Instant Reaction: Nvidia Gives Strong Forecast, Countering Fears of AI Bubble

Summary

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Podcast Summary: Bloomberg Intelligence

Episode: Instant Reaction: Nvidia Gives Strong Forecast, Countering Fears of AI Bubble
Date: November 19, 2025
Host: Bloomberg (Scarlet Fu and Paul Sweeney)
Guests: Ed Ludlow (Bloomberg BTech), Jay Goldberg (Seaport Research Partners), Sarah Fryer (Bloomberg San Francisco)

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Overview

This episode delivers immediate analysis of Nvidia’s latest quarterly earnings and the company’s guidance, with a focus on whether these results counter current fears of an "AI bubble." Experts from Bloomberg and Seaport Research Partners discuss the implications for the AI and semiconductor sectors, Nvidia’s business strategy, investor sentiment, and broader market trends.

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Key Discussion Points & Insights

1. Nvidia’s Q3 Results and Q4 Outlook

• Beat on High Expectations:

  • Nvidia’s fiscal Q3 earnings outpaced the Street’s already lofty targets.
  • Q4 revenue forecast: about $65 billion (plus or minus 2%), roughly $3 billion above consensus.
  • Ed Ludlow (02:19):

    “In the fiscal third quarter that they just reported, you know, it’s a beat and a good one. And this was a high bar going into it. … In the outlook for the fourth quarter, you know, it’s a, it’s a good $3 billion above consensus, $65 billion plus or minus 2%.”

• Market Reaction:

  • Stock up nearly 4% after hours, after being down ~10% from recent all-time highs.
  • Philadelphia Semiconductor Index and other chip stocks (e.g. Broadcom) also rise in sympathy.

2. AI Bubble and Investor Sentiment

• AI Bubble Fears:
  • Recent stock declines prompted concerns of cracks in the "AI bubble."
  • The strong outlook and earnings are helping to assuage those fears, at least temporarily.
  • Sarah Fryer (20:35):

    “I don’t think the concern is gone…The fact that Nvidia is investing in a lot of the entities that are buying its chips—so is there a way that they are indirectly funding demand for their product?”

• Silicon Valley Perspective:
  • In the Valley, sentiment is bullish—AI is viewed as being in its early innings, with transformative potential still ahead.
  • Sarah Fryer (23:37):

    “Here in the Valley, it is very much, you know, all systems go on AI. There is not as much of a concern about whether this is a bubble. People are seeing these, these big numbers and they’re thinking, you know, the world is about to change even further.”

3. Circular Financing & Nvidia’s Investments

• Circular Financing Concerns:
  • Nvidia investing in AI startups who then buy Nvidia hardware (e.g., Anthropic deal) raises transparency and demand sustainability questions.
  • Nvidia claims these deals don’t require their chips to be bought, but market mechanics often mean their money indirectly returns as product demand.
  • Ed Ludlow (05:01):

    “It is a flow of capital from Nvidia into Anthropic and then Anthropic buying capacity that does use Nvidia chips…”

  • Jay Goldberg (07:35):

    “I am curious to hear what Jensen is going to say about circular financing… Jensen is probably the most persuasive, charismatic CEO in semiconductors right now.”

4. The China Market

• China Fully Excluded from Forecasts:
  • Nvidia’s $500B six-quarter demand outlook does not include China, due to U.S. restrictions.
  • No mention of China in the current results; Nvidia is assuming zero China revenue for the foreseeable future.
  • Ed Ludlow (06:17):

    “China is potentially the biggest end market in the world for Datacenter and right now Nvidia assumes zero China. That $500 billion … excluded China completely.”

5. Depreciation, Product Cadence, and Customer Challenges

• Depreciation and Product Life Cycle:
  • Rapid annual cadence raises questions for customers and cloud providers: how long can older GPUs remain valuable?
  • This cycle pressures ‘Neo clouds’ (smaller, AI-centric cloud providers) trying to stay competitive, but potentially exposes them to economic strain.
  • Jay Goldberg (09:09):

    “There is this dynamic … where Nvidia is trying very hard to prop up the Neo clouds as alternatives to the traditional hyperscalers…That will eventually conflict with the annual cadence.”

