Nvidia Expects to Make $1 Trillion From AI Chips Through 2027

Summary

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Bloomberg Businessweek Podcast Summary

Episode: Nvidia Expects to Make $1 Trillion From AI Chips Through 2027
Date: March 16, 2026
Hosts: Carol Massar & Tim Stenovec
Notable Guests: Ed Ludlow (Bloomberg Tech), Catherine Owen Adams (Acadia Pharmaceuticals), Mark Champion (Bloomberg Opinion), Aaron Mobihill (JP Morgan Asset Management)

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Episode Overview

This episode spotlights Nvidia’s ambitious AI chip revenue forecast, analyzes the market’s reaction, discusses AI advances and data center hardware trends, and expands into related economic and geopolitical issues, including regulatory developments in biotech and the macroeconomic impacts of ongoing Middle East conflicts.

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Key Discussion Points and Insights

1. Nvidia’s $1 Trillion AI Chip Revenue Forecast

Segment: [02:03–11:14]

• Announcement Summary:

  • Nvidia CEO Jensen Huang, at the GTC event, projected $1 trillion in revenue from AI chips between 2025 and 2027, doubling a previously cited $500 billion figure ([02:37]).
  • Interpretation: The new forecast extends the timeframe, not necessarily accelerating prior growth, but clarifies Nvidia’s outlook through 2027 ([02:37], Ed Ludlow).

• Market Reaction:

  • The announcement led to a brief spike in Nvidia’s share price, which tapered as analysts saw this as a natural extension of previous trajectory, not a game-changer.

    “Massive spike when Jensen Huang said it on stage. And then Wall Street did the math.”
    – Ed Ludlow ([03:39])

• Revenue Sources:

  • About 60% of the projected $1T revenue will still come from the “hyperscalers”—the four major cloud providers, showing Nvidia’s continued reliance on large customers ([04:47]).

    “It seems as if actually it's swung back to being heavily a majority being around the hyperscalers.”
    – Ed Ludlow ([04:47])

• Reporting Critique:

  • Ed Ludlow questions the lack of a formal 8K or written filing to clarify the forecast for the market:

    “Why didn't you guys file an 8K or put it in writing so the market could understand it?”
    – Ed Ludlow ([05:18])

  • Explained the challenges for analysts and market watchers trying to reconcile Nvidia’s fiscal and calendar projections.

2. Nvidia’s Move into CPUs and Hardware Innovation

Segment: [06:45–09:14]

• CPUs vs. GPUs:

  • Nvidia’s “Vera” CPU is now positioned as a standalone product, aiming more directly at the CPU market, but CPUs are “not as valuable to Nvidia as GPUs are” for AI workloads ([07:10])

    “CPUs are not as valuable to Nvidia as GPUs are. ... But it's an addressable market that Nvidia can go after to boost the overall TAM.”
    – Ed Ludlow ([07:10])

  • CPUs extend Nvidia’s reach into data centers not using their GPUs.

• Rubin Ultra System and Agentic AI:

  • The new “Rubin Ultra” system represents a major efficiency advance for agentic (autonomous) AI platforms but doesn’t contain major new surprises for those following Nvidia ([08:41–09:14])

    “It's a big step up ... a much more efficient system. But those data points aren't that new.”
    – Ed Ludlow ([09:04])

3. AI Inference and the Groq Acquisition

Segment: [09:37–10:59]

• Inference Hardware:
  • Ed Ludlow notes absence of major inference-specific hardware news, but Nvidia’s acquisition of Groq (with a Q) positions them to develop specialized inference hardware ([09:37]).
  • Clarification between Groq (hardware company) and Grok (Elon Musk’s chatbot):

    “Grok with a Q ... makes accelerators ... for running AI workloads. Grok with a K is ... Elon Musk's AI frontier lab ... company.”
    – Ed Ludlow ([10:23])

4. Broader Tech and Market Implications

Segment: [11:34–12:04, 14:14–21:27]

• Trends:
  • Rapid evolution in platform generations, aggressive R&D timelines, and increasing demand from massive data center operators.
  • The stock market’s muted response reflects anticipation of these incremental updates and mature expectations about Nvidia’s roadmap.

5. Biotech Industry & Regulatory Hurdles

Segment: [24:49–32:44]

• Acadia Pharmaceuticals Regulatory Challenge:
  • Catherine Owen Adams discusses the struggle to get Rett syndrome drug “debut” approved in Europe, despite having FDA (US), Canada, and Israel approvals ([25:26–27:16]).
  • EU considered more skeptical of rare disease drugs; much education still needed for regulators and patient advocacy groups.

    “We have a pivotal trial which was statistically significant ... the European Union has stated that they don't value the meaningful difference that ... that gives our Rett patients.”
    – Catherine Owen Adams ([26:19])

  • Notable on affordability: 90% of Acadia’s US patients pay less than $10 a month due to insurance and assistance ([29:33]).
  • PBM Critique: An explanation of how US pharmaceutical intermediaries (PBMs) block drug rebates from reaching patients, increasing system inefficiencies ([30:08]):

    “America is unique in terms of a market in that 50 cents on every dollar spent on medicine goes to middlemen ...”
    – Catherine Owen Adams ([30:05])

6. Geopolitics: Strait of Hormuz, NATO, and Oil Markets

Segment: [14:14–21:27, 36:11–41:28]

• US Allies & Persian Gulf War:

  • Mark Champion explains that Trump’s call for NATO help is not automatically supported; allies may attach conditions, especially relating to clear separation from direct war efforts and support for Ukraine ([15:50–18:14]).

