Speaker 1: From Marhart.
Speaker 2: We're Innovation, Money and Power Collie in Silicon Valley, Nbon.
Speaker 1: This is Bloomberg Technology with Caroline Hyde and Ed Ludlove.
Speaker 3: Now from London in San Francisco. This is Bloomberg Technology
Speaker 3: coming up. Full coverage of Tesla's disappointing second quarter results.
Speaker 4: Flask Google investors still waiting for an AI payoff.
Speaker 5: We bring you the details and an.
Speaker 3: Update from CrowdStrike on the global IT outage. But Ed,
Speaker 3: we get straight to it. A big fall in Tesla stock.
Speaker 4: Yeah, I mean the chart on the screen tells the
Speaker 4: story right. We're down around twelve percent thirteen percent in
Speaker 4: the session intraday. That would be the biggest drop since
Speaker 4: January twenty fifth on a closing basis, a decline of
Speaker 4: about twelve half percent I think is the biggest drop
Speaker 4: going back to September of twenty twenty. There's a lot
Speaker 4: of anxiety in the misunderstanding here. Fourth consecutive quarter of
Speaker 4: EPs missing estimates, but a record revenue quarter where we
Speaker 4: return to urine year growth. Despite the estimate we would
Speaker 4: see a declining growth. There's a lot to pass over.
Speaker 4: I think robotaxis at the heart of it.
Speaker 3: Carric Yeah of course, the delay being the key watchword.
Speaker 3: Here's a Musk had to say about the delay of
Speaker 3: the robotaxi.
Speaker 6: I wanted to make some important changes that I think
Speaker 6: would improve the big the sort of the robotaxi. That
Speaker 6: think that I think that were the main thing that
Speaker 6: we're going to show and we're also going to show
Speaker 6: up a couple of other things.
Speaker 3: We turned to Craig Trudell because Craig, it was your team,
Speaker 3: It was Ed plus your team that broke down the
Speaker 3: fact that there would be this delay in robotaxis. This
Speaker 3: is the future of the AI underpinning of Tesla. Why
Speaker 3: are we so worried about this quarter's results?
Speaker 7: Yeah, I think you know, it wouldn't normally be a
Speaker 7: huge cause for concern for an event to be pushed
Speaker 7: back by all of two months. I mean, you know
Speaker 7: how material is that for the company, except you know,
Speaker 7: Elon Musk has has really leaned into this being you know,
Speaker 7: the way forward for Tesla, and you know the reason
Speaker 7: why you should or shouldn't you know, invest in the stock,
Speaker 7: and so the slightest delay of you know, this event
Speaker 7: to showcase you know what he's essentially betting the company
Speaker 7: on as the company continues to have deteriorating earnings, is
Speaker 7: you know, cause for concern, especially in light of the
Speaker 7: move and the stock and the lead up to these earnings.
Speaker 7: This was a stock that was really battered when they
Speaker 7: last reported results and has come roaring back over the
Speaker 7: last few months. So right, I'm not surprised to see
Speaker 7: the shares doing this.
Speaker 4: And we underscore it's the delay of an event where
Speaker 4: we were going to unveil or see publicly for the
Speaker 4: first time, a purpose built ROBOTAXI actually debt Gray. They
Speaker 4: went some way to explain the manufacturing process. It's going
Speaker 4: to be this what they call revolutionary unboxed manufacturing strategy,
Speaker 4: but the inference is that that will be post twenty
Speaker 4: twenty five, right, Automotive Gross Margein taught me through where
Speaker 4: the cell side is focused on that.
Speaker 7: Yeah, there's a real concern here that you know, not
Speaker 7: only has has Tesla cut prices, but it's cut prices
Speaker 7: and only seen sales shrink and so uh, that means
Speaker 7: you have to to continue to cut costs, which you know, Tesla,
Speaker 7: to its credit, has has done that very consistently for years,
Speaker 7: but it also needs a product to reinvigorate sales, and
Speaker 7: you know, Musk has has really you know spoken to
Speaker 7: the importance of being able to offer people more affordable
Speaker 7: evs in order for them to you know, be adopted
Speaker 7: by a wider, you know set of consumers. But he
Speaker 7: really has not you know, been willing to to sort
Speaker 7: of back that up with with product we've we've seen
Speaker 7: you know, the cyber truck roll out, but you got
Speaker 7: to pay six figures to buy that truck. You know,
Speaker 7: where is the model too, as people like to refer
Speaker 7: to it, the vehicle that would be cheaper than the
Speaker 7: Model three.
Speaker 5: And that's a real.
Speaker 7: Concern for folks who you know, are willing to credit
Speaker 7: him with his you know vision and give him, you know,
Speaker 7: some time to you know, realize robotaxis. But he needs
Speaker 7: to sort of deliver in the here and now more
Speaker 7: affordable electric vehicles for Tesla to grow again.
Speaker 4: Bloomber's cry Tudew Global Auto's editor in London, thank you
Speaker 4: so much. Let's get reaction to Tesla's second quarter from
Speaker 4: an investor, but this time a retail or.
Speaker 5: Individual investor.
Speaker 4: Alexandra Metz aka Tesla Booma Mama holds thousands of shares
Speaker 4: of Tesla and has done so since twenty twenty. She's
Speaker 4: had previous careers in finance and as an investment analyst,
Speaker 4: but now works as a visa consultant in California and
Speaker 4: on x, the social platform owned by Mask. Is a
Speaker 4: prominent voice in that large body of individuals who do
Speaker 4: back elon Mask and a bullish on Tesla's long term Alexandre,
Speaker 4: good morning to you, Welcome to Bloomberg Technology. The most
Speaker 4: important takeaway from earnings of the earning score for you.
