# Chevron to Invest $7 Billion to Double Its Venezuelan Output

An episode of [Bloomberg Intelligence](https://invisiblenetwork.ai/podcast/326301337), 2 Sep 2026, 24 min.

Audio: https://podtrac.com/pts/redirect.mp3/tracking.swap.fm/track/UVBrz8bN8aM2Xe47PEPu/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/7f534b8c-9e91-429a-b102-ae3c00090c6d/51fe24bc-aea9-4d54-a14b-b4b9011427ed/audio.mp3?utm_source=Podcast&in_playlist=0ad812bf-fd15-4012-a18c-ae3c00090c76

Watch Paul and Scarlet LIVE every day on YouTube: http://bit.ly/3vTiACF. Bloomberg Intelligence hosted by Paul Sweeney and Scarlet Fu - Kevin Crowley, Bloomberg Senior Oil Reporter, discusses Chevron planning to invest $7 billion over the next five years to more than double crude production in Venezuela through its joint venture partnerships. The company won the right to develop two giant oil fields in the Carabobo area of the Orinoco Belt, which are located next to Chevron’s Petroindependencia joint venture. -Lee Klaskow, Bloomberg Intelligence Senior Transport, Logistics and Shipping Analyst, discusses the impact of oil prices and geopolitics on the transportation industry. -Mandeep Singh, Global Head of Tech Research for Bloomberg Intelligence, discusses Uber job cuts and Nvidia. Uber Technologies Inc. is cutting about 3,300 roles, or 10% of its staff globally, in a restructuring aimed at reducing management layers and reallocating spending into its ride-sharing, delivery and robotaxi businesses. Separately, Nvidia Corp. is in advanced talks to acquire artificial intelligence startup Hugging Face in a transaction that may total about $14 billion, according to people familiar with the matter. -Woo Jin Ho, Bloomberg Intelligence Senior Hardware and Networking Analyst, recaps Dell earnings. Dell Technologies Inc. shares jumped after the company boosted its annual sales forecast by $25 billion due to surging demand for servers to run artificial intelligence tasks. Revenue in the fiscal year ending in January 2027 will be about $192 billion, including $74 billion from the sale of AI servers, which is up from an outlook in May of about $167 billion. The AI server forecast represents a threefold increase over the prior year, and the company has booked more than $130 billion in AI server orders over the past 12 months. See omnystudio.com/listener for privacy information.

## Transcript

[0:02] Speaker 1: Bloomberg Audio Studios.
[0:04] Speaker 2: Podcasts.
[0:05] Speaker 3: Radio.
[0:06] Speaker 4: News.
[0:09] Speaker 5: You're listening to the Bloomberg Intelligence Podcast. Catch us live
[0:13] Speaker 5: weekdays at 10 a.m. Eastern on Apple CarPlay and Android
[0:16] Speaker 5: Auto with the Bloomberg Business App. Listen on demand wherever
[0:19] Speaker 5: you get your podcasts or watch us live on YouTube.
[0:24] Speaker 6: Our U.S.
[0:25] Speaker 2: Energy Secretary Chris Wright is in Caracas today and is
[0:28] Speaker 2: expected to announce more than a dozen agreements with energy companies.
[0:32] Speaker 2: The largest is with Chevron, which is significantly expanding in
[0:35] Speaker 2: Venezuela operations with two giant oil fields in the Orinoco boat.
[0:40] Speaker 2: We check in with Kevin Crowley. He's the senior oil
[0:42] Speaker 2: reporter for Bloomberg News. He is based down there in
[0:45] Speaker 2: the energy.
[0:46] Speaker 1: Capital, Houston, Texas. Kevin, thanks so much for joining us here.
[0:50] Speaker 2: You know, when you talk to folks here, in your
[0:53] Speaker 2: sphere there of the energy business, what do they think
[0:55] Speaker 2: about the Chevron deal?
[0:59] Speaker 6: Well, first of all, it's a big deal. I think
[1:02] Speaker 6: the first question is how much oil is going to
[1:05] Speaker 6: come to the market immediately. And I think it's going
[1:09] Speaker 6: to come gradually. This is what the CEO, Mike Wirth,
[1:13] Speaker 6: told us in a TV interview earlier today. So, Chevron
[1:18] Speaker 6: is planning to double its oil production to about 600,000
[1:23] Speaker 6: barrels a day, going to spend about $ 7 billion today.
