Speaker 1: From Marhart.
Speaker 2: We're Innovation, Money and Power Collie in Silicon Valley, NBN.
Speaker 3: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 4: I'm Caroline Heyde of Bloomberg's world headquarters in New York,
Speaker 4: and I'm an adler in San Francisco.
Speaker 5: This is Bloomberg Technology coming up.
Speaker 4: Amd rallies on AI optimism, as the company says it's
Speaker 4: artificial intelligence chip will generate billions next year.
Speaker 3: Plus, the UK Summit on AI Safety is underway in
Speaker 3: London with attendees including Kamala Harris and Elon Musk. Will
Speaker 3: bring you the big takeaways and interviews from the event, and.
Speaker 4: We'll push you ahead to the Federal Reserve rate decision
Speaker 4: due out later this afternoon and look at the central
Speaker 4: banks impact on you guess, the AI startups. But first
Speaker 4: let's check in on these markets, because well, we do
Speaker 4: have some movement ahead of the all important decision, but
Speaker 4: many are thinking, yes, rate's going to stay at that
Speaker 4: twenty two year high for yet another month. We're seeing
Speaker 4: the NASTAC up some seven tens of percent. Maybe it's
Speaker 4: actually some of the economic data, Ed that's weighing on. Well,
Speaker 4: the bad news being good news once more, if we're
Speaker 4: seeing some of those factory orders coming in worse than expected,
Speaker 4: if we're seeing jobless claims actually just ticking up more, indeed,
Speaker 4: job openings starting to open up a little bit, maybe
Speaker 4: this is something that we're trying to get, this mixed
Speaker 4: picture of where the economy is really going. Whatever the case,
Speaker 4: we're seeing some buoyancy in tech. We're seeing some boyancy
Speaker 4: in the bomb market, yields falling that of course as
Speaker 4: we get a hint that actually will see a slowing
Speaker 4: of pace of growth in the amount of bonds that
Speaker 4: will be issued on the long dated end by the
Speaker 4: US Treasury, so lack of supply means yiels fall down.
Speaker 4: We're seeing the VIX indexs just lower a little bit.
Speaker 4: There's some calming over, of course, still concerns over geopolitics.
Speaker 4: Move on to what's happening in the world the crypto though,
Speaker 4: because on the day, even as VIX pulls back, options
Speaker 4: protection maybe lower a bit. Even though we heard the
Speaker 4: Apple maybe ticking up a little bit ahead of its earnings,
Speaker 4: we're looking at crypto just on the downside by about
Speaker 4: a percentage point. This as we see the dollar treading
Speaker 4: water at thirty four thousand the end.
Speaker 5: What are you watching on the micraft AMD?
Speaker 3: This is the big technology story of the day, at
Speaker 3: least from a market mover perspective. We're up always eight percent,
Speaker 3: on track for the biggest jump since May. The story
Speaker 3: the MII three hundred. AMD's AI accelerator on track to
Speaker 3: start production and shipments in the final three months of
Speaker 3: the year. Four hundred million dollars of revenue in the
Speaker 3: current period coming from its AI accelerator two billion dollars
Speaker 3: of revenue the company season four year twenty four, and
Speaker 3: AMD is saying this will be the fastest of its
Speaker 3: products to ever hit one billion dollars of revenue. This
Speaker 3: is the direct competitor to Nvidia's h one hundred. We're
Speaker 3: talking about a GPU that ships is an assemble component
Speaker 3: for hyperscalers, data centers, and large AI startups to train
Speaker 3: LM's large language models and foundation models. And that's despite
Speaker 3: giving its current period forecast five point eight billion to
Speaker 3: six point four billion dollars, the midpoint of that range
Speaker 3: was below Street Can census. The concern for them separately
Speaker 3: is a slow down in gaming CHIT sales, but AI
Speaker 3: to the rescue and It's funny because the stock fell
Speaker 3: in after hours during the earning school, it was week
Speaker 3: during pre market trading, and it's gone off like a
Speaker 3: rocket during the main session this Wednesday in Certaly.
Speaker 4: Has let's stelve into someone who's perhaps benefiting from the rocket.
Speaker 4: Evana de Leskas, with our CIO of Spear invested AMD
Speaker 4: a key holding. I'm interested in how you balance out
Speaker 4: that narrative that there is weakness, particularly in Europe when
Speaker 4: you're coming to desire to get into industrial chips. There
Speaker 4: is worry about China, but AI is still the bright spot.
Speaker 6: That's right, Caroline. So we see AI as a pretty
Speaker 6: big opportunity. And it's not just on the GPU side
Speaker 6: for AMD, it's across the board data center spending. So
Speaker 6: we believe they're going to benefit from this YouTube the Milano,
Speaker 6: but also from their CPUs as well, like the Berghama
Speaker 6: and Gene And that was really the big surprise this quarter.
Speaker 6: Investors had expected that AMD's guidance was very aggressive for
Speaker 6: the second half of this year, but they were able
Speaker 6: to deliver and guide to still fifty percent growth for
Speaker 6: the data center segment overall.
Speaker 4: Now thinking more about a two billion run right by
Speaker 4: the end of it. I'm interested as to whether you
Speaker 4: think these two players and Video and AMD are going
Speaker 4: to be the ones that take all. Whether the market
Speaker 4: is going to be so large that vast the time
Speaker 4: of one hundred and fifty billion or so that we
Speaker 4: can still see entrance taking market share.
Speaker 6: So we do see new entrants coming in. However, AMD
Speaker 6: and in Nvidia have the early start, so they're going
Speaker 6: to be able to capture significant part of the market share.
Speaker 6: We're going to see some of the cloud vendors develop
Speaker 6: their own solutions as well, so we see them benefiting
Speaker 6: from this trend. Amazon has some new products that they're introducing,
Speaker 6: but in Nvidia NAMD will be able to capture a
Speaker 6: big part of market share as their first movers in
Speaker 6: this market.
Speaker 3: If our AMD shares are up eight percent, as I said,
Speaker 3: on track for the biggest jump since May, and a
Speaker 3: lot of the cell side talking about the Mi three
Speaker 3: hundred being the.
Speaker 5: Catalyst for the stock.
