da
Davidson was a little bit above that. So compared to
perhaps some of the highest levels out there, they're coming
in below and there's a plus or minus two percent
there to be built in as well. So I think
there is some digesting that this isn't beaten raised and
blown out of every single analysts expectations.
Speaker 5 (01:58):
Still, these are incredibly strong numbers.
Speaker 4 (02:00):
This is a guide to the fact that we're getting
Blackwell on stream. That supply side will be ironed out,
and I think we'll have far more from Gensen hung
on that particular perspective, and that demand is still incredible.
So I think there's just a little bit of profit
taking coming on. When we've seen that the rapid rise
has been two hundred percent over the year, maybe four
or five percent sell down isn't the most remarkable.
Speaker 3 (02:20):
Shift, Caroline Great point, right, it's not Reay yet. Well,
you know, listen, this is her world that she's talking
to these you know, tech companies, following them inside and outside,
and this idea that there's still supply, that there's demand,
it's just the supply constraints. It's not like people are
running away from the products. Having said that, I want
to tap into your knowledge of this industry and that
you do have companies that come out and it's gangbusters,
(02:42):
and then maybe they have some issues with supply constraints
and so on and so forth. This is kind of
part of the process. Is that fair?
Speaker 4 (02:48):
I think that's fair when it comes to in Video
as well, and the rapid rate of innovation. I mean,
they've almost become an Apple in every single year they're
bringing out their latest neww chip set and design, and
we go from Hopper swiftly on to Blackwell, and people
have got to keep up with that innovation.
Speaker 5 (03:01):
Just the way in which you store your.
Speaker 4 (03:04):
Chips and the infrastructure within your data centers means that
if they're vertically stored, well, that's going to lead to
more heating issues. Then if you're doing it more broadly
on a horizontal perspective. There is a lot of innovation
that has to come along with in Video's own GPU
CPUs and overall chipsets. So I think that they have
said and guided to the market that yes, you're getting
(03:25):
this reporting of overheating, Yes you're getting these reports of
snags and design. This is entirely normal, and we're working
very closely with our hyperscale sub clients to fix this,
to innovate with them and ensure that we can get
them out there as swiftly as possible. I think there
has been also just trying to spreading out of AI demand.
(03:45):
What's been interesting hearing from Jensen Wong of late has
been the scaling laws. Basically, the theory goes is that
the more data you fire, the more compute power you bring,
the faster and more sophisticated.
Speaker 5 (03:56):
These large language models become.
Speaker 4 (03:58):
But actually we started to hear from the anthrop from
the great reporting coming out of San Francisco with the
Bloomberg team that Rachel Mets is saying maybe open aiyes
had to slow down a little bit in terms of
the developments of their own large language models because they're
not getting as sophisticated as it happen in the Leaps
and Bounds. Jensen still saying, Look, in the next decade,
you're going to see a million times increase in compute.
(04:19):
But we've just got to get there in terms of
actually making it happen.
Speaker 2 (04:23):
Yeah, I mean, hard to even imagine, hard to even
imagine that kind of increase in compute at this point,
Kun john'subney, I want to bring you back in here
over a senior intell senior analysts over at Bloomberg Intelligence.
We're seeing shares down about two percent in the after hours.
A couple headlines the company sees fourth quarter revenue coming
in at thirty seven point five billion dollars plus or
minus two percent. That's pretty much in line with estimates
(04:45):
at thirty seven point one billion dollars. Third quarter Data
center revenue blowing past expectations at thirty point eight billion
dollars estimates report twenty nine point one billion dollars Coon, John,
what's the question you'd ask, Jensen Wong?
Speaker 6 (04:56):
I mean, my questions really would focus on trying to
figure out the physical twenty six calendar twenty twenty five
black Well revenue ramp magnitudes and around gross margins. I mean, look,
we have seen in the past when vidias come out
and beat way more than what they did right now,
and the stock has still plummeted double digits. You also
have to keep in mind this end of the year.
(05:16):
The stock has tripled this year, right, so there is
some incentive for profit locking and taking the gains away
from the table as well.
Speaker 3 (05:24):
You know, I also do think about how do you feel, Kunjon,
that they are giving numbers for fiscal year twenty twenty
six good sign? Do you trust that visibility? Like, how
do you think about their ability to put out a
number and maybe that number might change based on if
they figure out the supply issues.
Speaker 6 (05:46):
I mean, I see that as a very strong sign
I mean, look at this earning season across the semi
sector right nobody is giving out numbers that far out.
Even in Vida's competitors who are trying to address the
same opportunity and are sing the same strong demand signals,
are not giving out numbers, strong confident numbers that in
(06:06):
year out. So that really speaks to the strength and
the confidence that they have that they'll be able to
support this demand and the demand is there, and you guys, it'd.
Speaker 3 (06:15):
Be tech talk to him a lot, like I'm just
curious with the top of mind, if you were sitting
down with him right now, like top two.
Speaker 4 (06:20):
Questions, and if Ed Ludlow was but he's out in
fraternity leaves and congratulations.
