Nvidia’s AI Boom, Salesforce’s Anthropic Bet | Bloomberg Tech 8/27/2026

ANNOUNCER: BLOOMBERG TECH DOES LIVE FROM THE HEART OF SILICON VALLEY WITH ED LUDLOW IN SAN FRANCISCO. COMING UP, NVIDIA SEES 70% REVENUE GROWTH NEXT FISCAL YEAR, FAR EXCEEDING ANALYST ESTIMATES. WE WILL BREAK DOWN THE ASTONISHING OUTLOOK. PLUS, SALESFORCE JUMPS AFTER GIVING AN OUTLET STRONG REVENUE AND DEEPENING ITS TIES WITH ANTHROPIC AND HUGGING FACE COMES OUT WITH ITS NEWEST ROBOT, A DOCK THAT CAN WALK AND TALK AND EVEN ROLLERSKATE. WE ARE GOING TO BE JOINED BY THE COFOUNDER AND CHIEF SCIENCE OFFICER THOMAS WOLF. NVIDIA IS THE STORY, THE DRIVER OF MARKETS. THE STOCK IS UP NOW MORE THAN 8% , ON TRACK FOR ITS BIGGEST JUMP SINCE APRIL OF 2025. IN VERY QUICK SUCCESSION THE STOCK HAS CHANGED DIRECTION AND THE STORY HAS CHANGED. THAT IS DRIVING DIFFERENT INDICES HIGHER. THE NEWS? TOPLINE GROWTH 70%. LET'S BRING IN IAN KING. NVIDIA DOES NOT GIVE FOUR-YEAR FISCAL YEAR OUTLOOKS BUT THEY DID AND IT IS A BIG ONE. >> ABSOLUTELY EVERYTHING CHANGED WITH THAT YESTERDAY. JUST FOR CONTEXT, WALL STREET WAS EXPECTING A BRILLIANT YEAR NEXT YEAR. IT WAS EXPECTING 45% AND THEN NVIDIA SAYS GUESS WHAT, IT COULD DOUBLE. >> I WANT TO BRING UP SOMETHING THAT THE CFO TOLD YOU ON THE PHONE WHICH WAS BASICALLY THE REVENUE FORECAST WOULD BE GREATER WERE IT NOT FOR SUPPLY CONSTRAINTS. SUPPLY CONSTRAINT IS STILL SEVERE. EXPLAIN THAT NUMBER AND WHAT THEY WERE TRYING TO GET AT. >> YOU'LL REMEMBER I AM MAKING A POINT HERE, I AM TELLING EVERYBODY WHETHER IT IS THE MEMORY CHIPMAKERS, EVERYBODY IN THE SUPPLY CHAIN, DEMAND IS HERE. GET WORKING, GET PUTTING MORE PRODUCTION IN PLACE. THERE IS MORE BUSINESS TO BE DONE. >> THERE IS NOT A PERFECT SET OF NUMBERS BECAUSE ULTIMATELY THERE IS SOME MARGINAL IMPACT. NVIDIA WILL RAISE PRICES OF ITS TECHNOLOGY AT THE START OF NEXT YEAR. EXPLAIN THAT SORT OF BOTTOM LINE SITUATION FOR US. >> WE KIND OF LAUGHED ON THE CALL SAYING HOW MANY CFOS GO ON A CALL LOWER THAN MARGIN BY 3%? WHAT IS GOING ON HIS MEMORY HAS JUST GOT OUT OF HAND. THERE JUST ISN'T ENOUGH OF IT. NVIDIA HAS HAD TO PASS THAT ALONG AND OF COURSE THAT IS HAVING AN IMPACT ON MARGINS. >> IT WAS A VERY INTERESTING SET OF NUMBERS CALLED AND IN THE REACTION, OUR NEXT GUEST SAYS THE REAL SURPRISES NVIDIA EARNINGS, THE DURABILITY OF THAT GROWTH OUTLOOK. ACROSS FUNDS, ABOUT $1.9 BILLION OF NVIDIA STOCK. WHAT DO YOU MEAN BY DURABILITY? WHAT WAS THE EVIDENCE YOU SAW THAT THIS GOES BEYOND FISCAL 2028? >> FRANKLY, IT REALLY DID SHIFT THE DYNAMIC TO ME IN THAT MASSIVE OUTLOOK THEY PUT FORWARD. I THINK IT SHIFTED THE THOUGHT PROCESS OF IS DEMAND SLOWING, IS THE INDUSTRY PHYSICALLY ABLE TO BUILD ENOUGH COMPUTE TO SATISFY IT? I THINK THAT WITH THAT SHOCKING NUMBER WITH 70% GROWTH NEXT YEAR. THAT SUPPLY CONSTRAINT, AND THEN IT COULD BE 120. EVERYBODY THOUGHT THAT CYCLE WAS CARRYING AND THEY WERE PRETTY CLEAR THAT THERE WAS A LOT OF DEMAND NOT ONLY FOR HYPERSCALER, BUT ALSO THROUGH THE ASI CHANNELS. ED: SO LET'S GO THERE. WHEN IAN AN D I WERE ON THE PHONE, THERE WAS A HEAVY EMPHASIS ON HYPERSCALERS STILL SURGING. IF THERE WERE NUMBERS UNDER THE HOOD IT WAS THE CONCENTRATION OF BUSINESS. WHAT DO YOU MAKE OF THAT NOW AND THE IDEA THAT NVIDIA FEELS THAT BROADENS BEYOND FISCAL 2028? >> I THINK SHE POINTED OUT ON THE CALL THAT THEY ARE BUYERS, ESSENTIALLY. SOME OF THE OTHER CHANNELS IT IS MUCH MORE TOTAL INFRASTRUCTURE. I THINK THE INTEGRATIONS TAKE LONGER. YES, I THINK WE EXPECTED TO SEE BETTER NUMBERS FROM THOSE OTHER CHANNELS, BUT I THINK THEY ALLUDED TO THE FACT THAT IT IS COMING THROUGH AND GOING THROUGH. YOU CAN SEE THOSE AS BEING REALLY LARGE CHANNELS. I THINK THAT WILL BE AN INTERESTING CHANNEL FOR THEM. THE QUESTION I HAVE, AND I DON'T THINK THEY REALLY TOUCHED ON IT TODAY, DO THEY GET THE SAME MARGIN OUT OF THAT? >> I FIND THAT INTERESTING. THERE IS A DIFFERENCE IN SELLING SYSTEMS TO THE HYPERSCALERS AT SCALE AND DOING LOTS OF LITTLE DEALS WITH WHAT ARE ENTERPRISES, ESSENTIALLY. DO YOU WANT TO SEE NVIDIA SHIFT AWAY? >> I DON'T KNOW IF I WOULD DEMANDED OF THE COMPANY, THEY ARE CLEARLY DOING A PRETTY GOOD JOB. BUT I THINK THEY ARE INTERESTINGLY MOVING TO MORE OF THE INTEGRATED AI PLATFORM. THE GPU, THE CPU, NETWORKING, THE SOFTWARE INFERENCE AND HOW THEY CAN APPLY