Speaker 1: Bloomberg Tech is alive from coast to coast with Caroline
Speaker 1: Hide in New York and ev Low in sentrances go.
Speaker 2: This is Bloomberg Tech coming up.
Speaker 3: Palenteer shares form concerns about the company's valuation and the
Speaker 3: sustainability of the AI rally.
Speaker 1: Thus we'll break down more tech earnings, Spotify, Uber grab
Speaker 1: all out with results as well, and we push ahead
Speaker 1: to am D tonight.
Speaker 3: And the world's largest sovereign wealth fund vote against Tesla's
Speaker 3: proposed pay package for CEO E Long. Musk will discuss
Speaker 3: the impact on the company's shares.
Speaker 1: But first we check out what's happening in these markets
Speaker 1: more broadly. In and I'm looking at and now's that
Speaker 1: one hundred that is under pressure. Look, we're only down
Speaker 1: to levels well that we've seen this month, and indeed
Speaker 1: it's the worst sell off since all Thursday. So this
Speaker 1: isn't seismic, but there is a tension here about some
Speaker 1: of the levels of valuations in certain people speaking out
Speaker 1: about putting on some short bearish bets. I'm looking at Bitcoin, though,
Speaker 1: has been under far more pressure. It's the lowest level
Speaker 1: that we've seen since June.
Speaker 4: Of this year.
Speaker 1: Off by another three point three percent amid the risk
Speaker 1: of tension. You're looking at some big movers underneath the herd.
Speaker 2: Yeah, Tesla's down two point eight percent.
Speaker 3: It had been down four percent of the open Norway's
Speaker 3: Sovereign Wealth funds, Tessa's ninth largest shareholder voting against the
Speaker 3: bait package. We're going to head out to Europe in
Speaker 3: a minute and get more on that. And then there's
Speaker 3: Palenteer strong beat in the third quarter, raising annual outlook
Speaker 3: for revenue. But the cell side and investors and the
Speaker 3: internet all going to valuation as a pointed discussion carro
Speaker 3: commercial growth and government growth. But this isn't about fundamentals,
Speaker 3: or maybe it is.
Speaker 1: Let's talk about both fundamentals and valuations and talk about
Speaker 1: Palenteer's earnings and the sustainability of these numbers. Of Marianna
Speaker 1: Perez Mora, she has an aerospaceed defense analyst that be
Speaker 1: Evasecurities with a BI rating two ondred and fifteen dollars
Speaker 1: price target for Palenteer. More broadly, and I think you're
Speaker 1: even upping it to two five five. Tell us about
Speaker 1: why Palenteer is just outperforming. It is peerless in your perspective.
Speaker 5: So first, thank you so much for having me here.
Speaker 5: I'm happy to share this with you too. And I
Speaker 5: think Polunteers has proven that has been the winner of
Speaker 5: this AI implementation. And I mean not only about like investment,
Speaker 5: but actually the growth they are unlocking the customers actually
Speaker 5: go into them because they can prove that they can
Speaker 5: actually extract value from these AI implementations. And it doesn't
Speaker 5: only stop with those customers, but also other software peers
Speaker 5: that are partnering with Palenteer because they also want to
Speaker 5: be part of this. They have like really good software,
Speaker 5: but they are still struggling to actually make that software work.
Speaker 5: And Polunteering is like from a fundamental perspective, actually proving
Speaker 5: that they can extract value from those implementations.
Speaker 1: Your note is such a joy to read because you're
Speaker 1: using wonderful analogies going back to the matrix, whether you're
Speaker 1: going to be where you're going to red pell But
Speaker 1: what's interesting is you're thinking that ultimately the red pillar
Speaker 1: is there with Paneteer, and they are unlike the ninety
Speaker 1: five percent of failed pilots that MIT drew a focus on,
Speaker 1: they're managing to make AI work. But why what is
Speaker 1: it different about dot cart Daddy Carp however you see
Speaker 1: him and indeed the go to market focus that they have.
Speaker 5: I think what is different first is that they have
Speaker 5: been working on this infrastructure that is actually what makes
Speaker 5: AI be operationable for more than twenty years. This is
Speaker 5: something that today has more value than anything because of
Speaker 5: like the acceleration and AI and the new software that
Speaker 5: we have, but like this ontology that they have that
Speaker 5: is like the data integration that can actually unlock value
Speaker 5: from all these different like data parts and like have
Speaker 5: the human to be able to interoperate with that that
Speaker 5: has been in the works for more than twenty years,
Speaker 5: and that's why they are a real winner. And from
Speaker 5: a customer perspective, you have to take into account that
Speaker 5: they work with the US government and they have worked
Speaker 5: with the uscrment for so long, so they know how
Speaker 5: to do complex operations and they are translating all that
Speaker 5: know how into the commercial world. That is why I
Speaker 5: think their winner. They were prepared for this.
Speaker 2: Marianna.
Speaker 3: A part of the pressure on the stock this morning,
Speaker 3: and we need to acknowledge it is that Michael Berry
Speaker 3: of the Big Short fame or Sian Asset Management his
Speaker 3: firm have disclosed some various wages, including on Palenteer put options.
Speaker 3: It's the form that they've taken, but there's clearly some
Speaker 3: bigger picture worry about valuation and are we or are
Speaker 3: we not in an AI bubble. The way that you
Speaker 3: put it in your note is to discern what is
Speaker 3: real and what is not real. What is it you
Speaker 3: see in Palenteer that gives you the conviction it is real.
Speaker 5: What makes me convinced about being real is what when
Speaker 5: you hear about the customers and the transformation they are
Speaker 5: seeing from implementing polunteers product. They are like actually saving money,
Speaker 5: They are doing things faster, cheaper, better, smarter. Those real
Speaker 5: changes are the ones that make me optimistic about it.
