WEBVTT - SoftBank Invests in Intel as US Government Eyes 10% Stake 0:00:02.520 --> 0:00:13.440 Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive 0:00:13.520 --> 0:00:17.319 from coast to coast with Carolline Hide in New York 0:00:17.600 --> 0:00:19.720 and Edmavelow in San Francisco. 0:00:22.040 --> 0:00:25.200 This is Bloomberg Tech coming up. Intel gets two billion 0:00:25.200 --> 0:00:28.160 dollars from soft Bank as the US government confirms discussions 0:00:28.200 --> 0:00:30.720 to take a steak in the chip maker. Plus Palo 0:00:30.800 --> 0:00:34.160 Alto Networks gives a strong forecast for the cybersecurity giant 0:00:34.240 --> 0:00:38.520 our conversation with the CEO Nikesha Rura, and Apple expands 0:00:38.560 --> 0:00:41.680 its iPhone production in India as it seeks to lessen 0:00:41.840 --> 0:00:45.240 its reliance on China. But first I shinelight what's happening 0:00:45.240 --> 0:00:47.839 with arm as well, because the news was that SoftBank 0:00:47.920 --> 0:00:50.600 is taking well two billion dollars in inequity state. They're 0:00:50.640 --> 0:00:52.479 going to be selling new shells. Soft Bank is going 0:00:52.520 --> 0:00:55.040 to be having them. Remember SoftBank, of course, in many 0:00:55.040 --> 0:00:58.680 ways controls on the chip designer. We're thinking also about 0:00:58.680 --> 0:01:01.840 the US government, which doesn't indeed confirm that they are 0:01:01.840 --> 0:01:04.560 eyeing a stake for the business. We're wondering just how much. 0:01:04.920 --> 0:01:06.680 And I'm pretiused to say that we can dive into 0:01:06.720 --> 0:01:09.880 this with Michael Shepherd, of course, Blomberg's executive editor on 0:01:10.000 --> 0:01:13.240 all things to do with technology and Washington, and boy 0:01:13.360 --> 0:01:16.000 is Washington playing a bigger and bigger role at the moment. 0:01:16.160 --> 0:01:19.800 COMMAS Secretary Lutnik saying, yes, we're involved in talks, but 0:01:20.000 --> 0:01:21.360 how much equity MIC. 0:01:22.520 --> 0:01:23.479 Well, it's a great question. 0:01:23.600 --> 0:01:25.680 He stopped short of saying that it would be the 0:01:25.840 --> 0:01:31.280 ten percent stake that our colleagues scooped and reported yesterday, 0:01:31.440 --> 0:01:34.480 and it gave a size and scope to what we 0:01:34.560 --> 0:01:38.200 had broken earlier over last week, and that is that 0:01:38.240 --> 0:01:42.399 the government had been weighing this investment in the company. 0:01:42.520 --> 0:01:44.760 And the idea is to take some of the Chips 0:01:44.840 --> 0:01:47.680 Act money and those are funds and subsidies CARA that 0:01:47.720 --> 0:01:50.600 we have talked about on these airwaves so much. 0:01:50.400 --> 0:01:51.760 Over the past year and a half. 0:01:52.240 --> 0:01:54.280 But they would take that money and turn it into 0:01:54.480 --> 0:01:57.760 equity handstock over to the government, and that would make 0:01:58.160 --> 0:02:01.280 the federal government the largest holder in Intel, which would 0:02:01.280 --> 0:02:04.920 be an extraordinary step, especially in the tech space, and 0:02:05.160 --> 0:02:08.360 it would also provide something of a lifeline to this 0:02:08.400 --> 0:02:11.560 company as the new CEO, Lip Bhutan, tries to turn 0:02:11.600 --> 0:02:15.720 it around after inheriting from Pat Gelsinger's predecessor, a company 0:02:15.760 --> 0:02:18.320 that was really at a crossroads. 0:02:17.800 --> 0:02:21.280 Really at a crossroads. Lip Bhutan now has to almost 0:02:21.320 --> 0:02:24.720 try and weave a narrative that's got pretty confusing for 0:02:24.800 --> 0:02:28.560 the government. They care about manufacturing in the United States, 0:02:28.560 --> 0:02:32.000 they care about Ohio an awful lot, They care about innovation, 0:02:32.120 --> 0:02:34.320 and that almost felt like something that Boutan was pulling 0:02:34.320 --> 0:02:37.040 away from, and certainly in terms of the latest and 0:02:37.080 --> 0:02:42.079 greatest innovation with fourteen eight processes, but they couldn't find 0:02:42.120 --> 0:02:42.720 demand for it. 0:02:44.040 --> 0:02:46.720 Well, Caro, you hit the nail on the head right there. 