Preparing for Nvidia Earnings, SpaceX Faces Another Setback
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From the heart of where innovation, money, and power collide. In Silicon Valley and beyond. This is Bloomberg Technology with Caroline Hyde and Ed Ludlow. ♪♪

Live from New York and San Francisco, this is Bloomberg Technology. Coming up, all eyes on $3 trillion Nvidia as it gears up for earnings after the closing bell. Can it profit margins? Whether the Chinese export restrictions?

Plus we speak with the CEO of identity software player Okta following its own earnings posting a conservative forecast. And a SpaceX Starship rocket lost control and disintegrated during a test flight last night, the company's third setback in a row. But first Ed, we check in on these markets. Look, gains disintegrating here too. We're currently off by about two tenths of a percent. Look, we are treading water ahead of the all-important macro event.

whether you think that's the Fed minutes a little bit later today, or whether you think that that is the all-important NVIDIA numbers after the bell, we are on tenterhooks, Ed.

Yeah, Nvidia is a little bit softer, right? Down four tenths of 1% on a year-to-date basis. It's just in positive territory, up half a percentage point. Everyone I speak to, Cara, I think you're right. Nvidia is a macro level event when it comes to its earnings. So let's get right to what we can expect from those earnings later today and bring in Bloomberg Intelligence Senior Analyst Kunjan Spani. In his earnings preview research, Kunjan says investors should expect

a strong quarter and kunjan a big part of that of that is a ramp in gb200 and where those gb200 units are going definitely i mean the demand expectation for gb200 from our channel checks continue to exceed uh what we thought before and one key important point for this earnings is the this is the most noisiest quarter we have seen in terms of nvidia expectations

The 2Q numbers have been brought down to take the impact of the China ban, but there is still a lot of confusion on that magnitude. So we think the beat and the miss on the absolute basis for this quarter should be much less important. Rather, the more important thing should be the second half commentary around the GB300 transition, the clarity on the new China chip, and if bonus points, if we can get some color on the 26th demand outlook from Jensen.

And from Colette Cress, the CFO, how much do you need to hear from her about the margins going back to a 70% or so level at the moment? Because they have been under pressure, Kunjan.

That will be a lot more important. We think margin will take a headwind impact just like AMD did in either this quarter or next quarter. But that should be just a one-time temporary impact. But you're right, if they can give any commentary in the confidence of getting back to the mid or even low 70s by Q4, that would be absolutely positive.

Kunjan Sabani, it's going to be busy. We thank you so much for Bloomberg Intelligence. Let's discuss now Nvidia's expectations and how they fit in with the broader market, the macro perspective. Ayoko Yoshioka joins us, Portfolio Consulting Director at Wealth Enhancement Group. And look, this is a macro event. How do you manage what Kunjan has clearly said is going to be noise on the first footing of the numbers?

Sure, Caroline. I think we put this into short-term versus long-term context. I think in the short term, yes, we might have a noisy quarter and maybe this does not allow Nvidia stock to break out of its sort of 100 to 150 range that it's been in over the last year. But I think over the long term, I think what we're all looking for is that macro impact of the AI theme. Is it going to continue? Is the demand really there? And I think the answer is going to be yes.

In the short term and the long term, for me, the question is what happens for Nvidia in China.

Absolutely. I think everybody's aware of the H20 export ban and whether or not Nvidia is going to potentially come up with a new redesigned chip for that market. I think they're likely to work on it. They've done it before. And I think that's going to help. But that's the big question is what is China revenue going to look like for Nvidia over the next six months as well as next year?

And Ayako, what's notable is Ed said at the top, this is a stock that yes, you can see has rebounded hard since its lows in April, up 40%, but basically flat on the year. And so how are we thinking about the AI trade more broadly at this moment? Geopolitics, does that counter what has been the bubble driver of the last couple of years?

Yeah, I don't know if geopolitics really counters it. I mean, clearly the tariff situation is weighing on a lot of tech companies as well. And so I think it's contributing to a lot of the noise that we're seeing here. But I think over the long term, we know that the build-out for the infrastructure for AI continues.

continues and you know Nvidia continues to benefit from that. We've already heard a lot about that. Boy the Middle East deals, Saudi Arabia, UAE, what more can Jensen deliver for you today?

just the overall outlook regarding additional use cases, how much are NVIDIA's chips going to be utilized in robotaxis and humanoid robotics? I think those are additional areas of growth that can continue to propel NVIDIA stock higher over the long term.

