WEBVTT - Nvidia Earnings Loom for AI-Obsessed Stock Market 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:22.000 on Apple CarPlay or Android Auto with the Bloomberg Business app. 0:00:22.360 --> 0:00:25.680 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:27.040 us live on YouTube. 0:00:27.440 --> 0:00:31.000 Seem Ashaw with us right now. Thrilled to ever with 0:00:31.160 --> 0:00:35.680 us from London. Always here on the shifting tides that 0:00:35.760 --> 0:00:39.600 we see with Principal Asset Management, their chief global strategies. 0:00:39.640 --> 0:00:43.120 See I look at the discussion of the last forty 0:00:43.120 --> 0:00:46.640 eight hours, maybe seventy two hours, and there seems to 0:00:46.680 --> 0:00:50.720 be a threat to technology, a threat that takes risk, 0:00:51.640 --> 0:00:53.600 risk loving out of the markets. 0:00:54.480 --> 0:00:55.440 Is that shiftable? 0:00:55.520 --> 0:00:57.960 Do you think that there can be a rebuttal where 0:00:58.000 --> 0:01:02.600 we get back on board and optimism about software, AI 0:01:02.680 --> 0:01:04.960 and technology. 0:01:05.280 --> 0:01:09.160 Yeah, Hi Todd, I certainly think that this is a 0:01:09.160 --> 0:01:11.840 fleeting moment. I mean, I do think that the narrative 0:01:11.920 --> 0:01:17.360 around tech, the potential displacement from which would come from AI, 0:01:17.600 --> 0:01:19.240 is something which is going to be lingering in the 0:01:19.280 --> 0:01:20.760 market for a while. 0:01:21.600 --> 0:01:23.319 But overall, I do think that. 0:01:23.160 --> 0:01:26.480 That sense of risk on can return. The macro backdrop 0:01:26.560 --> 0:01:28.640 is pretty strong. There's a lot of concerns at the 0:01:28.640 --> 0:01:31.479 moment about what I could do two jobs. I think 0:01:31.480 --> 0:01:34.040 a lot of that is a little bit misplaced, very 0:01:34.080 --> 0:01:36.840 very forward looking. So I think as time goes and 0:01:36.959 --> 0:01:39.360 the market should settle down and start to really refocus 0:01:39.360 --> 0:01:41.759 on those fundamentals. But I would continue to expect shopping 0:01:41.800 --> 0:01:42.759 markets going forward. 0:01:43.280 --> 0:01:45.600 So Sima, we've seen that rotation out of some of 0:01:45.600 --> 0:01:49.280 the high growth, higher multiple stocks really starting kind of 0:01:49.440 --> 0:01:52.600 late last year into this year. Is that a short 0:01:52.720 --> 0:01:56.920 term trade? Is that something a longer term theme for 0:01:56.960 --> 0:02:00.200 twenty twenty six, maybe into more value, into maybe wall 0:02:00.240 --> 0:02:00.760 or in mid camp. 0:02:02.160 --> 0:02:02.960 Yeah, Sidy, we. 0:02:03.160 --> 0:02:07.200 Have increasingly light small cups since around Q three of 0:02:07.280 --> 0:02:08.840 last year, and there's you know, there's a couple of 0:02:08.880 --> 0:02:12.600 really key reasons. One is you need to have constructive 0:02:12.639 --> 0:02:15.040 growth backjobs only that's something that we're seeing or just 0:02:15.080 --> 0:02:18.080 in the US for globally. You need to have rate cuts. 0:02:19.000 --> 0:02:21.359 You need to have ideally signs of deregulation. So these 0:02:21.400 --> 0:02:23.639 three things are all coming and then especially at a 0:02:23.680 --> 0:02:27.080 time when valuations are really very favorable for small cups, 0:02:27.080 --> 0:02:29.760 so that continue to be the case. And similar to 0:02:30.600 --> 0:02:32.239 value as well, like a lot of the stuff which 0:02:32.240 --> 0:02:36.760 has been somewhat unloved, has been shifting towards looking at 0:02:36.760 --> 0:02:38.799 other parts of the market, such as value. I think 0:02:38.800 --> 0:02:41.280 that's been interesting is that there's a number of different 0:02:41.280 --> 0:02:43.359 themes going on in the market though, so of course 0:02:43.400 --> 0:02:45.600 there's a shift towards small cap and value. There's also 0:02:45.639 --> 0:02:49.160 been this kind of really strong performance from some of 0:02:49.200 --> 0:02:51.960 the defensives and then at times really strong performance from 0:02:52.000 --> 0:02:54.519 deep cycles. So this is a confusing market. There's a 0:02:54.560 --> 0:02:56.720 lot of different cross currents going on at the moment. 