Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is live
Speaker 1: from coast to coast with Caroline Hide in New York
Speaker 1: and Vla Lolow in San Francisco.
Speaker 2: This is Bloomberg Tech coming up.
Speaker 3: President Trump says more chip tariffs are coming soon. This
Speaker 3: is the administration explores equipping chips with location tracking tech.
Speaker 2: Will have the latest from Washington.
Speaker 4: Plus, Booming AI demand is sending Palenties second quarter revenue
Speaker 4: soaring above a billion dollars, Chez hit a new record.
Speaker 3: And AMD also out of earnings after market close today
Speaker 3: with the company under pressure to show benefits from the
Speaker 3: AI race, and.
Speaker 4: We take a check on the markets amid what is
Speaker 4: yet more earnings to come from AMD and a digestion
Speaker 4: of weaker services data that seems to be putting up
Speaker 4: pressure in a macro picture is underwhelming. We're off by
Speaker 4: five ten percent on nasback one hundred, but ed get
Speaker 4: to the nitty gritty, what's moving in terms of points here?
Speaker 3: Yeah, the earning story is palent here and we're up
Speaker 3: eight percentage points forty eight percent growth on the top line,
Speaker 3: which the company attributes to astonishing AI contribution. We're going
Speaker 3: to get deeper into that in the program. Another top
Speaker 3: story that we're tracking is what's happening with AI chips
Speaker 3: in particular. So we're going to talk about how tariffs
Speaker 3: are coming, specifically for semiconductors. But then there's the reporting
Speaker 3: overnight that the US is thinking about putting location trackers
Speaker 3: on AI chips that are exported to certain countries. In fact,
Speaker 3: overnight we caught out with a key White House official
Speaker 3: who talks about it.
Speaker 2: Listen to this.
Speaker 5: There is discussion around very important research and development that
Speaker 5: needs to be done on potentially the types of software
Speaker 5: or even physical changes you could make to the chips
Speaker 5: themselves to do better location tracking. And that's something that
Speaker 5: we're exploring and we explicitly included in the plant.
Speaker 4: We can get to order this with Boomberg's Mike Shepherd,
Speaker 4: who's joining us.
Speaker 6: Now from Washington.
Speaker 4: Look, I want to go into the broader picture first
Speaker 4: and foremost, we are anticipating semiconductors to be in the
Speaker 4: eye in the storm when it comes to localized tariffs.
Speaker 4: How much is that impacting the future of companies wanting
Speaker 4: to import.
Speaker 7: Well, that's a great question, Carol, because the administration, while
Speaker 7: it has spared chips imports from the country by country tariffs.
Speaker 7: We are now expecting Donald Trump to sign an order
Speaker 7: in the next week or so putting tariffs on semiconductors
Speaker 7: as a category, no matter the point of origin, and
Speaker 7: the countries will have to negotiate individual levels perhaps after that.
Speaker 7: But they have made clear that just like with pharmaceuticals
Speaker 7: and autos and copper and so many other categories of goods,
Speaker 7: they want to see more of them produced here in
Speaker 7: the US, and they see tariffs as a great means
Speaker 7: of doing so. Now, what this means is that industries
Speaker 7: such as automakers, even the chip plants themselves, will face
Speaker 7: higher costs. And then when you look at the hyperscalers,
Speaker 7: Open AI and the companies that we've seen report their
Speaker 7: earnings this week and announced even further intentions of expanding
Speaker 7: their investment in artificial intelligence, they run the risk CARAF
Speaker 7: facing higher costs on those two from chips. Chips are
Speaker 7: one of the biggest inputs that these hyperscalers face in
Speaker 7: terms of cost, and adding to that, adding up to
Speaker 7: a twenty five percent tariff would be tricky. Now we've
Speaker 7: been anticipating this since April, when the Commerce Department opened
Speaker 7: its investigation into whether tariffs were called for. It's under
Speaker 7: a so called two thirty two process. It would be
Speaker 7: on sounder legal ground than the reciprocal country by country tariffs.
Speaker 7: We will have to see what the timing looks like
Speaker 7: and whether or not they carve out any exemptions as well,
Speaker 7: including for semiconductor manufacturing equipment, which is key to expanding
Speaker 7: here in the US as well.
Speaker 3: Mike location track, we have the United States willing to
Speaker 3: export technology, the American tech stack around the world, but
Speaker 3: it wants to track where the chips are going. Can
Speaker 3: you explain that one to us?
Speaker 7: Yes, Ed, And it really is central to the administration's
Speaker 7: plan to try to expand the American tech stack, especially
Speaker 7: advanced AI chips. They want to be able to sell
Speaker 7: those more broadly and more widely, including even into the
Speaker 7: Chinese market. We saw the promise to loosen restrictions on
Speaker 7: those aged twenty chips.
Speaker 2: But it's more than just China.
Speaker 7: It's being able to sell those semiconductors across the Middle East.
Speaker 2: We saw all the deals that.
Speaker 7: Were reached with the United Arab Emirates and in Saudi Arabia,
Speaker 7: But to be able to sell in those markets. The
Speaker 7: US wants to also have the capability of tracking those
Speaker 7: chips to ensure that they are not somehow diverted or
Speaker 7: smuggled or resold or somehow end up in the wrong hands.
Speaker 7: And that would include not only China, but Russia, in Iran,
Speaker 7: every series that the US does not want to see
Speaker 7: gain capability when it comes to artificial intelligence, which of course,
Speaker 7: as we know, has a dual use capability.
Speaker 4: Mike Sheffin always on the nose. We thank you from Washington. Meanwhile,
Speaker 4: Taiwanese prosecutors, well, they've arrested six people suspected of stealing
Speaker 4: trade secrets from TSMC. Now, the chipmaker reported former and
Speaker 4: current staff to authorities on suspicion they illegally obtained core technology.
Speaker 6: The prosecutors searching the homes of some staff.
Speaker 4: Now authorities are now trying to find out if data
Speaker 4: had been leaked to other parties.
