Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: From Mahard.
Speaker 3: We're Innovation, Money and Power Collie in Silicon Valley, NBN.
Speaker 4: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 5: I'm Caroline Heid at Bloomberg's World headquarters in New York.
Speaker 6: And I Amed Ludlow in San Francisco. This is Bloomberg.
Speaker 7: Technology coming up.
Speaker 5: Intel, it slides amid some tepid forecasts. We're going to
Speaker 5: discuss all of that with the CEO, Pat Girl Singer.
Speaker 6: Plus Microsoft and Google posts strong results on AI demand
Speaker 6: for cloud full coverage ahead.
Speaker 5: And Jeff Bezos and Andy Jesse deleting chats in an
Speaker 5: anti trust probe. Now that's according to the FTC. We
Speaker 5: bring you their response and the details right now.
Speaker 7: Caro, we start with semiconductors.
Speaker 4: We do.
Speaker 5: Let's dig in on ill things Intel. Blumberg's in king
Speaker 5: was on, of course, across the earnings last night, discussing
Speaker 5: with the business and look, this seems to be a
Speaker 5: worry about forecasts.
Speaker 8: Q one actually pretty resilient. The forecast Teppid.
Speaker 1: Yeah, no, you're absolutely right. All of the divisions performed
Speaker 1: roughly where Wall Street was expecting.
Speaker 2: If not a little bit better.
Speaker 1: The issue that investors had was with the forecast that
Speaker 1: Partner's team put out there, and I was considerably lighter
Speaker 1: than the consensus, and that was explained by Partner's management
Speaker 1: team as that being related to a structural issue that
Speaker 1: some of the excess demand that out there can't be
Speaker 1: met because of an issue with a shortages of a
Speaker 1: certain type of manufacturing.
Speaker 6: It's important about the server market. What did we learn
Speaker 6: about Intel's place in the server market?
Speaker 1: Yeah? I mean, as I forwarded along to you and
Speaker 1: analyst to put it this way, look at the server market.
Speaker 1: The fund you know, the basic server market that Intel
Speaker 1: has owned for many years just isn't growing at a
Speaker 1: rate that it has in the past because spending is
Speaker 1: going elsewhere. It's going into AI accelerators and that isn't
Speaker 1: a big market for Intel yet.
Speaker 6: And finally, we should talk about foundry. Intel is unique
Speaker 6: in that sense that it is pursuing two business models.
Speaker 7: What did you learn there?
Speaker 1: Yeah, I mean that's the big story, isn't it. That
Speaker 1: you know, Pap is pursuing some long term fundamental changes
Speaker 1: to the chip industry and if it plays out how
Speaker 1: he projects, we're going to see a whole different Intel
Speaker 1: and a whole different industry.
Speaker 2: But in the meantime, he's.
Speaker 1: Got a report quarterly earnings based upon what's happening right now.
Speaker 6: Bloomberg's in king who leads our semiconduct to coverage here
Speaker 6: at Bloomberg. Thank you very much, And Caro, you know
Speaker 6: it's the earnings context, right. They are numbers relative to
Speaker 6: street expectations, But like every earnings, it's about.
Speaker 7: An outlook and the long term.
Speaker 6: The story with Intel that I think the market's seizing
Speaker 6: on right now.
Speaker 8: The long term we want to dig into with a CEO.
Speaker 5: In the short term, though, we have to ignore the
Speaker 5: market reaction and one point the worst sell off that
Speaker 5: we've seen since twenty twenty July of twenty twenty. We're
Speaker 5: now coming off of those lows ed but we're now
Speaker 5: at the worst since January twenty twenty four. But just
Speaker 5: to add to the fact that this is a company
Speaker 5: that's lost a third of its market capitalization in this year.
Speaker 6: Alone, we know that AI is a complicated story. Yes,
Speaker 6: AI accelerators, but the server market needs CPUs. It also
Speaker 6: needs memory, which we discussed with Micron just the other day.
Speaker 6: A lot of this is happening in parallel, and as
Speaker 6: we learned with Microsoft and Google, some of the cloud
Speaker 6: growth is not necessarily AI related. Data center infrastructure is
Speaker 6: needed for non AI reasons as well. So let's try
Speaker 6: and unpick what's happening in a name that, as you say,
Speaker 6: is down. We welcome now our Bloomberg TV and radio
Speaker 6: audiences worldwide, and joining us is the Intel CEO Pat Gelsinger.
Speaker 6: A Pat, good morning to you and thank you for
Speaker 6: your time. You know, the stock is down more than
Speaker 6: ten percent, and we're kind of here again right where
Speaker 6: there's the short term and the long term where you're
Speaker 6: trying to convince investors of a return to technology leadership
Speaker 6: and also grow a foundry business. Have you an updated
Speaker 6: timeline and when you think you will achieve that target?
Speaker 2: Yeah?
Speaker 9: Thanks Ed, And obviously, hey, we delivered a solid Q one, right,
Speaker 9: We met on revenue, We beat on earnings a bit
Speaker 9: tep it in the first half, as we said, but
Speaker 9: we see a lot of improvement as we go through
Speaker 9: the year. And with that, obviously the foundry business, as
Speaker 9: I would say, we're going to see progress in the
Speaker 9: foundry business every quarter from now to the end of
Speaker 9: the decade. It just gets better and better as we
Speaker 9: move into our new technologies, you know, as we've said,
Speaker 9: getting back to process leadership, which have better asps and
Speaker 9: we can build better products with them. We win more
Speaker 9: external foundry customers as our scale growth, and we also
Speaker 9: get past this period where we had to invest to
Speaker 9: catch up right and create the capacity for a decade
Speaker 9: plus of under investment. So everything there becomes a tailwind
Speaker 9: going forward. And we hit key milestones and one of
Speaker 9: those I was very proud of just this week we
Speaker 9: went to production with our first server part on Intel three.
Speaker 9: The US is back to leadership process technology being manufactured
Speaker 9: on our shores for the first.
Speaker 7: Time in a decade.
