WEBVTT - Meta's AI Investments Pay Off, and Nvidia Shatters Records 0:00:01.400 --> 0:00:05.720 From Mahard where Innovation Money and power Collie in Silicon 0:00:05.840 --> 0:00:06.720 Vallet NBN. 0:00:07.040 --> 0:00:11.080 This is Bloomberg Technology with Caroline Hyde and Ed Ludlow. 0:00:24.920 --> 0:00:27.720 Like from New York. This is Bloomberg Technology coming up. 0:00:27.760 --> 0:00:32.120 AI investments, payoff for Meta details to come, and armed 0:00:32.280 --> 0:00:35.360 slumps as the chip company holds off boosting its outlook. 0:00:35.560 --> 0:00:38.040 We speak to the CEO Rene has plus. 0:00:38.360 --> 0:00:42.159 Nvidia shatters records, adding three hundred and twenty nine billion 0:00:42.240 --> 0:00:46.040 dollars to its market cap in a single session. Full 0:00:46.080 --> 0:00:48.479 coverage ahead. I want to start on that meta story. 0:00:48.479 --> 0:00:50.400 This is what the start looks like. You know, it's 0:00:50.440 --> 0:00:53.800 basically trading as it stands on track for its biggest 0:00:53.840 --> 0:00:56.760 jump since February. We know all about the capital expenditures 0:00:56.800 --> 0:00:59.440 commitment slightly boosting the bottom end of the range, but 0:00:59.560 --> 0:01:02.240 it looks it's like this whole AI thing is helping 0:01:02.240 --> 0:01:03.720 the top line at least if you look at the 0:01:03.760 --> 0:01:06.600 sales outlook for the current period. Throughout the show, we're 0:01:06.600 --> 0:01:08.840 going to get a lot more on meta now. One 0:01:08.840 --> 0:01:11.560 stock that's going in the other direction is the chit 0:01:11.680 --> 0:01:13.080 design firm ARM. 0:01:13.120 --> 0:01:15.920 I think we're down around fifteen percent as it stands. 0:01:16.240 --> 0:01:20.280 They smashed it in the quarter gone relative to street expectations. 0:01:20.560 --> 0:01:23.080 But the story around ARM, as we bring up the. 0:01:23.000 --> 0:01:26.600 Stock here down more than fifteen percent, is simply that 0:01:26.680 --> 0:01:30.240 they resisted the urge to boost their outlook, and that 0:01:30.360 --> 0:01:33.840 raises some questions. The question should be answered now we 0:01:33.920 --> 0:01:36.959 have ARM CEO, Rene has standing by joining us here 0:01:36.959 --> 0:01:38.080 on Bloomberg Technology. 0:01:38.200 --> 0:01:39.880 I mean, Renne, good morning to you. That that is 0:01:39.959 --> 0:01:45.120 the story. What were the factors behind you not boosting 0:01:45.160 --> 0:01:47.920 the outlook? What were the factors that made you cautious. 0:01:48.440 --> 0:01:51.840 Maybe it's specific end markets, maybe it's your view of 0:01:51.880 --> 0:01:53.680 the macro situation around the world. 0:01:55.360 --> 0:01:58.160 Yeah, thank you, Ed, and a great question to kick 0:01:58.200 --> 0:02:01.520 off with. The way I I think about it as follows. 0:02:01.680 --> 0:02:04.520 This is our fourth quarter as a public company. It 0:02:04.600 --> 0:02:07.240 is our fourth quarter of record revenues. As you said, 0:02:07.320 --> 0:02:10.679 we smashed it last quarter, over nine hundred and thirty 0:02:10.680 --> 0:02:12.040 million dollars of revenue. 0:02:12.120 --> 0:02:15.480 So super happy about the quarter. Last quarter. 0:02:15.800 --> 0:02:19.760 Ninety days ago, we raised the annual guidance about eight 0:02:19.760 --> 0:02:23.520 to ten percent. So when we looked at the outlook 0:02:23.560 --> 0:02:26.720 for the year ninety days later, coming off a great quarter, 0:02:27.080 --> 0:02:30.120 we just didn't feel the need to raise expectations again. 0:02:30.280 --> 0:02:33.800 So that's really just the backdrop. It's quite simple. We 0:02:33.880 --> 0:02:37.000 raised the guidance for the year last quarter, record quarter 0:02:37.080 --> 0:02:39.000 this quarter, and we're maintaining at this. 0:02:39.000 --> 0:02:41.600 Point, Renne, is there anything you can tell me about 0:02:41.639 --> 0:02:45.360 specific markets that you serve where you see some cause 0:02:45.520 --> 0:02:48.760 or some hesitation, but you're also able to see whatever 0:02:48.800 --> 0:02:51.560 it is holding you back working itself out. 0:02:53.000 --> 0:02:53.240 Yeah. 0:02:53.520 --> 0:02:56.160 Remember ed that we have two components to our business. 