WEBVTT - AI Payoff in Focus During Tech Earnings Bonanza 0:00:02.520 --> 0:00:12.920 Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is live 0:00:12.960 --> 0:00:16.759 from coast to coast with Caroline Hide in New York 0:00:17.040 --> 0:00:19.040 and Ever though in San Francisco. 0:00:21.800 --> 0:00:22.919 This is Bloomberg Tech. 0:00:23.079 --> 0:00:27.560 Alphabet, Amazon, Meta, and Microsoft all out with earnings and 0:00:27.640 --> 0:00:28.640 big AI dreams. 0:00:28.960 --> 0:00:31.600 Four companies ED are expected to spend as much as 0:00:31.600 --> 0:00:34.400 seven hundred and twenty five billion dollars in twenty twenty six, 0:00:34.720 --> 0:00:37.360 but the key question being whether that massive spending is 0:00:37.360 --> 0:00:40.800 providing tangible results. We'll discuss throughout this hour, and we 0:00:40.920 --> 0:00:42.240 fixate on these numbers. 0:00:42.440 --> 0:00:45.720 And you said it best. It was in seventy seconds. 0:00:45.760 --> 0:00:48.800 The fire hose ensued last night and Alphabet is the 0:00:48.840 --> 0:00:50.360 clear winner. We're at a record high. 0:00:50.560 --> 0:00:53.680 Google really posting strength in its cloud division one than 0:00:53.760 --> 0:00:57.320 sixty percent growth. Yes, they are opping their capital expenditure 0:00:57.640 --> 0:01:02.040 to one hundred and ninety billion dollars. Amazon also committing 0:01:02.120 --> 0:01:06.240 its capital expenditure. Look all together, this is actually growing GDP. 0:01:06.400 --> 0:01:09.240 We saw the numbers for the US economy strengthen on 0:01:09.280 --> 0:01:11.839 the business outlaws that Amazon puts to work with again, 0:01:12.200 --> 0:01:15.720 growth in its aws twenty eight percent growth. That was enough, 0:01:15.720 --> 0:01:17.720 but still maybe we're coming off of our near record 0:01:17.840 --> 0:01:18.679 highs in that stock. 0:01:19.400 --> 0:01:23.000 All four have the capital expensure story in common alphabet, 0:01:23.080 --> 0:01:26.920 Amazon and Microsoft. They had the cloud growth metric in common. 0:01:27.240 --> 0:01:31.280 Azure grew forty percent in the quarterer. Their briefing modest 0:01:31.600 --> 0:01:34.000 acceleration of cloud growth in the second half of this year. 0:01:34.520 --> 0:01:37.720 Meta is the outlier. It is down nine percent on 0:01:37.720 --> 0:01:40.160 one point, on track for its biggest drop since October. 0:01:40.560 --> 0:01:43.000 It told us the capital expenditures up to one hundred 0:01:43.000 --> 0:01:45.399 and forty five billion dollars this year. It gave us 0:01:45.440 --> 0:01:47.880 an outlook for sales that was in line with consensus. 0:01:48.080 --> 0:01:52.120 But then there was not that one extrametric about how 0:01:52.160 --> 0:01:56.080 AI is being justified, how the payoff is translating to 0:01:56.120 --> 0:01:57.680 them with their go to market. 0:01:58.120 --> 0:02:00.920 Yeah, let's try and translate therefore, because yesterday's frenzy and 0:02:01.080 --> 0:02:03.520 offered eight glimpse and just how some of the world's 0:02:03.520 --> 0:02:05.840 biggest tech companies are doing in AI. And this is 0:02:05.880 --> 0:02:07.560 what some of the big tech leaders had to say 0:02:07.600 --> 0:02:08.679 post earnings release. 0:02:09.600 --> 0:02:14.720 Looking ahead. Our ability to invest in this moment and 0:02:14.800 --> 0:02:17.600 stay at the frontier, you know, I think puts us 0:02:17.639 --> 0:02:21.200 in a strong position, and I think we are doing 0:02:21.360 --> 0:02:26.120 it based on tangible demand signal sphere, seeing. 0:02:27.040 --> 0:02:29.600 Nobody has a better sort of chips across AI and 0:02:29.680 --> 0:02:33.960 CPU workers in aws with training and Gravitan. 0:02:33.919 --> 0:02:36.800 And we're unusually well positioned for this AI inflection. 0:02:36.880 --> 0:02:39.560 We're in the early stages of experiencing. 