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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive

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Speaker 1: from coast to coast with Caroline Hyde in New York

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Speaker 1: and Vlow in San Francisco.

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Speaker 2: This is Bloomberg Tech coming up in video. The world's

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Speaker 2: most valuable company underwhelms on earnings as investors digest decelerating growth.

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Speaker 2: This as its CFO weighs in on the Trump administration's

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Speaker 2: fifteen percent commission on.

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Speaker 3: Chip sales, telling us the.

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Speaker 2: Plan needs to be codified first, and we break down

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Speaker 2: other earnings from the tech world, the Snowflake HP gaining

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Speaker 2: on results and Dell on deck after the bell. But

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Speaker 2: first are we check in on this market, which of

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Speaker 2: course is dragged lower by one key stock we're looking

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Speaker 2: in in video, off by nine tenths of a percent

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Speaker 2: looking after ours trade yesterday, it was more than three

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Speaker 2: percent lower, as people just digest a company that is

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Speaker 2: now revenue in with.

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Speaker 3: Both of fifty percent. But it's not a two.

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Speaker 2: Hundred and sixty percent growth that we were used to

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Speaker 2: in previous years. And I'm interested in the focus on

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Speaker 2: China in particular.

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Speaker 3: This is a company that.

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Speaker 2: Has no h twenty sales for fiscal second quarter, no

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Speaker 2: sales baked in for the third quarter, but there is

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Speaker 2: opportunity there. Just listen to what jensup Huang said on

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Speaker 2: the call.

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Speaker 4: So I think the you know, the opportunity for us

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Speaker 4: to bring Blackwell to the China market is a real possibility.

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Speaker 4: And so we just have to keep advocating the sensibility

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Speaker 4: of and the importance of American tech companies to be

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Speaker 4: able to lead in win the AI.

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Speaker 2: Race for more bluebergs Ian King, who covers semiconductors, who

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Speaker 2: was up late last night, does this with us. Now, Look,

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Speaker 2: China is the big overhang and why some think that

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Speaker 2: perhaps the numbers were a little light, largely because we

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Speaker 2: didn't know whether to factor in Chinese.

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Speaker 3: Revenue or not.

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Speaker 5: I yeah, I mean they said that in the release

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Speaker 5: and there was nothing China related in there in terms

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Speaker 5: of the data center stuff. Then on the call they

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Speaker 5: gave us a slightly extended picture and said, look, if

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Speaker 5: everything goes okay, if everything gets sorted out, we might

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Speaker 5: have up to five billion dollars worth of Chinese revenue.

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Speaker 5: And if you add that back into their forecast, then

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Speaker 5: this is an amazing quarter for them. So there's a

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Speaker 5: lot of moving parts.

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Speaker 2: There is and it feels as though it's a knee

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Speaker 2: jerk to send the shares lower, many would feel the

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Speaker 2: analyst community out there saying, look, strip this out.

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Speaker 3: And this was actually quite a rich beat.

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Speaker 2: But in you got even more detail from the CFO,

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Speaker 2: in particular collect cross walk us through what she said

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Speaker 2: about that fifteen percent stake taking that the government wants

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Speaker 2: on future H twenty sales.

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Speaker 5: Yeah, I mean, I think it's important to frame this appropriately.

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Speaker 5: This isn't some kind of political stand or dispute with

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Speaker 5: the Trump administration. What she was doing was what investors

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Speaker 5: would like to do, which is to you know, for

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Speaker 5: sheer duty, which is saying, look, there is no mechanism

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Speaker 5: by which I can give fifteen percent of this China

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Speaker 5: related revenue to the government as statutes currently exist. Something

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Speaker 5: will have to happen before I can do that. So

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Speaker 5: she was really just making a point and reassuring investors that, look,

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Speaker 5: we are running this company properly according to the rules

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Speaker 5: that exist.

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Speaker 2: So give us the detail on whether they do or

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Speaker 2: do not have licenses to certain Chinese customers yet in

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Speaker 2: the bag, and whether or not that two to five

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Speaker 2: billion dollars worth for the quarter coming could become a

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Speaker 2: reality in.

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Speaker 5: Yeah, and again, I mean they were very clear to say, look,

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Speaker 5: we've got a few licenses right now, but there are

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Speaker 5: so many geopolitical variables in the mix here. What does

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Speaker 5: Beijing want? What does Washington really want? Will there be

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Speaker 5: more licenses? Will they be given quickly? And all of these,

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Speaker 5: to be fair to video, are not knowable right now

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Speaker 5: because as we know, things change on a daily basis.

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Speaker 5: With a social media post, the whole world changes. So

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Speaker 5: I think you know, when people calm down and look

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Speaker 5: at what we said, they'll perhaps realize that this is

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Speaker 5: something which you know, this is a company taking a conservative,

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Speaker 5: perhaps measured approach to it and collect told us and

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Speaker 5: that was a message that was given to investors. Look,

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Speaker 5: we think we'll get some of this where you know,

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Speaker 5: we're not saying this has all gone away, but we

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Speaker 5: just don't know when and how much. So we're going

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Speaker 5: to be careful, going.

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Speaker 2: To be careful, Ian King always careful with this. Who ads,

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Speaker 2: we appreciate it. Let's get an investor. Take someone who's

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Speaker 2: dug deep onto the detail. Is Nazi Tengler, CEO CEO

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Speaker 2: at Leffa Tengo Investments. You've been taking some money off

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Speaker 2: the table with Vida recently, You've still got significant exposure.

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Speaker 2: And Natzi, what's so interesting is this question mark on China.

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Speaker 2: What's your read? Because again and again someone quit saying

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Speaker 2: there's a fifty billion dollar opportunity here.

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Speaker 6: Yeah, thanks for having me, Caroline, and I agree with

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Speaker 6: Ian on just about everything he said. I mean, China's critical,

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Speaker 6: of course, but they already took the charge last quarter,

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Speaker 6: and so the big disappointment overnight was they came in

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Speaker 6: below the whisper number, but their guidance did not include

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Speaker 6: China at I think it was fifty four billion, and

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Speaker 6: the whisper number was at fifty five. So if you

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Speaker 6: back out China from the whisper number, they actually beat

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Speaker 6: not only the street but the whisper number on guidance.

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Speaker 6: So I'm giving it a triple play. A beat beaten rays,

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Speaker 6: but I think it doesn't make I mean, if this

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Speaker 6: was a disastrous report, the stock would be off significantly

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Speaker 6: more than it is. We trimmed some at one seventy nine.

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Speaker 6: That's where it's trading right now. We put it to

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Speaker 6: work in some other names like Palanteer and CrowdStrike, and

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Speaker 6: we got some good execution there, but it's still four

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Speaker 6: percent of our portfolios and a candidate for our twelve

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Speaker 6: Best Ideas portfolio. So I think that the report was excellent.

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Speaker 6: Decelerating growth is something that Microsoft dealt with with Azure

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Speaker 6: early days, from ninety percent now down to thirty. I mean,

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Speaker 6: I don't think Nvidious valuation is even as expensive as

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Speaker 6: Microsoft if you look at it on price earnings to

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Speaker 6: growth basis below one time. So I think this is

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Speaker 6: an opportunity.

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Speaker 2: I mean, to that point, when a four point four

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Speaker 2: trillion dollar company is still delivering in excess of fifty

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Speaker 2: percent revenue and earn ex for the share growth, it's

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Speaker 2: pretty extraordinary.

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Speaker 3: But the opportunity still is so extraordinary.

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Speaker 2: I think Jensen Hung did a very good job at

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Speaker 2: reminding us four trillion dollars is how big AI infrastructure

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Speaker 2: spend could be alone, but he wouldn't really give us

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Speaker 2: an amount of how much his take is of that market.

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Speaker 3: Can you do the math on that a little bit?

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Speaker 7: Well?

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Speaker 6: Yeah, I mean, if you look at at earnings growth

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Speaker 6: expectations for twenty twenty fiscal year twenty twenty five, it's

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Speaker 6: one hundred and thirteen percent growth. For twenty six it's

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Speaker 6: fifty percent growth, so you if you factor that in

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Speaker 6: to the total numbers, I mean, this could be an

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Speaker 6: incrementalion one hundred billion dollars in revenues over the next

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Speaker 6: twelve months. Don't forget too, Sovereign is starting to pick up.

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Speaker 6: That was about twenty billion euro in expectations. And then

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Speaker 6: you've got the buyback putting a floor under the stock.

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Speaker 6: They announced a sixty billion dollar buyback. So the market

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Speaker 6: share take from Nvidia continues to remain or grow. And

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Speaker 6: what was interesting to me today is that you're seeing

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Speaker 6: AMD and Broadcon up on the news, but in Vidia

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Speaker 6: down slightly.

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Speaker 2: It's really interesting actually that all the Chinese names are

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Speaker 2: up on the news as well. You just think of

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Speaker 2: what's happening with Smick, what you're having with other key

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Speaker 2: players who are building out AI accelrators for China.

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Speaker 3: AMD.

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Speaker 2: It really reminds me of AMD because they'd beat and

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Speaker 2: in any ways they raised, but they couldn't give clarity

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Speaker 2: on the future of China and they were punished because

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Speaker 2: of that.

