WEBVTT - Broadcom Expects AI Chips Sales to Top $100 Billion in 2027 0:00:02.680 --> 0:00:13.360 Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is live 0:00:13.400 --> 0:00:17.200 from coast to coast with Carolline Hide in New York 0:00:17.480 --> 0:00:19.480 and Eva Low in San Francisco. 0:00:22.480 --> 0:00:24.000 This is Bloomberg Tech Coming up. 0:00:24.000 --> 0:00:27.920 Broadcom CEO Hocktan says the company expects AI chips to 0:00:27.920 --> 0:00:30.720 top one hundred billion dollars next year, the stock pushing 0:00:30.800 --> 0:00:31.720 higher on the earnings. 0:00:31.800 --> 0:00:32.120 Plus. 0:00:32.120 --> 0:00:35.720 Anthropic has resumed discussions with the Pentagon about the use 0:00:35.760 --> 0:00:38.120 of its AI models by the US military amid of 0:00:38.159 --> 0:00:39.720 feud over safety details. 0:00:39.760 --> 0:00:43.960 US hour an industrial software startup, Nominal, is now valued 0:00:43.960 --> 0:00:46.760 at a billion dollars thanks to Series B funding led 0:00:46.800 --> 0:00:49.479 by Founders Fund. We speak to the company CEO and 0:00:49.560 --> 0:00:51.560 Trey Stevens of Founders Fund. 0:00:51.880 --> 0:00:54.720 First we check in on these publicly traded markets. Then 0:00:54.720 --> 0:00:57.360 once again anxiety rips through. We're in a sixth day 0:00:57.400 --> 0:01:00.280 of conflicts with Iran and all prices are still and 0:01:00.320 --> 0:01:03.640 concern brank crude up three points three percent, supply chains 0:01:03.680 --> 0:01:05.480 being choked. We're going to get into that story later on, 0:01:05.800 --> 0:01:08.959 but it means that we're seeing inflationary pressures, worrying people 0:01:08.959 --> 0:01:11.560 about the Federal Reserve's ability to cut rates going forward. 0:01:11.560 --> 0:01:12.800 We got jobs data tomorrow. 0:01:12.959 --> 0:01:15.000 Then as that one hundreds down by tenth of a percent, 0:01:15.040 --> 0:01:17.600 two tenths of percent, let's call it bitcoin of by 0:01:17.600 --> 0:01:18.360 more than two percent. 0:01:18.360 --> 0:01:19.119 What are you looking at? 0:01:19.440 --> 0:01:22.440 Yeah, it's the difficult tension in public market, the Iran war, 0:01:22.560 --> 0:01:23.960 but also earnings is there. 0:01:23.959 --> 0:01:25.399 So broad comes up five percent. 0:01:25.440 --> 0:01:28.480 It's a big gain, but nothing sort of remarkable against 0:01:28.480 --> 0:01:31.960 recent history. The key data point is one hundred billion 0:01:32.000 --> 0:01:35.440 dollars just in AI chip sales in twenty twenty seven, 0:01:35.480 --> 0:01:38.399 which is remarkable because in the current quarter they'll do 0:01:38.440 --> 0:01:41.759 about ten billion dollars. In the quarter gone chip sales 0:01:41.760 --> 0:01:45.319 grew doubled basically one hundred percent from a year ago. 0:01:45.440 --> 0:01:47.000 There's a lot of momentum there, but it was a 0:01:47.080 --> 0:01:50.120 high bar. There's also anxiety about them executing. We need 0:01:50.160 --> 0:01:50.760 to dig into it. 0:01:51.200 --> 0:01:51.880 Let's dig into it. 0:01:51.880 --> 0:01:54.760 A Blueberg exuty supporter run A Stelca, who goes to 0:01:54.920 --> 0:01:57.960 all the analysts, reports the reactions to the numbers. Are 0:01:57.960 --> 0:01:59.840 they buying this one hundred million dollar figure? 0:02:01.200 --> 0:02:01.560 So far? 0:02:01.600 --> 0:02:04.200 It does seem like people are. People are pretty optimistic 0:02:04.240 --> 0:02:07.120 about the company's position with AI, and a lot of 0:02:07.160 --> 0:02:10.360 the AI forecasts at broadcome game we're seen as much 0:02:10.400 --> 0:02:13.560 better than expected. So there's certainly a lot of optimism, 0:02:13.560 --> 0:02:15.320 but like you said, we're not seeing the stock really 0:02:15.360 --> 0:02:17.520 go on a tier here the way we've seen in 0:02:17.639 --> 0:02:21.000 past quarters when they really surprise to the upside. 