WEBVTT - Daybreak Holiday: Walmart, Nvidia, OpenAI 0:00:01.800 --> 0:00:04.440 Hello everybody, and thank you so much for joining us 0:00:04.440 --> 0:00:07.880 for this special edition of Bloomberg Daybreak. US markets are 0:00:07.920 --> 0:00:11.280 closed for the President's Day holiday. I'm Nathan Hager. Coming 0:00:11.360 --> 0:00:13.239 up this hour. We'll look ahead to a couple of 0:00:13.320 --> 0:00:17.080 major lawsuits on the docket. Elon Musk's battle against Open 0:00:17.120 --> 0:00:20.560 Ai and the Justice Department's case against Live Nation and 0:00:20.680 --> 0:00:22.920 ticket Master. We'll break them down with two of our 0:00:22.920 --> 0:00:26.799 litigation analysts from Bloomberg Intelligence, Matthew Shettenhelm on big tech 0:00:27.040 --> 0:00:29.600 and Jennifer Ree on Big ticket. Plus, we have a 0:00:29.600 --> 0:00:33.040 big earnings report coming up from AI Behemoth and Nvidia 0:00:33.400 --> 0:00:36.159 BI analyst man Deep Singh and Kunjohn Sapani will be 0:00:36.200 --> 0:00:39.159 along to preview those results. Before that, though, we hear 0:00:39.159 --> 0:00:43.200 from the world's biggest big box retailer this week, Walmart, 0:00:43.280 --> 0:00:46.320 reports earnings on Thursday. Here to get a set for 0:00:46.360 --> 0:00:50.040 that report, our Bloomberg Intelligence senior analyst Jennifer Bartashis who 0:00:50.080 --> 0:00:53.800 covers retail staples, and Punam Goyle, who's got things covered 0:00:53.880 --> 0:00:55.800 on the e commerce side. Thanks to both of you 0:00:55.920 --> 0:00:57.600 for being with us, and you know, coming off the 0:00:57.840 --> 0:01:00.960 flat retail sales report for decent number that we saw 0:01:01.080 --> 0:01:04.120 recently Jennifer, I'll start with you, how does that affect 0:01:04.160 --> 0:01:05.960 what we could see from Walmart when it comes to 0:01:06.040 --> 0:01:06.959 the earnings this week. 0:01:07.760 --> 0:01:11.520 You know what's interesting is that for Walmart, it doesn't 0:01:11.520 --> 0:01:13.959 matter so much what the retail sales do just because 0:01:14.040 --> 0:01:17.400 the trends that are in place have really been conducive 0:01:17.480 --> 0:01:20.480 to their growth and their business. People are seeking value, 0:01:20.520 --> 0:01:26.360 People are seeking, you know, ways to streamline their time 0:01:26.400 --> 0:01:29.679 and find convenience, and Walmart just seems to be gaining 0:01:29.720 --> 0:01:34.640 share based on their ability to offer that to their customers. So, 0:01:34.920 --> 0:01:37.800 regardless of the macro environment, Walmart really seems to be 0:01:37.840 --> 0:01:38.720 thriving at the moment. 0:01:39.080 --> 0:01:41.759 And put them to bring you into the conversation, We're 0:01:41.800 --> 0:01:45.720 seeing a lot of consumers seeking out Walmart's business on 0:01:45.920 --> 0:01:48.920 the e commerce side as well. How could that play 0:01:48.960 --> 0:01:50.160 out into these earnings? 0:01:51.040 --> 0:01:53.080 We think Walmart will continue to do well on the 0:01:53.080 --> 0:01:56.600 e commerce side. If Amazon is any reflection on how 0:01:56.600 --> 0:01:59.280 the consumer is shopping online, they had great numbers on 0:01:59.320 --> 0:02:01.800 the retail side, high single digit sales growth in their 0:02:01.840 --> 0:02:05.280 online business. We expect Walmart to be no different. They've 0:02:05.280 --> 0:02:08.480 put a lot of investment behind their e commerce unit 0:02:08.680 --> 0:02:11.799 and they have been very quickly gaining share. Its over 0:02:11.840 --> 0:02:16.280 one hundred billion dollars in GMB today. That's pretty impressive 0:02:16.320 --> 0:02:19.560 given how little time they've gotten there. So we think 0:02:19.600 --> 0:02:22.040 the e commerce handle for them will play out while 0:02:22.200 --> 0:02:23.320 just like it did for Amazon. 