WEBVTT - BI Weekend: Nvidia, Lowe’s, TJX Earnings 0:00:02.920 --> 0:00:12.600 Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Intelligence 0:00:12.640 --> 0:00:14.400 with Alex Steina and Paul'sweenye. 0:00:14.520 --> 0:00:17.720 The real app performance has been the US corporate high yield. 0:00:17.880 --> 0:00:20.239 Are the companies lean enough? Have they trimmed all the fats? 0:00:20.320 --> 0:00:23.880 The semiconductor business is a really cyclical business. 0:00:23.600 --> 0:00:27.200 Breaking market headlines and corporate news from across the globe. 0:00:27.240 --> 0:00:29.880 Do investors like the M and A that we've seen? 0:00:30.080 --> 0:00:33.159 These are two big time blue chip companies. 0:00:33.320 --> 0:00:36.920 The window between the peak and cut changing super fast. 0:00:37.080 --> 0:00:41.720 Bloomberg Intelligence with Alex Steinhall and Paul's Wheenye on Bloomberg Radio. 0:00:43.120 --> 0:00:45.680 On Today's Bloomberg Intelligence Show, we dig inside the big 0:00:45.720 --> 0:00:47.920 business story impacting Wall Street and the global markets. 0:00:48.080 --> 0:00:50.080 Each and every week we provide in depth research and 0:00:50.159 --> 0:00:51.920 data on some of the two thousand companies and one 0:00:52.000 --> 0:00:54.480 hundred and thirty industries our analysts cover worldwide. 0:00:54.840 --> 0:00:57.520 Today, we'll look at why shares of the IT company 0:00:57.640 --> 0:01:01.040 super Microcomputer roast the most since February plaus. 0:01:00.760 --> 0:01:03.520 We'll discuss how a weak housing market impacted quarterly sales 0:01:03.520 --> 0:01:04.759 at the department store lows. 0:01:05.120 --> 0:01:08.200 First, we dive into corporate earnings from AI giant Nvidia, 0:01:08.319 --> 0:01:10.840 the chip maker delivered a revenue forecast that failed to 0:01:10.880 --> 0:01:14.080 meet analyst expectations, and this suggests that the company's dizzey 0:01:14.080 --> 0:01:15.600 and growth has its limits. 0:01:15.720 --> 0:01:18.200 However, in Nvidia did ashore investors that its new product 0:01:18.280 --> 0:01:21.720 lineup can maintain the company's AI fueled growth run for more. 0:01:21.840 --> 0:01:24.400 Paul was joined by man Deep Sing Bloomberg Intelligence senior 0:01:24.480 --> 0:01:25.520 tech industry analyst. 0:01:25.720 --> 0:01:27.480 I first asked man Deep for his take on in 0:01:27.600 --> 0:01:28.679 Vidia's most recent quarter. 0:01:29.080 --> 0:01:32.280 Any slight miss in the networking side, which was the 0:01:32.360 --> 0:01:35.600 case here, or even a gross margin degradation which they 0:01:35.680 --> 0:01:39.480 said will go up in the second half of next year, 0:01:39.520 --> 0:01:43.560 So it's really a transitory thing. I think overall, the 0:01:43.760 --> 0:01:48.360 demand side looks pretty solid, they said. Jensen called out 0:01:48.800 --> 0:01:52.520 there will be no CAPEX digestion until the data center 0:01:52.720 --> 0:01:54.600 spending hits a trillion dollars. 0:01:54.920 --> 0:01:55.480 That's huge. 0:01:55.520 --> 0:01:58.040 I mean, just think about you know how much runway. 0:01:58.120 --> 0:02:02.080 He thinks, without a pause. Now, does the market believe it? 0:02:02.160 --> 0:02:06.320 Probably not, Given what we heard at our conference yesterday 0:02:06.520 --> 0:02:09.720 is it's moving from training to inferencing, and on the 0:02:09.880 --> 0:02:14.440 inferencing side there is probably more. So if once you 0:02:14.520 --> 0:02:18.440 have a train model, you're deploying that model in co 0:02:18.680 --> 0:02:22.720 pilots or chat pots, and it's basically a train model 0:02:22.800 --> 0:02:27.440 that's being used for answering queries and that's inferencing answering 0:02:27.520 --> 0:02:30.600 queries or you know, providing some productivity benefit. 0:02:31.160 --> 0:02:33.840 And that's where do you really need a high end 0:02:33.840 --> 0:02:36.920 in video chip. The answer is divided. 