WEBVTT - Nvidia Investors Digest Decelerating Growth Forecast 0:00:02.520 --> 0:00:13.399 Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive 0:00:13.440 --> 0:00:17.239 from coast to coast with Caroline Hyde in New York 0:00:17.520 --> 0:00:20.640 and Vlow in San Francisco. 0:00:21.720 --> 0:00:24.120 This is Bloomberg Tech coming up in video. The world's 0:00:24.200 --> 0:00:29.600 most valuable company underwhelms on earnings as investors digest decelerating growth. 0:00:30.080 --> 0:00:33.080 This as its CFO weighs in on the Trump administration's 0:00:33.280 --> 0:00:34.680 fifteen percent commission on. 0:00:34.640 --> 0:00:36.479 Chip sales, telling us the. 0:00:36.479 --> 0:00:40.200 Plan needs to be codified first, and we break down 0:00:40.360 --> 0:00:43.440 other earnings from the tech world, the Snowflake HP gaining 0:00:43.479 --> 0:00:45.440 on results and Dell on deck after the bell. But 0:00:45.560 --> 0:00:48.120 first are we check in on this market, which of 0:00:48.159 --> 0:00:50.800 course is dragged lower by one key stock we're looking 0:00:50.840 --> 0:00:53.240 in in video, off by nine tenths of a percent 0:00:53.440 --> 0:00:56.120 looking after ours trade yesterday, it was more than three 0:00:56.200 --> 0:00:59.680 percent lower, as people just digest a company that is 0:00:59.720 --> 0:01:01.440 now revenue in with. 0:01:01.480 --> 0:01:03.760 Both of fifty percent. But it's not a two. 0:01:03.640 --> 0:01:05.600 Hundred and sixty percent growth that we were used to 0:01:05.680 --> 0:01:08.840 in previous years. And I'm interested in the focus on 0:01:08.959 --> 0:01:09.920 China in particular. 0:01:10.120 --> 0:01:11.280 This is a company that. 0:01:11.240 --> 0:01:14.399 Has no h twenty sales for fiscal second quarter, no 0:01:14.520 --> 0:01:16.640 sales baked in for the third quarter, but there is 0:01:16.720 --> 0:01:19.120 opportunity there. Just listen to what jensup Huang said on 0:01:19.160 --> 0:01:20.680 the call. 0:01:20.800 --> 0:01:23.920 So I think the you know, the opportunity for us 0:01:24.000 --> 0:01:29.720 to bring Blackwell to the China market is a real possibility. 0:01:29.880 --> 0:01:35.039 And so we just have to keep advocating the sensibility 0:01:35.120 --> 0:01:39.039 of and the importance of American tech companies to be 0:01:39.080 --> 0:01:42.800 able to lead in win the AI. 0:01:42.680 --> 0:01:47.080 Race for more bluebergs Ian King, who covers semiconductors, who 0:01:47.160 --> 0:01:50.320 was up late last night, does this with us. Now, Look, 0:01:50.480 --> 0:01:53.720 China is the big overhang and why some think that 0:01:53.760 --> 0:01:56.400 perhaps the numbers were a little light, largely because we 0:01:56.400 --> 0:01:58.160 didn't know whether to factor in Chinese. 0:01:57.800 --> 0:01:58.360 Revenue or not. 0:01:58.400 --> 0:02:03.040 I yeah, I mean they said that in the release 0:02:03.080 --> 0:02:06.440 and there was nothing China related in there in terms 0:02:06.440 --> 0:02:08.640 of the data center stuff. Then on the call they 0:02:08.680 --> 0:02:12.079 gave us a slightly extended picture and said, look, if 0:02:12.120 --> 0:02:14.880 everything goes okay, if everything gets sorted out, we might 0:02:14.919 --> 0:02:18.800 have up to five billion dollars worth of Chinese revenue. 0:02:18.800 --> 0:02:20.919 And if you add that back into their forecast, then 0:02:21.240 --> 0:02:24.280 this is an amazing quarter for them. So there's a 0:02:24.320 --> 0:02:25.359 lot of moving parts. 0:02:25.639 --> 0:02:28.240 There is and it feels as though it's a knee 0:02:28.280 --> 0:02:30.960 jerk to send the shares lower, many would feel the 0:02:31.000 --> 0:02:33.359 analyst community out there saying, look, strip this out. 0:02:33.360 --> 0:02:35.120 And this was actually quite a rich beat. 0:02:35.160 --> 0:02:38.880 But in you got even more detail from the CFO, 0:02:38.960 --> 0:02:41.480 in particular collect cross walk us through what she said 0:02:41.480 --> 0:02:45.480 about that fifteen percent stake taking that the government wants 0:02:45.720 --> 0:02:47.120 on future H twenty sales. 