Speaker 5 (06:23):
To on Ed Ludler becoming a father.
Speaker 4 (06:25):
But I think first and foremost we'd be asking exactly
as Kuan Jhn has been saying, as you all have
been saying, it's got to be about supply coming on
tap and just talking a little bit more around Blackwell
and the incredible demand, What exactly does that really mean?
Speaker 5 (06:39):
Who are the key clients?
Speaker 4 (06:40):
How are we seeing that diversify out of the main
hyper scalers, if.
Speaker 5 (06:42):
At all, and then I think sort of trying.
Speaker 4 (06:45):
To articulate that, look, yes, maybe we haven't blown past
the highest analyst expectations, but thirty seven and a half
billion dollar guide that's still seventy percent ramp up in revenue.
That's following a ninety percent ramp up in revenue of
the fiscal quarter just reported their fiscal third quarter. I
think he's just going to have to sort of remind
(07:06):
the market how far they've come, how far they've still
to go, and maybe just take a bit of a
reality check here that you know, at the moment, the
numbers will go up, but maybe not at the two
hundred percent that we were hoping to see well, that
we did see in the first quarter of twenty twenty
five for their fiscal year reporting.
Speaker 2 (07:23):
Hey coon, John ian King on the live blog bringing
up a really interesting point, and it kind of gets
at the question that I was asking with regard to
super micro computer. Ian notes that cloud computing providers are
the biggest companies in technology, and they still dominate in
videous sources of revenue, making up fifty percent of sales
for its data center unit. So that's just a handful
(07:44):
of companies that are making up the majority of the
revenue for the data center in video watchers want that
number to go down. Three months ago that number was
forty five percent. Is that a concern to you.
Speaker 6 (07:57):
I mean, I don't want to look at it from
quarter to because remember these large customers are lumpy in nature, right,
they have to also manage their capex and deployments. We
did see over the last two to three quarters, if
I'm not wrong, the number come down. It was about
close to fifty or even about fifty and it has
been coming down steadily. So that was a good sign
(08:17):
for us. I still have to go and digest the
numbers later on, but the fifty percent in the short
term might not be that great of a sign. But
I would not jump to conclusions just looking at one quarter.
It could be very well timing of you know, them
picking up a lot more Hopper supply supply right now
when they cannot get their hands on blackwell.
Speaker 3 (08:37):
You know, I'm looking at the supply chain analysis on
the Bloomberg function. When it comes to Nvidia, Microsoft, about
nineteen percent of the revenue for Invidio, Meta, about ten percent,
super Micro nearly eight percent Alphabet about six percent, Amazon
more than five percent, Dell more than three percent. So
we talk about a handful of companies, these cluster of
companies that are so involved. You know, Caroline, I want
(08:58):
to bring you back in here. You know, Nvidia. This
has been such a focal point right the end of
the earning season, just thinking about it so much. You know,
how do you think about you know, Bloomberg Technology, you know,
into the Thursday edition, you guys when you're on air
and like, what's the tomorrow's story?
Speaker 5 (09:16):
The tomorrow story.
Speaker 4 (09:17):
I think we'll be trying to articulate where the growth
trajectory goes from here. I think we're gonna hear from
Jensen the next decade. You're gonna hear him talking about
humanoid robots. You're gonna hear him talking about drug discovery,
the capabilities of generative AI, the return on AI investment.
So I think we're gonna want to be talking to
the investors that back that vision. We're going to be
(09:39):
wanting to hear from the analysts out there that are
trying to square these numbers with where their own viewpoint
have been on the here and now at the fiscal
fourth quarter. But I think we're also going to we
want to think about who else is in the space
at the moment. It's answering some of the development issues,
some of the heating issues, some of the concerns around AI,
generative AI chip development and manufacturing. Who are the startups
in the space, wh the rivals in the space? What
(10:01):
are we seeing in terms of the hyper scalers building
their own chips. So I think there's so many directions
that we could go for, But for me, it's going
to be really interesting talking about where does AI infrastructure
go from here?
Speaker 5 (10:10):
And where does in video's view on selver in AI?
Where does in video's view on China? Where does in videos.
Speaker 4 (10:15):
View on the next repurposing of their chips not just
to keep hammering large language models, but the development of
generative AI in the real world.
Speaker 2 (10:23):
So what are some of the names, Caroline, that our
investing audience has to have their eyes on. Is it
the sam Altman's of the world who are trying to
raise lots and lots of money to go after Invidia?
Is it the hyperscalers who are going to be doing
this in house? Who who holds a candle to them
or who could hold a candle.
Speaker 4 (10:39):
To them in terms of siphoning off future demand or
in terms of just wanting to know who the name
key players are.
Speaker 2 (10:48):
Off future demand because you know, Intel, Intel, Intel's in
a tough position right now, as you guys have reported
on a lot over the last year. Am D maybe,
but what about those upstarts.