Speaker 3: Z okay Onto Earnings Palenteer reported a forty eight percent
Speaker 3: increase in revenue for the second quarter to more than
Speaker 3: a billion dollars. The company cited the quote astonishing impact
Speaker 3: of AI on its business. Bloomberg Intelligence senior analyst Mandy
Speaker 3: Singh joins US. Now, this is the story that everyone's
Speaker 3: talking about this morning, Palenteer's continued momentum. At BI, you
Speaker 3: went a little bit deeper on how that's playing out,
Speaker 3: But did you just summarize where they were strong and
Speaker 3: what's happening with Palenteer right now?
Speaker 1: Yeah.
Speaker 8: I mean when you look at the US commercial segment,
Speaker 8: that is what everyone is excited about. It grew ninety
Speaker 8: three percent for the full year. Their guide is eighty
Speaker 8: five percent, and look for a small segment with over
Speaker 8: a one point two billion dollar run rate, it's very
Speaker 8: impressive growth. But I think the metric that we still
Speaker 8: don't understand is how much is the AI contribution to
Speaker 8: their top line growth. I mean, when you look at
Speaker 8: a Microsoft Azure number, you know the AI contribution to
Speaker 8: growth this seventeen percent when they grew thirty nine percent.
Speaker 8: In the case of Palenteer, yes they grew forty eight percent,
Speaker 8: but we don't know how much of that is driven
Speaker 8: by AI because their business model is dependent on contract wins.
Speaker 8: And yes, they gave us a number around the backlock
Speaker 8: growth and the remaining deal value on the commercial side,
Speaker 8: but we just don't know enough to quantify that AI contribute.
Speaker 8: And for a company that's trading at such a rich
Speaker 8: valuation multiple, you want to have a better sense of,
Speaker 8: you know, what that flow through of AAR revenue is.
Speaker 4: Okay, So perhaps more transparency on a breakdown of numbers, Mandy,
Speaker 4: what about who they're taking market share from, who's losing
Speaker 4: out as we see Palenteer make these wins.
Speaker 8: Yeah, their core business is data ware housing, So you
Speaker 8: have the legacy vendors like terror Data and Oracle, and
Speaker 8: you also have cloud companies like Snowflake and Data Breaks.
Speaker 8: And we know Data Breaks is also doing very well
Speaker 8: in terms of growth rates. So now that Palenteer is
Speaker 8: expanding on the commercial side, it'll be interesting to see
Speaker 8: if they can sustain this kind of growth rates, because
Speaker 8: you're right, it will come at the expense of someone
Speaker 8: on the commercial side. Clearly, the hyperscalers are looking to
Speaker 8: get a piece of that pie as well. Because Microsoft,
Speaker 8: the way it's positioning Copilot, it's trying to solve some
Speaker 8: of the use cases that Valenteer is looking to solve
Speaker 8: by applying LLLM. So to my mind, the commercial side growth,
Speaker 8: the sustainability of growth is going to determine whether it
Speaker 8: can sustain this valuation, and so far I find the
Speaker 8: net new arr metric from the Hyperscalers far exceeds what
Speaker 8: Talenteer has had a given. Talenteers is a much smaller company.
Speaker 4: Great context, Blue meg Intelligence, Senior analyst, man Leeve Seeing,
Speaker 4: thank you so much. Let's dive into all of this,
Speaker 4: particularly into the valuation front. Stephanie Aliaga is with US,
Speaker 4: joining us from Global Market Strategy JP morgas Asset Management
Speaker 4: market Insights team.
Speaker 6: Stephanie, we look at.
Speaker 4: Something like Palenteer five hundred percent in twelve months, the
Speaker 4: most expensive stock on the s and P five hundred
Speaker 4: When you're looking at where it prices versus future sales,
Speaker 4: does it seem vindicated to you these sorts of valuations.
Speaker 9: There's absolutely some AI enthusiasm at play here, and I
Speaker 9: think there's some and I think in this earning season
Speaker 9: we have heard from a variety of companies, not just
Speaker 9: these megacap tech companies, that they're seeing early signs of
Speaker 9: success US with AI. AI is helping them run more efficiently.
Speaker 9: It's writing more and more of their code, something like
Speaker 9: fifty percent of code, and it's also helping them hit
Speaker 9: more shots on target, particularly in marketing. But beyond that,
Speaker 9: I think when it comes to valuations, you need to
Speaker 9: on one end, look at the stability in the core
Speaker 9: business operations of some of these companies, these megacap tech
Speaker 9: companies which remain highly profitable, and then also some of
Speaker 9: the upside moving forward in the AI race. And when
Speaker 9: it comes to the leading megacap tech companies, at least,
Speaker 9: we actually think valuations aren't as overstretched because core earnings
Speaker 9: are so robust and they are actively reinvesting a lot
Speaker 9: of those profits that cash flow into the next paradigm shift,
Speaker 9: and we're already seeing some early signs of success these
Speaker 9: Faces and Shovels companies.
Speaker 6: They're also digging for goals and seeing the fruits of that.
Speaker 3: Stephanie, when you were lost with us in April, it
Speaker 3: was just after the sort of deep seat chaos and
Speaker 3: we discussed how the semiconductor industry in particular was in
Speaker 3: the crosshairs of the administration. A lot has changed since then.
Speaker 3: Actually the administration has been very supported at exporting American technology.
Speaker 3: But just on the stories we touched on tariffs on
Speaker 3: semiconductors and location tracking on chips, there's a risk premium.
Speaker 9: There is there absolutely geopolitics remains a risk. Policy has
Speaker 9: been a headwind for the sector in recent months and
Speaker 9: particularly today, but we are seeing a shift from this
Speaker 9: administration towards a greater appreciation around what safeguarding US dominance in.
Speaker 6: AI really looks like.
Speaker 9: Right, And I will add, outside of these risks around tariffs,
Speaker 9: what is really promising and quite structural, is that you
Speaker 9: have seen a decline in over ninety percent around the
Speaker 9: cost of inference for AI, and that has to do
Speaker 9: with four factors. Hard hardware, the chips themselves have been
Speaker 9: getting significantly more efficient. Algorithms are getting more efficient, how
Speaker 9: much data, how many numbers they need a crunch, we're
Speaker 9: right sizing models. We now have mini models that we
Speaker 9: can access, and we've seen this democratization in models, particularly
Speaker 9: open source. So all of that has led to this
Speaker 9: pretty remarkable decline in the costs of AI, and I
Speaker 9: think we need to put that to one side when
Speaker 9: thinking about these risks for tariffs.
