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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive

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Speaker 1: from coast to coast with Caroline Hyde in New York

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Speaker 1: and Eva low In sent frances.

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Speaker 2: Go, this is Bloomberg Tech coming up.

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Speaker 3: Microsoft and open Ai finalize a new agreement, with Microsoft

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Speaker 3: now getting a twenty seven percent ownership stake in the

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Speaker 3: AI startup worth about one hundred and thirty five billion plus.

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Speaker 3: Today is in Video's DC super Bowl. We'll discuss what

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Speaker 3: investors are looking for in CEO Jensen One's keynote address

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Speaker 3: at the GtC conference, and we sit down with Tesla

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Speaker 3: board chair Robin Denholm to discuss the push to convince

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Speaker 3: shareholders to approve Elon Musk's one trillion dollar pay package.

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Speaker 3: At the index level, there is not a lot going

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Speaker 3: on in the world of technology, but there are two

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Speaker 3: big stories. In video is off itsself highs upper percentage

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Speaker 3: point and trading at a record high. We await Jensen

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Speaker 3: Jang later today and a big GtC keynote. Then there

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Speaker 3: is the big breaking news story of the morning. Microsoft

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Speaker 3: will get a twenty seven percent stake in open Ai

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Speaker 3: at a value of one hundred and thirty five billion dollars.

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Speaker 2: There or thereabouts.

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Speaker 3: It is some certainty for investors for both companies who

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Speaker 3: have been waiting to understand the evolution of this relationship,

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Speaker 3: and we got some details well into the future. Let's

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Speaker 3: get to our senior tech editor Mike Shepherd, who's.

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Speaker 2: Here in DC.

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Speaker 3: There's the ownership in the financials, let's go through those, please.

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Speaker 3: But also we now know that open ai will license

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Speaker 3: its technology to Microsoft for a very long time.

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Speaker 4: Yes, until twenty thirty two ed.

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Speaker 5: And this is really, in a way a bigger move

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Speaker 5: for open ai because it removes some of the uncertainty

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Speaker 5: that has been surrounding its evolution into a for profit venture.

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Speaker 4: We know the numbers there.

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Speaker 5: We are Microsoft getting a twenty seven percent stake worth

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Speaker 5: about one hundred and thirty five billion.

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Speaker 4: But another key.

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Speaker 5: Element that we also heard was that it will have

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Speaker 5: a hold on open ai technology until twenty thirty two,

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Speaker 5: and that also includes when open ai achieves AGI artificial

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Speaker 5: This is the state of generalized intelligence when AI can

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Speaker 5: think like a human in essence, So that's a key development.

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Speaker 5: And there is also some money going into the nonprofit

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Speaker 5: open Ai Foundation. That also resolves another loose end. And

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Speaker 5: for investors, this removes one of the hurdles that have

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Speaker 5: been standing in the way of this all happening, and

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Speaker 5: it have been standing in the way. Microsoft was one

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Speaker 5: of the last holdouts among the backers of open ai

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Speaker 5: for this evolution to a for profit.

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Speaker 3: Okay, so the pathway is open for open ai to

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Speaker 3: become a for profit business and get the resources it needs.

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Speaker 3: It was a hell of a day to pick to

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Speaker 3: put news out between nine and nine thirty four East

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Speaker 3: in this morning, four red headlines on the Bloomberg terminal,

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Speaker 3: which is a lot for our technology news we all

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Speaker 3: here for in video GtC and as we've written on

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Speaker 3: the Bloomberg terminal, this is the AI super Bowl. The

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Speaker 3: expectation is very high that Gensen Wang will say something

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Speaker 3: that moves the needle, and he'll say something political.

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Speaker 5: Well, they're sure is that we've been looking at this

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Speaker 5: from two lenses.

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Speaker 4: One, what are they going to be introducing?

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Speaker 5: The way of products features partnerships to accelerate this push

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Speaker 5: that Jensen Wong and Nvidia have been making to try

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Speaker 5: to spread and disseminate artificial intelligence through the economy and

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Speaker 5: a lot of different sectors ranging from healthcare to transportation.

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Speaker 5: We'll hear him talk about things like robotics and other

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Speaker 5: areas where they want to see what he calls the

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Speaker 5: AI factory take hold. This is where AI is used

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Speaker 5: to develop ideas. But one of the things that has

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Speaker 5: been holding back the Nvidia push, of course, has been

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Speaker 5: US export controls that has kept Nvidia out of the

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Speaker 5: world's largest market for semiconductors, and that is China, and

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Speaker 5: he would surely like to see that change. And not coincidentally,

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Speaker 5: President Donald Trump is in Asia as we speak. He

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Speaker 5: is about to meet with Chinese President Shi Jimping on

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Speaker 5: Thursday and perhaps hashed through some of those issues. For now,

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Speaker 5: this preliminary core between the US and China does not include.

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Speaker 4: Any change to those export controls.

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Speaker 5: But perhaps Jensen today will be sending a signal to

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Speaker 5: his new friend, Donald Trump, and Jensen will be traveling

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Speaker 5: to South Korea and he will see Trump there as

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Speaker 5: soon as the Super Bowl.

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Speaker 4: Wraps up later today.

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Speaker 3: The President told us he expects to see Jensen Wong tomorrow,

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Speaker 3: so he's going to have to hot foot it away

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Speaker 3: from Washington, DC this afternoon. Bloobog's Mike Shephard, thank you

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Speaker 3: very much. Now coming up, Robin Denholt, Chair and Tesla's board,

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Speaker 3: joins us to discuss the push to convince shareholders to

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Speaker 3: approve Elon Musk's one trillion dollar pay package.

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Speaker 2: That conversation is next. This is Bloomberg Tech.

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Speaker 6: He's to welcome our TV and radio audiences worldwide as

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Speaker 6: we're joined here in New York by Robin dan Holm,

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Speaker 6: chair of Tesla's Board of directors in New York, meeting

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Speaker 6: with shareholders.

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Speaker 7: Key institutional shareholders of Tesla.

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Speaker 6: Chris, there's a pay package that many have been analyzing

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Speaker 6: that will keep from your perspective, Elon Musk in the

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Speaker 6: driving seat and CEO of Tesla. Who are you meeting

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Speaker 6: with and what thus far has been the response been

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Speaker 6: to this pay package that could see Elon paid as

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Speaker 6: much as a trillion dollars.

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Speaker 8: Well, thank you for having me today. Yes, as part

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Speaker 8: of our annual shareholder meeting, I meet with the top

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Speaker 8: investors in Tesla on the institutional side, and obviously also

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Speaker 8: talk to retail investors through forums like this this morning

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Speaker 8: to encourage everybody to vote, but also to answer any

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Speaker 8: questions that they have. From a board perspective, we really

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Speaker 8: like to engage with our shareholders. Understand their questions that cancers,

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Speaker 8: their optimism for the future, and so it's a really

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Speaker 8: important part of the process we go through on a

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Speaker 8: quarterly basis, but also with the proxy on an annual

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Speaker 8: basis as well.

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Speaker 6: So the initial feedback is it one of optimism around

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Speaker 6: the pay package. We've heard from Glass Lewis from ISS

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Speaker 6: which have said they're not in agreement with the way

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Speaker 6: in which the pay package is thus formed.

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Speaker 7: The key concern seems to be.

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Speaker 6: The sheer amount of money going to Elon Musk if

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Speaker 6: indeed he achieves all of those key milestones. But for you,

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Speaker 6: it's about and for Elon influence, it seems like, so

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Speaker 6: how are you managing to discuss that with the investors

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Speaker 6: institutional a retail.

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Speaker 8: Yeah, So, firstly, it is a performance package, so he

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Speaker 8: gets nothing if he doesn't perform against the pretty audacious

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Speaker 8: milestones that are part of the performance criteria that's been

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Speaker 8: outlined by the board in the performance package. So I

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Speaker 8: think rather than compensation, it's actually about the performance and

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Speaker 8: the goals that we have for the company as we

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Speaker 8: move forward. And so for me, it really is about

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Speaker 8: making sure that investors understand that that they actually get

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Speaker 8: paid if he hits the master and before he will.

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Speaker 8: But to your point, it is about voting influence. Elon's

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Speaker 8: been very public, including on last week's earnings call, about

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Speaker 8: the fact that it's around the voting influence that he

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Speaker 8: could have in future shareholder meetings as opposed to the

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Speaker 8: economic interests of the shares that he would get as

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Speaker 8: part of the performance plan.

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Speaker 2: Robin, good morning from Washington, DC.

