Nvidia Goes Big on Buybacks as SpaceX Reaches Orbit

28:24Coming up, NVIDIA and Gecko Robotics are building new guardrails for autonomous machines. We're going to speak to Gecko Robotics CEO Jake Lusrerian next. This is the AI agent safety story that we did at the top. And Gecko Robotics is the physical AI case study. Super interesting. Halfway through the program here in the city of San Francisco. Thanks for being with us. This is Bloomberg Tech.

28:58Welcome back to Bloomberg Tech. Meta Enterprise Platform, it's a big story in markets this morning. Generally, the sell side is really positive about the idea that Meta has a mechanism now to do business with other companies rather than just focus on the consumer, leveraging its work in agents and AI. It has tapped CJ Desai, who was the CEO and president of MongoDB, and that stock is down accordingly. off-session lows but down 17%, a pretty severe reaction as CJ Desai leaves MongoDB and goes to Meta to lead Meta Enterprise platforms. And they brought back a former CEO at Mongo to bridge the gap while they searched for a long-term replacement.

29:35It's had a lot of effect on the market in different ways to different enterprise stocks. The other big kind of financial market story is NVIDIA, putting another$150 billion behind its own stock, taking its remaining buyback authorization to$235 billion, the stock higher 2 % off its session highs. Bloomberg Intelligence says the size of that commitment underscores NVIDIA's financial firepower, but with plenty of room to keep funding the broader AI build out. Robert Shiffman, Bloomberg Intelligence, senior credit analyst joins us now. You were so quick out the gate with the React. Just explain your thesis on this buyback.

30:13Well, I think NVIDIA has been reading Bloomberg intelligence research, and they realize that there's no AI bubble. And because of that, they're going to be so cash rich, they can not only fund friends and family and keep this AI ecosystem going, but they can also spend a significant amount on shareholder returns, benefiting, I think, both creditors and shareholders alike. And this sort of stuff, I think, over time is only going to get bigger because we see their free cash flow potentially going to a trillion dollars over the next couple of years. Shif, sincerely, and just like in very basic terms, what is the credit analyst's interest when you get a headline about what is now, I think, the biggest buyback in U.S.

30:56company history? Yeah, it's bigger than Apple's$110 billion. It certainly shows that they are king of the hill when it comes to AI these days. Unfortunately, there's not so many other hyperscaler friends that are in this position anymore. I think from a creditor standpoint, it doesn't really make any difference to the way NVIDIA trades. What I do think, though, it suggests is that they're going to have enough cash to give out in order to fund everybody else. If you look at what we think CapEx is going to be spent through 2031 from the hyperscalers, it's now going to reach$9 trillion. That's with a T.

31:33And I think next year we're going to see IG borrowing probably in and around$500 billion. And to know that there's capital around to help build that system, I just think brings confidence. People have been very, very concerned that there's both an AI bubble, there's a credit bubble. We don't see it at all. We've never seen demand stronger, and we haven't heard anything different from either investors or the companies themselves. Okay, so as of the end of the fiscal second quarter, fiscal year 27, the most recent quarter, NVIDIA is sitting on just north of$99 billion, cash, cash, quibs. you, A, don't see a circular financing concern, and you, B, see their ability to make different kinds of investments grease the wheels for the build-out.

32:21Yeah, listen, circular financing is a great media buzz line to try to bash this space. And I just don't think it's working. What they're doing is they're making equity investments. They're making credit-style investments where They're both leasing facilities. They're providing residual value guarantees. They're providing support behind the value of their chips beyond their depreciable life. I just think what they're doing is they're just acting as a bank for everybody, which is not a bad thing. I mean, this is the whole story of Robinhood. You take a little bit from the rich and you give to the poor.

32:54That's all they're doing. It's a timing delay when it comes to making money in this business. You know, those that are collecting right now, the semis, are sharing that money with those that are building, the hyperscalers and the neoclouds. That is going to change in the next couple of years when those companies have facilities that are up and running and you see AI monetization start to boom. They're all going to turn free cash flow positive and they're all going to start buying back masses and amounts of stock again. And I think this sort of revolution is just going to end up continuing. and I don't see NVIDIA slowing that down and I don't think they care about circular referencing other than they're also now raising third-party money.

