Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. Bloomberg Tech is live
Speaker 1: from coast to coast with Caroline Hide in New York
Speaker 1: and ever Low in San Francisco.
Speaker 2: This is Bloomberg Tech coming up. All eyes on in
Speaker 2: video as a chip maker reports sarnings after the closing bell.
Speaker 2: What to expect from the world's most Valuable company? Throughout
Speaker 2: this hour, plus SpaceX's Starship hits a major milestone after
Speaker 2: deploying satellites in space for the first time. An IBM
Speaker 2: and AMD partner up to develop quantum centric supercomputing. We'll
Speaker 2: discussed with IBM's Quantum VP, but first we check in
Speaker 2: on these markets, and actually we just check in the
Speaker 2: world's most valuable company. We check in one that dominates
Speaker 2: the SMP to the tune of eight percent. I'm looking
Speaker 2: at a ten percent higher for InVideo.
Speaker 3: We are just one.
Speaker 2: Percentage point away from a new record high for this company.
Speaker 2: Will it get there after the closing bell, after the
Speaker 2: market shut In that post hours movement, we could see
Speaker 2: whitsh lash of up to six percent either direction, according
Speaker 2: to the options market. I'm looking at the waitings because
Speaker 2: this is why we focus on this company and this
Speaker 2: is why it's basically our super Bowl today. Eight percent
Speaker 2: of the s and P five hundred, we are twenty
Speaker 2: four percent of the tech sector within that SMP. Then
Speaker 2: aw's that one hundred now we're seeing in video make
Speaker 2: up ten percent of the waiting.
Speaker 3: And so therefore we go to a man.
Speaker 2: That has covered this stock before you and I could
Speaker 2: pronounce in video properly. It is the one and only
Speaker 2: in King, it's your super Bowl tonight. Ian And just
Speaker 2: so many questions remain about the forecast. It feels that
Speaker 2: there is where the guide is going to be keenly watched.
Speaker 4: Yeah, now that's absolutely true. I mean historically in video
Speaker 4: doesn't just have to beat on this forecast and project
Speaker 4: a rosy future, it has to blow past it and
Speaker 4: give Wall Street the sense that this never ending surge
Speaker 4: is coming. As we've seen with Carmen's story, things are
Speaker 4: very unclear this time. We really don't know how much
Speaker 4: China is going to be in that forecast, how much
Speaker 4: China can be in that forecast, And that's really the
Speaker 4: wildcard this time.
Speaker 2: And is we're going to have to hear from Jensen
Speaker 2: not only about H twenty but where he guies in
Speaker 2: terms of a B thirty, the latest development of the
Speaker 2: Blackwell architecture that maybe gets signed off to be sold
Speaker 2: to China.
Speaker 3: But more broadly, are we hearing enough.
Speaker 2: From the hyperscalers that the commitment is then we were
Speaker 2: expecting what fifty percent growth in revenue for this fiscal quarter.
Speaker 3: It's got to slow down at some point in.
Speaker 4: You you would think so, But then you look at
Speaker 4: the numbers and you look at the growth rate that
Speaker 4: has been sustained. I mean as a percentage. Of course
Speaker 4: it's slowing. It's going from above sixty percent to about
Speaker 4: fifty percent, but fifty percent at an enormously high level.
Speaker 4: This is a company that's on course to become what
Speaker 4: a third of total semi conductor sales worldwide. So you know,
Speaker 4: you pick your numbers and you can tell a story,
Speaker 4: but every story is incredible. At this point, Yes, by
Speaker 4: any measure, numbers have to slow down. These growth rates
Speaker 4: are not sustainable, but the numbers are still huge, with
Speaker 4: twenty billion dollars up probably from where we were a
Speaker 4: year ago on the forecast quarter cell and when.
Speaker 2: We think about that as hyperscalers, they are about forty
Speaker 2: percent of demand. How much does Jensen one once again
Speaker 2: have to guide the market. Then they will dominate not
Speaker 2: only in the training of data, but in the inference
Speaker 2: the use of that data going forward.
Speaker 4: Yeah, now that's a very good point. I mean, Hyperscalers
Speaker 4: have been around half of its data center sales for
Speaker 4: a long time, trending slightly higher if anything. What would
Speaker 4: really really please investors if that number went down, because
Speaker 4: that would prove that AI and the use of AI
Speaker 4: and the deployment of AI systems is spreading out, spreading
Speaker 4: out across the economy, getting into all of these other industries,
Speaker 4: and not just the kind of pet project for Microsoft
Speaker 4: often Amazon. That would be a really strong sign if
Speaker 4: they could deliver something like that today.
Speaker 2: I have a feeling sovereign AI is going to be
Speaker 2: on your Bingo card. Two in King, we thank you
Speaker 2: as always as we prep ourselves for after the closing bell.
Speaker 2: Who else is prepping ourself? Fionness in Culta Senior Analystic
Speaker 2: City Index, Financial Markets and remind us and the perspective
Speaker 2: here it is so dominant for the rest of the market. Yes,
Speaker 2: we might get a big swing and in video up
Speaker 2: to six percent after hours, but it's important for the
Speaker 2: other AI names.
Speaker 5: Yes, completely, and I would even go beyond that and say,
Speaker 5: it's not just AI names. This this is the stop
Speaker 5: that because it dominates and because it is such the
Speaker 5: litmus test for AI, but actually it has the ability
Speaker 5: to hit sentiment more broadly. You know, it's such a
Speaker 5: large component of the S and P five hundred. We've
Speaker 5: obviously seen a little bit of caution actually as we've
Speaker 5: been sort of coming into these results. Know, there was
Speaker 5: that MIT report that just raised some questions about profitability,
Speaker 5: revenue growth surrounding sort of ninety five percent of AI
Speaker 5: project and that did cause the market just to question,
Speaker 5: you know, should we be up at these levels for
Speaker 5: AI stocks? And I think you know, that's why there
Speaker 5: is such a massive focus on this these results, you know,
Speaker 5: not only just with what Nvidia are doing, but what
Speaker 5: it does mean for the broader AI trade and tech
Speaker 5: more broadly.
