1 00:00:00,040 --> 00:00:06,720 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,640 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,480 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordernt. Join us each day 4 00:00:18,720 --> 00:00:22,280 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,400 --> 00:00:24,880 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,720 --> 00:00:31,280 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,320 --> 00:00:33,919 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,000 --> 00:00:37,240 Speaker 2: Terminal and the Bloomberg Business app. We begin this out 10 00:00:37,440 --> 00:00:40,320 Speaker 2: as big tech struggles to impress a blowout quarter for Nvidia, 11 00:00:40,400 --> 00:00:43,120 Speaker 2: failing to spark a market rally. Emily Run of John 12 00:00:43,120 --> 00:00:45,879 Speaker 2: Hancock Investment Management Rights in the following, It's amazing the 13 00:00:45,880 --> 00:00:48,800 Speaker 2: market doesn't seem to care. It's like in Nvidia's winning 14 00:00:48,840 --> 00:00:51,559 Speaker 2: the game, but investors are giving participation prizes out to 15 00:00:51,680 --> 00:00:54,360 Speaker 2: all the other players. Emily joins us now for more. 16 00:00:54,600 --> 00:00:57,120 Speaker 2: Emily welcome. I think a lot of people feel the 17 00:00:57,160 --> 00:00:59,920 Speaker 2: same way this morning, looking at those numbers yesterday evening, 18 00:01:00,240 --> 00:01:02,440 Speaker 2: looking at the price section this morning, and nobody asking them. 19 00:01:02,440 --> 00:01:04,280 Speaker 2: Stavs the question, what is going on? 20 00:01:05,520 --> 00:01:08,200 Speaker 3: Yeah, John, there has never been anything like this in 21 00:01:08,360 --> 00:01:12,280 Speaker 3: US corporate history. Eighty percent year over year earnings growth. 22 00:01:12,319 --> 00:01:15,080 Speaker 3: The estimate was fifty seven percent, and a five trillion 23 00:01:15,120 --> 00:01:19,080 Speaker 3: dollar company like this is just so remarkable. And then 24 00:01:19,120 --> 00:01:21,039 Speaker 3: you look, you wake up this morning and you look 25 00:01:21,040 --> 00:01:24,120 Speaker 3: at the relative winners again, and it's it's the cost By, 26 00:01:24,360 --> 00:01:27,280 Speaker 3: it's you know, Europe, it's the CAC, it's everything else 27 00:01:27,400 --> 00:01:31,520 Speaker 3: except US technology companies. You know, the market cap of 28 00:01:31,600 --> 00:01:35,120 Speaker 3: Navidia hasn't really changed very much over the past six months, 29 00:01:35,120 --> 00:01:39,960 Speaker 3: and meanwhile we've just seen massive, multiple expansion, massive changes 30 00:01:39,959 --> 00:01:42,400 Speaker 3: in terms of the size of pretty much every other 31 00:01:42,480 --> 00:01:43,679 Speaker 3: company on the planet. 32 00:01:44,319 --> 00:01:45,760 Speaker 4: We've been talking about. 33 00:01:45,480 --> 00:01:49,200 Speaker 3: This sort of idea of march madness coming up to us. 34 00:01:49,200 --> 00:01:52,800 Speaker 3: It's momentum madness that we're watching. And you think about 35 00:01:52,840 --> 00:01:56,920 Speaker 3: the brackets. It's Spain, it's the cost By, it's Europe, 36 00:01:57,080 --> 00:02:00,240 Speaker 3: it's Silver, and that's really where the focus is been. 37 00:02:00,400 --> 00:02:03,480 Speaker 3: And the markets are really not all that impressed by Navidia. 38 00:02:03,600 --> 00:02:06,280 Speaker 3: Pretty remarkable to us, given the strength of the earnings, 39 00:02:06,280 --> 00:02:07,680 Speaker 3: the margins, the revenues there. 40 00:02:07,800 --> 00:02:10,079 Speaker 2: I mean, as soon as the year started, straight out 41 00:02:10,080 --> 00:02:12,280 Speaker 2: of the gang, the Costpe off to the racis. South 42 00:02:12,320 --> 00:02:15,160 Speaker 2: Korean equities are up by close to fifty percent today. 43 00:02:15,400 --> 00:02:18,160 Speaker 2: We're not even two full months into the year. You 44 00:02:18,200 --> 00:02:19,959 Speaker 2: talk about the momentum, the team's gonna have plenty of 45 00:02:20,040 --> 00:02:22,040 Speaker 2: questions about tech and what's happening state side, but the 46 00:02:22,080 --> 00:02:24,640 Speaker 2: momentum that's happening gusewere do you really want to fight 47 00:02:24,720 --> 00:02:25,280 Speaker 2: that right now? 48 00:02:26,360 --> 00:02:29,519 Speaker 3: I mean, momentum, as we know, is a really powerful force. 49 00:02:29,560 --> 00:02:32,000 Speaker 3: Matt Miskin and I've been watching the COSPY for about 50 00:02:32,000 --> 00:02:34,320 Speaker 3: a year now. It's up one hundred and sixty percent 51 00:02:34,800 --> 00:02:37,120 Speaker 3: over a one year basis, and we're always trying to 52 00:02:37,160 --> 00:02:40,280 Speaker 3: square that with what the fundamentals look like and what 53 00:02:40,320 --> 00:02:43,120 Speaker 3: the economic picture looks like in some of these countries, 54 00:02:43,160 --> 00:02:46,480 Speaker 3: you know. You look, for example, at Europe, the estimate 55 00:02:46,520 --> 00:02:49,680 Speaker 3: for earnings growth this quarter was three percent. They barely 56 00:02:49,919 --> 00:02:52,840 Speaker 3: beat that, and then European equities are on fire. In 57 00:02:52,880 --> 00:02:55,720 Speaker 3: the United States, the earnings growth estimate for this quarter 58 00:02:55,880 --> 00:02:59,040 Speaker 3: was eight percent, and we're coming in at fifteen percent. 