WEBVTT - Nvidia’s Upbeat Sales Forecast Shows AI Boom Remains Strong 0:00:02.520 --> 0:00:07.040 Bloomberg Audio Studios, Podcasts, radio news. 0:00:08.680 --> 0:00:13.000 This is Bloomberg business Week Daily reporting from the magazine 0:00:13.000 --> 0:00:17.639 that helps global leaders stay ahead with insight on the people, companies, 0:00:17.640 --> 0:00:22.560 and trends shaping today's complex economy. Plus global business finance 0:00:22.600 --> 0:00:25.919 and tech news as it happens. The Bloomberg Business Week 0:00:26.000 --> 0:00:31.960 Daily Podcast with Carol Masser and Tim Steneveek on Bloomberg Radio. 0:00:32.000 --> 0:00:35.960 I know Ed Ludlow and Jay Goldberg are watching clear 0:00:36.040 --> 0:00:38.000 screens closely. I want to bring both of them in 0:00:38.080 --> 0:00:39.960 as we do await these earnings. Ed Ludlow is the 0:00:40.000 --> 0:00:42.479 cost of Bloomberg Tech on Bloomberg TV. He joins us 0:00:42.479 --> 0:00:45.319 from the San Francisco Bureau, and Jay Goldberg is with 0:00:45.400 --> 0:00:48.839 us too, senior analyst Semiconductors and Electronics at Seaport Research Partners. 0:00:48.880 --> 0:00:53.280 He's still the only analyst on the Bloomberg terminal who 0:00:53.280 --> 0:00:58.360 has a celerating on Nvidia, Jay, is it lonely in 0:00:58.440 --> 0:00:59.440 that corner. 0:00:59.800 --> 0:01:01.840 Of It's getting left lonely by the day, is it? 0:01:01.880 --> 0:01:02.280 How come? 0:01:03.200 --> 0:01:07.240 I mean in Q four November December, I had a 0:01:07.280 --> 0:01:08.479 lot of newfound friends. 0:01:08.920 --> 0:01:12.559 Okay, right, okay, well we'll see. 0:01:12.400 --> 0:01:14.480 If it was me being right, it was just I 0:01:14.480 --> 0:01:16.440 think the market is sort of rotating out of AI 0:01:16.600 --> 0:01:17.679 or de risking a little bit. 0:01:19.080 --> 0:01:21.320 Yeah, I take it. Okay, we'll see and we'll see 0:01:21.319 --> 0:01:22.959 what the numbers say today. Is there is there a 0:01:23.040 --> 0:01:24.480 chance that And look, I know that I don't want 0:01:24.520 --> 0:01:26.160 you to get in trouble with compliance or anything, but 0:01:26.360 --> 0:01:29.280 I ask you this every quarter, can you hear anything 0:01:29.280 --> 0:01:32.240 from Nvidia today? And I'm gonna have to interrupt you 0:01:32.280 --> 0:01:34.880 if we do get those numbers, are we going to 0:01:34.959 --> 0:01:36.600 Are you going to hear anything from Nvidia today or 0:01:36.600 --> 0:01:38.800 could you hear that would make you change your view 0:01:39.200 --> 0:01:41.640 to at least neutral or buy. 0:01:43.000 --> 0:01:43.040 It? 0:01:43.280 --> 0:01:44.240 It's pretty unlikely. 0:01:44.360 --> 0:01:47.240 My concerns are their capacity constrained, and I think they're 0:01:47.280 --> 0:01:48.840 just going to limit the amount of upside that they 0:01:48.840 --> 0:01:51.960 can deliver to revenue for the next few quarters. 0:01:53.320 --> 0:01:56.000 All right, sit tight, We're going to continue to away. 0:01:56.120 --> 0:01:58.200 Jay Goldberg is with us or Ed Ludlow is with us. 0:01:58.240 --> 0:02:00.320 Keep in mind, Tim you mentioned earlier with we talk 0:02:00.360 --> 0:02:04.320 with Ouroni and King three months ago in Verdia Nvidia 0:02:04.360 --> 0:02:06.400 excuse me, it'd beat the stock went up a little 0:02:06.440 --> 0:02:08.880 bit and then we start go down the next day. 0:02:09.000 --> 0:02:11.880 So you know, high in terms of expectations, although the 0:02:11.919 --> 0:02:14.400 stock has been beaten up here Ed Ludlow, as we 0:02:14.440 --> 0:02:19.000 await those results. Top thing you're watching out for here. 0:02:19.360 --> 0:02:22.720 Well usually hits it exactly twenty minutes the hours. So 0:02:22.760 --> 0:02:25.040 I'm a little bit on edge, and one wonders what's 0:02:25.120 --> 0:02:27.600 behind that. And I just state that as facts because 0:02:27.639 --> 0:02:30.600 I always go back and double check myself on the 0:02:30.720 --> 0:02:34.160 terminal evt go. Your last guest said that, you know, 0:02:34.280 --> 0:02:36.920 for the outlook for the current period April quarter, first 0:02:37.880 --> 0:02:41.440 fiscal quarter, that he was about seventy three to seventy 0:02:41.440 --> 0:02:46.000 four billion dollars in sales overall. That's above consensus, but 0:02:46.080 --> 0:02:49.000 it is not as high as the most bullish estimates, right. 