Speaker 1: From Marhard where Innovations, Money and Power Collie in Silicon Valley, NBN.
Speaker 1: This is Bloomberg Technology with Caroline Hyde and Ed Ludlove.
Speaker 2: I'm Caroline Hyde and Bloomberg's world headquarters in New York
Speaker 2: and Ourmed Ludlow in San Francisco.
Speaker 3: This is Bloomberg Technology.
Speaker 4: Coming up in Vidio.
Speaker 2: Boy Knock said out of the park with earnings that
Speaker 2: blow past estimates.
Speaker 4: Shares they're still at that all time high. We'll bring
Speaker 4: you the details.
Speaker 5: Class will have full market coverage and cover the other
Speaker 5: tech names reporting results like Snowflake and China's may Twine,
Speaker 5: and we.
Speaker 2: Talk all things artificial intelligence with CEO's of Twilio and
Speaker 2: Hugging Face. But we start with the AI story that
Speaker 2: is pervasive for the entire.
Speaker 4: Market there and in Vidio.
Speaker 2: Even though it comes off of its highs that we're
Speaker 2: trading what in excess of six percent higher earlier in
Speaker 2: the day, we're still at a record. We're up more
Speaker 2: than one, almost at two percentage points higher. But extraordiny
Speaker 2: where some of these price targets have been moved to
Speaker 2: one one hundred dollars one price target from Rosenblack.
Speaker 4: We're looking at four hundred seventy nine.
Speaker 2: This could still double Edits an amazing set of numbers.
Speaker 5: Yeah, let's get right to the numbers, right. This is
Speaker 5: the third consecutive quarter where Nvidia's guidance for the current
Speaker 5: fiscal quarter was way ahead of expectations.
Speaker 3: Revenue in the.
Speaker 5: Fiscal third will be sixteen billion dollars plus or minus
Speaker 5: two percent, as you see on your screen.
Speaker 3: In the second quarter just gone.
Speaker 5: Data center is everything ten point three billion, way past
Speaker 5: the expectations of almost eight billion. And if you look
Speaker 5: at the commentary Carrow, the growth is coming from the
Speaker 5: United States. It's the hyperscalers in the enterprise company. But
Speaker 5: it was also interesting to note that China accounted for
Speaker 5: twenty to twenty five percent of data center revenue, which
Speaker 5: is well within its historic range.
Speaker 2: I mean, the fact that we're seeing it firing on
Speaker 2: all these cylinders, whether or not we're seeing it at
Speaker 2: being a data center story. I thought what was interesting
Speaker 2: in a Morgan Stanley note just saying the pervasiveness of
Speaker 2: the small companies, small cloud providers that want to be
Speaker 2: in on an AI, not just the huge hyperscalers as well.
Speaker 5: Yes, it's a really good point because for example, AMD,
Speaker 5: a competitor, right opened up two percent in this morning's open.
Speaker 5: It's now down almost eight percent, a swing of ten percent.
Speaker 5: The market sees yields rising ahead of Jackson Hole, but
Speaker 5: how much of that is the strength in response on Nvidia?
Speaker 5: You know they are direct competitors for GPUs in the
Speaker 5: service space. In Vidia, You're right, it's off session highs.
Speaker 5: What's so interesting in that Morgan Stanley note, By Morgan
Speaker 5: Stanley's estimation, in Vidia is only meeting fifty percent of
Speaker 5: the demand that's out there. So when they talk up
Speaker 5: supply improving as well, it gives confidence that the outlook
Speaker 5: longer term is strong.
Speaker 2: And I think you've raised this point and it's one
Speaker 2: worth dwelling on the analyst reaction the price targets one
Speaker 2: after another being raised or.
Speaker 4: No single sell on this stock. Just look at that graphic.
Speaker 5: Values tripled beyond three a trillion dollars of market cap.
Speaker 5: The final sell final analyst throwed in through in the
Speaker 5: tow which was morning Star really quick. They did give
Speaker 5: us a note of caution and said on China that
Speaker 5: even if US technology export restrictions are increased in the
Speaker 5: near term, there won't be an immediate effect, why because
Speaker 5: demand around the world for the HGX server designs is
Speaker 5: so great. But long term they called it basically the
Speaker 5: removal of opportunity and what is the world's key market
Speaker 5: for data center and also electronics, So China is a
Speaker 5: long term question.
Speaker 2: Yeah, yeah, and is for armholdings as we approach that
Speaker 2: particular IPO, and it is for this particular company as well,
Speaker 2: the exposure to the demand there.
Speaker 3: Yeah.
Speaker 5: Well, we got the numbers out the way, but I
Speaker 5: think we have to look forward. Let's bring in JP Scandalios,
Speaker 5: Franklin Equity Group portfolio manager one hundred and twenty five
Speaker 5: billion dollars in assets, and you guys hold and video
Speaker 5: across multiple funds. Let's just start with the simple question,
Speaker 5: what was your take from this?
Speaker 3: In Nvidia earnings print.
Speaker 6: Certainly and thank you for having me. As you guys
Speaker 6: alluded to, you went through the numbers that kind of growth,
Speaker 6: we just we just don't see eighty eight percent sequential
Speaker 6: growth and one hundred and forty one percent quench growth
Speaker 6: in that all important data center business that you referenced,
Speaker 6: which is now seventy six percent of total revenues five
Speaker 6: ten years ago, and I've been covering the group for
Speaker 6: about thirty years.
Speaker 3: Five ten years.
Speaker 6: Ago in the video was a gaming company and now,
Speaker 6: as you said, it's all about data center. So there's
Speaker 6: two things here, right, fundamentals outstanding, huge beat huge rays.
Speaker 6: It's like The Godfather too, the sequel was as good
Speaker 6: as the predecessor. So nothing there, and I think Abigail
Speaker 6: alluded to it. There was a lot of you if
Speaker 6: you had been paying attention, I'm sure you were during
Speaker 6: the quarter. Expectations we're so so high, and there's a
Speaker 6: lot of people who get uncomfortable with parabolic growth like this.
