WEBVTT - China Probes Nvidia, Geopolitical Risks Weigh on Tech Stocks 0:00:02.440 --> 0:00:10.120 Bloomberg Audio Studios, Podcasts, radio news from Mahart where innovation, 0:00:10.400 --> 0:00:11.360 money and power. 0:00:11.480 --> 0:00:13.800 Collie in Silicon Vallet Nbon. 0:00:14.200 --> 0:00:18.720 This is Bloomberg Technology with Caroline Hyde and Ed Ludlove. 0:00:32.280 --> 0:00:34.720 Live from New York. This is Blouebag Technology. Coming up. 0:00:34.960 --> 0:00:38.840 China opens a probe into Nvidia regarding anti monopoly laws. 0:00:38.920 --> 0:00:40.240 That's the global tech. 0:00:40.120 --> 0:00:44.080 War escalates this adding to broader geopolitical risk. 0:00:43.960 --> 0:00:45.479 Weighing on US tech stocks. 0:00:45.800 --> 0:00:49.879 We get the market impact and Alphabet reveals new details 0:00:49.880 --> 0:00:52.560 on the progress it's made in quantum computing. 0:00:53.120 --> 0:00:55.800 But first we check in on Invidio. Top story for 0:00:55.840 --> 0:00:56.120 the day. 0:00:56.240 --> 0:00:59.120 We're currently shaving off a cool one hundred billion dollars 0:00:59.280 --> 0:01:01.880 in terms of market capitalization for what is the most 0:01:01.960 --> 0:01:04.240 valuable company out there and listed in the United States, 0:01:04.480 --> 0:01:05.360 down three percent. 0:01:05.480 --> 0:01:07.320 Why Moores about. 0:01:07.120 --> 0:01:10.400 An investigation, a probe being opened up by China about 0:01:10.440 --> 0:01:12.280 a deal and acquisition. 0:01:11.800 --> 0:01:13.000 It made back in twenty twenty. 0:01:13.000 --> 0:01:16.040 But this really fits into a context of global tit 0:01:16.080 --> 0:01:19.160 for tap between China and the US. Peter Elstrom joins us. 0:01:19.200 --> 0:01:22.560 Now just go into the intricacies of this particular investigation 0:01:22.720 --> 0:01:24.800 regarding a deal made years ago. 0:01:26.240 --> 0:01:28.240 Yeah, this was a bit of a surprise. We got 0:01:28.240 --> 0:01:32.319 this news last night from state television in China, where 0:01:32.640 --> 0:01:37.639 CCTV disclosed that the Agency SAMR has opened this probe 0:01:37.680 --> 0:01:41.680 into Nvidia and what it calls potentially anti monopolistic behavior. 0:01:41.959 --> 0:01:44.840 It's a little curious because, as you say, they're focused 0:01:44.840 --> 0:01:47.280 in or They mentioned specifically a deal that they did 0:01:47.319 --> 0:01:50.760 four years ago to buy a company called Melanox. It's 0:01:50.760 --> 0:01:54.080 a company in Israel that makes networking equipment. China had 0:01:54.080 --> 0:01:56.520 to approve that deal when Nvidia decided to do it, 0:01:56.560 --> 0:01:58.840 and they did approve it, as you mentioned in twenty twenty, 0:01:59.040 --> 0:02:02.440 but they did with seven different conditions about invidious behavior 0:02:02.520 --> 0:02:06.440 going forward. That included giving the customers in China access 0:02:06.520 --> 0:02:11.640 to product information from Melanox and product access for Invidia's 0:02:11.639 --> 0:02:15.080 own chips. Now it's not exactly clear what they're going 0:02:15.120 --> 0:02:17.960 to dig into in this case, but as you noted, 0:02:18.200 --> 0:02:21.480 in Vidia has been this company at the heart of 0:02:21.520 --> 0:02:25.280 the US China conflicts over technology. Washington has cut off 0:02:25.520 --> 0:02:28.800 in Vidia's ability to sell its most advanced chips into China, 0:02:29.120 --> 0:02:31.359 so they're really at the heart of this conflict between 0:02:31.360 --> 0:02:33.040 the two biggest economies. 0:02:32.560 --> 0:02:33.040 In the world. 0:02:33.360 --> 0:02:36.120 Now it's worth noting that the US Justice Department itself 0:02:36.160 --> 0:02:39.560 is looking for information to in video and potentially violating 0:02:39.560 --> 0:02:43.720 anti trust laws. It's not the only country investigating in video, 0:02:43.919 --> 0:02:46.680 but set the context of what other companies are being 0:02:47.120 --> 0:02:49.280 focused in on on this tip for tap, because Micron, 0:02:49.360 --> 0:02:52.880 for example, is having difficulty with its relationship with China. 