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Speaker 3: You've acknowledged that there is a very real risk that

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Speaker 3: Elon leaves if the vote is a no. This question

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Speaker 3: we get most often from shareholders to you is what's

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Speaker 3: the plan be? Is there a plan B as a

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Speaker 3: different person stepping up, or have you discussed with Elon

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Speaker 3: the idea that it will result in a no vote

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Speaker 3: and that you can use some kind of bridging mechanism

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Speaker 3: another interim pay award for example.

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Speaker 8: Well, he's been quite public in terms of the implications

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Speaker 8: of a no vote being on his leadership as well

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Speaker 8: as on the obviously on the performance plan itself, and

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Speaker 8: so from our perspective as a board, we we obviously

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Speaker 8: take our fiduciary responsibilities really seriously to all shareholders and

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Speaker 8: having you know, a succession plan, you know those types

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Speaker 8: of things things we've discussed on an ongoing basis, particularly

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Speaker 8: you know, if something unto world were to happen. So,

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Speaker 8: from our perspective, succession planning is an important part, and

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Speaker 8: so much so that we've actually baked in an orderly

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Speaker 8: succession plan and a plan for a plant, if you like,

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Speaker 8: as part of this performance plan. So the last two

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Speaker 8: tranches of the of the performance plan are unlocked by

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Speaker 8: having a robust performance plan that sorry succession plan that

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Speaker 8: Elon would be part of.

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Speaker 3: If Elon Musk walks away from Tesla on November sixth

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Speaker 3: or seventh because of a no vote, is there a

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Speaker 3: contingency where there is an individual already within Tesla or

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Speaker 3: an individual outside of Tesla that is lined up as

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Speaker 3: a near term option.

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Speaker 8: Yeah, So from our perspective, the most important thing at

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Speaker 8: this point in time is making sure that we're explaining

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Speaker 8: all of the items on the shareholder agenda for the

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Speaker 8: annual sharing holder Meeting, making sure that institutional investors retail

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Speaker 8: investors have their questions answered. That's our most important thing

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Speaker 8: right at this point, and we.

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Speaker 3: Are only robin That is their question, Who's the backup plan?

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Speaker 2: Is the question that they're asking you.

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Speaker 8: Well, there is no other person that is Elon. We

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Speaker 8: think that he is the right leader for the company

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Speaker 8: over this next decade and delivering the plan and the

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Speaker 8: opportunities ahead of us. So it's about how do we

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Speaker 8: create the most value for the company and for our

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Speaker 8: shareholders over this next period of time. And he is

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Speaker 8: the right leader for us over this next decade.

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Speaker 6: Can you give me a sense of probability if the

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Speaker 6: vote is no, what probability Elon walks?

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Speaker 2: So right?

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Speaker 8: At this point in time, it's too early to actually

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Speaker 8: make a call on the outcome. Most investors wait to

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Speaker 8: the last minute to vote, so we're still early in

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Speaker 8: that cycle, which is one of the reasons why I'm

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Speaker 8: in New York to meet with our institutional investors. And

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Speaker 8: we will get a better sense as the votes come in.

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Speaker 8: And some institutions are more public than others in terms

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Speaker 8: of how they're going to vote. So yesterday there was

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Speaker 8: public announcement by the pension fund in Florida, and so

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Speaker 8: other investors will start to make their votes public as well.

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Speaker 7: But if it's no, the probability that Elon.

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Speaker 9: Goes well, time will tell.

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Speaker 8: But he's been very very public in terms of you know,

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Speaker 8: it would be more of a say on his leadership

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Speaker 8: over this period of time, not just about the performance

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Speaker 8: plan itself in terms of a no vote.

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Speaker 3: Yeah, Robin, you've been generous with your time. You know,

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Speaker 3: we've already spoken with you in September at length about

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Speaker 3: the goals that you've set for Elon Musk. But one

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Speaker 3: of the things that came out of that from again

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Speaker 3: the shareholder base is why are the energy products not

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Speaker 3: as strictly mandated to Elon when you consider the earnings

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Speaker 3: that just posted. That was a growth driver, right, It's

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Speaker 3: such a key part of Elon Musk's master Plan Part

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Speaker 3: four and this abundance that he is going after. So

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Speaker 3: why didn't you include energy products as a stated goal?

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Speaker 8: Yeah, So there are many different goals that we looked at.

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Speaker 8: Energy is an important part of the Tesla product line

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Speaker 8: up today and in the future, and you can see

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Speaker 8: the impact that energy is having not only on the results,

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Speaker 8: but also on the transition to sustainable energy longer term.

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Speaker 8: So it is embedded in the plan. The ebitter goals

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Speaker 8: that we have as a company. You can't get there

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Speaker 8: without a robust energy outcome. And so again, if you

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Speaker 8: look at the results of last week, energy contributed very significantly,

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Speaker 8: and to get to four hundred billion dollars of adjusted

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Speaker 8: ebitter as a monumental task for anybody. No one out there,

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Speaker 8: at least to my knowledge, is at that sort of level.

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Speaker 8: And so even the first ebitter goals at billion dollars

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Speaker 8: is nearly three times our highest bitter goals that we've had,

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Speaker 8: So from our perspective, it is absolutely.

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Speaker 7: Embedded in the goals.

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Speaker 8: To your point, it's not a specific line item in

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Speaker 8: terms of the revenue or the units or the killer

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Speaker 8: watts of energy or megawatts of energy that are out there,

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Speaker 8: but it is implicit in the plans, and the master

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Speaker 8: Plan for you know, talks about that as well in

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Speaker 8: terms of getting to sustainable abundance.

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Speaker 3: Robin has the special committee and the advisors that you

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Speaker 3: took on discuss the use of interim awards in the

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Speaker 3: event of the no votes and how you might replicate

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Speaker 3: what you did already.

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Speaker 8: Well, there's an important other measure on the board as well,

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Speaker 8: proposal in terms of increasing the share pool that we have.

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Speaker 8: Firstly for our employees. As you know, we're in a

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Speaker 8: talent wall at the moment, particularly around aar talent and

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Speaker 8: adding to the Employee Reserve as part a of that

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Speaker 8: to actually increase the amount of equity that we have

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Speaker 8: for our employee program. But secondarily, we've also asked shareholders

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Speaker 8: to add to the pool in the event that we

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Speaker 8: need to award an amount to elin to compensate for

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Speaker 8: the twenty eighteen plan, because as you know, we put

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Speaker 8: an intram award for roughly one third of what he

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Speaker 8: earned under the twenty eighteen plan. Given the appeal that

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Speaker 8: is ongoing in Delaware at the moment, so we have

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Speaker 8: not ruled that out. The special Committee was charged with

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Speaker 8: looking at all matters compensation wise. As you're aware, in August,

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Speaker 8: we did actually award an interim award which does have

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Speaker 8: a two year vesting period and is four aforded if

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Speaker 8: we win the appeal in Delaware for the twenty eighteen

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Speaker 8: compensation program.

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Speaker 6: It does seem then to be about money, and I'm

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Speaker 6: interested as to how you continue to You've made very

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Speaker 6: clear it's about influence as well. Some of the feedback

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Speaker 6: has been just a gargantuan amount that could go to

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Speaker 6: Elon in terms of monetary value, but then others.

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Speaker 7: Are worried about the dilution to other shareholders.

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Speaker 6: How was it in just no way possible to give

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Speaker 6: him more voting rights without the one trillion dollar mega

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Speaker 6: money bonus.

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Speaker 8: It feels like yeah, I mean, we looked at many

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Speaker 8: different instruments to be able to award equity that had

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Speaker 8: voting rights versus the economic value, and it's just not

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Speaker 8: possible once a public company has gone public to introduce

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Speaker 8: a special class of voting shares.

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Speaker 7: Other companies have that.

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Speaker 8: If you look at some of the tech companies, they

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Speaker 8: have two classes and founder shares if you like, or

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Speaker 8: special voting rights exist. But Kesler, that wasn't implemented at

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Speaker 8: the time that we actually went public, and therefore we

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Speaker 8: weren't able to use that type of instrument. But what

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Speaker 8: we were able to do was to bifurcate the voting

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Speaker 8: rights versus the economic rights. And so under the plan.

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Speaker 7: The first.

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Speaker 8: All the awards have voting rights that are earned first,

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Speaker 8: and then the economic rights happen, you know, seven and

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Speaker 8: a half years later in the first instance.

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Speaker 7: Or ten years later.

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Speaker 8: So it really isn't about the economic or monetary value.

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Speaker 7: It's more about the voting rights.

