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Welcome to the Daybreak Asia podcast.

I'm Doug Krisner.

We begin with the results from the world's most valuable publicly traded company after the bell in.

Vidio posted third quarter numbers above estimates, and the company gave a strong forecast for revenue in the current period.

Sales are expected to be about sixty five billion dollars and gross margins are expected to reach the mid seventy percent range.

So this outlook signals demand does remain strong for Invidia's artificial intelligence accelerators.

We took a deeper dive into the Nvidia story with CEO Jensen Wong.

He spoke with Bloomberg's Ed Ludlow.

Jensen, It's been an astonishingly busy day for you in Washington, DC, so I'm grateful for your time.

You're sold out of Blackwell, that's what you said, and also that five hundred billion dollar forecast, which is Blackwell Rubin has room to grow.

How do those fit together?

I said, Sales are off the charts for Blackwell and Nvidia GPUs in the cloud are sold out.

We got plenty of Blackwells to sell you.

We have lots of Blackwells coming.

We're making a lot of Blackwells, and we have a bunch of Vera Rubens coming, and so business is very very strong.

But we've planned our supply chain incredibly well.

We have the largest supply chain in the world.

Our partners TSMC, our memory partners, sk Heinex, Micron, Samsung are doing a fantastic job supporting us.

And all of our systems partners, fox Con and Quantum and Wistron are packaging partners.

Everybody's doing a fantastic job supporting us.

And we've done a good job planning for a very very strong year, and we've done a good job planning for Vera Rubin.

So sales are off the charts and video GPUs and the cloud is sold out, but we've got a bunch of Blackwells to sell.

Jensen, what's the road ahead for Vera Rubin.

It's one of the most common questions we get for you of how that ramp will go relative to what we saw with the Blackwell generations.

Well, the silicon for Vera Rubin, seven different chips are back in our labs and the bring up is happening across engineering teams.

Probably a couple of twenty thousand people are working on bringing up Vera Rubin from silicon to systems, the software to algorithms.

People are working around the clock and this bring up is going beautifully.

We're on track to deliver Vera Rubin about Q three timeframe of next year, continuing our once a year cycle.

Vera Ruben is already assured a huge success.

Everybody's incredibly excited about it.

Can't wait to show everybody.

And then one last thing is that the rack architecture, the rack scale architecture is completely revolutionary.

It includes a scale up switch called the mvy Link envy Link seventy two.

Our fifth generation is the only one of its kind in the world.

This rack architecture, which is incredibly complex, started with Grace Blackwell, then Grace Blackwell Ultra.

It is transitioned to Grace Blackwell Ultra is incredibly seamless.

The same rack scale architecture is going to be used for Vera Rubin, and so the supply chain is all used to it.

This complexity that we enjoyed with Grace Blackwell transition, we're now incredibly smooth running and so I think Vera Ruben is going to be just really smooth and we're gonna rap it really hard.

Jensen I tried to go through what the CFO COLLECT CRES said about China.

In the quarter gone it seemed like there was not meaning for H twenty sales because the demand wasn't there even if you were permitted to sell H twenty.

And then in the current period and going forward in video, seems committed to working with both the United States and China to sell what COLLECT called more competitive compute.

Where do we stand with that and could you just clarify what COLLECT was talking about in the current state of play for China.

The most important thing she said is that we've said for some time now our forecast for China is zero.

All of our forecasts guidance that we showed zero, we should start.

That's the most important thing that she said.

She also said that effectively, China's a very important market to us.

It's very important to the United States, it's very important to China.

We would love the opportunity to be able to re engage the Chinese market with excellent products that we deliver and to be able to compete globally.

The Chinese market is very large.

This year, my guess is probably about fifty billion dollars.

It's great for the American people that we're able to compete in the Chinese market.

It's great for the China market that we're able to provide and video's technology to them.

It's great for the rest of the world as Chinese software companies and Chinese open source models leave China and are used all over the world.

And so I think it's fantastic that we're able.

