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This is Bloomberg Tech coming up in Vidio, the first five trillion dollar company as President Trump puts Blackwell at the heart of talks with China.
We had the interview with Nvidio CEO Jensen one.
Plus Alphabet, Microsoft and Meta all sut to report results after the closing bell today will 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 in 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 one D We're up four.
Tenths of percent.
It is our worth more than thirty three trillion, this entire benchmark. But there's one keen juggernaut ed underneath that and you're looking.
At it, yep, and that is in Nvidia.
Nvidia is the first company to reach five trillion dollars of market value of market capitalization, and one of the things we reflected on on the gain in the shares, if we could pre bring up that chart, is the idea that that value jump has happened very quickly from the four trillion dollar milestone. Why is the stock hire by four percent today in the session. It's because President Trump on board Air Force one saying will be speaking about Blackwell.
It's a super duper chip.
I think we may be talking about that with President Ji, and of course President Trump due to meet with China's leader.
That's where the focus is.
But in Vidia's role in it is what's driving the market. Let's stay on in video and bring in bloombergs Ian King, who leads our coverage as a semiconductor sector. The news is that the President has said that he will discuss Blackwell with China's President G. 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, but there is actually quite a lot we don't know.
Yeah, no, absolutely right, And if you just go by what the President has said yesterday or today and what he said previously, there's a gap.
Right.
Our understanding was they might be allowed to send part of this new chip line to China, but only a very reduced version of it. That was the understanding that would be better than what they can do now. That will be good for revenue. But if he's referring to the whole of the Blackwell line to effectively in Video's best chips, that's a massive expansion of the opportunity and would obviously explain a lot of excitement, but it's unlikely that that's the case.
What's extraordinary is the level of excitement even prior to that statement on Air Force one, the fact that Jensen one was outlining how much rampant demand there is for Reuben and Blackwell, even without any China demand whatsoevery in.
Yeah, No, you're absolutely right, and I think that would probably be the bigger driver of what's going on today if we sort of look at the Wall Street reaction. As you said, he put that number of half a trillion dollars of sales that he's sure he's going to get for these new chips over a five quarter period.
So it's a little bit uncertain when it will exactly hit and how it will line up with Wall Street estimates, But you've got to remember that total revenue estimates for the company over the next couple of years are in the three hundred range. So five hundred is a lot more than three hundred. So regardless of how exactly that lines up and whether that's all captured in one year,
is 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 what bubble, don't worry about it.
Ian.
You've covered this industry since the late nineties, and you know, I was reflecting at the top of the show that the jump in market cap from four trillions five trillions quite recent. But there was so many headlines yesterday from Jensen Wong himself. You know, 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 was trying. He's playing whackam all 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 this that was signing these deals to get rid of some of these blockages, were 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.
Mexican King, Well, thank you so much for the roundup.
And look in was just talking about the florry of partnerships that were announced yesterday. One key one of them in Video Planning to make a one billion dollar equity investment in Nokia. The announcement saw a massive search look at it in Nokia shares.
We of course sat down with Jensen Wang.
And Nokia CEO Justin Hootard 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 deal with Nokia.
The market reaction kind of speaks for itself. There was a time where 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 and D and innovation and technology leadership. And if you think about where this world is going, and all those incredible devices are gonna be built on video platforms, robotics, autonomous vehicles, augmented reality, virtual reality, we need a different kind of network in the future and that's what we realized, and that's why we wanted to forge this partnership so that we're building a network leveraging AI for AI services, and that's really the big change here.
The technology is flowing both ways.
I mean, what is it that you will be able to do with Nokia, Jensen un able to do on your.
Own well, first of all, Nokia is in all of the world's base stations, and this air scale platform of Nokia's millions of base stations around the world, if our computers are not inside that base station doesn't help. It's no different than in videos tech computing platforms not inside of cars doesn't help. And so the first thing is we need a partner to get us into the world space station. We also remember we're bringing AI to radio networks, AI to RAM so that we can make wireless tech
communications a lot more efficient. Second, we're bringing AI for the radio, meaning on top of these radio networks and these telecommunication network we're going to be able to provide AI services, which is going to be able to make it easier for us to do robotics and autonomous vehicles and industrial automation and reach all of the different places around the world. That's kind of hard to deal with.
Wi Fi, celluar reads everything. And so we now have this fabric that we can deploy AI computing services on top of it. It's going to be completely revolutionary.
In your world and in your market.
