Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: From the heart of where Innovation, money and power. Collie
Speaker 2: in Silicon Valley, Nbon.
Speaker 3: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 4: Live from New York.
Speaker 5: This is Bloomberg Technology, Microsoft and AMD earnings on deck
Speaker 5: as big tech flirts with a correction, and we hear
Speaker 5: from Nvidio's CEO on Meta and Zuckerberg being their most
Speaker 5: important customers. Plus a Tesla test drive that hit a roadbump.
Speaker 5: Truest analyst William Stein joining us after narrowly avoiding a
Speaker 5: car accident while testing full self driving.
Speaker 4: This is a big day.
Speaker 5: It's the charting gun basically for megacap tech earning. So
Speaker 5: after market, you start with Microsoft and you start with AMD,
Speaker 5: talking a lot about the money machine, the money going
Speaker 5: into the machine, the investment in the infrastructure. That's where
Speaker 5: we check on AMD that soft buy almost a percentage point.
Speaker 5: The money coming out is the top line growth. Are
Speaker 5: we going to see any anything tangible from Microsoft? In
Speaker 5: particular massive investment in terms of CAPEX into the GPUs
Speaker 5: and infrastructure needed for their cloud business. How is that
Speaker 5: translating to top line growth? Let's talk about it and
Speaker 5: what to expect with the Cole Web Senior vice president
Speaker 5: and financial advisor at the Wealth Enhancement Group, a national
Speaker 5: independent wealth management firm with eighty five point seven billion
Speaker 5: dollars in client assets. I've been talking about the money
Speaker 5: machine here on Bloomberg Technology, the money in for infrastructure
Speaker 5: and not knowing how much money's coming out in terms
Speaker 5: of top line growth.
Speaker 4: Is that how you would approach earnings?
Speaker 6: Yeah, you know, I think it's it's unique and you
Speaker 6: have to look at each company differently, and the setup
Speaker 6: going into this week is one where I think there
Speaker 6: has to be a hyper focus on the unique business
Speaker 6: model of each So when we talk specifically about Microsoft,
Speaker 6: the thing that we know is that capacity is below demand.
Speaker 7: So to your point, the spending is going to be high.
Speaker 7: We expect that both in land GPUs, but on the
Speaker 7: same token, we expect that bookings are going to be
Speaker 7: relatively strong again this past quarter, and so we look
Speaker 7: to names like Microsoft or continued Efficiency where they can
Speaker 7: offset some of that cost spend through other parts of
Speaker 7: the business. The other thing that I would mention, you know,
Speaker 7: our King's point team is things that there's actually going
Speaker 7: to be this transition over where the forgotten sub sector
Speaker 7: of software is going to be more part of the
Speaker 7: conversation again going forward. So we expect that both from Microsoft,
Speaker 7: and we actually really think that about salesforce as well.
Speaker 5: Let's focus in on Microsoft. I think language is really important.
Speaker 5: Last quarter, Microsoft told us Nicole that they had over
Speaker 5: rule more than thirty percent top line growth for the
Speaker 5: cloud unit, and they said seven percent of that was
Speaker 5: a contribution from AI. Do you think that a number
Speaker 5: like that is enough for investors to say, okay, I
Speaker 5: believe the story for all the investment you've made, you
Speaker 5: are out actually making money from this AI thing.
Speaker 7: You know, this is where we are in a pivotal
Speaker 7: moment in evaluation. And so when you think about where
Speaker 7: exactly AI is going to take us five years from now,
Speaker 7: nobody knows the answer on that. What you're listening for
Speaker 7: is when can I expect any glimmer of return on
Speaker 7: the invested capital that's going to work today?
Speaker 8: And so you've seen that play out in.
Speaker 7: The last few weeks where you really did have to
Speaker 7: right size your positions as valuations looked a bit stretched
Speaker 7: if that is going to be a moving target. And
Speaker 7: so we are very much of the choppy and the
Speaker 7: short term great returns in a longer period of time
Speaker 7: as you see that navigation both of right sizing positions
Speaker 7: here to date from that really fast priced movement, and
Speaker 7: then also this expected drop down.
Speaker 8: In earnings in the next couple of quarters.
Speaker 5: There's a line in one of our Bloomberg Terminal stories
Speaker 5: today about how Microsoft is like one of the most
Speaker 5: widely held stocks in the world amongst retail investors and
Speaker 5: institutional investors. What kind of a dynamic is that when
Speaker 5: you talk to clients, it seems that Microsoft's always been
Speaker 5: there and you want to have a piece of it.
Speaker 7: Yeah, Microsoft became the utility of enterprise business, and so
Speaker 7: when you think about the structure of both business and
Speaker 7: personal life today, Microsoft is at the center of that.
Speaker 7: What Microsoft has built out for the consumer is a
Speaker 7: unique story, and so you can both look to them
Speaker 7: for having the free cash flow, the money to the
Speaker 7: money to build the the future of infrastructure, will also
Speaker 7: providing those subscription level services that are so necessary for
Speaker 7: day to day operations, and so from that perspective, it's
Speaker 7: really hard to break up with a position like Microsoft
Speaker 7: in a portfolio.
Speaker 5: Niicole I wanted to ask what this week's going to
Speaker 5: be like for you. You know, if you're a technology investor,
Speaker 5: you have just this incredible calendar of the world's biggest
Speaker 5: technology names reporting and then a FED meeting slap bang
Speaker 5: in the middle of it. How do you operate like
Speaker 5: that in that environment?
Speaker 8: Yeah, you know.
Speaker 7: I think starting on Friday, what we started to see
Speaker 7: was the narrowing in the divergence between Nasdaq and small cap,
Speaker 7: and so that gave us a better footing going into
Speaker 7: this week.
