WEBVTT - Cisco Shares Nears Dot-Com Highs

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive

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<v Speaker 1>from coast to coast with Caroline Hide in New York

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<v Speaker 1>and ever though in San Francisco.

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<v Speaker 2>This is Bloomberg Tech coming up. Cisco shares gain after

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<v Speaker 2>boosting it's twenty twenty six forecast, showing progress in its

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<v Speaker 2>efforts to capture more AI spending. We're going to discuss

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<v Speaker 2>with the CEO plus shares of Disney.

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<v Speaker 3>They're falling today as the company invests in its content

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<v Speaker 3>slate and stream bundling. Our conversation with the Disney CFO Hugh.

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<v Speaker 2>Johnson, and ten Cent strikes a deal with Apple under

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<v Speaker 2>which the iPhone maker takes a fifteen percent cut for

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<v Speaker 2>purchases in we chat, minigames and apps.

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<v Speaker 3>First free checking on these markets and maybe a little

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<v Speaker 3>bit of chot as we try to discern when we

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<v Speaker 3>get the government data and what that will show the

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<v Speaker 3>Federal Reserve, canondean do or do not when it comes

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<v Speaker 3>to cutting in the future. The market a little bit

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<v Speaker 3>uncertain at the moment. It seems as though that lifting

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<v Speaker 3>of a government shutdown have been priced in. We're currently

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<v Speaker 3>off by one point four percent. We're dragged down by

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<v Speaker 3>the key names in Magnificent seven. But ed, you're looking

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<v Speaker 3>at the company that's adding the most in points upside.

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<v Speaker 2>Yeah, one of the big movers to the upside is

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<v Speaker 2>Cisco shares currently up around four percent. They'd open much

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<v Speaker 2>higher than that. The key bit is they're trading at

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<v Speaker 2>their highest level since the year two thousand, after the

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<v Speaker 2>company raised its outlook and showed progress on capturing more of.

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<v Speaker 4>The global AI spend.

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<v Speaker 2>Let's get the details with Cisco's CEO, Chuck Robins. Chuck,

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<v Speaker 2>in the year two thousand, Cisco is one of the

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<v Speaker 2>original four horsemen of technology. Based on the numbers you

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<v Speaker 2>gave and what you said on the call, do you

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<v Speaker 2>feel like customers, the new ones and investors now understand

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<v Speaker 2>Cisco's place in this new AI era.

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<v Speaker 5>Well, first of all, thanks for having me, and you know,

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<v Speaker 5>I'm super proud of what teams have accomplished. We had

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<v Speaker 5>a record quarter and set ourselves up for what's likely

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<v Speaker 5>going to be the best year we've ever had. So

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<v Speaker 5>it was just a great performance. And as I've been

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<v Speaker 5>asked a lot over the last twenty four hours to

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<v Speaker 5>reflect back on two thousand and it's kind of an

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<v Speaker 5>interesting comparison, but I think that, Look, the hyperscalers are

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<v Speaker 5>some of the most advanced customers in the world. They

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<v Speaker 5>do the deepest analysis of the technology before they make decisions,

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<v Speaker 5>and I think that their decisions to continue spending more

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<v Speaker 5>with us speaks volumes about the innovation and the technology

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<v Speaker 5>that our teams are building right now. So I'm really

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<v Speaker 5>proud of them, and I think it'll just extend into

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<v Speaker 5>the enterprise over time.

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<v Speaker 2>Chuck, who are some of those new customers that you've

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<v Speaker 2>been able to sign in the air context.

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<v Speaker 5>Well, we're just talking about the major hyperscalers, primarily in

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<v Speaker 5>the United States, but we've also announced these sovereign deals

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<v Speaker 5>in the Middle East with G forty two and the

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<v Speaker 5>Emirates as well as Humane in Saudi There's a lot

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<v Speaker 5>of work going on in the neo cloud space. We're

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<v Speaker 5>seeing sovereign players start popping up now in parts of

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<v Speaker 5>Europe as well as Southeast Asia and India. So it's

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<v Speaker 5>a broad swath of customers. But the one point three

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<v Speaker 5>billion that we talked about is strictly the top hyperscalers

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<v Speaker 5>that we're doing business with.

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<v Speaker 4>So you're talking about five companies and.

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<v Speaker 3>They're good for the money, as you can tell from

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<v Speaker 3>the cash flow that they.

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<v Speaker 6>Have chuck not two hundred million dollars.

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<v Speaker 3>That you are expanding into sovereign, you are expanding into

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<v Speaker 3>enterprise and neoclouds. How do you bake in some of

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<v Speaker 3>the risks that the market just cannot get enough of

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<v Speaker 3>talking about this circular economy.

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<v Speaker 5>Well, so we did talk about the fact that we

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<v Speaker 5>have over two billion dollars now in our pipeline through

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<v Speaker 5>the end of the fiscal years over the next three

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<v Speaker 5>quarters in neo cloud, sovereign cloud, and enterprise, and we

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<v Speaker 5>see that continue to accelerate. We took two hundred million

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<v Speaker 5>dollars in orders in Q one, and it's just it's

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<v Speaker 5>a natural way the technology technologies have been evolving over

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<v Speaker 5>the last decade. More they start in the hyperscalers, they

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<v Speaker 5>move through the telco space in this case the neo

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<v Speaker 5>clouds and the sovereign players, and then into the enterprise.

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<v Speaker 5>And it's happening exactly that way. And our bread and

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<v Speaker 5>butter over the years has been in the enterprise. And

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<v Speaker 5>we have lots of technolo knowlogy, We have a partner ecosystem,

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<v Speaker 5>we have full stack solutions, we have security, we have

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<v Speaker 5>all the things that they're looking forward to actually build

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<v Speaker 5>out AI workloads and deal with AI with confidence.

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<v Speaker 3>Let's just go to that security a little bit of

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<v Speaker 3>a fly in the ointment. Let's say, I know you've

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<v Speaker 3>talked clearly about perhaps how the booking of revenue can

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<v Speaker 3>be misinterpreted, but how are you going to sell that

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<v Speaker 3>more holistically? How do you think the security part of

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<v Speaker 3>the offering can really start firing on all cylinders.

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<v Speaker 5>Well, I started by saying clearly we're not pleased with

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<v Speaker 5>where we are yet, but I will say over the

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<v Speaker 5>last two to three years, we've made a lot of progress.

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<v Speaker 5>It's a major decision for customers to make big platform decisions.

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<v Speaker 5>In security, We've had a lot of great wins. I'm

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<v Speaker 5>proud of what the teams have built. And we saw

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<v Speaker 5>our next generation our walls, we saw mid teens growth

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<v Speaker 5>and orders there. We saw double digit arr growth and Splunk.

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<v Speaker 5>We saw our new and refreshed products on the security

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<v Speaker 5>side continue to show growth. And the issue we had

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<v Speaker 5>in the quarter was really it's an accounting issue around

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<v Speaker 5>how cloud delivered Splunk versus on prem delivered Splunk. The

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<v Speaker 5>cloud stuff is radable and realize revenues realized over the

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<v Speaker 5>life of the term, and the on prem stuff gets

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<v Speaker 5>recognized immediately, and we just had a major shift in

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<v Speaker 5>how our customers consume it, which is great for us

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<v Speaker 5>in the long term that they're buying more cloud based solutions,

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<v Speaker 5>but it creates a little bit of a challenge on

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<v Speaker 5>revenue during the quarter. The good news is the networking

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<v Speaker 5>business is doing incredibly well and can cover that for us.

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<v Speaker 2>Chuck, it is fair to say at a minimum that

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<v Speaker 2>the Cisco of today isn't the same as the Cisco

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<v Speaker 2>of two thousand. What you've done is kind of been

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<v Speaker 2>open about the product lineup and you've used M and

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<v Speaker 2>A to change the footprint of the company. What's your

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<v Speaker 2>latest thinking on that, the products that you offer and

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<v Speaker 2>what you need to do, either organically or inorganically to

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<v Speaker 2>offer what the world of AI wants.

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<v Speaker 5>I think the big things that we did we obviously

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<v Speaker 5>introduced a lot more software into our portfolio in areas

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<v Speaker 5>that are strategic, like security, and this Plunk acquisition has

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<v Speaker 5>been a great one. I think the other thing that's

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<v Speaker 5>worth calling out is is this investment that we started

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<v Speaker 5>in twenty sixteen to be clear on our silicon strategy

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<v Speaker 5>that is absolutely the reason that we're having success today

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<v Speaker 5>in the hyperscaler space. If we did not have our

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<v Speaker 5>silicon and develop and design our own silicon, we wouldn't

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<v Speaker 5>be participating at all. It's just black and white. And

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<v Speaker 5>so as we as we look at both internal innovation

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<v Speaker 5>as well as or inorganic opportunities. We're very focused on security,

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<v Speaker 5>We're very focused on AI. We've made some tech and

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<v Speaker 5>talent deals. Anything that can help us accelerate our solutions

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<v Speaker 5>in those areas we're open to look at.

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<v Speaker 2>Chuck, I do not apologize for this next question. Are

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<v Speaker 2>we or are we not in an AI bubble?

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<v Speaker 5>Oh, it's just it's so funny. Look, the customers that

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<v Speaker 5>are buying the predominant amount of this technology have incredible

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<v Speaker 5>balance sheets, have incredible cash flow, have incredible profitability. I

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<v Speaker 5>think Caroline said it. They actually pay their bills and

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<v Speaker 5>and so, and they view it as an existential issue

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<v Speaker 5>for them. That's that's a really key element. They don't

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<v Speaker 5>view this as something that's nice to have. They don't

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<v Speaker 5>view it as something that is okay if we if

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<v Speaker 5>we're successful, great, if we're not great. They view it

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<v Speaker 5>as existential, which you see with the level of spending

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<v Speaker 5>that they're putting into it. So it's it's a lot

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<v Speaker 5>and it's moving fast. And but the difference between now

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<v Speaker 5>in two thousand is that these are massive companies with

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<v Speaker 5>strong financial performance and they believe in this one hundred percent.

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<v Speaker 5>So I don't think it's going to change. We haven't

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<v Speaker 5>gotten into physical AI. We have, we're just getting into

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<v Speaker 5>synthetic training. Yeah, we haven't gotten into robotics. We haven't

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<v Speaker 5>gotten into the enterprise in a big way yet, and

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<v Speaker 5>so there's a there's a huge opportunity ahead for all

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<v Speaker 5>of us. I believe.

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<v Speaker 3>Well, Chuck Blouemberg Intelligence Analysis says, your projections are conservative.

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<v Speaker 6>Briefly are the conservative?

