WEBVTT - Nvidia Beats Big on AI, Fellow Chipmakers Rally

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

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<v Speaker 1>Daybreak Aisia podcast. I'm Doug Krisner. You can join Brian

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<v Speaker 1>Curtis and myself for the stories making news and moving

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<v Speaker 2>Joining us now on the program to take a closer

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<v Speaker 2>look at Nvidia is Louis Novellier, who is chairman and

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<v Speaker 2>founder of Navalier and Associates. So, Louis, there wasn't a

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<v Speaker 2>lot of nervousness leading into this print by Nvidia because

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<v Speaker 2>the hyperscalers had already told us that they were buying

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<v Speaker 2>big time in Vidia chips. But going forward, is that

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<v Speaker 2>still the most important thing to watch or are there

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<v Speaker 2>some other metrics that you have that will tip us

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<v Speaker 2>on if and when business actually slows.

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<v Speaker 3>Well, certainly, with two hundred and sixty two percent sales growth,

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<v Speaker 3>obviously they're not going to be able to sustain that

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<v Speaker 3>much longer. Even super microcomputers slowing their sales. They're going

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<v Speaker 3>from two one hundred and forty five percent next quarter.

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<v Speaker 3>But I the order book is strong, the margins are ridiculous.

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<v Speaker 3>The Blackwell chip is finally going to get implemented. That's

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<v Speaker 3>a given a nice little turbo boost. It really boils

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<v Speaker 3>down to how fast they can put all this in

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<v Speaker 3>the cloud and build all these great new data centers

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<v Speaker 3>so we can do AI via the cloud. And of

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<v Speaker 3>course there's also a rush to boost electricity to fuel

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<v Speaker 3>all this, and so there's a lot of plays socio

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<v Speaker 3>of AI. But it remains very healthy and we just

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<v Speaker 3>went into extra innings on the AI rally today.

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<v Speaker 1>What is your sense on the degree to which AI

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<v Speaker 1>is being adopted, how quickly that's occurring. Jensen Wog during

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<v Speaker 1>the conference call with analyst was talking about an expansion

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<v Speaker 1>into consumer internet companies, enterprise, sovereign AI, automotive healthcare. I

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<v Speaker 1>mean it seems to be spreading out. Do you have

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<v Speaker 1>a sense of the rate of change or the rate

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<v Speaker 1>of adoption?

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<v Speaker 4>Oh, it's unbelievable.

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<v Speaker 3>I think the biggest problem is the way they're doing AI.

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<v Speaker 3>Not everybody should do it the really fancy way. I

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<v Speaker 3>have friends that are in the chip business and they

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<v Speaker 3>build AI chips for samps and things like that, and Essentially,

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<v Speaker 3>when you look at everything, you can get errors.

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<v Speaker 4>So you want to look at correlated things.

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<v Speaker 3>And you know, the intelligence community missed nine to eleven,

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<v Speaker 3>they missed October seventh. So you can get what we

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<v Speaker 3>call garbage and garbage out if you look at too

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<v Speaker 3>much stuff. So it's very important when they implement all

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<v Speaker 3>this AI that they just put in the things that

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<v Speaker 3>are correlated versus the kitchen saying.

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<v Speaker 1>You are talking about the training data that they're using

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<v Speaker 1>to create these models.

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<v Speaker 3>Right, correct, correct, And you know I build I built

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<v Speaker 3>stock models and I'm very proud of them, and that

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<v Speaker 3>they're online free and we great stocks, A, B, C,

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<v Speaker 3>D F and and uh so I'm kind of a

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<v Speaker 3>programmer to begin with. And but what's interesting is when

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<v Speaker 3>you build a model, the more factors you put in,

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<v Speaker 3>the more errors you're going to make. So my friends

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<v Speaker 3>that are building chips, now it's for consumer products. They're

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<v Speaker 3>they're basically chips are mimicking our pets in our household.

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<v Speaker 3>You know, our pets plot against us and figure out

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<v Speaker 3>who we are and and and then try to condition us,

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<v Speaker 3>you know, And so that's what consumer AI will be doing.

