1 00:00:02,520 --> 00:00:13,360 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive 2 00:00:13,400 --> 00:00:17,160 Speaker 1: from coast to coast with Caroline Hide in New York 3 00:00:17,520 --> 00:00:21,799 Speaker 1: and ever though in San Francisco. 4 00:00:22,680 --> 00:00:25,880 Speaker 2: This is Bloomberg Tech coming up. Cisco shares gain after 5 00:00:25,920 --> 00:00:30,040 Speaker 2: boosting it's twenty twenty six forecast, showing progress in its 6 00:00:30,080 --> 00:00:32,839 Speaker 2: efforts to capture more AI spending. We're going to discuss 7 00:00:32,880 --> 00:00:34,800 Speaker 2: with the CEO plus shares of Disney. 8 00:00:34,800 --> 00:00:37,280 Speaker 3: They're falling today as the company invests in its content 9 00:00:37,320 --> 00:00:41,000 Speaker 3: slate and stream bundling. Our conversation with the Disney CFO Hugh. 10 00:00:40,880 --> 00:00:44,520 Speaker 2: Johnson, and ten Cent strikes a deal with Apple under 11 00:00:44,560 --> 00:00:47,640 Speaker 2: which the iPhone maker takes a fifteen percent cut for 12 00:00:47,760 --> 00:00:50,120 Speaker 2: purchases in we chat, minigames and apps. 13 00:00:50,560 --> 00:00:53,000 Speaker 3: First free checking on these markets and maybe a little 14 00:00:53,000 --> 00:00:55,160 Speaker 3: bit of chot as we try to discern when we 15 00:00:55,200 --> 00:00:57,680 Speaker 3: get the government data and what that will show the 16 00:00:57,720 --> 00:01:00,840 Speaker 3: Federal Reserve, canondean do or do not when it comes 17 00:01:00,840 --> 00:01:02,760 Speaker 3: to cutting in the future. The market a little bit 18 00:01:02,800 --> 00:01:05,120 Speaker 3: uncertain at the moment. It seems as though that lifting 19 00:01:05,120 --> 00:01:07,320 Speaker 3: of a government shutdown have been priced in. We're currently 20 00:01:07,319 --> 00:01:09,640 Speaker 3: off by one point four percent. We're dragged down by 21 00:01:09,640 --> 00:01:13,240 Speaker 3: the key names in Magnificent seven. But ed, you're looking 22 00:01:13,280 --> 00:01:15,839 Speaker 3: at the company that's adding the most in points upside. 23 00:01:16,440 --> 00:01:18,640 Speaker 2: Yeah, one of the big movers to the upside is 24 00:01:18,720 --> 00:01:21,800 Speaker 2: Cisco shares currently up around four percent. They'd open much 25 00:01:21,880 --> 00:01:24,280 Speaker 2: higher than that. The key bit is they're trading at 26 00:01:24,280 --> 00:01:27,360 Speaker 2: their highest level since the year two thousand, after the 27 00:01:27,400 --> 00:01:31,039 Speaker 2: company raised its outlook and showed progress on capturing more of. 28 00:01:31,000 --> 00:01:32,480 Speaker 4: The global AI spend. 29 00:01:32,840 --> 00:01:37,200 Speaker 2: Let's get the details with Cisco's CEO, Chuck Robins. Chuck, 30 00:01:37,560 --> 00:01:40,560 Speaker 2: in the year two thousand, Cisco is one of the 31 00:01:40,600 --> 00:01:45,319 Speaker 2: original four horsemen of technology. Based on the numbers you 32 00:01:45,400 --> 00:01:47,840 Speaker 2: gave and what you said on the call, do you 33 00:01:47,840 --> 00:01:52,480 Speaker 2: feel like customers, the new ones and investors now understand 34 00:01:52,920 --> 00:01:55,160 Speaker 2: Cisco's place in this new AI era. 35 00:01:56,960 --> 00:01:58,960 Speaker 5: Well, first of all, thanks for having me, and you know, 36 00:01:59,000 --> 00:02:01,440 Speaker 5: I'm super proud of what teams have accomplished. We had 37 00:02:01,440 --> 00:02:04,920 Speaker 5: a record quarter and set ourselves up for what's likely 38 00:02:04,920 --> 00:02:06,760 Speaker 5: going to be the best year we've ever had. So 39 00:02:06,960 --> 00:02:10,280 Speaker 5: it was just a great performance. And as I've been 40 00:02:10,320 --> 00:02:12,080 Speaker 5: asked a lot over the last twenty four hours to 41 00:02:12,120 --> 00:02:15,280 Speaker 5: reflect back on two thousand and it's kind of an 42 00:02:15,280 --> 00:02:20,160 Speaker 5: interesting comparison, but I think that, Look, the hyperscalers are 43 00:02:20,480 --> 00:02:24,600 Speaker 5: some of the most advanced customers in the world. They 44 00:02:24,680 --> 00:02:28,480 Speaker 5: do the deepest analysis of the technology before they make decisions, 45 00:02:28,960 --> 00:02:32,040 Speaker 5: and I think that their decisions to continue spending more 46 00:02:32,080 --> 00:02:35,720 Speaker 5: with us speaks volumes about the innovation and the technology 47 00:02:35,720 --> 00:02:37,519 Speaker 5: that our teams are building right now. So I'm really 48 00:02:37,520 --> 00:02:39,799 Speaker 5: proud of them, and I think it'll just extend into 49 00:02:39,840 --> 00:02:40,880 Speaker 5: the enterprise over time. 50 00:02:41,960 --> 00:02:44,160 Speaker 2: Chuck, who are some of those new customers that you've 51 00:02:44,200 --> 00:02:46,079 Speaker 2: been able to sign in the air context. 52 00:02:47,160 --> 00:02:51,440 Speaker 5: Well, we're just talking about the major hyperscalers, primarily in 53 00:02:51,480 --> 00:02:54,880 Speaker 5: the United States, but we've also announced these sovereign deals 54 00:02:54,880 --> 00:02:56,760 Speaker 5: in the Middle East with G forty two and the 55 00:02:56,760 --> 00:03:00,120 Speaker 5: Emirates as well as Humane in Saudi There's a lot 56 00:03:00,120 --> 00:03:02,079 Speaker 5: of work going on in the neo cloud space. We're 57 00:03:02,080 --> 00:03:05,800 Speaker 5: seeing sovereign players start popping up now in parts of 58 00:03:05,840 --> 00:03:09,880 Speaker 5: Europe as well as Southeast Asia and India. So it's 59 00:03:10,200 --> 00:03:12,680 Speaker 5: a broad swath of customers. But the one point three 60 00:03:12,720 --> 00:03:16,200 Speaker 5: billion that we talked about is strictly the top hyperscalers 61 00:03:16,880 --> 00:03:17,800 Speaker 5: that we're doing business with. 62 00:03:17,840 --> 00:03:20,120 Speaker 4: So you're talking about five companies and. 63 00:03:20,040 --> 00:03:22,760 Speaker 3: They're good for the money, as you can tell from 64 00:03:22,800 --> 00:03:23,880 Speaker 3: the cash flow that they. 65 00:03:23,760 --> 00:03:25,720 Speaker 6: Have chuck not two hundred million dollars. 66 00:03:25,720 --> 00:03:27,919 Speaker 3: That you are expanding into sovereign, you are expanding into 67 00:03:28,040 --> 00:03:31,080 Speaker 3: enterprise and neoclouds. How do you bake in some of 68 00:03:31,080 --> 00:03:33,040 Speaker 3: the risks that the market just cannot get enough of 69 00:03:33,080 --> 00:03:34,639 Speaker 3: talking about this circular economy. 70 00:03:36,040 --> 00:03:38,320 Speaker 5: Well, so we did talk about the fact that we 71 00:03:38,720 --> 00:03:42,000 Speaker 5: have over two billion dollars now in our pipeline through 72 00:03:42,000 --> 00:03:43,680 Speaker 5: the end of the fiscal years over the next three 73 00:03:43,760 --> 00:03:48,440 Speaker 5: quarters in neo cloud, sovereign cloud, and enterprise, and we 74 00:03:49,000 --> 00:03:51,720 Speaker 5: see that continue to accelerate. We took two hundred million 75 00:03:51,760 --> 00:03:55,440 Speaker 5: dollars in orders in Q one, and it's just it's 76 00:03:55,480 --> 00:03:58,920 Speaker 5: a natural way the technology technologies have been evolving over 77 00:03:58,920 --> 00:04:02,400 Speaker 5: the last decade. More they start in the hyperscalers, they 78 00:04:02,440 --> 00:04:05,360 Speaker 5: move through the telco space in this case the neo 79 00:04:05,400 --> 00:04:07,760 Speaker 5: clouds and the sovereign players, and then into the enterprise. 80 00:04:08,200 --> 00:04:10,960 Speaker 5: And it's happening exactly that way. And our bread and 81 00:04:10,960 --> 00:04:13,000 Speaker 5: butter over the years has been in the enterprise. And 82 00:04:13,040 --> 00:04:16,360 Speaker 5: we have lots of technolo knowlogy, We have a partner ecosystem, 83 00:04:16,760 --> 00:04:19,479 Speaker 5: we have full stack solutions, we have security, we have 84 00:04:19,600 --> 00:04:21,799 Speaker 5: all the things that they're looking forward to actually build 85 00:04:21,839 --> 00:04:25,560 Speaker 5: out AI workloads and deal with AI with confidence. 86 00:04:26,040 --> 00:04:28,560 Speaker 3: Let's just go to that security a little bit of 87 00:04:28,560 --> 00:04:30,400 Speaker 3: a fly in the ointment. Let's say, I know you've 88 00:04:30,400 --> 00:04:33,320 Speaker 3: talked clearly about perhaps how the booking of revenue can 89 00:04:33,320 --> 00:04:35,600 Speaker 3: be misinterpreted, but how are you going to sell that 90 00:04:35,720 --> 00:04:38,359 Speaker 3: more holistically? How do you think the security part of 91 00:04:38,440 --> 00:04:40,600 Speaker 3: the offering can really start firing on all cylinders. 92 00:04:41,680 --> 00:04:44,440 Speaker 5: Well, I started by saying clearly we're not pleased with 93 00:04:44,480 --> 00:04:46,680 Speaker 5: where we are yet, but I will say over the 94 00:04:46,720 --> 00:04:48,839 Speaker 5: last two to three years, we've made a lot of progress. 95 00:04:49,040 --> 00:04:53,200 Speaker 5: It's a major decision for customers to make big platform decisions. 96 00:04:53,240 --> 00:04:55,680 Speaker 5: In security, We've had a lot of great wins. I'm 97 00:04:55,680 --> 00:04:58,720 Speaker 5: proud of what the teams have built. And we saw 98 00:04:59,080 --> 00:05:02,279 Speaker 5: our next generation our walls, we saw mid teens growth 99 00:05:02,320 --> 00:05:06,320 Speaker 5: and orders there. We saw double digit arr growth and Splunk. 