WEBVTT - Sam Returns to OpenAI and Nvidia Earnings Beat Estimates 0:00:01.800 --> 0:00:06.119 From Mahart where innovation, money and power. Collie in Silicon 0:00:06.200 --> 0:00:07.080 Vallet NBN. 0:00:07.440 --> 0:00:11.680 This is Bloomberg Technology with Caroline Hyde and Ed loved Love. 0:00:26.520 --> 0:00:29.440 I med Lolo in San Francisco. Caroline hides off today 0:00:29.480 --> 0:00:32.440 this is Bloomberg Technology in my water show we have 0:00:32.560 --> 0:00:36.080 for you coming up. Sam Outman returns to open Ai. 0:00:36.200 --> 0:00:39.120 Will break down the changes at the artificial intelligence company. 0:00:39.320 --> 0:00:42.559 As Outman takes the helm after a shock Ouster, we 0:00:42.560 --> 0:00:46.800 speak to Vino Kosler, the first venture investor into open Ai. 0:00:47.159 --> 0:00:49.920 Past the world's most valuable chipmaker and Nvidia tops earnings 0:00:50.000 --> 0:00:53.760 estimates that fails to meet loftier expectations from investors. We 0:00:53.840 --> 0:00:57.320 break down the results and will take a deep dive 0:00:57.400 --> 0:01:00.560 into the world of crypto as cz pleads Gill to 0:01:00.680 --> 0:01:04.759 criminal charges for anti money laundering and US sanctions violations. 0:01:04.800 --> 0:01:07.319 All that and so much more ahead a very quick 0:01:07.400 --> 0:01:09.720 check on the kind of public market perspective of what 0:01:09.800 --> 0:01:12.080 is going on in the world. Nvidia smashes it in 0:01:12.080 --> 0:01:15.319 the fiscal third quarter, gives a very strong outlook in 0:01:15.360 --> 0:01:19.240 the fiscal fourth quarter ahead of the street consensus. The 0:01:19.360 --> 0:01:23.560 story the impact of US technology curbs taking hold. It 0:01:23.600 --> 0:01:25.800 will impact them in the fiscal fourth quarter. We will 0:01:25.800 --> 0:01:28.679 go deep and bring you the analysis on that stock 0:01:29.000 --> 0:01:31.360 and what the world of AI accelerators looks like going 0:01:31.400 --> 0:01:34.560 into next year. The other publicly traded proxy for the 0:01:34.560 --> 0:01:38.600 big story is Microsoft. Sam Altman is back at open Ai. 0:01:39.360 --> 0:01:41.840 This is largely being seen as a big cluss for 0:01:41.880 --> 0:01:44.120 Microsoft to stock up one point five percent. It's the 0:01:44.160 --> 0:01:46.880 third time this week that Microsoft has hit a fresh 0:01:46.959 --> 0:01:50.720 record high. There is some element that Microsoft gets what 0:01:50.800 --> 0:01:53.480 it wants. We will discuss that throughout the program. We 0:01:53.520 --> 0:01:56.480 have an excellent external voice coming right up. But first 0:01:56.600 --> 0:01:59.880 our top story, Sam Outman's return to open Ai as CEO. 0:02:00.080 --> 0:02:03.160 I want to bring in Sharen Gafari. Okay, let's start 0:02:03.160 --> 0:02:06.400 with the basics. Sam Ountman is back as CEO, and 0:02:06.480 --> 0:02:10.840 there are some temporary board changes. We don't know, let's 0:02:10.840 --> 0:02:12.360 be honest, but what are those changes? 0:02:12.840 --> 0:02:13.000 Right? 0:02:13.120 --> 0:02:15.760 So, there are some new board members and you know, 0:02:15.840 --> 0:02:18.120 it's unclear exactly the details, but it seems like there 0:02:18.160 --> 0:02:20.840 may they may be appointing a new board long term. 0:02:21.160 --> 0:02:25.200 For now, it is going to be Larry Summers. Adam 0:02:25.240 --> 0:02:26.920 Dangelo is still on the board, who. 0:02:26.760 --> 0:02:28.680 Was already a board member, who was already. 0:02:28.320 --> 0:02:29.040 A board member. 0:02:30.080 --> 0:02:32.520 And then we have Brett Taylor. 0:02:32.560 --> 0:02:35.640 Brett Taylor, that's right, who was also a remember on 0:02:35.720 --> 0:02:36.919 the board of Twitter, right. 