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<v Speaker 3>You know, the new alexas of the world and things

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<v Speaker 3>like that, and I just think it's recording. They don't

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<v Speaker 3>go overboard and do it like the NSA or c

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<v Speaker 3>i A.

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<v Speaker 2>Let's talk a little bit about some of these second, third,

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<v Speaker 2>and fourth derivative place. Probably in the most immediate we

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<v Speaker 2>can look at some of the Asian suppliers for sure,

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<v Speaker 2>TSMC is a big one obviously, with Strawn and Skix

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<v Speaker 2>and Samsung. Are you playing those as well, and if so,

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<v Speaker 2>what do you like?

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<v Speaker 4>No, I'm not.

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<v Speaker 3>I'm playing the companies that are built making the electric

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<v Speaker 3>demand go up, So that would be something like an

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<v Speaker 3>eton An, Mcore, a Quantum Services, Vista Corporation. And I'm

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<v Speaker 3>helping companies secure the cloud. That would be things like CrowdStrike,

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<v Speaker 3>a New Annex, NTNX, Parsons, and virtual holdings. So it's

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<v Speaker 3>all cloud and security. It's that's kind of where we're at.

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<v Speaker 1>So we also got news of a ten for one

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<v Speaker 1>stock split and an increase in the dividend of one

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<v Speaker 1>hundred and fifty percent is or would in Nvidia be

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<v Speaker 1>better served taking that money into plowing it back into

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<v Speaker 1>R and D or do you think they're adequately taking

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<v Speaker 1>care of kind of what's necessary on on the research

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<v Speaker 1>and development front.

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<v Speaker 4>Oh, they spent over two billion dollars on that Blackball chip.

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<v Speaker 4>That's why I know we can compete with them.

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<v Speaker 3>And I mean if AMD wants to even try to

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<v Speaker 3>compete with them, they're not going to. And you know,

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<v Speaker 3>Apple and others have announced they're going to get in

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<v Speaker 3>the AI chip business. But that's the that's the cheap

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<v Speaker 3>AI stuff that it's not as fancy as what Navidia does.

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<v Speaker 3>So I think Navidia has a monopoly. They're going to

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<v Speaker 3>continue monopoly to the end of the decade. You know,

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<v Speaker 3>Jensen said he wants to double the processing speeds every

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<v Speaker 3>year and then eventually at the end of the decade

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<v Speaker 3>they'll have chips in a basically impliance sized device that

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<v Speaker 3>will replace data centers. You know, all these chips have

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<v Speaker 3>to be liquid cooled, and.

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<v Speaker 4>They run hot and they suck a lot of electricity.

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<v Speaker 3>So the electricity play is my big play at this moment.

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<v Speaker 2>Yeah, and you mentioned Eating and Quanta Services and companies

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<v Speaker 2>like that. What about on the cooling side, which you

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<v Speaker 2>just referenced, like Carrier or General HVAC companies that supply

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<v Speaker 2>cooling systems to data centers, is that also in your

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<v Speaker 2>in your target range.

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<v Speaker 3>Not yet, but I can tell you it's hard to

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<v Speaker 3>get air conditioners. I'm in Florida now. We ordered some.

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<v Speaker 3>It's going to take a while. Most of them come

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<v Speaker 3>from Monterey, Mexico, although the crane ones are coming in heavy.

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<v Speaker 3>But the uh, you know, they put the server farms,

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<v Speaker 3>a lot of them in the desert so they can

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<v Speaker 3>open them up at night and they actually cool themselves

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<v Speaker 3>because the deserts get cold at night.

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<v Speaker 4>And you know, I have a home in Reno where

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<v Speaker 4>Apple and Google have server farms there, and so it's

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<v Speaker 4>but the server farms are always going to go. There's

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<v Speaker 4>cheap electricity.

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<v Speaker 3>But no, Navidia and super Micro should be about eighty

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<v Speaker 3>percent or AI investments, and those two stocks are about

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<v Speaker 3>twenty percent of my portfolio. Not no, no, no, because

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<v Speaker 3>they just don't have the results.