0:02:39.440 --> 0:02:41.600 From CEOs to the investor. Take Ioka. 0:02:41.639 --> 0:02:44.800 Yes, that's portfolio consulting director at Wealth Enhancement Group, who 0:02:44.840 --> 0:02:47.080 I'm pleased to say has exposure to all of the 0:02:47.080 --> 0:02:50.040 four names. I Okay, let's start with a winner. Alphabet 0:02:50.160 --> 0:02:52.880 blew the market away. Is it justified the increase in. 0:02:52.800 --> 0:02:59.040 Spending absolutely, you know, they continue to see this exponential 0:02:59.120 --> 0:03:03.600 demand in AI, whether it was through Google Cloud or 0:03:03.639 --> 0:03:08.200 through their backlog doubling quarter over quarter. So yes, the 0:03:08.240 --> 0:03:11.360 spending is definitely justified. And they've been doing a great 0:03:11.440 --> 0:03:15.639 job of being a low cost token provider for AI. 0:03:15.919 --> 0:03:18.520 So we continue to think that there is some momentum 0:03:18.560 --> 0:03:20.320 here with Alphabet. 0:03:20.280 --> 0:03:22.440 And in many ways that's because of the vertical integration 0:03:22.520 --> 0:03:25.640 one that is replicated over at Amazon and we're seeing 0:03:25.680 --> 0:03:27.960 a huge backlog more than three hundred and sixty billion 0:03:28.000 --> 0:03:32.400 dollars worth of coming to business for Amazon and AWSKA. 0:03:32.480 --> 0:03:34.960 What did you make of Amazon's numbers in the flywheel effect. 0:03:36.000 --> 0:03:40.440 Sure, Now, it's great to see that acceleration in AWS growth. 0:03:40.680 --> 0:03:43.720 I mean we're talking big numbers here, and so to 0:03:43.760 --> 0:03:47.640 see an acceleration of AWS growing twenty eight percent year 0:03:47.640 --> 0:03:50.400 every year versus last quarters twenty four percent, we haven't 0:03:50.440 --> 0:03:53.600 seen these kinds of acceleration in these growth rates from 0:03:53.640 --> 0:03:57.080 AWS in quite some time, and so it's really nice 0:03:57.080 --> 0:03:59.880 to see, and it really sort of doubles down on 0:04:00.120 --> 0:04:02.880 the demand that everybody is seeing on the AI front. 0:04:04.840 --> 0:04:07.720 MG, give me the capital expenditures numbers for all four 0:04:07.960 --> 0:04:10.840 and let's show shares of Nvidia, and now YOURKO explain 0:04:10.920 --> 0:04:14.960 this to me, right, the overall CAPEX environment has been 0:04:15.080 --> 0:04:18.960 raised for twenty twenty six. Nvidia, which you think would 0:04:19.000 --> 0:04:21.480 be the biggest beneficiary, is down three and a half 0:04:21.520 --> 0:04:23.480 percent in the in the session and one of the 0:04:23.520 --> 0:04:25.280 biggest point drags at the index level. 0:04:25.960 --> 0:04:31.040 Why so, I think there was so much conversation yesterday 0:04:31.120 --> 0:04:36.200 regarding you know, whether it's Trainium, Graviton, Google talking about 0:04:36.200 --> 0:04:40.520 their TPUs, you know, customs, Silicon and you know, the 0:04:41.200 --> 0:04:45.080 sort of shift as we move more towards inference that 0:04:45.360 --> 0:04:48.360 is really going to be a benefit to you know, 0:04:48.600 --> 0:04:52.120 things like companies like Broadcom right, and so I think 0:04:52.120 --> 0:04:55.359 perhaps people are thinking that Nvidia isn't going to be 0:04:55.920 --> 0:05:00.080 the beneficiary as this infrastructure continues to build out. But 0:05:00.360 --> 0:05:02.359 I do think Nvidia is going to be the base 0:05:02.440 --> 0:05:05.480 layer here and you're going to continue to need to 0:05:05.520 --> 0:05:08.560 build out those large language models. You're just going to 0:05:08.560 --> 0:05:13.440 get that added additional benefit from CPUs as well going forward. 0:05:14.560 --> 0:05:16.799 So I wanted to take that sort of halftime pause 0:05:16.839 --> 0:05:18.560 before we move on to the other two Microsoft and 0:05:18.600 --> 0:05:21.400 Meta Microsoft, I guess it was an issue of language, right, 0:05:21.480 --> 0:05:25.520 they showed forty percent Azure growth and said modest acceleration 0:05:26.400 --> 0:05:29.000 into the second half of this year. The stock is 0:05:29.000 --> 0:05:32.159 actually down more than you might think it would be. 0:05:33.880 --> 0:05:37.080 Absolutely with Microsoft, you know, I think it was still 0:05:37.120 --> 0:05:41.760 a very solid earnings growth number, and it's it's you know, 0:05:41.800 --> 0:05:44.000 it got caught up and a lot of the software 0:05:44.440 --> 0:05:47.800 downdraft that we saw in the first quarter of this year. 0:05:48.440 --> 0:05:52.760 But Microsoft is continuing to you know, deliver solid earnings. 