0:02:36.919 --> 0:02:39.799 He was chairman when Twitter now known as X was 0:02:39.840 --> 0:02:40.959 sold to Elon Musk. 0:02:40.800 --> 0:02:43.720 Correct, So he has experience with companies and crises, right 0:02:43.760 --> 0:02:47.679 and during leadership changes. So that's a new board we're 0:02:47.720 --> 0:02:51.079 seeing reported, right. But Tasha and Helen are out. 0:02:51.400 --> 0:02:54.320 Yeah, I'm hearing that from sources as well. Yep, Tusha 0:02:54.320 --> 0:02:56.960 and Helen, who were on the board that that fired 0:02:57.120 --> 0:03:00.560 Sam Outman, excuse me, Friday are not as it stands 0:03:00.600 --> 0:03:03.200 my understanding, and I think other outlets are reported they're 0:03:03.200 --> 0:03:04.360 not on the board, correct. 0:03:04.360 --> 0:03:07.239 And remember Tasha and Helen were both keyboard members who 0:03:07.320 --> 0:03:12.200 ousted Sam Altman, right, And we're behind essentially this coup. 0:03:12.639 --> 0:03:15.120 So it makes sense that with Sam returning, part of 0:03:15.120 --> 0:03:18.000 that negotiation would involve having people who turned on him out. 0:03:18.360 --> 0:03:22.480 For our audience worldwide disclosure, Larry Summers is a paid 0:03:22.600 --> 0:03:27.239 contributor on Bloomberg Television, So that's that a lot of 0:03:27.240 --> 0:03:30.280 people around the world ask why the drama? Why do 0:03:30.400 --> 0:03:32.720 any of us around the world care about open AI 0:03:33.000 --> 0:03:37.680 who leads it? The answer to me seems well, open 0:03:37.720 --> 0:03:40.840 Ai is the face of AI, absolutely. 0:03:40.920 --> 0:03:44.040 I mean, this is an industry leader. Remember that AI 0:03:44.200 --> 0:03:46.640 has been something that Silicon Valley talked about for decades, 0:03:46.640 --> 0:03:49.680 but it didn't really explode onto the market until Opening 0:03:49.680 --> 0:03:52.680 Eye came out with Chatchipt just about a year ago. Right, 0:03:52.760 --> 0:03:55.280 that was a breakthrough moment. So they are the ones 0:03:55.320 --> 0:03:57.240 setting the tone for this industry. They are the ones 0:03:57.320 --> 0:04:00.680 making AI relevant on a consumer level. They're the ones 0:04:00.680 --> 0:04:02.400 who came out with products at one hundred you know, 0:04:02.400 --> 0:04:05.480 one hundred million people are actually using So how AI go, 0:04:05.640 --> 0:04:07.360 how open Ai go, as the rest of the industry 0:04:07.400 --> 0:04:09.040 will go. And that's why I think people should care. 0:04:08.960 --> 0:04:09.640 About this story. 0:04:09.840 --> 0:04:12.080 I think it's important to recap that this will started 0:04:12.080 --> 0:04:16.960 Friday lunchtime and we are now Wednesday, the day before Thanksgiving, 0:04:17.680 --> 0:04:21.760 and we actually don't have a definitive end to this story. 0:04:21.880 --> 0:04:25.520 There's a part of the resolution where there will be 0:04:25.560 --> 0:04:29.359 an independent investigation into Sam Outman why he was fired. 0:04:29.440 --> 0:04:32.320 Just explain the rest of what was announced late last 0:04:32.400 --> 0:04:33.240 night by open Ai. 0:04:34.160 --> 0:04:37.240 Correct, So we're going to see you know, and again, 0:04:37.279 --> 0:04:39.360 remember this is a negotiation between two sides. 0:04:39.400 --> 0:04:41.040 You have the old board who. 0:04:40.920 --> 0:04:43.039 Was very skeptical of Sam Altman and pushed him out, 0:04:43.279 --> 0:04:46.400 and then you have Sam having this prodigal return. So 0:04:47.600 --> 0:04:49.640 on the other side, we sort of see this concession 0:04:49.640 --> 0:04:52.360 and that there will be an investigation into Sam's. 0:04:53.560 --> 0:04:54.080 Conduct. 0:04:54.920 --> 0:04:57.760 So far, the only allegations we've seen raised against him 0:04:57.800 --> 0:04:59.640 by the board or people close to the board are 0:05:00.080 --> 0:05:05.159 pretty vague, right, just statements around that he essentially was 0:05:05.240 --> 0:05:07.080 not candid with the board, but we don't know about 0:05:07.080 --> 0:05:10.480 exactly what was he not candid allegedly. 0:05:10.560 --> 0:05:15.400 Now you're maybe maybe a philosophical point of difference on 0:05:15.680 --> 0:05:18.719 the existential threat of AI and I reported and you 0:05:18.839 --> 0:05:22.320 reported that one reason Emmitt Sheer has added as the 0:05:22.360 --> 0:05:24.480 CEO and interim basis is that he was an EA. 0:05:24.560 --> 0:05:25.760 He shared that stential threat. 