0:02:56.160 --> 0:02:58.920 We had the licensing business and the royalty business. The 0:02:59.000 --> 0:03:02.920 licensing business, which is really the forward indicator of demand 0:03:02.960 --> 0:03:08.359 for armed technology, never been stronger. The licensing revenue year 0:03:08.360 --> 0:03:12.480 on year up seventy percent. What's driving that, that's demand 0:03:12.560 --> 0:03:16.200 for building new complex chips, more demand for arm more 0:03:16.200 --> 0:03:20.000 compute capability, so that is a harborager of forward type 0:03:20.000 --> 0:03:25.040 of demand. Royalties were also up year on year almost 0:03:25.120 --> 0:03:29.840 twenty percent, largely driven by smartphone growth where units have 0:03:29.880 --> 0:03:32.679 been modest, but our new version nine is driving high 0:03:32.720 --> 0:03:36.160 royalty growth. So in general, we're very very optimistic about 0:03:36.160 --> 0:03:38.880 the long term outlook, particularly because of the licensing activity 0:03:38.920 --> 0:03:39.640 being so strong. 0:03:40.360 --> 0:03:42.400 One of the areas you know that I cover a 0:03:42.400 --> 0:03:45.080 bit more deeply is automotive technology, and I'm just trying 0:03:45.120 --> 0:03:49.000 to draw parallels with different names out there understand what's happening. 0:03:49.000 --> 0:03:53.080 Mobili told us this morning, for example, that particularly in China, 0:03:53.080 --> 0:03:56.280 but globally, some of their customers just stop making orders 0:03:56.280 --> 0:03:58.640 for the second half of this year. I understand that 0:03:58.680 --> 0:04:02.040 from arms perspective different Right you think about the pipeline 0:04:02.040 --> 0:04:04.960 of a specific chit that you're involved in the design of, 0:04:05.080 --> 0:04:08.320 it's much further afield longer term. But do you see 0:04:08.360 --> 0:04:12.600 in that industry in particular any sort of either cyclical 0:04:13.920 --> 0:04:16.400 process happening or some specific weakness. 0:04:17.560 --> 0:04:19.719 Now, I think the way we think about the automotive 0:04:19.760 --> 0:04:23.960 market is we are growing faster in terms of demand 0:04:24.040 --> 0:04:27.560 for our technology than the market itself. So we were 0:04:27.560 --> 0:04:31.640 actually up double digits last quarter in automotive royalties, and 0:04:31.680 --> 0:04:34.920 that's really a function of a gaining market share, But 0:04:34.960 --> 0:04:38.880 more importantly, the quality of the technology that's going in 0:04:38.960 --> 0:04:43.080 is much higher. These are more complex compute platform devices. 0:04:43.400 --> 0:04:47.200 They run a lot of software, whether it's for ibiev autonomous. 0:04:47.760 --> 0:04:51.279 So we're very, very bullish about the long term automotive outlook. 0:04:51.520 --> 0:04:53.960 The near term inventory issues that go back and forth, 0:04:54.360 --> 0:04:56.360 we haven't been impacted by that so much because, as 0:04:56.440 --> 0:04:59.160 I said, we're gaining share and the complexity of our 0:04:59.160 --> 0:05:01.560 own technology being used just keeps going up. 0:05:01.880 --> 0:05:03.720 Rennie, I don't know if you'd agree, but I think 0:05:03.760 --> 0:05:07.719 the common theme of this earning season is capital expenditures 0:05:07.760 --> 0:05:12.480 relating to infrastructure for AI. And my question simply is 0:05:12.520 --> 0:05:15.640 what direct benefit does ARM get from any of that 0:05:15.720 --> 0:05:17.240 process or investment cycle. 0:05:18.880 --> 0:05:20.880 Yeah, thank you for the question. We get a bit 0:05:20.920 --> 0:05:24.279 of a dual benefit. There is a lot of capex 0:05:24.320 --> 0:05:29.160 going into overall infrastructure scale out, there's general purpose compute. 