Speaker 6: We're much more comfortable on Wall Street with steady or
Speaker 6: linear growth, and this kind of growth. People optically right
Speaker 6: away say well, this can't continue, and certainly there is
Speaker 6: a law of large numbers. But they are so well
Speaker 6: positioned for the foreseeable future. I suspect fundamentals will remain
Speaker 6: very strong, and ed you mentioned it, they conveyed that
Speaker 6: they're getting additional capacity and they have more demand than
Speaker 6: they know than they can address.
Speaker 2: I'm interested more broadly with the fact that the competition.
Speaker 2: Is this why we're seeing the likes of MD fall off.
Speaker 2: Are people feeling that really this is the winner that
Speaker 2: takes all or is that more a sign of market
Speaker 2: and gyrations that's happening on the day.
Speaker 7: I think it's the former.
Speaker 8: I think.
Speaker 6: Lisas who has done an excellent job at AMD, and
Speaker 6: I think AMD, given their limited resources, went after the
Speaker 6: CPU and especially the data center CPU market first, and
Speaker 6: they're doing really nicely. They're a relative to Intel, especially
Speaker 6: when you compare it to again five or ten years ago.
Speaker 6: I think now they've just gotten with their I three hundred.
Speaker 6: They're coming into the data center GPU market and the
Speaker 6: issue is can they gain some share? And I think
Speaker 6: there was some expectation throughout the quarter as that product
Speaker 6: comes to market that they would gain share. They're not,
Speaker 6: you know, the killer of Nvidia, but they're going to
Speaker 6: gain some share. And I think with such strong results
Speaker 6: from Nvidia, and not just the results but the guidance
Speaker 6: of course, but also their product lineup, they're just canvassing
Speaker 6: between inferencing and training, between the networking on the Finneban
Speaker 6: side and Ethernet that I think some investors who are
Speaker 6: saying this is going to be a real uphill battle
Speaker 6: climb for AMD, that'd be my guess.
Speaker 2: I mean, and it feels as though many a betting
Speaker 2: in video is the only picks and shovels out there
Speaker 2: at the moment, but only from a product perspective of offering,
Speaker 2: but just the breadth of where their customers are coming from.
Speaker 5: That's why the level of Intel's so key. Caroline right,
Speaker 5: just I'm really sorry to interrupt JP. Just point out
Speaker 5: one thing, you know, loads analysts ask collect cress, give
Speaker 5: us detail which product, right, is it H one hundred.
Speaker 5: It's broadly HGX server tip right, And I think Jensen
Speaker 5: made the point that, you know, H one hundred is
Speaker 5: not just a single chip, it has a trillion transistors
Speaker 5: in combination. You don't just sort of hand it over
Speaker 5: to the customers. But did you hear enough from them
Speaker 5: that the pipeline of future products maintains that technology lead?
Speaker 8: JP? You know I did.
Speaker 6: I think HGX is just getting started, right, and Grace
Speaker 6: on its own, and Grace Hopper CPUGPU combination is just
Speaker 6: coming to market now. There are Ethernet product Spectrum just
Speaker 6: coming to market, Bluefield their DPU Bluefield three kind of
Speaker 6: just getting going. And then you add on top of
Speaker 6: that all their software offerings. So yes, I don't think
Speaker 6: this was like, Okay, that's the game over and now
Speaker 6: time to move on. And Carolyn brings up a great point.
Speaker 6: To some degree, there's just not many AI companies, especially
Speaker 6: generated A companies that are monetizing this robust trend today,
Speaker 6: and so there is a scarcity value there.
Speaker 8: JP.
Speaker 5: I think we need to look at what collect Cress
Speaker 5: had to say about China long term that if you
Speaker 5: know US X technology export controls are in place long term,
Speaker 5: she's calling it a lots of opportunity in that market
Speaker 5: the US semiconductor maker is how seriously do you take
Speaker 5: that warning?
Speaker 6: I take it very seriously. I've done several meetings with
Speaker 6: in a podcast with Chris Miller, who wrote the book
Speaker 6: Chapurs that has often cited, and there's public funds we
Speaker 6: own GSMC as well. It's one of my major concerns
Speaker 6: just because very difficult to analyze the political back and
Speaker 6: forth between China and the US and how far our
Speaker 6: government will go and how far their government will go.
Speaker 6: And so to your point, I try to address it
Speaker 6: with adjusting my terminal growth rate, because as you say,
Speaker 6: if you take out that economy and that market, certainly
Speaker 6: it will be a lower terminal growth rate over time,
Speaker 6: and it's just a we will see what happens, but
Speaker 6: certainly something to follow, as if we don't have enough
Speaker 6: to follow. In the semiconductor industry, another thing to watch
Speaker 6: very closely.
Speaker 4: Well said.
Speaker 2: One thing that many an investor was following was the
Speaker 2: buyback enormous Where else could they should they be allocating
Speaker 2: that money at these sorts of price points to be
Speaker 2: buying back their stock? Is it because they believe the
Speaker 2: stock has got yet further to run, as some analysts do.
Speaker 4: Why not more in R and D?
Speaker 6: So they spend they already spend a lot hot well,
Speaker 6: a tremendous amount in R and D, And so I'm
Speaker 6: willing to give them a pass there if you will.
Speaker 6: I think what it says. One thing it says is
Speaker 6: M and A again going back to China, that M
Speaker 6: and A is going to be very difficult to get
Speaker 6: approved through all these regulatory bodies. And so you turn
Speaker 6: around and you say, well, what else can we do
Speaker 6: with it? Well, we have four billion left in our
Speaker 6: buy back. Let's add twenty five billion to that. I
Speaker 6: think it's sending a message to the market that they're
Speaker 6: very comfortable even at these prices, that their prospects are
Speaker 6: so strong and they outlook so positive that they're willing
Speaker 6: to buy back their shares, And you're right. It's again,
Speaker 6: it's like the results. The sticker tag is a massive number,
Speaker 6: but you're talking about a one point one trillion dollar
Speaker 6: market cap company. So at the end of the day,
Speaker 6: the number of shares that they'll actually buy back, it's
Speaker 6: great to see, don't get me wrong, but put it
Speaker 6: in a little context, I guess, yeah, hey.
Speaker 5: I have the stocks undervalue, or they got nothing to
Speaker 5: spend on JP scandalios the Frank collectority. Great to have
Speaker 5: you here on bloem. It's analogy.
