November 19, 2025 • 23 mins
Nvidia, the world’s most valuable company, gave a strong revenue forecast for the current period, helping counter concern that a global surge in AI spending is poised to fizzle. Sales will be about $65 billion in the fiscal fourth quarter, which runs through January, the chipmaker said in a statement Wednesday. Analysts had estimated $62 billion on average, with some predictions ranging as high as $75 billion.
The outlook signals that demand remains strong for Nvidia’s artificial intelligence accelerators, the pricey and powerful chips used to develop AI models. Nvidia has faced growing fears that the runaway spending on such equipment isn’t sustainable. Nvidia shares gained about 4% in late trading after the report was released. They had been up 39% this year through the close.
For instant reaction and analysis, Bloomberg Businessweek Daily hosts Carol Massar and Tim Stenovec speak with:
- Jay Goldberg, Senior Analyst, Semiconductors & Electronics with Seaport Research Partners
- Bloomberg Tech Co-Host Ed Ludlow
- Bloomberg News Big Tech Team Leader Sarah Frier
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:09):
This is a breaking news update from Bloomberg, instant reaction
and analysis from our three thousand journalists and analysts around
the world.
Speaker 3 (00:19):
Let's bring in Bloomberg Tech b Tech co host Ed Ludlow,
who will be speaking exclusively with Nvidio CEO Jenson Wong.
That's coming your way at six thirty pm Wall Street
time right here on Bloomberg TV and Radio. Hey, Ed,
investors seem to be pretty happy. It's up about two
percent here. What's your immediate takeaway from these results?
Speaker 4 (00:41):
Yeah, in the fiscal third quarter that they just reported,
you know, it's a beat and a good one, and
this was a high bar going into it. And in
the outlook for the fourth quarter, you know, it's a
it's a good three billion dollars above consensus sixty five
billion dollars plus or minus two percent. Remember this is
always the case. There were some very bullish forecasts on
(01:04):
the street. I think some analysts were saying that in
Vidio could even surprise us with a seventy five billion
dollar figure for that fourth quarter. But the great unknown
is the numbers that they've just posted, how do they
relate to the five hundred billion dollar or half a
trillion dollar figure that Jensen wog outlined at GtC in
(01:24):
the last week of October. He basically said, over the
next six fistal quarters, just for Blackwell Rubin Systems, they
see five hundred billion dollars of demand. But in video
doesn't give formal guidance like that. It was just a
slide over his shoulder on stage. So there is going
to be some mathing based on what he says on
the call and hopefully in the conversation that we have
(01:45):
to explain how in aggregate their forecast has changed for
the longer term.
Speaker 2 (01:49):
Okay, So Jentsen, if you're watching just a little preview
of the line of questioning that you may get from
Ed Ludlow at six thirty Wall Street time Bloomberg Television
and Radio for that exclusive conversation in video shares off
about as of today's close, roughly ten percent from those
all time highs back at the end of October. That
was just around the GtC event in Washington, d C.
Where I know you spoke with Jensen and Justin Hotard
(02:11):
of Nokia as well. I'm wondering really about the narrative
that's emerged since then about cracks starting to form or
punctures in the quote unquote AI bubble and the decline
in some of the high flying stocks that we've seen
of late. Does this assuage investor concerns that not all
(02:33):
is okay when it comes to the infrastructure spend.
Speaker 4 (02:36):
Yeah, you know, in Nvidia is down sharp piece since
since the all time high it hit four weeks ago.
But it's also a stock that as of today's close
was up almost forty percent year to date, double the
performance that we see of the Nasdaq one hundred or
the S and P five hundred. This again was a
very high expectations quarter where there is also high skepticism
(03:01):
to meet it. And two of the data points that
we will inevitably hear asked of Jensen is the circular
financing issue, because a lot of the news flow in
that period of time has been about Nvidia investing in
some form in the in the frontier model labs or
end users of their chips.
Speaker 2 (03:20):
Look at the anthropic news yesterday.
Speaker 4 (03:22):
This week, right, you know, And in that specific case,
it's very hard to argue it is not circular financing
because historically what Jensen Wang's argument has been is when
they put an investment into an AI company, they don't
require the AI company to use that capital or financing
to buy in video chips. They can go away and
(03:44):
using video's money to buy someone else's chips. But in
the mechanics of that anthropic deal, you know, it is
a flow of capital from in video interanthropic and then
enthropic buying capacity that does use in video chips. The
other data point is appreciation, which is a real fixation
of this market at the moment.
Speaker 3 (04:05):
So, you know, one of the things we were talking
about with Jay Goldberg and we're going to get back
to him in just a moment.
Speaker 2 (04:11):
We're leting him read the pressure, so we're letting him
actually look at the numbers right now.
Speaker 3 (04:14):
But you talked about China remaining effectively online.
Speaker 5 (04:18):
How much of it that is a problem? And I
think we also heard.
Speaker 3 (04:21):
From was it this being kind of the first clean
numbers that we're kind of getting was that Kunja?
Speaker 2 (04:28):
I think we talked.
Speaker 3 (04:29):
About, you know, without kind of I guess China impact
or China concerns, but and how important is China going
forward to the Nvidia story.
Speaker 4 (04:39):
So you know, China is potentially the biggest end market
in the world for data center and right now Nvidia
assumes zero China. You know that five hundred billion dollars
or half a trillion dollar figure that I mentioned a
moment ago that was given on October twenty eight excluded
China completely. I've just put in the blog and just
(05:00):
making an observation that if you go back to August
when in Video gave their forecast for the third quarter
that they've just released, they were very clear in explaining
that this did not assume any h twenty sales to China.
