WEBVTT - Software Selloff Continues as AI-Impact Worries Grow 0:00:02.520 --> 0:00:13.720 Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive 0:00:13.760 --> 0:00:17.600 from coast to coast with Caroline Hide in New York 0:00:17.840 --> 0:00:19.840 and ever though in San Francisco. 0:00:22.800 --> 0:00:25.479 This is Bloomberg Tech coming up. Wall Street is shedding 0:00:25.560 --> 0:00:27.800 stocks it thinks are on the wrong side of the 0:00:27.840 --> 0:00:28.680 AI revolution. 0:00:29.080 --> 0:00:33.199 Plus Twilio founder Jeff Lawson has a new company, Nuclear Fusions, 0:00:33.240 --> 0:00:36.440 startup Inertia. We'll discuss how the surging demand for electricity 0:00:36.520 --> 0:00:37.479 is powering big. 0:00:37.360 --> 0:00:40.800 Energy bets and shares of lift plunging off of the 0:00:40.840 --> 0:00:44.280 company's latest earnings results. Will be joined by CEO David 0:00:44.360 --> 0:00:45.440 Risher to unpack it all. 0:00:45.800 --> 0:00:48.640 But first we turn our attentions to these public markets 0:00:48.640 --> 0:00:50.600 that are actually being whip swored. On the day we 0:00:50.680 --> 0:00:54.560 get the big jobs data that signals their strength, people 0:00:54.640 --> 0:00:57.400 start to backtrack, maybe on when or where we could 0:00:57.440 --> 0:00:59.840 see some sort of rate cut and it impacts treasuries, 0:00:59.840 --> 0:01:02.280 but stops actually manage to having been in the red. 0:01:02.320 --> 0:01:04.000 Now shake it off for up a tenth per percent 0:01:04.040 --> 0:01:06.280 on then, as that one hundred managed climb back after 0:01:06.360 --> 0:01:09.480 yesterday's lows. Bitcoin, though I'm afraid no respite from the 0:01:09.520 --> 0:01:12.119 selling there were of by three percent sixty six thousand, 0:01:12.600 --> 0:01:13.080 and what are. 0:01:13.000 --> 0:01:14.119 You looking at underneath the hood. 0:01:14.240 --> 0:01:15.600 I'm going to run through the earnings so that we're 0:01:15.600 --> 0:01:17.880 going to get through throughout the hour. Lift is down 0:01:18.000 --> 0:01:20.240 or on track to be down the most since August 0:01:20.240 --> 0:01:22.800 of twenty twenty four. Its profit outlook has the street 0:01:22.800 --> 0:01:24.920 a little bit worried because they don't have the answers 0:01:24.959 --> 0:01:28.160 on why that outlook is weaker than consensus. T Mobile 0:01:28.200 --> 0:01:30.720 actually missed on wireless subscribers in the court of gone, 0:01:30.920 --> 0:01:33.400 was lower and is now higher three percent in the session, 0:01:33.640 --> 0:01:36.840 and then Shopify be estimates. But there seems to be 0:01:36.880 --> 0:01:39.000 this concern out there with the stock on track for 0:01:39.000 --> 0:01:42.560 its biggest drop since April last year, that AI is 0:01:42.600 --> 0:01:45.200 coming for it. That is a common theme we've heard 0:01:45.319 --> 0:01:46.199 for a little while now. 0:01:46.120 --> 0:01:46.760 Charac it is. 0:01:46.760 --> 0:01:48.080 I'm looking at the Software index. 0:01:48.560 --> 0:01:51.680 It's once again down by three point three percent, so 0:01:52.120 --> 0:01:55.000 clearly having a torrid time as those rising fears just 0:01:55.080 --> 0:01:58.240 about AI of pummeling shares of companies at risk been 0:01:58.240 --> 0:02:00.280 caught on the wrong side of the new technology, from 0:02:00.320 --> 0:02:04.280 small software makers to big wealth management firms. Just yesterday 0:02:04.600 --> 0:02:07.720 at tax Strategy tool ed it rolled out by a 0:02:07.720 --> 0:02:09.760 little known startup called Altruist. 0:02:10.320 --> 0:02:11.080 She has a Charles. 0:02:10.880 --> 0:02:14.600 Schwab, Raymond James LPO financialist. You'll see absolutely tumbling. Let's 0:02:14.639 --> 0:02:17.520 get more on Blueboge Tech equity reporter Common Rhynicky. You've 0:02:17.560 --> 0:02:22.240 been all over the implications and Anthropick's one thing. To 0:02:22.240 --> 0:02:27.360 have these smaller LLM or AI offerings start to rule markets, 0:02:27.400 --> 0:02:28.160 that's quite something. 