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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: From the Heart where Innovation, money and power Collie in

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Speaker 2: Silicon Valley n Beyond.

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Speaker 3: This is Bloomberg Technology with Caroline Hyde and Ed lud Love.

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Speaker 4: Welcome to Bloomberg Technology.

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Speaker 5: I'm Caroline Hyde in Bloomberg's World headquarters in New York.

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Speaker 5: There is a lot to get to this hour, but

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Speaker 5: let's start with some of the political turmoil in France,

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Speaker 5: that no confidence vote that could topple the country's current

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Speaker 5: government Blouemost. Caroline Conan is there for the latest in

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Speaker 5: Paris debate finally getting underway. But for our global audience

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Speaker 5: and our technology audience, Caroline, for listen to.

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Speaker 4: What we expect in the next hour or so. So

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Speaker 4: the debate just started.

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Speaker 6: Here behind me inside the National Assembly, you've got Erie

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Speaker 6: Cokrel at the moment speaking, is the leader of the

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Speaker 6: far left group in the National Assembly, and this is

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Speaker 6: the group that is proposing this motion of no confidence

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Speaker 6: in order to topple Michelle Bannie's governments and make Michelle

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Speaker 6: Bannie's government collapse. That vote could happen in the next

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Speaker 6: couple of hours, and we're pretty sure of the outcome

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Speaker 6: as we speak given the national value. So the far

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Speaker 6: right party of Marin Lupen has said that they will

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Speaker 6: back this motion of no confidence even if it was

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Speaker 6: presented by the far left, So the two extremes joining

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Speaker 6: forces in order to overthrow this Banne government.

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Speaker 5: We can see the impact on the euro, we've seen

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Speaker 5: the impact on the price of French debt. But for

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Speaker 5: those that are running businesses for a technology audience that

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Speaker 5: cares about the French technology startups, for example, what does

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Speaker 5: a change or collapsing government mean for them?

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Speaker 6: Of course, the main question is that we're going to

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Speaker 6: have a twenty two twenty five budget and what is

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Speaker 6: left in this budget. There will probably be some special

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Speaker 6: laws in order to roll over the twenty twenty four budget, but.

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Speaker 4: That means a lot of help and.

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Speaker 6: For example, a reduction of contributions from companies in order

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Speaker 6: to hire lowest income employees. These are not going to

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Speaker 6: be automatically indexed on inflation, meaning that it's going to

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Speaker 6: be harder. It's going to cost more for those companies

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Speaker 6: to hire some of those employees. So technically, in the

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Speaker 6: short term it's a little unclear. But in the longer term,

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Speaker 6: if there is still no budget over the next few

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Speaker 6: weeks before the end of December, that will have a

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Speaker 6: big impact on companies.

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Speaker 4: That will because we'll.

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Speaker 6: Have this twenty twenty four budget saying the same we

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Speaker 6: had any increase.

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Speaker 5: Carolyn, We thank you so much for the latest from Paris.

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Speaker 5: We'll come back to you on any of the breaking news,

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Speaker 5: but first let's kind.

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Speaker 4: Of check on the markets, because despite.

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Speaker 5: Political termol worldwide, it fails often. ZAC is at a

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Speaker 5: record high, the S and P is at a record high,

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Speaker 5: and we have tech to thank for it.

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Speaker 4: In large part.

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Speaker 5: We see Salesforce also at a record high, up eight

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Speaker 5: point seven percent off the back of its earnings, really

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Speaker 5: managing to pull out the power from its AI agent

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Speaker 5: force focus.

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Speaker 4: We're looking at Octa, this is.

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Speaker 5: Application software company also rising at one point up more

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Speaker 5: than thirteen percent. We're now up five percent on the

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Speaker 5: back of a beaten raise for its earnings after the

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Speaker 5: bell yesterday. And Marvel Technology it's now up some twenty percent,

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Speaker 5: sawing its world to a record high. This is the

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Speaker 5: chip company had better than expected results and stronger earnings

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Speaker 5: forecast as well. What's notable is also Marvell's CEO Matt

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Speaker 5: Murphy said on the call that he is committed to

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Speaker 5: the company despite being a potential contender. We understand to

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Speaker 5: lead Intel and that is where we want to go next.

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Speaker 5: Because Intel's search for a new CEO is the focus

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Speaker 5: for many at the moment, and is it going to

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Speaker 5: be focusing heavily on outsiders. The chip maker is considering

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Speaker 5: candidates such as Matt Murphy, but also the former Cadence

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Speaker 5: Design System CEO Lip Bhutan, who actually recently quit the

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Speaker 5: board of Intel, as bringing in Bloomberg's Ryan Gold for

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Speaker 5: more Ryan. Is it surprising to see Intel not go

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Speaker 5: to its own bench.

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Speaker 1: Carol, I think it is when you think this is

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Speaker 1: the first time since nineteen sixty eight when Intel was founded,

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Speaker 1: that they will actually sort of think about looking outside.

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Speaker 1: I think that kind of gets to the heart of

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Speaker 1: what it means to be in semi conductors right now.

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Speaker 1: Semi Conductors takes a lot of expertise, It takes a

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Speaker 1: load of nows and you know, some of the decisions

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Speaker 1: that were made excuse me, over the years, you know,

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Speaker 1: and the pet even the Bob Swan Krasnich before him.

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Speaker 1: You know, these are decisions that will pay if you

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Speaker 1: make them, might in ten years time.

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Speaker 4: That's how long it takes.

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Speaker 1: To get some things over the line in semiconductors and

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Speaker 1: to go out and think about who your next CEO is.

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Speaker 1: It's not only easy toss.

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Speaker 5: Well, many are going to look at Pat Keilsinger didn't

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Speaker 5: actually get that much time. He came from VMware EMC,

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Speaker 5: but he was in many ways an Intel life though

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Speaker 5: he had started his career there. And what therefore is

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Speaker 5: really the attractiveness of this role at the moment, Marvel,

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Speaker 5: for example, Matt Murphy doing a great job showing the

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Speaker 5: power of a strategy. Is it not going to be

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Speaker 5: that appetizing a role to be taking on right now?