0:02:46.840 --> 0:02:49.680 There is such tension between what lip Bhutan was going 0:02:49.680 --> 0:02:52.440 to have to do with the turnaround, with the goals 0:02:52.480 --> 0:02:55.239 of the administration, which, as you said, is to try 0:02:55.240 --> 0:02:59.480 to stoke warm domestic manufacturing, especially in the advanced technology 0:02:59.560 --> 0:03:03.040 space and semiconductor space, and that factory in Ohio we've 0:03:03.080 --> 0:03:05.320 talked so much about has now been pushed back to 0:03:05.639 --> 0:03:08.760 the twenty thirties, and that's not a timeline that the 0:03:08.800 --> 0:03:12.520 Trump administration would accept. The rub though, is that Intel 0:03:12.760 --> 0:03:15.120 just doesn't yet have the customers to be able to 0:03:15.160 --> 0:03:20.560 sustain the factory build out there, which is so costly 0:03:20.919 --> 0:03:24.960 and would involve such continued investment by the company. It 0:03:25.040 --> 0:03:29.240 needs a guaranteed revenue stream from those buyers of chips. 0:03:29.040 --> 0:03:30.480 To be able to make that work. 0:03:30.600 --> 0:03:33.200 Now, one of the questions is would the government try 0:03:33.280 --> 0:03:38.280 to cajole some other tech companies into buying chips from 0:03:38.400 --> 0:03:42.000 Intel to help it find that customer base as it 0:03:42.000 --> 0:03:47.880 seeks to move forward. We heard from Treasury Secretary Treasury, 0:03:47.960 --> 0:03:51.360 the secret Treasury Secretary Scott Vestn't this morning saying that no, 0:03:51.480 --> 0:03:53.920 the federal government would not get involved in trying to 0:03:54.000 --> 0:03:55.400 find those customers. 0:03:55.600 --> 0:03:56.800 But we'll wait and see. 0:03:57.400 --> 0:04:00.640 The President is very much interested in trying to see 0:04:00.680 --> 0:04:01.520 Intel succeed. 0:04:01.600 --> 0:04:03.320 He had a very positive meeting with. 0:04:03.560 --> 0:04:06.920 Bhutan about ten days ago, and this was just days 0:04:06.920 --> 0:04:10.480 after suggesting that the CEO might have to leave over 0:04:10.520 --> 0:04:13.160 his prior ties and engagement with China. 0:04:13.600 --> 0:04:13.880 China. 0:04:13.960 --> 0:04:16.279 So we are seeing a bit of a turn of 0:04:16.360 --> 0:04:19.960 fortune between not only the company and the government, but 0:04:20.040 --> 0:04:23.600 really the company and CEO with the president himself. 0:04:23.680 --> 0:04:27.200 I mean, Link Secretary Strategies might call this monumental the 0:04:27.279 --> 0:04:30.479 last couple of days in their view for Intel. What 0:04:30.600 --> 0:04:33.040 I think is really interesting though, is not aside from 0:04:33.040 --> 0:04:36.440 already the investment, they're managing to push from SoftBank, for example, 0:04:36.720 --> 0:04:41.320 into Intel. But whether other companies that have taken Chipsack 0:04:41.400 --> 0:04:44.640 money might see that turn into an equity investment too. 0:04:44.680 --> 0:04:46.240 That seemed to be what I was reading between the 0:04:46.279 --> 0:04:49.160 lines of our reporting. Well, Micron's taken money, but how 0:04:49.200 --> 0:04:51.680 could that possibly work for TSMC Samsung? 0:04:53.200 --> 0:04:56.640 We are seeing in between the lines of those reporting 0:04:56.680 --> 0:04:59.359 a sense among some White House officials that they would 0:04:59.400 --> 0:05:02.080 like to perhaps take it a step further with those 0:05:02.080 --> 0:05:05.360 other companies, perhaps including the ones that you mentioned now, 0:05:05.360 --> 0:05:09.960 with a venture like Micron, perhaps because it's US flagged 0:05:10.000 --> 0:05:10.920 and US based. 