Speaker 1: Bloomberg Audio Studios, podcasts, radio news from the heart of
Speaker 1: where innovation, money and power collide in Silicon Valley and beyond.
Speaker 1: This is Bloomberg Technology with Caroline Hyde and.
Speaker 2: Ed Ludlow live from New York.
Speaker 3: I'm Tim Steneveek and I'm Jackie Devalas in San Francisco.
Speaker 3: This is Bloomberg Technology coming up. Intel shares are soaring
Speaker 3: on reports that both TSMC and Broadcom are only potential
Speaker 3: deals that would split the US chip making Giant. In
Speaker 3: two plus, Elon Musk's artificial intelligence startup XAI showcases it's
Speaker 3: updated Grock three model, a rush challenge to open AI,
Speaker 3: and we'll dive into concerns around AI safety as companies
Speaker 3: and governments appear to change their attitudes on how to
Speaker 3: make the technology safer. But first let's look at markets. Tim,
Speaker 3: what are you looking at?
Speaker 4: I'm looking at the Nazaq one hundred, searching for a
Speaker 4: little bit of direction you can see down not even well,
Speaker 4: not even one tenth of one percent, bouncing between gains
Speaker 4: and losses throughout the session so far, Traders watching the
Speaker 4: latest geopolitical developments. All eyes are what's happening in Eastern Europe.
Speaker 4: This is the US and Russia agreed to more talks
Speaker 4: on resolving the war in Ukraine, but set no date
Speaker 4: for a summit meeting between Donald Trump and Vladimir Putin
Speaker 4: Ukraine's of Vladimir's Olenski canceling his visit.
Speaker 2: To Saudi Arabia. So we'll bring you updates on that
Speaker 2: as we do get them. I am watching.
Speaker 4: Shares of Intel though, up about ten percent as we speak,
Speaker 4: surging after the Wall Street Journal reported that both TSMC
Speaker 4: and Broadcom are molling separate potential deals that would split
Speaker 4: Intel into two. Now the journal is reporting that Broadcom
Speaker 4: would be interested in the chip design and market business. Well,
Speaker 4: TSMC is apparently interested in Intel's chip plants. Today's serge, though,
Speaker 4: does come after Intel had its best week all the way.
Speaker 2: Going back to the year two thousand.
Speaker 4: Shares rows more than twenty percent last week on reports
Speaker 4: that the US government is possibly getting involved with a
Speaker 4: plan that involves both Intel and TSMC.
Speaker 3: Jackie, let's get right too with Bloomberg's Bryan Westelica. Ryan,
Speaker 3: let's talk about those chip plans which Intel is operating
Speaker 3: currently at a loss. What could a potential deal with
Speaker 3: TSMC mean for that business.
Speaker 5: Hey, good afternoon, thanks for having me. So.
Speaker 6: Yeah, so a lot remains unclear right now, but certainly
Speaker 6: this has been a real drag on Intel for quite
Speaker 6: an extended period of time. Obviously, the previous CEO invested
Speaker 6: heavily in the foundry business, you know, billions of dollars
Speaker 6: and really see too much of a return on that.
Speaker 6: It is well behind TSMC and Samsung. So people are
Speaker 6: really looking to see if there is any kind of
Speaker 6: you know, sort of resk you for the foundry business
Speaker 6: that is really expected to really support Intel. If there
Speaker 6: is some kind of deal coming to fruition.
Speaker 4: Ryan, what would be left of Intel if it's TSMC
Speaker 4: and Broadcom were to succeed in this as reported by
Speaker 4: the journal.
Speaker 5: Yeah, that's a great question.
Speaker 6: Again, so many details are still up in the air,
Speaker 6: not yet confirmed. I mean, you know, there is such
Speaker 6: a focus on domestic manufacturing. Intel got a lot of
Speaker 6: money from the Chips Act. It was building out a
Speaker 6: factory in Ohio, for example, So there is certainly a
Speaker 6: geopolitical aspect to this. People want to see more domestic
Speaker 6: chip manufacturing, and if TSMC is able to work with
Speaker 6: Intel in some capacity, obviously that would probably be good
Speaker 6: for PSMC to have more of a domestic presence here,
Speaker 6: certainly good for Intel. But again, we really don't know
Speaker 6: what any of this is going to end up looking like,
Speaker 6: if anything does come to fruition.
Speaker 3: Ryan, Let's talk about some other non sexy names in tech,
Speaker 3: like IBM and Cisco. You wrote this morning that they're
Speaker 3: kind of seeing a run up and showing themselves to
Speaker 3: be AI contenders. What's leading this enthusiasm.
Speaker 6: Yeah, so Cisco last week gave a pretty positive revenue
Speaker 6: forecast talking about the demand it is seeing related to
Speaker 6: all the AI infrastructure that is being built out. IBM
Speaker 6: earlier this year had a pretty strong forecast of its own,
Speaker 6: some strong long term sales targets. These are two companies
Speaker 6: that you know, were sort of forgotten by a lot
Speaker 6: of investors. They are nowhere near you know, like you said,
Speaker 6: they're sexy heydays like Cisco still below its dot com
Speaker 6: erapeak from two thousand, but you know, as it's starting
Speaker 6: to see a little bit more of a growth narrative,
Speaker 6: especially really to AI, people are taking another look. These
Speaker 6: are stocks that are you know, trading at pretty considerable
Speaker 6: discounts to the max seven names. They have pretty strong
Speaker 6: dividend yield. So in a period of time when people
Speaker 6: are maybe wondering, have the Max seven gone too far?
Speaker 5: Is this story already priced in?
Speaker 6: Having some new AI stocks in there, especially mature companies
Speaker 6: with pretty solid cash flow and dividends and so forth
Speaker 6: trading at lower multiples, you can see white people might
Speaker 6: be taking another look at them.
Speaker 4: Well, let's stick with the Mag seven. Bloomberg's Ryan Vistelica
Speaker 4: joining us from Chicago. Always good to see you, Ryan.