  • Ed Ludlow (10:47):

    “…the hopper generation of accelerators or GPUs is running at 100% utilization in terms of workloads. It can't be used any more than it already is. As a very bullish signal…”

6. Utilization, Capacity, and Market “Froth”

• High Utilization, But...
  • Arguments go both ways. Some data points say legacy GPUs are heavily used, while Goldberg counters that contractual backstops suggest excess or unbalanced supply.
  • Jay Goldberg (12:29):

    “If utilization is so high, why do AMD and Nvidia make it a practice to backstop capacity at the Neo clouds as part of these deals?...There are growing signs of friction in that corner of the trade and makes me cautious about the broader spectrum of things.”

7. Electricity and Physical Constraints

• Energy Supply a Key Bottleneck:
  • As workloads and data centers scale, there are open questions about whether the physical infrastructure (especially electricity) can keep pace.
  • Ed Ludlow (15:01):

    “When the data center is built, finished, ready to turn the lights on, is the electricity there? … These are all deals on paper. They don’t exist in the real world.”

8. Inventory Management and Forward Planning

• Inventory builds are controversial:
  • Inventory rose—Nvidia says it’s securing parts for long-lead time products (e.g., Blackwell systems), not signaling weak demand.
  • Ed Ludlow (16:35):

    “…when they want to ship Blackwell accelerated computer systems at scale, the GPU, it can’t just be the GPU that’s ready to go. You need all the other components to go with it…with the stock up…in after hours, 4%. So I don’t think anyone’s worried about that.”

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Notable Quotes & Timestamps

• On Bubble Fears by Ed Ludlow (02:19):

  “This was a very high expectations quarter where there is also high skepticism to meet it.”

• On China’s Significance by Ed Ludlow (06:17):

  “China is potentially the biggest end market in the world for Datacenter and right now Nvidia assumes zero China… It’s a really critical market.”

• On Circular Financing by Jay Goldberg (07:35):

  “Jensen is probably the most persuasive, charismatic CEO in semiconductors right now. And so listening to him on the quarter is always going to be interesting…”

• On Depreciation Pressures by Jay Goldberg (09:09):

  “The more important question is the economic life of the server. And if you have a new GPU coming out every year, the old ones become less valuable…The new clouds will eventually run out of money.”

• On Electricity as a Limitation by Ed Ludlow (15:01):

  “When the data center is built…is the electricity there? … These are all deals on paper. They don’t exist in the real world.”

• On AI’s Future by Sarah Fryer (23:37):

  “Here in the Valley, it is very much…all systems go on AI…People are seeing these big numbers and thinking…the world is about to change further.”

• On Coexistence of Hype and Reality by Sarah Fryer (25:53):

  “Two things can be true…There can be a dramatic revolution in technology… and there can be irresponsible spending at the same time.”

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Timestamps for Important Segments

• [02:19] – Nvidia’s Q3 Results and Outlook
• [04:14] – Stock Price, Bubble Concerns, and ‘Circular Financing’
• [06:17] – Nvidia’s Exclusion of China from Guidance
• [07:35] – Jay Goldberg’s Take on the Quarter
• [09:09] – Depreciation and Annual Product Cadence
• [10:47] – Utilization of Older GPUs
• [12:29] – Market Froth in Neo Clouds
• [15:01] – Electricity and Data Center Constraints
• [16:35] – Inventory Build Controversy
• [20:35] – Sarah Fryer on Silicon Valley’s Sentiment and Bubble Lingering
• [23:37] – AI’s Transformative Potential and Long-Term Outlook

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Tone & Language

The conversation is analytical, balanced, and rich in financial and technical context, with a blend of market skepticism and tech-world optimism. Speakers frequently caveat their statements, reflect industry uncertainties, and layer detailed observations with pointed questions for future management interviews.

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Conclusion

The episode offers a nuanced, immediate take on Nvidia’s results, balancing celebration over its staggering numbers and guidance with clear-eyed skepticism about valuation, sustainability of AI infrastructure spending, physical and economic bottlenecks, and the durability of the current boom. The discussion acknowledges both the transformative potential of AI (as seen from Silicon Valley) and the risks of overheated hype—a balanced assessment for investors and industry watchers.

