Instant Reaction: Nvidia’s Upbeat Sales Forecast Shows AI Boom Remains Strong

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1:09Bloomberg Audio Studios. Podcasts. Radio. News. This is a breaking news update from Bloomberg. Instant reaction and analysis from our 3 ,000 journalists and analysts around the world. Let's go to actually the outlook. First quarter revenue forecast beating estimates. The company saying for the first quarter sees revenue of$76.44 billion to$79.56 billion. That is easily above the street estimate of$72.78 million. Let's go back to the fourth quarter data center revenue. That coming in better than expected. $62.3 billion versus the street estimate of$60.36 billion. NVIDIA saying computing demand is growing exponentially.

1:55Fourth quarter adjusted gross margin, we expected 75%. We got 75.2%. Fourth quarter revenue coming in overall,$68.1 billion, better than the street estimate of$65.91 billion. Tim, we're seeing that stock up now about 2.2 % in the aftermarket. Yeah, just to remind everybody where we are with these numbers, The company sees first quarter revenue coming in$76.44 billion to$79.56 billion. That beat estimates handily of$72.78 billion. As Carol mentioned, NVIDIA CEO Jensen Wong saying in a statement, computing demand is growing exponentially. We also, fourth quarter data center revenue worth repeating a beat there,$62.3 billion.

2:41dollars the estimates for 60.36 billion and that gross margin coming in above estimates at 75.2 percent our sour fryer on our live blog saying that shares are growing up on that data center revenue beat hey ed ludlow come on in uh i know you're looking at uh these numbers what jumps out for you yeah i mean straight to the outlook and by the way i would have done the same thing go right there you know revenue in the fiscal first quarter 78 billion dollars plus or minus two percent. You know, consensus was really high. But like going into this, it's a very simple equation. There were many names from across sell side and buy side that said they wanted to see NVIDIA beat revenues overall in the current period by the multiple billions of dollars, you know, against consensus.

3:26And so one thing I would say to confirm something is that the fiscal first quarter, which is the April quarter, does not assume any compute revenue from China in the outlook, does not factor in any compute revenue of China. That, I guess, is something to check off the list. It was one of the questions we had. I want to bring in Jay Goldberg from Seaport Research Partner. He's a senior analyst for Semiconductors and Electronics. He joins us also from San Francisco. Jay, anything in here that confirms your thesis or does it sort of go against the sell rating that you have on NVIDIA? Yeah, I mean, it goes, I mean, it's a good quarter.

4:04It's a good quarter and a good guide. It's above consensus. It's above my expectations, but good for them. We're still waiting to see a lot more detail. What do you want to see? I want to see, I want to hear more, have a talk about gross margin for next quarter. I think that's going to be in the CFO commentary. Yeah. Oh, Ed, jump in. Ed, do you have that? Yeah. No, I don't have it yet, but it will be in the CFO commentary. But 75.2 % versus 75 % expectations. I mean, Ed, can you use that as sort of a guide for how the company could see first quarter? I mean, on a basis point basis. Yeah, look, like margins are impacted by a number of things.

4:43It has been a sell side question on prior calls, the percentage of a server that NVIDIA contributes to. And again, what's changed in the period is NVIDIA starting to sell, for example, CPUs as standalone product. And that was a part of the meta deal that was included. They talked about CoreWeave being an early user of CPU as a standalone product. You know, how does that impact the margin profile going forward? But yeah, I mean, what they do is they own more of the server. And that has been one of the ways in which that they've got margins to where they are. And clearly being 0.2 % above, you know, where the hopes were is not a bad thing.

5:25Yeah, I'm looking at that CFO commentary. As we know, revenue expected to be$78 billion, plus or minus 2%. And as you correctly pointed out, not assuming any data center compute revenue from China in their outlook. Gap and non-gap gross margins expected to be 74.9 % and 75 % respectively, plus or minus 50 basis point, inclusive of a one-tenth of 1 % impact from stock-based compensation expense. Just looking at what else we have here. Operating expense of GAAP and non-GAAP operating expenses to be approximately$7.7 billion,$7.5 billion respectively, including, that's inclusive of$1.9 billion of stock-based compensation expense.