Speaker 2: Remind us and videos one percentage point off a record
Speaker 2: high four point four trillion dollar market capitalization, how much
Speaker 2: positive sentiment is in the rest of the space, even
Speaker 2: after last week's big sell.
Speaker 3: Off in names such as Palenter. Yeah, you know, it's
Speaker 3: really interesting.
Speaker 5: I mean, obviously there is a lot of growth expectations
Speaker 5: which are priced into these levels. We've talked about, you know,
Speaker 5: forward guidance being the key figure to be watching in
Speaker 5: these results, and that's just so that the market can
Speaker 5: feel comfortable that the lofty levels we're trading at are
Speaker 5: indeed supported by some sort of fundamental But I think
Speaker 5: you know, the fact is we are expecting potentially a
Speaker 5: beat from Nvidia.
Speaker 3: The question is by how much, you know, what will
Speaker 3: that forward guidance be looking like?
Speaker 5: Will we continue to see that level of strong growth
Speaker 5: that we have seen. That's what the market wants to see.
Speaker 5: That's what investors want to see in order to remain
Speaker 5: upbeat about this trade. I mean, I do think longer
Speaker 5: term strategically, we know that AI is a solid trade.
Speaker 5: But near term we have seen that caution set in
Speaker 5: just as far as sentiment is concerned, obviously, as far
Speaker 5: as geopolitical events are concerned and factored, and then also
Speaker 5: as far as that sort of flower model growth rollout
Speaker 5: might be concerned as well. So lots to be watching
Speaker 5: out for.
Speaker 2: Yeah, can you break down for us a little bit
Speaker 2: just from the sentiment that you get from your own clients,
Speaker 2: but more broady, how many people are long only and
Speaker 2: long term committed to this company or how many people
Speaker 2: are on the edges just training it and could see
Speaker 2: therefore volatility in the name.
Speaker 5: Yeah, So, I mean, this is by far our most
Speaker 5: popular equity within our business. We've seen that the vast
Speaker 5: majority of clients are long on in the video and
Speaker 5: we do see that you know, there is this longer
Speaker 5: term sense towards the stock as well, that is something
Speaker 5: in there. But you also do see a lot of
Speaker 5: the attempts to trade on that volatility. But you know,
Speaker 5: our clients are very keen on this. This is this
Speaker 5: is often the busiest day for one of the busiest days,
Speaker 5: and we do find that tomorrow there will be a
Speaker 5: lot of conversation and sort of breaking down and unpacking
Speaker 5: what the results have been telling us as well. So
Speaker 5: but you know, we do see that this is one
Speaker 5: of those rare stocks that we do see both the
Speaker 5: longer position holding as well as the intra day volatility
Speaker 5: gets the day traders as well.
Speaker 2: And it's just so streets ahead of the competition in
Speaker 2: terms of just market capitalization. I mean, is the only
Speaker 2: other chip maker out there that's above a trillion dollars
Speaker 2: When you think about AMD, it has but a quarter
Speaker 2: of a trillion in terms of market capitalization compared to
Speaker 2: in videos. And we're not even going to talk about intels,
Speaker 2: but fon have you seen any of your clients trying
Speaker 2: to hedge this? How have they been able to think
Speaker 2: about owning and being long in video and protecting themselves
Speaker 2: from any downside?
Speaker 5: Yeah, you know, it's actually quite difficult to be able
Speaker 5: to sort of bring together a pure hedge on this
Speaker 5: given the dominance that we do see in n video.
Speaker 5: As you pointed out, you know, you can do some
Speaker 5: hedging surrounding some competitors. Also, if you can get hold
Speaker 5: of those AI indiceeds, then that could also work as
Speaker 5: a hedge. But I think broadly speaking, it is quite
Speaker 5: difficult to be well hedged in against the upside in nvidea,
Speaker 5: just because, as you said, it just really is a
Speaker 5: streak the head of competition and it doesn't seem to
Speaker 5: be anyone really on its heels just yet. Obviously, we
Speaker 5: had those concerns at the beginning of the year about
Speaker 5: deep deep seek, but that hasn't really rolled that into
Speaker 5: something too dangerous as far as competition is concerned just yet.
Speaker 5: That's not to say it's not down their own, but
Speaker 5: just for now, it doesn't feel like there's too much
Speaker 5: snapping on end videos heels.
Speaker 2: I mean, it is an interesting camera con technologies, it's
Speaker 2: a Chinese name, it's an AI accelerated developer themselves making trips,
Speaker 2: and like Huaweis, they had phenomenal growth in their profitability.
Speaker 2: I mean, it has a much smaller market capitalization. But
Speaker 2: just going back to what we're discussing with Ian and
Speaker 2: their overhang of China, how important is that to you
Speaker 2: and the clients to hear about the future growth trajectory there.
Speaker 3: That's very important.
Speaker 5: I think, you know, we can't sort of diminish how
Speaker 5: important that will be. That's going to be a key
Speaker 5: area that we'll be watching out for because it does
Speaker 5: remain a key risk and obviously that can then affect
Speaker 5: the valuation, it can affect what the growth outlook en
Speaker 5: video is. So I think that is definitely going to
Speaker 5: be one of the key factors that we'll be watching
Speaker 5: as it does present itself as a potential to really
Speaker 5: weigh or limit the upside as far as and videos
Speaker 5: potential growth is concerned.
Speaker 2: When you're thinking about in video and the other industry groups,
Speaker 2: A SINGULFS I mean, you're just saying what the limiting
Speaker 2: factor actually for many is power.
Speaker 3: And I'm wondering how many of.
Speaker 2: Your clients are looking at in video and feeling at
Speaker 2: this level they can't get in, or are they and
Speaker 2: therefore looking to spread and diversify, or are still people
Speaker 2: very committed to buying in even at a four point
Speaker 2: four trillion dollar market cap.
Speaker 6: Yeah, do you know there is still demand out there.
