Nvidia's Blowout Quarter; Investors Gauge Jackson Hole

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1:25time.

1:29Bloomberg Audio Studios, podcasts, radio, news. Good morning, I'm Nathan Hager. And I'm John Tucker. Here are the stories we're following today. John, we begin this morning with earnings from NVIDIA. The chipmaker at the heart of the artificial intelligence boom gave a bullish sales outlook into fiscal 2028. And that's easing concerns that AI spending is poised to lose momentum. We get more from Bloomberg tech host Ed Ludlow. NVIDIA never does this. They do not give full fiscal year outlooks. And so saying growth will be 70 percent for revenue in fiscal 28 was not just astonishing to take that step.

2:09But when you compare it to Wall Street estimates going into this earnings print, the street was seeing 45 percent growth in fiscal 28. Add to that the commentary from Jensen Wong and Colette Crest, who I spoke to on the phone, the CFO, that basically demand is running at 100 percent or there are lots of parts of NVIDIA's business where demand is doubling right now. The reason they're guiding growth of 70 percent is that's what they can supply. The main constraint is still memory. And so what they can get their hands on, that results in 70 percent top line growth. This is Ed Ludlow for Bloomberg News in San Francisco.

2:44All right, Ed, thank you. And shares of NVIDIA in the pre-market are jumping. They're up more than 7.5%. Yeah, and Nathan, NVIDIA is not the only tech stock on the move. Shares of Salesforce, they are up almost 11 % in early trading. The software company delivering an outlook for strong revenue expansion. It's also deepening its partnership with Anthropic, and that is reassuring investors it can compete successfully in the era of AI. John, shares of CrowdStrike are soaring pre-market as well, up eight and two-thirds percent. The security software firm projected revenue for the full year that exceeded analyst estimates.

3:20They say that is evidence the cybersecurity industry is continuing to benefit from AI-fueled demand. And the attention now moves from tech earnings to the economy. We are just a day away from Kevin Warsh's first speech at Jackson Hole as Fed chair. It's going to be highly anticipated around the world. And Bloomberg's Tom Keene is heading our coverage at Jackson Hole. I think what we're going to see more than anything is the international sense of the meetings always in attendance. Our other global central bankers, Lagarde, Ueda, Bailey, Tiff Macklem of Canada, all of a sudden very, very important.

3:54So there's the international component at Jackson Hole always there. And again, we're going to go out and by the split rail fence, Chairman Warsh will wave at the Rocky Mountain, the Grand Tetons, I should say. But far more will be the anticipation of the speech, maybe like I've never seen before. And the anticipation is, are we going to get something or not? I'll be honest, I'm in the camp where Chairman Warsh will play this very close to the vest. It will be a very safe speech as he awaits data coming up to get to the next Fed meeting. Join Tom Keene tomorrow for a special edition of Bloomberg Surveillance, live from the Jackson Hole Economic Symposium.

4:35It'll be with Lisa Abramowitz and Michael McKee speaking with Fed experts on the path forward starting tomorrow, 9 a.m., Wall Street time, on Bloomberg Radio, Bloomberg Television, and the Bloomberg Business Hub. And while Fed Chairman Warsh prepares to give that speech, John, Fed Governor Lisa Cook is once again fighting to keep her job, denying unproven mortgage fraud allegations that President Trump has repeated. In a letter to the White House, Cook's attorney, Abby Lowell, calls the allegations, quote, unfounded and untrue. This latest back and forth comes a couple months after the president narrowly lost his initial bid at the Supreme Court to oust Governor Cook.

5:12Let's get the latest from the Middle East right now. Iran's military says it's reached a revenue-sharing agreement with Oman on the Strait of Hormuz. That statement from the Islamic Revolutionary Guard Corps goes further than what the two countries' foreign ministers are saying, that they've discussed an interim framework for resuming shipments through the waterway. Meanwhile, President Trump is repeating his claims that the strait is open and the mines are gone. Bloomberg Middle East correspondent Abir Abu Omar has more from Dubai. President Trump and the United States have made those claims multiple times before, but we have from multiple different fronts saying that that's not entirely true.

5:50One is the IRGC saying that the only parties that are involved or know about where those explosives are in the waterway are officials in Iran. We, of course, had the head of the IMO last week saying that no ships are making their way in the Strait of Hormuz in a natural way and that the explosives are still pretty much there. You've got European officials voicing their concern that those explosives are there. Bloomberg's Zabir Abu Omar reports all this comes after the U.S. moved to toughen sanctions on Iran's economy this week. Iran's president says that effort will ultimately fail. And John Bloomberg News has learned Russia is preparing to escalate attacks on Ukraine.