0:02:57.240 --> 0:03:01.639 I mean, this really caught my intention lesson right. Netflix's 0:03:01.720 --> 0:03:07.680 forward pe on the Bloomberg is higher, larger than Microsoft's 0:03:07.840 --> 0:03:09.200 forward welling. 0:03:09.280 --> 0:03:11.280 Okay, that is how things have shifted. 0:03:11.320 --> 0:03:13.240 That's how it has Seema. 0:03:13.320 --> 0:03:15.720 We've seen, you know, as we look back to twenty 0:03:15.720 --> 0:03:18.040 twenty five and so far this year in twenty twenty six, 0:03:18.720 --> 0:03:23.120 non US equity markets perform outperforming the US here across 0:03:23.280 --> 0:03:26.680 the board in a lot of key, key geographical markets. 0:03:26.720 --> 0:03:28.519 How do you think about the US versus rest of 0:03:28.520 --> 0:03:28.919 the world. 0:03:30.360 --> 0:03:31.680 Yeah, you know, this is I mean, this is one 0:03:31.680 --> 0:03:34.160 of those those trades that started last year there were 0:03:34.280 --> 0:03:36.400 question marks around whether it's going to be sustained for 0:03:36.440 --> 0:03:39.680 twenty twenty six. But as we've seen you go into 0:03:39.800 --> 0:03:42.480 this year and actually it seems like it's gaining momentum. 0:03:42.480 --> 0:03:45.520 We've actually seen more and more clients really becoming more 0:03:45.520 --> 0:03:48.480 interested in the national into the international trade. And again 0:03:48.520 --> 0:03:49.600 there's a couple of reasons for that. 0:03:49.640 --> 0:03:50.280 I mean, I think the. 0:03:50.200 --> 0:03:53.600 Global micro performance continues to be pretty strong. You've got good, 0:03:54.160 --> 0:03:57.480 I guess, supportive fiscal emunctory cycles, and a number of 0:03:57.480 --> 0:03:59.640 different parts of the world, there's a week dollar and 0:03:59.640 --> 0:04:02.560 then on top of that, I think the lack of 0:04:02.600 --> 0:04:05.440 certainty with regards to US policy is really starting to 0:04:05.520 --> 0:04:08.280 grate on a lot of investors. And so when you 0:04:08.400 --> 0:04:12.240 have got these cheap evaluations in international markets, when ernest 0:04:12.320 --> 0:04:16.120 growth for these markets is also performing fairly well, and 0:04:16.160 --> 0:04:18.960 then you have the policy uncertainty you thrown into there, 0:04:19.640 --> 0:04:22.120 Certainly that international space is looking more and more interesting, 0:04:22.200 --> 0:04:23.880 and you know, you can point in parts of Europe, 0:04:23.880 --> 0:04:26.560 you can point parts of Asia emerging markets, so a 0:04:26.560 --> 0:04:28.480 ton of other opportunities beyond the US. 0:04:28.600 --> 0:04:31.560 We continue with Seema Shure, a chief global strategiest principal, 0:04:31.720 --> 0:04:35.479 said Management Sam, I look at one of the great 0:04:35.520 --> 0:04:37.680 thoughts out there and what I've seen in the zeitgeist. 0:04:38.200 --> 0:04:41.520 Is Europe still wants to invest in America? Is the 0:04:41.600 --> 0:04:46.720 flow of equity purchase still coming into America? 0:04:46.839 --> 0:04:47.039 Yeah? 0:04:47.080 --> 0:04:48.919 I mean, you know, it's not like the tap has 0:04:48.960 --> 0:04:52.560 been completely switched off. European investors are still looking for 0:04:52.600 --> 0:04:55.839 where there's innovation and growth. But I guess I think 0:04:55.880 --> 0:04:59.360 the opportunities have been really compelling in order to offset 0:04:59.360 --> 0:05:04.120 the currency respects, offset their policy uncertainty, So it has 0:05:04.160 --> 0:05:06.920 to be a very interesting trade. Whereas before just buying 0:05:06.920 --> 0:05:09.880 into the US was almost enough to get that pickup, 0:05:10.240 --> 0:05:12.840 there's just a lot more differentiation, and there's also stronger 0:05:12.839 --> 0:05:13.920 performance out of Europe. 