TRANSCRIPTIE 🔗
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Speaker 1: Bloomberg Audio Studios.
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Speaker 2: Podcasts.
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Speaker 3: Radio.
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Speaker 4: News.
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Speaker 5: Bloomberg Tech is live from the heart of Silicon Valley with Ed Ludlow in San Francisco.
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Speaker 6: And a very good Monday, everyone. This is Bloomberg Tech. I'm Carol Masser in for Ed Ludlow. Coming up, we go all in on NVIDIA's investigation into CEO Jensen Wang after his affair with an alleged Chinese spy, sending shares down on concerns around his job and the company's future. The share price right now down about 3.7%. Keep in mind, we've been as low as 8.8% intraday. So definitely trading off our overall lows. And this on a day when we're seeing investors come back into the stock market more broadly. We are going to discuss how this scandal is becoming a Washington national security issue, putting the U.S.-China battle over AI chips back into the spotlight. And in the face of all of this, we look at the future of enterprise AI with Menlo Ventures out with their latest report on the sector. So a good broad look at all of that. Let's once again check in, though, in on NVIDIA's chairs. As we said, definitely off their lows of the session. They were down about almost 9% intraday at their low, but they've come off now down.
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Speaker 3: About 3%, 3.9%.
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Speaker 6: So just shy of a 4% decline in a market where if you look at the Philadelphia Semiconductor Index Index, Nearly all of the names, except for Nvidia, are higher in today's session. So we are definitely seeing Nvidia stand out as one of the decliners, and we know that there is a story at play. The semiconductor index, keep in mind, over the past month, down 20%. We've talked about this here at Bloomberg. We have seen a pullback by investors when it comes to the semiconductor space. And you can see, similarly, Nvidia down about almost 22% from that high just about one month ago. Similarly, as we've seen the decline in the overall semiconductor space, it's just a reminder, when you talk about semiconductors, when you talk about chips, NVIDIA is such an important story when it comes to that sector, but also to the overall AI trade. And Jensen Wang, obviously, what many would say, the key cheerleader when it comes to that space. So let's bring in Bloomberg Semiconductor Reporter Ian King to get all the details. Ian, good to have you here, someone who knows the semispace so well. I guess what I want to ask you, what happened over the weekend for a company that's been on the radar already by the U.S. government, that's been on the radar, too, because of its relationship with NVIDIA specifically, that's been on the radar also because of various reports between NVIDIA CEO Jensen Huang and Alice Huang already?
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Speaker 3: So what changed this weekend?
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Speaker 7: Well, as you pointed out, there's been a lot of speculation, a lot of reports saying that Jensen was in a relationship with this lady who was in fact allegedly an agent for the Chinese government. Jensen had told us publicly and said publicly that this was just a normal business relationship. Over the weekend, he sent a letter out internally to his employees saying saying that he had in fact had an affair. He issued an abject apology. At the same time, his board said that they would have to investigate whether he had been subject to a foreign intelligence effort and that that investigation was going to be something that he was going to cooperate with.
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Speaker 3: So many issues here.
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Speaker 6: I mean, this is an individual, as we talk about, Ian, so tied to the AI story, the AI build. He's been called, you know, kind of the central banker to AI at this point. His investments in other companies have been so important in terms of the AI build out. You know, what's at stake for NVIDIA? And should we be even thinking about an NVIDIA without Jensen Huang?
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Speaker 7: Yeah, I mean, you just pointed out some of the very many layers of importance around this event. This isn't just another corporate executive scandal, right? Personal behavior scandal. This has much broader implications than that. And the first and foremost is that this company, this 30-year-old company, has never had another CEO. And more than just his tenure, NVIDIA is defined by his personality, his style, and his management explicitly so. There's no succession plan. So the first step here is that we are facing, I think for the first time, the prospect of an NVIDIA without this man in a central role.
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Speaker 6: And we should point out there is an independent investigation going on in NVIDIA. And so to be fair, time will tell certainly what investors really need to know about this relationship and what it all means. All right, Ian, thank you so much. Really appreciate it. Bloomberg's Ian King joining us there. out in San Francisco. Well, Jensen Wang has pushed for the U.S. to sell more chips to China for quite a while, arguing that it's better to supply them that allow trade barriers to push China to develop its own technology. Jensen Wang discussed the U.S.-China relationship around AI with Bloomberg's Emily Chang last month.
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Speaker 8: I did my best to inform the policymakers in the United States of the importance of engaging the Chinese market and making sure that we serve that market for as long as we can. I think we made a mistake, and this mistake is hard to unwind, but I did my best.
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Speaker 3: That's all I could do.
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Speaker 8: There are more Chinese AI researchers than any other nation in the world, and many of them working at the labs. I've been very clear that even though, although we compete against China, they're not our enemies.
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Speaker 6: All right, that was Emily Chang with Jensen Wang last month. So how are investors weighing Wang's position in light of these new allegations?
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Speaker 3: Let's bring in Nancy Tengler.
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Speaker 6: She
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is CEO and CIO of Laffer Tengler Investments, which counts NVIDIA among its top holdings.