0:05:11.240 --> 0:05:12.679 Sure, maybe that could work. 0:05:12.880 --> 0:05:18.640 But then Taiwan and TSMC, how does Taiwan semiconductor manufacturing 0:05:18.680 --> 0:05:24.040 company and the Taiwanese government leadership accept something like that? 0:05:24.120 --> 0:05:28.320 And Samsung and the government in South Korea there lies 0:05:28.360 --> 0:05:32.040 some greater sensitivities. Even as those governments have come to 0:05:32.160 --> 0:05:36.600 embrace the need to diversify the location of their manufacturing 0:05:36.680 --> 0:05:40.400 and to also curry favor with Donald Trump by investing 0:05:40.520 --> 0:05:43.000 in the US, there may be a certain line when 0:05:43.040 --> 0:05:44.839 it comes to the equity stakes, Carol, So we'll have 0:05:44.839 --> 0:05:46.000 to see how that plays out. 0:05:46.160 --> 0:05:48.360 A Max Michael Shepherd and the Inside Track of what's 0:05:48.360 --> 0:05:51.559 happening in Washington. We thank you. Let's turn to well 0:05:51.720 --> 0:05:54.440 they analysis on the street now for Intel and the 0:05:54.480 --> 0:05:56.800 read across to the sector. Gailuria's with US head of 0:05:56.800 --> 0:05:59.159 Tech research at DA Davison. Is this a good thing 0:05:59.360 --> 0:05:59.839 for Intel? 0:06:01.640 --> 0:06:05.599 It's a lightsaver. They were on an unclear path before 0:06:06.160 --> 0:06:09.360 the government decided to renegotiate its deal. Let's not forget 0:06:09.680 --> 0:06:12.680 the US government already had a deal with Intel. It's 0:06:13.000 --> 0:06:15.680 we're going to give you six billion dollars and we're 0:06:15.720 --> 0:06:18.880 going to get a colored profit shared down the line. 0:06:20.000 --> 0:06:22.800 What this administration is doing is just renegotiating the deal. 0:06:22.880 --> 0:06:25.440 It's saying that's not good enough. We want to take 0:06:25.480 --> 0:06:28.719 an equity state. And by the way, Intel is different 0:06:28.880 --> 0:06:31.760 because part of this deal is a big Department of 0:06:31.839 --> 0:06:36.000 Defense component. Let's not forget. We're going to want Intel 0:06:36.080 --> 0:06:39.080 to manufacture chips for our F thirty fives and other 0:06:39.120 --> 0:06:42.800 important weapons systems. So the government has a different type 0:06:42.800 --> 0:06:46.920 of relationship, for instance, than it does with TMSMC, where 0:06:46.960 --> 0:06:50.560 we're just talking about making chips for data centers. So 0:06:50.800 --> 0:06:54.400 the government renegotiated the deal, and now when it's done that, 0:06:54.600 --> 0:06:57.800 it's not a coincidence that Libu time can go to 0:06:57.839 --> 0:07:00.760 his friend Masa San and say, okay, this is the 0:07:00.880 --> 0:07:04.799 time for SoftBank to invest as well and maybe line 0:07:04.880 --> 0:07:08.720 up some armed demand for those fourteen eight chips down 0:07:08.800 --> 0:07:09.200 the line. 0:07:09.360 --> 0:07:12.240 I'm so interested in the arm architecture side of this. 0:07:12.600 --> 0:07:15.960 How do you see these working hand in hand going forward? 0:07:16.120 --> 0:07:19.320 How more cemented could a relationship become? 0:07:20.800 --> 0:07:23.800 Well, clearly it could be part of the deal. And 0:07:23.840 --> 0:07:26.600 more importantly for Intel, as of a week ago, they 0:07:26.640 --> 0:07:31.320 had no customers for the fourteen A architecture and they 0:07:31.400 --> 0:07:34.680 said they may not even proceed with it. Now they 0:07:34.840 --> 0:07:37.880 might have one lined up. Let's not forget the Department 0:07:37.880 --> 0:07:41.280 of Defense is a customer that's now more likely to 0:07:41.320 --> 0:07:43.800 be lined up for that, And then they can go 0:07:43.880 --> 0:07:46.960 and talk to the other companies. And even if the 0:07:47.000 --> 0:07:51.240 government doesn't have it, doesn't go ahead and twist some arms. 0:07:51.280 --> 0:07:54.560 Let's not forget. And Nvidia's committed half a trillion dollars 0:07:54.600 --> 0:07:58.160 of investment in the US, so can the government now? 0:07:58.400 --> 0:08:02.120 Can President Trump called Jensen Wang and say, hey, this 0:08:02.200 --> 0:08:04.080 is part of how I want to see the investment 0:08:04.120 --> 0:08:06.800 play out. I need for you to be a customer 0:08:06.840 --> 0:08:10.240 of fourteen A that's not inconceivable at this point. And again, 0:08:10.360 --> 0:08:14.280 remember this is national security, So the rules of the 0:08:14.320 --> 0:08:17.320 games change once we say this is national security. 