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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is live

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Speaker 1: from coast to coast with Caroline Hide in New York

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Speaker 1: and Ever though in San Francisco.

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Speaker 2: This is Bloomberg Tech.

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Speaker 3: Alphabet, Amazon, Meta, and Microsoft all out with earnings and

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Speaker 3: big AI dreams.

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Speaker 4: Four companies ED are expected to spend as much as

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Speaker 4: seven hundred and twenty five billion dollars in twenty twenty six,

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Speaker 4: but the key question being whether that massive spending is

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Speaker 4: providing tangible results. We'll discuss throughout this hour, and we

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Speaker 4: fixate on these numbers.

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Speaker 5: And you said it best. It was in seventy seconds.

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Speaker 5: The fire hose ensued last night and Alphabet is the

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Speaker 5: clear winner. We're at a record high.

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Speaker 4: Google really posting strength in its cloud division one than

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Speaker 4: sixty percent growth. Yes, they are opping their capital expenditure

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Speaker 4: to one hundred and ninety billion dollars. Amazon also committing

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Speaker 4: its capital expenditure. Look all together, this is actually growing GDP.

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Speaker 4: We saw the numbers for the US economy strengthen on

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Speaker 4: the business outlaws that Amazon puts to work with again,

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Speaker 4: growth in its aws twenty eight percent growth. That was enough,

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Speaker 4: but still maybe we're coming off of our near record

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Speaker 4: highs in that stock.

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Speaker 3: All four have the capital expensure story in common alphabet,

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Speaker 3: Amazon and Microsoft. They had the cloud growth metric in common.

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Speaker 3: Azure grew forty percent in the quarterer. Their briefing modest

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Speaker 3: acceleration of cloud growth in the second half of this year.

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Speaker 3: Meta is the outlier. It is down nine percent on

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Speaker 3: one point, on track for its biggest drop since October.

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Speaker 3: It told us the capital expenditures up to one hundred

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Speaker 3: and forty five billion dollars this year. It gave us

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Speaker 3: an outlook for sales that was in line with consensus.

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Speaker 3: But then there was not that one extrametric about how

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Speaker 3: AI is being justified, how the payoff is translating to

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Speaker 3: them with their go to market.

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Speaker 4: Yeah, let's try and translate therefore, because yesterday's frenzy and

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Speaker 4: offered eight glimpse and just how some of the world's

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Speaker 4: biggest tech companies are doing in AI. And this is

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Speaker 4: what some of the big tech leaders had to say

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Speaker 4: post earnings release.

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Speaker 6: Looking ahead. Our ability to invest in this moment and

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Speaker 6: stay at the frontier, you know, I think puts us

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Speaker 6: in a strong position, and I think we are doing

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Speaker 6: it based on tangible demand signal sphere, seeing.

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Speaker 7: Nobody has a better sort of chips across AI and

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Speaker 7: CPU workers in aws with training and Gravitan.

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Speaker 8: And we're unusually well positioned for this AI inflection.

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Speaker 4: We're in the early stages of experiencing.

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Speaker 5: From CEOs to the investor. Take Ioka.

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Speaker 4: Yes, that's portfolio consulting director at Wealth Enhancement Group, who

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Speaker 4: I'm pleased to say has exposure to all of the

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Speaker 4: four names. I Okay, let's start with a winner. Alphabet

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Speaker 4: blew the market away. Is it justified the increase in.

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Speaker 9: Spending absolutely, you know, they continue to see this exponential

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Speaker 9: demand in AI, whether it was through Google Cloud or

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Speaker 9: through their backlog doubling quarter over quarter. So yes, the

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Speaker 9: spending is definitely justified. And they've been doing a great

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Speaker 9: job of being a low cost token provider for AI.

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Speaker 9: So we continue to think that there is some momentum

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Speaker 9: here with Alphabet.

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Speaker 4: And in many ways that's because of the vertical integration

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Speaker 4: one that is replicated over at Amazon and we're seeing

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Speaker 4: a huge backlog more than three hundred and sixty billion

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Speaker 4: dollars worth of coming to business for Amazon and AWSKA.

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Speaker 4: What did you make of Amazon's numbers in the flywheel effect.

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Speaker 9: Sure, Now, it's great to see that acceleration in AWS growth.

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Speaker 9: I mean we're talking big numbers here, and so to

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Speaker 9: see an acceleration of AWS growing twenty eight percent year

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Speaker 9: every year versus last quarters twenty four percent, we haven't

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Speaker 9: seen these kinds of acceleration in these growth rates from

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Speaker 9: AWS in quite some time, and so it's really nice

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Speaker 9: to see, and it really sort of doubles down on

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Speaker 9: the demand that everybody is seeing on the AI front.

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Speaker 3: MG, give me the capital expenditures numbers for all four

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Speaker 3: and let's show shares of Nvidia, and now YOURKO explain

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Speaker 3: this to me, right, the overall CAPEX environment has been

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Speaker 3: raised for twenty twenty six. Nvidia, which you think would

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Speaker 3: be the biggest beneficiary, is down three and a half

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Speaker 3: percent in the in the session and one of the

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Speaker 3: biggest point drags at the index level.

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Speaker 9: Why so, I think there was so much conversation yesterday

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Speaker 9: regarding you know, whether it's Trainium, Graviton, Google talking about

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Speaker 9: their TPUs, you know, customs, Silicon and you know, the

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Speaker 9: sort of shift as we move more towards inference that

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Speaker 9: is really going to be a benefit to you know,

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Speaker 9: things like companies like Broadcom right, and so I think

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Speaker 9: perhaps people are thinking that Nvidia isn't going to be

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Speaker 9: the beneficiary as this infrastructure continues to build out. But

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Speaker 9: I do think Nvidia is going to be the base

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Speaker 9: layer here and you're going to continue to need to

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Speaker 9: build out those large language models. You're just going to

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Speaker 9: get that added additional benefit from CPUs as well going forward.

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Speaker 3: So I wanted to take that sort of halftime pause

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Speaker 3: before we move on to the other two Microsoft and

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Speaker 3: Meta Microsoft, I guess it was an issue of language, right,

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Speaker 3: they showed forty percent Azure growth and said modest acceleration

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Speaker 3: into the second half of this year. The stock is

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Speaker 3: actually down more than you might think it would be.

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Speaker 9: Absolutely with Microsoft, you know, I think it was still

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Speaker 9: a very solid earnings growth number, and it's it's you know,

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Speaker 9: it got caught up and a lot of the software

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Speaker 9: downdraft that we saw in the first quarter of this year.

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Speaker 9: But Microsoft is continuing to you know, deliver solid earnings.

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Speaker 9: We think that, you know, this is a great opportunity

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Speaker 9: to continue to own these shares and that acceleration you'll

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Speaker 9: see in the back half. I think Copilot is you know,

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Speaker 9: one of the AI use cases in which enterprise are

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Speaker 9: going to gravitate towards first, and so we continue to

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Speaker 9: think there's some value there.

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Speaker 4: So you would be adding to Microsoft in this weakness

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Speaker 4: because actually it was one of the only names that

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Speaker 4: was down on the year leading into these numbers.

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Speaker 9: Absolutely. I mean, you know, I think the biggest issue

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Speaker 9: for all of these companies is the free cash flow numbers.

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Speaker 9: You know, as the CAPPAC spend continues to rise, you know,

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Speaker 9: despite these double digit revenue growth numbers that they're posting

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Speaker 9: along with solid profit margin and expansions, the free cash

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Speaker 9: flow continues to sort of dwindle. And I think that's

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Speaker 9: the biggest issue in terms of how much do you

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Speaker 9: pay for these companies as that free cash flow continues

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Speaker 9: to be pressured and how long will it continue to

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Speaker 9: be pressured.

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Speaker 3: Okay, so let's the three of us try and unpick

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Speaker 3: what happened with Meta. The stocks down ten perent on

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Speaker 3: track for its biggest drop since October thirtieth. The outlook

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Speaker 3: for revenue in the current period was a range of

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Speaker 3: fifty eight to sixty one billion dollars, basically bang in

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Speaker 3: line with consensus, and then there wasn't another number right,

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Speaker 3: There wasn't another metric Yoko that said all of this

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Speaker 3: investment into AI is paying off.

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Speaker 2: You know.

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Speaker 9: I think we saw some nice numbers in terms of

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Speaker 9: ad pricing. You know, that was up twelve percent, and

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Speaker 9: so I think it was it was solid, but not great.

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Speaker 9: I think it wasn't a blowout or some sort of

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Speaker 9: acceleration there. And then we haven't had some you know,

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Speaker 9: great efficiency numbers or any kind of quantifiable, tangible numbers

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Speaker 9: coming out of news Spark and what that means.

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Speaker 5: So you know, just I.

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Speaker 9: Think there's a little bit of impatience relative to investors

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Speaker 9: for Meta, but I think that that's going to come

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Speaker 9: around and again metas in control of that cat back spend,

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Speaker 9: so they can dial it back if they need to.