It's interesting, but there is no mention of the word
China at all in today's press release, and so now
(05:23):
it's kind of all stripped out. But as Jensen Wong
has said repeatedly, it's a really critical market. A lot
of activity is there, and you know in Video would
like to be able to sell its technology into that market.
Speaker 3 (05:38):
Jay, I want to just bring you back in and
we do see and Video shares climbing once again, back
up near that four percent mark that we saw on
the aftermarket. It's up about three point six three point
seven percent.
Speaker 5 (05:50):
Jay.
Speaker 3 (05:50):
As you are going through the press release, anything that's
jumping out.
Speaker 5 (05:53):
That you think the Bloomberg audience needs to know about
so far nothing.
Speaker 6 (05:58):
I came the same conclusion, there's nothing. There's no mention
of China in here at all, which is good for now,
but also concerning it, looks like their networking business, the
networking side of their of their data center business did
a little better than expected, which is great because it's
high margin, high margin business. Is very They have a
(06:18):
really solid position there. I mean, overall, it's a pretty
clean quarter. I haven't gotten all the way through it,
but I do. I am curious to hear what Jensen's
going to say about circular financing and those sorts of questions.
Jensen is probably the most persuasive, charismatic CEO in semiconductors
right now, so listening to him on the quarter is
always going to be interesting. I want to see how
(06:41):
much energy he brings and how he's going to address
some of those sort of stickier questions.
Speaker 3 (06:46):
Hey, Ed Lodlo, come on in on this as you
listen to Jay. Love to bring you into the conversation
with Jay.
Speaker 4 (06:52):
Yeah, I think the circular financing question is one that
I've received in advance, you know, of speaking to Jensen
in a couple of hours time. The other one for
me is the depreciation issue.
Speaker 1 (07:05):
Right.
Speaker 4 (07:05):
You know, Nvidia commits to this annual cadence of a
new generation of GPU, and I think there are a
lot of people out there who would really appreciate Jensen
explaining the useful life cycle of any generation of GPU
and how they manage that, how they convince the big
spenders in a CAPEX context to upgrade. Is that a
(07:27):
concern for you? Is it something that you feel is unanswered?
Speaker 6 (07:31):
Well, I think there is this dynamic taking place where
in Nvidia is trying very hard to prop up the
neo clouds as alternatives to the traditional hyperscalers. You'd much
rather have one hundred small customers than three large ones.
The problem is that will eventually conflict with that annual cadence. Right.
This whole issue about the appreciation of how long a
(07:51):
server lasts. I think people look a lot of sort
of the physical life of the server, but the more
important question is the economic life of the server. And
if you have a new GPU coming out every year,
the old ones become less valuable, and so that leads
to some pretty pretty punishing price curves for the neo clouds,
and so Jensen and n Video want to constantly be
(08:12):
coming out, coming out with new products to stay competitive
and push their own sales up. But that makes it
hard for these big for these customers, the small ones
who have to also stay on that treadmill. And at
some point, at some point, it can't go on forever, right,
the neoclouds will eventually run out of money. And so
that's sort of a big long term picture outlook. And
(08:34):
I mean it's one of these things that keeps me,
would keep me up at night if I didn't have
a cell rating on it.
Speaker 2 (08:41):
Well, okay, so Ed, I want you to kind of
go back to Jay on this because I know you've
talked to Core, we've CEO quite a bit of time,
quite a bit in recent months. We said that Core
we've was hire in sympathy after these Invidia results and
in addition to another neo cloud company that's out there
right now, the demand is there for these neo cloud companies.
(09:02):
I mean even Core we've said just very recently it's
been able to diversify away from its biggest customers.
Speaker 4 (09:09):
Yeah, in the conversations that we've had with Microntrator that
they there is demand for the older generation technology. One
sort of data point or statistic that those who are
more calm about the depreciation issue would point to his utilization.
(09:30):
So they would say, right now the Hopper generation of
accelerators or GPUs is running at one hundred percent utilization
in terms of workloads. It can't be used any more
than it already is, as a very bullish signal that
they're these these kind of obsolute somes of funny thing
to say, but these older generation GPUs are not idle.
(09:52):
Comparing contrast with some of the secondary secondary market data,
which we have limited visibility into. We don't know how
strong that is, and nor do do we know how
close attention in Vidia plays to the secondary market for
older generations of chip. But forty percent of revenue is
the hyperscalers and depreciation is an accounting issue that they
(10:15):
need to mark against their balance sheets, and.
Speaker 5 (10:17):
We haven't seen it yet.
Speaker 4 (10:19):
So it's kind of interesting because at some point, and
I ain't an accountant, but you know, basic financial journalism,
it will come up.
Speaker 5 (10:31):
Hold on for a second, Jay, last question, final thoughts
on this.
Speaker 3 (10:36):
I mean, I'm looking at the Philadelphia Semiconductor Index up
almost two percent in the aftermarket, A name like Broadcom
is also up about two percent and again, and Vidia
is still up about three point two percent here after
its earnings. Final thoughts jay from you when it comes
to Nvidia, So.
Speaker 6 (10:52):
I want to respond. I want to close in responding
to Ed's comment utilization. I've certainly heard data points that
utilization are high in the neoclouds, at least some of
them anecdotally. But if if utilization is so high, why
do A and D and Nvidia make it a practice
to backstop capacity at the neoclouds as part of these deals.
(11:13):
If you look across the sales process for GPS right now,
you'll see a lot of these big neoclouds have contractual
terms which allow them, which basically put am D in
Nvidia in the position of backstopping or buying up excess capacity.