0:02:23.560 --> 0:02:27.760 You know, it's interesting, Jen, Walmart is seeing competition from 0:02:27.840 --> 0:02:31.840 Amazon on multiple fronts, not just on the e commerce side, 0:02:31.880 --> 0:02:34.800 but Amazon is kind of altering its footprint in the 0:02:34.800 --> 0:02:38.840 grocery business as well. How do you see Walmart weathering 0:02:38.919 --> 0:02:40.240 that well? 0:02:40.280 --> 0:02:43.320 I think what's interesting is that, you know, when Amazon 0:02:43.360 --> 0:02:45.760 announced that they were closing their Amazon Fresh stores and 0:02:45.800 --> 0:02:48.440 their Amazon Ghost stores, which was more of a convenience 0:02:48.440 --> 0:02:51.480 store format. You know, people kind of set up and 0:02:51.480 --> 0:02:55.200 took notice, but it's important to remember there were way 0:02:55.280 --> 0:02:58.440 under one hundred of those stores altogether, so it's never 0:02:58.520 --> 0:03:03.240 been the majority of Amazon's grocery footprint. Instead, you know, 0:03:03.320 --> 0:03:05.959 they have a lot of sales that are what you 0:03:05.960 --> 0:03:10.440 would consider grocery category sales that happen through Amazon dot 0:03:10.480 --> 0:03:13.760 Com and through their Amazon Fresh and so those are 0:03:13.919 --> 0:03:17.360 your your fresh items, as your paper towels, things like that. 0:03:18.280 --> 0:03:23.240 Walmart is the biggest grocer in the United States. You know, 0:03:23.320 --> 0:03:27.760 they own almost thirty percent of market share, so they're 0:03:27.880 --> 0:03:31.440 very well entrenched and because they've been investing in their capabilities. 0:03:32.160 --> 0:03:34.480 You know, I think there's room for Amazon to grow, 0:03:34.880 --> 0:03:38.080 but we're not expecting any kind of major, you know, 0:03:38.560 --> 0:03:41.280 change in who's the leader in grocery over the next 0:03:41.360 --> 0:03:41.960 couple of years. 0:03:42.360 --> 0:03:44.680 You got to think to put them that Walmart's got 0:03:44.760 --> 0:03:48.440 room to grow overall on e commerce as well. Although 0:03:48.640 --> 0:03:52.040 Amazon being the behemoth it is, what's the challenge for 0:03:52.120 --> 0:03:54.600 Walmart to compete online? 0:03:55.560 --> 0:03:57.880 I don't think it's really a challenge anymore because they're 0:03:57.920 --> 0:04:01.000 making the right investments. They're investing like just they're investing 0:04:01.080 --> 0:04:04.600 in product and expanding their marketplace. You know, a lot 0:04:04.640 --> 0:04:07.520 of times people tend to think that if Walmart wins, 0:04:07.600 --> 0:04:10.600 Amazon loses, that's not the case. I think both of 0:04:10.640 --> 0:04:13.280 them can grow together. There's a lot of share shifts 0:04:13.280 --> 0:04:15.480 that are taking place in retail where shopping is just 0:04:15.520 --> 0:04:19.159 gradually moving online. We have estimated that twenty five percent 0:04:19.160 --> 0:04:22.440 of total retail sales in the US are online today 0:04:22.480 --> 0:04:24.320 and they're going to be growing to thirty three percent 0:04:24.360 --> 0:04:27.640 in the next few years. So there's plenty of opportunity 0:04:28.040 --> 0:04:32.520 for retailers to capture that growing opportunity and among them, 0:04:32.640 --> 0:04:35.960 Walmart and Amazon are still probably best position to do so. 0:04:36.320 --> 0:04:39.200 And when it comes to the overall business, Jen, is 0:04:39.240 --> 0:04:43.560 it all about grocery for Walmart? Is that where the 0:04:43.600 --> 0:04:47.719 basis for Walmart's businesses right now? Or is it seeing 0:04:48.040 --> 0:04:52.440 the potential for growth across its categories of items that 0:04:52.480 --> 0:04:52.960 it sells? 0:04:53.560 --> 0:04:57.279 Now, there's definitely growth across all of the categories. You know, 0:04:57.360 --> 0:05:02.920 grocery categories do you comprise about half of Walmart's total revenue, 0:05:02.960 --> 0:05:06.200 so it is important. But you know, the company does 0:05:06.240 --> 0:05:10.520 a great job of of having that broad assortment be 0:05:10.640 --> 0:05:13.680 tailored to be appealing to customers. And that's in the 0:05:13.760 --> 0:05:16.920 US and that's worldwide. And so you know what we 0:05:17.000 --> 0:05:20.000 see is that, you know, grocery is great because it's 0:05:20.040 --> 0:05:23.760 a frequency category. You buy groceries frequently. It takes you 0:05:23.800 --> 