Speaker 1: Bloomberg Audio Studios, podcasts, radio news from Marhard.
Speaker 2: We're Innovation, Money and Power co lie in Silicon Valley, NBN.
Speaker 1: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 3: I'm Caroline hide A Bloomberg's World headquarters in New York,
Speaker 3: and I'm Ed Ludlow in San Francisco.
Speaker 4: This is Bloomberg Technology.
Speaker 3: Coming up you know it. Full coverage on Nvidio as
Speaker 3: its sales forecast lives up to those very high expectations.
Speaker 5: Plus, the Department of Justice takes aim to break up
Speaker 5: Live Nation.
Speaker 4: Details to come, but.
Speaker 3: First let's check in on these markets and more broadly
Speaker 3: on these two singular names. If we want to highlight
Speaker 3: for you front and center, we focus in on Live
Speaker 3: Nation and down more than five percent. The US Justice
Speaker 3: Department and almost thirty states suing Live Nation Entertainment that
Speaker 3: they want to force the company to sell off the
Speaker 3: ticketing giant ticket Master. In response, Live Nations saying once
Speaker 3: again that it is not them, but is the artist
Speaker 3: teams that set prices, not Ticketmaster, and they dispute the
Speaker 3: fact that they are in any way a monopoly. Power
Speaker 3: will have so much more as we go live to
Speaker 3: the DOJ. Meanwhile, in video up more than nine percent,
Speaker 3: extraordinary and eclipsing one thousand dollars. We therefore have a
Speaker 3: of course share split that will be music to retail
Speaker 3: investors ears. But what is music to investors is, more broadly,
Speaker 3: is the fact that they do post more than two
Speaker 3: hundred and sixty percent jump in revenue year on year growth. Now,
Speaker 3: wonder therefore, the share price is up in excess of
Speaker 3: that over the last twelve months, as well ed so
Speaker 3: much to digest in terms of revenue future revenue potential
Speaker 3: fact that they're going to double yet again twenty eight
Speaker 3: billion dollars in the next quarter.
Speaker 4: Look at this chart.
Speaker 5: This chart shows the market value or market capitalization of Nvidia.
Speaker 5: It's currently at almost two zero point six trillion US dollars.
Speaker 5: What that chart on your screen on the Bloomberg terminal
Speaker 5: is showing you is that Nvidia's value is more than
Speaker 5: Tesla an Amazon combined. Interesting in light of the fact
Speaker 5: that Tesla and Amazon are both customers of Nvidia, and
Speaker 5: it sells h one hundreds to both of them in
Speaker 5: this session alone. As you just pointed out, we're up
Speaker 5: more than nine percent. We've added almost two hundred and
Speaker 5: twenty billion dollars of market cap in a single session,
Speaker 5: or in other words, Nvidia has added almost two Intel's
Speaker 5: worth of market cap in a single session. Let's get
Speaker 5: the reaction to the numbers from Bloomberg Intelligence analyst Conngensabani
Speaker 5: here in San Francisco.
Speaker 4: The story is pretty clear.
Speaker 5: They're selling to the hyperscalers to a lesser extent, but
Speaker 5: the growth is that they've moved beyond the hyperscalers. That
Speaker 5: seems to be the read.
Speaker 6: Exactly and something really like we have been pointing on
Speaker 6: for a while, view want the enterprise piece to grow.
Speaker 4: It did grow fast for.
Speaker 6: The very first time in the last many quarters, because
Speaker 6: enterprise is much more diversified and.
Speaker 3: Sticky when we're thinking about the stickiness when we're thinking
Speaker 3: about the ultimate value longer term. Many were worried about
Speaker 3: this so called air pocket, the shift to the more
Speaker 3: the Blackwell architecture. Is that something that we saw any
Speaker 3: hint of how are we going to see companies replacing
Speaker 3: their technology?
Speaker 4: Yeah, there's two aspects to it.
Speaker 6: If we were in a normal cycle, you would think
Speaker 6: these h one hundreds to last about four to eight
Speaker 6: years and replaced on that cycle. But what we are
Speaker 6: seeing is right now, the biggest customers are racing. I
Speaker 6: would want to use the analogy of a pit stop
Speaker 6: in a racing where if you want to go cheap
Speaker 6: and hire a less prominent crew less technology lower parts,
Speaker 6: you can't afford to spend few seconds when you're fighting
Speaker 6: for milliseconds. That's what's happening with its customers. They can't
Speaker 6: afford to slow down and not purchase the most greatest
Speaker 6: and latest new product that puts out because everyone's competing
Speaker 6: against each other.
Speaker 3: The certainly are, but for now we know where the
Speaker 3: market share is ending up country in Savanni. We thank
Speaker 3: you for the latest from Blouemberg Intelligence. For more from
Speaker 3: a portfolio manager perspective, Franklin Equity Group Senior vice president
Speaker 3: and portfolio manager Jp Scandalios, who oversees three point nine
Speaker 3: billion dollar Franklin Small MidCap Growth fund, you oversee a
Speaker 3: holding an Nvidia.
Speaker 4: It has been a.
Speaker 3: Wise choice, friend, Jp, talk to us about what was
Speaker 3: the most important line coming from executives yesterday?
