Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: From the Heart where Innovation, money and power Collie in
Speaker 2: Silicon Valley n Beyond.
Speaker 3: This is Bloomberg Technology with Caroline Hyde and Ed lud Love.
Speaker 4: Welcome to Bloomberg Technology.
Speaker 5: I'm Caroline Hyde in Bloomberg's World headquarters in New York.
Speaker 5: There is a lot to get to this hour, but
Speaker 5: let's start with some of the political turmoil in France,
Speaker 5: that no confidence vote that could topple the country's current
Speaker 5: government Blouemost. Caroline Conan is there for the latest in
Speaker 5: Paris debate finally getting underway. But for our global audience
Speaker 5: and our technology audience, Caroline, for listen to.
Speaker 4: What we expect in the next hour or so. So
Speaker 4: the debate just started.
Speaker 6: Here behind me inside the National Assembly, you've got Erie
Speaker 6: Cokrel at the moment speaking, is the leader of the
Speaker 6: far left group in the National Assembly, and this is
Speaker 6: the group that is proposing this motion of no confidence
Speaker 6: in order to topple Michelle Bannie's governments and make Michelle
Speaker 6: Bannie's government collapse. That vote could happen in the next
Speaker 6: couple of hours, and we're pretty sure of the outcome
Speaker 6: as we speak given the national value. So the far
Speaker 6: right party of Marin Lupen has said that they will
Speaker 6: back this motion of no confidence even if it was
Speaker 6: presented by the far left, So the two extremes joining
Speaker 6: forces in order to overthrow this Banne government.
Speaker 5: We can see the impact on the euro, we've seen
Speaker 5: the impact on the price of French debt. But for
Speaker 5: those that are running businesses for a technology audience that
Speaker 5: cares about the French technology startups, for example, what does
Speaker 5: a change or collapsing government mean for them?
Speaker 6: Of course, the main question is that we're going to
Speaker 6: have a twenty two twenty five budget and what is
Speaker 6: left in this budget. There will probably be some special
Speaker 6: laws in order to roll over the twenty twenty four budget, but.
Speaker 4: That means a lot of help and.
Speaker 6: For example, a reduction of contributions from companies in order
Speaker 6: to hire lowest income employees. These are not going to
Speaker 6: be automatically indexed on inflation, meaning that it's going to
Speaker 6: be harder. It's going to cost more for those companies
Speaker 6: to hire some of those employees. So technically, in the
Speaker 6: short term it's a little unclear. But in the longer term,
Speaker 6: if there is still no budget over the next few
Speaker 6: weeks before the end of December, that will have a
Speaker 6: big impact on companies.
Speaker 4: That will because we'll.
Speaker 6: Have this twenty twenty four budget saying the same we
Speaker 6: had any increase.
Speaker 5: Carolyn, We thank you so much for the latest from Paris.
Speaker 5: We'll come back to you on any of the breaking news,
Speaker 5: but first let's kind.
Speaker 4: Of check on the markets, because despite.
Speaker 5: Political termol worldwide, it fails often. ZAC is at a
Speaker 5: record high, the S and P is at a record high,
Speaker 5: and we have tech to thank for it.
Speaker 4: In large part.
Speaker 5: We see Salesforce also at a record high, up eight
Speaker 5: point seven percent off the back of its earnings, really
Speaker 5: managing to pull out the power from its AI agent
Speaker 5: force focus.
Speaker 4: We're looking at Octa, this is.
Speaker 5: Application software company also rising at one point up more
Speaker 5: than thirteen percent. We're now up five percent on the
Speaker 5: back of a beaten raise for its earnings after the
Speaker 5: bell yesterday. And Marvel Technology it's now up some twenty percent,
Speaker 5: sawing its world to a record high. This is the
Speaker 5: chip company had better than expected results and stronger earnings
Speaker 5: forecast as well. What's notable is also Marvell's CEO Matt
Speaker 5: Murphy said on the call that he is committed to
Speaker 5: the company despite being a potential contender. We understand to
Speaker 5: lead Intel and that is where we want to go next.