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Speaker 3: Do investors just need to understand.

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Speaker 2: That it's very difficult to get real clarity on China.

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Speaker 6: Yeah, and Caroline, remember too, there are investors and then

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Speaker 6: there are the hedge funds and the algorithms, and the

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Speaker 6: latter tend to drive the volatility. Investors like me look

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Speaker 6: at opportunities like this and say, I want to be

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Speaker 6: in this for the long term. So last summer we

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Speaker 6: picked off in video at one hundred dollars a share.

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Speaker 6: Remember last summer people were saying the story was over.

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Speaker 6: It's not going to continue. The hyper six scalers can't

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Speaker 6: continue to spend capex at this level. And not only

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Speaker 6: did they do that, but many of them increase their

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Speaker 6: capex budgets. So if you think about data center, it's

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Speaker 6: twenty nine percent growth, right, But China, he's saying, could

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Speaker 6: grow at fifty percent. So to answer your previous question,

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Speaker 6: China's growing faster than the rest of the world. But

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Speaker 6: twenty nine percent is unlikely to be the growth number.

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Speaker 6: It's likely to be closer to thirty to forty percent

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Speaker 6: in data center growth for Nvidia in the coming year

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Speaker 6: or two. So I think again, as I've said, you

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Speaker 6: want to take advantage of these periods of confusion or

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Speaker 6: you know, melancholy around the stocks future performance and add

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Speaker 6: to your holdings if you own it, and initiate if you.

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Speaker 2: Don't, okay, and then the real opportunity is the fact

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Speaker 2: that the cadence of innovation keeps them coming. You've got

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Speaker 2: Blackwell Blackwell Ultra already in the FABS according to the CFO.

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Speaker 2: So is the Ruben an architect show. Why does that

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Speaker 2: take us?

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Speaker 7: Yeah?

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Speaker 6: I mean I think it takes us to quantum and

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Speaker 6: then some I think, you know, robotics. We've launched a

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Speaker 6: new fund that we're incubating at the firm and it's

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Speaker 6: called New Ara Thematic and it's all of the above.

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Speaker 6: So you know, it's not just nuclear, it's quantum, it's robotics,

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Speaker 6: because photonics. So this is an area that investors need

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Speaker 6: to be sure they're not underestimating. You know, I heard

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Speaker 6: the naysayers overnight it's decelerating the growth. There's not ai

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Speaker 6: trade is over. It's not even close to over. We're

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Speaker 6: in the early stages, and I think you want to

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Speaker 6: be continue to be looking around and look for those

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Speaker 6: that are going to get left behind. And there will

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Speaker 6: be companies I believe, like Adobe that will probably get

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Speaker 6: left behind. But then you want to focus on the

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Speaker 6: winners and you don't want to shy away from them

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Speaker 6: too early. And this is I think Reuben is the

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Speaker 6: next stage Blackwell had. We haven't even realized the staggering

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Speaker 6: demand for Blackwell that Jensen Wong spoke about last night.

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Speaker 6: So yeah, strap in it's going to be vol little

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Speaker 6: bit volatile to the upside.

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Speaker 2: It's interesting yesterday we had Jamigambetta of IBM on talking

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Speaker 2: about their deal while that partnership with AMD, the fact

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Speaker 2: that they're looking in the future of soup coop and

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Speaker 2: computing twinning with the future of quantum as well. You're

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Speaker 2: talking about that as an area of growth. Where are

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Speaker 2: these companies, though, managing to pick away at in Video's

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Speaker 2: chants really with inference? Because yes, they are the chip

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Speaker 2: of choice, they are the architecture of choice when it

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Speaker 2: comes to training models. Are they really the only game

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Speaker 2: in town when it comes to inference?

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Speaker 3: No, I mean I think not.

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Speaker 6: But that doesn't mean it's just like, you know, maybe

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Speaker 6: you could argue that Microsoft sort of pioneered cloud computing.

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Speaker 6: Larry Ellison might disagree with us from Oracle, but but

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Speaker 6: you can. But you know, you see eventually they that

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Speaker 6: their growth slowed, but there's still a dominant provider and

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Speaker 6: AWS obviously would disagree with me that as well. But

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Speaker 6: so I think you have to step back look at

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Speaker 6: where the marginal erosion is coming from. Yes, we know

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Speaker 6: Apple and Microsoft are developing your own chips. That's that's fine.

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Speaker 6: I don't think that's going to change the dynamic. It

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Speaker 6: goes back to Jevon's paradox. So when we had the

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Speaker 6: deep Seek news, you know, everybody sold the stocks. I

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Speaker 6: happened to be on air that day and said, listen,

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Speaker 6: this is an opportunity because Morbi gets more, and so

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Speaker 6: I think this is I mean, that's that's really the story.

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Speaker 6: That they can lose share and still be growing at

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Speaker 6: rapid pace. And the margins. We haven't even talked about

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Speaker 6: the margins. You know about seventy percent. I mean, I

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Speaker 6: don't know what there is to complain about.

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Speaker 2: Instagram add a sixty brilliant lot of stock buyback, I mean,

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Speaker 2: and still the stock cast away some Nancy tang of

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Speaker 2: lef at Tangra Investments. It's always so good Tavy on

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Speaker 2: the show, Thank you very much. Indeed wearing a leather

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Speaker 2: an ode to Jensen that I mean, well, coming up

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Speaker 2: more in Nvidia as China trade tensions. Of course, they're

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Speaker 2: weighing on earnings. We're going to speak with Teresa Payton

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Speaker 2: for Alis Solutions CEO on the China AI landscape.

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Speaker 3: This is Bloomberg Tech.

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Speaker 2: Check in on those Nvidia shares we're off by let's

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Speaker 2: call it nine ten percent for a more than four

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Speaker 2: trillion dollar stock. That's thirty eight billion that you've just

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Speaker 2: wiped out in terms of market capitalization in Vidia's business.

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Speaker 2: I mean the overhang has been China clouding the area

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Speaker 2: because of trade tensions. That the company now saying that

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Speaker 2: unconventional plan of course by the Trump administration to charge

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Speaker 2: a fifteen percent commission on AI chip sales to China

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Speaker 2: when it hasn't progressed actually beyond its early stages. Let's

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Speaker 2: check in what the CFO, Collect Crest told us earlier.

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Speaker 2: She said to Bloomberg, I don't have to do this

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Speaker 2: fifteen percent until I see something that is a true

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Speaker 2: regulatory document. Let's get more from New Meg's executive editor.

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Speaker 3: Mike Shephard.

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Speaker 2: You really sit at the intersection of politics and technology mine.

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Speaker 2: So the ball is in the administration's court. They've told

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Speaker 2: us that they're going to take fifteen percent. Well, where's

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Speaker 2: the regulatory approval here?

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Speaker 8: Well, that's really the question of the hour here in Washington,

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Speaker 8: in Silicon Valley and on Wall Street. When are we

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Speaker 8: going to see the fine print on this? And as

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Speaker 8: Ian noted at the top of the hour, the company

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Speaker 8: is proceeding very carefully on this front. It doesn't want

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Speaker 8: to commit without seeing something in writing, because the terms

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Speaker 8: could even change, especially with this administration halfway through. So

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Speaker 8: they want to make sure they see this imprint and

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Speaker 8: if they understand the legal and regulatory mechanism under which

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Speaker 8: they would make these payments to the US Treasury. Remember,

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Speaker 8: it's not quite a tax, it's not quite an import fee.

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Speaker 8: It's really kind of hard to figure out how they

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Speaker 8: would define it. And in a way it is holding

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Speaker 8: the company up a little bit in terms of making

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Speaker 8: those sales once again of the age twenty AI chip

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Speaker 8: to Chinese customers. They don't want to proceed too fast,

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Speaker 8: as a CFO suggest that they had the right to do.

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Speaker 8: They have some of the export licenses in hand. But

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Speaker 8: then again, if they proceed without actually giving the government

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Speaker 8: a cut, that does risk angering the administration. And this

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Speaker 8: is a government that Jensen Wong, the CEO of Nvidia,

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Speaker 8: has tried very hard to cultivate good terms with He

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Speaker 8: is visited with President Donald Trump a number of times,

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Speaker 8: and the two men have built this report. So they

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Speaker 8: want to make sure they are treading carefully here, Caro,

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Speaker 8: because they're playing the long game. They are looking ahead

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Speaker 8: to how Trump can help them in China.

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Speaker 2: And I think Jensen and his CFO are trying to

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Speaker 2: really remind the administration just how much money's left on

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Speaker 2: the table. Up to five billion dollars worth could be

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Speaker 2: made in H twenty sales in this next quarter alone.

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Speaker 2: They're talking about the fifty billion dollar opportunity of China

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Speaker 2: sales if they can get a modified Blackwell architecture the country.

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Speaker 2: And that really was what Jensen was talking about, his

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Speaker 2: hopes to talk to Trump about that, and actually the administration,

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Speaker 2: in fact, President Trump has put messages out posted on

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Speaker 2: his truth social about the fact that he expects some

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Speaker 2: sort of request.

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Speaker 8: Yes, and he is signaling his openness to granting that

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Speaker 8: permission to the company to sell a scaleback version of

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Speaker 8: the market leading Blackwell chip to Chinese customers. Now, again,

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Speaker 8: we would expect the president to insist on getting his cup.

