Speaker 1: Bloomberg Audio Studios, podcasts, radio news from the heart of
Speaker 1: where innovation, money and power collide in Silicon Valley and beyond.
Speaker 1: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 2: Live from San Francisco. This is Bloomberg Technology coming up.
Speaker 2: US President Trump accuses China of violating an agreement with
Speaker 2: the US to east tariffs, escalating tensions between the two countries.
Speaker 3: Plus sales of Apple's.
Speaker 2: iPhone are set to take a big hit from Trump's
Speaker 2: new tariff policy. We get into the numbers and we
Speaker 2: speak with the CEO of AWS as the leading Hyperscala
Speaker 2: runs faster on a What a week it has been
Speaker 2: in the world of technology.
Speaker 3: I'm looking at the Nazak one hundred.
Speaker 2: It is a megacap and technology heavy index, and over
Speaker 2: the course of the week we're up a percentage point.
Speaker 2: We're actually lower in Friday session, but this is a
Speaker 2: rebound from last week where earnings and that tariff story
Speaker 2: have been the driver of the markets and the headlines.
Speaker 2: There are two names in particular that we have been
Speaker 2: so focused on. Those names are in video. Of course,
Speaker 2: we had earnings twenty four hours ago, thirty eight hours ago,
Speaker 2: forty eight hours ago, and then we spoke to Gensen one.
Speaker 2: It's giving some of the gains that it had seen back,
Speaker 2: but there is a big question still about China and
Speaker 2: cross border trade of the lead edge technology. And then
Speaker 2: Apple again softer four tens and one percent just twenty
Speaker 2: four hours ago, and Video was the world's most valuable company.
Speaker 2: Apple had regained some status as a three trillion dollar club.
Speaker 3: We're under pressure. Now. Here's the top story.
Speaker 2: China's planning to allocate seventy billion dollars of capital in
Speaker 2: a new effort to fast track new infrastructure projects and
Speaker 2: up its own economy from ongoing US tariffs.
Speaker 3: That's according to sources.
Speaker 2: Meanwhile, President Trump reigniting those tariff war concerns, posting on
Speaker 2: True Social that China has quote totally violated its agreement
Speaker 2: with US or US, offering no details of what agreements
Speaker 2: China could have violated. Let's get more from Bloomberg's Mike Shephard.
Speaker 2: Do we know what the president is talking about here?
Speaker 4: Well, we haven't gotten a clear signal from him directly
Speaker 4: about what had set him off this morning, but we
Speaker 4: have seen ed over the past few weeks since that
Speaker 4: sit down in Geneva, between Treasury Secretary Scott Besson and
Speaker 4: his Chinese counterparts signed that that little agreement that that
Speaker 4: daytime that they had forged there in Switzerland was starting
Speaker 4: to come apart. The Chinese government had objected to some
Speaker 4: export controls that the US has increasingly been applying to China,
Speaker 4: keeping advanced technology from getting in there, And of course
Speaker 4: this has been a sore spot for Beijing for years,
Speaker 4: with limits on exports of semikins, but they have been escalating,
Speaker 4: and in more recent weeks we even saw the US
Speaker 4: go after makers of chip design software, telling them essentially,
Speaker 4: you can't sell to China without violating our export restrictions.
Speaker 4: So that is something that already Beijing was seeing as
Speaker 4: a violation of the spirit of those conversations. We had
Speaker 4: heard that a week ago, but now today we hear
Speaker 4: from the top US trade negotiator Jamison Greer talking about
Speaker 4: rare earths and critical minerals. And during that discussion in Geneva,
Speaker 4: the two sides had agreed that Beijing might lift some
Speaker 4: of the barriers that it had placed in retaliation for
Speaker 4: US export curbs on exports to the US of critical minerals.
Speaker 3: So there is a bit of.
Speaker 4: Tit for tat that we are seeing here, and it
Speaker 4: may be bubbling over in the form of Donald Trump's
Speaker 4: truth social feed here today.
Speaker 2: Yet Yeah, I'm reading the news on the Bloomberg terminal,
Speaker 2: and I go back to what Michael Kratsios, who runs
Speaker 2: the White House Office of Science and Technology, right told us.
Speaker 2: The policy from this administration is promote and protect. Protect
Speaker 2: is the tariffs bit right. Promote is on shoring and
Speaker 2: stimulus for the tech industry. China is doing the same thing, right,
Speaker 2: It's trying to drum up some money seventy billion dollars
Speaker 2: we're reporting for its own industries in China.
Speaker 3: What do we know about that?
Speaker 4: Well, And that's a good question, and I'm glad you
Speaker 4: brought that up, because it's unclear whether the administration here
Speaker 4: is responding to that report of additional Chinese stimulus toward
Speaker 4: artificial intelligence and other high tech projects that they have
Speaker 4: planned as a way to spark their economy and make
Speaker 4: sure that they have some domestic demand to satisfy the
Speaker 4: industry that is trying to cultivate. But nonetheless it would
Speaker 4: not sit well with the US administration here because they
Speaker 4: are trying to bring some of that manufacturing to American
Speaker 4: shores to try to build up the American tech manufacturing base.
Speaker 4: We've seen so much of it, especially in semiconductors over decades,
Speaker 4: move to Asia, and Donald Trump there's been applying pressure
Speaker 4: to none other than Tim Cook, the Apple CEO, to
Speaker 4: try to get the iPhone production moved here. Of course,
Speaker 4: in our conversations with Mark German and so many others,
Speaker 4: we know that that is a bit of a pipe dream,
Speaker 4: but nonetheless it is a priority for the administration, and
Speaker 4: so you do see, as you said from your interview
Speaker 4: with Michael Kratzios, this desire to promote American tech here
Speaker 4: at home, but also protect it against the challenge it
Speaker 4: sees coming.
Speaker 2: From China, Bluembos, Mike Shephard, do not go far, how
Speaker 2: a sense, more news is coming on those topics. Meanwhile,
Speaker 2: sales of Apple's iPhone and those of its rivals are
Speaker 2: set to take a significant blow from President Trump's tariffs.
Speaker 2: IDC research showing smartphone growth of just zero point six
Speaker 2: percent post tariffs. For more, Nabila popeu IDC senior research director,
Speaker 2: joins us, I always track your data, not just the
Speaker 2: backward looking data, but extrapolating out and looking forward, you've
Speaker 2: kind of now got the post tariffscenario. Just explain what
Speaker 2: you published overnight and how this impacts in particular Apple.