And it seems like a little bit of disconnect to
me that you would need those backstops if utilization were
so high. So I think I think there is definitely
(11:36):
signs of froth in the neocloud sector, not necessarily Coreweave
or nebbutus I don't want to pick on them, but
there is the there are growing signs of friction that
in that corner of the AI trade, it makes me
cautious about the broader spectrum of things.
Speaker 3 (11:50):
And to be fair, I just want to bring you
in on that if you have any thoughts.
Speaker 4 (11:53):
For Jay, you know only that those that share some
skepticism and want to ask difficult questions of gens and
would all so point out that you know, call Weave
is one of Nvidia's biggest equity positions to equity investments.
It's also one of its biggest customers technically, and they
are in a position where call weaves under pressure from
(12:14):
its customers to have access to the latest technology. There
is a disconnect there. At some point they can't be
running both the old GPUs. But again, you know, I
think asking the basic question of depreciation and how Jensen
Wong sees it, that that's something that we will put
to him for sure.
Speaker 3 (12:30):
Yeah, it definitely has to be addressed. Jake Olberg, thank
you as always, you give us so much time. We
so appreciate it. Senior analyst semic Conductors and Electronics over
at Seaport Research Partners.
Speaker 5 (12:39):
As we've said, currently, as.
Speaker 3 (12:40):
A cell rating on Nvidia, the only such rating for
the stock listed in the terminal, sticking.
Speaker 5 (12:44):
To his conviction.
Speaker 3 (12:46):
His conviction shares of Nvidia, by the way, still up
about three point six percent, but ed still with.
Speaker 2 (12:51):
Us sill with uson once again, Jay, not just the
only cell rating, but that price target at one point
forty and shares you know close today? What you know
one sixty something? Yeah, yeah, six, Thank you, go ahead, No, Ed.
Speaker 3 (13:05):
As you think about, you know, your conversation Jensen. You've
had many conversations with him at you know, different venues,
different events, I don't know what are you what is
really you think the most important thing to hear from
We talked about depreciation and some other things. But I'm
just curious what's top of mind for you here and
what you really want to hear from him.
Speaker 5 (13:23):
Electricity.
Speaker 4 (13:26):
It's fair to say I've had more terminal client ibs,
more messages on social media, more people in the user
and come up to me and just say, like, you know,
we we should probably talk about electricity and energy because
you know, we don't really have a good line of
sight to whether if they can build all these data centers,
and Jensen one does have a good line of sight
(13:46):
on that. When the data center is built, finish, ready
to turn the lights on. Is the electricity there? You know?
And the answer is no. There's loads of deals out there, right.
You guys would have done the red headline on the
show to about the US or the DOE taking government
ownership of nuclear reactors. But these rule deals on paper,
(14:06):
they don't exist in the real world. I think that's
really critical. The other thing is the press release says
they're sold out of GPUs. I just asked him what
do you mean by sold out? Because they're ramping output.
You know, their supply constraint. Demand is greater at any
given moment than their ability to supply. But to say
that something is sold out is a bit confusing, to
(14:27):
be honest, and so you know, ask for some clarity
on that.
Speaker 2 (14:31):
Hey, before we let you go, last question, Ian King
writing an inventory took a jump in the quarter normally
at chip makers, and just to remind everybody, Ian King
has covered chip makers for more than twenty years, that's
a worrying sign, meaning the amount of unused product is
going up. The company said it's to quote ordering to
secure long lead time components, meet the demand for blackwell
and support future architecture road maps. Is a little different
(14:53):
than what it's traditionally done.
Speaker 5 (14:54):
I thought they don't cant ne demand.
Speaker 4 (14:57):
Yeah, inventory is typically bad, depending on the type of chip,
because it signals that you, you know, no one's building
up there, the customers aren't building. Inventry by the way,
Ian's covered semiconductors since nineteen ninety eight at Bloomberg, so
so longer than twenty years. But you know, in Videa's
argument has always been, we keep telling our customers, our suppliers,
and our partners what we're doing for the next five years.
(15:20):
That includes the memory chip makers and telematics, data center
server design builders, so that everyone can keep pace. And
the argument that they're making is that when they want
to ship Blackwell accelerating computer systems at scale, the GPU,
it can't just be the GPU that's ready to go.
Speaker 5 (15:41):
You need all the.
Speaker 4 (15:42):
Other components to go with it. And you know, with
the stock up whatever it is now and after ours
four percent STO, I don't think anyone's worried about that
inventory number.
Speaker 3 (15:50):
YEP inventry days all right, all right, good stuff. Hey listen, Kitter,
we will be watching, all of us will be watching.
Speaker 5 (15:57):
Co host of b Tech and Ludlow.
Speaker 6 (16:00):
Hello.
Speaker 3 (16:00):
As you know, catch him at eleven am Wall Street
Time every Monday through Friday. But he will be speaking
exclusively this evening with Nvidia CEO Jensen Wank. That's at
six thirty pm Wall Street Time, and you can catch
that on both Bloomberg Television and Bloomberg Radio, So be
sure to check that one out.
Speaker 5 (16:15):
It is an exclusive. So he's got the conversation well
in video.
Speaker 2 (16:19):
Gave a strong revenue forecast for the current period of
sales expected to be about sixty five billion dollars in
the fiscal fourth quarter. I want to bring in Bloomberg
News Big Tech team leader Sarah Fryer. She's also the
author of No Filter, The Inside Story of Instagram. She
joins us from Bloomberg's San Francisco bureau. So going into this, Sarah,
there was this narrative emerging that there was concern that
(16:40):
the AI bubble, you know, if we're calling it that
maybe losing a little bit of air, if we're going
to stay with that metaphor concerned about the hyperscalers capex.
We saw what happened with meta platforms a few weeks ago.
