The countdown is on. Everything you need
to get the edge at the end of the market
day. This is the close.
The market awaits, but will Nvidia
deliver? Live from Studio 2 here at
Bloomberg headquarters in New York. I'm
Roma Boston
and I'm Scarlett Fu. We're kicking off
to the closing bell here in the US. The
market might be waiting, but the
investors are pushing this S&P to a new
record high.
Record high already.
All right, let's take a look at where
things stand right now. The S&P 500
gaining 3/10en of 1% right now. Nvidia
itself is little changed before it
reports results after the close. Of
course, this is a stock that has gained
about 90% since its April low. Uh more
than doubling the return of the S&P 500
and leading the MAG7 names. We are
continuing to see a steeping in the
yield curve. Shorterdated uh treasuries
are outperforming longerdated
treasuries. At one point, the 30-year
yield approached 4.96% a onemon high,
but has since pulled back. from it.
Expectations of course, Scarlet, are
high for Nvidia's earnings. So somewhat
cautious as well, particularly since
Nvidia has grown revenue and earnings
10x over barely three years and
quadrupled its market cap to more than
$4 trillion in less than two. The AI
frenzy has made Nvidia one of the most
phenomenal growth stories in stock
market history and one of the most
phenomenal contributors to stock market
gains.
feels like for the past 18 months
absolutely any good news that has driven
the market has been uh two letters AI.
But here's the hitch. Of course, the AI
frenzy has dialed down to well more of
an AI stir. Investors taking some
profits and searching maybe for
something with better valuation
multiples. The Russell 2000 small caps
actually poised to outperform the S&P
for a third straight week here.
Something it hasn't done all year long.
value stocks as a long only factor
pacing big tech momentum on a year-to-
date basis as well. And that means while
Nvidia earnings will be a big event, it
may be less of a binary buyell event and
maybe it elicits more of a rotational
response. Illan Benamu, a derivative
specialist over at JP Morgan, had a note
out this morning that I thought put it
best, saying that the rotation into
value stocks from mega cap tech is now
more important to the broad equity
market narrative than Fed rate cuts,
which of course would grow even more
important if Nvidia somehow disappointed
later this afternoon.
Right. And of course, that's a big if,
but it is a good point because as much
as investors are focused on Nvidia this
afternoon, it's not to the exclusion of
other factors. And even though Nvidia
makes up more than 8% of the S&P 500, it
doesn't actually always dictate the
overall market's direction. In the past
eight quarters, we've seen a divergence
between the orange bars, which measure
Nvidia's uh stock performance the day
after its results, and the yellow bars,
which measure the S&P 500's move that
day. At least half the time, they've
moved in different directions. Most
notably, last August. And here, well,
you can see it. Uh Nvidia stock took a
dive. It fell more than 6% because its
earnings beat was not a blowout. and the
S&P 500 remain closed unchanged. So, it
can happen where Nvidia doesn't weigh on
the market in a big way.
Yeah, absolutely. And of course, that
will be the parlor game for the next
couple of hours here as we kick you off
to the close with John Beltton,
portfolio manager and managing director
for growth portfolios at Gabelli Funds
is Gabelli Growth Innovators ETF and
Gabelli Growth Funds has Nvidia as its
largest position in both. Are you
nervous? Well, I mean, I think the the
chart you just showed, I think Nvidia's
flattered down in three of the last four
earnings, T+1, hasn't really mattered to
the stock performance longer term. So, I
feel any expectations missed today,
barring some, you know, big surprise out
of left field, which I'm not expecting,
will get defended in the coming weeks.
So,
there's been a lot of talk and obviously
we kind of joke here about maybe some of
the short-term moves that we might see
tomorrow. We know ultimately,
particularly for the AI trade, this is a
much more of a long-term story. And I'm
curious as an investor, particularly in
Nvidia, but also in other tech names.
How much further do you see this AI
trade going? Well, I I I think
fundamentals right now remain very
strong for all these companies, Nvidia
included. I think what we saw over the
June quarter earnings cycle from all the
mega cap tech companies, suggest that
the AI investment cycle is still
actually accelerating, still in an still
in early innings. all the the the four
largest investors in AI infrastructure,
Microsoft, Meta, Amazon, and Google, all
revised capex outlooks higher for both
this year and next year. Simultaneously,
you're seeing a service like Open AI,
massive adoption of that, massively
accelerating. They're now doing 12
billion of annualized recurring revenue
going to 20 billion by year end. So, I
still think we are in early innings.
That's what Jensen Huang said last time
Nvidia reported three months ago. So
yeah, I still think there is run room
for fundamentals to keep running.
For this earnings report this afternoon,
the big tension is whether Nvidia will
be able to sell its chips in China.
That's kind of the question that
everyone's asking. But then when you
look at the results, Nvidia seems to
only rely on China for about 14% of its
overall revenue, which is not the lion's
share. So why is there this outsized
attention on its China chip sales? Are
investors just looking for something to
fret over? I think that that it it has
implications for kind of short-term
trading. If if Nvidia can they if they
include China in the you know October
quarter revenue guide, it could be
massively ahead of the street because I
don't think the streets expecting them
to include China. Similarly, I think if
they were able to generate some China
revenues towards the tail end of the
July quarter, which they probably were
able to, that could represent upside to
the July quarter revenue numbers. So I
think it's more of a shortterm dynamic
longer term. And in terms of the earlier
part of your question, you know,
skepticism on will they be able to sell
to China. I I think the market is now
expecting they will be able to
participate in China. It's just a matter
of timing and which products they'll be
able to sell to China.
Given the deals that it had to make to
be able to sell chips to China to begin
with, you know, paying a 15% essentially
tax to the US government. Is Nvidia now
a politically sensitive stock? meaning
when there's news coming from the White
House on something that this is a stock
that can get caught in the crosshairs.
Yeah, it's it's a it's a bit of a touchy
subject. I think Nvidia has become a
very important company. I think it's
pioneered this new technology that has
incredible potential across many
different industries. Um and for that
reason, yeah, it it it does have
political significance for the US. So I
think it it's just a very important
company
in terms of just the broader tech trade
right now. And obviously Nvidia is kind
of still the sort of the hub for a lot
of that. I mean we should point out we
get some other tech earnings tonight
that will probably get overshadowed like
Snowflake and Crowd Strike Pure Storage
as well. But I am curious as to where
you see the investable opportunities not
just on a straight AI play but more
importantly just in the broader tech
ecosystem.
Yeah I I still think this infrastructure
buildout for AI is still very early. So,
we like some of the infrastructure names
that are going to participate in the
buildout. Some of the electrical
equipment companies, some of the HVAC
companies, um, and some of the power
management companies. Um, and you know,
I I I just think as time goes on for AI
to to to get comfort in the duration of
that growth story, we're going to need
to see a broadening out of use cases.
What we've seen so far is digital
advertising, digital media, massive
commercial use case that is already
operating at scale. I think large
language models seems to be a second
commercial use case that is starting to
scale. That's very encouraging. Down the
road, I think we're going to have things
like corporate productivity initiatives,
agentic software. So, there's some
interesting ideas to your question
within that space. Um, and then longer
term, you know, things like defense,
things like robotics and autonomous
driving and and maybe some applications
in healthcare as well.
You didn't mention anything directly
related to the consumer. I know there's
been some talk about maybe uh whether
it's glasses that Meta might be working
on or other sort of consumerf facing
devices. Do you see anything there?
I think I mean when Yeah. I I think
there are it it seems early to say what
the form factor for consumer AI is going
to be. I think consumer companies are
using AI in a variety of ways already.
So digital media would be one. what
Amazon's doing with robotics in its
fulfillment center network. I think
that's I think they've disclosed they
they now have over a million robots
operational in their fulfillment
network. That's driving big margin
expansion for them. So I think consumer
companies, every company can participate
in AI or can use AI to their advantage
um even if they're not selling some
consumer device.
All right, John, always great to have
you. Great insights as always from John
Belton, portfolio manager and managing
director for growth portfolios at Cablli
funds as we continue our coverage here
today. The drum beat to those Nvidia
earnings. And we're going to talk about
what is going to power the next phase of
the AI revolution. And well, some of
that's going to be real estate. We're
going to talk the investment trends in
the data center space with David
Steinbach over at Hines.
Plus, we're keeping all AIS or eyes on
Nvidia. We're going to wrap up today's
price action. You laughed at that. in
anticipation of those results with Sarah
Kunst, managing director of Cleo
Capital.
And we're also going to talk robotics.
We're going to talk to a company, Miso
Robotics, that is using Nvidia's chips.
The CEO there, Rich Hole, he's been on
before, and he's coming back to talk
about how that partnership is helping
them develop their latest kitchen
robots. All that more coming up here on
the close. This is Bloomberg.
[Music]
Concerns are rising that President
Trump's escalating pressure on the
Federal Reserve may increase risk to
longer term interest rates. Our next
guest says though there is opportunity
to be had in fixed income even if we end
up stuck in this uh higher for longer
limbo or at least not cutting rates as
much as people hope for. Let's bring in
David Forgash. He is managing director
and portfolio manager over at PIMCO.
Great to see you.
Hey, thanks for having me. So, I want to
take a step back a bit first and get
your take on what's been a fairly muted
reaction to what's happening at and with
the Fed, whether it's in equities,
treasuries, or in your area. Credit,
give us your read on what investors
appear to be pricing in.
Yeah. Well, I I think generally
speaking, you'd have to like you have to
look through the the the the amount of
noise that that's coming into the
market, but when we think about
investing, it's more for the longer term
and you have to take out a kind of
political view that you might have
independently um and have more of a view
just on the credits that we're investing
in the markets itself so that you don't
get a biased view one way or the other.
So, if you look through it in that way,
I think that's what the market is
tending to do as well and that's why
it's held up so well.
Okay. So within your space, high yield,
uh we see credit spreads for high yield,
extremely narrow. Where do you see the
opportunity then?
So they they are narrow. They're about
their narrowest level in about 20 years.
But if you think about it, we've had a
very solid return in the high yield
market. It's about 6% so far this year
just just in this part of it. Uh but it
does get much trickier here. So I mean
there is definitely cause that you have
concern for spreads widening, but it's a
lot of single name risk. In other words,
we're starting to see borrowers have
more flexibility, putting out uh pick
loans and more dividend deals um to try
to take some money out of the market for
the companies. These are the types of
things that raise some red flags with
us. It makes us realize, you know, we
always take a lot of concern on the
credits we're investing in, the
companies we're investing in, but you
really have to dig in deep um to the
covenants and to the credits themselves
to make sure that you miss those
potential.
All that due diligence.
All that due diligence. What's been the
balance between uh sort of refinancing
in this market versus new issuance?
So, it's been about 75% has been for
refinancing. It's about 80% in the
leverage loan market, but 75%. I mean,
companies were last year there was only
about 70 7% of the bonds were called
that that could have been called.
It's usually about 20%. This year, we're
seeing much more of that happen because
CFOs are thinking, well, I think the
market's going to remain somewhat
stable, but you don't know. Rates have
started to come down. I don't want to
wait much longer. So, let's refinance at
a period now where there is some
stability.
There's been a lot of talk that maybe
we'll we'll start to see more new
issuance along with of course uh more
M&A activity, more deal making activity.
We did see a pickup and there was a
story even on the terminal today how
we're we're tracking at like a trillion
dollars on M&A activity so far this year
which I think surprised some people.
