WEBVTT - Meta Shifts to AI Devices From Metaverse 0:00:02.520 --> 0:00:07.000 Bloomberg Audio Studios, podcasts, radio news. 0:00:07.800 --> 0:00:11.160 You allocation, right, we've been obsessed about GPUs and AI 0:00:11.200 --> 0:00:14.320 accelerated cards, but you need to have an equivalent, if 0:00:14.360 --> 0:00:16.840 not greater number of CPU in the design of the server. 0:00:17.280 --> 0:00:19.480 And that's an area that into on amb have done 0:00:19.520 --> 0:00:23.560 well to some market share where videas trying to dominate 0:00:23.600 --> 0:00:26.200 the whole system. And clearly two big moves our size 0:00:26.239 --> 0:00:29.479 moves almost carrot for an analyst upgrade, but Intel in 0:00:29.520 --> 0:00:30.960 particular soaring high at the moment. 0:00:31.240 --> 0:00:33.519 Yeah, wants to watch big points contributors, and let's just 0:00:33.520 --> 0:00:35.880 flip gears a little bit and talk about, well, where's 0:00:35.920 --> 0:00:38.000 one out on some of their investments of late hedge 0:00:38.000 --> 0:00:40.880 fund investors, Well, they haven't had it this good since 0:00:40.920 --> 0:00:43.920 the aftermath of the financial crisis. Data compiled by industry 0:00:43.920 --> 0:00:46.760 tracker Hedge Fund Research showing them back in twenty twenty five, 0:00:47.040 --> 0:00:50.080 the industry posted its best year since two thousand and nine. 0:00:50.320 --> 0:00:52.360 Gains are about top point six percent on average, but 0:00:52.440 --> 0:00:55.240 some scrowing much higher than that. Bloomberg hedge fund reporter 0:00:55.280 --> 0:00:57.520 Hemma Palmer joins us now, and we like to think 0:00:57.560 --> 0:00:59.400 about the way in which they've all embraced AI and 0:00:59.400 --> 0:01:02.240 the quant funds doing well. But who really shone in 0:01:02.280 --> 0:01:03.720 twenty five and why Yes? 0:01:03.920 --> 0:01:06.600 So you know, it's such an interesting year because funds 0:01:06.600 --> 0:01:10.440 across strategies, across sizes generally did very, very well. And 0:01:10.480 --> 0:01:12.600 when you look at the big winners, you're looking at 0:01:12.640 --> 0:01:14.240 some of the tech focus firms. 0:01:14.280 --> 0:01:14.720 If you look a. 0:01:14.720 --> 0:01:18.399 Whale Walk, they did quite well. If you look at 0:01:18.520 --> 0:01:21.200 light Street, they got over their high watermark from the 0:01:21.280 --> 0:01:24.039 really difficult twenty two to twenty three period. You're seeing 0:01:24.040 --> 0:01:26.280 some of the best returns over at Bridgewater. If we 0:01:26.319 --> 0:01:30.880 look at Macro MAI percents exactly excellent numbers. So kind 0:01:30.920 --> 0:01:35.520 of across strategies, you're seeing winners across pretty much every strategy. 0:01:35.560 --> 0:01:38.760 D E Shaw over twenty percent and the multi strat strategy. 0:01:38.880 --> 0:01:43.160 So pretty interesting and good news for investors and hedge funds. 0:01:44.120 --> 0:01:47.040 Yeah, Hammer, when I was growing up in the Bloomberg 0:01:47.160 --> 0:01:51.280 school of hedge funds ten years ago on the TV desk, 0:01:51.840 --> 0:01:54.360 that's what hedge funds do, make cash out of chaos. 0:01:54.400 --> 0:01:57.400 Isn't that the whole point? Is there anything unique in 0:01:57.440 --> 0:01:59.520 this bucket of data that we've got about what they're 0:01:59.560 --> 0:02:03.000 doing different diferently AI playing a role talent stepping up 0:02:03.040 --> 0:02:04.440 and delivering big performance. 0:02:05.040 --> 0:02:07.760 Yes, So what makes the year interesting is the volatility 0:02:07.760 --> 0:02:10.720 that we're seeing is the kind that goes in and 0:02:10.760 --> 0:02:13.959 out pretty frequently and provides great times to get in 0:02:14.320 --> 0:02:17.679 on different types of trading opportunities. So AI has been 0:02:17.800 --> 0:02:20.880 a great lifter for a lot of the tech focused funds. 