WEBVTT - Nvidia Outlook Tops Estimates

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio news.

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<v Speaker 2>Welcome to the Daybreak Asia podcast. I'm Doug Chrissner. We

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<v Speaker 2>begin today with Nvidia. After the US closed, the company

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<v Speaker 2>issued revenue guidance for the current quarter above estimates. Sales

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<v Speaker 2>could be as much as seventy eight billion dollars plus

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<v Speaker 2>or minus two percent, and in Vidia CEO Jensen Wong

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<v Speaker 2>said the enterprise adoption of AI agents is skyrocketing. For

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<v Speaker 2>a closer look, now, I'm joined by Daniel Newman. He

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<v Speaker 2>is the CEO at the Futurum Group. Daniel, thank you

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<v Speaker 2>for being here. Give me your take on what we

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<v Speaker 2>heard from Nvidia.

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<v Speaker 3>I think we knew coming into this print that the

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<v Speaker 3>numbers both for this quarter and the outlook, we're going

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<v Speaker 3>to be very positive. I think the market has been

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<v Speaker 3>in this bit of an uncertain space, almost in between

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<v Speaker 3>whether AI is a bubble or AI is so valued

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<v Speaker 3>that it is going to disrupt and basically eliminate entire industries.

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<v Speaker 3>But in Vidio sits in this really good position where

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<v Speaker 3>it's providing the quote unquote arms for this revolution. And

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<v Speaker 3>with those CAPEX numbers, we knew forty fifty percent of

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<v Speaker 3>those numbers would go to Nvidia. We're seeing it show

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<v Speaker 3>up in this big data center number and this forward

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<v Speaker 3>guidance that was almost ten percent above expectations. Just further

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<v Speaker 3>is that this isn't a short term There isn't some

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<v Speaker 3>near term pullback in neither capex or demand for its products.

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<v Speaker 3>It shows that not only the hyperscalers, but these next

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<v Speaker 3>generation clouds enterprises, sovereign nations are all continuing to bet

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<v Speaker 3>big on building out their AI futures with Nvidia haarmwork.

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<v Speaker 2>So we also heard from Salesforce after the balance. Kind

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<v Speaker 2>of interesting because this company faced a lot of scrutiny

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<v Speaker 2>when the conversation focused on disruption from artificial intelligence, and

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<v Speaker 2>the outlook from Salesforce was a little under whelming. Which

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<v Speaker 2>companies do you think are most at risk of being

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<v Speaker 2>threatened by some of the advancements that we're seeing in

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<v Speaker 2>AI right now?

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<v Speaker 3>Yeah, So Salesforce is a great example of a company

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<v Speaker 3>that's kind of into being the baby being thrown out

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<v Speaker 3>with the bathwater.

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<v Speaker 4>CRM, Salesforce Oracle Service.

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<v Speaker 3>Now, some of these big enterprise software companies that have

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<v Speaker 3>massive data modes and deep deeply entrenched inside of enterprises,

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<v Speaker 3>we just aren't seeing that the CIOs we're talking to

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<v Speaker 3>aren't seriously considering any sort of replacement, and basically their

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<v Speaker 3>numbers have been more of a continuation of the trend

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<v Speaker 3>lines that preceded this AI revolution. Having said that there

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<v Speaker 3>is some software that seems to be at risk, we

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<v Speaker 3>see the software companies that were sort of features that

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<v Speaker 3>ended up becoming large SaaS platforms that ended up going

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<v Speaker 3>public at high valuations with high multiples.

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<v Speaker 4>Say a software company like expensify that just does expenses.

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<v Speaker 3>It's one feature that can be augmented by an AI

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<v Speaker 3>vibe coded tool. Some of the design platforms like Canva,

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<v Speaker 3>we think are at risk when you see what Google

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<v Speaker 3>is doing with Nana Banana and other AI platforms that

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<v Speaker 3>are making design really easy. So there are softwares that

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<v Speaker 3>are at risk of being disrupted meaningfully by AI. We

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<v Speaker 3>look at the ones that have significant data modes, that

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<v Speaker 3>have large entrenched enterprise utilization, and of course those that

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<v Speaker 3>have like cross border transaction, major governance compliance. Those softwares

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<v Speaker 3>don't seem to be in trouble. Also, some of the

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<v Speaker 3>key technologies that are like in the design of semiconductors

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<v Speaker 3>and chips, we saw companies like Synopsis being sold on this.