Speaker 4 (10:59):
Hmmm, I mean, and that's going to be interesting as
to whether or not we just get a future type
of chip development. You know, we've got the grocks for example,
that are backed by venture backing who have been looking
to ways in which we expand and have faster and
more efficient chips. You've also got you know, different players
out there thinking about not just the data that you
(11:20):
have to train, but then the inferencing that you do,
and that does that become a different type of conversation
around the technology and ultimately whether you need to have
more efficient chips within an energy source and an energy suck.
So I think so many people AMPI has been doing
things around that particular innovation of different types of chips. Eventually,
will people start to go to Galdhi and what Intel
(11:40):
has been providing. How much can AMD chip away in
terms of market share, in terms of the AI part
of the business as well. So there are so many
people and analysts and investors that are looking at distributing.
Speaker 5 (11:54):
Some of their bets.
Speaker 4 (11:55):
I'm sure, but for now in video has been the
only game in town and certainly the easiest one to
back in terms of up into the right Coon.
Speaker 3 (12:01):
Jent, I want to bring you back in here looking
at our live blog. Ian King, who follows the semiconductor
space and video as well. He says, one question analyst
will have when the conference call begins, what's happening in
networking sales? And that business slid sequentially dropping by that
five hundred million dollars and videos acquired. Networking tech has
faced opposition from many rivals, some of which argue for
(12:22):
an industry standard approach rather than a reliance on and
vidious proprietary technology. Weigh in on that, yeah, I.
Speaker 6 (12:28):
Mean, look, we have identified since last year that networking
in AI servers is going to be sort of the
next wave of growth, especially in terms of where the
dollars spend. The dollars go beyond just accelerators. So I mean,
until now in media, if you look at the market
for the first Hopper series, right, they had this advantage
of shipping their own proprietary networking gear, which customers had
(12:51):
no other option but to just buy that. So two things, right,
They got all the dollars, but they also got great
profit margins because they could really charge whatever they wanted. Now,
the competition there is increasing. Customers want to move to Ethernet,
which again Nvidia has started offering and starting from the
black Bell series. So we are going to see that
Ethernet revenue also increase for Nvidia, But when you compare
(13:13):
it from perchip dollar perspective, it's still less. We still
think positive for Nvidia's networking revenue share going forward, but
there will be a lot more competition there. It won't
be just one company taking everything in your area.
Speaker 3 (13:29):
That's a really good point, right, And I do think about,
you know, and Videa's really had this world to its
own for a while, and you think about increasingly kind
of what's going on in the future as there's more competition.
YouTube Dynamic Duo, thank you so much. Your insight really
so important to breaking down these results from Nvidia. Bloomberg
Technology co host Caroline Hidketcher at eleven am Wall Street
(13:50):
Time on Bloomberg Television for Bloomberg Tech and of course
our thanks to ku Joan Sabani of our Bloomberg Intelligence team.
He's a senior semiconductor analyst. So again, some great insight
we'll watch for some of you research. Let's continue our conversations.
Bloomberg News Equities reporter at Ryan Lostelico with us. He
has been writing about it and kind of you know,
talking about markets bracing for what we might get from Nvidia.
(14:12):
He joins us from Chicago. Also with us is our
own Red Brown, who follows the earning season and sets
us up. Bloomberg News Earnings reporter. He's back in New
York City. Ryan, come on in on this your report.
Ahead of the release in Nvidia, traders bracing for a
potential three hundred billion dollar earnings move. It was down
more than four percent though initially.
Speaker 1 (14:30):
Yeah, absolutely, I don't think it would be all that
surprising to see the stock really take some swings from
where it's trading right now. I mean, this is not
a huge move, especially not for our company as viollatile
as Nvidia is. Just to put it in context. Palo
Alto also reported that stock is at about five percent
and after hours trading in video is obviously much bigger,
but you know, not a huge move by their standard.
Speaker 2 (14:50):
I like that Ryan's out here talking about Pallelt the networks.
It's a good well there is Look, there are other
companies out.
Speaker 3 (14:56):
There, no question, but listen, we're gonna get you in
just a moment. But Ryan, I mean, it's been so
important in terms of market momentum, right, Like, give us
some of that context. We talk about it all. We've
talked about the mag seven, but when it comes to
momentum that aid this is a big one.
Speaker 7 (15:12):
Yeah.
Speaker 1 (15:12):
Oh absolutely. The stock is almost tripled this year. It's
added more than two trillion in market capitalization. Like you mentioned,
it's the biggest stock in the world. You know, We've
had plenty of analysts come out and say this is
more important than the FED, this is more important than
inflation data. This is the key report for Wall Street
this week, if not this month. So it's obviously very significant.
I do think, you know, we just got the numbers.
People are still digesting the report. We are still waiting
(15:34):
on the conference call. It's likely we're going to get
a bigger move maybe, you know, once we get you know,
full details, once we hear from you know, the management
team once people get a little bit more context for this.
But this is certainly not, you know, a sky is
falling type report. It's falling short of some of the
most optimistic expectations. But you know, people just got very
used to forecasts that are just, you know, billions dollars
above the consensus.