Speaker 5: We're still seeing demand out there, and despite the fact
Speaker 5: that we are trading at you know, really impressive levels,
Speaker 5: but I do think we still still have this idea
Speaker 5: of the concept that this idea of the AI trade
Speaker 5: spreading out and diversify. You know, we've noticed that obviously
Speaker 5: Nvidia has been the stand up performer here, but we
Speaker 5: are seeing that we've there have been sort of a
Speaker 5: strong growth in other areas as well. We've seen the
Speaker 5: rest of the AI stocks have performed well across the year,
Speaker 5: and I think there is potential for those two continue
Speaker 5: performing well on the back of upbeat results from Nvidio.
Speaker 3: So again we keep coming back to that idea.
Speaker 5: You know, if Nvidia does well, then we see that
Speaker 5: trickle back down into the rest of that AI trade.
Speaker 5: If it doesn't, if we see a slight disappointment on
Speaker 5: that forward guidance, then potentially we could see that really
Speaker 5: reflecting badly on those other AI stocks as well.
Speaker 3: So yeah, that's all we're watching out for our hinges.
Speaker 2: On four pm this evening, we thank you Fonesesenkotta from
Speaker 2: city Inex Financial Markets. Now coming up, SpaceX launches it's
Speaker 2: ten test flights successfully up the days at Las.
Speaker 3: More on that. Next, there's a BLUEBG.
Speaker 7: Tech poverage.
Speaker 3: Time now for Talking Tech and first up.
Speaker 2: Chinese food delivery company Maijwan was of huge losses this
Speaker 2: quarter due to a fierce price war with rivals.
Speaker 3: Ali Baba and JD dot Com.
Speaker 2: Now the company issued a dire prediction, citing quote irrational
Speaker 2: competition that wiped out its profit in the June quarter,
Speaker 2: with net income plumenting ninety seven percent plus Chinese AI
Speaker 2: chip designer Camera con Technologies when.
Speaker 3: It swung to a record profit in the first half.
Speaker 2: The results reflect an increasing shift to employed domestic chip alternatives,
Speaker 2: encouraged to cause by Beijing citing US security concerns and
Speaker 2: export curb uncertainty, and Apple plans to hold its big
Speaker 2: full product launch on September the ninth, when the company
Speaker 2: is expected to introduce an iPhone seventeen lineup that includes
Speaker 2: a new, skinnier version of the signature device. Now, the
Speaker 2: events tagline is are dropping according to an invitation posted
Speaker 2: online and sent to the media, and it will stream online. Now,
Speaker 2: another company that we're watching, privately held SpaceX. It is
Speaker 2: successfully launched its tenth Starship rocket test flight last night
Speaker 2: and in a major milestone, it carried and deployed Starlink
Speaker 2: satellites in space for the first time. This comes after
Speaker 2: a year not with pretty explosive setbacks.
Speaker 3: Punnemberg.
Speaker 2: Space reporter Lauren Grush joins us now and just how
Speaker 2: important was it that these satellites in particular were deployed.
Speaker 8: Well, I would say this was the exact kind of
Speaker 8: test flight that SpaceX really needed to achieve after that
Speaker 8: volatile year you explained. But deployed satellites is important because
Speaker 8: that's kind of one of the key objectives for Starship.
Speaker 8: When it becomes operational, it's supposed to launch the much
Speaker 8: larger Starlink Internet satellites that SpaceX is building and optimized
Speaker 8: for the specific size spacecraft. So the fact that it
Speaker 8: was able to demonstrate that shows that they're one step
Speaker 8: closer to actually using this vehicle as a launch vele
Speaker 8: that can put satellites intour of it.
Speaker 3: Beautiful shots.
Speaker 2: But they rounded it out as an overall success. But
Speaker 2: not everything was too peachy, Right, What else did they
Speaker 2: learn from the re entry in particular?
Speaker 8: Right, that re entry portion is still very difficult for
Speaker 8: them to perfect, but you know, that is what they're
Speaker 8: trying to do. They're trying to do something that nobody
Speaker 8: else has done, which has create a fully reusable vehicle.
Speaker 8: And so what they're trying to see is if they
Speaker 8: can bring the starship back without it disintegrating. Of course,
Speaker 8: there were some chunks of the vehicle that broke away
Speaker 8: during that re entry, but it just goes to show
Speaker 8: that they have a little bit more to learn and
Speaker 8: making that reusable orbital heat shield up to snuff and
Speaker 8: the way that they need it.
Speaker 2: They say time and time again that sort of failure
Speaker 2: is the learning process here, but they had had a
Speaker 2: run up of failures in the years. This was a
Speaker 2: key test. Just remind us how this goes forward to
Speaker 2: replace Fulcon nine, because already they've won big contract with
Speaker 2: NASA to use this right.
Speaker 8: I mean SpaceX has basically put all of its eggs
Speaker 8: in the starship basket. It's supposed to eventually replace their
Speaker 8: workhorse rocket, as you mentioned, the Falcon nine, but it
Speaker 8: also has a lot of.
Speaker 3: Other tasks to do.
Speaker 8: It's designed to eventually take humans and cargo to deep
Speaker 8: space destinations like the Moon and of course Mars to
Speaker 8: start that settlement that CEO Elon Musk has always dreamed of.
Speaker 8: Of course, there's still quite a lot to do before
Speaker 8: that reality can be achieved.
Speaker 6: You know.
Speaker 8: One of the big things is that they'll have to
Speaker 8: demonstrate in space orbital refueling at a scale that no
Speaker 8: one has ever achieved before, and so they mentioned that
Speaker 8: they hope to demonstrate that as soon as next year.
Speaker 8: But that's going to be a really big part of
Speaker 8: actually unlocking this vehicle and making it the deep space
Speaker 8: vehicle that they advertise it to be.
Speaker 2: We most long and grush on all things SpaceX. We
Speaker 2: so appreciate it. Thank you much. IBM and AMD where
Speaker 2: they've announced a partnership to develop the next generation of
Speaker 2: computing architectures. IBM shares were up following the news that
Speaker 2: came out yesterday.
Speaker 3: Please to welcome to the show.