Speaker 4: For more, I do want to bring in Dana Dioria.
Speaker 4: She's group president over at invest Net Solutions, also co
Speaker 4: chief investment officer at invest Net. Dana, we heard Ryan
Speaker 4: just now talking about the Mag seven. It's more than
Speaker 4: thirty percent of the makeup of the S and P
Speaker 4: five hundred, those seven stocks. How are your clients diversifying
Speaker 4: away from the MAG seven? Are they overinvested in them?
Speaker 5: Well?
Speaker 7: I mean so, beauties in the eye of the holder, right,
Speaker 7: So there's a lot of you know, research that suggest look,
Speaker 7: if you are invested.
Speaker 8: In the market, the market, the market's.
Speaker 7: Determination is this is what these stocks are worth, and
Speaker 7: you know they're invested where they should be. I think
Speaker 7: a lot of our clients though, are looking at that,
Speaker 7: and obviously on investment, we're talking about retail clients with
Speaker 7: advisors managing our assets, and they look to diverse.
Speaker 8: By in other places. They look to have an overall
Speaker 8: globally allocate portfolio.
Speaker 7: That has international investments that perhaps leans a little bit
Speaker 7: into small caps. But let's be honest, if you are
Speaker 7: you know, more than fifty cents on the dollar that
Speaker 7: goes into our platform goes into passive assets. So if
Speaker 7: you're there, you've got a ton of you said it yourself,
Speaker 7: it's it's thirty percent right of the SMP. But even
Speaker 7: if you're in an actively managed strategy, it's very hard
Speaker 7: at this point to have a ton of tracking error
Speaker 7: to the passive index because it's performed so well in
Speaker 7: the last several years.
Speaker 3: Dana, there's a couple of different ways that we can
Speaker 3: look at tech companies. Now you have software, hardware, enterprise
Speaker 3: and then the consumer focus. How are you thinking about
Speaker 3: how to bucket these sorts of investments going forward and
Speaker 3: the sorts of catalysts you're looking from each bucket?
Speaker 7: Well, so I think you know, for the average client
Speaker 7: on the platform, it's more about the sector, and it's
Speaker 7: more about, you know, where is the sector from a
Speaker 7: market cap weighted perspective within the indexes. And then if
Speaker 7: you're in say a Rust one thousand growth actively managed strategy,
Speaker 7: how are the how is that manager doing that bucketing?
Speaker 8: How are they thinking about playing the AI trade? For example?
Speaker 8: Is it a question of you know, do I diverse by.
Speaker 7: Again away from saying Nvidia right, and and this has
Speaker 7: been a big struggle for them because you know, you
Speaker 7: have to meet forty act rules around diversification in a
Speaker 7: lot of cases, and it's hard to do when you
Speaker 7: have more than fifty percent of say the Russell one
Speaker 7: thousand growth uh, you know, invested in these mag seven
Speaker 7: And so I think that bucketing helps where a good
Speaker 7: active manager who's able to look at the tech sector
Speaker 7: and say, okay, you.
Speaker 8: Know, I see opportunity sets.
Speaker 7: Maybe in some of these suppliers to big you know,
Speaker 7: to the MAG seven right, and these different parts of
Speaker 7: the market where I can still kind of take that
Speaker 7: growthy bet on AI and tech, but.
Speaker 8: Not necessarily you know, be so heavily focused.
Speaker 7: On the MAG seven and you know, not meeting those
Speaker 7: diversification roles. So I think that's something that you know,
Speaker 7: these managers struggle with and every time we see sort
Speaker 7: of a dip, you know, it's a question is it
Speaker 7: a buying opportunity to kind of leg more into those
Speaker 7: types of things as opposed.
Speaker 8: To actually diversifying.
Speaker 3: You know, that's kind of the question where can we
Speaker 3: find certainty? And I know that's asking a lot given
Speaker 3: these days, but when we think about where we can
Speaker 3: see the tangible return, you have concerns around infrastructure capacity
Speaker 3: and then at the same time and consumer you just
Speaker 3: don't really know how these sorts of features are going
Speaker 3: to be monetized. Which one do you think holds more
Speaker 3: certainty for investors?
Speaker 7: Well, I mean, I think the energy theme has been
Speaker 7: a huge one. It's it comes across and you know,
Speaker 7: so we sit at the junction of hundreds of asset managers,
Speaker 7: so we kind of get a good sense of where,
Speaker 7: you know, the zeitgeist is sort of leaning, and I
Speaker 7: would say to you that the secular trend and energy
Speaker 7: has definitely been a theme.
Speaker 8: I also think people understand that this administration.
Speaker 7: Is probably going to be not like pro growth, but
Speaker 7: you know, helpful and terms of energy centers, you know,
Speaker 7: helping the energy sector in general. Here in the US,
Speaker 7: and I have a view. You know that we're going
Speaker 7: to have to meet the energy demands over the next
Speaker 7: several years and into the next you know, decade, et cetera.
Speaker 8: You're going to have energy sources from everywhere. It just
Speaker 8: is what it is.
Speaker 7: So sustainable, yes, you know, more traditional incumbent. Yes, We're
Speaker 7: just not there yet to kind of transition over to sustainable.
Speaker 7: So I think energy is a play that probably a
Speaker 7: lot of investors have focused on for this and you know,
Speaker 7: particularly with this administration, they see the opportunity set there.
Speaker 8: You know, even before AI.
Speaker 7: Right, our energy needs we're going to increase just looking
Speaker 7: at demographic trends, population growth, you know, parts of the
Speaker 7: world that are moving into a better standard of living,
Speaker 7: which is what we obviously want to see. But all
Speaker 7: of that is going to create energy demands even before
Speaker 7: you get to the AI.
Speaker 4: Trade growth versus value. It's a debate that I've been
Speaker 4: having with guests. I started doing this, Is this finally
Speaker 4: the year? I mean, growth is one every year I've
Speaker 4: been doing this, Is this finally the year that we
Speaker 4: see value?
Speaker 2: I perform?
Speaker 8: It is so hard to be a value manager.
