Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: Welcome to the Daybreak Asia podcast. I'm Doug Chrissner. We
Speaker 2: begin today with Nvidia. After the US closed, the company
Speaker 2: issued revenue guidance for the current quarter above estimates. Sales
Speaker 2: could be as much as seventy eight billion dollars plus
Speaker 2: or minus two percent, and in Vidia CEO Jensen Wong
Speaker 2: said the enterprise adoption of AI agents is skyrocketing. For
Speaker 2: a closer look, now, I'm joined by Daniel Newman. He
Speaker 2: is the CEO at the Futurum Group. Daniel, thank you
Speaker 2: for being here. Give me your take on what we
Speaker 2: heard from Nvidia.
Speaker 3: I think we knew coming into this print that the
Speaker 3: numbers both for this quarter and the outlook, we're going
Speaker 3: to be very positive. I think the market has been
Speaker 3: in this bit of an uncertain space, almost in between
Speaker 3: whether AI is a bubble or AI is so valued
Speaker 3: that it is going to disrupt and basically eliminate entire industries.
Speaker 3: But in Vidio sits in this really good position where
Speaker 3: it's providing the quote unquote arms for this revolution. And
Speaker 3: with those CAPEX numbers, we knew forty fifty percent of
Speaker 3: those numbers would go to Nvidia. We're seeing it show
Speaker 3: up in this big data center number and this forward
Speaker 3: guidance that was almost ten percent above expectations. Just further
Speaker 3: is that this isn't a short term There isn't some
Speaker 3: near term pullback in neither capex or demand for its products.
Speaker 3: It shows that not only the hyperscalers, but these next
Speaker 3: generation clouds enterprises, sovereign nations are all continuing to bet
Speaker 3: big on building out their AI futures with Nvidia haarmwork.
Speaker 2: So we also heard from Salesforce after the balance. Kind
Speaker 2: of interesting because this company faced a lot of scrutiny
Speaker 2: when the conversation focused on disruption from artificial intelligence, and
Speaker 2: the outlook from Salesforce was a little under whelming. Which
Speaker 2: companies do you think are most at risk of being
Speaker 2: threatened by some of the advancements that we're seeing in
Speaker 2: AI right now?
Speaker 3: Yeah, So Salesforce is a great example of a company
Speaker 3: that's kind of into being the baby being thrown out
Speaker 3: with the bathwater.
Speaker 4: CRM, Salesforce Oracle Service.
Speaker 3: Now, some of these big enterprise software companies that have
Speaker 3: massive data modes and deep deeply entrenched inside of enterprises,
Speaker 3: we just aren't seeing that the CIOs we're talking to
Speaker 3: aren't seriously considering any sort of replacement, and basically their
Speaker 3: numbers have been more of a continuation of the trend
Speaker 3: lines that preceded this AI revolution. Having said that there
Speaker 3: is some software that seems to be at risk, we
Speaker 3: see the software companies that were sort of features that
Speaker 3: ended up becoming large SaaS platforms that ended up going
Speaker 3: public at high valuations with high multiples.
Speaker 4: Say a software company like expensify that just does expenses.
Speaker 3: It's one feature that can be augmented by an AI
Speaker 3: vibe coded tool. Some of the design platforms like Canva,
Speaker 3: we think are at risk when you see what Google
Speaker 3: is doing with Nana Banana and other AI platforms that
Speaker 3: are making design really easy. So there are softwares that
Speaker 3: are at risk of being disrupted meaningfully by AI. We
Speaker 3: look at the ones that have significant data modes, that
Speaker 3: have large entrenched enterprise utilization, and of course those that
Speaker 3: have like cross border transaction, major governance compliance. Those softwares
Speaker 3: don't seem to be in trouble. Also, some of the
Speaker 3: key technologies that are like in the design of semiconductors
Speaker 3: and chips, we saw companies like Synopsis being sold on this.