0:02:52.960 --> 0:02:56.960 This just does seem to be around the context of 0:02:57.080 --> 0:03:00.680 China trying to be one up on what respond to 0:03:00.720 --> 0:03:03.680 the US limitations of technology into its country. 0:03:04.960 --> 0:03:08.480 Yeah, as you say, the anti monopoly concerns around in 0:03:08.560 --> 0:03:11.040 Vidia are quite broad. It's not just China, it's also 0:03:11.040 --> 0:03:13.720 the United States. France here has taken a look at it. 0:03:13.840 --> 0:03:16.679 That's because they have essentially a monopoly one hundred percent share, 0:03:16.720 --> 0:03:19.680 almost one hundred percent share in the most advanced chips 0:03:19.680 --> 0:03:23.359 to train AI models. But you're exactly right. Also, there's 0:03:23.400 --> 0:03:26.560 this broader trade conflict that we've seen that creates all 0:03:26.600 --> 0:03:29.600 sorts of problems for companies in between the US and China. 0:03:30.280 --> 0:03:32.560 In Vidia still sells a lot of chips into China. 0:03:32.600 --> 0:03:34.920 It had sold more in the past, but two years 0:03:34.920 --> 0:03:37.120 ago we got this news that Washington was going to 0:03:37.160 --> 0:03:39.920 cut off their ability to sell the most high end 0:03:39.960 --> 0:03:43.400 AI chips used to train AI models. Those restrictions have 0:03:43.440 --> 0:03:46.080 been steadily tightened since then, so in Vidia has suffered 0:03:46.120 --> 0:03:46.680 because of that. 0:03:46.920 --> 0:03:48.000 But it's beyond that too. 0:03:48.120 --> 0:03:51.800 It's the chip equipment makers that have been restrained, ASML 0:03:51.880 --> 0:03:54.280 here in Europe has been restrained from selling their most 0:03:54.280 --> 0:03:57.240 advanced gear. So in response, Beijing has taken a number 0:03:57.240 --> 0:04:00.560 of actions that we're seeing them retaliate in kinds of 0:04:00.600 --> 0:04:03.040 ways where they cut off a couple of minerals that 0:04:03.080 --> 0:04:07.440 are very important to the chip industry, in the defense industry, 0:04:07.440 --> 0:04:10.760 in particular Gallium and Germanium. So they're beginning to show 0:04:10.760 --> 0:04:13.000 that they also have some cards to play some lovers 0:04:13.040 --> 0:04:15.640 the poll in this broader trade conflict. 0:04:15.600 --> 0:04:17.599 Peter Elstrom always bringing us the context. 0:04:17.760 --> 0:04:20.120 Thank you so much, and look, let's just stick with 0:04:20.240 --> 0:04:24.000 China and the US. Because President elect Donald Trump said 0:04:24.080 --> 0:04:27.120 he did have an exchange with Chinese leader Jijingping in 0:04:27.160 --> 0:04:30.760 recent days, the first clear indication of direct contact between 0:04:30.760 --> 0:04:33.560 the two men since Trump's reelection in November. Here he 0:04:33.680 --> 0:04:35.920 is in an interview with NBC's Meet the Press with 0:04:36.080 --> 0:04:36.800 Kristin Walker. 0:04:37.200 --> 0:04:38.000 Have a listen, I. 0:04:37.960 --> 0:04:40.479 Had any agreement with President she who I got along 0:04:40.480 --> 0:04:43.560 with very well, we've had communication as recently as this week, 0:04:44.160 --> 0:04:45.960 and I had communication with him where they were going 0:04:46.000 --> 0:04:48.480 to give the death penalty to anybody sending drugs into 0:04:48.480 --> 0:04:49.800 the United States. 