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- [00:00]
David Gura
At CES.
- [00:01]
Michael McDermott
Michael McDermott, EVP of Samsung, spoke with Bloomberg Media Studios about what the company calls its next AI chapter, your companion to AI living. It's a shift from AI as a feature to AI as a trusted partner in everyday life.
- [00:15]
David Gura
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
- [00:47]
Michael McDermott
Oppenheimer we're proven because we're grounded in discipline. For 145 years we've been building and protecting wealth through every market cycle with precision, clarity and the courage to think boldly beyond the moment. This is what market tested legacy looks like for this generation and the next. Put the power of Oppenheimer thinking to work for you. Wealth Management Capital markets Investment Banking.
- [01:18]
Caroline Hyde
Bloomberg audio studios podcasts, radio news. Bloomberg Tech is live from coast to coast with Caroline Hyde in New York and Ed Ludlow in San Francisco.
- [01:38]
Ed Ludlow
This is Bloomberg Tech. Coming up, Nvidia's latest sales forecast draws a bearish response from investors with concerns over a potential bubble still weighing on the company.
- [01:47]
Bloomberg Host/Interviewer
Plus, we break down more tech earnings for the CEOs of Snowflake and Chime later this hour.
- [01:53]
Ed Ludlow
And Warner Brothers, Discovery and Paramount both out with earnings too as the bidding war drama continues. Let's get right to our top story. And video is now down around 5%. Earlier in the session, it had been down and on track for its worst day since April of last year. It is a change of direction and sentiment from where we traded in after hours in its earnings print, the forecast for the fiscal first quarter is sales of $78 billion plus or minus 2%. Interesting margin guidance. That sales forecast does not include any contribution from datacenter revenues from China. Let's get to Bloomberg's in King who leads our coverage of this name. It was all about the outlook. So that's the data point. $78 billion of sales there or thereabouts. Actually Jensen, Wong and collect crest, the CFO went beyond that to say that $500 billion guide, which is just Blackwell and Rubin. Actually, they're probably tracking ahead of that now. The stock is down 5%.
- [02:51]
Brody Ford
Yeah, you're breaking down the numbers and we tried to do. I spoke to numerous people after the report yesterday and nobody is pointing to any number and saying that's a problem that's worse than what we're expecting across the board. They were saying the numbers were, were better than we expected if there is an identifiable problem. It was this amorphous idea that well, where's the news story? What's going to take this to the next level?
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Bloomberg Host/Interviewer
And is that GTC in that?
- [03:20]
Brody Ford
That was the conclusion that people have come up with that, you know, they want Jensen to walk out on stage in San Jose like tell them something new and exciting, show them a new path forward and that was the end of it really.
- [03:34]
Ed Ludlow
GTC is Nvidia's big showcase for the audience and those aren't familiar with it and often they do come out and say something quite big. There were other bits in there. For example, if we continue to talk about how this is a supply constrained industry. Right. Detail about how they have inventory and capacity for several quarters. But a warning at the same time from Collette Kress that actually supply is still something to think, think about how are they managing the world of intense AI compute demand?
- [04:03]
Brody Ford
Yeah, I mean that's just one of the questions that they had to answer and did. And the answer was look, we've spent a lot of money, we've got a lot of inventory ready, we can support growth into 2027. Right. So asked and answered at the same time people were like what about memory chips? What about you know, high end capacity? And she did say look it is tight but we have what we need for now.
- [04:26]
Bloomberg Host/Interviewer
Bloomberg's thinking with the breakdown. We thank you. Let's get more on Nvidia Sri Shuni Pejoria is with us, RBC Capital markets research analyst. He has an outperform rating on the stock has raised its price target from 240 to 250. And you're not alone Jeannie, because I'm looking at True securities raising their price target. Citi did, JP Morgan did, Morgan Stanley raised their price target and called it the largest, cleanest beat and raise in the history of semi's industry. What was missing?
- [04:54]
Srini Shuni Pejoria
Right. I mean they delivered on everything, you know, they checked all the boxes. You know, for Nvidia given their track record, the expectations are always high and they were high this quarter. And you know, they came in well about even the high end of the so called whisper numbers. And also they talked about visibility extending well into you know, 2027. And if you look at the breakdown of the quarter, you know what drove Actually what led the growth was interestingly the non hyperscaler business which is kind of, you know, suggests that, you know, the momentum is spreading into, you know, the broad markets like enterprise and in a smaller cloud, customers, etc. And then in addition to that, networking was particularly strong. That's also a positive sign in our view because networking is a market where Nvidia is actually gaining share. You know, they don't have as dominant as a position as they, as they do in compute. So you know, I would say those are actually, you know, definite incremental positives in the quarter. And then there were some concerns about gross margins heading into the print and you know, they guided to mid 70% despite the fact that memory pricing is up more than 100% this year. So you know, as I said, you know, they checked every, every box. I think, I think the reason for the stock reaction, if I have to guess is you know, the concerns about the broader air spending sustainability. So, you know, that's more of a market concern as opposed to everything that
- [06:25]
Bloomberg Host/Interviewer
they said about that sustainability because you've just outlined how they managed to diversify their end customer. About 50% of datacenter demand was from hyperscalers. But they are looking to sovereign AI and the like. Are we needing to hear more about growth in China, for example, which again isn't being factored into the forecast. How much can we support that the capital expenditure is going to last through 2027 fiscal?