Speaker 3: I don't see them being disrupted. And also the security companies.
Speaker 3: We see security and AI as symbiotic, and Thropic had
Speaker 3: a major breach by China. They need CrowdStrike, they need
Speaker 3: Palo Alto, so some software at risk. But I think
Speaker 3: the selling has been largely overblown.
Speaker 2: So I'm glad that you mentioned Anthropic, Daniel, because today
Speaker 2: the company indicated that it's basically loosening its commitment to
Speaker 2: managing its guardrails where AI is concerned. Some people were
Speaker 2: saying this is one of the most dramatic shifts that
Speaker 2: we have seen lately in the industry. Back in twenty three,
Speaker 2: Anthropics that it would delay AI development that might be dangerous.
Speaker 2: But we just learned yesterday that the company will no
Speaker 2: longer do so if it believes it lacks a significant
Speaker 2: lead over a competitor. And in the context of this,
Speaker 2: earlier in the week, Defense Secretary Pete Hegseth was giving
Speaker 2: Anthropic until Friday to open its AI technology for unrestricted
Speaker 2: military use or risk losing its government contracts. So talk
Speaker 2: to me about regulatory risk here, or at the very least,
Speaker 2: how the government may get involved to kind of influence
Speaker 2: where this industry moves going forward.
Speaker 3: And this is a really difficult situation for Dario and
Speaker 3: Anthropic because if Kiyak, if he ACQUIESCES, he looks like
Speaker 3: sort of his long term position of being the more
Speaker 3: ethical AI platform, the one that would move more slowly,
Speaker 3: that would potentially be the protector of this innovation. But
Speaker 3: on the other side of this, if he doesn't do it,
Speaker 3: Open Ai, Google, you know, many of the other companies
Speaker 3: that are that are pursuing leadership in this space likely
Speaker 3: will And so the question mark is by potentially loosening
Speaker 3: some guardrails, can he still be influential in trying to
Speaker 3: drive some policy, some level of guardrails, some awareness to
Speaker 3: the public markets of what is at stake as we
Speaker 3: continue to see the incredible power of its technology and
Speaker 3: the others that are in this space. I don't think
Speaker 3: there's a win for Anthropic here. If they hold their ground,
Speaker 3: they're going to lose significant business. They're going to be
Speaker 3: at risk of being under immense pressure. We've seen how
Speaker 3: you know, the various administrations can use new comer's tactics
Speaker 3: to create pressure on companies, and of course their ability
Speaker 3: to influence the future becomes less than.
Speaker 4: It is today. So I'm to some extent I.
Speaker 3: Doubt this is what he truly wants, But I think
Speaker 3: his choices be at the table potentially with maybe not
Speaker 3: completely living his ideal, or maybe be taken away from
Speaker 3: the opportunity to be at the table and have no
Speaker 3: influence at all on a really important shift into the future.
Speaker 2: We've seen a lot of volatility in the equity market
Speaker 2: around some of these AI names this week after that
Speaker 2: report from a little known firm called Saittrini Research. It
Speaker 2: seemed to outline some potential downside risk from AI on
Speaker 2: a number of industries. And this report used several hypothetical
Speaker 2: scenarios to kind of set the future. Future is in
Speaker 2: the name of your firm. So if you had to
Speaker 2: kind of forecast, Daniel, what the next five years may
Speaker 2: look like as the artificial intelligence and the advancements that
Speaker 2: we're talking about, what do you come away with?
Speaker 3: Yeah, that report was quite the Doom's Day report. However,
Speaker 3: there were iterations that were created that had greater levels
Speaker 3: of optimism. We see many trillions of dollars of economic
Speaker 3: growth that will come with the efficiencies and productivity that
Speaker 3: will be generated by AI.
Speaker 4: Where we see some potential.
