‘Nvidia has to support the ECOSYSTEM’: CIO on what’s next for AI leader

ON THIS TOPIC, GUESTS THAT HAVE MADE YOU A TON OF MONEY. BETH KINDIG LATER, BUT IVANA DELEVSKA, LET'S START WITH THIS, OKAY? [LAUGHTER] THESE ARE OBVIOUSLY SELF-SERVING INVESTMENTS FROM NVIDIA, RIGHT? THE QUESTION THOUGH IS, ARE THEY NEFARIOUS? ARE THEY QUESTIONABLE? IN OTHER WORDS, ARE THEY DOING SOMETHING SMART BUSINESS WISE, OR ARE THEY BUYING TIME AND IT'S, ULTIMATELY, A TICKING TIME BOBOMBSOME. >> WELL, CHARLES, I THINK IT'S VERY IMPORTANT FOR PEOPLE TO UNDERSTAND THAT NVIDIA HAS TO SPORT THE ECOSYSTEM -- SUPPORT THE ECOSYSTEM. THEY BASICALLY BENEFIT FROM GENERAL PURPOSE COMPUTING AND ANYBODY BASICALLY BUILDING ANYTHING ON THE NVIDIA CHIPS, THEY WOULD NEED TO SUPPORT. SO FROM THIS PERSPECTIVE, YOU SEE SOME INVESTMENTS UPSTREAM AND DOWN DREAM IS IN THE CHANNEL. IF URGE GO -- DROWN STREAM IN THE CHANNEL. I THINK IN. CHARLES: WHAT'S'S AN UPSTREAM INVESTMENT? >> SO, FOR EXAMPLE, THEIR INVESTMENT IN OPTICAL COMPONENTS IS THINGS THAT THEY NEED TO SECURE. SO LIGHT AND COHERENT INVESTMENTS THAT? -- SNAGS THAT'S WHERE THEY -- SIGNALS THAT'S WHERE THEY THINK THE TIGHTNESS IS GOING TO BE. CHARLES: YOU DON'T SEE ANYTHING THAT HEARKENS BACK TO THE DOT.COM BUBBLE. >> NOT NECESSARILY. AND COME OF THE INVESTMENTS IN COREWEAVE, NEBIUS, THOSE WOULD BE THE QUESTIONABLE ONES BECAUSE THAT IS ESSENTIALLY LIKE SELLING TO THEIR CUSTOMERS, IF YOU WILL. CHARLES: RIGHT. >> I THINK AT THE END OF THE DAY THEY ARE USING THEIR BALANCE SHEET, WHICH IS VERY STRONG IS, TO BE ABLE TO PROVIDE BETTER TERMS -- CHARLES: USING THEIR BALANCE SHEET, THAT'S FINE. WHAT ABOUT THE OFF-BALANCE SHEET STUFF? THIS IS SPOOKING THE HELL OUT OF PEOPLE. NVIDIA'S NOT THE MOST EGREGIOUS. WHEN THEY REPORT AFTER THE BELL, HOW IMPORTANT IS IT THAT JENSEN ARTICULATES THE FACT THAT, HEY, THIS OFF BALANCE SHEET, WHETHER IT'S THE NVIDIA, GOOGLE, ANY OF THESE OTHER NAMES, THIS IS SOMETHING THAT'S MORE OF AN INVESTMENT, NOT A MAJOR LIABILITY FOR THE MARKET? >> IT'S VERY IMPORTANT, CHARLES. AND I THINK MICROSOFT DID A VERY GOOD JOB EXPLAINING THE RETURNS ON THESE TYPES OF INVESTMENTS. AND ALL OF THEM FOLLOW SIMILAR PATHS. SO ALL OF THIS BALANCE SHEET INVESTMENTS ARE DOLLARS FLOWING INTO DATA CENTERS. AND BOTH MICROSOFT AND AMAZON DID A GOOD JOB EXPLAINING HOW THEY'RE GOING TO BE GENERATING RETURNS WITH, BASICALLY, CLOSE TO ONE-YEAR PAYBACKS HERE. SO THERE SHOULD BE PRETTY ATTRACTIVE INVESTMENTS. CHARLES: A LOT OF MONEY GOING INTO ANTHROPIC AND OPENAI. THEY'VE GOT A TON OF MONEY, A BUNCH OF BACKLOG AND A TON OF DEBT. THEY FELT LIKE THEY WERE CENTRAL TO THIS WHOLE THING WORKING OUT, NOW ALL OF A SUDDEN YOU'VE TO GOT KIMI K3. AND NOW SOME PEOPLE ARE WONDERING HOW THIS CHANGED THE DYNAMICS OF ALL OF THIS STUFF. YOU THOUGH, YOU THINK -- AND BY THE WAY, JENSEN DEFENDED, YOU KNOW, THE KIMI K3 MODELS. SO IN MY MIND, ARE THEY GOING TO BE WINNERS NO MATTER WHAT? NO MATTER WHO WINS THIS? >> WELL, NVIDIA BENEFITS MUCH MORE FROM OPEN SOURCE, AND THAT'S WHY