Speaker 8: When we think about the FED.
Speaker 7: We really see that as creating this backdrop where we
Speaker 7: believe there can be wider participation. So we want diversified
Speaker 7: portfolios to have their moment in the sun.
Speaker 8: Again, I think seeing.
Speaker 7: Too much return for too few names creates an investor
Speaker 7: sentiment that is systemically.
Speaker 8: Going to lead them in the wrong direction.
Speaker 7: At the same time, though you've seen some of these
Speaker 7: names like Meta, where we've chosen to deploy more cash
Speaker 7: because you see where they're trading, and from a relative
Speaker 7: valuation perspective at twenty two times, you have kind of
Speaker 7: a tiny risk there, and so you can play both
Speaker 7: sides of this leading into earnings.
Speaker 8: When you have moments of volatility like we've had.
Speaker 5: Mess is a great final thought based on the idea
Speaker 5: you separate them out from the rest of the megacaps,
Speaker 5: and it's something for us to look forward to see.
Speaker 5: Nicole Webb, Senior vice president and financial advisor at the
Speaker 5: Wealth Enhancement Group, Thank you now. Sticking with earnings so far,
Speaker 5: CEO Anthony Noto joined Bloomberg just moments ago. Here's what
Speaker 5: we had to say about the company's results. But also
Speaker 5: it's planned for diversification.
Speaker 9: Over the next five years.
Speaker 10: I would expect our growth to result in revenue that's
Speaker 10: about thirty percent financial services revenue, thirty percent tech platform revenue,
Speaker 10: and thirty percent lending.
Speaker 2: The business that's.
Speaker 10: Growing the fastest now and that's increasing as a percent
Speaker 10: of revenue the fastest is the financial services segment. We
Speaker 10: had a record revenue for the quarter at close to
Speaker 10: six hundred million dollars and twenty two percent growth, and
Speaker 10: it was really driven by that financial services segment that
Speaker 10: grew eighty percent year of year and is now starting
Speaker 10: to reach real scale at about one hundred and seventy
Speaker 10: million dollars of revenue. It's benefiting from fifty eight percent
Speaker 10: growth in AUM in our invest business. It's benefiting from
Speaker 10: deposit growth of eighty percent, and it's growing. It's benefiting
Speaker 10: from high interchange revenue growth as well, and of course
Speaker 10: forty percent product growth in that segment. So that'll be
Speaker 10: the horse that we continue to ride to drive the diversification.
Speaker 10: The second element would be, as you mentioned, the technology
Speaker 10: platform business, which we believe is a mid to high
Speaker 10: teens grower for the rest of this year, for the
Speaker 10: full year I mean, and then going to twenty percent
Speaker 10: growth shares. We have a great backlog of partners coming
Speaker 10: online hopefully in twenty twenty.
Speaker 11: Five, and theny One major question is around interest rates.
Speaker 11: If you do see the FED cut this year, then
Speaker 11: what does that four point six percent APY on your
Speaker 11: sofa money product look like moving forward? If it lowers,
Speaker 11: how competitive do you have to be to keep that
Speaker 11: money flowing in.
Speaker 10: Yeah, we think we'll still have a very competitive APY
Speaker 10: and a declining rate environment. Several of our businesses will
Speaker 10: benefit meetingful from a higher lower rate environment. The loans
Speaker 10: in our balance sheet will be worth more. Everything else equal.
Speaker 10: Home loans will actually see more financing, and that business
Speaker 10: should benefit for greater demand, greater marketing, efficiencies gre greater
Speaker 10: flow through.
Speaker 9: Also our student loan and financing business would benefit. That
Speaker 9: will all allow us.
Speaker 10: To continue to maintain a very high APY relative to competition.
Speaker 10: Many of our competitors that offer an APY that's even
Speaker 10: close stars We're at four point six percent if you
Speaker 10: do direct deposit, We're still superior to others. But those
Speaker 10: that are to us will struggle to keep the same
Speaker 10: rate in the same premium because they're not origination platforms.
Speaker 10: So we benefit from both of those businesses working well together.
Speaker 5: That was so FI CEO Anthony Noto, along with Bloomberg's
Speaker 5: Shnale bask Another top story we're looking at is PayPal,
Speaker 5: the company that suddenly got a sixty million dollar market
Speaker 5: gap shares notably higher, up almost eight percent, jumping the
Speaker 5: most in more than like twenty months adjusted EPs. You know,
Speaker 5: the guidance that will increase loads of single digits I
Speaker 5: think beats expectations. And then we discuss less on Bloomberg technology,
Speaker 5: but one that seems to be holding its own in
Speaker 5: the earnings context.
Speaker 4: We will revisit it all right.
Speaker 5: Coming up on the show, we will be joined by
Speaker 5: Truest Security Senior analyst William Stein on his experience using
Speaker 5: Tesla's full self driving technology. That's next, This is Bloomberg technology.
Speaker 5: Elon Musk has said during Tesla's last two earnings calls
Speaker 5: that investors won't understand the company unless they're using the
Speaker 5: driver assistance system marketed as full self driving. Well Truest
Speaker 5: Securities Managing director and senior analyst William Stein did just that,
Speaker 5: and he writes the version he tried is quote stunningly good,
Speaker 5: but does not solve autonomy. In fact, he even narrowly
Speaker 5: avoided a crash or accident. William Stein joins me now
Speaker 5: for more. And William, when I said on social media
Speaker 5: you were coming on the program, many many people pointed
Speaker 5: out that the version of a FSD you were using
Speaker 5: was twelve point three point six, not the latest twelve
Speaker 5: point five, which rolled out starting Friday last week and
Speaker 5: in a limited release through the weekend. So let's start here.
