Nvidia Says It’s Getting Orders From China

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2:00Bloomberg Tech is live from coast to coast with Caroline Hyde in New York and Ed Ludlow in San Francisco. This is Bloomberg Tech coming up. NVIDIA says it's now getting orders from China and ramping up sales of its H200 chips. Plus, NVIDIA CEO Jensen Wang says that OpenClaw is, quote, definitely the next chat GPT. A comment that sent Chinese AI stocks higher. And we bring you an exclusive interview with the CEO of CalShe. That's after Arizona filed criminal charges against the prediction market platform. But first, we check in on these public markets, roiled by geopolitics, by macro events. And we keep an eye on what's happening in terms of the stock market.

2:43Nasdaq 100 is off by five tenths of a percent. The S &P is lower after two straight days of gains. And this is as we see oil spiral higher, up more than 5.5%. This is a question of conflict in the Middle East that seems to be accelerating. And we're starting to see infrastructure continue to be targeted. That is, of course, spiraling concerns about oil prices. Now, all of this is an inflationary pressure on the back of PPI numbers today that show that inflationary pressure is already here in the United States. What will the Fed do later today? All eyes on macro policy at this moment. But there's also all eyes on what's happening in terms of individual stocks.

3:16And there is a macro tale at play when it comes to NVIDIA and the demand for compute and also what's happening with China. Demand signals, actually a sign-off from the Chinese government at least. We're starting to see a bit more of an appetite for buying into NVIDIA stocks as GTC continues. Let's just get more context on the market moves and what's happening with NVIDIA. Bloomberg, Carmen Reinecke joins us. Look, NVIDIA is one of the few names that pushes to the green today alongside the likes of Micron and others. Carmen, how is NVIDIA able to shake off what for the rest of the market is angst about the Middle East and inflation?

3:51Yeah, I mean, it really seems like investors are getting a little bit more confident with NVIDIA here. I think that Jensen has said a lot during this conference that hopefully, you know, making people feel a little bit more confident. I mean, the orders from China is very positive. It's something that investors have been looking for for a long time from NVIDIA. And he also said yesterday that they're looking at a very large number to go into buybacks and the dividend for Nvidia. So I think these are all things that are positive and are maybe helping the stock sort of shake off some of those macro pressures that we're seeing really way down the rest of the market.

4:26What had been extraordinary is that$1 trillion figure initially said didn't spur any absolute buying. But then he's trying to articulate that that$1 trillion can then be added to other new products that are coming to the market is well likely to inject upside to that number. Yeah, exactly. And I think that upside is really important. He did clarify very specifically that that doesn't include the new products that are coming out. So, a lot of the positivity, I think, is baked into the stock. But that potential for future growth, which is what everybody expects from NVIDIA but wants to see even more of, is really positive here, especially when we're seeing a backdrop that has so much uncertainty for the rest of the market.

5:09And, you know, I mean, NVIDIA is still the biggest stock in the S &P 500. So seeing it go up when sort of the rest of the market goes down is significant because if you're selling the S &P, you know, you're also selling a lot of NVIDIA. He just, of course, speaks in big numbers, talking about how computing demand has increased by one million times in the last two years. But he's pushing forward on where next for compute. And that's going to be driven by Argentic AI. Look, you saw his adoption of this ChatGPT moment for OpenClaw really helping Chinese names, is it going to have a read-across to the U.S.?

5:41You know, that's something we're definitely looking for. And I mean, I guess it sort of remains to be seen. You know, we know that, you know, what NVIDIA does definitely moves, you know, stocks of other companies that are related. And we see that on a global scale. So, you know, we've seen through GTC, you know, companies that have partnerships with NVIDIA get some investor confidence or some buying into their stock. I see no reason why we wouldn't see more buying into certain U.S. companies sort of based on this news and, you know, going forward there. I've already seen certain analysts trying to talk about the companies that will be benefited by Claw, OpenClaw, the Claw 6.

6:19We'll see if that catches on Bloomberg's Carmen Reinecke. Thank you very much indeed. Now, NVIDIA CEO Jensen Huang was indeed articulating this projection for a trillion dollars plus in AI chip sales. And the fact that, of course, it doesn't include other product offerings. Now, we've already got the signal of the upside. Bloomberg Intelligence noting that this reinforces confidence in AI demand through 2027 and NVIDIA's market leadership. Let's get more on that with Kim Forrest, CIO of Boca Capital Partners. Look, we're used to Jensen Huang being optimistic. Are you buying into it, Kim? Kind of, sort of.