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<v Speaker 5>Well, I think you said that last quarter, so you've

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<v Speaker 5>proved to be correct ninety days ago. But look, I

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<v Speaker 5>think based on what we know today we're ninety days

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<v Speaker 5>into the year, were taking what we have in our backlog,

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<v Speaker 5>what we see in the forecast. But again we got

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<v Speaker 5>we have three more quarters to play out. Lots of

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<v Speaker 5>things can change, the world's very dynamic, but we're very

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<v Speaker 5>confident in the numbers that we put up yesterday.

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<v Speaker 3>Cisco CEO Chuck Robins always a joy to catch up

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<v Speaker 3>with the thanks for spending time. Meanwhile, as I'm going

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<v Speaker 3>to look at some other shares on the move, JD

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<v Speaker 3>dot Com, Tencent, I want to shine light on these

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<v Speaker 3>ad rs. They're under water a little bit like the

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<v Speaker 3>rest of the market. But JD dot Com actually relieve

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<v Speaker 3>many an investor with a few fifteen percent increase in revenue,

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<v Speaker 3>managing to show that maybe the investment in the food

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<v Speaker 3>area is really building more broadly into the overall merchandise sales.

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<v Speaker 3>We're looking at Tencent social media app more cautious in

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<v Speaker 3>AI spending, but it's making it work in terms of

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<v Speaker 3>selling its overall products and the gaming strength really coming

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<v Speaker 3>to bear. We're seeing again a fifteen percent increase in

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<v Speaker 3>revenue there as well. But fifteen percent is an interesting

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<v Speaker 3>number end because it's a theme in the next story.

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<v Speaker 2>Ten cents US shares trading tropic because at one point

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<v Speaker 2>we're hiring the session. Ten Cent has struck a deal

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<v Speaker 2>with Apple that we'll see the iPhone maker handle payments

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<v Speaker 2>and take a fifteen percent cut of purchases in we chat,

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<v Speaker 2>minigames and apps doing both. Global tech editor Petere Elstrom

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<v Speaker 2>joins us for more that there's one of several stories

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<v Speaker 2>actually about ten Cent today, but.

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<v Speaker 4>Let's start with the Apple one. What do we need

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<v Speaker 4>to know?

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<v Speaker 7>Yeah, so ten Cent in Apple have been in this

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<v Speaker 7>standoff for a number of different years. Tencent offers a

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<v Speaker 7>bunch of different services, including games, but they also offer

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<v Speaker 7>we Chat, which is really the original super app. It's

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<v Speaker 7>a messaging app, but you can do many other things

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<v Speaker 7>within it too. Now, Tencent has wanted to offer different

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<v Speaker 7>services and games through this super app, and they've allowed

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<v Speaker 7>developers to circumvent the Apple Store to avoid some of

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<v Speaker 7>the fees that you would typically pay by using the

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<v Speaker 7>Apple Store. Apple hasn't liked that. They want everybody to

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<v Speaker 7>go through their Apple Store, where they take a thirty

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<v Speaker 7>percent cut of most things that are going on. So

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<v Speaker 7>we understand from our sources, the sub bloomberg Scoop that

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<v Speaker 7>they've reached an agreement now where customers within the ten

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<v Speaker 7>Cent we Chat ecosystem are going to pay a fee

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<v Speaker 7>of fifteen percent to Apple, so about half of their

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<v Speaker 7>usual fee. But they'll begin to reach some sort of

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<v Speaker 7>truce between Tencent and Apple as they collaborate on games

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<v Speaker 7>and other kinds of services.

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<v Speaker 6>So to push us forward, is this good for Apple?

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<v Speaker 3>Because they can start to well reap more rewards from

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<v Speaker 3>these companies that are super apps.

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<v Speaker 6>Or is this a concern.

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<v Speaker 3>Because everyone else is going to be looking at a

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<v Speaker 3>fifteen percent number.

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<v Speaker 7>Yeah, it's a very good question. Certainly, Apple faces this

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<v Speaker 7>kind of pressure in many different markets. It's not just China.

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<v Speaker 7>In China it's a little bit different though, because they

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<v Speaker 7>don't have the kind of market power that they do

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<v Speaker 7>in places like the United States or Europe for that matter,

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<v Speaker 7>or they can just take their thirty percent cut. Regulators

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<v Speaker 7>are looking at those fees. They'd like to bring them down,

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<v Speaker 7>but in China they haven't been able to make that

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<v Speaker 7>much progress because there are these alternatives like ten cents,

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<v Speaker 7>ecosystem and other kinds of areas too. So this is

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<v Speaker 7>at least an altre for them into a China market

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<v Speaker 7>that they really haven't been able to tap that effectively

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<v Speaker 7>in the past.

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<v Speaker 3>Peter Elstrom, all across the world of te tencent we

0:11:30.040 --> 0:11:33.360
<v Speaker 3>so appreciated. Meanwhile, coming up, we're all across Disney falling

0:11:33.360 --> 0:11:34.199
<v Speaker 3>today after what.

0:11:34.240 --> 0:11:37.880
<v Speaker 6>Some investors are calling we're underwhelming forecast. More on that next.

0:11:37.920 --> 0:11:41.040
<v Speaker 3>Meanwhile, check out shares of Verizon. We have breaking news

0:11:41.040 --> 0:11:43.439
<v Speaker 3>coming from the Wall Street Journal talking about how there

0:11:43.440 --> 0:11:47.520
<v Speaker 3>could be some fifteen thousand job cuts to come. Remember,

0:11:47.520 --> 0:11:50.320
<v Speaker 3>we've had a relatively new CEO in place, Bloomberg reporting

0:11:50.320 --> 0:11:53.480
<v Speaker 3>earlier that layoffs could be announced as soon as next week,

0:11:53.640 --> 0:11:56.720
<v Speaker 3>according to people familiar, as we have a major step

0:11:56.760 --> 0:11:59.320
<v Speaker 3>in the transformation led by the new CEO, Dan Shulman

0:12:00.000 --> 0:12:00.440
<v Speaker 3>in New York.

0:12:00.760 --> 0:12:01.480
<v Speaker 6>Is a really bad tag.

0:12:14.000 --> 0:12:17.240
<v Speaker 2>Shares of Disney really falling today after posting fourth quarter

0:12:17.280 --> 0:12:21.800
<v Speaker 2>earnings that missed estimates and projecting forecasts that underwhelmed Wall

0:12:21.800 --> 0:12:23.280
<v Speaker 2>Street were down almost ten percent.

0:12:23.640 --> 0:12:25.839
<v Speaker 4>We spoke with Hugh Johnston Disney.

0:12:25.520 --> 0:12:28.400
<v Speaker 2>CFO earlier today to walk through those results.

0:12:29.920 --> 0:12:32.600
<v Speaker 8>I thought it was a good quarter overall, and frankly

0:12:32.920 --> 0:12:35.840
<v Speaker 8>versus Wall Street, we beat expectations by six cents. So,

0:12:36.679 --> 0:12:40.319
<v Speaker 8>as you noted, the experiences business did very very well,

0:12:40.800 --> 0:12:44.520
<v Speaker 8>six percent revenue growth thirteen percent of wide growth was terrific.

0:12:45.400 --> 0:12:49.040
<v Speaker 8>Sports did very strongly while we were launching the new

0:12:49.120 --> 0:12:52.120
<v Speaker 8>DTC product, which is off to a great start. And

0:12:52.120 --> 0:12:55.680
<v Speaker 8>then in terms of experience the entertainment business, it was

0:12:55.760 --> 0:12:59.800
<v Speaker 8>largely just the overlap of the film slate that drove

0:12:59.840 --> 0:13:03.080
<v Speaker 8>the numbers. I know, the linear business looked a little

0:13:03.120 --> 0:13:05.199
<v Speaker 8>bit soft, but that's primarily due to the fact that

0:13:05.960 --> 0:13:08.360
<v Speaker 8>we had India in the numbers last year where we

0:13:08.400 --> 0:13:11.560
<v Speaker 8>made eighty four million bucks and wasn't in the numbers

0:13:11.559 --> 0:13:14.800
<v Speaker 8>this year. Take that out Apple Staples basis. Overall, I

0:13:14.840 --> 0:13:18.640
<v Speaker 8>thought the quarter was good and it actually allows us

0:13:18.640 --> 0:13:20.520
<v Speaker 8>to end the year with a lot of momentum as

0:13:20.679 --> 0:13:23.480
<v Speaker 8>we think about where we are right now. We grew

0:13:23.520 --> 0:13:27.560
<v Speaker 8>EPs nineteen percent for the year and nineteen percent Keeger

0:13:27.679 --> 0:13:30.160
<v Speaker 8>for the last three years, and that's why we both

0:13:30.240 --> 0:13:33.840
<v Speaker 8>guided to double digit EPs growth in twenty six and

0:13:33.960 --> 0:13:36.040
<v Speaker 8>on top of that, doubled the share of purchase and

0:13:36.080 --> 0:13:37.720
<v Speaker 8>increased the dividend by fifty percent.

0:13:38.600 --> 0:13:40.599
<v Speaker 4>You good morning. On that momentum.

0:13:40.640 --> 0:13:43.320
<v Speaker 2>The focus for a lot is streaming, right and you

0:13:43.679 --> 0:13:47.240
<v Speaker 2>have the confidence to say streaming is going to continue

0:13:47.280 --> 0:13:50.760
<v Speaker 2>to be profitable through twenty twenty six. What are the

0:13:50.760 --> 0:13:54.040
<v Speaker 2>factors behind that? What allows you to have the confidence

0:13:54.120 --> 0:13:57.360
<v Speaker 2>to have such visibility into how that streaming business is

0:13:57.400 --> 0:13:58.760
<v Speaker 2>going well?

0:13:58.800 --> 0:14:02.120
<v Speaker 8>Of course, streaming all we begins with the quality of

0:14:02.240 --> 0:14:04.160
<v Speaker 8>the content that we have and the quality of the

0:14:04.200 --> 0:14:07.120
<v Speaker 8>slate that we have going forward. So if you think

0:14:07.120 --> 0:14:10.760
<v Speaker 8>about the film slate we have right now, number one.