0:02:49.120 --> 0:02:51.920 And so we started this year with Nvidia and Jens 0:02:52.000 --> 0:02:54.639 Mung at cees and there was actually quite a lot 0:02:54.680 --> 0:02:57.440 more update in those on stage and in front of 0:02:57.480 --> 0:03:01.519 camera appearances than perhaps at the time we preciated in 0:03:01.680 --> 0:03:04.440 terms of them going beyond that that original five hundred 0:03:04.440 --> 0:03:07.760 billion dollar forecast for calendar twenty six for example. 0:03:07.880 --> 0:03:10.079 So you know, you guys have done all week. 0:03:10.160 --> 0:03:13.440 I guess this is quite tense for the market because 0:03:13.480 --> 0:03:16.080 even that really good results may not be good enough. 0:03:16.520 --> 0:03:19.359 Yeah, And I Ian made that point on our program 0:03:19.400 --> 0:03:22.720 because we ask you know, and it's different every quarter, 0:03:22.800 --> 0:03:26.200 but in recent quarters this has been such a big event. 0:03:26.240 --> 0:03:29.040 But Ian made the point, Look, there's not you know, 0:03:29.080 --> 0:03:32.680 we've heard a lot from Jensen already about demand and 0:03:32.720 --> 0:03:36.360 so investors have that information. So yes, we will get 0:03:36.360 --> 0:03:39.160 obviously we'll get new information when the company reports its 0:03:39.160 --> 0:03:42.560 results and when we look at the you know, expectations 0:03:42.560 --> 0:03:46.120 and commentary. But like you said, a lots out there already. 0:03:47.080 --> 0:03:47.480 Yeah. 0:03:47.520 --> 0:03:50.520 So basically, this forecast for five hundred billion dollars at 0:03:50.560 --> 0:03:53.920 the time, it was over five fiscal quarters, and it 0:03:53.960 --> 0:03:55.600 was something that he said toward the end of last 0:03:55.680 --> 0:03:58.840 year in Washington, DC's in DC. That was just for 0:03:59.040 --> 0:04:02.839 Blackwell system and then Reubin Systems, but it didn't take 0:04:02.880 --> 0:04:07.680 into account any revenue whatsoever from China. Then what happened 0:04:07.720 --> 0:04:10.520 was Bloombergsine and King asked Jensen at a press conference 0:04:11.040 --> 0:04:13.880 how that number was looking three months on, and what 0:04:13.920 --> 0:04:16.840 he said was, well, we're tracking beyond it and that 0:04:16.880 --> 0:04:20.400 there may be some contribution from China, but right now, 0:04:20.440 --> 0:04:23.359 like until the print hits, those are imponderables. We don't 0:04:23.400 --> 0:04:25.640 know or we are pondering them, I guess, but they're 0:04:25.640 --> 0:04:29.120 not within the forecast, nor are they within what in 0:04:29.200 --> 0:04:35.000 Video has actually stated. So again, I'm just kind of 0:04:35.000 --> 0:04:39.000 noodling here, guys, it's difficult bear with me with the audience. 0:04:39.240 --> 0:04:42.080 I don't think in videos reported late late being later 0:04:42.120 --> 0:04:45.280 than twenty minutes past since like twenty twenty three, So 0:04:45.440 --> 0:04:47.160 I don't know. 0:04:47.400 --> 0:04:49.640 No, I think you're right to go there. 0:04:49.680 --> 0:04:51.919 We're looking at our live blog, which is the whole 0:04:51.920 --> 0:04:56.400 team here at Bloomberg. Number is with us, but Sarah Fryar, 0:04:56.960 --> 0:04:59.880 our big technology team leader, she's like, men, video earnings 0:04:59.880 --> 0:05:02.640 are usually by four to twenty still waiting. I don't 0:05:02.640 --> 0:05:04.960 want to speculate, but it is unusual in. 0:05:05.680 --> 0:05:07.520 I meta a few quarters ago and it was nothing. 0:05:07.839 --> 0:05:09.320 Yeah, it does happen. 