Speaker 8: Please well, thank you ED for having me. For me,
Speaker 8: the most important was actually that we're moving on into
Speaker 8: this next phase of Tesla's growth, and all the markers
Speaker 8: that we have laid there are still there and are
Speaker 8: moving ahead in the same timeline with the same vigor
Speaker 8: then anticipated. So as a retail investor, I mean I
Speaker 8: acknowledge that the market and your typical audience probably doesn't
Speaker 8: have the same large time horizon than we have, but
Speaker 8: for us, it is really as a retail investor, just
Speaker 8: another buying opportunity. Also, do remember we were at these
Speaker 8: prices at the beginning of the month, right when we
Speaker 8: got the delivery and production numbers. The share price was
Speaker 8: about at the same level when your channel broke the
Speaker 8: news that the Robotech Seed Day Taxi event was going
Speaker 8: to be delayed by two months. We were already a
Speaker 8: little bit higher. That's where we saw first fluctuations in
Speaker 8: the stock price. Well, now it is confirmed for October tenth,
Speaker 8: so it is a mere two months. Your colleague Greg
Speaker 8: is completely right. It is not a long delay, and
Speaker 8: there are technical reasons for it. But I also think
Speaker 8: you know, Tesla wants to be ready, wants to be
Speaker 8: sure to show whatever is necessary to convince the market,
Speaker 8: the retail investors about autonomy and that being the crucial
Speaker 8: part to Tesla's future.
Speaker 9: Can you con well sell to us a little bit more?
Speaker 3: Confirm to us how you understand full self driving, the
Speaker 3: focus on AI to eventually become some robotaxi fleet where
Speaker 3: suddenly we've got to ride hailing app out of Tesla's
Speaker 3: How does that become to bear in a good use,
Speaker 3: efficient business strategy way for you?
Speaker 8: Well, I have mine model and I'm very happy to
Speaker 8: share it with us, but we don't have Tesla's model yet. Right.
Speaker 8: That is what is going to be the quintessence of
Speaker 8: October tenth. So what I'm going to bring forward is
Speaker 8: my interpretation from former speetures of Elon and the Tesla team,
Speaker 8: So this may not be the current version, but for me,
Speaker 8: it seems very clear there's going to be a threefold
Speaker 8: business model. One Tesla's own fleet, meaning cars that are
Speaker 8: either already in Tesla's possession, people handing back their leases
Speaker 8: or whatever else, you know, inventory cars, whatever else they
Speaker 8: they have in their own fleet that are going to
Speaker 8: operate autonomously, and that are going to be strategically put
Speaker 8: in cities at spots where they will have the best
Speaker 8: yield of a robotaxi business could be airports, could be
Speaker 8: shopping malls, whatever I mean. That's probably to be to
Speaker 8: be tried out and found out how it's gone up right,
Speaker 8: So that is one part of it. The second part
Speaker 8: is that owners like me can participate and can enroll
Speaker 8: their cars. Instead of standing here in front of my house,
Speaker 8: it can just you know, travel around the day and
Speaker 8: pick up clients and bring them to the places they
Speaker 8: want to be brought to. And that's going to be
Speaker 8: a revenue sharing model. And then the third one is
Speaker 8: going to be the purpose built robotaxis. So those are
Speaker 8: the ones.
Speaker 4: Alexander, right, which is why the date of availing and
Speaker 4: seeing it was important. Just real quick, I want to
Speaker 4: think about the cell side for a second. One of
Speaker 4: Tesla's biggest balls is basically moving to the sidelines after earnings.
Speaker 4: I'm talking about New Streets.
Speaker 5: Pf fer agree.
Speaker 4: He's drapped, downgraded Tesla to neutral and is writing that
Speaker 4: the stock is at the target price they had trading
Speaker 4: at fifty times their twenty twenty six estimates. They see
Speaker 4: limited and unreliable valuation upside, etc. Now we have you
Speaker 4: on the program, retail or individual shareholder, how closely do
Speaker 4: you follow those kind of fundamental analyzes that the sales
Speaker 4: side make.
Speaker 5: And characters like Pierre Well I form.
Speaker 8: A peer a lot his French. I've lived a lot
Speaker 8: in France, so I love him. I love his accent,
Speaker 8: I love the way he's doing that. I think at
Speaker 8: this point he's wrong, And actually I liked how he
Speaker 8: formulated his post because he was not saying that he
Speaker 8: downgraded Tesla, but that Newstreet did it. So there was something.
Speaker 5: Bizarre about it.
Speaker 10: But let's put that aside.
Speaker 8: He doesn't see in the next twelve months major developments
Speaker 8: that could bring the stock higher. That's why they are
Speaker 8: putting it to neutral, I completely disagree. I think we're
Speaker 8: having in October, on October tenth, the ROBOTEXI Day. We'll
Speaker 8: also have in October obviously Q three numbers, and then
Speaker 8: we're going to move into twenty twenty five with a
Speaker 8: lot of announcement, actually three of them. We will have
Speaker 8: the model too, how Craig called it, the cheaper version
Speaker 8: of a Tesla be presented in early twenty twenty five.
Speaker 8: Will have production of Optimus at the end of twenty
Speaker 8: twenty five.
Speaker 5: So there is a.
Speaker 8: Lot of things happening. And he actually differ referred to
Speaker 8: energy being and it's already twenty percent part of the
Speaker 8: profit of it's about seventeen percent. Only there is much
Speaker 8: more margin and energy. I mean, if you want to
Speaker 8: give me a minute to talk about energy revenues and profits,
Speaker 8: because they are not like a car immediately consumed at
Speaker 8: the moment of sales. They're actually over time because when
Speaker 8: you sell energy, you actually get in the revenues and
Speaker 8: get in the profits in installments. And so there is
Speaker 8: a lot of waiting revenues and waiting profits already there,
Speaker 8: and there is much more to come. And I'm very
Speaker 8: surprised that Pierre didn't take care.
Speaker 3: Of that, alex I'm really glad Alexandre that you bring
Speaker 3: up the other parts of just the cars, the optimist
Speaker 3: side of things, the energy side of things. There's also
Speaker 3: the dojo side of things, and many trying to understand
Speaker 3: the logic there.