0:14:10.920 --> 0:14:15.560
<v Speaker 8>We obviously have Zootopia two, followed by Avatar, followed Bright,

0:14:15.760 --> 0:14:21.320
<v Speaker 8>the Double Wars product two, followed by Toy Story five, Milana,

0:14:21.640 --> 0:14:24.600
<v Speaker 8>and then we've got an Avengers movie as well. So

0:14:25.320 --> 0:14:27.360
<v Speaker 8>if I look at all of that playing its way

0:14:27.360 --> 0:14:29.960
<v Speaker 8>into the streaming service, certainly feel good about those ten

0:14:30.000 --> 0:14:34.840
<v Speaker 8>pole events. In addition to that, our TV side continues

0:14:34.880 --> 0:14:37.360
<v Speaker 8>to perform very strongly. The ratings are great, the number

0:14:37.400 --> 0:14:40.280
<v Speaker 8>of hit shows are great. And then on top of that,

0:14:40.320 --> 0:14:43.840
<v Speaker 8>we're investing in the product in a significant way, creating

0:14:43.880 --> 0:14:47.080
<v Speaker 8>a unified app, and in addition to that, improving our

0:14:47.120 --> 0:14:53.600
<v Speaker 8>recommendation engines and improving the navigation withinside within the DTC app.

0:14:54.040 --> 0:14:56.880
<v Speaker 8>Put all of that together and what we really see

0:14:57.080 --> 0:15:00.560
<v Speaker 8>is just a huge opportunity for growth Spire to grow

0:15:00.560 --> 0:15:04.000
<v Speaker 8>that business double digits along with the double digit margins

0:15:04.040 --> 0:15:06.480
<v Speaker 8>we expect to achieve this coming year. And as a result,

0:15:06.720 --> 0:15:09.440
<v Speaker 8>I think we're going to continue to see that business

0:15:09.440 --> 0:15:11.880
<v Speaker 8>do really well and be a real growth driver for Disney.

0:15:11.880 --> 0:15:14.720
<v Speaker 3>But the profitability who streaming operating income for the first

0:15:14.800 --> 0:15:16.760
<v Speaker 3>quarter of twenty twenty six, you got to be three

0:15:16.800 --> 0:15:18.920
<v Speaker 3>hundred and twenty five million dollars. That's a lot less

0:15:19.000 --> 0:15:20.600
<v Speaker 3>than the street was anticipating.

0:15:20.640 --> 0:15:21.240
<v Speaker 6>Why is that?

0:15:22.320 --> 0:15:24.240
<v Speaker 8>I think it's primarily due to the fact that we're

0:15:24.240 --> 0:15:28.600
<v Speaker 8>investing in product in the business, and we're investing in

0:15:28.600 --> 0:15:33.120
<v Speaker 8>in bundling. So we all know that bundling ultimately is

0:15:33.160 --> 0:15:37.040
<v Speaker 8>a very profitable thing to invest in. It increases retention,

0:15:37.240 --> 0:15:41.120
<v Speaker 8>reduces churn, increases engagement. And that's not a theory. We

0:15:41.240 --> 0:15:43.200
<v Speaker 8>have proof on that, Hugh, Is.

0:15:43.080 --> 0:15:47.000
<v Speaker 2>This the last earnings report and quarter before Disney's board

0:15:47.080 --> 0:15:50.000
<v Speaker 2>names a successor to Bob Eiga's CEO.

0:15:51.000 --> 0:15:51.960
<v Speaker 4>That's a great question.

0:15:52.160 --> 0:15:55.440
<v Speaker 8>So what the board has previously indicated, and I will

0:15:55.480 --> 0:15:58.880
<v Speaker 8>say the board has been about as transparent as any

0:15:58.920 --> 0:16:02.480
<v Speaker 8>CEO succession I have ever seen in my long career.

0:16:03.480 --> 0:16:05.640
<v Speaker 8>What the board is indicated is that will take place

0:16:05.680 --> 0:16:10.400
<v Speaker 8>sometime during the first calendar quarter of twenty six. We

0:16:10.440 --> 0:16:15.480
<v Speaker 8>report in next February. Whether that'll be before or after,

0:16:15.520 --> 0:16:18.640
<v Speaker 8>I'll be up to the board. But we should have

0:16:18.720 --> 0:16:20.720
<v Speaker 8>it done by the end of March.

0:16:21.520 --> 0:16:25.000
<v Speaker 3>Part of our conversation with Disney's CFO, Hugh Johnson, let's

0:16:25.000 --> 0:16:27.480
<v Speaker 3>stay on Disney, stink a little deeper into the numbers.

0:16:27.480 --> 0:16:30.200
<v Speaker 3>Ether Rangon Athams with us BlueBag Intelligence senior media analyst.

0:16:30.280 --> 0:16:32.760
<v Speaker 3>You've been writing the overall view for fiscal twenty twenty

0:16:32.800 --> 0:16:36.760
<v Speaker 3>six is strong within guidance, maybe conservative, given multiple levers,

0:16:36.800 --> 0:16:40.120
<v Speaker 3>including the launch of two new cruises, multiple blockbuster theatrical releases,

0:16:40.320 --> 0:16:44.840
<v Speaker 3>and greater operating leverage at streaming driven by price increases.

0:16:44.880 --> 0:16:49.640
<v Speaker 3>But getha, the market's not giving any sort of optimism here.

0:16:49.840 --> 0:16:51.680
<v Speaker 3>Why are they beating up so hard on Disney?

0:16:52.720 --> 0:16:56.320
<v Speaker 9>Yeah, I think after Caroline, you'll come off of fiscal

0:16:56.320 --> 0:17:00.400
<v Speaker 9>twenty twenty five delivering nineteen percent EPs growth. You know,

0:17:00.440 --> 0:17:03.800
<v Speaker 9>you obviously have some very solid momentum in the business. Yes, granted,

0:17:03.880 --> 0:17:06.600
<v Speaker 9>fiscal you know, first quarter of twenty twenty six looks

0:17:06.600 --> 0:17:08.679
<v Speaker 9>a little light. They're dealing with a lot of different

0:17:08.680 --> 0:17:10.840
<v Speaker 9>cost issues, whether it's on the studio side, in terms

0:17:10.840 --> 0:17:13.840
<v Speaker 9>of launch costs for you know, cruises, So there's a

0:17:13.840 --> 0:17:15.359
<v Speaker 9>little bit of all of that that they have to

0:17:15.359 --> 0:17:17.679
<v Speaker 9>contend with. But I think, you know, the street was

0:17:17.720 --> 0:17:20.400
<v Speaker 9>really expecting. I think something much more specific and much

0:17:20.440 --> 0:17:24.959
<v Speaker 9>more concrete, something better than just double digit EPs growth

0:17:25.000 --> 0:17:28.280
<v Speaker 9>for twenty twenty six, especially when they have the benefit

0:17:28.400 --> 0:17:30.760
<v Speaker 9>of a lot of different catalysts that come in fiscal

0:17:30.800 --> 0:17:31.560
<v Speaker 9>twenty twenty six.

0:17:32.280 --> 0:17:34.840
<v Speaker 2>I mean the stock's down ten percent, right, that puts

0:17:34.840 --> 0:17:37.119
<v Speaker 2>it on track for its biggest drop since November of

0:17:37.119 --> 0:17:42.000
<v Speaker 2>twenty twenty two. You heard the final question asked and

0:17:42.240 --> 0:17:45.679
<v Speaker 2>answered to Hew of what happens next with succession?

0:17:46.400 --> 0:17:48.320
<v Speaker 4>Is that the overhang on the stock here.

0:17:49.280 --> 0:17:50.640
<v Speaker 6>I think a little bit ed.

0:17:50.720 --> 0:17:52.320
<v Speaker 9>I mean, you know, we know that, you know, the

0:17:52.359 --> 0:17:55.359
<v Speaker 9>Disney succession issue has really been you know, bungled so

0:17:55.480 --> 0:17:57.919
<v Speaker 9>many times right now, it's this has been an ongoing

0:17:58.000 --> 0:18:00.800
<v Speaker 9>question for them for almost a decas I would say,

0:18:01.359 --> 0:18:03.119
<v Speaker 9>you know, it seems like things are moving in the

0:18:03.200 --> 0:18:05.439
<v Speaker 9>right direction. It's kind of turning into I think a

0:18:05.480 --> 0:18:09.120
<v Speaker 9>two horse race between Dana Walden, who heads the creative

0:18:09.119 --> 0:18:12.440
<v Speaker 9>division at Disney, as well as Josh Tomorrow, who heads

0:18:12.480 --> 0:18:14.600
<v Speaker 9>the parks. And this has kind of been the eternal

0:18:14.680 --> 0:18:16.879
<v Speaker 9>question for Disney. Do you have somebody who is at

0:18:16.880 --> 0:18:19.280
<v Speaker 9>the head of creative who can talk to talent, who

0:18:19.280 --> 0:18:21.560
<v Speaker 9>can talk to all of those Hollywood executives, or do

0:18:21.600 --> 0:18:24.120
<v Speaker 9>you need somebody who you know, heads the parks, who

0:18:24.240 --> 0:18:26.840
<v Speaker 9>you know which is basically sixty percent of the company's profit.

0:18:27.280 --> 0:18:28.880
<v Speaker 9>I really don't know how it's going to shake out.

0:18:29.000 --> 0:18:32.000
<v Speaker 9>Maybe they have a co CEO structure like Netflix, like

0:18:32.040 --> 0:18:34.280
<v Speaker 9>Spotify is doing, but again we have to wait and

0:18:34.280 --> 0:18:35.359
<v Speaker 9>watch till the end of March.

0:18:36.800 --> 0:18:39.280
<v Speaker 2>Keeth Rang and Eathan of Bloomberg Intelligence. Great to have

0:18:39.359 --> 0:18:41.359
<v Speaker 2>you back on Bloomberg Tech. Thank you so much.

0:18:48.760 --> 0:18:50.119
<v Speaker 4>Breaking news from Bloomberg.

0:18:50.240 --> 0:18:54.959
<v Speaker 2>Tesla is developing support for Apple's car Play system in

0:18:55.000 --> 0:18:55.600
<v Speaker 2>its vehicles.

0:18:55.600 --> 0:18:57.200
<v Speaker 4>That's, according to sources.

0:18:56.960 --> 0:18:59.520
<v Speaker 2>Working to add one of the most highly requested features

0:18:59.760 --> 0:19:02.399
<v Speaker 2>by Tesla customers, and in car Play would mark a

0:19:02.400 --> 0:19:05.760
<v Speaker 2>pretty stunning reversal for Tesla and its CEO, Elon Musk,

0:19:06.000 --> 0:19:09.240
<v Speaker 2>who have long ignored please to implement the popular feature.

0:19:09.280 --> 0:19:11.720
<v Speaker 2>We're going have much more detail later this hour with

0:19:11.720 --> 0:19:14.320
<v Speaker 2>Bloomberg's Mark German. Cara, you've got another one of our

0:19:14.320 --> 0:19:14.920
<v Speaker 2>top stories.

0:19:15.080 --> 0:19:15.280
<v Speaker 4>Yeah.

