Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: From Mahart where Innovation, money and power Collie in Silicon Valley, Nbon.
Speaker 2: This is Bloomberg Technology with Caroline Hyde and Ed Ludlove.
Speaker 3: I'm Caroline Heidel Bloomberg's World headquarters in New York.
Speaker 4: Ed Ludlow is off.
Speaker 3: This is Bloomberg Technology coming up exclusive reporting that chip
Speaker 3: giants TSMC and ASML well they can remotely shut down
Speaker 3: the key equipment in event of an invasion to Taiwan.
Speaker 4: Details to come.
Speaker 3: Plus, we hear from Microsoft CEO Saty Innadella as its
Speaker 3: Bill Developers conference kicks off, and actress Scarlett Johansson pushes
Speaker 3: back against open Ai and that eerily similar Sky Voice.
Speaker 3: All that and so much more ahead. But first, that's
Speaker 3: checking on these markets. We want to go higher. We
Speaker 3: want to keep those record highs going. It seems on
Speaker 3: the SMP. Certainly the NASDAK turns flat. I'm pushing forward
Speaker 3: also to what's happening in crypto. We'll get back to
Speaker 3: what the MAINNGJA benchmarks are doing at the moment, but
Speaker 3: crypto has been a key story.
Speaker 4: Of course.
Speaker 3: This all eyes shifting from what we saw was a
Speaker 3: spot bitcoin ETF now to potentially a spot ETF. But
Speaker 3: there is the NASDAK currently just trading into positive territory.
Speaker 3: We are on a new record high. We're a new
Speaker 3: record high in the SMP. Not so on the stock
Speaker 3: six hundred and over in Europe actually off by about
Speaker 3: a quarter of a percent. But all eyes focused on
Speaker 3: FED talk today. Raphile Bostic of course, still trying to
Speaker 3: analyze the data many of FED talk coming to us.
Speaker 3: But also we're seeing what's happening with the ten year
Speaker 3: yield currently off by some three basis points. So maybe
Speaker 3: a bit of buying into the bomb market right now,
Speaker 3: as we also push forward to what's happening in earnings.
Speaker 3: Let's have a look at some of the individual movers
Speaker 3: that we've been seeing, and Palo Alto Networks, one of
Speaker 3: the key forwards, is actually coming off of its lows.
Speaker 4: We're down only now four percent.
Speaker 3: Why cybersecurity company just posting revenue that's eleven percent, well,
Speaker 3: thirty fifteen percent growth on.
Speaker 4: A year on year basis.
Speaker 3: That's not the twenty to thirty percent revenue growth what
Speaker 3: we used to do with a cybersecurity company.
Speaker 4: We go speaking to the CEO a little bit later,
Speaker 4: in the show in.
Speaker 3: Vidia trading flat ahead of its all in important earnings tomorrow.
Speaker 3: But what's key is this relationship, of course with what
Speaker 3: they've been talking about in ai and Taiwan, how dependent
Speaker 3: they are on TSMC to deliver the sort of super
Speaker 3: chips that the market is so dependent on. And a
Speaker 3: really interesting piece of reporting therefore on ASML and TSMC
Speaker 3: today coming from Bloomberg SML is off.
Speaker 4: By one and a half percent.
Speaker 3: That's as we see that exclusive reporting coming from our
Speaker 3: colleague showing that in an event that China invades Taiwan,
Speaker 3: both TSMC and of course the chip equipment making company
Speaker 3: ASML could basically have a kill switch. They can remotely
Speaker 3: disable their chip making machines. We heard about the importance
Speaker 3: in fact of Taiwan from Nvidia's CEO Jensen one and
Speaker 3: the Dell World conference just yesterday.
Speaker 5: Listen, Taiwan is at the epicenter of the world's technology
Speaker 5: supply flight chain. Without Taiwan, it would be very difficult
Speaker 5: for Michael and I to do our jobs, it would
Speaker 5: be very difficult for us to serve Bill and his company,
Speaker 5: And so the technology industry depends very heavily on Taiwan.
Speaker 5: Who continues to for some time.
Speaker 3: The ai juggernaut has spoken and he's saying that Taiwan
Speaker 3: is really important as if we forgot, we'll pleased to
Speaker 3: go join in Washington bluebags. Mike Shephard, this is an
Speaker 3: extraordinary piece of reporting. Ultimately companies having to ease US
Speaker 3: government concerns here, Well, that's right.
Speaker 6: And this is actually answering with this reporting one of
Speaker 6: the fundamental questions surrounding Taiwan, one of the big what ifs.
Speaker 6: For years, the US government has warned that, you know,
Speaker 6: China has its eyes on Taiwan and may try to
Speaker 6: reunite with the island using military force. Now Beijing has
Speaker 6: that they have no interest in doing so. They would
Speaker 6: prefer peaceful reunification, but they have not ruled out military
Speaker 6: intervention at the same time, so one of the key
Speaker 6: questions is what happens if this takes place. One of
Speaker 6: the big questions is what happens to the semiconductor industry.
Speaker 6: Taiwan is responsible for ninety percent of the world supply
Speaker 6: the most advanced chips, the kind that supply and video.
Speaker 6: We just heard from Jensen, why are you talking about that?
Speaker 6: And it is so essential for the US we saw
Speaker 6: during the pandemic and more recently with the earthquake in Taiwan,
Speaker 6: the concerns about any sort of supply chain disruption.
Speaker 3: Really, what's phenomenal here is that ASML is the lynchpin. Really,
Speaker 3: it's shipped more than two hundred of these very sophisticated
Speaker 3: EUV machines to clients outside of China. But they also
Speaker 3: do still ship to China, but far less technically sophisticated
Speaker 3: kinds of machines. Nevertheless, it looks as China has really
Speaker 3: been making strides in self sufficiency here.
Speaker 6: Michael, Well, you're right, it has, and we saw a
Speaker 6: sample of that last year during US Commerce Secretary Gina
Speaker 6: Raymondo's visit to mainland China, they Huawei Technologies unveiled a
Speaker 6: brand new smartphone and May sixty that featured a much
Speaker 6: faster semiconductor a processing chip than anybody thought they were
Speaker 6: capable of generating and using in a consumer device like that.
