1
00:00:02,480 --> 00:00:14,440
Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is live

2
00:00:14,560 --> 00:00:18,239
Speaker 1: from the heart of Silicon Valley with Ed Lulow in

3
00:00:18,440 --> 00:00:20,160
Speaker 1: San Francisco.

4
00:00:22,239 --> 00:00:23,800
Speaker 2: This is Bloomberg Tech coming up.

5
00:00:23,880 --> 00:00:27,159
Speaker 3: Tim Cook's final Apple earning sco as CEO is a

6
00:00:27,240 --> 00:00:31,720
Speaker 3: story of supply crunches, demand misreads, and a tough outlook. Plus,

7
00:00:31,720 --> 00:00:36,400
Speaker 3: Amazon shares roaring on AI progress, big spending and accelerating

8
00:00:36,479 --> 00:00:40,720
Speaker 3: cloud growth. And after open Aiyes breaches, it's now anthropics term,

9
00:00:40,760 --> 00:00:44,640
Speaker 3: with the company saying it's AI models breached three organizations

10
00:00:45,040 --> 00:00:50,080
Speaker 3: during cybersecurity tests. We have the details technology earnings and

11
00:00:50,159 --> 00:00:53,880
Speaker 3: a very big reaction in stocks. Apple is on track

12
00:00:53,960 --> 00:00:58,440
Speaker 3: for its biggest drop since March of twenty twenty. Amazon

13
00:00:58,720 --> 00:01:02,200
Speaker 3: is on track for its biggest jump since April of

14
00:01:02,240 --> 00:01:03,120
Speaker 3: twenty twelve.

15
00:01:03,280 --> 00:01:04,160
Speaker 2: Let's get the stories.

16
00:01:04,200 --> 00:01:07,280
Speaker 3: Bloom Bax Ryan Versedica's with us. Let's start with Apple.

17
00:01:07,560 --> 00:01:10,240
Speaker 3: Everything we need to know about Tim Cook's final quarter

18
00:01:10,560 --> 00:01:11,600
Speaker 3: as CEO of Apple.

19
00:01:13,160 --> 00:01:16,720
Speaker 4: Well, I think the major takeaway from Apple's report was

20
00:01:16,840 --> 00:01:20,800
Speaker 4: how much the increase in memory prices is really starting

21
00:01:20,840 --> 00:01:23,360
Speaker 4: to weigh on the company. They talked a lot about

22
00:01:23,400 --> 00:01:26,880
Speaker 4: component shortages. People have been very concerned that the memory

23
00:01:26,920 --> 00:01:29,920
Speaker 4: issue is going to really eat into their margins, potentially

24
00:01:29,959 --> 00:01:32,400
Speaker 4: eat into demand. But as we talked about a couple

25
00:01:32,400 --> 00:01:35,840
Speaker 4: of days ago, the stock hadn't really been reflecting a

26
00:01:35,880 --> 00:01:38,440
Speaker 4: lot of these concerns going into the report. It had

27
00:01:38,520 --> 00:01:41,240
Speaker 4: a very strong month going into it. I think this

28
00:01:41,400 --> 00:01:44,679
Speaker 4: as part of the overall ANTIAI sentiment. Now it does

29
00:01:44,720 --> 00:01:47,080
Speaker 4: seem like that has flipped again and people are sort

30
00:01:47,080 --> 00:01:50,160
Speaker 4: of reassessing some of the issues that Apple is facing,

31
00:01:50,280 --> 00:01:52,920
Speaker 4: even as they continue to maybe take a new look

32
00:01:53,160 --> 00:01:55,639
Speaker 4: at some of the AI names that had been selling

33
00:01:55,680 --> 00:01:57,040
Speaker 4: off prior to this.

34
00:01:57,760 --> 00:01:59,520
Speaker 3: Apple was saying revenue growth in the set time of

35
00:02:00,240 --> 00:02:02,720
Speaker 3: to eleven percent, the street was looking at twelve and

36
00:02:02,760 --> 00:02:06,240
Speaker 3: they also admitted they misjudged demand. They didn't even place

37
00:02:06,280 --> 00:02:09,760
Speaker 3: the right amount of orders for chips on the processors side. Amazon,

38
00:02:09,919 --> 00:02:13,560
Speaker 3: there is growth in aws and there's clearly AI demand.

39
00:02:13,600 --> 00:02:14,320
Speaker 2: What do we need to know?

40
00:02:15,080 --> 00:02:17,240
Speaker 4: Yeah, they also talked about how their chip business is

41
00:02:17,240 --> 00:02:19,440
Speaker 4: starting to see pretty strong revenue.

42
00:02:19,440 --> 00:02:19,639
Speaker 5: There.

43
00:02:19,880 --> 00:02:22,600
Speaker 4: Overall, a very strong report out of Amazon. I think

44
00:02:22,600 --> 00:02:25,880
Speaker 4: it really highlights the divide we've seen this earning season

45
00:02:25,880 --> 00:02:28,400
Speaker 4: between the companies that are able to do a lot

46
00:02:28,400 --> 00:02:31,200
Speaker 4: of AI related spending, but make the case that they

47
00:02:31,240 --> 00:02:35,440
Speaker 4: are justifying that with improved growth, with improved prospects all

48
00:02:35,480 --> 00:02:38,520
Speaker 4: you'd put Amazon and Microsoft into one bucket. Both of

49
00:02:38,520 --> 00:02:41,760
Speaker 4: those companies really had powerful reaction to the results. I

50
00:02:41,760 --> 00:02:45,640
Speaker 4: think people were sort of reassessing their outlooks following the

51
00:02:45,680 --> 00:02:48,120
Speaker 4: strong results from their cloud business, even in the face

52
00:02:48,160 --> 00:02:50,600
Speaker 4: of higher spending. On the other side of that equation,

53
00:02:50,680 --> 00:02:53,440
Speaker 4: you had Alphabet and Meta maybe didn't do as good

54
00:02:53,480 --> 00:02:55,760
Speaker 4: a job justifying how much money they're spending, and you

55
00:02:55,800 --> 00:02:57,120
Speaker 4: saw those stocks come back.

56
00:02:58,040 --> 00:03:00,680
Speaker 3: Amazon did raise capex by twenty billion dollars in part

57
00:03:00,720 --> 00:03:03,400
Speaker 3: because the cost environment's higher, but a lot of AI

58
00:03:03,480 --> 00:03:06,320
Speaker 3: momentumly bits. Ryan Vstellica, Thank you very much to our

59
00:03:06,360 --> 00:03:10,919
Speaker 3: next guest. Amazon set of numbers define game changer. Jordan

60
00:03:11,000 --> 00:03:14,239
Speaker 3: Clin Managing Directs, a sector specialist for tech, media and

61
00:03:14,280 --> 00:03:17,120
Speaker 3: Telecom at Missouri Securities, is with us. You see it

62
00:03:17,160 --> 00:03:20,079
Speaker 3: as a game changer. What was it about Amazon's numbers

63
00:03:20,080 --> 00:03:20,679
Speaker 3: that you liked?

64
00:03:22,639 --> 00:03:25,480
Speaker 6: Well, yeah, I definitely think it was a game changer,

65
00:03:25,680 --> 00:03:30,120
Speaker 6: just because the acceleration in AWS growth on the top

66
00:03:30,160 --> 00:03:33,560
Speaker 6: line at thirty seven percent, I think has really convinced

67
00:03:33,680 --> 00:03:38,320
Speaker 6: more people that AI is you know, improving their overall business,

68
00:03:39,360 --> 00:03:42,600
Speaker 6: and then the disclosure they gave in terms of how

69
00:03:42,640 --> 00:03:47,600
Speaker 6: AI is impacting them on the silicon side. You know,

70
00:03:47,640 --> 00:03:50,960
Speaker 6: with their Gratron and Trainium chip, they're really well positioned.

71
00:03:51,080 --> 00:03:55,240
Speaker 6: So all in all, you know, the bookings growth, the backlog,

72
00:03:55,400 --> 00:03:58,080
Speaker 6: and the commentary form Andy Jassey about what's to come,

73
00:03:58,600 --> 00:04:03,600
Speaker 6: I think set this this to continue to outperform going forward.

74
00:04:03,600 --> 00:04:04,040
Speaker 2: For sure.

75
00:04:04,880 --> 00:04:07,840
Speaker 3: What Amazon said is it's chip business where it rents

76
00:04:07,880 --> 00:04:11,240
Speaker 3: compute capacity, but based on their in house silicon right

77
00:04:11,280 --> 00:04:13,800
Speaker 3: has a revenue run rate twenty five billion dollars.

78
00:04:14,240 --> 00:04:15,320
Speaker 2: Dwell on that a little bit.

79
00:04:15,360 --> 00:04:17,640
Speaker 3: Are you kind of extrapolating out and saying, wow, that's

80
00:04:17,680 --> 00:04:21,440
Speaker 3: another line of business where Amazon can get some upside.

81
00:04:22,720 --> 00:04:26,240
Speaker 6: Yeah, I think it's. It's it's showing how much benefit

82
00:04:26,279 --> 00:04:29,680
Speaker 6: that they get from having their own custom chip. Not

83
00:04:29,720 --> 00:04:33,120
Speaker 6: only does it enable them to get supply right because

84
00:04:33,120 --> 00:04:37,880
Speaker 6: it's so difficult to get pint graphic processors from Nvidia,

85
00:04:38,720 --> 00:04:42,560
Speaker 6: it also enables them to offer that to their customers,

86
00:04:42,839 --> 00:04:46,800
Speaker 6: probably at a lower cost, So you win on both

87
00:04:46,839 --> 00:04:50,479
Speaker 6: sides supply and price or cost. And you saw that

88
00:04:50,560 --> 00:04:51,800
Speaker 6: because their margins are.

89
00:04:51,680 --> 00:04:52,359
Speaker 2: Going up.

90
00:04:53,680 --> 00:04:56,960
Speaker 6: Very healthily, and I think That's also encouraging to investors

91
00:04:57,360 --> 00:04:59,880
Speaker 6: because all these companies are going to be continuing to spend.

92
00:05:00,000 --> 00:05:03,800
Speaker 6: They need more compute, more capacity. But what the worry

93
00:05:03,839 --> 00:05:06,960
Speaker 6: would be is they see compression on the margins or

94
00:05:06,960 --> 00:05:10,839
Speaker 6: the cash flow. And even though Amazon's cash flow was

95
00:05:10,920 --> 00:05:13,800
Speaker 6: negative for the last twelve months, their margins in their

96
00:05:13,800 --> 00:05:16,440
Speaker 6: AWS business are increasingly going higher.

97
00:05:17,040 --> 00:05:18,839
Speaker 3: I think some would point out on the chip business

98
00:05:18,880 --> 00:05:21,520
Speaker 3: as well, that they're not surrendering any margin to Nvidia

99
00:05:21,640 --> 00:05:23,720
Speaker 3: if they go with the in house silicon John, let

100
00:05:23,720 --> 00:05:25,839
Speaker 3: me ask you this, do you have any Amazon Echo

101
00:05:25,880 --> 00:05:27,520
Speaker 3: devices in your household?

102
00:05:28,240 --> 00:05:28,480
Speaker 7: Yeah?

103
00:05:28,480 --> 00:05:29,000
Speaker 6: I have one?

104
00:05:29,800 --> 00:05:30,160
Speaker 2: Okay?

105
00:05:30,200 --> 00:05:31,839
Speaker 3: And how many days a week would you say? You

106
00:05:31,880 --> 00:05:33,440
Speaker 3: have an Amazon Prime package on your.

107
00:05:33,320 --> 00:05:37,080
Speaker 6: Doorstep every other day at least?

108
00:05:37,480 --> 00:05:37,800
Speaker 2: Okay?

