Nvidia Shares Tumble; Exclusive Nvidia CEO Interview

Bloomberg Audio, Studios, Podcasts, Radio News. Good morning, I'm Nathan Hager and I'm Karen Moscow. Here are the stories we're following today.

Karen, we begin with the latest reaction to those highly anticipated earnings from Nvidia. The shares are down more than four percent in early trading. The AI juggernaut met or beat analyst's estimates on nearly every measure, but Nvidia investors have grown accustomed to blowout quarters, and the latest numbers did not qualify. Moreover, in Vidia's next big cash cow, the new Blackwell processor lineup, has proven more challenging to

We're expecting Q three to have more supply than Q two, We're expecting Q four to have more supply than Q three, and we're expecting Q one to have more supply than Q four, and so I think our supply, our supply condition going into next year will be in will be a large improvement over this last year.

In Nvidia CEO Jensen Wong says third quarter revenue will be about thirty two and a half billion dollars. Analysts had predicted thirty one point nine billion on average, but the estimates ranged as high as thirty seven point nine billion.

Well, Nathan reaction is still pouring into the Nvidia results and Jensen Wong interview. Man Deep Singh is a senior tech analyst with the Bloomberg Intelligence.

It's still a very solid growth story, but when it comes to convincing investors that there are more catalysts for upside relative to where expectations are, I think a lot of it right now is dependent on how the industry actually deploys Generator AI. That's what Jensen highlighted that look, jenai is transformational. It's changing how compute is done and everyone will use it.

Bloomberg Intelligence senior tech analyst man Deep Singh notes that most of Nvidia's growth comes from a small group of customers. About forty percent stems from a large data center operators, companies like alphabet s, Google and Facebook parent meta platforms.

And we're going to have much more coverage of the Nvidia story in a few minutes. Will bring you more from our conversation with the CEO, Jensen Wong, and that will be followed by analysis from web Bush Security senior equity research analyst Dan ives Well.

Nathan and Video is not the only stock on the move this morning following earning. Several other high tech results came in after the bell as well, and we get the latest with Bloomberg's John Tucker, John and.

Karen CrowdStrike shares down over two percent pre market trading. The security software company cutting it's full your forecast. However, some analysts of the reduction better than feared. This comes in the wake of the CrowdStrike update. You'll remember that crash computers worldwide last month, Salesforce gave an earnings forecast the top analyst estimate's the top maker of customer management

All right, John, thanks for also watching. Shares of super micro Computer. They're down nearly five percent in early trading that follows yesterday's nineteen percent plunge. Super Micro says it's delaying filing its annual financial disclosures and will need more time to assess its internal controls. This ten k delay erased more than eight hundred million dollars from super Micro chairman Charles Leang's net worth. In fact, his fortune is slumped by nearly two thirds from its March high.

Well, we turn to the economy now, Nathan, as investors all waited another key inflation rating tomorrow, the Personal Consumption Expenditures price index. A top FED official is cautioning about moving too fast on rate cuts. Atlanta FED President Raphael Bostik says he's still looking for additional data before he'll support lowering interest rates next month.

I don't want us to be in a situation where we cut and then we have to raise rates again. Like that would be a very bad outcome. It would really undermine all the conference I was talking about.

People have it. Speaking at the Stanford Club of Georgia, Atlanta FED President Rafael Bostik reiterated that his timeline for cuts had moved up after inflation fell more quickly than he expected, and the unemployment rate increased more rapidly, but he's still cautious.

So now two geopolitics Karen a major development overseas. White House National Security Advisor Jake Sullivan is wrapping up his three day trip to China with a visit with the President Chi Jinping. It is the first time Sullivan's held one to one talks with the Chinese leader. It comes hours after his first face to face with the top Chinese general. Bloomberg's Gill Deesis is in Hong Kong. She says the goal of Sullivan's trip is to set up guardrails.

There's just a lot of uncertainty too going into the US election later this year as who exactly will be the leader after that that you're probably looking at this attempt by the Biden administration to kind of future proof ties with China or at least stabilize relations heading into that election.