Speaker 3: We shall borrow the acronym going forward. What I've wanted
Speaker 3: to ask you for a real long time, is there
Speaker 3: an America ink trade going on here where you just say,
Speaker 3: I bet on these companies that are most likely to
Speaker 3: succeed if this American strategy pays off.
Speaker 9: I think it's a really interesting point, particularly in the
Speaker 9: context of this debate around US exceptionalism, because when I
Speaker 9: look at the markets right now, I don't see so
Speaker 9: much US exceptionalism, but exceptionalism from a few US companies,
Speaker 9: and that is really what is driving the markets right now.
Speaker 9: We're actually less concerned about valuations for let's say, the
Speaker 9: Magnificent seven and.
Speaker 6: A bit more concerned about the other four.
Speaker 9: Ninety three because without that structural tailwind when it comes
Speaker 9: to AI, it's a bit harder to see the cyclical
Speaker 9: tailwinds for the rest of the market. But when it
Speaker 9: comes to these leading tech companies, I think you do
Speaker 9: have unprecedented fundamentals and the continued dominance, particularly in tech services.
Speaker 9: Now there's plenty for investors to consider, and we still
Speaker 9: think portfolios should be diversified, but at a time like this,
Speaker 9: you maybe don't want to be diversifying away from that
Speaker 9: epicenter of innovation.
Speaker 6: Okay, so interesting that you got the.
Speaker 4: Acronym hard tech is where everyone's looking at from a
Speaker 4: spot up culture but also into these big Magnificent seven.
Speaker 4: But then drip feed it down into where if you
Speaker 4: are going to diversify the sector, is that are deploying
Speaker 4: it right or indeed, is it more about the picks
Speaker 4: and shovels a little bit more, it's about the energy,
Speaker 4: It's about the infrastructure and that slide of the equation
Speaker 4: that keeps you in the AI spin.
Speaker 9: Absolutely, the AI value is continuing to expand we think
Speaker 9: that infrastructure layer is huge, and that is a secular
Speaker 9: story that is still in its early innings. The amount
Speaker 9: of energy that we're going to need, the investment that
Speaker 9: we're going to need in a variety of different sources,
Speaker 9: and also everything that goes into those data centers themselves,
Speaker 9: the cooling equipment, the server technology, and so forth. So
Speaker 9: we still think there's a significant investment case there. But
Speaker 9: what's also really interesting in particularly what we're seeing in
Speaker 9: private markets this year, is this explosion of AI applications,
Speaker 9: the kind of applications that businesses are going to need
Speaker 9: because it's not enough to give their worker SHATBT.
Speaker 6: They need domain.
Speaker 9: Specific AI applications that are actually productivity enhancing and show
Speaker 9: up in the bottom line. We're seeing more and more
Speaker 9: of those come to market this year, mostly in private markets,
Speaker 9: but I think that's a trend that is worth watching
Speaker 9: and just getting going.
Speaker 4: And then they move from private markets into public markets
Speaker 4: and we see what happened with Figma and the bephoria
Speaker 4: around that particular listing.
Speaker 6: Are you seeing more of.
Speaker 4: Your clients wanting to know about what IPOs to get
Speaker 4: into or indeed how to make that move from private
Speaker 4: markets into public markets.
Speaker 9: I think there's a lot of interest there, as there
Speaker 9: should be. I mean, there's a lot of anticipation for
Speaker 9: a pickup an Ibo activity, and I think the fundamentals
Speaker 9: and the promise and a lot of those AI startups
Speaker 9: could be the thing that really gets enthusiasm and comfort going.
Speaker 6: In the market again.
Speaker 9: But I also don't think that we're going to go
Speaker 9: back to that kind of post pandemic period. A lot
Speaker 9: of these companies have different goals beyond just being profitable
Speaker 9: AI companies. Right, many of the LM providers that are
Speaker 9: in private markets, they're on the race to AGI, and
Speaker 9: so there is also this appreciation that these AI companies
Speaker 9: can get a lot of the capital that they need
Speaker 9: in private markets, maybe they will more control over their companies.
Speaker 9: So if you want to access that opportunity set, don't
Speaker 9: just wait for them to go public. I think you
Speaker 9: might want to look at your private market exposure and
Speaker 9: then also maybe some of those tactical opportunities that do
Speaker 9: arise this year.
Speaker 3: Stephanie Aliago, JP Morgan. Great to have you back on
Speaker 3: the show. Thank you very much. Now coming up, Joe Faff,
Speaker 3: known for making early bets on comempanies like Alphabet and
Speaker 3: Amazon while at tro Price, joins us discuss his new
Speaker 3: role head of Growth for Eclipse, a VC firm.
Speaker 2: That's next. This is Bloomberg Tech.
Speaker 3: Investor Joepath's scale trow Price's US growth stock Fund from
Speaker 3: fifty seven billion dollars to over one hundred and fifty
Speaker 3: billion dollars in assets, and had twenty years at the
Speaker 3: investment firm, making early bets on companies like Amazon, Alphabet,
Speaker 3: and Meta.
Speaker 2: He's now joining a Clipse, a.
Speaker 3: VC firm focused on physical industries as the head of
Speaker 3: growth and also as a partner.
Speaker 2: Joe's here with us in San Francisco.
Speaker 3: I've always known you to be somebody who is higher
Speaker 3: up the cap table of big companies that then go public.
Speaker 3: Rivian is the example that I know best, late growth
Speaker 3: stage round and anchor investor in in what was huge
Speaker 3: IPO in twenty twenty one. You've been lures to bench
Speaker 3: capital in Silicon Valley.
Speaker 10: Why good to be with you, Ed, I appreciate it.
Speaker 10: I'd say, you know, you've known me for a long
Speaker 10: time now, and I've been a builder of companies over
Speaker 10: time and investing capital, and those companies that they've scaled,
Speaker 10: I think what really attracted me eclips and opportunities. I
Speaker 10: really think we're at a seminal moment right now for
Speaker 10: physical industries. So if you look at the companies that
Speaker 10: have been created now, both private and public, and you
Speaker 10: look at the market caps, there's been significant interest in
Speaker 10: those and there's capital formation around them.
Speaker 6: The other parts of.