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Speaker 1: I think it's a it could be a poison chalice.

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Speaker 1: I think some people do you as a poison cholie,

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Speaker 1: just given the challenges because when you think about am

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Speaker 1: dference and it's a big rival to Intel. It made

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Speaker 1: the decision to go Fablus years and years ago. Intel

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Speaker 1: is still you know, still a fab chip company.

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Speaker 4: It'll be more of a fast.

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Speaker 1: Exactly, and you know rival t SMC and we all

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Speaker 1: know how that went. So whoever comes in has a

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Speaker 1: massive challenge on their hands. That said, though you know

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Speaker 1: the fact that we were probably sid them at Murphy

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Speaker 1: is being considered, lip bout ten being considered. Let's remember

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Speaker 1: that lip Boo is a big advocate for you know,

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Speaker 1: making Intel more sort of industrially manufacturing sound, so you

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Speaker 1: know that could be interesting. But you know there are

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Speaker 1: many others too, because we're told, for instance, when we

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Speaker 1: talk to sources that anyone who puts their hand up

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Speaker 1: who has a remote degree of expertise in semiconductors will

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Speaker 1: likely be considered. And you know, I can tell you

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Speaker 1: that Spencer Stewart that's running the process to higher than UCO.

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Speaker 1: Right now, they're saying that we're probably going to look

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Speaker 1: for four or five candidates and then shortliss to one

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Speaker 1: to two.

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Speaker 4: Which can we get a timeframe?

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Speaker 1: I think they're looking to this as soon as.

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Speaker 4: Possible, Ran keeping us up to speed. We thank you

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Speaker 4: Rangel there. Meanwhile, let's just.

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Speaker 5: Get a deeper look at the chip space tech market

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Speaker 5: more broadly, turning one of t RO prices with US

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Speaker 5: managing the Science and Technology Fund more than nine billion

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Speaker 5: dollars under management there and basically, you look like you're

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Speaker 5: in every chip name apart from Intel in many ways, Tony,

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Speaker 5: is that right? And and how are you looking at

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Speaker 5: the ecosystem and its strength.

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Speaker 7: Yeah, I think that's a great question.

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Speaker 8: You know, when you look at our holdings, we currently

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Speaker 8: are focused on the compute aspect of things, and so

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Speaker 8: looking at AI, you know in video is a big

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Speaker 8: holding as well as Marvell and Broadcom.

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Speaker 7: On my view is that the compute.

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Speaker 8: Tam is growing significantly as the foundational models are kind

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Speaker 8: of growing exponentially every year, and so the chip Coneys

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Speaker 8: that had the scale, the expertise of tape out the

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Speaker 8: leading edge, you know, are I think going to be

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Speaker 8: advantageous in terms of capturing this compute TAM. So I think,

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Speaker 8: you know, I like the space long term. But you know,

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Speaker 8: we are selective in our in our holdings here, you know,

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Speaker 8: specifically those three especially well.

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Speaker 5: Let's talk about Marvel for example, would it be a

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Speaker 5: worry as the leader did jump ship to Intel.

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Speaker 8: Well, I think Matt Murphy has created created a ton

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Speaker 8: of value over the years. You look at when they

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Speaker 8: picked it up, it was in the sub ten billion

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Speaker 8: dollar mark cap, and he's over the years, I've done

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Speaker 8: a lot of great m and A and capital allocation,

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Speaker 8: spun businesses off, acquired a world class custom team that

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Speaker 8: is right now delivering a lot of AI custom uh

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Speaker 8: compute ships for like the likes of Amazon, for example,

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Speaker 8: and so you know, I think that it would be

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Speaker 8: a concern if you jump ship. I do think it's

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Speaker 8: it's uh, you know, He's put a lot of work

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Speaker 8: in to Marvell.

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Speaker 7: He's got a.

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Speaker 8: Great team there and they're kind of firing on all

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Speaker 8: cylinders coming out of the last few years. So you know,

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Speaker 8: from my perspective, it seems like he does have a

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Speaker 8: lot of good reasons.

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Speaker 7: To stay at Marvell.

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Speaker 8: And so I'm you know, I'm taking his word what

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Speaker 8: he said last night kind of face value here.

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Speaker 5: Looking at your top ten holdings, Marvel is one of

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Speaker 5: them at the end of October is about two percent

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Speaker 5: of the fund. The top holding is in video, as

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Speaker 5: you mentioned. Interestingly, we had as CEO Matt Garman on

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Speaker 5: the show Well on the pro across our network yesterday

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Speaker 5: and we're going to be playing out a bit of

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Speaker 5: that sound later. But Amazon is the best points contributor

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Speaker 5: to the NASDAC. Today they had a whole raft of

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Speaker 5: chip announcements. What does that mean for Invidia? What does

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Speaker 5: it mean in terms of their own customers building custom silicon?

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Speaker 8: Yeah, I think I don't think that story is anything new.

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Speaker 8: It's just generally the evolution of compute. Essentially, you have

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Speaker 8: the new workloads that need more general purpose in video chips,

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Speaker 8: and then over time, as the workloads get bigger and

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Speaker 8: they mature and stabilize, you kind of bring in the

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Speaker 8: custom compute.

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Speaker 7: And so, you know, I.

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Speaker 8: Think the two kind of coexists, and they have co

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Speaker 8: existed over the last decade, and so going forward, I

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Speaker 8: think of them as kind of you know, kind of

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Speaker 8: symbiotic relationship in some ways, and that it is just

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Speaker 8: an evidence that the chipped kind of TAM is increasing

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Speaker 8: in the compute TAM, and the demands continue to increase

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Speaker 8: because you the workloads are argating to be so big,

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Speaker 8: you it, then it makes sense to have a custom chip.

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Speaker 8: But you know, what's what's special is that, like you know,

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Speaker 8: previously kind of five ten years ago, we thought AI

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Speaker 8: would just be you know, subject to just only like

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Speaker 8: identifying what's a cat and what's not a cat.