Speaker 5: Hi, thank you and nice to be here as always. Yeah,
Speaker 5: so exactly, And whenever we publish our forecast, we always
Speaker 5: have to show what was the scenario before, right, So
Speaker 5: in our latest forecast, which we just published, we're showing
Speaker 5: a flat growth and it's really important to see how
Speaker 5: that's changed, right, because twenty four was.
Speaker 3: You know, the year of we had like twenty three.
Speaker 5: We basically we've been in a few years of decline.
Speaker 5: In the twenty four exactly, thank you for showing that
Speaker 5: up was a big year of growth. And then twenty
Speaker 5: five was supposed to continue this growth. But we were
Speaker 5: supposed to have about two percent two point three percent,
Speaker 5: you know, continued recovery. But since February, when was our
Speaker 5: last forecast was published, we've been going through such tumulus times. Right,
Speaker 5: there's been a world ruin of uncertainty. You've seen that
Speaker 5: we're thrown around many times. We've had to pull down
Speaker 5: the forecast because of our we see high uncertainty, so
Speaker 5: much terrrift supply chain turmoil, and there's a lot of
Speaker 5: you know, just soft demand across the board in large
Speaker 5: global markets.
Speaker 2: I'm trying to understand policy and how you factor policy
Speaker 2: into that model. Right, So, the situation was that smartphones
Speaker 2: were given a tariff exemption.
Speaker 3: That was mid April.
Speaker 2: Then President Donald Trump just this month May said that
Speaker 2: for smartphones made outside of America there should be a well,
Speaker 2: let's be honest, not just smartphones, the iPhone made outside
Speaker 2: of America, there should be a levy of twenty five percent.
Speaker 3: How have you factored that in?
Speaker 5: So you know, that came out right actually after we
Speaker 5: had finalized our forecast. So we you know, what we
Speaker 5: had taken into consideration, right, because we knew that even
Speaker 5: when the exemptions were announced or whatever wherever the tariff stood,
Speaker 5: that it was all temporary. That things could always change.
Speaker 5: So we had to draw a line under stand at
Speaker 5: some point.
Speaker 6: But there was you know.
Speaker 5: We had we did bacon that there is I think
Speaker 5: things could always change. So there the what we're you know,
Speaker 5: saying to our clients or anyone that you know essentially
Speaker 5: asked us this question is that that there is a
Speaker 5: huge downside risk to the US forecast and the tariffs
Speaker 5: that twenty five percent essentially brings, you know, would impose
Speaker 5: the US market, right, It would impact increased prices, It
Speaker 5: would change the demand right to.
Speaker 3: The US market.
Speaker 5: Right now, we're expecting the US market to grow about
Speaker 5: one point nine percent, and what which is actually US
Speaker 5: and China are what are holding up that even that
Speaker 5: flat zero point six percent growth that we're seeing globally,
Speaker 5: but it was pulled down Both those large markets were
Speaker 5: previously expected to grow higher. And if this twenty five
Speaker 5: percent were to grow go into effect, you know, US
Speaker 5: market would potentially even go into a decline.
Speaker 2: We should say that that this data from you and
Speaker 2: the newsflow, it doesn't just apply to the iPhone, right,
Speaker 2: it also applies to other smartphone makers like on Android
Speaker 2: os as well. But this has been our focus, which
Speaker 2: is Apple and the pressure that Tim Cook has been
Speaker 2: under from this administration. The supply chain is a question mark.
Speaker 2: But right now, do you envisage any impact to pricing
Speaker 2: of iPhone or any giant shift to where that company
Speaker 2: manufactures that handset.
Speaker 5: So I'll address the second part first, right even you know,
Speaker 5: when when you know President Trump announced this potential twenty
Speaker 5: five percent for anywhere he even said that it's not
Speaker 5: just Apple, it would be to any brand that as
Speaker 5: long as phones coming into the US were not made
Speaker 5: in the US, it would they would face potentially twenty
Speaker 5: five percent or anything wherever they lack, Right, We do
Speaker 5: think that despite wherever, whatever, if you wherever the tears
Speaker 5: happen to land eventually if they do, regardless of that,
Speaker 5: we think smartphone OEMs will continue to diversify outside of
Speaker 5: China and Vietnam and India. We said this in our
Speaker 5: press release, will continue to be the two primary, you know,
Speaker 5: global hubs for smartphone manufacturing for reasons that everyone on
Speaker 5: your show that has come on to say, right, for
Speaker 5: because of the supply chain ecosystem that has already been
Speaker 5: established there prior to all this tariffs madness that began
Speaker 5: earlier this year. Right, it's really hard. I think anyone
Speaker 5: that says smartphone manufacturing, I mean, you understand that, I
Speaker 5: understand the ideal ideology behind bringing manufacturing to the US,
Speaker 5: And the question has also been asked, it's a dream,
Speaker 5: but I you know, I don't see any reality where
Speaker 5: that is possible. So it's just yeah, So that's the
Speaker 5: reason why we do feel that it's continued, those two
Speaker 5: regions are going to continue to be the focus of
Speaker 5: oh m's diversification plans.
Speaker 2: IDC Senior Research Director Nabila Popad's great to have you
Speaker 2: on the show.
Speaker 3: Thank you so much.
Speaker 2: Now coming up, UiPath raised its outlook, but competition in
Speaker 2: agentic WORKFOW solutions it's intensifying. We'll talk to CEO Daniel
Speaker 2: Dines about what that means for his company.
Speaker 3: That's next. This is Bloomberg Technology.
Speaker 2: Automation software company UiPath raised its full years sales outlook
Speaker 2: yesterday when it released its earnings. The company also stressed
Speaker 2: that it's public sector clients renewed contracts. Let's get more
Speaker 2: on this with UIPAR CEO Daniel Dines. Daniel, it's great
Speaker 2: to have you back here on Bloomberg Technology. You know,
Speaker 2: a point of discussion for most of the year so
Speaker 2: far has been the impact on of joje on companies
Speaker 2: just like yours that have government federal level contracts. I'm
Speaker 2: trying to read between the lines and the transfer to
Speaker 2: the earnest call. Was there any impact to you, positive
Speaker 2: or negative from that doge activity.
