Bloomberg Audio Studios, podcasts, radio news.
Live from San Francisco to our TV and radio audiences around the world. Welcome to a special edition of Bloomberg Technology imed Lovelo. In just a few moments in video, CEO Jensen Wang will join us for a live interview following the company's latest earnings report in video, posting revenue of forty four billion dollars for the fiscal first quarter, even as a slowdown in China weighed on results in
video gave a positive outlook. I want to bring in Bloomberg's Ian King, who leads our coverage of semiconductors here at Bloomberg. And there is some math to be done, because the outlook for sales in the fiscal second quarter was forty five billion dollars plus or minus two percent. But the big disclosure was that there was eight billion dollars in revenue lost because of the restrictions on Age twenty, the China specific chip. What else do we need to know apart from that?
Yeah, I mean the high level is here is. In some respects it was worse than people had feared, but in others it was much better than they had hoped. The China blow was arguably much worse than some analysts have projected. They were saying, you know, at the worst end, we're going to see seven billion dollars of revenue go away. Here in video said eight. But guess what still in line or that there or thereabouts with where consensus was, which means other parts of our business are doing well.
There's black Well chip that they're able to ship to other places. Obviously they're getting supply, and that had, you know, kind of almost made up for some of the losses that we saw from China.
There was a number fifty billion dollars of total addressable market in China loss. That's the way they've framed it. They've said that before. It was away from the numbers where the news was. I felt Jensen Wong opened the earnings call his portion addressing China head on that essentially that door is basically closed to them now in doing business there.
What did he say, Yeah, I mean, this was in line with what he's been doing recently, where he's basically decided there's no point in messing around here, there's no point in working behind the scenes. I'm just going to go out there and lobby publicly. What he's telling the Trump administration in particular is, look, we if we lose China, if we're not allowed to play in China, we're going
to be at risk competitively worldwide. It's not just a revenue, it's that because we're not in China, the Chinese companies are going to start to do it themselves. Thinking that China cannot do AI is wrong. You need to let us play there. That was his main message.
He said that China will carry on with AI with or without Nvidia. In US newbergzine King, thank you very much. Let's get the investors reaction. Aoko Yoshioka, portfolio consulting director at Wealth Enhancement Group, joins us here on Bloomberg Technology.
You listen to the call. Your main takeaways please.
Sure, And you know, I think what Jensen said in terms of the AI era is here. I think that's the long term takeaway. You know, we didn't get answers on China. However, we know that demand is very strong and it's going to be strong for many years. There's still a lot of catalysts at Nvidia that's going to propel the stock for quite some time.
I asked you on the show this morning. Well, the biggest question was we agreed it was China. Were all of your answers given and what you were looking for to understand the future of Nvidia's business in that market.
No, I wish we had you know more details, but I think you know, Jensen and Collect gave as much as they could in regards to what is currently the situation with China, So there's not a whole lot we can do about it. I think we're all just going to have to wait and see whether or not they
can come up with a cheaper Blackwell. Perhaps there's other ways that they can sell into the China market, but for now they're effectively closed to China, as they said during the call, So you know that's going to have to wait for more engineering and perhaps more news out of the administration.
I want to bring Bloombergs in King back into the conversation. Ioko help us understand what Jensen Huang explained on the call. That they have a product or a category of products called Hopper, and as far as I understand the explanation, taking into account current US technology export controls, they have engineered that product, that chip to its lowest possible level of performance. What happened after that, Jensen essentially said it cannot get any less performant than that.
Yeah, I mean the way to under standard is to go back. Hopper is a fundamental design that was the most important chip inarguably in this AI revolution. Rules came in, and these rules aren't like, you can't send this chip there. What they what they do is they set parameters, whether it's speed or memory or interface, all of these technical parameters get set in place and say you cannot have a chip that goes beyond these capabilities and send that
to China. Page twenty was then a reaction to that, Hey, we'll make a chip that doesn't trigger these concerns, doesn't trigger these rules, and we'll send that. And then what's happened is basically the goalposts have been shifted again on in Vidia. So now they're at a point where we can't make this any worse and still have anything worth selling AOKO.
