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Bloomberg Daybreak: US EditionNvidia Fails to Impress Investors; Supreme Court Keeps Trump Foreign-Aid Freeze
Bloomberg Daybreak: US EditionNvidia Fails to Impress Investors; Supreme Court Keeps Trump Foreign-Aid Freeze
Nvidia Fails to Impress Investors; Supreme Court Keeps Trump Foreign-Aid Freeze
Update: 2025-02-27
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On today's podcast:
1) Nvidia Corp., the chipmaker at the center of an AI spending boom, delivered good-but-not-great quarterly numbers on Wednesday, drawing a muted response from investors accustomed to blowout results.
2) Chief Justice John Roberts temporarily let President Donald Trump keep freezing foreign-aid payments while the US Supreme Court weighs whether to lift an order that would require disbursement of as much as $2 billion.
3) Two-time Academy Award-winner Gene Hackman and his wife were found dead at their New Mexico home on Wednesday, the BBC reported, citing local police.
See omnystudio.com/listener for privacy information.
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00:01:00
Bloomberg audio studios, podcasts, radio, news.
00:01:10
Good morning, I'm Nathan Hager.
00:01:12
And I'm Karen Moscow.
00:01:13
Here are the stories we're following today.
00:01:15
Karen, we begin with the latest reaction to the earnings report investors around the world we're bracing for.
00:01:20
It has been volatile, but shares of NVIDIA have turned higher.
00:01:24
They are now up three quarters of 1% in early trading.
00:01:27
The chipmaker at the center of the AI spending boom delivered good, but not great, quarterly numbers.
00:01:33
It's drawing a muted response from investors who've been accustomed to blow out results.
00:01:37
We get more from Bloomberg's Tom McKenzie.
00:01:39
It's about expectations, and it's also about whether or not this is a company that, by the way, in the last five years, has only missed quarterly results once and this time was not a miss.
00:01:47
Again, it was a modest beat.
00:01:48
The question mark is, to what extent the huge revenue growth that we've seen from NVIDIA in the last two years is starting potentially to peak?
00:01:56
How much further can they go in supplying these chips and continuing to generate the, frankly, eye-watering growth, almost unprecedented growth that we've seen from one individual company in the months and quarters ahead?
00:02:07
And that question has not yet been resolved, and it hasn't been put to bed by the results that we've had out.
00:02:13
Bloomberg's Tom McKenzie says NVIDIA is putting its quarterly sales at about $43 billion that is slightly above the average analyst estimate.
00:02:20
Well, Nathan, many analysts pointed to a disappointment with NVIDIA's gross-poffit margins.
00:02:26
Here's Angelo Zeno, vice president of equity research at CFRA.
00:02:30
The gross margin number was probably the one black eye as far as where we kind of were looking at the guide inside of things.
00:02:38
It was definitely a disappointment.
00:02:40
I think when you kind of especially look at the trajectory of gross margins over the last couple of quarters, it kind of hit a peak run rate of about 78% in the first half of calendar 2024.
00:02:51
So that the margins continue to compress here going into the April quarter.
00:02:56
The good news is we do expect that to essentially be the trough of the cycle here in the April quarter.
00:03:02
CFRA's Angelo Zeno also says Chinese start-up deep sea, Kaspark fears that champ-bots can be developed more cheaply, potentially reducing the need for NVIDIA's powerful chips for AI.
00:03:13
In the meantime, Karen, we have some sad news to report this morning, the death of a Hollywood legend, Oscar-winning actor Gene Hackman and his wife were found dead in their new Mexico home.
00:03:24
Their dog died as well.
00:03:25
Authorities did not release any details of the circumstances of their deaths, but they do say foul play is not suspected.
00:03:31
Gene Hackman appeared in more than 80 films, including the French connection, unforgiven, and Hoosiers.
00:03:36
He was 95 years old.
00:03:38
Well, Nathan, let's turn now to some breaking developments on the Trump administration's push to freeze foreign aid payments.
00:03:44
We get the latest.
00:03:45
With Bloomberg's John Tucker, John Good Morning.
00:03:48
And good morning, Karen.
00:03:49
Chief Justice John Roberts has handed President Trump a victory.
00:03:52
At least for now, he temporarily blocked up to $2 billion in foreign aid.