0:04:52.480 --> 0:04:55.960 Let's get out to Mike Shepherd in Washington, and that 0:04:56.120 --> 0:05:00.640 was notable. The fact that conversation has already started in 0:05:00.880 --> 0:05:03.760 the environment where we're seeing actually China having to respond 0:05:03.760 --> 0:05:07.159 to its own economic issues, particularly as they have to 0:05:07.200 --> 0:05:09.280 look to what Trump might do to their economy come 0:05:09.279 --> 0:05:10.320 twenty twenty five. 0:05:11.440 --> 0:05:15.480 Well highlights the uncertainty surrounding the US China relationship as 0:05:15.520 --> 0:05:20.520 we enter this change over here in Washington. On the 0:05:20.560 --> 0:05:23.320 one hand, Trump is coming in with very much a 0:05:23.360 --> 0:05:26.920 hawkish agenda towards China when you look at his promises 0:05:27.000 --> 0:05:30.160 during the campaign to impose tariffs of as much as 0:05:30.279 --> 0:05:34.719 sixty percent on Chinese goods and his follow on promise 0:05:34.839 --> 0:05:38.880 to put ten percent tariffs on Chinese goods over his 0:05:39.000 --> 0:05:42.359 complaint is mentioned in that interview over the flow of 0:05:42.440 --> 0:05:46.440 fentanel from China into this country. But at the same time, 0:05:47.040 --> 0:05:50.080 Beijing is sort of looking to the change in administration 0:05:50.120 --> 0:05:54.240 as possibly a way to engage with an incoming president 0:05:54.279 --> 0:05:56.640 who has shown a tendency to be a little bit 0:05:56.640 --> 0:05:59.400 more transactional. Maybe they can engage with him in a 0:05:59.440 --> 0:06:02.520 way they have been able to with President Joe Biden 0:06:02.560 --> 0:06:05.640 and his team. So they have signaled that. And in fact, 0:06:05.720 --> 0:06:08.320 when you were talking just now with Peter about some 0:06:08.400 --> 0:06:12.320 of the restrictions that China recently imposed on some of 0:06:12.320 --> 0:06:16.360 those sensitive critical minerals like gallium and germanium, their statement 0:06:16.360 --> 0:06:19.279 also included an overture to the US that we look 0:06:19.360 --> 0:06:23.279 forward to engaging more positively at some point. So there 0:06:23.400 --> 0:06:26.440 is sort of a we don't know which exactly which 0:06:26.480 --> 0:06:29.200 way this is going to go, but the direction of travel, 0:06:29.279 --> 0:06:32.839 based on the people in Trump's team, looks to be pretty. 0:06:32.560 --> 0:06:35.680 Tough, tough, and particularly around tariffs. Just take listen to 0:06:35.680 --> 0:06:38.000 what he said in that particular interview on tariffs too. 0:06:39.240 --> 0:06:42.560 I can't guarantee anything. I can't guarantee tomorrow, but I 0:06:42.560 --> 0:06:47.280 can say that if you look at my just pre COVID, 0:06:47.320 --> 0:06:49.600 we had the greatest economy of the history of our country, 0:06:50.080 --> 0:06:52.000 and I had a lot of tariffs on a lot 0:06:52.040 --> 0:06:55.479 of different countries, but in particular China. We took in 0:06:55.560 --> 0:06:59.279 hundreds of billions of dollars and we had no inflation. 0:07:00.080 --> 0:07:03.839 Finding that to consumer impact in terms of inflationary pressure. 0:07:04.160 --> 0:07:06.440 But businesses are eyeing this very closely. 0:07:06.120 --> 0:07:10.600 To Mike, they should be, because businesses really are consumers. 0:07:10.640 --> 0:07:12.720 A lot of those goods that are coming in from 0:07:12.840 --> 0:07:16.720 China as key inputs to their industries and key components, 0:07:17.080 --> 0:07:20.480 and an increase in tariffs would not just hit consumers 0:07:20.800 --> 0:07:23.920 at the end of the very end of the supply chain, 0:07:24.160 --> 0:07:26.560 it would also hit businesses and they would have to 0:07:26.560 --> 0:07:27.320 think about. 0:07:27.040 --> 0:07:29.240 Well, what do we do with our costs? 0:07:29.280 --> 0:07:32.520 Do we pass those along? And from that interview you 0:07:32.600 --> 0:07:35.560 really get the sense that Trump is not inclined to 0:07:35.640 --> 0:07:39.800 back away from any of those pledges. He was pressed 0:07:39.880 --> 0:07:43.000 during the interview about the impact on consumers and he 0:07:43.160 --> 0:07:47.240 insisted that no, there was no cost to consumers. He 0:07:47.320 --> 0:07:49.880 was asked that he said so twice during the interview 0:07:49.920 --> 0:07:52.520 that there is no cost, and he actually tried to 0:07:52.520 --> 0:07:55.800 tout the benefits of it, and moreover, he actually pointed 0:07:55.840 --> 0:07:58.720 to tariffs as a way to gain in other areas 