WEBVTT - BI Weekend: OpenAI, AMD Deal, New Verizon CEO 0:00:00.280 --> 0:00:11.360 Bloomberg Audio, Studios, podcasts, radio news. This is Bloomberg Intelligence 0:00:11.440 --> 0:00:13.520 with Scarletfoo and Paul Sweeney. 0:00:13.640 --> 0:00:15.760 How do you think the FED is looking at tariffs? 0:00:15.880 --> 0:00:17.120 The uncertainty of terriffs. 0:00:17.160 --> 0:00:19.160 Let's take a look at the sectors and how. 0:00:19.000 --> 0:00:21.280 They performed a lot of investors getting whip saled every 0:00:21.320 --> 0:00:22.279 day by news. 0:00:22.000 --> 0:00:26.160 Events, breaking market headlines, and corporate news from across the globe. 0:00:26.160 --> 0:00:28.680 Could we see a market disruption of market event? 0:00:28.840 --> 0:00:30.880 So people just too exuberant out there? 0:00:31.000 --> 0:00:33.600 You see some so called low quality stocks driving this 0:00:33.640 --> 0:00:34.440 short term rally. 0:00:34.479 --> 0:00:39.240 Bloomberg Intelligence with Scarletfoo and Paul Sweeney on Bloomberg Radio, 0:00:39.440 --> 0:00:41.320 YouTube and Bloomberg Originals. 0:00:42.000 --> 0:00:44.480 On today's Bloomberg Intelligence Show, we dig inside the big 0:00:44.520 --> 0:00:46.960 business stories impacting Wall Street and global markets. 0:00:47.000 --> 0:00:49.240 Each and every week, we provide in depth research and 0:00:49.320 --> 0:00:51.199 data on some of the two thousand companies and one 0:00:51.280 --> 0:00:53.920 hundred and thirty industries are analysts cover worldwide. 0:00:54.080 --> 0:00:56.600 Today, we'll look at how AMD landed a deal with 0:00:56.640 --> 0:00:59.680 open Ai to build AI infrastructure. 0:00:59.440 --> 0:01:02.680 Plus why Dell Technologies is roughly doubling its growth estimates 0:01:02.680 --> 0:01:04.639 for sales and profit for the next two years. 0:01:04.920 --> 0:01:07.560 First, we begin with a big deal in the banking sector. 0:01:07.680 --> 0:01:10.040 This week, Fifth Third agreed to buy Coo America for 0:01:10.080 --> 0:01:12.840 about ten point nine billion dollars in stock. It is 0:01:12.880 --> 0:01:14.839 the largest US bank deal this year. 0:01:15.240 --> 0:01:17.400 The deal will create the ninth largest bank in the 0:01:17.400 --> 0:01:19.559 country with about two hundred and eighty eight billion dollars 0:01:19.560 --> 0:01:21.160 in assets, according to the two companies. 0:01:21.240 --> 0:01:24.240 So we called in Herman Chan Bloomberg Intelligence, senior analysts 0:01:24.240 --> 0:01:26.919 for US regional banks, and we began by asking Herman 0:01:27.000 --> 0:01:28.119 for his take on the deal. 0:01:28.560 --> 0:01:31.720 Yeah, I think it's a win win for both. Comerica 0:01:31.760 --> 0:01:33.600 has been sort of in the doldrums over the past 0:01:33.640 --> 0:01:37.440 couple of years after the SBB debacle. It's taken some 0:01:37.480 --> 0:01:41.040 long time to get it under its own footing, and 0:01:41.400 --> 0:01:46.080 they've gotten a lot of agitated investors and activists pushing 0:01:46.080 --> 0:01:48.880 for a sale, and this was a great outcome. On 0:01:48.960 --> 0:01:51.200 the other hand, for Fifth Third, it's a great deal. 0:01:51.240 --> 0:01:54.840 It moves them into growth growth yer markets in Texas 0:01:54.920 --> 0:02:00.360 and California, supplements their Michigan presence and really build out 0:02:00.360 --> 0:02:03.800 there their branching presence across the southeast and southwest. 0:02:04.400 --> 0:02:07.720 So within the regional banking space, what does this deal 0:02:07.720 --> 0:02:10.160 put pressure on? Who does this deal put pressure on 0:02:10.240 --> 0:02:11.400 to make a move of their own. 0:02:11.560 --> 0:02:14.600 Yeah, so that's a question. The follow on question like 0:02:14.600 --> 0:02:18.720 who's next. So there are other banks that are operating 0:02:18.800 --> 0:02:21.840 within the size of a fifth third that have also 0:02:21.880 --> 0:02:25.480 done deals like a PNC and Huntington, and the others 0:02:25.520 --> 0:02:28.480 that are still on the sidelines are banks like Regions 0:02:28.680 --> 0:02:32.520 in the southeast, Key Corp in Ohio as well, and 0:02:32.720 --> 0:02:35.280 M and T and Citizens in the northeast. So those 0:02:35.320 --> 0:02:37.600 are the ones that probably are going to get asked. 