Speaker 3 (15:55):
Carmen Ryanick here, stocks reporter on our live blog, digging
into the plus or minus two percent on the revenue
outlook that we got from Video a little math, doing
some quick math, it means and Video expects fourth quarter
revenue between thirty six points seventy five billion and thirty
eight point twenty five billion. The average analyst estimate was
thirty seven point one billion. So if it's on the
minus two percent, it would fall short of expectations. And
(16:16):
I think that's why you are seeing investors, at least
in the aftermarket, wanting a little bit more color or
commentary around this.
Speaker 2 (16:23):
Okay, so Red Brown, come on in here, because you've
got your eye on what's going on after hours and
Video shares down about two percent? Is that what it is?
Is that concern around that plus or minus two percent?
Speaker 7 (16:33):
Yeah, I think it kind of has to be the
main focus for everybody right now, you know sound it
felt like analysts maybe weren't as kind of euphoric heading
into this report. Things definitely war more tempered, So I
guess it isn't that much of a surprise to see,
you know, stock kind of trading a little bit less
volatile than it has in recent quarters. I was also
(16:53):
just looking at some of the customers because we don't
read Ryan's point just how important this is for the
wider market. And you know, Microsoft and Meta, two of
their biggest customers, both not really reacting as well.
Speaker 3 (17:05):
So so what are you read watching out for? Listen,
you are with us throughout the whole earning season. It's
been it feels like a long one, you know. But
here we are with Nvidia, which is such a huge
one in terms of the reporting season, and you know
what we get from Nvideo. But you know, how are
you thinking about it as we were kind of reporting
into it and now we are on the other side,
(17:26):
and there's still some questions to be had that will
hopefully play it on the analyst call, but you know,
walk us through it in an earning season, you know
how this kind of fits in, especially against some of
those MAGS seven, those very important big tech names.
Speaker 7 (17:40):
I think one thing that I'm looking at for and
Vidia specifically and kind of how it fits into the
wider landscape is actually the R and D spending. So
if we look and actually grow forty eight percent, if
you compare that to their peers, super Micro forty five
percent up this quarter, Broadcom jump seventy five percent. So
when we kind of start to dig in beyond on
just the top line numbers, I think a kind of
(18:03):
an interesting dynamic is playing out there in video is
kind of really expending hand over fist to keep up
or to kind of continue to have their their lead
in this race, And I think it really helps when
you can, you know, double your revenue every quarter as well.
That there's that spending three billion dollars on R and
D is a little bit easier than it is for
a company like Broadcom, which is actually you know, the
(18:24):
percentage wise, the margin that they're spending is actually much higher,
so that race they are kind of still a distant
second compared to in videos, so trying to can maintain
that lead that they have in the air space.
Speaker 2 (18:38):
Hey, Ryan, what about when it comes to blackwell and
demand around Blackwell. To what extent is that? The question
on the call later it went from insane to incredible.
As Caroline Hyde pointed out to us, how are you
thinking about it?
Speaker 7 (18:52):
Yeah?
Speaker 1 (18:52):
Is that a deceleration to go from insane to incredible?
I mean I think, you know, in general demand, I
think it is.
Speaker 3 (18:58):
You tell me, I think it is insane to incredible.
Speaker 2 (19:01):
Yeah, I think that's a declation.
Speaker 3 (19:02):
Yeah, we say incredible a lot. We throw that word around.
When you say insane, that's like a whole other level.
Speaker 1 (19:08):
Yeah, fair enough. Obviously, you know, people continue to focus
on supply. There have been some you know, production hiccups here.
Like I said before, people are focused very much on
you know, pricing and margins for Blackwell. So all these
things together, you know, this remains like a point of
real focus for investors, even kind of beyond just sort
of the headline numbers of the forecast and so forth.
Speaker 3 (19:26):
Guys, thank you so much. Busy afternoon, of course. Bloomberg
News Earnings reporter Red Brown out there in New York City.
Ryan Lostelica in Chicago. He's Bloomberg News Equities reporter
Bloomberg Audio Studios, podcasts, radio news third.
Speaker 2 (00:07):
Quarter adjusted earnings per share coming in above estimates at
eighty one cents. Estimate was for seventy four cents. Third
quarter at revenue coming in at thirty five point one
billion dollars. Estimates were for thirty three point twenty five
billion dollars third quarter data center revenue. This is what
everybody wants to see that coming in above estimates thirty
point eight billion dollars. The estimate was for twenty nine
point one four billion dollars. Carrol Nvidiac's fourth quarter revenue
(00:30):
at thirty seven point five billion plus or minus two percent.
The estimate was for thirty seven point one billion dollars.
Speaker 3 (00:35):
Gotta say, initial reaction, folks, not an upbeat one. Kunjan
Zabani of our Bloomberg Intelligence Senior semi conductor team, he's
an analyst. And then we're going to want to bring
in another guest to kind of give us some more
thoughts about what we got from video today.