Speaker 3: Right, your ETF includes both AMD and Nvidia. The Mi
Speaker 3: three hundred is a direct competitor to the H one hundred,
Speaker 3: which is already out there in the real world in volume.
Speaker 5: So how do you play this?
Speaker 3: How do you consider the composition of the ETF going forward.
Speaker 6: So we see data center as a trillion dollar market
Speaker 6: that is going to need upgrading, right, so we see
Speaker 6: opportunities for multiple players. The shares of Nvidia have styled
Speaker 6: out recently due to China concerns and also people just
Speaker 6: being cautious on the AI being hype versus reality. But
Speaker 6: we do believe that we are going to see significant investments,
Speaker 6: and we do think that these companies are going to
Speaker 6: be able to compound at over fifty percent GIGER over
Speaker 6: the next few years.
Speaker 3: The story of Nvidia over the course of twenty twenty
Speaker 3: three is a stock up almost one hundred and ninety percent,
Speaker 3: So you expect AMD's stock to track like Nvidia story
Speaker 3: did with the h one hundred if they can prove
Speaker 3: that they can scale up mi I three hundred in
Speaker 3: the same way that Nvidia did.
Speaker 6: Well in Nvidia really got oversold at some point in
Speaker 6: the cycle, so a lot of what you're seeing here
Speaker 6: in terms of the move is from really depressed levels.
Speaker 6: So we do see similar upsite from here for both
Speaker 6: in Nvidia in and AMD.
Speaker 4: I mean, what's really interesting is, of course you set
Speaker 4: up and launched sprx in large part to find the
Speaker 4: undervalued areas of particularly B to B industrial use of tech.
Speaker 4: Talk to us from a macro perspective geographically, where you
Speaker 4: are worried about because there was serious signs of some
Speaker 4: European slowdown is not going to be long lasting. Do
Speaker 4: we think that that can be offset by the satiable
Speaker 4: demand for artificial intelligence?
Speaker 6: Yeah, well, Caroline. Interestingly, technology is going to be one
Speaker 6: of the least sensitive to the economy sectors. So while
Speaker 6: you're going to see some movement like, for example, in
Speaker 6: consumer technology, we see some downside in autos. We're seeing
Speaker 6: a lot of negative data points on the EV side.
Speaker 6: We saw similar impact on semiconductor companies that sell to autos.
Speaker 6: So we believe that consumer is going to be where
Speaker 6: the downside is going to be in the near term
Speaker 6: here driven by the economy and really high interest rates.
Speaker 6: So those areas of the economy are going to be
Speaker 6: more sensitive and that's what we are avoiding. However, enterprise
Speaker 6: just went through a down cycle in spending. Companies already
Speaker 6: cut their budgets to a pretty low level, so we
Speaker 6: see those comps being pretty favorable position going into twenty
Speaker 6: twenty four. So areas like cloud data infrastructure, cybersecurity. We
Speaker 6: think those are going to be good areas to be
Speaker 6: into it next year.
Speaker 3: Ivan, I always wanted to ask you how much you
Speaker 3: nerd out, how deep you go on the details on
Speaker 3: a product like this. Right, we're going to look at
Speaker 3: some pictures of the Mi three hundred. You know, a
Speaker 3: lot of the work in the market this morning is
Speaker 3: based on what Lisa Sue had to say. Do you
Speaker 3: go through the specs of these semikinduct and go with
Speaker 3: your own conviction call based on deep research or do
Speaker 3: you just go based on the commentary of executives.
Speaker 6: So we do very fundamental deep research, and what where
Speaker 6: we differentiate ourselves is that we read data across the
Speaker 6: value chain. So we're going to be talking to companies
Speaker 6: like Microsoft that are going to be partnering with companies
Speaker 6: like Nvidia. We're talking to smaller cap companies that sell
Speaker 6: liquid cooling to the data center segment, that are selling
Speaker 6: casings to the data center segment. So we gather these
Speaker 6: data points from multiple sources and that gives us confidence
Speaker 6: in where the data center spending cycle is going. So
Speaker 6: it really is not about just following what management is saying.
Speaker 6: Is really trying to understand how they're positioned in the
Speaker 6: ecosystem by getting data points from the supply chain.
Speaker 4: Even doing that sort of deep research touts shore cet development.
Speaker 4: Millennium Global companies with global perspectives give us the global
Speaker 4: take on how much MPD is going to be exposed
Speaker 4: to China and the continues when it comes to top
Speaker 4: in technology, Well.
Speaker 6: China is going to be a big risk to both
Speaker 6: AMD and Nvidia, and we're going to see how the geopolitics.
Speaker 6: We don't necessarily make geopolitical calls, so we're going to
Speaker 6: see how that evolves over the next few years. But
Speaker 6: it's a pretty large market and both the AM and
Speaker 6: VDIA are very well positioned there because they're really the
Speaker 6: only game in town. And the consumer side in China
Speaker 6: of enterprise companies is pretty large and there are pretty
Speaker 6: big consumers of this product. So if they're shut down
Speaker 6: from this market, we do see the upside going maybe
Speaker 6: five years out being really cupped and we see earning
Speaker 6: stalling out then. But for the next three years, we
Speaker 6: do see strong demand just from US domestic hyperscalers and enterprises.
Speaker 6: We've not really seen enterprises participate in this cycle yet,
Speaker 6: so we do see pretty significant near terms upset in
Speaker 6: the next two to three years.
Speaker 3: Vana de la Lasco Beer invest great to catch up
Speaker 3: with you, and thank you for that technical expertise as well.
Speaker 5: We appreciate it.
Speaker 4: The UK Summit on AI Safety is underway, and earlier
Speaker 4: on Bloomberg caught up with the CEO of Google's Deep
Speaker 4: Mind about the future benefits of artificial intelligence to stick
Speaker 4: a listen.
Speaker 7: I think the message that we bring is one of
Speaker 7: cautious optimism. Obviously, we're working on this technology because we
Speaker 7: think it'll be one of the most beneficial technologies to
Speaker 7: society ever. But it does come with attending risks, as
Speaker 7: all transformative technologies do, and I think we need to
Speaker 7: take those seriously, ranging from the near term risk to
Speaker 7: the longer term technological risks, and I think we need
Speaker 7: to start an international dialogue about that now. So it's
Speaker 7: fantastic to see this happening in the summit, and.
