Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
Speaker 1: from coast to coast with Caroline Hyde in New York
Speaker 1: and Vla low in sent Frances Go.
Speaker 2: This is Bloomberg Tech coming up. AMD shares sync after
Speaker 2: a sales forecast that underwhelms investors, the chip maker perhaps
Speaker 2: not making the aim roads some on Wall Street had
Speaker 2: hoped for.
Speaker 3: Plus, the sell off continues across tech markets as fears
Speaker 3: of AI disruption they take hold.
Speaker 4: Following Anthropics new automation model.
Speaker 2: And Bloomberg reports Nvidia is nearing a deal to invest
Speaker 2: twenty billion dollars in Open AI, with the AI company
Speaker 2: looking to raise up to one hundred billion dollars in
Speaker 2: its new funding round. AMD is ugly right now, the
Speaker 2: stockdown fifteen percent. It is on track for its biggest
Speaker 2: drop since October of twenty eight. That is how severe
Speaker 2: this selloff is. Let's get to the numbers. It's projecting
Speaker 2: sales in the period roughly nine point eight billion dollars
Speaker 2: plus or minus three hundred million dollars. That was above
Speaker 2: consensus estimates. But go into your Bloomberg terminal and you'll
Speaker 2: see at the high end of the ranger's forecast. Many
Speaker 2: expected sales to be ten billion dollars. Anyway, then there's
Speaker 2: the China issue. They had China revenues, but it weighed
Speaker 2: on Margins AMD's results. Let's react, Congensubanni, a Bloomberg Intelligence
Speaker 2: who in his React piece in his research you talk
Speaker 2: about the impact of China. Good. We recognize some revenues.
Speaker 2: It impacted Margins. You talk about the CPUGPU ramp that's
Speaker 2: not coming until the second half of the year. Take
Speaker 2: it from that.
Speaker 5: Yeah, I mean, fundamentally there was nothing wrong in this report.
Speaker 5: Is just when you take out the China revenue was
Speaker 5: a three ninety million and one hundred million for the guide.
Speaker 5: The beat magnitude was really modest, and that didn't hit
Speaker 5: at part of the lofty expectations.
Speaker 6: Again, most of this was known.
Speaker 5: So very surprised to see a stock reaction that we're
Speaker 5: seeing today.
Speaker 3: So the surprise what in terms of what enthusiasm had
Speaker 3: been baked in that shouldn't have been. How far had
Speaker 3: the market moved past already the bullish.
Speaker 4: Tone that we get time and time again from Lisa Su.
Speaker 5: Yeah, it's about it's about now waiting about the next
Speaker 5: GPU inflection point, which is which we knew is not
Speaker 5: going to happen in this quarter or next quarter.
Speaker 2: It is for second half twenty six.
Speaker 5: Remember, there has also been that noise in the market
Speaker 5: around it delays with their ramp of the four hundred
Speaker 5: and fifty series. None of this was shown in this report.
Speaker 5: I mean, we don't expect significant upside right now because
Speaker 5: most of their customers are really waiting to pick up
Speaker 5: that server revel Helios Raax.
Speaker 2: Solution which dollar terms right, sequential decline in revenues maybe,
Speaker 2: and no one wants to hear that, right, And we'll
Speaker 2: wait until the rest of the year. Second half the
Speaker 2: year can mean June, it can mean December. Who knows
Speaker 2: a big piece of M and A in your industry?
Speaker 2: Texas Instruments buying Silicon Lab seven point five billion dollars.
Speaker 2: What do we need to know about this in the
Speaker 2: analog space?
Speaker 5: Yeah, this is surprising. The last time they did a
Speaker 5: deal like this was in twenty eleven. Strategically this fits
Speaker 5: will they add a missing piece which was wireless connectivity
Speaker 5: in TI's portfolio. But more important the implications are financially.
Speaker 5: The key thing you'll remember here Texas Instrument states on
Speaker 5: free cash deliverability. So this management has said will not
Speaker 5: impact that free cash flow, will not impact that dividend,
Speaker 5: and they'll be able to absorb the capacity in the
Speaker 5: capex that they've spent over the last three to five years.
Speaker 2: Quinjinspani Bloomberg Intelligence and All Things Ship. We have breaking
Speaker 2: news on Sara Bras Cerebra Systems raising a one billion
Speaker 2: dollar Series H at a twenty three billion dollar valuation.
Speaker 2: This is a company that we've been tracking closely. Will
Speaker 2: they won't they IPO? Well, right now they're raising around
Speaker 2: a billion dollars at a premium valuation of twenty three
Speaker 2: billion dollars. We'll get more carr as we get that
Speaker 2: throughout this day and this week. There is plenty more
Speaker 2: news hit me with it.
Speaker 3: There is because those fears around AI just they're continuing
Speaker 3: to ripple through the markets.
Speaker 4: At the moment.
Speaker 3: Ed Anthropic it accelerated the sell off in software stocks
Speaker 3: after it rolled out that new AI automation tool. Namba
Speaker 3: Gequity supporter Carmen Ryanikey has been.
Speaker 4: Following this story. I mean the numbers are Goganshman.
Speaker 3: I think it's somewhere like two trillion dollars been wiped
Speaker 3: off that Gold and SAX Software index more broadly since
Speaker 3: its highes.
Speaker 4: But what can stop the rot right now? Because this
Speaker 4: has gone global? You know, that's such a great question.
Speaker 7: And we're really seeing such a broad sort of reaction
Speaker 7: to the software stop. I mean, we know that software
Speaker 7: has been beaten down. We're seeing more you know, sort
Speaker 7: of stocks kind of join in the fray off of
Speaker 7: this latest anthropic tool. But it's also kind of spreading
Speaker 7: into the hardware stocks. We're seeing in video down, you know,
Speaker 7: Google down. Interestingly, Microsoft is up a little bit today,
Speaker 7: sort of rebounding I think from a selloff from its
Speaker 7: earnings report, but it has spread even into the European
Speaker 7: markets and others as well, so it looks a little
Speaker 7: bit like a washout. I think I have heard investors
Speaker 7: start to say that maybe this is a place to
Speaker 7: start nibbling. You know, there could be really a rally
Speaker 7: if software sells off too much. You know, many stocks
Speaker 7: in the index are in over sold territory, so we
Speaker 7: could see you know, some rebound, some reinvigoration in that trade.