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Speaker 8: Would it be fifteen percent, would it be more? What

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Speaker 8: other demands might he put there, But again, this would

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Speaker 8: be very much in tune and in line with what

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Speaker 8: the administration is doing, not only with Nvidia, but also

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Speaker 8: in a way trying to, I guess, restore some of

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Speaker 8: those economic and political ties with China that we've seen

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Speaker 8: bruised over the years.

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Speaker 2: Mike Shephard, we thank you so much, Bloomberg. Let's get

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Speaker 2: more insight now. Teresa Payden's with us for Tallis Solution CEO,

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Speaker 2: former White House Chief Information Officer. At the moment, we're

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Speaker 2: seeing Chinese rivals gain on the back of this lack

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Speaker 2: of Nvidio competition.

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Speaker 3: Right now, what do you make of it?

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Speaker 9: Well, all I know is we're going to have to

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Speaker 9: figure out there's a long race here and a short

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Speaker 9: race here, and we have to secure not only our

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Speaker 9: global leadership but also our intellectual property. And that's really

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Speaker 9: some of the underpinning of the discussions here of is

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Speaker 9: there a fifteen percent? Is there not a fifteen percent?

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Speaker 9: What does this mean from an export control? So a

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Speaker 9: lot more to come on this, but obviously China is

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Speaker 9: amping up their part in the race, trying to win

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Speaker 9: the global war on who's going to dominate AI?

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Speaker 3: What is the IP risk.

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Speaker 9: Well, the IP risk. So even though we're talking about

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Speaker 9: sending a modified chip over to China, in my opinion,

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Speaker 9: based on my years of experience, it's like handing over

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Speaker 9: the keys to your R and D lab and saying

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Speaker 9: just be in the small QA lab, not in the

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Speaker 9: bigger lab, and don't look around. You wouldn't hand the

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Speaker 9: keys to your R and D lab to your competitor.

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Speaker 9: And China is our global competitor here for this technology.

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Speaker 9: So that really what we're thinking about here is how

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Speaker 9: could they get access to these chips and perhaps reverse

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Speaker 9: engineer everything from performance to how things behave. Really, you

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Speaker 9: just don't know what they're going to be able to

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Speaker 9: do once they have their hands on all these chips.

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Speaker 2: Teresa, let's say you're back as the White House Chief

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Speaker 2: Information officer. What are you advising President Trump as to

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Speaker 2: whether Jensen should have access to the Chinese market.

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Speaker 9: Well, I think this is a tough one because the

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Speaker 9: private sector does have the right. You know, companies do

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Speaker 9: have the right to sell their goods and services all

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Speaker 9: around the globe. We don't have a blockade on selling

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Speaker 9: technology and other goods and services to China. So this

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Speaker 9: is a very delicate balance here between a White House

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Speaker 9: administration and a private sector organization. And so really what

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Speaker 9: you have to do is look at the laws we

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Speaker 9: already have on the books, and then so what kind

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Speaker 9: of safeguards is this US based company going to follow

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Speaker 9: based on the laws on the books, What types of

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Speaker 9: inspection processes, what types of control processes. There is a

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Speaker 9: playbook for doing this, even though this technology is new,

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Speaker 9: and so we have to look at this playbook. The

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Speaker 9: question is is whether or not new rules and regulations

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Speaker 9: are going to be codified. And I think that's the

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Speaker 9: open question that in Nvidia is having to deal with.

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Speaker 2: In Vidia put in its ten Q that it could

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Speaker 2: be exposed to potential legal implications because of this fifteen

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Speaker 2: percent issue.

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Speaker 3: What would it face in terms of legal issues?

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Speaker 9: Well, if we end up codifying some type of a

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Speaker 9: new barrier to the market in China or enforcing one

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Speaker 9: of the existing regulations in a way that hasn't been

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Speaker 9: enforced before, then in Video would have to make the

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Speaker 9: decision of am I now blockaded from actually selling to China?

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Speaker 9: Or do I have a lot of burdens on me

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Speaker 9: that maybe don't exist for other companies who are selling

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Speaker 9: technology to China. Remember, you've got big tech who's in

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Speaker 9: China's social media is in China. It's not just Nvidia

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Speaker 9: who is selling goods and services to China. And so

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Speaker 9: they may decide, well, this is an undue burden placed

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Speaker 9: on us. So they may decide to take on a lawsuit,

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Speaker 9: or they may find themselves answering to for example, Siphius.

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Speaker 9: As you know, TikTok Usa has had a lot of

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Speaker 9: legal challenges in legal bills as it relates to how

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Speaker 9: they operate and sifias interpretations of how they operate. So

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Speaker 9: I think they're just kind of looking at past cases

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Speaker 9: president precedent and then also looking at the president's remarks

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Speaker 9: as a potential future precedent and deciding that there could

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Speaker 9: be a risk for a long protracted legal battle.

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Speaker 3: Theresa.

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Speaker 2: We heard from Jensen Wang there's a fifty billion dollar

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Speaker 2: opportunity in this year alone in China, but push out

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Speaker 2: five years. Does that exist at the rate that Chinese

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Speaker 2: government trying to push their own companies away from the

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Speaker 2: US tech stack.

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Speaker 9: Yeah, it may not exist in the future. That is

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Speaker 9: a tough one. All I can tell you is from

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Speaker 9: the frontlines of working with companies who have done business

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Speaker 9: with China. It is a very tricky proposition, especially as

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Speaker 9: it relates to cutting edge technologies, whether it's sort of

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Speaker 9: like clean energy, whether it's computer technology, and it's very

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Speaker 9: difficult and challenging to really understand what the regulatory environment

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Speaker 9: is going to be and the protection for your intellectual property.

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Speaker 6: You know.

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Speaker 9: Kind of the big elephant that we're not discussing in

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Speaker 9: having all of these conversations is we have a new

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Speaker 9: more detailed report from the FBI on Salt Typhoon, and

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Speaker 9: the findings from that report are stunning. We're talking eighty

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Speaker 9: countries were impacted, not just the United States, and the

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Speaker 9: access to metadata, phone calls and other information. You know,

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Speaker 9: this is one of those things in China denies that

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Speaker 9: they had any part in this, but this is one

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Speaker 9: of those things where we're seeing sort of this vacuum

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Speaker 9: cleaner effect of China basically vacuuming up intellectual property data

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Speaker 9: information to use it for economic espionage.

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Speaker 2: That was a breach that really hit the major US

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Speaker 2: carries in particular Verizon and AT and T and T Mobile.

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Speaker 2: Teresa Payton, thanks for reminding of us off it for

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Speaker 2: Alice Solutions and it's time now for Talking Tech and

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Speaker 2: first Up d D Global will pay seven and forty

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Speaker 2: million dollars to resolve a sharehold or lawsuit concerning it's

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Speaker 2: fort twenty twenty one USIPO Now, an offering that not

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Speaker 2: only attracted into its scrutiny from Beijing also preceeded the

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Speaker 2: company's dlisting. The right Haling Giant announce the deal Thursday

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Speaker 2: alongside its second quarter results. Plus Taiwan, the prosecutors have

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Speaker 2: charged three people for allegedly stealing trade secrets from TSMC,

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Speaker 2: alleging that proprietary tech was stolen to help improve a.

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Speaker 3: Take Tokyo Electron Now.

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Speaker 2: Taiwan is seeking jail terms for at least seven years

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Speaker 2: for the Trio, citing threat to the islands, national security

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Speaker 2: and delivery hero cub It's earnings guidance for the full

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Speaker 2: year this after a week dollar in South Korean one cut,

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Speaker 2: interprofit and free cashlow look. The company saw revenue rise

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Speaker 2: nearly eight point four billion dollars in the first half,

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Speaker 2: but faces increased competition for rivals in Asia and the

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Speaker 2: Middle East. And coming up more on Nvidia, let's take

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Speaker 2: a look at the stock and other global chip exposed names.

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Speaker 2: Shine Light on ASML. It is lower in sympathy. That's

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Speaker 2: the European hip equipment maker can look on though. This

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Speaker 2: is the upstart in China trying to eat in on

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Speaker 2: AI accelerators in that country. We're p fifteen percent record high.

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Speaker 2: It has doubled its market cap in this month alone.

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Speaker 3: This is Bloomberg Tech.

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Speaker 2: Welcome back to Bloomberg Tech. We take a look at

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Speaker 2: the earning story. Because benchmark's relatively flat, we're actually higher

439
00:22:50,160 --> 00:22:53,280
Speaker 2: just on the likes of the Nasdaq one hundred. I'm

440
00:22:53,320 --> 00:22:56,280
Speaker 2: looking at what's happening with Snowflake having an absolutely brilliant

441
00:22:56,359 --> 00:22:58,160
Speaker 2: day best place that's November twenty twenty four.

442
00:22:58,160 --> 00:22:59,359
Speaker 3: We're up eighteen percent.

443
00:23:00,160 --> 00:23:03,359
Speaker 2: Are showing that the desire for Agenderki is working in

444
00:23:03,359 --> 00:23:04,240
Speaker 2: their business right now.