0:02:37.600 --> 0:02:39.320 A lot of questions on the three two earnings go 0:02:39.360 --> 0:02:39.919 about M and A. 0:02:40.360 --> 0:02:42.840 So what do we know about the Trumpet administration and 0:02:42.880 --> 0:02:45.680 its view towards bank consolidation. Are they a pined on 0:02:45.720 --> 0:02:46.160 this at all? 0:02:46.240 --> 0:02:46.440 Yeah? 0:02:46.480 --> 0:02:49.360 So we can see that these bank deals are getting 0:02:49.400 --> 0:02:52.880 approved at much faster clips. So I mentioned Huntington earlier. 0:02:53.120 --> 0:02:55.919 They're buying a bank in Texas named Vera tex and 0:02:56.720 --> 0:02:59.720 it's going to take them about ninety eight days from 0:03:00.040 --> 0:03:04.800 deal closed for merger announcements. And that contrasts with under 0:03:04.960 --> 0:03:08.240 Biden administration, it's taken four hundred to six hundred days 0:03:08.280 --> 0:03:11.200 for a large bank made deals. So these deals under 0:03:11.240 --> 0:03:14.480 Trump are being fast tracked and it's really encouraging the 0:03:14.520 --> 0:03:17.760 management teams to really go out there and search for deals. 0:03:18.639 --> 0:03:20.840 So for so long, a lot of people had commented 0:03:20.880 --> 0:03:24.240 that the US is overbanked. By one count there's almost 0:03:24.520 --> 0:03:28.360 forty five hundred FDI and C insured banking institutions here. 0:03:28.560 --> 0:03:29.560 Are we still overbanked? 0:03:29.600 --> 0:03:30.720 Herman I would. 0:03:30.440 --> 0:03:34.360 Say, so, there's a lot of competition these and that's 0:03:34.400 --> 0:03:37.400 the reason why COO America is looking to sell because 0:03:37.440 --> 0:03:42.680 they were lacking in the retail branch presence. They mostly 0:03:42.760 --> 0:03:48.840 bank middle market commercial customers that are grades, but it 0:03:48.880 --> 0:03:52.480 doesn't create the diversity that they needed during times of 0:03:52.520 --> 0:03:55.800 stress like the SVB environments. And so that was a 0:03:55.880 --> 0:03:58.640 lesson learned for a lot of the banking industry that 0:03:58.680 --> 0:04:02.920 you need to diversify your deposit base. And one way 0:04:02.920 --> 0:04:05.760 to diversify the cell to a larger organization. 0:04:05.520 --> 0:04:09.760 Which segment of the banking industry is bloated, needs to 0:04:09.880 --> 0:04:10.720 streamline the most. 0:04:10.960 --> 0:04:14.440 Yeah, so there you mentioned forty five hundred banks, Like 0:04:15.160 --> 0:04:17.440 does there need to be that many banks within the 0:04:17.560 --> 0:04:20.680 United States? Probably not. They don't have the scale to 0:04:20.760 --> 0:04:24.600 operate a retail branch presidence. They don't have the capabilities 0:04:24.640 --> 0:04:27.400 on the fee side and the advisory side to really 0:04:27.400 --> 0:04:31.880 help their customers on the commercial side. And you see 0:04:31.920 --> 0:04:35.239 so much competition from not only larger banks, but also 0:04:35.320 --> 0:04:38.120 the FinTechs that are just you know, biding at the 0:04:38.160 --> 0:04:41.679 heels on the consumer side. So it's a really tough 0:04:41.760 --> 0:04:45.800 operating environment and we expect more consolidation over the next 0:04:45.800 --> 0:04:46.440 several years. 0:04:46.520 --> 0:04:48.960 All right, riod of me this year. Why do banks 0:04:49.000 --> 0:04:52.760 even have branches? I hep adding branches. I've been into 0:04:52.800 --> 0:04:53.599 a branch. 0:04:53.320 --> 0:04:55.920 In years across the street from Bloomberg headquarters. 0:04:56.279 --> 0:04:58.400 City Groups City branch right across. 