Latest / Bloomberg Intelligence / Instant Reaction: Nvidia Gives Strong Forecast, Countering Fears of AI Bubble

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

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  Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
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  Speaker 2: This is a breaking news update from Bloomberg, instant reaction
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  Speaker 2: and analysis from our three thousand journalists and analysts around
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  Speaker 2: the world.
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  Speaker 3: Let's bring in Bloomberg Tech b Tech co host Ed Ludlow,
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  Speaker 3: who will be speaking exclusively with Nvidio CEO Jenson Wong.
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  Speaker 3: That's coming your way at six thirty pm Wall Street
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  Speaker 3: time right here on Bloomberg TV and Radio. Hey, Ed,
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  Speaker 3: investors seem to be pretty happy. It's up about two
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  Speaker 3: percent here. What's your immediate takeaway from these results?
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  Speaker 4: Yeah, in the fiscal third quarter that they just reported,
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  Speaker 4: you know, it's a beat and a good one, and
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  Speaker 4: this was a high bar going into it. And in
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  Speaker 4: the outlook for the fourth quarter, you know, it's a
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  Speaker 4: it's a good three billion dollars above consensus sixty five
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  Speaker 4: billion dollars plus or minus two percent. Remember this is
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  Speaker 4: always the case. There were some very bullish forecasts on
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  Speaker 4: the street. I think some analysts were saying that in
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  Speaker 4: Vidio could even surprise us with a seventy five billion
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  Speaker 4: dollar figure for that fourth quarter. But the great unknown
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  Speaker 4: is the numbers that they've just posted, how do they
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  Speaker 4: relate to the five hundred billion dollar or half a
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  Speaker 4: trillion dollar figure that Jensen wog outlined at GtC in
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  Speaker 4: the last week of October. He basically said, over the
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  Speaker 4: next six fistal quarters, just for Blackwell Rubin Systems, they
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  Speaker 4: see five hundred billion dollars of demand. But in video
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  Speaker 4: doesn't give formal guidance like that. It was just a
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  Speaker 4: slide over his shoulder on stage. So there is going
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  Speaker 4: to be some mathing based on what he says on
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  Speaker 4: the call and hopefully in the conversation that we have
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  Speaker 4: to explain how in aggregate their forecast has changed for
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  Speaker 4: the longer term.
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  Speaker 2: Okay, So Jentsen, if you're watching just a little preview
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  Speaker 2: of the line of questioning that you may get from
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  Speaker 2: Ed Ludlow at six thirty Wall Street time Bloomberg Television
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  Speaker 2: and Radio for that exclusive conversation in video shares off
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  Speaker 2: about as of today's close, roughly ten percent from those
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  Speaker 2: all time highs back at the end of October. That
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  Speaker 2: was just around the GtC event in Washington, d C.
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  Speaker 2: Where I know you spoke with Jensen and Justin Hotard
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  Speaker 2: of Nokia as well. I'm wondering really about the narrative
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  Speaker 2: that's emerged since then about cracks starting to form or
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  Speaker 2: punctures in the quote unquote AI bubble and the decline
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  Speaker 2: in some of the high flying stocks that we've seen
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  Speaker 2: of late. Does this assuage investor concerns that not all
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  Speaker 2: is okay when it comes to the infrastructure spend.
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  Speaker 4: Yeah, you know, in Nvidia is down sharp piece since
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  Speaker 4: since the all time high it hit four weeks ago.
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  Speaker 4: But it's also a stock that as of today's close
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  Speaker 4: was up almost forty percent year to date, double the
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  Speaker 4: performance that we see of the Nasdaq one hundred or
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  Speaker 4: the S and P five hundred. This again was a
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  Speaker 4: very high expectations quarter where there is also high skepticism
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  Speaker 4: to meet it. And two of the data points that
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  Speaker 4: we will inevitably hear asked of Jensen is the circular
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  Speaker 4: financing issue, because a lot of the news flow in
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  Speaker 4: that period of time has been about Nvidia investing in
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  Speaker 4: some form in the in the frontier model labs or
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  Speaker 4: end users of their chips.