0:05:25.920 --> 0:05:27.640 Yes, and that gets to a key detail that we 0:05:27.680 --> 0:05:31.080 should mention, which is that you know, the interim CEO, 0:05:31.160 --> 0:05:33.800 em Shear is stepping down right right, and so he's 0:05:33.839 --> 0:05:35.520 being seen in the industry now and seeing a lot 0:05:35.560 --> 0:05:38.480 of people react in texting that he he sort of 0:05:39.279 --> 0:05:42.800 is actually not as maybe bad as people thought who 0:05:42.839 --> 0:05:44.800 were pro Sam, because he's sort of giving up now 0:05:44.839 --> 0:05:46.360 and letting Sam Altman come back. 0:05:46.240 --> 0:05:49.599 All right, Bloomberg's sharing Gafara, You've been just an incredible 0:05:49.640 --> 0:05:51.880 reporting over the last five days or so. Let's continue 0:05:51.880 --> 0:05:55.240 the conversation. There is another party to this drama, Microsoft, 0:05:55.279 --> 0:05:57.800 and we need to understand what this means for them. 0:05:57.839 --> 0:06:01.039 Michael Pacter of Webbush joins us. Now someone this covied 0:06:01.080 --> 0:06:04.840 Microsoft Clay State for a long time. Simple question, what 0:06:04.880 --> 0:06:06.120 does this mean for Microsoft? 0:06:08.040 --> 0:06:10.000 It's pretty huge, you know. 0:06:10.000 --> 0:06:14.200 I think that if you think about why we haven't 0:06:14.240 --> 0:06:19.360 had deep AI solutions for the last twenty years, it's 0:06:19.400 --> 0:06:23.919 that computing power hadn't caught up. And open Ai is 0:06:24.040 --> 0:06:27.640 integrated into Microsoft Cloud. Microsoft made a huge investment in 0:06:27.680 --> 0:06:31.880 them to make sure that happens. And Microsoft Cloud is 0:06:32.279 --> 0:06:37.040 building its scale. It's scaling all of its products, all 0:06:37.040 --> 0:06:40.160 of its user interface, all of its developer and product 0:06:40.200 --> 0:06:43.120 interfaces to make sure they work with open Ai. So 0:06:43.680 --> 0:06:47.360 you need massive computing power. You know, if you were 0:06:47.400 --> 0:06:51.479 to decide to write Charles Dickens novel and The Voice 0:06:51.480 --> 0:06:54.880 of Stephen King, you need a product that's going to 0:06:54.920 --> 0:07:00.000 read every tools Dickens ever and that requires massive cloud capabilities. 0:07:00.000 --> 0:07:05.160 So Microsoft is leveraging something it's already built and integrating 0:07:05.200 --> 0:07:07.480 it into what they consider it to be the up 0:07:07.480 --> 0:07:11.200 and coming application and developers are going to be forced 0:07:11.240 --> 0:07:13.920 to use Microsoft Cloud if they want to use up 0:07:13.920 --> 0:07:14.200 in AI. 0:07:15.600 --> 0:07:18.840 But Michael Pactor, this is not a Charles Dickens novel. 0:07:19.240 --> 0:07:21.400 This is real life. For what it's worth, I've lived 0:07:21.400 --> 0:07:24.480 it for the last five days. I want to go 0:07:24.520 --> 0:07:27.520 to the point of what Satya Nadella told our Emily Chang, 0:07:27.920 --> 0:07:31.679 which is, surprises are bad. And clearly, as we've reported 0:07:31.720 --> 0:07:36.960 at Bloomberg, a priority for Microsoft was to address governance changes, 0:07:37.040 --> 0:07:41.480 governance structure. Can Microsoft say with any certainty and you 0:07:41.520 --> 0:07:45.760 know you're analyzing the stock right and it's in Microsoft's leadership, 0:07:46.040 --> 0:07:49.040 but can they say with any certainty that this is 0:07:49.160 --> 0:07:51.600 the end of the story, this is the outcome that 0:07:51.640 --> 0:07:52.200 they wanted. 0:07:53.440 --> 0:07:53.960 They meet a. 0:07:53.960 --> 0:07:57.720 Lot of friends, I think by hiring Sam Mortman. And 0:07:57.800 --> 0:08:01.080 you know, you saw that the letter, you know, demanding 0:08:01.080 --> 0:08:03.560 the board resign was signed by seven hundred and fifteen 0:08:03.640 --> 0:08:07.000 of the seven hundred and fifty employees they then offered 0:08:07.040 --> 0:08:10.360 apparently offered all of those employees of job of Microsoft. 