Huawei is an influential player not just in Europe, I think also about the Middle East and Africa. How important is the relationship with Nvidia to be able to counter, you know, what Huawei does in those markets.
Yeah, I look. I think for us, one of the principles I've had with my team is coming in has been do what we can do that no one else can do, and that is air scale. What we do with any rand software, the software that runs on it that we're going to be putting on on the Nvidia Arc platform, that do what we can do well, and partner with the.
Best everywhere else.
And this is a clear opportunity to partner with the best. And by the way, that's where America and the Western world succeeds because we don't necessarily have one company doing everything like Whuawei. We succeed because we partner aggressively. And you if you watch GtC today, it was hard to not find it obvious that you're partnering with everybody. But
that's the advantage is this partnership. So we do what we do best, we let in Video do what they do best, and ultimately our customers win and ultimately for America, I think America will win because there'll be more innovation faster.
Nobody knows telecommunications better than Nokia. They've been at it for a long time. They're all over the world, and between our two partnerships, we know how wireless telecommunications we have and we have accelerated computing all in this partnership.
Nvidia CEO Jensen Wang and Nokia CEO Justin Hotard. There, let's get more on Nvidia this deal with Nokia. Vlad Galibov joins us. He's senior research director at Omdia, where he's responsible for cloud and data center research. Under this arrangement, that the technology flows both ways, but it's basically about wireless tech for use at the edge. You know, it was a huge surprise just going on the reaction of Nokia shares, but it's it's Nvidia moving into yet another new segment.
What's your reaction to it, please?
So it is I think we have seen the transition towards a virtualized radio access network be a little bit slower than what we would like. With this partnership, Nokia is basically promising to rewrite it. Stack up data is harder, stack updated software, stack optimize on Nvidia's software libraries and on Nvidia hardware. So I think it's very significant.
Why does Nvidia need to make a one billion dollar equity investment in Nokia and own three percent of it in order to do this.
I think that what we've seen in the past, whenever you ask a company to rewrite their software stack, it is costly. In fact, Amazon did something similar a little bit more under the radar when they started shipping their ARM CPU. What they did is they would enable software developers through funding to optimize their code for ARMED, to
migrate their code from Excity six to ARM. In essence, what Nvidia is asking nok to do is to optimize their code for whatever is already virtualized from Xcity six to ARM, but also to move from a physical RAN appliances to a virtual RAN.
What's extraordinary, Vlad here is the bigger picture.
This is in Vidia time and time again.
Basically making investments for people to ensure that in Vidio technology is integral across every industry group if you just go through not here when you think it telecoms, but they did deals across Lucid, across Uber. We think about robotaxes and thinking not just tell them communications I think are the future of software. When we think about what they've been doing with Palenteer of flood. Is there any other wide open space for in Vidia to get into.
I think you're absolutely right. This is in Nvidia utilizing its cash stockpile in a very smart way by entering another market. The mobil infrastructure market itself is only thirty five billion, 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 in Vidia has a lot more room to grow in a networking I think you'll see it growing a lot more in customer piece a 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 cold environment, to be ubiquitous.
Just tell us how ubiquitous it already is.
Flat because I think so many of us make the quick assumption that it's all about hardware and se inconductors, 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 Envy Link, 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 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 in for many optimized functions. I think that's what's very interesting. In essence, Jensen is asking, she's army of developers, I want you to help this industry, in this industry, and this industry and this industry. That's I think what's the most impressive.
Flat The biggest disclosure that Jensen Woe made was the five hundred billion dollar 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.
Bus says that n video is doing.
It's I knew you were going to ask me this, so I did. Of course, that was what we were also watching yesterday. It's about one hundred billion high. So this creates about one hundred billion opportunity. I think it's very significant, particularly if we end up seeing the Black Veil deal with China, because that means that we then have more than one hundred billion of upside. I think when I think about the one hundred 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 bicking it in. But some of the things that I am concerned about are physical infrastructure availability and supply chain readiness, and power availability in the data center. I would say that these are the three things that I am most concerned about. Is all of the components that
we need there in the supply chain. Specific is the physical infrastructure ready for the data centers because there's very long lead times on some physical infrastructure. And then finally it's the power.
Black Can I jump in very briefly here because when you think about the supply chain, you think about the other components that are needed within data centers. S k Heinez says, it's full twenty twenty six chips late, it's sold out exactly.