0:02:37.160 --> 0:02:40.720 Some people say, for the older versions of in video chips, 0:02:40.919 --> 0:02:43.240 you could use that for inferencing. The latest one will 0:02:43.280 --> 0:02:46.840 continue to get used for training, and that's a plausible answer, 0:02:47.120 --> 0:02:50.680 but as we have learned, there is growing competition on 0:02:50.720 --> 0:02:53.639 the inferencing side from the likes of AMD as well 0:02:53.639 --> 0:02:57.600 as startups like sam Banava, Cerebras and all these companies 0:02:57.639 --> 0:02:59.960 are trying to get some portion of that part. 0:03:00.800 --> 0:03:03.480 When you listen to this the management team in Nvidia, 0:03:04.280 --> 0:03:06.280 where do they say, I mean, can they look a 0:03:06.360 --> 0:03:08.600 year two years in advance? How do they think their 0:03:08.600 --> 0:03:09.760 business is going to develop? 0:03:10.120 --> 0:03:10.320 Yeah? 0:03:10.360 --> 0:03:13.399 I mean, look the fact that they're saying gross margins 0:03:13.480 --> 0:03:16.240 will go down to around seventy one percent over the 0:03:16.280 --> 0:03:17.080 next two quarters. 0:03:17.080 --> 0:03:19.600 But readbound seventy one, seventy one grows. 0:03:19.440 --> 0:03:23.720 Smart Yes, wow, and it's it's again terrific when you 0:03:23.760 --> 0:03:27.920 look at it from every angle is just the way 0:03:28.000 --> 0:03:31.560 expectations were priced for it's mid seventy percent, So the 0:03:31.639 --> 0:03:33.960 fact that they are going down to seventy one percent, 0:03:34.400 --> 0:03:40.640 but in Jensen's case, he called out those margins going 0:03:40.720 --> 0:03:43.200 back to seventy five percent. So it's really a ramp 0:03:43.280 --> 0:03:46.640 up of their new architecture Blackwell, which is causing the 0:03:46.920 --> 0:03:50.920 transitory gross margin degradation. But once they get that in 0:03:51.000 --> 0:03:54.040 full production, he expects gross margins to go back to 0:03:54.040 --> 0:03:57.119 seventy five percent. Now I do think again there will 0:03:57.160 --> 0:04:00.160 be more competition, but he clearly doesn't believe that to 0:04:00.200 --> 0:04:00.680 be the case. 0:04:00.720 --> 0:04:02.640 All Right, I mean, here are just some crazy numbers 0:04:02.680 --> 0:04:06.280 of folks, just total Revenue's let's go really simple here. 0:04:06.360 --> 0:04:11.880 Revenue roughly calendar year twenty two, twenty seven billion of revenue, 0:04:12.040 --> 0:04:15.560 calendar year twenty four, one hundred and twenty eight billion 0:04:15.560 --> 0:04:18.920 of revenue. Have you seen anything like this in technology? 0:04:19.520 --> 0:04:21.839 I mean, the closest thing that comes to mind is 0:04:21.880 --> 0:04:25.599 the build out of the internet infrastructure back in nineteen 0:04:25.680 --> 0:04:29.360 ninety nine. I think Cisco had a similar ramp up 0:04:29.400 --> 0:04:33.360 on the networking side. But what's different is in Vidia 0:04:33.400 --> 0:04:37.800 clearly has the balance sheet as well as they are 0:04:37.960 --> 0:04:42.279 in more products than Cisco was. So Cisco was just 0:04:42.360 --> 0:04:46.120 providing the networking gear. In Nvidia has a software line, 0:04:46.279 --> 0:04:49.279 they have a networking business and then their core ship business. 0:04:49.279 --> 0:04:52.040 So clearly in Vidia is going with the. 0:04:52.000 --> 0:04:56.040 Platform a stupid income statement. They have fifty five percent 0:04:56.160 --> 0:05:00.200 net income margins, so and they have no capback to 0:05:00.240 --> 0:05:03.080 speak of two three four poen so the free cash 0:05:03.080 --> 0:05:05.279 flow is just freakish. 0:05:05.800 --> 0:05:07.680 So what do they do with the cash? 0:05:07.920 --> 0:05:11.760 Well, right now they're doing some share buybacks, but acquisitions 0:05:11.800 --> 0:05:15.080 maybe on the table if the incoming Trump administration loses 0:05:15.120 --> 0:05:15.760 the regulation. 