Speaker 7: I think investors are really just sort of thinking, is
Speaker 7: it worth trying to catch a falling knife?
Speaker 2: Colmin bring us some of the action of today Wednesday session,
Speaker 2: right because, like to be fair to our audience, this
Speaker 2: is a conversation we had yesterday. It is a multi
Speaker 2: day story that's playing out. What's new in the market
Speaker 2: this morning and what are we looking for next?
Speaker 7: Yeah, I think that there are multiple things going on here.
Speaker 7: So we're not only seeing you know, this pressure on software,
Speaker 7: but we've had a couple of few earnings reports that
Speaker 7: have stumbled that I think are adding. So Microsoft up
Speaker 7: a little bit today, but that report, you know, injected
Speaker 7: some jitters into the market.
Speaker 4: And also AMD as well.
Speaker 7: You know, it really showed that even if you have
Speaker 7: a pretty solid guidance, it might just not be enough
Speaker 7: for investors to continue to buy your stocks. So we're
Speaker 7: seeing that as well. And you know, coming up we
Speaker 7: have Google report or Alphabet reporting tonight, we have Amazon tomorrow.
Speaker 7: So there are just a lot of catalysts that are
Speaker 7: coming into the market right now that are shaking investors
Speaker 7: confidence in the sector.
Speaker 3: Of course, many pinpointed Anthropics legal offering, but we saw
Speaker 3: Google out with its gaming offering that had seen a
Speaker 3: lot of hit to some of the gaming software names.
Speaker 3: But I'm also interested in we're a public market identifying
Speaker 3: show right now, but private markets, in particular the debt markets,
Speaker 3: we're seeing them roiled as well, and it's impacting certain
Speaker 3: pea houses exactly.
Speaker 7: Yeah, So there's just been a major softfare as well. This,
Speaker 7: I mean, this idea of contagion I think is huge,
Speaker 7: right and you know, the pain here from software spreading
Speaker 7: into all these other parts, you know, not just equities,
Speaker 7: is really prescient right now. So until there's sort of
Speaker 7: this idea that there can be a rebound, I think
Speaker 7: it's it's likely that we see that continue to spread
Speaker 7: and investors sort of continue to question what's next for
Speaker 7: the sector, especially if AI is going to eat the
Speaker 7: lunch of these companies.
Speaker 2: And by the way, guys brace earnings is still happening, right, So,
Speaker 2: like there's all this news flow and there's market moves
Speaker 2: on on a sort of macro concern about AI labs
Speaker 2: eating the lunch of software companies. Alphabet's going to come
Speaker 2: out and it's going to tell us about how it's doing.
Speaker 2: I mean, how does that function into your week? Fit
Speaker 2: into your week? Sorry, calm and the earning story.
Speaker 7: I mean, they're going to be huge. I think the
Speaker 7: thing that we're looking at the most for Alphabet and
Speaker 7: Amazon are these cloud numbers. And that's going to be
Speaker 7: really important because that's where we saw Microsoft stumble. So
Speaker 7: that's what I'm going to be really laser focused on
Speaker 7: to see. I mean, obviously all of these businesses are different,
Speaker 7: there are other components at play with both Alphabet and
Speaker 7: Microsoft or sorry hands Amazon, but you know the cloud
Speaker 7: figure is going to be absolutely the most important thing
Speaker 7: and could really move these stocks in either direction going forward.
Speaker 2: Bluomo's come rhinicky all over the software space. Thank you
Speaker 2: very much. Earnings again, shares of Uber. This is so interesting.
Speaker 2: We're down three percent now in the pre market. We
Speaker 2: kind of swung to a gain. We've been down like
Speaker 2: nine percent in the pre market. I'd call this a
Speaker 2: mixed bag. The company posted a weak profit outlook and
Speaker 2: announced a new CFO with a focus on a robotaxi
Speaker 2: future and new markets for robotaxi. Bluebos Natalie Lung covers
Speaker 2: consumer apps, theog economy, and increasing the robotaxi. Where do
Speaker 2: you want to start? Like, I think, let's go with
Speaker 2: the financials, right, the earnings. They gave this a justed
Speaker 2: EPs forecast. Ebit Dar forecast that appeared light, but actually
Speaker 2: management that explained some of that already just explain.
Speaker 8: Yes, so the EPs outlook for first quarter came in
Speaker 8: a bit light. That could be a result of a
Speaker 8: lot of their new product initiatives, let's say the low
Speaker 8: costs shuttle product at airports and even the high end
Speaker 8: you know, premium reserved rise at airports. Sort of these
Speaker 8: new products not yet yeuring the return that they're hoping
Speaker 8: to see, but they're still hoping that would sort of
Speaker 8: expand towards this year. That said, like the fund mentors,
Speaker 8: the demand underlying demand, especially in the US where they
Speaker 8: have some of their most profitable markets, is very healthy.
Speaker 8: They think grow through accelerate there as some of the
Speaker 8: risks we saw last year, like high insurance costs, they
Speaker 8: think that will sort of abate this year.
Speaker 3: And growth bookings can be up to fifty three and
Speaker 3: a half billion dollars for the current fiscal. Call to
Speaker 3: Natalie Donokles with Shahi mainly trying to talk up so
Speaker 3: the healthier pricing, what about this new CFO, what about
Speaker 3: the focus on robotaxi from him.
Speaker 8: It's interesting they appointed that they promoted Pilaji Christiaan murmurthy
Speaker 8: to the role of CFO. He's one of the more outspoken,
Speaker 8: tartomous bos among the leadership. He's always on X defending
Speaker 8: Uber's AV strategy, and so we'll definitely see Uber double
Speaker 8: down on that sort of narrative, you know, trying to
Speaker 8: combat what it caused misconceptions among Wall Street bears on
Speaker 8: how it's got to you know, facilitate and support the
Speaker 8: ecosystem rather than completely be disrupted by rivals like Tesla
Speaker 8: or Weimo.
