Speaker 1: From the heart of where innovation, money and power collide
Speaker 1: in Silicon Valley and beyond. This is Bloomberg Technology with
Speaker 1: Caroline Hyde.
Speaker 2: And Ed Ludlow live from New York and San Francisco.
Speaker 2: This is Bloomberg Technology coming up. All eyes on three
Speaker 2: trillion dollar in video as it gears up for earnings
Speaker 2: after the closing bell. Can it profit margins weather the
Speaker 2: Chinese export restrictions?
Speaker 3: Plus, we speak with the CEO of identity software player
Speaker 3: Octa following its own earnings, posting a conservative forecast, and.
Speaker 2: A SpaceX Starship Rocket loss control and disintegrated during a
Speaker 2: test flight last night, the company's third setback in a row,
Speaker 2: the first ed we check in on these markets. Look
Speaker 2: gains disintegrating here too. Are currently of by about two
Speaker 2: tens percent. Look, we are treading water ahead of the
Speaker 2: all important macro event. Whether you think that's the FED
Speaker 2: minutes a little bit later today, or whether you think
Speaker 2: that that is the all important video numbers after the bell.
Speaker 2: We are on ten to Hook.
Speaker 3: Said, Yeah, Nvidia's a little bit softer, right down four
Speaker 3: tenths of one percent on a year to date basis.
Speaker 3: It's just in positive territory, up half a percentage point.
Speaker 4: Everyone I speak to Caro, I think.
Speaker 3: You're right in video is a macro level event when
Speaker 3: it comes to its earnings. So let's get right to
Speaker 3: what we can expect from those earnings later today and
Speaker 3: bring in Bloomberg intelligence around this. Kunjensbarni in his earnings
Speaker 3: preview research, Kunjen says investors should expect a strong quarter
Speaker 3: and congen. A big part of that is a ramp
Speaker 3: in GB two hundred and where those GB two hundred
Speaker 3: units are.
Speaker 5: Going definitely, I mean the demand expedition for GB two
Speaker 5: hundred from our channel checks continue to exceed what we
Speaker 5: thought before. And one key important point for this earnings
Speaker 5: is this is the most noisiest quarter we have seen
Speaker 5: in terms of Nvidia expectations. The two Q numbers have
Speaker 5: been brought down to take that impact of the China ban,
Speaker 5: but there is still a lot of confusion on that magnitude.
Speaker 4: So we think the beat.
Speaker 5: And the miss on the absolute basis for this quarter
Speaker 5: should be much less important. Rather, the more important thing
Speaker 5: should be the second half commentary around the GB three
Speaker 5: hundred transition, the clarity on the new China chip, and
Speaker 5: if bonus points if you can get some color on
Speaker 5: the twenty six dey Man outlook from.
Speaker 2: Jensen and from collect Chris, the CFO. How much do
Speaker 2: you need to hear from her about the margins going
Speaker 2: back to a seventy percent or so level at the
Speaker 2: moment because they have been under pressure congent.
Speaker 5: That will be a lot more important.
Speaker 4: We think margin will take.
Speaker 5: A headwind impact just like AMD did in either this.
Speaker 4: Quarter or next quarter, but that should be just.
Speaker 5: A one time, temporary impact.
Speaker 6: But you're right.
Speaker 5: If they can give any commentary in the confidence of
Speaker 5: getting back to the mid or even low seventies by
Speaker 5: Q four, that would be absolutely positive.
Speaker 2: It's going to be busy. Well, thank you so much
Speaker 2: for Bluemergis Intelligence. Let's discuss now in Video's expectations and
Speaker 2: how they fit in with the broader market. The macro perspective.
Speaker 2: Oka Yeshioka joins usport Hodio, consulting director at Wealth Enhancement Group,
Speaker 2: and look, this is a macro event. How do you
Speaker 2: manage what Kunjan has clearly said is going to be
Speaker 2: noise on the first footing of the numbers.
Speaker 7: Sure, Caroline, I think you know we put this into
Speaker 7: short term versus long term context. I think in the
Speaker 7: short term, yes, we might have a noisy quarter and
Speaker 7: maybe this does not allow Nvidia stock to break out
Speaker 7: of its sort of one hundred to one fifty range
Speaker 7: that it's been in over the last year. But I
Speaker 7: think over the long term, I think what we're all
Speaker 7: looking for is that macro impact of the AI theme.
Speaker 7: Is it going to continue?
Speaker 2: Is the demand really there?
Speaker 7: And I think the answer is going to be yes.
Speaker 3: In the short term and the long term. For me,
Speaker 3: the question is what happens for Nvidia in China.
Speaker 7: Absolutely, I think you know, everybody's aware of the H
Speaker 7: twenty export ban and whether or not, you know, in
Speaker 7: Video is going to potentially come up with a sort
Speaker 7: of new redesigned chip for that market. I think they're
Speaker 7: likely to work on it. They've done it before, and
Speaker 7: I think that's going to help. But that's the big
Speaker 7: question is what is China revenue going to look like
Speaker 7: for in Nvidia over the next six months as well
Speaker 7: as next year.
Speaker 2: And ioko what's notable is ed sat at the top.
Speaker 2: This is a stop thing. Yes, you can see is
Speaker 2: rebounded hard since it's loads in April forty percent were
Speaker 2: basically flat on the air and so how are we
Speaker 2: thinking about the AI trade more broadly at this moment geopolitics?
Speaker 2: Does that counter what has been the bubble driver of
Speaker 2: the last couple of years.
Speaker 7: Yeah, I don't know if geopolitics really counters it. I mean,
Speaker 7: clearly the tear off situation is weighing on a lot
Speaker 7: of tech companies as well, and so I think it's
Speaker 7: contributing to a lot of the noise that we're seeing here.
Speaker 7: But I think over the long term, we know that
Speaker 7: the build out for the infrastructure for AI continues, and
Speaker 7: you know, in video continues to benefit from that.
Speaker 2: We've already heard a lot about that boy the Middle
Speaker 2: East deals, Saudi Arabia, UAE. What more can Jensen deliver
Speaker 2: for you today?