So the thing is with ESK Hannix, they are in the blackwell, but the rubbin is done with some sung So I think that there's some smart hedging of bets there from a memory perspective, But there's so many other aspects. There's packaging material and again in videos being very careful with how to balance the packaging material supply chain, but Nvidia has only been able to control the semiconductor part
of supply chain. I'm worried about some fundamental materials like precious metals used in the building of the servers and the electrical equipment.
So why where metals are key concern when we're thinking about US and China. Vlad Galibov joy to have you on Senior research director at Omdia. Thank you coming up more on Nvidia and it's border impact on the tech markets.
It's a blue meg.
Tech Nvidia has become the first five trillion dollar company.
This is CEO Jensen.
Wang's spree of deals propels the AI frenzy to new heights. Let's bring in Marghi Patel for Moore. She's a senior portfolio manager and head of the capital allocation team at all Spring Global Investments. Six hundred and twenty nine billion dollars in assets under advisement, about eleven billion dollars worth of Nvideo shares in your fun Margie, your reaction to this company being the world's first five trillion dollar market value company.
Well, it really shows us. This representation is 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 the and 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 in Video at this moment, do you add to.
That stake that you currently have.
We've still got seventy three buys out there from the analyst community and in one sell even at a five trillion dollar valuation.
Yeah.
Well, it's very hard to be negative on in Vidia unless you see some negative development in the company. And just because the stock has gone up, and actually looking at my portfolio, I actually have some stocks that have actually are performed in Vidia this year gone up even more so, I would say that as long as a gross path looks pretty good for n India, that it would be a worthwhile add.
I mean, look at Micron for example, of one hundred and fifty percent so far this year. Some of the alterias 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 leading edge and viata.
And really, 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 one 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 the eyebubble, and the reason for that is we're going through a natural trend position from an old computing model based on general purpose computing to accelerated computing. We also know that AI has now become good enough because of reasoning capability, research capabilities, its ability to think. It's now generating tokens and now generating intelligence that's worth paying for.
Jensen's argument is the same it has been for the last two years, we're in the early innings of a shift from general purpose computing to accelerated computing. But the different bit now is he's saying AI is worth paying for. I think that he's saying there's real revenues on the software side. Is that the evidence here is that the argument, well, I.
Think it's really not so much. We haven't actually seen revenue pourion. But I think it's a change that companies are making because they see that this is what they need for their future. And I think it's totally different. As he was making the point from say the Internet Bubble that people often make a comparison with the Internet bubble was about degregulation of the telecom industry and it was about moving data and voice faster through pipes. It
wasn't a material change. This is artificial intelligence. All the new chips and so forth are really a fundamental change in how we perform all kinds of tasks related in our economy. And I think because it's happened so fast, it's really only been say one year or two years, it's hard to adjust to say we're looking on the verge of a whole new world and how we approach technology. So I think that's why people are a little discombobulated seeing how fast these socks have taken off.
But they all have the cash flow to finance's growth.
So it isn't as if they're artificially borrowing money to make investments that look pie in the sky.
This looks the beginning of something.
Yes, Margie, you mentioned cash flows. What's your position on the circular financing concern about Nvidia?
Well, I think those partnerships where they've made equity acquisition and some of these companies is just a business partnership. It seems perfectly reasonable when they're striking up a deal between two companies. And again coming back to the companies like Invidia, they aren't borrowing money to financi's activity. They really have enormous cash flow that they're using and deciding how to best.
To allocate that.
So I think that companies, particularly the large companies, have an idea of where they can best get the long term returns on their cash flow, and that's what we're seeing.
Margie Vitelli Allspring, thank you so much for joining us today on all Things at AI time out for talking tech. And first, Amazon is planning to invest another five billion dollars in data centers in South Korea. That's on top of the more than four billion dollars that are committed with partner sk Group back in June. Now, the new funding will support the buildout of AI infrastructure to twenty thirty one plus go to Group.
Well, it's raise.
It's fully of forecast, citing new initiatives and cost cuts. Indonesia's largest internet company posted its fifth straight positive quality result has been steadily narrowing losses since it's twenty two. IPO still investors remin cautious. The stock has fallen about twenty percent of the last twelve months. And Apple, while it's preparing major refreshes to its mac Boogair, iPad Mini and iPad airlineup, with plans to give the devices higher
end OLED displays. Now that's according to sources, the iPad Mini will likely be the first A game in the upgrade, arriving as soon as next year.