109
00:05:37,960 --> 00:05:41,080
Speaker 3: So what I found so interesting were the other data points,

110
00:05:41,120 --> 00:05:44,240
Speaker 3: the non financial right where they say here is some

111
00:05:44,320 --> 00:05:48,280
Speaker 3: evidence that people that use Alexa plus their consumer facing

112
00:05:48,279 --> 00:05:51,440
Speaker 3: AI are more likely to sign up for Prime, are

113
00:05:51,440 --> 00:05:54,520
Speaker 3: more likely to spend in a greater basket size on

114
00:05:54,560 --> 00:05:57,680
Speaker 3: Amazon dot Com. Less talked about this morning. I mean,

115
00:05:57,680 --> 00:05:59,520
Speaker 3: has anyone brought that up on your desk?

116
00:06:01,080 --> 00:06:01,520
Speaker 2: Actually?

117
00:06:01,880 --> 00:06:04,159
Speaker 6: No, I think people are so focused on the AI,

118
00:06:05,040 --> 00:06:07,640
Speaker 6: the data center, the compute side of the business because

119
00:06:07,640 --> 00:06:11,960
Speaker 6: it drives all the profit that they've kind of I

120
00:06:11,960 --> 00:06:15,320
Speaker 6: wouldn't say overlooked, but they're not as concerned or worried

121
00:06:15,360 --> 00:06:19,120
Speaker 6: about e commerce, where they're doing very well, and I

122
00:06:19,160 --> 00:06:21,200
Speaker 6: think that's a good thing. But I agree like you

123
00:06:21,560 --> 00:06:24,480
Speaker 6: would like to see them get more value or credit

124
00:06:24,520 --> 00:06:29,760
Speaker 6: for their breadth, their strength, their traction, their brand and people.

125
00:06:29,800 --> 00:06:32,920
Speaker 6: What they are saying is why does Amazon trade at

126
00:06:33,080 --> 00:06:35,640
Speaker 6: kind of a mid to low twenties forward multiple when

127
00:06:35,640 --> 00:06:38,960
Speaker 6: you look at Costco and Walmart look at their valuations.

128
00:06:40,240 --> 00:06:42,000
Speaker 2: I appreciate you bringing it back to the stock.

129
00:06:42,080 --> 00:06:45,000
Speaker 3: I mean, we're a household where my eco device competes

130
00:06:45,040 --> 00:06:47,080
Speaker 3: with my baby is the alarm clock every morning, and

131
00:06:47,120 --> 00:06:50,960
Speaker 3: we've not really moved beyond that. On the AI side,

132
00:06:51,120 --> 00:06:54,920
Speaker 3: you heard Ryan talk about Apple was the AI safety

133
00:06:54,920 --> 00:06:58,640
Speaker 3: trade in a way in Apple, this is a hell

134
00:06:58,680 --> 00:07:01,640
Speaker 3: of a reaction in the stock. There's no sentimentality here

135
00:07:02,040 --> 00:07:04,800
Speaker 3: for Tim Cook's final earning school. You talk about that

136
00:07:04,839 --> 00:07:07,160
Speaker 3: in your note on the stock in the trade. What

137
00:07:07,200 --> 00:07:08,120
Speaker 3: are you making of all of it?

138
00:07:10,280 --> 00:07:12,720
Speaker 6: Well, I would tell people that the move, you know,

139
00:07:12,880 --> 00:07:17,160
Speaker 6: down nine percent is probably more than the actual results

140
00:07:17,200 --> 00:07:20,440
Speaker 6: would suggest, but that's because the stock has materially outperformed

141
00:07:20,960 --> 00:07:23,400
Speaker 6: Tech and the mag seven over the last thirty days,

142
00:07:23,400 --> 00:07:25,960
Speaker 6: so there was a ton of money hiding in Apple.

143
00:07:26,080 --> 00:07:30,480
Speaker 6: Is like the anti safety AI trade that's going to

144
00:07:30,520 --> 00:07:33,280
Speaker 6: come out and it's going back to Microsoft and Amazon

145
00:07:33,400 --> 00:07:35,800
Speaker 6: and some others. But what I would make of it

146
00:07:35,880 --> 00:07:39,000
Speaker 6: is is that they're going to probably continue to see

147
00:07:39,080 --> 00:07:42,720
Speaker 6: higher risk and struggling a bit, not only in iPhone

148
00:07:42,760 --> 00:07:46,280
Speaker 6: to get components in supply, but their services business missed

149
00:07:47,000 --> 00:07:49,440
Speaker 6: and that's where they get a lot of profit and margin,

150
00:07:49,560 --> 00:07:52,000
Speaker 6: and it sounds like that's going to remain at a

151
00:07:52,040 --> 00:07:54,080
Speaker 6: lower growth rate as you look into the end of

152
00:07:54,120 --> 00:07:56,680
Speaker 6: the year. And my concern, and this is why I

153
00:07:56,720 --> 00:07:59,600
Speaker 6: wouldn't be chasing Apple even down nine percent, is that

154
00:08:00,120 --> 00:08:04,280
Speaker 6: they're going into their iPhone eighteen launch cycle and I

155
00:08:04,320 --> 00:08:06,880
Speaker 6: feel like the risk is that you go into a

156
00:08:06,920 --> 00:08:10,080
Speaker 6: new product cycle and you can't get enough components.

157
00:08:10,240 --> 00:08:11,000
Speaker 2: Okay, what does.

158
00:08:10,920 --> 00:08:13,280
Speaker 6: That mean for your ability to beat and raise numbers?

159
00:08:13,320 --> 00:08:14,560
Speaker 6: I don't think it's good.

160
00:08:14,960 --> 00:08:16,760
Speaker 3: So this is a people story as well, right, Like

161
00:08:16,840 --> 00:08:20,680
Speaker 3: Tim Cook, a cool facet of his career has been

162
00:08:20,720 --> 00:08:22,840
Speaker 3: his ability to manage the supply chain, and he made

163
00:08:22,920 --> 00:08:27,560
Speaker 3: the admission that they misjudged demand, they miscalculated how many

164
00:08:27,600 --> 00:08:31,680
Speaker 3: processes they should order in September in the launch cycle

165
00:08:31,720 --> 00:08:34,120
Speaker 3: for the eighteen He hands the rains to turn Us,

166
00:08:34,120 --> 00:08:36,360
Speaker 3: who is a product guy. I mean, how worrying has

167
00:08:36,360 --> 00:08:39,720
Speaker 3: that been for people phoning you today.

168
00:08:39,920 --> 00:08:42,400
Speaker 6: I don't actually think people are all that nervous or

169
00:08:42,440 --> 00:08:46,080
Speaker 6: worried about the management transition. I think they're going to

170
00:08:46,080 --> 00:08:48,800
Speaker 6: be status quo. They're going to focus on the supply chain.

171
00:08:48,840 --> 00:08:51,680
Speaker 6: That's what they do best. I think they need to

172
00:08:52,480 --> 00:08:56,320
Speaker 6: have a good, flashy launch with this foldable product. Actually,

173
00:08:56,400 --> 00:08:58,480
Speaker 6: that could go a long way to helping turn Us,

174
00:08:59,200 --> 00:09:01,800
Speaker 6: even though that was probably put into place well before

175
00:09:01,840 --> 00:09:04,360
Speaker 6: he took the reins, but it would help, at least

176
00:09:04,360 --> 00:09:07,480
Speaker 6: on the margin, convince people that they've got some new innovations,

177
00:09:07,520 --> 00:09:10,480
Speaker 6: some exciting new products coming. But end of day, it's

178
00:09:10,520 --> 00:09:13,040
Speaker 6: about how much your consumer is going to be willing

179
00:09:13,080 --> 00:09:14,600
Speaker 6: to spend. They're going to raise the price of the

180
00:09:14,640 --> 00:09:18,280
Speaker 6: iPhone probably by two hundred dollars, and they they're doing

181
00:09:18,320 --> 00:09:21,480
Speaker 6: really well. Actually when max where they raise prices and

182
00:09:21,559 --> 00:09:24,320
Speaker 6: they can't ship enough product to meet demand. But the

183
00:09:24,400 --> 00:09:27,679
Speaker 6: question is going to be come early next year after

184
00:09:27,760 --> 00:09:30,640
Speaker 6: the launch quarter you know, in the fall is behind

185
00:09:30,679 --> 00:09:34,000
Speaker 6: them and they've raised prices. Is demand holding up as

186
00:09:34,080 --> 00:09:37,720
Speaker 6: well given the higher costs? And we'll have to wait

187
00:09:37,720 --> 00:09:40,680
Speaker 6: and find out. I think it's it's undetermined right now.

188
00:09:41,440 --> 00:09:43,880
Speaker 3: Again, a decline of nine percent in the session for Zapple,

189
00:09:43,960 --> 00:09:46,280
Speaker 3: on track for its biggest drop since March of twenty twenty.

190
00:09:46,520 --> 00:09:49,680
Speaker 3: Jordan Klein, Managing Directors TMT sector Specialists in a Zoo

191
00:09:49,960 --> 00:09:52,000
Speaker 3: Go and read his end of July. Note there's some

192
00:09:52,080 --> 00:09:54,719
Speaker 3: relief in there, Thank you very much. Now, coming up,

193
00:09:55,240 --> 00:09:58,280
Speaker 3: concerns about Chinese AI startup Moonshot.

194
00:09:57,920 --> 00:09:59,960
Speaker 2: Grow following a Bloomberg report.

195
00:10:00,000 --> 00:10:03,240
Speaker 3: Well, it has a computing power agreement with Ali Barber

196
00:10:03,760 --> 00:10:06,320
Speaker 3: which uses or relies on Nvidia chips. We have the

197
00:10:06,360 --> 00:10:13,400
Speaker 3: details next. This is Bloomberg Tech. Chinese AI champion Moonshot

198
00:10:13,600 --> 00:10:16,760
Speaker 3: has a computing power agreement with Ali Barber for the

199
00:10:16,840 --> 00:10:21,360
Speaker 3: use of around twenty thousand Nvidia chips, according to sources.

200
00:10:21,679 --> 00:10:24,760
Speaker 3: Those sources say that the hardware forms a substantial chunk

201
00:10:24,960 --> 00:10:28,080
Speaker 3: that the computing capacity Moonshot uses for its Kimmi models,

202
00:10:28,120 --> 00:10:31,520
Speaker 3: the latest of which rival US competitors. You'll remember, of course,

203
00:10:31,720 --> 00:10:35,240
Speaker 3: that Washington had restricted Chinese access to some generations of

204
00:10:35,320 --> 00:10:38,920
Speaker 3: Nvidia chip on national security grounds. Bloomberg's executive editor Peter

205
00:10:39,000 --> 00:10:41,720
Speaker 3: Elstrich joins us, let's start with the basics of what

206
00:10:41,760 --> 00:10:42,680
Speaker 3: we're reporting here.

207
00:10:44,640 --> 00:10:47,160
Speaker 8: Yeah, well, just to back up one step, of course,

208
00:10:47,200 --> 00:10:51,280
Speaker 8: Moonshot announced itself really to the Western world at least

209
00:10:51,640 --> 00:10:53,560
Speaker 8: a couple of weeks ago, where it came out with

210
00:10:53,600 --> 00:10:57,160
Speaker 8: this Kimmy K three model which has very strong performance,

211
00:10:57,960 --> 00:11:00,840
Speaker 8: really near the leading edge of the frontier lane in

212
00:11:00,920 --> 00:11:03,880
Speaker 8: the models at open Ai and Anthropic, And one of

213
00:11:03,880 --> 00:11:05,839
Speaker 8: the questions since then has been how did they do it?

214
00:11:06,040 --> 00:11:09,040
Speaker 8: We know that there's been breakthrough engineering at a number

215
00:11:09,040 --> 00:11:11,439
Speaker 8: of the different Chinese companies. Of course, Deep Seek was

216
00:11:11,480 --> 00:11:13,760
Speaker 8: really the phenomenon last year, but now the questions are

217
00:11:13,800 --> 00:11:16,440
Speaker 8: around Moonshot and how did they actually pull this off?

218
00:11:16,679 --> 00:11:18,840
Speaker 8: And we've seen a couple of bits and pieces of it,

219
00:11:18,880 --> 00:11:21,200
Speaker 8: but this kind of helps us understand the broader picture.