- [06:49]
Srini Shuni Pejoria
Yeah, so look, you know, it's, the adoption is broadening. There's no question about it. We are seeing that, you know, on the enterprise side, on the sovereign side, you know, China is kind of a little tricky because, you know, there's a lot of geopolitical issues. The good thing is that the management did not include any China revenue in the guidance. So if it comes through, it's upside to the model. I think, I think it's going to be incremental. Longer term. We're not counting on China. You know, you look at the valuation, you know, it's in the low to mid 20s today on forward numbers, you know, that's pretty attractive for, for a stock for a company that's growing, you know, 70% plus, obviously that's not sustainable. But our expectation is that even in 27 this company can grow at least 30%. And this level of gross margins and profitability, I think that's a particularly attractive valuation.
- [07:41]
Ed Ludlow
In your risks to rating column in your research note very clearly, hyperscale spending is a leading indicator for demand. Jensen was asked that on the call, this is what he said.
- [07:54]
Michael McDermott
I am confident in their cash flow growing.
- [07:58]
Srini Shuni Pejoria
You need compute capacity and that translates
- [08:01]
Michael McDermott
directly to growth and that translates directly to revenues.
- [08:06]
Ed Ludlow
He was asked about capital expenditures growth going forward. His answer was confidence in cash flows because of course cash flows have been impacted by the capex commitment. He didn't really answer the question. But what did you interpret from what he did say?
- [08:23]
Srini Shuni Pejoria
Look, at the end of the day, you know, the spending has to have a return, right? The ROI is very important, but we're still very early in terms of the cycle and part of the reason we are speed, we are seeing this, you know, elevated spending is that the competition among this big four or five hyperscalers is pretty intense. You know, it's still, the battle for leadership is still not settled. I mean just recently, you know, Google took the lead in terms of the large language model performance and you know, you have open air anthropic right behind them and say, so there's, the competition is quite intense and we don't expect that battle to settle anytime soon. So it's not so much about ROI right now. Longer term it does matter. Of course, you know, we need, we need to generate free cash flows for, for the investments that these companies are making and, but at the same time, right now it's more about the competition and the battle for leadership in AI in my view.
- [09:20]
Ed Ludlow
Very quickly, Jensen Huang sprung to the defense of the software industry. Is the ecosystem of his other customers healthy?
- [09:30]
Srini Shuni Pejoria
Yeah, I mean, look, I'm not an expert in software but at the same time we are seeing broadening adoption of AI in the enterprise. His view, as he, as he stated yesterday, is that, you know, AI is, you know, is more of an agentic in nature. You know, the software, essentially the tools. Our software team agrees with that. You know, our software has been, you know, positive on the sector, but at the same time I'm not an expert in that sector so I'll probably refrain from commenting on that.
- [10:01]
Ed Ludlow
Srini Bajiri of RBC Capital Markets, thank you very much. Coming up, Snowflake CEO joins us to talk about his company's earnings and the fears of AI driven disruption. That's one mover to the upside side. This is Bloomberg Tech.
- [10:17]
Bloomberg Host/Interviewer
Snowflake, another of the tech names that released earnings yesterday after the bell. And as investors look for signs of adoption or disruption, its forecast product revenue for the current quarter will be about $1.26 billion. That's up 27%. They reported more than 9,000 accounts using Snowflake Features shares you can see up 3.7%. Let's bring in the Snowflake CEO, Shira Ramaswamy. Shira. I'm reading notes Mizuho saying bookings were a standout. They're talking about the seven nine figure deals that have come. Where are those deals coming from? What are those customers demanding of you?
- [10:51]
David Gura
Great to see you, Caroline. Yes, we had seven nine figure deals including a mammoth $400 million deal. It reflects the confidence that our customers have both in where Snowflake is right now, but importantly that we are going. We all understand that software is being disrupted by AI in a very, very big way. But what our customers understand is that for enterprise AI to truly succeed, they need a single source of enterprise truth. They need built in security, auditability, trust and access. Of course, you also need the best models. That's what Snowflakes provides for them. And we are creating great products, products like Snowflake Intelligence that put the power of data into the hands of every business user who the health care company, I mean the health company loves using us. And there are lots of partners that are using products like Cortex code to speed up what can be done with Snowflake. They are really looking to the future and making sure that we can deliver value with Snowflake and we are creating the products that help them deliver that kind of value day in and day out. That's why you are seeing companies that said make commitments of 400 plus million dollars with Snowflake.
- [12:05]
Bloomberg Host/Interviewer
I'm really interested in Codex Code was something that was talked a lot about and people are adopting swiftly. But that partnership model that you have, the fact that you have integrations with Anthropic OpenAI Cloud, also Google Cloud, but some of these have very good coding tools of their own. How do you see this ecosystem evolving? Because customers get it, but the investor base have been questioning whether they'll take away your market shack.