0:05:53.360 --> 0:05:56.440 We think that, you know, this is a great opportunity 0:05:56.520 --> 0:06:01.000 to continue to own these shares and that acceleration you'll 0:06:01.000 --> 0:06:04.320 see in the back half. I think Copilot is you know, 0:06:04.400 --> 0:06:09.240 one of the AI use cases in which enterprise are 0:06:09.240 --> 0:06:12.760 going to gravitate towards first, and so we continue to 0:06:12.760 --> 0:06:14.440 think there's some value there. 0:06:14.920 --> 0:06:17.040 So you would be adding to Microsoft in this weakness 0:06:17.080 --> 0:06:18.520 because actually it was one of the only names that 0:06:18.640 --> 0:06:21.000 was down on the year leading into these numbers. 0:06:22.080 --> 0:06:25.279 Absolutely. I mean, you know, I think the biggest issue 0:06:25.520 --> 0:06:29.240 for all of these companies is the free cash flow numbers. 0:06:29.520 --> 0:06:33.080 You know, as the CAPPAC spend continues to rise, you know, 0:06:33.160 --> 0:06:37.240 despite these double digit revenue growth numbers that they're posting 0:06:37.279 --> 0:06:41.119 along with solid profit margin and expansions, the free cash 0:06:41.120 --> 0:06:44.280 flow continues to sort of dwindle. And I think that's 0:06:44.320 --> 0:06:46.320 the biggest issue in terms of how much do you 0:06:46.400 --> 0:06:50.880 pay for these companies as that free cash flow continues 0:06:50.880 --> 0:06:53.440 to be pressured and how long will it continue to 0:06:53.520 --> 0:06:54.200 be pressured. 0:06:55.120 --> 0:06:57.440 Okay, so let's the three of us try and unpick 0:06:57.440 --> 0:07:00.440 what happened with Meta. The stocks down ten perent on 0:07:00.480 --> 0:07:05.040 track for its biggest drop since October thirtieth. The outlook 0:07:05.080 --> 0:07:06.960 for revenue in the current period was a range of 0:07:07.000 --> 0:07:10.000 fifty eight to sixty one billion dollars, basically bang in 0:07:10.040 --> 0:07:14.000 line with consensus, and then there wasn't another number right, 0:07:14.120 --> 0:07:17.320 There wasn't another metric Yoko that said all of this 0:07:17.400 --> 0:07:19.200 investment into AI is paying off. 0:07:20.840 --> 0:07:20.960 You know. 0:07:21.080 --> 0:07:24.520 I think we saw some nice numbers in terms of 0:07:24.640 --> 0:07:28.920 ad pricing. You know, that was up twelve percent, and 0:07:29.000 --> 0:07:31.640 so I think it was it was solid, but not great. 0:07:31.800 --> 0:07:35.080 I think it wasn't a blowout or some sort of 0:07:35.120 --> 0:07:38.840 acceleration there. And then we haven't had some you know, 0:07:39.000 --> 0:07:44.040 great efficiency numbers or any kind of quantifiable, tangible numbers 0:07:44.320 --> 0:07:47.040 coming out of news Spark and what that means. 0:07:47.120 --> 0:07:49.440 So you know, just I. 0:07:49.360 --> 0:07:54.240 Think there's a little bit of impatience relative to investors 0:07:54.320 --> 0:07:56.960 for Meta, but I think that that's going to come 0:07:57.000 --> 0:08:01.360 around and again metas in control of that cat back spend, 0:08:01.440 --> 0:08:03.240 so they can dial it back if they need to. 0:08:03.480 --> 0:08:06.560 I think the higher CAPBAC spend does reflect a lot 0:08:06.560 --> 0:08:09.920 of the additional costs that you're seeing from an in perspective, 0:08:10.160 --> 0:08:14.239 whether it's energy or memory chips, those are all flowing through, 0:08:14.360 --> 0:08:18.200 So I'm not sure they're intentionally spending that much more. 0:08:18.640 --> 0:08:20.600 I think a lot of this is that cost a 0:08:20.600 --> 0:08:23.160 push that is impacting CAPBAC spend. 