0:02:21.080 --> 0:02:23.080 Part of this in the data is that there was 0:02:23.160 --> 0:02:26.680 an existing data point of backlog of seventy three billion 0:02:26.680 --> 0:02:29.520 dollars relating to AI, and they seem to be getting 0:02:29.520 --> 0:02:31.200 a lot of credit by coming out and saying we 0:02:31.280 --> 0:02:34.400 have line of sights quotes to this one hundred billion 0:02:34.440 --> 0:02:37.600 dollars through twenty twenty seven or on an annual basis 0:02:37.639 --> 0:02:41.200 twenty twenty seven, Like, is that just what the street 0:02:41.240 --> 0:02:44.280 is seizing on. Did they make an assessment of margins? 0:02:44.320 --> 0:02:46.480 Did they make an assessment of the other parts of 0:02:46.480 --> 0:02:48.440 Broadcom's business, which is also software. 0:02:49.400 --> 0:02:52.480 Yeah, I believe the software business disappointed at least mildly 0:02:52.560 --> 0:02:54.760 this past quarter. But I think the focus really is 0:02:54.800 --> 0:02:57.000 on the AI side of things. I've spoken to people 0:02:57.000 --> 0:02:59.799 who say that Broadcom just doesn't get the credit for 0:02:59.800 --> 0:03:03.200 a position in AI, especially relative to companies like in video, 0:03:03.280 --> 0:03:06.960 So this is obviously a very positive data point for them. Now, 0:03:06.960 --> 0:03:08.400 I think there are a lot of just sort of 0:03:08.560 --> 0:03:12.120 growing concerns out there about you know, capital spending on 0:03:12.240 --> 0:03:14.799 AI infrastructure. Are we getting to a point where we're 0:03:14.800 --> 0:03:17.120 getting near peak earnings. There might be some of that 0:03:17.240 --> 0:03:19.440 that are sort of tempering some of the enthusiasm for 0:03:19.480 --> 0:03:22.000 Broadcoms results, But I think overall, anyone who is just 0:03:22.040 --> 0:03:23.760 looking at the numbers should be pretty happy. 0:03:25.000 --> 0:03:27.320 Whomo's Ryan for the l Selca who all morning in 0:03:27.400 --> 0:03:29.920 Chicago has been across dozens of sales side notes and 0:03:29.960 --> 0:03:31.920 gave us the summary there. I want to talk more 0:03:31.919 --> 0:03:35.720 about broadcon Jomfienie Advisors, capital partner and portfolio manager about 0:03:35.720 --> 0:03:39.040 thirteen billion dollars that you manage for clients and broad 0:03:39.040 --> 0:03:42.800 cooms the top three right in terms of holdings. It's 0:03:42.840 --> 0:03:46.200 really interesting the direction of a six and custom silicon. 0:03:46.600 --> 0:03:49.120 You know, how do you go from ten billion dollars 0:03:49.440 --> 0:03:52.640 of sales in the current quarter to telling your investors, oh, 0:03:52.680 --> 0:03:54.880 by the way, next year in excess of one hundred 0:03:54.920 --> 0:03:56.120 billion dollars just in chips. 0:03:56.920 --> 0:03:58.000 That's believable to you. 0:04:00.000 --> 0:04:04.000 It's an incredible ramp ed Ludlow, no question about it. 0:04:04.040 --> 0:04:06.640 But you know, when you look at the history of Broadcom, 0:04:07.520 --> 0:04:09.600 you know we've owned them we've owned this stock for 0:04:09.680 --> 0:04:12.480 clients since I arrived at the firm in twenty fifteen. 0:04:12.560 --> 0:04:13.640 It's been a core holding. 0:04:13.640 --> 0:04:14.560 It's been a leading. 0:04:14.280 --> 0:04:17.880 Holding for many of our strategies on the equity side 0:04:18.240 --> 0:04:22.960 because of several things. One, they've always managed to maintain 0:04:23.000 --> 0:04:25.720 a deep moat in their products relative to the competition, 0:04:25.839 --> 0:04:29.480 whether it was for iPhone chips or storage or elsewhere. 