Speaker 7: You know, here's what I would say January effect is interesting.
Speaker 7: It's not statistically significant, but you know, there's a little
Speaker 7: signal in there. January did see out performance of value.
Speaker 7: I think, look the notion that we are higher for
Speaker 7: longer on interest rates. Traditionally speaking, that should benefit value,
Speaker 7: right because more of those cash flows are coming earlier,
Speaker 7: and so when you have a higher discount rate, the
Speaker 7: growth stocks should theoretically be impacted worse by that because
Speaker 7: they have more longer dated cash flows, more years that
Speaker 7: you have to discount by a higher number.
Speaker 8: So yeah, theoretically there's some makings for that there, but.
Speaker 7: We all know the AI trade can just you know,
Speaker 7: and or other secular trends can can just blow that
Speaker 7: out of the water.
Speaker 8: So it's very hard I think in the short run
Speaker 8: to say what will win what won't win.
Speaker 7: I will say, you know, I think at the end
Speaker 7: of the day, valuation will always still matter.
Speaker 8: It matters more for medium term expect and return.
Speaker 7: To try to trade on it in the short run
Speaker 7: is you know, it doesn't have a good track record
Speaker 7: for that.
Speaker 3: There's hope yet for value investors. Dana Doria from Investment
Speaker 3: thanks for joining us Elon Musk's XAI has debuted its
Speaker 3: latest GROP three model, promising advanced reasoning and even a
Speaker 3: new smart search feature. This comes just days after Musk
Speaker 3: made an unsolicited bid to buy Sam Motman's open Ai,
Speaker 3: which was ultimately rejected for more. Bloomberg Intelligence analyst man
Speaker 3: Deep Singh joins us Now, Man Deep, what do you
Speaker 3: make of this model? How does it stack up to
Speaker 3: xai rivals?
Speaker 5: Yeah?
Speaker 9: Look, I think what they have showed is another reasoning
Speaker 9: model that can do well on certain benchmarks, and clearly
Speaker 9: was trained on one of the biggest clusters out there.
Speaker 2: And you think about you know the number of.
Speaker 9: GPUs they use for this model, So is there anything groundbreaking?
Speaker 5: I don't think so.
Speaker 9: But at the same time, what they're showing is all
Speaker 9: these llms are narrowing, you know, the capability gap they
Speaker 9: had with open ai, and I still think open ai
Speaker 9: is the preferred model when it comes to the usage
Speaker 9: and the distribution they have created for themselves. It would
Speaker 9: be interesting to see how much upsale xai can have
Speaker 9: on their own platform, Twitter and whether users are willing
Speaker 9: to pay a subscription. That will be the real test.
Speaker 9: But clearly I think it scores well on all the benchmarks.
Speaker 2: Mandeep.
Speaker 4: Is the market big enough now and in the future
Speaker 4: for Claude, for chat, GPT, for you know, whatever comes
Speaker 4: next that's being worked on right now. Is it smart
Speaker 4: enough for Gemini? Is it big enough for Gemini? Do
Speaker 4: we need all of these?
Speaker 5: Yeah?
Speaker 9: Look, I mean we just got off the earning season
Speaker 9: in the past one month, and it's very obvious that
Speaker 9: everyone is doubling down when it comes to their capex investments.
Speaker 9: So the market is big enough to answer your question.
Speaker 9: At the same time, our view is that the field
Speaker 9: is narrowing when it comes to the foundational model players.
Speaker 9: And that's where, you know, only the ones with deep pockets,
Speaker 9: your hyperscalers or XAI for that matter, that can spend
Speaker 9: on these you know, billion dollar training runs will be
Speaker 9: the ones who would have the foundational models and they'll
Speaker 9: try to roll it out for all the applications to use.
Speaker 4: Bloomberg Intelligence analyst Mandeep saying and joining us here in
Speaker 4: New York, Mandy, thanks so much.
Speaker 2: Well sticking with AI.
Speaker 4: Meanwhile, open ai co founder Ilias at Skimer is looking
Speaker 4: to raise more than one billion dollars for his startup,
Speaker 4: Safe Superintelligence. It could value the company at over thirty
Speaker 4: billion dollars. According to sources. San Francisco based VC firm
Speaker 4: Green Oaks Capital Partners is leading the deal. For more
Speaker 4: Bloomberg's Kate Clark joins US now here in New York.
Speaker 4: So where does this company sit in the AI world?
Speaker 10: Well, this company is brand new. It was founded in
Speaker 10: June of last year, which its valuation even more incredible.
Speaker 10: The company is trying to create a safe superintelligence, so it's.
Speaker 3: All in the name.
Speaker 10: But otherwise we don't know very much about this company.
Speaker 10: It is very secretive, it is very much under the radar,
Speaker 10: and it's just getting started.
Speaker 3: Kate, what do we know about why investors are interested?
Speaker 3: As you mentioned, it's super new, it's not really generating
Speaker 3: much revenue. And you add on to the fact that
Speaker 3: kind of the word safety is almost coming out of
Speaker 3: vogue this year amid a new administration that doesn't really
Speaker 3: seem to put too much importance on responsible AI. What
Speaker 3: do you make of that? Like, what's kind of the
Speaker 3: hook here for a VC that's investing in this company.
Speaker 10: There's one huge clear hook, and that's the founder, Iliasitzkiber, which,
Speaker 10: as you both know, is a co founder of open ai.
Speaker 10: Longtime chief scientists and a chief architect of those aim models.
Speaker 10: People really truly believe that he is a singular force
Speaker 10: and that whatever he builds will be a massive, massive success.
Speaker 10: The company has zero revenue and we won't see a
Speaker 10: product for years most likely, as it seeks to create
Speaker 10: this safe super intelligence. So truly it is all about
Speaker 10: the founder in this one, and that is what's justifying
Speaker 10: this thirty billion dollar valuation, which by the way, makes
Speaker 10: this one of the most highly valued companies in the world.