Speaker 6: It was a seven animeter chip, very very small, and
Speaker 6: the US was taken aback by it, and it was
Speaker 6: made in part with older generation ASML machines, but with
Speaker 6: technology that came from other sources as well. It was
Speaker 6: a sign that the concern is that China will be
Speaker 6: able to catch up in terms of technological advances in
Speaker 6: producing these semiconductors, and it requires sensitive equipment like the
Speaker 6: kind that ASML makes. ISML is the only producer of
Speaker 6: these machines called extreme ultraviolet machines, and they harness light
Speaker 6: waves to create these tiny, tiny transistors that you need
Speaker 6: a microscope to look at, and yet they do all
Speaker 6: these powerful computations of the likes that artificial intelligence and
Speaker 6: even military applications require. So the sensitivity of this is.
Speaker 4: Very clear.
Speaker 6: What we're talking about though, also is a maintenance function
Speaker 6: because these EUV machines, as they're known, they require a
Speaker 6: lot of upkeep and the company ASML needs to be
Speaker 6: able to turn them off remotely just for maintenance purposes. However,
Speaker 6: they now have a geopolitical significance too.
Speaker 3: Michael Shepard weaving it all together for us so beautifully,
Speaker 3: we thank you so much, and look at has real
Speaker 3: effects on companies' earnings.
Speaker 7: Here.
Speaker 3: SML has said with the latest export controls on their
Speaker 3: ability to shift to China, they could see a revenue
Speaker 3: impact of some fifteen.
Speaker 4: Percent this year.
Speaker 3: We look ahead to what's happening within video earnings yet
Speaker 3: to come, and we know they've got exposure to China too,
Speaker 3: as we've all together with Christina Hooper, Investco's chief global
Speaker 3: market strategists, and I'm just going to kick off with ultimately,
Speaker 3: China is a headwind at the moment where record highs across.
Speaker 4: All major benchmarks in the US. Is China much of
Speaker 4: a headwind from your perspective, I don't think so. Clearly.
Speaker 1: There are always going to be geopolitical tensions, issues concerns,
Speaker 1: but markets have a funny way of putting blinders on
Speaker 1: and focusing on what's the most important fundamentals as well
Speaker 1: as monetary policy in these challenging.
Speaker 4: Times and these unique times.
Speaker 1: And so I think there's a calculus that has gone
Speaker 1: on that has said, yes, you know, there are a
Speaker 1: number of risks out there, but we're going to keep
Speaker 1: investing and we're going to continue to enjoy the earnings
Speaker 1: growth that we've seen.
Speaker 3: And talking of earnings growth, everyone waiting with baited breath
Speaker 3: and what sort of growth in vidio does indeed post
Speaker 3: after the bell tomorrow in excess of two hundred percent
Speaker 3: increase in revenue is extraordinary. There is a market from
Speaker 3: the back of reporting coming from other titles today, that
Speaker 3: maybe there'll be some sort of pocket air pocket in
Speaker 3: between some of the more sophisticated chips that was being
Speaker 3: made from a Grace Hopper perspective. Buy in Nvidia moving
Speaker 3: onto the Grace Blackwell and Amazon, for example, pausing the
Speaker 3: ones on the less sophisticated Grace Hopper. Does that ultimately
Speaker 3: matter more the Nvidia intricacies that who's buying who's not
Speaker 3: than say FED policy right now.
Speaker 1: Well, for the tech sector, perhaps it's in Vidia, But
Speaker 1: I think when we take a step back and look
Speaker 1: at what is likely to help markets move forward, it's
Speaker 1: rate cuts. The reality is that it impacts the tech
Speaker 1: sector in particular because typically when we see higher yields,
Speaker 1: when the ten years higher, that exerts downward pressure on
Speaker 1: technology stocks and vice versa. The higher valuation names are
Speaker 1: more sensitive. So I think that that right now is important.
Speaker 1: Certainly in Video's important for Nvidia, for for semiconductors, for
Speaker 1: the tech sector, but right now there is a weight
Speaker 1: on for central banks to start cutting.
Speaker 4: We've gotten a.
Speaker 1: Few little cuts so far Swiss National Bank, Risk Bank,
Speaker 1: but now we're ready for more.
Speaker 4: And I look at it this way.
Speaker 1: We you know, as a parent of teenagers, a son
Speaker 1: who went through the college process a couple of years ago.
Speaker 1: He got into school off the waitlist, some kids got
Speaker 1: in early decision. They all wound up graduating at the
Speaker 1: same time with the same degree. And so we're going
Speaker 1: to see probably the first mover is going to be
Speaker 1: the ECB, maybe the Bank of Canada given the inflation print,
Speaker 1: but the FED will be along this year as well,
Speaker 1: and we'll get a few rate cuts. We'll all end
Speaker 1: up pretty much in the same place, but we're going
Speaker 1: to see We're probably going to see others start the
Speaker 1: ball rolling, other majors start the ball rolling before.
Speaker 4: We see the FED. So in a way, be patient.
Speaker 3: Christina, should you buy into tech for all viewers now?
Speaker 4: On the biasis of macro policy?
Speaker 1: Well, I'm not a believer in market timing because it
Speaker 1: is so hard to do, but I do think starting
Speaker 1: to increase exposure now as we wait for rate cuts
Speaker 1: to begin is arguably a very sensible strategy. Many investors,
Speaker 1: retail and institutional, are overweight to cash, and so certainly
Speaker 1: they should be taking some money off the sidelines and
Speaker 1: moving it into fixed income, locking in rates on the
Speaker 1: long end, but also they should be moving into equities,
Speaker 1: and it's not just tech. I think tech's very attractive,
Speaker 1: but for valuation reasons, European equities, UK equities, Emerging markets equities,
Speaker 1: there are a lot of opportunities out there for different reasons.
Speaker 4: On industry groups.
Speaker 3: Utility is doing very well, but also because everyone thinks
Speaker 3: that's an AI play.
Speaker 1: Absolutely, who would have ever thunk it. That was not
Speaker 1: on my Bingo card for this year, but utilities absolutely
Speaker 1: are ANAI play.
Speaker 4: So do you.
Speaker 3: Think that ultimately we should start spreading our wings from
Speaker 3: an industry perspective as well as a geographical perspective.
Speaker 1: Yes, absolutely, But we have to recognize a lot of
Speaker 1: the very significant earnings growth is coming from.
Speaker 4: The tech sector especially.
Speaker 1: You know, when we look at at the industries within tech,
Speaker 1: three of them are delivering double digit earnings growth. So
Speaker 1: that is a compelling place. We just have to recognize
Speaker 1: that valuations are higher.