Speaker 5: And we have said this over time. I'm really convinced
Speaker 5: that even if THEI bubble were to burst, Polenteer will
Speaker 5: survive because it's the structure to actually extract that value
Speaker 5: and do more with AI, AI agents or whatever is
Speaker 5: next from a stochastic models or anything in software and
Speaker 5: computing and everything.
Speaker 3: You're right that seeing is believing, Marianna. I've attended quite
Speaker 3: a few AIP cons and what happens is you had
Speaker 3: these customers go on stage and demo how they actually
Speaker 3: use palented, Like, there are so many people out there
Speaker 3: that are like, what does palenteer even too?
Speaker 6: Do you know?
Speaker 3: I've seen the demo and you get a sense for
Speaker 3: how it works. So then that takes me to the
Speaker 3: commercial growth one hundred and twenty one percent growth here
Speaker 3: on year in the US. The nervousness out there is
Speaker 3: that it's only the US that commercial business isn't growing internationally.
Speaker 5: I think when you think about international, you have to
Speaker 5: take into account two things. Number One, there are larger
Speaker 5: customers there that like, we're already hardly like a lot
Speaker 5: of penetrated, and that palenttary is putting their focus in
Speaker 5: the US. So it's also demand is like amazing for
Speaker 5: AI in general, and we see that with all the
Speaker 5: capits being invested. But if you have to actually catch
Speaker 5: up with that demand and execute on that, you have
Speaker 5: to take into account where you put your efforts on
Speaker 5: your resources, and I think it's aligned with that the
Speaker 5: Palantear is putting most of their commercial resources focused in
Speaker 5: the US.
Speaker 3: Mariana perez More Bank of America Securities price target up
Speaker 3: to two hundred and fifty five dollars, reiterating a buy
Speaker 3: on Palenteer, appreciate it. That's get a lot of the
Speaker 3: top story in Tesla shares down after the world's largest
Speaker 3: sovereign wealth fund voted against Tesla's stock award proposal for
Speaker 3: CEO Ela Musk, the biggest show of opposition yet by
Speaker 3: a major shareholder in London, Bloomberg's Auto Zar crag Trudell
Speaker 3: joins us as more, we're trying to tabulate in tally
Speaker 3: who's voted no so far ahead of November sixth. Norway's
Speaker 3: sovereign wealth fund is the ninth largest Tesla shareholder, I believe,
Speaker 3: hence why we're saying this is the biggest no vote
Speaker 3: so far.
Speaker 7: Yeah, that's right. And they were pretty diplomatic about it.
Speaker 7: They praised the value that Musk has has created over
Speaker 7: the years. They refer to him as, you know, having
Speaker 7: played a visionary role. And yet they're concerned just about
Speaker 7: this sort of magnitude of of this award, about dilution
Speaker 7: and also about the issue of sort of key man risk.
Speaker 7: This is something that has been has come up time
Speaker 7: and again with Musk. You know, the moment that he
Speaker 7: has had someone who's emerged as sort of you know
Speaker 7: who's sort of looks like a number two that person
Speaker 7: doesn't seem to last very long. So in Tesla's defense,
Speaker 7: I think the board has tried to take some steps
Speaker 7: with this package to try and mitigate some of that
Speaker 7: risk and sort of have Musk play a role in
Speaker 7: in you know, succession, But the planning for that still
Speaker 7: seems to be, you know, pretty much you know, sort
Speaker 7: of to the side, as they really sort of focus
Speaker 7: as a board on retaining him and on incentivizing him.
Speaker 1: Can you take us to how they have voted in
Speaker 1: prior votes on pay for Tesla or the relationship between
Speaker 1: the Norwegian Weld Fund and Elon Musk going forward what
Speaker 1: that means for well, really the retail base, which is
Speaker 1: the big push here for many.
Speaker 7: Yeah, I think as much as this no vote is concerning,
Speaker 7: if if you want to see this measure pass, you know,
Speaker 7: we only have to go back to last year to
Speaker 7: an example of when this fund voted against a Musk
Speaker 7: pay package. This was the vote on reratifying the twenty
Speaker 7: eighteen award that a judge in Delaware threw out. And
Speaker 7: there's there's kind of a juicy story to that in
Speaker 7: that the CEO of this wealth fund, you know, kind
Speaker 7: of got raked over the coals by Musk. We found
Speaker 7: out later for the way that the fund voted on
Speaker 7: that pay package. There was a freedom of information requests
Speaker 7: for messages between the head of the fund, Nikolai Tangen
Speaker 7: and Elon Musk, and Musk, you know, refer to this
Speaker 7: notion that he needed to quote make amends for the
Speaker 7: way that the fund voted. So there is a backstory here.
Speaker 7: And as much as you know, this is maybe a
Speaker 7: negative signal again if you want this to pass. We've
Speaker 7: seen that it's been the case that even when this
Speaker 7: fund has opposed a measure that the board has wanted
Speaker 7: to see through, the board has managed to get its
Speaker 7: way with its you know, in part thanks to its
Speaker 7: very substantial retail investor base.
Speaker 1: Great context is always pretty most creted out, so appreciate
Speaker 1: you joining coming up. Grab well it Boost is early
Speaker 1: forecast for the year. We speak with the CFO P
Speaker 1: t Ui about the company's latest results as have been
Speaker 1: their tech AI is headed for the grocery aisle. Instacart
Speaker 1: is launching new AI tools, including an assistant they can
Speaker 1: make product recommendations. As it really leans the e commerce
Speaker 1: business into more profitable software those Natalie Lung joins us
Speaker 1: to talk us through it, tell us a little bit
Speaker 1: about how these actual instacar AI tools are working.
Speaker 8: So instacart is building this AI chadboard as a white
Speaker 8: label service for groceries, so they can actually have a
Speaker 8: chatboard within let's say Kroger's own iOS app or the
Speaker 8: Sprout's website app.
