Speaker 1: From Marhard.
Speaker 2: We're Innovation, Money and Power Collie in Silicon.
Speaker 1: Valley, NBN.
Speaker 3: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 4: I'm Caroline Heider Bloomberg's World head quarters in New York,
Speaker 4: and I met Ludlow in San Francisco.
Speaker 5: This is Bloombay Technology.
Speaker 4: Coming up after staying out of public view for years.
Speaker 6: Ali Baba founder Jack mart.
Speaker 4: He speaks out to his own employees, urging them to
Speaker 4: correct the company's course. We'll have more on the e
Speaker 4: commerce giants' plans to compete with rivals like PDD, and.
Speaker 7: We'll hear from Amazon Web Services CEO Adam Zelipski off
Speaker 7: the back of the company's Reinvent conference discussing AI, Nvidia,
Speaker 7: and a lot more.
Speaker 4: Plus Apple offers Gommen Sachs an exit ramp for its
Speaker 4: troubled card partnership. We'll bring you those details so much
Speaker 4: more throughout the hour. Let's just go to what this
Speaker 4: macro picture looks like. We're just looking through the bond market.
Speaker 4: We're looking at the impact on the tech sector. More broadly,
Speaker 4: Let's launches is with us senior portfolio manager over at
Speaker 4: Invesco and Well and the amount of run up that
Speaker 4: we've seen in tech stocks has been phenomenal for November,
Speaker 4: and we know how much it's led the benchmarks.
Speaker 6: Is this going to continue? From your perspective?
Speaker 8: Thank you Karen and Ed for having me. We think
Speaker 8: actually the global yield backdrop that you just highlighted is
Speaker 8: likely to stimulate a cyclical rebound into your end and
Speaker 8: into next year. As you alluded to, tech has been
Speaker 8: driven primarily by obviously a thematic focused artificial intelligence narrative
Speaker 8: and also supported by the declining global bond yields as
Speaker 8: of late. But what we think is really happening is
Speaker 8: that this declining bond yield will lead a cyclical rebound
Speaker 8: because it's primarily driven by a fall in inflation expectations
Speaker 8: and actual inflation, which will in our mind create a
Speaker 8: more supporting narrative for a soft lending and therefore allow
Speaker 8: market participants to believe again in a cyclical rebound in
Speaker 8: the cyclical sector. So we do think at tech as
Speaker 8: are performed because if its quality characteristics is defensive characteristics,
Speaker 8: it's higher duration characteristics. But now we do expect a
Speaker 8: rotation more to the sectors and styles that have been
Speaker 8: neglected and unloved such as smaller capitalizations and value oriented sectors.
Speaker 4: Is banks one of those? We're just looking at a
Speaker 4: banner at the moment. The FDIC coming out with its
Speaker 4: annual report and actually talking about how profit profits bank
Speaker 4: profits are dipping as they say ultimately that loans are
Speaker 4: the next pain point at the moment they're seeing, and
Speaker 4: most notably they're saying, the banking industry on this quarterly
Speaker 4: focus has got some unrealized losses that are increasing in
Speaker 4: the third quarter. So is it now the time to
Speaker 4: be getting into banks?
Speaker 8: I think you're alluding to a very important point. We
Speaker 8: have now just dealt for over a year of yield
Speaker 8: creve inversion, which we know creates a particularly challenging environment
Speaker 8: for financials. The yell cre is beginning to rest deepen,
Speaker 8: and if we do see rake cuts into next year,
Speaker 8: a powerful resteeping of the Yil curve would improve materially
Speaker 8: the four perspective on bank profits.
Speaker 2: So we do.
Speaker 8: Place financials and banks as part of the cyclical sector
Speaker 8: that is likely to benefit together with others if our
Speaker 8: thesis of a cyclical rebound and resteeping of the yell
Speaker 8: curve does play out.
Speaker 7: Let's see you take this kind of worldview from a
Speaker 7: capital allocation standpoint, right, you are kind of more heavily
Speaker 7: weighted toward equities. But the world of technology is big.
Speaker 7: We just talked about China, We're increasingly talking about Europe.
Speaker 7: How do you guys feel about tech in the United
Speaker 7: States visa v Europe and parts of Asia.
Speaker 8: Well, tech the clearest the expression from a global standpoint
Speaker 8: of the tech theme or that quality theme that comes
Speaker 8: with a large profit margins, large return on assets. It's
Speaker 8: really a United States theme. When you go outside of
Speaker 8: the United States, there is more smaller capitalizations companies that
Speaker 8: are likely to benefit more from that cyclical rebound. But
Speaker 8: it's really there is a bit of a polarization happening
Speaker 8: in the structure of capital markets, as you allude to,
Speaker 8: where being overweigh the United States relative to the rest
Speaker 8: of the world basically means being overweight tech relative to
Speaker 8: value relative to CIICL. Course, they are two manifestations of
Speaker 8: the same risk and return profile.
Speaker 7: Sometimes looking a little deeper tells a slightly different story. Right,
Speaker 7: If you think about the S and P five hundred,
Speaker 7: communications or information technology both up fifty percent year today,
Speaker 7: but a lot of that attributable to the Magnificent seven.
Speaker 7: You know, think about Microsoft and Apple achieve giving record
Speaker 7: highs multiple times this year. How do you feel about that?
Speaker 7: What does that tell you about the dynamic of this market.
Speaker 8: It's reminiscent of many situations we've seen before where the
Speaker 8: tech sector in particular is very prone to boost them
Speaker 8: bus cycles by the very nature of where its return
Speaker 8: expectations coming from. Right, these are growth stocks with that
Speaker 8: tend to overreact to extrapolation of growth expectations. We have
Speaker 8: seen a meaningful run up in the last six months,
Speaker 8: and the decomposition of market returns that you just alluded
Speaker 8: to clearly does not reflect the performance of the US economy.