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Speaker 7: I can mentioned. So now it's like.

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Speaker 8: Transformed into something that we no one could have thought

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Speaker 8: about or predicted.

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Speaker 7: So, you know, I think that it's just we've had

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Speaker 7: this debate.

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Speaker 8: Before of like but I think what you've seen is

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Speaker 8: that both kind of Nvidia and the custom chip providers

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Speaker 8: have done well as the TAMA has increased.

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Speaker 5: I am not a cat forever to be part of

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Speaker 5: Internet's story. What then, about in Vidia's valuation at these

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Speaker 5: levels You're talking about how finally we're getting the return

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Speaker 5: on investment from an application layer perspective of AI. We're

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Speaker 5: actually using it in our everyday life. While work life

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Speaker 5: can in video grow in terms of its own valuation,

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Speaker 5: Have we priced it all in?

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Speaker 7: Yeah, I think that's a great question.

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Speaker 8: I mean, three point three four trillion dollars that's marketcap

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Speaker 8: right now is pretty astounding. If you look at like

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Speaker 8: the profitability in the in the free cash flow, I mean,

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Speaker 8: it's kind of pretty reasonable, like thirty thirty five times

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Speaker 8: forward earnings, and so while the stock price has gone

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Speaker 8: up a lot, I think that when you look at evaluation,

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Speaker 8: it's not an extreme at one hundred times earnings, which

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Speaker 8: I think that says the market You're saying there is

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Speaker 8: a little bit of concern of like how sustainable the

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Speaker 8: numbers are, whether profitability can continue to be at these levels,

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Speaker 8: and so, you know, I think the valuation in that

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Speaker 8: face value is actually relatively moderate. You know, given its

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Speaker 8: history and its growth, it.

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Speaker 5: Is extraordinary just to take a step back and think

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Speaker 5: that on this day we're at a record high for

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Speaker 5: the NAST, that one hundred apples at a record high.

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Speaker 5: We've got Nvidia continuing to rise in terms of market cap,

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Speaker 5: and then you have the salesforce numbers and its own

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Speaker 5: record high in terms of share price today, what do

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Speaker 5: you make of their application of AI agent force and

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Speaker 5: whether actually it's going to make the more profitable as

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Speaker 5: well as getting revenue off the ground.

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Speaker 8: Yeah, I think it's an exciting time in tech in

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Speaker 8: that you know, AI could be this next productivity revolution

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Speaker 8: and so, you know, kind of uncapping labor as we

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Speaker 8: know it with digital agents and digital labor that essentially

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Speaker 8: doesn't need a sleep, doesn't need to take breaks, operate

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Speaker 8: twenty four to seven, and can operate alongside humans.

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Speaker 7: And so I think that's what's really exciting.

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Speaker 8: And all these software companies are now kind of seeing

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Speaker 8: the opportunity and going after and everyone wants to be

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Speaker 8: the platform where you soar your data, you operate and

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Speaker 8: so whether that's Mirosoft Service now you know, Salesforce, like

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Speaker 8: I think it's a bigger opportunity. And so we've kind

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Speaker 8: of seen, you know, the first year of chativity or

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Speaker 8: to be dominated by the chip companies like Invidia dominate

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Speaker 8: infrastructure layer and so now I think that we're seeing

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Speaker 8: it on the appware, which is really exciting because you

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Speaker 8: need to see it in the appwere for kind of

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Speaker 8: the chip companies to continue doing well, and you know,

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Speaker 8: I think we are kind of seeing that in the

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Speaker 8: last kind of earning season.

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Speaker 5: Get we've seen that shift, as you say, movement from

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Speaker 5: all in on chips then shifting into software. But boy,

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Speaker 5: is it playing out in some of the valuations. I'm

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Speaker 5: looking at Palenteer training at one hundred and eighty times

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Speaker 5: future earnings that had been the darling of the AI story.

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Speaker 5: Will other companies rip to to get to those sorts

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Speaker 5: of valuation levels or is Palenteers overdone as well? You

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Speaker 5: talk about how are at this crucial moment where AI

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Speaker 5: is going to disrupt the workforce, But I feel that

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Speaker 5: the market's been trying to price that in for quite

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Speaker 5: a while.

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Speaker 7: Yeah.

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Speaker 8: Absolutely, and I think that not every company can be

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Speaker 8: like what Paluneer is doing. I think to do AI

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Speaker 8: is really really hard, and they've been the AI leader

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Speaker 8: for the last decade, and I think I think of

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Speaker 8: them bringing AI to the government and the the the enterprise,

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Speaker 8: and so I think what's special about them is that

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Speaker 8: they've got this like very centralized ontology for AI, and

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Speaker 8: then they can kind of customize that for clients and

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Speaker 8: clients can build on that.

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Speaker 7: So I think them as like a platform.

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Speaker 8: And you think about what the United States government is

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Speaker 8: trying to doing now is to be more efficient, and

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Speaker 8: part of that is bringing AI and technology to automate

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Speaker 8: things and to modernize people's peoples are processing and data.

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Speaker 8: And so I don't think every company can be like Puenteer.

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Speaker 8: I think there's like some special ones in kind of

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Speaker 8: the AI software kind of madcaps area, like you know,

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Speaker 8: kind of like app love in for example, or AX,

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Speaker 8: and I like, you know, where there's like specific vertical

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Speaker 8: application where AI can be applied and really drive a

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Speaker 8: lot of automation and in intelligence.

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Speaker 5: I love that you take us out to some of

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Speaker 5: the different names as well. Tenuang of t row Price

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Speaker 5: brilliant to have you one.

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Speaker 4: Thank you.

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Speaker 5: Last week, Bloomberg reported that the FTC is investigating into Microsoft,

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Speaker 5: which is focusing on how the tech Giant is bundling

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Speaker 5: its Windows operating system with other software as well as

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Speaker 5: its dominance in cybersecurity. Now reports from the Information are

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Speaker 5: saying that the agency is asking about Microsoft steel with

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Speaker 5: open Ai, which grants the course the cloud giant exclusive

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Speaker 5: right to run the startup models on the cloud servers, as.