Speaker 7: Certainly, and good morning and thank you for having me.
Speaker 7: And just to be clear, we don't We no longer
Speaker 7: own Nvidia in my MidCap fund.
Speaker 8: I don't think it would qualify as a MidCap.
Speaker 7: The most important thing we heard, I think is that
Speaker 7: cadence that you refer to that Hopper is doing quite nicely,
Speaker 7: and Hopper two hundred is coming, has started shipping, and
Speaker 7: then before the end of the year we'll see Blackwell
Speaker 7: one hundred and Grace Blackwell soon they're following in twenty five.
Speaker 8: And so they have.
Speaker 7: They are putting up such velocity and product introduction that
Speaker 7: they're making it very difficult for challengers to keep up
Speaker 7: with them, especially since you heard Jensen say it yesterday.
Speaker 8: They're a platform company.
Speaker 7: All the software, all the firmware, all the APIs around
Speaker 7: that GPU, all the networking, and so they're really semiconductor
Speaker 7: analysts such as myself, we don't see a lot of these,
Speaker 7: and that's why you're seeing unprecedented numbers and growth rates
Speaker 7: because this artificial intelligence opportunity is really a secular one
Speaker 7: and perhaps one of the largest in our lifetime. The
Speaker 7: only person I can think over the last two or
Speaker 7: three years who's had as much competitive success as someone
Speaker 7: like Patrick Mahomes for the chiefs, This is just incredible
Speaker 7: and unprecedented.
Speaker 5: JP Franklin across all of its properties and all the
Speaker 5: funds has a lot of exposures in video. Right, And
Speaker 5: I know a lot of people at your firm. They
Speaker 5: call you, mister Nvidia. You know your brain focused and
Speaker 5: you're probably going to keep your job for the time being.
Speaker 5: You've done a good job so far. Jensen one's getting
Speaker 5: a lot of airtime. Right, He's got a lot of momentum.
Speaker 5: He has an answer for everything, and just bear with
Speaker 5: me because I want to be accurate on this that
Speaker 5: he's also a little bit inconsistent. Right, So the cadence
Speaker 5: of new product cycles is one new generation of accelerator
Speaker 5: per year. And he talks about how the H one
Speaker 5: hundred generation is designed such that you can just swap
Speaker 5: it out when the new generation comes along, and that
Speaker 5: all the customers have great visibility. But the data center
Speaker 5: guys are lowering exposure. At some point, we have to
Speaker 5: ask when this slows down, right, We have to ask
Speaker 5: when the competition comes, give your sort of most objective
Speaker 5: assessment of that timing.
Speaker 7: Certainly, and you make extremely important and our points. And
Speaker 7: a Franklin equity group, we try to maintain discipline and
Speaker 7: don't let my youthful looks surprise you. I've been aronounced
Speaker 7: to the nineties. I've seen these booms and busts, and tech,
Speaker 7: the tech sector is known for this. Correct, And you're
Speaker 7: absolutely right for those of us who've been doing this
Speaker 7: for twenty eight thirty years, in Vidia through no fault
Speaker 7: of their own semiconductors. In general, it's a cyclical business
Speaker 7: and you do get these boom busts, and people do
Speaker 7: miss quarters. And if I were to wager, I'd be
Speaker 7: on your side that there will be a quarter or
Speaker 7: maybe two quarters where these cloud guys decide, oh, you
Speaker 7: know what, we have enough GPUs right now, we have
Speaker 7: enough dgx's.
Speaker 8: We're going to pause for now. And so you're absolutely right.
Speaker 7: There will be you know, it's not going to be
Speaker 7: linear and up to the right, which Wall Street loves.
Speaker 7: So there will be a time where shares get hit,
Speaker 7: where an air pocket does happen. And so, yes, you
Speaker 7: have to remain disciplined. You have to do your DCF,
Speaker 7: you have to do your modeling, you have to talk
Speaker 7: to the customers, you talk to competitors, and be very disciplined.
Speaker 3: JP for sure, stick with us JAP scandalios of frankline
Speaker 3: equity groups.
Speaker 5: So it's got out to Bloom based Lucas in New
Speaker 5: York City. Lucas leads our screen time coverage, that's our
Speaker 5: coverage of the entertainment industry. And something that the Attorney
Speaker 5: General said Lucas was about illegal actions trying to protect
Speaker 5: a dominant market position. But what is it that the
Speaker 5: DOJ is accusing Live Nation of actually doing to keep
Speaker 5: the competition down.
Speaker 9: Well, that's some of what we'll have to see as
Speaker 9: as the case continues. You know, I don't think anyone
Speaker 9: in the music business would question that Live Nation is
Speaker 9: the most dominant player in the business right It's the
Speaker 9: number one promoter. Ticket Master is the number one ticket seller.