Yeah, I mean I remember speaking to you
last and it was very slow the amount of
M&A. he expected it to pick up much
sooner into the year. But there was a
lot of concerns at the time with tariffs
and trade slowing economy. Um and then
obviously the new administration. So now
it's become much more clear to a lot of
companies that there is more of an
allowance to combine to have M&A, which
is good overall for a lot of these
companies because they take out costs.
They're able to combine together.
Sometimes you you saw one last week
where it was a large retailer buying a
smaller distributor. they're able to
immediately lift to the uh margins that
they have and bring and bring uh higher
earnings onto the balance sheet. So
these are very positive aspects that are
coming in there. There's certain sectors
that are benefiting more than others
such as
well so you've already seen it happen
some of that in retail but you're seeing
some of it also in say broadcasting
broadcasting's been a broadcasting
speaking my language familiar with that
at all. So you you think about the the
rules that have been set up in the past
with 39% coverage. Those rules, they
haven't been broken yet, but there's a
lot more easement of it. So if you start
to see that TV stations can be swapped,
that's another area that can benefit
from it. So it's it's really sector by
sector.
What about the impact of tariffs and how
that is perhaps generating some activity
in deal making and therefore creating
opportunities.
Yeah. So there's positives and
negatives. So we are seeing some of that
and we expect to continue. You could
even see some of that in autos. But
there are other areas like other
industries that are really suffering. So
if I think of one in particular, it
would be chemicals. So the chemical
companies, there's a slowdown already in
in in uh GDP. So that's hurting them a
bit. There's also been a flood of
chemicals into the market from producers
in China. So that's been that's been a
difficult environment. And then the in
the end product user, there's just been
less demand. So chemical companies have
been seeing more downgrades and
upgrades. you have to be careful about
the credits um in that and we have uh
less less uh focus on it as far as from
investing in our portfolios.
As far as uh for for other investors
coming into this space, are you seeing
them more interested in buying I guess
uh single company uh issues or more of a
you know a more repackaging securization
of something.
So securization is is done very well.
form of securization that's most
prevalent in the markets that we're in
is CLOS's and CLO demand has been very
high. There's been a ton of new issuance
of it. CLOS's are product that brings in
loans as far as the assets underneath it
and that has been a big demand in the in
the market and then you have the
borrowers that have come in. Some of
these will be M&A type borrowers that
come in and feed that demand through
issuance.
All right, David, always great uh stuff.
you and your team uh basically the best
in the business out there. David Forash
is managing director and portfolio
manager over at PIMCO. Stick with us. We
are going to turn back to earnings and
of course back to Nvidia. Those results
set to drop in just about an hour's
time. We're going to talk to one of the
the only bear amongst the analysts on
Wall Street. When we come back, this is
the close on Bloomberg.
Let's right go get right to our top
calls. Big movers on the back of analyst
recommendations and we start off with
Crispy Cream DNU JP Morgan downgrading
to underweight no price target with the
analyst saying the company is in quote
survivor mode with execution risk
plaguing the company's turnaround plans.
The brief meme stock there spiked about
20% over the past two weeks giving back
4% today. Eli Liy up next. HSBC
upgrading the stock to hold, boosting
the price target to 700 from 675.
Analysts cautiously hopeful about Lily's
position in the obesity drug market as
long as it stays disciplined on price.
That stock, which popped 6% yesterday,
giving back a half a percent today. And
finally, Core Weave, Caner Fitzgerald
initiating coverage of the AI cloud play
with an overweight and a 116 price
target. That implies about 25% upside
from where we stand right now.
expectations that the company's efforts
in AI model training and infrastructure
should pay off in a big way. Those
shares up about 5% and those are some of
our top calls. We're going to stay in
the AI space and of course turn to the
granddaddy in that space and that is
Nvidia. The shares fractioning lower
ahead of their earnings coming after the
bell tonight. More than 80 analysts
track this stock. 71 have a buy rating
and one has the equivalent of a sell.
That person joins us right now. Jay
Goldberg, analyst over at Seapport
Research Partners. And Jay, taking a
look at the numbers here. We're talking
about 50% growth expectation on revenue,
50% growth expectation on earnings. For
any other company, I would say that
would be phenomenal. What's giving you
pause?
So, my concern is that they've done so
well for so long, it's just getting
harder and harder for them to keep
things going, right? I've never told
anyone to short this. I think it's more
of an underperform. And I think they
have underperformed in my sector for the
last few months, right? they've just
gotten so big. It's it's tough to keep
the hits going and the it's you know and
and so I it's good it's good company.
It's great products, but like there
there just limits to how how big they
can grow and how how much longer they
can keep this going.
It gets to the idea though and I mean I
think a lot of people feel that way. Of
course, a lot of people are also looking
at the stock and feeling like okay, they
don't want to miss out. But we've talked
a lot on this show about the idea that
most investors are trying to find a
broader sort of entry point in this AI
trade. And I am curious that when you
look at Nvidia and how it has sort of
dominated this space, do you see that
broadening out or do you see that trade
altogether just sort of shriveling?
Yeah, I think that's definitely one of
the big problems with the AI trade this
past few years has been how tightly it's
tied to Nvidia. I do think there are
other beneficiaries of it. It's still a
pretty small pool, but I think AMD and
Broadcom are both big beneficiaries
here. Broadcom in particular is really
well positioned. I don't think people
fully understand that story. Whenever
Nvidia loses share today, it's to
someone who is using Broadcom to bring a
chip to market, usually one of the
hyperscalers. So, there are other
beneficiaries here. Um, but I think we
really need to see more compelling use
cases for AI, a broader spreading of AI
utility into sort of new areas before we
can really spread out this trade more.
Is there anything that you would be you
would be that would prompt you to change
your mind on the stock based on today's
earnings report or what Jensen Hong
could say in the earnings call? Well,
it's always tough when Jensen speaks
because he's so persuasive and so
charismatic. I really want to believe
everything he says. Um, but right, I
have to turn on my analyst reality
filters. And I think the things that I'm
really watching for most carefully today
are like this is the this is the sort of
inaugural quarter where we have a lot of
Blackwell volume in in the numbers,
right? Blackwell is a new product. It
looks pretty good. How well is it doing?
How's it tracking next quarter? Uh,
another big concern we have is around
margins. Like what are the gross margins
for this? It's Blackwell looks like
they've indicated it's going to trade
below corporate gross margin averages.
Is that going to continue? Will they
will they have learning effects where
they start to get better with their
margins as we as the product matures or
will that learning curve take so long
that we already into the next product
before this one gets to good margins. So
those are the areas I'm looking at. Also
I want to hear if he has any sort of new
use cases for AI. He's really good about
painting this big vision of what the
future of AI will be but the things he
talks about it's sort of been talking
about the same things for the last few
calls. So I want to know what people are
doing with black wallet that's any
different than what they were doing with
the previous version.
So Jay you pointed out that there are
better companies maybe to go in on uh
for this AI story like Broadcom, like
AMD. What are the leaders of those
companies saying when it comes to use
case and you know answering some of
those bigger questions that you have?
I think it's a it's a the idea is sort
of around having reasonable expectations
about what you want to do with this.
There's certainly a camp of people who
are buying into the AI story because of
some big grand vision where we have
artificial general intelligence and
happy dancing robots. Maybe we get to
that someday, but no technology has ever
been adopted in a perfectly straight
line, especially something this big. So,
I think I think there going to be ups
and downs to this adoption cycle. And
so, you have to sort of make your bets,
make your plans accordingly, sort of to
be a little bit more flexible and a
little bit more reasonable. It's not
always going to be up and to the right.
And I think we see that with like AMD.
They're not saying they're going to
overtake any Nvidia anytime soon. They
just have to keep executing and sort of
slowly chipping away at this product, at
this problem, getting better and better.
Broadcom also is just very capable, not
just in in sort of GPUs and
accelerators, but also in networking and
a host of other areas.
Yeah.
So, a bigger approach helps.
Well, it's kind of fitting you bring
that up because of course about a week
from today, I think uh Broadcom actually
is scheduled to report. And I am
curious. I mean, part of the problem
with the bar broadcom, at least in the
most recent quarters, has been the
feeling that they are aren't
articulating their AI strategy as well.
I mean, we know a lot of these trades
run on narratives and they run on
storytelling and Jensen Wong has been a
master at that. What can Broadcom do
better to get its story out there?
I I think for Broadcom it the story will
eventually just be borne out by the
numbers, right? Broadcom over its
history with Hawkan as CEO there uh has
just had a tremendous track record. He
is not as charismatic as Jensen or in a
different way. He's charismatic in a
different way. Let's put it that way. Um
but he is he is just been a ruthless
machine when it comes to executing on
his plan and finding and growing cash
flow and sort of finding value in his in
his companies. So I think that will be
borne out by time. Uh, and I I think
personally I I think we need a little
bit less sort of story in AI and more
tangible proof points to really, you
know, for it to become real for for more
people and for it to really matter.
All right, Jay, really pleasure speaking
with you. Jay Goldberg, analyst at
Seapport Research Partners. He has a
sell rating on uh Nvidia and he is the
only one of the analysts that we track
of the 80 analysts that we track
and I thought his uh comments about uh
Broadcom was interesting. He's not the
first analyst to actually say that as
well that to really keep an eye on them.
All right. Well, coming up, data centers
central to Nvidia's imminent earnings
report. We're going to break down the AI
boom's impact on real estate with the
David Stinach of Hines next.
3:30 p.m. in a beautiful New York City.
This is the countdown to the close. I'm
Roma Boston.
And I'm Scarlett Fu. We're what about 50
minutes away from the big earnings
report this afternoon?
Yeah. I'm surprised we don't have a
countdown clock. I mean, I'm told this
is probably the most consequential
earnings report since well the last
Nvidia's earnings report.
Well, yeah, that's right. And of course,
it's all going to be data centers
because that's the biggest part of its
business, right? And if you take a look
at the growth rate of its business, it's
remarkable. Nothing short of remarkable
really. 14% at the start of 2023,
ramping up to 280% by the third quarter
to 427%
uh at the start of 2024. And of course,
since then, it's been a big drop off.
But it can be deceiving because even
though we've plateaued,
we're still at 57% growth. That's
remarkable.
Yeah, remarkable. But of course, you go
back prior to whatever the chatbt or
whatever, and what was that growth rate?
Probably single digit, single
percentage,
maybe high double digit, low double
digits, maybe. Maybe. All right. Well,
let's dig a little deeper into the
impact of the data center deluge, those
chips that go into data centers, uh,
especially as we await earnings from
Nvidia, one of the big drivers of that
boom. We're going to talk about the real
estate angle here. Joining us live on
set is David Steinbach. He is global CIO
of Hines, which is one of the largest
private real estate investment firms.
David, great to speak with you. So,
there's the chips that go into the data
centers. We won't ask you about that,
but we want to talk to you about the
actual physical data centers, the
facilities housing, the IT
infrastructure, the servers, networking
equipment. From where you sit, do you
see any kind of immediate cause and
effect between Nvidia's commentary uh on
demand for its chips with the supply of
data center facilities?
So, great question and we've we've been
done data centers for a long time and
it's interesting to see how the space
has evolved. Um years ago when we were
doing them the the customer were main
mainly the banks and the scarce resource
was mainly uh the building spec. Today
the customers are mainly the
hyperscalers and the scarce resource is
energy as we all know. And so that that
real shift has affected pricing. It's
affected where you can do data centers.