0:02:28.720 --> 0:02:30.680 Yeah, I think what it really shows here is that 0:02:30.840 --> 0:02:33.520 kind of everyone's at risk right Investors have been so 0:02:33.720 --> 0:02:36.960 quick to punish the shares of companies that might be 0:02:37.040 --> 0:02:39.880 in the crosshairs here of any new innovation or disruption 0:02:40.000 --> 0:02:42.480 from AI, and it really marks kind of a shift 0:02:42.560 --> 0:02:44.360 or it's sort of two truths that are happening in 0:02:44.400 --> 0:02:46.720 the market right now. One the sphere of an AI 0:02:46.760 --> 0:02:50.000 bubble and sort of overspending and that the technology won't 0:02:50.000 --> 0:02:51.760 live up to the hype, and then on the flip 0:02:51.840 --> 0:02:54.680 side that the technology it's here and it's really good 0:02:54.720 --> 0:02:56.680 and it's going to disrupt, you know, entire parts of 0:02:56.680 --> 0:03:00.000 the market. So we're seeing these little pockets sell off 0:03:00.120 --> 0:03:02.919 on these new things that are coming out, and investments 0:03:02.960 --> 0:03:05.440 are really just trying to see what's next. 0:03:05.600 --> 0:03:07.920 We were talking about your your story as a team 0:03:08.080 --> 0:03:10.120 common just really one of the most read on the 0:03:10.200 --> 0:03:12.680 terminal and on dot com. There are names in there 0:03:12.680 --> 0:03:15.440 that are familiar, like some of the wealth managers for example, 0:03:15.720 --> 0:03:18.000 and then there are names that really like even we 0:03:18.080 --> 0:03:21.320 haven't heard of go through those impacted specifically. 0:03:22.200 --> 0:03:24.959 Yeah, so some of the ones that were most impacted yesterday, 0:03:25.000 --> 0:03:29.000 you know, Charles Schwab was one, Raymond James LPL Financial. 0:03:29.000 --> 0:03:31.160 But then we've also seen you know, some stocks across 0:03:31.200 --> 0:03:33.920 Europe also get hit. Not you know, super high profile 0:03:33.960 --> 0:03:35.960 I think for some of us here in the US, 0:03:36.200 --> 0:03:38.720 but you know, last week it was things you know, 0:03:38.800 --> 0:03:40.880 into it saw a little bit of a sell off. Also, 0:03:41.000 --> 0:03:45.000 tax you know, programming just really all over sort of 0:03:45.000 --> 0:03:48.440 across the board. Insurres you know, had a little bit 0:03:48.440 --> 0:03:50.400 of of a sell off as well. So it's a 0:03:50.520 --> 0:03:54.000 very broad range of stocks that we're seeing here get hit, 0:03:54.320 --> 0:03:56.800 and there is not there's not an easy way to 0:03:56.840 --> 0:03:59.640 really think about what could be next. 0:04:00.080 --> 0:04:02.600 Come in, Ryanikey, She's going to be writing what's next. 0:04:02.680 --> 0:04:05.560 We so appreciate it for more on the software sell off, 0:04:05.560 --> 0:04:07.520 but still the demand for hardware. We're joined by on 0:04:07.640 --> 0:04:10.280 Care Crawford, EVP put Photio manager over an outjo and 0:04:10.280 --> 0:04:12.920 you recently updated your twenty twenty three paper AI and 0:04:12.920 --> 0:04:14.760 the declining cost to create. 0:04:14.840 --> 0:04:16.880 Your thesis is now playing out in real time. 0:04:17.160 --> 0:04:20.279 You've been writing, When AI can write software, the cost 0:04:20.279 --> 0:04:23.160 to create the software plummets. I believe the market is 0:04:23.200 --> 0:04:25.919 starting to question the terminal value of these businesses. I 0:04:25.960 --> 0:04:29.000 will be more challenging. It will be more challenging for 0:04:29.040 --> 0:04:32.640 companies who are not AI native. So how much longer 0:04:32.680 --> 0:04:34.039 could this pressure build for? 0:04:34.920 --> 0:04:35.120 You know? 0:04:35.279 --> 0:04:37.919 I think again, when the terminal value is changing and 0:04:37.960 --> 0:04:42.039 you don't really know what the end point is, it's 0:04:42.120 --> 0:04:44.440 difficult to put a multiple on these stocks. 