Speaker 1: From Marhart where Innovation, Money and power Collie in Silicon
Speaker 1: Vallet NBN.
Speaker 2: This is Bloomberg Technology with Caroline Hyde.
Speaker 3: And Ed Loved Love.
Speaker 4: Live from New York and San Francisco. This is Bloomberg
Speaker 4: Technology coming up in videop is the Price of lofty expectations.
Speaker 4: CEO Jensen One tries to boost confidence in a Bloomberg exclusive.
Speaker 5: Past the Telegram. CEO is charged and out on bail
Speaker 5: in France. So the crimes committed on the app. We
Speaker 5: go live to Paris.
Speaker 6: And California advances.
Speaker 4: It's controversial AI safety bill that has divided tech leaders.
Speaker 6: We'll discuss the law as it heads to the state Senate.
Speaker 4: That is so much more coming up, but first which
Speaker 4: I can on the key name that we are all
Speaker 4: watching today in video of by two point eight percent,
Speaker 4: the three trillion dollar company not living up to the
Speaker 4: hype in terms of its forecasts and particularly Blackwell, which
Speaker 4: will dig into ed but it's not dragging down the
Speaker 4: rest of the indices.
Speaker 5: Mark it up in vidio down. I caught up with
Speaker 5: Nvidia CEO Jensen Wang after the results. He addressed concerns
Speaker 5: about the company's latest generation Blackwell chips.
Speaker 7: We're expecting Q three to have more supply than Q two,
Speaker 7: We're expecting Q four to have more supplier than Q three,
Speaker 7: and we're expecting Q one to have more supply than
Speaker 7: Q four, And so I think our supply, our supply
Speaker 7: condition going into next year will be in will be
Speaker 7: a large improvement over this last year.
Speaker 5: Congensabani of Bloomberg Intelligence joins us now in San Francisco.
Speaker 5: You said it in Vidio's strong expectations stronger.
Speaker 8: What's your thesis this morning.
Speaker 9: When they've fallen victim to their own strength and on
Speaker 9: realistic expectations. When we look about the top concerns going
Speaker 9: into the prink blackwell, the several billion in Q four
Speaker 9: put a lid on uncertainties in twenty twenty five.
Speaker 5: Demand sustainability, just real quick, because several billion doesn't mean anything.
Speaker 9: Well, it still is solid in terms of what we
Speaker 9: expected or given the last four weeks of what we've
Speaker 9: been hearing the issues. So that's still impressive that they
Speaker 9: are able to pull it off so soon. Second, demand sustainability,
Speaker 9: we saw demand broadening and in fact getting stronger beyond.
Speaker 10: Just the large cloud guys.
Speaker 9: And finally, when we put it all together our estimates,
Speaker 9: and I believe most of the street estimates are actually
Speaker 9: going up after this earnings than they were before.
Speaker 4: Quin John, Yes, perhaps it's a victim of its own
Speaker 4: success and analyst investors' exuberance around the name. But is
Speaker 4: it also a victim of its own ambitions setting itself
Speaker 4: terms of time that just aren't able to be hit
Speaker 4: When we see that people aren't disappointed by a Q
Speaker 4: four and later ramp up for Q one Q two
Speaker 4: of next year.
Speaker 9: Fiscally, I mean definitely, it's part of two things. The
Speaker 9: execution they have performed over the last two years have
Speaker 9: been nothing but phenomenal. It's very hard to continue with
Speaker 9: this annual cadence reiterating the new chip designs at time,
Speaker 9: bringing in the supply not just at scale but at
Speaker 9: new technology module. So it's definitely a high bar.
Speaker 5: They have said, I actually want to talk about new
Speaker 5: technology model. There was a question on the Analyst score
Speaker 5: which I also try to get into a Jensen Wang
Speaker 5: about generational upgrades. Right now, H two hundred is ramping
Speaker 5: being deployed in the real world, and before we know it,
Speaker 5: Blackwell's here. So if you're a data center operator, you
Speaker 5: have the option of both potentially at the same time.
Speaker 8: How do you model for that?
Speaker 9: I mean, each data center operator is at a different
Speaker 9: technology stack and a different phase in this journey, right,
Speaker 9: so there has been a pent up demand. So I
Speaker 9: think right now this sort of tier two and low
Speaker 9: enterprises and the new up and comers who are installing
Speaker 9: this base would choose to go for the H two
Speaker 9: hundred and Blackwell is not really for everyone.
Speaker 3: You really need a.
Speaker 9: Significant ROI, significant investment to implement Blackwell.
Speaker 4: What about geographic reach here? Were you worried in any
Speaker 4: way about the China pullback?
Speaker 3: No, I mean there was.
Speaker 9: This is the first time we saw the US decline sequentially.
Speaker 9: We don't think there's a lot to read into it,
Speaker 9: but it definitely outlines that the demand is broadening outside
Speaker 9: of the US. When we look at rest of the
Speaker 9: world other than US over the last few years, the
Speaker 9: growth there has been significantly faster, and that leads to
Speaker 9: that sort of low double digit so and billion dollars
Speaker 9: that Jensen outlined.
Speaker 4: Congen Shavani and has been a busy twenty four hours
Speaker 4: for you.
Speaker 6: We appreciate you pre meg intelligence.
Speaker 4: Meanwhile, let's get a broader market reaction Anthony Singramany is
Speaker 4: with US chief Market stretches that Ameral Price Financial.
Speaker 6: Who would have thought it with all of the handwringing.
Speaker 4: In video is so important to the S and P,
Speaker 4: to the NASDAC of eight percent. Waiting benchmarks are higher
Speaker 4: even though the name is down.