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Speaker 9: I think the higher CAPBAC spend does reflect a lot

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Speaker 9: of the additional costs that you're seeing from an in perspective,

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Speaker 9: whether it's energy or memory chips, those are all flowing through,

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Speaker 9: So I'm not sure they're intentionally spending that much more.

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Speaker 9: I think a lot of this is that cost a

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Speaker 9: push that is impacting CAPBAC spend.

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Speaker 4: Yees seasonly talking about those component PRICESCO pushes forward you

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Speaker 4: alsow an a Apple comes after the bell. Can they

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Speaker 4: show some resilience that they can compete in the AI

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Speaker 4: space even if they're not having to invest in the

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Speaker 4: same solch fog.

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Speaker 7: Yeah.

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Speaker 9: Now, Apple's been, you know, a great follower in technology, right.

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Speaker 9: They tend to perfect the user experience when it comes

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Speaker 9: to new technology, and so we continue to think that

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Speaker 9: they're working on that, whether it's with new enhancements to Siri,

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Speaker 9: and you know, we do think that they continue to

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Speaker 9: be very diligent when it comes to their free cash flow,

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Speaker 9: and you continue to see that they're not spending as

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Speaker 9: much when it comes to this arms race for ai.

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Speaker 3: Oyoko Yoshioka from Wealth Enhancement Group, thank you very much

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Speaker 3: for joining us on Bloomberg Tech. Another story out of Asia.

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Speaker 3: Overnight Samsung shares actually kind of modestly lowered down two percent,

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Speaker 3: but record profits over the March quarter. In fact, we're

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Speaker 3: talking about the chip division where profits sored forty eightfold.

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Speaker 3: It's a story about AI spending, just as we've been discussing,

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Speaker 3: but also what Bloomberg's now call calling the memory chip

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Speaker 3: super psychle Samsung exposure to both on the fab side,

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Speaker 3: on the memory side, as well shares kind of in

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Speaker 3: career pretty muted Cara.

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Speaker 4: Now Quilcom's got exposure to both, and this is a

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Speaker 4: story of trying to pivot into the world of AI

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Speaker 4: spending and more away from the complete exposure it had

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Speaker 4: to mobile phones up seventeen percent, stop us down after hours.

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Speaker 4: The volatility is extraordinary. We've all focused on this mystery

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Speaker 4: leading Hyperscala Customs silicon engagement that they've got that they

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Speaker 4: say is on track initial shipments later.

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Speaker 5: This calendar year.

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Speaker 4: This is the pivot that many want to see in

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Speaker 4: the Avesta base. Yes you're in automotive, Yes you're in

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Speaker 4: the phones, Yes you're in the IoT space, but are

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Speaker 4: you in data centers? They're saying they're going to be soon.

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Speaker 4: And look at the CEO, Christiano Amon's going to be

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Speaker 4: joining us later. This out to tell us a little

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Speaker 4: bit more what a ride Now coming up, we're all's

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Speaker 4: going to be diving into anthropics ride, the push to

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Speaker 4: ramp up fundraising, weighing a fresh round that would value

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Speaker 4: the startup more than nine hundred billion dollars. That was

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Speaker 4: your conversation that you had ed with Anthor. Well, you've

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Speaker 4: been helping focus on throw. But you're also be having

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Speaker 4: a conversation with the Stripe president John Collinson.

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Speaker 5: After the company.

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Speaker 4: Announced new AI tools and a new partnership with Google.

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Speaker 5: There's a blueberg Tech.

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Speaker 3: Anthropic has begun weighing a fresh funding round that could

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Speaker 3: value the AI developer at more than nine hundred billion dollars,

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Speaker 3: according to sources, potentially over taking long time rival open

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Speaker 3: Ai is the world's most valuable AI startup. Bloomberg's and

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Speaker 3: the Sasha Mascaraneus part of the team that break the

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Speaker 3: story with us. Now, I think we've got to be

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Speaker 3: very specific with this. This is investors going to Anthropic

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Speaker 3: and saying, let's do this, but take that and give

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Speaker 3: us the details that we have so far.

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Speaker 10: Yeah.

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Speaker 5: Sure.

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Speaker 10: So last week we talked about unsolicited term sheets getting

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Speaker 10: headed Anthropics way at around an eight hundred billion valuation.

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Speaker 3: Which we said Anthropic rebuffed. They basically said no, thank

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Speaker 3: you exactly.

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Speaker 10: The update now is that Anthropic is actually engaging in

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Speaker 10: those conversations at her nine hundred billion valuation even higher.

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Speaker 10: But no term sheet has been signed. So this is

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Speaker 10: not one of those deals where we expect to see

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Speaker 10: a press release.

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Speaker 5: The ink dry by end of day.

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Speaker 10: This is one of those deals where Anthropic is hearing

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Speaker 10: his offers and is responding to the investors that have

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Speaker 10: approached them, And it comes in the backdrop of you know,

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Speaker 10: Google and Amazon putting tons of capital into Anthropic at

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Speaker 10: around a three hundred and fifty billion valuation. So to me,

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Speaker 10: this is a really interesting example of there being kind

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Speaker 10: of two tales of capital raising at the same time.

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Speaker 5: Yeah, Natasha, why the change of hot? Is it a

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Speaker 5: change of hot?

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Speaker 4: Is there a need that the fool they could tap

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Speaker 4: the public markets because we're all been talking about an

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Speaker 4: IPO for this.

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Speaker 5: Year, you know.

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Speaker 10: It's it's pretty much the standard dance in AI fundraising

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Speaker 10: these days, is how I see it. When investors approach

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Speaker 10: a company with an offer to invest a million, things

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Speaker 10: could be you know, wrong, so to speak. It could

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Speaker 10: be the wrong investor, the wrong price. With Anthropic, we

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Speaker 10: all know very clearly that they need capital to fund

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Speaker 10: their compute needs. It's why they've brought on so many strategics.

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Speaker 10: It's also what financial investors are frankly, you know, taking

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Speaker 10: advantage of by saying, listen, we'll come to you before

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Speaker 10: you go public. We'll offer you a fresh you know,

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Speaker 10: tranch of capital, get it all ready and then go public.

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Speaker 10: And so is it a change of heart? I would say, yeah,

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Speaker 10: It's different than them completely ignoring the offers. These are

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Speaker 10: serious investors that are approaching them with real capital offers.

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Speaker 10: The next thing to break is who they'll accept and

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Speaker 10: at what price. Like we said right now, it's at

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Speaker 10: above a nine hundred billion valuation, which if accepted, would

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Speaker 10: surpass their biggest rival, Open AI.

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Speaker 5: Natasha Mascariness.

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Speaker 4: It's great reporting along Psyde colleagues, including ed we appreciate it.

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Speaker 3: Now.

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Speaker 4: Sticking with anthropic, the National Security Agency has been testing

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Speaker 4: the startups new AI model Mythos to find cybersecurity vulnerabilities

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Speaker 4: in popular software, including Microsoft products.

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Speaker 11: Now.

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Speaker 4: That's according to a US official and a source who

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Speaker 4: say that an essay officials studying the Mythos model, well,

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Speaker 4: they've been impressed. Right speed is sufficiency in searching for

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Speaker 4: potential security flaws it.

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Speaker 3: White House officials have spent months preparing a memo that

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Speaker 3: outlines requirements for AI deployment by national security agencies.

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Speaker 2: Sources help bloombag.

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Speaker 3: The wide ranging policy will touch on issues that have

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Speaker 3: been at the center of the feud between the Pentagon

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Speaker 3: and Anthropic. Let's get more with Bloomberg's Maggie Eastland in DC. Maggie,

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Speaker 3: what are you reporting?

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Speaker 12: Yeah again, Ed, as you said, the White House is

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Speaker 12: preparing this National Security memo. It aims to essentially set

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Speaker 12: one standard for how a swath of agencies can work

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Speaker 12: with and contract with AI companies. But what's especially interesting

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Speaker 12: is it addresses each of those key fault lines that

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Speaker 12: we saw come up as Anthropic and the Pentagon we're

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Speaker 12: in this very tense feud that resulted in a legal

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Speaker 12: supply chain designation.

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Speaker 5: So the fault lines, let's dig in.

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Speaker 4: Does this end up allowing federal agencies a workaround here,

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Speaker 4: an ability to keep on using Anthropics technology.

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Speaker 12: Some officials said that they do view this as a

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Speaker 12: workaround now. One senior official that we talked to disputed that,

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Speaker 12: but they one of the key terms here is this

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Speaker 12: idea that it directs agencies to diversify the model companies

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Speaker 12: that it's working with. Now, some view this as a

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Speaker 12: way that the Pentagon could drop some of the more

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Speaker 12: extreme legal measures that would force it to fully excise

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Speaker 12: Anthropic and instead point to this memo, which says that

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Speaker 12: the supply gene risk can be dealt with simply by

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Speaker 12: working with other AI providers, which the Pentagon is already

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Speaker 12: doing in its agreements with open Ai and Xai.

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Speaker 4: Totally fascinating reporting Bloomberg's Maggie Eastland, thanks for bringing it

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Speaker 4: now to another closely watched AI story. Elon Musk is

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Speaker 4: set to take the stand again today in his lawsuit

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Speaker 4: over open AI's pivot from a charity to a for

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Speaker 4: profit business.

