August 28, 2025 • 43 mins
Bloomberg’s Caroline Hyde discusses how markets are reacting to Nvidia’s decelerating growth. Plus, the Nvidia CFO tells Bloomberg News that the company needs a codified plan before it can pay the Trump administration's 15% commission on chip sales. And shares of Snowflake and HP rise on the back of their earnings reports.
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
from coast to coast with Caroline Hyde in New York
and Vlow in San Francisco.
Speaker 2 (00:21):
This is Bloomberg Tech coming up in video. The world's
most valuable company underwhelms on earnings as investors digest decelerating growth.
This as its CFO weighs in on the Trump administration's
fifteen percent commission on.
Speaker 3 (00:34):
Chip sales, telling us the.
Speaker 2 (00:36):
Plan needs to be codified first, and we break down
other earnings from the tech world, the Snowflake HP gaining
on results and Dell on deck after the bell. But
first are we check in on this market, which of
course is dragged lower by one key stock we're looking
in in video, off by nine tenths of a percent
looking after ours trade yesterday, it was more than three
percent lower, as people just digest a company that is
(00:59):
now revenue in with.
Speaker 3 (01:01):
Both of fifty percent. But it's not a two.
Speaker 2 (01:03):
Hundred and sixty percent growth that we were used to
in previous years. And I'm interested in the focus on
China in particular.
Speaker 3 (01:10):
This is a company that.
Speaker 2 (01:11):
Has no h twenty sales for fiscal second quarter, no
sales baked in for the third quarter, but there is
opportunity there. Just listen to what jensup Huang said on
the call.
Speaker 4 (01:20):
So I think the you know, the opportunity for us
to bring Blackwell to the China market is a real possibility.
And so we just have to keep advocating the sensibility
of and the importance of American tech companies to be
able to lead in win the AI.
Speaker 2 (01:42):
Race for more bluebergs Ian King, who covers semiconductors, who
was up late last night, does this with us. Now, Look,
China is the big overhang and why some think that
perhaps the numbers were a little light, largely because we
didn't know whether to factor in Chinese.
Speaker 3 (01:57):
Revenue or not.
Speaker 5 (01:58):
I yeah, I mean they said that in the release
and there was nothing China related in there in terms
of the data center stuff. Then on the call they
gave us a slightly extended picture and said, look, if
everything goes okay, if everything gets sorted out, we might
have up to five billion dollars worth of Chinese revenue.
(02:18):
And if you add that back into their forecast, then
this is an amazing quarter for them. So there's a
lot of moving parts.
Speaker 2 (02:25):
There is and it feels as though it's a knee
jerk to send the shares lower, many would feel the
analyst community out there saying, look, strip this out.
Speaker 3 (02:33):
And this was actually quite a rich beat.
Speaker 2 (02:35):
But in you got even more detail from the CFO,
in particular collect cross walk us through what she said
about that fifteen percent stake taking that the government wants
on future H twenty sales.
Speaker 5 (02:47):
Yeah, I mean, I think it's important to frame this appropriately.
This isn't some kind of political stand or dispute with
the Trump administration. What she was doing was what investors
would like to do, which is to you know, for
sheer duty, which is saying, look, there is no mechanism
by which I can give fifteen percent of this China
(03:08):
related revenue to the government as statutes currently exist. Something
will have to happen before I can do that. So
she was really just making a point and reassuring investors that, look,
we are running this company properly according to the rules
that exist.
Speaker 2 (03:24):
So give us the detail on whether they do or
do not have licenses to certain Chinese customers yet in
the bag, and whether or not that two to five
billion dollars worth for the quarter coming could become a
reality in.
Speaker 5 (03:38):
Yeah, and again, I mean they were very clear to say, look,
we've got a few licenses right now, but there are
so many geopolitical variables in the mix here. What does
Beijing want? What does Washington really want? Will there be
more licenses? Will they be given quickly? And all of these,
to be fair to video, are not knowable right now
because as we know, things change on a daily basis.
(03:59):
With a social media post, the whole world changes. So
I think you know, when people calm down and look
at what we said, they'll perhaps realize that this is
something which you know, this is a company taking a conservative,
perhaps measured approach to it and collect told us and
that was a message that was given to investors. Look,
we think we'll get some of this where you know,
we're not saying this has all gone away, but we
(04:20):
just don't know when and how much. So we're going
to be careful, going.
Speaker 2 (04:24):
To be careful, Ian King always careful with this. Who ads,
we appreciate it. Let's get an investor. Take someone who's
dug deep onto the detail. Is Nazi Tengler, CEO CEO
at Leffa Tengo Investments. You've been taking some money off
the table with Vida recently, You've still got significant exposure.
And Natzi, what's so interesting is this question mark on China.
What's your read? Because again and again someone quit saying
(04:45):
there's a fifty billion dollar opportunity here.
Speaker 6 (04:49):
Yeah, thanks for having me, Caroline, and I agree with
Ian on just about everything he said. I mean, China's critical,
of course, but they already took the charge last quarter,
and so the big disappointment overnight was they came in
below the whisper number, but their guidance did not include
China at I think it was fifty four billion, and
(05:09):
the whisper number was at fifty five. So if you
back out China from the whisper number, they actually beat
not only the street but the whisper number on guidance.
So I'm giving it a triple play. A beat beaten rays,
but I think it doesn't make I mean, if this
was a disastrous report, the stock would be off significantly
more than it is. We trimmed some at one seventy nine.
(05:29):
That's where it's trading right now. We put it to
work in some other names like Palanteer and CrowdStrike, and
we got some good execution there, but it's still four
percent of our portfolios and a candidate for our twelve
Best Ideas portfolio. So I think that the report was excellent.
Decelerating growth is something that Microsoft dealt with with Azure
early days, from ninety percent now down to thirty. I mean,
(05:52):
I don't think Nvidious valuation is even as expensive as
Microsoft if you look at it on price earnings to
growth basis below one time. So I think this is
an opportunity.
Speaker 2 (06:04):
I mean, to that point, when a four point four
trillion dollar company is still delivering in excess of fifty
percent revenue and earn ex for the share growth, it's
pretty extraordinary.
Speaker 3 (06:12):
But the opportunity still is so extraordinary.
Speaker 2 (06:15):
I think Jensen Hung did a very good job at
reminding us four trillion dollars is how big AI infrastructure
spend could be alone, but he wouldn't really give us
an amount of how much his take is of that market.
Speaker 3 (06:27):
Can you do the math on that a little bit?
Speaker 7 (06:29):
Well?
Speaker 6 (06:29):
Yeah, I mean, if you look at at earnings growth
expectations for twenty twenty fiscal year twenty twenty five, it's
one hundred and thirteen percent growth. For twenty six it's
fifty percent growth, so you if you factor that in
to the total numbers, I mean, this could be an
incrementalion one hundred billion dollars in revenues over the next
(06:50):
twelve months. Don't forget too, Sovereign is starting to pick up.
That was about twenty billion euro in expectations. And then
you've got the buyback putting a floor under the stock.
They announced a sixty billion dollar buyback. So the market
share take from Nvidia continues to remain or grow. And
what was interesting to me today is that you're seeing
(07:12):
AMD and Broadcon up on the news, but in Vidia
down slightly.
Speaker 2 (07:16):
It's really interesting actually that all the Chinese names are
up on the news as well. You just think of
what's happening with Smick, what you're having with other key
players who are building out AI accelrators for China.
Speaker 3 (07:27):
AMD.
Speaker 2 (07:28):
It really reminds me of AMD because they'd beat and
in any ways they raised, but they couldn't give clarity
on the future of China and they were punished because
of that.
Speaker 3 (07:37):
Do investors just need to understand.
Speaker 2 (07:39):
That it's very difficult to get real clarity on China.
Speaker 6 (07:42):
Yeah, and Caroline, remember too, there are investors and then
there are the hedge funds and the algorithms, and the
latter tend to drive the volatility. Investors like me look
at opportunities like this and say, I want to be
in this for the long term. So last summer we
picked off in video at one hundred dollars a share.
Remember last summer people were saying the story was over.
It's not going to continue. The hyper six scalers can't
(08:05):
continue to spend capex at this level. And not only
did they do that, but many of them increase their
capex budgets. So if you think about data center, it's
twenty nine percent growth, right, But China, he's saying, could
grow at fifty percent. So to answer your previous question,
China's growing faster than the rest of the world. But
twenty nine percent is unlikely to be the growth number.
(08:27):
It's likely to be closer to thirty to forty percent
in data center growth for Nvidia in the coming year
or two. So I think again, as I've said, you
want to take advantage of these periods of confusion or
you know, melancholy around the stocks future performance and add
to your holdings if you own it, and initiate if you.
Speaker 2 (08:48):
Don't, okay, and then the real opportunity is the fact
that the cadence of innovation keeps them coming. You've got
Blackwell Blackwell Ultra already in the FABS according to the CFO.
So is the Ruben an architect show. Why does that
take us?
Speaker 7 (09:05):
Yeah?
Speaker 6 (09:05):
I mean I think it takes us to quantum and
then some I think, you know, robotics. We've launched a
new fund that we're incubating at the firm and it's
called New Ara Thematic and it's all of the above.
So you know, it's not just nuclear, it's quantum, it's robotics,
because photonics. So this is an area that investors need
(09:26):
to be sure they're not underestimating. You know, I heard
the naysayers overnight it's decelerating the growth. There's not ai
trade is over. It's not even close to over. We're
in the early stages, and I think you want to
be continue to be looking around and look for those
that are going to get left behind. And there will
be companies I believe, like Adobe that will probably get
left behind. But then you want to focus on the
(09:49):
winners and you don't want to shy away from them
too early. And this is I think Reuben is the
next stage Blackwell had. We haven't even realized the staggering
demand for Blackwell that Jensen Wong spoke about last night.
So yeah, strap in it's going to be vol little
bit volatile to the upside.
Speaker 2 (10:08):
It's interesting yesterday we had Jamigambetta of IBM on talking
about their deal while that partnership with AMD, the fact
that they're looking in the future of soup coop and
computing twinning with the future of quantum as well. You're
talking about that as an area of growth. Where are
these companies, though, managing to pick away at in Video's
chants really with inference? Because yes, they are the chip
(10:30):
of choice, they are the architecture of choice when it
comes to training models. Are they really the only game
in town when it comes to inference?