The outlook for the fiscal second quarter is sales of forty five billion US dollars plus or minus two percent. But at the same time, in Nvidia told us that there was eight billion dollars in lost revenue opportunity relating to China, and to me, that seems like somewhere in their business in some geography, they found more demand and they sold more of something than they had initially anticipated.
Have you been able to work that out?
Absolutely? I mean, I think consensus numbers were closer to forty seven forty eight billion for two Q prior to the export van and so that the if you add back that eight billion that they said they lost for two Q, they'd be closer to fifty three billion. And so you know, the demand was very, very strong, and I think that continues, and I think we also got great information about margins in the second half. So really strong numbers and solid guidance out of Nvidia.
Very shortly, Okay, we're going to speak to Jensen Wong live on this program.
What's your question for Nvidia's CEO?
Now, I think in terms of AI, just how things play out, especially on the enterprise. I think one of the things that he talked about is that enterprise AI, you know, is going to have to be back on prem. It's a little full circle for me when everything used to be on prem and we moved everything to the cloud, and now we're bringing back parts of it onto the premises as we need to protect those enterprise specific data.
So I would love to understand how he views all of that playing out going forward.
Okay, okay, a showcase, stay with us for just a moment. I'm looking at some of the after hours performance and video shares up more than four percent after ours highs. But then there are the other names, the other chip makers,
those server assembly firms, super Micro, Dell. In the memory space, Micron, Qualcom is not as high as some of the others, Marvel, which got to shout out on the call from Nvidia, Blue Magazine King those after ours moves are interesting because basically the market is projecting a bit of confidence that all the picture stuff that Jensen's been talking about for some time appears intact, in other words, a commitment to continue investing in the infrastructure that supports AI.
Yeah, I mean they want Uncle Jensen to tell everybody that everything's okay, and that's essentially what he tried to do today. But what is important to pick up on what our guest just said, Nvidia again said, guess what, these four or five big customers that are buying all of our gear, they're still fifty percent. So for the scenario that Jensen outlined to come true, which is that the enterprise is really using AI, that number has to go down. We have to see a large percentage go down.
A Yoko Yoshoka, who's portfolio consulting director at Wealth Enhancement Group, we don't talk as often about Collect Cress, the CFO of Nvidia, but she spoke for the first twenty five minutes of that earning school, and throughout it she was going into great detail about all of Nvidia's customers away from the hyperscalers, all kinds of healthcare and industrial and
robotics and consulting firms. But I don't quite understand that side of Nvidia's business, the software side, where they're not just selling GPUs to those that are building data centers.
Do you.
I think it's more the AI factories that they were talking about in conjunction with the software, you know. I think everybody needs to sort of pipe in and make sure they are getting AI in the manner in which they want to get it, whether it's through you know, the public cloud, which I think most enterprises are accessing some of that through that channel or other ways. And I think everybody's trying to explore how best to get the most out of AI from Nvidia.
There was some discussion in King about recent announcements from the Middle East. Actually there wasn't a great lot of detail, particularly in how that relates to top line growth going forward. There was something that Jensen Wong said about what he's doing next week.
He said, next.
Week I will go to Europe, and in the context of further announcements, there's this expectation that Europe will start doing what others are doing, which is building out AI infrastructure.
What did you make of.
That and what was this sort of between the hints message I think that Jensen Wong was trying to share.
Yeah, I mean the underlying message here is and this is a theme that he's been sort of forcing on us for a while, has been sovereign AI that a lot of companies, sorry, a lot of countries around the world want to keep their data within their borders and that to do the only way to do that is
to build systems locally. We obviously saw the announcements in Saudi Arabia, in the United Arab Emirates, and so he got asked, Hey, when's this going to help You wouldn't answer that, but then he said, so will there be more announcements Jensen, and he was like smiling although we couldn't see him, and saying, I'm on my way to Europe. You can expect more announcements.