    “NATO doesn’t need to respond ... this is a war of choice that the US made ... It isn’t often that the US needs military help, but this is one instance ...”
    – Mark Champion ([15:50])

  • Gulf allies (e.g. Saudi Arabia, UAE) are reconsidering security arrangements due to the unintended vulnerabilities exposed by US actions ([20:38]):

    “They made us less secure. So, you know, what are we going to do about that?”
    – Mark Champion ([20:38])

• Economic/Market Impact:

  • Aaron Mobihill (JP Morgan) notes investor shifts toward private markets (e.g., shipping, infrastructure) as geopolitical risks drive energy price volatility ([36:11–41:28]).
  • Shipping companies profit from longer supply routes as Hormuz is disrupted, reinforcing progress in inflation-hedged alternative assets.

    “We might see inflation drag on further. And that means looking at assets that have that inflation hedging characteristic like infrastructure ...”
    – Aaron Mobihill ([39:53])

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Notable Quotes & Memorable Moments

• On Market Response:

  “Massive spike when Jensen Huang said it on stage. And then Wall Street did the math.”
  — Ed Ludlow ([03:39])

• Analyst’s Quip On Nvidia’s Communication:

  “Why didn't you guys file an 8K or put it in writing so the market could understand it?”
  — Ed Ludlow ([05:18])

• On Hyperscaler Power:

  “60% of that revenue opportunity is coming from the hyperscalers ... it’s swung back to being heavily a majority.”
  — Ed Ludlow ([04:47])

• On PBMs and Drug Pricing:

  “America is unique ... that 50 cents on every dollar spent on medicine goes to middlemen ... It’s the PBMs. It's also hospitals mark up their drug prices.”
  — Catherine Owen Adams ([30:05])

• On Geopolitics and Security:

  “They made us less secure. So, you know, what are we going to do about that?”
  — Mark Champion ([20:38])

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Timestamps – Key Segments

| Segment | Topic / Guest | Timestamp | |-------------------------------|----------------------------------------------------------|------------| | Nvidia’s $1T Forecast | Ed Ludlow (Bloomberg Tech) | 02:03–11:14| | Biotech Regulation | Catherine Owen Adams (Acadia) | 24:49–32:44| | Geopolitics: Hormuz & NATO | Mark Champion (Bloomberg Opinion) | 14:14–21:27| | Macro & Alternatives | Aaron Mobihill (JP Morgan Asset Management) | 36:11–41:28|

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Tone and Takeaways

• Direct, analytical, occasionally wry: typical of Bloomberg’s in-studio discussions.
• Deep dives into financial implications, practical skepticism about splashy announcements, and a healthy sense of the market’s ability to self-correct hype.
• Critical look at healthcare inefficiencies and regulatory disparities across US and EU.
• Cautious, informed optimism regarding US innovation environment and adaptability in global geopolitics and investing.

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This episode provides listeners with a nuanced understanding of Nvidia’s bold projections, market dynamics around AI hardware, ongoing biotech regulatory struggles, and the real-world effects of geopolitical instability on global markets and investor strategies.

Transcript

[Catherine Owen Adams]

They told us to expect change. They warned us about the transition, but honestly, they forgot the best part.

[Bloomberg Business Week Daily Hosts]

This is the chapter where we finally focus on us.

[Catherine Owen Adams]

LifeMD delivers expert menopause and midlife care right from your home. From hormone health to holistic wellness, LifeMD

[Carol Massar]

helps you feel your best for the best years of your life.

[Catherine Owen Adams]

LifeMD it's just getting good. Visit LifeMD.com/good life for many men, mental

[Dr. Guy Winch]

health challenges aren't recognized until they've already taken a toll. Work pressure, financial stress, changing relationships and traditional expectations around masculinity can quietly wear men down, often without clear warning signs. In season three of the Visibility Gap, Dr. Guy Winch and his guests explore how these pressures show up, how to spot them earlier, and how men can access meaningful support. Listen to the new season of the Visibility Gap, a podcast presented by Cigna Healthcare.

[Ed Ludlow]

So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now a global workforce of 300,000 can use AI to fill their HR questions, resolving 94% of common questions, not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business IBM

[Bloomberg Business Week Daily Hosts]

Bloomberg Audio Studios Podcasts Radio News this is Bloomberg Business Week Daily reporting from the magazine that helps global leaders stay ahead with insight on the people, companies and trends shaping today's complex economy. Plus global business, finance and tech news as it happens. The Bloomberg Business Week Daily podcast with Carol Massar and Tim Stanweck on Bloomberg Radio.

[Tim Stannweck]

I want to go now back to San Francisco and talk a little bit about video because shares of Nvidia were up as much as 4.8%. Now they're up just about 2%. Nvidia expects to make $1 trillion from AI chips through 2027. That's just one of the headlines. The latest forecast delivered by CEO Jensen Wong during the company's GTC event. Extending the outlook, I want to bring in Ed Ludlow. He's the co host of Bloomberg Tech on Bloomberg tv. And the numbers. These were some of the numbers that we were waiting for. Just give us some context around these figures and what we knew and what is new here.