6:07A headline getting my attention is NVIDIA says that hyperscalers were just over 50 % of 4Q data center revenue. Jay Goldberg, I want to repeat that headline for you. hyperscalers were just over 50 % of fourth quarter data center revenue. Is that a sign that NVIDIA is diversifying revenue? Who made up the other half of data center revenue? Is it automakers? Who's buying? Well, I think that's one of the most interesting things that's taking place with NVIDIA is they're not just reshaping the semiconductor industry. They're trying to reshape the cloud computing industry as well. And that's why we see all these neoclods getting investment from or support from nvidia nvidia would much rather have a hundred neocloud customers three hyperscale customers of course and they're they're doing a really good job of of creating that willing that into existence so so those other customers ed come on in here those other customers are are like the core weaves and the other neoclouds yeah i mean what is still uh important and is fact is that obviously the vast majority has been the hyperscalers plus meta right and so they've wanted to kind of switch between a story what they used to call an AI factory at first an AI factory was an on-prem data center that enterprises and maybe some of the neoclouds would operate themselves now an AI factory is what they you define any data center that's running AI workloads in so they have chopped and changed between that story but the its origin was that they wanted to go beyond the hyperscalers to have people own their own infrastructure for AI workloads if they were, say, a software company or an enterprise of a slightly different size.

7:48You know, it's interesting. I'm looking for supply constraints, and they seem to say in the CFO commentary, I'm seeing it in terms of gaming. They say we expect supply constraints to be a headwind to gaming in the first quarter, fiscal 2027 and beyond, but not so important, right, Ed? I mean, we want to really just see if that's a problem in the data center area. uh sadly you know uh my history with with nvidia you know before coming to silicon valley and covering the data center thing was gaming and you know it's now such a small piece of of revenue it's it's i mean jay can jump in but really it's not where anyone's looking right now um there is some uh discussion later on as it relates to the balance sheet and cash flow um on uh on things to do with with supply but you're right that that what they're basically saying is that the gaming was the segment that was impacted.

8:39And I don't know that that is having any effects really on how we see the stock trading in after hours. Oh, NVIDIA shares up 3.4 % right now. And in fact, we're seeing Broadcom, TSMC, and Micron shares follow NVIDIA higher. Jay Goldberg, come on in here and talk a little bit about the broader repercussions of a print like this outside of NVIDIA. What's the signal that it sends not just to hardware makers, but to the entire market? I think there are always concerns about how long the spend is going to keep going. And we certainly had some positive data points about that two weeks ago when the hyperscale is reported, Facebook reported.

9:14They have very strong CapEx numbers. This just continues that trend. And I don't want to say it's a rising tide that lifts all boats, but it is$600,$700 billion in CapEx this year. And that's going to spread across the entire ecosystem. them. No, and I want to go back to, and I totally get like gaming non-important, but I was like looking to see if there was any supply constraints in the rest of their universe. And I just thought it was kind of interesting that I haven't seen anything along those lines. It was just in regards to gaming. So is that a good sign that we haven't seen anything that the company has said so far in terms of supply constraints for the rest of the business?

9:49Or I don't know, is it not that important? Well, I, you know, I, I leave it to, to the analysts to model money left on the table, if there were any, so to speak, but like given the, the outlook in terms of sales and where it, where it came in relative to consensus, you know, Nvidia it's an enviable position to be in, right? Where demand exceeds your ability to supply anyway, but going back to that five-year handbag analogy of a few moments ago, you know, the other argument that, that gentlemen and NVIDIA have made quite consistently is that if you tell your suppliers what you plan to do five years in advance, then the rest of the supply chain can help prepare with you and keep up.

10:29And, you know, recently that's been most difficult in memory, but memory shows up in pricing, you know, and if you're Jensen Wong, I'm sure you can make a phone call and make sure that the corresponding high bandwidth memory that you need is there or thereabouts. Quick check on NASDAQ 100 e-mini futures here in the aftermarket, and they're up about 1.8%, so we're certainly seeing a lift to the overall market. Jay Goldberg, come on back in. What's top of mind when we get to this conference call in terms of what you want to hear? I know we talked a lot about margins earlier, but what is it? yeah i mean i think this this margin stuff is important because what i'm sort of reading between the lines is they had to negotiate pricing with the memory got memory makers the memory makers have the most leverage they've had in a decade and we don't see any impact on nvidia's numbers compare that to pretty much any other electronics company out there today which is warning about memory i'm sure that nvidia is feeling some of that but the fact that their gross margins are guiding to at least in line tells me that they're just going to price on those memory increases to their customers, which is a testament to their pricing power, to their power, their market position.

