Nvidia’s $5.5B cost: ‘No one’ needs to be ‘shocked’

00:00 Speaker A

Nvidia sinking. So after the chip maker disclosed that it could take a $5.5 billion greenback hit from the US authorities’s shock new controls on its semiconductor exports to China. For extra on the most recent, let’s welcome now Daniel Newman, Futurum CEO. Daniel, it’s nice to see you right here on set. Admire it from Texas. Um, you realize, earlier than J. Powell, frankly, this was the story of the day. It was chips, it was Nvidia. Nvidia is down right here, Dan. It is not about 10%. It is getting clobbered in as we speak’s commerce. I suppose two, two questions to start out. One, Dan, have been you shocked by that information whenever you noticed these headlines? And two, do you suppose down 10%, is that transfer justified in your opinion?

01:06 Daniel Newman

Yeah, to start with, no one ought to have been shocked by this transfer. Actually the administration’s been giving the sign that it was going to clamp down. Now, what was fascinating is that this week, there was a little bit of gyration as a result of they reduce this deal, they introduced 500 billion {dollars} of AI supercomputers being constructed right here in the US. After which a day later, he pulls again on this new export licensing requirement.

01:45 Speaker A

That that, you deliver that, Dan. That’s an fascinating level as a result of there have been some people who thought Jensen Wong was going to be form of shielded from this. Proper?

02:02 Daniel Newman

They made a deal. I had a number of reporters really hit me up, do you suppose there was some tip for tat occurring. And to start with, I feel Trump wants to indicate, President Trump wants to indicate that there isn’t a tip for tat. So whether or not it is, you realize, Tim Prepare dinner bringing extra manufacturing right here, whether or not it is TSMC coming right here. However I really suppose on the opposite aspect of this, and perhaps we come again to this, is that I really suppose creating some certainty with the, with the group, the enterprise group, about what kind of profit they’ll anticipate by onshoring and bringing manufacturing again right here. I feel that may be a fantastic begin. Having mentioned that, nationwide safety, financial safety, and AI are tightly correlated. Us giving the chips to China, whether or not it is the tuned down chips or the very best chips coming via intermediaries, which they should not be getting. That is one thing that is giving an advantaging China. There’s lots of people on the market which might be like, oh, properly, that is going to solely push their resolve. Do you suppose China is ready as a result of we’re sending Nvidia chips, they don’t seem to be investing in Huawei and constructing their very own chips? You will be completely sure that they’re. This battle, this commerce battle, is basically being fought on the grounds of long-term financial domination. Lengthy-term financial domination will solely be had if we management the know-how commerce. Nvidia is on the forefront of that commerce.

04:15 Speaker B

And what do you consider from an investor standpoint? Right here you’ve gotten Nvidia falling but once more, 8 to 10%. You already know, look what occurred over the past couple days. It had recovered from its lows, proper? And a whole lot of buyers who obtained in brief time period skilled that bounce. The place, the place do you suppose that appears like this week?

04:43 Daniel Newman

Yeah. I, I take a look at that line of individuals across the nook at $150 that simply could not wait to purchase. And also you go, what is actually modified? Nicely, to start with, you have obtained GPUs melting over at, at X and at OpenAI. There’s a lot demand there. May Nvidia pivot a few of its capability, not focus a lot on constructing specialised merchandise for China, and ensure we meet all of the capability and demand that is on the market for corporations which might be within the US which might be attempting to construct? You have obtained $325 billion of CAPEX. And it has been reiterated. So whether or not it has been Sunder Pichai, whether or not it has been Satya Nadella, they’re all planning to spend. And I genuinely imagine, Sylvia, that the businesses with, you realize, the massive working leverage are going to take a look at this pullback because the second to construct AI infrastructure out. As a result of once we come out of this, and we are going to come out of this, there can be offers made. Calling that on the document proper now. It might be a troublesome couple of months. When offers are made, we are going to see the economic system speed up. And people corporations need to construct the long run and have that AI infrastructure in place. So the Googles and the Microsofts and the Amazons, they’ll purchase Nvidia. Um, and one different factor, if I, if I could, I discover it very fascinating that everyone thinks that China and their push to construct Huawei goes to be so profitable. When AMD got here out with a aggressive product, nobody believed they might construct the software program. Broadcom’s making chips for the hyperscalers and everybody mentioned, properly, that is nice, however they do not have CUDA. So it isn’t going to work as properly. However immediately, everyone believes that China and Huawei goes to construct the CUDA aggressive product that is going to undo Nvidia? I imagine in China, I imagine of their resolve. I do not imagine that they’ve as a lot competitors or a lot aggressive functionality as we speak as persons are suggesting.