00:00Is there room to the downside here or are you thinking there's some sort of relief rally from any data we get from Jensen later?
00:06Well I don't think you can ever count out a relief rally but what I come back to when we look at the price action that we've seen over the past few weeks is that we have we have taken some froth off the top but we're not looking at really attractive valuations at this point.
00:21We're still at elevated valuations for a lot of these names and what's interesting and Ed alluded to this you know the questions that people are raising in the current environment I don't think they're necessarily going to be conclusively answered with NVIDIA's report right.
00:37The depreciation question the demand question you know extending to the rest of the economy I think those doubts are with us which would mean potentially more volatility.
00:47Well if Jensen can't tell us how long his GPUs are going to last and what the depreciation of them are I'm not sure anyone can but you're so right that that has been again an argument about why perhaps the valuations are flush.
00:58But you look at NVIDIA trading about 30 times future earnings that's not that elevated so is it the rest of the trade the palanteers or perhaps some of the energy stocks that have risen to extraordinary degrees?
01:11Well I think you raise a good point it's not that elevated especially if you're focused on that right side of the probability distribution if you're looking at a full probability distribution and you come to the conclusion that I don't know if I share but some folks are raising hey this isn't as transformative as people have suggested it is we're not going to see every application take off the way people suggest it would then I think there's room for some of these stocks to come down.
01:37Now I'm not sure I share that view I tend to believe that the AI super cycle is real that it is going to have a pretty profound impact on the economy but we have to make room for the full range of outcomes when we price these things.
01:48Marta it's great to have you back on Bloomberg tech as is quoted in that that well read story on the Bloomberg terminal on Bloomberg.com from one investor this is a quote so goes NVIDIA so goes the market kind of report from from your desk and your perspective is is that the situation here?
02:08Well I think there's no question that this is a capstone report it's a macro indicator and it I think has the potential and you see that in pricing around it right this idea that you could have swings up to seven
02:18percent either way I think this is the kind of thing that people are really going to key off of my my my question is whether this is going to answer all the AI doubts that are out there or whether it's just going to arrest them for now but we're still going to be wrestling with some of these questions going forward depreciation is the most common concern or question that I've received for Jensen so far you know get out to people and said what would you ask?
02:43There are people that look at the depreciation issue and say how can I model for that impact on the balance sheet of those key customers of NVIDIA but others on social media are talking about a different data set which is utilization if those older generation GPUs are running at 100 percent that's a really good problem to have right the this is kind of very specific but are those soft data sets that your team are looking at to work out what on earth is going on?
03:10Well you know I think the thing that we're focused on as we turn our gaze to 2026 is this question in particular about the capacity build that we expect in 2026 and frankly in 2027 so our view is that you know we're going to have these questions to your point about utilization about depreciation but our
03:31view is that those questions are going to linger as we build out the capacity for AI in 2026 and 2027 because there is so much that you have to put in place to be able to see the demand come through and so for us as we go through 2026 we're going to be watching
03:47of course like everybody else are we seeing that capex is the conviction still there to build out the massive infrastructure that you need for AI and I think that's the key question that we're wrestling
03:57with it was interesting that you said you don't align yourself with the negativity on actually applications of AI you do think the super cycle is real what data set are you looking for that because we do have the
04:10MIT pilots aren't working there's always a counter example for every time there's a negative but Bloomberg intelligence had some great analysis out showing that actually only 10 percent of companies at the moment or people surveyed are saying that they're using generative
04:23AI for revenue or for new product right I think there's still and I mean first of all if you take a look at kind of adoption rates for the AI cycle relative to the internet and things like that people are pointing out the federal reserve and others that you've seen a much faster acceleration of adoption but to your point we're still very much early days and so I think one of the things that we look at is just at the earnings season themselves and looking at what companies are saying and a lot of the commentary around AI at this point is still
04:52very generic it's not very specific in terms of how AI is actually transforming those businesses and I think also watching to see how earnings in the broader economy are responding are you starting to see those cost savings come through which I think is of course the first leg and then ultimately you also want to see the revenue which we're seeing from the hyperscalers but I think those are you know that real world application is really what we're going to be keying off of and I think it's going to take time I think you still need to build that capacity
05:22because is really what we're told to do that and what does it have to impact broadly speaking
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