Loading summary
Transcript170 lines
- [00:01]
Alex Rodriguez
For every six Chinese people, there's a Ping an customer.
- [00:04]
Jason Kelly
We have accumulated a massive amount of the customer data, not just on the financial side, but end to end across.
- [00:10]
Alex Rodriguez
Channels thanks to our AI advancements.
- [00:13]
Karen Moscow
This is the Technology Empowered Growth at Ping an podcast. In our latest episode, Ping an is utilizing technology to provide integrated and personalized 24. 7 support for China's rapidly growing elderly population. Now available on Spotify, Apple Podcast and Ping An's website.
- [00:31]
Ed Ludlow
With Venmo Stash A.
- [00:32]
Amy Morris
Taco in one hand and ordering a.
- [00:35]
Ed Ludlow
Ride in the other means you're stacking cash back. Nice.
- [00:39]
Jason Kelly
Get up to 5% cash back with.
- [00:40]
Ed Ludlow
Venmo Stash on your favorite brands when you pay with your Venmo debit card. From takeout to rideshares, entertainment and more, pick a bundle with your go tos and start earning cash back at those brands.
- [00:51]
Jason Kelly
Earn more cash when you do more with Stash. Venmo Stash terms and exclusions apply.
- [00:56]
Amy Morris
Max $100 cash back per month.
- [00:58]
Ed Ludlow
See Terms at Venmo Me Stash terms.
- [01:01]
Jason Kelly
You can get the news whenever you want it with Bloomberg News Now.
- [01:05]
Ed Ludlow
I'm Amy Morris.
- [01:06]
Karen Moscow
And I'm Karen Moscow, here to tell you about our new On Demand News report delivered right to your podcast feed. Bloomberg News now is a short 5 minute audio report on the day's top stories. Episodes are published throughout the day with the latest information and data to keep you informed.
- [01:23]
Ed Ludlow
Yes, there are other products like this from a variety of news organizations, but.
- [01:28]
Jason Kelly
They usually rerun their radio newscasts throughout throughout the day. That's not what we do.
- [01:33]
Ed Ludlow
We create customized episodes that can only.
- [01:36]
Jason Kelly
Be heard on Bloomberg News now and.
- [01:38]
Karen Moscow
We don't wait an hour to publish breaking news. When news breaks. We'll have an episode up in your podcast feed within minutes so you're always getting the latest stories and developments.
- [01:47]
Jason Kelly
Get the reporting and the context from.
- [01:49]
Ed Ludlow
Bloomberg's 3,000 journalists and analysts. We're all over the world.
- [01:53]
Karen Moscow
Listen to the latest from Bloomberg News.
- [01:55]
Jason Kelly
Now on Apple, Spotify or anywhere you listen.
- [02:02]
Alex Rodriguez
Bloomberg Audio Studios Podcasts Radio News. Bloomberg Tech is alive from coast to.
- [02:14]
Caroline Hyde
Coast with Caroline Hyde in New York.
- [02:17]
Alex Rodriguez
And Ed Ludlow in San Francisco.
- [02:22]
Ed Ludlow
This is Bloomberg Tech. Coming up in videos Strong revenue forecast soothes investor concerns about an AI bubble RX Exclusive conversation with CEO Jensen Wong.
- [02:32]
Caroline Hyde
Plus the CEO of Palo Alto Networks joins us to discuss its own results and the latest acquisition to boost its.
- [02:38]
Ed Ludlow
AI offerings and a pioneer, Yann Lecun will depart Meta at the end of the year to start a new company. Details later this hour now we focus.
- [02:48]
Caroline Hyde
In on the broader markets. We said yesterday. So in video, so the market, so the market follows Nvidia higher but we're up 1.7%. The NASDAQ 100 a breath of relief when it comes to anxieties. Instead those are quelled world a bit ed and not enough even to be shaking off some of the anxiety that comes with the jobs report that maybe, maybe we could see a December rate cut. We built up a little bit the bond market pricing in now 35% chance of a rate cut come December. But really all eyes on this trade.
- [03:17]
Ed Ludlow
Today and all eyes on Nvidia. The stock is up about 3%, had opened up about 5% and has paired some of that gain in the last half hour or so. $65 billion of sales in the fiscal fourth quarter. Many see that as being healthily above consensus. There was a lot of fighting talk on the demand side, on the supply side and how good Nvidia's technology is. We spoke with Nvidia CEO Jensen Huang in an exclusive interview post. Earnings Take a listen.
- [03:49]
Jason Kelly
Sales are off the charts for Blackwell and Nvidia. GPUs in the cloud are sold out. We got plenty of black wells to sell you. We have lots of Blackwells coming. We're making a lot of Blackwells and we have a bunch of Vera Rubens coming. And so business is very, very strong. But we've planned our supply chain incredibly well. We have the largest supply chain in the world, but we've got a bunch of Blackwells to sell.
- [04:21]
Ed Ludlow
Jensen, I tried to go through what the CFO Kress said about China in the quarter gone. It seemed like there was not meaningful 20 sales because the demand wasn't there. Even if you were permitted to sell H20. And then in the current period and going forward, Nvidia seems committed to working with both the United States and China to sell what Collette called more competitive compute. Where do we stand with that? And could you just clarify what, what Colette was talking about in the current state of play for China?
- [04:55]
Jason Kelly
The most important thing she said is that we've said for some time now our forecast for China is zero. All of our forecast guidance that we showed zero, we should start. That's the most important thing that she said. She also said that effectively China is a very important market to us. It's very important to United States, it's very important to China. We would love the opportunity to be able to re engage the Chinese market with excellent products that we deliver and to be able to compete globally.