Speaker 5: Give me the basics of the tests you conducted, where
Speaker 5: you conducted it, whose Tesla you were using, and the
Speaker 5: parameters around it.
Speaker 12: Please, yeah, that's a very fair question. Thanks for having me.
Speaker 12: So both the test initially after the Q one earnings
Speaker 12: report and the Q two report were done you know,
Speaker 12: under very similar conditions. Sunny, dry, easy to see, easy
Speaker 12: to operate. This was a Tesla owned car.
Speaker 9: This was, you know, a I.
Speaker 12: Approached Tesla as if I were any other potential buyer.
Speaker 12: So I went to a Tesla showroom, signed up, and
Speaker 12: plugged in a relatively local address about seven miles away
Speaker 12: from from the showroom, someplace near where I live in
Speaker 12: suburban New York City. And that was the setup, and
Speaker 12: it mostly worked well in both cases.
Speaker 4: And William, just real quick, when did this test take place?
Speaker 9: Sure?
Speaker 12: So the first one that I tried was right after
Speaker 12: Q one, when Musk first issued this sort of directive
Speaker 12: to investors or potential investors that they must see this
Speaker 12: in order to determine whether they should invest in the company.
Speaker 12: So that was about a quarter ago. And the most
Speaker 12: recent one was done on Friday. Okay, And I'd like
Speaker 12: to acknowledge that we did not have version twelve dot five.
Speaker 12: I have asked the company for access to it hasn't
Speaker 12: been made available to me yet. I think they will,
Speaker 12: just it wasn't available when I went to the dealer
Speaker 12: or to the I should say, to the showroom, and
Speaker 12: I was using twelve to three dot six.
Speaker 5: That's correct, William did test the response specifically to the
Speaker 5: research report that you posted.
Speaker 12: I reached out to management in a proactive effort to
Speaker 12: not hide from them, because I think it's important when
Speaker 12: one is critical of technology or a solution or a
Speaker 12: financial aspect of a company.
Speaker 9: That did not be confused with an attack or especially
Speaker 9: something that's unfair.
Speaker 12: And there was a reply, and it wasn't really substantial
Speaker 12: other than you know, we understand your view and it's
Speaker 12: okay to have a difference of opinion.
Speaker 5: We're actually showing some style, William, just really quick. We're
Speaker 5: showing some file footage of FSD which comes from Tesla.
Speaker 5: It's not the trip that you took, and so I'm
Speaker 5: just stating that because you used a Tesla sort of
Speaker 5: showroom or dealership vehicle, you don't actually have access to
Speaker 5: the footage from your trip, do you.
Speaker 9: That's correct.
Speaker 12: I tried to take I actually had my son with
Speaker 12: me taking some videos, but unfortunately we didn't capture the
Speaker 12: most interesting and most exciting, okay parts of the trip
Speaker 12: or when I avoided in your ground.
Speaker 5: One of the things you tested was the ability to
Speaker 5: look away from the wheel right, and so I have
Speaker 5: twelve point five on my own Tesla at home, and
Speaker 5: I put on X for example my experiences with it.
Speaker 5: But it doesn't require me to have my hands on
Speaker 5: the wheel. It does require me to stay focused. The
Speaker 5: camera in the cabin judges my ability to be attentive.
Speaker 5: You tested by turning your head away for twenty to
Speaker 5: forty seconds. My question around that is whether NITSA has
Speaker 5: reached out to you, because that's one area that they've
Speaker 5: looked at.
Speaker 12: NITSA has not reached out to me. I was very
Speaker 12: surprised that the car allowed me to be not just distracted.
Speaker 12: I mean my head was completely turned away. I was looking,
Speaker 12: you know, in the back seat. And you know, luckily
Speaker 12: I was able to do this because I brought my
Speaker 12: son with me and I said, hey, you know, tell
Speaker 12: me if i'm if there's anything dangerous about to happen.
Speaker 12: We were on a relatively you know, underpopulated area and
Speaker 12: on the highway, so it was fairly predictable, and I
Speaker 12: trusted him to give me enough warning. The car allowed
Speaker 12: me to do is for something on the order of
Speaker 12: thirty seconds, which.
Speaker 9: Sixty miles an hour. It's half a mile.
Speaker 12: I mean, you could do a lot of damage in
Speaker 12: that that was sort of stunning.
Speaker 9: When I got back to the showroom.
Speaker 12: The service associate told me, oh, that's demo mode, and
Speaker 12: that's to make the experience more useful and perhaps easy
Speaker 12: for an inexperienced user of this technology.
Speaker 9: For me, it was a little frightening, right. It allowed
Speaker 9: me to distract William.
Speaker 5: There are many on social media who are sort of
Speaker 5: bemoaning that you didn't use twelve point five point one.
Speaker 5: There are many that acknowledge twelve point five also has
Speaker 5: yielded some quite worrying scenarios for those that have tested it.
Speaker 5: I want to get to the big picture, which is
Speaker 5: that Mosk said on both first quarter and second quarter,
Speaker 5: and it is cool to judge whether Tesla can in
Speaker 5: the future soul for autonomy.
Speaker 4: Go out and use FSD for yourself.
Speaker 5: The conclusion that I read in your research note is
Speaker 5: you don't see the jump right from a consumer that's
Speaker 5: using FSD and there will be more iterations of it
Speaker 5: in their car to a world where Tesla operates a
Speaker 5: fleet of robot taxes itself.
Speaker 4: Do I have that right?
Speaker 12: I think it's a very challenging thing to know with certainty.
