Nvidia Earnings In Focus; SpaceX Eyes Historic IPO

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This is Bloomberg Tech coming up in video. Earnings on deck, a huge moment to the world's most valuable company in the stock at the center of the AI Boom plus SpaceX inches closer to launch.

It could be.

Today that must company unveils it's IPO filing and we take a deep dive into soft banks bet on open AI insiders worried the Masoschi sun is too tight to the AI giant. Right now in video is everything that the Bloomberg Tech audience is clicking on reading about, talking about We're up two percent, taking our year to D eight game twenty percent. We expect eighty percent top line growth,

Let's get the stock story for the world's.

Most valuable company with Bloomberg Tech Equasies Reporter Carmen Ryanikey Friday, Monday Tuesday, we were almost in correction territory within video at the heart of what was happening in chip stocks. You write today that in Videa's earnings will either make or will break the rally and chips, why, Yeah, So.

It's been so important in video overall. Right, we know it's sort of the king maker of the AI trade. It's the stock that all investors are watching really to see the demand going forward and if that story is still strong. And so this huge rally that we've seen in the chip making space really from this March thirtieth low up through last week, it's had incredible momentum. But in video is really the thing that investors are going

Calm and the m Live and macro View team go back and say, what typically happens post earnings for Nvidia, even if it is a blowout, and this is the answer. It's a pretty mixed picture, right. There is no guarantee that even if Nvidia has a bond storming print that in the days that follow, even the month that follows, the market will go with it exactly.

So, something that we've seen over the last few earnings reports for in video is that shares at actually fall in the day after results, even if they're very strong, even if it's a blowout report. Some of that is pretty typical around earnings. You get a little bit of a buy the rumor sell the news. Obviously, this could be a good place for investors to trim to sort of take some profits, especially after such an incredible rally.

Hey common how often before the show and before big moments are Ibu, and I say, calm and check me on this.

Let's do it again.

In Vidia's twenty four times forward earnings twelve month forward earnings that seems below.

It's historical average.

I'm basically saying, tell me about the valuation of this company going into this print.

Yeah, So we've seen in Vidia's valuation sort of continuously tick down even through the stocks rally, because its earnings growth is so astronomical. So basically, what investors are paying for that forward earnings growth is less than a lot of other companies, even other companies in the space that come manda much higher valuation.

So it's interesting that it's so cheap.

Usually that entices investors to jump back into the stock, but that remains to be seen. We'll see what happens in the after hours today.

So smart and given the impact at the index level, that's why I wanted to start on the stock story. Bloomberg's Carmen Ryinike, thank you very much. That's the broader picture. Let's dive into Nvidia's specific concerns. We've got to Bloomberg's Maggie Eastland, and this is about a story of AI momentum, the infrastructure build out, the basics, What does the world think Nvidia is going to say after the market closed.

Today, Well, look across the board, folks are expecting a really strong performance from Nvidia, But like we discussed earlier, that might not necessarily translate to stock market gains because at this point they're expected to do well.

AI demand is strong.

Jensen Wong has said that repeatedly. The thing that they're going to be looking through is trying to determine how long can this AI boom really last? Is this sustainable for demand to be this strong for this long? And then more specifically, what are some of the supply constraints. Obviously demand is skyrocketing.

There are things like.

Memory, like networking that in video could run into bottlenecks that ultimately limit how much of their AI compute they're able to supply to hyperscalers and other customers.

Maggie, we're in the unusual situation, aren't we, Where it's Wednesday, we have earnings. I just got back from Las Vegas.

We spoke to.

Jensen Wong on Monday, and to your point on the supply demand dynamic, this is what he had to say.

We have the largest supply chain in the world.

Our partners have done a great job securing supply for us, and so all of the pieces go together. The silicon, photonics is lined up, Everything is all lined up. It's just that the demand is much greater than the overall capacity of the world.

Then there's the overhang, and I think you and I both know the overhang on in Video is probably China, even if it's not material in some sense, where do we stand on China?

Look, the outlook is still very cloudy. So back in March, Jensen Wong told investors that he was firing up H two hundred production and he had US permissions. Now the US has confirmed that. But what we're seeing, even after Jensen joined for the trip to China last week, is that US officials are saying China is blocking its companies

Call after hours.