Speaker 5: Because Intel's search for a new CEO is the focus
Speaker 5: for many at the moment, and is it going to
Speaker 5: be focusing heavily on outsiders. The chip maker is considering
Speaker 5: candidates such as Matt Murphy, but also the former Cadence
Speaker 5: Design System CEO Lip Bhutan, who actually recently quit the
Speaker 5: board of Intel, as bringing in Bloomberg's Ryan Gold for
Speaker 5: more Ryan. Is it surprising to see Intel not go
Speaker 5: to its own bench.
Speaker 1: Carol, I think it is when you think this is
Speaker 1: the first time since nineteen sixty eight when Intel was founded,
Speaker 1: that they will actually sort of think about looking outside.
Speaker 1: I think that kind of gets to the heart of
Speaker 1: what it means to be in semi conductors right now.
Speaker 1: Semi Conductors takes a lot of expertise, It takes a
Speaker 1: load of nows and you know, some of the decisions
Speaker 1: that were made excuse me, over the years, you know,
Speaker 1: and the pet even the Bob Swan Krasnich before him.
Speaker 1: You know, these are decisions that will pay if you
Speaker 1: make them, might in ten years time.
Speaker 4: That's how long it takes.
Speaker 1: To get some things over the line in semiconductors and
Speaker 1: to go out and think about who your next CEO is.
Speaker 1: It's not only easy toss.
Speaker 5: Well, many are going to look at Pat Keilsinger didn't
Speaker 5: actually get that much time. He came from VMware EMC,
Speaker 5: but he was in many ways an Intel life though
Speaker 5: he had started his career there. And what therefore is
Speaker 5: really the attractiveness of this role at the moment, Marvel,
Speaker 5: for example, Matt Murphy doing a great job showing the
Speaker 5: power of a strategy. Is it not going to be
Speaker 5: that appetizing a role to be taking on right now?
Speaker 1: I think it's a it could be a poison chalice.
Speaker 1: I think some people do you as a poison cholie,
Speaker 1: just given the challenges because when you think about am
Speaker 1: dference and it's a big rival to Intel. It made
Speaker 1: the decision to go Fablus years and years ago. Intel
Speaker 1: is still you know, still a fab chip company.
Speaker 4: It'll be more of a fast.
Speaker 1: Exactly, and you know rival t SMC and we all
Speaker 1: know how that went. So whoever comes in has a
Speaker 1: massive challenge on their hands. That said, though you know
Speaker 1: the fact that we were probably sid them at Murphy
Speaker 1: is being considered, lip bout ten being considered. Let's remember
Speaker 1: that lip Boo is a big advocate for you know,
Speaker 1: making Intel more sort of industrially manufacturing sound, so you
Speaker 1: know that could be interesting. But you know there are
Speaker 1: many others too, because we're told, for instance, when we
Speaker 1: talk to sources that anyone who puts their hand up
Speaker 1: who has a remote degree of expertise in semiconductors will
Speaker 1: likely be considered. And you know, I can tell you
Speaker 1: that Spencer Stewart that's running the process to higher than UCO.
Speaker 1: Right now, they're saying that we're probably going to look
Speaker 1: for four or five candidates and then shortliss to one
Speaker 1: to two.
Speaker 4: Which can we get a timeframe?
Speaker 1: I think they're looking to this as soon as.
Speaker 4: Possible, Ran keeping us up to speed. We thank you
Speaker 4: Rangel there. Meanwhile, let's just.
Speaker 5: Get a deeper look at the chip space tech market
Speaker 5: more broadly, turning one of t RO prices with US
Speaker 5: managing the Science and Technology Fund more than nine billion
Speaker 5: dollars under management there and basically, you look like you're
Speaker 5: in every chip name apart from Intel in many ways, Tony,
Speaker 5: is that right? And and how are you looking at
Speaker 5: the ecosystem and its strength.
Speaker 7: Yeah, I think that's a great question.
Speaker 8: You know, when you look at our holdings, we currently
Speaker 8: are focused on the compute aspect of things, and so
Speaker 8: looking at AI, you know in video is a big
Speaker 8: holding as well as Marvell and Broadcom.
Speaker 7: On my view is that the compute.