Speaker 12: Right there are certainly improvements from version to version. As
Speaker 12: it stands in version twelve three six, this is totally
Speaker 12: inadequate to solve autonomy, if there is such a thing
Speaker 12: as solving it. Ifull autonomy is not there with twelve
Speaker 12: three six, do I anticipate it could be there with
Speaker 12: twelve five to one or some later version.
Speaker 9: I would say that's a maybe.
Speaker 12: I think for me, the big question is the near
Speaker 12: accident that I experienced.
Speaker 9: What was the failure mode?
Speaker 5: I think that's William, may I jump in here. Please
Speaker 5: let's go through the specifics of that. You were approaching
Speaker 5: intersection at speed, there was a vehicle in front of
Speaker 5: you making a right hand turn, and you write in
Speaker 5: the note it didn't complete that turn. So just explain
Speaker 5: literally what happened and how you or your son reacted.
Speaker 12: Yeah, so it's slightly different from how you'd described. It
Speaker 12: was in a very congested downtown street and a suburb.
Speaker 12: We were lined up stopped at a light light turned green.
Speaker 12: I think I was second in line. The car in
Speaker 12: front of me progressed making a right turn, but it
Speaker 12: didn't quite complete it. So I was the second car
Speaker 12: in the line, and as the car in front of
Speaker 12: me moved off to the right. The tesla just it
Speaker 12: reacted as though it was all clear and just started accelerating,
Speaker 12: and so the failure mode would have been, you know,
Speaker 12: we would have hit the back right corner of the
Speaker 12: car in front of us, and I had to you know, idea, William, we're.
Speaker 4: Out of time.
Speaker 5: William Stein a Trice Securities, I appreciate you coming on
Speaker 5: the show.
Speaker 4: He shares a.
Speaker 5: Crowd Strike down around nine percent right now after reports
Speaker 5: that Delta hired a prominent attorney following that technology outage
Speaker 5: that led to carrier to cancel thousands of flights. Those
Speaker 5: reports noting that the airline may seek compensation from both
Speaker 5: CrowdStrike and Microsoft. Another catalyst, ever Core, added the company
Speaker 5: to its tactical underperform list, the firm cutting the price
Speaker 5: target from three hundred and fifty dollars to three twenty
Speaker 5: five while maintaining its outperform rating.
Speaker 4: Let's bring in Shlomakram, a CATO.
Speaker 5: Network CEO, a leader of secure access service EDGE in
Speaker 5: the field of IT security, and my goodness, the last
Speaker 5: ten days with somebody of your experience and reputation in
Speaker 5: the industry must have been interesting.
Speaker 4: What happened well.
Speaker 13: A mistake happened, and mistakes will happen, But what's really
Speaker 13: important was that that mistake caused tremendous a disruption. And
Speaker 13: I think what's really important is what is the.
Speaker 2: Learning from that, Missie?
Speaker 4: What is the learning?
Speaker 13: And the learning is that we live in a very
Speaker 13: vulnerable world where everything is digital. And imagine if this
Speaker 13: was not a mistake but an attack.
Speaker 4: I wrote about this, I call them right.
Speaker 5: Let me ask you this real quick though, that in
Speaker 5: the crowd strike example, Microsoft and crowdstrikes, what's about how
Speaker 5: only one percent of Windows PCs were impacted, but it's
Speaker 5: those PCs that were mission critical, right, think about the
Speaker 5: cost of securing them? Is that just part of doing
Speaker 5: business in this day and age. It's something like this happening.
Speaker 2: Well, mistakes will happen.
Speaker 13: You know, aws head an outage, GESPAN an outage, everybody
Speaker 13: has an outage. But you have to take the economics
Speaker 13: of that outage and learn from it. And the learning
Speaker 13: is that everything needs to be gradual. You can't deploy
Speaker 13: anything to all the computers in the world at the
Speaker 13: same time. You need to be very gradual in doing that.
Speaker 13: That's a cloud service learning. And the second learning is
Speaker 13: that we really need to make security pervasive because the
Speaker 13: next time it's not going to be a mistake, it's
Speaker 13: going to be an attack.
Speaker 4: And correct me if I'm wrong.
Speaker 5: You built CATO because you basically looked at the big
Speaker 5: guys out there, the names you and I have talked
Speaker 5: about the fresh for, and you thought I can do
Speaker 5: this better. Indifferently, your phone must have run a few times.
Speaker 2: Well, I want to correct it.
Speaker 13: I thought I can do it in a way that
Speaker 13: simplifies security and AWS and digital transform it security and
Speaker 13: make it more affordable and accessible to all types of organization,
Speaker 13: which means that security is pervasive in cases of such
Speaker 13: mistakes and thet texts.
Speaker 5: You are very experienced, well known, and have invested a
Speaker 5: lot in this sector. How do you assess how CrowdStrike
Speaker 5: handled the fallout and responded.
Speaker 13: I think they, George and his team responded really well
Speaker 13: to this mistake, and I really commend them for.
Speaker 5: That philosophically and very quickly. To we change how we
Speaker 5: approach security now at the corporate or enterprise layer.
Speaker 13: I think we need to operationalize security. I need we
Speaker 13: need to make security available to any types of enterprise.
Speaker 13: We need to digitively transform security and make it simple.
Speaker 5: Schlimo Kramer, co founder and Ceoka Too Networks, really appreciate you.
Speaker 2: Thank you very much.