Speaker 2: So further news, regarding, of course, the plane crash that
Speaker 2: presumably killed the Wagner founder Progosion, we're hearing from Putin
Speaker 2: himself saying an investigation into Progosion's death will be completed. Overall,
Speaker 2: he's saying overall that there are concerns and indeed an
Speaker 2: investigation will be completed, expressing condonencis over the Progosion jet
Speaker 2: crash and saying he was a talented man and a businessman.
Speaker 4: More on that global news throughout the day.
Speaker 2: But meanwhile, let's just return to technology and China's mag
Speaker 2: one in particular seeing its fastest pace of sales growth
Speaker 2: two years. That's like it's a large part to a
Speaker 2: rebound in dining, in travel demand. Bloomberg's Isabel Lee is
Speaker 2: here with more and for many that's a hard thing
Speaker 2: to swallow around all the narrative that China is slowing,
Speaker 2: the consumers weak, the housing crisis, the wealth crisis.
Speaker 1: It's kind of a good report and it takes some
Speaker 1: analysis because yes, the Chinese economy is slowing down, but
Speaker 1: because it's slowing down, consumers are shying away from big
Speaker 1: ticket items expensive so far something like that, and they're
Speaker 1: leaning more into the little pleasures of eating out or traveling.
Speaker 1: May to One is a giant in the delivery business,
Speaker 1: and this bounce back and travel and eating out really
Speaker 1: help its earnings dis quarter, especially after the COVID pandemic
Speaker 1: when we know that China had years of stringent lockdowns.
Speaker 1: So salesloras are better than expected at thirty three percent
Speaker 1: and may to One swung from an operating loss earlier
Speaker 1: a year earlier to an operating profit. So it's really
Speaker 1: good news for this report. But again we also focus
Speaker 1: on the outlook and the outlook is kind of shaky.
Speaker 1: Investors are saying that, you know, maybe we won't see
Speaker 1: the same growth.
Speaker 4: We are expecting a slowdown.
Speaker 1: So it's still kind of a double edged sword when
Speaker 1: it comes to these Chinese companies, But for now it's
Speaker 1: kind of good news, so we'll take it.
Speaker 5: Yeah, there's so much analogous with this May to One
Speaker 5: report and what we saw really playing up AI as well,
Speaker 5: while the macro conditions improve our big banks. To Bloomberg's
Speaker 5: Isabel Lee out in New York, another company we are watching,
Speaker 5: Cloud Software provide a snowflake displaying signs of caution after
Speaker 5: its sales out looked for the third quarter came in
Speaker 5: line with expectations. Bloomberg's Brodie Ford has everything on the
Speaker 5: software beat. Bradie, what's the story with Snowflake.
Speaker 9: Snowflake's one of those really interesting companies where it was
Speaker 9: just growing like crazy a year or two. We're talking,
Speaker 9: you know, doubling every year in terms of revenue. But
Speaker 9: of course, like every other software company out there, I
Speaker 9: hit this point where all of its customers said, WHOA,
Speaker 9: our budgets with you have.
Speaker 8: Grown insanely and so what's really.
Speaker 9: Been hitting Snowflake is something that's been hitting AWS or
Speaker 9: Microsoft Azure is that their customers are saying, how can
Speaker 9: we trim our bill a little bit? And that's really
Speaker 9: what's been impacting Snowflake. You know, they're still growing pretty heavily, right,
Speaker 9: I mean we're talking like about around thirty percent revenue growth,
Speaker 9: but at the end of the day, they're really having
Speaker 9: trouble with those big customers because they want to trim
Speaker 9: their budgets.
Speaker 2: It's interesting reading through the analyst reactions and Barkley is saying, look,
Speaker 2: after two quarters of life, we're down your guidance. The
Speaker 2: fact that's unchanged, yep, it is actually a pretty good sign.
Speaker 2: Why are we there for seeing a set off? Why
Speaker 2: are people seeing more caution around this than optimism instability?
Speaker 8: It's a good question because there's a funny dynamic.
Speaker 9: Where as you said, it's stabilized, and that's what Amazon said,
Speaker 9: and people loved it. They said, Okay, it's not getting worse,
Speaker 9: but it's stabilized. I think people just want to see
Speaker 9: a reacceleration. But something very funny that happened last night
Speaker 9: is the results came out.
Speaker 8: People said that I don't know about this.
Speaker 9: They were selling off then in video hit in vidio hit,
Speaker 9: and they had an insane result, and everyone said, oh man,
Speaker 9: I mean that's a good sign for AI.
Speaker 8: And you know what, Snowflake, they'll use that for AI.
Speaker 8: So it's all good.
Speaker 9: And so there's a lot of different factors here. Investors
Speaker 9: want to see growth come back, but sometimes this AI
Speaker 9: demand might be enough to bring Snowflake up with everybody else.
Speaker 5: Brady just having a great time after the ending spread track.
Speaker 3: In the aftermark.
Speaker 5: I mean, to your point, we opened four percent higher
Speaker 5: in this morning session of Snowflake, we're down three and
Speaker 5: a half percent and one point down, a big swing.
Speaker 5: A lot of that is the market broadly. Snowflake is
Speaker 5: like this layer on top of the hyper scalers, right
Speaker 5: on top of cloud, and they've been trying to tell
Speaker 5: an AI story that the market wants to make sense of.
Speaker 3: Have you made sense of it?
Speaker 9: So yeah, there's an interesting thing. Where As you said,
Speaker 9: Snowflake is a company that helps people organize their data
Speaker 9: and prepare it for multiple uses.
Speaker 8: One of those uses could be AI.
Speaker 9: Of course, every company that's back end data management right
Speaker 9: now is saying, hey.
Speaker 8: Hey, we'll help you with AI. Don't worry.
Speaker 9: We got you, And I think a lot of investors
Speaker 9: are saying, well, you can't all do this, And so
Speaker 9: that's kind of the question with Snowflake, right, I mean,
Speaker 9: do they have a really unique positioning as it relates
Speaker 9: to AI.
Speaker 8: Some people say they do. Some others would say no, no, no,
Speaker 8: we'll do it instead. So I think the jury is
Speaker 8: still all out on who really will be.
Speaker 9: Able to own this data organizational business as it relates
Speaker 9: to AI and training large language models, the.
Speaker 4: Pigs and shovels.