Speaker 7: Thank you for having me. Look, we had a great
Speaker 7: event in dc A month ago and we talked to
Speaker 7: it a lot of agency. There is a renewed interest
Speaker 7: in agentic automation as a space, and we basically renewed
Speaker 7: our contract. We have a great deal with the Air Force.
Speaker 7: They are coming with a great initiative called Airmen which
Speaker 7: is aiming at a very transformative of their business processes.
Speaker 6: So on.
Speaker 7: In one, I think it's a more positive environment in DC,
Speaker 7: but still there is a lot of moving pieces in
Speaker 7: transition there. From our perspective and our guidance, it's not
Speaker 7: a big difference.
Speaker 2: Many points to new ar R R additions and then
Speaker 2: being low.
Speaker 3: What then accounts for that.
Speaker 7: Well, we continue to execute. Well, we just finish a
Speaker 7: big transition. We had an entire year of changes in
Speaker 7: the company. We accommodate everything to go really big in
Speaker 7: agentic automation.
Speaker 3: Basically, what is the growth picture?
Speaker 2: Our analyst right that growth indicators a mix for UiPath.
Speaker 2: Would you agree with that analysis of it being mixed?
Speaker 2: And if you do see growth, where's it coming from?
Speaker 7: Well, I think that agentic automation is a tremendous opportunity
Speaker 7: and it's I think everybody agrees that this is gonna
Speaker 7: be very trans formative on the business landscape.
Speaker 3: We believe this is.
Speaker 7: Going to be a bigger opportunity than RPA, and we
Speaker 7: are really well positioned to capture a significant share of it.
Speaker 7: So all in once, I think this is really our
Speaker 7: biggest opportunity for growth.
Speaker 2: I'm looking at the cost of inference right now, you know,
Speaker 2: particularly in the context of companies just like yours trickling down.
Speaker 2: A lot of companies are talking about the momentum that
Speaker 2: agent KI is giving them. What's your point of difference.
Speaker 2: What is it that you're able to offer that others
Speaker 2: are not.
Speaker 7: I think a lot of agents that we are seeing
Speaker 7: today are conversational agents, but customers would like agents that
Speaker 7: are deployed in the context of their existing business processes.
Speaker 7: And how can you trust the agents? It's the main
Speaker 7: point of the conversations. And we offer a technology to
Speaker 7: ork straight between RPA bots and agents and humans that
Speaker 7: really enhance the reliability of agents and the trust of customers.
Speaker 2: Right now, what is the biggest cost consideration for you?
Speaker 2: I talked about inference costs coming down. Even so, investors
Speaker 2: in particular love to see a commitment to access to
Speaker 2: compute and also just some like long term commitment that
Speaker 2: the investment's worthwhile.
Speaker 7: Yeah, I would not say that. In our business, the
Speaker 7: infant cost is significant. The real cost comes with the
Speaker 7: implementing of the agents. Still, the capability is required to
Speaker 7: create really good agents that mimic the capability of humans
Speaker 7: are kind of rare, and we are working a lot
Speaker 7: to build technology that helped to democratize the ability to
Speaker 7: build agents. To me, this is gonna be the real
Speaker 7: cost of deploying a gentic automation.
Speaker 8: That's key.
Speaker 2: Daniel dines UiPath CEO, thank you so much for joining
Speaker 2: us here on Bloomberg Technology. Now coming up, Microsoft's push
Speaker 2: to get corporate customers on board with co Pilot seems
Speaker 2: to be taking off. We've got the details on its
Speaker 2: AI sales coming up next.
Speaker 3: This is Bloomberg Technology.
Speaker 2: A growing push for sovereign AI has led to a
Speaker 2: wave of data center announcements, including one this week from
Speaker 2: Bell Canada. It plans to invest hundreds of millions of
Speaker 2: dollars to build AI data centers across the country, and
Speaker 2: it is named chip startup Grock as the project's exclusive
Speaker 2: inference partner. Grock CEO Jonathan Ross spoke with Caroline Hyde
Speaker 2: about sovereign AI, but also US chip curbs on China.
Speaker 9: From grox's beginning, we have done no business in China,
Speaker 9: and this is not a geopolitical thing. This is just
Speaker 9: a shrewd business thing. We saw all of these very
Speaker 9: large tech companies go into China and lose over and
Speaker 9: over and again, and there's just a thumb on the
Speaker 9: scale for any Western company. I hope that someday China
Speaker 9: allows real competition because real competition makes people stronger, and
Speaker 9: I want to compete against those Chinese companies. But until
Speaker 9: they allow real competition, we can't do that. So we've
Speaker 9: blocked all Chinese companies from having access to our API.
Speaker 9: We will not sell chips in China because they're just
Speaker 9: going to reverse engineer them and try and build them themselves,
Speaker 9: and they're not going to compete fairly. As a result,
Speaker 9: when we do these deals, we're not allowing Chinese companies
Speaker 9: to run on them, and we do build operate transfer.
Speaker 9: In these sovereign cases, we're doing build operate, so we're
Speaker 9: the ones operating that, and that actually gives commerce and
Speaker 9: others a lot of comfort that Chinese companies aren't going
Speaker 9: to be getting.
Speaker 10: Access, But does the strictions on say in video selling
Speaker 10: H twenties, as Jensen would say, mean that China just
Speaker 10: gets better at.
Speaker 3: Doing it themselves.
Speaker 10: In a Huawei will be able to compete with growth in.
Speaker 9: The future potentially. However, the reality is if you enable
Speaker 9: people now, then they're going to be able to use
Speaker 9: that advantage to keep growing quicker. We're going to be
Speaker 9: using AI to design our chips, We're going to be
Speaker 9: using AI to design our software, So why would you
Speaker 9: give that advantage? I think it's different going back to
Speaker 9: information age technology, it's about replicating and distributing. Compute is
Speaker 9: about doing something specific. If you don't have the compute,
Speaker 9: you can't do it, whereas information knowledge sort of diffuses
Speaker 9: and you'll catch up. With generative age technology you can
Speaker 9: pull ahead.
Speaker 10: You talk about wand in competition and to be competitive
Speaker 10: in China, for example, what about the competition within VideA.
Speaker 10: How do you stand compared to AMD and the other
Speaker 10: offerings Here in the United States.