Is that concern gone after reports such as this is
everything all fine and dandy.
Speaker 1 (16:57):
Now, I don't think the concern is gone, because I
do think there are still some trends that are are
you know, as noted in my my colleague and King stories,
but somewhat worrisome. Right the fact that in Vidia is
investing in a lot of the entities that are buying
its chips, right, so is there is there a way
that that they are indirectly ending demand for their product.
(17:21):
There is the concern about China sales. We still don't
have any forecast of sales to China despite some of
the loosening of the most restrictive restrictive policies from the
Trump administration. And and then there's also the question of
everyone trying to come up with Nvidia alternatives for their chips,
(17:43):
and some some of the rivals starting to gain a
little bit attraction we saw a little bit from Ambi.
And then furthermore, just the idea that you know, so
much of the uh, some of the the spending on
chips on data centers depends on having this physical infrastructure
to really put them to work, and especially the energy
(18:07):
making sure that there is power to make all these
data centers come to life with Nvidia's chips. So I
think that, you know, although this is this is a
company on a tear, this is we are in the
you know, the Nvidia economy. It is really popping up
the stock market right now. It has it has altered
the financial future of a lot of the companies my
(18:30):
team covers. But you know, can it last longer? Probably,
and that's what this report is showing. But is it
inevitable that it will? You know, are all the fears
in our past and we're not thinking about them anymore,
certainly not. We're going to keep looking at all those
trends and making sure that we can explain to people
what what is what is putting pressure on the future.
Speaker 5 (18:54):
So one thing I want to bring out, Sarah.
Speaker 3 (18:56):
You're, you know, there on the West coast, San Francisco,
you know, the tech community front and center, so you
hear things in.
Speaker 5 (19:04):
And around, not just in the newsroom, but just in
the area.
Speaker 3 (19:07):
And I'm you know, I'm looking at you know, the
concerns about Like you said, maybe this doesn't put concerns
to rest, but I'm looking at you know, in videos.
Speaker 5 (19:14):
Certainly up in the aftermarket.
Speaker 3 (19:15):
I'm looking at Nasdaq one hundred e mini futures, they're
up about one and a half percent. S and P
five hundred futures are up about nine tens of a percent.
Speaker 2 (19:23):
I think it's big.
Speaker 5 (19:25):
It's big.
Speaker 2 (19:26):
I look at the SoCs effect.
Speaker 5 (19:28):
The Socks is up almost two percent. There's a bunch
of other names in the space. So it's I.
Speaker 3 (19:32):
Think there was just so much fear that what if
they missed those numbers and they you know, met on
the data center revenue number for the third quarter and
fourth quarter revenue was upbeating the outlook, Right, So I think,
does it feel like, I mean, I don't know, you know,
this community just a little bit of a sigh of
relief that Okay, they hit these numbers. They actually did
better than what the street was expecting, and maybe that
(19:54):
puts some.
Speaker 5 (19:55):
Some of the concerns, I don't know, under wraps for
a little bit.
Speaker 1 (19:59):
I think here, you know, you're asking about the perspective
here in the valley. Here in the valley, AI doesn't
sound like anything that there's the sense that we're just
at the beginning of this grand movement that will change
the world. Right, Maybe it's not even the ll M
that will be the model that secure the future with AI.
(20:21):
And so we're just now starting to see the applications
of AI. The you know, the payback really for all
of this investment, we haven't quite solved that, you know,
where where is all this this revenue, the actual sales
to companies that are going to pay for all of
the chips that Nvidia makes. We haven't really solved that
(20:43):
problem to the tune of the billions that have been spent.
But I think that here you're asking out here in
the valley, it is very much you know, all systems
go on AI.
Speaker 4 (20:53):
There.
Speaker 1 (20:53):
There is not as much of a concern about whether
this is the bubble. People are seeing these these big
numbers and they're thinking, you know, the world is about
to change even further. How so, people are thinking about
how their jobs are going to change. They're using AI
very very much in their jobs, in their personal lives,
(21:13):
like you know, relying on on AI to help them
make decisions for themselves and their families. And I think
people are are eager to create products that are going
to take advantage of the of this is a new resource.
Whether that is going to dramatically lead to efficiency, more
(21:35):
more profits for the companies given all the investment so far,
it's sort of yet to be seen.
Speaker 3 (21:44):
Yeah, it's it's just kind of interesting, right. I mean,
here we are, what almost three years in to this
AI story, and most people say it's just early innings
on all of this. But it's hard for right, all
of us who've covered you know, booms and busts and crises,
and I'm not saying that this is any of that,
but it's hard not to be a little bit skeptical
when you see, you know, the spend over and over
(22:05):
and again, the conversations around the circular financing, and you know.
Speaker 5 (22:10):
It's hard.
Speaker 3 (22:11):
You're the logical side of your brain says, well, wait,
an it doesn't ultimately make sense.
Speaker 1 (22:15):
Two things can be true, right, It's not necessarily either
or there can be a dramatic revolution in technology that
will change our lives, and there can be irresponsible spending
at the same time. Right. We saw in the dot
com boom, for instance, that there were a lot of
companies that had very dire circumstances at the end when
(22:39):
that bubble burst and they had to shut down. But hey,
we still use the internet via the net is still a.
Speaker 5 (22:44):
Thing, so so I think.
Speaker 1 (22:48):
No, I think I think we might. We're not necessary Yeah, no,
we're not necessarily talking about, you know, a bubble burst.
And that means that AI wasn't the thing, and we
shouldn't have we shouldn't have thought that it was going
to be so big. It could be that, you know,
there there is still potential for a large financial correction
(23:08):
down the road, but AI remains a force that changes
how we do business and how we live our lives.
