00:00Angelo, what do you make of this sort of race between Alphabet and NVIDIA that we've seen play out over the last couple of days?
00:06The narrative shift that, hey, wait a second, Alphabet, with a 10-year-old product, might actually have something that could compete with NVIDIA's GPUs.
00:14Do you buy it?
00:16Yeah, and thanks for having me, Tim.
00:17The way I look at this is, listen, NVIDIA's had the 90% plus market share on the compute side, right, with their GPUs.
00:25Our view the whole time was that they were going to lose share anyway.
00:28And that custom silicon chips were going to gain a bigger piece of the pie.
00:33AMD eventually was going to have its share as a second alternative to the GPU market.
00:38So this is kind of playing out the way we anticipated.
00:42It's going to be a slow roll.
00:44But ultimately, listen, I do think there's a place for TPUs as well as other custom silicon chips.
00:49I don't think you can necessarily sleep on a company like Amazon.
00:52But it's interesting that the strategic pivot that potentially Alphabet is looking at, potentially looking to sell those TPUs to Meta.
01:02And to the extent that that's true and how quickly some of that scales up, I think, is a risk to the NVIDIA story.
01:10But again, I mean, NVIDIA will continue to be the dominant player out there.
01:14And I think investors maybe shouldn't be looking too deep into the share fight and kind of also consider the upside in terms of the total addressable market opportunity here over the next couple of years.
01:27Well, it makes me think of the incredible and enviable margins that NVIDIA has in its data center business.
01:33And I'm wondering, OK, well, even if NVIDIA still becomes and remains the clear market leader, does it put margin pressure on the company?
01:39Does the company have to come out and say, OK, well, we're not going to charge as much for these GPUs because they're potentially, at least for some customers, there may be another option out there.
01:50Does it put margin pressure on them?
01:51I think that's an interesting point.
01:53The way we look at this actually is a little bit differently.
01:55I mean, when we think about kind of these next-gen offerings that NVIDIA is set to roll out, and we're big believers that, listen, NVIDIA is a generation ahead.
02:04They will continue to be leaders in terms of technology advancements.
02:08But as you roll out Rubin, and Rubin doesn't really have kind of the step-up function to Blackwell the way Blackwell had relative to Hopper.
02:17But you get to Rubin and then Rubin Ultra, you're going to see some significant content growth here over the next couple of years from NVIDIA in the data center.
02:24So that should continue to hold up their revenue trajectory as well as the margins here for the company.
02:31So we're not necessarily concerned about margins here.
02:34But that said, listen, if we get to a point where the whole debate between supply and demand starts to even out and those competitive pressures do start to intensify, then you have an issue.
02:45It's not something we're really kind of concerned about here over the next 18 to 24 months, though.
02:48OK, so, you know, in terms of not being concerned in the near term, that makes sense.
02:54What about the other side of the coin, which is the opportunity that it presents for Alphabet?
02:58Can they ramp up production of these?
03:01Can they actually get these to customers quickly who may want them?
03:05Yeah, I mean, and to the extent that they're looking at this strategic pivot, I think remains to be seen.
03:12But, yeah, I mean, listen, it's an opportunity for them.
03:16Again, I don't think they take up a huge chunk of the market.
03:19I think it's actually a bigger play and opportunity for Broadcom, to be honest with you.
03:24And as you kind of go into 26 and 27, the accelerating growth that you're going to see in their semiconductor business, I think, is kind of a nice, intriguing play alongside their software offering,
03:36where if you have any concerns about share loss from NVIDIA, take a look at Broadcom, because that becomes a nice, interesting play on a company that will be taking market share here on that customer silicon growth,
03:48as they also continue to broaden out their customer base outside of just, you know, Alphabet's TPUs to other custom silicon vendors.
03:57Angela, if we were having a conversation last week, we'd probably be talking about and we'd probably started the conversation with equity valuations.
04:03And I'm just wondering how you're looking at valuations right now, where there's been some talk about, OK, things are looking a little bit bubbly right now.
04:12You know, I actually feel much better about valuations today than I did three, four weeks ago.
04:17And it almost kind of self-corrected itself out, right?
04:20So when you look ahead of just, you know, late October, look at valuations, they were essentially where we were at the June 24, you know, tech highs and essentially at 20-year highs.
04:31So you kind of look at what the market has done here.
04:33We've actually had a better than expected Q3 earnings season.
04:36On top of that, also a pullback here, you know, on the tech side.
04:40That's really kind of compressed multiples to now where you would expect multiples, you know, on a forward basis to be here over the last five years.
04:48So when you look at valuations, especially given the earnings growth that we see over the next 18 to 24 months, we actually think this is actually an enticing opportunity, especially with some of those larger cap tech names.
05:00You look at maybe some of the most reasonable valuations out there, Meta and NVIDIA really kind of stand out at this point in time where I think they could be kind of nice rebound plays on the sharp pullback they've had.
05:12Hey, just 20 seconds, Angelo, before we let you go, we just had an interesting conversation with Alistair Marsh about data centers and what could happen in the United States to the electric grid and China actually taking a lead as a result of infrastructure issues here.
05:26Just very briefly, how could that rein in data center growth and development here in the U.S. if that were and is some sort of boundary or barrier?
05:35Yep. To us, it's one of the biggest risks going into 2026, the energy bottlenecks, and more so into 27 and 28, right, as we start transforming and changing the narrative from, you know, the bookings growth expectations to one where it's also all about execution of these data center buildouts.
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