0:08:10.480 --> 0:08:15.080 So you know, would they rather have rebuilt everything starting 0:08:15.120 --> 0:08:17.280 from scratch with all the same employees or would they 0:08:17.400 --> 0:08:21.600 rather just leverage what those employees have already built. And ultimately, 0:08:21.800 --> 0:08:25.360 I think it's easier to just continue the partnership than 0:08:25.440 --> 0:08:28.000 to try to rebuild. So I think that they won 0:08:28.120 --> 0:08:31.520 either way, they win more. I think keeping things as 0:08:31.640 --> 0:08:35.200 is it will require less of an investment. Nadella managed 0:08:35.240 --> 0:08:38.920 this masterfully. I mean, he honestly was an honest broker 0:08:38.960 --> 0:08:42.040 in the whole process, and he reaffirmed his commitment to 0:08:42.559 --> 0:08:45.600 Altman and to the product and to the product team. 0:08:45.679 --> 0:08:49.599 So I think everything that they did was just flawlessly executed. 0:08:49.880 --> 0:08:54.599 Michael, how closely is Microsoft's valuation tied to the investment 0:08:54.640 --> 0:08:57.080 it made in Microsoft a thesis outline on the show 0:08:57.559 --> 0:09:01.520 yesterday that the ten billion investment they put into open 0:09:01.559 --> 0:09:04.640 Ai at the beginning of the year has translated to 0:09:04.720 --> 0:09:08.920 the one trillion valuation. It's direct. Do you agree with that? 0:09:10.280 --> 0:09:14.680 I look, it's really it's hard to value Microsoft based 0:09:14.679 --> 0:09:19.800 solely on a single investment. The company is worth the 0:09:19.880 --> 0:09:22.400 sum of its future cash flows, and so if the 0:09:22.440 --> 0:09:26.400 market is making a bet that Microsoft can leverage ten 0:09:26.520 --> 0:09:30.320 or thirteen billion into a trillion of ultimate profit, then 0:09:30.400 --> 0:09:33.000 the market's right. I mean, that's really what this comes 0:09:33.040 --> 0:09:35.680 down to that the market thinks that this is going 0:09:35.720 --> 0:09:37.800 to turn into let's say, one hundred billion to free 0:09:37.880 --> 0:09:41.360 cash flow a year in perpetuity. You know, at some 0:09:41.480 --> 0:09:45.000 point twenty thirty years from now. I'm not smart enough 0:09:45.040 --> 0:09:46.839 to tell you what the market is thinking. I can 0:09:46.880 --> 0:09:49.080 tell you that this is worth a lot to them. 0:09:49.120 --> 0:09:51.160 And I as to say current market cap two point 0:09:51.280 --> 0:09:53.800 eight trillion. Michael Packtive web Bits. Great to have you 0:09:53.840 --> 0:10:04.400 on this program, Thank you so much. This is an 0:10:04.440 --> 0:10:08.040 individual H one hundred GPU, or graphics processing unit in 0:10:08.160 --> 0:10:11.240 videos AI accelerator, But in reality, it's not just a 0:10:11.320 --> 0:10:13.360 chip that comes out of a plant. When we talk 0:10:13.360 --> 0:10:17.199 about the h one hundred GPUs training AI models, we're 0:10:17.360 --> 0:10:22.319 likely talking about DGXH one hundred in videos AI supercomputer. 0:10:22.600 --> 0:10:26.160 That's eight h one hundred GPUs combined, capable of thirty 0:10:26.160 --> 0:10:31.760 two quadrillion floating point operations per second, crazy computer performance. 0:10:31.960 --> 0:10:33.720 It's a server design, and this is what it looks 0:10:33.760 --> 0:10:35.760 like under the lid. It starts with an H one 0:10:35.800 --> 0:10:39.080 hundred GPU seen here in the form of an SXM module. 0:10:39.160 --> 0:10:42.360 Eight individual sxms are topped with heat six, designed to 0:10:42.360 --> 0:10:46.040 dissipate heat generated from running big AI workloads. Those are 0:10:46.040 --> 0:10:49.520 connected on a single baseboard by interconnectors, and that assembly 0:10:49.520 --> 0:10:52.880 alone weighs sixty pounds. Add CPUs and other components, and 0:10:52.920 --> 0:10:56.200 a finished DGX system weighs almost three hundred pounds. But 0:10:56.240 --> 0:10:59.360 the scale in the real world is bigger still. Some 0:10:59.400 --> 0:11:01.520 of the most power of four large language models are 0:11:01.520 --> 0:11:05.880 trained on the Nvidia DGX super Pod. That is thirty 0:11:05.880 --> 0:11:09.520 two DGX eight one hundred systems combined into what's called 0:11:09.559 --> 0:11:13.560 a scalable unit. At its absolute most mind modeling scale, 0:11:13.640 --> 0:11:17.640 DGX Superpod can be up to sixty four scalable units. 