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  Speaker 2: Look at the anthropic news yesterday.
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  Speaker 4: This week, right, you know, And in that specific case,
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  Speaker 4: it's very hard to argue it is not circular financing
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  Speaker 4: because historically what Jensen Wang's argument has been is when
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  Speaker 4: they put an investment into an AI company, they don't
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  Speaker 4: require the AI company to use that capital or financing
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  Speaker 4: to buy in video chips. They can go away and
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  Speaker 4: using video's money to buy someone else's chips. But in
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  Speaker 4: the mechanics of that anthropic deal, you know, it is
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  Speaker 4: a flow of capital from in video interanthropic and then
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  Speaker 4: enthropic buying capacity that does use in video chips. The
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  Speaker 4: other data point is appreciation, which is a real fixation
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  Speaker 4: of this market at the moment.
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  Speaker 3: So, you know, one of the things we were talking
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  Speaker 3: about with Jay Goldberg and we're going to get back
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  Speaker 3: to him in just a moment.
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  Speaker 2: We're leting him read the pressure, so we're letting him
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  Speaker 2: actually look at the numbers right now.
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  Speaker 3: But you talked about China remaining effectively online.
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  Speaker 5: How much of it that is a problem? And I
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  Speaker 5: think we also heard.
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  Speaker 3: From was it this being kind of the first clean
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  Speaker 3: numbers that we're kind of getting was that Kunja?
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  Speaker 2: I think we talked.
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  Speaker 3: About, you know, without kind of I guess China impact
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  Speaker 3: or China concerns, but and how important is China going
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  Speaker 3: forward to the Nvidia story.
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  Speaker 4: So you know, China is potentially the biggest end market
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  Speaker 4: in the world for data center and right now Nvidia
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  Speaker 4: assumes zero China. You know that five hundred billion dollars
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  Speaker 4: or half a trillion dollar figure that I mentioned a
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  Speaker 4: moment ago that was given on October twenty eight excluded
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  Speaker 4: China completely. I've just put in the blog and just
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  Speaker 4: making an observation that if you go back to August
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  Speaker 4: when in Video gave their forecast for the third quarter
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  Speaker 4: that they've just released, they were very clear in explaining
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  Speaker 4: that this did not assume any h twenty sales to China.
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  Speaker 4: It's interesting, but there is no mention of the word
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  Speaker 4: China at all in today's press release, and so now
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  Speaker 4: it's kind of all stripped out. But as Jensen Wong
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  Speaker 4: has said repeatedly, it's a really critical market. A lot
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  Speaker 4: of activity is there, and you know in Video would
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  Speaker 4: like to be able to sell its technology into that market.
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  Speaker 3: Jay, I want to just bring you back in and
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  Speaker 3: we do see and Video shares climbing once again, back
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  Speaker 3: up near that four percent mark that we saw on
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  Speaker 3: the aftermarket. It's up about three point six three point
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  Speaker 3: seven percent.
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  Speaker 5: Jay.
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  Speaker 3: As you are going through the press release, anything that's
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  Speaker 3: jumping out.
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  Speaker 5: That you think the Bloomberg audience needs to know about
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  Speaker 5: so far nothing.
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  Speaker 6: I came the same conclusion, there's nothing. There's no mention
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  Speaker 6: of China in here at all, which is good for now,
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  Speaker 6: but also concerning it, looks like their networking business, the
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  Speaker 6: networking side of their of their data center business did
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  Speaker 6: a little better than expected, which is great because it's
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  Speaker 6: high margin, high margin business. Is very They have a
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  Speaker 6: really solid position there. I mean, overall, it's a pretty
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  Speaker 6: clean quarter. I haven't gotten all the way through it,
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  Speaker 6: but I do. I am curious to hear what Jensen's
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  Speaker 6: going to say about circular financing and those sorts of questions.
