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Welcome to the Daybreak Asia podcast. I'm Doug Chrissner. We begin today with Nvidia. After the US closed, the company issued revenue guidance for the current quarter above estimates. Sales could be as much as seventy eight billion dollars plus or minus two percent, and in Vidia CEO Jensen Wong said the enterprise adoption of AI agents is skyrocketing. For a closer look, now, I'm joined by Daniel Newman. He is the CEO at the Futurum Group. Daniel, thank you
for being here. Give me your take on what we heard from Nvidia.
I think we knew coming into this print that the numbers both for this quarter and the outlook, we're going to be very positive. I think the market has been in this bit of an uncertain space, almost in between whether AI is a bubble or AI is so valued that it is going to disrupt and basically eliminate entire industries. But in Vidio sits in this really good position where it's providing the quote unquote arms for this revolution. And with those CAPEX numbers, we knew forty fifty percent of
those numbers would go to Nvidia. We're seeing it show up in this big data center number and this forward guidance that was almost ten percent above expectations. Just further is that this isn't a short term There isn't some near term pullback in neither capex or demand for its products. It shows that not only the hyperscalers, but these next generation clouds enterprises, sovereign nations are all continuing to bet big on building out their AI futures with Nvidia haarmwork.
So we also heard from Salesforce after the balance. Kind of interesting because this company faced a lot of scrutiny when the conversation focused on disruption from artificial intelligence, and the outlook from Salesforce was a little under whelming. Which companies do you think are most at risk of being threatened by some of the advancements that we're seeing in AI right now?
Yeah, So Salesforce is a great example of a company that's kind of into being the baby being thrown out with the bathwater.
CRM, Salesforce Oracle Service.
Now, some of these big enterprise software companies that have massive data modes and deep deeply entrenched inside of enterprises, we just aren't seeing that the CIOs we're talking to aren't seriously considering any sort of replacement, and basically their numbers have been more of a continuation of the trend
lines that preceded this AI revolution. Having said that there is some software that seems to be at risk, we see the software companies that were sort of features that ended up becoming large SaaS platforms that ended up going public at high valuations with high multiples.
Say a software company like expensify that just does expenses.
It's one feature that can be augmented by an AI vibe coded tool. Some of the design platforms like Canva, we think are at risk when you see what Google is doing with Nana Banana and other AI platforms that are making design really easy. So there are softwares that are at risk of being disrupted meaningfully by AI. We look at the ones that have significant data modes, that have large entrenched enterprise utilization, and of course those that
have like cross border transaction, major governance compliance. Those softwares don't seem to be in trouble. Also, some of the key technologies that are like in the design of semiconductors and chips, we saw companies like Synopsis being sold on this. I don't see them being disrupted. And also the security companies. We see security and AI as symbiotic, and Thropic had a major breach by China. They need CrowdStrike, they need
Palo Alto, so some software at risk. But I think the selling has been largely overblown.
So I'm glad that you mentioned Anthropic, Daniel, because today the company indicated that it's basically loosening its commitment to managing its guardrails where AI is concerned. Some people were saying this is one of the most dramatic shifts that we have seen lately in the industry. Back in twenty three, Anthropics that it would delay AI development that might be dangerous. But we just learned yesterday that the company will no longer do so if it believes it lacks a significant
lead over a competitor. And in the context of this, earlier in the week, Defense Secretary Pete Hegseth was giving Anthropic until Friday to open its AI technology for unrestricted military use or risk losing its government contracts. So talk to me about regulatory risk here, or at the very least, how the government may get involved to kind of influence where this industry moves going forward.
And this is a really difficult situation for Dario and Anthropic because if Kiyak, if he ACQUIESCES, he looks like sort of his long term position of being the more ethical AI platform, the one that would move more slowly,
that would potentially be the protector of this innovation. But on the other side of this, if he doesn't do it, Open Ai, Google, you know, many of the other companies that are that are pursuing leadership in this space likely will And so the question mark is by potentially loosening some guardrails, can he still be influential in trying to drive some policy, some level of guardrails, some awareness to the public markets of what is at stake as we
continue to see the incredible power of its technology and the others that are in this space. I don't think there's a win for Anthropic here. If they hold their ground, they're going to lose significant business. They're going to be at risk of being under immense pressure. We've seen how you know, the various administrations can use new comer's tactics to create pressure on companies, and of course their ability to influence the future becomes less than.