THAT. I THINK THAT HAS SET THEM APART IN LITTLE BIT AND I THINK IT PROTECTS THEM, ESPECIALLY SOME OF THESE HYPERSCALERS. ED: I'M GOING TO GO BACK TO THE SHARES, PRETTY ASTONISHING, RIGHT? THE CHANGE IN THE STORY ON TRACK FOR ITS BEST DAY SINCE APRIL OF 2025 AT SOME POINT. WHAT IS IT SPECIFICALLY THAT THE MARKET IS CHEERING SO MUCH HERE? HOW UNUSUAL IT IS TO HAVE A FOUR YEAR FISCAL GUIDE? SOMETHING MORE? >> IT SEEMS TO BE REALLY ANCHORED TO THAT GUIDANCE. IT ACTUALLY TRENDED DOWN RIGHT AFTER THE ANNOUNCEMENT. I THINK PEOPLE LOOK AT THE FORWARD GUIDANCE THAT THE MARGIN MIGHT DECREASE NEXT YEAR, BUT THEN ON THE CALL AS THEY HAMMER THIS POTENTIAL FUTURE GROWTH OPPORTUNITY, I THINK THAT WILL HE WOKE THEM UP TO THE FACT THAT THERE IS STILL A LOT OF DEMAND, AND WE ARE ACTUALLY TRYING TO FIGURE OUT HOW TO RESUPPLY IT ALL? I THINK THAT WAS A REAL DEFINING POINT IN THAT CALL THAT YOU ACTUALLY SAW THE PRICE ACTION MOVE RIGHT AROUND WHEN THAT CAME UP. ED: SO THE ARGUMENT IS TOPLINE GROWTH FOR THAT FISCAL YEAR WOULD BE GREATER WERE IT NOT FOR SUPPLY CONSTRAINTS. SO DEMAND IS DOUBLING. DO YOU TAKE THAT FOR FACE VALUE? >> THAT'S A GREAT QUESTION. I THINK THAT IS WHAT EVERYBODY IS TRYING TO FIGURE OUT. I THINK MORE DATA POINT AS WE GO THROUGH HERE WILL BE INTERESTING TO SEE. ARE WE SEEING THAT CONTINUE TO GO UP, ARE WE SEEING THE FOLKS CONTINUED TO PRESS THAT, AND HOW ARE THEY GUIDING? THAT WILL BE CERTAINLY CONFIRMATORY TO WHAT WE ARE SEEING. IT DOES APPEAR THAT THEY ARE PRETTY BULLISH ON THE CALLS, WE KNOW THAT. BUT THIS ONE HAD EVIDENCE THAT SEEMED TO INDICATE THAT THIS IS A REALLY SUSTAINABLE AND QUITE REAL POSSIBILITY THAT THE GROWTH IS THERE. OBVIOUSLY THE MARKET IS GOING TO PRICE THIS ON WHAT THEY EXECUTE ON, BUT IT CERTAINLY SEEMS LIKE THERE'S A LOT OF TAILWIND, MAYBE MORE THAN ANYBODY MIGHT HAVE APPRECIATED HERE. ED: IN PRIOR QUARTERS THE QUESTION WAS ALWAYS IS THE BIGGER PICTURE STORY INTACT? THAT CHART I WAS JUST SHOWING WAS ADOPTION ON DIFFERENT METRICS AGAINST THE FRONTIERLAND. WE HAVE FULL CONFIDENCE THAT THOSE ARE GOING TO TURN INTO COMPANIES, NOT JUST REVENUE, BUT GREAT BUSINESSES. NO ONE SEEMS TO BE LINGERING ON THAT THIS MORNING. WHY? >> TO THE GREAT QUESTION. I THINK THEY'VE INVESTED $50 BILLION OR PLANNED TO INVEST $50 BILLION. IT IS A GREAT BREEDING GROUND. IF YOU CAN BE INTIMATELY INVOLVED AND HAVE YOUR PRODUCT INTEGRATED EARLY, HAVE THE SYSTEM SET UP SO IT IS UTILIZING YOUR INFRASTRUCTURE FROM THE START, IF THEY CATCH TRACTION AND IF THEY BECOME THE NEXT BIG PLAYER, BEING IN EARLY IS UNBELIEVABLE. IT COULD REALLY LEAD TO A LOT OF UPSIDE FOR NVIDIA AND FOR THEIR ABILITY TO PUSH THAT PRODUCT THROUGH. I DON'T KNOW IF PEOPLE ARE NOT QUITE DISCOUNTING THAT YET AS TIME GOES ON, WE ARE MORE FOCUSED ON THE ACTUAL NUMBERS, BUT I THOUGHT IT WAS A REALLY INTERESTING PIECE OF THE PHONE CALL. ED: COMING UP, SALESFORCE ALSO JUMPS AFTER GETTING IN OUTLOOK FOR STRONG REVENUE EXPANSION. AND DEEPENING TIES WITH ANTHROPIC, A BIG PART OF THE STORY. YES, SALESFORCE IS UP 21%. THIS IS "BLOOMBERG TECH." ED: $45 BILLION. THAT IS HOW MUCH ANTHROPIC IS PICKING UP SPENDING FROM AND SCALES TO FLAGSHIP DATA CENTER IN WEST VIRGINIA. THAT IS ACCORDING TO SOURCES. THEY SAY IT REPRESENTS ABOUT 460 MEGAWATTS OF POWER. LET'S STICK WITH ANTHROPIC AND ADD SALESFORCE INTO THE MIX AS THE COMPANIES ARE DEEPENING THEIR PARTNERSHIP WITH ANTHROPIC INTEGRATING SALESFORCE'S PRODUCTS WITHIN CLOAUDE. AN OUTLOOK FOR STRONG REVENUE EXPANSION SENDING SHARES JUMPING BEYOND 21%, THE MOST IN SIX YEARS. THE MOST IN SIX YEARS. THAT IS A STOCK MOVE. THE ANTHROPIC EFFECT OR SOMETHING MORE RELATED TO ANTHROPIC? >> THE NUMBERS WERE GOOD. THEY WEREN'T AMAZING. SALESFORCE HAS BEEN DEALING WITH THIS WHOLE SAAS APOCALYPSE THE MODEL LAY OR IS GOING TO EAT THE APPLICATION LAYER. SEEING THEM TOGETHER IN A TV INTERVIEW HAS SHOWN PEOPLE HEY, THERE IS A BIT OF A NONAGGRESSION TREATY HERE. THEY ARE GOING TO WORK TOGETHER, THE APPLICATION LAYER HERE IS -- IS HERE TO STAY. ED: WHAT WAS THE EARNINGS STORY FOR SALESFORCE BEYOND THE NUMBERS? IS THIS THEM DOING REAL AI STUFF? >> EFFECTIVELY, THEIR STORY IS THAT YOU SELL AI PRODUCTS AT THE MARGINS. YOU GET PEOPLE TO UPGRADE THEIR SUBSCRIPTIONS, YOU GET THEM TO LEAVE AI INTO THEIR EXISTING PLATFORM. AND