It's been really interesting sitting next to you at some of the events of the last twelve months. Right we started with CS in January, then GtC. A lot of this is about Jensen one trying to convince the world that AI is doing things that are meaningful and useful.

Absolutely, I'm fully expecting Judson to emphasize all of the applications for AI. Right That's the question that hyperskillers are also sort of facing, is what is the end use of this? Where is the return on investment going to finally arrive? So we're definitely going to see and focus on that. You also may see a focus on imprinting

Kloomberg's Maggie Eastland top Top Reporting. Thank you very much. There's another big one out there today and come in up. SpaceX moves closer to what could be the biggest IPO in market history. We're waiting on a pretty key document and we're going to break down what to expect. It is primed for list off. This is what financial markets look like right now. Then a's that one hundred rebounding up more than a percentage point. Semiconductors rebounding again. Friday, Monday, Tuesday,

We'll be right back. This is Bloomberg Tech.

Investors are watching waiting for SPACEXIPO. The s one could flip public as soon as today. That's the reporting, and the company reportedly targeting a seventy five billion dollar raise in a listing that could value SpaceX up to more than two trillion. We also learn more about the banks. Let's talk to Bloomberg's Anthony Hughes. It looks like Goldman is flush lead left. Surprising because Morgan Stanley is also a lead bank.

Ah Hi ed, Yes, well, I think that's not that's prizing. Goldman has got the coveted lead left role here, But whether that really means they're leading the IPO. I mean, they are leading the IPO, but to what extent they are leading it in a joint capacity with Morgan Stanley will be sort of you know, a big copic of

It's possible.

And also you know, we know the Golden Sacks has obviously done a lot of work for Tesla in the past as well, so you know, we knew that Golden Sacks was going to have a pretty big role on this as well.

We've must is anything as straightforward as things being in alphabetical order. I mean, Morgan Stanley too, Wright has done a lot with XAI, did a lot with Twitter at the time that must bought it. The thing about you, Anthony is you're a student of history. You've covered a lot of these IPOs tech IPOs, Like if you look at Ali Barber, there was a flush lead left then, but after the fact, when you pour through it, it was pretty much equal economics.

Yeah, if we go back to Ali Barber, which was in twenty fourteen, and you know, that was the biggest IPO of the biggest us IPO, it is still the biggest us IPO of all time. But that IPO actually listed Credit Swiss in that lead left spot, and Credit Swiss doesn't exist in the form that it did anymore. But you know, at that time, I do remember that, you know, there was a lot of debate in the bank and banking circles about which bank was really, you know,

Again, we are expecting the biggest IPO of all time, and those banks are going to get big business from that. Bloomberg is Anthony Hughes, thank you very much. Indeed, staying with SpaceX. The company is reportedly planning to acquire coding startup Cursor just thirty days or within thirty days.

After its IPO. That's according to sources.

In April, SpaceX said it reached an agreement giving it the right to acquire Cursor for sixty billion dollars later this year, alternatively pay a ten billion dollar fee tied to the company's partnership. Bloomberg's Rachel Metz has been across this, the chaos of it, every twist in turn. I mean, it's so interesting, right. We were asking ourselves at the time in April, like why is it structured this way?

Yeah.

So this transaction, according to our reporting, is set to proceed thirty days after the IPO. So what that doesn't mean that it will close necessarily right then. Sometimes there's regulatory looking into that happens, and that could take up to a few months, but it is set to go ahead or expected, I should say, to go ahead around that time. And the other thing that we found that was interesting is that this ten billion dollar fee we knew in the past from past reporting that it was

There's going to be a section of the blombog tech audience with respect that they're going to say, hold on, SpaceX is acquiring a coding startup, Cursor, and let's fill the gaps for them. SpaceX acquired Xai just before it plans to go public. Spacexai is like this bigger entity. Where does Cursor fit in.

Yeah, that's a really good question, and I think part of it, as you mentioned, is this combination between SpaceX and Xai.

Xai has a ton of compute.