33:32Remember, they just announced a deal with the biggest alternative asset managers out there to help raise$500 billion and I don't think that money is getting any smaller. I'm surprised it wasn't a trillion or it's not going to grow to a trillion or two trillion in the next couple of years. Robert Schiffman of Bloomberg Intelligence with a credit perspective on this massive buyback program. Thank you very much. NVIDIA is pushing its AI safety efforts into the physical world. It's working with Gecko Robotics to test new safeguards that put hard limits on what AI-powered robots can do and stop them when they cross boundaries.

34:07Gecko CEO Jake Lusererians with us. And this was our top story today, right? Part one, make an agent fit within parameters that you set in a box, right? Part two, a security guard for when that agent misbehaves or acts suspiciously. How does that work in your physical AI world? Well, thanks for being able to have me on and talk about this. What's so important and we're all talking about today is the criticality of these agentic tools being able to be deployed in the real world, especially being deployed in such important environments, but doing so in a way that's safe and ensures that we have the utmost standards as it relates to safety, quality, especially with some of the most critical sectors, whether it be on the military side or on the commercial side with energy, mining, and manufacturing.

34:51And that's exactly what this partnership is all about, is ensuring that we keep humans in control, but also supercharge the benefits of these authentic tools coming out of the Foundation Lab. So really exciting announcement, and it puts safety in humans first. This is a partnership NVIDIA has with about 100 different entities across software, hardware, robotics companies. Give me a case study that can make it real for the audience, right? It does all sound a little bit abstract. So an AI agent in the context of something like a robot in the industrial and defense settings that you work in. Well, what's becoming very clear is that I think impressive and critical these models are to such an incredible ecosystem of tech.

35:38What's becoming really clear is that deployment into the real world on the physical intelligence side, that's where real large moats are coming from. by gathering information, data sets never existed before, to power these abilities to model and simulate what the real world looks like and how to make sure it optimizes for better. A way to understand one of the use cases is actually with the military contracts that we have. One of our robots, Komodo, is actually using this partnership and the system that the open agent safety platform that NVIDIA and Gecko are pioneering to actually ensure that we're gathering information and data sets by letting agents run the robots, but ensuring that parameters are set and humans are able to control certain sorts of actions that the robots are taking in the real world.

36:20And so the agents need to be able to path plan and gather information and supercharge where they're taking actions and getting data, but do so in a way that doesn't compromise safety and quality standards that humans set and prioritize. And this is exactly the key to ensuring that we can get as much information and data as possible at low cost and do so in a way that keeps humans in control and safety paramount. Take me into the backstory here. Part of this platform, NVIDIA talked about at GTC earlier this year, right? There has been so much in the headlines about AI safety, models misbehaving, agents going rogue.

37:00Like, was there a frantic phone call from Jensen Huang last week saying, okay, this is what we're doing, everyone get on board? Yeah, I'll keep the phone calls between the two confidential, but you're 100 % right. which is that you need to prioritize safety, but you also need to be moving at a pace that's really bringing to bear the best technology in the world for the people keeping our borders safe and keeping freedom for the world. You know, it's so exciting that Jensen at NVIDIA and myself at Gecko are able to be doing a partnership like this for the military as the first example of many to come as it relates to the technology that's being deployed to ensure that we keep ships out of dry dock and in the fight and ensure that we can deter conflict around the world.

37:47And this is putting such a positive spin on the benefits and impacts that this technology stack is able to have. And also the game plan of how robotics has to be used to give us the advantage in the West. And so it's an exciting partnership because it pushes the frontier and ensures that technologies and technology companies like Echo and NVIDIA are leading the way and creating the rules. You know, Jensen Huang's school of thought is that the safety of a model and an issue of alignment, does the AI do what it's intended to? That's an engineering problem. Is that what you see in your physical AI realm?

38:31It's just an engineering problem that you can now solve for because of what NVIDIA has made open source. Yeah, it also is ensuring that we put into perspective the power of these tools. I mean, we hear so much conversation from certain CEOs about the doom of AI. But I think what's important is this partnership highlights how these technologies, robotics and artificial intelligence models, are actually being used for good. For keeping humans out of harm's way, to ensuring that we get critical assets and components back up and running. Ensuring that they're deterring conflict or keeping lights on, empowering homes for heating and cooling.