Speaker 3: Risk is the digestion period that we've historically seen during
Speaker 3: massive transformative periods, you know, whether it's been steam or
Speaker 3: electricity or the Internet, generally took place over a much
Speaker 3: longer time. This particular innovation cycle has happened in a
Speaker 3: very short period of time. And so many things, many
Speaker 3: many roles in jobs and careers. You hear, you know,
Speaker 3: will we need lawyers, Will we need doctors, Will we
Speaker 3: need engineers, marketers, designers, salespeople. All these things have never
Speaker 3: been put into question the same way. But if you
Speaker 3: do look at history, and I think it's a and
Speaker 3: the people do. With every revolution, there were roles that
Speaker 3: people said, wow, will that go away? Just like the
Speaker 3: people that used to walk the streets of small towns
Speaker 3: and light the gas lamps at night, the original gas lighters.
Speaker 3: Right with electricity, there would no longer be roles, or
Speaker 3: they would no longer need people to chisel wheels out
Speaker 3: of stone, Doug. But the net of it is is
Speaker 3: that we ended up building industries that were exponentially larger.
Speaker 4: Manufacturing at scale.
Speaker 3: The Internet created entire new industries in marketplaces that did
Speaker 3: not exist in the largest companies in the world that
Speaker 3: employ the most people were, many of which were.
Speaker 4: Created in that era.
Speaker 3: So I think the hardest part for most people is
Speaker 3: to visualize the unknown. And while I can't concretely say
Speaker 3: what will be created, what I could say is this
Speaker 3: innovation is creating an immense amount of additional productivity. It's
Speaker 3: giving humans the potential to five and ten x what
Speaker 3: they're able to output, and new roles, new opportunities will emerge.
Speaker 3: But there is a risk for a short period of
Speaker 3: time that there will be downside because how fast this
Speaker 3: innovation has happened, and they know the humanity has never
Speaker 3: seen anything change in this quick.
Speaker 2: So as I'm listening to I'm thinking of Amara's law.
Speaker 2: It says that people tend to overestimate the short term
Speaker 2: impact of new technologies and underestimate their longer term effects.
Speaker 2: Is that what you're saying, does it really apply in
Speaker 2: this case?
Speaker 3: There's a little bit of that, and there's a little
Speaker 3: bit of Jevin's paradox in the sense that as we
Speaker 3: continue to become more efficient as human beings, we will
Speaker 3: continue to scale industries at a great rate. You know,
Speaker 3: we've talked about numbers of GDP growth in the twenties
Speaker 3: and thirties of trillion. There will be work to support
Speaker 3: that that will not all be done by robots in
Speaker 3: by AI. We need multi sided marketplaces. We need to
Speaker 3: fulfill goods and services. People will still travel, people will
Speaker 3: still get into autonomous vehicles, people will still want to
Speaker 3: eat people. You know, the things that we do that
Speaker 3: creates economic value will still be done and consumed. However,
Speaker 3: some of that monotonous work, some of those low less
Speaker 3: value processes that people are grinding away at their desk,
Speaker 3: moving data from one cell to the next, or moving
Speaker 3: papers from one email inbox to another, sending documents to
Speaker 3: be signed, things like that will be automated. But people
Speaker 3: will continue to evolve like we have all throughout history.
Speaker 3: But the speed is the risk. But I think in
Speaker 3: good time what you mentioned with the Mar's law does
Speaker 3: become the truth.
Speaker 2: So Daniel, before i'd let you go, give me your
Speaker 2: sense of where investors can find the best opportunities right
Speaker 2: now in the info tech space.
Speaker 3: Yeah, there's really two places that we are focusing on.