0:04:59.240 --> 0:05:02.640 A lot of it marketing because and a lot of 0:05:02.640 --> 0:05:06.400 it is scale. So for a bank like Fifth Third, 0:05:06.960 --> 0:05:10.200 they're growing organically in the Southeast and that's been a 0:05:10.240 --> 0:05:12.839 major growth driver for them. If you need a branch, 0:05:13.240 --> 0:05:15.919 you don't need a branch, but you need the branch 0:05:16.120 --> 0:05:17.880 for a marketing aspect, so you need. 0:05:17.800 --> 0:05:19.120 To do big ability, right. 0:05:19.160 --> 0:05:23.160 It's a big billboard, expensive billboard in markets. 0:05:22.800 --> 0:05:24.960 Where you have a lot of foot traffic and higher 0:05:25.000 --> 0:05:28.360 growth markets. So it's a big billboard and it's been 0:05:28.560 --> 0:05:31.200 a proven growth driver for banks. But on the other hand, 0:05:31.480 --> 0:05:35.200 branches are declining. So if you have critical mass and 0:05:35.240 --> 0:05:38.800 scale in your existing markets, you can trim your branch 0:05:38.880 --> 0:05:42.960 presence and not affect your depositors. But if you're entering 0:05:43.000 --> 0:05:45.360 new markets, then opening new branches. 0:05:45.160 --> 0:05:45.480 Is the way. 0:05:45.520 --> 0:05:47.320 Do you think I could find my checkbook? 0:05:48.200 --> 0:05:50.599 That raises a question, does a fintech that wants to 0:05:50.640 --> 0:05:53.039 be a bank need to therefore have a retail presence? 0:05:53.080 --> 0:05:55.159 Do they need to open up a branch also across 0:05:55.200 --> 0:05:56.200 the street from our office? 0:05:56.400 --> 0:05:59.160 So that's that's the beauty of the fintech models that 0:05:59.200 --> 0:06:03.039 they're issueing the branches. It's not a requirement. It's a 0:06:03.080 --> 0:06:05.560 lower cost to serve because you don't have the physical 0:06:05.600 --> 0:06:11.520 retail presence, and it's one way to really compete effectively 0:06:11.600 --> 0:06:16.479 with these with these legacy banks where you have a 0:06:16.680 --> 0:06:20.840 really easy to use app and you you aren't burden 0:06:21.000 --> 0:06:23.680 by this cost basis of owning the physical presence. 0:06:24.080 --> 0:06:25.880 All right, So when we had a couple of little 0:06:25.920 --> 0:06:27.599 blow ups in your world a couple of years ago, 0:06:27.760 --> 0:06:30.560 I did I found this k r E the spider 0:06:30.680 --> 0:06:32.400 S and P Regional banking ETF. 0:06:32.560 --> 0:06:32.960 That's right. 0:06:33.839 --> 0:06:36.479 How are you? How are the regional banks trading these days? Yeah? 0:06:36.560 --> 0:06:40.520 So they're really doing all right. We're talking about price 0:06:40.560 --> 0:06:44.680 the tangibles around one point five to one points times. 0:06:44.760 --> 0:06:48.039 Is during the height of the weakest point during the 0:06:48.120 --> 0:06:51.880 SBB debacle, it was less than one time. So they've 0:06:51.920 --> 0:06:55.560 rebounded really nicely despite some of the uncertainty on the 0:06:55.600 --> 0:06:58.760 economy and with tariffs and and so we've seen some 0:06:58.800 --> 0:07:01.520 growth from them, especially on the commercial lending side that's 0:07:01.560 --> 0:07:04.000 really helped grow their top line. 0:07:04.240 --> 0:07:06.880 Our thanks to Hermit Chan Bloomberg Intelligence senior analysts for 0:07:06.960 --> 0:07:07.920 US regional banks. 0:07:08.240 --> 0:07:10.520 We move next to some news in the telecom space. 0:07:10.760 --> 0:07:13.880 This week, for Rizon Communications named Dan Schulman as chief 0:07:13.880 --> 0:07:17.040 executive officer, replacing Hans Vesperg. The goal was to boost 0:07:17.080 --> 0:07:18.640 mobile subscriber growth and shares. 0:07:18.880 --> 0:07:21.880 Schulman is the previous CEO of PayPal and brings financial 0:07:21.880 --> 0:07:25.240 and operational leadership experience, as well as expertise in telecoms, 0:07:25.360 --> 0:07:28.480 technology and finance. Vessberg will stay on for a year 0:07:28.520 --> 0:07:30.720 to help insure a smooth transition for more. 0:07:30.760 --> 0:07:34.400 I was joined by John Butler, Bloomberg Intelligence Senior telecom analysts. 