Speaker 3: This only our all eyes still on tomorrow's set of
Speaker 3: earnings or great macro perspective. Coming from Invesco Chief Global
Speaker 3: Strategist Christina Hooper, we love having her hair. Let's talk
Speaker 3: zoom video for a moment reporting as first quarter results
Speaker 3: and they beat expectations on the prior quarter.
Speaker 4: It's the sales forecast perhaps.
Speaker 3: That had some people trying to understand where there's conservative
Speaker 3: elements are lying and where the opportunities are too. Let's
Speaker 3: talk through it all as the shares push higher with
Speaker 3: Kelly Steckelberg Zoom CFO to have you here in New
Speaker 3: York with us, Kelly, and there is some concern about
Speaker 3: perhaps a more cautious forecast. Can you talk us through
Speaker 3: how you've seen small medium sized enterprise demand for your
Speaker 3: products at the moment.
Speaker 8: Sure. So, first of all, we were very pleased with
Speaker 8: our Q one results. We beat analyst expectations across revenue, profitability,
Speaker 8: and free cash flow, and we reported you know, Q
Speaker 8: one revenue of one point one four one billion dollars
Speaker 8: up three percent year every year. We did see growth
Speaker 8: in our enterprise which was up five percent year every year.
Speaker 8: And then turn in terms of SMB, which we've gotten
Speaker 8: a lot of questions about. We support that segment of
Speaker 8: our business, mostly through our online segment, and that actually
Speaker 8: did better than we expected this quarter. So very pleased
Speaker 8: with the results across all of our segments.
Speaker 4: You are a numbers person.
Speaker 3: We saw the number of enterprise customs declined slightly, but
Speaker 3: there was a reshuffling of who.
Speaker 4: Actually fills into those gaps.
Speaker 3: They accounting for the difference of of how you count customers.
Speaker 4: But why are they declining? How do we digest that
Speaker 4: to climb Yeah.
Speaker 8: What I really want to point out, as you just said,
Speaker 8: we did transition some customers from the direct segment online
Speaker 8: just to promote better self service. These are typically, you know,
Speaker 8: much smaller customers. Where we continue to see growth is
Speaker 8: in the upmarket. So when you look at customers that
Speaker 8: contribute more than one hundred thousand dollars of trailing twelvemonth revenue,
Speaker 8: that was actually up eight percent year every year. So
Speaker 8: that's the segment of the business that is really helping
Speaker 8: us drive growth and where we're really focused, you know,
Speaker 8: on the smaller end those customers, we give them a
Speaker 8: lot of flexibility. They come and go as they please.
Speaker 8: They sometimes you know, turn the service off while they
Speaker 8: take a break with their kids, and then they come
Speaker 8: back when it serves them.
Speaker 3: Well, let's talk about some of the areas that you
Speaker 3: have been pushing into to diversify. In particular, I'm thinking
Speaker 3: of contact central workforce engagement, management of AI now city
Speaker 3: group analysts and I know you love having analysts notes
Speaker 3: reported back to you, but they say it find it
Speaker 3: a bit hard to see a durable offway to reaccelerating growth.
Speaker 4: Paint that picture therefore, Yeah, accelerating cround.
Speaker 8: So we talked about this a lot on the call yesterday.
Speaker 8: We've said that we expect growth in the second half
Speaker 8: of the year to start to reaccelerate. You mentioned contact center.
Speaker 8: We announced yesterday we have over ninety customers now in
Speaker 8: our contact center that are contributing more than one hundred
Speaker 8: thousand dollars of trailing twelvemonth revenue, which highlights these are
Speaker 8: sophisticated buyers and our products are now competing with the
Speaker 8: top four in the Gartner Magic quadrant that you probably.
Speaker 4: Know all the names of.
Speaker 8: And that combined with the strength we continue to see
Speaker 8: with Zoom Phone work Vivo, which we were just there
Speaker 8: was news about this last week where Meta is discontinuing
Speaker 8: its workplace and we have been named the preferred partner
Speaker 8: for that transition, which opens up a whole new opportunity
Speaker 8: for us. So those are all the components that are
Speaker 8: going to lead to reacceleration in the back half of
Speaker 8: the year and then into FY twenty six.
Speaker 3: And let's talk about competitors though, because Microsoft Teams is
Speaker 3: a strong one and we understand that perhaps there's been
Speaker 3: some regulatory conversations coming from Zoom about unfair competition.
Speaker 4: How's that going.
Speaker 8: Well, you know, there's a lot that's going on in
Speaker 8: the EU around bundling.
Speaker 4: They unbundle it there.
Speaker 8: However, until they really get to a competitive pricing for
Speaker 8: their products, it's not really a level playing field. And
Speaker 8: that's what would serve everyone in this industry, we believe
Speaker 8: the best, including customers, because having a really level playing
Speaker 8: field for the two strongest competitors, which is of course
Speaker 8: Zoom and Microsoft, we think is the best approach. Regulators listening, Yeah,
Speaker 8: I guess we'll wait and see how it continues to evolve.
Speaker 3: Well, Europe's always quite busy and quite quick on their
Speaker 3: regulatory decision making. But I'm interesting in what therefore you
Speaker 3: are doing for an investor base who is still waiting
Speaker 3: for this regalvanization, this reacceleration of growth. They're seeing some
Speaker 3: of the areas that you're pushing into in products. Jeffrey's saying, look,
Speaker 3: we want to see perhaps a little bit buyback sometimes
Speaker 3: of shares. We're thinking about potentially strategic M and A.
Speaker 3: Have we've got any news for the investor base there.
Speaker 8: Yeah, So you know, reaccelerating and top line growth is
Speaker 8: at absolutely our number one priority. In the meantime, while
Speaker 8: we are focused on investing there, we are also focused
Speaker 8: on giving returns back to our shareholders. So last quarter
Speaker 8: we announced a one point five billion dollars share buyback program.
Speaker 8: During Q one we did buy back two point four
Speaker 8: million shares, and we will continue to execute that over
Speaker 8: the next seven quarters, and in the meantime also looking
Speaker 8: for opportunities to deploy our cash if we see strategic
Speaker 8: M and A opportunities that would accelerate top line growth
Speaker 8: or accelerate tech development as well. Those are the two
Speaker 8: areas that we really keep front and center.
Speaker 4: The kind of aqua highest potentially.