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  Speaker 6: Jensen is probably the most persuasive, charismatic CEO in semiconductors
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  Speaker 6: right now, so listening to him on the quarter is
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  Speaker 6: always going to be interesting. I want to see how
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  Speaker 6: much energy he brings and how he's going to address
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  Speaker 6: some of those sort of stickier questions.
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  Speaker 3: Hey, Ed Lodlo, come on in on this as you
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  Speaker 3: listen to Jay. Love to bring you into the conversation
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  Speaker 3: with Jay.
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  Speaker 4: Yeah, I think the circular financing question is one that
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  Speaker 4: I've received in advance, you know, of speaking to Jensen
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  Speaker 4: in a couple of hours time. The other one for
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  Speaker 4: me is the depreciation issue.
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  Speaker 1: Right.
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  Speaker 4: You know, Nvidia commits to this annual cadence of a
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  Speaker 4: new generation of GPU, and I think there are a
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  Speaker 4: lot of people out there who would really appreciate Jensen
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  Speaker 4: explaining the useful life cycle of any generation of GPU
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  Speaker 4: and how they manage that, how they convince the big
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  Speaker 4: spenders in a CAPEX context to upgrade. Is that a
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  Speaker 4: concern for you? Is it something that you feel is unanswered?
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  Speaker 6: Well, I think there is this dynamic taking place where
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  Speaker 6: in Nvidia is trying very hard to prop up the
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  Speaker 6: neo clouds as alternatives to the traditional hyperscalers. You'd much
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  Speaker 6: rather have one hundred small customers than three large ones.
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  Speaker 6: The problem is that will eventually conflict with that annual cadence. Right.
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  Speaker 6: This whole issue about the appreciation of how long a
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  Speaker 6: server lasts. I think people look a lot of sort
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  Speaker 6: of the physical life of the server, but the more
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  Speaker 6: important question is the economic life of the server. And
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  Speaker 6: if you have a new GPU coming out every year,
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  Speaker 6: the old ones become less valuable, and so that leads
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  Speaker 6: to some pretty pretty punishing price curves for the neo clouds,
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  Speaker 6: and so Jensen and n Video want to constantly be
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  Speaker 6: coming out, coming out with new products to stay competitive
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  Speaker 6: and push their own sales up. But that makes it
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  Speaker 6: hard for these big for these customers, the small ones
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  Speaker 6: who have to also stay on that treadmill. And at
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  Speaker 6: some point, at some point, it can't go on forever, right,
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  Speaker 6: the neoclouds will eventually run out of money. And so
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  Speaker 6: that's sort of a big long term picture outlook. And
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  Speaker 6: I mean it's one of these things that keeps me,
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  Speaker 6: would keep me up at night if I didn't have
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  Speaker 6: a cell rating on it.
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  Speaker 2: Well, okay, so Ed, I want you to kind of
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  Speaker 2: go back to Jay on this because I know you've
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  Speaker 2: talked to Core, we've CEO quite a bit of time,
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  Speaker 2: quite a bit in recent months. We said that Core
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  Speaker 2: we've was hire in sympathy after these Invidia results and
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  Speaker 2: in addition to another neo cloud company that's out there
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  Speaker 2: right now, the demand is there for these neo cloud companies.
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  Speaker 2: I mean even Core we've said just very recently it's
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  Speaker 2: been able to diversify away from its biggest customers.
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  Speaker 4: Yeah, in the conversations that we've had with Microntrator that
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  Speaker 4: they there is demand for the older generation technology. One
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  Speaker 4: sort of data point or statistic that those who are
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  Speaker 4: more calm about the depreciation issue would point to his utilization.
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  Speaker 4: So they would say, right now the Hopper generation of
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  Speaker 4: accelerators or GPUs is running at one hundred percent utilization
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  Speaker 4: in terms of workloads. It can't be used any more
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  Speaker 4: than it already is, as a very bullish signal that
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  Speaker 4: they're these these kind of obsolute somes of funny thing
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  Speaker 4: to say, but these older generation GPUs are not idle.