0:05:26.640 to stores, but once you're in the store or once 0:05:26.640 --> 0:05:30.200 you're online, placing that order between either the in store experience, 0:05:30.520 --> 0:05:35.479 the merchandise selection, or the technology that's used from a 0:05:35.560 --> 0:05:38.960 from an interface perspective, it's really helping guide people to 0:05:39.040 --> 0:05:42.080 buy more than just their groceries at Walmart, and so 0:05:42.320 --> 0:05:45.559 you know, they've had strong, much stronger general merchandise sales 0:05:45.560 --> 0:05:47.680 than some of their peers over the last last few 0:05:47.760 --> 0:05:48.640 quarters and. 0:05:48.600 --> 0:05:51.240 Put them how do you see Walmart continuing to grow 0:05:51.360 --> 0:05:55.000 its business on the tech side in terms of developing 0:05:55.040 --> 0:05:59.479 its interfaces integrating artificial intelligence into what it does. 0:06:00.320 --> 0:06:03.279 I think, just like everyone else today, the integration of 0:06:03.360 --> 0:06:08.440 artificial intelligence agentic shopping is key. Walmart's integrated itself into 0:06:08.520 --> 0:06:12.600 chat GBT, so it's clearly opening up avenues to broaden 0:06:12.640 --> 0:06:17.000 its customer base and get a piece of that agentic 0:06:17.200 --> 0:06:22.240 AI shopping driven conversion. We think they're making advancements to 0:06:22.360 --> 0:06:26.040 broaden their customer base beyond you know, when you think 0:06:26.080 --> 0:06:28.720 about the Walmart customers, it is broad and it is 0:06:29.400 --> 0:06:32.479 a customer predominantly that's seeking value. But they're trying to 0:06:32.560 --> 0:06:35.040 expand that and they have to some extent, and Jen 0:06:35.080 --> 0:06:37.919 could talk about this, have really expanded that through the 0:06:37.920 --> 0:06:41.720 Walmart Plus membership. But in using AI and agentic shopping 0:06:41.760 --> 0:06:46.360 and just technology robotics automation, we think they are making 0:06:46.839 --> 0:06:49.279 progress and they will continue to invest in that front 0:06:49.279 --> 0:06:52.120 to move forward in retail because if they don't, quite honestly, 0:06:52.200 --> 0:06:54.080 they won't be able to continue to gain share. 0:06:55.000 --> 0:06:59.320 I'm speaking with Punum Goyle and Jen Bartascius of Bloomberg Intelligence. 0:06:59.400 --> 0:07:02.560 Jen pickop to that point that Punam raised there in 0:07:02.640 --> 0:07:06.440 terms of the Walmart Plus business, there has been this 0:07:06.560 --> 0:07:10.360 push into more subscriber fed business. How is that paying 0:07:10.400 --> 0:07:11.200 off for Walmart? 0:07:12.200 --> 0:07:15.040 Yeah, it's it's a it's a great program for Walmart. 0:07:15.440 --> 0:07:18.080 When you think about what Walmart has been talking about 0:07:18.120 --> 0:07:20.720 and over the past several quarters, they've been bringing in 0:07:20.760 --> 0:07:24.160 more higher income households into their ecosystem. Now, part of 0:07:24.200 --> 0:07:27.760 that is people seeking value, but the Walmart Plus program, 0:07:27.800 --> 0:07:31.720 when they get people engaged with that, that makes people sticky. 0:07:32.440 --> 0:07:35.680 And so historically, when the economy has been weak, Walmart 0:07:35.720 --> 0:07:38.920 gains people, they gain shoppers, but then as the economy 0:07:38.920 --> 0:07:42.120 gets better, some of those customers bleed away. What Walmart 0:07:42.160 --> 0:07:44.960 Plus does is it helps keep all of those customers 0:07:45.000 --> 0:07:48.400 sticky and in the in the Walmart universe, and through 0:07:48.560 --> 0:07:52.040 the offering of convenience of being able to have things 0:07:52.040 --> 0:07:54.240 delivered to your house or even into your house and 0:07:54.280 --> 0:07:57.760 into your refrigerator directly, or being able to pick things 0:07:57.840 --> 0:08:00.040 up at the at the curb side, and all the 0:08:00.000 --> 0:08:03.520 their perks and benefits that they offer via that membership program. 