- [05:30]
Ed Ludlow
During the call, the U.S. commerce Department issued a statement saying that you are now permitted to export up to 35,000 Blackwell chips each to both Saudis Humane and to the UAE through G42. But there are some requirements that the US has of you in particular around controls of preventing tech transfer to China through the Middle East. What can you tell us about your understanding of what the US Government's asking of you there?
- [05:59]
Jason Kelly
That that element is has been around for a long time is to prevent diversion. Of course, over the years, people have speculated about diversion. We've chased down every single concern and we've repeatedly tested and sampled data centers around the world and found no diversion. And so this is an area that we'll continue to be rigorous on. And there's a lot of different ways to comply. And one of them, of course, is to have it be run by American cloud. Another way is just to make sure that we have measures put in place, whether technology or processes, to ensure that no diversion happens.
- [06:47]
Caroline Hyde
Nvidia CEO Jensen Huang speaking to us exclusively last night. Let's dig in to that last bit from Jensen addressing concerns around selling to the Middle east, selling it to China. Bloomberg Senior editor Mike shepherd can break down what is currently happening at the White House level. There's a pressure on Congress in particular to allow Jensen Huang and in Video to have greater access to some of these so called adversaries. What are you hearing?
- [07:11]
Jason Kelly
Well, what we're hearing is that the White House would like Congress to hold off on legislation that would force In Video to put American customers first ahead of adversarial nations like China. And of course, Nvidia is proscribed from selling to China right now by US export controls and even by Beijing, rejecting those H20 chips that we've talked about that have won American authorization to be sold inside China. Nvidia has been looking for permission to do more and that includes selling a deprecated version of its market, leading Blackwell Chip to China. Jensen Huang sees being able to compete in China as key to being able to compete around the world. But this measure is seen as really putting the handcuffs on video and on AMD as well. And both companies have moved against this. The bill is called the GAIN Act. It would be attached to a piece of legislation that must pass. It governs defense policy and it has bipartisan support. But now the White House is weighing in and seeking to get it pulled from the legislation. And it's unclear what would emerge in its place. Because right now, Carol, there really is no uniform code governing export controls, especially as applied to China. And that's because if we go back all the way to the beginning of the year, and it seems so long ago, the Biden administration had tried to impose this diffusion rule, this framework that would prevent tech from leaking from allies like Saudi Arabia, like the uae, to China. And, and we don't really have anything here yet in place in Washington. So you see the China hawks on Capitol Hill and even inside the administration grasping for an alternative. And this bill, which the White House is not trying to head off, is at least an attempt at that.
- [09:03]
Ed Ludlow
Shep, last night was a little bit an issue of timing and chronology. So during the call, the analyst call, the Commerce Department put out a statement confirming that in video is now allowed to export for Blackwell to the Gulf states. Is that just kind of rubber stump stamping, something we knew was coming?
- [09:21]
Jason Kelly
We have widely expected this approval to come through, but it does take some time to work its way through the guts of the bureaucracy. But there is also a hurdle to overcome, and that is the concerns, as we just discussed, that the technology does risk leaking to adversarial nations, especially, especially China. And that is because both the Saudis and the Emiratis have had longstanding business ties with China, and China's Huawei Technologies has a footprint in each of those two nations. And the concern is that the proximity of Huawei to American technology in a data center creates a risk of some sort of leakage, either through software or something else. And that is something that the US Government was really trying to seek assurances on. We don't have details on what was required of the Emiratis and include also of the companies. And you did your best in asking Jensen for specifics on that, but he really dug in on the whole broader question of diversion. And that is something that the company has been sensitive about. They have insisted that their know your customer programs have done enough to prevent diversion. And yet that hasn't assuaged all, all the concerns of China hawks here in Washington that advanced American technology could eventually leak back to China and somehow support its military and intelligence bureaucracies.
- [10:47]
Ed Ludlow
Bloomberg's Mike Shepard, thank you very much. Let's get back to the Nvidia and the earnings story. Ayaka Yoshioka's portfolio consulting director at wealth Enhancement Group. $124.5 billion in assets under management and a pretty healthy chunk of Nvidia shares as well. I feel like Jensen Huang was trying to give the trifecta a positive picture on demand, positive picture on supply, and even had the opportunity to kind of throw a bit of shade at asics or Google. TPU's saying that customers looked at alternatives and they came back to Nvidia. There was a lot there. What is the most important data point to you?
- [11:24]
Karen Moscow
Hi, good to see you. Perhaps maybe the most important one was that Jensen wasn't wearing his signature leather jacket. But for the most part, you know, for us, the. When you look at the financials and when you look at the growth rate that Nvidia has posted and really delivering beyond expectations for where consensus estimates were, that was the most important metrics for us. As we listened to the call, what.
- [11:51]
Ed Ludlow
I tried to do at the beginning of conversation was get a sense of how supply constrained they are and how conservative that $500 billion forecast for through the end of next year is. Let's start there. Listen to this.
- [12:03]
Jason Kelly
Sales are off the charts for Blackwell and Nvidia. GPUs in the cloud are sold out. We got plenty of Blackwells to sell you. We have lots of Blackwells coming. We're making a lot of Black Wells and we have a bunch of Vera Rubens coming. And so business is very, very strong.
- [12:28]
Ed Ludlow
Is that $500 billion figure which excludes China? And is Blackwell Rubin through the end of calendar 26 a bit conservative?
- [12:38]
Karen Moscow
Well, we heard analysts ask that question. Right. And they have visibility into that $500 billion number. And so that doesn't include sort of the demand that will be coming forward in the next 14 to 18 months. And so it perhaps is conservative. And I think that's the part that's so difficult for all of us to really wrap our heads around. These numbers are so large and they're growing at such a rate that we haven't seen before that it really becomes, you know, for, for most of us, we're all skeptical that this is going to happen at the rate that it continues to happen at.