220
00:11:21,520 --> 00:11:24,400
Speaker 8: We know that Ali Baba has an investment in Moonshot,

221
00:11:24,520 --> 00:11:26,840
Speaker 8: and what we were reporting in this story is that

222
00:11:26,880 --> 00:11:29,360
Speaker 8: Ali Baba is also supplying a bunch of the computing

223
00:11:29,400 --> 00:11:32,200
Speaker 8: power behind that model. We know that they're using twenty

224
00:11:32,200 --> 00:11:37,520
Speaker 8: thousand of Nvidia chips. The Hopper generation of chips from Nvidia.

225
00:11:37,559 --> 00:11:39,440
Speaker 8: Alibaba did get back to us and they said they're

226
00:11:39,480 --> 00:11:42,440
Speaker 8: not that H two hundred chips which are the leading edge.

227
00:11:42,559 --> 00:11:44,840
Speaker 8: Our sources have told us that they actually are those

228
00:11:45,040 --> 00:11:48,240
Speaker 8: H two hundred chips, but they're definitely the Hopper generation

229
00:11:48,320 --> 00:11:50,680
Speaker 8: the chips that they're providing, and Moonshot has been able

230
00:11:50,720 --> 00:11:52,920
Speaker 8: to use that to build out this model. We also,

231
00:11:52,960 --> 00:11:56,000
Speaker 8: of course had the White House Micratzios saying that they

232
00:11:56,000 --> 00:11:59,400
Speaker 8: believe they're also accessing Grace Blackwell chips even more advanced

233
00:11:59,440 --> 00:11:59,880
Speaker 8: chips from it.

234
00:12:01,360 --> 00:12:02,840
Speaker 2: We're just showing that sort of.

235
00:12:04,520 --> 00:12:08,080
Speaker 3: Communication from Alie Barbara and what they are denying and

236
00:12:08,120 --> 00:12:10,320
Speaker 3: what they're not. I guess that, you know, it's worth

237
00:12:10,320 --> 00:12:12,720
Speaker 3: a discussion, Peter, of what we don't know right. For

238
00:12:12,760 --> 00:12:16,800
Speaker 3: a long time, we've been asking about, well, how many

239
00:12:17,280 --> 00:12:19,920
Speaker 3: in video chips are actually going into China? Are Chinese

240
00:12:19,920 --> 00:12:23,640
Speaker 3: firms using this technology outside of the United States and

241
00:12:23,679 --> 00:12:26,679
Speaker 3: outside of China post some of those questions for us.

242
00:12:27,960 --> 00:12:30,680
Speaker 8: Yeah, it's a complicated picture, and we do have this

243
00:12:30,800 --> 00:12:35,360
Speaker 8: shifting regime of export regulations that's affected a bunch of this.

244
00:12:35,720 --> 00:12:38,600
Speaker 8: In Video is not allowed to sell its most advanced chips,

245
00:12:38,600 --> 00:12:41,200
Speaker 8: the Blackwell chips into China right now. What we have

246
00:12:41,280 --> 00:12:43,280
Speaker 8: seen in the past is they were able to sell

247
00:12:43,320 --> 00:12:45,800
Speaker 8: a number of the Hopper generation of chips, some of

248
00:12:45,800 --> 00:12:49,440
Speaker 8: the earlier generations of chips. More recently, the US signed

249
00:12:49,480 --> 00:12:52,800
Speaker 8: off on in video selling those H two hundreds into China.

250
00:12:52,840 --> 00:12:55,280
Speaker 8: That would be a pretty advanced chip for many of

251
00:12:55,280 --> 00:12:58,560
Speaker 8: these companies to use, including Moonshot and deep Seek. But

252
00:12:58,800 --> 00:13:02,440
Speaker 8: Beijing is pushed back on that idea that domestic companies

253
00:13:02,440 --> 00:13:05,280
Speaker 8: should use those chips. It would prefer to continue building

254
00:13:05,280 --> 00:13:09,840
Speaker 8: out its own semiconductor industry, particularly supporting companies like Huawei

255
00:13:09,840 --> 00:13:13,000
Speaker 8: and Cambra Con in particular. So if you are using

256
00:13:13,120 --> 00:13:16,080
Speaker 8: H two hundred chips, that would be it's possible from

257
00:13:16,080 --> 00:13:19,360
Speaker 8: the US standpoint, within within China, but there would be

258
00:13:19,400 --> 00:13:21,520
Speaker 8: a little bit of pushback from Beijing if you're using

259
00:13:21,640 --> 00:13:24,000
Speaker 8: H two hundred ships that they would prefer you not use.

260
00:13:24,040 --> 00:13:27,080
Speaker 8: At this point, just to flag one other loophole here,

261
00:13:27,800 --> 00:13:31,440
Speaker 8: it is still entirely possible, entirely legal for Chinese companies

262
00:13:31,480 --> 00:13:34,880
Speaker 8: to access all of Nvidia's chips outside of the country.

263
00:13:34,920 --> 00:13:36,960
Speaker 8: They can go to Southeast Asia and they can get

264
00:13:37,040 --> 00:13:40,040
Speaker 8: access to some of these chips, including the H two

265
00:13:40,120 --> 00:13:43,880
Speaker 8: hundreds there. That's not forbidden in any case. This is

266
00:13:43,920 --> 00:13:45,880
Speaker 8: a loophole that some of the China Hawks have wanted

267
00:13:45,880 --> 00:13:47,720
Speaker 8: to close for a long period of time. But at

268
00:13:47,800 --> 00:13:50,640
Speaker 8: least at this period of time, you can't still access there.

269
00:13:50,800 --> 00:13:52,360
Speaker 2: We have a Bloomberg terminal client.

270
00:13:52,400 --> 00:13:53,920
Speaker 3: Just send me an ib and make a point that's

271
00:13:53,960 --> 00:13:57,400
Speaker 3: in the story that Alibaba's one of Moonshot's biggest investors,

272
00:13:57,760 --> 00:14:00,320
Speaker 3: and of course they're also competitors like go Away. Read it,

273
00:14:00,320 --> 00:14:03,520
Speaker 3: Bloomberg's Peter Elstrom, Thank you very much. Indeed, m Fropic

274
00:14:03,880 --> 00:14:06,760
Speaker 3: says its AI models broke out to the closed testing

275
00:14:06,880 --> 00:14:11,240
Speaker 3: environment and breached three outside organizations, and Forropic said it

276
00:14:11,280 --> 00:14:15,760
Speaker 3: made the discovery after reviewing its own cybersecurity tests following

277
00:14:15,840 --> 00:14:18,559
Speaker 3: open AI's announcement of a similar incident. Let's get the

278
00:14:18,640 --> 00:14:21,800
Speaker 3: latest with Bloomboz Patrick Howe O'Neil one of the most

279
00:14:21,880 --> 00:14:26,080
Speaker 3: read stories unsurprisingly on Bloomberg. Tell me everything that we're

280
00:14:26,120 --> 00:14:26,960
Speaker 3: reporting right now.

281
00:14:28,800 --> 00:14:29,760
Speaker 2: Yeah, happy to be here.

282
00:14:30,120 --> 00:14:33,640
Speaker 9: So, as you mentioned, Anthropic began an internal review of

283
00:14:33,760 --> 00:14:38,160
Speaker 9: their cybersecurity tests after the hugging face incident was disclosed

284
00:14:39,080 --> 00:14:42,040
Speaker 9: a little over a week ago. And discovered that in

285
00:14:42,160 --> 00:14:46,720
Speaker 9: three instances, their models, which were conducting their own internal tests,

286
00:14:46,800 --> 00:14:51,160
Speaker 9: had broke out and had hacked three external organizations.

287
00:14:51,920 --> 00:14:54,440
Speaker 2: I think it raises a ton of really interesting.

288
00:14:54,120 --> 00:14:59,440
Speaker 9: And important questions about these AI companies' abilities to control, understand,

289
00:14:59,480 --> 00:15:03,360
Speaker 9: and monitor these models, and especially the fact that it took,

290
00:15:03,440 --> 00:15:06,640
Speaker 9: in at least one case, three months for Anthropic to

291
00:15:06,760 --> 00:15:09,800
Speaker 9: discover what had happened, which just raises questions about the

292
00:15:09,840 --> 00:15:11,240
Speaker 9: ability to really see what's going on.

293
00:15:12,040 --> 00:15:12,400
Speaker 2: Patrick.

294
00:15:12,400 --> 00:15:14,400
Speaker 3: In the Anthropic case, we don't know who the three

295
00:15:14,440 --> 00:15:16,480
Speaker 3: companies are, right, we do know that there was a

296
00:15:16,520 --> 00:15:19,200
Speaker 3: connection to the Internet escaping the sandboxed environment.

297
00:15:19,440 --> 00:15:22,680
Speaker 2: Go over all that real quick, That's right.

298
00:15:22,800 --> 00:15:25,840
Speaker 9: So there's an important distinction to be drawn here. In

299
00:15:25,920 --> 00:15:28,720
Speaker 9: the recent open ai case, which is obviously drawing a

300
00:15:28,760 --> 00:15:32,880
Speaker 9: lot of comparisons, open AI's model discovered novel vulnerabilities and

301
00:15:32,920 --> 00:15:36,000
Speaker 9: hacked its way out of its environment. In the Anthropic case,

302
00:15:36,160 --> 00:15:40,520
Speaker 9: there was a human misconfiguration that allowed Internet access for

303
00:15:40,600 --> 00:15:43,520
Speaker 9: the model, and therefore the model thought that everything it

304
00:15:43,560 --> 00:15:45,760
Speaker 9: had accessed, at least at the beginning was part of

305
00:15:45,800 --> 00:15:48,120
Speaker 9: the test. And this is something that Anthropic is really

306
00:15:48,160 --> 00:15:52,880
Speaker 9: insistent on because they're positioning this as primarily a human

307
00:15:53,000 --> 00:15:56,000
Speaker 9: error or human series of errors, as opposed to an air.

308
00:15:57,360 --> 00:15:59,960
Speaker 2: I invited anthropic on the show. They said no.

309
00:16:00,080 --> 00:16:05,360
Speaker 3: Bloomberg's Patrick how O'Neil, thank you very much. Indeed, troubled

310
00:16:05,360 --> 00:16:09,760
Speaker 3: hedge funds, Situational Awareness explored selling stakes in private companies

311
00:16:09,800 --> 00:16:12,440
Speaker 3: to raise cash. Is It faced a wave of margin

312
00:16:12,520 --> 00:16:16,200
Speaker 3: calls from lenders this week. Its assets plunged from forty

313
00:16:16,200 --> 00:16:19,000
Speaker 3: five billion dollars to roughly ten billion dollars. Is AI

314
00:16:19,080 --> 00:16:22,400
Speaker 3: stocks got hit in recent weeks. That's when Citadel's King

315
00:16:22,440 --> 00:16:24,960
Speaker 3: Griffin swooped in to buy a bulk of the fund's

316
00:16:25,200 --> 00:16:29,160
Speaker 3: public portfolio. You're seeing pictures of Leo Bold Ashan Brenner,

317
00:16:29,360 --> 00:16:34,320
Speaker 3: founder of Awareness, coming from the website for our posterity.

318
00:16:34,800 --> 00:16:37,240
Speaker 3: Let's get the details, Bloomberg Hedge Fund reporter Hema Palmer.

319
00:16:37,520 --> 00:16:41,680
Speaker 3: It's with us extraordinary reporting. The new bit is trying

320
00:16:41,720 --> 00:16:45,520
Speaker 3: to offload some private steak to continue to manage the situation.

