Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
Speaker 1: from coast to coast with Caroline Hyde in New York
Speaker 1: and Ed Lovelow in San Francisco.
Speaker 2: This is Bloomberg Tech coming up.
Speaker 3: Belon Musk rejects another Wall Street convention, sets a fixed
Speaker 3: price for his space xipo ahead of the marketing phase
Speaker 3: of the deal. The plan offer shares at one hundred
Speaker 3: and thirty five dollars a piece.
Speaker 4: Plus Palo Alto Networks falls after the company reported its
Speaker 4: results failing to meet really elevated by side expectations. This
Speaker 4: following a more than six percent run to date.
Speaker 3: And candidates backed by tech billionaires and founders fell short
Speaker 3: in California's primary elections. Yesterday. We break down the results
Speaker 3: and what it means for Silicon Valley.
Speaker 4: But let's check in on what current geopolitics means for
Speaker 4: this market.
Speaker 2: We take a breather.
Speaker 4: We have been at record high after record high, have
Speaker 4: been on a nine day tair. The NASDAG have been
Speaker 4: up for four straight training days. Today we pause rob
Speaker 4: By just a tenth percent. Of course, Front and Center
Speaker 4: is maybe conflict rumpting once more, A little bit that
Speaker 4: sees far under pressure between the US and Iran. All
Speaker 4: those higher bonialds they go higher. Stocks just pull back
Speaker 4: a little bit ed.
Speaker 2: But what are you.
Speaker 3: Watching, skit today's big number eighty four point seventy five billion.
Speaker 3: Alphabet is upsizing It's equity raised to that level, up
Speaker 3: from the previously announced rays of eighty billion dollars. All
Speaker 3: this to fund its AI infrastructure expansion. Interesting like this
Speaker 3: is a multi day story. The stock's basically flat, but
Speaker 3: is an element of dilution, the main point being parts
Speaker 3: of the equity offering really oversubscribe to Alphabet's saying okay,
Speaker 3: we'll do a little bit more. Google's lay is fundraising.
Speaker 3: There's a race happening here, guys. Highlights this scramble for
Speaker 3: capital in the Aire, and now SpaceX is taking things
Speaker 3: a step further. Elon Musk company is planning a seventy
Speaker 3: five billion dollar IPO and has already set a fixed
Speaker 3: share price ahead of the traditional roadso process. Another sign
Speaker 3: Musk is willing to rewrite Wall Street's playbook. That's all
Speaker 3: according to sources. Bloomberg's caffriin dollarities here with more.
Speaker 2: It's been.
Speaker 3: Well, a bit of a well in few days, So
Speaker 3: we report it's one hundred and thirty five dollars a share,
Speaker 3: five hundred and fifty six point five million shares. Do
Speaker 3: the math, they'll raise seventy five billion dollars. That's not
Speaker 3: how this typically works in an IPO process.
Speaker 5: Why No, Typically a company that's looking to list in
Speaker 5: the US markets is going to look at a range.
Speaker 5: They're not going with a firm number like this one
Speaker 5: hundred and thirty five that you're referencing. And that's because
Speaker 5: in the next week or so there's a lot of
Speaker 5: things that could change. This is supposed to be a
Speaker 5: marketing process, but locking in a price of one hundred
Speaker 5: and thirty five dollars a share is giving some sort
Speaker 5: of certainty. It's giving a signal to the market of
Speaker 5: what to expect. We're expecting that next week, by around
Speaker 5: the eleventh is when we could see these SpaceX shares
Speaker 5: come to market, But even leading up to it, it's
Speaker 5: just another indication of the difference in the approach that
Speaker 5: SpaceX and Musk's team are taking at this time.
Speaker 4: I mean, there is some precedent for doing it this way, Catherine,
Speaker 4: just not of.
Speaker 5: This size, right, absolutely so, smaller companies can take this
Speaker 5: route that SpaceX is looking like it will, but it
Speaker 5: is not typical for a company, especially given that this
Speaker 5: is supposed to be the largest listing on record. So
Speaker 5: it's taking just some unconventional roots. But you're absolutely right,
Speaker 5: it's not the first time or likely the last, especially
Speaker 5: for companies of smaller sizes.
Speaker 4: I mean, and you've been at the forefront of reporting
Speaker 4: each tick by tick when it comes to what's happening
Speaker 4: with en On Musk and SpaceX more broadly. But isn't
Speaker 4: there there are a lot of cooks in the kitchen
Speaker 4: right now. How we understanding is to what this price
Speaker 4: point means and what it means for all of those friends, family,
Speaker 4: those are about to potentially becomes well.
Speaker 3: The price point is interesting. So one hundred and thirty
Speaker 3: five dollars to share is a twenty eight percent premium
Speaker 3: from when they did a stock split on May the fifteen,
Speaker 3: So basically SpaceX's shares were above five hundred dollars in
Speaker 3: the private market, so it did a five for one
Speaker 3: took it down to one hundred and five at the
Speaker 3: valuation of one point twenty five trillion. So this is
Speaker 3: like math, it's kind of you know, a little bit dry.
Speaker 3: But the point is is that the share price at
Speaker 3: one thirty five is not keeping up with the jump
Speaker 3: in valuation. There's dilution there, but the friends and family
Speaker 3: that'll get an allocation, all of the mechanics are still
Speaker 3: in place, like traditional IPO stuff. The roadshow will happen,
Speaker 3: it will price in the normal way. You're just saying, like,
Speaker 3: here's the number. It's a very very unusual situation, by
Speaker 3: the way, Bloomerskaarn dotty, thank you very much. Top recording.
Speaker 3: As always, some news crossing the terminal as well. Elon
Speaker 3: Musk's ai company Xai has paused hiring for professionals to
Speaker 3: train its groc chatbot on a range of specialized skills.
Speaker 3: That's according to sources, who say the decision is at
Speaker 3: least partly to concerns that the company's HR department is
Speaker 3: overwhelmed and often unable to process new candidates. Read that
Speaker 3: one on the Bloomberg.
Speaker 2: Carat we always will.
Speaker 4: Meanwhile, read on the Bloomberg just how these markets are performing? Look,
Speaker 4: you know the S and P five hundred had been
Speaker 4: writing a really powerful winning streak.
Speaker 2: It was up for nine straight days.
Speaker 4: Maybe it's nine straight weeks stocks a record hires as
Speaker 4: of yesterday. Next guest saying, look, we are just actually
Speaker 4: at the infancy of this AI industrial revolution. Joining us
Speaker 4: now with her outlook Rebecca Wels CEO, Chief Investment Officer,
Speaker 4: whilst the wealth management and look we take a breather today,
Speaker 4: it's more about geopolitics, Rebecca. But how when we have
Speaker 4: five trillion dollar companies and we have Alphabet tapping the
Speaker 4: market for eighty five billion dollars let's call it. How
Speaker 4: is that not some sort of sign that we're kind
Speaker 4: of nearer the end than the beginning here.
Speaker 6: No, I don't think so, Caroly.
Speaker 7: I think this is the very very beginning stages of monetization.