- [13:15]
Caroline Hyde
What was interesting was the depreciation question was tackled. This is what's got Michael Burry in a tizzy. It's got what many have been seeing is a little bit of anxiety that ultimately the consumers of Nvidia chips have been saying, look, these last longer than some had anticipated. But really it was made clear that the A100 is the older type of chips are still working six years on Ioka. Did that put that anxiety to bed?
- [13:39]
Karen Moscow
Yeah, I think it was a great way for Colette to sort of clap back at that depreciation argument. You know, we are still using these older chips. They are still getting consumed simply because the demand is so Great. So I do think there was a little bit of that that was put to rest and a relief I think from investors to a certain extent that they were still being utilized to that extent.
- [14:04]
Caroline Hyde
There's a relief today and we are up 2 percentage points. I but I feel as though the entire market is a bit of an anxious boyfriend at the moment, trying to have soothing words currently given to it from whomever they can class as they girlfriend in many ways.
- [14:20]
Jason Kelly
Ways.
- [14:20]
Caroline Hyde
But what are you thinking of in terms of that this will suit for the longer term? Are we going to need weekly updates that we're not in some sort of bubble?
- [14:28]
Karen Moscow
You know, it is really difficult to sort of wrap our heads around. I think on one hand we do see all of the demand continuing to grow at these exponential rates, but on the other hand you see all this circularity and financing that I think concerns all of us and, and then all of us who kind of grew up during the sort of tech bubble era. We've kind of seen this movie before and we don't want it to end the way that it ended back in 2000. And so there's a lot of push and pull and a lot of monitoring on a daily, weekly, quarterly basis. And I think that's why Nvidia's earnings calls continue to be sort of the super bowl of, you know, equity investors, sort of, you know, calendars.
- [15:10]
Ed Ludlow
What about Nvidia's valuation specifically? You feel comfortable with that?
- [15:16]
Karen Moscow
You know, it's trading at 28 times next year's numbers. It's growing revenue at 60%, it's growing earnings at 50 plus percent. You know, it's their reasonable valuations. They are not astronomical like we saw during the tech bubble. However, you know, it's still relatively expensive and it all hinges upon the duration of this growth rate. Does this continue at these levels for 3, 5 years or is it just this sort of near term, 12 month growth rate that we're seeing? And I think that's this anxious investor base that's sort of watching this. When does the growth rate start to deteriorate?
- [15:59]
Caroline Hyde
Well, according to Bloomberg analysis, if you're looking at what the general consensus is, by 2028, revenue growth is going to have slowed to 26%. Just in 2027, it will have slowed to 45%. But is that just the law of ever greater numbers? I mean, we're already almost a $5 trillion company. How can we expect it to keep growing at 60% out into 2028 and above?
- [16:22]
Karen Moscow
And I think that's the thing that's the skepticism that really sort of creeps into, you know, the investor mindset is that how large can this get? And the numbers, when you start to just grow at 60% plus year after year, it's just astronomical. And yet, you know, Jensen's talking about 3 to 4 trillion dollars of annual spend for data center and AI infrastructure. And, and you know, if all of that or a good portion of that goes to Nvidia, the numbers continue to grow and then, you know, the hyperscalers will grow as well because that benefits their cloud revenue. So it's just something that we continue to keep monitoring and we'll have to see each quarter not just from Nvidia, but from all of the tech ecosystem in terms of how large this AI platform is going to become.
- [17:14]
Caroline Hyde
Okay, yes, you, it's always great to get your analysis from Wealth Enhancement Group.
- [17:18]
Karen Moscow
We thank you.
- [17:19]
Caroline Hyde
Now coming up, a pioneer, John Lecun, he's leaving Matter to launch his own startup. What's next for him and what it says about Matters own AI plans, that's next. This is Bloomberg Tech.
- [17:43]
Ed Ludlow
Yann Lecun, one of the so called godfathers of AI, is leaving his role at Matter to launch his own startup. Rumors of his departure have been swirling for more than a week and it comes as the social media giant makes big changes to its AI efforts, including forming a new lab earlier this summer and spending billions to hire new talent boomers. Kurt Wagner broke the story actually after we published our report, Yannick and posted on LinkedIn referring to rumors and clarified a few things. But I guess let's start with why he's leaving, what he's doing, where he's going. Yeah. So Yann Lecun is an researcher in sort of every sense of the term. He is looking at things, things on a very long time horizon. And as Metta has come into this sort of a fight that we're seeing right now with OpenAI and Google and Anthropic, they had really started to focus their efforts on the here and now, right on the chat bots, on the lens, the things that consumers are using today. And so Lacune's work is years, if not decades sort of down the line. And what we had heard in our reporting is that because of Metis Focus, he was starting to have trouble getting the resources that he felt he needed in order to do his research. The focus was certainly on things that were not what he was paying attention to. And ultimately Meadow was going in a bit of a different direction, I think, on AI than what he envisioned and so, as you mentioned, Ed, this was something that had been discussed and sort of talked about really since this summer when they started pivoting towards a superintelligence effort. And, you know, they did try to leave on good terms. Meta is going to be sort of involved in some capacity in his new startup, but it was time for him to move on and do his research elsewhere.
- [19:30]
Caroline Hyde
Yeah, he describes it as advanced machine intelligence, more sensory information, more physical AI. In many ways, your story articulates how the tide moved against him and certainly executives moved against him because Alexander Wang came in and sort of superseded him.