Speaker 10: This, I would say, you know, all this is coming
Speaker 10: together at once. Is US policy, which you talked about
Speaker 10: earlier in the segment, I think is very supportive of
Speaker 10: bringing industries back.
Speaker 11: To the United States.
Speaker 10: And the other thing is clearly an inordinate amount of
Speaker 10: innovation around artificial general intelligence and ultimately artificial superintelligence, which
Speaker 10: I think provides this unique intersection of hardware and software
Speaker 10: to transform physical industries.
Speaker 3: So the reindustrialization piece is something that comes up in
Speaker 3: this program all the time. There's a sort of national priority,
Speaker 3: national interest, even sort of national pride elements to it.
Speaker 3: How are you going to play that in your strategy.
Speaker 10: I think it's important you talk about policy and ultimately
Speaker 10: national security and economic sovereignty, and it's very important, I think,
Speaker 10: you know, looking at the Eclipse team and why I
Speaker 10: joined them specifically, they've been doing this for ten years
Speaker 10: and had a vision a decade ago, and it's an
Speaker 10: incredibly competent, amazing team. During my process, the time I
Speaker 10: spent with Lere and the rest of the partners, they're passionate,
Speaker 10: they're hungry.
Speaker 6: They're true builders.
Speaker 10: They roll up their sleeves, they get their hands dirty,
Speaker 10: and they've done a lot of you know, early stage
Speaker 10: enterprises and companies. Where I come in. I've allocated capital
Speaker 10: at scale. I've looked at companies both private and public
Speaker 10: that have grown, and I've worked alongside invested in many
Speaker 10: of the best companies in the world. So to do
Speaker 10: that as we scale these businesses and connect the two
Speaker 10: together with that team, their technical experience, in my financial experience,
Speaker 10: I think is really like a one plus one equals
Speaker 10: three situation. They remind me I'll date myself here, ed,
Speaker 10: but it's a team of Jerry Maguire's not.
Speaker 6: Dating at all. It's an iconic movie, Joe.
Speaker 4: I'm interested though, in just how you go from managing.
Speaker 6: Tens of billions to going.
Speaker 4: To managing and writing relatively small checks. What sort of
Speaker 4: size checking you're going to be giving do you think
Speaker 4: when you see these smaller scale companies that are going
Speaker 4: to be huge?
Speaker 10: Yeah, well, I mean initially, right at the early stage
Speaker 10: or venture side of this Caroline, you're going to see
Speaker 10: smaller check sizes. But we're going to scal all those
Speaker 10: over time, both for companies as they hit a scale
Speaker 10: velocity and they need more capital to continue to build
Speaker 10: out their strategies. And on top of that, there will
Speaker 10: be companies, as we've seen, that need bigger check sizes
Speaker 10: earlier and getting more traction. A good example that is investment.
Speaker 10: I made it both Trow and we've made it Eclipses
Speaker 10: Androl to give you an example.
Speaker 4: So, and Andrew, I immediately think of just the focus from
Speaker 4: the government and indeed for many an investor right now,
Speaker 4: just what was happening in point seventy two, for example,
Speaker 4: on getting in on defense tech in particular. But I'm
Speaker 4: interested in other particular areas where you think the US
Speaker 4: is leaning in more that you want to be contributing
Speaker 4: to thinking. When you think of red word, I'm thinking
Speaker 4: about the supply chain more. But when you're thinking then
Speaker 4: about Tesla is more about robotics. Where are your sweet
Speaker 4: spot's going to be?
Speaker 6: Do you think?
Speaker 10: Yeah, I've heard a lot of experience in electric vehicles,
Speaker 10: material science, battery technology, but that's also extended and I
Speaker 10: think it ties in with what Eclipse has done well,
Speaker 10: supply chain solutions, semiconductors. You mentioned defense tech, autonomy, So
Speaker 10: there's a lot of crossing a paths given my experience
Speaker 10: that I've had as a private and public investor, now
Speaker 10: as I join.
Speaker 3: Eclipse, Joe, you visited Tesla in twenty eleven. You took
Speaker 3: Rivian public basically, and then you help them after going public,
Speaker 3: just very quickly, What were the lessons you took from
Speaker 3: M two companies?
Speaker 10: Yeah, I mean, I think this is one of the
Speaker 10: seminal moment for me on physical industries was in twenty
Speaker 10: eleven when I visited Tesla. It was not just a
Speaker 10: differentiated product ed but at the end of the day,
Speaker 10: a different way of building right. The first principle ways
Speaker 10: of thinking, and we see that permeating a lot of businesses.
Speaker 10: And as we've had successful companies like Tesla, SpaceX, mentioned Anderill, Redwood,
Speaker 10: there's people leaving those firms and they're starting new firms
Speaker 10: as well. So the ecosystem is growing and they're taking
Speaker 10: those lessons they learned with them, things that were really
Speaker 10: important to me, and I think I can help businesses
Speaker 10: with clearly, product market fit is very important. You know,
Speaker 10: right product, right time, solving the right customer problem set
Speaker 10: or providing them something that they don't have, that's very important.
Speaker 10: I've always talked about, you know, additional acts beyond X one.
Speaker 10: You look at Tesla, They've done that, SpaceX has done that,
Speaker 10: Amazon's done that. So a handful of those and then
Speaker 10: and then really what I've we've focused on growth for
Speaker 10: many years is driving durable growth and making sure companies
Speaker 10: are sustainable longer term. So I'll be working with most
Speaker 10: of them to scale and ultimately get them to be
Speaker 10: durable public companies.
Speaker 3: Joe Farf on his second act, the Klip's partner and
Speaker 3: head of growth, thank you very much. Coming up, Aberdabi's
Speaker 3: MGX gets ready to raise billions for its own AI ambitions.
Speaker 2: We have more in that story. Next, this is Bloomberg Tech.
Speaker 6: It's the time now for talking tech.
Speaker 4: First up Abadabi based MNGX is said to be considering
Speaker 4: plans to raise billions of dollars as it ramps up
Speaker 4: investments in AI. And that's according to sources the firm.