Speaker 2 (00:48):
Yeah, Caroline Hyde, who hosts Bloomberg Technology on Bloomberg TV,
is joining us now. She's got our eyes closely watching
everything happening over ed in video that forecasts failing to
meet the loftiest estimates for the company cheers in the
after hours right now down about four percent, so they're
off of those lows, Caroline, But is this just about
high expectations, very high expectations and in Nvidia coming out
(01:09):
and saying Okay, we're almost going to meet them, but
not quite.
Speaker 4 (01:12):
And a very high market valuation that is the most
valuable in the world, that has seen a run up
of almost two hundred percent so far in the years.
So maybe some profit taking when you are seeing, Yes,
Luke Capital, if you dig into the analysts expectations for
the fiscal fourth quarter or twenty twenty five, Luke Capital
had it at about forty four billion dollars as the
highest realm.
Speaker 5 (01:32):
Then you had few one and securities at about forty one.
Speaker 4 (01:34):
Billion, and then you get into the thirty seven billion
dollar range with the likes of Craig Hullum and Da
Davidson was a little bit above that. So compared to
perhaps some of the highest levels out there, they're coming
in below and there's a plus or minus two percent
there to be built in as well. So I think
there is some digesting that this isn't beaten raised and
blown out of every single analysts expectations.
Speaker 5 (01:58):
Still, these are incredibly strong numbers.
Speaker 4 (02:00):
This is a guide to the fact that we're getting
Blackwell on stream. That supply side will be ironed out,
and I think we'll have far more from Gensen hung
on that particular perspective, and that demand is still incredible.
So I think there's just a little bit of profit
taking coming on. When we've seen that the rapid rise
has been two hundred percent over the year, maybe four
or five percent sell down isn't the most remarkable.
Speaker 3 (02:20):
Shift, Caroline Great point, right, it's not Reay yet. Well,
you know, listen, this is her world that she's talking
to these you know, tech companies, following them inside and outside,
and this idea that there's still supply, that there's demand,
it's just the supply constraints. It's not like people are
running away from the products. Having said that, I want
to tap into your knowledge of this industry and that
you do have companies that come out and it's gangbusters,
(02:42):
and then maybe they have some issues with supply constraints
and so on and so forth. This is kind of
part of the process. Is that fair?
Speaker 4 (02:48):
I think that's fair when it comes to in Video
as well, and the rapid rate of innovation. I mean,
they've almost become an Apple in every single year they're
bringing out their latest neww chip set and design, and
we go from Hopper swiftly on to Blackwell, and people
have got to keep up with that innovation.
Speaker 5 (03:01):
Just the way in which you store your.
Speaker 4 (03:04):
Chips and the infrastructure within your data centers means that
if they're vertically stored, well, that's going to lead to
more heating issues. Then if you're doing it more broadly
on a horizontal perspective. There is a lot of innovation
that has to come along with in Video's own GPU
CPUs and overall chipsets. So I think that they have
said and guided to the market that yes, you're getting
(03:25):
this reporting of overheating, Yes you're getting these reports of
snags and design. This is entirely normal, and we're working
very closely with our hyperscale sub clients to fix this,
to innovate with them and ensure that we can get
them out there as swiftly as possible. I think there
has been also just trying to spreading out of AI demand.
(03:45):
What's been interesting hearing from Jensen Wong of late has
been the scaling laws. Basically, the theory goes is that
the more data you fire, the more compute power you bring,
the faster and more sophisticated.
Speaker 5 (03:56):
These large language models become.
Speaker 4 (03:58):
But actually we started to hear from the anthrop from
the great reporting coming out of San Francisco with the
Bloomberg team that Rachel Mets is saying maybe open aiyes
had to slow down a little bit in terms of
the developments of their own large language models because they're
not getting as sophisticated as it happen in the Leaps
and Bounds. Jensen still saying, Look, in the next decade,
you're going to see a million times increase in compute.
(04:19):
But we've just got to get there in terms of
actually making it happen.
Speaker 2 (04:23):
Yeah, I mean, hard to even imagine, hard to even
imagine that kind of increase in compute at this point,
Kun john'subney, I want to bring you back in here
over a senior intell senior analysts over at Bloomberg Intelligence.
We're seeing shares down about two percent in the after hours.
A couple headlines the company sees fourth quarter revenue coming
in at thirty seven point five billion dollars plus or
minus two percent. That's pretty much in line with estimates
(04:45):
at thirty seven point one billion dollars. Third quarter Data
center revenue blowing past expectations at thirty point eight billion
dollars estimates report twenty nine point one billion dollars Coon, John,
what's the question you'd ask, Jensen Wong?
Speaker 6 (04:56):
I mean, my questions really would focus on trying to
figure out the physical twenty six calendar twenty twenty five
black Well revenue ramp magnitudes and around gross margins. I mean, look,
we have seen in the past when vidias come out
and beat way more than what they did right now,
and the stock has still plummeted double digits. You also
have to keep in mind this end of the year.
(05:16):
The stock has tripled this year, right, so there is
some incentive for profit locking and taking the gains away
from the table as well.