Speaker 8: Right The S and P five hundred, driven predominantly by
Speaker 8: the disproportionate tech relative to other sectors, is not representative
Speaker 8: of US economic performances represented of the tech sector, the
Speaker 8: dynamics for the market going forward, We believe that there
Speaker 8: needs to be a rebalance from those Magnificent seven and
Speaker 8: rebalancing where there's more participation, wider leadership rather than narrow
Speaker 8: leadership across sectors and industries that should be more reflective
Speaker 8: of the outperformance that we do see for the global
Speaker 8: economy and the recovery that we do see for the
Speaker 8: US economy. So the positive news is that despite a
Speaker 8: P five hundred being up twenty percent of the day,
Speaker 8: we believe that that is not reflective of a cyclical
Speaker 8: rebound that we see in the cards, and that cyclical
Speaker 8: rebounds still has plenty of room to be priced in
Speaker 8: through a rotation within smaller capitalizations, more cyclical sectors, and
Speaker 8: value oriented companies within the equity market.
Speaker 4: Talking about this real orientation, it's interesting, colleague John Author's
Speaker 4: was writing about if you still believe in a run
Speaker 4: up in overall technology but not the magnificent seven, the
Speaker 4: way to play that is equal weighted benchmarks rather than
Speaker 4: going for those ones that take into account the actual
Speaker 4: overall market capitalization these behemoths.
Speaker 6: Is that something that you're seeing plaid a little bit more.
Speaker 4: Is there other ways that you can still remain exposed
Speaker 4: to technology but tactically be more long some of the
Speaker 4: areas that have been beaten off of late No.
Speaker 8: I think that's very well said, and it hits the
Speaker 8: nail in the head if you if you look at
Speaker 8: equally weighted type of strategies within within tech relative to
Speaker 8: the market. What they will deliver is is a smaller
Speaker 8: capitalization bias and a more value orientation. So also when
Speaker 8: you look at the breakdown of large cup growth versus
Speaker 8: mid cup growth and small cup growth, you can clearly
Speaker 8: see that smaller capitalization effect. So I think it's it's
Speaker 8: for for a portfolio manager, for a portfolio strategy that
Speaker 8: want that needs to have, and wants to retain a
Speaker 8: dedicated technology exposure. Rebalancing within that strategy towards smaller capitalization
Speaker 8: and cheaper evaluations is the way to maintain that exposure
Speaker 8: and participate to that broadening of the seclical rebound.
Speaker 7: Alessia the longest of Investco just a deep, smart take
Speaker 7: on the technology sector.
Speaker 5: Thank you.
Speaker 4: Ali Baba founder Jack ma is actually speaking out two
Speaker 4: employees at the company and an internal message urging Ali
Speaker 4: Baba to quote correct its course.
Speaker 6: We wanted to get into what all of this means.
Speaker 4: Want to bring in blombergs, Henry Ren and Isabel Lee
Speaker 4: and Isabelle I start with you because is this a
Speaker 4: rallying cry? Is this sort of in any way a
Speaker 4: negative impact? I mean, what does this do to morale
Speaker 4: when he's bigging up competitors saying that there's an opportunity
Speaker 4: in AI. Is he meant to be sort of helping
Speaker 4: with morale or detracting from it.
Speaker 9: So this is really interesting and had shocked a lot
Speaker 9: of investors because remember in twenty twenty, jackmar largely stepped
Speaker 9: away from public eye when he criticized Chinese regulators, so
Speaker 9: many articles were like where is Jack ma? And today
Speaker 9: he makes a comment. And there are three things to
Speaker 9: look at this. I think first there is the fact
Speaker 9: that you can't because to your point, I think it
Speaker 9: meant was meant to encourage troops. But then we have
Speaker 9: analysts saying that it perhaps may have been the opposite
Speaker 9: and deflated them, because why are you commenting? And the
Speaker 9: second is where and he did it in a forum
Speaker 9: he and the message is also interesting because he praised PDD,
Speaker 9: his rival which has grown, which has gone to be
Speaker 9: a formidable competitor in recent years, and he said Ali
Speaker 9: Baba needs to course correct.
Speaker 6: So that's second. And the third is the timing because this.
Speaker 9: Comes shortly after PDD again reported blockbuster results, so I
Speaker 9: am not sure if it actually motivated folks, but it's
Speaker 9: really interesting the fact that he commented I would think.
Speaker 7: It is a surprise in and of itself that somebody
Speaker 7: who hasn't been operationally involved since twenty twenty comments at
Speaker 7: all and then calls out one of the biggest rivals
Speaker 7: saying the following about pinned wod Woe.
Speaker 5: But here's the story as I see it.
Speaker 7: Bring up the chart and show the performance on the
Speaker 7: ADRs at least of pinned wod Woe, the owner of
Speaker 7: Timu versus Ali Barba, And the chart speaks for itself, right, Henry,
Speaker 7: just explain to the audience, Henry the battleground between Ali
Speaker 7: Baba and Timu owned by Pindroid well on the e
Speaker 7: commerce side.
Speaker 10: Yeah, definitely, Just as Isabelle said, this come and come
Speaker 10: from a very interesting point of time. On one hand, you
Speaker 10: have the incumbent Ali Baba, which is struggling to gain
Speaker 10: ground in domestic market. It has its strategy change, it
Speaker 10: recently canceled the plan to spin off and list its
Speaker 10: cloud unit, but at the same time it's going through management.
Speaker 5: Reshuffle as well.