6:50I mean, he really is the poster child of AI build-out, right? And for the longest time until this GTC, we've all made the assumption that this is going to happen at large data centers. And that is who the company was serving. Probably the hidden gem in his comments were that only 60 % of the chips that they're selling right now are going towards those large data centers. But then corporations who are trying to figure out maybe developing some in-house uses of this are now buying their products. And I think that's really interesting and kind of takes a little pressure off of the company because it isn't solely dependent on, you know, what CoreWeave and Microsoft and, you know, the rest of the gang are buying.

7:40Perhaps it's not just about GPUs, CPUs, even LPUs. It's actually about the software side. How much did you pay attention to NemoClaw, for example, the way in which it seems as though Jensen Wang's trying to get in on the enterprise desire to have safe agentic AI. Right. And I, you know, I talk to a lot of people in my job and I have heard more and more companies rolling out agentic services for their employees, making them more productive. Now, you know what the spending on that is going to be, it's anyone's guess. I am going to point back to the dot com era, which it wasn't just about pets.com and stamps.com and all that kind of goofy stuff.

8:24But rolled into that was the Y2K conversion that a lot of companies were undergoing. And one of the flaws in thinking by investors during that time was that spending was going to go on in perpetuity. What companies were spending on IT for that Y2K conversion was thought to, you know, it will bloom and blossom into other areas and it didn't happen. And I think this is a warning for this technology as well. I've seen some really goofy estimates that, you know, companies are going to be spending on this, you know, in perpetuity in the trillions. And that's really not how technology works. People want an end to it and they just want to use of the build out and they just want to use the technology for productivity.

9:09So investors beware. Well, how therefore should the warnings to investors be about in perpetuity, the pricing of memory going ever higher. At the moment, we seem to be getting endless calls that this is going to be at least until maybe 2030, but there's got to be demand destruction, and that's going to be focused on in Micron's numbers after the bell. Exactly. And Micron is a really great example of this, right? Because they had been participating in an, I love to say this word, oligopoly of about six companies that were making NAND and DRAM memory, right? And what would happen was somebody would bring on a new supply and that would just kill NAND prices because it was kind of a commodity.

9:56Well, even though high bandwidth memory is a gating factor now for a lot of these AI build-outs, at some point, we're going to go back into that boom-bust cycle, even though it's exotic and in demand. So I think that Micron just announced that they're adding capacity to a Taiwan plant. And, you know, look for the other players in this area to start doing that as well. And again, it's not going to go upwards to the right like it has been, the demand or the pricing, you know, because we're going to have supply demand here entering into this. And these are even a smaller oligopoly of about three players right now that are making this high bandwidth memory.

10:46How much have these stopped pricing in already the enthusiasm here, Kim? Because we're seeing Micron rally into its numbers. Are people already expecting just killer results? And what more can the CEO really talk about? Absolutely. I mean, they are expecting killer results. But the physical world is going to impact their, you know, results too, because there's only, you can only ship what you make. And they are running up, everybody in this industry is running up against, you know, supply problems. And you can see that as the chip builders are complaining about it. So I would be, I am very enthusiastic about Micron for the long haul.

11:30I think they're a great company. But in the short term, I wonder, can they ship enough to satisfy investors' demand? And I guess tonight we'll see. We've also seen perhaps a slight quietening of the anxiety around the AI trade just from a can we afford it? Will it really come? Do we need this level of data center build out perspective, Kim? Where is the anxiety right now for you when it comes to the still optimism we see baked into the stock market? Sure. Well, I have some real questions about how much capacity is needed. While I'm a huge bull on AI, I understand what it can do. I am not still convinced that large language models are the way forward forever and ever.

12:16Amen. I think they've done wonderful things in solving natural language processing, but I don't know that that is what we're going to do in, let's say, five years. So my fear still is that we are building, our investors are building their expectations on what they know today. And I think things can change very, very quickly with innovations like, I don't know, OpenClaw or whatever it is, where I'm sure companies are using less processing power and getting more bang for the buck. Unpredictability in the stock market. That's exactly what Howard Marks is calling out today when it comes to AI. Kim Forrest, CIO of Boca Capital Partners.

12:58Great to have some time with you. Now, coming up, we're going to be speaking with Tarek Mansour, Kalshi CEO and co-founder, as after Arizona filed criminal charges against the prediction market platform. More next. This is Bloomberg Tech.

