00:00Hi Martin, hi Sherry, thank you guys very much for giving us the time to talk to Jensen Wong today.
00:05Jensen of course is just coming off of his conference call and the earnings that were put out earlier today.
00:09The stock is up sharply after that news and Jensen Wong is joining us right now.
00:14Of course he is the co-founder, president and CEO of NVIDIA and Jensen thank you for being with us
00:19today.
00:22Great to be with you Becky.
00:23Alright so Jensen let's talk through some of the numbers that the street was kind of keying off today.
00:27That guidance for the current quarter is really probably the biggest number.
00:30It was quite a bit higher than the street had been anticipating, even higher than the whisper number, somewhere between
00:35$76.4 and $79 billion.
00:37Where's the biggest strength and how confident are you in that projection for your revenue growth for this quarter at
00:43this point?
00:46Yeah demand is really strong and it's diverse.
00:50It's coming from all over the place.
00:51At the core of it, Becky, what's happening is that AI just went through its third inflection.
00:58The first one was two years ago with ChatGPT and then the second one was about a year ago when
01:04the reasoning AI agents came out, reasoning AI systems came out and the number of tokens, the amount of computing
01:10demand that it needed to be able to reason and produce all the excellent answers that these chat bots were
01:15doing was really sky high.
01:18And then now with these agentic systems, we're now having these agents able to reason, take tasks, and actually do
01:26work.
01:26And so the agentic systems are doing incredibly well all over the world.
01:31Of course, you've heard how cloud code and OpenAI's codecs are doing incredibly well in companies all over the world
01:40in software programming, but it's starting to spread out into all these different other types of tasks.
01:45And so at the core, it's because AI has gone through a new inflection point and the amount of computing
01:52demand is off the charts.
01:53Let's talk a little bit about your customers, too, because you did say that the big companies, the big hyperscalers,
01:59actually increased the amount of spending.
02:02And I think they make up about half of the spending that went into the data center segment in particular.
02:06But you said the other customers were growing really quickly, and that's where so much of the growth came from.
02:11Who are those other customers?
02:15You know, most people see AI as a chat bot.
02:18And it's understandable because OpenAI is so popular and they're doing so well.
02:23And we hear a lot about cloud code.
02:25But remember, AI is about a new way of doing software and affects every single industry.
02:32NVIDIA is really fortunate in the sense that we are the computing platform, the accelerated computing platform for every cloud,
02:39for any model, as well as every different domains of science.
02:43And so we're seeing success, whether it's in small cloud service providers regionally around the world, it could be an
02:50enterprise, our big partnership with Lilly, we have many others, car companies that are building autonomous vehicles, the robo-taxi
02:58era is coming.
02:59And so there's a whole bunch of computing being built for that.
03:02Scientific computing is being completely revolutionized by artificial intelligence.
03:05And so, you know, the number of industries that are affected by AI, because AI is fundamentally a new way
03:13of doing software, is going to be very broad-based.
03:16And that's one of the reasons why I say AI is a new industrial revolution, because every single company is
03:21affected, every industry will be transformed, and every country will power it.
03:25And so it's broad-based.
03:27Jensen, you mentioned what Claude is doing with Anthropic right now, and it seems like just about every time Anthropic
03:33comes out and talks about a new segment or a new tool that can be used with Claude, it sets
03:39another industry up in upheaval.
03:43You think about the software industry, the Saskedan that they've been calling it.
03:46You look at law firms, cybersecurity firms last week, and then IBM shares this week had their biggest drop in
03:52a quarter of a century.
03:54Is that overdone by the markets, or do you think there's a real good reason that investors are looking at
03:59this and saying, uh-oh, this is going to change everything for these industries that have been so entrenched?
04:06Deeply, I think there's a deep misunderstanding.
04:09What Claude, Claude is definitely revolutionary, and it's an inflection point for AI.
04:14It's the first time that AI can perceive, it can reason, but it can also do work.
04:19It actually performs tasks.
04:21Like, for example, it can, you know, write software.
04:23It could create a website for you.
04:25It could arrange a vacation for you.
04:29And so it can actually perform tasks.
04:31And that's the reason why we call them agents.
04:34They're agentic in their nature.
04:37What software companies, the reason why it's so exciting, of course, is because it could write software.
04:42What's going to happen are the tools companies, the platform, the ISVs, the SaaS companies, the tools companies,
04:47they will use agentic systems to develop their software.
04:52But enterprises are not going to go develop software.
04:56They're going to use agents to use those tools.
04:59And so what's likely going to happen is that agents won't replace the tools, but agents will use tools.
05:06That's the reason why we also say agents are tool users.
05:08Why rewrite the browser when the browser exists and just use it?
05:14Why rewrite Excel when Excel exists, just use it?