It would be fantastic if we're able to participate in the China market.

But for now, we should just assume the videos forecast for China market is zero.

We're going to continue to engage the US government, continue to engage the China government to advise them and to encourage them to allow us to go back and compete in the open market.

And so until then we should assume zero Jensen.

During the call, the US Commerce Department issued a statement saying that you are now permitted to export up to thirty five thousand Blackwell chips each to both saudiast Humane and to the UAE through G forty two.

But there are some requirements that the US has a view, in particular around controls of preventing tech transfer to China through the Middle East.

What can you tell us about your understanding of what the US government's asking of you there that that.

Element has been around for a long time is to prevent diversion.

Of course, over the years, people have speculated about diversion.

We've chased down every single concern, and we've repeatedly tested and sampled data centers around the world and found no diversion.

And so this is an area that will continue to be rigorous on.

And there's a lot of different ways to comply, and one of them, of course, is to have it be run by American cloud.

Another way is just to make sure that we have measures put in place, whether technology or processes, to ensure that no diversion happens.

Jensen, The number one question I get for you is always about energy.

How severe is the energy shortage in the context of AI expansion, and would you talk a bit about power and whether power is a bigger constraint for this buildout than the chips themselves.

When you're growing at the rate and scale of Nvidia, Remember we're growing some sixty percent a year just quarter to quarter growth of our company as ten billion dollars.

We grew an entire size of a company just from in one quarter, and so the scale and the rate at which we're growing everything's a challenge, which is the reason why Nvidia has to be world class at our supply chain, working with incredible providers and suppliers like TSMC and the memory partners and all of our systems partners, but also working downstream to work with energy providers, power generator companies, all of the land power and shell providers, so that we could make sure that as we launch into the marketplace, as we deploy into the marketplace, land power and shell will be ready for us.

One of our great advantages is that we have such a large network of go to market.

We're in every single cloud.

Every single cloud service provider is a customer of ours.

We're in every single GPU cloud, and so we have a large network, not to mention OEMs, not to mention, all around the world.

Our customer base, our network of partners is so large that we will find nooks and crannies of power and large scale, medium scale, small scale in different parts of the world.

And so this is a huge advantage of ours, and it stems from the fact ed that Nvidia's architecture literally runs every model and today, yesterday we announced a big news with Nentropic and so now the premiere frontier models, open Ai, Anthropic, Xai, Gemini, all the open sources, biological models, physical ai models, everything in the world runs on Nvidia.

And as a result of that, irrespective of which cloud provider you are, it is fantastic that we can deploy in your cloud because the off take will be incredible.

Jensen, we can see where the hyperscale is are getting the money, where they have the money to deploy and build.

But you mentioned Anthropic.

With Anthropic or indeed open Ai, they have tens of billions of dollars of commitments around the world.

Very simple like, how do you know the open ai is good for it that it will be able to find the money.

Well, we're thoughtful along with open Ai, thoughtful in aligning on and taking into consideration visibility of demand and their financing capabilities.

All of that has to be in accordance, has to be aligned, has to be coherent before we start to build out.

And so I think the ambitions large, but the execution is disciplined, and that's really really important to recognize we're very disciplined with our investment, We're disciplined with our buildout.

These are very large scale investments, and so the two teams are quite disciplined, very disciplined in thinking through the investment levels.

Now, it's also important to take a step back and realize that open AI anthropic.

These are the fastest growing company in the history of humanity.

Their off take, their end market demand is absolutely real and absolutely incredible, and you could see that they're really struggling to keep up with the demand that they have.

The engineering teams we work incredibly hard to make sure that we bring them on more capacity, but also optimizing their stack so that the usage of whatever capacity is as efficient as possible.

And meanwhile, there's so many new use cases that they want to put back put out into the world, and its currently limited by the capacity they have, and so this is a really important time.

You're seeing an exponential growth in the amount of compute demand necessary for AI, You're seeing an exponential growth of adoption and use of AI, and the number of applications that are going to be using these AI is also growing, and so we've got to do our best to support the scaling out of two of the most consequential companies in history, and we're delied to be partnered with them.

