Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is live
Speaker 1: from coast to coast with Caroline Hyde in New York
Speaker 1: and Ed Lolow in San Francisco.
Speaker 2: Miss Bloomberg Tech coming up ASML says bookings for its
Speaker 2: most sophisticated chip making machines remain resilient thanks to the
Speaker 2: AI boom.
Speaker 3: That's a whirlwind of data center.
Speaker 2: News and Microsoft cutting a fourth deal. Then Scale among
Speaker 2: others will break it all down, and Apple updates its
Speaker 2: top of the line. I've had pro when other products
Speaker 2: with its own in house chip first a SML the
Speaker 2: maker of EUV equipment, the most sophisticated chip equipment that
Speaker 2: then get sent to key partners around China but also
Speaker 2: around Asia, and they're showing strong bookings. Let's get the
Speaker 2: details of Bloomberg's equities reporter Henry Wren And what's so
Speaker 2: important is it? The EUV Extreme Ultra Violet lithography machines
Speaker 2: seem to be being still snapped up even as China
Speaker 2: has to pull away eventually.
Speaker 4: Yeah, so thanks for having me and for this quarter,
Speaker 4: which is the market focus. Is this EUV order's number
Speaker 4: and has risen to the highest level since late twenty
Speaker 4: twenty three, a huge plus for investors, and that's why
Speaker 4: we've been seeing stock trading higher now. So we know
Speaker 4: that actually mainland China investor chip makers they can't order
Speaker 4: EUV tools directly. They can access a less advanced tool
Speaker 4: called DUV. But it really is a sign that some
Speaker 4: other chip makers, including Samsung in South Korea, including TSMC
Speaker 4: in Taiwan, is stepping up, and to investors, it's an
Speaker 4: early sign that this rapid increase in AI infrastructure is
Speaker 4: actually translating to the orders that ASML has been seeing
Speaker 4: so far in this quarter.
Speaker 2: Interesting is the dominance of Asia as the demand flow
Speaker 2: us starting to pick up for ASML's equipment.
Speaker 3: But they're in the heart of the geopolitical tension right now.
Speaker 2: They must be exposed to concerns around rare earth metals,
Speaker 2: let alone an ability to have to pull away from
Speaker 2: selling into China.
Speaker 5: Yeah.
Speaker 4: Indeed, a lot of discussions on rare earth in the
Speaker 4: morning as well, and ASML said that it has stacked
Speaker 4: enough rare Earth's materials for at least several months because
Speaker 4: realize that we realize that the market has a lot
Speaker 4: of concerns regarding chip equipment makers reliance on those metals
Speaker 4: because analysts said that although in terms of rare earths
Speaker 4: the total material input for ASML, it just accounts for
Speaker 4: a very small amount, but it's still a very critical
Speaker 4: component for its most advanced EUV machines as you mentioned,
Speaker 4: but also for its partners for example, because ASML works
Speaker 4: with other partners for mirrors, for other components for uvs
Speaker 4: as well, so it's a very important ingredient into the
Speaker 4: EUV machines. But so far the company said that it
Speaker 4: hasn't seen major impact.
Speaker 2: Most valuable European stock, Henry Ren, we appreciate the breakdown
Speaker 2: on ASML. Let's stick with that very company in the
Speaker 2: Broader AI conversation. Andrew gardners with us the City Research
Speaker 2: how of European Technology Equity Research, and you have a
Speaker 2: bio rating on a SML, you have a price target
Speaker 2: of more than a thousand euros.
Speaker 3: What takes us there?
Speaker 6: Andrew, good morning, Thank you for having me. Yes, we
Speaker 6: continue to be bullish on ASML, and I would say
Speaker 6: you know this morning's results and the orders in particular
Speaker 6: that you are highlighting with Henry just now are a
Speaker 6: step in the right direction in terms of the potential
Speaker 6: appreciation of this stock. I really think we've we've been
Speaker 6: on a journey over the last year in terms of
Speaker 6: resetting a base for twenty twenty six, and they have
Speaker 6: confirmed this morning that you expectations are at a reasonable level.
Speaker 6: They don't want to yet go so far as to
Speaker 6: call out growth, but at least going to decline next year,
Speaker 6: and I think that's removed one of the key uncertainties
Speaker 6: for the stock, and that's helped to get us to
Speaker 6: where we are today, just shy of nine hundred euros.
Speaker 6: In terms of further appreciation from here, it's all about
Speaker 6: the growth beyond twenty twenty six in my view, and
Speaker 6: that really comes down to some of what you've been
Speaker 6: alluding to with the demand coming from the artificial intelligence
Speaker 6: players into the data center here. Clearly there's a lot
Speaker 6: of momentum in terms of the news flow ASML management.
Speaker 6: We're highlighting that just recently on the conference call. It's
Speaker 6: not yet fully reflected in their order flow, but it's
Speaker 6: something that we expect to come in the future quarters,
Speaker 6: and so it's really that momentum that we'll drive the
Speaker 6: stock higher.
Speaker 2: I love that you say that, Andrew, because I pulled
Speaker 2: this part from your note, which I think was really
Speaker 2: important for our viewers because in particularly say sml acknowledge
Speaker 2: basically the momentum in the chip industry and market more Braorley,
Speaker 2: but this is not yet reflected in firm orders, and
Speaker 2: there's a growing disconnect in the industry between the mirriaud
Speaker 2: of AICHIP deals being announced and the amount of spend
Speaker 2: committed to these equipment companies.
Speaker 3: When will it show up?
Speaker 2: Are you really confident that it will show up, because
Speaker 2: many are questioning the absolute financing of some of these orders.
Speaker 5: Yeah.
Speaker 6: I think it's a critical question for this space, as
Speaker 6: it has been talked about already this morning on this program.