0:05:10.000 --> 0:05:13.400 Yeah, can we talk quickly about margins unless the numbers 0:05:13.440 --> 0:05:15.440 like here? Yeah, you know, Like it's interesting that everyone 0:05:15.440 --> 0:05:18.240 discusses margins. This is a company that has seventy five 0:05:18.279 --> 0:05:21.160 percent gross margin, and we know that the economics of 0:05:21.200 --> 0:05:24.440 this industry are brutal. But something interesting has happened in 0:05:24.480 --> 0:05:27.800 recent months, which is that in Video owns more of 0:05:27.839 --> 0:05:30.159 the content of the server design. It's not just the 0:05:30.200 --> 0:05:33.800 GPU anymore. It's the little plugins around the GPU, and 0:05:33.880 --> 0:05:36.960 those may not be major drivers of revenue growth, but 0:05:37.040 --> 0:05:40.719 they have it would appear supported margins. But that creates 0:05:40.720 --> 0:05:42.640 some jeopardy for this print because if you have a 0:05:42.680 --> 0:05:45.599 gross margin of seventy five percent and the street and 0:05:45.600 --> 0:05:47.719 I think your last guest talked about this is the 0:05:47.800 --> 0:05:50.320 profile in terms of their risk tolerance that they like 0:05:50.360 --> 0:05:52.760 of a company like in video, they come to have 0:05:52.800 --> 0:05:56.080 an expectation and so don't just look at the earning statement, 0:05:56.120 --> 0:05:59.080 but when the CFO letter hits, look for the section 0:05:59.200 --> 0:06:01.600 on margins and where that that there's an indication that 0:06:01.720 --> 0:06:05.200 seventy five percent gross margin going forward is the norm, 0:06:05.279 --> 0:06:06.520 the status quoite so to speak. 0:06:06.720 --> 0:06:08.799 I mean, that's an incredible status quo for a company 0:06:08.839 --> 0:06:11.000 in the hardware business. Jay Goldberg, I want to bring 0:06:11.040 --> 0:06:13.479 you in here on the seventy five percent margins. I 0:06:13.480 --> 0:06:15.760 mean we heard this from Ian King earlier. These are 0:06:15.839 --> 0:06:19.120 software margins, not hardware margins. 0:06:19.640 --> 0:06:22.159 Yeah, I mean strong agree with what it was just saying. 0:06:22.320 --> 0:06:25.400 Is I think the bigger risk of my thesis or 0:06:25.400 --> 0:06:27.920 the bigger question mark this supporter is going to be margins. 0:06:28.279 --> 0:06:30.240 Like we have a pretty good fix on where you 0:06:30.279 --> 0:06:32.040 know what their revenue is going to look like he 0:06:32.240 --> 0:06:32.880 puts in takes. 0:06:33.279 --> 0:06:34.839 But the margin question is a big one. 0:06:35.000 --> 0:06:37.400 They make a lot of money money from memory. They 0:06:37.400 --> 0:06:39.320 buy memory from the memory makers then mark it up 0:06:39.320 --> 0:06:42.160 to their full margin. That's a lot of earnings for them. 0:06:42.760 --> 0:06:45.720 Their competitors don't do that. And we all know about 0:06:45.720 --> 0:06:48.200 the memory shortage. Is in Nvidia going to eat it? 0:06:48.240 --> 0:06:48.400 Is they? 0:06:48.520 --> 0:06:49.680 Are they going to be able to pass on the 0:06:50.680 --> 0:06:53.320 memory costs to their customers? I think that's I think 0:06:53.320 --> 0:06:54.960 that's going to be an area that the street's going 0:06:55.000 --> 0:06:56.400 to focus on a lot is how does how does 0:06:56.440 --> 0:06:58.400 their margin the gross margin that look look. 0:06:58.640 --> 0:07:01.000 All right, folks, We are talking with our Ed Ludlow, 0:07:01.120 --> 0:07:03.400 and of course we've also got with s. J. Goldberg 0:07:03.480 --> 0:07:07.400 over at Seaport Research Partners. We expected that in Vidia 0:07:07.440 --> 0:07:09.800 would have had its results at about seven minutes ago. 0:07:09.840 --> 0:07:11.760 We're still waiting two four to twenty. 