Compute is something that Cursor really really needs more of, as we saw just the other day, they announced their latest model, which is meant to help people with coding, as some of its past have done, and it was partially trained on Colossus two, which is a new data center from Xai. So you're starting to see the companies already working together and this sense that they can be really helpful to each other.

What I understand is about people. Something that happened post Xai SpaceX integration, a lot of talent left.

Do you have any sense of how Cursor feels about that? Right?

There is the wow, we get to work with Elon Musk, and there's also the ut, oh we have to work for Elon Musk.

That's a really good question.

I mean, I think these two companies have been familiar with each other for a while that there have been a few Cursor people. I believe that I've gone over to Xai. So it's going to be interesting to see what happens, right. I mean, as we know, as you mentioned, a lot of people had left Xai over time, but I mean Cursor they feels a really strong team, and we'll just have to wait and see.

Bloomboa's Rachel Matt's top Reporting. Thank you very much. Coming out from the program, we're going to speak to AMCA CEO Joi Malik after raising a three hundred million dollars Series B Unicorn status manufacturing in critical Defense and Aerospace. That's next. This is Bloomberg Tech. Let's take a look at today's big number. Eight thousand. That's how many employees Meta is laying off starting today as part of a previously announced restructuring aimed at reducing costs while investing in AI.

Well.

Those comments received a bit of a backlash online, including from former Singapore President Halimi Yakob, calling it disturbing to describe workers in such clinical terms. Singapore and Hong Kong

Absolutely, So what AMCA is actually doing is we're developing and then manufacturing critical components, not just contract manufacturing, for critical readiness and production gaps that our customers have. And so typically these components there's only a single source for in the country, unlike other contract manufacturing categories, and our business designs these components, qualifies them rapidly and then manufactures them.

So it's a little bit different.

Than your typical contract manufacturing business, which is, you know, just a machine shop you're looking to produce at scale.

Jay case study Why harness right, That's something we talked about a lot in this program. Heavy dependence in that case study on China. Give me a similar product, a similar sort of component that you are solving for where there might be a reliance on an external country to get it.

Yeah, you know. I'll give you two examples.

One example are the sensors that we put onto our you know, put on put onto almost all of our industrial platforms today. A lot of those sensors are sourced to sensing elements are sourced from off or you know, offshore companies and nations allied with them.

You know.

That's one example.

Another example would be, you know, capacitors in other passive electronic electrical components. These are often components that have been offshore you know, to Asian countries over the past three decades.

In America today has.

A very very lowd windling supply base for these types of entergy components. And so that those are two examples of areas where we are designing in the country and then manufacturing into the country.

Those components for the warfighter.

Jay, just have a few rapid fire questions if I may, what years have you found this company?

Twenty twenty four in November twenty.

Twenty four in November? And is this one billion dollar valuation post money or pre money?

That is post money?

So in about eighteen months you've founded, launched, and scaled up this company and got to a billion dollar valuation.

What should I infer from that? The pace at which you've done.

That, you should infer that you know, we're living at I would say the largest gap between what America needs and what America.

Is able to produce in generations.

It's a generational opportunity for folks who are looking to build in this country. I think over the next five to ten years you will see a lot more manufacturing companies in America building for America. And we're just, you know, sitting at the forefront of this. I think immense growth growth curve that's that's coming and will and it is already happening in the nation, both for defense and aerospace customers as well as in other categories like AI, infrastructure, energy, robotics, et cetera.

Jay, who are your customers?

You know, do the sensitive nature of you know, of the work that we do. I can you know, disclose any specific names, you know, but some of the names that that we are we have been able to disclose are you know, Boeing, Airbus, Honeywell, Lockheed Martin and then you know certain branches of the military. But you know, all of our components today that go on to platforms. We all know about seven thirty seven, MAS, Triple seven, F thirty five's, F fifteen's, F sixteen's, you know our

You know, it's interesting we've we've probably spent a lot of time understanding some of the problems that those customers that you've just outlined have, but probably of ancor it's better to talk about what your constraints are, where the bottlenecks are for you and your own supply chain.