59 00:02:59,120 --> 00:03:03,960 Speaker 3: That's almost technology companies just produce thirty three percent year 60 00:03:04,000 --> 00:03:06,360 Speaker 3: over year earnings growth in the United States, it's not 61 00:03:06,400 --> 00:03:09,840 Speaker 3: getting rewarded. Look at Japan, their stock markets on fire. 62 00:03:10,000 --> 00:03:11,720 Speaker 3: Guess what their GDP growth is. 63 00:03:12,000 --> 00:03:12,760 Speaker 4: It's zero. 64 00:03:13,240 --> 00:03:16,600 Speaker 3: They just missed a technical recession. So it's just hard 65 00:03:16,639 --> 00:03:20,600 Speaker 3: to really square this momentum, this sentiment, the technicals that 66 00:03:20,639 --> 00:03:24,519 Speaker 3: are driving these markets with what's really happening underneath the service. 67 00:03:24,600 --> 00:03:27,520 Speaker 3: We want to participate in this, but investors might want 68 00:03:27,560 --> 00:03:30,440 Speaker 3: to think about right sizing positions in a market that's 69 00:03:30,440 --> 00:03:31,839 Speaker 3: been driven by momentum. 70 00:03:31,919 --> 00:03:34,120 Speaker 5: At the same time, Emily, the US markets have already 71 00:03:34,160 --> 00:03:36,440 Speaker 5: benefited from momentum, right, I mean you look at video shares, 72 00:03:36,480 --> 00:03:39,080 Speaker 5: They've gone from three dollars essentially at the beginning of 73 00:03:39,120 --> 00:03:42,160 Speaker 5: twenty nineteen to almost two hundred dollars today. I mean, 74 00:03:42,200 --> 00:03:45,640 Speaker 5: it's been a tremendous blowout in terms of market capitalization. 75 00:03:46,200 --> 00:03:48,720 Speaker 5: How can you understand, even when we're talking about such 76 00:03:48,760 --> 00:03:52,000 Speaker 5: big numbers, what that's baking in and how many more 77 00:03:52,080 --> 00:03:54,560 Speaker 5: multiples to price in at a time where there are 78 00:03:54,560 --> 00:03:58,520 Speaker 5: many beneficiaries, clearly, and the race is very very intense. 79 00:03:59,240 --> 00:04:02,160 Speaker 3: Yeah, absolutely, and the earnings engine is on in the 80 00:04:02,240 --> 00:04:05,760 Speaker 3: United States, So when we think about valuations, we really 81 00:04:05,760 --> 00:04:09,200 Speaker 3: care a lot more about the denominator, and we've seen that, 82 00:04:09,800 --> 00:04:12,640 Speaker 3: especially in some of these AI beneficiaries. But We just 83 00:04:12,680 --> 00:04:16,120 Speaker 3: saw so much momentum to your point last year, it's 84 00:04:16,240 --> 00:04:18,720 Speaker 3: just going to be hard to repeat that, to continue 85 00:04:18,720 --> 00:04:21,880 Speaker 3: to compound that. So we understand this idea that there's 86 00:04:21,960 --> 00:04:24,360 Speaker 3: catch up potential in other areas of the market, but 87 00:04:24,480 --> 00:04:27,679 Speaker 3: we are always following earnings. We believe that stock prices 88 00:04:27,760 --> 00:04:31,000 Speaker 3: follow profits over time, and that's where the earnings are. Now, 89 00:04:31,040 --> 00:04:34,120 Speaker 3: do you need to protect against the valuation risk that's 90 00:04:34,120 --> 00:04:36,920 Speaker 3: inherent in some of these big large cap companies tech 91 00:04:36,920 --> 00:04:40,679 Speaker 3: companies in the United States. Absolutely, So what we're doing 92 00:04:40,760 --> 00:04:44,240 Speaker 3: is we're looking at sort of our favorite, more quality 93 00:04:44,320 --> 00:04:47,160 Speaker 3: cyclical areas of the market. Industrial that's been a top 94 00:04:47,200 --> 00:04:50,160 Speaker 3: idea for us for quite some time. We're going down 95 00:04:50,200 --> 00:04:52,840 Speaker 3: in market cap and looking at mid cap stocks which 96 00:04:52,839 --> 00:04:56,560 Speaker 3: have elevated earnings, growth prospects, and at least like reasonable 97 00:04:56,680 --> 00:05:00,240 Speaker 3: valuations in a world where everything is expensive right now. 98 00:05:00,279 --> 00:05:01,560 Speaker 4: So it's about owning tech. 99 00:05:01,600 --> 00:05:04,599 Speaker 3: It's about looking for the earnings, following the profits, but 100 00:05:04,720 --> 00:05:07,760 Speaker 3: then diversifying from that down in market cap and looking 101 00:05:07,800 --> 00:05:09,000 Speaker 3: for quality value. 102 00:05:09,080 --> 00:05:11,960 Speaker 5: Emily, is it a contradiction to go down in market 103 00:05:11,960 --> 00:05:14,520 Speaker 5: cap to go to smaller, riskier companies and also like 104 00:05:14,560 --> 00:05:17,080 Speaker 5: high quality bonds. I mean is there a contradiction here 105 00:05:17,200 --> 00:05:20,320 Speaker 5: betting on the reacceleration of the economy on one hand, 106 00:05:20,560 --> 00:05:22,719 Speaker 5: but then on sort of the opposite on the other. 107 00:05:23,800 --> 00:05:24,719 Speaker 4: So great question. 108 00:05:24,920 --> 00:05:27,599 Speaker 3: So it's a key reason that we're overweight mid versus 109 00:05:27,680 --> 00:05:30,960 Speaker 3: small cap stocks. We look at small caps their lower quality. 