[1:26] Speaker 6: with its joint venture partners doing that. But these are big, big,
[1:30] Speaker 6: big projects requiring lots of drilling, lots of heavy equipment,
[1:34] Speaker 6: lots of pipeline capacity. Venezuela has a lot of heavy oil,
[1:38] Speaker 6: which is difficult to process. So, these barrels are going
[1:42] Speaker 6: to come to the market kind of gradually. And what's
[1:44] Speaker 6: interesting here is that they are not going to be
[1:47] Speaker 6: a direct replacement for the barrels that are currently stuck
[1:50] Speaker 6: through the Strait of Formosa. So we're not seeing any
[1:54] Speaker 6: relief in oil prices today.
[1:56] Speaker 2: Yeah, that's exactly right. So, Kevin, what do we know
[1:59] Speaker 2: about some of the assurances that Chevron may have received
[2:02] Speaker 2: either from the Venezuelan government or the U.S.
[2:05] Speaker 1: Government?
[2:05] Speaker 2: Because that has always been a concern that, boy, our assets,
[2:09] Speaker 2: our investments can be nationalized overnight. And that's one of
[2:12] Speaker 2: the many reasons that other majors left Venezuela and did
[2:15] Speaker 2: not come back.
[2:17] Speaker 6: Right, exactly. I mean, Venezuela's nationalized its oil industry twice
[2:21] Speaker 6: in the last 50 years. So I put this question
[2:23] Speaker 6: to Chevron CEO Mike Wirth in an interview, and he
[2:29] Speaker 6: said he wouldn't go into the contract specifics, but he
[2:31] Speaker 6: said there were very strong protections built into those contracts.
[2:37] Speaker 6: With regards to, and I interpret that to mean sort
[2:41] Speaker 6: of legal protections, but also with regard to arbitration. So
[2:45] Speaker 6: if there is a dispute between Chevron and the Venezuelan government,
[2:50] Speaker 6: they would be arbitrated in perhaps internationally as opposed to internationally.
[2:56] Speaker 6: So Chevron seemed pretty confident that their money will be protected. Now,
[3:03] Speaker 6: it is worth saying Chevron has a slightly different kind
[3:06] Speaker 6: of risk tolerance for this. I mean, Chevron was the
[3:09] Speaker 6: one U.S. oil major that stayed. in Venezuela after the
[3:12] Speaker 6: nationalizations of the mid-2000s. They've been there the last 20
[3:16] Speaker 6: years through all these sanctions and on again, off again,
[3:21] Speaker 6: OFAC licenses and that. So they are in a slightly
[3:25] Speaker 6: different position. We haven't seen Exxon go in. We haven't
[3:28] Speaker 6: seen ConocoPhillips go in. These were two bigger U.S. oil
[3:31] Speaker 6: companies that were nationalized under the Chavez regime.
[3:35] Speaker 1: Yeah, that's kind of where I wanted to go, Kevin.
[3:37] Speaker 2: Do we think that once maybe Exxon and the others
[3:40] Speaker 2: get a look at this this contract or at least
[3:42] Speaker 2: talk to the Chevron management, they might get a level
[3:44] Speaker 2: of comfort that they will go back into, you think?
[3:47] Speaker 6: Well, that's certainly what the U.S. government hopes, that all
[3:51] Speaker 6: these deals will create a level of confidence for others
[3:56] Speaker 6: to follow. I think there will be others to follow.
[3:59] Speaker 6: The problem is these fields are getting nabbed. They're getting
[4:02] Speaker 6: snapped up quickly. And Exxon, for example, doesn't want to
[4:06] Speaker 6: do anything small. So, if they want to go in,
[4:08] Speaker 6: they'll want a large number of fields and they want
[4:12] Speaker 6: to do things on a big scale. And, yeah, the
[4:17] Speaker 6: question is what's left. So, yeah, so it remains to
[4:23] Speaker 6: be seen who else will go in. But certainly with
[4:28] Speaker 6: these big companies now committing real dollars, this is the
[4:31] Speaker 6: first time we've seen real dollars being committed to Venezuela.
[4:35] Speaker 6: There is a degree of confidence around the country.
[4:39] Speaker 2: What are your sources telling you, Kevin, about the Strait
[4:42] Speaker 2: of Hormuz? How much oil do we think is actually
[4:44] Speaker 2: getting through on a daily basis? We heard from the Treasury,
[4:48] Speaker 2: I mean, the Energy Secretary, a big, big number.