- [19:48]
Ed Ludlow
Yeah, well, LeCun is a legend in the AI industry. He's considered a, quote, godfather of this entire field. And yet when Meta decided to build this new lab, the summer TBD lab, and go out and acquire essentially Alexander Wang from scale AI, he became Yann Lecun's boss. Right. I think he's more than 30 years younger, obviously very different type of, of expert in terms of AI. And so there was a feeling sort of in that mom, where, okay, if they have this legendary AI researcher in the building and yet they're still going outside the company to bring in people to run their new AI effort, what does that signal, right, for, for Yan's future here? And I think again, this was something that in some ways was a long time coming because of the fact that he is so forward and future looking with what he does. And Meta is fighting sort of for its life right here and now. But I think that layering of executives over the summer was probably another big reason that he' leaving today.
- [20:52]
Caroline Hyde
And a big supporter of open sourcing that perhaps matters shifted slightly away from as well. Bloomberg's C.O. wagner, great breakdown. Thank you very much indeed. Meanwhile, coming up, we'll talk about the Chinese university shaping the country's AI sector and its future startup leaders. This is Bloomberg Tech.
- [21:10]
Alex Rodriguez
For every six Chinese people, there's a ping on customer.
- [21:13]
Jason Kelly
We have accumulated a massive amount of the customer data, not just on the financial side, but end to end across.
- [21:19]
Alex Rodriguez
Channels thanks to our AI advancements.
- [21:22]
Karen Moscow
This is the technology empowered growth at Ping an podcast in our latest episode.
- [21:26]
Ed Ludlow
Ping an is utilizing technology to provide.
- [21:28]
Karen Moscow
Integrated and personalized 24. 7 support for China's rapidly growing elderly population. Now available on Spotify, Apple Podcasts and Ping An's website.
- [21:39]
Ed Ludlow
With Venmo Stache a.
- [21:41]
Amy Morris
Taco in one hand and ordering a.
- [21:44]
Ed Ludlow
Ride in the other means you're stacking cash back. Nice.
- [21:47]
Jason Kelly
Get up to 5% cash back with.
- [21:49]
Ed Ludlow
Venmo Stash on your favorite brands when you pay with your Venmo debit card. From takeout to ride shares, entertainment and more. Pick a bundle with your go tos and start earning cash back at those brands.
- [22:00]
Jason Kelly
Earn more cash when you do more with stash. Venmo Stash terms and exclusions apply.
- [22:05]
Amy Morris
Max $100 cash back per month.
- [22:07]
Ed Ludlow
See Terms at Venmo Me Stash Terms.
- [22:10]
Jason Kelly
This is Tom Keene inviting you to join me for the Bloomberg Surveillance Podcast. It's about making you smart. Each and every business day we bring.
- [22:19]
Ed Ludlow
You a recap of what happened overnight.
- [22:21]
Jason Kelly
In Europe and Asia. The day's economic data and complete coverage of the US Market open. We cover stocks, bonds, commodities, currencies, even crypto. All the information you need to excel. Bloomberg Surveillance also brings you the analysis behind the headlines. We do that with lengthy conversations with our expert guests, the smartest names in economics, finance, investment and international relations. We do all this live each and every weekday that bring you the best analysis in our daily podcast. Search for Bloomberg surveillance on YouTube, Apple, Spotify or anywhere else you listen on the East Coast. Listen at lunch and on the west coast when you wake up. That's the Bloomberg Surveillance Podcast with me, Tom Keene, along with Paul Sweeney and Lisa Mateo. Subscribe today wherever you get your podcast.
- [23:23]
Caroline Hyde
China's Syngo University, but it's having an outsized impact on the country's industry and the school's professors and students. They've received more patents each year than mit, Stanford, Princeton, Harvard combined. Let's go out to Bloomberg's Executive tech editor Peter Elstrom for more on what this signifies about China's ambitions. They are wholly focused on making sure that they have many, many more experts and potential employees of the future.
- [23:52]
Jason Kelly
Hmm. Yet Ching was a very prestigious university for many years. It's educated the best and the brightest, especially in science and engineering in China. But what's really changing now is you're seeing this momentum in AI. In particular. A couple of things are feeding into that. First of all, Deep Seek. The success of Deep Deep Seek and its breakthrough model earlier this year really gave a lot of confidence to these young students that they too could build businesses that would be very, very successful. In addition to that, Xi Jinping and the Communist Party have been calling on the tech sector in China to be able to build in a number of very key areas for them, strategically important areas for them, especially AI. So you can get government funding, you can get tax subsidies. There's a lot of momentum to be able to build businesses. So the students there feel like they have a lot more opportunities in front of them. Venture capitalists are coming, they're funding a lot of these businesses. We're seeing quite impressive startups coming out of Tsinghua and the rest of China.
- [24:51]
Ed Ludlow
Peter, as part of this Bloomberg Big take you look at the alumni that have gone away, founded key startups, but also that those that have quite senior jobs at China's biggest technology companies. What are the best examples we need to know about?
- [25:07]
Jason Kelly
Well, Tingwa has put their graduates in a number of different places including leading companies like Alibaba, which has done a lot of impressive work with the Gwen model in particular ByteDance, the parent company of TikTok. And they've, they founded startups like Jeep, who is another cutting edge company there. And really what you're seeing is this mass of students, China graduates, many more STEM graduates than the United States and they have done that for many years. So you're seeing three and a half million students at last count compared to 80,000 in the United States. So it's a big magnitude difference for them in particular. And now they're able to get this kind of funding to be able to build up up their tech sector. And you're seeing these impressive startups come out of the country's technology opportunities in universities. Universities like Tsinghua are also starting up their own incubators where students can get funding. They run a shark tank like competition to be able to give these kids a chance to pitch their stories and possibly get funding for them too.