Transcript

[Baillie Gifford Announcer]

What is actual investing? We believe that it's a real world task to deliver thoughtful capital deployment. It's not about speculating over the short term. It's about understanding the long term opportunities for companies through technological progress or new business models. So we seek out those exploring big new ideas that will change the world. Then we back them to give those ideas time to flourish. Bailey Gifford Actual Investors Find out [e-mail].

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[Ed Ludlow]

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[Jay Goldberg]

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[Ed Ludlow]

This is.

[Bloomberg Host/Interviewer]

A breaking news update from Bloomberg. Instant reaction and analysis from our 3,000 journalists and analysts around the world.

Let's bring in Bloomberg Tech Btech co host Ed Ludlow, who will be speaking exclusively with Nvidia CEO Jensen Huang. That's coming your way at 6:30pm Wall street time right here on Bloomberg TV and radio. Hey Ed, investors seem to be pretty happy. It's up about 2% here. What's your immediate takeaway from these results?

[Ed Ludlow]

Yeah, in the fiscal third quarter that they just reported, you know, it's a beat and a good one. And this was a high bar going into it. And in the outlook for the fourth quarter, you know, it's a, it's a good $3 billion above consensus, $65 billion plus or minus 2%. Remember, this is always the case. There were some very bullish forecasts on the Street. I think some analysts were saying that Nvidia could even surprise US with a $75 billion figure for that fourth quarter. But the great unknown is the numbers that they've just posted. How do they relate to the $500 billion or half a trillion dollar figure that Jensen Huang outlined at gtc in the last week of October he basically said over the next six fiscal quarters just for Blackwell Rubin Systems, they see $500 billion of demand. But Nvidia doesn't give formal guidance like that. It was just a slide over his shoulder on stage. So there is going to be some mathing based on what he says on the call and hopefully in the conversation that we have to explain how in aggregate their forecast has changed for the longer term.

[Bloomberg Host/Interviewer]

Okay, so Jensen, if you're watching just a little preview of the line of questioning that you may get from ed Ludlow at 6:30 Wall street time, Bloomberg television and radio for that exclusive conversation. And Nvidia shares off about as of Today's close, roughly 10% from those all time highs back at the end of October. That was just around the GTC event in Washington D.C. where I know you spoke with Jensen and Justin Hotard of Nokia as well. I'm wondering really about the narrative that's emerged since then about cracks starting to form or punctures in the quote unquote AI bubble and the decline in some of the high flying stocks that we've seen of late. Does this assuage investor concerns that not all is okay when it comes to the infrastructure spend?

[Ed Ludlow]

Yeah, you know in video is, is down sharply since, since the all time high it hit four weeks ago. But it's also a stock that as of today's close was up almost 40% year to date, double the performance that we see of the NASDAQ 100 or the S&P 500. This again was a very high expectations quarter where there is also high skepticism to meet it. And to the data points that we will inevitably hear hear asked of Jensen is the circular financing issue because a lot of the news flow in that period of time has been about Nvidia investing in some form in the in the frontier model labs or end users of their chips.

[Bloomberg Host/Interviewer]

Yeah, look at, look at the anthropic news yesterday this week.

[Ed Ludlow]

Right. You know, and in that specific case it's very hard to argue it is not circular financing because historically what Jensen Huang's argument has been is when they put an investment into an AI company, they don't require the AI company to use that capital or financing to buy Nvidia chips. They can go away and use Nvidia's money to buy someone else's chips. But in the mechanics of that anthropic deal, you know, it is a flow of capital from Nvidia into anthropic and then anthropic buying capacity that does use Nvidia chips. The other data point is depreciation, which is a real fixation of this market at the moment.

[Bloomberg Host/Interviewer]

So, you know, one of the things we were talking about with Jay Goldberg and we're going to get back to him in just a moment, we're letting.

Him, we're letting him read the press release and we're letting him actually look at the numbers right now.