Speaker 4: It plans to raise money through a fund structure and
Speaker 4: can raise as much as twenty five billion. Now this
Speaker 4: is his executives raising money from investors in Aberdabi, but
Speaker 4: also beyond Plus and videos assembly partner on High and
Speaker 4: actually saw sales growth slow in July, a signal that
Speaker 4: tariff induced uncertainty is affecting electronics demand. Still, the company
Speaker 4: hopes to ride that wave of continued AI spending from
Speaker 4: its partners, even expanding its AI server assembly capacity in
Speaker 4: the United States and shares of German ship maker in Finion,
Speaker 4: where they're rising today after the company said that tariff
Speaker 4: impact it's fourth quarter fiscal results will be less than anticipated.
Speaker 4: Convenience CFOs Ben Schneider joined Blomberg TV Justselier today.
Speaker 11: I would say from today's perspective, the indirect tariff guestimate
Speaker 11: for this fiscal quarter is probably less pronounced than we
Speaker 11: thought last quarter. On the other hand, we are faced
Speaker 11: with more and more negative currency headwinds from the weakening dollar,
Speaker 11: which offsets to a certain extent.
Speaker 3: Coming up, eleven Labs bets on AI Music, launching a
Speaker 3: new service called eleven Music. We speak with CEO Matthew Sanazuski.
Speaker 2: Next, this is Bloomberg Tech.
Speaker 6: Welcome back to Bloomberg Tech.
Speaker 4: In on those markets that just starling back from some
Speaker 4: of the record highs have been out recently, we're seeing
Speaker 4: then that one hundred and down sixt ten percent. There's
Speaker 4: more of a creeping anxiety about the macro picture in
Speaker 4: the United States that services data looking week, remember the
Speaker 4: jobs data that President Trump took issue with the end
Speaker 4: of last week also painted a less than rosy picture
Speaker 4: about the economy. We take some money off the table
Speaker 4: as we digest also earnings. We're expecting amd after the bell,
Speaker 4: but let's look forward as also how we're seeing some
Speaker 4: companies still at record highs. Palenteered doing the work today,
Speaker 4: we're up almost seven percent, new record high after it's
Speaker 4: already climbed five hundred percent in the last twelve months.
Speaker 6: This is their earnings managed to impress a billion dollars
Speaker 6: in terms of revenue.
Speaker 4: We'll also see in Global Foundries, though not such a
Speaker 4: pleasing picture that they actually beat in terms of their
Speaker 4: fiscal quarter reported, but it's in anxiety around profitability looking
Speaker 4: forward that midpoint of the range not met. When it
Speaker 4: looks for their forecast, we're off by nine percent of
Speaker 4: the contract ship make red.
Speaker 3: Okay, take a look at this chart showing the sales
Speaker 3: slump Tesla's posting in key European markets.
Speaker 2: These numbers come as.
Speaker 3: Chinese rival Bed picks up sales team in the region.
Speaker 3: I want to get out to Bloomberg Stefan Nikola to
Speaker 3: talk about this because it's an ongoing story. It's a
Speaker 3: trend that we've seen Tesla in some European markets dropping
Speaker 3: off and China's BYD making ground.
Speaker 2: How would you sum the data we got most recently.
Speaker 12: Yeah, I mean Tesla has been suffering in Europe for
Speaker 12: the past few months and suffering in the key electric
Speaker 12: vehicle markets Germany, the UK, France. Those are all markets
Speaker 12: that are rising in terms of electric vehicle demand. So
Speaker 12: you know that that's really bad for for Tesla. Of course, BYD,
Speaker 12: by contrary, is sort of making a big push into
Speaker 12: all of these markets selling electric cars but also hybrids
Speaker 12: and yeah, and just in general, it's it's a really
Speaker 12: bad picture for Tesla. Of course, the company has a
Speaker 12: factory up and running in Germany and it needs demand.
Speaker 4: Yeah, just try and weave the narrative for us, because
Speaker 4: Tesla wanted the narrative to be. Look, we're moving to
Speaker 4: a new production format, particularly with a model. Why that's
Speaker 4: what's slowing down perhaps some of our end results, but
Speaker 4: actually it seems to be political connotations. It seems to
Speaker 4: be competition.
Speaker 6: Is the issue? Is that really what we're seeing here?
Speaker 12: Yeah, there are a lot of factors at play here.
Speaker 12: The whole shifting to a new model and narratives is
Speaker 12: way too simple to explain this drastic decline. Elon Musk's
Speaker 12: political activities are certainly contributing to this sales slump, as
Speaker 12: are better models from rivals, better prices from rivals, but also,
Speaker 12: you know, just very shifting market dynamics in Europe, but
Speaker 12: also more broadly, so you know, the overhaul of the
Speaker 12: model why as you we certainly plays a role, but
Speaker 12: it's definitely not the only reason for this really big slump.
Speaker 4: Chefen Nicola, we thank you. For painting, but what is
Speaker 4: an intricate picture? Meanwhile, we shift gears. We look at
Speaker 4: AI voice startup eleven Laps its launching a new initiative
Speaker 4: for businesses stepping into the world of AI music. Customers
Speaker 4: can enter a prompt and generate a new tune within
Speaker 4: a matter of minutes using eleven Music.
Speaker 6: That's the name of the service.
Speaker 4: Joining us now is Matty Sanychewski eleven Labs CEO. So
Speaker 4: what is demand like, you're doing voices, but what was
Speaker 4: the inbound? What scale you're seeing of companies wanting to
Speaker 4: create their own music?
Speaker 13: Carlin, thanks for having me here. So at eleven laps
Speaker 13: we are doing AA audio research and product deployment. We
Speaker 13: are on the mission to be the voice of technology,
Speaker 13: build the most comprehensive AI audio platform in the world.
Speaker 13: And now this includes eleven Music, which we are extremely
Speaker 13: excited about because this is something that so many customers
Speaker 13: came to our platform to create a voiceover, to create
Speaker 13: a voices, to create narrations with our core models, but
Speaker 13: frequently needed that additional background sounds, soundtrack in those productions,
Speaker 13: which we will now be able to provide as part
Speaker 13: of the service from creators all the way through the enterprises.
Speaker 4: It's a fraught world where you're trying to navigate IP.
Speaker 4: In particular, this is IP protective music because you've already
Speaker 4: got the training of the models is based upon agreements
Speaker 4: you have.
Speaker 6: I'm thinking with Merlin Network.