0:07:58.800 --> 0:08:02.000 when it comes to non economic policy as well. So 0:08:02.240 --> 0:08:06.400 it'll be interesting to see how he approaches this not 0:08:06.520 --> 0:08:08.720 only as an economic tool, but maybe as a way 0:08:08.720 --> 0:08:12.280 to gain leverage in other policy areas, including immigration and 0:08:12.320 --> 0:08:13.200 who knows what else. 0:08:13.960 --> 0:08:16.600 Who knows what else Mike sheppin, We appreciate it now, 0:08:16.720 --> 0:08:19.120 all of this geopolitical risk, but we haven't even mentioned 0:08:19.160 --> 0:08:22.240 Syria yet. There's also this week the likelihood of another 0:08:22.280 --> 0:08:25.440 sticky inflation print here in the United States. All of 0:08:25.480 --> 0:08:28.240 it is sending US tech stocks lower on the day, despite, 0:08:28.240 --> 0:08:30.080 of course, what had been a bit of optimism around 0:08:30.120 --> 0:08:31.640 stimulus potential from China. 0:08:32.080 --> 0:08:33.080 That's going to market take. 0:08:33.200 --> 0:08:36.439 Brian Cosman is with US portfolio manager at GQG. 0:08:37.200 --> 0:08:37.959 You'll read on the. 0:08:37.880 --> 0:08:41.920 Market trends, look any of these latest issues in video 0:08:42.040 --> 0:08:43.679 China giving you pause, Brian. 0:08:44.720 --> 0:08:48.360 Yeah, So further starts in terms of technology. We did 0:08:48.400 --> 0:08:51.040 have a very heavy waiting to a lot of technology 0:08:51.080 --> 0:08:53.440 names earlier in the year about in terms of our 0:08:53.600 --> 0:08:56.079 US secuity portfolio, more than fifty percent of the portfolio 0:08:56.080 --> 0:09:00.120 was in it and also communications services types of names. 0:09:00.679 --> 0:09:02.400 And we have seen a lot of hype kind of 0:09:02.400 --> 0:09:04.600 build up in a lot of these technius. In recent months, 0:09:05.120 --> 0:09:07.360 we've adjusted and gotten a little bit more of a 0:09:07.400 --> 0:09:09.880 neutral posture at this point in time. So, you know, 0:09:09.960 --> 0:09:12.760 coming back to in Vidia specifically, they do seem to 0:09:12.800 --> 0:09:15.760 be still garnering the majority of economics within sort of 0:09:15.760 --> 0:09:18.040 this capital cycle and its tech cycle that we're seeing 0:09:18.040 --> 0:09:20.480 at this point in time. And I think you're seeing 0:09:20.520 --> 0:09:22.080 that in terms of the power and their ability to 0:09:22.120 --> 0:09:25.080 sort of you know, capture the market and sort of 0:09:25.360 --> 0:09:27.400 you know, circle of wagons, if you will, in that sense. 0:09:28.200 --> 0:09:31.400 With regards to China, they do have a slightly reduced 0:09:31.440 --> 0:09:34.720 exposure to China then they've had in recent years and months, 0:09:34.720 --> 0:09:36.360 and I think that's because you're just seeing the overall 0:09:36.400 --> 0:09:38.520 strength in the other areas that they're selling through to 0:09:38.600 --> 0:09:41.560 the hyperscalers and things like that. So China's now fifteen 0:09:41.640 --> 0:09:43.640 sixteen percent of their revenue at this point in time. 0:09:43.840 --> 0:09:45.160 So I think this is a little bit less of 0:09:45.160 --> 0:09:46.679 an issue than maybe what we saw a couple of 0:09:46.720 --> 0:09:49.080 years ago when you saw some of those US restrictions 0:09:49.080 --> 0:09:51.839 sort of pulling back you know, in video's ability to 0:09:52.080 --> 0:09:53.559 sell into China. 0:09:53.679 --> 0:09:56.800 So ultimately, the valuations when we're still seeing in video 0:09:57.320 --> 0:10:00.360 and excess of three trillion dollars that's been dedicat by 0:10:00.400 --> 0:10:03.839 the extend to the market opportunity despite some curtailment to 0:10:03.960 --> 0:10:04.800 China for example. 