0:02:21.240 --> 0:02:24.600 But if you look, for example, at Viking Global, which 0:02:24.680 --> 0:02:28.520 Viking doesn't do as much tech and AI as say 0:02:28.639 --> 0:02:33.239 other funds like other Tiger cubs CO two for example, 0:02:33.520 --> 0:02:36.080 they didn't do as well. They were only up about 0:02:36.120 --> 0:02:38.519 eight point six percent, putting them lower in the pack 0:02:38.520 --> 0:02:41.800 of tech funds. Tiger Global, which we typically think of 0:02:41.840 --> 0:02:45.560 as a tech investor, they did well in their long book, 0:02:45.639 --> 0:02:48.880 but their short positions eight into those gains, putting them 0:02:48.919 --> 0:02:52.320 also lower in the pack more than seven percent gains. 0:02:52.400 --> 0:02:55.840 So you know, everyone made money, but the real question 0:02:55.880 --> 0:02:57.720 is who made the double digita games? 0:02:57.760 --> 0:02:59.080 And you see would. 0:02:58.960 --> 0:03:01.360 Likes to read good return from a lot of those 0:03:01.440 --> 0:03:02.560 sort of popular names. 0:03:03.639 --> 0:03:06.400 Bloomberg's Tamma Palmer with the hedge fund breakdown, Thank you 0:03:06.560 --> 0:03:08.800 very much now. JP Morgan kicked off a week of 0:03:08.840 --> 0:03:12.200 big bank earnings today. One area of focus the impact 0:03:12.280 --> 0:03:15.760 AI could have on spending at those banks. CEO Jamie 0:03:15.760 --> 0:03:19.000 Diamond insisting the bank will be spending on AI to 0:03:19.080 --> 0:03:22.400 drive efficiencies but also keep up with competitors. There was 0:03:22.440 --> 0:03:25.080 a surprise in the expenses number for JP Morgan of 0:03:25.080 --> 0:03:27.600 the year, nine billion, above what the streets saw, and 0:03:27.639 --> 0:03:30.000 they wanted to know if AI was to blame. Let's 0:03:30.000 --> 0:03:33.320 bring in Alexandra and miss Visita. She's co CEO and 0:03:33.320 --> 0:03:36.360 co founder of Evident, a platform that benchmarks and tracks 0:03:36.680 --> 0:03:39.520 AI adoption across the financial services sector. 0:03:39.640 --> 0:03:41.160 Was really interesting earnings call. 0:03:41.400 --> 0:03:44.320 Often it's with Jamie Diamond, but this was Wells Fargo's 0:03:44.520 --> 0:03:48.800 Mike Mayo basically saying like, hey, those expenses seem very high, 0:03:48.840 --> 0:03:51.480 and you've been talking up AI a lot of JP Morgan. 0:03:51.880 --> 0:03:55.920 Is that directly correlated? And Jamie Diamond's point was kind 0:03:55.920 --> 0:03:58.720 of like, we will be spending, it's just not as 0:03:58.800 --> 0:04:01.800 much as you think we have to because everyone is. 0:04:02.560 --> 0:04:06.000 Is JP Morgan ahead in this AI implementation race in 0:04:06.040 --> 0:04:06.720 the banks? 0:04:07.680 --> 0:04:08.840 Yeah, well, thank you, thank you. 0:04:09.040 --> 0:04:09.240 Yeah. 0:04:09.520 --> 0:04:13.080 It was interesting to see the discussions today, but sort 0:04:13.080 --> 0:04:16.320 of stepping back and overall, as you know, we map 0:04:16.440 --> 0:04:18.720 the biggest banks in North America and Europe on their 0:04:18.760 --> 0:04:21.680 AI deployment, and JP Morgan is very much leading. 0:04:22.000 --> 0:04:24.599 They're out number one. 0:04:24.320 --> 0:04:27.280 Three and a half years in a row, so they 0:04:27.320 --> 0:04:29.160 are leading on AI deployment. 0:04:29.839 --> 0:04:31.080 They are leading on. 0:04:32.520 --> 0:04:36.600 Deploying and embedding AI throughout the bank. They do also 0:04:36.680 --> 0:04:38.719 spend a lot on tech and a growing proportion of 0:04:38.760 --> 0:04:41.960 that is on AI precisely to be able to take 0:04:42.080 --> 0:04:43.640 over time some of. 0:04:43.600 --> 0:04:45.239 These costs out. 0:04:45.920 --> 0:04:48.400 A lot of the deployment we do see is in 0:04:48.480 --> 0:04:51.919 those are in those internal processes and to create the 0:04:51.960 --> 0:04:54.480 efficiency gains but also someone revenue uplift. 