Speaker 3 (10:37):
No, I mean I think not.
Speaker 6 (10:39):
But that doesn't mean it's just like, you know, maybe
you could argue that Microsoft sort of pioneered cloud computing.
Larry Ellison might disagree with us from Oracle, but but
you can. But you know, you see eventually they that
their growth slowed, but there's still a dominant provider and
AWS obviously would disagree with me that as well. But
(11:01):
so I think you have to step back look at
where the marginal erosion is coming from. Yes, we know
Apple and Microsoft are developing your own chips. That's that's fine.
I don't think that's going to change the dynamic. It
goes back to Jevon's paradox. So when we had the
deep Seek news, you know, everybody sold the stocks. I
(11:24):
happened to be on air that day and said, listen,
this is an opportunity because Morbi gets more, and so
I think this is I mean, that's that's really the story.
That they can lose share and still be growing at
rapid pace. And the margins. We haven't even talked about
the margins. You know about seventy percent. I mean, I
don't know what there is to complain about.
Speaker 2 (11:46):
Instagram add a sixty brilliant lot of stock buyback, I mean,
and still the stock cast away some Nancy tang of
lef at Tangra Investments. It's always so good Tavy on
the show, Thank you very much. Indeed wearing a leather
an ode to Jensen that I mean, well, coming up
more in Nvidia as China trade tensions. Of course, they're
weighing on earnings. We're going to speak with Teresa Payton
for Alis Solutions CEO on the China AI landscape.
Speaker 3 (12:09):
This is Bloomberg Tech.
Speaker 2 (12:21):
Check in on those Nvidia shares we're off by let's
call it nine ten percent for a more than four
trillion dollar stock. That's thirty eight billion that you've just
wiped out in terms of market capitalization in Vidia's business.
I mean the overhang has been China clouding the area
because of trade tensions. That the company now saying that
unconventional plan of course by the Trump administration to charge
(12:42):
a fifteen percent commission on AI chip sales to China
when it hasn't progressed actually beyond its early stages. Let's
check in what the CFO, Collect Crest told us earlier.
She said to Bloomberg, I don't have to do this
fifteen percent until I see something that is a true
regulatory document. Let's get more from New Meg's executive editor.
Speaker 3 (13:01):
Mike Shephard.
Speaker 2 (13:02):
You really sit at the intersection of politics and technology mine.
So the ball is in the administration's court. They've told
us that they're going to take fifteen percent. Well, where's
the regulatory approval here?
Speaker 8 (13:12):
Well, that's really the question of the hour here in Washington,
in Silicon Valley and on Wall Street. When are we
going to see the fine print on this? And as
Ian noted at the top of the hour, the company
is proceeding very carefully on this front. It doesn't want
to commit without seeing something in writing, because the terms
(13:33):
could even change, especially with this administration halfway through. So
they want to make sure they see this imprint and
if they understand the legal and regulatory mechanism under which
they would make these payments to the US Treasury. Remember,
it's not quite a tax, it's not quite an import fee.
It's really kind of hard to figure out how they
(13:53):
would define it. And in a way it is holding
the company up a little bit in terms of making
those sales once again of the age twenty AI chip
to Chinese customers. They don't want to proceed too fast,
as a CFO suggest that they had the right to do.
They have some of the export licenses in hand. But
then again, if they proceed without actually giving the government
(14:16):
a cut, that does risk angering the administration. And this
is a government that Jensen Wong, the CEO of Nvidia,
has tried very hard to cultivate good terms with He
is visited with President Donald Trump a number of times,
and the two men have built this report. So they
want to make sure they are treading carefully here, Caro,
because they're playing the long game. They are looking ahead
(14:38):
to how Trump can help them in China.
Speaker 2 (14:41):
And I think Jensen and his CFO are trying to
really remind the administration just how much money's left on
the table. Up to five billion dollars worth could be
made in H twenty sales in this next quarter alone.
They're talking about the fifty billion dollar opportunity of China
sales if they can get a modified Blackwell architecture the country.
And that really was what Jensen was talking about, his
(15:02):
hopes to talk to Trump about that, and actually the administration,
in fact, President Trump has put messages out posted on
his truth social about the fact that he expects some
sort of request.
Speaker 8 (15:14):
Yes, and he is signaling his openness to granting that
permission to the company to sell a scaleback version of
the market leading Blackwell chip to Chinese customers. Now, again,
we would expect the president to insist on getting his cup.
Would it be fifteen percent, would it be more? What
other demands might he put there, But again, this would
(15:36):
be very much in tune and in line with what
the administration is doing, not only with Nvidia, but also
in a way trying to, I guess, restore some of
those economic and political ties with China that we've seen
bruised over the years.
Speaker 2 (15:49):
Mike Shephard, we thank you so much, Bloomberg. Let's get
more insight now. Teresa Payden's with us for Tallis Solution CEO,
former White House Chief Information Officer. At the moment, we're
seeing Chinese rivals gain on the back of this lack
of Nvidio competition.
Speaker 3 (16:04):
Right now, what do you make of it?
Speaker 9 (16:07):
Well, all I know is we're going to have to
figure out there's a long race here and a short
race here, and we have to secure not only our
global leadership but also our intellectual property. And that's really
some of the underpinning of the discussions here of is
there a fifteen percent? Is there not a fifteen percent?
What does this mean from an export control? So a
(16:28):
lot more to come on this, but obviously China is
amping up their part in the race, trying to win
the global war on who's going to dominate AI?
Speaker 3 (16:38):
What is the IP risk.
Speaker 9 (16:41):
Well, the IP risk. So even though we're talking about
sending a modified chip over to China, in my opinion,
based on my years of experience, it's like handing over
the keys to your R and D lab and saying
just be in the small QA lab, not in the
bigger lab, and don't look around. You wouldn't hand the
keys to your R and D lab to your competitor.
(17:02):
And China is our global competitor here for this technology.
So that really what we're thinking about here is how
could they get access to these chips and perhaps reverse
engineer everything from performance to how things behave. Really, you
just don't know what they're going to be able to
do once they have their hands on all these chips.
Speaker 2 (17:21):
Teresa, let's say you're back as the White House Chief
Information officer. What are you advising President Trump as to
whether Jensen should have access to the Chinese market.
Speaker 9 (17:32):
Well, I think this is a tough one because the
private sector does have the right. You know, companies do
have the right to sell their goods and services all
around the globe. We don't have a blockade on selling
technology and other goods and services to China. So this
is a very delicate balance here between a White House
administration and a private sector organization. And so really what
(17:55):
you have to do is look at the laws we
already have on the books, and then so what kind
of safeguards is this US based company going to follow
based on the laws on the books, What types of
inspection processes, what types of control processes. There is a
playbook for doing this, even though this technology is new,
and so we have to look at this playbook. The
(18:16):
question is is whether or not new rules and regulations
are going to be codified. And I think that's the
open question that in Nvidia is having to deal with.
Speaker 2 (18:25):
In Vidia put in its ten Q that it could
be exposed to potential legal implications because of this fifteen
percent issue.
Speaker 3 (18:36):
What would it face in terms of legal issues?
Speaker 9 (18:40):
Well, if we end up codifying some type of a
new barrier to the market in China or enforcing one
of the existing regulations in a way that hasn't been
enforced before, then in Video would have to make the
decision of am I now blockaded from actually selling to China?
Or do I have a lot of burdens on me
(19:01):
that maybe don't exist for other companies who are selling
technology to China. Remember, you've got big tech who's in
China's social media is in China. It's not just Nvidia
who is selling goods and services to China. And so
they may decide, well, this is an undue burden placed
on us. So they may decide to take on a lawsuit,
or they may find themselves answering to for example, Siphius.
(19:24):
As you know, TikTok Usa has had a lot of
legal challenges in legal bills as it relates to how
they operate and sifias interpretations of how they operate. So
I think they're just kind of looking at past cases
president precedent and then also looking at the president's remarks
as a potential future precedent and deciding that there could
(19:45):
be a risk for a long protracted legal battle.
Speaker 3 (19:49):
Theresa.
Speaker 2 (19:50):
We heard from Jensen Wang there's a fifty billion dollar
opportunity in this year alone in China, but push out
five years. Does that exist at the rate that Chinese
government trying to push their own companies away from the
US tech stack.
Speaker 9 (20:04):
Yeah, it may not exist in the future. That is
a tough one. All I can tell you is from
the frontlines of working with companies who have done business
with China. It is a very tricky proposition, especially as
it relates to cutting edge technologies, whether it's sort of
like clean energy, whether it's computer technology, and it's very
(20:28):
difficult and challenging to really understand what the regulatory environment
is going to be and the protection for your intellectual property.
Speaker 6 (20:34):
You know.
Speaker 9 (20:34):
Kind of the big elephant that we're not discussing in
having all of these conversations is we have a new
more detailed report from the FBI on Salt Typhoon, and
the findings from that report are stunning. We're talking eighty
countries were impacted, not just the United States, and the
access to metadata, phone calls and other information. You know,
(20:56):
this is one of those things in China denies that
they had any part in this, but this is one
of those things where we're seeing sort of this vacuum
cleaner effect of China basically vacuuming up intellectual property data
information to use it for economic espionage.
Speaker 2 (21:12):
That was a breach that really hit the major US
carries in particular Verizon and AT and T and T Mobile.
Teresa Payton, thanks for reminding of us off it for
Alice Solutions and it's time now for Talking Tech and
first Up d D Global will pay seven and forty
million dollars to resolve a sharehold or lawsuit concerning it's
fort twenty twenty one USIPO Now, an offering that not
only attracted into its scrutiny from Beijing also preceeded the
(21:35):
company's dlisting. The right Haling Giant announce the deal Thursday
alongside its second quarter results. Plus Taiwan, the prosecutors have
charged three people for allegedly stealing trade secrets from TSMC,
alleging that proprietary tech was stolen to help improve a.
Speaker 3 (21:49):
Take Tokyo Electron Now.
Speaker 2 (21:51):
Taiwan is seeking jail terms for at least seven years
for the Trio, citing threat to the islands, national security
and delivery hero cub It's earnings guidance for the full
year this after a week dollar in South Korean one cut,
interprofit and free cashlow look. The company saw revenue rise
nearly eight point four billion dollars in the first half,
but faces increased competition for rivals in Asia and the
(22:11):
Middle East. And coming up more on Nvidia, let's take
a look at the stock and other global chip exposed names.