Speaker 6: You're seeing all of these deals being announced by the
Speaker 6: likes of Nvidia, open Ai committing to certain volumes at AMD,
Speaker 6: in Nvidia, the memory companies, and yet ASML sure was
Speaker 6: a healthy order intake of five billion euros, but nothing
Speaker 6: too out of the ordinary for them. You know, certainly
Speaker 6: they've had stronger quarters in terms of order intake. So
Speaker 6: I do think given the lead times in particular, we
Speaker 6: are going to see need to see orders pick up
Speaker 6: in the coming quarters in order to support the future
Speaker 6: demand that's been talked about by the artificial intelligence sector
Speaker 6: in particular. For example, ASML, on the EUV tools that
Speaker 6: you've already highlighted, their lead times are roughly twelve months,
Speaker 6: So even if you're ordering today in the fourth quarter,
Speaker 6: you're not going to get those tools until the fourth
Speaker 6: quarter of next year, ramping production into twenty twenty seven.
Speaker 6: So the lead times are quite long, and therefore the
Speaker 6: supply chain needs to be prepared for that ramp to come.
Speaker 2: Andrew, you don't cover the stocks in particular, but if
Speaker 2: you are thinking about an announcement coming from Nvidia saying
Speaker 2: we're going to be there with thousands of chips ready
Speaker 2: by twenty twenty six to be put into which have
Speaker 2: a data center that open Air has just asked for, and.
Speaker 3: The AMD as well, do you think the backlog is.
Speaker 2: There that they've got them the inventory to be able
Speaker 2: to sustain the twenty twenty six dates that we keep
Speaker 2: getting from these companies.
Speaker 6: So in terms of thinking through the supply chain, you
Speaker 6: take ASML as a critical supplier, the only one in
Speaker 6: the world who can supply the EUV tools that necessary
Speaker 6: for many of these chips. They are close to but
Speaker 6: not quite fully booked for twenty twenty six deliveries. That
Speaker 6: will be the case by the end of twenty twenty five,
Speaker 6: given that twelve month lead time, and so really the
Speaker 6: capacity that is already planned to be installed next year,
Speaker 6: Sure there could be a little bit of upside, but
Speaker 6: we're already getting close to the limits, and really, as
Speaker 6: I described earlier, what you're playing for is the growth
Speaker 6: into twenty twenty seven. SML management this afternoon here in
Speaker 6: Europe commented on the fact that they don't have perfect
Speaker 6: visibility because those orders aren't there yet, but they are trying.
Speaker 6: They're acknowledging the growth in the industry, the demand that
Speaker 6: is coming, and they're trying to prepare themselves and indeed
Speaker 6: their suppliers to be able to make sure that they
Speaker 6: are not going to be a bottleneck into future years.
Speaker 2: What was so notable about this quarter just gone that
Speaker 2: they reported on for SML was the forty two percent
Speaker 2: exposure still to China in terms of revenue. How much
Speaker 2: smaller will that became lad eventually?
Speaker 6: Yeah, So they have called that out in terms of
Speaker 6: the expectation for twenty twenty six and saying it's going
Speaker 6: to decline significantly unquote into next year. I would say,
Speaker 6: on a year to date basis through September, they're at
Speaker 6: about thirty two percent of system sales into China. As
Speaker 6: you point out, that was higher in the third quarter
Speaker 6: at about forty two percent, So they're still generating very
Speaker 6: strong business in China at the moment. They're just saying
Speaker 6: given the extended level of spend this year, last year,
Speaker 6: indeed the year before that, they think it should normalize
Speaker 6: into the future. At the moment, though, with the restrictions
Speaker 6: in the way that they are, the Chinese companies are
Speaker 6: ordering what they can and so yeah, we'll just have
Speaker 6: to see exactly how that pans out into twenty twenty six.
Speaker 6: The lead times for the type of tools that the
Speaker 6: Chinese customers are buying are not twelve months in the
Speaker 6: way that they are for EUV They're much shorter, six months,
Speaker 6: perhaps even less in some cases. So again, things could
Speaker 6: as we look into twenty twenty six.
Speaker 2: Andrew, you cover ASML and the who's who of the
Speaker 2: European hardware sector.
Speaker 3: We appreciate you being on the show today.
Speaker 2: Andrew Gardner of City Research, Apple updated this.
Speaker 3: Top of the line iPad pro.
Speaker 2: As well as this vision pro headset and the fourteen
Speaker 2: inch MacBook Pro, rounding out a series of product refreshes,
Speaker 2: all ahead of the crucial holiday shopping season that the
Speaker 2: new products all use Apple's latest in house chip five.
Speaker 2: US Consumer Tech editor Mark German joins us for more.
Speaker 2: How impactful is it that they're going yet more and
Speaker 2: more on their own supply chain, their own hardware.
Speaker 7: Well using in house chips, of course, is you know,
Speaker 7: paramount to what Apple has been doing under Tim Cook
Speaker 7: for the last you know, a decade and a half
Speaker 7: or so. But in terms of these new products today,
Speaker 7: this is probably the most minor set of Apple product
Speaker 7: refreshes that I could remember in recent history. What they've
Speaker 7: done here is essentially taking design from prior years, the
Speaker 7: iPad pro design from last year, the MacBook Pro design
Speaker 7: they've been using since twenty twenty one. Obviously, the Vision
Speaker 7: Pro rolled out at the beginning of twenty twenty four,
Speaker 7: and they put.
Speaker 5: New processors inside.
Speaker 7: So for the Vision Pro, going from the M two
Speaker 7: to the M five, that is a size of a leap.
Speaker 5: The UI should be a bit smoother.
Speaker 7: The device is now more comfortable, but still thirty five
Speaker 7: hundred dollars. So the fundamentals of the product have not
Speaker 7: changed to any major extent the MacBook Pro. What they've
Speaker 7: done here is they've split the line in terms of
Speaker 7: rollout timing between the entry level and the high end.