Speaker 5: Joining me here in New York City, but also drawing
Speaker 5: on your your wealth of experience in this domain. Welcome
Speaker 5: back to Bloomberg Technology, Ed Ludlow in New York City,
Speaker 5: And overnight there was some news, so to speak about
Speaker 5: two names that are a business relationship to names that
Speaker 5: are well known in this industry, in Nvidia CEO Jensen
Speaker 5: Huang and Meta CEO Mark Zuckerberg.
Speaker 4: Just real quick mes as flat as a pancake.
Speaker 5: It is in Nvidia that's been the main mover in
Speaker 5: the last thirty minutes or so. Not entirely clear what
Speaker 5: the catalyst is either way. Last night they both sat
Speaker 5: down at the Sidegraph Computer Graphics conference to discuss the
Speaker 5: future of generative AI and how open source will help
Speaker 5: AI developers and creators. Here is Meta CEO Mark Zuckerberg.
Speaker 14: There is a lot of new stuff to build, and
Speaker 14: I think even if the progress on the foundation models
Speaker 14: kind of stopped now, which I don't think it will,
Speaker 14: I think we'd have like five years of product innovation
Speaker 14: for the industry to basically figure out how to most
Speaker 14: effectively use all the stuff that's gotten built so far.
Speaker 14: But I actually just think the kind of foundation models
Speaker 14: and the progress on the fundamental research is accelerating so
Speaker 14: that it's a pretty wild time.
Speaker 5: His breakdown what was said at the conference is Bloomberg's
Speaker 5: Ian King actually for Jensen I and this was the
Speaker 5: second appearance of the day, and he actually started by
Speaker 5: talking about NIMS. We have a new acronym in the
Speaker 5: world of AI and high performance GPUs. But basically in
Speaker 5: videos trying to say to us all the rest of
Speaker 5: you that aren't a hyperscaler, don't worry.
Speaker 4: We got you.
Speaker 2: Yeah, now that's exactly I mean.
Speaker 15: This is something that they've previously announced and now it's
Speaker 15: actually coming to market. These are micro services is what
Speaker 15: they call them. Basically software that says, hey, you just
Speaker 15: tell us what you want to do in your business
Speaker 15: and we'll sort everything else out. We'll provide you with
Speaker 15: the model and then all of the links to the
Speaker 15: hardware and the other pieces of software and data that
Speaker 15: you need. And this is a big push for the
Speaker 15: company because right now they've got sort of four or
Speaker 15: five big customers and great customers, but really they want
Speaker 15: this to be out there in the economy, to be pervasive,
Speaker 15: and that's what they're trying to facilitate.
Speaker 4: In video is down pretty sharply.
Speaker 5: I don't see any kind of clear catalyst other than
Speaker 5: the mechanics of the market trying to work things out.
Speaker 5: The conversation between Jensen Huang and Mark Zuckerberg highlighted one thing,
Speaker 5: which is Meta is a critically important.
Speaker 4: Customer for them.
Speaker 5: Could you just explain to our audience what Meta does
Speaker 5: within video's technology and a sense of how important a
Speaker 5: customer they are.
Speaker 15: Yeah, I mean they're one of the biggest spenders on
Speaker 15: in videos, GPUs.
Speaker 2: And other systems.
Speaker 15: Basically, they are putting these massive supercomputers in place to
Speaker 15: do training of AI models that they then use for
Speaker 15: the services that they offer through the phase through Facebook
Speaker 15: and their other platforms. And you know, Luckenberg was talking
Speaker 15: about that yesterday. He was somewhat begrudgingly acknowledging just how
Speaker 15: many hundreds of thousands of the GPUs he's bought off.
Speaker 5: Jenson, I just add one thing to what Ian said,
Speaker 5: which is that's why we're watching Microsoft and watching others
Speaker 5: in the earnings context, because the infrastructure commitments probably will
Speaker 5: have an impact on Nvidio down the line, and then
Speaker 5: Ian will come back on the show. Bloomberg Z and King,
Speaker 5: thank you very much. Sticking in the world of AI,
Speaker 5: Credo Ai recently completed a funding round of twenty one
Speaker 5: million dollars, but it doubled their valuation to about one
Speaker 5: hundred and one million dollars. That's in Bloomberg exclusive reporting.
Speaker 5: The company focuses on AI government governance, an area of
Speaker 5: particular significance during a time where deep fakes are increasingly
Speaker 5: interfering with election cycles. I'm delighted to bring in and
Speaker 5: welcome back Navna Singh, who's the founder and CEO of Credoai.
Speaker 4: I'll start on the funding round.
Speaker 5: I we bring you to Bloomberg Technology because the world
Speaker 5: of AI is basically on a collision course with society
Speaker 5: and the world of politics. That's what we often talk about.
Speaker 5: But let's just focus on credo for a minute. Why
Speaker 5: did you raise the funds and what are you going
Speaker 5: to do with it?
Speaker 8: Well, thank you so much for having me ed.
Speaker 1: Certainly a very exciting day for credoaif you've just raised
Speaker 1: twenty one million dollars in new capital and this capital
Speaker 1: round is really focused on making sure that the AI
Speaker 1: oversight and accountability is pervasive. As Zuckerberg just pointed out,
Speaker 1: we are living through really wild times and AI innovation,
Speaker 1: but it can get really wild if the risk of
Speaker 1: these technology is not really assessed and managed proactively. This
Speaker 1: is where from our founding in twenty twenty, we've been
Speaker 1: heads down focused on bringing AI governance to forefront. You know,
Speaker 1: my belief has always been governance really unlocks the understanding
Speaker 1: of this very complex technology, which, as you can imagine,
Speaker 1: is just getting more and more complex with the coming
Speaker 1: of the foundation models and frontier capabilities. So with this
Speaker 1: round of funding, we are doubling down on making sure
Speaker 1: that one understanding risk of these new frontier models is
Speaker 1: at the hands of these enterprises. Secondly, making sure that
Speaker 1: these organizations are well equipped for all the regulatory changes
Speaker 1: that are happening globally, and lastly to adopt generative AI
Speaker 1: with confidence at scale.