What is this like for you as a moment in time as an investor? I'm trying to think about something that's analogous. And for me, the earnings call, it's a little bit like Tesla and Elon in that you get the earnings release and you read through it and you think, okay, and then there's a pre-prepared remarks. But actually it all kind of hangs on the Q&A. And this man called Jensen Huang, who people call the godfather of AI, and some people call him something different. Just when you're at your desk, how do you endure that? How do you play it?

Sure. I think we're all listening for just the demand cues, the supply constraints, really trying to understand the longer term nature of this thematic. Cloud computing was something that came about and was very long in duration in terms of its growth, and it continues.

We want to know how long AI's build out is going to continue as we transition from training to inference and how long that continues to benefit Nvidia. Do you pay any attention to the technology story? Like if they tell you we have a new timeline for a product, do you react to it?

Only to the extent that it continues to propel the AI story. I think the more important things that came out were like the NVLink Fusion product that they talked about, just networking and allowing for additional CPUs and ASICs to connect

to the GPUs that NVIDIA produces. I think that allows for the overall AI growth story to continue for much longer, and it expands the total addressable market. So we like hearing things like that. You know, new additional sort of chips, you know, things that will follow

whether it's Rubin following Blackwell, we'd like to hear how that's going and the impact on margins from a timing perspective, but the quarterly fluctuations aren't going to sort of deter our long-term thesis there. And are you fully over the anxiety around DeepSeek? Because today the R1 model has been upgraded, we understand. Did Jensen do enough in terms of clearly showing the inferences where it's at, Ayoko?

I think so. I think we're seeing that across many sort of hyperscalers talking about this. And I do think that the deep-seek story, although it was sort of jarring at the beginning, I think a lot of that really just came out of the fact that it came out of China. I think if it had come out of the United States, it might not have been as jarring. But again, I think this really just sort of expands the overall addressable market.

I think the sensible place to end it on is a sort of chicken and egg debate. What's more important for investors to get a long-term picture on, Nvidia or the hyperscalers and their capex figures? Because we've kind of done a juggle between the two. It's a great question. I think it's the capex spend. One of the things that we continue to monitor is the overall capex spend from the hyperscalers and it continues to grow.

The growth rate has slowed down and we expect that to slow down going forward, but that spend in terms of dollars continues to be very large and that will propel the overall infrastructure and the speed at which we all adopt AI.

Jensen Wang would disagree with you. He'd say, I told everyone what I'm doing for five years so they can make better plans. Oyoko Yoshioka, Portfolio Consulting Director, Wealth Enhancement Group, thank you very much. Discover how one of China's largest financial services companies serves 240 million customers with AI-powered solutions. Hear from Ping An's co-CEO and chief scientist.

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Octa shares down nearly 14% today after the maker of identity management software gave a conservative forecast for the futures. Octa's first quarter revenue was up 12% year over year and subscription backlog suggests a longer sales cycle. That's according to our own Bloomberg analysis. We're joined now by Octa's CEO, Todd McKinnon. Let's get the market seep out of the way. This conservative guide is up.

Do you agree with the interpretation that it's conservative? And if so, what made you be a little more cautious? Well, I think we're talking about guidance on very short term. So one quarter is very short term. And so, yeah, we would look at the world right now and we say there's some uncertainty with tariffs and trade policy and economic

the future of the economy in the short term and so we give a prudent guide but that doesn't change our outlook for the even the medium term the long term we're very bullish on the opportunity very bullish on the business and if you look at the q1 numbers we have a lot of reason to be optimistic in q1 over the medium and long term we're talking about identity and access management like that's the field you're in but one tailwind that i keep hearing about is this issue of ai memory and ai agents in other words

if an ai agent is going to be super useful it needs to talk to many other agents but it means the person the human at the center of it has to give away a lot of their information that may be an area where you come in and make it more secure is there an opportunity there well what identity and access management is about is making sure the right people have access to the right information and traditionally that's been business applications web applications mobile phones mobile applications