Speaker 7: Now we I've seen some financing changes. I think Alphabet
Speaker 7: Google is just trying to get ahead of the three
Speaker 7: huge IPOs. Obviously just talked about SpaceX, the largest IPO
Speaker 7: in history, will be the largest company valuation and the
Speaker 7: entire world.
Speaker 2: So that in and of itself is just crazy.
Speaker 7: Then you follow that with opening AI and anthropic googlegle
Speaker 7: once to get more money. If you look at the hyperscalers,
Speaker 7: they're usually writing about a little under thirty billion of
Speaker 7: bonds a year and last year in twenty twenty five,
Speaker 7: they wrote one hundred and twenty one billion. So we're
Speaker 7: starting to see we can't get enough capital to do
Speaker 7: all of the investments the capex that we want, and
Speaker 7: so I think if we get the capex, we're going
Speaker 7: to keep seeing this market go up.
Speaker 2: It's the beginning stages.
Speaker 3: So, Rebecca, you are the capital or you're a part
Speaker 3: of the capital. Right, you have the alphabet equity raise SpaceX,
Speaker 3: IPO and tropics filed confidentially, a lot of debt financing,
Speaker 3: and then there's the Nvidia bit. Is this the fomo
Speaker 3: trade where you just have to have exposure to everything
Speaker 3: or do you pick a hole in the race and say, actually,
Speaker 3: in the end, why there are five lanes, but I
Speaker 3: only think three of them will will succeed.
Speaker 2: Yeah, that's a great question.
Speaker 7: It's so hard to pick the winners at the beginning
Speaker 7: stages of monetization because we don't know who what technologies
Speaker 7: are actually gonna win out or what methodologies. So I
Speaker 7: do think you have to sprinkle some capital kind of everywhere.
Speaker 2: But that's and you have to hold.
Speaker 7: You have to be willing, Like if you look at
Speaker 7: the monetization of Nasdak in the nineties we had you know,
Speaker 7: thirty thirty three percent overall, but we had fifteen pullbacks.
Speaker 7: So people need to understand that monetization is volatile and
Speaker 7: get the steal the band of steel to stay the
Speaker 7: course and to be in for at least the long haul.
Speaker 7: Most of our IPOs usually are you know, coming down
Speaker 7: in the first twelve months, so I think there's gonna
Speaker 7: be a lot of emotion. Possibly wait till the at
Speaker 7: least the insider lockups expire in six months, and then
Speaker 7: go in. But I do think if you're going to
Speaker 7: participate in the emotion of it, you're going to I
Speaker 7: want to feel the pressure pulling back. So I would wait,
Speaker 7: and I would buy in strategically, and I would keep
Speaker 7: my investment broad I.
Speaker 4: Mean, in many ways people come what may well have
Speaker 4: exposure to these names just by the very weight within
Speaker 4: certain benchmarks.
Speaker 2: But Rebecca, how much exposure do.
Speaker 4: You want outside of the US that the IPO frenzy
Speaker 4: is stealing the thunder when it comes to big US giants.
Speaker 4: But still we've seen significant outperformance over an Asian training
Speaker 4: for example.
Speaker 7: Yes, I definitely think that you've got things in Korea Obviously,
Speaker 7: you've got markets outside of the US that are going
Speaker 7: to be a part of AI, and I look really
Speaker 7: to the legislative policies. I'm really concerned about the Secure Act.
Speaker 7: If the banking lobby is successful and really pulling weight
Speaker 7: and teeth out of the stable corn in the United States,
Speaker 7: it will route elsewhere and that is going to be
Speaker 7: part of this whole AI monetization. We're changing our payment
Speaker 7: system to digital that's coming.
Speaker 2: So the United States.
Speaker 7: Seem to be a part of that and facilitating that
Speaker 7: and not trying to stop it and keep legacy systems
Speaker 7: in place because they are on their out. It's going
Speaker 7: to take time, but they are legacy, and we need
Speaker 7: to keep making sure the United States is the focal
Speaker 7: point of everything. But certainly I would pick up some
Speaker 7: international as well.
Speaker 3: Just what you said a minute ago, By the way,
Speaker 3: love that participate in the emotion of it. I'm not
Speaker 3: participating in the markets right for obvious reasons. Certainly participating
Speaker 3: in the motion and the emotion of what's going on.
Speaker 3: So now you've given me something to think about. There's
Speaker 3: statement as well, right. Jensen Mung's on stage again last
Speaker 3: night for the seventh time in five days saying that
Speaker 3: you would be insane if you didn't see the return
Speaker 3: on investment that is now real out in the world
Speaker 3: from AI, and that you would be foolish, you know,
Speaker 3: not to keep investing in the space. Do you see
Speaker 3: it as clearly as he does.
Speaker 2: Well, I was just.
Speaker 7: Excited that he was on stage saying here's the first
Speaker 7: laptop for an agentic AI agent Like I was like, yay,
Speaker 7: Now we're buying laptops for agents AI agents, not people.
Speaker 2: This is really interesting.
Speaker 7: Listen, this is the largest technological change and the history
Speaker 7: of human time. You can't be more hyperbolic and parabolic.
Speaker 7: With these equity prices going up, there is going to
Speaker 7: be volatility.
Speaker 2: It is going to pull back.
Speaker 7: But this is the largest opportunity for wealth creation and
Speaker 7: for people, average people to get in on it.
Speaker 6: Take only to.
Speaker 7: The risk that you can tolerate, but definitely participate in
Speaker 7: this and just know that you're going to have a volatility.
Speaker 7: Stay the course, that's the theme. Stay the course and
Speaker 7: you will be a winner in the long run. Financially. Anyways,
Speaker 7: we don't know about all the other bad side of AI,
Speaker 7: but the financial side positive.
Speaker 6: Wow.
Speaker 3: On debut, Rebecca Walsa, CEO and Chief investment officer of
Speaker 3: so Wealth Management on Bloomberg Tech. Hit every single story
Speaker 3: that we had to offer today, Thank you very much.
Speaker 3: Now coming up Palato Networks fools after the company failed
Speaker 3: to meet very elevated by side expectations. We got the
Speaker 3: earning story and a little chat about a pay package
Speaker 3: that's coming up next.
Speaker 6: This is Bloomberg Tech.
Speaker 4: Let's check in on Palo Alto Network shares down. They're
Speaker 4: actually having their worst day and let's call it a
Speaker 4: couple of months. April the tenth, we're off five to
Speaker 4: five percent, but that's such a cybersecurity firm.
Speaker 2: Actually reported really strong revenue growth.
Speaker 4: They've again been fueled by AI spending in the fiscal
Speaker 4: third quarter. It was up though against the Hima paralle
Speaker 4: Alto network shares. Look, they're up fifty three percent so
Speaker 4: far year today they were up sixty percent going into
Speaker 4: this release. Let's talk more with Bloomberg's editor covering cybersecurity, Linduan,
Speaker 4: and we've got plenty to talk about in the exec
Speaker 4: chair as well. But first talk about these numbers, because
Speaker 4: there was a lot of anticipation they raised, but it
Speaker 4: wasn't good.
