00:00The spending is justified and the spending is going to continue to grow. AMD will be a
00:05beneficiary of that. You know, I find the chronology of earnings interesting. What do you think we'll
00:09learn from AMD about the future? Yeah, I mean, obviously the hyperscaler earnings that we have
00:15seen so far has laid out the groundwork that all the relevant hardware semiconductor value chain
00:21will tremendously benefit because we continue to see that demand cannot, you know, basically there's
00:28a supply that cannot meet the demand. So definitely really interesting to see how they're evolving that
00:34in terms of their revenue and their addressable market. They're seeing especially for the CPU that
00:39can benefit as a core driver of the growth in the inference demand. AWS CEO Matt Garman was on the
00:47show
00:47yesterday and I tried to push him on what the capex number for next year will be, you know, whether
00:53it
00:53will be higher in simple terms. That's on the spending side. On the growth side, also what's
01:00driving it? And he was pretty clear it's a shift to inference. You know, training load's still there,
01:06but inference is now the driver. Do you see that in your research? Yeah, absolutely. Like a lot of
01:12companies are highlighting that the mix shift to more inference workload, especially on the back of the
01:18growth in the AI agency has been a boon for the demand in the growth. Not just AWS, I would
01:25like to highlight
01:26that the same pattern has been seen in the other two other important hyperscalers, including Google
01:32and then Microsoft as well. I mean, it's truly impressive how the three companies have delivered
01:38combined 50% rate of growth just this quarter, which was a double the rate that we have seen just
01:44five
01:44quarters ago. Very strong validation for AI ROI, continued commitment to spending because they're
01:51seeing extended backlog of the customer visibility, which is a really important parameter for the
01:57investing in AI. All three of those, Alphabet, Amazon, Microsoft are members of TEKY. If you were
02:04going to do a scorecard from last week's earnings across the hyperscalers in the week prior, who came out
02:10on top of those three? Well, it's hard to pick, but I would say Microsoft and Amazon definitely
02:16relative to the expectation. This quarter was truly impressive because all the three delivered
02:22something much better than expectation. That was pretty impressive in my view. And then I think
02:29people have to be comfortable and understand that by nature, this large spending commitment has to be
02:35taking place off front. But over time, you are going to see the tangible numbers flowing through
02:41their core businesses. And this quarter was fantastic to prove that point.
02:45Selina, if there's something in aggregate across all of the companies that you track and that you
02:50include, it seems to be that demand is still running ahead of supply, be that cloud capacity supply,
02:58literal chip supply on the basis of the compute. Is that a good thing? And how long do you sort
03:04of
03:04see that lasting for? It's a great thing. But at the same time, it's a balancing act that entire supply
03:11chain has to work around to make sure, yes, when there's a strong demand visibility, they have to
03:17make sure that they can supply all the necessary components in time so that growth does not taper off.
03:23I think it's often underestimated how much amazing job this entire supply chain is doing just to make
03:29that happen. For example, the LTA that is taking place in memory space, for example, I think it's a great
03:36example to make sure that the long trajectory for demand and the growth should be there. And that is something
03:43truly different and unprecedented this time. So let's linger on that for a second. Long term agreements in memory are
03:49atypical against history, right? What's happening, you know, based on the conversations I've had recently with SK
03:55Group and as well with Jensen Wong is it's the customer saying, hey, let's do a five-year deal.
04:01That hasn't happened historically. Just again, what does that signal to you? Why is that noteworthy?
04:07It is noteworthy because it basically proves the point that there's extended visibility from the
04:13customer demand and there's basic preemptive efforts to make that happen so that supply and demand go
04:21hand in and in balance to make that this truly impressive, once in a generation, gross opportunities is coming from
04:27AI. We have to remember that all the visibility is actually coming from the upstream. If you think about TSMC,
04:34for
04:34example, the largest foundry in the world, I would argue that this is the company that has the best visibility
04:40when it
04:41comes to customers. And guess what? They just announced committing to additional hundred billion dollars in
04:46CAPEX to expand in Arizona in the U.S. In conjunction with hyperscalers, I don't think they're spending money
04:52blindly. They're talking about they can actually see the demand that can stretch out to the five years.
04:58That's why they're committing to spend today. And that's why they need to make sure all the supply chain,
05:03including the memory companies, to just pace together to make that supply and demand come in balance.
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