Speaker 2: The infrastructure is well and truly owned by one, but
Speaker 2: it feels as though the rest of being scribbled over
Speaker 2: when it comes to the software application prodi forward brilliant,
Speaker 2: Thank you so much. Meanwhile, coming up, look the impact
Speaker 2: of the SEC's crypto crackdown on one of the oldest
Speaker 2: digital asset exchanges.
Speaker 4: All the details next from San Francisco. I'm from New York.
Speaker 10: I'm sprinkling in Washington. This is bringing back technology.
Speaker 3: Time for talking tech.
Speaker 5: First up, Walmart is planning its longest distance drone deliveries
Speaker 5: yet by teaming up with Alphabet's Wing. It's going to
Speaker 5: be at two Dallas areas stores. They've got FDA approval
Speaker 5: to drop off food and other household essentials as far
Speaker 5: as six miles away from that store and vin Fast Auto.
Speaker 5: It is seeing a head scratching surge, giving the money
Speaker 5: losing ev startup a bigger market cap this time than
Speaker 5: City Group. By the way, fame shortshare seller Jim Chainos
Speaker 5: is even calling the stocks valuation quote insane. Plus Bitstamp,
Speaker 5: one of the oldest digital asset exchanges, will discontinue staking
Speaker 5: services in the US following a crackdown on their products
Speaker 5: by the SEC. The move takes effect on September twenty fifth.
Speaker 2: Caroline all eyes of course on that story and let's
Speaker 2: just dwell on it Frommtionnani Basek is here for more
Speaker 2: on that latest story and what's the read from market
Speaker 2: on it.
Speaker 11: The region of the market is that this is just
Speaker 11: another player here that you're seeing not able to engage
Speaker 11: in the staking service when we are watching a coinbase
Speaker 11: clearly fight the issue, and we've seen the volatility kind
Speaker 11: of a hover over the market when it comes to
Speaker 11: of course, this means more for ethereum than it does
Speaker 11: for say Bitcoin.
Speaker 4: However, without staking.
Speaker 11: You don't have that proof of stake model working out
Speaker 11: the way that the market was so excited for. Remember
Speaker 11: the exuberants that surrounded this kind of new model that
Speaker 11: was supposed to be less energy dependent than the mining history,
Speaker 11: that was supposed to potentially have more favorable economics for
Speaker 11: a wider array of people, given that the control would
Speaker 11: be changing in terms of the way that it is
Speaker 11: held over time. So a lot of questions for the
Speaker 11: model itself. But remember coinbase has been still sticking to
Speaker 11: the staking model. While we have seen now Kraken as
Speaker 11: well as Bitsdams start to throw on a towel.
Speaker 5: The other piece of news than headlines that we've seen
Speaker 5: across this morning is FTX court filings. What's the latest
Speaker 5: with FTX Shanami.
Speaker 11: Now, this is really interesting because you were watching them
Speaker 11: look to Galaxy. Remember this is still a bankruptcy process
Speaker 11: in which the FTX and John Jay had John Ray
Speaker 11: I'm sorry, had looked over and looked to Galaxy Asset Management.
Speaker 11: This is a business run by a fellow named Steve
Speaker 11: Kerz that would oversee a certain amount of assets. What
Speaker 11: happens from here, so a certain amount of these assets
Speaker 11: will be essentially liquidated and sold so that they could
Speaker 11: shore up money to pay the creditors back over at FTX.
Speaker 11: There is a fee that Galaxy would take, although from
Speaker 11: now until the court approval, things could definitely change from here.
Speaker 11: But there is an aspect of this as well where
Speaker 11: they don't want to get rid of that bitcoin and
Speaker 11: ether right away as well because the value in the
Speaker 11: price could change. So while a certain number of these
Speaker 11: tokens can be sold into the market, there will be
Speaker 11: a number here that are going to be held managed
Speaker 11: and hedged in order to maintain the most value for
Speaker 11: the firm.
Speaker 2: Remind us there have been some credits of frustrations, to
Speaker 2: say the least, about the fear that they were losing
Speaker 2: money because some of these assets weren't being.
Speaker 4: Sold off in a meticulous amount.
Speaker 11: Yeah, and the idea here is that they would give
Speaker 11: it to somebody who would have the ability to manage
Speaker 11: these assets in the most profitable way. At the end
Speaker 11: of the day, remember time value of money. If you're
Speaker 11: not getting your money back today, how long do you
Speaker 11: have to wait and what happens to those assets? It
Speaker 11: would Bitcoin, ether and some of these tokens continue to
Speaker 11: decline in value. That is of course a concern for
Speaker 11: the creditors, which is why they are holding some of
Speaker 11: that Bitcoin and ether and hedging the exposure rather than
Speaker 11: selling that off right away as they are looking to
Speaker 11: do with some of these other tokens.
Speaker 5: To mind ourselves, sorry, Carol Bloomberg Technology that the whole
Speaker 5: point of this story is about whether people get their
Speaker 5: money back or not. You know, people that had assets
Speaker 5: with not just the US, but multiple jurisdictions. We at
Speaker 5: a place where we can answer that question. Shanale, it's early.
Speaker 11: I think it's early. And the reason it's early is
Speaker 11: even with these assets in itself, like I said, it's
Speaker 11: a court process, So it's not even that Galaxy is
Speaker 11: taking over those assets tomorrow and selling them off into
Speaker 11: the market and giving them money back to the creditors
Speaker 11: right away. It will take time and there is friction
Speaker 11: as they look. It's not the only assets that FTX has,
Speaker 11: so it will take time to see what ultimately we'll
Speaker 11: be recouped. Now, if they do sell these assets at
Speaker 11: a decent price, there could be some money, of course,
Speaker 11: and a certain degree of funds reclaimed for creditors, but
Speaker 11: even the creditors would expect that it would be materially
Speaker 11: less than what they walked in.
Speaker 2: With Shanale all over that story, all over the chrystosphere
Speaker 2: for us today.
Speaker 4: Welcome back to Brimog Technology. I'm Caaren Hide in.