0:07:34.600 --> 0:07:37.320 First asked John if this change was expected at Verizon. 0:07:37.840 --> 0:07:40.040 Not at all, Paul, I mean, you know, when you 0:07:40.120 --> 0:07:44.440 think merger Monday. I've had a lot of busy Mondays lately. 0:07:45.000 --> 0:07:48.080 But the last piece of news I expected was this 0:07:48.240 --> 0:07:52.280 change in leadership at Verizon. The company had really been 0:07:52.480 --> 0:07:56.960 sort of I guess prepping the head of the consumer business, 0:07:57.040 --> 0:08:01.760 or grooming is a better word, Orian Sampath, who is 0:08:02.000 --> 0:08:06.240 just a phenomenal talent in my opinion, and he's been 0:08:06.360 --> 0:08:09.360 sort of pushed out there doing a lot of investor 0:08:09.480 --> 0:08:13.840 conferences and giving the investment community the impression that he 0:08:14.040 --> 0:08:16.840 was the next in line. So when the news broke 0:08:16.920 --> 0:08:20.240 that Dan is taking over as CEO, it really surprised 0:08:20.280 --> 0:08:21.680 a lot of people, including me. 0:08:22.440 --> 0:08:24.800 So what's the company saying here? Why do you think 0:08:25.040 --> 0:08:28.800 they chose this outsider versus somebody that, again an insider 0:08:28.840 --> 0:08:30.400 that maybe the street thought was going to be the 0:08:30.400 --> 0:08:31.640 next in line? 0:08:32.200 --> 0:08:35.599 You know, I think for telecoms, all three of the majors, 0:08:35.679 --> 0:08:40.720 the wireless business is slowing very rapidly on them. We're 0:08:40.760 --> 0:08:44.360 seeing subscriber growth down a lot this year. There's a 0:08:44.400 --> 0:08:46.880 lot of pressure on pricing, and I think the thought 0:08:47.040 --> 0:08:51.280 is Dan Shulman used to be CEO of PayPal. He's 0:08:51.320 --> 0:08:56.440 got experience at Amex in the consumer finance business, so 0:08:56.559 --> 0:08:59.800 they're thinking in terms of how to monetize the hundred 0:08:59.840 --> 0:09:05.280 and fifty million consumer relationships they have to move into adjacencies. 0:09:05.840 --> 0:09:08.640 The naming of Shulman in my mind tells me they're 0:09:08.640 --> 0:09:12.200 looking to tap the consumer finance market. You know, they've 0:09:12.200 --> 0:09:16.400 already got a credit card business. I think it's probably 0:09:16.440 --> 0:09:19.000 doing pretty well, but they're not actually in the loan 0:09:19.080 --> 0:09:23.359 business there, but they're doing a lot of device financing, 0:09:23.559 --> 0:09:27.000 and so I think the hope, maybe this is my speculation, 0:09:27.960 --> 0:09:31.360 maybe that they can take that perhaps a step deeper 0:09:31.440 --> 0:09:35.760 into the consumer finance market and maybe other adjacencies to 0:09:35.800 --> 0:09:38.920 be able to monetize that base a little bit more 0:09:39.360 --> 0:09:42.400 and diversify away from the slowdown and wireless. 0:09:42.920 --> 0:09:46.200 I know Verizon they've kind of dabbled over the years, 0:09:46.200 --> 0:09:52.080 and other businesses, purchasing AOL and Yahoo. So what's the 0:09:52.080 --> 0:09:54.280 focus going forward here? Is it to try to just 0:09:55.160 --> 0:09:58.160 manage the wireless business as you know, the decline in 0:09:58.160 --> 0:09:59.880 the wireless business as best they can. 0:10:01.200 --> 0:10:04.720 So again it's the strategy here, Paul, I think, is 0:10:04.760 --> 0:10:07.240 to sort of build off that base that they have. 0:10:07.320 --> 0:10:12.080 The wireless business is stable, it's not going anywhere. It's 0:10:12.960 --> 0:10:17.280 typically a GDP plus business. Again, we're seeing a slowdown now, 0:10:17.880 --> 0:10:21.360 so it could move down to a GDP like growth rate. 0:10:22.120 --> 0:10:25.280 But again it's all about extensions. So all three of 0:10:25.320 --> 0:10:30.160 the majors here are pushing hard into consumer broadband. They're 