0:05:14.080 --> 0:05:15.320 So I think the hurdle. 0:05:15.040 --> 0:05:17.920 For insting in the US is a little bit higher, 0:05:18.760 --> 0:05:21.440 and it's probably more that the hurdle for investing domestically 0:05:21.800 --> 0:05:22.680 is that much lower. 0:05:24.160 --> 0:05:27.400 The bond market, we've seen bonds, you know, give you 0:05:27.440 --> 0:05:30.719 some solid returns in twenty twenty five, solid returns so 0:05:30.800 --> 0:05:34.440 far here in the start twenty twenty six, radious. The 0:05:34.480 --> 0:05:35.760 opportunities in the bond market. 0:05:37.800 --> 0:05:40.640 Look, we continue to have a fairly constructive outlook for 0:05:41.000 --> 0:05:44.080 US growth, for global growth, so that means that we 0:05:44.120 --> 0:05:46.440 can still be really focused on credit and still focus 0:05:46.520 --> 0:05:49.120 on segments of high yield, but really focusing within the 0:05:49.200 --> 0:05:52.719 higher quality segments of high yield. Probably more than anything, 0:05:52.720 --> 0:05:55.200 there is emerging market debt which continues to look really 0:05:55.240 --> 0:05:57.680 strong for US, and actually emerging markets both across the 0:05:57.720 --> 0:06:01.600 equity space and bond markets. You know, we have a 0:06:01.760 --> 0:06:03.640 belief that the dollar is going to continue to weaken, 0:06:03.680 --> 0:06:06.880 and that certainly helps out that narrative. But certainly we 0:06:06.880 --> 0:06:08.640 do think fixed income is interesting. It's just that we 0:06:08.680 --> 0:06:12.640 would have a probably greater preference for exits in other 0:06:12.680 --> 0:06:13.600 parts of the market. 0:06:13.640 --> 0:06:14.800 Seem very quickly here. 0:06:14.880 --> 0:06:17.240 I just looked at two standard deviation chart of the 0:06:17.279 --> 0:06:21.040 standard of course five hundred. We haven't even had a correction. 0:06:21.880 --> 0:06:24.680 I mean, where we are now, we've barely nudge. Should 0:06:24.680 --> 0:06:28.719 our listeners and viewers focus on the larger index or 0:06:28.760 --> 0:06:32.080 the uproar over technology and software? 0:06:33.360 --> 0:06:35.080 I mean, you're right, it's interesting because there's been so 0:06:35.160 --> 0:06:37.760 much noise and yet absolutely indexes it's very much pretty 0:06:37.800 --> 0:06:40.400 much unchanged. But I do think investors can be looking 0:06:40.400 --> 0:06:42.599 beyond the tech side. There's been a broadening of earnings 0:06:42.640 --> 0:06:45.520 growth to a number of different sectors. We're looking at 0:06:45.520 --> 0:06:48.359 which of the sectors that can benefit from from AI 0:06:48.400 --> 0:06:50.560 and not really be disrupted by AI. So there's a 0:06:50.600 --> 0:06:52.840 lot of opportunities and of course valuations and more compelling 0:06:52.880 --> 0:06:54.080 outside of the tech sector. 0:06:54.360 --> 0:06:56.200 So I think for investors look beyond. 0:06:56.000 --> 0:06:57.920 The index, you know, look to you know, where can 0:06:58.160 --> 0:07:01.640 and this really provide the additional information and sophistication. 0:07:01.960 --> 0:07:03.440 Thank you for the brief to get to start and 0:07:03.480 --> 0:07:07.240 see Mishaw with us with Principal Asset Management. 0:07:08.800 --> 0:07:09.720 Stay with us. 0:07:09.720 --> 0:07:12.960 More from Bloomberg Surveillance coming up after this. 0:07:20.200 --> 0:07:23.800 You're listening to the Bloomberg Surveillance podcast. Catch us live 0:07:23.880 --> 0:07:27.000 weekday afternoons from seven to ten am Eastern Listen on 0:07:27.120 --> 0:07:30.520 Apple Karplay and Android Otto with the Bloomberg Business app, 0:07:30.680 --> 0:07:32.760 or watch us live on YouTube. 