0:02:47.840 --> 0:02:51.000 Yeah, I mean, I think it's important to frame this appropriately. 0:02:51.080 --> 0:02:55.360 This isn't some kind of political stand or dispute with 0:02:55.520 --> 0:02:59.440 the Trump administration. What she was doing was what investors 0:02:59.440 --> 0:03:02.600 would like to do, which is to you know, for 0:03:03.000 --> 0:03:05.399 sheer duty, which is saying, look, there is no mechanism 0:03:05.480 --> 0:03:08.200 by which I can give fifteen percent of this China 0:03:08.240 --> 0:03:13.680 related revenue to the government as statutes currently exist. Something 0:03:13.720 --> 0:03:15.880 will have to happen before I can do that. So 0:03:15.919 --> 0:03:20.639 she was really just making a point and reassuring investors that, look, 0:03:20.680 --> 0:03:23.720 we are running this company properly according to the rules 0:03:23.760 --> 0:03:24.760 that exist. 0:03:24.960 --> 0:03:27.040 So give us the detail on whether they do or 0:03:27.120 --> 0:03:31.440 do not have licenses to certain Chinese customers yet in 0:03:31.480 --> 0:03:33.799 the bag, and whether or not that two to five 0:03:33.840 --> 0:03:36.800 billion dollars worth for the quarter coming could become a 0:03:36.840 --> 0:03:37.560 reality in. 0:03:38.520 --> 0:03:41.440 Yeah, and again, I mean they were very clear to say, look, 0:03:41.480 --> 0:03:44.160 we've got a few licenses right now, but there are 0:03:44.200 --> 0:03:47.760 so many geopolitical variables in the mix here. What does 0:03:47.800 --> 0:03:50.880 Beijing want? What does Washington really want? Will there be 0:03:50.960 --> 0:03:53.640 more licenses? Will they be given quickly? And all of these, 0:03:53.840 --> 0:03:56.800 to be fair to video, are not knowable right now 0:03:56.840 --> 0:03:59.400 because as we know, things change on a daily basis. 0:03:59.440 --> 0:04:02.320 With a social media post, the whole world changes. So 0:04:02.840 --> 0:04:05.320 I think you know, when people calm down and look 0:04:05.360 --> 0:04:07.400 at what we said, they'll perhaps realize that this is 0:04:07.440 --> 0:04:10.880 something which you know, this is a company taking a conservative, 0:04:11.040 --> 0:04:14.960 perhaps measured approach to it and collect told us and 0:04:15.200 --> 0:04:16.960 that was a message that was given to investors. Look, 0:04:16.960 --> 0:04:19.080 we think we'll get some of this where you know, 0:04:19.080 --> 0:04:20.760 we're not saying this has all gone away, but we 0:04:20.880 --> 0:04:22.920 just don't know when and how much. So we're going 0:04:22.960 --> 0:04:24.359 to be careful, going. 0:04:24.200 --> 0:04:27.160 To be careful, Ian King always careful with this. Who ads, 0:04:27.200 --> 0:04:30.080 we appreciate it. Let's get an investor. Take someone who's 0:04:30.120 --> 0:04:33.040 dug deep onto the detail. Is Nazi Tengler, CEO CEO 0:04:33.120 --> 0:04:35.200 at Leffa Tengo Investments. You've been taking some money off 0:04:35.240 --> 0:04:38.360 the table with Vida recently, You've still got significant exposure. 0:04:38.400 --> 0:04:41.599 And Natzi, what's so interesting is this question mark on China. 0:04:42.000 --> 0:04:45.200 What's your read? Because again and again someone quit saying 0:04:45.240 --> 0:04:47.560 there's a fifty billion dollar opportunity here. 0:04:49.000 --> 0:04:51.760 Yeah, thanks for having me, Caroline, and I agree with 0:04:51.800 --> 0:04:54.920 Ian on just about everything he said. I mean, China's critical, 0:04:54.920 --> 0:04:57.520 of course, but they already took the charge last quarter, 0:04:57.960 --> 0:05:02.279 and so the big disappointment overnight was they came in 0:05:02.320 --> 0:05:05.480 below the whisper number, but their guidance did not include 0:05:05.560 --> 0:05:08.800 China at I think it was fifty four billion, and 0:05:09.080 --> 0:05:11.039 the whisper number was at fifty five. So if you 0:05:11.080 --> 0:05:14.040 back out China from the whisper number, they actually beat 0:05:14.120 --> 0:05:17.039 not only the street but the whisper number on guidance. 