Speaker 3: One is we look at where everything remains constrained compute
Speaker 3: memory power. These things are a multi year trend and
Speaker 3: while there has been a lot of volatility. We've seen
Speaker 3: Nvidia settle a little bit, We've seen Micron move quite
Speaker 3: a bit up. We're still seeing the need for power
Speaker 3: and rare earth. All of those areas are going to
Speaker 3: continue to see growth as we see a number of
Speaker 3: as high as four trillion dollars in data center infrastructure
Speaker 3: by the end of the decade. On the other hand,
Speaker 3: there is some opportunity in the arbitrage and in the
Speaker 3: hard selloff that a number of companies have faced. We
Speaker 3: do not believe companies like IBM, like I mentioned, Service
Speaker 3: Now Salesforce, they have been sold at a rate that
Speaker 3: is not appropriate based on the business and metrics that
Speaker 3: they have delivered. There is some risk of AI and disruption,
Speaker 3: but we think the names I mentioned and several others
Speaker 3: of those deep moat enterprise software companies will continue to
Speaker 3: perform at a high level despite the fact that the
Speaker 3: rerating may be real, but the upside still exists.
Speaker 2: Daniel Bell, leave it. They are always a pleasure. Thanks
Speaker 2: so much. Daniel Newman there, he is the CEO at
Speaker 2: the Futureum Group, joining us here on the Daybreak Asia podcast.
Speaker 2: Welcome back to the Daybreak Asia Podcast. I'm Doug, Chris
Speaker 2: and as I mentioned a moment ago, in Vidia gave
Speaker 2: another bullish forecast for quarterly revenue. This would suggest the
Speaker 2: massive buildout in AI compute remains on track now. This
Speaker 2: could underpin earnings expectations across the Asian semiconductor supply chain,
Speaker 2: especially where high bandwidth memory chip makers are concerned. And
Speaker 2: that's where we begin our conversation with Karen Calder. Kieren
Speaker 2: is head of equity research for Asia at UBP. He
Speaker 2: spoke earlier with Bloomberg TV host Heidi Stroud Watts and
Speaker 2: Sherry on.
Speaker 5: We have this situation where, of course all of the
Speaker 5: macro factors are still at play, ranging from everything to
Speaker 5: you have political related to tariffs to central banks globally,
Speaker 5: but at the moment it is really all about that
Speaker 5: tech space. What do you make of the price action
Speaker 5: that we've seen under the numbers from nvidio take away
Speaker 5: the fear that clearly was dominating the training up until
Speaker 5: now for the last few days.
Speaker 4: Good morning.
Speaker 6: So obviously the the numbers from a video are are
Speaker 6: a big relief as a bellweather of you know, the
Speaker 6: AI trade, at least on the infrastructure CAPEX build out side,
Speaker 6: Nvidia needs to keep delivering and and and having a
Speaker 6: strong outlook, So that's pretty positive if you look at
Speaker 6: you know, over the course of this week. Of course,
Speaker 6: we had this Centreny report over the weekend talking about
Speaker 6: a hypothetical scenario a couple of years down the road
Speaker 6: where we've had, you know, the AI build out and
Speaker 6: the implementation. It basically takes out a lot of different sectors,
Speaker 6: and I think probably we've passed peak worry about about
Speaker 6: that sort of scenario. In fact, if you put that
Speaker 6: report into chat GPT itself, it really says, don't worry
Speaker 6: too much about this. This is a hypothetical scenario looking
Speaker 6: at identifying risks going forward. So we think peak fear
Speaker 6: has probably passed, and it's an opportunity, we think to
Speaker 6: recalibrate in the names that have a decent near term outlook.
Speaker 6: And for us, it's really the sort of Capex AI
Speaker 6: CAPEX build out. So the names like in Nvidia as
Speaker 6: well as some of the semiconductor manufacturers I think are
Speaker 6: a good place to be at the moment.
Speaker 7: Karin, how long do you think we sort of should
Speaker 7: be looking at in terms of the time for that
Speaker 7: separation of the sustainable gainers within that AI space. And
Speaker 7: those you know clearly, you know, particularly in the likes
Speaker 7: of Jamie Diamond's World, are something that you should be
Speaker 7: a lot more cautious about.