00:03:58
Roberts paused a lower court's order that had lifted the administration's freeze on foreign assistance.
00:04:03
The humanitarian groups say this freeze is having a devastating impact, upending hundreds of projects forcing USAID partner groups to lay off or furlough thousands of U.S.
00:04:14
workers and putting people who depend on the assistance at risk of disease and even death.
00:04:19
The groups say the money includes payments for work already completed.
00:04:23
The humanitarian groups challenging the freeze now have until Friday afternoon to respond.
00:04:28
I'm John Tucker, Bloomberg Radio.
00:04:29
Okay, John.
00:04:30
Thank you.
00:04:30
President Trump is warning federal workers who haven't responded to Elon Musk's email asking what they did last week.
00:04:36
They could be out of a job.
00:04:38
I think it's a good idea because, you know, those people, as I said before, they run the bubble.
00:04:43
Even a lot of people that have not responded to which are they going to do they exist?
00:04:47
Who are they?
00:04:48
And it's possible that a lot of those people will be actually fired.
00:04:52
In cabinet meeting remarks heard on Bloomberg Radio President Trump spoke, after the White House told federal agencies to submit large-scale workforce reduction plans by March 13th.
00:05:02
The president says the environmental protection agency is looking into cutting up to 65 percent of its staff.
00:05:07
One agency, the National Oceanic and Atmospheric Administration, is putting together a list of workers who have yet to respond to Musk's email.
00:05:15
Now, Nathan, the latest on Trump's trade war, the president says tariffs on products from the European Union will be 25 percent.
00:05:23
In his first cabinet meeting, he used strong language to attack the EU.
00:05:27
It was formed in order to screw the United States.
00:05:30
I mean, let's be honest, the European Union was formed in order to screw the United States.
00:05:35
That's the purpose of it.
00:05:37
And they've done a good job of it, but now I'm president.
00:05:40
While Trump's proposal for a 25 percent tariff on the EU is new, officials later clarify that all options are being considered on whether those would affect all exports from the block or only certain products or sectors.
00:05:52
And we have breaking trade news, crossing the Bloomberg terminal, Karen.
00:05:55
Officials in India are exploring ways to lower tariffs on a wide range of imports, including cars and chemicals, in a bid to evade President Trump's threatened reciprocal levies,
00:06:05
sources tell Bloomberg news officials in New Delhi are discussing reducing duties on automobiles, agricultural products, chemicals, and critical pharmaceuticals.
00:06:14
Well, Nathan Trump's announcement on EU tariffs come as UK Prime Minister Kier Starmer heads to the White House to meet with the president.
00:06:22
We got to learn it.
00:06:23
It is with Bloomberg, James Wilcox, good morning, James.
00:06:26
Good morning, Karen and Nathan.
00:06:28
Since the Second World War, the UK has framed itself as having a so-called special relationship with America.
00:06:33
So with Europe's leaders scrambling to change Ukraine's fate, Prime Minister Kier Starmer's visit to the White House today is a test.
00:06:40
How strong is that alliance?
00:06:41
And will Starmer be able to sway a US president who has been willing to upend transatlantic relations?
00:06:47
Watching France's leader Emmanuel Macron's trip this week, Starmer's aides told Bloomberg they would be delighted if they can get through the week without any public disagreement with Donald Trump.
00:06:57
In London, James Wilcox, Bloomberg Radio.
00:06:59
All right, James.
00:07:00
Thank you.
00:07:01
And Bloomberg will bring you live coverage of the news conference with President Trump and Kier Starmer scheduled to begin a 2pm Wall Street time here at on Bloomberg Radio and on the Bloomberg podcast page on YouTube.
00:07:11
Karen Secretary of State Marco Rubio is laying out a strategy for managing Russia's relationship with China.
00:07:17
And as he wants to dilute ties between the nuclear powers, but not have them at each other's throats.
00:07:22
The big story of the 21st century is going to be US-Chinese relations.
00:07:26
And if China becomes a permanent junior partner to China in the long term, when that you're talking about two nuclear powers aligned against the United States.
00:07:34
Secretary of State Marco Rubio tells the conservative outlet Bright Bart News, Russia wouldn't be able to improve relations with the US even if it wanted to, if it became completely dependent on China.
00:07:44
Well, Nathan Russia is using ties with North Korea to boost its war effort in Ukraine.