0:05:17.040 --> 0:05:20.320 So I'm giving it a triple play. A beat beaten rays, 0:05:20.880 --> 0:05:23.800 but I think it doesn't make I mean, if this 0:05:23.920 --> 0:05:26.640 was a disastrous report, the stock would be off significantly 0:05:26.680 --> 0:05:29.760 more than it is. We trimmed some at one seventy nine. 0:05:29.839 --> 0:05:31.960 That's where it's trading right now. We put it to 0:05:32.000 --> 0:05:34.320 work in some other names like Palanteer and CrowdStrike, and 0:05:34.360 --> 0:05:37.120 we got some good execution there, but it's still four 0:05:37.160 --> 0:05:39.799 percent of our portfolios and a candidate for our twelve 0:05:39.800 --> 0:05:43.560 Best Ideas portfolio. So I think that the report was excellent. 0:05:44.000 --> 0:05:47.479 Decelerating growth is something that Microsoft dealt with with Azure 0:05:47.600 --> 0:05:51.960 early days, from ninety percent now down to thirty. I mean, 0:05:52.880 --> 0:05:56.960 I don't think Nvidious valuation is even as expensive as 0:05:57.000 --> 0:05:59.120 Microsoft if you look at it on price earnings to 0:05:59.160 --> 0:06:03.000 growth basis below one time. So I think this is 0:06:03.000 --> 0:06:03.840 an opportunity. 0:06:04.400 --> 0:06:06.880 I mean, to that point, when a four point four 0:06:06.920 --> 0:06:09.320 trillion dollar company is still delivering in excess of fifty 0:06:09.320 --> 0:06:11.640 percent revenue and earn ex for the share growth, it's 0:06:11.680 --> 0:06:12.760 pretty extraordinary. 0:06:12.960 --> 0:06:15.120 But the opportunity still is so extraordinary. 0:06:15.440 --> 0:06:17.240 I think Jensen Hung did a very good job at 0:06:17.360 --> 0:06:21.479 reminding us four trillion dollars is how big AI infrastructure 0:06:21.520 --> 0:06:23.880 spend could be alone, but he wouldn't really give us 0:06:23.920 --> 0:06:27.080 an amount of how much his take is of that market. 0:06:27.320 --> 0:06:28.840 Can you do the math on that a little bit? 0:06:29.720 --> 0:06:29.880 Well? 0:06:29.960 --> 0:06:32.000 Yeah, I mean, if you look at at earnings growth 0:06:32.040 --> 0:06:35.760 expectations for twenty twenty fiscal year twenty twenty five, it's 0:06:35.920 --> 0:06:38.520 one hundred and thirteen percent growth. For twenty six it's 0:06:38.520 --> 0:06:42.120 fifty percent growth, so you if you factor that in 0:06:42.520 --> 0:06:45.400 to the total numbers, I mean, this could be an 0:06:45.440 --> 0:06:50.000 incrementalion one hundred billion dollars in revenues over the next 0:06:50.200 --> 0:06:54.360 twelve months. Don't forget too, Sovereign is starting to pick up. 0:06:54.920 --> 0:06:58.640 That was about twenty billion euro in expectations. And then 0:06:58.680 --> 0:07:01.000 you've got the buyback putting a floor under the stock. 0:07:01.040 --> 0:07:05.279 They announced a sixty billion dollar buyback. So the market 0:07:05.560 --> 0:07:10.160 share take from Nvidia continues to remain or grow. And 0:07:10.200 --> 0:07:12.040 what was interesting to me today is that you're seeing 0:07:12.080 --> 0:07:15.440 AMD and Broadcon up on the news, but in Vidia 0:07:15.560 --> 0:07:16.240 down slightly. 0:07:16.720 --> 0:07:19.560 It's really interesting actually that all the Chinese names are 0:07:19.600 --> 0:07:21.040 up on the news as well. You just think of 0:07:21.080 --> 0:07:24.560 what's happening with Smick, what you're having with other key 0:07:24.560 --> 0:07:27.080 players who are building out AI accelrators for China. 0:07:27.840 --> 0:07:28.320 AMD. 0:07:28.400 --> 0:07:30.960 It really reminds me of AMD because they'd beat and 0:07:31.120 --> 0:07:34.080 in any ways they raised, but they couldn't give clarity 0:07:34.240 --> 0:07:36.400 on the future of China and they were punished because 0:07:36.440 --> 0:07:36.680 of that. 0:07:37.120 --> 0:07:39.400 Do investors just need to understand. 