And what's happening in this AI revolution is that now machines are accessing information more and more than ever. So it's not only about getting the people the right access, but you have to get the computers the right access. And we're very good at that. We have thousands and thousands of customers that trust us every day to make sure that their machines and their

software systems have access to the right information and now AI is turbo charging that. You're getting, we're moving in the industry, we're moving from prototypes, everyone's prototyping these agentic systems and these customer support reps and these sales reps that can work on people's behalf and they're putting them in production and that means they have to have this access to real customer data, real user data and that's where we come in. We can help them do that seamlessly and securely and most importantly make these prototypes work.

And that's what businesses want. They want AI to work for them, and we can help them do that. What about the public sector? How much do they want it? Because I know you've secured some decent deals with them of late. Yeah, it's no different. Every government agency is trying to get more efficient and more effective with their IT, and the AI revolution is part of that. In fact, in Q1,

four of our top ten deals were with public sector agencies who are seeing very robust demand there is for the same reason they need to be secure our business is about identity and what people are understanding is that identity is security to be secure you have to have a good identity system and then when you start to do the agentic workloads and move these move these projects from

prototypes and proofs of concepts into production, you really have to control access to the data and that's what our customers are telling us we can do for them. And of course the drive for Doge for efficiency was about tech adoption but it was also about cost cutting. How much do you think that there is this headwind, this caution around, well maybe a pushback on some of the contracts that you have within the public sector?

Well, like I said, four of our top ten deals and two of the top three deals in Q1 were in the public sector. So what you're seeing, especially at the U.S. federal level, is organizations are looking to be more efficient and more effective. And that means looking at all their spending, but most of their spending is on legacy technology.

So they're managing on-premise software and they're paying massive bills to people to support and maintain that software. And the industry of cloud computing and AI offers a viable alternative. And Okta inside of that is the key layer in securing and managing it. So if you want security and you want efficiency, we're a required thing. And that's what's driving some of the success in that part of the market for us.

Okta has been trading for several years as a public company. When was it founded? Just very quickly. 2009. You just talked about legacy tech. Could you just talk a little bit about what doing business is like in this environment? There are lots of new names in this field. There are lots of new names who want to be your customers and they're kind of used to negotiating with other people they may or may not know in this sort of Silicon Valley orbit.

You've been around a little longer and I just wonder what that's like. Well, I think the most exciting thing about the current age of technology is that we are very established. We have, you know, $2.6 billion of revenue and growing quickly and we're very profitable. In fact, in Q1, we had record profitability. So in our space, we are the clear leader, our space of independent, neutral identity management. And now there's this AI revolution and it's opening up...

vast new markets for every technology company. So it's like, how do you defend what you've done very well while at the same time investing for the future and innovating to making sure you capture this massive new opportunity? It's quite exciting, but it makes us really double down and stick to our past history of innovation and defining the market and extending what we've done into this whole new world. At the top of the segment, we reference subscription backlogs. Why is there a backlog and how does it get...

unfolded. Well we're a cloud service so people pay us a recurring subscription so we prove value to them and they reinvest in us over a period of the contract duration that's the way business works now and it's a good trade-off between value delivered to the customer and a vendor like us being able to capture that value we deliver.

Okta, CEO, Todd McKinnon, we really appreciate coming on and talking back against perhaps some of the narratives around the Doge issues.

Apple set to release a dedicated gaming app across its devices later this year. It's all according to sources. The feature is set to debut at this year's Worldwide Developers Conference on June 9th, just a few days after Nintendo's Switch 2 release. For more, Bloomberg's Mark Gurman joins us now. And is this defence? Is this offence, Mark?

Thank you for having me. Apple's been working on this for quite some time. Over the past few years, they've been trying to push iOS and macOS as better gaming platforms. And, you know, the Mac has come a long way. There are new porting tools for developers to move their apps over from PC to Mac.