00:07:49
According to South Korea's Yamaha news, North Korea has sent more than 1,000 more troops to Russia this year.
00:07:55
That's on top of the thousands deployed last year.
00:07:58
Back in Washington, Karen, the Trump administration's making a move that could affect the next flu season.
00:08:02
It's canceled a meeting of the Food and Drug Administration's Vaccine Advisory Committee that had been tentatively set for March 13th.
00:08:09
The committee was planning to discuss how to make next season's flu shot.
00:08:13
It's usually a routine step to ensure that manufacturers have enough time to produce the proper doses.
00:08:18
And Nathan Bloomberg News has learned US health officials are re-evaluating a $590 million dollar contract for bird flu shots that the Biden administration awarded to Moderna.
00:08:28
Their review is part of a government push to examine spending on messenger RNA-based vaccines and shares a Moderna they're down more than 4%.
00:08:41
Now for a look at some of the other stories making news in New York and around the world.
00:08:44
And for that, we're joined by Bloomberg, Michael Barr, Michael Goodmorning.
00:08:47
Good morning, Karen.
00:08:48
Hamas says it is ready to negotiate the next phase of the ceasefire in the Gaza Strip.
00:08:54
After handing over the remains of four hostages in exchange for the release of hundreds of Palestinian prisoners held by Israel, the truce is set to end this weekend.
00:09:03
Former US Deputy Assistant Secretary of Defense for the Middle East, Mick Mulroy.
00:09:07
As they happen to agree to enter into the second phase, that means the cessation on hostilities could be over and fighting could resume.
00:09:14
And we've seen steps taken by the IDF, both mobilizing units and calling up reservists that indicate that might actually happen.
00:09:23
A school-aged child in Texas has died of measles and outbreak in the state has grown to more than 120 cases.
00:09:30
Almost all the cases are in unvaccinated patients, epidemiologist Dr.
00:09:34
John Brownstein.
00:09:35
It's not just a raft.
00:09:37
It can cause pneumonia, brain swelling, even death.
00:09:39
We're seeing that now in Texas.
00:09:41
It's a safe, effective vaccine.
00:09:43
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00:09:47
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00:09:49
Allies, a former New York governor, Andrew Cuomo, have formed a super PAC.
00:09:53
It comes just days before Cuomo is expected to enter the New York mayoral race.
00:09:58
And again, recapping.
00:09:59
Academy Award winner Gene Hackman and his wife were found dead at their New Mexico home, along with their dog, police do not believe foul play was a factor.
00:10:06
Hackman was 95.
00:10:08
Global news 24 hours a day and whatever you want it with Bloomberg News now, I'm Michael Barron.
00:10:12
This is Bloomberg, Karen.
00:10:13
All right, Michael Barron, thank you.
00:10:15
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John Good morning.
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Good morning, Karen Nixon.
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Sixers at the Garden, the two teams at a memorable playoffs series last year.
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00:12:35
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Colorado Victory Mads card to winning on the road.
00:12:57
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John's got 24 points of RJ Lewis and one at Butler, 76 to 70.
00:13:05
The Red Storm have clinched at least a tie for the Big E's regular season title.
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When Saturday at the Garden over Seton Hall and they win it outright, the NFL Flair's Association had their rank and file do a survey of their employers that dolphins got the highest grades.
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The Cardinals, the worst when it came to team ownership, the only owner that got a great of an F was the Jets, Woody Johnson, John Stash L.R.
00:13:26
Bloomberg Sports, Karen Nathan.
00:13:30
Coast to coast on Bloomberg Radio nationwide on Series XM and around the world on Bloomberg.com and the Bloomberg business app.
00:13:39
This is Bloomberg Daybreak.
00:13:41
Good morning.
00:13:42
I'm Nathan Hager.
00:13:43
The morning after Nvidia earnings day, the most hotly anticipated earnings report arguably of the week, if not the month.
00:13:50
This morning, it seems investors are still trying to figure out how to react to it.
00:13:54
The AI chip giant came out with a sales forecast that beat the average Wall Street estimate, but not the blowout result that a lot of investors have gotten used to over the last couple years with this company.
00:14:05
More reaction, let's bring in Dan Ives, global head of tech research at Wedbush Securities.
00:14:10
Dan, always great to talk with you particularly about AI, your reaction to these results from Nvidia.