Speaker 10: And I don't have the statistics in front of me,
Speaker 10: but I think having zero dollars in revenue and evaluation
Speaker 10: that high is pretty rare.
Speaker 4: I feel like you're, you know, you're sort of emphasizing
Speaker 4: the fact that this company doesn't have a product at
Speaker 4: this point and it's all on the founder and it
Speaker 4: could be worth billions of dollars at this point.
Speaker 2: Can we can we say froth or VC saying froth.
Speaker 3: Vcs are saying froth.
Speaker 10: I mean vcs are also saying this is a once
Speaker 10: in a generation moment, and they want to get on
Speaker 10: board with people like Ilia because they do believe that
Speaker 10: they will someone like him can create the next trillion
Speaker 10: dollar company. So if you believe that, then sure it's
Speaker 10: a great moment. But I think outside of you know,
Speaker 10: maybe Ilia is a unique person who really will create
Speaker 10: that super intelligence. But you're seeing tens of billions of
Speaker 10: dollars go into one year old, two year old companies.
Speaker 10: It'll take five to ten years before we know how
Speaker 10: much money venture capitalists will lose, but they will lose
Speaker 10: a lot of money.
Speaker 3: That's Bloomberg's Kate Clark, thanks for joining us. Coming up,
Speaker 3: we speak to Cato Network CEO Shlomo Kramer as the
Speaker 3: company sees a big revenue boost in twenty twenty four.
Speaker 3: This is Bloomberg.
Speaker 4: Elon musk Dos team is said to be attempting to
Speaker 4: gain access to a broad range of taxpayer data, raising
Speaker 4: concern from Democratic lawmakers over privacy concerns. Strict US laws
Speaker 4: prohibit the disclosure of taxpayer data, with some exceptions for
Speaker 4: law enforcement resources.
Speaker 2: The team is seeking the data but has not yet
Speaker 2: accessed it.
Speaker 3: Jackie cybersecurity firm Cato Networks as they surpassed two hundred
Speaker 3: and fifty million in annual recurring revenue for twenty twenty four.
Speaker 3: That's a jump of forty six percent compared to the
Speaker 3: year prior. Here with us is Cato Network CEO Shlomo Kramer. Solomo,
Speaker 3: at a time when companies are really on the hook
Speaker 3: to show that they can deliver, can you tell us
Speaker 3: where this demand is coming from.
Speaker 11: The demand is coming from all sizes of organization that
Speaker 11: faces increased complexity of point solution and are looking for
Speaker 11: a platform to deliver the network security with operational efficiency
Speaker 11: and business agility. So it's all about digitively transforming IT
Speaker 11: security to serve the digitive business.
Speaker 2: Soloma.
Speaker 4: Are you seeing a decline in demand in terms of
Speaker 4: total spent on this sector due to investment in AI
Speaker 4: or are you seeing investment grow here?
Speaker 11: We are seeing consistent increase in spending on IT security. Actually,
Speaker 11: in the four years following COVID, spend of IT security
Speaker 11: out of IT budget has gone forty percent, while we
Speaker 11: are not more secure now than we were four years ago.
Speaker 11: So actually this is actually the increase in spend is
Speaker 11: the core problem that platforms such as Kato solved.
Speaker 2: So how do we get.
Speaker 4: More secure If people are and companies are spending more
Speaker 4: money but they're not seeing the results when it comes
Speaker 4: to security, how do we get more secure?
Speaker 11: We replaced the fifty point products that an average CISO has.
Speaker 11: With three four call platforms, you know, a platform on
Speaker 11: the endpoint, a platform on the cloud, a CATO on
Speaker 11: the network side, all integrated together. It's much more manageable,
Speaker 11: it's much more agile. You can say yes to the
Speaker 11: business and you can fit it within the budget and
Speaker 11: talent that you have.
Speaker 3: Let's talk about venture capital. Investors are pretty excited about
Speaker 3: cybersecurity startups. They raised a bunch of money in twenty
Speaker 3: twenty four. You US raised around in twenty twenty three,
Speaker 3: two hundred and thirty eight million dollars. I mean, is
Speaker 3: an IPO next for you this year?
Speaker 11: As a growth company, we have many different options, both
Speaker 11: public and private, and the real goal here is to
Speaker 11: build a long term leader in this new category called
Speaker 11: SASS platform for network security.
Speaker 3: Do you see that being as a possibility this year though?
Speaker 3: I mean, if you were to perhaps speculate on who
Speaker 3: potential buyers could be, perhaps not just for your company,
Speaker 3: but kind of in the space in general. As we
Speaker 3: see M and A tick up, what are you seeing?
Speaker 2: Well?
Speaker 11: Really heads on, heads down on building CATO and I
Speaker 11: can't I won't circulate on any financing M and a
Speaker 11: events this year.
Speaker 4: What would be the next financial benchmark? Though you did
Speaker 4: say you've surpassed two undred and fifty million in arr
Speaker 4: for twenty twenty four, what's the next benchmark?
Speaker 11: So you know, Governor assess is the market is going
Speaker 11: twenty six percent AEOV to twenty eight billion dollars in
Speaker 11: less than four years, and we last year we go
Speaker 11: much more than that, and we fully expect to go
Speaker 11: this year also more than the market and take market
Speaker 11: share and continue to build the company.
Speaker 4: What would you say is the market size?
Speaker 2: It's a huge market, you know.
Speaker 11: Essentially, a SASE our category is the third generation of
Speaker 11: network security. It replaces the second generation, which are the appliances.
Speaker 11: These are many tens of billions of dollars that are
Speaker 11: going to be re architected and five to seven years
Speaker 11: from now, eighty to ninety percent of appliances are going
Speaker 11: to be replaced by a SASE cloud implementation. So there's
Speaker 11: a huge potential and we are just in the beginning.
Speaker 11: Less than fifteen percent of enterprises have started implemented SASE,
Speaker 11: and more than almost fifty percent of enterprises are saying
Speaker 11: that they are going to implement US in the next
Speaker 11: three years. So this is literally the money time of
Speaker 11: this cut.