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<v Speaker 3>I don't see them being disrupted. And also the security companies.

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<v Speaker 3>We see security and AI as symbiotic, and Thropic had

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<v Speaker 3>a major breach by China. They need CrowdStrike, they need

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<v Speaker 3>Palo Alto, so some software at risk. But I think

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<v Speaker 3>the selling has been largely overblown.

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<v Speaker 2>So I'm glad that you mentioned Anthropic, Daniel, because today

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<v Speaker 2>the company indicated that it's basically loosening its commitment to

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<v Speaker 2>managing its guardrails where AI is concerned. Some people were

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<v Speaker 2>saying this is one of the most dramatic shifts that

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<v Speaker 2>we have seen lately in the industry. Back in twenty three,

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<v Speaker 2>Anthropics that it would delay AI development that might be dangerous.

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<v Speaker 2>But we just learned yesterday that the company will no

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<v Speaker 2>longer do so if it believes it lacks a significant

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<v Speaker 2>lead over a competitor. And in the context of this,

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<v Speaker 2>earlier in the week, Defense Secretary Pete Hegseth was giving

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<v Speaker 2>Anthropic until Friday to open its AI technology for unrestricted

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<v Speaker 2>military use or risk losing its government contracts. So talk

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<v Speaker 2>to me about regulatory risk here, or at the very least,

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<v Speaker 2>how the government may get involved to kind of influence

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<v Speaker 2>where this industry moves going forward.

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<v Speaker 3>And this is a really difficult situation for Dario and

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<v Speaker 3>Anthropic because if Kiyak, if he ACQUIESCES, he looks like

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<v Speaker 3>sort of his long term position of being the more

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<v Speaker 3>ethical AI platform, the one that would move more slowly,

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<v Speaker 3>that would potentially be the protector of this innovation. But

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<v Speaker 3>on the other side of this, if he doesn't do it,

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<v Speaker 3>Open Ai, Google, you know, many of the other companies

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<v Speaker 3>that are that are pursuing leadership in this space likely

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<v Speaker 3>will And so the question mark is by potentially loosening

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<v Speaker 3>some guardrails, can he still be influential in trying to

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<v Speaker 3>drive some policy, some level of guardrails, some awareness to

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<v Speaker 3>the public markets of what is at stake as we

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<v Speaker 3>continue to see the incredible power of its technology and

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<v Speaker 3>the others that are in this space. I don't think

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<v Speaker 3>there's a win for Anthropic here. If they hold their ground,

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<v Speaker 3>they're going to lose significant business. They're going to be

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<v Speaker 3>at risk of being under immense pressure. We've seen how

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<v Speaker 3>you know, the various administrations can use new comer's tactics

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<v Speaker 3>to create pressure on companies, and of course their ability

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<v Speaker 3>to influence the future becomes less than.

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<v Speaker 4>It is today. So I'm to some extent I.

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<v Speaker 3>Doubt this is what he truly wants, But I think

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<v Speaker 3>his choices be at the table potentially with maybe not

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<v Speaker 3>completely living his ideal, or maybe be taken away from

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<v Speaker 3>the opportunity to be at the table and have no

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<v Speaker 3>influence at all on a really important shift into the future.

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<v Speaker 2>We've seen a lot of volatility in the equity market

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<v Speaker 2>around some of these AI names this week after that

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<v Speaker 2>report from a little known firm called Saittrini Research. It

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<v Speaker 2>seemed to outline some potential downside risk from AI on

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<v Speaker 2>a number of industries. And this report used several hypothetical

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<v Speaker 2>scenarios to kind of set the future. Future is in

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<v Speaker 2>the name of your firm. So if you had to

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<v Speaker 2>kind of forecast, Daniel, what the next five years may

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<v Speaker 2>look like as the artificial intelligence and the advancements that

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<v Speaker 2>we're talking about, what do you come away with?

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<v Speaker 3>Yeah, that report was quite the Doom's Day report. However,

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<v Speaker 3>there were iterations that were created that had greater levels

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<v Speaker 3>of optimism. We see many trillions of dollars of economic

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<v Speaker 3>growth that will come with the efficiencies and productivity that

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<v Speaker 3>will be generated by AI.