321
00:16:46,320 --> 00:16:49,960
Speaker 10: So what we were seeing is really incredibly dramatic unfolding

322
00:16:49,960 --> 00:16:52,680
Speaker 10: of events over the past twenty four hours. And what

323
00:16:52,760 --> 00:16:57,200
Speaker 10: we reported last night was the news that while Situational

324
00:16:57,240 --> 00:17:01,600
Speaker 10: Awareness was in conversations with Citadel, Millennium Jane Street to

325
00:17:01,640 --> 00:17:05,280
Speaker 10: offload their public book. They were also having conversations to

326
00:17:05,359 --> 00:17:09,680
Speaker 10: potentially offload their private portfolio. This is a sizeable portfolio

327
00:17:09,680 --> 00:17:13,840
Speaker 10: that includes a five billion dollar position in Anthropic and

328
00:17:13,920 --> 00:17:17,600
Speaker 10: the fact that they were in talks with Sequoia and

329
00:17:17,760 --> 00:17:21,159
Speaker 10: Green Oaks to potentially offload those stakes really shows how

330
00:17:21,240 --> 00:17:25,280
Speaker 10: dramatic the situation was. Ultimately, they did not go ahead

331
00:17:25,320 --> 00:17:28,840
Speaker 10: with that because they got the Citadel deal. But it

332
00:17:28,920 --> 00:17:31,119
Speaker 10: is not a great sign when a fund is looking

333
00:17:31,200 --> 00:17:34,240
Speaker 10: at trying to sell their public and their private book

334
00:17:34,320 --> 00:17:35,119
Speaker 10: to meet margin.

335
00:17:35,160 --> 00:17:37,280
Speaker 2: Calls Heimer, what's the state of play?

336
00:17:37,320 --> 00:17:39,560
Speaker 3: It sounds like the firm is still there and has

337
00:17:39,600 --> 00:17:44,119
Speaker 3: its private book. Has anyone heard from Leopold Ashton Brenner

338
00:17:44,320 --> 00:17:45,480
Speaker 3: in the last twenty four hours.

339
00:17:45,560 --> 00:17:49,200
Speaker 10: Yes, he's sent a letter to investors apologizing for the

340
00:17:49,280 --> 00:17:53,639
Speaker 10: dramatic unfolding of events, saying that he is responsible, saying

341
00:17:53,760 --> 00:17:58,520
Speaker 10: that the fund still has its ur date or since

342
00:17:58,560 --> 00:18:02,119
Speaker 10: inception performance of up eighty percent, but keep in mind

343
00:18:02,640 --> 00:18:07,960
Speaker 10: the monthly performance down nearly seventy percent. Also really important

344
00:18:08,359 --> 00:18:11,359
Speaker 10: is thinking about when investors got in the LPs that

345
00:18:11,440 --> 00:18:14,959
Speaker 10: got in early in the funds existence they're probably doing okay,

346
00:18:15,240 --> 00:18:16,919
Speaker 10: but if you're an investor and you got in the

347
00:18:16,920 --> 00:18:19,359
Speaker 10: past few months, the pain is pretty bad.

348
00:18:20,480 --> 00:18:24,159
Speaker 3: Bloomberg's Hemma Palmer, thank you very much. Indeed, Tesla is

349
00:18:24,240 --> 00:18:28,119
Speaker 3: considering separating its China business to pave the way for

350
00:18:28,160 --> 00:18:31,840
Speaker 3: a potential SpaceX merger, all according to a report in

351
00:18:31,840 --> 00:18:34,600
Speaker 3: the Wall Street Journal. While the journal said some Tesla

352
00:18:34,680 --> 00:18:38,160
Speaker 3: execs have been told to prepare for that move, CEO

353
00:18:38,240 --> 00:18:41,520
Speaker 3: Elon Musk wrote on X the report was quote fake news,

354
00:18:42,119 --> 00:18:45,560
Speaker 3: joining us now, Bloomberg Managing editor Break Trudel. Let's start

355
00:18:45,560 --> 00:18:48,960
Speaker 3: with what is in the Wall Street Journal report. There

356
00:18:48,960 --> 00:18:54,159
Speaker 3: are multiple lines of information about what's being considered summarized

357
00:18:54,200 --> 00:18:54,880
Speaker 3: as best you can.

358
00:18:55,520 --> 00:18:58,840
Speaker 11: Yeah, I think in the sort of broad scheme of things,

359
00:18:59,160 --> 00:19:01,600
Speaker 11: the I've have been you know, for months now on

360
00:19:02,000 --> 00:19:03,879
Speaker 11: is you know, SpaceX and Tesla.

361
00:19:04,000 --> 00:19:05,479
Speaker 2: Are these companies going to combine?

362
00:19:05,480 --> 00:19:07,840
Speaker 11: And one of the big questions has been how did

363
00:19:07,880 --> 00:19:11,719
Speaker 11: these companies sort of come together? Considering the fact that

364
00:19:11,760 --> 00:19:15,520
Speaker 11: SpaceX is this great, big, you know, US defense contractor,

365
00:19:15,960 --> 00:19:19,320
Speaker 11: and Tesla has this you know, huge China business that

366
00:19:20,040 --> 00:19:22,840
Speaker 11: is crucial to the company. Aren't those two things sort

367
00:19:22,840 --> 00:19:25,600
Speaker 11: of in conflict? I think you know, what was you know,

368
00:19:25,800 --> 00:19:28,800
Speaker 11: very interesting about this report last night was, Yes, it

369
00:19:28,880 --> 00:19:32,040
Speaker 11: laid out some elements of the fact that, you know,

370
00:19:32,080 --> 00:19:34,880
Speaker 11: these companies already are kind of separate. But I think

371
00:19:34,880 --> 00:19:37,640
Speaker 11: that's pretty you know, well known and understood. I think

372
00:19:37,440 --> 00:19:41,760
Speaker 11: the question is, you know, what exactly are advisors thinking

373
00:19:41,880 --> 00:19:45,280
Speaker 11: or how is this possibly going to work out considering

374
00:19:45,320 --> 00:19:49,520
Speaker 11: the fact that that the Chinese Communist Party probably is

375
00:19:49,560 --> 00:19:53,359
Speaker 11: not particularly client for the Shanghai factory that's so crucial

376
00:19:53,400 --> 00:19:56,639
Speaker 11: to Tesla sort of closing up to you know, the

377
00:19:56,680 --> 00:20:01,520
Speaker 11: SpaceX business or at all sort of overlapping wa with SpaceX,

378
00:20:01,560 --> 00:20:04,520
Speaker 11: which you know, Musk has been quite open about, you know,

379
00:20:04,560 --> 00:20:06,760
Speaker 11: not being crazy about Starlink exactly.

380
00:20:06,800 --> 00:20:09,040
Speaker 3: So you know, Musk posted more than once this is

381
00:20:09,119 --> 00:20:11,000
Speaker 3: one of the posts and xx this has never even

382
00:20:11,040 --> 00:20:14,440
Speaker 3: come up in a discussion ever, absurdly fake news. People

383
00:20:14,480 --> 00:20:19,480
Speaker 3: should assume uses fake until proven otherwise. I think our

384
00:20:19,520 --> 00:20:23,439
Speaker 3: colleagues in China were also able to make contact with

385
00:20:23,480 --> 00:20:25,800
Speaker 3: Tesla China, who disputed the report.

386
00:20:25,880 --> 00:20:27,080
Speaker 2: Right, that's correct.

387
00:20:27,119 --> 00:20:30,440
Speaker 11: And you know, look, I think the fact that Musk

388
00:20:30,520 --> 00:20:32,480
Speaker 11: has been sort of, you know, very public about the

389
00:20:32,520 --> 00:20:35,760
Speaker 11: fact that Starlink is a no Goo in China has

390
00:20:35,800 --> 00:20:39,640
Speaker 11: also talked quite openly about, you know, just how much China.

391
00:20:39,359 --> 00:20:40,959
Speaker 2: Is competing with SpaceX.

392
00:20:41,119 --> 00:20:43,399
Speaker 11: I think there are a lot of elements of the

393
00:20:43,480 --> 00:20:46,040
Speaker 11: journals reporting that sort of you know, ring true. The

394
00:20:46,160 --> 00:20:48,720
Speaker 11: question is, of course, you know, what's going on behind

395
00:20:48,720 --> 00:20:52,120
Speaker 11: the scenes for these these companies to sort of game

396
00:20:52,160 --> 00:20:54,800
Speaker 11: out what could be done. I think, you know, the

397
00:20:55,119 --> 00:20:57,920
Speaker 11: journal you know, sort of brought some new things to

398
00:20:58,040 --> 00:21:01,960
Speaker 11: light last night. Of course, Sir Muskin his campus pushing

399
00:21:02,000 --> 00:21:04,240
Speaker 11: back and what was reported being.

400
00:21:04,160 --> 00:21:07,200
Speaker 2: That's great, Trudell, thank you very much. Let's stick with muss.

401
00:21:07,240 --> 00:21:10,040
Speaker 3: Just a year after his bitter split with President Donald Trump,

402
00:21:10,240 --> 00:21:12,800
Speaker 3: he looks to re enter the political sphere with plans

403
00:21:12,800 --> 00:21:15,480
Speaker 3: to spend at least one hundred million dollars to back

404
00:21:15,520 --> 00:21:18,399
Speaker 3: Republican candidates for the midterms. That's according to the New

405
00:21:18,520 --> 00:21:21,440
Speaker 3: York Times. However, just last week, must told the economists

406
00:21:21,480 --> 00:21:24,480
Speaker 3: that he got quote a little too involved in politics,

407
00:21:24,520 --> 00:21:28,280
Speaker 3: got carried away frankly. According to reports, his super PACs

408
00:21:28,320 --> 00:21:30,760
Speaker 3: planning to spend between one hundred million and one hundred

409
00:21:30,760 --> 00:21:33,560
Speaker 3: and twenty million dollars on a new field program in

410
00:21:33,640 --> 00:21:44,919
Speaker 3: at least eight states. Welcome back to Bloomberg Tech earnings

411
00:21:45,040 --> 00:21:46,840
Speaker 3: in the world of tech is the big story. But

412
00:21:46,840 --> 00:21:49,480
Speaker 3: I thought, let's take a beat this Friday and look

413
00:21:49,520 --> 00:21:53,399
Speaker 3: at the Nazak one hundred on the week, modestly lower

414
00:21:53,480 --> 00:21:58,720
Speaker 3: four tens percent in semiconductors on the socks were down

415
00:21:58,840 --> 00:22:00,919
Speaker 3: four percent on the week. And it's just been so

416
00:22:01,000 --> 00:22:04,560
Speaker 3: much newsful. Remember the week started with concerns about circular

417
00:22:04,600 --> 00:22:08,080
Speaker 3: financing and video and we've kind of ended the week

418
00:22:08,119 --> 00:22:12,680
Speaker 3: with pretty upbeat picture of capital expenditures in the world

419
00:22:12,720 --> 00:22:17,199
Speaker 3: of AI, largely through Amazon's lens. But Apple, Wow, that

420
00:22:17,359 --> 00:22:19,720
Speaker 3: was a bit of a surprise their management of the

421
00:22:19,720 --> 00:22:22,760
Speaker 3: supply chain. Apple's on track for its biggest drop since

422
00:22:22,840 --> 00:22:25,600
Speaker 3: March of twenty twenty on an outlook for the September

423
00:22:25,680 --> 00:22:30,080
Speaker 3: quarter that was below expectations, but disclosure of some mismanagement

424
00:22:30,080 --> 00:22:32,520
Speaker 3: of the supply chain, and one would not expect to

425
00:22:32,560 --> 00:22:35,320
Speaker 3: say that about Apple in Tim Cook's final Warning School.

426
00:22:35,400 --> 00:22:37,760
Speaker 3: Then there's Amazon on track for its biggest jumpance is

427
00:22:37,800 --> 00:22:41,400
Speaker 3: twenty twelve, incredible cloud growth and a lot of AI momentum.

428
00:22:42,040 --> 00:22:46,440
Speaker 3: Let's talk about earnings Apple, Amazon and how it's all going.

429
00:22:46,560 --> 00:22:49,639
Speaker 3: Joining us now is laugh Atengler Investments CEO and CEO

430
00:22:49,720 --> 00:22:51,560
Speaker 3: and Nancy Tegler, and tell let me tell you on

431
00:22:51,600 --> 00:22:53,360
Speaker 3: a Friday, we have to go through all of it.

432
00:22:53,960 --> 00:22:56,760
Speaker 2: There's no one better. Let's start with Amazon.