Speaker 6: Enough, Karlin.
Speaker 8: It feels baffling at first, right, But as you noted
Speaker 8: just now, there was a huge run up in this
Speaker 8: dark ahead of the earnings. They have done amazingly since
Speaker 8: the beginning of the year. I think there was a
Speaker 8: lot of anticipation. I'm just going to call this like
Speaker 8: the Nvidia effect. From here on out right, you can
Speaker 8: beat on every single key metric, and that's what Palo
Speaker 8: Alto did. Every beat on revenue, earnings, outlook was solid.
Speaker 8: And yet your stock can still come down because of
Speaker 8: that run up, because analysts aren't really honest about what
Speaker 8: they want to see in those earnings, and because of
Speaker 8: the macro review, right. I mean, I'm sure that it
Speaker 8: doesn't help that the entire stock market is down on
Speaker 8: usc run news on top of all that bad timing
Speaker 8: for Palo Alto.
Speaker 3: Of course, one of the issues that shareholders have with
Speaker 3: the company, or as we put it, the recurring beef,
Speaker 3: is with the pay package of the CEO and other
Speaker 3: senior leaders. We ran this big feature twenty four hours
Speaker 3: ago explaining it.
Speaker 6: Explain it to us.
Speaker 3: You know, that's a really interesting issue, as I said,
Speaker 3: that's going on in the background.
Speaker 2: Isn't it.
Speaker 8: Now, This is an analysis that we did based on
Speaker 8: proxy data that is available on the Bloomberg terminal, and
Speaker 8: we went back several years to twenty fifteen, and what
Speaker 8: that revealed to us in a surprising way. We didn't
Speaker 8: expect to see this that Palo Alto Networks has seen
Speaker 8: more rejections on its say on pay votes, which cover
Speaker 8: executive compensation for that past year, than any other company
Speaker 8: in the SMP five hundred. They have seen seven total
Speaker 8: rejections by investors on those SAM pay votes since twenty fifteen.
Speaker 8: No other company in the EDIX comes close to that.
Speaker 4: The last vote I think was in December, and at
Speaker 4: that point I think more than half of shareholder has
Speaker 4: pushed back on the one hundred million dollars potentially coming
Speaker 4: Nick kesh Aora's way. But to be fair to the guy,
Speaker 4: the stock has added a market cap of one hundred billion.
Speaker 4: Is that sort of how they tend to say, Like, yes,
Speaker 4: he's paid more, actually more than some of the biggest
Speaker 4: CEOs in the world, like a Tim Cook, but a
Speaker 4: lot more is actually linked to the performance of the stock.
Speaker 2: You're raising.
Speaker 8: Such a good point, Caroline, and we actually hit that
Speaker 8: in the story because the story itself isn't even just
Speaker 8: about Palo Alto. It's about the effectiveness of these say
Speaker 8: on pay votes. And in fact, there have been reports
Speaker 8: done that suggest that investors like it and they like
Speaker 8: to compensate CEOs when the returns on their investments are strong.
Speaker 8: So in that way, Palo Alto and its CEO are
Speaker 8: a bit of an anomaly because Palo Alto has soared,
Speaker 8: as we just talked about, in the past year. In fact,
Speaker 8: they've soared in the past like six years. They've been
Speaker 8: on the rise since Aurora took over. I think they've
Speaker 8: added well over one hundred billion dollars in market cap, right,
Speaker 8: So you would think that their shareholders would vote supporting
Speaker 8: that compensation, but they are an exception to that rule.
Speaker 8: They have voted against it.
Speaker 3: Nikesha ROR's package is valued at like nearly one hundred
Speaker 3: million dollars, and one of the things you do in
Speaker 3: the story is compare it with some of the titans
Speaker 3: of corporate America. Right, So it's not just tech. You know,
Speaker 3: you've outlined the performance of the stock. Why is it
Speaker 3: that the shareholders think that number is too big relative
Speaker 3: to Nikesh's peers?
Speaker 6: Well ed?
Speaker 8: If you are comparing Nikesh and his pay packages to
Speaker 8: his peers, ISS would say, and Glass Lewis for that matter,
Speaker 8: both proxy advisory firms would say that it is not aligned.
Speaker 8: He is consistently paid well above his peers in the
Speaker 8: cybersecurity industry. What Nikesh would say, and what he did
Speaker 8: say in our story is that that's because he's been
Speaker 8: capable of delivering outsize returns. And in fact, if you
Speaker 8: look at Palo Alto Networks performance this year, it has
Speaker 8: performed well, far and above the rallies that you've seen
Speaker 8: from other major cybersecurity stocks in the US.
Speaker 3: Being mostly into bringing that story to life, thank you
Speaker 3: very much. Indeed, CEOs and a ings are also top
Speaker 3: of mind for Adobe investors. The creative software giant is
Speaker 3: under pressure from AI native rivals and is in the
Speaker 3: process of finding a new CEO to replace shantan In Iran,
Speaker 3: who's led the company for nearly two decades. Being the
Speaker 3: software reporter, Brody Ford joins us with reporting that there
Speaker 3: are two internal candidates in the running, but the company,
Speaker 3: Brody is also looking elsewhere.
Speaker 9: What do we know, Yeah, well, we know that Adobe
Speaker 9: needs a new CEO. They decide they stop nice. They
Speaker 9: you know, they are kind of one of the air
Speaker 9: examples of the saaspocalypse. Or investors have decided that AI
Speaker 9: might disrupt some of these leading software companies that enjoyed
Speaker 9: some of the best growth rates and margins for decades.
Speaker 9: And so Adobe announced back in March that they're going
Speaker 9: to do a whole search for a CEO. And what
Speaker 9: we have today is that they've zeroed in on two
Speaker 9: internal leaders, and they've also brought in one of tech's
Speaker 9: best known search firms to look for folks who might
Speaker 9: have a little more experience with cutting EDGI development.
Speaker 4: I mean talk to us about the internal leaders and
Speaker 4: where they were they stood to lead before in the
Speaker 4: business units. Because this is a company that probably, rather
Speaker 4: like Salesforce, a lot of the general revenue.
Speaker 2: Drivers are just flowing down.
Speaker 4: There's like a little bit of macro overhang.
Speaker 2: Companies aren't spending so.
Speaker 4: Much on software as much unless it is sort of
Speaker 4: directly AI related.
Speaker 9: The most obvious choice is somebody named David Wadwani. I mean,
Speaker 9: he's been the main deputy for quite a while for
Speaker 9: the largest chunk of the business. I think a lot
Speaker 9: of folks within Adobe assumed that he would just be
Speaker 9: the next CEO, and so the fact that they announced
Speaker 9: this big public search made some folks say, hmm, oh, well,
Speaker 9: maybe David isn't going to get it right. Our understanding
Speaker 9: is David certainly still could get it.
Speaker 4: You need to have an evident race, you know, you
Speaker 4: need to prove yourself that you are the right person
Speaker 4: for their job.