Part of the question that the analysts pose to gen Some Wong was that analyst saying, historically, and remember, this company's been around a fair amount of time, there were moments on prior earnings calls where either Jensen Huang or collect Cress would give the streets something that was evidence that the big picture investment cycle was intact over a multi year horizon. Is how the analysts put it, that
they could see what was happening would continue. What was your reaction to the response to that question?
Sure, I mean, I think it was pretty positive in that their vision for how AI is going to impact every industry, every country is pretty spot on. It's been spot on. I think we're all trying to figure out how best to utilize it and what the parameters are. But it's impacting us in a true fundamental way, and I think that's something that NBDA has been talking about for quite some time.
Jensen Wong talked about his relationship with President Trump, He said that he trusts the president, that the president has a plan and a vision. Whether you are on the cell side or the by side. When you listen to something like that, can you model for it the CEO of a technology company's relationship with the President of the United States and what that might mean for this company going forward.
That's a really difficult thing to model for, especially when you know headlines can make changes pretty quickly. I think the one thing that you can rely on is at least you know, Jensen was talking about how manufacturing is going to be more high tech, more automated. We're not talking about, you know, low tech coming back, low manufacturing coming back to the United States. And I think that's the vision that we want to see going forward, especially in the United States.
Just again the after hours trade and VideA higher four point three percent in late trading. Looking at other movers, super micro, Dell, some of the server assemblers also higher, in part because of that broader confidence of what this means for AI infrastructuring and King and video off.
It's after ours highs though.
You know, there was a moment in the earning school where people started to say, have we answered the China question. I think it's worth recapping the basics the outlook for the fiscal second quarter forty five billion dollars of revenue puss or minus two percent, but also this eight billion dollar figure of lost revenues because of the restrictions on h Chenney and China. What were the other numbers that we needed to look at.
Yeah, I mean, as our guest mentioned, you know, sorry margins have been a concern, right, I mean, it's all a high class problem. But what the company was able to do today, which I'm sure help, was to say, look, despite all of the noise, despite all of the China, despite of everything else, we are still on course to get back to that five percent range later this year. And again, that is an astronomically high level for a
company that is in this particular industry. And you know the fact that there were even concerns about it heading towards seventy percent is kind of arguably a joke anyway, But again, you know coll that Crest CFO was yet, Yeah, don't worry, We'll we'll get back there, and adding reassurance, adding back, you know, I think to that list of ticked off concerns that at Wall Street had about in Video.
There is a longer term story about in Vidia's supply chain IOKO, and that's that it is like many others on shoring, they are working to assemble more of the server design, the complete package that goes into the data center here in America, insofar as in Video can control it. Jensen Wong spoke really positively about that. It's one of the good pieces of news. But the cost of doing business in this country is higher than other places in the world. How do you prepare for that as an investor?
And when you think about videos quarterly earnings going forward?
Sure, so, you know, I think he's especially called out a lot of partnerships too with TSMC, especially in Arizona and the build out that they're you know, doing out
in Arizona. So I think you know that they're all talking about this and planning for this in a in a very methodical way, and you know, the costs are going to be the cost But I do think that again, we're bringing back higher tech, it's not going to be too low tech, and that is going to cost quite a bit and it's going to be difficult to do. But they're also generating just so much cash I mean
to Ian's point. You know margins A's seventy five percent on You know, a company that's generating one hundred and twenty billion plus in revenues. You know, we're talking free cash flow, which is just astronomical for a company that was only generating twenty seven billion dollars in annual revenue just two years ago.
Heyoka, Yoshioka, portfolio consulting director at Wealth Enhancement Group Bloomberg Z and King, who leads semiconductor coverage. That is the numbers you need to know and the reaction to Invideo's earnings report. Coming up, We'll continue our coverage of Video's earnings results and tune in for our conversation with CEO Jensen one that's coming up after a short break. This is Bloomberg Technology. Let's bring in in Video CEO Jensen one.