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  Speaker 4: Comparing contrast with some of the secondary secondary market data,
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  Speaker 4: which we have limited visibility into. We don't know how
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  Speaker 4: strong that is, and nor do do we know how
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  Speaker 4: close attention in Vidia plays to the secondary market for
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  Speaker 4: older generations of chip. But forty percent of revenue is
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  Speaker 4: the hyperscalers and depreciation is an accounting issue that they
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  Speaker 4: need to mark against their balance sheets, and.
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  Speaker 5: We haven't seen it yet.
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  Speaker 4: So it's kind of interesting because at some point, and
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  Speaker 4: I ain't an accountant, but you know, basic financial journalism,
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  Speaker 4: it will come up.
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  Speaker 5: Hold on for a second, Jay, last question, final thoughts
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  Speaker 5: on this.
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  Speaker 3: I mean, I'm looking at the Philadelphia Semiconductor Index up
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  Speaker 3: almost two percent in the aftermarket, A name like Broadcom
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  Speaker 3: is also up about two percent and again, and Vidia
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  Speaker 3: is still up about three point two percent here after
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  Speaker 3: its earnings. Final thoughts jay from you when it comes
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  Speaker 3: to Nvidia, So.
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  Speaker 6: I want to respond. I want to close in responding
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  Speaker 6: to Ed's comment utilization. I've certainly heard data points that
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  Speaker 6: utilization are high in the neoclouds, at least some of
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  Speaker 6: them anecdotally. But if if utilization is so high, why
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  Speaker 6: do A and D and Nvidia make it a practice
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  Speaker 6: to backstop capacity at the neoclouds as part of these deals.
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  Speaker 6: If you look across the sales process for GPS right now,
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  Speaker 6: you'll see a lot of these big neoclouds have contractual
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  Speaker 6: terms which allow them, which basically put am D in
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  Speaker 6: Nvidia in the position of backstopping or buying up excess capacity.
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  Speaker 6: And it seems like a little bit of disconnect to
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  Speaker 6: me that you would need those backstops if utilization were
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  Speaker 6: so high. So I think I think there is definitely
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  Speaker 6: signs of froth in the neocloud sector, not necessarily Coreweave
• 11:40
  Speaker 6: or nebbutus I don't want to pick on them, but
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  Speaker 6: there is the there are growing signs of friction that
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  Speaker 6: in that corner of the AI trade, it makes me
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  Speaker 6: cautious about the broader spectrum of things.
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  Speaker 3: And to be fair, I just want to bring you
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  Speaker 3: in on that if you have any thoughts.
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  Speaker 4: For Jay, you know only that those that share some
• 11:56
  Speaker 4: skepticism and want to ask difficult questions of gens and
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  Speaker 4: would all so point out that you know, call Weave
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  Speaker 4: is one of Nvidia's biggest equity positions to equity investments.
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  Speaker 4: It's also one of its biggest customers technically, and they
• 12:11
  Speaker 4: are in a position where call weaves under pressure from
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  Speaker 4: its customers to have access to the latest technology. There
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  Speaker 4: is a disconnect there. At some point they can't be
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  Speaker 4: running both the old GPUs. But again, you know, I
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  Speaker 4: think asking the basic question of depreciation and how Jensen
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  Speaker 4: Wong sees it, that that's something that we will put
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  Speaker 4: to him for sure.
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  Speaker 3: Yeah, it definitely has to be addressed. Jake Olberg, thank
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  Speaker 3: you as always, you give us so much time. We
• 12:34
  Speaker 3: so appreciate it. Senior analyst semic Conductors and Electronics over
• 12:37
  Speaker 3: at Seaport Research Partners.
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  Speaker 5: As we've said, currently, as.
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  Speaker 3: A cell rating on Nvidia, the only such rating for
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  Speaker 3: the stock listed in the terminal, sticking.
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  Speaker 5: To his conviction.
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  Speaker 3: His conviction shares of Nvidia, by the way, still up
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  Speaker 3: about three point six percent, but ed still with.
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  Speaker 2: Us sill with uson once again, Jay, not just the
• 12:53
  Speaker 2: only cell rating, but that price target at one point
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  Speaker 2: forty and shares you know close today? What you know
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  Speaker 2: one sixty something? Yeah, yeah, six, Thank you, go ahead, No, Ed.