So I think to put it in that stock of
a either or is missing the larger trend.
Speaker 5 (23:24):
This is why we come to you.
Speaker 3 (23:27):
Because it's really yeah, and it's very balanced and thoughtful.
Speaker 5 (23:33):
Sarah, thanks so much.
Speaker 3 (23:34):
I really appreciate Bloomberg News Big Tech team leader Sarah Fryer.
She's also the author of No Filter, The Inside Store
of Instagram, and she is, of course there from our
Bloomberg San Francisco bureau
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:09):
This is a breaking news update from Bloomberg, instant reaction
and analysis from our three thousand journalists and analysts around
the world.
Speaker 3 (00:19):
Let's bring in Bloomberg Tech b Tech co host Ed Ludlow,
who will be speaking exclusively with Nvidio CEO Jenson Wong.
That's coming your way at six thirty pm Wall Street
time right here on Bloomberg TV and Radio. Hey, Ed,
investors seem to be pretty happy. It's up about two
percent here. What's your immediate takeaway from these results?
Speaker 4 (00:41):
Yeah, in the fiscal third quarter that they just reported,
you know, it's a beat and a good one, and
this was a high bar going into it. And in
the outlook for the fourth quarter, you know, it's a
it's a good three billion dollars above consensus sixty five
billion dollars plus or minus two percent. Remember this is
always the case. There were some very bullish forecasts on
(01:04):
the street. I think some analysts were saying that in
Vidio could even surprise us with a seventy five billion
dollar figure for that fourth quarter. But the great unknown
is the numbers that they've just posted, how do they
relate to the five hundred billion dollar or half a
trillion dollar figure that Jensen wog outlined at GtC in
(01:24):
the last week of October. He basically said, over the
next six fistal quarters, just for Blackwell Rubin Systems, they
see five hundred billion dollars of demand. But in video
doesn't give formal guidance like that. It was just a
slide over his shoulder on stage. So there is going
to be some mathing based on what he says on
the call and hopefully in the conversation that we have
(01:45):
to explain how in aggregate their forecast has changed for
the longer term.
Speaker 2 (01:49):
Okay, So Jentsen, if you're watching just a little preview
of the line of questioning that you may get from
Ed Ludlow at six thirty Wall Street time Bloomberg Television
and Radio for that exclusive conversation in video shares off
about as of today's close, roughly ten percent from those
all time highs back at the end of October. That
was just around the GtC event in Washington, d C.
Where I know you spoke with Jensen and Justin Hotard
(02:11):
of Nokia as well. I'm wondering really about the narrative
that's emerged since then about cracks starting to form or
punctures in the quote unquote AI bubble and the decline
in some of the high flying stocks that we've seen
of late. Does this assuage investor concerns that not all
(02:33):
is okay when it comes to the infrastructure spend.
Speaker 4 (02:36):
Yeah, you know, in Nvidia is down sharp piece since
since the all time high it hit four weeks ago.
But it's also a stock that as of today's close
was up almost forty percent year to date, double the
performance that we see of the Nasdaq one hundred or
the S and P five hundred. This again was a
very high expectations quarter where there is also high skepticism
(03:01):
to meet it. And two of the data points that
we will inevitably hear asked of Jensen is the circular
financing issue, because a lot of the news flow in
that period of time has been about Nvidia investing in
some form in the in the frontier model labs or
end users of their chips.
Speaker 2 (03:20):
Look at the anthropic news yesterday.
Speaker 4 (03:22):
This week, right, you know, And in that specific case,
it's very hard to argue it is not circular financing
because historically what Jensen Wang's argument has been is when
they put an investment into an AI company, they don't
require the AI company to use that capital or financing
to buy in video chips. They can go away and
(03:44):
using video's money to buy someone else's chips. But in
the mechanics of that anthropic deal, you know, it is
a flow of capital from in video interanthropic and then
enthropic buying capacity that does use in video chips. The
other data point is appreciation, which is a real fixation
of this market at the moment.
Speaker 3 (04:05):
So, you know, one of the things we were talking
about with Jay Goldberg and we're going to get back
to him in just a moment.
Speaker 2 (04:11):
We're leting him read the pressure, so we're letting him
actually look at the numbers right now.
Speaker 3 (04:14):
But you talked about China remaining effectively online.
Speaker 5 (04:18):
How much of it that is a problem? And I
think we also heard.
Speaker 3 (04:21):
From was it this being kind of the first clean
numbers that we're kind of getting was that Kunja?
Speaker 2 (04:28):
I think we talked.
Speaker 3 (04:29):
About, you know, without kind of I guess China impact
or China concerns, but and how important is China going
forward to the Nvidia story.
Speaker 4 (04:39):
So you know, China is potentially the biggest end market
in the world for data center and right now Nvidia
assumes zero China. You know that five hundred billion dollars
or half a trillion dollar figure that I mentioned a
moment ago that was given on October twenty eight excluded
China completely. I've just put in the blog and just
(05:00):
making an observation that if you go back to August
when in Video gave their forecast for the third quarter
that they've just released, they were very clear in explaining
that this did not assume any h twenty sales to China.
It's interesting, but there is no mention of the word
China at all in today's press release, and so now
(05:23):
it's kind of all stripped out. But as Jensen Wong
has said repeatedly, it's a really critical market. A lot
of activity is there, and you know in Video would
like to be able to sell its technology into that market.
Speaker 3 (05:38):
Jay, I want to just bring you back in and
we do see and Video shares climbing once again, back
up near that four percent mark that we saw on
the aftermarket. It's up about three point six three point
seven percent.
Speaker 5 (05:50):
Jay.