Speaker 3: And where Mo they partner with often as well, Natalie Lung,
Speaker 3: We appreciate the breakdown and talking of Avis. The Senate
Speaker 3: Committee on Commerce, Science, and Transportation is holding a hearing
Speaker 3: on the future of self driving cars right now to
Speaker 3: assess existing autonomous vehicle regulations. Of course, this is as
Speaker 3: the race with China to lead the future transportation technology
Speaker 3: heats up. Witnesses are from Tesla, from Weimo and others
Speaker 3: they're participating. If you want to follow ono, just go
Speaker 3: to Live go on the Bloomberg terminal D.
Speaker 2: That's Tesla's Lars Maravi on the on the screen right
Speaker 2: there will track the headlines coming up. Jessica Lujim from
Speaker 2: the Competitive Enterprise Institute joins us to talk about antitrust
Speaker 2: concerns from a Netflix Warner Brothers tie up. We have
Speaker 2: more on that in a moment. AMD sell off accelerated
Speaker 2: in the last few minutes at one point down sixteen percent,
Speaker 2: already on track for its biggest decline since October twenty eighteen.
Speaker 2: A forecast for sales in the current period that at
Speaker 2: the high end of estimates was disapp pointing, but also
Speaker 2: a sequential drop in revenues. And we are waiting on
Speaker 2: this big GPU and server design moment that isn't coming
Speaker 2: until the second half of this year. This is one
Speaker 2: we're going to watch for the hop This is Bloomberg Tech.
Speaker 9: This deal keeps one of the most iconic Hollywood studios
Speaker 9: healthy and competitive. Warner and Netflix together will create value
Speaker 9: for consumers, more opportunities for the creative community, and more
Speaker 9: American jobs.
Speaker 3: Netflix co CEO too surrounders there testifying with four lawmakers
Speaker 3: about the company's plan to buy Warner Brothers streaming and
Speaker 3: studio divisions. Surandos also said yesterday that the deal would
Speaker 3: give streaming consumers more for less, noting the eighty percent
Speaker 3: of Netflix subscribers also pay for HBO Max currently owned
Speaker 3: by Warner Brothers. Let's talk through the anti trust concerns
Speaker 3: with Jessica Manujin, director of the Central of Technology and
Speaker 3: Innovation at the.
Speaker 4: Competitive Enterprise Institute.
Speaker 3: Jessica, you've actual, we've testified before Congress about streaming competition
Speaker 3: in previous times. So what did you make of Ted
Speaker 3: Sarandels and his argument that this is going to give
Speaker 3: more consumers more to them for less.
Speaker 10: You know, I think you can buy it. There's so
Speaker 10: much overlap in people who maintain a Netflix subscription and
Speaker 10: also in HBO subscription. The companies have talked about how
Speaker 10: they would be willing to combine those and offer those
Speaker 10: at a lower price. I think he said as much
Speaker 10: in the hearing yesterday. So there are competitive concerns that
Speaker 10: remain for some people, but I think certainly there are
Speaker 10: efficiencies in overlap. Because the most of this merger is
Speaker 10: a vertical merger. There's pieces that one company doesn't have
Speaker 10: that the other one does. They're going to fit them
Speaker 10: together and that could be substantial cost savings that one
Speaker 10: hopes get passed along to consumers.
Speaker 3: What was interesting amid the politicking that goes on on
Speaker 3: Capitol Hill in these sorts of hearings the time and
Speaker 3: time again, iteration we hear from our guests. Is it
Speaker 3: all depends on how the market is defined? Now, how
Speaker 3: you defining this market, is, for example, YouTube the competitor
Speaker 3: or is it just other streaming companies?
Speaker 6: You know?
Speaker 10: I tend to come at it from how do consumers
Speaker 10: actually use these technologies? What would they reach for as
Speaker 10: a substitute if Netflix weren't there or Warner Brothers streaming
Speaker 10: services weren't there. How do we actually behave I think
Speaker 10: is the most common sense way to approach that. And
Speaker 10: I think in the way that we see users sit
Speaker 10: down and they PLoP on their couch, they go to
Speaker 10: the TV. What do they put on? It's very difficult
Speaker 10: to exclude YouTube, YouTube TV from that because that's how
Speaker 10: people use it, that's the way we're living now. So
Speaker 10: I think if regulators are trying to get to the
Speaker 10: closest version of what the real competitive effects are, you
Speaker 10: have to say, how is this actually happening with consumers
Speaker 10: and in the market. And I think it means a
Speaker 10: more broader definition of the market, which puts them more
Speaker 10: at a ten percent market share roughly. If these companies combined,
Speaker 10: if you exclude things like YouTube, and you want things
Speaker 10: that look just exactly like Netflix. That's how you get
Speaker 10: to your thirty percent market share mark with triggers a
Speaker 10: bunch of stuff in anti trust litigation that would make
Speaker 10: it more difficult for this merger Jessica.
Speaker 2: In antitrust, there is political theater and then there is
Speaker 2: actual process. What we showed on the screen a few
Speaker 2: moments ago and are showing now, that's political theater. Doesn't
Speaker 2: it matter really whether the DOJ takes an action here
Speaker 2: and that actually regulators are paying attention beyond the senators
Speaker 2: that post questions in that room. No, that's exactly right.
Speaker 10: There was a lot of political haymade, and I will
Speaker 10: point out that the Senate doesn't actually have any direct
Speaker 10: jurisdiction over this merger. That's all happening at the DOJ.
Speaker 10: And if they follow traditional US anti trust laws, they're
Speaker 10: going to look at how do we define what the
Speaker 10: market is so we can think about what the market
Speaker 10: shares involved are here. And then once you get past
Speaker 10: all of that, the question becomes, you know, on net generally,
Speaker 10: on what we can predict into the future, are there
Speaker 10: potential consumer benefits here to these two companies merging that
Speaker 10: might outweigh some of the competitive concerns that we heard
Speaker 10: mentioned yesterday in the hearing.