WHAT IS REALLY IMPORTANT AS THEY SHOWED THAT CUSTOMERS ARE NOT TRANSITIONING OFF THE PLATFORM. AT LEAST FOR NOW, IT IS NOT HAPPENING WHICH IS GIVING COMFORT A LOT TO INVESTORS. >> THIS IS A BIG STOCK MOVE COME ON TRACK FOR ITS BIGGEST THEY SINCE AUGUST, NOW TRADING AT A JANUARY HIGH. THE SITUATION HAS CHANGED. BLOOMBERG HAS LEARNED THAT SPACEX CEO ELON MUSK, A FORMER WHITE HOUSE AI STSA DAVID SACHSR -- TSAR DAVID SACHS A SET TO SPEAK ALONG WITH JENSEN HUANG, SAM ALTMAN AND META PRESIDENT DENA POWELL MCCORMICK. MIKE SHEPARD JOINS US WITH MORE. IT SEEMS LIKE AN IMPORTANT MEETING AND IT IS CERTAINLY A TOP-TIER LIST OF PARTICIPANTS. WHAT IS THE POINT OF IT? >> THE POINT IS THAT THEY ARE REALLY TRYING TO LAY THE AGENDA OUT FOR THE LEADERS ULTIMATELY WHEN THEY GATHER IN FLORIDA AT DONALD TRUMP'S GOLF CLUB. YOU WILL HAVE LEADERS FROM THE 20 LARGEST ECONOMIES GATHER IN IN DECEMBER. BEFORE HAND, YOU REALLY HAVE TO MAKE SURE ALL THE DUCKS ARE LINED UP AND EVERYBODY IS ON ROUGHLY THE SAME PAGE WHEN IT COMES TO KEY POINTS OF THE GLOBAL ECONOMIC AGENDA. CERTAINLY THESE DAYS, ARTIFICIAL INTELLIGENCE AND ADVANCES IN TECHNOLOGY IS AT CENTER STAGE, AND IT'S A TOP CONCERN FOR U.S. OFFICIALS. THEY WANT TO MAKE SURE THERE'S GENERAL AGREEMENT AMONG THESE NATIONS THAT ARE GOING TO TAKE PART, AND THEY INCLUDE CHINA, THEY INCLUDE OTHER PARTICIPANTS LIKE INDIA, BRAZIL, A NUMBER OF COUNTRIES. THEY WANT TO MAKE SURE THERE'S AN AGREEMENT ON HOW TO APPROACH REGULATION FOR AI IN PARTICULAR. WHAT THEY ARE HOPING FOR IS AT THIS MEETING NEXT WEEK, TO AGREE ON A SET OF PRINCIPLES, KNOWN AS THE CAROLINA PRINCIPLES, THAT WOULD LAY OUT A LIGHTER TOUCH FOR REGULATION, PUSH FOR MORE FOUNDATIONAL RESEARCH, CALL FOR MORE PRIVATE-PUBLIC SECTOR COOPERATION, AND OVERALL TRY TO SET THE STAGE FOR A COMMON GROUND BETWEEN GOVERNMENTS, SO THAT YOU DON'T SEE HEAVY REGULATION IN ONE COUNTRY, A LIGHTER APPROACH IN ANOTHER, AND OVERALL DISAGREEMENT AND BALANCES. THIS WILL BE A HEAVY LIFT, AND THAT IS WHY THEY ARE BRINGING THESE HIGH-PROFILE FOLKS TO TRY TO HELP THEIR ARGUMENT THERE. ED: LET'S GO TO INDIANA. TAKE ME TO INDIANA, SHEP. WE BROKE A STORY THAT SK HYNIX, KOREAN MEMORY NAME THAT WE'VE FOLLOWED CLOSELY, HAS BROKEN GROUND ON SOMETHING PRETTY SIGNIFICAN IN THAT STATE. WHAT IS THE PROJECT? MIKE: THIS IS A LONG-AWAITED PACKAGING PLANT THAT HAS BEEN PLANNED FOR INDIANA, WEST LAFAYETTE, FOR A NUMBER OF YEARS NOW, AND THEY ARE FINALLY KICKING THIS OFF. THEY ARE GETTING FINANCING FROM THE C.H.I.P.S. AND SCIENCE ACT SIGNED BY PRESIDENT JOE BIDEN IN 2022. IT WILL BE A $4 BILLION INVESTMENT BY THE COMPANY. THE IDEA IS IT WILL CREATE AS MANY AS 1000 JOBS THERE. IT WILL ALSO ADDRESS ONE OF THE KEY CONCERNS HERE IN U.S. CHIPMAKING. THAT IS THAT THERE IS NOT ENOUGH PACKAGING CAPACITY TO GO AROUND. AND PACKAGING, AS YOU KNOW, IS SO CRUCIAL, ESPECIALLY IN THIS AREA. THEY NEED TO BE ABLE TO STACK CHIPS, TO MAKE THEM MORE EFFICIENT, AND IT IS A HUGE STEP BY SK HYNIX WHICH A COUPLE OF MONTHS AGO HAD ITS HIGH-PROFILE DEBUT IN U.S. FINANCIAL MARKETS. NOW WE ARE SEEING ITS EXPANSION PHYSICALLY HERE WITH THAT NEW PLAN. ED: LEADER IN THE SHOW, WE WILL SPEAK WITH LAM RESEARCH'S CEO. BLOOMBERG'S MIKE SHEPARD, THANK YOU SO MUCH. COMING UP, META SETTLED A LANDMARK CASE YESTERDAY. UNIVERSITY OF VIRGINIA LAW SCHOOL PROFESSOR DANIELLE CITRON JOINS US NEXT. THIS IS "BLOOMBERG TECH." ED: AS PART OF A LANDMARK SETTLEMENT, META IS ROLLING OUT NEW SAFEGUARDS TO INSTAGRAM AND FACEBOOK, CURRENTLY LIMITED TO U.S. USERS. BUT RISKS REMAIN, EVEN WITH GUARDRAILS, STARTING WITH PROPERLY VETTING CHILDREN WITH AGE VERIFICATION TOOLS. YOU PUT OUT SOME REALLY INTERESTING WORK OVERNIGHT SINCE THE SETTLEMENT BROKE. LET'S START WITH THE BASICS, THE MECHANISM. AT AGE VERIFICATION AND THE LIMIT THAT META HAS PUT IN PLACE, AND IT IS U.S. ONLY. >> YEAH. I THINK VERIFICATION IS REALLY CENTRAL TO THIS. AS WE HEARD IN SEVERAL TRIALS PLAYED OUT THIS YEAR, INCLUDING THE MOST RECENT ONE, VERIFICATION IS SOMETHING THAT NOT ONLY META BUT THE ENTIRE TECH INDUSTRY HAS STRUGGLED WITH FOR YEARS AT THIS POINT. GIVEN THE SAFETY FEATURES THAT META IS COMMITTING TO COME OF REALLY HINGING ALMOST ENTIRELY ON THEIR ABILITY TO CORRECTLY DETERMINING A USER'S AGE. I THINK THERE'S A LOT OF LESSONS ABOUT