[Ed Ludlow]

So $1 trillion, which is a range between 2025 and the end of 2027. The prior figure was $500 billion, which was stated on October 28th of last year over a period of five fiscal quarters through the end of calendar 2026. So what this new number is $1 trillion between 2025 and the end of 20 27. It doesn't represent an acceleration nor an expansion of the outlook that Nvidia had kind of given. It's not saying that growth is accelerating beyond the prior trend. What they are doing is making that outlook further out. They're telling us what they see through the end of next year, 2027. And the market reaction represents, you know, the line chart. Bring up your GP on the terminal of Nvidia shares. Massive spike when Jensen Huang said it on stage. And then Wall street did the math

[Tim Stannweck]

and he realized this is just the natural progression of how things would go if things stayed at what he announced in October.

[Ed Ludlow]

Yeah, I mean, it's very, very complicated because you can. This is what they're tracking out on a. On a quarter basis going forward. The original forecast was just Blackwell Rubin Systems. It was stated out loud by Jensen Huang on October 28. And then it was a mismatch between a forecast for five fiscal quarters against a dateline of the end of this calendar year 2026. There's another data point within it and I posted the slide on X. There's a pie chart that they shared with it. What's really interesting is that Nvidia is saying that 60%, 6 0% of that revenue opportunity is coming from the hyperscalers still just those four big cloud computing providers. And the reason that's important is that that with Nvidia has been something very closely tracked, how much they're reliant on the hyperscalers only and how diversified their customer base is. And it seems as if actually it's swung back to being heavily a majority being around the hyperscalers.

[Carol Massar]

You know, I did the same thing because I saw the number and I'm like trying to understand, like, where's that? I need some context. And I was looking at, was it the CBS reporting that Ian and you guys all did reporting, and he at that point was talking about $500 billion right. In revenue by the end of 2026. And I think an opportunity that it could eclipse that. So. So we need to kind of, I don't know. Is there a question you would ask Jensen at this point off of this number or off of this.

[Ed Ludlow]

Yeah. Why didn't you guys file an 8k or put it in writing so the market could understand it? And actually, like, I don't know, I think that the market might sympathize with me on that. Question.

[Tim Stannweck]

But is that.

[Ed Ludlow]

Yeah.

[Tim Stannweck]

And is the reason is because he wants something flashy for this event that he holds twice a year.

[Ed Ludlow]

Look, I. In the sequence the video will be available for people to watch back. Right. But in the sequence of presenting that number, what Jensen Huang was saying was, you know, I presented to you this $500 billion figure and then he kind of make a joke that no one gave them credit for it or no one was wowed by it. And he paused and he said, as I stand right here today, we now see $1 trillion through the end of 2027. And you know, for them it is a really big moment. I'm really finding it difficult to pass. We're discussing it as a team in the IB about how do you word that and mismatch the, the. The. I'm trying to, I'm trying to reconcile fiscal quarters with calendar quarters. What I would say is when that $500 billion came out after GTC DC, what happened was the sell side went away and baked it into what they modeled and then that started showing up in the estimates. And so at least we can say oh aren't we lucky that in the coming days maybe people you go on model on the Bloomberg and those numbers will be updated a little bit.

[Tim Stannweck]

Okay. So in the meantime, in the meantime we are getting some other headlines. I don't know if you had a chance to see these. The company saying that Vera has twice the performance of any cpu. Jensen says the CPU quote for sure is a multi billion dollar business or multibillion business rather. What do you. What about the. The latest from Vera at Nvidia and you know how this changes the equation in hardware. Is this new to you?

[Ed Ludlow]

So Nvidia has been hinting for a few months that they're going to go harder after the CPU market. And you know that was confirmed first with core Weavers having access to it and then Meta as the CPU being sold as a standalone product. If you look at the market right now, in the moment that the headlines hit, there's no sharp reaction in AMD or Intel to the downside because the markets kind of baked that in that in video would do this. CPUs are not as valuable to Nvidia as GPUs are. The cost per CPU and where the CPU fits in the server design. You know, it's a general purpose processor. It doesn't, it doesn't have the sort of AI workload specific use case that a GPU has. But it's an addressable market that Nvidia can Go off over to boost the overall tam, you know, and do something different that they've not already done. And you know there are loads of use cases where you might have data center infrastructure built that Nvidia's GPUs are not not a part of the plans. But that that CPU would come in quite useful.

[Carol Massar]

Hey, one other headline I want to ask you about. Jensen Huang talking and showing off the new Rubin Ultra system. And this plays into agentic AI which I feel like when I have a conversations now increasingly people are moving in that direction. What do we know need to know about that? Is that a big mover, you know.

[Ed Ludlow]

Yeah. Or no, no, no. Insofar as that like you know, Nvidia is committed to bringing out a new generation of platform on an annual basis. The details of the Rubin based platforms have been released and you know, in terms of literally the energy it takes to power that thing relative to the Blackwell system. It's a big step up.

[Carol Massar]

Yeah.

[Ed Ludlow]

Tokens generated. It's a big step up. It's a much more efficient system. But those data points aren't that new. You know, they've been out already and discussed.