Speaker 9: So some key milestones, and I'll just say everything is
Speaker 9: coming together as we would say, and we're very optimistic
Speaker 9: that yes, in fact, we will deliver the foundry business
Speaker 9: and the manufacturing capabilities as we've laid out for the company,
Speaker 9: the industry, and the world Stiphil.
Speaker 8: Interestingly, anais over there.
Speaker 5: Twenty twenty four should mark the bottom in many aspects.
Speaker 7: Pat but they.
Speaker 5: Really want to understand the pace of the climb that
Speaker 5: is necessary. How can you tell us about how quickly
Speaker 5: you'll be able to scale that market share that.
Speaker 8: You're so far lost.
Speaker 9: Yeah, And you know, we look at Intel now in
Speaker 9: these two different perspectives Intel products, and we expose through
Speaker 9: our recast financials that we have a very solid, fabulous
Speaker 9: business with healthy financials and we expect those to improve
Speaker 9: over time. But the big story has been about exposing
Speaker 9: the foundry financials and the losses associated with those. And
Speaker 9: what we see is over the decade, you know that
Speaker 9: we'll cross through profitability in the middle of the period
Speaker 9: for that business as we get back to process leadership
Speaker 9: and start to moderate the level of investment required to
Speaker 9: go rebuild that decade of under investment. And as we
Speaker 9: do that, if we would have that today, we'd be
Speaker 9: more than double the earnings this year that we're forecasting.
Speaker 9: So it becomes a huge positive lever for us. And
Speaker 9: as I like to say, all of that's in our control,
Speaker 9: the wafers, getting back to leadership, the product implications of it,
Speaker 9: all of these things are our control, and it gets
Speaker 9: better as we win additional external foundry customers.
Speaker 6: The link I think pat is that is about growing
Speaker 6: market share a server to support the costs necessary for
Speaker 6: the foundry business. You're asked an interesting question on the
Speaker 6: call in the context of servers built on x eighty
Speaker 6: six versus on based alternatives, And you gave a pretty
Speaker 6: thorough explanation about the place of all of those particular
Speaker 6: data center CPUs. But what I didn't hear was what's
Speaker 6: happening out there in the real world. Where are data
Speaker 6: centers being built and what are they being built on
Speaker 6: right now?
Speaker 9: Yeah, and this is important because we've been at the
Speaker 9: period now for a number of quarters where data centers
Speaker 9: CPUs have been fairly tepid, and we do see that improving.
Speaker 9: We had good improvement in the first quarter of the year,
Speaker 9: and we expect that to continue through the year, and
Speaker 9: you know, there's time for refrash in those data centers.
Speaker 2: But we're also seeing that the.
Speaker 9: CPUs now has head nodes for AI use cases. We've
Speaker 9: posted some pretty incredible results that we can now run
Speaker 9: seventy billion parameter models natively.
Speaker 2: On the CPU.
Speaker 9: I don't need accelerator. I can do everything on the
Speaker 9: software stack that I already use inside of data centers.
Speaker 9: And we're seeing that these power efficient products that we're
Speaker 9: bringing to the marketplace, such as our Xeon six that
Speaker 9: we just announced, are going to enable us to stabilize
Speaker 9: and regain market share with much higher core counts. The
Speaker 9: asps are going up very nicely on that through the year,
Speaker 9: So we saw growth in Q one. We expect that
Speaker 9: to continue through the year, and as we get to
Speaker 9: the back half of the year, our Accelerator product line
Speaker 9: with Goudy Xeon plus Goudy, we become, we believe, becomes
Speaker 9: a very compelling solution for enterprise customers, and we have
Speaker 9: quite a number of announcements of those this quarter. Customers
Speaker 9: such as Bosh and Dell and super Micro all bringing
Speaker 9: those into the marketplace, Roach and IBM, and eCloud partners
Speaker 9: like Nahvor, the fastest growing cloud provider in Asia, all
Speaker 9: of those coming alongside the Intel strategy.
Speaker 7: So we see that momentum.
Speaker 5: Building it momentum, and we want to just remind us
Speaker 5: that we are with TV radio audiences. The CEO of Intel,
Speaker 5: Pat Gelsinger, Pat on the momentum. Everyone wants to talk
Speaker 5: about AI in all.
Speaker 8: Of its ways and means.
Speaker 5: You've been focusing in on an AIPC and I'm just
Speaker 5: really interested in Ultimately you're going to be watch shipping
Speaker 5: in excess. Originally forty million AIPC CPUs that's target for
Speaker 5: twenty twenty four, But what's the demand like at the moment,
Speaker 5: pat and what's the cost like.
Speaker 9: Yeah, And when we announced the category at the end
Speaker 9: of last year, Carolyn, it was sort of like everybody says, Wow,
Speaker 9: what's going on the AIPC And you're seeing a flurry
Speaker 9: of interest of other people coming into that market. But
Speaker 9: Intel unquestionably the leader. You're first to declare the market,
Speaker 9: first to describe the use cases. And our first product,
Speaker 9: Core Ultra, is having a very robust ramp into the marketplace,
Speaker 9: and to some degree, I'm racing the catch up to
Speaker 9: the demand. We're meeting all of our supply commitments, but
Speaker 9: not all of the upside requests yet that we're getting
Speaker 9: from customers.
Speaker 7: So this is very robust.
Speaker 9: We expect that we'll exceed the forty million units this year.
Speaker 9: We'll be introducing our next generation product in the middle
Speaker 9: of this year, so all of these pieces, we are
Speaker 9: very optimistic. And you're seeing use cases and communications where
Speaker 9: all of a sudden, I get summarization, contextualization, translation in
Speaker 9: real time, all running on my PC. Developers, gamers, all
Speaker 9: of these use cases are now becoming AI Enabled and
Speaker 9: Intel leading the AIPC parade. It's a very exciting time
Speaker 9: for I believe will be the biggest cycle of PC
Speaker 9: refrash and expansion that we've seen in likely decades.
Speaker 5: Pat this is a conversation about your technology and about
Speaker 5: ultimately your fundamentals of a business. I'm just going to
Speaker 5: take a turn for a moment, and it's a sensitive question,
Speaker 5: so I give you a moment to.