0:04:29.520 --> 0:04:32.880 And their acquisitions have generally led to better cost savings 0:04:32.920 --> 0:04:35.640 than folks have predicted. And you know now with the 0:04:35.640 --> 0:04:39.120 diversification you know into software and that continuing to do 0:04:39.160 --> 0:04:42.520 well through VMware, you know, they have recurring revenue streams 0:04:42.520 --> 0:04:45.400 through the software side, which helps maintain margins. And they've 0:04:45.440 --> 0:04:48.039 shown their ability to execute the fact that they've locked 0:04:48.120 --> 0:04:51.840 up capacity through twenty twenty eight tells us how good 0:04:51.880 --> 0:04:53.000 their visibility is. 0:04:54.000 --> 0:04:56.960 So I want to seize on that pot. A lot 0:04:56.960 --> 0:04:58.480 of people ask me, like, what is it the brawl 0:04:58.480 --> 0:05:00.800 com actually does. So if you take goo Goll's TPU, 0:05:00.920 --> 0:05:05.839 for example, they co design the architecture, make it a 0:05:05.920 --> 0:05:10.800 manufacturable chip. But Rowcom is fabulous, right, And so that 0:05:11.080 --> 0:05:13.160 bit you just said, as far as I can tell, 0:05:13.240 --> 0:05:15.920 the value is not just in the design of the TPU, 0:05:16.240 --> 0:05:19.880 which they've been discrete talking about in recent years. It's 0:05:20.080 --> 0:05:23.039 the ability to scale and get it to market a scale. 0:05:23.440 --> 0:05:24.680 Is that how you look at it? 0:05:25.839 --> 0:05:27.720 Yeah, that's that's definitely part of it. 0:05:27.920 --> 0:05:28.000 Ed. 0:05:29.040 --> 0:05:32.760 You know, their ability to work well with TSMC. I mean, 0:05:32.839 --> 0:05:35.279 it's not just up to TSMC to get these. 0:05:35.120 --> 0:05:36.080 Designs to work. 0:05:36.120 --> 0:05:40.000 It's very much a coordinated process of design with the 0:05:40.040 --> 0:05:43.440 manufacturing capabilities. So they have shown that they're very effective 0:05:43.440 --> 0:05:47.560 in helping TSMC get to high yields and that's behind 0:05:47.600 --> 0:05:48.840 the scaling capability. 0:05:49.080 --> 0:05:51.120 But it isn't just the TPU or the XPU. 0:05:51.400 --> 0:05:54.720 It's also the fact that they're selling the networking you know, 0:05:54.760 --> 0:05:58.800 technology along with these chips. In fact, with networking expected 0:05:58.839 --> 0:06:02.440 to grow faster, they're selling networking devices beyond their six 0:06:02.520 --> 0:06:06.359 customers to the broader ecosystem of AI based data centers. 0:06:06.600 --> 0:06:09.440 They're becoming even more like in video in terms of 0:06:09.640 --> 0:06:13.560 just a full stack offering and in many ways going 0:06:13.640 --> 0:06:16.239 for the key competition that is designing the chips for 0:06:16.360 --> 0:06:19.039 the META for the open AI. Did you get enough 0:06:19.080 --> 0:06:21.880 certainty that relationship with Meta is really strong that they 0:06:21.920 --> 0:06:23.480 are going to be able to ramp in the way 0:06:23.480 --> 0:06:25.719 that they expect for open AI and these companies that 0:06:25.800 --> 0:06:27.800 want to build their own and not just wholly rely 0:06:27.880 --> 0:06:28.400 on in video. 0:06:29.680 --> 0:06:31.599 You know, I think one thing we know about Broadcom 0:06:32.000 --> 0:06:34.720 is that they work very closely with their customers and 0:06:34.760 --> 0:06:37.400 that is what has given them visibility in the past. 0:06:37.440 --> 0:06:40.400 And it's that visibility they're pointing to now. They work 0:06:40.440 --> 0:06:43.280 on multi year roadmaps and so yes, when they say 0:06:43.320 --> 0:06:46.400 that Meta is continuing to work with them, you know, 0:06:46.880 --> 0:06:49.720 that seems like a reliable piece of information. There was 0:06:49.760 --> 0:06:52.720 a lot of information on last night's call. But you know, 0:06:52.800 --> 0:06:57.880 beyond what Nvidia does, the networking capability that Broadcom brings 0:06:57.880 --> 0:07:00.919 to the table allows their customers not just to build 0:07:01.000 --> 0:07:06.039 right around the chip, but also to the connectivity to 0:07:06.160 --> 0:07:08.680 other parts of the server and the data center. And 0:07:08.720 --> 0:07:11.480 that's you know, that's a different line of products. And 0:07:11.480 --> 0:07:13.840 and then you look beyond just the AI business and 0:07:13.880 --> 