It affects some of the supply. But the
constraint in the system right now is
not the physical real estate itself.
It's power and it's access to it. And
that's that's really the thing driving
pricing uh for where you can put the
data centers. So where does that leave
um certain markets? Which markets are in
a better position to house some of those
data centers versus those that you know
shouldn't be considered?
It really depends on where you are in
the world. So in Europe there's a
different dynamic. The the the way the
utilities are regulated and power access
is given is is very different. So areas
uh such as in France, UK, Ireland have
all had different elements. Um more more
interest on the continent now of Europe
versus before it was a bit more focused
on Ireland um and UK. Here in the United
States, um you know, the grids are much
more um uh distributed in terms of how
power is accessed. Um places like Texas
have been very aggressive and in trying
to get power and be very easy to get
power power interconnects to. So it it's
again very very um uh location dependent
bottoms up.
I am curious about what you are seeing
in terms of pricing and I think the last
time we we had you on you talked a
little bit about how some of the pricing
that you've seen in this space is at
least from an investor's perspective,
your perspective, not necessarily
attractive. Well, the last I'd say the
last 24 18 24 months, I think that there
was a significant focus and drive by the
hyperscalers to get access. They were
trying to nail down locations, tried to
nail down access because they knew I
think they could see the constraints
coming and so there was a very much
almost a um going on offense to be ready
for for a game that was going to be
underway.
That that created a dynamic of pricing
that got pretty aggressive. Um, and that
that we have felt pull back some,
but that doesn't mean that the the space
is I'm not I'm not in no way, shape, or
form negative on the space. It just
means some of that maybe that excitement
has has waned a little bit, but that's
probably a good thing.
Probably does mean that actually given
we all I think we all believe in the
long-term potential of this
and the amount that has to be built.
Um, any pullback actually means you lean
in. Um, and and that that actually means
there probably are some interesting
So, it's interesting. I mean, you you
mentioned you kind of use the word
long-term, and this is a long-term play.
And as a real estate investor, I do have
to ask you just about the interest rate
environment, particularly at a time when
the market seems to be pricing in the
idea of a long-term drop in rates or at
least a more dovish uh central bank. Uh
that maybe, I would think, potentially
be beneficial to real estate
investments. What are your expectations?
I I I think that if the if the Fed does
drop rates a little bit um say 25 basis
points I think in light of where we've
been which um what one point was a 500
basis point increase in rates those are
just you know small incremental uh
changes the the bigger thing to look at
for me is the long longer tale of of
interest rate expectations and where we
think inflation interest rates will be
in five or 10 years because when you do
a real estate project you underwrite for
that duration and so thinking about that
is really important the thing I think
that's happening in the market right now
though is because of interest rate
pricing and maybe some rates coming in
will help this um new development it's
it's hard to make it pencil uh because
uh investors are usually looking for um
a spread between your build to versus
buy to um rates of return about 200
basis point spread is common and so
because we're not seeing that right now
the market is not developing and and and
not bringing in new supply like we
should that makes it a fantastic time to
be acquiring uh because with time rent
growth and other uh dem demand pressures
will come to the market and and make
those acquisitions you're doing today
look very smart and and it will be time
to build once rates uh rental rates go
up but we're in this kind of in between
space right now.
How long does it take for that that to
happen? I mean you're saying that it's
there's going to be this lull this lag
period but I'm curious whether that's
going to be months or years.
Well in some markets we're already
seeing the rent growth come through. Um
you know the US is about two and a half
million houses short and in some markets
we're seeing some rent growth. um in
multif family other markets in I'll say
even the best to best office projects
where there's a lack of new supply lack
of quality product we're seeing some
rent growth so it it depends on where um
some markets it's happening today other
markets I would expect it in the the
coming 12 months
I appreciate the long-term view that you
take on here when you're considering
these projects 5 to 10 years out uh
given that there's a lot of concern
about inflation over the longer term um
I'm wondering what kind of scenario
you're using as an assumption are we
talking about like a light stagfl
inflation kind of environment here.
It is starting to look like that is
likely the scenario that we're looking
at which is more stagflation. We've
we've done some research in our our team
to look back at other times like that
and you go back to the 1960s and 70s to
see some similar dynamics of what we're
seeing today and in that you see rent
growth come through and that's a little
bit counterintuitive. People think back
on the 70s and didn't think it was
viewed as kind of a flat time. In real
estate actually rent growth came
through. We've got the evidence to show
that. So that that does inform how you
want to underwrite deals today and
really looking to rent growth as a
driver of value creation.
I do want to circle this back to Nvidia
and AI, not so much from the AI trade,
but this idea of how the geography in
this nation has shifted. We've talked a
lot of about uh how you know down south
we've seen a lot more migration down
there which of course has helped uh your
real estate businesses uh in those
areas. There's been also a lot of talk
about how AI is also re reshaping that
geography. a lot more companies uh
located outside of Silicon Valley,
outside of New York. And I am curious if
whether you see that tech trend, whether
it's data centers or the physical uh
consumer products or even just the
incorporation of companies aiding that
migration to uh the non-traditional
areas.
Well, I do think San Francisco is going
to be a beneficiary and I think we're
already seeing some of that on the real
estate side and we're making
acquisitions today in the Bay Area and I
think I think there's some interesting
buys there. But I I do think when you
look at the economy broadly and think
about the drivers the next 5 to 10
years. I mean data, AI, energy, space, I
mean there's a handful of things that
feel like they're going to have a
disproportionate impact and chasing
those quarters of demand wherever they
might be with Space Coast in Florida,
things happening in Texas. I mean there
are some real new quarters of demand
that are coming up and I think it's
important for investors to stay ahead of
that and be thinking about what's going
to drive the next economy. Yeah, we
didn't get a chance to talk about it on
the show, but that SpaceX launch the
other day, a real a big milestone uh
there. Uh David uh has his finger on the
pulse of all of that as global CIO over
at Hines. Stick with us. Our coverage
continues here on the big program with a
look at Nvidia and a look at maybe a
wouldbe Chinese competitor as a stock of
the hour. Yeah. And it's coming up next
right here on the Close on Bloomberg.
All right, it's time now for our stock
of the hour and we're doing something
different today. Taking a look at a
Chinese company, Cambercon. Shares of
the Chinese chip designer surging over
there in Asia after the company reported
record profit for the first half of the
year. This all because of China's
crackdown on US chips and how it may
actually be benefiting homegrown
companies. Carmen Rinicki joins us right
now, deputy team leader for equities to
talk a little bit more about a stock
that quite frankly I didn't hear about
until just a few hours ago. So what do
we know about this? Because there's been
a lot of talk about Nvidia, its ability
to sell in China, and more importantly
whether Xiinping and the Chinese
government necessarily want Nvidia to
sell in China.
Yeah. So this is actually a really
interesting thing to look at right
before Nvidia reports earnings later
because something that investors are
really watching is the China market.
What is available to Nvidia? that it
sees as demand in China. And what this
signals, um, Campercon shows that, you
know, companies like Alibaba, Chinese
national companies are using their own
homegrown chips. So they're they're
taking, you know, the encouragement of
Beijing and um, you know, they're seeing
increased demand locally. So that could
factor into what Nvidia sees for their
own, you know, future there.
Alibaba being like a hyperscaler
equivalent of what we have in the US. Is
Cambercon, you know, the equivalent of
Nvidia in China or one of the smaller
players? Where does it fit in?
I think it's a smaller player. I think
we would call it maybe more like an AMD
or a Broadcom. I mean, Huawei is the
biggest one that we hear about, you
know, with when it comes to Chinese
chips. Um, but you know, it it's it's
interesting to see these kinds of
results. And Cambercon actually even
shouted out Nvidia in its results and
said that they really do see
intensifying competition overall in the
chip market, but that Nvidia does have
the clear advantage here. So, it's
definitely still a player in the space.
Well, there's also a question too of of
the performance of these chips and
there's a lot we don't know, at least
here on the US side. The idea has been
for quite some time that it was Nvidia
or bus that if you really wanted to run
at least the really large language
models and really get to that point
where you can get to inference you
needed effectively if not the black
wheel chips certainly the H20 chips.
Do we have any sense that what uh
Cambercon is doing or some of the other
chip makers like Huawei and China are if
not at the level of that H20 chip
getting close to it. You know, I think
the the thing that's interesting here
though is like post deepseek, we realize
that, you know, they're models that are
just as competitive can be built on
chips that aren't as good as Nvidia's
chips. So even if these companies aren't
quite getting close or they're getting
close to the H20, that is competitive
and especially if they have pricing
advantage, which they might have
locally, I think that that's something
that, you know, local companies are
going to be looking at. So um we'll see
what happens. I mean, Nvidia is likely,
you know, continuing to develop chips in
this space. It's not just the H20. Um,
we've been hearing about a B30, which
would be a sort of scaled down version
of their Blackwell chip. Um, obviously
that would require, you know, more
licensing from the government, but um,
there's a long road ahead.
So, we're looking at the share price
right now. This is uh in Asian trading.
It's listed in Shanghai. There's no ADRs
for this company, is there? I mean, if
American investors wanted to invest in
it, they couldn't, could they?
No, there's no ADRs for this one. It's
it's ticker 603019 CH
for those
just rolls off the tongue.
All right, Carmen Reini, thank you so
much. It covers everything for us here
at Bloomberg News. Certainly everything
in the equities world and remain we are
what uh tminus 25 minutes from the
results.
Yeah, we're expecting them somewhere in
that 4 p.m. hour. And it gets to this
idea though too. I mean Nvidia has been
the only game in town both for investors
and for customers and the idea is that
we we've been looking for a broadening
of this trade. We talked about Broadcom
earlier on the US side. Maybe Cambercon
or Huawei becomes uh that on uh the
Chinese Asian side.
Yeah, absolutely. And Jensen Wong,
whatever he says, people are going to
read into it and kind of u read about
the larger economy, the broader industry
overall, whether it's applicable or not.
That's just been the tendency here.
Yeah, absolutely.
All right, coming up, we're going to
take you to the closing bell with Sarah
Capital, as we count you down to the
closing bell and Nvidia's results. This
is the close on Bloomberg.
Fundamentals right now remain very
mega cap tech companies suggest that the
AI investment cycle is still actually
accelerating, still in an still in early
innings. I still think there is run room
John Belton over at Cababelli kicking us
off to the close. A big owner of Nvidia
stock. That stock in a holding pattern
ahead of a big earnings report in just a
matter of minutes.
Yeah, and of course, because it makes up
8% of the S&P 500 and about 10% of the
NASDAQ 100, whatever it does, will have
a big sway on the overall market. As you
mentioned, not doing a whole lot at this
moment. And uh the S&P 500, you know, up
by 310 of 1%, good enough for a record
high. What's notable is the Russell 2000
small caps outperforming once again. You
had a great stat earlier about how this
has gone on for a little bit now.
Yeah, it's going on for a little bit and
and I have to kind of give a hat tip. Uh
folks over at JP Morgan had a great note
out this morning kind of talking about
this rotation that we've been seeing
into effectively something uh I guess
more value, the idea that tech uh
valuations are a little bit stretched
and people are looking something that
offers a little bit more value and
that's been a beneficiary to small and
midcaps.
