WEBVTT - Meta Stock Surges on Plans for Metaverse Cuts 0:00:02.520 --> 0:00:13.280 Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive 0:00:13.360 --> 0:00:17.120 from coast to coast with Caroline Hyde in New York 0:00:17.440 --> 0:00:19.400 and Ed lave Low in sentrances go. 0:00:22.720 --> 0:00:24.239 This is Bloomberg Tech coming up. 0:00:24.239 --> 0:00:28.240 Bloomberg reports Metas considering budget cuts of thirty percent for 0:00:28.280 --> 0:00:31.320 its Metaverse group next year. The very group Mark Zuckerberg, 0:00:31.360 --> 0:00:34.040 once framed as the future of the company, shares. 0:00:33.800 --> 0:00:36.440 Jumped plus in Vidio CEO Jens and Wang is not 0:00:36.479 --> 0:00:40.560 sure China would accept more powerful aichips even the US 0:00:40.600 --> 0:00:42.760 relaxes restrictions on the sales. 0:00:43.000 --> 0:00:45.960 We discuss and we break down the latest tech earnings 0:00:45.960 --> 0:00:48.879 results from Snowflake and Salesforce, and we were joined by 0:00:48.920 --> 0:00:50.400 the UiPath CEO two. 0:00:50.560 --> 0:00:52.279 At first, let's check in on these markets that are 0:00:52.360 --> 0:00:55.440 struggling to find direction. Today, Ed, we've been higher, we're 0:00:55.480 --> 0:00:57.600 now pushing back lower on the nas that one three 0:00:58.600 --> 0:01:01.080 real catalysts were still way to really for next week. 0:01:01.120 --> 0:01:03.720 In the Federal Reserve decision, we get still get that 0:01:03.800 --> 0:01:05.960 myriad of jobs data that we try to digest. 0:01:06.120 --> 0:01:08.480 We're looking though at pickun just coming off by eighteen percent. 0:01:08.480 --> 0:01:10.800 At one point it broke into positive territory for the 0:01:10.880 --> 0:01:13.200 year again. But we're now back to ninety two and 0:01:13.200 --> 0:01:14.560 seventy three. But what are you looking at on the 0:01:14.560 --> 0:01:15.440 individual stocks? 0:01:15.600 --> 0:01:18.120 Yeah, one single name where the stock does have the direction. 0:01:18.240 --> 0:01:19.160 It's our top story. 0:01:19.200 --> 0:01:22.959 Metaches off their session high that up four percent. Bloomberg 0:01:23.000 --> 0:01:27.600 reporting that executives are considering cutting up to thirty percent 0:01:27.640 --> 0:01:31.279 of the budget for its Metaverse initiative as long along 0:01:31.319 --> 0:01:35.319 with wider cuts. Let's talk more about what Meta's plans 0:01:35.360 --> 0:01:37.920 mean for the company with Bloombergs Kurt Wagner, who broke 0:01:37.959 --> 0:01:41.080 the story and joins us with the reporting. Sounds like 0:01:41.280 --> 0:01:45.479 in the last few weeks. Last month Zuckerberg assembled leadership, 0:01:45.840 --> 0:01:48.680 they looked at the budget for next year and Metaverse 0:01:48.760 --> 0:01:50.160 is where they want to focus their cuts. 0:01:50.240 --> 0:01:51.160 Bring us your reporting. 0:01:51.360 --> 0:01:53.760 Yes, so this is an annual thing right looking ahead 0:01:53.760 --> 0:01:56.920 in twenty twenty six budgets In this case, Mark Zuckerberg 0:01:57.000 --> 0:01:59.640 has a nice home in Hawaii where they have a 0:01:59.680 --> 0:02:02.920 serious meetings. Executives come in in the month of November, 0:02:03.320 --> 0:02:06.400 and to your point, they talk about this year ten 0:02:06.440 --> 0:02:09.960 percent cuts sort of across the board, looking at all 0:02:10.000 --> 0:02:12.760 the different teams, but that the Metaverse has been asked 0:02:12.800 --> 0:02:16.160 to cut much more deeply than that. As much as 0:02:16.280 --> 0:02:18.720 thirty percent is currently being discussed, I should point out 0:02:18.760 --> 0:02:20.840 it hasn't been decided yet, but a cut of thirty 0:02:20.880 --> 0:02:24.400 percent would certainly also come with layoffs. So to your point, 0:02:24.440 --> 0:02:26.880 this is an effort that Mark Zuckerberg has touted as 0:02:26.919 --> 0:02:29.600 being the future of the company for years. So it's 0:02:29.680 --> 0:02:32.000 a pretty meaningful change there. 