Welcome back to Bloomberg Tech. There is a lot to get through in the earnings context. That throw up the board and let's go through it one by one. Five Serve is a name that we have not used as much on this program, but the stock is down forty two percent at one point, down forty seven percent in the session, absolutely slashing its EPs guidance. Left one analyst at Jeffrey's saying that the level of this miss in the quarter gone and the cut to its outlook is
difficult to comprehend. That's a payments processing name. Very interesting. Going also to telecommunication Verizon another one that we're watching are almost three percentage points the US of largest mobile service provider, of course, actually had a loss in wireless phone subscribers in three Q. 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 earning 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 four who's been at the business since twenty eleven and ran deepop and the company that they bought a few years ago. And we're talking really here about Christy Ptelgoyle being brought up from Chief Growth Officer to be CEO as of January the first, just Silverman and I chattered to him yesterday, and really, here's a man who's been at the Helm for eight years.
He's did this company through the.
Lockdown crisis, through supply chain crisis, and now he's positioning this business for artificial intelligence. Remember they did the deal with open ai already, and he thinks Etsy is uniquely
positioned to win an AI. But he really thinks the more brutal more clearly, Cruti Patel Goyle 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 deepop 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, 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 Alphabet, Microsoft, and Meta all set to report results. Let's take a look at what investors can expect and start with Meta. Bloemerg 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 Zark 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 seventy two 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 fifty billion this quarter coming in and they're forecasting about fifty seven 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 it's 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. So they are taking really creative approaches to ensure that that debt isn't showing up. On today's quarterly report the.
Books, Riley Griffin, thank you very much that stay with earnings this time, Alphabet, Bloomberg Big Tech reported Davy Alba here with the latest and actually with Alphabet really consistent spending Davy, but also Cloud and like GCP in recent weeks has been really interesting.
What do we need to look for?
Yeah, absolutely, ed, I think Capex and Cloud are the key units to watch out for. Last quarter, we saw that Alphabet changed its guidance to eighty five billion dollars for spending on AI infrastructure for twenty twenty five, which was a ten billion increase over its last guidance. So you know, Google is really showing its commitment to AI here.
And then Cloud has been booming. You know, we've reported recently on the huge, high profile deal with Anthropic for Cloud to provide its specialized AI chips to the AI startup Anthropic, and this was deal valued in the tens of billions of dollars, So that is a unit that we will be certainly watching very closely. We also know that Cloud has existing commitments from AI startups that it knows will boost revenue for its unit up to fifty eight billion by twenty twenty seven.
Yeah, I think will Street anam is anticipating what about a thirty percent growth for the cloud computing part of the business. But in terms of scale, Davy just remind us, I mean, what is it about eighty five percent of revenue still comes from advertising. That's still going to be where the real driver of revenue is going forward. Is there any worry about well competitive threat, particularly when it comes to search.
Yeah.
Absolutely. Search is still the core financial engine of Alphabet that has long been the case, and it's you know, being it's being pressured to prove that it can still be a driver of growth. And as AI rifle Circle, particularly open Ai with its AI powered search tools and a new web browser that it's launching, this unit is certainly under pressure right now.
Yeah, all lies on Atlas Bloemags Davy Alba. Thank you as we head towards the closing bell and that set of numbers and rounding out the big earnings is of course going to be Microsoft, the tech giant, hot off the heels of that relationship reset we've seen with open Ai. Let's begain Michael Turn's managing director and senior technology analyst over at Wells Fargo Securities.
Interesting to Microsoft.
Trading down a bit today, but yesterday really got a lift past four trillion dollar market capitalization because we thought that clarity is there in terms of relationship with open Ai. What clarity do you want from the numbers tonight?
Well, the tech.
Investing market is going to be focused on Microsoft's capex. We're a billion above street at thirty one billion and expecting more than one hundred and twenty five billion.
This fiscal year from Microsoft.
Microsoft investors are clearly focused on two things.
Your growth. Can the reacceleration continue.
We've seen really strong net new Azure revenue trends over the past couple of quarters from the company, as well as what you're alluding to, the opening relationship. We caught it a sigh of relief yesterday, just that that announcement is out and we're seeing you saw the stock react well yesterday. Just some signs that the companies are working more closely together. Still after I think a lot of back and forth around what's happening between the two companies right.
Now, Michael, But based on your model for Microsoft, like has has this unknown about the relationship with open now, I really been and overhang on the stock.