[Ryan Reynolds / Wise Ad Voice]

Huh.

[Carol Massar]

Which I don't go to.

[Tim Stannweck]

Don't go too far ahead.

[Carol Massar]

It kind of explains though the trade, right. Like we got this kick up of more than 4% and now we're just up about 1.67 which I think was

[Tim Stannweck]

lower than where it was before.

[Carol Massar]

It is the announcement because we were up 2% higher earlier in the session today we were up about 2%. Anything else you're looking out for at this point or just we're going to.

[Ed Ludlow]

I don't know.

[Ryan Reynolds / Wise Ad Voice]

Yeah.

[Ed Ludlow]

I mean I ran away from my desk in the live feed to come join you guys. Which is, which is good. I'm not complaining about that. But the thing that I'm not seeing is a specific announcement on an inference specific platform. You know, again, Nvidia hired Grok Grok with accused CEO and other leading talent and acquired the rights to their platform. And you know, I think that they've hinted that at gc. Well, Jensen Wong said explicitly at GTC we will hear more about what they actually plan to do with that. That transaction. And Grok was an inference only platform. So you'd expect Nvidia to say here's

[Tim Stannweck]

our is our offering and you got it for everybody. You got to explain Grok with a Q versus Grok with a K. Because I think people hear Grok, they think oh sure, yeah.

[Malcolm Gladwell]

Yeah.

[Ed Ludlow]

There is a, a hardware company called Grok with a Q. It makes accelerators or or server systems, server designs for running AI workloads. Not training them but running them. Grok with a K is the tool, the chat bot of X AI or indeed it's model. You know, the models are also named Grok&X AI is Elon Musk's AI frontier lab or company, which is now owned by SpaceX, his rocket company. They are the same words spelled differently.

[Tim Stannweck]

And you know what? Got that we end with the always sunny it's always sunny in Philadelphia whiteboard with Charlie. I think it's Charlie just standing there, you know, trying to connect everything.

[Ed Ludlow]

I think we should just load that into Viz or into our system for the next time I'm on.

[Aaron Mobihill]

Sure.

[Carol Massar]

Our producer Cece threw it in our chat as soon as you said it and just a reminder of kind of where we are. Thank you so much. Ed Ludlow on Twice for us. He is one of the co hosts of Bloomberg Tech on Bloomberg TV. Catch Ed and Caroline Hyde, 11am to 12 noon Wall street time, Monday through Friday on Bloomberg TV.

[Tim Stannweck]

Stay with us. More from Bloomberg Businessweek Daily coming up after this.

[Catherine Owen Adams]

They told us to expect change. They warned us about the transition, but honestly, they forgot the best part.

[Bloomberg Business Week Daily Hosts]

This is the chapter where we finally focus on us.

[Catherine Owen Adams]

LifeMD delivers expert menopause and midlife care right from your home.

[Carol Massar]

From hormone health to holistic wellness, LifeMD helps you feel your best for the best years of your life.

[Catherine Owen Adams]

LifeMD it's just getting good. Visit LifeMD.com GoodLife for many men, mental

[Dr. Guy Winch]

health challenges aren't recognized until they've already taken a toll. Work pressure, financial stress, changing relationships, and traditional expectations. Masculinity can quietly wear men down, often without clear warning signs. In season three of the Visibility Gap, Dr. Guy Winch and his guests explore how these pressures show up, how to spot them earlier, and how men can access meaningful support. Listen to the new season of the Visibility Gap, a podcast presented by Cigna Healthcare.

[Malcolm Gladwell]

Hello Hello, I'm Malcolm Gladwell, host of the podcast smart talks with IBM. I recently sat down with IBM's chairman and CEO Arvind Krishna, and I asked him, how can companies use AI to its fullest potential to create smarter business? My one advice to them Pick areas you can scale. Don't pick the shiny little toys on the side. For example, if anybody has more than 10% of what they had for customer service 10 years ago, they're already five years behind. If anybody is not using AI to make their developers who write software 30% more productive today with the goal of being 70% more productive. Yeah. So we are not asking our clients to be the first experiment on it. We say you can leverage what we did. We are happy to bring out all our learnings, including what needs to change in the process. Because the biggest change is not technology, is getting people to accept that there's a different way to do things. To listen to the full conversation, visit IBM.com smarttalks.

[Bloomberg Business Week Daily Hosts]

You're listening to the Bloomberg Business Week daily podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch US live on YouTube.

[Carol Massar]

While US allies deflecting President Trump' demands to help reopen the Strait of Hormuz, expressing unease about getting pulled into that war, U.S. war in Iran, President Trump spoke about it less than two hours ago from the White House.

[Malcolm Gladwell]

Their capacity to threaten commercial shipping in the Strait of Hormuz with more than 30 mine laying ships destroyed. So we want them to come and help us with the strait.

[Mark Champion]

We have it in very good shape.

[Carol Massar]

The numerous countries have told me they're on the way.

[Malcolm Gladwell]

Some are very enthusiastic about it and some are. And some are countries that we've helped

[Mark Champion]

for many, many years.

[Malcolm Gladwell]

We've protected them from horrible outside sources and they weren't that enthusiastic.