11:43Jay Goldberg. Jay, we're going to have to leave it there. We're going to give you time to get ready to jump on that call. Jay Goldberg is Senior Analyst, Semiconductors and Electronics for Seaport Research Partners. Once again, Jay, the only analyst tracked by the Bloomberg terminal who has a sell rating on NVIDIA. Ed, I want to give you the last word. You've spoken to Jensen Wong many, many times. What's a question that you would have for him on the earnings call tonight? Yeah, like ultimately, it just always comes down to a projection of confidence that all of the stories we've been over in more than the last year is still intact.

12:17You know that the great build out of AI infrastructure is early, that they have long horizon visibility into what's going on. All NVIDIA can control, I suppose, is the roadmap to go from one generation of compute to the next. And so they talk about in the CFO document, margins being supported by the ramp up in Blackwell and mix of new products. Well, when does that mix change? When does Vera Rubin really kick in and then go beyond that? That's kind of how the street would look at it, I think. All right. We're going to leave it there. Ed, We know you're busy as well. Ed Ludlow, thank you so much as we awaited those numbers and helping us break them down.

12:55Co-host of Bloomberg Tech, of course, on Bloomberg Television. Catch it at 11 a.m. Wall Street time, Monday through Friday. Hello, I'm Stephen Carroll. I'm in Brussels, where many of Europe's biggest decisions get made. And I'm Caroline Hepker in London. We're the hosts of the Bloomberg Daybreak Europe podcast. We're up early every weekday, keeping an eye on what's happening across Europe and around the world. We do it early so the news is fresh, not recycled, so you know what actually matters as the day gets going. From Brussels, I'm following the politics, policy and the people shaping the European Union right now.

13:29And from London, I'm looking at what all that means for markets, money and the wider economy. We've got reporters across Europe and around the globe feeding in as stories break. So whether it's geopolitics, energy, tech or markets, you're hearing it while it happens. It's smart, calm and to the point. And it fits into your morning. You can find new episodes of the Bloomberg Daybreak Europe podcast by 7am in Dublin or 8am in Brussels, Berlin and Paris. On Apple, Spotify, YouTube or wherever you get your podcasts. In the meantime, we've got shares of NVIDIA up about 3.2%. We're seeing Broadcom up about three quarters of one percentage point here in the aftermarket.

14:10TSM, Taiwan Semi up about one and a third percent. And you're seeing Micron also higher off its best levels in the aftermarket, but still up, Tim, about eight-tenths of a percentage point. All right. We're keeping an eye on this. We know Charlie Pellett is keeping an eye on all this and more. He's standing by in the Bloomberg Interactive Brokers studios with a business flash. Hey, Charlie. All right. Thank you very much, Tim and Carol. Keeping an eye as we recap and reset on NVIDIA. The stock higher after hours up by 3 % right now. it did give another bullish quarterly revenue forecast, signaling that the massive build-out of AI computing does remain on track.

14:44Chipmakers said fiscal first-quarter sales is going to be around$78 billion. That compares with an estimate of$72.8 billion. NVIDIA is the world's most valuable company. Closely watched, shares up now by 3%. Salesforce heading in the other direction after ours. Stocked down roughly 5%, out with a lukewarm outlook for sales growth in the new fiscal year, fueling Wall Street's worries that the software giant will lose out to new competitors in the age of AI. Other companies reporting earnings. Zoom Communications forecast adjusted EPS for 2027. That guidance missing the average analyst estimate.

15:23Shares down 1.7 percent. Also reporting Snowflake after ours. The stock down 2.5 percent. It gave an outlook for quarterly sales that was in line with estimates. The Dow, the S &P, and NASDAQ all advanced today. S &P up 56, wrapping up the Wednesday session at 69.46, a gain of 0.8%. Dow Industrials up 307, up 0.6%. NASDAQ today up by 1.3%. The NASDAQ 100 index up today by 1.4%. The VIX just falling below 18, with a 10-year 4.05%, spot gold up$26 the ounce, up by 0.5%, 51.70. Major move in Bitcoin today, surging 8.1%, 69 ,245 on Bitcoin. And finally, beyond Wall Street, Cuban forces killed four people today who opened fire from a speedboat with Florida tags, an incident with the potential to escalate an already tense standoff with the U.S.