Speaker 9: What the government seems to be arguing is that Live
Speaker 9: Nation has used those two businesses to sort of self
Speaker 9: reinforce each other and strengthen its position. So, for example,
Speaker 9: you know, it would tell a venue that if you
Speaker 9: want to book a certain artist that Live Nation promotes,
Speaker 9: you need to use ticket Master as your ticket seller,
Speaker 9: or vice versa. You also heard in those Merrick Garland
Speaker 9: comments that it believes it's gone and acquired any potential competitors,
Speaker 9: granted much smaller competitors, but done so to consolidate control
Speaker 9: in certain markets. It also has issues with these exclusive
Speaker 9: deals that Live Nation and Ticketmasters strike with venues that
Speaker 9: sort of lock in a relationship for a long period
Speaker 9: of time. They believe that there should be multiple ticket
Speaker 9: sellers at certain venues. You know, people have made claims
Speaker 9: like these in the past, and it'll be really interesting
Speaker 9: to see whether a court.
Speaker 4: Is open to them.
Speaker 3: There has been a response from Live Nations saying the
Speaker 3: DOJ's lawsuit won't solve the issues that fans care about
Speaker 3: relating to ticket prices, service fees, and access in demand shows.
Speaker 3: And they're calling ticket master monopoly. Maybe a pr win
Speaker 3: for the DOJ in the short term, but it will
Speaker 3: lose in court. A sentiment that some analysts are agreeing
Speaker 3: with that this is going to be a very high
Speaker 3: bar to having originally signed off on a deal to
Speaker 3: then unwind it in this horizontal manner.
Speaker 4: Yeah.
Speaker 9: Look, the government approved this deal more than a decade
Speaker 9: ago with a lot of conditions. Live Nation has been
Speaker 9: under scrutiny. There's been a consent decree for most of
Speaker 9: its existence. Since that deal, there's sort of been this
Speaker 9: looming threat of federal investigation. This is the kind of
Speaker 9: the first big suit that we've in a while. You know,
Speaker 9: I think investors will see it as an overhang on
Speaker 9: the stock because there is uncertainty as to what this
Speaker 9: will mean. I think most will probably still air on
Speaker 9: the side that it's unlikely that it gets broken up,
Speaker 9: but there will need to be some behavioral remedies, as
Speaker 9: they say, to Live Nation, to satisfy the government.
Speaker 3: It is so good to have one Luca Sure right
Speaker 3: here in the building in New York. We appreciate him
Speaker 3: weighing in on this landmark case. Meanwhile, let's get back
Speaker 3: to what is really driving sentiment in the benchmarks today.
Speaker 3: It is AI enthusiasm in is one Nvidia. It is
Speaker 3: back to portfolio manager Franklin Equity Group's senior vice president
Speaker 3: as well JP Scandalios and JP just returning to some
Speaker 3: of the enthusiasm we heard from not just CEO CFO
Speaker 3: over at Nvidia and some of the concerns that still
Speaker 3: are about so called air pockets, the shift to the
Speaker 3: most powerful chips and architecture they offer, but also China.
Speaker 3: I just want to get to grips with really how
Speaker 3: much of a concern it is there.
Speaker 7: It's been an issue for the whole industry, including equipment,
Speaker 7: semi connector equipment. So that's largely embedded or understood. The
Speaker 7: US government restrictions, certainly believe it or not, impeded growth
Speaker 7: or slowed growth. But in Nvidia and others have chips,
Speaker 7: and they're making chips the L forty h twenty that
Speaker 7: are despect if you will, that fall beneath the government restrictions.
Speaker 7: The unknown for people like me is that the government
Speaker 7: might move the goal line, if you will, and so
Speaker 7: you have to stay on top of that. It's just
Speaker 7: another variable to consider. But that headwind, if you will,
Speaker 7: has already been communicated and is understood by the market.
Speaker 5: Well, JP, I mean the pushback from Nvidia is that
Speaker 5: there is unanswered demand all around the world that will
Speaker 5: make up for the shortfall. I've been just taking a
Speaker 5: look at Dell, look at the Gainsdell showing, and look
Speaker 5: at Intel moving to the downside, and I wonder how
Speaker 5: much they going to be like a disintermediation between Nvidia
Speaker 5: the people it relies on, like Dell, its rivals, because
Speaker 5: in Nvidia is a systems vendor now, isn't it, JP?
Speaker 7: As I said earlier, right, they consider themselves a platform
Speaker 7: company if you will, they will sell individual GPUs or
Speaker 7: GPU cards. But yes, with the software and all the firmware,
Speaker 7: they do consider themselves a systems or a platform company.
Speaker 3: Certainly, we want to thank you so much JP Scandalias
Speaker 3: for holding over to keep giving us your expertise from
Speaker 3: the research research angle and indeed the investment angle of
Speaker 3: Franklin Equity Group. Thank you. Let's just shift our attention
Speaker 3: to telecoms now, and there's the news out of billionaires
Speaker 3: Avier Neil. He's exploring a bid to buy out other
Speaker 3: shareholders the Latin American telecom provider Millicom, which will value
Speaker 3: the carried about four point one billion dollars. Neil's holding
Speaker 3: company that's at this investor estimate, says it is exploring
Speaker 3: financing options to support an offer price of about twenty
Speaker 3: four dollars per Minicon common share, though it cannot guarantee
Speaker 3: and off will materialize, and there's already the bigger shareholder
Speaker 3: in the company with the twenty nine per cent stake.
Speaker 3: We want to dive deeper though, into this industry right now.