0:05:15.960 --> 0:05:18.480 So okay, let's go down that road there. What's the 0:05:18.560 --> 0:05:22.360 feeling in Silicon Valley in technology about that opportunity, because, boy, 0:05:22.720 --> 0:05:24.880 your industry, in particularly some of the bigger companies that 0:05:24.920 --> 0:05:27.040 you cover, the Amazons of the world, the Google's the world, 0:05:27.240 --> 0:05:30.560 they can't do anything these days. Is the expectation that 0:05:30.640 --> 0:05:31.359 might loosen up. 0:05:32.240 --> 0:05:35.760 Well, the overall m andy environment an IP environment may 0:05:35.760 --> 0:05:39.080 get better, but in terms of big tech, I doubt 0:05:39.120 --> 0:05:42.600 it's anything is changing on that front, especially for the 0:05:42.720 --> 0:05:47.000 likes of Alphabet and Meta. Probably an Apple or an 0:05:47.080 --> 0:05:50.520 Nvidia may be able to do more acquisitions, but I 0:05:50.520 --> 0:05:53.760 think the companies that are in the crosshairs of you 0:05:53.800 --> 0:05:58.560 know what the incoming administration feels on the consumer side. 0:05:58.720 --> 0:06:01.799 I doubt they'll allow them to make any for their acquisition, 0:06:02.080 --> 0:06:02.279 all right. 0:06:02.320 --> 0:06:05.480 Thanks to Mandy pep Seeing Bloomberg Intelligence, Senior tech industry analyst. 0:06:05.839 --> 0:06:08.520 Each week we look at research from Bloomberg and EF 0:06:08.640 --> 0:06:10.719 previously known as New Energy Finance, so the. 0:06:10.680 --> 0:06:13.440 Team at Bloomberg that tracks and analyzes the energy transition 0:06:13.520 --> 0:06:17.360 from commodities to power, transport, industries, buildings, and ag sectors. 0:06:17.640 --> 0:06:19.680 This week we took a look at what Donald Trump's 0:06:19.760 --> 0:06:22.560 upcoming presidency will mean for the energy transition for more. 0:06:22.560 --> 0:06:24.799 We are joined by Derek flakel Bloomberg b and EF 0:06:24.880 --> 0:06:27.640 lead US policy analyst, and we first asked Derek for 0:06:27.680 --> 0:06:30.000 his take on what changes will come next. 0:06:30.400 --> 0:06:31.880 First of all, there's a lot of worries about the 0:06:31.920 --> 0:06:34.400 future of the Inflation Reduction Act. The US is signature 0:06:34.760 --> 0:06:38.920 climate subsidy program. We expect that will mostly remain intact. 0:06:39.240 --> 0:06:42.520 A lot of Republican district states for benefiting fourteen. How 0:06:42.600 --> 0:06:45.200 Republicans have signed a letter saying they don't want to 0:06:45.240 --> 0:06:47.599 see those tax credits repealed hastily, and the Speaker of 0:06:47.600 --> 0:06:49.960 the House has said that he wants to see the scalpel, 0:06:50.000 --> 0:06:51.600 not a sledgehammer, So we think a lot of that 0:06:51.640 --> 0:06:53.760 will survive. Where you're likely to see more change is 0:06:53.839 --> 0:06:58.279 regulations and some voluntary initiatives like the procurement for clean 0:06:58.320 --> 0:06:59.520 products from the federal government. 0:07:00.400 --> 0:07:04.239 So I'm just looking. You have a great, great chart 0:07:04.360 --> 0:07:07.200 graphic here. Fossil fuels are likely to farewell on our 0:07:07.240 --> 0:07:12.480 Trump administration. Electric vehicles are not. Wouldn't mister Musk have 0:07:12.560 --> 0:07:14.840 something to say about the fate of electric vehicles? 0:07:15.920 --> 0:07:17.960 He certainly would, But the question is what is Tesla's 0:07:17.960 --> 0:07:20.760 strategy going to be visa VI of a electric vehicle producers, 0:07:21.080 --> 0:07:24.520 most of the valuation comes from the dream of a ROBOTAXI. 0:07:24.600 --> 0:07:27.360 And we've certainly seen some Bloomberg reporting recently saying that 0:07:27.440 --> 0:07:29.880 Musk is likely to put for a favorable framework on 0:07:30.000 --> 0:07:33.400 av's when it comes to evs or electric vehicles. You know, 0:07:33.600 --> 0:07:35.800 he has said and the business and now may or 0:07:35.800 --> 0:07:38.840 may not bear this out that Tesla would do better 0:07:39.240 --> 0:07:42.520 sort of survive the loss of the EV tax credits 0:07:42.520 --> 0:07:44.480 in a way that some of his EV competitors might not. 0:07:45.160 --> 0:07:47.920 It ultimately depends on what you and what he thinks 0:07:47.960 --> 0:07:50.760 tesl's interest is whether it's dominating a smaller EV market 0:07:50.920 --> 0:07:52.920 or having a smaller share of a larger EV market. 