0:08:04.160 --> 0:08:09.160 It really helps keep those customers you know, engaged, and 0:08:09.320 --> 0:08:13.239 it provides a recurring revenue source in terms of membership fee. 0:08:13.600 --> 0:08:15.560 So there's there's lots of levels to the win of 0:08:15.640 --> 0:08:18.160 having a robust program like Walmart Plus. 0:08:17.880 --> 0:08:22.120 And in terms of the value seeking customer getting into 0:08:22.160 --> 0:08:25.600 that engagement as well. Poonam, do you see that trend 0:08:25.680 --> 0:08:29.360 continuing having some of these more higher middle income consumers 0:08:29.360 --> 0:08:32.840 getting driven more into Walmart to seek that value. 0:08:33.280 --> 0:08:35.480 Yeah. I don't think that changes much for the lower 0:08:35.559 --> 0:08:37.120 end customer. I mean, at the end of the day, 0:08:37.200 --> 0:08:41.840 Walmart stands for value, so everyone wants to find things cheaper. 0:08:41.880 --> 0:08:43.959 I don't think a higher income consumer would go out 0:08:44.000 --> 0:08:46.400 and say I'm willing to pay more unless there's a 0:08:46.400 --> 0:08:49.000 service element to it, or there's an aesthetic involved or 0:08:49.000 --> 0:08:52.320 a better brand involved. But I think having a broad 0:08:52.559 --> 0:08:56.280 array of customers which Walmart is now targeting to expand 0:08:56.280 --> 0:08:59.200 that upper end of the funnel, it doesn't hurt them. 0:08:59.360 --> 0:09:02.880 And it's an easy way to do that because when 0:09:02.880 --> 0:09:06.520 you're on an online platform, the experience is similar to 0:09:06.600 --> 0:09:09.440 all versus you know, people would argue in the past 0:09:09.440 --> 0:09:12.160 when you walk into a Walmart store, the experience is 0:09:12.280 --> 0:09:14.560 very different. Than when you were to walk into a 0:09:14.559 --> 0:09:17.600 whole food store, right, But if you're shopping online for 0:09:17.760 --> 0:09:21.520 paper towels, it's wherever you're used to going. And that's 0:09:21.520 --> 0:09:24.000 what Jen talked about the stickiness of it. Right when 0:09:24.160 --> 0:09:26.720 you're a Prime member, you're a Walmart Plus member, because 0:09:26.760 --> 0:09:29.520 you're paying for this membership, you want to utilize it. 0:09:29.559 --> 0:09:31.280 And once you begin to utilize it and see the 0:09:31.360 --> 0:09:33.839 value in it, that's just a natural place that you're 0:09:33.880 --> 0:09:34.920 going to go to next. 0:09:35.400 --> 0:09:37.400 You know, Jen, this is an interesting time in the 0:09:37.800 --> 0:09:42.720 big retail business with a lot of these sort of 0:09:43.200 --> 0:09:45.440 businesses that we think of as catering to the lower 0:09:45.520 --> 0:09:48.560 end consumer, like Dollar Tree, Dollar General moving into some 0:09:48.600 --> 0:09:52.000 of these bigger markets and target continuing to try to 0:09:52.080 --> 0:09:55.240 find a direction. How do you see Walmart sort of 0:09:55.320 --> 0:10:00.480 navigating some of that perhaps increased competition from the lower 0:10:00.559 --> 0:10:01.320 end retailers. 0:10:02.320 --> 0:10:04.440 Yeah, it's it's a it's a very good question. You know, 0:10:04.520 --> 0:10:08.679 when when you look at the customer that the the 0:10:08.800 --> 0:10:12.400 organizations that target the lower end consumers, like your dollar stores, 0:10:13.200 --> 0:10:16.320 you know, in terms of store base, those those companies 0:10:16.320 --> 0:10:19.440 tend to be located in greater proximity to some of 0:10:19.480 --> 0:10:22.120 the you know, to some of those customers. So you know, 0:10:22.240 --> 0:10:25.520 it's about it's about trip frequency. So dollar stores are 0:10:25.559 --> 0:10:28.880 really favored when people are doing kind of quick fill 0:10:28.920 --> 0:10:32.960 in trips in between larger shops. Where Walmart comes into 0:10:32.960 --> 0:10:35.600 place is for that larger shop when people are planning, 0:10:35.880 --> 0:10:38.640 you know, multiple meals in advance. They're planning, you know, 0:10:39.200 --> 0:10:42.680 for a larger event or something like that. And so 0:10:43.160 --> 0:10:46.520 you know, as we've seen you know, some uh some 0:10:46.520 --> 0:10:49.959 some consolidation happening in the in the dollar store industry. 