Speaker 3: Having at Disney as well, right like you know that
Speaker 3: you go in internal candidate, but you put a little
Speaker 3: pressure by saying, well, we're also looking at You said
Speaker 3: search for them, but you mean executive search, right, headhunters
Speaker 3: or that case.
Speaker 10: Do we know if there's anyone out there headhunters? Yeah,
Speaker 10: they're looking quite widely. One name that we have in
Speaker 10: the story is Microsoft's Charles Lamana. I mean, he's an
Speaker 10: ascendent executive at Microsoft. He helped some talks with Adobe,
Speaker 10: ultimately backed out of those, but it's an illustrative example
Speaker 10: of the kind of folks that Adobe's probably looking at,
Speaker 10: those who are seen as being able to kind of
Speaker 10: develop and monetize AI at the scale that you need
Speaker 10: to at a company like Adobe.
Speaker 4: What about Shantanou right now and how he guides it
Speaker 4: in this interim period where everyone's.
Speaker 2: Kind of just what kind of just holding all breath
Speaker 2: and to find out more.
Speaker 9: He's the chair of the board, so it's got to
Speaker 9: be a little awkward for him, right. I mean you
Speaker 9: have these two deputies. The other one Neil Chakravarti, he
Speaker 9: runs the other big part of the business. He's done
Speaker 9: very well that part of the business. While it's not
Speaker 9: what we think of as Adobe. It's marketing software, marketing
Speaker 9: and analytics software, which is you know, it's not Photoshop,
Speaker 9: but it's still a big money maker and it's grown
Speaker 9: quite a bit. You know, he has a Neil, and
Speaker 9: he has David Likely saying hey, pick me.
Speaker 6: I should be your next CEO.
Speaker 3: Soare going back spaces right? You know people will know
Speaker 3: Adobe because of Photoshop or PDF or some video editing
Speaker 3: equip software platforms. But the basic story is that a
Speaker 3: lot of that tool can be found free from some
Speaker 3: kind of generated AI platform.
Speaker 2: Right.
Speaker 3: So Adobe, you know, you and I've worked on this together.
Speaker 3: Right when we've we've sat down with Chantono in the
Speaker 3: last twelve months, is to say what are you good
Speaker 3: at here? Like are you using AI? Have they sort
Speaker 3: of dispelled those fears with investors? Where are people still
Speaker 3: saying oh, you know, the AI companies are coming for you.
Speaker 9: The big concern with Adobe is that their software is
Speaker 9: expensive when it's complicated hosting. If you're a professional who
Speaker 9: needs all the knobs, you're not leaving. But if you're
Speaker 9: somebody who wants to make a stupid meme and show
Speaker 9: your friend and photoshop them doing something silly, you might
Speaker 9: have bought Photoshop in the past, and you're probably not
Speaker 9: going to today. That's the big concern the verse.
Speaker 3: Brady Ford, thank you the real, really important read on
Speaker 3: what's going on with the Adobe CEO.
Speaker 6: Sir.
Speaker 4: Let's go out to the Bloomberg Global Credit Forum while
Speaker 4: Bloomberg savanas co host Elisa and Bromowitz is sitting down
Speaker 4: with Steve Tannenbaum's Golden Dry Asset Management founder and Cia
Speaker 4: take a listen.
Speaker 11: Yes, and it also is very competitive. There's hundreds of
Speaker 11: different managers out there. I remember when I started at
Speaker 11: Makay Shields, we were eighty nine out of ninety one,
Speaker 11: and within three years I was very proud we got
Speaker 11: to be number one.
Speaker 6: But that's a.
Speaker 11: Lot of people to compete against and so and you
Speaker 11: get your scoreboard every day. But more importantly, strategically, there
Speaker 11: was the mindset of why do people buy, why do
Speaker 11: they sell?
Speaker 6: And can you front run that?
Speaker 11: Can you predict if the premise if you're thinking of
Speaker 11: investments as maybe as short movies, and how's a movie
Speaker 11: going to end? And if your premise is that this happens,
Speaker 11: and this happens, can I sell?
Speaker 6: Who am I going to sell it to? And why
Speaker 6: are they going to buy it?
Speaker 11: And so, you know, part of that could be liquidity,
Speaker 11: part of it can be the stats. Why isn't somebody
Speaker 11: going to buy the four times levered software company that's
Speaker 11: growing at eleven percent? Sure they're going to be upset
Speaker 11: that they didn't buy it a twenty percent, but it
Speaker 11: was five and a quarter or five and a half
Speaker 11: times leverage back then, and the mindset was different. So
Speaker 11: I think that and if that looks attractive, for instance,
Speaker 11: just using an example to what else is in the
Speaker 11: market that's yielding ten percent or nine percent, there's going
Speaker 11: to be enough takers in that. So that so having
Speaker 11: that mindset's always been attractive and helpful. There's also the
Speaker 11: you know, you look at something like COVID and okay,
Speaker 11: how are people going to going to behave there was usually.
Speaker 11: I remember in mutual funds that when people got redeemed,
Speaker 11: they would sell what they could sell quickest, or what
Speaker 11: was most liquid. I always tried to sell my semi
Speaker 11: liquid product because I know I could never sell it
Speaker 11: in another week at this continued. So there's just different
Speaker 11: strategies to think about.
Speaker 12: So if you fast forward to now at Golden Tree
Speaker 12: Asset Management, how do you perceive the mentality right now
Speaker 12: in the masses or in the funds that you go
Speaker 12: up against?
Speaker 6: Sure, so there was a bigger question.
Speaker 11: We were talking just a few moments ago about the
Speaker 11: perspective on credit, particularly total return credit, and there's probably
Speaker 11: frustration because some other assets equities are participating significantly. In
Speaker 11: credit broadly speaking is in the low single digits, So
Speaker 11: there's frustration and anxiousness. How do I capture returns against
Speaker 11: that backdrop You have great current yields and still value
Speaker 11: when you subtract out versus the faults that justify being
Speaker 11: in credit.
Speaker 12: Just to have everybody participate, this is a great time
Speaker 12: to bring in our question, which is how you're positioned
Speaker 12: in credit for the remainder of this year. And I
Speaker 12: would love for you all to weigh in defensive, neutral
Speaker 12: or risk on. From your perspective, how are you positioned?
Speaker 12: I mean, right now, do you want to take more risk?
Speaker 12: Are you looking for yields or are you looking for
Speaker 12: defense ahead of greater opportunities.
Speaker 11: So when we spoke in January at Davos, I mentioned
Speaker 11: how the setup was poor for credit and good for equities. Historically,
Speaker 11: when you've had stretch valuations in a mid cycle, where
Speaker 11: the economy is expected to grow at two percent or better,
Speaker 11: your returns in credit or less than the coupon, and
Speaker 11: that's exactly what's happened so far. In contrast, usually that's
Speaker 11: a great environment for equities, and that's what's happened. And
Speaker 11: even if you look at the equal weight to S
Speaker 11: and P is certainly beginning to catch on.
Speaker 6: So it's been a.