Speaker 7: I think just the overall outlook regarding you know, additional
Speaker 7: use cases. How much are you know, in Videa's chips
Speaker 7: going to be utilized in robotaxis and you know, humanoid robotics.
Speaker 7: You know, I think those are additional areas of growth
Speaker 7: that can continue to propel in video stock hire over
Speaker 7: the long term.
Speaker 3: What is this like for you is a moment in
Speaker 3: time as an investor, like I'm trying to think about
Speaker 3: something that's analogous and for me the Earnings call it's
Speaker 3: a little bit like Tesla and Elon in that you
Speaker 3: get the Earnings release and you read through it and
Speaker 3: you think okay, and then there's a pre prepared remarks,
Speaker 3: But actually it all kind of hangs on the Q
Speaker 3: and A and this man called Jensen, who people call
Speaker 3: the godfather of AI and some people call him something different.
Speaker 4: Just when you're at your desk, how do you endure that?
Speaker 4: How do you play it?
Speaker 8: Sure?
Speaker 7: I think we're all listening for just you know, the
Speaker 7: demand cues, the supply constraints, really trying to understand the
Speaker 7: longer term sort of nature of this thematic. You know,
Speaker 7: cloud computing was something that came about and was very
Speaker 7: long and in duration in terms of its growth and
Speaker 7: it continues, right, we want to know how long AI's
Speaker 7: build out is going to continue as we transition from
Speaker 7: you know, training to inference, and you know how long
Speaker 7: that continues to benefit Nvidia.
Speaker 3: Do you say any attention to the technology story, Like
Speaker 3: if they tell you we have a new timeline for
Speaker 3: a product, do you react to it.
Speaker 7: Only to the extent that you know it continues to
Speaker 7: help to prop hell the AI story I mean, I
Speaker 7: think more so the more important things that came out
Speaker 7: were like the you know Envy Link Fusion, uh you
Speaker 7: know product that they talked about, just networking and allowing
Speaker 7: for additional you know, CPUs and a six to connect
Speaker 7: to the GPUs that that Nvidia produces. I think that
Speaker 7: allows for the overall AI growth story to continue for
Speaker 7: much longer, and it expands the total addressable market. So
Speaker 7: we like hearing things like that, you know, new additional
Speaker 7: sort of chips, you know, things that will follow, whether
Speaker 7: it's Rubin following Blackwell, we'd like to hear how that's
Speaker 7: going and the impact on margins from a timing perspective.
Speaker 7: But the quarterly fluctuations aren't going to sort of deter
Speaker 7: our long term thesis there.
Speaker 2: And are you fully over the anxiety around deep Seek
Speaker 2: because today the IR one model has been upgraded, we
Speaker 2: understand did Jensen do enough in terms of clearly showing
Speaker 2: the inferences where it's at TEI okay, I think so.
Speaker 7: I think we're seeing that across you know, many sort
Speaker 7: of uh you know, hyperscalers talking about this, and you know,
Speaker 7: I do think that the deep Seek story, although it
Speaker 7: was sort of jarring at the beginning. I think a
Speaker 7: lot of that really just came out of the fact
Speaker 7: that it came out of China. I think if it
Speaker 7: had come out of the United States, it might not
Speaker 7: have been as jarring. But again, you know, I think
Speaker 7: this really just sort of expands the overall uh, you know,
Speaker 7: addressable market.
Speaker 3: I think the sensible place to end it on it
Speaker 3: is a sort of chicken and egg debate. What's more
Speaker 3: important for investors to get a long term picture on
Speaker 3: Nvidia or the hyper scalers and their CAPEX figures, because
Speaker 3: we've kind of done a juggle between the two.
Speaker 7: It's a great question. I think it's the CAPPAC spend.
Speaker 7: You know, one of the things that we continue to
Speaker 7: monitor is the overall CAPAC spend from the hyper scalers,
Speaker 7: and it continues to grow. The growth rate has slowed down,
Speaker 7: and we expect that to slow down going forward, but
Speaker 7: that spend in terms of dollars continues to be very large,
Speaker 7: and that will propel the overall infrastructure and the speed
Speaker 7: at which we all adopt.
Speaker 3: Ai Jensen one would disagree with you. He'd say, I
Speaker 3: told everyone what I'm doing for five years, so they
Speaker 3: can make better plans. Oyoko Yoshioka, portfolio consulting director at
Speaker 3: a wealth.
Speaker 4: Enhancement group, thank you very much.
Speaker 3: Octa shares down nearly fourteen percent today after the maker
Speaker 3: of identity management software gave a conservative forecast for the futures.
Speaker 3: Ox's first quarter revenue is up twelve percent year over year,
Speaker 3: and subscription baglocks suggests a longer sales cycle. That's according
Speaker 3: to our own Bloomberg analysis. We're joined now by OCTA's CEO,
Speaker 3: Tom McKinnon. Let's get the market, Cee Bicket out the
Speaker 3: way this conservative guide. Do you agree with the interpretation
Speaker 3: that it's conservative, and if so, what made you be
Speaker 3: a little more cautious.
Speaker 8: Well, I think we're talking about guidance on very short term.
Speaker 8: So one quarter is a very short term, and so yeah,
Speaker 8: we would look at the world right now and we
Speaker 8: say there's some uncertainty with tariffs and trade policy and
Speaker 8: economic the future of the economy and the short term,
Speaker 8: and so we give a prudent guide, but that doesn't
Speaker 8: change our outlook for even the medium term. The long term.
Speaker 8: We're very bullish on the opportunity, very bullish on the business.
Speaker 8: And if you look at the Q one numbers. We
Speaker 8: have a lot of reason to be optimistic in Q
Speaker 8: one over the medium and long term.
Speaker 3: We're talking about identity and access management, like that's the
Speaker 3: field you're in. But one tailwind that I keep hearing
Speaker 3: about is this issue of AI memory and AI agents.
Speaker 3: In other words, if an AI agent is going to
Speaker 3: be super useful, it needs to talk to many other agents,
Speaker 3: but it means the person, the human at the center
Speaker 3: of it, has to give away a lot.
Speaker 4: Of their information.
Speaker 3: That may be an area where you come in and
Speaker 3: make it more secure.