Speaker 10: And at the other side you have the challenger TEAMU
Speaker 10: and its owner pindor Door. So at the domestic market,
Speaker 10: pin doo Doo is gaining share rapidly aggressively by cost
Speaker 10: cutting and price cutting as well. And at the overseas playground,
Speaker 10: Pindo Door is winning share by its Team U super
Speaker 10: app and it's planning uh to roll out another ads
Speaker 10: during this Super Bowl mid time show as well. So
Speaker 10: which shows that the Pindodo is really gaining ground in
Speaker 10: the US mark in the UK and the other side
Speaker 10: of the market as well. So you see that from
Speaker 10: the two spectrum. You see on one hand Ali Baba
Speaker 10: is waning, but on the other hand, Pindo or the
Speaker 10: PDD is definitely gaining ground rapidly.
Speaker 4: Henry, I like that you dig into the restructuring and
Speaker 4: on again, off again sort of versions of it. BlueBag
Speaker 4: Intelligence put out a piece saying, actually, this cool out
Speaker 4: by Jack Mars seems to reaffirm that indeed the restructuring
Speaker 4: is still going to be upon us.
Speaker 6: What does it end up looking like, Henry?
Speaker 10: So remember Jack mauseeeded his control as CEO of Alibaba
Speaker 10: in twenty fourteen, and he barely entered the public appearance
Speaker 10: in the last two years due to the tech crackdown,
Speaker 10: and now he's re entering the public sphere. He's now
Speaker 10: commenting in the company's internal messaging board. There are lots
Speaker 10: of analysis about this, and mostly it's about it has
Speaker 10: been some time in this company's history that this company
Speaker 10: is run by some companies, some executives that doesn't have
Speaker 10: a close link with Jack Mal himself.
Speaker 5: But now Jack Mal.
Speaker 10: Re entering this public sphere might mean that Jack Mal
Speaker 10: might have more control of the company's strategy, more company's
Speaker 10: management as well.
Speaker 6: Just something that we will wait and see.
Speaker 7: There was a time where Ali Baba was going to
Speaker 7: be China's trillion dollar market cap company. It was going
Speaker 7: to be China's equivalent of the Silicon Valley darlings, Apple,
Speaker 7: et cetera. And a lot has happened this year. You know,
Speaker 7: there has been leadership shuffles. Isabelle I think it's worth
Speaker 7: reminding everyone who actually runs Ali Barba as it stands.
Speaker 6: It's exactly right.
Speaker 9: It's been a tough year for Ali Baba, a tough
Speaker 9: few years because Ali Baba's market cap is now around
Speaker 9: one ninety billion, and PDD has leap frog and it's
Speaker 9: now around one seventy billion, so that's not really a
Speaker 9: far cry anymore. And of course you still have ten
Speaker 9: cent leading. But the point is Ali Baba was going
Speaker 9: at a fast pace and now it's slowed, and I think,
Speaker 9: I don't want to put words into Jackma's mouth, of course,
Speaker 9: but shows that he's kind of really concerned about the
Speaker 9: direction of where Ali Baba is going, because it's one
Speaker 9: thing to slow, but another thing for all your arrivals
Speaker 9: to surpass you.
Speaker 6: So I think that's really key right now.
Speaker 9: And you know, Ma even this month hit the brakes
Speaker 9: on his plan to reduce his stick on Alibaba because
Speaker 9: the South price was not at a level that he's
Speaker 9: happy with. For now, Ali Baba is just a fraction
Speaker 9: of what it was in twenty twenty and is trading
Speaker 9: at the lowest level this year.
Speaker 7: Ed Yeah, and it's in negi ary year today, while
Speaker 7: Pindodo's up triple digits year today. Bloomberg's Henry Wren and
Speaker 7: Isabella Lee great team coverage on an important China story. Meanwhile,
Speaker 7: sticking with China, China's five Whye capital and early backer
Speaker 7: go Me is on track to surpass its target of
Speaker 7: raising seven hundred million dollars for a closely watched venture fund.
Speaker 5: It's a sign that investors.
Speaker 7: Are regaining confidence in the world's biggest Internet arena. The
Speaker 7: over subscribed US dollar fund has a hard cap of
Speaker 7: eight hundred million dollars and is sector close early next year.
Speaker 7: That's according to Bloomberg's sources CARC.
Speaker 4: Now let's just move our attention towards the world of
Speaker 4: crypto for a moment. And because Finance is appointed a
Speaker 4: new CEO after it's four point three billion dollars settlement
Speaker 4: with the US Department of Justice that force the co
Speaker 4: founder CZ to step down. Now bloemgs Funsten like I
Speaker 4: sat down with Richard Tang earlier to discuss his vision
Speaker 4: for the company.
Speaker 6: Is the new CEO.
Speaker 11: The US resolution with the US agencies are very important,
Speaker 11: right there are historical issues on compliance, registration and sanctions,
Speaker 11: and with the resolution, we move on to a new chapter,
Speaker 11: moving past a very challenging period of our corporate history.
Speaker 11: So going forward, we will continue to focus on things
Speaker 11: like user growth. On that front, I need to stress
Speaker 11: the user SX are back one to one. Users can
Speaker 11: withdraw one hundred percent of their SS at any point in time.
Speaker 11: We continue to force focus on user need. At the
Speaker 11: same time, we did make some mistakes along the way.
Speaker 11: We acknowledge those. It's important for us as a financial
Speaker 11: institution to do so, and we learn from the and
Speaker 11: we continue to build in the journey right on things
Speaker 11: like I think you're going to ask who as our
Speaker 11: working quarters. We'll make those disclosures and do class right
Speaker 11: as part of the resolution. There are certain things that
Speaker 11: we were put in place that we are complete to
Speaker 11: do so, including board of directors. But those announcements will
Speaker 11: be coming soon, so watch that space.