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14:25Arizona has filed criminal charges against Kalshi, accusing the company of operating an illegal gambling business. Lumeig's Tim Stunovic joins us now with Kalshi co-founder and CEO. Tim, take it away. We're joined by Tarek Mansour. He's the CEO and co-founder of Kalshi. Tarek, good to see you. Thanks for joining us on this. Look, even though other state regulators have taken steps to crack down on what they say is unlicensed betting on Kalshi's site, Arizona appears to be the first to escalate to criminal charges. What is your response to these charges? Look, I mean, these charges have nothing to do with gambling or the merits.

15:00If it was about gambling or the merits, they would let the judicial process run its course in the federal courts. You know, five days ago on Thursday, Calci filed suit against Arizona in federal courts on the merits on whether Calci is subject to exclusive jurisdiction of the CFTC. And, you know, we're confident in our position and wanted to let the court process play out. And instead of letting that happen, the Arizona attorney general decided to subvert the judicial process and weaponize it and go to state court and file these criminal charges, which we view as meritless and baseless. We see this as a total overstep, and we look forward to fighting it in court.

15:34Well, experts are saying this could be the first of many charges, such as these, from other states, too. How does it change your legal strategy? Well, this is the whole point of federal preemption. So this is not about Cameron. The charges that the attorney general filed are not about gambling. They're not even about sports only. They're about prediction markets writ large. It's just attacking the entire business model. And nothing prevents from the same attorney general or others from fighting the same criminal charges against derivatives markets writ large. They could file the same exact charges under the same analysis against CME or NASDAQ.

16:07And that's the whole point of federal regulation of these financial exchanges is to prevent this sort of chaos. and these sort of attacks on these businesses that could be political in nature or other. And that's a very important distinction. Well, I read the charging document from the attorney general. It has 20 charges. They're mostly about betting and wagering when it comes to sports. There's some election stuff in there. Would you ever consider limiting your business in Arizona or other states to things that these AGs don't seem to have problems with, like economic data, the price of Bitcoin, what markets are going to do?

16:42Predictions around those things. Look, I mean, the AG also claimed that we have war markets, which is incorrect. It's either flat out the lie or it's misinformed take, which is unfortunate for someone filing criminal charges against the company. What's more important here, again, is this is not about the merits. If it's about the merits, let's let the judicial process run its course in federal courts. This is about something other than the merits, which is what I'm focused on. I don't know what the AG is focused on, but, you know, she is up for re-election. You know, it does, they did some press.

17:13It does seem to be making some buzz. But what I'm really focused on is building a great product for our millions of customers, out of which close to 400 ,000 are in Arizona, and fighting any of these baseless cases in courts, which we're going to continue doing. So you're fighting the cases. As I mentioned, Arizona is not the only state to take issue with your business. What happens, ultimately, if courts do side with states? What does it mean for the future of your company? We believe in the rule of law, right? We will always abide by court decisions. The law applies to us, but it also applies to the government, including state governments.

17:49And that's a very important thing, right? This is really not about our business model. Again, if it was about our business model, we would be focused on the federal courts and the lawsuit about the merits. This is a broader attack. and, you know, many states have sided with us and have granted us a preliminary injunction agreeing with our legal analysis. We have spent four years getting regulated by the federal government and we have a federal government in the CFTC that is coming strongly in favor of our position. Filing these charges is a total, total overstep and an overreach from an AG that's up for reelection and we find that unfortunate, but we will stay focused on what we do best, which is building a great product.

18:31So certainly the CFTC, We know where the CFTC stands and we know where Mike Selig stands on this. We don't know where courts stand on this. And I'm wondering if we see a state like Nevada, for example, block access to your business, what will you do? Will you continue to operate or will you say, okay, we're not going to operate in Nevada? Well, first of all, let's get to that point and we'll have to make a decision as a company what we do. What I can reiterate is we will 100 % abide by the law. That's what we will do as a company. It's always been our position. That's why we spent four years getting regulated up front, regulatory first as a company, and always abide by the law.

19:14But what I always say, the law applies to us as much as it applies to the government. And when government oversteps the law and goes out of bound, we're going to fight that in court, which we look forward to. How long does that process take? Because it seems like there's a regulatory limbo happening. It's almost like your legal team is going to have to play whack-a-mole with all these states that are filing suit or bringing criminal charges. How long is this going to take? And gladly we have a legal team to handle these types of things and what they're going to be focused on, and maybe it's a question for them.