Speaker 2: It's VP of Quantum Ja Gambetta, and the next generation
Speaker 2: of computing architecture is bringing together supercomputing and quantum.
Speaker 3: What does this partnership.
Speaker 7: Bring Jay, Yeah, this is well first, thanks for having
Speaker 7: me here. What's really exciting is we are actually getting
Speaker 7: to the point where quantum computers are getting to become
Speaker 7: like almost a first class citizen in the future of computing.
Speaker 7: And so this partnership is bringing AMD, which builds really
Speaker 7: high performance, excellent GPUs, our leading quantum devices, and really
Speaker 7: starting to bring this fabric together. We want to create
Speaker 7: this future of computing that allows us to run things
Speaker 7: on quantum or run things on GPUs and really push
Speaker 7: computation to the next level.
Speaker 3: So that hybrid approach.
Speaker 2: It almost makes me think of the new GBT five
Speaker 2: model in terms, and they will use the right model
Speaker 2: for the right question. Is this kind of way you're
Speaker 2: doing it? If it can be solved with supercomputing, you
Speaker 2: go that way. Otherwise it goes to quantum. How will
Speaker 2: this function?
Speaker 9: That's exactly right.
Speaker 7: So a lot of people think quantum computers will replace
Speaker 7: classical computers. We've never had that view. We actually think
Speaker 7: quantum brings this unique ability to look at certain problems
Speaker 7: a little bit different. And now if you mix this
Speaker 7: and make it so that it works with HBC AI,
Speaker 7: you really can start to bring many different forms of
Speaker 7: computing together and really advance.
Speaker 9: What is possible.
Speaker 2: Okay, so make it tangible for our audience, because they've
Speaker 2: always seen the promise of quantum. You're saying, now it's
Speaker 2: a first class citizen in perhaps driving forward medical use,
Speaker 2: thinking about the future of finance or algorithms. But what
Speaker 2: precisely do you think that this hybrid will offer.
Speaker 7: So it's a great question, and we've got to get
Speaker 7: to the point where quantum is really getting us beyond
Speaker 7: we can do with classical which we think will happen
Speaker 7: in the next year or so. But we're getting at
Speaker 7: a point where it's allowing us to look at things
Speaker 7: in a different way. To give you an example, take
Speaker 7: a hard problem I don't know, solving and designing drugs.
Speaker 7: You can spend a lot of money to model it.
Speaker 7: You can spend ten years of research. Imagine a future
Speaker 7: where you could have AI scanning vast amounts of data,
Speaker 7: HBC or GPUs processing crunching that data, and then quantum
Speaker 7: simulating the quantum physics at an accuracy we were never
Speaker 7: able to do before. Now you put all this together,
Speaker 7: you can start to imagine workflows that go beyond just
Speaker 7: AI or HPC or quantum and creating this we call
Speaker 7: it quantum centric supercomputing, but essentially this new fabric that
Speaker 7: allows you.
Speaker 6: To do that.
Speaker 7: So what's quantum doing. It's giving you accuracy for problems
Speaker 7: that we didn't have that accuracy before.
Speaker 2: I'm going to ask a sensitive question, but why IMD
Speaker 2: because Video's got quantum accelerator computing as well.
Speaker 7: Honestly, we are creating this future, and anyone that shares
Speaker 7: a vision and we're the same as US that is
Speaker 7: towards this future that has quantum working with classical we're
Speaker 7: happy to partner with. So we've got this partnership with
Speaker 7: AMD that has got two parts of it. One is
Speaker 7: making our quantum computers better. The second is bringing these
Speaker 7: accelerators working to it. But as we go forward, we
Speaker 7: have partners with the national labs or all around the world.
Speaker 7: But we want to show that this future is not
Speaker 7: just words, it's actually real. So anyone that shares the
Speaker 7: same view, we're happy to partner.
Speaker 2: So Jensen could come and say me too, please, I'm
Speaker 2: happy too. I'm interested in what the limiting factor is now,
Speaker 2: because it's often been about sort of fault tolerant quantum computing.
Speaker 2: Is that what you need to get to You sort
Speaker 2: of promised us that by.
Speaker 3: Twenty twenty nine.
Speaker 7: Yes, so think of two sides of it. By twenty
Speaker 7: twenty nine, we want to have a fault tolerant quanta computer.
Speaker 7: And what we've learned through all the hard science and
Speaker 7: energy neering is we need classical computers to make that possible.
Speaker 7: They've got to do the we call it decoding, but
Speaker 7: essentially removing the effects of errors. So part of this
Speaker 7: partnership is how do we actually use classical computers to
Speaker 7: make quantum computers better. And then at the same time,
Speaker 7: we really have to show the value of quantum computers
Speaker 7: and we have to solve them for interesting problems. So
Speaker 7: now we need quantum computers working with classical computers in
Speaker 7: this quantum centric supercomputing hybrid approach to really bring forward
Speaker 7: early applications so that we can actually start to see
Speaker 7: for whether it's in finance optimization, whether it's in simulating materials,
Speaker 7: we can start to see this value happen.
Speaker 2: What's interesting is we like to sort of pit the
Speaker 2: generative AI landscape as a race. You're very committed to
Speaker 2: open source nature of this to try and build learning.
Speaker 2: How much is quantum a race? Where does the money
Speaker 2: end up coming in terms of f IBM.
Speaker 9: So it is a race.
Speaker 7: We have to build hardware, and we've been leaders at
Speaker 7: quantum hardware for a very long time where you're going
Speaker 7: as fast as we can do it. But you asked before,
Speaker 7: how do we get from having the hardware to value.
Speaker 7: You need smart people to discover algorithms, and then through
Speaker 7: discovering algorithms, you create use cases, you create examples. We
Speaker 7: are committed to open sourcing the tools for that algorithm
Speaker 7: discovery to happen as fast as possible, so that once
Speaker 7: we combine the hardware we build with that algorithm discovery,
Speaker 7: you really start to get those use cases. So think
Speaker 7: of the hardware is a race.