Speaker 12: Yeah, but Richard, can you already just give us a
Speaker 12: sense of what people want? So if they want a
Speaker 12: more normal structure with headquarters that was problematic in the
Speaker 12: past because there was no one single place, how fast
Speaker 12: do you think that will be done?
Speaker 6: And then I'll also ask you.
Speaker 12: About the board of directors because I guess that's what
Speaker 12: people are asking for. It's like, what kind of framework
Speaker 12: will Binance have.
Speaker 11: We com back to the past where the industry is
Speaker 11: ran naiscent. If you look at today, the direction of
Speaker 11: travel is very clear. There's going to be much more
Speaker 11: regulations for the crypto industry, even though only wanted of
Speaker 11: global regulators are regulating this space. But the direction of
Speaker 11: travel is very very clear.
Speaker 5: Right.
Speaker 11: So along with that, along with the maturing of both
Speaker 11: industry as well as to copy it ourselves. All these
Speaker 11: things will be put in place. As I mentioned again,
Speaker 11: a bot of directors will be instituted. It's on very
Speaker 11: robuth timeline. Same for things like the questions did you asked?
Speaker 11: And we will make those annoscement coasts so you can
Speaker 11: disclose it at this point in.
Speaker 4: That it's today's big Take, and we're taking a look
Speaker 4: at an issue that's been rising along with AI generated
Speaker 4: content coming closer and closer to real images. We bring
Speaker 4: you exclusive reporting from Bluebog Business Week focusing on a
Speaker 4: group of deep fake pornography victims and how they actually
Speaker 4: banded together they fought back despite the absence of federal
Speaker 4: laws to protect them. Bloomberg's Olivia Carvill joins us now
Speaker 4: one of the key reporters on this, and it all
Speaker 4: goes back to New Year's Eve twenty twenty, when a
Speaker 4: text came through to one of these particular women in
Speaker 4: Long Island who've managed to now well find feel there
Speaker 4: were perhaps victims and fought back and the ending up
Speaker 4: sort of winning out here.
Speaker 6: Yeah, that's right.
Speaker 13: I mean, this is a story of female empowerment in
Speaker 13: this new era of generative AI that we all live in.
Speaker 13: This technology is both terrifying but also exciting, and I
Speaker 13: think we wanted with this story to highlight some of
Speaker 13: those potential harms and that's what led us to leave
Speaker 13: it Town.
Speaker 5: Long Island, Olivia.
Speaker 7: In allgad Big Takes, there is a case study or
Speaker 7: case studies and a narrative around the broader story. But
Speaker 7: what it highlights is a lack of legal protection, a
Speaker 7: deficit in the law.
Speaker 5: Just explain that side to us.
Speaker 13: When you look across the country, there is just a
Speaker 13: patchwork of laws focusing on deep fakes at the moment.
Speaker 13: The story is really symbolic of the fact that there
Speaker 13: are no very strong laws to target deep fake content
Speaker 13: right now in the US, there is no federal law
Speaker 13: against creating fake pornographic con tent online and with this
Speaker 13: rise of generative AI, that puts us in a very
Speaker 13: scary place. So what we did for this story is
Speaker 13: we analyzed some of the statutes that have been put
Speaker 13: in place across the country and found this patchwork of
Speaker 13: civil cases. Some of the statutes are criminal, some only
Speaker 13: target election related content, and some are just amendments to
Speaker 13: revenge porn laws. What this means is that there is
Speaker 13: very little recourse for victims of deep fake pornography today.
Speaker 4: It's an extremely graphic Internet address which was where they
Speaker 4: found the content that was faked for seeing me of
Speaker 4: themselves young girls in school, and I'm interested as also.
Speaker 4: You also go to New Zealand for the story and
Speaker 4: a legal entanglement that's happening over there. Is this an
Speaker 4: issue in the US alone or is this a global
Speaker 4: issue of regulation trying to keep up with now generative
Speaker 4: AI pushing out what are incredibly realistic photos that aren't photos.
Speaker 13: This is definitely a global issue. We're seeing cases across
Speaker 13: the country. As we were studying this particular website, we
Speaker 13: saw examples of deep fake pornography of women from countries
Speaker 13: all over the world.
Speaker 6: This isn't just a US problem.
Speaker 13: But this case in Levittown is the first real example
Speaker 13: of a deep fake related conviction where we could highlight
Speaker 13: in the story how prosecutors and the police really tried
Speaker 13: to file charges against the young man who was behind
Speaker 13: this content, but ultimately failed to do so because there
Speaker 13: are no laws to protect victims of deep fake pornography here.
Speaker 13: So I feel as though this story this narrative, and
Speaker 13: you're right, it crosses from Levittown all the way to
Speaker 13: New Zealand is symbolic of a much broader problem.
Speaker 7: Bloomberg's Olivia carvill with the big take, terrific reporting, Thank you.
Speaker 7: Another big story coming out of Apple reportedly taking steps
Speaker 7: to pull the plug on a credit card partnership with
Speaker 7: Goldman the details. Next, this is Bloomberg Technology. Welcome back
Speaker 7: to Bloomberg Technology, Ed love O here in San Francisco.
Speaker 4: I'm Caroline hired in New York. Let's get a check
Speaker 4: in on these markets. But I'm looking at what's happening
Speaker 4: in the world of Golden Dragon and China Index.
Speaker 6: Then now's that Golden Dragon.