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<v Speaker 4>Where we see some potential.

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<v Speaker 3>Risk is the digestion period that we've historically seen during

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<v Speaker 3>massive transformative periods, you know, whether it's been steam or

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<v Speaker 3>electricity or the Internet, generally took place over a much

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<v Speaker 3>longer time. This particular innovation cycle has happened in a

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<v Speaker 3>very short period of time. And so many things, many

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<v Speaker 3>many roles in jobs and careers. You hear, you know,

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<v Speaker 3>will we need lawyers, Will we need doctors, Will we

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<v Speaker 3>need engineers, marketers, designers, salespeople. All these things have never

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<v Speaker 3>been put into question the same way. But if you

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<v Speaker 3>do look at history, and I think it's a and

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<v Speaker 3>the people do. With every revolution, there were roles that

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<v Speaker 3>people said, wow, will that go away? Just like the

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<v Speaker 3>people that used to walk the streets of small towns

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<v Speaker 3>and light the gas lamps at night, the original gas lighters.

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<v Speaker 3>Right with electricity, there would no longer be roles, or

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<v Speaker 3>they would no longer need people to chisel wheels out

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<v Speaker 3>of stone, Doug. But the net of it is is

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<v Speaker 3>that we ended up building industries that were exponentially larger.

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<v Speaker 4>Manufacturing at scale.

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<v Speaker 3>The Internet created entire new industries in marketplaces that did

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<v Speaker 3>not exist in the largest companies in the world that

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<v Speaker 3>employ the most people were, many of which were.

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<v Speaker 4>Created in that era.

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<v Speaker 3>So I think the hardest part for most people is

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<v Speaker 3>to visualize the unknown. And while I can't concretely say

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<v Speaker 3>what will be created, what I could say is this

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<v Speaker 3>innovation is creating an immense amount of additional productivity. It's

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<v Speaker 3>giving humans the potential to five and ten x what

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<v Speaker 3>they're able to output, and new roles, new opportunities will emerge.

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<v Speaker 3>But there is a risk for a short period of

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<v Speaker 3>time that there will be downside because how fast this

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<v Speaker 3>innovation has happened, and they know the humanity has never

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<v Speaker 3>seen anything change in this quick.

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<v Speaker 2>So as I'm listening to I'm thinking of Amara's law.

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<v Speaker 2>It says that people tend to overestimate the short term

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<v Speaker 2>impact of new technologies and underestimate their longer term effects.

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<v Speaker 2>Is that what you're saying, does it really apply in

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<v Speaker 2>this case?

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<v Speaker 3>There's a little bit of that, and there's a little

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<v Speaker 3>bit of Jevin's paradox in the sense that as we

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<v Speaker 3>continue to become more efficient as human beings, we will

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<v Speaker 3>continue to scale industries at a great rate. You know,

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<v Speaker 3>we've talked about numbers of GDP growth in the twenties

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<v Speaker 3>and thirties of trillion. There will be work to support

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<v Speaker 3>that that will not all be done by robots in

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<v Speaker 3>by AI. We need multi sided marketplaces. We need to

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<v Speaker 3>fulfill goods and services. People will still travel, people will

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<v Speaker 3>still get into autonomous vehicles, people will still want to

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<v Speaker 3>eat people. You know, the things that we do that

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<v Speaker 3>creates economic value will still be done and consumed. However,

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<v Speaker 3>some of that monotonous work, some of those low less

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<v Speaker 3>value processes that people are grinding away at their desk,

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<v Speaker 3>moving data from one cell to the next, or moving

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<v Speaker 3>papers from one email inbox to another, sending documents to

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<v Speaker 3>be signed, things like that will be automated. But people

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<v Speaker 3>will continue to evolve like we have all throughout history.

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<v Speaker 3>But the speed is the risk. But I think in

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<v Speaker 3>good time what you mentioned with the Mar's law does

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<v Speaker 3>become the truth.

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<v Speaker 2>So Daniel, before i'd let you go, give me your

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<v Speaker 2>sense of where investors can find the best opportunities right

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<v Speaker 2>now in the info tech space.

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<v Speaker 3>Yeah, there's really two places that we are focusing on.