0:05:29.680 --> 0:05:33.760 ARMED benefits there because our low cost, low power processors 0:05:33.800 --> 0:05:36.480 are very very efficient in terms of building data centers. 0:05:36.800 --> 0:05:39.599 You have AWS, you have Microsoft, you have Google. They've 0:05:39.600 --> 0:05:42.120 all announced products based on ARM. And then you have 0:05:42.200 --> 0:05:47.120 the AI data centers, which are very very complex, require 0:05:47.120 --> 0:05:51.480 a high degree of customization. Power efficiency even more important there, 0:05:52.040 --> 0:05:54.560 and that's been a great tailwind for our business. Just 0:05:54.600 --> 0:05:57.560 look at what Nvidia announced with Grace Blackwell, a very 0:05:57.640 --> 0:06:02.360 very complex not only chip but based on ARM, using 0:06:02.400 --> 0:06:05.520 their most advanced GPUs to drive the most complex AI 0:06:05.600 --> 0:06:09.440 data centers. So for US, we broadly view this AI 0:06:09.600 --> 0:06:13.080 capex expenditures as a tailwind for the business. 0:06:13.560 --> 0:06:16.120 Rennie, you mentioned Grace Blackwell, it takes me to one 0:06:16.120 --> 0:06:17.960 of our audience questions. When I said you were coming 0:06:18.000 --> 0:06:20.400 on the show on social media, I actually got quite 0:06:20.400 --> 0:06:23.440 a number of submissions for you, and one is straightforward. 0:06:23.960 --> 0:06:29.120 Does ARM plan to design its own accelerator to compete 0:06:29.160 --> 0:06:31.080 I guess against some of the partners that you're with 0:06:31.240 --> 0:06:32.400 or out in the marketplace. 0:06:33.320 --> 0:06:36.080 Yeah, no product announcements today, ed, Sorry, We're just here 0:06:36.080 --> 0:06:38.280 to kind of talk about the past quarter and our 0:06:38.279 --> 0:06:39.240 outlook going forward. 0:06:40.080 --> 0:06:42.640 No products announcement that that would indicate from a source 0:06:42.680 --> 0:06:45.120 of I suppose academic or R and D standpoint that 0:06:45.160 --> 0:06:46.360 you at least think about it. 0:06:47.440 --> 0:06:49.200 We think about a lot of things, right, I mean, 0:06:49.440 --> 0:06:52.440 our technology, as broad as it is, as many markets 0:06:52.480 --> 0:06:55.400 as we can play in. My job is to think 0:06:55.400 --> 0:06:56.960 about a lot of things. So I think that's a 0:06:57.000 --> 0:06:57.640 safe statement. 0:06:57.880 --> 0:07:00.359 Away from the sort of scale of infrastructure data centers, 0:07:00.360 --> 0:07:04.000 I think the AIPC is something that's pretty much dominated 0:07:04.279 --> 0:07:08.080 the news cycle so far in twenty twenty four. One 0:07:08.080 --> 0:07:10.760 of the other audience questions was when do we see 0:07:10.840 --> 0:07:16.040 sort of a truly competitive ARM based Windows product that 0:07:16.320 --> 0:07:19.520 can take on the performance of Max or Apple's owned 0:07:19.520 --> 0:07:21.320 Silicon that goes into a MAC. I know that you 0:07:21.360 --> 0:07:24.840 think about this field a lot. But on the competition side, 0:07:24.840 --> 0:07:26.000 what do you make of that question? 0:07:27.280 --> 0:07:30.200 Yeah, so I want to be respectful of my great 0:07:30.200 --> 0:07:33.040 partner Apple and their ecosystem, but there are some great 0:07:33.120 --> 0:07:38.920 products out there today. Dell XPS has some amazing technology. 0:07:39.320 --> 0:07:41.640 The battery life I think I was reading online. In fact, 0:07:42.080 --> 0:07:44.760 I was looking to buy one of them. The advertised 0:07:44.800 --> 0:07:47.960 battery life is nineteen hours now for a Windows machine. 0:07:48.040 --> 0:07:52.360 That's rather unprecedented in terms of battery life. All day 0:07:52.480 --> 0:07:55.720 use don't need a brick. So Dell and Michael and 0:07:55.760 --> 0:07:58.480 his team have done an amazing job developing some great products. 0:07:58.520 --> 0:08:00.240 So I think there are great products out there today. 