0:02:32.480 --> 0:02:35.080 Let's go back to when he thought it was the 0:02:35.120 --> 0:02:36.919 future of the company. Just take a listen to Mark 0:02:36.960 --> 0:02:38.639 Zuckerberg back in twenty twenty one. 0:02:39.560 --> 0:02:42.040 If we all work at it, within the next decade, 0:02:42.080 --> 0:02:45.520 the metaverse will reach a billion people, host hundreds of 0:02:45.520 --> 0:02:49.480 billions of dollars of digital commerce, and support jobs for 0:02:49.680 --> 0:02:51.839 millions of creators and developers. 0:02:53.760 --> 0:02:56.359 Boy a lot has changed since then, and that was 0:02:56.400 --> 0:02:58.880 a long time ago, kut, but we still will get 0:02:59.120 --> 0:03:01.800 well the idea that will have augmented reality. 0:03:01.880 --> 0:03:03.960 We're still focusing in on the glasses. 0:03:04.000 --> 0:03:07.240 It's just not the actual virtual worlds and working out 0:03:08.440 --> 0:03:08.880 that's right. 0:03:08.880 --> 0:03:11.120 And the virtual worlds aren't going away, to be clear, 0:03:11.240 --> 0:03:13.960 It's still going to be something that they invest in, 0:03:14.040 --> 0:03:16.120 just not quite as aggressively as they had. And what 0:03:16.240 --> 0:03:19.600 was explained to me by sources this week. Is that 0:03:19.760 --> 0:03:23.320 part of that is that the market has not really materialized. 0:03:23.360 --> 0:03:23.520 You know. 0:03:23.560 --> 0:03:26.840 I think they originally spent a lot of money building 0:03:26.880 --> 0:03:29.240 out this Metaverse group, thinking that they would have competition 0:03:29.320 --> 0:03:32.480 from others in the industry, rushing towards a metaverse like 0:03:32.520 --> 0:03:35.560 product as well. That has not happened. And so it's 0:03:35.640 --> 0:03:38.920 not necessarily that Mark Zuckerberg no longer believes in this. 0:03:39.000 --> 0:03:42.160 I'm told that he still does. But clearly they have 0:03:42.440 --> 0:03:44.960 overspent to try to build this thing, and I think 0:03:45.000 --> 0:03:47.240 the ultimate goal is to get to these you know, 0:03:47.280 --> 0:03:50.840 AI inspired glasses and ar glasses, and maybe the metaverse 0:03:50.880 --> 0:03:52.760 was a stepping stone to that all the way. 0:03:52.920 --> 0:03:57.200 So actually it signals a commitment to AI hardware distinct. 0:03:56.840 --> 0:03:57.800 From metaverse hardware. 0:03:57.800 --> 0:04:00.880 I thought it was really interesting that shares of Losutica, 0:04:01.080 --> 0:04:03.120 who they partner with to make the ray band metas, 0:04:03.320 --> 0:04:05.840 kind of rose a little bit after the story and 0:04:05.920 --> 0:04:07.840 all of the analyst notes and there are many actually 0:04:07.880 --> 0:04:11.400 reacting to our reporting say this is probably bullish for 0:04:11.480 --> 0:04:15.280 AI spending. At the same time, Bloomberg reporting that Apple's 0:04:15.280 --> 0:04:18.800 most senior design executive going to meta right, They're. 0:04:18.600 --> 0:04:21.359 Not giving up on hardware right, that the VR virtual 0:04:21.400 --> 0:04:25.080 reality group is expected to be hit by these metaverse cuts, right, 0:04:25.120 --> 0:04:28.559 that is the immersive metaverse product. But they are still 0:04:28.560 --> 0:04:32.080 investing in in AI glasses, the ray bands that you 0:04:32.160 --> 0:04:35.719 mentioned ed. They are still obviously bringing in big talent 0:04:35.800 --> 0:04:38.840 and you know, poaching people to design these things. This 0:04:38.880 --> 0:04:41.200 is what Mark Zuckerberg talks about on earning sculls AI. 0:04:41.279 --> 0:04:43.839 He talks about the glasses. Those things are not going away. 0:04:44.240 --> 0:04:46.960 It is the specific kind of immersive virtual stuff that 0:04:47.000 --> 0:04:49.039 it looks like they're taking a second look at. 0:04:49.279 --> 0:04:53.120 And reallocation of resources. Kurt Wagner, a huge market moving story. 