0:07:39.040 --> 0:07:41.920 That it's very difficult to get real clarity on China. 0:07:42.880 --> 0:07:45.600 Yeah, and Caroline, remember too, there are investors and then 0:07:45.640 --> 0:07:48.760 there are the hedge funds and the algorithms, and the 0:07:48.960 --> 0:07:52.680 latter tend to drive the volatility. Investors like me look 0:07:52.720 --> 0:07:55.240 at opportunities like this and say, I want to be 0:07:55.280 --> 0:07:57.640 in this for the long term. So last summer we 0:07:57.680 --> 0:07:59.840 picked off in video at one hundred dollars a share. 0:08:00.160 --> 0:08:02.520 Remember last summer people were saying the story was over. 0:08:02.640 --> 0:08:05.360 It's not going to continue. The hyper six scalers can't 0:08:05.360 --> 0:08:08.360 continue to spend capex at this level. And not only 0:08:08.400 --> 0:08:10.360 did they do that, but many of them increase their 0:08:10.680 --> 0:08:13.800 capex budgets. So if you think about data center, it's 0:08:13.880 --> 0:08:17.400 twenty nine percent growth, right, But China, he's saying, could 0:08:17.400 --> 0:08:20.600 grow at fifty percent. So to answer your previous question, 0:08:21.160 --> 0:08:23.920 China's growing faster than the rest of the world. But 0:08:24.400 --> 0:08:27.640 twenty nine percent is unlikely to be the growth number. 0:08:27.680 --> 0:08:30.080 It's likely to be closer to thirty to forty percent 0:08:30.400 --> 0:08:33.000 in data center growth for Nvidia in the coming year 0:08:33.280 --> 0:08:35.920 or two. So I think again, as I've said, you 0:08:36.440 --> 0:08:40.880 want to take advantage of these periods of confusion or 0:08:41.400 --> 0:08:45.960 you know, melancholy around the stocks future performance and add 0:08:46.000 --> 0:08:48.920 to your holdings if you own it, and initiate if you. 0:08:48.920 --> 0:08:52.520 Don't, okay, and then the real opportunity is the fact 0:08:52.600 --> 0:08:55.560 that the cadence of innovation keeps them coming. You've got 0:08:55.679 --> 0:08:59.920 Blackwell Blackwell Ultra already in the FABS according to the CFO. 0:09:00.000 --> 0:09:03.480 So is the Ruben an architect show. Why does that 0:09:03.520 --> 0:09:03.959 take us? 0:09:05.160 --> 0:09:05.400 Yeah? 0:09:05.480 --> 0:09:07.800 I mean I think it takes us to quantum and 0:09:07.840 --> 0:09:12.440 then some I think, you know, robotics. We've launched a 0:09:12.480 --> 0:09:14.800 new fund that we're incubating at the firm and it's 0:09:14.800 --> 0:09:17.880 called New Ara Thematic and it's all of the above. 0:09:18.000 --> 0:09:21.679 So you know, it's not just nuclear, it's quantum, it's robotics, 0:09:21.720 --> 0:09:26.040 because photonics. So this is an area that investors need 0:09:26.080 --> 0:09:29.120 to be sure they're not underestimating. You know, I heard 0:09:29.160 --> 0:09:32.920 the naysayers overnight it's decelerating the growth. There's not ai 0:09:33.000 --> 0:09:35.480 trade is over. It's not even close to over. We're 0:09:35.520 --> 0:09:38.600 in the early stages, and I think you want to 0:09:38.640 --> 0:09:41.120 be continue to be looking around and look for those 0:09:41.160 --> 0:09:43.160 that are going to get left behind. And there will 0:09:43.200 --> 0:09:45.800 be companies I believe, like Adobe that will probably get 0:09:45.880 --> 0:09:49.440 left behind. But then you want to focus on the 0:09:49.440 --> 0:09:51.400 winners and you don't want to shy away from them 0:09:51.559 --> 0:09:54.840 too early. And this is I think Reuben is the 0:09:54.840 --> 0:09:59.360 next stage Blackwell had. We haven't even realized the staggering 0:09:59.400 --> 0:10:02.960 demand for Blackwell that Jensen Wong spoke about last night. 0:10:03.120 --> 0:10:07.520 So yeah, strap in it's going to be vol little 0:10:07.559 --> 0:10:08.800 bit volatile to the upside. 