39:11This is the kind of way that we want to imagine the future looking like for robotics and AI and not some doomerism that can be sold to assist whatever is trying to be pushed by these companies. And so similar to Jensen, what we're here talking about is such a positive impact that these technologies are having for real people and ensuring as well that we keep those real people with those sort of expertise in control. And we're building technology stacks right alongside them. And that's what's leading to such incredible outcomes. Jake Lusararian, Gecko Robotics CEO, on that technology partnership with NVIDIA.

39:48Thank you very much indeed. Let's talk about SpaceX again. We're seeing some live pictures now. Live pictures. This is Starship reentering Earth's atmosphere. It did reach an orbital altitude of 275 kilometers. But SpaceX made the decision to bring Starship back to Earth and back home early. It was originally the mission goal to do six orbits of the planet and then after about nine hours and 50 minutes, bring it back. But they came back early after successfully deploying 26 V3 Starlink satellites, the feed breaking up there as it passes through Earth's atmosphere. Mission successful, mostly. Coming up, Anthropics CEO Dario Amodei met with President Trump as the debate around AI safety continues.

40:36We'll have those details next. This is Bloomberg Tech.

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45:19president trump and anthropic ceo dario amode taking their ai safety debate face to face the two met for dinner after amode called for slowing the development of the most advanced models as a growing number of ai security breaches add urgency to the fight over guardrails bloomberg senior tech editor mike shepherd is with us um we know the dinner happened what else do we know we do know the dinner happened. A White House official has confirmed that it took place. It was late last night here in Washington. But we don't know anything more beyond that right now. There's been no readout from either side.

45:53And Ed, really, the key takeaway is that this meal would have brought together two men on opposite ends of the AI safety debate. As we all know, Dario Amadei has for years warned of the potential existential risks from the technology. And on September 12th, he published that high-profile essay promising to slow development of the most advanced models. President Donald Trump, on the other hand, has pushed back against those doomsday fears, calling them a hoax and also rejecting calls embraced by Amadei for more regulation as a globalist conspiracy. So we'll be eager to see whether the two men were able to meet somewhere in the middle.

46:30And we may get some details on that from President Donald Trump during a policy announcement later this afternoon. And we're also, of course, out to Anthropic for any readout on their side. Over the weekend, I think ahead of this meeting, the president did speak to reporters and he basically said, here's my point of view on AI. Could you summarize what the president's standing is on it? Well, for weeks, he has been in response to a lot of the safety fears that have been surfaced by leaders in Silicon Valley, including Amadei, but as well as his arch rival, Sam Altman, that something must be done on a global basis to create some standards to address these risks that AI agents could get out of control.

47:17But the president has pushed back against that. He is interested in two things. He wants development of this technology to proceed largely unfettered because of its economic importance to the United States and, of course, also to the importance to the U.S. of staying ahead of China, the top geopolitical rival in this technology. And that was really one of the centerpieces of the conversation between the president and his Chinese counterpart, Xi Jinping, here in Washington last week. A lot of other tech CEOs were at that state dinner for Xi Jinping on Thursday evening, but one absence notably was Dariu Amadei.

47:52So perhaps we will see a little bit of movement in the debate here in Washington, including with the president himself. and as shep mentioned the president is due to make a statement in a couple of hours time bloomberg's mike shepherd thank you very much indeed let's get over to new york bloomberg's yara yara anand has the news hi yara hi ed it's time now for talking tech first up shares of sk hynix fell five percent in south korea and its adrs are falling here as well on reports its u.s subsidiary solid dime could go public as soon as next year at a valuation of up to 100 billion. An IPO would add another layer to the broader SK group's already complex ownership structure, raising concerns for shareholders.

48:37Plus, China expanding overseas travel restrictions for families of top AI professionals, relatives of executives whose work is considered critical to state security, now require Beijing's approval before traveling abroad. That's according to sources. That's to prevent sensitive AI expertise from leaving for the U.S. And OpenAI CEO Sam Altman and Anthropics CEO Dario Amadei will not appear before an Australian Senate inquiry into AI. The hearing comes after an OpenAI model hacked an Australian government website. Both companies will send other executives instead. Ed. Thank you, Yohaira. Now coming up, we're going to go back to NVIDIA's buyback plans, one of several NVIDIA stories that are impacting the shares today.