0:04:53.480 --> 0:04:55.400 Thank you for joining us on it. Let's talk more 0:04:55.400 --> 0:04:57.679 about the market moves. Natsy Curtains with us just global 0:04:57.760 --> 0:05:00.080 chief investment officer at ALTI Team and Global and. 0:05:00.120 --> 0:05:02.040 That see you've actually been writing really. 0:05:01.880 --> 0:05:05.320 Saying that we are currently in an innovation driven bull market. 0:05:05.839 --> 0:05:08.000 But what does this move from meta and sort of 0:05:08.200 --> 0:05:11.160 the moving around of capital expenditure tell you about where 0:05:11.160 --> 0:05:11.960 we are in the cycle. 0:05:13.440 --> 0:05:15.640 I mean, I think the thing is about innovation driven 0:05:15.680 --> 0:05:18.760 bull markets and we've had you know, pretty much three 0:05:18.800 --> 0:05:21.640 of them before this one, which is they tend to 0:05:21.680 --> 0:05:24.680 be characterized by a couple of different risks. You know, 0:05:24.760 --> 0:05:28.159 cap expenditure is quite large. Companies need to tap the 0:05:28.200 --> 0:05:32.480 debt markets, and they're shifting perceptions of the winners and losers. 0:05:32.520 --> 0:05:35.719 So volet you know, these these bull markets last longer, 0:05:36.000 --> 0:05:38.720 they go beyond people expect. They tend to come with 0:05:38.760 --> 0:05:42.640 productivity improvements, but you do get some shifting perceptions and 0:05:42.720 --> 0:05:45.760 shifting priorities. So let's just bring that back to Meta. 0:05:46.120 --> 0:05:47.640 You know, they've got a lot of money that they 0:05:47.680 --> 0:05:51.000 want to spend on jen AI. The market hasn't liked 0:05:51.000 --> 0:05:53.360 the fact they've tapped into the debt market to do that. 0:05:53.800 --> 0:05:56.039 You know, they've got less in a way cash flow 0:05:56.040 --> 0:05:58.880 than some of the other companies making similar levels of 0:05:58.920 --> 0:06:02.560 capex spend. So I think this is a good and 0:06:03.440 --> 0:06:08.400 saying reallocation of resources towards AI. Which is the price. 0:06:08.760 --> 0:06:10.200 Nancy, I want to go saying you just said, I 0:06:10.240 --> 0:06:13.920 think it's critically important cash flow. If you look at 0:06:13.920 --> 0:06:17.520 the reaction to this Bloomberg report on Meta, many would 0:06:17.560 --> 0:06:20.400 note that Meta was headed for negative. 0:06:20.000 --> 0:06:21.279 Free cash flow next year. 0:06:21.400 --> 0:06:21.880 That's right. 0:06:21.920 --> 0:06:25.880 This year, the story was about Oracle hitting negative free 0:06:25.960 --> 0:06:28.680 cash flow for the first time since nineteen ninety two. 0:06:28.880 --> 0:06:31.239 Is that a worrying set of data that you're seeing 0:06:31.279 --> 0:06:31.880 on your desk? 0:06:33.120 --> 0:06:35.880 Yeah, because I think the market's being more discerning now. 0:06:35.880 --> 0:06:39.680 It's recognizing that some companies have cash flow that can 0:06:39.720 --> 0:06:44.120 support this, and some companies really need debt. And Oracle 0:06:44.279 --> 0:06:46.920 is a good poster child for not only being late 0:06:46.960 --> 0:06:50.599 to cloud spending quite a lot of money being very 0:06:50.640 --> 0:06:54.400 tied into the open AI in terms of contracts and 0:06:54.440 --> 0:06:57.680 the risks associated with that, but also using debt. And 0:06:57.720 --> 0:07:00.000 I think their debt to ever does like four times, 0:07:00.360 --> 0:07:02.160 so it's in a completely different category. 0:07:02.240 --> 0:07:02.359 You know. 0:07:02.360 --> 0:07:04.839 It's kind of in the core we've department in terms 0:07:04.880 --> 0:07:09.520 of indebtedness, and investors quite rightfully are becoming more discerning 0:07:09.880 --> 0:07:13.360 about the risk associated with you know, financial leverage. 0:07:13.400 --> 0:07:15.200 And then there's the risk of the private markets. 0:07:15.680 --> 0:07:18.880 How are you seeing open AI playing as a virtuous 0:07:18.920 --> 0:07:20.600 or a vicious circle right now? Is it a single 0:07:20.640 --> 0:07:22.040 point of failure or is it the one that you 0:07:22.120 --> 0:07:24.080 need to be allocated to. 0:07:25.600 --> 0:07:26.760 It's a little of both. 0:07:26.840 --> 0:07:30.520 Let's face it. Open AI declared code read yesterday the 0:07:30.600 --> 0:07:35.320 day before yesterday. Look, it's facing competition. It recognizes that 0:07:35.440 --> 0:07:38.880 Gemini is really and if you've used the Gemini three. 