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<v Speaker 4>Yeah. Sorry, it's uh.

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<v Speaker 3>I mean, I know they're rallying in the wake of

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<v Speaker 3>what Navidia did, but they just don't hit my criteria.

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<v Speaker 4>I'm pretty picky.

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<v Speaker 3>I got to have my sales growth, my margin expansion,

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<v Speaker 3>positive anser visions.

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<v Speaker 4>I got a surprise, you know, so they got a

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<v Speaker 4>guide hired.

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<v Speaker 1>What about the memory chips that a Micron would develop

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<v Speaker 1>to go hand in hand with an Nvidia product.

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<v Speaker 4>Not yet. I have friends and Boise that ex Micron people.

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<v Speaker 3>That's my buddy who's building chips for Samson, and Micron

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<v Speaker 3>has not shown up on my radar, although it has

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<v Speaker 3>improved dramatically.

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<v Speaker 2>All right, Louis, thanks so much for joining us here

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<v Speaker 2>live on the program. Louis Novelier, chairman and founder of

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<v Speaker 2>novel Year and Associates. The chip maker in Nvidia announced

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<v Speaker 2>revenue up two hundred and sixty percent from the same

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<v Speaker 2>quota last year. It also had a big beat on

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<v Speaker 2>the bottom line and second quarter revenue will be about

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<v Speaker 2>twenty eight billion dollars. Joining us now for some discussion

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<v Speaker 2>is Vlad Savov Bloomberg Tech editor, So, Vlad that two

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<v Speaker 2>hundred and sixty that means that revenue tripled, more than

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<v Speaker 2>tripled from last year, profit tripling as well? Who does that?

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<v Speaker 5>And Vidia? The hilarious thing, Brian, is we're back here

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<v Speaker 5>doing this all over again. I mean, three months ago,

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<v Speaker 5>we're having a conversation, maybe we're previewing MVDA earnings and

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<v Speaker 5>we were saying expectations as sky high. Can Nvidia meet them?

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<v Speaker 5>And it did. He's doing it all over again, and

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<v Speaker 5>maybe three months from now we'll do it over again.

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<v Speaker 5>It's we can't see the top of this cycle. The

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<v Speaker 5>thing that's happening right now, it's worth saying. I mean,

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<v Speaker 5>I've been covering a Video since it was still a

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<v Speaker 5>purely gaming company. Gaming revenue was estimated at two point

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<v Speaker 5>six billion. It came in at two point six billion.

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<v Speaker 5>This is all about AI. This is all about data centers.

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<v Speaker 1>No doubt about that. And I think we can say

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<v Speaker 1>safely that this is pretty much a monopolist right at

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<v Speaker 1>this point. There's no chip company that can touch in video.

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<v Speaker 5>That's a bit of a tough time to put in

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<v Speaker 5>it because it's not by any sort of unfair competition.

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<v Speaker 5>The competition is wide open if anybody wants to compete

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<v Speaker 5>with in video, and you can be sure that companies

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<v Speaker 5>are trying. AMD is the closest competitor they can try it.

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<v Speaker 5>It's just the technology is that clearly ahead. Everybody is

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<v Speaker 5>deploying in video's AI acceleration protocols that he has developed itself.

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<v Speaker 5>It has developed this with billions of dollars of investment

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<v Speaker 5>and over many years, and people have just adopted this

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<v Speaker 5>technology because the best that there is out there right now.

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<v Speaker 2>Yeah, there's just so many superlatives with this. It's not

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<v Speaker 2>like we're, you know, all pushing in VideA. It's just

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<v Speaker 2>one of these things. It tends to be a freak

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<v Speaker 2>of nature here at this point data centers. You mentioned

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<v Speaker 2>that's the big thing. It's eighty five to eighty seven

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<v Speaker 2>percent of total sales. We've seen the stock triple in

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<v Speaker 2>a year, and we mentioned that revenue and profit had tripled,

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<v Speaker 2>and so it means that the stock is really no

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<v Speaker 2>more expensive now than it was a year ago. The

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<v Speaker 2>forward pe is thirty five.