0:08:23.240 --> 0:08:27.320 Yees seasonly talking about those component PRICESCO pushes forward you 0:08:27.400 --> 0:08:30.800 alsow an a Apple comes after the bell. Can they 0:08:30.920 --> 0:08:34.120 show some resilience that they can compete in the AI 0:08:34.200 --> 0:08:36.120 space even if they're not having to invest in the 0:08:36.160 --> 0:08:36.840 same solch fog. 0:08:38.040 --> 0:08:38.240 Yeah. 0:08:38.320 --> 0:08:42.839 Now, Apple's been, you know, a great follower in technology, right. 0:08:42.880 --> 0:08:48.040 They tend to perfect the user experience when it comes 0:08:48.080 --> 0:08:51.320 to new technology, and so we continue to think that 0:08:51.480 --> 0:08:56.080 they're working on that, whether it's with new enhancements to Siri, 0:08:57.160 --> 0:08:59.600 and you know, we do think that they continue to 0:08:59.600 --> 0:09:03.680 be very diligent when it comes to their free cash flow, 0:09:03.800 --> 0:09:06.319 and you continue to see that they're not spending as 0:09:06.400 --> 0:09:09.880 much when it comes to this arms race for ai. 0:09:11.480 --> 0:09:14.880 Oyoko Yoshioka from Wealth Enhancement Group, thank you very much 0:09:15.080 --> 0:09:18.000 for joining us on Bloomberg Tech. Another story out of Asia. 0:09:18.040 --> 0:09:21.880 Overnight Samsung shares actually kind of modestly lowered down two percent, 0:09:22.000 --> 0:09:25.439 but record profits over the March quarter. In fact, we're 0:09:25.440 --> 0:09:28.760 talking about the chip division where profits sored forty eightfold. 0:09:29.080 --> 0:09:32.359 It's a story about AI spending, just as we've been discussing, 0:09:32.559 --> 0:09:35.600 but also what Bloomberg's now call calling the memory chip 0:09:35.679 --> 0:09:38.800 super psychle Samsung exposure to both on the fab side, 0:09:38.960 --> 0:09:41.800 on the memory side, as well shares kind of in 0:09:42.000 --> 0:09:43.360 career pretty muted Cara. 0:09:43.480 --> 0:09:45.520 Now Quilcom's got exposure to both, and this is a 0:09:45.559 --> 0:09:48.000 story of trying to pivot into the world of AI 0:09:48.080 --> 0:09:51.720 spending and more away from the complete exposure it had 0:09:51.760 --> 0:09:56.360 to mobile phones up seventeen percent, stop us down after hours. 0:09:56.640 --> 0:10:01.000 The volatility is extraordinary. We've all focused on this mystery 0:10:01.640 --> 0:10:04.840 leading Hyperscala Customs silicon engagement that they've got that they 0:10:04.840 --> 0:10:07.120 say is on track initial shipments later. 0:10:07.040 --> 0:10:07.760 This calendar year. 0:10:07.840 --> 0:10:10.079 This is the pivot that many want to see in 0:10:10.120 --> 0:10:13.000 the Avesta base. Yes you're in automotive, Yes you're in 0:10:13.040 --> 0:10:15.400 the phones, Yes you're in the IoT space, but are 0:10:15.440 --> 0:10:17.360 you in data centers? They're saying they're going to be soon. 0:10:17.400 --> 0:10:19.000 And look at the CEO, Christiano Amon's going to be 0:10:19.040 --> 0:10:21.120 joining us later. This out to tell us a little 0:10:21.160 --> 0:10:24.560 bit more what a ride Now coming up, we're all's 0:10:24.559 --> 0:10:26.800 going to be diving into anthropics ride, the push to 0:10:26.920 --> 0:10:30.320 ramp up fundraising, weighing a fresh round that would value 0:10:30.320 --> 0:10:32.760 the startup more than nine hundred billion dollars. That was 0:10:33.080 --> 0:10:35.880 your conversation that you had ed with Anthor. Well, you've 0:10:35.880 --> 0:10:37.880 been helping focus on throw. But you're also be having 0:10:38.000 --> 0:10:40.120 a conversation with the Stripe president John Collinson. 0:10:40.200 --> 0:10:40.960 After the company. 0:10:40.760 --> 0:10:43.560 Announced new AI tools and a new partnership with Google. 