Speaker 7: So the high end machines with higher end versions of
Speaker 7: the M five chip that won't come out until early
Speaker 7: next year, and then of course the iPad pro that
Speaker 7: got a gigantic upgrade with the M four version last year.
Speaker 7: So this is about just bringing up to the latest
Speaker 7: processor in terms of upgrades. Very unlikely that anyone should
Speaker 7: or will upgrade if they have the last generation versions
Speaker 7: of those products, but ahead of the holiday season and
Speaker 7: they keep everything humming.
Speaker 2: So if we want something really new, we have to
Speaker 2: think about the new home devices eventually coming on tap.
Speaker 2: There's a great story on the terminal about where these
Speaker 2: are coming from. It seems as though they're leaning less
Speaker 2: on China all at the same time as Tim Cooks
Speaker 2: trying to say he's going to invest more in the country.
Speaker 5: Yeah, both can be true.
Speaker 7: They're going to up their investment in China, but at
Speaker 7: the same time, for some newer products they're going to differentiate,
Speaker 7: they're going to diversify. They're working with BYD obviously known
Speaker 7: as a electric car maker predominantly in Asia. They also
Speaker 7: do mass manufacturing. They've been doing some final assembly for
Speaker 7: Apple for some iPads over the last year or so.
Speaker 7: They're going to do these new devices. Why is that interesting?
Speaker 7: Typically when Apple rolls out an entirely new product category,
Speaker 7: they start with China. This time around, they're starting with Vietnam,
Speaker 7: where they already, like I said, make some iPads. They
Speaker 7: make the vast majority of Apple watches and air pods
Speaker 7: for the US market, and they also make.
Speaker 2: Some home podsloomg's Mark German always with the latest, We
Speaker 2: so appreciate it. Meanwhile, in China, a fatality involving Shaomi's
Speaker 2: SU seventy and v saidan when it's renewed. Scrutiny on
Speaker 2: flush door handle designs bystanders were unable to open the
Speaker 2: doors for the vehicle to rescue a suspected drunk driver
Speaker 2: during a collision, who died when the vehicle burst into flames. Now,
Speaker 2: flush door handles they've recently come under scrutiny globally, Tesla
Speaker 2: now facing an investigation after the Bloomberg reported incidents related
Speaker 2: to the door design, and Rivian also saying they'll be
Speaker 2: redesigning their handles in an upcoming future model. For more,
Speaker 2: Bloomberg's Creatudel joins us and your team have been so
Speaker 2: on top of what has become a global concern about
Speaker 2: the design of door handles in the latest evs.
Speaker 8: Yeah, and the big concern here, I feel like in
Speaker 8: these issues of crashes and battery fires is particularly the
Speaker 8: troubles that people are having with getting into these vehicles
Speaker 8: from the outside. Yes, there are issues with mechanical releases
Speaker 8: that are different from inside the inside the vehicle and
Speaker 8: different from the typical way you get out of the vehicle.
Speaker 8: But what's really I think alarming for people and particularly
Speaker 8: for first responders, is if these door handles are built
Speaker 8: from the outside to where they just aren't operable when
Speaker 8: the low voltage battery fails or sort of you know,
Speaker 8: purposely goes out of commission to sort of prevent against
Speaker 8: these battery fires. You're just not able to get into
Speaker 8: the vehicle without bashing through a window or some other means.
Speaker 8: And so to have built a vehicle where the external
Speaker 8: door handles are inoperable without low voltage battery, that's just
Speaker 8: a problem and sort of on its face a concern
Speaker 8: for regulators.
Speaker 2: Well, why we might see a rush of buying many
Speaker 2: hammers and cutters to go inside vehicles At the moment, Craig,
Speaker 2: which the latest purchase I've just made, It might be
Speaker 2: focused on the regulatory pushback, and you're seeing China in
Speaker 2: particular looking for feedback open comment by November twenty ten,
Speaker 2: November the twenty second. But what else are we expecting
Speaker 2: Chinese regulators to do here?
Speaker 8: Yeah, I think it's interesting that you know this is
Speaker 8: this has been spurred. This rulemaking and this soliciting of
Speaker 8: views from the industry got underway because there was a
Speaker 8: similar incident back in March, also involving a Gaomi vehicle.
Speaker 5: Uh.
Speaker 8: And so we've seen the regulator in China move pretty
Speaker 8: quickly here in terms of you know, there was an
Speaker 8: incident that got a lot of attention, there's this second incident,
Speaker 8: and I think interestingly we may see some manufacturers not
Speaker 8: necessarily wait for the regulator to change the rules. I
Speaker 8: think Linda LUs a story about this latest incident out
Speaker 8: today goes into this idea that you know, some manufacturers
Speaker 8: already are changing their their door handled designs to take
Speaker 8: into account that this is a concern. And I think
Speaker 8: one of the things that we've seen in China's car
Speaker 8: market is just the level of competition is so intense
Speaker 8: that any way you can sort of sell your cars
Speaker 8: being incrementally better from different performance aspects, including safety. You're
Speaker 8: going to jump at that opportunity.
Speaker 3: Zeker jumping at it.
Speaker 2: The nine exports utility vehicle already going back to an
Speaker 2: old school kind of handle and a return to common
Speaker 2: sense is for one consultancy called it.
Speaker 3: Blooms Creatudell. Thanks so much.
Speaker 2: Now coming up, we're going to be talking all things quantum.
Speaker 3: The CEO of d Wave joins us. This is Bloomberg Tech.
Speaker 2: News out of Europe from d Wave, which develops quantum
Speaker 2: computing systems. Today the company announced an agreement with the
Speaker 2: Swiss Quantum Technology to deploy a D wave advantage to
Speaker 2: quantum computer in Europe. It's expanding access to the technology.