Speaker 4: And goalie Shlomo Kramer, CEO of Cato Networks, thanks so
Speaker 4: much for joining us to appreciate it. Welcome back to
Speaker 4: Bloomberg Technology. I'm Tim Stenoveek in New.
Speaker 3: York and I'm Jackie Devalis in San Francisco.
Speaker 4: Let's get a check on the market. So I do
Speaker 4: want to take a look at shares a super Micro,
Speaker 4: which are just surging. Look at that up thirteen percent.
Speaker 4: It's exciting gain three fourth session in a row. This
Speaker 4: after the totally beat up chip maker issued an aggressive
Speaker 4: long term revenue outlook and pledged to meet a Nasdaq
Speaker 4: deadline to file auditive financial results. Super Micro has rallied
Speaker 4: almost ninety percent this month, putting it on track for
Speaker 4: the best month going back to May of twenty twenty three,
Speaker 4: and it looks like it finally could happen meta platforms
Speaker 4: the parent company on Facebook, Instagram, WhatsApp, and more, halting
Speaker 4: that twenty day winning streak, shares adding more than twenty
Speaker 4: percent over that record run, though shares down about two
Speaker 4: point three percent in today's session.
Speaker 2: Well.
Speaker 4: Creators of a new AI chat bought often claim their
Speaker 4: model is the best the website. Chat Bot Arena puts
Speaker 4: those claims to the test, allowing users to test and
Speaker 4: rank these programs, and bans of the site likely knew
Speaker 4: that Deep seeks are one model would challenge us.
Speaker 2: Built rivals Bloomberg.
Speaker 4: Seth Figgerman is here to tell us more about chat
Speaker 4: Bought Arena.
Speaker 2: What happens on this site.
Speaker 12: Well, it seems thinking that the fate and the temperature
Speaker 12: of a billion dollar industry is being largely shaped by
Speaker 12: a bunch of students that you see Berkeley.
Speaker 5: It's basically a blind test.
Speaker 12: You know, people can try out, I think something two
Speaker 12: hundred different models on the site and put two of
Speaker 12: them against each other. They don't know what they are,
Speaker 12: and they'll ask a question and see which one does better,
Speaker 12: and then they'll vote it up or down. And based
Speaker 12: on that crowdsource ranking, we'll see which rankings which models
Speaker 12: are at the top of the leaguerboard. So Deep Seek
Speaker 12: grows up pretty high for months leading up to the
Speaker 12: launch that captivated everyone, and today as we speak, Grock
Speaker 12: three is rigging high there too, So it's become a
Speaker 12: real bragging right for some of the industry.
Speaker 3: But Seth talk to us about some of the risks
Speaker 3: of some of these crowdsourced platforms that allow us to
Speaker 3: benchmark how well one model is versus another. What can
Speaker 3: go wrong?
Speaker 12: Yeah, it's a great question. I mean, first off, it's
Speaker 12: not definitive. It seems definative, But these are systems that
Speaker 12: could be rigged, and they're starting not being tests for
Speaker 12: every different use case. I think the real point here
Speaker 12: is that one, there are not that many, you know,
Speaker 12: really agreed upon benchmarks right now for AI systems, and
Speaker 12: as these systems get better, there's even fewer. I think
Speaker 12: you're seeing hyperbolic name things like Humanity's last Exam for example,
Speaker 12: as a mogul with test that with And I think also,
Speaker 12: you know, at the end of the day, a lot
Speaker 12: of this as vibes. You know, these systems are all
Speaker 12: kind of similarly competitive right now, so what might feel
Speaker 12: good for one person may feel different for another.
Speaker 3: Always the vibes Bloomberg set viagram and thanks for joining us.
Speaker 3: Concerns around AI safety appear to be shifting, and companies
Speaker 3: and governments are starting to change the language they use
Speaker 3: to talk about the topic. Doctor Margaret Mitchell is the
Speaker 3: chief Ethics Scientists for hugging Face, an open source platform
Speaker 3: for building and training AI. Margaret talked to us about
Speaker 3: the shift and tone that we're seeing not just from
Speaker 3: lawmakers but also from companies as they're starting to really
Speaker 3: reckon with the fact that weren't a completely different eras
Speaker 3: or relates to AI safety.
Speaker 13: Yeah, so in the US, we've seen a shift with
Speaker 13: US companies so like Meta and Google removing some of
Speaker 13: the language that they had in their various terms of
Speaker 13: use and sort of responsible practices. So it's less focused
Speaker 13: on things like accountability, less focused on not participating in
Speaker 13: surveillance that sort of thing, and less of a focus
Speaker 13: on this general concept of safety. And there was recently
Speaker 13: this AI Action summit where jd Vance came and spoke
Speaker 13: and said that he thinks that the focus should now
Speaker 13: be on opportunity and it seems like the larger tech
Speaker 13: companies are our following suit on.
Speaker 4: That, Margaret, If the large tech companies aren't necessarily the
Speaker 4: ones who put the framework into place when it comes
Speaker 4: to rules regulations, does the government need to step in?
Speaker 2: What's your view there?
Speaker 13: Yeah, So my view of the role of government, and
Speaker 13: people have different views here, is that the government should
Speaker 13: be set up to protect the people, not to protect companies,
Speaker 13: you know, creating a marketplace of ideas that companies can
Speaker 13: sort of thrive in, but ultimately stepping in where companies
Speaker 13: can't step in, in order to make sure that there's
Speaker 13: a level playing field that everyone can do the responsible
Speaker 13: thing within the context of market dynamics where you might
Speaker 13: accidentally destroy your company if you're trying to do all
Speaker 13: the things that are the best for the people. Right Like,
Speaker 13: companies exist to make money, and so there needs to
Speaker 13: be a counterbalance that sort of thinks about, well, what
Speaker 13: if we're not making money, what if we care about people,
Speaker 13: and what can we put in place for all companies
Speaker 13: to abide, buy and then change the market place dynamics
Speaker 13: in light of that leveled playing field.