110 00:05:31,080 --> 00:05:33,800 Speaker 3: You know, forty percent of the Rustle two thousand indexes 111 00:05:33,800 --> 00:05:37,920 Speaker 3: comprised of unprofitable companies. We really prefer to be up 112 00:05:37,920 --> 00:05:40,680 Speaker 3: and in cap to mid caps, which are not our parents' 113 00:05:40,760 --> 00:05:41,960 Speaker 3: mid cap stocks anymore. 114 00:05:41,960 --> 00:05:43,440 Speaker 4: These are pretty large companies. 115 00:05:44,440 --> 00:05:46,880 Speaker 3: But on the fixed income side, that's an area that 116 00:05:46,920 --> 00:05:49,800 Speaker 3: we just think is mispriced. You know, with the ten 117 00:05:49,880 --> 00:05:54,600 Speaker 3: year treasure yields still over four percent, there's opportunity, especially 118 00:05:54,640 --> 00:05:56,800 Speaker 3: in the intermediate part of the curve here, to lead 119 00:05:56,839 --> 00:06:00,679 Speaker 3: into that bonds return four to five percent, seven eight percent, 120 00:06:00,800 --> 00:06:04,279 Speaker 3: like very quietly last year. We think that can happen again. 121 00:06:04,400 --> 00:06:06,680 Speaker 3: Now there's not as much value on the shorter end 122 00:06:06,720 --> 00:06:09,200 Speaker 3: of the curve. Now, you know, given the moves there, 123 00:06:09,200 --> 00:06:12,200 Speaker 3: investors can benefit from roll down, they can get income. 124 00:06:12,560 --> 00:06:15,240 Speaker 3: We don't think that bond investors are sniffing out the 125 00:06:15,320 --> 00:06:18,680 Speaker 3: disinflation and the lower growth that's coming down the pipeline, 126 00:06:19,200 --> 00:06:22,039 Speaker 3: and that's an area that we think offers some relative 127 00:06:22,160 --> 00:06:23,480 Speaker 3: value across markets. 128 00:06:23,560 --> 00:06:26,920 Speaker 6: Emily, if investors like utilities, materials and some of these 129 00:06:26,920 --> 00:06:30,000 Speaker 6: more tangible assets, aren't they also part of the AI trade. 130 00:06:30,040 --> 00:06:32,400 Speaker 6: You have to have a case that the AI buildout 131 00:06:32,720 --> 00:06:33,440 Speaker 6: is going to be real. 132 00:06:34,279 --> 00:06:35,680 Speaker 4: Oh, that's a huge part of it. 133 00:06:35,960 --> 00:06:39,400 Speaker 3: These are traditionally more defensive assets, but they're also benefiting 134 00:06:39,440 --> 00:06:43,440 Speaker 3: from the buildout of data centers around AI. We're looking 135 00:06:43,480 --> 00:06:47,440 Speaker 3: at industrial production, automation, robotics as key themes. So these 136 00:06:47,440 --> 00:06:50,919 Speaker 3: sort of old school, you know, parts of the economy, 137 00:06:51,000 --> 00:06:54,080 Speaker 3: parts of the market are also you know benefiting from 138 00:06:54,160 --> 00:06:57,200 Speaker 3: this this AI build out, you know, the lack of 139 00:06:57,240 --> 00:07:00,920 Speaker 3: supply that's needed in order to build the infrastructure here. 140 00:07:01,120 --> 00:07:03,800 Speaker 3: So you know, we're looking at that as an opportunity 141 00:07:04,680 --> 00:07:08,640 Speaker 3: again to sort of look at the tertiary beneficiaries of 142 00:07:08,680 --> 00:07:09,320 Speaker 3: AI here. 143 00:07:09,560 --> 00:07:11,679 Speaker 6: So what didn't the market view that as the AI 144 00:07:11,760 --> 00:07:14,680 Speaker 6: trade is real and when you see blockbuster results like 145 00:07:14,720 --> 00:07:16,920 Speaker 6: you have from n Video overnight, that you want to 146 00:07:16,960 --> 00:07:18,680 Speaker 6: buy into it even more this morning? 147 00:07:19,440 --> 00:07:19,720 Speaker 4: Yeah? 148 00:07:19,760 --> 00:07:22,800 Speaker 3: Absolutely, And I think in Mari, the challenge is just 149 00:07:22,920 --> 00:07:25,200 Speaker 3: the size of this. You know, you look at how 150 00:07:25,280 --> 00:07:28,920 Speaker 3: important that the market has become to the economy, and 151 00:07:28,960 --> 00:07:32,400 Speaker 3: it's just remarkable. Consumer net worth right now sitting at 152 00:07:32,440 --> 00:07:35,560 Speaker 3: a record one hundred and seventy six trillion dollars the 153 00:07:35,640 --> 00:07:39,760 Speaker 3: stock market, it's sixty trillion dollars dwarfs the size of 154 00:07:39,800 --> 00:07:43,360 Speaker 3: the US economy right now. So we've seen this incredible 155 00:07:43,440 --> 00:07:47,440 Speaker 3: capital appreciation that's been driven by AI as being. 156 00:07:47,280 --> 00:07:48,520 Speaker 4: The most important thing. 157 00:07:49,360 --> 00:07:51,720 Speaker 3: The market is like the tail that's wagging the dog 158 00:07:51,760 --> 00:07:55,520 Speaker 3: of the economy, and it's usually the opposite. So we 159 00:07:55,600 --> 00:07:58,560 Speaker 3: want to think about diversification given the fact that there's 160 00:07:58,560 --> 00:08:01,200 Speaker 3: so much wealth it's constant created in AI, and it 161 00:08:01,240 --> 00:08:03,640 Speaker 3: puts us in a little bit of a precarious position 162 00:08:04,160 --> 00:08:05,720 Speaker 3: if we do see a challenge here. 163 00:08:05,760 --> 00:08:07,000 Speaker 4: You know, there's a lot that's. 164 00:08:06,760 --> 00:08:10,360 Speaker 3: Been written, of course, as of lead around software companies 165 00:08:10,400 --> 00:08:14,440 Speaker 3: and the obsolescence potentially there. We think that is overdone, 166 00:08:14,680 --> 00:08:16,960 Speaker 3: but we've got to think about how much of a 167 00:08:17,080 --> 00:08:20,280 Speaker 3: risk there is given this massive wealth concentration in the 168 00:08:20,320 --> 00:08:23,400 Speaker 3: AI trade, and think about other ways other assets to 169 00:08:23,440 --> 00:08:27,200 Speaker 3: own to diversify from that, whether it's infrastructure, whether it's bonds, 170 00:08:28,000 --> 00:08:29,440 Speaker 3: whether it's utilities, et cetera. 