0:10:50.000 --> 0:10:51.800 You know, we saw ninety nine cent stores go out 0:10:51.840 --> 0:10:55.080 of business. You know, we saw a party city collapse. 0:10:55.720 --> 0:10:58.760 That offers opportunity to ev for everybody, and and Walmart 0:10:58.800 --> 0:10:59.880 is included in that mix. 0:11:00.320 --> 0:11:02.520 And Jen, just to close this out, I think this 0:11:02.600 --> 0:11:05.640 is going to be the first earnings report under Walmart's 0:11:05.679 --> 0:11:09.400 new CEO, John Ferner, Right, Uh, what what's the pressure 0:11:09.440 --> 0:11:12.440 on him, uh to keep up the momentum that we've 0:11:12.440 --> 0:11:14.760 seen under Doug McMillan over the years. 0:11:15.800 --> 0:11:17.840 I think that they certainly there's there's going to be 0:11:17.880 --> 0:11:21.520 expectations that he continues with the things that have really 0:11:21.520 --> 0:11:24.840 benefited Walmart in recent years, which is that willingness to 0:11:25.160 --> 0:11:30.800 experiment and and fail. So experiment, adapt what what works, 0:11:31.000 --> 0:11:33.640 you know, roll it up quickly. If something doesn't work, 0:11:33.920 --> 0:11:36.360 walk away. You know, I think that he's you know, 0:11:36.400 --> 0:11:39.280 he's been with Walmart for a while, so you know, 0:11:39.320 --> 0:11:43.000 he certainly has the perspective of what the company has 0:11:43.040 --> 0:11:46.280 been doing. But I think all eyes will be on whether, 0:11:46.559 --> 0:11:50.840 you know, he finds new opportunities to kind of supplement 0:11:50.840 --> 0:11:54.079 the ecosystem that Walmart has been building. That said, we're 0:11:54.080 --> 0:11:56.600 not expecting any major pivots and strategy in the short 0:11:56.679 --> 0:12:01.520 term because the the the this is working quite well 0:12:01.559 --> 0:12:03.600 for Walmart at the moment, and they continue to gain 0:12:03.640 --> 0:12:06.120 share and they continue to put on new customers. 0:12:05.960 --> 0:12:08.560 Really appreciate this as we look ahead to these earnings 0:12:08.559 --> 0:12:12.920 from Walmart on Thursday. That's Jen Bartashis and Punam Goyle, 0:12:13.160 --> 0:12:16.560 retail analysts for Bloomberg Intelligence. And up next, we're going 0:12:16.600 --> 0:12:18.200 to stick with the earnings theme and look at what 0:12:18.280 --> 0:12:21.640 to expect from Chip Giant in Vidia. It's twenty minutes 0:12:21.679 --> 0:12:25.000 past the hour. I'm Nathan Hager, and this is Bloomberg. 0:12:35.320 --> 0:12:38.520 Welcome back to this special edition of Bloomberg Daybreak. US 0:12:38.520 --> 0:12:41.720 markets are closed for the President's holiday. I'm Nathan Hager, 0:12:41.720 --> 0:12:45.559 and we continue our focus on earnings. Nvidia reports its 0:12:45.640 --> 0:12:48.920 latest quarterly numbers next week. From what we can expect 0:12:48.920 --> 0:12:51.600 from the chip behemoth, let's bring in Man Deep Saying, 0:12:51.640 --> 0:12:54.640 global head of tech research for Bloomberg Intelligence, and BI 0:12:54.800 --> 0:12:58.640 senior Semiconductors analyst Kunjohn Sabani. Thanks so much to both 0:12:58.679 --> 0:13:00.760 of you for being with us, and many people start 0:13:00.800 --> 0:13:02.720 with you because it seems like the bar keeps getting 0:13:02.760 --> 0:13:06.640 set higher and higher for Nvidia quarter in and quarter out. 0:13:07.160 --> 0:13:08.840 Do you agree with that and how high is the 0:13:08.840 --> 0:13:09.560 bar this time? 0:13:10.080 --> 0:13:12.600 Well, so, in the last couple of years, what we 0:13:12.679 --> 0:13:18.640 have seen is in Vidia's top line growth actually tracks 0:13:19.440 --> 0:13:23.600 the hyperscale capex changes. And what we have seen here 0:13:23.640 --> 0:13:29.200 today is all these hyperscalers raising their capex expectations for 0:13:29.280 --> 0:13:33.480 twenty twenty six and we're talking about another year of 0:13:33.559 --> 0:13:38.240 a sixty percent increase in total capex. And so if 0:13:38.320 --> 0:13:42.040 that's tracking, you know, in Vidia's top line growth and 0:13:42.120 --> 0:13:44.160 it's a it's a good proxy for that, then we 0:13:44.240 --> 0:13:47.160 can expect something