0:10:30.200 --> 0:10:32.960 doing very well there, both in the fiber and the 0:10:33.000 --> 0:10:37.760 fixed wireless access business, but even that business is starting 0:10:37.800 --> 0:10:40.720 to mature a bit as it saturates here in the US. 0:10:40.760 --> 0:10:44.400 So the question becomes what's next, And maybe the what's 0:10:44.520 --> 0:10:48.800 next could be consumer finance. If you look at T Mobile, 0:10:48.840 --> 0:10:53.480 they've tapped the outdoor advertising market, which actually is growing 0:10:53.520 --> 0:10:58.760 double digit. I never would have guessed, but the thought is, hey, 0:10:58.880 --> 0:11:02.440 is people carry around these phones, we know where they are. 0:11:02.600 --> 0:11:06.480 Perhaps we can leverage that and come up with very 0:11:06.520 --> 0:11:12.600 innovative ways of increasing eyeballs on our outdoor advertising. So 0:11:12.640 --> 0:11:15.920 I think they're looking for that type of creative thinking 0:11:16.600 --> 0:11:19.560 to come up with new ways of generating growth. And 0:11:19.640 --> 0:11:23.080 again you're trying to leverage that huge core base of 0:11:23.160 --> 0:11:25.319 wireless subs that you have just. 0:11:25.280 --> 0:11:27.840 Been at their balance sheet, John, this is a this 0:11:27.920 --> 0:11:30.959 is company. Verizon's got one hundred and seventy billion dollars 0:11:31.360 --> 0:11:34.320 of total debt there, how's the How does the market 0:11:34.320 --> 0:11:35.400 feel about their balance sheet. 0:11:36.520 --> 0:11:41.200 So I think of the Big three, Verizon is probably 0:11:41.679 --> 0:11:44.160 at a point where they want to be in terms 0:11:44.200 --> 0:11:48.080 of financing the business. Can they load on a bunch 0:11:48.160 --> 0:11:51.959 more debt? It's it's hard to say. I'm going to 0:11:52.040 --> 0:11:55.040 defer to our credit at les for that, Steve Flynn, 0:11:55.760 --> 0:12:00.640 But I don't view their ability to finance new ventures 0:12:00.679 --> 0:12:04.000 as an issue here at all. It's a very cash 0:12:04.120 --> 0:12:07.839 rich business wireless that is, and you know, I think 0:12:07.960 --> 0:12:12.040 that will allow Verizon to bankroll any of the new 0:12:12.120 --> 0:12:14.800 ventures they plan to push into from here. 0:12:15.080 --> 0:12:17.840 Certainly pro shareholders. Is six point six percent dividend yield? 0:12:17.880 --> 0:12:18.520 Is that safe? 0:12:19.880 --> 0:12:22.480 I think it is safe. That's a good question. I 0:12:22.559 --> 0:12:26.840 think Verizon, of the Big three, really sort of gets 0:12:26.880 --> 0:12:29.680 it when it comes to the importance of the dividend 0:12:29.760 --> 0:12:33.680 to the investment community. There's a lot of telecoms out 0:12:33.679 --> 0:12:36.640 there at and T included that have cut the dividend 0:12:36.679 --> 0:12:39.679 in the past and learned the hard way that that 0:12:39.840 --> 0:12:42.719 really I call it the third rail of telecom. I mean, 0:12:42.760 --> 0:12:45.840 you do not want to cut the dividend yep. So 0:12:46.120 --> 0:12:49.120 my call here is that I think the dividend is safe. 0:12:49.200 --> 0:12:52.840 Yes, are Thanks to John Butler, Bloomberg Intelligence senior telecom 0:12:52.880 --> 0:12:55.680 analyst coming up a look at how IBM is planning 0:12:55.720 --> 0:12:56.920 to integrate AI tech. 0:12:57.440 --> 0:13:00.320 Listening to Bloomberg Intelligence on Bloomberg Radio, providing in depth 0:13:00.320 --> 0:13:02.679 research and data on two thousand companies and one hundred 0:13:02.679 --> 0:13:03.400 and thirty industries. 0:13:03.480 --> 0:13:06.559 You can access Bloomberg Intelligence via big on the terminal. 0:13:06.640 --> 0:13:07.640 I'm Scarlet Foo. 0:13:07.640 --> 0:13:09.880 And I'm Paul Sweeney. This is Bloomberg. 0:13:13.960 --> 0:13:18.480 This is Bloomberg Intelligence with Scarlet Foo and Paul Sweeney 0:13:18.800 --> 0:13:20.120 on Bloomberg Radio. 0:13:20.760 --> 0:13:22.680 We moved to some news in the tech space. 