Speaker 5: New York at our Meed Ludlow in San Francisco. Carry
Speaker 5: Let's check on the markets and Videa's the big story
Speaker 5: and the market from a technology sector perspective of opened
Speaker 5: higher and a's that one hundred has swung from a
Speaker 5: pretty modest gain in the first hour of trading, we're
Speaker 5: now down one point three percent. The story's kind of
Speaker 5: evolving towards Jackson whole Friday when we hear from fed
Speaker 5: chair Pale yields to creeping higher and Vidia pretty much
Speaker 5: one of the only names now in the technology sector
Speaker 5: that is still in the green. Earning's a big part
Speaker 5: of it. As we've covered right we had Snowflake now
Speaker 5: disappointing to the downside. There is one stock that is
Speaker 5: frankly on a hyperbolic trajectory and we're not really sure
Speaker 5: what's going on.
Speaker 3: But let's quickly talk about.
Speaker 5: Vin Fast because at current gains, the company listing via
Speaker 5: spack just a week ago has a market cap and
Speaker 5: more than one hundred billion. At one point in the session,
Speaker 5: it had a market cap and more than one hundred
Speaker 5: and twenty billion. So if you took four General motors
Speaker 5: and throwing Rivian for good measure, and combined them, you
Speaker 5: have vin Fast that's only delivered a thousand vehicles here
Speaker 5: in the US, and then record all of them. I
Speaker 5: have a lot of experience covering ev companies went public
Speaker 5: vice back. This one makes no sense to me either.
Speaker 5: And then I guess finally, in the name we're looking
Speaker 5: at is Twilio. Twilio out with a new kind of
Speaker 5: suite of AI powered products on the data management side.
Speaker 5: I think what's interesting about this story is they're kind
Speaker 5: of responding to what is customer demand. The news was
Speaker 5: out twenty four hours ago, the stock closed around two
Speaker 5: percent higher. It's now down about two percent. But again,
Speaker 5: consider the broader market and where we're going in the
Speaker 5: tech sector in particular.
Speaker 2: And so many ed have said the amount of productivity gains,
Speaker 2: the real value is going to be in proprietary data,
Speaker 2: and well, maybe you access it through Twilio. We're priased
Speaker 2: to say, we've got the CEO, Jeff Lawson, to talk
Speaker 2: about the roll out of your new products and ultimately
Speaker 2: that end user demand. What are your customers wanting to
Speaker 2: have when it comes to accessing and making the most
Speaker 2: of their customer data.
Speaker 12: Well, look, I think we all know that you know,
Speaker 12: AI is going to transform so many parts of business,
Speaker 12: and it all comes down to the quality of the
Speaker 12: data that you're going to bring in feed AI. That's
Speaker 12: going to provide proprietory outcomes for companies. And so the
Speaker 12: way we look at it is if companies are able
Speaker 12: to take all the information they know about their customers,
Speaker 12: write every click, every scroll, every propensity to buy all
Speaker 12: that information and feed it to an AI, it can
Speaker 12: make those companies ten times better at serving their customers
Speaker 12: and do it at a tenth of the price. That's
Speaker 12: because you can take make your marketers ten times as
Speaker 12: effective by designing and executing marketing campaigns automatically. You can
Speaker 12: make your contact center ten times as effective by automating
Speaker 12: so many of those conversations.
Speaker 7: You make your sales team.
Speaker 12: Ten times as effective because you can automate so many
Speaker 12: of those early conversations. And so because of this, we
Speaker 12: think companies that combine their customer data with advanced AI
Speaker 12: are going to be able to get ten times better
Speaker 12: at a tenth of the cost.
Speaker 2: Jeff, I hear you, and I hate to sound in
Speaker 2: any way jaded around this AI euphoria, but I feel
Speaker 2: like everyone's making an announcement about how they can supercharge
Speaker 2: their clients using adswercial.
Speaker 4: Intelligence and generative AI. Why is your offering different?
Speaker 7: It really all comes down to the data.
Speaker 12: And we have a segment which is the leading real
Speaker 12: time CDPs.
Speaker 7: CDP is a customer.
Speaker 12: Data platform and what it does we work with leading companies.
Speaker 12: It allows them to ingest all the signals that they
Speaker 12: get from their customers. Now, mind you, this is all
Speaker 12: first party data, but every website, visit, every click, every scroll, everything,
Speaker 12: people buy everything they don't buy right, and turn that
Speaker 12: into a profile. That's an understanding of that customer. And
Speaker 12: when you take an understanding of your customer and then
Speaker 12: feed it to AI. And the reason why I am
Speaker 12: so bullish on AI is that you look at chat GPT, right,
Speaker 12: you look at a lot of these applications are getting
Speaker 12: built viz our computers that can reason like you can
Speaker 12: look at chat GPT and it will reason its way
Speaker 12: through solving a hard problem in the way that a
Speaker 12: human would do it. Now you feed it knowledge of
Speaker 12: your customers you can say, reason through how to target
Speaker 12: my customers to get better offers in their hands, reason
Speaker 12: through how to design a marketing campaign that's going to
Speaker 12: do better than maybe one that a human would design.
Speaker 12: And I think we are going to see great success
Speaker 12: with those as being able to do those amazing things.
Speaker 3: Like Caro, I'm jaded too.
Speaker 5: You know, we handle a lot of headlines in this way,
Speaker 5: the way that Caroline has been describing. If you take
Speaker 5: in video, it's like the picks and shovels of the
Speaker 5: AI chain. You and I've discussed this before, but if
Speaker 5: you think about the large language model underlying algorithms, you're
Speaker 5: basically technology agnostic because you're working with both open ai
Speaker 5: and Google. Why is that beneficial to you to say, oh,
Speaker 5: we'll work with anyone where we can benefit.
Speaker 12: Yeah, well, it's the right model for the right use case,
Speaker 12: and so we have partnered. We partner with Google for
Speaker 12: certain use cases. We've partnered with open ai yesterday around
Speaker 12: our AI personalization engine, and we're going to partner with
Speaker 12: others as well. And the key thing is taking the
Speaker 12: right model, the right technology to go solve.
Speaker 7: The right problem.
Speaker 12: But I do believe this is day zero of AI,
Speaker 12: and so it is at the infrastructure stage.
Speaker 7: That's why you see in video right posting the results
Speaker 7: they are.