Speaker 4: Is there an opportunity to Well, what.
Speaker 8: Identity and access management is about is making sure the
Speaker 8: right people have access to the right information. And traditionally
Speaker 8: that's been business applications, web applications, mobile phones, mobile applications.
Speaker 8: And what's happening in this AI revolution is that now
Speaker 8: machines are accessing information more and more than ever. So
Speaker 8: it's not only about getting the people the right access,
Speaker 8: but you have to get the computers the right access.
Speaker 9: And we're very good at that.
Speaker 8: We have thousands and thousands of customers that trust us
Speaker 8: every day to make sure that their machines and their
Speaker 8: software systems have access to the right information and now
Speaker 8: AI is turbo charging that you're getting. We're moving in
Speaker 8: the industry. We're moving from prototypes. Everyone's prototyping these agentic
Speaker 8: systems and these customer support reps and these sales reps
Speaker 8: that can work on people's behalf and they're putting them
Speaker 8: in production and that means they have to have this
Speaker 8: access to real customer data, real user data, and that's
Speaker 8: where we come in. We can help them do that
Speaker 8: seamlessly and sec securely, and most importantly, make these prototypes
Speaker 8: of work. And that's what businesses want. They want AI
Speaker 8: to work for them, and we can help them do that.
Speaker 2: What about the public sector? How much do they want it?
Speaker 2: Because I know you've secured some decent deals with them
Speaker 2: of late.
Speaker 6: Yeah, it's no different.
Speaker 8: Every government agent is trying to get more efficient and
Speaker 8: more effective with their IT and the AI revolution is
Speaker 8: part of that. In fact, in Q one, four of
Speaker 8: our top ten deals were with public sector agency, so
Speaker 8: we're seeing very robust demand there and it's for the
Speaker 8: same reason they need to be secure. Our business is
Speaker 8: about identity, and what people are understanding is that identity
Speaker 8: is security.
Speaker 4: To be secure, you have to have a good.
Speaker 8: Identity system and then when you start to do the
Speaker 8: agentic workloads and move these projects from prototypes and proofs
Speaker 8: of concepts into production, you really have to control access
Speaker 8: to the data. And that's what our customers are telling
Speaker 8: us we can do for them.
Speaker 2: And of course the drive for DOZE for efficiency was
Speaker 2: about tech adoption, but it is also about cost cutting.
Speaker 2: How much do you think that there is this head wind,
Speaker 2: this caution around well, maybe a pushback on some of
Speaker 2: the contracts that you have within the public sector.
Speaker 8: Well, like I said, four of our top ten deals
Speaker 8: and two of the top three deals in the Q
Speaker 8: one we're in the public sector. So what you're seeing,
Speaker 8: especially at the US federal level, is organizations are looking
Speaker 8: to be more efficient and more effective, and that means
Speaker 8: looking at all their spending. But most of their spending
Speaker 8: is on legacy technology, so they're managing on premise software
Speaker 8: and their pain massive bills to people to support and
Speaker 8: maintain that software. And the industry of cloud computing and
Speaker 8: AI offers a viable alternative, and inside of that is
Speaker 8: the key layer in security and managing it. So if
Speaker 8: you want security and you want efficiency, we're a required
Speaker 8: thing and that's what's driving some of the success in
Speaker 8: that part of.
Speaker 9: The market for US.
Speaker 3: Octa has been trading for several years as a public company.
Speaker 3: When was it founded just very quickly two thousand and nine.
Speaker 3: He just talks about legacy tech. Could you just talk
Speaker 3: a little bit about what doing business is like in
Speaker 3: this environment? So there are lots of new names in
Speaker 3: this field. There are lots of new names who want
Speaker 3: to be your customers, and they're kind of used to
Speaker 3: negotiating with other people they may or may not know
Speaker 3: in this sort of Silicon Valley orbit. You've been around
Speaker 3: a little longer, and I just wonder what that's like.
Speaker 8: Well, I think the most exciting thing about the current
Speaker 8: age of technology is that we are very established.
Speaker 4: We have two point six.
Speaker 8: Billion dollars of revenue and growing quickly, and we're very profitable.
Speaker 8: In fact, in Q one we had record profitability. So
Speaker 8: in our space, we are the clear leader our space
Speaker 8: of independent and neutral identity management. And now there's this
Speaker 8: AI revolution and it's opening up vast new markets for
Speaker 8: every technology company. So it's like, how do you defend
Speaker 8: what you've done very well while at the same time
Speaker 8: investing for the future and innovating to making sure you
Speaker 8: capture this massive new opportunity. It's quite exciting, but it
Speaker 8: makes us really double down and stick to our past
Speaker 8: history of innovation and defining the market and extending what
Speaker 8: we've done into this whole new world.
Speaker 3: At the top of the segment, we reference subscription backlogs.
Speaker 3: Why is there a backlog and how does it get unfolded?
Speaker 8: Well, we're a cloud service, so people pay us a
Speaker 8: recurring subscription, so we prove value to them and they
Speaker 8: reinvest in us over a period of the contract duration.
Speaker 8: That's the way business works now, and it's a good
Speaker 8: trade off between value delivered to the customer and a
Speaker 8: vendor like us being able to capture that value we deliver.
Speaker 2: Oltor CEO Tom McKinnon, we really appreciate coming on and
Speaker 2: talking back against perhaps some of the narratives around the
Speaker 2: DOGE issues. Apple set to release a dedicated gaming app
Speaker 2: across its devices later this year. It's all according to sources.
Speaker 2: The feature is set to debut at this year's Worldwide
Speaker 2: Developers Conference on June ninth, just a few days after
Speaker 2: Nintendo's switched to release from All. Bloomberg's Mark Gunman joins
Speaker 2: us now and is this defense? Is this offense, Mark.
Speaker 6: Ye, thank you for having me. Apple has been working
Speaker 6: on this for quite some time.
Speaker 10: Over the past few years, they've been trying to push
Speaker 10: iOS and mac os as better gaming platforms, and you know,
Speaker 10: the Mac has come a long way. There are new
Speaker 10: porting tools for developers to move their apps over from
Speaker 10: PC to Mac, but there's still a long way to go.