0:08:17.600 --> 0:08:20.920 Rules of the game are often blurred by frenemy lines. 0:08:21.440 --> 0:08:23.880 Gil And what's so interesting is Massa has had a 0:08:23.920 --> 0:08:28.200 long term relationship with the CEO of Invidia, of course, 0:08:28.280 --> 0:08:31.000 Jensen Wang, but also in some ways wants to build 0:08:31.000 --> 0:08:33.600 a competing architecture in some ways, what's to take on 0:08:34.200 --> 0:08:36.600 in Vidio in terms of AI chips? Could he do 0:08:36.720 --> 0:08:38.840 that with Intel's help. 0:08:41.040 --> 0:08:43.720 It's one way for him to participate in an even 0:08:43.880 --> 0:08:47.760 more broad fashion in the growth of AI, which he's 0:08:47.800 --> 0:08:51.120 doing now. He regrets selling in video when he did. 0:08:51.120 --> 0:08:53.720 He's buying some of it back, but he's also making 0:08:53.720 --> 0:08:58.200 a set of other investments in AI infrastructure. Let's not 0:08:58.240 --> 0:09:02.600 forget Stargate is probably the flag bearer of his effort, 0:09:02.679 --> 0:09:06.160 combining with open Ai and Oracle to build again at 0:09:06.240 --> 0:09:09.360 least one hundred billion dollars worth of data center capacity. 0:09:09.840 --> 0:09:13.040 And for that it would make sense to diversify and 0:09:13.080 --> 0:09:16.560 not only buy Nvidia chips. Now, that's going to take 0:09:16.600 --> 0:09:19.280 a while, and Nvidia not only has a lead but 0:09:19.440 --> 0:09:23.400 continues to extend its lead every year, but it does 0:09:23.520 --> 0:09:27.960 make sense for him and for other companies to try 0:09:28.000 --> 0:09:29.840 to diversify away from Nvidia. 0:09:30.440 --> 0:09:33.920 What's interesting is how a Lutnik Ecomo sextuary had said, look, 0:09:33.960 --> 0:09:36.680 we will be we confirm that we're looking at taking 0:09:36.679 --> 0:09:39.320 an equity stake. Didn't say how much, but it wouldn't 0:09:39.360 --> 0:09:42.640 be with a governance role. Now, well, broadly, how are 0:09:42.679 --> 0:09:46.360 you starting to analyze companies that are getting closer and 0:09:46.400 --> 0:09:49.840 closer to the US government and how much Well is 0:09:49.840 --> 0:09:54.160 it interference or is it positive help that is being 0:09:54.240 --> 0:09:55.959 led by a US government here. 0:09:57.400 --> 0:10:01.960 Well, the US government has an ability to to give 0:10:02.040 --> 0:10:05.559 proferential treatment to some of these companies to change the 0:10:05.640 --> 0:10:09.840 rules of the road, and it wants equity participation when 0:10:09.840 --> 0:10:12.080 it does that. And again, it's not doing it broadly. 0:10:12.400 --> 0:10:14.880 It's doing when it's a matter of national security. Let's 0:10:14.920 --> 0:10:18.600 not forget it's already very involved with Nvidia. It's limiting 0:10:18.600 --> 0:10:21.760 their chip sales to China. It's already very involved with 0:10:21.840 --> 0:10:25.400 open Ai. This may be quiet, but it's pretty safe 0:10:25.480 --> 0:10:28.400 to assume the Department of Defense gets briefs from open 0:10:28.440 --> 0:10:31.760 Ai very frequently about where the models are. So the 0:10:31.800 --> 0:10:36.200 government is involved because it's national security. In Intel's case, 0:10:36.600 --> 0:10:41.200 it's a matter of if this is this century's nuclear arsenal, 0:10:41.679 --> 0:10:45.079 we need somebody to make the shellcasings domestically. We can't 0:10:45.080 --> 0:10:47.800 have a Taiwanese company in a Korean company make our 0:10:47.840 --> 0:10:53.000 shellcasings for our nuclear arsenal. So in Intel's case, it's 0:10:53.000 --> 0:10:56.880 a much deeper involvement, and I wouldn't be surprised if 0:10:56.920 --> 0:11:00.400 there are if there is input into where the investments go, 0:11:00.920 --> 0:11:06.040 what the governance is, even if it's not explicit. 