Speaker 2: Glue DA CEO Alan Ratz joins us now from Lake Como,
Speaker 2: which of course very close to Switzerland. In Italy where
Speaker 2: the announcement comes from. Alan, what does it mean to
Speaker 2: be deploying this right.
Speaker 3: Here right now?
Speaker 9: So we are going to be deploying an advantage to
Speaker 9: quantum computer here in the region. And it will be
Speaker 9: available to researchers, scientists, businesses in Italy to basically explore
Speaker 9: how to make the best use of quantum computers. This
Speaker 9: is a part of the Q Alliance which was announced yesterday.
Speaker 9: The WAVE is a founding member of the Q Alliance
Speaker 9: and that's all about bringing quantum to Italy and support
Speaker 9: of their Digital Transformation initiative.
Speaker 2: Let's talk about the FOY four hundred plus cubit advantage
Speaker 2: shoe system. What can it do that is more sophisticated
Speaker 2: than classical computers today.
Speaker 9: Alan So, our four four hundred cubit advantage to quantum
Speaker 9: computer is arguably the largest and most powerful quantum computer
Speaker 9: in the world. At over four thousand cubits. We have
Speaker 9: almost ten times more cubits than anybody else and with
Speaker 9: respect to the power of the processor, we recently published
Speaker 9: in Science a paper showing that we are able to
Speaker 9: compute properties of materials on our quantum computer in minutes
Speaker 9: that it would take nearly a million years to compute
Speaker 9: on the fastest supercomputers in the world. So this is
Speaker 9: literally computing properties that can't be computed classically. This is
Speaker 9: what everybody in the quantum industry has aspired to, namely,
Speaker 9: the ability to do something important and useful on a
Speaker 9: quantum computer that can't be done classically, and this advantage
Speaker 9: to quantum computer has achieved that goal.
Speaker 2: I believe you solved a physics problem on the behavior
Speaker 2: of magnetism, particularly in certain solids. What's interesting is a
Speaker 2: ton of phrase arguably, Alan, Why is it only arguably
Speaker 2: the most powerful at the moment? How is your technology
Speaker 2: differing or or still try to measure itself out versus
Speaker 2: others out there.
Speaker 9: Yeah, so when it comes to the ability to perform
Speaker 9: a computation on a useful problem that can't be solved classically,
Speaker 9: we have the only quantum computer in the world that
Speaker 9: is capable of doing that today. I use the word
Speaker 9: arguably in the context of largest when I talked about
Speaker 9: four four hundred cubits, and the reason why I did
Speaker 9: that is because DWave quantum computers today are what's called
Speaker 9: annealing quantum computers. Everybody else in the industry is pursuing
Speaker 9: a different approach called Gate model quantum computers, and while
Speaker 9: they have many fewer cubits, the nature of the cubits
Speaker 9: is a little different between annealing and gate model. So
Speaker 9: we believe that at four thousand and four one hundred
Speaker 9: and knealing cubits, we are significantly larger than anybody else
Speaker 9: because all these other gate model systems have tens to
Speaker 9: a few hundred cubits. But there is an academic debate
Speaker 9: around the difference between the cubits.
Speaker 2: What's interesting is you are making and generating real revenue.
Speaker 3: It's small, but it's there.
Speaker 2: But the market capitalization of yours and many other quantum
Speaker 2: computing companies has just gone so far up into the
Speaker 2: right Allen, is the promise and hope being shown up
Speaker 2: in reality from orders because this is Europe taking a
Speaker 2: ten million euro step forward.
Speaker 3: What about other deals?
Speaker 9: Yeah, So we announced at the end of last year
Speaker 9: that we had sold a quantum computer to the Ulick
Speaker 9: Supercomputing Center in Germany. They purchased that system to connect
Speaker 9: it to their Jupiter exoscale supercomputer to explore new AI workflows.
Speaker 9: And then earlier this year we announced that we had
Speaker 9: signed a memorandum of understanding with Yansai University and Incheon
Speaker 9: City in South Korea for the acquisition of a quantum
Speaker 9: computer there. And we have frankly a number of other
Speaker 9: countries and research centers that are interested in acquiring our
Speaker 9: quantum computers as well, and that's just with respect to
Speaker 9: purchasing of the quantum computers. Our quantum computers today are
Speaker 9: also used commercially in support of a broad array of
Speaker 9: business applications. For example, North Wales Police is using us
Speaker 9: to compute the best way to forward place police vehicles
Speaker 9: to be able to arrive at incidents in a timely fashion.
Speaker 9: These customers use us over the cloud, so we have
Speaker 9: both a cloud based business and an on premise.
Speaker 3: Business North Wales UK or Australia.
Speaker 5: UK.
Speaker 2: Fascinating, absolutely fascinating. Thank you very much for data, Alan Barats.
Speaker 2: It's learning about the European focus that you seem to
Speaker 2: be having with the business in particular US based company
Speaker 2: and the new announcement out of lake Como.
Speaker 3: We wish you well over their d Waceo. Welcome back
Speaker 3: to Blue Beg Tech. Let's tack in on these markets.
Speaker 2: Because we are trading higher once again, new AI deals,
Speaker 2: AI compute deals helping push up then as that one hundred,
Speaker 2: we're at one point two percent. Amid some of the
Speaker 2: geopolitical risks, we continue trading higher. Let's go onder the
Speaker 2: hood and look, what's really moving from a points perspective.
Speaker 3: We know about the AIRSMEL numbers, we.
Speaker 2: Know about the optimism that chip equipment is still selling strong.
Speaker 3: Well, let's have a look.
Speaker 2: At AMD and indeed in video both of them getting
Speaker 2: some more mighty price target raises over at HSPC today
Speaker 2: more than eight percent. In fact, AMD is your leader
Speaker 2: in terms of points moves on the Nasdaq one hundred.