Bloombergs Jill Lisis reporting from Hong Kong. Earlier, Sullivan discussed setting up a call between presidents she and Biden with the Chinese Foreign Minister Wangi.

Now let's get to the latest and the presidential race. Nathan Democrat Kamala Harris is on her second day of a two day bus tour through Georgia. She's heading through rural areas with a focus on shoring up support among black men. Harris is also getting ready for her first interview since taking the nomination on CNN tonight, and we get more from Bloomberg's Julie Fine.

It's a very high stakes moment for her, and she's also taking some criticism because she's not doing the interview alone. She is doing it with Tim Walls. However, at the end of the day, she is going to be the one that has to answer the questions, even if he's just sitting right beside her. So it's high stakes. It's the first time it is that situation. It is a one on two.

Bloomberg's July Fine reports the Harris campaign is brushing off the criticism, saying former President Trump has also done joint interviews with his running mate jd Vance. Tonight's interview airs at nine pm Wall Street Time on CNN. But it's time now for a look at some of the other stories making news in New York and around the world, and for that we're joined by Bloomberg's Michael Barr Michael, Good morning.

Good morning, Karen. The listeria outbreak from Bor's Head Deli meat has been linked to fifty seven illnesses in eighteen states and the deaths of nine people, including two in New York and New Jersey. Carshawn Morgenstein says his father, a Holocaust survivor, was in good health until he says his dad got listeria after eating tainted liverwurst. Morgenstein says the infection led to meningitis and brain damage, and.

He always a lunch meet, always boores Head.

We're all still in shock for all of the things you know that he's seen and been through in his life.

The CDC Warren's customers may still have tainted meat in their fridge with best by dates through October. A Nevada jury has found a democratic former Las Vegas area politician guilty of murdering an investigative journalists who wrote articles critical of his conduct in office. After deliberating for almost twelve hours, the jury found Robert Tellis guilty of murdering Jeff German of the Las Vegas Review Journal. Clark County District Attorney Steve Wolfson says the jury sent a clear message.

Did any attempts to silence the media or to silence or intimidate a journalist will not be tolerated. That's what occurred in this case.

Clark County District Attorney Steve Wolfson jurors set tell Us his sentence at twenty years to life in prison, tell Us tonight killing German, and instead blamed a broad conspiracy of people for framing him. It won't end tomorrow. That's according to the Israel Defense Force. Of the raids in the West Bank, the IDF is calling it a counter terrorism operation. The Palestinian Health Ministry says the raids that

What we have accomplished is exactly what we knew we could accomplish with the right insight. And the right focus and determination. A thousand shops were closed.

The crackdown involves a joint law enforcement effort including the NYPD, the New York City Sheriff, and other agencies. Global news twenty four hours a day and whenever you want it with the Bloomberg News.

Now.

I'm Michael Barr, and this is Bloomberg.

Karen.

All right, Michael Barr, thank you time now for the Bloomberg Sports UF date with John Stashauer.

John, good morning, Good morning, Karen. Mets and Phoenix. They fell behind four nothingk Corbyn, Carrol homerd Off, Luis seven Reno. The Mets rally tied the game fifth in ety two onunch shot for Harrison Vader. They went up five to four of the six, but in the eighth Carol with a grand slam of Edwin Diaz. Arizona one eight to five and Atlanta keeps winning five one at Minnesota in the bras are four games ahead of the Mets. Second

Didn't do enough last two nights, just pushing runs across and so lost the series. So you know, tough one, you know, regrouping off day and curators started a little quick three to day or but just one of those days where weren't able to just finish off some rallies.

Juan Soto back where he used to play. He had his worst series, zero for twelve, only drew one walk. Aaron Judges did drive in a run last night, but he did not homer in the series. Baltimore lost to the Dodgers six to four. Yanks remained game ahead. Red Sox shoutout Toronto three nothing. Battle of Division leaders, Houston blank the Phillies ten to nothing. Jordan Alvarez hit three home runs and a wild one. In Pittsburgh, the Pirates led the Cubs ten to three, and the seventh inning.

Karen Nathan all.

Right, John, thank you well.

If you're listening to us in Boston, our new home beginning September third is going to be on ninety two nine FM, That is the day after Labor Day. This coming Tuesday, Bloomberg Radio moving to ninety two nine FM in Boston.