[Carol Massar]

That, of course, is President Trump at the White House earlier today. Well, the U.S. request for a NATO assist comes at a time when Bloomberg Opinion's Mark Champion, who covers Europe, Russia and the Middle east for us, writes about how he spoke. Essentially, US Allies can put a high price on helping out the United States in the Strait of Hormuz. It's all about maybe being in the driver's seat a little bit. Maybe this is what we want to hear from Mark about. Hey, Mark joins us right now. Mark Champion, that is from London. Mark, it is good to have you here with Tim and myself. You know, after a year where President Trump seems to have had the edge on US Allies on a lot of different fronts and situations, have the tables turned a bit here and are US Allies a little bit more perhaps in the driver's seat?

[Mark Champion]

Well, it's not, you know, they're still dependent on the US for security. There's limits to what they can do. But the point is that here is an instance where, you know, when he says, you know, this is a NATO, you know, NATO needs to respond, you know, NATO doesn't need to respond. This, you know, NATO has a defense clause, collective defense clause, and it's been invoked once on behalf of the US when it was attacked on September 11th. And this is not a war of self defense, this is a war of choice that the US made. It wasn't attacked, it decided to attack Iran. So there's no automaticity here. And basically this is a case where Donald Trump needs some help. It isn't often that the US Needs military help, but this is one instance where the US is pretty stretched. It's got two carrier strike fleets in the Gulf. They are very busy attacking Iran. And it isn't actually militarily very easy to sort of split that out and begin a, you know, an operation to protect shipping on its way through the Gulf. Also, you know, some of the countries that he's asked, the uk, France, Japan, South Korea, these are countries that are actually pretty good at demining. So if the Iranians have demined, they have the kit, they have, you know, drone demining equipment, which is what you want in a conflicted zone like this. But, you know, the point is that, you know, because he needs them. You know, it isn't just about raising your, I mean, controlling the oil price so that, you know, that's why you want the straits open. But he needs it in order, because that is where the war is being fought. He needs it in order to win the war. And so they, they should do what Donald Trump would do, which is to say, okay, if you're going to ask us to put our, you know, our ships and sailors at risk, then we have certain conditions and we have a price.

[Tim Stannweck]

What would the price be? What would the conditions be in your view, Mark, how would Donald Trump handle this if he were on the other side?

[Mark Champion]

Yeah, I mean, so there are things that different countries will want. I would say that there are two overall things that they should be asking for. The first is for to make it for the Americans to understand and to make it clear that this is a non American operation. In other words, to be able to separate this and be able to say, we are not joining the war effort, we are operating a non US Effort in order to keep the international water rays free and to keep shipping safe. The Iranians will see this as an intervention because they aren't trying to keep the straits closed. But nevertheless, this is a war that may not suddenly end from one day to the next. It may drag on in different forms for some time. And it will be important for allies who didn't want to be part of the war and don't want the consequences to be able to sort of make that difference and to include other countries that aren't necessarily the usual suspects of Western allies and so on in order to take part. So that's one thing they can do. The other thing that they can and should do is to tell him, look, we know that you're not that keen on helping out Ukraine. We need Ukraine helped. You haven't been the difference between the Trump administration and the Biden administration in terms of helping out on Ukraine is pretty stark. So we have a minimal demand to make. And that really should be that the US Continues to provide Patriot missiles, which will be at a premium after this Gulf War because of the rate at which the Gulf states have been burning through them and that US Bases have been burning through them.

[Carol Massar]

Hey, before we go, Mark, just one last thing that this really jumped out in your column that's on the Bloomberg today. You remind us that the worst hit countries have been America's allies in the Persian Gulf specifically. And you say the Trump administration's failure to prioritize Gulf allies will have a long tail from prompting a reassessment of their security policies. But for now, they need the Hormuz open to just real quickly, 30, 40 seconds, what might be the implications there?

[Mark Champion]

Yeah, I mean, I, you know, I don't have a crystal ball to say how it will fall, but there's no question that the Saudis, the uae, you know, the Gulf states collectively that they are going to be looking at their situation and saying, we host these US Bases in order to make us more secure. They made us less secure. So, you know, what are we going to do about that? And I don't know that they would know the answers at this point. I certainly don't. But they will be looking at it.

[Carol Massar]

All right. Going to leave it there. So appreciate it. We know it's later over there in London. Mark, thank you as always, Mark. Mark Champion's columns, I got to say, must read on the Bloomberg so highly recommend you check them out on the bloomberg [e-mail] Mark, by the way, international affairs columnist for Bloomberg Opinion, again joining us from London.

[Tim Stannweck]

Stay with us. More from Bloomberg businessweek Daily coming up after this.

[Dr. Guy Winch]

For many men, mental health challenges aren't recognized until they've already taken a toll. Work pressure, financial stress, changing relationships and traditional expectations around masculinity can quietly wear men down, often without clear warning signs. In season three of the Visibility Gap, Dr. Guy Winch and his guests explore how these pressures show up, how to spot them earlier, and how men can access meaningful support. Listen to the new season of the Visibility Gap, a podcast presented by CIGNA Healthcare

[Malcolm Gladwell]

hello Hello, I'm Malcolm Gladwell, host of the podcast Smart Talks with IBM. I recently sat down with IBM's chairman and CEO Arvind Krishna and I asked him, how can companies use AI to its fullest potential to create smarter business? My one advice to them Pick areas you can scale. Don't pick the shiny little toys on the side. For example, if anybody has more than 10% of what they had for customer service 10 years ago, they're already five years behind it. If anybody is not using AI to make their developers who write software 30% more productive today with the goal of being 70% more productive. Yeah.