0:10:43.640 --> 0:10:44.640 There's a blueberg Tech. 0:10:50.720 --> 0:10:54.079 Anthropic has begun weighing a fresh funding round that could 0:10:54.160 --> 0:10:57.920 value the AI developer at more than nine hundred billion dollars, 0:10:57.960 --> 0:11:01.959 according to sources, potentially over taking long time rival open 0:11:02.000 --> 0:11:05.520 Ai is the world's most valuable AI startup. Bloomberg's and 0:11:05.520 --> 0:11:08.040 the Sasha Mascaraneus part of the team that break the 0:11:08.080 --> 0:11:09.880 story with us. Now, I think we've got to be 0:11:10.000 --> 0:11:15.920 very specific with this. This is investors going to Anthropic 0:11:16.120 --> 0:11:19.400 and saying, let's do this, but take that and give 0:11:19.480 --> 0:11:21.200 us the details that we have so far. 0:11:21.520 --> 0:11:21.800 Yeah. 0:11:21.840 --> 0:11:22.120 Sure. 0:11:22.240 --> 0:11:26.480 So last week we talked about unsolicited term sheets getting 0:11:26.559 --> 0:11:30.200 headed Anthropics way at around an eight hundred billion valuation. 0:11:30.080 --> 0:11:33.600 Which we said Anthropic rebuffed. They basically said no, thank 0:11:33.640 --> 0:11:34.400 you exactly. 0:11:34.600 --> 0:11:38.680 The update now is that Anthropic is actually engaging in 0:11:38.720 --> 0:11:42.800 those conversations at her nine hundred billion valuation even higher. 0:11:43.240 --> 0:11:45.720 But no term sheet has been signed. So this is 0:11:45.760 --> 0:11:48.160 not one of those deals where we expect to see 0:11:48.520 --> 0:11:49.480 a press release. 0:11:49.800 --> 0:11:51.840 The ink dry by end of day. 0:11:52.120 --> 0:11:54.960 This is one of those deals where Anthropic is hearing 0:11:54.960 --> 0:11:58.560 his offers and is responding to the investors that have 0:11:58.600 --> 0:12:02.040 approached them, And it comes in the backdrop of you know, 0:12:02.120 --> 0:12:05.960 Google and Amazon putting tons of capital into Anthropic at 0:12:06.000 --> 0:12:09.520 around a three hundred and fifty billion valuation. So to me, 0:12:09.600 --> 0:12:11.959 this is a really interesting example of there being kind 0:12:12.000 --> 0:12:14.360 of two tales of capital raising at the same time. 0:12:14.640 --> 0:12:17.079 Yeah, Natasha, why the change of hot? Is it a 0:12:17.160 --> 0:12:17.720 change of hot? 0:12:17.840 --> 0:12:20.040 Is there a need that the fool they could tap 0:12:20.080 --> 0:12:22.000 the public markets because we're all been talking about an 0:12:22.000 --> 0:12:22.800 IPO for this. 0:12:22.760 --> 0:12:24.600 Year, you know. 0:12:24.679 --> 0:12:28.479 It's it's pretty much the standard dance in AI fundraising 0:12:28.600 --> 0:12:31.800 these days, is how I see it. When investors approach 0:12:31.880 --> 0:12:34.480 a company with an offer to invest a million, things 0:12:34.520 --> 0:12:36.719 could be you know, wrong, so to speak. It could 0:12:36.760 --> 0:12:40.040 be the wrong investor, the wrong price. With Anthropic, we 0:12:40.120 --> 0:12:43.520 all know very clearly that they need capital to fund 0:12:43.559 --> 0:12:47.000 their compute needs. It's why they've brought on so many strategics. 0:12:47.040 --> 0:12:50.040 It's also what financial investors are frankly, you know, taking 0:12:50.040 --> 0:12:52.440 advantage of by saying, listen, we'll come to you before 0:12:52.559 --> 0:12:55.400 you go public. We'll offer you a fresh you know, 0:12:55.480 --> 0:12:59.160 tranch of capital, get it all ready and then go public. 0:12:59.520 --> 0:13:02.120 And so is it a change of heart? I would say, yeah, 0:13:02.160 --> 0:13:05.160 It's different than them completely ignoring the offers. These are 0:13:05.280 --> 0:13:09.199 serious investors that are approaching them with real capital offers. 0:13:09.559 --> 0:13:11.920 The next thing to break is who they'll accept and 0:13:11.960 --> 0:13:14.000 at what price. Like we said right now, it's at 0:13:14.040 --> 0:13:18.000 above a nine hundred billion valuation, which if accepted, would 0:13:18.000 --> 0:13:19.720 surpass their biggest rival, Open AI. 0:13:20.360 --> 0:13:21.560 Natasha Mascariness. 