- [12:28]
David Gura
Well, so there are a lot of things that are specific to Snowflake and to data. Absolutely. There are coding agents that are often provided by the model companies themselves. But we know a lot about how data systems are supposed to work, about how Snowflake is supposed to work. And Cortex code is super tightly integrated with the customer's Snowflake account. Data does not go anywhere. And remember, we have earned the trust of all of these customers. Customers with certifications with the guarantee around things like use. We never use customer data for things like training models. They get the superior models that we get through partnerships with these folks. But we also add the secret Sauce of data of how Snowflake works into products like Cortex code. And we are seeing amazing wins both internally and also externally. One of our partners told us that having Cortex code was like Snowflake supplying them with bulldozers where previously they had shelves.
- [13:24]
Ed Ludlow
True to one of the core pillars for you to grow is to go out and find new customers. And I wondered if you just give some detail on what's happening in the world of technology in AI that would bring a customer to Snowflake for the first time. What is it that they need that they didn't before?
- [13:43]
David Gura
Typically they come to us because they need better Internet sight into data. It is sitting somewhere. It's hard for them to get these insights. But increasingly what we are able to do is have our sales team build an honest to goodness customized demo of something like a Snowflake Intelligence on data that the, on the kind of data that a customer is going to have. It is that easy access that really is the big winner for our customers. And smart customers are also quickly realizing that having data in Snowflake means that they can think about how this data is going to be used in ways that they had not done before. Sanofi, which is an existing customer, is now Snowflake is now using Snowflake Intelligence, our products, to redefine a lot of workflows, replacing a lot of existing software. These are the use cases that drive these customers to come to Snowflake and adopt it.
- [14:37]
Ed Ludlow
Sridhar Last night, Jensen Huang, who, you know very well talked about profitable tokens, the idea that the output of an AI model is worth paying for. Customers do pay, and they pay at a price that is greater than the compute used to generate it. Are you able to give me any evidence through Snowflake's lens that you actually see that in the real world?
- [15:00]
David Gura
Well, what I can assure you is getting projects done as being changed dramatically quickly. Something like setting up a pipeline used to be a multi week task. We can get that done in a small number of hours. My teams come to me just last weekend with speed ups going from four weeks for a software engineering project that they did down to 40 minutes. That is 100x speed up. And we are happy to spend any number of tokens in those 40 minutes to save that kind of time. I think coding agents are really quite magical in the value that they deliver. And I think it's only going to accelerate from here. And so these investments are going to be pretty foundational in every company, you know, succeeding and thriving. And that's why we are so bullish about Cortex code and how much you
- [15:50]
Bloomberg Host/Interviewer
having to invest in your own business. I mean the bullion case for many is you need to keep up with a furious pace of innovation. Can you at this moment briefly.
- [16:00]
David Gura
We can because we are organized to drive rapid innovation. The team that is driving a product like Snowflake Intelligence is not that large, but we have structured it in such a way that they can make rapid progress. And it is more the metal structure of how you set up environments where people can get work done quickly and effectively that matters a lot more than things like how much hardware you are investing in and and things like that. The current moment is magical because all of us have access to great tools. It really comes down to how effectively we set up teams and projects to get things done. And that's why we are very bullish on how we have set things up at Snowflake because we now have a demonstrated capability to be right at the cutting edge of where is having impact.
- [16:47]
Ed Ludlow
Snowflake CEO Sridhar Ramaswamy Great to have you back on Bloomberg Tech. Thank you very much. Coming up continues and this time it's with Hollywood. We'll discuss results from Warner Brothers and Paramount. That's next. This is Bloomberg Tech.
- [17:03]
Michael McDermott
How do you shift AI from being a flashy feature to a trusted partner
- [17:06]
Brody Ford
in consumers everyday lives on the ground
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Hannah Miller
at CES Bloomberg Media Studios?
- [17:10]
Michael McDermott
Asked Michael McDermott, EVP of Samsung.
- [17:12]
Brody Ford
Our 2026 vision is built around an AI companion. It understands you and responds responds intuitively. This intelligence works quietly in the background across TVs, home appliances and mobile devices. By putting AI at the center of everything we do, we're simply improving everyday life for everyone everywhere.
- [17:33]
Caroline Hyde
We believe in starting with your financial goals, not a formula. At Oppenheimer, we put the full strength of our long standing expertise to work. Understanding your life and and your ambitions and designing the precise strategies that build and protect your wealth. With confidence across this generation and the next, put the power of Oppenheimer thinking to work for you. Wealth management, capital markets, investment banking. At Charmin, we heard you shouldn't talk about going to the bathroom in public. So we decided to sing about it.
- [18:07]
Brody Ford
Light a candle, pour some wine Grab a roll the soft kind for a little me time Charmin Ultra Soft so smooth tear Wavy edges for my rear
- [18:17]
Caroline Hyde
so let the softness caress your soul
- [18:20]
Brody Ford
Just relax your on a roll let her rip Charmin Ultra Soft Smooth tear
- [18:26]
Caroline Hyde
Charmin Ultra Soft Smooth tear has the same softness you love now with wavy edges that tear better than the leading one Ply brand. Enjoy the go with Charmin.
- [18:35]
Brody Ford
Our board continues to lead a rigorous, highly competitive and thorough sales process. We engaged with four bidders which led
- [18:44]
Srini Shuni Pejoria
to eight price increases and have thus
- [18:47]
David Gura
far achieved a 63% increase in value versus the first offer received in September,
- [18:54]
Brody Ford
delivering significant value for WBD shareholders throughout the process.