But there's still a long way to go. You've seen all sorts of different cloud gaming services and on-device gaming services over the last few years. You've seen some from Google. Microsoft has tried this. And what Apple is trying to do with this app is create one unified place for

where developers can pitch their apps with new editorial content, a unified place for gamers on all of Apple's devices to go to when they want to launch a game, view achievements, view leaderboards, connect with other players online. And so this new service is Apple Games application that will be pre-installed on Apple's devices beginning at the end of this year, will be that new place to do so.

Mark, I've struggled for many years with gaming through Mac OS. I find this so interesting. On the titles themselves, we're not saying, though, that Apple is going to become a developer and publisher of games specific to its own platform, right? It is still a marketplace and a way to monetize access through other people's software and titles. Apple bought a two-person game studio project

I believe the app is called Sneaky Sasquatch. It's one of the more popular games on the Apple Arcade subscription service. So they bought that, but I don't anticipate them to go a lot further than that in terms of in-house games. Maybe they'll buy a few other smaller studios.

But I don't anticipate them to go down the route of developing their own games, investing billions of dollars into that. What I do expect is for this new games app on Apple devices to be a central way where people access games. You know, two-thirds of Apple revenue from the App Store, probably north of $12.

thirteen billion dollars a year comes from games so games is super important they want people playing more games they want people downloading more games they want people buying more subscriptions within games and having a unified place to access all those titles could potentially help with that. Gaming is important to Apple's business model but how important is Apple to the gaming industry just what sort of market share does it have give us the context Mark.

You know, if you think about it, the iPhone is probably the most popular gaming device on the planet. You can now get AAA titles on there, Resident Evil, Fortnite is back on the App Store now after a few year reprieve after that lawsuit hit new levels with the...

I'm going to jump in here, Caro, because I think we had a technical issue on Bloomberg technology, but our thanks to Bloomberg's Mark Gurman. Another story we're tracking, YouTube has spent the past few years trying to make itself the centrepiece of the living room, and now creators are finding themselves making longer shows to meet viewers where they are, in front of

of their TVs, where YouTube is now the TV service of choice for viewers of all ages. Bloomberg's Lucas Shaw is here for more on his Business Week piece that's out today. I found this so interesting in the context of, like, different genres. I think about where I consume and what I consume on YouTube. What is the kind of conclusion reached in this Business Week piece, Lucas? Well, I think for most of YouTube's existence, people thought of it as...

as a short form video service that people watched probably initially on laptops and desktop computers, then primarily mobile phones. And over the last three to five years, there's been a pretty dramatic shift where the television is now the primary device that people use, at least in the US and increasingly in other countries. And as a result of that, or

you know, a little bit of a chicken and the egg scenario, but the length of video that people are watching is getting longer, whether that's a three-hour Joe Rogan podcast or a 25-minute sitcom. And the latter is something that really interested me, because I also think most people think of YouTube as a place for sort of crappy, unscripted stuff. And increasingly, there is scripted programming that people actually watch on YouTube. Slopfest.

That's what you say in the piece. And this idea that it has slop is something that perhaps others in the industry try to portray, but how have they pushed back against that? How are we seeing that reverse in terms of trends or not, Lucas?

Yeah, I mean, look, there's been this ongoing debate as to whether there is quality programming on YouTube, right? They had what were their brand safety scandals a little less than a decade ago where you had ads run against unsafe materials. You had a lot of their biggest stars get in trouble. You had Jeffrey Katzenberg start this service Quibi that was supposed to be, you know, YouTube, but...

YouTube-length videos with sort of Netflix budgets. That didn't work. And the truth is that for most people, what they see on YouTube is quality. You know, if you asked someone who watches Hot Ones, the chicken-wing-eating question show, like, that's a talk show that young people care about a lot more than Seth Meyers, for example.

Lucas, just real quick, I couldn't name though a single YouTube original. Like I have HBO Max because of The Last of Us. I go to Apple TV because of Silo. And that's the reason I have all of these different platforms and subscription bills every month. What's YouTube doing there? Like some name recognition programming, original programming. Well, but have you heard of Hot Ones or Mr. Beast? Yeah. Yeah, different format, but good example, right? Yeah.