Speaker 10: You've seen all sorts of different cloud gaming services and
Speaker 10: on device gaming services over the last few years.
Speaker 6: You've seen some from Google.
Speaker 10: Microsoft has tried this, and what Apple's trying to do
Speaker 10: with this app is create one unified place where developers.
Speaker 6: Can pitch their apps with new editorial.
Speaker 10: Content, a unified place for gamers on all of Apple's
Speaker 10: devices to go to when they want to launch a game,
Speaker 10: view achievements, view leader boards, connect with other players online.
Speaker 10: And so this new service is Apple Games application that
Speaker 10: will be pre installed on Apple's devices beginning at the
Speaker 10: end of this year, will be that new place to
Speaker 10: do so.
Speaker 3: Mark I've struggled for many years with gaming through macOS.
Speaker 4: I find this so interesting.
Speaker 3: On the titles themselves, we're not saying though, that Apple
Speaker 3: is going to become a developer and publisher of games
Speaker 3: specific to its own net platform, right, it is still
Speaker 3: a marketplace and a way to monetize access through other people's.
Speaker 4: Software and titles.
Speaker 10: Apple bought a two person game studio. I believe the
Speaker 10: app is called Sneaky Sasquatch. It's one of the more
Speaker 10: popular games on the Apple Arcade subscription service, So they
Speaker 10: bought that. But I don't anticipate them to go a
Speaker 10: lot further than that in terms of in house games.
Speaker 10: Maybe they'll buy a few other smaller studios, but I
Speaker 10: don't anticipate them to go down the route of developing
Speaker 10: their own games, investing billions of dollars into that. What
Speaker 10: I do expect is for this new games app on
Speaker 10: Apple devices to be a central way where people access games.
Speaker 10: You know, two thirds of Apple revenue from the app store,
Speaker 10: probably north of twelve thirteen billion dollars a year, comes
Speaker 10: from games, So games is super important.
Speaker 6: They want people playing more.
Speaker 10: Games, they want people downloading more games, they want people
Speaker 10: buying more subscriptions within games, and having a unified place
Speaker 10: to access all those titles could potentially help with that.
Speaker 2: Gaming is important to Apple's business model, But how important
Speaker 2: is Apple to the gaming industry? What sort of market
Speaker 2: share does it have give us the context mark?
Speaker 10: You know, if you think about it, the iPhone is
Speaker 10: probably the most popular gaming device.
Speaker 6: On the planet.
Speaker 10: You can now get TRIPLEA titles on their resident Evil
Speaker 10: Fortnite is back on the app store now after a
Speaker 10: few year reprieve after that lawsuit hit new levels with the.
Speaker 3: Well technically jump in here, Carro, because I think we
Speaker 3: had a technical issue on Bloomberg technology, but thanks to
Speaker 3: Bloomberg's Mark German, another story we're tracking. YouTube has spent
Speaker 3: the past few years trying to make itself the centerpiece
Speaker 3: of the living room, and now creators are finding themselves
Speaker 3: making longer shows to meet viewers where they are in
Speaker 3: front of their TVs, where YouTube is now the TV
Speaker 3: service of choice for viewers.
Speaker 4: Of all ages.
Speaker 3: Bloombergs Lucashaw is here for more in his BusinessWeek piece
Speaker 3: That's out there. I found this so interesting in the
Speaker 3: context of like different genres. I think about where I
Speaker 3: consume and what I consume on YouTube. What is the
Speaker 3: kind of conclusion reached in this Business Week piece.
Speaker 11: Leucas well, I think for most of YouTube's existence, people
Speaker 11: thought of it as a short form video service that
Speaker 11: people watched probably initially on you know, laptops and desktop computers,
Speaker 11: then primarily mobile phones, and over the last three to
Speaker 11: five years there's been a pretty dramatic shift where the
Speaker 11: television is now the primary device that people use, at
Speaker 11: least in the US and increasingly in other countries.
Speaker 4: And as a result of that.
Speaker 11: Or you know, a little bit of a chicken in
Speaker 11: the egg scenario, but the length of video that people
Speaker 11: are watching is getting longer, whether that's a three hour
Speaker 11: Jo Roken podcast or a twenty five minute sitcom, and
Speaker 11: the latter is something that really interested me because I
Speaker 11: also think most people think of YouTube as a place
Speaker 11: for sort of crappy, unscripted stuff, and increasingly there is
Speaker 11: scripted programming that people actually watch on YouTube.
Speaker 2: Slopfest, that's what you say in the piece, and this
Speaker 2: idea that it has slop that perhaps others in the
Speaker 2: industry try to portray. But how have they pushed back
Speaker 2: against that? How are we seeing that reverse in terms
Speaker 2: of trends or not?
Speaker 11: Lucas Yeah, I mean, look, there's been this ongoing debate
Speaker 11: as to whether there is quality programming on YouTube. Right,
Speaker 11: they had what were their brand safety scandals a little
Speaker 11: less than a decade ago, where you had ads run
Speaker 11: against unsafe materials, you had a lot of their biggest
Speaker 11: stars get in trouble. You had Jeffrey Katzenberg start this
Speaker 11: service Quibi that was supposed to be you know, YouTube,
Speaker 11: but YouTube length videos with sort of Netflix budgets that
Speaker 11: didn't work. And the truth is is that for most people,
Speaker 11: what they see on YouTube is quality. You know, if
Speaker 11: you ask someone who watches Hot Ones the chicken wing
Speaker 11: eating question show, like that's a talk show that people
Speaker 11: young people care about a lot more than Seth Myers,
Speaker 11: for example.
Speaker 3: But I do Lucas just real quick, I couldn't name
Speaker 3: though a single YouTube original, Like I have HBO Max
Speaker 3: because of the Last of Us. I go to Apple
Speaker 3: TV because of Silo. And that's the reason I have
Speaker 3: all of these different platforms and subscription bills every month.
Speaker 4: What's YouTube doing there?
Speaker 3: Like some name recognition programming, original programming, Well, but have.
Speaker 4: You heard of have you heard of Hot Ones or
Speaker 4: Mister Beast?