0:08:00.600 --> 0:08:04.440 So all of the AIPC announcements, are there any examples 0:08:04.480 --> 0:08:08.960 of things that actually sort of translate into revenue for ARM? 0:08:09.320 --> 0:08:13.520 Well, again, when you think about AIPCS running on ARM, 0:08:14.200 --> 0:08:16.640 that's revenue fore ARM, and I think we're you know, 0:08:16.720 --> 0:08:19.560 the way we think about the AIPC Windows on our 0:08:19.560 --> 0:08:22.680 market is probably less about the shipments this quarter, but 0:08:22.800 --> 0:08:25.720 the long term trajectory. I think what you're now seeing 0:08:25.840 --> 0:08:29.520 is single suppliers that are in the market today. We've 0:08:29.560 --> 0:08:32.160 heard from a lot of sources that in the upcoming 0:08:32.240 --> 0:08:34.360 years there's going to be more and more vendors building 0:08:34.480 --> 0:08:36.960 chips for the Windows on our market. That's just going 0:08:37.000 --> 0:08:38.840 to be great for us because not only does it 0:08:39.600 --> 0:08:43.160 fill out the choices of units for the end market, 0:08:43.360 --> 0:08:45.800 but it's going to drive growth for US. So I 0:08:45.880 --> 0:08:48.360 said a few months ago that I thought ARM could 0:08:48.360 --> 0:08:51.040 be a fifty percent market share in the Windows market 0:08:51.040 --> 0:08:54.280 in five years. I do believe that we're about one 0:08:54.360 --> 0:08:57.760 hundred percent of the Apple operating system, so fifty percent 0:08:57.760 --> 0:08:59.600 of the Windows market doesn't seem too ambitious. 0:08:59.600 --> 0:09:02.920 In five year, four quarters ago, probably in a number 0:09:02.960 --> 0:09:04.600 of years ago, you and I might have started a 0:09:04.600 --> 0:09:06.800 conversation talking about the smartphone market. 0:09:07.240 --> 0:09:08.120 So we'll end there. 0:09:08.360 --> 0:09:11.280 You know what's going on in the smartphone market right 0:09:11.320 --> 0:09:14.840 now and whatever is happening as sort of an industry 0:09:14.880 --> 0:09:18.760 wide level, Is there anything specific relating to ARM or 0:09:18.840 --> 0:09:21.280 the high end of the smartphone market VISA v sort 0:09:21.320 --> 0:09:23.720 of lower end models the middle market that you can 0:09:23.760 --> 0:09:24.440 tell me about. 0:09:25.400 --> 0:09:27.240 Yeah, I don't want to sound like a broken record 0:09:27.280 --> 0:09:29.360 saying the trends that are going on in the smartphone 0:09:29.400 --> 0:09:31.679 market are good for ARM, but I'm going to say that, 0:09:32.040 --> 0:09:35.480 because what we're seeing in the smartphone market is while 0:09:35.600 --> 0:09:39.320 unit growth has been modest, single digits, there's been significant 0:09:39.320 --> 0:09:42.120 growth in the premium segment, the high end, and for 0:09:42.400 --> 0:09:45.080 ARM that's where we draw the highest level of revenue. 0:09:45.400 --> 0:09:47.880 The reason for that is we use Version nine up 0:09:47.880 --> 0:09:50.520 in that area of the stack. That's a much higher 0:09:50.600 --> 0:09:54.360 royalty rate than the previous version. And those Version nine 0:09:54.480 --> 0:09:57.160 smartphones in the premium space, they use a lot of 0:09:57.240 --> 0:10:01.600 ARMED processors, in some cases twelve four or fourteen sixteen, 0:10:02.320 --> 0:10:04.600 depending on the mix. So it's a true compute platform 0:10:04.640 --> 0:10:07.240 solution which drives growth for us, which is why in 0:10:07.280 --> 0:10:11.040 the last quarter, where units were single digits, our smartphone 0:10:11.080 --> 0:10:13.040 royalties were up fifty percent year on year. 0:10:13.360 --> 0:10:15.960 I had a similar conversation with Lisa suve AMD yesterday. 0:10:15.960 --> 0:10:19.240 But is that a reflective of a broad market movement 0:10:19.360 --> 0:10:22.160 or is it something special ARMS doing to outperform in 0:10:22.200 --> 0:10:22.760 the market. 