Speaker 4: This is what, of course is the Chinese names traded
Speaker 4: here over the United States ADRs and actually under pressure
Speaker 4: after we saw mayit one's numbers showing a lack of resiliency.
Speaker 4: Was so worried about a Chinese consumer and Andy Dali
Speaker 4: Barber Jack mar coming back to speak out and say
Speaker 4: you need to take on PDD, which actually did incredibly
Speaker 4: well in its numbers. We're looking at what's happening in
Speaker 4: HPE as well. It came out with its numbers yesterday
Speaker 4: after the bell We're seeing a rebound up seven percent.
Speaker 6: Why, well, it's not at server business, that's the sure.
Speaker 4: It's all about its resiliency in artificial intelligence that manages
Speaker 4: to buoy this stock. And I'm interested in the AI
Speaker 4: read across when it comes to Amazon as well. Ed
Speaker 4: we're looking at just off by about four tens percent
Speaker 4: on Amazon, but they had been doing well earlier on
Speaker 4: the day as we saw reinvent. Of course, that annual
Speaker 4: gathering of its customers really managing to paint a position
Speaker 4: of well combative and competitive nature that Amazon's coming at
Speaker 4: this when it comes with its chips, of course, that
Speaker 4: it is making and managing to make general to AI
Speaker 4: part of the corporate lexicon.
Speaker 6: Two.
Speaker 7: I think combative is correct. Competitive is what they'd say.
Speaker 7: Amazon Web Services did kick off its giant annual conference
Speaker 7: in Las Vegas yesterday, the new announcement updated versions of
Speaker 7: its in house Silicon and expansion of a partnership with Nvidia.
Speaker 7: I caught up with AWS CEO Adam Selipski, have a listen, well, I.
Speaker 2: Think our strategy has been very consistent. It is to
Speaker 2: provide choice and powerful options at all layers of the stack.
Speaker 2: So down at the infrastructure layer of what you need
Speaker 2: to do generative AI really well. As you mentioned, we
Speaker 2: both have been investing in our own silicon and then
Speaker 2: we have had a long standing, wonderful relationship with Nvidia.
Speaker 2: We've been the first to bring pretty much every significant
Speaker 2: in Nvidia chip to the cloud, including their latest H
Speaker 2: one hundred this past summer, and I was really excited
Speaker 2: to have their CEO, Jensen Holong on stage with me
Speaker 2: this morning talking about an expansion of the partnership with
Speaker 2: AWS bringing their DJX cloud to AWS, and Nvidia itself
Speaker 2: is going to be standing up a huge supercomputer of
Speaker 2: a cloud for their own internal R and D on AWS.
Speaker 2: So it's a fantastic expansion of what's really a great
Speaker 2: relationship that benefits our mutual customers, Adam.
Speaker 7: And they still supply constraints around in video GPUs.
Speaker 2: Well, they're very popular, and I think it is still
Speaker 2: remains true that there's probably more people who want to
Speaker 2: get their hands on them than actually can, which is
Speaker 2: one of the reasons why we also announced this concept
Speaker 2: of clusters BC two for chips and so that you
Speaker 2: can actually go down reserve up to hundreds of GPUs
Speaker 2: for your short term generative AI needs for things like
Speaker 2: training models, which can tend to apisotic, and there's really
Speaker 2: nobody else out there offering anything like that kind of service.
Speaker 7: Given that's the case, if you had to shift any
Speaker 7: customers to Trainium because of the limited supply of in
Speaker 7: video GPUs, Yeah.
Speaker 2: It's really not about shifting. It's really about customers need
Speaker 2: different Different customers need different things. The same customer needs
Speaker 2: different things for different use cases and awos for this
Speaker 2: over seventeen years we've been doing this has been all
Speaker 2: about choice, all about democratization, all about putting tools in
Speaker 2: the hands of our customers so that they can make
Speaker 2: the choices about what we need. And so we're also
Speaker 2: excited that we announced the second generation of our training
Speaker 2: specific chip for training gener VII workloads, and that is
Speaker 2: Trainium too, and that's going to have up to four
Speaker 2: times the compute performance of the first generation of Trainium.
Speaker 2: We of course, have been investing in our own custom
Speaker 2: silicon for years. We also today announce that we're shipping
Speaker 2: the preview of our fourth generation of general purpose chip,
Speaker 2: Graviton four. I happen to have one with me right here.
Speaker 2: This is a Graviton forward ship. We're not talking about
Speaker 2: it we're not showing slides on it. It's not future
Speaker 2: looking like a lot of other cloud providers. Yeah, it
Speaker 2: is shipping today and again our fourth generation, the power
Speaker 2: is incredible, the price performance is going to be incredibly attractive,
Speaker 2: and our chips also have incredible energy efficiency benefits, which
Speaker 2: is really really important to our customers these days.
Speaker 7: A bit of shade being thrown their carro We also
Speaker 7: finally got a chatbot from Amazon.
Speaker 5: It's called Q. Any idea why it's called Q?
Speaker 6: Please tell me it's something to do with the British
Speaker 6: Secret Service.
Speaker 5: It is not. I did post that on X it
Speaker 5: is not. Q stands for question. Oh that's it. That
Speaker 5: was the rationale from the Star Trek's inside Amazon. That's it.
Speaker 6: Oh, well, gotta love it. Chatbots taking over the world.
Speaker 4: Meanwhile, well, let's talk about whether or not Apple's focus
Speaker 4: on fintech has been taking over the world or not,
Speaker 4: because it's actually taking steps towards running down as credit
Speaker 4: card deal with Goldman Sachs. So's to say, Apple recently
Speaker 4: sent a term sheet to well, perhaps a different institution
Speaker 4: which has been trying to ultimately see a pullback from
Speaker 4: a credit card business for Goldman Sacks. At the same time,
Speaker 4: let's get more contact on Blue Magnus Wall Street reporter
Speaker 4: Shanani Bassack.