Yeah. And we're seeing uh the VIX tamp
down also below 15. So we'll see how
that all changes with this big earnings
report in a few minutes.
And absolutely and just even though we
are seeing some of that rotation, that
doesn't mean the tech trade is over. In
fact, you go back to what almost three
years ago, November of 2022. And you
look at what has led the markets higher
here in the US and worldwide, it has
been the AI trade and it has been
primarily Nvidia. Sarah Coons joins us
right now. She's managing director over
at Cleo Capital. She's been tracking
this trade and investing in it as well.
And Cleo, I know expectations are always
high heading into an earnings report
like this, but there are some people
kind of looking at this as maybe an
inflection point that those triple digit
growth rates that we have seen in
revenue and earnings for this stock,
that's kind of behind it. And the
question now is where does that growth
settle in and what growth rate are
investors going to be comfortable with?
I think that this is one of those things
where Nvidia's been going up so long
that that even a decent beat um even
decent growth can feel like de
acceleration and I I think it's going to
be tough for them um to to do something
that really impresses the market. When
you look at where the estimate is
sitting for this quarter, it is really
really high compared to the previous
quarters. So even if they hit it, even
if they beat it a little bit, I wouldn't
be shocked to see a bit of a sell-off or
kind of a muted reaction.
And we should point out that when we
take a look at options activity, it's
kind of interesting to see how narrow uh
the swings at uh that investors actually
expect for this stock, which has been of
course in the past, one of the more
volatile stocks, mostly in a good way.
And it raises the question, Sarah, as to
whether you search for other names in
this AI, big cap, tech trade, or do you
stick with Nvidia one way or the other?
I
I certainly don't think that you are in
that we're in a position where there's
any reason to not have Nvidia in your
portfolio. Um, it's a real company with
solid fundamentals and revenue, solid
leadership. Um, that being said, I don't
know how overexposed people want to be
right now. I think that there are other
names in the AI trade. One of my
favorites is is Taiwan Semiconductor. Um
I think that that's a name that that
does something similar in terms of it is
very hard to replace in the ecosystem.
Um but it's slightly more wellpriced and
and a little bit uh less loved.
You know, Roma was talking about the
shift the rotation to smaller cap stocks
where there might be some more value. Is
there a combination of value and growth
in the smaller company groupings?
I mean, everything's a smaller company
compared to Nvidia, but yeah, I I think
that there are some names there that
that have gotten a little bit overlooked
because so much of the last kind of
couple years have been dominated by the
meg mag7 trades. Um, and we forget that
there are very good companies in the
market that are not trillion dollar
companies that might not even be
doubledigit billion-dollar companies.
And so, I do think that you're going to
see people look more there. Um, in tech,
that can be a little bit trickier. tech
companies over the last five, seven
years have either been really big or
relatively memetockesque.
Um, but I think that in other sectors,
uh, yeah, you're seeing more people look
at the small caps.
And just a reminder, we're about 25
minutes away from Nvidia reporting
results for the quarter that ended. For
some companies, there's just this
tendency to read through it to the
specific technology or the overall
sector or the overall economy, and
that's happened here with Nvidia. Is
that appropriate or have people gotten
carried away with that idea that it is
kind of the beall endall for the entire
tech sector?
Look, the stock market's not the economy
and Nvidia certainly not either. That
being said, I think that it it has
driven um so much of the market up and
it is so much of the the index. Uh that
there is a little bit of confusion
there. I also think people have really
poured into Nvidia over the last kind of
this year because of the uncertainty uh
you know in DC with the federal
government with the banks and so there's
just a huge desire right now to say
where do you put your cash that you can
sort of trust that it's not going to to
be really impacted and Nvidia for a lot
of people has been that bet. There's
been a question going forward too about
kind of national importance of a company
like Nvidia or on the Chinese side,
companies like an Alibaba or Huawei.
This idea that uh what's happening in AI
right now isn't just about business and
economics that there is a national
security component and there's been a
lot of talk about whether the government
the US government should be taking
stakes in some of these companies like
they have already said they're doing
with Intel. Do you anticipate that we
could see more of this on the US side
and if so why?
You know I I think that there was a note
out earlier today from uh somebody in
federal government saying that that uh
Nvidia is not a target for that. Um I
don't love that. I think that you want
businesses America has done very well
with businesses that are able to grow in
the way that best suits them and not
sort of be beholden to central planning.
Um the Chinese model works for China. I
don't know how well it will work for the
US and I think making that jump sort of
um uninvited by the companies could have
some really negative externalities and
so I don't love that. Um at the same
time DC saying no you're going to see
more of that and we are in a moment
where you know what the White House says
seems to be the the law of the land. So,
I'm sure that behind the scenes
investors and companies are starting to
really think about what's the upside
because uh whether or not you want the
the federal government as a shareholder,
you might be getting it, especially if
you've previously t previously taken
bailout money. All
right, Sarah Coons, managing director
over at Cleo Capital, counting us down
to the closing bell and more importantly
counting us down to earnings from
Snowflake, from Pure Storage, from Urban
Outfitters, from HP, from Crowdstrike,
from Five Below, from NetApp, and yeah,
Scarlet, from Nvidia.
Yeah, that that comes a little bit later
on. So, there's a you know, a drum roll
leading up to it. I'm so
Who is our investor relations people
that scheduled their earnings for today?
You know, they wanted us to be able to
talk about something until the results
came out, right? Um I was just looking
at volume in Nvidia shares right now 32%
above the uh daily average. So that just
gives you a sense of the anticipation
even if the stock isn't doing a whole
lot at the moment.
Yeah, absolutely. And of course that
could change in a big way. And we talked
a little bit earlier that the big moves
in the market might not actually be from
Nvidia. It might be from some of its
wouldbe competitors and some of the
other ancillary names in this space.
Yeah. Whether it's AMD, whether it's
Broadcom, they've been brought up a
couple of times as good adjacent
companies, maybe alternatives to Nvidia.
All right, stick with us. We're going to
break down all of today's market action,
but more importantly, we're going to
fill you in on what Nvidia has to say
with the global simocast that starts
now.
The closing bell, Bloomberg's
comprehensive cross-platform coverage of
the US market close starts right now.
And right now, we are 2 minutes away
from the end of the trading day. Roma
Bostic alongside Scarlet Fu taking you
through to that closing bell with a
global simalcast. Special coverage today
as we're joined by Tim Stenic in the
radio booth as always. Isabelle Lee in
today for Carol Master. Caroline Hyde
the co-host of Bloomberg Tech. Joining
us as well here in the TV studio as we
parse all of the crucial moments of the
day. But forget that. More importantly
here, we're pushing ahead to the big
earnings report coming in just a few
minutes time.
Are you talking about NetApp or Five
Below?
I did that joke just a few minutes ago.
Which one? You did?
Yeah. Thank you.
You know what what's great about this?
You do that joke every quarter.
I do. So I can then I can then come in
and do the joke too and I know you're
going to laugh about it. I am. So yeah.
Well, you know, in in all seriousness,
we're getting CrowdStrike, Snowflake,
Urban Outfitters, HP Inc., and then yes,
Nvidia, but that doesn't come till 420.
So there is going to be a lot of to talk
about ahead of that drop. So Nvidia may
be the star of the show, but all eyes
are also going to be on Microsoft Meta,
Amazon, and Alphabet because those
account for 40% of Nvidia's revenue. And
altogether, those four weigh as much as
15% of the S&P 500. What's been notable
is some of the big reactions we've had
in certain software names and other
areas of tech just on the day. I think
MongoDB up more than 30% after its climb
and numbers. That has a lot to do with
integrating AI within your business
model. How much is Snowflake able to
ride that wave as well? Okay, so those
are the tech names. I think it's worth
noting as well today that you have the
Russell 2000 outperforming the big cap
indexes up about 710 of 1%. That's been
the case over the past month.
Absolutely. Here and maybe that is part
of the rotation. And I think to
illustrate that point, I was just going
back all the way to November 30th, 2022.
That's basically when chat GPT came into
the public's consciousness. 20% of the
gains in the S&P 500. the points 2500
points higher than where it was back
then. 20% of those points coming from
Nvidia alone, pushing the S&P to today.
Yet another record high up 15 points or
a quarter of a percent. 64.81 and
change. The Dow Jones Industrial Average
up 310 of a percent on the day. The
Nasdaq Composite and the Nasdaq 100 each
up about a tenth of a percent on the day
and the Russell 2000 as you were just
mentioning Scarlet outperforming yet
again up 6/10en of 1%. A pretty
broad-based move too when it comes to
stocks within the S&P 500. 343 stocks
gained. They were to the upside today in
the S&P 158 stocks lower.
All right, let's take a look at the
IMAP. The 11 sectors in the S&P 500. A
lot of green there, led by energy, which
is uh up by more than 1%. Tech was the
second best performer, gaining half of
1%, followed by REITs and consumer
staples. The sectors that finish in the
red, they finished pretty much little
change. Industrials, healthcare, and
communication services.
All right. Well, let's go to some of the
stocks that were in the green today.
Caroline mentioned MongoDB. Shares just
soaring today. Actually, the most ever
going back to its IPO in 2017. The
company did report second quarter
results that came in much stronger than
expected. To the upside remain of 38%. I
think we got some earnings coming
through.
Yeah, let's just walk through these
really quickly here. Five Below, the
retailer out with earnings. It beat on
the bottom line. EPS in the quarter 77
cents. The street was looking for 55.
Comp sales up 12.4%. the street was
looking for 9.1% in your guidance here
for the full year. The company says that
it sees netkin income in a range of 253
to 275 and on the sales of basis uh it's
looking at uh net sales of 4.44 billion
to 4.52. Uh the numbers don't matter
here. Basically have beaten a raise 45
below.
All right, let's take a look at NetApp,
one of the other highly anticipated tech
companies, hardware companies in this
case, and its results. first quarter net
revenue meeting estimates of 1.56
billion and it still sees fullear net
revenue at 6.63 billion to 6.88 billion.
So it sounds like it is holding uh it's
maintaining its fullear forecast here.
The stock at least in the initial
reaction is down about 4 and a.5% in
after hours trading. And Caroline, I'm
not sure that this is a company that
gives us much of a read into some of the
uh bigger trendier parts of the tech uh
ecosystem where
it certainly hasn't caught a bid over
the course of the year. We're down about
3% so far year to date when you think
about comparing it to the 35% that
Invvenia has climbed. But look, this is
still about database. This is still
about managing your data and it's one to
watch.
Uh the company's CEO, George Currion,
saying uh in a statement that by helping
customers modernize with cutting edge
and cyber resilient storage solutions.
They've taken the lead position in the
all flash market. He says he's confident
in the company's ability to capitalize
on this momentum and deliver sustainable
long-term growth. Shares in the after
hours down by about 6%.
All right. Well, let's take a look at
some of the other gainers on the radar
as we do expect other companies to
report earnings in just a few minutes. A
reminder to everybody, we're expecting
Crowdstrike, Snowflake, Urban
Outfitters, HP, Inc., and then of course
the big one, Nvidia. Another gainer uh
higher today, Kohl's shares just surging
after the company offered a more
optimistic fullear sales outlook. It
expects comp sales to fall no more than
5% this year. shares to the upside today
of 24%. The company did see strong
performance from back-to-chool
categories. Uh its latest results
suggest that recent moves for for
example focusing on fine jewelry,
improving women's wear are helping win
back consumers. And finally, here's a
statement from the company. We thank our
guests for sharing your voices and love
for Cracker Barrel. And we said we would
listen and we have. Our new logo is
going away and our oldtimer
will remain.