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Speaker 4: Well as of the company's revenue and trust.

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Speaker 5: Lawyer David Belto shows us now he previously worked as

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Speaker 5: former policy director of the FTC's Bureau of Competition, someone

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Speaker 5: who's well versed in how long these.

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Speaker 4: Investigations could go on and with what right they take.

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Speaker 5: So the way which the FDC is pursuing Microsoft, does

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Speaker 5: it seem significant to you?

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Speaker 2: I think it's very important. You know, that Microsoft case

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Speaker 2: brought by the Department of Justice in the late nineteen

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Speaker 2: nineties was critical to the expansion and growth of the Internet.

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Speaker 2: Many of the things that we benefit from in competition

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Speaker 2: on the Internet are specifically because of that earlier case.

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Speaker 5: What's interesting is, of course we've heard back from the

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Speaker 5: Microsoft Deputy General Council Ruma Ali, who put on LinkedIn

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Speaker 5: saying on behalf of Microsoft, the FDC Inspector General to

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Speaker 5: investigate whether the FDC management improperly leaked confidential information about

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Speaker 5: a potential anti trust investigation. How do you see these

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Speaker 5: sorts of investigations involving and becoming publicly known before Indeed,

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Speaker 5: Microsoft has a chance to ultimately lead the way here.

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Speaker 2: I'm extraordinarily skeptical about whether or not the agency would

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Speaker 2: there would be some kind of leak from the agency.

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Speaker 2: That's extraordinarily unusual. Third parties, however, who receive civil investigative

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Speaker 2: demands can disclose whatever they want, and maybe this is

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Speaker 2: a situation where one of those parties disclosed information to

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Speaker 2: the press about the requests it had received from the TC.

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Speaker 4: Of course, this is wide ranging.

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Speaker 5: It would see Bloomberg initially reporting on how it's going

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Speaker 5: to be focusing on the way they intertwine their operating

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Speaker 5: system and also their dominance and cybersecurity. Now the information

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Speaker 5: talking about the open Ai Microsoft deal, I want to

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Speaker 5: just take a listen to a conversation I have with

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Speaker 5: the AWS CEO yesterday, Matt Garmon talking about how he'd

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Speaker 5: like to offer his own AWS clients access to open

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Speaker 5: aiye models but can't at the moment.

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Speaker 4: Just take a listen.

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Speaker 3: I believe that we would love open ai models inside

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Speaker 3: of aws. Absolutely, it's we listen to our customers and

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Speaker 3: if that's something the customers want.

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Speaker 7: We're absolutely game.

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Speaker 3: Obviously, with the partnership, it takes multiple sources, and there's

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Speaker 3: probably some complexities in there, as you allude to, but

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Speaker 3: I think in the fullness of time as likely.

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Speaker 7: Is the case.

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Speaker 5: So there in lies some of the issue that maybe

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Speaker 5: the FTC is investigating this relationship with open Ai Microsoft

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Speaker 5: and whether it should be indeed broken open a little.

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Speaker 5: It seems as though Matt Garman is positive that it will.

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Speaker 5: Do you think that ultimately that be done by self

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Speaker 5: regulation or actual FTC regulation.

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Speaker 2: No, I think the FTC is going to take a

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Speaker 2: serious look at this relationship and the potential of that

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Speaker 2: relationship to foreclose other forms of competition other rivals. They're

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Speaker 2: going to take a very close look at the nature

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Speaker 2: of the agreement between open ai and Microsoft.

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Speaker 5: Do you think though, that a lot of these cloud

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Speaker 5: companies are having particular relationships with some of these very

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Speaker 5: powerful generative AI models. Is that something that's generally going

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Speaker 5: to be looked at across the board.

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Speaker 2: Yes, but it's always important to realize that Microsoft is dominant.

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Speaker 2: They're dominant in cloud computing, they're dominant in certain software categories,

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Speaker 2: vital software categories, and when the firm takes that dominance

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Speaker 2: and extends that dominance to other product markets and for

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Speaker 2: closes competition in those markets, that violates the antitrust laws.

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Speaker 5: I feel though AWS would have something to say about

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Speaker 5: as you're being all that dominant. They feel that they

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Speaker 5: have owned a lot of the market. I'm sure that

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Speaker 5: even other areas Oracle fields that they've got a key

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Speaker 5: state Google as well. Can you have broader provision less

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Speaker 5: oligopoly like cloud operations when this ultimately is incredibly expensive

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Speaker 5: to offer.

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Speaker 2: I think that's one of the considerations that's kept in

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Speaker 2: mind here. But we see many markets where there are

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Speaker 2: not contractual arrangements that for closed competition, where competition flourishes.

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Speaker 2: And it's specifically those arrangements like the arrangement between Microsoft

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Speaker 2: and open Ai that will receive in ten scrutiny. And

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Speaker 2: you know, especially because Microsoft is so dominant in cloud.

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Speaker 5: Computing and dominant in cybersecurity and in many ways they're

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Speaker 5: reporting is such that this investigation started because some of

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Speaker 5: the failings to do with cyber when it came to

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Speaker 5: federal provision is that what sparked all of this, David,

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Speaker 5: how do you think this is going to weather a

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Speaker 5: transition into a new administration?

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Speaker 2: First of all, that suggests one of the real advantages

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Speaker 2: of having a federal Trade Commission that deals with both

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Speaker 2: consumer protection issues. They are failure to provide cybersecurity adequately

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Speaker 2: and competition issues. I think this is an investigation that

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Speaker 2: won't lose any steam in a new Trump administration. The

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Speaker 2: kinds of legal issues here about when bundling is legal

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Speaker 2: and illegal. I think there's a pretty strong consensus between

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Speaker 2: Republican and Democratic and I try some forcers, so I

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Speaker 2: expect this investigation will go full throughout in the next administration.