0:11:17.880 --> 0:11:22.760 That's more than sixteen thousand individual h one hundred GPUs. 0:11:23.160 --> 0:11:27.640 An AI company may use several superpods to train their LLLM. 0:11:27.880 --> 0:11:30.319 In the end, the DGX infrastructure sent out to the 0:11:30.360 --> 0:11:34.120 hyperscale cloud providers to put in their massive data centers. 0:11:36.480 --> 0:11:38.720 We bring you that video something we put out before 0:11:38.720 --> 0:11:41.360 because it was a point of discussion on the call 0:11:41.440 --> 0:11:45.240 and video reporting third quarter results beating expectations in the 0:11:45.240 --> 0:11:47.920 fiscal third quarter yesterday, giving an outlook for the fiscal 0:11:48.000 --> 0:11:51.400 fourth which was strong on any account. The Chick Company 0:11:51.679 --> 0:11:54.160 been a major beneficiary of the AI trade up more 0:11:54.160 --> 0:11:56.760 than two hundred and forty percent this year on the stock, 0:11:57.160 --> 0:12:01.040 prompting Wolf Research is Chris Casso to remain very bullish 0:12:01.080 --> 0:12:03.720 and outperformed rating and a six hundred and thirty dollars 0:12:03.720 --> 0:12:07.319 price target on that stock, and Chris Casso joins us 0:12:07.320 --> 0:12:12.000 now welcome to the program, Wolf Research, Managing Director for Semiconductors. 0:12:12.360 --> 0:12:14.960 So the stocks down, we go into this saying really 0:12:15.000 --> 0:12:18.719 high hurdle. They didn't pass the really high herd or 0:12:18.760 --> 0:12:22.120 based on the stock reaction. But what was the big 0:12:22.160 --> 0:12:25.560 takeaway for you? What did you learn about in Video's 0:12:25.640 --> 0:12:26.600 data center business. 0:12:27.800 --> 0:12:31.640 Well, certainly the numbers were very strong and as you said, 0:12:32.640 --> 0:12:37.280 expectations re elevated coming into the print. But the concern 0:12:37.320 --> 0:12:40.360 that we heard from investors coming into this event was 0:12:40.800 --> 0:12:44.280 not about how strong the numbers are right now. It's 0:12:44.320 --> 0:12:47.280 really about where do we go from here? And I 0:12:47.320 --> 0:12:51.000 think there's some concerns over just kind of peak revenue 0:12:51.040 --> 0:12:55.520 here in calendar twenty four, precisely because in Vidia has 0:12:55.600 --> 0:13:00.480 become such a large part of overall cloud capex, and 0:13:00.720 --> 0:13:03.040 what we think they need to do next is give 0:13:03.080 --> 0:13:05.920 people comfortable comfort that you know there's just going to 0:13:05.920 --> 0:13:10.480 be enough dollars to be able to generate in video growth. Right, 0:13:11.040 --> 0:13:13.400 what we think is of the next year, there's enough 0:13:13.440 --> 0:13:17.160 product cycle catalyst, there's new products coming out, and most importantly, 0:13:17.200 --> 0:13:21.040 the pricing of those products are substantially higher, which is 0:13:21.080 --> 0:13:21.840 driving growth. 0:13:22.400 --> 0:13:23.599 But the longer. 0:13:23.440 --> 0:13:25.400 Term that I think kind of really moves to the 0:13:25.400 --> 0:13:28.480 stock well over five hundred dollars is convincing people that 0:13:28.840 --> 0:13:31.600 you know, there's enough dollars flowing into the data center 0:13:31.640 --> 0:13:33.040 to be able to commodate this growth. 0:13:33.640 --> 0:13:35.680 Okay, so let's go there. This is what Jensen Huang, 0:13:35.760 --> 0:13:39.079 the CEO of the Video said on the call. Absolutely 0:13:39.440 --> 0:13:43.120 he sees data center can grow through twenty twenty five. 0:13:43.240 --> 0:13:48.120 Several factors or reasons. They're expanding their supply quite significantly. 