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Speaker 3: with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 1: Hey, back with the season tech View to help us
Speaker 1: kind of make sense of all this with Lash is
Speaker 1: through McAfee, Principal research scientist at MIT. He's the author
Speaker 1: of a new book, The Geek Way, The Radical mindset
Speaker 1: that drives Extraordinary Results. He joined us last week, but
Speaker 1: we wanted to have him back on after the news
Speaker 1: of Sam Altman happened on Friday. He's also a visiting
Speaker 1: Fellow in Technology and Society at Google, that is Andrew McAfee,
Speaker 1: where he's working with Google on research related to the
Speaker 1: societal impacts of generative AI. And Andrew joins us on
Speaker 1: Zoom from Boston.
Speaker 4: Andrew, great to have you back with us. Radical Mindsets
Speaker 4: your book, you write about that in it. Sam Altman
Speaker 4: and open EI do they kind of fit into that
Speaker 4: in your view?
Speaker 5: You know, they were certainly operating like a fast charging,
Speaker 5: high performing geek company, and then this very strange episode
Speaker 5: started to unfold on Friday.
Speaker 4: So what how do you from someone who has watched technology,
Speaker 4: has seen trends, seen innovation, how are you looking at
Speaker 4: this and what's the significant thing kind of longer term,
Speaker 4: especially as we all expect of AI to be a
Speaker 4: part of our lives forever.
Speaker 5: Probably I absolutely expect that, and I think this is
Speaker 5: just a crystal clear case study of the importance of
Speaker 5: good old fashion, boring corporate governance and running a good board.
Speaker 5: This feels like a huge enforced error on the part
Speaker 5: of the Open AI board and I still don't quite
Speaker 5: understand it.
Speaker 1: Yeah, I think you're not the only one who doesn't
Speaker 1: quite understand it. We don't even know why he initially
Speaker 1: was fired at this point, and we're kind of following
Speaker 1: every move of will here, won't he go back to
Speaker 1: open AI. It doesn't sound like even Satinadella at Microsoft
Speaker 1: Carol knows why he was fired.
Speaker 6: Yeah, I mean that's what's interesting.
Speaker 4: I mean, is it important in your view, Andrew, that
Speaker 4: we know every detail in terms of how this ends,
Speaker 4: or what is ultimately the important thing that we get
Speaker 4: out of this, or how it ends?
Speaker 5: In your view, I don't think we're ever going to
Speaker 5: know all the details, but we do know that if
Speaker 5: you have an extraordinarily popular, very effective CEO at growing
Speaker 5: a tech company, the board might not want to fire
Speaker 5: that person with almost with no notice, really without apparently
Speaker 5: engaging on a lot of back and forth with him,
Speaker 5: not for any fraud or misconduct or malfeasance, but because
Speaker 5: of some other kind of vague problem. If the board
Speaker 5: is going to take that fairly rash step, they probably
Speaker 5: want to alert their major investors, their biggest business partners,
Speaker 5: their employee base, and give them time to get ready
Speaker 5: for all that, they didn't appear to do any of that,
Speaker 5: and when they were frantically negotiating over the weekend to
Speaker 5: try to bring him back, that all fell apart, and
Speaker 5: it fell apart to the extent that the huge majority
Speaker 5: of the employees of the company have signaled that they
Speaker 5: will walk away. Whatever you think the board's duty is,
Speaker 5: I can't see how it includes destroying that much value,
Speaker 5: hollowing out the employee base of the company. And if
Speaker 5: the mission of the Open Ai Foundation is to advance
Speaker 5: safe AGI for humanity, I do not see how these
Speaker 5: actions support that mission at all.
Speaker 6: Hey, Business School, this is a case study of how
Speaker 6: not to do things. Basically, there are.
Speaker 1: Plenty of examples of that. By the way, there is plenty.
Speaker 6: They're all that right often usually.
Speaker 4: You know, I'm wondering. You know, Tim was really smart
Speaker 4: in terms of our discussions that we've been having around
Speaker 4: this about what seems to be maybe at odds, and
Speaker 4: that is this debate about a need for balance of
Speaker 4: pushing generative AI, this technology, expanding, exploring it to reach
Speaker 4: its potential, but with also having an ethical line because
Speaker 4: of the potential of it to do wrong. Although I
Speaker 4: would go back to you know, the Cold War and
Speaker 4: missiles and the battle to have the greatest and best
Speaker 4: in terms of military and how that could bring the
Speaker 4: end to civilization. So I'm trying to kind of figure
Speaker 4: out what is at risk if we get this wrong.
Speaker 5: Help me hear, Yeah, whatever is at risk? If your
Speaker 5: organization organization's mission is safe AI, and you believe apparently
Speaker 5: that a for profit company is not the right way
Speaker 5: to accomplish that mission, then doing things that let your
Speaker 5: CEO and again, almost all of the employees wind up
Speaker 5: at an AI building for profit company. They appear right
Speaker 5: now to be a lot of them to heading to Microsoft.