445
00:23:04,359 --> 00:23:05,760
Speaker 3: Revenue grow thirty two percent.

446
00:23:05,800 --> 00:23:08,200
Speaker 2: They beat and they raised as well in terms of

447
00:23:08,200 --> 00:23:11,240
Speaker 2: their forward looking guidance. The analysts across the street really

448
00:23:11,280 --> 00:23:13,960
Speaker 2: liking the strength coming from this particular software company that

449
00:23:13,960 --> 00:23:17,280
Speaker 2: many had anxiety perhaps that new AI startups the spell

450
00:23:17,320 --> 00:23:17,760
Speaker 2: to eat.

451
00:23:17,640 --> 00:23:18,480
Speaker 3: Into the business model.

452
00:23:18,520 --> 00:23:21,119
Speaker 2: No, no, they're managing to show real growth here and

453
00:23:21,160 --> 00:23:23,760
Speaker 2: retention of customers. Move on though, and we're all a

454
00:23:23,840 --> 00:23:26,760
Speaker 2: little bit lackluster about what happened with Nvidia last night.

455
00:23:26,960 --> 00:23:29,280
Speaker 3: Look, this is a company that delivered fifty six percent

456
00:23:29,320 --> 00:23:30,800
Speaker 3: revenue growth for their fiscal second quarter.

457
00:23:30,880 --> 00:23:33,680
Speaker 2: Fifty four billion dollars is promised for the fiscal third quarter,

458
00:23:33,800 --> 00:23:35,800
Speaker 2: and that's not including any Chinese revenue.

459
00:23:35,800 --> 00:23:36,920
Speaker 3: That's only upside.

460
00:23:37,040 --> 00:23:39,000
Speaker 2: But this is already a company that was very close

461
00:23:39,040 --> 00:23:40,560
Speaker 2: to its record highs were off by one and a

462
00:23:40,640 --> 00:23:42,720
Speaker 2: quarter percent, but off of those lows in the pre

463
00:23:42,800 --> 00:23:45,680
Speaker 2: market trade, here is the reaction on the results from

464
00:23:45,720 --> 00:23:49,200
Speaker 2: a few analysts on Blueberg TV on Invidia.

465
00:23:49,400 --> 00:23:53,320
Speaker 10: When we have a beat and stocks don't go up

466
00:23:53,440 --> 00:23:55,640
Speaker 10: or as hot stock like in video doesn't go up

467
00:23:55,840 --> 00:23:58,439
Speaker 10: where it starts to roll over a little bit, that

468
00:23:58,640 --> 00:24:02,120
Speaker 10: suggests to a trader and a technical analyst that everyone

469
00:24:02,119 --> 00:24:06,000
Speaker 10: who might own the stock already does. But we're nowhere

470
00:24:06,040 --> 00:24:06,720
Speaker 10: near there yet.

471
00:24:07,080 --> 00:24:09,920
Speaker 11: The reason the stock has recouped some of those losses

472
00:24:09,960 --> 00:24:14,080
Speaker 11: and I think will rule retain strength is because of

473
00:24:14,119 --> 00:24:17,360
Speaker 11: that guide. For Q three, it was very strong. It's

474
00:24:17,400 --> 00:24:21,240
Speaker 11: really all about Q three, and it's because Blackwell and

475
00:24:21,320 --> 00:24:24,239
Speaker 11: Blackwell Ultra are starting to ship, and if you know

476
00:24:24,320 --> 00:24:26,960
Speaker 11: that story, you're not selling this stock right now.

477
00:24:27,200 --> 00:24:30,080
Speaker 7: They were very good about signaling to the market that

478
00:24:30,160 --> 00:24:33,000
Speaker 7: the chinahovertainning could continue and that has about a five

479
00:24:33,040 --> 00:24:37,240
Speaker 7: billion dollar impact in the next quarters numbers. So, having

480
00:24:37,280 --> 00:24:40,720
Speaker 7: said that, fifty four billion represents a very strong showing,

481
00:24:40,760 --> 00:24:43,679
Speaker 7: which means they expect hyperscalers and other parts of the

482
00:24:43,720 --> 00:24:46,080
Speaker 7: world to pick up that slack.

483
00:24:46,800 --> 00:24:49,719
Speaker 2: More reaction for you now from an investor. Daniel Pilling's

484
00:24:49,720 --> 00:24:51,479
Speaker 2: with US Sans Capital Ponio manager.

485
00:24:51,800 --> 00:24:53,400
Speaker 3: So why is the stock down?

486
00:24:55,480 --> 00:24:58,000
Speaker 12: Well, I think there's a few reasons. One stock had

487
00:24:58,040 --> 00:25:01,320
Speaker 12: a good run into the quarter, and two it probably

488
00:25:01,400 --> 00:25:03,919
Speaker 12: slightly a missed sort of the byside expectations and it

489
00:25:04,000 --> 00:25:08,480
Speaker 12: was mainly around I think China. And then secondly black

490
00:25:08,520 --> 00:25:10,760
Speaker 12: Hole is still a little bit supply constraints, so that

491
00:25:10,960 --> 00:25:12,800
Speaker 12: ramping it as fast as they can, but I guess

492
00:25:12,800 --> 00:25:15,400
Speaker 12: the ramp wasn't fast enough. But I would say though

493
00:25:15,440 --> 00:25:18,720
Speaker 12: to us, those were pretty strong results and maybe one

494
00:25:18,760 --> 00:25:21,560
Speaker 12: interesting fact to look at if you take out the

495
00:25:21,680 --> 00:25:25,199
Speaker 12: China revenues completely out of the data center, then the

496
00:25:25,200 --> 00:25:27,720
Speaker 12: rest of the world for them actually accelerated from about

497
00:25:28,080 --> 00:25:30,679
Speaker 12: sixty ish percent growth in Q one this year to

498
00:25:30,720 --> 00:25:33,520
Speaker 12: a guide that eighty percent growth in Q three this year.

499
00:25:33,880 --> 00:25:36,880
Speaker 12: So actually in Nvidia X China has been accelerating, which

500
00:25:36,880 --> 00:25:38,000
Speaker 12: which I think is really strong.

501
00:25:38,440 --> 00:25:40,840
Speaker 3: I think that's a really interesting take. We had Vladimir

502
00:25:41,000 --> 00:25:42,800
Speaker 3: Galibov from MDA.

503
00:25:42,400 --> 00:25:46,960
Speaker 2: Yesterday talking about how Europe is stopped starting certain countries.

504
00:25:47,200 --> 00:25:49,720
Speaker 2: You've got them up really going hard on sovereign AI,

505
00:25:49,920 --> 00:25:53,080
Speaker 2: other countries less. So we got told twenty billion dollars

506
00:25:53,119 --> 00:25:56,240
Speaker 2: for sovereign AI. Is that strong enough for you, Daniel, Yeah, I.

507
00:25:56,200 --> 00:25:58,080
Speaker 12: Think that's a great number. But the truth of the

508
00:25:58,160 --> 00:26:02,960
Speaker 12: game is still within high scalers and AI startups. I

509
00:26:02,960 --> 00:26:05,040
Speaker 12: think that's where the real action is for now, and

510
00:26:05,080 --> 00:26:07,840
Speaker 12: it's a much much much larger number, and I think

511
00:26:07,840 --> 00:26:11,040
Speaker 12: the interesting aspects there are one as Jensen noted that

512
00:26:11,320 --> 00:26:14,760
Speaker 12: reasoning AI is so much more compute intensive. He quoted

513
00:26:14,800 --> 00:26:17,000
Speaker 12: one hundred two thousand times more on the one inside

514
00:26:17,320 --> 00:26:18,960
Speaker 12: and then on the other inside though it's also much

515
00:26:19,000 --> 00:26:22,600
Speaker 12: better so it reduces hallucinations. And he also mentioned that

516
00:26:22,640 --> 00:26:25,760
Speaker 12: the return and invested capitally received from buying these ships

517
00:26:25,800 --> 00:26:26,360
Speaker 12: is phenomenal.

518
00:26:26,440 --> 00:26:26,520
Speaker 8: Right.

519
00:26:26,600 --> 00:26:28,760
Speaker 12: He mentioned if you invest three million today, you can

520
00:26:28,800 --> 00:26:31,600
Speaker 12: make thirty millions in token revenues in short order. So

521
00:26:31,640 --> 00:26:33,760
Speaker 12: I think that's where the real action is as of today,

522
00:26:33,880 --> 00:26:34,240
Speaker 12: and is.

523
00:26:34,160 --> 00:26:36,560
Speaker 2: That why the real action is talking about where Rubin

524
00:26:36,600 --> 00:26:39,320
Speaker 2: takes us the cadence of innovation over at in video.

525
00:26:40,520 --> 00:26:43,480
Speaker 12: I think so. I think Ruben will again that the

526
00:26:43,520 --> 00:26:46,920
Speaker 12: most important thing that Nvidia is doing is they're increasing

527
00:26:46,960 --> 00:26:50,120
Speaker 12: the performance per what and they noted that it costs

528
00:26:50,119 --> 00:26:53,480
Speaker 12: about fifty billion dollars for each one giga what data center.

