Chapter 1: How did Nvidia become the first $5 trillion company?
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This is Bloomberg Tech. Coming up, NVIDIA, the first $5 trillion company. As President Trump puts Blackwell at the heart of talks with China, we have the interview with NVIDIA CEO Jensen Wang. Plus, Alphabet, Microsoft and Meta, all set to report results after the closing bell today. We'll drill down on what investors are looking for.
An AI startup, Character AI, will ban kids from having conversations with chatbots on its platform. We have more on that story later this hour. But first, we check in on these markets that are at a new record high. Five straight days of gains on the Nasdaq 100. We're up four tenths of a percent. It is now worth more than 33 trillion, this entire benchmark.
But there's one key juggernaut, Ed, underneath that, and you're looking at it. Yep, and that is Nvidia. Nvidia is the first company to reach $5 trillion of market value, of market capitalization. And one of the things we reflected on on the gain in the shares, if we could please bring up that chart, is the idea that that value jump has happened very quickly from the $4 trillion milestone.
Why is the stock higher by 4% today in the session? It's because President Trump, on board Air Force One, saying, we'll be speaking about Blackwell. It's a super duper chip. I think we may be talking about that with President Xi. And of course, President Trump due to meet with China's leader, that's where the focus is. But NVIDIA's role in it is what's driving the market.
Let's stay on NVIDIA and bring in Bloomberg's Ian King, who leads our coverage of the semiconductor sector. The news is that the president has said that he will discuss Blackwell with China's President Xi. There is some explaining to do because the understanding of the market was this is Blackwell architecture for a deprecated lower power chip for China, not necessarily the leading edge.
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Chapter 2: What role does AI play in Nvidia's market success?
are in the 300 range. So 500 is a lot more than 300. So regardless of how exactly that lines up and whether that's all captured in one year, it's still a huge number. And really, as we saw from our TV interview with him yesterday and as we saw from his appearance at the big show here in Washington, he's saying, look, bubble what bubble, don't worry about it.
Ian, you've covered this industry since the late 90s. And I was reflecting at the top of the show that the jump in market cap from $4 trillion to $5 trillion is quite recent. But there were so many headlines yesterday from Jensen Huang himself. We heard from him for like an hour and a half in total.
After the keynote, was there anything that was really important that jumped out that you think might have got lost in the wash of all of the news that happened?
Yeah, I mean, he's playing whack-a-mole, right? The biggest concern is that we're building ahead of the actual business case for AI. So a lot of what he said was like, hey, we're doing this, that, this, that. We're signing these deals to get rid of some of these blockages. We're bringing these new products to market to get rid of some of these perceived blockages.
Oh, by the way, here's our guaranteed revenue. And guess what? I'm on a plane to Asia to try and help sort out this big problem with China. So there was a huge amount of information given, but it was all channeled in the same direction, which is AI is real, we're going to make sure it's real, and we're going to get rid of some of these problems.
Thanks, Ian King. We thank you so much for the roundup. And look, Ian was just talking about the flurry of partnerships that were announced yesterday. One key one of them, NVIDIA planning to make a $1 billion equity investment in Nokia. The announcement saw a massive surge. Look at it in Nokia shares. We, of course, sat down with Jensen Huang and Nokia CEO Justin Hothard about the news.
for national security reasons, for economic reasons. Our industry should be built on American technology, and for the very first time, we can do that. We have a brand new product line that takes advantage of computing, accelerated computing and AI, and we have a great partner to help us do it with, Nokia. The market reaction kind of speaks for itself.
There was a time when Nokia was already looking to America. You've been in the role since April, but may I start by asking you what role the administration played in bringing you both together, if this is indeed a strategic priority? I don't think there was anything specific that the administration did other than they've created the environment to support innovation.
I mean, Jensen's talked about manufacturing, but it's also about R&D and innovation and technology leadership. And if you think about where this world is going and all those incredible devices that are going to be built on NVIDIA platforms, robotics, autonomous vehicles. augmented reality, virtual reality, we need a different kind of network in the future. And that's what we realized.
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Chapter 3: What are the implications of President Trump's discussions about Nvidia with China?
So I think Jensen understands that this is not going to be the holy grail. This is one of the many investments. I think that you see something very similar that I think will become more prominent in storage. I think that NVIDIA has a lot more room to grow in storage. and networking, I think you'll see it growing a lot more in consumer PC, right?
Because that's one of the things it wants to do with Intel. I think you end up seeing it probably in their robot revolution in the future. They also said they want to be in cars. So I think that we can see that Jensen's strategy is just maximize your presence and specifically get your programming environment, the CUDA environment, to be ubiquitous.
Just tell us how ubiquitous it already is, Vlad, because I think so many of us make the quick assumption that it's all about hardware and semiconductors. But this is a full tech stack. And the fact that they're so ingrained in terms of software as well, it's almost become the de facto king across every other big tech company.
