Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Let's talk about this
Speaker 1: markets because things have been going crazy. We talk about
Speaker 1: an SMP in an ASDAC right now around session lows
Speaker 1: I was looking at the Philadelphia Semiconductor Index down seven
Speaker 1: percent on the deck.
Speaker 2: Yeah, it's pretty brutal out there. It's not just chips,
Speaker 2: it's also some of the AI plays. We were speaking
Speaker 2: earlier about some of those AI darlings getting hit with
Speaker 2: some short reports. So investors coming out and saying, I'm
Speaker 2: sure at the stock and this is why, and that
Speaker 2: has lumen, for example, has gotten hidden in part of that?
Speaker 3: Yeah?
Speaker 1: Absolutely, And it raises the question super micro, symbiotic, a
Speaker 1: lot of these other names here. I don't know. Is
Speaker 1: this just a symptom of the fact that these were
Speaker 1: the high flyers, So hey, if you made a lot
Speaker 1: of money off them and you're stealing skittish, why not
Speaker 1: just cash out? Or is this more symptomatic of people
Speaker 1: rethinking that HOLYI.
Speaker 2: Trade or with the idea of say super micro, is
Speaker 2: that now it's not in the small caps, it's in
Speaker 2: the SMP. So does that change who covers it and
Speaker 2: how they look at it? And that changes how you
Speaker 2: view the numbers. But either way you're laughing at me.
Speaker 1: I'm laughing because it's some day we have to talk
Speaker 1: about why super Micro is even in the SMP five hundred.
Speaker 1: That's a whole on the topics, right, But.
Speaker 2: That's also why the analysts can now look at it
Speaker 2: in a different way, and then you have different analysts
Speaker 2: covering that stock, and that winds up hurting. It does
Speaker 2: raise the question in terms of the AI trade, what
Speaker 2: a cyclical what a structural role? And then how do
Speaker 2: you invest in that? Sam palm Asano, chairman of the
Speaker 2: Center for Global Enterprise and former CEO over at IBM,
Speaker 2: it joins us. Now, Sam, it's really good to get
Speaker 2: your perspective. We very much appreciate this. How do you
Speaker 2: how does someone who's been in the technology industry for
Speaker 2: decades and understands innovation and understands a business cycle, what
Speaker 2: is AI right now?
Speaker 3: Well, that's a great question, Alex, and remain good being
Speaker 3: with you guys. Again, it's always a pleasure to be
Speaker 3: with you, especially in a beautiful afternoon. It's great to
Speaker 3: be in my office not outside playing golf or something.
Speaker 3: But on a more serious note, now, I think that
Speaker 3: the best way to think about this that I can
Speaker 3: draw parallels to the Internet if you like, but when
Speaker 3: they're still in the early stations of AI. And if
Speaker 3: you go back to the early days of the Internet,
Speaker 3: what happens in phases. It begins with the enablers, and
Speaker 3: that would have been back then that's scage on Cisco
Speaker 3: and AT and T. Today you would put the enablers
Speaker 3: is the Microsoft and videos, AMD, anthropics, the chip guys,
Speaker 3: et cetera, the foundational model guys. And then it moves
Speaker 3: to the adopters over time. But that's time and that
Speaker 3: if they go back to the Internet, that would have
Speaker 3: been Meta Amazon, DoorDash, Netflix, and then the next phase
Speaker 3: with the people people that apply the innovation to the technology,
Speaker 3: and that would be the ubers, the Netflix of the
Speaker 3: Airbnb's et cetera, et cetera, in door dash, you know.
Speaker 3: So that's the phases of this thing and so far
Speaker 3: to repeating itself. And we are in the early phase,
Speaker 3: there's no doubt about it. So the enablers are going
Speaker 3: to continue, to my opinion, anyway, do well now, I mean,
Speaker 3: you guys know markets. I can't speak to evaluations of
Speaker 3: what happens day to day but long term trends. I've
Speaker 3: seen this thing. I saw in the early days of
Speaker 3: Client So I've been at this industry a bout fifty years,
Speaker 3: so this isn't my first time to kind of view
Speaker 3: these transitions.
Speaker 2: So, Sam, is the real boost and efficiency going to
Speaker 2: come from Romaine and I using it on our phones,
Speaker 2: or is it going to come from like entirely new
Speaker 2: business lines and re thinking the way we fundamentally do.
Speaker 3: Things, Alex, I tell you that's a very interesting insight
Speaker 3: because if you look at what's going to happen short term,
Speaker 3: if I quote the Kinsey estimates of this sort of thing,
Speaker 3: they value the GENAI that's got the adoption in the
Speaker 3: early stages of it in four key areas. That's customer operations,
Speaker 3: marketing and sales, software engineering in R and D. I
Speaker 3: ete productivity in the word, so they're saying the first
Speaker 3: phase will be productivity. That also could be productivity to
Speaker 3: the user on the phone, by the way, as far
Speaker 3: as their user experience booking, reservations or whatever it happens
Speaker 3: to be, it could be simplified by the application of ANI.
Speaker 3: But in the enterprise itself, it's going to be more
Speaker 3: around productivity Now having said that, the real innovation comes,
Speaker 3: real value creation comes in the next phase. And I
Speaker 3: go back to my analogy to the Internet. That's what
Speaker 3: I mentioned earlier. Uber, Airbnb, Spotify, Netflix, That is the
Speaker 3: next phase where this thing is going to take off.