Speaker 9: We actually think we're one of the best things that's
Speaker 9: ever happened to in Vidia shareholders. So in Vidia sells
Speaker 9: a product that is a premium product. It's a luxury good,
Speaker 9: it's for training the models. When you train a model,
Speaker 9: you're willing to spend more money because you get to
Speaker 9: amortize that across an enormous number of users. If in
Speaker 9: Vidia continues focusing on inference, which they have to do
Speaker 9: right now because there isn't enough inference capacity, they're going
Speaker 9: to have to bring their margins down. They're going to
Speaker 9: have to sell their chips for a lot less. Remember,
Speaker 9: our cost is much less than in Vidia's cost. On
Speaker 9: top of that, higher volume, lower margin. And so the
Speaker 9: more inference compute we deploy, the more demand there is
Speaker 9: for training compute. The more demand for training compute, the
Speaker 9: more GPUs and VideA sells. And the one thing that's
Speaker 9: really important here in Video wants to do between three
Speaker 9: and five million GPUs for AI this year. But that's
Speaker 9: based on what's called HPM high bandwidth memory. It's this
Speaker 9: very scarce component. They can make as many GPU chips
Speaker 9: as they want, they can't make as much of the
Speaker 9: memories they want. Those chips are going to be built
Speaker 9: and sold, and the only question is what are they
Speaker 9: going to be sold to do when we come in
Speaker 9: and we sell inference chips than what we're doing is
Speaker 9: we're allowing those GPUs to be sold into training, which
Speaker 9: is a higher margin business. The video is going to
Speaker 9: make more profit thanks to us.
Speaker 2: All Right, we have some breaking news crossing the Bloomberg terminal.
Speaker 2: Utel Sat satellite based internet providers in talks to Rays
Speaker 2: one point five billion euros. This is interesting because in Europe,
Speaker 2: the continent's hoping that you tel Sat will be able
Speaker 2: to displace and compete against the likes of Elon, Musk
Speaker 2: Starlink in Europe.
Speaker 3: That's the red headline.
Speaker 2: You tail Satin talks to Rays one point five billion
Speaker 2: euros with a doubling of the steak from French entities.
Speaker 3: We get more on that story as we get more
Speaker 3: on it.
Speaker 2: All right, let's get back to what's happening in the
Speaker 2: world of AI, and Microsoft is focused in driving adoption
Speaker 2: of its AI tool co Pilot, and at a town
Speaker 2: hall this week, it touted its progress.
Speaker 3: Who broke the story, Bloomberg's Brody Ford.
Speaker 2: I think this is really interesting, right because it's quick
Speaker 2: on the heels of this deep dive we did in
Speaker 2: Business Week about co Pilot, how it happened, how it launched,
Speaker 2: What Microsoft shypes are for it, what you reported are
Speaker 2: names across various industries, big corporate names that are doing deals.
Speaker 5: Right.
Speaker 11: Yeah, The background here is that Microsoft salesforce companies like
Speaker 11: them they have these AI tools, right. I mean, in
Speaker 11: the consumer space, Chat, GPT and tools like it have
Speaker 11: ramped incredibly. In the enterprise, it hasn't been quite as
Speaker 11: easy of an adoption path, and so with tools like Copilot,
Speaker 11: Microsoft's AI assistance, we don't have great intel over how
Speaker 11: many folks are really using it, how many folks are
Speaker 11: really paying for it. What we learned from the meeting yesterday,
Speaker 11: which sources we're telling us about, is that you know,
Speaker 11: there are dozens of customers who are having over one
Speaker 11: hundred thousand paid users. That's a pretty significant amount. I mean,
Speaker 11: of course, you know there's some discounting in that, but
Speaker 11: this is a sign that adoption is ramping, maybe more
Speaker 11: than investors had been appreciating.
Speaker 3: Your reporting.
Speaker 2: We note that Microsoft CEO Sati Endella is very closely
Speaker 2: tracking all kinds of data, including who is using co
Speaker 2: pilot and how they're using it.
Speaker 3: Why is that important, right?
Speaker 11: I Mean, what's really important is that you don't have shelfware,
Speaker 11: but you don't buy one hundred thousand licenses, but you know,
Speaker 11: fifty people use it in finance, right. I mean, this
Speaker 11: is the classic problem with software where maybe you can
Speaker 11: sell a lot of things, but you have to really
Speaker 11: make sure they're using it.
Speaker 2: Bloomberg's Brodie Ford another excellent piece of reporting.
Speaker 3: Thank you very much.
Speaker 2: Okay, coming up, Patrick McGoldrick from JP Morgan Private Capital
Speaker 2: joins us to talk about its approach to AI investment opportunities.
Speaker 2: Their conversation's next, This is Bloomberg Technology. Welcomes back to
Speaker 2: Bloomberg Technology, Amed Ludlow in San Francisco. It's kind of
Speaker 2: like the last day of technology earning and we're seeing
Speaker 2: movers in the market on some numbers that got posted
Speaker 2: last night, those of Dell and Marvel. In Dell's case,
Speaker 2: it was all about the profit outlook in topped estimates.
Speaker 2: There is clearly a backlog for AI serve demand, but
Speaker 2: shares are a little bit softer. Marvel a slightly different story.
Speaker 2: They kind of have like strong sales targets, they've won
Speaker 2: some business and they were pretty clear with the market,
Speaker 2: but investors still tip it on that chip name stock
Speaker 2: down five percent. That's having an impact at the index
Speaker 2: level as well. Let's go from public markets now to
Speaker 2: private markets. JP Morgan private Capital's Growth Equity Partners. It's
Speaker 2: a one billion dollar fund focusing on Series B right
Speaker 2: through the pre IPO startups. Managing partner Patrick McGoldrick joins
Speaker 2: us the focus right now the AI opportunity. I find
Speaker 2: this so interesting and it's part of today's VC spotlight.
Speaker 2: In my world, when I break a story about an
Speaker 2: AI startup or a new round, it's so interesting to
Speaker 2: look at the cat table traditional venture capital, traditional but
Speaker 2: also people like you coming in more in the private
Speaker 2: growth equity space. Would you just talk a bit about
Speaker 2: that business model and what you try to do.