Jensen investors have been worrying about depreciation.

Software can actually extend life like there are a one hundreds out there in the real world still at full utilization.

Are people underestimating how long your chips stay useful or are they kind of misunderstanding in the context of depreciation, how you're handling generation to generation updates of GPU.

And Vidious architect and vidiot is unlike any other accelerator, and the reason for that is because of Kuda's diversity of capability and versatility.

Remember I said two things earlier.

I said the fact that Nvidia participates and could accelerate every phase of AI, pre training, post training, and inference.

We're the only architecture in the world that does that fantastically.

The second thing we do we run every single model, and so most agentic systems, most clouds are running so many different diverse type of models language models, vision models, biological models, chemical models, for all the different fields of science.

Nvidia could be used across the entire lifespan of the technology.

And so if you look at products that we shipped amper A one hundred we shipped six years ago.

But because we're continuing, our installed bas is so large, our diversity is so great, we could continuously update our software bring value to our customers on the one hand, but because our versatility is so great based on the capability they need, they could use our GPUs for a very very long time.

Now, remember A one hundred and six years old.

However, it is still an order of a magnitude faster than any CPU could put the bear, so it is still the best computer.

It is still the best processor for much of the workload in the cloud, and most people misunderstand that because unlike US, most accelerators are kind of singular use, because they don't have diversity, because they don't have versatility, because they're not great at every phase of AI.

Once they're used for whatever they were designed to do, their value falls off a cliff.

That is not true with Nvidio Jensen.

My final question is a point of clarification, if I may.

You were asked on the call about content and in video's contribution to any given piece of AI infrastructure, and what you said was Hopper around twenty to twenty five black COO about thirty With those figures billions of dollars in dollar terms on a one gigawa data center, are you talking about percentages of total cost?

Oh?

Thank you, billions of dollars, billions of dollars.

Yeah, And so for our vera Rubens system, a one gigawak data center is probably something along the lines of fifty to fifty five, and Video's contribution is probably about thirty five of that.

That was in Nvidia CEO Jensen Wong speaking to Bloomberg's Ed Ludlow, bringing it to you here on the Daybreak Asia podcast.

Welcome back to the Daybreak Asia podcast.

I'm Doug Prisoner.

On Wednesday, President Trump renewed his attacks against FED Shair J.

Powell.

Trump said he would love to fire him for not lowering interest rates as much as the President would like, and Trump suggested he would fire Scott Besant if the Treasury Secretary doesn't help secure lower interest rates well.

Importantly, the Treasury Secretary has no influence on the FED, although Best is leading the selection process for the next FED share to replace Powell when his term expires in May twenty twenty six.

Also today we got minutes from the last FED meeting, and they were a little hawkish.

Policymakers were divided.

Several were against lowering the Fed's benchmark rate last month, and many said it would likely be appropriate to keep rate steady for the remainder of this year.

So one of the hallmarks of the US session was this idea that we have to reduce bets on a December rate cut.

For a closer look, now, I'm joined by Clayton Trick.

He is head of portfolio management at angel Oak Capital Advisors.

Clayton is on the line from Atlanta, Georgia.

Thank you, sir for making time to chat with me.

So I'm looking at the swaps market pricing right now.

Thirty percent probability that we're going to get a twenty five basis point rate cut in December.

Is that how you see things right now?

Yes, we do.

We feel that the press conference right after the last meeting, you saw Chim and Pale really push against the market.

You know, before that you had one hundred percent, you know, mere one hundred percent chance of a rate cut for the December meeting, and he really wanted to push against the market and really keep the optionality open.

You know.

After that we saw continuous public appearances from more hawkish and centrist type members, you know, thinking you of a FED presidence like Schmid, Logan, Hammock, as well as centrists like Bostick and Collins that really kind of reiterated their apprehension toward a December cut.

So not surprising the market is pricing in a much lower probability of a cut.