100 00:05:06,680 --> 00:05:08,799 Speaker 5: We saw our new and refreshed products on the security 101 00:05:08,800 --> 00:05:11,920 Speaker 5: side continue to show growth. And the issue we had 102 00:05:11,920 --> 00:05:14,440 Speaker 5: in the quarter was really it's an accounting issue around 103 00:05:14,440 --> 00:05:18,840 Speaker 5: how cloud delivered Splunk versus on prem delivered Splunk. The 104 00:05:18,880 --> 00:05:22,800 Speaker 5: cloud stuff is radable and realize revenues realized over the 105 00:05:22,800 --> 00:05:25,159 Speaker 5: life of the term, and the on prem stuff gets 106 00:05:25,160 --> 00:05:27,880 Speaker 5: recognized immediately, and we just had a major shift in 107 00:05:27,920 --> 00:05:30,080 Speaker 5: how our customers consume it, which is great for us 108 00:05:30,120 --> 00:05:33,400 Speaker 5: in the long term that they're buying more cloud based solutions, 109 00:05:33,800 --> 00:05:36,480 Speaker 5: but it creates a little bit of a challenge on 110 00:05:36,560 --> 00:05:38,640 Speaker 5: revenue during the quarter. The good news is the networking 111 00:05:38,680 --> 00:05:41,760 Speaker 5: business is doing incredibly well and can cover that for us. 112 00:05:43,400 --> 00:05:45,640 Speaker 2: Chuck, it is fair to say at a minimum that 113 00:05:45,680 --> 00:05:47,840 Speaker 2: the Cisco of today isn't the same as the Cisco 114 00:05:47,920 --> 00:05:51,120 Speaker 2: of two thousand. What you've done is kind of been 115 00:05:51,200 --> 00:05:53,880 Speaker 2: open about the product lineup and you've used M and 116 00:05:53,920 --> 00:05:57,400 Speaker 2: A to change the footprint of the company. What's your 117 00:05:57,480 --> 00:06:00,160 Speaker 2: latest thinking on that, the products that you offer and 118 00:06:00,200 --> 00:06:03,320 Speaker 2: what you need to do, either organically or inorganically to 119 00:06:03,400 --> 00:06:05,120 Speaker 2: offer what the world of AI wants. 120 00:06:06,480 --> 00:06:08,960 Speaker 5: I think the big things that we did we obviously 121 00:06:09,400 --> 00:06:12,560 Speaker 5: introduced a lot more software into our portfolio in areas 122 00:06:12,560 --> 00:06:16,120 Speaker 5: that are strategic, like security, and this Plunk acquisition has 123 00:06:16,120 --> 00:06:18,280 Speaker 5: been a great one. I think the other thing that's 124 00:06:18,279 --> 00:06:20,880 Speaker 5: worth calling out is is this investment that we started 125 00:06:20,920 --> 00:06:24,400 Speaker 5: in twenty sixteen to be clear on our silicon strategy 126 00:06:24,880 --> 00:06:28,440 Speaker 5: that is absolutely the reason that we're having success today 127 00:06:28,920 --> 00:06:31,120 Speaker 5: in the hyperscaler space. If we did not have our 128 00:06:31,160 --> 00:06:35,440 Speaker 5: silicon and develop and design our own silicon, we wouldn't 129 00:06:35,480 --> 00:06:39,880 Speaker 5: be participating at all. It's just black and white. And 130 00:06:39,960 --> 00:06:43,279 Speaker 5: so as we as we look at both internal innovation 131 00:06:43,360 --> 00:06:48,839 Speaker 5: as well as or inorganic opportunities. We're very focused on security, 132 00:06:48,920 --> 00:06:51,960 Speaker 5: We're very focused on AI. We've made some tech and 133 00:06:52,000 --> 00:06:56,599 Speaker 5: talent deals. Anything that can help us accelerate our solutions 134 00:06:56,760 --> 00:06:58,880 Speaker 5: in those areas we're open to look at. 135 00:07:00,200 --> 00:07:04,520 Speaker 2: Chuck, I do not apologize for this next question. Are 136 00:07:04,560 --> 00:07:07,719 Speaker 2: we or are we not in an AI bubble? 137 00:07:09,320 --> 00:07:12,840 Speaker 5: Oh, it's just it's so funny. Look, the customers that 138 00:07:12,880 --> 00:07:17,400 Speaker 5: are buying the predominant amount of this technology have incredible 139 00:07:17,440 --> 00:07:22,280 Speaker 5: balance sheets, have incredible cash flow, have incredible profitability. I 140 00:07:22,280 --> 00:07:24,960 Speaker 5: think Caroline said it. They actually pay their bills and 141 00:07:25,600 --> 00:07:29,679 Speaker 5: and so, and they view it as an existential issue 142 00:07:29,680 --> 00:07:33,080 Speaker 5: for them. That's that's a really key element. They don't 143 00:07:33,160 --> 00:07:35,200 Speaker 5: view this as something that's nice to have. They don't 144 00:07:35,280 --> 00:07:38,120 Speaker 5: view it as something that is okay if we if 145 00:07:38,160 --> 00:07:41,680 Speaker 5: we're successful, great, if we're not great. They view it 146 00:07:41,720 --> 00:07:45,080 Speaker 5: as existential, which you see with the level of spending 147 00:07:45,120 --> 00:07:48,320 Speaker 5: that they're putting into it. So it's it's a lot 148 00:07:48,360 --> 00:07:51,560 Speaker 5: and it's moving fast. And but the difference between now 149 00:07:51,560 --> 00:07:55,080 Speaker 5: in two thousand is that these are massive companies with 150 00:07:55,520 --> 00:07:59,320 Speaker 5: strong financial performance and they believe in this one hundred percent. 151 00:07:59,400 --> 00:08:01,280 Speaker 5: So I don't think it's going to change. We haven't 152 00:08:01,280 --> 00:08:04,400 Speaker 5: gotten into physical AI. We have, we're just getting into 153 00:08:04,400 --> 00:08:07,960 Speaker 5: synthetic training. Yeah, we haven't gotten into robotics. We haven't 154 00:08:07,960 --> 00:08:10,760 Speaker 5: gotten into the enterprise in a big way yet, and 155 00:08:10,840 --> 00:08:13,720 Speaker 5: so there's a there's a huge opportunity ahead for all 156 00:08:13,720 --> 00:08:14,480 Speaker 5: of us. I believe. 157 00:08:14,800 --> 00:08:18,760 Speaker 3: Well, Chuck Blouemberg Intelligence Analysis says, your projections are conservative. 158 00:08:18,880 --> 00:08:20,320 Speaker 6: Briefly are the conservative? 159 00:08:21,880 --> 00:08:24,480 Speaker 5: Well, I think you said that last quarter, so you've 160 00:08:24,520 --> 00:08:28,840 Speaker 5: proved to be correct ninety days ago. But look, I 161 00:08:28,920 --> 00:08:30,800 Speaker 5: think based on what we know today we're ninety days 162 00:08:30,840 --> 00:08:35,320 Speaker 5: into the year, were taking what we have in our backlog, 163 00:08:35,400 --> 00:08:37,440 Speaker 5: what we see in the forecast. But again we got 164 00:08:37,440 --> 00:08:39,360 Speaker 5: we have three more quarters to play out. Lots of 165 00:08:39,400 --> 00:08:42,800 Speaker 5: things can change, the world's very dynamic, but we're very 166 00:08:42,800 --> 00:08:44,679 Speaker 5: confident in the numbers that we put up yesterday. 167 00:08:45,440 --> 00:08:48,040 Speaker 3: Cisco CEO Chuck Robins always a joy to catch up 168 00:08:48,040 --> 00:08:50,480 Speaker 3: with the thanks for spending time. Meanwhile, as I'm going 169 00:08:50,480 --> 00:08:51,920 Speaker 3: to look at some other shares on the move, JD 170 00:08:52,000 --> 00:08:54,040 Speaker 3: dot Com, Tencent, I want to shine light on these 171 00:08:54,080 --> 00:08:56,960 Speaker 3: ad rs. They're under water a little bit like the 172 00:08:56,960 --> 00:08:58,880 Speaker 3: rest of the market. But JD dot Com actually relieve 173 00:08:58,960 --> 00:09:01,520 Speaker 3: many an investor with a few fifteen percent increase in revenue, 174 00:09:01,679 --> 00:09:03,640 Speaker 3: managing to show that maybe the investment in the food 175 00:09:03,960 --> 00:09:07,520 Speaker 3: area is really building more broadly into the overall merchandise sales. 176 00:09:07,520 --> 00:09:10,160 Speaker 3: We're looking at Tencent social media app more cautious in 177 00:09:10,200 --> 00:09:12,520 Speaker 3: AI spending, but it's making it work in terms of 178 00:09:12,559 --> 00:09:15,640 Speaker 3: selling its overall products and the gaming strength really coming 179 00:09:15,679 --> 00:09:17,880 Speaker 3: to bear. We're seeing again a fifteen percent increase in 180 00:09:17,920 --> 00:09:20,560 Speaker 3: revenue there as well. But fifteen percent is an interesting 181 00:09:20,640 --> 00:09:22,960 Speaker 3: number end because it's a theme in the next story. 182 00:09:23,480 --> 00:09:25,800 Speaker 2: Ten cents US shares trading tropic because at one point 183 00:09:25,840 --> 00:09:28,040 Speaker 2: we're hiring the session. Ten Cent has struck a deal 184 00:09:28,080 --> 00:09:31,280 Speaker 2: with Apple that we'll see the iPhone maker handle payments 185 00:09:31,559 --> 00:09:34,760 Speaker 2: and take a fifteen percent cut of purchases in we chat, 186 00:09:34,880 --> 00:09:38,800 Speaker 2: minigames and apps doing both. Global tech editor Petere Elstrom 187 00:09:38,840 --> 00:09:41,640 Speaker 2: joins us for more that there's one of several stories 188 00:09:41,679 --> 00:09:42,800 Speaker 2: actually about ten Cent today, but. 189 00:09:42,840 --> 00:09:45,280 Speaker 4: Let's start with the Apple one. What do we need 190 00:09:45,320 --> 00:09:45,520 Speaker 4: to know? 191 00:09:46,559 --> 00:09:49,240 Speaker 7: Yeah, so ten Cent in Apple have been in this 192 00:09:49,360 --> 00:09:52,280 Speaker 7: standoff for a number of different years. Tencent offers a 193 00:09:52,320 --> 00:09:55,240 Speaker 7: bunch of different services, including games, but they also offer 194 00:09:55,280 --> 00:09:57,760 Speaker 7: we Chat, which is really the original super app. It's 195 00:09:57,760 --> 00:09:59,920 Speaker 7: a messaging app, but you can do many other things 196 00:10:00,080 --> 00:10:03,640 Speaker 7: within it too. Now, Tencent has wanted to offer different 197 00:10:03,640 --> 00:10:08,160 Speaker 7: services and games through this super app, and they've allowed 198 00:10:08,200 --> 00:10:11,960 Speaker 7: developers to circumvent the Apple Store to avoid some of 199 00:10:11,960 --> 00:10:14,520 Speaker 7: the fees that you would typically pay by using the 200 00:10:14,520 --> 00:10:17,480 Speaker 7: Apple Store. Apple hasn't liked that. They want everybody to 201 00:10:17,520 --> 00:10:19,400 Speaker 7: go through their Apple Store, where they take a thirty 202 00:10:19,400 --> 00:10:21,800 Speaker 7: percent cut of most things that are going on. So 203 00:10:21,840 --> 00:10:25,080 Speaker 7: we understand from our sources, the sub bloomberg Scoop that 204 00:10:25,080 --> 00:10:28,520 Speaker 7: they've reached an agreement now where customers within the ten 205 00:10:28,600 --> 00:10:30,679 Speaker 7: Cent we Chat ecosystem are going to pay a fee 206 00:10:30,720 --> 00:10:33,240 Speaker 7: of fifteen percent to Apple, so about half of their 207 00:10:33,320 --> 00:10:36,400 Speaker 7: usual fee. But they'll begin to reach some sort of 208 00:10:36,440 --> 00:10:39,760 Speaker 7: truce between Tencent and Apple as they collaborate on games 209 00:10:39,800 --> 00:10:40,960 Speaker 7: and other kinds of services. 210 00:10:41,200 --> 00:10:43,640 Speaker 6: So to push us forward, is this good for Apple? 211 00:10:43,679 --> 00:10:46,760 Speaker 3: Because they can start to well reap more rewards from 212 00:10:46,840 --> 00:10:48,640 Speaker 3: these companies that are super apps. 213 00:10:48,720 --> 00:10:50,160 Speaker 6: Or is this a concern. 214 00:10:49,840 --> 00:10:51,440 Speaker 3: Because everyone else is going to be looking at a 215 00:10:51,440 --> 00:10:52,400 Speaker 3: fifteen percent number. 