Speaker 9: Just take a listen to what Elo said last night.
Speaker 6: We are going to double down on dojo and we
Speaker 6: do see a path to being competitive with in video
Speaker 6: with with dojo, and I think we kind of have
Speaker 6: no choice because.
Speaker 5: The demand for in videos.
Speaker 11: So I.
Speaker 3: In video shares down, as is most of the market today.
Speaker 3: But some saying, look, because maybe this is a lack
Speaker 3: of demand that's going to come from Tesla going forward.
Speaker 3: Was that a surprise ultimately that they're really going to
Speaker 3: be ramping up dojo because they are worried about the
Speaker 3: supply side.
Speaker 8: I'm so pleased you're bringing this up, Carolina, Thank you
Speaker 8: so much. Well, it is actually funny because over the
Speaker 8: last five six years, dojo was always one of those
Speaker 8: topics in the earnings call, so shall I do it?
Speaker 5: Shall I not?
Speaker 9: And I do not?
Speaker 8: It was really going It was a dance and I've
Speaker 8: actually done about a six months ago, a whole timeline
Speaker 8: of non committal. We would like to do it, but
Speaker 8: we're really not sure. Don't bet on it. Dojo is
Speaker 8: really not so clear yet. This is the first time
Speaker 8: that Elon clearly said we actually have no choice. We're
Speaker 8: going to double down on it. We're going to do it.
Speaker 5: And this is a.
Speaker 8: Fabulous news because Alexis supercomputers are so far ahead and
Speaker 8: will make will make the whole Tesla infrastructure, the whole
Speaker 8: digestion of videos and output so much more profitable, rather
Speaker 8: than purchasing the Nvidia chips.
Speaker 5: Alexandro, we're running out of time.
Speaker 4: We have a lot to get to, so I want
Speaker 4: to ask, would you vote in favor of Tesla investing
Speaker 4: in Xai per the poll in the Exchange last night.
Speaker 8: I love that you did the yes. Thank you very much.
Speaker 8: I appreciate all of those. So we're close to sixty
Speaker 8: nine percent, which is always a fun number, isn't it. Yes,
Speaker 8: I would actually vote for it, but not unconditionally, you
Speaker 8: know how I like doing the analysis of things. This morning,
Speaker 8: we just had news that Open Ai will probably produce
Speaker 8: another five billion dollar loss this year. I think these
Speaker 8: AI companies need to be thoroughly analyzed in principle.
Speaker 5: I love it.
Speaker 8: I completely understand why it was a segregate identity from
Speaker 8: the start. Elon reeksplain yesterday those engineers don't want to
Speaker 8: be in a mega cup company. They want to have
Speaker 8: all the upside of a small startup, so it needed
Speaker 8: to be set up that way. But also I fully
Speaker 8: underscerent that Tesla needs groc needs all this input, and
Speaker 8: Tesla has at the moment thirty billion dollars offer a
Speaker 8: cash line, so investing five billion into XI could be
Speaker 8: a good idea.
Speaker 4: Okay, that was a screen grab of the poll, not
Speaker 4: any member of the Bloomberg Technology team voting yes on it.
Speaker 4: Alexandra Mehd's investor in Tesla, retail shareholder, thank you now.
Speaker 5: Some other news.
Speaker 4: Earlier this month, it was reported the Elon Musk had
Speaker 4: pledged in an eight forty five million dollars a month
Speaker 4: to a super pack supporting Trump's presidential campaign. On Tuesday,
Speaker 4: Musk confirmed on x that he would be making donations, however,
Speaker 4: at a much lower level than what had been reported.
Speaker 4: He did not say how much he had contributed.
Speaker 9: Carol, well done for clearing that up.
Speaker 3: Meanwhile, let's check in on these markets and NASLAK currently
Speaker 3: off by two point six percent. The worst daysis July seventeenth.
Speaker 3: We are training at the lowest as juloon the eleventh.
Speaker 3: Why are we lower? A worry that AI just isn't
Speaker 3: reaping the rewards in the here and now. So coming
Speaker 3: up we dive into that. We take a look at
Speaker 3: Alphabet's earnings. What it tells us if investors antsiness.
Speaker 9: About AI and its rewards.
Speaker 3: Ioko Yoshioka's with US well founded Enhancement Group.
Speaker 9: This is bluebig technology.
Speaker 3: Alphabet shares falling after the Google parents sunk more resources
Speaker 3: thirteen billion dollars worth. They expect into driving to outmatch
Speaker 3: rivals in artificial intelligence, fueling spending higher than analysts have
Speaker 3: been expecting. CFO Ruth Porat wanting to sound some reassurance
Speaker 3: on the call with media yesterday, saying quote, we are
Speaker 3: seeing the benefit of our strength in AI AI infrastructure
Speaker 3: as we generative AI solutions for cloud customers. There is
Speaker 3: no question customers are turning to us as they are
Speaker 3: building out the capabilities.
Speaker 9: Let's discuss all of this.
Speaker 3: Ioco Oshioka's with US put folio manager over at Wealth
Speaker 3: Enhancement Group. You hold shares of Alphabet they're down the
Speaker 3: most since February. Look, revenue up some fifteen percent, earnings
Speaker 3: per share jumping thirty one percent. But it seems to
Speaker 3: be this idea of plunging thirteen billion dollars per quarter
Speaker 3: into AI that is the real worry here.
Speaker 11: Sure, hi Caroline, thanks for having me. You know, in
Speaker 11: terms of Google, we thought it was a pretty solid quarter.
Speaker 11: You know, we had strength in revenues out of UH
Speaker 11: search and YouTube, and you know, Cloud was pretty strong. Now,
Speaker 11: the thirteen billion dollars that is being spent on capax
Speaker 11: and the twenty five billion that's been spent so far
Speaker 11: your date, you know, you t you take that and
Speaker 11: you say it's gonna be fifty billion for twenty twenty four.