0:07:18.160 you've got software that is separate and storage and other 0:07:18.600 --> 0:07:23.160 iPhone and other technologies. Gives them a more diversified positioning 0:07:23.320 --> 0:07:25.800 relative to in video. We like in video. We've owned 0:07:25.800 --> 0:07:27.520 it for a long time for clients as well, and 0:07:27.600 --> 0:07:29.320 we think it's going to continue to grow. We think 0:07:29.360 --> 0:07:31.480 the pie is expanding so much at those room for 0:07:31.560 --> 0:07:35.200 both of them. But the visibility that that broadcom articulated, 0:07:35.760 --> 0:07:38.480 I think is really compelling, and I think that's why 0:07:38.520 --> 0:07:41.320 you're going to see the analyst community get more on 0:07:41.400 --> 0:07:43.160 board and raise those estimates. 0:07:43.240 --> 0:07:45.880 Can you talk a little bit more how complementary it 0:07:45.960 --> 0:07:47.920 is to have the hardware and the software offering why 0:07:48.000 --> 0:07:48.880 VMware matters. 0:07:50.440 --> 0:07:53.880 Yeah, So you know, the you know the role of 0:07:53.960 --> 0:07:58.000 the enterprise software is to not just be able to 0:07:58.800 --> 0:08:02.440 run AI for your company and use other AI models, 0:08:02.800 --> 0:08:06.120 but it's to integrate those you know, capabilities of AI 0:08:06.200 --> 0:08:10.280 to deliver insights into how you run your businesses right, 0:08:10.360 --> 0:08:15.160 And so that's it's not enough just to have the information, right, 0:08:15.160 --> 0:08:17.280 You've got to then pass that information through to your 0:08:17.360 --> 0:08:20.640 enterprise software to enable you to change the way you're 0:08:20.680 --> 0:08:23.800 doing things within the business, change the way you're serving customers. 0:08:24.040 --> 0:08:26.440 So that's the integration that you know that they articulate, 0:08:26.520 --> 0:08:28.160 and I think is a pretty compelling story. 0:08:29.400 --> 0:08:32.880 You know, hoc Tan historically has been mister m and 0:08:32.920 --> 0:08:36.240 A right, and I look at like how Nvidia has 0:08:36.360 --> 0:08:42.520 kept itself in the lead, not necessarily outright acquisition, but investments, Uh, 0:08:42.920 --> 0:08:46.559 you know, licensing agreements. Do you see Broadcom doing more 0:08:46.600 --> 0:08:47.880 of that, Joanne. 0:08:50.880 --> 0:08:53.680 I'm not sure which direction you're going in with that one, Ed. 0:08:54.080 --> 0:08:57.839 I do see Broadcom continuing to look for M and 0:08:57.920 --> 0:09:01.000 A opportunities. I mean, right now, it's like they're flat 0:09:01.040 --> 0:09:04.439 out in terms of, you know, co developing these xpus. 0:09:04.800 --> 0:09:07.240 I don't know if they currently have the bandwidth to 0:09:07.280 --> 0:09:10.600 do any major M and A. They're you know, using 0:09:10.640 --> 0:09:14.000 up their capacity allocation at TSMC for what is clearly 0:09:14.000 --> 0:09:18.280 a high growth, high margin opportunity. But one thing they 0:09:18.360 --> 0:09:20.679 have done in the past regularly is when any one 0:09:20.800 --> 0:09:24.200 area of their business got too large relative to the rest, 0:09:24.240 --> 0:09:27.679 they'd go find some other area in which to invest 0:09:27.720 --> 0:09:30.320 in which to bring in into the company. So, you know, 0:09:30.679 --> 0:09:33.240 maybe over the next couple of years, I would see 0:09:33.240 --> 0:09:35.200 that as a possibility. I don't see it as imminent. 0:09:35.480 --> 0:09:35.839 At the moment. 0:09:35.880 --> 0:09:37.959 They're investing in their shares and buying them back. Johanne 0:09:37.960 --> 0:09:39.720 Phoeni of Advice's Capital. 