0:19:15.480 --> 0:19:19.320
<v Speaker 3>Everyone reading about the sec findings revealed that Michael Burry's

0:19:19.400 --> 0:19:23.080
<v Speaker 3>Scion Asset Management has terminated its registration status, raising the

0:19:23.119 --> 0:19:26.080
<v Speaker 3>possibility that Barry could be shuttering his hedge fund or

0:19:26.080 --> 0:19:28.480
<v Speaker 3>closing it to outside investors at least now. The move

0:19:28.560 --> 0:19:32.000
<v Speaker 3>comes just one month after Burry warned about marketing exuberants,

0:19:32.000 --> 0:19:35.280
<v Speaker 3>particularly in AI. For more, Bloomberg's Tom Metcalf joins us

0:19:35.359 --> 0:19:38.800
<v Speaker 3>he'd cover financials banking and what really do you think

0:19:38.840 --> 0:19:41.399
<v Speaker 3>this is signaling that he just couldn't bet against this

0:19:41.520 --> 0:19:42.520
<v Speaker 3>so called AI bubble.

0:19:44.160 --> 0:19:45.200
<v Speaker 4>Yeah, look, I think.

0:19:45.080 --> 0:19:47.280
<v Speaker 10>Your speculations is probably on the nose in terms of

0:19:47.320 --> 0:19:49.919
<v Speaker 10>the you know, this fund might well be closed in

0:19:49.920 --> 0:19:51.800
<v Speaker 10>it and you know that's what you know. You read

0:19:51.880 --> 0:19:54.320
<v Speaker 10>his message and he's always been saying he just cannot

0:19:54.359 --> 0:19:58.560
<v Speaker 10>read this market. It's extremely exuberant, and you know, it

0:19:58.680 --> 0:20:00.919
<v Speaker 10>was hard to interpret these he was offering of like

0:20:01.320 --> 0:20:03.720
<v Speaker 10>pictures of his character from the big short, for example,

0:20:04.000 --> 0:20:05.480
<v Speaker 10>you do get a sense of the frustration.

0:20:05.600 --> 0:20:07.080
<v Speaker 4>And obviously he put.

0:20:06.920 --> 0:20:11.160
<v Speaker 10>Out some shorts on Palenteer and n Video quite recently.

0:20:11.200 --> 0:20:12.800
<v Speaker 4>They would disclose in the thirteen f's.

0:20:12.960 --> 0:20:16.639
<v Speaker 10>So it's very interesting that, you know, relatively small fund

0:20:16.840 --> 0:20:19.480
<v Speaker 10>but very closely followed, and you know the fact that

0:20:19.520 --> 0:20:22.399
<v Speaker 10>he's potentially taken a step does suggest perhaps even a

0:20:22.480 --> 0:20:25.359
<v Speaker 10>Michael Burry is starting to lose faith in trying to

0:20:25.400 --> 0:20:26.080
<v Speaker 10>time this bubble.

0:20:27.960 --> 0:20:31.240
<v Speaker 3>I know that's what's so interesting really about the timing

0:20:31.280 --> 0:20:33.960
<v Speaker 3>of it. He hinted that there's better things to come

0:20:34.040 --> 0:20:36.080
<v Speaker 3>November the twenty fifth, So I'm sure we've not seen

0:20:36.400 --> 0:20:39.600
<v Speaker 3>the end of this ride. But what clarification did we

0:20:39.720 --> 0:20:41.919
<v Speaker 3>get in terms of the bets he's made against the

0:20:42.040 --> 0:20:45.880
<v Speaker 3>likes of Palenteer that has just defied fundamentals for so long.

0:20:47.480 --> 0:20:48.840
<v Speaker 10>Yeah, and that was one of the things he points

0:20:48.880 --> 0:20:52.639
<v Speaker 10>out in his post, which which basically one one image

0:20:52.680 --> 0:20:55.399
<v Speaker 10>in the post said, I've sort of de registered the

0:20:55.440 --> 0:20:59.199
<v Speaker 10>firm without clarifying any further what that precisely means. But

0:20:59.240 --> 0:21:02.159
<v Speaker 10>the other kind of lays out the precise nature of

0:21:02.160 --> 0:21:05.400
<v Speaker 10>that bet he had against Palenteer. So in the post

0:21:05.440 --> 0:21:08.120
<v Speaker 10>he says he spent about nine point two million dollars

0:21:08.359 --> 0:21:11.879
<v Speaker 10>effectively betting on Palenteer shares would sell, would fall. Sorry,

0:21:11.880 --> 0:21:13.720
<v Speaker 10>And as part of that he's got I think until

0:21:13.760 --> 0:21:17.560
<v Speaker 10>twenty twenty seven the option to sell those Palenteer shares

0:21:17.600 --> 0:21:20.399
<v Speaker 10>that I think it was fifty dollars, so, you know,

0:21:20.480 --> 0:21:22.200
<v Speaker 10>for a fund which is about you know, one hundred

0:21:22.200 --> 0:21:24.560
<v Speaker 10>and fifty million AUM at least it was in March.

0:21:24.640 --> 0:21:28.160
<v Speaker 4>That's a pretty sort of striking bet. But yeah, of course,

0:21:28.160 --> 0:21:28.359
<v Speaker 4>as you.

0:21:28.359 --> 0:21:31.040
<v Speaker 10>Look at Palenteer shares, it's sort of he's on the

0:21:31.040 --> 0:21:32.040
<v Speaker 10>wrong side of it at the moment.

0:21:32.240 --> 0:21:32.480
<v Speaker 6>Tom.

0:21:32.520 --> 0:21:34.240
<v Speaker 3>I think it's so greatly remind us that it is

0:21:34.280 --> 0:21:37.800
<v Speaker 3>a relatively small fund. And the reason it has outside

0:21:37.880 --> 0:21:40.640
<v Speaker 3>interest is because many have read the Michael Lewis book,

0:21:40.680 --> 0:21:41.720
<v Speaker 3>many have watched the movie.

0:21:41.800 --> 0:21:44.760
<v Speaker 6>But why do we listen to what Michael Barry does?

0:21:46.400 --> 0:21:46.600
<v Speaker 4>Well?

0:21:46.640 --> 0:21:48.919
<v Speaker 10>I think you know, the way he presents his theories

0:21:48.960 --> 0:21:52.440
<v Speaker 10>and stuff is always entertaining for one, but most principally

0:21:52.440 --> 0:21:55.040
<v Speaker 10>you know, it's that incredible win he had back in

0:21:55.080 --> 0:21:58.159
<v Speaker 10>the financial crisis, right, He really was out front and

0:21:58.200 --> 0:22:01.200
<v Speaker 10>center on that huge effort to to you know, quintuple

0:22:01.720 --> 0:22:04.359
<v Speaker 10>his investors' money. So I think whatever he says people

0:22:04.359 --> 0:22:07.200
<v Speaker 10>who sit up and listen. And you know, he has

0:22:07.200 --> 0:22:10.399
<v Speaker 10>built this social media following. I think also with the honesty, right, Like,

0:22:10.760 --> 0:22:12.600
<v Speaker 10>he's made bets and when they've gone wrong, he's been

0:22:12.600 --> 0:22:14.119
<v Speaker 10>happy to kind of hold his hands up.

0:22:14.720 --> 0:22:17.080
<v Speaker 4>So it's always been interesting to follow him the most.

0:22:17.119 --> 0:22:20.040
<v Speaker 3>Tom Metcalf following him for us, we so appreciate it.

0:22:26.359 --> 0:22:28.640
<v Speaker 3>Welcome back to Blomberg Tech. Let's take a quick check

0:22:28.640 --> 0:22:30.480
<v Speaker 3>on these markets, shall we, Because in fact, we're on

0:22:30.560 --> 0:22:32.240
<v Speaker 3>sell off mode on the NASAQ more broadly, off by

0:22:32.280 --> 0:22:32.560
<v Speaker 3>one and.

0:22:32.480 --> 0:22:33.080
<v Speaker 6>A half percent.

0:22:33.359 --> 0:22:36.879
<v Speaker 3>We've got anxiety around actually the government reopening that's already

0:22:36.880 --> 0:22:38.520
<v Speaker 3>priced in. But what does that mean in terms of data?

0:22:38.520 --> 0:22:39.960
<v Speaker 3>What does that mean in terms of the Federal Reserve

0:22:40.000 --> 0:22:42.280
<v Speaker 3>its ability to cut into this market.

0:22:42.400 --> 0:22:43.480
<v Speaker 6>We're up by one and a half percent.

0:22:43.520 --> 0:22:46.359
<v Speaker 3>Some of the biggest tech names are on the downside.

0:22:46.520 --> 0:22:47.800
<v Speaker 6>Let's go to where the earnings.

0:22:47.560 --> 0:22:49.080
<v Speaker 3>Have led us, because one of the key names in

0:22:49.119 --> 0:22:52.240
<v Speaker 3>the red is indeed Disney. We're off by almost ten percent.

0:22:52.440 --> 0:22:54.240
<v Speaker 3>We're having a significantly poor day.

0:22:54.040 --> 0:22:55.600
<v Speaker 6>Worst in several years for Disney.

0:22:55.800 --> 0:22:58.000
<v Speaker 3>This is as they actually pointed to still double digit

0:22:58.000 --> 0:23:00.520
<v Speaker 3>earing for share growth into the fiscal twenty two six,

0:23:00.920 --> 0:23:03.800
<v Speaker 3>but revenue was flat for their fourth quarter and actually

0:23:03.800 --> 0:23:04.960
<v Speaker 3>owners for share dropped.

0:23:04.680 --> 0:23:05.120
<v Speaker 6>A little bit.

0:23:05.320 --> 0:23:07.800
<v Speaker 3>Maybe people wanting to see more of a narrative around

0:23:07.840 --> 0:23:11.040
<v Speaker 3>the growth is they inject more investment into streaming, as

0:23:11.040 --> 0:23:14.159
<v Speaker 3>they invest into their slate, as they invest into marketing

0:23:14.160 --> 0:23:16.400
<v Speaker 3>and the like. We're looking at Cisco up by four

0:23:16.400 --> 0:23:18.760
<v Speaker 3>and a half percent. Boy, Chuck Robbins on a tear

0:23:18.840 --> 0:23:20.920
<v Speaker 3>as we see this company now trade at the highest

0:23:20.920 --> 0:23:25.600
<v Speaker 3>since the previous bubble two thousand. Of course, Cisco currently

0:23:25.680 --> 0:23:27.800
<v Speaker 3>up four point six percent as they managed to beat

0:23:27.840 --> 0:23:30.159
<v Speaker 3>and raise in terms of their earnings and they managed

0:23:30.160 --> 0:23:33.240
<v Speaker 3>to just really show the AI path that they're currently

0:23:33.400 --> 0:23:37.000
<v Speaker 3>navigating and sell into, in particular to hyperscalis this is

0:23:37.000 --> 0:23:39.680
<v Speaker 3>where we want to go to the questioning around AI.