[Catherine Owen Adams]

Wow.

[Malcolm Gladwell]

So we are not asking our clients to be the first experiment on it. We say you can leverage what we did. We are happy to bring out all our learnings, including what needs to change in the process. Because the biggest change is not technology. It's getting people to accept that there's a different way to do things. To listen to the full conversation, visit IBM.com smarttalks.

[Ryan Reynolds / Wise Ad Voice]

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[Bloomberg Business Week Daily Hosts]

You're listening to the Bloomberg Business Week daily podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.

[Tim Stannweck]

Earlier this month, Acadia Pharmaceuticals said the Committee for Medicinal Products for Human Use this is the CHMP of the European Medicines Agency reviewed the drug. Okay.

[Carol Massar]

Trifenatide.

[Tim Stannweck]

Trifenatide. This is why Carol Massar no listen.

[Carol Massar]

You are usually like king on this.

[Tim Stannweck]

For treatment of Rett syndrome in patients 2 years of age and older for approval in the EU and decided the Evidence didn't support approving it. Acadia said it planned to formally challenge the decision. We're joined now once again by Catherine Owen Adams, CEO of Acadia Pharmaceutical. It's the $3.6 billion market cap a biopharmaceutical company. It focuses on the discovery, development and commercialization of small molecule drugs for the treatment of central nervous systems disorder. She joins us here in the Bloomberg Interactive Brokers studio. Welcome. It's good to see you again. Last time we spoke you were in San francisco at the JPMorgan Health Care Conference.

[Catherine Owen Adams]

So good to be here. Thanks for having me.

[Tim Stannweck]

Good to have you in New York. So I want to start with the trofinetide statement from the European from European regulators for the treatment of Rett syndrome. Is there anything new you came out a few weeks ago and said you would challenge? What's the latest on that?

[Catherine Owen Adams]

Yeah, so there's nothing new. Since we said that, we are putting in writing our official application for re examination and that's going in in the next few days. And we expect that process, it's governed by a time clock, so it's pretty fixed. And that process will run probably till June and that's during that time we have the opportunity to restate our evidence, have another scientific advisory group and also probably have an oral explanation. So there's a lot more chance to interact with the European Union.

[Tim Stannweck]

So this drug is approved for use in the US under debut.

[Catherine Owen Adams]

Approved for use in the US's debut, also proved in Canada and Israel.

[Tim Stannweck]

So what's different about the European situation?

[Carol Massar]

Aren't they tougher?

[Catherine Owen Adams]

They are definitely tougher in rare disease. We have a pivotal trial which was statistically significant across two co primary endpoints. And the European Union has stated that they don't value the meaningful difference that that gives our rep patients and they're finding it to understand the clinical value of the differentiation that we saw between the endpoints. And so we're having to educate on Rett. It's not a very well understood. It's rare neurological disorder. It affects mainly young girls. There's about 12,000 patients in the EU, 6,000 in the US so it's not very well understood even by neurologists. So there's a lot of education that we have to continue to do. And also our patient advocacy voices are quite disparate across the EU and now with the International Rett Syndrome foundation helping us as well in terms of understanding what it's like to live with a child with Rett syndrome. All of this is important now to help our reexamination process.

[Carol Massar]

You know, speaking of a process or processes, I am wondering Catherine too, I think we are, we think a lot about this administration and what it's like going through a regulatory process. How has it changed? Has it calmed down? Give us some insight since you guys have to deal with it on a day to day basis.

[Catherine Owen Adams]

We do have an active approval process going on right now. We actually just got our debut sticks formulation approved by the FDA in December and actually our process went really quite smoothly. So as I try to explain to people, we don't deal necessarily with the people at the top of the fda. We deal with our divisions and the division leaders and the division staff work really hard all the time to ensure that they are applying the timelines that we agreed to during the PDUFA process. And we have found so far at Acadia that all of those timelines have

[Tim Stannweck]

been stuck to do those individuals stay from administration to administration or they have tended to.

[Catherine Owen Adams]

And the people that we deal with are certainly the same people that we've been dealing with for a number of years. So that's really a positive right now.

[Carol Massar]

Are there fewer trials? Are there faster approvals? And I think this gets to, I think as, you know, citizens here of the United States trying to understand, you know, public safety concerns and just wondering, a process that I think many would say was a gold standard globally, has that changed?

[Catherine Owen Adams]

No, I don't think so. I think the FDA still applies very high standards of safety and efficacy for our population and I think the US Will continue to be the gold standard. As we see the leadership changing, I think some positives have come out of it, this sort of focus on trying to be less bureaucratic, trying to think about different ways of approaching clinical trials. And so we're very positive about some supporting that. But obviously that then needs to be actually put into the guidelines and the rules. So we'll see how that flows down.