- [26:15]
Ed Ludlow
Bloomberg's Peter Elstrom, thank you very much. On the latest this big take actually since we come to air on Bloomberg Tech, you see in video kind of paring, some of its gains are up 1.7% the way off session highs. And that's having an impact of course at the index level. Think about the NASDAQ 100 or the S&P 500. And from a weighting perspective, Nvidia is the top dog. So markets kind of losing a bit of steam. We're going to get back to that key Nvidia earnings forecast and help help understand why some of the enthusiasm around AI and some of the concern around a bubble is dissipating a little bit. This is Bloomberg Tech. Welcome back to Bloomberg Tech. In markets in video is really off its session highs now. Actually in the last 30 minutes or so we've gone from a gain of around 3%. We're now up 1.7%. But part of the story when that Nvidia print hit was some belief that the investment cycle has Some staying power. You saw Neo clouds like call we've really jump in after hours last night still up 3% on core. We've been the session that had been much higher at one point Jensen Wong name checked quite a lot of model labs and you know Google was included on that continues to be at record highs Alphabet parent company of Google. Although I keep reminding myself that Gemini 3 which we went over this week was trained on TPU. And of course as part of that interview and part of the earnings call Jensen one carry through a bit of shade at some of the alternative to Nvidia's GPU offering saying they keep on.
- [27:57]
Caroline Hyde
Coming back even when they're using rivals. Let's talk about video a bit more Bloomberg. US equities reporter Carmen Reinecke is here and you had a great story. We're really talking about how much Nvidia was hinging on the rest of the market mood and it on Nvidia talking about that basically we're anxious about spending. It seems as though it offered some well relief rally. But why are we fighting it?
- [28:19]
Karen Moscow
Well I mean we're really seeing like so goes Nvidia, so goes the rest of the market. And you're right, this report was really overwhelmingly positive and you know we did see a share spike sort of a mean immediately after popped in after hours it was up this morning. It seemed to be broadening out into other names. But I think what we might be seeing now is just a little bit of fatigue. I spoke to at least one investor that said they were actually surprised and thought the move was quite muted for how good the report was. You know the, the revenue guidance was great and then they even sort of doubled down in this $500 billion forecast and said they might do even better than that. That's, that's hugely bullish and you know shows that spending for AI is set to continue. So we could just be seeing some fatigue here, some shakeout. Nvidia shares are still up 40% this year and overall the NASDAQ has done really well and valuations are high. So we could just see a little bit of thrashing here because of that.
- [29:14]
Ed Ludlow
On the so goes Nvidia, so goes the market point. Which corners of the technology sector did we see make moves even though it's fading at a bit now because of Nvidia. And I guess like I've been looking at the Neo clouds but it's broader than that.
- [29:29]
Karen Moscow
Yeah, it was actually very broad based. So we did see the new clouds move like you mentioned, you know, core weave Nebulous were up after hours but we even saw, you know, rival chip makers move. AMD was up, Broadcom was up, you know, Marvell was up, Micron, the other hyperscalers, you know the Mag7 name. So Mel to Alphabet, Microsoft, although I think that's dipped into the red just now. And Alphabet closed at another record high yesterday and was extending those gains as well. So we did see some broad based moves that seem to be linked to optimism in those names and you know, just seeing a little bit of a turn there now.
- [30:07]
Caroline Hyde
Yeah, Micron is actually off by now 5%. I mean it's had a phenomenal rally this year. Are we going to keep needing adrenaline hits to sustain as we as we see more broadly investors tie up their books as we go into the market, what is some of the narratives that they're going to have to face? The trade versus the Fed versus rebalancing?
- [30:26]
Karen Moscow
Well, you make such a good point which that there are all these other macro backdrop things happening that are really important and are also weighing on the market. It's not just Nvidia as much as we're focused on that. So yes, they're going to need some AI reinvigoration. I think everybody's own also really watching. If we're going to get more cuts from the Fed, that's going to be really important. And I think that maybe optimism is a little dull for the end of the year. I've definitely heard people say that they're not expecting a Santa Claus rally which we'll, you know, we'll see. It would be kind of a sad Christmas without one but you know, it might be that just valuations are stretched. Investors are looking to take some of their profits into the end of the year and then see what 2027 six.
- [31:07]
Ed Ludlow
Springs boomers common Roy, Nikki, great to have you back on Bloomberg Tech. Thank you very much. Let's get some more Wall street reaction to Nvidia's print. Joining us now Reuben Roy Stifel, Applied Technology analysts. A buy rating on Nvidia maintaining a $250 price target. Let's start just with the outlook for the fiscal fourth quarter around $65 billion depending on where you stood going into that. That is meaningfully above consensus. Consensus to some. How do you react to that data point?
- [31:38]
Amy Morris
Yeah, the data point is that the slope of the spend is continuing to move higher and I think that that was a concern going into the trend especially after Jensen sort of let the cat out of the bag on how strong demand has been going with the $500 billion of backlog that you talked about at GTC back in October. And you know, I think expectations because of that had increased going into expectations for the results for the October quarter as well as the guidance. And so, you know, with, with the acceleration of revenue in both the October quarter versus July and then further accelerate acceleration into the January quarter, I think that took away some of the concerns. And then, you know, the commentary on the call, which I thought was very important was that they're obviously taking more orders. And so. Right, you just talked about this, which is that there could be, you know, not could be, there will be further upside to that $500 billion backlog as we think about 26. You know, one of the things in addition to the slope increasing is that the Runway here is increasing. So we get a lot of questions from investors around sustainability of the spend. Obviously the hyperscalers have been increasing capex on a quarterly basis for quite a while right now. But you know, these types of data points would suggest that the Runway on the spend and the demand for AI compute continues to, you know, lengthen. And so I think, I think those are very strong data points for the trade looking forward.
- [33:14]
Ed Ludlow
Ruben, just as you were speaking, Nvidia's gain is now just 9, 10 of a percent in a session. I'm not saying that's your fault. That's just curious time. The base case assumption is zero revenues from China. You know, Jensen could not have been more clear about that. But does that not then give, give quite a lot of opportunity for some upside if they can get the China situation resolved?