Speaker 3: Yeah, yeah, it's an original last but good good example.
Speaker 11: Right, So, look, we're not at the point where they're
Speaker 11: making a Last of Us for YouTube. The budgets are
Speaker 11: too big for that to make money.
Speaker 6: On YouTube.
Speaker 11: I think there's a belief that we may eventually get there,
Speaker 11: certainly with the use of AI bringing the cost down.
Speaker 11: But that is the kind of the big white whale
Speaker 11: for YouTube. If you will, or YouTube would tell you
Speaker 11: that you can still watch the last of us on YouTube,
Speaker 11: you'll just do it via max and kind of buy
Speaker 11: max as from the YouTube Google channel store the data.
Speaker 2: It talks Loca sure, so great to have you. It's
Speaker 2: a great business leek piece. Welcome back to BlueBag Tchnology
Speaker 2: and Caroline.
Speaker 3: Hide in New York Low in San Francisco. This is
Speaker 3: what financial markets look right now, zeroed in on the
Speaker 3: technology sector.
Speaker 4: We are basically, as.
Speaker 3: Caroline said at the top of the show, treading water.
Speaker 3: Were flat on the Nasdaq one hundred. We're slightly softer
Speaker 3: on the Philadelphia Semiconductor Index. And that story is almost
Speaker 3: solely in Nvidia, which reports earnings after the market close.
Speaker 3: It's a stock that is treading water right now, completely
Speaker 3: flat on a year to date basis. It is higher,
Speaker 3: but marginally less than one percentage point.
Speaker 4: And what we're looking for.
Speaker 3: Is some sense in the short term the China story,
Speaker 3: how have sales been impacted?
Speaker 4: Remember a five point five billion.
Speaker 3: Dollar right down in the quarter gone relating to the
Speaker 3: lack of being able to sell age twenty. What does
Speaker 3: that look like going forward, Gareth, It's.
Speaker 2: Going to be an interesting one. And as you say,
Speaker 2: like all eyes on that report tonight, but that attention
Speaker 2: is actually spilling over to others in the AI supply
Speaker 2: chain head including Napatas Semiconductor, a maker of power efficient
Speaker 2: gallium nitride chips that go into everything from laptop to evs,
Speaker 2: and now data centers. Last week, news of a partnership
Speaker 2: with NVIDIAs and Navatas shares absolutely soaring one hundred and
Speaker 2: sixty four percent in a single day. Since then added
Speaker 2: more than a billion dollars in market value, tripling its
Speaker 2: size as the rally continues, and Navta CEO Gen Sheridan
Speaker 2: joins US now gallium nitride silicon carbide. How is it
Speaker 2: going to change the world of data centers?
Speaker 12: Good question, Well, data centers are completely changing the world
Speaker 12: as we know it. It used to be data centers
Speaker 12: required just a few hundred watts per processor or ten
Speaker 12: to twenty thousand bots in a server rack. That's the
Speaker 12: building block of a data center. AI is changing that completely.
Speaker 12: We're now talking about hundreds of thousands of watts and
Speaker 12: in the future of megawatt per server rack, how are
Speaker 12: we going to deliver that kind of power? Silicon chips
Speaker 12: just can't do it, they run out of steam. Gallium
Speaker 12: nitride and silicon carbide can offer up to ten to
Speaker 12: twenty times more power and do it more energy efficiently
Speaker 12: with faster charging, faster power. These are the key technology
Speaker 12: chips to power the future data center and.
Speaker 2: Gene, as we mentioned, been selected by in video for
Speaker 2: this partnership. Going forward, how's your supply chain? How's your
Speaker 2: ability to suddenly meet this level of demand.
Speaker 12: We have lined up significant capacity. We've seen this coming
Speaker 12: for the last few years. We've been working on gallium
Speaker 12: nitride and solding garbage for over ten years. We have
Speaker 12: excellent supply chain partners TSMC with gallium nitride, x FAB
Speaker 12: with Silding carbide. Significant capacity available today in six inch,
Speaker 12: going to eight inch in the coming years. So we've
Speaker 12: got a lot of capacity lined up.
Speaker 9: Now. We're working with Nvidia on the development side.
Speaker 12: There's a lot to do in development to enable what
Speaker 12: they call the eight hundred volt data center. This data
Speaker 12: center architecture is not only going to save energy, use.
Speaker 9: Our tip to make it more energy efficient.
Speaker 12: It's going to enable that megawatt capability to ten twenty
Speaker 12: times more powerful to held the future AI processors for
Speaker 12: the next few years.
Speaker 3: Gene, Your company's stock has been on a wild ride,
Speaker 3: hasn't it since the announcement of the deal, largely by
Speaker 3: association probably right with the name in Nvidia. But can
Speaker 3: you give us something tangible, like what's the dollar value
Speaker 3: of this relationship to Navitas? What's this sort of sales
Speaker 3: growth trajectory just from the agreement you put in place
Speaker 3: with in Vidia.
Speaker 12: Well, we're already shipping our high voltage GAN chips and
Speaker 12: sling CARBA chips into data centers today. We have about
Speaker 12: seventy opportunities in the acd DC converter for the traditional
Speaker 12: data center of today. That's sort of growth and that's
Speaker 12: going to drive some short term growth to the company.
Speaker 12: But this announcement is really about tomorrow. We're going to
Speaker 12: spend the next year in development within Vidia and others
Speaker 12: creating the key technology or building box for this eight
Speaker 12: hundred data center, this megawatt SERVERAC power. These systems won't
Speaker 12: come online until maybe late twenty six and really be
Speaker 12: ramping in twenty seven, so it's not a short term play. Well,
Speaker 12: we do have solid business in the near term that
Speaker 12: has a story, engaged with Nvidia and others, and we're
Speaker 12: really excited about making this next generation data center happen
Speaker 12: over the next twelve to et months.
Speaker 3: We said at the top of the show that you've
Speaker 3: added almost one billion dollars of market cap in the
Speaker 3: last seven trading sessions and the company's values tripled.
Speaker 4: Is it, CEO, what's that like for you?
Speaker 12: Well, we went public a few years ago as an
Speaker 12: early stage public company.