[Carol Massar]

What about when it comes to affordability and the focus on affordability? How is that kind of affecting you as a pharmaceutical company? We're also like focusing on certainly the United States, on the pharmacy benefit managers. That level trump Rx there is that. So just how is any of that affecting so some of the business decisions? Because as you say, you guys are developing sometimes a treatment, a drug that is not inexpensive and it's a smaller pool of patients who there's also a

[Catherine Owen Adams]

little bit of misunderstanding about that. So debut, for example, 90% of our patients pay less than $10 per month for their prescription. So there's a lot of misunderstanding around that whole sort of high price situation. But I think, Carol, your point around pressures on affordability for the American patient. That is absolutely top of all of our minds, even as individuals. Right. We all go to the pharmacy as well and see that. And so America is unique in terms of a market in that 50 cents on every dollar spent on medicine goes to middlemen and we're the only country in the world.

[Carol Massar]

So by unique.

[Catherine Owen Adams]

Yes. Unique. This is not unique.

[Tim Stannweck]

Well, some would argue inefficient or maybe.

[Catherine Owen Adams]

Yes. And it's. And it's the PBMs. It's also. Also hospitals mark up their drug prices as well. It's a lot of intermediaries that actually don't add to the patient experience at the end at the pharmacy. And we're really trying to work with our various policy groups in a bipartisan way. I think everybody agrees that it's not great for patients in terms of how we're currently structured. And we're very, very focused on supporting the administration in a bipartisan way to help us get through that.

[Tim Stannweck]

My daughter got some crayons and play DOH at the hospital when she was there a few weeks ago, and I haven't gotten the bill yet.

[Ed Ludlow]

So I don't know.

[Aaron Mobihill]

I don't know what it'll be.

[Carol Massar]

Everything will be itemized.

[Tim Stannweck]

I think it'll be okay.

[Carol Massar]

How did we kind of get there? And I know you're from London.

[Catherine Owen Adams]

Yes.

[Carol Massar]

And just as you think about different health systems and everything has pluses and minuses, I get that, you know, not. It's not apple to apples in terms of comparison, but how did we get this wrong? Maybe in terms of PBMs, because everybody thought this was going to be great for patients, for everybody, was going to be more efficient and cost savings would be passed on to consumers.

[Catherine Owen Adams]

The idea of a middleman in terms of brokering sort of, you know, larger discounts across sort of right payers, I guess it is fundamental, is a good idea. The issue is that the rebates that the pharmaceutical manufacturers give to the PBM should be passed along to patients. And yet they're not. And so that's the point where we're really trying to sort of unpick the systems that have got us to where we are now and ensure that those rebates that we do give actually do get to the patients that, that they were intended for. And that is actually written into the contracts and into the, into the sort of the legislation. And that actually happens, I have to

[Carol Massar]

say I always find that whole process, like, why is there a rebate? Like who gets a rebate and how does it work? It just seems to me so.

[Tim Stannweck]

Well, the idea is you get the coupon and then you don't use it.

[Carol Massar]

So why don't we just mark down the drug to begin with because then

[Tim Stannweck]

that will be a guarantee of a decline in revenue rather than you actually taking the time to get the coupon and going in.

[Catherine Owen Adams]

And the middlemen are so entrenched now in our whole health care system, it's really quite hard right now to sort of try and take them out and just get these discounts to the patient at the pharmacy counter.

[Tim Stannweck]

Okay, I'm glad we settled everything. We solved it all.

[Carol Massar]

30 seconds. I know we have to run because we get to envy in terms of the macro. How do you feel about the environment with everything that's going on?

[Catherine Owen Adams]

You know, we are just every day trying to deliver our medicines to patients who have high unmet medical need. And we're continuing with our R and D pipeline, we're continuing to vast and biotech innovation and we believe in it. And we also believe the US is the best innovation environment in the world and we'll continue to do that.

[Carol Massar]

I love that optimism. Thank you so much. Great day and thank you for letting us go kind of wider because you have a great vantage point. Catherine, thank you. Good to have you here, Catherine. Owen Adams, chief executive officer and board member of Acadia Pharmaceuticals, joining us in our Bloomberg Interactive Broker studio.

[Tim Stannweck]

Stay with us. More from Bloomberg businessweek Daily. Coming up after this.

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[Bloomberg Business Week Daily Hosts]

You're listening to the Bloomberg Business Week daily podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.

[Tim Stannweck]

I want to bring in Aaron Mobihill, JP Morgan Asset Management Executive Director and Global Alternative strategist. He joins us here in the Bloomberg Interactive Brokers studio. We want to talk alternatives. We want to talk about the Fed meeting this week. We want to talk about the macro environment and private credit. But I think the thing that we want to start with is the conflict in Iran and sort of how, as it enters its third week, how it's changed your view or not changed your view of the macroeconomic environment.

[Aaron Mobihill]

Yeah, that's, that's obviously what everybody's focused on right now. I think coming into the Fed meeting, we don't expect a change in interest rates, but what we'll be looking at will be the commentary out of the FOMC and what we're seeing in the dot plot and how much inflation is reflected in that because inflation is coming out of the higher oil prices.

[Tim Stannweck]

Right?

[Aaron Mobihill]

We're not on $100 a barrel anymore, but we're at much higher prices.

[Tim Stannweck]

So in other words, you want to know, is this transitory or not?

[Aaron Mobihill]

Exactly. How long? The key question is how long is the war going to continue? When will it end, and what will the situation be like when it ends?