0:13:22.840 --> 0:13:25.400 This week. Advanced micro Devices landed a deal with open 0:13:25.400 --> 0:13:28.360 Ai to build AI infrastructure, and this gives the chip 0:13:28.400 --> 0:13:31.000 maker AMD a chance to challenge in VideA in the 0:13:31.040 --> 0:13:32.240 AI computing industry. 0:13:32.440 --> 0:13:36.120 Open Ai will deploy AMD graphics processing units over multiple years. 0:13:36.360 --> 0:13:38.440 The deal also sets the stage for open ai to 0:13:38.440 --> 0:13:40.480 acquire a large steak in the chip maker, with the 0:13:40.520 --> 0:13:42.640 ability to buy as many as one hundred and sixty 0:13:42.720 --> 0:13:43.840 million shares of AMD. 0:13:44.240 --> 0:13:46.440 So we asked for contacts from Ed Ludlow, b Tech 0:13:46.520 --> 0:13:48.760 co anchor. We first asked ed what he makes of 0:13:48.800 --> 0:13:49.440 this week's deal. 0:13:49.960 --> 0:13:52.800 The specifics of the deal a really important. What is 0:13:53.280 --> 0:13:56.160 open ai going to use AMD's technology for it's going 0:13:56.200 --> 0:13:58.720 to use it for inference, in other words, running the 0:13:58.760 --> 0:14:02.600 models that already exist, not training them. It is six 0:14:02.640 --> 0:14:07.440 gigawatts of capacity. The reason that that figure is critical 0:14:07.520 --> 0:14:10.360 is that it equates to the peak electricity demand of 0:14:10.640 --> 0:14:13.920 most major US cities. Like these are huge numbers, as 0:14:13.920 --> 0:14:17.960 you say, but it just speaks to what's happening to 0:14:18.040 --> 0:14:20.760 the mind of the participants in the industry, which is 0:14:20.840 --> 0:14:26.000 they will need this capacity. You guys are using words 0:14:26.040 --> 0:14:29.320 like top and bubble, and I think that's completely fair. 0:14:29.400 --> 0:14:31.800 Maybe you saw my column on the debt role that 0:14:32.440 --> 0:14:36.720 in what's happening. But I would say that AMD has 0:14:36.800 --> 0:14:40.600 done something interesting here which is different to what Nvidia did, 0:14:40.960 --> 0:14:45.800 which is they will issue stock two open Ai AMD 0:14:45.920 --> 0:14:50.240 shares going to open Ai, but only once open Ai 0:14:50.360 --> 0:14:53.720 is spent some money and actually built some stuff. So 0:14:53.760 --> 0:14:55.280 where's open Ai going to get the money? 0:14:56.440 --> 0:14:58.960 Well, that's why Sam Allman has been traveling the world 0:14:59.080 --> 0:15:02.640 meeting with all kinds of investors trying to get some funding. 0:15:02.960 --> 0:15:05.720 You said the specifics matter, ed, but we don't know 0:15:06.280 --> 0:15:10.040 how much this partnership, this deal is worth beyond the 0:15:10.160 --> 0:15:12.600 very generic tens of billions of dollars, right, that could 0:15:12.640 --> 0:15:15.000 be ten billion dollars, that could be ninety nine billion dollars. 0:15:15.200 --> 0:15:18.600 Yes, that's correct. I mean AMDCFO framed it as being 0:15:18.720 --> 0:15:22.240 tens of billion dollars of revenue opportunity. But that's why 0:15:22.560 --> 0:15:24.760 I think the specifics of the terms I've made a 0:15:24.760 --> 0:15:29.520 careful examination of them are really important understand versus what 0:15:29.640 --> 0:15:32.800 Nvidia did with open Ai. So Nvidia said it was 0:15:32.840 --> 0:15:36.200 going to invest one hundred billion dollars into open Ai. 0:15:36.760 --> 0:15:39.160 We don't even know if that was cash or chips 0:15:39.200 --> 0:15:43.120 in lieu of cash, but basically in Nvidia would get 0:15:43.120 --> 0:15:46.160 some equity in open Ai in return. In this instance 0:15:46.240 --> 0:15:50.200 AMD and open Ai. Open ai is getting AMD shares, 0:15:50.600 --> 0:15:54.520 but they are deliverable in tranches against s milestones, which 0:15:54.560 --> 0:15:57.480 relate to literally building the data centers. So for each 0:15:57.520 --> 0:16:00.080 gig of wat of capacity that comes online, am you 0:16:00.080 --> 0:16:02.520 would