Speaker 2: We've been asking this question consistently and in a process,
Speaker 2: it's probably right to ask the same question consistently, which is,
Speaker 2: is there any past precedent that we can look to
Speaker 2: that would suggest the outcome of this proposed.
Speaker 10: Merger In the regulatory sense, I don't know it's you know,
Speaker 10: Washington these days is setting precedent every day. But I
Speaker 10: think in the market you could look at something like
Speaker 10: the T Mobile Sprint merger and say, you know, that
Speaker 10: took two competitors into being one, but that one bigger, better,
Speaker 10: stronger competitor was able to make it three big guys
Speaker 10: on the scene alongside Verizon in AT and T instead
Speaker 10: of two, which those two individual companies at three and
Speaker 10: four wouldn't have been able to challenge to the big two.
Speaker 10: So I think there's precedent in how things actually work
Speaker 10: in the real world, and say a lot of times
Speaker 10: mergers can be very productive, very good for the economy,
Speaker 10: for stockholders and for consumers. I think that's probably one
Speaker 10: of the more recent examples.
Speaker 3: Consumers are the focus, though right in America at least,
Speaker 3: how are you looking at to how.
Speaker 4: Other jurisdictions are going to analyze this deal? Because this
Speaker 4: are global companies.
Speaker 10: Yeah, they're going to have to go within the US,
Speaker 10: They're going to have to talk to some state attorney
Speaker 10: generals and they'll have to deal with the DOJ's assessment.
Speaker 10: But you're absolutely right internationally, the standards are different here
Speaker 10: in US antitrust law. You know, it's all still the
Speaker 10: consumer harm standards. So even if there might be some
Speaker 10: concerns with labor, that's part of the discussion. But really
Speaker 10: the load star is do consumers benefit from this in
Speaker 10: terms of maybe lower prices, more innovation, more output. There's
Speaker 10: lots of things to look at there, but that's not
Speaker 10: the case, for example, in the EU, where the focus
Speaker 10: for regulators is much more concerned with the effect on
Speaker 10: competitors to these companies and not so much just consumers.
Speaker 3: Now, someone turned down going for the political theater, and
Speaker 3: it was David Ellison over at Paramount Skuidance.
Speaker 4: He wasn't there. I'm sure he was tuned in.
Speaker 3: What do you think it states in terms of him
Speaker 3: not wanting to go and address his own concerns or
Speaker 3: indeed whether he'll have his time to be able to
Speaker 3: discuss what a potential merger looks like with his business
Speaker 3: rather than that of Netflix.
Speaker 11: I don't know.
Speaker 10: He's probably smart to take the opportunity to not have
Speaker 10: to testify in front of Congress whenever he can. We
Speaker 10: watched those two executives yesterday or in their paychecks. But
Speaker 10: you know, the paramount stuff lingering on the sideline is
Speaker 10: sort of like a whole different bag of raccoons waiting
Speaker 10: in the wings to see how that interacts with all
Speaker 10: of this. Maybe not at all. If the board doesn't
Speaker 10: approve this, then that pretty much goes away.
Speaker 2: But hopefully it.
Speaker 10: Doesn't have any effect on what the board decides they
Speaker 10: want to sell, they want to do, and hopefully also
Speaker 10: doesn't have any impact on the regulatory structure. There's economics
Speaker 10: to be applied to this, there's consumers to be looked
Speaker 10: out for, and that should be a very dry, boring
Speaker 10: story that I hope we'll see sooner rather than later.
Speaker 2: Jessica Maludim, director of the Center of Technology and Innovation
Speaker 2: at the Competitive Enterprise Institute, Thank you very much. And
Speaker 2: Video is close to investing twenty billion dollars in open Ai.
Speaker 2: That's according to sources, the deal, if completed, would be
Speaker 2: the chipmaker's single biggest investment in the chat GPT developer.
Speaker 2: Both companies declined to comment on Bloomberg's reporting. Let's get
Speaker 2: the details with AI reporter Sharen Gafari. So, Jensen Wong
Speaker 2: has walked in front of a camera quite often recently,
Speaker 2: Sam Altman has taken to social media and also been
Speaker 2: on stage. You and I are best understanding and reporting
Speaker 2: from sources is that actually, for all the noise, this
Speaker 2: transaction's almost done. What do we need to know?
Speaker 11: Yes, well, the key part is the twenty billion potential
Speaker 11: investment in open aiy's current funding round is almost done.
Speaker 8: Now.
Speaker 11: The bigger question is what about the overall up to
Speaker 11: one hundred billion commitment that in Nvidia and open Ai
Speaker 11: were supposed to agree on. They're still finalizing that agreement
Speaker 11: that is still yet to be determined.
Speaker 3: Trian, did everything just get very confused, because at no
Speaker 3: point did it feel like in what was originally one
Speaker 3: hundred billion dollar up to agreement on paper that was
Speaker 3: going to be in exchange for Giga what's coming online
Speaker 3: was in any way sort of also bounded around the
Speaker 3: actual funding round of open Ai and can you just
Speaker 3: make a clear line of what we expected in Video
Speaker 3: and Open AI's relationship to be like from that September announcement.
Speaker 11: Look, I think what we're seeing in these larger and
Speaker 11: larger mega funding rounds that both open Aiyanthropic and others
Speaker 11: are doing is that strategic investors are increasingly getting involved. Right,
Speaker 11: so we know as expected that it's not just going
Speaker 11: to bebc's, it's also going to be these large tech
Speaker 11: companies like in Vidia who are investing in rounds. Twenty
Speaker 11: billion is a lot for Invidia, but obviously up to
Speaker 11: one hundred billion is a lot more. When they made
Speaker 11: that announcement of up to one hundred billion, they didn't
Speaker 11: say over what time period. They said it was a
Speaker 11: tentative agreement that has yet to be finalized, and they
Speaker 11: also said that it would be contingent upon certain milestones
Speaker 11: around how Opening Eye deploys it's chips, it's compute power,
Speaker 11: so there's still details to be sorted out. I think
Speaker 11: what's sort of confusing is when you know there's reporting
Speaker 11: out that the deal has yet to be finalized, that
Speaker 11: there may be tension, and then at the same time
Speaker 11: we see in Nvidia in talks and as we're reported,
Speaker 11: finalizing this very large sum in the current round. And
Speaker 11: you know, it can be true that two things are
Speaker 11: happening at once, right, so there can be a big
Speaker 11: investment in this current round, and there can be uncertainty
Speaker 11: about how much more in Vidia might give in the future.