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Speaker 9: Now.

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Speaker 4: Elon Musk became visibly irritated during cross examination yesterday, clashing

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Speaker 4: with open AI's lawyer over the exact amount he contributed

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Speaker 4: to the startup. Now, the billionaire is set to wrap

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Speaker 4: up his testimony today, and we followed by his longtime

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Speaker 4: well maybe we call him Fixer and Neuralink CEO Joed Burchill.

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Speaker 3: Stripe is partnering with Google to let businesses transact inside

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Speaker 3: of AI mode and the Gemini app. This was part

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Speaker 3: of a slew of announcements made a Stripe's annual customer conference.

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Speaker 3: We cut up with stripe president and co founder John Collison.

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Speaker 7: I think when people talk about this it seems really

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Speaker 7: far off, and maybe part of that is, you know,

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Speaker 7: the the examples people give almost sounds incredibly far off

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Speaker 7: where it's like, oh, I'll just have my AI agent

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Speaker 7: plan my entire summer vacation. You know, in transfer, it's like, no,

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Speaker 7: you love planning to the subberfication, you want to do

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Speaker 7: that yourself. Whereas if you say, okay, you just give

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Speaker 7: your AI this is the recipe I'm making tonight by

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Speaker 7: the things I don't have in the fridge already. Like

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Speaker 7: that's the kind of delegation that you know, people are

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Speaker 7: much more comfortable with, and so we think people and

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Speaker 7: AI services will kind of work their way up the

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Speaker 7: trust curve. Where again, it's already the case that the

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Speaker 7: research you're doing, the research you're doing, you do within

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Speaker 7: the AI app. You're probably still confirming that directly, but

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Speaker 7: it might get the case where you're allowing the AIS

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Speaker 7: make small decisions for you and especially as it gets

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Speaker 7: to know you. And so again, on the developer side,

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Speaker 7: imagine you're building a website and you need a hosting

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Speaker 7: provider or you need to buy a domain name for us.

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Speaker 7: Today it's the case that you go and you like

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Speaker 7: find the domain name buying service yourself, and you could

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Speaker 7: go fill out the form and everything like that. You

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Speaker 7: just want a domain name, you can get it for

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Speaker 7: multiple providers. You'd probably be okay with cloud code or

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Speaker 7: Codex or cursor, you know, whatever you're using actually choosing

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Speaker 7: how to buy a domain for you. And so it's

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Speaker 7: already the case that people are doing a lot of

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Speaker 7: interactive buying with AIS where they're improving the final step.

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Speaker 7: We think people are already starting to have a little

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Speaker 7: bit in a huge amount of what we announced today

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Speaker 7: is those little decisions. People are delegating them to the

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Speaker 7: ice buying your domain name. Again, it's the example I

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Speaker 7: would give, and then as they start to see that

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Speaker 7: it works really well, people will just give them more

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Speaker 7: and more.

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Speaker 9: Rope.

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Speaker 3: Google has not historically led in payments. The partnership that

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Speaker 3: you've been through today and the changes in integrating Stripe

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Speaker 3: in to AI mode in Gemini, does that change their

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Speaker 3: fortunes in that market.

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Speaker 7: I mean, I think Google has done a phenomenal job

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Speaker 7: in commerce generally, and I mean again, Google pay is

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Speaker 7: very large and successful within the Android ecosystem, and so

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Speaker 7: I don't think that will be quite a fair characterization.

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Speaker 7: I think they've done a phenomenal job enabling commerce. And again,

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Speaker 7: this is a new tool in the toolbox for them

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Speaker 7: where now they're enabling within Gemini these amazing agenda commerce experiences,

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Speaker 7: which again we think just has to be the future

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Speaker 7: because it's so much more convenient for consumers. It's never

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Speaker 7: been the case in technology when you get a way

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Speaker 7: more convenient way of working for consumers. But they picked

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Speaker 7: the less convenient one.

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Speaker 2: It's never happened.

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Speaker 4: That was Strike President co founder John Collison, creat interview ed.

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Speaker 4: Now we've got to get back to earnings. We're going

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Speaker 4: to be getting back with them with Brad Erickson from

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Speaker 4: OBBC Capital Markets. To believe Alphabet's future growth and multiple

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Speaker 4: expansion are constrained some extent not constrained on the market

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Speaker 4: right now, are we alphabet best point added to to

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Speaker 4: then as that one hundred leads the way and we're

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Speaker 4: at a record high.

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Speaker 3: We're trying to find the common story between all four companies, right,

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Speaker 3: Capital expenditures is probably it, but I think that you

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Speaker 3: know what all four companies said is that they are

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Speaker 3: constrained in capacity, right, they cannot build the infrastructure that

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Speaker 3: they need quick enough to service. In the case of

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Speaker 3: alphabt Amazon and Microsoft external demand and one thing carry

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Speaker 3: you probably get this right, you know, Meta is internal

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Speaker 3: demand for workloads, not necessarily something that's consumer facing, and it's.

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Speaker 5: Getting more expensive.

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Speaker 4: Maybe the one hundred and forty five billion dollar that

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Speaker 4: they guided to gets less banned for the buck when

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Speaker 4: memory prices have sawed, when component prices have sawed. This

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Speaker 4: is something that we saw Susan Lee really talk about

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Speaker 4: the fact that pricing pressure is going up, and so

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Speaker 4: maybe that impacts how much capex they have to spend.

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Speaker 4: What's interesting there is the kapux is firm for the

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Speaker 4: infrastructure layer.

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Speaker 5: Why then is Nvidio down.

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Speaker 4: It seems as though a lot of them are talking

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Speaker 4: up their own inn house chips.

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Speaker 3: Things could be true. It could be that the TPU

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Speaker 3: is coming for them, as outlined on the call last night.

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Speaker 3: It could be sell the news, and it could be Qualcom,

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Speaker 3: which we'll get to later in the programs. They are

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Speaker 3: the data center business.

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Speaker 4: Welcome back to Bloomberg Tech and let's take a look

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Speaker 4: at today's big number. We've talked about it already, seven

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Speaker 4: hundred and twenty five billion dollars. That is how much Amazon, Alphabet, Meta,

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Speaker 4: Microsoft together alone are expected to spend in twenty twenty six,

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Speaker 4: upping their AI spending plans after their March quarter, but

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Speaker 4: with still a key question when will we see return

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Speaker 4: on all this AI spending. Well, we saw it from

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Speaker 4: Alphabet and people are applauding the numbers because Google Cloud

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Speaker 4: on farm more than sixty percent growth and we're seeing

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Speaker 4: really it doing the flywheel effect because they're vertically integrated

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Speaker 4: business model and the fact that you people are using

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Speaker 4: their AI tools up seven percent record high Amazon, that

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Speaker 4: fly will effect are still there. They create and have customs.

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Speaker 4: But of course they're also making moves on Cloud Aws

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Speaker 4: twenty and eight percent growth.

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Speaker 5: But maybe we come off near.

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Speaker 4: Record highs on that share price down five percent is

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Speaker 4: Microsoft and.

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Speaker 5: That's more interesting.

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Speaker 4: Yes, they also are spending more, leaning into one hundred

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Speaker 4: and ninety billion dollars spend for the year. They're also,

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Speaker 4: though maybe not managing to ramp up the asual growth

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Speaker 4: as much as people anticipated, but it's still going to

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Speaker 4: be a healthy forty percent in future quarters. It's at

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Speaker 4: thirty nine percent of this particular quarter. Move on and

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Speaker 4: see what's happened. In terms of Meta. I'm afraid we

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Speaker 4: are not applauding Meta's commitment to capital expenditure because they

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Speaker 4: don't have a cloud offering.

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Speaker 5: Thus yet let's just have a little listen to what

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Speaker 5: Mark Zuckerberg really had to.

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Speaker 4: Say about well, where his spending is going yesterday.

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Speaker 8: We are increasing our infrastructure capex forecast for this year.

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Speaker 8: Most of that is due to higher component costs, particularly

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Speaker 8: memory pricing. But every sign that we're seeing in our

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Speaker 8: own work and across the industry gives us confidence in

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Speaker 8: this investment. That said, we are very focused on increasing

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Speaker 8: thefficiency of our investments.

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Speaker 3: Let's get into it with RBC's Internet analyst Brad Erickson,

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Speaker 3: whose pre earnings report flagged metas quote elevated investment cycle.

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Speaker 2: And yeah, that's what we got.

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Speaker 3: Meta is a company that operates social media platforms and

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Speaker 3: it makes money from advertising, and at the same time

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Speaker 3: it will spend at the high end one hundred and

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Speaker 3: forty five billion dollars in infrastructure to support its work

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Speaker 3: in AI. For me, there just wasn't that number that

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Speaker 3: explained this is the result of that investment. This is

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Speaker 3: how our AI work is getting traction with the world.

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Speaker 3: Is that your tape, Brad, Yeah, I.

