Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2: Welcome to the Daybreak Asia podcast. I'm Doug Krisner. We
Speaker 2: begin with the results from the world's most valuable publicly
Speaker 2: traded company after the bell in. Vidio posted third quarter
Speaker 2: numbers above estimates, and the company gave a strong forecast
Speaker 2: for revenue in the current period. Sales are expected to
Speaker 2: be about sixty five billion dollars and gross margins are
Speaker 2: expected to reach the mid seventy percent range. So this
Speaker 2: outlook signals demand does remain strong for Invidia's artificial intelligence accelerators.
Speaker 2: We took a deeper dive into the Nvidia story with
Speaker 2: CEO Jensen Wong. He spoke with Bloomberg's Ed Ludlow.
Speaker 3: Jensen, It's been an astonishingly busy day for you in Washington, DC,
Speaker 3: so I'm grateful for your time. You're sold out of Blackwell,
Speaker 3: that's what you said, and also that five hundred billion
Speaker 3: dollar forecast, which is Blackwell Rubin has room to grow.
Speaker 3: How do those fit together?
Speaker 4: I said, Sales are off the charts for Blackwell and
Speaker 4: Nvidia GPUs in the cloud are sold out. We got
Speaker 4: plenty of Blackwells to sell you. We have lots of
Speaker 4: Blackwells coming. We're making a lot of Blackwells, and we
Speaker 4: have a bunch of Vera Rubens coming, and so business
Speaker 4: is very very strong. But we've planned our supply chain
Speaker 4: incredibly well. We have the largest supply chain in the world.
Speaker 4: Our partners TSMC, our memory partners, sk Heinex, Micron, Samsung
Speaker 4: are doing a fantastic job supporting us. And all of
Speaker 4: our systems partners, fox Con and Quantum and Wistron are
Speaker 4: packaging partners. Everybody's doing a fantastic job supporting us. And
Speaker 4: we've done a good job planning for a very very
Speaker 4: strong year, and we've done a good job planning for
Speaker 4: Vera Rubin. So sales are off the charts and video
Speaker 4: GPUs and the cloud is sold out, but we've got
Speaker 4: a bunch of Blackwells to sell.
Speaker 3: Jensen, what's the road ahead for Vera Rubin. It's one
Speaker 3: of the most common questions we get for you of
Speaker 3: how that ramp will go relative to what we saw
Speaker 3: with the Blackwell generations.
Speaker 4: Well, the silicon for Vera Rubin, seven different chips are
Speaker 4: back in our labs and the bring up is happening
Speaker 4: across engineering teams. Probably a couple of twenty thousand people
Speaker 4: are working on bringing up Vera Rubin from silicon to systems,
Speaker 4: the software to algorithms. People are working around the clock
Speaker 4: and this bring up is going beautifully. We're on track
Speaker 4: to deliver Vera Rubin about Q three timeframe of next year,
Speaker 4: continuing our once a year cycle. Vera Ruben is already
Speaker 4: assured a huge success. Everybody's incredibly excited about it. Can't
Speaker 4: wait to show everybody. And then one last thing is
Speaker 4: that the rack architecture, the rack scale architecture is completely revolutionary.
Speaker 4: It includes a scale up switch called the mvy Link
Speaker 4: envy Link seventy two. Our fifth generation is the only
Speaker 4: one of its kind in the world. This rack architecture,
Speaker 4: which is incredibly complex, started with Grace Blackwell, then Grace
Speaker 4: Blackwell Ultra. It is transitioned to Grace Blackwell Ultra is
Speaker 4: incredibly seamless. The same rack scale architecture is going to
Speaker 4: be used for Vera Rubin, and so the supply chain
Speaker 4: is all used to it. This complexity that we enjoyed
Speaker 4: with Grace Blackwell transition, we're now incredibly smooth running and
Speaker 4: so I think Vera Ruben is going to be just
Speaker 4: really smooth and we're gonna rap it really hard.
Speaker 3: Jensen I tried to go through what the CFO COLLECT
Speaker 3: CRES said about China. In the quarter gone it seemed
Speaker 3: like there was not meaning for H twenty sales because
Speaker 3: the demand wasn't there even if you were permitted to
Speaker 3: sell H twenty. And then in the current period and
Speaker 3: going forward in video, seems committed to working with both
Speaker 3: the United States and China to sell what COLLECT called
Speaker 3: more competitive compute. Where do we stand with that and
Speaker 3: could you just clarify what COLLECT was talking about in
Speaker 3: the current state of play for China.