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Speaker 8: And if there was a different mechanism that was available

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Speaker 8: to us, we may have used that, but we had

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Speaker 8: many experts look at it over an extensive period of time,

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Speaker 8: and we were not able to come up with something

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Speaker 8: that would enable us to do that.

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Speaker 6: We asked you who had Robin Dunholm, Chaphas and Tasla

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Speaker 6: board of directors of course, and Robin what's so interesting

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Speaker 6: is made very clear why he wants influence, and in

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Speaker 6: the Earning school, who is saying he's worried about this

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Speaker 6: army of robots that he is creating and they're not

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Speaker 6: having the influence if something went untoward. His concerns about

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Speaker 6: AI have been well documented, But why is he the

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Speaker 6: right person to have influence, to have more than twenty

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Speaker 6: twenty five percent.

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Speaker 7: Vote in control?

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Speaker 8: I think there's not another person on the planet that

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Speaker 8: has the skill set that Elon has, both in terms

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Speaker 8: of the manufacturing prowess that we've developed and he has

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Speaker 8: developed over many years, but also around AI, that confluence

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Speaker 8: of those technology skills, I think there are very few

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Speaker 8: people that have that, and therefore, obviously, looking at the

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Speaker 8: risks associated with new technologies andology and risks that haven't

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Speaker 8: even yet emerged around those technologies, I think he is

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Speaker 8: the right person not only to take advantage of the

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Speaker 8: opportunities for the company ahead of us, but also to

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Speaker 8: make sure that there are not the pitfalls of new

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Speaker 8: technologies that could happen. Obviously the board plays a role

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Speaker 8: in that as well, and as from a governance perspective,

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Speaker 8: looking at the types of evil that could be done

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Speaker 8: with different types of technology is part of our purview

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Speaker 8: as well, and it is why we have such a

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Speaker 8: phenomenal board with the skill sets that we have, both

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Speaker 8: from a technology perspective but also from a governance perspective,

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Speaker 8: and so we play a role. But obviously the CEO

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Speaker 8: the management team play an even bigger role on safeguarding

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Speaker 8: companies and safety is a huge priority of ours as

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Speaker 8: a company, and so when you're developing new technologies and

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Speaker 8: technologies that other people have not yet developed globally, it

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Speaker 8: is important to make sure that you have the right

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Speaker 8: framework in place.

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Speaker 3: Robin final question from the shareholder base is did the

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Speaker 3: situation around the twenty eighteen package Chancery Delaware situation mean

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Speaker 3: that the board had to hold off on authorizing any

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Speaker 3: other investments or big strategic shifts.

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Speaker 8: No, I don't think so. I mean, obviously we take

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Speaker 8: into account a whole bunch of factors as we're working

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Speaker 8: through strategy and different alternatives the company.

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Speaker 7: Has ahead of us, but.

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Speaker 8: Clearly the Delaware situation was disruptive, but not disruptive from

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Speaker 8: a strategic point of view. Making sure that we have

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Speaker 8: an eye on the future and the evolution of the

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Speaker 8: company over the long term, I think is something that

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Speaker 8: the board is focused on, but also something the management

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Speaker 8: team is focused on.

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Speaker 3: Robin Dunholm, Chair of Tessa's board. Thank you very much,

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Speaker 3: Thank you. Adobe is hosting its annual user conference this week,

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Speaker 3: where the company will announce it's continued in integrations of

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Speaker 3: generative AI into flagship creativity and productivity tools. The announcements

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Speaker 3: include an updated version of their fly Fi image model

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Speaker 3: and an AI assistant in Adobe Express, and access to

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Speaker 3: models from Google and open Ai. We sat down with

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Speaker 3: Adobe CEO Shantanu Orion for an exclusive conversation about its

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Speaker 3: AI ambitions.

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Speaker 10: I think everybody is so focused right now on training

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Speaker 10: and the creation of these models, and that's where the

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Speaker 10: investment is until that moves to inference and you're starting

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Speaker 10: to see, you know, the usage of that. All of

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Speaker 10: this investment is not going to be monetized, and you're

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Speaker 10: not going to get a return. So you know, I'm

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Speaker 10: very confident that Adobe is already at the path where

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Speaker 10: it's the inference, it's the usage, it's the workflows, it's

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Speaker 10: the actual value that we provide to customers. That's going

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Speaker 10: to be the long lasting value.

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Speaker 3: You present to picture a human generated picture of a

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Speaker 3: business in rude health to the market.

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Speaker 2: Give you enough credit for that?

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Speaker 10: Well, I think it's fair to say that you know

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Speaker 10: the stock price right now I don't think represents because

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Speaker 10: there's a question about software at large that I think

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Speaker 10: is misunderstood when you look at how profitable we are,

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Speaker 10: the growth prospects that we have models are going to

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Speaker 10: be an on wrap, and what we have to do

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Speaker 10: at Adobe is just to continue to focus on driving

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Speaker 10: the innovation, on demonstrating the metrics that are power powering

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Speaker 10: this underlying business, the early metrics and adoption of all

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Speaker 10: of this technology. And that gives me great confidence that

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Speaker 10: the innovation that we're doing, innovation is alive as well

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Speaker 10: at Adobe as well as it's being recognized by our customers.

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Speaker 10: So you know, we recognize that inference is where the

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Speaker 10: action is. We're skating to where the puck is and

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Speaker 10: you know, I think the stock will take care of itself,

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Speaker 10: but it's certainly undervalued right now, which is why we're

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Speaker 10: buying back a lot of our stock.

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Speaker 2: Let me address this head on.

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Speaker 3: Wool Street does not see Adobe as a place where

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Speaker 3: AI innovation is happening. And you just said, you know,

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Speaker 3: when inference comes, you will be there. What's the counter

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Speaker 3: argument to the statement that I just made.

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Speaker 10: I actually think Wall Street has recognized that AI and

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Speaker 10: Adobe and the way we've innovated has actually been stellar.

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Speaker 10: I think they're wondering where the monetization of training and inference.

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Speaker 10: I think this incredible focus on chips and the infrastructure

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Speaker 10: for training is where the action is right now, and

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Speaker 10: you know, my belief is that it will switch to inference.

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Speaker 10: So I would actually dispute the fact that they are

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Speaker 10: not recognizing the innovation that we're providing. But I think

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Speaker 10: they're waiting to, you know, see how that accelerates on

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Speaker 10: the inference site.

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Speaker 3: There was Adobe CEO Shantanuan Orion. Okay, some more news,

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Speaker 3: It's time for talking tech.

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Speaker 2: First.

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Speaker 3: Our PayPal shares surging today after the company raised its

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Speaker 3: full year earnings guidance and announce a new partnership with

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Speaker 3: open Ai. The deal integrate PayPal's digital wallet into chat

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Speaker 3: GPT products, enabling users to seamlessly turn searches into purchases. Plus,

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Speaker 3: Meta is moving its top Metaverse executive to a new role.

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Speaker 2: Vishal shar is set.

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Speaker 3: To oversee AI products and will be responsible for adding

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Speaker 3: the company's AI Tech two metas, app and wearable devices.

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Speaker 3: This comes just a week after the company cuts six

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Speaker 3: hundred jobs from its AI unit and Paramounts Guidance is

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Speaker 3: preparing for a major round of layoffs, cutting about one

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Speaker 3: thousand jobs starting Wednesday.

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Speaker 2: That's according to sources.

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Speaker 3: The move follows the company's merger in August, as management

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Speaker 3: looks to streamline operations and reduce costs. The second wave

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Speaker 3: of job cuts is expected at a later date.

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Speaker 7: Welcome back to blue Mentech.

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Speaker 6: Let's get a quick check on these markets because for

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Speaker 6: a record hires folk then as that one hundred tracking

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Speaker 6: up just about three tens percent. We're coming off of

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Speaker 6: the previous highs of the day, but nevertheless we march

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Speaker 6: ever higher as the moon music is positive. One around earnings.

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Speaker 6: One about some of the seismic announcements we're going to

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Speaker 6: get from Nvidia, it's trading higher ahead of the big

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Speaker 6: announcementsro GDC. Microsoft trades higher with clarity on that twenty

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Speaker 6: seven percent state they have in the public benefit cooperation

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Speaker 6: of opening I going forward better stig beneath also what's

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Speaker 6: rallying and Amazon is now we understand with clarity now

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Speaker 6: that fourteen thousand jobs in the corporate part of the

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Speaker 6: business are to go. We're up about a quarter of

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Speaker 6: a percent. But we want to dig into this particular

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Speaker 6: story and what it means going forward with Matt Day,

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Speaker 6: you cover Amazon Matt and in many ways this has

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Speaker 6: been signaled by Andy Jasse. Generator AI is going to

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Speaker 6: allow them to do more with less from a corporate

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Speaker 6: personnel perspective.