Speaker 11: You know, Google still has eighty billion dollars of net
Speaker 11: cash on their balance sheet, and so, you know, I
Speaker 11: think the spend is warranted. That infrastructure is really needed.
Speaker 11: They needed it to do it for the cloud growth
Speaker 11: to begin with, and so you know, it is something
Speaker 11: that all the hyperscalers are continuing to do in twenty
Speaker 11: twenty four, and investors are just asking, you know, what
Speaker 11: is that return on investment? At some point in twenty
Speaker 11: twenty five Oka.
Speaker 4: When I was on the phone with Roofport, I asked
Speaker 4: her if she would give me a revenue run rate
Speaker 4: number like AWS. Did you probably remember last quarter? She said,
Speaker 4: I'm not going to do that because we'll address it
Speaker 4: on the Analyst school. On the Analyst CAOL, they said
Speaker 4: that year to date they had billions of dollars of
Speaker 4: revenue from AI infrastructure and generative AI.
Speaker 5: And I'm just curious for like and investigate you why.
Speaker 4: Wasn't that enough If it was so good for Amazon
Speaker 4: to give a number like that a few months ago.
Speaker 9: I think it's on the spending side.
Speaker 11: I think historically we've seen that, you know, companies that
Speaker 11: spend more on capex just have less room on their
Speaker 11: free cash flow to spend on money being returned to shareholders. So,
Speaker 11: you know, that's probably the reason why the stock selling
Speaker 11: off a.
Speaker 9: Little bit today.
Speaker 11: But over the long term, you know, the valuation for
Speaker 11: Google is not extreme. It still is a quality company,
Speaker 11: it still has a good business model, and I think
Speaker 11: it's pretty attractive at these levels.
Speaker 3: What's so interesting is it feels as though Alphabet and
Speaker 3: indeed slightly Tesla are just shaking all of our concerns
Speaker 3: about the AI hype and the fact that this isn't
Speaker 3: going to be hugely revenue generating in this quarter.
Speaker 9: Or the next.
Speaker 3: How is your patience for AI to pay off? Whether
Speaker 3: it's alphabet or whether it's in video or some of
Speaker 3: the other names. I have just gone stratospheric and the
Speaker 3: hope that AI is becoming a profitable reality.
Speaker 9: Sure, So I think.
Speaker 11: In the broader scheme of things, you know, this sell
Speaker 11: off in technology shares across all of tech, I think
Speaker 11: it's actually a healthy.
Speaker 9: Thing for markets.
Speaker 11: We're seeing, you know, the broadening out of markets that
Speaker 11: we've been talking about for so long, and you're seeing
Speaker 11: other of the market sort of pick up the slack,
Speaker 11: which is great to see, you know. I think for AI,
Speaker 11: Sunder Pitch I said it in terms of taking time,
Speaker 11: it's all going to take time.
Speaker 9: And when we look back at.
Speaker 11: The cloud and the growth of cloud, that also took time.
Speaker 11: I mean Aws, Microsoft Azure, and.
Speaker 9: You know, Google Cloud. We're all being built.
Speaker 11: You know, years and years ago, and we're just starting
Speaker 11: to see that benefit and they're still growing at you know,
Speaker 11: twenty five percent plus rates, and so, you know, I
Speaker 11: think that AI is probably on a similar trajectory. It's
Speaker 11: just not going to be in a straight line.
Speaker 5: Are ok.
Speaker 4: Weimo fifty thousand paid rides a week, so Alphabet puts
Speaker 4: another five billion dollars into it.
Speaker 5: Your reaction to.
Speaker 11: That, you know, I think, just as Tesla is putting
Speaker 11: money into the robotaxi side of things, I think autonomous
Speaker 11: driving cars are you know, something that is a long
Speaker 11: term growth driver for many of these companies, whether be
Speaker 11: Google or Tesla or even Nvidia in terms of the
Speaker 11: overall chips that will be installed in many of these cars.
Speaker 11: So I think it's still again another leg that maybe
Speaker 11: you know, again take more time that investors don't always
Speaker 11: have the patients for, but it is another growth avenue
Speaker 11: for many of these stocks.
Speaker 4: Oko Yahia, portfolio manager at Wealth Enhancement Group, thank.
Speaker 3: You today for our AI and Action segment. Let's bring
Speaker 3: in Alex retre CEO of Stainless is a company dedicated
Speaker 3: to building basically a platform for high quality, easy to
Speaker 3: use APIs by building software development kits SDKs for AI
Speaker 3: companies like Open Ai and Anthropic Company recently closed a
Speaker 3: three and a half million seed round.
Speaker 9: Let's bring in Alex And you know what prompted you?
Speaker 9: You were building and doing.
Speaker 3: This over at Stripe basically, and you've taken it broader.
Speaker 3: How different is it creating SDKs APIs over overt AI companies?
Speaker 9: How much more difficult?
Speaker 1: It's a great question. There's a lot of techniques that
Speaker 1: we use today. It's stay in lists that are similar
Speaker 1: to the techniques that we that I developed a Stripe
Speaker 1: empowered stripes stks, but a lot of things are different.
Speaker 1: For one thing, we need to support a much broader
Speaker 1: variety of API design patterns. And that's true for just
Speaker 1: building a platform that can support any company to build
Speaker 1: a great developer experience for their s API. That includes
Speaker 1: AI and non AI companies, but for companies like opening
Speaker 1: I and Thropic and wide variety of other AI companies
Speaker 1: that we support, we actually have to go a lot
Speaker 1: deeper to help developers really take full advantage of the
Speaker 1: full power of these APIs. They're much more advanced, they're
Speaker 1: richer with things like streaming and function calling, and that
Speaker 1: requires a lot more STK expertise. And then even fintech
Speaker 1: API is like.
Speaker 4: Straight, you're a team of ten with three and a
Speaker 4: half million dollars in the bank, Just talk to me
Speaker 4: about how difficult it is out there.
Speaker 5: How you're going to grow your business?