529
00:26:53,680 --> 00:26:57,080
Speaker 12: Ruben will again improve that performance per WHAT, which means

530
00:26:57,080 --> 00:27:00,560
Speaker 12: that Nvidia's competitive situation improves on the one inside, but

531
00:27:00,600 --> 00:27:02,280
Speaker 12: also on the other hand side, you can do more

532
00:27:02,280 --> 00:27:04,880
Speaker 12: computer you can build better models with Ruben, which means

533
00:27:04,920 --> 00:27:07,639
Speaker 12: it's a self fulfilling prophecy a little bit because whatever

534
00:27:07,720 --> 00:27:11,320
Speaker 12: comes out of these models again have higher IQ and

535
00:27:11,320 --> 00:27:13,320
Speaker 12: effectively bigger and better apps.

536
00:27:13,960 --> 00:27:17,280
Speaker 2: You're not worried in any way about Amazon's trainium, about

537
00:27:17,359 --> 00:27:21,480
Speaker 2: Google's TPU, the fact that the customers are innovating themselves.

538
00:27:22,440 --> 00:27:24,560
Speaker 12: Yeah, no, I think it's our job to worry sometimes.

539
00:27:24,560 --> 00:27:26,520
Speaker 12: But we've looked at this in detail out and I

540
00:27:26,560 --> 00:27:29,399
Speaker 12: think the idea here is again to say, well, so

541
00:27:29,480 --> 00:27:32,360
Speaker 12: here's in Vidia. They're building a giant system of a company.

542
00:27:32,400 --> 00:27:36,240
Speaker 12: They have both networking CPUs, GPUs, hundreds of difference of

543
00:27:36,280 --> 00:27:40,040
Speaker 12: suppliers and they put the software on top. They say,

544
00:27:40,040 --> 00:27:42,080
Speaker 12: and we believe in this that they are the best

545
00:27:42,119 --> 00:27:45,920
Speaker 12: performance for one supplier in the industry bar nobody else.

546
00:27:46,440 --> 00:27:49,240
Speaker 12: And as long as that it's true, something like Trainium

547
00:27:49,359 --> 00:27:51,840
Speaker 12: cannot compete simply because they don't have the scale, they

548
00:27:51,840 --> 00:27:54,280
Speaker 12: don't have the system, and they don't have the software.

549
00:27:54,600 --> 00:27:57,520
Speaker 12: So in Vidia to us remains the winner in the sense.

550
00:27:58,119 --> 00:28:01,680
Speaker 2: And that's what's interesting about and what I'm trying to say, Look,

551
00:28:01,680 --> 00:28:03,760
Speaker 2: we are more than just hardware in many ways, we

552
00:28:03,840 --> 00:28:06,000
Speaker 2: are the one stop shop, and we're leaning more into that.

553
00:28:06,040 --> 00:28:08,720
Speaker 2: Did it lean more into the future opportunities enough for

554
00:28:08,800 --> 00:28:11,919
Speaker 2: you the robotic side of things, cause automotive remains a

555
00:28:11,920 --> 00:28:13,600
Speaker 2: bit of an overhang when it comes to China. But

556
00:28:13,960 --> 00:28:18,280
Speaker 2: thinking also about quantum and real future here, I.

557
00:28:18,240 --> 00:28:21,000
Speaker 12: Think in Vidia is probably the company in the world

558
00:28:21,000 --> 00:28:24,320
Speaker 12: that runs the fastest that I've ever seen. I mean,

559
00:28:24,359 --> 00:28:26,080
Speaker 12: what they're trying to do is they're trying to align

560
00:28:26,160 --> 00:28:28,679
Speaker 12: hundreds of difference of suppliers. They try to design a

561
00:28:28,720 --> 00:28:31,560
Speaker 12: GPU on an annual cadence, and they're trying to update

562
00:28:31,600 --> 00:28:33,840
Speaker 12: their systems on an annual to eighteen months cadence, which

563
00:28:34,119 --> 00:28:37,159
Speaker 12: is unheard of. At the same time they're focusing on

564
00:28:37,240 --> 00:28:40,240
Speaker 12: quantum robotics, et cetera, et cetera. So I think in

565
00:28:40,320 --> 00:28:43,760
Speaker 12: Nvidia is running as fast as anything else I have

566
00:28:43,840 --> 00:28:46,160
Speaker 12: ever seen. And if I may mention that too, I

567
00:28:46,200 --> 00:28:49,080
Speaker 12: think quantum is probably going to slot into the Nvidia

568
00:28:49,120 --> 00:28:52,520
Speaker 12: ecosystem by saying they have CPUs, they have GPUs, and

569
00:28:52,560 --> 00:28:54,720
Speaker 12: at some point they'll have quantum somewhere in there too,

570
00:28:54,720 --> 00:28:56,720
Speaker 12: And you can just switch between those various sort of

571
00:28:57,040 --> 00:28:57,920
Speaker 12: compute layers.

572
00:28:58,200 --> 00:29:01,040
Speaker 2: And that was what was interesting with IBM and AD's partnership,

573
00:29:01,080 --> 00:29:04,480
Speaker 2: the idea that almost you reference how these reasoning models work.

574
00:29:04,480 --> 00:29:06,040
Speaker 3: While I'm thinking of GPT five.

575
00:29:05,880 --> 00:29:08,120
Speaker 2: How it just pushes you towards the best possible model

576
00:29:08,120 --> 00:29:10,160
Speaker 2: for your question. We're going to have the best possible

577
00:29:10,200 --> 00:29:13,200
Speaker 2: computing standard for your general task.

578
00:29:14,440 --> 00:29:16,920
Speaker 12: Yes, I fully agree with that, the best possible as

579
00:29:16,920 --> 00:29:20,200
Speaker 12: well as the cheapest and the fastest. And again I

580
00:29:20,200 --> 00:29:22,680
Speaker 12: mean as we think through the next few years, the

581
00:29:22,760 --> 00:29:25,040
Speaker 12: question is like how much more compute can a video sell?

582
00:29:25,440 --> 00:29:27,360
Speaker 12: And as truthfully continues to be a question of the

583
00:29:27,360 --> 00:29:30,000
Speaker 12: scaling laws, right, and we've seen with GROCK four that

584
00:29:30,160 --> 00:29:33,880
Speaker 12: compute still provides better and bigger models. We're going to

585
00:29:33,880 --> 00:29:36,400
Speaker 12: have black Wood clusters scaling in the next twelve months

586
00:29:36,480 --> 00:29:39,200
Speaker 12: or six to twelve months, and hopefully we'll be seeing

587
00:29:39,240 --> 00:29:41,680
Speaker 12: good results coming out of whatever comes after GROG four

588
00:29:41,680 --> 00:29:44,920
Speaker 12: and chat GPT five, and that's ultimately truly going to

589
00:29:45,000 --> 00:29:46,920
Speaker 12: drive the bus fund video in terms of demand and

590
00:29:46,920 --> 00:29:48,200
Speaker 12: in terms of the revenue outlook.

591
00:29:48,360 --> 00:29:50,800
Speaker 2: So you think we should think more about Colossus, We

592
00:29:50,800 --> 00:29:53,240
Speaker 2: should think more about what Meta is doing in terms

593
00:29:53,240 --> 00:29:55,760
Speaker 2: of well it's scaling in Louisiana.

594
00:29:56,200 --> 00:29:58,280
Speaker 3: Should we figure China out entirely.

595
00:29:58,080 --> 00:30:01,440
Speaker 2: Considering the government wants to push its own homegrown domestic

596
00:30:01,480 --> 00:30:02,520
Speaker 2: talent anyhow.

597
00:30:03,120 --> 00:30:06,280
Speaker 12: Yes, I think we should, and I would actually argue

598
00:30:06,320 --> 00:30:10,239
Speaker 12: what China is doing seems to be relatively rational. What

599
00:30:10,320 --> 00:30:12,920
Speaker 12: China is basically saying is that you're trying to sell

600
00:30:13,080 --> 00:30:15,440
Speaker 12: the chip that's based off of an architecture that's three

601
00:30:15,440 --> 00:30:19,160
Speaker 12: and a half years old. And secondly, we've also grown

602
00:30:19,200 --> 00:30:22,840
Speaker 12: a local AI architecture or a stack that has caught

603
00:30:22,920 --> 00:30:25,920
Speaker 12: up somewhat to that old chip. So unless you start

604
00:30:26,000 --> 00:30:29,480
Speaker 12: selling us a newer derivative of Blackwell, we don't really

605
00:30:29,560 --> 00:30:31,720
Speaker 12: maybe need you as much anymore as we needed you

606
00:30:31,760 --> 00:30:34,840
Speaker 12: three years ago, so that all seems to make sense.

607
00:30:34,880 --> 00:30:36,959
Speaker 12: And I don't know whether the licensing will work out

608
00:30:37,080 --> 00:30:40,040
Speaker 12: or not, but the interesting piece is if it does,

609
00:30:40,600 --> 00:30:43,840
Speaker 12: that's a big, big upside of time fun video because

610
00:30:44,280 --> 00:30:47,200
Speaker 12: Jens noted is a fifty billion dollar market and if

611
00:30:47,240 --> 00:30:49,800
Speaker 12: they're allowed to ship a derivative of the newest chip

612
00:30:49,880 --> 00:30:52,239
Speaker 12: their market share that should be enormous because there is

613
00:30:52,320 --> 00:30:54,880
Speaker 12: nothing in China that even can remotely compete with what

614
00:30:54,960 --> 00:30:55,800
Speaker 12: Nvidia has.