Speaker 11: And you know what milestones opening I may or may
Speaker 11: not hit tied to that larger investment.
Speaker 3: While excited for the rest of your reporting on the
Speaker 3: current round and who else is involved uring Gafari, we
Speaker 3: thank you very much.
Speaker 2: Indeed, welcome back to Bloomberg Tech. If you're just joining us.
Speaker 2: The technology picture in equities public markets, it's pretty ugly.
Speaker 2: The earning story is a big part of that. AMD
Speaker 2: is now on track for its biggest drop since twenty seventeen.
Speaker 2: But there are other stories out there, right Kroen.
Speaker 3: There are. The software sell off is a key one.
Speaker 3: It's continuing with the sector ready trailing the S and
Speaker 3: P five hundred as as investors reassess valuations and business
Speaker 3: models in the face of this rapid advance in AI.
Speaker 3: That the move has been accelerated course by Anthropic introducing
Speaker 3: a new AI automation tool fueling disruption fears across industries
Speaker 3: now here to discuss the tech market impact in both
Speaker 3: software but also in hardware. It's handling load and portfolio
Speaker 3: manager Ude Taruvu And in fact, a lot of this
Speaker 3: software names that you analyze are balancing today. I'm looking
Speaker 3: at Adobe for example, Microsoft which is all things to
Speaker 3: all men. We've also got the likes of SAP that
Speaker 3: just managed to push up a little bit today for.
Speaker 4: This software pain. Yeah, what do you make of it?
Speaker 12: Look, I think there's a narrative out there that AI
Speaker 12: is going to eat up software, that AI is going
Speaker 12: to replace software, and that's dominating right now, and in
Speaker 12: a sense that investors are putting high probability to that.
Speaker 12: What we look at as long term investors is say
Speaker 12: that there's a range of outcomes that are possible. AI
Speaker 12: could be complementary and supplementary to software, not just replacing software.
Speaker 12: And that's how you have to think about it. Right now,
Speaker 12: in a market where everything's blowing up, it looks like, hey,
Speaker 12: there's pain coming left, right and center. You step back
Speaker 12: and think about what are the sort of companies that
Speaker 12: can go through this sort of environment, go through this
Speaker 12: transformation and technology and still come out to the other
Speaker 12: side holding their own And in that sense, Microsoft is
Speaker 12: one of those companies that we think can do that.
Speaker 3: What have you added to get that comfort, because there's
Speaker 3: much to say that not many of the seats that
Speaker 3: are actually being paid for for Copilot are being used. Yeah,
Speaker 3: I think about Adobe has been on the offensive. There's
Speaker 3: a story out today showing how they've ramped up advertising
Speaker 3: by thirty percent. Try and highlight their own AI tools.
Speaker 3: What do you want to hear and see in the
Speaker 3: data to show that these companies can weather it?
Speaker 12: So I think before we get to the data, what
Speaker 12: we need to understand is what is the type of
Speaker 12: software that these companies are selling. Where they're points solutions, say,
Speaker 12: for example, on the legal side, you know Lexus Nexus.
Speaker 12: Maybe there's a reason why that can be displaced more
Speaker 12: by AI, which does point solutions. But Microsoft and Adobe,
Speaker 12: they do their platform solutions. What they do is not
Speaker 12: just a function for the user. They do manage the
Speaker 12: whole workflow, the whole process of a company set up
Speaker 12: in these in companies like Microsoft or SAP, those companies
Speaker 12: from a product perspective are much more entrenched. So that's
Speaker 12: the starting point. The second point we do look at
Speaker 12: is from a data per seed, is the revenue per
Speaker 12: seed going up? And why is that going up? Is
Speaker 12: that just from pricing or increasing the number of tools
Speaker 12: that are being used? And if you look at the evidence,
Speaker 12: there seems to be an improvement for Microsoft. The copilot
Speaker 12: is going up. Now. Is the pace of that going
Speaker 12: up differently to cloud Cowork and what they're announcing It
Speaker 12: would be because one is an enterprise product and one
Speaker 12: is much more an experimental product right now, so the
Speaker 12: growth rates would be quite different. So that's what we're
Speaker 12: looking at the data points and the number of users,
Speaker 12: percentage of take up in terms of new products.
Speaker 6: And tools oday.
Speaker 2: It's great to have you on the program at this
Speaker 2: moment in time, in particular, Microsoft, you know is a
Speaker 2: name that you hold in the portfolio. It's probably worth
Speaker 2: just looking back a little bit and asking what you
Speaker 2: learned from that earning sprint, because of course the market
Speaker 2: reaction in the moment was pretty severe. But what is
Speaker 2: the bigger picture for you?
Speaker 12: The bigger picture for us is the fact that Azure
Speaker 12: is continuing to grow. Yes, it missed the bogie of
Speaker 12: you know forty percent growth, it came at thirty eight percent.
Speaker 12: To us, that matters much less than the fact that
Speaker 12: the reason that they missed is because their capacity constraint,
Speaker 12: and the reason why their capacity constraint is two years
Speaker 12: ago they made the decision to wait and see instead
Speaker 12: of blowing into growing their data centers just in anticipation
Speaker 12: of demand.
Speaker 6: So that shows us.
Speaker 12: The management mindset is that they will build for as
Speaker 12: they see demand, not just anticipating demand, and that's why
Speaker 12: the growth is constrained, and that's why their growth for
Speaker 12: the next quarter is constrained. So to us, that's not
Speaker 12: the end all and be ald, So therefore, missing that
Speaker 12: small number is not a bad thing. But what we
Speaker 12: do like is the fact that on the office side,
Speaker 12: on the commercial side, growth remains very strong. The part
Speaker 12: that missed was their personal computing and that's got to
Speaker 12: do with memory pricing. Now, when you come back to hardware,
Speaker 12: huge memory price increases, there's going to be a demand
Speaker 12: destruction and that's what Microsoft are seeing. So to us,
Speaker 12: put all that together, this doesn't change the long term
Speaker 12: valuation picture. The fact that they continue to allow other
Speaker 12: llms and other models into there as you're into their
Speaker 12: asial infrastructure, is that they benefit from the overall growth
Speaker 12: in the AI ecosystem.