Speaker 1: Yeah, great question. You know, with companies like open Ai
Speaker 1: Andthropic cloud Flare even using our SDKs, and a bunch
Speaker 1: of smaller companies that are recognized within Silicon Valley as
Speaker 1: leaders in API first strong developer experience using our product,
Speaker 1: we've seen a lot of inbound interest and so I'm
Speaker 1: very glad that we've invested in building a strong platform
Speaker 1: for scaling out SDKs for a large number of companies
Speaker 1: because it's enabled us to keep our team small, focused
Speaker 1: and high skill while serving a large number of API companies.
Speaker 4: Stainless CEO Alex Raptre in Today's AI and Action, thank
Speaker 4: you very much. Welcome back to Bloomberg Technology. Ed Ludlow
Speaker 4: in San Francisco.
Speaker 3: Calon hid right here in London at the moment, and
Speaker 3: let's check in on these markets because we've had plenty
Speaker 3: digest when it comes to Alphabet and Tesla. But look,
Speaker 3: there are other companies that posted earnings and some of
Speaker 3: them well giving us some relief.
Speaker 9: Texas Instruments up five tenths of a percent.
Speaker 3: Maybe that glot the inventory glut is coming to an end.
Speaker 3: We've got some reassuring signs that we're meeting expectations for
Speaker 3: the forecast. Really, it seems to be the revival is
Speaker 3: under the way in key markets. Look, there's still pressure
Speaker 3: on automotive in industrial, but maybe that's sort of the
Speaker 3: bottoming of that IBM three tens percent lower as we
Speaker 3: expect their numbers of course, coming out after the bell today,
Speaker 3: consulting likely to be a little bit weaker.
Speaker 9: Can software make up for it?
Speaker 3: Are we going to eke out that one percent revenue
Speaker 3: growth that many are anticipating? Service now likely to see
Speaker 3: some twenty twenty one percent growth in revenue and indeed
Speaker 3: in earnings. How much again, are we starting to see
Speaker 3: appetite for artificial intelligence? Generative AI really managed to buoy
Speaker 3: some their software sales at the moment when companies are
Speaker 3: strapped for IT spending. I just want to take it
Speaker 3: on a gear, though, and look at what's happening with
Speaker 3: a story that just won't go away. For CrowdStrike in particular,
Speaker 3: we're currently seeing it off by twenty five percent over
Speaker 3: the last five training days. Look, we've finally got some
Speaker 3: sort of answer to why this happened. The massive global
Speaker 3: IT outage was a bug in a quality assurance tool
Speaker 3: the company uses to check updates for mistakes. Basically, it
Speaker 3: allowed flawed data to go out to customers, causing last
Speaker 3: week's meltdown, and the meltdown and stock continues.
Speaker 9: Let's just get a little bit of detail.
Speaker 3: Katrina Manson is with us, and we've all been waiting
Speaker 3: for further details. Can you give us the nuancewers to well, ultimately,
Speaker 3: why this is so unique, how this qualities assurance step failed.
Speaker 12: Can you even get the words out because it is
Speaker 12: so complicated and so detailed, And what we've now got
Speaker 12: is five days later, the preliminary incident report. Now this
Speaker 12: right in the small print takes us to what cybersecurity
Speaker 12: experts are saying is a welcome, detailed, transparent report, but
Speaker 12: it is still early days as they do. What they're
Speaker 12: saying is their root cause analysis, and.
Speaker 9: Let me read it to you.
Speaker 12: Due to a bug in the content validata, one of
Speaker 12: the two template instances past validation despite containing problematic content data.
Speaker 12: What that means is exactly as you said, the testing
Speaker 12: process for making updates in some way failed to flag
Speaker 12: an error. So that's two things. If one there was
Speaker 12: an error and to the testing process to find it
Speaker 12: also had a problem, and because CrowdStrike is so instrumental
Speaker 12: to what's called endpoint detection response, really protecting computers. In
Speaker 12: this case, Microsoft Windows computers, eight point five million of them,
Speaker 12: according to Microsoft, experienced the blue screen of death that
Speaker 12: affected hospitals, airports, retail, airlines. They're still getting back on
Speaker 12: their feet, some of these companies, they're trying to do
Speaker 12: automated fixes.
Speaker 9: They're still in recovery mode.
Speaker 12: At the same time, they're trying to share what went
Speaker 12: wrong and promising that there will be fixes.
Speaker 4: The message from crowdstrikes like, look, we're going to make
Speaker 4: sure technologically speaking that we know what happened and prevent
Speaker 4: it happening again. But as you write, and I wrote
Speaker 4: about earlier in the week, we still are learning about
Speaker 4: how systemic this issue was, about how central CrowdStrike is
Speaker 4: to an important supply chain.
Speaker 5: What's the latest on that front.
Speaker 12: I think this comes down to exactly that the single
Speaker 12: point of failure. As we speak to customers, as we
Speaker 12: speak to experts in this area, it really does become
Speaker 12: clear that some of the things that protect people are
Speaker 12: also very very closely nestled inside their systems, and so
Speaker 12: if something does go wrong. It has tremendous potential to
Speaker 12: affect everything. This is another one of those single points
Speaker 12: of failure that simply hadn't been noticed, caught, examined, and
Speaker 12: I think we will expect to hear from not only
Speaker 12: as cybersecurity companies trying to make mileage out of this
Speaker 12: potentially and perhaps trying to take customers, but also really
Speaker 12: from those who look at cyber defense in this country
Speaker 12: and worry that there are simply too many holds.
Speaker 4: Katrina hold that thought bloombergs Katrina Manson with the latest
Speaker 4: reporting on CrowdStrike. Other companies in the space, Let's stick
Speaker 4: with cybersecurity and bring in Gil Schwed, founder and CEO
Speaker 4: of Checkpoint Software Technologies, which just release its second quarter
Speaker 4: results beat expectations and also announce a new incoming CEO.