The guy leaning on on the barrel, right?
I guess he's has a name. I didn't know
this. He's called his name.
Oldtimer.
Oh, okay. That seems kind of on there.
It's a little rude, right?
Yeah. Okay. So,
well, investors cheering this. It's up
8% today. What else is there to say?
Our great national nightmare is over.
Yeah, just until the next Just until the
next one starts. Roma.
All right.
What do you got, Asabelle? Slim pickings
for me uh with thoughts in the red but
let's start with James Mucker. Shares
are down by four and a half%. This comes
after the company's first quarter
adjusted EPS and volume declined more
than expected. Net sales also
underwhelmed. Up next is Abberrombi and
Fitch shares are down by just 510 of 1%.
The company boosted their annual
guidance but the midpoint of their EPS
and net sales range slightly trailed
estimates. So its namesake Abberrombi
banner missed on sales but hollister
their beat. I must say that Abbercrombie
has really gotten great. Uh my friends
and I now shop there. Lastly is Fortune
Brands. FBIN is the ticker. Shares are
down after True Securities downgraded
the stock to hold. So Fortune Brands is
a home and security products company.
Truis said that fundamentals have seen
more pressure than we expected partially
due to dramatic declines.
All right. And we keep an eye on yields
here. The yield curve continues its
steepening. though we did see yields
drop across the curve uh mostly on the
low end down six uh six basis points for
your two-year yield and on your 30-year
yield only down about one basis point
scar
okay we have uh earnings out from HP Inc
the ticker HPQ and we can tell you for
third quarter adjusted EPS 75 cents
beating the consensus estimate by one
penny uh adjusted operating margin 7.1%
slightly below what analysts were
looking for in terms of the forecast uh
the company sees fourth quarter adjusted
EPS PS of 87 cents to 97 cents. Analysts
were looking for on average 91 cents. So
the higher end of that range certainly
above the consensus estimate. Uh and
that is perhaps what investors are
reacting to there with the stock up
about 6.4% after hours trading.
Another stock up in the after hours is
Snowflake share surging uh by about 8%
as we speak right now. The company out
with results saying that second quarter
adjusted diluted EPS coming above
estimates at 35 cents. second quarter
revenue at $114
1.14 billion that beat estimates of 1.09
billion. As far as that outlook goes,
the company sees fiscal year adjusted
operating margin at 9%. They saw 8%
third quarter product revenue at 1.13
billion. The estimate was for 1.12
billion. Snowflake sees fiscal year
product revenue at 4.4 billion saw 4.33
billion. The estimate was for 4.34
billion. Once again, shares in the after
hours higher right now by just about
10%.
And it's interesting that Snowflake is
up on the day and we've seen it actually
being up 30% year to date. Think about
the private sector competitor data
bricks which is now worth hundred
billion dollars in the private markets.
This is worth some 60 billion. But I'm
looking at HP as well and remain to this
point. This is an AI story because it's
AIP PCs that are doing particularly well
there. and you're seeing commercial
adoption and actually PCs more broadly
way more resilient than many had thought
thanks in large part to Microsoft's
software outage.
Well, this is what I'm curious about.
We've been talking a lot about the
broadening of the AI trade earlier
today, Caroline. We were talking to an
analyst who actually said he was a
little bit more favorable to Broadcom as
a chip play than Nvidia, but also where
is the use case here? I mean, when are
we going to start to see uh real use
cases for this AI in an investable way?
Is it already there? Are we seeing it
and we're just not paying attention to
it? Where?
I don't know. You tell me. I don't
a student. Maybe you're using it AI.
You know, I actually did use it today.
We We This is This is I I don't know if
you guys know this, but we actually get
access to some of the AI tools recently.
And I'm I It's uh
Have you not done your training, Tim?
Are you not using chat GPT every time
that you're about to go on air and
you're amalgamating your notes and
you're understanding?
This is a true story. I was actually
looking for a Bloomberg economics
statistic and I found it through
ChatGpt. It sent me to the Bloomberg
economics article. There are other chat
on bloomberg.com and yeah, it worked
really well.
You didn't search for it on the
Bloomberg terminal.
I did search.
You did using the generative AI product
that has been entert
that's that's just what happens here.
Look, the big one is coming in about 12
minutes. That's Nvidia 420. We are going
to be glued to Bloomberg TV and radio as
you all should be for instant analysis
and insight as those numbers cross.
Until then, we'll see you tomorrow. Same
time, same place. Maybe we'll be at the
US Open. So, I don't know. Maybe not.
Same place.
Maybe not. Okay. All right. That's going
to do it. We'll see you later.
Stick with us. Our coverage continues
here on Bloomberg Television as we await
those earnings out of Nvidia. The market
expecting pretty solid growth. 50% on
the revenue side, 50% when it comes to
net income as well. a full slate and a
full conversation across in the
investment landscape, including a look
into robotics, wearables, and everything
in between. This is the close on
Bloomberg.
The countdown is on everything you need
Welcome back to the close and our
special coverage of Nvidia's earnings.
The world's largest chipmaker and
inarguably the most important
contributor to US stock market gain
since chat GPT grabbed everyone's
attention three years ago. It's set to
report second quarter results within
minutes. I'm Roma Boston
and I'm Caroline Hyde
and as we wait for Nvidia Caroline,
let's take a look at some of the other
tech names that just reported including
crossing the wire right now. Crowd
Strike.
Yeah. uh the cyber cyber security
company uh basically provide actually
beating on a couple of key metrics but
the guidance may be giving some folks
pause here. The company saying that it
sees revenue for the current quarter in
a range of about 1.21 to 1.22 billion.
The street on average was looking for
about 1.23 billion. So a bit of a miss
here on the guidance and maybe that
could be the story here. But you see
we've gotten results out of Pure
Storage, Snowflake and HP Inc. All those
shares moving higher in the after hours
trade. Yeah, people liking the
resilience in particular when you think
of HPN hardware, liking the sales in PC
in PCs. Look, we thought maybe it was a
pull forward in the tariffs. Maybe we
thought that it was because the Windows
being upgraded, but more broadly, this
is about apparently the AI adoption,
commercial use, thinking that there's a
productivity gain there. So, we do see
resilience and a forecast that looks
pretty good as well. It's interesting
though that Crowdstrike misses on its
forward-looking guidance. Snowflake big
move up 12%. So significant growth there
when you're thinking about the use case
of the underlying data that all these
companies are sitting on at the moment.
Normally Caroline Hyde is the co-host of
Bloomberg Tech. She's going to be
sticking with us here on the close for
the hour as we await those earnings out
of Nvidia along with Caroline Mandep
Singh who is our global head of
technology research at Bloomberg
Intelligence also here in studio 2 as we
await those results. And before we get
to Nvidia I do just want to get your
take on some of the other names that
have just crossed the wire and sort of
what jumped out at you most. I mean
among the software names we saw with
MongoDB last night uh you know any
company on the software side that's
exposed to AI agents is uh putting out
good numbers. Snowflake it looks like
they have pivoted in terms of
integrating large language models and
then building AI agents on the platform
and that's why we saw an acceleration in
product growth. So those are the names
that seem to be doing well this quarter
and it's so important isn't it given
last week's kind of market jitters the
idea that the MIT report had said 95% of
all these tests that we were doing were
flopping but then when you actually see
that people are wanting to invest invest
in Agentic AI and seemingly build
productivity they're sticking with these
companies
it is and look I mean it's going beyond
the infrastructure and picks and shovels
to production uh when it comes to AI
agents nobody knows what the ROI maybe
you know 12 months from now so it's
still early days but clearly there are
projects that are going to production
and that's why these companies seem to
be doing
just real quickly Mandy what do you what
you want to hear out of Jensen not out
of the earning statement but when Jensen
Wong actually uh steps up there for the
conference call in in about an hour
I mean to me it's training versus
inferencing Nvidia so far has benefited
from training every version of their
model is like 5x increase in compute
required which is what has translated it
into their growth inferencing. Jensen
said they have a 40% share. So, uh, when
it comes to the use of their chips, I
want to see how much that token count is
growing because Google is the only one
that has shared the token count growth.
980 trillion per month. Microsoft has
also shared token count, but we know
Google is TPUdriven. They don't use
Nvidia. So, from that perspective, I
really want to see how much inferencing
share has grown for Nvidia.
Five minutes to go. Mandep Singh is
going to be watching eagle-eyed to those
numbers. Of course, he'll be giving us
his intelligence at Bloomberg
intelligence. But let's dive deep into
our next perspective now because
apparently according to our next guest,
we are expecting from this report quote
likely some near-term story remaining
intact. Joining us to discuss Lindsey
Bell, chief investment strategist 248
Ventures. You own shares of Nvidia, a
very very small allocation to your own
personal investment. But I'm thinking
more broadly as you're consulting for
businesses, as you're thinking about the
stickiness of Nvidia as the most
valuable company in the world. Lindsay,
how much does Jensen have to beat and
raise here? How much do we think about
the future trajectory, not just of
Blackwell, but of Ruben?
Yeah, you know, I think he has to beat
the whisper numbers and we're looking
for about 55 billion on revenue in the
third quarter. That's the whisper
number. I'd like to see the outlook come
in better than that. But I do think it's
really important because it's not just
is the AI spending boom going to
continue. This is a story about the the
US economy in the near term too because
tech has played a critical role in GDP
growth. We saw that in the last couple
quarters and we're going to need that to
continue while other companies uh uh
trans translate into into AI into their
workforces and into their businesses. So
I think it's a really important um
business going forward.
When we talk about I guess how Nvidia
certainly didn't build this ecosystem,
but they've been the focal point of it
for the last couple of years. Lindsay,
how does this broaden out? I mean, no
one is doubting that AI is here to stay
and it's going to have a meaningful
impact on our economy and our markets.
But how does it broaden out?
You know, I think it has to broaden out
across all sectors. If I look at S&P 500
earnings expectations for 2026, we're
looking for over a 100 basis points of
operating margin expansion in 2026 to to
margins that are in the 17 18% range.
These would be new all-time highs. Of
course, tech and communication services
are going to be huge contributors to
that. But analyst, Wall Street, we are
expecting to see productivity gains
across sectors here and AI is going to
play a very critical role in it. So
right now of course it's energy and
utilities software as as you guys were
talking about we're seeing starting to
see some of those companies actually use
AI to their advantage. Um so that's a
benefit too I think cloud computing. So
we're still in the you know we're moving
just past the porks and forks and picks
uh as your analyst just said there but I
think we have a long way to go to really
improving the consumer experience
and then you fold in geopolitics. How
much are you going to be digging into
the numbers when it comes to China
exposure? China growth and how much
that's forecast by Jensen Wang and
indeed the rest of the street.
Yeah, I think that look, the street is
giving Jensen a pass on China for this
quarter. Next quarter, they're not
expecting much. Uh Wall Street in
general doesn't have much in terms of
China revenue expected in the year
ahead. So, anything on top of that is
going to be gravy and I think that'll be
an important thing because Jensen has
been a believer in the Chinese market,
$50 billion market. Um, and so I think
it will be a positive for investors, but
I think really what's going to be more
important than China is really just
understanding and a reassurance that
demand is outstripping supply in this
space.