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Speaker 5: David Balto, former Policy director of the Bureau of Competition

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Speaker 5: at the FTC, thank you for your time. Now coming up,

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Speaker 5: David Ellison is dying big changes to Paramount.

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Speaker 4: We're on that next. This has pretty big technology time

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Speaker 4: now for talking tech.

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Speaker 5: First up, big changes may be coming to Paramount Global.

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Speaker 5: According to sources, expected CEO David Ellison is exploring combining

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Speaker 5: Paramount's TV units, investing more into streaming, and overhauling its

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Speaker 5: top management. This is all expected to come when it's

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Speaker 5: merged with Skydance. It's finalized next year. Plus Meta is

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Speaker 5: looking towards nuclear energy to fuel its AI ambitions. The

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Speaker 5: parent company of Facebook is asking developers to submit proposals

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Speaker 5: to deliver one to four gigawatt's reactors, studying in early

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Speaker 5: twenty thirty. For scale, one gigawa of electricity is enough

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Speaker 5: to power seven and fifty thousand typical homes and millionaires.

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Speaker 5: Ab O'Neil's Iliad is set to sell half of its

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Speaker 5: data center business to French infrastructure fund INFRA via Capital.

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Speaker 4: Partners, and the company is in exclusive.

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Speaker 5: Talks to sell fifty percent stake in iLiad's Opcore for

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Speaker 5: total enterprise value of nine hundred and four million dollars.

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Speaker 5: Coming up plenty more when it comes to data centers.

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Speaker 5: My conversation with Amazon Web Services CEO Matt Garmon on

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Speaker 5: the company's major plans for AI. What's going to power it?

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Speaker 5: That's next? This is Blue Meg Technology. Welcome back to

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Speaker 5: Blue Meg Technology. I'm Caroline Hide, New York. A quick

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Speaker 5: check on these markets that are at new record highs.

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Speaker 5: The NASDAK, the S and P five hundred apples at

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Speaker 5: a record, Amazon's at a record.

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Speaker 4: You've got across the board.

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Speaker 5: The key companies that are coming out with earnings also

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Speaker 5: raising to new record highs Marvel coming out with its

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Speaker 5: numbers that beaten raise and we see it at.

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Speaker 4: A record high, and so is Salesforce.

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Speaker 5: So move on as the Nazaq one hundred goes up

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Speaker 5: nine tens percent, we in large part are being helped

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Speaker 5: by the latest numbers that out of CRM, Salesforce up

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Speaker 5: nine percent. Of course, its third quarter earnings looking strong.

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Speaker 5: This is his AI agent Force comes through with a

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Speaker 5: bang that adding thousand people to go out and sell

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Speaker 5: this in particular. But we're seeing eight percent growth in

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Speaker 5: their earnings as well in terms of revenue. Let's break

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Speaker 5: it all down with Bloomberg Intelligence analyst Anna rag Rana,

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Speaker 5: and I mean many were questioning the valuation the share

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Speaker 5: price of Salesforce going into this earnings report, but they

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Speaker 5: managed to vindicate it.

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Speaker 9: Yeah, Caroline, if you look at the results, the margin

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Speaker 9: number was above expectations, but other than that, everything else

442
00:22:55,000 --> 00:22:57,760
Speaker 9: was generally in line to what people were expecting. But

443
00:22:57,840 --> 00:23:00,560
Speaker 9: I think the real push is people are really buying

444
00:23:01,160 --> 00:23:05,359
Speaker 9: Mark Bennehoff's agent for story and the potential for that

445
00:23:05,600 --> 00:23:07,720
Speaker 9: down the road to add revenue. You know, it's not

446
00:23:07,760 --> 00:23:09,760
Speaker 9: going to add revenue for the next twelve months to

447
00:23:09,800 --> 00:23:12,040
Speaker 9: a point where it's going to move the needle. But

448
00:23:12,119 --> 00:23:14,760
Speaker 9: I think after that it should start to add, you know,

449
00:23:14,880 --> 00:23:17,280
Speaker 9: a good momentum to the overall revenue base.

450
00:23:17,600 --> 00:23:20,320
Speaker 5: Executive VP Mike Spence is saying it was quote a

451
00:23:20,359 --> 00:23:22,880
Speaker 5: good number of the amount of deals that they signed

452
00:23:23,119 --> 00:23:24,000
Speaker 5: with Agent Force.

453
00:23:24,080 --> 00:23:25,560
Speaker 4: What does a good numbers look like?

454
00:23:25,640 --> 00:23:28,000
Speaker 9: Do you think, yeah, on the call they said something

455
00:23:28,000 --> 00:23:30,160
Speaker 9: about two hundred deals or so. But at the same time,

456
00:23:30,200 --> 00:23:32,640
Speaker 9: those two hundred deals are not moving the needle when

457
00:23:32,640 --> 00:23:34,920
Speaker 9: it comes to the bookings data, and we don't think

458
00:23:34,960 --> 00:23:37,160
Speaker 9: that's going to happen. I think what you're seeing right

459
00:23:37,200 --> 00:23:39,800
Speaker 9: now is a lot of value realization by the street

460
00:23:39,840 --> 00:23:42,840
Speaker 9: that says, Okay, at the end of the day, Salesforce

461
00:23:42,920 --> 00:23:45,600
Speaker 9: is going to be a net beneficiary of GENNI. I

462
00:23:45,600 --> 00:23:49,200
Speaker 9: think this is the biggest discussion around almost the entire

463
00:23:49,280 --> 00:23:52,680
Speaker 9: software space, is what companies will benefit over the next

464
00:23:52,680 --> 00:23:55,239
Speaker 9: two to three years or longer and which one's going

465
00:23:55,280 --> 00:23:57,320
Speaker 9: to be you know, not so much. And I think

466
00:23:57,320 --> 00:24:00,280
Speaker 9: that's where salesforces people are getting convinced that, you know,

467
00:24:00,320 --> 00:24:02,600
Speaker 9: they have their act together because previously.