Speaker 12: Well, we look at it as companies today, they are
Speaker 12: getting their data AI ready because they know this rule
Speaker 12: is coming and they need to get all of their
Speaker 12: customer data into a format where and these use cases
Speaker 12: become a reality, they're able to combine it with the
Speaker 12: powers of large language models and actually get these kinds
Speaker 12: of outcomes.
Speaker 5: I actually wanted to ask you if you could walk
Speaker 5: us through how Twilio is a management team came to
Speaker 5: this decision because in the second line of our story,
Speaker 5: in the first paragraph, it says Twilio is responding to
Speaker 5: customer demand. So is this just a case of customers
Speaker 5: kicking down your Doorjef and saying we need this, make
Speaker 5: it for us please.
Speaker 12: Well, if you think about it, if AI is able
Speaker 12: to get ten times better results, which I firmly believe
Speaker 12: at one tenth of the cost of prior solutions right
Speaker 12: where you needed humans to go do all the work,
Speaker 12: well guess what the economic incentives for companies to invest
Speaker 12: in this technology are going to be undeniable? Right if
Speaker 12: you can get a roughly one hundred x outcome by
Speaker 12: investing in a technology. Every company is going to need
Speaker 12: it if they're going to survive and thrive in this
Speaker 12: AI powered world. And so that's why every conversation that
Speaker 12: I have with customers today is all about AI, because
Speaker 12: companies are asking the questions, how is this going to
Speaker 12: radically transform my business in my industry in the coming one, two, five,
Speaker 12: and ten years, and they're building in their starting those
Speaker 12: investments today.
Speaker 5: Caroline, the conversations that you and I have every single
Speaker 5: day are all about AI, but with investors principally.
Speaker 2: Yeah, and on that note, a more sensitive question I
Speaker 2: suppose for Hujef, and that point is you've got customers
Speaker 2: knocking down your door, have you got investors knocking down
Speaker 2: your door asking how you're managing to capitalize on this moment?
Speaker 2: In particular, I ask because we are the lookout for
Speaker 2: activist investor interaction. Of course, some of your expire that's
Speaker 2: happened in terms of your founder's shares means perhaps you're
Speaker 2: a little bit more exposed.
Speaker 12: Well, look, without dual class shares, we are in the
Speaker 12: category of nearly every public company that exists. So I
Speaker 12: don't think it's really a newsworthy story. But we have
Speaker 12: been very active participants with our investors, understanding what they
Speaker 12: want from us as a management team, and doing a
Speaker 12: substance of actions representing the needs and the desires of
Speaker 12: our shareholders. And so we've taken a major actions. We've
Speaker 12: taken the company from really focused on growth and never
Speaker 12: making a substantive profit to a company that's now throwing off,
Speaker 12: you know, more than ten percent non gap operating margins
Speaker 12: in just the course of six months. And so I
Speaker 12: think that is from amazing progress that we've made listening
Speaker 12: to the needs of investors, responding and taking substantive actions
Speaker 12: while we're investing in this exciting new roadmap around AI
Speaker 12: and customer AIA.
Speaker 2: Jeff, I like that you take us there, that you
Speaker 2: almost remind us of the macro picture that you're trying
Speaker 2: to navigate right now. It is one where people want
Speaker 2: to see not growth at any cost, but growth at
Speaker 2: profitable costs here and I'm interested in what you're seeing
Speaker 2: from clients. Yes, there's AI euphoria, but are people pulling back?
Speaker 2: Are people reticent, worried, nervous to spend?
Speaker 7: Well?
Speaker 12: Companies are rightly looking at their investments and saying these
Speaker 12: are the right investments. Have we invested in the right
Speaker 12: software and are we getting an ROI from these investments?
Speaker 7: And I think in the cases where they're not.
Speaker 12: Seeing an ROI, they may be pulling back or they
Speaker 12: may be reducing think abouts.
Speaker 7: SAD SaaS is seat.
Speaker 12: Based for most companies, and so if you know, with
Speaker 12: all the layoffs that have gone on and a lot
Speaker 12: of companies, you need fewer seats, right, So there's those
Speaker 12: things happening. But at the same time, companies are looking
Speaker 12: at this moment with technology still continuing to grow, the
Speaker 12: economy is still doing fairly well, and AI right around
Speaker 12: the corner. They're saying, how do I make sure I
Speaker 12: have the right investments to fuel our growth going forward
Speaker 12: while looking at some of the older investments and saying
Speaker 12: are those still the ones that we need? And so
Speaker 12: I think we're seeing a lot of that. And the
Speaker 12: nice thing about our business model is that we're usage based, right.
Speaker 12: We're not selling seats and we're not selling there's no
Speaker 12: such thing as shelfware in a usage based model, and
Speaker 12: so all of the money that companies pay.
Speaker 7: Us today is value that they are getting.
Speaker 12: And I think companies that sell seats or companies that
Speaker 12: have had a history of selling shelfware i e.
Speaker 7: Software the company didn't really need.
Speaker 12: Those companies are struggling because those clients are pulling back.
Speaker 8: In their investments.
Speaker 3: Jeff, it's great to see you in person. Have you
Speaker 3: here on set.
Speaker 5: AI in San Francisco seems like a big story to me.
Speaker 5: You seem to be spending more time with CEOs of
Speaker 5: other companies doing things. Can you talk a little bit
Speaker 5: about whether or not what's happening with the an has
Speaker 5: actually brought some of the tech industry here back together
Speaker 5: a little bit absolutely.
Speaker 12: I mean, look, San Francisco has become the center of
Speaker 12: the AI universe. You've got open Ai, their headquarters, has
Speaker 12: done in the mission right, You've got a lot of
Speaker 12: companies participating in this AI revolution right in this area
Speaker 12: and in the broader tech community. And look, I think
Speaker 12: that the advent of what we're seeing with large language models,
Speaker 12: computers that can reason, this is going to be bigger
Speaker 12: than the mobile revolution we saw, give or take fifteen
Speaker 12: years ago. This is probably about as big as the
Speaker 12: advent of the internet on what it means for business,
Speaker 12: what it means for society.
Speaker 7: And so that's why you see a lot of excitement,
Speaker 7: a lot.
Speaker 12: Of energy, a lot of developers going to work, building,
Speaker 12: exploring what's now possible. And that's the energy that I
Speaker 12: feel sitting here in San Francisco and inside of Silicon Valley.