- [19:00]
Bloomberg Host/Interviewer
Warner Brothers Discovery CEO David Zaslav. They're discussing the progress of deal talks. An increased offer from Paramount has renewed the takeover tension and it comes as Warner Brothers posted a 6% decline in revenue during the fourth quarter. Paramount Skylines also came out with this numbers. Let's bring in Bloomberg Media reporter Hannah Miller. And all of this speaks to still profitable cable companies where they're trying to subsidize basically revenue profits not showing up in streaming thus far. But subscriber growth is that, yeah, the
- [19:30]
Carmen Reineke
subscriber growth is there. And you know, Warner Brothers has made a point that they want to build up that subscription subscriber count. They're shooting for 150 million people for their streaming services by the end of this year. And you know, we have seen these gains. But again, they're overshadowed by the fact that revenue earnings have declined compared to last year.
- [19:51]
Ed Ludlow
There's also this idea of like what's happening with the bottom line and we can't get away from what's happening in the background. You know, it's awkward when you have company earnings and all the players involved are in a kind of bidding war. Did they expect explain any of that, Hannah?
- [20:04]
Caroline Hyde
Yes.
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Carmen Reineke
So, you know, all of these earnings results, they've been overshadowed by this bidding war. And we saw on both, both earnings calls that, you know, the CEOs were like, we don't really want to comment on this. Things are still underway. What's happening right now is the Warner Brothers board has to determine whether or not the Paramount most Paramount's most recent offer could be considered superior to their current agreement with Netflix. If they do make that declaration, Netflix has four days to respond with either a sweetened offer or just bowing out.
- [20:36]
Ed Ludlow
Bloomberg's Hannah Miller, who's been across all of this in real time. Thank you very much. Let's move on to another big media named paramount. It posted $8.15 billion in revenue and the shares, again, it's kind of interesting. They're reacting significantly. We're up 11%. Are we up 11% because of the health of the business and the content of earnings or are we up for another reason? Let's discuss with Laura Martin, senior entertainment and Internet analyst at Needham and Company. Laura, you're recommending fundamental investors.
- [21:02]
David Gura
Hello.
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Ed Ludlow
Remain on the sidelines. I just showed the chart. Maybe they'll bring it back up. So up 11%. Reconcile that please.
- [21:11]
Laura Martin
Right, So I think what Wall street likes is the fact that this is company is subscale. And it looks like they're more likely to to win the bid for Warner Brothers, which would then not make them subscale because they would like a third of total linear channels that have owned two of the largest film studios. And so. And really their revenue is up 2%. They had a lot of positive comments about UFC, which was their top rated streaming channel. And streaming revenue was up 17% at Paramount plus in the fourth quarter. And it should. So I mean all of those numbers fundamentally were better. At least this business is growing. Warner Brothers is shrinking, but Paramount Peace Guy is growing.
- [21:54]
Ed Ludlow
So still, I think we'll get to Warner Brothers in a moment. Like really simple question and it comes from a sincere place. A lot of our audience have this. Based on what you've just outlined with Paramount, Skydance, what does doing the deal with Warner Brothers Discovery, the whole entirety of it, fix or improve or accelerate?
- [22:14]
Laura Martin
Okay, so if they don't win, if Netflix wins, Instead they're an $11 billion market cap company and their primary competitors will be Netflix, which if it buys Warner will be at 500 billion dollar market cap and Amazon and Google, which are $3 trillion round numbers. So its competitive position, it will be more subscale than it is today. If it wins Warner Brothers, it suddenly combines and cut costs from several of the largest streaming companies, several of the largest. It will be 30% of total linear TV ownership and it will combine. It will have two of the biggest studios. So there's a lot of cost cutting in that. And it will not be near as subscale round numbers. It will be around the same size as Disney and Netflix if it wins Warner. So it basically, it basically makes it a legitimate competitor to those other streaming companies.
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Bloomberg Host/Interviewer
And I think what Paramount, Skydance, Laura did in its numbers was show they can cut costs and then some. Certainly when it comes to the cable part of the business, how much does it need Warner Brothers Discovery?
- [23:21]
Laura Martin
So good question, because price is the thing you're not asking. But strategically it must have Warner Brothers Discovery. But of course, you know, we do stocks and we do valuations and they're paying an awful premium for a shrinking business. As you saw like every single business segment, everything advertising was down, you know, a lot, a lot at peace, guys. So some of their businesses at Warner Brothers are Shrinking. A lot of them are shrinking actually. So, I mean they're buying a business is weakening fundamentally every single quarter. And they're paying peace guys bidding higher and higher values, which implies they're not going to get a good price on this asset because of the bidding war.
- [24:02]
Bloomberg Host/Interviewer
I mean, Laura, you're all about the fundamentals, but are we, if they do have to pay over and above, they have to, to go to $32 for Warner Brothers Discovery, Is that a good deal fundamentally for the business longer term and given maybe Netflix happens to be able to push them there?
- [24:19]
Laura Martin
You know, I think the answer is if they didn't have a billionaire behind this. I cannot imagine a investor, a, you know, a venture capitalist or private equity guy or public markets funding this stock price. But you've got a billionaire sitting behind that and he can spend his money the way he wants.