0:07:38.960 --> 0:07:41.600 It's pretty it's pretty impressive. It's not as friendly as 0:07:41.680 --> 0:07:45.320 chat GBT and now it's a personal relationship thing going on, 0:07:45.880 --> 0:07:49.040 but it really is quite interesting in terms of nano banana, 0:07:49.440 --> 0:07:52.200 you know, the image editor as well as I would 0:07:52.200 --> 0:07:55.720 say complex reasoning is really quite good in Gemini three. 0:07:55.800 --> 0:07:58.960 So open AIS facing competition, they got to focus. They've 0:07:58.960 --> 0:08:01.840 been spread across a lot of different dimensions. I think 0:08:01.840 --> 0:08:06.360 they're refocusing now on personalization, reliability, speed, and continuing to 0:08:06.440 --> 0:08:10.360 build out that open AI large language model to maintain 0:08:10.400 --> 0:08:10.800 their lead. 0:08:10.960 --> 0:08:13.800 Right, Nancy, We came into this morning when we met 0:08:13.800 --> 0:08:16.920 as a team, thinking probably we focus on salesforce and 0:08:16.960 --> 0:08:19.280 snowflake earnings and then we've got the meta report. 0:08:19.360 --> 0:08:19.520 Right. 0:08:19.560 --> 0:08:22.840 Your thesis is that you have innovation cycles driven by 0:08:22.880 --> 0:08:27.600 heavy CAPEX monetization follows. Actually, if you take the different 0:08:27.640 --> 0:08:32.439 part of the stack with salesforce and Snowflake, tepid outlook 0:08:32.480 --> 0:08:35.360 in terms of profits and top line growth from all 0:08:35.360 --> 0:08:38.360 the AI investment. Is that Is that a fair point 0:08:38.400 --> 0:08:40.800 I've just made, Yeah. 0:08:40.559 --> 0:08:43.680 Because I think that the problem is in innovation ball 0:08:43.800 --> 0:08:46.920 markets as CAPEX starts and you've got to build out 0:08:46.920 --> 0:08:50.680 the Capex and the revenue follows, you know, sometimes years later, 0:08:50.760 --> 0:08:53.720 sometimes within a couple of years, and so investors have 0:08:53.800 --> 0:08:57.199 to extrapolate is the investment really going to deliver the 0:08:57.280 --> 0:09:00.360 revenue and profits and the rate of reach and not 0:09:00.520 --> 0:09:02.720 everyone's going to get there, And that's the risk of 0:09:02.760 --> 0:09:06.000 innovation driven ballmarket. There are some winners, there are some 0:09:06.200 --> 0:09:09.400 losers along the way. But you know, I think the 0:09:09.520 --> 0:09:12.320 key is you've got to really focus on who is 0:09:12.400 --> 0:09:16.720 delivering the revenue today or at least the visibility of that, 0:09:17.040 --> 0:09:20.240 and who has the wherewithal? And just an example, you know, 0:09:20.600 --> 0:09:22.960 I mean, Alphabet's got what one hundred and fifty billion 0:09:23.000 --> 0:09:26.600 of operating income open AIS losing nine billion a year, 0:09:27.360 --> 0:09:31.400 so you know, the wherewithal the financial might probably I 0:09:31.440 --> 0:09:34.679 think investors are thinking may set with Alphabet at the moment. 0:09:35.400 --> 0:09:37.320 We're going to go very deep later in the program 0:09:37.360 --> 0:09:40.080 on the earnings from Salesforce and from Snowflake. But there 0:09:40.120 --> 0:09:42.880 was a very interesting across the board. Look Nancy Ko 0:09:42.960 --> 0:09:45.800 and Global Chief Investment Officer Lty Team and Global thank 0:09:45.840 --> 0:09:48.240 you very much. Like coming up in videos, Gens and 0:09:48.320 --> 0:09:51.920 Wang looks to win over Washington on chip export rules, 0:09:51.960 --> 0:09:53.959 but could it be too late for the AI chip 0:09:54.000 --> 0:09:55.280 maker in China. 0:09:55.360 --> 0:09:57.720 We've got more on that. Next, This is Bloomberg. 0:09:57.280 --> 0:10:11.080 Tech going toe to toe against anyone. 