Speaker 8: Think about it.
Speaker 5: But giving your relationship with Israel and the fact that
Speaker 5: you are one of the largest employers over there, how
Speaker 5: are you currently feeling about Well, students in the United
Speaker 5: States protesting against endowments being invested in companies that are
Speaker 5: associated with Israel.
Speaker 8: At this moment.
Speaker 9: Well, we have been in Israel for forty years now
Speaker 9: and it's been an incredible country for us, incredible innovators,
Speaker 9: and extraordinary resilience by the Israeli people, and they continue,
Speaker 9: despite the challenges of the war that's going on there,
Speaker 9: to deliver against their objectives. So we're very committed to
Speaker 9: support our teams wherever they are in the world that said, hey,
Speaker 9: we seek peace, and we've been clearly emphasizing that we
Speaker 9: need to find routes of sustainable peace in the region.
Speaker 9: I've been supporting perspectives that reinforce that across the region,
Speaker 9: and as we look across the world, we say, boy,
Speaker 9: you know, there continues to be the turbulence. And fundamentally,
Speaker 9: our strategy is around building globally rec zillient supply chains
Speaker 9: that are balanced across the world. So our core strategy
Speaker 9: is so emphasizing that there will be these challenges across
Speaker 9: the world, you know, whether that's in Israel, Ukraine or Asia,
Speaker 9: and we are committed to making sure that we can
Speaker 9: support the global markets that we serve right with a
Speaker 9: strategy that really was built for a turbulent world.
Speaker 6: Pat let's end on AI accelerators. Goudi is on track
Speaker 6: for five hundred million this year, AMD's MI I three
Speaker 6: hundred X will probably do three and a half billion,
Speaker 6: and Nvidia with its generations will do forty billion. You've
Speaker 6: said that choice is important and also the CPU is important,
Speaker 6: and I accept that many share it, but do you
Speaker 6: see a clear path where the numbers I just outlined
Speaker 6: rebalance in your favor in the AI accelerator market going forward.
Speaker 9: Given the strength that we saw at our vision event
Speaker 9: that we had, we had twenty plus customers coming out
Speaker 9: publicly in support of our accelerator and our Z plus
Speaker 9: accelerator strategy. We're really starting to see that pipeline of
Speaker 9: activity convert and ultimately much of the activity that you've
Speaker 9: seen so far on generative AI has been in cloud
Speaker 9: training and now and I think the ultimate monetization of
Speaker 9: AI happens as business deployments start to occur, and those
Speaker 9: are the areas that we see strength. We launch the
Speaker 9: open platform for Enterprise AI. How do we enable these
Speaker 9: use cases inside of the enterprise, but in an open
Speaker 9: architecture that many get to participate in. We announced the
Speaker 9: open AI Networking, you know, from closed proprietary networking to
Speaker 9: standard ethernet based scale up and scale out networking. We
Speaker 9: announced that this quarter, and obviously the momentum that we're
Speaker 9: seeing with Goudy, know, all of that half a billion,
Speaker 9: almost all of it's in the second half of the year,
Speaker 9: so you can see a very accelerated cycle, a lot
Speaker 9: of enthusiasm for Goudy, you know, the unquestioned leader in
Speaker 9: TCO total call the ownership for enterprises, building on the
Speaker 9: Xeon franchise and the position that we have in the
Speaker 9: enterprise and literally ISVs and cloud providers, but most importantly
Speaker 9: enterprise customers seeing that value proposition. Yeah, we feel like
Speaker 9: we're gaining a lot of momentum now in this category
Speaker 9: and feel good about the potential for our AI everywhere AIPC,
Speaker 9: AI Edge, AI Enterprise and AI cloud.
Speaker 5: Ending on an optimistic mote, we thank you so much,
Speaker 5: Intel CEO Pat Gelsinger there on all things AI, all
Speaker 5: things Intel numbers. Got to get back to those earnings,
Speaker 5: got to get back to the new two trillion dollar
Speaker 5: entrant Google Microsoft two shares absolutely popping higher after the
Speaker 5: surge and.
Speaker 8: Cloud revenue those businesses.
Speaker 5: And fueled in part, I guess what booming use of
Speaker 5: artificial intelligence services is helping deliver strong earnings results and
Speaker 5: we want to get to it with Clearbridge Investments Senior
Speaker 5: research analyst Hillary Frish, who just comment on the one
Speaker 5: that's moving the most today and alphabet.
Speaker 8: Parent at Google.
Speaker 5: Interestingly, cloud always been seen as the laggard there, but
Speaker 5: infusing artificient intelligence is helping bring about market share, particularly
Speaker 5: with startups.
Speaker 10: Indeed, it is thanks for having me cure line.
Speaker 3: Yeah.
Speaker 10: Google is well known for having a strong presence among
Speaker 10: startups tech companies and they have among the best AI
Speaker 10: assets around historically, and so they're going to benefit from
Speaker 10: this along with everybody else. And we've seen two quarters
Speaker 10: of improvement at Google Cloud now, and.
Speaker 5: I think many were waiting for Okay, you've got these offerings,
Speaker 5: how are people using them, adopting them and actually boosting
Speaker 5: their own productivity? Microsoft shone a light on the fact
Speaker 5: that what is It's like sixty five percent of the
Speaker 5: Fortune one hundred are using their Azure Cloud at the moment.
Speaker 5: I mean, they must be just ripping away market share
Speaker 5: from everyone else. Even though cloud is still good for Google,
Speaker 5: Microsoft still firing on all the senators for you.
Speaker 10: Indeed, it is, in fact, those cylinders are just really
Speaker 10: starting to get going. It's interesting because Microsoft is absolutely
Speaker 10: benefiting from a share perspective due to their leading position
Speaker 10: in AI across all their businesses. Certainly cross cloud and
Speaker 10: I view AI as ultimately, you know, an ultimate contributor,
Speaker 10: but it's definitely an accelerant to cloud migrations.