Speaker 3: Again, this hope that yet.
Speaker 2: More AI compute needs means more desire for their chips,
Speaker 2: and they are making an indent on the likes VideA,
Speaker 2: but in VideA could go high to the tune of
Speaker 2: what an eight trillion dollar company is what HSBC is
Speaker 2: currently outlining or one hundred and eighty one as we speak,
Speaker 2: up nine ten percent on the day. Let's dig into
Speaker 2: that particular report a little bit more and just the
Speaker 2: AI further more broadly with Bloomberg executive reporter Ryan Lastelica
Speaker 2: and Ryan they are seeing significant market cap accretion.
Speaker 3: To invidea on what over at HSBC.
Speaker 10: Well, it's not going to come as a surprise of
Speaker 10: many people, but they are touting the growth potential of
Speaker 10: artificial intelligence. Specifically, they see the total addressable market of
Speaker 10: these AI chips expanding beyond the hyperscalers, which are the
Speaker 10: major Nvidia customers right now, Microsoft, Amazon, Alphabet, Meta, and
Speaker 10: so forth, and really sees that expanding beyond them into
Speaker 10: other parts of the economy. So as this continues to grow,
Speaker 10: they see in Vidia's earnings continue to grow and eventually
Speaker 10: leading it to the market cap you said before, I
Speaker 10: think it was about nearly eight trillion dollars, so certainly
Speaker 10: a significant jump from where it.
Speaker 5: Is right now.
Speaker 2: That the most bullish when it comes to the overall
Speaker 2: analyst recommendations ran how much you're seeing portfolio managers echoing
Speaker 2: that sort of well further and excitement, because we've had
Speaker 2: a lot of talk of bubbles just yesterday with discussing
Speaker 2: them all.
Speaker 5: Hm.
Speaker 10: Yeah, So I do hear some people talking about, you know,
Speaker 10: having a certain amount of skepticism, can this continue to
Speaker 10: go on the way it has been going on? But
Speaker 10: even when I ask them specifically, do you see maybe
Speaker 10: new competition threats from A and D or Broadcom just
Speaker 10: given some of the deals that those companies have announced
Speaker 10: this past week, they still continue to like in Vidia.
Speaker 10: They still see it as the market leader. It continues
Speaker 10: to have a dominant market share in the market for
Speaker 10: these GPUs, so no one is very barre. I think
Speaker 10: there is one analyst on Wall Street right now who
Speaker 10: has a cell equivalent rating on Invidia, but other than that,
Speaker 10: people are pretty positive about it. I'd also note that
Speaker 10: as it continues to grow, the multiple has been coming
Speaker 10: in a little bit, so these are not the kind
Speaker 10: of dot Com era multiples that you know, some of
Speaker 10: the bubble concerns might be indicating. These are certainly a
Speaker 10: little bit above their medium term average, but certainly not
Speaker 10: at the level set would be you know, real nosebleed.
Speaker 2: Bloomberg's round plus Selca thank you so much for the breakdown.
Speaker 2: Let's talk more about the AI compute demand right now,
Speaker 2: because it's time for talking tech and Microsoft data center
Speaker 2: builder developer en Scale, Well, they've.
Speaker 3: Just reached a fourth.
Speaker 2: Deal, this time to build a site in Texas with
Speaker 2: power capacity of much as two hundred and forty megal watts.
Speaker 3: The UK startup.
Speaker 2: Says the site will have over one hundred thousand new
Speaker 2: in video chips. The GB three hundred is scheduled to
Speaker 2: open in the third quarter of next year. Plus an
Speaker 2: investment consortium including black Rocks Global Infrastructure partner, Abu Dab's MGX,
Speaker 2: Microsoft and Video, and many more.
Speaker 3: I'm gree to buy Aligned data centers for forty billion dollars.
Speaker 2: This is the first deal for that partnership that the
Speaker 2: investors established a year ago to invest heavily in AI
Speaker 2: data centers and energy, and Coreyeve is partnering with startup
Speaker 2: poll Side to develop a massive data center complex.
Speaker 3: In West Texas.
Speaker 8: Now.
Speaker 2: The site will be powered using local natural gas and
Speaker 2: is expected to generate as much as electricity for hooverd APT.
Speaker 2: Let's talk more about all this AI investment news. Thomas Martin's,
Speaker 2: with their senior portfolio manager at Global Investments, got north
Speaker 2: of three billion dollars in assets under management.
Speaker 3: Thomas, is this a bubble?
Speaker 11: Well, thanks for having me on your program. And of
Speaker 11: course that is the question that people are asking when
Speaker 11: things like this just go you know, parabolic, to use
Speaker 11: a word that captures the imagination. People wonder, you know,
Speaker 11: how long can this go on, and they start comparing
Speaker 11: it to the past. We don't believe that it's a bubble.
Speaker 11: The underlying factor and force is the usefulness that can
Speaker 11: be gotten from these AI models.
Speaker 5: And we're only at the very very beginning of that.
Speaker 11: You know, companies are having varying degrees of success at
Speaker 11: implementing these and the compute.
Speaker 5: Power that's needed is prodigious.
Speaker 11: It's already been said, and all of these deals really
Speaker 11: articulate various aspects of what is going on with bringing
Speaker 11: this kind of compute to the folks and companies.
Speaker 5: That need it.
Speaker 2: But Thomas, what fundamental data you're looking at that shows
Speaker 2: productivity and revenue.
Speaker 3: Will be there?
Speaker 11: Well, that's kind of the rub is that that data
Speaker 11: is not really there yet in a way that you
Speaker 11: can put your finger on it and count on it.
Speaker 11: And I think that's why you're getting some of this questioning.