Speaker 5: Mavrina, you are a vocal You have official positions in
Speaker 5: government appointed panels in the domain of AI and some
Speaker 5: of the safeguards around its use in society. I just
Speaker 5: wonder if this this funding gives you the ability to
Speaker 5: have a sort of louder voice in the things that
Speaker 5: you think are important.
Speaker 4: Absolutely.
Speaker 1: You know, governance is many a time seen as a
Speaker 1: barrier to innovation, and you and I've spoken about it
Speaker 1: multiple times that governance actually is going to be an
Speaker 1: enabler and a competitive advantage for every organization, whether you're
Speaker 1: a Meta or a Microsoft, to really make sure that
Speaker 1: you can bring the frontier EI capabilities with confidence in
Speaker 1: the market. And I think with this round of funding,
Speaker 1: what it is providing us is an ability to continue
Speaker 1: delivering to our customers who are becoming responsible by design
Speaker 1: and not waiting for failures to happen. In this world
Speaker 1: where AI is transforming pretty much every use case, every
Speaker 1: business at scale.
Speaker 5: I think we should probably talk about the presidential election cycle.
Speaker 5: A lot was made particularly from small tech, so to
Speaker 5: speak about JD Vance in particular being a running mate
Speaker 5: who supports entrepreneurship and in technological advancement. Does CREEDOT have
Speaker 5: a position on what will happen with AI safey, God
Speaker 5: rails and safety depending on the outcome of that race.
Speaker 1: You know, ed we are living through a very important time,
Speaker 1: especially with the upcoming election, and I don't want to
Speaker 1: speculate what the outcome of that election is going to be.
Speaker 1: But I think the key thing I want to bring
Speaker 1: our focus back to is that irrespective of the outcome
Speaker 1: of the election, governance of this transformational technology, artificial intelligence,
Speaker 1: is going to be paramount. You know, we are seeing
Speaker 1: at scale that the traditional GRC, the governance, risk and
Speaker 1: compliance tooling that exists in the market does not serve
Speaker 1: the needs of this very complex and emerging technology. And
Speaker 1: this is where you know, not only did we coin
Speaker 1: the term AI governance, but bringing in tools that can
Speaker 1: keep up with this very increased sense of capabilities that
Speaker 1: AI is presenting and also the increased risk it's presenting.
Speaker 1: So irrespective of the election outcome, what is going to
Speaker 1: be critical is enterprises put governance front and center as
Speaker 1: they adopt this technology.
Speaker 5: We've heard a lot from Mark Zuckerberg about open source.
Speaker 5: We heard from him again it's cygraph. Just listen to
Speaker 5: what he had to say on the topic.
Speaker 14: I don't think that there's just gonna be like one
Speaker 14: AI model, right, I mean, this is something that some
Speaker 14: of the other companies in the industry, they're like, you know,
Speaker 14: it's like they're building like one central agent and and yeah,
Speaker 14: we'll have the MEDAI assistant that you can use. But
Speaker 14: a lot of our vision is that we want to
Speaker 14: empower all the people who use our products to basically
Speaker 14: create agents for themselves.
Speaker 4: So whether that's you know all the many.
Speaker 14: Many millions of creators that are on the platform, or
Speaker 14: you know, hundreds of millions of small businesses.
Speaker 5: Your reaction to that Avrena in the idea that he's
Speaker 5: he's a world where people go out and create their
Speaker 5: own AI agents.
Speaker 1: You know, absolutely true. I think we are already reaching
Speaker 1: a stage where the reliance on a single model is
Speaker 1: not going to happen. We at CRETOAI ourselves are now
Speaker 1: switching from open AI to open source models because the
Speaker 1: innovation in that space has been accelerating. So what we
Speaker 1: are going to see ed is our need for a
Speaker 1: single pain of governance. This is where Credo AI comes in.
Speaker 1: That can actually not only you know, connect with different
Speaker 1: AI toolings, but also be able to adapt.
Speaker 4: To these new plethro.
Speaker 1: FAI models and agents that are showing up in the market.
Speaker 1: But the consistent pain of governance, which provides oversight and accountability,
Speaker 1: is going to be critical.
Speaker 5: Every innessing founder and CEO of Credo AI, Thank you
Speaker 5: very much.
Speaker 16: I had a fantastic experience with jd I worked with
Speaker 16: him for about a year when he was just starting
Speaker 16: out in Silicon Valley.
Speaker 17: When it comes to deregulation, tax policy, AI, cryptocurrency, there is,
Speaker 17: you know, some degree of consonants between what a jd
Speaker 17: Vance wants and what much of the tech industry wants.
Speaker 9: Jd Vance in the business side doesn't make me confident
Speaker 9: at all.
Speaker 17: But when it comes to Section two thirty, privacy, even competition,
Speaker 17: to some degree, they're going to be at odds.
Speaker 16: He's going to be good at for Silicon Valley, he's
Speaker 16: going to be good for the country because he is
Speaker 16: pro growth, he is pro innovation, and he's also pro
Speaker 16: eliminating those regulations that strangle industry, that strangle growth.
Speaker 3: Having somebody who's been as part of a fund, who's
Speaker 3: seen the way innovation works, back companies, been on a
Speaker 3: board things like that, I think it's kind of a
Speaker 3: unique experience and opportunity that can be helpful.