0:07:11.800 --> 0:07:13.680 As Ed reminds us, this is the time that they 0:07:14.120 --> 0:07:17.440 have reported over the last few years, So we're kind 0:07:17.440 --> 0:07:20.840 of glued to our Bloomberg as we speak, just waiting 0:07:20.920 --> 0:07:23.920 for it to cross. Having said that, as we await, 0:07:24.000 --> 0:07:25.760 the stock is just up about four tenths of a 0:07:25.800 --> 0:07:29.280 percent here in the aftermarket. I'm not going to read 0:07:29.320 --> 0:07:31.800 anything into that, but we did see the stock hire 0:07:31.960 --> 0:07:33.920 also in the regular trade today, Jay. 0:07:33.760 --> 0:07:35.040 I want to go back to you as we do 0:07:35.280 --> 0:07:39.480 await these numbers. You mentioned some investors having AI fatigue, 0:07:39.480 --> 0:07:42.520 and indeed we've seen Nvidia in this narrow range really 0:07:42.560 --> 0:07:45.720 going back to just a few months ago. Explain more 0:07:46.080 --> 0:07:50.080 about how you're interpreting AI fatigue, because there's there are 0:07:50.120 --> 0:07:55.040 different different companies are working in different spaces here and 0:07:55.080 --> 0:07:57.720 in video. I think many would argue stands in a 0:07:57.800 --> 0:08:00.360 league of its own given the demand that it canntinues 0:08:00.400 --> 0:08:01.640 to see from the hyperscalers. 0:08:03.000 --> 0:08:06.160 So I think the issue is there are so many 0:08:06.160 --> 0:08:09.160 constraints across the industry. Right We're short on chip capacity, 0:08:09.200 --> 0:08:12.480 on packaging, on copper, on electricity, on substrates, all these 0:08:12.520 --> 0:08:14.119 things we haven't really thought about in a long time 0:08:14.360 --> 0:08:18.640 are very tight, and so that feels a little precarious. 0:08:19.080 --> 0:08:20.880 And then on top of it, you have a lot 0:08:20.920 --> 0:08:24.520 of questions about how these data center data center financing 0:08:24.600 --> 0:08:26.440 is going to work. There's a whole lot of financial 0:08:26.480 --> 0:08:30.240 engineering taking place on the construction side, and I think 0:08:30.280 --> 0:08:31.920 people look at that and they sort of think back 0:08:31.920 --> 0:08:35.360 to you know, past past periods and economic history of 0:08:35.400 --> 0:08:39.360 financial engineering going crazy, and it just I think in 0:08:39.920 --> 0:08:43.040 late last year it caused people to reassess how much 0:08:43.080 --> 0:08:46.040 exposure they want to AI. Even if you're not owning 0:08:46.240 --> 0:08:49.280 Nvidio stock, you probably have AI exposure in your portfolio 0:08:49.520 --> 0:08:51.520 just because the buildout is so spread. 0:08:51.200 --> 0:08:52.400 Out across the economy. 0:08:52.559 --> 0:08:55.520 Yeah, right, and so you can own you can own 0:08:55.600 --> 0:08:59.520 energy stocks, you can own you know, power plants, chemicals companies, 0:08:59.559 --> 0:09:02.120 all of them have a fair amount of AI exposure 0:09:02.160 --> 0:09:05.719 to growth. And so I think that sort of the 0:09:06.080 --> 0:09:09.280 market repriced that a little bit. And then you have 0:09:09.400 --> 0:09:11.319 in video who, like I said, just is sold out. 0:09:11.320 --> 0:09:14.080 But once you're sold out, there's no upside. And that's 0:09:14.080 --> 0:09:16.480 sort of stocks traded sideways for six months. 0:09:17.120 --> 0:09:18.760 Ed, come on in here, because Jay got me thinking 0:09:18.800 --> 0:09:20.199 about constraints. Go ahead. 0:09:20.240 --> 0:09:22.000 Well, the only thing I wanted to point out is 0:09:22.000 --> 0:09:25.800 that you know, we got salesforce no no salesforce earlier 0:09:26.480 --> 0:09:28.680 right after the market and it's down about four percent, 0:09:28.760 --> 0:09:31.360 and some of it has to do kind of feeding 0:09:31.360 --> 0:09:33.080 into the AI fears that are out there. 0:09:33.240 --> 0:09:33.839 A little bit. 0:09:33.920 --> 0:09:37.120 They gave a lukewarm outlook for sales growth. I mean 0:09:37.200 --> 0:09:39.959 it's in video and then it's the others because it's 0:09:40.000 --> 0:09:42.520 just been an interesting market environment as of late in 0:09:42.600 --> 0:09:46.120 terms of that AI scare, and it's been playing its 0:09:46.120 --> 0:09:49.000 way in a lot of areas, in particular in those 0:09:49.040 --> 0:09:49.920 software companies. 