HOW EFFECTIVELY THIS IS GOING TO WORK IF THIS INDEED IS SOMETHING THAT META AND ITS COMPETITORS HAVE BEEN CHALLENGED WITH. ED: YOU PUT OUT A STORY WITH A HEADLINE, "KIDS WILL BE KIDS: AND THAT IS THE RISK WITH META'S SAFEGUARDS." THE OPENING, "HOW DOES META KNOW FOR SURE IF A KID IS A KID?" THAT KIDS WILL WANT TO PUSH THE BOAT ON HOW MANY HOURS THEY USE ON THESE PLATFORMS. ALEXANDRA: OF COURSE. EVEN OVERNIGHT IN THIS MORNING, IF YOU LOOK AT SOCIAL MEDIA, YOU START TO SEE KIDS' REACTIONS TO SOME OF THIS NEWS, YOU WILL SEE SOME OF THEM DON'T AGREE WITH THEM. . SOME WILL THINK IT IS A GOOD THING. SOME OF THEM DISCUSS HOW THEY HAVE A VERY EASY TIME SIGNING UP FOR ALL OF THESE PLATFORMS. VERY LITTLE PUSHBACK WITHOUT USING THEIR REAL BIRTHDAY IS. SO I REALLY DO THINK THERE IS THE TENSION BETWEEN WHAT THE COMPANY ARE PUTTING ON THE PARENTS, THE KIDS, THE FAMILIES, AND THEN WHAT THE PARENTS, KIDS, AND FAMILIES ARE ACTUALLY GOING TO DO. BUT IT REMAINS TO BE SEEN, YOU KNOW, WHETHER ANY OF META'S EFFORTS TO RESTRICT AGE TECHNOLOGY ARE GOING TO PAN OUT. ED: THANK YOU VERY MUCH. LET'S STAY ON MESSAGE. JOINING US NOW IS DANIELLE CITRON, PROFESSOR AT THE UNIVERSITY OF VIRGINIA SCALE OF LAW, WHO BELIEVES THE OUTCOME IS A PITTANCE FOR META. LET'S START THERE. WHAT YOU MEAN BY THAT, PROFESSOR? PROF. CITRON: WHEN META STRUGGLED WITH THE FTC FOR $5 BILLION, THAT WAS I THINK A COUPLE DAYS' WORTH OF THEIR ADVERTISING INCOME. SO LET'S PUT IN PERSPECTIVE 46 BILLION DOLLARS, I THINK OVER THE LAST QUARTER OR THE FIRST HALF OF THIS YEAR WAS SOMETHING LIKE $50 BILLION. SO, 17 POINT $5 BILLION OVER 10 YEARS IS A SMALL AMOUNT OF THEIR INCOME. ED: RIGHT. PROF. CITRON: IT IS A SMALL HIT THEY WERE HAPPY TO TAKE. ED: YOU WERE TALKING ABOUT THE FINANCIAL SETTLEMENT. THERE'S A LOT OF PEOPLE, THE CHANGES THAT META HAS AGREED TO COME IN TO THE FACEBOOK AND INSTAGRAM PLATFORMS, AND THE NEWS, RIGHT? THESE ARE SIGNIFICANT POLICY CHANGES AND OPERATIONAL CHANGES. SO IN ONE EXAMPLE, TWO-HOUR DAILY LIMIT, AND IT IS FOR THE PARENTS TO AUTHORIZE ANY ADDITION BEYOND THAT. THAT BRINGS THE ROLE OF THE PARENT INTO THIS. IS THAT A MECHANISM FOR ENFORCEMENT? PROF. CITRON: AS A PARENT MYSELF -- I DON'T MEAN TO DEMEAN PARENTS -- PARENTS ARE OVERWHELMED, THEY WERE OVER TASK, AND TO PUT THE BURDEN ON PARENTS, YOU KNOW, KIDS ARE VERY PERSISTENT. IF THEY WANT TO OVERRIDE AND ASSIST TO THEIR PARENT, LIKE, YOU CAN TRUST ME, ALLOW ME TO OVERRIDE THIS TWO-HOUR LIMIT, THEY ARE GOING TO DO IT. I THINK RELYING ON PARENTS IS A MISTAKE THAT BOTH THE LAW UNDER THE ONLINE PROTECTION ACT AND OUR CURRENT LAWMAKERS APPROACH, YOU KNOW, PARENTAL CONTROL IS THE APPROACH OF THE FCC. I THINK IT IS A MISTAKE. PARENTS ARE OVERBURDENED, AND THEY OFTEN HAVE THEIR KIDS BEST INTEREST IN MIND, BUT KIDS ARE PERSUASIVE. AND FOR SOME KIDS, IT IS DANGEROUS. SO IF YOU PUT PARENTS IN THE DRIVER'S SEAT, AND KIDS ARE, YOU KNOW, HAVE EMERGING SEXUAL ORIENTATION, THEY ARE EXPERIMENTING, THE GENDER IDENTITY, IT CAN BE DANGEROUS FOR PARENTS TO BE IN TOTAL CONTROL OF SOCIAL MEDIA. ED: STUDYING THE COURT FILING OF THE AGREEMENT, I SEE NO LEGAL REQUIREMENT IMPOSED ON PARENTS TO MONITOR, ENROLL IN THE SUPERVISION. I SEE AN AGREEMENT THAT REGULATES META. THAT MECHANISM, EXPLAIN WHY IT WILL OR WILL NOT WORK, IN YOUR VIEW. PROF. CITRON: SO, PARENTS, UNDER THE CHILDREN'S ONLINE PRIVACY PROTECTION ACT, WHICH IS ONE OF THE SERIES OF CLAIMS IN THE LAWSUIT, IT REQUIRES THAT PARENTS GET VERIFIED PARENTAL CONSENT FOR THE COLLECTION, USE, AND SHARING OF CHILDREN'S DATA. SOME DATA OF KIDS UNDER 13. AND SO IN THAT REGARD, WE ARE PUTTING PARENTS -- LAW IS -- ASK ING PARENTS TO GIVE PERMISSION. BUT AS YOUR NEWS REPORTER JUST NOTED,, KIDS OFTEN GET AROUND THAT REQUIREMENT BY PUTTING AN AGE FOR THEIR BIRTHDAY THAT MAKES THEM OVER 15. SO WE GET AROUND PARENTAL CONSENT IN THAT FIRST WAY. THE SECOND INCOME APPEARANCE WILL OFTEN GIVE THAT CONSENT, EVEN IF KIDS ARE HONEST ABOUT THEIR BIRTHDAY -- THE SECOND IS, PARENTS WILL OFTEN GIVE THAT CONSENT, EVEN IF KIDS ARE HONEST ABOUT THEIR BIRTHDAY. PARENTS CAN OVERRIDE THAT DEFAULT. YOU CAN IMAGINE THAT THE DEFAULT WILL BE EASILY OVERRIDDEN, YOU KNOW, KIDS TALKING TO THEIR PARENTS OR SIMPLY DOING IT THEMSELVES. "HEY, MOM, CAN I HAVE YOUR LAPTOP?" KIDS ARE PRETTY