0:04:44.480 --> 0:04:44.680 Now. 0:04:44.680 --> 0:04:46.640 I would say that we're getting a. 0:04:46.600 --> 0:04:49.920 Little bit of a phenomenon of the baby's getting thrown 0:04:49.960 --> 0:04:53.919 out with breathwater in that all stocks are going down 0:04:54.720 --> 0:04:58.640 regardless because there is such a fear factor right now, 0:05:00.000 --> 0:05:03.680 and not all of the software stocks are created equal, right, 0:05:03.760 --> 0:05:06.640 and there are going to be some beneficiaries, But one 0:05:06.640 --> 0:05:11.200 thing is for sure, the entire industry needs to rethink. 0:05:11.320 --> 0:05:14.080 And you know something that the Shopify CFO said this 0:05:14.160 --> 0:05:17.800 morning that I thought was really interesting. He wrote, he said, 0:05:18.040 --> 0:05:21.720 the rules of what is possible are being rewritten real time. Yeah, 0:05:22.279 --> 0:05:25.360 And I think that's what you're seeing is when you 0:05:25.440 --> 0:05:26.600 can create. 0:05:26.279 --> 0:05:29.599 Bespoke software on the fly. And that's today. 0:05:30.240 --> 0:05:33.640 What happens five years from now when these llms and 0:05:33.680 --> 0:05:37.800 these you know, self coding mechanisms are actually even more 0:05:37.839 --> 0:05:44.440 powerful by orders of magnitude. So anything digital, any digital asset, 0:05:44.960 --> 0:05:48.120 you must call to question as to what is its future. 0:05:48.279 --> 0:05:51.440 But this knee jerk of sell first, ask questions later? 0:05:51.560 --> 0:05:53.920 What questions are you now asking to decide where you 0:05:53.960 --> 0:05:56.200 can bossom pick which ones aren't going to be disrupted? 0:05:56.360 --> 0:05:58.920 So I think it becomes again a very much a 0:05:59.040 --> 0:06:03.200 stock pickers mark because there are some you have to 0:06:03.279 --> 0:06:05.680 understand the architecture of how some of the software is 0:06:05.680 --> 0:06:10.080 actually being built. I would say things like point Solutions 0:06:10.160 --> 0:06:13.960 that are in the small to MidCap space very difficult 0:06:13.960 --> 0:06:18.440 to own because that kind of end market that they're 0:06:18.440 --> 0:06:22.760 addressing can easily get you served by, you know, companies 0:06:22.800 --> 0:06:26.120 that are bigger or adjacent businesses, you know, so you 0:06:26.360 --> 0:06:28.680 it's very difficult to own some of those. I think 0:06:28.760 --> 0:06:33.560 companies that are larger cap, more platform like companies, parts 0:06:33.600 --> 0:06:35.320 of those businesses. 0:06:35.240 --> 0:06:37.480 Are at risk, not the entire thing. 0:06:37.560 --> 0:06:40.800 We'll still have SaaS it will just exist at a 0:06:40.800 --> 0:06:45.479 different margin structure, different growth rates than we are used to. 0:06:45.680 --> 0:06:47.159 So how do you pick? 0:06:47.240 --> 0:06:49.600 I think you have to understand the differences between all 0:06:49.600 --> 0:06:52.680 the software. Security is not the same as enterprise software, 0:06:53.200 --> 0:06:56.440 not the same as you know, mid and small cap 0:06:56.440 --> 0:07:01.640 point solutions. So you have to be almost very very 0:07:01.680 --> 0:07:04.560 deliberate in what you're looking at, and not just by 0:07:04.600 --> 0:07:04.960 the group. 