Speaker 6: We mosto got Blue Magnuze chief.
Speaker 4: Correspondent Mark German, And Mark, let's start with you on
Speaker 4: the Apple Goldman relationship, because well, it hasn't been as
Speaker 4: positive as both would have liked.
Speaker 14: Feels like, Yeah, the Apple and Goldman Sax relationship has
Speaker 14: been rocky from the beginning the Apple cards development, everything
Speaker 14: that had to be done on both the Apple side
Speaker 14: and the Goldman side. Really it was a rocky development process.
Speaker 14: It was two companies getting into a new game together
Speaker 14: right for the first time. A lot of back end
Speaker 14: changes had to be created both at Apple and Golden Sacks.
Speaker 14: You had two companies run by people with big personalities,
Speaker 14: with ends with different backgrounds coming together to build.
Speaker 1: Something, right.
Speaker 14: That's what a partnership is. But when you have two
Speaker 14: really intense companies, two intense groups of people, opinionated groups
Speaker 14: of people who believe they're doing it best, sometimes that
Speaker 14: could come to a head.
Speaker 6: Right, And what you've.
Speaker 14: Seen is you've seen pretty good consumer reception to the
Speaker 14: Apple Card and the other fintech products from Apple over
Speaker 14: the past few years. But what you've also seen are
Speaker 14: some struggles Goldman in particular. This has been a multi
Speaker 14: hundred million dollar, if not multi billion dollar loss and
Speaker 14: proposition for Goldman Sacks, and so their skin in the
Speaker 14: game has been little more than a branding exercise. As
Speaker 14: we've written several times, and I'm sure a Shanali can
Speaker 14: talk about, Goldman has been pulling back from consumer businesses.
Speaker 14: They've pulled back on other credit cards and such, and
Speaker 14: Apple needs to sort of save face here. They need
Speaker 14: to have a strong partner in the credit card game.
Speaker 14: And being with a company that has been publicly one
Speaker 14: foot out the door, maybe one and a half feet
Speaker 14: out the door, maybe even two feet out the door,
Speaker 14: you know, that really doesn't serve Apple well long term.
Speaker 14: So with done is they sent a proposal to Goldman
Speaker 14: Sacks to get out of this partnership. This is being
Speaker 14: able to get out in about two three years from
Speaker 14: now versus when the deal's supposed to end in twenty
Speaker 14: twenty nine. So I don't know if that means Goldman
Speaker 14: has to make some sort of public acknowledgement about exiting.
Speaker 14: I don't know if Goldman has to pay a certain amount.
Speaker 14: I don't know if Apple has to reduce its payments
Speaker 14: to Goldman, but they've sent a proposal to Goldman to
Speaker 14: let Goldman walk about five years early from this partnership,
Speaker 14: while Apple can go ahead and look for someone else
Speaker 14: to replace them.
Speaker 5: Snarali.
Speaker 7: We can get into Apple's position long term on a
Speaker 7: car because it looks like the Apple side of the cart.
Speaker 5: Ain't going anywhere.
Speaker 7: But there's been an emission from Goldman that they just
Speaker 7: moved too quickly, too early, They made mistakes with the product.
Speaker 7: Some of the data around the deposits is really good.
Speaker 7: Where are they coming at this from from Goldman Sachs side.
Speaker 15: Yeah, you have to look at it across product lines,
Speaker 15: because I think that's an important part here. On one hand,
Speaker 15: Goldman likes to pull in deposits those market markets. Deposit
Speaker 15: rates are still quite high and for a bank, that
Speaker 15: extra consumer deposit base helps lower the cost of funding
Speaker 15: for a bank. But the credit card business here, where
Speaker 15: they had struck deals with GM major clients Apple, you
Speaker 15: have them starting to step back from that business and
Speaker 15: it is really kind of the last major piece of
Speaker 15: the consumer strategy that they're trying to exit from. So
Speaker 15: what have they already gotten out of they have looked
Speaker 15: to sell Green Sky already United Capital. These are things
Speaker 15: that have brought them deeper into the wealth business. They
Speaker 15: had scrapped that idea of larger sets of accounts for
Speaker 15: different clients as well. But the green Sky was the
Speaker 15: home installment loan business, of course, So where does that
Speaker 15: leave them. It leaves them with all these card deals
Speaker 15: and Apple is you know this, by the way, for
Speaker 15: Goldman could have been a problem that could have lasted
Speaker 15: them years. And when it comes to the Apple card
Speaker 15: in particular, one major problem ed it was the servicing
Speaker 15: of these clients as well as the loss rates, because
Speaker 15: the idea here that Apple wanted more of their clients
Speaker 15: to be able to get credit through these cards, and
Speaker 15: so they pushed for that to happen. And now you
Speaker 15: had Goldman stuck with those loss rates, really bringing down
Speaker 15: the profit of the business overall. Now, according to the
Speaker 15: Wall Street Journal, some of the potential people that could
Speaker 15: take on these this card business alongside Apple could include
Speaker 15: American Express, could include Synchrony. But some of the issues
Speaker 15: I've outlined for you over there at Goldman would still
Speaker 15: hold true for them as well.
Speaker 7: All right, Bloombos Mark German and Shanalie Bassett. We did
Speaker 7: show Apple's comment on the story. There they seem committed
Speaker 7: Caro to a card in the first instance and long term.
Speaker 4: Well from fintech to where you'd be spending your money.
Speaker 4: And perhaps it's not the movies to go and see.