- [33:37]
Amy Morris
Yeah, I think, I think that's right. I think, you know, at some point it is likely that we'll see, you know, companies like Nvidia and potentially AMD and others figure out ways to work with both governments. The company talked about this on the call last night. But you know, to your point, even without China, and you know this came up on last quarter, I mean they had a beat in another raise without any H20 assumptions in the guidance. But you know, even without that, you do have what I mentioned, which is the hyperscale CAPEX going up. And I think it's something that is still not fully appreciated is the rate at which sovereign governments are spending on AI. So, you know, we talk about the five major hyperscalers in the United States and the CapEx budgets that are growing there. But Nvidia is doing quite a bit of growth in sovereign nation deployments. And I think that that's something that's going to continue as well. So even without China, obviously there's a big demand backdrop here. And like I said, that backdrop is extending into sort of a multi year investment cycle.
- [34:45]
Caroline Hyde
Jensen and the company more broadly really spelled out again, they own 90% of the accelerator market, of the datacenter market. Is that going to change? You just referenced amd.
- [34:56]
Amy Morris
Yeah, you know, I think, you know, at some point you will see, you know, just if for nothing else, you know, capacity that AMD that's, I'm sorry, Nvidia can bring to the table, you know, could, could enable others to participate here. The hyperscalers obviously have their own ASIC platforms that they're trying to bring to the market. But I think, you know, the way to think about this is that the overall TAM assumptions continue to rise.
- [35:24]
Jason Kelly
Right.
- [35:24]
Amy Morris
So a year ago or so we're talking about multiple hundreds of billions of dollars in potentially I compute tam and now we're talking about trillions of dollars. Right. So Nvidia is talking about 1 to 3 trillion dollars. AMD had an analyst meeting just a few weeks ago where they talked about a million dollar, sorry, trillion dollar tam. As you get down to the end of the decade and as that TAM increases, even if Nvidia's share comes down, which it likely will, I think, you know, this concept of all votes rise, you know, they're going to continue to grow revenue in our view, you know, just on the overall TAM assumption increasing.
- [35:58]
Caroline Hyde
Ruben, Roy Stifel, great to have your analysis on the show. Thank you very much indeed. Indeed. This is the market continues to fade, but we've got some more earnings for you next. Palo Alto Network CEO joining us to discuss the report, the latest acquisition. That's next. This is Bloomberg Tech.
- [36:19]
Amy Morris
With Venmo Stash.
- [36:21]
Ed Ludlow
A taco in one hand and ordering a ride in the other means you're stacking cash back. Nice.
- [36:27]
Jason Kelly
Get up to 5% cash back with.
- [36:29]
Ed Ludlow
Venmo Stash on your favorite brands when.
- [36:31]
Amy Morris
You pay with your Venmo debit card.
- [36:33]
Ed Ludlow
From takeout to ride shares, entertainment and more. Pick a bundle with your go tos and start earning cash back at those brands.
- [36:40]
Jason Kelly
Earn more cash when you do more with stash. Venmo Stash terms and exclusions apply.
- [36:45]
Amy Morris
Max $100 cash back per month.
- [36:47]
Ed Ludlow
See terms at Venmo Me stash terms.
- [36:49]
Jason Kelly
In our new podcast Everybody's Business, we.
- [36:52]
Ed Ludlow
Talk about the business news that concerns everybody.
- [36:55]
Karen Moscow
From Bloomberg Business Week, I'm Stacey Vanek Smith.
- [36:58]
Ed Ludlow
And I'm Max Chavkin.
- [36:59]
Karen Moscow
Each week we unpack what is happening.
- [37:01]
Ed Ludlow
On Main street and Wall street, all the streets.
- [37:04]
Karen Moscow
WrestleMania has taken over the US economy.
- [37:08]
Jason Kelly
Poetry that executives write on LinkedIn.
- [37:10]
Karen Moscow
A little actual magic in our underrated.
- [37:13]
Jason Kelly
Story of the single greatest marketing campaign the music business has ever seen.
- [37:16]
Karen Moscow
I decided to ask people how they felt about the penny going away. Listen to everybody's business wherever you get your podcasts.
- [37:29]
Caroline Hyde
Let's dig into earnings a little bit more now. But this time is Palo Alto Networks, a CyberSecurity firm reporting 16% increase in revenue. That was yesterday. But it also announced a $3.4 billion plan to acquire Chronosphere. It's a boost to its AI enabled cybersecurity offerings. Palo Alto Network CEO Nikesh Arora joins us for more now. And look, your stock is lower because many are saying it's an M and A well digestion risk that maybe is being faced here. You put $25 billion offer into cyber Arc. Now another M and A piece. Why does it work for you?
- [38:02]
Alex Rodriguez
Well Caroline, nice to see you. This is our 28th acquisition in about seven and a half years and we've demonstrated to the market that we have been able to establish our business in adjacent markets over the last seven years by paying attention to the market, looking at where the puck is going, understanding what is important for our customers. And I think Chronosphere, which is our latest acquisition, fits right bank smack in the middle of where the market's going. If you look at what you guys are talking about before this, you're talking about Nvidia amd. Eventually all this compute power is going to result in people building faster and more and more relevant applications. The end consumer or enterprises. All those applications have to be observed and make sure they don't have problems or go down. And that's what Chronosphere does. It observes applications and infrastructure, makes sure you have 99.9% uptime. And then we are going to combine that with our agent capabilities to make sure agents will go fix that if they go down. So I think it's a phenomenal opportunity going forward and it's fine. The stock will recover. I think investors are beginning to understand the story is all right.