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Speaker 3: Nancy, good to be talking with you again.
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Speaker 6: Top of mind for you as we try to figure out exactly what the implications are of this relationship and what we know certainly about Alice Wang and her relationship with this company.
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Speaker 9: Yeah, Carol, tail is all this time.
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Speaker 10: I just you can't make some of this stuff up. It would be one thing if he had an affair, just a regular old affair. But with an alleged Chinese spy, it becomes a little more complicated. And it appears that it was known or it was at least suspected. So I think that will be investigated for some time. But for the company as a shareholder, we're not certainly jumping in here today. But this is a stock that we have argued is was trading at ridiculously low valuations, even if you don't believe the 70% earnings growth next year. So I think what we have to do is consider analogs. What would happen if he wasn't there? I mean, I'm surprised the stock isn't down much, much more today, but I think the company is in supporting it. And remember, they announced a $ 230 billion buyback, or it was cumulative, but still out there. So they have plenty of dry powder to continue to support the stock while this gets worked out.
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Speaker 9: But I suspect he survives unless he was culpable. And then they're going to have to dig into the bench.
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Speaker 2: And we've seen that before.
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Speaker 10: You know, we were told Apple would never innovate again, never. The stock price wouldn't go up after Steve Jobs. Tim Cook did a pretty darn good job and thousands of percent total returns. So Everybody's replaceable, including me, and we'll figure it out.
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Speaker 3: You and me both.
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Speaker 6: But what's interesting, though, this is an individual who's so identified with this company and really being at the forefront of AI, the AI chip that is so instrumental to building out kind of the story of AI today, Nancy. Would you be as interested as an investor in an NVIDIA without Jensen? Or does it just depend on, well, we'll see what the numbers turn out to be, the fundamental story of NVIDIA?
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Speaker 3: Does it change?
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Speaker 1: Yes.
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Speaker 10: I mean, I think it changes. The competition will increase because there's weakness. So you've already heard the announcement from Google today. I want to be Lisa Su when I grow up because she just kind of plods along, you know, puts Intel out of the CPU business, then moves over to GPUs, then goes back to CPUs.
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Speaker 9: All the while taking shares. So I think there will be winners.
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Speaker 10: And the question is, will NVIDIA be an actual loser or will there just be a pause, as we've been talking about with the whole data center build out? The backlog, the demand for the chips is so great that I think that extends beyond his life at the company. The vision and the strategy, however, is where we would probably use strength to exit if he is gone.
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Speaker 6: All right, I just want to mention, just crossing the Bloomberg terminal, this from the New York Times, NVIDIA intervened in the U.S. probe of Megaspeed. Again, coming from the New York Times, just crossing the Bloomberg terminal.
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Speaker 3: The U.S.
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Speaker 6: Transferred the probe from Commerce to the Department of Justice.
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Speaker 3: The U.S.
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Speaker 6: Probe of Megaspeed was halted after NVIDIA intervened.
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Speaker 3: So the U.S.
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Speaker 6: Ship inquiry was halted after the NVIDIA intervention. Nancy, just breaking, we're continuing to get more and more about this story. How might that change your view of kind of this situation?
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Speaker 10: Yeah, I mean, I think if he's culpable, if there was knowledge and insight help to the Chinese, getting chips, smuggling, offering strategy up, then I think we would, as investors, pause and step back and use strength to exit. And because they have such a cash reward, we do think they will support the stock. And that may give us everyone that wants to get out a chance to get out. But until we know that, I think, and we also need to know who the replacement is, Carol. I think that would become very important to the narrative. But this is a train that's in motion. CUDA software is really omnipresent amongst developers. And we know that the AI build-out is going to continue. So I don't think the company's too big to fail. I don't think anything is.
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Speaker 9: But I think there will be a solution soon.
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Speaker 10: Whether he stays or not, the solution will keep the company, I believe, moving in.
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Speaker 1: The right direction.
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Speaker 6: Having said that, Nancy, just looking at the New York Times story, it says the investigation to Megaspeed that was buying NVIDIA advanced AI chips was transferred to the Justice Department after a top NVIDIA executive reached out to a Commerce Department officials. Apparently, Commerce was deep into a months-long investigation of the company that they suspected of smuggling NVIDIA's AI chips into China when their work came to a sudden halt late last year.
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Speaker 3: I guess what's interesting, too, is if it is.
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Speaker 6: Deeper embedded in the company of the awareness of this. How much more serious does this story become?
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Speaker 9: Very serious.
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Speaker 10: And I think this doesn't wear well for Howard Lutnick either at Commerce.
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Speaker 9: So I think, you know, it'll trickle out. We'll learn more. And I think if it was deeper, Carol, that is a severe problem.
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Speaker 10: I mean, that's fraud. That's defrauding of investors. The SEC will get involved. I don't even want to think about it, and I certainly don't want to be any of them.
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Speaker 3: Yeah, I totally understand.