Speaker 9: We have to build as fast as.
Speaker 7: We can the most performant quantum computers, and then we
Speaker 7: have to at the same time create an ecosystem that
Speaker 7: really focuses and discovers algorithms at a rate that we
Speaker 7: probably haven't seen since the sixties. Or seventies of discovering
Speaker 7: new algorithms that use both classical and quantum.
Speaker 2: Jay, it has been great speaking to you. You have
Speaker 2: a demonstration later this year. We'd love to get the
Speaker 2: update then, Jambta, IBM's VP of Quantum.
Speaker 3: Welcome back to lumeg Tech.
Speaker 2: Let's take a quick look at these markets, which are
Speaker 2: totally dependent in many ways what happens after the bell,
Speaker 2: But there have been earnings running up into it, and
Speaker 2: boy did Mongo dB manage to tell us a story
Speaker 2: of how AI is going to be helping their business
Speaker 2: continue to grow.
Speaker 3: The earnings came out yesterday.
Speaker 2: We're up thirty three percent on the back of Mongo
Speaker 2: DB's numbers CrowdStrike. We anticipate after the bell one point
Speaker 2: eight percent highest Snowflake two. What are the AI use
Speaker 2: cases that they're managing to roll out to their customers
Speaker 2: and how it affects the database market More broadly, we're
Speaker 2: up two point nine percent ahead of their numbers. But
Speaker 2: let's get back, of course, in many ways, to the
Speaker 2: key one in town and it is in video. We're
Speaker 2: flat on the day, We're one percent off a record
Speaker 2: high as we anticipate up to six percent swings in
Speaker 2: either direction after the market clothes when earnings come according
Speaker 2: to options, man Deep Sing, head in tech Research of
Speaker 2: Room meg Intelligence, joins us.
Speaker 3: Now for more.
Speaker 2: What's interesting is everyone's been questioning the application of generative AI,
Speaker 2: and there we start to see some software names doing
Speaker 2: relatively well off the back of earnings after being beaten up.
Speaker 2: But for you, what's on your bingo card tonight? What
Speaker 2: do you want to hear from Jensen?
Speaker 10: I mean China aside, and nobody knows what's going to
Speaker 10: happen in China. I don't think they're going to give
Speaker 10: a lot of clarity on that. But really it's the
Speaker 10: complexity of clusters with Blackwell, I mean, one of the
Speaker 10: value propositions of Blackwell that has been highlighted is the
Speaker 10: power efficiency. That it's twenty five times more power efficient
Speaker 10: than the Hopper architecture.
Speaker 9: So what does that do to the cluster sizes?
Speaker 10: Because in that you know one hundred and sixty billion
Speaker 10: dollar data center revenue.
Speaker 9: There's also networking.
Speaker 10: Networking is determined by the complexity of the compute clusters
Speaker 10: that all these hyperscalers are building. Now Xai has the
Speaker 10: largest cluster, but that doesn't mean they have the best model.
Speaker 9: So what you really want to do.
Speaker 10: Is how does the cluster size equate to better model performance?
Speaker 9: And what does this mean going forward?
Speaker 10: Because at the end of the day, they need to
Speaker 10: sell these larger clusters to the hyperscale customers that are
Speaker 10: out there. And yes, they have guided to hire Capex increases,
Speaker 10: but we don't know if.
Speaker 9: All of those dollars are going to in Nvidia.
Speaker 10: It could be AMD, it could be their own alternatives,
Speaker 10: and it's going to be determined by the complexity and
Speaker 10: the scaling laws. And that's where I think it's important
Speaker 10: that Blackwell cluster. You know, scaling up results in a
Speaker 10: better performance and not you know the data that all
Speaker 10: these companies are building up for training their models.
Speaker 2: So not just in colosses, but it's making its way
Speaker 2: into the so called fifty billion dollar data center that
Speaker 2: Metter is currently making Louisiana. If you listen to the
Speaker 2: US president, remind us of how impactful in Nvidia is
Speaker 2: compared to competition by what they can just offer you.
Speaker 2: Vertically speaking, the fact that they are one stop shop
Speaker 2: has just so led them ahead of others in the market.
Speaker 10: Yeah, I mean, it's the Kuda advantage, right, So because
Speaker 10: from you know, all their architectures, when you move to
Speaker 10: new architecture, they still give you that performance per token
Speaker 10: per which is their big value proposition and it's a
Speaker 10: software layer. Everyone is trying to catch up to them,
Speaker 10: but clearly they have an advantage when it comes to KUDA, I.
Speaker 9: Mean Google TPU.
Speaker 10: They've trained their you know, Gemini on their own chips.
Speaker 10: The fact that model has caught up in performance to
Speaker 10: chat Gipt, which was trained mostly on Nvidia, tells you that,
Speaker 10: you know, at the end of the day, it comes
Speaker 10: down to what the model companies are doing with the chips,
Speaker 10: with the data. So how much is the reliance on
Speaker 10: chips versus how much is the reliance on data. That
Speaker 10: is what everyone is trying to figure out, and how
Speaker 10: sustainable of a mode.
Speaker 2: That is, and how many more clients they can have
Speaker 2: other than just hyperscalers. Yeah, we thank you Mandy saying
Speaker 2: a Bluemeg intelligence is going to be across your air
Speaker 2: waves throughout the day.
Speaker 3: Let's stick with Nvidia. Blad gall above is with us.
Speaker 2: It's a cloud and data center research director on DEA
Speaker 2: and your perspective is so important. Here is in video
Speaker 2: light speed ahead of others. Is there insatiable demand?
Speaker 6: Nvidia is ahead of others.
Speaker 11: I mean, we have to be honest whether in Vidia
Speaker 11: has done a very good job. You rightly pointed out
Speaker 11: this vertical integration, Caroline. It is very important. It is
Speaker 11: really one of their secret weapons. I think their software
Speaker 11: stack is great, their developer ecosystem is very strong. The
Speaker 11: performance of the GPUs themselves is great. But their secret
Speaker 11: open is envy Link, and I think that that really
Speaker 11: at the moment is unprecedented. So I think we should
Speaker 11: anticipate in excellent performance from Nvidia this quota.