0:10:12.160 --> 0:10:16.160 The American technology industry has nothing to fear. We are mighty, 0:10:16.600 --> 0:10:20.120 were fast, or inventive. We'll take anybody on. In the 0:10:20.160 --> 0:10:25.000 case of China, we should concede the entire market to them. 0:10:25.200 --> 0:10:29.600 They're formidable, But conceding that entire market we are to 0:10:29.600 --> 0:10:30.360 go compute for it. 0:10:30.320 --> 0:10:31.559 In Vida CEO Jenson one. 0:10:31.559 --> 0:10:35.480 They're speaking on American AI leadership at the CSIS conference 0:10:35.480 --> 0:10:39.480 in Washington yesterday. We also met with President Trump to 0:10:39.559 --> 0:10:43.120 discuss export controls on his chips, noting some uncertainty of 0:10:43.120 --> 0:10:46.360 a whether China would even accept the processes if restrictions 0:10:46.360 --> 0:10:49.480 were indeed eased. Here with the latest is Bloomberg Senior 0:10:49.520 --> 0:10:52.199 Tech editor Mike Shephard and Mike we're talking about H 0:10:52.280 --> 0:10:55.440 two hundreds in particular here, and it feels as though. 0:10:55.520 --> 0:10:58.280 Maybe Jensen thinks the ship has already had sailed. 0:10:58.320 --> 0:11:01.640 They're limited in one folk on domestic really. 0:11:02.720 --> 0:11:06.240 Yeah, it's unclear exactly where things stand internally inside the 0:11:06.240 --> 0:11:10.120 administration on the H two hundred and whether Donald Trump 0:11:10.120 --> 0:11:13.280 will give the ultimate green light for those chips to 0:11:13.440 --> 0:11:15.880 be sold to China. You'll remember, just a few weeks 0:11:15.880 --> 0:11:19.559 ago before the holiday, we broke the news that administration 0:11:19.640 --> 0:11:23.760 officials have been deliberating this idea of allowing the H 0:11:23.920 --> 0:11:26.559 two hundred to be sold to China, to be exported 0:11:26.559 --> 0:11:29.840 to China, and this would be a significant relaxation of 0:11:29.840 --> 0:11:32.800 the export controls that have been in place on AI 0:11:32.920 --> 0:11:36.000 chips since twenty twenty two and have really hampered in 0:11:36.120 --> 0:11:39.680 Vidia's ability to sell into China, which is the world's 0:11:39.720 --> 0:11:43.680 second largest AI and chip market right now, and it's 0:11:43.679 --> 0:11:45.880 something that he has made a priority. Even though in 0:11:45.960 --> 0:11:50.840 Nvidia is not putting the China market on its forecasts 0:11:50.920 --> 0:11:53.400 or anything else, yet, he's identified it ad as as 0:11:53.480 --> 0:11:56.840 a fifty billion dollar opportunity for the company. 0:11:58.080 --> 0:12:01.520 The baseline assumption is zero China revenue, right, but Jensenmongk's 0:12:01.600 --> 0:12:04.160 keeping himself in proximity not just to the Administration, but 0:12:04.280 --> 0:12:08.280 to Congress as well. Whether China wants those chips. We'll 0:12:08.280 --> 0:12:10.319 talk about that with Peter Elstrom in just a minute. 0:12:10.800 --> 0:12:13.880 The Gain AI Act is also a part of this 0:12:14.000 --> 0:12:17.000 lobbying effort, and it's an area where maybe in Vidia 0:12:17.080 --> 0:12:19.280 is nearer to a win could just explain the basics 0:12:19.320 --> 0:12:22.360 of legislation or a piece of it that was omitted 0:12:22.679 --> 0:12:23.680 in in Nvidia's favor. 0:12:25.040 --> 0:12:27.920 Oh, of course, and this was actually a big portion 0:12:28.240 --> 0:12:31.760 of his visit to Washington. It was another whirlwind day 0:12:31.760 --> 0:12:34.640 in the nation's capital for Jensen, who has become a 0:12:35.000 --> 0:12:38.560 regular here in Washington, both on Capitol Hill but even 0:12:38.600 --> 0:12:41.000 more so at the White House, where he has forged 0:12:41.040 --> 0:12:42.360 that close bomb with. 0:12:42.400 --> 0:12:43.560 President Donald Trump. 0:12:43.800 --> 0:12:46.240 What Nvidia has been trying to do is fend off 0:12:46.280 --> 0:12:49.960 this gain AI Act, which would prevent or make it 0:12:50.000 --> 0:12:53.080 at least very hard for in Nvidia to sell to 0:12:53.240 --> 0:12:58.000 China and other US adversary nations without explicit permission from 0:12:58.040 --> 0:12:59.000 the US government. 