Speaker 4: Well, David Sachs's Crypto and AIS are you confident that
Speaker 4: the Trump administration will put into place policies that will
Speaker 4: protect people.
Speaker 14: I think the jury is still out on that.
Speaker 13: There definitely is interest in growing the economy, so they've
Speaker 13: spoken a lot about creating healthy competition that sort of thing.
Speaker 14: I haven't seen.
Speaker 13: As much of their thoughts on protecting people and what
Speaker 13: that is. I think right now there's sort of a
Speaker 13: reactionary force. So there's always pendulum swings and ethics. People
Speaker 13: care a lot about ethics and safety and things like that,
Speaker 13: and then people absolutely do not. I think we're having
Speaker 13: a little bit of a pendulum swing right now, back
Speaker 13: to not being.
Speaker 14: As concerned about foreseeable risks.
Speaker 13: But you know, hopefully the government will listen to the
Speaker 13: will of the people and step in where no one
Speaker 13: else will help them.
Speaker 3: Margaret, Just a couple of years ago, we had companies
Speaker 3: and just a wide swath of the AI community coming
Speaker 3: out and highlighting the existential risks. Some of these AI
Speaker 3: safety groups of dubbed as dooomer types if you will.
Speaker 3: Elon Musk has a growing influence in Washington, and he's
Speaker 3: been one of those at the forefront of kind of
Speaker 3: highlighting these existential risks as he's building his own AI technology.
Speaker 3: What do you make of his influence, but also the
Speaker 3: existential risks that have been raised before.
Speaker 14: Yeah, so there's a lot to unpack there. This is
Speaker 14: a really big discussion in ethics circles.
Speaker 13: There's a little bit of an issue where people who
Speaker 13: focus on existential risks tend to drown out the concerns
Speaker 13: about current discrimination, so that causes a little bit of
Speaker 13: tension in ethical discussions. Elon Musk in particular, I'm pretty
Speaker 13: concerned about the role he has throughout the government right now,
Speaker 13: but within that's a AI in particular, he doesn't seem
Speaker 13: to be someone who would really stand up for making
Speaker 13: sure technology is not discriminatory or doesn't disproportionately harm some subpopulations.
Speaker 14: So there's a pretty big risk there.
Speaker 13: Existential risk is now less of an issue within the
Speaker 13: past few months, we've seen some stepping down from that
Speaker 13: as part of these pendulum swings, and so one would
Speaker 13: hope that that would mean that the immediate and current
Speaker 13: harms of AI would have more of a center stage.
Speaker 13: But as it seems to be right now, neither current
Speaker 13: harms nor foreseeable harms are really much of the focus.
Speaker 3: Even coming out of the Paris AI Action Summit, so
Speaker 3: much of the language shifted from safety to security, the
Speaker 3: UK Safety Institute being rebranded as the UK Security Institute.
Speaker 3: Where should we look to as a leader for you know,
Speaker 3: how to build not just innovative technology but also responsible
Speaker 3: AI technology.
Speaker 13: Yeah, so there's a bunch of different ways to kind
Speaker 13: of approach This one is via governments, and one is
Speaker 13: via different companies. So like one the company I work for,
Speaker 13: Hugging Face, takes an approach of being transparent and open
Speaker 13: because that's a way of making yourself accountable to people.
Speaker 13: So even in the in marketplace dynamics where you're sort
Speaker 13: of going for profit, you also have to show your
Speaker 13: work and that you're doing responsible things. So this is
Speaker 13: an area where openness can really be helpful in helping
Speaker 13: drive forward responsible practices. And then you know, there's also
Speaker 13: been a lot of really nice work in the EU
Speaker 13: on legislation. The EU and the US are not currently
Speaker 13: fully aligned on what to prioritize, but I've definitely appreciated
Speaker 13: a lot of their work on legislation that looks at
Speaker 13: foreseeable harms and risks as well as benefits.
Speaker 2: Margaret, what are the stakes here? Like?
Speaker 4: What could go wrong if we don't get this right
Speaker 4: as a society.
Speaker 13: Yeah, So we're in a situation right now where there's
Speaker 13: a large centralization of power for the AI companies and
Speaker 13: the larger ones, and they're accruing a lot of wealth
Speaker 13: while a lot of other people are losing their jobs,
Speaker 13: and so there's more and more of a divide between
Speaker 13: the have nots and the have yachts, as Trudeau said recently,
Speaker 13: So you're really seeing that the wealthy people are getting
Speaker 13: wealthier and people who are just struggling by are losing
Speaker 13: their jobs or having their data used in these AI
Speaker 13: systems that then the larger tech companies are benefiting from
Speaker 13: while they can't even get you a basic basic income.
Speaker 14: So this massive divide is happening right now.
Speaker 13: There has been like some discussion about UBI like universal
Speaker 13: basic income, but I haven't seen that really moving forward
Speaker 13: in the AI world, despite the great idea there. And
Speaker 13: so that's happening now. And then that also means that
Speaker 13: people who are dis powered are going to be more
Speaker 13: subject to things like surveillance, more subject to non consensual
Speaker 13: usage of their content kind of way that it can
Speaker 13: be used to further harm them, you know, not give
Speaker 13: them the medical benefits they need, this sort of thing
Speaker 13: because of something they had said on social media. You
Speaker 13: can get into really nasty territory in terms of the
Speaker 13: rights to the general public, the rights that people have.
Speaker 4: Hugging faces Chief Ethics Scientists Margaret Margaret Mitchell, thanks so
Speaker 4: much for joining us, Margaret, do appreciate it well. Now
Speaker 4: Carson Block, founder and CEO of short Sellar Muddy Waters
Speaker 4: sat down with Bloomberg's Huslinda Men to discuss Elon Musk's
Speaker 4: Empire and Testless Future in particular.
Speaker 2: Check it out.
Speaker 15: It's one thing to ask whether you bet on Elon Musk,
Speaker 15: but I would not bet against him, So I don't
Speaker 15: count the capital structure arbitrage trade is betting against him
Speaker 15: because it was pretty edged.