Speaker 3: Natalie, let's head out to Uber, one of the big
Speaker 3: decliners ride share good delivery, good, profit, not good.
Speaker 2: What's the story then, Yes.
Speaker 8: So Uber sort of reported some disappointing operating income and
Speaker 8: adjusted EBITDA this morning out of the third quarter, as
Speaker 8: well as some disappointing forecasts earning this forecast for the
Speaker 8: four Q and so it's the profit has not been
Speaker 8: catching up with some of the growth recovery. We're seeing
Speaker 8: their growth reaccelerated to more than twenty percent on the
Speaker 8: top line growth spookingymetric. And this is sort of attestament
Speaker 8: to their strategy to go into new products, some of
Speaker 8: which may not be proudable at the beginning, such as
Speaker 8: autonomous investments, which they have been doing a lot of recently.
Speaker 2: Most Natalie Lung, thank you very much.
Speaker 3: Food delivery and right hailing company Grab raised its earnings
Speaker 3: forecast for the year after carely profit top testaments. The
Speaker 3: Singapore based Grab introduced new products like group food orders
Speaker 3: and less expensive shared rights that helped drawing customers. Here
Speaker 3: to discuss Peter Uey grabs CF. That's so interesting, right,
Speaker 3: you just heard Natalie talking about Uber bringing in new
Speaker 3: products that hurts profitability. Your strategy seems to me to
Speaker 3: be like more affordable products for a wider audience based
Speaker 3: customer base, but you're doing it in a way that
Speaker 3: is accreative to your bottom line.
Speaker 2: How have you done that? Let's try it.
Speaker 9: We've been on point in terms of strategy making our
Speaker 9: product more affordable and we really widened the top of
Speaker 9: the funnel for us. If you look at the third quarter,
Speaker 9: we have now forty eight monthly transacting users on our platform,
Speaker 9: which is another rerecord for us. And we're also seeing
Speaker 9: more you use spending on the platform at the same time,
Speaker 9: so that it affordability also is pushing the average spend
Speaker 9: also on our platform because they're transacting more on the platform.
Speaker 9: If you look at the number of transactions on our platform,
Speaker 9: we've grew twenty seven percent, which was actually growing faster
Speaker 9: than our GMB also at the same time. So what
Speaker 9: we're seeing is a number of things. One is people
Speaker 9: are engaging on the platform. We're also cross selling more
Speaker 9: also as they're coming in into certain funnels that we
Speaker 9: have on the affordable side, they're also trying other products
Speaker 9: that we have, whether it's the group order that you
Speaker 9: just mentioned, whether it's the dine out features that we
Speaker 9: have also for them to be able to go to restaurants.
Speaker 9: So there's a lot more products that we've actually been
Speaker 9: monetizing and that's producing some of the results that you've seen.
Speaker 3: If you have a strategy where group food orders and
Speaker 3: shared rides are a driver of demand, do you need
Speaker 3: big volume in order to make this a profitable exercise?
Speaker 2: For grab?
Speaker 9: Obviously, scale is important. The more scale that we have,
Speaker 9: the more users using the platform, the more we can
Speaker 9: actually leverage the cost structure of our business and also
Speaker 9: scale the big driver base that we have also at
Speaker 9: the same time. So it does play a role, and
Speaker 9: hence what you've been seeing is that now over a
Speaker 9: third of our user base, especially in deliveries now are
Speaker 9: coming into what we call more the affordable product stack,
Speaker 9: and it's a great entry point for them to use.
Speaker 9: You're looking at over twenty five million monthly transacting users
Speaker 9: just interacting in those affordable products, just on the food
Speaker 9: delivery side of the business. And that's a great way
Speaker 9: for us because it enables us for those users who
Speaker 9: are a little bit more price sensitive to try the
Speaker 9: product first, get a taste of it. Also, they're a
Speaker 9: little bit more price sensitive on the delivery fee, and
Speaker 9: we've managed to be able to lower the delivery fee
Speaker 9: for them. But they also get to experience the platform,
Speaker 9: and once they've experienced the platform, they get to also
Speaker 9: experience other products like grocery delivery, which is still a
Speaker 9: very nascent business for us. It's about ten percent of
Speaker 9: out delivery GMB. And at the same time, also we're
Speaker 9: cross selling them to other products like dine now for
Speaker 9: an example, for them to be able to go to restaurants.
Speaker 1: At the same time, it's interesting that you also for
Speaker 1: fintech as well and loans.
Speaker 2: But I've just got to target.
Speaker 1: The ennefit in the room is that we hear all
Speaker 1: these growth stories, we see analyst raising price target on you,
Speaker 1: but the shares are down on the day, Peter, and
Speaker 1: from the conversations you had with investors and analysts. What
Speaker 1: was it that perhaps was a little bit of concern.
Speaker 9: About I would say any of concern. A lot of
Speaker 9: the investors are really focused on how we are going
Speaker 9: to finish the quarter, and I've reiterated them that were
Speaker 9: on track to finish a very strong quarter. If anything,
Speaker 9: that reflects on the guidance that we've given out. Also,
Speaker 9: we've increased the EBD guidance now to four hundred and
Speaker 9: ninety million dollars to five hundred and that's there also
Speaker 9: shows that our confidence in terms of how we're exiting
Speaker 9: the quarter. I've also told them that in terms of
Speaker 9: our GM we growth, we're continuing to sustain this growth
Speaker 9: acceleration in our business today. So we are looking to
Speaker 9: finish strong in the quarter. One of the areas that
Speaker 9: we're focusing also is the fintech business. We've given out
Speaker 9: a one billion dollar loan outstanding by the end of
Speaker 9: the year and we're on target to hit that also,
Speaker 9: so all the different parts of the business are on
Speaker 9: track for us to have a very strong finish of
Speaker 9: the year.