433
00:22:56,840 --> 00:22:59,159
Speaker 3: You know, you know both companies well, and you have

434
00:22:59,720 --> 00:23:01,840
Speaker 3: on for the firm and for your clients. You know,

435
00:23:01,880 --> 00:23:04,800
Speaker 3: a clear strategy that involves both of them. Was there

436
00:23:04,840 --> 00:23:07,479
Speaker 3: one single thing with Amazon that just jumped out at

437
00:23:07,520 --> 00:23:09,280
Speaker 3: you and thought, yep, we've got this one right.

438
00:23:10,680 --> 00:23:13,359
Speaker 5: Yeah, And we started adding it to our value portfolio

439
00:23:13,440 --> 00:23:16,919
Speaker 5: and actually used proceeds from Apple earlier this week to

440
00:23:17,000 --> 00:23:20,879
Speaker 5: continue that edition. It has been trading like a value stock.

441
00:23:21,000 --> 00:23:25,960
Speaker 5: And what we knew was CEO jasse understands how to

442
00:23:26,160 --> 00:23:28,400
Speaker 5: roll out new technologies, as he was kind of the

443
00:23:28,400 --> 00:23:32,520
Speaker 5: father of AWS, so our bet has been on him.

444
00:23:32,600 --> 00:23:33,760
Speaker 12: It was our stock of the year.

445
00:23:33,800 --> 00:23:36,919
Speaker 5: It didn't look so good until to yesterday and today

446
00:23:37,359 --> 00:23:41,920
Speaker 5: or today mostly but effectively, what we believe is that

447
00:23:41,960 --> 00:23:46,600
Speaker 5: the company is in a position to monetize the capex spend,

448
00:23:47,000 --> 00:23:49,520
Speaker 5: and that's been the big concern on Wall Street. So

449
00:23:50,000 --> 00:23:51,520
Speaker 5: you know, the a lot of lovers to pull there.

450
00:23:51,560 --> 00:23:52,320
Speaker 5: They pulled all the.

451
00:23:52,320 --> 00:23:54,720
Speaker 12: Levers and it was an outstanding quarter.

452
00:23:55,800 --> 00:23:58,040
Speaker 3: The two that people focus on beyond sort of growth

453
00:23:58,040 --> 00:24:00,240
Speaker 3: of the cloud business, is the revenue run rate for

454
00:24:00,280 --> 00:24:03,840
Speaker 3: the chip business renting cloud capacity but on their own silicon.

455
00:24:04,119 --> 00:24:08,640
Speaker 3: And then what they call AWSAI, which is services, bedrock, models, etc.

456
00:24:09,720 --> 00:24:12,119
Speaker 3: Do you look at those or does it still just

457
00:24:12,160 --> 00:24:15,000
Speaker 3: fall to aws overall?

458
00:24:15,040 --> 00:24:17,560
Speaker 12: I mean effect Well, we look at all the segments

459
00:24:18,080 --> 00:24:18,960
Speaker 12: and the one.

460
00:24:18,800 --> 00:24:23,399
Speaker 5: That always gets overlooked is the retail side, maybe even advertising.

461
00:24:24,200 --> 00:24:26,760
Speaker 5: We certainly look at all of them, but what we're

462
00:24:27,040 --> 00:24:30,800
Speaker 5: concerned about as investors is the management pivoting. And that

463
00:24:30,960 --> 00:24:32,720
Speaker 5: was the reason we got out of Adobe, because you

464
00:24:32,760 --> 00:24:35,560
Speaker 5: had a CEO who missed kind of Now the stocks

465
00:24:35,600 --> 00:24:38,359
Speaker 5: recovered some, but it's still half of where we got out.

466
00:24:39,040 --> 00:24:41,119
Speaker 12: So we're looking for management teams.

467
00:24:40,800 --> 00:24:44,959
Speaker 5: That really are driving into the future, and that is

468
00:24:45,040 --> 00:24:49,120
Speaker 5: the case at Amazon. Jasse's cut costs in pretty much

469
00:24:49,160 --> 00:24:52,560
Speaker 5: all the right places, invested in the right places, and

470
00:24:52,600 --> 00:24:54,760
Speaker 5: he keeps a low profile, which I think is also

471
00:24:55,080 --> 00:24:58,800
Speaker 5: very important as an investor. So yeah, we pay attention

472
00:24:58,880 --> 00:25:02,840
Speaker 5: to that and we care about but generally speaking, overarching,

473
00:25:03,000 --> 00:25:04,879
Speaker 5: what is the catalyst forout performance?

474
00:25:05,160 --> 00:25:06,440
Speaker 12: And we think it's being in the.

475
00:25:06,359 --> 00:25:10,199
Speaker 5: Sweet spot of investing in capex and monetizing it.

476
00:25:10,240 --> 00:25:11,919
Speaker 12: From an AI standpoint.

477
00:25:12,640 --> 00:25:14,480
Speaker 3: Now, see would it be fair to say that in

478
00:25:14,560 --> 00:25:17,959
Speaker 3: financial markets people have different opinions on the same metric.

479
00:25:18,280 --> 00:25:20,440
Speaker 3: And the case study I put to you is free

480
00:25:20,440 --> 00:25:23,359
Speaker 3: cash flow. You know, Meta showed its lowest level of

481
00:25:23,359 --> 00:25:26,720
Speaker 3: free cash flows since twenty twenty two. Amazon's been a

482
00:25:26,760 --> 00:25:29,320
Speaker 3: negative free cash flow on trailing twelve month basis, and

483
00:25:29,320 --> 00:25:31,800
Speaker 3: no one seems to mind. Like, I'm not an investor,

484
00:25:31,880 --> 00:25:34,560
Speaker 3: I'm a financial and technology journelist, but you know, people

485
00:25:34,560 --> 00:25:37,200
Speaker 3: would always say free cash flow is the much better

486
00:25:37,280 --> 00:25:41,679
Speaker 3: measure than margin or any form of profit, and everyone

487
00:25:41,680 --> 00:25:43,720
Speaker 3: seems to sort of be calm about that.

488
00:25:44,680 --> 00:25:47,040
Speaker 12: Well, I think, no, you're one hundred percent right ed.

489
00:25:47,080 --> 00:25:49,359
Speaker 5: But I think we are in an economy and a

490
00:25:49,520 --> 00:25:54,240
Speaker 5: sector that's in a major transformation, and during those periods

491
00:25:54,320 --> 00:25:57,199
Speaker 5: historically I've been doing this for forty plus years, you

492
00:25:57,320 --> 00:26:01,320
Speaker 5: must invest. It is an arms rate, and so we

493
00:26:01,440 --> 00:26:05,280
Speaker 5: can tolerate as investors periods of negative free cash flow,

494
00:26:05,359 --> 00:26:09,320
Speaker 5: particularly when a company has the balance sheet of quality

495
00:26:09,400 --> 00:26:13,280
Speaker 5: that these hyperscalers have. So it is a metric that's

496
00:26:13,320 --> 00:26:16,119
Speaker 5: super important to most investors and to us as well.

497
00:26:16,400 --> 00:26:19,399
Speaker 5: But if you're investing for the future, you have to

498
00:26:19,440 --> 00:26:23,720
Speaker 5: be willing to sacrifice free cash flow at some point

499
00:26:23,880 --> 00:26:26,080
Speaker 5: to invest for the next round. And I think what

500
00:26:26,119 --> 00:26:28,960
Speaker 5: we saw in this report is the investment is paying

501
00:26:29,000 --> 00:26:31,360
Speaker 5: off and free cash flow will return.

502
00:26:32,080 --> 00:26:33,640
Speaker 12: And he talked quite a bit about that.

503
00:26:34,440 --> 00:26:35,520
Speaker 2: Let's talk about Apple.

504
00:26:35,920 --> 00:26:39,359
Speaker 3: It was Tim Cook's final earnings and Cares CEO becomes

505
00:26:39,400 --> 00:26:44,200
Speaker 3: executive chair September one. John Turners becomes CEO the September quarter.

506
00:26:45,280 --> 00:26:47,680
Speaker 3: The world is getting more difficult for them. But there

507
00:26:47,760 --> 00:26:50,160
Speaker 3: was this abmission that they'd got it wrong on how

508
00:26:50,160 --> 00:26:51,480
Speaker 3: they handled supply chain.

509
00:26:52,560 --> 00:26:53,359
Speaker 2: What did you make of that?

510
00:26:54,240 --> 00:26:55,399
Speaker 12: Yeah, I kind of.

511
00:26:55,520 --> 00:26:57,639
Speaker 5: I mean, I'm not happy about it, but that is

512
00:26:57,680 --> 00:26:59,960
Speaker 5: one of the things I've loved about Tim Cooks. Over

513
00:27:00,160 --> 00:27:02,159
Speaker 5: Tim Cook over the thirteen years when we've owned the

514
00:27:02,160 --> 00:27:05,920
Speaker 5: stock we got in after the Google Map debacle, he wrote,

515
00:27:06,200 --> 00:27:10,400
Speaker 5: if you recall, he wrote an apology basically acknowledging this mistake.

516
00:27:10,840 --> 00:27:13,720
Speaker 12: In January twenty nineteen, when they missed earnings, he wrote

517
00:27:14,000 --> 00:27:17,080
Speaker 12: a letter to shareholders. I don't know other CEOs that

518
00:27:17,160 --> 00:27:17,479
Speaker 12: do that.

519
00:27:17,880 --> 00:27:21,600
Speaker 5: So he is a competent, obviously manager of the supply

520
00:27:21,680 --> 00:27:22,640
Speaker 5: chain and the business.

521
00:27:22,880 --> 00:27:24,840
Speaker 12: But he made mistake, as we all do.

522
00:27:25,200 --> 00:27:28,280
Speaker 5: I make him every day and so I think what

523
00:27:28,320 --> 00:27:30,800
Speaker 5: we learned, however, is that the next quarter, which was

524
00:27:30,840 --> 00:27:35,439
Speaker 5: expected to continue to be a really strong momentum quarter,

525
00:27:35,920 --> 00:27:39,719
Speaker 5: is not going to be. In that whole discussion, though,

526
00:27:39,880 --> 00:27:42,000
Speaker 5: ed what I thought was interesting was that he said,

527
00:27:42,359 --> 00:27:47,040
Speaker 5: even though the supply of memory chips may improve, we

528
00:27:47,080 --> 00:27:48,520
Speaker 5: don't expect prices to go down.

529
00:27:48,600 --> 00:27:51,360
Speaker 12: We expect them to go up. And he also didn't.

530
00:27:51,160 --> 00:27:53,879
Speaker 5: Say that he was going to be in China buying

531
00:27:53,920 --> 00:27:56,520
Speaker 5: those parts. So I think the market still trying to

532
00:27:56,560 --> 00:27:59,760
Speaker 5: digest all of that. We had sold a chunk of

533
00:27:59,760 --> 00:28:03,000
Speaker 5: our things about twenty five percent going into earnings because

534
00:28:03,000 --> 00:28:05,879
Speaker 5: it had just been such a strong performer relative to

535
00:28:05,920 --> 00:28:08,240
Speaker 5: everything else, and so we thought some of the good

536
00:28:08,280 --> 00:28:10,879
Speaker 5: news was priced in, and we wanted to fund names

537
00:28:11,240 --> 00:28:15,119
Speaker 5: like Amazon that had not participated in the rally.

538
00:28:15,200 --> 00:28:17,520
Speaker 12: So I think it's a name you hold on to.

539
00:28:17,720 --> 00:28:20,879
Speaker 5: We call it our treasury bill of technology holdings. But

540
00:28:20,920 --> 00:28:22,800
Speaker 5: I don't think you chase it in here. You let

541
00:28:22,840 --> 00:28:26,159
Speaker 5: it settle and watch very carefully. They are going to

542
00:28:26,200 --> 00:28:28,240
Speaker 5: have an AI announcement, We are going to have a

543
00:28:28,240 --> 00:28:28,800
Speaker 5: new CEO.

544
00:28:28,880 --> 00:28:31,720
Speaker 12: They always get tested. Jase did, Tim Cook did?

545
00:28:32,160 --> 00:28:36,080
Speaker 5: So, I think you have some time to at least

546
00:28:36,119 --> 00:28:38,520
Speaker 5: accumulate the holdings, but certainly not today.