Yes. In fact, I myself underestimated it a little bit because, you know, one of the things we know is a NVIDIA advantage was the NVLink. And we are starting to see more challengers in the networking domain. But the reality is the networking is not as sticky as software. Software is extremely sticky. The thing is they have made such a rich suite of applications.
tools, in essence, a programming language and so many tools that make it easier for different skill sets of programmers to develop. I think that's what's so impressive about the NVIDIA software portfolio and the fact that you can use it for many optimized functions. I think that's what's very interesting.
In essence, Jensen is asking his army of developers, I want you to help this industry and this industry and this industry and this industry. That's, I think, what's the most impressive.
Vlad, the biggest disclosure that Jensen Wang made was the $500 billion figure of revenues that they say will come from just Blackwell Rubin, specifically over five fiscal quarters, excluding China. When that number went up on the screen on stage, a lot of people reacted. How far ahead is that figure than the model that you had for the data center business that NVIDIA is doing?
It's, I knew you were gonna ask me this, so I did, of course, that was what we were also watching yesterday. It's about a hundred billion high. So this creates about a hundred billion opportunity. I think it's very significant, particularly if we end up seeing the Blackwell deal with China, because that means that we then have more than 100 billion of upside.
I think when I think about the 100 billion of upside that Jensen is showing us, I think of it as a backlog, an order pipeline, There are a few concerns that I have along the way in terms of that materializing in my forecast. So I am going to start exploring baking it in.
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Chapter 4: How is Nvidia's stock reacting to recent announcements?
Your reaction to this company being the world's first $5 trillion company dollar market value company?
Well, it really shows us this representation of this huge sea change in technology, which is artificial intelligence. And certainly, it's the leader. It's way ahead. But honestly, it's like a tsunami. There's one big wave, and then there's wave after wave after wave.
And we really don't know if we're even near the peak of artificial intelligence really being incorporated in all the different industries. So, this is a qualitative change that we've never seen in our investment careers.
So, Margie, just to focus in on Nvidia at this moment, do you add to that stake that you currently have? We've still got 73 buys out there from the analyst community, only one sell, even at a $5 trillion valuation.
Yeah. Well, it's very hard to be negative on NVIDIA unless you see some negative development in the company. And just because a stock has gone up, and actually looking at my portfolio, I actually have some stocks that have actually outperformed NVIDIA this year, gone up even more. So I would say that as long as the growth path looks pretty good for NVIDIA, that it would be a worthwhile add.
I mean, look at Micron, for example, up 150% so far this year. Some of the ulterias that have really managed to be swept up in what's needed in data centers and compute more broadly. Where hasn't the market seen enough value yet?
Well, I think really all the oxygen is being sucked out of other areas of the market and going into artificial intelligence, data storage, data centers, all the rest of that. And I think we're still continuing on that trail. All those companies have high cash flow to fund these activities. There's no sign that they're losing their enthusiasm to make investments to keep a
If you look at some of those stocks, like Micron's a great example, if the worst thing you can say about it is the price has gone up a lot, that doesn't mean you ought to sell it here. So I think we're still somewhere in the middle of this huge wave of changing the whole economy, changing technology, and it's really too soon to say stocks are too high, I'm going to bail out.
On that note, Margie, I spoke to Jensen Wang yesterday afternoon, and I had to ask about his view on a market bubble. Let's listen to what he said. I don't believe we're in an AI bubble. And the reason for that is we're going through a natural transition from an old computing model based on general purpose computing to accelerated computing.
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Chapter 5: What are the market expectations for Alphabet and Microsoft earnings?
Actually had a loss in wireless phone subscribers in 3Q, but new CEO has this aggressive growth plan that we're looking at. Then there's Etsy. So this is kind of interesting. There's the earnings story, Caro, and then there's the change of the top. And you spoke with the company about that CEO change. Tell me more.
Yeah, and it's actually a trusted veteran of Etsy that's coming to the fore, who's been at the business since 2011 and ran Depop, a company that they bought a few years ago. And we're talking really here about Krishi Patel-Goyal being brought up from chief growth officer to be CEO as of January the 1st. Josh Silverman, I chatted to him yesterday.
And really, here's a man who's been at the helm for eight years. He steered this company through the lockdown crisis, through supply chain crises. And now he's positioning this business for artificial intelligence. Remember, they did the deal with OpenAI already. And he thinks Etsy is uniquely positioned to win in AI. But he really thinks the more brutal, the more
Clearly, Kruti Patel-Goyal is the person to steer it with her really having done every single job, he says, over at Etsy apart from head of engineering. And he really thinks the amount of artificial intelligence and personalization she brought to Depop is going to be the winning formula.