It is today. So I'm to some extent I.
Doubt this is what he truly wants, But I think his choices be at the table potentially with maybe not completely living his ideal, or maybe be taken away from the opportunity to be at the table and have no influence at all on a really important shift into the future.
We've seen a lot of volatility in the equity market around some of these AI names this week after that report from a little known firm called Saittrini Research. It seemed to outline some potential downside risk from AI on a number of industries. And this report used several hypothetical scenarios to kind of set the future. Future is in
the name of your firm. So if you had to kind of forecast, Daniel, what the next five years may look like as the artificial intelligence and the advancements that we're talking about, what do you come away with?
Yeah, that report was quite the Doom's Day report. However, there were iterations that were created that had greater levels of optimism. We see many trillions of dollars of economic growth that will come with the efficiencies and productivity that will be generated by AI.
Where we see some potential.
Risk is the digestion period that we've historically seen during massive transformative periods, you know, whether it's been steam or electricity or the Internet, generally took place over a much longer time. This particular innovation cycle has happened in a very short period of time. And so many things, many many roles in jobs and careers. You hear, you know, will we need lawyers, Will we need doctors, Will we need engineers, marketers, designers, salespeople. All these things have never
been put into question the same way. But if you do look at history, and I think it's a and the people do. With every revolution, there were roles that people said, wow, will that go away? Just like the people that used to walk the streets of small towns and light the gas lamps at night, the original gas lighters. Right with electricity, there would no longer be roles, or they would no longer need people to chisel wheels out
of stone, Doug. But the net of it is is that we ended up building industries that were exponentially larger.
Manufacturing at scale.
The Internet created entire new industries in marketplaces that did not exist in the largest companies in the world that employ the most people were, many of which were.
Created in that era.
So I think the hardest part for most people is to visualize the unknown. And while I can't concretely say what will be created, what I could say is this innovation is creating an immense amount of additional productivity. It's giving humans the potential to five and ten x what they're able to output, and new roles, new opportunities will emerge.
But there is a risk for a short period of time that there will be downside because how fast this innovation has happened, and they know the humanity has never seen anything change in this quick.
So as I'm listening to I'm thinking of Amara's law. It says that people tend to overestimate the short term impact of new technologies and underestimate their longer term effects. Is that what you're saying, does it really apply in this case?
There's a little bit of that, and there's a little bit of Jevin's paradox in the sense that as we continue to become more efficient as human beings, we will continue to scale industries at a great rate. You know, we've talked about numbers of GDP growth in the twenties and thirties of trillion. There will be work to support that that will not all be done by robots in by AI. We need multi sided marketplaces. We need to
fulfill goods and services. People will still travel, people will still get into autonomous vehicles, people will still want to eat people. You know, the things that we do that creates economic value will still be done and consumed. However, some of that monotonous work, some of those low less value processes that people are grinding away at their desk, moving data from one cell to the next, or moving papers from one email inbox to another, sending documents to
be signed, things like that will be automated. But people will continue to evolve like we have all throughout history. But the speed is the risk. But I think in good time what you mentioned with the Mar's law does become the truth.
So Daniel, before i'd let you go, give me your sense of where investors can find the best opportunities right now in the info tech space.
Yeah, there's really two places that we are focusing on. One is we look at where everything remains constrained compute memory power. These things are a multi year trend and while there has been a lot of volatility. We've seen Nvidia settle a little bit, We've seen Micron move quite a bit up. We're still seeing the need for power and rare earth. All of those areas are going to continue to see growth as we see a number of as high as four trillion dollars in data center infrastructure
by the end of the decade. On the other hand, there is some opportunity in the arbitrage and in the hard selloff that a number of companies have faced. We do not believe companies like IBM, like I mentioned, Service Now Salesforce, they have been sold at a rate that is not appropriate based on the business and metrics that
they have delivered. There is some risk of AI and disruption, but we think the names I mentioned and several others of those deep moat enterprise software companies will continue to perform at a high level despite the fact that the rerating may be real, but the upside still exists.
Daniel Bell, leave it. They are always a pleasure. Thanks so much. Daniel Newman there, he is the CEO at the Futureum Group, joining us here on the Daybreak Asia podcast. Welcome back to the Daybreak Asia Podcast. I'm Doug, Chris and as I mentioned a moment ago, in Vidia gave another bullish forecast for quarterly revenue. This would suggest the massive buildout in AI compute remains on track now. This could underpin earnings expectations across the Asian semiconductor supply chain,
especially where high bandwidth memory chip makers are concerned. And that's where we begin our conversation with Karen Calder. Kieren is head of equity research for Asia at UBP. He spoke earlier with Bloomberg TV host Heidi Stroud Watts and Sherry on.
