1
00:00:00,120 --> 00:00:07,040
Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

2
00:00:10,080 --> 00:00:12,080
Speaker 2: This is the Blue Big Day, Bake you at podcast.

3
00:00:12,080 --> 00:00:14,640
Speaker 2: Good morning, It's Thursday, the twenty eighth of August. I'm

4
00:00:14,680 --> 00:00:16,560
Speaker 2: Caroline Hepca in London.

5
00:00:16,280 --> 00:00:18,200
Speaker 3: And I'm Stephen Carroll. Coming up today.

6
00:00:18,400 --> 00:00:21,520
Speaker 4: After a staggering two year AI boom, the world's most

7
00:00:21,640 --> 00:00:25,639
Speaker 4: valuable company, in Vidia forecasts a slowdown in growth.

8
00:00:25,880 --> 00:00:29,240
Speaker 2: Defense spending by NATO members is on track to hit

9
00:00:29,400 --> 00:00:32,280
Speaker 2: one and a half trillion dollars this year. Is the

10
00:00:32,320 --> 00:00:35,840
Speaker 2: Alliance confront growing geopolitical.

11
00:00:35,000 --> 00:00:39,160
Speaker 4: Risks, plus charging ahead. European car sales surge as motor

12
00:00:39,280 --> 00:00:42,919
Speaker 4: stop for more electric vehicles. Welcome news for an industry

13
00:00:42,960 --> 00:00:45,040
Speaker 4: that's been battered by US tariffs.

14
00:00:45,200 --> 00:00:47,360
Speaker 2: Let's start with a roundup of our top stories.

15
00:00:47,720 --> 00:00:51,040
Speaker 4: The AI boom made in Video the world's most valuable company,

16
00:00:51,080 --> 00:00:53,640
Speaker 4: but some investors are now worrying that boom could be

17
00:00:53,680 --> 00:00:56,560
Speaker 4: slowing down. In its latest results, in Video says it

18
00:00:56,600 --> 00:00:59,600
Speaker 4: expects sales to be roughly fifty four billion dollars in

19
00:00:59,640 --> 00:01:02,160
Speaker 4: the three to the end of October, so that was

20
00:01:02,160 --> 00:01:04,960
Speaker 4: in line with the average Wall Street estimate. Some analysts

21
00:01:05,000 --> 00:01:08,920
Speaker 4: had projected more than sixty billion dollars. The tepped outlook

22
00:01:08,920 --> 00:01:11,600
Speaker 4: ads to concern that the pace of investment in AI

23
00:01:11,680 --> 00:01:15,000
Speaker 4: systems is unsustainable. Mandeep Singh is the global head of

24
00:01:15,080 --> 00:01:17,640
Speaker 4: Technology sector Research at Bloomberg Intelligence.

25
00:01:18,200 --> 00:01:19,280
Speaker 3: I mean just a guy.

26
00:01:19,480 --> 00:01:24,440
Speaker 1: The three Q expectations were fifty four to fifty five billion,

27
00:01:24,720 --> 00:01:28,080
Speaker 1: and to my mind, this print is not something to

28
00:01:28,120 --> 00:01:29,320
Speaker 1: be excited about.

29
00:01:29,319 --> 00:01:32,000
Speaker 4: And markets seem to share man Deep Singh's view. Shares

30
00:01:32,120 --> 00:01:35,720
Speaker 4: in Nvidia slipped three point one percent in post market trading.

31
00:01:36,040 --> 00:01:40,000
Speaker 2: Now, if those losses hold when markets reopen, it would

32
00:01:40,160 --> 00:01:43,520
Speaker 2: wipe roughly one hundred and forty billion dollars of in

33
00:01:43,600 --> 00:01:47,640
Speaker 2: Nvidia's market capitalization. That is the equivalent of the entire

34
00:01:47,760 --> 00:01:51,720
Speaker 2: value of Pfizer, highlighting the company's outsized role in driving

35
00:01:51,880 --> 00:01:55,480
Speaker 2: stock gains this year. During a conference call with Analysis

36
00:01:55,520 --> 00:01:58,840
Speaker 2: Or Wednesday, the company's leadership, though rejected the notion that

37
00:01:59,000 --> 00:02:03,600
Speaker 2: interest in deploying AI infrastructure is flagging, and Vidia CEO

38
00:02:03,720 --> 00:02:07,160
Speaker 2: Jensen Wong suggested that the quote opportunity ahead is still

39
00:02:07,280 --> 00:02:10,560
Speaker 2: immense and that the company is still pushing to bring

40
00:02:10,600 --> 00:02:14,399
Speaker 2: their most advanced AI chips to the Chinese market.

41
00:02:14,720 --> 00:02:18,160
Speaker 5: So I think the opportunity for us to bring Blackwell

42
00:02:18,560 --> 00:02:22,440
Speaker 5: to the China market is a real possibility, and so

43
00:02:22,480 --> 00:02:27,639
Speaker 5: we just have to keep advocating the sensibility of and

44
00:02:27,680 --> 00:02:30,920
Speaker 5: the importance of American tech companies to be able to

45
00:02:31,320 --> 00:02:33,880
Speaker 5: lead and win the AI race.