0:10:24.320 --> 0:10:26.079 I think it's a combination of both. You know, a 0:10:26.160 --> 0:10:28.360 number of years ago with Version nine, we added some 0:10:28.400 --> 0:10:32.760 significant compute capability that was really to drive performance. Now, 0:10:32.760 --> 0:10:35.800 what we're seeing, particularly in the near term and going forward, 0:10:36.040 --> 0:10:39.240 is the skws that are being built. People are trying 0:10:39.280 --> 0:10:42.199 to put as much compute performance as possible in those phones. 0:10:42.320 --> 0:10:44.600 You know, for example, when you think about the large 0:10:44.640 --> 0:10:49.320 language models such as Lama or Gemini. When those phones 0:10:49.360 --> 0:10:53.720 were developed, those models didn't even exist. So not only 0:10:53.720 --> 0:10:56.120 are you having to run all the complex software the 0:10:56.160 --> 0:10:58.840 camera apps, but now you want to run an AI workload. 0:10:59.200 --> 0:11:01.280 So people are just put as much compute as possible 0:11:01.320 --> 0:11:03.079 in those high end ships, which is good for us. 0:11:04.040 --> 0:11:06.720 Rennie Haas, CEO of thank you very much, And for 0:11:06.760 --> 0:11:09.400 what it's worth, the stock hit session low down sixteen 0:11:09.400 --> 0:11:12.000 point two percent during that conversation, but a lot learned. 0:11:12.240 --> 0:11:14.480 Let's stick with earnings and look at Etsy. 0:11:14.240 --> 0:11:17.040 Which released their second quarter earnings on Wednesday after the 0:11:17.080 --> 0:11:19.960 closing bell. It's the CEO, Josh Silverman, join me. Let's 0:11:19.960 --> 0:11:21.160 talk about it. Have listened to this. 0:11:22.520 --> 0:11:25.560 We're really proud of the fact that in an environment 0:11:25.600 --> 0:11:29.400 where we're really swimming upstream with a really tough macro, 0:11:29.520 --> 0:11:31.640 and I think the story of this quarter has been 0:11:32.320 --> 0:11:36.320 for discretionary products in particular. It's a tough it's a 0:11:36.360 --> 0:11:37.160 tough time. 0:11:37.000 --> 0:11:38.640 And that's hitting the consumer directly. 0:11:38.679 --> 0:11:41.720 Basically, it's hitting the consumer directly. Wells Fargo published a 0:11:41.760 --> 0:11:44.680 report just recently saying sixty percent of American say that 0:11:44.720 --> 0:11:48.000 by the time they're done paying their essential bills, they 0:11:48.040 --> 0:11:51.240 have very little money left over for anything else. And 0:11:51.320 --> 0:11:54.160 yet we are actually maintaining, you know, we have roughly 0:11:54.200 --> 0:11:56.560 the same number of active biuses are all time high 0:11:56.679 --> 0:11:58.720 ninety one and a half million. We came in actually 0:11:59.120 --> 0:12:01.520 above the top of our guide or at the top 0:12:01.559 --> 0:12:04.600 of our guide on every metric, So we're really proud 0:12:04.320 --> 0:12:06.600 of how we're doing, and we're aware that it's a 0:12:06.760 --> 0:12:11.200 super vollato macro. But in this time when we're swimming 0:12:11.280 --> 0:12:14.719 upstream and maintaining, we're building muscle that we know is 0:12:14.760 --> 0:12:17.280 going to make us stronger, and most importantly, we're not 0:12:17.360 --> 0:12:18.840 letting ourselves be dragged down. 0:12:19.120 --> 0:12:20.319 We're in a moment where. 0:12:20.120 --> 0:12:22.120 There's a race to the bottom right now around who 0:12:22.120 --> 0:12:25.720 can sell things the cheapest, and Etsy is not focused 0:12:25.720 --> 0:12:28.880 on that. We're focused on making ets even more. Etsy 0:12:28.960 --> 0:12:31.840 leaning into our point of differentiation, and to your point 0:12:31.840 --> 0:12:34.000 about AI AI is going to be so helpful for 0:12:34.120 --> 0:12:36.560 us because, as you know, there's over one hundred and 0:12:36.559 --> 0:12:39.800 twenty million things for sale on Etsy, and every single 0:12:39.840 --> 0:12:41.560 one of them is unique, Every single one of them 0:12:41.640 --> 0:12:44.200 is made just for you, so organizing that in a 0:12:44.200 --> 0:12:47.600 way that's easy to navigate is a very tough challenge. 