Speaker 2: Bloomberg's reporting that Innvidia is close to confirming its twenty
Speaker 2: billion dollar contribution to the open Ai round that's ongoing.
Speaker 2: That of course comes from sources, but that's my best understanding.
Speaker 2: Is a portfolio manager that holds in VideA and looks
Speaker 2: in VideA, how much do you care about that story
Speaker 2: in Vidia's financial investment in open ai.
Speaker 12: The financial investment is this quantum of that financial investment
Speaker 12: is not that important. It's what's the relationship that they're
Speaker 12: building up with open ai and how they're driving open
Speaker 12: ai in terms of their usage of Nvidia, Because the
Speaker 12: long term story for Nvidia is how much of your
Speaker 12: chips are going to be used in the next generation
Speaker 12: of training models. How much is going to go to
Speaker 12: the assets that the companies like Google and all are
Speaker 12: coming up with. The more the deeper their relationship with
Speaker 12: these AI front team model companies is, the more likely
Speaker 12: they can they can you know, they design roadmap will
Speaker 12: tailor to these companies, and therefore they become more entrenched.
Speaker 12: What you want to see is companies getting more entrenched
Speaker 12: and invest in those companies.
Speaker 2: Through data review of herding Loan. It's great to have
Speaker 2: you here on Blomberg Tech. Thank you very much. So
Speaker 2: coming up, Amazon's former worldwide consumer chief Dave Clark joins us.
Speaker 2: Talk about is new supply chain software startup AUGA that's next.
Speaker 2: This is Blomberg Tech.
Speaker 4: Meta Reality Labs.
Speaker 3: Well, it's just selected to startup Auger to provide the
Speaker 3: operating system for the company supply chain. Now, the startup
Speaker 3: was founded by the former head of Amazon supply chain itself.
Speaker 4: Dave Clark, O a CEO. Founder joins us.
Speaker 3: Now, you're co founder along with your partner, and I'm interested, Dave,
Speaker 3: is to what this is going to mean for all
Speaker 3: those that want the latest, greatest hardware from Meta.
Speaker 4: How much quickly will it be in their hands?
Speaker 13: Well, good morning, thanks for having me on. We're excited
Speaker 13: to be working with Meta in this way. We're in
Speaker 13: the midst of deploying software. Now we'll deploy with them
Speaker 13: over Q one, Q two of this year and finalizing
Speaker 13: Q three.
Speaker 3: Interestingly, how a little spa on your website? Mess is
Speaker 3: not the only brand that I saw. Fanatics is another one.
Speaker 3: How are you scaling new companies to come on and
Speaker 3: basically be the first customers that you have for this.
Speaker 13: Startup, Well, we started building out that. We've been building
Speaker 13: out the products for the last year. We deployed in
Speaker 13: proof of concepts with customers in the middle of last year,
Speaker 13: including Meta and Fanatics, and so what we've been doing
Speaker 13: is building the platform for how you're going to build
Speaker 13: an autonomous operating system for supply chain. At its core
Speaker 13: is really the contextual infrastructure for data across the supply
Speaker 13: chain world that makes it happen. And because we build
Speaker 13: it as this platform of infrastructure, it's very scalable from
Speaker 13: customer to customer.
Speaker 2: Dave, without trivializing it. Why the name auga what does
Speaker 2: it represent? I think that might give us an insight
Speaker 2: into in what the company is and what it does.
Speaker 13: Well, if you think about the big challenge in supply
Speaker 13: chain is really trying to connect all of this disconnected
Speaker 13: data together to make it reason together, to create a
Speaker 13: layer of contextualization and understanding. And to do that you
Speaker 13: really have to have both the technology and the knowledge
Speaker 13: to drill down into an organization, to drill into the
Speaker 13: process of how they were to enable that. And so
Speaker 13: Augier fit a lot of, you know, things that we
Speaker 13: really liked and had some meaning behind it as well,
Speaker 13: for you know, how to think about it. Also, supply
Speaker 13: chains of contacts fort like this is not you know,
Speaker 13: the world wakes up every day trying to recavoc on
Speaker 13: supply chain planners around the world, and so we thought
Speaker 13: it was it was a framing that sort of represented
Speaker 13: the grit and determination and sort of just grind through
Speaker 13: it that represents operators around the world.
Speaker 2: We're showing video of how the software the platform works.
Speaker 2: We know you from from your time at Amazon, right
Speaker 2: and your your experience of global supply chains. You had
Speaker 2: a brief ten year at Flexport, and maybe we'll get
Speaker 2: into that another time, But I don't know you as
Speaker 2: a software guy. How did you build this platform? What
Speaker 2: are the people behind the core competency here? Please?
Speaker 13: Yeah, well, I mean if you think about I mean,
Speaker 13: Amazon is in many ways the supply chain technology company
Speaker 13: at its core. You know, we had my team had
Speaker 13: thousands of software developers, you know, the last mile technology teams,
Speaker 13: the robotics tms, the inventory forecasting, email and neural network teams.
Speaker 6: You know.
Speaker 13: So well, I'm not I don't write code for a living.
Speaker 13: I've been leading and working with software teams for two
Speaker 13: decades now, and we have a phenomenal team of people,
Speaker 13: you know, many of whom were from folks I've worked
Speaker 13: with that in my past life, and some new folks
Speaker 13: that have joined us from other places. But the unifying
Speaker 13: bit of the whole group is people incredibly passionate about customers,
Speaker 13: incredibly curious about the technology that's coming out in the world,
Speaker 13: and incredibly fast at delivering output for the people we're
Speaker 13: working for.