Speaker 4: That's for independent labels, it's a digital rights agencies.
Speaker 6: Also got a similar deal with Cobalt Music Group. But
Speaker 6: what about the bigger ones, what about UMG?
Speaker 4: What about some of the other key music license holders?
Speaker 4: Can you make deals with them?
Speaker 11: It's exactly.
Speaker 13: One of the very special things about the release of
Speaker 13: the Model is that it's both extremely high quality, one
Speaker 13: of the highest qualities in the market, while it's also
Speaker 13: fully licensed and built in collaboration with the labels, with
Speaker 13: the artists, with the publishers. Like you mentioned, we already
Speaker 13: are very happy to be working with Merlin and Cobbalt
Speaker 13: frequently referred to as the fourth both because they represent
Speaker 13: respectively thirty thousand independent labels on the Maryland side and
Speaker 13: over twenty five thousand songwriters on the Cobbalt side. So
Speaker 13: really that gives us such a high ability to create
Speaker 13: extremely high equality music. Of course, as we look into
Speaker 13: the future, we would love to work with UMGWG Sony
Speaker 13: and help we find a path in the future to
Speaker 13: do so. As we think about our work across eleven Music,
Speaker 13: that's one of the key elements to make sure that
Speaker 13: the work we do is both licensed but also gives
Speaker 13: you that broad commercial license to use it, which our
Speaker 13: enterprises demand from gaming all the way to media entertainment
Speaker 13: companies that we work with.
Speaker 3: Maddie, are you talking with and negotiating with those major
Speaker 3: labels you just named?
Speaker 13: Currently the focus was on bringing the current model and
Speaker 13: product to the market, So really we're deep with our
Speaker 13: partners with Merlin, Cobalt, Source, Audio Lander and a number
Speaker 13: of other partners that are in the mentioned in the
Speaker 13: release to bring the current iteration. As we bring the
Speaker 13: product to the market iterate, we will see whether we
Speaker 13: can expand out further.
Speaker 3: But it does a lot of interest in eleven Labs
Speaker 3: in your business to what stage have you grown? Do
Speaker 3: you have any financial metrics ar R or anything you
Speaker 3: can tell us about how it's going for you over there.
Speaker 13: We're doing really well as a company. A few months ago,
Speaker 13: over half a year ago now, we crossed the one
Speaker 13: hundred million ARR mark as a company and we've been
Speaker 13: growing steadily since. Across the company, we have really those
Speaker 13: two key offerings. The first one is that creative platform
Speaker 13: which music will form those in those early and initial days,
Speaker 13: and then the agendic platform where we help companies create
Speaker 13: voice agent conversational agents. And over the last six months
Speaker 13: we've just seen an explosion in companies building with both
Speaker 13: parts of the use cases, both on the creative and
Speaker 13: the agentic side. We're now partnering over a thousand different
Speaker 13: companies in the market and over a five million creators
Speaker 13: that come through the platform on a monthly basis.
Speaker 4: I want to go back to those creators because can
Speaker 4: you name any individual musicians, for example, that are willing
Speaker 4: to go this way? I think of how Grimes is
Speaker 4: really lent into this and she wants a fifty to
Speaker 4: fifty split with her royalties going forward. But what are
Speaker 4: the musicians you're seeing actually wanted to adopt this, Because,
Speaker 4: as I say, it is fraud.
Speaker 13: We are seeing a number of musicians in the space
Speaker 13: that are keen to lean into the technology Iterate quicker
Speaker 13: make it a little bit easier to create music. Currently,
Speaker 13: as part of the eleven Music we are still crafting
Speaker 13: the partnerships and will hopefully announce some of those in
Speaker 13: the coming weeks. So I cannot name any on that
Speaker 13: side just yet, but we've seen a wider set of
Speaker 13: creators working with the tools to make it easier to
Speaker 13: produce variations of the genres, make it easier to see
Speaker 13: how the tracks can be produced before heading that production stuff.
Speaker 3: Maddy, there's a lot of intro seen you and eleven
Speaker 3: Labs kind of fits the profile of this like vertical
Speaker 3: model where it's a potential aqua higher target right. I
Speaker 3: just wonder what you make of what's happening right now,
Speaker 3: the windsurf scenario and whether you might consider doing something
Speaker 3: that joining a bigger entity to continue your work.
Speaker 13: We are building generational company, are planning to go in
Speaker 13: the pandemic and try to create and become the voice
Speaker 13: of the technology, make computers speak, make information accessible across
Speaker 13: voices like ross sounds across languages and now music. So
Speaker 13: current default this to a create a company that can
Speaker 13: that can create something special on its own, and we
Speaker 13: think we can. So hopefully the opposite will be true
Speaker 13: where we'll be able to acqui hire or acquire a
Speaker 13: number of companies in the space on that path too.
Speaker 13: To potential IPO in the future.
Speaker 3: Matty Sanderschewski of eleven Labs, thank you very much. Now
Speaker 3: coming up on the program, and thirteen partner Brent Murray
Speaker 3: joins us talk about the firm's new investment in the
Speaker 3: generative AI advertising space.
Speaker 2: That's next. This is Winberg Tech.
Speaker 3: Venture firm M thirteen is just led a ten million
Speaker 3: dollar seed round in generative AI advertising platform Context. The
Speaker 3: startups now the largest and most well funded gen AI
Speaker 3: ADS platform to date, according to M thirteen. M thirteen
Speaker 3: partner Brent Murray's here to tell us more. This space
Speaker 3: is dynamic, right because it's highly analogous with Meta. You know,
Speaker 3: a lot of the story around Meta is how their
Speaker 3: working AI improves AD pricing, ad impact that core business.
Speaker 3: You are looking at a very different scale and early stage.
Speaker 3: I'd just love to get a presentation of the thesis
Speaker 3: and why this is an interesting domain within AI.
Speaker 14: Yeah, thank you Ed and Caroline as well for having me.
Speaker 14: So we are excited to announce the coming out of
Speaker 14: stealth of Context this morning. They're ten million dollar seed
Speaker 14: round to really become the largest and most well funded
Speaker 14: generative AD platform out there. And so to answer your
Speaker 14: question our thesis on the space, Well, we see the
Speaker 14: advertising world at a major inflection point, and I'm glad
Speaker 14: you hit on meta. There's also industry incumbent Google that
Speaker 14: have pioneered a lot of the previous waves.