All right, we're in conversation right
now with Lindseay Bell, chief investment
strategist at 248 Ventures. She's
sticking with us as we await those
earnings out of Nvidia. I've talked a
lot about the percentage growth that
we're talking, but you talk about
historically, you go back just a few
years ago. This was a company generating
maybe 10 to 20 billion dollars in
revenue per quarter.
Announce it properly.
That's going up to about 50 billion
based on expectations right now, which
is a behemoth. A $4 trillion company. 46
billion in revenue. That's what the
street's expecting. That's insane.
And since then, people have been
flocking to have Jensen Hang sign their
t-shirts. He'd been wanting to get
little bit of of the magic that he's
brought to the world of generative AI
and it's whether he can deliver that
magic in the face of geopolitical
tensions. Whether he can deliver the
magic in the in the face of a $4.4
trillion most valuable company valuation
and how he manages to basically live up
to what has been hype. We've had some of
that hype pulled back in the last week
when it comes to actually applications
of that generative AI. The MIT report
for example,
there's been a lot of talk about the uh
exposure to China. We should point out
revenue uh from the China Barauder China
is only about 14 15% of re 13% of
revenue but there's a big concern that
if they're not able to sell the H20
chips or any other chips any other
advanced chips in that market that that
could be a ding on valuations
and will he speak to a Blackwell like
product going to China the B30 that's
where everyone's attention is so far
been trained because President Trump
himself hinted at it saying I'm
expecting Jensen Huang to come back I
want to renegotiate on that remember the
US government now takes a 15% clip of
any H20s that are indeed sold. The
question is the information report said
he stopping their suppliers. Is that
because of lack of demand? Is that
because everyone wants the next better
product and would that be some sort of
blackwell architecture that is then
managed to be sold into China?
And as we talk about the idea of the
importance of Nvidia to this market, we
should point out it's kind of been a
mixed bag in terms of the market
reaction to their earnings. Last few
quarters is kind of like the next day
reaction has been down then up then down
then up. has not really been a linear
straight line despite the fact that if
you do a long-term chart, of course, we
know that it is kind of a straight line.
And how much of that is because you've
had outsized retail implications in
previous iterations? We know according
to Goldman Sachs's reports that actually
the retail stake in this name has been
pulling back the amount of exuberance
around it. Institutional remains very
committed and we know that market cap
has continued to improve. But this is a
company that whiplashes on the original
headline, but then you do the dig
deeping and then you hear from Jensen
Wang and he steers us as to the
longerterm forecast whether that remains
resilient.
A lot of volume right now here in the
after hours trade. The shares up about a
percent as we continue to weight those
earnings. Those earnings now crossing
the wire right now. Nvidia saying that
in the most recent quarter it reported
EPS of a$15 per share. I'm going to get
you uh the comparison on that on the
revenue side. $46.74 billion in revenue,
a 56% jump and relatively in line with
estimates. Data center revenue 41.1
billion up 56% in line with estimates.
Gaming revenue if you care 4.3% up 49%
uh just slightly above what the street
was looking for. Your adjusted gross
margins coming in at about 73% 72.7%
to be precise here. And free cash flow
in the quarter 13.45 45 billion here.
And here's your forecast. The company
says that for the current quarter,
Caroline, it sees revenue of $54 billion
plus or minus 2%. The street was looking
for 53.46
billion. So if you take that plus or
minus 2% here, maybe a slight
disappointment.
There were no H20 sales to China based
customers in the second quarter is what
we go to in the statement. Invineia
benefited from $180 million release of
previously reserved H20 inventory from
approximately $650 million in
unrestricted H20 sales to a customer
outside of China. So interestingly that
was taking up outside of China because
remember for most of the quarter they
were unable to ship to the country.
They're talking in the statement about
Blackwell is the AI platform that the
world has been waiting for delivering on
exceptional generation and leap. The
production of Blackwell Ultra is where
he's talking about that ramp of full
speed. How much is that bringing in more
broadly? But really this is in overall
he says the AI race is on and Blackwell
is a platform at its center. The
question is will they make a Blackwell
architecture for China and what would
sales look like there?
That is going to be a big part of the
question. We should also point out the
company is announcing a $60 billion
share buyback but that's not doing a
whole lot here to drag the shares out of
the red. The knee-jerk reaction to the
downside. Matt Bryson, he joins us right
now. managing director of equity
research at Wed Bush Securities covering
the hardware sector. Now, I do want to
start off with the China numbers here. I
guess it's not a total surprise that we
didn't see any sales there. But does
this give you concern longer term about
what their ability to uh uh to have
access to the Chinese market will be?
No, I I mean I don't think so, Roman.
They they they weren't allowed to ship
to China last quarter, so and they they
told us they weren't going to have any
revenue to China. I I think it really
depends more on what they talk about uh
for an outlook and and actually the the
lower the expected China number is in
fiscal Q3 the the better off you are in
the sense that uh the less contribution
they're expecting from that geography so
that the better their organic growth
looks if you if you will
I think more broadly talk to us on a
quarter byquarter basis and a
year-by-year basis look m the market had
basically frontr run this in many ways
Last week you had nine analysts
upgrading their expectations. This week
alone on Monday you had two extra
increase their price targets. People
were anticipating good numbers. Was this
beat not enough more broadly? They're
coming in line for their fiscal second
quarter and basically in line for the
forecast as well.
I I mean the the market's telling you
that that that expectations had lifted a
bit more. I was one of those analysts
who who who upgraded my price target
last week. Um, but something to think
about here is Nvidia almost always
leaves or over the last few years
they've left something on the table and
that that something has consistently
been, you know, 23 billion. So when the
guy to 54 billion, what it seems like
they've been telling the street is more
like they can do 56 57 billion, I don't
think anyone's going to be disappointed
if at the end of Q3 they're coming in at
those type of numbers. Uh when we talk
about uh the idea that this is still a
company obviously generating a lot of
revenue, a lot of cash flow and
incredibly healthy margins particularly
for a company its size, Matt, where is
the growth story for this company longer
term given uh just how outsized that
growth had been over the last three
years and what is sort of a growth rate
that you're comfortable with?
Yeah, so I it's I think the growth story
is pretty clear. It's right now uh we
are testing these really large models uh
and that's where a lot of NVIDIA's
revenue is coming from. Um but going
back to that that MIT MIT report only 5%
of companies are realizing value I I
think the growth comes from both
businesses and consumers
bringing inference into their workloads.
Um, right. So, getting real applications
out of out of uh generative AI, that's
what that's what drives revenue.
What's interesting is when you go into
the statement and they talk about all
the wins they've had in the previous
quarter revealing model builders across
Europe and the Middle East, they're
talking about sovereign AI. They're
talking about adoption in European
nations, France, Germany, Italy, Spain,
the UK. Matt, how much do we need to
hear Jensen Hang really articulate
sovereign AI versus this dependency of
about 40% of their revenues on those few
hyperscalers?
Um, I I I think I think sovereign AI is
really important. I think it's really
important in 2026, right? Roma was
asking me how how they get to growth
numbers. Um, you know, I I think they
can do well over 30% growth next year
and I think Sovereign's really an
important part of that. Um I I think
Jensen talking to that is important but
I also think that people have made those
commitments that the part of the reason
that that Nvidia
you know is kind of a safe investment
here is there will be more model
building next year. There will be more
data center spend next year. The real
question is by the time you get to the
end of 2026 do we begin to see those
inference applications show up to drive
more data center investment as well as
more consumer investment. Um, and I
think that's where 2027, 2028, those
legs of growth come from.
All right, Matt. Uh, great stuff. Matt
Bryson, managing director of equity
research at Wed Bush Securities. We
should point out, you see the shares
lower on Nvidia down about 2%. AMD also
moving lower. Uh, uh, Taiwan Semi, its
ADRs here in the US also moving lower.
In fact, the entire chip ecosystem
starting to take a leg down. And we're
actually seeing futures on both the
NASDAQ uh and the S&P also dipping into
the red here uh erasing uh the gains
from earlier today.
Still with us, Lindsay Bell, chief
investment strategist at 248 Ventures.
Lindsay, look, too much in line, not
enough of a beat coming in terms of
their fiscal second quarter and their
forecast. What is interesting is that
they are not putting within their
guidance, within that outlook any H20
shipments to China. So, how much are you
going to be listening out to what the
next iteration is, whether it's a B30,
whether it's some sort of new offering
to China, if indeed at the moment the
Chinese government is saying, "We don't
want your H20s."
You know, I think that's absolutely
going to be part of the story. Jensen
Wong is going to have to address that on
the conference call. And what I'd like
to note is while the stock is down, it's
not down as much as options markets
thought it could go. You know, there was
a potential for a 6% move here. So, I I
think once we get the conference call
going, this stock could potentially turn
around. We've seen that happen in the
past, but it's absolutely in the year
ahead, it's going to be about um
innovation. It's going to be about uh
continued growth and and an AI
revolution and boom that is able to
continue. So, I think that he's going to
be able to tell that story in a way. And
I love that you pointed out the
sovereign AI story because he likes to
point to these other areas of revenue
growth even though the hyperscalers do
account for about 40% of their revenue.
So, I think there's a bigger story to
tell here and I think he's going to do a
great job of of of doing that uh in in
the call
and that is one of the reasons of course
why so many people gravitated to this
stock not just uh because of the
business itself but more importantly how
it's been run when he gets on that
conference call uh at the top of the
hour here Lindsay there are still going
to be a lot of questions uh about state
craft about the government involvement
in the chip sector here in the United
States about the competition potential
competition I just say maybe coming out
of China I I know it doesn't necessarily
have to be a worries per se, but I do
wonder how you think he will try to
navigate investor expectations with
regards to it.
Yeah. No, there are definitely going to
be questions that come up because if
China is able to come back online, we we
restart H2 uh revenue. Uh I think it
it's going to be there's 15% that's
going back to the US government. So, how
is that impacting their sales? But also,
like you said, he's he's does such a
good job of walking the line. And I
think it's just going to be important
for investors to know that he's working
with the government both here and in
China for the best optimal outcome for
investors. And so that's really what
we're looking for.
Lindsey Bell, chief investment
strategist at 248 Ventures. As we keep
an eye on Nvidia shares and she made a
good point here. The shares were down
about 5% now only down about one and a
half and you're going to get this
volatility. uh the knee-jerk reaction
Caroline of course as we await the
conference call and maybe things start
to smooth out there but quite a few
other names in the broader tech space
and AI space are moving as well
they are and you've got to look at
what's related to them in the United
States whether it be a palenteer on the
downside as you can see we currently got
Microsoft only off by about 210 of a
percent key smick super microcomput is
another US name that's off by 1.4% 4% if
you're looking to China. Smick is we
we're likely to see in after hours start
to underperform maybe. But coreweave
remember coreweave is a key one that is
all about offering of cloud and more
compute more broadly and they of course
are a big buyer of Nvidia chips. So core
weave is on the downside too
and I just love this board here that we
have up. If you have a Bloomberg
terminal, you can actually run the
function yourself and you can see the
concentration right now of Nvidia's
revenue amongst these four companies.
Those four companies alone making up
somewhere around 40% of its revenue in
the most recent quarter. A lot of
questions about whether that
concentrates even further or whether it
even starts to broaden out. That's also
the big question for the AI trade writ
large. And our Bloomberg opinion
columnist Jonathan Leven has been
writing about this for quite some time.