Speaker 3 (05:24):
You know, I also do think about how do you feel, Kunjon,
that they are giving numbers for fiscal year twenty twenty
six good sign? Do you trust that visibility? Like, how
do you think about their ability to put out a
number and maybe that number might change based on if
they figure out the supply issues.
Speaker 6 (05:46):
I mean, I see that as a very strong sign
I mean, look at this earning season across the semi
sector right nobody is giving out numbers that far out.
Even in Vida's competitors who are trying to address the
same opportunity and are sing the same strong demand signals,
are not giving out numbers, strong confident numbers that in
(06:06):
year out. So that really speaks to the strength and
the confidence that they have that they'll be able to
support this demand and the demand is there, and you guys, it'd.
Speaker 3 (06:15):
Be tech talk to him a lot, like I'm just
curious with the top of mind, if you were sitting
down with him right now, like top two.
Speaker 4 (06:20):
Questions, and if Ed Ludlow was but he's out in
fraternity leaves and congratulations.
Speaker 5 (06:23):
To on Ed Ludler becoming a father.
Speaker 4 (06:25):
But I think first and foremost we'd be asking exactly
as Kuan Jhn has been saying, as you all have
been saying, it's got to be about supply coming on
tap and just talking a little bit more around Blackwell
and the incredible demand, What exactly does that really mean?
Speaker 5 (06:39):
Who are the key clients?
Speaker 4 (06:40):
How are we seeing that diversify out of the main
hyper scalers, if.
Speaker 5 (06:42):
At all, and then I think sort of trying.
Speaker 4 (06:45):
To articulate that, look, yes, maybe we haven't blown past
the highest analyst expectations, but thirty seven and a half
billion dollar guide that's still seventy percent ramp up in revenue.
That's following a ninety percent ramp up in revenue of
the fiscal quarter just reported their fiscal third quarter. I
think he's just going to have to sort of remind
(07:06):
the market how far they've come, how far they've still
to go, and maybe just take a bit of a
reality check here that you know, at the moment, the
numbers will go up, but maybe not at the two
hundred percent that we were hoping to see well, that
we did see in the first quarter of twenty twenty
five for their fiscal year reporting.
Speaker 2 (07:23):
Hey coon, John ian King on the live blog bringing
up a really interesting point, and it kind of gets
at the question that I was asking with regard to
super micro computer. Ian notes that cloud computing providers are
the biggest companies in technology, and they still dominate in
videous sources of revenue, making up fifty percent of sales
for its data center unit. So that's just a handful
(07:44):
of companies that are making up the majority of the
revenue for the data center in video watchers want that
number to go down. Three months ago that number was
forty five percent. Is that a concern to you.
Speaker 6 (07:57):
I mean, I don't want to look at it from
quarter to because remember these large customers are lumpy in nature, right,
they have to also manage their capex and deployments. We
did see over the last two to three quarters, if
I'm not wrong, the number come down. It was about
close to fifty or even about fifty and it has
been coming down steadily. So that was a good sign
(08:17):
for us. I still have to go and digest the
numbers later on, but the fifty percent in the short
term might not be that great of a sign. But
I would not jump to conclusions just looking at one quarter.
It could be very well timing of you know, them
picking up a lot more Hopper supply supply right now
when they cannot get their hands on blackwell.
Speaker 3 (08:37):
You know, I'm looking at the supply chain analysis on
the Bloomberg function. When it comes to Nvidia, Microsoft, about
nineteen percent of the revenue for Invidio, Meta, about ten percent,
super Micro nearly eight percent Alphabet about six percent, Amazon
more than five percent, Dell more than three percent. So
we talk about a handful of companies, these cluster of
companies that are so involved. You know, Caroline, I want
(08:58):
to bring you back in here. You know, Nvidia. This
has been such a focal point right the end of
the earning season, just thinking about it so much. You know,
how do you think about you know, Bloomberg Technology, you know,
into the Thursday edition, you guys when you're on air
and like, what's the tomorrow's story?
Speaker 5 (09:16):
The tomorrow story.
Speaker 4 (09:17):
I think we'll be trying to articulate where the growth
trajectory goes from here. I think we're gonna hear from
Jensen the next decade. You're gonna hear him talking about
humanoid robots. You're gonna hear him talking about drug discovery,
the capabilities of generative AI, the return on AI investment.
So I think we're gonna want to be talking to
the investors that back that vision. We're going to be
(09:39):
wanting to hear from the analysts out there that are
trying to square these numbers with where their own viewpoint
have been on the here and now at the fiscal
fourth quarter. But I think we're also going to we
want to think about who else is in the space
at the moment. It's answering some of the development issues,
some of the heating issues, some of the concerns around AI,
generative AI chip development and manufacturing. Who are the startups
in the space, wh the rivals in the space? What
(10:01):
are we seeing in terms of the hyper scalers building
their own chips. So I think there's so many directions
that we could go for, But for me, it's going
to be really interesting talking about where does AI infrastructure
go from here?