Following the company's earnings and analysts call Jensen, thank you for your time here on Bloomberg Technology. You went into great detail about what's happening, particularly in China. I just wanted to go over something that I felt wasn't asked, which is fiscal second quarter sales forty five billion dollars plus or minus two percent eight billion dollars of lost
revenue opportunity relating to China in age twenty. It seems as if you made up somewhere some demand for a different product, or from a different geography, or from a different corner of the market.
What was that.
Well, we got a.
Whole bunch of engines firing right now. The biggest one, of course, is the reasoning AI inference. The demand is just off the charts. You see the popularity of all these AI services now, Chad, GBT, Gemini, you know, so on and so forth, GROC. I mean, they're just doing incredibly well across the board, and all of the APIs that they serve out and all the agentic AI services that are built on top of them, they're all doing incredibly well. I think that there's just a giant breakthrough
in AI's capability, and inferencing has just become a giant workload. Second, people realize that Blackwell is just a home run Envy Link seventy two is a home run architecture. We designed it to be a thinking machine, a reasoning AIS system, and I think people now the confluence of the breakthrough and reasoning AI and the availability you know, now the emergence of Grace Blackwell and Velink seventy two perfect timing.
I think that that's at the core a big part of it.
And the second part of it is that our supply chain is growing and we're really ramping it up, and they're doing fantastically for us, and so all of these things are all coming together.
And so it is fair to say that some of that additional supply on Blackwell and the demand for black Bell kind of made up for the opportunity lost in China, at least in the outlook for this current period.
Yeah, I guess so.
But you know, you just can't you can't underestimate the importance of the China market. This is the second largest AI market, This is the home of the world's largest population of AI researchers. And we want all of the world's AI researchers and all of the world's developers to be building on American stacks. And so, you know, irrespective of the nearer term revenue success that we have, we can't ignore the fact that the Chinese market is very important.
You explained again in some detail that at least in the Hopper architecture, you have engineered down to the lowest spec possible. It's not possible to do anything different with Hopper for the Chinese market. But in your consideration for a different architecture or a chip for the Chinese market, is that what we're talking about, a new design or new class? And have you made that proposal to the administration just designing from the ground up a new chip.
We're still thinking through that.
They're just the limitations are quite quite stringent, quite limited, if you will.
H twenty is.
You know, as far down as we could take a Hopper, we don't know how to make it even less. And so that's really the limit. But so there aren't there aren't. You know, the limitations are quite stringent, so we have we have to really think through it. Whatever we make
ultimately has to add value to the market. And so it's it's a really tight rope because because the Chinese competitors have evolved and advanced greatly over the last year, like everybody else, they're you know, doubling, quadrupling their capabilities every year, and the volume is increasing substantially. And remember these are data center chips. They don't have to be small.
They could be quite large and and and you know, they without American technology, the availability of Chinese technology will fill the market. And so you know, we whatever we offer has to at least at least be competitive and has to add value to the market.
Tensen.
Does Huawei have an AI accelerator or a GPU that is performance is hah twenty or is performance of other classes of GPU that you.
Make Huawei's technology based on based on our best understanding at the moment, uh, and we have a lot of ground truth there is probably comparable to an age two hundred and so they're they're they've been moving quite fast and and they've also offered uh this news system called cloud Matrix. UH that is that is scales up to even a larger system than our latest generation Grace Blackwell.
And so so they're Huawei, as you know, is a formidable technology company, and they're not sitting still and they look for ways to look for ways to compete, and they're quite formidable.
With that in mind, you've kind of explained the landscape now and Videa's ability to operate in China. I mean, you and I this year alone have already discussed the idea that they're they're fifty percent of the world's AI
research is in or from China. But are you having a sense of the vacuum created that those big names I think about Tencent or Ali Baba or bayd that were buyers of age twenty that they've already pivoted and turned to the offering from Huawei because of the the policy that is in place.