And Jonathan, when you take a look at
the broader market, particularly over
the last two, two and a half, three
years, if you will, and how Nvidia has
basically been kind of the all or
nothing catalyst for those gains, is
this it? I mean, have we kind of reached
the peak of that trade?
You know, there's a risk here. There's
clearly a risk here because if you look
at the uh the consumption story, US
economy for instance, if you look at
something like uh inflationadjusted
personal consumption, it has not been
great. It so far year to date here. Uh
and so it really has been these AI names
uh putting the market on on on their
back. Uh and you knowif guiding for 54
billion uh in revenue is is not too
shabby. It's possible that they can uh
continue to do that. But you you see the
nervousness here at the at these levels.
The fact that uh they came out with with
this number uh it was just around
expectations and the knee-jerk reaction
is a pullback. But can I just bring up
one thing though on that because I mean
part of the concern I mean you mentioned
the 54 billion and like I said in any
other environment that would be nothing
uh to sneeze at. But we're talking about
a company that is the world's most
valuable $4 trillion market cap. $50
billion in revenue doesn't even rank it
in the top 10 in terms of the largest
publicly traded companies out there.
Similar story on the profitability side.
It's a profit juggernaut but again it
doesn't even rank in the top five. Yet
it's been ascribed this valuation that
says maybe it is a top five or top one.
Why?
It's all about the it's all about the
growth story. I mean you know the the uh
the story that we can we can tell here
the fairy tale if if you will uh remains
uh somewhat infinite. But you know when
we when we get reports like this uh it
sort of chips around the edges of that
of that fairy tale. this this idea that
the sky is truly uh the limit. And you
know, all it takes in some sense is for
the market to uh come to the real the
realization that this management team,
this company are uh basically uh bound
by uh you know earthly uh earthly uh uh
profits and so forth. And it can change
a lot. Well, if you call a 70% margin
earthly profits and if you call actually
a nice little $60 billion additional
buyback as well and that still doesn't
move us. Jonathan Leven of Bloomberg
Opinion will be sticking with us. We'll
come back to you in a minute. But look,
let's turn our attention to the ways in
which Nvidia's technology is actually
being used. It's AI powered robotics.
Miso's mission we're going to talk to is
about modernizing restaurant kitchens
around the country by automating the
most dangerous, least desirable tasks.
If you go to a White Castle or a Jack in
the Box, one of the Flippy Fry Station
robots may have helped with your order
Roma. Miso robotic CEO Rich Hull is
joining us now because look, you are
using Nvidia's technology. You are using
some of the work that they've done to be
able to bring data sets to robotics more
broadly. Where is the growth story in
that? I'm looking at the numbers and
you're seeing just a 3% growth more
broadly in the automotive and robotics
side. $586 million. Nowhere near data
centers, but the growth trajectory for
the future is there.
Yeah, I think you're right. I mean,
obviously, Nvidia has solidified its
place in the center of the AI ecosystem.
Now, I think it's about what do you do
with that AI to really innovate and
drive additional revenues. And I think
robotics is at the tip of the spear of
that. Robotics is really a force
multiplier for AI. and Nvidia is really
right at the center of that as well
through things like the collaboration
that they're doing with us at MISO that
really combines kind of the best of AI
and the best of robotics into what we
are calling physical AI. It's where AI
meets the physical world and and
obviously Jensen has been very vocal
about what he thinks the opportunity is
in AI. He's called it a multi- trillion
dollar opportunity, the biggest industry
of our lifetime. And so we're thrilled
at Miso to be part of that right on the
leading edge with Nvidia.
You're using Nvidia Isaac robotics
platform. I mean there are hundreds of
other partners that are using robotics
and their technology more broadly.
You're doing it in the restaurant case.
But I'm interested as to how the money
moves when you're actually helping drive
the innovation in some ways by getting
that underlying technology into the real
world. Do you pay Nvidia? Are you
technically a customer or how much is
this a partnership?
It's a great question. And Nvidia looked
all over the restaurant technology space
and when they lined up all the players,
they chose Miso and only Miso. Uh
because really what we do we is we're
the first mover. And so we're
modernizing the commercial kitchen in a
way that has just never existed before.
Commercial kitchens have operated the
same way for 50 years. The front of the
house innovated probably 20 years ago
with the onset of Open Table and online
reservations. And the former president
of Open Table sits on our board. So he
talks about that moment a lot. But today
the innovation is happening in
restaurants and so Nvidia has partnered
with us and they share a lot of their
leading edge technology with us and only
us and we go back and forth and we help
each other innovate. So
so you pay them
we don't have to pay for that which is
really great.
So when we talk uh Richie about this
idea of kind of where it goes next and
this applied AI and the idea that it's
already here as we kind of see already
with your product and some competing
products here. What does that expansion
look like? because there is also an
issue not so much of whether it's useful
or functional but also about the cost
effectiveness of it and I am curious as
to where that price point is right now
for uh whether it's retailers,
restaurants, whatever and whether they
could even afford this at a mass scale
at least in the here and now.
Yeah, you know that and that word
applied AI is a really great term for
it. You know, I think the foundational
model race in AI is pretty much over. we
know who those winners are going to be
and now it's about how do you take those
foundational models and apply them to a
specific industry. So for us when we
think about restaurants there's a
misconception out there in the
marketplace that restaurants need
millions of dollars to modernize their
kitchen and just that's not true. Flippy
Fry Station which is kind of our
signature robot that a lot of people
already know costs a few thousand a
month. And so one of the things that we
do is we spend a lot of time working on
ROI analysis uh for our restaurant
partners so that they know the return
that they're getting on that few
thousand a month. And in most cases
they're paying for those few thousand a
month in simply the labor savings alone
and then driving additional net new
profits off of that around speed of
service and reduction of food waste. And
you're never going to get rid of humans
in restaurants.
But you want to deploy those humans to a
place where they're bringing far more
value than just a repetitive dangerous
task like the fry station.
Well, one reason I ask that you talked
to a lot of CEOs of companies that that
are utilizing things like this, not
necessarily your product. And the big
concern they've had is that some of the
upfront costs may be manageable, but
there are longerterm costs and the
return on those costs that at least they
don't feel is commensurate with maybe
what they would have gotten had they
just used, you know, human labor or
whatever mix of labor and technology
that they had before. So, how do you
sort of sell that to them on a long-term
basis that the ROI goes up or the cost
goes down and that ROI goes up long
term?
It's a that's that too is a great
question. And look, the reality of it is
the challenge that restaurants are
trying to solve is labor shortages and
labor costs and labor quality, but
especially labor shortages. There was a
lot of publicity during the pandemic
about restaurants having a hard time
hiring staff for the back of the house.
Everybody thought that that was
temporary. Turned out to just accelerate
something that was already happening and
it's permanent. And with birth rates
being so far down, there's just not that
many teenagers to work in their first
job at the fry station. And so, you
really have no choice but to automate
that if you want to survive at scale in
the restaurant business. So, it's not
necessarily about um you know uh
long-term ROI. It's just long-term
survivability. Yeah. Uh really what
they're trying to to solve for. And that
creates a lot of tailwinds for us in the
market.
All right. Well, Rich, a great point.
Got to leave it there. Rich Hole. He's
the CEO of a company called Miso
Robotics. Of course, partnering with
Nvidia and as he said, AI is here. It's
applied AI. We are moving into the next
phase of this trade. And that next phase
is probably going to include AI enabled
wearables. Our own man Deep Sing of
Bloomberg Intelligence saying that
Alphabets made by Google event just last
week could drive demand as its AI models
make progress on pairing with other
tech. Now, our next guest, he has a
Chinese company. They just lit up Times
Square for the global launch of their AI
enabled eyeglasses. Zoro Shiao is the
global general manager of a company
called Rokit and he joins us here in
studio 2 and I believe wearing said
glasses. How are you?
Hey, great. Thank you. I'm Zoro.
When we talk about the glasses that
you're wearing?
Yes.
How useful are they for just regular
people? What would I use this for?
Yeah. Um I used for right now I use for
to uh translation actually I can see the
uh English translation Chinese to my uh
in my eye.
Mhm.
And also I can use the teleprometer like
uh use this one also I can see the uh
teleprometer in my in my eyes.
This has been when we talk about the use
case
uh for regular people to use AI
translation uh being able to recognize
people and names and things like that.
How reliable is that technology right
now particularly within the Rokit
ecosystem?
Um I I can see uh three main users. Uh
the first one
three million
Yeah. Yeah. Yeah. Yeah. Your users. Uh
the first one I think the content
creator. Yeah. Uh they can use uh
glasses to take video, take photo uh the
worker more efficiency. The second uh
just like me uh as a global businessman
or global traveler. Yeah, they can use
their translation or and other functions
and uh there another uh somebody uh I
think the uh disabilities their hearing
or seeing kind of view they can use our
to improve their uh life quality.
You're actually only crowdfunding at the
moment. what 600,000 I think has been
raised.
Just how are you going to compare and
compete with Alphabet which ultimately
has unlimited money to be able to put to
work for this as does Meta. Meta is
flying off the shelves. Yes. You don't
see anything in the glasses thus yet,
but you're hearing about Alphabet
bringing out the latest and greatest in
the next year. Apple of course maybe
analyzing this. You're a Chinese company
trying to access a US retail user right
now because are they going to want your
product? Uh this is the um good
question. I can see um uh
we
uh sorry I can see that
uh like meta or
Google is a very gent company. We are
start company. We have three unique
strength of of us. The first one um I
think our OS our developed OS is more
open. Our system is more open. Uh we can
you need our users to uh choose the like
your air model. Yeah. If you use rib
meta you can only use the meta air
model. If you use the Google your Google
glass you
but you think US people will want to use
a Chinese model.
No no no no. We are open the ecosystem.
Uh uh people use uh the user in US can
choose CH GBT GI and uh uh also any uh
you can try choose anyone you want you
you like. Yeah.
Well, we understand that you got 15,000
developers, 5,000 corporate developers
in China, but you're bringing in a
thousand overseas developers onto the
network. Zoro, it's been great speaking
with you. Thank you. Lighting up Times
Square today. Zoro Shiao, of course,
global general manager at Rocket. Let's
take a look at some key movers though.
We we're talking about the application
of Nvidia's underlying technology here.
Remain the question for the last week
has been whether or not it's being
applied usefully in the corporate world
and the MIT study put everyone a bit on
edge about that. Now we think about some
of the competitors and the underlying
providers to an Nvidia were currently
down because basically they met
expectations. When you think about their
numbers,
they met expectations, but this is what
I've been curious about and you covered
this a lot uh on on Bloomberg Tech. the
idea that we've we're moving from the
picks and shovel phase to the actual use
cases, right? So, is it gonna is this
just going to be sort of an enterprise
function where companies internally find
ways to boost their productivity? Is it
going to be something like glasses where
I can go overseas and uh you know, I
don't speak Mandarin? I make can I go to
China now and and just walk around and I
don't need a translator. I can just wear
glasses. Is that the future? That's Mark
Zuckerberg's future and that's certainly
why he wants to win the super
intelligence race because he thinks that
we're all going to be interacting so
much more with large language models
with generative AI whether it's going to
be on our bodies in terms of hardware
that's where they're plowing into that
particular part of the business.