0:04:55.080 --> 0:04:57.800 Alexandra, A lot of this question is about when those 0:04:57.800 --> 0:05:01.840 efficiency gains come, Have they come, Are they coming in 0:05:01.920 --> 0:05:04.400 twenty six or is it more still longer term from 0:05:04.400 --> 0:05:05.080 your perspective. 0:05:05.760 --> 0:05:08.320 Yeah, I mean it's interesting right because we're three years 0:05:08.320 --> 0:05:11.400 into the GENAI journey and that was a journey with 0:05:11.760 --> 0:05:14.920 that started with a lot of excitement and testing and 0:05:14.960 --> 0:05:18.400 now use cases moving into production. But there seems to 0:05:18.440 --> 0:05:21.080 be a real sort of shift in the tectonic plates 0:05:21.120 --> 0:05:23.919 now where it's looking at fully embedding it across the 0:05:23.960 --> 0:05:27.159 banks and every across the bank in every function and 0:05:27.200 --> 0:05:29.719 line of business, and with that you need to have 0:05:30.200 --> 0:05:33.480 platform architecture that's built for scale. And what we are 0:05:33.560 --> 0:05:37.839 definitely seeing is some return on investment coming through on 0:05:37.880 --> 0:05:43.880 the efficiency side, so automation of KYC processes and you know, 0:05:43.920 --> 0:05:47.400 going into the asset management side, the investment banking and 0:05:47.440 --> 0:05:49.520 so on and so forth, so really across the entirety 0:05:49.600 --> 0:05:52.440 of the bank. So it's still early days in terms 0:05:52.480 --> 0:05:56.919 of the actual sort of return and the ROI. I 0:05:56.960 --> 0:05:59.800 still think that there's some years to it will take 0:06:00.080 --> 0:06:01.920 with us to really fully come through. And then we've 0:06:01.960 --> 0:06:05.920 also got a gentic Ai use cases coming, you know 0:06:05.960 --> 0:06:08.680 and going into production, and that's where I believe we're 0:06:08.680 --> 0:06:11.160 going to see the real impact. But it is going 0:06:11.200 --> 0:06:13.719 to take another three to four years for Argentic and 0:06:13.800 --> 0:06:18.000 fully autonomous Urgentic use cases to be fully embedded and 0:06:18.080 --> 0:06:23.440 to see that you know, really fundamental and sizable ROI 0:06:23.600 --> 0:06:25.719 that we know is coming, but it is going to 0:06:25.720 --> 0:06:27.760 take a couple of years for the gen AI to 0:06:27.800 --> 0:06:30.000 fully come through and maybe three to four years for 0:06:30.120 --> 0:06:32.440 gentic Ai impact to fully come through. 0:06:32.920 --> 0:06:35.160 It was interesting that basically that question about AI from 0:06:35.200 --> 0:06:37.120 Mike Mayo was at the tail end of the call. 0:06:37.200 --> 0:06:40.080 Before that there was Myriada questions for Jamie Diamond around 0:06:40.120 --> 0:06:43.920 the Apple onboarding with the credit cards there, but are 0:06:43.960 --> 0:06:46.920 also talking more broadly about their investment banking this and 0:06:46.960 --> 0:06:49.440 indeed credit cards by Alexandra and push us forward. We've 0:06:49.480 --> 0:06:52.440 got a whole host of other earnings coming thick and fast. 0:06:52.680 --> 0:06:55.680 Where will they be talking about AI most abundantly? 0:06:57.200 --> 0:07:00.480 Well, so you know, it's it's a time with a 0:07:00.520 --> 0:07:02.719 lot of things going on, so AI might not be 0:07:02.800 --> 0:07:04.880 front and centered this time. It has been over the 0:07:04.960 --> 0:07:07.320 years some of the questions that have been asked in 0:07:07.360 --> 0:07:10.240 the earning schools. There's a lot of shareholder pressure to 0:07:10.440 --> 0:07:13.520 understand where the bank is. We've definitely seen a shift 0:07:13.560 --> 0:07:17.280 in terms of banks being much more clear that it 0:07:17.360 --> 0:07:20.120 is a high priority, that it is part of the 0:07:20.240 --> 0:07:24.080 senior leadership team and the CEOs. Are you fully understanding 0:07:24.120 --> 0:07:26.400 that it has to be embedded across the bank and has. 0:07:26.240 --> 0:07:27.040 To be core. 0:07:27.480 --> 0:07:30.600 So I expect that there will continue to be not 0:07:30.640 --> 0:07:32.920 only