Speaker 12: Sure, and thanks for having me on today. I appreciate
Speaker 12: the opportunity. So the way we position our strategy is
Speaker 12: to operate like a traditional venture and growth equity investor.
Speaker 12: So we started investing at the earlier stages of a
Speaker 12: company's formation, Series B through pre IPO on the technology
Speaker 12: and consumer side, all the way through that last inflection.
Speaker 8: Point before going public.
Speaker 12: I think for us, we seek to leverage the whole
Speaker 12: firm to deliver value to companies, and in a world
Speaker 12: where capital is just that, but value add in changing
Speaker 12: the inflection curve, of a company's growth de risking. We
Speaker 12: think JP Morgan is well suited to be that partner
Speaker 12: of choice.
Speaker 2: So interesting you're talking about leveraging the full scale of
Speaker 2: JP Morgan.
Speaker 3: Right as you're pitched.
Speaker 2: The traditional VC would say, don't just take our check,
Speaker 2: take our operators. Many of us are entrepreneurs or startup founders.
Speaker 2: Your pitches, we're JP Morgan.
Speaker 12: Yes, I think in the simplest of essence, of course,
Speaker 12: I think we're privileged to be part of an organization
Speaker 12: that spends eighteen billion dollars a year in technology spend.
Speaker 8: We have sixty three thousand technologists.
Speaker 12: And I think what is really important to recognize is
Speaker 12: we will work with companies across our firm as early
Speaker 12: as the seed stage, so we're on the hunt for
Speaker 12: exceptional technologies. Now as investors, of course, first and foremost
Speaker 12: we assess product market fit, the strength of the management team.
Speaker 12: But then where can we pair in those relationships covering
Speaker 12: ninety percent of the Fortune five hundred or forty five
Speaker 12: thousand private companies, So we have the privilege of those
Speaker 12: operators that other VC firms have. But I think the
Speaker 12: global footprint of a firm like JP.
Speaker 3: Morgan, what are you saying in private markets right now?
Speaker 12: Yeah, it's a complicated question. It depends on the topic.
Speaker 12: But let's start with where we see the investment opportunity set.
Speaker 12: I think for us, we're spending a lot of time
Speaker 12: in areas like artificial intelligence and cybersecurity, both incredibly resilient.
Speaker 8: From a tech spend perspective.
Speaker 12: There is a recent review of chief information officers and
Speaker 12: chief technology officers budgeting priorities, and I think for different reasons,
Speaker 12: you're seeing increased commitments to those areas. In AI, I
Speaker 12: think it's a world of now having gone from experimentation
Speaker 12: to actual deployment. Over sixty five percent of companies are
Speaker 12: now deploying AI in.
Speaker 8: Their full production suite.
Speaker 12: Those companies are now automating tasks, they're creating efficiency and
Speaker 12: making a more delightful consumer and enterprise experience. In cyber unfortunately,
Speaker 12: you could have a version of me that's virtually produced
Speaker 12: my cadence inflection, a little bit of my positioning, and
Speaker 12: you'd have to be able to protect against that. So
Speaker 12: that defensive posture is critical. It's why even in tougher
Speaker 12: macro environments, the defensiveness of the spend there is very
Speaker 12: clear and so you'll see that reflected in some of
Speaker 12: our portfolio companies.
Speaker 2: Some of your portfolio companies we just showed Alpha Sense.
Speaker 2: Of course, the maker of Cursor such a hot property
Speaker 2: right now, tell me what's going on with that. But
Speaker 2: also data breaks like data Breaks recently has been relying
Speaker 2: on tenders like employee liquidity rather than a primary raise.
Speaker 2: How have you navigated those two mechanisms in these two
Speaker 2: hot names in the world of AI.
Speaker 12: Well, let's start with Alpha Sense, because I think that
Speaker 12: company think of it really as a market research and
Speaker 12: intelligence platform that in two thousand and eight had the
Speaker 12: idea of bringing publicly available data in the world of markets,
Speaker 12: also accessing the research reports that are put up by
Speaker 12: Wall Street firms, digesting that and giving research analysts, corporate
Speaker 12: development arms as well as portfolio managers the right solutions
Speaker 12: at their fingertips to make informed decisions.
Speaker 8: With the auDA end of AI.
Speaker 12: That's gotten even more acute and clear as how they
Speaker 12: deliver value. And they recently acquired a company called Tigis,
Speaker 12: which provides private market perspective, so customer interviews that could
Speaker 12: transcribe that marriage of data is critical to making better
Speaker 12: decisions on data Bricks.
Speaker 8: You bring up an interesting point.
Speaker 12: I think the evolution of the private markets are such
Speaker 12: that companies are staying private longer in order to provide liquidity.
Speaker 12: They look to access this tender solutions and letting employees.
Speaker 8: Seek some liquidity.
Speaker 12: For us, we want to be active in names like
Speaker 12: Data Bricks, where it's critical in the world of infrastructure
Speaker 12: for AI growing well in excess of the public markets
Speaker 12: with an exceptional management team, and so we're thrilled to
Speaker 12: be involved in both of those and think they're critical
Speaker 12: in this new advent of AI.
Speaker 2: Patrick, we just have thirty seconds. But you see some
Speaker 2: kind of exit coming in either of those names.
Speaker 12: Well, I wouldn't want to speculate on that too much.
Speaker 12: I think the management teams are better suits to do that.
Speaker 12: What I would say about the exit environment more broadly
Speaker 12: is we've gone from a faucet that's completely shut off
Speaker 12: to a trickle where you have companies like in health
Speaker 12: service Titan of course Core Weave that have used the
Speaker 12: public markets, which is important.
Speaker 8: Hopefully the back half of the year produces.
Speaker 12: More of that, but they are companies that could effectively
Speaker 12: go public by virtue of their performance.
Speaker 8: Again, the management team and the market.
Speaker 2: Size, Patrick, open up that tap next time. Come back
Speaker 2: on and tell us when you have an ex Patrichan McGoldrick,
Speaker 2: Managing Partner, JP Morgan Private Capital, Thank you very much.
Speaker 3: Coming up, we.
Speaker 2: Speak with AWS CEO Matt Garman in an exclusive conversation.
Speaker 2: One year in the role, so much has happened, from
Speaker 2: the sort of hyperscale perspective right through to the models
Speaker 2: that AWS is hosting large through Bedrock.