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Speaker 6: And I should point out NVIDIA shares, which were just down shy of 4%, now down about 5.3%. So dipping a little bit on that story from the New York Times. Nancy, always appreciate your insight. Nancy Tangler, she's CEO and CIO of Laffer Tangler Investments.
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Speaker 3: Joining us, she is an investor in NVIDIA.
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Speaker 9: All right, we're.
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Speaker 3: Taking a break, everyone.
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Speaker 6: Coming up, we'll take a look at how Washington is digesting Wang's affair with an alleged Chinese spy and the questions politicians are raising and, to be fair, have been raising.
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Speaker 3: That's coming up next.
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Speaker 6: You are listening and watching Bloomberg Tech.
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Speaker 5: Are we prepared?
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Speaker 3: Yeah, yeah, sure.
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Speaker 8: I'm in service of our of our. policymakers and our leaders and whatever they want to talk to me about, I'm more than happy to share with them what I know. I know a lot about this technology. I know a lot about engineering and I know what it takes to build this and I know what we're doing to build it.
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Speaker 6: And that was NVIDIA CEO Jensen Wang speaking with Bloomberg's Emily Cheng last month. Wang has worked closely with U.S. leaders and in particular has a close relationship with President Trump. Now, in light of allegations that Wang had an affair with a Chinese spy, an alleged Chinese spy, this is what the U.S.
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Speaker 3: President had to say yesterday.
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Speaker 2: I have not spoken to him about it. I just know he's a fine person, but you never know what is going on. I'm sure, I hope everything's fine. He's done such an incredible job.
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Speaker 5: I think so.
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Speaker 11: Oh, yeah, sure.
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Speaker 6: All right, that was President Trump last night. Let's get the latest on the D.C. reaction with Bloomberg's Mike Shepard. Mike, this is a story that I have, I think to be fair, it's been in the news for a while now, at least a year or so. But it is interesting, the oversight from Washington. Does it become even more intense? Is that just kind of to be expected considering the developments today?
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Speaker 12: Yes, Carol, most certainly there is going to be intensified scrutiny, not only from the administration, but also from Capitol Hill of whatever went on between Jensen Wang, the NVIDIA CEO, and the executive at the Singapore-based firm Megaspeed International that has been under investigation for possible diversion of NVIDIA's chips to Chinese buyers, and especially Jensen Wang's relationship with an executive at that firm, a relationship that on Sunday he admitted failed.
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Speaker 2: Had turned romantic.
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Speaker 12: And in admitting that affair, he really opened the door to all sorts of additional scrutiny from the administration as well, from the Justice Department and other corners potentially that would have to look into whatever may have gone on between
the two of them.
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Speaker 6: And is it possible, and this is, you know, just pulling off of this New York Times story that just crossed, Mike, about how the investigation into Megaspeed, which is the company, obviously the Chinese company at issue as well, with the relationship between NVIDIA, but also with Jensen Wang and Alice Wang, transferred to Justice after a top NVIDIA executive reached out to Commerce Department officials. We don't know exactly who that top NVIDIA executive is, but I want to go back to something I talked about with Nancy Tangler. If the awareness of this was much more deeply entrenched in the ranks of NVIDIA or their senior suite, if you will, senior C-suite, is that a bigger problem, a bigger issue now?
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Speaker 12: Well, this will become a bigger issue because for the past year, the company has sought to dismiss NVIDIA. some of the characterizations about its relationship with Megaspeed. And more recently, when we asked Jensen Wang during an interview just less than two weeks ago about his relationship specifically with the Megaspeed executive, Alice Wang, he said everything was normal and essentially nothing to see here. So it really casts a lot of raises a lot of questions about what they had told us in the past. and what their dealings were with the U.S. government behind closed doors in terms of these investigations into Megaspeed and into NVIDIA's business with the company, which has been going on really for almost a year.
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Speaker 6: Also on that, the New York Times and others certainly reporting the Secretary of State, Marco Rubio, he had a role in drafting a secret memo highlighting how top officials were concerned by this past spring about Jensen Wang's relationship with Alice Wang, a woman, again, tied to Chinese intelligence. Is this safe to say that this is an issue that both sides of the aisle are going.
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Speaker 3: To be very interested in, are already very interested in? Oh, very much so.
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Speaker 12: And last week, we did see a bunch of Republicans, three heads of key national security committees, asking Jensen Wang to appear before their panels behind closed doors on November 18th. Carol, that's a day after the company reports its quarterly results, and they will be under a lot of pressure heading into that. And we're also going to see if Marco Rubio, who is not only Secretary of State, but also President Donald Trump's national security advisor, if we see him involved, It signals that there is an interagency seriousness to this inquiry by the government into not only Jensen's conduct, but also the conduct of the.
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Speaker 1: Company as well.
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Speaker 2: Right.
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Speaker 6: Got to have to look at both sides, the company side as well as the government side in terms of what happened. So more to come, certainly. Hey, Mike, thank you as always. Bloomberg's Mike Shepard. He is there in the nation's capital. Shares of NVIDIA continuing to trade down about 5.5%.