- [39:08]
Caroline Hyde
I mean RBC has an outperform price target to 50 well above where you are. And they're saying that you're a top tier software vendor seeing a AI tailwinds as it grows ahead of industry peers. But how does observability take you into a whole new ecosystem that you're now fighting Datadog Dynatrace? Why is that the right total addressable market for you as well as security?
- [39:28]
Alex Rodriguez
Well, observability is a space. As I said, as we get more and more AI deployed, we're going to need more and more real time capability. Real time capability in actions, real time capability and applications. Real time capabilities required. 99.99% availability, which means you have to make sure infrastructure is always up and running. If it has a problem, you should be able to fix it right away. Sort of similar to security. We also have to watch security on a constant basis, make sure something happens, we fix it right away. So actually over the last 10 or 15 years, if you look, there are companies have tried to play in both spaces and typically they've ended up really well on one side, not the other. We've not made a foray into observability because we never thought we could build it organically leap. We don't have the skill set. But we went out looking for data pipelining. We found Chronosphere. Chronosphere has some of the best engineers in the space observatory. Suffers from two problems. One is too expensive and two, it doesn't scale well. Well, Chronosphere solved that problem. It is two and a half times cheaper than anybody else on the market and do it could scale to gigawatt size in terms of what is needed from an AI perspective. So we think the time's right, the asset is right and the opportunity is right.
- [40:34]
Ed Ludlow
Taken in aggregate, that is an astonishing amount of M and A. Is there any reason why you can't just keep going and keep using M and A as the tool to position the platform where you want it? Nick Cash.
- [40:48]
Alex Rodriguez
Look, in the last seven and a half years, I'd say 30% of our opportunity has been created by strategic and timely M and A. 70% of our opportunity has been on organic innovation. As a company now, that's worked out really well for us. Even now we've announced two big deals, Cyber Arc and Chronosphere. Collectively we're going to spend slightly under $30 billion. But that gave us the confidence to increase our targets for error in 530 by $5 billion. If I can go spend $30 billion and buy $5 billion of AR five years from now. I do that every day.
- [41:20]
Caroline Hyde
Let's go back to the fundamentals of where you are already. Rpo. In particular, remaining performance obligations, growth. It was strong in the quarter just announced, but when you're pushing out to fiscal 2026, our own intelligence analysts just a little bit worried about the slowdown in growth. Are you worried about it?
- [41:37]
Alex Rodriguez
You know, when I started seven half years ago, a $2 billion company warp year and that's 15 and a half billion dollars. We set a target of $20 billion in ARR. Those are big numbers. So I think part of what people fail to understand is absolute numbers get bigger and bigger on the margin, growth rates change. But I think from a, from a capability perspective, if we start doing $20 billion in ARR, we'll be generating 10 or $15 billion of free cash flow a year. That's a far cry from where we started at a few hundred million dollars seven years ago. So I think you have to look at it from a slightly multi year perspective. From that perspective, you think we're well positioned. We think this is going to be the largest cybersecurity company in the world and we have aspirations to take it and double or triple where we are right now.
- [42:18]
Ed Ludlow
Any given technology company might use a dozen, several dozen different tools across cyber and AI. Right. And your pitch is you just put everything in one place, you know, offer a suite of things in one place. Is that strategy working to convince software companies in particular that it's better to come to Palo Alto Networks than do business with a handful of different players?
- [42:45]
Alex Rodriguez
Yes, of course it is working. We call that platformization of Palo Alto. We continue to add 50 to 75 customers every quarter and sometimes more in about the fourth quarter. But I think more importantly, look at the evolution of technology. Almost every industry vertical and technology has started that way. From the application perspective, people had 15 or 20 different vendors did the entire solutioning for CRM. Today we see single vendors, platforms in CRM, same thing in HR. When I used to work in programming 25 years ago, we used to have multiple applications that solved the problem. Today there's one platform, same thing in itsm. I think the same thing is coming to cybersecurity. CyberSecurity is a 20 year old industry. It usually takes 30, 35 years to build that platform capability in industries and make them become ubiquitous. So I think we're at the right place, right time. We are seeing that move towards platformization. If you look at what happened most recently, a few weeks ago, there was an attack using an AI. That means AI was used by bad actors to go and attack customers and they were able to do it in real time. You have to have real time capability on your side to defend yourself. The only way to deliver real time capability on your side is to not have a mess of 40 or 50 products. The idea is to have them all be consolidated, running in a singular data Layer and building agents that go and defend you just the way bad actors, actors are using agents come attack you.
- [44:05]
Ed Ludlow
Nikash we just very briefly dropped into negative territory on the NASDAQ 100 having been up at 1.2.4%. And the story this morning when I woke up was that in videos forecast its print was soothing fears that we have about an AI market bubble. This might be the last chance I get for a while so I'm going to do it. Give me the the Nikeshwar Nikesh Arora call Are we or are we not in an AI bubble?
- [44:34]
Alex Rodriguez
Look, we are in an exuberant phase of AI. I think it is the fastest technology evolution we've seen in our lifetimes and I don't think it's about to stop. You can see huge bets being made by almost everybody. I think there is a lot of promise. You are seeing the consumer case. I think we underestimate how much the entire consumer landscape is changing and is going to change in the next 24 months. The idea of having applications where we have to go do all the work ourselves is going to become arcane. You know, you'll have agents that will go book your Uber will go get your food from doordash, we'll book your airline ticket. We can all imagine a future like that. We all want a future like that. That's going to require significant amounts of compute at the edge. So I think from an infrastructure perspective, in history we've never had a situation where we built infrastructure, didn't get consumed if we wanted to and more. So I don't think the infrastructure problem is a real problem. Whether the demand comes right away or it comes in a year or two later, I think that time will tell. But from a demand, from a technology fit word there. From an AI perspective, enterprises are slightly lagging that consumer adoption, but I think they're actually working hard to get there. You know, every time we do some experimentation internally, we come back say, wow, that is cool. I wish we could deploy that faster across the entire enterprise. So I think the demand is going to come. Timing is up to you guys. You guys follow that on a daily basis. We don't. We put our heads down and see where am I going to be two to five years from now. How do I position power to network in that context? And are we going to plot our way there? And we think that opportunity is going to create explosive opportunity for almost every technology subsector and even cybersecurity.