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<v Speaker 5>You're right, Bran. I was just looking at our charts

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<v Speaker 5>on the terminal and one of the things that stands

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<v Speaker 5>out is that the quarterly sales now are bigger than

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<v Speaker 5>the videohead annual sales as recently as one or two

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<v Speaker 5>years ago. It really is just a skyrocketing of sales.

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<v Speaker 5>And it's worth saying. I mean, we keep talking about

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<v Speaker 5>AI on a daily basis, is the predominant topic in tech,

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<v Speaker 5>and one of the highlights actually for me from Video's

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<v Speaker 5>earnings is that still about forty percent of these sales

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<v Speaker 5>are coming from the biggest US tech companies. You're talking Meta, Google, Microsoft,

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<v Speaker 5>all the ones that have said AI is a big priority,

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<v Speaker 5>big thing that we're doing, and they're investing most heavily

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<v Speaker 5>in video chips. If you want to have some sort

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<v Speaker 5>of balance here, there is a question to ask, when

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<v Speaker 5>will those companies say we have enough of these chips.

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<v Speaker 5>When will those companies start tapering off that spending and

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<v Speaker 5>start investing in more software investments.

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<v Speaker 1>Well, look at the story earlier in the week with

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<v Speaker 1>Amazon delaying the purchase of the last the most to

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<v Speaker 1>let me call it, the recent generation, in favor of

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<v Speaker 1>withholding fund so that they could buy the next generation

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<v Speaker 1>of these chips. So there's going to be this constant

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<v Speaker 1>cycle of upgrade and that's going to be driving a

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<v Speaker 1>lot of the sales growth going forward, I would imagine.

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<v Speaker 1>But you know, Okay, so maybe the company is not

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<v Speaker 1>a monopolist in the strictest sense of the term, but

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<v Speaker 1>if you dominate the market to such an extent, you

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<v Speaker 1>do have enormous pricing power, right, and so they are

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<v Speaker 1>in a position to raise prices on the next generation

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<v Speaker 1>of these advanced chips in a way that is going

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<v Speaker 1>to continue to feed that revenue growth.

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<v Speaker 5>That's right, perfectly fair to say. One of the things

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<v Speaker 5>that CEO Jensen Wang did say after the earnings is

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<v Speaker 5>that the company is trying to broaden out is customer base.

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<v Speaker 5>You've got to keep in mind we're here in Hong Kong.

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<v Speaker 5>Asian companies are just as eager to get hold of

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<v Speaker 5>those chips. I mean, the situation right now is Nvidia

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<v Speaker 5>has far more customers than it has chips to supply.

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<v Speaker 5>When you talk to TSA and seeing the likes, there

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<v Speaker 5>is still some constraints in advanced packaging to put these

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<v Speaker 5>chips together. So Nvidia is very much in an enviable

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<v Speaker 5>position today.

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<v Speaker 2>Yeah, I heard Mike Wilson from Morgan Stanley say that

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<v Speaker 2>the only thing about AI is that, you know, we

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<v Speaker 2>haven't really seen it in the sales outside of Nvidia.

0:12:20.360 --> 0:12:22.839
<v Speaker 2>I'm not sure that's really true, because you are seeing

0:12:22.840 --> 0:12:26.440
<v Speaker 2>a lot of companies report higher revenues and stronger growth

0:12:26.440 --> 0:12:30.959
<v Speaker 2>as a result of let's say power supply or cooling

0:12:31.000 --> 0:12:34.200
<v Speaker 2>systems or whatever. But how long is it before this

0:12:34.280 --> 0:12:37.480
<v Speaker 2>really does trickle down to the average Joe.