Speaker 5: That is not accomplishing the goals of your mission. I
Speaker 5: personally am not worried about the existential the alignment risk
Speaker 5: of AI. All very powerful tools bring risks and harms
Speaker 5: with them, and they demand vigilance, and we got to
Speaker 5: be careful about it. I don't think AI is any
Speaker 5: big exception to that trend or requires us to do
Speaker 5: radically different things. We just have to be vigilant stop
Speaker 5: the bad uses.
Speaker 1: That is really really surprising for me to hear from you, Andrew,
Speaker 1: because I hear from you know the worst case scenario
Speaker 1: when it comes to this stuff as Okay, what if
Speaker 1: AI developed some sort of super bug or biological weapon,
Speaker 1: or in fact, you know in the Elon Musk school,
Speaker 1: essentially become sentient and more powerful than human beings. Why
Speaker 1: does that not worry you?
Speaker 5: I mean, I read a lot of science fiction as
Speaker 5: a kid, too. I think terminator sci fi scenarios are
Speaker 5: not great guides to policy, are not great guides to
Speaker 5: using this very powerful, very beneficial toolkit. I do think
Speaker 5: that there is a risk that AI, for example, could
Speaker 5: be used to as part of an effort to engineer
Speaker 5: bad bugs or bioweapons. Great, why are we focusing on
Speaker 5: a AI and not gene editing and not gene sequencing technologies?
Speaker 5: And why are we letting anybody apply to molecular biology
Speaker 5: and genetics doctoral programs and distributing that knowledge very freely?
Speaker 5: There are, again, there are risks in the modern world.
Speaker 5: Let's not be naive about that. But singling out AI
Speaker 5: as the lynchpin that's going to make everything bad happen,
Speaker 5: I just think that's wrong. I think that's a misallocation
Speaker 5: of our effort demonizing technologies that will be super beneficial
Speaker 5: to us. I think as allows the idea.
Speaker 1: Well, let's move away from the superbug concern and more
Speaker 1: to the concern that it will become a sentient being
Speaker 1: that is more powerful and smarter than us and essentially
Speaker 1: a higher order being over us. Essentially, Yeah, why does
Speaker 1: that not concern you?
Speaker 5: You know, my friend and colleague Andrew Ing, who is
Speaker 5: himself a fantastic AI researcher, says it's theoretically possible. I
Speaker 5: love his phrasing. He said, it's like worrying about overpopulation
Speaker 5: on Mars. We have so many more important things to
Speaker 5: worry about. We have to accomplish an energy transition in
Speaker 5: the twenty first century. We have too high a disease burden.
Speaker 5: There are too many people in dire poverty around the world.
Speaker 5: I believe that AI might be the most powerful tool
Speaker 5: that we've ever come up with to help us solve
Speaker 5: these global planetary challenges facing humanity. And we're sitting around
Speaker 5: worried about the terminator when there's not a shred of
Speaker 5: evidence that AI has become sentient or taking control of
Speaker 5: anything that we don't want it to. I think it's
Speaker 5: like bad sci fi mixed bad policy.
Speaker 6: Andrew full transparency.
Speaker 4: You're working with Google on research related to the societal
Speaker 4: impacts of generative AI.
Speaker 6: I am curious that what.
Speaker 4: Is the balance you all at Google are pursuing when
Speaker 4: it comes to reach AI, generative AI, reaching its potential,
Speaker 4: but also being smart about it and careful with it.
Speaker 5: Yeah. Thanks for that, because I really want to make
Speaker 5: clear here I am just talking about my own personal views.
Speaker 5: I am not representing Google's views on this. I actually
Speaker 5: am not on top of everything that Google believes. What
Speaker 5: I do know because I read the statement like the
Speaker 5: rest of the public did, that Google stance is that
Speaker 5: we need to be bold and responsible. I think we
Speaker 5: are in danger of walking away from the bold part
Speaker 5: in an overabundance of not just caution, but fear about
Speaker 5: things that we just don't have any evidence for. I
Speaker 5: want to say this again, this is my view, not
Speaker 5: necessary Google's view.
Speaker 1: I think andrew everything that we've talked about in terms
Speaker 1: of fears. Personally, again, I'm speaking personally in terms of this,
Speaker 1: and I'm almost a lay person when it comes to
Speaker 1: this stuff. The thing that most concerns me about generitive
Speaker 1: AI is misinformation and the ability for bad actors to
Speaker 1: use that misinformation at scale to control.
Speaker 6: Outcomes like happens in social.
Speaker 1: Media exactly, not that different than a lot of accusations
Speaker 1: that we saw fly in the wake of twenty sixteen
Speaker 1: and twenty twenty elections here in the US. But if
Speaker 1: you thought a bot army of people, you know, in
Speaker 1: Eastern Europe with social media were scary, then what about
Speaker 1: an actual bought army of generative AI that's able to
Speaker 1: you know, do this stuff at scale.
Speaker 5: Andrew, Now that's a harm that we should be worrying about.
Speaker 5: Because I got fooled by that picture, that photo alleged
Speaker 5: photo of the Pope and the puffy white coat.
Speaker 1: He looked good.