Speaker 1: Go ahead, Yes, so you're seeing a lot of paly.
Speaker 1: I didn't mean to cut you off, but I want
Speaker 1: you to kind of on that because, I mean, your
Speaker 1: experience is relatively unique. I mean, you came of age
Speaker 1: at least share in your career at IBM at a
Speaker 1: time when corporate computing was really taking off, then personal computing.
Speaker 1: You were still there when the sort of the Internet
Speaker 1: age came about, and now you're not with IBM anymore,
Speaker 1: but you're still around here investing in what a lot
Speaker 1: of people think is going to be that next big
Speaker 1: new technology. I don't think anyone is doubting that this
Speaker 1: might be the next big thing. I think people are
Speaker 1: kind of doubting who the winners and losers are going
Speaker 1: to be. And right now all the bets seem to
Speaker 1: be with such a small core the companies.
Speaker 3: Well that's I mean, that's exactly right, and that's how
Speaker 3: it was. To go back to the Internet, it's a
Speaker 3: small core that benefited initially and then it broadened out,
Speaker 3: and it broadened out when it got to the adoption phase,
Speaker 3: not the enabling, I mean the infrastructure build out. That's
Speaker 3: why these guys are sold out, because everybody's chasing the
Speaker 3: infrastructure buildout, I EI the hyper scalers, and they're ordering
Speaker 3: GPUs and chips lay crazy because they want to be
Speaker 3: ahead of the curve as this adoption phase or demand
Speaker 3: increases on the cloud providers Amazon, Google, Microsoft Is or
Speaker 3: et cetera, et cetera. That's kind of where we are
Speaker 3: in the phase. I really do think that the hard
Speaker 3: thing to predict, I mean go back in time. Even
Speaker 3: in the early days of Internet when companies were digitizing,
Speaker 3: did people think it will be impacting how you take
Speaker 3: a ride in a car a uber or get a
Speaker 3: room someplace, or get videos media to place and all
Speaker 3: that sort of stuff from music? Nobody really conceived in
Speaker 3: the early days of the Internet. It was more about
Speaker 3: digitizing things and putting your information up from the web
Speaker 3: and maybe doing a little bit of commerce. Did anybody
Speaker 3: think that a little bit of commerce would be Amazon?
Speaker 3: So the point is now your point is predicting where
Speaker 3: it will go. I'd tell you that's really I'm not
Speaker 3: an investor in this space, and you know, we're focused
Speaker 3: primarily in areas around healthcare and around cyber and those
Speaker 3: sorts of things.
Speaker 1: And you're seeing the substantive use or potential use of
Speaker 1: this technology. Because even when you go back to the
Speaker 1: Internet age, and I know there was a lot of
Speaker 1: hype and a lot of folks who were predicting things
Speaker 1: that never panned out. But I think for a lot
Speaker 1: of us, at least the layman out there, you can
Speaker 1: actually see the tangible qualities of what they at least
Speaker 1: were trying to build. AI just seems a lot more Ephemerald.
Speaker 3: Well, I mean, there's a couple of things. First of all,
Speaker 3: let's take about the Let's talk about the enterprise adoption.
Speaker 3: Right where can great value can be created in these
Speaker 3: enterprise companies and s Guys running these companies realize they've
Speaker 3: done the pilots, they've experimented, they've done these things, and
Speaker 3: they're going to chase productivity in the short term, but
Speaker 3: they're going to drive innovation in the long term. And
Speaker 3: that's the innovation and the enterprise. There are still limitations
Speaker 3: in the technology I mean, for example, accuracy and transparency
Speaker 3: and validity. If you're doing financial services, or you're doing
Speaker 3: national security, or you're doing healthcare and you're worrying about
Speaker 3: people that are going to live or die, you need
Speaker 3: those issues to be addressed, and they will be addressed.
Speaker 3: And there are a lot of startups trying to address
Speaker 3: a lot of those and those areas of inadequacy that
Speaker 3: exist today. So therefore you see things being applied to
Speaker 3: what I called a simpler use case like marketing, like
Speaker 3: customer service, et cetera, et cetera. You believe that now
Speaker 3: these cycles, as I go back to the Internet, they're
Speaker 3: like ten to fifteen year cycles, you know, right, So
Speaker 3: I mean we're in the year what three maybe depend
Speaker 3: upon how you count this stuff. So I mean we
Speaker 3: have a long way to go. And from an investor,
Speaker 3: I mean I'm basically a VC today. I'm not involved
Speaker 3: in large companies. I'm an advisor, but I'm not really
Speaker 3: involved day to day. Fundamentally, from a VC perspective, we're
Speaker 3: making bets in those industries where the technology you can
Speaker 3: have a massive impact, for example, the delivery of healthcare
Speaker 3: or therapeutics and those sorts of things, massive impact, to
Speaker 3: improve the system, to drive productivity, to improve outcomes that
Speaker 3: could be significant. Financial services. There's a lot of things
Speaker 3: that can be done in financial services again to improve
Speaker 3: the value to society and value to the companies themselves.
Speaker 1: All right, Sam, have to leave it there, great insights,
Speaker 1: as always, have a wonderful day.
Speaker 2: Sam.
Speaker 1: Paul Masano is the chairman of the Center for Global Enterprises.
Speaker 1: He said, a vc funder in the AI space, and
Speaker 1: of course a long time IBM employee EU rose to
Speaker 1: the top of the mountain there