0:09:50.520 --> 0:09:50.760 Yeah. 0:09:50.760 --> 0:09:54.360 Look, the difficult thing with all of this is that 0:09:54.920 --> 0:09:58.920 the data center that gets built tomorrow with the latest 0:09:58.960 --> 0:10:02.000 generation and VideA, g use, the software results of that 0:10:02.400 --> 0:10:05.200 are in the future, right. And the way that Gentamong 0:10:05.280 --> 0:10:08.440 has explained it previously is that imagine if they were 0:10:08.440 --> 0:10:12.240 a handbag company bear with and they said to the market, 0:10:12.520 --> 0:10:15.800 here are next five seasons of bags. We're going to 0:10:15.840 --> 0:10:19.720 tell you in advance, the next five years worth in videos, 0:10:19.840 --> 0:10:22.040 argued for a really long time, it has told the 0:10:22.080 --> 0:10:25.040 market from the supply chain to its customers what it 0:10:25.160 --> 0:10:27.800 is going to do, and to its credit, it has 0:10:27.880 --> 0:10:33.680 delivered those generations of technology annually to a relatively accurate timeline. 0:10:34.760 --> 0:10:38.199 So that's why we track capital expenditures, right. Capital expenditures 0:10:38.240 --> 0:10:41.000 are a commitment for a calendar or a fiscal year 0:10:41.320 --> 0:10:44.319 in most cases in videos. The main beneficiary of that. 0:10:44.640 --> 0:10:47.280 The problem with salesforce and some of the other corners 0:10:47.280 --> 0:10:50.120 of the software market is that they know this is 0:10:50.160 --> 0:10:53.120 them showing the results of investments that they made in 0:10:53.240 --> 0:10:56.800 prior years, and those two timelines don't line up, and 0:10:56.880 --> 0:10:59.600 for investors, like, that's really hard. Again, I'm not an investor. 0:10:59.800 --> 0:11:01.400 This is just how it would be related to me, 0:11:01.559 --> 0:11:03.520 you know, on the show or in the course of 0:11:03.679 --> 0:11:05.520 being out there reporting, and you kind of have to 0:11:05.559 --> 0:11:06.280 sympathize with. 0:11:06.240 --> 0:11:09.000 That, you know, we're I want to remind everybody we 0:11:09.480 --> 0:11:12.880 are waiting for in video earnings usually reporting at twenty past. 0:11:13.040 --> 0:11:16.240 It's four thirty one here in on Wall Street, and 0:11:16.280 --> 0:11:19.000 we're going to be speaking a little later about salesforce 0:11:19.080 --> 0:11:21.280 or maybe even more a little sooner if we don't 0:11:21.280 --> 0:11:22.080 get these in video. 0:11:22.120 --> 0:11:22.640 Here we go. 0:11:22.760 --> 0:11:24.920 There they are, here we go. All right, go ahead, Cheryl. 0:11:25.400 --> 0:11:28.240 Let's go to actually the outlook first quarter revenue forecast, 0:11:28.360 --> 0:11:32.240 beating estimates, the company saying for the first quarter seas 0:11:32.280 --> 0:11:34.560 revenue of seventy six point forty four billion to seventy 0:11:34.640 --> 0:11:37.480 nine point fifty six billion, that is easily above the 0:11:37.480 --> 0:11:41.120 street estimate of seventy two point seventy eight million. Let's 0:11:41.200 --> 0:11:44.440 go back to the fourth quarter data center revenue that 0:11:44.640 --> 0:11:47.280 coming in better than expected sixty two point three billion 0:11:47.360 --> 0:11:50.120 versus the street estimate of sixty point thirty six billion, 0:11:50.800 --> 0:11:55.120 and video saying computing demand is growing exponentially. Fourth quarter 0:11:55.120 --> 0:11:58.160 adjusted gross margin we expected seventy five percent, We got 0:11:58.240 --> 0:12:02.400 seventy five point two percent. Fourth quarter revenue coming in 0:12:02.520 --> 0:12:05.360 overall sixty eight point one billion, better than the street 0:12:05.480 --> 0:12:08.240 estimate of sixty five point ninety one billion. Tim we're 0:12:08.240 --> 0:12:10.440 seeing that stock up now about two point two percent 0:12:10.520 --> 0:12:11.319 in the aftermarket. 