0:13:48.240 --> 0:13:50.440 Do you buy that and that's calendar year twenty five, 0:13:50.480 --> 0:13:51.960 by the way, not fiscal twenty five. 0:13:53.040 --> 0:13:55.640 Well, certainly that's the case, and you know we've seen 0:13:55.679 --> 0:13:58.400 we speak to the suppliers and that, and certainly they're 0:13:58.400 --> 0:14:02.760 Any capacity is a particular type of assembly back end 0:14:02.760 --> 0:14:06.600 capacity that's very unique to Innvidia that nobody expected it 0:14:06.600 --> 0:14:08.559 to be this large at this point. It takes some 0:14:08.679 --> 0:14:12.920 time to add that capacity. That happens again. The other factor, 0:14:12.960 --> 0:14:15.920 which I think is somewhat misunderstood with regard to the 0:14:15.920 --> 0:14:18.880 stock is a large part of the growth is coming 0:14:18.920 --> 0:14:22.760 from pricing, and that's a function of more's loss slowing down. 0:14:23.280 --> 0:14:27.120 The chips themselves are more expensive. The H one hundred 0:14:27.160 --> 0:14:30.320 of the current version is almost three times as expensive 0:14:30.360 --> 0:14:33.400 as the prior version, but the benefit the Nvidia gives 0:14:33.440 --> 0:14:35.920 you is that it's more than ten times the performance, 0:14:36.440 --> 0:14:36.960 so you're. 0:14:38.320 --> 0:14:39.400 Basically more of this. 0:14:39.400 --> 0:14:42.200 This pricing is coming to in Nvidia because they're giving 0:14:42.200 --> 0:14:44.240 you so much more performance for the same dollar. 0:14:45.640 --> 0:14:48.720 So the big unknown is the long term ability to 0:14:48.840 --> 0:14:51.440 sell chips into China. This is what collect Cres the 0:14:51.440 --> 0:14:55.560 CFO said in the letter to shareholders that basically there 0:14:55.560 --> 0:14:57.680 will be an impact in the fiscal for from US 0:14:57.720 --> 0:15:01.040 technology curves right, and they will ship bless the China 0:15:01.480 --> 0:15:04.640 in that quarter, but they will more than make up 0:15:04.760 --> 0:15:08.520 for it in growth or offset by strong growth in 0:15:08.600 --> 0:15:11.960 other regions. How do you price in the China risk 0:15:12.040 --> 0:15:12.640 on this stock? 0:15:13.800 --> 0:15:17.040 Well, for right now, for the January quarter guidance, there's 0:15:17.240 --> 0:15:20.760 very little China in there right now, so you know, 0:15:20.840 --> 0:15:24.280 to some extent that's been de risked already. We also 0:15:24.400 --> 0:15:26.680 when a company talked on the call, and our own 0:15:26.760 --> 0:15:29.320 checks have been indicating that there is a new chip 0:15:29.360 --> 0:15:31.520 that will be compliant with China that will come out 0:15:31.560 --> 0:15:34.200 in the first half of next year. You would imagine 0:15:34.240 --> 0:15:36.400 that there's some pent up demand for that chip since 0:15:36.440 --> 0:15:39.080 that you know, they can't ship it in the January quarter. 0:15:39.720 --> 0:15:42.720 The question that management doesn't know is what's going to 0:15:42.720 --> 0:15:46.400 be the reception of this chip in China. And it's 0:15:46.440 --> 0:15:49.000 going to have less performance because that's what's required to 0:15:49.000 --> 0:15:54.160 meet the new regulations, but you know, what are the 0:15:54.240 --> 0:15:56.840 Chinese going to do with it? Our view is that 0:15:56.880 --> 0:15:59.200 we think there's the Chinese customers are still going to 0:15:59.200 --> 0:16:01.680 buy it because there's really no alternative in the marketplace 0:16:01.760 --> 0:16:06.520 right now. And the problem is that there are local 0:16:07.080 --> 0:16:12.360 Chinese alternatives from from folks like Huaweih for example, but 0:16:12.720 --> 0:16:16.960 that's also a company with manufacturing restrictions on China. So 0:16:18.000 --> 0:16:20.840 they can build an ANI chap, they can design an 0:16:20.880 --> 0:16:22.920 AI chip, but they can't build it with leading edge 0:16:22.960 --> 0:16:27.760 technology because Chinese manufacturing facilities don't have access to that. So, 0:16:28.160 --> 0:16:29.840 you know, none