Speaker 7: Hillary, good morning, It's ed in San Francisco.
Speaker 6: The share reactions of each are interesting, you know, alphabet
Speaker 6: more pronounced when I talked to Ruth poor Out on
Speaker 6: the phone last night, about cloud.
Speaker 7: She basically said AI.
Speaker 6: Solutions did make a meaningful contribution to that that twenty
Speaker 6: eight percent cloud growth year on year, but she didn't
Speaker 6: put a number on it. Now, Microsoft and amy Hood
Speaker 6: did put a number on it. They said thirty one
Speaker 6: percent asure growth, seven percent of which came from AI.
Speaker 7: So really interesting share reaction.
Speaker 6: I put it to you that Alphabet probably isn't jumping
Speaker 6: as much on that cloud narrative as it is the
Speaker 6: sweetener of a dividend.
Speaker 8: I think you're right about that, Ed.
Speaker 10: I think investors were pleased to see the results across
Speaker 10: the board.
Speaker 8: I think they breathe a.
Speaker 10: Sigh of relief that cloud accelerated, that all businesses accelerated
Speaker 10: quarter over quarter. But the big piece of new information
Speaker 10: here was was operating margin improvement and commitment to that
Speaker 10: through the year, as well as the dividend. And that
Speaker 10: can draw a whole new class of users. But importantly,
Speaker 10: it signals a shareholder friendlier stance than we've seen from
Speaker 10: Google historically.
Speaker 6: Hillary, do you believe now through the lens of Alphabet
Speaker 6: and Microsoft earnings, that corporate America is actually spending on
Speaker 6: and using generative AI.
Speaker 8: I believe they are.
Speaker 10: I believe most of corporate America is experimenting with AI
Speaker 10: and testing generative AI, and in Microsoft's are cloud and elsewhere,
Speaker 10: certainly in Amazon and Google as well, there are some
Speaker 10: early adopters who are starting to get to some level
Speaker 10: of scale. Microsoft seven points of AI contribution were good.
Speaker 10: I would say they were generally in line, though, but
Speaker 10: Mycrosoft did signal on their call that they were actually
Speaker 10: a capacity constrained, alluding to the idea that that number
Speaker 10: would have actually been higher were it not for those constraints.
Speaker 10: I still believe it's going to be starting in the
Speaker 10: second half where we see that Microsoft inferencing base of
Speaker 10: users doing inferencing on their Azure Cloud really broaden out
Speaker 10: and start to drive that number.
Speaker 5: I want to dig into basically the broadening idea.
Speaker 8: Here we're talking about two names.
Speaker 5: That have already done phenomenally well on the hype around AI.
Speaker 5: We're waiting for the spin over effects. Now you shine
Speaker 5: a light on certain companies that I keep an eye
Speaker 5: on because they're New York based Mongo dB.
Speaker 8: We also think about what data dog is up to.
Speaker 5: How are these companies going to benefit from the adoption
Speaker 5: of jener to AI.
Speaker 10: So these companies will benefit the whole consumption complex, Cloud
Speaker 10: Consumption Complex, Mango, dB Snowflake, Data Dog, the.
Speaker 8: First and third being in New York.
Speaker 10: They'll benefit with a lag what they will. So I
Speaker 10: agree with your Caroline that we're not seeing it on
Speaker 10: a broad based basis yet there are select few who
Speaker 10: are actually going to benefit. But what they will benefit
Speaker 10: from is the absence of the extreme cost optimization we
Speaker 10: saw last year, companies going on a buyer strike in
Speaker 10: terms of new projects. They're going to see the flow
Speaker 10: through of what's effectively a cyclical upturn in cloud consumption.
Speaker 10: And we actually heard that from Microsoft last night that
Speaker 10: companies are commencing new projects, that they're starting to do things,
Speaker 10: they're taking out mothballed projects and bringing those back. So
Speaker 10: I think that's a positive for this whole group.
Speaker 6: Hillary, we're down week one of megacap Tech and I'm
Speaker 6: bracing for week two. What do you think is the
Speaker 6: kind of blanket takeaway of this seven day period so far?
Speaker 10: I'd say overall cautiously optimistic. Again, I stick to the
Speaker 10: names where expectations are low, valuations are reasonable, and companies
Speaker 10: have idiosyncratic drivers. Microsoft with AI and share gains the
Speaker 10: cloud consumption complex with the A and some negatives. Amazon
Speaker 10: should show some pretty good results based on the fact
Speaker 10: that they have a lot of tech companies and startups
Speaker 10: on their platform too who are experimenting with AI. But
Speaker 10: it's really company by company and enterprise budgets overall remain
Speaker 10: somewhat constrained in first half. I'd experience more of that
Speaker 10: opening up in second half.
Speaker 8: Lud Fresh all is.
Speaker 5: So good to get your expertise on the time that
Speaker 5: we have earnings and all the time actually clearbridge investments.
Speaker 8: We thank you for being here and what have you got.
Speaker 6: Let's get some news in talking tech and first up
Speaker 6: food delivery service Metwan is planning to launch its international
Speaker 6: platform in Reard, its first location outside of China, according
Speaker 6: to sources involved in discussions. The companies looked into expanding
Speaker 6: in the Middle East for months and could launch as
Speaker 6: early as a few months from now. The move comes
Speaker 6: as Chinese companies seek growth abroad to combat a domestic slowdown. Plus,
Speaker 6: US Secretary of State Anthony Blincoln and Chinese President Jijingping
Speaker 6: met in Beijing. She's China. She issued a warning to
Speaker 6: blink in against quote vicious competition between the two countries,
Speaker 6: saying quote, China and the United States should.
Speaker 7: Be partners rather than rivals.
Speaker 6: The two day meeting composed the dialogue on trade, geopolitical tensions,
Speaker 6: and even an announcement of AI talks that will begin
Speaker 6: in the coming weeks. And finally, Huawei's latest smartphones are
Speaker 6: said to be utilizing an updated version of its made
Speaker 6: in China chips. According to an independent analysis, the purest
Speaker 6: seventy phones sport a kirre In ninety ten processor, which
Speaker 6: is a new version of the nine thousand chips that
Speaker 6: alarmed Washington officials due to their seven nanimeter tech, long
Speaker 6: thought to be beyond China's capabilities. According to Jeffreys, the
Speaker 6: Pure seventy smartphones sold out within two days of being launched.