Speaker 4: The most important thing she said is that we've said
Speaker 4: for some time now our forecast for China is zero.
Speaker 4: All of our forecasts guidance that we showed zero, we
Speaker 4: should start. That's the most important thing that she said.
Speaker 4: She also said that effectively, China's a very important market
Speaker 4: to us. It's very important to the United States, it's
Speaker 4: very important to China. We would love the opportunity to
Speaker 4: be able to re engage the Chinese market with excellent
Speaker 4: products that we deliver and to be able to compete globally.
Speaker 4: The Chinese market is very large. This year, my guess
Speaker 4: is probably about fifty billion dollars. It's great for the
Speaker 4: American people that we're able to compete in the Chinese market.
Speaker 4: It's great for the China market that we're able to
Speaker 4: provide and video's technology to them. It's great for the
Speaker 4: rest of the world as Chinese software companies and Chinese
Speaker 4: open source models leave China and are used all over
Speaker 4: the world. And so I think it's fantastic that we're able.
Speaker 4: It would be fantastic if we're able to participate in
Speaker 4: the China market. But for now, we should just assume
Speaker 4: the videos forecast for China market is zero. We're going
Speaker 4: to continue to engage the US government, continue to engage
Speaker 4: the China government to advise them and to encourage them
Speaker 4: to allow us to go back and compete in the
Speaker 4: open market. And so until then we should assume zero Jensen.
Speaker 3: During the call, the US Commerce Department issued a statement
Speaker 3: saying that you are now permitted to export up to
Speaker 3: thirty five thousand Blackwell chips each to both saudiast Humane
Speaker 3: and to the UAE through G forty two. But there
Speaker 3: are some requirements that the US has a view, in
Speaker 3: particular around controls of preventing tech transfer to China through
Speaker 3: the Middle East. What can you tell us about your
Speaker 3: understanding of what the US government's asking of you there
Speaker 3: that that.
Speaker 4: Element has been around for a long time is to
Speaker 4: prevent diversion. Of course, over the years, people have speculated
Speaker 4: about diversion. We've chased down every single concern, and we've
Speaker 4: repeatedly tested and sampled data centers around the world and
Speaker 4: found no diversion. And so this is an area that
Speaker 4: will continue to be rigorous on. And there's a lot
Speaker 4: of different ways to comply, and one of them, of course,
Speaker 4: is to have it be run by American cloud. Another
Speaker 4: way is just to make sure that we have measures
Speaker 4: put in place, whether technology or processes, to ensure that
Speaker 4: no diversion happens.
Speaker 3: Jensen, The number one question I get for you is
Speaker 3: always about energy. How severe is the energy shortage in
Speaker 3: the context of AI expansion, and would you talk a
Speaker 3: bit about power and whether power is a bigger constraint
Speaker 3: for this buildout than the chips themselves.
Speaker 4: When you're growing at the rate and scale of Nvidia,
Speaker 4: Remember we're growing some sixty percent a year just quarter
Speaker 4: to quarter growth of our company as ten billion dollars.
Speaker 4: We grew an entire size of a company just from
Speaker 4: in one quarter, and so the scale and the rate
Speaker 4: at which we're growing everything's a challenge, which is the
Speaker 4: reason why Nvidia has to be world class at our
Speaker 4: supply chain, working with incredible providers and suppliers like TSMC
Speaker 4: and the memory partners and all of our systems partners,
Speaker 4: but also working downstream to work with energy providers, power
Speaker 4: generator companies, all of the land power and shell providers,
Speaker 4: so that we could make sure that as we launch
Speaker 4: into the marketplace, as we deploy into the marketplace, land
Speaker 4: power and shell will be ready for us. One of
Speaker 4: our great advantages is that we have such a large
Speaker 4: network of go to market. We're in every single cloud.
Speaker 4: Every single cloud service provider is a customer of ours.
Speaker 4: We're in every single GPU cloud, and so we have
Speaker 4: a large network, not to mention OEMs, not to mention,
Speaker 4: all around the world. Our customer base, our network of
Speaker 4: partners is so large that we will find nooks and
Speaker 4: crannies of power and large scale, medium scale, small scale
Speaker 4: in different parts of the world. And so this is
Speaker 4: a huge advantage of ours, and it stems from the
Speaker 4: fact ed that Nvidia's architecture literally runs every model and today,
Speaker 4: yesterday we announced a big news with Nentropic and so
Speaker 4: now the premiere frontier models, open Ai, Anthropic, Xai, Gemini,
Speaker 4: all the open sources, biological models, physical ai models, everything
Speaker 4: in the world runs on Nvidia. And as a result
Speaker 4: of that, irrespective of which cloud provider you are, it
Speaker 4: is fantastic that we can deploy in your cloud because
Speaker 4: the off take will be incredible.