Speaker 5: Jeff Lawson, Twilio CEO, you were the first ed board
Speaker 5: I did when I moved here from London. I think
Speaker 5: it was five and a half years ago. Now, it's
Speaker 5: good to have you back here in the seat. Carrie
Speaker 5: coming up here on Bloomberg Technology Salesforce another name here
Speaker 5: in SSET. Get me in on with a funding round
Speaker 5: for Hugging Face. We're gonna have more details on that
Speaker 5: next and Hugging Faces CEO Clem DeLong joins us Sunset.
Speaker 3: I think you have some more breaking news as well.
Speaker 8: We do.
Speaker 2: Let's talk about document management. Boy, we've done data management.
Speaker 2: We've of course done all the areas in which companies
Speaker 2: are optimizing their data. But let's talk about managing your documents.
Speaker 3: Dot Box.
Speaker 2: Actually Singling could be charging you a little bit more
Speaker 2: for it. New cloud storage plan fees are going to
Speaker 2: be announced later Thursday. We understand they're going to be
Speaker 2: ending their unlimited cloud document storage for customers at one
Speaker 2: point we went positive and then we sat back down again.
Speaker 10: From New York and from San Francisco, this is blame
Speaker 10: Meg Technology, all right.
Speaker 5: Some big funding news in the world of AI, with
Speaker 5: Salesforce leading a financing round in Hugging Face, giving the
Speaker 5: company a four point five billion dollar valuation. The startup,
Speaker 5: which helps companies store and use AI software, has risen
Speaker 5: as one of the main players in the field. CEO
Speaker 5: clemmed Along joins us now for more on that round,
Speaker 5: along with Bloomberg's Rachel Metz. Rachel leads our AI coverage
Speaker 5: and reported on this round.
Speaker 3: Rachel, take it away.
Speaker 13: Good morning, Clem.
Speaker 4: Why don't you start off by telling us.
Speaker 13: A little bit about this funding round. Why did you
Speaker 13: go with this group of investors which includes as at Salesforce,
Speaker 13: There's Google in there, Amazon, a bunch of big name
Speaker 13: tech companies.
Speaker 14: Yeah, we're super excited about the secret system around. I
Speaker 14: think it's pretty unique. I haven't seen in the past
Speaker 14: around with so many big players around around the table.
Speaker 14: We have Salesforce, we have Google, we have Amazon, we
Speaker 14: have Nvidia, Intel, md IBM, quad Com. I think it's
Speaker 14: a good signal for Hugging Face. Obviously, with this CAF
Speaker 14: like collabority platform that all these people and most of
Speaker 14: the AI builders are using, but also for open source
Speaker 14: AI in in general, which is kept like a trend
Speaker 14: that we've seen developing for the past few months.
Speaker 13: One of the things that I'm curious about is how
Speaker 13: your company pivoted from its initial product. Initially, when I
Speaker 13: first met you years ago, you guys were working on
Speaker 13: a chatbot. So how did you go from chatbot to
Speaker 13: an AI platform that tons and tons of companies and
Speaker 13: individuals used to share their AI models to a lot
Speaker 13: of people.
Speaker 14: It was quite quite a journey. It's really kept like
Speaker 14: the community, the companies, the users that really drove us right.
Speaker 14: We were building this conversational AI, and we were lucky
Speaker 14: to have like work for quite a long time on
Speaker 14: the underlying infrastructure for this conversational AI, which including the
Speaker 14: ability to like have a lot of different models, a
Speaker 14: lot of different data sets, and build a system that
Speaker 14: makes sense.
Speaker 8: And when we.
Speaker 14: Started to kind of like share some of that with
Speaker 14: the community, something really wonderful happened, which is that open
Speaker 14: source contributors started to come in and kept contribute to
Speaker 14: the platform that we released. In open source researchers started
Speaker 14: to camp like share their models. So most of the
Speaker 14: open AI models that you've heard of today have been
Speaker 14: added to the platform, like Bloom for example, Lama to Lama,
Speaker 14: Lama two, Lama code that has been released today, Stable diffusion.
Speaker 14: All these models have been added by the community, and
Speaker 14: that's really kept like what drove us to go from
Speaker 14: this camp like end use kate to providing the platform
Speaker 14: for all ail builders.
Speaker 15: Time Also interesting though, is it feels like there's this
Speaker 15: inherent sort of tension. You've got a community, an open
Speaker 15: source community, and at the same time trying to build
Speaker 15: an enterprise business that makes millions and millions of dollars investors.
Speaker 15: How do you treat your community within this sudden moment.
Speaker 14: The good thing is that we can look at other examples. Right,
Speaker 14: if you look at GitHub, they've done that quite well
Speaker 14: at much larger scale than we are now. Right they
Speaker 14: have over one hundred million users. They are kept like
Speaker 14: the main platform for software engineers, similar to us being
Speaker 14: the main platform for AIAI builders. The way we approach
Speaker 14: that is by kind like setting a clear boundary and
Speaker 14: campt like a public and camp like.
Speaker 3: A strategy that when users.
Speaker 14: Are contributing for example, publishing models in the open for
Speaker 14: others to use. It's free and it's always going to
Speaker 14: stay free, right, But when it's a company that is
Speaker 14: using for the private commercial gain without contributing to the community,
Speaker 14: it's fair that we make money out of that. And
Speaker 14: the money that we make there is funding all the
Speaker 14: open source and all the free products that we can
Speaker 14: offer to develop the commun do clem.
Speaker 5: I want to go back to the investors again and
Speaker 5: talk about not just the money but the strategy. I
Speaker 5: understand this is an all cash round, but you share
Speaker 5: investors with some pretty big AI companies taken VideA for example,
Speaker 5: which is backed Inflection AI. When the stuffer, Sallyman came
Speaker 5: on to beat Bloomberg Technology of Me, he didn't care
Speaker 5: about the cash. He cared about all the GPUs that
Speaker 5: he'd secured from Nvidia. Is there any strategic or compute
Speaker 5: advantage to this group you've assembled.