Speaker 8: There is divergence from policymakers, but there's also divergence and
Speaker 8: quite passionate splits within your own community.
Speaker 5: You're very aware of this.
Speaker 8: The head of AI at Meta Anderkut saying name checking
Speaker 8: in saying you're them hungering, there's maybe regulatory capture.
Speaker 5: Going on here.
Speaker 8: Your response to that critique, because ya, look isn't alone.
Speaker 8: There are others who say, quote unquote, that is preposterous
Speaker 8: to talk about some of these existential risks fearmongering. Is
Speaker 8: that what you're doing, Dennis, though, of course not.
Speaker 7: And there's equal luminaries on the other side of the
Speaker 7: camp as well, including some of Yan's fellow Cheering Award winners,
Speaker 7: And we've all known each other for a long time
Speaker 7: actually for the academic community, and as far as sort
Speaker 7: of regulatory capture and other things, I think that's pretty preposterous.
Speaker 7: We've been myself and Shane Leger, one of my other
Speaker 7: co founders of d Mine, have been talking about AI
Speaker 7: safety since we were post docs and academics in two
Speaker 7: thousand and nine, so before we'd even started our companies.
Speaker 7: So I think it's comes from a genuine, actually uncertainty
Speaker 7: around where the technology can go. It's more enormously powerful,
Speaker 7: we know, and that's why we all work our whole
Speaker 7: lives on it, all of us. We think it can
Speaker 7: being incredible benefits to science and medicine and climate and
Speaker 7: environment and can actually help us and help society face
Speaker 7: of our greatest challenges and solve some of those challenges.
Speaker 7: But you know, in terms of where the technology is
Speaker 7: going to go and the capabilities that will have, there's
Speaker 7: a lot of uncertainty around that, and I think it's good.
Speaker 7: There's disagreement and even amongst the academic fraternity, and that
Speaker 7: just shows you that's why we have to proceed with
Speaker 7: cautious optimism. You know, we want to make sure we
Speaker 7: get the benefits of the innovation and the promise that
Speaker 7: the technology clearly holds. But we've got to be doing
Speaker 7: a responsible way, I would say, using a scientific method,
Speaker 7: trying to have as much foresight on the technology as possible,
Speaker 7: so we predict ahead of time what the unintended consequences
Speaker 7: might be.
Speaker 8: I guess for some it's the emphasis, and the Deputy
Speaker 8: Prime Minister himself, speaking to us earlier, said this is
Speaker 8: very much the summit focused on frontier technology, so the
Speaker 8: next models, the deep mind and others may be going
Speaker 8: out with the next twelve months or so. Others would say, look,
Speaker 8: we need to focus on the more prosaic risks of
Speaker 8: the here and now, the misinformation.
Speaker 1: Data security.
Speaker 8: Those issues are not being given enough weight with the
Speaker 8: critics would say.
Speaker 7: Yeah, I don't agree with that. I mean I think
Speaker 7: that that Actually, even in the summit, there's many sessions
Speaker 7: on the near term Rizz and all of us in
Speaker 7: the frontier labs are also thinking a lot about near
Speaker 7: term harms and how to mitigate those.
Speaker 3: Demss Hassi bis CEO of Google Deep Mind there. Bloomberg's
Speaker 3: Tom McKenzie joins us now from the ground at the
Speaker 3: AI summit, of course, conducted that conversation. It's kind of
Speaker 3: like a who's who in the world of AI. Elon
Speaker 3: Musk is there, right, Tom. But from a political perspective,
Speaker 3: the world's leaders have not turned up. So how much
Speaker 3: is Richie Schunach leaning in on Elon Musk of all
Speaker 3: people being there?
Speaker 8: Well, Elon Musk, certainly. Look a lot of your friends
Speaker 8: and Caroline are on the ground today. Sam Moltman's here,
Speaker 8: of course, have opened AI. Elon Musk is here, Eric
Speaker 8: Schmidt is here. You have deep minds, demsocivists, of course,
Speaker 8: so they already have bought the power lists in terms
Speaker 8: of those driving the innovation within technology. But you're right, Look,
Speaker 8: there's on the edges maybe a little bit of disappointment
Speaker 8: that you don't have the French president here, that you
Speaker 8: don't have the German chancellor, but I will suppress this.
Speaker 8: The UK government, they say, look, we're actually pretty relaxed.
Speaker 8: You've got vonder lyon the European Commissioned President, You've got
Speaker 8: the Vice President of the United States kind of house
Speaker 8: is here, You've got the Japanese representation, you've got Chinese representation.
Speaker 8: So they would say, look, the leaders are here, and
Speaker 8: crucially those executives are here in al must certainly helps
Speaker 8: the UK and it's kind of pr efforts, certainly, And
Speaker 8: what they have mons achieve is sign off on this
Speaker 8: communic A twenty eight different nations. And that's no mean
Speaker 8: feet right, getting China on board with the US, with
Speaker 8: the UK on signing off on the need to protect
Speaker 8: against what they describe as these catastrophic risks.
Speaker 4: Yeah, and there was much made of China being part
Speaker 4: of this conversation, but it needs to be a global agreement,
Speaker 4: a global narrative. If we're going to have guardrails here, Tom,
Speaker 4: what do you expect to actually be coming out in
Speaker 4: terms of hard regulatory policy? Already We've been hearing from
Speaker 4: the US already enacting in executive order for example.
Speaker 8: Yeah, so you've you've got the Communica, which is a
Speaker 8: consent census around protecting against some of these risks.
Speaker 5: But that's all it is. It's a consensus.
Speaker 8: There's no regulatory concrete action that comes on the back
Speaker 8: of this. They'll be hoping that that follows. In six
Speaker 8: months time, South Korea will host their summit, then six
Speaker 8: months after that it'll be France. But look, you're absolutely right.