Speaker 8: Carol, fascinating.
Speaker 5: Coming up, Look, we're going to talk FTC allegations against
Speaker 5: the Amazon founder Jeff Bezos and it's currency Leo Andy Jesse. Apparently,
Speaker 5: according to the FDC, they've been destroying messages amid an
Speaker 5: antitrust probe. We'll get you the details and the response
Speaker 5: from Amazon next you more just of course happening with
Speaker 5: dark Trace today, UK listed company up sixteen percent. Why
Speaker 5: the UK cyber Companies actually agreed to sell itself to
Speaker 5: a private equity firm Tomo Bravo for an equity.
Speaker 8: Value of five point three billion dollars.
Speaker 5: That's basically a twenty percent premium. So still a little
Speaker 5: bit of caution in the market that this deal will
Speaker 5: get done. Remember tom O Bravo actually walked away back
Speaker 5: in twenty twenty two for talks to buy dark Trace.
Speaker 5: But really interesting and this is a company, of course
Speaker 5: in somewhat an interesting relationship with the battle British entrepreneur
Speaker 5: Mike Lynch who is on trial for Ford. Here in
Speaker 5: the US, we shine a light on dark Trace today.
Speaker 5: This is Broome, their technology.
Speaker 6: Welcome back to Bloomberg Technology. Ed Ludlow in San Francisco.
Speaker 8: Aaron Hyed back in New York.
Speaker 6: Let's get to one of the top stories on the
Speaker 6: Bloomberg terminal and dot com. Top Amazon executives, including founder
Speaker 6: Jeff Bezos and CEO Andy Jesse destroy Lloyd's text messages
Speaker 6: discussing business, according to allegations by the FTC, A raising
Speaker 6: evidence the agency could have used in an antitrust case
Speaker 6: against the retail giant. I want to bring in Bloomberg's
Speaker 6: Mike Shepherd, who leads our coverage of the kind of
Speaker 6: intersection of tech and politics. Now, Amazon is pushing back
Speaker 6: against this FTC allegation with some force. We will get
Speaker 6: to that, but we're talking about communications made by executives
Speaker 6: on the Signal app. Mike explain it to us, well, I.
Speaker 3: Think it's important to turn the clock back a couple
Speaker 3: of months to September, and this is when the FTC
Speaker 3: filed its initial anti trust case against Amazon, and they've
Speaker 3: gradually been increasing the pressure on the company in this
Speaker 3: particular matter, in this lawsuit.
Speaker 7: In November, they had.
Speaker 3: A less redactive version of the case released to the public,
Speaker 3: and that indicated that they had concerns executives have been
Speaker 3: concealing some information, but they didn't name names.
Speaker 7: Today.
Speaker 3: We learned last night we're discussing today the latest and
Speaker 3: that is that they are naming names, including CEO Andy
Speaker 3: Jase and the founder of Jeff Bezos. And that indicates
Speaker 3: the kind of pressure that the agency is putting on
Speaker 3: the company, and it echoes what this broader effort against
Speaker 3: big tech by anti trust and forces here in DC.
Speaker 5: Mike, turn the clock back even further, and you go
Speaker 5: to twenty nineteen, when Jeff Bezos indeed made clear and
Speaker 5: evident that his phone had been hacked, he felt and
Speaker 5: that is the argument as to why executives moved to
Speaker 5: signal and these automatic discussions that can delete themselves.
Speaker 8: And I'm noting.
Speaker 5: That Amazon has currently said, Look, the FDC has a
Speaker 5: complete picture of Amazon's decision making in this case, including
Speaker 5: one point seven million documents from sources like email, internal
Speaker 5: messaging applications, and laptops, among other sources, over.
Speaker 8: One hundred terabytes of data.
Speaker 5: What more needed they do to prove that they weren't
Speaker 5: using signal for well, conversations they didn't want seen by
Speaker 5: the FTC.
Speaker 3: Well, you know, the FTC is actually alleging that maybe
Speaker 3: there was more that they needed to know about.
Speaker 2: Maybe there was more in.
Speaker 3: Those conversations that disappeared that they don't have access to
Speaker 3: and are not privy to in the case yet, and
Speaker 3: that they should therefore be able to see to have
Speaker 3: a clear and complete picture. But Amazon is saying that, look,
Speaker 3: you already have enough, You have more than enough. Then
Speaker 3: you need to be able to carry on your work here.
Speaker 3: And I'm glad you brought up, Caroline, the point about
Speaker 3: twenty nineteen, because of course that's when Jeff Bezos's texts
Speaker 3: were purportedly hacked, and his desire to maintain some degree
Speaker 3: of privacy is another driver here, and so the company
Speaker 3: is saying, look, we've done enough, and also we had
Speaker 3: cause to try to protect some of these communications against
Speaker 3: people on the outside.
Speaker 5: Mike Shepherd, you always sum it up so beautifully, Thank
Speaker 5: you very much. Indeed, of all things FTC and Amazon.
Speaker 7: Today.
Speaker 8: Meanwhile, a shift gears a little bit. Elon Musk's artificial
Speaker 8: intelligence startup.
Speaker 5: Xai parently is nearing a deal to raise six billion
Speaker 5: dollars in funding, and that would value the company at
Speaker 5: eighteen billion. It's all according to a person familiar when
Speaker 5: the matter. Bluembg's Max Chafkin all in on Elon Inc.
Speaker 5: Joins us now, and I'm interested by the fact that
Speaker 5: this year at mount they're raising versus the capitalization of
Speaker 5: the business. But we did know they were going for
Speaker 5: funding to beef up XAI.
Speaker 4: Well, here's the thing.