05:18And so all of these tools that we use today, whether it's Cadence or Synopsys or ServiceNow or SAP, these
05:24tools exist for a fundamentally good reason.
05:27And AIs, these agentic AIs, will be intelligent software that uses these tools on our behalf and help us be
05:36more productive.
05:36And so what's likely to happen, and this is very counterintuitive, it's very likely that because we have so many
05:44agents in our company now,
05:45the tool use will actually go up.
05:49And so, and you could see it all over the place, the number of C compilers that we use, the
05:55number of Python programmers that we,
05:57the Python programs that we have, the number of instances are growing very, very fast because the number of agents
06:03we have that use these tools are going up.
06:06And so I have 42,000 biological employees, and I'm going to have hundreds of thousands of digital employees, and
06:15together we're going to use a lot more tools.
06:17But that means that you think that they're not going to disintermediate these companies like a Salesforce or so many
06:24of the others along the way.
06:25You think they'll still be using those tools coming from those companies that are being sold off right now by
06:30the markets?
06:33I think so.
06:34I think the market's got it wrong.
06:36I think it's very likely that these companies that we're talking about are going to introduce agents that run on
06:43their platforms.
06:44You know, these agents, of course, they have to be experts in what they do, and nobody's going to understand
06:50customer service better than ServiceNow,
06:52and they're going to come up with agents that are really fine-tuned and optimized for the type of work
06:57that uses the tools that they have.
06:58In the end, also, we need the tools to finish their work and put the information back in a way
07:06that we can understand, and that we call them system of records.
07:10And so each one of these tools have their own system of records.
07:14Those systems of records exist because we put them there, and we use it so that we understand the information
07:20that's finally complete.
07:22And so those systems of records will still be ground truth, and they'll continue to be ground truth, and now
07:28the agents will help.
07:29They will use it, and they will populate the system of records that will use the tools that are available
07:34on these platforms.
07:35I think a thought experiment that could be helpful is imagine one of these days when we have robots, and
07:42these robots are in our homes.
07:43It's very unlikely that the robot will come up with a new Cuisinart.
07:48The robot will just read the manual for the Cuisinart and just use the Cuisinart.
07:51It's more likely that instead of coming up with another way of doing microwaving, that the robot will just use
07:58the microwave.
07:59These tools exist for a good reason.
08:01And so I'm fairly certain future robots will use screwdrivers and wrenches and, you know, pliers and things like that.
08:08And these tools are essentially in their digital form from the companies that you're talking about.
08:14So they're not going to replace the tools.
08:16They're just going to replace us, the humans that use all these tools to begin with.
08:21That's an interesting thought experiment.
08:22They're going to help us.
08:23They're going to help us.
08:24Okay, we'll take that.
08:25They're going to help us, yeah.
08:27They're going to help us.
08:28And the reason for that is because, as it turns out, that for most of our software engineers, coding is
08:36what they do.
08:37Just as for a CEO, typing is what I do.
08:39But the purpose of the typing, the purpose of the coding is solving problems and solving problems that we haven't
08:45even thought of solving.
08:46That's called innovation.
08:47And so the purpose of the work won't change.
08:50And so we're going to need lots and lots of software engineers, but maybe they don't just, they just don't
08:54have to code like they used to code.
08:56They'll code in a new way.
08:58They'll code in a, they'll describe to the agents what their intentions are, what kind of ideas they have.
09:06And the agents will write the actual software.
09:09And so, you know, we'll work at a different level of abstraction.
09:12We'll be a lot more productive, you know, hopefully, you know, create a lot of new things and solve a
09:18lot of new problems.
09:19Jensen, let me ask you about how the market views your stock, because it's pretty interesting.
09:25You guys are the complete controllers of the data center market.
09:29I think it's like 95 percent of the market share.
09:31And yet the market right now is valuing you all at a little over 25 times earnings.
09:37That's lower than it's valuing so many other chip companies that are out there, Broadcom and the rest of them.
09:43Are you frustrated by that?
09:45Why do you think that is when you control such a huge part of the market that the market would
09:50look at you all and say, OK, we think we're already peaking at the AI trade.
09:55But when we look at the other chip companies, we're not.
10:00Well, I think part of it is just imagination, imagination of how large a company can be and imagination of
10:07how large this computing industry can be.
10:10I would say, starting from the punchline, the market can't hold us back forever.
10:18And the reason for that is because we're going to keep on growing.
10:21And the reason why we're going to keep on growing is because software has fundamentally changed.
10:26The way software was done in the past in these classical computers, the amount of computation necessary was not very
10:32high.
10:33But because AI is contextually aware, meaning every single time you use AI, it's generating the tokens, it's generating the
10:41response to you, generating the answer to you for the very first time.