0:13:00.000 --> 0:13:00.760 But he has already get that. 0:13:00.840 --> 0:13:03.480 Look, we don't need these restrictions in place. The Commerce 0:13:03.520 --> 0:13:06.360 Department already has the authority to do so, and there 0:13:06.480 --> 0:13:10.920 is no competition between customers in China and the customers 0:13:10.920 --> 0:13:13.640 here in the US. The bill also would have required 0:13:13.679 --> 0:13:17.439 the company to give first DIBs to American buyers. It 0:13:17.480 --> 0:13:21.240 looks like lawmakers are going to exclude this provision from 0:13:21.400 --> 0:13:24.559 must pass defense legislation that has to be done before 0:13:24.600 --> 0:13:27.440 the end of the year. However, we can't consider it 0:13:27.440 --> 0:13:30.960 completely dead. Our sense is that Congress may try again. 0:13:31.080 --> 0:13:34.840 There is bipartisan support for this idea, and we do 0:13:34.920 --> 0:13:38.840 get a sense that some lawmakers still have concerns about 0:13:39.240 --> 0:13:42.679 allowing China to have access to some of those advanced 0:13:42.720 --> 0:13:44.199 AI chips from Nvidia. 0:13:44.880 --> 0:13:47.680 Bluebogs Mike Sheppard in Washington, DC, thank you. At the 0:13:47.720 --> 0:13:51.880 same time, China's ramping up support for domestic chip production 0:13:52.240 --> 0:13:55.960 to occupy a vacuum that's been left by Nvidia's forced exit. 0:13:56.000 --> 0:14:00.000 According to sources, Beijing based Cambricon is set to try 0:14:00.040 --> 0:14:03.280 triple production of AI chips in twenty twenty six, with 0:14:03.400 --> 0:14:06.840 plans to deliver half a million AI accelerators, the vast 0:14:06.840 --> 0:14:10.560 majority of which are advanced. Bloombo's technology executive editor Peter 0:14:10.640 --> 0:14:15.800 Eldstrom joins us cambricn is another example of a domestic 0:14:15.880 --> 0:14:19.600 player with an AI accelerator product. It is reliant on Smick, 0:14:20.200 --> 0:14:24.640 China's domestic version of TSMC and this is an interesting 0:14:24.640 --> 0:14:29.400 piece of reporting. Bring us the details, but also technologically speaking, 0:14:29.760 --> 0:14:33.560 the differences of where Cambercorn and Spick are versus Nvidia, 0:14:33.600 --> 0:14:35.320 because the scale is completely different. 0:14:36.680 --> 0:14:39.560 Yeah, this is exactly what Jensen Wong is talking about. 0:14:39.600 --> 0:14:42.640 This is exactly what he's concerned about within China that 0:14:42.840 --> 0:14:46.160 after the Biden administration first decided to cut off shipments 0:14:46.160 --> 0:14:49.200 of Nvidio chips into that country, the government and the 0:14:49.240 --> 0:14:53.280 companies there saw the market opportunity, they saw their own vulnerabilities, 0:14:53.280 --> 0:14:56.200 and they decided to invest very very aggressively in their 0:14:56.240 --> 0:14:59.480 own production technologies for chips and also EI designs. So 0:15:00.000 --> 0:15:03.040 always really the primary competitor that we have been talking about, 0:15:03.240 --> 0:15:05.360 they have quite a bit of momentum in building these 0:15:05.360 --> 0:15:07.520 AI chips. They've been used in a number of different 0:15:07.520 --> 0:15:10.200 places there. Camera Con is really the second player. It's 0:15:10.240 --> 0:15:13.160 sort of like the AMD for that market. They're quite 0:15:13.200 --> 0:15:14.880 small at this point. They don't have the kind of 0:15:14.920 --> 0:15:18.080 hef that Huawei does in particular, but they are making 0:15:18.120 --> 0:15:20.240 a lot of progress. So what our sources have told 0:15:20.280 --> 0:15:22.600 us is that their plans are to triple their production 0:15:22.640 --> 0:15:25.800 of AI chips into next year. They'll be a pretty 0:15:25.840 --> 0:15:29.440 significant second to Huawei and supplying those chips. So to 0:15:29.480 --> 0:15:32.800 the broader question about what US export controls due to 0:15:32.840 --> 0:15:35.840 this market, as Jensen