So, look, we're not at the point where they're making a Last of Us for YouTube. The budgets are too big for that to make money on YouTube. I think there's a belief that we may eventually get there, certainly with the use of AI bringing the cost down. But that is kind of the big white whale for YouTube, if you will. Or YouTube would tell you that you can still watch The Last of Us on YouTube. You'll just do it via Macs.

and kind of buy Macs from the YouTube Google channel store. The data, it talks. Luca Shaw, so great to have you. It's a great Business Week piece. Welcome back to Bloomberg Technology. I'm Caroline Hyde in New York.

and I'm Ed Ludlow in San Francisco. This is what financial markets look like right now, zeroed in on the technology sector. We are basically, as Caroline said at the top of the show, treading water. We're flat on the NASDAQ 100. We're slightly softer on the Philadelphia Semiconductor Index. And that story is almost solely NVIDIA, which reports earnings after the market close. It's a stock that is treading water right now, completely flat on a year-to-date basis. It is higher.

marginally less than one percentage point and what we're looking for is some sense of in the short term the China story how sales been impacted remember a 5.5 billion dollar write-down in the quarter gone relating to the lack of being able to sell h20 what does that look like going forward car it's going to be an interesting one and as you say that all eyes on that report tonight but fit that attention

That attention is actually spilling over to others in the AI supply chain, Ed, including Navitas Semiconductor, a maker of power-efficient gallium nitride chips that go into everything from laptops to EVs and now data centers. Last week, news of a partnership with Nvidia sent Navitas shares

Absolutely soaring. 164% in a single day. Since then, added more than a billion dollars in market value, tripling its size as the rally continues. And Navitas CEO, Gene Sheridan, joins us now. Gallium nitride, silicon carbide. How is it going to change the world of data centers?

Good question. Well, data centers are completely changing the world as we know it. It used to be data centers required just a few hundred watts per processor or 10 to 20,000 watts in a server rack. That's the building block of a data center. AI is changing that completely. We're now talking about hundreds of thousands of watts and in the future, a megawatt per server rack.

How are we going to deliver that kind of power? Silicon chips just can't do it. They run out of steam. Gallium nitride and silicon carbide can offer up to 10 to 20 times more power and do it more energy efficiently with faster charging, faster power. These are the key technology chips to power the future data center. And Gene, as we mentioned, been selected by NVIDIA for this partnership going forward. How's your supply chain? How's your ability to suddenly meet this level of demand? We have lined up supply chains.

significant capacity. We've seen this coming for the last few years. We've been working on gallium nitride and silicon carbide for over 10 years. We have excellent supply chain partners, TSMC with gallium nitride, XFAB with silicon carbide. Significant capacity available today in six-inch going to eight-inch in the coming years. So we've got a lot of capacity lined up. Now we're working with NVIDIA on the development side. There's a lot to do in development to enable what they call the 800-volt data center. This data center architecture is

It's not only going to save energy and use our chip to make it more energy efficient, it's going to enable that megawatt capability up to 10, 20 times more powerful to handle the future AI processors for the next few years.

Gene, your company's stock's been on a wild ride, hasn't it, since the announcement of the deal, largely by association, probably, right, with the name NVIDIA. But can you give us something tangible? Like, what's the dollar value of this relationship to Navitas? What's the sort of sales growth trajectory just from the agreement you've put in place with NVIDIA?

Well, we're already shipping our high-voltage GaN chips and silicon carbon chips into data centers today. We have about 70 opportunities in the AC to DC converter for the traditional data center of today. That's already grown, and that's going to drive some short-term growth for the company. But this announcement is really about tomorrow. We're going to spend the next year in development with NVIDIA and others, creating the key technology or building blocks for this 800-volt data center, this megawatt server-backed power.

rack power. These systems won't come online until maybe late 26 and really be ramping in 27. So it's not a short-term play, but we do have solid business in the near term that has us already engaged with Nvidia and others. And we're really excited about making this next generation data center happen over the next 12 to 18 months. We said at the top of the show that you've added almost $1 billion of market cap in the last seven trading sessions and the company's values tripled. As its CEO, what's that like for you?