[4:50] Speaker 6: What are you hearing? Yeah, so he was saying on
[4:54] Speaker 6: Monday 17 million barrels got through the Strait of Hormuz.
[4:59] Speaker 6: That's certainly a high. We don't think that's happening every
[5:02] Speaker 6: day at all. There's still major constraints. I mean, we've
[5:07] Speaker 6: seen a fair bit of uptick in conflict, I mean,
[5:10] Speaker 6: just this week. It's interesting. There seems to be a
[5:14] Speaker 6: tone around the administration this week. Secretary Besant and Chris
[5:20] Speaker 6: Wright have been emphasising this line around workarounds, emphasising, you know,
[5:27] Speaker 6: we're going to build pipelines and there's going to be
[5:30] Speaker 6: other ways of getting around the straightforward moves. I think
[5:33] Speaker 6: Besant said earlier today that straightforward moves wouldn't be very
[5:36] Speaker 6: important in the oil industry in the future. So I
[5:39] Speaker 6: just wonder if this... they're starting to kind of think
[5:46] Speaker 6: that this conflict may be much more longer term and
[5:51] Speaker 6: this might be the new normal for the straight.
[5:54] Speaker 1: Stay with us. More from Bloomberg Intelligence coming up after this.
[6:01] Speaker 5: You're listening to the Bloomberg Intelligence Podcast. Catch us live
[6:05] Speaker 5: weekdays at 10 a.m. Eastern on Apple CarPlay and Android
[6:08] Speaker 5: Auto with the Bloomberg Business App. Listen on demand wherever
[6:11] Speaker 5: you get your podcasts or watch us live on YouTube.
[6:16] Speaker 2: There are a lot of people that don't like higher
[6:17] Speaker 2: energy prices. And I guess if you think about it,
[6:20] Speaker 2: if you put gas in your truck or diesel in
[6:22] Speaker 2: your truck or jet fuel in your plane and that
[6:24] Speaker 2: kind of stuff, if you're a transportation company, this is
[6:27] Speaker 2: a squeeze, I think. Let's check in with Lee Klaskow.
[6:29] Speaker 2: He's a senior transport engineer. Logistics and Shipping Analyst for
[6:32] Speaker 2: Bloomberg Intelligence. He also hosts a weekly podcast, Bloomberg Intelligence
[6:36] Speaker 2: Talking Transports. Lee, what are your companies telling you? Railroad companies,
[6:40] Speaker 2: trucking companies, air transport. I mean, the tankers, they all
[6:44] Speaker 2: consume a lot of fuel.
[6:46] Speaker 7: They certainly do. It's usually their highest cost. And they're
[6:49] Speaker 7: able to pass a lot of that cost on through
[6:51] Speaker 7: fuel surcharges. The problem is the volatility in fuel prices
[6:55] Speaker 7: can be sometimes a drag on margins, especially when prices
[6:59] Speaker 7: for fuel are rising quickly. Trucking, for example, their fuel
[7:03] Speaker 7: surcharges resets every week. And railroads, it's anywhere between a
[7:08] Speaker 7: week and 60 days, depending on the type of freight.
[7:11] Speaker 7: But while it does cover the miles that they travel,
[7:16] Speaker 7: as you probably know, trucking companies, sometimes they have to
[7:19] Speaker 7: travel from point A to point B to pick up
[7:21] Speaker 7: a load, and that's obviously not covered under their fuel
[7:23] Speaker 7: surcharge most.
[7:24] Speaker 3: Of the time.
[7:25] Speaker 7: So it does have a negative impact to margins. But,
[7:30] Speaker 7: you know, I think the knock-on effect, obviously, is the
[7:32] Speaker 7: impact to consumers. It's inflationary. You know, when you're spending
[7:35] Speaker 7: more at the pump, you're buying less stuff, and stuff
[7:38] Speaker 7: is shipped in trucks and trains. And so that's probably
[7:41] Speaker 7: less opportunity for freight for them. So, you know, that's
[7:43] Speaker 7: a big concern. Yesterday, the whole group was down, probably on,
[7:48] Speaker 7: you know, the fact that oil rose a little bit yesterday,
[7:51] Speaker 7: and coupled with the fact that the ISM index, which,
[7:54] Speaker 7: while still in expansion territory, was slightly below expectations.