Shine Light on ASML. It is lower in sympathy. That's
the European hip equipment maker can look on though. This
is the upstart in China trying to eat in on
AI accelerators in that country. We're p fifteen percent record high.
It has doubled its market cap in this month alone.
Speaker 3 (22:33):
This is Bloomberg Tech.
Speaker 2 (22:44):
Welcome back to Bloomberg Tech. We take a look at
the earning story. Because benchmark's relatively flat, we're actually higher
just on the likes of the Nasdaq one hundred. I'm
looking at what's happening with Snowflake having an absolutely brilliant
day best place that's November twenty twenty four.
Speaker 3 (22:58):
We're up eighteen percent.
Speaker 2 (23:00):
Are showing that the desire for Agenderki is working in
their business right now.
Speaker 3 (23:04):
Revenue grow thirty two percent.
Speaker 2 (23:05):
They beat and they raised as well in terms of
their forward looking guidance. The analysts across the street really
liking the strength coming from this particular software company that
many had anxiety perhaps that new AI startups the spell
to eat.
Speaker 3 (23:17):
Into the business model.
Speaker 2 (23:18):
No, no, they're managing to show real growth here and
retention of customers. Move on though, and we're all a
little bit lackluster about what happened with Nvidia last night.
Speaker 3 (23:26):
Look, this is a company that delivered fifty six percent
revenue growth for their fiscal second quarter.
Speaker 2 (23:30):
Fifty four billion dollars is promised for the fiscal third quarter,
and that's not including any Chinese revenue.
Speaker 3 (23:35):
That's only upside.
Speaker 2 (23:37):
But this is already a company that was very close
to its record highs were off by one and a
quarter percent, but off of those lows in the pre
market trade, here is the reaction on the results from
a few analysts on Blueberg TV on Invidia.
Speaker 10 (23:49):
When we have a beat and stocks don't go up
or as hot stock like in video doesn't go up
where it starts to roll over a little bit, that
suggests to a trader and a technical analyst that everyone
who might own the stock already does. But we're nowhere
near there yet.
Speaker 11 (24:07):
The reason the stock has recouped some of those losses
and I think will rule retain strength is because of
that guide. For Q three, it was very strong. It's
really all about Q three, and it's because Blackwell and
Blackwell Ultra are starting to ship, and if you know
that story, you're not selling this stock right now.
Speaker 7 (24:27):
They were very good about signaling to the market that
the chinahovertainning could continue and that has about a five
billion dollar impact in the next quarters numbers. So, having
said that, fifty four billion represents a very strong showing,
which means they expect hyperscalers and other parts of the
world to pick up that slack.
Speaker 2 (24:46):
More reaction for you now from an investor. Daniel Pilling's
with US Sans Capital Ponio manager.
Speaker 3 (24:51):
So why is the stock down?
Speaker 12 (24:55):
Well, I think there's a few reasons. One stock had
a good run into the quarter, and two it probably
slightly a missed sort of the byside expectations and it
was mainly around I think China. And then secondly black
Hole is still a little bit supply constraints, so that
ramping it as fast as they can, but I guess
the ramp wasn't fast enough. But I would say though
to us, those were pretty strong results and maybe one
(25:18):
interesting fact to look at if you take out the
China revenues completely out of the data center, then the
rest of the world for them actually accelerated from about
sixty ish percent growth in Q one this year to
a guide that eighty percent growth in Q three this year.
So actually in Nvidia X China has been accelerating, which
which I think is really strong.
Speaker 3 (25:38):
I think that's a really interesting take. We had Vladimir
Galibov from MDA.
Speaker 2 (25:42):
Yesterday talking about how Europe is stopped starting certain countries.
You've got them up really going hard on sovereign AI,
other countries less. So we got told twenty billion dollars
for sovereign AI. Is that strong enough for you, Daniel, Yeah, I.
Speaker 12 (25:56):
Think that's a great number. But the truth of the
game is still within high scalers and AI startups. I
think that's where the real action is for now, and
it's a much much much larger number, and I think
the interesting aspects there are one as Jensen noted that
reasoning AI is so much more compute intensive. He quoted
one hundred two thousand times more on the one inside
(26:17):
and then on the other inside though it's also much
better so it reduces hallucinations. And he also mentioned that
the return and invested capitally received from buying these ships
is phenomenal.
Speaker 8 (26:26):
Right.
Speaker 12 (26:26):
He mentioned if you invest three million today, you can
make thirty millions in token revenues in short order. So
I think that's where the real action is as of today,
and is.
Speaker 2 (26:34):
That why the real action is talking about where Rubin
takes us the cadence of innovation over at in video.
Speaker 12 (26:40):
I think so. I think Ruben will again that the
most important thing that Nvidia is doing is they're increasing
the performance per what and they noted that it costs
about fifty billion dollars for each one giga what data center.
Ruben will again improve that performance per WHAT, which means
that Nvidia's competitive situation improves on the one inside, but
(27:00):
also on the other hand side, you can do more
computer you can build better models with Ruben, which means
it's a self fulfilling prophecy a little bit because whatever
comes out of these models again have higher IQ and
effectively bigger and better apps.
Speaker 2 (27:13):
You're not worried in any way about Amazon's trainium, about
Google's TPU, the fact that the customers are innovating themselves.
Speaker 12 (27:22):
Yeah, no, I think it's our job to worry sometimes.
But we've looked at this in detail out and I
think the idea here is again to say, well, so
here's in Vidia. They're building a giant system of a company.
They have both networking CPUs, GPUs, hundreds of difference of
suppliers and they put the software on top. They say,
and we believe in this that they are the best
performance for one supplier in the industry bar nobody else.
(27:46):
And as long as that it's true, something like Trainium
cannot compete simply because they don't have the scale, they
don't have the system, and they don't have the software.
So in Vidia to us remains the winner in the sense.
Speaker 2 (27:58):
And that's what's interesting about and what I'm trying to say, Look,
we are more than just hardware in many ways, we
are the one stop shop, and we're leaning more into that.
Did it lean more into the future opportunities enough for
you the robotic side of things, cause automotive remains a
bit of an overhang when it comes to China. But
thinking also about quantum and real future here, I.
Speaker 12 (28:18):
Think in Vidia is probably the company in the world
that runs the fastest that I've ever seen. I mean,
what they're trying to do is they're trying to align
hundreds of difference of suppliers. They try to design a
GPU on an annual cadence, and they're trying to update
their systems on an annual to eighteen months cadence, which
is unheard of. At the same time they're focusing on
quantum robotics, et cetera, et cetera. So I think in
(28:40):
Nvidia is running as fast as anything else I have
ever seen. And if I may mention that too, I
think quantum is probably going to slot into the Nvidia
ecosystem by saying they have CPUs, they have GPUs, and
at some point they'll have quantum somewhere in there too,
And you can just switch between those various sort of
compute layers.
Speaker 2 (28:58):
And that was what was interesting with IBM and AD's partnership,
the idea that almost you reference how these reasoning models work.
Speaker 3 (29:04):
While I'm thinking of GPT five.
Speaker 2 (29:05):
How it just pushes you towards the best possible model
for your question. We're going to have the best possible
computing standard for your general task.
Speaker 12 (29:14):
Yes, I fully agree with that, the best possible as
well as the cheapest and the fastest. And again I
mean as we think through the next few years, the
question is like how much more compute can a video sell?
And as truthfully continues to be a question of the
scaling laws, right, and we've seen with GROCK four that
compute still provides better and bigger models. We're going to
have black Wood clusters scaling in the next twelve months
(29:36):
or six to twelve months, and hopefully we'll be seeing
good results coming out of whatever comes after GROG four
and chat GPT five, and that's ultimately truly going to
drive the bus fund video in terms of demand and
in terms of the revenue outlook.
Speaker 2 (29:48):
So you think we should think more about Colossus, We
should think more about what Meta is doing in terms
of well it's scaling in Louisiana.
Speaker 3 (29:56):
Should we figure China out entirely.
Speaker 2 (29:58):
Considering the government wants to push its own homegrown domestic
talent anyhow.
Speaker 12 (30:03):
Yes, I think we should, and I would actually argue
what China is doing seems to be relatively rational. What
China is basically saying is that you're trying to sell
the chip that's based off of an architecture that's three
and a half years old. And secondly, we've also grown
a local AI architecture or a stack that has caught
up somewhat to that old chip. So unless you start
(30:26):
selling us a newer derivative of Blackwell, we don't really
maybe need you as much anymore as we needed you
three years ago, so that all seems to make sense.
And I don't know whether the licensing will work out
or not, but the interesting piece is if it does,
that's a big, big upside of time fun video because
Jens noted is a fifty billion dollar market and if
(30:47):
they're allowed to ship a derivative of the newest chip
their market share that should be enormous because there is
nothing in China that even can remotely compete with what
Nvidia has.
Speaker 2 (30:56):
Fifty four billion dollar forecast for physical thirty culture and
not even fracturing in China.
Speaker 3 (31:01):
And Daniel pilling A sounds capital. It's great to have
you on.
Speaker 2 (31:09):
All about Nvidio, But there are several of China's big
tech names also reporting earnings this week, including Ali Baba. Now,
the company has been stepping up it's AI efforts since
Chinese firm Deep Seat released its own R one model.
Remember Blomberg's Isabelle Lee joins us. Now this stock has
been on a tear this year at some forty two percent.
What more can it give in terms of where it
is on AI and cloud?
Speaker 13 (31:29):
I think it's like everything in tech, investors just want
more and more and more, and even if you beat,
it's still not enough. So for Alibaba, there's later to
report on Friday, and they're likely to really highlight their
AI strategy. But if you look at their peers, ten
Cent and by Do, they're likely to kind of disappoint
because it's really going to struggle or it may struggle
to show how it's big investments in AI will be
paying off. I mean, these companies ever since the chat
(31:51):
gip they came into the picture, they've invested billions of
dollars in AI, They've rolled out their llms, they've infused
therm flag your products with that, but making money has
been hard. Why because analysts are saying that Chinese users,
unlike Western counterparts, are reluctant to spend on premium paid
subscription models.
Speaker 2 (32:09):
What's also interesting is just everyone's trying to get on
every other game. They will want to be like the
megaaps to a certain extent, and you have a super
ropp with may Twon for example, that the phase competition
in food delivery, so.