of it is we think the Chinese 0:16:29.840 --> 0:16:31.760 are going to have to buy in video product, even 0:16:31.840 --> 0:16:34.720 if it's less performance, because that's all what's going to be. 0:16:34.680 --> 0:16:38.880 A beltwright Chris Chris Casso, Wolf Research Managing director covering 0:16:38.880 --> 0:16:40.880 Semis with tie on time. But we're grateful to have 0:16:40.920 --> 0:16:42.560 you on the show. Thank you know. Coming up here 0:16:42.560 --> 0:16:47.240 on b tech Binance, ceocz pleads guilty to anti money 0:16:47.440 --> 0:16:51.000 laundering and US sanctions violations of Jilak. Joe Bamputra, founder 0:16:51.000 --> 0:16:53.840 and managing partner of Future Perfect Ventures, is our guest 0:16:53.880 --> 0:17:13.399 with the take. Next. This has been bog Technology. Another 0:17:13.480 --> 0:17:17.440 story we're watching finance after its CEO, Cheng Peng Chao 0:17:17.720 --> 0:17:21.480 pleaded guilty to anti monitoring money laundering in US sanctions 0:17:21.520 --> 0:17:24.719 violations under a sweeping settlement with the US that allows 0:17:24.760 --> 0:17:29.520 the crypto exchange to continue operating. Coinbased CEO Brian Armstrong, 0:17:29.560 --> 0:17:33.240 a competitor, joined Bloomberg Tuesday to discuss. 0:17:33.400 --> 0:17:35.600 Well, I think this is really a vindication of the 0:17:35.640 --> 0:17:38.359 long term strategy that coinbase has taken to build a 0:17:38.400 --> 0:17:41.800 trusted and regulated company, going back to twenty twelve. We 0:17:41.840 --> 0:17:44.439 really decided to do that and got the licenses and 0:17:44.480 --> 0:17:46.880 got the teams in place that were necessary to run 0:17:46.880 --> 0:17:49.560 that type of company, and then every few years we 0:17:49.600 --> 0:17:51.720 did see a new company come on the scenes that 0:17:51.760 --> 0:17:54.159 didn't take that approach. Sometimes they would grow very quickly 0:17:54.680 --> 0:17:56.680 because they were able to offer products that we didn't 0:17:56.720 --> 0:18:00.560 think were legal. But inevitably they do come rashing down. 0:18:00.600 --> 0:18:03.240 You know, regulators do eventually act even if they don't 0:18:03.240 --> 0:18:05.199 act quickly, and that's what we saw here in this 0:18:05.280 --> 0:18:08.480 case today. So it's not only been I think, an 0:18:08.520 --> 0:18:11.879 opportunity for coinbase to step in, but it's also an 0:18:11.880 --> 0:18:13.919 opportunity for the industry I think to turn the page 0:18:13.920 --> 0:18:16.600 here and say that, yeah, some of the rules are 0:18:16.640 --> 0:18:19.880 clear around AMLKYIC oh fact that the issues that Finance 0:18:19.960 --> 0:18:23.960 really had you know, stepped over line on, but some 0:18:24.160 --> 0:18:25.760 areas of the law are not yet clear. We need 0:18:25.800 --> 0:18:28.040 to go get that regulatory clarity to make sure that 0:18:28.119 --> 0:18:30.200 the future of this industry is built here in America, 0:18:30.320 --> 0:18:33.399 not on offshore underregulated exchanges. And so that's what we 0:18:33.400 --> 0:18:35.240 need to go do next, and I think it'll prevent 0:18:35.240 --> 0:18:36.720 this kind of activity in the future. 0:18:36.840 --> 0:18:40.160 Well, listen, even with this crackdown that you're seeing, there 0:18:40.200 --> 0:18:45.520 were some really scathing allegations in the DJ's crackdown sanctions violations, 0:18:45.880 --> 0:18:47.679 illegal trafficking of drugs. 0:18:47.920 --> 0:18:50.680 You know, how do you know that this is it? 0:18:51.119 --> 0:18:52.960 How do you know that there are not more bad 0:18:52.960 --> 0:18:56.320 actors out there that would continue to stay in crypto? 