0:10:05.720 --> 0:10:07.360 Yeah, so when I think you look at in video, 0:10:07.480 --> 0:10:09.640 you look at sort of the hardware implication and sort 0:10:09.679 --> 0:10:12.760 of the technology that they have, and they have a 0:10:12.760 --> 0:10:15.000 better mouse trap in terms of the GPUs that they're 0:10:15.000 --> 0:10:16.559 selling into folks, and I think you're seeing that in 0:10:16.640 --> 0:10:18.640 terms of the strength of their business. But I think 0:10:18.640 --> 0:10:21.960 goes underappreciation is the software element of the thesis as well. 0:10:22.520 --> 0:10:25.200 That gives them a lot longer tail in terms of 0:10:24.960 --> 0:10:28.640 the ability to continue to sell through that software angle. 0:10:28.720 --> 0:10:31.600 The thesis pulls up the margin structure of the video 0:10:31.640 --> 0:10:33.520 over the course of time. People talk about kudos or 0:10:33.640 --> 0:10:36.520 being that base software layer, and then these software stacks 0:10:36.520 --> 0:10:38.680 that they're building on top of this. This all creates 0:10:38.720 --> 0:10:41.400 a very system wide approach and it's hard to sort 0:10:41.440 --> 0:10:44.120 of disrupt. That creates really good economics for them, and 0:10:44.160 --> 0:10:46.200 I think there's a plenty of hetero for them to 0:10:46.240 --> 0:10:48.160 continue to grow on an ongoing basis. I think it 0:10:48.200 --> 0:10:50.360 gives a little more stickiness than maybe some of their peers, 0:10:50.400 --> 0:10:51.800 even within the GPU space. 0:10:52.080 --> 0:10:55.800 Interesting, Brian take us there for to software more broadly, 0:10:55.920 --> 0:10:58.480 we have seen the shift out of perhaps chip stocks 0:10:58.440 --> 0:11:01.920 semi conductors into the software space. Thinking how generative AI 0:11:02.040 --> 0:11:04.680 is going to make their valuation suddenly ever more inflated. 0:11:04.760 --> 0:11:05.560 Is that the right way to go? 0:11:05.880 --> 0:11:07.800 Yeah, So, in terms of the software names, we have 0:11:07.880 --> 0:11:11.520 seen so multiples really inflate and sort of expectations go up. 0:11:11.640 --> 0:11:13.920 In terms of the ability for these folks to sort 0:11:13.960 --> 0:11:17.240 of capture the economics from GENAI and things like that, 0:11:17.280 --> 0:11:19.360 I think we're still in early stages. I think we 0:11:19.400 --> 0:11:21.960 need to see where some of the impacts are going 0:11:22.320 --> 0:11:24.800 and where folks are able to sort of monetize the 0:11:24.840 --> 0:11:27.640 economics of how generative AI work. I think enterprise is 0:11:27.679 --> 0:11:29.760 a little bit slower to adopt and it's going to 0:11:29.760 --> 0:11:32.280 take some time to get there. Where we see the 0:11:32.320 --> 0:11:35.360 impact more immediately is on the advertising space. So we 0:11:35.440 --> 0:11:38.360 are seeing that by using sort of GENAI, using this 0:11:38.440 --> 0:11:41.200 unstructured data to predict what people want to see, what 0:11:41.280 --> 0:11:43.079 people want to sort of buy in terms of the 0:11:43.120 --> 0:11:45.679 advertising and things along those lines, matching up that media 0:11:45.760 --> 0:11:49.679 content with those advertising components. That's an area where we're 0:11:49.679 --> 0:11:51.880 seeing real returns at this point in time. The economics 0:11:51.920 --> 0:11:53.960 are actually going in that direction. So that's more of where 0:11:53.960 --> 0:11:56.720 our focus has been on a your to day basis 0:11:56.720 --> 0:11:58.720 and where we're positioned in the portfolio at the moment. 0:11:59.360 --> 0:12:01.920 Interesting of course, we've seen Meta outperform on the back 0:12:01.920 --> 0:12:03.200 of that alphabet as well. 0:12:03.640 --> 0:12:06.040 Brian, What was so interesting about what you said. 0:12:05.880 --> 0:12:08.120 Earlier was that the fact that you have gone more neutral, 0:12:08.280 --> 0:12:11.040 and I'm interested as to therefore are you putting allocation 0:12:11.120 --> 0:12:14.640 into other AI tangential industry groups if it's not just 0:12:14.679 --> 0:12:17.000 all about semiconductors and software right now. 0:12:17.080 --> 0:12:19.800 Yeah, So when I describe sort of the neutral posturing, 0:12:19.840 --> 0:12:22.120 I think that's the overall