0:11:06.000 --> 0:11:09.199 Something that Blomberg will seek comment on Da Davidson's Guilduria, 0:11:09.600 --> 0:11:12.640 like so much be analysis today we are coming up. 0:11:12.760 --> 0:11:15.480 We have from Palo Alto Network CEO Niickesha Arora is 0:11:15.520 --> 0:11:18.200 the company sees it a stronger than expected twenty twenty six. 0:11:18.960 --> 0:11:31.800 This is Blue Medtech Shares a Palo alter Networks rising 0:11:31.800 --> 0:11:34.280 in fact best days since April. It's not apposting a 0:11:34.320 --> 0:11:37.560 stronger than expected forecast for twenty twenty six. We caught 0:11:37.600 --> 0:11:39.840 up with the CEO, Niickesha Rara earlier. That's what we 0:11:39.880 --> 0:11:40.960 had to say about the growth. 0:11:41.960 --> 0:11:44.880 The industry has got too many fragmented players where the 0:11:44.880 --> 0:11:47.920 customers are left to do the stitching on cybersecurity themselves, 0:11:48.040 --> 0:11:50.840 and now the base at which attacks are happening, the 0:11:50.840 --> 0:11:52.760 base at which the bad actor is able to get 0:11:52.800 --> 0:11:56.000 in and excellent straight data has shrunk to twenty five minutes. 0:11:56.200 --> 0:11:58.440 You can't solve that problem with the humans. You have 0:11:58.480 --> 0:12:01.080 to apply technology. You have to apply automation, you have 0:12:01.160 --> 0:12:01.800 to apply. 0:12:01.600 --> 0:12:03.920 Yeah, and that's why that's where platformization comes in. 0:12:04.720 --> 0:12:07.439 You talk about the pervasive attacks, I mean you apply 0:12:07.559 --> 0:12:11.240 GENI to tackle ultimately attacks coming from JENI. I think 0:12:11.240 --> 0:12:14.439 you had phenomenal statistics in the call, eight hundred and 0:12:14.520 --> 0:12:18.960 ninety percent increase in GENAI traffic in twenty twenty four. 0:12:19.360 --> 0:12:21.520 Can you just talk to us about how you can 0:12:21.559 --> 0:12:23.839 combat that, what sort of things you need in place 0:12:23.880 --> 0:12:26.120 to be able to take on the GENI impact. 0:12:27.040 --> 0:12:30.520 Well, look, as we're noticing everywhere as AI is getting deployed, 0:12:30.520 --> 0:12:33.840 the fundamental problem that every company is facing and deploying 0:12:34.000 --> 0:12:36.920 LLLMS or AI effectively is they don't have good data. 0:12:37.040 --> 0:12:39.600 You need good data on drug discovery, you need good 0:12:39.679 --> 0:12:42.360 data on self driving cars to understand where every tree is, 0:12:42.360 --> 0:12:45.120 where we plant is, So you need good data to 0:12:45.160 --> 0:12:47.719 solve the problem. If you want to use AI and 0:12:47.920 --> 0:12:49.920 What we have done at our end is we have 0:12:50.000 --> 0:12:52.880 basically built a platform that ingests so collects all the 0:12:53.000 --> 0:12:56.080 data from the enterprise and makes sense of it as 0:12:56.160 --> 0:12:56.959 fast as. 0:12:56.800 --> 0:12:59.160 The bad actors can. Now, that can't be done in humans. 0:12:59.160 --> 0:13:02.440 For example, in an instance of ourselves, Leaven just one 0:13:02.520 --> 0:13:05.320 hundred and fifty terabytes a day. That's a lot of data, 0:13:05.800 --> 0:13:07.959 and that's just for ourselves. And imagine doing that across 0:13:08.000 --> 0:13:11.400 four hundred customers. We're ingesting data and petabytes, analyzing it 0:13:11.440 --> 0:13:13.960 on the fly and trying to stop an attack made stream. 0:13:14.600 --> 0:13:18.600 That requires tons of technology, tons of AI expertise because 0:13:18.800 --> 0:13:22.559 the consequences are disastrous. Right, the bad actors are doing that, 0:13:22.720 --> 0:13:24.199 but they're trying to get it right once. We have 0:13:24.280 --> 0:13:25.839 to get it right one hundred percent of the time. 0:13:26.400 --> 0:13:29.760 Okay, so you're on the expertise that you need. You've 0:13:29.800 --> 0:13:33.240 had organically, but also some inorganic expertise coming on. When 0:13:33.240 --> 0:13:35.360 I think about the identity focus you've now put on 0:13:35.400 --> 0:13:36.920 with cyber arg it's a deal that of course will 0:13:36.960 --> 0:13:38.200 be folded in in the longer term. 0:13:38.320 --> 0:13:40.720 I don't know. You guys like to call it in organic. 