[7:59] Speaker 3: Do companies ever remove the surcharge, the fuel surcharge, or
[8:02] Speaker 3: does it only go up and up and up?
[8:04] Speaker 7: Well, it sometimes comes down. So when fuel prices come down,
[8:06] Speaker 7: it does come down. So when fuel prices are coming
[8:09] Speaker 7: down quickly, it's actually a tailwind for earnings because they
[8:15] Speaker 7: are charging the customers a price higher than what they're
[8:21] Speaker 7: actually paying for today because of the lag effect.
[8:24] Speaker 3: They're slower to remove the fuel surcharge or bring them
[8:27] Speaker 3: down than what the actual market price is.
[8:28] Speaker 7: So for trucking, for example, they reset every week, and
[8:31] Speaker 7: it's based on the price of diesel, the national price
[8:33] Speaker 7: of diesel.
[8:34] Speaker 3: By the way, the national price of diesel, $ 5. 68 a gallon,
[8:37] Speaker 3: according to AAA.
[8:38] Speaker 1: Five months high.
[8:39] Speaker 4: Yep.
[8:40] Speaker 1: My son has a hybrid.
[8:41] Speaker 6: He doesn't care.
[8:43] Speaker 2: He's laughing all the way.
[8:44] Speaker 1: Your stocks have been ripping, Lee.
[8:45] Speaker 2: I'm looking at some of the trucking stocks up 30%, 40%
[8:48] Speaker 2: this year.
[8:49] Speaker 1: The railroad stocks up big this year. What's going on?
[8:53] Speaker 1: So there's two things.
[8:54] Speaker 7: The space is obviously early cycle and people are a
[8:57] Speaker 7: little excited about what's going on with the industrial economy
[9:01] Speaker 7: given the data center build out that's really been helping
[9:04] Speaker 7: with freight. That coupled with ag has been pretty good
[9:07] Speaker 7: as well. That's one thing. But really what's probably primarily
[9:11] Speaker 7: driving it is a tighter trucking market. The trucking industry
[9:14] Speaker 7: has been terrible for the last three or four years.
[9:17] Speaker 7: And up until about six months ago, you've seen rates
[9:19] Speaker 7: starting to inch off really depressed levels and the levels
[9:22] Speaker 7: that were a lot of trucking companies were not making
[9:24] Speaker 7: money and a lot of trucking companies were leaving the
[9:27] Speaker 7: industry because of bankruptcies or they just couldn't make any more, make.
[9:31] Speaker 1: Money and make a go of it.
[9:32] Speaker 7: And so what we've seen is we've seen rates considerably
[9:36] Speaker 7: rise in the spot market and that's really been driven
[9:38] Speaker 7: by a lot of federal initiatives. They are forcing states
[9:43] Speaker 7: to enforce rules that are on the book about English
[9:45] Speaker 7: language proficiencies. They've been shutting down a lot of driving
[9:48] Speaker 7: schools that have pumped out drivers that don't even know
[9:52] Speaker 7: how to drive a truck. It's been pretty ridiculous. I
[9:55] Speaker 7: think the Trump administration, for everything that you could say
[10:00] Speaker 7: about what they're doing with trade, has done really great
[10:02] Speaker 7: things when it comes to the trucking industry because it's
[10:05] Speaker 7: making the industry safer and it's obviously making the roads
[10:08] Speaker 7: safer for everybody.
[10:10] Speaker 6: Right.
[10:10] Speaker 3: But if they're closing down these commercial driving training schools,
[10:13] Speaker 3: that means it's harder for these truckers to actually hire.
[10:16] Speaker 1: How are they addressing that? How are they solving for it? Yeah.
[10:18] Speaker 7: So they're going to have to pay more for truckers
[10:21] Speaker 7: and then therefore the shippers.
[10:22] Speaker 1: Have they started to do that?
[10:23] Speaker 3: Yes.
[10:24] Speaker 7: So if you're a trucker and you're working for a
[10:27] Speaker 7: trucking company, you probably can go to a different trucking
[10:30] Speaker 7: company and get a signing bonus. And you know, While
[10:32] Speaker 7: there's some loyalty when it comes to working at a
[10:35] Speaker 7: trucking company.
[10:36] Speaker 1: Not like airline lounges. At the end of the day,
[10:38] Speaker 1: they get paid per mile, right?