Well, we went public a few years ago as an early stage public company. I've learned to ride the highs and the lows and not get too excited about either extreme. So I think the market's going to do what it's going to do. But we keep our heads down, focusing on building a great next generation power semiconductor business. If we can keep partnering with companies like NVIDIA and

in key segments data center is a top one for us we're also working on mobile chargers we're also working on electric vehicles changing solar inverters partnering up with some of these key guys that's what gets me excited that's what's going to drive our business and we're super excited about the nvidia one to really create these future data centers

Jean, how are you navigating also the politicization of all of this? The idea that people want U.S. data centers, but they're also willing to then go and partner in the UAE and Saudi Arabia and issues around access to China in that way. How are you thinking about the global footprint you'll have?

Yeah, it really is deglobalization in such a big way. I think we're starting from a good place. Taiwan is a great central location, neutral, if you will, to serve the world. TSMC is the biggest and best out there for the gallium nitride chips. Our silicon carbide at XFAB

It's actually manufactured right in the United States in Texas. There's a lot of work to do here in the United States to upgrade the grid. And most of the data centers in the world are concentrated here in the U.S. So made in America for the at the chip level, made in America for the data center and for the power grid upgrades.

It's a perfect fit. But we're not going to stop there. We're looking at bringing up wafer fab and manufacturing partners all around the world so we have geographically diverse footprint so we can deal with whatever the geopolitics are as well as whatever the localization needs are. So there's a lot to do in our expansion. We've got a lot going on to expand that footprint.

Gene, you said this partnership with Nvidia bears fruit late 26, early 2027. Does that mean that you'll be involved in some of the projects Nvidia announced in the Gulf states, Saudi and UAE, and some of its onshoring activity here in the United States, projects like Stargate, for example?

Well, we'll work at the power chip and power module or power supply level. So we create kind of these building blocks. The building blocks that move that power around, allow the power to happen, happen efficiently, keep the data centers cool. Where they take those building blocks, the beauty is I don't have to customize them from one region to the next. They can build these all around the world and they'll ship and move those ships and modules easily without my involvement. So we don't really need to be impacted by those international moves.

Nevertest CEO, Jean Sheridan, thank you so much for joining us on Bloomberg Technology. Caroline. Time now for Talking Tech. Ed, first up, Shein is said to be considering switching up its planned IPO offering, moving from London to Hong Kong. That's according to sources. The fast fashion retailer is said to have shifted its plans because the approved process is dragged. Shein initially planned to list in the United States but was ultimately derailed amid supply chain and labor scrutiny.

Plus, Instacart has named Chris Rogers its new CEO, effective August 15th. He will replace current CEO, Fujisimo, who announced earlier this month that she will leave the company for a newly created role at OpenAI. Simo will remain chair of the board at Instacart.

And a US district judge has ruled that Elon Musk will have to face a lawsuit that claims he wielded illegal power in cutting federal jobs and spending under Doge. Now, while Musk has been the public face of Doge, he's denied he holds a formal position or has any authority to direct agencies to carry out the president's cost-cutting agenda.

We stay with Elon Musk. His SpaceX Starship rocket launched last night but exploded mid-flight, marking the third consecutive setback for the company. Still, Musk seemed enthusiastic despite the outcome, writing on X, a lot of good data to review. Launch cadence for next three flights will be faster. For more, we're joined by Bloomberg's Sana Pashankar, who was up late covering the minute-by-minute highlights

this ninth scheduled test flight I think it's really important right to another context that the super heavy booster as a part of the Starship combined system was a Re-flight it had flown on the seventh test flight and the way that SpaceX is always going to say is that it's a success because of the data gathered give us the kind of high-level details we need to know about mission 9

Yeah, totally. So essentially, you know, everything seemed to be going smoothly at first. The giant rocket thundered off the launch pad at around 6:30 p.m. in Texas. But about half an hour into the flight, the rocket experienced a leak in its fuel tank system, which kind of caused it to lose control and spin out as it hurtled back towards Earth's atmosphere.