Speaker 5: Those were some of our recent guests weighing in on
Speaker 5: Donald Trump's VP pick Jade Vance and what that can
Speaker 5: mean for Silicon Valley. If the Republican ticket were elected.
Speaker 5: Now some other vcs have been coming forward more recently
Speaker 5: in support of Democratic candidate Kamala Harris. So as we
Speaker 5: await her decision for a running mate, let's dig into
Speaker 5: it with Katie Jacob Stanton, founder and general partner of
Speaker 5: Moxy Ventures.
Speaker 4: And it's been interesting.
Speaker 5: You will have noticed your peers and colleagues in let's
Speaker 5: call it venture capital but small tech maybe as well.
Speaker 5: That week following the assassination attempt on former President Trump
Speaker 5: and then Jade Vance emerging as the pick X in particular,
Speaker 5: was a place where everyone was quite vocal. Now we're
Speaker 5: hearing more from the Kamala Harris side. Your position, please, Katie.
Speaker 18: Hi, thank you so much for having me. So we
Speaker 18: live in a democracy and everyone has a right to
Speaker 18: their own opinion, and I think our industry, just like
Speaker 18: our country, has a diversity of opinions. And I think
Speaker 18: there are a lot of people like myself who are
Speaker 18: really enthusiastic and excited about what the Kamala Harris campaign
Speaker 18: stands for or hope for optimism, for innovation, and we're
Speaker 18: excited to move the country forward.
Speaker 5: One of the areas of focus with JD Vance particular
Speaker 5: is his experiences of entu capitist, his experience of so
Speaker 5: called Silicon Valley and what that might mean for sort
Speaker 5: of an environment where entrepreneurs want to thrive. Do you
Speaker 5: feel that Kamala Harris has the same attributes that she
Speaker 5: can provide a similar environment if she were to be
Speaker 5: re elected.
Speaker 4: Well, first, she's way better be elected. Yeah, yeah, she's
Speaker 4: way better.
Speaker 18: She's from the Bay Area, she understands technology, she understands innovation.
Speaker 18: She also understands responsibility. So she is somebody that I
Speaker 18: think we're very enthusiastic from the tech industry about what
Speaker 18: she can bring to the future and really excited for
Speaker 18: her campaign.
Speaker 5: Finally, on the election, I was not in America in
Speaker 5: twenty sixteen. I arrived twenty eighteen, But I find the
Speaker 5: venture capital community how vocal they are a bit of
Speaker 5: surprise this time around. Do you see a difference in
Speaker 5: how active your industry is now versus twenty sixteen and
Speaker 5: twenty twenty.
Speaker 18: I think right now we have enormous challenges in front
Speaker 18: of us. We have climate change, we have economic uncertainty,
Speaker 18: we have a lack of access to healthcare affordability and
Speaker 18: housing affordability, and it's important to be able to support
Speaker 18: a number of entrepreneurs and innovators and to help provide
Speaker 18: better solutions that make life and work better. So I
Speaker 18: think they're enormous challenges, enormous opportunities, and again really excited
Speaker 18: about teams that can move us forward and help us
Speaker 18: build services for more people.
Speaker 5: Casey, we welcome you to Bloomberg Technology because Moxie has
Speaker 5: raised ninety five million dollars for a third fund. There's
Speaker 5: some interesting and quite unique factors behind the LPs and
Speaker 5: how you went about the raise. Just just explain the
Speaker 5: basics of that.
Speaker 18: Sure, we're thrilled to be able to announce our third fund,
Speaker 18: which is ninety five million dollars in a really challenging
Speaker 18: funding environment, and we're looking for founders who basically make
Speaker 18: life and work better for millions of people around the world.
Speaker 18: And most of our founders are technical, fifty percent of
Speaker 18: them are immigrants, a third are women, and we're really
Speaker 18: excited to have a diverse group of founders. We're also
Speaker 18: really proud of the investors that have backed us. We
Speaker 18: have a number of world class mission driven investors, from
Speaker 18: GEM to the Nature Conservancy to Children's Health and Foundry,
Speaker 18: and we're really delighted and honored to be able to
Speaker 18: work with them going forward.
Speaker 5: Case I just mentioned quickly you were within the Obamba
Speaker 5: administration at one point, but in Tech, Twitter, Google, you're
Speaker 5: on the board of Yahoo, Vivendi. How's that sort of
Speaker 5: CB going to influence your your investments and where you
Speaker 5: write checks.
Speaker 8: I think it's really helpful.
Speaker 18: So I invest in seed stage companies, but I'm on
Speaker 18: the board of a company, the Vendi, which was started
Speaker 18: by Napoleon, So that's a really wide range, and I
Speaker 18: think it's important to be able to cross pollinate our network,
Speaker 18: our experiences, and to enable ourselves and our team at
Speaker 18: Moxie to be able to help support our founders, helping
Speaker 18: them grow, helping them build, helping them hire.
Speaker 5: Katie Jacob Stanton, founder and general partner of Moxie Ventures,
Speaker 5: thank you once again going viral.
Speaker 4: The Olympics.
Speaker 5: Paris Olympic Games organizers postpone them men triathlon to Wednesday
Speaker 5: morning due to insufficient water quality levels in the Sene River.
Speaker 5: The delay to one of the game's flagship events came
Speaker 5: when athletes were already at breakfast, leading to some anger
Speaker 5: and disappointment. Meanwhile, the US is leading the field in
Speaker 5: total medal count, recently picking up the gold in fencing
Speaker 5: and swimming. However, Japan and China are leading the gold
Speaker 5: medal count at six, just ahead of France, Australia and
Speaker 5: South Korea. Everyone is talking about it on the social
Speaker 5: So let's get back to the other big story of
Speaker 5: the day, which is earnings. Out after the bell, you
Speaker 5: have AMD, you have Microsoft reporting. Mandy Saying of Bloomberg
Speaker 5: Intelligence joins me on set. I want to first just
Speaker 5: think about Nvidia in the context of what's to come.