547
00:28:39,720 --> 00:28:43,800
Speaker 3: Nancy Tegler, CEO and CIO of Lafetenger Investments, Happy Friday.

548
00:28:44,080 --> 00:28:46,760
Speaker 3: It's been a long week, Thank you very much. Rivian's

549
00:28:46,800 --> 00:28:50,680
Speaker 3: quarterly revenue beat estimates, but the eb maker still posting losses.

550
00:28:50,720 --> 00:28:54,840
Speaker 3: They're narrowing it begins. Deliveries of the new midsize SUVR

551
00:28:54,920 --> 00:28:58,560
Speaker 3: two shares open higher, they're now down eight percent. I

552
00:28:58,600 --> 00:29:01,160
Speaker 3: caught up with CFO Claim Donna, who says that then

553
00:29:01,200 --> 00:29:04,240
Speaker 3: you are too, will be a key catalyst for Rivian's

554
00:29:04,240 --> 00:29:05,280
Speaker 3: anticipated growth.

555
00:29:06,080 --> 00:29:10,000
Speaker 13: We're really excited about the opportunity to both introduce R

556
00:29:10,080 --> 00:29:13,360
Speaker 13: two to the world in June, so it's the start

557
00:29:13,400 --> 00:29:17,800
Speaker 13: of our first external customer deliveries, also the first opportunity

558
00:29:17,880 --> 00:29:19,440
Speaker 13: for consumers to test.

559
00:29:19,280 --> 00:29:21,800
Speaker 12: Drive the vehicle as well, and we're.

560
00:29:21,600 --> 00:29:25,520
Speaker 13: Able to complete fifty seven thousand demo drives over the

561
00:29:25,520 --> 00:29:28,120
Speaker 13: course of the second quarter. And R two is a

562
00:29:28,200 --> 00:29:31,200
Speaker 13: key enabler and driver of the increase that we saw

563
00:29:31,640 --> 00:29:34,640
Speaker 13: in our demo drive and traffic across each of our

564
00:29:34,800 --> 00:29:39,080
Speaker 13: our retail locations and spaces, and the reaction from the

565
00:29:39,160 --> 00:29:42,280
Speaker 13: media has just been fantastic, and the same is true

566
00:29:42,280 --> 00:29:45,160
Speaker 13: as we looked at the feedback that we're seeing from

567
00:29:45,240 --> 00:29:49,120
Speaker 13: consumers who are getting behind the wheel experiencing it for

568
00:29:49,520 --> 00:29:53,240
Speaker 13: themselves and for someone like myself that's been here for

569
00:29:53,400 --> 00:29:56,400
Speaker 13: five and a half years now, just a really great

570
00:29:56,480 --> 00:30:00,200
Speaker 13: moment to see R two out into the wild and

571
00:30:00,240 --> 00:30:03,560
Speaker 13: now Rivian in position to scale up production over the

572
00:30:03,600 --> 00:30:04,360
Speaker 13: second half.

573
00:30:04,120 --> 00:30:04,520
Speaker 12: Of the year.

574
00:30:05,360 --> 00:30:08,160
Speaker 3: Claire, do you track the conversion rate of those fifty

575
00:30:08,160 --> 00:30:11,160
Speaker 3: seven thousand demos? How many end up being actual sales?

576
00:30:12,840 --> 00:30:16,360
Speaker 13: Right now, we're in the process of both taking existing

577
00:30:16,480 --> 00:30:20,280
Speaker 13: reservation holders who are interested in R two and giving

578
00:30:20,320 --> 00:30:24,200
Speaker 13: them really the first look to experience the product, and

579
00:30:24,240 --> 00:30:28,680
Speaker 13: then also introducing more and more customers into the broader

580
00:30:28,720 --> 00:30:31,840
Speaker 13: Ribean ecosystem. So this is a big moment for the

581
00:30:31,880 --> 00:30:35,240
Speaker 13: business as we're trying to drive and expand our brand

582
00:30:35,240 --> 00:30:39,720
Speaker 13: awareness and introduce more households into the Ribean community.

583
00:30:40,960 --> 00:30:44,160
Speaker 3: Can you try and quantify what the sales contribution from

584
00:30:44,280 --> 00:30:46,440
Speaker 3: R two was in that quarter and kind of where

585
00:30:46,480 --> 00:30:49,080
Speaker 3: you're tracking. You've already said that, you know, in the

586
00:30:49,080 --> 00:30:51,080
Speaker 3: back half of this year that's where we'll start to

587
00:30:51,120 --> 00:30:53,760
Speaker 3: see R two in a meaningful way. But what is

588
00:30:53,800 --> 00:30:54,720
Speaker 3: the trajectory you.

589
00:30:54,720 --> 00:30:57,400
Speaker 12: See in the second quarter.

590
00:30:57,560 --> 00:30:59,680
Speaker 13: R two was limited in terms of the number of

591
00:31:00,000 --> 00:31:04,920
Speaker 13: liveries that was contributed to our overall delivery volumes of

592
00:31:05,040 --> 00:31:08,800
Speaker 13: just over twelve thousand units, but embedded within our sixty

593
00:31:08,840 --> 00:31:12,600
Speaker 13: five thousand to seventy thousand units of guidance for the year,

594
00:31:13,120 --> 00:31:16,360
Speaker 13: we'll see a significant step up in the second half

595
00:31:16,880 --> 00:31:19,480
Speaker 13: for deliveries and our two will be a key catalyst

596
00:31:19,560 --> 00:31:21,680
Speaker 13: for the growth that we anticipate seeing.

597
00:31:23,040 --> 00:31:26,480
Speaker 3: That was Rivian's CFO Clad McDonough. President Trump now holding

598
00:31:26,480 --> 00:31:29,200
Speaker 3: a cabinet meeting at Camp David assisting then.

599
00:31:29,720 --> 00:31:31,120
Speaker 7: Well, basically its favorite nation.

600
00:31:31,320 --> 00:31:34,160
Speaker 14: So we have the lowest drug prices anywhere in the

601
00:31:34,200 --> 00:31:37,280
Speaker 14: world from the highest drug prices anywhere in the world.

602
00:31:37,280 --> 00:31:39,800
Speaker 14: Now what that does for your healthcare? I mean, I

603
00:31:39,800 --> 00:31:43,840
Speaker 14: see these fake polls where the Democrats have wonderful numbers

604
00:31:43,880 --> 00:31:46,480
Speaker 14: on this stuff, and they are horrible what they've done.

605
00:31:46,680 --> 00:31:51,320
Speaker 14: Obamacare is a total disaster. It's a costly wreck. It's unaffordable.

606
00:31:51,320 --> 00:31:54,520
Speaker 14: We call it the Unaffordable Care Act. It's a disgrace.

607
00:31:54,920 --> 00:31:57,120
Speaker 14: They never even thought of being able to do something

608
00:31:57,200 --> 00:31:59,880
Speaker 14: like this. They didn't even try. They didn't even try.

609
00:32:00,040 --> 00:32:02,680
Speaker 14: So I got the drug companies first, and then I

610
00:32:02,720 --> 00:32:07,280
Speaker 14: got the countries, and the drug companies agreed because they

611
00:32:07,320 --> 00:32:10,719
Speaker 14: knew the countries wouldn't agree. And when I called Germany, France,

612
00:32:11,200 --> 00:32:14,040
Speaker 14: when I called the UK, when I called all of

613
00:32:14,080 --> 00:32:16,400
Speaker 14: these countries, I said, you got to do it.

614
00:32:16,400 --> 00:32:19,760
Speaker 7: It's unfair. We're paying ten times more than you pay

615
00:32:19,840 --> 00:32:21,240
Speaker 7: for the same drug. You can't do this.

616
00:32:21,960 --> 00:32:23,440
Speaker 14: And they said, well, we're not going to do that,

617
00:32:23,480 --> 00:32:25,240
Speaker 14: because we're going to have to double our price in

618
00:32:25,320 --> 00:32:26,440
Speaker 14: order to make you happy.

619
00:32:26,440 --> 00:32:28,040
Speaker 7: I said, no, maybe you're going to have to triple

620
00:32:28,120 --> 00:32:30,680
Speaker 7: your price. They said, well, we can't do it. I said,

621
00:32:30,720 --> 00:32:32,760
Speaker 7: that's all right. If you can't do it, then I.

622
00:32:32,720 --> 00:32:36,360
Speaker 14: Can't do something also, and I'm going to charge you

623
00:32:36,520 --> 00:32:39,640
Speaker 14: very substantial tariffs, which are far more than we're talking about.

624
00:32:40,360 --> 00:32:42,160
Speaker 14: And they all said, we'd love to do it. We

625
00:32:42,200 --> 00:32:43,920
Speaker 14: would love to do it, would be our great honor

626
00:32:43,960 --> 00:32:46,000
Speaker 14: to do it. So nobody else would do this. This

627
00:32:46,000 --> 00:32:49,320
Speaker 14: would have never happened. So your drug prices have gone down.

628
00:32:49,320 --> 00:32:52,200
Speaker 14: My numbers not even think well, my first term I

629
00:32:52,240 --> 00:32:55,040
Speaker 14: had the privilege of having lower drug prices from the

630
00:32:55,080 --> 00:32:57,640
Speaker 14: beginning of the year till the end for the first

631
00:32:57,640 --> 00:33:00,880
Speaker 14: time in twenty eight years. You remember and I called

632
00:33:00,880 --> 00:33:03,640
Speaker 14: the news conference to announce it. So the year it ended,

633
00:33:04,240 --> 00:33:07,840
Speaker 14: and I was turned out one eighth of a percent,

634
00:33:08,040 --> 00:33:11,280
Speaker 14: one eighth of a percent living tiny this much. It

635
00:33:11,320 --> 00:33:14,560
Speaker 14: went down that much during one year, first time in

636
00:33:14,600 --> 00:33:16,480
Speaker 14: twenty eight years it went down. It was always like this,

637
00:33:16,840 --> 00:33:21,600
Speaker 14: just up more expensive. And I called the news conference.

638
00:33:21,640 --> 00:33:24,000
Speaker 14: I was so proud of myself, and I said, ladies

639
00:33:24,040 --> 00:33:27,040
Speaker 14: and gentlemen, the first time in twenty eight years, drug

640
00:33:27,040 --> 00:33:32,000
Speaker 14: prices have gone down from January till the end of December.

641
00:33:32,520 --> 00:33:36,480
Speaker 14: And I want to just congratulate everybody for being a

642
00:33:36,520 --> 00:33:38,120
Speaker 14: part of this wonderful experiment.

643
00:33:39,120 --> 00:33:41,480
Speaker 7: And one eighth of a point now we're.

644
00:33:41,320 --> 00:33:44,040
Speaker 14: Talking about four hundred, five hundred and six hundred percent

645
00:33:45,240 --> 00:33:48,040
Speaker 14: coming down. We paid the lowest drug prices anywhere in

646
00:33:48,040 --> 00:33:50,720
Speaker 14: the world from the highest, so you know, and I'll

647
00:33:50,760 --> 00:33:52,760
Speaker 14: say it again and again because the press doesn't want

648
00:33:52,760 --> 00:33:53,800
Speaker 14: to report it, the fake news.

649
00:33:53,800 --> 00:33:55,640
Speaker 7: Does I want to report it, They don't want to

650
00:33:55,680 --> 00:33:56,320
Speaker 7: talk about it.

651
00:33:56,600 --> 00:34:00,240
Speaker 14: What that does for healthcare, Bobby, is unbelievable because it's

652
00:34:00,280 --> 00:34:03,680
Speaker 14: a big part of healthcare. So I wish that people

653
00:34:03,720 --> 00:34:05,960
Speaker 14: would understand that, and I hope they're going to vote

654
00:34:05,960 --> 00:34:08,440
Speaker 14: for us in the midterms, because you'll see some stuff

655
00:34:08,440 --> 00:34:11,280
Speaker 14: that will be horrible because they can blow it very fast,

656
00:34:11,280 --> 00:34:12,680
Speaker 14: so they don't know what they're doing.