PERSUASIVE. THEY ARE PRETTY SMART. THEY CARVE OUT PRIVACY. THEY KNOW THE SOCIAL SCIENCE. THEY COULD DO IT THEMSELVES. I'M NOT CONVINCED THAT THE ARCHITECTURAL PROMISES MADE IN THIS SETTLEMENT WILL DO VERY MUCH. UNFORTUNATELY, THE SETTLEMENT DOES NOT PREVENT THE AMASSING, THEY USE OF THE SHARING IN TERMS OF METAPHOR THE USE OF THE DATA. ED: DANIELLE CITRON, UNIVERSITY OF VIRGINIA LAW SCHOOL PROFESSOR, THANK YOU VERY MUCH INDEED. COMING UP, MORE ON NVIDIA AND ITS OUTLOOK, AN ASTONISHING OUTLOOK. THE SHARES OF 7% COME ON TRACK FOR THEIR BEST DAY RIGHT NOW SINCE FEBRUARY. HALFTIME HERE IN SAN FRANCISCO. THIS IS "BLOOMBERG TECH." ♪ ED: WELCOME BACK TO BLOOMBERG TECH. NVIDIA IS THE BIG STORY, THE POINTS DRIVER ON ALL THE MAJOR INDICES WE TRACK. IF SOMETHING HAS CHANGED, IT IS THAT SOME OF THE OTHER NAMES THAT WERE HIGHER BY ASSOCIATION EARLIER IN THE SESSION ARE NOW A LITTLE BIT LOWER. BUT IT IS NVIDIA OR BUST. LET'S LOOK AT THE CHARTS. >> YESTERDAY, SENTIMENT GOING INTO NVIDIA'S REPORT WAS QUITE CAUTIOUS. LOOKING AT THE STOCK TODAY, SHARES ARE UP 7.5 PERCENT RIGHT NOW. THIS IS ON TRACK FOR ITS BEST DAY SINCE FEBRUARY. SOMETHING WE ARE MONITORING IS THAT IF NVIDIA GOES UP A LITTLE BIT MORE, IT COULD OVERTAKE MICROSOFT'S RECORD FOR MOST MARKET VALUE ADDED IN A DAY. MICROSOFT, ON JULY 30, AFTER ITS OWN EARNINGS, ADDED NEARLY $450 BILLION IN MARKET CAP IN ONE DAY. NVIDIA IS A LITTLE BIT UNDER THAT. WHY ARE WE HAVING THIS INCREDIBLE STOCK REACTION? IT IS ALL ABOUT THIS REVENUE GUIDANCE. THE COMPANY SAID THAT IN FISCAL 2020 EIGHT, NEXT YEAR, IT EXPECTS REVENUE TO GROW 70%. THAT IS MORE THAN THE 45% IT SAID PREVIOUSLY AND IS EXACTLY WHAT INVESTORS WANTED TO HEAR. IT REALLY CALMED CONCERNS ABOUT AN AI BUBBLE AND OVERSHADOWED FEARS ABOUT CIRCULAR FINANCING. THIS WAS ALSO A LITTLE BIT OF A CONSERVATIVE GUIDANCE. THEY SAID THEY COULD SEE REVENUE GROW EVEN MORE IF THEY HAD ACCESS TO ALL THE SUPPLIES THEY NEEDED. SO A HUGELY BULLISH REPORT FROM NVIDIA AND WE ARE SEEING THE STOCK REACTING TODAY. ED: NVIDIA DELIVERED A STRONG SALES OUTLOOK. THAT IS PUTTING IT MILDLY. IT DID WARN THAT MARGINS WOULD NARROW IN THE COMING MONTHS, PRINCIPALLY DUE TO RISING MEMORY COSTS. WE WILL TALK WITH THE MANAGING DIRECTOR AND SENIOR SEMICONDUCTOR ACTIVIST AT BENCHMARK, WHO HAS A BUY RATING AND A $335 PRICE TAG FOR NVIDIA. WHAT IS SO INTERESTING -- IN THE SEMICONDUCTOR SPACE, IF ANY CFO'S SAID THIS IS WHAT IS GOING TO HAPPEN TO MARGINS OVER THE NEXT SIX MONTHS, THE STOCK WOULD NOT GO UP LIKE IT DID. YOU SEEM SANGUINE ABOUT THAT AS WELL. >> I REALLY WAS. INITIALLY, THE STOCK WAS DOWN ON THAT DISCLOSURE. LIKE YOU SAID, HAD ANY OTHER COMPANY TALKED ABOUT A COLLAPSE OF MARGIN FROM 75%, TO 71%, TO 72 PERCENT IN TWO QUARTERS, RECOVERING ONLY ANOTHER 100 BASIS POINTS, THAT WOULD HAVE BEEN ENOUGH TO TANK THE STOCK. BUT THAT GUIDANCE FOR REVENUE REALLY TRUMPS EVERYTHING. THEY ARE TALKING ABOUT 870% TO 100% INCREASE, AND 70% IN THE BANK FOR NEXT YEAR. THAT IS A $300 BILLION ANNUAL INCREASE AND 100 $20 BILLION AHEAD OF EXPECTATIONS. SO OUR NUMBERS ARE GOING ABOVE $700 BILLION FOR NEXT YEAR, FROM 400 BILLION DOLLARS IN CALENDAR 2026. OUR EPS ESTIMATES ARE UP NEARLY THREE DOLLARS. ED: WHAT LINKS THE MARGIN STORY WITH THE REVENUE GROWTH OUTLOOK STORY IS MEMORY, RIGHT? THEY WERE PRETTY CLEAR THAT WHAT THEY WOULD HAVE BEEN ABLE TO DO ON GROWTH, WERE IT NOT FOR SUPPLY CONSTRAINTS -- THIS BUSINESS WOULD BE DOUBLING. AT THE SAME TIME, THE EMPHASIS ON CIRCULAR FINANCING -- NVIDIA SAID WE ARE JUST TRYING TO HELP EVERYONE GET MOVING, PARTICULARLY THE CFO TELLING ME THEY ARE HELPING PEOPLE GET SUPPLY. HOW DID YOU ASSESS THAT EXPLANATION ON NVIDIA AS THE BANK OF NVIDIA IN THE ECOSYSTEM? >> I THINK IT IS NVIDIA PRIMED TO EASE IN THE BOTTLENECK. AS YOU SAID, THE MEMORY IS THE BIGGEST CONCERN. THEY HAVE A LIST STRETCHING OUT THREE YEARS. A COMMITMENT OF NEARLY $300 BILLION IN CAPITAL COMMITMENTS FOR PRICING AND AVAILABILITY. THEY SAID THEY ARE WELL SET FOR THEIR EXPECTATIONS FOR AT LEAST THE NEXT TWO TO THREE YEARS AND THEY WILL BE WORKING TO ENSURE GUIDANCE OF CAPACITY FROM THAT POINT. REGARDING YOUR OTHER COMMENTS ABOUT CIRCULAR FINANCING, I THINK ONE OF THE OTHER BIG BOTTLENECKS TO THE INDUSTRY IS JUST THE AVAILABILITY OF THINGS LIKE LAND, POWER, AND