216 00:10:53,200 --> 00:10:57,320 Speaker 7: Yeah, it's a very good question. Certainly, Apple faces this 217 00:10:57,400 --> 00:10:59,920 Speaker 7: kind of pressure in many different markets. It's not just China. 218 00:11:00,040 --> 00:11:01,720 Speaker 7: In China it's a little bit different though, because they 219 00:11:01,760 --> 00:11:03,560 Speaker 7: don't have the kind of market power that they do 220 00:11:03,640 --> 00:11:06,600 Speaker 7: in places like the United States or Europe for that matter, 221 00:11:06,720 --> 00:11:09,400 Speaker 7: or they can just take their thirty percent cut. Regulators 222 00:11:09,440 --> 00:11:11,400 Speaker 7: are looking at those fees. They'd like to bring them down, 223 00:11:11,440 --> 00:11:13,040 Speaker 7: but in China they haven't been able to make that 224 00:11:13,160 --> 00:11:16,720 Speaker 7: much progress because there are these alternatives like ten cents, 225 00:11:17,200 --> 00:11:20,440 Speaker 7: ecosystem and other kinds of areas too. So this is 226 00:11:20,440 --> 00:11:23,040 Speaker 7: at least an altre for them into a China market 227 00:11:23,200 --> 00:11:25,439 Speaker 7: that they really haven't been able to tap that effectively 228 00:11:25,440 --> 00:11:26,520 Speaker 7: in the past. 229 00:11:27,000 --> 00:11:29,840 Speaker 3: Peter Elstrom, all across the world of te tencent we 230 00:11:30,040 --> 00:11:33,360 Speaker 3: so appreciated. Meanwhile, coming up, we're all across Disney falling 231 00:11:33,360 --> 00:11:34,199 Speaker 3: today after what. 232 00:11:34,240 --> 00:11:37,880 Speaker 6: Some investors are calling we're underwhelming forecast. More on that next. 233 00:11:37,920 --> 00:11:41,040 Speaker 3: Meanwhile, check out shares of Verizon. We have breaking news 234 00:11:41,040 --> 00:11:43,439 Speaker 3: coming from the Wall Street Journal talking about how there 235 00:11:43,440 --> 00:11:47,520 Speaker 3: could be some fifteen thousand job cuts to come. Remember, 236 00:11:47,520 --> 00:11:50,320 Speaker 3: we've had a relatively new CEO in place, Bloomberg reporting 237 00:11:50,320 --> 00:11:53,480 Speaker 3: earlier that layoffs could be announced as soon as next week, 238 00:11:53,640 --> 00:11:56,720 Speaker 3: according to people familiar, as we have a major step 239 00:11:56,760 --> 00:11:59,320 Speaker 3: in the transformation led by the new CEO, Dan Shulman 240 00:12:00,000 --> 00:12:00,440 Speaker 3: in New York. 241 00:12:00,760 --> 00:12:01,480 Speaker 6: Is a really bad tag. 242 00:12:14,000 --> 00:12:17,240 Speaker 2: Shares of Disney really falling today after posting fourth quarter 243 00:12:17,280 --> 00:12:21,800 Speaker 2: earnings that missed estimates and projecting forecasts that underwhelmed Wall 244 00:12:21,800 --> 00:12:23,280 Speaker 2: Street were down almost ten percent. 245 00:12:23,640 --> 00:12:25,839 Speaker 4: We spoke with Hugh Johnston Disney. 246 00:12:25,520 --> 00:12:28,400 Speaker 2: CFO earlier today to walk through those results. 247 00:12:29,920 --> 00:12:32,600 Speaker 8: I thought it was a good quarter overall, and frankly 248 00:12:32,920 --> 00:12:35,840 Speaker 8: versus Wall Street, we beat expectations by six cents. So, 249 00:12:36,679 --> 00:12:40,319 Speaker 8: as you noted, the experiences business did very very well, 250 00:12:40,800 --> 00:12:44,520 Speaker 8: six percent revenue growth thirteen percent of wide growth was terrific. 251 00:12:45,400 --> 00:12:49,040 Speaker 8: Sports did very strongly while we were launching the new 252 00:12:49,120 --> 00:12:52,120 Speaker 8: DTC product, which is off to a great start. And 253 00:12:52,120 --> 00:12:55,680 Speaker 8: then in terms of experience the entertainment business, it was 254 00:12:55,760 --> 00:12:59,800 Speaker 8: largely just the overlap of the film slate that drove 255 00:12:59,840 --> 00:13:03,080 Speaker 8: the numbers. I know, the linear business looked a little 256 00:13:03,120 --> 00:13:05,199 Speaker 8: bit soft, but that's primarily due to the fact that 257 00:13:05,960 --> 00:13:08,360 Speaker 8: we had India in the numbers last year where we 258 00:13:08,400 --> 00:13:11,560 Speaker 8: made eighty four million bucks and wasn't in the numbers 259 00:13:11,559 --> 00:13:14,800 Speaker 8: this year. Take that out Apple Staples basis. Overall, I 260 00:13:14,840 --> 00:13:18,640 Speaker 8: thought the quarter was good and it actually allows us 261 00:13:18,640 --> 00:13:20,520 Speaker 8: to end the year with a lot of momentum as 262 00:13:20,679 --> 00:13:23,480 Speaker 8: we think about where we are right now. We grew 263 00:13:23,520 --> 00:13:27,560 Speaker 8: EPs nineteen percent for the year and nineteen percent Keeger 264 00:13:27,679 --> 00:13:30,160 Speaker 8: for the last three years, and that's why we both 265 00:13:30,240 --> 00:13:33,840 Speaker 8: guided to double digit EPs growth in twenty six and 266 00:13:33,960 --> 00:13:36,040 Speaker 8: on top of that, doubled the share of purchase and 267 00:13:36,080 --> 00:13:37,720 Speaker 8: increased the dividend by fifty percent. 268 00:13:38,600 --> 00:13:40,599 Speaker 4: You good morning. On that momentum. 269 00:13:40,640 --> 00:13:43,320 Speaker 2: The focus for a lot is streaming, right and you 270 00:13:43,679 --> 00:13:47,240 Speaker 2: have the confidence to say streaming is going to continue 271 00:13:47,280 --> 00:13:50,760 Speaker 2: to be profitable through twenty twenty six. What are the 272 00:13:50,760 --> 00:13:54,040 Speaker 2: factors behind that? What allows you to have the confidence 273 00:13:54,120 --> 00:13:57,360 Speaker 2: to have such visibility into how that streaming business is 274 00:13:57,400 --> 00:13:58,760 Speaker 2: going well? 275 00:13:58,800 --> 00:14:02,120 Speaker 8: Of course, streaming all we begins with the quality of 276 00:14:02,240 --> 00:14:04,160 Speaker 8: the content that we have and the quality of the 277 00:14:04,200 --> 00:14:07,120 Speaker 8: slate that we have going forward. So if you think 278 00:14:07,120 --> 00:14:10,760 Speaker 8: about the film slate we have right now, number one. 279 00:14:10,920 --> 00:14:15,560 Speaker 8: We obviously have Zootopia two, followed by Avatar, followed Bright, 280 00:14:15,760 --> 00:14:21,320 Speaker 8: the Double Wars product two, followed by Toy Story five, Milana, 281 00:14:21,640 --> 00:14:24,600 Speaker 8: and then we've got an Avengers movie as well. So 282 00:14:25,320 --> 00:14:27,360 Speaker 8: if I look at all of that playing its way 283 00:14:27,360 --> 00:14:29,960 Speaker 8: into the streaming service, certainly feel good about those ten 284 00:14:30,000 --> 00:14:34,840 Speaker 8: pole events. In addition to that, our TV side continues 285 00:14:34,880 --> 00:14:37,360 Speaker 8: to perform very strongly. The ratings are great, the number 286 00:14:37,400 --> 00:14:40,280 Speaker 8: of hit shows are great. And then on top of that, 287 00:14:40,320 --> 00:14:43,840 Speaker 8: we're investing in the product in a significant way, creating 288 00:14:43,880 --> 00:14:47,080 Speaker 8: a unified app, and in addition to that, improving our 289 00:14:47,120 --> 00:14:53,600 Speaker 8: recommendation engines and improving the navigation withinside within the DTC app. 290 00:14:54,040 --> 00:14:56,880 Speaker 8: Put all of that together and what we really see 291 00:14:57,080 --> 00:15:00,560 Speaker 8: is just a huge opportunity for growth Spire to grow 292 00:15:00,560 --> 00:15:04,000 Speaker 8: that business double digits along with the double digit margins 293 00:15:04,040 --> 00:15:06,480 Speaker 8: we expect to achieve this coming year. And as a result, 294 00:15:06,720 --> 00:15:09,440 Speaker 8: I think we're going to continue to see that business 295 00:15:09,440 --> 00:15:11,880 Speaker 8: do really well and be a real growth driver for Disney. 296 00:15:11,880 --> 00:15:14,720 Speaker 3: But the profitability who streaming operating income for the first 297 00:15:14,800 --> 00:15:16,760 Speaker 3: quarter of twenty twenty six, you got to be three 298 00:15:16,800 --> 00:15:18,920 Speaker 3: hundred and twenty five million dollars. That's a lot less 299 00:15:19,000 --> 00:15:20,600 Speaker 3: than the street was anticipating. 300 00:15:20,640 --> 00:15:21,240 Speaker 6: Why is that? 301 00:15:22,320 --> 00:15:24,240 Speaker 8: I think it's primarily due to the fact that we're 302 00:15:24,240 --> 00:15:28,600 Speaker 8: investing in product in the business, and we're investing in 303 00:15:28,600 --> 00:15:33,120 Speaker 8: in bundling. So we all know that bundling ultimately is 304 00:15:33,160 --> 00:15:37,040 Speaker 8: a very profitable thing to invest in. It increases retention, 305 00:15:37,240 --> 00:15:41,120 Speaker 8: reduces churn, increases engagement. And that's not a theory. We 306 00:15:41,240 --> 00:15:43,200 Speaker 8: have proof on that, Hugh, Is. 307 00:15:43,080 --> 00:15:47,000 Speaker 2: This the last earnings report and quarter before Disney's board 308 00:15:47,080 --> 00:15:50,000 Speaker 2: names a successor to Bob Eiga's CEO. 309 00:15:51,000 --> 00:15:51,960 Speaker 4: That's a great question. 310 00:15:52,160 --> 00:15:55,440 Speaker 8: So what the board has previously indicated, and I will 311 00:15:55,480 --> 00:15:58,880 Speaker 8: say the board has been about as transparent as any 312 00:15:58,920 --> 00:16:02,480 Speaker 8: CEO succession I have ever seen in my long career. 313 00:16:03,480 --> 00:16:05,640 Speaker 8: What the board is indicated is that will take place 314 00:16:05,680 --> 00:16:10,400 Speaker 8: sometime during the first calendar quarter of twenty six. We 315 00:16:10,440 --> 00:16:15,480 Speaker 8: report in next February. Whether that'll be before or after, 316 00:16:15,520 --> 00:16:18,640 Speaker 8: I'll be up to the board. But we should have 317 00:16:18,720 --> 00:16:20,720 Speaker 8: it done by the end of March. 318 00:16:21,520 --> 00:16:25,000 Speaker 3: Part of our conversation with Disney's CFO, Hugh Johnson, let's 319 00:16:25,000 --> 00:16:27,480 Speaker 3: stay on Disney, stink a little deeper into the numbers. 320 00:16:27,480 --> 00:16:30,200 Speaker 3: Ether Rangon Athams with us BlueBag Intelligence senior media analyst. 