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  Speaker 3: As you think about, you know, your conversation Jensen. You've
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  Speaker 3: had many conversations with him at you know, different venues,
• 13:10
  Speaker 3: different events, I don't know what are you what is
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  Speaker 3: really you think the most important thing to hear from
• 13:17
  Speaker 3: We talked about depreciation and some other things. But I'm
• 13:19
  Speaker 3: just curious what's top of mind for you here and
• 13:21
  Speaker 3: what you really want to hear from him.
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  Speaker 5: Electricity.
• 13:26
  Speaker 4: It's fair to say I've had more terminal client ibs,
• 13:29
  Speaker 4: more messages on social media, more people in the user
• 13:32
  Speaker 4: and come up to me and just say, like, you know,
• 13:34
  Speaker 4: we we should probably talk about electricity and energy because
• 13:38
  Speaker 4: you know, we don't really have a good line of
• 13:40
  Speaker 4: sight to whether if they can build all these data centers,
• 13:44
  Speaker 4: and Jensen one does have a good line of sight
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  Speaker 4: on that. When the data center is built, finish, ready
• 13:50
  Speaker 4: to turn the lights on. Is the electricity there? You know?
• 13:54
  Speaker 4: And the answer is no. There's loads of deals out there, right.
• 13:58
  Speaker 4: You guys would have done the red headline on the
• 13:59
  Speaker 4: show to about the US or the DOE taking government
• 14:03
  Speaker 4: ownership of nuclear reactors. But these rule deals on paper,
• 14:06
  Speaker 4: they don't exist in the real world. I think that's
• 14:09
  Speaker 4: really critical. The other thing is the press release says
• 14:11
  Speaker 4: they're sold out of GPUs. I just asked him what
• 14:14
  Speaker 4: do you mean by sold out? Because they're ramping output.
• 14:19
  Speaker 4: You know, their supply constraint. Demand is greater at any
• 14:21
  Speaker 4: given moment than their ability to supply. But to say
• 14:24
  Speaker 4: that something is sold out is a bit confusing, to
• 14:27
  Speaker 4: be honest, and so you know, ask for some clarity
• 14:31
  Speaker 4: on that.
• 14:31
  Speaker 2: Hey, before we let you go, last question, Ian King
• 14:34
  Speaker 2: writing an inventory took a jump in the quarter normally
• 14:36
  Speaker 2: at chip makers, and just to remind everybody, Ian King
• 14:38
  Speaker 2: has covered chip makers for more than twenty years, that's
• 14:41
  Speaker 2: a worrying sign, meaning the amount of unused product is
• 14:44
  Speaker 2: going up. The company said it's to quote ordering to
• 14:47
  Speaker 2: secure long lead time components, meet the demand for blackwell
• 14:50
  Speaker 2: and support future architecture road maps. Is a little different
• 14:53
  Speaker 2: than what it's traditionally done.
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  Speaker 5: I thought they don't cant ne demand.
• 14:57
  Speaker 4: Yeah, inventory is typically bad, depending on the type of chip,
• 15:00
  Speaker 4: because it signals that you, you know, no one's building
• 15:03
  Speaker 4: up there, the customers aren't building. Inventry by the way,
• 15:06
  Speaker 4: Ian's covered semiconductors since nineteen ninety eight at Bloomberg, so
• 15:10
  Speaker 4: so longer than twenty years. But you know, in Videa's
• 15:13
  Speaker 4: argument has always been, we keep telling our customers, our suppliers,
• 15:16
  Speaker 4: and our partners what we're doing for the next five years.
• 15:20
  Speaker 4: That includes the memory chip makers and telematics, data center
• 15:25
  Speaker 4: server design builders, so that everyone can keep pace. And
• 15:28
  Speaker 4: the argument that they're making is that when they want
• 15:32
  Speaker 4: to ship Blackwell accelerating computer systems at scale, the GPU,
• 15:39
  Speaker 4: it can't just be the GPU that's ready to go.