Speaker 4: Wish it would seem because Disney's newest.
Speaker 6: Auni Maintor musical is being marked as a box office dud,
Speaker 6: delivering just half.
Speaker 4: Of its expected ticket sales over the Thanksgiving weekend. Now,
Speaker 4: Disney Studio executives, they've got to assess or went wrong,
Speaker 4: Like it's been a year where we've seen strong female
Speaker 4: leads win big in the box office, Think Barbie, think
Speaker 4: Taylor Swift. But wish it's flopping And maybe it's the
Speaker 4: son of the times. Maybe these classic fairy tale princess
Speaker 4: stories aren't as appealing as they were once or as
Speaker 4: the mother of a daughter who's obsessed with princesses for
Speaker 4: my sins, maybe it's bit scary.
Speaker 6: I don't know, but for now it's a flop.
Speaker 4: Coming up, we'll take the pulse of the European VC
Speaker 4: and tech industry. OX co founder Michael Johnson's joining us
Speaker 4: on a big raise in the second fund.
Speaker 7: Stability AI has explored selling the company, with management facing
Speaker 7: increased pressure from investors over its financial position. That all,
Speaker 7: according to Bloomberg's sources, a deal is not imminent and
Speaker 7: the company could of course cut the process short without selling.
Speaker 7: Let's bring in Bloomberg's Rachel Metz, who broke this one.
Speaker 7: We've been chasing what's going on inside Stability for a
Speaker 7: little while. Looks like there's a for sale sign in
Speaker 7: the digital window and IMAD is under pressure.
Speaker 5: What have you learned?
Speaker 6: Yeah, so we.
Speaker 16: Have learned that one of the company's key investors, CO two,
Speaker 16: sent a letter to the company in October asking pressure
Speaker 16: pressure you had to step down, asking questions about the
Speaker 16: company's financial status, how much certain people were being paid,
Speaker 16: things like that. And there's also been this is putting
Speaker 16: pressure on the company to see if it can find
Speaker 16: a buyer for itself. It at this point doesn't have
Speaker 16: a ton of cash, so it's been reaching out to
Speaker 16: a few companies. We've learned it's reached out to cohere Jasper.
Speaker 16: Those are two of the companies that we know for
Speaker 16: sure that it's been reaching out to. But those companies,
Speaker 16: as far as we know are not interested.
Speaker 4: Meanwhile, spose people for the company's stability fight back and
Speaker 4: say no, it's not not for sale, and actually investors
Speaker 4: believe in leadership.
Speaker 6: Do you buy that?
Speaker 16: I mean, I think these things are always complicated and
Speaker 16: it it it could be sort of both ways at once. Right,
Speaker 16: they have plenty of investors, uh, but it is certainly
Speaker 16: clear that some of its key investors are not happy
Speaker 16: with the direction that the company has been going in.
Speaker 4: For sure, Mets as always brilliant reporting. We thank you
Speaker 4: for keeping us up to date with perhaps what's thought of.
Speaker 6: Is AI hype.
Speaker 4: We're going to move away from that for a moment
Speaker 4: because one firm is going anti hype, but it's continuing
Speaker 4: to double down investments in the SaaS space. Ox just
Speaker 4: announce the close of their second fund with one hundred
Speaker 4: ninety million dollars to grow European software startups. US co
Speaker 4: founder and general partner Michael Johnson is joining us now.
Speaker 4: And you have a focus on European software as a service,
Speaker 4: but can that still be AI leveraged, generative AI applied.
Speaker 6: If you're saying you're anti hype at this.
Speaker 17: Moment, A good afternoon, Caroline, Yes, very much. So I mean,
Speaker 17: we are not specifically looking to make AI investments as
Speaker 17: a sector bed per se, but we do think that
Speaker 17: AI is providing a foundational new wave of innovation that
Speaker 17: will underpin all of software, you know, for the next
Speaker 17: ten to twenty years.
Speaker 5: So very much so, yes, okay, I've been excited to
Speaker 5: have you on the show.
Speaker 7: I think it's like a good time to define again
Speaker 7: what is SaaS right, Software as a service. To most people,
Speaker 7: it just means a piece of software or an app
Speaker 7: you can use over the Internet, and in many cases
Speaker 7: that ain't complicated. So is that your definition in terms
Speaker 7: of what you're looking for in a portfolio company.
Speaker 17: I think there's a couple of things to think about.
Speaker 17: There's the underlying infrastructure, and then there's the business model.
Speaker 17: So the infrastructure usually that is associated with SaaS is
Speaker 17: cloud infrastructure, so you have elastic scalability and you have
Speaker 17: multi tenant hosting. Now, SaaS as a business model can
Speaker 17: actually work on a lot of different situations as well,
Speaker 17: and it could be a piece of software that it's
Speaker 17: in a data center, or it could be a shared service,
Speaker 17: or it could be a true multi tenant cloud service.
Speaker 17: I think what is also important for SAS is that
Speaker 17: what used to be SaaS was a traditional subscription for
Speaker 17: a monthly or an annual fee. We're seeing way more
Speaker 17: sophisticated pricing models, which are you the capacity based or
Speaker 17: value based and what have you. So it's evolving continuously,
Speaker 17: but at the core of it, it's about buying software
Speaker 17: on a subscription basis rather than buying a perpetual license.
Speaker 4: You brought back some key LPs British patient Capital, some
Speaker 4: investor example, you brought on some new what is it
Speaker 4: that they like about European VC investing At the moment.
Speaker 17: We're obviously really happy to raise the fund despite these
Speaker 17: very challenging backdrop macroeconomically for a venture as an acid
Speaker 17: class and for you know, venture back growth companies in general.