171 00:08:30,360 --> 00:08:33,839 Speaker 2: Stay with us mult Bloomberg surveillance coming up after this 172 00:08:43,240 --> 00:08:46,240 Speaker 2: in video in the pre market by zero point nine percent. 173 00:08:46,320 --> 00:08:48,320 Speaker 2: If you have one, Wall Street looks like this. Angela 174 00:08:48,400 --> 00:08:50,880 Speaker 2: Zeno of Cfira with a twenty six price target of 175 00:08:50,880 --> 00:08:53,200 Speaker 2: two fifty. Right in the following in video post a 176 00:08:53,320 --> 00:08:57,280 Speaker 2: JANQ revenue of sixty eight billion, crushing expectations driven by 177 00:08:57,360 --> 00:09:00,920 Speaker 2: continued AI infrastructure build out and success fault blank while 178 00:09:00,960 --> 00:09:03,880 Speaker 2: platform ramp. Angelo joins us now for more. Angelo on 179 00:09:03,960 --> 00:09:07,480 Speaker 2: this name, one Cell four holds seventy eight buys, you're 180 00:09:07,480 --> 00:09:10,160 Speaker 2: one of them, a strong buy and a rally is stilled. 181 00:09:10,280 --> 00:09:11,320 Speaker 7: What's behind it? Angelo? 182 00:09:12,559 --> 00:09:12,760 Speaker 8: Yeah? 183 00:09:12,840 --> 00:09:16,760 Speaker 1: John, I think it has everything to do with just 184 00:09:17,440 --> 00:09:19,319 Speaker 1: and it's something we have written about back into summer. 185 00:09:19,520 --> 00:09:21,920 Speaker 8: It's this changing AI narrative that you're seeing. 186 00:09:21,640 --> 00:09:24,360 Speaker 1: Across the markets right And I think right now the 187 00:09:24,400 --> 00:09:27,360 Speaker 1: street really more focused about the risk tied to AI 188 00:09:27,880 --> 00:09:30,720 Speaker 1: more so than the growth of opportunities here long term 189 00:09:30,760 --> 00:09:31,360 Speaker 1: from AI. 190 00:09:31,840 --> 00:09:35,559 Speaker 8: And I think that the street's really trying to. 191 00:09:34,760 --> 00:09:37,840 Speaker 1: Grasp the two sides, But right now they're really focused 192 00:09:37,880 --> 00:09:41,480 Speaker 1: on this the risks tied to the AI side. You're 193 00:09:41,520 --> 00:09:45,160 Speaker 1: getting this massive AI infrastructure built out, but we have 194 00:09:45,280 --> 00:09:49,280 Speaker 1: yet to really see that AI monetization story really play 195 00:09:49,400 --> 00:09:52,400 Speaker 1: out to the extent that I maybe that maybe others. 196 00:09:52,040 --> 00:09:54,320 Speaker 8: Had hoped it would play out to this. 197 00:09:54,960 --> 00:09:57,240 Speaker 1: At this point in time, it's going to take time 198 00:09:57,520 --> 00:10:00,720 Speaker 1: in terms of this AI monetization store, and I think, 199 00:10:00,880 --> 00:10:02,560 Speaker 1: you know, there might be others out there that are 200 00:10:02,600 --> 00:10:04,120 Speaker 1: just taking this weight and see approach. 201 00:10:04,200 --> 00:10:05,920 Speaker 8: So we're getting these beaten raises. 202 00:10:06,000 --> 00:10:09,280 Speaker 1: The reporter really didn't tell us anything new with many respects 203 00:10:09,440 --> 00:10:11,920 Speaker 1: in the sense that we expected a beaten raise, in 204 00:10:11,960 --> 00:10:14,600 Speaker 1: the sense that we just had a cute war earning 205 00:10:14,640 --> 00:10:18,440 Speaker 1: season with these hyperscalers all significantly you know, ramped up 206 00:10:18,440 --> 00:10:21,560 Speaker 1: their capex. Then, So twenty six is going to be good. 207 00:10:21,559 --> 00:10:23,959 Speaker 1: I think that's pretty much baked in a sack. Twenty 208 00:10:24,000 --> 00:10:27,160 Speaker 1: twenty seven, I think at this point also looks the 209 00:10:27,240 --> 00:10:29,560 Speaker 1: visibility looks pretty good as well. I think there's street 210 00:10:29,600 --> 00:10:32,760 Speaker 1: and more focused about, you know, really that AI monetization 211 00:10:32,880 --> 00:10:33,880 Speaker 1: story at this point time. 212 00:10:34,360 --> 00:10:36,560 Speaker 5: To put simply what you just said, Angelo, is it 213 00:10:36,600 --> 00:10:39,960 Speaker 5: a case of fear porn trumping any kind of fundamental performance, 214 00:10:40,000 --> 00:10:42,320 Speaker 5: because ultimately I don't know where the risk factor was 215 00:10:42,600 --> 00:10:44,360 Speaker 5: in the earnings that were reported by Nvidia. 216 00:10:46,600 --> 00:10:50,080 Speaker 1: Yeah, I mean, you know, I think when you look 217 00:10:50,120 --> 00:10:52,480 Speaker 1: at here, yeah, I mean I think you're right. 218 00:10:52,520 --> 00:10:55,920 Speaker 8: I mean, you look at Nvidia, and I don't think. 