0:07:53.200 --> 0:07:54.680 Let's move into some of the stuff that feels a 0:07:54.720 --> 0:07:57.320 little bit disier, and those are the tax credits that 0:07:57.400 --> 0:08:00.640 are part of the IRA. So one is as a 0:08:00.800 --> 0:08:04.160 tax credit for carbon that's captured, how you store, how 0:08:04.200 --> 0:08:06.560 you capture it is debatable in terms of how much 0:08:06.560 --> 0:08:08.320 tax credit you receive, and the other has to do 0:08:08.360 --> 0:08:11.920 with hydrogen. How do we feel about those two policies 0:08:12.760 --> 0:08:14.960 either staying in place or getting reduced. 0:08:16.080 --> 0:08:19.960 So these tax credits are favored by industrial interests, oil 0:08:19.960 --> 0:08:22.560 and gas interests. From what I've heard, there's not a 0:08:22.600 --> 0:08:24.600 lot of Republican appetite to appeal either of the votes. 0:08:24.640 --> 0:08:27.160 But you're likely to see is looser regulations on both, 0:08:27.280 --> 0:08:29.680 which actually strengthens the business case for both. We might 0:08:29.680 --> 0:08:32.320 see a better outlook for both carbon caster and for 0:08:32.440 --> 0:08:36.440 hydrids than under Trump administration. Now, as for emissions benefits, 0:08:36.480 --> 0:08:38.880 the market acceptance of that, that might be a little 0:08:38.880 --> 0:08:43.400 bit diceier, but nevertheless we see the economic case too 0:08:43.760 --> 0:08:45.960 being a little bit easier as compliance costs go down. 0:08:47.160 --> 0:08:50.360 So I'm just looking again winners and losers here, how 0:08:50.440 --> 0:08:53.320 much of this is a day one type of policy 0:08:53.360 --> 0:08:56.720 thing versus boy, this is just take a while. To 0:08:56.800 --> 0:08:59.640 the extent that Trump administration may want to shift gears 0:09:00.200 --> 0:09:03.480 on the energy transition, it seems like a lot of 0:09:03.520 --> 0:09:05.880 stuff has already been spent. There's a lot of investment 0:09:05.920 --> 0:09:08.160 already on my ground. What's the timing, do you think? 0:09:09.520 --> 0:09:11.320 Right? Well, it depends on what you're talking about. If 0:09:11.320 --> 0:09:13.360 you're talking about taxes, there's going to be a big 0:09:13.400 --> 0:09:16.200 tax negotiation taking up probably most of twenty twenty five 0:09:16.280 --> 0:09:18.360 to do with extending the Trump tax cuts, seeing what 0:09:18.400 --> 0:09:20.840 happens with the IRA et cetera. You're likely to see 0:09:21.200 --> 0:09:22.600 closure on that by the end of the year. But 0:09:22.640 --> 0:09:25.680 after that will come regulatory changes and so forth. In general, 0:09:25.679 --> 0:09:30.160 regulatory changes, including those for existing tax credits, take usually 0:09:30.240 --> 0:09:34.240 about two or three years, give or take, and so 0:09:34.640 --> 0:09:36.800 a lot of the stuff can't really happen on day one. 0:09:36.840 --> 0:09:40.560 You can't really shift to sip on a dime. However, 0:09:40.640 --> 0:09:43.280 in terms of carrif, those are things that can be 0:09:43.320 --> 0:09:47.120 done more or less immediately, though politically that might not 0:09:47.200 --> 0:09:51.760 fly too well. And programs that are sort of voluntary 0:09:51.880 --> 0:09:54.240 like again federal procurement of clean products, Those could be 0:09:54.360 --> 0:09:56.720 killed more or less day one by an executive order. 