Speaker 3: We want to talk about it from the US perspective
Speaker 3: and globally. One of the biggest telecom providers here is
Speaker 3: at and T and I pleased to say that the CEO,
Speaker 3: John Stankey joins us now fresh off comments from a
Speaker 3: company's multi year growth strategy over at the JP Morgan
Speaker 3: Technology Conference, and I just want to weave in the
Speaker 3: era that we're sitting in at the moment, the fact
Speaker 3: that we just hear from Johnson, Wang and Ai and
Speaker 3: we're talking about open versus clothes. We're talking about infrastructure needs,
Speaker 3: equipment needs, to talk about energy efficiency, and in many
Speaker 3: ways you're having a very similar conversation over in the
Speaker 3: world of telecoms at the moment innovation, the needs for
Speaker 3: open and in particularly god An Ericsson fourteen billion dollars
Speaker 3: spend revamp wireless network focus. You want to have an
Speaker 3: open platform?
Speaker 4: Why we do?
Speaker 2: And we're pretty excited about what I heard before because
Speaker 2: the more workloads Jensen produces that you have to go
Speaker 2: somewhere and we like carrying those around on our networks,
Speaker 2: whether they're wireless or fix. So it's an exciting time
Speaker 2: to be in telecom. And our point of view is
Speaker 2: if you're going to scale at the level we're talking about,
Speaker 2: you need to have more cost efficiency and you need
Speaker 2: to be able to scale more dramatically and so open
Speaker 2: separating hardware and software and our infrastructure starts to give
Speaker 2: us that cost curve and that flexibility, and that's going
Speaker 2: to be critical to have the agility to move forward
Speaker 2: in this environment.
Speaker 3: Agile at a time why wireless demand is plateauing, maybe slowing, No,
Speaker 3: not at all.
Speaker 2: Wireless demands up thirty percent a year and it's not
Speaker 2: slowing down. And I think as you start to look
Speaker 2: at where we are with what's occurring from a usage perspective,
Speaker 2: you start getting workloads that come out of AI, it's
Speaker 2: going to continue to fuel that. And really it's one
Speaker 2: of the key things that this country needs to deal
Speaker 2: with is if you're going to continue to see usage
Speaker 2: go up thirty thirty five percent a year, you've got
Speaker 2: to build bigger highways to take that. And that all
Speaker 2: comes on the foundation of spectrum, and we need to
Speaker 2: make sure we got policy right in this country to
Speaker 2: get more spectrum out there to deal with the rise workloads. So, yeah,
Speaker 2: a handset demand might be coming down a little bit,
Speaker 2: we're not seeing quite the growth we saw ten years ago,
Speaker 2: but the utility of connected devices, how people are using
Speaker 2: those handsets and the demand for the traffic that they
Speaker 2: generate isn't coming down at all.
Speaker 5: John, Good Morning, is ED in San Francisco. Look, my
Speaker 5: head is often outside the bounds of our atmosphere and
Speaker 5: up in space, and I was really interested to see
Speaker 5: your deal with AST. You know, Starlink is doing a
Speaker 5: lot with the other carriers. I just wondered, in the
Speaker 5: first sense, if you have a really clear view of
Speaker 5: what the addressable market is for Constellation Direct to sell.
Speaker 2: I think we have a view of it, Ed. I
Speaker 2: don't know whether or not we're going to all understand
Speaker 2: exactly how consumers are going to use this, but we've
Speaker 2: done a lot of work to not only understand who's
Speaker 2: the segment of the population that truly needs always on connectivity.
Speaker 2: I mean, that's really what we want to do here.
Speaker 2: Most people wake up in the morning they say, I
Speaker 2: can't for to be off the Internet. And some folks
Speaker 2: have a lifestyle that take them to places where they do,
Speaker 2: unfortunately get to the bottom of the Grand Canyon on
Speaker 2: a rafting trip and can't continue to post to their
Speaker 2: website about what's going on with their family and it's
Speaker 2: really important to them, or they have an important business call.
Speaker 2: There's others who do it incidentally. Maybe they're on a
Speaker 2: road trip and they're out on an interstate somewhere and
Speaker 2: they drive off the network and they need it for
Speaker 2: a day. So we know those kind of behaviors in
Speaker 2: our customer base because we run the networks and we
Speaker 2: know what our customers are doing. We think there's a
Speaker 2: good application for this, just like when somebody leaves the
Speaker 2: United States and needs to roam on a network outside
Speaker 2: the US to make sure that they're connected when they're
Speaker 2: in Europe or Asia or wherever they're going. So this
Speaker 2: is just the next step and simplifying connectivity and ensuring
Speaker 2: customers be connected wherever they.
Speaker 5: Go, John YaST and not STYLINGK and SpaceX well.
Speaker 2: As you pointed out at it's a nascent area where
Speaker 2: the technology is starting to develop. We think AST has
Speaker 2: done a remarkable job of getting the technology right where
Speaker 2: it's consumer centric. The customer doesn't have to change any
Speaker 2: equipment and doesn't have to change anything they're doing with
Speaker 2: their handset, and they can still avail themselves of the service.