• 15:41
  Speaker 5: You need all the.
• 15:42
  Speaker 4: Other components to go with it. And you know, with
• 15:44
  Speaker 4: the stock up whatever it is now and after ours
• 15:47
  Speaker 4: four percent STO, I don't think anyone's worried about that
• 15:49
  Speaker 4: inventory number.
• 15:50
  Speaker 3: YEP inventry days all right, all right, good stuff. Hey listen, Kitter,
• 15:54
  Speaker 3: we will be watching, all of us will be watching.
• 15:57
  Speaker 5: Co host of b Tech and Ludlow.
• 16:00
  Speaker 6: Hello.
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  Speaker 3: As you know, catch him at eleven am Wall Street
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  Speaker 3: Time every Monday through Friday. But he will be speaking
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  Speaker 3: exclusively this evening with Nvidia CEO Jensen Wank. That's at
• 16:09
  Speaker 3: six thirty pm Wall Street Time, and you can catch
• 16:12
  Speaker 3: that on both Bloomberg Television and Bloomberg Radio, So be
• 16:14
  Speaker 3: sure to check that one out.
• 16:15
  Speaker 5: It is an exclusive. So he's got the conversation well
• 16:19
  Speaker 5: in video.
• 16:19
  Speaker 2: Gave a strong revenue forecast for the current period of
• 16:21
  Speaker 2: sales expected to be about sixty five billion dollars in
• 16:24
  Speaker 2: the fiscal fourth quarter. I want to bring in Bloomberg
• 16:27
  Speaker 2: News Big Tech team leader Sarah Fryer. She's also the
• 16:29
  Speaker 2: author of No Filter, The Inside Story of Instagram. She
• 16:32
  Speaker 2: joins us from Bloomberg's San Francisco bureau. So going into this, Sarah,
• 16:36
  Speaker 2: there was this narrative emerging that there was concern that
• 16:40
  Speaker 2: the AI bubble, you know, if we're calling it that
• 16:43
  Speaker 2: maybe losing a little bit of air, if we're going
• 16:45
  Speaker 2: to stay with that metaphor concerned about the hyperscalers capex.
• 16:49
  Speaker 2: We saw what happened with meta platforms a few weeks ago.
• 16:53
  Speaker 2: Is that concern gone after reports such as this is
• 16:55
  Speaker 2: everything all fine and dandy.
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  Speaker 1: Now, I don't think the concern is gone, because I
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  Speaker 1: do think there are still some trends that are are
• 17:04
  Speaker 1: you know, as noted in my my colleague and King stories,
• 17:06
  Speaker 1: but somewhat worrisome. Right the fact that in Vidia is
• 17:10
  Speaker 1: investing in a lot of the entities that are buying
• 17:13
  Speaker 1: its chips, right, so is there is there a way
• 17:15
  Speaker 1: that that they are indirectly ending demand for their product.
• 17:21
  Speaker 1: There is the concern about China sales. We still don't
• 17:24
  Speaker 1: have any forecast of sales to China despite some of
• 17:28
  Speaker 1: the loosening of the most restrictive restrictive policies from the
• 17:33
  Speaker 1: Trump administration. And and then there's also the question of
• 17:37
  Speaker 1: everyone trying to come up with Nvidia alternatives for their chips,
• 17:43
  Speaker 1: and some some of the rivals starting to gain a
• 17:46
  Speaker 1: little bit attraction we saw a little bit from Ambi.