468
00:24:02,600 --> 00:24:05,080
Speaker 5: People are worried about that act, right arag We were

469
00:24:05,160 --> 00:24:08,320
Speaker 5: seeing a concern about Mark Beniov's desire to keep on

470
00:24:08,400 --> 00:24:11,919
Speaker 5: doing M and A, perhaps not thinking about profitability. They

471
00:24:12,000 --> 00:24:14,920
Speaker 5: made big layoffs, they've streamlined the business, but then they're

472
00:24:14,920 --> 00:24:17,720
Speaker 5: still splashing three and forty four million dollars on zoom

473
00:24:17,720 --> 00:24:19,159
Speaker 5: In's startup acquisition.

474
00:24:19,680 --> 00:24:21,800
Speaker 4: Do you still like them adding on tucking in when

475
00:24:21,800 --> 00:24:22,120
Speaker 4: they can.

476
00:24:23,119 --> 00:24:25,560
Speaker 9: Yeah, the small acquisitions don't bother me one bit because

477
00:24:25,560 --> 00:24:28,760
Speaker 9: that doesn't really impact the free cash flow. It's really

478
00:24:28,800 --> 00:24:31,600
Speaker 9: the big ones that worry because that's going to change

479
00:24:31,640 --> 00:24:34,679
Speaker 9: the momentum of the margin improvement. You know, we just

480
00:24:34,760 --> 00:24:37,080
Speaker 9: looked at it the day he announced that it's not

481
00:24:37,119 --> 00:24:38,479
Speaker 9: going to be any more M and A, it's going

482
00:24:38,520 --> 00:24:42,240
Speaker 9: to focus on margins. Just from that point till today,

483
00:24:42,680 --> 00:24:45,520
Speaker 9: their margins have gone up by ten percentage points. That's

484
00:24:45,560 --> 00:24:49,160
Speaker 9: a very big number by any standard, And frankly speaking,

485
00:24:49,160 --> 00:24:52,280
Speaker 9: when you look at a company like Microsoft or Oracle,

486
00:24:52,680 --> 00:24:54,760
Speaker 9: salesforce has a long way to go before it can

487
00:24:54,800 --> 00:24:57,679
Speaker 9: reach those numbers. So there is still more potential for

488
00:24:57,800 --> 00:25:00,640
Speaker 9: margin improvement. As long as they they can get their

489
00:25:00,720 --> 00:25:03,320
Speaker 9: organic growth rate up, you know, people will like it.

490
00:25:03,880 --> 00:25:06,640
Speaker 5: Operating margin I think coming in at about thirty three

491
00:25:06,680 --> 00:25:07,560
Speaker 5: point one percent.

492
00:25:07,680 --> 00:25:10,000
Speaker 4: And what of Microsoft, what of.

493
00:25:10,119 --> 00:25:14,280
Speaker 5: Competitors in this agent offering and co pilot offering that

494
00:25:14,320 --> 00:25:15,240
Speaker 5: we hear so much about.

495
00:25:16,600 --> 00:25:18,919
Speaker 9: So when you look at Salesforce, the two of their

496
00:25:18,960 --> 00:25:22,480
Speaker 9: biggest products are sales Cloud and service Cloud. Service Cloud

497
00:25:22,600 --> 00:25:25,399
Speaker 9: is a lot to depend on people who are looking at,

498
00:25:25,960 --> 00:25:29,399
Speaker 9: you know, back office and customer support functions. This is

499
00:25:29,440 --> 00:25:32,600
Speaker 9: where the agents are really going to benefit because think

500
00:25:32,640 --> 00:25:35,560
Speaker 9: about it, if you are calling a human to get

501
00:25:35,640 --> 00:25:38,280
Speaker 9: transaction done or taking care of your work, it's going

502
00:25:38,320 --> 00:25:40,840
Speaker 9: to cost the company or the end market, whether it's

503
00:25:40,840 --> 00:25:43,280
Speaker 9: an airline or a phone company, a lot of money.

504
00:25:43,680 --> 00:25:46,400
Speaker 9: If you can get that done through an automated chat

505
00:25:46,440 --> 00:25:49,840
Speaker 9: pot that can actually execute the operation for you, that

506
00:25:49,880 --> 00:25:53,000
Speaker 9: can change your phone plan without getting a human being involved,

507
00:25:53,080 --> 00:25:55,600
Speaker 9: that can return your stuff and refund you the money

508
00:25:55,840 --> 00:25:58,720
Speaker 9: before you know, without getting any human involved in it.

509
00:25:58,960 --> 00:26:01,400
Speaker 9: That's a very big cost benefit for the end customer.

510
00:26:01,680 --> 00:26:04,440
Speaker 9: And that's really where Salesforce is going right now.

511
00:26:04,520 --> 00:26:08,440
Speaker 5: Through meg Intelligence analyst Anna Ragrana, thank you so much.

512
00:26:08,720 --> 00:26:10,240
Speaker 4: Talking of application of AI.

513
00:26:10,600 --> 00:26:13,879
Speaker 5: Amazon It's trading at a record high today after its

514
00:26:13,920 --> 00:26:18,240
Speaker 5: cloud divisions annual Reinvent conference and it rolled out there yesterday.

515
00:26:18,520 --> 00:26:21,199
Speaker 5: Powerful new chip arrays a large language model to compete

516
00:26:21,240 --> 00:26:25,159
Speaker 5: with leading rivals. Mark Garman Awico joined us after his

517
00:26:25,200 --> 00:26:28,720
Speaker 5: stage appearance and we started discussing the massive cluster of

518
00:26:28,800 --> 00:26:32,439
Speaker 5: homegrown chips. He says, we'll quintuple the processing path for

519
00:26:32,480 --> 00:26:33,960
Speaker 5: its AI partner, Anthropic.

520
00:26:33,960 --> 00:26:34,520
Speaker 4: Take a listen.