0:10:08.920 --> 0:10:11.720 It's interesting yesterday we had Jamigambetta of IBM on talking 0:10:11.760 --> 0:10:15.280 about their deal while that partnership with AMD, the fact 0:10:15.280 --> 0:10:16.840 that they're looking in the future of soup coop and 0:10:16.840 --> 0:10:20.840 computing twinning with the future of quantum as well. You're 0:10:20.840 --> 0:10:23.520 talking about that as an area of growth. Where are 0:10:23.559 --> 0:10:27.160 these companies, though, managing to pick away at in Video's 0:10:27.240 --> 0:10:30.600 chants really with inference? Because yes, they are the chip 0:10:30.640 --> 0:10:32.840 of choice, they are the architecture of choice when it 0:10:32.880 --> 0:10:35.319 comes to training models. Are they really the only game 0:10:35.360 --> 0:10:36.480 in town when it comes to inference? 0:10:37.640 --> 0:10:39.160 No, I mean I think not. 0:10:39.559 --> 0:10:42.199 But that doesn't mean it's just like, you know, maybe 0:10:42.240 --> 0:10:46.200 you could argue that Microsoft sort of pioneered cloud computing. 0:10:46.480 --> 0:10:50.840 Larry Ellison might disagree with us from Oracle, but but 0:10:51.000 --> 0:10:54.160 you can. But you know, you see eventually they that 0:10:54.240 --> 0:10:57.679 their growth slowed, but there's still a dominant provider and 0:10:58.040 --> 0:11:00.960 AWS obviously would disagree with me that as well. But 0:11:01.720 --> 0:11:05.760 so I think you have to step back look at 0:11:05.840 --> 0:11:10.640 where the marginal erosion is coming from. Yes, we know 0:11:10.760 --> 0:11:15.360 Apple and Microsoft are developing your own chips. That's that's fine. 0:11:15.440 --> 0:11:17.480 I don't think that's going to change the dynamic. It 0:11:17.520 --> 0:11:20.920 goes back to Jevon's paradox. So when we had the 0:11:20.920 --> 0:11:24.160 deep Seek news, you know, everybody sold the stocks. I 0:11:24.200 --> 0:11:26.520 happened to be on air that day and said, listen, 0:11:26.600 --> 0:11:30.120 this is an opportunity because Morbi gets more, and so 0:11:30.280 --> 0:11:33.640 I think this is I mean, that's that's really the story. 0:11:33.760 --> 0:11:37.080 That they can lose share and still be growing at 0:11:37.240 --> 0:11:40.000 rapid pace. And the margins. We haven't even talked about 0:11:40.040 --> 0:11:43.640 the margins. You know about seventy percent. I mean, I 0:11:43.640 --> 0:11:45.599 don't know what there is to complain about. 0:11:46.920 --> 0:11:50.080 Instagram add a sixty brilliant lot of stock buyback, I mean, 0:11:50.160 --> 0:11:53.160 and still the stock cast away some Nancy tang of 0:11:53.240 --> 0:11:55.920 lef at Tangra Investments. It's always so good Tavy on 0:11:55.920 --> 0:11:57.960 the show, Thank you very much. Indeed wearing a leather 0:11:58.080 --> 0:12:00.000 an ode to Jensen that I mean, well, coming up 0:12:00.240 --> 0:12:02.640 more in Nvidia as China trade tensions. Of course, they're 0:12:02.679 --> 0:12:05.000 weighing on earnings. We're going to speak with Teresa Payton 0:12:05.120 --> 0:12:09.000 for Alis Solutions CEO on the China AI landscape. 0:12:09.000 --> 0:12:09.840 This is Bloomberg Tech. 0:12:21.480 --> 0:12:24.200 Check in on those Nvidia shares we're off by let's 0:12:24.200 --> 0:12:26.400 call it nine ten percent for a more than four 0:12:26.480 --> 0:12:29.680 trillion dollar stock. That's thirty eight billion that you've just 0:12:29.720 --> 0:12:33.400 wiped out in terms of market capitalization in Vidia's business. 0:12:33.600 --> 0:12:37.280 I mean the overhang has been China clouding the area 0:12:37.320 --> 0:12:39.600 because of trade tensions. That the company now saying that 0:12:39.920 --> 0:12:42.800 unconventional plan of course by the Trump administration to charge 0:12:42.800 --> 0:12:46.080 a fifteen percent commission on AI chip sales to China 0:12:46.520 --> 0:12:49.400 when it hasn't progressed actually beyond its early stages. Let's 0:12:49.440 --> 0:12:52.160 check in what the CFO, Collect Crest told us earlier. 