Speaker 8: There is a divergent picture when it comes to the
Speaker 8: regulatory response, whether that is the euai AT that they
Speaker 8: hope to put into lawn next year, or the executive
Speaker 8: action of the US or China's own regulatory regime. And
Speaker 8: it's interesting because you speak to certain people like Demis,
Speaker 8: but also Inflection CEO as well, the Inflection AIICO saying, look,
Speaker 8: we need to have kind of a global oversight body
Speaker 8: and others push back on that. We spoke to the
Speaker 8: Senior Vice President and IBM said, that's just not going
Speaker 8: to happen. You're not going to be able to get
Speaker 8: that global consensus. You need to work through the agencies
Speaker 8: that already exist. So look, there are divisions in terms
Speaker 8: of that regulatory framework. How it works the implementation, but
Speaker 8: there are also divisions amongst executives themselves, take executives in
Speaker 8: terms of how you define risks and how you define
Speaker 8: the regulations that are needed to contain some of them.
Speaker 9: RIK.
Speaker 8: So the gap is huge at a time of course,
Speaker 8: when we know the innovation is coming through at a
Speaker 8: very rapid pace, whole load.
Speaker 4: Of so much true to be done. There's a couple
Speaker 4: of more days. Of course, it's today, it is tomorrow,
Speaker 4: and of course it's all important. X discussion going on
Speaker 4: between Enol Musk and Mishi Sunac after the event. Tom
Speaker 4: McKenzie on the ground for us over there in buckingham Shaw.
Speaker 4: We thank him very much for it. Meanwhile, coming up funding,
Speaker 4: an AI scientist, former Google CEO actually is in the
Speaker 4: UK at the moment. He's also been lending a hand
Speaker 4: to a nonprofit with ambitious plans to build an aisystem
Speaker 4: capable of scientific research. We have more on that next.
Speaker 5: Ed, what's you got?
Speaker 3: Yeah, just a real quick look at shares of Wayfair,
Speaker 3: another one that had been lower and then suddenly book
Speaker 3: Off it goes higher, up five percent, and lists really
Speaker 3: impressed with the profitability in the e commerce context. In
Speaker 3: the fintech context, with this stock up five point four percent.
Speaker 3: This has been bog technology. Here's talking tech first Up.
Speaker 3: We Work shares slumping by as much as fifty percent
Speaker 3: today after a Wall Street Journal report about its plans
Speaker 3: to file for bankruptcy. A spokesperson for the company said
Speaker 3: it would quote not comment on speculation and interest. Internet
Speaker 3: companies in Southeast Asia, like seeing Grabber, facing their slowest
Speaker 3: growth in years. Researchers say online spending is expected to
Speaker 3: rise by eleven percent this year, but down from twenty
Speaker 3: percent a year earlier, in its lowest rate going back
Speaker 3: to twenty seventeen. This comes as consumers in the region
Speaker 3: pull back on their spending. Plus, new emails shown in
Speaker 3: the DOJ lawsuit against Google are shedding new light about
Speaker 3: the blurry line between search and advertising. In twenty nineteen,
Speaker 3: the former head of Google Search raised concerns that his
Speaker 3: team was quote getting too involved with ads. After Google
Speaker 3: internally declared a code yellow amid revenue concern, speculators world
Speaker 3: that its search team has sometimes been pulled into the
Speaker 3: advertising side of the business. Google has pushed back on
Speaker 3: that very IDEA.
Speaker 4: Caroline Now, speaking of Google, the former CEO of that
Speaker 4: business Searchmith, but he's mentioned further into the non profit
Speaker 4: space by lending his funds his expertise to an AIPAD
Speaker 4: research initiative called Future House, who mergs Jacki Davilas joins
Speaker 4: us in Washington with a great story all about Basically,
Speaker 4: they're assuming that the scientific process in and of itself
Speaker 4: needs to be accelerated by AI, not just the actual
Speaker 4: finding of scientific breakthroughs, that's very Caroline.
Speaker 10: What Future House really wants to do here is not
Speaker 10: just advanced breakthroughs like the alpha fold protein folding breakthrough
Speaker 10: that we saw in the last couple of years that
Speaker 10: really cracked open AI's potential in science. What Future House
Speaker 10: wants to do is actually advanced the process itself. Now,
Speaker 10: a lot of us kind of have to go back
Speaker 10: to that high school, you know, laboratory where we were
Speaker 10: learning about how to create a hyphe doing the research,
Speaker 10: and then ultimately testing that. But there's a lot of
Speaker 10: bottlenecks here that Future House says they can solve, starting
Speaker 10: with the ability to make new hypotheses at a greater
Speaker 10: scale and much faster, perhaps more accurate than humans can.
Speaker 10: And the way they want to do that is with
Speaker 10: this AI scientist, So they plan to kind of build
Speaker 10: their own AI system that can ingest thousands and thousands
Speaker 10: of papers at a much bigger scale than a human
Speaker 10: scientist can, and eventually start to semi autonomously come up
Speaker 10: with hypotheses of its own.
Speaker 3: What's interesting about this story is there are loads of
Speaker 3: startups and big companies working on applying AI and the
Speaker 3: sciences by technology farmer drug discovery. This is a non
Speaker 3: profit and it's focused in academia. Tell us who the
Speaker 3: people are behind Future House.
Speaker 10: Jackie that was by design ed Now, of course, Eric
Speaker 10: Schmidt is by far the largest backer here. The organization
Speaker 10: plans to have is backing for at least the first
Speaker 10: five years. It expects to spend about twenty million dollars
Speaker 10: in the next her up until next and a lot
Speaker 10: of that funding is going to go to talent and
Speaker 10: building what's called a wet laboratory, much like what we
Speaker 10: would see in an academic institution or even some of
Speaker 10: these industry led research labs. But the reason it's a
Speaker 10: nonprofit is because it doesn't want to have the pressure
Speaker 10: to make money or pump out products, and so that's
Speaker 10: where you have Eric Schmidt saying he wants the incentives
Speaker 10: really aligned to advance the research itself, not having its
Speaker 10: attention diverted by you know, other priorities that perhaps might
Speaker 10: come from investors or the market itself.
Speaker 5: All Right, thanks to Bloombox. Jackie Dablos out in DC.
Speaker 4: Then welcome back to blom meg Technology.
Speaker 3: I'm Caroline Heard in New York and I'm ed Ludlow
Speaker 3: in San Francisco. A quick check in on European markets.
Speaker 3: The equities market in Europe has just closed.
Speaker 5: The stock six.