Speaker 13 (32:21):
That too, and then I feel like if you look at,
for instance, the ten cents earning this month, they showed
revenue from that business including selling a services going more slowly.
By Do also when it comes to the cloud business
didn't expand fast enough, so I feel like, how will
you improve to your point? And if you look at
the contribution of AI, it's really going to dampen the
gross outlook of Alibaba, I mean, and it comes at
(32:41):
a time where their e commerce business is kind of
struggling compared to the arrivals. Consumption in China still remains
weak even as the economy slightly improves. So really lots
of moving parts for Alibaba. But in relation to Nvidia, yesterday,
we do have Bloomberg Intelligence saying that despite uncertainty over
Invidia's ability to provide H twenty chips, all these three Alibaba,
ten and by Doo are still well positioned, at least
(33:02):
in the medium term.
Speaker 3 (33:03):
In begs as Vali, we love our breaking it down,
thank you.
Speaker 2 (33:06):
Let's stick with Chinese firms, but shift gears to the
automotive industry. Hong Kong shares of electric vehicle maker byd
fell yesterday concerns about possible decreases in exports after Mexico
announced plans to tariff China.
Speaker 3 (33:19):
For Let's bring in. Bloomberg's Craig Trudell so.
Speaker 2 (33:21):
BYD on the day had had some issues around maybe
accessing Mexico, but boy, their sales in Europe going well,
what were they were up threefold while Tesla actually saw
sales drop forty percent.
Speaker 14 (33:33):
Yeah, we've seen BYD really put a dent in the
European car market and take advantage of the softness for Tesla,
maybe be a sort of factor in that softness where
you know, it's not been uncommon now for BYD to
actually outseell Tesla in this region, which would have been
(33:53):
unthinkable even just a year ago. This was a company
that was really sort of taking off in its home market,
and yet overseas sales it's still had a long way
to go. So we've seen some progress on the export business,
I think we have seen maybe a little bit of
a slowdown and some softness at home, And that's been
(34:16):
the real story this year where you know, for all
the sort of continued growth that we've seen out of BYD,
there's some real questions starting to emerge about can they
hit the full year sales figures that they were expecting
for twenty twenty five.
Speaker 2 (34:28):
Yeah, because what they've already sold two point one five
million in the first half of the year, but that's
only a less than forty percent of what they're aiming
to do for the full year, so having to discount
in some ways.
Speaker 14 (34:41):
Yeah, and I think it's really an ironic story in China,
right where you've seen so much state support for this industry,
so much attempts to sort of foster this really competitive
auto industry and particularly ev industry, and yet maybe we've
seen sort of some overdoing of it. Right we have
(35:01):
Chinese companies with by D maybe front and center, discounting
their lineup in really aggressive fashion. Concerns about suppliers not
getting paid in a timely manner, and you know, maybe
some concerns too about you know, just how long this
can continue if if we just see manufacturers, you know,
(35:21):
aggressively discounting, at what point is enough enough? And do
we see some companies go out of business? So you've
seen this kind of campaign in China and the part
of the government to do away with the you know
what people refer to as a price for and yet
some real reluctance on the companies to sort of sort
of take heed.
Speaker 2 (35:41):
There most creature dell On BYD, we thank you.
Speaker 3 (35:51):
We're also keeping an eye on Dell today.
Speaker 2 (35:53):
The stock is climbing ahead of earnings release of its
own after the close.
Speaker 3 (35:56):
Mesters looking for signs that the company.
Speaker 2 (35:58):
Will boost its forecast for AI server shipments has bring
in blooming intelligence analysts reugin Ho regin is interesting that
it's actually higher on the day when in video is down.
Often they move in sympathy with one another. But we're
expecting big things.
Speaker 15 (36:11):
Yeah, so there's a good thing. There are a couple
of things that's going on with Dell this morning. A
relative not only for AI but also for PCs, right,
you know, and video was more China related. Dell has
no China exposure as it relates to AI servers, and
I do expect them to report seven billion dollars in
AI server revenues. They guide you to about fifteen billion.
(36:33):
Street some of the bullcase on the street has guided
potentially guiding up to twenty billion. So that's the bogie
that the street is looking for.
Speaker 2 (36:42):
HP is an interesting read if you're thinking about PCs
and HP had really resilient PC strength. It's about the
AIPC apparently, and actually the commercial adoption of that seems
to be holding things up as well as Microsoft's upgrade
reigin is that how we read across from perhaps HP
to Dell.
Speaker 15 (37:00):
That's exactly it, so that that's the second tailwind for Dell.
Let's keep in mind that Windows eleven upgrade cycle is
actually going strong, and what we learned from the HP earnings,
callers had only fifty percent of actually upgraded to Windows eleven,
So that means we have an elongated Windows eleven cycle
(37:21):
that's going to benefit Dell. How eighty percent of their
revenues come from commercial PCs, and those are the customers
who need to upgrade, and Dell should be a beneficiary
from that upgrade cycle. And the PC business actually actually
has been more resilient. So HP results essentially tell us
that downside risk on the PC might be limited, at
(37:42):
least for the near term.
Speaker 2 (37:43):
The thing with Dell is everyone's very bullish on it.
We've got twenty two buys across the analyst zero cells,
and actually the price is pretty close to overall consensus
price targets. How much is already baked in to a
good set of numbers. Yeah, so.
Speaker 15 (37:58):
From well, let me tell you how much is baked in?
I think from a valuation perspective, fourteen times forward earnings.
If you look at Hpe, which is another enterprise IT company,
they're own trading around eleven times. So there was a
lot of good news baked into the shares from evaluation standpoint,
so sales upside is expected. Now I will want to
(38:23):
cautions some people heading into the print. There are a
couple of red flags. Other enterprise IT companies are not
benefiting from an uptick and spending net APP report the
last night, New Tanics, Cisco a couple of weeks back,
they all cautioned US federal spending as being weaker than anticipated.
(38:44):
Keep in mind that Dell has roughly about three percent
sales exposure to the US FED. So if there is
any pocket of weakness, that could be one and a
yellow flag that I want to raise to investors heading
into the print.
Speaker 2 (38:56):
So, Sarah, thank you, Lujin Hove, Senior analyst, Rubag Intelligence,
so appreciate having you on. Let's get back to the
key story of the day. Though it is in video
the world's most valuable company, but there are other companies
around it that tell us the hardware versus software story.
Let's bring in Bloomberg Intelligence Senior analyst man Leep saying, Look,
when we're anticipating Dell doing very well on AI servers,
this just speaks to the strength of AI adoption that
(39:17):
some are perhaps sleeping on a bit today.
Speaker 3 (39:19):
When it comes to in video's numbers.
Speaker 16 (39:21):
Yeah, and look, I mean when you look at the
overall ecosystem. You know, this quarter we saw Microsoft Azure
growth accelerating to thirty nine percent. Now Snowflake and Mango
deb outperforming. Just when you connect the dots, you can
see if Microsoft's AI consumption is going up and it's
reflecting in their cloud numbers, who is the user of
(39:43):
that cloud consumption. It's your Snowflake. And so from that perspective,
you know it's all intertwined. Dell doing well, Microsoft deploying
that on their clouds, Snowflake actually seeing an increment in
their product growth because companies are deploying more AI agents.
So you can see how the ROI question is getting answered.
(40:04):
When it comes to that aispan, It's like the.
Speaker 2 (40:06):
Whole food chain, isn't it. You've got the picks and
shovels of the end video and then got the user
of that. That's Microsoft that's going into then the use
case of Snowflake talk us through the Snowflake numbers. Because
the shows are more than twenty percent. It was clearly
some anxiety built into these numbers that we were going
to see competitors take a bit of an edge on
a GenTech.
Speaker 16 (40:24):
I mean, look, traditionally database businesses are very sticky. It's
just right now we are in an environment for everyone
is trying to figure out what gets disintermediated by llms
and AI agents, and all the software companies were getting
beaten up because everyone thought llms can do everything that
these software products do. Well, guess what if you're trying
(40:45):
to deploy an AI agent, llms don't have the data
that you want to customize your chat pot on. Snowflake
does or you know, data breaks does, and that's where
Mango dB does, and all these database companies are what
you need to custom your chat pot experience to your
particular use case. And I think that's what you are
seeing in the numbers. You're seeing them sequentially outperformed.
Speaker 3 (41:08):
I mean, can we look at Manga DV for a second.
Speaker 2 (41:11):
Two days you pointed this out, it is almost fifty percent.
It is the best two day run for the company
on record. So they really managed to push back also
on that m I narrative that perhaps people aren't getting
any bang for the buck when it comes to using
AI pilots as well.
Speaker 16 (41:26):
When it comes to valuation multiples, what we have seen
traditionally is companies that grow at thirty percent will trade
at twenty times sales. But once that growth comes down
below twenty percent, then multiple goes from twenty times to
five times.
Speaker 3 (41:39):
Wow.
Speaker 16 (41:40):
So the multiple compression is always huge and software and
that's why the top line growth is so important, I
mean snowflake. Going back again to thirty percent plus growth,
you will see a multiple expansion. It's not as if
the story changed completely, but just the multiple that investors
put on these companies growing over thirty percent versus under
twenty percent, it's huge.
Speaker 2 (42:00):
But let's go to say, then a multiple on Nvidia,
it's not that high. If you're thinking about a Blend
and Ford version of the price to earnings estimated price
to earnings, it's one of like thirty three times.
Speaker 4 (42:11):
Yeah.
Speaker 16 (42:11):
And look with Nvidia, the biggest concern is it's not
a recurring business. Although they are proving that. You know,
they can keep releasing a new architecture every year and
it becomes a recurring refair cycle when it comes to
their data center chips. But that's the biggest I would
say risk is Right now, they are growing over fifty percent.
They said Hyperscalers will increase their CAPEX by fifty percent
(42:33):
next year, so that translates into similar growth for next year.
But it's very hard to sustain that. I mean, do
you think capex will keep growing fifty percent in perpetually? No,
And if your largest customers are for Hyperscalers, then that's
a big risk. And that's what you have to model
for two years from now, three years from now.
Speaker 2 (42:51):
Man Nave saying he's always modeling for us from Bloomberg Intelligence.
Speaker 3 (42:54):
We thank him. That does it to this edition of
Bloomberg Tech.