Speaker 3: Yeah, absolutely, Kenny, It's great to have you here, coming
Speaker 3: in from Texas to be here with us in New York.
Speaker 4: Zoom CFO Candy Stackerberg. We really appreciate it.
Speaker 3: Meanwhile, coming up, I've just got to talk about crypto
Speaker 3: for a moment, ether surging on science of momentum for
Speaker 3: that ETF approval, will it come to spot eth US next.
Speaker 4: I Meanwhile, we've.
Speaker 3: Just got to keep an eye on what's happening with
Speaker 3: ten Cent because there has been pressure.
Speaker 4: There has been, of.
Speaker 3: Course, well a big new game, a blockbuster game that
Speaker 3: everyone has been waiting for, but within an hour they
Speaker 3: had to basically put that game on ice because the
Speaker 3: servers were overloaded. Dungeon and Fighter Mobile has really got
Speaker 3: everyone very excited, but clearly some server fluctuations hurt on
Speaker 3: the interim. We're down by two point nine percent, and
Speaker 3: say this isn't going to be a long term impact.
Speaker 9: This is Bluebeg technology.
Speaker 3: Let's just talk about this rally rally in cryptocurrencies. It
Speaker 3: is underway amid signs of pretty much a momentum for
Speaker 3: approval of another spot ETF, but this time linked to
Speaker 3: ETH joining us. Now, James Sift from Bloemberg Intelligence, we're
Speaker 3: up twenty three percent in the last couple of days.
Speaker 4: We used to volatility. But what are the tea leaves
Speaker 4: that you're reading here? James?
Speaker 10: Yeah, So, I mean we've had these filings just pot
Speaker 10: of theory metfs for months since the fall even and
Speaker 10: nothing over the last couple months signified to us that
Speaker 10: there was any sort of approval if you talk to
Speaker 10: these issuers, exchanges, you name it.
Speaker 11: No one thought it was going to happen.
Speaker 10: And then we started hearing from different people yesterday that
Speaker 10: the SEC reached out with comments and requesting immediate basically
Speaker 10: responses and updates to filings.
Speaker 11: The deadline for this was Thursday.
Speaker 10: It's May twenty third, and the SEC was basically silent,
Speaker 10: not interacting with anyone on these topics until yesterday, which
Speaker 10: tells us this was a huge.
Speaker 11: Change as far as I'm concerned.
Speaker 10: So basically the SEC decided as of Monday when they
Speaker 10: reach up to issues. We don't know exactly when it started,
Speaker 10: made late morning, early afternoon, who knows, but the SEC
Speaker 10: basically started saying, all right, we're gonna, we're gonna, we're
Speaker 10: likely going to approve these things and basically took the
Speaker 10: approval odds out of the ABYSS as far as we
Speaker 10: were concerned.
Speaker 3: And therefore you've moved your spot ether ETF likelihood probbability
Speaker 3: to seventy five percent from just twenty five percent.
Speaker 4: Is this usual?
Speaker 3: Is this typical to have a sudden resurgence in the drama,
Speaker 3: shall we call it?
Speaker 10: No, Honestly, we were thinking about lowering our odds last week,
Speaker 10: but we were basically, we only went to ninety percent
Speaker 10: for the spot bitcoin ETFs, even though everything was pointing
Speaker 10: that it was going to get approved, and but the
Speaker 10: what we left that ten percent because we heard rumblings
Speaker 10: that the Biden White House was considering stepping in to
Speaker 10: stop the approval of spot bitcoin ETFs, which just signs
Speaker 10: a little bit crazy on its face. But honestly, it
Speaker 10: seems like the exact opposite might have happened here. It
Speaker 10: seems like the SEC was likely planning to approve. There
Speaker 10: might even be denial letters drafted up, and it might
Speaker 10: be the Biden admin for political reasons, that came in
Speaker 10: and basically said you need to approve these things. We
Speaker 10: don't want to be too anti crypto.
Speaker 4: Interesting perspective coming from you, James.
Speaker 3: I'm interested therefore what it actually means in terms of
Speaker 3: institutional demand. What we saw was with the Bitcoin ETF,
Speaker 3: a whole host of new ETFs were launched and suddenly
Speaker 3: a whole wave of money came in.
Speaker 4: Is the same thing going to happen for smart contract focus?
Speaker 11: Yeah?
Speaker 10: So I do think that there is going to be
Speaker 10: a wave of ethereym ETFs that launch. We don't know
Speaker 10: exact timing because this hasn't been planned out. The Bitcoin
Speaker 10: ETF was planned out for months in advance. There's a
Speaker 10: whole bunch of other filings besides this nineteen before approval
Speaker 10: that we're now expecting this week. There needs to be
Speaker 10: approval on the s onees or perspectuses as well. So
Speaker 10: we do think there's going to be significant demand for
Speaker 10: these things, but it will be probably some.
Speaker 11: Fraction of the Bitcoin ETF demand.
Speaker 10: So if you look at the market cap at bitcoin,
Speaker 10: etherium is about a third of that market cap. Also,
Speaker 10: these ETFs they're not going to be allowed to stake,
Speaker 10: which is like there's native yield in using ethereum. So
Speaker 10: if these ETFs cannot stake, that should probably likely diminish
Speaker 10: some of the demand. So if you take the demand
Speaker 10: in the native crypto market and say it's about thirty
Speaker 10: percent of bitcoin and then discount.
Speaker 11: That a little bit, I think there will be demand.
Speaker 10: So twenty maybe twenty five percent of the demand for
Speaker 10: Bitcoin ETFs over the long term or at least the
Speaker 10: near term after launch.
Speaker 11: If you're comparing them to bitcoin, but that's still billions
Speaker 11: of dollars.
Speaker 10: I mean thirteen We have twelve thirteen billion dollars of
Speaker 10: influenced the spotpack coin ETFs in just four months. So
Speaker 10: even if we get twenty five percent of that, there's
Speaker 10: still a pretty significant chunk of change coming into new
Speaker 10: ETFs that are potentially going to launch in the coming
Speaker 10: weeks and months.
Speaker 3: All lies on that May twenty third spot Ether ETF application,
Speaker 3: James Seffert raising those probabilities.
Speaker 4: We love having you on.
Speaker 3: Thank you very much from Blue Megan Intelligence. Welcome back
Speaker 3: to Blue meg Technology. I'm Caroen Had in New York.