Speaker 8: Tam is growing significantly as the foundational models are kind
Speaker 8: of growing exponentially every year, and so the chip Coneys
Speaker 8: that had the scale, the expertise of tape out the
Speaker 8: leading edge, you know, are I think going to be
Speaker 8: advantageous in terms of capturing this compute TAM. So I think,
Speaker 8: you know, I like the space long term. But you know,
Speaker 8: we are selective in our in our holdings here, you know,
Speaker 8: specifically those three especially well.
Speaker 5: Let's talk about Marvel for example, would it be a
Speaker 5: worry as the leader did jump ship to Intel.
Speaker 8: Well, I think Matt Murphy has created created a ton
Speaker 8: of value over the years. You look at when they
Speaker 8: picked it up, it was in the sub ten billion
Speaker 8: dollar mark cap, and he's over the years, I've done
Speaker 8: a lot of great m and A and capital allocation,
Speaker 8: spun businesses off, acquired a world class custom team that
Speaker 8: is right now delivering a lot of AI custom uh
Speaker 8: compute ships for like the likes of Amazon, for example,
Speaker 8: and so you know, I think that it would be
Speaker 8: a concern if you jump ship. I do think it's
Speaker 8: it's uh, you know, He's put a lot of work
Speaker 8: in to Marvell.
Speaker 7: He's got a.
Speaker 8: Great team there and they're kind of firing on all
Speaker 8: cylinders coming out of the last few years. So you know,
Speaker 8: from my perspective, it seems like he does have a
Speaker 8: lot of good reasons.
Speaker 7: To stay at Marvell.
Speaker 8: And so I'm you know, I'm taking his word what
Speaker 8: he said last night kind of face value here.
Speaker 5: Looking at your top ten holdings, Marvel is one of
Speaker 5: them at the end of October is about two percent
Speaker 5: of the fund. The top holding is in video, as
Speaker 5: you mentioned. Interestingly, we had as CEO Matt Garman on
Speaker 5: the show Well on the pro across our network yesterday
Speaker 5: and we're going to be playing out a bit of
Speaker 5: that sound later. But Amazon is the best points contributor
Speaker 5: to the NASDAC. Today they had a whole raft of
Speaker 5: chip announcements. What does that mean for Invidia? What does
Speaker 5: it mean in terms of their own customers building custom silicon?
Speaker 8: Yeah, I think I don't think that story is anything new.
Speaker 8: It's just generally the evolution of compute. Essentially, you have
Speaker 8: the new workloads that need more general purpose in video chips,
Speaker 8: and then over time, as the workloads get bigger and
Speaker 8: they mature and stabilize, you kind of bring in the
Speaker 8: custom compute.
Speaker 7: And so, you know, I.
Speaker 8: Think the two kind of coexists, and they have co
Speaker 8: existed over the last decade, and so going forward, I
Speaker 8: think of them as kind of you know, kind of
Speaker 8: symbiotic relationship in some ways, and that it is just
Speaker 8: an evidence that the chipped kind of TAM is increasing
Speaker 8: in the compute TAM, and the demands continue to increase
Speaker 8: because you the workloads are argating to be so big,
Speaker 8: you it, then it makes sense to have a custom chip.
Speaker 8: But you know, what's what's special is that, like you know,
Speaker 8: previously kind of five ten years ago, we thought AI
Speaker 8: would just be you know, subject to just only like
Speaker 8: identifying what's a cat and what's not a cat.
Speaker 7: I can mentioned. So now it's like.
Speaker 8: Transformed into something that we no one could have thought
Speaker 8: about or predicted.
Speaker 7: So, you know, I think that it's just we've had
Speaker 7: this debate.
Speaker 8: Before of like but I think what you've seen is
Speaker 8: that both kind of Nvidia and the custom chip providers
Speaker 8: have done well as the TAMA has increased.
Speaker 5: I am not a cat forever to be part of
Speaker 5: Internet's story. What then, about in Vidia's valuation at these
Speaker 5: levels You're talking about how finally we're getting the return
Speaker 5: on investment from an application layer perspective of AI. We're
Speaker 5: actually using it in our everyday life. While work life
Speaker 5: can in video grow in terms of its own valuation,
Speaker 5: Have we priced it all in?
Speaker 7: Yeah, I think that's a great question.