46
00:02:34,760 --> 00:02:38,160
Speaker 2: And Vidia CEO Jensen Roe, speaking there as the company

47
00:02:38,160 --> 00:02:41,480
Speaker 2: also revealed that the Trump administration's plan to charge a

48
00:02:41,560 --> 00:02:46,000
Speaker 2: fifteen percent commission company for the company's AI chip sales

49
00:02:46,040 --> 00:02:49,840
Speaker 2: to China hasn't progressed beyond the early stages and could

50
00:02:49,919 --> 00:02:53,400
Speaker 2: pose legal risks. The company said that it excluded as

51
00:02:53,520 --> 00:02:56,919
Speaker 2: much as five billion dollars in possible China sales from

52
00:02:56,960 --> 00:03:00,480
Speaker 2: its projection because it can't be sure whether GPS political

53
00:03:00,560 --> 00:03:03,440
Speaker 2: tensions between the US and China will allow Nvidio to

54
00:03:03,480 --> 00:03:04,200
Speaker 2: fill orders.

55
00:03:04,760 --> 00:03:08,040
Speaker 4: Francis Prime Minister says he will negotiate directly with lawmakers

56
00:03:08,080 --> 00:03:10,280
Speaker 4: next week and an effort to win support for a

57
00:03:10,320 --> 00:03:13,960
Speaker 4: planned confidence votes on the eighth of September. Frant Barberiu

58
00:03:14,040 --> 00:03:16,560
Speaker 4: warned against another snap election, saying he doesn't think it

59
00:03:16,560 --> 00:03:19,160
Speaker 4: will provide any stability given the demands of the far

60
00:03:19,320 --> 00:03:22,720
Speaker 4: right and the far left. Speaking to French broadcaster TEA,

61
00:03:22,800 --> 00:03:26,720
Speaker 4: fan Beau called for cooperation to address what he described

62
00:03:26,720 --> 00:03:28,279
Speaker 4: as a crushing debt burden.

63
00:03:29,919 --> 00:03:33,800
Speaker 1: Lest sample. The question is simple. My conviction is that

64
00:03:33,919 --> 00:03:37,760
Speaker 1: it is impossible to continue to carry out the country's

65
00:03:37,800 --> 00:03:42,640
Speaker 1: recovery policy if there is not at minimum agreement on

66
00:03:42,720 --> 00:03:46,720
Speaker 1: the importance of this choice, because we cannot force our

67
00:03:46,760 --> 00:03:50,400
Speaker 1: way through, and besides, I don't want to force our

68
00:03:50,440 --> 00:03:50,920
Speaker 1: way through.

69
00:03:53,440 --> 00:03:56,160
Speaker 4: Francis Prime Minister from Saberiu, was speaking as investors are

70
00:03:56,200 --> 00:04:00,040
Speaker 4: already positioning for higher risks selling French assets following the

71
00:03:59,720 --> 00:04:03,720
Speaker 4: inn intment of the confidence vote on Monday. France's benchmark

72
00:04:03,800 --> 00:04:07,880
Speaker 4: bondyield premium over Germany reached eighty two basis points yesterday,

73
00:04:07,960 --> 00:04:09,680
Speaker 4: its highest since January.

74
00:04:10,640 --> 00:04:14,760
Speaker 2: Bloomberg understands that Mexico is set to raise tariffs on

75
00:04:14,880 --> 00:04:18,919
Speaker 2: imports from China after US pressure. The move aligns with

76
00:04:19,000 --> 00:04:22,440
Speaker 2: President Trump's pushed to shield North America from cheaper imports,

77
00:04:22,839 --> 00:04:26,120
Speaker 2: and approval is likely in Mexico given President at Claudia

78
00:04:26,160 --> 00:04:31,680
Speaker 2: Shinbaum's coalition majority also say that the hikes will target cars, textiles,

79
00:04:31,680 --> 00:04:34,840
Speaker 2: and plastics, among other products. Mexico has become the top

80
00:04:34,839 --> 00:04:39,440
Speaker 2: global destination for Chinese vehicles, overtaking Russia earlier this year.

81
00:04:40,320 --> 00:04:43,080
Speaker 4: Two children have been killed and seventeen other people hurt

82
00:04:43,080 --> 00:04:46,719
Speaker 4: in Minneapolis after a gunman opened fire through the windows

83
00:04:46,720 --> 00:04:50,520
Speaker 4: of a Catholic church holding a mass for elementary school pupils.

84
00:04:51,160 --> 00:04:54,840
Speaker 4: FBI Director Cash Pattel identified the suspect as twenty three

85
00:04:54,920 --> 00:04:57,599
Speaker 4: year old Robin Westman, who police say died at the

86
00:04:57,640 --> 00:05:01,440
Speaker 4: scene from a self inflicted gunshot. World and Minneapolis Police

87
00:05:01,480 --> 00:05:04,640
Speaker 4: Chief Brian O'Hara says it's an unthinkable tragedy.

88
00:05:05,720 --> 00:05:06,600
Speaker 3: This was a.

89
00:05:06,560 --> 00:05:12,560
Speaker 6: Deliberate act of violence against innocent children and other people worshiping.

90
00:05:13,680 --> 00:05:19,480
Speaker 6: The sheer cruelty and cowardice firing into a church full

91
00:05:19,480 --> 00:05:22,960
Speaker 6: of children is absolutely incomprehensible.

92
00:05:24,320 --> 00:05:26,880
Speaker 4: Ohara says police are still looking for a motive, but

93
00:05:27,000 --> 00:05:30,960
Speaker 4: the Trump appointed FBI chief Cash Hotail says the attack

94
00:05:31,480 --> 00:05:34,599
Speaker 4: is being investigated as an anti Catholic hate crime.