in the earning scores, but as we've seen throughout 0:07:32.920 --> 0:07:37.080 the year and investment days and investor days and and 0:07:37.160 --> 0:07:40.160 you know, press releases when partnerships and so on are 0:07:40.200 --> 0:07:43.840 getting produced by the banks. The discussion on AI is. 0:07:43.840 --> 0:07:45.280 An ongoing one and throughout the. 0:07:45.320 --> 0:07:47.920 Year, but we've got some earning scores coming through from 0:07:47.920 --> 0:07:50.640 the big banks, you know. Goldmesas has also made a 0:07:50.680 --> 0:07:55.880 big announcement late last year about their one GS three 0:07:55.920 --> 0:08:00.600 point three point zero program, which is really about fully 0:08:00.640 --> 0:08:05.000 transforming the bank end to end, top down, bottom up 0:08:05.200 --> 0:08:08.280 for fully embedding AI. So it's going to be really 0:08:08.320 --> 0:08:11.480 exciting to see what numbers might be associated with that 0:08:11.560 --> 0:08:14.920 the leading banks are going to be talking about ROI. 0:08:14.960 --> 0:08:18.240 I believe there has been a lot of talk with 0:08:18.360 --> 0:08:21.440 numbers associated with within the last year. I think that 0:08:21.560 --> 0:08:24.360 these numbers are probably tip of the iceberg, and we're 0:08:24.360 --> 0:08:28.840 going to see these being updated and upgraded in twenty twenty. 0:08:28.600 --> 0:08:31.320 Six, Alesandra, we just have thirty seconds. 0:08:31.360 --> 0:08:35.319 But how competitive is JP Morgan in attracting and paying 0:08:35.400 --> 0:08:36.439 top talent in AI? 0:08:37.840 --> 0:08:41.200 Very Yeah, it's very good at getting top talent. It 0:08:41.280 --> 0:08:44.240 is a place that is known for putting AI first. 0:08:44.320 --> 0:08:46.360 Jamie Diamond was very clear about that all the way 0:08:46.400 --> 0:08:48.920 back in twenty seventeen where he said we're going to 0:08:48.960 --> 0:08:53.480 be an AI first enterprise. They are able to attract 0:08:53.520 --> 0:08:57.600 top talent. They're in competition with the tech sector. Everyone's 0:08:57.679 --> 0:09:01.559 looking for that top talent that really do the difficult 0:09:01.679 --> 0:09:07.560 systems wethink everyone's thinking about the shark tanking taking talent 0:09:07.600 --> 0:09:10.920 from tech companies that can rethink the processes end to 0:09:11.080 --> 0:09:14.719 end and completely change the system. Remember, the technology here 0:09:14.800 --> 0:09:17.840 is just ten percent of the problem. Ninety percent of 0:09:17.840 --> 0:09:21.080 the problem lies in the sort of rethinking of the 0:09:21.120 --> 0:09:24.680 processes entirely. You almost have to build a digital twin. 0:09:24.800 --> 0:09:27.160 We think the process and put it back in. That 0:09:27.760 --> 0:09:30.640 talent is what JP Morgan can attract. 0:09:31.240 --> 0:09:33.480 Thanks was a visit A always great to catch up 0:09:33.520 --> 0:09:36.800 with you, co CEO, co founder of Evident. We thank 0:09:36.880 --> 0:09:40.120 you coming up and bringing room mags exclusive conversation with 0:09:40.160 --> 0:09:43.760 a bid CFO Henry Hay on the US China race 0:09:44.800 --> 0:09:47.040 from New York for San Francisco. It's a room ed Tech. 0:09:59.200 --> 0:10:03.280 Defense Secretary Pete Hegseth lamented the defense industry's risk averse 0:10:03.320 --> 0:10:06.000 culture and praised Enol Musk during a visit to the 0:10:06.040 --> 0:10:09.160 SpaceX Star based launch site that was last night. Hexath 0:10:09.200 --> 0:10:12.520 announced plans to integrate Musk's Groqui platform into the Defense 0:10:12.559 --> 0:10:15.800 departments system and to make the US military a quote 0:10:15.920 --> 0:10:20.199 AI first war fighting force. Take a listen we need to. 0:10:20.120 --> 0:10:20.640 Be blind here. 0:10:20.679 --> 0:10:24.120 We can no longer afford to wait a decade for 0:10:24.280 --> 0:10:28.760 our legacy prime contractors to deliver the next perfect system, 0:10:29.720 --> 0:10:32.560 only to find that it's delivered years behind schedule and 0:10:32.600 --> 0:10:38.760 cost ten times what it should. Winning requires a new playbook. 