Speaker 14: So all these companies they are using massively hugging Face
Speaker 14: already and contributing massively to hugging Face. Collectively, they have
Speaker 14: over ten thousand team members using the platform and they've
Speaker 14: shared over one thousand open models on bugging Face. So
Speaker 14: we plan to complict double down on that. However, something
Speaker 14: that we wanted to do during this round is to
Speaker 14: make sure that there's no strings attached. There's no commitment
Speaker 14: on our sides in exchange to this this investment, so
Speaker 14: it's a pure.
Speaker 3: Cash deal, really separated.
Speaker 14: To some of the other commercial collaborations that we can
Speaker 14: have with these with these companies, of course, having them
Speaker 14: aligned with us on the cap table is a good
Speaker 14: strategic advantage to keep developing our partnerships with these companies.
Speaker 13: I'm really curious to know what you're planning to do
Speaker 13: with some of this money. We spot you and I
Speaker 13: spoke the other day. You said you're going to put
Speaker 13: some of it in the bank.
Speaker 8: What are you going to do with.
Speaker 3: The rest of it?
Speaker 14: Yeah, we really think that, you know, we're on the
Speaker 14: long term technology trend here. Even if AI is all
Speaker 14: the rage right now, we're pretty early. Ultimately, we believe
Speaker 14: it's going to be the default paradigm to build or tech.
Speaker 14: So in this perspective, we're still early. So we want
Speaker 14: to make sure that you know we're here at building
Speaker 14: on the long term right in the next ten years.
Speaker 7: However, we're going.
Speaker 14: To use it of this money to keep growing the team.
Speaker 14: We're one hundred and seventy team members right now and
Speaker 14: we're planning to keep hiring quite a lot. And as
Speaker 14: you know, hiring in AI right now is very competitive,
Speaker 14: especially for the best people in science and engineering that
Speaker 14: we're looking for taking place.
Speaker 2: Really great to have some time with you, Clem DeLong.
Speaker 2: We want to thank you hugging face CEO on the
Speaker 2: latest round, and of course the person reporting on all
Speaker 2: of that and asking brilliant questions, as Rachel Metz, we
Speaker 2: thank her for all of her work. And look, let's
Speaker 2: just stick with AI. We're just talking about Lama. Of course,
Speaker 2: let's talk about Lara a little bit more. Meta just
Speaker 2: launching a new artificial intelligence coding tool called code Lama
Speaker 2: and uses Generator AI surprise surprize to help developers work
Speaker 2: faster by suggesting lines of software code. One of those
Speaker 2: ASH accounts joins us now, So it's a monetization coming
Speaker 2: in here.
Speaker 8: Yeah, exactly right.
Speaker 16: They're taking Comma and they're allowing people to actually use
Speaker 16: it for commercial use, which is an interesting play because
Speaker 16: you have some companies that will be able to use
Speaker 16: it for free and then make money off of it,
Speaker 16: and then Meta might also charge some of the larger companies,
Speaker 16: so there's a couple different ways that they can make money.
Speaker 16: But it's a really good opportunity for companies that want
Speaker 16: us a cheap or free sort of tool to be able.
Speaker 8: To make money for free.
Speaker 5: Caro Asha, I'm just going to say it. This looks
Speaker 5: very similar to Microsoft's get hub. In fact, they're basically
Speaker 5: the same.
Speaker 3: Is that fair? Asia?
Speaker 16: I think that's fair, and that's part of I think
Speaker 16: the play here, right. I know Meta has talked about
Speaker 16: wanting to make things open source and available to sort
Speaker 16: of like democratize access, but you can't help but avoid
Speaker 16: that comparison to gethub, right, like, this could be a
Speaker 16: way to undercut GitHub if companies can use code Lama
Speaker 16: and then not have to pay for gethub. I mean
Speaker 16: you have to take a look at that too, all.
Speaker 3: Right, Blomberg's Asia counts and all things matter.
Speaker 11: I've had enough already tonight of a guy who sounds
Speaker 11: like Chatchy BT standing up here.
Speaker 2: Ool chat ChiPT getting a shout out presidential hopeful there,
Speaker 2: Chris Christy. I mean he was attacking at the time
Speaker 2: the other fellow candidate, vik Gramaswami, and this was more
Speaker 2: about what he well, the way in which he says
Speaker 2: that climate change is a hoax, for example. But interesting
Speaker 2: that technology was so ingrained in last night's Republican predessidential debate.
Speaker 5: That was the big takeaway for me. I think, you know,
Speaker 5: he said that he sounded like chat GPT, but I
Speaker 5: think you and I have both been over the search
Speaker 5: data on Google Trends, right, So, Ramaswami, I think was
Speaker 5: the most searched of the participants overnight. There's the data
Speaker 5: that's astonishing.
Speaker 3: You know.
Speaker 5: I think he's kind of come into the public consciousness
Speaker 5: because of last night. And at the same time, Caro,
Speaker 5: you have a completely different on air discussion happening on
Speaker 5: the platform X.
Speaker 2: Yeah, I mean the rub for Fox, I suppose, having
Speaker 2: said goodbye to Tucker Carlson and then at exactly the
Speaker 2: same time he's busy interviewing Donald Trump f used to
Speaker 2: come on the overall debates in an interview on X.
Speaker 2: It was sort of counterprogramming, which of course is still
Speaker 2: being fought out at the moment.
Speaker 3: Yeah.
Speaker 5: And from X's perspective, you know, video on that platform,
Speaker 5: it raised a lot of questions. When I last looked
Speaker 5: at the tweet, the videos post to it said two
Speaker 5: hundred and ten million views, But does that really mean
Speaker 5: two hundred and ten million people watch the full forty
Speaker 5: six minute thing.
Speaker 3: We have to find out, And I.
Speaker 2: Wonder how Ronda Santas felt about it all of course,
Speaker 2: having announced his run on X well, it was formerly
Speaker 2: known as Twitter at that point, right, and it well
Speaker 2: wasn't the most slick introduction as it happened, full of
Speaker 2: tech issues at that point.
Speaker 4: But meanwhile, no tick issues here. That does it for
Speaker 4: this edition of Bloomberg Technology.
Speaker 5: Yeah, massive week, massive show, all about in video, So
Speaker 5: don't forget to recap on our podcast, Apple, Spotify, iHeart
Speaker 5: and our Bloomberg platforms. We have one day in a
Speaker 5: mega week to go from over in New York and
Speaker 5: here in San Francisco.
Speaker 3: This is Bloomberg Technology