00:00This was actually a pretty strong quarter, an outlook for NVIDIA.
00:05Why is everybody so concerned?
00:08I don't think there's any fundamental concern.
00:11There was nothing negative we could find.
00:13But investors are unhappy completely.
00:16There is. I think it has a function of AI fatigue in the market.
00:19So if you look at the top five, seven customers who are driving all this revenue,
00:23they all got punished because of raising higher capex spendings, right?
00:28So you can't have it both ways from an investor perspective.
00:30Like if they don't like the high capex spending, the company that's capturing a lot of that
00:35would also likely not get rewarded.
00:37Also, like you said, it's a $5 trillion company, right?
00:41A lot of this story has been digested and absorbed and analyzed.
00:45So there's also that wanting for a brand new catalyst factor,
00:48which I guess was not there from the earnings.
00:51Robert Shiffman, come on in here because like Kunjan,
00:54you look at this from the credit perspective too.
00:57You look at NVIDIA in the context of the other companies too,
01:00and obviously the customers as well.
01:02How do you view the earnings?
01:03What story did it tell to you?
01:05Yeah, sometimes I feel like I'm living in a bizarro world.
01:08Why?
01:08This might have been the greatest print in the history of the stock market
01:13with the greatest guide.
01:16And we're in a market, at least an equity market right now,
01:19where nothing is good enough.
01:21A lot of people are long this name.
01:23It's $5 trillion equity market cap.
01:25Where do you find the next buyer?
01:27From a credit perspective, spreads are tighter this morning.
01:30It's not a huge float, but tighter.
01:32NVIDIA got upgraded earlier this year,
01:34and I think they're going to be the next AAA rated name.
01:37So, you know, what do my customers think?
01:40I think they think everything's fine.
01:41They're worrying about other names.
01:43NVIDIA is not one of them.
01:45No signs though of credit stress.
01:46Like, okay, so let's broaden out in terms of hyperscalers,
01:49like tapping the debt markets and so on and so forth.
01:52Any of it that shows any signs of stress or strains
01:55when you look at these balance sheets?
01:57What some see as stress in terms of borrowing money to build AI,
02:02I see as opportunity.
02:04And I think that's what the leaders of all these hyperscalers see as well.
02:08Opportunity to buy there and own their debt and be part of this?
02:10No, no.
02:11What?
02:11They're building the future.
02:13They're investing capital into cash flow generating assets.
02:17The problem is it takes a lot of time up front to build it
02:21before you start seeing the returns.
02:22So right now, all we're seeing is the spending.
02:25No one's actually seeing the returns so far.
02:27Again, I would argue that if you actually look at the first quarter prints
02:30for all of these names, whether it's Microsoft, Meta, Alphabet,
02:34they had all had record highs, and they're all guiding even higher,
02:38all with double-digit top-line growth.
02:40So I think there's a dichotomy between the equity markets
02:43and the credit markets.
02:44The credit markets are fine.
02:46We're actually hearing about a wall of worry, a dystopian world
02:49where we're all going to be walking around with robots and rocks.
02:52And quite frankly, I think that's news that sells.
02:55And I don't see it.
02:56The credit markets don't see it.
02:57And if these companies have more bonds to sell, there are buyers out there.
03:00But to be fair, and Kunjan, come on in here,
03:02that part of the dystopian world is the promise of this technology
03:08actually succeeding.
03:09So to Robert's point, what would make you say,
03:14okay, we've gone from the place of spend, where these companies are spending money,
03:18to actually seeing the returns?
03:20What do you need to see in order to say we've gotten there?
03:23I think we are seeing the return, just like Robert mentioned.
03:27We are seeing a return from all of these names.
03:29Look at their earnings.
03:30Look at their AI-driven earnings.
03:32In a lot of places, I know the data is too early,
03:35and you cannot still justify a token dollar spent to a dollar of revenue captured.
03:41But when you dig deeper and look at their key metrics,
03:44I mean, Salesforce also announced a new metric that they created
03:48to justify token usage to how an agentic task is done.
03:52So we are seeing a lot of data points here,
03:55which is driving higher and higher revenue,
03:58driving higher and higher productivity for a lot of these companies that are spending money.
04:02But it will take time.
04:04And, you know, interestingly enough,
04:05we did get Salesforce earnings after the close of stocks up about 3.5%.
04:09I mean, we're seeing some outperformance.
04:10You know, the worries about the software space and so on and so forth.
04:14And forgive me, I only got about 25 seconds.
04:16Robert, any stress there?
04:18I mean, there are going to be some winners and losers.
04:20I think down the credit curve in high-yield land, there will be some stresses.
04:24But high-quality names like Salesforce, what did they announce yesterday?
04:28A $50 billion stock buyback.
04:31That does not show any stress in the credit markets.
04:33I think these markets continue to remain strong,
04:35and everything these companies are saying are actually pointing to that.
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