0:10:39.760 --> 0:10:45.160 Elon wrote it with his algorithm, question every requirement, delete 0:10:45.160 --> 0:10:47.720 the dumb ones, and accelerate like hell. 0:10:49.400 --> 0:10:52.239 No care of people saying why is Hegseth at SpaceX 0:10:52.320 --> 0:10:55.760 or SpaceX has four billion dollars in government contracts alone 0:10:56.080 --> 0:10:59.559 just for development, but one of few carriers, Falcon nine 0:10:59.600 --> 0:11:03.880 Falcon he that's authorized to take Pentagon's sensitive satellites to orbit. 0:11:04.360 --> 0:11:07.440 It's also interesting timing regarding GROC, right. I mean, already 0:11:07.559 --> 0:11:10.560 Google AI is integrated with the Defense Department, but to 0:11:10.600 --> 0:11:13.080 add GROC at this moment when there has been a 0:11:13.080 --> 0:11:16.120 lot of concern about what it has been producing in 0:11:16.200 --> 0:11:19.120 terms of imagery, and they're like a notable step forward 0:11:19.120 --> 0:11:21.120 in that respect, in that relationship and deepening. 0:11:21.120 --> 0:11:22.280 At least a. 0:11:22.240 --> 0:11:24.559 Week ago, the President put on true social that he 0:11:24.600 --> 0:11:28.280 wanted to cap salaries of defense companies who weren't performing 0:11:28.360 --> 0:11:31.360 for their CEOs. Today we have news that the government 0:11:31.400 --> 0:11:34.200 is taking a significant stake in a top five defense 0:11:34.200 --> 0:11:35.240 contractor EL three Harris. 0:11:35.320 --> 0:11:35.960 What do we need to know? 0:11:36.240 --> 0:11:37.920 Yeah, and the idea that they're going to be spinning 0:11:37.920 --> 0:11:40.840 off an IPO of the unit, the missile solutions business 0:11:41.320 --> 0:11:42.760 they're going to and REL three Horris is going to 0:11:42.880 --> 0:11:45.199 train control in the missile solutions business. But second half 0:11:45.200 --> 0:11:46.880 of twenty twenty six they're looking at spinning it off. 0:11:46.880 --> 0:11:49.240 And we understand the Department of Defense is set to 0:11:49.280 --> 0:11:52.240 invest one billion dollars in convertible preferred security. I mean 0:11:52.240 --> 0:11:53.959 it's lifted the shares up two percent up to six 0:11:54.000 --> 0:11:54.920 percent at one point end. 0:11:56.040 --> 0:11:59.120 Meanwhile, in Asia, by do CFO Henry Hir spoke with 0:11:59.120 --> 0:12:03.240 Bloomberg Steven Angle about that company's AI spending of over 0:12:03.280 --> 0:12:05.360 fourteen billion dollars listen to listen. 0:12:05.120 --> 0:12:05.480 To view. 0:12:07.520 --> 0:12:10.200 In the November earning call last year, we actually disclosed 0:12:10.200 --> 0:12:14.800 one numbers. Since earning came out back in twenty twenty three, 0:12:14.920 --> 0:12:17.599 we have invested over one hundred billion R and B 0:12:17.720 --> 0:12:20.320 in terms of AI investment, which is a huge investment 0:12:20.480 --> 0:12:21.640 just on the web site. 0:12:21.840 --> 0:12:24.160 On the end, we do see a great return on that. 0:12:24.320 --> 0:12:28.760 For example, right now, our cloud revenue increasing about twenty 0:12:28.840 --> 0:12:31.200 eight percent on a wildlire basis in Q three for 0:12:31.240 --> 0:12:34.120 the AI cloud. And also we are seeing over kind 0:12:34.160 --> 0:12:35.720 of two hundred percent growth. 0:12:35.400 --> 0:12:37.760 On the AI search transformation. 