Speaker 9: I've learned to ride the highs and.
Speaker 12: The lows, and I get too excited about either extreme.
Speaker 9: So I think the market's going to do what it's
Speaker 9: going to do.
Speaker 12: But we keep our heads down focusing on building a
Speaker 12: great next generation paras semiconductor business. If we can keep
Speaker 12: partnering with companies like Nvidia and key segments, data center
Speaker 12: is a top one for us. We're also working on
Speaker 12: mobile chargers, We're also working on electric vehicles, changing solar inverters.
Speaker 9: Partnering up with some of these key guys, that's what
Speaker 9: gets me excited.
Speaker 12: That's what's going to drive our business and We're super
Speaker 12: excited about the video one to really create these future
Speaker 12: data centers.
Speaker 2: Jeane, how are you navigating also the politicization of all
Speaker 2: of this, the idea that people want US data centers,
Speaker 2: but they're also willing to then go in partner in
Speaker 2: the UAE in Saudi Arabia, and issues around access to
Speaker 2: China in that way, how you thinking about the global
Speaker 2: footprint you'll have.
Speaker 12: Yeah, really is deglobalization in such a big way. I
Speaker 12: think we're starting from a good place. Taiwan is a
Speaker 12: great central location neutral if you will, to serve the world.
Speaker 12: TSMC is the biggest and best out there. For the
Speaker 12: gallium nitrid chips, our slicing CARBD at XFAB, it's actually
Speaker 12: manufactured right in the United States in Texas. There's a
Speaker 12: lot of work to do here in the United States
Speaker 12: to upgrade the grid, and most of the data centers
Speaker 12: in the world are concentrated here in the US. So
Speaker 12: made in America for at the chip level, made in
Speaker 12: America for the data center and for the power grid
Speaker 12: upgrades is a perfect fit.
Speaker 9: Well, we're not not going to stop there.
Speaker 12: We're looking at bringing up wafer PAB and manufacturing partners
Speaker 12: all around the world, so we have geographically diverse footprint,
Speaker 12: so we can deal with whatever the geopolitics are as
Speaker 12: well as whatever the localization needs are.
Speaker 9: So there's a lot to do.
Speaker 12: In our expansion. We've got a lot going on to
Speaker 12: expand that footprint.
Speaker 3: Geane, you said this partnership with vide bez fruit late
Speaker 3: twenty six early twenty twenty seven, does that mean that
Speaker 3: you will be involved in some of the projects in
Speaker 3: video announced in the Gulf State Saudi and UAE and
Speaker 3: some of its onshoring activity here in the United States,
Speaker 3: projects like Stargate for example.
Speaker 12: Well, we'll work at the power chip and power module
Speaker 12: or power supply level, so we create kind of these
Speaker 12: building blocks, the building blocks that move that power around,
Speaker 12: allow the power to happen, happen efficiently, keep the data
Speaker 12: centers cool where they take those building blocks. The beauty
Speaker 12: is I don't have to customize them from one region
Speaker 12: to the next. They can build these all around the
Speaker 12: world and they'll ship and move those ships and modules
Speaker 12: easily without my involvement, So we don't really need to
Speaker 12: be impacted by those international moops.
Speaker 3: Never tast CEO Gen Sheridan, thank you so much for
Speaker 3: joining us on Bloomberg Technology Caroline Time now for.
Speaker 2: Talking Tech ed first up Chan is said to be
Speaker 2: considering switching up its planned IPO offering, moving from London
Speaker 2: to Hong Kong. That's coording to sources. The fast fashion
Speaker 2: retailer is said to have shifted its plans because the
Speaker 2: approved process is dragged. She initially planned a list in
Speaker 2: the United States, but was ultimately derailed amid supply chain
Speaker 2: and labor scrutiny. Plus, Instacart has named Chris Rogers its
Speaker 2: new CEO, effective August fifteenth. He will replace current CEO Figisimo,
Speaker 2: who announced earlier this month that she will leave the
Speaker 2: company for a newly created role at OpenAI. Cimo will
Speaker 2: remain chair of the board at instacut. And a US
Speaker 2: district judge has ruled that Elon Musk will have to
Speaker 2: face a lawsuit that claims that he wielded illegal power
Speaker 2: in cutting federal jobs and spending under DOGE. Now, while
Speaker 2: Mask has been the public face a DOGE, he's deniety
Speaker 2: holds a formal position or has any authority to direct
Speaker 2: agencies to carry out the President's cost cutting agenda.
Speaker 3: ED and we stay with Elon Musk, his SpaceX Starship
Speaker 3: rocket launched last night but exploded mid flight, marking the
Speaker 3: third consecutive setback for the company. Still, Musk seemed enthusiastic
Speaker 3: despite the outcome, writing on X a lot of good
Speaker 3: data to review. Launch cadence for next three light flights
Speaker 3: will be faster.
Speaker 9: For more.
Speaker 3: We're joined by Bloomberg Sana Pashankar, who was up late
Speaker 3: covering the minute by minute of this ninth scheduled test flight.
Speaker 4: I think it's really important rights under the context.
Speaker 3: That the super heavy booster, as a part of the
Speaker 3: Starship combined system, was a reflight. It had flown on
Speaker 3: the seventh test flight. And the way that SpaceX is
Speaker 3: always going to say is that it's success because of
Speaker 3: the data gathered give us the kind of high level
Speaker 3: details we need to know about mission nine.
Speaker 2: Yeah, totally.
Speaker 13: So essentially, you know, everything seemed to be going smoothly
Speaker 13: at first. The giant rocket thundered off the launch pad
Speaker 13: at around six thirty pm in Texas, but about half
Speaker 13: an hour into the flight, the rocket experienced a leak
Speaker 13: in its fuel taking system, which kind of caused it
Speaker 13: to lose control and space now as it hurtled back
Speaker 13: towards Earth's atmosphere, and at the same time, it missed
Speaker 13: one of its key objectives, which was to deploy dummy
Speaker 13: Starlink satellites because the door to the rocket wouldn't open
Speaker 13: like which would release those satellites, So it did miss
Speaker 13: that key objective. As you said, it was able to
Speaker 13: reuse a booster from a previous flight, so as we've
Speaker 13: seen in some previous Starship launches, they were able to
Speaker 13: catch those boosters after the rocket launch, and so that
Speaker 13: was using one of those previously used boosters, which was
Speaker 13: a first for the company. However, as the rocket took off,
Speaker 13: the booster actually ended up being lost as well and exploding,
Speaker 13: although they weren't meant to retrieve that one to begin with.