Speaker 5: I thought the Pope was wearing a puffy white coat. Look,
Speaker 5: I really did got I got taken in by a
Speaker 5: photo realist deep fake. These are actual challenges, and like
Speaker 5: you say, bad actors are going to weaponize generative AI
Speaker 5: to do all kinds of harm or try to do
Speaker 5: all kinds of harm. This is a real risk, it's
Speaker 5: a real harm. I have faith in our ability to
Speaker 5: deal with the harms that technology brings us. I think
Speaker 5: we can find ways to have trusted sources that will
Speaker 5: verify whether a thing is a deep fake or not.
Speaker 5: All of us have the new sources that we run
Speaker 5: to when we see something that might be true or
Speaker 5: might not be true. We can strengthen those kinds of
Speaker 5: institutions and those kinds of responses. We can also educate
Speaker 5: people to be more discerning consumers of the news. These
Speaker 5: are all things that we can and should do sitting
Speaker 5: around worrying about the terminator instead, As I said, it's
Speaker 5: just a huge misallocation of our attention.
Speaker 1: I think the terminator coming to life is more realistic
Speaker 1: than educating the large populace with news judgment. But I'm
Speaker 1: a cynical person.
Speaker 5: I guess that's a little cynical.
Speaker 1: Yeah, I know.
Speaker 6: All right, everybody.
Speaker 4: What's interesting too, though, is you know you talk about
Speaker 4: you know, you have faith to deal with the harms
Speaker 4: of this technology maybe will ultimately bring us, should there
Speaker 4: there be some guardrails in place, you know, shamy once
Speaker 4: you know full you know, shame or fully one.
Speaker 6: Shame on you for me twice, shame on you know.
Speaker 6: You know what I mean. You know what I mean.
Speaker 1: Okay, George W. Bush Rich shut.
Speaker 4: But I guess my point is, whether it's social media,
Speaker 4: whether it's crypto, there's a lot of things out there
Speaker 4: that it's like, oh, I guess we should have.
Speaker 6: Been doing this.
Speaker 4: Is there something we should have in place at this
Speaker 4: point when it comes to generative AI.
Speaker 5: I think what we should have in place is a
Speaker 5: very agile system for becoming aware of the harms and
Speaker 5: dealing with the harms as they crop up. For example,
Speaker 5: after smartphones were out for a while, we learned that
Speaker 5: a bunch of losers were using them to take pictures
Speaker 5: of the skirts of women, you know, as they commuted
Speaker 5: to work on the subway. We didn't not a love
Speaker 5: the smartphone. We didn't make smartphone makers apply for a
Speaker 5: license to use a camera. We didn't make all of
Speaker 5: us apply for a license to have a camera equipped smartphone.
Speaker 5: Around the states anyway, lots of legislatures acted really quickly
Speaker 5: to make that particular use of the phone illegal. The
Speaker 5: best response to the harms that come up is my
Speaker 5: preferred approach for dealing with these. I don't trust me
Speaker 5: or you or anybody else to sit around right here
Speaker 5: and correctly anticipate all of the things that will happen
Speaker 5: and all of the effective ways to head that off.
Speaker 5: I just don't.
Speaker 6: All right, We're going to leave it on that note.
Speaker 6: I'm so glad we got some more time with you.
Speaker 4: Andrew McAfee, principal research scientist at MIT, author of a
Speaker 4: new book, The Geekway, The radical mindset that drives extraordinary results.
Speaker 4: Also the visiting fellow and Technology and Society over at Google.
Speaker 4: Joining us on zoom from Boston. Andrew, thank you so
Speaker 4: much for be well.
Speaker 3: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 1: It's the most wonderful time.
Speaker 6: With the kids, all right, everybody.
Speaker 4: So, there are a lot of retail earnings that have
Speaker 4: crossed the Bloomberg terminal, but we do want to go
Speaker 4: to there, and those were earlier in the session, but
Speaker 4: we do want to mention. We just talked about Nordstrum,
Speaker 4: and really what is kind of freaking investors out here
Speaker 4: in the aftermarket is the company's outlook seeing fiscal year
Speaker 4: just at EPs of a dollar ninety to two ten.
Speaker 4: They had seen one eighty to two twenty and Tim,
Speaker 4: we've been covering it, but the stock. Let me just
Speaker 4: pull it up.
Speaker 6: It is down well now, it's.
Speaker 4: Just actually a little higher, up about nine tenths of
Speaker 4: a percent in the aftermarket, but it's bouncing around. It
Speaker 4: was selling off earlier, but we had a lot of
Speaker 4: retail earlier today as well.
Speaker 1: Yeah, Low's shares took a hit after the company cut
Speaker 1: it's annual forecast. Best Buy slumped after reporting third quarter
Speaker 1: comp sales that trailed the average analyst estimate. Coals tanked
Speaker 1: earlier today after the company reported third quarter sales. Dick's
Speaker 1: Sporting Goods. It was kind of mixed bag, although I
Speaker 1: guess you could say kind of Dix was the outlier here.
Speaker 1: It raised its profit forecast.
Speaker 7: Uh.
Speaker 1: You know, and I mentioned that story that richer Americans
Speaker 1: are starting to pull back on their spending. There's a
Speaker 1: lot of questions and a lot to get to when
Speaker 1: it comes to the strength of the American consumer.