Speaker 2 (42:57):
Do not forget to check out our podcast kind it
on the terminal as well as online on Apple, Spotify,
and iHeart this is Bloomberg Tech. Mm hmmm mmmmmmm
Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
from coast to coast with Caroline Hyde in New York
and Vlow in San Francisco.
Speaker 2 (00:21):
This is Bloomberg Tech coming up in video. The world's
most valuable company underwhelms on earnings as investors digest decelerating growth.
This as its CFO weighs in on the Trump administration's
fifteen percent commission on.
Speaker 3 (00:34):
Chip sales, telling us the.
Speaker 2 (00:36):
Plan needs to be codified first, and we break down
other earnings from the tech world, the Snowflake HP gaining
on results and Dell on deck after the bell. But
first are we check in on this market, which of
course is dragged lower by one key stock we're looking
in in video, off by nine tenths of a percent
looking after ours trade yesterday, it was more than three
percent lower, as people just digest a company that is
(00:59):
now revenue in with.
Speaker 3 (01:01):
Both of fifty percent. But it's not a two.
Speaker 2 (01:03):
Hundred and sixty percent growth that we were used to
in previous years. And I'm interested in the focus on
China in particular.
Speaker 3 (01:10):
This is a company that.
Speaker 2 (01:11):
Has no h twenty sales for fiscal second quarter, no
sales baked in for the third quarter, but there is
opportunity there. Just listen to what jensup Huang said on
the call.
Speaker 4 (01:20):
So I think the you know, the opportunity for us
to bring Blackwell to the China market is a real possibility.
And so we just have to keep advocating the sensibility
of and the importance of American tech companies to be
able to lead in win the AI.
Speaker 2 (01:42):
Race for more bluebergs Ian King, who covers semiconductors, who
was up late last night, does this with us. Now, Look,
China is the big overhang and why some think that
perhaps the numbers were a little light, largely because we
didn't know whether to factor in Chinese.
Speaker 3 (01:57):
Revenue or not.
Speaker 5 (01:58):
I yeah, I mean they said that in the release
and there was nothing China related in there in terms
of the data center stuff. Then on the call they
gave us a slightly extended picture and said, look, if
everything goes okay, if everything gets sorted out, we might
have up to five billion dollars worth of Chinese revenue.
(02:18):
And if you add that back into their forecast, then
this is an amazing quarter for them. So there's a
lot of moving parts.
Speaker 2 (02:25):
There is and it feels as though it's a knee
jerk to send the shares lower, many would feel the
analyst community out there saying, look, strip this out.
Speaker 3 (02:33):
And this was actually quite a rich beat.
Speaker 2 (02:35):
But in you got even more detail from the CFO,
in particular collect cross walk us through what she said
about that fifteen percent stake taking that the government wants
on future H twenty sales.
Speaker 5 (02:47):
Yeah, I mean, I think it's important to frame this appropriately.
This isn't some kind of political stand or dispute with
the Trump administration. What she was doing was what investors
would like to do, which is to you know, for
sheer duty, which is saying, look, there is no mechanism
by which I can give fifteen percent of this China
(03:08):
related revenue to the government as statutes currently exist. Something
will have to happen before I can do that. So
she was really just making a point and reassuring investors that, look,
we are running this company properly according to the rules
that exist.
Speaker 2 (03:24):
So give us the detail on whether they do or
do not have licenses to certain Chinese customers yet in
the bag, and whether or not that two to five
billion dollars worth for the quarter coming could become a
reality in.
Speaker 5 (03:38):
Yeah, and again, I mean they were very clear to say, look,
we've got a few licenses right now, but there are
so many geopolitical variables in the mix here. What does
Beijing want? What does Washington really want? Will there be
more licenses? Will they be given quickly? And all of these,
to be fair to video, are not knowable right now
because as we know, things change on a daily basis.
(03:59):
With a social media post, the whole world changes. So
I think you know, when people calm down and look
at what we said, they'll perhaps realize that this is
something which you know, this is a company taking a conservative,
perhaps measured approach to it and collect told us and
that was a message that was given to investors. Look,
we think we'll get some of this where you know,
we're not saying this has all gone away, but we
(04:20):
just don't know when and how much. So we're going
to be careful, going.
Speaker 2 (04:24):
To be careful, Ian King always careful with this. Who ads,
we appreciate it. Let's get an investor. Take someone who's
dug deep onto the detail. Is Nazi Tengler, CEO CEO
at Leffa Tengo Investments. You've been taking some money off
the table with Vida recently, You've still got significant exposure.
And Natzi, what's so interesting is this question mark on China.
What's your read? Because again and again someone quit saying
(04:45):
there's a fifty billion dollar opportunity here.
Speaker 6 (04:49):
Yeah, thanks for having me, Caroline, and I agree with
Ian on just about everything he said. I mean, China's critical,
of course, but they already took the charge last quarter,
and so the big disappointment overnight was they came in
below the whisper number, but their guidance did not include
China at I think it was fifty four billion, and
(05:09):
the whisper number was at fifty five. So if you
back out China from the whisper number, they actually beat
not only the street but the whisper number on guidance.
So I'm giving it a triple play. A beat beaten rays,
but I think it doesn't make I mean, if this
was a disastrous report, the stock would be off significantly
more than it is. We trimmed some at one seventy nine.
(05:29):
That's where it's trading right now. We put it to
work in some other names like Palanteer and CrowdStrike, and
we got some good execution there, but it's still four
percent of our portfolios and a candidate for our twelve
Best Ideas portfolio. So I think that the report was excellent.
Decelerating growth is something that Microsoft dealt with with Azure
early days, from ninety percent now down to thirty. I mean,
(05:52):
I don't think Nvidious valuation is even as expensive as
Microsoft if you look at it on price earnings to
growth basis below one time. So I think this is
an opportunity.
Speaker 2 (06:04):
I mean, to that point, when a four point four
trillion dollar company is still delivering in excess of fifty
percent revenue and earn ex for the share growth, it's
pretty extraordinary.
Speaker 3 (06:12):
But the opportunity still is so extraordinary.
Speaker 2 (06:15):
I think Jensen Hung did a very good job at
reminding us four trillion dollars is how big AI infrastructure
spend could be alone, but he wouldn't really give us
an amount of how much his take is of that market.
Speaker 3 (06:27):
Can you do the math on that a little bit?
Speaker 7 (06:29):
Well?
Speaker 6 (06:29):
Yeah, I mean, if you look at at earnings growth
expectations for twenty twenty fiscal year twenty twenty five, it's
one hundred and thirteen percent growth. For twenty six it's
fifty percent growth, so you if you factor that in
to the total numbers, I mean, this could be an
incrementalion one hundred billion dollars in revenues over the next
(06:50):
twelve months. Don't forget too, Sovereign is starting to pick up.
That was about twenty billion euro in expectations. And then
you've got the buyback putting a floor under the stock.
They announced a sixty billion dollar buyback. So the market
share take from Nvidia continues to remain or grow. And
what was interesting to me today is that you're seeing
(07:12):
AMD and Broadcon up on the news, but in Vidia
down slightly.
Speaker 2 (07:16):
It's really interesting actually that all the Chinese names are
up on the news as well. You just think of
what's happening with Smick, what you're having with other key
players who are building out AI accelrators for China.
Speaker 3 (07:27):
AMD.
Speaker 2 (07:28):
It really reminds me of AMD because they'd beat and
in any ways they raised, but they couldn't give clarity
on the future of China and they were punished because
of that.
Speaker 3 (07:37):
Do investors just need to understand.
Speaker 2 (07:39):
That it's very difficult to get real clarity on China.
Speaker 6 (07:42):
Yeah, and Caroline, remember too, there are investors and then
there are the hedge funds and the algorithms, and the
latter tend to drive the volatility. Investors like me look
at opportunities like this and say, I want to be
in this for the long term. So last summer we
picked off in video at one hundred dollars a share.
Remember last summer people were saying the story was over.
It's not going to continue. The hyper six scalers can't
(08:05):
continue to spend capex at this level. And not only
did they do that, but many of them increase their
capex budgets. So if you think about data center, it's
twenty nine percent growth, right, But China, he's saying, could
grow at fifty percent. So to answer your previous question,
China's growing faster than the rest of the world. But
twenty nine percent is unlikely to be the growth number.
(08:27):
It's likely to be closer to thirty to forty percent
in data center growth for Nvidia in the coming year
or two. So I think again, as I've said, you
want to take advantage of these periods of confusion or
you know, melancholy around the stocks future performance and add
to your holdings if you own it, and initiate if you.
Speaker 2 (08:48):
Don't, okay, and then the real opportunity is the fact
that the cadence of innovation keeps them coming. You've got
Blackwell Blackwell Ultra already in the FABS according to the CFO.
So is the Ruben an architect show. Why does that
take us?
Speaker 7 (09:05):
Yeah?
Speaker 6 (09:05):
I mean I think it takes us to quantum and
then some I think, you know, robotics. We've launched a
new fund that we're incubating at the firm and it's
called New Ara Thematic and it's all of the above.
So you know, it's not just nuclear, it's quantum, it's robotics,
because photonics. So this is an area that investors need
(09:26):
to be sure they're not underestimating. You know, I heard
the naysayers overnight it's decelerating the growth. There's not ai
trade is over. It's not even close to over. We're
in the early stages, and I think you want to
be continue to be looking around and look for those
that are going to get left behind. And there will
be companies I believe, like Adobe that will probably get
left behind. But then you want to focus on the
(09:49):
winners and you don't want to shy away from them
too early. And this is I think Reuben is the
next stage Blackwell had. We haven't even realized the staggering
demand for Blackwell that Jensen Wong spoke about last night.
So yeah, strap in it's going to be vol little
bit volatile to the upside.
Speaker 2 (10:08):
It's interesting yesterday we had Jamigambetta of IBM on talking
about their deal while that partnership with AMD, the fact
that they're looking in the future of soup coop and
computing twinning with the future of quantum as well. You're
talking about that as an area of growth. Where are
these companies, though, managing to pick away at in Video's
chants really with inference? Because yes, they are the chip
(10:30):
of choice, they are the architecture of choice when it
comes to training models. Are they really the only game
in town when it comes to inference?
Speaker 3 (10:37):
No, I mean I think not.
Speaker 6 (10:39):
But that doesn't mean it's just like, you know, maybe
you could argue that Microsoft sort of pioneered cloud computing.