And at the same time, it missed one of its key objectives, which was to deploy dummy Starlink satellites because the door to the rocket wouldn't open, which would release those satellites. So it did miss that key objective. As you said, it was able to reuse a booster from a previous flight. So as we've seen in some previous Starship launches, they were able to catch those boosters after launch.

the rocket launch and so that was using one of those previously used boosters which was a first for the company however as the rocket took off the booster actually ended up being lost as well and exploding although they weren't meant to retrieve that one to begin with so

Overall, there was a win with the use of the booster, but they missed a few key objectives. And Sana, what was interesting is we had been expecting an all-Han style talk, right, as well, but that seemingly didn't occur. What are we anticipating in terms of signaling for the next steps? Where do we push forward if they are going to deem it a success story from what they've at least learned on the test?

Yeah, totally. Yeah. So we were expecting an all-hand style talk after the launch and there was just no mention of it, no mention of canceling it or if it would happen at a later date. But yeah, so SpaceX really does...

I emphasize this philosophy of flying, failing, and then fixing it. So that's kind of what Musk was saying about using the data to iterate again, make those fixes, fly more. And so recently the FAA authorized that SpaceX would be able to do more launches. So I think they're really thinking about ramping up the launch cadence, learning more, flying more. And so we can expect a lot more test flights in the future.

Salah Pashanka, we thank you very much indeed.

NATO has proposed including cyber security as part of its new defence-related spending target of 1.5% of GDP. Here in the US this week, there is a House Committee Homeland Security field hearing on the future of America owning the cyberspace. Wendy Whitmore, Palo Alto Network's Chief Security Intelligence Officer, is a witness at that hearing and joins us now in San Francisco, clearly for Western alliances, but also America.

the role of cyber security in the national interest in defense is more prominent. Give me the basics of the hearing and why you have been called as a witness to it.

Yeah, so we're excited that the hearing is happening in Silicon Valley, and the focus of the hearing today is on technology innovation. So I think there's no organization that's doing more of that, especially when it comes to AI, than Palo Alto Networks. And we'll be really focused on what is it that the government needs to do to make security more actionable. And one of those areas is technology.

taking technology and focusing on outcomes. So the president, for example, should have a daily dashboard that shows civilian federal agencies how quickly are they responding to attacks and detecting them. And that should be as transparent as possible. You said the president should have, which indicates to me that in the cybersecurity context,

this hearing is a step in the right direction, but you feel that the administration and our government generally can do more to own cyber security on behalf of the nation.

Well, I think the challenge that I was getting at, and it's certainly within the government, but also within civilian organizations, is security is too complex and visibility is not centralized. And that's really what we're focused on is, hey, let's create technological capabilities that then drive these outcomes so that those answers are clear and precise.

Wendy, that dashboard, I'm so intrigued as to what it would show because if I'm right, the numbers are extraordinary that Palo Alto Networks blocks every day 31 billion cyber attacks. So what ultimately would the transparency look like?

You are right. And one statistic that's I think even more staggering is that up to 9 million of those every day are brand new and have never been seen before. So what we would encourage that dashboard to look like is focused on the time to detect and the time to respond. We work every day with organizations throughout the world to drive those times down. And in one organization we recently worked with, they took that mean time to respond from three weeks down to 19 minutes.

And that time matters. When you can get it down into a number of minutes, you are now changing an outcome because that attack can no longer be successful. The Committee on Homeland Security calls this discussion "Innovation Nation" and leveraging technology to secure cyberspace. The innovation, is it all about AI at the moment, Wendy?

It's certainly a huge part of it right we at Palazzo Network spent 1.8 billion dollars last year alone in R&D much of it focused on AI so we're absolutely looking at how we can use AI to turbocharged defenses and make sure that we're driving the time down and that organizations throughout the world are also implementing AI securely in the broader

theatre of defence technology, we often talk about how the private sector and public sector work together. For example, different private organisations, Andriel on the hardware side and Palantir on the software side, will work with the national defence apparatus. How does that work in the sort of software cyber security space as a coalition of private companies and government entities?

Well, what's critical, as you point out, is that those partnerships remain stronger than ever between the government and between civilian organizations. And so what we're focused on is how we can provide actionable data and insights into our government partners and agencies to make sure that they can continue the defense of the country.

What are the main risks that they currently fend off? For a layman such as myself, it's still fishing that seems to be incredibly purposeful since Gen AI has come on the scene, but where are the threats particularly coming from and what form?