0:12:37.640 --> 0:12:40.000
<v Speaker 5>Honestly, it really is a matter of the software side

0:12:40.000 --> 0:12:42.400
<v Speaker 5>of things. We just saw Microsoft announce it so called

0:12:42.440 --> 0:12:45.920
<v Speaker 5>co pilot plus PCs. Those are based on Quotcom chips

0:12:45.920 --> 0:12:49.120
<v Speaker 5>almost entirely. That's one aspect of the chip market where

0:12:49.160 --> 0:12:51.839
<v Speaker 5>Nvidia is not a player. Quotcom is trying to get

0:12:51.840 --> 0:12:54.760
<v Speaker 5>in on Intel's turf and basically takeover is the leader

0:12:54.800 --> 0:12:56.719
<v Speaker 5>in PCs, because when you think of PCs, it's really

0:12:56.840 --> 0:13:00.840
<v Speaker 5>laptops nowadays, that's the leading thing. They are the ones

0:13:00.920 --> 0:13:02.679
<v Speaker 5>that are going to show us over the next few

0:13:02.720 --> 0:13:05.400
<v Speaker 5>weeks and months how competing the AI features are going

0:13:05.440 --> 0:13:07.959
<v Speaker 5>to be for end users. That part really hasn't come

0:13:08.000 --> 0:13:10.200
<v Speaker 5>to fruition yet because it's still really early. Everyone is

0:13:10.240 --> 0:13:12.880
<v Speaker 5>just buying the immediate chips to train stuff. But the

0:13:12.960 --> 0:13:16.640
<v Speaker 5>next the next wave of innovation and the next wave

0:13:16.640 --> 0:13:19.360
<v Speaker 5>of chip buying, as far as Ahi goes, is going

0:13:19.400 --> 0:13:21.480
<v Speaker 5>to be in the end devices, the stuff that Quocom

0:13:21.520 --> 0:13:21.880
<v Speaker 5>is setting.

0:13:22.160 --> 0:13:25.800
<v Speaker 2>Yeah in Frience Flat, Thanks very much, Flat Salvov, Bloomberg

0:13:25.840 --> 0:13:36.079
<v Speaker 2>Tech Editor with us. We are joined online by Lorraine

0:13:36.120 --> 0:13:40.160
<v Speaker 2>Tan who's director of Asia Equity Research at morning Star

0:13:40.400 --> 0:13:43.679
<v Speaker 2>on the markets. So at the moment, Lorraine, we're not

0:13:43.800 --> 0:13:48.000
<v Speaker 2>seeing this huge follow through from the optimism surrounding in

0:13:48.040 --> 0:13:51.040
<v Speaker 2>Nvidia to the broader markets in Asia, but it shows

0:13:51.080 --> 0:13:53.640
<v Speaker 2>you these are big markets and there are a lot

0:13:53.640 --> 0:13:55.080
<v Speaker 2>of factors.

0:13:56.559 --> 0:13:59.680
<v Speaker 6>Yes, that's right, so you know, while you know Nvidia

0:13:59.760 --> 0:14:03.520
<v Speaker 6>does provide some relief that at least that's not a

0:14:03.920 --> 0:14:07.560
<v Speaker 6>risk trigger. I think the broader events are the ones

0:14:07.600 --> 0:14:10.920
<v Speaker 6>that is going to drive Asian market direction. And first

0:14:10.920 --> 0:14:14.080
<v Speaker 6>and foremost is people are still wondering when the Fed's

0:14:14.120 --> 0:14:16.440
<v Speaker 6>going to cut, what the inflation numbers are going to

0:14:16.440 --> 0:14:20.000
<v Speaker 6>look like coming up that would allow for that. So

0:14:20.040 --> 0:14:22.280
<v Speaker 6>I think that still tends to be a key factor

0:14:22.440 --> 0:14:24.680
<v Speaker 6>that the markets are looking for in terms of direction.

0:14:25.040 --> 0:14:25.440
<v Speaker 4>Lorraine.