You know, in our own supply chain, there are certainly, you know, big gaps right now at the sort of like infrastructure level, like I mentioned, you know, for sensors, for example, you know, we need sensing elements these are highly precise, you know, elements that go into sensors that the country doesn't have a lot of suppliers for. So in those cases, you know, we're taking a new approach.

Complim J.

Malik of AMKA raising three hundred million dollars one billion dollar valuation, Thank you very much. Plenty of other news headlines for the show's time for Talking Tech. First up, Open ai is planning its first international flag, the chat GBT maker, committing two hundred and thirty four million dollars to launch a new facility in Singapore, its first so called applied AI lab outside the US. Partnering with local authorities. To Hub will hire over two hundred engineers to embed

The Chinese government has to decide how much of their local market do they want to protect and how much of their local markets do they want.

To expand with a more AI capacity.

My sense is that the demand in China is so incredible, just like it is here. Agentic AI is also making enormous progress there.

My sense is that over time the market will open.

Two themes, what's happening with China and demand outpacing supply around the world. Let's discuss where video sits in the global chip ecosystem with Paulina mcpadden, Investment Manager of International Concentrated Growth Strategy at Bailey Gifford. I'm so excited to talk to you because, yes, in video is in your strategy, but so is everything else around the world. And what Gensen outlined there on China's so interesting. The base case assumption right now for Invidia is zero access to China.

Maybe we'll get some clarity.

There's everything else that comes with that, and I just wonder how much attention you really pay to in Nvidia's ability to service the China market or not.

I mean, it's a really good question.

And I think the honest answer is it's not really factored into our upside cases for Nvidia for a while because the problem there is you're having to try and prejudge what politicians might want to do at some point in the future. So each two hundreds have been approved for export to China since last year, but it's the Chinese government's decision not to approve purchases by Chinese companies

Now long term, maybe that's.

Possible, maybe it does threaten in the video eventually, but two things give me comfort on that or at least the next five years. One of those is that the existing high power chips in China are still a fraction of the performance of Nvidia's leading chips, so I think that gives non Chinese companies and AI.

Researchers a leg up for the long term.

And the second thing is it's actually really really hard to build up a scaled and complex semiconductor supply chain.

It's not as easy as just putting capital into.

It, as China has done in the past with things like EVS and emmersion into global dominance in the battery supply chain, for example. These are extremely complex bits of equipment that require cooperation around the world, and that's just not something that I think you can do year on year if you're only relying on the domestic demand that you get from China and you're not able to sell internationally.

We just showed s k Heinex is a part of your strategy, and what we played to you a moment ago was a conversation I had with Jensen one on Monday, and it seems memory is still the bottleneck. But the way that Jensen outlined it to me is three years ago he went to the Memory make is, including Skhinex, and he said, this is what I think the world will look like in a few years time, and he tried to convince them to invest in permanent capacity. You know better than I do, Paulina. Memory has been boom

So I think bottlenecks is a really interesting framing because people tend to think, oh, bottleneck is extremely investable and that can lead to a lot of growth and a lot of upside.

And that's true to a certain extent.

But I think Marcus are actually quite good in some cases recognizing bottlenecks well ahead of time and investing in them before the fundamentals.

Even come through.

So as long term investors, what we're trying to do is identify these structural opportunities. Are companies that become even better as they scale and deepen their competitive position in the ecosystem. So i'd contrast sk Hinex here on the one hand, with TSMC because to some extents of portfolio construction question. So I think that there is a potential that Skiheyinex becomes a substantially better company over the long term.

Been in the past.

But that's just a hypothesis, and I think we're going to see how that develops over time. And i'd contrast that with something like TSMC, which is actually the largest position in our portfolio, where I think they have demonstrated that extreme control and dominance over their entire supply chain and the ability to coordinate multiple actors in an increasingly complex ecosystem. And that means that as semiconductors become ever more complicated to produce, TSMC just keeps getting better.

Sometimes you can't say what the story is from just a few market sessions, but Friday through Tuesday's close, we were almost in correction territory, particularly in the chip sector, right and you're coming to us from sunny Scotland. I was trying to make sense of what the net outcome was of the President of the United States trip to China. And without putting words in your mouth, I think that you would say investors now start to look outside of the US, look internationally.