Speaker 4: I think that's a really important one because we talk
Speaker 4: about trading down. Mary Lou Gardner has a lot to
Speaker 4: say about the retail sector. She's Associate Partner for Consumer
Speaker 4: Packaged Goods, Retail and Logistics at Inphosis Consulting. She joins
Speaker 4: us on Zoom from Naples Florida, Mary Lou how's the
Speaker 4: retail group doing? And I know it's not oranges to orange,
Speaker 4: not everybody has the same story, but how would you
Speaker 4: sum up the retail sector and how is the US
Speaker 4: consumer doing?
Speaker 8: Well?
Speaker 9: You know, the US consumer is still feeling that tremendous
Speaker 9: pressure from three areas, the rising interest rates, the credit
Speaker 9: card debt has gone through the roof, and the savings
Speaker 9: that they had coming out of the pandemic has you know,
Speaker 9: really decreased or deflated, and so they're getting more anxious
Speaker 9: every day what to spend, where to spend it, and
Speaker 9: their decisions in terms of discretionary spending are getting more
Speaker 9: regimented every single day.
Speaker 1: So does any of this surprise you what we heard
Speaker 1: from these companies not just in the last ten minutes,
Speaker 1: but in the last twenty four hours, Dick sort of experience.
Speaker 8: No.
Speaker 9: I mean, I think we had some leading indicators with
Speaker 9: Target and Walmart last week as well. Right, they saw
Speaker 9: that in October spending really started to slow down in
Speaker 9: the back half, which gets everyone nervous for the holiday
Speaker 9: selling season where retail you know, that's their bread and butter.
Speaker 9: And right now, the forecast for the retail selling season
Speaker 9: is that it's going to be the slowest in the
Speaker 9: slowest growth in the past five years, only expected to
Speaker 9: be up three to four percent. So I think, you know,
Speaker 9: what you're starting to see is they're looking forward for
Speaker 9: the next three months based off of even what they've
Speaker 9: seen in October and said this could be a little
Speaker 9: bit of a year for us. We're not going to
Speaker 9: get the profits we thought, and we're not going to
Speaker 9: see the salts or they're going to be spread out
Speaker 9: over time.
Speaker 4: What does holiday hiring trends tell us about the holiday season?
Speaker 9: Well, I mean, the NRF also has said that they
Speaker 9: expect that trend to be down about forty percent, and
Speaker 9: what we've.
Speaker 6: Seen so far, we said forty percent.
Speaker 9: Forty percent from from twenty twenty one, which was that
Speaker 9: recent high. So Walmart's a perfect example. They have not
Speaker 9: hired any seasonal hires.
Speaker 1: Wow, so I remember seeing Amazon hiring tens of thousands,
Speaker 1: But that's typically what.
Speaker 6: It does, right, That's what it typically does.
Speaker 9: You know what it's mostly You know, we haven't heard
Speaker 9: from Amazon that they haven't been hiring. Macy's cut down
Speaker 9: their hiring significantly across the board. There are just less
Speaker 9: there's you know, three hundred and forty five thousand to
Speaker 9: four hundred and forty five thousands what they're predicting, which
Speaker 9: is forty percent down from twenty twenty one.
Speaker 4: So you mentioned it to the peak of twenty twenty one.
Speaker 4: How does this compare to twenty nineteen, because I'm trying
Speaker 4: to figure out how much is just getting back to normal,
Speaker 4: how much is there's something going on consumers are feeling pressured,
Speaker 4: which certainly seems to be the case at this point
Speaker 4: because it feels like there's more and more evidence of that.
Speaker 4: But give me an idea of how this what we
Speaker 4: are seeing and how it compares to twenty nineteen pre pandemic.
Speaker 9: I don't have the exact twenty nineteen numbers, but this
Speaker 9: slowdown is so significant in the hiring, and you know,
Speaker 9: there's the combination of the shift to e commerce, so
Speaker 9: there's probably maybe more hiring there less right in the
Speaker 9: retail brick and mortar, you know, with you know, using
Speaker 9: Amazon as one of the examples, but it still is.
Speaker 9: It's concerning in a couple of ways that if you
Speaker 9: think about how retailers have spread, like kind of the
Speaker 9: importance of the holiday season and they keep pulling it
Speaker 9: forward and pulling it forward. I think the consumer's got
Speaker 9: some fatigue and along with the pressures. So if retailers
Speaker 9: are not hiring, which is what we've seen, and I
Speaker 9: don't know the exact numbers to twenty nineteen, I can
Speaker 9: get them for you another time, but it would show
Speaker 9: to me that this that drop of thirty up to
Speaker 9: forty percent is nothing we've ever seen before. It would
Speaker 9: shift by ten to fifteen percent over the years depending
Speaker 9: what was happening in the economy. But we have that,
Speaker 9: like I said that, you know, triangulation of that pressure
Speaker 9: on the consumer, and you know, I know a lot
Speaker 9: of people that have said that they're pulling back as well,
Speaker 9: and people who can well afford to were just there's
Speaker 9: so much economic uncertainty, as we all know, and it
Speaker 9: just makes people nervous.