- [24:40]
Bloomberg Host/Interviewer
Talking Larry Ellison, that of David Ellison, of course. Laura Martin, it's always so great catching up with you. Thank you. From Needham and co. Coming up, more earnings. How are results impacting the disruption fears that engulf this market, particularly in the area of software? We're discussing that next. We're also talking hardware and Nvidia. We've got to talk about that.
- [25:00]
Ed Ludlow
Yeah, look, it's, it's clearly having a drag on the market. We're not down as much as we were, but still down 4%. And like it is a sentiment change. We've gone from basically muted on what was a beat even against bullish buy side expectations to a very bearish reaction to what Nvidia had to say about the durability of this. I spend and there is a lot more to unpack. So much more analysis and reaction to come. It is half time and this is Bloomberg Tech.
- [25:36]
Bloomberg Host/Interviewer
Welcome back to Bloomberg Tech. It is a big day in the markets because it's a big day of earnings and the number one most valuable company in the world has failed to impress. What more is Nvidia to do? So by 3.9% they saw 73% increase in revenue for the quarter that they posted. For a giant that is worth 4, $4.8 trillion, they say that that's going to accelerate to 78%. They see margins that are expanding as well, but yet the market isn't convinced. And still we see the stocks rollover across the board. When you're looking at amd, Dam, Broadcom, Micron, the fourth hardware lower. Let's look at software though, because earnings have also been coming thicker, fast. They're both actually in the green snowflake we just had the CEO on talking about how they're able to be at the epicenter of the enterprise, AI adoption. And for now, investors believe that. But I'm looking at Salesforce managing turnaround. It was down aftermarket yesterday. They post a $50 billion authorization to buy back shares. We're seeing an adoption of Agent Force that is now a $800 million run rate, up from 500. We're up 2.5%. But both of these stocks have been battered over the course of the last few months.
- [26:38]
Ed Ludlow
Okay, let's get more on Salesforce's earnings and speak with Bloomberg's brody Ford in 24 hours ago. When you were on the show, we were saying this is going to be about them evidencing organic growth versus inorganic growth. And actually, that did come up. They talked about, you know, whatever's happening in AI, the thing that they're offering will help them grow. As opposed to just buying up other companies that are growing fast.
- [26:59]
Brody Ford
Absolutely. So, I mean, the big concern is that the core Salesforce products for, let's say, managing your Salesforce or managing your service, these are slowing down quite a bit.
- [27:10]
Srini Shuni Pejoria
Bit.
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Brody Ford
And so their new tools, they are making some money. $800 million per year at this point. Is that enough to offset the slowdown in the core business? I mean, they're in the green today. But we have to remember application software has been incredibly beat up this year. And if you zoom that chart out, it's still not an amazing picture.
- [27:30]
Bloomberg Host/Interviewer
It's an ugly picture. In fact, if you're looking over the course of the last 12 months, Brody. And in terms of age, Agent Force adoption, in terms of that average revenue run rate, are we seeing them being able to prove out that they're so intertwined? No one's going to be forcing out the platform. And it's more just a question of how much they can charge for it going forward.
- [27:48]
Brody Ford
They have proven at this point that Agent Force is a real product. People are paying for it. That was an open question 612 months ago. What's less clear is do they have a ton of pricing leverage? Are customers increasing total spend with Salesforce? Right. I mean, is this a question of you're spending money on Agent Force, but you're not expanding your seats on the core platform. The jury is still out on whether generative AI means that leading platforms remain this kind of center of gravity.
- [28:21]
Bloomberg Host/Interviewer
Ready? Ford, we thank you for talking us through software. Let's talk about how the markets are digesting all the of. Of these earnings. We're going to go back of course in videos results as well with none other than Nancy Tangla, CEO CIO Rapha Techno Investments, who joins us on our birthday and also our super bowl day that is in video. But let's just start with software for a minute. Nancy, what do you make of the software numbers that we saw from CRM that we see from Snowflake as well? Did they manage to push back on this disastrous fear engulfing the market? That generative AI is going to eat their lunch?
- [28:55]
Caroline Hyde
Yeah, thanks Caroline for mentioning my birthday. Goodness sakes. Pretending like I don't have them anymore. I, I do think that some of these companies are facing some really strong headwinds. We got out of Salesforce a while ago not because we, we knew this narrative would prevail, but we just didn't see an exciting growth trajectory for the company. We also became a client. It was not a great experience and so we canceled our contract. But in terms of, of software in general, I think some of these companies are going to win. And I've talked with you in the past about ServiceNow. We still own it. We added to it recently. We think they are going to benefit from better margins in the future because they're pivoting and vertically integrating. But we got out of Adobe and that was because we didn't see the company pivoting and that was a number of years ago or about over a year ago. And so I think that's what investors have to digest is who are going to be the winners. And Salesforce will be in business but they may not put up the kind of growth numbers they put in the past and we won't know for a couple of days because it was down premarket, then it shot up and now it's pulling back. So I think you have to wait for the hedge funds and the algos to settle in and then, and then we'll see if investors come back to the name long term investors.
- [30:12]
Bloomberg Host/Interviewer
It's interesting Nancy. You call out service now we know that you've called out before and indeed Jensen Huang has been on calling out service now himself as a winner Nazi. Go back to your own well experience with using the Salesforce product. Why didn't you like it? Why did you cut it? What was it that we're not getting offered that keeps it sticky.