Yeah, they have no choice, but to you know, one of our one of the one of the challenges of the changing regulations is the ability for markets to trust the Nvidia and and ultimately American platforms. And so so it's prudent, I think for the Chinese customers UH to make sure that they they developed their stack on Huawei and because it's hard to rely on American technology at this point. And so that's one of the that's one
of the the unfortunate, unfortunate parts of changing policies. But anyhow, you know, I have every confidence that that if able to compete, American companies will compete.
This is in to HUH.
To write off American technology companies is not smart.
This is this is the home of of of.
Some of the brightest computer scientists in the world. American companies are incredibly competitive. We just have to have the confidence to go compete, and if we have the confidence to compete, we will win.
You said during the earning school that you trust President Trump and that the president has a vision.
And a plan.
Could I ask if you've talked to him about that plan and if it includes coordinating with Nvidia on policy adjustment that relates to changes in technology export controls.
Well, obviously I don't know all of his ideas, but let me tell you about two that are incredible. The first one is utterly visionary, the idea of tariffs being a pillar of a bold vision to reindustrialize to onshore manufacturing and motivate the world to invest in the United States. And it's just an incredible vision. I think this is going to be a transformative idea for the next century
for us. We're all in on the idea where we're setting up plants and encouraging our partners from around the world to invest the United States, and we have a lot of stuff going on, and so I'm very.
Excited about that.
The second major idea is to re send the AI diffusion Rule, recognizing that this isn't about limiting American technology, but this is about accelerating American stacks around the world to make sure that before it's too late, that the world builds on American stacks during this extraordinary time the AI era, and so these two initiatives are completely visionary and it's going to be transformative for America.
Jensen.
In the time that you and I have been on having this conversation, some news is broken from US Secretary of State Rubio who has said that the US will begin revoking some Chinese student visa. What I wanted to ask you is that with US government limits on foreign student visas, how does that impact a company like Nvidia. I think about the size but also composition of your engineering talent here in California and elsewhere in the United States.
I believe the administration still feels very strongly about about the incredible importance of immigration. Look, I'm an immigrant. I know many immigrants that came came to United States to to build a great life, and many of us, many of us have contributed greatly to the technology industry and and uh in the United States. I believe that that's going to have to continue.
Uh.
Remember, remember, you know, people from all of the world want to come to United States. This is just such an extraordinary country with such incredible opportunities.
We want the brightest to come here.
We don't want we don't want others to you know, we we don't want everybody to be able to come here, and there should be there should be rules, but nonetheless for the ones that really can make a contribution, want to make a difference, and we want to make it possible for them to come here and bring their great ideas, bring their great intellect and help us build in a
great America. And so I think I think the administration is all in on that, and I don't think anything that they've said changes that.
Jensen.
I surveyed our Bloomberg Technology audience around the world for questions for you, and I think the most common question is understanding who Nvidia's customers are away from the hyperscalers, but actually many questions about Elon Inc. And whether Tesla and Xai and Aggregate might actually be one of the biggest customers you have. You think about not just the data center chips, but this chip specific for optimists or in the cars, the omniverse component.
Could you speak a little about that.
We do.
We do a lot of business with Tesla and Xai, of Elons. As you know, it's just an extraordinary engineer. And I love working with him. We've built some amazing computers together. We're going to build many more computers together. And and uh, the work that he's doing in Grock, his self driving car, his optimists, these are these are all every single one of them world class, every single one of them revolutionary, every single one of them are going to be gigantic opportunities.
And and we're delighted.
I'm delighted to be working with him on that. And and so I I think the uh, the the optimist opportunities just right around the corner. It's very likely that human robots are are going to be robots that we can deploy into the world relatively easily. And uh, this is the first robot that really has a chance to achieve the high volume and technology scale necessary to advance technology. And and so I think this is likely to be the next multi trillion dollar industry.
I'm very excited for him.
Densen.
Let's end by talking about Europe. You alluded to a trip you're taking next week. It sounds as if the infrastructure build out in Europe is coming. Where will you be visiting and who we be speaking with.