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<v Speaker 3>One is we look at where everything remains constrained compute

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<v Speaker 3>memory power. These things are a multi year trend and

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<v Speaker 3>while there has been a lot of volatility. We've seen

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<v Speaker 3>Nvidia settle a little bit, We've seen Micron move quite

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<v Speaker 3>a bit up. We're still seeing the need for power

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<v Speaker 3>and rare earth. All of those areas are going to

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<v Speaker 3>continue to see growth as we see a number of

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<v Speaker 3>as high as four trillion dollars in data center infrastructure

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<v Speaker 3>by the end of the decade. On the other hand,

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<v Speaker 3>there is some opportunity in the arbitrage and in the

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<v Speaker 3>hard selloff that a number of companies have faced. We

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<v Speaker 3>do not believe companies like IBM, like I mentioned, Service

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<v Speaker 3>Now Salesforce, they have been sold at a rate that

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<v Speaker 3>is not appropriate based on the business and metrics that

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<v Speaker 3>they have delivered. There is some risk of AI and disruption,

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<v Speaker 3>but we think the names I mentioned and several others

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<v Speaker 3>of those deep moat enterprise software companies will continue to

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<v Speaker 3>perform at a high level despite the fact that the

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<v Speaker 3>rerating may be real, but the upside still exists.

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<v Speaker 2>Daniel Bell, leave it. They are always a pleasure. Thanks

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<v Speaker 2>so much. Daniel Newman there, he is the CEO at

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<v Speaker 2>the Futureum Group, joining us here on the Daybreak Asia podcast.

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<v Speaker 2>Welcome back to the Daybreak Asia Podcast. I'm Doug, Chris

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<v Speaker 2>and as I mentioned a moment ago, in Vidia gave

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<v Speaker 2>another bullish forecast for quarterly revenue. This would suggest the

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<v Speaker 2>massive buildout in AI compute remains on track now. This

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<v Speaker 2>could underpin earnings expectations across the Asian semiconductor supply chain,

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<v Speaker 2>especially where high bandwidth memory chip makers are concerned. And

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<v Speaker 2>that's where we begin our conversation with Karen Calder. Kieren

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<v Speaker 2>is head of equity research for Asia at UBP. He

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<v Speaker 2>spoke earlier with Bloomberg TV host Heidi Stroud Watts and

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<v Speaker 2>Sherry on.

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<v Speaker 5>We have this situation where, of course all of the

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<v Speaker 5>macro factors are still at play, ranging from everything to

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<v Speaker 5>you have political related to tariffs to central banks globally,

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<v Speaker 5>but at the moment it is really all about that

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<v Speaker 5>tech space. What do you make of the price action

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<v Speaker 5>that we've seen under the numbers from nvidio take away

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<v Speaker 5>the fear that clearly was dominating the training up until

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<v Speaker 5>now for the last few days.

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<v Speaker 4>Good morning.

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<v Speaker 6>So obviously the the numbers from a video are are

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<v Speaker 6>a big relief as a bellweather of you know, the

0:13:05.040 --> 0:13:09.920
<v Speaker 6>AI trade, at least on the infrastructure CAPEX build out side,

0:13:11.400 --> 0:13:15.520
<v Speaker 6>Nvidia needs to keep delivering and and and having a

0:13:15.520 --> 0:13:18.760
<v Speaker 6>strong outlook, So that's pretty positive if you look at

0:13:18.920 --> 0:13:20.200
<v Speaker 6>you know, over the course of this week. Of course,

0:13:20.240 --> 0:13:23.559
<v Speaker 6>we had this Centreny report over the weekend talking about

0:13:23.559 --> 0:13:25.920
<v Speaker 6>a hypothetical scenario a couple of years down the road

0:13:25.960 --> 0:13:30.920
<v Speaker 6>where we've had, you know, the AI build out and

0:13:31.000 --> 0:13:35.360
<v Speaker 6>the implementation. It basically takes out a lot of different sectors,

0:13:35.360 --> 0:13:40.920
<v Speaker 6>and I think probably we've passed peak worry about about

0:13:40.920 --> 0:13:44.040
<v Speaker 6>that sort of scenario. In fact, if you put that

0:13:44.080 --> 0:13:46.960
<v Speaker 6>report into chat GPT itself, it really says, don't worry

0:13:47.000 --> 0:13:49.320
<v Speaker 6>too much about this. This is a hypothetical scenario looking

0:13:49.360 --> 0:13:54.400
<v Speaker 6>at identifying risks going forward. So we think peak fear

0:13:54.640 --> 0:13:58.320
<v Speaker 6>has probably passed, and it's an opportunity, we think to

0:13:58.480 --> 0:14:04.520
<v Speaker 6>recalibrate in the names that have a decent near term outlook.