0:18:56.680 --> 0:18:58.800 Well, I can tell you the companies that I really 0:18:58.880 --> 0:19:01.439 engage with, at least especially the ones here built in 0:19:01.440 --> 0:19:04.159 the United States, they don't get to big headlines because 0:19:04.280 --> 0:19:07.639 it's not salacious. They haven't you know, rocketed up because 0:19:08.080 --> 0:19:10.280 you know they're not following the rules. But there are 0:19:10.440 --> 0:19:15.280 dozens of really well intentioned and well funded and compliant 0:19:15.359 --> 0:19:17.639 US based crypto companies that are building this industry. I mean, 0:19:17.680 --> 0:19:20.240 you have to remember that fifty two million Americans have 0:19:20.400 --> 0:19:24.119 used crypto now about four hundred million people globally. And 0:19:24.200 --> 0:19:27.200 so while there is there are bad actors who try 0:19:27.240 --> 0:19:29.600 to use crypto, the best data we have is that 0:19:29.600 --> 0:19:32.119 that's less than one percent of the activity is for 0:19:32.119 --> 0:19:34.680 illicit purposes. By the way, the US dollar cash is 0:19:34.720 --> 0:19:38.320 about four percent illicted activity. So crypto is really not 0:19:38.440 --> 0:19:42.200 uniquely crime ridden. And the centralized actors in crypto, they 0:19:42.240 --> 0:19:45.960 need to follow these rules around transaction monitoring and kyc AML, 0:19:46.119 --> 0:19:47.919 just that like coinbase has been doing for over a 0:19:47.960 --> 0:19:51.280 decade now to make sure bad actors don't take advantage 0:19:51.280 --> 0:19:51.920 of these systems. 0:19:52.160 --> 0:19:56.080 That was Coinbase CEO Brian Armstrong along with Bloomberg Shnale Bassett. 0:19:56.160 --> 0:19:58.679 Let's keep the conversation going. So much has happened in 0:19:58.720 --> 0:20:02.120 the last twenty four ho job Bampuutra founder, a managing 0:20:02.160 --> 0:20:05.680 partner of Future Perfect Ventures, early stage VC firm zeroed 0:20:05.680 --> 0:20:11.600 in on blockchain, blockchain tech, CRYPTOAI, human computer interaction. Oppose 0:20:11.680 --> 0:20:15.600 the question that Shanali put to Brian Armstrong, when you're 0:20:15.640 --> 0:20:18.679 in this market and investing in this sector, how do 0:20:18.760 --> 0:20:21.240 you know that that's it? That's all there is left 0:20:21.240 --> 0:20:21.720 to come out? 0:20:21.880 --> 0:20:23.520 Well, it's good to talk to you again. At We 0:20:23.880 --> 0:20:27.240 spoke after the FTX ruling, and the way I look 0:20:27.280 --> 0:20:30.000 at this right now is the other shoe has dropped. 0:20:30.480 --> 0:20:30.640 Now. 0:20:30.680 --> 0:20:33.960 We can't guarantee that there's nothing else out there, but 0:20:34.080 --> 0:20:36.480 those of us in the industry have been waiting for 0:20:36.560 --> 0:20:39.720 a while to see what happened with Finance. We know 0:20:39.800 --> 0:20:43.720 that they've been under investigation for several years now. There 0:20:43.760 --> 0:20:46.960 have been a number of allegations against them. CZ has 0:20:47.000 --> 0:20:51.280 been notorious for moving the company to different jurisdictions, first 0:20:51.400 --> 0:20:55.159 China and then Japan and then Malta and so we 0:20:55.280 --> 0:20:59.040 knew something was coming, and the fact that this finally happened, 0:20:59.080 --> 0:21:04.320 these allegations were proven, they've been find cz is out, 0:21:04.560 --> 0:21:07.280 but the exchange is still running, and so I think 0:21:07.320 --> 0:21:11.200 that is an indication that regulators also understand that crypto 0:21:11.320 --> 0:21:15.280 is not going away, but they want to encourage the 0:21:15.680 --> 0:21:16.640 good actors, the. 0:21:16.520 --> 0:21:17.960 Ones that want to be compliant. 0:21:18.000 --> 0:21:21.200 And our portfolio is full of those entrepreneurs and those 0:21:21.240 --> 0:21:25.679 companies and we welcome this and we really want to 0:21:25.720 --> 0:21:26.240 move forward. 0:21:26.720 --> 0:21:30.120 So Jack, we have fifteen seconds. This impact your ability 0:21:30.160 --> 0:21:31.240 to invest, yes or. 0:21:31.200 --> 0:21:34.920 No, It makes it even more of an opportunity. We're 0:21:35.000 --> 0:21:37.520 leveling the playing field for those that do want to 0:21:37.520 --> 0:21:41.200 be compliant, and then we're looking forward to what happens 0:21:41.200 --> 0:21:45.760 with the ETF and more adoption of cryptois. As Ryan 0:21:45.880 --> 0:21:47.160