similar and that's where the estimates keep 0:13:47.200 --> 0:13:52.280 getting revised upward. And now you know, consensus is forecasting 0:13:52.320 --> 0:13:55.760 almost a sixty percent increase in in Vidio's top line 0:13:55.800 --> 0:13:56.840 for twenty twenty six. 0:13:57.440 --> 0:14:02.080 My eyebrowser already hurting just thinking about that, Kunjon. To 0:14:02.240 --> 0:14:05.920 that point, six hundred and fifty billion dollars over the 0:14:05.960 --> 0:14:08.360 next year is the number we keep hearing from the 0:14:08.720 --> 0:14:13.640 four hyper scalers in terms of their AI plans. How 0:14:13.640 --> 0:14:18.480 do you think that plays out for Nvidia's results, Well. 0:14:18.320 --> 0:14:22.720 That should be a definite tailwind. Remember sometime in three 0:14:22.880 --> 0:14:26.960 Q calendar three Q last year, Jensen gave out a 0:14:27.160 --> 0:14:30.600 five hundred billion dollar This is Nvidia's revenue, not the 0:14:30.680 --> 0:14:33.680 hyperscale care PACs, but five hundred billion dollar of a 0:14:33.880 --> 0:14:38.000 pipeline of a backlog for both its Blackwell and upcoming 0:14:38.440 --> 0:14:41.480 Rubin which will be in second half twenty six through 0:14:41.560 --> 0:14:46.720 twenty twenty six. Since then, as Mandeep mentioned, the estimates 0:14:46.760 --> 0:14:49.920 for these hyper scalers have gone up in some cases 0:14:50.280 --> 0:14:52.600 like Google and Amazon has gone up close to forty 0:14:52.680 --> 0:14:56.640 fifty percent, So those a significant portion of that increase 0:14:56.800 --> 0:15:00.160 should definitely go in Vida's way. So that should now 0:15:00.680 --> 0:15:04.120 raise the estimates even more. Since off of that three 0:15:04.200 --> 0:15:06.520 QI billion pipeline. 0:15:06.160 --> 0:15:09.720 Number, Mandy, do you see in Vidia keeping up with 0:15:09.840 --> 0:15:13.200 the demand that that kind of spending entails. 0:15:13.720 --> 0:15:13.920 Yeah. 0:15:13.960 --> 0:15:17.520 In fact, I was at CEES this year and then 0:15:17.960 --> 0:15:22.240 at Davos as well, and Jensen said demand is really 0:15:22.320 --> 0:15:26.920 strong at least ten times you know, during those big events. 0:15:26.920 --> 0:15:31.840 So clearly he anticipated this and Nvidia has been preparing 0:15:32.000 --> 0:15:35.120 for this kind of step up and demand. The one 0:15:35.200 --> 0:15:38.480 caveat here is what we are hearing from companies about 0:15:38.520 --> 0:15:42.360 memory prices, and every company that has reported so far 0:15:42.440 --> 0:15:45.800 on the hardware side has called out, you know, memory 0:15:45.840 --> 0:15:49.880 pricing being a challenge. I think Nvidia, given their scale, 0:15:50.840 --> 0:15:54.200 has probably managed it far better than some of the 0:15:54.400 --> 0:15:58.920 smaller companies. But there's no doubt that memory is having 0:15:58.960 --> 0:16:03.360 an impact on the supply chain this quarter and most 0:16:03.440 --> 0:16:05.520 likely for the next couple of quarters at least. 0:16:05.600 --> 0:16:07.600 Now give us your view on that, Coon, John, because 0:16:07.800 --> 0:16:10.000 to man Deep's point, that is something that we've been 0:16:10.040 --> 0:16:14.360 hearing a lot from many companies, even outside the hyperscalers, 0:16:14.360 --> 0:16:18.560 that these memory prices are potential crimp to their margins. 0:16:19.280 --> 0:16:21.880 Yeah, I mean that is true, and as an industry 0:16:21.920 --> 0:16:24.360 they just have to deal with it. But given you know, 0:16:24.520 --> 0:16:27.240 in the terms of stack of priority, look and media 0:16:27.280 --> 0:16:30.080 is of course going to get the first priority. We 0:16:30.240 --> 0:16:33.560 have seen, including Nvidia, but we have seen from the 0:16:33.640 --> 0:16:38.880 memory players that they are reprioritizing key markets, which is 0:16:38.920 --> 0:16:41.720 the data center, which is the latest and greatest servers, 0:16:41.760 --> 0:16:43.880 because that's where they get the most profit and the 0:16:43.920 --> 0:16:49.520 most dollar. And Nvidia also has prioritized and has actually 0:16:49.560 --> 0:16:53.840 announced