0:13:40.800 --> 0:13:43.600 When you hire great people, that's possibly call it in organic, 0:13:43.640 --> 0:13:46.040 isn't it like, Well, Meta goes and hires AI researchers 0:13:46.080 --> 0:13:48.800 and people hire people. That's innerwirement. Guess we have to 0:13:48.800 --> 0:13:51.720 get great people from elsewhere because we don't have, you know, 0:13:51.800 --> 0:13:54.040 the prerogative of having best people on all of the time. 0:13:54.080 --> 0:13:56.600 So yes, we buy great teams who are doing great works. 0:13:56.600 --> 0:13:58.800 It's twenty five billion, This is a twenty five billion 0:13:58.880 --> 0:13:59.640 dollar Aquahi. 0:14:00.679 --> 0:14:02.439 Well, we can't get there the way we got here, 0:14:02.480 --> 0:14:03.760 so we're going to have to make sure that we 0:14:03.800 --> 0:14:06.560 go ahead. And it's not just acquhire. It's amazing technology. 0:14:06.559 --> 0:14:08.880 It's a great bunch of people. And honestly, I think 0:14:09.040 --> 0:14:12.120 the way to frame it, Caroline, is if you listen 0:14:12.160 --> 0:14:14.680 to all the narratives I here in Bloomberg and around 0:14:14.760 --> 0:14:17.000 in media, we're all worried about agents. 0:14:17.040 --> 0:14:18.719 We all believe that agents are going to take over 0:14:18.760 --> 0:14:19.000 the world. 0:14:19.080 --> 0:14:21.200 We believe they're going to be more agents in companies 0:14:21.200 --> 0:14:23.560 and they're going to be humans. Now, well, somebody's got 0:14:23.600 --> 0:14:25.440 to make sense of these agents. Somebody's got to make 0:14:25.440 --> 0:14:28.960 sure these agents have credentials, they're managed, they're understood, they 0:14:28.960 --> 0:14:31.800 don't run rogue, they have guardrails. That whole world of 0:14:31.800 --> 0:14:35.880 agentic AI needs a whole cloak or framework of identity 0:14:35.920 --> 0:14:38.680 management around them, and cyber Arc is the world leader 0:14:38.760 --> 0:14:41.920 in this topic. So partnering with them, making them put 0:14:41.960 --> 0:14:44.280 the networks allows us to see ahead and say two 0:14:44.320 --> 0:14:46.240 years from now, three years from now, when the world 0:14:46.280 --> 0:14:48.200 is talking about how to manage all these things, how 0:14:48.240 --> 0:14:50.640 does podel to get ready and be at the forefront 0:14:50.680 --> 0:14:53.640 so our customers can solve their problems on deploying AI 0:14:53.760 --> 0:14:55.560 while we help them a security What. 0:14:55.440 --> 0:14:57.760 Sales synergies do you see in that two to three years? 0:14:57.840 --> 0:14:59.480 How do you ensure that you don't get a hit 0:14:59.560 --> 0:15:02.040 to that margin that some award about. 0:15:05.040 --> 0:15:08.440 We are as the first at scale cybersecurity company. We 0:15:08.520 --> 0:15:11.000 crossed a ten billion dollar revenue rundrate never been done 0:15:11.040 --> 0:15:14.200 in cybersecurity. That allows us to leverage scale economics. We 0:15:14.280 --> 0:15:16.840 run a thirty percent operating margin, We run close to 0:15:16.920 --> 0:15:17.920 forty percent free. 0:15:17.720 --> 0:15:18.600 Cash flow margins. 0:15:18.680 --> 0:15:21.880 Were a robust, profitable company. Any company that isn't a 0:15:21.880 --> 0:15:24.600 billion two billion dollar ur business, which a cyber Arc is, 0:15:24.600 --> 0:15:27.400 we think we can vastly improve their operations as part 0:15:27.400 --> 0:15:29.600 of Polo Alto because the scale economics that we bring 0:15:29.840 --> 0:15:31.720 both on the go to market side, we have ten 0:15:31.800 --> 0:15:34.320 times of sellers they have, and on the operating side, 0:15:34.360 --> 0:15:37.320 and we run large scale systems for sixteen thousand employees. 0:15:37.440 --> 0:15:41.320 Adding six thousand employees doesn't take a lot, but it 0:15:41.360 --> 0:15:43.840 does improve the margins the underlying business of Tagic, So 0:15:43.880 --> 0:15:46.760 we believe that the acquisition will be a creative over time. 0:15:46.880 --> 0:15:49.240 The billion f FI twenty eight we can collectively achieve 0:15:49.280 --> 0:15:51.680 a forty percent free cash flow margin, which again is 0:15:51.760 --> 0:15:55.200 gold standard in our industry, let alone our industry and software. 