0:14:04.559 --> 0:14:07.720
<v Speaker 6>And for us, it's really the sort of Capex AI

0:14:07.880 --> 0:14:11.920
<v Speaker 6>CAPEX build out. So the names like in Nvidia as

0:14:11.920 --> 0:14:14.800
<v Speaker 6>well as some of the semiconductor manufacturers I think are

0:14:15.480 --> 0:14:16.720
<v Speaker 6>a good place to be at the moment.

0:14:20.680 --> 0:14:24.680
<v Speaker 7>Karin, how long do you think we sort of should

0:14:24.680 --> 0:14:26.720
<v Speaker 7>be looking at in terms of the time for that

0:14:26.800 --> 0:14:30.600
<v Speaker 7>separation of the sustainable gainers within that AI space. And

0:14:30.640 --> 0:14:33.640
<v Speaker 7>those you know clearly, you know, particularly in the likes

0:14:33.640 --> 0:14:36.000
<v Speaker 7>of Jamie Diamond's World, are something that you should be

0:14:36.040 --> 0:14:37.200
<v Speaker 7>a lot more cautious about.

0:14:40.160 --> 0:14:42.600
<v Speaker 6>Well, I mean think the timeline is now if you look,

0:14:42.640 --> 0:14:45.200
<v Speaker 6>you know, particularly JP Morgamy. They had a mini investor

0:14:45.280 --> 0:14:46.960
<v Speaker 6>day this week and they highlighted that they're going to

0:14:46.960 --> 0:14:50.080
<v Speaker 6>be spending almost twenty billion dollars this year, about half

0:14:50.120 --> 0:14:54.280
<v Speaker 6>of which is investment in platforms and AI capabilities. You know,

0:14:54.360 --> 0:14:58.840
<v Speaker 6>big corporates, including financials, which are able to spend and

0:14:58.840 --> 0:15:02.200
<v Speaker 6>implement AI will will benefit from that, and they'll be

0:15:02.200 --> 0:15:05.000
<v Speaker 6>able to help their clients and names that are a

0:15:05.000 --> 0:15:07.680
<v Speaker 6>little bit more exposed, you know, we'll have some work

0:15:07.720 --> 0:15:11.040
<v Speaker 6>to do. So obviously there's a sharp contrast between in

0:15:11.160 --> 0:15:14.000
<v Speaker 6>video results and Salesforce results, so Salesforce has a bit

0:15:14.040 --> 0:15:17.560
<v Speaker 6>of work to do to you know, adapt their business

0:15:17.560 --> 0:15:20.080
<v Speaker 6>model to you know, the new environment.

0:15:22.280 --> 0:15:24.320
<v Speaker 8>Karen, can you have this point also tell who the

0:15:24.320 --> 0:15:27.880
<v Speaker 8>winners or losers could be across Asia as well?

0:15:30.480 --> 0:15:33.200
<v Speaker 6>I wish I could. I mean, obviously I think that

0:15:33.280 --> 0:15:36.720
<v Speaker 6>we uh, we think that the semiconductor names are an

0:15:36.760 --> 0:15:39.320
<v Speaker 6>obvious place to be, so, you know, the big ones

0:15:39.520 --> 0:15:43.320
<v Speaker 6>T SMC and Samsung, which of course have have done well.

0:15:44.040 --> 0:15:47.840
<v Speaker 6>We think there's some critical companies in Japan in the

0:15:47.960 --> 0:15:51.920
<v Speaker 6>in the supply chain, which which we think at this

0:15:51.960 --> 0:15:54.040
<v Speaker 6>stage is also a place to be. I think it's

0:15:54.040 --> 0:15:58.280
<v Speaker 6>probably too it's difficult now to pick the winners on

0:15:58.320 --> 0:16:01.840
<v Speaker 6>the implementation side. So you know, while software names have

0:16:01.920 --> 0:16:04.640
<v Speaker 6>been really taken to the cleaners, I think it's maybe

0:16:04.680 --> 0:16:07.120
<v Speaker 6>a little bit too early to start to pick through

0:16:07.120 --> 0:16:10.120
<v Speaker 6>there and try to identify winners as we're still at

0:16:10.120 --> 0:16:11.000
<v Speaker 6>the build out stage.

