Chapter 1: What is the main topic discussed in this episode?
So, what will Rachel Reeves' pivotal new budget mean for you?
Has an innovative think tank just come up with a solution for replacing stamp duty?
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Chapter 2: What insights did Nvidia's CEO share about the company's earnings forecast?
It governs defense policy and it has bipartisan support. But now the White House is weighing in and seeking to get it pulled from the legislation.
And it's unclear what would emerge in its place, because right now, Carol, there really is no uniform code governing export controls, especially as applied to China. And that's because if we go back all the way to the beginning of the year, and it seems so long ago, the Biden administration had tried to impose this AI diffusion rule, this framework that would prevent tech from leaking online.
from allies like Saudi Arabia, like the UAE, to China. And we don't really have anything here yet in place in Washington. So you see the China hawks on Capitol Hill and even inside the administration grasping for an alternative. And this bill, which the White House is now trying to head off, is at least an attempt at that. Shep, last night was a little bit an issue of timing and chronology.
So during the call, the analyst call, the Commerce Department put out a statement confirming that NVIDIA is now allowed to export Blackwell to the Gulf states. Is that just kind of rubber stamping something we knew was coming?
We have widely expected this approval to come through, but it does take some time to work its way through the guts of the bureaucracy. But there is also a hurdle to overcome, and that is the concerns, as we just discussed, that the technology does risk leaking to adversarial nations, especially China.
And that is because both the Saudis and the Emiratis have had longstanding business ties with China. And China's Huawei technologies has a footprint in each of those two nations. And the concern is that the proximity of Huawei to American technology in a data center creates a risk of some sort of leakage, either through software or something else.
And that is something that the US government was really trying to seek assurances on. We don't have details on what was required of the Emiratis, and also of the companies, and you did your best in asking Jensen for specifics on that, but he really dug in on the whole broader question of diversion, and that is something that the company has been sensitive about.
They have insisted that their Know Your Customer programs have done enough to prevent diversion, And yet that hasn't assuaged all the concerns of China hawks here in Washington that advanced American technology could eventually leak back to China and somehow support its military and intelligence bureaucracies. Bloomberg's Mike Shepard, thank you very much.
Let's get back to the NVIDIA and the earnings story. Ayako Yoshioka is Portfolio Consulting Director at Wealth Enhancement Group, $124.5 billion in assets under management and a pretty healthy chunk of NVIDIA shares as well.
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Chapter 3: How is Nvidia's performance affecting investor sentiment in the AI market?
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Sales are off the charts for Blackwell and NVIDIA GPUs in the cloud are sold out. We got plenty of Blackwells to sell you. We have lots of Blackwells coming. We're making a lot of Blackwells and we have a bunch of Vera Rubins coming. And so business is very, very strong.
Is that $500 billion figure, which excludes China and is Blackwell Rubin through the end of calendar 26, a bit conservative?
Well, we heard analysts ask that question, right? And they have visibility into that $500 billion number. And so that doesn't include sort of the demand that will be coming forward in the next 14 to 18 months. And so it perhaps is conservative. And I think that's the part that's so difficult for all of us to really wrap our heads around.
These numbers are so large and they're growing at such a rate that we haven't seen before that it really becomes, you know, for most of us, we're all skeptical that this is going to happen at the rate that it continues to happen at. What was interesting was the depreciation question was tackled.
This is what's got Michael Burry in a tizzy. It's got what many have been seeing as a little bit of anxiety that ultimately the consumers of NVIDIA chips have been saying, look, these last longer than some had anticipated. But really, it was made clear that the A100s, the older type of chips, are still working six years on IOKA. Did that put that anxiety to bed?
Yeah, I think it was a great way for Colette to sort of clap back at that depreciation argument. We are still using these older chips. They are still getting consumed simply because the demand is so great. So I do think there was a little bit of that that was put to rest and a relief, I think, from investors to a certain extent that they were still being utilized to that extent.
There's a relief today, and we are up two percentage points, Sayoko. But I feel as though the entire market is a bit of an anxious boyfriend at the moment, trying to have soothing words currently given to it from whomever they can class as their AI girlfriend in many ways. But what are you thinking of in terms of that this will soothe for the longer term?
Are we going to need weekly updates that we're not in some sort of bubble?