Coast to coast on Bloomberg Radio, nationwide on Sirius XM, and around the world on Bloomberg dot Com and the Bloomberg Business app. This is Bloomberg Daybreak. Good morning, I'm Nathan Hager.

We continue our coverage of chip giant Nvidia the earnings report that Wall Street had been waiting for pretty much all quarter long. The AI chip giant delivered an underwhelming forecast and disappointed with news that it's still ironing out production issues with its new US chips. Bloomberg's at Ludlow spoke with the CEO of Nvidia, Jensen Wong, and they began by discussing those issues with Blackwell. We now bring you part of that discussion.

We made a mass change to improve the yield. Functionality of Blackwell is wonderful. We're sampling Blackwell all over the world today. We show people giving tours to people of the Blackwall systems that we have up and running.

You could find pictures of Blackwell.

Systems all over the web. We have started volume production. Volume production will ship in Q four. Q four, we will have billions of dollars of Blackwell revenues and.

We will ramp from there. We will ramp from there. The demand for.

Blackwell far exceeds its supply, of course in the beginning, because the demand is so great, but we're going to have lots and lots of supply and we will be able to ramp starting in Q four. We have billions of dollars of revenues, and we'll remp from there into Q one into Q two and two next year. We're going to have a great next year as well.

Jensen, what is the demand for accelerated computing beyond the hyperscalers and.

Meta hyperscalers represent about forty five percent of our total data center business.

We're relatively diversified today.

We have hyperscalers, we have Internet service providers, we have sovereign ais, we have industries enterprises, so it's fairly fairly diversified a site outside of hyperscalers. The other fifty five percent, Now, the application use across all of that, all of that data center starts with accelerated computing. Accelerated computing does everything, of course, from well the models the things that we know about, which is generative AI and that gets most

One of them is generative AI. And so let's see what else can I say, I think that's that.

Let jump in Jensen please on sovereign AI. You and I've talked about that before, and it was so interesting to hear something behind it that in this fiscal year there will be low double digit I think you said billions of dollars in sovereign AI sales. But to the lay person, what does that mean? It means deals with specific governments, if so.

Were, it's not necessarily.

Sometimes it deals with a particular regional service provider that's been funded by the government, and oftentimes that's the case in a case of In the case of Japan, for example, the Japanese government came out and offered UH subsidies of a couple of billion dollars I think for several different internet companies and telcos to be able to fund their AI infrastructure. India has a sovereign AI initiative going and

You know a large.

Number of countries are subsidizing their regional data centers so that they could become able to build out their AI infrastructure. They recognize that their country's knowledge, their country's data. Digital data is also their natural resource, not just the land

And so this is what we call sovereign AI.

You could imagine almost every single country in the world will eventually recognize this and build out their AI infrastructure.

Jensen, you use the word resource, and that makes me think about the energy requirements here. I think on the cool you talk about how the next generation models will have many orders of magnitude greater compute needs. But how will the energy needs increase and what is the advantage you feel in Vidia has in that sense.

Well, the most important thing that we do is increase the performance of and increase the performance and efficiency of our next generation. So Blackwell is many times more performance than Hopper at the same level of power used, and so that's energy efficiency, more performance with the same amount of power or same performance at a lower power And that's number one.

And the second is using LUCA cooling.

We support air, we support air cooling, we support liqual cooling, but liqual cooling is a lot more energy efficient, and so the combination of all of that, you're going to get a pretty large, pretty large step up. But the important thing to also realize is that AI doesn't really care where it goes to school, and so increasingly we're going to see AI be trained somewhere else, have that model come back and be used near the population, or even running on your PC or your phone.

And so we're going.

To train large models, but the goal is not to run the large models necessarily all the time.

You can, you can surely do that for some.

Of the premium services and the very high value AIS, but it's very likely that these large models would then help to train and teach smaller models, and what we'll end up doing is have one large a few large models that are able to train a whole bunch of small models.

And they run everywhere.