95
00:05:35,200 --> 00:05:37,840
Speaker 2: NATO says it's on track to spend more than one

96
00:05:37,880 --> 00:05:41,080
Speaker 2: and a half trillion dollars on defense this year. The

97
00:05:41,120 --> 00:05:45,160
Speaker 2: alliance faces an unprecedented range of challenges, including the ongoing

98
00:05:45,200 --> 00:05:49,480
Speaker 2: war in Ukraine and questions over America's role in European security.

99
00:05:49,680 --> 00:05:52,120
Speaker 2: Blomberg's freddie Fulston reports.

100
00:05:52,360 --> 00:05:55,839
Speaker 7: US President Donald Trump has been pushing for Europe to

101
00:05:55,960 --> 00:06:00,080
Speaker 7: invest more in its own defense, and the latest figures

102
00:06:00,240 --> 00:06:04,080
Speaker 7: show NATO has listened. All thirty two members of the

103
00:06:04,160 --> 00:06:07,320
Speaker 7: Alliance are on track to meet their old defense spending

104
00:06:07,360 --> 00:06:11,119
Speaker 7: target of two percent of GDP, and in a meeting

105
00:06:11,160 --> 00:06:13,560
Speaker 7: at the Hague in June, they agreed a new goal

106
00:06:13,640 --> 00:06:18,120
Speaker 7: of five percent of GDP by twenty thirty five. The

107
00:06:18,200 --> 00:06:22,080
Speaker 7: spending push is being led by Germany, whose annual defense

108
00:06:22,160 --> 00:06:25,040
Speaker 7: budget is expected to double to as much as one

109
00:06:25,160 --> 00:06:29,560
Speaker 7: hundred and eighty eight billion dollars within the next four years.

110
00:06:29,839 --> 00:06:31,880
Speaker 7: In London, I'm Freddie Folston.

111
00:06:32,200 --> 00:06:36,440
Speaker 4: Bloomberg Radio UK's Chancellor rter Reeves produced her upcoming budget

112
00:06:36,440 --> 00:06:38,960
Speaker 4: to build a larger fiscal buffer. That's the view of

113
00:06:38,960 --> 00:06:41,799
Speaker 4: Bloomberg Economics, which says the government should boost its fiscal

114
00:06:41,880 --> 00:06:45,760
Speaker 4: room for maneuver from ten billion pounds to twenty five billion.

115
00:06:45,880 --> 00:06:48,520
Speaker 3: Boombrook James Wilcock has more all yeh.

116
00:06:48,600 --> 00:06:51,640
Speaker 8: The Chancellor has faced questions about what tax is she's

117
00:06:51,720 --> 00:06:55,880
Speaker 8: going to raise. That's because both economists and journalists can

118
00:06:55,920 --> 00:07:00,360
Speaker 8: see changes to growth forecasts and spending plans that road

119
00:07:00,440 --> 00:07:04,080
Speaker 8: to ten billion pounds. The government sets aside in case emergencies,

120
00:07:04,600 --> 00:07:08,080
Speaker 8: so Bloomberg Economics are one of many bodies now suggesting

121
00:07:08,320 --> 00:07:11,760
Speaker 8: Rachel Reeve should set the bar higher, but doing so

122
00:07:12,160 --> 00:07:14,520
Speaker 8: would mean she has to find even more money to

123
00:07:14,640 --> 00:07:16,640
Speaker 8: fill the coffers in London.

124
00:07:16,800 --> 00:07:18,760
Speaker 3: James Willcock, Bloomberg Radio.

125
00:07:19,440 --> 00:07:21,720
Speaker 2: And those are our top stories for you this morning.

126
00:07:21,960 --> 00:07:24,440
Speaker 2: Looking at the markets this hour, so the all country

127
00:07:24,440 --> 00:07:29,320
Speaker 2: World index is higher, brushing off perhaps the slightly negative

128
00:07:29,320 --> 00:07:32,520
Speaker 2: outlook from in Video whose shares fell after market. In

129
00:07:32,680 --> 00:07:36,680
Speaker 2: US trading, Chinese chip shares have actually surged. You've got

130
00:07:36,680 --> 00:07:40,240
Speaker 2: the CSI three hundred index up overall by seven tenths

131
00:07:40,240 --> 00:07:41,600
Speaker 2: of one percent, and you had the S and p

132
00:07:41,640 --> 00:07:43,800
Speaker 2: f i' found a closed at a record high on Wednesday,

133
00:07:44,080 --> 00:07:46,400
Speaker 2: even if stop futures this morning are actually down about

134
00:07:46,400 --> 00:07:49,080
Speaker 2: a tenth of one percent. Eurosource Switeist features are higher,

135
00:07:49,400 --> 00:07:52,800
Speaker 2: and we do continue to follow the most important story

136
00:07:52,800 --> 00:07:56,320
Speaker 2: in bond markets, where you've seen significant moves in terms

137
00:07:56,360 --> 00:07:59,160
Speaker 2: of long dated bonds in the US, in France and

138
00:07:59,200 --> 00:08:02,720
Speaker 2: the UK, maybe for some slightly different reasons, but still

139
00:08:02,800 --> 00:08:06,640
Speaker 2: hugely significant thirty year US els this morning they were

140
00:08:06,640 --> 00:08:08,800
Speaker 2: actually easing off down by two basis points of four

141
00:08:08,800 --> 00:08:10,720
Speaker 2: point nine percent. Those are the markets in.

142
00:08:10,680 --> 00:08:13,520
Speaker 4: A moment we'll discuss in videos forecast which has failed

143
00:08:13,560 --> 00:08:17,000
Speaker 4: to impress investors, and why European car sales have jumped.