219 00:10:55,800 --> 00:10:58,640 Speaker 1: You're going to necessarily see, you know, anything that that's 220 00:10:58,640 --> 00:11:01,240 Speaker 1: going to cause you a to raise an eyebrow. Would 221 00:11:01,240 --> 00:11:03,800 Speaker 1: be concerned about the story here this quarter, next quarter, 222 00:11:04,000 --> 00:11:08,400 Speaker 1: the quarter thereafter. I think again, it is just monitoring 223 00:11:08,440 --> 00:11:11,040 Speaker 1: the markets at this point in time. I think on 224 00:11:11,080 --> 00:11:14,480 Speaker 1: the software side of things, there's definitely some concern. You know, 225 00:11:15,200 --> 00:11:17,080 Speaker 1: you look at what bet and you guys just you know, 226 00:11:17,360 --> 00:11:19,839 Speaker 1: really talked about Salesforce. But you look at you know, 227 00:11:19,920 --> 00:11:23,280 Speaker 1: benning Off, what he had to say about Salesforce, his. 228 00:11:23,240 --> 00:11:25,760 Speaker 8: Conviction level there. You look at what open ai and 229 00:11:25,920 --> 00:11:28,440 Speaker 8: Rowick are doing. We need to monitor all of that. 230 00:11:28,559 --> 00:11:32,640 Speaker 1: We need to see this agentic AI inflection really start 231 00:11:32,720 --> 00:11:34,960 Speaker 1: to pick up in the second half of this year 232 00:11:35,280 --> 00:11:37,760 Speaker 1: into twenty twenty seven. I think you see that, you 233 00:11:37,800 --> 00:11:40,679 Speaker 1: see those new use cases emerge. I think then, you know, 234 00:11:40,720 --> 00:11:43,080 Speaker 1: in video also starts to work alongside that. 235 00:11:43,280 --> 00:11:45,600 Speaker 5: One thing that Salesforce did seem to point to is 236 00:11:45,640 --> 00:11:49,480 Speaker 5: agent force his idea of actually using agents AI agents 237 00:11:49,559 --> 00:11:52,880 Speaker 5: to try to monetize this exactly what you're saying that 238 00:11:52,920 --> 00:11:54,800 Speaker 5: in video needs to see and frankly, what Jensen Wong 239 00:11:54,880 --> 00:11:57,120 Speaker 5: was talking about that he is seeing that inflection point 240 00:11:57,160 --> 00:11:59,720 Speaker 5: where you are seeing a monetization. What will it take 241 00:12:00,160 --> 00:12:03,079 Speaker 5: to prove to Wall Street, to analysts that the monetization 242 00:12:03,280 --> 00:12:07,120 Speaker 5: is taking place? And ultimately this is kind of the. 243 00:12:06,960 --> 00:12:08,480 Speaker 4: Stick in the whole story. 244 00:12:08,600 --> 00:12:12,160 Speaker 5: Is it vast layoffs to justify the expense? Is it 245 00:12:12,160 --> 00:12:14,440 Speaker 5: efficiencies that get born out in other ways that could 246 00:12:14,440 --> 00:12:17,680 Speaker 5: potentially be punitive to the overall economy. 247 00:12:18,200 --> 00:12:19,959 Speaker 8: I mean, you need to see it in the numbers 248 00:12:20,000 --> 00:12:21,319 Speaker 8: from the hyperscalers. 249 00:12:21,320 --> 00:12:23,320 Speaker 1: You need to see it in the numbers from and 250 00:12:23,400 --> 00:12:25,960 Speaker 1: you have seen it to an extent from the hyperscalers, right, 251 00:12:25,960 --> 00:12:29,160 Speaker 1: You've seen them be able to monetize AI to an extent, 252 00:12:29,240 --> 00:12:31,480 Speaker 1: maybe not to the degree that. 253 00:12:31,400 --> 00:12:32,640 Speaker 8: Wall Street has wanted them to. 254 00:12:32,840 --> 00:12:35,600 Speaker 1: But when you look at the AI inflection thus far, 255 00:12:35,679 --> 00:12:41,760 Speaker 1: it really has been dominated on the on the consumer side, 256 00:12:41,760 --> 00:12:44,400 Speaker 1: and really you really can't monetize the consumer at this 257 00:12:44,440 --> 00:12:46,600 Speaker 1: point in time because they're getting this stuff for free. 258 00:12:46,760 --> 00:12:49,120 Speaker 1: On the enterprise side, I thinks that's where you need 259 00:12:49,160 --> 00:12:51,560 Speaker 1: to see those applications really start to pick up. You 260 00:12:51,600 --> 00:12:53,000 Speaker 1: need to see a number that you don't need to 261 00:12:53,040 --> 00:12:56,200 Speaker 1: see the entire SaaS community really start to benefit from it. 262 00:12:56,480 --> 00:12:59,439 Speaker 8: But you need to see some you know, some big 263 00:12:59,480 --> 00:12:59,960 Speaker 8: wins there. 264 00:13:00,040 --> 00:13:02,400 Speaker 1: You need to see that that inflection in the second 265 00:13:02,440 --> 00:13:04,880 Speaker 1: half of this year in terms of revenue acceleration something 266 00:13:04,920 --> 00:13:08,880 Speaker 1: that Benioff had had talked about last night. So you 267 00:13:08,920 --> 00:13:10,920 Speaker 1: need to see some of those use cases really start 268 00:13:10,960 --> 00:13:13,560 Speaker 1: to pick up in terms of the token count, the 269 00:13:13,640 --> 00:13:16,720 Speaker 1: increase in tokens that's going to that's going to play out. 270 00:13:16,760 --> 00:13:19,359 Speaker 8: But again, we need to see the revenue really tied. 271 00:13:19,160 --> 00:13:23,120 Speaker 1: To that and be demonstrated, uh, you know, for Wallstreet 272 00:13:23,120 --> 00:13:25,480 Speaker 1: to really like the story here and to warm up 273 00:13:25,480 --> 00:13:26,280 Speaker 1: to AI again. 274 00:13:26,760 --> 00:13:29,120 Speaker 6: Angel on China, it's the largest market for chips. Do 275 00:13:29,160 --> 00:13:31,079 Speaker 6: you think at any point this year in video will 276 00:13:31,120 --> 00:13:33,120 Speaker 6: be able to make some revenue from Beijing? 277 00:13:34,600 --> 00:13:37,760 Speaker 1: I mean, listen, personally, I'm starting to lose hope on 278 00:13:37,920 --> 00:13:39,000 Speaker 1: the China story, right. 279 00:13:39,040 --> 00:13:40,679 Speaker 8: I Mean, it's hard to really. 