Neoclouds "Will Not Collapse by Any Means:" Rolf Bulk on CRWV, NVDA & MU Acceleration

Marley (0:00)

For more on the chip space, we are joined by Rolf Bulk, the head of semiconductors at Futurum Equities. And Rolf, you're joining us from Semicon West. So I'd love to start with what you're hearing on the ground there. What are some of your key takeaways from the conference so far?

Rolf Bulk (0:16)

Yes, hey Marley, and thanks for having me. Well, you know, overall, there's still a lot of optimism and in the SemiCAP space.

Most people that have spoken to expect WFE spending, so we have FAP equipment spending to grow by around 30% this year, next year, even into 2028 So what we're looking at here is a market that is set to double from 2025 to 2028 So optimism on the near term remains very strong. In the back end of the decade, 2029, 2030, expectations are still a bit uncertain. How is this cycle going to shape up in the back end of the decade? But in the near term, everything looks very favorable, and that has also been confirmed by ASML over the last few days.

Marley (1:00)

So we're looking at favorable, we're seeing signs that the AI build out is accelerating at least through 28 Where are you hearing any caution, Rolf?

Rolf Bulk (1:10)

Well, in particular, when it comes to sizing, what's the eventual end demand for AI is going to be in the back end of the decade, there's still question marks around this. This is also something that we've seen over the last few days in relation to, for instance, CoreWeave.

There is skepticism around whether this build out can continue to be financed and whether the eventual demand is going to meet the lofty expectations that the market has at the moment. So there are absolutely doubters, but in the near term, we shouldn't forget that for 2027, and Nvidia is guiding for revenue growth of 70 to 100 percent, AMD expects to double the revenues, Broadcom, very similar growth figures. So the near term looks secure, stable, but beyond that, in the back end of the decade, yes, that remains a bit of a question mark.

Marley (2:03)

And let's talk about CoreWeave, because obviously fascinating move, I mean 15 percent to the downside yesterday, we're seeing another five plus percent move lower today, bringing a lot of the other NeoCloud names down with it as well.

As you look at that, I mean, CoreWeave does have a substantial backlog of business. How, when you are analyzing CoreWeave, how are you weighing the backlog that the company has against the financing and the actual building of the infrastructure that's needed to finance those contracts and fulfill them?

Rolf Bulk (2:36)

Yes. Ultimately, I think for major NeoClouds such as CoreWeave, given the constraints that we continue to see on compute, demand for compute exceeds supply by by far. So I expect that an integral part of the AI infrastructure chain such as CoreWeave will continue to fare well. Now, that doesn't mean that financing new projects is not going to be challenging for them. Obviously, with increasing rates, it is becoming increasingly difficult to justify building out those data centers if you do not have a very strong balance sheet yourself.

CoreWeave is backed by Nvidia, equity investment, financial backstop, supply agreements for GPUs. I would expect they will continue to fare well, but some of the smaller Neo Clouds, they might find their businesses in jeopardy over the coming years. That said, all of those companies have assets, tangible assets. You have GPUs, power supply agreements, data center shelves.

So I don't expect this space to collapse by any means, but I do think that we're in for some consolidation over the next few years.

Marley (3:46)

So no collapse, but some consolidation, and perhaps even a slowdown. That's the conversation I've been talking about all morning. If borrowing costs remain high, could it force a bit of a slowdown in the expansion? While we see AI demand holding up, and you mentioned Nvidia there, do you see a point in time before the end of the decade where this potentially negatively impacts Nvidia and the semiconductor equipment suppliers?

Rolf Bulk (4:15)

That is a conceivable scenario. I wouldn't call it that a reasonable base case. The base case that I have is some continued strong growth, close to doubling of CapEx in 2027

Another strong growth year in 2028 We've already heard NVDA and Broadcom talking about 2028 But 2029, 2030, a reasonable assumption is a slowdown of growth. But still, I do expect it to be a growth environment. And yes, in NVDA, they will see their growth slow down as well. Not only because the market slows down, but also because NVDA is beginning to see the market share to the likes of AMD, Broadcom, MediaTek and so on.