144
00:08:17,200 --> 00:08:19,680
Speaker 4: Another story that we've been reading this morning, Karl and

145
00:08:19,720 --> 00:08:22,240
Speaker 4: I didn't do my homework after yesterday's program and I

146
00:08:22,280 --> 00:08:24,680
Speaker 4: did not go home and watch K pop Demon Hunter.

147
00:08:24,880 --> 00:08:28,920
Speaker 2: Oh no, I wanted you to harm all the songs? Yeah, anyway,

148
00:08:29,040 --> 00:08:30,480
Speaker 2: are you thinking that I can be off book in

149
00:08:30,520 --> 00:08:30,880
Speaker 2: a day?

150
00:08:30,920 --> 00:08:31,160
Speaker 9: Though?

151
00:08:32,760 --> 00:08:38,040
Speaker 2: I love it? That is a deep musical records, doesn't it?

152
00:08:38,200 --> 00:08:41,120
Speaker 2: Love it? Netflix is big weekend box office hit, well

153
00:08:41,120 --> 00:08:43,480
Speaker 2: of course being Biggs. Jason Bailey's got a great story

154
00:08:43,480 --> 00:08:47,280
Speaker 2: out about this, wrapping the knuckles of Netflix's CEO Ted

155
00:08:47,320 --> 00:08:50,840
Speaker 2: Sarandos for leaving money on the table as he sees it,

156
00:08:50,880 --> 00:08:53,040
Speaker 2: because he says that Netflix seems to be trying to

157
00:08:53,040 --> 00:08:56,080
Speaker 2: cut off its nose to spite its face by refusing

158
00:08:56,120 --> 00:08:58,280
Speaker 2: to give fans what they seem to want, which is

159
00:08:58,280 --> 00:09:02,319
Speaker 2: actually to see movies in theater. Is in cinemas. This

160
00:09:02,360 --> 00:09:06,720
Speaker 2: is after the success of this animated movie that was

161
00:09:06,760 --> 00:09:10,120
Speaker 2: weeks and weeks available actually download on Netflix, and then

162
00:09:10,160 --> 00:09:13,360
Speaker 2: finally was so popular they put it into these sing

163
00:09:13,440 --> 00:09:17,520
Speaker 2: along in theater performances. But Jason sort of makes the

164
00:09:17,559 --> 00:09:21,200
Speaker 2: thread that that's actually a bigger issue that cinemas and

165
00:09:22,120 --> 00:09:24,720
Speaker 2: people still do want to go and sit together and watch.

166
00:09:25,040 --> 00:09:28,400
Speaker 4: The communal experience is now the premium part of this.

167
00:09:28,559 --> 00:09:30,760
Speaker 4: I mean, you know, think about the secret cinema trend

168
00:09:30,760 --> 00:09:33,120
Speaker 4: that's been so popular for many years, This idea of

169
00:09:33,160 --> 00:09:35,320
Speaker 4: actually it being an event that you want to go

170
00:09:35,360 --> 00:09:37,160
Speaker 4: and spend money on and want to go and attend.

171
00:09:37,600 --> 00:09:40,920
Speaker 4: That's part of how the consumer psyche has shifted away.

172
00:09:40,960 --> 00:09:43,080
Speaker 4: Perhaps at a post COVID thing as well, people are

173
00:09:43,080 --> 00:09:45,520
Speaker 4: happy to be out of the house and enjoying entertainment

174
00:09:46,120 --> 00:09:49,199
Speaker 4: in person as well. So this is a very interesting

175
00:09:49,280 --> 00:09:51,360
Speaker 4: argument from Jason Barry that really Netflix is missing a

176
00:09:51,400 --> 00:09:53,600
Speaker 4: trick here and they should be leaning into the fact

177
00:09:53,640 --> 00:09:56,520
Speaker 4: that they can draw audiences into a cinema as well

178
00:09:56,520 --> 00:09:59,200
Speaker 4: as into their subscriber services. It's not one or the other,

179
00:09:59,280 --> 00:10:01,480
Speaker 4: but you can actually do both. A great piece you'll

180
00:10:01,480 --> 00:10:03,880
Speaker 4: find at bloomberg dot Com Void Lash Opinion Our Los

181
00:10:03,960 --> 00:10:06,120
Speaker 4: a link to the article in our podcast show notes.

182
00:10:06,760 --> 00:10:09,600
Speaker 2: Now to our top story on Nvidia. Shares fell and

183
00:10:09,640 --> 00:10:13,000
Speaker 2: extended New York trading after the chipmaker gave a forecast

184
00:10:13,000 --> 00:10:15,200
Speaker 2: for the current quarter that wasn't as bullish as some

185
00:10:15,320 --> 00:10:18,280
Speaker 2: analysts had anticipated. Joining us out, it's been a big

186
00:10:18,280 --> 00:10:22,080
Speaker 2: intelligence is senior analyst Robert Lee. Robert, good morning. So

187
00:10:22,280 --> 00:10:24,640
Speaker 2: just tell us a bit about the results for the

188
00:10:24,720 --> 00:10:28,720
Speaker 2: second quarter and looking backwards in other words, and also

189
00:10:28,800 --> 00:10:33,120
Speaker 2: why the forecast going forwards has slightly disappointed investors.