Larry Ellison might disagree with us from Oracle, but but
you can. But you know, you see eventually they that
their growth slowed, but there's still a dominant provider and
AWS obviously would disagree with me that as well. But
(11:01):
so I think you have to step back look at
where the marginal erosion is coming from. Yes, we know
Apple and Microsoft are developing your own chips. That's that's fine.
I don't think that's going to change the dynamic. It
goes back to Jevon's paradox. So when we had the
deep Seek news, you know, everybody sold the stocks. I
(11:24):
happened to be on air that day and said, listen,
this is an opportunity because Morbi gets more, and so
I think this is I mean, that's that's really the story.
That they can lose share and still be growing at
rapid pace. And the margins. We haven't even talked about
the margins. You know about seventy percent. I mean, I
don't know what there is to complain about.
Speaker 2 (11:46):
Instagram add a sixty brilliant lot of stock buyback, I mean,
and still the stock cast away some Nancy tang of
lef at Tangra Investments. It's always so good Tavy on
the show, Thank you very much. Indeed wearing a leather
an ode to Jensen that I mean, well, coming up
more in Nvidia as China trade tensions. Of course, they're
weighing on earnings. We're going to speak with Teresa Payton
for Alis Solutions CEO on the China AI landscape.
Speaker 3 (12:09):
This is Bloomberg Tech.
Speaker 2 (12:21):
Check in on those Nvidia shares we're off by let's
call it nine ten percent for a more than four
trillion dollar stock. That's thirty eight billion that you've just
wiped out in terms of market capitalization in Vidia's business.
I mean the overhang has been China clouding the area
because of trade tensions. That the company now saying that
unconventional plan of course by the Trump administration to charge
(12:42):
a fifteen percent commission on AI chip sales to China
when it hasn't progressed actually beyond its early stages. Let's
check in what the CFO, Collect Crest told us earlier.
She said to Bloomberg, I don't have to do this
fifteen percent until I see something that is a true
regulatory document. Let's get more from New Meg's executive editor.
Speaker 3 (13:01):
Mike Shephard.
Speaker 2 (13:02):
You really sit at the intersection of politics and technology mine.
So the ball is in the administration's court. They've told
us that they're going to take fifteen percent. Well, where's
the regulatory approval here?
Speaker 8 (13:12):
Well, that's really the question of the hour here in Washington,
in Silicon Valley and on Wall Street. When are we
going to see the fine print on this? And as
Ian noted at the top of the hour, the company
is proceeding very carefully on this front. It doesn't want
to commit without seeing something in writing, because the terms
(13:33):
could even change, especially with this administration halfway through. So
they want to make sure they see this imprint and
if they understand the legal and regulatory mechanism under which
they would make these payments to the US Treasury. Remember,
it's not quite a tax, it's not quite an import fee.
It's really kind of hard to figure out how they
(13:53):
would define it. And in a way it is holding
the company up a little bit in terms of making
those sales once again of the age twenty AI chip
to Chinese customers. They don't want to proceed too fast,
as a CFO suggest that they had the right to do.
They have some of the export licenses in hand. But
then again, if they proceed without actually giving the government
(14:16):
a cut, that does risk angering the administration. And this
is a government that Jensen Wong, the CEO of Nvidia,
has tried very hard to cultivate good terms with He
is visited with President Donald Trump a number of times,
and the two men have built this report. So they
want to make sure they are treading carefully here, Caro,
because they're playing the long game. They are looking ahead
(14:38):
to how Trump can help them in China.
Speaker 2 (14:41):
And I think Jensen and his CFO are trying to
really remind the administration just how much money's left on
the table. Up to five billion dollars worth could be
made in H twenty sales in this next quarter alone.
They're talking about the fifty billion dollar opportunity of China
sales if they can get a modified Blackwell architecture the country.
And that really was what Jensen was talking about, his
(15:02):
hopes to talk to Trump about that, and actually the administration,
in fact, President Trump has put messages out posted on
his truth social about the fact that he expects some
sort of request.
Speaker 8 (15:14):
Yes, and he is signaling his openness to granting that
permission to the company to sell a scaleback version of
the market leading Blackwell chip to Chinese customers. Now, again,
we would expect the president to insist on getting his cup.
Would it be fifteen percent, would it be more? What
other demands might he put there, But again, this would
(15:36):
be very much in tune and in line with what
the administration is doing, not only with Nvidia, but also
in a way trying to, I guess, restore some of
those economic and political ties with China that we've seen
bruised over the years.
Speaker 2 (15:49):
Mike Shephard, we thank you so much, Bloomberg. Let's get
more insight now. Teresa Payden's with us for Tallis Solution CEO,
former White House Chief Information Officer. At the moment, we're
seeing Chinese rivals gain on the back of this lack
of Nvidio competition.
Speaker 3 (16:04):
Right now, what do you make of it?
Speaker 9 (16:07):
Well, all I know is we're going to have to
figure out there's a long race here and a short
race here, and we have to secure not only our
global leadership but also our intellectual property. And that's really
some of the underpinning of the discussions here of is
there a fifteen percent? Is there not a fifteen percent?
What does this mean from an export control? So a
(16:28):
lot more to come on this, but obviously China is
amping up their part in the race, trying to win
the global war on who's going to dominate AI?
Speaker 3 (16:38):
What is the IP risk.
Speaker 9 (16:41):
Well, the IP risk. So even though we're talking about
sending a modified chip over to China, in my opinion,
based on my years of experience, it's like handing over
the keys to your R and D lab and saying
just be in the small QA lab, not in the
bigger lab, and don't look around. You wouldn't hand the
keys to your R and D lab to your competitor.
(17:02):
And China is our global competitor here for this technology.
So that really what we're thinking about here is how
could they get access to these chips and perhaps reverse
engineer everything from performance to how things behave. Really, you
just don't know what they're going to be able to
do once they have their hands on all these chips.
Speaker 2 (17:21):
Teresa, let's say you're back as the White House Chief
Information officer. What are you advising President Trump as to
whether Jensen should have access to the Chinese market.
Speaker 9 (17:32):
Well, I think this is a tough one because the
private sector does have the right. You know, companies do
have the right to sell their goods and services all
around the globe. We don't have a blockade on selling
technology and other goods and services to China. So this
is a very delicate balance here between a White House
administration and a private sector organization. And so really what
(17:55):
you have to do is look at the laws we
already have on the books, and then so what kind
of safeguards is this US based company going to follow
based on the laws on the books, What types of
inspection processes, what types of control processes. There is a
playbook for doing this, even though this technology is new,
and so we have to look at this playbook. The
(18:16):
question is is whether or not new rules and regulations
are going to be codified. And I think that's the
open question that in Nvidia is having to deal with.
Speaker 2 (18:25):
In Vidia put in its ten Q that it could
be exposed to potential legal implications because of this fifteen
percent issue.
Speaker 3 (18:36):
What would it face in terms of legal issues?
Speaker 9 (18:40):
Well, if we end up codifying some type of a
new barrier to the market in China or enforcing one
of the existing regulations in a way that hasn't been
enforced before, then in Video would have to make the
decision of am I now blockaded from actually selling to China?
Or do I have a lot of burdens on me
(19:01):
that maybe don't exist for other companies who are selling
technology to China. Remember, you've got big tech who's in
China's social media is in China. It's not just Nvidia
who is selling goods and services to China. And so
they may decide, well, this is an undue burden placed
on us. So they may decide to take on a lawsuit,
or they may find themselves answering to for example, Siphius.
(19:24):
As you know, TikTok Usa has had a lot of
legal challenges in legal bills as it relates to how
they operate and sifias interpretations of how they operate. So
I think they're just kind of looking at past cases
president precedent and then also looking at the president's remarks
as a potential future precedent and deciding that there could
(19:45):
be a risk for a long protracted legal battle.
Speaker 3 (19:49):
Theresa.
Speaker 2 (19:50):
We heard from Jensen Wang there's a fifty billion dollar
opportunity in this year alone in China, but push out
five years. Does that exist at the rate that Chinese
government trying to push their own companies away from the
US tech stack.
Speaker 9 (20:04):
Yeah, it may not exist in the future. That is
a tough one. All I can tell you is from
the frontlines of working with companies who have done business
with China. It is a very tricky proposition, especially as
it relates to cutting edge technologies, whether it's sort of
like clean energy, whether it's computer technology, and it's very
(20:28):
difficult and challenging to really understand what the regulatory environment
is going to be and the protection for your intellectual property.
Speaker 6 (20:34):
You know.
Speaker 9 (20:34):
Kind of the big elephant that we're not discussing in
having all of these conversations is we have a new
more detailed report from the FBI on Salt Typhoon, and
the findings from that report are stunning. We're talking eighty
countries were impacted, not just the United States, and the
access to metadata, phone calls and other information. You know,
(20:56):
this is one of those things in China denies that
they had any part in this, but this is one
of those things where we're seeing sort of this vacuum
cleaner effect of China basically vacuuming up intellectual property data
information to use it for economic espionage.
Speaker 2 (21:12):
That was a breach that really hit the major US
carries in particular Verizon and AT and T and T Mobile.
Teresa Payton, thanks for reminding of us off it for
Alice Solutions and it's time now for Talking Tech and
first Up d D Global will pay seven and forty
million dollars to resolve a sharehold or lawsuit concerning it's
fort twenty twenty one USIPO Now, an offering that not
only attracted into its scrutiny from Beijing also preceeded the
(21:35):
company's dlisting. The right Haling Giant announce the deal Thursday
alongside its second quarter results. Plus Taiwan, the prosecutors have
charged three people for allegedly stealing trade secrets from TSMC,
alleging that proprietary tech was stolen to help improve a.
Speaker 3 (21:49):
Take Tokyo Electron Now.
Speaker 2 (21:51):
Taiwan is seeking jail terms for at least seven years
for the Trio, citing threat to the islands, national security
and delivery hero cub It's earnings guidance for the full
year this after a week dollar in South Korean one cut,
interprofit and free cashlow look. The company saw revenue rise
nearly eight point four billion dollars in the first half,
but faces increased competition for rivals in Asia and the
(22:11):
Middle East. And coming up more on Nvidia, let's take
a look at the stock and other global chip exposed names.
Shine Light on ASML. It is lower in sympathy. That's
the European hip equipment maker can look on though. This
is the upstart in China trying to eat in on
AI accelerators in that country. We're p fifteen percent record high.