Wong is talking about, it certainly 0:15:35.840 --> 0:15:39.080 has opened it up for domestic production Chinese companies are 0:15:39.120 --> 0:15:41.920 being told by Beijing that they should buy domestic chips 0:15:42.000 --> 0:15:45.160 whenever possible. They've also turned down this idea that they're 0:15:45.160 --> 0:15:48.080 going to buy in Vidia's H twenty chips. They don't 0:15:48.080 --> 0:15:49.800 think that those are good enough for the market. So, 0:15:50.120 --> 0:15:52.680 as Mike Shepherd was talking about earlier, there may be 0:15:52.720 --> 0:15:55.000 a discussion of about H two hundreds, but there's no 0:15:55.080 --> 0:15:57.600 putting this genie back in the bottle. China has decided 0:15:57.640 --> 0:15:59.520 they are going to make their own chips domestically, and 0:15:59.560 --> 0:16:00.760 they're making a lot of progress. 0:16:01.240 --> 0:16:03.960 They're making a lot of progress and designing them, but 0:16:04.000 --> 0:16:05.840 then they've got to get them spout out by Smike 0:16:05.880 --> 0:16:09.040 and it feels as though ultimately the production that what 0:16:09.040 --> 0:16:12.080 you're really garnering isn't very many. 0:16:13.200 --> 0:16:15.920 Yeah, that's a very good point. They are way way 0:16:15.960 --> 0:16:19.400 behind the global standards. There is some desperation here that 0:16:19.440 --> 0:16:21.480 if you have to produce that lower standards, you will, 0:16:21.480 --> 0:16:23.240 But if you look at some of the details, it's 0:16:23.320 --> 0:16:26.240 very very interesting. So Smick is still producing these chips 0:16:26.240 --> 0:16:29.320 at seven nanimeters, so well behind the three nanimeter that 0:16:29.360 --> 0:16:32.920 we see from TSMC at this point. Also, the yields 0:16:32.920 --> 0:16:35.560 we got some insights into the yields. Only about twenty 0:16:35.560 --> 0:16:38.120 percent of the chips that they're making right now are 0:16:38.160 --> 0:16:42.120 actually usable, So that's only one out of five chips 0:16:42.400 --> 0:16:45.320 that they produce they're actually able to use. You compare 0:16:45.320 --> 0:16:47.640 that with a TSMC, which is up at eighty or 0:16:47.720 --> 0:16:51.560 ninety percent yields. Their economics are just totally different. But 0:16:51.720 --> 0:16:54.280 it's a sign of how badly Beijing wants to be 0:16:54.320 --> 0:16:55.880 able to catch up in this market that they're just 0:16:55.960 --> 0:16:56.880 going to eat those costs. 0:16:56.880 --> 0:16:58.240 They're going to eat four. 0:16:58.040 --> 0:17:00.680 Times the cost of what it would cost some other 0:17:00.760 --> 0:17:04.440 globally competitive manufacturers to make these chips because they feel 0:17:04.440 --> 0:17:06.840 like from a strategic standpoint, they need to make this 0:17:06.920 --> 0:17:08.040 progress into. 0:17:07.800 --> 0:17:17.240 Alstrom brilliant reporting, Thank you very much. Indeed, shares of 0:17:17.400 --> 0:17:20.480 UiPath having their best day in two years after the 0:17:20.520 --> 0:17:23.720 automation software provider reported earnings. They showed accelerating growth in 0:17:23.760 --> 0:17:25.960 the third quarter. I'm used to stay found a CEO, 0:17:26.040 --> 0:17:27.680 Daniel Dines joins us for more. 0:17:28.000 --> 0:17:28.879 You like the OG. 0:17:29.119 --> 0:17:32.600 You've been doing this for two decades, automating processes. 0:17:32.680 --> 0:17:34.320 You're thinking about repetitive. 0:17:33.840 --> 0:17:37.800 Administ administration and the tasks you can take away from 0:17:37.800 --> 0:17:40.440 a human how you're building an AI agents into that. 0:17:43.240 --> 0:17:50.240 Agents are very complementary to our automation engine. We specialize 0:17:50.280 --> 0:17:53.880 over the year in bringing rule based automations and AA 0:17:53.960 --> 0:17:57.480 agents is bringing something that is much more closer to 0:17:57.600 --> 0:17:58.640 human intelligence. 