Speaker 2: That's really important in our view, and so what we
Speaker 2: have going on in other parts of the industry is
Speaker 2: we're kind of taking satellites and services that we're fit
Speaker 2: for fixed wireless connections or fixed satellite connections and now
Speaker 2: trying to make the mobile and it's a little more
Speaker 2: clunky as a result of that. So I think what
Speaker 2: we're looking at is cost performance, how do we make
Speaker 2: it easy for the consumer? And I don't think there's
Speaker 2: going to be one winner. I think there's going to
Speaker 2: be multiple opportunities going forward or providers, and we think
Speaker 2: that's good for us, especially when we have partnerships that
Speaker 2: ultimately we can have the right kind of relationships to
Speaker 2: satisfy the needs of our customers.
Speaker 3: Satisfying the needs of a customer, you articulate it very
Speaker 3: well why we as customer is going to need more
Speaker 3: and more data, more and more wallas, but the actual
Speaker 3: business of selling wallness has kind of been slowing for
Speaker 3: you and competitors. How do you stand apart, how do
Speaker 3: you make sure people reach the AT and T versus
Speaker 3: Verizon T Mobile when you have had some hits, perhaps
Speaker 3: to worries about data security for example.
Speaker 2: First of all, despite the fact that customer net ads
Speaker 2: are slowing, utility and use is continuing to grow, and
Speaker 2: so we had a very good year. When you think
Speaker 2: about what happened from a service revenue growth perspective, we
Speaker 2: led the industry. We're still seeing healthy growth. It's a
Speaker 2: bit higher than what the GDP levels are and an
Speaker 2: infrastructure business like ours, that's kind of what you want
Speaker 2: to see happen, and so it's not a bad thing.
Speaker 2: But in terms of what we do going forward on
Speaker 2: this is it's what I just talked about. Customers want
Speaker 2: to be connected everywhere. Customers want to make a simple
Speaker 2: decision of how they get on the internet. They don't
Speaker 2: wake up in the morning relishing having two or three
Speaker 2: relationships to be able to use my phone when I'm
Speaker 2: on the go, or my phone at home or my
Speaker 2: computer at home. They want to call somebody say just
Speaker 2: get me on the internet. And I think our position
Speaker 2: at AT and T is about doing that better than
Speaker 2: anybody else. And our focus is on making sure we
Speaker 2: take our great fiber assets, we take our wireless business,
Speaker 2: bring it together, start to do things like add value
Speaker 2: to a customer to ensure that their privacy is protected,
Speaker 2: their traffic is secure. They only have to call one
Speaker 2: place to get it done at a great value. They
Speaker 2: can use it in the grand Canyon, they can use
Speaker 2: it at home. That's the race we're on right now,
Speaker 2: and that's what we're focused on doing at AT and T.
Speaker 3: John Sanker, I wish we had more time. Thank you
Speaker 3: so much for talking us through the focus and of
Speaker 3: course some of those commitments to the financial goals that
Speaker 3: were reinstated yesterday and restated at the JP Morgan event.
Speaker 3: We thank him so much. John Stanking of AT and T,
Speaker 3: ed what have you got?
Speaker 5: Okay, So coming up on the show, we're going to
Speaker 5: check back in on in video. We have to and
Speaker 5: discuss the outlet for AI accelerators. Also an AI to
Speaker 5: AIPC Lenovo softer nine tenths. We percent third successive quarter
Speaker 5: of profit beating, and again we talk about the Asian
Speaker 5: OEMs really moving quickly on the AIPC. Dell came out
Speaker 5: this week, so did Asus. This is heating up, so
Speaker 5: we'll keep tracking it. From SF and New York. This
Speaker 5: is Bloomberg.
Speaker 4: Welcome back to me Meg Technology.
Speaker 3: I'm Caroline Hide in New York and I.
Speaker 5: Med Ludlow in San Francisco. Nvidia is the top story
Speaker 5: of the day. It's been the top story for quite
Speaker 5: a long time, so let's look at the markets in
Speaker 5: the moment. The stock is up almost ten percent, more
Speaker 5: than ten percent now, But there are other names impacted here, right,
Speaker 5: so we talk about AI accelerators, GPUs. The reality is
Speaker 5: that Dell is higher because it's a beneficiary of what
Speaker 5: we're seeing. You know, they need Dell for literally the
Speaker 5: boxing up of the server. But also Dell has a
Speaker 5: lot of experience in the sales channels that Nvidia does
Speaker 5: not if Video's never had to sell to enterprises or
Speaker 5: smaller customers, and so it seems like there's some feel
Speaker 5: good association between those two names. How long it lasts,
Speaker 5: anyone's guess. And to the downside, Intel's down more than
Speaker 5: three percent. That might be AI accelerator related, right, It
Speaker 5: might just be that the market sees in Video pulling
Speaker 5: even further ahead.
Speaker 4: But there was some.
Speaker 5: Commentary about in Video moving into other products, namely PCCPUS,
Speaker 5: which is Intel's everything. Could we see competition there. Let's
Speaker 5: go back to that market cap chart just one more time,
Speaker 5: humanly carriage, just once once more, because I feel like
Speaker 5: this might not happen again for a long time. The
Speaker 5: combined value of or in Vidia's market value, total market
Speaker 5: cap is greater than Tesla and Amazon combined. Again, both
Speaker 5: Tesla and Amazon are customers of Nvidia. It's just an
Speaker 5: illustrative example of what's happened the run up in value
Speaker 5: that Nvidia has had, but also it's kind of leaked
Speaker 5: everyone and the technology side of things as well. It
Speaker 5: is the market for AI, as several said this week, but.