Speaker 3: Let's get your quick check on these markets. Halfway through
Speaker 3: this trading day, and we're seeing Look, just sensitivity, shall
Speaker 3: we say to the markets right now, as we still
Speaker 3: near those record highs across most benchmarks in the United States,
Speaker 3: we're just down by five points on the Nasdaq one
Speaker 3: hundred as we digest and FED speak today, how quickly
Speaker 3: might we see rate cuts? Raphael Postik saying, look, maybe
Speaker 3: we're going to reanalyze really where the neutral rate lies.
Speaker 4: Stock six hundred currently off by two tens percent.
Speaker 3: Europe under pressure as we wait with beta breath for
Speaker 3: some key earnings that we'll get to win. And I'm
Speaker 3: also having a look at what's happening in the crypto space.
Speaker 3: We're just talking about it on the up and up
Speaker 3: in particular, a shine a light on what's happening with
Speaker 3: eth We're currently up more than eight percent as we
Speaker 3: potentially start to get ourselves ready for a spot ETF
Speaker 3: here in the United States. Move on, let's have a
Speaker 3: look at what's happening on in individual stocks on the move.
Speaker 3: Amazon down by more than a percentage point. Really interesting
Speaker 3: story coming here being reported by the Financial Times that
Speaker 3: maybe Amazon is putting pause on its well demand or
Speaker 3: at least its orders for the most high rate and
Speaker 3: most sophisticated tech chip architecture coming from in Vidia, and
Speaker 3: instead of getting that Grace Hopper, they're waiting and they're
Speaker 3: going for the Grace Blackwell, while in Video is still
Speaker 3: up a tenth of a percent in spite of that,
Speaker 3: perhaps just air pocket, as the City Group has been
Speaker 3: talking about, we get the earnings after the bell. On Wednesday,
Speaker 3: Microsoft up by a more than of almost a percentage point.
Speaker 3: They are enhancing co Pilot in particular, then racing Google.
Speaker 4: Remember yesterday we're.
Speaker 3: Hearing how they're taking on Apple with a new AIPC.
Speaker 3: But we've got so much to hear from the leader
Speaker 3: of Microsoft right now because they are launching the team
Speaker 3: co Pilot and they've got a new AI feature that's
Speaker 3: going to be helping you with your project management, fostering competition,
Speaker 3: he says. And the chairman of CEO, Stia Nadella, sat
Speaker 3: down with bringing Back Original's host Emily Chang, and.
Speaker 4: They talked about just how it can help with maybe
Speaker 4: a little bit of drudgery and meetings.
Speaker 7: Take a listen and everybody complains about meetings, but what
Speaker 7: one should really complain about is not being prepared for meetings,
Speaker 7: not paying attention in meetings, not remembering what happened in meetings.
Speaker 7: The Meetings co Pilot helps keep the knowledge always front
Speaker 7: and center for an organization. So the feature we are
Speaker 7: launching is really this thing called.
Speaker 11: Team core Pilot.
Speaker 7: This Team core Pilot is going to be in the
Speaker 7: meeting and everywhere your team is working on. For example,
Speaker 7: if you're doing a project and you want project management assistant,
Speaker 7: this team Copilot will help you and all your teammates.
Speaker 7: It's kind of like having an AI teammate that helps
Speaker 7: you well.
Speaker 12: On that note, you know, for all of this to
Speaker 12: really work, you've really got to trust your PC with
Speaker 12: everything about you. Will it know you better than a
Speaker 12: real assistant or a friend or a colleague.
Speaker 4: And are we in relationship territory?
Speaker 7: Yeah, it's a super important one, right, which is to me,
Speaker 7: there are two things. One is how should one think
Speaker 7: about privacy? How should one think about safety? And then
Speaker 7: the third is how should we relate to AI?
Speaker 6: Right?
Speaker 4: All of these are important.
Speaker 7: So let's take them even unpack them. Right on the
Speaker 7: privacy side, that's why I think there are going to
Speaker 7: be needs for real private information and whether it's in
Speaker 7: the enterprise side where people say, don't train on my data.
Speaker 7: That's the assurance we have for anybody in the cloud,
Speaker 7: even or the new PCs we just launched yesterday, right,
Speaker 7: which are all about keeping everything that you're doing on
Speaker 7: the PC local. So that's on the privacy side. Safety
Speaker 7: is another one, right, which is how do I make
Speaker 7: sure that whatever I am doing is safe? You know,
Speaker 7: I'm safe from adversarial attacks? And then the third is
Speaker 7: the relationship side is I don't I believe of I
Speaker 7: don't like anthropomorphizing AI. I sort of believe it's a tool.
Speaker 7: It has got intelligence if you want to give it that,
Speaker 7: as you know, Moniker, But it's not the same intelligence
Speaker 7: that I have, right, I think one of the most
Speaker 7: unfortunate names is artificial intelligence.
Speaker 4: It's a different I wish we would call it a.
Speaker 7: Different intelligence, even because I have my intelligence. I don't
Speaker 7: need any artificial intelligence. I just want my intelligence to
Speaker 7: compose with this different intelligence so that I have more agency.
Speaker 3: Quite frankly, Microsoft Chairman CEO tier Nadella, there a blue
Speaker 3: max Emily Chang. Now let's turn our attention to another
Speaker 3: key company on the move and shares. Palo Alto Networks
Speaker 3: have been under pressure. That is, the company telling us
Speaker 3: where it's forecast is going. Fourth quarter revenue coming in
Speaker 3: two point one five to two point one seven billion dollars.
Speaker 3: Now we get a chance to talk through those forecasts
Speaker 3: and where the direction of strategy is. When Nikeshiro is
Speaker 3: Paralo Alto Networks CEO and Nikesha's great to have some
Speaker 3: time with you, and I thinkultimately the forecasts we used
Speaker 3: to get the growth we have been used to of
Speaker 3: revenue from palowel To Networks is what twenty thirty percent
Speaker 3: year on year growth. We're now having to get more
Speaker 3: used to potentially an eleven percent growth perspective, Is this
Speaker 3: buyer fatigue for cyber not really?
Speaker 2: First of all, Karen, thank you for having me here. Remember,
Speaker 2: we are planning to deliver close to two billion dollars
Speaker 2: of revenue in Q four. That makes us close to
Speaker 2: an eight billion dollar company for the year and our
Speaker 2: growth rates our forecast beteen ten and fifteen percent, So
Speaker 2: there is no buyer fittigue in cybersecurity. We are the
Speaker 2: first company to break the barrier and get to that
Speaker 2: scale in cybersecurity, making us not to one hundred billion dollars.