0:09:56.920 --> 0:09:59.440 What about wind and solar? So to some extent a 0:09:59.480 --> 0:10:01.880 lot has our been thrown into that, and it's hard 0:10:01.880 --> 0:10:04.199 to see onshore wind and solar, it's hard for me 0:10:04.280 --> 0:10:08.080 to reconcile that being really stripped away. But the offshore 0:10:08.160 --> 0:10:10.920 wind space that has question marks for me. 0:10:11.880 --> 0:10:14.199 Yeah, it does have quite a few. If you look 0:10:14.240 --> 0:10:18.079 at BNFS modeling for what might happen if the IRA 0:10:18.280 --> 0:10:20.720 were repealed at the earliest opportunity, which again we don't 0:10:20.720 --> 0:10:22.720 think will happen, but even if it did, you would 0:10:22.720 --> 0:10:25.560 see about a seventeen percent drop overall in the combination 0:10:25.679 --> 0:10:28.920 of wind, solar, and storage installations. Wind itself, though, would 0:10:28.920 --> 0:10:31.120 see a much bigger drop because it's very expensive and 0:10:31.160 --> 0:10:33.679 tax pres dependent. You might see about like thirty percent 0:10:33.760 --> 0:10:36.520 drop in on store wind and an over forty percent 0:10:36.640 --> 0:10:38.960 drop in offshore wind, and that's only based on the 0:10:38.960 --> 0:10:39.920 financial subsidies. 0:10:39.960 --> 0:10:40.160 Right. 0:10:40.440 --> 0:10:44.000 Trump has a lot more control over offshore leasing as 0:10:44.080 --> 0:10:47.120 well as federal permits. There's a pipeline of products that 0:10:47.120 --> 0:10:49.640 already have both offer leases and permits, but a lot 0:10:49.640 --> 0:10:52.240 of proposed ones don't have that yet, and there's also 0:10:52.360 --> 0:10:54.960 questions about how the Unity would approach litigate and against 0:10:54.960 --> 0:10:58.440 existing off for wind permits. You might see some of 0:10:58.480 --> 0:11:00.960 that fall by the wayside depending on how lawsuits go. 0:11:01.679 --> 0:11:06.000 Derek just broadly defined how committed is Congress as a 0:11:06.120 --> 0:11:10.040 legislative body to this whole energy transition. Do they feel 0:11:10.040 --> 0:11:13.720 like it's real or how did they feel about it? 0:11:13.800 --> 0:11:17.720 Are facilities being built in their states? Yeah, so that 0:11:16.440 --> 0:11:18.679 might act they answer. 0:11:18.480 --> 0:11:22.360 To exactly from what we attract in clean tech factory deployments, 0:11:22.360 --> 0:11:25.280 I think about ninety percent is going to red or purple. 0:11:25.280 --> 0:11:28.280 It has swing states, so there's a lot of electoral consequences, 0:11:28.360 --> 0:11:31.200 especially if you zoom down at the district level, where 0:11:31.240 --> 0:11:35.480 overwhelmingly it's Republican districts with the planned better labor costs, 0:11:36.400 --> 0:11:38.880 rich resource these are the place they're seeing the most investment. 0:11:38.920 --> 0:11:42.520 And so I think the commitment primarily is to economic development, 0:11:42.600 --> 0:11:46.120 local opportunity, as well as to some degree on storing 0:11:46.240 --> 0:11:50.680 and supply chained diversificatement and de risking, and that I 0:11:50.679 --> 0:11:53.280 think is fairly durable in a bipartisan manner. 0:11:53.679 --> 0:11:57.800 Our Thanks to Derek flakel BN ef lead US Policy ammost. 0:11:57.679 --> 0:11:59.360 Coming up, we're going to break down how Wall Street 0:11:59.360 --> 0:12:02.480 banks are planning money into artificial intelligence as the next 0:12:02.480 --> 0:12:03.000 big thing. 0:12:03.240 --> 0:12:06.199 You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 0:12:06.240 --> 0:12:08.320 depth research and data on two thousand companies and one 0:12:08.400 --> 0:12:11.199 hundred and thirty industries. You can access Bloomberg Intelligence via 0:12:11.240 --> 0:12:12.480 b I go on the terminal. 0:12:12.640 --> 0:12:15.600 I'm Paul Sweeney and I'm Alex Deel, and this is Bloomberg. 0:12:20.720 --> 0:12:24.600 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:12:24.679 --> 0:12:28.040 weekdays at ten am Eastern on Affocarplay and Android Auto 0:12:28.120 --> 0:12:31.080 with the Bloomberg Business app. Listen on demand wherever you 0:12:31.120 --> 0:12:34.800 get your podcasts, or watch us live on YouTube. 0:12:35.920 --> 0:12:38.760 We move next to news on the information technology company 0:12:38.840 --> 0:12:40.160 super micro Computer. 