Speaker 3: It's helped float many boats that demand and exuberance around AI.
Speaker 3: Let's get the broader market implications and bring in Blue
Speaker 3: Bag Intelligence Chief Ecuty Starts Tinette, Martin Adams, and wmon'to
Speaker 3: stock specific. We all go industry specific. Have you got
Speaker 3: to be all in on tech right now?
Speaker 1: I think there are other opportunities bubbling up in the
Speaker 1: index outside of technology, and we're seeing sort of that
Speaker 1: play out real time. When the course of twenty twenty four,
Speaker 1: we look at thirty different themes in our bi thematic
Speaker 1: library and we look at stocks exposed to those themes.
Speaker 1: What we find is, of all the stocks exposted themes
Speaker 1: in Navidia is not even the most the best performing stock.
Speaker 1: We're actually seeing themes in physical environments start to outperform
Speaker 1: themes of tech. Semen's energy is the best performing sort
Speaker 1: of multi theme stock in our overall library. And I
Speaker 1: think this is evidence of what's happening in the broader market,
Speaker 1: and that is Tech was the story, without a doubt,
Speaker 1: it was the only story of twenty twenty three that
Speaker 1: resulted in a lot of attention, a lot of capital
Speaker 1: flowing into tech. Navidia of course at the center of
Speaker 1: that story. But as we move through twenty twenty four,
Speaker 1: we're starting to see other.
Speaker 3: Earnings grow of the merge.
Speaker 1: We're starting to see commodity prices hopping again. We're starting
Speaker 1: to see growth prospects improved for financials as well as
Speaker 1: industrials companies. Even consumer and healthcare companies are on the
Speaker 1: growth board for this year. So while tech is still
Speaker 1: important and certainly essential to the broader market, given it
Speaker 1: still is the largest sector, these are still the largest
Speaker 1: stocks in the S and P five hundred, we're starting
Speaker 1: to see interest spread reflecting fundamental conditions improving in the
Speaker 1: rest of the market.
Speaker 5: Right now, we went into this saying this would be
Speaker 5: a macro level event right largely because of the waiting
Speaker 5: of Nvidia relative to the major indices S and P
Speaker 5: five hundred, for example. But if you say it's a
Speaker 5: macro level event. You have to acknowledge that something bigger
Speaker 5: is happening around the world. Like I was interested to
Speaker 5: read that Bloomberg Intelligence has kind of moved on from
Speaker 5: the Magnificent seven and you're now looking at a basket
Speaker 5: of I think it's eight.
Speaker 4: Names in China. What is kind of the thesis there, Yeah.
Speaker 1: I mean we're just acknowledging what's actually happening in the market. Yes,
Speaker 1: these are the biggest stocks and they've commanded the vast
Speaker 1: majority of our attention. But over the last three months,
Speaker 1: these biggest Magnificent seven stocks in the United States are
Speaker 1: getting out performed by the biggest eight stocks in China.
Speaker 1: As just a representative example of there's a lot more
Speaker 1: happening in the world today. Again, a year ago, this
Speaker 1: was all we had. We had very little earnings growth.
Speaker 1: The rest of the S and P five hundred was
Speaker 1: in recession. Navidia came out and told us, gave us
Speaker 1: a nugget of optimism that then exploded into some real
Speaker 1: tangible economic outcomes. Now we're starting to see improvement in
Speaker 1: some of the other segments of the world where growth
Speaker 1: prospects just suddenly start to look a little bit better.
Speaker 1: China is a good example of that. China's market is
Speaker 1: and you're moving higher at an exponential pace, reflecting potential
Speaker 1: improvement in conditions there, which clearly we didn't have a
Speaker 1: year ago. We see this kind of in themes, in
Speaker 1: pockets across different areas of the world where just other
Speaker 1: opportunities are bubbling up that are not related or.
Speaker 4: That TECH adjacent.
Speaker 3: You look at utilities on five because of energy demand.
Speaker 3: We just hadn s thank you of AT and t
Speaker 3: on and it's all about whiless demand at this moment, Gina.
Speaker 3: Where else can you be AI adjacent?
Speaker 1: Yeah, I think so. On the utilities point, I think
Speaker 1: this is way overstated. I mean, frankly, when we actually
Speaker 1: look at utilities earning statements and we look first mentions
Speaker 1: of AI. Even the Census Bureau does a survey every
Speaker 1: two weeks of companies across industries, utilities companies are not
Speaker 1: mentioning AI as a growth prospect. It's really a market phenomenon.