Well, I'm going to leave the WHO as a surprise for all of you, but but I'll be seeing lots of heads of states, and I'll be in France and UK and Germany and Belgium, and and I think that that the the it's very clear now that every under every country recognizes that artificial intelligence, like electricity, like internet,
like communications, is part of a national infrastructure. No, no society could do without intelligence, as you know, and and there's an awakening that every country has to has to take some initiative to ensure that that their country and their society has access to artificial intelligence. And so we're really delighted to be able to work with you know, work with the European countries to bring AI infrastructure to
them and work with them to build AI factories. There's an untem number of AI factory projects in discussion and development and and so so I'm really excited to make this trip.
We're going to be all over Europe.
Nvidia, Ce Jensen Wang, thank you, thank you.
Good to see you.
Okay, let's get reaction from the analyst.
S Gilderia Da Davidson, Managing director joins us A gil Whether it's to what you just heard Jensen Wog say, or is it the numbers that you saw? What is your big takeaway of the last couple of hours.
That add this result to a long list of accomplishments from Nvidia. The fact that they can exceed expectations for the quarter and guy for sequential revenue growth while one of their biggest markets, their second biggest market is really frozen is very impressive and that's why the stocks up
after hours. This isn't as bad as it could have been, considering the fact they had to stop selling H twenties on April ninth into China and had to write off a substantial amount of inventory, So that's a significant accomplishment. The other takeaway, though, is the company's been very careful in how it's communicated this message. But let me make
it a little bit more clear. We are currently frozen out of China, and if we remain frozen out of China, that's going to have a material negative impact on the results of the company, which is to say, they probably will not be able to accomplish the goals that the consensus estimates have for them for next year. If they can get back into China, so they are actively lobbying the administration, the US administration, to find a way to be able to return to the Chinese market, and that
seems to still be a negotiation. That's why the company is so effusive in talking about the administration. That's why the company is so clear about their reasoning for why they should be able to sell in the China and how negative it would be if they are not able to sell in the China.
Go stay with us.
I want to bring in Bloomberg Intelligence Senior analyst Colenjen Sabani to the conversation. You've published your REACT document, you have your model and your numbers, but you and I both agreed a big question was where did the makeup come from?
On the demand side?
Where did they sell to Noting the eight billion dollar lost revenue opportunity out of China.
Yeah, if you unpack the numbers and put the age twenty impact aside, this would have been a blown out quarter.
But there would have.
Been the result and the outlook by seven percent and ten percent, which they have not done in the last five quarters. What this means is based on over Matt that black Well did three billion above expectations. And remember Blackwell expectations were not brought down both in one Q two Q. That's significantly important. Having said that China loss is a real revenue loss, but relatively so is it closed for most of its competitors.
I asked Jensen Wang.
Did Blackwell make up the shortfall? He said, I guess. So what's next? What happens for Nvidia in that key market of China.
I mean, the one thing we were expecting them is to announce the new chip or any clarity around that. So I think that was the only negative out of today's call that we didn't get that, so might create some room for uncertainty and you know, rumors or speculation
when it comes to numbers going forward. But the other key important thing we saw today was that gross margin again taking the H twenty van out came in better, which means the Blackwell yields and cost improvements are running better than we anticipated.
Kill Larry a final word to you, what happens next for Nvidia?
We need to get clarity on what are the restrictions of selling chips into China, and given those restrictions, what is the product that Nvidia can sell into that market and how does it stack up against the Wahwei product. I think you got mister Wang to acknowledge that the Whawei product is now caught up to the Age two hundred. So if all in Nvidia can introduce into that market is a product that's not as good as the Age two hundred, they probably have lost a significant part of
that market. We need to get clarity on that. I would expect us to get that clarity in the next few weeks.
And Gloria Da Davidson, Managing Director, along with Bloomberg Intelligence Senior Analyst Congen Sabani, thanks to you both. That does it for this special edition of Bloomberg Technology. Don't forget to check out our podcasts. You can find it on the terminal as well as online on Apple, Spotify, and Ihea From San Francisco, this is Bloomberg Technology.