It feels as though there's some nervousness out there from the investor community right now, whether it's about the CEO or whether about, of course, Etsy. maybe about the forward-looking guidance from some of its earnings. But let's talk about earnings more broadly right now, because after the bell, we've got, what, Alphabet, Microsoft, and Meta all set to report results.
Let's take a look at what investors can expect and start with Meta. Bloomberg Tech reporter Riley Griffin joins us now. For Meta, we know the capital expenditure has been there. We know the focus has been on hiring and talent. What really Zuck has to prove out is that it's really winning formula for advertising sales.
No doubt, and we will be watching that capital expenditure number quite closely. So Meta has guided that it expects to spend as much as $72 billion this year on CapEx, a lot of that going to AI, infrastructure, data centers, talent. Any revisions to that number will certainly interest Wall Street. We'll also be looking, as you said, at the core advertising business.
So analysts want to see about $50 billion this quarter coming in, and they're forecasting about $57 billion for the next. Whether there is any weakness in those numbers will give pause to investors who are concerned that they're not going to see that return on investment from AI. So if we see beats there, it will be a good day for Meta.
Just really quick, Riley, we're also now thinking about Meta's debt pile and its borrowing to fund these projects. What do you know? Well, in a lot of ways, Meta has been able to keep debt off its balance sheet. Think about the really notable deal with Blue Owl to finance construction at what's going to be Meta's biggest data center in Richland Parish, Louisiana.
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Chapter 6: How does Character AI's decision impact children and chatbots?
And then the relationship with OpenAI has really improved the perception of innovation within Azure and created an environment where startups are building using Azure really for the first time. And I think everyone wants access to OpenAI's technology, which is embedded into Copilot. You can directly tap the OpenAI API through Azure. That's an exclusive agreement.
Those things are holding firm, so we're still very confident in Microsoft's position. But the world has changed. What we underestimated was just how big the size of just the training market would be within the AI cloud market. So we're just seeing growth that we haven't seen in technology in quite a long time.
And to be fair, maybe Microsoft did too. The issue for them is supply, not demand. They're having to turn to other companies that you analyze, CoreWeave. They're looking at Nebius and Nscale to really be able to fulfill some of its overall cloud needs. How are you thinking about capital expenditure rising for Microsoft in the next full year, 26?
I mean, we think it continues to go higher. We're modeling above consensus right now. We're a billion above consensus for this quarter. We updated that just based on some of what you're saying. We hear the capacity constraints in the market. We hear data center capacity still coming online. We think the most important thing beyond what Azure presents for the quarter is where they guide data.
The December quarter should have a little bit less capacity constraints. So I think investors will be listening carefully to see how they characterize Azure growth for December as well. But you're right. This is a good problem to have for Microsoft in many ways. We have a business that we're saying is $100 billion in scale and can't even keep up with demand right now.
Just unprecedented levels of interest.
What about the productivity tools? How much of a lock-in does it have because of the software?
We can't get away from it. I think it's been the toughest moat to crack in software. We've seen many companies try, and the honest truth is we've just all been conditioned to work in Microsoft and very effectively. Copilot is a way to extend. I think the productivity use case that is pretty interesting from the
Numbers perspective, investors are focused in on Microsoft 365 commercial cloud, which does embed the co-pilot metrics as well. That business is forecast to grow 13% to 14% this quarter. Any upside would likely be attributed to co-pilot and could create, I think, the next big unlock for Microsoft. The productivity business could start to show growth improvement alongside Azure.
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Chapter 7: What partnerships is Nvidia pursuing to expand its influence?
One of the things we mentioned in the story is circular financing or the circular nature of what's happening in the AI ecosystem. What would Nvidia say about that?
You know, what they've said to us and to other outlets certainly is that there is no obligation here that the companies that it provides money to have to then turn around and buy Nvidia chips. And that may be true. What's also true is that, obviously, NVIDIA is the market leader for AI chips.
So if it helps prop up dozens or hundreds of AI startups with capital, some of that money is going to come back to NVIDIA. And ultimately, that feels part of a larger strategy. As we all know, NVIDIA is very dependent on a handful of large tech firms who buy up the majority of its chips.
If it can build future market leaders or even smaller firms with more capital, that's going to benefit and help diversify its revenue stream.
There's a great anecdote in the story coming from Aravind Srinivas, who's over at Perplexity, just saying how Jensen gets it done in terms of giving him access to GPUs that he needs.
Exactly. I think it's not just about financial resources. It's about technical know-how. It's about the network. And fundamentally, it's about being able to brand yourself as an NVIDIA-backed company that carries a lot of bona fides right now.
Bloomberg's AI editor, Seth Figman. Thank you very much. Now, coming up, we will stay with NVIDIA as President Trump says he'll be discussing Blackwell chips with Chinese President Xi Jinping. That conversation's next. This is Bloomberg Tech.
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Chapter 8: What are the future prospects for AI technology in various industries?
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