280 00:13:41,160 --> 00:13:43,360 Speaker 1: You know, continue to pound the table on China just 281 00:13:43,520 --> 00:13:44,560 Speaker 1: on the fact that you've got. 282 00:13:44,480 --> 00:13:46,480 Speaker 8: These geopolitical uncertainties out there. 283 00:13:47,000 --> 00:13:48,719 Speaker 1: The hope would have been at this point in time 284 00:13:48,800 --> 00:13:51,079 Speaker 1: we'd start to see at least some sort of incremental 285 00:13:51,120 --> 00:13:52,599 Speaker 1: revenue tied. 286 00:13:52,360 --> 00:13:54,559 Speaker 8: To China, given that we haven't seen it yet. 287 00:13:55,320 --> 00:13:58,720 Speaker 1: You know, I'm just on the on the sidelines and saying, hey, listen, 288 00:13:59,240 --> 00:14:03,040 Speaker 1: if we see it. If not, you know, at least 289 00:14:03,040 --> 00:14:06,360 Speaker 1: in Nvidia continues to find ways, you know, to see 290 00:14:06,360 --> 00:14:09,160 Speaker 1: their revenue trajectory continued to increase. But you know, if 291 00:14:09,160 --> 00:14:13,360 Speaker 1: you're Jensen, you continue to want to and to some extent, 292 00:14:13,520 --> 00:14:18,000 Speaker 1: need China participation more because of the developer compute community 293 00:14:18,040 --> 00:14:22,160 Speaker 1: there and for those developers to really build on China's 294 00:14:22,200 --> 00:14:26,000 Speaker 1: software ecosystem. But up until this point, and we've seen 295 00:14:26,040 --> 00:14:27,800 Speaker 1: it also from a m D. A D did see 296 00:14:27,800 --> 00:14:29,960 Speaker 1: about three hundred ninety million or so in terms of 297 00:14:30,520 --> 00:14:32,960 Speaker 1: China revenue in Q four. They guide it to only 298 00:14:33,000 --> 00:14:35,280 Speaker 1: about one hundred million here in Q one, and the 299 00:14:35,280 --> 00:14:37,320 Speaker 1: big biggest reason for that is they just don't see 300 00:14:37,320 --> 00:14:40,480 Speaker 1: the visibility either, and there's a lot of uncertainty. So 301 00:14:40,520 --> 00:14:42,360 Speaker 1: at this point in time, you know, we're not looking 302 00:14:42,400 --> 00:14:43,320 Speaker 1: for much out of China. 303 00:14:43,640 --> 00:14:45,320 Speaker 6: I'm glad you brought up am D though they are 304 00:14:45,360 --> 00:14:48,000 Speaker 6: making some money off of China. What's the difference between 305 00:14:48,000 --> 00:14:52,080 Speaker 6: what they're doing versus Jensen long, you know, it's hard 306 00:14:52,120 --> 00:14:52,360 Speaker 6: to say. 307 00:14:52,400 --> 00:14:53,880 Speaker 1: I mean, at this point in time, it's really just 308 00:14:53,880 --> 00:14:57,400 Speaker 1: about the type of licenses they're getting approved for. I mean, 309 00:14:57,800 --> 00:15:01,080 Speaker 1: clearly am D is a much smaller skill type company 310 00:15:01,160 --> 00:15:05,360 Speaker 1: relative to in Video, but at this disappoint in time, 311 00:15:05,400 --> 00:15:08,880 Speaker 1: it's all about getting the necessary licenses approved there. 312 00:15:09,920 --> 00:15:13,400 Speaker 2: Stay with us more Bloomberg Surveillance coming up after this, 313 00:15:22,840 --> 00:15:25,600 Speaker 2: Andrew Bishop of Signum Global writing, President Trump is not 314 00:15:25,680 --> 00:15:27,880 Speaker 2: eager to go to war with Iran. This means that 315 00:15:27,960 --> 00:15:31,000 Speaker 2: even doubt about whether diplomacy can still succeed, he will 316 00:15:31,040 --> 00:15:33,640 Speaker 2: continue to give it a chance. Andrew joined us now 317 00:15:33,640 --> 00:15:36,040 Speaker 2: for more. Andrew, welcome to the program. The US has 318 00:15:36,080 --> 00:15:40,280 Speaker 2: already demonstrated superior military capability, and the Iranian government has 319 00:15:40,320 --> 00:15:43,320 Speaker 2: already demonstrated how stubborn they're willing to be. Where is 320 00:15:43,360 --> 00:15:45,520 Speaker 2: their space for a diplomatic breakthrough? 321 00:15:47,720 --> 00:15:49,840 Speaker 9: So, frankly, in terms of getting to an actual agreement, 322 00:15:50,000 --> 00:15:52,880 Speaker 9: I think there's very little space. We've been optimistic, I 323 00:15:52,920 --> 00:15:54,600 Speaker 9: don't know have optimistic as the right term, but ever 324 00:15:54,640 --> 00:15:57,840 Speaker 9: since January fourteen, that feedful day when it looked like 325 00:15:57,880 --> 00:16:01,040 Speaker 9: President Trump was going to strike that day, and on 326 00:16:01,200 --> 00:16:03,840 Speaker 9: that day, we've continuously said that the President was not 327 00:16:03,880 --> 00:16:07,080 Speaker 9: going to strike for several months and that continues to 328 00:16:07,120 --> 00:16:10,440 Speaker 9: be our view, not because we're optimistic about, as you say, 329 00:16:10,480 --> 00:16:13,120 Speaker 9: the substance of these talks, but because we think the 330 00:16:13,160 --> 00:16:15,960 Speaker 9: President wants to drag them out for as long as possible, 331 00:16:16,080 --> 00:16:20,160 Speaker 9: both to see if there's even the sliverest of possibility 332 00:16:20,160 --> 00:16:22,800 Speaker 9: of getting a breakthrough, but also for calendar reasons. We're 333 00:16:22,800 --> 00:16:25,280 Speaker 9: in the middle of Ramadan, you've gotten to ruz Persian 334 00:16:25,280 --> 00:16:27,480 Speaker 9: New Year. Liberating the irun In people by bombing them 335 00:16:27,560 --> 00:16:30,120 Speaker 9: is not necessarily good pr and then President Trump is 336 00:16:30,120 --> 00:16:32,240 Speaker 9: going to China at the end of the of March, 337 00:16:32,680 --> 00:16:35,040 Speaker 9: and we all know that this would potentially be a 338 00:16:35,120 --> 00:16:39,080 Speaker 9: multi week operation. I don't see how bombing one of 339 00:16:39,120 --> 00:16:42,480 Speaker 9: China's biggest suppliers of oil right before visiting season ping 340 00:16:42,560 --> 00:16:44,040 Speaker 9: is going to help extend the trade truce. 