657
00:34:13,000 --> 00:34:16,400
Speaker 7: So your drug prices are great. You know, I saw Spain.

658
00:34:17,360 --> 00:34:20,959
Speaker 14: Yesterday and I watched the catastrophe that took place.

659
00:34:21,000 --> 00:34:25,320
Speaker 7: It looks like an invasion of a country by hundreds

660
00:34:25,360 --> 00:34:26,520
Speaker 7: of thousands of people.

661
00:34:27,360 --> 00:34:29,200
Speaker 14: And that same thing's going to happen to us if

662
00:34:29,239 --> 00:34:34,239
Speaker 14: the Republicans they'll get elected, except worse, much bigger, much

663
00:34:34,320 --> 00:34:37,160
Speaker 14: easier to get into. Despite the fact that we have

664
00:34:37,280 --> 00:34:41,200
Speaker 14: built thousands of miles of wall, which I said we

665
00:34:41,200 --> 00:34:44,640
Speaker 14: were going to do, but we didn't have that, forget it.

666
00:34:44,680 --> 00:34:46,719
Speaker 14: But we have the safest border in the world. If

667
00:34:47,520 --> 00:34:48,520
Speaker 14: we're not an office.

668
00:34:48,680 --> 00:34:51,680
Speaker 3: That was President Trump speaking in a cabinet meeting at

669
00:34:51,719 --> 00:34:56,040
Speaker 3: Camp David. No headlines other than the President touting the

670
00:34:56,120 --> 00:34:59,239
Speaker 3: stock market. Will continue to monitor and bring you headlines

671
00:34:59,360 --> 00:35:01,839
Speaker 3: if and when they for terminal users. You can get

672
00:35:01,880 --> 00:35:05,680
Speaker 3: to this in full by going to Live Go with Anthropic,

673
00:35:05,800 --> 00:35:08,439
Speaker 3: joining Open AI and revealing that some of it's AI

674
00:35:08,520 --> 00:35:12,960
Speaker 3: models broke out of sealed testing and hacked outside organizations.

675
00:35:13,440 --> 00:35:17,080
Speaker 3: Fears about the real world risks and calls for safeguards arising.

676
00:35:17,120 --> 00:35:20,359
Speaker 3: The concern isn't just what AI knows anymore, it's what

677
00:35:20,680 --> 00:35:24,319
Speaker 3: AI can do. Is these systems become more augentic and

678
00:35:24,360 --> 00:35:28,200
Speaker 3: begin taking actions in the real world. Trust security become

679
00:35:28,200 --> 00:35:32,520
Speaker 3: more important. Dina Shakir, partner at Lux Capital and an

680
00:35:32,520 --> 00:35:35,600
Speaker 3: investor across the AI spectrum with a focus on health,

681
00:35:35,840 --> 00:35:38,440
Speaker 3: something that the President has been speaking about in the

682
00:35:38,480 --> 00:35:42,040
Speaker 3: last few minutes, joins us. Now, you know, you know

683
00:35:42,760 --> 00:35:45,960
Speaker 3: so many founders that have a strong view on this,

684
00:35:46,080 --> 00:35:49,480
Speaker 3: you're investing into the space. Just to start your reaction

685
00:35:49,640 --> 00:35:53,080
Speaker 3: to anthropics disclosure last night in aggregate with the open

686
00:35:53,120 --> 00:35:54,320
Speaker 3: I hugging face situation.

687
00:35:55,440 --> 00:35:57,719
Speaker 15: Great to see you, ed, Thanks for having me. Yeah,

688
00:35:57,760 --> 00:36:00,160
Speaker 15: you know, two weeks in a row of disclosures here

689
00:36:00,200 --> 00:36:04,040
Speaker 15: are certainly ringing alarm bells for quite a few people.

690
00:36:04,040 --> 00:36:06,600
Speaker 15: But I think it's really illustrating a broader point, which

691
00:36:06,640 --> 00:36:10,279
Speaker 15: is that we are moving beyond the commoditization of intelligence

692
00:36:10,360 --> 00:36:15,239
Speaker 15: models to your point, into what happens when models interact

693
00:36:15,239 --> 00:36:19,440
Speaker 15: with the real world. These disclosures show both what can

694
00:36:19,480 --> 00:36:22,920
Speaker 15: happen when there's a misconfiguration in the anthropic case around

695
00:36:22,960 --> 00:36:26,640
Speaker 15: a sandbox and also when you stress test these super

696
00:36:26,719 --> 00:36:28,520
Speaker 15: hyperintelligent models.

697
00:36:28,640 --> 00:36:29,800
Speaker 12: The potential risks.

698
00:36:30,360 --> 00:36:34,800
Speaker 15: At the same time, I think it's incredibly exciting how

699
00:36:34,960 --> 00:36:38,279
Speaker 15: advanced these models are getting and where the real opportunity

700
00:36:38,400 --> 00:36:42,440
Speaker 15: might actually be moving beyond the commoditization of models into

701
00:36:42,520 --> 00:36:46,920
Speaker 15: the operating system and most importantly that the trust infrastructure

702
00:36:46,960 --> 00:36:47,440
Speaker 15: around it.

703
00:36:48,880 --> 00:36:53,799
Speaker 3: The President was speaking about drug prices, about the role

704
00:36:54,120 --> 00:36:57,799
Speaker 3: and positioning of drug prices in healthcare. My hope is

705
00:36:57,840 --> 00:36:59,120
Speaker 3: you come on the show and kind of do the

706
00:36:59,160 --> 00:37:02,719
Speaker 3: newspapers with me anyway that you are very focused on

707
00:37:02,760 --> 00:37:06,960
Speaker 3: that vertical and I mean literal vertical AI application of healthcare.

708
00:37:08,120 --> 00:37:11,920
Speaker 3: There's an opportunity there. It seems to really change industry.

709
00:37:13,080 --> 00:37:15,480
Speaker 15: There is ed and you were with us in March

710
00:37:15,520 --> 00:37:18,759
Speaker 15: when we hosted a whole conference around the opportunity at

711
00:37:18,760 --> 00:37:21,600
Speaker 15: the intersection of healthcare and AI. Since then, there have

712
00:37:21,719 --> 00:37:25,000
Speaker 15: been quite a few exciting developments from all of the labs,

713
00:37:25,760 --> 00:37:29,320
Speaker 15: whether it's anthropic going on the record saying healthcare is

714
00:37:30,080 --> 00:37:33,879
Speaker 15: one of their biggest priorities, going deep into life sciences,

715
00:37:34,320 --> 00:37:38,560
Speaker 15: talking about in fact drug development as a potential priority

716
00:37:38,600 --> 00:37:44,440
Speaker 15: for them, or open AIS launched just last week around healthcare.

717
00:37:44,600 --> 00:37:46,239
Speaker 15: And I don't know if you've played around with it

718
00:37:46,320 --> 00:37:48,080
Speaker 15: at all, It's been really fun.

719
00:37:48,120 --> 00:37:49,160
Speaker 12: I've enjoyed using it.

720
00:37:49,840 --> 00:37:53,080
Speaker 15: As someone who helped launch Google Health over a decade ago,

721
00:37:53,200 --> 00:37:56,680
Speaker 15: it's really remarkable to see just how far these models

722
00:37:56,719 --> 00:38:01,799
Speaker 15: have taken the opportunity to really take healthcare information into

723
00:38:01,840 --> 00:38:05,040
Speaker 15: your own hands. But I think, more importantly moving beyond

724
00:38:05,239 --> 00:38:09,640
Speaker 15: information gathering into actual action, and I think that's where

725
00:38:09,680 --> 00:38:12,440
Speaker 15: the next generation of innovation in and around healthcare and

726
00:38:12,440 --> 00:38:14,520
Speaker 15: frankly across regulated industries will be.

727
00:38:15,440 --> 00:38:17,200
Speaker 3: When I was with you at the conference in March,

728
00:38:17,360 --> 00:38:20,960
Speaker 3: in the room, there were the founders of specialized startups,

729
00:38:21,360 --> 00:38:27,000
Speaker 3: there were representatives from all kinds of technology companies, former clinicians,

730
00:38:27,160 --> 00:38:30,960
Speaker 3: and some regulators. Right, And I think the question post

731
00:38:31,239 --> 00:38:35,319
Speaker 3: was if open AI and Anthropic are so big and

732
00:38:35,360 --> 00:38:39,239
Speaker 3: their capabilities so wide, why do they not go after

733
00:38:39,280 --> 00:38:40,560
Speaker 3: this field more intensely.

734
00:38:42,040 --> 00:38:44,040
Speaker 15: Yeah, you know, I think this is an existential question

735
00:38:44,080 --> 00:38:47,440
Speaker 15: for pretty much every applied AI company with regard to

736
00:38:47,480 --> 00:38:48,320
Speaker 15: healthcare specifically.

737
00:38:48,360 --> 00:38:49,120
Speaker 12: It's a valid one.

738
00:38:49,120 --> 00:38:52,200
Speaker 15: As I just mentioned, both of those labs have gone

739
00:38:52,239 --> 00:38:55,000
Speaker 15: on the record not only launching in and around healthcare

740
00:38:55,000 --> 00:38:58,080
Speaker 15: and life sciences, but talking about how important these priorities are.

741
00:38:58,239 --> 00:39:00,680
Speaker 15: But I think what's become clear is that think will

742
00:39:00,680 --> 00:39:05,040
Speaker 15: not happen in isolation. If you saw the launch coming

743
00:39:05,080 --> 00:39:08,880
Speaker 15: out of Chat GPT. On the healthcare side, the product

744
00:39:08,960 --> 00:39:13,719
Speaker 15: itself is grounded in partnership. It's about literally connecting your

745
00:39:13,719 --> 00:39:17,399
Speaker 15: health information, whether it's your function health labs or your

746
00:39:17,440 --> 00:39:21,200
Speaker 15: EMR records or Apple Health to these labs. And so

747
00:39:21,360 --> 00:39:24,640
Speaker 15: at the end of the day, it's again incredibly exciting

748
00:39:24,640 --> 00:39:28,279
Speaker 15: how good these models are getting. But it's less about

749
00:39:28,360 --> 00:39:31,680
Speaker 15: extracting information and more about taking that information and applying

750
00:39:31,680 --> 00:39:34,239
Speaker 15: it to the real world context. And healthcare might very

751
00:39:34,280 --> 00:39:37,320
Speaker 15: well be the best example of the real physical world

752
00:39:37,640 --> 00:39:42,400
Speaker 15: interacting with models. Without those partnerships, the healthcare information is

753
00:39:43,840 --> 00:39:47,000
Speaker 15: just living in isolation. It is going to be dependent

754
00:39:47,040 --> 00:39:50,080
Speaker 15: on deployment and on partnership. And so that's where I

755
00:39:50,080 --> 00:39:53,640
Speaker 15: think it's actually never been more exciting for startups and

756
00:39:53,719 --> 00:39:58,239
Speaker 15: for third party companies, right rather than trying to replicate

757
00:39:58,280 --> 00:40:01,360
Speaker 15: a model or build a new foundational layer, they are

758
00:40:01,440 --> 00:40:03,480
Speaker 15: the ones who can take deployment to the next level.

759
00:40:04,960 --> 00:40:06,680
Speaker 3: Diana, can we talk a little bit about some of

760
00:40:06,719 --> 00:40:10,719
Speaker 3: your recent investments. You're a very busy person. I mean

761
00:40:10,760 --> 00:40:12,120
Speaker 3: that in the kindest way.

762
00:40:12,160 --> 00:40:12,239
Speaker 14: That.

763
00:40:12,560 --> 00:40:14,879
Speaker 2: You know, you have been doing some interesting rounds of late.

764
00:40:15,440 --> 00:40:18,120
Speaker 3: You know, lucks Capital has scale, which I always find

765
00:40:18,160 --> 00:40:22,239
Speaker 3: so interesting. But I also recognize increasingly some of the

766
00:40:22,280 --> 00:40:25,800
Speaker 3: more legacy Will Street institutions, private growth equity mutual funds

767
00:40:25,880 --> 00:40:29,279
Speaker 3: getting earlier into the game in some of these verticals.