then say, here is this tranch of stock. And 0:16:02.560 --> 0:16:06.200 that's why I'm saying focus on the open ai obligation here. 0:16:06.680 --> 0:16:09.800 They need actual money to dig up the dirt, to 0:16:09.840 --> 0:16:12.120 put the foundations in, get the data center up, and 0:16:12.120 --> 0:16:15.440 put the servers in before any of this stock comes 0:16:15.440 --> 0:16:15.960 into play. 0:16:16.320 --> 0:16:19.000 Our thanks to ed Lovelow be Tech co anchor Staying 0:16:19.040 --> 0:16:19.440 with tech. 0:16:19.560 --> 0:16:22.080 This week, the tech company IBM announced a plan to 0:16:22.080 --> 0:16:25.800 integrate anthropics AI technologies into its software solutions. 0:16:26.000 --> 0:16:28.080 IBM said it will make the startups claud family of 0:16:28.160 --> 0:16:31.320 large language models accessible for its clients. Shares the IBM 0:16:31.520 --> 0:16:32.800 jump after the news. 0:16:32.560 --> 0:16:34.360 So for more, we were joined by Ana ag Rana, 0:16:34.400 --> 0:16:38.120 Bloomberg Intelligence technology analyst. We began by asking anag how 0:16:38.160 --> 0:16:40.160 he evaluates this latest partnership. 0:16:40.480 --> 0:16:42.520 See, when you come to a company like IBM, I 0:16:42.520 --> 0:16:44.520 think they have done a very good job of being 0:16:44.560 --> 0:16:48.120 open and partnering with other vendors. I think the acquisition 0:16:48.160 --> 0:16:50.240 of red Hat was the first such example a few 0:16:50.320 --> 0:16:52.840 years ago, and frankly speaking, the company has turned around 0:16:52.880 --> 0:16:55.120 quite a bit. Now it's more of a software company 0:16:55.120 --> 0:16:58.280 than it is a service order hardware company. IBM still 0:16:58.320 --> 0:17:02.160 has a lot of footprint in legacy companies and their 0:17:02.280 --> 0:17:06.600 internal infrastructure, whether that's a regulated entity, whether that's you know, 0:17:06.640 --> 0:17:10.399 an on premise software. What they're basically saying is for 0:17:10.520 --> 0:17:13.680 these companies who want to add more AI capabilities into 0:17:13.720 --> 0:17:16.120 their infrastructure, we're going to use one of the best 0:17:16.160 --> 0:17:19.600 models that's out there, and that's anthropic. They're not, you know, 0:17:19.720 --> 0:17:23.560 just solely dependent on IBM's own internal models. But you know, 0:17:23.600 --> 0:17:25.960 we see more and more of that happening that companies 0:17:26.040 --> 0:17:28.800 like IBM and other services companies will go out and 0:17:29.200 --> 0:17:31.879 partner with you know, anthropic with open ai which M 0:17:31.920 --> 0:17:36.160 and I and give more enterprise capabilities to to vendors, 0:17:36.400 --> 0:17:37.000 to companies. 0:17:37.000 --> 0:17:41.040 Basically, how does anthropic differ from open ai if at all? 0:17:41.359 --> 0:17:43.880 That's a very good question, Pauland right now what we're 0:17:43.880 --> 0:17:46.320 seeing is entropy is pushing more and more stuff on 0:17:46.359 --> 0:17:50.040 the corporate side or the enterprise side, on open Ai side. 0:17:50.040 --> 0:17:53.000 You know, their core businesses still chat GPT, which is 0:17:53.040 --> 0:17:55.520 the app, and that's more of a consumer app right now. 0:17:55.720 --> 0:17:58.280 And the question is, you know which one of the 0:17:58.320 --> 0:18:01.239 models will somebody use, Whether if you are let's say, 0:18:01.280 --> 0:18:03.400 a JP Morgan or a City Corp, you know, would 0:18:03.400 --> 0:18:05.280 you be going to be using one of their models 0:18:05.359 --> 0:18:07.919 or an open source model. I think they're going to 0:18:07.920 --> 0:18:11.560 be using all of the models. What anthropic relationship with 0:18:11.640 --> 0:18:14.280 IBM does. It actually helps them to spread the word 0:18:14.320 --> 0:18:17.400 out across their entire customer base. So if you are 0:18:17.400 --> 0:18:20.000 trying to get more coding done, for example, in an 0:18:20.000 --> 0:18:22.960 IT department and you have all the legacy products that 0:18:23.040 --> 0:18:26.000 they're now you can use you know, an AI model 0:18:26.080 --> 0:18:28.920 from Anthropic rather than using you know, whatever tools you 0:18:29.000 --> 0:18:29.600 had before. 