Speaker 2: Maybe that's me being.
Speaker 15: Intellectually disingenuous, but I wouldn't bet against him.
Speaker 5: Now.
Speaker 15: In terms of the robotaxis literally, I think he's been
Speaker 15: saying that Tesla's robotaxi capability is imminent. I think he's
Speaker 15: been saying that since twenty sixteen, So you know, take
Speaker 15: take that with a grain of salt, and you do
Speaker 15: see in the US in Weimo is offering robotaxi services
Speaker 15: where I live in Austin, it won't drive on the freeways.
Speaker 7: You know.
Speaker 15: My understanding is that Tesla's technology, because they won't use lidar,
Speaker 15: is not up to par with with Weimo.
Speaker 2: Or even with Cruise. So yeah, I'd be skeptical of that.
Speaker 15: I mean, do they find appliable local or state government
Speaker 15: somewhere in the US that says, okay, you can run
Speaker 15: the service here.
Speaker 8: Yeah.
Speaker 15: Maybe, but I don't think it's you know, I mean
Speaker 15: even WEIMO is not ready for prime time if you're
Speaker 15: not driving on the freeway.
Speaker 14: So, Carson, would you be a buyer of Tesla.
Speaker 3: Then or not?
Speaker 15: Well, I'll check with the quantitative screen that we have
Speaker 15: and let you know.
Speaker 16: But as it stands now, as it stands now, I mean,
Speaker 16: given where he is with Trump, given his relationship with Trump,
Speaker 16: given the chances of him being able.
Speaker 3: To influence regulation for instance displayed.
Speaker 2: Ge you calculation, Well, that's really a double edged sword.
Speaker 15: And one of the things that I was just you know,
Speaker 15: marveling over on the sixteen and a half hour flight
Speaker 15: here was when you look at how Elon Musk has
Speaker 15: really changed his positioning politically over the years. It needs
Speaker 15: to be darling of the left right, you know, pounding
Speaker 15: the table that oh, we need to electrify the economy,
Speaker 15: we need electric cars or else we're going to die
Speaker 15: as a civilization. We're killing ourselves with CO two emissions,
Speaker 15: et cetera.
Speaker 2: I mean, politically, we know that.
Speaker 15: He's totally switched Poles, but I mean he's allied himself
Speaker 15: very closely with the no, let's be realistic here about
Speaker 15: energy transition. If we're going to transition, we need natural gas,
Speaker 15: nuclear and you know, electrification is a pipe dream. We
Speaker 15: don't have the battery technology. I mean, that's what the
Speaker 15: smarter people on the right, and I happen to agree
Speaker 15: with those views. That's what they're saying. So Elon Musk
Speaker 15: is now aligned with them. So my question is with
Speaker 15: all the focus that he's putting, all the energy is
Speaker 15: putting into Doge, which, by the way, I'm ahead of
Speaker 15: the election, I had no idea whether this was really
Speaker 15: just him trying to be a provocateur or whether.
Speaker 2: He was serious.
Speaker 15: He's serious, he's really focusing on on this Doge, and
Speaker 15: I think he's actually doing some very interesting things there.
Speaker 15: But my question then is in his head, has he
Speaker 15: basically has he admitted.
Speaker 2: To himself that Tesla is.
Speaker 15: It's never going to be. It's that electric vehicles are
Speaker 15: a long long way away from supplanting ices, and that
Speaker 15: it's really a niche product, and that it's you know,
Speaker 15: and has he convinced himself that no, we shouldn't be pushing,
Speaker 15: you know, running head you know, headfirst into trying to
Speaker 15: electrify the grid or trying to electrify our economy. I
Speaker 15: wonder if he's I suspect he has switched views on
Speaker 15: a macro level, but especially with how he thinks about Tesla,
Speaker 15: that would be a little bit embarrassing for him to
Speaker 15: say publicly. So yeah, maybe just banging the table about
Speaker 15: oh ai AI and robotaxis is how he tries to
Speaker 15: cover up that sentiment shift internally.
Speaker 3: That was Muddy Waters founder and CEO Carson Block, along
Speaker 3: with Bloomberg's has Linda. I'm in coming up big text,
Speaker 3: big pullback from DEI. The CEO of inclusion benchmarking platform
Speaker 3: Paradigm joins us. Next, this is Bloomberg.
Speaker 4: Well, following the lead of the Trump administration, some tech companies,
Speaker 4: including Google, Meta, and Amazon are scrapping or rolling back
Speaker 4: DEI diversity, equity.
Speaker 2: And inclusion programs.
Speaker 4: For more on what this change of direction could mean,
Speaker 4: we're joined by Joel Emerson. She's the co founder and
Speaker 4: CEO of Paradigm. It's a platform that helps companies improve
Speaker 4: and benchmark inclusion efforts. Joelle, good to see you. You know,
Speaker 4: I'm curious, I would imagine you kind of have a
Speaker 4: problem with the premise of the question here, because you
Speaker 4: argue that these companies are not in fact rolling back
Speaker 4: their DEI programs. But I got to tell you, it's
Speaker 4: what it looks like to me.
Speaker 17: You know, I think it's a moment of evolution. Definitely,
Speaker 17: the legal, political.
Speaker 14: Social landscapes are changing.
Speaker 17: But what I see, especially from the companies that we
Speaker 17: work with, is this desire to refocus efforts on programs
Speaker 17: that create fair and inclusive cultures for everyone.
Speaker 14: And the good news is that that's a goal that's.
Speaker 17: Pretty universally popular, and I think, you know, that's going
Speaker 17: to require us some evolution. It's going to look like
Speaker 17: a shift away from maybe some of the more performative
Speaker 17: or high visibility but less impactful to employees types of
Speaker 17: programs that companies might have been focused on, the last
Speaker 17: several years. And I don't think that's necessarily a bad thing, Joell.