Speaker 13: So overall there were there was a win with the
Speaker 13: use of the booster, but they missed a few key objectives.
Speaker 9: I sound know.
Speaker 2: What was interesting is we had been expecting an all
Speaker 2: hand style talk right as well, but that seemingly didn't occur.
Speaker 2: What are we anticipating in terms of signaling for the
Speaker 2: next steps, when do we push forward? If they are
Speaker 2: going to deem it in success story from what they've
Speaker 2: at least learned on the test.
Speaker 9: Yeah, totally.
Speaker 13: Yeah, so we were expecting an all hand style talk
Speaker 13: after the launch, and there was just no mention of it,
Speaker 13: no mention of canceling it or if it would happen.
Speaker 9: At a later date.
Speaker 13: But yeah, so SpaceX really does emphasize this philosophy of flying,
Speaker 13: failing and then fixing it. So that's kind of what
Speaker 13: Musk was saying about using the data to iterate again,
Speaker 13: make those fixes fly more. And so recently the FAA
Speaker 13: authorized that SpaceX.
Speaker 2: Would be able to do more launches.
Speaker 13: So I think they're really thinking about ramping up the
Speaker 13: launch cadence, learning more, flying more, and so we can
Speaker 13: expect a lot more test flights in the future.
Speaker 2: Satavashanka, we thank you very much.
Speaker 3: Indeed, NATO has proposed including cybersecurity as part of its
Speaker 3: new defense related spending target of one point five percent
Speaker 3: of GDP. Here in the US this week there is
Speaker 3: a House Committee Homeland Security field hearing on the future
Speaker 3: of America owning the cyber space. Wendy Whitmore, Palo Alto
Speaker 3: Networks chief security intelligence officer, is a witness at that
Speaker 3: hearing and enjoins US NOW in San Fan Francisco. Clearly
Speaker 3: for Western alliances, but also America, the role of cybersecurity
Speaker 3: in the national interest in defense is more prominent. Give
Speaker 3: me the basics of the hearing and why you have
Speaker 3: been called as a witness to it.
Speaker 14: Yeah, so we're excited that the hearing is happening in
Speaker 14: Solicon Valley and the focus of the hearing today is
Speaker 14: on technology innovation. So I think there is no organization
Speaker 14: that's doing more of that, especially when it comes to
Speaker 14: AI than Palo Alto Networks and will be really focused
Speaker 14: on what is it that the government needs to do
Speaker 14: to make security more actionable, and one of those areas
Speaker 14: is taking technology and focusing on outcomes. So the president,
Speaker 14: for example, should have a daily dashboard that shows civilian
Speaker 14: federal agencies how quickly are they responding to attacks and
Speaker 14: detecting them, and that should be as transparent as possible.
Speaker 3: You said the president should have which indicates to me
Speaker 3: that when in the cybersecurity context, this hearing is a
Speaker 3: step in the right direction.
Speaker 4: But you feel that.
Speaker 3: The administration in our government generally can do more to
Speaker 3: own cybersecurity on behalf of the nation.
Speaker 14: Well, I think the challenge that I was getting at,
Speaker 14: and it's certainly within the government, but also within civilian organizations.
Speaker 14: Is security is too complex and visibility is not centralized.
Speaker 14: And that's really what we're focused on is, Hey, let's
Speaker 14: create technological capabilities that then drive these outcomes so that
Speaker 14: those answers are clear, precise.
Speaker 2: Wendy, that dashboard, I'm so intrigued just to what it
Speaker 2: would show, because if I'm right, the numbers are extraordinary.
Speaker 2: That pallel to networks blocks every day thirty one billion
Speaker 2: cyber attacks. So what ultimately would the transparency look like?
Speaker 9: You are right?
Speaker 14: And one statistic that's I think even more saggering is
Speaker 14: that up to nine million of those every day are
Speaker 14: brand new and have never been seen before. So what
Speaker 14: we would encourage that dashboard to look like is focused
Speaker 14: on the time to detect and the time to respond.
Speaker 9: We work every day.
Speaker 14: With organizations throughout the world to drive those times down,
Speaker 14: and in one organization we recently worked with, they took
Speaker 14: that meantime to respond from three weeks down to nineteen minutes.
Speaker 14: And that time matters. When you can get it down
Speaker 14: into a number of minutes, you are now changing an
Speaker 14: outcome because that attack can no longer be successful.
Speaker 2: I mean the Committee on Home Land Security cools this
Speaker 2: discussion innovation Nation technology to secure cyberspace. The innovation is
Speaker 2: it all about AI at the moment, Wendy.
Speaker 14: It's certainly a huge part of it. Right We at
Speaker 14: Palaza Network spent one point eight billion dollars last year
Speaker 14: alone in R and D, much of it focused on AI.
Speaker 14: So we're absolutely looking at how we can use AI
Speaker 14: to turbocharts defenses and make sure that we're driving the
Speaker 14: time down and that organizations throughout the world are also
Speaker 14: implementing AI securely.
Speaker 3: In the broader theater of defense technology, we often talk
Speaker 3: about how the private sector and public sector work together.
Speaker 3: For example, different private organizations and reial on the hardware
Speaker 3: side and paleteer on the software side, we'll work with
Speaker 3: the National Defense Apparatus. How does that work in the
Speaker 3: sort of software cybersecurity space is a coalition of private
Speaker 3: companies and government entities.
Speaker 14: Well, what's critical, as you point out, is that those
Speaker 14: partnerships remain stronger than ever between the government and between
Speaker 14: civilian organizations. And so what we're focused on is how
Speaker 14: we can provide actionable data and insights into our government
Speaker 14: partners and agencies to make sure that they can continue
Speaker 14: the defense of the country.