I would certainly hope so there's such a rich hunting ground for AI related names outside the US. I think it's there's a really interesting dichotomy that chips and AI is sort of designed in America, but it's manufactured internationally. Whether it's TSMC actually making the chips themselves, whether it's ke Heinex putting the memory inside the systems, or ASML that builds the EUV machines the lithography machines for producing the chips at TSMC FABS they do that in the Netherlands.

Lake ICG.

I think the other thing that we can do, being based in Sunny Scotland is take that step back and say, yes, the market is doing its thing. There's a tendency, I think for the market to price a lack of a catalyst as.

A negative thing. The fact that there wasn't really any news about at.

Chipex Sports coming out of the Chinese summit was seen as a bad thing, But I think over the very long term, none of that affects the fundamentals of any

Paulina mcpadden of Bailey Gifford from Sunny Scotland putting a pretty sunny disposition on this reporter's face, thank you very much. Indeed, from public markets to the private markets again, today's Big Take focuses on soft Banks Open Ai. Bet it's committed more than sixty billion dollars to open Ai. We founder Mashoosi's son reportedly convinced Sam Altman is leading the most

Yeah, so this is a deep dive into the situation at SoftBank. Masioshu Son, as you pointed out, has been investing in starlups for a long time. He's had several enormous hits, including Olive Babo was one of his biggest successes, the Chinese Ai company, and then he went into the Vision Fund and he made hundreds of birds on small AI, small technology company, some successfully and some not so successfully. And now with open Ai, he's committed more than sixty

Bit starstruck here.

Maybe he's being persuaded by this very charismatic founder to put in more money than really should be at this point. So it goes into some of the details of those concerns. And as you point out, this is at a time when open ai is facing some strategy challenge, some business challenges, and also reputational challenges as we've seen with Sam Altman.

We're showing it sixty five billion dollars cumulatively through twenty twenty. That's the reporting on the insider concern. What was soft Bank's response to the big tape?

Peter Now soft Bank and open Ai, we should say, pointed out that they have a great relationship. They feel like it's a very strong partnership at this point. But what some of the people have told us is that there are a few areas of concern. First of all, soft Bank and open Ai talked about this big stargate venture that they were going to do in the United States.

But there are.

Constraints inside SoftBank in outside SoftBank about how this relationship has going so far.

Bloomberg's Peter Elstrom with the big take, Thank you very much. An update on the situation with Samsung's workers' union, which has decided to suspend its planned strike. South Korea's Yonhap news agency says the union will put a tentative wage agreement with Samsung management to a vote. This comes after days of stop and start negotiations with the union threatening an eighteen day walkout that was supposed to start tomorrow.

This is Bloomberg Tech.

A new study by four am ais says quote AI companies are grading their own homework. The report reveals are staggering ninety percent failure of rate on election questions across four major chatbots, and they are routinely serving up Russian and Chinese state media as authoritative sources. Joining us now as the CEO of FORUMAI, Campbell Brown, who believes AI companies have to be different. The headline Campbell is that chatbots struggle with news accuracy.

If we're going to make.

It as simple as we can, but I think the best place to start is with the methodology. You know what you went and tested in how you tested it.

Sure ed.

We've looked at essentially three dimensions, which is factual accuracy biased generally, and then the quality of the sources that they used. And the way we did it was training judgment models with senior domain experts who architected benchmarks. This is an area I think it's worth pointing out that hasn't gotten a lot of measurement. Most of the measurement and benchmarks that you see around the models is focused on coding and math and model capability, which makes sense.

I want to get to the midterms just very quickly. The evail process is called news bench wide, right, yep? Do we have the why on why chatbots struggle with news accuracy?

What's the cause?

Honestly, I think it hasn't been a priority. As I said, they're leaning into other areas in terms of the measurement. I think that's going to change, not only because consumers are looking for it and going to demand it eventually, but I think enterprise is starting to demanding it, to starting to demand it. And that's again where their focus is from a business perspective, and being just okay on accuracy overall on news and politics and geopolitics is not going to cut it.