Speaker 11: Elon Musk was able to kind of spin this open
Speaker 11: ai competitor. This is this company basically it makes large
Speaker 11: language models very similar to open ai.
Speaker 4: He did this kind of quickly and with a very
Speaker 4: small staff.
Speaker 11: But the thing is to keep these models training, you
Speaker 11: need an insane number of very very expensive GPUs.
Speaker 4: These are the graphics chips that artificial intelligence companies use.
Speaker 11: Elon Musk on a x spaces interview last month's said
Speaker 11: that they were using twenty thousand already of these Nvidia
Speaker 11: each one hundreds. They would need one hundred thousand of
Speaker 11: these chips. So this is you know, that's an expense
Speaker 11: that's in the hundreds of millions of dollars, if not
Speaker 11: the billions of dollars.
Speaker 4: So that's why he's raising this money and why they
Speaker 4: need it.
Speaker 6: There is a little backstory of all of this that
Speaker 6: the Zett, Chapman and I have. Bloomberg News reported on
Speaker 6: January nineteenth that Xai was in talks to raise funds
Speaker 6: at evaluation between fifteen and twenty billion dollars. Eighteen billion
Speaker 6: is pretty much between fifteen and twenty billion, and Elon.
Speaker 7: Must denied it.
Speaker 6: He said false, fake, and then the ft followed up
Speaker 6: with the same report and he said fake. And then
Speaker 6: the information came out yesterday with the report which Bloomberg
Speaker 6: then reported too, And he hasn't said anything yet. The
Speaker 6: main thing is irrespective of what Elon Musk says. He's
Speaker 6: got an edibility to raise money for pretty much any
Speaker 6: project he's doing max well.
Speaker 11: And it's not that he only has an ability, but
Speaker 11: he has to raise money here because you know, Elon Musk,
Speaker 11: as many people know, is you know, very wealthy, right,
Speaker 11: but he is not very liquid. Most of his wealth
Speaker 11: is tied up in Tesla stock, SpaceX stock. He does
Speaker 11: not have billions of dollars. He spent a lot of
Speaker 11: money to buy Twitter turn it into x. He does
Speaker 11: not have billions of dollars rattling around his pocket without
Speaker 11: selling some assets, which would you know, create some disruption
Speaker 11: within his empire. So he needs this outside money if
Speaker 11: he has any prayer of sort of catching up to
Speaker 11: open Ai. And from the point of view of investors,
Speaker 11: you can see why they're happy to give it to him,
Speaker 11: because Open Ai anthropic.
Speaker 4: These companies, you know, there are some.
Speaker 11: Real questions about the business models, but they have been
Speaker 11: able to achieve huge valuations, a lot of adoption. You know,
Speaker 11: taking a flyer on Elon Musk and the hottest category
Speaker 11: in business makes a lot of sense if you're these
Speaker 11: venture capitalists who are considering this.
Speaker 6: Deal, and to his credit, a lot of these projects
Speaker 6: then do tend out to be influential, and it's a
Speaker 6: lean team at XAI, and it looks like they're making
Speaker 6: progress doing best match Taffick and Happy Friday to you.
Speaker 6: A quick news story that we're looking at shares of
Speaker 6: IBM a little lower down a percentage point, but they're
Speaker 6: backing a project in Canada seven hundred and thirty million
Speaker 6: US dollars one billion Canadian dollars. This is for semiconductors,
Speaker 6: but in the context of what IBM is involved in,
Speaker 6: which is packaging and also testing labs, it's.
Speaker 7: An interesting bet.
Speaker 6: We haven't really talked as much about Canada in the
Speaker 6: context of, well, are they going to be on shoring
Speaker 6: making some kind of domestic effort when it comes to
Speaker 6: semi conductors like the United States are, Well, IBM's doing
Speaker 6: something to the tune seven hundred and thirty million dollars.
Speaker 7: We will be right back. This has Bienbo Technology.
Speaker 5: Cybersecurity firm Rubric remember jumped yesterday on its IPO day.
Speaker 8: And well it's holding on to its gains.
Speaker 5: Remember it about seven hundred and thirty two million dollars on.
Speaker 8: The back of that IPO.
Speaker 5: One of the key backers long term backers was gray
Speaker 5: Lock PRIP please to say that we have grey.
Speaker 8: Lock partner asheme Chanda with us and.
Speaker 5: Ashme you there stock exchange, ringing the bells, celebrating and
Speaker 5: how does it feel ultimately to see an early payoff
Speaker 5: like that? What was the signals that you got early
Speaker 5: on to know that will go public.
Speaker 8: And do so so well?
Speaker 12: Yeah, so now thanks so much for having me. You know,
Speaker 12: the hounderstand sor of when you back a company very early,
Speaker 12: you don't really fully know what lies ahead. I'd say
Speaker 12: this is this company is really a story of an
Speaker 12: exceptional leadership team, exceptional leader targeting a very very large market.
Speaker 12: So I think early on in the company's history it
Speaker 12: was very clear like the size of the markets that
Speaker 12: they were targeting, you know, our market sizes that most
Speaker 12: companies don't really go after, and then the quality of
Speaker 12: the people.
Speaker 7: Yeah.
Speaker 5: And I think what's interesting more broadly about the direction
Speaker 5: of travel with Rubric is that vantage they popped, they've increased,
Speaker 5: but also that there are other cybersecurity companies I'm sure
Speaker 5: in your portfolio eyeing the market, but there's also the
Speaker 5: juggernaut that is Microsoft. And the same day that they
Speaker 5: went public, Microsoft came out with its earnings saying, look,
Speaker 5: we're still making strides in cybersecurity, all interlaced with generator
Speaker 5: of AI. How much room is that for this sort
Speaker 5: of element of competition.
Speaker 12: Yeah, I would say, you know, so cybersecurity is a
Speaker 12: you know, is a secular kind of growing market. These markets,
Speaker 12: you know, have become very, very large and today, you know,
Speaker 12: it's one of the most important parts of intermission technology.