Speaker 2: What are the main risks that they currently fend off?
Speaker 2: For laymen such myself, it's still phishing that seems to
Speaker 2: be incredibly purposeful since JENAI has come on the same
Speaker 2: But where are the threats particularly coming from in what form?
Speaker 14: Phishing is more powerful than ever, as you mentioned, because
Speaker 14: JENI has made JENAI has made communication capabilities even you know,
Speaker 14: less of a barrier to entry. But you know, I
Speaker 14: think what we're seeing our attacks from throughout the world,
Speaker 14: certainly from our adversaries in countries like China and Russia,
Speaker 14: that continues to occur. So we're focused on how do
Speaker 14: we make sure organizations we work with can defend those
Speaker 14: they can detect them within seconds ideally and then respond
Speaker 14: and contain them within minutes.
Speaker 3: If there is one message you want to get across
Speaker 3: to those committee members today or that you will challenge
Speaker 3: them on, what is it, Well.
Speaker 14: It's an AI is a key investment areas as a
Speaker 14: country and all of our allies to have successful defense.
Speaker 14: So we must be able to turb our charge our
Speaker 14: defense with technologies that fuel that.
Speaker 2: Wendy whitmore so good to have you ahead of that testimony.
Speaker 2: We appreciate it. Palo Alto Networks. Meanwhile, let's talk about
Speaker 2: deep Seek said it has upgraded the R one aim
Speaker 2: a eye moodel that it has and that of course,
Speaker 2: helped propel the Chinese start up to global prominence earlier
Speaker 2: this year. It described it as a quote minor trial
Speaker 2: upgrade and told users that it can start testing it.
Speaker 2: That's according to a company representatives post in an official
Speaker 2: we chat group. Now, the company didn't provide details about
Speaker 2: the upgrade and didn't respond to an email seeking further comment.
Speaker 2: Back to earning Salesforce coming up after the closing bell today,
Speaker 2: investors anxious for signs that customers are paying for new
Speaker 2: AI products and looking for more details about the company's
Speaker 2: eight billion dollar acquisition of Informatica. Now, analysts project Salesforce
Speaker 2: revenue will increase about seven percent to nine point seventy
Speaker 2: five billion dollars in the fiscal first quarter. At that rate,
Speaker 2: it marked the sixth straight period of slowing sales growth.
Speaker 3: Ed okay, Let's check back on Nvidia. The stock is
Speaker 3: a touch higher, basically flat and treading water ahead of
Speaker 3: the earnings being posted after the market.
Speaker 4: Bloomosei and King is here.
Speaker 3: Who leads our coverage of semiconductors, and I think it's
Speaker 3: really important to clarify for Wall Street, for our audience,
Speaker 3: and also for us here on bloe Blog Technology the
Speaker 3: situation with regards.
Speaker 4: To H twenty in China.
Speaker 3: In the quarter gone April, Nvidia took a five point
Speaker 3: five billion dollar right down on the asset or inventory
Speaker 3: and its commitments to sell that product into China, which
Speaker 3: it now can't sell into China. But if you look
Speaker 3: at the estimates for the fiscal second quarter, that may
Speaker 3: not be reflected this lost revenue opportunity because of the
Speaker 3: China situation.
Speaker 6: Yeah, that's absolutely right.
Speaker 15: If you look at the most recent reports that try
Speaker 15: to factor in what the effect might be going forward,
Speaker 15: they would indicate that can Census, which at the moment
Speaker 15: is at forty five point five billion in revenue for
Speaker 15: the quarter, probably should be maybe two three billion dollars
Speaker 15: lighter than that, maybe even more so, depending upon how
Speaker 15: you slice and dice that China revenue. So that's something
Speaker 15: that people need to be aware of as they look
Speaker 15: at the numbers when they get reported later today.
Speaker 2: I think the word I keep seeing is noisy. So
Speaker 2: as investors and you and I and ED try to
Speaker 2: weave ourselves through what the numbers actually say. What is
Speaker 2: it that Jensen and Colllect actually have to say.
Speaker 15: Yeah, I mean, noisy is the right way to look
Speaker 15: at it. I mean there are those out there that saying, hey, look,
Speaker 15: we shouldn't be over indexing on this because guess what
Speaker 15: in video has so much fundamental demand. If it just
Speaker 15: increases production of other chips for other markets, and these
Speaker 15: are more expensive chips, we can more than make up
Speaker 15: for this. So there is kind of an ongoing debate.
Speaker 15: That debate, as we've just established, is not resulting in
Speaker 15: a lot of clarity in terms of firm XPS.
Speaker 3: Jensen is going to talk about all of the industries
Speaker 3: that benefit from invidious technology, robotics, healthcare, the end result.
Speaker 4: Of large language model development.
Speaker 3: But in the quarter gone he flew around the world
Speaker 3: and did a lot of deals, the Middle East of
Speaker 3: the Golf being one example. Do we expect him to
Speaker 3: kind of give us a real sense of how much
Speaker 3: money this company is making from those deals?
Speaker 15: Yeah, I mean a lot of them are sort of
Speaker 15: tentative flash future memorial understanding type arrangements, So it's unlikely
Speaker 15: that he'll give those as a specific target, and he
Speaker 15: tends to not want to do that for obvious reasons,
Speaker 15: but you're right, he'll talk in broad terms about the
Speaker 15: future of AI and how that's going to increase general
Speaker 15: demand for his products going forward. The near term is
Speaker 15: probably going to be a little bit more choppy.
Speaker 2: Bloomberg's and King's going to be busy. Thank you. Tuning
Speaker 2: later today, of course, there's a special edition of BlueBag
Speaker 2: Technology and breaking down in videos earnings with at CEO
Speaker 2: Josan One. Tune in six thirty pm Eastern three thirty
Speaker 2: pm specific and that does it for this edition of
Speaker 2: bloomag Technology ED.
Speaker 4: Yeah, don't forget to check out the podcast.
Speaker 3: You can find it on the terminal as well as
Speaker 3: online on Apple, Spotify, and iHeart. From New York City
Speaker 3: and San Francisco, this is Bloomberg Technology