Nvidia's vibe shift

Hey, it’s Ed Ludlow and Ian King in San Francisco. Nvidia’s co-founder and chief, no stranger to skeptics, was surprised to hear doubts afte [View in browser]( [Bloomberg]( Hey, it’s Ed Ludlow and Ian King in San Francisco. Nvidia’s co-founder and chief, no stranger to skeptics, was surprised to hear doubts after his company’s latest earnings report. But first... Three things you need to know today: • China warned Japan about [retaliation against more chip trade curbs]( • Elon Musk’s X went dark in Brazil after [a judge’s order]( • Huawei’s hosting a big launch event [hours after Apple’s iPhone 16 debut]( Stratospheric expectations Nvidia Corp. Chief Executive Officer Jensen Huang is never lost for words. He’s one of the great explainers and pitchmen in tech and that skill has played a role in making his company one of the biggest in the world. Fresh off an earnings conference call where his persuasion skills had failed to halt a 7% slide in his company’s stock — on concern the AI boom is fading and his latest chip won’t sustain the industry dominance of its predecessors — he needed a moment. “The fact I was so clear and it wasn’t clear enough kinda tripped me up,” Huang said at the start of [an interview with Bloomberg Television](. After composing himself, he offered a robust defense of Nvidia’s next-generation chip architecture, Blackwell, and argued that what’s to come is good enough for him and, therefore, should be good enough for global Wall Street. This was not a normal earnings report. Investors, technologists, AI speculators and journalists were all counting down to what some billed as the most important set of numbers since US banks reported amid the financial crisis. There were watch parties in bars. And within minutes of Huang joining Bloomberg Television from Nvidia's headquarters, there were Reddit threads from the meme stock crowd about how bullish a signal his sartorial [choices]( were and what his [sipping]( an unidentifiable black liquid (Coke or coffee?) live on TV meant. Huang was a bit exasperated because he’d done his best on the call to explain the intricacies of the most advanced technology known to humankind to a market that had set sky-high expectations. Over the past two years, as Nvidia shot up to become the world’s third most-valuable company, that had been enough. His main point: Nvidia’s next generation of AI accelerator is going to be just fine. The company will have “lots and lots” of Blackwell chips after production ramps up in the final three months of this year. Stopping short of a financial forecast, Huang added that Nvidia’s performance is going to be "great next year." For weeks, there had been reports that something was fundamentally wrong with Blackwell’s design. It’s literally the biggest chip to enter mass production, using two chip dies in a complicated design that also makes manufacturing more challenging. The issue was addressed in documents and on the conference call. It isn’t the Blackwell graphics processing unit itself, it’s how the chip is made. Nvidia had to make a change to the design’s lithography mask. This is the template used to burn the lined patterns that make up circuits onto the materials deposited on a disk of silicon. Those circuits are what gives the chip the ability to crunch data. The problem with the mask, which wasn't explicitly identified, was affecting the yield of Blackwell production. The yield is the proportion of good, functional chips per production batch. The higher the better, as any dysfunctional units are equivalent to throwing dollars into the furnace. "What they are doing is transformative, and it is early,” said [Lei Qiu](bbg://people/profile/16881981), AllianceBernstein’s thematic innovation chief information officer. “So when you look at innovation and this early in the product cycle you will see, quarter to quarter, perhaps a little unevenness,” she said on Bloomberg Television. Alliance Bernstein is the 22nd-largest shareholder of Nvidia, which has a market value of almost $3 trillion. “We continue to have a constructive view of the AI ecosystem as a whole, and we believe in Nvidia’s leading position,” Qiu said. While market gyrations continued, and Nvidia shares had their worst weekly drop in six weeks, the biggest investors remain sanguine about the company’s AI story. Data centers will be built to power AI workloads. And Nvidia will be the main beneficiary. It’s a dark place looking at the comments on YouTube, X or Reddit, but retail investors and Nvidia fans were, on the whole, pleased with how the whole spectacle went. The problem for Huang is we now have something else to target. He said Blackwell will translate to “several billion dollars” of revenue in the fiscal fourth quarter. So mark your calendars for a Wednesday in late November, reserve some tables at your favorite watering hole, and prime your social media game because the mother of all earnings — again — is still to come. —[Ed Ludlow](mailto:eludlow2@bloomberg.net) and [Ian King](mailto:ianking@bloomberg.net) The big story Intel, formerly the most dominant chipmaker in the industry, is facing a crisis that has it thinking about ending a plan to manufacture chips for other companies — [a central part]( of CEO Pat Gelsinger’s turnaround effort. One to watch [Lei Qiu of AllianceBernstein speaks on Bloomberg Television about her confidence in active investing in artificial intelligence.]( Get fully charged SpaceX’s primary Falcon 9 rocket can return to spaceflight while US regulators continue an investigation into a [landing failure on Aug. 28](. Strava and other affinity-based online social platforms are [surging in user interest and engagement](. Amazon is acquihiring the founders of robot-software maker Covariant in an effort to [boost its warehouse automation](. In case you missed it last week: our deep dive into video game monetization enabler Xsolla and [the lavish spending of its founder](. 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