- [30:33]
Caroline Hyde
So this is interesting, Caroline. I think this is the story of this market. So we, we were going to use it internally and as, as for the obvious reason and it took almost a year. They assign you to someone who helps you get set up and customize the product. Before we were even up and live we had a price increase. It was very clunky. It was not a smooth process, a lot of hard sell, not a lot of delivery and service. We are shifting our investment management software away from Advent to Ridgeline. Ridgeline was founded, built from scratch, new technology founded by David Duffield. He made the pivot. I mean he still obviously owns tons of shares in workday but that firm is a joy and a privilege to work with. So I think that's what software providers are going to have to do. They're going to have to service and show that they add value to the underlying business.
- [31:24]
Ed Ludlow
There is a link here between that and Nvidia's earnings. Your main takeaway from the call last night is the same that we've been talking about all morning. Compute equals inference which equals revenues. And the way that Jensen Huang explained that was profitable tokens. In other words, customers of all kinds are willing to pay for the output of an AI model and that actually the economics have improved. The thing is I don't see any evidence of that in any of the software companies earnings yet. Do you not?
- [31:54]
Caroline Hyde
Not yet. I don't think so. Part of that is capacity though and I mean we heard Microsoft say they took some of their own capacity but you heard them say we and Amazon too, we can, we can fill whatever we get immediately in terms of demand but they don't have enough capacity. So I guess I would look at it two ways. One is if you go back and look at capex in the 90s it was about a two standard deviation above the mean spend in tech Capex we're not even one standard deviation deviation away from the mean and one man's Capex spend is another man's revenue. So amd, Nvidia, Broadcom, names we all own will continue to benefit. And here's the last thing I'll say. 60% earnings growth at Nvidia, a P E of somewhere around 23 to 24. Procter and Gamble, 2% earnings growth on next year's earnings and a P E of 24. So I know which one I want to own for the long term but there's a lot of trading going on, there's a lot of hiding in the defensive names. That's what happens during this period. It happened last year, right. If you look at all these names after Deep Seek where we thought the world was ending, I mean we were buying a video at just over $100 a share. That's still a good investment.
- [33:06]
Ed Ludlow
You are an Nvidia shareholder. I think you continue to like the name. Right. So what was your big takeaway from any of the earnings from print or the cool.
- [33:14]
Caroline Hyde
Yeah, I think no one's really talking about the growth in sovereign which is just getting started. So I understand it's a small portion of total revenues. It was 30, $30 billion last quarter. Up 3x year over year though.
- [33:27]
Ed Ludlow
And excluding China, right?
- [33:29]
Caroline Hyde
Yes, yes, excluding China. I think that's important. And the company. It's just like when Tesla's megapack business got started, it became the fastest growing, most profitable business. I think we will continue to see these companies expand their reach and more compute is going to be more demand and we are going. You know, I think he made a really interesting comment. What if or what, what if when we have 100% autonomous calls, cars, let's call it 50 or even 35 cars that are autonomous. The compute demand is going to be great. And those data centers, centers in space while super intriguing intellectually and capture the imagination. That's not going to happen very quickly.
- [34:13]
Ed Ludlow
Nancy Tangla from Lafitting Investments, thank you very much. Now coming up, more earnings. We're going to speak with Chime CEO Chris Brett following that company's report. This is Bloomberg Tech.
- [34:25]
Caroline Hyde
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Michael McDermott
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- [36:09]
Ed Ludlow
Okay. Shares of Chime are up almost 11%. More than 10%. On track for their best day since November. Earlier in the session, up almost 17% and on track for their best day since the company IPO'd last year June, the fintech firm issued guidance that topped analyst expectations, driven by rising user growth, strong demand for digital banking products. Chime CEO Chris Britt joins us now. Actually, the other thing you're getting a lot of credit for is a technology story. A lot of the transition to your own tech stack, how you've managed the company. You don't need to grow headcount necessarily because of the focus and investment you've made on tech. Do you mind if we start with that and explain, explain a bit about the strategy behind that?
- [36:50]
Michael McDermott
Yeah, absolutely. And first of all, thanks for having me today. I'm so proud of this team and the way that we've executed. I think we're shipping faster than ever. And you know, if you just think about this first year of this is the first time we're reporting as a public company our full year results and they were outstanding. You know, we, we added a million five new active members who are now at 9.5 million actives. We took the company public, we launched a range of new products, we launched a new business in our enterprise channel and yes to your point, we completed the conversion of our core processing and ledgering system onto our own in house tech stack top to bottom. And that's really unleashed not only lowered costs but also unleashed a whole set of new products and services for our members that, that drove awesome results for the year of $2.2 billion of top line revenue growing 30% and, and we got to a 10% EBITDA margin in Q4. So feeling good across the board and this technology platform really is an enabler for our future growth.