We have this situation where, of course all of the macro factors are still at play, ranging from everything to you have political related to tariffs to central banks globally, but at the moment it is really all about that tech space. What do you make of the price action that we've seen under the numbers from nvidio take away the fear that clearly was dominating the training up until now for the last few days.
Good morning.
So obviously the the numbers from a video are are a big relief as a bellweather of you know, the AI trade, at least on the infrastructure CAPEX build out side, Nvidia needs to keep delivering and and and having a strong outlook, So that's pretty positive if you look at you know, over the course of this week. Of course, we had this Centreny report over the weekend talking about a hypothetical scenario a couple of years down the road where we've had, you know, the AI build out and
the implementation. It basically takes out a lot of different sectors, and I think probably we've passed peak worry about about that sort of scenario. In fact, if you put that report into chat GPT itself, it really says, don't worry too much about this. This is a hypothetical scenario looking at identifying risks going forward. So we think peak fear has probably passed, and it's an opportunity, we think to recalibrate in the names that have a decent near term outlook.
And for us, it's really the sort of Capex AI CAPEX build out. So the names like in Nvidia as well as some of the semiconductor manufacturers I think are a good place to be at the moment.
Karin, how long do you think we sort of should be looking at in terms of the time for that separation of the sustainable gainers within that AI space. And those you know clearly, you know, particularly in the likes of Jamie Diamond's World, are something that you should be a lot more cautious about.
Well, I mean think the timeline is now if you look, you know, particularly JP Morgamy. They had a mini investor day this week and they highlighted that they're going to be spending almost twenty billion dollars this year, about half
of which is investment in platforms and AI capabilities. You know, big corporates, including financials, which are able to spend and implement AI will will benefit from that, and they'll be able to help their clients and names that are a little bit more exposed, you know, we'll have some work to do. So obviously there's a sharp contrast between in video results and Salesforce results, so Salesforce has a bit of work to do to you know, adapt their business model to you know, the new environment.
Karen, can you have this point also tell who the winners or losers could be across Asia as well?
I wish I could. I mean, obviously I think that we uh, we think that the semiconductor names are an obvious place to be, so, you know, the big ones T SMC and Samsung, which of course have have done well. We think there's some critical companies in Japan in the in the supply chain, which which we think at this stage is also a place to be. I think it's probably too it's difficult now to pick the winners on
the implementation side. So you know, while software names have been really taken to the cleaners, I think it's maybe a little bit too early to start to pick through there and try to identify winners as we're still at the build out stage.
Yeah, lots of component makers also chemical suppliers across Japan, right Kieran. But here we also do have the idiosyncratic story around the Bank of Japan, what privates Attakaichi wants when it comes to those rate hikes, the weakness of the Japanese yend and the acceleration of the losses. Is this a risk or is this just more upside for those exporters.
Well, so, okay, the end is a difficult issue for Japan obviously. You know, the Bank of Japan is obviously very cautious and with the comments and the new appointments from the comments from the Prime Minister, a rate hike, a further rate hike is probably pretty unlikely.
At this point.
On the other hand, the weekend is all very problematic, especially for Japanese households, because so much of uh, you know, the household basket is imported all mostly all energy is important, lots of food is imported so important. Inflation is a big problem, not only for the economy but specifically for households. This is likely to continue, and I think, you know, the export is obviously benefit from translation of earnings, but at some point it's just too weak for the domestic economy.
She's got, she's bought herself four years. Hopefully there'll be, you know, some measures taken sooner.
That was Karen Calder, head of Equity Research for Asia at UBP, speaking with Bloomberg TV host Heidi Stroud, Watts and Sherry On bringing you their conversation here on the Daybreak Asia podcast. Thanks for listening to today's episode of the Bloomberg Daybreak Asia Edition podcast. Each weekday, we look at the story shaping markets, finance, and geopolitics in the
Asia Pacific. If you can find us on Apple, Spotify, the Bloomberg Podcast YouTube channel, or anywhere else you listen, join us again tomorrow for insight on the market moves from Hong Kong to Singapore and Australia. I'm Doug Prisoner, and this is Bloomberg