0:09:39.760 --> 0:09:41.520 This aways great to check in with you. Thank you. 0:09:42.080 --> 0:09:45.319 Look, let's turn to private credit now because black Rock 0:09:45.480 --> 0:09:48.880 It's marked down its loan to Infinite Commerce holdings to 0:09:49.160 --> 0:09:51.959 zero from one hundred to zero in just three months, 0:09:52.080 --> 0:09:54.079 having varned that tech company is dead at one hundred 0:09:54.080 --> 0:09:56.680 cents on the dollar. Look, the roughly twenty five million 0:09:56.679 --> 0:09:59.800 dollar loan to the so called Amazon aggregator is now 0:09:59.800 --> 0:10:03.080 can and worthless, marking the second sudden wipeout to hit 0:10:03.080 --> 0:10:06.439 BlackRock's private credit division in recent months. What's interesting about 0:10:06.440 --> 0:10:08.280 Infinite Commerce ED is. 0:10:08.200 --> 0:10:09.600 It's also VC backed. 0:10:09.880 --> 0:10:12.160 And look they're saying Black Crocks saying a lot of 0:10:12.160 --> 0:10:15.280 this business was written in twenty twenty one. Well, we 0:10:15.360 --> 0:10:17.240 just think about what the venture community has got in 0:10:17.320 --> 0:10:20.560 terms of liabilities to twenty twenty one equity and where 0:10:20.559 --> 0:10:21.880 that currently trades for them. 0:10:22.480 --> 0:10:25.520 This is Caroline Hyde's stomping ground. So being a bit 0:10:25.520 --> 0:10:28.200 careful in going to the key risk in private credit. 0:10:28.200 --> 0:10:29.440 But the thing is that when you have a loan 0:10:29.520 --> 0:10:32.400 to a private company, it doesn't like trade every single day. 0:10:32.720 --> 0:10:35.600 The valuation kind of lacks and so before you know it, 0:10:35.600 --> 0:10:38.520 if something's gone wrong, then you get the piece of 0:10:38.559 --> 0:10:40.160 news that you just read out. That's kind of how 0:10:40.200 --> 0:10:41.439 I understand the market at least. 0:10:41.559 --> 0:10:46.520 What's interesting is another credit offering, well, another partner that had. 0:10:46.360 --> 0:10:48.000 Been lending to Infinite Commerce. 0:10:48.080 --> 0:10:50.920 They mark that loan down in December, so maybe black 0:10:50.960 --> 0:10:51.800 person might flow to it. 0:10:52.720 --> 0:10:54.760 Most read story on the Bloomberg in No Surprise and 0:10:54.840 --> 0:10:58.240 coming up in the program, talks resume between Antrotropic and 0:10:58.280 --> 0:11:01.439 the Pentagon over the military's AI use the details. 0:11:01.480 --> 0:11:02.960 Next this is Bloomberg. 0:11:02.520 --> 0:11:08.520 Tech Anthropic when it's resumed talks with the Pentagon over 0:11:08.600 --> 0:11:11.760 how it's AI models are used by the US military. Now, that's, 0:11:11.800 --> 0:11:14.400 according to a source, follows a feud between the two 0:11:14.480 --> 0:11:17.000 sides that had seen President Trump threatened to actually blacklist 0:11:17.040 --> 0:11:17.520 the company. 0:11:17.800 --> 0:11:18.400 Let's get more. 0:11:18.480 --> 0:11:23.080 The Bloomberg Tech editor Seth Figuerman and Dario Amanda had 0:11:23.280 --> 0:11:27.000 taken this dispute into the public realm. Now we understand 0:11:27.000 --> 0:11:28.720 perhaps some of talks going on in private again. 0:11:28.800 --> 0:11:30.600 Yeah, it feels like some of the public rhetoric, which 0:11:30.640 --> 0:11:33.280 on both sides that sounded pretty fierce, may not be 0:11:33.360 --> 0:11:35.600 reflecting what's going on behind the scenes right now. Now, 0:11:35.600 --> 0:11:37.920 we don't know how much closer they are to an 0:11:37.960 --> 0:11:40.920 agreement here after the standoff last week, but it does 0:11:40.960 --> 0:11:43.640 suggest that Onanthropic side there's a cloud of uncertainty now 0:11:43.679 --> 0:11:47.000 over its business. And for the Pentagon, we've known throughout 0:11:47.040 --> 0:11:49.720 that they've leaned pretty heavily on this model, and there's 0:11:49.720 --> 0:11:52.960 been calls both within the defense industry and in Silicon Valley. 