0:07:32.560 --> 0:07:35.440 Snow the Sire Franklin Templeton. But let's secuw you into it. 0:07:35.680 --> 0:07:39.040 Robert Schiffman. I don't think he went home for the storm. 0:07:39.080 --> 0:07:41.040 No, he stays, he's got like a pop ten, you know, 0:07:41.160 --> 0:07:43.120 like back on the food court. Yep, down at one 0:07:43.160 --> 0:07:47.400 twenty park. Schiffman just publishes second sense. He notices it's 0:07:47.400 --> 0:07:53.040 snowing today. Second sentence, maybe a bond deal today? Question mark? 0:07:53.080 --> 0:07:56.040 Oh okay, and it's like totally out in the zeitgeist. 0:07:56.120 --> 0:07:56.400 It is. 0:07:56.480 --> 0:07:59.240 I mean, and we've seen you know, Rob Schiffman covers 0:07:59.240 --> 0:08:02.720 all them names, the tech names from a credit perspective, 0:08:02.720 --> 0:08:05.600 and he's been writing about all these big bond deals. 0:08:05.600 --> 0:08:08.120 We've seen, Tom, from the big tech companies and he says, 0:08:08.160 --> 0:08:09.400 the market's still up and bring. 0:08:09.320 --> 0:08:12.720 Them inside baseball. We go to Franklin Templeton today. 0:08:12.720 --> 0:08:16.160 The woman that picks up the phone at Franklin Templeton 0:08:16.560 --> 0:08:20.720 when Google or microsoftware ampletool bond deal, sonew de Side 0:08:20.800 --> 0:08:24.800 joins the CIO fixed income Franklin Templeton. So how does 0:08:24.840 --> 0:08:27.360 it work? Like, I get there's a bond deal, like 0:08:27.440 --> 0:08:29.960 John Dee does the thing? Okay, fine, But if a 0:08:30.040 --> 0:08:35.040 big tech company does an offering, a trunch offering six 0:08:35.160 --> 0:08:36.280 seven eight trunches? 0:08:37.000 --> 0:08:40.080 Do they call Franklin Templeton? Do you call them? Do 0:08:40.120 --> 0:08:42.560 you meet it a Starbucks? How does it work? 0:08:43.480 --> 0:08:43.520 No? 0:08:43.679 --> 0:08:45.840 It doesn't put that way, Tom, I wish you did. 0:08:46.080 --> 0:08:49.920 I'd say that. The first instance, what we have observed is. 0:08:49.840 --> 0:08:53.960 That very large institutional bias tend to have there are 0:08:53.960 --> 0:08:57.400 discussions which take place. I'm talking about large pension funds 0:08:57.440 --> 0:08:59.839 and so on, and so forth. But we absolutely thought 0:08:59.920 --> 0:09:03.240 up as the deals come to market. 0:09:03.360 --> 0:09:04.800 They do they listen to you? 0:09:04.880 --> 0:09:07.440 I mean the heritage of Franklin on the West Coast 0:09:07.440 --> 0:09:11.720 and Templeton and the Bahamas and the huge emotional merger 0:09:11.800 --> 0:09:12.880 decades ago. 0:09:13.440 --> 0:09:16.080 Do they listen to your experts? 0:09:16.280 --> 0:09:19.640 Or is it almost a bond deal of a hyperscaler 0:09:19.880 --> 0:09:21.680 is dictated to the street? 0:09:21.760 --> 0:09:22.360 Which is it? 0:09:23.720 --> 0:09:28.720 You know I had currently in the recent past, I 0:09:28.760 --> 0:09:33.680 would say that these hyperscalers essentially are dictating to the street. 0:09:34.160 --> 0:09:36.120 And this is the truth over the last year when 0:09:36.120 --> 0:09:39.080 we look at the shar volume of debt which has 0:09:39.080 --> 0:09:44.439 been issued, that there is a certain amount of expectation 0:09:44.960 --> 0:09:48.040 of some indigestion as we go further into this year, 0:09:48.160 --> 0:09:52.320 because even those initial assumptions that we would have around 0:09:52.720 --> 0:09:56.320 OLF a trillion of issues this year has now picked 0:09:56.400 --> 0:09:59.559 up to over seven hundred billion this year itself. 0:10:00.040 --> 0:10:03.200 I'd say that we're watching all this with some question. 