0:13:21.559 --> 0:13:24.800 It's great reporting along Psyde colleagues, including ed we appreciate it. 0:13:24.880 --> 0:13:25.000 Now. 0:13:25.040 --> 0:13:28.200 Sticking with anthropic, the National Security Agency has been testing 0:13:28.200 --> 0:13:31.880 the startups new AI model Mythos to find cybersecurity vulnerabilities 0:13:31.880 --> 0:13:34.160 in popular software, including Microsoft products. 0:13:34.240 --> 0:13:34.360 Now. 0:13:34.360 --> 0:13:36.800 That's according to a US official and a source who 0:13:36.840 --> 0:13:39.760 say that an essay officials studying the Mythos model, well, 0:13:39.760 --> 0:13:42.760 they've been impressed. Right speed is sufficiency in searching for 0:13:42.800 --> 0:13:44.599 potential security flaws it. 0:13:45.920 --> 0:13:49.360 White House officials have spent months preparing a memo that 0:13:49.480 --> 0:13:53.640 outlines requirements for AI deployment by national security agencies. 0:13:53.960 --> 0:13:55.040 Sources help bloombag. 0:13:55.520 --> 0:13:58.880 The wide ranging policy will touch on issues that have 0:13:58.880 --> 0:14:00.920 been at the center of the feud between the Pentagon 0:14:01.280 --> 0:14:05.800 and Anthropic. Let's get more with Bloomberg's Maggie Eastland in DC. Maggie, 0:14:05.840 --> 0:14:06.640 what are you reporting? 0:14:08.400 --> 0:14:11.120 Yeah again, Ed, as you said, the White House is 0:14:11.200 --> 0:14:15.160 preparing this National Security memo. It aims to essentially set 0:14:15.160 --> 0:14:18.840 one standard for how a swath of agencies can work 0:14:18.880 --> 0:14:23.000 with and contract with AI companies. But what's especially interesting 0:14:23.360 --> 0:14:26.360 is it addresses each of those key fault lines that 0:14:26.400 --> 0:14:29.920 we saw come up as Anthropic and the Pentagon we're 0:14:29.920 --> 0:14:32.760 in this very tense feud that resulted in a legal 0:14:32.840 --> 0:14:34.080 supply chain designation. 0:14:35.240 --> 0:14:37.120 So the fault lines, let's dig in. 0:14:37.160 --> 0:14:41.600 Does this end up allowing federal agencies a workaround here, 0:14:41.640 --> 0:14:45.840 an ability to keep on using Anthropics technology. 0:14:46.880 --> 0:14:49.960 Some officials said that they do view this as a 0:14:50.000 --> 0:14:53.720 workaround now. One senior official that we talked to disputed that, 0:14:53.760 --> 0:14:56.440 but they one of the key terms here is this 0:14:56.520 --> 0:15:00.960 idea that it directs agencies to diversify the model companies 0:15:01.000 --> 0:15:03.520 that it's working with. Now, some view this as a 0:15:03.560 --> 0:15:06.840 way that the Pentagon could drop some of the more 0:15:06.880 --> 0:15:10.280 extreme legal measures that would force it to fully excise 0:15:10.320 --> 0:15:14.080 Anthropic and instead point to this memo, which says that 0:15:14.120 --> 0:15:16.600 the supply gene risk can be dealt with simply by 0:15:16.640 --> 0:15:19.840 working with other AI providers, which the Pentagon is already 0:15:19.840 --> 0:15:22.520 doing in its agreements with open Ai and Xai. 0:15:23.200 --> 0:15:26.880 Totally fascinating reporting Bloomberg's Maggie Eastland, thanks for bringing it 0:15:27.280 --> 0:15:30.400 now to another closely watched AI story. Elon Musk is 0:15:30.400 --> 0:15:32.880 set to take the stand again today in his lawsuit 0:15:32.920 --> 0:15:35.680 over open AI's pivot from a charity to a for 0:15:35.680 --> 0:15:36.360 profit business. 0:15:36.360 --> 0:15:36.480 Now. 0:15:36.480 --> 0:15:41.000 Elon Musk became visibly irritated during cross examination yesterday, clashing 0:15:41.040 --> 0:15:44.040 with open AI's lawyer over the exact amount he contributed 0:15:44.160 --> 0:15:46.480 to the startup. Now, the billionaire is set to wrap 0:15:46.560 --> 0:15:49.880 up his testimony today, and we followed by his longtime 0:15:50.000 --> 0:15:53.320 well maybe we call him Fixer and Neuralink CEO Joed Burchill. 