19:43I mean, look, whatever long it takes, we're going to fight for prediction markets. I spent eight years building this company, four out of which, half of which, are getting regulated up front. I really believe in this marketplace. I'm very excited about the growth that we're seeing. It's one of the fast-growing companies in America right now. And so what I'm going to be focused on is keep building a great product. And that's what's sort of most important for me. The more important sort of question is, you know, when it comes to this is not really about, you know, whether this is gambling or not.

20:10It's not really about state versus federal, which are both coexisting and both growing, both models. This really is turning into sort of some special interest that like the status quo. The status quo is working very well for monopolies, but not for the consumers that are flocking to prediction markets right now, which we're going to keep fighting for. Tarek, there is this perception, though, that people think this is gambling. An Ipsos survey from just a few weeks ago, for example, shows 61 % of adults say prediction market trading is closer to gambling, 8 % say it's closer to investing. So there is this public perception that doesn't necessarily match with what you say the platform is.

20:48How do you respond to that, and how do you battle that? Like, how is this not gambling? I haven't really looked at these polls. you know the thing I will say is there's always been a battle of whether financial derivatives are gambling. Grain futures were called gambling in the 1800s and there was a Supreme Court decision that you know said even though there is speculation these you know products have financial are structures of financial markets and thus are going to fall under financial market jurisdiction. So I always say this you know whether something feels and looks like gambling doesn't necessarily make it gambling.

21:20Speculation exists in all financial markets. If we're going to take a line that speculation is gambling, then the stock market with retail participation is gambling. Then buying options for retail or zero data expiry options is gambling. Then retail buying crypto is gambling. The more important line and the historical line that we've been taking under the law, but also as we think about it societally, is the business model a gambling business model, which is a model where the revenue of the business and the profits are equal to the customer's losses, in which case the incentive is to promote more losses and block the winners, or is it an open, free, and fair marketplace where people can enter in and out freely and transparently, which is a financial exchange in which Kalshi falls under.

22:00Tariq Mansour, Kalshi co-founder and CEO. Tariq, always good to speak with you. Thanks so much for joining us. Caroline, back to you. Fantastic interview, Tim. Thanks for bringing it.

22:16The Trump administration is dialing up efforts to oust anthropic from all federal agencies, saying the U.S. government has reason to question whether the AI firm is a trusted partner after the company asked for limits on how its technology was used by the Department of Defense. Let's get the latest on this saga by Bloomberg's AI reporter Rachel Metz. This is now not just in the public court of the media. This is going to the actual court for a fight out. Yeah. So as part of this fight between Anthropic and the federal government, Anthropoc has filed two lawsuits, and the one in California has a lot of action happening.

22:55Yesterday, the federal government said, we are going to fight. We think that Anthropoc's technology became an unacceptable risk, essentially, to the military because Anthropoc would not agree with a change to its contract that the military wanted. earlier this year. Emil Michael, he's the U.S. Undersecretary of Defense for Research and Engineering, and has really sort of been the public voice of this. And he's talking about how there was hostility thrown around by Anthropic during the negotiations, he feels. And their fear, it seems to be, is that in some way the technology can be manipulated.

23:36If it remains within federal use, Anthropic, if it feels its red lines across, could just go in there and change the way in which the technology works. Is there going to be grounds for this, Rachel, as a legal argument? I mean, I think that that is really alarming, Sunni, right? Like the idea that if you could be using technology in a warfighting situation, and then the company that has built the technology could do something about it. For Anthropics' part, they said in a statement, Dario Amadei, Anthropics CEO, said in a statement in February, the company has never done something like that. And really what the company wants is just some specific limits on how its technology is deployed, while the military is saying, we want to be able to use that technology for any lawful purpose, something that Anthropic, it alleges, refused to accept due to its usage policies for Claude.

24:30Really, they're talking about their longstanding commitment to harnessing AI to protect our national security is what Anthropic is saying. How is this affecting or could affect the business briefly, Rachel? It sort of could affect it in two different ways. On the one hand, this has seemed to be a huge boost for Anthropic, especially as a consumer product, which typically it is not thought of as a consumer product. It's Chatbot Cloud. But the app has gotten extremely popular, big boost in popularity. And at the same time, the company says this could be hundreds of millions or even billions of dollars in damage.