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Speaker 11: That's right.

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Speaker 12: Andy Jasse, the Amazon boss, came up with a memo

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Speaker 12: earlier this spring, I guess, saying that over time they

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Speaker 12: expected AI to reduce the headcount in corporate roles. Now

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Speaker 12: PR is telling us that's not the driving force today,

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Speaker 12: but it's hard to escape as a background they did

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Speaker 12: just in the layoff memo from the hrchief this morning

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Speaker 12: announcing those fourteen thousand cuts. You know, they mentioned AIS

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Speaker 12: transformative and Amazon's got a reshape to be ready for it.

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Speaker 3: We actually did find out a little bit more granularity

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Speaker 3: from sources right now on which roles, which departments. And

444
00:25:16,560 --> 00:25:20,200
Speaker 3: I think it's worth pointing out fourteen thousand is less

445
00:25:20,240 --> 00:25:23,280
Speaker 3: than half the number that Reuters put out yesterday afternoon.

446
00:25:24,320 --> 00:25:27,159
Speaker 12: That's right, And I think one of the indications in

447
00:25:27,200 --> 00:25:29,840
Speaker 12: Amazon's communication to employees is that these might not be

448
00:25:29,960 --> 00:25:32,199
Speaker 12: over They said, you know, looking to twenty twenty six,

449
00:25:32,240 --> 00:25:34,560
Speaker 12: the company would continue to hire in some areas, but

450
00:25:35,040 --> 00:25:38,360
Speaker 12: also look for efficiencies and look for ways to cut

451
00:25:38,359 --> 00:25:40,320
Speaker 12: the fat. So employees are definitely taking that as a

452
00:25:40,359 --> 00:25:42,480
Speaker 12: sign that more are coming, which would be within the

453
00:25:42,480 --> 00:25:45,080
Speaker 12: patterns Amazon is established from its prior big layoff.

454
00:25:45,160 --> 00:25:45,280
Speaker 5: Right.

455
00:25:45,280 --> 00:25:47,080
Speaker 12: We saw this movie a few years back when they

456
00:25:47,359 --> 00:25:50,639
Speaker 12: rolled out layoffs in October, November, January, and March.

457
00:25:52,359 --> 00:25:55,119
Speaker 3: Bloomberg's Matt Day, thank you very much. Let's get to earning.

458
00:25:55,280 --> 00:25:59,080
Speaker 3: Shares of so far down roughly this morning, this despite

459
00:25:59,119 --> 00:26:02,240
Speaker 3: the company reporting pretty strong earnings, raising its full year

460
00:26:02,280 --> 00:26:06,440
Speaker 3: profit outlook, and increasing membership in the latest quarter. Let's

461
00:26:06,440 --> 00:26:09,840
Speaker 3: talk through those numbers with CEO anton Ote. I'm reading

462
00:26:09,840 --> 00:26:14,040
Speaker 3: actually the Bloomberg Intelligence reaction to the numbers. Right, You've

463
00:26:14,080 --> 00:26:16,320
Speaker 3: been through the numbers on the call. But the story

464
00:26:17,040 --> 00:26:21,040
Speaker 3: is that this one stop shop platform is getting traction

465
00:26:21,600 --> 00:26:25,200
Speaker 3: with affluent, younger people. Is that the story that you'd

466
00:26:25,200 --> 00:26:25,480
Speaker 3: want to.

467
00:26:25,480 --> 00:26:28,719
Speaker 11: Tell, Absolutely, and the results speak to that.

468
00:26:29,119 --> 00:26:33,280
Speaker 13: We've driven seventeen consecutive quarters where our revenue growth and

469
00:26:33,320 --> 00:26:38,640
Speaker 13: our margins when added together, exceeds the very attractive rule

470
00:26:38,680 --> 00:26:41,400
Speaker 13: of forty that technology investors like to see.

471
00:26:41,200 --> 00:26:42,280
Speaker 11: In software companies.

472
00:26:42,560 --> 00:26:46,040
Speaker 13: We've actually averaged fifty eight in this quarter, we're sixty

473
00:26:46,040 --> 00:26:49,359
Speaker 13: seven percent. We drove thirty percent revenue growth and have

474
00:26:49,520 --> 00:26:53,520
Speaker 13: twenty nine percent with down margins, which is an exceptional performance,

475
00:26:53,920 --> 00:26:56,399
Speaker 13: and it's really the direct result of the foundation that

476
00:26:56,440 --> 00:26:58,879
Speaker 13: we've built over the last eight years to have this

477
00:26:58,960 --> 00:27:02,840
Speaker 13: diverse setup product that are all now firing together to

478
00:27:02,920 --> 00:27:07,600
Speaker 13: deliver durable growth and really strong profitability. Our business continues

479
00:27:07,640 --> 00:27:11,320
Speaker 13: to diversify into products outside of lending. Fifty six percent

480
00:27:11,320 --> 00:27:14,439
Speaker 13: of our revenue was from the line lending segments, and

481
00:27:14,480 --> 00:27:17,600
Speaker 13: that was up quite meaningfully fifty seven percent. So the

482
00:27:17,640 --> 00:27:21,879
Speaker 13: strategies working with thirty five percent product member growth, thirty

483
00:27:21,960 --> 00:27:25,640
Speaker 13: six percent product growth, and then about forty percent other

484
00:27:25,680 --> 00:27:29,760
Speaker 13: products in the quarter were bought by existing members.

485
00:27:30,480 --> 00:27:32,879
Speaker 3: And to bear with me one moment please, there's just

486
00:27:32,960 --> 00:27:35,800
Speaker 3: some breaking news. Nvidia is making a one billion dollar

487
00:27:35,840 --> 00:27:42,160
Speaker 3: equity investment in Nokia, the European telecom telecommunication networking name.

488
00:27:42,560 --> 00:27:45,440
Speaker 3: Nvidia will subscribe Nokia shares at a price of six

489
00:27:45,480 --> 00:27:49,119
Speaker 3: dollars one cent per share and hold three percent of

490
00:27:49,160 --> 00:27:52,280
Speaker 3: the company almost three percent, two point nine percent. Nokia

491
00:27:52,320 --> 00:27:55,240
Speaker 3: is going to use that money to accelerate its strategic

492
00:27:55,280 --> 00:28:00,040
Speaker 3: plans around AI, and the shares will be delivered in

493
00:28:00,040 --> 00:28:02,800
Speaker 3: the form of ADRs. It's an interesting piece of breaking news.

494
00:28:02,840 --> 00:28:03,360
Speaker 2: We're here in.

495
00:28:03,359 --> 00:28:06,720
Speaker 3: DC for Nvidia GtC. I'm sure later in the day

496
00:28:06,920 --> 00:28:09,000
Speaker 3: we'll get back to it. Antie, thank you for bearing

497
00:28:09,040 --> 00:28:11,440
Speaker 3: with me. The other person I want to ask about

498
00:28:11,680 --> 00:28:14,520
Speaker 3: is what's happening in the market right now. If you

499
00:28:14,600 --> 00:28:17,200
Speaker 3: are a fintech company and you put out a press

500
00:28:17,240 --> 00:28:19,320
Speaker 3: release or you say the words open AI in the

501
00:28:19,320 --> 00:28:23,680
Speaker 3: public forum, your stock goes ballistic. Paypalers example of that.

502
00:28:24,240 --> 00:28:27,320
Speaker 3: Does so FI feel the need to integrate itself as

503
00:28:27,359 --> 00:28:28,760
Speaker 3: an API through chat GPT?