[10:39] Speaker 7: And they want to be treated well. And so, you know,
[10:42] Speaker 7: if they're slightly unhappy with the way they're treated, you know,
[10:45] Speaker 7: they're happy to go down the street to another trucking
[10:47] Speaker 7: company and maybe have a $ 10, 000 signing bonus, you know,
[10:51] Speaker 7: if they reach certain criterias. So, you know, you are
[10:55] Speaker 7: seeing that and, you know, you are going to and
[10:57] Speaker 7: that is really what's going to be really interesting in
[10:59] Speaker 7: the trucking market is that this cycle, this up cycle
[11:02] Speaker 7: in rates is really going to be elongated. And it's
[11:04] Speaker 7: going to be well beyond the typical 12 to 18
[11:07] Speaker 7: months because of these structural changes, because a lot of
[11:09] Speaker 7: these drivers that were kicked out, they're never coming back.
[11:11] Speaker 6: Yeah.
[11:12] Speaker 7: We're in past cycles. They would go work in construction
[11:15] Speaker 7: and warehousing and then they would cycle back in.
[11:17] Speaker 6: Yeah.
[11:17] Speaker 7: And so what you're seeing is you're going to see
[11:19] Speaker 7: a real structural change. And then, no, to answer your question,
[11:23] Speaker 7: autonomous trucking is not there. They're not going to really
[11:27] Speaker 7: fill the void. So it'll be a very interesting couple
[11:30] Speaker 7: of years for the trucking industry. And what's great about
[11:33] Speaker 7: trucking is the spot market within the truckload industry kind
[11:36] Speaker 7: of ripples across all other modes. So then when spot
[11:40] Speaker 7: markets rise, contractual markets rise, and the lessen truckload rates
[11:44] Speaker 7: get better, then intermodal rates get better, railroad rates get better.
[11:48] Speaker 7: And so that will have a knock-on effect for all
[11:50] Speaker 7: freight rates. So in 2027 should be a pretty robust
[11:54] Speaker 7: year for rates.
[11:55] Speaker 1: More inflation for us, Paul. That's exactly right. Quick update
[11:58] Speaker 1: on what is it, CSX and Union Pacific, the merger
[12:01] Speaker 1: to create the first. Norfolk Southern. Norfolk Southern. OK, so
[12:04] Speaker 1: where are we on that?
[12:05] Speaker 7: They just the the STB, the regulator just said, OK,
[12:09] Speaker 7: all the paperwork's in. We're going to start looking at
[12:11] Speaker 7: the merits of the deal. And so what you're going
[12:14] Speaker 7: to have is you're going to have both sides of
[12:16] Speaker 7: the argument press their case, and we're going to get
[12:20] Speaker 7: some sort of a ruling, not until late 2027.
[12:23] Speaker 6: Late 2027?
[12:23] Speaker 1: It takes a long time. No kidding. This thing was announced, what,
[12:27] Speaker 1: six months ago?
[12:27] Speaker 3: A year ago.
[12:28] Speaker 4: A year ago.
[12:29] Speaker 3: The government moves slowly. Lee, do you watch The Gilded Age?
[12:33] Speaker 3: I don't. Oh, it's on HBO. Anyway, it's really good,
[12:37] Speaker 3: and it's about the railroad barons. And, you know, when
[12:40] Speaker 3: they were doing a lot of stuff and, you know,
[12:42] Speaker 3: just expanding their empire.
[12:44] Speaker 2: People liken the AI CapEx to, like, the railroad CapEx back.
[12:48] Speaker 1: In the day. Yeah, yeah, yeah, yeah. Taking over the
[12:50] Speaker 1: world and making everyone pay up.
[12:51] Speaker 6: Yep.
[12:52] Speaker 2: All right, Lee, thanks so much. Appreciate it, Lee Klaskow.
[12:55] Speaker 2: He's a senior transport, logistics, and shipping analyst for Bloomberg Intelligence.
[12:58] Speaker 2: He also hosts a weekly podcast called Bloomberg Intelligence Talking Transports.
[13:05] Speaker 1: Stay with us.
[13:06] Speaker 5: More from Bloomberg Intelligence coming up after this. You're listening
[13:13] Speaker 5: to the Bloomberg Intelligence Podcast. Catch us live weekdays at
[13:16] Speaker 5: 10 a.m. Eastern on Apple CarPlay and Android Auto with
[13:19] Speaker 5: the Bloomberg Business App. Listen on demand wherever you get
[13:22] Speaker 5: your podcasts or watch us live on YouTube.