But he talked about China remaining effectively online. How much of that is a problem? And I think we also heard from, was it this being kind of the first clean numbers that, that we're kind of getting? Was that Kun job we talked about, you know, without kind of, I guess China impact or China concerns. But. And how important is China going forward to the Nvidia story?

[Ed Ludlow]

So, you know, China is potentially the biggest end market in the world for Datacenter and right Now Nvidia assumes zero China. You know, that $500 billion or half a trillion dollar figure that I mentioned a moment ago that was given on October 28th excluded China completely. I've just put in the blog and I'm just making an observation that if you go back to August, when Nvidia gave their forecast for the third quarter that they've just released, they were very clear in explaining that this did not assume any H20 sales to China. It's interesting, but there is no mention of the word China at all in today's press release. And so now it's kind of all stripped out. But as Jensen Huang has said repeatedly, it's a really critical market. A lot of activity is there and you know, in video would like to be able to sell its technology into that market.

[Bloomberg Host/Interviewer]

Jay, I want to just bring you back in. And we do see Nvidia shares climbing once again back up near that 4% mark that we saw in the aftermarket. It's up about 3.6, 3.7%. Jay, as you are going through the press release, anything that's jumping out that you think, think the Bloomberg audience needs to know about?

[Jay Goldberg]

So far, nothing. I came to the same conclusion. There's nothing, there's no mention of China in here at all, which is good for now. But also concerning, it looks like their networking business, the networking side of their data center business did a little better than expected, which is great because it's a high margin business. They have a really solid position there. I mean overall it's a pretty clean quarter. Haven't gotten all the way through it, but I do, I am curious to hear what Jensen is going to say. About circular financing and those sorts of questions. Jensen is probably the most persuasive, charismatic CEO in semiconductors right now. And so listening to him on the quarter is always going to be interesting. I want to see how much energy he brings and how he's going to address some of those sort of stickier questions.

[Bloomberg Host/Interviewer]

Hey, Ed Ludlow, come on in on this as you listen to Jay. Love to bring you into the conversation with Jay.

[Ed Ludlow]

Yeah, I think the circular financing question is one that I've received in advance of speaking to Jensen in a couple of hours time. The other one for me is the depreciation issue. Right. You know, Nvidia commits to this annual cadence of a new generation of gpu. And I think there are a lot of people out there who would really appreciate Jensen explaining the useful life cycle of any generation of GPU and how they manage that, how they convince the big spenders in the capex context to upgrade. Is that a concern for you? Is it something that you feel is unanswered?

[Jay Goldberg]

Well, I think there is this dynamic taking place where, where Nvidia is trying very hard to prop up the Neo Clouds as alternatives to the traditional hyper hyperscalers. He'd much rather have 100 small customers and three large ones. The problem is that will eventually conflict with that annual cadence. Right. This whole issue about depreciation of how long a server lasts. I think people look a lot at sort of the physical life of the server, but the more important question is the economic life of the server. And if you have a new GPU coming out every year, the old ones become less valuable. And so that leads to some pretty, pretty punishing price curves for the Neo Clouds. And so Jensen and Nvidia want to constantly be coming out, coming out with new products to stay competitive and push their own sales up. But that makes it hard for these big, for these customers, the small ones who have to also stay on that treadmill. And at some point, at some point, it can't go on forever. The new clouds will eventually run out of money. And so that's sort of this big long term picture outlook. And I, I mean it's one of these things that keeps me, would keep me up at night if I didn't have a sell rating on it.

[Bloomberg Host/Interviewer]

Well, okay, so Ed, I want you to kind of go back to Jay on this because I know you talked to Core Weave CEO quite a bit of time, quite a bit in recent months. We said that Core we was higher in sympathy after these Nvidia results. And in addition to another Neo cloud company that's out there right now. The demand is there for these new cloud companies. I mean even core we've said just very recently it's been able to diversify away from its biggest customers.