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Chapter 4: What factors are contributing to Nvidia's projected revenue growth?
And so there's a lot of push and pull and a lot of monitoring on a daily, weekly, quarterly basis. And I think that's why NVIDIA's earnings calls continue to be sort of the Super Bowl of, you know, equity investors sort of, you know, calendars.
What about NVIDIA's valuation specifically? Do you feel comfortable with that?
You know, it's trading at 28 times next year's numbers. It's growing revenue at 60%. It's growing earnings at 50 plus percent. You know, they're reasonable valuations. They are not astronomical like we saw during the tech bubble. However, you know, it's still relatively expensive and it all hinges upon the duration of this growth rate. Does this continue at these levels for three, five years?
Or is it just this sort of near term 12 month growth rate that we're seeing? And I think that's this anxious investor base that's sort of watching this. When does the growth rate start to deteriorate? Well, according to Bloomberg,
analysis, if you're looking at what the general consensus is, by 2028, revenue growth is going to have slowed to 26%. Just in 2027, it will have slowed to 45%. But is that just the law of ever greater numbers? I mean, we're already almost a $5 trillion company. How can we expect it to keep growing at 60% out into 2028 and above?
And I think that's the thing. That's the skepticism that really sort of creeps into, you know, the investor mindset is that how large can this get? And the numbers when you start to just grow at 60 percent plus year after year, it's just astronomical. And yet, you know, Jensen's talking about $3 to $4 trillion of annual spend for data center and AI infrastructure.
And, you know, if all of that or a good portion of that goes to NVIDIA, the numbers continue to grow. And then, you know, the hyperscalers will grow as well because that benefits their cloud revenue. So it's just something that we continue to keep monitoring and we'll have to see each quarter grow.
Not just from NVIDIA, but from all of the tech ecosystem in terms of how large this AI platform is going to become. Ayoko Yoshioka, it's always great to get your analysis from Wealth Enhancement Group.
We thank you. Now coming up, AI pioneer Jan LeCun. He's leaving Meta to launch his own startup. What's next for him and what it says about Meta's own AI plans? That's next. This is Bloomberg Tech. Jan LeCun, one of the so-called godfathers of AI, is leaving his role at Meta to launch his own startup.
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Chapter 5: How is Palo Alto Networks expanding its AI offerings through acquisitions?
And yet when Meta decided to build this new lab, the summer TBD lab, and go out and acquire, essentially, Alexander Wang from Scale.ai, He became Yann LeCun's boss, right? I think he's more than 30 years younger, obviously a very different type of expert in terms of AI.
And so there was a feeling sort of in that moment where, okay, if they have this legendary AI researcher in the building and yet they're still going outside the company to bring in people to run their new AI effort, what is that signal, right, for Yann's future here? And I think...
Again, this was something that in some ways was a long time coming because of the fact that he is so forward and future looking with what he does. And Meta is fighting sort of for its AI life right here and now. But I think that layering of executives over the summer was probably another big reason that he's leaving today.
And a big supporter of open sourcing that perhaps Meta's shifted slightly away from as well. Bloomberg's Kurt Wagner, great breakdown. Thank you very much indeed. Meanwhile, coming up, we'll talk about the Chinese university shaping the country's AI sector and its future startup leaders.
Chapter 6: What challenges does Nvidia face in the Chinese market?
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You certainly ask interesting questions.
China's Tsinghua University, while it's having an outsized impact on the country's AI industry and the school's professors and students, they've received more patents each year than MIT, Stanford, Princeton, Harvard combined. Let's go out to Bloomberg's executive tech editor, Peter Elstrom, for more on what this signifies about China's AI ambitions.
They are wholly focused on making sure that they have many, many more experts and potential employees of the future. Yeah, Tsinghua is a very prestigious university. For many years, it's educated the best and the brightest, especially in science and engineering in China. But what's really changing now is you're seeing this momentum in AI in particular. A couple things are feeding into that.
First of all, DeepSeq. The success of DeepSeq and its breakthrough model earlier this year really gave a lot of confidence to these young students that they too could build businesses that would be very, very successful.
In addition to that, Xi Jinping and the Communist Party have been calling on the tech sector in China to be able to build in a number of very key areas for them, strategically important areas for them, especially AI. So you can get government funding, you can get tax subsidies. There's a lot of momentum to be able to build businesses
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