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Speaker 13: Think that's a very fair way to sort of look

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Speaker 13: at it. You know, each quarter that ticks off with

442
00:22:49,680 --> 00:22:53,040
Speaker 13: all of these companies, right, we fair or unfair, We

443
00:22:53,119 --> 00:22:55,199
Speaker 13: have to evaluate kind of what have you done for

444
00:22:55,280 --> 00:22:59,800
Speaker 13: me lately relative to that spend. And clearly the cloud

445
00:23:00,040 --> 00:23:04,120
Speaker 13: commercial cloud vendors last night are the ones showing sort

446
00:23:04,160 --> 00:23:07,840
Speaker 13: of the best return, particularly with that margin upside, whereas

447
00:23:07,880 --> 00:23:11,280
Speaker 13: with Meta you've got a deceleration. Just start there, right,

448
00:23:11,320 --> 00:23:13,840
Speaker 13: the revenue was fine in the quarter, but you do

449
00:23:13,920 --> 00:23:16,600
Speaker 13: have a little bit more deceleration in their guidance for

450
00:23:16,840 --> 00:23:19,359
Speaker 13: Q two, And then they were the only ones to

451
00:23:19,760 --> 00:23:22,959
Speaker 13: raise the capex guide at least on an organic basis, Right,

452
00:23:23,040 --> 00:23:25,679
Speaker 13: Amazon and Google. Google had to raise their capex, but

453
00:23:25,720 --> 00:23:28,200
Speaker 13: it wasn't It was because of an acquisition, not because

454
00:23:28,200 --> 00:23:31,119
Speaker 13: of higher component pricing. So yeah, it's just a tough

455
00:23:31,320 --> 00:23:34,959
Speaker 13: combination for you know, kind of that next day stock reaction.

456
00:23:36,359 --> 00:23:39,560
Speaker 3: I use Meta AI. I'm sure Caroline uses Meta AI too,

457
00:23:39,560 --> 00:23:41,360
Speaker 3: but I don't pay for it. I use it within

458
00:23:41,400 --> 00:23:44,879
Speaker 3: the Instagram app for example. Or I'm awarer of ray

459
00:23:44,960 --> 00:23:47,840
Speaker 3: Ban metas and you know voice based assistant version of

460
00:23:47,840 --> 00:23:51,840
Speaker 3: Meta AI. A parallel example was Alphabet giving us data

461
00:23:51,920 --> 00:23:56,359
Speaker 3: quarter on quarter for Gemini's enterprise growth. You know, Meta

462
00:23:56,440 --> 00:23:59,879
Speaker 3: doesn't have that sales channel, so what is it that

463
00:24:00,600 --> 00:24:03,200
Speaker 3: Mark Zuckerberg can say other than meuse spark The latest

464
00:24:03,200 --> 00:24:06,640
Speaker 3: model is making ads better that will convince the street. Yeah,

465
00:24:06,720 --> 00:24:07,639
Speaker 3: let's keep going with this.

466
00:24:08,760 --> 00:24:11,639
Speaker 13: Yeah sure, yeah, I mean there's always going to be optimization, right,

467
00:24:11,680 --> 00:24:15,600
Speaker 13: They drive you know, more content recommendation gets people staying

468
00:24:15,600 --> 00:24:18,720
Speaker 13: on there for longer, they show more ad impressions, they

469
00:24:18,800 --> 00:24:22,720
Speaker 13: find people with better ads that convert more. So there's

470
00:24:22,720 --> 00:24:25,240
Speaker 13: all sorts of value creation that's still going to happen there.

471
00:24:26,200 --> 00:24:28,120
Speaker 13: But yeah, I kind of agree with you. I think,

472
00:24:28,200 --> 00:24:30,200
Speaker 13: you know, clearly, on the enterprise, there's a far more

473
00:24:30,280 --> 00:24:35,840
Speaker 13: compelling argument for you know, enterprise developers adopting things like

474
00:24:35,920 --> 00:24:40,879
Speaker 13: Gemini or Anthropic or chat GPT, where I think the

475
00:24:40,960 --> 00:24:43,199
Speaker 13: idea though, that we're kind of broaching for people. We

476
00:24:43,280 --> 00:24:46,040
Speaker 13: call it born on Meta, and what it means is

477
00:24:46,160 --> 00:24:50,040
Speaker 13: we actually think there's big opportunities that are probably underappreciated

478
00:24:50,480 --> 00:24:54,000
Speaker 13: for meta to almost start to like help small businesses

479
00:24:54,240 --> 00:24:58,480
Speaker 13: start exist and execute entirely on meta.

480
00:24:58,600 --> 00:25:00,840
Speaker 2: We think that's a possibility in the future.

481
00:25:00,960 --> 00:25:04,560
Speaker 13: Right today, you start a small business somewhere else, you

482
00:25:04,680 --> 00:25:05,800
Speaker 13: come to Meta to market.

483
00:25:05,880 --> 00:25:07,480
Speaker 2: It's certainly helpful for the business.

484
00:25:07,800 --> 00:25:10,960
Speaker 13: But they've only participated in kind of that advertising portion

485
00:25:11,000 --> 00:25:15,679
Speaker 13: of it. Imagine if meta ai started like helping you idate, originate,

486
00:25:15,920 --> 00:25:20,800
Speaker 13: literally start businesses on the platform that were specifically geared

487
00:25:20,880 --> 00:25:24,360
Speaker 13: around success with the ads. Right, Like, there's a connection

488
00:25:24,520 --> 00:25:28,000
Speaker 13: there that I think the Superintelligence group is aiming to make.

489
00:25:28,359 --> 00:25:30,600
Speaker 13: And I think it's subtle at this point, but it's

490
00:25:30,600 --> 00:25:33,320
Speaker 13: a topic we're kind of trying to elevate for people

491
00:25:33,359 --> 00:25:35,840
Speaker 13: because I think that might be the more compelling way

492
00:25:35,880 --> 00:25:37,600
Speaker 13: that they use meta AI in the future.

493
00:25:37,880 --> 00:25:42,120
Speaker 4: Briefly, there was lip service given by in a statement

494
00:25:42,680 --> 00:25:45,680
Speaker 4: Susan Lee that there's the regulatory overhang and that could

495
00:25:45,760 --> 00:25:49,040
Speaker 4: impact future revenues. How much is that What if you

496
00:25:49,040 --> 00:25:52,320
Speaker 4: at the moment, Brad, you.

497
00:25:52,240 --> 00:25:55,120
Speaker 13: Know, that's a you know you're here to it referred

498
00:25:55,119 --> 00:25:57,480
Speaker 13: to as kind of the big Tobacco moment. I mean

499
00:25:57,480 --> 00:26:00,760
Speaker 13: that would be relative to kind of social media usage

500
00:26:00,800 --> 00:26:04,520
Speaker 13: broadly in today's world, that would be such a seismic change.

501
00:26:05,200 --> 00:26:08,879
Speaker 2: It's a risk. We worry about a lot of stuff

502
00:26:08,920 --> 00:26:09,520
Speaker 2: on stocks.

503
00:26:09,560 --> 00:26:12,680
Speaker 13: That's something that's completely out of sort of everyone's control

504
00:26:12,720 --> 00:26:15,239
Speaker 13: at this point. But yeah, if that happens and they

505
00:26:15,280 --> 00:26:18,240
Speaker 13: are forced to kind of throttle usage for users below

506
00:26:18,280 --> 00:26:22,840
Speaker 13: a certain age. It will absolutely meaningfully impact the business.

507
00:26:22,560 --> 00:26:25,800
Speaker 13: It's also just one of those things. A it's totally unpredictable.

508
00:26:25,920 --> 00:26:28,600
Speaker 13: Be you know, there will be like years of appeals involved,

509
00:26:29,480 --> 00:26:31,960
Speaker 13: and so I don't want to say a fine or

510
00:26:32,000 --> 00:26:34,760
Speaker 13: a settlement looks more likely, but historically we've seen that

511
00:26:34,880 --> 00:26:38,120
Speaker 13: be kind of the primary outcome of these types of situations.

512
00:26:38,400 --> 00:26:41,080
Speaker 4: Obviously's Internet analyst Brad Erics. I'm really glad we could

513
00:26:41,080 --> 00:26:43,640
Speaker 4: dig into metal with you, Thank you very much. Indeed, look,

514
00:26:43,720 --> 00:26:47,320
Speaker 4: we've got more earnings Apple reports later today its first release.

515
00:26:47,440 --> 00:26:50,320
Speaker 4: Is the iPhone maker really announced the hardware chief, John Turners,

516
00:26:50,320 --> 00:26:52,000
Speaker 4: will succeed the CEO, Tim Cook.

517
00:26:52,520 --> 00:26:53,920
Speaker 5: Let's get the details of what to expect.

518
00:26:54,000 --> 00:26:56,440
Speaker 4: Mumbo's Mark Gumman like almost is it a sideshow of

519
00:26:56,520 --> 00:26:57,160
Speaker 4: the earnings?

520
00:26:59,400 --> 00:27:01,240
Speaker 2: Yeah, I mean this is going to be quite interesting.