Speaker 3: Hundred Europe, which is kind of this continent wide gauge
Speaker 3: of equities up for a third straight day seven ten
Speaker 3: to one percent. A lot of the trading that's going
Speaker 3: on in Europe, or did go on in Europe throughout
Speaker 3: Wednesday session was kind of ahead of the Fed, a
Speaker 3: drum beat to and treading water towards this afternoon's FED decision,
Speaker 3: because of course Fed and rates policy has an impact
Speaker 3: on the global economy. But there was also some pulled
Speaker 3: back in some of the sort of benchmark European yields.
Speaker 3: We're looking at the German ten year burned two point
Speaker 3: seventy five percent on its yield, and euro dollar slipping
Speaker 3: for a euro against the dollar for a second straight day.
Speaker 5: Remember for one week only.
Speaker 3: We're checking in on these European markets because of the
Speaker 3: time difference and how exciting it is, Caroline, and.
Speaker 4: Indeed it is all kind of dictated by US macro policy.
Speaker 4: Let's dig in on what's happening in the US markets
Speaker 4: right now. We are up wells seven tenser percent, let's
Speaker 4: call it on the Nastak one hundred. Interesting desire to
Speaker 4: be getting into technology names on a day where perhaps
Speaker 4: we had some mixed data coming out from the US.
Speaker 4: I mean, overall, we're trying to be reading the tea
Speaker 4: leaves of what's been disclosed. When it comes to job openings,
Speaker 4: actually climbing, the US factory gauge slumping. Nevertheless, some movement
Speaker 4: towards some of the tech names Bitcoin. On the downside,
Speaker 4: the dollar stays flat, but we do remain at about
Speaker 4: thirty four thousand elevated level US tending yield though. This
Speaker 4: is what to watch while markets rallying twelve basis points
Speaker 4: to the downside. This is the Treasury said it will
Speaker 4: sell one hundred and twelve billion dollars in longer term securities,
Speaker 4: actually sort of slowing that growth of issuance. But notably,
Speaker 4: we are thinking that the Federal Reserve is going to
Speaker 4: be holding those interest rates steady and a twenty two
Speaker 4: year high. Of course in their meeting today, maybe they
Speaker 4: could hike later in the year. What does that policy
Speaker 4: mean for sort of hearts and minds in terms of
Speaker 4: allocating capital, tools, technology names in private sector and the
Speaker 4: public sector. We want to discuss the FED conversation. It's implication,
Speaker 4: but again for AI investors and how should they be
Speaker 4: thinking about monetary policy. And pleased to say, Joe Chow's
Speaker 4: with us. He's the co founder and managing partner over
Speaker 4: at Millennia Capital, and someone who worked with the FED
Speaker 4: knows how to think about the implications of valuations of companies.
Speaker 4: And you actually think, look, this AI, some call it
Speaker 4: a mini bubble, is not a bubble if you're looking
Speaker 4: at where interest rates ultimately.
Speaker 11: Are exactly and in our view the AI super second
Speaker 11: which just starting this year, this is year one, and
Speaker 11: that the bubble is not going to peak or burst
Speaker 11: for like the ten years in Nerview. There's a couple
Speaker 11: of reasons for why. If you look at historical tech
Speaker 11: bubbles like the crypto we had ten to twelve years
Speaker 11: of loose monster policy, and in two thousand and one
Speaker 11: when the dotcom bubble burst it we had ten years
Speaker 11: of fiscal policy fiscal surplus. So usually these tech bubbles,
Speaker 11: InnoVision bubbles tend to form when you have one of
Speaker 11: these following conditions. Loose Mountter policy, strong markets. We're strong economy,
Speaker 11: and in twenty twenty three we have anything but that
Speaker 11: we have time Mountter policy. With QT we have a
Speaker 11: very difficult market. And my point is, if AI has
Speaker 11: been this bigger important, then imagine when the FEN normalizes
Speaker 11: and when the markets kind of resume, then that how
Speaker 11: big AA bubble could become.
Speaker 4: I'm interested. You're obviously backing some of the key names
Speaker 4: that we talked a lot about on the show, the
Speaker 4: coheres of this world, the stability AIS, and there's some
Speaker 4: management concerns with that business. I'm interesting now one a
Speaker 4: day where we see Olive AI, for example, once worth
Speaker 4: four billion dollars valuation in twenty twenty one when it
Speaker 4: last raised some funds and now it basically sales off
Speaker 4: folts of the business and has to fold. What is
Speaker 4: this distinguishing factor between companies that can't make it through
Speaker 4: and companies that can.
Speaker 11: Yeah, So you know, I've been having these conversations with
Speaker 11: a lot of investors and founders. So basically I've been
Speaker 11: asked what is AI, and I said, AI is software squared.
Speaker 11: Think about how big impact internet and software have had
Speaker 11: on our lives, business and consumer lives as can be
Speaker 11: much much bigger. So by the same token you can
Speaker 11: you can you can value a software company on a
Speaker 11: price to revenue, on a price to growth profit e
Speaker 11: bit of free cash to LTV CACT and all these
Speaker 11: operating metrics. You would value an AI company by the
Speaker 11: same token, and you would value kind of like the
Speaker 11: company based on long term DCF and so yes, some
Speaker 11: of these AI companies are overvalued, but that's because they're
Speaker 11: growing fast, so the growth rate price the earnings earnings
Speaker 11: growth or revene growth is justified, or because the total
Speaker 11: addressing market is big, or there's such a strong mode.
Speaker 11: So some of the companies that you know are not
Speaker 11: sustainable may not exemplify one of those our characteristics.
Speaker 3: Joe, Caroline and I were reflecting this morning on a
Speaker 3: conversation we kind of had throughout the year, but it
Speaker 3: started within a COSTLA that ninety percent of these new startups.
Speaker 3: In other words, ones that were founded this year in
Speaker 3: the AI domain won't survive. But I kind of like
Speaker 3: it's a conversation that I've always had covering bench capital. Right,
Speaker 3: you look at your portfolio, aren't ninety percent of they're
Speaker 3: not going to make it anyway?