Speaker 11: In market cap.
Speaker 2: So no, I think cybersecurity is a very robust market
Speaker 2: from a demand perspective, and our teams are executing amazingly
Speaker 2: around the world.
Speaker 3: Let's talk about where therefore the robust among comes from
Speaker 3: and what for You've talked a lot about ultimately sort
Speaker 3: of being in everything, offering a platformization is what's necessarily
Speaker 3: that's heard of the strategy, if I'm correct, the idea
Speaker 3: that yes, you want to be able to ensure that
Speaker 3: all parts are sophisticatedly protected, but how does that win
Speaker 3: out versus what people have called sort of a best
Speaker 3: in breed offering where you're focusing on one particular element
Speaker 3: of cyber.
Speaker 2: I think the important way to think about it, Caroline,
Speaker 2: is if you will take back fifteen twenty years ago,
Speaker 2: we used to have a multitude of applications across an
Speaker 2: enterprise which did customer management things. Today you don't think
Speaker 2: about having fifteen different applications to manage your customers. You
Speaker 2: either use Salesforce or Oracle or Microsoft Dynamics. You don't
Speaker 2: use fourteen bestor breed applications to solve your customer problems.
Speaker 11: Take the problem in HR.
Speaker 2: You use people systems, whether it's workday or others. So
Speaker 2: you are getting to place where these concepts require integration
Speaker 2: across these best bid capabilities. Otherwise, the owners of integration
Speaker 2: goes on the customer, which means every customer has to
Speaker 2: be able to take these best to breed, stitch them
Speaker 2: together and create amazing security outcomes. On the other side,
Speaker 2: you got bad actors who've changed their tactics. They can
Speaker 2: get in and out of your business in under an
Speaker 2: hour and axtiltrat large amounts of data.
Speaker 4: So I think it's a.
Speaker 2: Problem that's stacked up against companies if they plan to
Speaker 2: stitch this stuff together for years to come. That's why
Speaker 2: we need to move towards and more integrated things that
Speaker 2: work together and a more real time out from the
Speaker 2: security strategy as opposed to the best to breed strategy
Speaker 2: which has worked historically.
Speaker 4: But with your shares.
Speaker 3: Under pressure, is the market understanding that is the market saying, okay,
Speaker 3: I buy the platformization.
Speaker 2: Well our shared We're done very well over the last
Speaker 2: one year. I think these short term bumps are part
Speaker 2: of the absorption by the market where the market needs
Speaker 2: to go. We've done really well in the last five years.
Speaker 2: We're done really well in the last one year. I
Speaker 2: think the important part is to understand it is a very
Speaker 2: strong demand market. We're executing amazingly. We are the largest
Speaker 2: player in the market, and the number of conversation, a
Speaker 2: number of platform deals we did this quarter far exceeded
Speaker 2: any that we've done in history, which sets us in
Speaker 2: the right direction to try and achieve a fifteen billion
Speaker 2: dollar AR number, which we've targeted in the next few years.
Speaker 2: So we think things are on track and we're executing.
Speaker 4: You're likely AAR number.
Speaker 3: There is a number in your metrics that you don't
Speaker 3: like people really focusing on, and that's a billing forecast.
Speaker 3: You say, look, it's volatile, and ultimately it's it's sort
Speaker 3: of an artificial metric. But can you talk us through
Speaker 3: that a little bit, because why is it artificial? You say,
Speaker 3: it's due to payment terms changing. But it's a bit
Speaker 3: worried about this billing forecast being the slowest since your IPO.
Speaker 2: Well, I think what happened is when we lived in
Speaker 2: a zero interest rate and environment, people were willing to
Speaker 2: pay you upfront for years of upcoming service. Today, CFOs
Speaker 2: get involved a saying listen, I'll pay you when you
Speaker 2: deliver service. You look at the companies your name, companies, Jurned,
Speaker 2: Arr business which are on an analyzed payment plan. There
Speaker 2: they give you ar and annual values, and that seems
Speaker 2: to work for us. People look at are you collecting
Speaker 2: all the money upfront? So that's what billings is in
Speaker 2: our view. The right number is RPO or remaining performance obligations.
Speaker 2: Our URPO grew at twenty three percent. We have a
Speaker 2: leven point five billion dollars or the services we intend
Speaker 2: to deliver to our customer over the next three years.
Speaker 2: So that's an important metric. The growth is important because
Speaker 2: that tells you how big your book of businesses that
Speaker 2: is committed by your customers. That gives your truth understanding
Speaker 2: of the strength of the business. I think buildings can
Speaker 2: be a managed depending on when customers use to pay you,
Speaker 2: So I think that becomes a less reliable metric, particularly
Speaker 2: in a higher interest rate and environment where customers are
Speaker 2: conscious about when they want to pay you.
Speaker 3: Is there need to be pressure on contract length going
Speaker 3: forward though, and what does that say about enterprise's desire
Speaker 3: to commit to cybersecurity protection.
Speaker 2: Actually things are in the opposite direction, Caroline, because if
Speaker 2: you take along the contract you get price protection, and
Speaker 2: in a higher interestate environment, you have the risk of
Speaker 2: higher prices in the future. So actually you're seeing customers say,
Speaker 2: guarantee me the price for longer because I don't want
Speaker 2: to deal with inflationary impacts or price increases.
Speaker 3: When you look at ultimately, what all the analysts are
Speaker 3: saying rem versus your particular earnings, they really are saying
Speaker 3: that this is a kneeja reaction. You got vital knowledge,
Speaker 3: really saying the core fundamentals remain very healthy.
Speaker 4: A lot of the.
Speaker 3: Analysts out there saying they believe in the leadership. Right now, Nakesh,
Speaker 3: talk to us there for about what you believe in,
Speaker 3: how artificial intelligence is changing your role as a leader
Speaker 3: and changing the way in which we protect against cybersecurity.
Speaker 3: We will talk about how much harder it's made life.
Speaker 3: But has it really in terms of attacks?