Speaker 11: More broader rally, particularly the last few weeks. Even in
Speaker 11: the face of a run on again off again conversations,
Speaker 11: credit has still been is still linguished, and we expect
Speaker 11: that to continue. Now that's not to say that it
Speaker 11: can't have a better second half, but I do think
Speaker 11: there's some pockets of opportunity. But this is historically a
Speaker 11: tough time to be in credit in terms of in
Speaker 11: the cycle.
Speaker 12: Because of inflation and growth. That doesn't really benefit the instruments.
Speaker 11: It's just how it's priced its price as if defaults
Speaker 11: are going to be low, and and that the corporate
Speaker 11: earnings are going to and that they're more likely to disappoint.
Speaker 11: You're getting you're not getting paid to increase corporate earnings
Speaker 11: or for earnings to surprise on the upside, and you're
Speaker 11: being heavily penalized at the surprise on the downside. In
Speaker 11: the equity market, there's still some acceptance or excitement if
Speaker 11: you're taking up numbers.
Speaker 12: There are some opportunities. Like you said, where's the distress
Speaker 12: and where are you finding them right now?
Speaker 6: So it's very situational.
Speaker 11: There's the expected distress, which is in software where the
Speaker 11: business model is getting called into question. Then there is
Speaker 11: also in telecom another business model that's getting called into question.
Speaker 11: And there's an interesting relationship between the public equity. As
Speaker 11: you look at a Comcast, I think that's hitting a
Speaker 11: new low as we speak, a fifty two week low.
Speaker 11: If not, it's certainly close to that. Charters probably in
Speaker 11: the same camp, Cable one in the same camp, but
Speaker 11: yet some of the debt isn't, so I think that's
Speaker 11: kind of an interesting relationship the debt and what happened
Speaker 11: I guess recently with lts with threatening a transaction. I
Speaker 11: think it's all a ploy for negotiation, but it probably
Speaker 11: brings people to the table sooner if it works. It's
Speaker 11: the same team that brought you Ballish and we respect
Speaker 11: them an awful lot, but it kind of went nowhere
Speaker 11: when there was a bunch of of I guess potential
Speaker 11: transactions being contemplated that didn't get to the finish line
Speaker 11: from the equity.
Speaker 12: So playing the debt equity structure in creative ways is
Speaker 12: why you're playing.
Speaker 6: With it right.
Speaker 11: And within industries, I think the equity in cable is
Speaker 11: much easier. It's hard to see that the equities don't work,
Speaker 11: workers don't work, and the debt works. So I think
Speaker 11: that relationships kind of is kind of interesting. I'd say
Speaker 11: the same thing in healthcare, which seems like it's been
Speaker 11: a source of funding for technology stocks, and there's certain
Speaker 11: companies like Tenant which strike.
Speaker 6: Me as very reasonable value.
Speaker 11: Sure there has been some volume issues, but the valuations
Speaker 11: seem very credible.
Speaker 6: Top match management team, and.
Speaker 11: I think the equity market exhues me the credit markets
Speaker 11: would finance the entire market cap.
Speaker 12: More broadly, you started by talking about the frustration felt
Speaker 12: by a number of credit fund managers because right now,
Speaker 12: this isn't an assa class that tends to work that
Speaker 12: well or give that many that give outsize returns, given
Speaker 12: the narrow we're in, and yet people are pouring trillions
Speaker 12: of dollars into AI infrastructure. Does that worry you, excite
Speaker 12: you for the potential down the line?
Speaker 11: Well, when you look at the devils in the details
Speaker 11: in terms of what the terms are, but when you
Speaker 11: look at who's backstopping it, they seem like good credits.
Speaker 11: And people tend to think of two and three years out,
Speaker 11: not five or ten years out, and it looks like
Speaker 11: for two to three years out you're getting overcompensated for
Speaker 11: the risk. On the other hand, you're dealing with terrible technicals.
Speaker 11: They don't seem to run out of product. And I
Speaker 11: think even this Google financing is suggesting that they want
Speaker 11: to make sure to be out in front of the
Speaker 11: financing in terms of the equity, and there's almost not almost,
Speaker 11: there is an arms race going on, and the issue
Speaker 11: is will the infrastructure investment be justified or will this
Speaker 11: be more like underwater cable, which was a good thing
Speaker 11: until it wasn't.
Speaker 6: Do you have a take on that.
Speaker 12: Are you imbedding a sort of thesis into your investments.
Speaker 11: I'm somewhat agnostic, but history would have a bad record
Speaker 11: in terms of overinvestment for industries that have very high payouts,
Speaker 11: whether it's riverboat gambling to something like undersea cable. So
Speaker 11: you know, it's not a great precedent, but there's not
Speaker 11: a great precedent, But there's an argument that you know,
Speaker 11: I understand the arguments now, and I think our view
Speaker 11: is to be very deliberate to have additional assurances by
Speaker 11: the users that they're committed to these projects.
Speaker 12: Would you rather invest in the high yield part of
Speaker 12: the investment grade part with the all in back drop
Speaker 12: the idea that it tends to be lower duration, shorter
Speaker 12: maturity in the high yield but higher risk investment grade
Speaker 12: longer duration but tied to.
Speaker 11: Very So my guess is at different points in this
Speaker 11: funding you're going to get high yel type of spreads
Speaker 11: in the investment grade market. So the issue is, you
Speaker 11: know what you do in between them. So I think
Speaker 11: it depends you know, on the pricing, but I think
Speaker 11: you'll get at least every other stretched or over financed
Speaker 11: industry I've been part of, you usually have been able
Speaker 11: to get excellent protection with below investment grade pricing at
Speaker 11: some point.
Speaker 6: So now what do you do in between? There? You
Speaker 6: know is the issue, But it's going to get there
Speaker 6: at some point.
Speaker 12: So just dance and cable and and and some pick
Speaker 12: up some distressed software where and wait to invest in
Speaker 12: this area until it falls out A.
Speaker 11: Bit no, no, because if it's two or three years,
Speaker 11: it's a lot of return to give up. But to
Speaker 11: be deliberate about what you're getting versus the opportunity of
Speaker 11: what you might be getting. And you know, at I'm
Speaker 11: incredibly fickle on these topics. So I could you know
Speaker 11: in a month or two, could just have a different
Speaker 11: perspective with more evidence.
Speaker 12: How do you remain nimble at a time when you're
Speaker 12: going in and out of sometimes less liquid instruments.
Speaker 11: First is you've got to assume you can't be nimble
Speaker 11: and less liquid instruments and lower prices brings in illiquidity,
Speaker 11: higher prices brings in confidence. So that's kind of the
Speaker 11: way the credit markets work. Just trying to ask as
Speaker 11: many questions and focus on what we think are the
Speaker 11: key variables, and something like AI. You can be overwhelmed
Speaker 11: by so much, so to try and look at some
Speaker 11: of the larger issues and just focus on that and
Speaker 11: be deliberate, you know, because there's so much supply.
Speaker 6: The idea of.
Speaker 11: You're going to run out of opportunities isn't a real Yeah,
Speaker 11: that's not realistic. There's going to be something to do
Speaker 11: in this space, particularly as it continues to be successful.