Speaker 3: Jensen, we can see where the hyperscale is are getting
Speaker 3: the money, where they have the money to deploy and build.
Speaker 3: But you mentioned Anthropic. With Anthropic or indeed open Ai,
Speaker 3: they have tens of billions of dollars of commitments around
Speaker 3: the world. Very simple like, how do you know the
Speaker 3: open ai is good for it that it will be
Speaker 3: able to find the money.
Speaker 4: Well, we're thoughtful along with open Ai, thoughtful in aligning
Speaker 4: on and taking into consideration visibility of demand and their
Speaker 4: financing capabilities. All of that has to be in accordance,
Speaker 4: has to be aligned, has to be coherent before we
Speaker 4: start to build out. And so I think the ambitions large,
Speaker 4: but the execution is disciplined, and that's really really important
Speaker 4: to recognize we're very disciplined with our investment, We're disciplined
Speaker 4: with our buildout. These are very large scale investments, and
Speaker 4: so the two teams are quite disciplined, very disciplined in
Speaker 4: thinking through the investment levels. Now, it's also important to
Speaker 4: take a step back and realize that open AI anthropic.
Speaker 4: These are the fastest growing company in the history of humanity.
Speaker 4: Their off take, their end market demand is absolutely real
Speaker 4: and absolutely incredible, and you could see that they're really
Speaker 4: struggling to keep up with the demand that they have.
Speaker 4: The engineering teams we work incredibly hard to make sure
Speaker 4: that we bring them on more capacity, but also optimizing
Speaker 4: their stack so that the usage of whatever capacity is
Speaker 4: as efficient as possible. And meanwhile, there's so many new
Speaker 4: use cases that they want to put back put out
Speaker 4: into the world, and its currently limited by the capacity
Speaker 4: they have, and so this is a really important time.
Speaker 4: You're seeing an exponential growth in the amount of compute
Speaker 4: demand necessary for AI, You're seeing an exponential growth of
Speaker 4: adoption and use of AI, and the number of applications
Speaker 4: that are going to be using these AI is also growing,
Speaker 4: and so we've got to do our best to support
Speaker 4: the scaling out of two of the most consequential companies
Speaker 4: in history, and we're delied to be partnered with them.
Speaker 3: Jensen investors have been worrying about depreciation. Software can actually
Speaker 3: extend life like there are a one hundreds out there
Speaker 3: in the real world still at full utilization. Are people
Speaker 3: underestimating how long your chips stay useful or are they
Speaker 3: kind of misunderstanding in the context of depreciation, how you're
Speaker 3: handling generation to generation updates of GPU.
Speaker 4: And Vidious architect and vidiot is unlike any other accelerator,
Speaker 4: and the reason for that is because of Kuda's diversity
Speaker 4: of capability and versatility. Remember I said two things earlier.
Speaker 4: I said the fact that Nvidia participates and could accelerate
Speaker 4: every phase of AI, pre training, post training, and inference.
Speaker 4: We're the only architecture in the world that does that fantastically.
Speaker 4: The second thing we do we run every single model,
Speaker 4: and so most agentic systems, most clouds are running so
Speaker 4: many different diverse type of models language models, vision models,
Speaker 4: biological models, chemical models, for all the different fields of science.
Speaker 4: Nvidia could be used across the entire lifespan of the technology.
Speaker 4: And so if you look at products that we shipped
Speaker 4: amper A one hundred we shipped six years ago. But
Speaker 4: because we're continuing, our installed bas is so large, our
Speaker 4: diversity is so great, we could continuously update our software
Speaker 4: bring value to our customers on the one hand, but
Speaker 4: because our versatility is so great based on the capability
Speaker 4: they need, they could use our GPUs for a very
Speaker 4: very long time. Now, remember A one hundred and six
Speaker 4: years old. However, it is still an order of a
Speaker 4: magnitude faster than any CPU could put the bear, so
Speaker 4: it is still the best computer. It is still the
Speaker 4: best processor for much of the workload in the cloud,
Speaker 4: and most people misunderstand that because unlike US, most accelerators
Speaker 4: are kind of singular use, because they don't have diversity,
Speaker 4: because they don't have versatility, because they're not great at
Speaker 4: every phase of AI. Once they're used for whatever they
Speaker 4: were designed to do, their value falls off a cliff.