6:30Three sources close to the Kremlin say Vladimir Putin thinks negotiations for a peace deal have reached a dead end. And our sources say Russia is considering an intensification of ballistic missile strikes on Ukrainian cities, including the capital, Kiev. Jennifer Welch is Bloomberg's chief geoeconomics analyst. The strategic landscape has shifted. Ukraine, for example, has been able to leverage drones to create an essential no-man's land along the front line with Russia. And that's part of the reason, as the Bloomberg reporting is reflecting, that Moscow is considering these other strategies of striking at, for example, more of Ukraine's key cities and economic centers because they simply aren't able to make gains along the battlefield front as they were in the earlier stages of the war.

7:11That's a Bloomberg economist Jennifer Welch. U.S. efforts to end the conflict have failed to produce a breakthrough and negotiations have stalled while President Trump focuses on the war with Iran. And there's little let up to the trade war between the U.S. and Canada. U.S. Trade Representative Jamison Greer is speaking out about the breakdown in talks that now has both sides leveling the tit-for-tat to tariffs. In an interview with a Canadian broadcasting corporation, Greer is suggesting things could go even further. Canada has banned the sale of liquor and spirits. We haven't banned anything from Canada.

7:46You know, they've capped the type of autos we can bring in. They've banned certain goods and services from procurement in the provinces. Again, we've never done these bans. It's quite extreme. But maybe we need to. U.S. Trade Representative Jamison Greer posting those comments to the CBC on his X account. Canada has announced dollar-for-dollar counter tariffs to 50 % duties on many of its exports. Last night, Canada removed fish and seafood from the list of U.S. goods it's targeting. It says it made the change based on feedback without further elaborating. And John, reaction continues to pour into Meta Platform's landmark lawsuit settlement.

8:24The social media giants agreed to pay up to$18 billion with almost every state in this country to resolve their legal claims related to teen users on Meta's social media platforms. The agreement requires Meta to set up new guardrails, including restrictions on how much time younger people can scroll. Here's California State Attorney General Rob Bonta. This is a significant victory for families across the country, for parents, for children, for those who are suffering in silence and those who are suffering in public. California Attorney General Rob Bonta. Now, the only states that aren't part of this deal are New Mexico and Florida.

9:00New Mexico secured a billion dollars in payouts after won a trial against Meta earlier this year. And Florida's attorney general says yesterday's settlement is insufficient. A judge has dismissed a suit by Elon Musk's acts that sought to block a New York law requiring social media companies to disclose how they deal with hate speech, extremism, and disinformation. Ex-sued New York last year claiming provisions of New York's Stop Hiding Hate Act violates state and federal free speech guarantees. The judge ruled that the First Amendment poses no obstacle to the law.

9:36All right, now let's get a look at some of the other stories making news in New York and around the world. For that, we're joined by Bloomberg's Michael Barr. Michael, good morning. Good morning, John. Rescue teams are searching for hundreds of missing people along the Nepal-China border. A catastrophic and deadly torrent of floods and mud swept through several communities on Wednesday following a glacier collapse. The disaster left nearly 170 people dead and around 1 ,300 missing, including foreigners. At least 47 Americans are among the missing. Australian Prime Minister Anthony Albanese says there are also more than 30 Australians unaccounted for.

10:12Nepal, you know, is a developing country. It doesn't have the resources that an event like that would have in Australia. So information is difficult. Now, our thoughts are with all those who'll be concerned about their loved ones today. Videos show the flood swallowing people as they try to escape. Closing arguments are scheduled to begin this morning in the murder trial of Lindsay Clancy. Jurors heard from a total of 84 witnesses across 21 days of testimony. Prosecutors sought to prove that the Massachusetts woman deliberately murdered her three small children in 2023. Defense lawyers argue she was suffering from postpartum psychosis.

10:54Tributes are coming in for Tim Curry. The actor died Wednesday at age 80. Curry was best known for his role in the cult film The Rocky Horror Picture Show. Curry fans were outside Studio 54 in New York City, where a Broadway revival of The Rocky Horror Show is playing. He was so diverse, but I think he was just in such iconic films from my childhood. Grew up in Ohio. We used to go to the Midnight Showings, the Rocky Horror Picture Show. Tim Curry is just like a once-in-a-lifetime performer. Curry also starred in other films such as Clue and on the small screen played the evil Pennywise the Clown in it.

11:32Global News, 24 hours a day and whenever you want it with Bloomberg News Now. I'm Michael Barr and this is Bloomberg. Thanks, Michael. Time now for a Bloomberg Sports Update. For that, we bring in John Stash Hour. Top 30 golfers play this weekend in Atlanta for the Tour Championship. Scotty Scheffler won it two years ago. Rory McIlroy has won it three times. The final weekend of NFL preseason begins with three games tonight. Meanwhile, the NFL announced there will be no more Pro Bowl. They always tried to make this game more popular than it really was. They will still honor 88 players. The Giants wide receiver Calvin Austin suffered a torn ACL in practice.