Speaker 1: Yeah, you know, at the beginning of the week we
Speaker 1: kind of said move over power. Here comes Jensen Wong,
Speaker 1: and you're really kind of seeing the markets just kind
Speaker 1: of not really react in videos earnings last night. And
Speaker 1: I think it's because earnings were positive. As Kanja mentioned,
Speaker 1: you know, the wow factor is starting to come down
Speaker 1: because the hurdle rates are getting higher.
Speaker 2: It's getting harder to achieve that.
Speaker 1: But overall, the delivery of profits and outlooks last night
Speaker 1: from in video, we're solid, and so I think the
Speaker 1: market is starting to kind of look forward and say, hey,
Speaker 1: everything's okay with big tech. We're going to move over
Speaker 1: the next couple of quarters. Macro is obviously going to
Speaker 1: be a concern coming here over the next few weeks
Speaker 1: and as we get rate cuts from the FED later
Speaker 1: next month. But I think the story in big tech
Speaker 1: is less homogeneous trading a little bit more focus on
Speaker 1: you know where's the payoff or AI what's the supply
Speaker 1: and demand build for companies like in video moving forward?
Speaker 1: And I think it will likely provide opportunities when when
Speaker 1: we get some of these pullbacks for investors to reassess
Speaker 1: and maybe look at stocks that got away from them
Speaker 1: earlier this year.
Speaker 6: Would you say that in video? I don't want to
Speaker 6: go into individual names.
Speaker 4: But would you say these sorts of valuations when today Apple, Microsoft, Amazon, Meta, Google,
Speaker 4: Tesla are all the top performers in terms of points
Speaker 4: in the S and P five hundred, should you be
Speaker 4: wrapping up more in technology?
Speaker 6: With valuations at these levels, you.
Speaker 1: At the top, as you said, like equal weights in
Speaker 1: these companies, and in technology just holding an equal weight
Speaker 1: is thirty forty percent of the S and P five hundred.
Speaker 1: So I don't think you need to get over your
Speaker 1: skis around you extending psitioning in these areas. But when
Speaker 1: we do see pullbacks in these big tech leaders, this
Speaker 1: is the time to start looking at them, at least
Speaker 1: if you've underweighted the area. Our view is that there
Speaker 1: is a broader group of stocks that are more attractive.
Speaker 1: They're particularly more attractive as earnings growth expectations are moving
Speaker 1: higher for outside for areas outside of the big tech.
Speaker 1: The economy seems to be on firm footing. The GDP
Speaker 1: grew by three percent in the second quarter, and the
Speaker 1: Fed is likely to start their you know, their moves
Speaker 1: to lower rates over the next few months and a
Speaker 1: few quarters. So the outlook for the rest of the
Speaker 1: four hundred and ninety three stocks that aren't the Magnificent
Speaker 1: seven are starting to look more attractive. And that's what
Speaker 1: we're seeing this month. Consumer staples, healthcare utilities. They're all
Speaker 1: at the top of the charts for August, and that
Speaker 1: might be because September is a pretty poor month for
Speaker 1: the market.
Speaker 5: And see that's a pretty sweet Bloomberg terminal chot over
Speaker 5: your left shoulder. What is that that's in video quarterly revenues.
Speaker 2: That's right, that's right.
Speaker 1: And as the chart if you can see it in
Speaker 1: the back, it shows the actuals and the estimates starting
Speaker 1: to get closer.
Speaker 2: And I think that's why you're seeing A.
Speaker 1: Get more trouble start moving higher, even though they had
Speaker 1: great results last night.
Speaker 5: So bear with me. I have a chot of my own.
Speaker 5: Let's bring it up. This is the beat in the
Speaker 5: quarter relative to expectations, and I think the point is
Speaker 5: that it was a It was a four percent beat
Speaker 5: against consensus, right, four percent upside surprise.
Speaker 8: Have you ever experienced a quarter like.
Speaker 5: This where everyone has just lost their absolute minds over
Speaker 5: a single name in a week where we had Central
Speaker 5: Bank speakers left, right and center and more economic data
Speaker 5: that we can fit into a one hour program.
Speaker 1: Yeah, no, I mean I think the last and you
Speaker 1: started at volatility spike in early August.
Speaker 2: Some of that was the japan Yen Carrie trade.
Speaker 1: But I do think expectations are really high in these
Speaker 1: big tech, magnificent names, and so not only do they
Speaker 1: have to surpass and kind of meet the perfection standards
Speaker 1: that investors put on it, but they actually need to
Speaker 1: surpass them by even more. That's getting harder and so
Speaker 1: as as my earlier comments said, I think you're going
Speaker 1: to see more less homogeneous trading between some of these
Speaker 1: big tech leaders, and it's really going to come down
Speaker 1: to fundamentals and capital spending and what's the revenue outlook, how.
Speaker 2: Much are you beating?
Speaker 1: Those things will play a much more dominant role in
Speaker 1: moving share prices around. But at the same at the
Speaker 1: same you know, the same brath. You have a lot
Speaker 1: of stocks that have not kept pace with these big
Speaker 1: tech companies that remain attractive in an environment where we're growing.
Speaker 1: And so if the FED is cutting interest rates and
Speaker 1: they can kind of engineer that soft landing, there's a
Speaker 1: lot of sectors of the economy that are more attractive today.
Speaker 5: So let's finish here in aggregate Nvidia and everything else.
Speaker 8: That you've outlined.
Speaker 5: Do you believe that this cycle, the investment cycle around
Speaker 5: AI is intact and it continues.