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Speaker 3: All right, we're back on Bloomberg Tech.
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Speaker 6: Everybody, Nominal is now valued at $ 3 billion.
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Speaker 3: That is triple what the startup was worth back in March.
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Speaker 6: It raised $ 240 million in its latest funding round, and the company says its revenue has more than tripled so far this year. Joining us now to talk about the company is the co-founder and CEO, Cameron McCord. Cameron, great to have you here on Bloomberg Tech. So talk to us about this funding round, $ 3 billion valuation. Talk to us a little bit about the business metrics, your top customers, and the type of growth you're seeing.
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Speaker 11: Yeah, thank you so much. It's great to be here. We've been busy this year. We've over three and a half X our revenue since we were here about eight months ago, sharing that we had become a billion dollar company. So growing very, very quickly. We're working with five of the seven top aerospace and defense companies in the world. And we've been really, really investing in our AI product and platform. And really, that's what today is about for us.
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Speaker 6: To be fair, investors are the audience here's platform. Okay, there's lots of platforms out there. What exactly does your software do?
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Speaker 11: Yeah, so Nominal is building a hardware intelligence platform. So a purpose-filled data and AI platform for hardware engineering. So, frontier AI is transforming industries. We see this in legal, marketing, medical, sales, but no such platform really yet exists for hardware engineers, and that's what we're building at Nominal. So, you can think about what we've learned in AI over the past, really, one to two years is that for AI to function and for agents to function, you have to get all of this context in one place, and that's really what Nominal is doing. So, think telemetry, sensor data, all of this sensor data coming off of hardware machines, that's what Nominal organizes, aggregates, and then we build AI on top of that for our customers.
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Speaker 6: So defense, aerospace, we're showing pictures. These are going to be your customers. They already are your customer base.
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Speaker 10: Yes, yes.
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Speaker 3: How much is government contracts?
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Speaker 11: Yeah, about 40% of our business is working directly with the government, predominantly the U.S. government, but we also work globally. We work in Europe pretty extensively.
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Speaker 3: You've made a couple of acquisitions.
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Speaker 6: So talk to us a little bit about the strategy because I'm curious how much of the growth is organically, how much of it is also strategic add-ons?
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Speaker 11: Yeah, I think what people don't realize for the industrial sector broadly is the delta between, I think, what is capable in frontier AI and what is being experienced by our users, technicians, manufacturers, could not be wider. We hear so much about the
frontier of AI right now. And so really we're building all along what we call the hardware development lifecycle. So everything from modeling and simulation requirements, building and manufacturing hardware, and then ultimately deploying and operating that hardware in the field. That's a broad expanse. And so to do that, we've looked very strategically at M & A over the past year. We've acquired two companies, successfully integrated them into the business. And really, when we think about what we're using with some of this Series C funding, it's going to be continuing that successful strategy and bringing more into the platform.
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Speaker 6: Cameron, I feel like the longer the AI story, which you've now been talking, what, three years easily when it comes to the narrative changes. When you talk about frontier AI, what do investors need to understand about what's to come in that space?
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Speaker 11: Yeah, I think models are obviously progressing beyond exponential. I think what we really believe is that in this case for ours, our world, the industrial sector, need these diffusion layers, diffusion platforms that can help transfer that cutting-edge AI technology into how it's actually operationalized by companies. And so much of what Nominal does.
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Speaker 3: Is- Make it pragmatic, right?
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Speaker 11: Make it pragmatic, exactly, yeah. We want everyone to experience the benefits. And when you think about Nominal, you should think about a technician working next to a test stand or a manufacturing line, trying to make sure that the products that they're shipping out to the world to be used in mission-critical applications actually work. And we want AI to serve that purpose.
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Speaker 6: So you did a big capital raise. You've got about 30 seconds. What's the long-term view? I mean, do you stay private for a long time? You can because you can access capital that you need. Would you rather stay private for a longer time?
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Speaker 11: I think we have the belief that we are building a generational company that is going to inflect human prosperity in the physical world. And that's a big, bold, ambitious mission. And we have a lot of work to do. So I think we'll be able to stay private and keep building for a long time.
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Speaker 3: And nicer to do it as a private company. All right, good stuff. Cameron, thank you. Stay in touch. Let us know how things are going.
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Speaker 11: Thank you so much.
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Speaker 6: Cameron McCorg, CEO and co-founder of Nominal, joining us right here in our New York studio. Coming up, just a quick check on shares of NVIDIA. We've seen them dip a little bit on that New York Times story that said that the Commerce Department tip increase was halted after an NVIDIA intervention.
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Speaker 3: Right now, stocks down 5.8%. We're going to continue divvying into the NVIDIA probe.
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Speaker 13: Is there anything that China could do or that could change in the relationship between the United States and China that would make you say maybe we shouldn't sell our chips to them?