Speaker 3 (05:50):
As you are going through the press release, anything that's
jumping out.
Speaker 5 (05:53):
That you think the Bloomberg audience needs to know about
so far nothing.
Speaker 6 (05:58):
I came the same conclusion, there's nothing. There's no mention
of China in here at all, which is good for now,
but also concerning it, looks like their networking business, the
networking side of their of their data center business did
a little better than expected, which is great because it's
high margin, high margin business. Is very They have a
(06:18):
really solid position there. I mean, overall, it's a pretty
clean quarter. I haven't gotten all the way through it,
but I do. I am curious to hear what Jensen's
going to say about circular financing and those sorts of questions.
Jensen is probably the most persuasive, charismatic CEO in semiconductors
right now, so listening to him on the quarter is
always going to be interesting. I want to see how
(06:41):
much energy he brings and how he's going to address
some of those sort of stickier questions.
Speaker 3 (06:46):
Hey, Ed Lodlo, come on in on this as you
listen to Jay. Love to bring you into the conversation
with Jay.
Speaker 4 (06:52):
Yeah, I think the circular financing question is one that
I've received in advance, you know, of speaking to Jensen
in a couple of hours time. The other one for
me is the depreciation issue.
Speaker 1 (07:05):
Right.
Speaker 4 (07:05):
You know, Nvidia commits to this annual cadence of a
new generation of GPU, and I think there are a
lot of people out there who would really appreciate Jensen
explaining the useful life cycle of any generation of GPU
and how they manage that, how they convince the big
spenders in a CAPEX context to upgrade. Is that a
(07:27):
concern for you? Is it something that you feel is unanswered?
Speaker 6 (07:31):
Well, I think there is this dynamic taking place where
in Nvidia is trying very hard to prop up the
neo clouds as alternatives to the traditional hyperscalers. You'd much
rather have one hundred small customers than three large ones.
The problem is that will eventually conflict with that annual cadence. Right.
This whole issue about the appreciation of how long a
(07:51):
server lasts. I think people look a lot of sort
of the physical life of the server, but the more
important question is the economic life of the server. And
if you have a new GPU coming out every year,
the old ones become less valuable, and so that leads
to some pretty pretty punishing price curves for the neo clouds,
and so Jensen and n Video want to constantly be
(08:12):
coming out, coming out with new products to stay competitive
and push their own sales up. But that makes it
hard for these big for these customers, the small ones
who have to also stay on that treadmill. And at
some point, at some point, it can't go on forever, right,
the neoclouds will eventually run out of money. And so
that's sort of a big long term picture outlook. And
(08:34):
I mean it's one of these things that keeps me,
would keep me up at night if I didn't have
a cell rating on it.
Speaker 2 (08:41):
Well, okay, so Ed, I want you to kind of
go back to Jay on this because I know you've
talked to Core, we've CEO quite a bit of time,
quite a bit in recent months. We said that Core
we've was hire in sympathy after these Invidia results and
in addition to another neo cloud company that's out there
right now, the demand is there for these neo cloud companies.
(09:02):
I mean even Core we've said just very recently it's
been able to diversify away from its biggest customers.
Speaker 4 (09:09):
Yeah, in the conversations that we've had with Microntrator that
they there is demand for the older generation technology. One
sort of data point or statistic that those who are
more calm about the depreciation issue would point to his utilization.
(09:30):
So they would say, right now the Hopper generation of
accelerators or GPUs is running at one hundred percent utilization
in terms of workloads. It can't be used any more
than it already is, as a very bullish signal that
they're these these kind of obsolute somes of funny thing
to say, but these older generation GPUs are not idle.
(09:52):
Comparing contrast with some of the secondary secondary market data,
which we have limited visibility into. We don't know how
strong that is, and nor do do we know how
close attention in Vidia plays to the secondary market for
older generations of chip. But forty percent of revenue is
the hyperscalers and depreciation is an accounting issue that they
(10:15):
need to mark against their balance sheets, and.
Speaker 5 (10:17):
We haven't seen it yet.
Speaker 4 (10:19):
So it's kind of interesting because at some point, and
I ain't an accountant, but you know, basic financial journalism,
it will come up.
Speaker 5 (10:31):
Hold on for a second, Jay, last question, final thoughts
on this.
Speaker 3 (10:36):
I mean, I'm looking at the Philadelphia Semiconductor Index up
almost two percent in the aftermarket, A name like Broadcom
is also up about two percent and again, and Vidia
is still up about three point two percent here after
its earnings. Final thoughts jay from you when it comes
to Nvidia, So.
Speaker 6 (10:52):
I want to respond. I want to close in responding
to Ed's comment utilization. I've certainly heard data points that
utilization are high in the neoclouds, at least some of
them anecdotally. But if if utilization is so high, why
do A and D and Nvidia make it a practice
to backstop capacity at the neoclouds as part of these deals.
(11:13):
If you look across the sales process for GPS right now,
you'll see a lot of these big neoclouds have contractual
terms which allow them, which basically put am D in
Nvidia in the position of backstopping or buying up excess capacity.
And it seems like a little bit of disconnect to
me that you would need those backstops if utilization were
so high. So I think I think there is definitely
(11:36):
signs of froth in the neocloud sector, not necessarily Coreweave
or nebbutus I don't want to pick on them, but
there is the there are growing signs of friction that
in that corner of the AI trade, it makes me
cautious about the broader spectrum of things.
Speaker 3 (11:50):
And to be fair, I just want to bring you
in on that if you have any thoughts.
Speaker 4 (11:53):
For Jay, you know only that those that share some
skepticism and want to ask difficult questions of gens and
would all so point out that you know, call Weave
is one of Nvidia's biggest equity positions to equity investments.