• 17:48
  Speaker 1: And then furthermore, just the idea that you know, so
• 17:53
  Speaker 1: much of the uh, some of the the spending on
• 17:57
  Speaker 1: chips on data centers depends on having this physical infrastructure
• 18:02
  Speaker 1: to really put them to work, and especially the energy
• 18:07
  Speaker 1: making sure that there is power to make all these
• 18:11
  Speaker 1: data centers come to life with Nvidia's chips. So I
• 18:15
  Speaker 1: think that, you know, although this is this is a
• 18:17
  Speaker 1: company on a tear, this is we are in the
• 18:20
  Speaker 1: you know, the Nvidia economy. It is really popping up
• 18:23
  Speaker 1: the stock market right now. It has it has altered
• 18:27
  Speaker 1: the financial future of a lot of the companies my
• 18:30
  Speaker 1: team covers. But you know, can it last longer? Probably,
• 18:37
  Speaker 1: and that's what this report is showing. But is it
• 18:39
  Speaker 1: inevitable that it will? You know, are all the fears
• 18:43
  Speaker 1: in our past and we're not thinking about them anymore,
• 18:45
  Speaker 1: certainly not. We're going to keep looking at all those
• 18:47
  Speaker 1: trends and making sure that we can explain to people
• 18:50
  Speaker 1: what what is what is putting pressure on the future.
• 18:54
  Speaker 5: So one thing I want to bring out, Sarah.
• 18:56
  Speaker 3: You're, you know, there on the West coast, San Francisco,
• 19:00
  Speaker 3: you know, the tech community front and center, so you
• 19:03
  Speaker 3: hear things in.
• 19:04
  Speaker 5: And around, not just in the newsroom, but just in
• 19:06
  Speaker 5: the area.
• 19:07
  Speaker 3: And I'm you know, I'm looking at you know, the
• 19:09
  Speaker 3: concerns about Like you said, maybe this doesn't put concerns
• 19:11
  Speaker 3: to rest, but I'm looking at you know, in videos.
• 19:14
  Speaker 5: Certainly up in the aftermarket.
• 19:15
  Speaker 3: I'm looking at Nasdaq one hundred e mini futures, they're
• 19:18
  Speaker 3: up about one and a half percent. S and P
• 19:20
  Speaker 3: five hundred futures are up about nine tens of a percent.
• 19:23
  Speaker 2: I think it's big.
• 19:25
  Speaker 5: It's big.
• 19:26
  Speaker 2: I look at the SoCs effect.
• 19:28
  Speaker 5: The Socks is up almost two percent. There's a bunch
• 19:30
  Speaker 5: of other names in the space. So it's I.
• 19:32
  Speaker 3: Think there was just so much fear that what if
• 19:34
  Speaker 3: they missed those numbers and they you know, met on
• 19:37
  Speaker 3: the data center revenue number for the third quarter and
• 19:39
  Speaker 3: fourth quarter revenue was upbeating the outlook, Right, So I think,
• 19:43
  Speaker 3: does it feel like, I mean, I don't know, you know,
• 19:45
  Speaker 3: this community just a little bit of a sigh of
• 19:47
  Speaker 3: relief that Okay, they hit these numbers. They actually did
• 19:51
  Speaker 3: better than what the street was expecting, and maybe that
• 19:54
  Speaker 3: puts some.
• 19:55
  Speaker 5: Some of the concerns, I don't know, under wraps for
• 19:58
  Speaker 5: a little bit.
• 19:59
  Speaker 1: I think here, you know, you're asking about the perspective
• 20:01
  Speaker 1: here in the valley. Here in the valley, AI doesn't
• 20:05
  Speaker 1: sound like anything that there's the sense that we're just
• 20:08
  Speaker 1: at the beginning of this grand movement that will change
• 20:11
  Speaker 1: the world. Right, Maybe it's not even the ll M
• 20:15
  Speaker 1: that will be the model that secure the future with AI.
• 20:21
  Speaker 1: And so we're just now starting to see the applications
• 20:24
  Speaker 1: of AI. The you know, the payback really for all
• 20:27
  Speaker 1: of this investment, we haven't quite solved that, you know,
• 20:32
  Speaker 1: where where is all this this revenue, the actual sales
• 20:37
  Speaker 1: to companies that are going to pay for all of
• 20:39
  Speaker 1: the chips that Nvidia makes. We haven't really solved that
• 20:43
  Speaker 1: problem to the tune of the billions that have been spent.