0:07:06.240 --> 0:07:09.039 We've been zeroed in on this software story for so 0:07:09.120 --> 0:07:11.520 many days in a row now and earnings of course, 0:07:11.560 --> 0:07:15.360 but we should discuss the stronger than expected US jobs report, 0:07:15.760 --> 0:07:18.280 payrolls in January rising by the most and more than 0:07:18.320 --> 0:07:24.080 a year unemployment faoling unexpectedly. What does that signal for 0:07:24.160 --> 0:07:27.200 the tech sector? What do our audience need to understand 0:07:27.200 --> 0:07:27.720 about that? 0:07:28.680 --> 0:07:32.000 So look, I think I think we're living in two 0:07:32.040 --> 0:07:36.800 separate regimes right now, in that you know, the tech 0:07:36.880 --> 0:07:41.840 sector is going through its own hiccups with understanding the 0:07:43.280 --> 0:07:45.800 what AI will do to it. On the other hand, 0:07:45.840 --> 0:07:48.240 you have the hardware sector inside of tech, which is 0:07:48.320 --> 0:07:52.080 faring much better than software because they are the beneficiaries 0:07:52.600 --> 0:07:56.640 of all of this AI and the infrastructure spending. So 0:07:57.640 --> 0:08:01.920 how do would I read the unemployment report and attach 0:08:01.960 --> 0:08:04.360 it to AI, I think today or over the next 0:08:04.400 --> 0:08:07.920 few weeks, they're kind of not connected to one another, 0:08:08.680 --> 0:08:12.720 and I won't read anything into it for the tech sector. 0:08:14.480 --> 0:08:17.840 That would suggest that we are still zeroed in on 0:08:17.880 --> 0:08:21.200 the capital expenditures numbers that will come from the Hyperscalers 0:08:21.240 --> 0:08:24.880 and others, and that that will be the yardstick by 0:08:24.880 --> 0:08:28.160 which we judge continued growth right for the bands of 0:08:28.200 --> 0:08:30.720 this year. And how important a data set is that 0:08:30.800 --> 0:08:32.600 going to be for you this year, Anka, I. 0:08:32.640 --> 0:08:33.480 Think very much. 0:08:33.520 --> 0:08:38.720 I think besides the Hyperscaler CAPEX numbers, I think we 0:08:38.800 --> 0:08:42.079 have to look at demand. Token growth in the month 0:08:42.120 --> 0:08:46.120 of January was twenty five percent growth month over month 0:08:46.160 --> 0:08:50.000 from December. If you annualize that, that means token growth 0:08:50.000 --> 0:08:52.840 for the year is going to be fourteenfold what we 0:08:52.920 --> 0:08:53.760 saw last year. 0:08:54.800 --> 0:08:56.400 Fourteen full token growth. 0:08:56.559 --> 0:08:58.880 And that is just a measure of the amount of 0:08:58.920 --> 0:09:03.000 intelligence that we are we are asking the system or 0:09:03.080 --> 0:09:04.600 AI to do for us. 0:09:05.200 --> 0:09:07.160 That is an incredible. 0:09:06.559 --> 0:09:10.439 Amount of demand that is being put into the system, 0:09:10.840 --> 0:09:13.560 and we will need an incredible amount of capex to 0:09:13.640 --> 0:09:16.680 support it. And I will remind everyone we are in 0:09:16.760 --> 0:09:22.360 the very early innings of adoption of artificial intelligence and 0:09:23.640 --> 0:09:28.280 so that CAPEX number actually is necessary, and it doesn't 0:09:28.320 --> 0:09:32.960 really scare me because as we as we move forward two, three, 0:09:33.080 --> 0:09:36.400 four and five years, I do believe that our world 0:09:36.480 --> 0:09:39.959 is changing in such a dramatic way that we are 0:09:40.000 --> 0:09:41.160 going to need this kapex. 0:09:42.600 --> 0:09:44.599 Uncle Crawlford, about a great to have you back on 0:09:44.640 --> 0:09:47.520 the program. Thank you very much. Coming up, time to 0:09:47.600 --> 0:09:52.400 launch SpaceX meet Xai. Yai may be key for the 0:09:52.480 --> 0:09:57.160 company's next launch. Bloomberg Intelligence just initiated coverage and we 0:09:57.200 --> 0:09:58.800 have it next. This is Bloomberg Tech. 0:10:09.240 --> 0:10:13.000 SpaceX's acquisition of Xai has many wondering what the company's 0:10:13.080 --> 0:10:15.840 next chapter will look like. The profitable rocket maker is 0:10:15.880 --> 0:10:18.800 set to merge the AI startup, which is what he cause, 0:10:18.880 --> 0:10:22.280 burning billions as it races to compete with other AI players. 