0:12:38.360 --> 0:12:40.680 So for example, last year we only have three percent 0:12:40.720 --> 0:12:44.520 of the contents are generating for the AI for traditional search, 0:12:44.600 --> 0:12:47.000 but right now this number is increasing about eighteen percent, 0:12:47.320 --> 0:12:50.080 and we're seeing kind of three digits increasing on the 0:12:50.120 --> 0:12:53.080 traditional search to the AI news search. And also for 0:12:53.120 --> 0:12:55.880 the robot taxi, as I mentioned, it's actually delivered over 0:12:55.960 --> 0:12:59.280 a quarter million drives every week and we're seeing that 0:12:59.400 --> 0:13:02.720 number is on accelerated at gross pass. So I think 0:13:02.760 --> 0:13:05.240 the investment, we are seeing the good trends of the 0:13:05.440 --> 0:13:08.040 Montadasia and the company on the return, how do. 0:13:07.960 --> 0:13:10.600 You see the difference between how AI is evolving in 0:13:10.679 --> 0:13:13.680 China versus you know what we've all been following very 0:13:13.720 --> 0:13:17.000 closely in the MAGS seven and what's happening Open AI 0:13:17.160 --> 0:13:20.040 and others in the United States. Essentially, there are concerns 0:13:20.040 --> 0:13:24.200 about this allocation of capital and not getting the kinds 0:13:24.200 --> 0:13:27.160 of return, so there could be potentially a bubble China. 0:13:27.880 --> 0:13:31.480 There bubble concerns as well, but there's a bifurcated AI 0:13:32.240 --> 0:13:35.320 space in China as well the big boys like you 0:13:35.880 --> 0:13:39.240 and Tencent and Bite Dance in Ali Baba. And then 0:13:39.280 --> 0:13:40.920 there are new up and comers that are hitting the 0:13:40.960 --> 0:13:43.560 market in Hong Kong like Mini Max and others, those 0:13:44.000 --> 0:13:47.240 lms that are starting to make a dent. But you 0:13:47.280 --> 0:13:51.720 guys have the capital base. Is there a bubble forming 0:13:51.760 --> 0:13:55.240 as well in the investment in China because of the 0:13:55.280 --> 0:13:56.000 over investment. 0:13:57.000 --> 0:14:00.439 I want to call it two tails of the city. Usually, 0:14:00.480 --> 0:14:03.840 I think if you want to decompose the drivers, I 0:14:03.880 --> 0:14:09.040 think there are four things, right, the data model, computing power. 0:14:08.840 --> 0:14:10.240 As well as applications. 0:14:10.440 --> 0:14:13.000 Right, So I think if you analyze these four different things, 0:14:13.120 --> 0:14:15.520 US China does have a lot of different contexts. 0:14:15.600 --> 0:14:15.720 Right. 0:14:15.720 --> 0:14:18.040 For example, right now in the US as a lot 0:14:18.040 --> 0:14:21.280 of investment on infrastructures. But today if you look at electricity, 0:14:21.680 --> 0:14:25.080 cable network in China's already being built in the past 0:14:25.080 --> 0:14:27.320 few years. So if you really want to compare on 0:14:27.480 --> 0:14:30.840 IOI or IRO or on infrastructure, site that's in China 0:14:30.920 --> 0:14:33.680 does have certain advantage on that. And also in the 0:14:33.720 --> 0:14:36.120 past ten years of the mobile internet age in China, 0:14:36.200 --> 0:14:39.760 there's a huge accumulation of data and data become important 0:14:39.800 --> 0:14:42.960 for today's influences because a few years ago everyone is 0:14:43.000 --> 0:14:45.480 competing for foundation model, right, So true question. 0:14:45.600 --> 0:14:48.440 I think in my view, any company. 0:14:48.120 --> 0:14:51.720 Have a close loop or full stack of the computing power, 0:14:52.160 --> 0:14:56.680 data and ownership of application user cases will be sustainable 0:14:56.680 --> 0:14:57.440 on AI. 0:14:57.960 --> 0:15:00.960 I do CFO Henry Hay there talking a full stack. 0:15:01.160 --> 0:15:03.360 We're going to talk about alphabet next. Coming up, Dan 0:15:03.440 --> 0:15:06.000 Ives and Webbush joining us to talk about that deal, 0:15:06.400 --> 0:15:09.480 the impact of Apple choosing Google's AI to power Serri. 