sort of exposure that you've 0:12:22.120 --> 0:12:23.840 seen in the portfolio has come down. We still have 0:12:23.960 --> 0:12:26.840 higher conviction calls in those select names like an Nvidia, 0:12:27.080 --> 0:12:29.680 like a Meta, even like a Microsoft, a little bit 0:12:29.720 --> 0:12:32.199 lesser extent in our portfolio. You see some fairly decent 0:12:32.200 --> 0:12:35.120 sizing in those anes. Lean knows is a tech show 0:12:35.120 --> 0:12:37.160 and a tech program that we're talking about, But we 0:12:37.200 --> 0:12:39.280 are seeing some more interesting areas and some of the 0:12:39.280 --> 0:12:42.199 more boring areas of the economy as well. So consumer 0:12:42.240 --> 0:12:46.200 staples to some extent utilities, not necessarily because they're defensive 0:12:46.240 --> 0:12:48.520 by nature, but quite frankly because they're a little bit 0:12:48.880 --> 0:12:51.679 or less trend. The multiples look more attractive and you're 0:12:51.679 --> 0:12:54.800 getting a little bit more in a bank for your buck, 0:12:54.840 --> 0:12:56.439 so to speak. In terms of the returns, you get 0:12:56.440 --> 0:12:58.280 to a high single digit, low double digit type of 0:12:58.320 --> 0:12:59.959 return with a divid and eel on top of it 0:13:00.160 --> 0:13:02.680 for a reasonable multiple. You don't have to worry about 0:13:02.679 --> 0:13:05.079 the higher So it's almost like a barbell approach, if 0:13:05.080 --> 0:13:07.240 you will, having some of these punchier names, some of 0:13:07.280 --> 0:13:09.800 these higher conviction names within the tech ecosystem where we 0:13:09.880 --> 0:13:12.360 are seeing the economics coming through, and then you're seeing 0:13:12.400 --> 0:13:13.679 some of these other things where we can get some 0:13:13.800 --> 0:13:16.439 really good quality compounding at a reasonable price. 0:13:17.080 --> 0:13:19.400 Diversification key no matter who the audience is. 0:13:19.480 --> 0:13:24.320 Brian Kersman, we thank you, GQG portfolio manager there, appreciate it. Meanwhile, 0:13:24.559 --> 0:13:27.120 let's just check in on super micro shares for a moment. 0:13:27.600 --> 0:13:30.400 Jumping earlier in the training session, we're now up just 0:13:30.440 --> 0:13:31.000 two percent. 0:13:31.080 --> 0:13:32.280 But all of this after the battle. 0:13:32.360 --> 0:13:35.320 Server makers said that the Nasdaq has granted the firm 0:13:35.600 --> 0:13:39.760 more time to become compliant with listing rules. Ultimately, this 0:13:39.840 --> 0:13:42.200 is all regarding whether or not they've got time to 0:13:42.240 --> 0:13:44.480 serve their teen filings. 0:13:44.520 --> 0:13:45.240 Take whose filings. 0:13:45.240 --> 0:13:46.880 We're seeing that the company has now been given till 0:13:46.880 --> 0:13:49.840 February the twenty fifth the file. It's financial report for 0:13:49.880 --> 0:14:01.840 the fiscal year ended June thirtieth alphabet, and it's revealing 0:14:01.920 --> 0:14:04.680 new details on the progress it's made in quantum computing. 0:14:04.920 --> 0:14:08.079 The exponential advancements are being done with a new Willow 0:14:08.200 --> 0:14:11.200 quantum chip that is helping overcome some of the biggest 0:14:11.280 --> 0:14:13.240 challenges in the field. Now the next step is of 0:14:13.280 --> 0:14:15.440 course coming up with real world use for all the 0:14:15.440 --> 0:14:18.360 theoretical power. Here to talk about all of it, hartman 0:14:18.520 --> 0:14:21.120 Naven here's the vice president of Engineering at Google as 0:14:21.120 --> 0:14:23.200 well as a founder and manager of the Quantum Artificial 0:14:23.240 --> 0:14:26.520 Intelligence Lab, And the biggest challenge thus far has been. 0:14:26.920 --> 0:14:30.080 Ultimately error correction. Can you just talk us through what 0:14:30.200 --> 0:14:31.240 you have just achieved. 