0:16:12.440 --> 0:16:15.920
<v Speaker 8>Yeah, lots of component makers also chemical suppliers across Japan,

0:16:16.000 --> 0:16:19.320
<v Speaker 8>right Kieran. But here we also do have the idiosyncratic

0:16:19.360 --> 0:16:22.320
<v Speaker 8>story around the Bank of Japan, what privates Attakaichi wants

0:16:22.320 --> 0:16:25.680
<v Speaker 8>when it comes to those rate hikes, the weakness of

0:16:25.760 --> 0:16:29.720
<v Speaker 8>the Japanese yend and the acceleration of the losses. Is

0:16:29.720 --> 0:16:32.160
<v Speaker 8>this a risk or is this just more upside for

0:16:32.200 --> 0:16:33.160
<v Speaker 8>those exporters.

0:16:36.600 --> 0:16:39.640
<v Speaker 6>Well, so, okay, the end is a difficult issue for

0:16:40.920 --> 0:16:45.840
<v Speaker 6>Japan obviously. You know, the Bank of Japan is obviously

0:16:45.920 --> 0:16:49.080
<v Speaker 6>very cautious and with the comments and the new appointments

0:16:50.080 --> 0:16:53.760
<v Speaker 6>from the comments from the Prime Minister, a rate hike,

0:16:54.280 --> 0:16:56.560
<v Speaker 6>a further rate hike is probably pretty unlikely.

0:16:56.280 --> 0:16:56.840
<v Speaker 4>At this point.

0:16:57.920 --> 0:17:00.800
<v Speaker 6>On the other hand, the weekend is all very problematic,

0:17:00.920 --> 0:17:05.520
<v Speaker 6>especially for Japanese households, because so much of uh, you know,

0:17:05.640 --> 0:17:09.400
<v Speaker 6>the household basket is imported all mostly all energy is important,

0:17:09.440 --> 0:17:14.720
<v Speaker 6>lots of food is imported so important. Inflation is a

0:17:14.720 --> 0:17:18.320
<v Speaker 6>big problem, not only for the economy but specifically for households.

0:17:19.480 --> 0:17:22.520
<v Speaker 6>This is likely to continue, and I think, you know,

0:17:22.560 --> 0:17:25.040
<v Speaker 6>the export is obviously benefit from translation of earnings, but

0:17:25.320 --> 0:17:28.920
<v Speaker 6>at some point it's just too weak for the domestic economy.

0:17:29.280 --> 0:17:32.399
<v Speaker 6>She's got, she's bought herself four years. Hopefully there'll be,

0:17:33.080 --> 0:17:35.399
<v Speaker 6>you know, some measures taken sooner.

0:17:35.640 --> 0:17:38.479
<v Speaker 2>That was Karen Calder, head of Equity Research for Asia

0:17:38.520 --> 0:17:42.480
<v Speaker 2>at UBP, speaking with Bloomberg TV host Heidi Stroud, Watts

0:17:42.520 --> 0:17:45.520
<v Speaker 2>and Sherry On bringing you their conversation here on the

0:17:45.600 --> 0:17:51.000
<v Speaker 2>Daybreak Asia podcast. Thanks for listening to today's episode of

0:17:51.040 --> 0:17:55.160
<v Speaker 2>the Bloomberg Daybreak Asia Edition podcast. Each weekday, we look

0:17:55.160 --> 0:17:58.960
<v Speaker 2>at the story shaping markets, finance, and geopolitics in the

0:17:59.000 --> 0:18:02.080
<v Speaker 2>Asia Pacific. If you can find us on Apple, Spotify,

0:18:02.200 --> 0:18:05.720
<v Speaker 2>the Bloomberg Podcast YouTube channel, or anywhere else you listen,

0:18:06.119 --> 0:18:09.000
<v Speaker 2>join us again tomorrow for insight on the market moves

0:18:09.080 --> 0:18:13.600
<v Speaker 2>from Hong Kong to Singapore and Australia. I'm Doug Prisoner,

0:18:13.760 --> 0:18:15.200
<v Speaker 2>and this is Bloomberg