Speaker 5: The stock is down significantly with no news headline. Although
Speaker 5: if you read the markets and listen to the markets,
Speaker 5: I think there's a growing skepticism that either the infrastructure
Speaker 5: spend is going to pay off in top line growth
Speaker 5: or that the infrastructure spend is going to remain what's
Speaker 5: the b I take, Well, so I.
Speaker 4: Look at it this week.
Speaker 19: Google last week told us that they're raising their capex.
Speaker 19: We expect something similar from Microsoft tonight. Meta also this week,
Speaker 19: So that's all good news for video. I'm actually surprised
Speaker 19: by the market reaction given you know, hyperscalers still make
Speaker 19: up almost fifty percent of in Video's data center revenue.
Speaker 19: Why is this start going down. Given whatever we have
Speaker 19: heard so far has been incrementally positive.
Speaker 5: That shot maybe I was talking in a few blocks ago.
Speaker 5: This is still a stock. This up one hundred and
Speaker 5: ten percent year today, and so.
Speaker 19: That's where the valuations come into play. You know, there's
Speaker 19: a lot of good news that's prized in, and you
Speaker 19: know there could be some negatives in terms of the
Speaker 19: ROI as you alluded to. You know, companies probably aren't
Speaker 19: able to monetize the GPUs as fast as they would like.
Speaker 5: The Bloomberg technology audience is global and diverse. Not everyone
Speaker 5: is an institutional investor, not even retail investor. And way
Speaker 5: we've been talking about it is like the money machine. Okay,
Speaker 5: so you have capital spending going in and what everyone's
Speaker 5: trying to understand is how many dollars are coming out
Speaker 5: in terms of top line growth. So you gave Alphabet
Speaker 5: as the example last week. I think what Ruthparat said
Speaker 5: on the call was year to date, we've made billions
Speaker 5: of dollars in AI infrastructure and generatord AI. Essentially, it
Speaker 5: doesn't seem very tangible, do.
Speaker 2: You know what I mean?
Speaker 19: You know what I to me and Vidia is more
Speaker 19: about the supply demand imbalance. As long as your supply constrained.
Speaker 19: When it comes to GPUs and the demand exceeds supply,
Speaker 19: I think it's positive for Nvidia. Once we get to
Speaker 19: a point where TSMC can make enough of these chips
Speaker 19: and you've got custom ASICs and companies can train outside
Speaker 19: of Nvidia GPUs, that's when they will have a problem
Speaker 19: sustaining that pricing that we have seen with GPUs.
Speaker 5: Okay, so let's bring up the calendar because it's a
Speaker 5: huge week. It's a good week to be in New
Speaker 5: York City with you. I think Microsoft is a big one.
Speaker 5: You know, what is the BI expectation.
Speaker 19: I mean, the estimates have to go up for this
Speaker 19: doc to sustain this kind of valuation. And when I
Speaker 19: say estimates, last quarter they said geni contribution to Azure
Speaker 19: was seven percentage points. You want to see that number
Speaker 19: go up because even if it's flat, then what it's
Speaker 19: telling you is Jenni actually is not translating into revenue.
Speaker 19: To answer your prior question, and the copilot side of
Speaker 19: it has to boost the office segment. I mean, what
Speaker 19: we saw last quarter was it was low teen's growth.
Speaker 19: You want some meaningful upside to office coming from these
Speaker 19: copilot sales.
Speaker 5: The other one after the bell is AMD and all
Speaker 5: I'll say on that is that Lisa Sue, the CEO,
Speaker 5: is coming on the show tomorrow, so we'll get the
Speaker 5: opportunity to kind of review.
Speaker 4: The rest of the week is also massive.
Speaker 5: Maybe like in aggregate, Amazon AWS is a component with
Speaker 5: an Apple Meta, what's the common thread, I mean Capex.
Speaker 19: In the end, it comes down to what these companies
Speaker 19: are spending and how does it translate into revenue. So
Speaker 19: clearly for cloud guys like Amazon and Microsoft, it's the Azure.
Speaker 4: Growth, the Awlus growth.
Speaker 19: But for Meta about how they've deployed on their social
Speaker 19: media network and they talked about custom chat our tools
Speaker 19: for Instagram. I mean, that's huge if they can monetize it,
Speaker 19: you know, through more ad revenue, and that's something to
Speaker 19: watch out for.
Speaker 5: It's a busy week for us here on Bloomberg Technology,
Speaker 5: but my colleagues over at Bloomberg Intelligence are just as
Speaker 5: busy and handle all those earnings so well. Mandate seeing
Speaker 5: of Bloomberg Intelligence who's leading our tech team there. It's
Speaker 5: a big week, but there was a lot that just
Speaker 5: happened in the show, so recap. That may well do
Speaker 5: it for this edition of Bloomberg Technology. But we always
Speaker 5: have our podcast, which you can find on the Bloomberg
Speaker 5: platforms like the Bloomberg Terminal, but also on Apple Spotify
Speaker 5: and also on iHeart After the Bell, Microsoft, AMD Tomorrow
Speaker 5: AMDCO Lisa Sue on this program. These are all big
Speaker 5: ones you don't want to miss. You've got any questions,
Speaker 5: you know where to find me. I'd be happy to
Speaker 5: look at them and fill them to Lisa.
Speaker 4: Thanks for tuning in. This is Bloomberg Technology.