0:23:40.240 --> 0:23:41.439
<v Speaker 6>Is it a boom? Is it a bubble?

0:23:41.560 --> 0:23:44.399
<v Speaker 3>Well, it's certainly fueling records in VC funding public markets,

0:23:44.400 --> 0:23:48.040
<v Speaker 3>as you've seen growth there and indeed in infrastructure, But

0:23:48.080 --> 0:23:51.080
<v Speaker 3>the questions are abound. Is in an AI bubble? How

0:23:51.119 --> 0:23:54.000
<v Speaker 3>far can it run? And what if it pops? Pellet

0:23:54.040 --> 0:23:57.119
<v Speaker 3>Butteri's with US partner at Axcel and one of the

0:23:57.160 --> 0:24:00.320
<v Speaker 3>authors of the firm's latest AI report published which just

0:24:00.680 --> 0:24:04.600
<v Speaker 3>there is still more room in AI spending, he joins us. Now,

0:24:04.880 --> 0:24:07.360
<v Speaker 3>so bluntly, is the rebubble?

0:24:08.960 --> 0:24:11.280
<v Speaker 4>Well, I mean, this is the question.

0:24:11.440 --> 0:24:15.919
<v Speaker 11>I think it's interesting to put that in context. So

0:24:16.000 --> 0:24:19.479
<v Speaker 11>if you look at the NASDAQ in the past fifteen years,

0:24:20.080 --> 0:24:23.280
<v Speaker 11>like with every platform shift, which is every five years,

0:24:23.320 --> 0:24:26.520
<v Speaker 11>so you ad mobile, cloud and AI, the nasdack is doubled.

0:24:26.920 --> 0:24:29.520
<v Speaker 11>So basically where we are right now, where the NASAK

0:24:29.680 --> 0:24:33.920
<v Speaker 11>is is basically in line with historical trends. So yes,

0:24:33.960 --> 0:24:37.040
<v Speaker 11>with every platform shift, you know you're seeing frosty evaluation

0:24:37.160 --> 0:24:41.040
<v Speaker 11>and we're clearly seeing that with AI, and not all

0:24:41.080 --> 0:24:44.480
<v Speaker 11>companies are going to be winners. But we're seeing tremendous

0:24:44.640 --> 0:24:47.840
<v Speaker 11>opportunities here for value creation and we think that the

0:24:47.880 --> 0:24:51.639
<v Speaker 11>winners are going to take a large share of that

0:24:51.760 --> 0:24:55.440
<v Speaker 11>value creation. So it's all about picking the right companies.

0:24:55.600 --> 0:24:58.119
<v Speaker 3>Well, if we look at the public markets, the winners

0:24:58.119 --> 0:25:00.480
<v Speaker 3>have been clear, and you call them as the super

0:25:00.520 --> 0:25:03.359
<v Speaker 3>six that have really been generating real cash. That was

0:25:03.359 --> 0:25:05.320
<v Speaker 3>something that Chuck Robins just said to us. Look, my

0:25:05.400 --> 0:25:08.480
<v Speaker 3>biggest demand has been coming from the hyperscalers and they're

0:25:08.520 --> 0:25:11.440
<v Speaker 3>pretty good for the money. But then in the private markets,

0:25:12.000 --> 0:25:13.840
<v Speaker 3>all winning bats have sort of been on a certain

0:25:13.840 --> 0:25:17.040
<v Speaker 3>few names Open AI for example, Philip, Where else are

0:25:17.080 --> 0:25:19.840
<v Speaker 3>you seeing the money being allocated to, particularly in Europe?

0:25:21.280 --> 0:25:24.680
<v Speaker 11>Yeah, I think it's it's worth looking at where the

0:25:25.080 --> 0:25:28.160
<v Speaker 11>venture funding is going in terms of you know, cloud

0:25:28.600 --> 0:25:31.440
<v Speaker 11>and THEI. I mean the total for Europe and Israel

0:25:32.040 --> 0:25:34.680
<v Speaker 11>and the US about one hundred and eighty four billion

0:25:34.720 --> 0:25:37.320
<v Speaker 11>dollars for this year. Sixty percent of that is going

0:25:37.320 --> 0:25:41.040
<v Speaker 11>into the models, so that's open AI on Tropic X,

0:25:42.359 --> 0:25:45.400
<v Speaker 11>but the rest forty percent is going into a new

0:25:45.480 --> 0:25:51.000
<v Speaker 11>generation of AI native native application that are growing very

0:25:51.080 --> 0:25:54.199
<v Speaker 11>very fast and that are very exciting. So you have

0:25:54.240 --> 0:25:57.119
<v Speaker 11>the Cursor, the Perplexity, the DECA going in the US,

0:25:57.200 --> 0:25:59.600
<v Speaker 11>you have the Sairah, the lover Ball and eight ten

0:26:00.080 --> 0:26:03.240
<v Speaker 11>and Synthesia in Europe. And what's very interesting here is

0:26:03.280 --> 0:26:05.359
<v Speaker 11>that if you look at the model side, yes, the

0:26:05.440 --> 0:26:07.920
<v Speaker 11>majority of the vast majority of the funding is going

0:26:07.960 --> 0:26:10.639
<v Speaker 11>into US company, but if you look at the AI

0:26:11.000 --> 0:26:15.119
<v Speaker 11>native application side, actually the Europe fares very well against

0:26:15.119 --> 0:26:18.800
<v Speaker 11>the US because it's thirty billion in Europe versus forty

0:26:18.800 --> 0:26:22.960
<v Speaker 11>five in the US, so that's about two third. And

0:26:23.119 --> 0:26:26.080
<v Speaker 11>Europe had shown that it can really generate its shares

0:26:26.160 --> 0:26:29.080
<v Speaker 11>of winner in this category.

0:26:29.400 --> 0:26:32.120
<v Speaker 3>And you've been backing some of those winners in particular.

0:26:32.160 --> 0:26:34.439
<v Speaker 3>I think of Lovable for example, that everyone has been

0:26:34.520 --> 0:26:36.879
<v Speaker 3>very excited about the way in which vibe coding has

0:26:36.920 --> 0:26:39.760
<v Speaker 3>taken over absolutely everything. But how do you know that

0:26:39.800 --> 0:26:42.920
<v Speaker 3>you're not paying too much when getting into those rounds?

0:26:44.320 --> 0:26:46.080
<v Speaker 11>Well, I mean, I think this is a question we

0:26:46.520 --> 0:26:50.040
<v Speaker 11>ask ourselves every time we, you know, we invest. I

0:26:50.040 --> 0:26:53.720
<v Speaker 11>think what we're trying to understand is like how far

0:26:53.760 --> 0:26:58.080
<v Speaker 11>can this business run? I think if you look at Lovable, yeah,

0:26:58.119 --> 0:27:00.440
<v Speaker 11>I mean it's vibe coding. What does vibe coote means

0:27:00.480 --> 0:27:03.600
<v Speaker 11>that means that any human on earth can start to quote,

0:27:03.800 --> 0:27:07.640
<v Speaker 11>I mean, we feel that is a pretty pretty large market. Uh,

0:27:07.720 --> 0:27:10.880
<v Speaker 11>and these you know this. It can be vibe coders

0:27:10.920 --> 0:27:13.440
<v Speaker 11>who are creators, and there can be vibe coders who

0:27:13.440 --> 0:27:16.879
<v Speaker 11>are in the enterprise and who are trying to very fastly,

0:27:17.320 --> 0:27:21.520
<v Speaker 11>you know, very quickly developed mockups of new products. So

0:27:21.760 --> 0:27:24.960
<v Speaker 11>we actually think there's a lot of room to run

0:27:25.160 --> 0:27:28.239
<v Speaker 11>in the case of Locoble. And as I said, I mean,

0:27:28.280 --> 0:27:32.199
<v Speaker 11>I think evaluation are where they are today, but I

0:27:32.200 --> 0:27:36.520
<v Speaker 11>think if you look at the value creation for the winners,

0:27:37.359 --> 0:27:39.840
<v Speaker 11>I think the opportunity we're seeing and that are unlocked

0:27:39.880 --> 0:27:42.720
<v Speaker 11>with AI, I think are much bigger than what we

0:27:42.760 --> 0:27:46.000
<v Speaker 11>have seen in the past because the productivity improvement potential

0:27:46.080 --> 0:27:49.600
<v Speaker 11>that EI is giving goes well beyond what any of

0:27:49.600 --> 0:27:52.200
<v Speaker 11>the previous platform shifts have generated.

0:27:52.960 --> 0:27:55.240
<v Speaker 3>Some of these companies are scaling so fast, and I

0:27:55.280 --> 0:27:58.800
<v Speaker 3>feel like we've had the CEO since you're on, plenty

0:27:58.800 --> 0:28:01.400
<v Speaker 3>of times to talk about how he is just driving

0:28:01.440 --> 0:28:04.159
<v Speaker 3>forward in enterprises at such scale and the ability to

0:28:04.240 --> 0:28:09.879
<v Speaker 3>produce AI real video that feels incredibly realistic, Philip. But

0:28:09.920 --> 0:28:12.840
<v Speaker 3>I'm interested as to you in your past and in

0:28:13.000 --> 0:28:15.439
<v Speaker 3>the companies that you've helped navigate have gone public. You've

0:28:15.440 --> 0:28:17.479
<v Speaker 3>seen it with Docusti, and we've seen it with u iPath.

0:28:18.160 --> 0:28:20.600
<v Speaker 3>How will we see these companies eventually tap the public

0:28:20.640 --> 0:28:23.440
<v Speaker 3>markets because they're getting enormous without needing.

0:28:23.200 --> 0:28:27.919
<v Speaker 11>To well, I mean, I think at some point, you know,

0:28:28.000 --> 0:28:32.240
<v Speaker 11>getting public is in the natural path for for companies.

0:28:32.720 --> 0:28:35.080
<v Speaker 11>And I think the bar to go public now is

0:28:35.200 --> 0:28:38.360
<v Speaker 11>much higher than it was, you know, five years ago.

0:28:38.480 --> 0:28:42.400
<v Speaker 11>So to go public, you want companies to be you know,

0:28:42.520 --> 0:28:47.120
<v Speaker 11>probably in the five hundred to seven hundred million in

0:28:47.120 --> 0:28:49.160
<v Speaker 11>in annual recurring revenues.