Speaker 1: You know. I got to ask you, and I know
Speaker 1: you're not a markets person, I know you cover retail,
Speaker 1: but there is this there does seem to be this
Speaker 1: disconnect from what we're seeing in equity in the bond
Speaker 1: markets in terms of the way that people are thinking
Speaker 1: where we are in the economy and where the feed
Speaker 1: is based on what you know and what you see
Speaker 1: in your work as a consultant who covers retail, would
Speaker 1: you say that we're in a recession or a recession
Speaker 1: is on the horizon.
Speaker 6: And maybe like a consumer like consumer spending.
Speaker 1: Recession, consumer economy.
Speaker 9: Correct, but the consumers are on the brink of I
Speaker 9: think the consumer spending is on the brink of a
Speaker 9: recession based off of all of the concerns and all
Speaker 9: the noise we hear about, you know the fact that
Speaker 9: debt has gone up significantly and people have lost their savings.
Speaker 9: They have to stop spending at some point.
Speaker 6: Right, we talked about yesterday people tapping into the four
Speaker 6: oh one ks.
Speaker 1: Today wealthier people, you know, training down essentially.
Speaker 4: So what does this mean in terms of retail names,
Speaker 4: more fallout, more consolidation. I don't know, how do you
Speaker 4: think about that?
Speaker 9: Yeah, I definitely think we're going to see some fallout.
Speaker 9: I mean, it was listen to you earlier about the
Speaker 9: whole Nordstrom UH announcement, and that's been on the brink
Speaker 9: of disaster for a while now. And when when you
Speaker 9: start to see and you know, the prestige market has
Speaker 9: has definitely collapsed and has been challenged. So if that
Speaker 9: market collapses, and then in between we've had the consolidation
Speaker 9: and we've had kind of the Amazon takeover happening. We're
Speaker 9: going to see, you know, a continue to see a
Speaker 9: shift in what the retailed landscape looks like and how
Speaker 9: it's defined and less about brick and mortar, more about
Speaker 9: e commerce. But what it looks like today and what
Speaker 9: it looks like three years from now, I think is
Speaker 9: going to be very very different, similar to what we
Speaker 9: saw coming out of the pandemic.
Speaker 1: That's that's so, I mean, I'm I'm really hearing a
Speaker 1: lot of concern from you. What are you telling clients
Speaker 1: in order to do? What are you client telling clients
Speaker 1: to do in order to prepare for where you see
Speaker 1: they consume are going?
Speaker 9: So getting really really smart about understanding your consumer, your
Speaker 9: consumer preferences, your consumer shopping behaviors, what are they responding
Speaker 9: to right now? Leveraging more of our AI and mL
Speaker 9: to really understand and be targeted in your assortment, Be
Speaker 9: very discreet, and not carry too much inventory. I mean,
Speaker 9: you've seen over the years retailers have gotten themselves into
Speaker 9: a lot of trouble around the inventory levels, and there's
Speaker 9: been some whispers that they're concerned about that again this year.
Speaker 9: Potentially that if the spending doesn't happen as people had
Speaker 9: hoped it was going to happen, they'll be hung with
Speaker 9: inventory and we'll have heavy disk markdowns again. So another
Speaker 9: cyclical problem.
Speaker 6: Interesting.
Speaker 9: So we're trying to tell people to be really smart
Speaker 9: about that and be targeted and be thinking about it
Speaker 9: now right even before you get to the end of
Speaker 9: the season, and be hung with all that inventory.
Speaker 6: Interesting.
Speaker 4: Interesting, I'm so great to talk with you so Timeley
Speaker 4: Mary Lou Gardner, Associate Partner for Consumer Packaged Goods, Retail
Speaker 4: and Logistics overfac Consulting.
Speaker 6: Joining us on zoom.
Speaker 3: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 3: just say Alexa playing Bloomberg eleven thirty.
Speaker 4: All right, folks, Tim and I have just been pouring
Speaker 4: over this Nvidia press release. Stock still down a little bit,
Speaker 4: about nine tens of a percent in the aftermarket, but
Speaker 4: it was taking a little bit of a bigger hit earlier.
Speaker 4: So let's get to it. Because back with us is
Speaker 4: Dan Morgan, so glad to have them with us. Follows
Speaker 4: the tech sector, and obviously and Vidio he's senior portfolio
Speaker 4: manager at Sonova's Trust.
Speaker 6: He's on the phone from Atlanta.
Speaker 4: Dan, help us out here, because it looks like it's
Speaker 4: a big beat on.
Speaker 6: A lot of level.
Speaker 1: I mean, expectations were really high, okay, but they.
Speaker 4: Met them and then some stock still down about nine
Speaker 4: tens percent, one percent off the lows in the aftermark market.
Speaker 4: Tell us about the quarter that was in the outlook.
Speaker 7: Hi, Carol high Tim. You know, if you look at
Speaker 7: these numbers, at least the headline numbers, it's hard to
Speaker 7: find a flaw, right, because they beat on revenue for
Speaker 7: the third quarter eighteen point one two billion versus sixteen
Speaker 7: point one eighth and then they their estimate going into
Speaker 7: the fourth quarter was twenty billion plus or minus two percent.