190
00:10:33,760 --> 00:10:36,120
Speaker 10: Maybe just to take a very brief step back and

191
00:10:36,200 --> 00:10:39,000
Speaker 10: go back to textbooks, because I think what we saw

192
00:10:39,040 --> 00:10:41,720
Speaker 10: in terms of the stock price reaction was really it

193
00:10:41,800 --> 00:10:45,000
Speaker 10: was a classic setup going into the results, textbook stuff,

194
00:10:45,200 --> 00:10:48,560
Speaker 10: because there was a very high level of expectation, you know,

195
00:10:48,600 --> 00:10:51,520
Speaker 10: ahead of the results. We've seen this many times with Nvidia.

196
00:10:51,760 --> 00:10:54,040
Speaker 10: The stock was trading close to an all time hide,

197
00:10:54,080 --> 00:10:57,719
Speaker 10: evaluations pretty punchy, sort of a very high level of expectations,

198
00:10:57,760 --> 00:10:59,839
Speaker 10: and if you look at the results themselves, I think

199
00:11:00,040 --> 00:11:02,880
Speaker 10: were pretty solid. But what we didn't see was any

200
00:11:02,880 --> 00:11:06,960
Speaker 10: significant outperformance either in terms of the reported numbers or

201
00:11:06,960 --> 00:11:09,920
Speaker 10: more importantly, the guidance. And so as a consequence, it's

202
00:11:10,000 --> 00:11:14,320
Speaker 10: unsurprising really that you're going to get profit taking, But

203
00:11:14,400 --> 00:11:17,400
Speaker 10: in terms of the fundamentals, I think the outlook for

204
00:11:17,440 --> 00:11:20,360
Speaker 10: the company remains pretty solid. I mean, in Crewe terms,

205
00:11:20,400 --> 00:11:23,400
Speaker 10: the only only game in town still from a Western perspective.

206
00:11:23,920 --> 00:11:26,880
Speaker 10: But as you appreciate, there are some question marks. One

207
00:11:26,920 --> 00:11:29,719
Speaker 10: of them is on the level of returns that are

208
00:11:29,720 --> 00:11:33,320
Speaker 10: being generated within the AI industry in general.

209
00:11:33,559 --> 00:11:35,400
Speaker 3: And if you remember, I think it.

210
00:11:35,400 --> 00:11:39,080
Speaker 10: Was a week ago, there was a very important report

211
00:11:39,120 --> 00:11:42,120
Speaker 10: that came out of MIT in America based on a

212
00:11:42,200 --> 00:11:47,040
Speaker 10: survey of various corporations that were employing AI internally. I

213
00:11:47,080 --> 00:11:49,440
Speaker 10: think it was only around five percent of those were

214
00:11:49,440 --> 00:11:53,520
Speaker 10: making a meaningful return. In other words, ninety five percent

215
00:11:53,600 --> 00:11:55,480
Speaker 10: were making next to no return.

216
00:11:55,240 --> 00:11:56,360
Speaker 3: Or were still loss making.

217
00:11:56,600 --> 00:12:02,400
Speaker 10: So that raises big fundamental questions about the monetization outlook

218
00:12:02,480 --> 00:12:05,280
Speaker 10: within the users of AI, in other words, the software

219
00:12:05,320 --> 00:12:10,040
Speaker 10: companies that are utilizing these models to help develop new apps.

220
00:12:10,360 --> 00:12:13,680
Speaker 10: And then the other issue is obviously the ongoing saga

221
00:12:13,720 --> 00:12:16,280
Speaker 10: with the H twenty, and I think the most interesting

222
00:12:16,400 --> 00:12:19,720
Speaker 10: new development on that front is that it appears now

223
00:12:19,840 --> 00:12:23,319
Speaker 10: that debate is moving on. Jensen Wang and the CFO

224
00:12:23,559 --> 00:12:26,840
Speaker 10: both mentioned the fact that they are effectively lobbying the

225
00:12:26,960 --> 00:12:31,199
Speaker 10: US administration to try and persuade them to allow in

226
00:12:31,360 --> 00:12:34,959
Speaker 10: Video to sell the high performance Blackwell chip.

227
00:12:35,320 --> 00:12:36,480
Speaker 3: So not the Age twenty.

228
00:12:36,880 --> 00:12:40,160
Speaker 10: This is a far more powerful chip, but trying to

229
00:12:40,200 --> 00:12:43,800
Speaker 10: get some permission to sell that into China, I think,

230
00:12:43,840 --> 00:12:46,160
Speaker 10: you know, Age twenty is probably dead in the water

231
00:12:46,240 --> 00:12:47,959
Speaker 10: at the moment from a Chinese perspective.

232
00:12:49,320 --> 00:12:52,320
Speaker 4: That's a really interesting point that was made during those

233
00:12:52,360 --> 00:12:58,000
Speaker 4: comments as well. I mean, how should we understand this

234
00:12:58,600 --> 00:13:02,120
Speaker 4: forecast in the count of the boom that Nvidia has

235
00:13:02,160 --> 00:13:06,400
Speaker 4: seen over the past two years. You know, sure, it's

236
00:13:06,400 --> 00:13:10,360
Speaker 4: slightly more tepid than some analysts had expected, but I

237
00:13:10,400 --> 00:13:12,720
Speaker 4: mean in the grander context of things, this is a

238
00:13:12,760 --> 00:13:15,800
Speaker 4: company that has massively benefited from investment in AI.

239
00:13:16,360 --> 00:13:19,480
Speaker 10: Yeah, I think near terms, again, there were numbers themselves.

240
00:13:19,480 --> 00:13:23,839
Speaker 10: I mean, technically the guidance was marginally above what was expected.