0:11:53.000 --> 0:11:55.880 You're trying to de escalate the situation, So. 0:11:56.080 --> 0:11:58.199 I guess we don't know what a resolution would look 0:11:58.240 --> 0:12:00.319 like yet, right, But could you just go back Sephan 0:12:00.440 --> 0:12:04.800 explain what the point of difference was originally between Anthropic 0:12:04.880 --> 0:12:08.079 and what Anthropic's red lines were and why the Pentagon, 0:12:08.679 --> 0:12:10.600 I guess labeled them a supply chain risk. 0:12:11.040 --> 0:12:11.240 Yeah. 0:12:11.240 --> 0:12:14.679 I mean, throughout Anthropic has been pushing for two key 0:12:14.880 --> 0:12:20.000 red lions, first on protections against mass surveillance of American 0:12:20.040 --> 0:12:25.160 citizens and the other deployment of autonomous weapons. It seems 0:12:25.160 --> 0:12:28.240 like throughout the negotiation they've gotten close. There have been 0:12:28.280 --> 0:12:30.240 stipulations on the contract that get close to it, but 0:12:30.240 --> 0:12:32.920 there have been certain wording differences that might be nu 0:12:32.960 --> 0:12:35.280 ones to usk AB, which Anthropic seems to feel are 0:12:35.440 --> 0:12:37.560 key to ensuring their appropriate safeguards. 0:12:38.360 --> 0:12:41.079 Bloomberg's AI editor Seth Figmann, thank you very much that 0:12:41.200 --> 0:12:44.640 stick with AI because data centers have proven to be 0:12:44.679 --> 0:12:47.680 a target in the Middle East conflict. The war in Iran, 0:12:47.679 --> 0:12:51.439 a modern version of the wartime strategy of attacking an 0:12:51.440 --> 0:12:54.760 opponent's critical infrastructure. Bloomberg's Lonni Prince Lou is one of 0:12:54.800 --> 0:12:58.360 the reporters who's been looking into this and joins us. Now, 0:12:59.120 --> 0:13:02.400 really we're showing kind of the map right now of 0:13:02.440 --> 0:13:05.280 the infrastructure impacted, but there are key sites in the 0:13:05.360 --> 0:13:07.240 United Arab Emirates and in Bahrain. 0:13:07.640 --> 0:13:09.320 Bring us the latest reporting and what we know. 0:13:13.080 --> 0:13:18.319 Yes, so basically after the Israelian US strikes, Iran retaliated 0:13:18.800 --> 0:13:23.000 and they hit three Amazon sites in the UAE in Bahrain. 0:13:23.559 --> 0:13:26.040 The other way around, there was also two sites hit 0:13:26.200 --> 0:13:32.040 in Iran, or what we know of according to our reporting, 0:13:32.720 --> 0:13:35.400 And what this tells US is that data centers are 0:13:35.440 --> 0:13:40.160 becoming as critical and as strategic as oil and ports 0:13:40.200 --> 0:13:43.480 when it comes to war and the functioning of the 0:13:43.520 --> 0:13:49.720 state during war times. So why yeah, yeah, yeah, And 0:13:49.720 --> 0:13:53.800 why were Amazon specifically hit? They are of course wholly 0:13:53.840 --> 0:13:57.920 owned by the US software company, and there's been some 0:13:58.000 --> 0:14:02.360 reports that they may have hosted some military data. 0:14:02.800 --> 0:14:04.640 This is a frightening story and at the moment we're 0:14:04.640 --> 0:14:07.439 seeing breaking news around the UAE telling to buy residents 0:14:07.480 --> 0:14:10.920 to seek shelter immediately due to missile threats. We go 0:14:11.000 --> 0:14:14.920 back to therefore, what operators of strategic infrastructure should do. 0:14:14.960 --> 0:14:17.959 How can these operators protect data centers right now and 0:14:18.000 --> 0:14:21.479 the people within them. 0:14:21.840 --> 0:14:25.840 So obviously you have to evacuate some of these or 0:14:25.880 --> 0:14:29.880 operate on minimal staff going forward, I think you have 0:14:29.960 --> 0:14:33.880 to treat it as a military priority, so hard in 0:14:33.920 --> 0:14:38.120 your infrastructure, which is very costly. Maybe build underground in 0:14:38.240 --> 0:14:42.840 bunkers and caves. Yeah, but it's going to be have 0:14:42.880 --> 0:14:47.040 to have some sort of rethink as we go forward 0:14:47.160 --> 0:14:50.240 and think about data centers and how critical they are 0:14:50.280 --> 0:14:54.040 becoming also in during times of war. 0:14:54.120 --> 0:14:57.520 What that means I think those Lennie Prince viah thank 0:14:57.560 --> 0:15:00.360 you so much for joining us on this important story. Meanwhile, 