504
00:28:30,280 --> 00:28:34,080
Speaker 13: What I'd say is this, we're benefiting from two technology supercycles,

505
00:28:34,119 --> 00:28:39,040
Speaker 13: blockchain and artificial intelligence. We'll talk about products and impact

506
00:28:39,160 --> 00:28:42,040
Speaker 13: as they're released. I think it's critically important to stay

507
00:28:42,080 --> 00:28:44,400
Speaker 13: grounded in reality of the business as well as the

508
00:28:44,400 --> 00:28:49,160
Speaker 13: impact of these new initiatives and the business. We've recently

509
00:28:49,240 --> 00:28:52,160
Speaker 13: launched something called Sofi Pay, which is the ability to

510
00:28:52,200 --> 00:28:54,800
Speaker 13: pay in the United States. There are app in dollars

511
00:28:55,200 --> 00:28:59,040
Speaker 13: of money that's remitted internationally to Mexico as a start

512
00:29:00,080 --> 00:29:03,560
Speaker 13: rides down a layer two blockchain and it arrives in

513
00:29:03,600 --> 00:29:07,400
Speaker 13: the destination country and local feat We've rolled out Mexico

514
00:29:07,520 --> 00:29:09,440
Speaker 13: and we'll soon be adding the rest of lat am

515
00:29:09,800 --> 00:29:11,480
Speaker 13: as well as Europe, and we think it's a very

516
00:29:11,560 --> 00:29:14,959
Speaker 13: unique product. We also will be launching before the end

517
00:29:15,000 --> 00:29:17,320
Speaker 13: of the year the ability to buy, sell, and hold

518
00:29:17,640 --> 00:29:21,680
Speaker 13: cryptocurrencies at SOFI. Will be the first national bank in

519
00:29:21,680 --> 00:29:25,360
Speaker 13: the US to offer buy, sell and hold cryptocurrencies, and

520
00:29:25,400 --> 00:29:27,920
Speaker 13: you'll be able to do it through your Sofi Money account.

521
00:29:28,240 --> 00:29:30,640
Speaker 13: Our Sofi Money accounts a our checking the seams accounts

522
00:29:30,960 --> 00:29:34,680
Speaker 13: they have up to two million dollars with FDIC insurance.

523
00:29:35,080 --> 00:29:38,160
Speaker 13: People could open up a crypto account and fund that

524
00:29:38,280 --> 00:29:39,600
Speaker 13: purchase directly.

525
00:29:39,240 --> 00:29:41,080
Speaker 11: From their Sofi Money account seamlessly.

526
00:29:41,520 --> 00:29:44,720
Speaker 14: So not only building unique products, but we're stitching them

527
00:29:44,760 --> 00:29:47,640
Speaker 14: together so that you have a seamless ability to use

528
00:29:47,680 --> 00:29:51,080
Speaker 14: all of our products, and it's better to use them together.

529
00:29:51,840 --> 00:29:54,760
Speaker 14: We'll also launch next year a stable coin, which we

530
00:29:54,800 --> 00:29:56,480
Speaker 14: think will impact a number.

531
00:29:56,200 --> 00:29:57,280
Speaker 11: Of our different businesses.

532
00:29:57,560 --> 00:29:59,880
Speaker 13: It will be part of Sofi pay, be part of

533
00:30:00,680 --> 00:30:03,680
Speaker 13: held Biols and sell Crypto, and will also be offered

534
00:30:03,720 --> 00:30:05,360
Speaker 13: to our technology platform partners.

535
00:30:06,040 --> 00:30:08,600
Speaker 7: The product innovation is rapid, Anthony.

536
00:30:09,200 --> 00:30:11,920
Speaker 6: What's interesting though, is trying to understand the asset quality

537
00:30:12,080 --> 00:30:15,360
Speaker 6: going forward. And as Ed started this conversation, there's perhaps

538
00:30:15,440 --> 00:30:18,480
Speaker 6: the sort of higher level, higher type of person that

539
00:30:18,520 --> 00:30:21,120
Speaker 6: you've been marketing to. But PayPal has just been saying,

540
00:30:21,160 --> 00:30:23,200
Speaker 6: I'm ind their earnings said worried about the US.

541
00:30:23,000 --> 00:30:25,120
Speaker 7: Consumer right now? Are you?

542
00:30:25,160 --> 00:30:28,040
Speaker 11: No, we're not. Our consumer is very strong.

543
00:30:28,080 --> 00:30:30,640
Speaker 13: We're going after prime and super prime customers with their

544
00:30:30,720 --> 00:30:34,680
Speaker 13: lending products. Our credits performed incredibly well. We actually saw

545
00:30:34,720 --> 00:30:38,920
Speaker 13: an improvement sequentially again in net charge offs by about

546
00:30:38,920 --> 00:30:40,960
Speaker 13: twenty basis points across both products.

547
00:30:41,320 --> 00:30:44,360
Speaker 11: Our average FYCOS score for our personal loans is.

548
00:30:44,240 --> 00:30:46,800
Speaker 13: In the seven to forty range and the average FYCO

549
00:30:46,880 --> 00:30:48,840
Speaker 13: score for our student owner financing is in the seven

550
00:30:48,880 --> 00:30:51,880
Speaker 13: to fifty range. So we're seeing really strong performance of

551
00:30:51,960 --> 00:30:55,480
Speaker 13: credit and great demand from our capital markets partners in

552
00:30:55,640 --> 00:30:59,440
Speaker 13: our loan platform business, which is now in this quarter

553
00:30:59,480 --> 00:31:03,000
Speaker 13: over three billion dollars, up nine hundred million dollars sequentially.

554
00:31:03,400 --> 00:31:05,440
Speaker 13: And so not only is our credit performing well, the

555
00:31:05,520 --> 00:31:09,640
Speaker 13: returns investors are getting and buying our loans or licensing

556
00:31:09,680 --> 00:31:12,760
Speaker 13: with us on our loan platform is also performing well.

557
00:31:12,920 --> 00:31:15,000
Speaker 13: And we see a flight to quality and we're benefiting

558
00:31:15,040 --> 00:31:15,280
Speaker 13: from that.

559
00:31:15,960 --> 00:31:19,120
Speaker 6: Anthony, you have been talking about the innovations when it

560
00:31:19,120 --> 00:31:21,840
Speaker 6: comes to investing in AI investing in crypto, maybe there's

561
00:31:21,840 --> 00:31:23,719
Speaker 6: a bit of an in organic as well as organic.

562
00:31:23,960 --> 00:31:26,040
Speaker 7: But I'm interested about what it means for your workforce.

563
00:31:26,600 --> 00:31:29,440
Speaker 6: Are you still going to be expanding Briefly, might you

564
00:31:29,480 --> 00:31:31,320
Speaker 6: see some trimming in terms of corporate jobs.

565
00:31:32,320 --> 00:31:36,000
Speaker 13: We are accelerating our rate of investment, and we've announced

566
00:31:36,000 --> 00:31:38,480
Speaker 13: a number of new initiatives, including the smart card for

567
00:31:38,560 --> 00:31:41,480
Speaker 13: next year as part of Sofi Plus. We'll continue to

568
00:31:41,520 --> 00:31:44,760
Speaker 13: expand the selection that we have in the invest product

569
00:31:44,760 --> 00:31:46,920
Speaker 13: that I mentioned the crypto investments.

570
00:31:47,000 --> 00:31:49,480
Speaker 11: We're also doing things in artificial intelligence.

571
00:31:49,840 --> 00:31:52,720
Speaker 13: We've recently launched cash Coach, which is a way to

572
00:31:52,760 --> 00:31:55,240
Speaker 13: evaluate the cash that you have in your Sofi accounts

573
00:31:55,520 --> 00:31:58,080
Speaker 13: and all of your external accounts and show you how

574
00:31:58,120 --> 00:32:01,440
Speaker 13: you're not using your cash optimally. Will also launch something

575
00:32:01,640 --> 00:32:04,600
Speaker 13: more broadly called Coach, which will answer your questions but

576
00:32:04,680 --> 00:32:08,280
Speaker 13: most importantly help you understand how to spend less than

577
00:32:08,280 --> 00:32:11,520
Speaker 13: you make so you can invest the rest. We're moving

578
00:32:11,560 --> 00:32:14,120
Speaker 13: forward with hired and we've hired more engineers this year

579
00:32:14,160 --> 00:32:16,320
Speaker 13: than we've had in the past, and we don't see

580
00:32:16,320 --> 00:32:17,240
Speaker 13: that signed.

581
00:32:16,880 --> 00:32:20,520
Speaker 6: Down, Anthony Noto, so Fi CEO. Great to catch up

582
00:32:20,520 --> 00:32:22,400
Speaker 6: with you today. On the back of your earnings.

583
00:32:23,920 --> 00:32:27,840
Speaker 3: Secretive Americans startup Substrate has come out of stealth with

584
00:32:27,880 --> 00:32:30,640
Speaker 3: a one billion dollar valuation and a bold claim on

585
00:32:30,800 --> 00:32:34,080
Speaker 3: chip making technology. It's built a new lithography tool that

586
00:32:34,200 --> 00:32:38,280
Speaker 3: it says uses particle acceleration and X ray wavelengths to

587
00:32:38,400 --> 00:32:41,560
Speaker 3: etch intricate wafer patterns as sharp as all sharper than

588
00:32:42,000 --> 00:32:47,000
Speaker 3: ASML's EUV machines. ASML shares fell after Bloomberg published its story.