0:12:11.440 --> 0:12:14.160 Yeah, just to remind everybody where we are with these numbers. 0:12:14.160 --> 0:12:16.600 The first the company ce's first quarter revenue coming in 0:12:17.280 --> 0:12:21.160 seventy six point four four billion dollars to seventy nine 0:12:21.200 --> 0:12:25.280 point five six billion dollars. That beat estimates handedly handily 0:12:25.360 --> 0:12:28.839 of seventy two point seven eight billion dollars. As Carol 0:12:28.920 --> 0:12:31.320 mentioned in video, CEO Jensen Wong saying in a statement, 0:12:31.360 --> 0:12:36.760 computing demand is growing exponentially. Were also fourth quarter data 0:12:36.800 --> 0:12:39.400 center revenue worth repeating a beat there sixty two point 0:12:39.480 --> 0:12:42.760 three billion dollars the estimers for sixty point three six billion, 0:12:43.080 --> 0:12:46.040 and that gross margin coming in above estimates at seventy 0:12:46.080 --> 0:12:47.480 five point two percent. 0:12:47.600 --> 0:12:49.800 Our Sarah Friar on our live blog saying that chairs 0:12:49.840 --> 0:12:51.959 are growing up on that data center revenue beat. Hey, 0:12:52.080 --> 0:12:54.480 Ed Ludlow, come on in. I know you're looking at 0:12:54.880 --> 0:12:56.560 these numbers. What jumps out for you? 0:12:57.480 --> 0:12:59.880 Yeah, I mean straight to the outlook. And by the way, 0:13:00.040 --> 0:13:01.760 I would have done the same thing. Go right there. 0:13:02.120 --> 0:13:04.319 You know, revenue in the fiscal first quarter seventy eight 0:13:04.360 --> 0:13:07.800 billion dollars plus or minus two percent. You know, a 0:13:07.840 --> 0:13:12.000 consensus was really high. But like going into this, it's 0:13:12.040 --> 0:13:14.880 a very simple equation. There were many names from across 0:13:14.920 --> 0:13:17.040 sell side and buyside that said they wanted to see 0:13:17.120 --> 0:13:21.840 Nvidia beat revenues overall in the current period in by 0:13:21.880 --> 0:13:25.040 the multiple billions of dollars, you know, against consensus. And 0:13:25.120 --> 0:13:28.880 so one thing I would say to confirm something is 0:13:28.920 --> 0:13:32.760 that the fiscal first quarter, which is the April quarter, 0:13:33.200 --> 0:13:37.360 does not assume any compute revenue from China. In the 0:13:37.400 --> 0:13:40.960 outlook does not factor in any compute revenue of China. 0:13:41.160 --> 0:13:42.880 That I guess is something to check off the list. 0:13:42.920 --> 0:13:44.240 It was one of the questions we had. 0:13:44.920 --> 0:13:47.880 I want to bring in Jake Goldberg from Seaport Research 0:13:47.920 --> 0:13:51.520 Partner's senior analysts, your semiconductors and Electronics. He joins us, 0:13:51.520 --> 0:13:56.600 also from San Francisco. Anything in here that confirms your 0:13:56.679 --> 0:13:59.800 thesis or does it sort of go against the celerating 0:13:59.800 --> 0:14:00.800 that you have on Nvidia? 0:14:01.520 --> 0:14:03.559 Yeah, I mean it goes I mean it's a good quarter. 0:14:03.679 --> 0:14:06.040 It's a good quarter and a good guide. It's above 0:14:06.200 --> 0:14:09.600 above consensus, above my expectations, but good for them. 0:14:10.360 --> 0:14:12.000 We're still waiting to see a lot more detail. 0:14:12.080 --> 0:14:12.880 What do you want to see? 0:14:13.559 --> 0:14:14.839 I want to see I want to hear more of 0:14:14.880 --> 0:14:16.640 have to talk about gross margin for next quarter. I 0:14:16.679 --> 0:14:18.520 think that's going to be in the CFO commentary. 0:14:19.200 --> 0:14:20.880 Yeah, Ed jump in. 0:14:21.520 --> 0:14:23.840 Yeah, No, I don't have it yet, but it will 0:14:23.840 --> 0:14:25.000 be in the CFO commentary. 0:14:25.040 --> 0:14:29.280 It's seventy versus seventy five percent expectations. I mean, can 0:14:29.400 --> 0:14:31.280 can Ed? Can you use that as sort of a 0:14:31.320 --> 0:14:33.800 guide for how the company could see. 0:14:33.560 --> 0:14:37.120 First Yeah, I mean on a basis point basis, Yeah, 0:14:37.360 --> 0:14:41.800 it looked like margins are impacted by a number of things. 