Speaker 1: In my opinion, the reason utilities outperformed in the last
Speaker 1: three months was, yes, in part do this speculation, but
Speaker 1: also because bond yields rallied. Also because markets across the
Speaker 1: world corrected, and utilities are a low data sector, so
Speaker 1: this is not necessarily a tech adjacent story. I think
Speaker 1: what we look for next is actually the companies that
Speaker 1: are going to spend on AI need to start to
Speaker 1: see improvement in productivity and improvement in margins as a
Speaker 1: reflection of that spend. So this story becomes less about
Speaker 1: demand for tech that fuels tech sector growth, which I
Speaker 1: think is going to persist. But nonetheless that's been the
Speaker 1: only real leg of the story phone so far, as
Speaker 1: who's going to buy AI and how's that going to
Speaker 1: benefit tech and tech adjacent companies going forward, I think
Speaker 1: will slowly transition to the next leg of the story,
Speaker 1: which is who's buying and implementing AI strategies that are
Speaker 1: ultimately resulting in margin expansion and productivity growth. And there
Speaker 1: you see a lot of really interesting intel coming out
Speaker 1: of some of the surveys as well as some of
Speaker 1: the transcripts analysis that we do, where companies in professional
Speaker 1: services for example, financials and real estate companies across the
Speaker 1: border starting to edge their way into this thinking about
Speaker 1: how it can be used as a productivity enhancer and
Speaker 1: margin growth engine for them, how it can create operational
Speaker 1: efficiencies going forward, and those are the enduring impacts that
Speaker 1: could help the rest of the sectors that are not
Speaker 1: tech at all, but tech implementers.
Speaker 5: Gina Martin Adams, Bloomberg Intelligeny is great to have you
Speaker 5: back here.
Speaker 4: On Bloomberg Technology. We really appreciate it.
Speaker 5: Right coming up on the show, we're going to be
Speaker 5: joined by Tribe Capital co founder Argent Seti. It's been
Speaker 5: a while since we've spoken. In fact, I think I'm
Speaker 5: right in saying Caro, the last time we spoke with
Speaker 5: Argent was with the SVB crisis, and a lot of
Speaker 5: the world has changed since then, so I'm very excited.
Speaker 4: Stick with us.
Speaker 10: We'll be right back. This is Bloomberg Technology.
Speaker 5: Okay, we're all keeping our eyes peeled this hour. We
Speaker 5: are waiting to hear from Elon Musk, who's at Vivtech
Speaker 5: in Paris, where a key theme being discussed is shock
Speaker 5: artificial intelligence must being involved in the space through his
Speaker 5: own artificial intelligence company XAI, in particular focus.
Speaker 4: There's a lot to talk.
Speaker 5: About, and I'm delighted to say that one investor in XAI,
Speaker 5: Tribe Capital, an investment firm with more than one point
Speaker 5: six billion dollars of assets under management, and it's co
Speaker 5: founder Argent.
Speaker 4: Thirty joins us here on set.
Speaker 5: I was saying before the commercial break, last time we
Speaker 5: spoke was the Silicon Valley bank crisis a long time ago,
Speaker 5: and AI has been the vacuum that's filled the filled
Speaker 5: the vacuum in that time.
Speaker 4: Let's just start with XAI.
Speaker 5: You know why you got him, what the merits of
Speaker 5: it were, your analysis of what Musk's doing.
Speaker 11: Yeah, I think the if you think about the culmination
Speaker 11: of what's been happening in software for the last twenty years,
Speaker 11: it's another AI has just sprung up. We've gone from
Speaker 11: machine learning to AGI, and I think that's a part
Speaker 11: of how to sort of think about the innovation that's happening.
Speaker 11: The data, warehousing, all the way to infering that data
Speaker 11: has been sort of the culmination of what we see today.
Speaker 11: And so if you take a look at open Ai XAI,
Speaker 11: I think a way to sort of think about it
Speaker 11: is that you know, two years ago you have zero
Speaker 11: people sort of thinking about requests per day around think
Speaker 11: about what they could do with AI and AGI. Today
Speaker 11: it's about five hundred million requests with just open AI
Speaker 11: that takes a certain amount of compute takes a their
Speaker 11: amount of power. It's almost equivalent to about two percent
Speaker 11: of power that Google has today in terms of their
Speaker 11: data centers. That's just one company. So when you have Xai,
Speaker 11: Anthropic a couple of other companies that are going to
Speaker 11: be supporting the next generation.
Speaker 5: Of you basically feel like there's enough to go around.
Speaker 5: But what's interesting question is we know you as an
Speaker 5: early stage investors. The numbers on the Xai round, which
Speaker 5: we reported were astronomical, but you still got in.
Speaker 11: Yeah, I think the the we're quant investors at the
Speaker 11: end of the day, even at the earliest stage. That's
Speaker 11: our expertise, this culmination of everything that I've done. And
Speaker 11: so what you're able to do is think about growth
Speaker 11: and loss. And it's powered by one of the systems
Speaker 11: that we have called Termina, which is like how' seen
Speaker 11: you account for usage and interpretation of using a product.
Speaker 11: So if you think about growth and loss, you've had
Speaker 11: a ton of growth and you've been able to see
Speaker 11: people use these products across not just one product, but
Speaker 11: multiple products to be able to save for customer service, voice, etc.
Speaker 11: And so if you think about what we're Xai is
Speaker 11: today and what it's going to be in the future,
Speaker 11: or open ayes today and where it's going to be
Speaker 11: in the future. You start seeing ten twenty fifty x
Speaker 11: growth patterns, and that's the type of investments you want
Speaker 11: to make, even at a late stage, because it's got
Speaker 11: early stage paradigms of growth.