It raises another question and I want to
bring Jonathan Levven back into this
conversation or Bloomberg opinion
columnist. It raises a lot of question
too about the kind of the difference
between real applicability of this
technology and the hype behind it. And
she mentions uh Meta and Zuckerberg. I I
feel like they've done glasses before.
So I'm a little confused as to where
we're going now. But but is there an
investable case right now, Jonathan, for
a practical use case, particularly on
the consumerf facing side of this
technology?
Yeah, that's the big question. Uh so in
the near term there we know that there
are extraordinary things going on all
over the place but there's uh you know
basically one massive company that is
making a ton of of money off of it right
now. For so many others the question is
okay you're showing me things that I
didn't even think were possible like
four years ago but how are you going to
monetize it? And then the next question
subsequent to that is for all of those
companies that aren't even directly
involved in this business. It could be
uh you know your neighborhood store or
whatever. Are they going to somehow uh
reap extraordinary uh productivity gains
through all of this? probably a lot of
that stuff is years and years uh in the
future and probably uh you know we're
going to go from mass hype to a little
bit of a trail of disillusionment in the
the gardener hype cycle in in all this
before we we get there. But the fact
that we can still dream about this stuff
uh really does wonders for valuations.
Are the glasses you're wearing right now
are those smart glasses or just regular
ones, Jonathan?
I I wish there were smart glasses otherw
otherwise I would have smarter answers
for you.
You're smart enough at the moment
Jonathan. I mean in the here and now I
think what more is at the key issue and
at the heart of investors right now is
how much we're seeing geopolitics affect
the business of these companies. It's
only been a week since we understand
that the US government is taking a 10%
stake in a chip manufacturer because
they want to make it domestic in focus.
limitations in terms of exporting into
China and at the moment so negative are
they on the outlook for this that Jensen
Hang has not baked in in any way to
future guidance what H20 sales might be.
How much do you think companies are
having to really navigate a very
difficult context for analysts to get
their head around and indeed for us to
really plan out what demand ultimately
looks like?
Yeah, it's you know it's so tricky and I
think what's trickier still is the fact
that uh the situ the the uncertainty
around geopolitics is really bad but
from a rate of change standpoint it
seems to be getting modestly better uh
and so the market has has sort of
treated it uh thusly. It really seemed
like the peak of the uncertainty was
that early uh April uh tariff move and
there have been totally wild things that
have happened uh in the interim. But it
feels at the very least like uh the
uncertainty the sense that anything can
happen with your supplier base and even
your customer base that has uh the
volume on that has turned down a little
bit. So at least we're moving in the
right direction here. stock of Nvidia
right now not moving in the right
direction if you're long it Jonathan
Levan of Bloomberg opinion sticking with
us but now let's turn our attention to
sort of the impact this is going to have
we've talked about whether it's on you
wearing smart glasses but what about you
in the workforce a new study from
Stanford showing the AI is disrupting
that workforce making it harder for
entry- level workers to find jobs in
fields like software development like
customer service joining us now to
discuss Dr. Kelly Moahan, managing
director at Upwork Research Institute.
You lead the research on remote
workforce strategies. It's so
interesting when you talk to CEOs at the
moment. We're not just hearing about
generative AI being offered in their
applications and in their offerings to
customers, but it's how they're adopting
it in their own workforce and how
they're trying to basically minimize
future hiring potentially or indeh
productivity. What are you seeing,
Kelly?
You know, I think the one thing that I'm
seeing a lot is I think AI is being used
as a scapegoat to explain a much broader
labor trend that has actually existed
over the last couple years. I think AI
is actually an accelerant right now to
some of that pullback that we're seeing,
especially in software and tech. And I
saw the Stanford study and I think the
one thing that's really important to
keep in context is the software and tech
industry is such a small sliver of the
actual labor market. If we look more
broadly, we heard the gentleman before
the restaurant industry, hospitality is
actually in a labor shortage. And so I
think we're overfocused right now to be
honest with you on the impact it's
having on tech. And it's going to impact
tech first just like robotic process
automation did just like the internet
boom did. We're going to see those
entry- level roles begin to be disrupted
and then over time evolve because the
technology is going to actually make
that bar much higher to go into and be
able to enter those those professions.
Okay. So at the moment in the here and
now we talk a lot about disruption
within customer services. We even hear
about those than coding and time and
time again Sam Alman saying look GPT5 is
really great if you want it to code
alongside you but where next what is the
next area of concern or indeed of uplift
and indeed into your network's name up
work
yes absolutely so I think if we look
only at the full-time labor markets we
may be missing the broader trend that's
happening here so part of the longer
term trend that we've seen in the labor
markets is that companies right now in
the midst of much uncertainty need
agility and they need to really be able
to hedge their bets. And one of the best
ways to do that is actually begin to
look at alternative talent pools, the
freelancer market. And so what's
interesting to me is I look at our data
on the freelancer platform globally,
we're actually up right now in customer
service. We see greater demand in uh
virtual assistants as well. And so what
I think is happening to some degree is
as AI is putting some pressure,
companies are also beginning to look at
the freelancer labor pool as a way to
start to build this AI human
collaboration to really begin to hedge
their bets and navigate this
uncertainty.
That raises the question though about
the idea of the longer term commitment
to this. When you look at that type of
uh utilization on your platform, am I
reading too much into that to say that
some of these companies are maybe still
a little bit on the fence? Is this just
kind of dipping their toe into the water
and hoping that once they actually do
see a return, maybe they look for
something more permanent?
I think it's a great question and I
think time will tell to be honest with
you of will we see an actual rebound. My
sense though is after looking at the
organizational design and labor markets,
I think we're actually going through a
pretty profound structural shift. We
know in many ways we've seen some of the
softening occur like we've mentioned in
software and tech and like the Sanford
study found but I think we actually have
greater demand emerging whether that's
coming from the content creator economy
is actually feeling a lot of this growth
and they're very bullish on using AI
tools and I would just like to say too
as we think about our market we serve a
lot of the small mediumsiz businesses
and we actually see them pretty bullish
going into Q4 their number one concern
right now um we do a lot of survey work
to understand this is talent acquisition
and talent retention
and so I think it really depends. It's
so contextual right now and I think we
have to be careful to overgeneralize the
impact AI is actually having.
What's the expertise of the folks coming
to the platform right now? And I asked
that I know AI itself isn't new but
certainly in the public conscious it's
relatively new and I would think uh and
correct me if I'm wrong that there would
be a somewhat finite supply of highly
skilled highly experienced people in
this space.
Yeah. So one of the very first things
that we're seeing continue to grow to be
honest with you is machine learning. And
as you mentioned, machine learning has
been around for a while. So we have very
highly skilled populations that have
been on our platform for a while
choosing to work differently because
they've been skilled. And I think one of
the things that most people don't
realize is our labor market in really
freelancer markets that are servicing
skilled work actually are two times more
likely to have a postgrad degree. And so
in some ways if you're highly skilled
today, you're able to work alongside of
AI, you've got a postgrad degree, you
may be choosing flexibility and the
ability to do that and work on your own
schedule. and actually in many ways
probably earn more wages as you're able
to command your own rate. And so I think
there's a shift going on. Again, I think
there's optionality and choice happening
for those that are highly skilled. We
know 52% of Gen Z as an example is
choosing to engage in some level of
freelancing. One in four Americans right
now are actually engaged in some level
of freelancing. And so I do think this
is a broader trend and signal we have to
pay attention to. Again, time will tell
if we have a rebound in some of the
entry-le full-time hiring, which I don't
think is a bad thing. I think these
could be two complimentary parallel
paths that would be very good for the
economy.
Kelly, I want to bring it down to the
here and now, which is we're all
obsessing about Nvidia's numbers. We're
obsessing about whether or not there is
hype built into the application of the
compute that Nvidia provides. From your
perspective, is there hype built into
this labor market?
It's a great question. And if I'm going
to be honest with you and frank, I do
think there's a bit hype. You know, if
we actually look at the numbers and we
look at the labor market, we've seen
small slivers of some structural changes
and growth directly attributed to AI, I
think this is going to be a long-term
transformation. It's going to take time
for organizations just like the MIT and
study that came out showing that many
organizations are struggling to figure
out where to fit AI and whether or not
they're getting the ROI from it. I do
think this is going to materialize and
create new value creation. I think the
opportunity here isn't just efficiency
and productivity. I think the real
challenge here is how do we actually
create new value from this technology. I
think that's where a lot of leaders
heads are at and that's not going to be
a today or tomorrow fix. That's going to
be a longerterm horizon before we
actually begin to see that full labor
market shift and evolution and
ultimately that new value companies can
create.
Dr. Kelly Monahan, managing director
over at the Upwork Research Institute. A
great look here at the job market right
now when it comes to the AI trade. And
speaking of that trade, Nvidia Shar is
down here in the after hours uh session
here as we await the start of that
conference call at the top of the hour.
Jonathan Levvin is still with us. And
Jonathan, I want to bring you back into
this conversation and talk a little bit
more about the valuation on Nvidia, a
stock of course that is trading at
something like 40 50 times its forward
price to earnings ratio. But you wrote a
column today pointing out something that
I hadn't really noticed that if you look
at Costco, which a lot of people would
consider a value stock, its multiples
are actually a little bit worse, if you
will, than Nvidia's.
Yeah. Ex. Exactly. You know, when I talk
to people about valuations, the truth is
I I find it somewhat easier to defend
Nvidia's valuation than I do some of
these retailers because at least you can
tell an incredible growth story and and
you could say, well, the the multiple
might look rich now, but you know,
compare it to my estimate of 2030
earnings and somehow you you magically
get to something that looks totally
sane. But with some of these uh these
retailers, especially Walmart and
Costco, it's much harder to get there.
You know, they have uh sort of inflected
into a slightly higher growth regime,
but they're basically mature companies
with massive footprints. They simply
cannot grow much much faster than the
economy itself. And yet, we are giving
them these extraordinary multiples. And
in some ways, this this is sort of the
argument that I make in my column. That
seems to tell us something more in terms
of where we are from a frothiness
standpoint than Nvidia does itself.
Nvidia, if you're looking at a blended
forward 12 months, is actually only 33.
And in comparison to a Palanteer, for
example, it's absolutely nothing. If you
think about overvalued and rich and
actually it's relatively low in terms of
its overall valuation on a PE
perspective from previous years that
we've seen gone by. I'm interested more
broadly about how Nvidia lives up to
expectations. Now, when we're expecting
still the growth of applications and use
cases here, we are anticipating
generally revenue to slow down. Then
that's an okay thing because it's from a
$4 trillion market capitalization
perspective.
Yeah, 100%. And you know, I got to say
uh I'm still basically a believer in
this company's story, but I I do wonder
about where we go over the next month.
You know, September is typically a
tricky month for the for the stock
market. The end of the Nvidia earnings.
Hey, Jonathan, I'm sorry. I'm just going
to interrupt you right now here. I'm
sorry. Jonathan Levvin over at Bloomberg
Opinion. Some new headlines right now
coming out of Nvidia. This on some of
the comments about whether the
government would take a stake in the
company. Nvidia has said that a request
for a percentage of revenue by the US
may lead to litigation. Stick with
Bloomberg. We're going to continue our
coverage here of Nvidia's earnings. That
conference call that starts at the top
of the hour and the latest headlines.
Nvidia commenting on the US government's
involvement in taking a percentage of
its revenue.