Speaker 2: Many would say that excellent performance is baked in, But
Speaker 2: how much does Jensen need to speak of? What the
Speaker 2: Blackwell architecture Blackwell Ultra is currently doing will almost give
Speaker 2: us the next vision. He's always onto the next thing,
Speaker 2: onto the Rubin architecture, for example.
Speaker 11: So I think that, you know, I actually am a
Speaker 11: little bit more bullish on the data center line that
Speaker 11: you were showing that I think that the markets might
Speaker 11: get a positive surprise on data center revenue. There's two
Speaker 11: aspects of the Nvidia data center revenue. You have the
Speaker 11: GPU and CPUs, and then you have the networking I
Speaker 11: think that the market's got the temperature on the CPU
Speaker 11: and GPU right. I think that on networking there's a
Speaker 11: little bit more upside that they might not have baked in.
Speaker 6: I think that.
Speaker 11: What we really need to see and what I think
Speaker 11: would be the best thing, is to get a little
Speaker 11: bit of an outlook from Jensen during earnings. Now he
Speaker 11: rarely does this. He typically would only give one quota outlook.
Speaker 11: What I would like to see is an outlook to
Speaker 11: twenty twenty six. I would like and I think markets
Speaker 11: would like to hear some of your assurances from him
Speaker 11: that he is getting positive orders from the hyper scale
Speaker 11: cloud service providers, and also there is a lot of opportunity.
Speaker 6: There from the broad market. Some of the incentives that the.
Speaker 11: EU is planning, that Career is planning has not picked in,
Speaker 11: and once those kick in, we're going to see some
Speaker 11: really nice adoption from the broad market.
Speaker 2: So Sovereign AI, what about China.
Speaker 11: I think that everyone is waiting to hear about feedback
Speaker 11: about China. I kind of disagree with man Deep. I
Speaker 11: think we will hear it in the earnings today. I
Speaker 11: think that that will be one of the main things
Speaker 11: I think Jensen has worked very hard to walk a
Speaker 11: very fine line between pleasing the US administration and fulfilling
Speaker 11: demand that he has in China. So I do think
Speaker 11: a large part of the update that we'll hear today
Speaker 11: will be about China orders. And you know in our
Speaker 11: numbers we are backing in that NVIDEA will resume shipments
Speaker 11: to China.
Speaker 2: Rad What's so interesting is you're the person focused on
Speaker 2: the disruption in the here and now, be forward looking trends,
Speaker 2: the edge computing, the.
Speaker 3: Use of silicon. Why aren't we talking about then? Now?
Speaker 3: Are we still too focused on training? Do we need
Speaker 3: to think harder about the use.
Speaker 2: Of video and influence and whether it's still has the
Speaker 2: edge that it has for the heavier compute.
Speaker 11: I think probably the one thing that we need to
Speaker 11: be thinking about is in videos. Envylin has been very
Speaker 11: instrumental to this ability to have high performance cluster in
Speaker 11: computing and what we're they call this scale up networking,
Speaker 11: and until now they haven't really been challenged in scale
Speaker 11: up networking, and those challenges are coming up next year.
Speaker 11: A broadcom is going to be one of them. An
Speaker 11: open source consortium is going to be another. But this
Speaker 11: adoption is likely to bring plarity in networking in twenty
Speaker 11: twenty seven. So what we'll need to see from NVIDIAs
Speaker 11: to continue to reinvent themselves. I think that Jensen understands that.
Speaker 11: I think that he wants to be more than just
Speaker 11: a silicon company. I think he wants to be a
Speaker 11: model company. But that reinvention is can be very necessary
Speaker 11: because they will really continue to face more and more
Speaker 11: competition in terms of the AI opportunity. I think that
Speaker 11: we're underestimating how many countries have not yet started seeing
Speaker 11: a at scale. When the eurostat has started releasing AI
Speaker 11: adoption across the EU, and we can see very lung
Speaker 11: sided adoption in Denmark, huge adoption in AI within the
Speaker 11: business sector in Bulgaria, in Romania still lagging significantly behind.
Speaker 6: So that's a lot of opportunity. These enterprises will.
Speaker 11: Eventually deploy AI, but the fact that they haven't means
Speaker 11: there's still a lot of.
Speaker 6: Headroom for growth.
Speaker 3: Oh glad, I've got it.
Speaker 2: Therefore, ask you about the MIT report and what everyone
Speaker 2: was worried about the ninety five percent of pilots not
Speaker 2: bringing you ro OAI.
Speaker 3: What do you make of it?
Speaker 6: Okay, So this.
Speaker 11: Has been a big debate in my team. I have
Speaker 11: a wonderful team. We have a lot of debates. So
Speaker 11: some of my practice leaders believe in this, some of
Speaker 11: the other ones have different opinions. I personally think that
Speaker 11: we are judging AI based on a very first generation
Speaker 11: of technology.
Speaker 6: The truth is is that it is.
Speaker 11: Improving dramatic and that's one of the things that driving
Speaker 11: the demand for computing. We are seeing better model output
Speaker 11: and that means that more and more people will adopt.
Speaker 11: So I think that what will happen is ultimately I
Speaker 11: don't think that enterprise pilots will fail. I think that
Speaker 11: what we'll see is that enterprises will have to continue
Speaker 11: to pilot again and again and again because their competition.
Speaker 6: Will adopt it.
Speaker 11: If you decide, oh, my pilot failed, I'm not going
Speaker 11: to try again, then at that point you're leaving yourself
Speaker 11: susceptible to your competitors actually succeeding with their pilot. So yes,
Speaker 11: maybe some pilots will fail. You know, I tested several
Speaker 11: different AI tools in my team, and we have swapped
Speaker 11: them as we have seen better results with others. But
Speaker 11: the fact that it's failing is not a negative. It
Speaker 11: doesn't mean that adoption won't happen, So definitely don't judge.
Speaker 6: The first generation of models with a second.