0:10:22.320 --> 0:10:24.719 All of this comes as SpaceX that you're looking at now, 0:10:24.800 --> 0:10:28.400 is expected to IPO later this year. Today, UMEG Intelligence 0:10:28.480 --> 0:10:31.160 has launched coverage as a combined entity and says the merger, 0:10:31.200 --> 0:10:33.880 along with the planned IPO, could help fund investment in 0:10:33.960 --> 0:10:37.000 larger launch vehicles and space based data centers. As new 0:10:37.040 --> 0:10:39.520 reports suggests the IPO could value the company as much 0:10:39.559 --> 0:10:42.120 as one point five trillion dollars for more want to 0:10:42.120 --> 0:10:44.880 bring in a dream team. Roome meg Intelligence Roundtable. George 0:10:44.880 --> 0:10:47.720 Ferguson's senior aerospace and defense analyst and manly seeing global 0:10:47.760 --> 0:10:50.800 head of Tech Research, has been thinking about the Tesla implications. George, 0:10:50.920 --> 0:10:54.440 we start with you on SpaceX. How much is it 0:10:54.480 --> 0:10:57.800 a burden or a help to be now aligned with 0:10:58.040 --> 0:11:01.360 XAI because it's certainly cash burn. Meanwhile, you think revenues 0:11:01.400 --> 0:11:03.520 are what up to the tune of ten billion for 0:11:03.600 --> 0:11:05.520 certain parts of SpaceX, so if not more. 0:11:06.559 --> 0:11:09.760 Yeah, So we think launch is worth probably as revenue 0:11:09.800 --> 0:11:13.280 generating probably at least ten billion, and we think that 0:11:13.320 --> 0:11:17.560 this satellite constellation Starlink is probably eightish nine ish billion. 0:11:17.559 --> 0:11:20.440 My colleague John Butler did the work on that, so 0:11:21.360 --> 0:11:25.000 we're up actually probably closer to twenty billion. Look, I 0:11:25.000 --> 0:11:29.360 think the combining with XAI is all about sort of 0:11:29.400 --> 0:11:33.280 strategy and funding AI, I mean manned people of course 0:11:33.320 --> 0:11:37.600 talk to it deeper, but I think that AI business 0:11:37.640 --> 0:11:40.120 needs a lot more investment. I think Musk wants to 0:11:40.120 --> 0:11:43.199 push it up in its competitiveness, and so I think 0:11:43.240 --> 0:11:47.240 you put it inside this broader offering for SpaceX in 0:11:47.320 --> 0:11:49.119 order to help move some money. 0:11:48.840 --> 0:11:53.559 That way, Mandy, the combination you know, long term, it's 0:11:53.559 --> 0:11:57.559 about compute in space right satellite space form factor data 0:11:57.559 --> 0:12:01.599 center of XAI. In your research, continuing to look at 0:12:01.640 --> 0:12:05.439 what we reported as being a potential tie up between Tesla, 0:12:06.160 --> 0:12:08.640 XAI and SpaceX give me a thesis. 0:12:09.400 --> 0:12:13.040 Well, so the way XAI has been looking to monetize 0:12:13.080 --> 0:12:16.320 is through consumer subscriptions so far, and when I stack 0:12:16.400 --> 0:12:20.280 them against let's say an open Ai, you know, they 0:12:20.320 --> 0:12:23.440 are nowhere close to the scale that OpenAI is or 0:12:23.480 --> 0:12:27.920 Gemini is in terms of consumer subscriptions. On the enterprise side, yes, 0:12:27.960 --> 0:12:31.080 they have that big defense contract, but that's where you know, 0:12:31.120 --> 0:12:34.480 the XAI revenue run rate is close to one billion, 0:12:34.559 --> 0:12:37.960 and compare that to Anthropic and the others. There's not 0:12:38.080 --> 0:12:39.280 growing at the same pace. 0:12:39.400 --> 0:12:41.440 So because all these. 0:12:41.280 --> 0:12:45.520 Large angrid models are converging and growing really fast, you 0:12:45.600 --> 0:12:48.040 have to ask yourself, how are they going to fund 0:12:48.040 --> 0:12:51.400 the next training run? And you need that sort of 0:12:51.440 --> 0:12:53.880 funding to really keep up in terms of how these 0:12:53.920 --> 0:12:57.400 models are developing. So I think the merger is really 0:12:57.440 --> 0:13:00.440 an attempt to make sure that they don't lack the 0:13:00.480 --> 0:13:04.040 funding because all these companies are tapping you know, the 0:13:04.080 --> 0:13:07.120 private market, the debt market, and you know, as a 0:13:07.120 --> 0:13:09.839 combined entity, they've already sort of come up with the 0:13:09.880 --> 0:13:11.199 one point two five trillion. 