321 00:16:30,280 --> 00:16:32,760 Speaker 3: You've been writing the overall view for fiscal twenty twenty 322 00:16:32,800 --> 00:16:36,760 Speaker 3: six is strong within guidance, maybe conservative, given multiple levers, 323 00:16:36,800 --> 00:16:40,120 Speaker 3: including the launch of two new cruises, multiple blockbuster theatrical releases, 324 00:16:40,320 --> 00:16:44,840 Speaker 3: and greater operating leverage at streaming driven by price increases. 325 00:16:44,880 --> 00:16:49,640 Speaker 3: But getha, the market's not giving any sort of optimism here. 326 00:16:49,840 --> 00:16:51,680 Speaker 3: Why are they beating up so hard on Disney? 327 00:16:52,720 --> 00:16:56,320 Speaker 9: Yeah, I think after Caroline, you'll come off of fiscal 328 00:16:56,320 --> 00:17:00,400 Speaker 9: twenty twenty five delivering nineteen percent EPs growth. You know, 329 00:17:00,440 --> 00:17:03,800 Speaker 9: you obviously have some very solid momentum in the business. Yes, granted, 330 00:17:03,880 --> 00:17:06,600 Speaker 9: fiscal you know, first quarter of twenty twenty six looks 331 00:17:06,600 --> 00:17:08,679 Speaker 9: a little light. They're dealing with a lot of different 332 00:17:08,680 --> 00:17:10,840 Speaker 9: cost issues, whether it's on the studio side, in terms 333 00:17:10,840 --> 00:17:13,840 Speaker 9: of launch costs for you know, cruises, So there's a 334 00:17:13,840 --> 00:17:15,359 Speaker 9: little bit of all of that that they have to 335 00:17:15,359 --> 00:17:17,679 Speaker 9: contend with. But I think, you know, the street was 336 00:17:17,720 --> 00:17:20,400 Speaker 9: really expecting. I think something much more specific and much 337 00:17:20,440 --> 00:17:24,959 Speaker 9: more concrete, something better than just double digit EPs growth 338 00:17:25,000 --> 00:17:28,280 Speaker 9: for twenty twenty six, especially when they have the benefit 339 00:17:28,400 --> 00:17:30,760 Speaker 9: of a lot of different catalysts that come in fiscal 340 00:17:30,800 --> 00:17:31,560 Speaker 9: twenty twenty six. 341 00:17:32,280 --> 00:17:34,840 Speaker 2: I mean the stock's down ten percent, right, that puts 342 00:17:34,840 --> 00:17:37,119 Speaker 2: it on track for its biggest drop since November of 343 00:17:37,119 --> 00:17:42,000 Speaker 2: twenty twenty two. You heard the final question asked and 344 00:17:42,240 --> 00:17:45,679 Speaker 2: answered to Hew of what happens next with succession? 345 00:17:46,400 --> 00:17:48,320 Speaker 4: Is that the overhang on the stock here. 346 00:17:49,280 --> 00:17:50,640 Speaker 6: I think a little bit ed. 347 00:17:50,720 --> 00:17:52,320 Speaker 9: I mean, you know, we know that, you know, the 348 00:17:52,359 --> 00:17:55,359 Speaker 9: Disney succession issue has really been you know, bungled so 349 00:17:55,480 --> 00:17:57,919 Speaker 9: many times right now, it's this has been an ongoing 350 00:17:58,000 --> 00:18:00,800 Speaker 9: question for them for almost a decas I would say, 351 00:18:01,359 --> 00:18:03,119 Speaker 9: you know, it seems like things are moving in the 352 00:18:03,200 --> 00:18:05,439 Speaker 9: right direction. It's kind of turning into I think a 353 00:18:05,480 --> 00:18:09,120 Speaker 9: two horse race between Dana Walden, who heads the creative 354 00:18:09,119 --> 00:18:12,440 Speaker 9: division at Disney, as well as Josh Tomorrow, who heads 355 00:18:12,480 --> 00:18:14,600 Speaker 9: the parks. And this has kind of been the eternal 356 00:18:14,680 --> 00:18:16,879 Speaker 9: question for Disney. Do you have somebody who is at 357 00:18:16,880 --> 00:18:19,280 Speaker 9: the head of creative who can talk to talent, who 358 00:18:19,280 --> 00:18:21,560 Speaker 9: can talk to all of those Hollywood executives, or do 359 00:18:21,600 --> 00:18:24,120 Speaker 9: you need somebody who you know, heads the parks, who 360 00:18:24,240 --> 00:18:26,840 Speaker 9: you know which is basically sixty percent of the company's profit. 361 00:18:27,280 --> 00:18:28,880 Speaker 9: I really don't know how it's going to shake out. 362 00:18:29,000 --> 00:18:32,000 Speaker 9: Maybe they have a co CEO structure like Netflix, like 363 00:18:32,040 --> 00:18:34,280 Speaker 9: Spotify is doing, but again we have to wait and 364 00:18:34,280 --> 00:18:35,359 Speaker 9: watch till the end of March. 365 00:18:36,800 --> 00:18:39,280 Speaker 2: Keeth Rang and Eathan of Bloomberg Intelligence. Great to have 366 00:18:39,359 --> 00:18:41,359 Speaker 2: you back on Bloomberg Tech. Thank you so much. 367 00:18:48,760 --> 00:18:50,119 Speaker 4: Breaking news from Bloomberg. 368 00:18:50,240 --> 00:18:54,959 Speaker 2: Tesla is developing support for Apple's car Play system in 369 00:18:55,000 --> 00:18:55,600 Speaker 2: its vehicles. 370 00:18:55,600 --> 00:18:57,200 Speaker 4: That's, according to sources. 371 00:18:56,960 --> 00:18:59,520 Speaker 2: Working to add one of the most highly requested features 372 00:18:59,760 --> 00:19:02,399 Speaker 2: by Tesla customers, and in car Play would mark a 373 00:19:02,400 --> 00:19:05,760 Speaker 2: pretty stunning reversal for Tesla and its CEO, Elon Musk, 374 00:19:06,000 --> 00:19:09,240 Speaker 2: who have long ignored please to implement the popular feature. 375 00:19:09,280 --> 00:19:11,720 Speaker 2: We're going have much more detail later this hour with 376 00:19:11,720 --> 00:19:14,320 Speaker 2: Bloomberg's Mark German. Cara, you've got another one of our 377 00:19:14,320 --> 00:19:14,920 Speaker 2: top stories. 378 00:19:15,080 --> 00:19:15,280 Speaker 4: Yeah. 379 00:19:15,480 --> 00:19:19,320 Speaker 3: Everyone reading about the sec findings revealed that Michael Burry's 380 00:19:19,400 --> 00:19:23,080 Speaker 3: Scion Asset Management has terminated its registration status, raising the 381 00:19:23,119 --> 00:19:26,080 Speaker 3: possibility that Barry could be shuttering his hedge fund or 382 00:19:26,080 --> 00:19:28,480 Speaker 3: closing it to outside investors at least now. The move 383 00:19:28,560 --> 00:19:32,000 Speaker 3: comes just one month after Burry warned about marketing exuberants, 384 00:19:32,000 --> 00:19:35,280 Speaker 3: particularly in AI. For more, Bloomberg's Tom Metcalf joins us 385 00:19:35,359 --> 00:19:38,800 Speaker 3: he'd cover financials banking and what really do you think 386 00:19:38,840 --> 00:19:41,399 Speaker 3: this is signaling that he just couldn't bet against this 387 00:19:41,520 --> 00:19:42,520 Speaker 3: so called AI bubble. 388 00:19:44,160 --> 00:19:45,200 Speaker 4: Yeah, look, I think. 389 00:19:45,080 --> 00:19:47,280 Speaker 10: Your speculations is probably on the nose in terms of 390 00:19:47,320 --> 00:19:49,919 Speaker 10: the you know, this fund might well be closed in 391 00:19:49,920 --> 00:19:51,800 Speaker 10: it and you know that's what you know. You read 392 00:19:51,880 --> 00:19:54,320 Speaker 10: his message and he's always been saying he just cannot 393 00:19:54,359 --> 00:19:58,560 Speaker 10: read this market. It's extremely exuberant, and you know, it 394 00:19:58,680 --> 00:20:00,919 Speaker 10: was hard to interpret these he was offering of like 395 00:20:01,320 --> 00:20:03,720 Speaker 10: pictures of his character from the big short, for example, 396 00:20:04,000 --> 00:20:05,480 Speaker 10: you do get a sense of the frustration. 397 00:20:05,600 --> 00:20:07,080 Speaker 4: And obviously he put. 398 00:20:06,920 --> 00:20:11,160 Speaker 10: Out some shorts on Palenteer and n Video quite recently. 399 00:20:11,200 --> 00:20:12,800 Speaker 4: They would disclose in the thirteen f's. 400 00:20:12,960 --> 00:20:16,639 Speaker 10: So it's very interesting that, you know, relatively small fund 401 00:20:16,840 --> 00:20:19,480 Speaker 10: but very closely followed, and you know the fact that 402 00:20:19,520 --> 00:20:22,399 Speaker 10: he's potentially taken a step does suggest perhaps even a 403 00:20:22,480 --> 00:20:25,359 Speaker 10: Michael Burry is starting to lose faith in trying to 404 00:20:25,400 --> 00:20:26,080 Speaker 10: time this bubble. 405 00:20:27,960 --> 00:20:31,240 Speaker 3: I know that's what's so interesting really about the timing 406 00:20:31,280 --> 00:20:33,960 Speaker 3: of it. He hinted that there's better things to come 407 00:20:34,040 --> 00:20:36,080 Speaker 3: November the twenty fifth, So I'm sure we've not seen 408 00:20:36,400 --> 00:20:39,600 Speaker 3: the end of this ride. But what clarification did we 409 00:20:39,720 --> 00:20:41,919 Speaker 3: get in terms of the bets he's made against the 410 00:20:42,040 --> 00:20:45,880 Speaker 3: likes of Palenteer that has just defied fundamentals for so long. 411 00:20:47,480 --> 00:20:48,840 Speaker 10: Yeah, and that was one of the things he points 412 00:20:48,880 --> 00:20:52,639 Speaker 10: out in his post, which which basically one one image 413 00:20:52,680 --> 00:20:55,399 Speaker 10: in the post said, I've sort of de registered the 414 00:20:55,440 --> 00:20:59,199 Speaker 10: firm without clarifying any further what that precisely means. But 415 00:20:59,240 --> 00:21:02,159 Speaker 10: the other kind of lays out the precise nature of 416 00:21:02,160 --> 00:21:05,400 Speaker 10: that bet he had against Palenteer. So in the post 417 00:21:05,440 --> 00:21:08,120 Speaker 10: he says he spent about nine point two million dollars 418 00:21:08,359 --> 00:21:11,879 Speaker 10: effectively betting on Palenteer shares would sell, would fall. Sorry, 419 00:21:11,880 --> 00:21:13,720 Speaker 10: And as part of that he's got I think until 420 00:21:13,760 --> 00:21:17,560 Speaker 10: twenty twenty seven the option to sell those Palenteer shares 421 00:21:17,600 --> 00:21:20,399 Speaker 10: that I think it was fifty dollars, so, you know, 422 00:21:20,480 --> 00:21:22,200 Speaker 10: for a fund which is about you know, one hundred 423 00:21:22,200 --> 00:21:24,560 Speaker 10: and fifty million AUM at least it was in March. 424 00:21:24,640 --> 00:21:28,160 Speaker 4: That's a pretty sort of striking bet. But yeah, of course, 425 00:21:28,160 --> 00:21:28,359 Speaker 4: as you. 426 00:21:28,359 --> 00:21:31,040 Speaker 10: Look at Palenteer shares, it's sort of he's on the 427 00:21:31,040 --> 00:21:32,040 Speaker 10: wrong side of it at the moment. 428 00:21:32,240 --> 00:21:32,480 Speaker 6: Tom. 429 00:21:32,520 --> 00:21:34,240 Speaker 3: I think it's so greatly remind us that it is 430 00:21:34,280 --> 00:21:37,800 Speaker 3: a relatively small fund. And the reason it has outside 431 00:21:37,880 --> 00:21:40,640 Speaker 3: interest is because many have read the Michael Lewis book, 432 00:21:40,680 --> 00:21:41,720 Speaker 3: many have watched the movie. 