Speaker 3: What about future regulation, Arjen, how do you look at
Speaker 3: the data for that?
Speaker 11: Yeah? I think look AI for us, at least from
Speaker 11: a high level, is the same way in which we
Speaker 11: think about crypto or blockchain is to technolog and so
Speaker 11: how is technology implementing how is it augmenting the software
Speaker 11: you're already building or the use case that you have.
Speaker 11: And so when we think about regulatory pressures, I think, one,
Speaker 11: we don't know what's happening week to week. It's changing
Speaker 11: very very quickly from open source to closed source systems,
Speaker 11: and so when we think about how is regulatory top
Speaker 11: down structure going to impact AI, I think we look
Speaker 11: to spend more time thinking about what is it that
Speaker 11: we did in the late nineties and the internet dot
Speaker 11: com era, and how is that type of thought process
Speaker 11: going to help machine learning AI? Software driven innovation actually
Speaker 11: help drive it rather than sort of inhibit it.
Speaker 3: I'm really interested as to where ultimately the money flows because,
Speaker 3: as we can see from n Video's market capitalization, a
Speaker 3: lot of been in picks and shovels. Many feel that
Speaker 3: it can be in the application layer, many feeling that
Speaker 3: it's going to be ultimately in the large language models.
Speaker 3: How do you think about where when's the value going forward?
Speaker 11: Yeah, cruel of value really means where usage is going
Speaker 11: to be, So you have to think about the full stack.
Speaker 11: So you've got a model, people use that model, people
Speaker 11: are gonna build applications on that model, but that those
Speaker 11: models consume power, and so the more power that you consume,
Speaker 11: you're gonna have to start thinking about how's that produced,
Speaker 11: how's that distributed, what do the data centers look like,
Speaker 11: what's the future of those data centers. That's why we're
Speaker 11: talking about video, and then the next phase is going
Speaker 11: to be what are the applications that start using it?
Speaker 11: So that full stack will think about supply and demand paradigms,
Speaker 11: and those supply and demand paradigms is going to actually
Speaker 11: change your flow of capital. Today, most of the capital
Speaker 11: is happening on the corporate side, not on the venture side,
Speaker 11: and the corporate side is driving the first parts of
Speaker 11: the innovation, and then we come up and start thinking
Speaker 11: about where we're gonna spend time on models and then applications.
Speaker 5: Last week, I think it was last week, David Sachs
Speaker 5: was on the show and he was talking about Glue,
Speaker 5: his AI startup, and I said, well, we know you
Speaker 5: as an investor, and he corrected me and said, well,
Speaker 5: I started in technology, and that's the kind of thinking
Speaker 5: that I have when I think about Termina. You know,
Speaker 5: what is your day to day involvement. Are you just
Speaker 5: kind of hands on? Are you backing them financially? And
Speaker 5: what prompted you to sort of say I can do
Speaker 5: this on my own.
Speaker 11: So similar to David and other folks in the industry,
Speaker 11: there's a very small set of people that grew up
Speaker 11: building products during what I call data one point zero
Speaker 11: to two point zero, right, And so you build products
Speaker 11: understanding how to leverage data to be able to have
Speaker 11: fast iteration. So you think of Facebook, you think of Uber.
Speaker 11: What we did is very similar is over the last
Speaker 11: ten to twenty years, and the culmination of my life
Speaker 11: and my team's work at Facebook and a couple of
Speaker 11: other these companies is like, how do you leverage data
Speaker 11: to build and iterated products? And that's what we do.
Speaker 11: So sometimes we build and sometimes we invest. If we build,
Speaker 11: it's because we've got a pattern of growth that we
Speaker 11: understand how to do well. So we've done that in India,
Speaker 11: we've done that in Mexico. We've been here in the
Speaker 11: United States where we take a large chunk or we'll
Speaker 11: start zero to one and from there will help propel
Speaker 11: that with another team. So I actually think that investor
Speaker 11: in build their mindset. Depending on the stage that you
Speaker 11: start isn't too different. It's just do you have the
Speaker 11: expertise to execute it.
Speaker 5: After that, Caroline asked about the regulatory environment about AI.
Speaker 5: A moment ago, you have been through what happened in crypto,
Speaker 5: largely through a relationship with an exposure to FTX. Reflecting
Speaker 5: on that experience, you know this is a classic question,
Speaker 5: but how do you not repeat the same mistakes in
Speaker 5: this AI cycle?
Speaker 11: I think it always comes down to a supplying demand.
Speaker 11: So right now you could ask the same question of
Speaker 11: is Nvidia overvalued or undervalue? Right so intrinsically versus options value.
Speaker 11: In crypto, you've had two or three waves where people
Speaker 11: spent their time thinking about speculation rather than intrinsic value,
Speaker 11: and during those pigs and troughs, you started seeing.
Speaker 4: More and more intrinsic value.
Speaker 3: Adre and Stephanie, we thank you so much. Co founder
Speaker 3: at Tribe Capital and termin at Ai, an investor in
Speaker 3: xai