Speaker 7: Consentius was around seventeen point eight one billion. Huge beat
Speaker 7: in data center, which is where the AI chips are housed,
Speaker 7: coming in at fourteen point five billion versus about twelve
Speaker 7: point eight billion. That's a forty one percent increase year
Speaker 7: over year and you know, earnings were a beat, So
Speaker 7: to be honest with you guys, this stock traded up
Speaker 7: in anticipation of blowout numbers because I don't want to
Speaker 7: say anything leaked out, but there were a lot of
Speaker 7: reports saying that channel checks were showing that they were
Speaker 7: doing very well in terms of selling their AI chips,
Speaker 7: and I just think that it's you know again, Caroll
Speaker 7: and Tim with those situation is where it's like buy
Speaker 7: on the rumors, sell on the news because I can't
Speaker 7: see the flaws in this report.
Speaker 1: What about the China element? Here? One of the headlines
Speaker 1: that we have on the Bloomberg terminal in Video saying
Speaker 1: that it expects sales of sales to China to decline
Speaker 1: significantly in the fourth quarter, but the decline will be
Speaker 1: offset by growth in other regions. How should investors take
Speaker 1: that information?
Speaker 7: We're right, Tim, you know, China is probably going to
Speaker 7: be the major focus on this upcomings conference call. Everyone's
Speaker 7: going to be asking about their China business. We know
Speaker 7: that in Video generates about twenty to twenty five percent
Speaker 7: of their sales from China. There are two core ships
Speaker 7: that they sell an AI which is the H one
Speaker 7: hundred and the A one hundred have Chinese equivalent H
Speaker 7: eight hundred and A eight hundred. We also know they
Speaker 7: have a slew of new chips coming out that are
Speaker 7: going to be focused just on the Chinese market, that
Speaker 7: are supposed to meet all these new restrictions. So yeah,
Speaker 7: I think that quote Tim, because that's kind of in
Speaker 7: the the act of everybody's mind in terms of little
Speaker 7: worry surrounding in video, and the fact that they mentioned
Speaker 7: it on the initial report, I think raises the big
Speaker 7: red flag and that could be why Tim and Carroll
Speaker 7: will seeing the stock kind of sell off a little
Speaker 7: bit on this news.
Speaker 1: Yeah, you bring up a good point about where the
Speaker 1: revenue comes from. If you have Bloomberg terminal, all you
Speaker 1: got to do is type in FAGO on the terminal
Speaker 1: and you go over to segments by geography, and you
Speaker 1: can see that foreign revenue accounts for about sixty nine
Speaker 1: point three percent of the company's total revenue in the
Speaker 1: in twenty twenty three. Carol, twenty five point nine percent
Speaker 1: of that came from Taiwan. A wopping, let's see twenty
Speaker 1: one point four percent of that came from China.
Speaker 4: But what's interesting, I want to go back to the outlook,
Speaker 4: they talked about revenue in the current period about twenty billion,
Speaker 4: I think give or take.
Speaker 6: What was it, two percent?
Speaker 1: Yeah, two percent upside.
Speaker 4: Downside are Ian King writing that the estimate that some
Speaker 4: were projecting was as much as twenty one billion?
Speaker 1: Was it?
Speaker 4: Like you said, just the case of that, people just
Speaker 4: wanted more, expected.
Speaker 7: More, you know, Carol and Vidios turned to the poster
Speaker 7: dog for Whisper numbers, right, Remember the.
Speaker 6: Whisper We used to talk about that.
Speaker 7: Yeah, yeah, we used to talk there was an estimate
Speaker 7: and then there's the Whisper numbers. So we're back to
Speaker 7: the Whisper numbers. It sounds like with m video. So yeah,
Speaker 7: I think you're right, even though it's a huge beat,
Speaker 7: right because the as estimate was seventeen point eight one billion. Again,
Speaker 7: they keep putting these matrix to go higher and higher
Speaker 7: and higher, and it just gets to the point where
Speaker 7: you know, you just can't please.
Speaker 4: Right, to be fair, the stock's now up about eight
Speaker 4: tens of a percent in the aftermarket, So it's like
Speaker 4: some where somebody like slapped somebody on the face and said,
Speaker 4: did you look at the numbers?
Speaker 1: But maybe, I mean maybe maybe in look it's tough
Speaker 1: to look at what happens. You know, winternings come out
Speaker 1: before the call and before the market's open in the morning,
Speaker 1: so we you know, take yeah, take moves. It's early.
Speaker 1: We take the moves of the grain of self. But maybe, Carol,
Speaker 1: you know, there were some there, maybe there was a
Speaker 1: block trade, or maybe people saw this as an opportunity
Speaker 1: just off of you know, all time highs to sell stock.
Speaker 6: I't no, that's fair, that's fair.
Speaker 4: Having said that, Dan, I do wonder, you know, when
Speaker 4: I think about Nvidia, I'm like, well, who's going to
Speaker 4: take share from Nvidia?
Speaker 6: Who will?