That was the CEO of Nvidia, Jensen Wong, speaking with Bloomberg's Ed Ludlow following the company's earnings. You can catch the entire interview on the Bloomberg Talks podcast. Subscribe to download this and all our high profile conversations on Apple, Spotify or anywhere else you get your podcasts and for more and what we've heard from Nvidia and the stock reaction. We are joined now by Dan Ives, senior equity research

I mean, Nata, I'm more bullish today than I probably was twenty four hours ago, becure, and I actually in the Fox should be up, not down, but because of the underlying demand. I mean, you know Jensen talked out with the little of the Ludwell interview. That's the key here, demand surgeon on the enterprise, the outlook for next quarter, maybe on the hair and miss whispers. I think it's conservative and they're going to continue to beat that number.

Does Nvidia need to be more specific though on where that demand is coming from and how much demand it's expecting going forward.

Look, I think the numbers speak to themselves. I mean, this is his store in terms of what we're seeing from a demand perspective. And I think the conference call last night solidified this is not stub ordering, this is not hype. This is a fourth and ducal revolution that's playing out right now, being led by godfather of AI, Jensen and Nvidios.

He said that he's expecting billions of dollars in revenue from the Blackwell chips. A lot of analysts on the call were looking for more specificity on that as well. How much are you expecting that the Blackwell chips could generate in terms of monetizing AI.

From everything we're seeing, its tens of billions, not billions. And who Look, Jensen is a He's a Grand Master World Series poker player. He's not going to reveal his playbook, nor should he. But when you and I think this is important for the rest of tech, there's a multiplier. For every dollar spend in videoship, we've eaten ten dollars for the rest of tech. I believe tech should be up today relative to everything we heard. That I think keeps his tech well market going higher.

Are you going to be reducing your outlook for where the revenue goes as far as not just in Vidio, but other AI players moving forward. Now that we have gotten something of a less than powerhouse outlook from Nvidia this time around, Yeah, and that.

Would be the initial nature. But I think, I mean, you know, we talked on your show after Apple's Worldwide Developer Conference. At that point, the stock was one ninety, sentiment was negative. Here it is two and a half months later, stocks two twenty six, and the sentiments chem drastically. I think it's going to be a similar dynamic within

How important is it going to be for Nvidia to grow its customer base beyond the hyperscalers, beyond companies like meta platforms, to get into, you know, something that Ed Ludlow has been focusing on pretty closely, sovereign AI government, something that Jensen Wang himself has said that he's going to be focusing on, you know, as early as February.

Yeah, look, and I think twenty maybe thirty percent of what's called a trillion dollars of AI cap ax will be the tech players. And you've already seen that all the story for Meta, Theamazon, all the Hyperscaros do books, but government, the rest of enterprise, that's what's still on the comp We only have three percent of enterprises that have actually even started to go down the AI journey. That's why to get out the popcorn moment. This is lebron in high school before we went to the NBA.

But is our tech company is going to be able to sustain the kind of spending that they've been doing to scale up their AI play?

Well, it's really the ROI. And I think what we're seeing what use cases and talunteer service now you know, I think Salesforce and others, is that it's really just started to the rois there. And I there's the big thing that Jensen talked about. They are seeing the ROI. And as you come to see the ROI, that's going to be the next step. And this season not even just started Apple with iPhone sixteen, which would be the consumer AI revolution.

Are you concerned at all about the delays that we've seen in the next generation Blackwell chips and the trouble that Jensen Wang has acknowledged that he's had getting them to perform the way they need to.

I think that they actually put those concerns to rest last night. I mean they were concerned that that could be called one two, three billion and moved back, and they actually put those concerns to rest. So I actually think black Well issues put the rest outlook robust, and then when you look over all at these numbers, I mean this should be criticizing Djokovic for losing one game of one set in the US.

Open, got about a minute left. Dan, I think one of the last times we spoke, you said that it was about nine pm in an Ai party. That's going into the early morning hours. What time is it for you in the Ai story now?

I mean, especially in text run out from then, I'd say nine to thirty ten pm to where this is filk. Is there going to be glass in the dance floor? Does the music stop? Every once in a while we saw Tokyo Black Monday. Yeah, this is going to four am in terms of the party, and it's ten pm not either.

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