Speaker 1: Yeah, I think you know, and from your interview with
Speaker 1: Jensen Wong, I think it's very clear the AI infrastructure
Speaker 1: build and the architecture around that is in the very
Speaker 1: early innings. Some of these companies like Microsoft, Amazon, Meta Alphabet,
Speaker 1: they spent almost sixty billion dollars in the prior quarter
Speaker 1: on AI investment. They said they were going to continue
Speaker 1: that over the next several quarters. And so as these
Speaker 1: companies and as sovereign AI that Nvidia mentioned last night,
Speaker 1: as these countries start to build that infrastructure, there is
Speaker 1: a lot of opportunities still left in AI. However, like
Speaker 1: the like the tech boom in their early late nineties
Speaker 1: early two thousand we go through periods where expectations get
Speaker 1: really high, they need to reset, and then maybe stocks
Speaker 1: can move higher from there. And I think we're starting
Speaker 1: to see that now with big tech and the AI theme.
Speaker 5: Ansney sagem Bene, chief market strategist in Americaprise Financially you
Speaker 5: believe thank you now, coming out of a conversation with
Speaker 5: Max Levchin, CEO of a firm following yesterday's pretty strong
Speaker 5: earnings report, car you're looking at another name.
Speaker 4: I AM firms up, CrowdStrike up as well, more than
Speaker 4: five percent. This isn't reporting second quarter sales that basically
Speaker 4: top tenas estimates. Remember we were all worrying about the
Speaker 4: global IT outage back in July, but it doesn't seem
Speaker 4: to have had an immediate, as bad a result impact.
Speaker 6: We're currently higher.
Speaker 5: Sublombo Technology, a firm delivering better than expected earning, sending
Speaker 5: shares upwards. The company's fourth quarter revenue and first quarter
Speaker 5: revenue forecast both coming in ahead of estimate, CEO Max
Speaker 5: Levchin saying the company had quote a killer quarter.
Speaker 8: Max joins us now here in San Francisco.
Speaker 5: I spent enough time with you to know that when
Speaker 5: you say something like that, you mean it. I wouldn't
Speaker 5: say that you're prone to superlatives like that. Why why
Speaker 5: a killer quarter?
Speaker 3: Numbers speak for themselves.
Speaker 8: I'll go beyond that.
Speaker 5: Come on, tell me the story of what's happening behind
Speaker 5: your platform and your user base.
Speaker 3: I think there's a real momentum.
Speaker 11: You can tell by looking at our metrics and the
Speaker 11: qualitative measures that we take, and just the fact that
Speaker 11: we've outperformed the credit card industry, which is our direct
Speaker 11: competitor in terms of managing credit, and just the sheer
Speaker 11: number of launchers and merchant signings. Every metric that I
Speaker 11: could cast my eye on, say, wow, that is a
Speaker 11: really good quarter.
Speaker 3: So you know, sometimes we got to take a bath.
Speaker 5: Let's say the buy now pay Lata space is let's
Speaker 5: say more competitive since last year on the program. Maybe
Speaker 5: in that time. Caroline and I spoke with the Klan,
Speaker 5: the CEO, for example. They seem very optimistic, particularly about
Speaker 5: the United States. Yet you continue to grow. I don't
Speaker 5: have the data for market share, but could you just
Speaker 5: contextualize your performance in that sense?
Speaker 11: Well, I think we are outpacing them reasonably well in
Speaker 11: terms of our growth relative to there is at least
Speaker 11: according to the stated numbers, not that I am competitive,
Speaker 11: but I'm very competitive, let's be honest. But the reality
Speaker 11: is it's a giant market and all of us together
Speaker 11: at up to less than ten percent of e commerce,
Speaker 11: and all of us are now looking at offline and
Speaker 11: so just the real share taking that's taking place is
Speaker 11: happening against cash, against credit cards, against debit cards, all
Speaker 11: the other payment types, and so there's just an incredible
Speaker 11: amount of road available to all of us.
Speaker 3: And a firm in particular, what.
Speaker 4: Does that mean in terms of the macro context? Then, Max,
Speaker 4: how confident are you of the US consumer the global
Speaker 4: consumer right now?
Speaker 11: Well, we're about to launch in the UK, so we'll
Speaker 11: find out exactly how confident I should be about the
Speaker 11: UK consumer. But the US consumer again, look at our
Speaker 11: investor supplement. Credit card companies have built and built and
Speaker 11: built up their delinquencies, and ours remained very firmly in control.
Speaker 11: Our consumer is borrowing and shopping and paying back, which
Speaker 11: is really important for our credit business.
Speaker 3: But so far, so good. We do not see a
Speaker 3: major slowdown.
Speaker 11: We do not see a significant pullback and demand there's
Speaker 11: always new industries. A quarter or two ago, I was
Speaker 11: lamenting the loss of interest and electronics. It came back
Speaker 11: roaring through the last quarter, travels a little bit softer.
Speaker 3: I think people got their COVID post COVID fix.
Speaker 11: But all in all, consumer is effectively shopping and buying
Speaker 11: and paying back and I don't see problems.
Speaker 4: Meanwhile, you're taking a bow and the market in particular
Speaker 4: likes the focus on profitability. Now I hate to bring
Speaker 4: them up again, but Karner actually did post a profit,
Speaker 4: even though they're still a private company that eying a
Speaker 4: twenty billion dollar valuation and they're cunning costs by leaning
Speaker 4: into AI. Is that something that you look at, Max,
Speaker 4: something that you feel you have to compete into.
Speaker 11: Well, good news is that we've been in the AI
Speaker 11: business since inception. So one percent of our loans are
Speaker 11: underwritten individually. Every single time I'm entirely buying machines, and
Speaker 11: so we've been on the machine learning and AI training
Speaker 11: since base Eero.
Speaker 3: And we don't think of.