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Speaker 8: Well, there are a lot of things that they can do theoretically. They're pragmatic people. They want what's in the best interest of their nation and their people. They want to be successful. The United States want to be successful. We want America to be rich. They want China to be rich. And we should respect that aspiration. We should be comforted by China. Nations that want prosperity, that want better for their people. It's the nations that don't want prosperity, don't care about what's in the interest of their people. Those are nations we should be concerned about. One of the best things that they've done, of course, is lifted the opportunities and the prosperity of hundreds of millions of people on Earth. And that's been great for every country, including ours. All right, welcome back to Bloomberg Tech, everyone. I'm Carol Masur in for Ed Ludlow on this Monday. That, of course, was NVIDIA CEO Jensen Wang with Bloomberg's Emily Chang last month on the relationship between the United States and China. On that, let's just take a moment, do a quick market check, because we are seeing stocks pretty much a rally underway across the board. But when you take a look, even semiconductors, which have been under a lot of pressures, as you know, as of late, we've got the stocks increasing. 29 of the 30 names are higher. Overall, that index is up just shy of 6%. The one solo name that's not higher in the socks, NVIDIA, which is down right now about 6.25%. We've seen it down as much as 8.8% intraday today, but under pressure off of that recent New York Times headline that we have been talking about.
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Speaker 3: So... Yeah, take a look.
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Speaker 6: That's the one-month chart, everybody. 21% lower on the SOX. Similar, slightly more on NVIDIA, but that probably has something to do with today's decline. That NVIDIA down in the last month about 24%. Well, NVIDIA's investigation into Jensen Wang's affair with an alleged Chinese spy is highlighting what Bloomberg Intelligence calls his, quote, central role in strategy, customer relationships, and and operations, and I would add supply chain to that. Joining us to talk about it further is Bloomberg Intelligence Mandeep Singh. I'm adding supply chains because I heard you talk about it earlier on TV. What's your gut thought here first on everything that continues to come at us? Also, I want to add in the New York Times saying that there was an inquiry by the Commerce Department and that was halted after a top NVIDIA executive reached out to Commerce Department officials. So it feels like things are spreading out a little bit.
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Speaker 14: Yeah, look, when you have such a dominant market share as Nvidia does, you know, when you look at things incrementally, it doesn't feel great. Now, it doesn't change anything about the fundamentals of the company right now,
but Jensen is the face of Nvidia. And, you know, when we look at the bench and succession, there is no one who can match, you know, what Jensen has done with everything around company strategies, supply chains, So to my mind, the execution risk has grown. And granted, you know, they may lose China revenue completely. Right now it's like mid single digit. But that to me is not the big risk here. The big risk is how people perceive of Nvidia, the relationships they had with the supply chain, And does that get changed in any way?
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Speaker 6: Well, is the brilliance of NVIDIA and the science, the chips, the complications or complicated designs of the chips, the expertise, is that all Jensen? Or is there a team that really backs all of that?
00:26:01
Speaker 2: There is a team.
00:26:02
Speaker 14: And look, I think clearly he had 60 reports, so there is a lot. But when it comes to how big NVIDIA has become over the past three years and why it became a $ 5 trillion company, I would credit Jensen a great deal with what he has done.
00:26:19
Speaker 6: Is it akin to how we always talked about Mandeep Apple and its expertise in its supply chain? Same thing for NVIDIA or Jensen Wang specifically in NVIDIA having all the components it needed to meet demand.
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Speaker 14: Yes, and right now, because everyone keeps talking about how compute constrained they are, I mean, a company like Alphabet, which has released a new TPU chip today, they could ramp up much faster if they had the supply chain to complement that. So that's where NVIDIA's brilliance has shown is how far ahead they were able to plan in terms of supply chain and scale and get to these big numbers where they could guide to 70%, like over $ 600 billion in revenue for 2027.
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Speaker 6: It's off the charts in terms of their numbers. Mandeep, who stands to gain? And I want to throw in Alphabet. Google is rolling out a broader array of AI chips, aiming to capitalize on its rapid ascent as a challenger to Nvidia. This has to do with two new TPUs. So is this significant?
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Speaker 2: It is significant.
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Speaker 14: Like I said, Nvidia had that dominance that even small incremental news can make a difference. And I would say Alphabet, AMD, these are the companies that had very small market share when it comes to the training side. And now that they are ramping up their own chips and the performance is comparable, I think these sort of news can influence the partnerships and the ecosystem. And it will be interesting to see what comes out of the board investigation.
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Speaker 3: Right.
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Speaker 14: To me, that is where, you know, if the board is objective and they do this thoroughly, you know, maybe nothing happens to NVIDIA. But we'll have to wait for that. This is the uncertain period right now.
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Speaker 3: Yeah, there's a lot still yet to be known, to be fair. And we'll look forward to that. Mandeep, thank you. Mandeep Singh, Bloomberg Intelligence.
00:28:05
Speaker 6: All right, well, our next guest says Jensen Wang's importance goes beyond NVIDIA. He's also a key figure in the broader US AI strategy.
00:28:12
Speaker 3: You know that.
00:28:13
Speaker 6: We talk about this a lot. Doug Huber is Chief Investment Officer over at Wealth Enhancement, and they do hold NVIDIA.