0:13:11.400 --> 0:13:14.000 Yes, they go public, probably. 0:13:13.600 --> 0:13:16.600 One point five trillion could be achievable, but it's a 0:13:16.720 --> 0:13:19.600 very high valuation multiple that they already have. 0:13:20.120 --> 0:13:20.400 Mandy. 0:13:20.880 --> 0:13:23.199 What's interesting in your research is you really compare and 0:13:23.240 --> 0:13:26.640 contrast how many individual users are going to a standalone GROQUEI. 0:13:26.800 --> 0:13:29.360 Yeah, not many, but there are. 0:13:29.320 --> 0:13:31.440 Plenty of US Tesla users out there who could be 0:13:31.520 --> 0:13:33.600 using it. How much should they need to lean in 0:13:33.760 --> 0:13:37.040 to ensure that adoption is brought to bear in that respect? 0:13:37.160 --> 0:13:38.760 Yeah, and you make a great point. 0:13:38.800 --> 0:13:43.280 The digital assistant use case within a Tesla makes perfect sense. 0:13:43.320 --> 0:13:46.280 I mean, why would they not deploy Rock inside a 0:13:46.360 --> 0:13:49.320 Tesla as a digital assistant? And you already have you know, 0:13:49.360 --> 0:13:52.359 ten million cars on the road where you could potentially 0:13:52.400 --> 0:13:56.280 deploy that. So from that perspective, the feedback loop can 0:13:56.320 --> 0:13:58.760 be very fast in terms of you know, them deploying 0:13:58.760 --> 0:14:01.360 the product, the feedback in terms of how well it's 0:14:01.440 --> 0:14:04.760 doing and constantly improving that. But you need that consumer 0:14:04.800 --> 0:14:08.760 adoption because that's what all these lms you're competing against, Google, 0:14:08.800 --> 0:14:09.480 Gemini and. 0:14:09.679 --> 0:14:11.679 More guardrails as well, I might add. 0:14:11.760 --> 0:14:15.240 Yeah, and that's where Grock so far has been kind 0:14:15.240 --> 0:14:18.560 of I feel like they haven't really caught up in 0:14:18.640 --> 0:14:22.480 terms of implementing the right guardrails, and people feel skeptical 0:14:22.520 --> 0:14:26.120 about implementing them on the enterprise side, so there is 0:14:26.240 --> 0:14:27.480 work to be done on that front. 0:14:28.400 --> 0:14:32.360 This is a big moment where Bloomberg Intelligence is initiating coverage, 0:14:32.400 --> 0:14:35.880 deep research of a big private entity that we think 0:14:35.920 --> 0:14:39.320 will go public, right, George, the data in the deck 0:14:39.400 --> 0:14:43.200 is so valuable. You're tracking the size of the Starlak consolation, 0:14:43.840 --> 0:14:48.040 You're tracking launch cadence, and then our forecasted financials. Which 0:14:48.080 --> 0:14:50.720 of those are going to be most important now that 0:14:50.840 --> 0:14:54.480 SpaceX is hard pivoted to the Moon from Mars, George, 0:14:54.760 --> 0:14:55.520 very quick. 0:14:56.280 --> 0:14:58.640 So I guess where I see the money really being 0:14:58.680 --> 0:15:03.280 generated from as the concl the satellite constellation around the Earth, 0:15:03.280 --> 0:15:05.560 and that's going to bring broadband revenue, and it's going 0:15:05.560 --> 0:15:08.880 to bring director sell revenue. The pivot to the Moon 0:15:09.160 --> 0:15:11.920 and Mars, I think is a little more about sort 0:15:11.960 --> 0:15:15.120 of marketing than it is about revenue generation. I'm all 0:15:15.160 --> 0:15:17.080 about revenue and profit generation. 0:15:18.360 --> 0:15:22.080 George ferguson Man deep seeing blue meg intelligence coverage of 0:15:22.120 --> 0:15:24.720 SpaceX and XAI appreciate it a lot. There's a lot 0:15:24.760 --> 0:15:26.920 going on in the world of Elon Inc. Jimmy Barr 0:15:27.200 --> 0:15:30.720 Tony Wu, co founders of XAI, have announced they're leaving 0:15:30.720 --> 0:15:34.560 the company after less than three years. By my count, Carroe, 0:15:34.640 --> 0:15:38.320 that means that half of the about dozen initial founders, 0:15:38.320 --> 0:15:40.920 which includes Elon Musk, have now gone. 0:15:41.120 --> 0:15:43.920 And