Speaker 4: That is not true with Nvidio Jensen.
Speaker 3: My final question is a point of clarification, if I may.
Speaker 3: You were asked on the call about content and in
Speaker 3: video's contribution to any given piece of AI infrastructure, and
Speaker 3: what you said was Hopper around twenty to twenty five
Speaker 3: black COO about thirty With those figures billions of dollars
Speaker 3: in dollar terms on a one gigawa data center, are
Speaker 3: you talking about percentages of total cost?
Speaker 1: Oh?
Speaker 4: Thank you, billions of dollars, billions of dollars. Yeah, And
Speaker 4: so for our vera Rubens system, a one gigawak data
Speaker 4: center is probably something along the lines of fifty to
Speaker 4: fifty five, and Video's contribution is probably about thirty five
Speaker 4: of that.
Speaker 2: That was in Nvidia CEO Jensen Wong speaking to Bloomberg's
Speaker 2: Ed Ludlow, bringing it to you here on the Daybreak
Speaker 2: Asia podcast. Welcome back to the Daybreak Asia podcast. I'm
Speaker 2: Doug Prisoner. On Wednesday, President Trump renewed his attacks against
Speaker 2: FED Shair J. Powell. Trump said he would love to
Speaker 2: fire him for not lowering interest rates as much as
Speaker 2: the President would like, and Trump suggested he would fire
Speaker 2: Scott Besant if the Treasury Secretary doesn't help secure lower
Speaker 2: interest rates well. Importantly, the Treasury Secretary has no influence
Speaker 2: on the FED, although Best is leading the selection process
Speaker 2: for the next FED share to replace Powell when his
Speaker 2: term expires in May twenty twenty six. Also today we
Speaker 2: got minutes from the last FED meeting, and they were
Speaker 2: a little hawkish. Policymakers were divided. Several were against lowering
Speaker 2: the Fed's benchmark rate last month, and many said it
Speaker 2: would likely be appropriate to keep rate steady for the
Speaker 2: remainder of this year. So one of the hallmarks of
Speaker 2: the US session was this idea that we have to
Speaker 2: reduce bets on a December rate cut. For a closer look, now,
Speaker 2: I'm joined by Clayton Trick. He is head of portfolio
Speaker 2: management at angel Oak Capital Advisors. Clayton is on the
Speaker 2: line from Atlanta, Georgia. Thank you, sir for making time
Speaker 2: to chat with me. So I'm looking at the swaps
Speaker 2: market pricing right now. Thirty percent probability that we're going
Speaker 2: to get a twenty five basis point rate cut in December.
Speaker 2: Is that how you see things right now?
Speaker 5: Yes, we do. We feel that the press conference right
Speaker 5: after the last meeting, you saw Chim and Pale really
Speaker 5: push against the market. You know, before that you had
Speaker 5: one hundred percent, you know, mere one hundred percent chance
Speaker 5: of a rate cut for the December meeting, and he
Speaker 5: really wanted to push against the market and really keep
Speaker 5: the optionality open. You know. After that we saw continuous
Speaker 5: public appearances from more hawkish and centrist type members, you know,
Speaker 5: thinking you of a FED presidence like Schmid, Logan, Hammock,
Speaker 5: as well as centrists like Bostick and Collins that really
Speaker 5: kind of reiterated their apprehension toward a December cut. So
Speaker 5: not surprising the market is pricing in a much lower
Speaker 5: probability of a cut. But that being said, we haven't
Speaker 5: had a lot of economic data obviously the last couple
Speaker 5: weeks with the government shutdown, so things could definitely change
Speaker 5: here in the coming weeks.
Speaker 2: We also heard today from Kevin Hassett to the Director
Speaker 2: of the National Economic Council, and Hassett, as we know,
Speaker 2: as one of the finals to become the next FED
Speaker 2: share I found it interesting that today he was discussing
Speaker 2: consumer price pressures and saying that they may not be
Speaker 2: fully tamed up until this point when I've heard Hasset speak,
Speaker 2: there's been a dubbish quality today that seemed to tilt
Speaker 2: a little on the hawkish side. So Clayton, can you
Speaker 2: give me your sense of how you view the inflation
Speaker 2: story right now?