00:28:19
Speaker 3: Doug, good to have you here.
00:28:21
Speaker 6: You just heard from Mandeep talking about the significance of this news and also Alphabet rolling out some new TPUs. But for you, as you and your team investing for investors in NVIDIA, any reason fundamentally to back off that investment?
00:28:37
Speaker 2: Carl, thanks for having me. And you're absolutely right.
00:28:38
Speaker 4: I mean, obviously, a big weekend and the team was hard at it thinking just about that question. I think Fundamentally, I don't think things changed over the weekend, right? I do think it's a really interesting story, and Mandeep just touched on some of that, in that you have a person who's not only so consequential to his own business, but has essentially been incredibly consequential to the entire AI narrative. And I think the one thing we're paying a little bit more attention to, and I think the market's obviously doing that as well, is that you now have leadership and governance really demanding a much more explicit place in that valuation discussion.
00:29:13
Speaker 6: Well, having said that, is an NVIDIA without Jensen Wang as interesting as an investment in your view?
00:29:21
Speaker 4: I mean, I think it obviously will have price action if that was really the case. That being said, you know, we've certainly seen other companies have leadership changes, probably not as abruptly and probably not for these reasons. And the problem is NVIDIA also hasn't been public about their succession plan. So I do think it would give a lot of pause to investors at all thinking about, you know, is this the same business that I underwrote before?
00:29:47
Speaker 2: And so I do.
00:29:48
Speaker 4: Think it would cause it would be a significant cause for pause if that was the case.
00:29:53
Speaker 6: So let's just like play this out here. So aftermarket, November 17th, we get NVIDIA earnings. If they are strong, if the metrics, if the fundamental story continues as we've seen it, do you kind of put this to the back?
00:30:09
Speaker 3: Can you? Should you?
00:30:11
Speaker 6: Because it sounds like there's still a lot to be known. And I think what's also interesting is how many within the company had an understanding of what was going on?
00:30:19
Speaker 4: Yeah, I mean, you're absolutely right. We're all learning about this in real time, you know, a lot through following you all, right? And so it will be really interesting to see what comes out over the next short period of time here. I do think positive earnings will continue to support, obviously, the narrative from a fundamental perspective. But again, if we start
to learn that this goes deeper, if it's more pervasive, if there was other governance shortfalls here, that will put a lot of pressure on the stock, in our opinion.
00:30:47
Speaker 6: Talk to us more broadly about the AI trade, what we've seen in markets as of late, whether it's Philadelphia Semiconductor Index, chip names really pulling back over the last few months, and just more broader questions about how much is being spent, what is ultimately the return on investment. Kind of layer that on top of the NVIDIA news. I mean, are you more confident about the AI trade more broadly right now, or more questions every day come out?
00:31:15
Speaker 2: Great. I mean, listen, there's always a ton of questions here.
00:31:18
Speaker 4: We are on a crazy journey here that is transformative to how we operate as a society. And so there's always going to be a lot of unknown as the pace of this all moves so fast. The story continues to evolve and what we're paying attention to continues to shift. I think you can break it into shorter term things that you're trying to pick off on maybe quarterly earnings, medium term, and then longer term. What is the actual impact of AI to productivity, to jobs, to all those things? I think, obviously, the other thing, you know, might not have touched on there, but it's certainly hitting the markets.
00:31:54
Speaker 2: Is last week's elections. You know, yeah.
00:31:57
Speaker 4: And I think that's proven that I think chips are not the only AI bottleneck today. I mean, we're kind of using a term internally that it's now power and permission, not just processors.
00:32:08
Speaker 2: A lot of P's there.
00:32:09
Speaker 4: And so I think it'll be interesting to see is over the medium term here, you're really going to have to pay attention to Is the supply that is intended to come online actually going to come online? And what is the cost to bring it online in this new paradigm?
00:32:24
Speaker 6: Well, you know, so having said that, are your clients, your investors coming to you and saying, we want to take some money off the table when it comes to the AI trade? Or are they doubling down as they've seen pullbacks in some of the big names, whether it was hyperscalers or so on?
00:32:39
Speaker 4: Yeah, I mean, listen, I think as a whole, we really encourage long-term thinking as we build portfolios at Wealth Enhancement. That being said, I think that the bigger question is not just adding or subtracting. I think it's really where do you find diversification in this environment? It is harder and harder.
00:32:54
Speaker 3: Where do you?
00:32:56
Speaker 2: I mean, we're spending a lot of time thinking about that.
00:33:00
Speaker 4: You know, it is it was positive to see last week we can make arguments that even rates are tied to AI and the broader build out. That being said, you know, it was good to see that that rates did serve as a bit of a shock absorber during the sell off last week. So there is still that fixed income playing a role.
00:33:18
Speaker 2: But I think you've got to look beyond that. You did see on a relative basis.
00:33:21
Speaker 4: You know, more defensive sectors, more cyclical sectors outperform significantly, you know, during that pullback on Thursday. So is there still diversification inside a 60-40?
00:33:31
Speaker 2: Sure.