Speaker 3: It's an agentic technology that's going to drive us forward
Speaker 3: in many ways, Dave. But what's so interesting is I
Speaker 3: see the retail benefits, I see the e commerce lived experience,
Speaker 3: and I can see what's happening with meta fanatics. But
Speaker 3: how does this expand supply chains is something we talk
Speaker 3: about in every type of industry right now, and particularly
Speaker 3: in the national security context.
Speaker 13: That's right, I mean, at the core of this thing
Speaker 13: is really while agentics is the subject of so much
Speaker 13: of the conversation, the way you make agentics work is
Speaker 13: through context. Context is king, and our core platform is
Speaker 13: really about context enablement across large global enterprise data sets,
Speaker 13: unifying thousands of tables into one operable platform of data
Speaker 13: that agents can actually then work with for autonomy and
Speaker 13: so that's extensible in all aspects of the world. Our
Speaker 13: early customers today are focused more in the consumer space,
Speaker 13: but we're also partnering looking at working with governments to
Speaker 13: enable processful You can imagine the kind of work that
Speaker 13: needs to be done to connect sovereigns, not just companies,
Speaker 13: and we think that's a big expansion area for us
Speaker 13: as we move forward in the next month months.
Speaker 3: Taking a step back, we are currently in a day
Speaker 3: of trade where anxiety runs high on AI disruption of
Speaker 3: software companies, and I'm interested as to how you felt
Speaker 3: that ALGA is something you needed to build for yourself
Speaker 3: as an operating system rather than companies plugging in what
Speaker 3: is currently being developed by large language models.
Speaker 13: Well, you know, as I said, I think the large
Speaker 13: language models can only do so much. You know, they're
Speaker 13: large language models are fantastic, but they're limited by the
Speaker 13: context you provide them. And what was missing, what I
Speaker 13: saw nobody building was the contextual infrastructure to make supply
Speaker 13: chains work as a unit. And so we felt, you know,
Speaker 13: that we had the right technology background, We had the
Speaker 13: right operational background, sort of right team, right technology, right
Speaker 13: time to go out and do this. We think it's
Speaker 13: one of the you know, sort of few big enablement
Speaker 13: plays at a global scale to really you can really
Speaker 13: go out in software and change the way the physical
Speaker 13: world interacts.
Speaker 2: Dave Clark, CEO of Auga, Great to have you here
Speaker 2: on Bloomberg Tech. Thank you very much. Let's get to
Speaker 2: the world of inference. Positron ai has raised two hundred
Speaker 2: and thirty million dollars in a Series B funding round,
Speaker 2: valuing the company at over a billion dollars. The AI
Speaker 2: chip startup is working to compete with Nvidia by developing
Speaker 2: energy efficient chips for AI inference. Joining us to discuss
Speaker 2: mtsha Agrou Positron CEO, it is good to see you.
Speaker 2: Thank you for coming on the show. We have to
Speaker 2: say we have a new inference chip name on the
Speaker 2: show on a weekly basis at the moment, Opus right
Speaker 2: through to the next generation of accelerator for inference. We'll
Speaker 2: get to the money. But what is the Positron elevator page.
Speaker 2: What is it you're doing differently that really would allow
Speaker 2: you to take on nvideor in the market for inference.
Speaker 14: Yeah, it's as you can, focused on memory architecture right
Speaker 14: in for inference, it's barely memory bottleneck both on memory
Speaker 14: speeds and memory capacity. Positron has deployed and you know,
Speaker 14: our first generation product already on our building our second generation,
Speaker 14: which is very much focused on building the memory closer
Speaker 14: to the systolic array, so very very fast on decode speeds,
Speaker 14: and then second is having massive amounts of memory capacity
Speaker 14: directly attached to the chip. Our second generation will be
Speaker 14: the world's first terrabyte memory chip, going up to two
Speaker 14: point three terabytes of attached memory.
Speaker 6: You know.
Speaker 14: For a comparison and video Rubin will launch with three
Speaker 14: eighty four gigabytes end of this year.
Speaker 6: So that's that's where we are really focused on.
Speaker 14: If you think about decode application you know, video generation,
Speaker 14: code generation and reasoning models, that's the current bottleneck, very
Speaker 14: large models as well, you.
Speaker 2: Know miteesh this issue like latency for one of a
Speaker 2: better expression, you know in video is looking the giant
Speaker 2: that is in video is looking at optics as well
Speaker 2: within the server design to overcome that. They've got a
Speaker 2: lot of cash to do it. You now have two
Speaker 2: hundred and thirty million dollars. You know, how is that
Speaker 2: going to help you progress it?
Speaker 14: Yeah? I think Look, obviously you can't do cash tra
Speaker 14: cash comparison. I think the research to directions are different.
Speaker 14: I think that's where our technology is completely different. Well
Speaker 14: and video is looking at optics to scale out or
Speaker 14: a rack scale data center scale because they have to
Speaker 14: connect multiple chips because they're limited on memory. We are
Speaker 14: kind of bringing the scale out a little bit invert
Speaker 14: We are saying that by having that much memory, you
Speaker 14: still have to do scale out when the models are
Speaker 14: going to be tentral in parameters long or large. But
Speaker 14: the point is you have to do it less so
Speaker 14: you can consume less chips, you consume less power and
Speaker 14: so on. Right, So it's a different type of architecture
Speaker 14: than what NVIDA is focused on. I really do believe that,
Speaker 14: you know, in the world of inference, you're going to
Speaker 14: see you know, the world you've heard the word disaggregation.
Speaker 6: You know obviously that's going to come through.
Speaker 14: But you know, each silicon will have Our silicon architecture
Speaker 14: will have it's kind of niche in terms of what
Speaker 14: applications it really drives through fundamentally more efficiently.
Speaker 6: It's like the Perido curve.
Speaker 14: You know, you are trying to minimize power consumption, You're
Speaker 14: trying to minimize energy, you're trying to minimize the cost,
Speaker 14: you know, with a per token, per video generation, and
Speaker 14: you're trying to increase the.
Speaker 6: Speed of output, right, and each.
Speaker 14: Of the silicon architectures will find its own niche there
Speaker 14: and we are right in that in that space.
