Hi, I'm CNBC producer Zach Vali. Today on SquawkPod, FDA Commissioner Dr. Marty Makary is pushing for changes in our health system. More approvals, more rare disease treatment, and more transparency.
We decided at the FDA that if we reject a drug, the public deserves to know why. So for the first time in history, our letters detailing why a drug has not been accepted, detailing that we gave guidance that was not followed, detailing why the clinical trial showed no benefit, that is now public information in real time.
In the AI world, Nvidia reported strong earnings and guidance. CEO Jensen Huang spoke to our own Becky Quick. AI is a new industrial revolution. Huang even weighs in on the other AI story of the morning, the Pentagon's showdown with Anthropic.
Here we are in a standoff that is actually, I think, a much bigger deal than maybe we're even giving it credit for.
Plus, the Beast Games finale in the books. And season 3 already underway. Beast Industries CEO Jeff Yos on producing Mr. Beast, the most followed person on the internet with 1 billion followers across all platforms.
How much more can that grow? There's seven more billion people to get.
It's Thursday, February 26th. Squawk Pod begins right now.
Good morning, everybody. Welcome to Squawkbox right here on CNBC. We are live from the NASDAQ market site in Times Square. I'm Becky Quick along with Joe Kernen and Andrew Ross Sorkin. Chip giant Nvidia reporting better than expected fourth quarter results. It was driven by revenue growth of 75% in its core data center business. That's a business that's very important to Nvidia. They control about 95% of that market. They see profit margins or gross margins of 75%. They are the 800 pound gorilla and then some when it comes to all of this. And we spoke with Nvidia CEO Jensen Huang about that revenue growth and AI chip demand first on CNBC.
Demand is really strong and it's diverse. It's coming from all over the place. At the core of it, Becky, what's happening is that AI just went through its third inflection. The first one was two years ago with ChatGPT and then the second one was about a year ago when the reasoning AI agents came out. Reasoning AI systems came out and the number of tokens, the amount of computing demand that it needed to be able to reason and produce all the excellent answers that these chatbots were doing was really sky-high. And then now with these agentic systems, we're now having these agents able to reason, take task, and actually do work. And so the agentic systems are doing incredibly well all over the world. Of course you've heard how Claude Code and OpenAI's Codex are doing incredibly well in companies all over the world in software programming but it's starting to spread out into all these different other types of tasks. And so at the core it's because AI has gone through a new inflection point and the amount of computing demand is off the charts.
Well, let's talk a little bit about your customers too because you did say that the big companies, the big hyperscalers actually increased the amount of spending and I think they make up about half of the spending that went into the data segment in particular. But you said the other customers were growing really quickly and that's where so much of the growth came from. Who are those other customers?
You know, most people see AI as a chatbot and it's understandable because OpenAI is so popular and they're doing so well and we hear a lot about Claude Code. But remember AI is about a new way of doing software and affects every single industry. NVIDIA is really fortunate in the sense that we are the computing platform, the accelerated computing platform for every cloud, for any model as well as every different domains of science. And so we're seeing success whether it's in small cloud service providers regionally around the world. It could be in enterprise, our big partnership with Eli Lilly. We have many others, car companies that are building autonomous vehicles. The robo taxi era is coming. And so there's a whole bunch of computing being built for that. Scientific computing is being completely revolutionized by artificial intelligence. And so, you know, the number of industries that are affected by AI because AI is fundamentally a new way of doing software is going to be very broad-based. And that's one of the reasons why I say AI is a new industrial revolution because every single company's affected, every industry will be transformed and every country will power it. And so, it's very broad-based.
Again, though, you talk about their market share of that data center chips. 95% the estimates run from 90 to 98% but about 95% and when you have margins like that 75% it's obviously a market that lots of others want to get involved with. You did hear earlier this week about AMD cutting a deal with Meta that's supposed to be a multi-year deal that they're going to be looking at as well. You have all kinds of competitors who are trying to get in on that but you also have Nvidia kind of running as fast as they can. The new chips that are going to be rolled out. They talked about those new chips that are coming. Vera Rubin's that will be the second half of this fiscal year and that is the way that they are planning to try and keep some of that market share. We'll show you more excerpts from this interview a little later today, just talking about the competition they're facing, talking about what he sees with the SaaS apocalypse or whatever you want to call this, just where the SaaS companies are really under pressure because you also heard a report last night from Salesforce. That stock was trading a little lower on some of these questions. But we'll get Jensen's take on whether this is overdone in the market.
It's just how long can you keep running ahead of the law of large numbers? Yeah, it seems like that always, that's like Einstein could have proposed a physical law that there's something called the law of large numbers. No one's ever, you can't break through the law of large numbers. But AI might be so it may be different this time so that you can, how do you do a $5 trillion company? How do you double a $5 trillion? I guess it goes to 10 trillion.
Look, OpenAI is a good example of a company that had a valuation of $200 billion and $400 billion and 500 billion.
We're at five now and you're getting 75% revenue growth on what number did they get the 75 on? It was...
It was 68.1 billion what they did this time.
So do you do 75 on 68 next year?
Well, that's where the doubters come in. And if you look at the valuation that the street gives just in terms of PE ratio, they are valuing Nvidia at lower ratios than they are any of the other chips at this point. People say because of exactly what you're saying.
