Nvidia faces challenge as 'promise of AI' is ahead of results, says Elevation Partner's McNamee

Published: Aug 28, 2024 Duration: 00:04:48 Category: News & Politics

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ONLY 1% OF IT IS. >> ELON MUSK WOULD TAKE ISSUE WITH THAT, AND THE COMPLAINT READS WELL. >>> LET'S TALK ABOUT THE AI BOOM. TECH INVESTOR, ROGER McNAMEE JOINS US NOW. FIRST UP, DO YOU -- WHAT DO YOU THINK OF OPEN AI? DO YOU TRUST SAM ALTMAN? >> NOT A BIT. I SAW THE PRIOR SEGMENT WHEN YOU WERE TALKING ABOUT NVIDIA. TO ME, VIDIA, THE COMPANY, IT DESERVES TO BE IN WHATEVER HALL OF FAME WE HAVE FOR THE TECHNOLOGY HAS, AND THEY HAVE GOTTEN THE GROSS MARGINS ON THE BACK OF GENERATIVE AI AND OTHER IMPORTANT TRENDS IN SILICON VALLEY. I LIKE TO DISTINGUISH, AS YOU KNOW, DAVID, BETWEEN STOCKS AND COMPANIES. RIGHT NOW THE ISSUE THAT NVIDIA FACES, WHICH I THINK IS GOING TO BE THE ISSUE FACED BY EVERYBODY IN GENERATIVE AI, IS THAT THE PROMISE OF AI HAS GOTTEN WAY OUT IN FRONT OF THE RESULTS, AND AS DEIRDRE JUST POINTED OUT, YOU KNOW, SAM ALTMAN WOULD LIKE TO RAISE MONEY, $100 BILLION VALUATION OFF OF THE BILLION DOLLAR REVENUE, AND THAT'S FINE, AND SOMEBODY NEEDS TO ASK THE QUESTION OF HOW LONG DO WE WAIT FOR ENTERPRISE APPLICATIONS TO SHOW PRODUCTIVITY AND VALUE TO CUSTOMERS? BECAUSE AT THE MOMENT, CO-PILOT SEEMS TO HAVE DIFFICULTIES IN THAT REGARD. I THINK THERE'S A BIG PROMISE THAT COMPANIES LIKE SALESFORCE WHERE THEY STILL HAVE TO DELIVER, AND FROM AN INVESTOR POINT OF VIEW, I THINK CAUTION IS GOING TO BE THE WATCH WORD HERE BECAUSE IT DOESN'T MATTER HOW GOOD THE CHIPS ARE AT NVIDIA. IF YOU ARE TALKING ABOUT REPLACING A TRILLION DOLLARS WORTH OF CLOUD SERVICES COMPUTE OVER THE LAST FEW YEARS, I MEAN, THE S&P 500, THE COMPANIES ARE MOSTLY RUN BY FINANCE PEOPLE. THE CHANCES THEY WILL WRITE OFF $100s MILLION OF INVESTMENT TO BUY A NEW CHIP, THAT COULD BE WISHFUL THINKING? >> AT THE SAME TIME, YOU MENTIONED THE WORDS KILLER APP. OPEN AI IS THE ONLY COMPANY THAT CREATED A KILLER APP IN THE AGE OF AI, AND DO YOU THINK THAT IN A WORLD WHERE THERE'S ONLY A FEW PLAYERS, OPEN AI COULD BE ONE OF THEM? >> WELL, DEIRDRE, THE POINT EARLIER WAS, THOUGH, THIS COULD BE A KILLER APP AND THE AMOUNT OF MONEY ASSOCIATED WITH IT IS NOT IN THE KILLER TERRAIN, IT'S COMPELLING, BUT, WOW, THE AMOUNT INVESTED IN THE INFRASTRUCTURE TO SUPPORT THE AI APS AND THE REVENUES ARE, WHAT, A TINY FRACTION OF THAT. >> YOU KNOW THE TROUGH OF DISSOLUTIONMENT, AND THEN IT PICKS UP. PEOPLE I TALK TO SAY YOU NEED TO HAVE MORE TIME HERE. >> DEIRDRE, LET'S REMEMBER, HISTORICALLY THE NUMBERS WERE AT MOST A TENTH OF WHAT WE ARE SEEING IN THIS CATEGORY. THE RISK WE ARE TAKING IS MUCH, MUCH GREATER. IF YOU ARE WRONG BY A YEAR, INVESTORS ARE GOING TO BE VERY UNHAPPY ABOUT THAT. >> ALTHOUGH, UNLIKE THE '90s, WHICH YOU AND I WELL REMEMBER AND ALL THE CAPITAL WENT TO ALL THE COMPANIES THAT WENT OUT OF BUSINESS. HERE WE HAVE THE CAP BEING EXTENDED BY THE LARGEST COMPANIES AND THEY ARE NOT GOING OUT OF BUSINESS AND NOT EVEN COMING CLOSE, AND IF YOU ARE RIGHT, THEY CAN DO THIS AND MOVE ON. >> I HAVE NO DOUBT THAT'S TRUE, DAVID, BUT THEY HAVE ENORMOUS STOCK MARKET VALUATIONS THAT ARE AT RISK. I DON'T THINK THE SOLVENCY OF MICROSOFT OR GOOGLE OR AMAZON OR APPLE IS IN DOUBT HERE. THERE'S NO QUESTION, WHENEVER YOU ARE SPENDING WHATEVER MICROSOFT IS SPENDING, INVESTORS ARE ENTITLED TO HAVE AN EXPECTATION OF RETURN ON THAT COMMENSURATE WITH THE RISK THEY ARE TAKING, AND IT MAY BE THERE. THE EVIDENCE IS NOT YET OVERWHELMING THAT THEY SOLVED THE PRODUCTIVITY PROBLEM IN ENTERPRISES. IN FACT, THE EVIDENCE IS THAT THEY ARE NOT CLOSE, AN

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