that they're going to not ship enough gaming GPUs 0:16:53.840 --> 0:16:56.760 because they want to prioritize the memory that goes to 0:16:56.800 --> 0:16:59.800 the server GPUs. So we think Nvidia should be okay. 0:17:00.200 --> 0:17:05.760 The smaller, much more not sophisticated players and players outside 0:17:05.760 --> 0:17:09.159 of the data center will see some impact of taking 0:17:09.320 --> 0:17:12.000 allogation away from them or not getting the key allogation, 0:17:12.119 --> 0:17:15.280 but Nvidia and hyperscalers should mostly be okay. 0:17:15.720 --> 0:17:19.119 Now we know that in Video is an industry leader 0:17:19.200 --> 0:17:21.360 in the GPUs, but we hear all this talk as 0:17:21.400 --> 0:17:26.679 well about TPUs. How could that be playing out in 0:17:26.720 --> 0:17:28.359 the earnings when they report. 0:17:28.920 --> 0:17:32.600 Yeah, I think what we saw from Google is one 0:17:33.280 --> 0:17:38.280 they expect, you know again fifty percent of their deployments 0:17:38.320 --> 0:17:42.160 to go towards their cloud business, and the cloud business 0:17:42.200 --> 0:17:45.840 seems to be accelerating. We saw a quarter with forty 0:17:45.880 --> 0:17:50.159 eight percent cloud growth, which is far better than the 0:17:50.240 --> 0:17:55.320 other hyperscalers and with you know, better margins. So I 0:17:55.359 --> 0:17:59.160 think where the TPUs story is really solid for someone 0:17:59.280 --> 0:18:03.159 like Google is the fact that one it's vertical stack 0:18:03.240 --> 0:18:07.800 integration that gives them a much better you know, token 0:18:07.880 --> 0:18:11.159 per what sort of a metric compared to other hyperscalers. 0:18:11.200 --> 0:18:16.400 And also, I think in terms of kapex efficiency, Google 0:18:16.520 --> 0:18:20.520 probably is the best position when it comes to the hyperscaler. 0:18:20.600 --> 0:18:24.480 So it'll be interesting to see, you know, what Microsoft 0:18:24.680 --> 0:18:27.800 and Meta end up doing, given Amazon has also talked 0:18:27.800 --> 0:18:31.920 about ramping up their Traanium chips their own A six. 0:18:32.040 --> 0:18:37.040 So both Amazon and Google are a tailwind for someone 0:18:37.160 --> 0:18:40.320 like Broadcom, which Kunjin can talk more about. But clearly 0:18:41.160 --> 0:18:44.480 I think Microsoft and Meta are probably more reliant on 0:18:44.600 --> 0:18:46.840 Nvidia at this point than the other hyperscalers. 0:18:46.960 --> 0:18:49.760 We're speaking with Mandeep Saying, Global head of Tech research 0:18:49.760 --> 0:18:54.480 at Bloomberg Intelligence, and BI Senior Semiconductor's analyst Kunjohn Sabani. 0:18:54.720 --> 0:18:57.720 Kenjohn Let's pick up off of Mandeep's point about how 0:18:57.920 --> 0:19:01.240 Nvidia is weathering the competition and from some of these 0:19:01.320 --> 0:19:04.360 other chip players, not just the TPUs but the likes 0:19:04.359 --> 0:19:06.440 of Broadcom, AMD, Micron. 0:19:08.960 --> 0:19:11.840 Yeah, I mean Look, there is no doubt and we 0:19:12.560 --> 0:19:15.840 have a forecast in our latest AI chip Deep Type 0:19:15.840 --> 0:19:18.360 that we are published, But there is no doubt that 0:19:18.520 --> 0:19:21.359 a six R, which is the likes of a TPU 0:19:21.400 --> 0:19:24.480 and a trainium are going to grow fast and to 0:19:24.600 --> 0:19:29.040 some degree definitely take share away from in Media. It's 0:19:29.240 --> 0:19:33.240 GPU competitor, which is from AMD, is also getting ready 0:19:33.280 --> 0:19:36.800 to ship its first server level solution in second half 0:19:36.800 --> 0:19:40.160 twenty six. So look, competition is coming from all angles. 