241
00:13:24,040 --> 00:13:27,440
Speaker 10: But again, cast your mind back in certainly sort of

242
00:13:27,440 --> 00:13:30,000
Speaker 10: eighteen months or so ago. This company, you know, as

243
00:13:30,040 --> 00:13:32,600
Speaker 10: our Americans colleagues would refer to, they were beaten race.

244
00:13:32,720 --> 00:13:36,599
Speaker 10: They were substantially beaten numbers and then raising guidance significantly.

245
00:13:36,640 --> 00:13:37,720
Speaker 3: So we've not seen that.

246
00:13:37,960 --> 00:13:41,440
Speaker 10: So again, the rate of incremental beaten rays the cadence

247
00:13:41,520 --> 00:13:45,920
Speaker 10: of that. The momentum behind that has eased significantly. Part

248
00:13:45,960 --> 00:13:48,000
Speaker 10: of that's a base effect because the company is obviously

249
00:13:48,080 --> 00:13:51,000
Speaker 10: significantly bigger than it was. I don't think it has

250
00:13:51,080 --> 00:13:55,559
Speaker 10: any near term fundamental consequence, but you know, that explains

251
00:13:55,559 --> 00:13:58,720
Speaker 10: the Cheff price reaction. And again you know, in terms

252
00:13:58,760 --> 00:14:02,240
Speaker 10: of supply from a way perspective, they've got the market

253
00:14:02,280 --> 00:14:02,840
Speaker 10: to themselves.

254
00:14:02,840 --> 00:14:04,560
Speaker 3: They've got an order book to die for.

255
00:14:04,920 --> 00:14:08,360
Speaker 10: But the end of the day, if the users of

256
00:14:08,400 --> 00:14:12,360
Speaker 10: these chips, if the company's purchasing these chips, are not

257
00:14:12,440 --> 00:14:15,320
Speaker 10: monetizing fast enough, or they don't have the prospect to

258
00:14:15,440 --> 00:14:19,320
Speaker 10: generate a meaningful return and investment from the very very

259
00:14:19,400 --> 00:14:22,040
Speaker 10: high levels of investment they're spending at the moment, then

260
00:14:22,040 --> 00:14:25,960
Speaker 10: that raises a fundamental question about the whole whole AI

261
00:14:26,400 --> 00:14:28,840
Speaker 10: cycle that we're seeing at the moment, because clearly AI

262
00:14:29,160 --> 00:14:32,200
Speaker 10: is a great productivity tool, but again it comes at

263
00:14:32,200 --> 00:14:36,560
Speaker 10: a huge cost. Again, Microsoft from Memory is going to

264
00:14:36,560 --> 00:14:40,560
Speaker 10: spend around eighty five billion in CAPEX this year, but

265
00:14:40,640 --> 00:14:43,560
Speaker 10: the level of monetization that even the leading player like

266
00:14:43,680 --> 00:14:46,920
Speaker 10: Microsoft seeing at the moment is significantly lower than that.

267
00:14:47,200 --> 00:14:50,960
Speaker 10: And whilst the rate of monetization is increasing, I would argue,

268
00:14:51,040 --> 00:14:55,200
Speaker 10: or continue to argue, that the ramping monetization is nowhere

269
00:14:55,600 --> 00:15:00,480
Speaker 10: fast enough to justify such humongous levels of kapex being spent.

270
00:15:01,000 --> 00:15:04,320
Speaker 10: So some might argue, as I've said, there are parallels

271
00:15:04,400 --> 00:15:08,240
Speaker 10: with the dot com boom and the capex bubble that

272
00:15:08,280 --> 00:15:09,200
Speaker 10: we saw at that point.

273
00:15:10,080 --> 00:15:13,160
Speaker 2: Yeah. Absolutely, let's see what people can actually deliver it

274
00:15:13,200 --> 00:15:17,880
Speaker 2: from all of their AI technology spend. Look, just very briefly,

275
00:15:17,920 --> 00:15:20,920
Speaker 2: in terms of the complexity of the sales to China,

276
00:15:21,360 --> 00:15:25,200
Speaker 2: the JOm administration wants to charge fifteen percent commission on

277
00:15:25,360 --> 00:15:28,240
Speaker 2: Nvidia's AI chip sales to China, which is a really

278
00:15:28,640 --> 00:15:32,960
Speaker 2: unusual plan. The CFO did also talk about that. Just

279
00:15:33,080 --> 00:15:35,960
Speaker 2: explain what he said. I mean essentially that it's there

280
00:15:36,000 --> 00:15:38,800
Speaker 2: needs to be a legal process for that to be possible. Right,

281
00:15:40,200 --> 00:15:41,040
Speaker 2: how do you see that?

282
00:15:42,200 --> 00:15:45,960
Speaker 10: Yeah, on the I guess it's yeah, there are legal

283
00:15:46,400 --> 00:15:50,320
Speaker 10: complexities there. But I think no sort of discussion is

284
00:15:50,360 --> 00:15:53,480
Speaker 10: academic to some extent because at the end of the day,

285
00:15:53,560 --> 00:15:57,920
Speaker 10: if your potential and customer Chinese AI companies, which you know,

286
00:15:58,000 --> 00:16:01,320
Speaker 10: based on recent Bloomberg report though it appears that the

287
00:16:01,360 --> 00:16:06,720
Speaker 10: government is encouraging strongly encouraging Chinese AI companies to buy locally,

288
00:16:07,240 --> 00:16:09,920
Speaker 10: then you know effectively that there may well be no

289
00:16:10,040 --> 00:16:14,200
Speaker 10: market there. And also as a major geopolitical rival and

290
00:16:14,320 --> 00:16:18,360
Speaker 10: economic rival to the US. Again, why is China going

291
00:16:18,400 --> 00:16:21,320
Speaker 10: to buy US products? You know in the full knowledge

292
00:16:21,360 --> 00:16:24,240
Speaker 10: that fifteen percent of that is going to their main rival.