Speaker 11: That's the power leventry capital is not every company is
Speaker 11: going to make it. But when I take a step
Speaker 11: back and I work at the ecosystem, you know, I'm
Speaker 11: really really excited about this juncture where AI has really
Speaker 11: introduced a lot of life back back into the ecosystem,
Speaker 11: where AI has created this whole new green field in
Speaker 11: which many new companies will be born and there will
Speaker 11: be many useful applications LBW built in cancer research, in
Speaker 11: healthcare services and et cetera. And so not every company
Speaker 11: is going to make it where the ones. But you know,
Speaker 11: I compare this twenty twenty three moments. It's sort of
Speaker 11: where we were in twenty ten for the cloud, and
Speaker 11: twenty ten was when we were coming out of the GFC,
Speaker 11: when markets were recovering, and maybe the.
Speaker 5: Two thousand and two moment.
Speaker 11: And so the companies that do that will stay, that
Speaker 11: will survive this sort of kind of wash out our
Speaker 11: poise to stay and you're seeing some of the most
Speaker 11: impressive growth numbers from open AI, from n RAPPID, from cohere,
Speaker 11: and we're really confident to say that the aida markets
Speaker 11: are to stay and that it's going to have a
Speaker 11: huge impact on our business consumer lives.
Speaker 3: There's been a debate this week about what's going to
Speaker 3: be bigger for global financial markets, the FED this afternoon
Speaker 3: or Apple earnings on Thursday evening.
Speaker 5: Let's stick with the FED.
Speaker 3: If you are a venture capitalist or you're a long
Speaker 3: term private investor, why do you care about monetary policy?
Speaker 3: Why do you track rates in the direction to travel
Speaker 3: for rates?
Speaker 11: Well, there's two things. One is venture capital assets are
Speaker 11: just equities and that's no different than public equities. It's
Speaker 11: just that public equities trade, you know, move every mill second,
Speaker 11: but venture capital ascess don't move. But if you're you
Speaker 11: see you need to understand where rates are, where discount
Speaker 11: rates are going, and what the exit markets will look like.
Speaker 11: And that's going to impact sort of evaluations your portfolio.
Speaker 11: And the secondly is is you know, let me say
Speaker 11: this now that the FED is done, where you're done
Speaker 11: and you know in my view, the only direction the
Speaker 11: federal funds rate is going to go absent any sort
Speaker 11: of blackswan events in the next few years is downwards.
Speaker 11: You know, when now we're at five point five and
Speaker 11: a little bit higher, you know, absent you know, blackswan events,
Speaker 11: the federal funds rate will kind of go down from
Speaker 11: five to five and a half, maybe three to four percent,
Speaker 11: maybe maybe two percent, And so we're discount rates to
Speaker 11: kind of compress by twenty pips points twenty pips. That's
Speaker 11: going to leave to equity valuation expansion, and that's going
Speaker 11: to be a healthy movement for the public markets in
Speaker 11: tech and private markets and comparables. So you know, that's
Speaker 11: why we're really decided about this juncture is the FA's
Speaker 11: almost done, we're starting a new business cycle, and AI
Speaker 11: is really introduced a lot of new activities in the market,
Speaker 11: and so this may be actually want to be one
Speaker 11: of the best comet to invest in AI.
Speaker 3: That is an answer that I think Caroline addresses a
Speaker 3: lot of the questions that are global technology. Audience has
Speaker 3: Joe Chow and Leniar Capital. Great to ab back on
Speaker 3: Bloomberg Technology. Thank you coming up here on the show
Speaker 3: will continue the conversation on AI and talk regulation and
Speaker 3: investment in the space. That's the next conversation, Caro.
Speaker 4: Meanwhile, let's talk about desire to be spending money on
Speaker 4: big deals. Some news crossing the wire that will endeavor.
Speaker 4: You know, the company of talent agency and behind an
Speaker 4: ultimate fighting champion as well, but a private equity firm,
Speaker 4: silver Lake, is turning to its closest partner in the
Speaker 4: Middle East to back one of its own largest ever
Speaker 4: buyout deal proposals. The pfirm is and talks to team
Speaker 4: with Abu Dab's well Fun Mumbadulla in a potential takeover
Speaker 4: of Endeavor. Just check out the shares popping two and
Speaker 4: a half percent Endeavor so far. Not commenting this is
Speaker 4: bloombog technology Now. Business officials told a Senate panel on
Speaker 4: artificial intelligence that Congress must take a more active role
Speaker 4: in regulating the use of AI, particularly in the workplace,
Speaker 4: so more and how the technology is impacting the workforce.
Speaker 4: That's just bring in Bloombergs to a Constancy's got a
Speaker 4: great story reading on at the moment. The myriad of
Speaker 4: state by state, region by region rules that are coming in.
Speaker 4: I think of here in New York in particular, but
Speaker 4: nothing from a federal level that's protecting the worker, right.
Speaker 9: Right, So, and that's what these these folks from the
Speaker 9: business community were really calling for, because if you have
Speaker 9: this patchwork of local and state regulations, it can make
Speaker 9: it really difficult for companies who are developing new technologies
Speaker 9: to figure out how to how to even proceed. So
Speaker 9: some some folks were calling for federal action on this,
Speaker 9: on this in particular, looking at AI and hiring. I
Speaker 9: think that's a big one. And as you mentioned, there's
Speaker 9: a New York City law looking at bias in AI
Speaker 9: software that you know, in order to regulate those sorts
Speaker 9: of of programs being used for employment decisions.
Speaker 4: Now there in comes the ongoing issue with regulation and
Speaker 4: new technology, which is do you stifle innovation? How much
Speaker 4: you're seeing this put in the push being discussed at
Speaker 4: a Congress.
Speaker 9: Level, Yeah, so that was a big part of the
Speaker 9: conversation at the hearing yesterday.
Speaker 6: And I think that.
Speaker 9: There are you know, it's it's really tough for lawmakers
Speaker 9: to figure out how to proceed here because I think
Speaker 9: that there are, you know, arguments on both sides that
Speaker 9: you know, on one side, folks say that you know,
Speaker 9: AI has holds a lot of risk for workers and
Speaker 9: may even result in displacement of people's jobs on a
Speaker 9: large scale. And then on the other side, people say
Speaker 9: that's really not going to happen. You know, we're going
Speaker 9: to see people shifting into new jobs, We're going to
Speaker 9: see people learning new skills, and so it's hard to
Speaker 9: know for Congress at this point in particular, you know,
Speaker 9: how exactly they should proceed, how tightly they should be
Speaker 9: regulating versus letting that companies do their.