[Ed Ludlow]

Yeah, in the conversations that we've had with micro and Trade said that they there is demand for the older generation technology. One sort of data point or statistic that those who are more calm about the depreciation issue would point to is utilization. So they would say right now the hopper generation of accelerators or GPUs is running at 100% utilization in terms of workloads. It can't be used any more than it already is. As a very bullish signal that there these, these kind of obsolete sounds a funny thing to say, but These older generation GPUs are not idle. Compare and contrast with some of the secondary, secondary market data which we have limited visibility into. We don't know how strong that is and nor do we know how close attention Nvidia plays to a secondary market for older generations of chip. But 40% of revenue is the hyperscalers and depreciation is an accounting issue that they need to mark against their balance sheets and we haven't seen it yet. So it's kind of interesting because at some point, and I ain't an accountant, but you know, basic financial journalism, it.

[Bloomberg Host/Interviewer]

Will come up and hold on for a second. Jay, last question. Final thoughts on this. I mean I'm looking at the Philadelphia Semiconductor index up almost 2% in the aftermarket. A name like Broadcom is also up about 2% and again Nvidia still up about 3.2% here after its earnings. Final thoughts. Jay, from you when it comes to Nvidia.

[Jay Goldberg]

So I want to respond, I want to close in responding to Ed's comment about utilization. I've certainly heard data points that utilization are high in the NEO clouds, at least some of them anecdotally. But if, if utilization is so high, why do AMD and Nvidia make it a practice to backstop capacity at the NEO clouds as part of these deals? If you look across the sales process for GPUs right now, you'll see a lot of these big deal clouds have contractual terms which allow them, which basically put AMD and Nvidia in the position of backstopping or buying up excess capacity. And it seems like a little bit of disconnect to me that you need those backstops if utilization were so high. So I think, I think there is definitely signs of froth in the new Cloud sector, not necessarily Core Weaver or Nebulous. I don't pick on them, but there is, there, there are growing signs of friction in that, in that corner of the trade and makes me cautious about the broader spectrum of things.

[Bloomberg Host/Interviewer]

Ed, to be fair, I just want to bring you in on that if you have any thoughts for Jay.

[Ed Ludlow]

Only that those that share some skepticism and want to ask difficult questions of Jensen would also point out that, you know, Core Weave is one of Nvidia's biggest equity positions or equity investments. It's also one of its biggest customers technically, and they are in a position where Core Weaves under pressure from its customers to have access to the latest technology. There is a disconnect there. At some point, they can't be running both the old GPUs. But again, you know, I think asking the basic question of depreciation and how Jensen Huang sees it, that that's something that we will put to him for sure.

[Bloomberg Host/Interviewer]

Yeah, it definitely has to be addressed. Jake Goldberg, thank you as always. You give us so much time. We so appreciate it. Senior analyst, Semiconductors and Electronics over at Seaport Research Partners, as we've said, currently has a sell rating on Nvidia, the only such rating for the stock listed in the terminal. Sticking to his conviction, his conviction. Shares of Nvidia, by the way, still up about 3.6%. But Ed, still with us.

Still with us. And once again, Jade, not just the only sell rating, but that price target at 140 in shares, you know, closed today. What? You know, 160 something.

Yeah.

180.

Yeah, 186.

186. Thank you.

[Jay Goldberg]

Go ahead.

[Bloomberg Host/Interviewer]

No, Ed, as you think about, you know, your conversation, Jensen, you've had many conversations with him at different venues, different events. I don't know what are you, what is really, you think the most important thing to hear from. We talked about depreciation and some other things. But I'm just curious what's top of mind for you here and what you really want to hear from him?

[Ed Ludlow]

Electricity. I, it's fair to say I've had more terminal client id, more messages on social media. More people in the newsroom come up to me and say like, you know, we should probably talk about electricity and energy because, you know, we don't really have a good line of sight to whether if they can build all these data centers. And Jensen one does have a good line of sight on that. When the data center is built, finish ready to turn the lights on, is the electricity there, you know, and the answer is no. There's loads of deals out there, right? You guys would have done the red headline on the show today about the US or the DOE taking government ownership of nuclear reactors. But these are all deals on paper. They don't exist in the real world. I think that's really critical. The other thing is the press release says they're sold out of GPUs. I just ask him, what do you mean by sold out? Because they're ramping output. You know, their supply constrained demand is greater any given moment in their ability to supply. But to say that something is sold out is a bit confusing, to be honest. And so, you know, ask for some clarity on that.