0:14:42.120 --> 0:14:44.560 It has been a sell side question on prior calls, 0:14:44.960 --> 0:14:47.960 the percentage of a server that in Vidia contributes to. 0:14:48.440 --> 0:14:53.800 And again, what's changed in the period is Nvidia starting 0:14:53.880 --> 0:14:57.840 to sell for example, CPUs as standalone product, and that 0:14:58.000 --> 0:15:00.640 was a part of the meta deal that was included. 0:15:00.680 --> 0:15:04.080 They talked about core Weave being an early user of 0:15:04.200 --> 0:15:06.680 CPU as a standalone product. You know, how does that 0:15:06.720 --> 0:15:11.120 impact the margin profile going forward? But yeah, I mean 0:15:11.720 --> 0:15:13.680 what they do is they own more of the server 0:15:13.760 --> 0:15:16.760 and that has been one of the ways in which 0:15:16.800 --> 0:15:19.000 that they've got margins to where they are, and clearly 0:15:19.080 --> 0:15:22.120 being zero point two percent above you know, where where 0:15:22.160 --> 0:15:24.040 the hopes were is not a bad thing. 0:15:24.360 --> 0:15:27.800 Yeah, I'm looking at that CFO commentary. As we know, 0:15:27.920 --> 0:15:30.880 revenue expected to be seventy eight billion plus or minus 0:15:30.880 --> 0:15:34.120 two percent, and as you correctly pointed out, not assuming 0:15:34.160 --> 0:15:37.600 any data center compute revenue from China in their outlook, 0:15:37.640 --> 0:15:40.480 gap and non gap gross margins expected to be seventy 0:15:40.480 --> 0:15:43.720 four point nine percent and seventy five percent, respectively, plus 0:15:43.760 --> 0:15:48.080 or minus fifty basis point, inclusive of a one tenth 0:15:48.120 --> 0:15:52.520 of one percent impact from stock based compensation expense. Just 0:15:52.560 --> 0:15:55.320 looking at what else we have here, operating expensive gap 0:15:55.320 --> 0:15:59.000 and non gap operating expenses to be approximately seven point 0:15:59.000 --> 0:16:02.720 seven billion, seven and a half billion, respectively, including that's 0:16:02.760 --> 0:16:06.360 inclusive of one point nine billion of stock based compensation expense. 0:16:06.480 --> 0:16:09.200 The headline getting my attention is in Vidia says that 0:16:09.280 --> 0:16:11.960 hyper scalers were just over fifty percent of four Q 0:16:12.520 --> 0:16:15.680 data center revenue. J Goldberg, I want to repeat that 0:16:15.680 --> 0:16:18.120 headline for you hyper scalers, We're just over fifty percent 0:16:18.160 --> 0:16:20.920 of fourth quarter data center revenue. Is that a sign 0:16:20.960 --> 0:16:25.880 that in Vidia is diversifying revenue? Who who made up 0:16:25.920 --> 0:16:29.680 the other half of data center revenue? Is it automakers? 0:16:29.720 --> 0:16:30.360 Like who's buying? 0:16:31.040 --> 0:16:31.200 Well? 0:16:31.240 --> 0:16:32.880 I think that's one of the most interesting things that's 0:16:32.920 --> 0:16:35.600 taking place with in videos is they're not just reshaping 0:16:35.640 --> 0:16:38.800 the semiconductor industry, they're trying to reshape the cloud computing 0:16:38.920 --> 0:16:40.920 industry as well. And that's why you see we see 0:16:40.920 --> 0:16:43.960 all these neo clouds getting investment from or support from Nvidio. 0:16:44.520 --> 0:16:47.880 In Vidia would much rather have one hundred neocloud customers. 0:16:47.360 --> 0:16:48.680 Than three hybrid scale customers, of. 0:16:48.680 --> 0:16:52.680 Course, and they're doing a really good job of creating that, 0:16:53.240 --> 0:16:54.440 willing that into existence. 0:16:54.440 --> 0:16:57.160 So those other customers had come on in here. Those 0:16:57.200 --> 0:17:01.000 other customers are like the core weaves, the other neuroclouds. 