521
00:27:01,280 --> 00:27:03,359
Speaker 14: Right a week ago they announced that Tim Cook is

522
00:27:03,359 --> 00:27:07,440
Speaker 14: stepping down September first, being replaced by John Turnis.

523
00:27:07,520 --> 00:27:08,680
Speaker 2: As we anticipated.

524
00:27:09,280 --> 00:27:11,879
Speaker 14: I'll be looking out for any other new color on

525
00:27:11,920 --> 00:27:14,160
Speaker 14: the transition. If Turnus is going to speak and gives

526
00:27:14,240 --> 00:27:17,600
Speaker 14: some insights to Wall Street for the first time, I'm

527
00:27:17,640 --> 00:27:18,640
Speaker 14: going to be interested.

528
00:27:18,359 --> 00:27:19,919
Speaker 2: To see how that all gets split.

529
00:27:20,000 --> 00:27:20,160
Speaker 9: Up.

530
00:27:20,320 --> 00:27:25,000
Speaker 14: Obviously, from a numbers perspective, we're expecting some pretty numbers, right,

531
00:27:25,320 --> 00:27:27,920
Speaker 14: thirteen to sixteen percent year every year revenue increases. What

532
00:27:27,960 --> 00:27:31,680
Speaker 14: Apple guided a few key factors in there. The biggest

533
00:27:31,680 --> 00:27:35,760
Speaker 14: one is pent up demand for iPhones seventeen, Pro and

534
00:27:35,840 --> 00:27:39,160
Speaker 14: Promax that launched last September. Obviously, but there were some

535
00:27:39,160 --> 00:27:42,280
Speaker 14: supply chain constraints through the tail end of the first quarter,

536
00:27:42,720 --> 00:27:46,520
Speaker 14: which means that some sales led into the second quarter,

537
00:27:46,600 --> 00:27:49,320
Speaker 14: so we'll see a bit of an iPhone increase because

538
00:27:49,359 --> 00:27:50,240
Speaker 14: of those products.

539
00:27:50,840 --> 00:27:52,080
Speaker 2: And then they had their wave.

540
00:27:51,880 --> 00:27:56,080
Speaker 14: Of new Mac and iPad and iPhone seventeen launches very

541
00:27:56,560 --> 00:27:58,480
Speaker 14: much at the tail end of the March quarter, which

542
00:27:58,520 --> 00:28:01,840
Speaker 14: obviously contributed as well. The MacBook Neo has been a

543
00:28:01,840 --> 00:28:04,440
Speaker 14: strong seller, so you're likely to see a big jump

544
00:28:04,440 --> 00:28:05,480
Speaker 14: in Mac revenue as well.

545
00:28:06,680 --> 00:28:09,520
Speaker 3: Mark, I think we're showing Apple shares up modestly half

546
00:28:09,520 --> 00:28:12,280
Speaker 3: percentage point, treading water until tonight, but we should probably

547
00:28:12,320 --> 00:28:15,920
Speaker 3: address how much of a leading indicator Qualcomm is right

548
00:28:15,960 --> 00:28:18,760
Speaker 3: they told us that the Android market in China will

549
00:28:18,760 --> 00:28:21,840
Speaker 3: bottom in Q three. Memory pricing is clearly an issue.

550
00:28:22,320 --> 00:28:26,440
Speaker 3: What data do we have about Apple facing similar issues?

551
00:28:27,520 --> 00:28:31,840
Speaker 14: You know, the Qualcom stuff is interesting. Actually, it's hard

552
00:28:31,880 --> 00:28:34,879
Speaker 14: to put two and two together at this point, just

553
00:28:34,920 --> 00:28:38,680
Speaker 14: because the android market is not selling well in particular

554
00:28:39,080 --> 00:28:41,320
Speaker 14: parts of the world like China. You know, there's no

555
00:28:41,400 --> 00:28:43,560
Speaker 14: telling if that means that the iPhone is also not

556
00:28:43,720 --> 00:28:46,320
Speaker 14: selling well. It's possible if the android market is not

557
00:28:46,400 --> 00:28:49,400
Speaker 14: selling well because people are buying iPhones instead. So I

558
00:28:49,680 --> 00:28:51,400
Speaker 14: probably wouldn't read too much into.

559
00:28:51,200 --> 00:28:54,600
Speaker 3: It, Okay, bluebos Mark Gunman on deck after the market

560
00:28:54,640 --> 00:28:57,320
Speaker 3: closed today for a big Apple print, Thank you very much.

561
00:29:03,960 --> 00:29:06,800
Speaker 3: One three seven Ventures as raised seven hundred million dollars

562
00:29:06,840 --> 00:29:10,160
Speaker 3: split across two new funds. The firm has put money

563
00:29:10,160 --> 00:29:15,240
Speaker 3: behind some familiar names like Anderil, Gusto Ramp, and SpaceX.

564
00:29:15,560 --> 00:29:19,440
Speaker 3: Justin Fishner Wolfson, founder and managing partner at one three seven.

565
00:29:19,440 --> 00:29:21,120
Speaker 2: Joins us here in San Francisco. Good morning.

566
00:29:22,320 --> 00:29:24,200
Speaker 3: This is interesting how you've done this.

567
00:29:24,200 --> 00:29:24,720
Speaker 6: This is.

568
00:29:26,280 --> 00:29:30,160
Speaker 3: Two funds where each sub's a purpose. It takes your

569
00:29:30,240 --> 00:29:32,920
Speaker 3: assets on the management to fifteen billion dollars. And I

570
00:29:32,960 --> 00:29:35,960
Speaker 3: mean this justin with respect. Your firm's gone a little

571
00:29:36,000 --> 00:29:39,040
Speaker 3: under the radar and now here you are arriving at

572
00:29:39,040 --> 00:29:39,560
Speaker 3: this moment.

573
00:29:40,880 --> 00:29:42,840
Speaker 15: I mean, I think we've just been focused on investing.

574
00:29:42,960 --> 00:29:46,640
Speaker 15: So maybe I think within the venture ecosystem people know us.

575
00:29:46,920 --> 00:29:49,040
Speaker 3: I want to talk about one of the funds in particular.

576
00:29:49,080 --> 00:29:51,600
Speaker 3: I find this very interesting. The idea of some of

577
00:29:51,640 --> 00:29:56,240
Speaker 3: the capital is that you offer liquidity right to founders,

578
00:29:56,280 --> 00:30:00,720
Speaker 3: that you back their employees in different forms, why specifically

579
00:30:00,720 --> 00:30:01,880
Speaker 3: earmarks some money for that.

580
00:30:02,840 --> 00:30:04,520
Speaker 15: So if you kind of rewind the clock, right, we

581
00:30:04,560 --> 00:30:08,280
Speaker 15: started the firm about sixteen years ago, and you know,

582
00:30:08,320 --> 00:30:11,080
Speaker 15: our thesis was that companies were going to stay private longer,

583
00:30:11,360 --> 00:30:14,480
Speaker 15: and the challenge of companies staying private longer was going

584
00:30:14,520 --> 00:30:19,320
Speaker 15: to be that founders, executives, employees were going to need liquidity.

585
00:30:18,920 --> 00:30:22,120
Speaker 2: Like working capital. I mean, look, if.

586
00:30:21,960 --> 00:30:23,760
Speaker 15: You start a company when you're twenty five and then

587
00:30:23,960 --> 00:30:26,120
Speaker 15: you know you end up being thirty five, right, Like

588
00:30:26,440 --> 00:30:28,320
Speaker 15: your life is different, Maybe you want to buy a house,

589
00:30:28,800 --> 00:30:31,080
Speaker 15: right in the same way, like all these companies need

590
00:30:31,120 --> 00:30:33,760
Speaker 15: more growth capital, right, And so we've seen the availability

591
00:30:33,800 --> 00:30:36,360
Speaker 15: of that expand in the private markets. And so you know,

592
00:30:36,400 --> 00:30:38,600
Speaker 15: our general view is if companies stay private longer, they're

593
00:30:38,600 --> 00:30:40,560
Speaker 15: going to be more opportunities to invest in them.

594
00:30:40,840 --> 00:30:41,800
Speaker 5: And opportunities.

595
00:30:41,920 --> 00:30:45,080
Speaker 4: Boy did you take you first invested in SpaceX for example,

596
00:30:45,440 --> 00:30:49,040
Speaker 4: in twenty ten, you've written two dozen checks. It tells

597
00:30:49,080 --> 00:30:52,560
Speaker 4: me into SpaceX since how much now do you own

598
00:30:52,880 --> 00:30:54,120
Speaker 4: a SpaceX if you're.

599
00:30:53,960 --> 00:30:54,600
Speaker 5: Able to do that.

600
00:30:56,360 --> 00:30:57,880
Speaker 15: I mean, I think at this point where I think

601
00:30:57,880 --> 00:31:00,360
Speaker 15: we own well over ten billion dollars, So it's a

602
00:31:00,440 --> 00:31:02,320
Speaker 15: it's a pretty big position for us. And we've had

603
00:31:02,360 --> 00:31:04,840
Speaker 15: a lot of conviction in the business over the last

604
00:31:05,280 --> 00:31:06,360
Speaker 15: fifteen sixteen years.