341 00:16:44,360 --> 00:16:46,000 Speaker 6: So when do you think this could start if Trump 342 00:16:46,080 --> 00:16:48,360 Speaker 6: had to use this option of a strike. 343 00:16:49,200 --> 00:16:52,880 Speaker 9: Yeah, we've said since January thirteen that the most likely 344 00:16:53,000 --> 00:16:56,560 Speaker 9: is after April fourth, so essentially after he returns from China. 345 00:16:56,600 --> 00:16:58,320 Speaker 6: But then that would be going into the summer, which 346 00:16:58,320 --> 00:17:00,440 Speaker 6: is peak driving season here in the United States. Andrew, 347 00:17:00,440 --> 00:17:02,640 Speaker 6: how does the president weigh potentially what a spike in 348 00:17:02,680 --> 00:17:05,360 Speaker 6: oil would be Tyler was talking about the Iranians being 349 00:17:05,359 --> 00:17:08,160 Speaker 6: willing to close the Strait of Horrormuz to gas prices 350 00:17:08,160 --> 00:17:10,560 Speaker 6: in the United States ahead of a midterm election. 351 00:17:11,359 --> 00:17:13,920 Speaker 9: Yep, that goes exactly back to both why we think 352 00:17:13,960 --> 00:17:17,040 Speaker 9: he's so reluctant overall, and then on your question about timing, 353 00:17:17,320 --> 00:17:19,399 Speaker 9: that gets to the issue of the fact that the 354 00:17:19,440 --> 00:17:21,879 Speaker 9: Iranians are so hardheaded. I guess my point, and I 355 00:17:21,960 --> 00:17:24,360 Speaker 9: do mean the government in this instance. What I mean 356 00:17:24,400 --> 00:17:26,960 Speaker 9: by that is, I think the President would like to 357 00:17:27,000 --> 00:17:30,440 Speaker 9: get a deal before April, but if we don't get 358 00:17:30,440 --> 00:17:33,840 Speaker 9: a deal, then he will act. I mean, what you 359 00:17:33,920 --> 00:17:35,840 Speaker 9: see is what you get in terms of this government's 360 00:17:35,840 --> 00:17:39,479 Speaker 9: position on striking. They want a diplomatic deal. If they 361 00:17:39,560 --> 00:17:42,000 Speaker 9: really can get one after having tried and tried and tried, 362 00:17:42,280 --> 00:17:42,879 Speaker 9: they will bomb. 363 00:17:43,280 --> 00:17:45,040 Speaker 5: At the same time, Andrew, you could look at the 364 00:17:45,160 --> 00:17:47,840 Speaker 5: troop build up in Iran and around Iran, and you 365 00:17:47,840 --> 00:17:49,920 Speaker 5: can look at the fact that a lot of people 366 00:17:49,920 --> 00:17:52,680 Speaker 5: are saying that if there isn't some sort of military 367 00:17:52,760 --> 00:17:54,440 Speaker 5: encourasion here, it's just going to be kicking the can 368 00:17:54,480 --> 00:17:57,359 Speaker 5: down the road, because ultimately Iran's not going to get 369 00:17:57,440 --> 00:17:59,840 Speaker 5: rid of their ballistic missiles. I mean, at what point 370 00:17:59,880 --> 00:18:02,440 Speaker 5: is is that a real pressure point that challenges the 371 00:18:02,440 --> 00:18:05,320 Speaker 5: thesis that calls for dragging this out and a lack 372 00:18:05,359 --> 00:18:06,480 Speaker 5: of a conflict. 373 00:18:07,240 --> 00:18:09,200 Speaker 7: The argument makes perfect sense. 374 00:18:09,680 --> 00:18:12,400 Speaker 9: But if you follow you know, open source intelligence accounts 375 00:18:12,600 --> 00:18:16,520 Speaker 9: and the like, you can points to about one hundred 376 00:18:16,600 --> 00:18:20,280 Speaker 9: or two hundred signals since mid January that suggested in 377 00:18:20,320 --> 00:18:23,920 Speaker 9: them in an attack. Right sort of, Yes, we're prepositioning 378 00:18:24,040 --> 00:18:26,320 Speaker 9: twenty four f thirty fives, and then the following week 379 00:18:26,359 --> 00:18:29,280 Speaker 9: it's forty eight, and then really we needed forty eight 380 00:18:29,320 --> 00:18:31,399 Speaker 9: all along, so twenty four should not have been the signal. 381 00:18:32,040 --> 00:18:34,320 Speaker 9: The goldpost keeps moving on this, so it's not I 382 00:18:34,359 --> 00:18:37,159 Speaker 9: don't disagree with the logic, it's just finding where that 383 00:18:37,280 --> 00:18:37,919 Speaker 9: limit is. 384 00:18:38,440 --> 00:18:39,560 Speaker 7: We think is a little later. 385 00:18:40,320 --> 00:18:42,479 Speaker 9: And this is very similar to what happened with Maduro 386 00:18:42,600 --> 00:18:45,040 Speaker 9: back in September, I believe of last year, we wrote 387 00:18:45,080 --> 00:18:47,520 Speaker 9: that President Trump was likely to take out Maduro, but 388 00:18:47,880 --> 00:18:49,800 Speaker 9: he would take a lot of time, he would not 389 00:18:49,880 --> 00:18:53,040 Speaker 9: be rushed into it. And by November December, people were 390 00:18:53,040 --> 00:18:56,119 Speaker 9: saying it has to happen now because we've deployed all 391 00:18:56,119 --> 00:18:59,000 Speaker 9: this firepower. The truth is the president can afford to 392 00:18:59,040 --> 00:19:01,800 Speaker 9: run the tab and even from an operational standpoint, he 393 00:19:01,880 --> 00:19:04,520 Speaker 9: does have the several weeks that he wants Andrews. 