Speaker 3: We also got some breaking news. Let's take a look
Speaker 3: at DJT hitting session higher, raising his decline.
Speaker 2: Just confirmation the company's closed about two point four billion
Speaker 2: dollars in a bitcoin treasury deal, something.
Speaker 3: We brought you a little bit of earlier this week.
Speaker 3: We'll be right back. Don't go far. This is Bloomberg Technology.
Speaker 2: Welcome to our Bloomberg radio and television audiences worldwide. We
Speaker 2: go right now to a conversation with Matt Garman, AWS CEO.
Speaker 3: Matt, it's good to catch up.
Speaker 2: It has been basically one year that you've been in
Speaker 2: the role as AWS CEO.
Speaker 3: Is a place to.
Speaker 2: Start what has been the biggest achievement in that time
Speaker 2: for AWS.
Speaker 13: Yeah, thanks for having me on. It's nice to be
Speaker 13: here again. Yeah, It's been a fantastic year of innovation.
Speaker 13: It's really been incredible, and as I look out there,
Speaker 13: one of the things that I've been most excited about
Speaker 13: is how fast our customers are innovating and ten adopting
Speaker 13: many of the new technologies that we have. And as
Speaker 13: you think about customers that are on this cloud migration journey,
Speaker 13: many of them have been doing that for over the
Speaker 13: last several years, but this year in particular, that we've
Speaker 13: really seen an explosion of AI technologies, of agentic technologies,
Speaker 13: and increasingly we're seeing more and more customers move their
Speaker 13: entire estates into the cloud and AWS.
Speaker 6: So it's been really fun to see.
Speaker 13: It's been an incredible pace of technology and it's been
Speaker 13: a really fun first year.
Speaker 2: The moment that investors kind of sat up and paid
Speaker 2: attention was when Amazon said that it's AI business was
Speaker 2: at a multi billion dollar run rate in terms of sales.
Speaker 2: What we don't understand as well is what proportion of
Speaker 2: that is AWS infrastructure.
Speaker 13: Yeah, that is AWS, right, and so the key is
Speaker 13: that's a mix of customers running their own models. Some
Speaker 13: of that is on Amazon Bedrock, which is our own
Speaker 13: hosted models where we have first party models like Amazon Nova,
Speaker 13: as well as many of the third party models like
Speaker 13: anthropics models, and some of those are applications things like
Speaker 13: Amazon Q which helps people do automated software developments, as
Speaker 13: well as a host of other capabilities, and so there's
Speaker 13: a mix of that. And I think part of the
Speaker 13: most interesting thing about being at a multi billion dollar
Speaker 13: run rate is we're at the very earliest stages of
Speaker 13: how AI is going to completely transform every single customer
Speaker 13: out there. And we talk to customers and we look
Speaker 13: at where the technology landscape is, and we firmly believe
Speaker 13: that every single business, every single industry, and really every
Speaker 13: single job is going to be fundamentally transformed by AI.
Speaker 13: And I think we're starting to see the early start
Speaker 13: the stages of that. But again, we're just at the
Speaker 13: very earliest stages that I think what's going to be possible,
Speaker 13: and so that multi billion dollar business that we have
Speaker 13: today is really just the start.
Speaker 3: Can you give me a generative AI revenue number.
Speaker 6: For the world or for awls?
Speaker 2: Are you guys for AWS? Maybe Amazon as a whole.
Speaker 13: Yeah, Like I said, we are in multiple billions of dollars,
Speaker 13: and that's for customers using AWS. We also use lots
Speaker 13: of generative AI inside of Amazon for a wide range
Speaker 13: of things. We use it to optimize our fulfillment centers.
Speaker 13: We use it when you go to the retail site
Speaker 13: to summarize reviews, or to help customer find products in
Speaker 13: a faster and more interesting way. We use AI in
Speaker 13: Alexa in our new Alexa Plus offering, where we conversationally
Speaker 13: talk to customers through the Alexa interface and help them
Speaker 13: accomplish things through voice that they were never able to
Speaker 13: do before. So every single aspect of what Amazon does
Speaker 13: leverages AI, and our customers are exactly the same. Customers
Speaker 13: are looking to AWS to completely change, whether it's their
Speaker 13: contact centers through something like Amazon Connect where it shows
Speaker 13: AI capabilities so that you don't have to go program
Speaker 13: it all the way down to our custom chips or
Speaker 13: Nvidia processors, or anything where customers at the metal are
Speaker 13: building their own models. We have the whole range of
Speaker 13: people that are building AI on top of AWS, as
Speaker 13: well as Amazon themselves.
Speaker 2: We always credit AWS as being number one HYPERSCALA. But
Speaker 2: just what you said there about what the client's using
Speaker 2: in the silicon level through the capacity, it would really
Speaker 2: help if you could proportionately tell me what percentage of
Speaker 2: workloads are being run for training and which proportion of
Speaker 2: workloads being run for inference.
Speaker 6: Sure, yeah, and that changes over time. I think.
Speaker 13: Look as we progress over time, more and more of
Speaker 13: the AI workloads are being inference. I'd say in the
Speaker 13: early stages of AI and generate of AI, a lot
Speaker 13: of that usage was dominated by training as people were
Speaker 13: building these very large models with small amounts of usage.
Speaker 6: Now the models are.
Speaker 13: Getting bigger and bigger, but the usage is exploding at
Speaker 13: a rapid rate, and so I expect that over the
Speaker 13: fullness of time, eighty percent, ninety percent, the vast majority
Speaker 13: of usage is going to be in inference out there,
Speaker 13: and really, and just for all those out there, inference
Speaker 13: it really is how AI is embedded in the applications
Speaker 13: that everybody uses. And so as we think about our
Speaker 13: customers building, you know, there's a small number of people
Speaker 13: who are going to be building these models, but everyone
Speaker 13: out there is going to use inference as a core
Speaker 13: building block in every they do, and every application is
Speaker 13: going to have inference, and already is starting to see
Speaker 13: inference built in to every application, and we think about
Speaker 13: it as just the new building block. It's just like compute,
Speaker 13: it's just like storage, it's just like a database. Inference
Speaker 13: is a core building block, and so as you talk
Speaker 13: to people who are building new applications, they don't think
Speaker 13: about it as AI is over here and my application
Speaker 13: is over here. They really think about AI is embedded
Speaker 13: in the experience. And so it's increasingly I think it's
Speaker 13: going to be difficult for people to say what part
Speaker 13: of your revenue is going to be driven by AI.