Speaker 2: We believe the first wave came sort of.
Speaker 14: At the early two thousands when when Google pioneered digital
Speaker 14: advertising as a space. Then shortly thereafter, a second wave
Speaker 14: came in the twenty tens where social media platforms led
Speaker 14: by Meta attracted new eyeballs, new audiences online, and ad
Speaker 14: inventory exploded online.
Speaker 2: And we see this as a third wave.
Speaker 14: The one trillion dollar AD market, three quarters of which
Speaker 14: is done through digital channels, is about to migrate towards
Speaker 14: generative AI apps. You already see Open ai as the
Speaker 14: fastest growing app of all time, closely getting to a
Speaker 14: billion users. And it's not just them, they're just the
Speaker 14: most well known. You have a lot of other generative
Speaker 14: AI entertainment apps that are attracting audiences where context is
Speaker 14: going to target them.
Speaker 3: What is context's core competency? What is it that they're
Speaker 3: actually doing good at.
Speaker 2: Yeah, there are two things.
Speaker 14: One is real time ad creation and the second is
Speaker 14: hyper personalized contextual ads.
Speaker 2: So I'll take those in pieces.
Speaker 14: The first one, similar to what Mark Zuckerberg is hinted
Speaker 14: at where Meta is going, is end to end advertising creative,
Speaker 14: where AI and llms are powering much of not just
Speaker 14: the targeting of audiences online, but the actual creation of
Speaker 14: the advertisement itself, the asset knowing what copy to use,
Speaker 14: what style, what color the image, the video. So what
Speaker 14: context has done is enable an AD to be created
Speaker 14: in real time using an LM. If you are in
Speaker 14: a chat bot, then your ad will be served up
Speaker 14: to you in real time, which means you don't have
Speaker 14: to have a lot of wasted time on the ad
Speaker 14: creative a lot of manual processes creating thousands of iterations.
Speaker 2: So that's the first thing.
Speaker 14: The second thing is contextual hyper personalized. So in the
Speaker 14: old world, if you're on social media, I think a
Speaker 14: great example is my family and I just had a baby.
Speaker 14: Any of your viewers know that the months leading up
Speaker 14: to a baby, the months following a baby, you are
Speaker 14: targeted ad nauseum by the social media platforms because that
Speaker 14: is when you're most likely to purchase baby goods. But
Speaker 14: what happens after you purchase the crib, After you purchase
Speaker 14: the high chair. You're not going to purchase them again,
Speaker 14: But hundreds of dollars are wasted on you as an
Speaker 14: audience because they're targeting you as a demographic and a
Speaker 14: social behavior. Take that as what context is doing is
Speaker 14: very different. They are targeting advertisements based on your real
Speaker 14: time queries into the LM. So if you are chatting
Speaker 14: through a chatbot telling it what you're interested in, an
Speaker 14: advertisement will be created in real time based on exactly
Speaker 14: what you're asking.
Speaker 4: I kind of want to go to the regulatory or
Speaker 4: unnerving part of this, because we're almost trusting these chatbots
Speaker 4: more than say, the social media side of things. How
Speaker 4: do I know the chatbot's not steering me during my questions?
Speaker 4: How do I ensure that basically I'm not suddenly finding
Speaker 4: the conversation being bent to certain direction because it wants
Speaker 4: me a hooked in it.
Speaker 6: So we're worried about addiction process again.
Speaker 4: Or indeed forcing me to then bend my will to
Speaker 4: end up buying something and perhaps I didn't need.
Speaker 6: How are we going to regulate that?
Speaker 14: Yeah, that's a great question, and I think the advertising industry,
Speaker 14: because we're at this inflection point, we'll have to face
Speaker 14: a lot of those questions right now, you see what
Speaker 14: happened with social media platforms in the past. Consumers are
Speaker 14: always hesitant to go on ad platforms like Meta or
Speaker 14: Instagram and just be served at ad after ad after ad.
Speaker 14: But then they become much better and influencers started talking
Speaker 14: about things that you wanted to buy, and a lot
Speaker 14: of advertisers and online merchants rely on some of these
Speaker 14: ads to power their businesses to stay in business. I
Speaker 14: think the advertisements in AI will have to follow the
Speaker 14: same suit. You have to be able to trust that
Speaker 14: the publisher or the chat bot isn't trying to steer
Speaker 14: you in the in the right in the wrong direction.
Speaker 14: That will lead to unnecessary churn. That's the last thing
Speaker 14: that Context wants for their publishing customers. They want to
Speaker 14: create seamless environments where you're having a regular chat.
Speaker 2: The ad will be.
Speaker 14: Promoted or shown in a way that you can distinguish
Speaker 14: it from an advertisement versus non advertisement, that it's not
Speaker 14: predatory or you know, going after you.
Speaker 2: In a certain way.
Speaker 14: But you'll you'll see a very very natural process where
Speaker 14: the chatbots are feeding you up things that you already
Speaker 14: want to see, already want to potentially purchase.
Speaker 4: Well, Google already doing that. In the third part, chatbots,
Speaker 4: It's fascinating. Brent Marrying, We thank you so much for
Speaker 4: your time talking about context. His partner over at thirteen. Now,
Speaker 4: let's talk about how women are holding well then eighteen
Speaker 4: percent of all partner and above rolls in venture capital.
Speaker 6: It's all according to data just released by All Rays Now.
Speaker 4: It's a nonprofit that aims to increase gender parity in
Speaker 4: tech and VC, and it's saying that this is ahead
Speaker 4: of its projected schedule. We spoke with All Raised CEO
Speaker 4: Page Buckner about where that change can be seen.
Speaker 15: Most twenty percent of decision making roles at VC firms
Speaker 15: with a billion plus and aom have women decision makers,
Speaker 15: which is super exciting. And so when you think about
Speaker 15: that stat what's important to us is that we're making
Speaker 15: progress at scale. But we do know that at the
Speaker 15: mega funds there are only three women holding managing partner roles,
Speaker 15: and so there's a big opportunity for us to make
Speaker 15: progress there.
Speaker 4: And they're the funds with more than ten billion in
Speaker 4: assets under management. Go back to the data therefore, page
Speaker 4: of what this means?