Speaker 6: Right now?
Speaker 12: Would you rather be in public securities or private securities?
Speaker 12: Just as a rule, I mean in terms of the
Speaker 12: interests that demand.
Speaker 11: So when we look at asset classes, probably the asset
Speaker 11: back to asset class we find the best value, which
Speaker 11: is a private asset class. So we're finding good value there.
Speaker 11: In private credit, there's some of the more anxious capital
Speaker 11: the open end of private credit funds are out of
Speaker 11: the market, so that leaves the funds and other players
Speaker 11: in private credit who are more deliberate being the main
Speaker 11: buyers of private credit. So we're seeing good good value there.
Speaker 11: We're seeing good of value in some of the out
Speaker 11: of favor sectors, which is always the case by definition,
Speaker 11: out of favorite sectors or.
Speaker 6: At discounts, but so I'd say it's eclectic.
Speaker 11: But we certainly are seeing better value in private credit
Speaker 11: today than we've seen in the last twenty four to.
Speaker 6: Thirty six months.
Speaker 12: Are you getting paid for the illiquidity premium?
Speaker 11: That's always after the fact comment, but it seems like
Speaker 11: you're getting better paid in the absolute. When I think
Speaker 11: of things, I think it's far to say out of ten,
Speaker 11: maybe a six, you know, six and a half, So
Speaker 11: it's above average, but not by much.
Speaker 12: Right now, we're looking out for a year where a
Speaker 12: lot of people keep talking about inflation inflationary risks, and
Speaker 12: this is one of the reasons why credit hasn't been
Speaker 12: as much of a sweet spot.
Speaker 7: How do you.
Speaker 2: Price it in?
Speaker 12: I mean, at what point do you just start to
Speaker 12: increase the sleeve of equities and create some protection on
Speaker 12: the downside And I kind of hope for the best
Speaker 12: with a couple of security selections.
Speaker 6: At least.
Speaker 11: It's probably the biggest risk in the market, and it's
Speaker 11: impacted because it's impacted rates much more credit than it
Speaker 11: has equities, which I'm surprised at, but just as what
Speaker 11: it is, and if you look in the seventies there
Speaker 11: were better equities did better than credit. So you know,
Speaker 11: if if the if you're looking at a bad environment,
Speaker 11: at least that's one example where equity outperform credit. It's
Speaker 11: it's very much data dependent. It's also what's going to
Speaker 11: happen with the war. You know, if you look at
Speaker 11: one of the big surprises so far this year is
Speaker 11: oil has been relatively calm in a relative to what expectations.
Speaker 11: Most people thought if you got past Memorial Day, it
Speaker 11: would be one twenty five, one thirty five.
Speaker 6: But yet we're in the mid nineties. So I think it's.
Speaker 11: You know, that's a factor that seems to you know,
Speaker 11: be developing.
Speaker 6: So it's hard to do. It's hard to.
Speaker 11: You have a line, you know, to draw a line
Speaker 11: in the sand, you know on that you know.
Speaker 12: This is a cognitive dissonance. Every single morning. We talked
Speaker 12: to a lot of people, and we were speaking with
Speaker 12: Mike Worth of Chevron the other day and he said,
Speaker 12: we're going to end up with shortages. If this keeps
Speaker 12: going in the next couple of weeks, we could start
Speaker 12: seeing shortages. In the United States, diesel inventories are the
Speaker 12: lowest levels since two thousand and three, and then you
Speaker 12: get an equity strategist on a credit strategist on we're
Speaker 12: not looking at that. That doesn't matter. How do you
Speaker 12: think about that?
Speaker 11: So I've kind of processed a little different is how
Speaker 11: are equities pricing this? And equities seem to not be
Speaker 11: pricing the future's curve. So on the strip curve, it's
Speaker 11: just so on oil service. Sure, Helliburton's having an excellent year,
Speaker 11: But when I look at some of the mid caps,
Speaker 11: very much pricing in i'd say seventy seventy five dollars oil.
Speaker 11: And when we see the M and A market in
Speaker 11: oil services, and we have a company that we or
Speaker 11: more than half of that looks at the M and
Speaker 11: A market and has bought a few companies in the
Speaker 11: past twelve months, that market hasn't changed that much so
Speaker 11: in terms of levels and pricings and multiples and expectations.
Speaker 11: So we see the regardless of what people are saying,
Speaker 11: how they're voting with their feet, they're still very cynical
Speaker 11: of how long this will last. And that's probably it
Speaker 11: seems like a better opportunity that it's going to be
Speaker 11: higher for longer than what's in the market.
Speaker 12: So in other words, by MidCap oil names.
Speaker 11: Yeah, and suppliers, but also when you're thinking about oil
Speaker 11: as an input to your companies, and I'm thinking as
Speaker 11: a portfolio manager, Okay, what should we be assuming in
Speaker 11: terms of whether it's in building material products and which
Speaker 11: oil can be an important input? You know, what does
Speaker 11: it mean for inflation, etc. My guess is going to
Speaker 11: be higher for longer.
Speaker 12: I want to pull up the results to the pole,
Speaker 12: and unfortunately we didn't have an answer to the pole
Speaker 12: of just frustrating.
Speaker 2: What the answer was, how are.
Speaker 12: You positioning credit for the rest of twenty twenty six?
Speaker 12: Not for ultimate frustration but neutral forty two percent, defensive,
Speaker 12: thirty one percent, risk on twenty seven percent?
Speaker 6: Does that surprise you?
Speaker 11: So I look at it as almost seventy five percent
Speaker 11: seventy three percent of people who are like yeah, what
Speaker 11: else did you say?
Speaker 6: Yeah? And so you know, it's it seems about about fair.
Speaker 11: What's being What's a strategy that's been very popular this
Speaker 11: year in terms of inflows is opportunistic credit having a
Speaker 11: long playbook and instead of a distress manager a private
Speaker 11: credit manager, how about a manager who can look for
Speaker 11: the best opportunities with a long playbook, So that strategy
Speaker 11: has been gaining a lot of traction.
Speaker 6: I think the.
Speaker 11: Positioning and credit credit in terms of getting alpha and
Speaker 11: dispersion is that's not surprising with the results here.
Speaker 12: You've been in the business for decades. You've seen a
Speaker 12: lot of cycles. You were talking earlier about the seventies.
Speaker 12: I hope that's not the aut analog. But is there
Speaker 12: an analog to the moment that we're in right now
Speaker 12: that you can think of in terms of investing, in
Speaker 12: terms of the macroeconomic backdrop.
Speaker 11: So we're mid cycle in a stretched environment where it's
Speaker 11: very narrow for what the opportunities are. That's like most
Speaker 11: markets I've been in.
Speaker 6: I mean, that's like just in.
Speaker 12: Feeling most markets for most people.
Speaker 11: So if you were to go back and count, yeah,
Speaker 11: stretch valuations, very little dispersion except for a certain percentage
Speaker 11: of the market, call it less than twenty percent of
Speaker 11: the market, that's kind of most markets.