0:12:52.640 --> 0:12:54.840 She said to Bloomberg, I don't have to do this 0:12:54.920 --> 0:12:57.880 fifteen percent until I see something that is a true 0:12:58.040 --> 0:13:02.160 regulatory document. Let's get more from New Meg's executive editor. 0:13:01.960 --> 0:13:02.559 Mike Shephard. 0:13:02.679 --> 0:13:06.319 You really sit at the intersection of politics and technology mine. 0:13:06.440 --> 0:13:08.760 So the ball is in the administration's court. They've told 0:13:08.840 --> 0:13:11.000 us that they're going to take fifteen percent. Well, where's 0:13:11.000 --> 0:13:12.280 the regulatory approval here? 0:13:12.920 --> 0:13:16.000 Well, that's really the question of the hour here in Washington, 0:13:16.080 --> 0:13:19.680 in Silicon Valley and on Wall Street. When are we 0:13:19.760 --> 0:13:22.680 going to see the fine print on this? And as 0:13:22.800 --> 0:13:25.920 Ian noted at the top of the hour, the company 0:13:25.960 --> 0:13:28.920 is proceeding very carefully on this front. It doesn't want 0:13:28.960 --> 0:13:33.160 to commit without seeing something in writing, because the terms 0:13:33.200 --> 0:13:38.440 could even change, especially with this administration halfway through. So 0:13:38.679 --> 0:13:41.400 they want to make sure they see this imprint and 0:13:41.480 --> 0:13:45.240 if they understand the legal and regulatory mechanism under which 0:13:45.280 --> 0:13:48.319 they would make these payments to the US Treasury. Remember, 0:13:48.520 --> 0:13:51.400 it's not quite a tax, it's not quite an import fee. 0:13:51.440 --> 0:13:53.680 It's really kind of hard to figure out how they 0:13:53.720 --> 0:13:56.520 would define it. And in a way it is holding 0:13:56.800 --> 0:13:59.760 the company up a little bit in terms of making 0:14:00.080 --> 0:14:03.760 those sales once again of the age twenty AI chip 0:14:03.800 --> 0:14:07.000 to Chinese customers. They don't want to proceed too fast, 0:14:07.080 --> 0:14:10.160 as a CFO suggest that they had the right to do. 0:14:10.280 --> 0:14:13.080 They have some of the export licenses in hand. But 0:14:13.120 --> 0:14:16.280 then again, if they proceed without actually giving the government 0:14:16.640 --> 0:14:20.560 a cut, that does risk angering the administration. And this 0:14:20.640 --> 0:14:24.000 is a government that Jensen Wong, the CEO of Nvidia, 0:14:24.040 --> 0:14:28.040 has tried very hard to cultivate good terms with He 0:14:28.160 --> 0:14:30.840 is visited with President Donald Trump a number of times, 0:14:31.000 --> 0:14:33.200 and the two men have built this report. So they 0:14:33.240 --> 0:14:36.040 want to make sure they are treading carefully here, Caro, 0:14:36.440 --> 0:14:38.840 because they're playing the long game. They are looking ahead 0:14:38.880 --> 0:14:41.160 to how Trump can help them in China. 0:14:41.200 --> 0:14:44.120 And I think Jensen and his CFO are trying to 0:14:44.560 --> 0:14:47.600 really remind the administration just how much money's left on 0:14:47.640 --> 0:14:49.600 the table. Up to five billion dollars worth could be 0:14:49.640 --> 0:14:52.600 made in H twenty sales in this next quarter alone. 0:14:52.680 --> 0:14:56.000 They're talking about the fifty billion dollar opportunity of China 0:14:56.040 --> 0:15:00.560 sales if they can get a modified Blackwell architecture the country. 0:15:00.560 --> 0:15:02.440 And that really was what Jensen was talking about, his 0:15:02.520 --> 0:15:05.960 hopes to talk to Trump about that, and actually the administration, 0:15:06.080 --> 0:15:10.080 in fact, President Trump has put messages out posted on 0:15:10.160 --> 0:15:12.880 his truth social about the fact that he expects some 0:15:12.880 --> 0:15:15.080 sort of request. 