0:28:49.720 --> 0:28:50.080
<v Speaker 12>Uh.

0:28:50.120 --> 0:28:52.960
<v Speaker 11>So there's still room for this company to grow into

0:28:53.480 --> 0:28:54.640
<v Speaker 11>you know, into these numbers.

0:28:55.240 --> 0:28:55.400
<v Speaker 10>Uh.

0:28:55.920 --> 0:28:59.400
<v Speaker 11>And you know, getting public is just like a financing milestone.

0:28:59.520 --> 0:29:02.080
<v Speaker 11>So the fact that they remain private is not something

0:29:02.200 --> 0:29:05.480
<v Speaker 11>that is preventing them to grow because they have access

0:29:05.480 --> 0:29:07.600
<v Speaker 11>to the capital they need on the private market side

0:29:07.600 --> 0:29:07.960
<v Speaker 11>as well.

0:29:08.400 --> 0:29:12.360
<v Speaker 3>What's been interesting is a lot of these AI native applications,

0:29:13.040 --> 0:29:16.400
<v Speaker 3>whether they've been snapped up for aqua higher purposes or

0:29:16.480 --> 0:29:18.880
<v Speaker 3>they've been snapped up for the underlying technology for they

0:29:18.880 --> 0:29:21.080
<v Speaker 3>have been snapped up and by some of these super

0:29:21.120 --> 0:29:23.160
<v Speaker 3>six as you mentioned, is that M and A trend

0:29:23.280 --> 0:29:25.960
<v Speaker 3>going to continue, and how are you ensuring that all

0:29:26.000 --> 0:29:28.800
<v Speaker 3>the founders protect the rest of the employee base they've

0:29:28.800 --> 0:29:29.280
<v Speaker 3>been growing?

0:29:30.680 --> 0:29:33.920
<v Speaker 11>Well, I mean I think they're they're you know, a

0:29:33.960 --> 0:29:35.920
<v Speaker 11>lot of the mn A that we have seen so

0:29:36.080 --> 0:29:40.200
<v Speaker 11>far have been more on the model development side, with

0:29:40.400 --> 0:29:44.040
<v Speaker 11>the Big six trying to kind of snap really big talents.

0:29:45.160 --> 0:29:48.000
<v Speaker 11>I think on the application side, I think the founder

0:29:48.240 --> 0:29:54.240
<v Speaker 11>that we're seeing extremely ambitious. They have global ambition and

0:29:54.240 --> 0:29:57.160
<v Speaker 11>and they won't they won't see how you know, how much,

0:29:57.360 --> 0:29:59.760
<v Speaker 11>you know, how fast and how big they're their business

0:29:59.760 --> 0:30:03.640
<v Speaker 11>can be. So we haven't seen this as as any

0:30:03.760 --> 0:30:06.920
<v Speaker 11>source of concern right now. And as I said, given

0:30:06.960 --> 0:30:09.920
<v Speaker 11>that they have access to the capital that they need

0:30:10.240 --> 0:30:13.040
<v Speaker 11>to you know, to run the business, and that they

0:30:13.080 --> 0:30:16.880
<v Speaker 11>also have the opportunity to potentially sell some stock along

0:30:16.880 --> 0:30:20.360
<v Speaker 11>the way through through seculary sale, there is everything that's

0:30:20.400 --> 0:30:25.040
<v Speaker 11>needed to keep them motivated to build a big global businesses.

0:30:25.560 --> 0:30:29.880
<v Speaker 3>Do they have to come to American capital markets? So indeed,

0:30:30.440 --> 0:30:33.440
<v Speaker 3>American venture capital two scale, if they are European, if

0:30:33.480 --> 0:30:34.440
<v Speaker 3>there Israeli.

0:30:34.120 --> 0:30:37.680
<v Speaker 11>Based, well, I mean I think there's there are two

0:30:37.680 --> 0:30:39.520
<v Speaker 11>different things. There is the market that you address and

0:30:39.520 --> 0:30:42.479
<v Speaker 11>there's where the capital is coming from. I think what

0:30:42.560 --> 0:30:46.800
<v Speaker 11>we've seen of Europe and Israel is great, great talent,

0:30:47.720 --> 0:30:50.280
<v Speaker 11>great team, great engineering.

0:30:51.600 --> 0:30:52.320
<v Speaker 4>Resources.

0:30:52.680 --> 0:30:55.440
<v Speaker 11>And so what companies are doing is they are basically

0:30:55.480 --> 0:30:58.840
<v Speaker 11>building their product and engineering team in Europe and Israel.

0:30:59.160 --> 0:31:01.280
<v Speaker 11>And if they're selling software, I mean the biggest market

0:31:01.320 --> 0:31:03.680
<v Speaker 11>for every dollar span of software fifty cents is spent

0:31:03.800 --> 0:31:05.560
<v Speaker 11>in the US. So then they have to develop their

0:31:05.920 --> 0:31:09.320
<v Speaker 11>go to market in the US. So I think from

0:31:09.320 --> 0:31:11.240
<v Speaker 11>a market standpoint, yes, if you want to be a

0:31:11.280 --> 0:31:14.640
<v Speaker 11>global leader in software and AI, you have to be

0:31:15.120 --> 0:31:16.080
<v Speaker 11>a leader in.

0:31:16.000 --> 0:31:16.920
<v Speaker 4>The US market.

0:31:17.200 --> 0:31:20.000
<v Speaker 11>Now, in terms of you know where the capital is

0:31:20.040 --> 0:31:22.840
<v Speaker 11>coming from, I think there are big pools of capital

0:31:22.960 --> 0:31:26.720
<v Speaker 11>on both sides of the ocean, and European companies that

0:31:27.680 --> 0:31:31.520
<v Speaker 11>have been raising rounds of similar size than the US,

0:31:31.560 --> 0:31:35.880
<v Speaker 11>so they have access to the same pockets of capital,

0:31:35.920 --> 0:31:37.760
<v Speaker 11>whether it's from Europe or it's from the US.

0:31:38.400 --> 0:31:42.440
<v Speaker 3>With global scape, which is the enormous amount of research

0:31:42.720 --> 0:31:45.040
<v Speaker 3>that you've managed to bring to US, and you analyze

0:31:45.040 --> 0:31:47.600
<v Speaker 3>trends and innovation and you go global and you think

0:31:47.600 --> 0:31:50.160
<v Speaker 3>about funding levels, where aren't we talking about enough?

0:31:52.600 --> 0:31:55.800
<v Speaker 11>Well, I mean, I think what's going to be interesting

0:31:55.840 --> 0:32:00.200
<v Speaker 11>to see is you know, how far can the models go?

0:32:00.760 --> 0:32:04.000
<v Speaker 11>I think so far we have seen a pretty pretty

0:32:04.040 --> 0:32:08.240
<v Speaker 11>steep curve of innovation on the model side, and I

0:32:08.240 --> 0:32:10.760
<v Speaker 11>think the big question is when are we you know,

0:32:10.880 --> 0:32:14.680
<v Speaker 11>is that improvement curve going to continue to accelerate or

0:32:14.880 --> 0:32:16.640
<v Speaker 11>at some point are we going to tap out with

0:32:16.760 --> 0:32:19.800
<v Speaker 11>the current architecture and uh and then you know, I

0:32:19.800 --> 0:32:21.880
<v Speaker 11>think if we tap out, then there's been there's going

0:32:21.920 --> 0:32:24.080
<v Speaker 11>to be a plateau until we get to the next

0:32:24.160 --> 0:32:27.640
<v Speaker 11>level of architecture. But I think if I look at

0:32:27.680 --> 0:32:31.520
<v Speaker 11>where we are right now, we're just scratching the surface

0:32:31.560 --> 0:32:35.280
<v Speaker 11>in terms of deploying the technology that we have today.

0:32:35.440 --> 0:32:39.160
<v Speaker 11>So I have you know, probably any if you look

0:32:39.200 --> 0:32:43.200
<v Speaker 11>at the enterprise, uh, we we haven't reached the S

0:32:43.320 --> 0:32:47.200
<v Speaker 11>curve in terms of the agenttic adoption for for different reasons.

0:32:47.200 --> 0:32:49.080
<v Speaker 11>We think that's going to happen in the next in

0:32:49.160 --> 0:32:51.640
<v Speaker 11>the next couple of years. So I think we have

0:32:51.680 --> 0:32:55.840
<v Speaker 11>plenty of room to grow and plenty of plenty of

0:32:55.880 --> 0:32:59.120
<v Speaker 11>opportunities for for a company to improve their productivity using

0:32:59.520 --> 0:33:00.680
<v Speaker 11>a knowledge.

0:33:00.440 --> 0:33:02.600
<v Speaker 6>Is Philibertary of ACCEL.

0:33:02.840 --> 0:33:05.400
<v Speaker 3>We are so appreciative of you coming on talking about

0:33:05.680 --> 0:33:07.800
<v Speaker 3>the wealth of research that Accel has just done.

0:33:07.920 --> 0:33:08.680
<v Speaker 6>I appreciate it.

0:33:09.440 --> 0:33:11.560
<v Speaker 3>Now let's go into another area of AI, because AI

0:33:11.600 --> 0:33:15.000
<v Speaker 3>has been fueling chip makers, in particular the memory side

0:33:15.000 --> 0:33:15.560
<v Speaker 3>of the equation.

0:33:16.000 --> 0:33:16.760
<v Speaker 6>But then we've just.

0:33:16.760 --> 0:33:20.320
<v Speaker 3>Had results out of Japan's Kyoxia holdings, and it's putting

0:33:20.360 --> 0:33:22.960
<v Speaker 3>pressure on sand Disk because you say, off by thirteen percent,

0:33:23.360 --> 0:33:26.880
<v Speaker 3>Western Digital of by almost four percent. Particular City is

0:33:26.880 --> 0:33:29.520
<v Speaker 3>out there writing that these Japanese results were somewhat negative.

0:33:29.720 --> 0:33:32.000
<v Speaker 3>The market may react negatively to the way that near

0:33:32.120 --> 0:33:35.200
<v Speaker 3>term earnings are undershooting consensus that there is a strength

0:33:35.200 --> 0:33:38.560
<v Speaker 3>of demand for solid state drives for AI inference. So

0:33:39.000 --> 0:33:42.480
<v Speaker 3>for now people trimming back on some big AI winners

0:33:42.480 --> 0:33:45.360
<v Speaker 3>of late. But coming up we talk more about key

0:33:45.400 --> 0:33:47.560
<v Speaker 3>mag seven names Tessa in particular.