Speaker 4: And Gil, we will get to that, I promise. But
Speaker 4: you're in the game also of endpoint security.
Speaker 5: To start.
Speaker 4: What's the last seven days or so been like for
Speaker 4: you and your company incoming and outgoing in your response
Speaker 4: to what happened with CrowdStrike.
Speaker 13: So, like everybody else, we've been watching it and supporting
Speaker 13: customers and helping in what we can be helped. It's
Speaker 13: not a cybersecurity bug. It is a software bag that
Speaker 13: shouldn't have happened. But it shows us how dependent us
Speaker 13: in software that can take the world up and down.
Speaker 13: And it's also a very strong We need a very
Speaker 13: tight balance between these quick automatic updates and the cyber
Speaker 13: risks that are involved, because these quick updates are supposed
Speaker 13: to help solve vulnerabilities, and unfortunately, every week versus dozens
Speaker 13: of vulnerabilities that are discovered in companies, and we really
Speaker 13: need these quick updates to stop these attackers.
Speaker 9: So gil have you changed anything?
Speaker 3: Has the industry changed anything architecturally speaking, that would mean
Speaker 3: that this cannot happen and become the single point of failure.
Speaker 13: Again, I think we are learning, I mean the entire industry,
Speaker 13: and again I don't want to exclude us. We need
Speaker 13: to learn how to create this balance between quick updates
Speaker 13: on one hand and avoiding vulnerabilities, which is also very
Speaker 13: very important, and I think that's a lesson that the
Speaker 13: entire world needs to learn.
Speaker 4: Kil I appreciate it. Early in this process. There are
Speaker 4: questions about the future of firewalls, and I want to
Speaker 4: ask you about whether there's going to be the sort
Speaker 4: of architectural shift in cyber security in the landscape. Our
Speaker 4: analysts at Bloomberg Intelligence talk about a move to agent
Speaker 4: loss delivery and security from agents, like in the case
Speaker 4: of endpoint security provided by CrowdStrike.
Speaker 5: Big picture, how do you see that playing out.
Speaker 13: In the last thirty years. Again, I'm in this business
Speaker 13: for thirty one years, and I think we've kind of
Speaker 13: invested the network cyber security part of things. With the Internet,
Speaker 13: there's always again, there's dozens of technologies, even hundreds of technologies.
Speaker 13: The two biggest one are the network security and the
Speaker 13: endpoint technology, and I think we need both. I mean,
Speaker 13: it would be easy for me to say everybody will
Speaker 13: shift to the network. Many times people we'll say the
Speaker 13: other around. But at the end of the day, we
Speaker 13: need both the end point security and the perimeter security,
Speaker 13: and each one of them compliments each other. And still
Speaker 13: with all of that, we're still facing a lot of
Speaker 13: cyber risks. They're just growing.
Speaker 9: Unfortunately, there is.
Speaker 3: So much to talk about with your company and your
Speaker 3: industry kill because you, of course have managed to bat
Speaker 3: expectations in your earnings. You're seeing the revenue growth as
Speaker 3: it had been anticipated. You've got a new CEO coming
Speaker 3: in but also we've got M and A not happening,
Speaker 3: potentially happening.
Speaker 9: Google and Wiz for example.
Speaker 3: Some of the interpretation is with your new CEO coming
Speaker 3: in nadav Zaverira, that maybe you'll do more M and
Speaker 3: A then maybe you could be beefing up pursuing deals.
Speaker 13: Do you agree first, I hope so, I definitely hope
Speaker 13: that we'll do more M and as we've been doing
Speaker 13: two a year in the last few years. But we
Speaker 13: can do more and we can do bigger ones. And
Speaker 13: I do think that what happening between with and Google
Speaker 13: is actually very interesting. A amazing company built a very
Speaker 13: fast leadership in the cloud security space, and I think
Speaker 13: the fact that they want to remain stand alone and
Speaker 13: build a large companies something that we can all admire
Speaker 13: because it will take so many many years to get
Speaker 13: to the same financial numbers that we got with this.
Speaker 13: I mean rumor is about wed deal.
Speaker 3: We really want to talk about just how much you
Speaker 3: continue to be innovating over in this space and Gilschwared comeback.
Speaker 3: Of course, I currently SEEO checkpoints, software technologies handing over
Speaker 3: those remains here remains as founder though, and what have
Speaker 3: we got coming up?
Speaker 5: Yeah, a lot more in the news time for Talking Tech.
Speaker 4: First up, hackers have leaked internal documents stolen from Lead
Speaker 4: US Holdings. That's according to sources. Lead US is one
Speaker 4: of the largest IT service providers to the US government,
Speaker 4: servicing the likes of the Pentagon and NASA. A company
Speaker 4: spokesperson says the leak stems from a previously disclosed breach
Speaker 4: and had no effect on their network or any sensitive
Speaker 4: customer data. Plus Meta has removed over sixty three thousand
Speaker 4: accounts in Nigeria linked to scammers. The parent company of
Speaker 4: Facebook said they removed accounts who used its social media
Speaker 4: platform to blackmail and sexually extort its users. The mass
Speaker 4: removal took place at the end of May, but just
Speaker 4: six weeks after a Bloomberg article detailed the rise of
Speaker 4: sex shaution scams on apps like Instagram and Snap and
Speaker 4: shares of Netty's a climbing. The company saw its biggest
Speaker 4: intro day jump in over a month as it gets
Speaker 4: set to launch its mobile game, the Raka Blade Point Mobile.
Speaker 4: According to Goldman Sachs, the game publisher is expected to
Speaker 4: generate sales of eight hundred and eighty million from the
Speaker 4: game over its first twelve months. Nettie says forty million
Speaker 4: people have already pre registered for the game.
Speaker 5: Claren Now you love been a gaming ed.
Speaker 3: Meanwhile, coming up, we'll have blue Eggs list of ten
Speaker 3: AI startups that you have to watch this year.
Speaker 9: That's coming up next.