It has doubled its market cap in this month alone.
Speaker 3 (22:33):
This is Bloomberg Tech.
Speaker 2 (22:44):
Welcome back to Bloomberg Tech. We take a look at
the earning story. Because benchmark's relatively flat, we're actually higher
just on the likes of the Nasdaq one hundred. I'm
looking at what's happening with Snowflake having an absolutely brilliant
day best place that's November twenty twenty four.
Speaker 3 (22:58):
We're up eighteen percent.
Speaker 2 (23:00):
Are showing that the desire for Agenderki is working in
their business right now.
Speaker 3 (23:04):
Revenue grow thirty two percent.
Speaker 2 (23:05):
They beat and they raised as well in terms of
their forward looking guidance. The analysts across the street really
liking the strength coming from this particular software company that
many had anxiety perhaps that new AI startups the spell
to eat.
Speaker 3 (23:17):
Into the business model.
Speaker 2 (23:18):
No, no, they're managing to show real growth here and
retention of customers. Move on though, and we're all a
little bit lackluster about what happened with Nvidia last night.
Speaker 3 (23:26):
Look, this is a company that delivered fifty six percent
revenue growth for their fiscal second quarter.
Speaker 2 (23:30):
Fifty four billion dollars is promised for the fiscal third quarter,
and that's not including any Chinese revenue.
Speaker 3 (23:35):
That's only upside.
Speaker 2 (23:37):
But this is already a company that was very close
to its record highs were off by one and a
quarter percent, but off of those lows in the pre
market trade, here is the reaction on the results from
a few analysts on Blueberg TV on Invidia.
Speaker 10 (23:49):
When we have a beat and stocks don't go up
or as hot stock like in video doesn't go up
where it starts to roll over a little bit, that
suggests to a trader and a technical analyst that everyone
who might own the stock already does. But we're nowhere
near there yet.
Speaker 11 (24:07):
The reason the stock has recouped some of those losses
and I think will rule retain strength is because of
that guide. For Q three, it was very strong. It's
really all about Q three, and it's because Blackwell and
Blackwell Ultra are starting to ship, and if you know
that story, you're not selling this stock right now.
Speaker 7 (24:27):
They were very good about signaling to the market that
the chinahovertainning could continue and that has about a five
billion dollar impact in the next quarters numbers. So, having
said that, fifty four billion represents a very strong showing,
which means they expect hyperscalers and other parts of the
world to pick up that slack.
Speaker 2 (24:46):
More reaction for you now from an investor. Daniel Pilling's
with US Sans Capital Ponio manager.
Speaker 3 (24:51):
So why is the stock down?
Speaker 12 (24:55):
Well, I think there's a few reasons. One stock had
a good run into the quarter, and two it probably
slightly a missed sort of the byside expectations and it
was mainly around I think China. And then secondly black
Hole is still a little bit supply constraints, so that
ramping it as fast as they can, but I guess
the ramp wasn't fast enough. But I would say though
to us, those were pretty strong results and maybe one
(25:18):
interesting fact to look at if you take out the
China revenues completely out of the data center, then the
rest of the world for them actually accelerated from about
sixty ish percent growth in Q one this year to
a guide that eighty percent growth in Q three this year.
So actually in Nvidia X China has been accelerating, which
which I think is really strong.
Speaker 3 (25:38):
I think that's a really interesting take. We had Vladimir
Galibov from MDA.
Speaker 2 (25:42):
Yesterday talking about how Europe is stopped starting certain countries.
You've got them up really going hard on sovereign AI,
other countries less. So we got told twenty billion dollars
for sovereign AI. Is that strong enough for you, Daniel, Yeah, I.
Speaker 12 (25:56):
Think that's a great number. But the truth of the
game is still within high scalers and AI startups. I
think that's where the real action is for now, and
it's a much much much larger number, and I think
the interesting aspects there are one as Jensen noted that
reasoning AI is so much more compute intensive. He quoted
one hundred two thousand times more on the one inside
(26:17):
and then on the other inside though it's also much
better so it reduces hallucinations. And he also mentioned that
the return and invested capitally received from buying these ships
is phenomenal.
Speaker 8 (26:26):
Right.
Speaker 12 (26:26):
He mentioned if you invest three million today, you can
make thirty millions in token revenues in short order. So
I think that's where the real action is as of today,
and is.
Speaker 2 (26:34):
That why the real action is talking about where Rubin
takes us the cadence of innovation over at in video.
Speaker 12 (26:40):
I think so. I think Ruben will again that the
most important thing that Nvidia is doing is they're increasing
the performance per what and they noted that it costs
about fifty billion dollars for each one giga what data center.
Ruben will again improve that performance per WHAT, which means
that Nvidia's competitive situation improves on the one inside, but
(27:00):
also on the other hand side, you can do more
computer you can build better models with Ruben, which means
it's a self fulfilling prophecy a little bit because whatever
comes out of these models again have higher IQ and
effectively bigger and better apps.
Speaker 2 (27:13):
You're not worried in any way about Amazon's trainium, about
Google's TPU, the fact that the customers are innovating themselves.
Speaker 12 (27:22):
Yeah, no, I think it's our job to worry sometimes.
But we've looked at this in detail out and I
think the idea here is again to say, well, so
here's in Vidia. They're building a giant system of a company.
They have both networking CPUs, GPUs, hundreds of difference of
suppliers and they put the software on top. They say,
and we believe in this that they are the best
performance for one supplier in the industry bar nobody else.
(27:46):
And as long as that it's true, something like Trainium
cannot compete simply because they don't have the scale, they
don't have the system, and they don't have the software.
So in Vidia to us remains the winner in the sense.
Speaker 2 (27:58):
And that's what's interesting about and what I'm trying to say, Look,
we are more than just hardware in many ways, we
are the one stop shop, and we're leaning more into that.
Did it lean more into the future opportunities enough for
you the robotic side of things, cause automotive remains a
bit of an overhang when it comes to China. But
thinking also about quantum and real future here, I.
Speaker 12 (28:18):
Think in Vidia is probably the company in the world
that runs the fastest that I've ever seen. I mean,
what they're trying to do is they're trying to align
hundreds of difference of suppliers. They try to design a
GPU on an annual cadence, and they're trying to update
their systems on an annual to eighteen months cadence, which
is unheard of. At the same time they're focusing on
quantum robotics, et cetera, et cetera. So I think in
(28:40):
Nvidia is running as fast as anything else I have
ever seen. And if I may mention that too, I
think quantum is probably going to slot into the Nvidia
ecosystem by saying they have CPUs, they have GPUs, and
at some point they'll have quantum somewhere in there too,
And you can just switch between those various sort of
compute layers.
Speaker 2 (28:58):
And that was what was interesting with IBM and AD's partnership,
the idea that almost you reference how these reasoning models work.
Speaker 3 (29:04):
While I'm thinking of GPT five.
Speaker 2 (29:05):
How it just pushes you towards the best possible model
for your question. We're going to have the best possible
computing standard for your general task.
Speaker 12 (29:14):
Yes, I fully agree with that, the best possible as
well as the cheapest and the fastest. And again I
mean as we think through the next few years, the
question is like how much more compute can a video sell?
And as truthfully continues to be a question of the
scaling laws, right, and we've seen with GROCK four that
compute still provides better and bigger models. We're going to
have black Wood clusters scaling in the next twelve months
(29:36):
or six to twelve months, and hopefully we'll be seeing
good results coming out of whatever comes after GROG four
and chat GPT five, and that's ultimately truly going to
drive the bus fund video in terms of demand and
in terms of the revenue outlook.
Speaker 2 (29:48):
So you think we should think more about Colossus, We
should think more about what Meta is doing in terms
of well it's scaling in Louisiana.
Speaker 3 (29:56):
Should we figure China out entirely.
Speaker 2 (29:58):
Considering the government wants to push its own homegrown domestic
talent anyhow.
Speaker 12 (30:03):
Yes, I think we should, and I would actually argue
what China is doing seems to be relatively rational. What
China is basically saying is that you're trying to sell
the chip that's based off of an architecture that's three
and a half years old. And secondly, we've also grown
a local AI architecture or a stack that has caught
up somewhat to that old chip. So unless you start
(30:26):
selling us a newer derivative of Blackwell, we don't really
maybe need you as much anymore as we needed you
three years ago, so that all seems to make sense.
And I don't know whether the licensing will work out
or not, but the interesting piece is if it does,
that's a big, big upside of time fun video because
Jens noted is a fifty billion dollar market and if
(30:47):
they're allowed to ship a derivative of the newest chip
their market share that should be enormous because there is
nothing in China that even can remotely compete with what
Nvidia has.
Speaker 2 (30:56):
Fifty four billion dollar forecast for physical thirty culture and
not even fracturing in China.
Speaker 3 (31:01):
And Daniel pilling A sounds capital. It's great to have
you on.
Speaker 2 (31:09):
All about Nvidio, But there are several of China's big
tech names also reporting earnings this week, including Ali Baba. Now,
the company has been stepping up it's AI efforts since
Chinese firm Deep Seat released its own R one model.
Remember Blomberg's Isabelle Lee joins us. Now this stock has
been on a tear this year at some forty two percent.
What more can it give in terms of where it
is on AI and cloud?
Speaker 13 (31:29):
I think it's like everything in tech, investors just want
more and more and more, and even if you beat,
it's still not enough. So for Alibaba, there's later to
report on Friday, and they're likely to really highlight their
AI strategy. But if you look at their peers, ten
Cent and by Do, they're likely to kind of disappoint
because it's really going to struggle or it may struggle
to show how it's big investments in AI will be
paying off. I mean, these companies ever since the chat
(31:51):
gip they came into the picture, they've invested billions of
dollars in AI, They've rolled out their llms, they've infused
therm flag your products with that, but making money has
been hard. Why because analysts are saying that Chinese users,
unlike Western counterparts, are reluctant to spend on premium paid
subscription models.
Speaker 2 (32:09):
What's also interesting is just everyone's trying to get on
every other game. They will want to be like the
megaaps to a certain extent, and you have a super
ropp with may Twon for example, that the phase competition
in food delivery, so.
Speaker 13 (32:21):
That too, and then I feel like if you look at,
for instance, the ten cents earning this month, they showed
revenue from that business including selling a services going more slowly.