0:17:01.880 --> 0:17:05.760 Yeah, I mean, what is still important in this fact 0:17:05.880 --> 0:17:10.040 is that obviously the vast majority has been the hyperscalers 0:17:10.200 --> 0:17:14.600 plus meta, right, And so they've wanted to kind of 0:17:15.240 --> 0:17:17.720 switch between a story what they used to call an 0:17:17.720 --> 0:17:21.000 AI factory. At first, an AI factory was an on 0:17:21.160 --> 0:17:24.280 prem data center that enterprises and maybe some of the 0:17:24.320 --> 0:17:27.960 neoclouds would operate themselves. Now an AI factory is what 0:17:28.000 --> 0:17:32.119 they you define any data center that's running AI workloads 0:17:32.160 --> 0:17:34.840 in so they have chopped and change between that story, 0:17:35.080 --> 0:17:37.960 but its origin was that they wanted to go beyond 0:17:38.000 --> 0:17:41.280 the hyperscalers to have people own their own infrastructure for 0:17:41.320 --> 0:17:44.399 AI workloads, if they were, say a software company or 0:17:44.440 --> 0:17:46.520 an enterprise of a slightly different size. 0:17:46.960 --> 0:17:49.359 You know, it's interesting, I'm looking for supply constraints and 0:17:49.359 --> 0:17:52.240 they seem to say in the CFO commentary, I'm seeing 0:17:52.240 --> 0:17:54.960 it in terms of gaming. They say, we expect supply 0:17:55.160 --> 0:17:57.000 constraints to be a headwind to gaming in the first 0:17:57.040 --> 0:18:00.920 quarter fiscal twenty twenty seven and beyond. But it's so important, right, Ed, 0:18:01.000 --> 0:18:02.320 I mean, we want to really just see if that's 0:18:02.320 --> 0:18:04.439 a problem in the data center area. 0:18:06.680 --> 0:18:11.000 Sadly, you know, my history within video, you know, before 0:18:11.080 --> 0:18:13.560 coming Silicon Valley and covering the data center thing was 0:18:13.600 --> 0:18:16.080 gaming and you know it's now such a small piece 0:18:16.119 --> 0:18:18.879 of revenue. It's I mean, Jay can jump in, but 0:18:18.920 --> 0:18:22.239 really it's not where anyone's looking right now. There is 0:18:22.320 --> 0:18:25.879 some discussion later on as it relates to the balance 0:18:25.880 --> 0:18:31.359 sheet and cash flow on things to do with supply, 0:18:31.440 --> 0:18:34.560 but you're right that what they're basically saying is that 0:18:34.560 --> 0:18:38.080 that was the gaming was the segment that was impacted, 0:18:38.119 --> 0:18:41.040 and I don't know that that is having any effect really, 0:18:41.080 --> 0:18:42.880 And how we see the stock trading in after. 0:18:42.680 --> 0:18:45.240 Hours, so in Video shares up three point four percent 0:18:45.359 --> 0:18:48.800 right now, and in fact we're seeing Broadcom TSMC and 0:18:49.000 --> 0:18:52.560 Micron shares follow in video higher. Jay Goldberg, come on 0:18:52.600 --> 0:18:54.920 in here and talk a little bit about the broader 0:18:54.920 --> 0:18:58.000 repercussions of a print like this outside of in video. 0:18:58.040 --> 0:19:00.440 What's the signal that it sends not just to hardware 0:19:00.480 --> 0:19:02.200 makers but to the entire market. 0:19:03.200 --> 0:19:05.840 I think there are always concerns about how how long 0:19:05.880 --> 0:19:07.600 the spend is going to keep going, and we had 0:19:07.640 --> 0:19:10.000 certainly had some positive data points about that. Two weeks 0:19:10.000 --> 0:19:13.720 ago when hyperscale is reported, Facebook reported they have very 0:19:13.720 --> 0:19:18.320 strong CAPEX numbers. This just continues that trend, and I 0:19:18.359 --> 0:19:19.960 don't want to say it's a rising tide that lifts 0:19:20.000 --> 0:19:22.560 all boats. But it's it is six seven hundred billion 0:19:22.600 --> 0:19:24.560 dollars in CAPEX this year, and that's that's going to 0:19:24.600 --> 0:19:26.640 spread across the entire ecosystem. 0:19:27.320 --> 0:19:28.919 No, and I want to go back to and I 0:19:28.960 --> 0:19:31.080 totally get like gaming non important, but I was like 0:19:31.160 --> 0:19:33.639 looking to see if there was any supply constraints in 0:19:33.680 --> 0:19:35.439 the rest of their universe, and I just thought it 0:19:35.440 --> 0:19:37.760