[Tim Stannweck]

Fortunately, you know the answer to all that, Carol.

[Carol Massar]

I absolutely do. That's why I'm still here.

[Tim Stannweck]

Okay.

[Carol Massar]

Now, Erin, I want to ask you, you guys, JP Morgan Asset Management, 4.1 trillion in assets under supervision. We're talking alternatives, fixed income equities, you know, lots of different areas of the marketplace. Give us an idea. First of all, certainly from either institutional investors or, you know, some of your investors, what are you hearing since this war began, since this year began, which, safe to say, with Venezuela and the US Invasion there, things haven't necessarily started as we anticipated.

[Aaron Mobihill]

No, they certainly have. And I think in public markets, performance has been fairly lackluster. As I looked just before coming in here, we're about 2 1/2% down in the S&P. A balanced, balanced 6040 portfolio of 60% stock, 40% bonds is negative so far year to date. And so that's got investors looking at where can they get alternative sources of yield, alternative returns, which private markets can be a provider of even with all

[Carol Massar]

the worries that are out there.

[Aaron Mobihill]

Yeah, absolutely. Give us an idea space. Yeah, so I'll take one. Right. Which is an interesting one that's kind of been at a geopolitical hedge is transportation. So shipping, private shipping companies that are, that are shipping funds. Right. And counterintuitive, because we expect when there's a geopolitical issue, shipping can slow down. But what's actually happening with the Strait of Hormuz closed effectively is all that oil and gas has got to come from somewhere else, and it's been brought by ships that are traveling longer distances to get there. So think about LNG, for example. 25% of the liquid natural gas comes from Qatar that can't get out of the Strait. And so more of it's coming from, from the United States and elsewhere that's traveling on ships. So those ships have to go further to get to their destinations, and that's a benefit for transportation companies and funds.

[Carol Massar]

Okay, but are you saying then investors should make that shift or shift to that exposure because you think this is going to be a longer conflict? Because if you don't, then why would you make that shift?

[Aaron Mobihill]

The challenging thing, Right. With alternatives in private markets is it takes time to get exposure. Yeah, right. So I think.

[Carol Massar]

But would you wanted the exposure before this then?

[Aaron Mobihill]

It certainly would be nice to have the exposure before coming into this.

[Malcolm Gladwell]

Right, okay.

[Aaron Mobihill]

But what's the next best thing is to think about what's the economic situation going to be like coming out of this. We probably need to think about inflation a little bit more and about counteracting that inflation that could persist even after the conflict resolves. Because it's not that easy. You've got a lot of oil can

[Carol Massar]

feed you don't think the straits going to go back, the Strait of Hormuz is just going to go back to the way it was.

[Aaron Mobihill]

It's a lot harder to start oil production than it is to shut it down.

[Ed Ludlow]

Yeah.

[Aaron Mobihill]

So it's going to take some time for those, those refineries to get back going. And so we might see inflation drag on further. And that means looking at assets that have that inflation hedging characteristic like infrastructure is one you were just talking about data centers and AI. Well, what's powering those data centers often is private infrastructure companies, energy companies. And so that can be an inflation hedge in itself.

[Tim Stannweck]

Let's say there is some sort of ceasefire and things do go back to. I'm not definitely not going to say normal, I'm not going to say the way they are because I don't think those two things are possible. But there are ships crossing the Strait of Hormuz. Again, how long does it take for those higher oil prices to sort of come out of our economy?

[Aaron Mobihill]

So what we can look at is the futures markets. So we're looking at futures for April right now trading around $90 a barrel. Right. That's expectations of markets. If we look at December, we're back down to 70, $75 a barrel. Right. So somewhere between that, it's going to take a matter of weeks to actually bring those prices back down.

[Carol Massar]

Or months as you see, or potentially months.

[Aaron Mobihill]

And really every day that the conflict continues could be multiple days of bringing, bringing that back to normal. Because a lot of people's expectations now are baking in higher prices going forward.

[Carol Massar]

Our investors just got about 20, 25 seconds. Are investors looking to put more money to work or are they just kind of sitting tight right now?

[Aaron Mobihill]

I think they're, they're reassessing their portfolio for the future in terms of potentially higher inflation expectations and want to be, wanting to be protected from that.

[Carol Massar]

All right, going to leave it there. Aaron, thank you. Really appreciate it. Aaron Movie how he is JP Morgan Asset Management Executive Director and Global Office Alternative strategist. Joining us right here in our Bloomberg Interactive Brokers Studio.

[Bloomberg Business Week Daily Hosts]

This is the Bloomberg businessweek daily podcast, available on Apple, Spotify and anywhere else you get. Your podcasts listen live weekday afternoons from 2 to 5pm Eastern on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business App. You can also watch us live Every weekday on YouTube and always on the Bloomberg Terminal.

[Dr. Guy Winch]

For many men, mental health challenges aren't recognized until they've already taken a toll. Work pressure, financial stress, changing relationships and traditional expectations around masculinity can quietly wear men down, often without clear warning signs. In season three of the Visibility Gap, Dr. Guy Winch and his guests explore how these pressures show up, how to spot them earlier, and how men can access meaningful support. Listen to the new season of the Visibility Gap, a podcast presented by Cigna Healthcare.

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