0:19:40.640 --> 0:19:42.960 Having said that, though you know, and Media is also 0:19:43.760 --> 0:19:47.359 not sitting on his heels. They have been trying to 0:19:47.440 --> 0:19:51.520 explore different areas and markets. One example is they have 0:19:51.600 --> 0:19:54.600 announced they are going to start selling their best in 0:19:54.680 --> 0:19:57.960 class ARM based CPU as a stand alone chips, so 0:19:58.480 --> 0:20:00.679 entering into a brand new TAM that they didn't have 0:20:00.760 --> 0:20:03.840 access to it in the past. And we think, you know, 0:20:03.880 --> 0:20:07.280 beyond just server GPUs, they will be making forays into 0:20:07.320 --> 0:20:10.960 a lot more other areas of AI, whether it's automotive, 0:20:10.960 --> 0:20:14.720 whether it's physical AI. So right now the demand is 0:20:14.760 --> 0:20:18.359 so high that despite such high competition that I talked about, 0:20:18.520 --> 0:20:21.480 in Media can still continue growing really handsomely, at least 0:20:21.480 --> 0:20:22.960 for the next two to three years. 0:20:23.320 --> 0:20:27.520 Matthew how do you see Video's growth rejectory at this point, 0:20:27.880 --> 0:20:31.520 not just on the chips, but growing into other markets. 0:20:31.240 --> 0:20:34.160 Does Video even need to grow into other markets? When 0:20:34.400 --> 0:20:36.720 the hyperscalers you're talking about the kind of spending that 0:20:36.760 --> 0:20:37.320 they are. 0:20:37.800 --> 0:20:40.720 Well, you have to think, you know, one or two 0:20:40.800 --> 0:20:43.760 years ahead, because the kind of levels we are seeing 0:20:43.800 --> 0:20:46.760 with capex and you know, as I said, we'll see 0:20:46.800 --> 0:20:49.680 another year of sixty percent growth. We already had two 0:20:49.720 --> 0:20:54.160 years of sixty to seventy percent CAPEX growth. These kind 0:20:54.200 --> 0:20:57.000 of growth levels are not sustainable. I mean, there is 0:20:57.080 --> 0:21:01.119 no doubt that growth in CAPEX will taper off. And 0:21:01.280 --> 0:21:04.720 you know we are already talking about trillion dollars plus 0:21:04.720 --> 0:21:07.680 in CAPEX. So from this point on, you know, six 0:21:07.800 --> 0:21:10.879 hundred and fifty billion, you will see a deceleration in 0:21:10.960 --> 0:21:14.119 capex grud. So the question for Nvidia is if there 0:21:14.160 --> 0:21:17.679 is competition coming, do they want to move up the stack, 0:21:17.720 --> 0:21:20.760 which they've already done with the release of a foundational 0:21:20.800 --> 0:21:24.119 model on the autonomous driving side, the Alpmyle model that 0:21:24.160 --> 0:21:27.720 they've released, And that's where you know, they'll have to 0:21:27.800 --> 0:21:30.640 pick their spots in terms of what are the areas 0:21:30.720 --> 0:21:34.800 where they feel like They've got a lot in terms 0:21:34.840 --> 0:21:38.760 of the adjacent capabilities. They've already have a very sizable 0:21:38.800 --> 0:21:42.520 networking business. Then that Kunjin can talk about. But to me, 0:21:42.680 --> 0:21:46.920 the key is what kind of advantage these foundational models 0:21:46.960 --> 0:21:50.639 that are trained on the latest Blackwell architecture can show 0:21:50.760 --> 0:21:53.560 versus the A six and how big that gap is, 0:21:53.640 --> 0:21:56.480 Because at the end of the day, companies that are 0:21:56.600 --> 0:22:00.200 using the Nvidia clusters want to see, you know, whether 0:22:00.280 --> 0:22:04.679 it's performance in terms of tokens for what, or you know, 0:22:04.720 --> 0:22:08.680 the intelligence layer being better versus some of the other 0:22:08.720 --> 0:22:11.840 foundational models that are not trained on Invidia chips and 0:22:11.880 --> 0:22:15.080 that sort of distinction is very important to keep, you know, 0:22:15.119 --> 0:22:18.440 the gross margins that Nvidia has versus the competition. 0:22:18.680 --> 0:22:20.439 I pick up on that, kin John, how do you 0:22:20.480 --> 0:22:23.960 see in Nvidia sort of growing into some of that story. 0:22:25.640 --> 0:22:28.639 Yeah, I mean, look mentioned about networking, just to just 0:22:28.680 --> 0:22:31.399 give a point of reference, This is not an area 0:22:31.760 --> 0:22:36.400 Nvidia was playing up until even just two years back. Today, 0:22:36.520 --> 0:22:39.960 the revenues from networking are going to run close to 0:22:40.680 --> 0:22:44.600 thirty billion figure for the full year. Nvidia was not 0:22:44.640 --> 0:22:48.200 even doing thirty billion as a whole company up back 0:22:48.200 --> 0:22:51.640 in until twenty twenty three, So that's just to set 0:22:51.680 --> 0:22:55.120