Speaker 5 (10:10):
And where does in video's view on selver in AI?
Where does in video's view on China? Where does in videos.
Speaker 4 (10:15):
View on the next repurposing of their chips not just
to keep hammering large language models, but the development of
generative AI in the real world.
Speaker 2 (10:23):
So what are some of the names, Caroline, that our
investing audience has to have their eyes on. Is it
the sam Altman's of the world who are trying to
raise lots and lots of money to go after Invidia?
Is it the hyperscalers who are going to be doing
this in house? Who who holds a candle to them
or who could hold a candle.
Speaker 4 (10:39):
To them in terms of siphoning off future demand or
in terms of just wanting to know who the name
key players are.
Speaker 2 (10:48):
Off future demand because you know, Intel, Intel, Intel's in
a tough position right now, as you guys have reported
on a lot over the last year. Am D maybe,
but what about those upstarts.
Speaker 4 (10:59):
Hmmm, I mean, and that's going to be interesting as
to whether or not we just get a future type
of chip development. You know, we've got the grocks for example,
that are backed by venture backing who have been looking
to ways in which we expand and have faster and
more efficient chips. You've also got you know, different players
out there thinking about not just the data that you
(11:20):
have to train, but then the inferencing that you do,
and that does that become a different type of conversation
around the technology and ultimately whether you need to have
more efficient chips within an energy source and an energy suck.
So I think so many people AMPI has been doing
things around that particular innovation of different types of chips. Eventually,
will people start to go to Galdhi and what Intel
(11:40):
has been providing. How much can AMD chip away in
terms of market share, in terms of the AI part
of the business as well. So there are so many
people and analysts and investors that are looking at distributing.
Speaker 5 (11:54):
Some of their bets.
Speaker 4 (11:55):
I'm sure, but for now in video has been the
only game in town and certainly the easiest one to
back in terms of up into the right Coon.
Speaker 3 (12:01):
Jent, I want to bring you back in here looking
at our live blog. Ian King, who follows the semiconductor
space and video as well. He says, one question analyst
will have when the conference call begins, what's happening in
networking sales? And that business slid sequentially dropping by that
five hundred million dollars and videos acquired. Networking tech has
faced opposition from many rivals, some of which argue for
(12:22):
an industry standard approach rather than a reliance on and
vidious proprietary technology. Weigh in on that, yeah, I.
Speaker 6 (12:28):
Mean, look, we have identified since last year that networking
in AI servers is going to be sort of the
next wave of growth, especially in terms of where the
dollars spend. The dollars go beyond just accelerators. So I mean,
until now in media, if you look at the market
for the first Hopper series, right, they had this advantage
of shipping their own proprietary networking gear, which customers had
(12:51):
no other option but to just buy that. So two things, right,
They got all the dollars, but they also got great
profit margins because they could really charge whatever they wanted. Now,
the competition there is increasing. Customers want to move to Ethernet,
which again Nvidia has started offering and starting from the
black Bell series. So we are going to see that
Ethernet revenue also increase for Nvidia, But when you compare
(13:13):
it from perchip dollar perspective, it's still less. We still
think positive for Nvidia's networking revenue share going forward, but
there will be a lot more competition there. It won't
be just one company taking everything in your area.
Speaker 3 (13:29):
That's a really good point, right, And I do think about,
you know, and Videa's really had this world to its
own for a while, and you think about increasingly kind
of what's going on in the future as there's more competition.
YouTube Dynamic Duo, thank you so much. Your insight really
so important to breaking down these results from Nvidia. Bloomberg
Technology co host Caroline Hidketcher at eleven am Wall Street
(13:50):
Time on Bloomberg Television for Bloomberg Tech and of course
our thanks to ku Joan Sabani of our Bloomberg Intelligence team.
He's a senior semiconductor analyst. So again, some great insight
we'll watch for some of you research. Let's continue our conversations.
Bloomberg News Equities reporter at Ryan Lostelico with us. He
has been writing about it and kind of you know,
talking about markets bracing for what we might get from Nvidia.
(14:12):
He joins us from Chicago. Also with us is our
own Red Brown, who follows the earning season and sets
us up. Bloomberg News Earnings reporter. He's back in New
York City. Ryan, come on in on this your report.
Ahead of the release in Nvidia, traders bracing for a
potential three hundred billion dollar earnings move. It was down
more than four percent though initially.
Speaker 1 (14:30):
Yeah, absolutely, I don't think it would be all that
surprising to see the stock really take some swings from
where it's trading right now. I mean, this is not
a huge move, especially not for our company as viollatile
as Nvidia is. Just to put it in context. Palo
Alto also reported that stock is at about five percent
and after hours trading in video is obviously much bigger,
but you know, not a huge move by their standard.
Speaker 2 (14:50):
I like that Ryan's out here talking about Pallelt the networks.
It's a good well there is Look, there are other
companies out.