Speaker 13: It's just part of the application that you're building, and
Speaker 13: it's going to be a core part of that experience,
Speaker 13: and it's going to deliver lots of benefits from efficiency,
Speaker 13: from capabilities, and from user experience for all sorts of
Speaker 13: applications and industries.
Speaker 2: The present day, it's fair to say majority is still training.
Speaker 13: No, I think that at this point more definitely more
Speaker 13: usage as inference than training.
Speaker 2: We want to welcome our radio and television audiences around
Speaker 2: the world. We're speaking to AWSCO Matt Garman, who officially
Speaker 2: next week celebrates one year in that role leading AWS.
Speaker 3: A new metric that.
Speaker 2: Has been discussed particularly this earning season. We discussed it
Speaker 2: with Nvidia CEO Jensen One this week is token growth
Speaker 2: and tokenization. Has AWS got a metric to share on
Speaker 2: that front.
Speaker 13: I don't have any metrics to share on that front,
Speaker 13: but I think it's one of the measures that we
Speaker 13: can look at as the numbers of tokens that are
Speaker 13: being served out there, but it's not the only one,
Speaker 13: and I increasingly think that people are going to be
Speaker 13: thinking about these things differently. Tokens are a particularly interesting
Speaker 13: thing to look at when you're thinking about text generation,
Speaker 13: but not all things are created equal. I think, particularly
Speaker 13: as you think about AI reasoning models, the input and
Speaker 13: output tokens don't necessarily talk about the work that's being done.
Speaker 13: And increasingly you're seeing models that can do work for
Speaker 13: a really long period of time before they output tokens.
Speaker 13: And so you're having these models that can sometimes think
Speaker 13: for hours at a time. Right, they might you ask
Speaker 13: these things a go and actually do research on your behalf.
Speaker 13: They can go out to the internet, they can pull
Speaker 13: information back, they can synthesize, they can redo things. If
Speaker 13: you think about coding and que developer, we're seeing lots
Speaker 13: of coding where it goes and actually reasons and does
Speaker 13: iterations and iterations and improves on itself. Looks at what
Speaker 13: it's done and then eventually outputs the end result, and
Speaker 13: so at some point kind of the final output token
Speaker 13: is not really the best measure of how much work
Speaker 13: is being done. If you think about images, if you
Speaker 13: think about videos, there's a lot of content that's being
Speaker 13: created and a lot of thought that's being done, and
Speaker 13: so tokens are one aspect of it, and it's an
Speaker 13: interesting measure, but I don't think it's the only measure
Speaker 13: to look at. Although they are rapidly increasing.
Speaker 2: Project Rainier, massive Custom server design project. What is the
Speaker 2: operational status and latest on Project Ray now?
Speaker 13: Yeah, so we're incredibly excited about so project right here
Speaker 13: is a collaboration that we have with our partners at
Speaker 13: Entthropic to build the largest compute cluster that they'll use
Speaker 13: to train their next generation of their claud models. And
Speaker 13: Anthropic has the very best models out there today. Claude
Speaker 13: four just launched, I think it was last week, and
Speaker 13: it's been getting incredible adoption out there from our customer base.
Speaker 13: Nthropic is going to be training their next version of
Speaker 13: their model on top of Trainium two, which is Amazon's
Speaker 13: custom built accelerator processors purpose built for AI workloads and
Speaker 13: we're building one of the largest clusters ever released. It's
Speaker 13: an enormous cluster, more than five times the size of
Speaker 13: the cluster compared to the last one that they trained on,
Speaker 13: which again is the world's leading model.
Speaker 6: So we're super excited about that.
Speaker 13: We're landing TRAININGUM to servers now and they're already in operation,
Speaker 13: and Entthropic is already is already using parts of that cluster,
Speaker 13: and so super excited about that. And the performance that
Speaker 13: we're seeing out of TRAININGUM two continues to be very
Speaker 13: impressive and really pushes the envelope I think on what's
Speaker 13: possible both from an absolute performance basis as well as
Speaker 13: a cost, performance and scale basis.
Speaker 6: I think some of those.
Speaker 13: Are equally going to be really important as we move
Speaker 13: forward in this world, because today much of the feedback
Speaker 13: you get is that AI is still too expensive. But
Speaker 13: costs are coming down pretty aggressively, and it's still too expensive,
Speaker 13: and so we think there's a number of things that
Speaker 13: need to happen there. Innovation on the silicon level is
Speaker 13: one of those things that needs to help bring the
Speaker 13: cost down, as well as innovation on the software side
Speaker 13: and algorithmic side, so that you have to use less
Speaker 13: compute per unit of inference or training. So all of
Speaker 13: those are important to bring that cost down, to make
Speaker 13: it more and more possible for ADI to be used
Speaker 13: in all of the places that we think that it
Speaker 13: will be over time.
Speaker 2: Matt and Wednesday, Nvidia CEO Jensen Wang summarized inference demand
Speaker 2: for me. I just wanted to play you that SoundBite.
Speaker 4: Sure, well, we got a whole bunch of engines firing
Speaker 4: right now. The biggest one, of course, is the reasoning
Speaker 4: AI inference.
Speaker 6: The demand is just off the charts.
Speaker 12: You see the popularity of all these AI services.
Speaker 2: Now your pitch for trainium too, And as you know,
Speaker 2: I've kind of taken a part the serve of design
Speaker 2: and looked at it is the efficiency and cost efficiency
Speaker 2: relative to Nvidia Tech. Are you seeing that same demand
Speaker 2: Jensen outlined for TRAININGUM two outside of the relationship with Mthropic.
Speaker 13: Yeah, Look, we're seeing it across a number of different places,
Speaker 13: but it's not really TRAININGUM two versus in Nvidia, and
Speaker 13: I think that's not really the right way to think
Speaker 13: about it. I think there's plenty of room. The opportunity
Speaker 13: in this space is massive. It's not one versus the other.