0:12:40.520 --> 0:12:44.000 This week, super micro computer shares rose the most since February, 0:12:44.040 --> 0:12:46.240 and this came after the company hired a new auditor, 0:12:46.360 --> 0:12:48.040 BDO USA. 0:12:48.120 --> 0:12:50.680 Super Micro also filed a plan to come into compliance 0:12:50.679 --> 0:12:53.880 with Nasdaq listing requirements. If the plan is accepted, super 0:12:53.920 --> 0:12:57.200 Micro's deadline for filing its financial disclosure reports will likely 0:12:57.240 --> 0:12:58.440 be extended to February. 0:12:58.559 --> 0:13:00.520 This would allow the company to stay listed on the 0:13:00.600 --> 0:13:03.400 NASTAC until a final decision is made. For more. We're 0:13:03.480 --> 0:13:06.720 joined by Woujin Hell Bloomberg Intelligence Senior Technology channelst We 0:13:06.760 --> 0:13:07.400 first asked. 0:13:07.200 --> 0:13:09.360 Wujin for his take on this week's news. 0:13:09.679 --> 0:13:13.120 The fact that they actually got an auditor, given what 0:13:13.160 --> 0:13:15.720 they've gone through over the last two to three months, 0:13:16.520 --> 0:13:18.199 is actually positive news for them. 0:13:18.679 --> 0:13:20.680 Which when I kind of just look at this story again, 0:13:20.679 --> 0:13:23.880 they've had some real concerns with their auditors and some 0:13:23.920 --> 0:13:26.040 of the auditors concerns about the risk controls. I guess 0:13:26.080 --> 0:13:28.480 at the company, can you give us your opinion of 0:13:29.040 --> 0:13:31.920 management of this company and the board of this company. 0:13:32.840 --> 0:13:36.840 Yeah. You know, one of the reasons why I and 0:13:36.840 --> 0:13:40.800 why resigned as an auditor as part of the AK 0:13:40.960 --> 0:13:45.080 filing was that there were some integrity issues that they 0:13:45.160 --> 0:13:49.120 found as part of trying to get some financial documents. 0:13:49.160 --> 0:13:52.640 You know, Paul, I haven't seen the word integrity issues 0:13:53.160 --> 0:13:57.960 in an AK filing or an auditor resignation since back 0:13:57.960 --> 0:13:59.920 in the end run days. I'm not saying that this 0:14:00.080 --> 0:14:03.320 is an Enron, but this is something that you don't 0:14:03.320 --> 0:14:07.000 typically find in filing. So you know, I have called 0:14:07.000 --> 0:14:10.120 for you may need an overhaul of the board or 0:14:10.200 --> 0:14:13.920 greater independence and possibly change of the CFO, because this 0:14:13.960 --> 0:14:17.240 is not the first rodeo of having delayed filings. 0:14:17.800 --> 0:14:21.239 Do you feel like the stock move is justified? 0:14:21.840 --> 0:14:25.720 Yeah, So if we think about the recent moves, there's 0:14:25.800 --> 0:14:30.080 actually been more headline risk that's been driving the stock 0:14:30.160 --> 0:14:33.600 than the fundamentals. I think much of this is more 0:14:33.600 --> 0:14:37.400 of a relief rally that they're not going to get delisted. Now, 0:14:37.520 --> 0:14:41.080 delisting would have meant a couple of things. First of all, 0:14:41.280 --> 0:14:43.680 for they get delisted and it is going to start 0:14:43.720 --> 0:14:47.680 some force selling, but it also potentially well it would 0:14:47.720 --> 0:14:49.880 have forced the removal of the S and P five hundred, 0:14:50.240 --> 0:14:52.920 which would have been another round of forced selling when 0:14:52.920 --> 0:14:57.640 the rebalancing comes in December the fifth. So that eliminates 0:14:57.920 --> 0:15:01.160 that risk for super micro risk. Some relief there, but 0:15:01.200 --> 0:15:02.480 they're still not out of the woods. 0:15:03.440 --> 0:15:06.320 Where does this company fit into kind of your part 0:15:06.320 --> 0:15:08.240 of the tech stack, Wouge in terms of being a 0:15:08.280 --> 0:15:11.520 supplier of you know, hardware and components and things like that, 0:15:11.560 --> 0:15:14.200 Because I mean it's got twenty five billion of I 0:15:14.200 --> 0:15:16.880 guess revenue. I'm just looking at the FA function forecasted 0:15:16.920 --> 0:15:18.760 for June twenty five. I mean, it's a big company. 