- [37:55]
Ed Ludlow
Last month I was on your own website, you this kind of blog post. It was what is Chime? Chime is not a bank. And if you consider, you know what the products you're offering are, a big part of where the streets focused on is new products coming to market and how you've monetized that. So you take Time Card, for example, through that lens, explain what you are, but also how you've been able to launch a sort of wider offering of financial services as a fintech company right
- [38:24]
Michael McDermott
Chime at our core we're a technology company. We partner with banks. And so when you sign up for a CHIME account, think of it, you're basically doing, there's a three way relationship between the consumer chime as the technology enabler and brand and the design and deliver delivery of all the actual experience and then the bank. So we have some community bank partners that actually hold the deposits in FDIC insured accounts for our members. And this approach has worked really, really well, particularly for mainstream American people that oftentimes live paycheck to paycheck. Basically the population that makes up to about $100,000 a year. That's the segment that we serve. And we offer a range of core banking services, fee free checking accounts, the ability to get access to short term lines of credit at low cost or no cost, the ability to build your credit and to earn high yield savings. And because we're a technology company, we don't have physical branches and a heavy infrastructure. Physical infrastructure. We're able to operate at a really low cost structure and we deliver that value back to our consumers and that's allowed us to really outmaneuver the big banks. We've been continuing to increase our share of new accounts. Yeah, new checking accounts in America and third party research continues to, to show that we are having an outsized impact and increasing our share.
- [39:44]
Bloomberg Host/Interviewer
Let's go to swipe fees because that is where you get a lot of the revenue. Is there any issue, any concern longer term as you scale, do you feel that that will become a regulatory issue as you hit certain benchmarks and amounts of money that you manage?
- [39:58]
Michael McDermott
Yeah, I think as we've grown over the past few years, you've seen an increasing balance in our business. So we were historically very heavily reliant on fees that we earned from Visa when our debit cards get used for everyday transactions. And we've now have a secured credit card product. We launched a product called Chime Card last year. That's a reward, a secured card that has rewards. And that's kind of changed the game for everyday transactions in America for, for average people, you know, average sort of mainstream consumers. And so that's a, also contributing revenue line. And then increasingly we have other services, our short term overdraft services. And our MyPay product has been an outstanding, you know, just one year in, it's almost a half a billion dollar revenue run rate that allows our members to get access to their paycheck essentially on demand. And that's also been a nice, added some additional balance to our revenue mix.
- [41:00]
Bloomberg Host/Interviewer
I'm going to ask a sort of more complex and maybe more emotive question. In some way you've talked clearly about how you have partnerships with banks. You're not the bank, you're not taking the details, details of the customer in so many ways. But there has been a consideration from the Trump administration that maybe banks should collect citizenship now, given the people that you serve at the moment. Briefly, Chris, is this an issue for you?
- [41:22]
Michael McDermott
It's absolutely not an issue. First of all, we open up FDIC insured checking accounts in partnership with our bank partners. So we comply with the rules and regulations that are required as OCC chartered banks that, that offer these FDIC insured accounts. So, so for every new CHIME member, we collect the full Social Security number and, and comply with the Patriot act and, and all of the KYC requirements to open up a checking account. So this, any rule changes in this area have no impact on our business.
- [41:53]
Bloomberg Host/Interviewer
CHIME CEO Chris Britt, we thank you for joining us today. Now coming up, we'll come back on today's big story. Nvidia earnings, how investors are digesting the numbers at the moment. You can see they're pushing down the stock on the back of it. This is Bloomberg Tech.
- [42:09]
Caroline Hyde
Nvidia continues to surprise and delight the market.
- [42:12]
Ed Ludlow
Nvidia hit it out of the park yet again.
- [42:14]
Michael McDermott
We saw, you know, phenomenal results.
- [42:16]
David Gura
It was a solid set of earnings
- [42:18]
Caroline Hyde
and more importantly, they had a very confident outlook for how they were going to sell more AI chips and data
- [42:25]
Michael McDermott
center product going forward.
- [42:27]
David Gura
And I think we were all looking forward to seeing. Is that going to be a thing?
- [42:30]
Michael McDermott
I think what was particularly, maybe not surprising but impressive was 75% growth year on year on the data center space.
- [42:38]
Caroline Hyde
As the marketplace tug of war over is the economy booming or are there
- [42:43]
Michael McDermott
concerns around the economy?
- [42:46]
Caroline Hyde
And in video continues to be. Regardless of what this debate is concluding, the stock just keeps getting cheaper and cheaper to the point where it's becoming an obvious buy.
- [42:58]
Michael McDermott
They're still investing and these are going to signal good times to come for
- [43:02]
David Gura
Nvidia, in our opinion. Could it be any bigger than this?
- [43:05]
Michael McDermott
And they basically said yes.
- [43:07]
Bloomberg Host/Interviewer
The reaction very positive from some of Bloomberg TV's guests after Nvidia posted its whopping numbers. But the reaction in the shares is not well, by 4.5%. Let's bring in Bloomberg Tech equity reporter Carmen Reineke for what your sources are telling you because the numbers were stellar, everyone agrees. So what more were they not able to demonstrate?
- [43:29]
Carmen Reineke
Yeah, what I'M hearing from investors is that they're really worried about the cyclicality here. That's sort of what they're seeing is you know the thing that might be still concerning people. So obviously Nvidia continues to beat and raise and Jensen even said, you know, they think the, you know, the hyperscalers are going to continue to spend but investors are worried about that. They're worried that that's going to down slow stop at some point and that then Nvidia will be impacted.
- [43:52]
Ed Ludlow
Common the market is now moving and the move is significant. What are the single names that you're tracking and what's the impact bim from Nvidia's move lower.