293
00:16:24,400 --> 00:16:27,120
Speaker 10: So I think the direction of travel from a Chinese

294
00:16:27,120 --> 00:16:30,000
Speaker 10: perspective is to double down on its efforts to become

295
00:16:30,240 --> 00:16:33,760
Speaker 10: self sufficient in tech. Those efforts are accelerating and the

296
00:16:33,800 --> 00:16:37,400
Speaker 10: country's making good progress. You've got the likes of Cambracon,

297
00:16:37,880 --> 00:16:40,160
Speaker 10: which is an a share listed Chinese company. If you

298
00:16:40,160 --> 00:16:44,200
Speaker 10: look at a stop price that's gone ballistic, is you

299
00:16:44,240 --> 00:16:48,320
Speaker 10: know recently the local suppliers are clearly benefiting from this.

300
00:16:48,480 --> 00:16:51,400
Speaker 10: Huawei as well, And I think on balance, you know,

301
00:16:51,440 --> 00:16:54,760
Speaker 10: the local AI companies like Alibaba, Tencent by do have

302
00:16:54,840 --> 00:16:58,200
Speaker 10: sufficient supply of chips on hand and are benefiting from

303
00:16:58,240 --> 00:17:01,720
Speaker 10: an increasing supply of domestic chips from the likes of

304
00:17:02,040 --> 00:17:05,040
Speaker 10: as I said, Huawei, cambricn SO net Net. With all

305
00:17:05,040 --> 00:17:10,240
Speaker 10: these geopolitical complications, on balance, I think it's highly unlikely

306
00:17:10,720 --> 00:17:14,639
Speaker 10: that Nvidia is likely to be selling meaningful level of

307
00:17:14,800 --> 00:17:17,399
Speaker 10: H twenty chips, or in fact probably none at all

308
00:17:17,760 --> 00:17:19,840
Speaker 10: from where we see it at the moment, with a

309
00:17:19,880 --> 00:17:23,560
Speaker 10: big question mark about their ability to sell Blackqell. So

310
00:17:24,119 --> 00:17:26,280
Speaker 10: you know it would be nice, but again it's all

311
00:17:26,320 --> 00:17:30,000
Speaker 10: tied up with a lot of geopolitical noise and complexity

312
00:17:30,119 --> 00:17:30,679
Speaker 10: at the moment.

313
00:17:31,520 --> 00:17:34,480
Speaker 4: Okay, Robert Lee, Bloomberg Intelligence Senior analyst, thank you very

314
00:17:34,560 --> 00:17:36,440
Speaker 4: much for joining us.

315
00:17:37,240 --> 00:17:38,000
Speaker 3: Stay with us.

316
00:17:38,000 --> 00:17:40,920
Speaker 4: More from Bloomberg Daybreak Europe coming up after this.

317
00:17:42,800 --> 00:17:45,919
Speaker 2: European car sales rose the most in fifteen months in July,

318
00:17:46,119 --> 00:17:48,320
Speaker 2: in a boost to the industry which has been battered

319
00:17:48,359 --> 00:17:51,200
Speaker 2: by President Trum's auto tariffs. Joining us this morning is

320
00:17:51,200 --> 00:17:54,520
Speaker 2: Bloomberg's transport or, reported Danny Lee. Danny, good to have

321
00:17:54,600 --> 00:17:56,480
Speaker 2: you on the program. So a big jump in sales.

322
00:17:56,520 --> 00:17:59,800
Speaker 2: What are Europeans buying then, by all.

323
00:17:59,680 --> 00:18:02,679
Speaker 9: The being consumer concerns about spending in the past, the

324
00:18:02,720 --> 00:18:05,560
Speaker 9: money is flowing into new cars again and particularly into

325
00:18:05,600 --> 00:18:08,840
Speaker 9: the plug in hybrids and the fully electric models. Noticeably

326
00:18:09,200 --> 00:18:12,959
Speaker 9: saw German consumers continue to pile into these fully electric

327
00:18:13,080 --> 00:18:15,920
Speaker 9: vehicles in the various hybrids, so they led the way

328
00:18:16,080 --> 00:18:18,560
Speaker 9: in that front in terms of unis sales. At the

329
00:18:18,560 --> 00:18:22,160
Speaker 9: same time, continue to see petrol and DZE sales are full.

330
00:18:22,560 --> 00:18:23,440
Speaker 3: But when you just look at.

331
00:18:23,320 --> 00:18:27,040
Speaker 9: The cart brands as we set up this July sales number.

332
00:18:27,240 --> 00:18:30,560
Speaker 9: Biggest beneficiaries continue to be the VW Group, Renault and

333
00:18:30,680 --> 00:18:35,520
Speaker 9: BMW or seeing strong jumping sales high high single digital

334
00:18:35,640 --> 00:18:38,280
Speaker 9: or low double digits. So it's a really encouraging picture

335
00:18:38,359 --> 00:18:42,560
Speaker 9: given the strugs we've seen over recent months, particularly you know,

336
00:18:42,680 --> 00:18:45,560
Speaker 9: the kind of months we've seen over this year. It's

337
00:18:45,680 --> 00:18:48,720
Speaker 9: been a whip saw as we've seen new car registrations

338
00:18:48,720 --> 00:18:52,200
Speaker 9: in July up five point nine percent, whilst previous month

339
00:18:52,240 --> 00:18:54,720
Speaker 9: in July and June was down five point one percent,

340
00:18:54,800 --> 00:18:57,800
Speaker 9: So it has been quite a ratic over the recent months,

341
00:18:57,840 --> 00:19:01,200
Speaker 9: but at least there has been a real or flow

342
00:19:01,240 --> 00:19:03,160
Speaker 9: on in terms of car spending.