0:15:09.600 --> 0:15:20.240 That's next. This is bluebg Tech new research out today 0:15:20.240 --> 0:15:22.600 on Apple's plan to use Google's AI to power Serie 0:15:22.680 --> 0:15:25.440 voice assistant and much more from meg Intelligence, writing that 0:15:25.480 --> 0:15:28.440 the deal highlights the cost advantages of Google's tens of 0:15:28.520 --> 0:15:31.880 chips of arrivals. Analysts also welcome confirmation in the news 0:15:31.960 --> 0:15:34.840 which Blomberg reported late last year. Remember now, when Bush 0:15:34.880 --> 0:15:37.120 reaffirmed its three hundred fifty dollars price target. It's the 0:15:37.160 --> 0:15:39.520 highest on the street for Apple after the deal the 0:15:39.640 --> 0:15:42.360 price to welcome Dan Ives, manager director senior equity analyst 0:15:42.360 --> 0:15:45.880 at Webush who has that number. So let's talk about 0:15:45.880 --> 0:15:49.480 the benefits for Apple first, Why the reinformation of three 0:15:49.600 --> 0:15:51.480 hundred and fifty? Why is this good? For them in 0:15:51.520 --> 0:15:52.360 Apple Intelligence. 0:15:52.360 --> 0:15:55.360 Look, they've had an invisible AI strategy. I mean, if 0:15:55.360 --> 0:15:58.240 you go back to the last wwdc's you felt, like 0:15:58.280 --> 0:16:00.600 Michael J. Fox back to the future, there was really 0:16:00.640 --> 0:16:04.160 nothing there talking about AI. Finally, this is a huge 0:16:04.200 --> 0:16:07.600 step forward and it's not going to happen internally. Had 0:16:07.640 --> 0:16:11.040 to happen from Google Gemini. Looking, it comes down to like, 0:16:11.320 --> 0:16:15.080 if they never win the adjsuit, this doesn't happen. So 0:16:15.960 --> 0:16:20.280 it speaks to just brick by brick, they're finally building it, 0:16:20.280 --> 0:16:22.960 and I think this is going to be instrumental to 0:16:23.040 --> 0:16:24.640 the valuation for Apple this year. 0:16:24.720 --> 0:16:26.520 If you look at the statement that was put out, 0:16:26.560 --> 0:16:28.560 it was very much for the time being, this is 0:16:28.600 --> 0:16:31.920 going to be embedded in Apple foundation models. The idea 0:16:32.000 --> 0:16:34.400 is that they pull away, they are able to get 0:16:34.400 --> 0:16:37.040 a grip on their own foundational models and indeed Siri 0:16:37.240 --> 0:16:40.320 becoming actually useful. Do you think they will distance themselves 0:16:40.360 --> 0:16:41.240 from Google over time? 0:16:41.440 --> 0:16:43.600 Look, I think there's a better chance in me playing 0:16:43.720 --> 0:16:47.360 NFL playoffs than Apple doing something internally. At this point. 0:16:47.920 --> 0:16:50.240 The reality is this is also a game of a 0:16:50.280 --> 0:16:53.760 high stakes poker negotiation that's going on too. In terms 0:16:53.800 --> 0:16:55.960 of a broader deal with Google that I think they're 0:16:56.040 --> 0:16:58.200 ultimately going to have to do. I think this will 0:16:58.200 --> 0:17:01.680 be exclusive, and because my view is that there's gonna 0:17:01.720 --> 0:17:05.800 be some sort of subscription service freemium, you also need 0:17:05.840 --> 0:17:08.960 a platform for developers. And it comes down to, like 0:17:09.000 --> 0:17:12.320 the AI revolution, like Apple's watching from the sidelines. From 0:17:12.320 --> 0:17:15.000 the stands, they need to get into the game. And 0:17:15.000 --> 0:17:17.440 that's why we talked about seventy five hundred dollars per share, 0:17:17.480 --> 0:17:20.560 that this adds to the story as they execute on 0:17:20.640 --> 0:17:24.879 the consumer AI revolution. Finally, going through Koupertino. 0:17:25.680 --> 0:17:29.520 Dan, you you had advocated on more than one occasion 0:17:30.520 --> 0:17:35.640 that Apple bi perplexity. With this confirmation of Gemini being 0:17:35.680 --> 0:17:38.919 the underpinning of Sirie, is such a transaction still necessary 0:17:38.960 --> 0:17:39.480 to your mind? 0:17:40.000 --> 0:17:42.480 Yeah, and Ed it's a great point. But a lot 0:17:42.560 --> 0:17:45.760 of that was based on as the dog suit was 0:17:45.800 --> 0:17:49.320 going on with Google. There was a sort of period 0:17:49.359 --> 0:17:52.480 there where Apple needed to do something. Now, obviously perplexity 0:17:52.560 --> 0:17:55.159 came and went they're clearly not going to do that. 0:17:55.520 --> 0:17:59.920 But once Google won the dog suit, that was sort 0:17:59.920 --> 0:18:03.480 of I green light lights on and now it's sort 0:18:03.520 --> 0:18:05.920 of good time for big tech. And I think that 0:18:06.359 --> 0:18:08.920 speaks why Apple did this deal. And look, you look 0:18:08.960 --> 0:18:12.080 at Google Gemini, what they've done, you go back a 0:18:12.160 --> 0:18:15.159 year ago, it's phenomenal. And I think Apple is making 0:18:15.200 --> 0:18:18.399 that bet. It's gonna be a much different twenty twenty 0:18:18.480 --> 0:18:22.280 six and twenty twenty five relative to Apple when it comes. 