By Do also when it comes to the cloud business
didn't expand fast enough, so I feel like, how will
you improve to your point? And if you look at
the contribution of AI, it's really going to dampen the
gross outlook of Alibaba, I mean, and it comes at
(32:41):
a time where their e commerce business is kind of
struggling compared to the arrivals. Consumption in China still remains
weak even as the economy slightly improves. So really lots
of moving parts for Alibaba. But in relation to Nvidia, yesterday,
we do have Bloomberg Intelligence saying that despite uncertainty over
Invidia's ability to provide H twenty chips, all these three Alibaba,
ten and by Doo are still well positioned, at least
(33:02):
in the medium term.
Speaker 3 (33:03):
In begs as Vali, we love our breaking it down,
thank you.
Speaker 2 (33:06):
Let's stick with Chinese firms, but shift gears to the
automotive industry. Hong Kong shares of electric vehicle maker byd
fell yesterday concerns about possible decreases in exports after Mexico
announced plans to tariff China.
Speaker 3 (33:19):
For Let's bring in. Bloomberg's Craig Trudell so.
Speaker 2 (33:21):
BYD on the day had had some issues around maybe
accessing Mexico, but boy, their sales in Europe going well,
what were they were up threefold while Tesla actually saw
sales drop forty percent.
Speaker 14 (33:33):
Yeah, we've seen BYD really put a dent in the
European car market and take advantage of the softness for Tesla,
maybe be a sort of factor in that softness where
you know, it's not been uncommon now for BYD to
actually outseell Tesla in this region, which would have been
(33:53):
unthinkable even just a year ago. This was a company
that was really sort of taking off in its home market,
and yet overseas sales it's still had a long way
to go. So we've seen some progress on the export business,
I think we have seen maybe a little bit of
a slowdown and some softness at home, And that's been
(34:16):
the real story this year where you know, for all
the sort of continued growth that we've seen out of BYD,
there's some real questions starting to emerge about can they
hit the full year sales figures that they were expecting
for twenty twenty five.
Speaker 2 (34:28):
Yeah, because what they've already sold two point one five
million in the first half of the year, but that's
only a less than forty percent of what they're aiming
to do for the full year, so having to discount
in some ways.
Speaker 14 (34:41):
Yeah, and I think it's really an ironic story in China,
right where you've seen so much state support for this industry,
so much attempts to sort of foster this really competitive
auto industry and particularly ev industry, and yet maybe we've
seen sort of some overdoing of it. Right we have
(35:01):
Chinese companies with by D maybe front and center, discounting
their lineup in really aggressive fashion. Concerns about suppliers not
getting paid in a timely manner, and you know, maybe
some concerns too about you know, just how long this
can continue if if we just see manufacturers, you know,
(35:21):
aggressively discounting, at what point is enough enough? And do
we see some companies go out of business? So you've
seen this kind of campaign in China and the part
of the government to do away with the you know
what people refer to as a price for and yet
some real reluctance on the companies to sort of sort
of take heed.
Speaker 2 (35:41):
There most creature dell On BYD, we thank you.
Speaker 3 (35:51):
We're also keeping an eye on Dell today.
Speaker 2 (35:53):
The stock is climbing ahead of earnings release of its
own after the close.
Speaker 3 (35:56):
Mesters looking for signs that the company.
Speaker 2 (35:58):
Will boost its forecast for AI server shipments has bring
in blooming intelligence analysts reugin Ho regin is interesting that
it's actually higher on the day when in video is down.
Often they move in sympathy with one another. But we're
expecting big things.
Speaker 15 (36:11):
Yeah, so there's a good thing. There are a couple
of things that's going on with Dell this morning. A
relative not only for AI but also for PCs, right,
you know, and video was more China related. Dell has
no China exposure as it relates to AI servers, and
I do expect them to report seven billion dollars in
AI server revenues. They guide you to about fifteen billion.
(36:33):
Street some of the bullcase on the street has guided
potentially guiding up to twenty billion. So that's the bogie
that the street is looking for.
Speaker 2 (36:42):
HP is an interesting read if you're thinking about PCs
and HP had really resilient PC strength. It's about the
AIPC apparently, and actually the commercial adoption of that seems
to be holding things up as well as Microsoft's upgrade
reigin is that how we read across from perhaps HP
to Dell.
Speaker 15 (37:00):
That's exactly it, so that that's the second tailwind for Dell.
Let's keep in mind that Windows eleven upgrade cycle is
actually going strong, and what we learned from the HP earnings,
callers had only fifty percent of actually upgraded to Windows eleven,
So that means we have an elongated Windows eleven cycle
(37:21):
that's going to benefit Dell. How eighty percent of their
revenues come from commercial PCs, and those are the customers
who need to upgrade, and Dell should be a beneficiary
from that upgrade cycle. And the PC business actually actually
has been more resilient. So HP results essentially tell us
that downside risk on the PC might be limited, at
(37:42):
least for the near term.
Speaker 2 (37:43):
The thing with Dell is everyone's very bullish on it.
We've got twenty two buys across the analyst zero cells,
and actually the price is pretty close to overall consensus
price targets. How much is already baked in to a
good set of numbers. Yeah, so.
Speaker 15 (37:58):
From well, let me tell you how much is baked in?
I think from a valuation perspective, fourteen times forward earnings.
If you look at Hpe, which is another enterprise IT company,
they're own trading around eleven times. So there was a
lot of good news baked into the shares from evaluation standpoint,
so sales upside is expected. Now I will want to
(38:23):
cautions some people heading into the print. There are a
couple of red flags. Other enterprise IT companies are not
benefiting from an uptick and spending net APP report the
last night, New Tanics, Cisco a couple of weeks back,
they all cautioned US federal spending as being weaker than anticipated.
(38:44):
Keep in mind that Dell has roughly about three percent
sales exposure to the US FED. So if there is
any pocket of weakness, that could be one and a
yellow flag that I want to raise to investors heading
into the print.
Speaker 2 (38:56):
So, Sarah, thank you, Lujin Hove, Senior analyst, Rubag Intelligence,
so appreciate having you on. Let's get back to the
key story of the day. Though it is in video
the world's most valuable company, but there are other companies
around it that tell us the hardware versus software story.
Let's bring in Bloomberg Intelligence Senior analyst man Leep saying, Look,
when we're anticipating Dell doing very well on AI servers,
this just speaks to the strength of AI adoption that
(39:17):
some are perhaps sleeping on a bit today.
Speaker 3 (39:19):
When it comes to in video's numbers.
Speaker 16 (39:21):
Yeah, and look, I mean when you look at the
overall ecosystem. You know, this quarter we saw Microsoft Azure
growth accelerating to thirty nine percent. Now Snowflake and Mango
deb outperforming. Just when you connect the dots, you can
see if Microsoft's AI consumption is going up and it's
reflecting in their cloud numbers, who is the user of
(39:43):
that cloud consumption. It's your Snowflake. And so from that perspective,
you know it's all intertwined. Dell doing well, Microsoft deploying
that on their clouds, Snowflake actually seeing an increment in
their product growth because companies are deploying more AI agents.
So you can see how the ROI question is getting answered.
(40:04):
When it comes to that aispan, It's like the.
Speaker 2 (40:06):
Whole food chain, isn't it. You've got the picks and
shovels of the end video and then got the user
of that. That's Microsoft that's going into then the use
case of Snowflake talk us through the Snowflake numbers. Because
the shows are more than twenty percent. It was clearly
some anxiety built into these numbers that we were going
to see competitors take a bit of an edge on
a GenTech.
Speaker 16 (40:24):
I mean, look, traditionally database businesses are very sticky. It's
just right now we are in an environment for everyone
is trying to figure out what gets disintermediated by llms
and AI agents, and all the software companies were getting
beaten up because everyone thought llms can do everything that
these software products do. Well, guess what if you're trying
(40:45):
to deploy an AI agent, llms don't have the data
that you want to customize your chat pot on. Snowflake
does or you know, data breaks does, and that's where
Mango dB does, and all these database companies are what
you need to custom your chat pot experience to your
particular use case. And I think that's what you are
seeing in the numbers. You're seeing them sequentially outperformed.
Speaker 3 (41:08):
I mean, can we look at Manga DV for a second.
Speaker 2 (41:11):
Two days you pointed this out, it is almost fifty percent.
It is the best two day run for the company
on record. So they really managed to push back also
on that m I narrative that perhaps people aren't getting
any bang for the buck when it comes to using
AI pilots as well.
Speaker 16 (41:26):
When it comes to valuation multiples, what we have seen
traditionally is companies that grow at thirty percent will trade
at twenty times sales. But once that growth comes down
below twenty percent, then multiple goes from twenty times to
five times.
Speaker 3 (41:39):
Wow.
Speaker 16 (41:40):
So the multiple compression is always huge and software and
that's why the top line growth is so important, I
mean snowflake. Going back again to thirty percent plus growth,
you will see a multiple expansion. It's not as if
the story changed completely, but just the multiple that investors
put on these companies growing over thirty percent versus under
twenty percent, it's huge.
Speaker 2 (42:00):
But let's go to say, then a multiple on Nvidia,
it's not that high. If you're thinking about a Blend
and Ford version of the price to earnings estimated price
to earnings, it's one of like thirty three times.
Speaker 4 (42:11):
Yeah.
Speaker 16 (42:11):
And look with Nvidia, the biggest concern is it's not
a recurring business. Although they are proving that. You know,
they can keep releasing a new architecture every year and
it becomes a recurring refair cycle when it comes to
their data center chips. But that's the biggest I would
say risk is Right now, they are growing over fifty percent.
They said Hyperscalers will increase their CAPEX by fifty percent
(42:33):
next year, so that translates into similar growth for next year.
But it's very hard to sustain that. I mean, do
you think capex will keep growing fifty percent in perpetually? No,
And if your largest customers are for Hyperscalers, then that's
a big risk. And that's what you have to model
for two years from now, three years from now.
Speaker 2 (42:51):
Man Nave saying he's always modeling for us from Bloomberg Intelligence.
Speaker 3 (42:54):
We thank him. That does it to this edition of
Bloomberg Tech.
Speaker 2 (42:57):
Do not forget to check out our podcast kind it
on the terminal as well as online on Apple, Spotify,
and iHeart this is Bloomberg Tech. Mm hmmm mmmmmmm
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