YOU SAW GENERAL IS SEVEN BASICALLY ENDORSE OPEN SOURCE -- JENSEN. SO I THINK THE REASON WHY IS THE CLOSED SOURCE MODELS OVER TIME WILL BUILD THEIR OWN CUSTOM CHIPS. ANYTIME YOU HAVE A PROPRIETARY APPLICATION LIKE GOOGLE SEARARCH OR META'S RENDER SYSTEMS, THOSE OVER TIME WILL MOVE AWAY FROM NVIDIA. SO FOR NVIDIA, THE KEY IS GOING TO BE OPEN SOURCE AND, BASICALLY, THEIR SHARE IN CHINA IS ALSO SOMETHING TO BE WATCHING. CHARLES: HOW MUCH -- I KNOW YOU HAVEN'T BEEN FOUNDING -- POUNDING THE TABLE ON NVIDIA IN RECENT MONTHS. DO YOU STILL HAVE SOME EXPOSURE. >> IS WE JUST ADDED SOME AHEAD OF THESE EARNINGS AND ON THIS PULLBACK. I THINK THAT ALL OF THE HARDWARE TRADE SIGNIFICANTLY OVERSOLD HERE, AND THE REASON IS BECAUSE YOU HAD LEVERAGE ON TOP OF MOMENTUM TRADING. SO ALL OF THAT HAS BEEN UNWINDING -- CHARLES: HAS THAT ALL BEEN WASHED OUT, THE SORT OF SITUATIONAL AWARENESS AND ALL THAT CRAP, IT'S JUST IS ABOUT UNWIND? >> ABSOLUTELY. WE THINK THERE'S A LITTLE MORE TO GO, ESPECIALLY WITH LOW SUMMER VOLUMES. YOU'RE FEELING IT A LITTLE MORE THAN YOU WOULD USUALLYLY -- USUALLY. CHASTLES CHARLES YOU DO HAVE SOME NAMES THAT YOU SAY BENEFIT FROM CLOSESSED AND OPEN MODELS. ONE OF THEM IS SIENNA, UP 6%. -- 61%. IT'S COME DOWN A LOT RECENTLY, UP ALMOST 600% IN THE LAST FIVE YEARS, AND YOU STILL SEE MORE UPSIDE. >> ABSOLUTELY. I THINK THIS IS THE OPPORTUNITY WHERE YOU CAN BE BUYING THE PULLBACK. THEY ARE A LEADER IN NETWORKING WHICH IS GOING TO BE CRITICAL IN CONNECTING THESE DAY CENTERS TOGETHER. SO WE THINK SCALE ACROSS IS A NEW THEME FOR SIENNA, AND BOOKINGS WILL SURPRISE TO THE UPSIDE WHEN THEY REPORT NEXT WEEK. CHARLES: CLOUD FLARE, UP 45% FOR THE YEAR WITH, UP ALMOST 135% IN THE LAST FIVE YEARS. SO THIS IS A NAME YOU'VE TALKED ABOUT A LOT RECENTLY. YOU SAY IT BENEFITS NO MATTER WHAT, THEY'RE IN THE DRIVER'S SEAT. >> ABSOLUTELY, CHARLES. CLOUDFLARE HAS ALSO PULLED BACK EVEN TO THOUGH THEY REPORTED OUTSTANDING RESULTS. BASICALLY, THEY'RE SEEING GROWTH IS ACCELERATING FROM THE 20s TO THE LOW 30s RIGHT NOW. SO IT'S A STRUCTURAL GROWTH STORY. THEY'RE PROVIDING A PLATFORM FOR ALL OF THESE COMPANIES TO BUILD A.I. APPLICATIONS. CHARLES: MOMENTUM SIDEWAYS, UP 1,000% IN FIVE YEARS, YOU SAY THERE'S MORE UPSIDE ON THIS. >> YES. THIS IS AN EXTREMELY CYCLICAL BET, AND WE'RE STILL IN THE EARLY INNINGS OF THE CYCLE. SO '27 AND 'TO 28 IS WHERE YOU'RE GOING TO SEE THE PEAK TIGHTNESS. AHEAD OF THAT, I THINK IT'S GOOD TO REPOSITION. CHARLES: THE ANALOGY I USED, THE PEAK OF ROME, 117 A.D., ARE WE THERE YET WITH A. A.I. STORY? >> WE DON'T THINK SO, AND THE REASON IS BECAUSE WE'RE SEEING AN ACCELERATION GOING INTO NEXT YEAR IN TERMS OF THE NUMBERS AND THE GIGAWATTS THAT ARE GETTING. ADAM:ED. SO THAT'S SOMETHING TO CLOSELY WATCH -- ADDED. ONCE YOU START TO SEE GROWTH TAPER OFF, THAT'S WHEN WE'D START BEING CONCERNED. AS OF RIGHT NOW, ACTUALLY, RESULTS HAVE SURPRISED SIGNIFICANTLY TO THE UPSIDE, AND I THINK THAT'S SOMETHING THAT IS MAYBE GETTING LOST IN ALL THE SELLOFF AND -- CHARLES: STILL TIME TO