394 00:19:04,520 --> 00:19:07,560 Speaker 2: You know, Tehran and the Iranian economy right now is 395 00:19:07,600 --> 00:19:11,399 Speaker 2: really strong. Like how well funded Iranian proxies in the 396 00:19:11,400 --> 00:19:14,080 Speaker 2: region right now? What are the capabilities to cause disruption 397 00:19:14,480 --> 00:19:15,399 Speaker 2: if Iran needs them to. 398 00:19:17,200 --> 00:19:20,399 Speaker 9: So their funding went through a hard period following the 399 00:19:20,840 --> 00:19:23,400 Speaker 9: major strikes and not just referring to the June war 400 00:19:23,440 --> 00:19:27,359 Speaker 9: of last year, but Israel's overall operations across the region. 401 00:19:27,600 --> 00:19:30,439 Speaker 9: But they have really recovered quite well, if you'd think 402 00:19:30,440 --> 00:19:33,240 Speaker 9: has love. For example, the smuggling routes for bringing in 403 00:19:33,280 --> 00:19:36,200 Speaker 9: cash had to be reject but they have been rejected. 404 00:19:37,119 --> 00:19:39,440 Speaker 7: The issue, though, is to be very transparent. 405 00:19:39,520 --> 00:19:42,240 Speaker 9: I don't think that the reaction function of these proxies 406 00:19:42,280 --> 00:19:44,280 Speaker 9: is going to depend that much on funding. 407 00:19:44,600 --> 00:19:45,760 Speaker 7: I think it's going to be much more of a 408 00:19:45,760 --> 00:19:46,640 Speaker 7: political decision. 409 00:19:47,119 --> 00:19:50,800 Speaker 9: And we have a slightly nuanced position at signum, which 410 00:19:50,840 --> 00:19:54,920 Speaker 9: is we think that Iran will retaliate extremely forcefully. So 411 00:19:55,000 --> 00:19:57,679 Speaker 9: the President's sort of scenario of a limited strike limited 412 00:19:57,680 --> 00:20:01,160 Speaker 9: retaliation is off the table, but not necessarily in fact, 413 00:20:01,240 --> 00:20:04,119 Speaker 9: not with its proxies. I think the proxies will largely 414 00:20:04,160 --> 00:20:07,359 Speaker 9: set this one out for political self preservation reasons. 415 00:20:07,400 --> 00:20:10,320 Speaker 2: Andrew, could you describe what forceful retaliation would look like then? 416 00:20:11,400 --> 00:20:12,879 Speaker 7: Yeah, it's very simple. 417 00:20:13,000 --> 00:20:16,040 Speaker 9: It's trying to kill Americans and Israelis, which is very 418 00:20:16,040 --> 00:20:18,959 Speaker 9: different than what happened in June. Entering the prior operations, 419 00:20:18,960 --> 00:20:23,119 Speaker 9: where the main goal was trying to demonstrate capability and 420 00:20:23,200 --> 00:20:28,320 Speaker 9: sort of, you know, show symbolic symbolic action. Here, we 421 00:20:28,400 --> 00:20:31,040 Speaker 9: think that they will try to kill as many as possible, 422 00:20:31,720 --> 00:20:34,320 Speaker 9: and from the military experts we speak with, it is 423 00:20:34,400 --> 00:20:36,400 Speaker 9: statistically extremely improbable that. 424 00:20:36,359 --> 00:20:39,080 Speaker 7: We will have a war with Iran and no US casualties. 425 00:20:39,119 --> 00:20:41,400 Speaker 2: Andrew, this is a serious conversation, and I think it's 426 00:20:41,400 --> 00:20:43,560 Speaker 2: a question we need to ask. When you say kill 427 00:20:43,640 --> 00:20:46,240 Speaker 2: is Rieties and Americans, are you talking about in the 428 00:20:46,280 --> 00:20:50,040 Speaker 2: region around Iran or beyond both. 429 00:20:50,800 --> 00:20:54,200 Speaker 9: I think they'll have less success beyond just because their 430 00:20:54,240 --> 00:20:55,960 Speaker 9: capabilities are less good beyond. 431 00:20:56,280 --> 00:20:57,960 Speaker 7: I'm well aware that you know, HAS and. 432 00:20:58,000 --> 00:21:00,320 Speaker 9: Other groups have had success as far as out as 433 00:21:00,400 --> 00:21:03,439 Speaker 9: Latin America and like, so that's not inconceivable. But I 434 00:21:03,520 --> 00:21:05,119 Speaker 9: do think that there's a case to be made that 435 00:21:05,480 --> 00:21:08,040 Speaker 9: short range ballistic missiles have a better chance of killing 436 00:21:08,080 --> 00:21:12,200 Speaker 9: American troops, for example, than Iranian operators have aed conducting 437 00:21:12,200 --> 00:21:15,199 Speaker 9: a successful terrorist operation in the US, which has been 438 00:21:15,280 --> 00:21:17,680 Speaker 9: largely at the table for the past twenty five years. 439 00:21:18,119 --> 00:21:21,680 Speaker 2: This is the Bloomberg Savannans podcast, bringing you the best 440 00:21:21,680 --> 00:21:24,760 Speaker 2: in markets, economics, an gio politics. You can watch the 441 00:21:24,760 --> 00:21:27,800 Speaker 2: show live on Bloomberg TV weekday mornings from six am 442 00:21:27,920 --> 00:21:31,080 Speaker 2: to nine am Eastern. Subscribe to the podcast on Apple, 443 00:21:31,359 --> 00:21:34,199 Speaker 2: Spotify or anywhere else you listen, and as always, on 444 00:21:34,240 --> 00:21:36,720 Speaker 2: the Bloomberg Terminal and the Bloomberg Business app.