0:10:03.760 --> 0:10:05.880 It's not that we think the deals will go bad, 0:10:05.960 --> 0:10:08.640 but spreads are likely to take a bit of a 0:10:08.720 --> 0:10:11.360 hit from the quantity of just the share volume. 0:10:11.520 --> 0:10:14.000 It's absorbable, absolutely, but. 0:10:16.320 --> 0:10:18.240 I would anticipate that spreads take a bit of a 0:10:18.320 --> 0:10:20.280 hit on this quantity of supply. 0:10:20.880 --> 0:10:24.400 So we've seen such a tremendous supply of new issuance 0:10:24.440 --> 0:10:25.920 come out of the tech space, which is a little 0:10:25.960 --> 0:10:29.240 bit unusual because the tech companies historically have had great 0:10:29.280 --> 0:10:32.400 cash character, which is great free cash, so it didn't 0:10:32.400 --> 0:10:33.760 really need the bond market. 0:10:34.640 --> 0:10:35.559 At what point do you think the. 0:10:35.480 --> 0:10:37.960 Bond market starts pushing back a little. 0:10:37.679 --> 0:10:44.160 Bit, maybe on the rates, maybe on some covenant language. 0:10:44.480 --> 0:10:46.920 When do you think that it may shift a little 0:10:46.920 --> 0:10:49.920 bit towards the buyer gets a little bit more power here? 0:10:50.720 --> 0:10:54.360 I think the buyer this is the year that happens, right, 0:10:54.559 --> 0:10:57.040 just given again the volume, and I think the first 0:10:57.320 --> 0:11:03.120 elements of pushback are coming. You see it in equity markets, 0:11:03.200 --> 0:11:06.959 and I think you also are seeing it broadly in 0:11:07.200 --> 0:11:10.199 fixed inco markets in the sense that when we looked 0:11:10.400 --> 0:11:13.640 at these issues, they are the picks and shovels piece 0:11:13.800 --> 0:11:14.320 of AI. 0:11:14.840 --> 0:11:15.040 Right. 0:11:15.120 --> 0:11:18.520 For a few years, everything was about mag seven and 0:11:18.720 --> 0:11:22.319 people were super excited and everything looked wonderful, and then 0:11:22.360 --> 0:11:25.600 a lot of the tech companies who did in fact 0:11:25.720 --> 0:11:28.439 have all of that free cash flow, we are now 0:11:28.480 --> 0:11:33.000 observing that the cash flow is not quite as free anymore. 0:11:33.000 --> 0:11:34.880 It's drying up a little bit. They're coming to the 0:11:34.880 --> 0:11:38.840 market for very big tapics. So I think what we 0:11:39.000 --> 0:11:45.400 might start seeing is more of more of the industry 0:11:45.480 --> 0:11:53.079 treating these growth firms, if you will, more like traditional, 0:11:53.480 --> 0:11:56.400 which means show us the money, show us the returns. 0:11:56.720 --> 0:11:58.719 And I think you're beginning to see a little bit 0:11:58.760 --> 0:12:02.520 of that. And since we had the bigs and trouvels, 0:12:03.360 --> 0:12:07.080 then we were looking where is the return that showed 0:12:07.080 --> 0:12:10.160 me the money? Couldn't find it, and therefore I think 0:12:10.240 --> 0:12:13.040 the market switched to saying, so who's losing? And that's 0:12:13.080 --> 0:12:15.640 what's hitting software right now. We're still in a bit 0:12:15.760 --> 0:12:19.760 of a gap, which is, show me the big winners, 0:12:19.960 --> 0:12:22.320 and we don't have them yet, we can't know. And 0:12:22.400 --> 0:12:26.360 I think that's a little bit of almost cognitive dissonance 0:12:26.480 --> 0:12:28.200 right now in the market, which is we all a 0:12:28.240 --> 0:12:31.960 create AI as transformative, but who is it transforming in 0:12:32.040 --> 0:12:32.960 a positive sense? 0:12:33.600 --> 0:12:35.680 So now let's just step back a little bit here. 0:12:35.920 --> 0:12:39.280 In twenty twenty five, fixed income had a very very 0:12:39.480 --> 0:12:42.840 solid year of high single digit all in total returns. 0:12:42.840 --> 0:12:45.760 Here in twenty twenty six, should I be content with 0:12:45.960 --> 0:12:49.200 just clipping coupons here? And if so, where. 