0:14:31.760 --> 0:14:36.320 Yeah, The biggest news for today is that we developed 0:14:36.320 --> 0:14:41.720 a new very high quality quantum ship and this enabled 0:14:41.760 --> 0:14:46.600 to break through computations. And one is an error correction 0:14:47.040 --> 0:14:49.320 where we showed for the first time that as we 0:14:49.440 --> 0:14:52.880 use more cubits, the error rate comes down, and it 0:14:52.920 --> 0:14:59.000 comes down exponentially. The second important achievement breakthrough achievement, is 0:14:59.040 --> 0:15:03.400 that we did benchmark computation took just five minutes on 0:15:03.480 --> 0:15:08.720 our new chip that would take the top supercomputer ten 0:15:08.840 --> 0:15:13.560 septillion years to perform, so ten septillion audience may not 0:15:13.600 --> 0:15:16.480 know that's one with twenty five zero. So it's a 0:15:16.520 --> 0:15:19.480 mind bogglingly long time and it. 0:15:19.440 --> 0:15:20.480 Took five minutes. 0:15:20.840 --> 0:15:23.400 What I want to understand is what this benchmark test 0:15:23.440 --> 0:15:25.480 is benchmark random circuit sampling? 0:15:25.720 --> 0:15:26.640 What does this prove? 0:15:27.400 --> 0:15:31.640 Yes, So this benchmark problem we often say, it's not 0:15:31.680 --> 0:15:36.080 a problem that people on mainstream have yet, but it's 0:15:36.160 --> 0:15:40.560 a suitable benchmark to compare different quantum processors to each other, 0:15:41.040 --> 0:15:47.360 or to compare quantum processors quantum chips against classical computers. 0:15:48.040 --> 0:15:51.440 What's so mind boggling about quantum more generally is that 0:15:51.480 --> 0:15:54.440 we have been talking about it for decades, but it 0:15:54.560 --> 0:15:57.240 always feels another five, another ten years off. 0:15:57.880 --> 0:15:59.680 Is it different this time? Hartlett? 0:16:00.080 --> 0:16:04.640 Yeah, Queen computing is definitely not that field. There's a 0:16:04.920 --> 0:16:09.080 steady progress, and our new chips that we just released 0:16:09.160 --> 0:16:13.880 a Willow will form the basis to start doing useful 0:16:13.960 --> 0:16:21.320 computations that will enable or solve problems that humankind has. 0:16:21.720 --> 0:16:22.960 Let's talk about those problems. 0:16:23.000 --> 0:16:27.360 Then everyone immediately goes to healthcare drug discovery. Is that 0:16:27.400 --> 0:16:30.600 the most obvious place with which this sort of computing 0:16:30.640 --> 0:16:31.440 is going to be helpful. 0:16:32.040 --> 0:16:36.280 So the well understood killer application of Queen computers is 0:16:36.760 --> 0:16:41.280 to model systems where quantum effects are important, and that 0:16:41.640 --> 0:16:44.880 is more often the case than you may think. For example, 0:16:44.960 --> 0:16:51.360 if you want to understand how drugs pharmaceuticals bind to cells, 0:16:51.680 --> 0:16:55.200 or if you want to design a nuclear fusion reactor 0:16:55.560 --> 0:16:59.520 or something as mundane as improving the batteries for an 0:16:59.520 --> 0:17:05.320 electric are all these engineering challenges involve quantum problems, and 0:17:05.440 --> 0:17:08.679 their quantum processes are just the tool of choice to 0:17:08.800 --> 0:17:10.040 solve those problems. 0:17:10.680 --> 0:17:14.800 Put it in the perspective of generative AI, the hype 0:17:15.000 --> 0:17:17.600 that our audience that we have had over the past 0:17:17.600 --> 0:17:18.399 couple of years. 0:17:18.600 --> 0:17:20.800 What does quantum mean for that? Is it? 0:17:21.000 --> 0:17:24.120 Is it superior even in its effects versus generative AI, 0:17:24.240 --> 0:17:26.679 and does itself the same issues in terms of energy 0:17:26.720 --> 0:17:27.600 and infrastructure. 