[Bloomberg Host/Interviewer]

Hey Ed, before we let you go, last question. Ian King writing that inventory took a jump in the quarter normally at chip makers. And just to remind everybody, Ian King has covered chip makers for more than 20 years. That's a worrying sign. Meaning the amount of unused product is going up. The company said it's to quote, ordering to secure long lead time components, meet the demand for Blackwell and support future architecture roadmaps is a little different than what it's traditionally done.

I thought they can't meet demand.

[Ed Ludlow]

Yeah, inventory is typically bad depending on the type of chip because it signals that you, you know, no one's building up there. The customers aren't building inventory. By the way, Ian's covered semiconductors since 1998 at Bloomberg, so. So longer than 20 years. But you know, Nvidia's argument has always been we keep telling our customers, our suppliers and our partners what we're doing for the next five years. That includes the memory chip makers and telematics data center server design builders so that everyone can keep pace. And the argument that they're making is that when they want to ship Blackwell accelerated Computer Systems at scale, the gpu, it can't just be the GPU that's ready to go. You need all the other components to go with it. And you know, with the stock up, whatever it is now in after hours, 4%. So I don't think anyone's worried about that. In fact, inventory number.

[Bloomberg Host/Interviewer]

Yep.

[Ed Ludlow]

Days.

[Bloomberg Host/Interviewer]

All right, all right, good stuff. Hey listen, kiddo. We will be watching. All of us will be watching. CO host of BTech, Ed Ludlow. As you know, catch him at 11am Wall street time every Monday through Friday. But he will be speaking exclusively this evening with Nvidia CEO Jensen Huang. That's at 6:30pm Wall street time. And you can catch that on both Bloomberg Television and Bloomberg Radio. So be sure to check that one out. It is an exclusive. So he's got the conversation.

[Baillie Gifford Announcer]

What is actual investing? We believe that it's a real world task to deliver thoughtful capital deployment. It's not about speculating over the short term. It's about understanding the long term opportunities for companies through technological progress or new business models. So we seek out those exploring big new ideas that will change the world. Then we back them to give those ideas time to flourish. Bailey Gifford Actual Investors Find out [e-mail].

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[Bloomberg Host/Interviewer]

Nvidia gave a strong revenue forecast for the current period, with sales expected to be about $65 billion in the fiscal fourth quarter. I want to bring in Bloomberg News Big Tech team leader Sarah Fryer. She's also the author of no Filter, the Inside Story of Instagram. She joins us from Bloomberg's San Francisco bureau. So going into this, Sarah, there was this narrative emerging that there was concern that the a bubble, you know, if we're calling it that maybe losing a little bit of air if we're going to stay with that metaphor, concern about the hyperscalers Capex. We saw what happened with meta platforms a few weeks ago. Is that concern gone after reports such as this? Is everything all fine and dandy now?

[Sarah Fryer]

I don't think the concern is gone because I do think there are still some trends that are are, you know, as noted to make my colleague in King stories somewhat worrisome. Right. The fact that in Video is investing in a lot of the entities that are buying its chips. Right. So is there a way that they are indirectly funding demand for their product? There is the concern about China sales. We still don't have any forecast of sales to China despite some of the loosening of the most restrictive policies from the Trump administration. And then there's also the question of everyone trying to come up with Nvidia alternatives for their chips and some of the rivals starting to gain a little bit of traction. We saw a little bit from amd. And then furthermore, just the idea that some of the spending on chips, on data centers depends on having the physical infrastructure to really put them to work and especially the energy making sure that there is power to make all these data centers come to life within video chips. So I think that, you know, although this is, this is a company on a tear, this is, we are in the, you know, the Nvidia economy, it is really popping up the stock market right now. It has, it has altered the financial future of a lot of the companies my team covers. But can it last longer? Probably, and that's what this report is showing. But is it inevitable that it will, you know, are all the fears in our past and we're not thinking about that anymore? Certainly not. We're going to keep looking at all those trends and making sure that we can explain to people what is putting pressure on the future.