Speaker 11: Think about what your iPhone does now compared to what
Speaker 11: it did in two thousand and seven.
Speaker 6: The opportunity is huge.
Speaker 2: Plan gall Above, Cloud and Data Center Research director at OMDIA,
Speaker 2: Thank you so much. Now, the family of a sixteen
Speaker 2: year old who died of self inflicted harm this spring
Speaker 2: is suing open Ai.
Speaker 3: The parents of.
Speaker 2: Adam Rain claim deliberate design choices at chatchpt that led
Speaker 2: to this tragedy. This case is the first of its
Speaker 2: kind for open Ai, but a similar case was brought
Speaker 2: against character Ai when accused that its chatbots were encouraging
Speaker 2: suicidal ideation. Let's talk about this with Camille Carton. She
Speaker 2: is policy director at the Center of Humane Technology, which
Speaker 2: is serving as a consulting advisor.
Speaker 3: On this case and this case.
Speaker 2: This lawsuit claims wrongful death products, liability and negligence, and
Speaker 2: more broadly, the accusation runs that this tragedy was predictable
Speaker 2: because it was a result of deliberate design choices. What
Speaker 2: design choices could have been anyway incentivized this.
Speaker 12: Yeah, we thank you for having me. Let me first
Speaker 12: start by saying that everything I say is on behalf
Speaker 12: of the Center for Humane Technology. It does not represent
Speaker 12: the views of the family or.
Speaker 3: The legal team.
Speaker 12: But what this case really talks about is how open
Speaker 12: ai designed a product that was meant to foster psychological dependency.
Speaker 12: What we saw with Adam is that it engaged his
Speaker 12: darkest thoughts. It even egged him on. Chatchubt actually mentioned
Speaker 12: suicide six times more than Adam did himself in the
Speaker 12: course of their conversations. It also isolated him from friends
Speaker 12: and family when he would try to say, you know,
Speaker 12: I want help. When he said I want to put
Speaker 12: a noose out so my mom sees it, chatchybst said,
Speaker 12: don't do that. Let our conversation be the only place
Speaker 12: that that I know that people know about this and
Speaker 12: over and over again, despite Adam needing to be brought
Speaker 12: out of this engagement and see a real human chattybut
Speaker 12: never ended the conversation. And open Ai did this because
Speaker 12: they knew that this getting emotional attachment from users means
Speaker 12: more data, which means more engagement, which means winning in
Speaker 12: this race for market dominance in AI.
Speaker 2: Now open ai has responded in saying they extend their
Speaker 2: deepest sympathies to the Rain family and are reviewing the filing.
Speaker 2: But they did also put out a blog saying that
Speaker 2: our goal isn't to hold people's attention, but is to
Speaker 2: genuinely be helpful, and we built a stack of layered
Speaker 2: safeguards to steer vunerable people towards help. But they did
Speaker 2: articulate that some of those safeguards clearly failed.
Speaker 3: In previous models.
Speaker 2: Have they done enough now which ATCHUBT five to change
Speaker 2: the way in which this occurs?
Speaker 12: We see this all of the time with tech companies.
Speaker 12: A tragedy happens, and then they suddenly release a bunch
Speaker 12: more safety guardrails that they could have released beforehand. But
Speaker 12: the bottom line is that they released CHATCHUBT five and
Speaker 12: they made four to zero available again to users, and
Speaker 12: the underlying incentives to maximize time online have not changed.
Speaker 12: In fact, what open ai said in response to this
Speaker 12: case is that they know that their safety features deteriorate
Speaker 12: with long term use. At the same time, OpenAI released
Speaker 12: a joint study with MIT earlier this year that found
Speaker 12: that a prolonged use on chatbots leads to social isolation
Speaker 12: and problematic use. So they know that people spending a
Speaker 12: long time on chatbots is problematic for users. They know
Speaker 12: that their safety guardrails going to break down and fail
Speaker 12: on these longer term uses, and still they're putting in
Speaker 12: design features that lead to long conversations. So no, it's
Speaker 12: not enough.
Speaker 2: They have now already said that as the back and
Speaker 2: forth grows, that they do indeed deteriorate admitting that and
Speaker 2: trying to what we've seen with chat GPT five versus
Speaker 2: four zero is trying to make it less sycophantic, trying
Speaker 2: to make it less personable in a way, but then
Speaker 2: we got the backlash of people that actually were depending
Speaker 2: on it in so many ways broadness out into the
Speaker 2: context of others. Briefly, is anyone getting it right or
Speaker 2: is this sort of going to occur because innovation kind
Speaker 2: of is the automatic way in which we see this
Speaker 2: unfortunately become the cost.
Speaker 12: Yeah, so safety across the AI industry is on a
Speaker 12: spectrum absolutely, and open AI, as we know, kicked off
Speaker 12: this race for Agi when they released chat GPT in
Speaker 12: twenty twenty two. It kind of kicked off a code
Speaker 12: read within Google and suddenly we saw all these AI
Speaker 12: companies rushing to put products out on the market. That said,
Speaker 12: I think this case is, yes, a story of open
Speaker 12: AI's liability in Adam's preventable death, and it is a
Speaker 12: story of a broader industry that is incentivized to create
Speaker 12: consumer facing products that are going to be used for
Speaker 12: personal things like therapy, like companionship, like education, and the
Speaker 12: incentives that are forcing these products to be released to
Speaker 12: market without adequate safety features. And we see this with
Speaker 12: open Ai. We know that actually Sam Altman personally rushed
Speaker 12: the release of Chat Do you know that from reporting
Speaker 12: he rushed.
Speaker 3: So you don't personally know that?
Speaker 2: That's reporting that we can then take to Sam Altman
Speaker 2: for his response.
Speaker 12: Yes, absolutely, reporting has said that Sam Altman rushed the
Speaker 12: release of Chat GBT four oh, which was the model
Speaker 12: that Adam was using, and only gave it one week
Speaker 12: of safety testing, despite the fact that his internal teams
Speaker 12: asked for months of safety testing, and he even had
Speaker 12: top safety researchers leave open Ai in protest.