0:18:29.840 --> 0:18:33.240 Okay, so it makes sense why Anthropic is a good 0:18:33.240 --> 0:18:36.359 fit for IBM or how it's going to incorporate Anthropic 0:18:36.359 --> 0:18:40.480 into IT software. But what does IBM specifically offer Anthropic? 0:18:40.560 --> 0:18:44.159 What access does IBM have that Anthropic wants and needs. 0:18:45.440 --> 0:18:48.000 That's another excellent question. And in this case you're looking 0:18:48.040 --> 0:18:51.640 at IBM's entire customer base. IBM has a very large 0:18:51.640 --> 0:18:55.400 services business or IBM consulting. These consultant will go out 0:18:55.440 --> 0:18:58.960 and sell Anthropic software into the enterprises and say, hey, bank, 0:18:59.080 --> 0:19:02.080 let me help you to you know, automate this particular 0:19:02.160 --> 0:19:04.639 process and you can use it with this software. It 0:19:04.760 --> 0:19:07.520 drives their consulting business and it also helps out their 0:19:07.560 --> 0:19:10.160 software business, which is fairly popular. 0:19:10.240 --> 0:19:13.920 Right now, IBM hitting all time high on a rug. 0:19:14.200 --> 0:19:16.119 This stock has found that a new life has. 0:19:15.960 --> 0:19:18.600 It absolutely and this is something that we've been saying 0:19:18.640 --> 0:19:21.119 it for almost five years now that you know, the 0:19:21.680 --> 0:19:25.240 acquisition of red Hat completely changed it. You know, if 0:19:25.280 --> 0:19:27.240 you go back and look at some of the comments 0:19:27.240 --> 0:19:29.680 we've made on TV about IBM. Prior to red Hat, 0:19:29.880 --> 0:19:32.000 it was a very closed company. It only wanted to 0:19:32.000 --> 0:19:34.400 sell their own products to people and was not very 0:19:34.480 --> 0:19:36.600 keen on embracing you know, what I would say is 0:19:36.600 --> 0:19:40.080 open source. With the acquisition of red Hat and the 0:19:40.119 --> 0:19:42.080 company saying, you know what, red Hat can work with 0:19:42.160 --> 0:19:44.640 any cloud provider, I think that was the biggest difference 0:19:44.680 --> 0:19:48.119 to me was it allowed red Hat to work with 0:19:48.240 --> 0:19:53.159 companies but based on Amazon Web Services or Microsoft, so 0:19:53.200 --> 0:19:55.600 they were not just pushing their own cloud products, and 0:19:55.640 --> 0:19:58.639 I think that really made a difference. Their software business 0:19:58.680 --> 0:20:01.800 has been doing so well competitively to the rest of 0:20:01.840 --> 0:20:03.800 the world, and I think that's where you see the 0:20:03.800 --> 0:20:06.760 market validation that this is the right strategy for them. 0:20:06.880 --> 0:20:09.920 Our thanks to Ana rog Rana Bloomberg Intelligence technology analysts. 0:20:10.160 --> 0:20:12.080 We moved to some more news in the IT hardware 0:20:12.119 --> 0:20:13.920 space this week and it's investor day. 0:20:13.920 --> 0:20:17.040 Dell Technologies roughly doubled its growth estimates for sales and 0:20:17.080 --> 0:20:18.320 profit for the next two years. 0:20:18.400 --> 0:20:21.640 Dell also said demand for artificial intelligence products will extend 0:20:21.680 --> 0:20:24.080 those higher projections at least through twenty thirty. 0:20:24.280 --> 0:20:27.560 Separately, Cisco system says it is releasing a new chip 0:20:27.720 --> 0:20:31.360 networking system to connect AIDATA centers across hundreds of miles. 0:20:31.440 --> 0:20:33.239 So for more on both of these companies, we were 0:20:33.280 --> 0:20:36.800 joined by Woujin Hoo Bloomberg Intelligence senior technology analysts. We 0:20:36.880 --> 0:20:39.320 began by asking Woods should break down what we heard 0:20:39.359 --> 0:20:39.720 from Dell. 0:20:40.200 --> 0:20:42.320