Speaker 3: For some of the people that this might affect, the
Speaker 3: underrepresented groups, people of color, women, it's somewhat emboldening when
Speaker 3: you see companies really taking a stand and making their
Speaker 3: stands known publicly. What are some of the drawbacks though,
Speaker 3: of perhaps pulling some of this language back, Even while
Speaker 3: some of these programs are still going on behind the scenes.
Speaker 17: I think the risk is that companies are going to
Speaker 17: signal in some of their messaging that they no longer
Speaker 17: care about casting a wide net for talent. They no
Speaker 17: longer care about building cultures where people from all backgrounds
Speaker 17: and all identities can come together and do their best
Speaker 17: work and thrive, which, you know, communicating that you care
Speaker 17: about those things is actually pretty essential to building a
Speaker 17: future ready company. It's the type of thing that attracts
Speaker 17: the best employees. It's the type of thing that unlocks
Speaker 17: engagement and performance. When you feel like you belong, you
Speaker 17: believe your company cares about these things. So I think
Speaker 17: what companies should do if they truly do still care
Speaker 17: about those goals but just don't want to be associated
Speaker 17: with this now highly charged acronym DEI is communicate more
Speaker 17: precisely about what it is they're actually going to be doing.
Speaker 14: So maybe they are no longer.
Speaker 17: Going to be tying you know, executive compensation to hitting targets, which,
Speaker 17: by the way, is the type of thing we haven't
Speaker 17: seen be all that impactful. It's focused on sort of
Speaker 17: one of the most lagging indicators of whether you're building
Speaker 17: an equitable, inclusive culture and instead talking about how are
Speaker 17: we going to build a culture for everyone? How are
Speaker 17: we going to take a look at what's happening in
Speaker 17: our hiring process and make sure that people from all
Speaker 17: backgrounds have a fair shot at getting hired here, How
Speaker 17: are we going to make sure that we're looking at
Speaker 17: things like who gets promoted or who stays and who leaves,
Speaker 17: and if we're consistently looking at those things and we're
Speaker 17: addressing any problems that we identify, I think that'll help
Speaker 17: employees understand that, you know, the acronym wasn't.
Speaker 14: Really what mattered.
Speaker 17: What mattered is are we actually doing the things that
Speaker 17: make our culture more diverse, more fair, more inclusive. And
Speaker 17: those are actually the types of things that buy and
Speaker 17: large I see companies continuing to.
Speaker 4: Focus on I imagine that you have data that shows
Speaker 4: that there's a business case for doing this. If that
Speaker 4: is indeed the case, then why doesn't the free market
Speaker 4: solve this? Or do you think that the free market
Speaker 4: could solve this?
Speaker 17: I actually think the free market does solve this to
Speaker 17: some extent, which is why I'm not that concerned that
Speaker 17: companies are going to stop doing the things that help
Speaker 17: them compete for the best talent that help them build
Speaker 17: cultures that unlock performance.
Speaker 14: But I think the business case is complicated.
Speaker 17: It's not true that you just make your team, you know,
Speaker 17: somewhat marginally more diverse, and magic happens in your share
Speaker 17: price goes up. I think you know what actually tends
Speaker 17: to unlock performance, what actually tends to drive better business outcomes,
Speaker 17: is some of the hard work of building a healthy
Speaker 17: and inclusive culture. Culture is where people are going to
Speaker 17: speak up if they have an idea that might diverge
Speaker 17: from the norm. Cultures where people who are different from
Speaker 17: each other, which is increasingly true as workplaces just become
Speaker 17: more diverse because the population is becoming more diverse. Creating
Speaker 17: a culture where people who are different from one another
Speaker 17: can come together and collaborate effectively and communicate effectively. These
Speaker 17: things really do matter to company performance, and I don't
Speaker 17: always think it's so obvious whether you're doing that, or
Speaker 17: whether or not or you know, companies are pretty complex.
Speaker 17: It's not always obvious which things are contributing to which outcomes.
Speaker 17: So I think it's important to continue to remind companies
Speaker 17: that you know, a lot of the things that formerly
Speaker 17: might have been categorized under the bucket of DEI are
Speaker 17: actually pretty universally popular and uncontroversial. Things like making sure
Speaker 17: that you're opening up access to your company to people
Speaker 17: from different backgrounds, like veterans who might not have known
Speaker 17: about the technology industry. Things like robust parental leaf policies
Speaker 17: so that caregivers can return to work and continue their
Speaker 17: careers after taking time off to have a child.
Speaker 14: Things like promotion practices that.
Speaker 17: Make sure that we're applying the same standards to everyone
Speaker 17: so it's the actual best person and not just the
Speaker 17: person who's closest friends with the manager who has an
Speaker 17: opportunity to grow. The vast majority of things that we
Speaker 17: categorize previously under this bucket of DEI, they help companies
Speaker 17: perform better, they make organizations more fair, and the vast
Speaker 17: majority of people think they're a good idea.
Speaker 14: And those are the types of things that I just
Speaker 14: don't see companies shifting.
Speaker 3: Away from that. Show Elamerson, CEO of Paradigm, thanks for
Speaker 3: joining us. Coming up, we'll discuss what to expect from
Speaker 3: Apple's event tomorrow. This is Bloomberg Apple CEO Tim Cook
Speaker 3: teasing last week the arrival of quote the newest member
Speaker 3: of our family, Bloomberg Intelligence analyst Anna A. Grano, joins
Speaker 3: us now with more anrog what can we expect next week?
Speaker 18: It's really looking forward to their the cheapest phone that
Speaker 18: they have, the iPhone. I see coming up with a
Speaker 18: big bang. Mark Gorman's already told us about it in
Speaker 18: terms of the foster processor and the larger screen. I
Speaker 18: think this is a good thing for Apple because they're
Speaker 18: really struggling to really break the market share both in
Speaker 18: China and India and Brazil in terms of getting a
Speaker 18: bigger piece of that pie, and a cheaper phone can
Speaker 18: really help them do that.
Speaker 3: That's Bloomberg Intelligences, Anna Igrana, thanks for joining us, and
Speaker 3: that does it for this edition of Bloomberg Technology. Don't
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