Speaker 4: It's only each finance.
Speaker 3: I mean, I'm looking at Jump Trading being one of
Speaker 3: your investors and is that sort of a strategic investor.
Speaker 3: Where do you think that you will be first shipping too?
Speaker 14: Yeah, I mean actually Jump is one of our customers
Speaker 14: for the first gen product, and it's that's the validation
Speaker 14: that you know, really kind of encouraged us to go
Speaker 14: out and raise this round.
Speaker 6: You know, Jump became a.
Speaker 14: Customer first, they looked at our version, they used it,
Speaker 14: they looked at our second gen roadmap, and they said, look,
Speaker 14: we got to invest in this company. And that's kind
Speaker 14: of how they came as co lead on the round.
Speaker 14: So you Trading is obviously using a lot of language models,
Speaker 14: transformer models, or aggresive models for their applications. They're exploring
Speaker 14: that it's R and D and expanding, but they're exploring
Speaker 14: that and that's kind of where having driving lower latency
Speaker 14: or a lotting like very large context length can really
Speaker 14: make an impact for them. So that's how they got interested.
Speaker 14: From a strategic point of Caroline, you mentioned we have
Speaker 14: ARM and Qia, So it's not just customers in finance
Speaker 14: or certain types of customers. It's the ecosystem players and
Speaker 14: you know, different types of sovereign and data center players
Speaker 14: that are getting interested in this space as they look
Speaker 14: at heterogeneous deployments.
Speaker 6: Offsolican for inference for clothes, So.
Speaker 4: We saw Grock.
Speaker 3: It's focus on inference and it's interesting purchase by Nvidia.
Speaker 3: How do you see your growth now you've got money,
Speaker 3: it's about hiring talent and getting and shipping the systems.
Speaker 3: But with ARM on the cap table, do you see
Speaker 3: some sort of purchase in your future?
Speaker 4: What do you want for the business?
Speaker 14: I think our main focus is how can we deliver
Speaker 14: our maximum of chifts in the world, right I think
Speaker 14: that's like really what drives us fundamentally is how can
Speaker 14: we deploy millions and millions of chips. I mean we
Speaker 14: are starting at you know, started obviously with just the
Speaker 14: first prototype. We are in Balabans right now, so it's
Speaker 14: still a long way to go and you know, and
Speaker 14: videos the company and the millions, and that's kind of
Speaker 14: where we have to reach.
Speaker 6: Everything that goes.
Speaker 14: By the side, you know, acquisitions, you know, going public,
Speaker 14: all those things are kind of by products off the
Speaker 14: actual technical product and the consumer and the customer. From
Speaker 14: a customer point of view, I'll answer you, Carolyn, I
Speaker 14: think from from from our perspective. You know, over eighty
Speaker 14: percent of walls inference gets driven through hyperscillus sort associated customers,
Speaker 14: and that's kind of where we are really aiming to
Speaker 14: go after from specific workloads.
Speaker 3: To to them Mintosha grow Well a Positron. Great to
Speaker 3: have you on today. Alphabet Journeys, they come out after
Speaker 3: the bell. We want to hear about what to expect,
Speaker 3: the bloombo's comment of Royo, and it's all going to
Speaker 3: be about Cloud, about capital expenditure again.
Speaker 15: Yes exactly. I think everyone's expecting a great quarter for Alphabet. Again,
Speaker 15: it's going to be a lot of attention on Google
Speaker 15: Cloud given that Alphabet basically released Jimini three during the
Speaker 15: last quarter. So we're going to talk about how it's
Speaker 15: been rolling it out in all the products, how the
Speaker 15: distribution is going, and basically they're still dominating search, which
Speaker 15: is expected that they are and how they're depending that
Speaker 15: position against other chatbots.
Speaker 2: Bloombo's Common Royal will be at her desk prime for
Speaker 2: alphabet post market. There are many others reporting. Qualcom is
Speaker 2: one carro Frank reality of it biggest maker smartphone processes.
Speaker 2: We'll learn about the health of the smartphone market, what's
Speaker 2: going on with memory supply chain and general demand. Of course,
Speaker 2: you know you spoke to Christiano at CES right. They
Speaker 2: want to diversify into data center, PC, auto's networking all that,
Speaker 2: but that's their bread.
Speaker 4: And butter and robot as well.
Speaker 3: Really, the future drivers for this business is something I'm
Speaker 3: sure they'll be trying to lean upon. But in the
Speaker 3: here and now, as you say, what is the ramifications
Speaker 3: of memory prices on some of the other clients that
Speaker 3: they serve, how are we seeing Qualcom brace for what
Speaker 3: has been just an extraordinary sell off that we're seeing
Speaker 3: into the hardware ecosystem as well. But this is as
Speaker 3: their fiscal first quarter as the one to look at. Look,
Speaker 3: we've also got chip design in the spotlight, right. Maybe
Speaker 3: one day it wants to be a chip maker too,
Speaker 3: but right now it's a designer and ARM just up
Speaker 3: nine tens percent ahead.
Speaker 4: Of its earnings.
Speaker 3: How are you thinking about the strength of its own
Speaker 3: design Visa Vida competition right now?
Speaker 2: Yeah, Jensen Wong and Video CEO changed the game for
Speaker 2: ARM based CPU. He said it just a couple of
Speaker 2: weeks ago. They're coming to market with their CPU as
Speaker 2: a standalone product. It's based on ARM architecture. AR might
Speaker 2: want to talk that up because that really did send
Speaker 2: some ripples in the market. CPU right now in demand.
Speaker 3: Yeah, we're thinking of total revenue about one and quarter
Speaker 3: billion dollars EPs estemate nineteen cents. But let's just focus
Speaker 3: on these markets today because that does it. With this
Speaker 3: edition of Bloomberg Tech Head, we are seeing such a
Speaker 3: significant sell off across the software names, but in risk
Speaker 3: assets more broadly. Look Bitcoin seventy three thousand, where.
Speaker 2: We stand YEP at his lowest level since the November
Speaker 2: twenty four presidential election. We have a podcast you should
Speaker 2: listen to it. This is Bloomberg Tech