[Bloomberg Host/Interviewer]

The one thing I want to though, bring out Sarah, and you're, you know, there on the West Coast, San Francisco, you know, the tech community front and center. So you hear things in and around, not just in the newsroom, but just in the area. And I'm, you know, I'm looking at, you know, the concerns about, like you said, maybe this doesn't put concerns to rest. But I'm looking at, you know, in video is certainly up in the aftermarket. I'm looking at NASDAQ 100 mini futures. They're up about one and a half percent. S&P 500 futures are up about 9, 10 of a percent.

It is big.

It's big.

I look at the size has a big effect.

The Sox is up almost 2%. There's a bunch of other names in the space. So it's, I think there was just so much fear that what if they missed those numbers and they met on the data center revenue number for the third quarter and fourth quarter revenue was upbeat in the outlook. Right. So I think, does it feel like, I mean, I don't know, you know, this community, just a little bit of a sigh of relief that, okay, they hit these numbers, they actually did better than what the street was expecting. And maybe that puts some, some of the concerns, I don't know, under wraps for a little bit.

[Sarah Fryer]

I think here, you know, you're asking about the perspective here in the Valley. Here in the Valley, I didn't sound like anything, that there's a sense that we're just at the beginning of this grand movement that will change the world. Right. Maybe it's not even the LLM that will be the, the model that secures the future with AI. And so we're just now starting to see the applications of AI. The, you know, the payback really for all of this investment. We haven't quite solved that. You know, where, where is all this, this revenue, the actual sales to companies that are going to pay for all of the chips that Nvidia makes? We haven't really solved that problem to the tune of the billions that have been spent. But I think that here you're asking, here in the Valley, it is very much, you know, all systems go on AI There, There is not as much of a concern about whether this is a bubble. People are seeing these, these big numbers and they're thinking, you know, the world is about to change even further.

[Bloomberg Host/Interviewer]

How so?

[Sarah Fryer]

People are thinking about how their jobs are going to change. They're using AI very, very much in their jobs and in their personal lives, like, you know, relying on, on AI to help them make decisions for themselves and their families. And I think people are, are eager to create products that are going to take advantage of the, of this as a new resource. Whether that is going to dramatically lead to efficiency, more, more profits for the companies, given all the investment so far, I sort of yet to be seen.

[Bloomberg Host/Interviewer]

Yeah, it's, it's just kind of interesting, right? I mean, here we are, what, almost three years in to this AI story, and most people say it's just early innings on all of this, but it's hard for, right, all of us who covered, you know, booms and busts and crises, and I'm not saying that this is any of that, but it's hard not to be a little bit skeptical when you see, you know, Sarah, the spend over and over and again the conversations around the circular financing and, you know, it's hard. The logical side of your brain says, well, wait a minute, does this ultimately make sense?

[Sarah Fryer]

Two things can be true. Right. It's not necessarily either or. There can be a dramatic revolution in technology that will change our lives and there can be irresponsible spending at the same time. Right. We, we saw in the, the dot com boom, for instance, that there were a lot of companies that had very dire circumstances at the end when that bubble burst and they had to shut down and. But hey, we still use the Internet. The Internet is still a thing. So what? So I think we might not so much.

[Bloomberg Host/Interviewer]

Sorry, Sarah, go ahead.

[Sarah Fryer]

We're not necessarily. Yeah, no, we're not necessarily talking about, you know, a bubble burst. And that means that AI wasn't a thing and we shouldn't have, we shouldn't have thought that it was going to be so big. It could be that, you know, there, there is still potential for a large financial correction down the road. But I remains a force that changes how we do business and how we live our lives. So, so I think to put it in that stock of a either or is missing the larger trend.

[Bloomberg Host/Interviewer]

This is why we come to you.

Because it's really the big picture.

Yeah. And it's very balanced and thoughtful. Sara, thanks so much. Really appreciate Bloomberg News big tech team leader Sarah Fryer. She's also the author of no Feature Filter, the inside story of Instagram. And she is of course there from our Bloomberg San Francisco bureau.

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