768
00:40:31,200 --> 00:40:33,840
Speaker 15: Yeah, I mean there's so much opportunity. I think everybody

769
00:40:33,840 --> 00:40:37,280
Speaker 15: wants to have a hand in it, for sure. At LUX,

770
00:40:37,400 --> 00:40:42,000
Speaker 15: we are excited about the opportunity across a number of verticals,

771
00:40:42,040 --> 00:40:46,120
Speaker 15: healthcare being one of them, but across quite a few

772
00:40:46,120 --> 00:40:49,120
Speaker 15: others as well. I think physical AI and robotics is

773
00:40:49,160 --> 00:40:51,560
Speaker 15: a massive opportunity, and we're still really at the early

774
00:40:51,640 --> 00:40:55,160
Speaker 15: days there, but it's clear that AI is no longer

775
00:40:55,320 --> 00:40:57,480
Speaker 15: just you know, it's not even a sector. It's how

776
00:40:57,480 --> 00:40:59,600
Speaker 15: we used to talk about tech, right, and tech eventually

777
00:40:59,680 --> 00:41:04,239
Speaker 15: became everything. AI is an operating system and the opportunity

778
00:41:04,239 --> 00:41:08,640
Speaker 15: across these legacy institutions is absolutely massive and we're literally

779
00:41:08,680 --> 00:41:09,400
Speaker 15: just getting started.

780
00:41:10,120 --> 00:41:11,480
Speaker 3: It's so funny, you say, Like when I moved to

781
00:41:11,480 --> 00:41:13,200
Speaker 3: San Francisco in twenty eighteen, I kind of felt like

782
00:41:13,239 --> 00:41:15,000
Speaker 3: I missed the boat a little bit, you know, on

783
00:41:15,040 --> 00:41:18,799
Speaker 3: the social media wave and on hardware, and now you

784
00:41:18,800 --> 00:41:23,399
Speaker 3: know AI is technology in itself. What do you think

785
00:41:23,440 --> 00:41:25,200
Speaker 3: happens kind of in the balance of the year in

786
00:41:25,200 --> 00:41:28,160
Speaker 3: private markets? You know there are certain spaces defense techs,

787
00:41:28,200 --> 00:41:31,560
Speaker 3: one that locks super focused on where there's just such momentum.

788
00:41:31,800 --> 00:41:34,120
Speaker 3: The numbers this year are bigger than last year. Does

789
00:41:34,160 --> 00:41:37,080
Speaker 3: that apply to health? What is the kind of zoomed

790
00:41:37,080 --> 00:41:39,520
Speaker 3: out view of the industries you're investing in?

791
00:41:40,239 --> 00:41:41,799
Speaker 15: Yeah, I mean, I think there's a lesson here that

792
00:41:41,840 --> 00:41:45,520
Speaker 15: every time you think you know, something pops up and

793
00:41:46,120 --> 00:41:49,160
Speaker 15: proves you wrong. But I think with regard to private markets,

794
00:41:49,160 --> 00:41:51,719
Speaker 15: as I said, like the opportunity has actually never been

795
00:41:51,760 --> 00:41:54,880
Speaker 15: better in the application layer, and that's not that wouldn't

796
00:41:54,880 --> 00:41:56,000
Speaker 15: have been the case if I had come on this

797
00:41:56,040 --> 00:41:57,920
Speaker 15: show just a couple of years ago. I think the

798
00:41:57,960 --> 00:42:00,480
Speaker 15: focus at that time was more around in structure and

799
00:42:00,520 --> 00:42:03,720
Speaker 15: around the models. But it's become clear just how quickly

800
00:42:03,840 --> 00:42:07,560
Speaker 15: these models can advance, and it's also become clear again

801
00:42:07,560 --> 00:42:09,760
Speaker 15: that they can't do it in isolation. So we're excited

802
00:42:09,760 --> 00:42:16,919
Speaker 15: about everything from real world health companies like Sonata Health,

803
00:42:16,960 --> 00:42:21,400
Speaker 15: which we just announced a few days ago, to sovereign

804
00:42:21,440 --> 00:42:26,120
Speaker 15: AI companies that are taking the Next, the next layer

805
00:42:26,160 --> 00:42:29,600
Speaker 15: of deployment even geographically. We recently announced a new investment

806
00:42:29,600 --> 00:42:32,200
Speaker 15: in a company called one thousand and one AI in

807
00:42:32,280 --> 00:42:35,719
Speaker 15: the GCC, and I think those are great examples, whether

808
00:42:35,719 --> 00:42:38,880
Speaker 15: it's healthcare or sovereign AI, where that trust layer, especially

809
00:42:38,880 --> 00:42:42,759
Speaker 15: given the news in recent weeks in these incidents, is

810
00:42:42,800 --> 00:42:45,279
Speaker 15: going to be more important than ever. And there are

811
00:42:45,640 --> 00:42:48,959
Speaker 15: more and more interesting companies you know in the works

812
00:42:49,040 --> 00:42:51,800
Speaker 15: right now that we'll be excited to unveil in weeks

813
00:42:51,800 --> 00:42:52,120
Speaker 15: to come.

814
00:42:53,000 --> 00:42:56,040
Speaker 3: Diana Shakie, partner at Louxe Capital, back on bloom Big Tech,

815
00:42:56,080 --> 00:42:59,160
Speaker 3: Thank you very much. Indeeda coming up made investor concerns

816
00:42:59,200 --> 00:43:02,800
Speaker 3: of heavy aid from the hyperscalers. Microsoft's kind of easing

817
00:43:02,840 --> 00:43:07,239
Speaker 3: fears by promising to stay cash flow positive details. Next,

818
00:43:07,280 --> 00:43:19,480
Speaker 3: this is Bloomberg tech Today's big number. Four hundred and

819
00:43:19,520 --> 00:43:22,319
Speaker 3: fifty billion dollars. That's how much Microsoft added to its

820
00:43:22,360 --> 00:43:26,960
Speaker 3: value yesterday after its market cap jumped sixteen percent, increasing

821
00:43:27,000 --> 00:43:30,400
Speaker 3: more than any company ever in a single day. That

822
00:43:30,560 --> 00:43:33,000
Speaker 3: number is even higher today, with the stock up two

823
00:43:33,000 --> 00:43:33,680
Speaker 3: point three percent.

824
00:43:33,680 --> 00:43:34,880
Speaker 2: Why are investors so happy?

825
00:43:35,200 --> 00:43:39,439
Speaker 3: Because, writes Bloomberg's Brady Ford, Microsoft struck a cautious tone

826
00:43:39,480 --> 00:43:42,360
Speaker 3: on spending, like many of its Max seven peers, managed

827
00:43:42,400 --> 00:43:45,880
Speaker 3: to ease investor fees over AI spending by remaining cash

828
00:43:46,080 --> 00:43:48,880
Speaker 3: flow positive. Bloombergs Brady Ford joins us now with the

829
00:43:48,920 --> 00:43:51,920
Speaker 3: tech in death. This is important. Free cash flows the

830
00:43:51,920 --> 00:43:55,040
Speaker 3: metric people are looking at and they are making a commitment.

831
00:43:55,520 --> 00:43:56,399
Speaker 2: They've stated it.

832
00:43:57,080 --> 00:43:59,560
Speaker 16: Right, that's the whole debate over the last couple of months, right,

833
00:43:59,600 --> 00:44:02,560
Speaker 16: all the money being spent on data centers is going

834
00:44:02,600 --> 00:44:04,120
Speaker 16: to have looked like a shrewd bet.

835
00:44:04,239 --> 00:44:06,120
Speaker 2: We see some of the world's great.

836
00:44:05,880 --> 00:44:10,320
Speaker 16: Cash flow businesses, Amazon at a Google heading towards negative

837
00:44:10,320 --> 00:44:13,239
Speaker 16: free cash flow, and Microsoft has said that we're going

838
00:44:13,320 --> 00:44:16,640
Speaker 16: to prioritizet cash flow positive. We're going to strike a

839
00:44:16,719 --> 00:44:19,560
Speaker 16: moderate tone on our spending. And at least for now,

840
00:44:19,600 --> 00:44:21,480
Speaker 16: the market is super happy to see that.

841
00:44:21,600 --> 00:44:23,960
Speaker 2: And it's not like Microsoft's CAPEX commitment is small.

842
00:44:23,960 --> 00:44:24,200
Speaker 6: It's not.

843
00:44:24,280 --> 00:44:27,160
Speaker 3: Right, Oh yeah, I mean, I remember the big moment

844
00:44:27,280 --> 00:44:29,000
Speaker 3: of the last year, maybe it's more than a year,

845
00:44:29,040 --> 00:44:31,520
Speaker 3: Andrew was Oracle tipping into negative free cash flow. Right,

846
00:44:31,800 --> 00:44:36,520
Speaker 3: markets freaked out comparing Chanstlas Night with Amazon. Amazon's on

847
00:44:36,560 --> 00:44:39,960
Speaker 3: a training basis been negative cash flow for a while.

848
00:44:40,280 --> 00:44:42,680
Speaker 16: You make a good point when Oracle went free cash

849
00:44:42,719 --> 00:44:44,719
Speaker 16: flow negative, they were the first big company to do

850
00:44:44,800 --> 00:44:47,600
Speaker 16: so everybody thought Larry Ellison's crazy, what is he doing.

851
00:44:47,960 --> 00:44:51,080
Speaker 16: Everybody's digested that that might be what's needed to do

852
00:44:51,160 --> 00:44:54,520
Speaker 16: a massive cloud build out, right. So yeah, Microsoft is

853
00:44:54,560 --> 00:44:56,719
Speaker 16: still spending one hundred and seventy five billion a year.

854
00:44:56,880 --> 00:44:59,919
Speaker 16: That's a lot of money, but they're signaling that they're

855
00:45:00,120 --> 00:45:01,920
Speaker 16: somewhat of an end in sight and it's not going

856
00:45:01,960 --> 00:45:04,759
Speaker 16: to be this constant rationing up of spending, which is

857
00:45:04,800 --> 00:45:06,800
Speaker 16: what makes the market super nervous.

858
00:45:07,400 --> 00:45:10,160
Speaker 3: Last night, Amazon raised capex for the year very quickly,

859
00:45:10,280 --> 00:45:11,839
Speaker 3: twenty billion dollars because.

860
00:45:11,600 --> 00:45:12,320
Speaker 2: Costs for hire.

861
00:45:12,680 --> 00:45:17,320
Speaker 3: Has Microsoft explained how they're going to pull off their goal, No.

862
00:45:17,239 --> 00:45:17,640
Speaker 7: They have it.

863
00:45:17,719 --> 00:45:20,040
Speaker 16: And the fact that costs are going up with memory

864
00:45:20,239 --> 00:45:22,720
Speaker 16: and they're still holding it steady, it means they're finding

865
00:45:22,760 --> 00:45:26,240
Speaker 16: cost efficiency, right, and so if that is truly what's happening,

866
00:45:26,320 --> 00:45:27,520
Speaker 16: folks will be happy to see it.

867
00:45:27,719 --> 00:45:30,200
Speaker 3: Bloomberg's Brody Ford with a must read thank you That

868
00:45:30,320 --> 00:45:34,040
Speaker 3: does it for this edition of Bloomberg Tech. Don't forget

869
00:45:34,360 --> 00:45:36,560
Speaker 3: recap the podcast. You know where to find it on

870
00:45:36,600 --> 00:45:40,080
Speaker 3: the Bloomberg terminal as well as online. On Apple, Spotify,

871
00:45:40,440 --> 00:45:45,000
Speaker 3: and iHeart goodness. What a week, big earnings week. It

872
00:45:45,160 --> 00:45:48,719
Speaker 3: started with circular financing Chat. We've had AI models break

873
00:45:48,760 --> 00:45:52,960
Speaker 3: free of sandboxes and still the city of San Francisco

874
00:45:53,040 --> 00:45:55,040
Speaker 3: looks beautiful this Friday, have a great weekend.

875
00:45:55,280 --> 00:45:56,319
Speaker 2: This is Bloomberg Tech