Speaker 6: I bet, I haven't.
Speaker 11: I bet it's three quarters of the market, is what that?
Speaker 11: It's certainly more than half.
Speaker 12: So you think that the analog is almost every time
Speaker 12: except for the big extremes, Well.
Speaker 11: I think that what's different this time because every cycle
Speaker 11: has something that's different.
Speaker 6: And what's different this time is.
Speaker 11: The AI expense and what the ramifications of who the
Speaker 11: winners and losers are. And you could have said that
Speaker 11: with media with the Internet, and who's going to be
Speaker 11: when I think of software and try and conceptualize who
Speaker 11: the winners and losers are. I look at legacy media,
Speaker 11: and there was TV which went from call it nominal
Speaker 11: growth to lesser noomenal growth, but still growth. You look
Speaker 11: at cable programmers who still had above nominal growth for
Speaker 11: about fifteen years, so those were healthy businesses. You had
Speaker 11: radio that call it by two thousand and eight or nine,
Speaker 11: seem to really be a more marginal product, and then
Speaker 11: by the late teens really in trouble. And then you
Speaker 11: had newspapers which really peaked about I'm trying to think
Speaker 11: of the tribune transaction of two thousand and six, two
Speaker 11: thousand and seven, I think two thousand and five. So
Speaker 11: after two thousand and five really began to be disintermediated.
Speaker 11: So where does some of these industries fall with that methodology?
Speaker 12: Fascinating and everyone wants to be not radio, although radio
Speaker 12: is coming back with podcasts, so there's.
Speaker 11: That though it's not though it's not only on the band, right,
Speaker 11: So when you're thinking about radio, as I grew up
Speaker 11: with it, it was AMFM and really FM for the
Speaker 11: most part, though I think I remember being invested the
Speaker 11: largest credit in MS, which was w FAN on the
Speaker 11: AM band, But it was but that's a different it's
Speaker 11: a different medium for radio.
Speaker 12: Yeah, different distribution mechanisms. Stephen Tannebaum, always a clinic, Always
Speaker 12: wonderful to speak with you. Steven Tannabaum of Golden Tree
Speaker 12: Asset Management, Thank you, it's so good here.
Speaker 3: That was Steve Tannenbaum, Golden Tree Asset Management founder and CIO,
Speaker 3: speaking with our own Lisa Abromowitz. Hello, Welcome back to
Speaker 3: Bloomberg Tech. This is what financial markets look like, zeroed
Speaker 3: in on the tech sector. There is a lot in
Speaker 3: the market to do with the move in oil. There
Speaker 3: is some concern about the current state of affairs in
Speaker 3: the relationship between the US and Iran and what that
Speaker 3: means for peace talks. Broadly, we're a little softer to
Speaker 3: flat on the Nasdaq one hundred, you know, that's our
Speaker 3: go to tech heavy index. But continued out performance in
Speaker 3: chip stocks and we've given you that story throughout the hour.
Speaker 3: We're going to get a lot more on it in
Speaker 3: just a moment's time. Bitcoin at sixty six thousand US
Speaker 3: dollars per token, down two percent, but you know, kind
Speaker 3: of risk off. And then there was that big number
Speaker 3: alphabet boosting its equity offering to eighty four point seventy
Speaker 3: five billion dollars. A little bit of dilution going on,
Speaker 3: maybe down six ten to one percent. Okay, markets are fun?
Speaker 3: What else is going on current?
Speaker 4: Maybe politics is fun in certain places. Right here in California,
Speaker 4: several tech favored candidates they delivered actually a poor showing
Speaker 4: in California's primary elections just yesterday. The results are still
Speaker 4: being tallied, but so far, the big buck spent by
Speaker 4: Silicon Valley billionaires and founders they haven't resulted in wide
Speaker 4: ranging wins for their favorite candidates. But in most California
Speaker 4: reporter Aniahou Commission is here with us and an iaho.
Speaker 2: Why why has money not worked?
Speaker 13: That's a good question. I think we're seeing that a
Speaker 13: lot of this frustration in Silicon Valley has been concentrated
Speaker 13: amongst a very small group of tech elite, and it
Speaker 13: didn't really translate to the voter base.
Speaker 6: So they spent a lot of money on Matt Mayhon.
Speaker 13: The moderate San Jose mayor, and they there's a lot
Speaker 13: of enthusiasm on X for him. A lot of venture capitalists,
Speaker 13: big names like Mike Morritz, Sergey Brinn came in behind him.
Speaker 2: But he promising like no billionaire attacks.
Speaker 13: Basically that was one of his promises. He was against
Speaker 13: the billionaire tax. He wanted to kind of do a
Speaker 13: more back to basics, smaller government, you know, kind of
Speaker 13: less taxation and little less regulation, a little more friendly
Speaker 13: to tech. And I think, you know, we've seen that
Speaker 13: there's a lot of actually fresh with Silicon Valley in
Speaker 13: California and these leaders who are making a lot of
Speaker 13: money in the tech boom, and they're feeling very confident.
Speaker 13: It's actually not translating.
Speaker 3: To the ballot box right now if you're watching Bloomberg
Speaker 3: Tech from outside of California, we're talking about the gubernatorial primary,
Speaker 3: the race for governor, and the first instance of that
Speaker 3: has been gone. The top two will go to the
Speaker 3: general election in November. Just where do we stand? You know,
Speaker 3: who is likely to go through on that? And always
Speaker 3: on this show, give us the tech angle of whoever
Speaker 3: does go through?
Speaker 13: Yeah, so there's three candidates that are at the top.
Speaker 13: Is Javier Bessera, Joe Baden's former health secretary, Steve Hilton,
Speaker 13: who is a Republican former Fox News commentator, and then
Speaker 13: Tom Steyer, who is a liberal former hedge fund billionaire.
Speaker 13: And right now it looks like Javier and Hilton are
Speaker 13: going to go to the runoff, although ballots are still
Speaker 13: being counted and Tom could make a late run. The
Speaker 13: ending on, you know, to be determined. I think what
Speaker 13: the tech angle is Javier has kind of started to
Speaker 13: coalesce some of the establishment democratic interests and also a
Speaker 13: little bit of.
Speaker 6: The tech money.
Speaker 13: So when he started surging as a late stage favorite,
Speaker 13: you saw Meta and you saw Airbnb come in for him.
Speaker 13: And interesting, they're kind of they laid in the stage.
Speaker 13: They acknowledge that he's going to be the front runner,
Speaker 13: and they're trying to kind of put pick a winning horse.
Speaker 3: Bimbogs Ellie Camrashow on tech and politics. What's happening in
Speaker 3: a selection cycle here in California? GitHub is beending big
Speaker 3: on ai agents, launching a new GitHub co pilot desktop app,
Speaker 3: or racing to keep up with surging demand. I sat
Speaker 3: down with Microsoft's EVP of Core Ai, Jay Prie, to
Speaker 3: discuss GitHub's growth, its efforts to improve reliability, and what
Speaker 3: comes next.
Speaker 6: Listen to this.