Speaker 4: Own thing, the ongoing debate. Joe Constance is great to
Speaker 4: have you, thank you very much indeed on that important story,
Speaker 4: and it's something that's been discussed in the UK right
Speaker 4: now as well.
Speaker 3: In it is and that's the topic of discussion in
Speaker 3: today's VC Spotlight. We're going to hone in on investing
Speaker 3: in art official intelligence, but with the context that right
Speaker 3: now in the United Kingdom there is an AI summit
Speaker 3: underway joining us. James Wise, a partner at Borders and
Speaker 3: Capital big presence in the UK and Europe. Ben what
Speaker 3: does the summit like this actually mean, James, for the
Speaker 3: ecosystem of startups working on AI in the UK. In particular,
Speaker 3: is there any actually tangible action that will come in
Speaker 3: supporting that industry.
Speaker 1: Well, overall it's a very positive thing, right.
Speaker 2: We want to see international collaboration, we want to see
Speaker 2: regulation that's clear and forward thinking. But obviously our aperature
Speaker 2: here is really how is this going to affect entrepreneurs
Speaker 2: on a day to day basis coming into the market
Speaker 2: and their ability to raise capital.
Speaker 1: And what we're looking at is how will.
Speaker 2: Regulation of models or access to the tools open source
Speaker 2: solutions affect the desire of entrepreneurs to try innovating in
Speaker 2: this space and the ability of investors to really make
Speaker 2: a difference and help build big businesses.
Speaker 3: Here, what this summit has done is literally put in
Speaker 3: front of the camera the talent in the UK, you know,
Speaker 3: deep mind being the obvious example. Are there any particular
Speaker 3: advantages or strengths that you feel the UK has in
Speaker 3: the field of artificial intelligence, be it academic or be
Speaker 3: it the private sector.
Speaker 2: Yeah, that we have a broad range of software successes right,
Speaker 2: whether it's in fintech, or it's in detech or even
Speaker 2: in the life sciences. And actually what we're seeing is
Speaker 2: research and AI now proliferating through inter industrial applications and
Speaker 2: being taken up by leading software businesses to make a
Speaker 2: difference for.
Speaker 1: Users and ultimately that's what matters.
Speaker 2: Having people here is fantastic, but making sure that they
Speaker 2: work on an international level is still.
Speaker 1: Going to be important.
Speaker 2: You know, the UK is a great market, but when
Speaker 2: we invest in businesses here, we're not investing in UK
Speaker 2: business to win in the UK. We want them to
Speaker 2: be impactful on the global scale, and that's why having
Speaker 2: something like the Global AI Safety Summit is incredibly beneficial.
Speaker 4: It's interesting, of course, summary investments include Writer and we've
Speaker 4: interviewed founder of that business who's permanently jetting across from
Speaker 4: London to SF and back building a global AI business.
Speaker 4: One of valuations like James in the UK, because we're
Speaker 4: just talking about how they're pretty elevated here in the US.
Speaker 2: Yeah, well, look, the amount of money from venture investors
Speaker 2: going into AI has grown significantly in the UK over
Speaker 2: the last year. It's grown by about seventy percent. AI
Speaker 2: has now just overtaken fintech this year in terms of
Speaker 2: the main area that vcs are putting dollars, and obviously
Speaker 2: that creates competition and it drives up valuations for early
Speaker 2: stage investments. I think what's different about AI investing right
Speaker 2: now versus some software valuations driven maybe a couple of
Speaker 2: years ago, is that revenues are really following right There
Speaker 2: is incredible demand both at the enterprise level and at
Speaker 2: the consumer level for these new tools. Now we need
Speaker 2: to make sure that demand convert into usage and that
Speaker 2: people really get benefit out of it. But a lot
Speaker 2: of the high valuations you're seeing are actually underpinned by
Speaker 2: very fast growing revenues.
Speaker 4: I put to you a question that we just had
Speaker 4: a chat with Joe Chaw about, and there's one company,
Speaker 4: for example. We're starting to get a view of these
Speaker 4: companies actually failing now. We had Olive AI, one of
Speaker 4: these companies that was worth four billion back in twenty
Speaker 4: twenty one and is now selling off parts of the
Speaker 4: business and basically unwinding. How do you discern a mote?
Speaker 4: How do you decide which company is the one that's
Speaker 4: going to be able to push through when a lot
Speaker 4: of the firepowerin AI is costly and ends up being
Speaker 4: owned by some of the big oligopolies. Shall we say?
Speaker 5: Yeah?
Speaker 1: And AI is an incredibly broad term, right.
Speaker 2: What we've seen over the last year is an explosion
Speaker 2: in the capabilities of generative AI, and in fact that's
Speaker 2: completely ruined the business models of some businesses that were
Speaker 2: building their own models at scale, and so there's going
Speaker 2: to be disruption, there will be failures.
Speaker 7: You know.
Speaker 2: What we're looking for right now in a period of
Speaker 2: very fast technical change and innovation are founders and product
Speaker 2: team so who can adapt and deploy these new technologies
Speaker 2: to find ways to really bring the value for the customers.
Speaker 2: You know, I think you did a great summary earlier
Speaker 2: of AMD's new earnings and forecasts.
Speaker 1: We all know the storage.
Speaker 2: VideA right now, a lot of the value is being
Speaker 2: captured at that level, at the cloud level, with the
Speaker 2: hyperscalers or with the chip producers.
Speaker 1: What we're looking for is the.
Speaker 2: Businesses who can navigate through this changing landscape and capture
Speaker 2: value by providing services to people. James, you raise a
Speaker 2: really good point because many of the founders at Caroline
Speaker 2: and I speak to you, the first thing they think
Speaker 2: about when they wake up literally is compute. It's expensive
Speaker 2: and it's hard to secure. The UK startups have access
Speaker 2: to that compute.
Speaker 1: Yeah, it is a challenge.
Speaker 2: You know, the UK locally has about a sixth or
Speaker 2: sixth in the world in terms of the amount of
Speaker 2: compute that has nationally well behind the US and China.
Speaker 1: However, you know, we do have some local centers.
Speaker 2: We've just announced in the UK funding for an exoscale
Speaker 2: computing center as well, which will help, and international funds
Speaker 2: like Bolderton have relationships with the likes of end VideA
Speaker 2: and others so that we can provide access to cloud.