Speaker 1: What's also on track is early twenty twenty six Robotaxi
Speaker 1: Chinese robotaxi company we Ride. You've been partnering there. How
Speaker 1: are you seeing av as the key area of focus
Speaker 1: just briefly.
Speaker 9: Yeah, we're leaning it into av it the biggest platform
Speaker 9: in Southeast Asia. We're leaning into the rarest part of
Speaker 9: investments that were making. One is across learning the tech
Speaker 9: and whether it's the wee Right partnership that we have
Speaker 9: in Singapore. We're hoping to have the cast deployed on
Speaker 9: the street in the first quarter to be able to
Speaker 9: take on public passengers with the safety driver. And also
Speaker 9: we're looking at US technology such as main Mobility. We
Speaker 9: made an announcement we're honering with main Mobility also, So
Speaker 9: we're looking at all the different tech and taking the
Speaker 9: best of it and really bringing it to Southeast Asia.
Speaker 2: Peter quickly.
Speaker 3: You know, across the jurisdictions you operate in, do you
Speaker 3: recognize one that is a better regulatory environment to deploy
Speaker 3: robotaxi in.
Speaker 9: You know, in all the countries, especially when we're studying
Speaker 9: in Singapore, because really Singapore, when it comes to the
Speaker 9: government regulations that the standard are very high here and
Speaker 9: a lot of the other Southeast Asian countries tend to
Speaker 9: look to Singapore as a proxy, So we've been working
Speaker 9: very closely with them, and that's around safety, which is
Speaker 9: really important, and also the customer adoption of autonomous vehicle itself.
Speaker 9: But at the same time, also we're leaning it in
Speaker 9: terms of how we can rescale the existing driver base
Speaker 9: that we have here also, so we identifying new opportunities
Speaker 9: for driver base where they become safety drivers, that become
Speaker 9: remote drivers, fleet operators, etc. Which is really important. So
Speaker 9: the way we're approaching AV is working with the government
Speaker 9: but also working with the driver community and also the
Speaker 9: end user also to be able to adopt these new technologies.
Speaker 1: I mean, the labor impact of AI as front center.
Speaker 1: It's interesting that you're really leaning into that, Peter, the
Speaker 1: prioritization of innovation. How much you were able to do
Speaker 1: that while still driving the bottom line because profitability is
Speaker 1: being asked of you.
Speaker 9: Yeah, we'll Actually AI is something which is very core
Speaker 9: to grab itself.
Speaker 2: It's not something new.
Speaker 9: Also, we've been focusing a lot on AI about four
Speaker 9: or five years ago. We've developed our own models actually
Speaker 9: very early on. We now have over one thousand models
Speaker 9: in production that we're running here. And the way we've
Speaker 9: been operating in the last eighteen months since the technology
Speaker 9: has advanced so much is really internally we're also using
Speaker 9: a lot of AI of a ninety eight percent of
Speaker 9: our engineers today use some sort of AI code assist.
Speaker 9: What also we started to deploy is the products to
Speaker 9: our customers. Also, we have voice activation now for the
Speaker 9: visually impaired where they can actually just speak to our
Speaker 9: app and able to order a food or order a
Speaker 9: ride for an example. And also we've deployed copilot equivalent
Speaker 9: to our driver base where they could really rely as
Speaker 9: on with a really effective a pilot to be able
Speaker 9: to navigate throughout their day. And also with the merchant
Speaker 9: or merchant bot actually that we have also they can
Speaker 9: interact with our merchants.
Speaker 1: Staying up late for us. We so appreciate it you
Speaker 1: do of grab the Chief Financial Officer. It's election day
Speaker 1: in the US and millions of Americans heading to the
Speaker 1: polls to cast ballots in local and state races. In
Speaker 1: New York, the meyoral contest is in the spotlight Zauraen
Speaker 1: Mamdani Andrew Cuomo Curtis leewa battle for city Hall, an
Speaker 1: outcome that could have major implications of big tech footprint
Speaker 1: right here in the city. Let's get the latest on
Speaker 1: an extraordinary race for Miles Miller. What are you watching
Speaker 1: out for?
Speaker 6: Yeah, you know, this is going to be a race
Speaker 6: that really is going to be either a landslide and
Speaker 6: a mandate or a squeaker with Andrew Cuomo. But the
Speaker 6: one thing that I think the tech community is looking
Speaker 6: out for is if Mamdani is to win, will these
Speaker 6: tech firms stay in New York. And the answer that
Speaker 6: he's given is yes. He says that in a city
Speaker 6: that is more affordable, tech firms will be able to
Speaker 6: recruit and retain much quicker. And what he has said
Speaker 6: is that that is what will be born out of
Speaker 6: some of his big proposals, talking about everything from free childcare,
Speaker 6: discounted childcare, to free buses, and he's saying that that'll
Speaker 6: have a measurable effect on the tech community. You know,
Speaker 6: as I speak to folks like Jeff blau At related
Speaker 6: in some other real estate firms, they say that tech
Speaker 6: is really starting to continue to work and stay in
Speaker 6: New York. And you know, those were some of the
Speaker 6: people who were backing Eric Adams and Andrew Cuomo's campaign.
Speaker 6: Will they be able to move over and work with Mamdanni.
Speaker 6: Mamdanni thinks yes if he is elected, because he will
Speaker 6: have this affordability message and that will bore true. We
Speaker 6: also know that if Andrew Cuomo were elected, you know,
Speaker 6: he spent ten years as governor and really worked very
Speaker 6: well with the tech community, and that's what he is
Speaker 6: making his pitch as as well.
Speaker 2: Bloomberg's Miles Miller, thank you very much.
Speaker 10: Me.