maybe that's to be expected when you see such 0:15:43.920 --> 0:15:46.960 a difference in the architecture of the business. Now it's 0:15:46.960 --> 0:15:49.440 subsumed into space X. What does that mean in terms 0:15:49.480 --> 0:15:52.120 of the founding principles of this business? But is there 0:15:52.120 --> 0:15:55.000 any read through Look, we're looking at their statements, their 0:15:55.320 --> 0:15:58.120 resignation posts that they actually put on X. Of course, 0:15:58.720 --> 0:16:00.240 what do you make of it, ed if someone who's 0:16:00.240 --> 0:16:03.120 so deeply within the Elon Musk space, We. 0:16:03.760 --> 0:16:06.640 Just don't know. When I read the merger documents, you know, 0:16:06.680 --> 0:16:08.880 it was pretty clear and we reported this right that 0:16:09.080 --> 0:16:13.480 XAI would operate as a standalone subsidiary because remember SpaceX 0:16:13.520 --> 0:16:16.120 is subject to ITEAR rules the use of technology and 0:16:16.160 --> 0:16:20.440 defense applications. Is that it is it about the reports 0:16:20.440 --> 0:16:24.160 that Musk has been frustrated about the pace of ROX deployment. 0:16:24.480 --> 0:16:27.360 But these are notable people who are leaders in field 0:16:28.320 --> 0:16:30.080 and talents everything in this game. 0:16:30.280 --> 0:16:34.400 And boy is a competition hot at the moment with Anthropic, Withnai, 0:16:34.880 --> 0:16:37.560 with Xai, we continue to track at me while coming up. 0:16:37.640 --> 0:16:40.120 Google another AI player that we keep golying on, but 0:16:40.160 --> 0:16:42.560 it's also adding the way to shop within its AI search. 0:16:42.800 --> 0:16:45.560 We'll discuss with the company's general manager of Ads and Commerce. 0:16:45.560 --> 0:16:46.960 Stick with us as Bluembag Tech. 0:17:01.000 --> 0:17:04.000 Google is adding shopping features to its AI search and 0:17:04.040 --> 0:17:07.440 Gemini chatbot. The move comes as tech companies more broadly 0:17:08.000 --> 0:17:11.280 look for ways beyond subscriptions to make money from the 0:17:11.359 --> 0:17:14.600 AI tools. Let's discuss with Vigistron Novas and Google's vice 0:17:14.640 --> 0:17:18.639 president and general manager of Ads and Commerce. There's always 0:17:18.680 --> 0:17:20.919 been a relationship at least you know, for me personally 0:17:20.920 --> 0:17:24.000 as well, between Google searching and then getting. 0:17:23.720 --> 0:17:24.480 To a product. 0:17:24.680 --> 0:17:26.879 But in AI mode, that's what we're talking about here. 0:17:26.920 --> 0:17:30.480 AI mode there's just a more direct interaction to a 0:17:30.560 --> 0:17:34.920 transaction right where you can go ahead and buy something 0:17:35.400 --> 0:17:35.800 that's right. 0:17:35.880 --> 0:17:37.280 How big are moments that for Google? 0:17:37.560 --> 0:17:40.200 It is a massive moment for us. We see this 0:17:40.400 --> 0:17:42.960 as not just a big moment for Google just sort 0:17:42.960 --> 0:17:44.800 of stepping back in the last year, what we see 0:17:44.840 --> 0:17:48.400 is shoppers have really changed their behaviors they are now 0:17:48.600 --> 0:17:52.480 Typically shoppers had to pick between shopping fast or shopping smart, 0:17:52.800 --> 0:17:55.800 and with AI, that trade off is kind of disappearing. 0:17:56.240 --> 0:17:59.600 And therefore businesses now need a new playbook and a 0:17:59.600 --> 0:18:01.440 lot of what they're doing now is all about how 0:18:01.440 --> 0:18:04.399 to empower them and an AI mode. What we're seeing 0:18:04.440 --> 0:18:07.760 is people's search behavior is completely evolving, from keyword search 0:18:07.800 --> 0:18:10.920 to conversation or search, they upload pictures, There's so much 0:18:11.000 --> 0:18:13.800 multimodal input that comes in, and that's just a moment 0:18:13.840 --> 0:18:15.800 for us to rethink how we do the whole thing. 