[13:26] Speaker 3: Another stock that is on the move this morning is Uber.
[13:29] Speaker 3: The shares have picked up some steam, now up 1.4%
[13:34] Speaker 3: on news that it is cutting about 3,300 jobs. That's
[13:37] Speaker 3: about 10% of its staff globally. Mandeep Singh is our
[13:40] Speaker 3: global head of tech research here at Bloomberg Intelligence. He's
[13:43] Speaker 3: in studio with us right now. Mandeep, this is very
[13:46] Speaker 3: much about turning Uber into a leaner company as it
[13:50] Speaker 3: reallocates some of its spending into the things that bring
[13:54] Speaker 3: a lot more value, like robo-taxi businesses.
[13:57] Speaker 4: Yeah, I mean, look, when it comes to Uber, it
[14:01] Speaker 4: feels like the hyper growth phase is past. And now
[14:06] Speaker 4: this company is growing, you know, at a very respectable
[14:10] Speaker 4: about 18 to 20 percent top line. But when it
[14:13] Speaker 4: comes to robo taxis or autonomous vehicles, they're facing a
[14:18] Speaker 4: lot of pressure from Waymo, which is going out on
[14:22] Speaker 4: its own. Tesla, we know they have ambitions and they
[14:25] Speaker 4: all are launching their own apps. And from a consumer standpoint, again,
[14:30] Speaker 4: we have talked about this in the past.
[14:32] Speaker 1: They don't have any loyalty.
[14:33] Speaker 4: They will download their own apps. And Uber is starting
[14:38] Speaker 4: to feel some pressure on their take rates as well.
[14:41] Speaker 4: So from that perspective, optimizing the cost structure, when you're
[14:45] Speaker 4: spending almost $ 50 billion, the total cost and expenses are
[14:50] Speaker 4: close to $ 50 billion. It's hard to imagine that for
[14:54] Speaker 4: an asset-like company, which actually brings a lot of external-like cars.
[14:58] Speaker 4: They don't even own the fleet. Why do they have
[15:01] Speaker 4: such a big employee base and cost structure? So it
[15:05] Speaker 4: doesn't surprise me that they are doing it irrespective of
[15:08] Speaker 4: AI optimizing some of that. And it makes sense.
[15:12] Speaker 3: I'm glad you bring up the lack of loyalty because
[15:14] Speaker 3: Paul Sweeney is notoriously not loyal to any car ride operator, right?
[15:19] Speaker 1: I arbitraged last night. South Amboy, don't.
[15:22] Speaker 2: Ever take a car from South Amboy down to the shore, 25% savings, almost,
[15:28] Speaker 2: arbitraging that.
[15:29] Speaker 6: How about that?
[15:30] Speaker 1: That's real money.
[15:31] Speaker 2: I'm gaming the system, as they say.
[15:32] Speaker 1: He's winning.
[15:33] Speaker 2: What's the latest thinking, Mandeep, in the industry about autonomous
[15:38] Speaker 2: vehicles and the threat it may pose longer term to
[15:43] Speaker 2: some of these ride-sharing companies?
[15:44] Speaker 1: I think it is a big threat.
[15:46] Speaker 4: I mean, the thing that saved the likes of Uber
[15:49] Speaker 4: so far is it's still a very small fraction of
[15:53] Speaker 4: the overall rides. I mean, when you think about how
[15:56] Speaker 4: many rides Uber does in a year, it is close
[16:00] Speaker 4: to 12 billion plus rides. So from that perspective, autonomous vehicles,
[16:05] Speaker 4: which are there in more than 10 cities now, even
[16:08] Speaker 4: Waymo is there across a lot of the U.S.
[16:11] Speaker 6: Cities.
[16:12] Speaker 4: It just hasn't had the share of volume and the
[16:14] Speaker 4: fleet you're required to scale. But everyone likes the experience.
[16:18] Speaker 4: And so that is the threat. Like once you ramp
[16:21] Speaker 4: up AVs and if AI helps expand the AV fleet,
[16:27] Speaker 4: then that becomes a big risk. And Uber, to their credit,
[16:30] Speaker 4: has made a lot of investments. They don't have their
[16:33] Speaker 4: own AV technology, but they have invested a lot in
[16:36] Speaker 4: Nuro and a lot of the other companies in the ecosystem.