615
00:30:56,200 --> 00:31:00,560
Speaker 2: Fifty four billion dollar forecast for physical thirty culture and

616
00:31:00,600 --> 00:31:01,720
Speaker 2: not even fracturing in China.

617
00:31:01,720 --> 00:31:04,320
Speaker 3: And Daniel pilling A sounds capital. It's great to have

618
00:31:04,360 --> 00:31:04,720
Speaker 3: you on.

619
00:31:09,960 --> 00:31:12,360
Speaker 2: All about Nvidio, But there are several of China's big

620
00:31:12,400 --> 00:31:15,560
Speaker 2: tech names also reporting earnings this week, including Ali Baba. Now,

621
00:31:15,600 --> 00:31:17,920
Speaker 2: the company has been stepping up it's AI efforts since

622
00:31:18,000 --> 00:31:20,320
Speaker 2: Chinese firm Deep Seat released its own R one model.

623
00:31:20,360 --> 00:31:23,479
Speaker 2: Remember Blomberg's Isabelle Lee joins us. Now this stock has

624
00:31:23,480 --> 00:31:25,560
Speaker 2: been on a tear this year at some forty two percent.

625
00:31:26,120 --> 00:31:28,040
Speaker 2: What more can it give in terms of where it

626
00:31:28,120 --> 00:31:29,440
Speaker 2: is on AI and cloud?

627
00:31:29,560 --> 00:31:32,080
Speaker 13: I think it's like everything in tech, investors just want

628
00:31:32,120 --> 00:31:33,640
Speaker 13: more and more and more, and even if you beat,

629
00:31:33,800 --> 00:31:36,040
Speaker 13: it's still not enough. So for Alibaba, there's later to

630
00:31:36,040 --> 00:31:38,440
Speaker 13: report on Friday, and they're likely to really highlight their

631
00:31:38,480 --> 00:31:41,000
Speaker 13: AI strategy. But if you look at their peers, ten

632
00:31:41,080 --> 00:31:43,680
Speaker 13: Cent and by Do, they're likely to kind of disappoint

633
00:31:43,760 --> 00:31:46,360
Speaker 13: because it's really going to struggle or it may struggle

634
00:31:46,400 --> 00:31:48,840
Speaker 13: to show how it's big investments in AI will be

635
00:31:48,920 --> 00:31:51,680
Speaker 13: paying off. I mean, these companies ever since the chat

636
00:31:51,760 --> 00:31:54,240
Speaker 13: gip they came into the picture, they've invested billions of

637
00:31:54,280 --> 00:31:57,840
Speaker 13: dollars in AI, They've rolled out their llms, they've infused

638
00:31:57,880 --> 00:32:00,360
Speaker 13: therm flag your products with that, but making money has

639
00:32:00,400 --> 00:32:04,440
Speaker 13: been hard. Why because analysts are saying that Chinese users,

640
00:32:04,480 --> 00:32:08,600
Speaker 13: unlike Western counterparts, are reluctant to spend on premium paid

641
00:32:08,600 --> 00:32:09,640
Speaker 13: subscription models.

642
00:32:09,760 --> 00:32:12,000
Speaker 2: What's also interesting is just everyone's trying to get on

643
00:32:12,200 --> 00:32:14,040
Speaker 2: every other game. They will want to be like the

644
00:32:14,120 --> 00:32:17,000
Speaker 2: megaaps to a certain extent, and you have a super

645
00:32:17,040 --> 00:32:19,680
Speaker 2: ropp with may Twon for example, that the phase competition

646
00:32:19,720 --> 00:32:21,200
Speaker 2: in food delivery, so.

647
00:32:21,240 --> 00:32:23,400
Speaker 13: That too, and then I feel like if you look at,

648
00:32:23,400 --> 00:32:25,720
Speaker 13: for instance, the ten cents earning this month, they showed

649
00:32:25,760 --> 00:32:29,440
Speaker 13: revenue from that business including selling a services going more slowly.

650
00:32:29,720 --> 00:32:31,520
Speaker 13: By Do also when it comes to the cloud business

651
00:32:31,560 --> 00:32:34,160
Speaker 13: didn't expand fast enough, so I feel like, how will

652
00:32:34,200 --> 00:32:36,239
Speaker 13: you improve to your point? And if you look at

653
00:32:36,240 --> 00:32:38,840
Speaker 13: the contribution of AI, it's really going to dampen the

654
00:32:38,840 --> 00:32:41,320
Speaker 13: gross outlook of Alibaba, I mean, and it comes at

655
00:32:41,360 --> 00:32:43,280
Speaker 13: a time where their e commerce business is kind of

656
00:32:43,280 --> 00:32:46,560
Speaker 13: struggling compared to the arrivals. Consumption in China still remains

657
00:32:46,560 --> 00:32:49,400
Speaker 13: weak even as the economy slightly improves. So really lots

658
00:32:49,440 --> 00:32:52,920
Speaker 13: of moving parts for Alibaba. But in relation to Nvidia, yesterday,

659
00:32:52,920 --> 00:32:56,000
Speaker 13: we do have Bloomberg Intelligence saying that despite uncertainty over

660
00:32:56,000 --> 00:32:59,760
Speaker 13: Invidia's ability to provide H twenty chips, all these three Alibaba,

661
00:32:59,760 --> 00:33:02,480
Speaker 13: ten and by Doo are still well positioned, at least

662
00:33:02,480 --> 00:33:03,280
Speaker 13: in the medium term.

663
00:33:03,760 --> 00:33:05,920
Speaker 3: In begs as Vali, we love our breaking it down,

664
00:33:05,960 --> 00:33:06,360
Speaker 3: thank you.

665
00:33:06,680 --> 00:33:09,280
Speaker 2: Let's stick with Chinese firms, but shift gears to the

666
00:33:09,320 --> 00:33:12,760
Speaker 2: automotive industry. Hong Kong shares of electric vehicle maker byd

667
00:33:13,160 --> 00:33:17,240
Speaker 2: fell yesterday concerns about possible decreases in exports after Mexico

668
00:33:17,240 --> 00:33:18,720
Speaker 2: announced plans to tariff China.

669
00:33:19,000 --> 00:33:21,440
Speaker 3: For Let's bring in. Bloomberg's Craig Trudell so.

670
00:33:21,440 --> 00:33:24,240
Speaker 2: BYD on the day had had some issues around maybe

671
00:33:24,280 --> 00:33:27,800
Speaker 2: accessing Mexico, but boy, their sales in Europe going well,

672
00:33:27,840 --> 00:33:31,080
Speaker 2: what were they were up threefold while Tesla actually saw

673
00:33:31,120 --> 00:33:32,400
Speaker 2: sales drop forty percent.

674
00:33:33,800 --> 00:33:37,920
Speaker 14: Yeah, we've seen BYD really put a dent in the

675
00:33:38,000 --> 00:33:43,240
Speaker 14: European car market and take advantage of the softness for Tesla,

676
00:33:43,320 --> 00:33:46,840
Speaker 14: maybe be a sort of factor in that softness where

677
00:33:47,520 --> 00:33:51,080
Speaker 14: you know, it's not been uncommon now for BYD to

678
00:33:51,120 --> 00:33:53,840
Speaker 14: actually outseell Tesla in this region, which would have been

679
00:33:53,920 --> 00:33:57,360
Speaker 14: unthinkable even just a year ago. This was a company

680
00:33:57,400 --> 00:34:01,560
Speaker 14: that was really sort of taking off in its home market,

681
00:34:01,800 --> 00:34:04,720
Speaker 14: and yet overseas sales it's still had a long way

682
00:34:04,760 --> 00:34:09,440
Speaker 14: to go. So we've seen some progress on the export business,

683
00:34:09,480 --> 00:34:11,440
Speaker 14: I think we have seen maybe a little bit of

684
00:34:11,600 --> 00:34:16,120
Speaker 14: a slowdown and some softness at home, And that's been

685
00:34:16,120 --> 00:34:18,279
Speaker 14: the real story this year where you know, for all

686
00:34:18,320 --> 00:34:21,320
Speaker 14: the sort of continued growth that we've seen out of BYD,

687
00:34:21,680 --> 00:34:24,120
Speaker 14: there's some real questions starting to emerge about can they

688
00:34:24,200 --> 00:34:27,800
Speaker 14: hit the full year sales figures that they were expecting

689
00:34:27,840 --> 00:34:28,680
Speaker 14: for twenty twenty five.

690
00:34:28,760 --> 00:34:31,000
Speaker 2: Yeah, because what they've already sold two point one five

691
00:34:31,040 --> 00:34:33,759
Speaker 2: million in the first half of the year, but that's

692
00:34:33,800 --> 00:34:36,240
Speaker 2: only a less than forty percent of what they're aiming

693
00:34:36,320 --> 00:34:38,880
Speaker 2: to do for the full year, so having to discount

694
00:34:39,120 --> 00:34:39,800
Speaker 2: in some ways.