Speaker 6: Well, I mean think the timeline is now if you look,
Speaker 6: you know, particularly JP Morgamy. They had a mini investor
Speaker 6: day this week and they highlighted that they're going to
Speaker 6: be spending almost twenty billion dollars this year, about half
Speaker 6: of which is investment in platforms and AI capabilities. You know,
Speaker 6: big corporates, including financials, which are able to spend and
Speaker 6: implement AI will will benefit from that, and they'll be
Speaker 6: able to help their clients and names that are a
Speaker 6: little bit more exposed, you know, we'll have some work
Speaker 6: to do. So obviously there's a sharp contrast between in
Speaker 6: video results and Salesforce results, so Salesforce has a bit
Speaker 6: of work to do to you know, adapt their business
Speaker 6: model to you know, the new environment.
Speaker 8: Karen, can you have this point also tell who the
Speaker 8: winners or losers could be across Asia as well?
Speaker 6: I wish I could. I mean, obviously I think that
Speaker 6: we uh, we think that the semiconductor names are an
Speaker 6: obvious place to be, so, you know, the big ones
Speaker 6: T SMC and Samsung, which of course have have done well.
Speaker 6: We think there's some critical companies in Japan in the
Speaker 6: in the supply chain, which which we think at this
Speaker 6: stage is also a place to be. I think it's
Speaker 6: probably too it's difficult now to pick the winners on
Speaker 6: the implementation side. So you know, while software names have
Speaker 6: been really taken to the cleaners, I think it's maybe
Speaker 6: a little bit too early to start to pick through
Speaker 6: there and try to identify winners as we're still at
Speaker 6: the build out stage.
Speaker 8: Yeah, lots of component makers also chemical suppliers across Japan,
Speaker 8: right Kieran. But here we also do have the idiosyncratic
Speaker 8: story around the Bank of Japan, what privates Attakaichi wants
Speaker 8: when it comes to those rate hikes, the weakness of
Speaker 8: the Japanese yend and the acceleration of the losses. Is
Speaker 8: this a risk or is this just more upside for
Speaker 8: those exporters.
Speaker 6: Well, so, okay, the end is a difficult issue for
Speaker 6: Japan obviously. You know, the Bank of Japan is obviously
Speaker 6: very cautious and with the comments and the new appointments
Speaker 6: from the comments from the Prime Minister, a rate hike,
Speaker 6: a further rate hike is probably pretty unlikely.
Speaker 4: At this point.
Speaker 6: On the other hand, the weekend is all very problematic,
Speaker 6: especially for Japanese households, because so much of uh, you know,
Speaker 6: the household basket is imported all mostly all energy is important,
Speaker 6: lots of food is imported so important. Inflation is a
Speaker 6: big problem, not only for the economy but specifically for households.
Speaker 6: This is likely to continue, and I think, you know,
Speaker 6: the export is obviously benefit from translation of earnings, but
Speaker 6: at some point it's just too weak for the domestic economy.
Speaker 6: She's got, she's bought herself four years. Hopefully there'll be,
Speaker 6: you know, some measures taken sooner.
Speaker 2: That was Karen Calder, head of Equity Research for Asia
Speaker 2: at UBP, speaking with Bloomberg TV host Heidi Stroud, Watts
Speaker 2: and Sherry On bringing you their conversation here on the
Speaker 2: Daybreak Asia podcast. Thanks for listening to today's episode of
Speaker 2: the Bloomberg Daybreak Asia Edition podcast. Each weekday, we look
Speaker 2: at the story shaping markets, finance, and geopolitics in the
Speaker 2: Asia Pacific. If you can find us on Apple, Spotify,
Speaker 2: the Bloomberg Podcast YouTube channel, or anywhere else you listen,
Speaker 2: join us again tomorrow for insight on the market moves
Speaker 2: from Hong Kong to Singapore and Australia. I'm Doug Prisoner,
Speaker 2: and this is Bloomberg