Speaker 2: You know, this weekend in London we're providing access to
Speaker 2: three hundred hackers. I think it's the biggest hackathon in
Speaker 2: the agathon con Alert two tools for free of charge,
Speaker 2: you know, subsidized byers and the providers to help them
Speaker 2: start getting on the scale and learning how to use
Speaker 2: these tools. And I think things like that, and things
Speaker 2: like deals with en Video here in the UK means
Speaker 2: that entrepreneurs here can compete and lead in the field.
Speaker 3: Remember to invite us to your hackathons. James Wise of
Speaker 3: Borders and Capital, thank you very much. Like coming out
Speaker 3: there on the show. Meta set to be hit by
Speaker 3: a privacy crackdown in the EU over its trove of
Speaker 3: personal data that it uses to target users with ads.
Speaker 5: Join us more. Our Big Tech editor Bloomberg.
Speaker 3: Sarah Fryer, So, the mechanics of this are interesting and important.
Speaker 3: What they're saying as you can't take the data from
Speaker 3: your big platforms and use it in how you target
Speaker 3: those users with ads.
Speaker 12: Right, they're saying that the data collection at this scale
Speaker 12: at which Meta has done it across Facebook, Instagram and
Speaker 12: a Messenger is beyond what consumers have agreed.
Speaker 5: To and.
Speaker 12: Takes away their choice. And so what Meta has done
Speaker 12: is they've operated or they've released this free version, this
Speaker 12: ad free version, thinking that that would satisfy regulators and say,
Speaker 12: you know, we're giving users a choice here, they don't
Speaker 12: have to have ads. It's a sort of calculated move
Speaker 12: on metas part, but because people probably won't use that
Speaker 12: one that said, regulators aren't sure that that necessarily satisfies them,
Speaker 12: and Meta saying that, you know, they have had discussions
Speaker 12: over the course of many months trying to get to
Speaker 12: a place where they can still operate in Europe, but
Speaker 12: it looks a little tenuous right.
Speaker 4: Now, Meta saying this statement is so white, Sarah. They've
Speaker 4: been aware of this plan for weeks and we were
Speaker 4: already fully engaged with them to arrive at a statisfy
Speaker 4: factory outcomfortable parties. But the band is unjustifiably ignores that careful,
Speaker 4: robust regulatory process. So when next, Because this is really
Speaker 4: stemming from Norway, right, they've already come down in this way.
Speaker 4: They're already getting fines on a daily basis. How harsh
Speaker 4: could this get?
Speaker 12: I mean it could It could be something that we
Speaker 12: see in all of Europe. We could see that this
Speaker 12: ad free version gets maybe deeper scrutiny as to whether
Speaker 12: it collects data. Still, I think, you know, users aren't
Speaker 12: is concerned about whether they have ads or not compared
Speaker 12: to how much data is taken from them. So so
Speaker 12: I think that that's that's what will come to next.
Speaker 12: Already Meta has pulled back from Europe. Remember that Threads,
Speaker 12: the new Instagram platform, wasn't launched there, so they are
Speaker 12: they are trying to be a little bit more cautious
Speaker 12: in the region, and that's difficult for the company because
Speaker 12: it is one of their more lucrative ad regions around
Speaker 12: the world.
Speaker 4: So far, great to break that down. We thank you
Speaker 4: the ongoing focus of regulators on Meta. Meanwhile, let's talk
Speaker 4: about regulation here in the US when it comes to
Speaker 4: crypto and indeed, while a trial that's going on we
Speaker 4: all know the Crypto Ford trial of FTX coming to
Speaker 4: a close this week. After Sam mcmnfred finished testifying, prosecu
Speaker 4: just make their final pitch to the jury promotion. Alibassek
Speaker 4: is going to be back at the courthouse tomorrow and
Speaker 4: people have been like getting there at one to two
Speaker 4: in the morning. May seem to get into this courthouse.
Speaker 4: What are we anticipating. How quickly could any sort of
Speaker 4: judgment be made him?
Speaker 13: Well, it could be as early as the end of
Speaker 13: this week, it could go into next week in theory
Speaker 13: here because the jury has to deliberate, but they are
Speaker 13: looking to get to a conclusion. What you're going through
Speaker 13: today is we have Sam mcmanfried who wrapped up his
Speaker 13: own testimony just yesterday, and now today you're watching the
Speaker 13: prosecution really come in with closing remarks using Sam Bankmanfried's
Speaker 13: own testimony against him. So what they are now saying
Speaker 13: is you saw him come in early to his own defense,
Speaker 13: very clear worded, very clear headed, and a day later
Speaker 13: you saw him walk into the prosecution stumble over many definitions,
Speaker 13: stumbling over many things that the prosecution put right in
Speaker 13: front of him, books articles as to what he had said,
Speaker 13: and then watching him either not remember or deny what
Speaker 13: has been written or said about him.
Speaker 3: What was SBF's defense beyond basically saying I wasn't a
Speaker 3: very good CEO.
Speaker 13: Well, that's the main defense, isn't it. This idea that
Speaker 13: they didn't have the right risk management in place. And
Speaker 13: the idea here was not just that, you know, he
Speaker 13: wasn't a very good CEO, but he was trying to
Speaker 13: show that he wasn't actually there or responsible for certain
Speaker 13: amounts of the decisions made over at Alameda while Caroline
Speaker 13: Ellison was running it. That's the distance he tried to
Speaker 13: create from himself, because remember, he's trying to convince a jury,
Speaker 13: many of which were not aware of what had happened
Speaker 13: the last year a couple of years at FTX. Were
Speaker 13: not aware of many of the inner workings of the
Speaker 13: crypto industry, and we're not aware of a lot of
Speaker 13: you know, what was allowed and what was not allowed
Speaker 13: in terms of margin loans, as he has said, Alameda
Speaker 13: had taken from FTX. But the prosecution is coming down
Speaker 13: hard and going against him in terms of the discrepancies
Speaker 13: in how he had shown what had happened over in FTX.
Speaker 4: Shanana Bess can be back at that courthouse in New York.
Speaker 4: We thanka Meanwhile, that does it for this suggation of
Speaker 4: BlueBag technology today.
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