Speaker 12: Most large and mid sized companies spend anywhere from five
Speaker 12: to ten percent of the IT budget on cyber and
Speaker 12: so there's a lot of room for multiple providers, you know,
Speaker 12: provide different pieces of the stack. And then and then
Speaker 12: and then Rubric is an important partner with you know,
Speaker 12: Rubrick and Microsoft have a strong partnership together.
Speaker 6: Ashan, I'm really really interested in Rubik's very close relationship
Speaker 6: with Microsoft. There's a financial element to it. But given
Speaker 6: how AI in all of its guys is playing out,
Speaker 6: I just wondered if you had a particular thesis on
Speaker 6: how that relationship continues.
Speaker 12: Yeah, I would say, it's it's, it's it's it's a
Speaker 12: multifaceted relationship, but fundamentally you know, what what Microsoft and
Speaker 12: Rubric are trying to do is really provide customers with
Speaker 12: cyber resilience, so, you know, and just bring different pieces together.
Speaker 7: So what's next? A gray lot?
Speaker 6: I mean, you have a lot going on, you would claim,
Speaker 6: I think, and and many of your colleagues who said
Speaker 6: on this show that you guys early on generative AI
Speaker 6: and organized on generative AI, wondered if you've kind of
Speaker 6: sharpened your focus on any other areas in particular.
Speaker 12: Yeah, I would say, you know, so I've been a
Speaker 12: greylock now just a little over two decades. It's never
Speaker 12: been a more exciting time to be in venture capital,
Speaker 12: just with everything going on with Jene AI. You know,
Speaker 12: the I'd say that, I'd say the average day in
Speaker 12: the life of a VC has it's really become an
Speaker 12: AI job. And you know, we think of it fundamentally
Speaker 12: at three layers, kind of the foundational layer at the
Speaker 12: lowest level, enabling infrastructure in the middle, and then applications
Speaker 12: at the top. And you know, it's say, in particular
Speaker 12: for VC backed startups, there's a lot of opportunity around
Speaker 12: enabling infrastructure and also in applications. You know, I think
Speaker 12: it's a safe statement to say that over the coming
Speaker 12: five to ten years, you're going to see lots of
Speaker 12: applications completely reinvented, you know, with new workflows, you know,
Speaker 12: leveraging generator AI.
Speaker 5: And you've got companies in the portfolio already doing that,
Speaker 5: and you can name some of the other key AI
Speaker 5: companies that you might want to anticipate coming to the market,
Speaker 5: I'm sure, But what about the companies that aren't in
Speaker 5: inherently AI focused and just tried to become So how
Speaker 5: do you advise those?
Speaker 12: Yeah, I think I think for I think any company
Speaker 12: that started let's say more than three or four years
Speaker 12: ago there at risk of being completely disrupted by a
Speaker 12: new startup. So I think it's as a company that's
Speaker 12: you know, that's that has a product line that whether
Speaker 12: whether it's a publicly traded company or in newer startup,
Speaker 12: they have to really go in AI enable. They have
Speaker 12: to go and look at the application of AI, you know,
Speaker 12: to their product line and you know and kind of
Speaker 12: re imagine you know, other ways and either you know,
Speaker 12: in a copilot mode or really you know, the more
Speaker 12: important trend, if you know, if you take him the
Speaker 12: one year review from here is it's all about asient
Speaker 12: frameworks and agentic approaches. So most companies you know, really
Speaker 12: should be looking at like, you know, how do these
Speaker 12: technologies really apply, you know, to the product area.
Speaker 6: Assuming there's one thing Caroline and I have learned in
Speaker 6: the last I say, twelve months or so, it's that
Speaker 6: not just a company is being founded incredibly quickly, but
Speaker 6: a platform or products being built very quickly. You guys
Speaker 6: have this EDGE program where that basically is what you
Speaker 6: facilitate an idea from an individual through to a business quickly.
Speaker 6: Just explain the process and how that's playing out.
Speaker 12: Yeah, I know, thanks for asking about that, Ed. So, yeah,
Speaker 12: we have a bespoke company building program at Graylock.
Speaker 7: It's called Edge.
Speaker 12: We're very selective about you know, who we pick in
Speaker 12: the program, and uh, you know, once we do mutually
Speaker 12: once an entrepreneur in Graylock, you know, kind of mutually
Speaker 12: select each other. We basically work very closely with engineers
Speaker 12: and founding teams all the way from market segmentation to
Speaker 12: product strategy to insertion you know for initial product, working
Speaker 12: with initial customers, building customer advisory boards. Then you know,
Speaker 12: over time helping you know, recruit go to market. So
Speaker 12: it's a very beastpoke program. And you know many years
Speaker 12: ago Palo Alto Network start in our office through that,
Speaker 12: you know, through you know, through that approach. You know
Speaker 12: another one that when public started through that approach is
Speaker 12: Zoomo Logic as well.
Speaker 3: Uh.
Speaker 12: And you know, more recently, you know a company called
Speaker 12: Abnormal Security started in that process as well. They've rapidly
Speaker 12: grown to become a late stage company. And we have
Speaker 12: another one in stealth mode today, saying the San Francisco office.
Speaker 6: You know in that program, shame Shan now Gray Lot partner.
Speaker 6: It's great to have you on the program out of
Speaker 6: New York. We really appreciate it. The Operator Have Shared
Speaker 6: Electric Bikes and Scooters line, which is backed by the
Speaker 6: likes of Uber, is planning to invest more than fifty
Speaker 6: five million dollars this year to expand its fleet globally.
Speaker 6: Joining us now is the line CEO Wayne Ting and
Speaker 6: Wayne I find this really interesting because it's not just
Speaker 6: San Francisco. The story of and relationship of micro mobility
Speaker 6: here is well told, but you're looking at other regions
Speaker 6: around the world. Which region is most receptive right now
Speaker 6: to adding more to the microability offering?