Speaker 5: Yeah, we have continued to believe that, you know, core
Speaker 5: goods inflation was going to put a little bit of
Speaker 5: upward pressure with tariffs, and it was going to take
Speaker 5: some time. That being said, thirty five percent of core PCE,
Speaker 5: thirty five percent of core CPI is shelter, and that
Speaker 5: has continued to decelerate. That's what we've got in the
Speaker 5: most recent number, the figure that we got within CPI
Speaker 5: during the shutdown, and we expect home prices to continue
Speaker 5: to decelebrate or fall, which will continue to bring down
Speaker 5: the shelter component of inflation. On the good side, that
Speaker 5: that's going to take a lot longer to flow through.
Speaker 5: That being said, we're already getting some rhetoric from from
Speaker 5: DC talking about how they may be rolling back some
Speaker 5: of the tariffs on specific things that are having to
Speaker 5: do with consumer spending. So we could see kind of
Speaker 5: a slight rollback of tariffs into next year. Shelter is
Speaker 5: going to continue to put downward pressure on core inflation,
Speaker 5: and so we don't think inflation is really going to
Speaker 5: rise much from here, but could see remaining in the
Speaker 5: high twos. So FED funds now in the high threes.
Speaker 5: We think there is room for them to be looking
Speaker 5: to cut but I'm not surprised you're getting a little
Speaker 5: bit of pushback in the most recent comments.
Speaker 2: So, if you're expecting some more easing and you're not
Speaker 2: expecting inflation to be a problem, what's your investment strategy
Speaker 2: right now?
Speaker 5: Yeah, so there are significant opportunities, especially with recent and
Speaker 5: the recent pullback, we've been keeping some dry powder on
Speaker 5: the sidelines, really looking to step into areas like agency
Speaker 5: and non agency mortgage backed securities. There's been a lot
Speaker 5: of comments recently regarding how corporate credit is on the
Speaker 5: tighter end of the range. You know, really that market's
Speaker 5: highly correlated to where equity valuations are. But outside of
Speaker 5: corporate credit, thinking of the securitized bond market, that areas
Speaker 5: is still actually really wide compared to corporate spreads thinking
Speaker 5: back to twenty twenty one and spreads, we're a lot
Speaker 5: tighter across the market. You're significantly wider in securitized bonds
Speaker 5: versus investment grade and higher corporate. So we see that
Speaker 5: as an attracted area of the market. And from a
Speaker 5: credit perspective, the housing market we view is actually still
Speaker 5: in very good shape, and so mortgage bond should huddle
Speaker 5: pulled up well in either continued muddling along the economy
Speaker 5: or you know, an environment where the FED needs to
Speaker 5: actually maybe be cutting more because the layer market is
Speaker 5: turning in the other direction.
Speaker 2: What about on the equity side, Clayton, I'm curious to
Speaker 2: know where you're focused in the equity space.
Speaker 5: Yeah, so we're continuing to watch obviously the moves impact
Speaker 5: that's very important for the coming growth and data centers
Speaker 5: and anything around AI led cap X. That being said,
Speaker 5: we think it's actually very notable to continue to be
Speaker 5: watching performance of public BDCs. Tinded to see discussions and
Speaker 5: concerns around middle market lending about the growth and private
Speaker 5: credit public market publicly traded BDCs is an area that
Speaker 5: we can continue to get insight into that area of
Speaker 5: the market. We've seen that really decouple from SMP and
Speaker 5: tech performance really since the second quarter, and so we're
Speaker 5: really keeping a keen focus heading into the year to
Speaker 5: see where those the valuations within that market looks heading
Speaker 5: into twenty twenty six.
Speaker 2: And what about opportunities offshore? Are you finding any.
Speaker 5: We definitely think of vests should be thinking globally right now.
Speaker 5: US acceptionalism in the last few years has really stuck out,
Speaker 5: and now you're seeing global opportunities coming back from an
Speaker 5: equity perspective. We think that's still going to be the case,
Speaker 5: and so you know, we're we're recommending investors really focus
Speaker 5: on global diversification, not just US equities heading into next year.
Speaker 2: All right, Clayton, we'll leave it there. Thank you so much.
Speaker 2: Clayton Trick, head of portfolio management at Angel Oak Capital Advisors,
Speaker 2: on the line from Atlanta, Georgia, here on the Daybreak
Speaker 2: Asia Podcast. Thanks for listening to today's episode of the
Speaker 2: Bloomberg Daybreak Asia Edition podcast. Each weekday, we look at
Speaker 2: the story shaping markets, finance, and geopolitics in the Asia Pacific.
Speaker 2: You can find us on Apple, Spotify, the Bloomberg Podcast
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Speaker 2: to Singapore and Australia. I'm Doug Prisner, and this is
Speaker 2: Bloomberg