Speaker 11: It as a way to replace humans or to get
Speaker 11: rid of humans. We think of it as a great
Speaker 11: tool for increasing productivity, to give us an edge in
Speaker 11: underwriting customer service, et cetera.
Speaker 3: And so yes, we're very, very active in AI.
Speaker 11: We have lots of really fun things happening, both visible
Speaker 11: and not to the investor eye. But it's a huge
Speaker 11: part of what we do in terms of profitability. You know,
Speaker 11: I said it last night on the Earning Skull, and
Speaker 11: I just want to make sure I repeated this was
Speaker 11: not a contortionist thing we just did when we said, hey,
Speaker 11: profitability is on the horizon.
Speaker 3: It is very much part of the plan. It's always
Speaker 3: been part of the plan.
Speaker 11: It's just now close enough where I can say, here's
Speaker 11: a date with history. We're going to get Gap profitable
Speaker 11: and move right past it and do more.
Speaker 5: Max and Carol also bear with me that I am
Speaker 5: a firm customer in the sense that you know, I
Speaker 5: used the firm to finance a specific thing for what
Speaker 5: it's worth. It was the Peloton tread. But the reason
Speaker 5: I did it is actually emphsis some point of sale.
Speaker 5: So when you go through the audience issubmitted, if you
Speaker 5: go and try buy something from Peloton, it's kind of
Speaker 5: a weird transaction, but you're presented with the firm as
Speaker 5: an option almost straight away. Do you negotiate that aggressively
Speaker 5: for those kind of bigger ticket items, I'm.
Speaker 11: Not sure individual deals are worth commenting on. But every
Speaker 11: deal where we are presented at the point of sale,
Speaker 11: and every deal where you see it up funnel as
Speaker 11: what might call it before you even get into the checkouts,
Speaker 11: are absolutely directly integrated. So we go to the merchant,
Speaker 11: we spend a lot of time with them making sure
Speaker 11: that we are as helpful as possible to their ability
Speaker 11: to sell, be it a Pelton tread or a mattress or.
Speaker 3: Anything in between. And that is what gives us a
Speaker 3: huge advantage.
Speaker 11: The consumer has the confidence and the clarity of what
Speaker 11: it might cost them to borrow money to buy something.
Speaker 8: Max.
Speaker 5: While you're here, could I please ask you, as a
Speaker 5: story out from Blomberg Law about a firm face sing
Speaker 5: a class action suit after the Evolved bank breach situation,
Speaker 5: comment on that please.
Speaker 11: Probably a very bad idea to comment and ongoing or
Speaker 11: potential future litigation, so I'm not sure I have anything
Speaker 11: to say on that. You know, I said it the
Speaker 11: day of Evolved news, which is certainly unfortunate that the
Speaker 11: firm card numbers were all safe. We did not need
Speaker 11: to rotate them and give people new cards. That is
Speaker 11: now confirmed no card numbers have been leaked and our
Speaker 11: consumers are safe. If you have your firm card, please
Speaker 11: continue using it.
Speaker 3: It works just fine.
Speaker 8: Thank you.
Speaker 4: Thanks Love Chin, It's always great to have you on
Speaker 4: the show. We appreciate it. It's taking about the CEO
Speaker 4: of a firm today.
Speaker 5: Telegram ceo Pavel durov was charged in France for complicity
Speaker 5: in the spread of sexual images of children and other crimes.
Speaker 8: It's a rare example of.
Speaker 5: A tech leader being held liable for the way their
Speaker 5: platform is used. I want to get right to the
Speaker 5: details with Bloomberg's Allan Katz or Paris bureau chief, and
Speaker 5: I think fill in the details. My understanding is Duroff
Speaker 5: is out on a significant bail and there is a
Speaker 5: process to come.
Speaker 12: So he is out of the sort of a holding
Speaker 12: cells the way they do it in France. From that
Speaker 12: four day interrogation that he had before being presented to
Speaker 12: the judge, he had to post a five million euro
Speaker 12: bond for that, so that's about five and a half
Speaker 12: million dollars, so it's a lot of money. That said,
Speaker 12: he's according to Bloomberg's you know, wealth ranking, he's quite
Speaker 12: a wealthy fellow, and so he could certainly afford it.
Speaker 12: And from here on out, at least according to the
Speaker 12: initial ruling from what's called a jugually liberte, he has
Speaker 12: to check in twice a week with authorities to make
Speaker 12: sure that he's still in France and he's not allowed
Speaker 12: to leave the country.
Speaker 3: So that's sort of.
Speaker 12: The process in the immediate future. And now it goes
Speaker 12: to an investigation where the investigating magistrate will continue to
Speaker 12: look into the case, and that could take months, could
Speaker 12: take a year longer, Like, it's really unclear how long
Speaker 12: the rest of this process might take beyond that.
Speaker 4: And really the case here is that dura off Telegram,
Speaker 4: which is CEO of basically in no way helps when
Speaker 4: it comes to investigations. They refuse, it said, to run
Speaker 4: legal wire taps on suspects, particularly when it comes to
Speaker 4: organized criminals and particularly sexual exploitation of children. Is that
Speaker 4: really wants at heart here, the fact that he doesn't
Speaker 4: want to take any movement, any action as a leader
Speaker 4: of a social media platform.
Speaker 12: Well, yes, The action though that you're talking about is
Speaker 12: he doesn't he deliberately, according to French officials, he deliberately
Speaker 12: did not respond to or applied to what they call
Speaker 12: legitimate requests for informational for help in other investigations that
Speaker 12: were running in criminal activities that they saw on the
Speaker 12: Telegram network. And that's different than the way that most
Speaker 12: other messaging services operate, and that's really why they issued
Speaker 12: the arrest warrant for him in the first place. And
Speaker 12: the prosecutor made a point of that in the statement
Speaker 12: last night, saying that was really what was particular about
Speaker 12: Telegram as a platform, and not just in France, but
Speaker 12: she specifically mentioned Belgium as well as having the same
Speaker 12: issues with Telegram.