Speaker 7: Yeah? And that's that's an interesting question because if you
Speaker 7: look at the data center space right now, their total
Speaker 7: revenues that they generate is about twice of the combined
Speaker 7: competitors right which is Intel, AMD, Marble. But they do
Speaker 7: have companies like MD, like Marble that are coming out
Speaker 7: with new chips that are going to be introduced in
Speaker 7: that space. Intel has Falcon stores. They also have their
Speaker 7: Habana which is supposed to be coming out here soon.
Speaker 7: So I think that may be another thing that's on
Speaker 7: a lot of people's minds, which is, you know, right
Speaker 7: now on video is seventy eighty percent as you know
Speaker 7: of the AI chip market. Really, these other companies have
Speaker 7: been a little bit slower to come out with their
Speaker 7: competing chips, but they are coming down the road, right.
Speaker 7: AMD has the mi I three hundred, You've got Marvel
Speaker 7: Technologies which has already introduced their PM four DFP. So
Speaker 7: will they be able to be still the king of
Speaker 7: the mountain, right or are they going to have to
Speaker 7: share a little bit of market share with some of
Speaker 7: these other companies. And there are flw of chips that
Speaker 7: are going to be coming out here in the next
Speaker 7: six to twenty four months from some of these competitors
Speaker 7: that I mentioned, and it'll be interesting to see if
Speaker 7: maybe buyers want to start using an am d jip.
Speaker 1: Okay. I got to ask you this because everything this
Speaker 1: week comes back to Sam Altman, but I mentioned this earlier,
Speaker 1: Dan and Amid the drama over the reporting of Sam
Speaker 1: Alman's auster at open AI last week and the ongoing
Speaker 1: discussions that our team is reporting that he's having with
Speaker 1: the board of open AI to return, we learned that
Speaker 1: Sam Altman was had some outside projects. He was trying
Speaker 1: to raise money for a chip competitor to take on
Speaker 1: in VideA. Could a startup actually emerge to take on
Speaker 1: in VideA?
Speaker 7: You know, Tim, I think it would just be really
Speaker 7: tough because, you know, we Carol and I always followed
Speaker 7: in video. We thought it was a big gaming chip,
Speaker 7: and they had all the cash cow and money that
Speaker 7: was coming in from that. They use that to leverage
Speaker 7: it to go into the AI space. So it would
Speaker 7: be really hard to take on the likes of some
Speaker 7: of these companies that we mentioned, just because of the
Speaker 7: sheer size and the amount of cash they have. I
Speaker 7: don't think they could raise enough money. So I'm not
Speaker 7: as worried about a startup like the one that you mentioned.
Speaker 7: I'm more thinking in terms of some of the older
Speaker 7: names that have these new chips coming out.
Speaker 4: Okay, so just got about a minute and a half left.
Speaker 4: What would you ask on the conference call? You mentioned
Speaker 4: about China coming up? But what is front of mind
Speaker 4: or for you in terms of the Nvidia story.
Speaker 7: Dan, Well, the China issue which we mentioned, and also
Speaker 7: how does Nvidia continue to defye gravity in regards to
Speaker 7: the data center space? Right? We know that asier we
Speaker 7: look at all these competing in IAS programs in terms
Speaker 7: of AWS and GCP. We're seeing growth rates slowing down,
Speaker 7: and yet we see continued increase spending towards Nvidia, the
Speaker 7: AI space and the data center. So will they eventually
Speaker 7: fall suit to this slowdown? So obviously getting a little
Speaker 7: bit more information about how they're seeing the data center
Speaker 7: space and why they're growing when everyone else is deaccelerating.
Speaker 4: Would you buy or sell on this news today? Just
Speaker 4: got about twenty seconds left here.
Speaker 7: Yeah, Carol, and Vidia has been a long time stock
Speaker 7: on our buy list. Obviously for clients that have the
Speaker 7: proper investment objective or risk tolerance and they don't own
Speaker 7: it, it would be something that we look at. You know,
Speaker 7: stock's not crazy. It's forty five times fiscal year twenty
Speaker 7: twenty four earnings and we're already going in the fourth quarter.
Speaker 7: So everybody hangs their hat on that trailing multiple. But
Speaker 7: it's not that overpriced if you look at the Ford
Speaker 7: growth rate expectations sometimes.
Speaker 1: Of earnings only of two hundred and forty percent this year, Carol, Yeah,
Speaker 1: stock still dead about one percent, but it is like
Speaker 1: you look at the dynamic growth that we continue to
Speaker 1: see at this company.
Speaker 4: Dan Morgan have a great evening and a great holiday.
Speaker 4: Dan Morgan over at Sonova's Trust.
Speaker 3: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 1: It's time out for another edition of Bloomberg Plugged In.
Speaker 1: It's your weekly book at Ed's, and all is not
Speaker 1: well when it comes to the world of EV's. Earlier today, Carol,
Speaker 1: we got the news that Ford is reducing capacity and
Speaker 1: hiring plans at a battery plant that it's building in
Speaker 1: Michigan because it sees weaker demand for EV's. Remember, sales
Speaker 1: off it's signature F one fifty lightning plug and pickup
Speaker 1: fell forty six percent in the third quarter.