433 00:21:41,800 --> 00:21:44,760 Speaker 6: But why do we listen to what Michael Barry does? 434 00:21:46,400 --> 00:21:46,600 Speaker 4: Well? 435 00:21:46,640 --> 00:21:48,919 Speaker 10: I think you know, the way he presents his theories 436 00:21:48,960 --> 00:21:52,440 Speaker 10: and stuff is always entertaining for one, but most principally 437 00:21:52,440 --> 00:21:55,040 Speaker 10: you know, it's that incredible win he had back in 438 00:21:55,080 --> 00:21:58,159 Speaker 10: the financial crisis, right, He really was out front and 439 00:21:58,200 --> 00:22:01,200 Speaker 10: center on that huge effort to to you know, quintuple 440 00:22:01,720 --> 00:22:04,359 Speaker 10: his investors' money. So I think whatever he says people 441 00:22:04,359 --> 00:22:07,200 Speaker 10: who sit up and listen. And you know, he has 442 00:22:07,200 --> 00:22:10,399 Speaker 10: built this social media following. I think also with the honesty, right, Like, 443 00:22:10,760 --> 00:22:12,600 Speaker 10: he's made bets and when they've gone wrong, he's been 444 00:22:12,600 --> 00:22:14,119 Speaker 10: happy to kind of hold his hands up. 445 00:22:14,720 --> 00:22:17,080 Speaker 4: So it's always been interesting to follow him the most. 446 00:22:17,119 --> 00:22:20,040 Speaker 3: Tom Metcalf following him for us, we so appreciate it. 447 00:22:26,359 --> 00:22:28,640 Speaker 3: Welcome back to Blomberg Tech. Let's take a quick check 448 00:22:28,640 --> 00:22:30,480 Speaker 3: on these markets, shall we, Because in fact, we're on 449 00:22:30,560 --> 00:22:32,240 Speaker 3: sell off mode on the NASAQ more broadly, off by 450 00:22:32,280 --> 00:22:32,560 Speaker 3: one and. 451 00:22:32,480 --> 00:22:33,080 Speaker 6: A half percent. 452 00:22:33,359 --> 00:22:36,879 Speaker 3: We've got anxiety around actually the government reopening that's already 453 00:22:36,880 --> 00:22:38,520 Speaker 3: priced in. But what does that mean in terms of data? 454 00:22:38,520 --> 00:22:39,960 Speaker 3: What does that mean in terms of the Federal Reserve 455 00:22:40,000 --> 00:22:42,280 Speaker 3: its ability to cut into this market. 456 00:22:42,400 --> 00:22:43,480 Speaker 6: We're up by one and a half percent. 457 00:22:43,520 --> 00:22:46,359 Speaker 3: Some of the biggest tech names are on the downside. 458 00:22:46,520 --> 00:22:47,800 Speaker 6: Let's go to where the earnings. 459 00:22:47,560 --> 00:22:49,080 Speaker 3: Have led us, because one of the key names in 460 00:22:49,119 --> 00:22:52,240 Speaker 3: the red is indeed Disney. We're off by almost ten percent. 461 00:22:52,440 --> 00:22:54,240 Speaker 3: We're having a significantly poor day. 462 00:22:54,040 --> 00:22:55,600 Speaker 6: Worst in several years for Disney. 463 00:22:55,800 --> 00:22:58,000 Speaker 3: This is as they actually pointed to still double digit 464 00:22:58,000 --> 00:23:00,520 Speaker 3: earing for share growth into the fiscal twenty two six, 465 00:23:00,920 --> 00:23:03,800 Speaker 3: but revenue was flat for their fourth quarter and actually 466 00:23:03,800 --> 00:23:04,960 Speaker 3: owners for share dropped. 467 00:23:04,680 --> 00:23:05,120 Speaker 6: A little bit. 468 00:23:05,320 --> 00:23:07,800 Speaker 3: Maybe people wanting to see more of a narrative around 469 00:23:07,840 --> 00:23:11,040 Speaker 3: the growth is they inject more investment into streaming, as 470 00:23:11,040 --> 00:23:14,159 Speaker 3: they invest into their slate, as they invest into marketing 471 00:23:14,160 --> 00:23:16,400 Speaker 3: and the like. We're looking at Cisco up by four 472 00:23:16,400 --> 00:23:18,760 Speaker 3: and a half percent. Boy, Chuck Robbins on a tear 473 00:23:18,840 --> 00:23:20,920 Speaker 3: as we see this company now trade at the highest 474 00:23:20,920 --> 00:23:25,600 Speaker 3: since the previous bubble two thousand. Of course, Cisco currently 475 00:23:25,680 --> 00:23:27,800 Speaker 3: up four point six percent as they managed to beat 476 00:23:27,840 --> 00:23:30,159 Speaker 3: and raise in terms of their earnings and they managed 477 00:23:30,160 --> 00:23:33,240 Speaker 3: to just really show the AI path that they're currently 478 00:23:33,400 --> 00:23:37,000 Speaker 3: navigating and sell into, in particular to hyperscalis this is 479 00:23:37,000 --> 00:23:39,680 Speaker 3: where we want to go to the questioning around AI. 480 00:23:40,240 --> 00:23:41,439 Speaker 6: Is it a boom? Is it a bubble? 481 00:23:41,560 --> 00:23:44,399 Speaker 3: Well, it's certainly fueling records in VC funding public markets, 482 00:23:44,400 --> 00:23:48,040 Speaker 3: as you've seen growth there and indeed in infrastructure, But 483 00:23:48,080 --> 00:23:51,080 Speaker 3: the questions are abound. Is in an AI bubble? How 484 00:23:51,119 --> 00:23:54,000 Speaker 3: far can it run? And what if it pops? Pellet 485 00:23:54,040 --> 00:23:57,119 Speaker 3: Butteri's with US partner at Axcel and one of the 486 00:23:57,160 --> 00:24:00,320 Speaker 3: authors of the firm's latest AI report published which just 487 00:24:00,680 --> 00:24:04,600 Speaker 3: there is still more room in AI spending, he joins us. Now, 488 00:24:04,880 --> 00:24:07,360 Speaker 3: so bluntly, is the rebubble? 489 00:24:08,960 --> 00:24:11,280 Speaker 4: Well, I mean, this is the question. 490 00:24:11,440 --> 00:24:15,919 Speaker 11: I think it's interesting to put that in context. So 491 00:24:16,000 --> 00:24:19,479 Speaker 11: if you look at the NASDAQ in the past fifteen years, 492 00:24:20,080 --> 00:24:23,280 Speaker 11: like with every platform shift, which is every five years, 493 00:24:23,320 --> 00:24:26,520 Speaker 11: so you ad mobile, cloud and AI, the nasdack is doubled. 494 00:24:26,920 --> 00:24:29,520 Speaker 11: So basically where we are right now, where the NASAK 495 00:24:29,680 --> 00:24:33,920 Speaker 11: is is basically in line with historical trends. So yes, 496 00:24:33,960 --> 00:24:37,040 Speaker 11: with every platform shift, you know you're seeing frosty evaluation 497 00:24:37,160 --> 00:24:41,040 Speaker 11: and we're clearly seeing that with AI, and not all 498 00:24:41,080 --> 00:24:44,480 Speaker 11: companies are going to be winners. But we're seeing tremendous 499 00:24:44,640 --> 00:24:47,840 Speaker 11: opportunities here for value creation and we think that the 500 00:24:47,880 --> 00:24:51,639 Speaker 11: winners are going to take a large share of that 501 00:24:51,760 --> 00:24:55,440 Speaker 11: value creation. So it's all about picking the right companies. 502 00:24:55,600 --> 00:24:58,119 Speaker 3: Well, if we look at the public markets, the winners 503 00:24:58,119 --> 00:25:00,480 Speaker 3: have been clear, and you call them as the super 504 00:25:00,520 --> 00:25:03,359 Speaker 3: six that have really been generating real cash. That was 505 00:25:03,359 --> 00:25:05,320 Speaker 3: something that Chuck Robins just said to us. Look, my 506 00:25:05,400 --> 00:25:08,480 Speaker 3: biggest demand has been coming from the hyperscalers and they're 507 00:25:08,520 --> 00:25:11,440 Speaker 3: pretty good for the money. But then in the private markets, 508 00:25:12,000 --> 00:25:13,840 Speaker 3: all winning bats have sort of been on a certain 509 00:25:13,840 --> 00:25:17,040 Speaker 3: few names Open AI for example, Philip, Where else are 510 00:25:17,080 --> 00:25:19,840 Speaker 3: you seeing the money being allocated to, particularly in Europe? 511 00:25:21,280 --> 00:25:24,680 Speaker 11: Yeah, I think it's it's worth looking at where the 512 00:25:25,080 --> 00:25:28,160 Speaker 11: venture funding is going in terms of you know, cloud 513 00:25:28,600 --> 00:25:31,440 Speaker 11: and THEI. I mean the total for Europe and Israel 514 00:25:32,040 --> 00:25:34,680 Speaker 11: and the US about one hundred and eighty four billion 515 00:25:34,720 --> 00:25:37,320 Speaker 11: dollars for this year. Sixty percent of that is going 516 00:25:37,320 --> 00:25:41,040 Speaker 11: into the models, so that's open AI on Tropic X, 517 00:25:42,359 --> 00:25:45,400 Speaker 11: but the rest forty percent is going into a new 518 00:25:45,480 --> 00:25:51,000 Speaker 11: generation of AI native native application that are growing very 519 00:25:51,080 --> 00:25:54,199 Speaker 11: very fast and that are very exciting. So you have 520 00:25:54,240 --> 00:25:57,119 Speaker 11: the Cursor, the Perplexity, the DECA going in the US, 521 00:25:57,200 --> 00:25:59,600 Speaker 11: you have the Sairah, the lover Ball and eight ten 522 00:26:00,080 --> 00:26:03,240 Speaker 11: and Synthesia in Europe. And what's very interesting here is 523 00:26:03,280 --> 00:26:05,359 Speaker 11: that if you look at the model side, yes, the 524 00:26:05,440 --> 00:26:07,920 Speaker 11: majority of the vast majority of the funding is going 525 00:26:07,960 --> 00:26:10,639 Speaker 11: into US company, but if you look at the AI 526 00:26:11,000 --> 00:26:15,119 Speaker 11: native application side, actually the Europe fares very well against 527 00:26:15,119 --> 00:26:18,800 Speaker 11: the US because it's thirty billion in Europe versus forty 528 00:26:18,800 --> 00:26:22,960 Speaker 11: five in the US, so that's about two third. And 529 00:26:23,119 --> 00:26:26,080 Speaker 11: Europe had shown that it can really generate its shares 530 00:26:26,160 --> 00:26:29,080 Speaker 11: of winner in this category. 531 00:26:29,400 --> 00:26:32,120 Speaker 3: And you've been backing some of those winners in particular. 532 00:26:32,160 --> 00:26:34,439 Speaker 3: I think of Lovable for example, that everyone has been 533 00:26:34,520 --> 00:26:36,879 Speaker 3: very excited about the way in which vibe coding has 534 00:26:36,920 --> 00:26:39,760 Speaker 3: taken over absolutely everything. But how do you know that 535 00:26:39,800 --> 00:26:42,920 Speaker 3: you're not paying too much when getting into those rounds? 