589
00:32:47,040 --> 00:32:48,240
Speaker 2: The company also has.

590
00:32:48,320 --> 00:32:52,360
Speaker 3: Long shot plans to build an American foundry, taking aim

591
00:32:52,640 --> 00:32:57,160
Speaker 3: at TSMC's dominance. Substrate founder and CEO James Proud joins

592
00:32:57,240 --> 00:33:00,560
Speaker 3: us now from San Francisco. James, I've had the benefit

593
00:33:00,560 --> 00:33:03,360
Speaker 3: of spending some time with you in recent weeks looking

594
00:33:04,000 --> 00:33:08,080
Speaker 3: at the company seeing the technology. The technical breakthrough is

595
00:33:08,080 --> 00:33:11,640
Speaker 3: the use of a particle accelerator. But you're very keen

596
00:33:11,640 --> 00:33:13,880
Speaker 3: to point out that you didn't take any ip from

597
00:33:13,920 --> 00:33:17,560
Speaker 3: anyone else or work with another technology company. The response

598
00:33:17,600 --> 00:33:19,720
Speaker 3: when we published the story was, how is this different

599
00:33:19,720 --> 00:33:22,280
Speaker 3: from a company called x light? So take that and

600
00:33:22,360 --> 00:33:23,160
Speaker 3: run with it, please.

601
00:33:25,280 --> 00:33:28,719
Speaker 15: I think that what we've shown today is a working

602
00:33:28,840 --> 00:33:34,360
Speaker 15: tool that is producing beautiful images. To our knowledge, there's

603
00:33:34,400 --> 00:33:39,520
Speaker 15: only two companies that are actually printing images at these resolutions,

604
00:33:40,680 --> 00:33:42,400
Speaker 15: in one in the United States.

605
00:33:43,840 --> 00:33:47,400
Speaker 3: Let's bring up those images. You're basically sharing these images

606
00:33:47,440 --> 00:33:51,160
Speaker 3: as evidence that the machine itself works. What is it

607
00:33:51,200 --> 00:33:54,880
Speaker 3: that we're looking at here? And you know, beyond that,

608
00:33:55,200 --> 00:33:57,959
Speaker 3: I think some of the technical questions that the analyst

609
00:33:58,000 --> 00:34:00,760
Speaker 3: community came to us with is what is the throughput

610
00:34:00,840 --> 00:34:03,920
Speaker 3: of this machine, you know, beyond this being a lab

611
00:34:03,960 --> 00:34:04,920
Speaker 3: based experiment.

612
00:34:06,360 --> 00:34:07,800
Speaker 4: Yeah, so that's a great question.

613
00:34:08,280 --> 00:34:11,000
Speaker 15: So it's important to know that the images that we've

614
00:34:11,040 --> 00:34:15,960
Speaker 15: printed printed, we've done them under production like conditions, So

615
00:34:16,000 --> 00:34:19,760
Speaker 15: this isn't something that is a very long exposure, a sort.

616
00:34:19,520 --> 00:34:20,160
Speaker 4: Of one off.

617
00:34:20,200 --> 00:34:22,560
Speaker 15: We've been very very focused on if we're going to

618
00:34:22,640 --> 00:34:24,880
Speaker 15: use this kind of light source. It has to be

619
00:34:24,960 --> 00:34:27,879
Speaker 15: capable of high volume production. And then on the other

620
00:34:27,960 --> 00:34:31,040
Speaker 15: side the actual tool itself. We have what is a

621
00:34:31,080 --> 00:34:35,000
Speaker 15: production quality three hundred millimeter away for tool with the

622
00:34:35,120 --> 00:34:39,320
Speaker 15: mechatronics in that tool moving a production throughput. Of course,

623
00:34:39,719 --> 00:34:41,960
Speaker 15: we're not in a fab. We've not built a fab yet,

624
00:34:42,000 --> 00:34:44,759
Speaker 15: and so the proof is really going to be there.

625
00:34:44,840 --> 00:34:47,399
Speaker 15: But we feel very very confident that on the key

626
00:34:47,520 --> 00:34:50,520
Speaker 15: metrics that go into throughput, we've been demonstrating those.

627
00:34:50,680 --> 00:34:53,040
Speaker 6: Okay, so you haven't built a fab, but you are

628
00:34:53,080 --> 00:34:54,520
Speaker 6: planning an American foundry.

629
00:34:55,080 --> 00:34:59,319
Speaker 15: Why, James, Well, if you look at the history of

630
00:34:59,360 --> 00:35:03,320
Speaker 15: all of this techn from the transistor to photo lithography itself,

631
00:35:03,600 --> 00:35:06,360
Speaker 15: the United States invented all of this. It was predominantly

632
00:35:06,360 --> 00:35:10,640
Speaker 15: actually two companies, Intel and IBM. And so I see

633
00:35:10,680 --> 00:35:13,279
Speaker 15: that we have a long history in this country of

634
00:35:13,400 --> 00:35:18,359
Speaker 15: doing crazy, bold things, and it feels like a more

635
00:35:18,920 --> 00:35:22,000
Speaker 15: brief aberration that the United States is not in the

636
00:35:22,080 --> 00:35:25,359
Speaker 15: leadership position here. We've gone and done something very very

637
00:35:25,400 --> 00:35:29,920
Speaker 15: different on the sort of key process in the manufacturing process.

638
00:35:30,480 --> 00:35:33,239
Speaker 15: Our ideas aren't limited just to the lithography. We have

639
00:35:33,440 --> 00:35:35,680
Speaker 15: lots of ideas about what would it look like if

640
00:35:35,719 --> 00:35:38,359
Speaker 15: you were starting a foundry from scratch, and so we're

641
00:35:38,480 --> 00:35:41,480
Speaker 15: very excited to go and keep building on top of that.

642
00:35:41,719 --> 00:35:44,560
Speaker 6: And I'm sure IML looks on with wonder as at

643
00:35:44,600 --> 00:35:47,239
Speaker 6: the moment they are at the heart of lithography, and

644
00:35:47,520 --> 00:35:50,680
Speaker 6: maybe Japanese player too, but really they have the choke point.

645
00:35:50,880 --> 00:35:54,239
Speaker 6: I'm interested as and when your facility might be up

646
00:35:54,280 --> 00:35:58,440
Speaker 6: and running for such lithography, for such semiconductor equipment making

647
00:35:58,480 --> 00:36:02,440
Speaker 6: machines to be up and running, and you see, commercially, James, our.

648
00:36:02,280 --> 00:36:04,480
Speaker 15: Goal is to be up and running in twenty twenty eight.

649
00:36:04,719 --> 00:36:07,680
Speaker 15: It's a very very fast timeline, but we've moved at

650
00:36:07,760 --> 00:36:11,160
Speaker 15: incredible speed. The company's really only three years old at

651
00:36:11,160 --> 00:36:13,840
Speaker 15: this point, and so if we can continue at that pace,

652
00:36:13,880 --> 00:36:15,279
Speaker 15: we think that we can get that done.

653
00:36:16,920 --> 00:36:17,320
Speaker 2: James.

654
00:36:17,320 --> 00:36:22,239
Speaker 3: For you, this is about American sovereignty over a national

655
00:36:22,680 --> 00:36:27,840
Speaker 3: security critical technology. Would you just explain your pitch in

656
00:36:27,880 --> 00:36:30,040
Speaker 3: those terms. I know that you are driven by a

657
00:36:30,160 --> 00:36:34,439
Speaker 3: very specific ideology on how and why America should lead

658
00:36:34,440 --> 00:36:35,080
Speaker 3: in this field.

659
00:36:36,440 --> 00:36:39,680
Speaker 15: Yeah, to be very clear, like you said, like this

660
00:36:39,800 --> 00:36:43,640
Speaker 15: company and starting this, this is a very ideologically driven mission.

661
00:36:44,040 --> 00:36:47,799
Speaker 15: Doing this and starting this is not easy. It's been incredibly,

662
00:36:47,800 --> 00:36:51,040
Speaker 15: incredibly hard to get to this point, but I feel

663
00:36:51,080 --> 00:36:56,160
Speaker 15: like the national security and economic security imperative, we need

664
00:36:56,239 --> 00:36:59,520
Speaker 15: to be doing absolutely everything that we possibly can to

665
00:36:59,560 --> 00:37:02,400
Speaker 15: get it States back into a leadership position. We need

666
00:37:02,440 --> 00:37:05,360
Speaker 15: to be building as many fabs from domestic and foreign

667
00:37:06,000 --> 00:37:09,120
Speaker 15: players as we possibly can. My number one goal is

668
00:37:09,200 --> 00:37:11,040
Speaker 15: wafers built in the United States.