605
00:31:06,400 --> 00:31:07,880
Speaker 2: So yeah, we're excited.

606
00:31:08,160 --> 00:31:10,000
Speaker 4: I mean, if you were in in twenty ten, what

607
00:31:10,040 --> 00:31:12,880
Speaker 4: sort of returns can the LPs be expecting on this?

608
00:31:15,040 --> 00:31:18,320
Speaker 15: Oh gosh, some of those some of those investments I

609
00:31:18,320 --> 00:31:21,240
Speaker 15: think are probably like kind of X investments at this point.

610
00:31:22,120 --> 00:31:25,520
Speaker 3: It's interesting. You know, ten billion dollars of position is

611
00:31:25,600 --> 00:31:29,200
Speaker 3: SpaceX I think would be around one percent of the company. Yeah,

612
00:31:29,240 --> 00:31:31,600
Speaker 3: but you've got a decision to make. So if we're

613
00:31:31,680 --> 00:31:34,680
Speaker 3: right and Bloomberg's reporting that a label the rook is

614
00:31:34,720 --> 00:31:39,360
Speaker 3: always right, Bloomberg is very often right. But we're reporting

615
00:31:39,360 --> 00:31:41,880
Speaker 3: that SpaceX, you know, goes public in late June and

616
00:31:41,960 --> 00:31:45,280
Speaker 3: evaluation of let's up to two trillion whatever, it ends

617
00:31:45,360 --> 00:31:48,840
Speaker 3: up raising seventy five billion dollars. You keep talking about

618
00:31:48,840 --> 00:31:51,320
Speaker 3: the whole point of the firm is to invest in

619
00:31:51,400 --> 00:31:54,760
Speaker 3: companies over that longer time horizon. In that case, companies

620
00:31:54,800 --> 00:31:57,520
Speaker 3: were staying private longer. What do you do for your

621
00:31:57,720 --> 00:32:00,680
Speaker 3: LPs or for your firm in an IPI scenario? Do

622
00:32:00,720 --> 00:32:02,840
Speaker 3: you stick with it or what's the strategy?

623
00:32:03,560 --> 00:32:06,840
Speaker 15: I mean, I think the exciting part about SpaceX is

624
00:32:06,920 --> 00:32:09,320
Speaker 15: like the next twenty years of the business. And so

625
00:32:10,000 --> 00:32:13,920
Speaker 15: I agree with your question. I think it's a hard decision. Ultimately,

626
00:32:14,000 --> 00:32:15,800
Speaker 15: let's see where we get to. Right, We'll find out

627
00:32:15,840 --> 00:32:18,200
Speaker 15: what the company price is at. As you know, these

628
00:32:18,240 --> 00:32:20,960
Speaker 15: things tend to happen that night before, right, So I

629
00:32:21,000 --> 00:32:23,160
Speaker 15: think there's a lot of information between now and when

630
00:32:23,200 --> 00:32:25,760
Speaker 15: the IBO happens, and I think we're going to be

631
00:32:25,800 --> 00:32:28,560
Speaker 15: happy with all outcomes, but we're sort of excited for

632
00:32:28,560 --> 00:32:29,440
Speaker 15: the next couple decades.

633
00:32:29,640 --> 00:32:31,840
Speaker 3: I wanted to look backward a little bit. You know,

634
00:32:31,920 --> 00:32:34,480
Speaker 3: the first investment around twenty ten. You had already had

635
00:32:34,520 --> 00:32:37,240
Speaker 3: a history of SpaceX from your time at Founder's Fund.

636
00:32:37,600 --> 00:32:40,600
Speaker 3: But if you did do two dozen checks over fifteen

637
00:32:40,680 --> 00:32:43,480
Speaker 3: sixteen years, what was that like. We make a lot

638
00:32:43,480 --> 00:32:47,800
Speaker 3: on this program of Google and Fidelity Founders Fund coming

639
00:32:47,840 --> 00:32:51,200
Speaker 3: in in these bigger rounds, but you were able to participate.

640
00:32:51,680 --> 00:32:54,120
Speaker 15: I mean, I think really the thing that we did

641
00:32:54,200 --> 00:32:54,920
Speaker 15: is consistency.

642
00:32:55,000 --> 00:32:55,160
Speaker 6: Right.

643
00:32:55,240 --> 00:32:57,480
Speaker 15: We were excited about the business, We had conviction about

644
00:32:57,520 --> 00:33:00,360
Speaker 15: the business, and so we kept investing, right, and some

645
00:33:00,400 --> 00:33:03,120
Speaker 15: people wrote it one check and that obviously was a

646
00:33:03,160 --> 00:33:06,040
Speaker 15: huge outcome. But we kind of showed in your We

647
00:33:06,040 --> 00:33:09,560
Speaker 15: showed up, you're in, you'ar out, and that's really paid off.

648
00:33:10,000 --> 00:33:15,840
Speaker 4: And now new people show up SPV access to retail.

649
00:33:16,680 --> 00:33:19,880
Speaker 4: Is that what naturally has to happen if we're going

650
00:33:19,920 --> 00:33:22,920
Speaker 4: to get these companies staying private longer, what's the tension there?

651
00:33:24,640 --> 00:33:27,480
Speaker 15: I mean, once the company is public, obviously everyone will

652
00:33:27,480 --> 00:33:30,040
Speaker 15: have an opportunity to invest in it. I think, you know,

653
00:33:30,160 --> 00:33:33,200
Speaker 15: as we've seen more capital become available in the private markets.

654
00:33:33,200 --> 00:33:35,160
Speaker 15: I mean you've seen, you know, some of the large

655
00:33:35,200 --> 00:33:38,040
Speaker 15: crossover funds get involved. So I mean there's just there's

656
00:33:38,080 --> 00:33:41,200
Speaker 15: an incredible increase in the amount of capital available in

657
00:33:41,240 --> 00:33:43,680
Speaker 15: the private markets relative to you know, ten or fifteen

658
00:33:43,720 --> 00:33:45,560
Speaker 15: years ago. And so I do you think some of

659
00:33:45,560 --> 00:33:47,840
Speaker 15: these things are sort of the natural evolution of the

660
00:33:47,840 --> 00:33:48,600
Speaker 15: private markets.

661
00:33:48,880 --> 00:33:52,040
Speaker 3: Well, I SPVs, Sorry, I just wanted to you know,

662
00:33:52,080 --> 00:33:54,280
Speaker 3: I want to get an answer to your question because

663
00:33:54,520 --> 00:33:57,640
Speaker 3: on the show, we talked a lot about claimed ownership

664
00:33:58,240 --> 00:34:01,600
Speaker 3: of company SpaceX as a prime example, but Anderils sorts

665
00:34:01,600 --> 00:34:04,440
Speaker 3: about this as well. There are people out there purporting

666
00:34:04,480 --> 00:34:06,360
Speaker 3: to have a position, but they bought in through some

667
00:34:06,520 --> 00:34:10,000
Speaker 3: SPV structure ahead of an IPO. What's the reality of that.

668
00:34:10,080 --> 00:34:13,080
Speaker 3: What happens when when the real ownership becomes clear?

669
00:34:13,239 --> 00:34:14,799
Speaker 15: Well, I mean, I think the greater concern is just

670
00:34:14,840 --> 00:34:17,320
Speaker 15: fraud in the private markets, right, and so just because

671
00:34:17,560 --> 00:34:22,040
Speaker 15: people there's clearly been fraud in the SpaceX market, in

672
00:34:22,080 --> 00:34:24,160
Speaker 15: the andro market, and you know, so I think that

673
00:34:24,400 --> 00:34:27,000
Speaker 15: people need to be thoughtful about why who they're partnering

674
00:34:27,040 --> 00:34:29,399
Speaker 15: with and who they're doing business with, because I think

675
00:34:29,400 --> 00:34:32,640
Speaker 15: we'll find out, I don't know, a year after the IPO,

676
00:34:32,719 --> 00:34:35,440
Speaker 15: when people think they're getting shares and they don't get them, right,

677
00:34:35,880 --> 00:34:37,920
Speaker 15: what actually happened that as of a lock up period.

678
00:34:38,360 --> 00:34:39,919
Speaker 15: There'll be some kind of lock up period or whatever.

679
00:34:39,960 --> 00:34:41,800
Speaker 15: But I just think it takes a while for people

680
00:34:41,800 --> 00:34:44,560
Speaker 15: to like actually actually start demanding the shares that they

681
00:34:44,560 --> 00:34:46,360
Speaker 15: thought they owned. And I think that's going to be

682
00:34:46,360 --> 00:34:49,560
Speaker 15: an unfortunate consequence of you know, some somember of bad

683
00:34:49,560 --> 00:34:51,120
Speaker 15: actors in the market and a.