[16:40] Speaker 4: So it sounds like they will end up using these
[16:42] Speaker 4: cost savings to make more AV-related investments. I don't think
[16:46] Speaker 4: it's going into buybacks.
[16:47] Speaker 1: Yeah, Waymo, very much a tourist activity in places like
[16:50] Speaker 1: the Bay Area.
[16:51] Speaker 6: Yeah. Yep.
[16:52] Speaker 5: I took one.
[16:52] Speaker 6: See?
[16:52] Speaker 4: Yeah.
[16:53] Speaker 6: Very cool.
[16:53] Speaker 3: I mean, again, Paul, not loyal to any ride-hailing company,
[16:57] Speaker 3: but he will go in a Waymo because it was
[16:59] Speaker 3: a fun thing to do.
[16:59] Speaker 2: He goaded me into it.
[17:01] Speaker 6: All right.
[17:02] Speaker 2: Promised me a meal in an Outburger.
[17:04] Speaker 6: All right.
[17:04] Speaker 1: That's worth it. That's worth it.
[17:06] Speaker 3: Mandeep, we also want to get your take on NVIDIA
[17:09] Speaker 3: and this $ 14 billion deal for Hugging Face.
[17:12] Speaker 1: That's what the reporting shows. What is Hugging Face?
[17:15] Speaker 4: So Hugging Face, I think the best comparison is they
[17:19] Speaker 4: are a repository of all the models. We talk about
[17:24] Speaker 4: Frontier Labs and open source models. And if you are
[17:28] Speaker 4: a company that wants to deploy an LLM, open source LLM,
[17:32] Speaker 4: Hugging Face has the repository of all the versions of
[17:36] Speaker 4: open source LLMs. And So from that perspective, they are
[17:40] Speaker 4: like the GitHub, a company that Microsoft bought. So the
[17:43] Speaker 4: surprising part here is Nvidia obviously is the largest chip company,
[17:47] Speaker 4: accelerator company looking to move into the software stack. I
[17:51] Speaker 4: would have expected a Microsoft looking to buy Hugging Face
[17:56] Speaker 4: or somebody that is operating in that layer. And look,
[18:01] Speaker 4: I think what Nvidia is signaling is they're just not
[18:04] Speaker 4: content to be that chip provider. They're partnering with Neo
[18:07] Speaker 4: Clouds to provide the compute infrastructure. And now with the
[18:12] Speaker 4: software layer, buying Hugging Face, They want to cover all
[18:18] Speaker 4: the adjacencies because they expect down the line, three to
[18:22] Speaker 4: four years down the line, everyone is developing their own chips,
[18:25] Speaker 4: all the hyperscalers, even the Frontier Labs, OpenAI. So they
[18:29] Speaker 4: want to make sure that NVIDIA is still that layer,
[18:33] Speaker 4: like the company that everyone standardizes on, like Intel back
[18:37] Speaker 4: in the day. I mean, Intel was the standard when
[18:40] Speaker 4: it comes to PCs, and they had a lot of
[18:43] Speaker 4: software components to their CPU strategy. I think that's what
[18:47] Speaker 4: NVIDIA is after. They want to move up the stack.
[18:49] Speaker 4: I wouldn't be surprised if they buy a security company,
[18:52] Speaker 4: you know, given all the focus on cybersecurity.
[18:55] Speaker 1: Stay with us.
[18:56] Speaker 5: More from Bloomberg Intelligence coming up after this. You're listening
[19:03] Speaker 5: to the Bloomberg Intelligence Podcast. Catch us live weekdays at
[19:07] Speaker 5: 10 a.m. Eastern on Apple CarPlay and Android Auto with
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[19:17] Speaker 1: We are still in earnings season.
[19:18] Speaker 3: We're at the tail end of earnings season, but still
[19:21] Speaker 3: getting results, particularly those companies that are tied to the
[19:24] Speaker 3: AI story. And Dell is very much one of those companies. Dell,
[19:29] Speaker 3: of course, makes the AI servers. And if you look
[19:32] Speaker 3: at the shares of Dell today, up 4% after the
[19:34] Speaker 3: company boosted its sales outlook by $ 25 billion. Woojin Ho
[19:39] Speaker 3: is our senior hardware and networking analyst, and he's here
[19:42] Speaker 3: with us to give us his take on these results.