0:15:19.960 --> 0:15:24.200 Yeah, look, it's all about AI AI AI. The question 0:15:24.280 --> 0:15:27.240 I have is how reliable are those estimates? Keep in 0:15:27.240 --> 0:15:30.760 mind there's been several coverage suspensions and I don't know 0:15:30.800 --> 0:15:32.480 how up to date those estimates are. 0:15:32.680 --> 0:15:35.720 Who are the customers for zuper Micro? 0:15:36.040 --> 0:15:39.200 Yeah, so we do know that there's one large cloud customer, 0:15:40.040 --> 0:15:43.560 which we suspect is Meta, but it's tier two cloud 0:15:43.600 --> 0:15:47.480 customers company that may be filing for an IPO called 0:15:47.520 --> 0:15:53.800 core Weave, and also Tesla's XAI. They bought probably about 0:15:53.800 --> 0:15:56.880 a one point five billion dollars in equipment from super 0:15:56.920 --> 0:15:58.720 Micro this past year, and. 0:15:58.640 --> 0:16:01.040 Which to your point about the analyst coverage, right, just 0:16:01.040 --> 0:16:04.040 pulled up the A and R function for analysts recommendations. 0:16:04.640 --> 0:16:09.119 Most or a lot of the annals have suspended coverage 0:16:09.680 --> 0:16:12.440 or not rated. Is kind of what we see. So 0:16:12.480 --> 0:16:13.920 we of the ones that do have a rating on 0:16:13.960 --> 0:16:17.280 their three buys, seven holds, and two sells. So it 0:16:17.320 --> 0:16:19.760 sounds like this company has a lot of ground a 0:16:19.800 --> 0:16:22.360 head of it to rebuild confidence from the analyst community, 0:16:22.400 --> 0:16:24.920 probably their customers, and from investors. Is that kind of 0:16:25.280 --> 0:16:25.720 your thought? 0:16:25.920 --> 0:16:26.200 Yeah? 0:16:26.800 --> 0:16:30.400 Yeah, I mean, look, I think some of the headline 0:16:30.480 --> 0:16:33.360 risk has been eliminated for now, or at least extended. 0:16:34.480 --> 0:16:37.640 You know, they only received an extension from the Nasdaq. 0:16:38.360 --> 0:16:41.760 The next milestone, quite frankly, is probably February twenty fifth, 0:16:41.840 --> 0:16:45.720 when if they don't follow their filings on time by 0:16:45.720 --> 0:16:49.120 that time, the delisting questions going to start arising again. 0:16:49.520 --> 0:16:51.200 They essentially kick the can down the road. 0:16:52.120 --> 0:16:54.160 This might be a super silly question. At one point 0:16:54.160 --> 0:16:55.920 I probably knew the answer to this, But where does 0:16:55.960 --> 0:16:58.640 super micro sit in the AI play stack? 0:17:00.160 --> 0:17:03.960 Yeah, so they're actually in the server space. It's the 0:17:04.680 --> 0:17:09.560 hardware equipment that helps run the models. Among the US vendors, 0:17:09.560 --> 0:17:12.879 they actually had the largest amount of AI service sales, 0:17:13.520 --> 0:17:15.159 larger than Dell and larger than HPE. 0:17:15.480 --> 0:17:18.280 So they're very much like needed in this market. Like 0:17:19.200 --> 0:17:21.320 it's going to be hard to replace them either way, right, 0:17:21.320 --> 0:17:23.000 Like they're needed essential. 0:17:23.960 --> 0:17:29.679 Well, that's a good comment and good question. Competition has grown. 0:17:30.200 --> 0:17:33.840 Dell is actually strengthening their AI chops quite a bit. 0:17:34.400 --> 0:17:36.840 But I came back from a couple of conferences recently 0:17:36.960 --> 0:17:40.040 and we're starting to see other companies with similar capabilities 0:17:40.920 --> 0:17:43.400 that we'll be making it much more competitive. And one 0:17:43.400 --> 0:17:46.040 of the evidence there so far is the lower gross 0:17:46.080 --> 0:17:49.800 margin they peaked their gross margin at around seventeen percent 0:17:49.840 --> 0:17:51.720 a couple of years back when they were the sole player, 0:17:52.200 --> 0:17:54.360 and now that you have more players coming in, their 0:17:55.000 --> 0:17:59.479 gross margin the last couple of quarters went from went 0:17:59.520 --> 0:18:02.040 to about three team percent in eleven percent all. 0:18:01.960 --> 0:18:05.160 Right, thanks to Bujin Hoo, Bloomberg Intelligence Senior Technology Analyst. 