It's also one of its biggest customers technically, and they
are in a position where call weaves under pressure from
(12:14):
its customers to have access to the latest technology. There
is a disconnect there. At some point they can't be
running both the old GPUs. But again, you know, I
think asking the basic question of depreciation and how Jensen
Wong sees it, that that's something that we will put
to him for sure.
Speaker 3 (12:30):
Yeah, it definitely has to be addressed. Jake Olberg, thank
you as always, you give us so much time. We
so appreciate it. Senior analyst semic Conductors and Electronics over
at Seaport Research Partners.
Speaker 5 (12:39):
As we've said, currently, as.
Speaker 3 (12:40):
A cell rating on Nvidia, the only such rating for
the stock listed in the terminal, sticking.
Speaker 5 (12:44):
To his conviction.
Speaker 3 (12:46):
His conviction shares of Nvidia, by the way, still up
about three point six percent, but ed still with.
Speaker 2 (12:51):
Us sill with uson once again, Jay, not just the
only cell rating, but that price target at one point
forty and shares you know close today? What you know
one sixty something? Yeah, yeah, six, Thank you, go ahead, No, Ed.
Speaker 3 (13:05):
As you think about, you know, your conversation Jensen. You've
had many conversations with him at you know, different venues,
different events, I don't know what are you what is
really you think the most important thing to hear from
We talked about depreciation and some other things. But I'm
just curious what's top of mind for you here and
what you really want to hear from him.
Speaker 5 (13:23):
Electricity.
Speaker 4 (13:26):
It's fair to say I've had more terminal client ibs,
more messages on social media, more people in the user
and come up to me and just say, like, you know,
we we should probably talk about electricity and energy because
you know, we don't really have a good line of
sight to whether if they can build all these data centers,
and Jensen one does have a good line of sight
(13:46):
on that. When the data center is built, finish, ready
to turn the lights on. Is the electricity there? You know?
And the answer is no. There's loads of deals out there, right.
You guys would have done the red headline on the
show to about the US or the DOE taking government
ownership of nuclear reactors. But these rule deals on paper,
(14:06):
they don't exist in the real world. I think that's
really critical. The other thing is the press release says
they're sold out of GPUs. I just asked him what
do you mean by sold out? Because they're ramping output.
You know, their supply constraint. Demand is greater at any
given moment than their ability to supply. But to say
that something is sold out is a bit confusing, to
(14:27):
be honest, and so you know, ask for some clarity
on that.
Speaker 2 (14:31):
Hey, before we let you go, last question, Ian King
writing an inventory took a jump in the quarter normally
at chip makers, and just to remind everybody, Ian King
has covered chip makers for more than twenty years, that's
a worrying sign, meaning the amount of unused product is
going up. The company said it's to quote ordering to
secure long lead time components, meet the demand for blackwell
and support future architecture road maps. Is a little different
(14:53):
than what it's traditionally done.
Speaker 5 (14:54):
I thought they don't cant ne demand.
Speaker 4 (14:57):
Yeah, inventory is typically bad, depending on the type of chip,
because it signals that you, you know, no one's building
up there, the customers aren't building. Inventry by the way,
Ian's covered semiconductors since nineteen ninety eight at Bloomberg, so
so longer than twenty years. But you know, in Videa's
argument has always been, we keep telling our customers, our suppliers,
and our partners what we're doing for the next five years.
(15:20):
That includes the memory chip makers and telematics, data center
server design builders, so that everyone can keep pace. And
the argument that they're making is that when they want
to ship Blackwell accelerating computer systems at scale, the GPU,
it can't just be the GPU that's ready to go.
Speaker 5 (15:41):
You need all the.
Speaker 4 (15:42):
Other components to go with it. And you know, with
the stock up whatever it is now and after ours
four percent STO, I don't think anyone's worried about that
inventory number.
Speaker 3 (15:50):
YEP inventry days all right, all right, good stuff. Hey listen, Kitter,
we will be watching, all of us will be watching.
Speaker 5 (15:57):
Co host of b Tech and Ludlow.
Speaker 6 (16:00):
Hello.
Speaker 3 (16:00):
As you know, catch him at eleven am Wall Street
Time every Monday through Friday. But he will be speaking
exclusively this evening with Nvidia CEO Jensen Wank. That's at
six thirty pm Wall Street Time, and you can catch
that on both Bloomberg Television and Bloomberg Radio, So be
sure to check that one out.
Speaker 5 (16:15):
It is an exclusive. So he's got the conversation well
in video.
Speaker 2 (16:19):
Gave a strong revenue forecast for the current period of
sales expected to be about sixty five billion dollars in
the fiscal fourth quarter. I want to bring in Bloomberg
News Big Tech team leader Sarah Fryer. She's also the
author of No Filter, The Inside Story of Instagram. She
joins us from Bloomberg's San Francisco bureau. So going into this, Sarah,
there was this narrative emerging that there was concern that
(16:40):
the AI bubble, you know, if we're calling it that
maybe losing a little bit of air, if we're going
to stay with that metaphor concerned about the hyperscalers capex.
We saw what happened with meta platforms a few weeks ago.
Is that concern gone after reports such as this is
everything all fine and dandy.
Speaker 1 (16:57):
Now, I don't think the concern is gone, because I
do think there are still some trends that are are
you know, as noted in my my colleague and King stories,
but somewhat worrisome. Right the fact that in Vidia is
investing in a lot of the entities that are buying
its chips, right, so is there is there a way
that that they are indirectly ending demand for their product.