[19:44] Speaker 3: And Ugin, this is very much all the AI servers
[19:48] Speaker 3: and not so much the PC market, right?
[19:51] Speaker 4: Well, hey, Scarlett.
[19:52] Speaker 8: I think there's actually a lot of breadth in Dell's numbers, right?
[19:57] Speaker 8: I know the AI server numbers get a lot of headline, but,
[20:02] Speaker 8: you know, 11 billion or 14 billion of that upside
[20:06] Speaker 8: came from AI servers. So $ 11 billion has to come
[20:08] Speaker 8: from somewhere else, right? So the traditional server numbers, as
[20:13] Speaker 8: well as storage, is carrying that additional, increment the $ 11
[20:17] Speaker 8: billion in the server, in the outlook. And then that's
[20:19] Speaker 8: coming at a better profit margin too.
[20:21] Speaker 2: $ 25 billion up on their revenue forecast. Just to give
[20:25] Speaker 2: people a sense of context, they have $ 150 billion of revenue.
[20:29] Speaker 2: I don't think I've seen that type of raise as
[20:31] Speaker 2: a percentage of revenue. I mean, it doesn't happen very often.
[20:35] Speaker 2: Who do they got back there forecasting the revenue?
[20:39] Speaker 8: Look, you're guiding a little bit conservatively, Paul, but there's
[20:44] Speaker 8: a couple of components that's really driving the memory, the
[20:48] Speaker 8: guidance as well. You know, resilient, strong volumes, of course, right?
[20:53] Speaker 8: But they're also catching the memory inflation and passing it
[20:57] Speaker 8: through to their customers. So when, you know, we've been
[20:59] Speaker 8: talking about memory quite a bit at BI, and if
[21:03] Speaker 8: you're getting like 200 to 300% memory, inflation and passing
[21:07] Speaker 8: it to your customers. You're catching a little bit of
[21:09] Speaker 8: that on the guidance.
[21:12] Speaker 3: What did you hear from the executives in terms of
[21:15] Speaker 3: commentary on the path ahead? I mean, there's a lot
[21:18] Speaker 3: of demand. We know that. And Dell is in a
[21:21] Speaker 3: very good position. But there are some competitors it deals with.
[21:24] Speaker 3: And I'm curious how bullish they sounded, even as you
[21:27] Speaker 3: said that they're being conservative in their outlook.
[21:31] Speaker 8: I'm telling you, Scarlett, these guys sounded very bullish, right?
[21:36] Speaker 8: And I think the large size and scale matters here.
[21:40] Speaker 8: I'm going to give you a case in point. HP
[21:43] Speaker 8: reported the evening before, and they raised their PC guidance,
[21:47] Speaker 8: but their margins came in like around 5% on the
[21:50] Speaker 8: PC side. Dell's PC business, you know, which they're seeing
[21:56] Speaker 8: sinking unit demand but passing through pricing as well, they
[21:59] Speaker 8: did about 8% on PC margins. The only way that
[22:04] Speaker 8: you can get a 400 basis point differential on how
[22:07] Speaker 8: much you're getting on your PC is just scale. These
[22:10] Speaker 8: guys have massive scale that they're able to get memory
[22:14] Speaker 8: at probably an incremental lower cost and capture that incremental
[22:19] Speaker 8: price increase better than others.
[22:22] Speaker 1: Memory, supply.
[22:23] Speaker 2: Give us an update on where we are today. How
[22:26] Speaker 2: scarce is it? How difficult is it to get memory
[22:29] Speaker 2: and all that type of stuff? And how's that going
[22:30] Speaker 2: to play out over the coming, I don't think it's months,
[22:33] Speaker 2: I think it's quarters and years probably.
[22:36] Speaker 8: Well, I don't want to go to years because my
[22:40] Speaker 8: PC costs will continue to go upward. When I speak
[22:46] Speaker 8: to my colleague, Jake Silverman, in terms of the memory capacity.
[22:51] Speaker 8: We're just going to be in a very tight supply
[22:52] Speaker 8: environment up until at least the second half of 2027
[22:56] Speaker 8: and likely into 2028. New capacity is coming online, but
[23:00] Speaker 8: it takes about two years for these shells to be
[23:03] Speaker 8: built and then up and running. So give or take
[23:08] Speaker 8: four to six quarters before we start getting memory pricing relief.
[23:13] Speaker 5: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,
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