0:16:00.080 --> 0:16:03.600 Stripe is partnering with Google to let businesses transact inside 0:16:03.600 --> 0:16:06.400 of AI mode and the Gemini app. This was part 0:16:06.400 --> 0:16:09.960 of a slew of announcements made a Stripe's annual customer conference. 0:16:09.960 --> 0:16:13.120 We cut up with stripe president and co founder John Collison. 0:16:13.840 --> 0:16:17.320 I think when people talk about this it seems really 0:16:17.360 --> 0:16:20.000 far off, and maybe part of that is, you know, 0:16:20.440 --> 0:16:25.400 the the examples people give almost sounds incredibly far off 0:16:25.400 --> 0:16:27.520 where it's like, oh, I'll just have my AI agent 0:16:27.840 --> 0:16:31.080 plan my entire summer vacation. You know, in transfer, it's like, no, 0:16:31.200 --> 0:16:33.000 you love planning to the subberfication, you want to do 0:16:33.040 --> 0:16:37.160 that yourself. Whereas if you say, okay, you just give 0:16:37.200 --> 0:16:41.000 your AI this is the recipe I'm making tonight by 0:16:41.120 --> 0:16:43.240 the things I don't have in the fridge already. Like 0:16:43.400 --> 0:16:45.440 that's the kind of delegation that you know, people are 0:16:45.520 --> 0:16:48.360 much more comfortable with, and so we think people and 0:16:49.040 --> 0:16:51.200 AI services will kind of work their way up the 0:16:51.240 --> 0:16:53.560 trust curve. Where again, it's already the case that the 0:16:53.600 --> 0:16:56.080 research you're doing, the research you're doing, you do within 0:16:56.160 --> 0:16:59.360 the AI app. You're probably still confirming that directly, but 0:16:59.480 --> 0:17:02.120 it might get the case where you're allowing the AIS 0:17:02.160 --> 0:17:05.200 make small decisions for you and especially as it gets 0:17:05.240 --> 0:17:07.159 to know you. And so again, on the developer side, 0:17:07.280 --> 0:17:10.159 imagine you're building a website and you need a hosting 0:17:10.200 --> 0:17:13.000 provider or you need to buy a domain name for us. 0:17:13.520 --> 0:17:15.280 Today it's the case that you go and you like 0:17:15.400 --> 0:17:17.640 find the domain name buying service yourself, and you could 0:17:17.640 --> 0:17:19.479 go fill out the form and everything like that. You 0:17:19.560 --> 0:17:21.159 just want a domain name, you can get it for 0:17:21.240 --> 0:17:24.399 multiple providers. You'd probably be okay with cloud code or 0:17:24.400 --> 0:17:28.000 Codex or cursor, you know, whatever you're using actually choosing 0:17:28.080 --> 0:17:30.640 how to buy a domain for you. And so it's 0:17:30.680 --> 0:17:32.200 already the case that people are doing a lot of 0:17:32.400 --> 0:17:36.520 interactive buying with AIS where they're improving the final step. 0:17:36.800 --> 0:17:38.520 We think people are already starting to have a little 0:17:38.520 --> 0:17:40.240 bit in a huge amount of what we announced today 0:17:40.440 --> 0:17:43.480 is those little decisions. People are delegating them to the 0:17:43.600 --> 0:17:45.639 ice buying your domain name. Again, it's the example I 0:17:45.680 --> 0:17:47.960 would give, and then as they start to see that 0:17:48.000 --> 0:17:50.760 it works really well, people will just give them more 0:17:50.800 --> 0:17:51.040 and more. 0:17:51.119 --> 0:17:51.399 Rope. 0:17:51.560 --> 0:17:56.720 Google has not historically led in payments. The partnership that 0:17:56.920 --> 0:17:59.800 you've been through today and the changes in integrating Stripe 0:17:59.840 --> 0:18:03.520 in to AI mode in Gemini, does that change their 0:18:03.560 --> 0:18:04.879 fortunes in that market. 0:18:06.359 --> 0:18:08.720 I mean, I think Google has done a phenomenal job 0:18:08.800 --> 0:18:12.200 in commerce generally, and I mean again, Google pay is 0:18:12.240 --> 0:18:15.439 very large and successful within the Android ecosystem, and so 0:18:15.920 --> 0:18:18.480 I don't think that will be quite a fair characterization. 