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00:00Dan, I do want to start off with where this sort of investment spree in the air space stands right now, given what we learned out of Nvidia last night and what we're learning in the moment right now out of companies like Dell. Well, I think you're at this interesting crossroads where if you think about some of the things we've heard over the past two weeks, you had Sam Altman, the CEO, Openai, come out and say, we're in an air bubble. You have a catchy beat, which they released really disappoint or a lot of users actually went back to Churchy Beat for from catchy Beat five that came out. You have that MIT study out that said 95% of enterprises that were investing in AI weren't seeing any return. And so and then, you know, the final one is Metta, which was spending money on air researchers like they were, you know, Major League Baseball pitchers. They actually went into a hiring freeze. So you had a massive surge in air spending since the end of 2022 when we heard about this thing called GPT. And so I think you're getting to the point now where it's going to get a lot more interesting, where you have to start to see some were turning that and the results from from in video last night, if you really look at it were a little bit on the disappointment side. I mean, it's amazing for stock coming in as well as it did because they actually missed Wall Street's estimates for data center revenues, not by much by just 2%. That's the first miss they've had since we ever heard about this thing called chat GPT. Right. In 2022. So, yeah, it's going to be more interesting between now and I think the end of the year. Well, I am curious about that. And we should point out, I mean, we're coming up on the three year anniversary of that. I think I was late November 2022, at least when it came to the public's consciousness of it. And we did hear Jensen Wong and his CFO talk a lot about this on the conference call. And one day component of this, though, has been the idea, at least in their characterization, that their future growth is at least right now kind of somewhat dependent, not so much on the companies buying their stuff, but on whether the governments here in the U.S. and around the world are going to allow it to sell its stuff where it wants to sell its stuff. Does it concern you that at least as of today, it basically has no market in China for its advanced chips? Well, here's the good news. There was no revenues in China in the last quarter, so there's no real downside from that. It's all upside, as they said on the call when they gave the guidance, which was just about, you know, a percent above where consensus was, that guidance was predicated with no China revenues in that guidance. And if they get China revenues, they believe that that'll add an extra 2 to 5 billion to that guidance that they gave, which would raise it by about 6% or so. So it's all upside if you get it. If you're asking from a longer term perspective, obviously, the more the U.S. puts pressure on China and we've heard this over the last couple of weeks, the Chinese governments encouraging their companies to go ahead and buy domestic Chinese products, whether it's deep sea on the software side or chips from a send to instead of in video chips. The government would like Chinese companies using Chinese products for obvious reason, because they don't want them dependent on U.S. companies for their technology. So from a longer term basis, China's pushing toward self-sufficiency. This just accelerates the process. And if we're not willing to sell them BLACKWELL chips, that's just going to accelerate it even more. And so that's kind of something you have to think about for the ultimate market share potential for Nvidia in China and every other company that wants to sell them to China. I'm curious your thoughts on kind of the other players in this space. I mean, we just got Dell earnings. Obviously, they've been a big beneficiary at the data center build out. There are a lot of other companies that have benefited from the infrastructure buildout, whatever's going on with Nvidia, specifically, whatever's going on with advanced chips. No one seems to think that this AI buildout is somehow coming to a halt, that it will continue. Are are you in that camp? Well, I'm not. Well, it depends if you're talking short term or long term in the short term. I've been talking about or I start talking about mid-last year, how you are going to go through this plateauing or digestion phase and training demand. And you kind of saw that. And what I mean is if you go back and you look at what happened when the three biggest hyperscalers so Microsoft, Amazon and Google reported their results for the June quarter of 2024, the revenue estimates all went down for the September quarter of 2024. And when they reported the December quarter of 2024, the revenue estimates for all three of those companies went down again for the March quarter of 2024. Then you had inference demand would really start to pick up. So you had, you know, companies like Google say, hey, we're seeing 50 times more token processing in the month of May versus a year ago. And Google talked about, you know, or sorry, Microsoft talked about five times more tokens processed in the March quarter versus a year ago. And then they started to put up pretty decent numbers as far as inference demand, You know, the stuff it takes to generate your answers overtook the training demand. And so that list kind of helped transition that baton. But if MIT is right and 95% of the enterprises investing in AI are seeing zero return, yeah, that's a problem. One year, you know, almost three years into this A.I. buildout since we heard about chatbots at the end of 2022.

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Dan Niles Reacts to Dell, Nvidia Earnings

Dan Niles, Founder & Portfolio Manager at Niles Investment Management, says the US is at a crossroads, while Sam Altman warns of an AI bubble, an MIT study found 95% of enterprises investing in AI saw no return. He tells Romaine Bostick and Scarlet Fu on “The Close” that with the surge in AI spending, investors now need results. (Source: Bloomberg)

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