684
00:34:51,040 --> 00:34:53,080
Speaker 4: Big claim and one I'm sure regulated to be looking

685
00:34:53,080 --> 00:34:55,239
Speaker 4: at one Blue Meg will continue to report on justin

686
00:34:55,280 --> 00:34:57,120
Speaker 4: Fishtahls and it's great to have some time with the

687
00:34:57,480 --> 00:35:01,759
Speaker 4: founder managing partner at one three seven Venture Now investors

688
00:35:02,400 --> 00:35:07,000
Speaker 4: look at how they're cheering Qualcomm's entry into AI, sparking

689
00:35:07,000 --> 00:35:10,280
Speaker 4: the biggest inter day rally after their earnings since October.

690
00:35:10,320 --> 00:35:12,680
Speaker 4: This is after the company revealed it will ship custom

691
00:35:12,719 --> 00:35:16,080
Speaker 4: aichips to a major hyperscaler later this year, joining US now.

692
00:35:16,400 --> 00:35:22,840
Speaker 4: Qualcom CEO Cristiano a'mon, who is the Hyperscala Christiano.

693
00:35:23,880 --> 00:35:25,839
Speaker 11: I'll tell you all about it on June twenty four.

694
00:35:26,080 --> 00:35:28,279
Speaker 11: It's going to be It's going to be three days

695
00:35:28,320 --> 00:35:31,080
Speaker 11: after my birthday, June the twenty fourth.

696
00:35:31,120 --> 00:35:33,640
Speaker 4: We've got to hold on to But what does this

697
00:35:33,680 --> 00:35:36,640
Speaker 4: signal about? You have been a man who's committed to

698
00:35:36,680 --> 00:35:39,600
Speaker 4: telling the market that you are expanding the market. It's

699
00:35:39,640 --> 00:35:43,000
Speaker 4: not just about mobile phones while Qualcom has really dominated

700
00:35:43,040 --> 00:35:46,040
Speaker 4: the market share, but chips now in automotives, in IoT,

701
00:35:46,360 --> 00:35:48,239
Speaker 4: but really in the data center. What sort of town,

702
00:35:48,280 --> 00:35:51,080
Speaker 4: what sort of expansion of Colcom's business will this.

703
00:35:51,040 --> 00:35:51,440
Speaker 5: Mean for you?

704
00:35:52,440 --> 00:35:55,200
Speaker 11: Yeah, look, you know this is a great question, and

705
00:35:55,280 --> 00:35:59,200
Speaker 11: I want to maybe start the answer by saying, you

706
00:35:59,239 --> 00:36:03,160
Speaker 11: know why we're not anybody you know bet on qualcom

707
00:36:03,320 --> 00:36:05,840
Speaker 11: diversification efforts. We started as a mobile company. If you

708
00:36:05,880 --> 00:36:08,120
Speaker 11: look at what we're doing right now, we expanded into PC,

709
00:36:08,320 --> 00:36:11,760
Speaker 11: we became one of the largest providers of semiconductor to automotive,

710
00:36:11,800 --> 00:36:14,120
Speaker 11: We're going to industry, we're going to robotics, we're going

711
00:36:14,200 --> 00:36:17,640
Speaker 11: to broadb in a networking and I think the data

712
00:36:17,640 --> 00:36:20,080
Speaker 11: center was a natural thing. We have been working on

713
00:36:20,120 --> 00:36:22,520
Speaker 11: this for the past couple of years. We've been consistently

714
00:36:22,560 --> 00:36:26,320
Speaker 11: saying we're building assets, we acquire companies psy Alpha Wave,

715
00:36:26,840 --> 00:36:30,160
Speaker 11: we have a pretty good CPU, a very good accelerator.

716
00:36:30,280 --> 00:36:33,640
Speaker 11: We're not a small company. We shipped forty billion chips,

717
00:36:33,640 --> 00:36:36,480
Speaker 11: So I actually I don't know why people will bet

718
00:36:36,480 --> 00:36:39,200
Speaker 11: against Qualcom, but I think it's okay. We're just being

719
00:36:39,320 --> 00:36:42,560
Speaker 11: on this road to execution like we have done on

720
00:36:42,600 --> 00:36:45,160
Speaker 11: the other business, and we're very exciting because I think

721
00:36:45,200 --> 00:36:48,360
Speaker 11: what's really happening right now as we enter this next

722
00:36:48,360 --> 00:36:51,880
Speaker 11: phase of AI. We went from training to inference now agents,

723
00:36:51,920 --> 00:36:56,040
Speaker 11: which actually would generate demand for tokens. It provides an

724
00:36:56,080 --> 00:36:59,920
Speaker 11: opportunity across the entire Qualcum business. All of those devices

725
00:37:00,000 --> 00:37:02,959
Speaker 11: where people are going to have agents running, where there's

726
00:37:03,040 --> 00:37:06,880
Speaker 11: phones and PCs, they're auto, they're going to go to

727
00:37:06,880 --> 00:37:09,759
Speaker 11: an upgrade cycle, and then from the assets that we

728
00:37:09,800 --> 00:37:11,560
Speaker 11: build create opportunity for data.

729
00:37:11,320 --> 00:37:17,719
Speaker 3: Center Christiano, specificity is so important here you said, and

730
00:37:17,800 --> 00:37:19,360
Speaker 3: you can correct me if I'm wrong. You said it

731
00:37:19,400 --> 00:37:23,360
Speaker 3: was an asick product, which I think the markets looked

732
00:37:23,360 --> 00:37:26,319
Speaker 3: at and is a little bit surprised. So you are

733
00:37:27,000 --> 00:37:29,800
Speaker 3: not doing your own chip, you're not doing merchant silicon,

734
00:37:30,520 --> 00:37:32,640
Speaker 3: your own designs for market. You're doing an a sick

735
00:37:32,719 --> 00:37:34,600
Speaker 3: with someone.

736
00:37:35,320 --> 00:37:39,160
Speaker 11: So we have said that our data center product and

737
00:37:39,200 --> 00:37:40,920
Speaker 11: I need to make sure I don't front run my

738
00:37:41,480 --> 00:37:45,600
Speaker 11: investor day, but trying our data Yeah, I understand that

739
00:37:45,760 --> 00:37:50,840
Speaker 11: my data center. My data center product offering includes twe vectors.

740
00:37:51,640 --> 00:37:55,399
Speaker 11: One is CPU. We are developing a CPU and we're

741
00:37:55,480 --> 00:37:58,520
Speaker 11: very flexible. We can provide we can provide a full

742
00:37:58,640 --> 00:38:01,440
Speaker 11: so SoC we can provide chip. So that's one asset.

743
00:38:02,040 --> 00:38:06,640
Speaker 11: The other asset is an accelerator. We have the accelerator

744
00:38:06,840 --> 00:38:11,520
Speaker 11: with innovative memory architecture. We don't need HBM for the

745
00:38:11,600 --> 00:38:15,319
Speaker 11: disaggregated inference. The other one is the ability to do

746
00:38:15,440 --> 00:38:19,640
Speaker 11: custom chip, which when we acquire Alpha Wave, they have

747
00:38:19,800 --> 00:38:22,759
Speaker 11: both a lot of IP which is important for CUSTOMERSIC

748
00:38:22,880 --> 00:38:25,399
Speaker 11: as well as a custom chip team. When you put

749
00:38:25,440 --> 00:38:28,560
Speaker 11: everything together, it creates a lot of opportunities for Qualcom.

750
00:38:28,600 --> 00:38:32,960
Speaker 11: Now here's what is important to understand. The data center

751
00:38:33,080 --> 00:38:37,760
Speaker 11: market is highly concentrated. Is correctly there are but six

752
00:38:37,880 --> 00:38:40,960
Speaker 11: to eight companies that represent the majority of it. And

753
00:38:41,040 --> 00:38:43,279
Speaker 11: when you see what's happening in the market right now,

754
00:38:43,320 --> 00:38:46,920
Speaker 11: a lot of solutions are becoming bespoke. They're no longer

755
00:38:47,520 --> 00:38:51,320
Speaker 11: just merchant solutions. So I think as Qualcom entered the space,

756
00:38:51,440 --> 00:38:53,640
Speaker 11: you should expect that we will offer a lot of

757
00:38:53,680 --> 00:38:58,440
Speaker 11: flexibility and we'll leverage our supply chain and our design

758
00:38:58,560 --> 00:39:02,000
Speaker 11: capability to do spoke products. And I think that's what

759
00:39:02,040 --> 00:39:02,600
Speaker 11: we're doing.

760
00:39:03,239 --> 00:39:06,040
Speaker 3: Four to six companies. That's interesting. So this depends on

761
00:39:06,080 --> 00:39:10,040
Speaker 3: your definition of hyperscaler. Like, for example, Meta is not

762
00:39:10,160 --> 00:39:14,200
Speaker 3: a cloud computing company, but it operates at hyper scale

763
00:39:14,760 --> 00:39:17,879
Speaker 3: its own data center infrastructure. So maybe that's what we're

764
00:39:17,880 --> 00:39:20,600
Speaker 3: talking about here, the definition of what is or is

765
00:39:20,680 --> 00:39:21,600
Speaker 3: not a hyperscaler.