0:14:25.480 --> 0:14:27.600
<v Speaker 1>One of the big ideals here in the States after

0:14:27.600 --> 0:14:31.400
<v Speaker 1>the bell was obviously the Nvidia earnings shattering on estimates

0:14:31.400 --> 0:14:33.320
<v Speaker 1>for sales. I mean, so the guidance here are very

0:14:33.320 --> 0:14:35.640
<v Speaker 1>positive for the current quarter. This is something that is

0:14:35.720 --> 0:14:39.280
<v Speaker 1>really kind of a revolution in the US. I don't

0:14:39.320 --> 0:14:43.560
<v Speaker 1>know how you're seeing AI play out in parts of

0:14:43.640 --> 0:14:46.240
<v Speaker 1>Asia China. Let's put that aside for a moment. We

0:14:46.280 --> 0:14:49.280
<v Speaker 1>can talk about what you're maybe seeing in Singapore, and

0:14:49.320 --> 0:14:52.400
<v Speaker 1>if you could tie in the issue of energy, because

0:14:52.400 --> 0:14:54.920
<v Speaker 1>I know you spent a number of years over the

0:14:54.960 --> 0:14:57.960
<v Speaker 1>course of your career focusing on energy and utilities, and

0:14:57.960 --> 0:15:03.800
<v Speaker 1>we know that AI generally speaking is very energy intensive.

0:15:05.920 --> 0:15:07.920
<v Speaker 6>Yeah, so I think there's a little bit of a

0:15:08.200 --> 0:15:12.400
<v Speaker 6>difference here because in video is benefiting because it's got

0:15:12.400 --> 0:15:17.640
<v Speaker 6>the platform to really extract the value from all the

0:15:17.680 --> 0:15:21.440
<v Speaker 6>AI activities that are going on. So you've got obviously

0:15:21.520 --> 0:15:26.080
<v Speaker 6>some fall flow through to the chip companies, but really

0:15:26.120 --> 0:15:28.520
<v Speaker 6>the chip cycles are going to be driven by the

0:15:28.560 --> 0:15:32.280
<v Speaker 6>broad industry, and for us, we do like that space,

0:15:32.400 --> 0:15:36.440
<v Speaker 6>but it's going to be partly driven by the handful

0:15:36.560 --> 0:15:40.480
<v Speaker 6>replacement cycle that we expect in twenty twenty five. So

0:15:40.760 --> 0:15:44.080
<v Speaker 6>there are slightly different nuances there. In Asia, I think

0:15:44.120 --> 0:15:47.400
<v Speaker 6>it's harder to pinpoint specific companies that are going to

0:15:47.480 --> 0:15:51.440
<v Speaker 6>benefit from what's going on in AI. So even within

0:15:51.600 --> 0:15:54.600
<v Speaker 6>let's say China, when we look at what's going on

0:15:54.680 --> 0:16:02.400
<v Speaker 6>in a cloud space, it's really the national telephone telecommunication

0:16:02.520 --> 0:16:05.360
<v Speaker 6>companies that are benefiting. But even then the percentage of

0:16:05.880 --> 0:16:08.520
<v Speaker 6>to their revenue is not as huge as what we

0:16:08.640 --> 0:16:11.520
<v Speaker 6>want it to be. Obviously, for by DO, this will

0:16:11.600 --> 0:16:13.880
<v Speaker 6>become a gross driver for them in the future, but

0:16:13.920 --> 0:16:17.080
<v Speaker 6>it's still not quite it's still not you know, as

0:16:17.200 --> 0:16:21.160
<v Speaker 6>the significant or it's harder for us to tell whether

0:16:21.360 --> 0:16:23.560
<v Speaker 6>they're going to be able to make a profit out

0:16:23.560 --> 0:16:24.400
<v Speaker 6>of it so soon.

0:16:26.280 --> 0:16:29.400
<v Speaker 2>We've looked a lot at some of these derivative markets

0:16:29.640 --> 0:16:33.520
<v Speaker 2>and areas sectors. Electrification is a big thing, the independent

0:16:33.560 --> 0:16:38.240
<v Speaker 2>power producers in addition to the actual utilities themselves. And

0:16:38.240 --> 0:16:40.680
<v Speaker 2>then you have you know, the HVAC companies, you have

0:16:40.840 --> 0:16:45.000
<v Speaker 2>industrials generally, and a lot of the enthusiasm has spread

0:16:45.040 --> 0:16:47.680
<v Speaker 2>to a lot of different sectors. But investors are still

0:16:47.720 --> 0:16:51.160
<v Speaker 2>looking for companies like Snowflake that stumbled at one point

0:16:51.200 --> 0:16:54.560
<v Speaker 2>in the future and are undervalued. Are you finding companies

0:16:54.560 --> 0:16:57.120
<v Speaker 2>that are undervalued or are you sort of swamped by

0:16:57.120 --> 0:16:58.960
<v Speaker 2>all these markets with all these games.