669
00:37:11,400 --> 00:37:12,719
Speaker 9: We think that we can.

670
00:37:12,680 --> 00:37:14,840
Speaker 15: Do a different version of that and bring that online

671
00:37:14,960 --> 00:37:18,600
Speaker 15: very rapidly, but the end goal is semiconductors built in

672
00:37:18,600 --> 00:37:20,400
Speaker 15: the United States as quickly as possible.

673
00:37:21,880 --> 00:37:25,239
Speaker 3: In the story, we outline both that you were once

674
00:37:25,280 --> 00:37:28,719
Speaker 3: a UK citizen who renounced UK citizenship and became an

675
00:37:28,719 --> 00:37:31,719
Speaker 3: American citizen, and that you have no intention to sell

676
00:37:31,760 --> 00:37:33,960
Speaker 3: these machines. So I want to get to some subject

677
00:37:34,000 --> 00:37:36,880
Speaker 3: the matter that we didn't cover. You know that you

678
00:37:36,960 --> 00:37:39,520
Speaker 3: need to raise tens of billions of dollars probably to

679
00:37:39,600 --> 00:37:43,239
Speaker 3: achieve this vision. The capital right now is coming from

680
00:37:43,280 --> 00:37:45,840
Speaker 3: the golf in the Middle East. How would you manage

681
00:37:45,880 --> 00:37:46,640
Speaker 3: that situation?

682
00:37:48,320 --> 00:37:50,600
Speaker 15: So I think it's actually really important to note that

683
00:37:51,120 --> 00:37:55,200
Speaker 15: traditionally with a large semiconductor fab, you need a very,

684
00:37:55,320 --> 00:37:58,040
Speaker 15: very large anchor customer to be able to fund the

685
00:37:58,080 --> 00:38:00,359
Speaker 15: sort of tens of billions required to get a a

686
00:38:00,360 --> 00:38:03,600
Speaker 15: fab up and running. But with what we're doing, we

687
00:38:03,680 --> 00:38:06,640
Speaker 15: can actually reduce those costs so that to bring up

688
00:38:06,640 --> 00:38:09,600
Speaker 15: a low volume facility you'd only really be in the

689
00:38:09,920 --> 00:38:13,560
Speaker 15: single low single digit billions of dollars. And so because

690
00:38:13,600 --> 00:38:15,040
Speaker 15: of that, we think that we have a lot more

691
00:38:15,080 --> 00:38:18,640
Speaker 15: flexibility in raising capital and actually getting this build as

692
00:38:18,719 --> 00:38:19,760
Speaker 15: quickly as we can.

693
00:38:20,600 --> 00:38:24,520
Speaker 6: So maybe keep on depending on US capital to build

694
00:38:24,560 --> 00:38:28,319
Speaker 6: and fabricate in the United States. And for that, how

695
00:38:28,360 --> 00:38:30,279
Speaker 6: much have you had to liaise with the Trump administration,

696
00:38:30,360 --> 00:38:32,160
Speaker 6: how much we had to be in sync with their

697
00:38:32,239 --> 00:38:34,800
Speaker 6: own focus on fabrication in the United States.

698
00:38:36,400 --> 00:38:38,840
Speaker 15: Well, I think the Trump administration and the President have

699
00:38:39,160 --> 00:38:41,400
Speaker 15: made it very clear they see that this is a

700
00:38:41,440 --> 00:38:43,680
Speaker 15: golden age for the United States and that we are

701
00:38:43,719 --> 00:38:47,719
Speaker 15: in a technological battle. There's an AI race and the

702
00:38:47,800 --> 00:38:51,160
Speaker 15: United States needs to win. And so from literally day

703
00:38:51,200 --> 00:38:55,440
Speaker 15: one of that administration, they've been incredibly supportive, engaged, and

704
00:38:55,920 --> 00:39:00,000
Speaker 15: the door has always been open. And so we're incredibles

705
00:39:00,280 --> 00:39:03,359
Speaker 15: of the administration and appreciative of the time that they've

706
00:39:03,400 --> 00:39:03,839
Speaker 15: given us.

707
00:39:04,160 --> 00:39:08,200
Speaker 6: James Crowd, CEO, substrate we thank you for joining us today. Meanwhile,

708
00:39:08,239 --> 00:39:10,280
Speaker 6: coming up, we're going to be speaking with Anka Crawford,

709
00:39:10,560 --> 00:39:12,320
Speaker 6: algia EVP and portfolio manager.

710
00:39:12,440 --> 00:39:12,799
Speaker 2: I want to.

711
00:39:12,800 --> 00:39:15,680
Speaker 6: Expect outam In Video's GtC keynote adds some news on

712
00:39:15,760 --> 00:39:16,200
Speaker 6: him Video.

713
00:39:17,400 --> 00:39:19,160
Speaker 2: Yeah, and it was breaking out of Europe.

714
00:39:19,280 --> 00:39:22,320
Speaker 3: In Video is making a one billion dollar equity investment

715
00:39:22,360 --> 00:39:25,560
Speaker 3: in Nokia, where in Video will end up holding almost

716
00:39:25,680 --> 00:39:29,719
Speaker 3: three percent of that company. And it's about Nokia having

717
00:39:29,719 --> 00:39:34,600
Speaker 3: both the capital and the technology relationship to advance its

718
00:39:34,640 --> 00:39:36,240
Speaker 3: strategic priorities in AI.

719
00:39:36,520 --> 00:39:38,080
Speaker 2: I am here in DC for GtC.

720
00:39:38,520 --> 00:39:41,000
Speaker 3: One would assume therefore that later today we'll hear more

721
00:39:41,000 --> 00:39:43,480
Speaker 3: about it. But Caro, look at Nokia shares right now

722
00:39:43,520 --> 00:39:46,360
Speaker 3: and that reaction that's called the Nvidia effect, the golden

723
00:39:46,400 --> 00:39:47,160
Speaker 3: ticket in AI.

724
00:39:47,800 --> 00:39:48,799
Speaker 2: This is Bloomberg Tech.

725
00:39:55,680 --> 00:39:57,040
Speaker 7: We've got to get back to our top story of

726
00:39:57,040 --> 00:39:57,279
Speaker 7: the day.

727
00:39:57,320 --> 00:39:59,800
Speaker 6: Microsoft has finalized a pact with Open AI, giving the

728
00:39:59,840 --> 00:40:02,400
Speaker 6: t tech giant Microsoft that is a twenty seven percent

729
00:40:02,440 --> 00:40:06,640
Speaker 6: stake in the chatchipte maker. It's public benefit corporation part

730
00:40:06,680 --> 00:40:09,240
Speaker 6: of it worth about one hundred and thirty five billion dollars.

731
00:40:09,320 --> 00:40:12,640
Speaker 6: Unco Crawlford is with US EVP portfolio manager at Algae.

732
00:40:12,880 --> 00:40:16,360
Speaker 6: And you've been putting a lot of thought into underlying

733
00:40:16,440 --> 00:40:21,160
Speaker 6: valuations into the overall AI spectrum right now. Is this

734
00:40:21,239 --> 00:40:22,920
Speaker 6: clarity a good one for you when it comes to

735
00:40:22,960 --> 00:40:24,000
Speaker 6: the Microsoft thesis?

736
00:40:24,719 --> 00:40:24,879
Speaker 8: Oh?

737
00:40:25,040 --> 00:40:27,879
Speaker 16: Sure, I mean, you know, partnering with open Ai. Open

738
00:40:27,880 --> 00:40:30,520
Speaker 16: ai is probably one of the most significant companies of

739
00:40:30,960 --> 00:40:34,520
Speaker 16: our decade. Of this decade, and to be able to

740
00:40:34,560 --> 00:40:38,399
Speaker 16: partner with open ai and increase the time horizon over

741
00:40:38,440 --> 00:40:44,040
Speaker 16: which the partnership will will exist was important for Microsoft

742
00:40:44,080 --> 00:40:47,560
Speaker 16: because the underlying technology is being developed at open Ai. So,

743
00:40:48,120 --> 00:40:51,480
Speaker 16: you know, welcome, We're very happy to see it. The

744
00:40:51,520 --> 00:40:57,080
Speaker 16: extension of the Data Center Pact also an important step

745
00:40:57,120 --> 00:40:57,840
Speaker 16: in the right direction.