0:12:50.040 --> 0:12:53.679 Yes, the answer is yes. 0:12:53.760 --> 0:12:58.280 Look, we are looking at incredibly tight spreads. Everything that 0:12:58.360 --> 0:13:02.439 we see wants us to be a little bit cautious 0:13:02.480 --> 0:13:07.560 in terms of additional spread tightening and in terms of 0:13:07.600 --> 0:13:10.720 where in the fixed income space you look for a terms, 0:13:10.960 --> 0:13:13.720 I'd say look at emergent markets, look a little more global, 0:13:13.800 --> 0:13:18.880 because those areas are still underinvested for most US investors. 0:13:18.880 --> 0:13:20.480 I think it's a good time to start looking at 0:13:20.480 --> 0:13:21.280 some of this again. 0:13:21.600 --> 0:13:25.439 And I also think I would not say don't look 0:13:25.480 --> 0:13:27.720 at high yield. You should be looking at high You 0:13:27.720 --> 0:13:30.360 should be looking at all of these sectors. Because the 0:13:30.360 --> 0:13:32.560 market typically throws a baby out with the bath water. 0:13:32.800 --> 0:13:37.560 All software is not in. It's in a death spiral, 0:13:37.840 --> 0:13:40.320 and you might think it is based on what we're seeing. 0:13:40.360 --> 0:13:43.160 So we are trying to look very carefully to find 0:13:43.200 --> 0:13:47.400 things which might in fact be mispriced at the current market. 0:13:47.600 --> 0:13:51.960 A question from the time where Franklin literally invented folks 0:13:52.040 --> 0:13:55.040 triple tex free. We make a joke about it, but 0:13:55.160 --> 0:13:57.720 somebody had to first do that, and I give Franklin 0:13:58.120 --> 0:14:00.520 all that Dreyfus was there as well. I really give 0:14:00.520 --> 0:14:03.959 Franklin all the credit. Sonew it's just as simple as 0:14:04.000 --> 0:14:08.199 I can. Are the hybrid kind of debt like convertible 0:14:08.320 --> 0:14:11.360 bonds or equity preferreds? 0:14:11.720 --> 0:14:12.920 Are they attractive? Here? 0:14:13.040 --> 0:14:16.040 Are they a legacy from another time and place. 0:14:16.800 --> 0:14:17.360 Common they go? 0:14:17.520 --> 0:14:19.920 And I think converts are still attractive. You have to 0:14:19.960 --> 0:14:22.960 just be careful about which points you pick them right. 0:14:23.120 --> 0:14:26.480 And I think that the question of whether you should 0:14:26.520 --> 0:14:29.960 be looking at interesting triplecs should you be looking at converts, 0:14:30.000 --> 0:14:33.400 that's always going to be from and I think that 0:14:33.520 --> 0:14:37.200 continues to be the case. I think it's definitely premature 0:14:37.280 --> 0:14:38.400 to say that their day is over. 0:14:38.760 --> 0:14:41.680 Hugely valuable. Thank you so much for those comments, Tonew. 0:14:41.960 --> 0:14:45.360 I hope compliance wasn't listening talking about like how do 0:14:45.400 --> 0:14:48.840 you digest a bond deal? That was really informative. Sonel 0:14:48.920 --> 0:14:52.440 Deci with the CIO fixed in at Franklin at Temper 0:14:52.560 --> 0:14:53.920 and we hope she keeps your job. 0:14:55.600 --> 0:14:56.320 Stay with us. 0:14:56.560 --> 0:14:59.760 More from Bloomberg Surveillance coming up after this. 0:15:07.040 --> 0:15:10.640 You're listening to the Bloomberg Surveillance podcast. Catch us live 0:15:10.680 --> 0:15:13.880 weekday afternoons from seven to ten am Eastern Listen on 0:15:13.920 --> 0:15:17.600 Applecarplay and Android Auto with the Bloomberg Business app, or 0:15:17.760 --> 0:15:19.240 watch us live on YouTube. 0:15:19.480 --> 0:15:23.120 Mandy sing with us here this morning. Of course, on Nvidia. 