0:12:47.600 --> 0:12:49.920 There's no army of humans you could hire to do that, 0:12:50.320 --> 0:12:53.880 but lms are really good at organizing huge amounts of 0:12:53.880 --> 0:12:56.800 information in a way that's easy for humans to understand. 0:12:58.280 --> 0:12:59.839 That was at CCO, Josh. 0:13:00.120 --> 0:13:04.319 They're coming up Meta to the rescue, delivery on earnings 0:13:04.679 --> 0:13:08.440 and easing some of those big tech growth concerns. Stock 0:13:08.520 --> 0:13:11.719 up almost seven percent, But let's talk about this is 0:13:11.720 --> 0:13:15.920 bloombog technology. 0:13:22.080 --> 0:13:24.600 There are all the jokes about how all the tech 0:13:24.679 --> 0:13:26.640 CEOs get on these earnings calls and just talk about 0:13:26.679 --> 0:13:27.400 AI the whole time. 0:13:27.400 --> 0:13:28.720 It's because it's actually. 0:13:28.400 --> 0:13:31.160 Super exciting and it's going to change all these different 0:13:31.160 --> 0:13:32.480 things over multiple time arise. 0:13:33.960 --> 0:13:36.200 I think we should probably update that photo. That was 0:13:36.240 --> 0:13:39.200 Mark Zuckerberg, the Meta CEO. He doesn't look like that anymore. 0:13:39.600 --> 0:13:42.800 Meta posting better than expected Q two results and it 0:13:43.240 --> 0:13:47.560 signals that the company's AI investments are starting to pay off, 0:13:47.960 --> 0:13:50.840 triggering the stocks biggest one day rally in around five months. 0:13:50.840 --> 0:13:53.320 That level seven percent, game on track for his. 0:13:53.320 --> 0:13:54.520 Biggest jumps in February. 0:13:54.600 --> 0:13:57.880 Let's get right out to our meta reporter Cut Wagner. 0:13:58.000 --> 0:14:00.320 I mean that was the question. You spend all this 0:14:00.480 --> 0:14:03.320 money and the CAPEX number at the bottom end of 0:14:03.320 --> 0:14:06.199 the range slightly boosted, But does it help you make 0:14:06.240 --> 0:14:09.200 money in the sort of normal areas of your business? 0:14:09.480 --> 0:14:09.800 Did it. 0:14:11.440 --> 0:14:11.520 Well? 0:14:11.600 --> 0:14:13.800 This is the story that they're trying to tell, right, 0:14:13.880 --> 0:14:18.160 which is that AI investment is impacting their current ads business. 0:14:18.240 --> 0:14:22.360 It's making their ads more relevant, it's helping advertisers even 0:14:22.400 --> 0:14:26.480 create new ads with gen AI tools. It's helping the timeline, 0:14:26.520 --> 0:14:29.400 it's giving people more relevant content, so they're sticking around longer. 0:14:29.480 --> 0:14:31.480 This is the narrative that they're trying to tell on 0:14:31.520 --> 0:14:34.320 the more immediate side and the challenge of courses. As 0:14:34.320 --> 0:14:36.640 you point out, they're investing very heavily in the future 0:14:36.680 --> 0:14:39.040 as well, and so they're trying to balance like, hey, 0:14:39.160 --> 0:14:41.480 the AI is paying off now, but it will also 0:14:41.880 --> 0:14:43.800 pay off in a couple of years when these glasses, 0:14:43.840 --> 0:14:46.560 these large language models, the metaverse comes to fruition. It's 0:14:46.560 --> 0:14:48.520 a tough balance for them, but they were able to 0:14:48.520 --> 0:14:50.680 sort of do that with the Q two earnings. 0:14:50.320 --> 0:14:52.440 This week, we're just showing the numbers or the revenue 0:14:52.480 --> 0:14:54.640 numbers by business line, and I think that's the bit 0:14:54.680 --> 0:14:56.720 that we're trying to understand. You and I have all 0:14:56.720 --> 0:15:00.600 these conversations with very smart people outside of Meta who 0:15:00.640 --> 0:15:03.360 give them a lot of credit for their work in 0:15:03.400 --> 0:15:06.120 the field of large language models and the future applications 0:15:06.120 --> 0:15:09.040 of generative AI. But it seems like the story here 0:15:09.080 --> 0:15:11.880 is that it's really helping advertising, which is what they've 0:15:11.880 --> 0:15:13.840 been basing their business on all along. 