746
00:40:57,880 --> 00:40:59,319
Speaker 7: Two hundred and fifty billion dollars worth.

747
00:41:00,080 --> 00:41:03,600
Speaker 16: Yeah, that's right, and so moving forward, I mean, there

748
00:41:03,640 --> 00:41:06,000
Speaker 16: was a lot of kerfuffling that we'd heard between open

749
00:41:06,040 --> 00:41:09,239
Speaker 16: ai and Microsoft. I'm glad that they're over it. I

750
00:41:09,239 --> 00:41:12,200
Speaker 16: think they'll make great partners once again. This is about

751
00:41:12,200 --> 00:41:15,160
Speaker 16: deal making once again. This is about open ai just

752
00:41:15,200 --> 00:41:17,719
Speaker 16: trying to ensure that it's got the bandwidth of compute

753
00:41:17,760 --> 00:41:20,960
Speaker 16: that it needs. With Microsoft being able to say real

754
00:41:21,040 --> 00:41:23,160
Speaker 16: revenue from general to AI in the here and now

755
00:41:23,200 --> 00:41:26,239
Speaker 16: and still have access to the IP When we keep

756
00:41:26,280 --> 00:41:28,480
Speaker 16: thinking about these deals, some of them being talked of

757
00:41:28,600 --> 00:41:31,600
Speaker 16: as circular. Has it given you any pools, any calls

758
00:41:31,640 --> 00:41:36,400
Speaker 16: for concern? Actually quite the opposite in that maybe we

759
00:41:36,400 --> 00:41:39,000
Speaker 16: should be asking what is it that open ai actually

760
00:41:39,000 --> 00:41:42,319
Speaker 16: thinks their revenues can be that they need so much capacity,

761
00:41:43,080 --> 00:41:46,120
Speaker 16: and back into perhaps you know, how big is this

762
00:41:46,239 --> 00:41:48,040
Speaker 16: market and how are they framing it?

763
00:41:48,160 --> 00:41:50,160
Speaker 9: How is anthropic framing their market?

764
00:41:51,160 --> 00:41:53,440
Speaker 16: You know, last week there was a really interesting article

765
00:41:53,600 --> 00:41:58,240
Speaker 16: about how open ai was hiring investment bankers, where they're

766
00:41:58,280 --> 00:42:00,600
Speaker 16: coding a junior investment bank analyst.

767
00:42:01,040 --> 00:42:02,000
Speaker 9: What is that worth?

768
00:42:03,040 --> 00:42:03,200
Speaker 3: Right?

769
00:42:03,239 --> 00:42:05,520
Speaker 16: What is that worth to a bank that may hire

770
00:42:05,640 --> 00:42:07,840
Speaker 16: an open ai digital banker?

771
00:42:08,960 --> 00:42:11,480
Speaker 9: Right? And if you do this across.

772
00:42:11,120 --> 00:42:15,200
Speaker 16: The economy, I think it becomes a clearer that you know,

773
00:42:15,239 --> 00:42:20,440
Speaker 16: the opportunity set here is very significant. It's not tens

774
00:42:20,440 --> 00:42:23,320
Speaker 16: of billions, it's hundreds of billions, if not greater.

775
00:42:23,960 --> 00:42:25,640
Speaker 7: We are at a new record high in the day.

776
00:42:25,719 --> 00:42:28,480
Speaker 6: We are seeing Nvidia push hire ahead of more announcements

777
00:42:28,480 --> 00:42:32,200
Speaker 6: coming out of GtC. We are seeing earnings anticipation all

778
00:42:32,239 --> 00:42:35,279
Speaker 6: of some of the major players of Magnificent seven this week, the.

779
00:42:35,320 --> 00:42:36,560
Speaker 7: Key five coming forward.

780
00:42:37,239 --> 00:42:40,520
Speaker 6: But when you're looking at your investment playbook. Are you

781
00:42:40,560 --> 00:42:43,080
Speaker 6: going to keep putting money into a Microsoft, into an Video,

782
00:42:43,160 --> 00:42:45,200
Speaker 6: into an Amazon and an alphabet or is it a

783
00:42:45,320 --> 00:42:46,399
Speaker 6: broader remit Now?

784
00:42:47,080 --> 00:42:51,200
Speaker 16: I think it has been a much broader subsection that

785
00:42:51,280 --> 00:42:55,799
Speaker 16: we have been investing in, mostly playing on the infrastructure side.

786
00:42:56,560 --> 00:42:58,040
Speaker 9: At some point you're.

787
00:42:57,840 --> 00:43:00,560
Speaker 16: Going to have to pivot from not only in structure,

788
00:43:01,000 --> 00:43:03,520
Speaker 16: but into those companies that are actually deploying and getting

789
00:43:03,560 --> 00:43:07,000
Speaker 16: the benefits of AI that is still on the come

790
00:43:07,360 --> 00:43:10,760
Speaker 16: because we are still in this ramp of building infrastructure.

791
00:43:11,120 --> 00:43:14,680
Speaker 16: I mean, we can't actually deploy artificial intelligence to companies

792
00:43:14,680 --> 00:43:17,120
Speaker 16: and get that benefit until the infrastructure is in place.

793
00:43:17,680 --> 00:43:19,799
Speaker 16: So I think there's another you know, two to three

794
00:43:19,880 --> 00:43:22,719
Speaker 16: year build out on the infrastructure. I think as we

795
00:43:22,760 --> 00:43:26,600
Speaker 16: go through this earning season, we will see everyone is

796
00:43:26,640 --> 00:43:29,640
Speaker 16: going to be raising their CAFEX estimates. Next year the

797
00:43:29,800 --> 00:43:31,279
Speaker 16: numbers probably go up again.

798
00:43:31,360 --> 00:43:34,200
Speaker 6: Can you celebrate that rather than seeing the revenue going

799
00:43:34,280 --> 00:43:34,919
Speaker 6: up into the right?

800
00:43:35,920 --> 00:43:37,200
Speaker 9: You celebrate both.

801
00:43:37,560 --> 00:43:41,920
Speaker 16: Right, you need to see the infrastructure people spending CAPEX,

802
00:43:42,280 --> 00:43:46,279
Speaker 16: which will eventually come as revenue to them over the

803
00:43:46,320 --> 00:43:48,960
Speaker 16: next few years. But you do have to invest first

804
00:43:49,360 --> 00:43:50,640
Speaker 16: in order to see the game.

805
00:43:51,080 --> 00:43:53,040
Speaker 6: OK, it's always great to get your perspective. We so

806
00:43:53,080 --> 00:43:55,400
Speaker 6: appreciate it on co cooford of Alga there with us

807
00:43:55,440 --> 00:43:58,600
Speaker 6: portfolio manager. Meanwhile, let's just take a quick look as

808
00:43:58,640 --> 00:44:00,840
Speaker 6: we wrap up this edition of Bluembag TI of the

809
00:44:00,880 --> 00:44:04,520
Speaker 6: movers of the day nokire European what was the telecom

810
00:44:04,560 --> 00:44:07,959
Speaker 6: equipment pivoting into AI equipment and then some in video

811
00:44:08,040 --> 00:44:11,319
Speaker 6: vindicates that pivot by investing some one billion in terms

812
00:44:11,360 --> 00:44:14,600
Speaker 6: of equity. That's a billion dollar equity investment in nock here.

813
00:44:15,000 --> 00:44:17,960
Speaker 6: This is all about the future of AI RAN. That's

814
00:44:18,040 --> 00:44:21,040
Speaker 6: radio access network market that's rapidly growing. It's about five

815
00:44:21,280 --> 00:44:24,200
Speaker 6: it's about sixty for ups seventeen percent. Look out of

816
00:44:24,239 --> 00:44:26,799
Speaker 6: course for the GtC announcements to come. But that does

817
00:44:26,840 --> 00:44:30,080
Speaker 6: it for this edition of Bloomberg Tech. One key focus

818
00:44:30,200 --> 00:44:34,279
Speaker 6: is also to get your podcasts satiation. Do it with us,

819
00:44:34,440 --> 00:44:37,280
Speaker 6: go to the terminal to online on Apple, Spotify and iHeart.

820
00:44:37,360 --> 00:44:40,600
Speaker 6: Lookout for ED a little bit later at the GtC

821
00:44:40,640 --> 00:44:41,359
Speaker 6: coverage as well.

822
00:44:41,400 --> 00:44:42,399
Speaker 7: This is Bloomberg Tech