Speaker 2: Well, Caroly, let me break that question in two parts. First,
Speaker 2: in the last five years, our company has gone off
Speaker 2: five times in value, so I think we've done really
Speaker 2: well to our for our shareholders were willing to run
Speaker 2: really well. From an execution perspective, we're you know, we're
Speaker 2: one of the largest companies now, we have an evergreen portfolio,
Speaker 2: like you mentioned, and we've brought the notion that large
Speaker 2: cybersecurity companies can continue to innovate so our customers don't
Speaker 2: have to. In that context, if we look at AI,
Speaker 2: most recently we announced is ceries of AI security products
Speaker 2: because the enthusiasm for AI, both on unfortunately the bad
Speaker 2: actor side and the company's side is high. People want
Speaker 2: to trial AI. You had a segment earlier. You know,
Speaker 2: we're seeing copilots being introduced, so everybody wants an AI buddy,
Speaker 2: an AI assystem to make their lives more productive in
Speaker 2: that environment, every company is raring to go out and
Speaker 2: deploy that technology. You've got to be careful when you deployed.
Speaker 2: It has to be secured by design. You have to
Speaker 2: make sure these lms don't hallstenate. You have to make
Speaker 2: sure nobody get inside, gets inside your LM, poisons it
Speaker 2: with lots of data, and we're going to see a
Speaker 2: lot of those attempts because bad actors have also learned
Speaker 2: the technology. So it's very important to deliver AI in
Speaker 2: such a way that it is secure for our customers
Speaker 2: and their end customers. And we've already pioneered at our
Speaker 2: essay most recently it comprehensive suite of products which we
Speaker 2: intend to make available to all of our customers in
Speaker 2: the next four weeks, which allows them to go down
Speaker 2: this journey and be secured from the get go.
Speaker 3: Hello el to Network CEO Pikshu Or thanks to spending
Speaker 3: some time with us on your latest results and indeed
Speaker 3: the latest threats that you're trying to combat. I Meanwhile,
Speaker 3: coming up, we're going to be hearing from the CEOs
Speaker 3: of Dell and Nvidio, both of course, at the Dell
Speaker 3: World Conference in Las Vegas, and they sat down with
Speaker 3: their own.
Speaker 4: And Ludloan and let's just check in on what Sodos
Speaker 4: is doing.
Speaker 3: Yeah, you know them for speakers, Well, now they want
Speaker 3: to get in your headphone space too.
Speaker 4: The market they see.
Speaker 3: For a four hundred and forty nine dollars device, it's
Speaker 3: all part of their effort to basically go from home
Speaker 3: speaker company to a broader maker, a consumer.
Speaker 4: Tech nine tens five percent. This is to make technology.
Speaker 2: Now.
Speaker 3: The Dell World conference is still in full swing today
Speaker 3: in Las Vegas and Ludlow He sat down yesterday with
Speaker 3: some of the key note speakers, which included Dell chairman
Speaker 3: and CEO Michael Dell an Nvidia CEO Jensen Juan take
Speaker 3: a listen.
Speaker 11: At Dell Technologies World.
Speaker 13: We love to bring our customers and partners together and
Speaker 13: talk about what's new and what's exciting. And you know,
Speaker 13: this AI opportunity is really tremendous and we can never
Speaker 13: do anything by ourselves, but this is a great example
Speaker 13: of how you have an ecosystem of companies coming together
Speaker 13: along with all these incredible innovations in GPUs and compute
Speaker 13: storage and networking and the AI models and software companies
Speaker 13: that are utilizing all this power and it's causing a
Speaker 13: new industrial revolution.
Speaker 14: There are five things that I would like to talk about,
Speaker 14: the first being the relationship between the three of you
Speaker 14: and your companies, how you work together. The second being
Speaker 14: AI infrastructure, how durable. What's happening is AIPC. You know,
Speaker 14: you've been talking about AIPC on social media for some time,
Speaker 14: and officially of course as well US leadership. You know,
Speaker 14: I reflect that I have three American CEOs that around me,
Speaker 14: all pulling towards the same sort of goal. And finally,
Speaker 14: increasingly people ask me to ask you about power and
Speaker 14: energy consumption and whether we should start talking about that.
Speaker 14: But really, gentsen, the origin of this, and one of
Speaker 14: the reasons I wanted to have the conversation was GtC.
Speaker 14: I'm paraphrasing, but you said, basically, there is no one
Speaker 14: better end to end systems at scale than Dell. You
Speaker 14: basically said, if you want a server, you phone Michael Dell.
Speaker 14: But why specifically, how is it that Nvidia interacts with
Speaker 14: that part of Michael's business.
Speaker 4: Well, this is a.
Speaker 5: Really important time where we've re engineered and reinvented every
Speaker 5: layer of computing from the chip, to the operating system,
Speaker 5: to the system servers, to the way that these data
Speaker 5: centers are put together. There's only one company in the
Speaker 5: world that can have the ability to build the computing system,
Speaker 5: the storage system, the networking system, all of the software
Speaker 5: that goes along with it, and the path to the
Speaker 5: world's enterprise. We want to bring this generative AI capability
Speaker 5: to every company in the world, and some of them
Speaker 5: can use it in the cloud, but many of the
Speaker 5: applications still has to be done on prem and so
Speaker 5: in order for us to bring them into the generative
Speaker 5: AI revolution, we're going to have to go through a
Speaker 5: partner that can help us take this completely new reinvention
Speaker 5: of a computer, the data center, these AI factories and
Speaker 5: help every customer have a you know.
Speaker 14: Just remport Tensen. Yeah, on prem is back, just really quick,
Speaker 14: yes or no?
Speaker 4: On prem never.
Speaker 5: Left, but on prem never left, but on prem is
Speaker 5: on prem is you know, on Prem is cool.
Speaker 4: Again, as if it ever wasn't cool. We you thank him,
Speaker 4: of course.
Speaker 3: In video CEO Joseph Wang, it was Dell chairman and
Speaker 3: CEO Michael Dell speaking, of course, along with their own
Speaker 3: ed Ludlow and alongside the Service Now CEO Bill McDermott.
Speaker 3: You probably caught a lot of it yesterday, but it
Speaker 3: was a great interview. Meanwhile, let's just talk about AI
Speaker 3: and the startups scene their scale. AI it's helping, of course,
Speaker 3: top tech companies improve the data used to build a
Speaker 3: eye products, basically to ensure that it's tagged in.
Speaker 4: The right way.
Speaker 3: It's roughly doubled its valuation to get this thirteen point
Speaker 3: eight billion dollars and it's raising one billion in one
Speaker 3: of the largest financing deals of the year. The round
Speaker 3: was led by Axcel, participation from mix of new corporate backers.