00:33:31
Speaker 4: Is there going to be elevated volatility because so much is hinging on the success of the AI trade?
00:33:36
Speaker 1: Absolutely.
00:33:37
Speaker 4: And so how do you look outside of that? You can certainly look to other types of strategies, and we're thinking about all those things. But it is an important thing to consider, especially for long-term strategic capital.
00:33:47
Speaker 6: Listen, investors are already looking outside of NVIDIA. As it's down more than 6%, you're seeing them move into names like Alphabet and Meta and Microsoft. We're definitely seeing that diversification. All right, Doug, thank you. Doug Huber, he's Chief Investment Officer at Wealth Enhancement, joining us here. Well, coming up, everybody, Didi Das of Menlo Ventures joining us to talk about the firm's state of enterprise AI report. We're going to get a nice, big, broad look at the AI, build the AI spend. That is coming up next when Bloomberg Tech continues.
00:34:17
Speaker 3: On this Monday. It's time now for Talking Tech. I'm Isabel Lee.
00:34:29
Speaker 13: First up, Google is rolling out a broader array of AI chips, introducing two new variations of its Tensor Processing Units, or TPUs. The company is aiming to capitalize on its rapid ascent as a challenger to NVIDIA. Plus, Chinese robot makers will drive a near quadrupling in global shipments of humanoids in 2026. That's according to a research firm, with shipments expected to surge to 86,000 in 2027. These are data which reflect the country's dominance of an area considered key to the future of the AI industry. And SoftBank's mobile arm is bracing for a possible slowdown in AI data center demand in the U.S. This comes after the Democratic Party's blue sweep in the midterms. The company's CEO said that the situation in the U.S. may not work to their advantage, adding that they may launch in other countries first if it worsens.
00:35:18
Speaker 3: All right, Isabel, thank you so much.
00:35:20
Speaker 6: Well, Menlo Ventures found enterprise AI deployment spend scaling up to $ 177 billion by September of this year.
00:35:29
Speaker 3: Check this out.
00:35:29
Speaker 6: It's up from $ 33 billion in 2025 and just $ 1.
00:35:32
Speaker 3: 7 billion back in 2023. Quite a rise.
00:35:35
Speaker 6: Now, the firm detailing all of these findings and many more in its 2026 State of Enterprise AI report. Didi Das is partner at Menlo Ventures and a co-author of the report. He joins us now. Great to have you here with us, Didi. I want to talk about the report, but you can't talk about AI more broadly without talking about NVIDIA. How are you thinking about NVIDIA in
light of the news that we are dealing with today?
00:36:01
Speaker 1: Look, Carol, thank you for having me so much.
00:36:03
Speaker 5: NVIDIA is a crucial part of the AI economy, as we know.
00:36:07
Speaker 1: It's a big supplier of chips.
00:36:10
Speaker 5: But what I want to say is even in light of the news that we see today, the main thing to keep in mind is the compute demand isn't going anywhere.
00:36:19
Speaker 1: People are using enterprise AI.
00:36:22
Speaker 5: AI has come to the enterprise and led to these fantastic productivity gains. And whether or not something happens with Jensen... I just think it's a stark reminder when we look at this $ 177 billion number that the compute will come from NVIDIA, whether Jensen's at the helm or not, and these productivity games are very quickly diffusing into the larger economy today.
00:36:44
Speaker 3: So, Didi, let's talk about this number.
00:36:46
Speaker 6: As we said, scaling to $ 177 billion by September 2026, up from $ 33 billion last year. It's been on quite a move. Is it all because of agentic AI? What's really driving all of this?
00:36:57
Speaker 1: That's right, Carol. 80% of the usage of AI comes from agents.
00:37:02
Speaker 5: And this is really a stark difference from what we saw when AI first came on the scene in 2022, where people were mostly using a chatbot style. And the critical difference between chatbot style use and agents is that chatbots only run when humans speak.
00:37:19
Speaker 1: Ask them a question.
00:37:20
Speaker 5: But with agentic AI, what people are doing and what we're seeing our companies and enterprises doing is they are running these agents overnight and they're doing various tasks for them with coding as a means for intelligence. And naturally, this leads to a lot more token spend and a lot more spend on actual AI, but also getting way more jobs done. And I can give many examples of how these companies are using AI in these many ways.
00:37:45
Speaker 3: Well, it's interesting, too.
00:37:46
Speaker 6: And, you know, there's a software component to all of this. We know that the software space went under a lot of trouble. We saw a lot of names, you know, go back a few months or so, go back last year, you know, where they came under pressure, concerned about how AI would change.
00:38:01
Speaker 3: The software space. What's going on?
00:38:03
Speaker 6: Because my understanding is AI actually expanding the software economy, according to your findings.
00:38:09
Speaker 1: That's exactly right.