Speaker 3: Meanwhile, though, keep an eye on certain shares. More earnings
Speaker 3: AT and T added far more mobile phone subscribers now.
Speaker 3: Actually Wall Street analyst had expected in the second quarter,
Speaker 3: fewer customers canceling, many adding wireless services to their broad
Speaker 3: brand plans were up almost five percent.
Speaker 9: T Mobile down more than one percent.
Speaker 3: Not their earnings splashing some cash for win nine billion
Speaker 3: dollars in a joint venture with a private equity firm
Speaker 3: that's KKR to buy five optic internet service provider Metronet.
Speaker 9: This is Room Med Technology.
Speaker 4: Bloomberg is out with its second annual leader Board of
Speaker 4: AI startups. The boom and AI innovation has led to
Speaker 4: tens of billions of dollars funneled into AI companies in
Speaker 4: just the first half of this year alone. From Open
Speaker 4: Ai and Perplexity, Tosuno and many more. Of these ten
Speaker 4: startups you see here are some of the biggest and
Speaker 4: best funded to be watching right now. Let's bring in
Speaker 4: one of the co authors and one of the assemblers
Speaker 4: of such a list. It is here the top ten,
Speaker 4: Bloomboat Rangel Mets. Let's start with methodology. Some of it's obvious.
Speaker 4: Open AI and anthropic are way up there. Perplexity super interesting.
Speaker 4: But how did you and Sharene and Dina Bass put
Speaker 4: this together?
Speaker 2: Yeah, so we used well, some of it is a
Speaker 2: little bit of thinking, you know, of like what do
Speaker 2: we think should be on this list? It should be
Speaker 2: pointed out this is not a ranked list, so it's
Speaker 2: not like one one through ten, you know, it's just
Speaker 2: it's arbitrarily listed on the list.
Speaker 10: But a lot of it is related.
Speaker 2: To the evaluation how much money leaveries and also buzz,
Speaker 2: which is admittedly a hard factor to pin down.
Speaker 10: That's kind of up to up to your opinion.
Speaker 9: Yeah, Like, let's dwell on like a company like Suno.
Speaker 3: Many of us have heard of the other players, but
Speaker 3: Sono it's Massachusetts based, it's five hundred million dollar evaluation. Oh,
Speaker 3: but nothing in comparison to open Ai. But why would
Speaker 3: you pick this particular AI music generator?
Speaker 10: Yeah, Ason, it was one of a couple of companies
Speaker 10: on this list.
Speaker 2: That may sound a little surprising at first because it
Speaker 2: hasn't raised a time money.
Speaker 10: It's not worth a ton of money.
Speaker 2: But it has gotten a ton of attention in good
Speaker 2: ways and bad both from people that are using it
Speaker 2: to make these very complicated sounding songs, kind of generating
Speaker 2: music that just wasn't possible until quite recently with AI.
Speaker 2: But it's also gotten the ire of the very famously
Speaker 2: litigious music industry. The biggest record labels in the world
Speaker 2: sued Suno and one of its competitors, Udo recently, claiming
Speaker 2: that it used songs copyrighted songs unlawfully in its training data.
Speaker 3: Let's go geographically, because I bring up a Cambridge based company.
Speaker 3: These are largely US based companies actually, whether they be
Speaker 3: in New Jersey or whether they be in San Francisco.
Speaker 9: But there is what one.
Speaker 3: Canadian one French is it hard to find international winners
Speaker 3: Right now?
Speaker 2: I think there's an increasing number of really cool, strong
Speaker 2: inter staying companies all around the world. We actually relied
Speaker 2: on some of our Bloomberg technology reporders that are in
Speaker 2: other parts of the world to help us figure out
Speaker 2: who in your geography do you think is most important?
Speaker 2: And also this year to give a sense of how
Speaker 2: hard it was to figure out who should.
Speaker 10: Be on this list.
Speaker 2: This year we added an additional six companies that are
Speaker 2: ones we think people should also be keeping an eye on,
Speaker 2: and a number of those are from outside the US
Speaker 2: as well, So who knows next year those might be
Speaker 2: also on the top ten.
Speaker 4: You know, I look at the list and how many
Speaker 4: of the news headlines and stories for those companies we've
Speaker 4: covered on the show, like super focused on their fundraising,
Speaker 4: like you pointed out, But I'm a user of chat,
Speaker 4: GPT and GROCK, and I've kind of played a bit
Speaker 4: with perplexity how much was the sort of real world
Speaker 4: use of the technology. So those companies are making a
Speaker 4: part of your decision in saying, Okay, these are the
Speaker 4: top ten.
Speaker 10: That's absolutely some of it.
Speaker 2: I think Opening Eye is an easy company to put
Speaker 2: on a list like this because you see it achieving
Speaker 2: in like the multiple different areas that we were looking at.
Speaker 2: It has brand recognition, It clearly has corporate users. It
Speaker 2: also has consumers that are really interested in the company.
Speaker 2: It's also raised a ton of money over time, and
Speaker 2: it's worth a lot of money. But some of these
Speaker 2: other companies, it was more like it was a combination
Speaker 2: of factors, but they might not have been up there
Speaker 2: on every single one. And it's true that sometimes it
Speaker 2: is hard to gauge buzz if your entirely enterprise focused, right, like,
Speaker 2: we don't always know who a ton of your customers are,
Speaker 2: for instance, because a lot of companies aren't are.
Speaker 10: Either still experimenting with AI and not.
Speaker 2: Like really really using it in their daily practices, or
Speaker 2: they might not want to be super public about what
Speaker 2: software they're using.
Speaker 3: Noted Rachel Metz. You and the team is always doing
Speaker 3: great work. Thanks for bringing it to us. We appreciate it.
Speaker 14: I am so very honored, and I pledge to you
Speaker 14: I will spend the coming weeks continuing to unite our
Speaker 14: party so that we are ready to win.