0:15:15.240 --> 0:15:17.240 Yeah, and it's not as sexy as a story, right, 0:15:17.280 --> 0:15:20.280 because it's like, Hey, investing billions and billions of dollars 0:15:20.280 --> 0:15:23.960 into these large language models is going to improve the 0:15:24.120 --> 0:15:27.080 ROI on our ads product is not really the exciting 0:15:27.440 --> 0:15:29.320 AI story that a lot of people want to hear. 0:15:29.720 --> 0:15:33.080 You know, that's chatbots, that's AI smart glasses and assistants 0:15:33.080 --> 0:15:35.280 and things like that. But I do think there's an 0:15:35.280 --> 0:15:37.920 element of this investment that is paying off more in 0:15:37.960 --> 0:15:40.320 the short term. We heard a lot about that yesterday, 0:15:40.720 --> 0:15:43.800 But I don't think that's what gets Mark Zuckerberg as excited, Right, 0:15:43.880 --> 0:15:46.280 That's a necessity, that's what's going to fuel and fund 0:15:46.400 --> 0:15:49.000 these bigger visions he has. But I really think you know, 0:15:49.040 --> 0:15:51.880 when he talks about AI, he's predominantly talking about this 0:15:52.040 --> 0:15:55.360 futuristic technology, this next wave of this next computing platform 0:15:55.400 --> 0:15:56.920 that he really wants Meta to own. 0:15:57.280 --> 0:15:58.000 Just really quick. 0:15:58.160 --> 0:16:00.760 Our audience around the world will have different relationships with 0:16:00.840 --> 0:16:03.880 Meta in its products. But I found the data on 0:16:03.960 --> 0:16:07.120 growth across the family of apps or family of products 0:16:07.400 --> 0:16:10.240 really interesting. Why is that going well? 0:16:12.040 --> 0:16:12.400 Well? 0:16:12.640 --> 0:16:14.760 I mean, they have WhatsApp, I think is sort of 0:16:14.760 --> 0:16:16.320 a secret weapon that a lot of people don't think 0:16:16.320 --> 0:16:18.680 about because it's not as big a part of the business, right. 0:16:18.960 --> 0:16:20.560 But I think this is also just to the stain 0:16:20.680 --> 0:16:23.360 power of the core network Facebook and Instagram. It's like 0:16:23.400 --> 0:16:25.600 these are products that are still growing, that are still 0:16:25.640 --> 0:16:29.440 finding new people despite years and decades of existence. And 0:16:29.680 --> 0:16:31.560 you know, they're adding threads to the mix now too. 0:16:31.600 --> 0:16:33.760 I don't think that's counted in that daily act of 0:16:33.800 --> 0:16:36.960 people tally, but eventually it will be. And Mark Zuckerberg 0:16:37.000 --> 0:16:39.480 was talking about that with a lot of praise yesterday 0:16:39.480 --> 0:16:40.320 on the Earnians. 0:16:40.000 --> 0:16:43.320 Call Bloomber's Kurt Wagner, thank you very much. Now, the 0:16:43.360 --> 0:16:45.440 other sext we're looking at is chips. The US is 0:16:45.480 --> 0:16:50.800 weighing unilateral restrictions on China's access to AI memory chips 0:16:50.800 --> 0:16:54.720 and equipment capable of making those semiconductors as soon as 0:16:54.840 --> 0:16:59.000 next month. Back with her latest reporting, Bloomberg's Mackenzie Hawkins 0:16:59.640 --> 0:17:02.240 actually quite a lot about this on Bloomberg Technology that 0:17:02.400 --> 0:17:04.920 you know, for all the hype around AI and the GPU, 0:17:05.640 --> 0:17:08.199 you've got to have that high bandwidth memory access as 0:17:08.240 --> 0:17:11.040 well to make it competitive. Just give me the basics 0:17:11.040 --> 0:17:13.760 of what you've reported and when it's happening. 0:17:15.240 --> 0:17:18.080 So the US government recognizes that too, that you can't 0:17:18.119 --> 0:17:21.160 make it in video GPU work without access to memory, 0:17:21.359 --> 0:17:25.520 and officials have been considering for months, adding to the restrictions. 