Speaker 13: Ed Thank you for having me. We actually see demand
Speaker 13: from all of the world. Line is today in thirty countries,
Speaker 13: five continents, three hundred plus cities. And the reason why
Speaker 13: cities are so interested is because the biggest challenge of
Speaker 13: our time is the challenge of the climate crisis. And
Speaker 13: the number one source or corbon pollution in Europe and
Speaker 13: in the United States is from transportation. The vast majority
Speaker 13: of that is from personal cars and trucks. And if
Speaker 13: we're going to need the challenge of climate change, that
Speaker 13: we must transition away from cars and adopt more green
Speaker 13: transportation alternatives like bikes and scooters, which is why I
Speaker 13: think you're seeing cities all around the world embrace microability
Speaker 13: as a way to reduce their reliance on cars.
Speaker 6: Wait and I told our audience who are coming on
Speaker 6: the show, and I put a poll out there to
Speaker 6: ask do cities need more electric scooters and bikes? The
Speaker 6: majority of respondents said no. Yeah, well almost the majority,
Speaker 6: and in some cases they voted for few. There's still
Speaker 6: sort of frustration and skepticism and disinterest out there.
Speaker 7: How do you overcome it?
Speaker 13: I think the best way we need to earn the
Speaker 13: trust of residents and city governments in order to operate.
Speaker 2: I think the best way to.
Speaker 13: Ensure that is to make sure that our scooters and
Speaker 13: bikes are parked responsibly, that we have a great safety record,
Speaker 13: which we do that we continue to invest in technology
Speaker 13: and line builds and r and ds every scooter bike
Speaker 13: that we put on the street to ensure that they're
Speaker 13: the safest, best ride on the out there. And when
Speaker 13: we continue to deliver an excellent service, we will continue
Speaker 13: to hopefully build that trust with cities to expand.
Speaker 8: Waan, you're talking to a bike addict here.
Speaker 5: I actually prefer the non electric ones than the electric
Speaker 5: ones here, but I do it a lot here in
Speaker 5: New York City.
Speaker 8: I do it when I'm over in London.
Speaker 5: I use the Uber apt to get what you're currently
Speaker 5: seeing on your screen the line bike. But they're a
Speaker 5: mess and they're everywhere, and I think that's a key
Speaker 5: concern here. How do you ensure do you have to
Speaker 5: spend more on infrastructure to ensure that people do have
Speaker 5: places to park them? What is the responsibility of you,
Speaker 5: Visa VI, the overall government right now?
Speaker 2: I think it's it's a joint effort.
Speaker 13: So you mentioned London, So London has two.
Speaker 2: And a half million cars.
Speaker 13: There are one hundred times more cars in London than
Speaker 13: there are electric e bikes, and each parking spot can
Speaker 13: fit six to eight e bikes. So if you say
Speaker 13: there's over abundance of something, there's an over of cars
Speaker 13: and London there's you know, if anything, if we can
Speaker 13: even take a tenth of the parking spots of London
Speaker 13: and turn it into bike parking corrals, we can easily
Speaker 13: solve any parking issues we have in London. So we
Speaker 13: have to continue to work with cities and city governments
Speaker 13: the makeage infrastructure transition, to build more bike lanes and
Speaker 13: protective bike.
Speaker 2: Lanes, and to build more places where you can safely
Speaker 2: respectfully park your e bikes.
Speaker 5: You're someone who's building out spending money while you're also
Speaker 5: thinking about profitability. And I know you've been thinking about
Speaker 5: a bit dar positive.
Speaker 8: For a couple of years now.
Speaker 5: You probably took a leief out of the book of
Speaker 5: Uber having worked so closely with Daara Costa Shah and continuing.
Speaker 8: To work with Uber at line now.
Speaker 5: But I'm interested as to what ultimately the goal is
Speaker 5: at the moment you have to remain profitable in this
Speaker 5: current environment.
Speaker 8: Is that what the VCS are asking.
Speaker 13: Yeah, so, Caroline, as you point out, twenty twenty three,
Speaker 13: Line grew by over thirty percent and hit over six
Speaker 13: hundred million dollars in gross bookings. It's actually a third
Speaker 13: year of thirty plus percent growth in a role. More impressively,
Speaker 13: our profitability five x to nearly one hundred million dollars
Speaker 13: and adjust the ebitah, and that is actually what's enabled
Speaker 13: us to invest fifty plus million dollars into.
Speaker 2: Scaling e bikes. And I absolutely think.
Speaker 13: That today's public markets demand sustainable and profitable companies, and
Speaker 13: Line is showing that we can do it in a
Speaker 13: very tough industry. As we continue to expand our profitability
Speaker 13: and profit margins you go in public scene, well, I
Speaker 13: think that depends on both the macro markets and our
Speaker 13: internal business results.
Speaker 2: What we can focus on is making sure that.
Speaker 13: Line continues to grow rapidly and continues to expand our profitability.
Speaker 13: The macro market still, I would say a little bit iffy,
Speaker 13: Like you guys were chatting about Rubric. Rubric great, IICO
Speaker 13: read it had a good ICO and then you had
Speaker 13: an Instacar last year. But then it's still like one
Speaker 13: step forward, three steps back. I would say the overall
Speaker 13: ifield market is probably still.
Speaker 2: A little frosty.
Speaker 13: So we're doing everything we can to ensure that line
Speaker 13: has the business, the profitability and the internal controls to
Speaker 13: be ready to live as a public trading company. And
Speaker 13: whether or not the right time is going to have
Speaker 13: to depend on the macro markets, which is outside of
Speaker 13: our control.
Speaker 5: Waiting Lime CEO eyeing that market. Thank you for telling
Speaker 5: your internals of the business. Meanwhile, let's get back to
Speaker 5: those public markets.
Speaker 12: Sad.
Speaker 6: Yeah, astonishing week in earnings and then next week it's
Speaker 6: another astonishing week in earnings.
Speaker 5: Well, we've just had so much focus on AI spend,
Speaker 5: the fact that they're what forty billion dollars a piece
Speaker 5: on AI spend, But what can you get from that?
Speaker 5: Google A performs, Microsoft performs. Will see what Apple, AMD
Speaker 5: and Amazon have for us. That's it for this edition
Speaker 5: of bringbour Technology.
Speaker 6: Check out the podlodod This is BTech