Speaker 4: All right, So let's see what Brendan Joan has to
Speaker 4: say about that. He is president and CEO at Blank Charging.
Speaker 4: It's a two hundred and forty one million dollar marketcap
Speaker 4: company trades on the NASDAK. It of designs, makes, owns,
Speaker 4: and operates EV charging stations, and the company says it's
Speaker 4: contracted soldier deployed nearly eighty five thousand charging ports around
Speaker 4: the world. He joins us on zoom from Miami Beach.
Speaker 4: Excuse me on the phone from Miami Beach, Florida. Hey, Brendan,
Speaker 4: great to have you here with us. Doc took a
Speaker 4: hit today, down about seven percent, your dad about sixty
Speaker 4: seven percent year today. Before we talk about the business,
Speaker 4: because you guys had a good quarter, what are you
Speaker 4: hearing from your investor relations teams about what's going on?
Speaker 4: Why is the share pricing so much pressure to the downside.
Speaker 8: So yeah, I think the whole industry, if we look
Speaker 8: at the EV charging industry and then more broadly at
Speaker 8: the EV industry in general, we've been under a lot
Speaker 8: of pressure for the past year. There's a marked difference
Speaker 8: from the frothy years that we saw about eighteen months
Speaker 8: plus ago to where we are now, and all the
Speaker 8: infrastructural companies seem to be suppressed at a much lower valuation.
Speaker 8: And if you listen to the advisors, you know what
Speaker 8: everybody's saying is the same thing. It's great to be
Speaker 8: a growth company, but we're focusing on profitability now. So
Speaker 8: you've got to continue to grow and you've got to
Speaker 8: give us a definitive path towards profitability, and that's what
Speaker 8: we've done on blank. We give them the timeline and
Speaker 8: a target and we intend to get there by December
Speaker 8: of twenty twenty four.
Speaker 1: Well, you're not going to grow if they don't grow
Speaker 1: the number of evs that are out there significantly. And
Speaker 1: I think that's an important thing that I want to
Speaker 1: get from you, Brendan, is what's going on with with EV's.
Speaker 1: I thought evs were the future, and now on some
Speaker 1: dealership lots they can't get rid of these things fast enough.
Speaker 8: Yeah, I mean, there's some micro issues in the in
Speaker 8: the industry, but when we look at aggregate sales both
Speaker 8: globally in the United States, they're up year over year
Speaker 8: and continue to be up. Eight percent was the sales
Speaker 8: pen rate on a US basis. In California, it was
Speaker 8: twenty two percent. In one of the earlier months of
Speaker 8: the quarter, it was actually at twenty five in California.
Speaker 8: You know, California has the twenty thirty five mandate of
Speaker 8: nothing but internal of EV's can be sold in the state,
Speaker 8: and several other states have adopted that same thing. So
Speaker 8: I think we're certainly seeing a little bit of a
Speaker 8: downplay in the sales volume. But over time, you know,
Speaker 8: based on regulation and OEM commitment, well, we're going to
Speaker 8: see an uptick. And when you look at the broader numbers,
Speaker 8: you know, we're looking at a twenty thirty number of
Speaker 8: just thirty five percent EV penetration rate, and that would
Speaker 8: necessitate a need for thirty million chargers within the United
Speaker 8: States alone. So while there's some blips right now, we're
Speaker 8: still encouraged by the overall economic positiveness of the whole space,
Speaker 8: especially the states that are mandating evs and zero sales
Speaker 8: of internal combustion engines.
Speaker 4: Brendan unfortunately only have about forty five to fifty seconds
Speaker 4: left here. How do you compete though, with the likes
Speaker 4: of Tesla that continues to open up its charging network
Speaker 4: and capabilities to other automakers.
Speaker 8: Yeah, well, Tesla is primarily a DC fast charge. Our
Speaker 8: owner operated model BLINK is a full on vertically integrated
Speaker 8: sales model where we sell chargers. The majority of the
Speaker 8: chargers we sell are L two chargers and we own
Speaker 8: and operate them as well. So Tesla is primarily highway
Speaker 8: based charging. We provide charging in the metro, we provide
Speaker 8: charging in the home. We for charge charging a multi
Speaker 8: family dwelling, and we do it when we install an
Speaker 8: our operator as far less the cost the expense of
Speaker 8: DC fast charging. So it's a completely different business model.
Speaker 8: But we'll also be deploying chargers that can charge Teslas
Speaker 8: and if we look more broadly at what our number
Speaker 8: one customers who plugs in the blank bloom Tesla.
Speaker 4: Drivers listen, Promise to come back soon when we have
Speaker 4: a little bit more time. We would love to continue
Speaker 4: this conversation. Brendan Jones is the President CEO at Blink Charging,
Speaker 4: joining us on the phone from Miami Beach, Florida. We
Speaker 4: continue to watch Nvidia in the aftermarket now just down
Speaker 4: about nine tenths of a burs set, looking for some
Speaker 4: headlines coming off of that analyst call.
Speaker 6: Will continue to monitor.
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