695
00:34:41,080 --> 00:34:44,560
Speaker 14: Yeah, and I think it's really an ironic story in China,

696
00:34:44,640 --> 00:34:47,920
Speaker 14: right where you've seen so much state support for this industry,

697
00:34:48,040 --> 00:34:51,879
Speaker 14: so much attempts to sort of foster this really competitive

698
00:34:52,400 --> 00:34:57,520
Speaker 14: auto industry and particularly ev industry, and yet maybe we've

699
00:34:57,560 --> 00:35:00,480
Speaker 14: seen sort of some overdoing of it. Right we have

700
00:35:01,120 --> 00:35:05,520
Speaker 14: Chinese companies with by D maybe front and center, discounting

701
00:35:05,760 --> 00:35:10,560
Speaker 14: their lineup in really aggressive fashion. Concerns about suppliers not

702
00:35:10,600 --> 00:35:15,120
Speaker 14: getting paid in a timely manner, and you know, maybe

703
00:35:15,120 --> 00:35:17,560
Speaker 14: some concerns too about you know, just how long this

704
00:35:17,600 --> 00:35:21,640
Speaker 14: can continue if if we just see manufacturers, you know,

705
00:35:21,960 --> 00:35:26,040
Speaker 14: aggressively discounting, at what point is enough enough? And do

706
00:35:26,080 --> 00:35:29,560
Speaker 14: we see some companies go out of business? So you've

707
00:35:29,600 --> 00:35:31,879
Speaker 14: seen this kind of campaign in China and the part

708
00:35:31,920 --> 00:35:35,200
Speaker 14: of the government to do away with the you know

709
00:35:35,239 --> 00:35:37,960
Speaker 14: what people refer to as a price for and yet

710
00:35:38,000 --> 00:35:40,960
Speaker 14: some real reluctance on the companies to sort of sort

711
00:35:41,000 --> 00:35:41,800
Speaker 14: of take heed.

712
00:35:41,600 --> 00:35:51,000
Speaker 2: There most creature dell On BYD, we thank you.

713
00:35:51,200 --> 00:35:53,200
Speaker 3: We're also keeping an eye on Dell today.

714
00:35:53,280 --> 00:35:55,239
Speaker 2: The stock is climbing ahead of earnings release of its

715
00:35:55,280 --> 00:35:56,160
Speaker 2: own after the close.

716
00:35:56,480 --> 00:35:58,560
Speaker 3: Mesters looking for signs that the company.

717
00:35:58,239 --> 00:36:01,399
Speaker 2: Will boost its forecast for AI server shipments has bring

718
00:36:01,400 --> 00:36:04,719
Speaker 2: in blooming intelligence analysts reugin Ho regin is interesting that

719
00:36:04,920 --> 00:36:07,279
Speaker 2: it's actually higher on the day when in video is down.

720
00:36:07,360 --> 00:36:09,719
Speaker 2: Often they move in sympathy with one another. But we're

721
00:36:09,719 --> 00:36:10,880
Speaker 2: expecting big things.

722
00:36:11,640 --> 00:36:13,680
Speaker 15: Yeah, so there's a good thing. There are a couple

723
00:36:13,680 --> 00:36:16,520
Speaker 15: of things that's going on with Dell this morning. A

724
00:36:16,520 --> 00:36:19,439
Speaker 15: relative not only for AI but also for PCs, right,

725
00:36:20,480 --> 00:36:22,759
Speaker 15: you know, and video was more China related. Dell has

726
00:36:23,239 --> 00:36:27,520
Speaker 15: no China exposure as it relates to AI servers, and

727
00:36:27,560 --> 00:36:30,080
Speaker 15: I do expect them to report seven billion dollars in

728
00:36:30,120 --> 00:36:32,800
Speaker 15: AI server revenues. They guide you to about fifteen billion.

729
00:36:33,120 --> 00:36:37,240
Speaker 15: Street some of the bullcase on the street has guided

730
00:36:37,239 --> 00:36:40,080
Speaker 15: potentially guiding up to twenty billion. So that's the bogie

731
00:36:40,080 --> 00:36:41,120
Speaker 15: that the street is looking for.

732
00:36:42,120 --> 00:36:45,040
Speaker 2: HP is an interesting read if you're thinking about PCs

733
00:36:45,120 --> 00:36:48,520
Speaker 2: and HP had really resilient PC strength. It's about the

734
00:36:48,520 --> 00:36:52,400
Speaker 2: AIPC apparently, and actually the commercial adoption of that seems

735
00:36:52,440 --> 00:36:54,719
Speaker 2: to be holding things up as well as Microsoft's upgrade

736
00:36:54,840 --> 00:36:58,080
Speaker 2: reigin is that how we read across from perhaps HP

737
00:36:58,200 --> 00:36:58,520
Speaker 2: to Dell.

738
00:37:00,160 --> 00:37:04,799
Speaker 15: That's exactly it, so that that's the second tailwind for Dell.

739
00:37:06,360 --> 00:37:10,160
Speaker 15: Let's keep in mind that Windows eleven upgrade cycle is

740
00:37:10,800 --> 00:37:14,560
Speaker 15: actually going strong, and what we learned from the HP earnings,

741
00:37:14,560 --> 00:37:17,640
Speaker 15: callers had only fifty percent of actually upgraded to Windows eleven,

742
00:37:17,680 --> 00:37:21,320
Speaker 15: So that means we have an elongated Windows eleven cycle

743
00:37:21,480 --> 00:37:25,200
Speaker 15: that's going to benefit Dell. How eighty percent of their

744
00:37:25,239 --> 00:37:29,640
Speaker 15: revenues come from commercial PCs, and those are the customers

745
00:37:29,680 --> 00:37:33,560
Speaker 15: who need to upgrade, and Dell should be a beneficiary

746
00:37:33,600 --> 00:37:36,720
Speaker 15: from that upgrade cycle. And the PC business actually actually

747
00:37:36,800 --> 00:37:39,920
Speaker 15: has been more resilient. So HP results essentially tell us

748
00:37:39,960 --> 00:37:42,160
Speaker 15: that downside risk on the PC might be limited, at

749
00:37:42,239 --> 00:37:43,080
Speaker 15: least for the near term.

750
00:37:43,200 --> 00:37:45,640
Speaker 2: The thing with Dell is everyone's very bullish on it.

751
00:37:45,640 --> 00:37:49,200
Speaker 2: We've got twenty two buys across the analyst zero cells,

752
00:37:49,280 --> 00:37:51,880
Speaker 2: and actually the price is pretty close to overall consensus

753
00:37:51,880 --> 00:37:54,880
Speaker 2: price targets. How much is already baked in to a

754
00:37:55,000 --> 00:37:57,120
Speaker 2: good set of numbers. Yeah, so.

755
00:37:58,920 --> 00:38:02,200
Speaker 15: From well, let me tell you how much is baked in?

756
00:38:02,560 --> 00:38:07,680
Speaker 15: I think from a valuation perspective, fourteen times forward earnings.

757
00:38:07,719 --> 00:38:11,960
Speaker 15: If you look at Hpe, which is another enterprise IT company,

758
00:38:12,360 --> 00:38:14,239
Speaker 15: they're own trading around eleven times. So there was a

759
00:38:14,239 --> 00:38:18,360
Speaker 15: lot of good news baked into the shares from evaluation standpoint,

760
00:38:18,480 --> 00:38:23,160
Speaker 15: so sales upside is expected. Now I will want to

761
00:38:23,200 --> 00:38:26,920
Speaker 15: cautions some people heading into the print. There are a

762
00:38:26,920 --> 00:38:30,840
Speaker 15: couple of red flags. Other enterprise IT companies are not

763
00:38:31,000 --> 00:38:35,560
Speaker 15: benefiting from an uptick and spending net APP report the

764
00:38:35,640 --> 00:38:38,680
Speaker 15: last night, New Tanics, Cisco a couple of weeks back,

765
00:38:39,000 --> 00:38:44,040
Speaker 15: they all cautioned US federal spending as being weaker than anticipated.

766
00:38:44,280 --> 00:38:46,560
Speaker 15: Keep in mind that Dell has roughly about three percent

767
00:38:46,600 --> 00:38:49,040
Speaker 15: sales exposure to the US FED. So if there is

768
00:38:49,280 --> 00:38:54,000
Speaker 15: any pocket of weakness, that could be one and a

769
00:38:54,080 --> 00:38:55,919
Speaker 15: yellow flag that I want to raise to investors heading

770
00:38:55,960 --> 00:38:56,439
Speaker 15: into the print.

771
00:38:56,640 --> 00:38:59,960
Speaker 2: So, Sarah, thank you, Lujin Hove, Senior analyst, Rubag Intelligence,

772
00:39:00,239 --> 00:39:02,600
Speaker 2: so appreciate having you on. Let's get back to the

773
00:39:02,640 --> 00:39:04,279
Speaker 2: key story of the day. Though it is in video

774
00:39:04,360 --> 00:39:06,840
Speaker 2: the world's most valuable company, but there are other companies

775
00:39:06,880 --> 00:39:09,279
Speaker 2: around it that tell us the hardware versus software story.