16:22Carol and Tim, that is a Bloomberg Business Flash. All right, folks, we're watching NVIDIA. Charlie, thank you so much for that breakdown on all of that. NVIDIA shares continuing to trade higher. A couple of headlines also crossing that we want to bring to you. NVIDIA says it's secured supply to meet demand for several quarters. So we talk about supply constraints often when we're talking about NVIDIA and the AI demand. Also, NVIDIA saying the United States granted a license to ship H200, ships to China-based clients. So they've granted a license for specific China-based customers. The U.S. license is to ship small amounts of the H200 to China.

17:00So we were looking for some clarification on its business in China, something that they've certainly been looking for. We've got a great Bloomberg Intelligence roundtable. Nandeep Singh is Global Head of Technology Research for Bloomberg Intelligence. He joins us here in the Bloomberg Interactive Brokers Studio. He covers NVIDIA. He covers Snowflake and more. Also, Anurag Rana is Senior Technology Analyst for Bloomberg Intelligence. He joins us from Chicago, and he covers Salesforce. So we're going to talk software. We're going to talk hardware. Mandeep, I want to start with your reaction to NVIDIA.

17:30It was a beat. It was, I mean, a very good quarter. Your reaction to margin and what is actually holding out margins here? Because 75.2%. Yeah, no mention of any impact related to memory costs, which is surprising. Why is that surprising? I know memory costs have gone up, but NVIDIA is such a big company. Don't they have pricing power? They do. Or purchasing power, rather. They clearly did a great job in terms of securing that supply, and they don't have to pay the premium that everyone else has to pay on the hardware side. They said secured supply to meet demand for several quarters. What's several?

18:04Well, I mean, in this case, at least— This is like the Fed. But they're saying that they've got it. That's a good thing. They have got it, and they're guiding to mid-70 % gross margin for next quarter as well. So clearly, memory, not, you know, an impact at all in terms of the margins. The thing that is clear is they are selling, you know, to existing customers, not just GPUs, but systems. And that's the big difference between an NVIDIA and an AMD. AMD wants Meta to use their chips and integrate it. Right. Right. NVIDIA is actually selling to their customers entire systems that have higher ASPs.

18:47They are helping them reduce the token costs. And that's where the customers don't mind paying that extra premium that NVIDIA is charging because overall, the total cost of ownership is lower than if you were to standardize on any other chips. And that's what's reflected in their print is, look, their customers see the value. So well done, NVIDIA, right? By doing the whole thing. And the Blackwell architecture, that's really taken off. I mean, all the concerns around the migration from Hopper to Blackwell, I mean, they just proved that Blackwell will be probably a bigger product in terms of their chip architectures.

19:24Does this in your mind, I mean, I always feel like you're like the calm voice of saying the AI spend is still happening, like everybody relax a little bit. It's accelerating now. But it's accelerating. Right. That's what you're getting from this. I mean, look at NVIDIA's growth in the last fiscal quarter. It was around mid-60%. They're pointing to 77 % growth in their fiscal 1Q. So that goes to show, and the proof point you can see in the hyperscaler CapEx. The hyperscaler CapEx seems to be going up as well. So it's underpinned by healthy fundamentals. We know why NVIDIA's top line is accelerating.

20:02Right. Because the CapEx seems to be accelerating. And all this points towards more inferencing, more demand for AI compute. And we are hitting that phase where it's not just about training or whether it will happen or not. It's happening. So the ROI, the usage, right? We're seeing it. The usage is happening. And companies are consuming the compute. It's going to get reflected in the cloud revenue next quarter. It's going to get reflected in all the possible forms of where inferencing will show up. We're going to bring Anurag in in a second and talk Salesforce because I think that's a good transition to talk about what companies are doing with AI and the message, at least, that Salesforce is trying to make with agentic AI.

20:43But before we get there, Mandy, if I do want you to weigh in on what Carol mentioned earlier about the China business. H200 shipped under a new program subject to a 25 % tariff. NVIDIA discloses U.S. government in a 10K filing granted license by the U.S. in February of 2026. the U.S. license to ship small amounts of H200 to China for specific China-based customers. What does our investing audience need to understand about what it can sell to China and the impact on that financially? I mean, it used to be China used to be mid-single-digit percentage of NVIDIA's overall data center revenue. And Jensen has said China is about a$50 billion addressable market when it comes to chips.