0:15:55.200 --> 0:16:06.000 Hello Alto Networks Cee Nikesh Aurora. The AI industry's massive 0:16:06.080 --> 0:16:08.960 funding needs are being seen as an opportunity by private 0:16:08.960 --> 0:16:12.320 credit firms. For example, firms competed for months till Ard 0:16:12.360 --> 0:16:15.040 Meta twenty nine million dollars for its AI data center 0:16:15.080 --> 0:16:18.160 project in Louisiana. Now Pinco and blue Out Capital eventually 0:16:18.240 --> 0:16:22.240 selected there. Bloomberg's Laura Benitez joins us. She covers asset management, 0:16:22.240 --> 0:16:25.480 and we're reporting on this a lot, and just remind 0:16:25.560 --> 0:16:28.800 us why private credit is really salivating at the opportunity here. 0:16:29.800 --> 0:16:33.360 There's a huge opportunity within AI, you know, unline private equity, 0:16:33.440 --> 0:16:37.360 which we're seeing, you know, some kind of logjam with exits. 0:16:37.360 --> 0:16:40.800 You know, there's big opportunity with infrastructure and digital infrastructure. 0:16:41.240 --> 0:16:44.000 The margins can be quite high, the coupons can be 0:16:44.120 --> 0:16:46.840 very lucrative. So yes, it's a piece of the private 0:16:46.880 --> 0:16:48.440 everyone's trying to get in on right now. 0:16:49.040 --> 0:16:51.720 They get in our meta, there's opportunities to come. I 0:16:51.800 --> 0:16:53.720 was just looking at a note put out by UBS, 0:16:53.720 --> 0:16:57.160 So they almost worry that perhaps this is getting too much. 0:16:57.280 --> 0:16:59.800 The froth starts to appear, the risks start to appear. 0:17:00.040 --> 0:17:02.480 That something you're hearing, Laura, that's right. 0:17:02.520 --> 0:17:04.520 There are some concerns that, you know, there's too much 0:17:04.640 --> 0:17:07.879 money chasing this opportunity now, and that it might be 0:17:07.960 --> 0:17:11.600 overblown and demand you know, seem to be you know, 0:17:11.960 --> 0:17:14.840 apparently soaring. But we I think kind of a bit 0:17:14.880 --> 0:17:17.720 skeptical on that in the long term. But you're right. 0:17:17.720 --> 0:17:19.840 Morgan Stanley have said, for instance, that there's you know, 0:17:20.240 --> 0:17:23.040 trillions of capital expenditure needs for AI in the next 0:17:23.040 --> 0:17:25.680 few years, and that could translate to hundreds of billions 0:17:25.680 --> 0:17:27.560 of bond issuance coming into the bond market. 0:17:27.600 --> 0:17:29.000 So again huge numbers here. 0:17:29.440 --> 0:17:32.640 Three trillion in the next three years is the number 0:17:32.640 --> 0:17:35.280 that morgus Standing was estimating. It is eyewatering. A lot 0:17:35.280 --> 0:17:37.879 of it is US denominated. Just tell us where on 0:17:37.920 --> 0:17:41.080 the respectrum actually this lies. Is this what would be 0:17:41.080 --> 0:17:44.400 deemed investment grade debt? More broadly, because these companies are 0:17:44.680 --> 0:17:47.520 i mean washed with cash and very betterable against the 0:17:47.640 --> 0:17:50.400 many see the demand is there for these AI data centers. 0:17:51.119 --> 0:17:51.879 It's a good question. 0:17:52.000 --> 0:17:54.200 The vast majority of what we're seeing could translate into 0:17:54.280 --> 0:17:57.760 investment grade issuance, primarily because of the tenor so the 0:17:57.920 --> 0:18:00.280 maturities of these debt instruments are very very low long 0:18:00.680 --> 0:18:03.639 that allows companies and issuers to get an investment grade rating. 0:18:03.960 --> 0:18:06.440 And also they're back to against card assets, so you've 0:18:06.480 --> 0:18:07.639 got more collateral there. 0:18:07.920 --> 0:18:09.120 Should things go wrong. 