0:33:47.240 --> 0:33:49.960
<v Speaker 6>Working to add Apple car Plays support to it vehicles.

0:33:50.200 --> 0:33:51.840
<v Speaker 6>While that next this is briom leg Tech.

0:34:09.200 --> 0:34:11.040
<v Speaker 3>We've got to get back to that news that Tesla

0:34:11.200 --> 0:34:13.240
<v Speaker 3>is developing support for Apple's car.

0:34:13.080 --> 0:34:15.960
<v Speaker 6>Play system in vehicles according to sources. Take a look

0:34:15.960 --> 0:34:17.000
<v Speaker 6>at the shares Actually.

0:34:16.719 --> 0:34:19.200
<v Speaker 3>Apple managed to turn from negative into positive on the news.

0:34:19.239 --> 0:34:21.520
<v Speaker 3>Tesla still much in the red, off by six percent,

0:34:21.560 --> 0:34:24.360
<v Speaker 3>but Bloomberg's Mark German joining us now help break the story,

0:34:24.360 --> 0:34:27.400
<v Speaker 3>and I think the context is so interesting here because

0:34:27.440 --> 0:34:30.520
<v Speaker 3>this feels a real about face. Why would now be

0:34:30.560 --> 0:34:32.400
<v Speaker 3>the right time for the two companies to work together.

0:34:34.000 --> 0:34:37.200
<v Speaker 13>Yeah, this is absolutely a huge reversal for Tesla. There's

0:34:37.239 --> 0:34:40.400
<v Speaker 13>two things going on here. One, as we've discussed on

0:34:40.440 --> 0:34:43.359
<v Speaker 13>this show many times, Tesla sales have not been as

0:34:43.400 --> 0:34:46.200
<v Speaker 13>hot as they have been in years prior. There are

0:34:46.280 --> 0:34:48.480
<v Speaker 13>a lot of new ed players. There's a lot of

0:34:48.520 --> 0:34:51.719
<v Speaker 13>pressure on the company, particularly in China, to up its

0:34:51.800 --> 0:34:54.839
<v Speaker 13>saled game. We saw some executives leading earlier this year

0:34:54.840 --> 0:34:55.839
<v Speaker 13>because sales.

0:34:55.480 --> 0:34:57.120
<v Speaker 4>Have not been so hot.

0:34:57.160 --> 0:35:00.279
<v Speaker 13>What is the most in demand feature in e these

0:35:00.360 --> 0:35:04.439
<v Speaker 13>right now when making purchase decisions. Well, it's Apple car Play.

0:35:04.719 --> 0:35:05.840
<v Speaker 4>People like to walk.

0:35:05.640 --> 0:35:09.400
<v Speaker 13>Into their car and have their iPhone interface projected onto

0:35:09.600 --> 0:35:12.760
<v Speaker 13>their infotainment system. I use it in my car. People

0:35:12.800 --> 0:35:15.120
<v Speaker 13>are not buying Tesla's because of it. In some cases,

0:35:15.120 --> 0:35:19.000
<v Speaker 13>people are buying other cars because of the well integrated support.

0:35:19.800 --> 0:35:23.240
<v Speaker 13>Tesla wants to hit every lever it could to improve sales.

0:35:23.480 --> 0:35:25.719
<v Speaker 13>You do that with car Play, right, and I would

0:35:25.760 --> 0:35:28.120
<v Speaker 13>expect them to go down the list of all the

0:35:28.160 --> 0:35:31.239
<v Speaker 13>requests that people have for wanting to buy a new

0:35:31.280 --> 0:35:33.920
<v Speaker 13>car and hit those one by one to help sales.

0:35:33.960 --> 0:35:36.080
<v Speaker 13>It's time for Tesla to do that as good as

0:35:36.120 --> 0:35:39.640
<v Speaker 13>their infotainment system is. The second thing, of course, is

0:35:39.640 --> 0:35:43.520
<v Speaker 13>Elon Musk's one trillion dollar pay package, which includes some metrics,

0:35:43.560 --> 0:35:47.400
<v Speaker 13>particularly around selling a certain number of vehicles and integrating

0:35:47.400 --> 0:35:51.080
<v Speaker 13>car play could potentially help with that. And so I

0:35:51.120 --> 0:35:53.400
<v Speaker 13>think this is a good thing for Tesla. They have

0:35:53.520 --> 0:35:57.279
<v Speaker 13>engineers developing support for this, testing support for this, and

0:35:57.320 --> 0:36:00.000
<v Speaker 13>we anticipate a rollout unless it is canceled, of course,

0:36:00.000 --> 0:36:02.040
<v Speaker 13>which Evon Musk is known to do with some features

0:36:02.120 --> 0:36:04.240
<v Speaker 13>late in development in the coming months.

0:36:04.719 --> 0:36:07.160
<v Speaker 3>Mark, you worked with ed on this story, and I'm

0:36:07.200 --> 0:36:10.640
<v Speaker 3>interested is to well, what is in it for Apple?

0:36:10.719 --> 0:36:13.799
<v Speaker 3>More broadly, Elon in many ways had refused to do

0:36:13.920 --> 0:36:16.120
<v Speaker 3>deals because he didn't want the sharing of data, particularly

0:36:16.160 --> 0:36:18.960
<v Speaker 3>when Apple was basically building a competitor. At one point

0:36:19.160 --> 0:36:21.239
<v Speaker 3>Apple backed away from that. Now, how do they win

0:36:21.320 --> 0:36:23.040
<v Speaker 3>by getting car play within it Tesla?

0:36:24.400 --> 0:36:27.120
<v Speaker 13>You know, from Apple's perspective, this is something that they

0:36:27.120 --> 0:36:31.040
<v Speaker 13>don't really have to participate in. There's no agreements behind

0:36:31.040 --> 0:36:35.600
<v Speaker 13>the scenes. Apple provides this functionality. It provides developer tools

0:36:35.920 --> 0:36:38.440
<v Speaker 13>for car makers to integrate this into their cars, so

0:36:38.480 --> 0:36:41.800
<v Speaker 13>there's no money exchanged here. It's really car play, a

0:36:41.960 --> 0:36:46.560
<v Speaker 13>iPhone ecosystem feature. If consumers rely on their iPhone for

0:36:46.880 --> 0:36:50.960
<v Speaker 13>use of their car, for Apple, that keeps people buying iPhones,

0:36:51.040 --> 0:36:54.279
<v Speaker 13>upgrading iPhones, keeping them locked into the ecosystem. So that's

0:36:54.280 --> 0:36:57.480
<v Speaker 13>the business play for them. And Tesla right has a

0:36:57.680 --> 0:37:00.520
<v Speaker 13>you know, over a third of the used market. They

0:37:00.520 --> 0:37:04.120
<v Speaker 13>are a gigantic player in terms of car sales globally

0:37:04.160 --> 0:37:08.640
<v Speaker 13>as well in aligning Tesla with the iPhone brand, and

0:37:09.040 --> 0:37:11.400
<v Speaker 13>that's great for Apple, whether they're making money directly on

0:37:11.440 --> 0:37:11.840
<v Speaker 13>in or not.

0:37:12.200 --> 0:37:14.360
<v Speaker 3>Do you think Elon's going to continue to criticize Apple

0:37:14.480 --> 0:37:15.759
<v Speaker 3>on his ex platform and the.

0:37:15.920 --> 0:37:19.120
<v Speaker 13>Like, Oh, I'm sure of it. But you know, his

0:37:19.239 --> 0:37:22.000
<v Speaker 13>relationship with Apple has taken a turn since Apple stopped

0:37:22.040 --> 0:37:25.480
<v Speaker 13>developing its own competitor. He relies on them very heavily

0:37:25.520 --> 0:37:29.880
<v Speaker 13>now for distribution of grock and X, so it's pretty

0:37:29.880 --> 0:37:31.440
<v Speaker 13>critical for him to be on Apple's good.

0:37:31.280 --> 0:37:34.839
<v Speaker 3>Side, romain on Apple's good side. We'll continue to see

0:37:34.840 --> 0:37:37.560
<v Speaker 3>how the rollout continues and if indeed it does happen

0:37:37.600 --> 0:37:40.440
<v Speaker 3>as you said, sometimes Eno Musk can be prone to

0:37:40.520 --> 0:37:42.960
<v Speaker 3>u turns. Mark German we so appreciate it. Now it's

0:37:42.960 --> 0:37:46.600
<v Speaker 3>time for talking tech. First up, JP Morgan is Lenny's

0:37:46.640 --> 0:37:50.520
<v Speaker 3>managers use AI to help write performance reviews. Now the

0:37:50.520 --> 0:37:53.520
<v Speaker 3>max's new guidelines allow supervisors to use an internal chatbot

0:37:53.520 --> 0:37:56.800
<v Speaker 3>to drop their evaluations, but caution that the technology is

0:37:56.880 --> 0:37:59.040
<v Speaker 3>quote not a substitute.

0:37:58.760 --> 0:38:02.880
<v Speaker 6>The human judgment. Us Google spacing a new EU probe.

0:38:02.880 --> 0:38:04.279
<v Speaker 6>The European Commission alleges the.

0:38:04.280 --> 0:38:08.120
<v Speaker 3>Tech gilt and unfairly demotes certain news results, violating the

0:38:08.160 --> 0:38:11.440
<v Speaker 3>Digital Markets Act. The investigation could add another eleven billion

0:38:11.480 --> 0:38:14.240
<v Speaker 3>dollars to Googles, growing it tally of fines in Europe

0:38:15.000 --> 0:38:17.440
<v Speaker 3>and delivery startup go pack as race to one of

0:38:17.520 --> 0:38:20.040
<v Speaker 3>fifty million dollars an evaluation of eight and a half billion.

0:38:20.360 --> 0:38:23.239
<v Speaker 3>But that's down for fifteen billion dollars in its twenty

0:38:23.320 --> 0:38:25.920
<v Speaker 3>twenty one funding round so all, according to sources. Now,

0:38:25.960 --> 0:38:28.879
<v Speaker 3>the company says the new funding will help accelerate its

0:38:28.920 --> 0:38:30.240
<v Speaker 3>investment in AI.

0:38:37.000 --> 0:38:38.719
<v Speaker 14>I don't believe we're in an AI bubble, and the

0:38:38.760 --> 0:38:42.080
<v Speaker 14>reason for that is we're going through a natural transition

0:38:42.680 --> 0:38:45.640
<v Speaker 14>from an old computing model based on general purpose computing

0:38:45.640 --> 0:38:50.120
<v Speaker 14>to accelerated computing. We also know that AI has now

0:38:50.200 --> 0:38:54.000
<v Speaker 14>become good enough because of reasoning capability, research capabilities, its

0:38:54.040 --> 0:38:57.600
<v Speaker 14>ability to think it's now generating tokens and now generating

0:38:57.640 --> 0:38:59.759
<v Speaker 14>intelligence that's worth paying for.