0:15:00.400 --> 0:15:03.560 coming up, we're going to talk more about logistics. The 0:15:03.600 --> 0:15:06.360 logistics firms H Robinson joining us to talk about integrating 0:15:06.440 --> 0:15:10.000 artificial intelligence into systems and dealing with an. 0:15:09.840 --> 0:15:13.360 AI scare trade. Not to mention what's happening logistics in 0:15:13.400 --> 0:15:14.960 the Middle East. As a bloombog tech. 0:15:24.520 --> 0:15:27.120 We're in Iran has put pressure on global supply chains 0:15:27.160 --> 0:15:30.240 in recent weeks. Global logistics stocks have also been hit, 0:15:30.480 --> 0:15:33.400 like other sectors by the AI scare trade. But one 0:15:33.520 --> 0:15:35.800 name that's been given some credit in the markets for 0:15:35.840 --> 0:15:39.440 its AI integration is H Robinson. How is the company 0:15:39.920 --> 0:15:43.600 managing both of those disruptive events? Dave Boseman, the company 0:15:43.680 --> 0:15:46.000 CEO joins us now here in San Francisco, and you 0:15:46.040 --> 0:15:48.520 are in town with a big focus on AI in 0:15:48.640 --> 0:15:51.240 terms of who you're meeting with, But you are when 0:15:51.280 --> 0:15:54.200 I talk about c Is Robinson. Your job is to 0:15:54.200 --> 0:15:57.040 move goods from point A to point B. So let's 0:15:57.080 --> 0:15:59.480 start with the conflict in the Middle East. What are 0:15:59.480 --> 0:16:01.920 you seeing right well, how is it impacting you day 0:16:01.920 --> 0:16:02.600 to day so far? 0:16:03.160 --> 0:16:04.960 Well, first of all, thanks for having me here. 0:16:05.360 --> 0:16:05.440 Ed. 0:16:05.960 --> 0:16:09.000 One thing that's happening right now is disruption in our 0:16:09.040 --> 0:16:13.240 industry is a reality. Global disruption is a reality, and 0:16:13.240 --> 0:16:15.600 this is just one more thing that we're seeing and 0:16:15.640 --> 0:16:19.680 that we are navigating with our customers. We're obviously seeing, 0:16:20.560 --> 0:16:24.640 you know, the airports within the Middle East are shut down. 0:16:25.000 --> 0:16:27.160 It was an estimate of about ten to thirteen percent 0:16:27.200 --> 0:16:29.160 of that capacity being affected. 0:16:28.800 --> 0:16:32.080 Which an air freight in that context, correct air freight. 0:16:31.880 --> 0:16:34.640 Out of the airports out of the Middle East. The 0:16:34.680 --> 0:16:38.040 Strait of Hanus has obviously been affected, and that's called 0:16:38.040 --> 0:16:41.160 some re routing of ships around the Horn of Africa. 0:16:41.880 --> 0:16:46.760 And just slowing down overall shipments with that disruption. 0:16:46.880 --> 0:16:48.240 But again it's. 0:16:48.120 --> 0:16:50.160 Something that we deal with, we've dealt with it before 0:16:50.240 --> 0:16:52.480 and will help our customers navigate through that. 0:16:52.600 --> 0:16:55.120 This is a technology show, but you know, throughout the 0:16:55.160 --> 0:16:57.640 week we've been looking very closely at energy. You know, 0:16:57.680 --> 0:17:00.280 is there anything specific and distilled that you can tell 0:17:00.360 --> 0:17:05.920 us about diesel in other markets that impact your operations? 0:17:05.960 --> 0:17:06.240 Really? 0:17:06.680 --> 0:17:10.000 No, Obviously it's more of a wake issue. We look 0:17:10.040 --> 0:17:14.160 at oil prices really down the line. Obviously we have 0:17:14.560 --> 0:17:18.400 carriers that can be affected by potential prices down the line, 0:17:18.440 --> 0:17:21.879 but if that's something that we just keep an eye on, 0:17:22.400 --> 0:17:25.520 not something that is affecting. 0:17:25.160 --> 0:17:25.720 Us right now. 0:17:26.280 --> 0:17:29.359 So let's talk about how with one hundred thousand goods 0:17:29.520 --> 0:17:32.600 you're delivering every single day, Dave, how Ai and in 0:17:32.640 --> 0:17:36.320 particular lean Ai as you see it, supply chains helping 0:17:36.359 --> 0:17:37.120 you in this situation. 