Speaker 3: While voters in New Jersey and Virginia are heading to
Speaker 3: the polls and key gubinatorial races, contests that could shape
Speaker 3: house states approached big tech, artificial intelligence, and data center development,
Speaker 3: Bloomberg's remain bostic in New Jersey with the latest and
Speaker 3: remain whether a Republican win or a Democratic win, the
Speaker 3: considerations are very clear.
Speaker 10: Here, yeah, ed. And in fact, this has actually become
Speaker 10: a bit of a sleeper issue in this campaign. Remember
Speaker 10: it was just about a year ago when one of
Speaker 10: the main wholesalers in this region actually ended up delivering
Speaker 10: to utilities a more than tenfold jump in wholesale electricity prices,
Speaker 10: and that was driven almost entirely by a big build
Speaker 10: out in data center demand earlier this year, just in
Speaker 10: the summer of twenty twenty five, there was a fresh
Speaker 10: auction and prices went up again more than twenty percent.
Speaker 10: Remember these are wholesale prices, and these are prices that
Speaker 10: are effectively a barometer on future demand for AI capacity.
Speaker 10: And I want to put this in context for you ED.
Speaker 10: As of right now, there is about five hundred megawatts
Speaker 10: of AI data center capacity up and running right now,
Speaker 10: so within a year that's likely to double. There are
Speaker 10: two big projects under the works about one hundred plus
Speaker 10: a mega white project being built by core Weave in
Speaker 10: central New Jersey in the downtowntal Worth and one even
Speaker 10: larger than that down south near Atlantic City, Carolina, and
Speaker 10: there that's going to have a big impact on energy prices.
Speaker 1: Great context Bimberg's remain Bostick.
Speaker 3: And the earnings landscape. We're thinking a lot about Spotify.
Speaker 3: This is kind of the Daniel Eck farewell tour. I
Speaker 3: guess a little bit. Actually, Common's about to tell me
Speaker 3: that I might be a bit wrong on that, but
Speaker 3: the core data pretty good. Let's get more on what's
Speaker 3: going on with Spotify Blue. It is actually common out
Speaker 3: there on the East coast. You know, we've been through
Speaker 3: this story with you, Daniel K. Taking a step back
Speaker 3: the new co CEO structure, and I'm just looking at earnings.
Speaker 3: The key metrics that matters seem to be good. They
Speaker 3: seem to be okay.
Speaker 11: Yeah, yeah, no great order. I think investors, you know,
Speaker 11: there's a little bit of a loss at one point today.
Speaker 11: I think investors really just want to hear that Spotify
Speaker 11: is going to raise prices in the US, and they
Speaker 11: didn't exactly hear that, so there was a little trepidation there.
Speaker 11: But otherwise, broadly speaking, things are looking pretty good.
Speaker 1: It does seem to be pricing power, doesn't it that
Speaker 1: everyone's focusing in on and whether advertising can just go
Speaker 1: up into the right In terms of that sort of oppo.
Speaker 1: What are you hearing for the trajectory in twenty twenty six?
Speaker 1: What are AMAS investors focusing on under the new co CEOs?
Speaker 11: Yeah, so, well, they're focusing on a few things. AI
Speaker 11: definitely is a big topic. Spotify is now partnering with
Speaker 11: chat Chat GPT, so Spotify shows up in chat GPT.
Speaker 11: They talked a lot on their earnings calls about this
Speaker 11: idea of ubiquity, so their Apple TV app, Chat GPT
Speaker 11: and other places where Spotify can show up to be
Speaker 11: used everywhere people are so AI is a big conversation
Speaker 11: for sure, but also again those prices, the investors and
Speaker 11: the music rights holders want to see.
Speaker 3: Higher prices actually want to go to a story that
Speaker 3: you broke about Netflix, It's in talks to license video
Speaker 3: podcasts from iHeartMedia. On the surface symbol headline, but it
Speaker 3: was impactful in the moment. What have you learned in
Speaker 3: the course of reporting about this deal?
Speaker 11: Well, and this also relates to Spotify because Spotify was
Speaker 11: the first one out of the gate. They announced that
Speaker 11: they're licensing some of their video podcasts to Netflix starting
Speaker 11: in the new year. Crucially, this means those video podcasts,
Speaker 11: the full episodes will be removed from YouTube. So the
Speaker 11: fact that Netflix is having conversations with additional networks like
Speaker 11: iHeart is pretty significant. It shows that they really are
Speaker 11: interested in at least testing out this video podcast space.
Speaker 1: Ashley Carmen always breaking the news. We appreciate it, thanks
Speaker 1: for joining. Let's just return to the macro picture now
Speaker 1: around this investment landscape, because more Wall Street executives they
Speaker 1: are sounding the alarm bell. They're saying investors should brace
Speaker 1: for next market correction one ten percent in the next
Speaker 1: twelve to twenty four months. Christina Hoop, a Man Group
Speaker 1: chief market strategist, sees a mixed economic picture, saying it
Speaker 1: is the tale of two cities, tech led success masking
Speaker 1: broader week this elsewhere paces, say Christina Hooper joins us
Speaker 1: now and we are on this day shining out and
Speaker 1: palenteer for example, the sort of poster child or whether
Speaker 1: fundamentals live up to what have been deemed nosebreed valuations
Speaker 1: on nosebreed success stories. But how do you square that
Speaker 1: with then the potential for a pullback in the act market.
Speaker 12: More broadly, well, I think there is just a lot
Speaker 12: of enthusiasm around anything that's related to AI. And I'm
Speaker 12: old enough to remember the late nineteen nineties and how
Speaker 12: much enthusiasm there was around any companies that were related
Speaker 12: to the Internet. For example, everyone was scrambling to change
Speaker 12: their name to have dot com at the end. Now
Speaker 12: many companies are scrambling to say they are part of
Speaker 12: this incredible AI food chain. And I think what is
Speaker 12: happening though, is that investors may not be thinking about
Speaker 12: what could be obstacles to the continued CAPEX boom. Around AI.