DATA CENTER INFRASTRUCTURE. ON FINANCING, THAT IS AS CRITICAL OF A CAPACITY CONSTRAINT AS MEMORY IS IN MANY CASES. WE HAVE STARTUP PROJECTS THAT ARE HAMSTRUNG BY FINANCING. SO IF NVIDIA CAN LOOSEN THAT BOTTLENECK BY PROVIDING THEIR BALANCE SHEET, IT IS ALL THE BETTER FOR THEM BECAUSE IT ALL COMES BACK TO THEM EXPONENTIALLY IN REVENUE. ED: ON THE ANALYST CALL, YOUR PEERS ASKED ABOUT CUSTOM SILICONE, AND JENSEN HUANG CONTINUES TO BE DISMISSIVE OF THE THREAT OF OTHER OPTIONS FOR ACCELERATORS. DO YOU MODEL THAT IN FOR GROWTH GOING FORWARD? >> WE DO. I THINK COMPETITION IS A REAL THING THAT IS INCREASING IN THE SPACE. I THINK YOU HAVE GUYS LIKE AMD THAT HAVE COMPETITIVE STACKS. CEREBRAS RECENTLY WENT PUBLIC AND GOT ALL THE HYPERSCALER INTERNAL DESIGNS THAT ARE COMPETITIVE. EVEN INTERNAL NVIDIA AT SILICON WITH ITS GROK ACQUISITION IS CREATING AN ALTERNATIVE. AT THE SAME TIME, EVEN IN THE FACE OF THIS COMPETITION, NVIDIA HAS SEEN A DOUBLING OF THEIR INDICATION OF REVENUE GROWTH. EVEN IF THEY ARE SEEING THE MARKET SHARE GO FROM 85% TO 75% OR 70%, DEMAND IS SO STRONG ACROSS THE AI COMPLEX THAT IT IS CONTINUING TO PUSH NVIDIA WELL ABOVE EXPECTATIONS. THEIR ISSUE RIGHT NOW IS SIMPLY SUPPLY. IT IS NOT A MATTER OF DEMAND, AND THAT IS EVEN IN THE FACE OF INCREASING COMPETITION. ED: THANK YOU VERY MUCH. COMING UP, HUGGING FACE'S NEWEST ROBOT IS A DUCK THAT CAN WALK AND TALK AND EVEN ROLLERSKATE. THE HUGGING FACE COFOUNDER AND CHIEF SCIENCE OFFICER, THOMAS WOLFE, LEADS THE ROBOTIC INITIATIVE AT HUGGING FACE, AND HE JOINS US NEXT. HUGGING FACE LAUNCHED ITS SECOND ROBOT TODAY, CALLED THE MIC'D, AIMED AT MAKING AI MORE ACCESSIBLE, MORE PLAYFUL. THE TRAINABLE BIPED ROBOT CAN WALK, KICK, GRAB ITEMS, AND EVEN ROLLERSKATE. IT'S OPEN SOURCE SOFTWARE ALLOWS USERS TO CREATE NEW AI BEHAVIORS. THE COFOUNDER AND CHIEF SCIENCE OFFICER JOINS US, AND WE WILL DISCUSS MIC'D. BUT FIRST, MULTIPLE MEDIA OUTLETS HAVE REPORTED IN THE LAST 24 HOURS THAT NVIDIA IS CLOSE TO A DEAL TO BUY HUGGING FACE FOR ROUGHLY $13 MILLION. NEITHER COMPANY HAS RESPONDED TO BLOOMBERG'S REQUEST FOR COMMENT. YOU ARE A COFOUNDER OF HUGGING FACE. WHAT CAN YOU TELL US ABOUT NVIDIA BUYING YOUR COMPANY? THOMAS: NOTHING. I WON'T COMMENT ON THAT. BUT I AM HAPPY TO TALK ABOUT MIC'D TODAY. ED: APPRECIATE THAT. NO COMMENT. THERE WERE EARLIER REPORTS THAT GENERALLY HUGGING FACE IS EXPLORING A SALE TO MULTIPLE PARTIES. ARE THE COFOUNDERS CONSIDERING SELLING HUGGING FACE GENERALLY? THOMAS: I WOULD SAY WE HAVE ALWAYS HAD -- WE HAVE BEEN A LOT IN THE NEWS WITH THE INCIDENT WITH OPENAI. IT IS GOING WELL. WE OFTEN HAVE A HOPE OF ACQUISITION AND INVESTMENT. IT IS A SPECIAL SUMMER ON THIS. ED: TO BE CLEAR, NO COMMENT ON NVIDIA BUYING HUGGING FACE. THOMAS: NO. ED: MIC'D. LET'S TALK ABOUT WHAT WE ARE HERE TO DISCUSS. A SECOND ROBOT. THE PRICE POINT IS INTERESTING. WHY DOES HUGGING FACE WANT TO PUT THIS OUT INTO THE WORLD? THOMAS: JUST LIKE EVERYONE IS ABLE TO WRITE DOWN APP, AND RIGHT NOW EVERYONE IS ABLE TO BUILD SOFTWARE, THERE IS A TIME COMING SOON WHEN EVERYBODY WILL BE ABLE TO CODE ROBOTS. AND WE THINK WE NEED THE RIGHT ROBOT TO DO THAT. IT IS A ROBOT THAT IS VERY ACCESSIBLE IN PRICE, VERY OPEN SOURCE. YOU CAN PUT WHATEVER MODEL YOU WANT AND IT, FROM ANTHROPIC TO OTHER SOURCE MODELS. AND YOU CAN USE IT TO EXPLORE ROBOTICS -- MAINLY REINFORCEMENT LEARNING TECHNIQUES. THAT IS MIC'D. ED: WE ARE SHOWING SOME VIDEO OF MIC'D NOW. MIC'D, IN THIS PARTICULAR VIDEO, IS TO -- MICRODUCK IS DEPICTED IN A CHILD'S BEDROOM. IS THIS SOMETHING FOR HOME, FOR THE DEVELOPER COMMUNITY, OR BOTH? THOMAS: WE ARE CREATING A NEW CATEGORY OF ROBOTS HERE. FOR PEOPLE WHO MAY BE KNOW HOW TO CODE OR HOW TO WRITE CODE. IT IS ALSO FOR THE WHOLE FAMILY, JUST LIKE AI STARTED AS SOMETHING REALLY TECH ECCENTRIC AND NOW IS USED BY EVERYONE. WE EXPECT THIS ROBOT TO BE SOMETHING PEOPLE WOULD BUY TO PLAY WITH THEIR KIDS OR WITH THEIR FAMILY MEMBERS, BUT ALSO TO DISCOVER THEMSELVES HOW TO TRAIN THE BEHAVIORS FOR ROBOTS, AND PEOPLE CAN TRANSFORM OPEN SOURCE MODELS AS A GAME. ED: HUGGING FACE'S CORE COMPETENCES OPEN MODELS, NOT NECESSARILY ON THE HARDWARE SIDE. CAN YOU EXPLAIN HOW MICRODUCK CAME TOGETHER, WHO YOU PARTNERED WITH ON THE HARDWARE? THOMAS: YOU REMEMBER PROBABLY TWO YEARS AGO WE ACQUIRED