Speaker 11: So a lot of what's going on is betting on
Speaker 11: the future that problems are going to be solved and
Speaker 11: this is going to be productive, and you see that
Speaker 11: in the beginning parts of what's going on. Just anybody
Speaker 11: as a consumer who is using AI to just ask
Speaker 11: it questions about anything can see the improvement.
Speaker 5: But that's not what really is going to drive it.
Speaker 11: It's going to be very complex things driven by businesses
Speaker 11: and agents and automation that is still very much to
Speaker 11: come and which will require more chips than we have
Speaker 11: and more connectivity that we have.
Speaker 5: So the need for that compute is gigantic.
Speaker 2: Mid supply chain headaches and more is and anxiety around
Speaker 2: China whether or not can keep buying some chips the
Speaker 2: US makes more broadly whether we'll get the rare earth
Speaker 2: metals that are needed for a lot of the supply chain. Thomas,
Speaker 2: how do you factor in the risks of geopolitical.
Speaker 11: Well, they're very significant. And the issue with the rare
Speaker 11: earths and the magnets that they go into is that
Speaker 11: when you have one country like China that possesses a
Speaker 11: very high level call it seventy eighty percent depending on
Speaker 11: what we're talking about, of that, they have a lot
Speaker 11: of leverage to be able to shut that down if
Speaker 11: they want to or to extract from the markets. And
Speaker 11: they know they have that power, and so does the
Speaker 11: United States. So if they decide that they're going to
Speaker 11: start using that and escalating, it will take a bigger
Speaker 11: escalation to kind of resolve that. I think what the
Speaker 11: markets are looking at is the opportunity is so great
Speaker 11: that that will not be allowed to happen.
Speaker 2: Look, you have been managing money for a long time,
Speaker 2: I mean even just twenty fourteen over at Global and
Speaker 2: I think Thomas, you are kind of talking a narrative
Speaker 2: where we have to believe, you have to ultimately have
Speaker 2: hope that this all comes to bear. Is that kind
Speaker 2: of the narrative You have to talk to your own
Speaker 2: clients about that. Ultimately, there aren't that many tangible fundamental
Speaker 2: data points you can use.
Speaker 3: You just have to use a product and know how much.
Speaker 2: What productive it's made you as an individual, even if
Speaker 2: you're not paying for it.
Speaker 11: Yeah, concepts are very difficult, and they're very easy to
Speaker 11: get excited about and to capture the imagination. But where
Speaker 11: you really get the where the rubber meets the road, right,
Speaker 11: is are they actually being used? And if you point
Speaker 11: back to the Internet and to connectivity back then with
Speaker 11: the laying of fiber et cetera and the switches that
Speaker 11: got ahead of itself and it wasn't really implemented. It
Speaker 11: was easy to imagine, but the implementation took a long
Speaker 11: time to get to where we are now. But where
Speaker 11: we are now is absolutely using all of those things
Speaker 11: and is enabling this revolution and.
Speaker 5: This one is just happening a lot faster.
Speaker 11: And so yes, you have to believe, but of course
Speaker 11: you have to look for proof, and in the third
Speaker 11: quarter earnings and as we go forward, that's what everybody
Speaker 11: is going to be looking for. But these deals that
Speaker 11: you just talked about our concrete evidence that real money
Speaker 11: is being put to work by a diversified number of
Speaker 11: very sophisticated and well capitalized players.
Speaker 3: Real money of money.
Speaker 2: To Thomas Martin's senior portfolio manager at glow World Investments,
Speaker 2: great speaking with you. Now, let's talk about billionaire Filanginis
Speaker 2: Mackenzie Scott reducing her stake in Amazon by forty two
Speaker 2: percent over the past year, according to regulatory filings that
Speaker 2: was on Tuesday, the latest disclosure from the end of September,
Speaker 2: so she now holds eighty one point one million shares,
Speaker 2: was down fifty eight million from a year earlier. Scott
Speaker 2: had ended up with about four percent of the tech
Speaker 2: giant after her twenty nineteen divorce from Amazon founder Jeff Bezos.
Speaker 2: Coming up, Salesforce pushes its Agentaki experience in this year's
Speaker 2: Dreamforce conference or on that next This is Bloomberg Tech.
Speaker 12: We love agent Force and we're investing huge amounts Force
Speaker 12: huge amouse. But listen to this, we've gone fast with
Speaker 12: the agent Force, and we have gone with any other technology.
Speaker 2: Salesforce CEO mart Beni are speaking yesterday at their Dreamforce
Speaker 2: twenty twenty five conference, during which Salesforce revealed it's AI
Speaker 2: customer service tools saves its own company one hundred million
Speaker 2: dollars a year. Who makes Brodie Ford covered this story
Speaker 2: and joins us now, And that's basically the sales pitch.
Speaker 2: We're using it, we're saving.
Speaker 13: Yeah, should do it too, right, But to me, the
Speaker 13: fact that they're leaning so heavily on internal implementation, internal savings,
Speaker 13: it could be a bit of a red flag, right.
Speaker 13: I mean, traditionally companies like to lean on their customer stories.
Speaker 13: And it kind of brings us back to the whole
Speaker 13: question of the moment, which is which companies benefit from
Speaker 13: the AI boom in the enterprise? Is it the old
Speaker 13: school leaders like Salesforce, Is it the young ones like
Speaker 13: Open Ai? Right now, the anxiety is towards companies like Salesforce.
Speaker 2: The question also the moment is any of this making
Speaker 2: real productive gains for other companies? And we've heard time
Speaker 2: and time again the n MIT report the ninety five
Speaker 2: percent of pilots aren't working.
Speaker 3: How is Salesforce able to combat that narrative?
Speaker 13: Yeap, Yeah, there's this huge gap right now where a
Speaker 13: lot of people anegotally will say AI has made my
Speaker 13: own life much more effective. I can use chat GPT
Speaker 13: for all these things and it's great in the enterprise.