12:10His season over before it begins. That's your Bloomberg Sports Update. Stay with us. More from Bloomberg Daybreak coming up after this.

13:05So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now, a global workforce of 300 ,000 can use AI to fill their HR questions, resolving 94 % of common questions. Not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business. IBM. Get essential news on the people and companies pushing the tech sector to new frontiers. Hi, I'm Ed Ludlow. Join me for Bloomberg Tech, a daily podcast focused exclusively on technology, innovation and the future of business.

13:49Every weekday, we bring you the latest insights on Silicon Valley's top companies and conversations with tech's biggest decision makers. Listen to Bloomberg Tech on your commute home and stay ahead of the news cycle. Subscribe today on Apple, Spotify or anywhere you listen. coast to coast on bloomberg radio nationwide on sirius xm and around the world on bloomberg.com and the bloomberg business app this is bloomberg daybreak good morning i'm nathan hager it was the most highly anticipated earnings report of the week and nvidia is giving the ai trade a lift and then some this morning with results that suggest the spending boom is not letting up Chief Financial Officer Colette Kress put it this way on the company conference call.

14:34We expect to grow revenue by approximately 70 percent in fiscal 2028. That was NVIDIA CFO Colette Kress on the company's earnings beat. And we're joined now by Bloomberg News senior strategist Neil Campling. Neil, that seemed to be the comment that really got the market's attention. Does this put the spending bubble concerns to rest now? Good morning. Good morning. It certainly does for now. I mean, we weren't expecting to get long-term guidance from NVIDIA. We don't normally get that kind of statement. Let's put that 70 % number into context. Relative to consensus who have about 45 % growth in their models, it's$100 billion plus of revenue uplift.

15:22And I think the other thing, the most important thing here is that this revenue growth outlook is apparently a supply number, not a demand number. What I mean by that is that Invitator is saying that customer forecasts would actually have implied something close to a doubling of revenue, but it expects to remain supply constrained through the time because the AI cycle is still being governed by physical constraints, such as memory, packaging, power, data center capacity. So there's no shortage at all of end demand. And to give you some perspective of what 70 % growth is for mega cap tech, the last time Apple grew revenues by 70 % or more year on year was way back in fiscal 2010.

16:06So it's a stunning growth number. The supply constraint gets to the question about margins as well. NVIDIA says that its margins could be squeezed due to those supply constraints. Does that raise a concern for you? They are willing, I think, to take some gross margin pressure for substantially sort of greater revenue opportunities. And I think the fact that Bloomberg News reported earlier this week that NVIDIA will be raising system prices by about 15 % at the beginning of next year shows that really NVIDIA, if you like, is a price setter and is able to pass through a lot of the costs to their end customers.

16:46So I don't think there'll be a lot to worry about from any margin compression, given the power of the ecosystem that NVIDIA faces today. What about the spending commitments that NVIDIA has, the potential for circular spending? Is that still an issue? It doesn't go away completely overnight. The encouraging piece, I think, from the conference call last night, was that management did tackle this question head on. and there was also the mention that they see this as the beginning of a significant cycle of technology not the end and the other thing i thought really interesting was that jensen huang actually said that his biggest regret that he didn't invest in these big tech new platforms earlier than he actually than he actually has and he thinks there's a path to companies like Anthropic and OpenAI eventually becoming the biggest companies in the world.

17:39So it was very encouraging to see them tackle this head on. This is Bloomberg Daybreak, your morning podcast on the stories making news from Wall Street to Washington and beyond. Look for us on your podcast feed by 6 a.m. Eastern each morning on Apple, Spotify or anywhere else you listen. You can also listen live each morning starting at 5 a.m. Wall Street time on Bloomberg 1130 in New York, Bloomberg 99.1 in Washington, Bloomberg 92.9 in Boston, and nationwide at Sirius XM channel 121. Plus, listen coast to coast on the Bloomberg Business app now with Apple CarPlay and Android Auto interfaces.

18:16And don't forget to subscribe to Bloomberg News Now. It's the latest news whenever you want it in five minutes or less. Search Bloomberg News Now on your favorite podcast platform to stay informed all day long. I'm John Tucker. And I'm Nathan Hager. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak.

18:58Digitalization of Africa is going to power its growth. Breeding the world of something like HIV is possible. Population growth is so enormous in Africa. Listen to Next Africa on Apple, Spotify, or wherever you get your podcasts.