0:17:59.080 --> 0:18:00.199 We've believed that the. 0:18:01.760 --> 0:18:06.000 Key aspect of bringing reliable AI to enterprises is to 0:18:06.119 --> 0:18:11.800 have a solid foundation of automation and then AI comes 0:18:11.960 --> 0:18:16.800 on the top of it and we connect basically, using 0:18:17.000 --> 0:18:23.000 our orchestration technology, we connect AIA agents with robots and humans. 0:18:24.680 --> 0:18:27.439 Daniel, I've been digging into RPA and trying to think about, like, 0:18:28.200 --> 0:18:30.920 what is new about RPA in an AI world. I 0:18:30.920 --> 0:18:32.840 think that was kind of the root of Caroline's question. 0:18:33.440 --> 0:18:36.119 One of the ideas is that there's a potential addressable 0:18:36.200 --> 0:18:42.280 market for you where desks with less technical staff can 0:18:42.520 --> 0:18:46.800 use your software because it's better at reasoning across documentation 0:18:47.800 --> 0:18:50.720 and those kinds of workloads. Just explain how you kind 0:18:50.720 --> 0:18:53.760 of grow the business beyond your traditional customer base. 0:18:56.600 --> 0:19:00.520 Well, first of all, within our traditional custom more base, 0:19:00.640 --> 0:19:04.920 there is a lot of room for expansion, and we 0:19:05.320 --> 0:19:12.160 are seeing tremendous opportunities in healthcare and financial services, so 0:19:12.200 --> 0:19:16.000 we really are expanding the reach of our RPA technology 0:19:16.720 --> 0:19:23.000 with this new agentic proposition, even for the traditional RPA itself, 0:19:23.160 --> 0:19:27.240 we are bringing the power of GENI to make the 0:19:27.280 --> 0:19:33.600 development faster and in some instances even more reliable when, 0:19:33.960 --> 0:19:37.959 for instance, the applications changes a lot. We are combining 0:19:38.160 --> 0:19:42.679 now computer use type of technology with traditional RPA. So 0:19:42.840 --> 0:19:48.640 this combination of agentic RPA, API and orchestration is really 0:19:48.960 --> 0:19:52.199 what is the crux of our platform and it's resonates 0:19:52.280 --> 0:19:55.600 quite well with our with our customers. 0:19:55.680 --> 0:20:00.520 And again talk about that resonating Daniel, because we're hearing 0:20:00.560 --> 0:20:02.560 more and more that really the barriers at the moment 0:20:02.880 --> 0:20:04.960 adoption or a willingness to pay. 0:20:05.520 --> 0:20:06.879 How are you seeing clients deal with that? 0:20:08.160 --> 0:20:14.080 Because many clients were initially investing mostly in like childboats 0:20:14.280 --> 0:20:19.280 and they don't get really the high you know, the outcomes, 0:20:19.440 --> 0:20:23.200 They don't have an impact on the bottom line. Eventually, 0:20:23.560 --> 0:20:25.520 what do we have ringing on the table is the 0:20:25.560 --> 0:20:31.879 capability of delivering autonomous agentic automation and this is even 0:20:31.960 --> 0:20:37.080 from RBA. We specialize in bringing this autonomous agent and 0:20:37.119 --> 0:20:42.200 now we show to our customers that they can get 0:20:42.359 --> 0:20:47.280 significant benefits and that can go directly into the bottom line. 0:20:48.040 --> 0:20:51.439 Daniel our colleagues at Bloomberg Intelligence, that's our in house 0:20:51.520 --> 0:20:56.399 analysts are a little bit cautious on your subscription revenues. 0:20:56.680 --> 0:20:58.520 If you look at where the street thought they'd be 0:20:58.640 --> 0:21:02.879 basically in line slightly and they're worried about the sustainability 0:21:03.320 --> 0:21:04.320 of subscriptions. 0:21:04.760 --> 0:21:05.960 Are they right or they wrong? 0:21:07.600 --> 0:21:09.919 Well, I think they are totally wrong, guys. I have 0:21:10.280 --> 0:21:14.240 I have yet to see one piece of AI that 0:21:14.400 --> 0:21:18.280 was capable of replacing one of our robots. I think 0:21:18.280 --> 0:21:23.560 this is the most misunderstanding piece of technology when you 0:21:23.680 --> 0:21:26.040 feel that AI can replace RPA. 0:21:26.600 --> 0:21:27.400 R PA, it's a. 0:21:27.400 --> 0:21:32.000 Great last my technology. It's the rule based driven it's fast, 0:21:32.040 --> 0:21:35.920