Speaker 13: There is just still this big.
Speaker 5: Gap right now.
Speaker 13: And so Salesforce is saying that, look, we have new
Speaker 13: features all the time. We're making it easier for her
Speaker 13: to use pricing wise and all these other ways, and
Speaker 13: here's how you can adopt. But still adoption has been
Speaker 13: a little more tepid than most would have thought maybe
Speaker 13: two years ago.
Speaker 2: And looking at the share price that tepid adoption, it's
Speaker 2: pretty painful. Stock is down twenty eight percent so far
Speaker 2: this year. And still Dreamforce is a dream and they've
Speaker 2: got Metallico and they got Zimboon and they're throwing all.
Speaker 3: The money at the situation.
Speaker 2: How is that reading for those in San Francisco and
Speaker 2: more broadly.
Speaker 13: I mean, Salesforce is a cash flow monster. Right Let's
Speaker 13: say that they aren't able to capitalize in this next wave.
Speaker 13: They're still making tons of money, but the question is
Speaker 13: are they losing the mind share are they losing the
Speaker 13: growth potential for this new investment wave? And investors can't
Speaker 13: decide every six months the narrative changes right now, application
Speaker 13: leaders like them, like Adobe, even like a service Now
Speaker 13: they're a bit in the penalty box right and so
Speaker 13: so far Benioff hasn't been able to convince them otherwise.
Speaker 13: But there is an analyst day today, and you know,
Speaker 13: maybe we'll tomorrow be able to say, actually, they're doing great.
Speaker 2: Yeah, I mean we've just had SAP, You've got Oracle
Speaker 2: talking up. But it's a particular event at the moment.
Speaker 2: Can you steer as as to who of the new
Speaker 2: guard they're almost worried about.
Speaker 13: Yeah, who of the new guard? It's the AI native
Speaker 13: workplace tools. I mean, I would even throw a chat
Speaker 13: GBT into this. I would throw people using anthropic models
Speaker 13: and coding their own apps. I mean, what's so interesting
Speaker 13: is that there aren't a lot of super clear competitors
Speaker 13: this point. But it's more the conceptual idea that a
Speaker 13: company like Salesforce will is the center of gravity for
Speaker 13: so long and enterprises and that maybe that paradigm is changing.
Speaker 13: It's not a tangible competitor yet, but it's this kind
Speaker 13: of creeping anxiety.
Speaker 2: I mean, while Salesforce is trying to get itself integrated
Speaker 2: within chat ept and doing that success to see who
Speaker 2: uses it in the product in begs, Brodie Ford is
Speaker 2: always breaking it down brilliantly. Look as Salesforce works to
Speaker 2: sell its agent Force experience, the next guest says customers,
Speaker 2: I'm not really ready for it yet, and quote Salesforce
Speaker 2: knows it, Rebecca Wetteman, Why allow our CEO principal analyst
Speaker 2: joins us. Now, what's you'll read on Dreamforce and Agent Force?
Speaker 2: Is it being adopted?
Speaker 14: Hey, Caroline, great to be here, Thanks for having me.
Speaker 14: So I'm here in San Francis great Dreamforce and I
Speaker 14: will tell you that there's a lot of talk about
Speaker 14: the agentic enterprise and what that means for customers, and
Speaker 14: what we saw yesterday was exactly what With all due
Speaker 14: respect to Brody, we're talking about the need to show
Speaker 14: real customer adoption with real recognizable brands talking about real
Speaker 14: business results.
Speaker 3: And I think what we've seen.
Speaker 14: With AI is we went from sort of the fear
Speaker 14: of missing out in the beginning to what we're calling FOMU,
Speaker 14: the fear of messing up. Now customers are really concerned
Speaker 14: because they experimented on those big projects that you talked
Speaker 14: about that didn't necessarily yield results.
Speaker 2: And so are they more willing to experiment with a
Speaker 2: non trusted partner that's already part of their overall spend
Speaker 2: from an internal software basis, or are they more willing
Speaker 2: to go out on a limb and try the new
Speaker 2: recruits that are coming intens of startups.
Speaker 14: All we definitely heard from Salesforce customers yesterday was that
Speaker 14: trusted partner is really important. But I think we're probably
Speaker 14: seeing the biggest innovator's dilemma that we've ever seen in tech.
Speaker 14: Salesforce knows and when I was talking to Mark about
Speaker 14: this yesterday, we talked about it.
Speaker 3: They have to.
Speaker 14: Bring all of those customers along, which means not just
Speaker 14: innovating and driving the latest and greatest in AI technology,
Speaker 14: but really providing those safety nets, providing that guidance, providing
Speaker 14: those examples of customers like them who have achieved real
Speaker 14: business success with AIS.
Speaker 3: Can you brag about that are making that sort of leap?
Speaker 14: Well, I've talked to probably twenty or thirty Agent forced
Speaker 14: customers from small to large organizations across multiple verticals that
Speaker 14: have really achieved success today. The poster children yesterday were
Speaker 14: folks like Pepsi Williams and Sonoma Pandora Dell. So really
Speaker 14: across both consumer brands and more tech brands, would you say,
Speaker 14: really focused on how they're delivering success today?
Speaker 2: I compare and contrast what you've learned at some of
Speaker 2: the other big bring together moments that we've had. You've
Speaker 2: been over an SAPs, You've also been an Oracles AI world.
Speaker 3: Is there s reality that they're.
Speaker 2: Vindicating the overall market capitalization of these companies and the
Speaker 2: AI bubble narrative that's brewing.
Speaker 14: You know, I think that the challenge is customers don't
Speaker 14: want to be educated, they want to be successful, and
Speaker 14: those vendors that are really able to show and not
Speaker 14: tell how they're our customers are achieving AI success today
Speaker 14: are ultimately going to be the ones that win.