Speaker 3: They're all the rage too now Amazon Meta Venture arms
Speaker 3: from AMD Service Now and indeed Intel.
Speaker 4: Meanwhile, coming up.
Speaker 3: We'd just been noting that Disney's saving some money. They're
Speaker 3: continuing to do that with Pixar announcing layoffs to the
Speaker 3: tune of some fourteen percent of the business.
Speaker 4: Have all the details.
Speaker 3: Next, it's been going viral. Actress Scarlett Johansson said that
Speaker 3: she was quote forced to hire legal counsel to demand
Speaker 3: the removal of an artificial intelligence voice for open AI's chatpot.
Speaker 4: That sounded only like herself.
Speaker 3: When most Rachel Metz joins us for more and basically
Speaker 3: this is Sky and we already heard that maybe open
Speaker 3: ai was pressing pause on the use of Sky.
Speaker 15: Yeah. Absolutely so just the other day open Ai stopped
Speaker 15: using the voice at least for now, and users would
Speaker 15: if they tried to use it within like the chat
Speaker 15: GBT app, for instance, they would hear a different voice
Speaker 15: called Juniper.
Speaker 4: I do think it's And to remember.
Speaker 15: These voices, and the Sky voice in particular, didn't just launch.
Speaker 15: They actually launched last year in September, which Scarlett said
Speaker 15: is around when or is the same month when Sam
Speaker 15: Martman reached out to her and asked her if she'd
Speaker 15: be interested in presenting one of these voices with her voice.
Speaker 3: And she decided, after a lot of thought, apparently not
Speaker 3: to provide her own voice.
Speaker 6: Now.
Speaker 3: All of this, of course, goes back to the fact
Speaker 3: that there was a movie years old now called Her,
Speaker 3: where Joaquin Phoenix plays a part that falls in love
Speaker 3: with an artificial intelligence well chatbot basically, who happens to
Speaker 3: be voiced by Scarlett Johansson.
Speaker 4: Interestingly, we saw Sam Altman just while the announcements of
Speaker 4: Chat GBT four oh were launched.
Speaker 3: He put in a post just literally her, but he says, yeah,
Speaker 3: it wasn't based on Scarlett ju Hanson.
Speaker 15: Yeah, I mean that's kind of tricky, right, I mean,
Speaker 15: you're tweeting her and everybody knows what you mean by that,
Speaker 15: and I guess you could say, oh, well, it is
Speaker 15: an homage, but it sounds like she didn't want any
Speaker 15: part of it. So I think it's going to be
Speaker 15: really interesting to sort of see what the next move is,
Speaker 15: either from Open Ai or from Scarlet Johansson's camp. As
Speaker 15: far as what happens next, I mean, will this voice
Speaker 15: come back? I don't know. It's another actress, but it
Speaker 15: does sound quite a bit like her. I think a
Speaker 15: lot of people would agree.
Speaker 3: And to be sure, Open Ai've tried to make clear
Speaker 3: how they found this voice, and it was found a
Speaker 3: year ago through four hundred applications and they managed to
Speaker 3: find these five voices they eventually went with. But there
Speaker 3: is another actress who just so happens to sound a
Speaker 3: bit like Scotlettohnson, who now might not get paid for
Speaker 3: the use of it within.
Speaker 15: The app Yeah, I mean, I think we also need
Speaker 15: to keep in mind that this is a real person's
Speaker 15: voice that is being used to train a voice model,
Speaker 15: So I have no way of knowing how much modification
Speaker 15: has been done to the voice. You know, they would
Speaker 15: have recorded probably quite a number of samples of this
Speaker 15: person speaking, and then I'm not really sure what kind
Speaker 15: of speaking they would have done to present the final
Speaker 15: actual voice. So it's possible that there was some works
Speaker 15: done there. Maybe they just need to change the voice
Speaker 15: a little bit, Maybe they need to retire the voice.
Speaker 15: Maybe they're going to say, you know what, this is
Speaker 15: not her voice, so we're going to keep using it.
Speaker 15: It'll be interesting to see what happens.
Speaker 3: Well, certainly it's highlighted that there are more voices on
Speaker 3: chut ChiPT four, at least for many. Rachel Metz, we
Speaker 3: thank you so much for running us through what is
Speaker 3: almost a bit of a celebrity story, but sticking with
Speaker 3: content for a moment. Pixar, the pioneering animator that made
Speaker 3: of course, toy story finding Nemo's cutting fourteen percent of
Speaker 3: a staff as part of an ongoing cost cutting effort
Speaker 3: with parent company Disney, finished Jollette here briefly for more
Speaker 3: and well, we'd anticipated that we would see cuts here.
Speaker 16: Yeah, I mean, this is part of Bob Iger's broader
Speaker 16: term to bring down costs at Disney Pixar, you know,
Speaker 16: for years couldn't do anything wrong, just had hit after
Speaker 16: hit after hit. During the pandemic, they released a couple
Speaker 16: of movies right to the streaming service. You know, their
Speaker 16: last couple Elemental was not a big hit.
Speaker 4: Light Year was not a big hit.
Speaker 16: So this has kind of been an expector for a while.
Speaker 16: They also at some point switched to you know, envisioning
Speaker 16: doing more TV production for the streaming service, and now
Speaker 16: they've basically decided we're going to go back to just
Speaker 16: making movies.
Speaker 4: So it's related to that.
Speaker 3: Also, is there anyway and briefly we could say that
Speaker 3: AI is going to be doing it.
Speaker 16: I mean, I'm sure that AI will be part of
Speaker 16: the mix. That's not what they're crediting these cuts to.
Speaker 16: At this point, they are pointing to the shift back
Speaker 16: to movie production. And again there's been you know, Bob
Speaker 16: Ayer's been looking for you know, something like eight billion
Speaker 16: dollars worth of cuts all across Disney. So this has
Speaker 16: been just the latest of multiple waves of people losing
Speaker 16: their jobs.
Speaker 3: Felix Shudette, thank you for running us through it with Disney. Meanwhile,
Speaker 3: that does it for this edition of Blue meg Technology.
Speaker 3: Don't forget to check out the podcast. You can find
Speaker 3: it on the terminal as well as online on Apple, Spotify, iHeart,
Speaker 3: wherever you get your information.
Speaker 4: This is Bloomberg