0:15:14.440 --> 0:15:18.040 Yes, and he is signaling his openness to granting that 0:15:18.240 --> 0:15:22.400 permission to the company to sell a scaleback version of 0:15:22.440 --> 0:15:26.760 the market leading Blackwell chip to Chinese customers. Now, again, 0:15:26.800 --> 0:15:29.960 we would expect the president to insist on getting his cup. 0:15:30.000 --> 0:15:32.600 Would it be fifteen percent, would it be more? What 0:15:32.640 --> 0:15:35.960 other demands might he put there, But again, this would 0:15:36.000 --> 0:15:38.520 be very much in tune and in line with what 0:15:38.560 --> 0:15:41.880 the administration is doing, not only with Nvidia, but also 0:15:41.960 --> 0:15:44.280 in a way trying to, I guess, restore some of 0:15:44.280 --> 0:15:47.600 those economic and political ties with China that we've seen 0:15:47.680 --> 0:15:48.840 bruised over the years. 0:15:49.360 --> 0:15:52.240 Mike Shephard, we thank you so much, Bloomberg. Let's get 0:15:52.280 --> 0:15:55.360 more insight now. Teresa Payden's with us for Tallis Solution CEO, 0:15:55.440 --> 0:15:59.200 former White House Chief Information Officer. At the moment, we're 0:15:59.240 --> 0:16:03.200 seeing Chinese rivals gain on the back of this lack 0:16:03.240 --> 0:16:04.280 of Nvidio competition. 0:16:04.400 --> 0:16:05.640 Right now, what do you make of it? 0:16:07.160 --> 0:16:09.360 Well, all I know is we're going to have to 0:16:09.360 --> 0:16:12.120 figure out there's a long race here and a short 0:16:12.200 --> 0:16:15.040 race here, and we have to secure not only our 0:16:15.520 --> 0:16:19.520 global leadership but also our intellectual property. And that's really 0:16:19.800 --> 0:16:22.760 some of the underpinning of the discussions here of is 0:16:22.760 --> 0:16:24.960 there a fifteen percent? Is there not a fifteen percent? 0:16:25.040 --> 0:16:28.720 What does this mean from an export control? So a 0:16:28.760 --> 0:16:31.760 lot more to come on this, but obviously China is 0:16:31.840 --> 0:16:34.960 amping up their part in the race, trying to win 0:16:35.120 --> 0:16:38.080 the global war on who's going to dominate AI? 0:16:38.600 --> 0:16:40.000 What is the IP risk. 0:16:41.240 --> 0:16:44.200 Well, the IP risk. So even though we're talking about 0:16:44.240 --> 0:16:48.760 sending a modified chip over to China, in my opinion, 0:16:48.800 --> 0:16:51.200 based on my years of experience, it's like handing over 0:16:51.240 --> 0:16:53.400 the keys to your R and D lab and saying 0:16:53.480 --> 0:16:56.280 just be in the small QA lab, not in the 0:16:56.280 --> 0:16:59.440 bigger lab, and don't look around. You wouldn't hand the 0:16:59.520 --> 0:17:01.880 keys to your R and D lab to your competitor. 0:17:02.240 --> 0:17:05.720 And China is our global competitor here for this technology. 0:17:05.800 --> 0:17:08.480 So that really what we're thinking about here is how 0:17:08.520 --> 0:17:12.040 could they get access to these chips and perhaps reverse 0:17:12.119 --> 0:17:17.240 engineer everything from performance to how things behave. Really, you 0:17:17.400 --> 0:17:19.240 just don't know what they're going to be able to 0:17:19.280 --> 0:17:21.359 do once they have their hands on all these chips. 0:17:21.520 --> 0:17:24.520 Teresa, let's say you're back as the White House Chief 0:17:24.520 --> 0:17:28.080 Information officer. What are you advising President Trump as to 0:17:28.119 --> 0:17:31.119 whether Jensen should have access to the Chinese market. 0:17:32.720 --> 0:17:34.960 Well, I think this is a tough one because the 0:17:35.000 --> 0:17:38.239 private sector does have the right. You know, companies do 0:17:38.320 --> 0:17:41.639 have the right to sell their goods and services all 0:17:41.680 --> 0:17:45.040 around the globe. We don't have a blockade on selling 0:17:45.160 --> 0:17:48.840 technology and other goods and services to China. So this 0:17:48.920 --> 0:17:52.080 is a very delicate balance here between a White House 0:17:52.119 --> 0:17:55.840 administration and a private sector organization. And so really what 0:17:55.880 --> 0:17:57.360 you have to do is look at the laws we 0:17:57.400 --> 0:17:59.880 already have on the books, and then so what kind 