Speaker 2: Can I can I ask a little bit about what
Speaker 2: your view is from the what that you're doing with customers,
Speaker 2: with people as to whether too much money is being
Speaker 2: thrown at this for the amount of productivity games we're
Speaker 2: getting in the heir now.
Speaker 14: You know, I think we've seen a lot of folks
Speaker 14: sort of dip their toe in the pool and get
Speaker 14: incremental results. They really need to be comfortable diving in
Speaker 14: to get those kind of exponential benefits that we're talking about,
Speaker 14: and most folks simply aren't there yet.
Speaker 3: So how are they getting that?
Speaker 14: Well, it's it's like I talked with Mark about yesterday.
Speaker 14: The vendors have to bring customers along and that's not
Speaker 14: about delivering the latest innovation, which is important. It's about
Speaker 14: providing those baby steps to help them get there, to
Speaker 14: help them understand what the payback is, to help them
Speaker 14: understand what the business cases, to help them focus their
Speaker 14: efforts not on that shiny AI object, but on the
Speaker 14: one that's likely to deliver the most real value for theiranization, Rebecca.
Speaker 2: Is an organization doing enough wholesale change in terms of
Speaker 2: interlacing human resources, people management with the CTO and the
Speaker 2: technical sides of the business to actually implement this right now?
Speaker 3: Well, no, Caroline, the short answer is no.
Speaker 14: I mean, we see fewer than twenty percent of companies
Speaker 14: have a policy on the use of AI today, and
Speaker 14: fewer than ten percent have training and reskilling in place,
Speaker 14: not just to train people on how to use AI effectively,
Speaker 14: but how to train them for what their future job
Speaker 14: is going to look like, and that's going to be
Speaker 14: a key part of.
Speaker 2: This moving forward to is there a standout company that
Speaker 2: you think has been taking its clients along and helping
Speaker 2: them edicate at the pace you think is necessary.
Speaker 3: Who's doing the best job today?
Speaker 14: Yeah, Again, if we go back to the narrative that
Speaker 14: you have to show them, not tell them. In terms
Speaker 14: of being able to show actual customers receiving results with
Speaker 14: a gentic AI today, Salesforce is way out ahead.
Speaker 3: Rebecca Whiteman Balois.
Speaker 2: We thank you very much being an optimism optimistic voice
Speaker 2: when it comes to the agentic dream ever at Salesforce. Meanwhile,
Speaker 2: coming up Weimo and it plans to launch its driver
Speaker 2: US ride hailing service in London next year. We'll have
Speaker 2: all those details. That's next. There's bloombg tech.
Speaker 15: M.
Speaker 2: Weimo is planning to launch its driveris ride hailing service
Speaker 2: in London next year, marking its second international expansion and
Speaker 2: it's first in Europe, whom most Natalie Lung covers the
Speaker 2: gig economy for US and joins US. Now what's interesting
Speaker 2: is they're not going to be partnering with Uber and Lyft.
Speaker 2: Longer term here, they're going to have their own app offering.
Speaker 15: Yes, Wymore is going to work with an Uber backed
Speaker 15: company Move. They were found in Africa and they used
Speaker 15: to do vehicle financing and now expanding globally. They're going
Speaker 15: to manage these fleets for Weimo and they actually were
Speaker 15: gonna planning to raise you know, more than three hundred
Speaker 15: billion dollars at like two billion valuations according to report
Speaker 15: by colleagues last month. So there's real business here for
Speaker 15: fleet companies like Move.
Speaker 2: But London seems to be welcoming with open arms. Both
Speaker 2: we got Weimo and also Uber seems to be on
Speaker 2: a similar flight path right in terms of having robotaxis
Speaker 2: in London.
Speaker 15: Yeah, so what happened was earlier this year the UK
Speaker 15: government moved forward their regulatory framework to pilot these autonomous
Speaker 15: vehicle trials to next year. So both companies are eyeing
Speaker 15: sort of that same timeline.
Speaker 2: What's interesting do you go back to the days when
Speaker 2: Uber was first coming into London and the backlash from
Speaker 2: black cabs over there at the time. Are we anticipating
Speaker 2: lobbying or is it the government just so wants to
Speaker 2: be all welcoming to innovation right now.
Speaker 15: That's really part of what's need to be done and
Speaker 15: what needs to be seen as these trials go on.
Speaker 15: As these trials start, you know, what does the community,
Speaker 15: how how do they respond and how do you know regulators?
Speaker 15: You know sort of consider all you know, all kind
Speaker 15: of voices from different.
Speaker 3: Of course, it's not Waym's first rodeo.
Speaker 2: They've been piloting and successfully unrolling in plenty of cities already.
Speaker 3: What is it?
Speaker 2: How are they going to do it in London? How
Speaker 2: will we see that integration into the ecosystem.
Speaker 15: So they're starting with a very small fleet of vehicles
Speaker 15: around a one hundred square mile radius in London and
Speaker 15: so in the coming months and so this will sort
Speaker 15: of lay the groundwork for when they launch it commercially
Speaker 15: next year.
Speaker 2: And I think were broadly, how are they doing elsewhere?
Speaker 2: I mean, you said, this is the second international destin.
Speaker 15: Nice, and so the first international city was in Tokyo.
Speaker 15: They're currently still testing with the local app and local
Speaker 15: taxi company. They haven't launched commercially yet. But in the
Speaker 15: US we've seen different launch approaches, whether it's launch exclusively
Speaker 15: on the Uber app in Austin and Atlanta or on
Speaker 15: their own app in San Francisco, in LA So we're
Speaker 15: seeing different approaches.
Speaker 2: They're trying horses for courses, robotaxis for courses.
Speaker 3: Bloomberg's Natalie Lang, we appreciate it.
Speaker 15: Now.
Speaker 3: That does it for this edition of Bloomberg Tech.
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