Fishing is more powerful than ever, as you mentioned, because Gen-AI has made communication capabilities even less of a barrier to entry. But I think what we're seeing are attacks from throughout the world, certainly from our adversaries in countries like China and Russia, that continues to occur. So we're focused on how do we make sure organizations we work with can defend those, they can detect them within seconds, ideally, and then respond and contain them within minutes.

If there is one message you want to get across to those committee members today or that you will challenge them on, what is it? Well, AI is a key investment area for us as a country and all of our allies to have successful defense. So we must be able to turbocharge our defense with technologies that fuel that. Wendy Whitmore, so good to have you ahead of that testimony. We appreciate it, Palo Alto Networks.

Meanwhile, let's talk about DeepSeek. Said it has upgraded the R1 AI model that it has, and that of course helped propel the Chinese startup to global prominence earlier this year. He described it as a quote, minor trial upgrade, and told users they can start testing it. That's according to a company representative's post in an official WeChat group. Now the company didn't provide details about the upgrade, and didn't respond to an email seeking further comment. Remember when a single technology glitch could bring an entire workday to a standstill?

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Back to earnings. Salesforce coming up after the closing bell today. Investors anxious for signs that customers are paying for new AI products and looking for more details about the company's $8 billion acquisition of Informatica. Now, analysts project Salesforce revenue will increase about 7% to $9.75 billion in the fiscal first quarter. At that rate, it would mark the sixth straight period of slowing sales growth, Ed.

Okay, let's check back on Nvidia. The stock is a touch higher, basically flat and treading water ahead of the earnings being posted after the market.

Bloomberg's Ian King is here, who leads our coverage of semiconductors. And I think it's really important to clarify for Wall Street, for our audience, and also for us here on Bloomberg Technology, the situation with regards to H20 in China. In the quarter gone April, Nvidia took a $5.5 billion write-down on the asset or inventory and its commitments to sell that product into China, which it now can't sell into China. But if you look at the estimates for the fiscal second quarter,

that may not be reflected this lost revenue opportunity because of the China situation. Yeah, that's absolutely right. If you look at the most recent reports that try to factor in what the effect might be going forward, they would indicate that consensus, which at the moment is at 45.5 billion in revenue for the quarter, probably should be maybe two, three billion dollars

lighter than that maybe even more so depending upon how you slice and dice that China revenue so that's something that people need to be aware of as they look at the numbers when they get reported later today I think the word I keep seeing is noisy so as investors and you and I and Ed try to weave ourselves through what the numbers actually say what is it that Jensen and Colette actually have to say? Yeah I mean

Noisy is the right way to look at it. I mean, there are those out there that are saying, "Hey, look, we shouldn't be over-indexing on this because guess what? NVIDIA has so much fundamental demand. If it just increases production of other chips for other markets and these are more expensive chips, we can more than make up for this." So there is kind of an ongoing debate, and that debate, as we've just established, is not resulting in a lot of clarity in terms of firm expectations.

Jensen is going to talk about all of the industries that benefit from NVIDIA's technology: robotics, healthcare, the end result of large language model development. But in the Cortagon, he flew around the world and did a lot of deals.

the Middle East or the Gulf being one example, do we expect him to kind of give us a real sense of how much money this company is making from those deals? Yeah, I mean a lot of them are sort of tentative/future, memorandum of understanding type arrangements, so it's unlikely that he'll give those as a specific target and he tends to not want to do that for obvious reasons.

But you're right, he will talk in broad terms about the future of AI and how that's going to increase general demand for his products going forward. The near term is probably going to be a little bit more choppy.

Bloomberg's Ian King is gonna be busy. Thank you. Tune in later today. Of course, there's a special edition of Bloomberg Technology breaking down Nvidia's earnings with its CEO, Jensen Wang. Tune in 6.30 p.m. Eastern, 3.30 p.m. Pacific. And that does it for this edition of Bloomberg Technology, Ed.

Yeah, don't forget to check out the podcast. You can find it on the Terminal as well as online on Apple, Spotify and iHeart from New York City and San Francisco. This is Bloomberg Technology.

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