0:17:28.440 --> 0:17:32.240 I wouldn't compare it in those terms. AI as well 0:17:32.240 --> 0:17:37.879 as quantum computing will be the most transformative technologies of 0:17:38.000 --> 0:17:42.000 our time. But there's a lot of cross fertilization between 0:17:42.880 --> 0:17:48.520 AI and quan computing. So AI can help work for 0:17:49.160 --> 0:17:52.080 quantum ships to work better and vice versas. There are 0:17:52.119 --> 0:17:57.080 many key computational tasks in AI where a quantum ship 0:17:57.119 --> 0:18:00.280 will just be the tool of choice to handle laws. 0:18:01.200 --> 0:18:02.560 It's a phenomenal step. 0:18:02.960 --> 0:18:06.000 Please come back as you start to apply the significance 0:18:06.080 --> 0:18:08.560 of this computing. Heartment name and he's the VP of 0:18:08.600 --> 0:18:10.840 Engineering at Google and founder of the Quantum Malt Official 0:18:10.880 --> 0:18:11.760 Intelligence Lab. 0:18:12.119 --> 0:18:13.360 Meanwhile, coming up, we're going to. 0:18:13.280 --> 0:18:16.480 Be discussing the limits of power grids and how they're 0:18:16.520 --> 0:18:18.520 running up against the ambitions of both Big Tech and 0:18:18.520 --> 0:18:21.080 Wall Street when it comes to generator of AI. What 0:18:21.119 --> 0:18:23.760 we're just finishing on conversation there on. Meanwhile, just check 0:18:23.760 --> 0:18:27.520 in on some key stories today. Comcast one of those, 0:18:27.880 --> 0:18:31.280 off by seven percent, key drops on the SMP at 0:18:31.280 --> 0:18:34.280 the moment and the Nasdaq shares sliding, and this after 0:18:34.600 --> 0:18:37.919 the Comcast Cable president's CEO David Watson is saying is 0:18:37.960 --> 0:18:41.400 projects broadband subscribing losses and more than one hundred thousand 0:18:41.760 --> 0:18:44.600 in the fourth quarter, hurricans Helene and Milton causing around 0:18:44.680 --> 0:18:47.440 ten thousand broad band losses. We're also looking at Vivendi 0:18:47.520 --> 0:18:50.240 Big News out of France, as this company does look 0:18:50.280 --> 0:18:53.560 to break itself apart, saying it's very likely though it 0:18:53.560 --> 0:18:56.360 would drop out of the CAC forty after it did 0:18:56.400 --> 0:19:00.000 indeed approve that three spin off listing December the sixth, 0:19:00.119 --> 0:19:03.920 Steek investors approving that and plans spin off of three 0:19:04.000 --> 0:19:05.399 multi billion euro units. 0:19:05.680 --> 0:19:20.280 This is bluembg technology time now for talking tech. 0:19:20.320 --> 0:19:23.199 First up, Hello Fresh, But it's facing allegations that one 0:19:23.240 --> 0:19:27.040 of its facilities in Illinois used migrant teen labor chars 0:19:27.040 --> 0:19:29.679 fell after ABC News reported it is under investigation by 0:19:29.680 --> 0:19:32.320 the US Labor Department along with a staffing agency that 0:19:32.400 --> 0:19:36.440 hired employees for the facility, plus Finance Holding CEO Richard 0:19:36.440 --> 0:19:38.960 Teng told Bloomberg that quote, the future is bright for 0:19:39.040 --> 0:19:41.399 crypto and encouraging other countries to follow the lead in 0:19:41.440 --> 0:19:41.919 the US just. 0:19:41.920 --> 0:19:42.440 Take a listen. 0:19:43.359 --> 0:19:47.680 Yeah, Now, very crypto friendly president in the States and 0:19:47.880 --> 0:19:52.119 extremely smart strategy appointing AI in crypto za on that 0:19:52.200 --> 0:19:55.320 front because this tool represents the most innovative technology for 0:19:55.359 --> 0:19:56.040 the future. 0:19:57.480 --> 0:20:00.119 And Jack Maher made a rare public appearance Sunday to 0:20:00.280 --> 0:20:03.760 Mark and Group's twentieth anniversary, spoke optimistically about the future 0:20:03.760 --> 0:20:06.520 of the company while acknowledging its challenges and also the 0:20:06.600 --> 0:20:10.600 hype around the company's AI powered products. Let's just talk 0:20:10.600 --> 0:20:13.320 about AI a little bit more because Blackstone has been 0:20:13.720 --> 0:20:17.240 big data center investor and its ambitions are huge, but 0:20:17.280 --> 0:20:20.879 not everyone is into it. After it bought data center 0:20:21.280 --> 0:20:24.920 developer QTS in twenty twenty one, it's turned it into 0:20:25.040 --> 0:20:26.480 a major profit driver for the firm. 0:20:26.560 --> 0:20:29.320 But around Fairttville, Georgia. 0:20:29.080 --> 0:20:31.520 The data center has stirred discord in the community over 0:20:31.520 --> 0:20:34.520