Speaker 3: In November, Vice President Kamala Harris there vowing to win
Speaker 3: the election in her first campaign rally, and after, of course,
Speaker 3: President Biden pulled out of the race and endorsed Harris.
Speaker 9: Many gen Z voters were quick to.
Speaker 3: Embrace the campaign through means, video edits or the VP
Speaker 3: that have well since gone viral on TikTok, on Instagram,
Speaker 3: on x Nayla Zaiden can talk us through the CEO
Speaker 3: of Future Caucus, a non partisan organization for young policymakers.
Speaker 9: You join us now for more.
Speaker 3: Basically, what has become a mean frenzy so quickly previous
Speaker 3: speeches jumped upon brat summer has become well, Kamala is Brat.
Speaker 3: This is a moment for gen Z to be awakened.
Speaker 3: Why is this happening so effectively?
Speaker 15: I love this and the fact that you just said
Speaker 15: on Bloomberg, come is Brat is just an incredible turn
Speaker 15: of events that history we're living through.
Speaker 10: I think, listen, you.
Speaker 15: Don't have to be a political expert to know that
Speaker 15: the past few weeks, months, years in politics have felt exhausting.
Speaker 15: The race between two people who we have seen this
Speaker 15: matchup before has felt static, and this moment has introduced
Speaker 15: some dynamism and frankly, some joy back into I think
Speaker 15: what's otherwise a really tense political moment and seeing the
Speaker 15: vice President's team capitalize on it, but also just a
Speaker 15: lot of organic content from random Internet users really speaks
Speaker 15: to the sense of joy. I think that people are
Speaker 15: infusing back into the conversation where it really was lacking.
Speaker 4: Leila on one sec director producer just telling me they're
Speaker 4: adding Caroline saying that to the show reel for twenty
Speaker 4: twenty four for the benefit of our global audience. Caroline
Speaker 4: and I have seen it, of course, and engage social media.
Speaker 4: Explain brought to us, Caroline, please, then we'll let Laila
Speaker 4: Way in.
Speaker 3: Well, Charlie XCX is Bratt, which has got this new
Speaker 3: song that basically is all about Bratt brat summer. And
Speaker 3: what is BRATCHI says, it's a kind of it's a
Speaker 3: female who's quick to laugh, who's doesn't take itself too seriously,
Speaker 3: but goes deep.
Speaker 9: Perhaps enjoys partying slightly.
Speaker 3: I mean, why, Layla, has this been a lexicon that's
Speaker 3: going to be different to mobilize gen z and to
Speaker 3: the point where we see perhaps Trump to his to
Speaker 3: his campaign's efforts thinking about crypto as the way to
Speaker 3: link to millennial or younger voters.
Speaker 15: Yeah, well, you know, the race really was about age
Speaker 15: for months, and ultimately President Biden made his decision in
Speaker 15: large part because of this push to move to generational
Speaker 15: future that he just you know, wasn't representing, and so
Speaker 15: the willingness to lean into something that appeals so deeply
Speaker 15: to young people are at least sort of speaks their language.
Speaker 15: I think is people feel heard, people feel like excited,
Speaker 15: and I think I can't predict the future. I can't
Speaker 15: tell you how it will affect the vice president's campaign,
Speaker 15: in part because you know, we don't actually have an
Speaker 15: official nominee until the Nuns later next month. But I
Speaker 15: think one thing to know is that sebby social media
Speaker 15: users still need to to use another phrase of the moment,
Speaker 15: live in the context, right, So gen Z might have
Speaker 15: an absurd sense of humor, and they might really enjoy
Speaker 15: these sort of buzzwords and these trendy memes, but at
Speaker 15: the end of the day, they're serious and they're informed
Speaker 15: about policies they care about.
Speaker 5: It's a great way to get people.
Speaker 4: Attention, Leila, there is a serious side to it, which
Speaker 4: is also memes are a tool for ridicule misinformation. So
Speaker 4: you know, generally this conversation has been about the positive
Speaker 4: reaction on social media's come of a Harry. There is
Speaker 4: negative reaction too, and the content in support of her
Speaker 4: is also in competition with content in support of Trump
Speaker 4: and Jade Vance, etc.
Speaker 5: You know, just explain the dynamic of that to our audience.
Speaker 15: Well, social media has always been I think a really
Speaker 15: powerful way to reclaim negative terms, negative perceptions, and I
Speaker 15: think that can really work in a positive a politicians
Speaker 15: favor if they lean into it. Right, So, even looking
Speaker 15: at President Biden with dark Brandon, or last selection cycle
Speaker 15: with Hillary Clinton's mention of deplorables and that becoming sort
Speaker 15: of a galvanizing cry for Trump supporters, I do think
Speaker 15: that if politicians or their supporters lean into some of
Speaker 15: the negative memes, it actually can be really powerful for them.
Speaker 15: But there's no doubt in my mind that social media
Speaker 15: really is boosting inflammatory content, it can contribute to worsening
Speaker 15: political polarization. It's actually something that Future Caucus works very
Speaker 15: deeply on, bringing young lawmakers together to get to know
Speaker 15: each other as humans and not digital avatars. But social
Speaker 15: media definitely has the potential to add gasoline to a
Speaker 15: polarized moment in history.
Speaker 3: Well, for now, some are finding the positive, humorous side,
Speaker 3: there is a serious side to all of it. In
Speaker 3: Leila Zaid and we hope that we're bringing back on
Speaker 3: to discuss the pros the cons of embracing social media
Speaker 3: in this campaign, CEO Future Care because we appreciate it. Meanwhile,
Speaker 3: that does it for This edition of Bloomberg Technology had
Speaker 3: a big.
Speaker 4: One, A big one, so much to recap. Listen to
Speaker 4: the podcast. It's on the terminal on Bloomberg platforms as
Speaker 4: well as Apple, Spotify and iHeart. I'm going to be
Speaker 4: off to mar again and the football tonight Chelsea Wrexham. Caro,
Speaker 4: take you away from London. This is Bloomberg Technology.