(17:21):
There is the concern about China sales. We still don't
have any forecast of sales to China despite some of
the loosening of the most restrictive restrictive policies from the
Trump administration. And and then there's also the question of
everyone trying to come up with Nvidia alternatives for their chips,
(17:43):
and some some of the rivals starting to gain a
little bit attraction we saw a little bit from Ambi.
And then furthermore, just the idea that you know, so
much of the uh, some of the the spending on
chips on data centers depends on having this physical infrastructure
to really put them to work, and especially the energy
(18:07):
making sure that there is power to make all these
data centers come to life with Nvidia's chips. So I
think that, you know, although this is this is a
company on a tear, this is we are in the
you know, the Nvidia economy. It is really popping up
the stock market right now. It has it has altered
the financial future of a lot of the companies my
(18:30):
team covers. But you know, can it last longer? Probably,
and that's what this report is showing. But is it
inevitable that it will? You know, are all the fears
in our past and we're not thinking about them anymore,
certainly not. We're going to keep looking at all those
trends and making sure that we can explain to people
what what is what is putting pressure on the future.
Speaker 5 (18:54):
So one thing I want to bring out, Sarah.
Speaker 3 (18:56):
You're, you know, there on the West coast, San Francisco,
you know, the tech community front and center, so you
hear things in.
Speaker 5 (19:04):
And around, not just in the newsroom, but just in
the area.
Speaker 3 (19:07):
And I'm you know, I'm looking at you know, the
concerns about Like you said, maybe this doesn't put concerns
to rest, but I'm looking at you know, in videos.
Speaker 5 (19:14):
Certainly up in the aftermarket.
Speaker 3 (19:15):
I'm looking at Nasdaq one hundred e mini futures, they're
up about one and a half percent. S and P
five hundred futures are up about nine tens of a percent.
Speaker 2 (19:23):
I think it's big.
Speaker 5 (19:25):
It's big.
Speaker 2 (19:26):
I look at the SoCs effect.
Speaker 5 (19:28):
The Socks is up almost two percent. There's a bunch
of other names in the space. So it's I.
Speaker 3 (19:32):
Think there was just so much fear that what if
they missed those numbers and they you know, met on
the data center revenue number for the third quarter and
fourth quarter revenue was upbeating the outlook, Right, So I think,
does it feel like, I mean, I don't know, you know,
this community just a little bit of a sigh of
relief that Okay, they hit these numbers. They actually did
better than what the street was expecting, and maybe that
(19:54):
puts some.
Speaker 5 (19:55):
Some of the concerns, I don't know, under wraps for
a little bit.
Speaker 1 (19:59):
I think here, you know, you're asking about the perspective
here in the valley. Here in the valley, AI doesn't
sound like anything that there's the sense that we're just
at the beginning of this grand movement that will change
the world. Right, Maybe it's not even the ll M
that will be the model that secure the future with AI.
(20:21):
And so we're just now starting to see the applications
of AI. The you know, the payback really for all
of this investment, we haven't quite solved that, you know,
where where is all this this revenue, the actual sales
to companies that are going to pay for all of
the chips that Nvidia makes. We haven't really solved that
(20:43):
problem to the tune of the billions that have been spent.
But I think that here you're asking out here in
the valley, it is very much you know, all systems
go on AI.
Speaker 4 (20:53):
There.
Speaker 1 (20:53):
There is not as much of a concern about whether
this is the bubble. People are seeing these these big
numbers and they're thinking, you know, the world is about
to change even further. How so, people are thinking about
how their jobs are going to change. They're using AI
very very much in their jobs, in their personal lives,
(21:13):
like you know, relying on on AI to help them
make decisions for themselves and their families. And I think
people are are eager to create products that are going
to take advantage of the of this is a new resource.
Whether that is going to dramatically lead to efficiency, more
(21:35):
more profits for the companies given all the investment so far,
it's sort of yet to be seen.
Speaker 3 (21:44):
Yeah, it's it's just kind of interesting, right. I mean,
here we are, what almost three years in to this
AI story, and most people say it's just early innings
on all of this. But it's hard for right, all
of us who've covered you know, booms and busts and crises,
and I'm not saying that this is any of that,
but it's hard not to be a little bit skeptical
when you see, you know, the spend over and over
(22:05):
and again, the conversations around the circular financing, and you know.
Speaker 5 (22:10):
It's hard.
Speaker 3 (22:11):
You're the logical side of your brain says, well, wait,
an it doesn't ultimately make sense.
Speaker 1 (22:15):
Two things can be true, right, It's not necessarily either
or there can be a dramatic revolution in technology that
will change our lives, and there can be irresponsible spending
at the same time. Right. We saw in the dot
com boom, for instance, that there were a lot of
companies that had very dire circumstances at the end when
(22:39):
that bubble burst and they had to shut down. But hey,
we still use the internet via the net is still a.
Speaker 5 (22:44):
Thing, so so I think.
Speaker 1 (22:48):
No, I think I think we might. We're not necessary Yeah, no,
we're not necessarily talking about, you know, a bubble burst.
And that means that AI wasn't the thing, and we
shouldn't have we shouldn't have thought that it was going
to be so big. It could be that, you know,
there there is still potential for a large financial correction
(23:08):
down the road, but AI remains a force that changes
how we do business and how we live our lives.
So I think to put it in that stock of
a either or is missing the larger trend.
Speaker 5 (23:24):
This is why we come to you.
Speaker 3 (23:27):
Because it's really yeah, and it's very balanced and thoughtful.
Speaker 5 (23:33):
Sarah, thanks so much.
Speaker 3 (23:34):
I really appreciate Bloomberg News Big Tech team leader Sarah Fryer.
She's also the author of No Filter, The Inside Store
of Instagram, and she is, of course there from our
Bloomberg San Francisco bureau
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