0:15:23.320 --> 0:15:25.440 The cell side's all in on this. I looked at 0:15:25.480 --> 0:15:28.480 the A and R function. No one's not in love 0:15:28.520 --> 0:15:30.880 with this thing. Some of the you know, they're popping 0:15:31.280 --> 0:15:35.280 up forty two percent return out twelve months. Where is 0:15:35.320 --> 0:15:39.280 the confidence in Nvidia given the tech crisis that we. 0:15:39.280 --> 0:15:43.440 Have, And you're right, I think the tech crisis points 0:15:43.480 --> 0:15:46.880 to the fact that this disruption is real when it 0:15:46.960 --> 0:15:52.080 comes to the AI impact, and Nvidia is the poster 0:15:52.240 --> 0:15:54.520 child when it comes to the demand that they have 0:15:54.720 --> 0:15:59.720 seen for their chips and look all the hyperscalers. We 0:16:00.080 --> 0:16:02.480 started the year thinking they're going to grow their capex 0:16:02.520 --> 0:16:06.280 thirty percent. Now that number is sixty percent. Some of 0:16:06.280 --> 0:16:10.040 that increases because of memory prices, but then you are 0:16:10.120 --> 0:16:14.560 also seeing an increased plans to add capacity, and that's 0:16:14.600 --> 0:16:18.640 where an Nvidia will likely have upside to their numbers tonight. 0:16:19.040 --> 0:16:22.920 The question still remains around the sustainability of growth, because 0:16:22.920 --> 0:16:25.760 when you are growing seventy percent at the scale that 0:16:25.920 --> 0:16:28.800 Nvidia is at, you know, three hundred billion dollars round 0:16:28.840 --> 0:16:32.440 rate for twenty twenty six, the numbers, the growth rates 0:16:32.480 --> 0:16:33.000 will taper. 0:16:33.200 --> 0:16:36.280 It's a given. So that's the part that I think. 0:16:36.320 --> 0:16:38.600 The visibility is what you want to figure out in 0:16:38.680 --> 0:16:42.120 terms of how much visibility the company has and what 0:16:42.160 --> 0:16:43.840 that means in terms of growth rates. 0:16:43.960 --> 0:16:46.560 I mean, again I'm looking at the FA function, which 0:16:46.600 --> 0:16:49.600 is a consensus of all the analysts forecasts here and 0:16:49.600 --> 0:16:54.560 again in Counter twenty six or Counter really twenty six 0:16:55.400 --> 0:16:58.360 fifty percent revenue growth. I mean, it's just extraordinary here. 0:17:00.080 --> 0:17:03.040 What does the street need to hear from Nvidia tonight? 0:17:03.040 --> 0:17:05.160 What's the what are they focusing on these days? 0:17:05.840 --> 0:17:10.160 I mean, Jensen has called out demand being stronger at 0:17:10.240 --> 0:17:12.840 least ten times, you know, since the start of the 0:17:12.920 --> 0:17:16.720 year Cees Davos, and yesterday, you know the fact that 0:17:16.840 --> 0:17:20.439 AMD had this deal with Meta where they ended up 0:17:20.480 --> 0:17:24.520 giving away ten percent of the stock as warrants. To me, 0:17:24.720 --> 0:17:28.520 that's a sign Invidia still is the leader when it 0:17:28.560 --> 0:17:31.600 comes to you know, everyone clamoring to get their chips 0:17:31.920 --> 0:17:34.480 and everyone else is trying to make sure they stay 0:17:34.520 --> 0:17:36.399 in the race, which is what the move I thought 0:17:36.720 --> 0:17:37.880 AMD had yesterday. 0:17:38.000 --> 0:17:40.800 Yesterday, I mean basically put the surveillance cork in my 0:17:40.880 --> 0:17:43.720 mouth and man, he lectured me on the use of AI. 0:17:44.680 --> 0:17:48.040 I look at it as a twenty dollars subscription. How 0:17:48.240 --> 0:17:50.760 God's name did they pay for the billions of data 0:17:50.800 --> 0:17:55.119 centers with twenty dollars from Alexis, twenty dollars from Paul, 0:17:55.520 --> 0:17:57.000 and twenty dollars from Time. 0:17:57.640 --> 0:18:01.000 So right now they are subsidizing it and it is 0:18:01.119 --> 0:18:05.000 being priced below the costs that you know, these hyperscalers 0:18:05.000 --> 0:18:07.520 have to pay to Nvidia to get the chips because 0:18:07.640 --> 0:18:10.840 Nvidia clearly is not taking a hit on their margins. 0:18:10.880 --> 0:18:14.280 They still have that mid seventy percent margins, So prices 0:18:14.320 --> 0:18:17.240 will go up, that twenty dollars subscription will go up, 0:18:17.320 --> 0:18:22.880 and extreme I know, and also the enterprise API usage 0:18:22.960 --> 0:18:24.560 that's a big part of adoption. 