But that being said, we haven't had a lot of economic data obviously the last couple weeks with the government shutdown, so things could definitely change here in the coming weeks.

We also heard today from Kevin Hassett to the Director of the National Economic Council, and Hassett, as we know, as one of the finals to become the next FED share I found it interesting that today he was discussing consumer price pressures and saying that they may not be fully tamed up until this point when I've heard Hasset speak, there's been a dubbish quality today that seemed to tilt a little on the hawkish side.

So Clayton, can you give me your sense of how you view the inflation story right now?

Yeah, we have continued to believe that, you know, core goods inflation was going to put a little bit of upward pressure with tariffs, and it was going to take some time.

That being said, thirty five percent of core PCE, thirty five percent of core CPI is shelter, and that has continued to decelerate.

That's what we've got in the most recent number, the figure that we got within CPI during the shutdown, and we expect home prices to continue to decelebrate or fall, which will continue to bring down the shelter component of inflation.

On the good side, that that's going to take a lot longer to flow through.

That being said, we're already getting some rhetoric from from DC talking about how they may be rolling back some of the tariffs on specific things that are having to do with consumer spending.

So we could see kind of a slight rollback of tariffs into next year.

Shelter is going to continue to put downward pressure on core inflation, and so we don't think inflation is really going to rise much from here, but could see remaining in the high twos.

So FED funds now in the high threes.

We think there is room for them to be looking to cut but I'm not surprised you're getting a little bit of pushback in the most recent comments.

So, if you're expecting some more easing and you're not expecting inflation to be a problem, what's your investment strategy right now?

Yeah, so there are significant opportunities, especially with recent and the recent pullback, we've been keeping some dry powder on the sidelines, really looking to step into areas like agency and non agency mortgage backed securities.

There's been a lot of comments recently regarding how corporate credit is on the tighter end of the range.

You know, really that market's highly correlated to where equity valuations are.

But outside of corporate credit, thinking of the securitized bond market, that areas is still actually really wide compared to corporate spreads thinking back to twenty twenty one and spreads, we're a lot tighter across the market.

You're significantly wider in securitized bonds versus investment grade and higher corporate.

So we see that as an attracted area of the market.

And from a credit perspective, the housing market we view is actually still in very good shape, and so mortgage bond should huddle pulled up well in either continued muddling along the economy or you know, an environment where the FED needs to actually maybe be cutting more because the layer market is turning in the other direction.

What about on the equity side, Clayton, I'm curious to know where you're focused in the equity space.

Yeah, so we're continuing to watch obviously the moves impact that's very important for the coming growth and data centers and anything around AI led cap X.

That being said, we think it's actually very notable to continue to be watching performance of public BDCs.

Tinded to see discussions and concerns around middle market lending about the growth and private credit public market publicly traded BDCs is an area that we can continue to get insight into that area of the market.

We've seen that really decouple from SMP and tech performance really since the second quarter, and so we're really keeping a keen focus heading into the year to see where those the valuations within that market looks heading into twenty twenty six.

And what about opportunities offshore?

Are you finding any.

We definitely think of vests should be thinking globally right now.

US acceptionalism in the last few years has really stuck out, and now you're seeing global opportunities coming back from an equity perspective.

We think that's still going to be the case, and so you know, we're we're recommending investors really focus on global diversification, not just US equities heading into next year.

All right, Clayton, we'll leave it there.

Thank you so much.

Clayton Trick, head of portfolio management at Angel Oak Capital Advisors, on the line from Atlanta, Georgia, here on the Daybreak Asia Podcast.

Thanks for listening to today's episode of the Bloomberg Daybreak Asia Edition podcast.

Each weekday, we look at the story shaping markets, finance, and geopolitics in the Asia Pacific.

You can find us on Apple, Spotify, the Bloomberg Podcast YouTube channel, or anywhere else you listen.

Join us again tomorrow for insight on the market moves from Hong Kong to Singapore and Australia.

I'm Doug Prisner, and this is Bloomberg