Speaker 4: A near complete lack of response, as pass prosecutor put it,
Speaker 4: we appreciate it. Alan Katz, thank you, Welcome back to
Speaker 4: Blue meg Technology. And Caroline Hide in New York and.
Speaker 8: I met Ludlow in San Francisco, and I.
Speaker 4: Just want to point out what is happening on the
Speaker 4: markets today because we've had so much anxiety around this
Speaker 4: one name, all around Nvidia, the fact that it was
Speaker 4: the most crucial that it had ever been to the market.
Speaker 4: It's eight percent waiting in the NASDAC, it's six percent
Speaker 4: waiting in the SMP would mean that the direction of
Speaker 4: travel after earnings would dictate that for the benchmark, not
Speaker 4: so we're currently up one point one percent, but then
Speaker 4: has that one hundred despite it's fourteen percent waiting in
Speaker 4: the socks. We're up one point four percent and it
Speaker 4: is lower by three point six percent. The reason is lower,
Speaker 4: of course, d is what you poured over yesterday was
Speaker 4: the fact that, yes, it's still beat in its quarter
Speaker 4: that was just announced, and the fact that its forecast
Speaker 4: looked pretty decent. But it was some of the issues
Speaker 4: that ramp up in Blackwell in particular that caused a
Speaker 4: little bit of uncertainty.
Speaker 6: And you spoke to the CEO just about that.
Speaker 3: I did.
Speaker 5: I did speak with Nvidia CEO Jensen Wang following what
Speaker 5: was kind of seen as a disappointing earnings report, so
Speaker 5: bizarre to say that out loud. He laid out his
Speaker 5: and the company's expectations for next year surrounding the production
Speaker 5: of Blackwell chips.
Speaker 8: Listen to this.
Speaker 7: We made a mass change to improve the yield. Functionality
Speaker 7: of Blackwell is wonderful. We're sampling Blackwell all over the
Speaker 7: world today. We show people giving tours to people of
Speaker 7: the Blackwall systems we have up and running. You could
Speaker 7: find pictures of Blackwell systems all over the web. We
Speaker 7: have started volume production volume. Production will ship in Q four.
Speaker 7: Q four, we will have billions of dollars.
Speaker 2: Of Blackwell revenues and.
Speaker 3: We will ramp from there. We will ramp from there.
Speaker 7: The demand for Blackwell far exceeds its supply, of course
Speaker 7: in the beginning, because the demand is so great. But
Speaker 7: we're going to have lots and lots of supply and
Speaker 7: we will be able to ramp. Starting in Q four
Speaker 7: we have billions of dollars of revenues, and we will
Speaker 7: ramp from there into Q one, into Q two and
Speaker 7: two next year.
Speaker 10: We're going to have a great next year as well.
Speaker 5: Jensen, what is the demand for accelerated computing beyond the
Speaker 5: hyperscalers and meta.
Speaker 7: Hyperscalers represent about forty five percent of our total data
Speaker 7: center business. We're relatively diversified today. We have hyperscalers, we
Speaker 7: have Internet service providers, we have sovereign ais, we have
Speaker 7: industries enterprises, so it's fairly fairly diversified a site outside
Speaker 7: of hyperscalers.
Speaker 3: The other fifty five percent.
Speaker 7: Now, the application use across all of that, all of
Speaker 7: that data center starts with accelerated computing. Accelerated computing does everything,
Speaker 7: of course, from Well the models the things that we
Speaker 7: know about, which is generative AI, and that gets most
Speaker 7: of the attention. But at the core we also do
Speaker 7: database processing, pre and post processing of data before you
Speaker 7: use it for generative AI, trans coding, scientific simulations, computer
Speaker 7: graph of course, image processing of course, and so there's
Speaker 7: tons of applications that people use are accelerated computing for,
Speaker 7: and one of them is generative AI.
Speaker 5: That was in Vidia c Jensen one speaking mate with
Speaker 5: me last night, Cara, and yeah, I mean body language,
Speaker 5: what he's wearing.
Speaker 8: There's a lot to talk about.
Speaker 4: No lever ed no lever who wore a vomber jacket.
Speaker 4: But look, there is a lot of deep diving on
Speaker 4: the numbers in particular, and let's get some of that
Speaker 4: reaction from our guests on Bloomberg TV.
Speaker 10: I'm not concerned.
Speaker 1: I think if you look at Nvidia, they still control
Speaker 1: this market and will continue to I would say, dominate
Speaker 1: this space over the next three to five years.
Speaker 13: Delivering chips at this rate, at this scale is fantastic
Speaker 13: and unprecedented. I don't think there's much of a revenue
Speaker 13: issue here, of a growth issue here. I think a
Speaker 13: little bit of a pushback is probably more around the
Speaker 13: margin situation, that type.
Speaker 5: Of growth isn't necessarily re realistic or sustainable in the
Speaker 5: long term. Two it's not necessary the long term either.
Speaker 14: At the end of the day, we still sense enormous
Speaker 14: an urgent demand across the board, and that really mitigates,
Speaker 14: in order of you, the risk of opposed in shipments
Speaker 14: as customers wait for the next generation of chips to
Speaker 14: be available in volumes.
Speaker 4: Not enough, we need more reaction, I coo Yoshioka joins
Speaker 4: us now senior portfolio manager at Wealth Enhancement Group the
Speaker 4: market seemingly thinking it's a disappointment.