A ROBOTICS COMPANY BASED IN FRANCE. ACTUALLY, WHEN WE ACQUIRED THIS TEAM, THEY ALREADY HAD WORKED A LITTLE BIT ON A SIDE PRODUCT WHICH WAS THE ANCESTOR OF MIC'D. IT WAS NOT FULLY WORKING AT THE TIME. IT COULD NOT STAND UP WHEN IT FELL. WE CANNOT MARKET IT TO A CUSTOMER YET BECAUSE YOU WOULD HAVE TO PUT IT BACK STANDING EACH TIME. IT IS NOT POSSIBLE. ONCE WE FOUND THAT IT CAN RISE AGAIN WITH ITS HEAD, WE THOUGHT THERE IS SOMETHING HERE. SO THAT IS A PRODUCT WE ACTIVELY WORKED ON FOR THE PAST TWO YEARS. IT IS ONE OF OUR LONGEST PRODUCTS -- PROJECTS EVER. ED: THERE IS THE BACK STORY YOU HAVE JUST GIVEN ON ROBOTICS, AND THIS IS THE SECOND ROBOT OFFERING. IN TERMS OF BUSINESS MODEL, WHERE DOES THIS FIT IN, IN HOW EVERYDAY PEOPLE CONSUME AI? IS THIS GOING TO BE A SERIOUS BUSINESS LINE FOR YOU GUYS, OR IS IT SOMETHING SMALLER SCALE? THOMAS: DEFINITELY A GROWING BUSINESS LINE FOR US, ROBOTICS. I WILL NOT COMMENT ON THE EXACT NUMBERS. WE HAD A SURGE IN REVENUE IN THE PAST SIX MONTHS. WE PASSED 100 MILLION. THIS IS DRIVEN BY THE MODEL AND DATA SET. A LOT OF THIS IS A DATA SET FOR ROBOTICS. THAT IS THE STRONGEST GROWING CATEGORY OF DATA SET ON THE HUB. WE THINK THAT GROWING THE COMMUNITY THAT USE ROBOTS WILL BE BENEFICIAL FOR US. AND IS BEING SAID ALREADY THE SELLING PRICE -- WE HAD A PREVIOUS ROBOT. WE ALREADY SOLD MORE THAN 10,000 UNITS. THAT IS AROUND THE FIVE-YEAR MARK FOR REVENUE. IT IS SIGNIFICANT. FOR MICRODUCK, LOOKING AT THE NUMBERS, WE OPENED THE PAGE A COUPLE OF HOURS AGO AND WE ARE ALREADY OVER HALF A MILLION ORDERS. IT IS GOING FAST. WE ARE SELLING ONE MICRODUCK EVERY FOUR SECONDS. ED: SELLING ONE MICRODUCK EVERY FOUR SECONDS. OPENAI PUBLISHED THIS REPORT IN THE LAST 24 HOURS -- I KNOW YOU HAVE BEEN LEADING THE ROBOTICS EFFORTS. THE CONCLUSION IS THAT OPEN I -- OPENAI SAID IT COULD REACT QUICKER. TWO OF ITS MODELS, MISTAKENLY YOU SAID, BREACHED YOUR PLATFORM. I SPOKE AT LENGTH ABOUT THIS IN A 20 MINUTE CONVERSATION. THE LATEST FINDINGS, WHAT HUGGING FACE'S POSITION IS ON THAT. THOMAS: IT IS STILL THE SAME. WE THINK OPEN SOURCE MODELS WERE EXTREMELY USEFUL TO BE ABLE TO DEFEND HERSELF. MAYBE IN THE SHORT-TERM, WE WILL SEE A LITTLE BIT LESS OF THESE EVENTS BECAUSE THE COMPANIES WILL BE MORE CAREFUL ABOUT THE GUARD RAILS. BUT I THINK IT WILL BE REALLY HARD TO BE ALWAYS FULLY FAULT PROOF. THERE WILL ALWAYS BE MODELS THAT MANAGED TO ESCAPE IN ONE WAY OR ANOTHER. I THINK RESEARCH ON BETTER ALIGNING CLOSED MODELS AND OPEN SOURCE MODELS IS SOMETHING THAT NEEDS TO BE DONE NOW. ED: OUTSIDE OF OPENAI PUBLISHING ITS FINDINGS OF THAT INVESTIGATION, DID THEY GIVE YOU ANY ASSURANCES ON BEING STRICTER AND MORE THOROUGH WITH THE GUARD RAILS AND THE TESTING ENVIRONMENT? THOMAS: NOT RELATED TO US. THERE IS MORE GUARD RAIL MONITORING. ONE TAKE AWAY FROM READING IT YESTERDAY AND TODAY'S REPORTS IS THAT MONITORING WHAT IS HAPPENING IS STILL EXTREMELY DIFFICULT BECAUSE THIS MODEL, THERE IS A LOT OF EVENTS GOING AT THE SAME TIME. YOU SEE 500, 7 HUNDRED THOUSAND AGENTS AT THE SAME TIME, DOING ITS OWN THINGS. THIS IS GOING TO STAY A CHALLENGING ACTIVITY TO MONITOR EXACTLY WHAT IS GOING ON. ED: THE HUGGING FACE CO-FOUNDER ON MICRODUCK, THE NEW ROBOT, AND AN OPPORTUNITY TO COMMENT ON REPORTS OF NVIDIA ACQUIRING HUGGING FACE. AS WE JUST DISCUSSED, OPENAI ADMITTED IT COULD HAVE REACTED SOONER TO PREVENT AN INADVERTENT HACK IT'S A MODELS CARRIED OUT ON HUGGING FACE. THEY KNEW AS FAR BACK AS LATE MAY THAT AI MODELS IT WAS TESTING WERE LEVERAGING A SOFTWARE VULNERABILITY TO ACCESS THE OPEN INTERNET. RACHEL METZ HAS THE STORY. THIS WAS THE CONCLUSION OF AN INVESTIGATION. WALK US THROUGH THE DISCLOSURES AND THE FINDINGS. RACHEL: OPENAI HAS BEEN CARRYING OUT AN INVESTIGATION INTO WHAT HAPPENED WITH ITS AI MODELS THAT WERE, DURING AN EVALUATION PROCESS WHERE THEY WERE NOT SUPPOSED TO BE ACCESSING THE INTERNET, ABLE TO TAKE ADVANTAGE OF THAT VULNERABILITY, REACHED THE OPEN INTERNET, AND REACHED HUGGING FACE'S SYSTEMS. THIS TOOK PLACE IN JULY. WHAT OPENAI FOUND IS THERE WERE SOME UNRELATED TO HUGGING FACE BUT RELATED TO MODELS DOING THINGS THE COMPANY DID NOT WANT THEM TO BE DOING EARLIER, LIKE AS FAR BACK AS MAY. THERE WERE ALERTS THAT WERE SENT FOR SYSTEMS. THIS HAPPENED A COUPLE TIMES. OPENAI CONTINUED WITH THE