0:18:24.720 --> 0:18:27.560 Don't just focus on the corporation. That's corporation. 0:18:27.600 --> 0:18:29.320 They don't pay twenty dollars a bag person. 0:18:29.400 --> 0:18:32.200 Yeah, they're signing multimillion dollar deals right now. 0:18:32.320 --> 0:18:34.440 I mean in Nvidia, you just mentioned three hundred million 0:18:34.480 --> 0:18:36.080 dollars in revenue. I just went on to look at 0:18:36.119 --> 0:18:39.480 AMD forty five billion dollars in revenue. It's not even. 0:18:39.400 --> 0:18:40.280 Close, dude. 0:18:40.440 --> 0:18:44.920 So is Nvidia that much ahead of everybody else in 0:18:45.000 --> 0:18:45.879 terms of this story? 0:18:46.320 --> 0:18:46.680 They are? 0:18:46.800 --> 0:18:50.320 And and that Blackwell chip ramp, that they showed last quarter. 0:18:50.920 --> 0:18:53.240 I mean you will see it in full gear and 0:18:53.280 --> 0:18:57.040 the results tonight. Now they have announced it in next architecture, 0:18:57.080 --> 0:19:00.440 the Ruben architecture. So that's how far ahead there at least, 0:19:00.440 --> 0:19:03.240 you know, eighteen months ahead of everyone in terms off 0:19:03.720 --> 0:19:07.640 the efficiency and the compute capacity and power that they 0:19:07.640 --> 0:19:08.800 are able to show with their. 0:19:08.760 --> 0:19:11.800 Chair accrossination today, Mandy Singe, So then are on ground. 0:19:11.880 --> 0:19:16.880 I just can't say enough about Bloomberg intelligence ability on technology. 0:19:16.920 --> 0:19:18.879 We threaten they have both of them on together, but 0:19:18.880 --> 0:19:22.359 they can't be in the same room at the same time. Okay, Mandy, 0:19:22.480 --> 0:19:25.879 here's the real world on depreciation. I had a twenty 0:19:26.000 --> 0:19:30.919 nineteen Intel cheese grater, fancy fancy Mac computer, fancy people 0:19:31.000 --> 0:19:33.879 like me can buy. It is a depreciated value of 0:19:33.960 --> 0:19:37.600 under four hundred dollars. The fancy Nvidia chip in the 0:19:37.640 --> 0:19:40.919 bottom of my cheese grater is now holding up a 0:19:40.920 --> 0:19:44.520 martini at five PM. I mean, tell us about the 0:19:44.560 --> 0:19:49.320 depreciation and the technological pressure that mister Winning is under 0:19:49.920 --> 0:19:53.000 to get better, better, better, and everything else becomes a 0:19:53.040 --> 0:19:54.600 coffee table for a martini. 0:19:54.800 --> 0:19:58.040 Yes, and that's a great point about the long term. 0:19:58.080 --> 0:20:01.080 You know, multiple that this company can get despite its 0:20:01.119 --> 0:20:04.520 growth is because of that aspects. But right now, the 0:20:04.560 --> 0:20:08.680 real constraint is power. So everyone has a finite amount 0:20:08.760 --> 0:20:11.800 of power, and you want the best compute and that's 0:20:11.840 --> 0:20:15.720 why people are willing to upgrade to Invidia's latest architecture 0:20:16.000 --> 0:20:17.560 because they can't add more power. 0:20:18.119 --> 0:20:20.040 They want to use the chip that is. 0:20:20.040 --> 0:20:23.480 Best optimized for the power they have available, which is 0:20:23.480 --> 0:20:27.800 why Nvidia is releasing their new generations so quickly within 0:20:27.840 --> 0:20:28.200 a year. 0:20:28.760 --> 0:20:31.879 In some cases it's blackwell it is I don't know, 0:20:32.240 --> 0:20:33.760 I get. 0:20:33.600 --> 0:20:36.960 The rental pricing of the older versions of their chips. 0:20:37.520 --> 0:20:41.640 They are pricing rental, yes, I mean they're still off 0:20:41.640 --> 0:20:42.080 the charge. 0:20:42.200 --> 0:20:45.280 Everyone wants to get a hold of whatever the market 0:20:45.320 --> 0:20:48.000 has to offer in terms of the rental price. 0:20:48.000 --> 0:20:50.640 All right, so in the last three, four, five, six 0:20:50.680 --> 0:20:53.720 weeks we've had to sell off in software stocks. What 0:20:53.760 --> 0:20:57.760