- [46:10]
Ed Ludlow
Palo Alto Network CEO Nikesh Aror it's great to have you back on Bloomberg Tech. Thank you very much. So coming up, we'll have more on Nvidia as the company is set to get a global boost from Middle east deals for AI chips. We're going to get the House view from Bloomberg Intelligence next. This is Bloomberg Tech. The US has approved the sale of tens of thousands of AI chips to the UAE and Saudi Arabia, a move that could further cement in video's global dominance. Bloomberg Intelligence senior analyst Kunjan Sobhani writes the US approval of Blackwell GPUs for Gulf nations quote is tangible proof of sovereign AI momentum. What we're trying to do, Kanjan, is take that $500 billion figure which takes us through Canada 26 and find some upside. And you think it's in sovereign AI.
- [47:04]
Jason Kelly
It is.
- [47:05]
Alex Rodriguez
And just for context as $500 figure was already about 4.5to6% above consensus as of yesterday.
- [47:11]
Jason Kelly
This new deals that they announced the.
- [47:13]
Alex Rodriguez
Three to four new deals mostly on the so could add five around billions of dollars on top of that if.
- [47:19]
Ed Ludlow
They were able to execute well and the supply keeps coming on and yet.
- [47:23]
Caroline Hyde
Shares are now down 3. 10 of a percent. We're negative. We raised all of our gains on the day and the NASDAQ follows suit. Why wasn't this enough to ease concerns do you think? What? Was there anything left that you needed to hear?
- [47:37]
Ed Ludlow
Fundamentally?
- [47:38]
Alex Rodriguez
No.
- [47:38]
Ed Ludlow
I mean this was one of the.
- [47:39]
Alex Rodriguez
More bullish quarters or earnings we have seen from Nvidia, not just in terms of the three Q4Q numbers which by.
- [47:45]
Jason Kelly
The way they blew past the loftiest buy side bogeys, but reaffirming the 500 billion target. The key point that people are missing.
- [47:52]
Alex Rodriguez
Is holding gross margin to mid-70s even when wafer HBM packaging costs are all rising.
- [47:58]
Jason Kelly
If you're able to hold that and execute that, that speaks a lot about their pricing power.
- [48:03]
Ed Ludlow
I just want to play you a soundbite from Jensen Huang about Vera Rubin. Listen to this.
- [48:07]
Jason Kelly
Billions of dollars. Yeah. And so for our Vera Rubin system a 1 GW data center is probably something along the lines of 50 to 55 and videos contribution is probably about 35 of that.
- [48:22]
Ed Ludlow
That cleared up some confusion for the sell side content. Just explain your view on it real quick. Yeah, when you think about the total.
- [48:29]
Jason Kelly
Cost it takes to build a data.
- [48:30]
Alex Rodriguez
Center, I mean we're talking about 50 to 60% just going to one company.
- [48:34]
Jason Kelly
Taking up all that bomb how important that is and what that mode speaks to. I don't think the debate around ASIC.
- [48:41]
Ed Ludlow
And GPU is going to go away.
- [48:42]
Jason Kelly
But this should give some investors key factual data points that despite we are going to see a future where companies.
- [48:50]
Ed Ludlow
Will do risk management and vendor diversity.
- [48:53]
Jason Kelly
And have Asics or a second virtue.
- [48:55]
Alex Rodriguez
Supplier, but the dominant share will still.
- [48:57]
Caroline Hyde
Go to Nvidia Sobhani of Bloomberg Intelligence. We thank you. That does it for this edition of Bloomberg Tech. Ed, we are in negative territory to end the show.
- [49:07]
Ed Ludlow
Yeah, it's an astonishing turnaround in the first couple of hours. The session the NASDAQ 100 now down half percentage point. Nvidia down half percentage point. That's worth a recap on the pod. You know where to find it from New York and San Francisco. This is Bloomberg Tech with Venmo Stash. A taco in one hand and ordering a ride in the other means you're stacking cash back. Nice.
- [49:31]
Alex Rodriguez
Get up to 5% cash back with Venmo Stash on your favorite brands when.
- [49:34]
Ed Ludlow
You pay with your Venmo debit card. From takeout to ride shares, entertainment and more, pick a bundle with your go tos and start earning cash back at those brands. Earn more cash when you do more with Stash.
- [49:45]
Alex Rodriguez
Venmo Stash terms and Exclusions apply.
- [49:47]
Ed Ludlow
Max $100 cash back per month. See terms at Venmo Me Terms.
- [49:53]
Alex Rodriguez
I'm Alex Rodriguez.
- [49:55]
Jason Kelly
And I'm Jason Kelly and we're back with more episodes of our show the Deal. We've got behind the scenes conversations with sports, greatest business people and athletes. From Serena Williams and Stephen A. Smith to Bill Belichick and Melody Hobson.
- [50:11]
Karen Moscow
I got dangerous in scenes.
- [50:13]
Ed Ludlow
Up arrows.
- [50:14]
Jason Kelly
Up arrows. Catch up on the interviews you've missed and listen to all new episodes every Thursday on Apple Podcasts, Spotify, YouTube or.
- [50:21]
Ed Ludlow
Wherever you get your podcasts.