Speaker 12: I think there are some pretty significant ones. First of all,
Speaker 12: we knew and of course we got the deal done
Speaker 12: on rare earth elements, but that was clearly an issue.
Speaker 12: If you don't have access to enough rare earth elements,
Speaker 12: that will certainly slow down an AI cap x boom.
Speaker 12: But we also have concerns around how much productivity gains
Speaker 12: companies will actually see. We had that MIT report that
Speaker 12: came out last spring that suggested maybe not so much.
Speaker 12: There could be a point where companies say, you know what,
Speaker 12: we've thrown an enormous amount of money at this We're
Speaker 12: not necessarily seeing all that we wanted to see. Will
Speaker 12: slow down investment, and then finally we have the potential
Speaker 12: for a NIMBI movement not in my backyard. In fact,
Speaker 12: you just reported on how there are AI data centers,
Speaker 12: and of course we're seeing a lot more news around
Speaker 12: neighborhoods that are not thrilled to have AI there or
Speaker 12: states that don't want to see it there because electricity
Speaker 12: costs are going up a lot.
Speaker 1: So there are a lot of macro elements and risk
Speaker 1: factors to the endless money that's being thrown at the
Speaker 1: desire to build out by the hyper scale as we've
Speaker 1: seen in their earnings, but more about the valuation from
Speaker 1: because I can understand how people. Is that really what
Speaker 1: takes the wind out of the sales of valuations or
Speaker 1: is it more of a Michael Berry perspective that you know,
Speaker 1: there's just an awful lot of endless capital expenditure and
Speaker 1: also cloud growth similarities that seem to be slowing down,
Speaker 1: and he's trying to say that, you know, maybe it's
Speaker 1: time to bet against just how far we've run rather
Speaker 1: than the future risks.
Speaker 12: Absolutely, I think it's both. There are certainly real question marks.
Speaker 12: I think about how much more investment we'll see companies
Speaker 12: make without seeing you know, sort of significant gains and
Speaker 12: perhaps recognizing that there could be some overlap. There could
Speaker 12: be there could be more discretion and more thoughtfulness around spending.
Speaker 12: So I certainly think there's there's a little of both there.
Speaker 12: I just as an outside observer seeing the credible, incredible
Speaker 12: amount of money and excitement, there's nothing like it. I
Speaker 12: think since what we've seen in the late nineteen nineties,
Speaker 12: we know how that ended, so we should just think
Speaker 12: of it as a cautionary tale and say, hey, maybe
Speaker 12: we should be diversified. Maybe we should have some exposure
Speaker 12: to China AI, given that the risks aren't the same,
Speaker 12: the vulnerabilities aren't necessarily the same.
Speaker 2: There, let's go back to the tail of two cities thesis.
Speaker 3: So American technology at least good, but papering over some cracks.
Speaker 2: What are those cracks?
Speaker 3: Tell our audience more about the warning signs you're seeing
Speaker 3: in other parts of this economy.
Speaker 2: Christina, So, I certainly.
Speaker 12: Think we are seeing consumer weakness, especially among lower income consumers,
Speaker 12: but also some middle income consumers. And I think we
Speaker 12: can just look to the Chipotle earnings call last week
Speaker 12: for signs of that growing weakness. September and October were
Speaker 12: difficult months where the frequency of visits went down for
Speaker 12: a lot of customers, many of whom are young, and
Speaker 12: so that could very well be giving us an inclination
Speaker 12: of what could come and what could spread. Because keep
Speaker 12: in mind, we are seeing a lot of white collar
Speaker 12: job layoffs being announced. We could see more coming and
Speaker 12: that will likely impact middle to higher income consumers, many
Speaker 12: of whom are spending still spending quite robustly, and that
Speaker 12: could create a much bigger problem for the economy. Thus far,
Speaker 12: it's been a two legged stool, and it could very
Speaker 12: well go down to one and a half legs.
Speaker 3: So this is very interesting going into the holiday quarter.
Speaker 3: Maybe this is not the right data set. That Apple
Speaker 3: told us last week that revenue going into the holiday
Speaker 3: quarters would be up ten to twelve percent, That indicating
Speaker 3: that in the middle to hire income in is they'll
Speaker 3: go out and spend money on iPhone. I guess that
Speaker 3: how does that set us us up for the holiday
Speaker 3: quarter and how we view this economy.
Speaker 12: Well, we could still have a very strong holiday quarter
Speaker 12: driven by those higher income consumers. My concern though, is
Speaker 12: that there are vulnerabilities there, and especially as we go
Speaker 12: into twenty twenty six, we could see more in the
Speaker 12: way of white collar layoffs. We also know that the
Speaker 12: higher income consumers are not so sensitive to inflation, but
Speaker 12: they are very sensitive to the stock market, and so
Speaker 12: if we were to see some kind of stock market
Speaker 12: sell off, think that would be problematic and would certainly
Speaker 12: reduce high end consumer spending as well.
Speaker 1: Christina, I want to go back to something you said
Speaker 1: that maybe you diversify into China. Ai had a great
Speaker 1: conversation with Man Deep just on the side of the set.
Speaker 1: He's oblom Bug intelligence analysts. He's just been to Asian
Speaker 1: he said, they're doing it so differently there because they
Speaker 1: cannot depend on in video chips being limitless. They are
Speaker 1: underaware of the geopolitical risks, maybe in the way that
Speaker 1: the US ones are putting rare rest to one side,
Speaker 1: which China names and how does one get exposure to
Speaker 1: that from your mindset?