0:17:38.359 --> 0:17:41.720 Yeah, Caroline, we are essentially and we are in town 0:17:41.800 --> 0:17:44.679 for a tech conference and when industrial being invited to 0:17:44.720 --> 0:17:47.080 a tech conference, and we feel really good about that, 0:17:47.800 --> 0:17:53.040 and we essentially operate like an industrial or tech built 0:17:53.520 --> 0:17:57.399 company in an industrial space. We ship thirty seven million 0:17:57.680 --> 0:18:01.800 shipments annually and we have seventy five thousand customers that 0:18:01.880 --> 0:18:05.439 we deal with at Robinson and relationships with hundreds of 0:18:05.480 --> 0:18:10.560 thousands of carriers, and AI has allowed us to really 0:18:10.680 --> 0:18:15.080 disrupt the industry and disrupt ourselves by the way, and 0:18:15.119 --> 0:18:17.760 we feel good about that. It's going to the bottom 0:18:17.840 --> 0:18:21.640 line because we have real customers, real shipments, and real 0:18:21.800 --> 0:18:26.119 data and that's allowed us to have a productivity increases 0:18:26.160 --> 0:18:29.720 of forty percent since the end of twenty twenty two, 0:18:30.080 --> 0:18:32.560 and it's just going to the bottom line. At the 0:18:32.640 --> 0:18:37.600 end of the day. We're the end user beneficiary of AI. 0:18:37.720 --> 0:18:39.679 There's a lot of talk right now, but a company 0:18:39.720 --> 0:18:43.000 like Robinson benefits from that in the industrial space. 0:18:43.080 --> 0:18:44.119 I mean that talk. 0:18:44.359 --> 0:18:46.639 Just take me back to February the twelve, when you 0:18:46.680 --> 0:18:49.720 saw your stock plummet about twelve percent because there was 0:18:49.840 --> 0:18:53.120 talk that some karaoke company that's pivoted into the world 0:18:53.119 --> 0:18:55.960 of AI logistics was suddenly going to eat everyone's lunch. 0:18:55.960 --> 0:18:59.280 Shape Like, how do you ground shareholders in the reality? 0:18:59.440 --> 0:19:02.080 What is it show that the innovation keeps on coming 0:19:02.480 --> 0:19:05.280 and that you're disrupting yourself and not allowing others to 0:19:05.320 --> 0:19:06.760 come and take that chet. 0:19:08.280 --> 0:19:12.960 Well, Caroline, I look at that as perception and reality, 0:19:13.200 --> 0:19:16.040 and we're the reality in that space. 0:19:16.480 --> 0:19:18.640 It's Robinson and not perception. 0:19:19.280 --> 0:19:21.760 You have to have real, tangible things, and for us, 0:19:22.400 --> 0:19:26.000 our tangible things are our data, it's our engineers. That 0:19:26.160 --> 0:19:29.359 we are a builder, not a buyer, and we have 0:19:29.440 --> 0:19:31.520 things that are going to the bottom line. I was 0:19:31.600 --> 0:19:36.360 really really pleased that our investors, the analysts, the banks 0:19:36.800 --> 0:19:40.200 really came out and said it's Robinson that is actually 0:19:40.320 --> 0:19:43.480 the disruptor. And as Robins said, that should be up 0:19:43.480 --> 0:19:46.000 on this news and we agree quite frankly. 0:19:46.560 --> 0:19:49.720 I'm trying to get a sense of what happens next 0:19:49.800 --> 0:19:51.800 for you a little bit. You know, we accept AI 0:19:51.880 --> 0:19:53.760 low as costs, so you have to make a decision 0:19:54.040 --> 0:19:56.520 if they're lowering your costs, do you keep that for 0:19:56.560 --> 0:19:59.080 yourself or you do something with customers And then you 0:19:59.119 --> 0:20:02.600 look at your specifically for tech, where's that going. 0:20:02.600 --> 0:20:04.000 You've got to keep spending through it. 0:20:04.480 --> 0:20:07.320 Yeah, this is this is amazing when you think about it. 0:20:07.600 --> 0:20:10.399 First of all, AI is driving that efficiency and that 0:20:10.560 --> 0:20:13.399 it just gives us that more competitive moat that we have. 0:20:13.480 --> 0:20:16.000 It's a deeper and wider competitive moat if you look 0:20:16.000 --> 0:20:20.919 at the numbers. Being an end user AI play a 0:20:20.960 --> 0:20:22.000 fun fact for you. 0:20:22.080 --> 0:20:24.360