Speaker 6: Did you think it was.
Speaker 15: A disappointment, Hi, Kroly, You know I was not disappointed
Speaker 15: with the actual numbers here.
Speaker 16: I think, you know, expectations were.
Speaker 15: Very high going into this particular print, and you know,
Speaker 15: especially when you're here, things like events in New York
Speaker 15: in which you know, bars were being rented out to
Speaker 15: see what the earnings report was going to be.
Speaker 16: You know, it gets to do and more. I was
Speaker 16: not in one. I was at my desk looking at
Speaker 16: the numbers.
Speaker 4: Joe Wisenthal, I saw open reporter was indeed out.
Speaker 6: There in the bars.
Speaker 4: But I'm interested, I co and even though you did
Speaker 4: see this overall disappointment in very high expectations, was there
Speaker 4: any cause for concern? Do you still think is ed
Speaker 4: put to our previous guest, Anthony, that the AI trade
Speaker 4: is intact.
Speaker 15: The AI trade is intact. I think we have to
Speaker 15: put this in the longer term context. You know, in
Speaker 15: Video was generating revenues of about twenty seven billion about
Speaker 15: two years ago. They're on pace to generate revenues of
Speaker 15: over one hundred and twenty five billion this year. That's
Speaker 15: just enormous. Is that growth rates sustainable?
Speaker 16: You know, it clearly is not.
Speaker 15: But they're continuing to grow and the expectations are for
Speaker 15: growth of over forty percent in revenues for next year.
Speaker 15: And Blackwell is just going to be another step up
Speaker 15: in allowing that to happen.
Speaker 5: Oko Wealth Enhancement Group has like what seven point eight
Speaker 5: million in video shares, like a billion dollars worth of stock.
Speaker 5: I know that you were part of our kind of
Speaker 5: watch party last night watching the interview.
Speaker 8: You lead research, right, you use.
Speaker 5: Your expertise to try and work out what's going on.
Speaker 5: What did you work out during the course of that conversation?
Speaker 16: You know, I think this is a long game.
Speaker 15: I think we're still in the early innings of AI deployment,
Speaker 15: the hyperscalers, meta, there's so much use from all of
Speaker 15: these It is table stakes for these large cloud providers,
Speaker 15: and they're seeing productivity gains from the use of AI.
Speaker 16: So I think that's going to continue. It's going to proliferate.
Speaker 15: It is going to take time, but you know, the
Speaker 15: Internet took time as well, and twenty years later, it's
Speaker 15: still evolving.
Speaker 5: Were you convinced by what Jensen Wong just said we
Speaker 5: played in that clip just then that their business has
Speaker 5: broadened out beyond the hyperscalers.
Speaker 15: Yes, I mean they mentioned about, you know, sovereign entities
Speaker 15: purchasing and being in that low double digit billions of
Speaker 15: dollars in terms of revenues.
Speaker 16: You know, that was exciting to see.
Speaker 15: And you know, hyper scalers were forty five percent, which
Speaker 15: means fifty five percent is other revenues.
Speaker 16: So that is a nice diversification as well.
Speaker 15: But that consistency from the hyper spit scalers is likely
Speaker 15: to continue.
Speaker 16: It's just going to be choppy year to year.
Speaker 15: You know, many of these companies, Apple, Microsoft, Amazon, Google,
Speaker 15: they're all going to be evaluating their cap X budgets
Speaker 15: for next year and each year it's not going to
Speaker 15: be the same and so we have to be diligent
Speaker 15: about that. But for the most part, they will be
Speaker 15: spending in order to get that productivity enhancement going forward.
Speaker 6: What about competition?
Speaker 4: A lot of people feeling that if there is just
Speaker 4: a slight blip in this annual cadence of innovation, maybe
Speaker 4: AMD can start to work its way in a little
Speaker 4: bit more.
Speaker 6: Do you agree?
Speaker 16: Sure?
Speaker 15: You know, I think from a high per scaler perspective
Speaker 15: or from the cloud providers, the Internet service providers, you
Speaker 15: always want to have more than just one provider of
Speaker 15: your chips, so you know, there is room for competition,
Speaker 15: I think, you know, that's always something that we have
Speaker 15: to keep in mind. You know, let's not forget that
Speaker 15: Intel had the majority of data center server share for many,
Speaker 15: many years, and here we are with Nvidia really coming
Speaker 15: out and taking share AMD as well. So competition is
Speaker 15: always something that we look for and watch out for.
Speaker 6: Cautionary tail.
Speaker 4: What's interesting is you have holds on Texas instruments on
Speaker 4: Broadcom what many of thought perhaps hasn't moved.
Speaker 6: At the pace that we're expecting.
Speaker 4: Was that these hyperscalers would make their own chips to
Speaker 4: compete in quite the same way, using a Texas instruments,
Speaker 4: using CSMC for example. I'm interested in if ever you
Speaker 4: see that really coming in as a competition.
Speaker 16: You know, it's tough.
Speaker 15: You know, the design part of those chips is you
Speaker 15: know where Nvidia has the advantage along with the software
Speaker 15: associated with AI.
Speaker 16: So you know they're Kuda.
Speaker 15: You know, all the chips are built off of Kuda,
Speaker 15: and that really provides them with the benefit that many
Speaker 15: other chip providers and chip manufacturers just don't have.
Speaker 5: Can you define what Nvidia is, what it actually is.
Speaker 15: You know, Nvidia is a chip maker at the end
Speaker 15: of the day, right, but it is a chip maker
Speaker 15: and is a primary beneficiary for artificial intelligence and how
Speaker 15: computing will go forward in the coming decade.