0:18:08.880 --> 0:18:12.080 You've got more security to negotiate with. 0:18:13.200 --> 0:18:16.600 Banks, cut out private credit swoops in Pimco A big 0:18:16.640 --> 0:18:19.040 winner here, Bluemos, Laura Benitez, it has been great speaking 0:18:19.040 --> 0:18:22.000 to you, thank you. But elsewhere in AI, let's talk 0:18:22.000 --> 0:18:25.560 about regulation. Last year, California Governor Gavin Newsom, remember he 0:18:25.720 --> 0:18:28.800 vetoed an AI safety bill. The lawmakers actually pleased to 0:18:28.840 --> 0:18:32.040 take another swing at the regulation. Here's State Senator Scott 0:18:32.040 --> 0:18:33.679 Wiener speaking with us after the. 0:18:33.720 --> 0:18:38.280 Vetop California as the heartland of tech and. 0:18:38.240 --> 0:18:42.200 AI innovation, has a responsibility to lead on AI safety. 0:18:43.080 --> 0:18:46.160 Titus Wu. He covers California politics for Bluembag Industry Group, 0:18:46.200 --> 0:18:49.200 and you're joining us now because there are multiple AI 0:18:49.240 --> 0:18:52.600 in tech related bills in front of lawmakers and Sacramento. 0:18:52.880 --> 0:18:55.680 But I thought, this is exactly what the administration doesn't want, 0:18:55.800 --> 0:19:00.440 a patchwork effect, a state by state AI regulation future. 0:19:02.520 --> 0:19:05.119 I would say for thanks for having me on, but 0:19:05.119 --> 0:19:08.800 I would say that you know, Governor news doesn't necessarily 0:19:08.800 --> 0:19:12.000 say that he didn't want, you know, any air regulation 0:19:12.080 --> 0:19:15.720 whatsoever here in California. If anything, you know, in recent months, 0:19:15.760 --> 0:19:17.480 you know, given that you know, on the fairal level, 0:19:17.480 --> 0:19:22.560 we saw them try to implement a ten year moratorium 0:19:22.600 --> 0:19:24.760 on state IO laws. That you know, Newsom has tod 0:19:24.760 --> 0:19:29.280 that he's felt that California has to lead on AI regulation. 0:19:29.800 --> 0:19:34.919 The question is what is Newsome's preferred approach of regulating it, 0:19:34.960 --> 0:19:37.600 because clearly, you know last year was SP ten forty seven, 0:19:37.920 --> 0:19:41.239 that was not how he wanted to see it. And 0:19:41.359 --> 0:19:43.960 right now, you know, lawmakers they're trying again, and they're 0:19:44.000 --> 0:19:46.399 trying to suss out and read the teenies on us 0:19:46.440 --> 0:19:49.760 to what the governor wants what kind of regulation. What's 0:19:49.800 --> 0:19:52.560 the mill line in which the governor would say, okay, 0:19:52.600 --> 0:19:56.720 this supports innovation but also advances some sensible regulation. 0:19:57.240 --> 0:20:00.760 So they're thinking about AI developers testing the tools against bias, 0:20:00.760 --> 0:20:03.920 for example, that's in the AB ten eighteen. This isn't 0:20:04.000 --> 0:20:07.879 just the only era of regulation that my OVERSEAI, right, 0:20:07.920 --> 0:20:10.800 we're also thinking about how big tech, in many ways 0:20:10.840 --> 0:20:13.800 is lobbying against what's SB fifty three. Can you took 0:20:13.840 --> 0:20:15.120 us through that one, Titus? 0:20:15.440 --> 0:20:18.480 Yes? So SB fifty three is basically center and Winner's 0:20:18.760 --> 0:20:22.119 kind of second attempt after his teen forty seven got vitailed. 0:20:22.760 --> 0:20:27.760 It's definitely a lot less i'd say, restrictive than ten 0:20:27.760 --> 0:20:32.080 forty seven. It focuses mostly on kind of disclosing safety 0:20:32.080 --> 0:20:34.840 and security prodcasts for AA developers. There's s a blow 0:20:34.880 --> 0:20:38.639 of protections the third party audits. You have to report 0:20:38.640 --> 0:20:42.000 a kind of safety instance to the state ag. So 0:20:42.080 --> 0:20:44.680 it's it's it's nothing not as intrusive as last years 0:20:44.680 --> 0:20:46.640 ten forty seven, and it's trying to pick up on 0:20:47.240 --> 0:20:50.920 some of the recommendations from this working group formed by 0:20:50.920 --> 0:20:53.679 this group of experts that the governor formed after his 0:20:53.800 --> 0:20:54.760 vetol last year. 0:20:55.040 --> 0:20:59.680 And very briefly worker rights against automated tools. That seems 0:20:59.680 --> 0:21:00.399 to we canes. 0:21:01.760 --> 0:21:05.360 Yes, definitely. You know, labor forces in California, the really 0:21:05.400 --> 0:21:08.760