Speaker 14: For us, it is one where GitHub continues to get
Speaker 14: lots of help from the rest of Microsoft. Right, So,
Speaker 14: we have even in just the year and a half
Speaker 14: I've been at Microsoft, we have brought in really great
Speaker 14: talent from other parts of the company to help us
Speaker 14: build products, to help us scale, to help get Hub
Speaker 14: be more secure, to build those enterprise backstory.
Speaker 3: Was the outage security issues, and then there was a
Speaker 3: change or departure of leadership. So you're describing what's happened since.
Speaker 14: So you know, we should start with the fact that
Speaker 14: beginning since the beginning of the year, the amount of
Speaker 14: traffic that has come to Getthub has gone up significantly. Right,
Speaker 14: So last year we had about a billion commits that
Speaker 14: we processed in all of twenty twenty five. Now we
Speaker 14: process about three hundred million commits each each week, So
Speaker 14: traffic has gone up pretty significantly, and we're very committed
Speaker 14: to improve the availability the performance of the platform. We're
Speaker 14: getting help from more of the Microsoft engineers and the
Speaker 14: top talent that we have. We're attracting new talent to
Speaker 14: the team, We're bringing in more capacity to scale well,
Speaker 14: and we're re architecting these systems. But you know, I
Speaker 14: feel really good about the path that we're on.
Speaker 3: Could you just give us a real time view of
Speaker 3: how much work is being done, real work by an
Speaker 3: agent and where you see that going over the next
Speaker 3: twelve months and beyond.
Speaker 14: And I think we're just at the start as this
Speaker 14: is right because it's early, but it is amazing to
Speaker 14: see how people are translating these ideas into these use
Speaker 14: cases and building these platforms right, and lots of use
Speaker 14: cases even internally where teams are building agents to continually
Speaker 14: improve their product even when they're sleeping, you know, on
Speaker 14: the weekends, these agents are running and then analyzing all
Speaker 14: sorts of different telemetry to find ways to then make
Speaker 14: suggestions for the engineers for the product folks when they
Speaker 14: wake up in the morning to how to improve the
Speaker 14: systems right. And this is technology that works today. You
Speaker 14: need that observability, as you keyed on earlier. You need
Speaker 14: that human in the loop to make sure the thing
Speaker 14: stay on track and that it is doing what you
Speaker 14: expected to and prioritizing it correctly. It's early, but it
Speaker 14: is going to be I think a really really quick
Speaker 14: ramp and it's exciting that we're seeing this. And you know,
Speaker 14: the team's super energized to be working closely with our
Speaker 14: customers to be iterating on these platforms, on these technologies.
Speaker 4: Microsoft's EVP of Core ai j perk there with ed
Speaker 4: coming up, all eyes and Broadcom as they get set
Speaker 4: to report off of the closing bell. What I need
Speaker 4: is you tell us about the AI trade chess Hi,
Speaker 4: this is blue.
Speaker 2: Bag Tex.
Speaker 6: The next trillion dollar company.
Speaker 11: Ladies and gentlemen, WHOA that would be exciting.
Speaker 3: Let's do it together.
Speaker 6: Let's do it.
Speaker 4: Together A CEO Jason Wong alongside Marvel CEO Matt Murphy
Speaker 4: over in Taiwan at computext that was yesterday and share
Speaker 4: some of continuing to run high and look at that
Speaker 4: move over three training days that we are getting c
Speaker 4: set potential one trillion dollars as Jensen was just talking
Speaker 4: about for more who most Denavas joins us. Now, it's
Speaker 4: the power of the five trillion dollar giant in the
Speaker 4: room to anoint the next one trillion. But is there
Speaker 4: real fundamentals behind it?
Speaker 15: Dina, It's we're i think waiting to see you know
Speaker 15: what Broadcom reports today Marvel's made competitor. But also Marvel,
Speaker 15: you know, and Broadcom are basically competing for the business
Speaker 15: around custom AI accelerators that aren't in video. Now, Jensen
Speaker 15: is not objective when he and you know so to speak,
Speaker 15: annoints Marvel in that manner. Marvel is the horse that
Speaker 15: Invidia has backed in that space, They've invested, and you know,
Speaker 15: he wants to set them up as an even stronger
Speaker 15: competitor to Broadcom because Broadcom itself has you know, been
Speaker 15: positioned and has positioned itself as a the alternative to
Speaker 15: in video if you don't want to use in videos GPUs.
Speaker 3: Right, and Broadcom is now a two point three trillion
Speaker 3: dollar company as a result. This is an important earning.
Speaker 3: Sprint explain why it's important, but also why Broadcom is
Speaker 3: a genuine competitor to Nvidia.
Speaker 15: So the vast majority of the AI chips that are
Speaker 15: used are in video's GPUs. The alternatives increasingly are coming from,
Speaker 15: you know, some of the hyper scalers and the large
Speaker 15: frontier labs that are making their own custom chips, and
Speaker 15: Broadcom has several of those. The biggest customers there. We
Speaker 15: talk a lot on this show in the past few
Speaker 15: months about Google's TPU that's made with Broadcom. Anthropic is
Speaker 15: buying a bunch of those and paying Broadcom for them,
Speaker 15: Metal Works with Broadcom, and those three companies have signed extended,
Speaker 15: you know, long term deals with Broadcom in the last
Speaker 15: few months. They already had deals and they expanded them.
Speaker 15: And so what we're seeing from Broadcom is, you know,
Speaker 15: according to Bloomberg Intelligence analysts, a better visibility of what
Speaker 15: the long term picture looks like for that pipeline. That's
Speaker 15: been something I think investors have been a little bit
Speaker 15: concerned about. You know, what is the long term pipeline.
Speaker 15: When do these contracts come online? And if they're a
Speaker 15: multi year contract, what is the amount of revenue the
Speaker 15: Broadcam is going to be able to get from each
Speaker 15: of them in you know, in each quarter. How does
Speaker 15: that kind of play out? But there is now greater visibility.
Speaker 3: Bloomberg's Dina Bass with the broadc on preview and stay
Speaker 3: with Bloomberg Tech tomorrow. We're live from the Bloomberg Tech Conference.
Speaker 3: Hock Tan, Broadcom president and CEO, joins us. This is
Speaker 3: just pure timing Caro and the linings after the Bell
Speaker 3: conversation tomorrow.
Speaker 4: What a phenomenal executive discussion to be having. Tom Giles,
Speaker 4: our executive editor, is going to be leading that conversation.
Speaker 4: What an array of people we're going to speak into
Speaker 4: throughout the day. I mean, you're going to be speaking
Speaker 4: with Andrell's chair and of.
Speaker 2: Course big Player over it found us fun.
Speaker 4: I'm going to be talking to San Francisco Fed President.
Speaker 2: We have a lot to digest tomorrow and it's a
Speaker 2: big show.
Speaker 3: It was a good show today, So recap it you
Speaker 3: know where on the podcast and you can find it
Speaker 3: online Spotify, iHeart and on Apple and then of course
Speaker 3: and all the Bloomberg platforms. This is Bloomberg Tech