0:18:05.480 --> 0:18:07.840 This week we focused on a Bloomberg Big Take story 0:18:08.000 --> 0:18:11.000 entitled Wall Street Banker Spot a fat payday in one 0:18:11.240 --> 0:18:13.000 trillion dollar AI hysteria. 0:18:13.200 --> 0:18:15.520 You can find it on Bloomberg dot com and the Terminal, 0:18:15.680 --> 0:18:17.480 and the story looks at how Wall Street banks are 0:18:17.520 --> 0:18:20.800 plowing capital into artificial intelligence as the next big thing 0:18:21.160 --> 0:18:21.520 from work. 0:18:21.640 --> 0:18:23.960 We're joined by one of the stories authors, Neil Callanan, 0:18:24.119 --> 0:18:25.359 Bloomberg Senior Editor. 0:18:25.520 --> 0:18:27.359 We first asked Neil to talk to us about how 0:18:27.440 --> 0:18:30.000 much money Wall Street banks are actually steering towards AI. 0:18:30.400 --> 0:18:33.680 We're talking about a trillion in credit and two trillion 0:18:33.720 --> 0:18:38.880 and overall expenditure on data centers and AI and everything 0:18:38.880 --> 0:18:41.760 related to that. And basically what we have at the 0:18:41.760 --> 0:18:45.440 moment is the banks and private credit providers saying the 0:18:46.200 --> 0:18:49.600 flow of capital that's needed to fund these things means 0:18:49.600 --> 0:18:51.320 that we don't even have to compete with each other 0:18:51.400 --> 0:18:55.040 because everybody is going to get a slice of the 0:18:55.080 --> 0:18:58.480 pie regardless of what happens. But having said all that, 0:18:58.600 --> 0:19:01.520 actually it's probably the that's part of financing right now, 0:19:01.560 --> 0:19:05.080 and margins are quite tight compared with other types of lending, 0:19:05.200 --> 0:19:07.600 so you know, less than two percentage points if you've 0:19:07.600 --> 0:19:10.719 got one of these hyperscalers like Amazon or Meta or 0:19:12.320 --> 0:19:14.239 Alphabet is one of your tenants in one of these 0:19:14.320 --> 0:19:17.639 data centers, and each one is massive, so you know, 0:19:17.880 --> 0:19:19.920 these things are going to cost about twelve billion dollars 0:19:20.000 --> 0:19:23.040 each to construct. They're about the size of a skyscraper 0:19:23.080 --> 0:19:26.359 if you put it down sideways, and they're just filled 0:19:26.359 --> 0:19:29.200 them with rocks of computing powered and tended to drive 0:19:29.240 --> 0:19:29.919 AI forward. 0:19:30.440 --> 0:19:32.879 Neil, talk to us about this Morgan Stanley dinner you 0:19:32.920 --> 0:19:34.200 wrote about in the piece. 0:19:35.640 --> 0:19:38.400 Yeah, it's a dinner between the bank and a number 0:19:38.440 --> 0:19:42.320 of private credit firms. You know, usually these these companies 0:19:42.359 --> 0:19:46.800 are competing quite heavily with each other. Among the invitees 0:19:46.800 --> 0:19:51.440 are Ares and Blackstone and Apollo, for example. But at 0:19:51.440 --> 0:19:53.520 that dinner day kind of mood was like, we don't 0:19:53.560 --> 0:19:55.560 need to compete in the same way in this in 0:19:55.560 --> 0:19:58.760 this area because there's just a demound for so much 0:19:58.800 --> 0:20:01.879 capital at the moment and so much credit that we 0:20:01.880 --> 0:20:04.800 can all make out quite well out of this. And 0:20:05.000 --> 0:20:06.480 you know, it's kind of a new goal rush as 0:20:06.520 --> 0:20:06.719 it were. 0:20:07.440 --> 0:20:09.679 Up Did that message land like, are they all on 0:20:09.680 --> 0:20:10.560 the same page about that? 0:20:12.400 --> 0:20:13.679 I think the fact we got a hold of the 0:20:13.680 --> 0:20:17.800 details suggests perhaps not. And again, the competition seems to 0:20:17.840 --> 0:20:21.240 be there in terms of the pricing of the loans 0:20:21.240 --> 0:20:24.240 for the construction of data centers, which are very competitively 0:20:24.240 --> 0:20:25.040 priced at the moment. 0:20:25.800 --> 0:20:29.320 And is this equity financing, debt financing both all of 0:20:29.320 --> 0:20:32.320 the above public private? What kind of capital is being raised? 0:20:33.080 --> 0:20:36.240