Speaker 12: So I can't name specific companies, but I can say
Speaker 12: that there are so many that look very attractive, that
Speaker 12: have much lower valuations and are part of that AI
Speaker 12: food chain and that capex spending. I think we'll see
Speaker 12: more dollars go there, and certainly it's in earlier innings
Speaker 12: in Asia, so I think we have a longer runway there.
Speaker 2: Christina Hooper of Man Group. Great to have you back
Speaker 2: on Bloomberg Tech. Thank you very much.
Speaker 3: Now coming up, Snowflake CEO Shwida Ramaswami joins us talk
Speaker 3: about the company's latest partnerships to expand AI enterprise access.
Speaker 3: This on a day when investors are broadly questioning AI valuations,
Speaker 3: particularly in the software space.
Speaker 2: That conversation's next. This is Bloomberg Tech.
Speaker 1: Now for Talking Tech and first s up in video
Speaker 1: and Deutsche telecom One have enveiled plans to build out
Speaker 1: a one point two billion dollar data center in Germany,
Speaker 1: boosting Europ's AI infrastructure. The facility will it's set to
Speaker 1: be one of Europe's largest in the region, expected to
Speaker 1: begin operations in the first quarter of twenty twenty six.
Speaker 1: Plus a two hundred and forty percent rally in sgay
Speaker 1: Heinez shares that's in this year alone explanted a warning
Speaker 1: from the Career Exchange, signaling that the stock may have
Speaker 1: been overheating. The exchange has issued an investment caution on
Speaker 1: the chip maker following a surge driven by booming demand
Speaker 1: for AI memory chips, and Nintendo is raising its sales
Speaker 1: forecast for the switch to now expecting to sell nineteen
Speaker 1: million units by March twenty twenty six, up from its
Speaker 1: early projection of fifteen million. The upbeat outlook follows strong
Speaker 1: early demand for the company, reporting of a ten million
Speaker 1: units sold by the end of September.
Speaker 3: Ed Okay Snowflake is announcing a series of new and
Speaker 3: expanded partnerships part of the company's effort to become the
Speaker 3: data center platform of choice for enterprise AI. Snowfla CEO
Speaker 3: Shrida Ramaswami joins us to discuss each of them. The
Speaker 3: one that caught my eye was the relationship with Google
Speaker 3: Cloud and bringing the availability of the latest.
Speaker 2: Gemini models to Snowflake.
Speaker 3: And the reason I want to start with that is
Speaker 3: you are all about choice, right because you can look
Speaker 3: at anthropic OAI. But there must have been an indication
Speaker 3: to U Shreda that those Gemini models are in demand
Speaker 3: amongst your customer base.
Speaker 10: Here.
Speaker 2: It's great to be here.
Speaker 13: Absolutely, Gemini models are among the best in the world
Speaker 13: and a lot of our customers are asking for access
Speaker 13: to these models. We are thrilled to be expanding our
Speaker 13: partnership with Google Blogs similar to what we have done
Speaker 13: with our big partners AWS and Azure.
Speaker 2: Is a big step forward for us.
Speaker 3: Can you just explain the basics of the Snowflake business model.
Speaker 3: We always talk about Snowflake being a different layer above
Speaker 3: the primary cloud. But why is it important that through
Speaker 3: cotex AI your platform, any given enterprise customer can access
Speaker 3: the underlying model.
Speaker 13: This is a great question. Snowflake is the data layer
Speaker 13: that sits above cloud service providers the AWS and Azure
Speaker 13: and GCP. We are very much a data centric platform.
Speaker 13: We are about making it really easy to ingest, clean
Speaker 13: and be able to run analytics on top of the
Speaker 13: data and AI, especially Snowflake Intelligence that we are launching,
Speaker 13: is a game changer because it brings the access the
Speaker 13: power of all the data directly to end users and
Speaker 13: what required dashboards, what required analysis right now at the fingertips,
Speaker 13: at the voices of every single person. And that's the
Speaker 13: reason why Snowflake plays such a critical role. We are
Speaker 13: among the best data platforms that run on top of
Speaker 13: the hyperscalers and it is that that gives us incredible
Speaker 13: ability to create value using AI with partnerships with the
Speaker 13: best folks in the world. The open AI is an
Speaker 13: anthropic and now.
Speaker 1: Gemini creating value. I think that has been the proof point,
Speaker 1: the watchword of this entire year. Strata. How can you
Speaker 1: turn to our audience and say this is return on
Speaker 1: AI investment, this is what my customers are experiencing.
Speaker 13: This is a great question. First of all, our model
Speaker 13: is a consumption model, meaning that Snowflake doesn't get paid.
Speaker 13: We don't get to recognize revenue unless customers actually use products.
Speaker 13: We don't sell subscriptions that automatically ties us to utility
Speaker 13: that we create with our AI products. We work with
Speaker 13: our customers, whether it is a ts Imagine or the
Speaker 13: USA bobsled team, to create products that they get additional
Speaker 13: value from, for example, often replacing an existing dashboarding solution
Speaker 13: like we have done at Snowflake. You're confident that using
Speaker 13: snowf like intelligence, we can replace a bunch of dashboards
Speaker 13: and run the entire data access in a much more
Speaker 13: flexible way for a fraction of the cost. We very
Speaker 13: much believe in showing ROI return on investment for every
Speaker 13: single project that we do, and the consumption model is
Speaker 13: a huge help here because if the product isn't used,
Speaker 13: there's no revenue on our site.
Speaker 1: So should I. When we're talking in the market, writ
Speaker 1: large about warriors of an AI bubble as people are
Speaker 1: perhaps selling certain names because they feel that the fundamentals
Speaker 1: have become dislocated with the actual valuation of companies. How
Speaker 1: are you thinking in this your context? How are you
Speaker 1: worrying perhaps that companies will stop their spending until they
Speaker 1: get ROAI in the near term.