Speaker 8: Good attempt.
Speaker 5: I think Jensen one might disagree with you and say
Speaker 5: it's more than that.
Speaker 8: We'll get another stab at it incoming.
Speaker 5: Call is Ayoka yoshiok, senior port Lafolio manager, a wealth
Speaker 5: enhancement group.
Speaker 8: Thank you.
Speaker 5: Another story we've been watching is May twan stock jumping
Speaker 5: the most in about six months after China's meal delivery
Speaker 5: leader posted strong earnings ununveiled a one billion dollar buyback.
Speaker 5: It's a positive signal for investors who are increasingly worried
Speaker 5: about domestic consumer malaise in China. It signals may Twan
Speaker 5: is beating rivals like byte Dance, which joined Ali Barber
Speaker 5: in its main market character.
Speaker 4: Coming up, we've got more of a conversation on AI
Speaker 4: about the regulation. Russell Wold, deputy director of Stanford's Institute
Speaker 4: for Humans Centered AI, joins US. Let's get a quick
Speaker 4: check on AI. Another area meta at one point six percent.
Speaker 4: They have an announcement. LAMA foundational model was downloaded over
Speaker 4: twenty million times in the past month, approaching three hundred
Speaker 4: and fifty million total downloads. Basically, it shows traction, so
Speaker 4: as Bloomberg Intelligence says, maybe some new licensing.
Speaker 6: Revenue stream in the horizon. This is Blomberg Technology.
Speaker 5: Sources telling Bloomberg Open Ai is getting closer to raising
Speaker 5: funding at evaluation of more than one hundred billion dollars
Speaker 5: in a round led by Frive Capital, Bloomberg Sharene Gafari
Speaker 5: joins us now for more and kind of you about this.
Speaker 5: Back in December, you and I reported about the idea
Speaker 5: of like a primary more secondaries by some pretty big number.
Speaker 8: More details please, that's right.
Speaker 17: So open ai is advancing talks to raise a new
Speaker 17: round of financing that would value it at one hundred
Speaker 17: billion dollars, and that round of financing would be for
Speaker 17: one billion led by Thrive Capital.
Speaker 6: Do we know why they're raising funding?
Speaker 17: Developing AI is incredibly expensive?
Speaker 5: Right?
Speaker 17: So, according to an employee memo written by obeniic Foe yesterday,
Speaker 17: you know the company is doing this because they need
Speaker 17: to cover their operating and computing costs, right, the incredible
Speaker 17: costs of GPUs that they need to keep scaling up
Speaker 17: their large language models to reach their goal of achieving
Speaker 17: some kind of artificial general intelligence. That is a project
Speaker 17: that just demands sort of an endless pile of cash.
Speaker 4: With all of Microsoft backing Sharhan KAfari, they still need more.
Speaker 6: We thank you.
Speaker 4: Meanwhile, California's state Assembly approved a controversial AI safety bill
Speaker 4: that requires companies to make sure their technology doesn't cause
Speaker 4: major harm. Now, the bill SB ten forty seven would
Speaker 4: require companies to take precautions such as implementing a kill
Speaker 4: switch that can turn off their technology at any time.
Speaker 4: Russell Wold as deputy director of the Stanford HI and
Speaker 4: you're discussing the bill and larger AI landscape with us
Speaker 4: because Russell many would say, well, that's a good thing,
Speaker 4: being able to control technology that perhaps some are fearful of.
Speaker 4: Why is this a threat to your academic Wesse such.
Speaker 18: Well, good morning, Caroline, and thank you for having me.
Speaker 18: I think what's really important about good policy is it
Speaker 18: should solve for the harm that it's trying to solve
Speaker 18: for in the case of SB ten forty seven, and
Speaker 18: unfortunately does not do that. However, what is most concerning
Speaker 18: from my perspective is that harms academia.
Speaker 10: Harms academia because it hurts.
Speaker 18: The open source community and makes it very difficult for
Speaker 18: the open source community, startups or other industry or large
Speaker 18: players like Meta who puts out the Lama model for
Speaker 18: us to be able to dissect understand how that works,
Speaker 18: what its impact will be for society. And we need
Speaker 18: to be able to train the next generation to be
Speaker 18: AI leaders. And if we can't be able to have
Speaker 18: access to this because this could hurt this entire community,
Speaker 18: then I think SB ten forty seven is actually counterproductive.
Speaker 4: Now, what those who have written SB ten and would
Speaker 4: come back with and indeed we did have Scott Wiener
Speaker 4: on the show previously is saying, look, we're not taxing,
Speaker 4: we're not asking those that are running smaller models. We're
Speaker 4: spending less than ten million or so. We are only
Speaker 4: after the big players. Why is it such a crucial impact?
Speaker 4: For example, when Lama seems to be going great, we
Speaker 4: just had numbers out of Meta that there's twenty million
Speaker 4: times downloads in the past month.
Speaker 10: Alone, right, And that's precisely the point.
Speaker 18: Meta alone right now is looking at maybe restricting Lama's
Speaker 18: use in the EU because of the overly stringent areas.
Speaker 10: SB ten forty seven is by.
Speaker 18: Far more far reaching than this when it comes to
Speaker 18: the liability issues related to that, and the problem with
Speaker 18: that is is companies like Meta won't be releasing this
Speaker 18: if there are such strong liability that can come against
Speaker 18: them for this, and without that, we won't be able
Speaker 18: to understand and interrogate these models and see how they
Speaker 18: work the way academia does and how we do that
Speaker 18: very well, so that will off an entire choke point
Speaker 18: to us. For second, I would also add that academia
Speaker 18: itself well resourced universities do want to look into how
Speaker 18: to build these, and so there's consortiums of universities that
Speaker 18: might want to spend more money in building these so
Speaker 18: we can train the next generation on how this works.