Speaker 8: I mean, three point three four trillion dollars that's marketcap
Speaker 8: right now is pretty astounding. If you look at like
Speaker 8: the profitability in the in the free cash flow, I mean,
Speaker 8: it's kind of pretty reasonable, like thirty thirty five times
Speaker 8: forward earnings, and so while the stock price has gone
Speaker 8: up a lot, I think that when you look at evaluation,
Speaker 8: it's not an extreme at one hundred times earnings, which
Speaker 8: I think that says the market You're saying there is
Speaker 8: a little bit of concern of like how sustainable the
Speaker 8: numbers are, whether profitability can continue to be at these levels,
Speaker 8: and so, you know, I think the valuation in that
Speaker 8: face value is actually relatively moderate. You know, given its
Speaker 8: history and its growth, it.
Speaker 5: Is extraordinary just to take a step back and think
Speaker 5: that on this day we're at a record high for
Speaker 5: the NAST, that one hundred apples at a record high.
Speaker 5: We've got Nvidia continuing to rise in terms of market cap,
Speaker 5: and then you have the salesforce numbers and its own
Speaker 5: record high in terms of share price today, what do
Speaker 5: you make of their application of AI agent force and
Speaker 5: whether actually it's going to make the more profitable as
Speaker 5: well as getting revenue off the ground.
Speaker 8: Yeah, I think it's an exciting time in tech in
Speaker 8: that you know, AI could be this next productivity revolution
Speaker 8: and so, you know, kind of uncapping labor as we
Speaker 8: know it with digital agents and digital labor that essentially
Speaker 8: doesn't need a sleep, doesn't need to take breaks, operate
Speaker 8: twenty four to seven, and can operate alongside humans.
Speaker 7: And so I think that's what's really exciting.
Speaker 8: And all these software companies are now kind of seeing
Speaker 8: the opportunity and going after and everyone wants to be
Speaker 8: the platform where you soar your data, you operate and
Speaker 8: so whether that's Mirosoft Service now you know, Salesforce, like
Speaker 8: I think it's a bigger opportunity. And so we've kind
Speaker 8: of seen, you know, the first year of chativity or
Speaker 8: to be dominated by the chip companies like Invidia dominate
Speaker 8: infrastructure layer and so now I think that we're seeing
Speaker 8: it on the appware, which is really exciting because you
Speaker 8: need to see it in the appwere for kind of
Speaker 8: the chip companies to continue doing well, and you know,
Speaker 8: I think we are kind of seeing that in the
Speaker 8: last kind of earning season.
Speaker 5: Get we've seen that shift, as you say, movement from
Speaker 5: all in on chips then shifting into software. But boy,
Speaker 5: is it playing out in some of the valuations. I'm
Speaker 5: looking at Palenteer training at one hundred and eighty times
Speaker 5: future earnings that had been the darling of the AI story.
Speaker 5: Will other companies rip to to get to those sorts
Speaker 5: of valuation levels or is Palenteers overdone as well? You
Speaker 5: talk about how are at this crucial moment where AI
Speaker 5: is going to disrupt the workforce, But I feel that
Speaker 5: the market's been trying to price that in for quite
Speaker 5: a while.
Speaker 7: Yeah.
Speaker 8: Absolutely, and I think that not every company can be
Speaker 8: like what Paluneer is doing. I think to do AI
Speaker 8: is really really hard, and they've been the AI leader
Speaker 8: for the last decade, and I think I think of
Speaker 8: them bringing AI to the government and the the the enterprise,
Speaker 8: and so I think what's special about them is that
Speaker 8: they've got this like very centralized ontology for AI, and
Speaker 8: then they can kind of customize that for clients and
Speaker 8: clients can build on that.
Speaker 7: So I think them as like a platform.
Speaker 8: And you think about what the United States government is
Speaker 8: trying to doing now is to be more efficient, and
Speaker 8: part of that is bringing AI and technology to automate
Speaker 8: things and to modernize people's peoples are processing and data.
Speaker 8: And so I don't think every company can be like Puenteer.
Speaker 8: I think there's like some special ones in kind of
Speaker 8: the AI software kind of madcaps area, like you know,
Speaker 8: kind of like app love in for example, or AX,
Speaker 8: and I like, you know, where there's like specific vertical
Speaker 8: application where AI can be applied and really drive a
Speaker 8: lot of automation and in intelligence.