00:38:10
Speaker 5: You know, Carol, what we saw is initially what this was doing, and it's still coding is very much a dominant way that people are using AI today. But people make this mistake of thinking that AI means software, means coding, and maybe that's the size of this market. But what is very, very clear from our report is coding is a means to a general intelligence. When we say coding, we take away this sort of random hallucinations that AI can do, and
we codify it. And we use coding as a way to do various hard tasks. So if you look like a company like Eve, which is a law company that does plaintiff law, you might say, what does that firm have to do with coding? But when it offers its product, it's using these coding agents to say, hey, let's read tens of thousands of cases overnight. Read plaintiff's medical record, and then file these cases, you know, up to 60 days faster than they were happening before. And so it's really not about just coding. It's about coding as a means to various other forms of intelligence, whether it's in legal, in finance, insurance, and so many other things.
00:39:18
Speaker 6: Diddy, just got about 30, 40 seconds. The two beneficiaries, most of all of this, is it still Anthropic and OpenAI? And I think about that as we march towards the IPO.
00:39:29
Speaker 3: Anthrop, in particular. And just be quick if you could.
00:39:32
Speaker 5: Right.
00:39:34
Speaker 1: Here's what the numbers say.
00:39:35
Speaker 5: When it comes to total spend, 69% of all of that $ 177 billion number was three players, Anthropic, OpenAI, and Google. If you cut it down to just enterprise API spend, then it's even more stark with 86% of all API spend going to Anthropic and OpenAI, with Anthropic taking the lion's share of 55% of the total dollars spent on API in the enterprise today. That's a mammoth number. And this is just, it goes to reflect real productivity gains. And the thing I want to really pinpoint is for every dollar spent on AI, we are seeing that companies are actually getting about $ 1.
00:40:15
Speaker 1: 7 back in productivity gains.
00:40:17
Speaker 3: So you're talking about ROI there.
00:40:19
Speaker 1: Yeah.
00:40:20
Speaker 6: All right, great to widen the aperture with you when it comes to AI in particular.
00:40:24
Speaker 3: Didi, thank you. Have a good week.
00:40:25
Speaker 6: Didi Das, his partner at Menlo Ventures, joining us on this Monday.
00:40:30
Speaker 5: All right, let's get back to today's top story.
00:40:37
Speaker 3: We were talking about NVIDIA.
00:40:38
Speaker 6: Last month, Bloomberg's Emily Chang asked Jensen Wong about the risks of NVIDIA's market dominance in artificial intelligence and how he would navigate a new administration in Washington.
00:40:49
Speaker 8: We don't take our position for granted. We came from nothing. And we have to earn our keep every day. We have competitors in every company, every industry, every country. With respect to the size of the market, just remember, it's just a number. NVIDIA can only be as large as the, if you will, the pond that we're in, the market.
00:41:15
Speaker 11: That we're in.
00:41:16
Speaker 6: Well, it's still a large company. I should point out it's about a $ 4. 2 trillion company. We're talking about NVIDIA. Joining us now, though, with more on the market reaction today is Bloomberg's Carmen Reinecke.
00:41:24
Speaker 3: It's been under pressure.
00:41:26
Speaker 5: Yes.
00:41:27
Speaker 3: Yes. I mean, and really this is just the latest thing.
00:41:29
Speaker 15: So this stock has been under pressure as sort of the cornerstone of the AI trade. There's been a lot of sort of caution from investors around that trade. And now this coming out very specific to NVIDIA. It is a key overhang for the stock. I mean, Wall Street analysts today are looking at it and saying, you know, there's key man risk here. Like Jensen Huang is by and far the most, I think, visible, notable figure that's really championing the AI trade and the build out. And NVIDIA is involved in so much of the money and the deals and the flow here that it's really important to to have him at the helm of this company. So it brings a key overhang risk for the stock.
00:42:07
Speaker 6: Carmen, none of the analysts on Wall Street are running for the exit tour. Because I'm looking, 95% have buys. You've got 3% withholds.
00:42:14
Speaker 3: I think there's one sell on the stock. Investors still like this, or Wall Street still likes this stock. It's true.
00:42:19
Speaker 15: And I think part of the reason we're not seeing downgrades yet is that so far everyone thinks revenue is growth. Those things shouldn't be impacted by this, at least from what we know now. Going forward, obviously, that might change. And that's something that I think investors will watch very closely.
00:42:34
Speaker 3: Got 20 seconds here.
00:42:36
Speaker 9: Volume.
00:42:36
Speaker 3: What's volume like on this stock today?
00:42:37
Speaker 15: It is absolutely crazy today. It's just off the charts. I mean, we're seeing the stock down. It's off its lows, but down 5%. This is more than 25% from its most recent high. Hundreds of billions of dollars in market value being erased here. And, I mean, we'll see what happens next.
00:42:52
Speaker 6: We'll see if any dip buyers come in. We've got a few hours to go. Carmen Reinecke, thank you, of course, at Bloomberg. And that's going to do it for this edition of Bloomberg Tech.
00:42:58
Speaker 3: Don't forget to check out our podcast.
00:43:00
Speaker 6: You can find it on the Terminal as well as online on Apple, Spotify, and iHeart.
00:43:05
Speaker 3: Thanks for watching, everybody. This is Bloomberg.