0:17:00.800 --> 0:17:03.960
<v Speaker 6>Actually, we're still looking at we still see value in

0:17:04.000 --> 0:17:06.560
<v Speaker 6>the markets even within the US that we think is

0:17:06.560 --> 0:17:10.480
<v Speaker 6>slightly overvalued. You know, we're you know, we're looking at

0:17:10.480 --> 0:17:14.760
<v Speaker 6>things like even Fortunate that we have a by call on.

0:17:15.840 --> 0:17:19.239
<v Speaker 6>You know, these are stocks that are laggered and but

0:17:19.280 --> 0:17:23.240
<v Speaker 6>we think that they're still upside potential for sure. Even

0:17:23.320 --> 0:17:26.680
<v Speaker 6>healthcare names that are not within the that haven't benefited

0:17:26.760 --> 0:17:31.200
<v Speaker 6>from the BCD drug run up, you know, there's still

0:17:31.280 --> 0:17:33.879
<v Speaker 6>value there that would come back to the broader farmers

0:17:33.880 --> 0:17:37.320
<v Speaker 6>space as well. Within Asia, definitely. You know, we've seen

0:17:37.400 --> 0:17:41.240
<v Speaker 6>value China remains in our views, somewhat undervalued despite the

0:17:41.280 --> 0:17:44.320
<v Speaker 6>recent run up. Probably would be a little bit more

0:17:44.359 --> 0:17:49.080
<v Speaker 6>cautious in jumping into more real estate China real estate

0:17:49.160 --> 0:17:53.080
<v Speaker 6>names that have come up the from the bottom. But

0:17:53.240 --> 0:17:56.840
<v Speaker 6>definitely we still like the chip sector for the most part.

0:17:56.920 --> 0:18:00.520
<v Speaker 6>In Japan, we'd like the lagging factory automation names. They

0:18:00.560 --> 0:18:07.600
<v Speaker 6>also benefit from basically a cyclical improvement, basically inventory levels coming.

0:18:07.400 --> 0:18:11.040
<v Speaker 1>Back to normal, So chips. I'm also thinking South Korea

0:18:11.040 --> 0:18:14.160
<v Speaker 1>and we just had to be okay raising growth it's

0:18:14.240 --> 0:18:17.280
<v Speaker 1>growth forecast for this year to a level of two

0:18:17.320 --> 0:18:19.280
<v Speaker 1>and a half percent, up from two to one. The

0:18:19.359 --> 0:18:22.080
<v Speaker 1>last projection was made in February. How are you feeling

0:18:22.080 --> 0:18:25.679
<v Speaker 1>about the South Korean market, particularly the chip makers like

0:18:25.880 --> 0:18:27.320
<v Speaker 1>Samsung and sk Heinex.

0:18:29.680 --> 0:18:33.159
<v Speaker 6>Yeah, we do like Samsung. I think we still have

0:18:33.200 --> 0:18:36.359
<v Speaker 6>a bikon on Samsung, but we are more so focused

0:18:36.400 --> 0:18:39.440
<v Speaker 6>on the laggards regardless of where they are. So even

0:18:39.720 --> 0:18:45.160
<v Speaker 6>within that space industry leader TSMC, we we think they're

0:18:45.160 --> 0:18:49.680
<v Speaker 6>still upside potential there. Media tech on the Taiwan side

0:18:49.760 --> 0:18:53.080
<v Speaker 6>is another name that we prefer. I think overall, we

0:18:53.160 --> 0:18:55.600
<v Speaker 6>probably see a little bit more value in some of

0:18:55.640 --> 0:18:59.280
<v Speaker 6>the Taiwanese names on the chip side relative to let's say,

0:18:59.560 --> 0:19:05.000
<v Speaker 6>specific to Japanese or Korean chip makers at this stage.