521
00:26:35,359 --> 00:26:38,800
Speaker 3: That is the first innovation is our Amazon designed custom

522
00:26:38,840 --> 00:26:44,200
Speaker 3: silicon that gives us really unparalleled performance for generative AIA capabilities.

523
00:26:44,400 --> 00:26:47,200
Speaker 3: And then we build these together with high performance networking

524
00:26:47,200 --> 00:26:49,800
Speaker 3: that we also build in house. And then of course

525
00:26:49,800 --> 00:26:53,680
Speaker 3: they'll be cooling and heating and power that we need

526
00:26:53,960 --> 00:26:55,919
Speaker 3: to go to go build the data centers. But it

527
00:26:55,960 --> 00:26:58,480
Speaker 3: really starts with that silicon down at the level, and

528
00:26:58,520 --> 00:27:01,199
Speaker 3: we innovate on the entire back of AI to make

529
00:27:01,240 --> 00:27:03,840
Speaker 3: sure that we can control everything that goes into those clusters.

530
00:27:04,040 --> 00:27:05,639
Speaker 4: Can you talk to us a little bit compare and

531
00:27:05,680 --> 00:27:06,520
Speaker 4: contrast here.

532
00:27:06,720 --> 00:27:10,040
Speaker 5: This is about less dependency on Nvidio GPUs too many

533
00:27:10,040 --> 00:27:13,439
Speaker 5: ways doing an alternative for your clients. What sort of

534
00:27:13,480 --> 00:27:16,000
Speaker 5: cost saving will clients get? What sort of energy and

535
00:27:16,040 --> 00:27:17,120
Speaker 5: efficiency will they get?

536
00:27:18,400 --> 00:27:18,640
Speaker 7: Yeah?

537
00:27:18,640 --> 00:27:20,200
Speaker 3: Well, first of all, I think we like to think

538
00:27:20,240 --> 00:27:22,639
Speaker 3: of it as a supplement to in video GPUs and

539
00:27:22,720 --> 00:27:25,280
Speaker 3: Vidia has a fantastic product that team has done an

540
00:27:25,320 --> 00:27:28,439
Speaker 3: outstanding job executing, and we think that the vast majority

541
00:27:28,480 --> 00:27:30,400
Speaker 3: of workloads are going to continue to run in VideA

542
00:27:30,400 --> 00:27:33,320
Speaker 3: processors for a long time. But customers want choice, and

543
00:27:33,320 --> 00:27:36,120
Speaker 3: they want choice that can give them some lower cost options,

544
00:27:36,240 --> 00:27:39,160
Speaker 3: and we think that for certain workloads, for many workloads,

545
00:27:39,160 --> 00:27:42,639
Speaker 3: Trainium two can give customers thirty to forty percent cost

546
00:27:42,640 --> 00:27:47,040
Speaker 3: performance benefits over today's GPU powered instances. And so we

547
00:27:47,080 --> 00:27:49,520
Speaker 3: think that that's a huge win for customers, particularly as

548
00:27:49,520 --> 00:27:52,280
Speaker 3: they're looking to lower the cost from Generator I workloads.

549
00:27:52,560 --> 00:27:55,040
Speaker 3: But we'll be great partners with Nvidia and continue to

550
00:27:55,119 --> 00:27:57,720
Speaker 3: lean in on building great technologies together with them for

551
00:27:57,760 --> 00:27:58,240
Speaker 3: a long time.

552
00:27:58,640 --> 00:28:02,040
Speaker 5: Train to Trainium two available, Training three in the works,

553
00:28:02,080 --> 00:28:05,000
Speaker 5: and all of this is as Nvidia at the moment,

554
00:28:05,240 --> 00:28:08,399
Speaker 5: it's estimated has about ninety five percent market shared. Do

555
00:28:08,440 --> 00:28:09,879
Speaker 5: you agree with that sort of number they have and

556
00:28:09,960 --> 00:28:11,480
Speaker 5: what sort of area do you think that that will

557
00:28:11,480 --> 00:28:12,000
Speaker 5: come down to?

558
00:28:13,119 --> 00:28:14,919
Speaker 3: Yeah, I mean, I think it's probably higher than that.

559
00:28:14,920 --> 00:28:17,439
Speaker 3: I think that the vast majority of workloads in generative

560
00:28:17,480 --> 00:28:22,399
Speaker 3: AI today run on in Vidia technology and they've absolutely

561
00:28:22,480 --> 00:28:24,760
Speaker 3: been the leaders in that space. But we do think

562
00:28:24,800 --> 00:28:27,280
Speaker 3: we hear from customers that they want choice, and just

563
00:28:27,359 --> 00:28:30,560
Speaker 3: with our processors where we're type partners with Intel and

564
00:28:30,600 --> 00:28:33,120
Speaker 3: with AMD, but we decided to go build a general

565
00:28:33,160 --> 00:28:36,359
Speaker 3: purpose processor called Graviton, and it's been hugely successful with

566
00:28:36,400 --> 00:28:38,960
Speaker 3: our customers. But we also provide lots of Intel and

567
00:28:39,040 --> 00:28:42,120
Speaker 3: lots of AMD processors in our cloud today and those

568
00:28:42,160 --> 00:28:45,800
Speaker 3: businesses continue to grow. So I expect that our usage

569
00:28:45,800 --> 00:28:49,040
Speaker 3: of Nvidia will continue to grow from our customers and

570
00:28:49,520 --> 00:28:51,600
Speaker 3: that choice is really going to be powerful. And as

571
00:28:51,640 --> 00:28:54,600
Speaker 3: you see this explosion of generative AI usage, I think

572
00:28:54,640 --> 00:28:57,160
Speaker 3: there's going to be plenty of business for multiple different

573
00:28:57,160 --> 00:28:58,160
Speaker 3: people to be successful.

574
00:28:58,280 --> 00:29:00,880
Speaker 5: I keep partners Intel. How concerned have you've been about

575
00:29:00,880 --> 00:29:01,640
Speaker 5: the change at the top?

576
00:29:03,200 --> 00:29:03,760
Speaker 7: Oh, it's okay.