Speaker 13: We think that there's plenty of room for both these
Speaker 13: and Jensen and I speak about this all the time
Speaker 13: that in Vidia is an incredibly fantastic platform. They've built
Speaker 13: a really strong platform that's useful and is the leading
Speaker 13: platform for many many applications out there, and so we
Speaker 13: are incredible design partners with them. We make sure that
Speaker 13: we have the latest in Vidia technology for everyone, and
Speaker 13: we continue to push the envelope on what's possible with
Speaker 13: all of the latest in Vidia capabilities. And we think
Speaker 13: there's room for Trainium and other technologies as well, and
Speaker 13: we're really excited about that, and so we have many
Speaker 13: of the leading AI labs are incredibly excited about using
Speaker 13: Trainium too and really leaning into the benefits that you
Speaker 13: get there. But for the law for a long time,
Speaker 13: these things are going to be living in concert together,
Speaker 13: and I think there's plenty of room. And customers want
Speaker 13: choice at the end of the day. Customers don't want
Speaker 13: to be forced into using.
Speaker 6: One platform or the other.
Speaker 13: They'd love to have choice in Our job at AWS
Speaker 13: is to give customers as much choice as possible.
Speaker 2: What is general availability of Nvidia GB two hundred for AWS,
Speaker 2: and have you I guess launched Grace Blackwell backed instances yet, Yes.
Speaker 13: Yep, so we've launched our they would call them P
Speaker 13: six instances. And so those are available in AWS today
Speaker 13: and customers are using them and liking them, and the
Speaker 13: performance is fantastic. So those are available today. We're continuing
Speaker 13: to ramp capacity. We work very closely with the Nvidia
Speaker 13: team to aggressively mp capacity and demand is strong for
Speaker 13: those P six instances, but customers are able to go
Speaker 13: and test those out today. And like I said, we're
Speaker 13: ramping capacity incredibly fast all around the world and in
Speaker 13: our various different regions.
Speaker 2: Now, what is your attitude to Claude anthropics model being
Speaker 2: available elsewhere on Azure Foundry for example.
Speaker 6: Great, I mean that's okay too.
Speaker 13: I think many of our customers make their applications available
Speaker 13: in different places, and we understand that various different customers
Speaker 13: want to use capabilities in different areas and different clouds.
Speaker 13: Our job is to make AWS and this is what
Speaker 13: we do, is to make AWS the best place to
Speaker 13: run every type of workload and that includes anthropic claud models,
Speaker 13: but it includes a wide range of things and frankly,
Speaker 13: that's why we see big customers migrating over to AWS.
Speaker 13: Take somebody like a Mandoli's who's really gone all in
Speaker 13: with AWS and move some of their workloads to there.
Speaker 13: One of the reasons is that they see that we
Speaker 13: have capabilities sometimes using AI by the way, in order
Speaker 13: to really help them optimize their costs and have the
Speaker 13: most available, most secure platform in monthlies. This case, they're
Speaker 13: taking many of their legacy Windows platforms and transforming them
Speaker 13: into Linux applications and saving all of that licensing costs.
Speaker 13: But we have many customers who are doing that, and
Speaker 13: so our job is to make AWS by far the
Speaker 13: most technically capable platform that has the most and widest
Speaker 13: set of services, and that's.
Speaker 6: What we do.
Speaker 13: But I'm perfectly happy for other people to use Like
Speaker 13: it's great that Claud's making their services available elsewhere and
Speaker 13: we see the vast majority of that usage happening in AWS.
Speaker 2: Though, will we see open AI models on AWS this year?
Speaker 6: Well, just like you.
Speaker 13: Know, we encourage all of our partners to be able
Speaker 13: to be available elsewhere, I'd love for others to take
Speaker 13: that same tack.
Speaker 2: Let's end it with this question from the audience, Actually,
Speaker 2: which is where you're going to grow data center capacity?
Speaker 3: Around the world.
Speaker 2: I got a lot of questions from Latin America and
Speaker 2: Europe in particular, where Jensen flies to you next week?
Speaker 6: Yeah? Great.
Speaker 13: So in Latin America we're continuing to span expand our
Speaker 13: capacity pretty aggressively.
Speaker 6: Actually.
Speaker 13: Earlier this year we launched our Mexico region, which has
Speaker 13: been really well received by customers, and we've announced a
Speaker 13: new region in Chile, and we already have for many
Speaker 13: years have had a region in Brazil which is quite
Speaker 13: popular and has many of the largest financial institutions in
Speaker 13: South America running there. So across Central and South America,
Speaker 13: we are continuing to rapidly expand. In Europe, we're expanding
Speaker 13: as well. We have many regions already in Europe. One
Speaker 13: of the things I'm most excited about actually is at
Speaker 13: the end of this year we're going to be launching
Speaker 13: the European Sovereign Cloud, which is a unique capability that
Speaker 13: no one has, which is completely designed for critical EU
Speaker 13: focused sovereign workloads, and we think given some of the
Speaker 13: concerns that folk have around data sovereignty, particularly for government
Speaker 13: workloads as well as regulator workloads, we think that's going
Speaker 13: to be an incredibly oper popular opportunity for everybody.
Speaker 3: Matt Garman, AWS CEO, thank you.
Speaker 6: Very much, thank you for having me.
Speaker 2: Let's get other headlines in talking tech. First up, TikTok
Speaker 2: shop is cutting several hundred jobs in Indonesia in this
Speaker 2: latest round of cuts. This after taking over the operations
Speaker 2: of local rival tocopedia last year. Sources say the cuts
Speaker 2: are mainly in e commerce teams, and more cuts are
Speaker 2: set to happen as soon as July. Plus Reform UK
Speaker 2: leader Nigel Farage announced plans to introduce a Crypto Assets
Speaker 2: and Digital Finance Bill if his party wins the next
Speaker 2: general election, aiming to launch what he calls a crypto
Speaker 2: revolution in the UK. The legislation would include a cut
Speaker 2: in capital gains tax on crypto investments to ten percent,
Speaker 2: the creation of a bitcoin digital reserve at the BOE,
Speaker 2: and provisions that will make it illegal to restrict services
Speaker 2: for people who want to pay with crypto and Stripe
Speaker 2: has held early discussions with banks about the potential use
Speaker 2: of stable coins. This comes as the payment firm debuted
Speaker 2: a number of stable coin related products.
Speaker 3: In recent months.
Speaker 2: That does it for this edition of Bloomberg Technology. What
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Speaker 2: this is Bloomberg Technology.