Let's talk about the midterms them. The Bloomberg report states the chatbots answers about elections failed on accuracy, bias, or source selection ninety percent of the time. What I found interesting reading about that is there must be evidence.

Therefore that the electorate.

Everyday Americans go to chatbots for news in the first place.

You're seeing those numbers increase, I think more and more. We've seen a couple of studies showing people are using them for news more and more. And we found that about third a third of the questions we asked or on election related questions had faction errors in them, but all of the chatbots failed on bias. Claude Gemini gave left leaning answers on election related questions one hundred percent of the time. Chat GBT ninety five percent of the time.

And who should I vote for?

So improving this between now and then, I mean, the one thing I am positive hopeful about is there was a broad difference. I think overall, Gemini handled a lot of the questions better than some of the other models, which shows there's area for improvement. But you can't fix something if you haven't measured it.

Chimboll, I know you previously, of course a Meta vice president of News and Global Media Partnerships, but also as an industry colleague award win journalists and an k CNN, NBC News both sides you see.

Do you see action on the news.

Side and the likes of Meta other frontier labs on actively fixing this taking action on it?

Yeah, I do.

I mean I talk to people in the labs on a regular basis that all of these companies and they do care about this. And are beginning to approach it with a sort of different way of thinking. I think you know, one of the challenges we had, and you said it in the opening, is today these model companies are essentially grading their own homework. There's not independent evaluation. And I'm not calling for regulation. I have a private company, but I do think we need an ecosystem of companies

Campbell Brown, CEO Forum AI. It's great to have you on Blueberg Tech. Thank you very much. Indeed, coming up, we're going to get back to the top story what to expect from Nvidia's earnings the chip maker off session highs still up just more than two percent, top line growth eighty percent, EPs growth eighty five percent. The market wants more than that. From Jensen one, this is Bloomberg Tech.

We've been licensed for many customers in China for Age two hundred. We have received purchase orders from many customers and we're in the process of restarting our manufacturing.

That was Jensen one in March, singing a pretty positive tune about selling AI chips to China. This was the Nvidia CEO striking a slightly different note when you spoke to us on Monday, and.

The Chinese government has to decide how much of their local market do they want to protect and how much of their local market do they want to.

Expand with a more AI capacity.

That needs to be reconciled. Some analysts are hoping to get more insight into Nvidia's future in China in its

Yeah, I mean, look tonight, the standard beaten raise numbers, given where we are in the time and where the stock is, don't matter unless they are able to pass through a ninety billion dollar hurdle mark, which is the high bar for the guide for the next quarter. Now, that should really make the buyside balls happy. I think tonight the key focus is going to be reassurance. There has been some noise around supply chain issues or liquid

So give me that ninety billion figure again, I just put fa go on the Bloomberg back up, then consent, go for it, go for it.

When the guide for the next quarter, the high bar, it seems on the byside is ninety billion, So if they're able to clear that, that should be a very positive event.

Fiscal two Q twenty seven consensus is eighty seven point three billion, the high side for the guide in the current period being ninety billion dollars, so fascinating.

You know, I think Jensmongks talked about the.

Performance of it in Vidia based system against TPU against other a six he may well get asked again, is there any data set out there in the world, con Jan, The evidence is your argument that the VERA Rubin platform at least is extending in video's lead rather than seeing its market share shrink.

There have been some third party you know, benchmarks, and as we as the systems LU role out, which they haven't yet, there will be more benchmarks. And we have seen consistently in Vidia system the latest in video systems, outperform what exists in the market today. But now it's no longer just about your performance. You outperforming on the specs. Right, there's a use case. There's a concept of dollars per

A lot real quick.

The Bloomberg intelligence thesis on China.

Yeah, we didn't hear anything positive coming out of the trip with trumpet musicians. So we are not going to increase or just any of our China revenue estimates anytime in the New.

Town Keunjen Sabani, Bloomberg Intelligence, Thank you very much. That does it for this edition of Bloomberg Tech. One last look the countdown to in Video's earnings and A's that one hundred session high one point five percent, socks rebounding up four percent, and in Video is kind of the heart of that story. There is a lot of optimism, but Kanjensvanni just said, raised feet doesn't matter. It's all