I think, you know, I think it's the first time in a long time we've started a field questions on cloud market share. Azure has been the dominant market share gainer since chat.
GPT took the world by storm.
We've seen Azure just continue to outpace growth of the other hyperscalers. We're talking about a business that's approaching one hundred billion of annual revenue growing near forty These are unprecedented rates.
But you know, with some of.
The deals that we've seen announced away from Microsoft starting to show up, there have been questions around just the size and scale of the aspirations of open Ai and how much of that occurs to Microsoft versus the broader cloud hyperscaler ecosystem.
So, you know, this is it, this is the conversation. Let's let's do this.
So GCP has a one million TPU deal with Amthropic. Microsoft has started having a relationship with Amthropic AWS and Bedrock is kind of thinking, well, what else can we offer? Grock is now available on Azure. I think basically the landscapes changed.
Does the higher.
Ary change now aws as your GCP.
I mean, we think Microsoft still has the lead in terms of market perception. That relationship with open Ai has been very advantageous. So we think Microsoft share games have
been primary a function of two reasons. Number one, just the later stage movers to cloud are disproportionunately more skewed towards Microsoft and more traditional businesses, whereas Amazon when the early adopters, Microsoft seen the next wave of come to cloud, and then the relationship with open Ai is really improved the perception of innovation with an Azure and created an environment where startups or building using Azure really for the
first time. And I think everyone wants access to opening Ice technology, which is embedded into Copilot. You can directly tap the opening IAPI 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 a
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.
Prefer maybe Microsoft did too. The issue for them is supply, not demand. They're having to turn to other companies you analyze Call We've they're looking at Nebious an end scale to really be able to fulfill some of its overall cloud needs. How are you thinking about capital Expendit show rising for Microsoft in the next full year twenty.
Six, I mean, we think it continues to go higher. We're modeling above consensus right now, or 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 is still coming online. We think the most important thing beyond what Azure presents for the quarter is where they guide 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 as one hundred 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 mode to crack in software.
Right.
We've seen many companies try and the honustrays as we've just all been condition 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 three sixty five Commercial Cloud,
which does embed the Copilot metrics as well. That business is forecast to grow thirteen to fourteen percent this quarter or any upside would likely be attributed to Copilot and could create I think the next big unlock for Microsoft to the productivity business could start to show growth improvement alongside Azure.
Michael Touring Software, an list of equity research at Wells Fargo.
Thank you so much.
AI startup Character AI will ban kits from having conversations with chatbots on its platform. This follows growing pressure from lawmakers and a wrath of lawsuits alleging the company so characters are responsible for harms to children. Bloomberg's AI reporter Rachel Metz has the story Character for some time has been a very interesting startup and platform to follow, and I think we've even talked about some of the risks around the concept of an AI avatar, but this is
a very specific line of reporting. I think best just to summarize it for us.
Yeah, I mean Character AI.
When it got its start a few years ago, the idea was that anybody could create or use any kind of chatbot. I mean they wanted people to make anything, really, so you'd see like video game character style chatbots like Mario. You'd see impersonations of celebrities like Elon Musk, so on, and so forth, all different kinds of things. It's kind of it's part of a wild West of the scene
of AI chatbots that we're really in right now. But what you also saw is immediately this was very appealing to teenager in particular, like a huge portion of their users have always skewed younger, and over time we've seen a number of lawsuits being filed in general against companies that are offering AI chatbots, alleging certain types of harms to users, but in particular a bunch of them have been filed by parents against Character AI due to harms
that they allege have happened to their teenagers, up to and including suicide.
And then the regulators have become involved. FTC opens a regulatory investigation into all makers of these sort of AI chatbots as to how much children should be continuing conversations with them. We've got others can State of California trying to regulate at RACHEL.
So are they running this in some way and how.
Do they execute the limitation on age here?
Yeah, I mean, I think this is a really interesting strategy. Just yesterday we saw a bill introduced in the Senate that seeks to outlaw the use of AI chatbots by people who are under eighteen, and and that's you know, like right in that same timeframe, we're seeing Character AI
saying Hey, actually, that's basically what we're doing here. I mean, they're going to let their kid users who are roughly between the ages of thirteen and seventeen use different features, but they will not be able to have these end lists back and forth chats with their so called characters,
that's what they call their chatbots. And I think, yeah, it is in many ways an effort to get ahead of some of the issues, but the company also told me, look, we think we don't know that there's still a lot we don't know about how these chatbots can impact kids, and so we think that this is the best thing to do right now.