766
00:39:22,640 --> 00:39:26,640
Speaker 11: Look, I'm just gonna cut to the chase. We're talking

767
00:39:26,680 --> 00:39:30,000
Speaker 11: about a large hyperscalers. You should be thinking about one

768
00:39:30,040 --> 00:39:34,080
Speaker 11: of the large cloud companies day we have today. It's

769
00:39:34,120 --> 00:39:37,760
Speaker 11: a scale business, so I think that's what we're talking about.

770
00:39:38,640 --> 00:39:40,760
Speaker 5: Oh, getting closer.

771
00:39:42,000 --> 00:39:44,640
Speaker 4: The potential customers therefore are four to six, but they're

772
00:39:44,719 --> 00:39:47,279
Speaker 4: huge and maybe they're even more than that. So just

773
00:39:47,440 --> 00:39:51,080
Speaker 4: can you get specific about how big the opportunity is

774
00:39:51,120 --> 00:39:53,400
Speaker 4: for this particular part of the business, how much you

775
00:39:53,440 --> 00:39:55,400
Speaker 4: think it could ramp up revenues, So that's something you're

776
00:39:55,440 --> 00:39:58,360
Speaker 4: able to push ahead before the investment meeting.

777
00:39:59,280 --> 00:40:01,959
Speaker 11: Look, we're not getting I don't want to get ahead

778
00:40:02,000 --> 00:40:05,319
Speaker 11: of our skis. We're executing. We're very pleased with the

779
00:40:05,360 --> 00:40:08,759
Speaker 11: engagement and what we said is it will be material

780
00:40:08,960 --> 00:40:11,640
Speaker 11: in fiscal twenty seven. Now, if you look at the

781
00:40:11,680 --> 00:40:15,319
Speaker 11: skill of the Quocom revenue base, so I think you know,

782
00:40:15,400 --> 00:40:19,160
Speaker 11: anything material to Qualcomm is probably in the multiple of

783
00:40:19,280 --> 00:40:22,600
Speaker 11: billion dollars in physical twenty seven. But look, we're just

784
00:40:22,640 --> 00:40:25,200
Speaker 11: starting and we're very happy with the progress we're making.

785
00:40:26,680 --> 00:40:29,440
Speaker 3: Christian, I think back very fondly to when you and

786
00:40:29,440 --> 00:40:31,560
Speaker 3: I are on stage together at the Bloombog Tech Summit.

787
00:40:31,560 --> 00:40:33,640
Speaker 3: I think it was three years ago now, and we

788
00:40:33,760 --> 00:40:37,000
Speaker 3: talked about the world where we switch to inference running

789
00:40:37,040 --> 00:40:40,480
Speaker 3: on device. But actually Qualcomm's story has really changed in

790
00:40:40,520 --> 00:40:43,239
Speaker 3: that time. Right, So in this world where we're moving

791
00:40:43,280 --> 00:40:46,520
Speaker 3: to inference and we're moving to a gentic how are

792
00:40:46,520 --> 00:40:47,800
Speaker 3: you positioning Qualcomm?

793
00:40:47,920 --> 00:40:48,040
Speaker 1: Right?

794
00:40:48,080 --> 00:40:51,360
Speaker 3: The CPU is important, but you must think differently to

795
00:40:51,960 --> 00:40:53,120
Speaker 3: how you did three years ago.

796
00:40:54,440 --> 00:41:01,480
Speaker 11: Look, frankly, it's it's actually playing out actually the way

797
00:41:00,840 --> 00:41:04,160
Speaker 11: we thought. And I know we have a limited time.

798
00:41:04,200 --> 00:41:06,600
Speaker 11: But when you start running agents, and when you start

799
00:41:06,680 --> 00:41:12,160
Speaker 11: running things like open Claw and a bunch of other claws, Actually,

800
00:41:12,160 --> 00:41:14,960
Speaker 11: what is fascinating to see what's happening in the phone industry.

801
00:41:15,120 --> 00:41:19,880
Speaker 11: Every Android OEM right now is launching their own claw.

802
00:41:20,440 --> 00:41:24,920
Speaker 11: And the way agents work, they actually operate your device

803
00:41:25,000 --> 00:41:27,560
Speaker 11: for you. So what you're going to see at the end,

804
00:41:28,000 --> 00:41:30,520
Speaker 11: you're going to see a lot of activity in the cloud,

805
00:41:30,960 --> 00:41:33,080
Speaker 11: and you're going to see also activity on the device

806
00:41:33,160 --> 00:41:35,880
Speaker 11: and it's all going to magically work. I almost like

807
00:41:36,000 --> 00:41:38,799
Speaker 11: to say this, I am sure you have probably two

808
00:41:38,920 --> 00:41:42,120
Speaker 11: hundred apps on your phone or close to that. We

809
00:41:42,400 --> 00:41:45,239
Speaker 11: never have a discussion, we never have a discussion about

810
00:41:45,320 --> 00:41:48,080
Speaker 11: how much each app is doing on the cloud or

811
00:41:48,120 --> 00:41:49,040
Speaker 11: doing on the device.

812
00:41:49,239 --> 00:41:50,280
Speaker 2: It just works.

813
00:41:50,320 --> 00:41:52,600
Speaker 11: And I think that's how we see those agents working.

814
00:41:53,000 --> 00:41:54,920
Speaker 11: They look at your data, they look at things on

815
00:41:54,960 --> 00:41:57,200
Speaker 11: your device, they do things for you, and they do

816
00:41:57,280 --> 00:41:59,279
Speaker 11: stuff on the cloud. And I think that's why I

817
00:41:59,360 --> 00:42:02,880
Speaker 11: believe this actually builds into the Qualcom assets and the

818
00:42:02,920 --> 00:42:06,760
Speaker 11: factor are present everywhere our engagement with the cloud companies

819
00:42:06,800 --> 00:42:09,920
Speaker 11: right now they look at our devices at endpoint for AI,

820
00:42:10,400 --> 00:42:12,920
Speaker 11: and that's also exciting. I think we're talking with all

821
00:42:12,960 --> 00:42:15,640
Speaker 11: the AI companies about their new and exciting devices.

822
00:42:15,800 --> 00:42:18,080
Speaker 4: What's less exciting is when supply chain disruption. But you

823
00:42:18,120 --> 00:42:20,320
Speaker 4: were really clear with investors and they liked it quickly.

824
00:42:20,320 --> 00:42:23,200
Speaker 4: With thirty seconds memory, you see an endpoint at least

825
00:42:23,200 --> 00:42:23,600
Speaker 4: in China.

826
00:42:25,120 --> 00:42:25,600
Speaker 6: Yeah.

827
00:42:25,640 --> 00:42:30,760
Speaker 11: Look, the reality is everything needs memory, and AI drives

828
00:42:30,800 --> 00:42:32,719
Speaker 11: more memory demand. If we drove a lot of the

829
00:42:32,719 --> 00:42:35,840
Speaker 11: men of the data center, it CAUs a crunch on

830
00:42:36,440 --> 00:42:39,600
Speaker 11: the consumer electronics. The good thing is we now see

831
00:42:39,600 --> 00:42:41,960
Speaker 11: the bottom, as I said in the call, where under

832
00:42:42,120 --> 00:42:46,440
Speaker 11: shipping market demand, we look at customer activations of devices

833
00:42:46,480 --> 00:42:49,799
Speaker 11: and cell thual data, we see how what the demand is.

834
00:42:49,880 --> 00:42:52,399
Speaker 11: That's now we can call the bottom and you know

835
00:42:52,480 --> 00:42:55,520
Speaker 11: there's going to be more supply and more suppliers and

836
00:42:55,560 --> 00:42:57,160
Speaker 11: we'll see how this is going to play out.

837
00:42:58,200 --> 00:43:00,839
Speaker 3: The market is taking this really serious. See Qualcomm having

838
00:43:00,880 --> 00:43:04,640
Speaker 3: its best day since April twenty nineteen. Qualcom's Christiana, I'm on.

839
00:43:05,120 --> 00:43:08,600
Speaker 3: Thank you very much, Caroline, that I don't know for

840
00:43:08,680 --> 00:43:11,920
Speaker 3: me in the ten years I've been here in extraordinary

841
00:43:11,920 --> 00:43:14,920
Speaker 3: Technology earnings twenty four hours and that does it for

842
00:43:14,960 --> 00:43:16,160
Speaker 3: this edition of Bloomberg Tech.

843
00:43:16,600 --> 00:43:19,960
Speaker 4: Super Bowl seventy second super Bowl. All came yesterday, but

844
00:43:19,960 --> 00:43:21,400
Speaker 4: there's more to come. There's the second half of the

845
00:43:21,400 --> 00:43:24,320
Speaker 4: super Bowl. It's Apple Tonight. Don't forget check out our podcast.

846
00:43:24,480 --> 00:43:26,160
Speaker 4: You'll find it on the terminal as well as online

847
00:43:26,160 --> 00:43:29,239
Speaker 4: on Apple, Spotify, and iHeart from New York, from San Francisco,

848
00:43:29,719 --> 00:43:30,480
Speaker 4: this is Bloomberg