The bears say it's priced for perfection.
It's almost priced. You are assuming they're going to beat on all metrics.
Yeah. Perfection with where it is, but they may even continue to beat on all metrics. Next quarter and the quarter after that.
The guidance that they issued for the current quarter in terms of revenue was $5 billion above what the street was expecting. And still you saw the stock at one point up three and a half to 4%. It dropped while I was talking to him yesterday and now it looks like it's up by less than 1%.
So have you thought both of you about how many things would be replaced by agentic AI? I've only thought about, you know, travel agents and a couple of things. How many things are there?
I think you might be replaced by AI but yeah not you.
No, I'm completely, I'm going first. Did he speak at all to this, the circular stuff, the whole idea of the sort of vendor financing? Because vendor financing can work in certain instances by the way. Boeing does vendor financing, like people do vendor financing.
We didn't get into in-depth with that but if you looked at the numbers yesterday the cash flow that they had at the end or the cash and cash equivalents that they had at the end of the quarter was $20 billion more than it had been a year ago and other analysts were looking at that saying if you were worried about the vendor financing that tells you that they have money to spread around. The other issue is that so much of the vendor financing is kind of pointing at areas where you could see a real bottleneck for AI to try and move forward. At one point people thought it was the Nvidia chips, but they said they've got supply to last several quarters looking out. That was the other thing they said last night. So the bottleneck is not going to be Nvidia chips probably at this point, but other arenas. And that's where some of that money's going.
And where would you try to play if it doesn't work, Andrew? What would the journal points out that bears are doing out Amazon and Alphabet. They're not doing Nvidia. They're supposed to come up with a combined 670 billion to build out just their AI infrastructure. So, is that overdone for those two? Can they got it, don't they? I mean, Meta's and Alphabet's results. No, they need...
Out of control, too. And they need to do it, but they got the money, too, don't they?
And they have the money. It's a different story, but that's a different question about than the rest of the whole business. We'll see.
Netflix co-CEO Ted Sarandos is reportedly heading to the White House for meetings today. Politico Report says Sarandos will be talking about his company's bid for Warner Brothers Discovery, obviously, and President Trump's call for Netflix to fire board member Susan Rice, but it's unclear if Sarandos will meet with President Trump himself. Netflix declined to comment on the report, and the White House says it's not going to provide information or discuss private meetings that may or may not be happening at the White House.
The Pentagon potentially laying some groundwork for a move against Anthropic. Axios is now reporting the defense department also asking Boeing and Lockheed Martin yesterday about the company's exposure to Anthropic's AI model Claude. That could be an indication that officials are getting ready to label Anthropic a supply chain risk. The Pentagon putting pressure on Anthropic to let the government use the company's technology for what they're saying is any lawful purpose it wants. Anthropic has pushed back on that broad access and sources tell CNBC that defense secretary Pete Hegseth gave Anthropic until tomorrow afternoon to provide wide access to its technology before the government could label Anthropic a supply chain risk or invoke the Defense Production Act. So here we are in a standoff that is actually I think a much bigger deal than maybe we're even giving it credit for because...
You say the word Hegseth and it involves... No, it's not even to me this isn't even about politics. It's about the idea that Claude and Anthropic in particular, they've been the most worried about safety of all of the companies.
They seem to have this week, we talked about it earlier this week, sort of, you know, lessened some of their viewpoint.
Well, no, no, no. So there's two things going on. There's the safety issue just about like how safe is Claude, how safe are all these models and the fact is that they're actually lessening that in their sort of their safety groupings.
To be more competitive at the same time that they're saying that this stuff could still be used in really bad ways.
I do think it's a serious concern that Dario Amodei has had over this time. And by the way, we talked to Jensen Huang about this too. We'll play that a little later. Just bringing this up because Anthropic is a huge partner and customer.
And where does he land? Can you give us a little hint?
The defense department has the right to use the technology and use products that they procure in the way that serves their needs and obviously their needs are, you know, it's the pen of war. In the case of Anthropic of course they have the right to decide how they would like to market their products and what kind of use cases it could be used for. And so I think they both have their reasonable perspective and however it gets worked out this won't be the, Anthropic is not the only AI company in the world and of course the United States is not the only customer for any company in the world and so I think they both have their proper positions. I hope that they can work it out. But if it doesn't get worked out it's also not the end of the world.
I don't think we're an agentic threat. I don't think it's a threat to us because we...
Because we have perfected, because it's garbage in garbage out and we have perfected our garbage.
Oh, you mean to us as anchors? Yeah. Oh, I thought...
I think it's, but I think it is a genuine threat to us.
You can't, they don't, they don't have...
Yes, I see. I that too. Even you.
Even you have perfected. Even you...
I like how you each say even you.
No, even you have perfected.
Well, Becky's obviously safe. Well, she's safe. But even you are essential. You're essential.
You need keyman insurance if you don't.
I think Andrew is talking about concerns about humanity.
I'm saying about ourselves.
I'm talking about humanity. I'm talking about robots that are controlled by Claude and drones. All right. They're not going to be sitting here.
The way the government can use these things and can use these things either inappropriately on their own or use these things inappropriately without even knowing.
You said earlier was going to replace us. That's what I'm still...
You're still back on that.
Yeah, I'm still back. Always thinking of, you know...