• 20:47
  Speaker 1: But I think that here you're asking out here in
• 20:49
  Speaker 1: the valley, it is very much you know, all systems
• 20:52
  Speaker 1: go on AI.
• 20:53
  Speaker 4: There.
• 20:53
  Speaker 1: There is not as much of a concern about whether
• 20:57
  Speaker 1: this is the bubble. People are seeing these these big
• 20:59
  Speaker 1: numbers and they're thinking, you know, the world is about
• 21:04
  Speaker 1: to change even further. How so, people are thinking about
• 21:08
  Speaker 1: how their jobs are going to change. They're using AI
• 21:10
  Speaker 1: very very much in their jobs, in their personal lives,
• 21:13
  Speaker 1: like you know, relying on on AI to help them
• 21:16
  Speaker 1: make decisions for themselves and their families. And I think
• 21:20
  Speaker 1: people are are eager to create products that are going
• 21:25
  Speaker 1: to take advantage of the of this is a new resource.
• 21:29
  Speaker 1: Whether that is going to dramatically lead to efficiency, more
• 21:35
  Speaker 1: more profits for the companies given all the investment so far,
• 21:42
  Speaker 1: it's sort of yet to be seen.
• 21:44
  Speaker 3: Yeah, it's it's just kind of interesting, right. I mean,
• 21:47
  Speaker 3: here we are, what almost three years in to this
• 21:49
  Speaker 3: AI story, and most people say it's just early innings
• 21:52
  Speaker 3: on all of this. But it's hard for right, all
• 21:54
  Speaker 3: of us who've covered you know, booms and busts and crises,
• 21:58
  Speaker 3: and I'm not saying that this is any of that,
• 22:01
  Speaker 3: but it's hard not to be a little bit skeptical
• 22:03
  Speaker 3: when you see, you know, the spend over and over
• 22:05
  Speaker 3: and again, the conversations around the circular financing, and you know.
• 22:10
  Speaker 5: It's hard.
• 22:11
  Speaker 3: You're the logical side of your brain says, well, wait,
• 22:13
  Speaker 3: an it doesn't ultimately make sense.
• 22:15
  Speaker 1: Two things can be true, right, It's not necessarily either
• 22:18
  Speaker 1: or there can be a dramatic revolution in technology that
• 22:23
  Speaker 1: will change our lives, and there can be irresponsible spending
• 22:28
  Speaker 1: at the same time. Right. We saw in the dot
• 22:31
  Speaker 1: com boom, for instance, that there were a lot of
• 22:34
  Speaker 1: companies that had very dire circumstances at the end when
• 22:39
  Speaker 1: that bubble burst and they had to shut down. But hey,
• 22:42
  Speaker 1: we still use the internet via the net is still a.
• 22:44
  Speaker 5: Thing, so so I think.
• 22:48
  Speaker 1: No, I think I think we might. We're not necessary Yeah, no,
• 22:55
  Speaker 1: we're not necessarily talking about, you know, a bubble burst.
• 22:57
  Speaker 1: And that means that AI wasn't the thing, and we
• 22:59
  Speaker 1: shouldn't have we shouldn't have thought that it was going
• 23:01
  Speaker 1: to be so big. It could be that, you know,
• 23:04
  Speaker 1: there there is still potential for a large financial correction
• 23:08
  Speaker 1: down the road, but AI remains a force that changes
• 23:14
  Speaker 1: how we do business and how we live our lives.
• 23:16
  Speaker 1: So I think to put it in that stock of
• 23:20
  Speaker 1: a either or is missing the larger trend.
• 23:24
  Speaker 5: This is why we come to you.
• 23:27
  Speaker 3: Because it's really yeah, and it's very balanced and thoughtful.
• 23:33
  Speaker 5: Sarah, thanks so much.
• 23:34
  Speaker 3: I really appreciate Bloomberg News Big Tech team leader Sarah Fryer.
• 23:37
  Speaker 3: She's also the author of No Filter, The Inside Store
• 23:39
  Speaker 3: of Instagram, and she is, of course there from our
• 23:41
  Speaker 3: Bloomberg San Francisco bureau