Speaker 10: And we won't be able to do that because we won't.
Speaker 18: Be able to afford all of the lawyers and the
Speaker 18: legal fees that will be required to be able to
Speaker 18: stay in compliance.
Speaker 5: Something that you just said, Russell about sort of academic
Speaker 5: access to technology. You know, we had Nvidia's earnings last
Speaker 5: night and a discussion with Jensen Wong I had was
Speaker 5: about the broadening out of the use of AI accelerators
Speaker 5: beyond the hyperscalas can Stamford Institute for Human Centered AI
Speaker 5: get access to a cluster like is this a situation
Speaker 5: that works for you?
Speaker 10: It's actually a significant challenge for us.
Speaker 18: We actually just were able to secure thirty h one hundreds,
Speaker 18: and that sounds one, but it's unfortunate because the reality
Speaker 18: is is if you look at what Meta has tried
Speaker 18: to secure, they're trying to secure three hundred thousand.
Speaker 10: So the reality is.
Speaker 18: Is academia is constrained as to what it can do
Speaker 18: in this particular space, and we are very limited, and
Speaker 18: what we need to do is have.
Speaker 10: Congress past the Create AI Act.
Speaker 18: That is a government a subsidizing compute and data for
Speaker 18: academic research, and it's desperately needed.
Speaker 10: And academia also needs to.
Speaker 18: Consider how to reform here and put greater degree of
Speaker 18: investment in this so that we can be able to
Speaker 18: train students so that they can be the next DAI leaders.
Speaker 5: SB ten forty seven. Sorry to go back to it.
Speaker 5: Is this the end of the story or do you
Speaker 5: think you'll continue to be consulted as this moves forward.
Speaker 10: We are being continually consulted on this.
Speaker 18: But the reality is is there's a chorus of people
Speaker 18: who are deeply concerned about this. It's not just academia.
Speaker 18: It is deed, small businesses that are startups that are
Speaker 18: afraid of what this will mean for them.
Speaker 10: And there's this ironic side of this.
Speaker 18: It bizarrely will entranch er make the most powerful companies
Speaker 18: even more secure in this space because they can afford
Speaker 18: the legal fees, they can afford all the compliance fees
Speaker 18: and things that come from this. Startups in academia cannot.
Speaker 5: Russell Wald of Stanford Institute for Human Centered Artificial Intelligence, thank.
Speaker 4: You just check in on shares of Salesforce arising after
Speaker 4: the company delivered in earnings forecus look that top estimates
Speaker 4: and announced some changes at the c suite.
Speaker 6: Amy Weaver stepping down a CFO.
Speaker 4: After four years in the job, numerks Brady Ford across it.
Speaker 4: What else do we hear other than executive shake up?
Speaker 19: What we really learned is that software companies and cumbents
Speaker 19: are not sure where they fit in the AI moment.
Speaker 19: Last night, Salesforce rebranded it's AI tools not as assistants,
Speaker 19: but as agents. And we heard this word over one
Speaker 19: hundred times. They kept saying, we are making agents.
Speaker 3: Now, how is.
Speaker 19: That different from the assistance we've seen with Microsoft and others.
Speaker 19: No one's sure yet, but we are learning that software
Speaker 19: companies continue to trying to find their place in this
Speaker 19: AI moment and the revenue is not here yet.
Speaker 8: But hey, just wait a year or two.
Speaker 5: I saw Amy Weavers post on LinkedIn She's been CFO
Speaker 5: for four years but Salesforce for eleven. How's the market
Speaker 5: taking that departure?
Speaker 3: Yeah?
Speaker 19: The market, I think is reading this as wait a second,
Speaker 19: is that everlasting Salesforce succession stories starting to kind of
Speaker 19: get rolling again right, four years is a relatively short
Speaker 19: CFO tenure.
Speaker 10: She was well liked.
Speaker 19: She's not leaving for another opportunity, it doesn't seem so
Speaker 19: it's hey, is this another phase of Salesforce's growth. They're
Speaker 19: doing more consumption based pricing, the business model's changing a bit,
Speaker 19: and maybe they just feel they need to bring some
Speaker 19: fresh blood in.
Speaker 10: At the top.
Speaker 19: Because again, that idea of who will one day replace
Speaker 19: Bernieoff is a kind of everlasting question.
Speaker 4: I mean who has been there a significant amount of
Speaker 4: time that people feel can step into that void.
Speaker 19: Third Chief operating Officer Brian Millum. He has been there
Speaker 19: for very long and has taken on a much wider
Speaker 19: expanded role. I would say if tomorrow bernnioff a I'm
Speaker 19: done with this, would probably be him. But at the
Speaker 19: end of the day, investors would probably like to see
Speaker 19: a bit more new talent coming in, maybe from the outside.
Speaker 19: That's something that I hear.
Speaker 4: Of them, and an AI boost that can't come quick
Speaker 4: enough to five momentum, so says Barkley's pretty ford all
Speaker 4: over these.
Speaker 6: Earnings, we thank him for it. Now?
Speaker 4: That does it for this edition of Bloomberg Technology A
Speaker 4: big one.
Speaker 5: Yeah, it was a big one. Recap it on the podcast.
Speaker 5: You know where to find the Bloomberg Technology Podcast on Apple, Spotify,
Speaker 5: iHeart and all the Bloomberg platforms. Big thanks from everyone
Speaker 5: here in San Francisco, Caitly and Jackie and Carr in
Speaker 5: New York City. There's one day to go in this
Speaker 5: busy tech week. This is Bloomberg Technology.
Speaker 8: It don't