0:17:25.040 --> 0:17:27.480 That they've already replaced on China's access to. 0:17:27.480 --> 0:17:30.240 Logic chips, which are the brains of devices to attack 0:17:30.280 --> 0:17:33.840 the memory side, which handles data storage. And they're working 0:17:33.880 --> 0:17:37.159 on this massive export controls package, probably the most significant 0:17:37.160 --> 0:17:39.720 one that we've seen since the October twenty twenty two 0:17:39.800 --> 0:17:42.560 rules initially rolled out and sort of changed the global 0:17:42.600 --> 0:17:47.160 landscape for semiconductors. This list could include restrictions on high 0:17:47.200 --> 0:17:50.840 bandwidth memory above the two point zero generation, so capturing 0:17:50.880 --> 0:17:55.160 Samsung SKHINEX and Micron's latest models, also on the tools 0:17:55.240 --> 0:17:56.280 used to make those chips. 0:17:56.600 --> 0:17:59.160 Then there's a separate massive restriction. 0:17:58.800 --> 0:18:02.520 On additional tools and mint used across the industry that 0:18:02.600 --> 0:18:05.040 would primarily affect US equipment companies. 0:18:05.080 --> 0:18:07.320 So think Lam Applied material. 0:18:07.280 --> 0:18:10.920 KLA with carveouts for their Japanese and Dutch rivals. 0:18:10.920 --> 0:18:13.840 So this is really a massive package. It's what will 0:18:13.880 --> 0:18:14.440 probably be. 0:18:14.440 --> 0:18:17.720 The Biden administration's last big swing in this space, and 0:18:17.760 --> 0:18:19.280 it could be unveiled as soon as a couple weeks 0:18:19.280 --> 0:18:19.640 from now. 0:18:19.880 --> 0:18:23.520 The strategy to make US chip sector more competitive is 0:18:23.560 --> 0:18:27.720 two sides, restrictions like you just outlined and incentives. And 0:18:27.760 --> 0:18:31.160 the other big story you reported was one name, Applied 0:18:31.200 --> 0:18:35.640 Materials not getting access to funds in incentives. 0:18:37.280 --> 0:18:39.960 Right, So we have the expert control side of the coin, 0:18:40.840 --> 0:18:42.359 and we also have the Chips. 0:18:42.080 --> 0:18:45.040 Act, which is a thirty nine billion dollar subsidy. 0:18:44.600 --> 0:18:47.760 Program designed to bring chip manufacturing back to US soil. 0:18:48.320 --> 0:18:51.639 And so far we've seen over almost ninety percent of 0:18:51.680 --> 0:18:55.919 the funding committed to names like Intel, Samsung, TSMC, and 0:18:56.040 --> 0:18:59.040 Micron for these massive commercial fabrication facilities. 0:18:59.480 --> 0:19:00.600 But more more than six. 0:19:00.600 --> 0:19:03.080 Hundred and seventy companies expressed interest in the funding, so 0:19:03.080 --> 0:19:03.919 there were always going to be. 0:19:04.560 --> 0:19:05.679 Companies that didn't get it. 0:19:06.080 --> 0:19:09.040 The biggest name perhaps among them is Applied Materials. They 0:19:09.040 --> 0:19:12.359 have this four billion dollar research and development project that 0:19:12.400 --> 0:19:14.840 they're working on in Sunny Vale and they had hoped 0:19:14.880 --> 0:19:15.960 to get government. 0:19:15.640 --> 0:19:16.320 Support for that. 0:19:16.680 --> 0:19:18.960 Unfortunately that didn't work out for them after the US 0:19:19.040 --> 0:19:22.200 scrapped part of that grant program that was specifically designated 0:19:22.200 --> 0:19:24.639 for commercial r and D because of infighting about a 0:19:24.640 --> 0:19:27.880 separate program on military ships. So not a great piece 0:19:27.920 --> 0:19:30.439 of news for Applied Materials, and they've always said that 0:19:30.480 --> 0:19:32.680 the scope of that project will depend on US governments. 0:19:32.760 --> 0:19:35.200 Mackenzie just very quickly, is there any money left then 0:19:35.240 --> 0:19:36.119 from the Chips actor. 0:19:36.119 --> 0:19:37.280 It's now all accounted for. 0:19:38.680 --> 0:19:40.840 There's a bit left, something on the order of six 0:19:40.880 --> 0:19:41.960 billion to allocate. 0:19:42.359 --> 0:19:44.760 We should expect to see converce actor. 0:19:44.840 --> 0:19:47.600 Romando has said that we'll see announcements through the end 0:19:47.640 --> 0:19:49.240 of the year eating up all of that funding. 0:19:49.840 --> 0:19:51.560 And after we've seen announcements to the. 0:19:51.560 --> 0:19:54.840 Major big foundaries, we'll probably expect to see a lot 0:19:54.840 --> 0:19:57.000 of smaller supply chain investments between now and. 0:19:57.000 --> 0:19:57.680