0:18:18.560 --> 0:18:21.600 I think they've done a phenomenal job enabling commerce. And again, 0:18:21.640 --> 0:18:24.960 this is a new tool in the toolbox for them 0:18:25.119 --> 0:18:29.080 where now they're enabling within Gemini these amazing agenda commerce experiences, 0:18:29.119 --> 0:18:31.359 which again we think just has to be the future 0:18:31.480 --> 0:18:34.359 because it's so much more convenient for consumers. It's never 0:18:34.359 --> 0:18:36.480 been the case in technology when you get a way 0:18:36.560 --> 0:18:39.920 more convenient way of working for consumers. But they picked 0:18:39.920 --> 0:18:40.880 the less convenient one. 0:18:40.880 --> 0:18:41.600 It's never happened. 0:18:42.080 --> 0:18:45.399 That was Strike President co founder John Collison, creat interview ed. 0:18:45.880 --> 0:18:48.119 Now we've got to get back to earnings. We're going 0:18:48.160 --> 0:18:49.720 to be getting back with them with Brad Erickson from 0:18:49.720 --> 0:18:52.840 OBBC Capital Markets. To believe Alphabet's future growth and multiple 0:18:52.840 --> 0:18:57.000 expansion are constrained some extent not constrained on the market 0:18:57.119 --> 0:19:00.679 right now, are we alphabet best point added to to 0:19:00.840 --> 0:19:03.240 then as that one hundred leads the way and we're 0:19:03.240 --> 0:19:04.600 at a record high. 0:19:04.960 --> 0:19:08.920 We're trying to find the common story between all four companies, right, 0:19:09.000 --> 0:19:12.240 Capital expenditures is probably it, but I think that you 0:19:12.280 --> 0:19:14.600 know what all four companies said is that they are 0:19:14.760 --> 0:19:18.919 constrained in capacity, right, they cannot build the infrastructure that 0:19:18.960 --> 0:19:21.840 they need quick enough to service. In the case of 0:19:21.840 --> 0:19:25.520 alphabt Amazon and Microsoft external demand and one thing carry 0:19:25.560 --> 0:19:29.399 you probably get this right, you know, Meta is internal 0:19:29.440 --> 0:19:34.600 demand for workloads, not necessarily something that's consumer facing, and it's. 0:19:34.480 --> 0:19:35.400 Getting more expensive. 0:19:35.440 --> 0:19:37.560 Maybe the one hundred and forty five billion dollar that 0:19:37.600 --> 0:19:40.520 they guided to gets less banned for the buck when 0:19:40.720 --> 0:19:43.879 memory prices have sawed, when component prices have sawed. This 0:19:43.920 --> 0:19:46.200 is something that we saw Susan Lee really talk about 0:19:46.200 --> 0:19:47.919 the fact that pricing pressure is going up, and so 0:19:48.000 --> 0:19:49.960 maybe that impacts how much capex they have to spend. 0:19:50.040 --> 0:19:52.760 What's interesting there is the kapux is firm for the 0:19:52.800 --> 0:19:53.720 infrastructure layer. 0:19:54.160 --> 0:19:55.520 Why then is Nvidio down. 0:19:55.840 --> 0:19:57.560 It seems as though a lot of them are talking 0:19:57.640 --> 0:19:59.399 up their own inn house chips. 0:20:00.160 --> 0:20:02.720 Things could be true. It could be that the TPU 0:20:02.800 --> 0:20:05.160 is coming for them, as outlined on the call last night. 0:20:05.240 --> 0:20:08.160 It could be sell the news, and it could be Qualcom, 0:20:08.200 --> 0:20:10.320 which we'll get to later in the programs. They are 0:20:10.480 --> 0:20:15.120 the data center business. 0:20:17.640 --> 0:20:20.200 Welcome back to Bloomberg Tech and let's take a look 0:20:20.280 --> 0:20:23.560 at today's big number. We've talked about it already, seven 0:20:23.640 --> 0:20:27.200 hundred and twenty five billion dollars. That is how much Amazon, Alphabet, Meta, 0:20:27.320 --> 0:20:31.400 Microsoft together alone are expected to spend in twenty twenty six, 0:20:31.800 --> 0:20:35.359 upping their AI spending plans after their March quarter, but 0:20:36.040 --> 0:20:39.080 with still a key question when will we see return 0:20:39.520 --> 0:20:41.800 on all this AI spending. Well, we saw it from 0:20:41.840 --> 0:20:45.359 Alphabet and people are applauding the numbers because Google Cloud 0:20:45.400 --> 0:20:47.879 on farm more than sixty percent growth and we're seeing 0:20:47.920 --> 0:20:51.600