0:39:00.840 --> 0:39:04.080
<v Speaker 3>That, of course, was in video CEO Jensen Wang speaking

0:39:04.120 --> 0:39:06.600
<v Speaker 3>with our own Ed Ludlow at GtC, just brushing off

0:39:06.600 --> 0:39:09.200
<v Speaker 3>those concerns about an AI bubble. But the scale of

0:39:09.239 --> 0:39:13.160
<v Speaker 3>spending for data centers and of course by AI startups

0:39:13.360 --> 0:39:15.640
<v Speaker 3>continues to raise eyebrows, so we wanted to dig into

0:39:15.680 --> 0:39:18.560
<v Speaker 3>it with Brianna Doherty, she's analyst with Bloomberg Intelligence. You've

0:39:18.560 --> 0:39:22.600
<v Speaker 3>been putting out some great rethinking of whether open ai

0:39:23.120 --> 0:39:26.359
<v Speaker 3>has scale, has the financial wherewithal, and whether there's risk

0:39:26.440 --> 0:39:26.840
<v Speaker 3>within this.

0:39:27.080 --> 0:39:29.439
<v Speaker 6>It's been some of the most red analysis I've seen.

0:39:30.400 --> 0:39:32.880
<v Speaker 3>What is your takeaway as to the circular financing and

0:39:32.880 --> 0:39:33.880
<v Speaker 3>whether this is a concern.

0:39:34.600 --> 0:39:37.080
<v Speaker 12>I think that there's clearly a lot happening right and

0:39:37.120 --> 0:39:40.279
<v Speaker 12>the integration that we're having between the private markets as

0:39:40.320 --> 0:39:42.480
<v Speaker 12>well as the public markets is clearly something to be watching,

0:39:42.480 --> 0:39:44.240
<v Speaker 12>and it's a space that we follow very very closely.

0:39:44.760 --> 0:39:47.040
<v Speaker 12>We think that actually what we've been seeing with open

0:39:47.080 --> 0:39:49.799
<v Speaker 12>aized relationships is the fact that they're broadening them, They're

0:39:49.840 --> 0:39:53.560
<v Speaker 12>creating structures that are allowing them to potentially IPO long term.

0:39:53.960 --> 0:39:56.080
<v Speaker 12>That's obviously something that's been talked about, I think over

0:39:56.080 --> 0:39:59.040
<v Speaker 12>the last couple of weeks especially and what we're thinking

0:39:59.160 --> 0:40:00.960
<v Speaker 12>when we look at these companies. So we've got a

0:40:00.960 --> 0:40:04.480
<v Speaker 12>few hecticorns that we watch very closely, and actually hecticorns,

0:40:05.160 --> 0:40:07.880
<v Speaker 12>I'm pretty sure it's a term. Over one hundred billion dollars,

0:40:07.920 --> 0:40:10.040
<v Speaker 12>that's what we call them. We've got three of them

0:40:10.040 --> 0:40:12.320
<v Speaker 12>in the data set that we track, over twelve actually

0:40:12.360 --> 0:40:14.400
<v Speaker 12>decacorns that we also track really really closely in our

0:40:14.440 --> 0:40:19.080
<v Speaker 12>data sets Open AI, Anthropic XAI. Naturally right now, at

0:40:19.080 --> 0:40:22.120
<v Speaker 12>their current implied valuations, they would rank in the top

0:40:22.200 --> 0:40:25.560
<v Speaker 12>thirty if they were public and in our Bloomberg Benchmark

0:40:25.600 --> 0:40:27.960
<v Speaker 12>AI Index, which has over one hundred and twenty equities

0:40:27.960 --> 0:40:30.440
<v Speaker 12>in it. So the scale these companies is huge. The

0:40:30.520 --> 0:40:34.399
<v Speaker 12>partnerships there forming are critical, and we do think we're

0:40:34.440 --> 0:40:37.279
<v Speaker 12>not in the bubble camp. We do think that there's

0:40:37.320 --> 0:40:39.160
<v Speaker 12>a lot of opportunity down the road. As it relates

0:40:39.239 --> 0:40:39.440
<v Speaker 12>to this.

0:40:40.320 --> 0:40:43.359
<v Speaker 3>When someone then sits set a dinner table with you

0:40:43.480 --> 0:40:47.000
<v Speaker 3>at a cocktail party and they're saying, I cannot see it.

0:40:47.160 --> 0:40:50.600
<v Speaker 3>I just Why on earth is AMD giving it stock

0:40:50.640 --> 0:40:52.839
<v Speaker 3>to open AI to seal these sorts of deals. What

0:40:52.960 --> 0:40:55.680
<v Speaker 3>is your general narrative as to why we can avoid

0:40:55.800 --> 0:40:57.760
<v Speaker 3>some sort of bubble? Is it just the sheer revenue

0:40:57.760 --> 0:40:59.640
<v Speaker 3>that could scale for open AI? But you do have

0:40:59.680 --> 0:41:01.040
<v Speaker 3>to have a belief, Yeah, I.

0:41:01.000 --> 0:41:02.520
<v Speaker 6>Think you do have to have a certain bit of belief.

0:41:02.640 --> 0:41:02.839
<v Speaker 4>Right.

0:41:02.920 --> 0:41:05.200
<v Speaker 12>I think what we've seen is even over the last year,

0:41:05.200 --> 0:41:08.040
<v Speaker 12>we've seen opening eyes implied valuation more than double, right,

0:41:08.120 --> 0:41:11.160
<v Speaker 12>I mean, naturally a lot has happened in that AI ecosystem.

0:41:11.200 --> 0:41:13.359
<v Speaker 12>And actually, something that we've been really focused on, and

0:41:13.480 --> 0:41:15.640
<v Speaker 12>Jensen actually said something the other day about this as well,

0:41:16.160 --> 0:41:18.359
<v Speaker 12>is we're not just talking about where we are right

0:41:18.400 --> 0:41:21.719
<v Speaker 12>now with AI. We're talking about an AI to quantum continuum, right,

0:41:22.080 --> 0:41:25.440
<v Speaker 12>We're talking about this continued acceleration and where we're going

0:41:25.480 --> 0:41:27.680
<v Speaker 12>to see and continue to prove it. Right. So, even

0:41:27.719 --> 0:41:29.920
<v Speaker 12>if it's that you're thinking, Okay, well, what if some

0:41:29.960 --> 0:41:32.600
<v Speaker 12>cost come down, or what if the power needs come down, Well,

0:41:32.600 --> 0:41:36.359
<v Speaker 12>the demand elasticity is just so strong that for every

0:41:36.360 --> 0:41:38.279
<v Speaker 12>little bit of efficiency you gain, you're going to gain

0:41:38.320 --> 0:41:40.440
<v Speaker 12>some extra demand that's going to drive a next new evolution.

0:41:40.960 --> 0:41:43.600
<v Speaker 12>So we're really looking at this as continuum and investing

0:41:43.640 --> 0:41:46.040
<v Speaker 12>through that type of disruption. I mean, it's not easy,

0:41:46.080 --> 0:41:49.279
<v Speaker 12>it's not without tension. So while there's tons of opportunity,

0:41:49.280 --> 0:41:51.440
<v Speaker 12>we are flagging. We've talked about this previously, about this

0:41:51.440 --> 0:41:54.040
<v Speaker 12>potential tension that can come with that. In twenty twenty six.

0:41:54.239 --> 0:41:56.120
<v Speaker 12>We're seeing over the last few weeks we get a

0:41:56.120 --> 0:41:58.320
<v Speaker 12>lot of pullbacks, right, We see a lot of optimism.

0:41:58.400 --> 0:42:01.759
<v Speaker 12>What we're seeing is investor's fear of missing note right,

0:42:01.880 --> 0:42:04.080
<v Speaker 12>really wanting the innovation, but also every now and then

0:42:04.080 --> 0:42:06.040
<v Speaker 12>pivot into a risk off. And that tension is something

0:42:06.080 --> 0:42:07.919
<v Speaker 12>that we think is going to persist through twenty twenty six.

0:42:08.080 --> 0:42:12.080
<v Speaker 3>So ride the volatility, expect the volatility when you're thinking

0:42:12.080 --> 0:42:15.480
<v Speaker 3>about the fundamental analyiso only briefly look Michael Berry basically

0:42:15.520 --> 0:42:17.040
<v Speaker 3>having to shut up shop on his hedge fund. It

0:42:17.040 --> 0:42:19.759
<v Speaker 3>would see the reporting is leading us there on his

0:42:19.960 --> 0:42:22.200
<v Speaker 3>negative bets on some of these companies.

0:42:22.320 --> 0:42:23.400
<v Speaker 6>You think it's impossible.

0:42:23.480 --> 0:42:28.160
<v Speaker 12>Briefly, nothing's impossible, yeah, right, and yes it does make

0:42:28.239 --> 0:42:31.400
<v Speaker 12>for good dinner side conversations. What we're like and the

0:42:31.440 --> 0:42:33.279
<v Speaker 12>way we approach this is we look very much the

0:42:33.280 --> 0:42:35.239
<v Speaker 12>theme holistically, right, It's one of the reasons why we

0:42:35.280 --> 0:42:38.359
<v Speaker 12>say picking single individual winners and losers is really tough

0:42:38.400 --> 0:42:41.719
<v Speaker 12>when you're talking about investing through disruption. We really look

0:42:41.719 --> 0:42:44.200
<v Speaker 12>at benchmark industries. That's one of the reasons why, you know,

0:42:44.239 --> 0:42:46.120
<v Speaker 12>the way we create our work is very much looking

0:42:46.120 --> 0:42:49.560
<v Speaker 12>at that benchmark approach, understanding that as these systems evolve,

0:42:49.600 --> 0:42:52.560
<v Speaker 12>you're going to find new connections, new correlations, and that's

0:42:52.560 --> 0:42:57.160
<v Speaker 12>really a way to continue investing through disruption without that nability, vulnerability.

0:42:57.320 --> 0:42:59.120
<v Speaker 6>And amazing analysis.

0:42:59.160 --> 0:43:01.879
<v Speaker 3>Go read it and Doherty a Bloomberg intelligence that does

0:43:01.920 --> 0:43:03.479
<v Speaker 3>it for this edition of Bloomberg Tech.

0:43:03.960 --> 0:43:04.840
<v Speaker 6>Check out the podcast

0:43:06.680 --> 0:43:08.440
<v Speaker 9>M hm hm