00:14:18
Good morning.
00:14:19
Hey, it's bullish.
00:14:20
I mean, if you look at black while the next generation chip, 11 billion, that's basically 3 to 4 billion.
00:14:26
I think most of the street works, but even the bulls, the deep-seek fears, you're not seeing it.
00:14:33
It's smoked new fire.
00:14:35
And I think this is one is the street digestus and the stocks green today.
00:14:40
The forecast for $43 billion in sales this quarter, as I mentioned, just above the average estimate, but there were some analysts who were calling for something like $48 billion or more.
00:14:53
Does Nvidia need to continue to produce the kinds of blowout results that investors had been getting used to?
00:15:02
Yeah, I actually don't think so.
00:15:04
We were at that point in terms of the hyper growth, going from $1 trillion to $3 trillion.
00:15:10
But now, for this stock, $175, 200, you're not going to need these massive blowouts.
00:15:16
It's actually the trajectory is so historic because they're the only game in town when it comes to these next-gen chips.
00:15:25
And there's only one red ones, Godfather Bay, Agents, and Nvidia.
00:15:28
I think you start to look at $6, $7 earnings next, you know, call one, two years.
00:15:33
And there's a stock that could have it two in front of it as we go into next year.
00:15:37
You say that Nvidia's still the only game in town.
00:15:40
There had been a lot of questions raised about deep-seek.
00:15:44
It sounds like you're putting deep-seek on the back burner here.
00:15:48
But how much of a threat could deep-seek be down the line if it continues to produce an AI model that is potentially much lower cost than Nvidia?
00:15:58
Yeah.
00:15:59
Look, deep-seek is a great model, but so is Chad GBT and so as well.
00:16:04
And there'll be other models and they'll get cheaper.
00:16:07
But for large-scale enterprise deployments, there's only one chip that you're using.
00:16:13
It's Nvidia.
00:16:14
And I could also argue as the models get cheaper, it's more GPU capacity.
00:16:19
It's actually bullish for Nvidia.
00:16:22
So I don't view it that way, but remember, look right now, everyone trying to find a crack in the arm or AI bubble, remember a lot of the bearers they've missed, you know, this massive run intact for the last three years,
00:16:33
they're not finding it.
00:16:34
I actually think, you know, this is the fuel for really the book is not just Nvidia, but really the broader AI revolution across the rest of the tech mags have in others.
00:16:46
So do you continue to see the hyperscalers, these big companies continuing to spend on AI, the way that they have tens of billions of dollars every quarter.
00:16:56
We've seen some companies talking about at least trying to scale back some of that cat backs.
00:17:01
Look, it's, you have 325 billion of cat backs between, you're called the top six tech players.
00:17:09
That's a hundred billion in Chris Year of a year.
00:17:11
Well, that moderately going into next year, of course.
00:17:15
But it's the start.
00:17:16
You're essentially building out a new city and it starts to envy, but then it goes to the hyperscalers, go to the rest of the software, go to the cyber security consumer data centers.
00:17:26
And that's really where this is playing out.
00:17:28
Look, are there certain things like Trump in terms of export controls and some other words?
00:17:33
Of course.
00:17:34
But the reality is that we're talking about once in a 40, 50 year build out.
00:17:38
We've got Nvidia in the pre market trading around $132 a share.
00:17:43
You adjusting your price target for Nvidia?
00:17:47
$175 base $200, and I ultimately think this is one where, you know, there's a lot of worries going into this.
00:17:57
They produce flying colors in terms of coming out of this and now you, now you digest what this means going forward.
00:18:04
China's going to be a player.
00:18:06
But ultimately, you know, Nvidia continues to be that only game in town when it comes to next-gen chips.
00:18:13
30 seconds left, Dan, how much does Nvidia have to get past Wall Street estimates to get to that $200 bull case?
00:18:21
Look, I think if they continue in this trajectory, especially with Blackwell, I mean, I think you could be there next, you know, called two, three quarters.
00:18:30
Bullock haters hate.
00:18:31
That's what happens in video.
00:18:32
They've missed every transmission on tech stock last 20 years.
00:18:35
The missing video were bored.
00:18:37
This is Bloomberg Daybreak, your morning podcast on the story's making news from Wall Street to Washington and beyond.
00:18:44
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00:18:46
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