TEST IT WAS RUNNING ON ITS MODELS AT THE TIME. IN HINDSIGHT, AS THE COMPANY NOTED, IT IS POSSIBLE THAT IT COULD HAVE NOTICED SOME OF THESE THINGS AND TAKE AN ACTION SOONER IN ORDER TO PREVENT WHAT EVENTUALLY BECAME A BREACH OF ANOTHER COMPANY'S SYSTEMS. ED: SINCE THIS REPORT WAS PUBLISHED IN OVER THE LAST FEW WEEKS, A LOT OF THE INDUSTRY HAS POINTED ME TO HUMAN ERROR, THE ACTIONS THAT HUMANS DID OR DID NOT TAKE. WHAT CAN YOU TELL US ABOUT THAT IN THE REPORT, ABOUT WHO THEY ATTRIBUTE THE BLAME TO? RACHEL: THERE IS NO QUESTION HERE THAT IN THIS SITUATION AND IN A BUNCH OF OTHER SITUATIONS WE HAVE SEEN LATELY WE ARE MODELS HAVE DONE THINGS THAT ARE NOT WHAT PEOPLE WANT THEM TO DO -- ULTIMATELY, YOU ARE LOOKING FUNDAMENTALLY AT PEOPLE MAKING DECISIONS THAT ARE LEADING TO MACHINES TO DO THINGS. BUT WHAT IS IMPORTANT HERE IS THAT THEY SAID THAT THE SYSTEMS THEY HAD IN PLACE, WHICH THEY ARE IMPROVING -- THOSE HAVE SENT OUT ALERTS AND IN A FEW DIFFERENT SITUATIONS, PEOPLE DECIDED THIS IS OK AND WE CAN CONTINUE WITH THE TEST. AND: HOW MUCH DOES THIS CLOSE THE BOOK ON WHAT HAPPENED, AND WHAT IS OPENAI DOING IN RESPONSE, CHANGES TO ITS POLICIES? RACHEL: THAT IS A GOOD QUESTION. AS FAR AS CLOSING THE BOOK ON IT, THERE COULD BE MORE TO LOOK INTO HERE. THERE WAS ONE THIRD PARTY REPORT THAT CAME OUT YESTERDAY FROM TWO NONPROFITS. WHAT THEY WERE LOOKING AT, BECAUSE THEY ARE EXTERNAL TO OPENAI -- BUT ALSO THEY WERE ONLY LOOKING AT A SMALL PIECE OF THE OVERALL INCIDENT. I THINK IT WILL BE INTERESTING TO SEE IF ANYBODY REALLY DOES A POSTMORTEM ON ALL THE INDIVIDUAL INCIDENTS THAT OPENAI REPORTED BEFORE THE HUGGING FACE BREACH. THAT WOULD BE INTERESTING AND COULD SHED SOME LIGHT. IT WILL BE INTERESTING TO SEE WHAT THE INDUSTRY DOES GOING FORWARD. THERE HAS BEEN SOME TALK OF COMPANIES WORKING TOGETHER, DIFFERENT TECH COMPANIES, OPENAI COMPANIES, TO COME UP WITH STANDARDS FOR TESTING THESE MODELS. I THINK THE FACT REMAINS THAT THEY DON'T HAVE ANY STANDARDS AS OF YET. AND IN SOME CASES, THESE AI MODELS ARE GOING OUT TO THE OPEN INTERNET. ED: TERRIFIC REPORTING. THANK YOU VERY MUCH INDEED. COMING UP, WE GET BACK TO NVIDIA. WE LOOK AT HOW CREDIT MARKETS ARE REACTING TO THE RESULTS. THIS IS BLOOMBERG TECH. ♪ ED: LET'S GET BACK TO NVIDIA. RESULTS ARE HELPING EASE FEARS OF AN AI BUBBLE. BLOOMBERG INTELLIGENCE POINTS OUT THAT THE CREDIT MARKETS STILL APPEARS SKEPTICAL, TRADING ITS CREDIT DEFAULT SWAPS MORE LIKE TRIP WILL RATED COMPANIES RATHER THAN ITS AA RATING. LET'S DISCUSS WITH ROBERT SCHIFFMAN. BRING ME THE CREDIT REACT THESIS, PLEASE. ROBERT: FROM THE EQUITY PERSPECTIVE, IF YOU ARE A BULL, ARE YOU NOT ENTERTAINED? THIS MAY BE THE BEST PRINT IN THE HISTORY OF THE STOCK MARKET AND THE BEST FORWARD GUIDE IN HISTORY. WHY ARE BONDHOLDERS NOT LOVING IT? BECAUSE IT MEANS MORE DEBT BEING ISSUED. HOW IS EVERYONE GOING TO PAY FOR ALL OF NVIDIA'S REVENUE? THEY'RE GOING TO DO IT THROUGH BORROWING. SO SPREADS ARE BASICALLY FLAT. THIS IS NO REASON NECESSARILY TO REJOICE, AND THIS DOES NOT ANSWER ALL THE QUESTIONS PEOPLE ARE ASKING ABOUT DEMAND. THE SAME GUYS WHO ARE BUYING OR JUST BUYING MORE. PEOPLE ARE ULTIMATELY GOING TO BE PAYING FOR AI, ENTERPRISE CUSTOMERS. WE NEED TO SEE THAT THROUGH MODERNIZATION FROM HYPERSCALERS, -- MONETIZATION FROM HYPERSCALERS, NOT NVIDIA. ED: THE FRONTIER LABS ARE NOT IG. WHY WAS SHE HAMMERING HOME THAT DISTINCTION? ROBERT: THE HYPERSCALERS CAN BORROW AS MUCH AS THEY WANT. THEY ARE AAA'S AND CAN RAISE HUNDREDS OF BILLIONS OF DOLLARS. THE NEO-CLOUDS, THEY CANNOT DO THAT. SO NVIDIA HAS TO PUT UP THEIR OWN CAPITAL AT LEAST AS A BACKSTOP, AT LEAST TO PROVIDE CREDIT SUPPORT AND RESIDUAL VALUES, BECAUSE THEY BELIEVE IN THEIR OWN CHIPS. AND THEY ASSUME THEY WILL GET PAID BACK. THAT IS WHY THEY ARE DIFFERENTIATING BETWEEN INVESTMENT GRADE AND NONINVESTMENT GRADE FINANCING NEEDS. ED: ROBERT SCHIFFMAN, REALLY APPRECIATE YOUR TIME AND THE CREDIT ANALYSIS, AND WHAT HAS BEEN A PRETTY WILD EQUITY MARKET STORY. THAT DOES IT FOR THIS EDITION OF BLOOMBERG TECH. MAY BE THE GREATEST EARNINGS PRINT IN HISTORY. THAT IS FOR YOU TO DECIDE. BUT YOU CAN RECAP -- WE CAP ALL THE CONVERSATIONS WE HAD ON THE BLOOMBERG TECH PODCAST. YOU CAN FIND IT ON ALL THE PLATFORMS AND ONLINE. WHAT A THURSDAY. THIS IS BLOOMBERG TECH.