536 00:26:44,320 --> 00:26:46,080 Speaker 11: Well, I mean, I think this is a question we 537 00:26:46,520 --> 00:26:50,040 Speaker 11: ask ourselves every time we, you know, we invest. I 538 00:26:50,040 --> 00:26:53,720 Speaker 11: think what we're trying to understand is like how far 539 00:26:53,760 --> 00:26:58,080 Speaker 11: can this business run? I think if you look at Lovable, yeah, 540 00:26:58,119 --> 00:27:00,440 Speaker 11: I mean it's vibe coding. What does vibe coote means 541 00:27:00,480 --> 00:27:03,600 Speaker 11: that means that any human on earth can start to quote, 542 00:27:03,800 --> 00:27:07,640 Speaker 11: I mean, we feel that is a pretty pretty large market. Uh, 543 00:27:07,720 --> 00:27:10,880 Speaker 11: and these you know this. It can be vibe coders 544 00:27:10,920 --> 00:27:13,440 Speaker 11: who are creators, and there can be vibe coders who 545 00:27:13,440 --> 00:27:16,879 Speaker 11: are in the enterprise and who are trying to very fastly, 546 00:27:17,320 --> 00:27:21,520 Speaker 11: you know, very quickly developed mockups of new products. So 547 00:27:21,760 --> 00:27:24,960 Speaker 11: we actually think there's a lot of room to run 548 00:27:25,160 --> 00:27:28,239 Speaker 11: in the case of Locoble. And as I said, I mean, 549 00:27:28,280 --> 00:27:32,199 Speaker 11: I think evaluation are where they are today, but I 550 00:27:32,200 --> 00:27:36,520 Speaker 11: think if you look at the value creation for the winners, 551 00:27:37,359 --> 00:27:39,840 Speaker 11: I think the opportunity we're seeing and that are unlocked 552 00:27:39,880 --> 00:27:42,720 Speaker 11: with AI, I think are much bigger than what we 553 00:27:42,760 --> 00:27:46,000 Speaker 11: have seen in the past because the productivity improvement potential 554 00:27:46,080 --> 00:27:49,600 Speaker 11: that EI is giving goes well beyond what any of 555 00:27:49,600 --> 00:27:52,200 Speaker 11: the previous platform shifts have generated. 556 00:27:52,960 --> 00:27:55,240 Speaker 3: Some of these companies are scaling so fast, and I 557 00:27:55,280 --> 00:27:58,800 Speaker 3: feel like we've had the CEO since you're on, plenty 558 00:27:58,800 --> 00:28:01,400 Speaker 3: of times to talk about how he is just driving 559 00:28:01,440 --> 00:28:04,159 Speaker 3: forward in enterprises at such scale and the ability to 560 00:28:04,240 --> 00:28:09,879 Speaker 3: produce AI real video that feels incredibly realistic, Philip. But 561 00:28:09,920 --> 00:28:12,840 Speaker 3: I'm interested as to you in your past and in 562 00:28:13,000 --> 00:28:15,439 Speaker 3: the companies that you've helped navigate have gone public. You've 563 00:28:15,440 --> 00:28:17,479 Speaker 3: seen it with Docusti, and we've seen it with u iPath. 564 00:28:18,160 --> 00:28:20,600 Speaker 3: How will we see these companies eventually tap the public 565 00:28:20,640 --> 00:28:23,440 Speaker 3: markets because they're getting enormous without needing. 566 00:28:23,200 --> 00:28:27,919 Speaker 11: To well, I mean, I think at some point, you know, 567 00:28:28,000 --> 00:28:32,240 Speaker 11: getting public is in the natural path for for companies. 568 00:28:32,720 --> 00:28:35,080 Speaker 11: And I think the bar to go public now is 569 00:28:35,200 --> 00:28:38,360 Speaker 11: much higher than it was, you know, five years ago. 570 00:28:38,480 --> 00:28:42,400 Speaker 11: So to go public, you want companies to be you know, 571 00:28:42,520 --> 00:28:47,120 Speaker 11: probably in the five hundred to seven hundred million in 572 00:28:47,120 --> 00:28:49,160 Speaker 11: in annual recurring revenues. 573 00:28:49,720 --> 00:28:50,080 Speaker 12: Uh. 574 00:28:50,120 --> 00:28:52,960 Speaker 11: So there's still room for this company to grow into 575 00:28:53,480 --> 00:28:54,640 Speaker 11: you know, into these numbers. 576 00:28:55,240 --> 00:28:55,400 Speaker 10: Uh. 577 00:28:55,920 --> 00:28:59,400 Speaker 11: And you know, getting public is just like a financing milestone. 578 00:28:59,520 --> 00:29:02,080 Speaker 11: So the fact that they remain private is not something 579 00:29:02,200 --> 00:29:05,480 Speaker 11: that is preventing them to grow because they have access 580 00:29:05,480 --> 00:29:07,600 Speaker 11: to the capital they need on the private market side 581 00:29:07,600 --> 00:29:07,960 Speaker 11: as well. 582 00:29:08,400 --> 00:29:12,360 Speaker 3: What's been interesting is a lot of these AI native applications, 583 00:29:13,040 --> 00:29:16,400 Speaker 3: whether they've been snapped up for aqua higher purposes or 584 00:29:16,480 --> 00:29:18,880 Speaker 3: they've been snapped up for the underlying technology for they 585 00:29:18,880 --> 00:29:21,080 Speaker 3: have been snapped up and by some of these super 586 00:29:21,120 --> 00:29:23,160 Speaker 3: six as you mentioned, is that M and A trend 587 00:29:23,280 --> 00:29:25,960 Speaker 3: going to continue, and how are you ensuring that all 588 00:29:26,000 --> 00:29:28,800 Speaker 3: the founders protect the rest of the employee base they've 589 00:29:28,800 --> 00:29:29,280 Speaker 3: been growing? 590 00:29:30,680 --> 00:29:33,920 Speaker 11: Well, I mean I think they're they're you know, a 591 00:29:33,960 --> 00:29:35,920 Speaker 11: lot of the mn A that we have seen so 592 00:29:36,080 --> 00:29:40,200 Speaker 11: far have been more on the model development side, with 593 00:29:40,400 --> 00:29:44,040 Speaker 11: the Big six trying to kind of snap really big talents. 594 00:29:45,160 --> 00:29:48,000 Speaker 11: I think on the application side, I think the founder 595 00:29:48,240 --> 00:29:54,240 Speaker 11: that we're seeing extremely ambitious. They have global ambition and 596 00:29:54,240 --> 00:29:57,160 Speaker 11: and they won't they won't see how you know, how much, 597 00:29:57,360 --> 00:29:59,760 Speaker 11: you know, how fast and how big they're their business 598 00:29:59,760 --> 00:30:03,640 Speaker 11: can be. So we haven't seen this as as any 599 00:30:03,760 --> 00:30:06,920 Speaker 11: source of concern right now. And as I said, given 600 00:30:06,960 --> 00:30:09,920 Speaker 11: that they have access to the capital that they need 601 00:30:10,240 --> 00:30:13,040 Speaker 11: to you know, to run the business, and that they 602 00:30:13,080 --> 00:30:16,880 Speaker 11: also have the opportunity to potentially sell some stock along 603 00:30:16,880 --> 00:30:20,360 Speaker 11: the way through through seculary sale, there is everything that's 604 00:30:20,400 --> 00:30:25,040 Speaker 11: needed to keep them motivated to build a big global businesses. 605 00:30:25,560 --> 00:30:29,880 Speaker 3: Do they have to come to American capital markets? So indeed, 606 00:30:30,440 --> 00:30:33,440 Speaker 3: American venture capital two scale, if they are European, if 607 00:30:33,480 --> 00:30:34,440 Speaker 3: there Israeli. 608 00:30:34,120 --> 00:30:37,680 Speaker 11: Based, well, I mean I think there's there are two 609 00:30:37,680 --> 00:30:39,520 Speaker 11: different things. There is the market that you address and 610 00:30:39,520 --> 00:30:42,479 Speaker 11: there's where the capital is coming from. I think what 611 00:30:42,560 --> 00:30:46,800 Speaker 11: we've seen of Europe and Israel is great, great talent, 612 00:30:47,720 --> 00:30:50,280 Speaker 11: great team, great engineering. 613 00:30:51,600 --> 00:30:52,320 Speaker 4: Resources. 614 00:30:52,680 --> 00:30:55,440 Speaker 11: And so what companies are doing is they are basically 615 00:30:55,480 --> 00:30:58,840 Speaker 11: building their product and engineering team in Europe and Israel. 616 00:30:59,160 --> 00:31:01,280 Speaker 11: And if they're selling software, I mean the biggest market 617 00:31:01,320 --> 00:31:03,680 Speaker 11: for every dollar span of software fifty cents is spent 618 00:31:03,800 --> 00:31:05,560 Speaker 11: in the US. So then they have to develop their 619 00:31:05,920 --> 00:31:09,320 Speaker 11: go to market in the US. So I think from 620 00:31:09,320 --> 00:31:11,240 Speaker 11: a market standpoint, yes, if you want to be a 621 00:31:11,280 --> 00:31:14,640 Speaker 11: global leader in software and AI, you have to be 622 00:31:15,120 --> 00:31:16,080 Speaker 11: a leader in. 623 00:31:16,000 --> 00:31:16,920 Speaker 4: The US market. 624 00:31:17,200 --> 00:31:20,000 Speaker 11: Now, in terms of you know where the capital is 625 00:31:20,040 --> 00:31:22,840 Speaker 11: coming from, I think there are big pools of capital 626 00:31:22,960 --> 00:31:26,720 Speaker 11: on both sides of the ocean, and European companies that 627 00:31:27,680 --> 00:31:31,520 Speaker 11: have been raising rounds of similar size than the US, 628 00:31:31,560 --> 00:31:35,880 Speaker 11: so they have access to the same pockets of capital, 629 00:31:35,920 --> 00:31:37,760 Speaker 11: whether it's from Europe or it's from the US. 630 00:31:38,400 --> 00:31:42,440 Speaker 3: With global scape, which is the enormous amount of research 631 00:31:42,720 --> 00:31:45,040 Speaker 3: that you've managed to bring to US, and you analyze 632 00:31:45,040 --> 00:31:47,600 Speaker 3: trends and innovation and you go global and you think 633 00:31:47,600 --> 00:31:50,160 Speaker 3: about funding levels, where aren't we talking about enough? 634 00:31:52,600 --> 00:31:55,800 Speaker 11: Well, I mean, I think what's going to be interesting 635 00:31:55,840 --> 00:32:00,200 Speaker 11: to see is you know, how far can the models go? 636 00:32:00,760 --> 00:32:04,000 Speaker 11: I think so far we have seen a pretty pretty 637 00:32:04,040 --> 00:32:08,240 Speaker 11: steep curve of innovation on the model side, and I 638 00:32:08,240 --> 00:32:10,760 Speaker 11: think the big question is when are we you know, 639 00:32:10,880 --> 00:32:14,680 Speaker 11: is that improvement curve going to continue to accelerate or 640 00:32:14,880 --> 00:32:16,640 Speaker 11: at some point are we going to tap out with 641 00:32:16,760 --> 00:32:19,800 Speaker 11: the current architecture and uh and then you know, I 642 00:32:19,800 --> 00:32:21,880 Speaker 11: think if we tap out, then there's been there's going 643 00:32:21,920 --> 00:32:24,080 Speaker 11: to be a plateau until we get to the next 644 00:32:24,160 --> 00:32:27,640 Speaker 11: level of architecture. But I think if I look at 645 00:32:27,680 --> 00:32:31,520 Speaker 11: where we are right now, we're just scratching the surface 646 00:32:31,560 --> 00:32:35,280 Speaker 11: in terms of deploying the technology that we have today. 647 00:32:35,440 --> 00:32:39,160 Speaker 11: So I have you know, probably any if you look 648 00:32:39,200 --> 00:32:43,200 Speaker 11: at the enterprise, uh, we we haven't reached the S 649 00:32:43,320 --> 00:32:47,200 Speaker 11: curve in terms of the agenttic adoption for for different reasons. 