10:46And so it has to compute and has to do artificial intelligence.
10:49The amount of computation necessary for the future of software is enormous.
10:54And so people are kind of wondering, is this $700 billion in the top five CSPs?
11:00Is that sustainable?
11:01And I'll just tell you, absolutely.
11:04This is the way computing will be done in the future.
11:07Every single query, every single way we interact, every time we interact with the computer, artificial intelligence will be involved.
11:14And the amount of tokens that will be generated will continue to grow.
11:18And so I think the sustainability question, people have to understand from first principles what's happening to the software.
11:24We understand it better than most.
11:26And they have to understand what's the direction of AI.
11:30The second, the other thing is, you know, will AI, people have questions about will AI ever be useful?
11:36Right.
11:36And, of course, when ChatGPT came out, everybody was inspired by that.
11:41And then it was hallucinating too much.
11:44And then all of a sudden, reasoning came out, and people were inspired by that.
11:48And all of a sudden, computing demand continued to shoot up.
11:51And then now the question is, you know, will AI ever be useful for enterprise?
11:57And here we are at a new inflection point with AI now agents being used in enterprises all over the
12:04world.
12:05The demand for these agent AIs are now skyrocketing, and the revenues are skyrocketing.
12:12Sure.
12:12And so I think these are things that people will understand, and they won't be able to hold back the
12:17stock much longer.
12:18The one question, though, is people look at your competitors.
12:22Let's say an AMD who just signed this deal with Meta earlier this week.
12:27And they think, OK, maybe some of these other companies could make some inroads into market share at some point.
12:32Again, you guys are 90% to 95% of the market, as it is right now.
12:37You are the 800-pound gorilla.
12:39But do you worry about losing market share to any of those chip companies?
12:43Losing market share to any of those chip companies?
12:46Well, this is the largest computing industry the world's ever seen, the largest opportunity that the world's ever seen.
12:52And so it's understandable that we have a lot of competition.
12:56But obviously, our position in the marketplace is because it's really, really hard to do what we do.
13:01And the pace that we do it, the scale at which we do it, has never been seen before.
13:07Our R&D budget is already $20 billion, growing and focused on just one thing and one thing only.
13:14You know, of course, other people are building chips here and there.
13:17But NVIDIA is building the entire AI infrastructure.
13:20And these AI infrastructures, the AI factories, are incredibly hard to build.
13:24The technology is complicated.
13:26The software stack is complicated.
13:27And the pace at which we're doing it is incredible.
13:30And so, you know, no matter how you look at it, NVIDIA's leadership is pulling ahead every single day.
13:37And the type of deals that people are doing kind of tells you how hard it is, the work that
13:41we do.
13:42And then the last thought that I'll share is because AI requires compute and because AI is now tokenized and
13:54tokens have revenues associated with it, compute is a company's revenues now.
14:00I call it an AI factory for a good reason because a company's factory is the source of its revenues.
14:08It's the source of its growth.
14:09And so the choice of the architecture is vitally important because it directly affects your revenues.
14:16It directly affects your company's growth.
14:17And so if you look at our architecture, our performance per dollar, our performance, our tokens per dollar, our tokens
14:25per watt per amount of energy used is completely off the charts better than anybody else's in the world.
14:31And when the world is power limited and when your factory is power limited, then our architecture translates to the
14:39highest revenues for our customers.
14:41And, you know, revenue grows in matters.
14:43Jensen, we mentioned Anthropik before, and the Secretary of Defense, Pete Hegseth, has given Anthropik until Friday to give the
14:52Defense Department more access to Claude.
14:54Or, he says, they could actually risk invoking the Defense Production Act or maybe even labeling the company a supply
15:02chain risk.
15:03You're a strategic partner of Anthropik's.
15:06Do you see anything wrong with what the Defense Department is doing?
15:09Do you see anything wrong with what the Defense Department is doing?
15:12Well, the Defense Department has the right to use the technology and use the products that they procure in the
15:20way that serves their needs.
15:22And obviously, their needs are, you know, it's the pen of war.
15:25In the case of Anthropik, of course, they have the right to decide how they would like to market their
15:30products and what kind of use cases it could be used for.
15:33And so I think they both have their reasonable perspective.
15:38And however it gets worked out, this won't be the – Anthropik is not the only AI company in the
15:44world.
15:44And, of course, the United States is not the only customer for any company in the world.
15:50And so I think they both have their proper positions.
15:53I hope that they can work it out.
15:55But if it doesn't get worked out, it's also not the end of the world.
15:59Okay.
15:59Jensen Wong.
16:00Jensen, we want to thank you so much for your time on this busy day.
16:03We appreciate it.
16:04And we hope to talk to you again soon.
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