- [44:00]
Carmen Reineke
Yeah so obviously Nvidia is the big one but we're also looking at other chip makers. So shares of Broadcom Micron were also down today. You know they spiked within video sort of in after hours and then followed them lower. The other thing that's really interesting to today is that software names are getting a little bit of buying here. So we saw Salesforce up. That's a reverse from what they are where they were after hours after their own earnings report. And then we're also seeing things like ServiceNow higher. So that's interesting. We've obviously been seeing a lot of weakness in software and maybe a little bit more strength on you know, in the Nvidia side. Although shares have been in range for quite some time. So seeing a switch there today is really interesting.
- [44:39]
Bloomberg Host/Interviewer
Interesting was interesting. Some parts of the supply chain or other areas that have benefited from the Capex spend are still showing resilience. I'm looking at Samsung traded in London for example is still holding on to gains. SK Hynix had whopping day over in Asia. So with it there's still areas that are resilient. The optical part of the equation for example.
- [44:57]
Carmen Reineke
For sure I think people still are looking at those sort of second derivative picks and shovels kind of the other place where Capex is going to be directed and saying okay we're we still think that there is strength here. They're still building data centers. That's going to continue and so maybe moving into that piece of the puzzle a little bit more. It's so interesting though because Nvidia is getting really cheap. That's something we're going to keep watching. I mean it's like 23 times forward earnings. That's barely a premium to the S&P 500.
- [45:24]
Ed Ludlow
Bloomberg's common Reineke thank you very much. Bloomberg Intelligence out with Nvidia earnings reaction Noting the beats in the fourth quarter but more impressively that first quarter outlook pointing to a stronger ramp of the GB300 system. Bloomberg Intelligence senior analyst Kunjan Sobhani with us. This was what they used to explain margins, you know, the Blackwell ramp. But then later this year we're going to get Vera Rubin. There will be a transition of technology for their biggest customers. How have you modeled for that?
- [45:51]
Hannah Miller
Yeah, so usually at the start of a new product ram, your margins will get hit. But one key thing is different this time is the, the ramp of improvement of margins with the black has been very impressive. We all know about the rising memory cost, the rising wafer and package cost. Despite of that and they don't pass on this cost to their customer. Despite of that they have been able to hold that 75% margins, the software level gross margin. So that speaks to two things. Their pricing power and their ability to optimize for costs in their supply chain. Hence that large purchase commitment increase which really lets them deploy their balance sheet in their supply chain.
- [46:26]
Bloomberg Host/Interviewer
I mean even the costs that they identify for stock recompense to those that work for them. I mean people saying that's a really classy act from the CFO from investor relations to be making that clear within the gap numbers concern. But where therefore are we lacking clarity? Is it from the China perspective? Is it future build? Where did we need a little, little bit more?
- [46:49]
Hannah Miller
I couldn't find anything negative in this print. I mean looking at buy side expectations, it very clearly cleared the most lofty bogeys on the buy side. I think this is just the reaction seems to be overall fatigue on one end when the top five customers who are raising capex targets are being punished for spending that money. You can't have it both ways. Where the company that's capturing all that revenue also gets, does not gets rewarded for, for taking a lot of that
- [47:14]
Ed Ludlow
high spending just very quickly networking provided a lot of the upside. Just explain it.
- [47:19]
Hannah Miller
Yeah, you know people have, people don't pay a lot of attention to the networking but networking has been surpassing expectations every single quarter and I think it will greatly because now they're networking they can sell it even where their GPUs don't go. So even like a six for an Amazon which are supposed to be growing and taking share away from the Nvidia GPUs servers, they're going to plug it within media networking. So that's a new source of revenue. Even where they don't have the chips
- [47:43]
Bloomberg Host/Interviewer
in the servers of Arnie Bullish. Take from Bloomberg Intelligence. Just not a bullish reaction on the stock. That does it for this edition of Bloomberg Tech. Extraordinary day on these markets that yeah,
- [47:54]
Ed Ludlow
and we had reaction from the sell side, from the buy side and in house the reporting of the things you need to know. Recap that on the podcast. You know where to find it. It's on the Bloomberg terminal and online on Apple, Spotify and iHeart. This is Bloomberg Tech.
- [48:11]
David Gura
I'm Barry Ritholtz inviting you to join me for the Masters in Business podcast. Every week we bring you fascinating conversations with the people who shape markets, investing and business. CEOs, fund managers, billionaires, Nobel laureates, traders and analysts, economists, everybody that affects what's going on in the market. Whether you own stocks, bonds, real estate, commodities, crypto. You really need to hear these conversations. Sometimes it's behaviorists like Dick Thaler or Bob Shiller. Sometimes it's fund managers like Peter Lynch, Bill Miller, Ray Dalio. Sometimes it's authors. Michael Lewis, author of the Big Short and and Moneyball. Regardless of the conversation, these are the folks that move markets each week. That's the Masters in Business podcast with me. Barry Ritholtz. Listen on Apple, Spotify or wherever you get your podcasts, People who didn't do what John of God wanted them to
- [49:18]
Carmen Reineke
do, they usually disappeared. John of God was once Brazil's most famous spiritual healer. But in this limited series podcast we uncover the darker truth behind his global empire of faith and fear. From exactly right and adonde Media, this is Two Faced John of God. Listen on the iHeartRadio app, Apple Podcasts or wherever you get your podcasts.