Speaker 17: I think our model is focused on long term creation
Speaker 17: and avoiding hype cycles, and that has resonated really well
Speaker 17: with both returning and new investors, specifically as it relates
Speaker 17: to Europe and you know, investing into software in Europe.
Speaker 17: There's you know, a sort of coming of age where
Speaker 17: a lot of people are recognizing that the factors that
Speaker 17: have historically favored perhaps much more US companies are you know,
Speaker 17: not as important today when it comes to the availability
Speaker 17: of talent, when it comes to the availability of actually
Speaker 17: dealing with distribution, and in terms of how to thinking
Speaker 17: about scaling commercially, even if you start out in Europe
Speaker 17: with an ambition to have a globally leading company.
Speaker 7: OX co founder general partner Michaelson, thank you so much
Speaker 7: for joining us on the.
Speaker 5: Show here on Bloomberg Technology.
Speaker 3: The great thing about this technology, which it's hard to
Speaker 3: believe is just going on to the year anniversary, it
Speaker 3: seems like it's been here much longer and the pace
Speaker 3: has been incredible, is the fact that you can actually
Speaker 3: put it in the hands of business people.
Speaker 6: And I think that.
Speaker 3: Above all else has really unlocked the ability for people
Speaker 3: to really like imagine how this can be used in
Speaker 3: their businesses.
Speaker 4: A little bit earlier, as I say, with Jp Morgan,
Speaker 4: chief Data and Analytics Officer, trees at Heights and Weather,
Speaker 4: and we want to discuss a little bit more about
Speaker 4: how AI is actually bringing in money, boosting revenue being
Speaker 4: commercially viable at the moment within not just finance, but
Speaker 4: across the board. Nicolo de Massi is Chairman of the
Speaker 4: Futureom Group and you sit on a number of boards
Speaker 4: you were once named Aspat King will delve into that
Speaker 4: in a moment, but I'm interested at the moment with
Speaker 4: ion Q, for example, quantum computing company, how are you
Speaker 4: seeing the commercialization opportunities of generative AI within the companies
Speaker 4: that you help well oversee?
Speaker 18: Yeah, I mean, look, it's coming faster and it's closer
Speaker 18: than everyone thought. When you're talking about quantum machine learning
Speaker 18: and quantum computing intersecting with artificial intelligence and machine vision,
Speaker 18: you know you're seeing it across frankly, every sector, right
Speaker 18: from drug discovery to making next generation batteries, to the.
Speaker 1: Gaming industry to even businesses like.
Speaker 18: The future from group that are taking advantage of a
Speaker 18: across their own market research and advisory.
Speaker 1: I think quantum.
Speaker 18: Advantage is going to happen sooner than people think, and
Speaker 18: it's going to surprise a lot of people. I think
Speaker 18: you're going to see quantum supremacy also come earlier than
Speaker 18: people think in a number of application areas in the
Speaker 18: next few years. And I've been excited to watch the
Speaker 18: breadth of my portfolio have an early lead in their
Speaker 18: respective segments. Right I'm quite proud of the fact that
Speaker 18: we invested early on every board I'm on every company
Speaker 18: I'm involved with, and they really are leaders in the
Speaker 18: respective areas, increasingly partnering with cloud players Amazon, Microsoft, Google,
Speaker 18: hyperscalers and a lot of what I see a lot
Speaker 18: of is the strong partnering with the strong, right, whether
Speaker 18: that's in video with Amazon, im Q with Amazon, Microsoft, Google,
Speaker 18: and I feel like the strongest companies in AI are
Speaker 18: actually entrenching their leads right now.
Speaker 7: Hey, Nikola, real quick though, lots of emphasis on the
Speaker 7: top line revenue, right, people making money, But the and
Speaker 7: learned has been the compute costs astronomical. How worried are
Speaker 7: you about sort of long term anyone actually making any
Speaker 7: profit from all of the R and D and the
Speaker 7: training and inference they're now doing well.
Speaker 18: Quantum computing is actually a solution to that, right in
Speaker 18: terms of energy usage per let's call it calculation or
Speaker 18: Colock tap.
Speaker 8: Right.
Speaker 18: If you look at imq's quantic computers, they're tiny, they
Speaker 18: don't use a lot of power compared to something that
Speaker 18: you know in National Lab.
Speaker 1: Is running, right, And so I'm actually quite bullish.
Speaker 18: That by twenty thirty, quantum AI through the cloud is
Speaker 18: going to change people's perspective on that question you just asked.
Speaker 1: But at the moment you're correct.
Speaker 18: There is a race on that no industry and no
Speaker 18: company can afford to lose. Right if you're a financial
Speaker 18: services firm, your trading arm is not going to make
Speaker 18: any money if you don't have the latest quantum computer
Speaker 18: and the latest AI helping your team. Same in drug discovery,
Speaker 18: same in defense and aerospace, same in cryptograph and so
Speaker 18: I think people right now, you know, have no choice,
Speaker 18: and that means the vendor supplier relationships, the kinds of
Speaker 18: companies the future and groups always advising are really front
Speaker 18: and center right now having to think through where they
Speaker 18: put their dollars to.
Speaker 1: Make sure they max it out, you know, quarter and
Speaker 1: quarter out.
Speaker 6: Sure, but very sweet.
Speaker 4: We thank you for your time, Nicolo de Massi, chairman
Speaker 4: of the Future Room Group. All things focused still on AI,
Speaker 4: of course, and that does it for this addition of
Speaker 4: Bloombo Technology ed.
Speaker 7: Check out the podcast wherever you get your podcasts from
Speaker 7: San Francisco, New York City.
Speaker 5: This is Bloombo Technology