49:24Stock up 2%. There's also been some disclosures on their backlog, how much NVIDIA gear Anthropic is using. And then there's the AI agent safety offering that they open source this morning as well. All to come, this is Bloomberg Tech.

49:52Let's get back to our top story. NVIDIA's record buyback. Shares 2 % off session highs. Actually, there were several pieces of news. Kunjan Sabani from Bloomberg Intelligence out with his react saying it's positive, but not thesis changing. Specifically when it comes to that$150 billion buyback increase. Kunjan Sabani from Bloomberg Intelligence joins us now. You know, it's such a big number. and then in aggregate and a bigger number still, why is it not thesis changing for you? Well, look, it does have some positive reads. Buyback is always good. Shareholder returns is always a positive. Also signals that the company believes that the stock is cheap and also helps sort of those investors who are concerned that the company is deploying too much cash into those financing deals instead of returning back.

50:41So definitely don't want to overshare all the positives. However, it doesn't do anything to address the fundamental risks that can the capex from hyperscalers sustain, the rising competition from the ASIC areas, and again, people who are concerned about sort of the circular financing. So, on one hand, it does do positive read-through on capital allocation, but on the other hand, it doesn't sort of sway away the risks that have been hamping over the stock multiple. There has been a lot of discussion about NVIDIA open agent safety platform. You talk about security, but the idea that NVIDIA is offering more than just GPUs, like in a very real sense now, it's saying you guys have a concern.

51:21Here's an engineering solution to it for a piece of open source software. What did you make of that? That was a more fundamental positive breakthrough. I mean, look, with all the talks about security, safety, with all the attacks happening and the talks about slowing down training progression. Remember, all of that will require more compute. Even if you slow down training, model training development to add more compliance, safety, security, you still need more compute. And guess what? Where are people going to turn for that compute? To the likes of NVIDIA. So that is definitely a fundamental long-term tailwind here for the company.

51:57Kunjan Sabani of Bloomberg Intelligence with a react to a lot of what happened with NVIDIA this morning. Thank you. sticking with NVIDIA, Lockheed Martin CEO Jim Teichlet says the chip company has been a partner of theirs for two decades now as AI keeps playing a growing role in Lockheed's roadmap. Listen to this. Our chief engineer, when I started the company in management six years ago, said AI is really critical. And of course, to ask for budget to invest in our own AI containerized instance where we would not be using data sets off the internet, we would not be using models and then feeding our information back into the system, where we would have basically a controlled environment for our AI workloads.

52:45And one of our partners, again, in the technology space has been Jensen Wong. Back in 2000, 2001, where hardly anyone maybe had heard of NVIDIA, if you weren't a gamer, we were teamed with NVIDIA to get GPUs, and that relationship continues today. So that was Lockheed Martin CEO, Jim Teichlet. Tune in on Friday for more of that conversation during Bloomberg's Defense Tech special, 11 a.m. Eastern, 8 a.m. Pacific. We're going to be live from Lockheed Martin Skunk Works. That's Lockheed Martin's advanced aircraft development facility in Southern California. A really rare, incredible access to what's happening in defense technology.

53:26From Defence Tech to space, let's get back to those live pictures of Starship reentering Earth's atmosphere. It did its deorbit burn, reached orbital altitude 275 kilometers. That mission goal achieved. It deployed 26 Starlink V3 satellites, commercial operational revenue generating for Starship. That was a first. but SpaceX decided to return Starship in its 14th test flight home early. The original mission design was to do six orbits of Earth over about a 10-hour period but they decided to come back. We still don't know why. We will find out. The plan is for the Starship spacecraft which you're seeing live on your screen to splash down west of the coast of Chile, South America, out of this world.

54:17That does it for this edition of Bloomberg Tech. Lots of conversations in the show, many market moves on the headlines, recap on the podcast. You know where to find it on the Bloomberg terminal as well as online on Apple, Spotify, and iHeart. What a way to start the week. This is Bloomberg Tech.

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