0:17:59.880 --> 0:18:04.119 of safeguards is this US based company going to follow 0:18:04.160 --> 0:18:06.359 based on the laws on the books, What types of 0:18:06.359 --> 0:18:10.320 inspection processes, what types of control processes. There is a 0:18:10.359 --> 0:18:14.359 playbook for doing this, even though this technology is new, 0:18:14.440 --> 0:18:16.520 and so we have to look at this playbook. The 0:18:16.640 --> 0:18:19.800 question is is whether or not new rules and regulations 0:18:19.800 --> 0:18:21.560 are going to be codified. And I think that's the 0:18:21.640 --> 0:18:24.320 open question that in Nvidia is having to deal with. 0:18:25.280 --> 0:18:28.560 In Vidia put in its ten Q that it could 0:18:28.600 --> 0:18:34.280 be exposed to potential legal implications because of this fifteen 0:18:34.280 --> 0:18:35.840 percent issue. 0:18:36.240 --> 0:18:38.960 What would it face in terms of legal issues? 0:18:40.640 --> 0:18:43.520 Well, if we end up codifying some type of a 0:18:43.640 --> 0:18:50.000 new barrier to the market in China or enforcing one 0:18:50.000 --> 0:18:52.320 of the existing regulations in a way that hasn't been 0:18:52.400 --> 0:18:55.000 enforced before, then in Video would have to make the 0:18:55.040 --> 0:18:59.600 decision of am I now blockaded from actually selling to China? 0:18:59.720 --> 0:19:01.800 Or do I have a lot of burdens on me 0:19:01.920 --> 0:19:04.440 that maybe don't exist for other companies who are selling 0:19:04.440 --> 0:19:07.600 technology to China. Remember, you've got big tech who's in 0:19:07.720 --> 0:19:10.720 China's social media is in China. It's not just Nvidia 0:19:10.760 --> 0:19:13.439 who is selling goods and services to China. And so 0:19:13.560 --> 0:19:16.679 they may decide, well, this is an undue burden placed 0:19:16.720 --> 0:19:19.720 on us. So they may decide to take on a lawsuit, 0:19:20.320 --> 0:19:24.480 or they may find themselves answering to for example, Siphius. 0:19:24.960 --> 0:19:27.800 As you know, TikTok Usa has had a lot of 0:19:27.880 --> 0:19:31.280 legal challenges in legal bills as it relates to how 0:19:31.320 --> 0:19:35.160 they operate and sifias interpretations of how they operate. So 0:19:35.240 --> 0:19:37.760 I think they're just kind of looking at past cases 0:19:37.800 --> 0:19:41.360 president precedent and then also looking at the president's remarks 0:19:41.400 --> 0:19:45.600 as a potential future precedent and deciding that there could 0:19:45.680 --> 0:19:49.080 be a risk for a long protracted legal battle. 0:19:49.640 --> 0:19:50.360 Theresa. 0:19:50.720 --> 0:19:53.040 We heard from Jensen Wang there's a fifty billion dollar 0:19:53.080 --> 0:19:57.080 opportunity in this year alone in China, but push out 0:19:57.119 --> 0:20:00.000 five years. Does that exist at the rate that Chinese 0:20:00.119 --> 0:20:02.920 government trying to push their own companies away from the 0:20:03.000 --> 0:20:03.800 US tech stack. 0:20:04.880 --> 0:20:07.879 Yeah, it may not exist in the future. That is 0:20:07.920 --> 0:20:10.919 a tough one. All I can tell you is from 0:20:11.160 --> 0:20:14.879 the frontlines of working with companies who have done business 0:20:14.960 --> 0:20:20.440 with China. It is a very tricky proposition, especially as 0:20:20.440 --> 0:20:23.199 it relates to cutting edge technologies, whether it's sort of 0:20:23.240 --> 0:20:27.960 like clean energy, whether it's computer technology, and it's very 0:20:28.000 --> 0:20:31.560 difficult and challenging to really understand what the regulatory environment 0:20:31.640 --> 0:20:34.320 is going to be and the protection for your intellectual property. 0:20:34.680 --> 0:20:34.879 You know. 0:20:34.960 --> 0:20:38.400 Kind of the big elephant that we're not discussing in 0:20:38.480 --> 0:20:40.720 having all of these conversations is we have a new 0:20:41.640 --> 0:20:45.560 more detailed report from the FBI on Salt Typhoon, and 0:20:45.600 --> 0:20:48.680