650 00:32:47,200 --> 00:32:49,080 Speaker 11: We think that's going to happen in the next in 651 00:32:49,160 --> 00:32:51,640 Speaker 11: the next couple of years. So I think we have 652 00:32:51,680 --> 00:32:55,840 Speaker 11: plenty of room to grow and plenty of plenty of 653 00:32:55,880 --> 00:32:59,120 Speaker 11: opportunities for for a company to improve their productivity using 654 00:32:59,520 --> 00:33:00,680 Speaker 11: a knowledge. 655 00:33:00,440 --> 00:33:02,600 Speaker 6: Is Philibertary of ACCEL. 656 00:33:02,840 --> 00:33:05,400 Speaker 3: We are so appreciative of you coming on talking about 657 00:33:05,680 --> 00:33:07,800 Speaker 3: the wealth of research that Accel has just done. 658 00:33:07,920 --> 00:33:08,680 Speaker 6: I appreciate it. 659 00:33:09,440 --> 00:33:11,560 Speaker 3: Now let's go into another area of AI, because AI 660 00:33:11,600 --> 00:33:15,000 Speaker 3: has been fueling chip makers, in particular the memory side 661 00:33:15,000 --> 00:33:15,560 Speaker 3: of the equation. 662 00:33:16,000 --> 00:33:16,760 Speaker 6: But then we've just. 663 00:33:16,760 --> 00:33:20,320 Speaker 3: Had results out of Japan's Kyoxia holdings, and it's putting 664 00:33:20,360 --> 00:33:22,960 Speaker 3: pressure on sand Disk because you say, off by thirteen percent, 665 00:33:23,360 --> 00:33:26,880 Speaker 3: Western Digital of by almost four percent. Particular City is 666 00:33:26,880 --> 00:33:29,520 Speaker 3: out there writing that these Japanese results were somewhat negative. 667 00:33:29,720 --> 00:33:32,000 Speaker 3: The market may react negatively to the way that near 668 00:33:32,120 --> 00:33:35,200 Speaker 3: term earnings are undershooting consensus that there is a strength 669 00:33:35,200 --> 00:33:38,560 Speaker 3: of demand for solid state drives for AI inference. So 670 00:33:39,000 --> 00:33:42,480 Speaker 3: for now people trimming back on some big AI winners 671 00:33:42,480 --> 00:33:45,360 Speaker 3: of late. But coming up we talk more about key 672 00:33:45,400 --> 00:33:47,560 Speaker 3: mag seven names Tessa in particular. 673 00:33:47,240 --> 00:33:49,960 Speaker 6: Working to add Apple car Plays support to it vehicles. 674 00:33:50,200 --> 00:33:51,840 Speaker 6: While that next this is briom leg Tech. 675 00:34:09,200 --> 00:34:11,040 Speaker 3: We've got to get back to that news that Tesla 676 00:34:11,200 --> 00:34:13,240 Speaker 3: is developing support for Apple's car. 677 00:34:13,080 --> 00:34:15,960 Speaker 6: Play system in vehicles according to sources. Take a look 678 00:34:15,960 --> 00:34:17,000 Speaker 6: at the shares Actually. 679 00:34:16,719 --> 00:34:19,200 Speaker 3: Apple managed to turn from negative into positive on the news. 680 00:34:19,239 --> 00:34:21,520 Speaker 3: Tesla still much in the red, off by six percent, 681 00:34:21,560 --> 00:34:24,360 Speaker 3: but Bloomberg's Mark German joining us now help break the story, 682 00:34:24,360 --> 00:34:27,400 Speaker 3: and I think the context is so interesting here because 683 00:34:27,440 --> 00:34:30,520 Speaker 3: this feels a real about face. Why would now be 684 00:34:30,560 --> 00:34:32,400 Speaker 3: the right time for the two companies to work together. 685 00:34:34,000 --> 00:34:37,200 Speaker 13: Yeah, this is absolutely a huge reversal for Tesla. There's 686 00:34:37,239 --> 00:34:40,400 Speaker 13: two things going on here. One, as we've discussed on 687 00:34:40,440 --> 00:34:43,359 Speaker 13: this show many times, Tesla sales have not been as 688 00:34:43,400 --> 00:34:46,200 Speaker 13: hot as they have been in years prior. There are 689 00:34:46,280 --> 00:34:48,480 Speaker 13: a lot of new ed players. There's a lot of 690 00:34:48,520 --> 00:34:51,719 Speaker 13: pressure on the company, particularly in China, to up its 691 00:34:51,800 --> 00:34:54,839 Speaker 13: saled game. We saw some executives leading earlier this year 692 00:34:54,840 --> 00:34:55,839 Speaker 13: because sales. 693 00:34:55,480 --> 00:34:57,120 Speaker 4: Have not been so hot. 694 00:34:57,160 --> 00:35:00,279 Speaker 13: What is the most in demand feature in e these 695 00:35:00,360 --> 00:35:04,439 Speaker 13: right now when making purchase decisions. Well, it's Apple car Play. 696 00:35:04,719 --> 00:35:05,840 Speaker 4: People like to walk. 697 00:35:05,640 --> 00:35:09,400 Speaker 13: Into their car and have their iPhone interface projected onto 698 00:35:09,600 --> 00:35:12,760 Speaker 13: their infotainment system. I use it in my car. People 699 00:35:12,800 --> 00:35:15,120 Speaker 13: are not buying Tesla's because of it. In some cases, 700 00:35:15,120 --> 00:35:19,000 Speaker 13: people are buying other cars because of the well integrated support. 701 00:35:19,800 --> 00:35:23,240 Speaker 13: Tesla wants to hit every lever it could to improve sales. 702 00:35:23,480 --> 00:35:25,719 Speaker 13: You do that with car Play, right, and I would 703 00:35:25,760 --> 00:35:28,120 Speaker 13: expect them to go down the list of all the 704 00:35:28,160 --> 00:35:31,239 Speaker 13: requests that people have for wanting to buy a new 705 00:35:31,280 --> 00:35:33,920 Speaker 13: car and hit those one by one to help sales. 706 00:35:33,960 --> 00:35:36,080 Speaker 13: It's time for Tesla to do that as good as 707 00:35:36,120 --> 00:35:39,640 Speaker 13: their infotainment system is. The second thing, of course, is 708 00:35:39,640 --> 00:35:43,520 Speaker 13: Elon Musk's one trillion dollar pay package, which includes some metrics, 709 00:35:43,560 --> 00:35:47,400 Speaker 13: particularly around selling a certain number of vehicles and integrating 710 00:35:47,400 --> 00:35:51,080 Speaker 13: car play could potentially help with that. And so I 711 00:35:51,120 --> 00:35:53,400 Speaker 13: think this is a good thing for Tesla. They have 712 00:35:53,520 --> 00:35:57,279 Speaker 13: engineers developing support for this, testing support for this, and 713 00:35:57,320 --> 00:36:00,000 Speaker 13: we anticipate a rollout unless it is canceled, of course, 714 00:36:00,000 --> 00:36:02,040 Speaker 13: which Evon Musk is known to do with some features 715 00:36:02,120 --> 00:36:04,240 Speaker 13: late in development in the coming months. 716 00:36:04,719 --> 00:36:07,160 Speaker 3: Mark, you worked with ed on this story, and I'm 717 00:36:07,200 --> 00:36:10,640 Speaker 3: interested is to well, what is in it for Apple? 718 00:36:10,719 --> 00:36:13,799 Speaker 3: More broadly, Elon in many ways had refused to do 719 00:36:13,920 --> 00:36:16,120 Speaker 3: deals because he didn't want the sharing of data, particularly 720 00:36:16,160 --> 00:36:18,960 Speaker 3: when Apple was basically building a competitor. At one point 721 00:36:19,160 --> 00:36:21,239 Speaker 3: Apple backed away from that. Now, how do they win 722 00:36:21,320 --> 00:36:23,040 Speaker 3: by getting car play within it Tesla? 723 00:36:24,400 --> 00:36:27,120 Speaker 13: You know, from Apple's perspective, this is something that they 724 00:36:27,120 --> 00:36:31,040 Speaker 13: don't really have to participate in. There's no agreements behind 725 00:36:31,040 --> 00:36:35,600 Speaker 13: the scenes. Apple provides this functionality. It provides developer tools 726 00:36:35,920 --> 00:36:38,440 Speaker 13: for car makers to integrate this into their cars, so 727 00:36:38,480 --> 00:36:41,800 Speaker 13: there's no money exchanged here. It's really car play, a 728 00:36:41,960 --> 00:36:46,560 Speaker 13: iPhone ecosystem feature. If consumers rely on their iPhone for 729 00:36:46,880 --> 00:36:50,960 Speaker 13: use of their car, for Apple, that keeps people buying iPhones, 730 00:36:51,040 --> 00:36:54,279 Speaker 13: upgrading iPhones, keeping them locked into the ecosystem. So that's 731 00:36:54,280 --> 00:36:57,480 Speaker 13: the business play for them. And Tesla right has a 732 00:36:57,680 --> 00:37:00,520 Speaker 13: you know, over a third of the used market. They 733 00:37:00,520 --> 00:37:04,120 Speaker 13: are a gigantic player in terms of car sales globally 734 00:37:04,160 --> 00:37:08,640 Speaker 13: as well in aligning Tesla with the iPhone brand, and 735 00:37:09,040 --> 00:37:11,400 Speaker 13: that's great for Apple, whether they're making money directly on 736 00:37:11,440 --> 00:37:11,840 Speaker 13: in or not. 737 00:37:12,200 --> 00:37:14,360 Speaker 3: Do you think Elon's going to continue to criticize Apple 738 00:37:14,480 --> 00:37:15,759 Speaker 3: on his ex platform and the. 739 00:37:15,920 --> 00:37:19,120 Speaker 13: Like, Oh, I'm sure of it. But you know, his 740 00:37:19,239 --> 00:37:22,000 Speaker 13: relationship with Apple has taken a turn since Apple stopped 741 00:37:22,040 --> 00:37:25,480 Speaker 13: developing its own competitor. He relies on them very heavily 742 00:37:25,520 --> 00:37:29,880 Speaker 13: now for distribution of grock and X, so it's pretty 743 00:37:29,880 --> 00:37:31,440 Speaker 13: critical for him to be on Apple's good. 744 00:37:31,280 --> 00:37:34,839 Speaker 3: Side, romain on Apple's good side. We'll continue to see 745 00:37:34,840 --> 00:37:37,560 Speaker 3: how the rollout continues and if indeed it does happen 746 00:37:37,600 --> 00:37:40,440 Speaker 3: as you said, sometimes Eno Musk can be prone to 747 00:37:40,520 --> 00:37:42,960 Speaker 3: u turns. Mark German we so appreciate it. Now it's 748 00:37:42,960 --> 00:37:46,600 Speaker 3: time for talking tech. First up, JP Morgan is Lenny's 749 00:37:46,640 --> 00:37:50,520 Speaker 3: managers use AI to help write performance reviews. Now the 750 00:37:50,520 --> 00:37:53,520 Speaker 3: max's new guidelines allow supervisors to use an internal chatbot 751 00:37:53,520 --> 00:37:56,800 Speaker 3: to drop their evaluations, but caution that the technology is 752 00:37:56,880 --> 00:37:59,040 Speaker 3: quote not a substitute. 753 00:37:58,760 --> 00:38:02,880 Speaker 6: The human judgment. Us Google spacing a new EU probe. 754 00:38:02,880 --> 00:38:04,279 Speaker 6: The European Commission alleges the. 755 00:38:04,280 --> 00:38:08,120 Speaker 3: Tech gilt and unfairly demotes certain news results, violating the 756 00:38:08,160 --> 00:38:11,440 Speaker 3: Digital Markets Act. The investigation could add another eleven billion 757 00:38:11,480 --> 00:38:14,240 Speaker 3: dollars to Googles, growing it tally of fines in Europe 758 00:38:15,000 --> 00:38:17,440 Speaker 3: and delivery startup go pack as race to one of 759 00:38:17,520 --> 00:38:20,040 Speaker 3: fifty million dollars an evaluation of eight and a half billion. 