0:19:06.200 --> 0:19:07.920
<v Speaker 2>And you know, we've talked a lot this morning about

0:19:07.920 --> 0:19:12.280
<v Speaker 2>b HP and Anglo and uh, it's interesting that you

0:19:12.280 --> 0:19:15.520
<v Speaker 2>know b HP is looking at copper mining but not

0:19:15.600 --> 0:19:19.240
<v Speaker 2>wanting to do it itself. But buy buy it, buy Anglo.

0:19:19.960 --> 0:19:23.240
<v Speaker 2>I'm curious what your thoughts about M and A. He's

0:19:23.280 --> 0:19:25.320
<v Speaker 2>been picking up a little bit here of late. What

0:19:25.320 --> 0:19:26.800
<v Speaker 2>what sort of message does it send?

0:19:29.400 --> 0:19:32.120
<v Speaker 6>I think when I think, what it means is that

0:19:32.680 --> 0:19:36.879
<v Speaker 6>for companies still having holding a lot of cash, and

0:19:36.960 --> 0:19:40.200
<v Speaker 6>I think that's across the board the number of companies

0:19:41.280 --> 0:19:45.520
<v Speaker 6>that we see and for those you know where you

0:19:45.560 --> 0:19:49.879
<v Speaker 6>have equity values also be at relatively low levels. That

0:19:49.960 --> 0:19:53.119
<v Speaker 6>probably means it's a good time to look for acquisitions

0:19:54.320 --> 0:19:58.600
<v Speaker 6>and and we do expect that to you know, basically continue,

0:19:58.680 --> 0:20:01.840
<v Speaker 6>particularly for those companies that can that do have the

0:20:01.960 --> 0:20:07.320
<v Speaker 6>cash flow to afford it. Definitely, you know, debt levels

0:20:07.359 --> 0:20:10.480
<v Speaker 6>of debt servicing is a little bit tougher now and

0:20:10.720 --> 0:20:13.840
<v Speaker 6>obviously getting funding is a little bit harder now. So

0:20:13.920 --> 0:20:16.600
<v Speaker 6>I think where you're probably seeing a little bit more

0:20:16.600 --> 0:20:20.120
<v Speaker 6>appetite for by some companies to consolidate.

0:20:20.400 --> 0:20:23.480
<v Speaker 1>We were just talking here in New York about a

0:20:23.600 --> 0:20:27.520
<v Speaker 1>Report City Group considering reducing some of its office foot

0:20:27.520 --> 0:20:31.200
<v Speaker 1>print in Singapore. Remote work is obviously gaining traction. How

0:20:31.280 --> 0:20:33.440
<v Speaker 1>is the commercial real estate market there in the Line

0:20:33.480 --> 0:20:34.359
<v Speaker 1>City very quickly?

0:20:37.200 --> 0:20:41.280
<v Speaker 6>Tier one basically the top grade real estate is still

0:20:41.520 --> 0:20:45.000
<v Speaker 6>highly demanded. If you look at the CBD areas, occupancy

0:20:45.080 --> 0:20:49.600
<v Speaker 6>rates are still high at about nine so we don't

0:20:49.600 --> 0:20:54.280
<v Speaker 6>actually expect any decline in rental rates unfortunately for US.

0:20:54.800 --> 0:20:57.240
<v Speaker 2>Laurene, thank you so much for joining us. Lorraine Tan,

0:20:57.359 --> 0:21:00.920
<v Speaker 2>their director of Asia Equity Research, Morning Star.

0:21:04.000 --> 0:21:06.919
<v Speaker 1>This has been the Bloomberg Daybreak Asia podcast, bringing you

0:21:07.000 --> 0:21:10.120
<v Speaker 1>the stories, making news and moving markets in the Asia Pacific.

0:21:10.600 --> 0:21:13.720
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