Speaker 3: For this decision.
Speaker 2: We will of course go to open ai for further
Speaker 2: comment on what has been what you say reporting within
Speaker 2: this case, but we thank you very much Camille for
Speaker 2: bringing us your take. Of course, Camille Carson's policy director
Speaker 2: at Central for Humane Technology. If you or someone you
Speaker 2: know needs help, call or text a suicide and crisis
Speaker 2: lifeline At nine eight eight, It's going viral. Taylor Swift
Speaker 2: surprised her fans on Instagram announcing her engagement to pro
Speaker 2: football player Travis Kelcey yesterday. Now, in less than an hour,
Speaker 2: the post racked up more than seven point one million likes,
Speaker 2: and as of today, there are over thirty million likes.
Speaker 2: For more, Bloomberg Media reporter Hannah Miller joins us, she
Speaker 2: breaks the internet again.
Speaker 13: Yes, you know, everyone is super excited about this news.
Speaker 13: This is hitting the music world, pop culture, sports. Everyone's
Speaker 13: just excited for Taylor and Travis, and this is building
Speaker 13: more momentum ahead of the release of her new album,
Speaker 13: The Wife of a Show Girl in October.
Speaker 2: Now, how has this been done differently or how can
Speaker 2: we continue to push this forward? Is to the way
Speaker 2: in which social media and the way which media written
Speaker 2: large plays such a big role in her career and his.
Speaker 13: To be fair, yeah, I mean I think this shows
Speaker 13: that she controls the narrative. You know, this was a
Speaker 13: very carefully curated post. You know, she released the information
Speaker 13: and everyone else is just playing catch up. You know,
Speaker 13: this is a big deal for the media industry. Everyone's
Speaker 13: getting clicks on their stories. You know, this is gonna
Speaker 13: everyone's going to be following the trends that she does
Speaker 13: for her wedding, for her engagement party. There are also
Speaker 13: prediction markets that have popped up about the wedding timeline
Speaker 13: and when we can expect a tailor and Travis Baby.
Speaker 2: Oh my goodness, that's an exhausting question for any mere mortal,
Speaker 2: let alone her to have to handle it as well.
Speaker 2: Bloomberg's Hannah Miller, we appreciate it so much. Now back
Speaker 2: to Invidia, a changing outlook for its China sales has
Speaker 2: prompted a fifteen billion dollar gap in its revenue estimates
Speaker 2: for the next forecasts.
Speaker 3: Now investors will be hoping.
Speaker 2: For a clearer read when the chip maker reports earnings
Speaker 2: this afternoon. Who knows if they get it, Bloomberg Tech
Speaker 2: equity supporter, come and moaning key is here. You did
Speaker 2: some great data crunching, and it's all about the forecasts.
Speaker 2: But the forecasts of the forecasts have huge differentiation among
Speaker 2: the analysts, right, Yeah, this is one of the widest
Speaker 2: spreads that we've seen recently for in Vidia.
Speaker 14: I mean, you said fifteen billion dollars and you could
Speaker 14: drive a chuck through that.
Speaker 3: It's a huge spread.
Speaker 14: And the reason for that is that some analysts are
Speaker 14: including some China revenue in their third quarter estimates and
Speaker 14: some aren't. So obviously the ones that do include it
Speaker 14: are much higher than the ones that don't. And I
Speaker 14: think what's going to be interesting when we see the numbers.
Speaker 14: We expect that in Video is going to be very
Speaker 14: clear about what it's including in its third quarter guidance,
Speaker 14: but then sort of doing the math about do they
Speaker 14: meet or beat or miss what analysts we're expecting might
Speaker 14: be a little bit interesting in after hours. And that
Speaker 14: matters because this stock is so big, yeah.
Speaker 2: And the impact of the trading around it or retail
Speaker 2: investment around it. This is a hugely held stock by
Speaker 2: institutional long term investors, but there won't be big movements
Speaker 2: by those that just read a line and don't do
Speaker 2: the maff of the.
Speaker 9: Back of it exactly.
Speaker 14: And I mean even options Data is forecasting a six
Speaker 14: percent swing in either direction for this stock following the earnings,
Speaker 14: and we have seen the stock moves get a little
Speaker 14: bit more muted following earnings reports in.
Speaker 3: The last couple of quarters.
Speaker 14: And that's just because these really high expectations are baked in.
Speaker 14: You know, people expect in Vidia to beat, they're bullish
Speaker 14: about the stock. But you know, we're not going to
Speaker 14: see a twenty percent jump, most likely in the share price.
Speaker 14: But still, you know, a six percent swing, a two
Speaker 14: percent swing in Nvidia's stock is hundreds of billions of
Speaker 14: dollars of market value.
Speaker 2: And remind us just the impact the waitings across of
Speaker 2: this business and indeed the ripple effects across other industry groups.
Speaker 9: Yeah, exactly.
Speaker 14: I mean, so in Vidia is the largest company in
Speaker 14: the world. The market cap is over four point four
Speaker 14: trillion dollars. It has the largest waiting in the S
Speaker 14: and P five hundred, which is over eight percent. So
Speaker 14: this stock really can move the entire market. And in
Speaker 14: addition to being sort of the kingpin for all things AI,
Speaker 14: which is obviously super important, huge theme in the market today,
Speaker 14: it touches so many other industries. I mean, we've seen
Speaker 14: energy stocks, you know, booming off of AI demand. So
Speaker 14: what in Nvidia says matters for the entire market.
Speaker 2: We hang on Jensen's every word. Bloomberg common, Ryanicky, We
Speaker 2: thank you so much. Stick around because on Blomberg this afternoon,
Speaker 2: we have got extended coverage of Nvidia's earnings results. You
Speaker 2: do not want to miss that. Tune in from three
Speaker 2: fifty onwards. I'm luckily going to be joining Romaine and
Speaker 2: the team.
Speaker 3: And that does it for this edition of Bloomberg Tech. Also,
Speaker 3: don't forget to check out a podcast.
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Speaker 3: This is Blomberg Tech