Rachel Matt, it's a great story. We urge people to go and read it. Thank you very much. Indeed, let's stay in the world of AI startups because one of the biggest backers in the industry is also one of
its biggest winners. Nvidia has been growing the number of startup investments and makes each and every year when it mergs AI editors, I think of and is here to talk us through it because it's not so venture capital company, but its strategic part, the VC arm of it is just becoming a jugglenaw in the space.
Yeah, it's definitely become the five trillion dollar benefactor of most of the AI industry right now. What we reported here is that just through October of this year, Indigia has backed fifty nine different AI startups, which already outpaces all of what it did last year. I think it's more than triple orquadruple will Get did a couple of
years ago. And there's no sign of it slowing down, and I think there's a clear desire here to kind of support the wider ecosystem and industry and ways that probably come back and benefit India.
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 NVIDIAs 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 Invigia chips. And that may be true. What's also true is that ob Nvidia is the market leader for AI chip, 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, in Vidia 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 benefitting and help diversify its revenue stream.
This great anecdote in the story coming from ourvindustry universe suits 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 bonafides.
Right now, Blue BIG'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 Jijing, ting that conversation's next.
This is Bloomberg Tech.
We are going back to our top story.
President Trump is set to meet with Chinese President's using pink tomorrow, with discussions expected to include in videos new black Well chips. Bloomberg Senior Tech editor Mike Sheppard joins us now, and video has just added a third of a trillion in the last two training days. Yes, there was a raft of its own announcements, but when I say new black Well ships, that's sort of the operative word here.
New Are they going.
To be allowed to sell some sort of dumb down version of a Blackwell architecture into China.
Mike Well, that is the proposal of President Donald Trump is express willingness to entertain. Over the summer, he said that a deprecated version of the cutting edge black weld chip would be something he would be open to allowing sales of in China, but it's unclear whether the Chinese would welcome it, and also what the reaction might be here in Washington among Republicans and Democrats who remained skeptical about the wisdom of selling such advanced technology to a geopolitical rival.
Carroll, what's so extraordinary is that what we heard articulated by Jensen, and here we have President Trump talking about Blackwell being in the discussion point Jensen went out and said, I've got half a trillion dollars worth of orders for Reuben and the newer architecture and Blackwell put together, with zero coming from China.
So what do you think the likelihood is.
Here that China even acquiesces, even wants to be buying any of this.
Well, it's a great question because so far China has rejected the even dumber down chips the AH twenties that President Donald Trump had relented on allowing sales of in China. Earlier this year. You remember in April the Trump administration blocked the sales of the Age twenty, which have been designed for the China market. Then relented in August, but at that point authorities in Beijing said no, thank you
and encourage local firms instead to buy domestically. And this is part of the Chinese government's effort to build up its own supply chain domestically, to try to turn to local producers and build up their own industry. So the question is will they even want the I guess dumbed down version of the blackwell should President Donald Trump persuade Hijinping to accept it?
Now?
One of the theories has been that maybe China is holding out for a more advanced version of the AI chips the Nvidia makes in hopes of deploying them across their industry. There's no question that they outperform on a chip per chip basis what is in the Chinese market.
But one thing that China has been able to do is produce its AI chips, including Huawei as send at scale and deploy them at scale, and that makes up perhaps for some of the deficiencies and individuals chip performance that we've seen, so it'll be interesting to see how this all plays out and whether other bargaining chips may get tossed into the conversation as well.
Caro on the pun, will we see Jensen and President Trump meet well?
The two men indicated yesterday that they might see each other somewhere on the sidelines at the APEC summit in South Korea. Jensen left. We're not sure exactly what time he left Washington, but by now he would.
Be at least close to soul.
The President's meeting Machesian paying a schedule for ten pm our time tonight, so we'll be watching to see if the Jensen and Donald Trump crosspads. The two men regularly meet and speak by phone, Jensen said yesterday, so surely they will be in touch, and if Blackwell is approved, we might see an even bigger reveal.
And we wish them all well with their jet lag. Bloombgs Mike Jefford, we thank you so much. She's been all across what's happening in Washington, and GtC.
Does it for this edition of Bloomberg Tech. Tell you what we're also all across. After the closing bell.
Join us to help break down the earnings out of these key companies Meta Alphabet, Microsoft, All focus on capital expenditure, All focus on how much demand there have for nvideo products.
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