0:18:16.320 --> 0:18:16.639 VIJA. 0:18:16.760 --> 0:18:20.600 Anyone that watched the Super Bowl will know that the 0:18:20.640 --> 0:18:25.480 inclusion of ads within a generative AI tool is let's 0:18:25.480 --> 0:18:28.880 not say controversial, but that people are deciding if it's 0:18:28.880 --> 0:18:32.080 what the consumer wants. Right, if you're interacting with an 0:18:32.119 --> 0:18:34.560 AI do you want an AD to pop up? And 0:18:34.600 --> 0:18:37.280 you've been testing different ad formats as part of this, 0:18:37.840 --> 0:18:40.000 what do you think the consumer wants? 0:18:40.280 --> 0:18:43.840 Yeah, obviously we spend a lot of time figuring out 0:18:43.880 --> 0:18:46.840 what consumers want. We've had a twenty five year history 0:18:48.160 --> 0:18:52.360 in satisfying human curiosity with search. In all of these experiences, 0:18:52.440 --> 0:18:54.640 as have been a big part of that, and they 0:18:54.720 --> 0:18:57.800 work because they're helpful and assistive to the person in 0:18:57.840 --> 0:19:01.159 the moment. Now, with what's happening with AI mode, what 0:19:01.200 --> 0:19:05.080 we see is the conversational modality is changing. It is 0:19:05.119 --> 0:19:08.240 a moment for us to reimagine what ads are possible 0:19:08.280 --> 0:19:10.040 and what will actually work. And there's a lot of 0:19:10.080 --> 0:19:12.360 experimentation that we're doing. In fact, we have a couple 0:19:12.400 --> 0:19:16.200 of announcements on that, but the foundations of what makes 0:19:16.240 --> 0:19:19.040 this work continue from what we've learnt all these years, 0:19:19.040 --> 0:19:22.520 and that's really based on a foundation of trust and safety. 0:19:23.320 --> 0:19:28.000 Trust safety then tell us about how you become entrepreneurial 0:19:28.000 --> 0:19:30.119 in your thinking, how you become creative in your thinking 0:19:30.600 --> 0:19:33.920 that these don't feel unnerving to the purchaser. 0:19:34.320 --> 0:19:37.320 They feel natural, organic and useful. 0:19:39.240 --> 0:19:40.560 Let me actually give you an example. 0:19:40.720 --> 0:19:43.960 So let's say you're in AI mode and you want 0:19:44.000 --> 0:19:47.400 to purchase a lamp for your bedroom and you talk 0:19:47.480 --> 0:19:50.840 to the you tell AI mode about your the de 0:19:51.000 --> 0:19:53.000 call you like it's a modern decor, you want a 0:19:53.000 --> 0:19:55.800 certain kind of lamp, this is a color, And you 0:19:55.840 --> 0:19:57.840 get to a point where you know the product that 0:19:57.880 --> 0:20:00.240 you want, you see the product that you want, the 0:20:00.280 --> 0:20:02.479 feature that we just launched today, lets you purchase it 0:20:02.640 --> 0:20:03.280 right there. 0:20:03.119 --> 0:20:03.800 In that moment. 0:20:04.320 --> 0:20:07.800 Now you're still very much in control of the purchase. However, 0:20:07.960 --> 0:20:11.200 a lot of the grunt work of getting from what 0:20:11.280 --> 0:20:13.840 I want to when I have it is removed in 0:20:13.880 --> 0:20:14.480 this process. 0:20:15.119 --> 0:20:16.600 So this feels a system. 0:20:16.320 --> 0:20:19.840 This feels natural, and it's based on the same principles 0:20:19.840 --> 0:20:20.360 that we've. 0:20:20.160 --> 0:20:22.560 Done a lot of things before. Direct offers. 0:20:23.359 --> 0:20:25.600 Who can I buy from when I found the perfect lamp? 0:20:25.840 --> 0:20:28.400 Is it just at saan Wayfair? You've got partnerships there. 0:20:28.440 --> 0:20:31.119 How is this expanding across the entire remit of partners 0:20:31.119 --> 0:20:31.439 that you have. 0:20:32.800 --> 0:20:36.080 Yeah, So direct office is an opportunity for retailers to 0:20:36.240 --> 0:20:40.879 provide us a very specialized discount that our AI actually 0:20:40.880 --> 0:20:44.440 matches with people during their shopping journeys and gives them 0:20:44.440 --> 0:20:46.359 this very personalized discount, and it. 0:20:46.280 --> 0:20:48.520 Allows retailers to just close the. 0:20:48.520 --> 0:20:52.239