Speaker 13: Well, this is where as I said, our model is
Speaker 13: very very helpful because we don't ask for investments ahead
Speaker 13: of the return. Very much we create pilots, we create
Speaker 13: proofs of concept and show value to your to our customers,
Speaker 13: and only then is it scaled. In our own example,
Speaker 13: we launched a tool that indexed all of the enablement information,
Speaker 13: the education information for our sales team, and then we
Speaker 13: started putting more and more things. Now all of our
Speaker 13: sales information lives in a single agent is used pretty
Speaker 13: much by everyone in the salesfork, certainly me at Snowflake.
Speaker 13: It is that step by step launch and not a
Speaker 13: big bang launch that is also important. And keeping that
Speaker 13: focus on what are projects that go about creating value?
Speaker 13: Are they replacing existing systems? Are they lowering costs? That
Speaker 13: kind of moniaical focus is what is helping us successful
Speaker 13: even in the AI era, because we very carefully tally
Speaker 13: all of this up and make sure that our customers
Speaker 13: feel like we are creating value every step of the way.
Speaker 3: STREETA, are we or are we not in an AI bubble?
Speaker 3: Based on what you're saying every day through Snowflake.
Speaker 13: Well, absolutely there's a lot of enthusiasm about it. But
Speaker 13: at Snowflake, I and every employee at Snowflake is focused
Speaker 13: on what does this mean for our customers? We are
Speaker 13: back to basics. We created Snowflake Intelligence because we wanted
Speaker 13: to bring the power of agentic AI to every single
Speaker 13: user within a company in a meaningful way. We wanted
Speaker 13: to make sure that data analysts who mind you get
Speaker 13: paid a lot, are focused on helping create data agents
Speaker 13: rather than writing endless equal queries as I've done in
Speaker 13: my life, and that focus on what are projects that
Speaker 13: can create value for our customers. How do we get
Speaker 13: them to production fast? How do we show the return
Speaker 13: to them is what we can do? The outside market valuations,
Speaker 13: those things are distractions. I think the more we focus
Speaker 13: on back to basics, the better off we are.
Speaker 1: Should Ramswami, it's great to get back to basics with
Speaker 1: the Snowflake CEO. We appreciate your time.
Speaker 3: AMD sets report earnings after the closing bell, and the
Speaker 3: results should give an indication of how the company's AI
Speaker 3: push is going. Investor sentiment has been strong after the
Speaker 3: chipmakers signed deals with open Ai and Oracle to deliver
Speaker 3: massive amounts of its latest AI chips. Let's get more
Speaker 3: with Bloomberg Semiconductor reporter Ian King, it's probably a good
Speaker 3: moment to look at what the forecasted revenue is for
Speaker 3: the period, and how much of that is data center
Speaker 3: revenue because the reality is, for all the headlines and
Speaker 3: that stock performance over the last two months, AMD is
Speaker 3: just still a much smaller second player behind Video.
Speaker 6: Yeah.
Speaker 4: I mean, it's not getting in annual revenue what in
Speaker 4: Vidia is getting in a year. And the story is
Speaker 4: as simple as that. But what we've seen over the
Speaker 4: last three months is maybe AMD has a seat at
Speaker 4: the table now maybe you know, we've seen some validation
Speaker 4: of its technology in these deals. Whether that translates in
Speaker 4: the short term to stronger revenue and stronger revenue forecast
Speaker 4: think importantly is going to be what determines the reaction today.
Speaker 1: There's been a lot of people trying to interpret who
Speaker 1: the key clients are. I think link secretary strategies really
Speaker 1: saying the key client for MD is metter and actually
Speaker 1: how real some of these longer term deals are in
Speaker 1: how much vindication is Lisa's who's going to give tonight
Speaker 1: or is it all about the analysts meeting that's coming
Speaker 1: up in the next week.
Speaker 4: It'll be both. I think up until now everybody has
Speaker 4: sort of been AMD curious. Will you know we should
Speaker 4: give them a chance, We should give them you know
Speaker 4: a look and maybe see if they're a viable alternative.
Speaker 4: These deals apparently tell people know their technology is real.
Speaker 4: So what they will want from Lisa is the numbers.
Speaker 4: If she doesn't give them the numbers the strong forecast,
Speaker 4: they'll want a pretty good explanation of why not now
Speaker 4: and if not why now then?
Speaker 3: When AMD's traditional market is processes for personal computers and
Speaker 3: servers away from the AI chip, what do we think
Speaker 3: will learn there?
Speaker 4: Yeah, I know there are very strong expectations there. You'll
Speaker 4: remember Intel came out and said, hey, we were worried
Speaker 4: that things were in trouble there and that we've got
Speaker 4: a lot of inventory. Turns out demands really strong for
Speaker 4: aipcs and for standard server parts. AMD is actually taking
Speaker 4: market share or has been taking market share from Intel.
Speaker 4: So the expectations there are very strong and that could
Speaker 4: help the near term numbers.
Speaker 1: It's relentless these earnings in inkings across it throughout for us,
Speaker 1: we so appreciate it. Thank you all things AMD after
Speaker 1: the bell, but that as I from this edition a
Speaker 1: Bloomberg techn YEP.
Speaker 3: Don't forget to check out the pod to recap the show.
Speaker 3: There is so much going on in this earning season
Speaker 3: and in the background anxiety about valuation and bubbles. Two
Speaker 3: day's time of vote on Elon Musk's proposed one trillion
Speaker 3: dollar pay package and earnings, no matter how good they
Speaker 3: are carriers Impalent's case, valuation is what we're all concerned about.
Speaker 3: I alluded to it and many of you use it.
Speaker 3: Listen to the podcast. It's very good, if we say
Speaker 3: so ourselves. You know where to find it. It's on
Speaker 3: the Bloomberg platform as well as online on Apple, Spotify,
Speaker 3: and iHeart this is Bloomberg Tech.
Speaker 1: H