Speaker 6: Why is it?
Speaker 4: What is helping those that are managing in excess one
Speaker 4: bay and make those decisions have more decision makers who
Speaker 4: are diverse in thought.
Speaker 2: Yeah.
Speaker 15: So I think the first thing to ground ourselves in
Speaker 15: is that there's so much data and we talked about
Speaker 15: this last year that makes the case for having diversity
Speaker 15: and decision making roles at any kind of organization, and
Speaker 15: this is especially important in venture capital when they are
Speaker 15: making decisions about the kind of innovation that we're going
Speaker 15: to fund in the private markets and then eventually in
Speaker 15: the public markets as well. So it's important for us
Speaker 15: to stay grounded in the results, and we talked about
Speaker 15: this last year. But what we know is that diversity
Speaker 15: is an advantage because diverse teams consistently outperform. They also
Speaker 15: better reflect where the market is heading. And one important
Speaker 15: data point that we've been thinking deeply about is the
Speaker 15: one hundred trillion dollars in wealth that's projected to move
Speaker 15: into the hands of women by twenty forty eight, and
Speaker 15: that's just going to reshape everything in the economy. But
Speaker 15: as we think about venture capital in particular, we've been
Speaker 15: asking what does that look like for LPs, what does
Speaker 15: that look.
Speaker 6: Like for venture firms?
Speaker 15: What does that look like for the kind of innovation
Speaker 15: that these women are.
Speaker 6: Going to be able to fund?
Speaker 4: So is the thought process here more money lands in
Speaker 4: female coffers, They therefore want to work with more diverse
Speaker 4: LPs or allocate the LPs want to allocate to more
Speaker 4: diverse vcs, and they want to be putting money to work.
Speaker 4: How does that reflect in the portfolio companies that then
Speaker 4: these diverse bench capitalists and decision makers are putting money into.
Speaker 7: Yeah.
Speaker 15: Absolutely so we know according to our friends at Kaufman
Speaker 15: that women vcs are two times more likely to invest
Speaker 15: in women's CEOs at the earliest stages.
Speaker 6: And we know that there's opportunity there.
Speaker 15: And often these markets have been overlooked because they've been
Speaker 15: perceived as niche markets. But what's great is that when
Speaker 15: you bring in more diversity on the VC side of
Speaker 15: the equation or on the LP side of the equation,
Speaker 15: by the way, that is felt across the capital stack,
Speaker 15: and then the kinds of innovation that we can have
Speaker 15: on the start up side of the equation shift, and
Speaker 15: so what gets funded then also better reflects than part
Speaker 15: of me the marketplace, which is of course commanded by women.
Speaker 15: When we think about the person of decisions around consumer
Speaker 15: and healthcare and education that are made by women every
Speaker 15: day for household across this country. So it is really
Speaker 15: reflecting not just where the market is today, but where
Speaker 15: the market is going to be. And we're thinking about
Speaker 15: the products that are therefore reflective of the consumer that
Speaker 15: vcs really want to be building for because they're going
Speaker 15: to be able to get outsize returns.
Speaker 3: That was Paige Buckner, CEO of All Rays. Now coming
Speaker 3: up investors, IAMD results after the closing bell, the latest
Speaker 3: earnings expectations coming up next, and the analysis from Bloomberg Intelligence.
Speaker 2: Stay with us. This is Bloomberg Tech.
Speaker 3: AMD out with earnings after the bell, and investors are
Speaker 3: putting increased pressure on the chip maker, expecting the company
Speaker 3: to show benefits from the AI race. Here with more
Speaker 3: Kungensavani of Bloomberg Intelligence, you put a number on this market.
Speaker 3: In Vidia has ninety five percent of the market for
Speaker 3: GPUs is AI accelerators. AMD has five percent. What do
Speaker 3: they need to show us that they're making some ground?
Speaker 2: Well?
Speaker 16: This time around the non air things will be important,
Speaker 16: PC gaining share, some maybe pair of pull in embedded,
Speaker 16: coming recovery in three Q but as you said, the
Speaker 16: second half AI ramp both in server CPU and GPU
Speaker 16: will matter the most. They need to again show sustained
Speaker 16: execution on the three fifty five ramp. There's a possibility
Speaker 16: of the China series coming back and adding about five
Speaker 16: hundred million to even more revenue in the second half,
Speaker 16: and any visibility into the Helios which is the next
Speaker 16: year server level REX solution, should be very positive.
Speaker 6: Where have they been executing really well?
Speaker 4: Because I feel like time and time again we're hearing
Speaker 4: about the PC side of the equation, but the consumer
Speaker 4: isn't too hot right now.
Speaker 16: Definitely, the ND markets are struggling, but they have been
Speaker 16: really gaining share on CPU, both on the PC and
Speaker 16: the server, which has really been helping them outperform even
Speaker 16: the unit weakness in the market. Secondly, we have heard,
Speaker 16: you know news about them raising prices both on the PC,
Speaker 16: the service if you, and the GPU side. That really
Speaker 16: speaks to the strength of their adoption across the board.
Speaker 1: Wow.
Speaker 4: Planning to watch out for in terms of size and
Speaker 4: market application countri In Savanni on Bloomberg Intelligence some great
Speaker 4: notes coming out ahead of these earnings, and we'll analyze
Speaker 4: them after the Bell as well. That does it though
Speaker 4: for this edition of Bloomberg Tech, and so much to
Speaker 4: be digesting in terms of the market. It's the macro pressure,
Speaker 4: but we look at AMD after the Bell in terms
Speaker 4: of the micro perspective.
Speaker 3: Yeah, another day where chips are in focused because of policy.
Speaker 2: But like AMD, best.
Speaker 3: Performing chip stock so far this year, right, and they
Speaker 3: have a lot of pressure on them. But it's an
Speaker 3: interesting company to follow. Good analysis from Kunjan recap it.
Speaker 3: As Cary said on the podcast, you know where to
Speaker 3: find it.
Speaker 2: It's on the.
Speaker 3: Bloomberg terminal as well as online on all of those
Speaker 3: great platforms Apple, Spotify, and on iHeart. From New York
Speaker 3: City in San Francisco, this is Bloomberg Tech