776
00:39:09,360 --> 00:39:12,040
Speaker 2: Let's bring in Bloomberg Intelligence Senior analyst man Leep saying, Look,

777
00:39:12,040 --> 00:39:15,160
Speaker 2: when we're anticipating Dell doing very well on AI servers,

778
00:39:15,440 --> 00:39:17,719
Speaker 2: this just speaks to the strength of AI adoption that

779
00:39:17,880 --> 00:39:19,800
Speaker 2: some are perhaps sleeping on a bit today.

780
00:39:19,920 --> 00:39:21,240
Speaker 3: When it comes to in video's numbers.

781
00:39:21,480 --> 00:39:23,600
Speaker 16: Yeah, and look, I mean when you look at the

782
00:39:23,680 --> 00:39:28,120
Speaker 16: overall ecosystem. You know, this quarter we saw Microsoft Azure

783
00:39:28,440 --> 00:39:32,640
Speaker 16: growth accelerating to thirty nine percent. Now Snowflake and Mango

784
00:39:32,719 --> 00:39:35,680
Speaker 16: deb outperforming. Just when you connect the dots, you can

785
00:39:35,719 --> 00:39:39,879
Speaker 16: see if Microsoft's AI consumption is going up and it's

786
00:39:39,960 --> 00:39:43,480
Speaker 16: reflecting in their cloud numbers, who is the user of

787
00:39:43,520 --> 00:39:48,120
Speaker 16: that cloud consumption. It's your Snowflake. And so from that perspective,

788
00:39:48,200 --> 00:39:52,800
Speaker 16: you know it's all intertwined. Dell doing well, Microsoft deploying

789
00:39:52,800 --> 00:39:57,160
Speaker 16: that on their clouds, Snowflake actually seeing an increment in

790
00:39:57,200 --> 00:40:00,480
Speaker 16: their product growth because companies are deploying more AI agents.

791
00:40:00,560 --> 00:40:04,840
Speaker 16: So you can see how the ROI question is getting answered.

792
00:40:04,880 --> 00:40:06,719
Speaker 16: When it comes to that aispan, It's like the.

793
00:40:06,640 --> 00:40:08,400
Speaker 2: Whole food chain, isn't it. You've got the picks and

794
00:40:08,400 --> 00:40:10,360
Speaker 2: shovels of the end video and then got the user

795
00:40:10,400 --> 00:40:12,440
Speaker 2: of that. That's Microsoft that's going into then the use

796
00:40:12,480 --> 00:40:14,880
Speaker 2: case of Snowflake talk us through the Snowflake numbers. Because

797
00:40:15,200 --> 00:40:17,960
Speaker 2: the shows are more than twenty percent. It was clearly

798
00:40:18,120 --> 00:40:21,640
Speaker 2: some anxiety built into these numbers that we were going

799
00:40:21,640 --> 00:40:23,200
Speaker 2: to see competitors take a bit of an edge on

800
00:40:23,239 --> 00:40:23,920
Speaker 2: a GenTech.

801
00:40:24,040 --> 00:40:28,120
Speaker 16: I mean, look, traditionally database businesses are very sticky. It's

802
00:40:28,200 --> 00:40:30,600
Speaker 16: just right now we are in an environment for everyone

803
00:40:30,640 --> 00:40:34,760
Speaker 16: is trying to figure out what gets disintermediated by llms

804
00:40:34,760 --> 00:40:37,920
Speaker 16: and AI agents, and all the software companies were getting

805
00:40:37,960 --> 00:40:42,080
Speaker 16: beaten up because everyone thought llms can do everything that

806
00:40:42,120 --> 00:40:45,240
Speaker 16: these software products do. Well, guess what if you're trying

807
00:40:45,280 --> 00:40:48,960
Speaker 16: to deploy an AI agent, llms don't have the data

808
00:40:49,000 --> 00:40:52,040
Speaker 16: that you want to customize your chat pot on. Snowflake

809
00:40:52,120 --> 00:40:54,600
Speaker 16: does or you know, data breaks does, and that's where

810
00:40:54,719 --> 00:40:58,239
Speaker 16: Mango dB does, and all these database companies are what

811
00:40:58,360 --> 00:41:02,640
Speaker 16: you need to custom your chat pot experience to your

812
00:41:02,719 --> 00:41:05,120
Speaker 16: particular use case. And I think that's what you are

813
00:41:05,120 --> 00:41:08,600
Speaker 16: seeing in the numbers. You're seeing them sequentially outperformed.

814
00:41:08,640 --> 00:41:10,800
Speaker 3: I mean, can we look at Manga DV for a second.

815
00:41:11,360 --> 00:41:15,040
Speaker 2: Two days you pointed this out, it is almost fifty percent.

816
00:41:15,160 --> 00:41:17,200
Speaker 2: It is the best two day run for the company

817
00:41:17,239 --> 00:41:19,920
Speaker 2: on record. So they really managed to push back also

818
00:41:19,920 --> 00:41:23,240
Speaker 2: on that m I narrative that perhaps people aren't getting

819
00:41:23,239 --> 00:41:25,160
Speaker 2: any bang for the buck when it comes to using

820
00:41:25,239 --> 00:41:26,319
Speaker 2: AI pilots as well.

821
00:41:26,360 --> 00:41:29,080
Speaker 16: When it comes to valuation multiples, what we have seen

822
00:41:29,160 --> 00:41:33,040
Speaker 16: traditionally is companies that grow at thirty percent will trade

823
00:41:33,080 --> 00:41:35,600
Speaker 16: at twenty times sales. But once that growth comes down

824
00:41:35,640 --> 00:41:39,120
Speaker 16: below twenty percent, then multiple goes from twenty times to

825
00:41:39,200 --> 00:41:39,800
Speaker 16: five times.

826
00:41:39,840 --> 00:41:40,080
Speaker 3: Wow.

827
00:41:40,120 --> 00:41:43,440
Speaker 16: So the multiple compression is always huge and software and

828
00:41:43,480 --> 00:41:46,440
Speaker 16: that's why the top line growth is so important, I

829
00:41:46,440 --> 00:41:50,200
Speaker 16: mean snowflake. Going back again to thirty percent plus growth,

830
00:41:50,360 --> 00:41:52,560
Speaker 16: you will see a multiple expansion. It's not as if

831
00:41:52,600 --> 00:41:56,239
Speaker 16: the story changed completely, but just the multiple that investors

832
00:41:56,239 --> 00:41:59,319
Speaker 16: put on these companies growing over thirty percent versus under

833
00:41:59,360 --> 00:42:00,680
Speaker 16: twenty percent, it's huge.

834
00:42:00,760 --> 00:42:03,080
Speaker 2: But let's go to say, then a multiple on Nvidia,

835
00:42:03,680 --> 00:42:06,239
Speaker 2: it's not that high. If you're thinking about a Blend

836
00:42:06,239 --> 00:42:09,560
Speaker 2: and Ford version of the price to earnings estimated price

837
00:42:09,560 --> 00:42:11,360
Speaker 2: to earnings, it's one of like thirty three times.

838
00:42:11,520 --> 00:42:11,800
Speaker 4: Yeah.

839
00:42:11,800 --> 00:42:15,480
Speaker 16: And look with Nvidia, the biggest concern is it's not

840
00:42:15,560 --> 00:42:18,200
Speaker 16: a recurring business. Although they are proving that. You know,

841
00:42:18,239 --> 00:42:20,719
Speaker 16: they can keep releasing a new architecture every year and

842
00:42:20,840 --> 00:42:23,680
Speaker 16: it becomes a recurring refair cycle when it comes to

843
00:42:23,760 --> 00:42:26,520
Speaker 16: their data center chips. But that's the biggest I would

844
00:42:26,560 --> 00:42:29,960
Speaker 16: say risk is Right now, they are growing over fifty percent.

845
00:42:30,040 --> 00:42:33,360
Speaker 16: They said Hyperscalers will increase their CAPEX by fifty percent

846
00:42:33,360 --> 00:42:36,919
Speaker 16: next year, so that translates into similar growth for next year.

847
00:42:37,239 --> 00:42:40,080
Speaker 16: But it's very hard to sustain that. I mean, do

848
00:42:40,160 --> 00:42:43,920
Speaker 16: you think capex will keep growing fifty percent in perpetually? No,

849
00:42:44,440 --> 00:42:47,959
Speaker 16: And if your largest customers are for Hyperscalers, then that's

850
00:42:47,960 --> 00:42:49,920
Speaker 16: a big risk. And that's what you have to model

851
00:42:49,960 --> 00:42:51,600
Speaker 16: for two years from now, three years from now.

852
00:42:51,880 --> 00:42:54,680
Speaker 2: Man Nave saying he's always modeling for us from Bloomberg Intelligence.

853
00:42:54,719 --> 00:42:56,640
Speaker 3: We thank him. That does it to this edition of

854
00:42:56,640 --> 00:42:57,319
Speaker 3: Bloomberg Tech.

855
00:42:57,400 --> 00:42:59,440
Speaker 2: Do not forget to check out our podcast kind it

856
00:42:59,480 --> 00:43:01,760
Speaker 2: on the terminal as well as online on Apple, Spotify,

857
00:43:01,840 --> 00:43:07,239
Speaker 2: and iHeart this is Bloomberg Tech. Mm hmmm mmmmmmm