Speaker 3 (14:56):
There, no question, but listen, we're gonna get you in
just a moment. But Ryan, I mean, it's been so
important in terms of market momentum, right, Like, give us
some of that context. We talk about it all. We've
talked about the mag seven, but when it comes to
momentum that aid this is a big one.
Speaker 7 (15:12):
Yeah.
Speaker 1 (15:12):
Oh absolutely. The stock is almost tripled this year. It's
added more than two trillion in market capitalization. Like you mentioned,
it's the biggest stock in the world. You know, We've
had plenty of analysts come out and say this is
more important than the FED, this is more important than
inflation data. This is the key report for Wall Street
this week, if not this month. So it's obviously very significant.
I do think, you know, we just got the numbers.
People are still digesting the report. We are still waiting
(15:34):
on the conference call. It's likely we're going to get
a bigger move maybe, you know, once we get you know,
full details, once we hear from you know, the management
team once people get a little bit more context for this.
But this is certainly not, you know, a sky is
falling type report. It's falling short of some of the
most optimistic expectations. But you know, people just got very
used to forecasts that are just, you know, billions dollars
above the consensus.
Speaker 3 (15:55):
Carmen Ryanick here, stocks reporter on our live blog, digging
into the plus or minus two percent on the revenue
outlook that we got from Video a little math, doing
some quick math, it means and Video expects fourth quarter
revenue between thirty six points seventy five billion and thirty
eight point twenty five billion. The average analyst estimate was
thirty seven point one billion. So if it's on the
minus two percent, it would fall short of expectations. And
(16:16):
I think that's why you are seeing investors, at least
in the aftermarket, wanting a little bit more color or
commentary around this.
Speaker 2 (16:23):
Okay, so Red Brown, come on in here, because you've
got your eye on what's going on after hours and
Video shares down about two percent? Is that what it is?
Is that concern around that plus or minus two percent?
Speaker 7 (16:33):
Yeah, I think it kind of has to be the
main focus for everybody right now, you know sound it
felt like analysts maybe weren't as kind of euphoric heading
into this report. Things definitely war more tempered, So I
guess it isn't that much of a surprise to see,
you know, stock kind of trading a little bit less
volatile than it has in recent quarters. I was also
(16:53):
just looking at some of the customers because we don't
read Ryan's point just how important this is for the
wider market. And you know, Microsoft and Meta, two of
their biggest customers, both not really reacting as well.
Speaker 3 (17:05):
So so what are you read watching out for? Listen,
you are with us throughout the whole earning season. It's
been it feels like a long one, you know. But
here we are with Nvidia, which is such a huge
one in terms of the reporting season, and you know
what we get from Nvideo. But you know, how are
you thinking about it as we were kind of reporting
into it and now we are on the other side,
(17:26):
and there's still some questions to be had that will
hopefully play it on the analyst call, but you know,
walk us through it in an earning season, you know
how this kind of fits in, especially against some of
those MAGS seven, those very important big tech names.
Speaker 7 (17:40):
I think one thing that I'm looking at for and
Vidia specifically and kind of how it fits into the
wider landscape is actually the R and D spending. So
if we look and actually grow forty eight percent, if
you compare that to their peers, super Micro forty five
percent up this quarter, Broadcom jump seventy five percent. So
when we kind of start to dig in beyond on
just the top line numbers, I think a kind of
(18:03):
an interesting dynamic is playing out there in video is
kind of really expending hand over fist to keep up
or to kind of continue to have their their lead
in this race, And I think it really helps when
you can, you know, double your revenue every quarter as well.
That there's that spending three billion dollars on R and
D is a little bit easier than it is for
a company like Broadcom, which is actually you know, the
(18:24):
percentage wise, the margin that they're spending is actually much higher,
so that race they are kind of still a distant
second compared to in videos, so trying to can maintain
that lead that they have in the air space.
Speaker 2 (18:38):
Hey, Ryan, what about when it comes to blackwell and
demand around Blackwell. To what extent is that? The question
on the call later it went from insane to incredible.
As Caroline Hyde pointed out to us, how are you
thinking about it?
Speaker 7 (18:52):
Yeah?
Speaker 1 (18:52):
Is that a deceleration to go from insane to incredible?
I mean I think, you know, in general demand, I
think it is.
Speaker 3 (18:58):
You tell me, I think it is insane to incredible.
Speaker 2 (19:01):
Yeah, I think that's a declation.
Speaker 3 (19:02):
Yeah, we say incredible a lot. We throw that word around.
When you say insane, that's like a whole other level.
Speaker 1 (19:08):
Yeah, fair enough. Obviously, you know, people continue to focus
on supply. There have been some you know, production hiccups here.
Like I said before, people are focused very much on
you know, pricing and margins for Blackwell. So all these
things together, you know, this remains like a point of
real focus for investors, even kind of beyond just sort
of the headline numbers of the forecast and so forth.
Speaker 3 (19:26):
Guys, thank you so much. Busy afternoon, of course. Bloomberg
News Earnings reporter Red Brown out there in New York City.
Ryan Lostelica in Chicago. He's Bloomberg News Equities reporter
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Tim Stenovec
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