21:26And so the fact that they're allowed to sell something now to China doesn't mean it's going to grow at the same rate as their overall top line, which is, you know, 77 percent. And that excludes the China number. But it's all incremental revenue. And this print shows there is just insatiable demand for NVIDIA's chips. And whoever can get it will buy it. So it's just a question of whether NVIDIA is willing to sell it to them or not. All right. So let's go to Salesforce. We do want to bring in our Anurag Rana, a senior technology analyst at Bloomberg Intelligence. He's in Chicago. Shares of Salesforce on a record, down about 4.5 % in the aftermarket.

22:06Some of the red headlines that we crossed on the Bloomberg company in terms of the outlook sees first quarter revenue of$11.03 to$11.08 billion. That's above the street estimate of$10.99 billion. Also increasing its share buyback authorization to$50 billion. Walk us through because this company has certainly been under a lot of pressure. It's down about 50 % since late 2024. So there are two things that are happening right now. The first is given so much spend going into AI, the non-AI spending is the one that's under pressure. And that is hurting companies like Salesforce, Workday, Accenture, and so forth, because companies have, or the clients, don't have that much money to spend in terms of how they're allocating AI spending versus non-AI.

22:51The second big piece right now Whereas the market's extremely worried about software companies getting disrupted by all the model providers and all the AI native companies. So Salesforce are getting hit by two different ways. But the results, frankly, I mean, I wouldn't say they were disappointing. I would say they were stable in line in terms of what they were saying they're going to do. So from our side, you know, it is just going to take some time to sort out. so Anurag the the question I think a lot of people have excuse me about a company like Salesforce and you know we could go through any other software company not any other but many other software companies and and ask you the same question is about the threat from artificial intelligence and Mark Benioff was was very clear in the press release to say that this is a company that has like relaunched I don't have the exact wording in front of me but relaunched as as an AI, an agentic AI company, is it really under threat?

23:50And specifically, like, what is the threat from Claude, from Anthropic, or from OpenAI that investors are so worried about? And is it warranted? So the question is the answer to the, if is it warranted? I mean, I think it's going to take some time to play out because if the models get really smart, then why do you need a manufactured software like this? that software can do a lot of what you need to do in terms of managing your Salesforce or customer service. Now, the question is, in our view, when a company like Salesforce is there, there are a handful of their products that they have that they sell into the enterprise, whether it's customer service cloud or sales automation cloud.

24:30Those are the ones I think they have a little bit better position of not being disrupted, but they have other visualization tools or some other smaller products that may not be the ones that anybody would pay for it. So I think there is a lot that needs to be done from Salesforce in terms of adding more AI capabilities to its core product and not change the narrative around it. You know, the narratives have been so interesting on AI, as you really well know. Looking at names like Snowflake, down about 1.3 % here in the aftermarket, we're talking about Salesforce and that stock. Just a real quick rehash here on the Bloomberg.

25:07We're seeing that stock still down about 4.5 % here in the aftermarket. And then, of course, we've got NVIDIA up about 2.3%. You put out some great research this week, Anarag, you and the team, about the haves and have-nots in AI disruption. What do we need to know at this point, especially when everyone says, folks, we're still early in on this. We don't really know how it all plays out. You know, I think that's the most important thing is we are very early in the inning. But at the same time, you know, when people are worried, they'll entirely sell the entire sector. We have seen that numerous times.

25:39So when we looked at this thing, I mean, the entire team worked on creating a framework of, you know, when we see a company, does it have high market share? Does it sell to very large companies versus smaller companies? Is it a platform? Is it a system of record? All those things takes into account, you know, kind of the history of a company. So let's say a company like SAP that's been around for 50 years, you use it for your core accounting reasons, supply chain. I think something like that is better entrenched than a very small company that's probably doing one particular function or selling only to the small and medium customers.

26:15Hey, final question here on Salesforce. Just going back as we watch this stock down 4.6 percent. top of mind. I know I always ask you guys this, but when the call starts with the company and the C-suite and analysts and investors, what must be asked? I think the biggest thing is going to be like, what are you doing to change the narrative around them being disrupted by AI and how are they adding more AI capabilities across their entire suite? All right. Love it. Anurag, thank you so much. Anurag Rana, his research, certainly on the AI world and also on Salesforce. We'll be looking for that later on today.

26:51Anora Grana, Senior Technology Analyst at Bloomberg Intelligence out there in Chicago.

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