0:18:22.040 --> 0:18:24.159 To AI again. 0:18:24.320 --> 0:18:27.320 Charriage just made the point that Apple was very careful 0:18:27.359 --> 0:18:31.080 in the statement to explain which parts of series functionality 0:18:31.200 --> 0:18:34.720 would be underpinned by by Gemini. The other way looking 0:18:34.760 --> 0:18:36.760 at is to say, have they still got a lot 0:18:36.800 --> 0:18:39.080 of work to do to make serious sort of all 0:18:39.200 --> 0:18:41.280 encompassing AI assistant. 0:18:43.040 --> 0:18:45.600 I mean, look, it's a it's an Everest like our 0:18:45.640 --> 0:18:49.480 pill battle, because the reality is they've lost so many developers, 0:18:49.480 --> 0:18:52.280 they've lost so much talent. You've seen a odd changing 0:18:52.480 --> 0:18:54.240 look and you know it as well as anyone like 0:18:54.440 --> 0:18:58.240 the DNA of Cooper Tino. Why that is supposed to 0:18:58.240 --> 0:19:01.399 come internally, and I think Cook recognized look riding on 0:19:01.440 --> 0:19:04.440 the wall. It speaks to my point that like Cook 0:19:04.520 --> 0:19:07.480 is not going to leave his CEO and leave this 0:19:07.560 --> 0:19:09.960 sort of in transition, he has to get the AI 0:19:10.040 --> 0:19:13.080 strategy sorted out. It's going to be a work in progress, 0:19:13.119 --> 0:19:16.160 but two point four billion iOS vices, one point five 0:19:16.160 --> 0:19:20.200 billion iPhones. It's my view that the consumer AI revolution 0:19:20.560 --> 0:19:23.800 ultimately comes through Cooper Tino, and this is a first 0:19:23.840 --> 0:19:26.200 step in that direction. We'll obviously see more about it 0:19:26.240 --> 0:19:28.840 in the spring, and of course more WWDC. 0:19:29.160 --> 0:19:32.320 Some might say it's incredibly savvy to be AI liked 0:19:33.040 --> 0:19:35.240 to not have to make all the investments in the 0:19:35.359 --> 0:19:38.600 data centers, to be able to say, look, privacy first, 0:19:38.760 --> 0:19:41.479 we're going to lean much more on EDGAI. Is that 0:19:41.520 --> 0:19:43.320 actually going to be a winning formula for Apple in 0:19:43.840 --> 0:19:47.520 the future and as models and sophistication develops. 0:19:47.680 --> 0:19:47.880 Yeah. 0:19:47.920 --> 0:19:50.200 Look, but also Apple is in a much different situation 0:19:50.440 --> 0:19:53.439 because of the unrivaled install base, because of where they 0:19:53.480 --> 0:19:56.800 play in the consumer That's why, like from a CAPEX perspective, 0:19:56.800 --> 0:20:00.240 they're not Microsoft, Google, you know many other big tech plays. 0:20:00.480 --> 0:20:04.000 But I think they finally hit the point Ruber met 0:20:04.040 --> 0:20:06.440 the road. They need to do something. They're going to 0:20:06.560 --> 0:20:09.320 have to incrementally spend, but they're basically going to rely 0:20:09.440 --> 0:20:12.040 on Google as a partner because you cannot have the 0:20:12.119 --> 0:20:15.960 Fourth Industrial Revolution, biggest tech transition in the last forty years, 0:20:16.400 --> 0:20:18.520 come and go and they don't monetize. And I think 0:20:18.560 --> 0:20:21.240 that's something that they recognize front and center, and it's 0:20:21.320 --> 0:20:24.320 key to the stock. I mean realistically, like a year 0:20:24.359 --> 0:20:28.520 from now stocks three fifty or lower from here. It's 0:20:28.600 --> 0:20:32.159 all based on AI and them monetizing it. 0:20:33.680 --> 0:20:36.120 Dan, I'm spanishing director at Webbush. We have the street 0:20:36.160 --> 0:20:39.040