343
00:19:03,520 --> 00:19:07,359
Speaker 4: How much is are subsidies playing into this bump in

344
00:19:07,359 --> 00:19:09,000
Speaker 4: in electric vehicle sales?

345
00:19:09,560 --> 00:19:13,159
Speaker 9: Well, Ultimately, carbons are continued to position towards EV's and

346
00:19:13,520 --> 00:19:16,240
Speaker 9: you know, especially as these the threat of a ban

347
00:19:16,359 --> 00:19:19,199
Speaker 9: on combustion engines still looms into the next decade, so

348
00:19:19,600 --> 00:19:22,200
Speaker 9: you do see the European countries continue to think about

349
00:19:22,480 --> 00:19:26,639
Speaker 9: reviving subsidies and to try and jump stop the EV demand.

350
00:19:26,640 --> 00:19:29,359
Speaker 9: And we've definitely seen the benefits for the likes of

351
00:19:29,480 --> 00:19:32,240
Speaker 9: UK reintroducing grants for as much as three thousands some

352
00:19:32,640 --> 00:19:36,000
Speaker 9: three thousand, seven hundred and fifty pounds to stimulate EV purchases.

353
00:19:36,359 --> 00:19:38,760
Speaker 9: So they have seen in July a nice bump up

354
00:19:38,760 --> 00:19:42,760
Speaker 9: in sales and it is a kind of balancing out

355
00:19:42,800 --> 00:19:46,360
Speaker 9: for some countries who are still seeing a strain on budgets, frankly,

356
00:19:46,560 --> 00:19:50,840
Speaker 9: particularly the legs of France. So yeah, it's that subsidies

357
00:19:51,119 --> 00:19:53,320
Speaker 9: which are helping drive up sales for sure.

358
00:19:53,560 --> 00:19:56,959
Speaker 2: Okay, well, how fragile there are European car manufacturers. I mean,

359
00:19:57,000 --> 00:19:59,399
Speaker 2: surely they'll they'll take this as good news. But the

360
00:19:59,520 --> 00:20:02,000
Speaker 2: upheave all of US tariffs has been enormous.

361
00:20:02,440 --> 00:20:02,680
Speaker 3: Yeah.

362
00:20:02,880 --> 00:20:05,720
Speaker 9: No, the Europe's co makers are really facing a delicate

363
00:20:05,760 --> 00:20:09,360
Speaker 9: balancing actor of the tariffs, and especially when you think

364
00:20:09,400 --> 00:20:12,160
Speaker 9: about their sales in a major market like the US

365
00:20:12,200 --> 00:20:15,600
Speaker 9: where they continue to still import from Europe and also

366
00:20:15,680 --> 00:20:19,600
Speaker 9: produce in America. It's the delicate balancing act. And you know,

367
00:20:20,320 --> 00:20:23,400
Speaker 9: as a reminder, you know, Europe's auto majors had downgraded

368
00:20:23,800 --> 00:20:26,680
Speaker 9: downgraded their four year earnings outlook not too long ago

369
00:20:27,040 --> 00:20:29,320
Speaker 9: because of the back of the higher tariffs. But the

370
00:20:29,359 --> 00:20:33,719
Speaker 9: Block is trying to lower tariffs on import for Russels,

371
00:20:33,840 --> 00:20:36,800
Speaker 9: is seeking to fast take legislation to remove all tariffs

372
00:20:36,840 --> 00:20:39,359
Speaker 9: on US and dust orgods and maybe that could help

373
00:20:39,760 --> 00:20:42,560
Speaker 9: EU car duties, which for now have a twenty seven

374
00:20:43,400 --> 00:20:44,080
Speaker 9: tariff level.

375
00:20:45,800 --> 00:20:48,560
Speaker 4: This is Bloomberg Daybreak Europe, your morning brief on the

376
00:20:48,600 --> 00:20:51,680
Speaker 4: stories making news from London to Wall Streets and beyond.

377
00:20:51,960 --> 00:20:55,920
Speaker 2: Look for us on your podcast feed every morning, on Apple, Spotify,

378
00:20:56,040 --> 00:20:57,960
Speaker 2: and anywhere else you get your podcasts.

379
00:20:58,000 --> 00:21:00,119
Speaker 4: You can also listen live each morning on London and

380
00:21:00,200 --> 00:21:03,800
Speaker 4: Dab Radio, the Bloomberg Business app, and Bloomberg dot Com.

381
00:21:03,800 --> 00:21:06,600
Speaker 2: Our flagship New York station, is also available on your

382
00:21:06,600 --> 00:21:11,320
Speaker 2: Amazon Alexa devices. Just say Alexa play Bloomberg eleven thirty.

383
00:21:11,560 --> 00:21:12,880
Speaker 2: I'm Caroline Hepka and.

384
00:21:12,800 --> 00:21:15,480
Speaker 4: I'm Stephen Carol. Join us again tomorrow morning for all

385
00:21:15,480 --> 00:21:17,920
Speaker 4: the news you need to start your day right here

386
00:21:17,960 --> 00:21:23,480
Speaker 4: on Bloomberg Daybreak Europe