577
00:29:03,880 --> 00:29:04,800
Speaker 3: I wish pat the best.

578
00:29:05,200 --> 00:29:06,320
Speaker 7: You know, he's no patent.

579
00:29:06,400 --> 00:29:09,360
Speaker 3: He's been a good partner of ours. But we've been

580
00:29:09,360 --> 00:29:11,440
Speaker 3: partners with Intel for a long time. It's been eighteen

581
00:29:11,480 --> 00:29:15,040
Speaker 3: years since we launched our first Intel instance when AWS

582
00:29:15,080 --> 00:29:17,760
Speaker 3: and EC two first launched, and we'll continue to be

583
00:29:17,840 --> 00:29:20,200
Speaker 3: great partners with Intel, and they have a great technology

584
00:29:20,200 --> 00:29:23,720
Speaker 3: team there and we look forward to continuing to roll

585
00:29:23,760 --> 00:29:25,920
Speaker 3: out the latest technologies from Intel for our customers to

586
00:29:25,920 --> 00:29:27,320
Speaker 3: be able to use, and he've been.

587
00:29:27,320 --> 00:29:29,880
Speaker 5: Continuing to roll out, as you say in video offerings.

588
00:29:30,240 --> 00:29:32,840
Speaker 5: Last time you're on, we're talking about Blackwell. Of course,

589
00:29:32,880 --> 00:29:36,560
Speaker 5: many have been frustrated, perhaps by some slowness to market there.

590
00:29:36,600 --> 00:29:39,320
Speaker 5: When do you anticipate that Blackwell will be unfolding? And

591
00:29:39,880 --> 00:29:42,720
Speaker 5: how difficult has it been to ensure the supply side

592
00:29:42,760 --> 00:29:43,040
Speaker 5: is there?

593
00:29:44,600 --> 00:29:47,120
Speaker 3: Well, They've obviously had some manufacturing things that they're going through,

594
00:29:47,160 --> 00:29:48,720
Speaker 3: but we're very excited about it. I think the early

595
00:29:48,800 --> 00:29:52,720
Speaker 3: returns and the early looks at Blackwell look fantastic. We

596
00:29:52,760 --> 00:29:55,920
Speaker 3: expect almost a two and a half times gain in

597
00:29:55,960 --> 00:29:58,240
Speaker 3: the compute power that you get from Blackwell that we

598
00:29:58,280 --> 00:30:00,240
Speaker 3: saw from H one hundreds, and so I think it'll

599
00:30:00,280 --> 00:30:03,120
Speaker 3: be a really material jump for customers once we get

600
00:30:03,160 --> 00:30:05,640
Speaker 3: those out, and you know, I think those will be

601
00:30:05,680 --> 00:30:08,600
Speaker 3: early next year, and we're excited about putting them into

602
00:30:08,600 --> 00:30:10,360
Speaker 3: gun customers hands, and we'll get them out there as

603
00:30:10,360 --> 00:30:11,240
Speaker 3: soon as they're available.

604
00:30:11,840 --> 00:30:16,520
Speaker 5: Investors, though they find it wild, this whole frenemy existence

605
00:30:16,560 --> 00:30:20,600
Speaker 5: that's going on. Do you truly think that investors here think, oh,

606
00:30:20,800 --> 00:30:23,880
Speaker 5: we want to see in video dependency as well as

607
00:30:23,920 --> 00:30:27,320
Speaker 5: AWS having its own offerings. Is that something you think

608
00:30:27,360 --> 00:30:30,280
Speaker 5: everyone can swallow or do you think ultimately there will

609
00:30:30,320 --> 00:30:33,680
Speaker 5: be a broadening out other than just in video winning all.

610
00:30:35,920 --> 00:30:37,880
Speaker 3: Look, I do think it's a partner if you think

611
00:30:37,880 --> 00:30:41,120
Speaker 3: about AWS. We started from the very beginning thinking about

612
00:30:41,120 --> 00:30:44,360
Speaker 3: this partnership mindset, and we built the entire business around

613
00:30:44,400 --> 00:30:47,239
Speaker 3: AWS thinking about how AWS would have services and our

614
00:30:47,280 --> 00:30:49,880
Speaker 3: partners would have services, and that there's plenty of space

615
00:30:49,920 --> 00:30:52,680
Speaker 3: for all of us to really grow and build our businesses.

616
00:30:53,120 --> 00:30:56,320
Speaker 3: And that is true for software providers, it's true for

617
00:30:56,920 --> 00:30:59,520
Speaker 3: service providers, and it's true for technology providers. And so

618
00:30:59,760 --> 00:31:02,560
Speaker 3: I think that we've proven time and time again over

619
00:31:02,560 --> 00:31:05,120
Speaker 3: the last eighteen years that AWS can have products and

620
00:31:05,120 --> 00:31:07,400
Speaker 3: our partners can have products, and then as we make

621
00:31:07,440 --> 00:31:11,479
Speaker 3: them all available, that the whole pie gets bigger. And

622
00:31:11,520 --> 00:31:13,320
Speaker 3: so I think there's plenty of opportunity for both. And

623
00:31:13,320 --> 00:31:15,360
Speaker 3: so it really isn't I think it makes for a

624
00:31:15,400 --> 00:31:18,320
Speaker 3: fun narrative that it's either or, But we're great partners

625
00:31:18,320 --> 00:31:20,040
Speaker 3: with n Video. We will continue to be, and this

626
00:31:20,080 --> 00:31:21,640
Speaker 3: is all about making the pie get bigger.

627
00:31:23,040 --> 00:31:27,680
Speaker 5: Fighting the Frenemi discussion my conversation with AWSCO Matt Garmon

628
00:31:28,120 --> 00:31:30,880
Speaker 5: Coming up plenty more on AI and the investment opportunities.

629
00:31:30,920 --> 00:31:34,200
Speaker 5: Liney Lyman underscore VC managing partner can be joining us.

630
00:31:34,840 --> 00:31:45,960
Speaker 4: This is really my technology