760 00:38:20,360 --> 00:38:23,239 Speaker 3: But that's down for fifteen billion dollars in its twenty 761 00:38:23,320 --> 00:38:25,920 Speaker 3: twenty one funding round so all, according to sources. Now, 762 00:38:25,960 --> 00:38:28,879 Speaker 3: the company says the new funding will help accelerate its 763 00:38:28,920 --> 00:38:30,240 Speaker 3: investment in AI. 764 00:38:37,000 --> 00:38:38,719 Speaker 14: I don't believe we're in an AI bubble, and the 765 00:38:38,760 --> 00:38:42,080 Speaker 14: reason for that is we're going through a natural transition 766 00:38:42,680 --> 00:38:45,640 Speaker 14: from an old computing model based on general purpose computing 767 00:38:45,640 --> 00:38:50,120 Speaker 14: to accelerated computing. We also know that AI has now 768 00:38:50,200 --> 00:38:54,000 Speaker 14: become good enough because of reasoning capability, research capabilities, its 769 00:38:54,040 --> 00:38:57,600 Speaker 14: ability to think it's now generating tokens and now generating 770 00:38:57,640 --> 00:38:59,759 Speaker 14: intelligence that's worth paying for. 771 00:39:00,840 --> 00:39:04,080 Speaker 3: That, of course, was in video CEO Jensen Wang speaking 772 00:39:04,120 --> 00:39:06,600 Speaker 3: with our own Ed Ludlow at GtC, just brushing off 773 00:39:06,600 --> 00:39:09,200 Speaker 3: those concerns about an AI bubble. But the scale of 774 00:39:09,239 --> 00:39:13,160 Speaker 3: spending for data centers and of course by AI startups 775 00:39:13,360 --> 00:39:15,640 Speaker 3: continues to raise eyebrows, so we wanted to dig into 776 00:39:15,680 --> 00:39:18,560 Speaker 3: it with Brianna Doherty, she's analyst with Bloomberg Intelligence. You've 777 00:39:18,560 --> 00:39:22,600 Speaker 3: been putting out some great rethinking of whether open ai 778 00:39:23,120 --> 00:39:26,359 Speaker 3: has scale, has the financial wherewithal, and whether there's risk 779 00:39:26,440 --> 00:39:26,840 Speaker 3: within this. 780 00:39:27,080 --> 00:39:29,439 Speaker 6: It's been some of the most red analysis I've seen. 781 00:39:30,400 --> 00:39:32,880 Speaker 3: What is your takeaway as to the circular financing and 782 00:39:32,880 --> 00:39:33,880 Speaker 3: whether this is a concern. 783 00:39:34,600 --> 00:39:37,080 Speaker 12: I think that there's clearly a lot happening right and 784 00:39:37,120 --> 00:39:40,279 Speaker 12: the integration that we're having between the private markets as 785 00:39:40,320 --> 00:39:42,480 Speaker 12: well as the public markets is clearly something to be watching, 786 00:39:42,480 --> 00:39:44,240 Speaker 12: and it's a space that we follow very very closely. 787 00:39:44,760 --> 00:39:47,040 Speaker 12: We think that actually what we've been seeing with open 788 00:39:47,080 --> 00:39:49,799 Speaker 12: aized relationships is the fact that they're broadening them, They're 789 00:39:49,840 --> 00:39:53,560 Speaker 12: creating structures that are allowing them to potentially IPO long term. 790 00:39:53,960 --> 00:39:56,080 Speaker 12: That's obviously something that's been talked about, I think over 791 00:39:56,080 --> 00:39:59,040 Speaker 12: the last couple of weeks especially and what we're thinking 792 00:39:59,160 --> 00:40:00,960 Speaker 12: when we look at these companies. So we've got a 793 00:40:00,960 --> 00:40:04,480 Speaker 12: few hecticorns that we watch very closely, and actually hecticorns, 794 00:40:05,160 --> 00:40:07,880 Speaker 12: I'm pretty sure it's a term. Over one hundred billion dollars, 795 00:40:07,920 --> 00:40:10,040 Speaker 12: that's what we call them. We've got three of them 796 00:40:10,040 --> 00:40:12,320 Speaker 12: in the data set that we track, over twelve actually 797 00:40:12,360 --> 00:40:14,400 Speaker 12: decacorns that we also track really really closely in our 798 00:40:14,440 --> 00:40:19,080 Speaker 12: data sets Open AI, Anthropic XAI. Naturally right now, at 799 00:40:19,080 --> 00:40:22,120 Speaker 12: their current implied valuations, they would rank in the top 800 00:40:22,200 --> 00:40:25,560 Speaker 12: thirty if they were public and in our Bloomberg Benchmark 801 00:40:25,600 --> 00:40:27,960 Speaker 12: AI Index, which has over one hundred and twenty equities 802 00:40:27,960 --> 00:40:30,440 Speaker 12: in it. So the scale these companies is huge. The 803 00:40:30,520 --> 00:40:34,399 Speaker 12: partnerships there forming are critical, and we do think we're 804 00:40:34,440 --> 00:40:37,279 Speaker 12: not in the bubble camp. We do think that there's 805 00:40:37,320 --> 00:40:39,160 Speaker 12: a lot of opportunity down the road. As it relates 806 00:40:39,239 --> 00:40:39,440 Speaker 12: to this. 807 00:40:40,320 --> 00:40:43,359 Speaker 3: When someone then sits set a dinner table with you 808 00:40:43,480 --> 00:40:47,000 Speaker 3: at a cocktail party and they're saying, I cannot see it. 809 00:40:47,160 --> 00:40:50,600 Speaker 3: I just Why on earth is AMD giving it stock 810 00:40:50,640 --> 00:40:52,839 Speaker 3: to open AI to seal these sorts of deals. What 811 00:40:52,960 --> 00:40:55,680 Speaker 3: is your general narrative as to why we can avoid 812 00:40:55,800 --> 00:40:57,760 Speaker 3: some sort of bubble? Is it just the sheer revenue 813 00:40:57,760 --> 00:40:59,640 Speaker 3: that could scale for open AI? But you do have 814 00:40:59,680 --> 00:41:01,040 Speaker 3: to have a belief, Yeah, I. 815 00:41:01,000 --> 00:41:02,520 Speaker 6: Think you do have to have a certain bit of belief. 816 00:41:02,640 --> 00:41:02,839 Speaker 4: Right. 817 00:41:02,920 --> 00:41:05,200 Speaker 12: I think what we've seen is even over the last year, 818 00:41:05,200 --> 00:41:08,040 Speaker 12: we've seen opening eyes implied valuation more than double, right, 819 00:41:08,120 --> 00:41:11,160 Speaker 12: I mean, naturally a lot has happened in that AI ecosystem. 820 00:41:11,200 --> 00:41:13,359 Speaker 12: And actually, something that we've been really focused on, and 821 00:41:13,480 --> 00:41:15,640 Speaker 12: Jensen actually said something the other day about this as well, 822 00:41:16,160 --> 00:41:18,359 Speaker 12: is we're not just talking about where we are right 823 00:41:18,400 --> 00:41:21,719 Speaker 12: now with AI. We're talking about an AI to quantum continuum, right, 824 00:41:22,080 --> 00:41:25,440 Speaker 12: We're talking about this continued acceleration and where we're going 825 00:41:25,480 --> 00:41:27,680 Speaker 12: to see and continue to prove it. Right. So, even 826 00:41:27,719 --> 00:41:29,920 Speaker 12: if it's that you're thinking, Okay, well, what if some 827 00:41:29,960 --> 00:41:32,600 Speaker 12: cost come down, or what if the power needs come down, Well, 828 00:41:32,600 --> 00:41:36,359 Speaker 12: the demand elasticity is just so strong that for every 829 00:41:36,360 --> 00:41:38,279 Speaker 12: little bit of efficiency you gain, you're going to gain 830 00:41:38,320 --> 00:41:40,440 Speaker 12: some extra demand that's going to drive a next new evolution. 831 00:41:40,960 --> 00:41:43,600 Speaker 12: So we're really looking at this as continuum and investing 832 00:41:43,640 --> 00:41:46,040 Speaker 12: through that type of disruption. I mean, it's not easy, 833 00:41:46,080 --> 00:41:49,279 Speaker 12: it's not without tension. So while there's tons of opportunity, 834 00:41:49,280 --> 00:41:51,440 Speaker 12: we are flagging. We've talked about this previously, about this 835 00:41:51,440 --> 00:41:54,040 Speaker 12: potential tension that can come with that. In twenty twenty six. 836 00:41:54,239 --> 00:41:56,120 Speaker 12: We're seeing over the last few weeks we get a 837 00:41:56,120 --> 00:41:58,320 Speaker 12: lot of pullbacks, right, We see a lot of optimism. 838 00:41:58,400 --> 00:42:01,759 Speaker 12: What we're seeing is investor's fear of missing note right, 839 00:42:01,880 --> 00:42:04,080 Speaker 12: really wanting the innovation, but also every now and then 840 00:42:04,080 --> 00:42:06,040 Speaker 12: pivot into a risk off. And that tension is something 841 00:42:06,080 --> 00:42:07,919 Speaker 12: that we think is going to persist through twenty twenty six. 842 00:42:08,080 --> 00:42:12,080 Speaker 3: So ride the volatility, expect the volatility when you're thinking 843 00:42:12,080 --> 00:42:15,480 Speaker 3: about the fundamental analyiso only briefly look Michael Berry basically 844 00:42:15,520 --> 00:42:17,040 Speaker 3: having to shut up shop on his hedge fund. It 845 00:42:17,040 --> 00:42:19,759 Speaker 3: would see the reporting is leading us there on his 846 00:42:19,960 --> 00:42:22,200 Speaker 3: negative bets on some of these companies. 847 00:42:22,320 --> 00:42:23,400 Speaker 6: You think it's impossible. 848 00:42:23,480 --> 00:42:28,160 Speaker 12: Briefly, nothing's impossible, yeah, right, and yes it does make 849 00:42:28,239 --> 00:42:31,400 Speaker 12: for good dinner side conversations. What we're like and the 850 00:42:31,440 --> 00:42:33,279 Speaker 12: way we approach this is we look very much the 851 00:42:33,280 --> 00:42:35,239 Speaker 12: theme holistically, right, It's one of the reasons why we 852 00:42:35,280 --> 00:42:38,359 Speaker 12: say picking single individual winners and losers is really tough 853 00:42:38,400 --> 00:42:41,719 Speaker 12: when you're talking about investing through disruption. We really look 854 00:42:41,719 --> 00:42:44,200 Speaker 12: at benchmark industries. That's one of the reasons why, you know, 855 00:42:44,239 --> 00:42:46,120 Speaker 12: the way we create our work is very much looking 856 00:42:46,120 --> 00:42:49,560 Speaker 12: at that benchmark approach, understanding that as these systems evolve, 857 00:42:49,600 --> 00:42:52,560 Speaker 12: you're going to find new connections, new correlations, and that's 858 00:42:52,560 --> 00:42:57,160 Speaker 12: really a way to continue investing through disruption without that nability, vulnerability. 859 00:42:57,320 --> 00:42:59,120 Speaker 6: And amazing analysis. 860 00:42:59,160 --> 00:43:01,879 Speaker 3: Go read it and Doherty a Bloomberg intelligence that does 861 00:43:01,920 --> 00:43:03,479 Speaker 3: it for this edition of Bloomberg Tech. 862 00:43:03,960 --> 00:43:04,840 Speaker 6: Check out the podcast 863 00:43:06,680 --> 00:43:08,440 Speaker 9: M hm hm