Speaker 5: I love that you take us out to some of
Speaker 5: the different names as well. Tenuang of t row Price
Speaker 5: brilliant to have you one.
Speaker 4: Thank you.
Speaker 5: Last week, Bloomberg reported that the FTC is investigating into Microsoft,
Speaker 5: which is focusing on how the tech Giant is bundling
Speaker 5: its Windows operating system with other software as well as
Speaker 5: its dominance in cybersecurity. Now reports from the Information are
Speaker 5: saying that the agency is asking about Microsoft steel with
Speaker 5: open Ai, which grants the course the cloud giant exclusive
Speaker 5: right to run the startup models on the cloud servers, as.
Speaker 4: Well as of the company's revenue and trust.
Speaker 5: Lawyer David Belto shows us now he previously worked as
Speaker 5: former policy director of the FTC's Bureau of Competition, someone
Speaker 5: who's well versed in how long these.
Speaker 4: Investigations could go on and with what right they take.
Speaker 5: So the way which the FDC is pursuing Microsoft, does
Speaker 5: it seem significant to you?
Speaker 2: I think it's very important. You know, that Microsoft case
Speaker 2: brought by the Department of Justice in the late nineteen
Speaker 2: nineties was critical to the expansion and growth of the Internet.
Speaker 2: Many of the things that we benefit from in competition
Speaker 2: on the Internet are specifically because of that earlier case.
Speaker 5: What's interesting is, of course we've heard back from the
Speaker 5: Microsoft Deputy General Council Ruma Ali, who put on LinkedIn
Speaker 5: saying on behalf of Microsoft, the FDC Inspector General to
Speaker 5: investigate whether the FDC management improperly leaked confidential information about
Speaker 5: a potential anti trust investigation. How do you see these
Speaker 5: sorts of investigations involving and becoming publicly known before Indeed,
Speaker 5: Microsoft has a chance to ultimately lead the way here.
Speaker 2: I'm extraordinarily skeptical about whether or not the agency would
Speaker 2: there would be some kind of leak from the agency.
Speaker 2: That's extraordinarily unusual. Third parties, however, who receive civil investigative
Speaker 2: demands can disclose whatever they want, and maybe this is
Speaker 2: a situation where one of those parties disclosed information to
Speaker 2: the press about the requests it had received from the TC.
Speaker 4: Of course, this is wide ranging.
Speaker 5: It would see Bloomberg initially reporting on how it's going
Speaker 5: to be focusing on the way they intertwine their operating
Speaker 5: system and also their dominance and cybersecurity. Now the information
Speaker 5: talking about the open Ai Microsoft deal, I want to
Speaker 5: just take a listen to a conversation I have with
Speaker 5: the AWS CEO yesterday, Matt Garmon talking about how he'd
Speaker 5: like to offer his own AWS clients access to open
Speaker 5: aiye models but can't at the moment.
Speaker 4: Just take a listen.
Speaker 3: I believe that we would love open ai models inside
Speaker 3: of aws. Absolutely, it's we listen to our customers and
Speaker 3: if that's something the customers want.
Speaker 7: We're absolutely game.
Speaker 3: Obviously, with the partnership, it takes multiple sources, and there's
Speaker 3: probably some complexities in there, as you allude to, but
Speaker 3: I think in the fullness of time as likely.
Speaker 7: Is the case.
Speaker 5: So there in lies some of the issue that maybe
Speaker 5: the FTC is investigating this relationship with open Ai Microsoft
Speaker 5: and whether it should be indeed broken open a little.
Speaker 5: It seems as though Matt Garman is positive that it will.
Speaker 5: Do you think that ultimately that be done by self
Speaker 5: regulation or actual FTC regulation.
Speaker 2: No, I think the FTC is going to take a
Speaker 2: serious look at this relationship and the potential of that
Speaker 2: relationship to foreclose other forms of competition other rivals. They're
Speaker 2: going to take a very close look at the nature
Speaker 2: of the agreement between open ai and Microsoft.
Speaker 5: Do you think though, that a lot of these cloud
Speaker 5: companies are having particular relationships with some of these very
Speaker 5: powerful generative AI models. Is that something that's generally going
Speaker 5: to be looked at across the board.
Speaker 2: Yes, but it's always important to realize that Microsoft is dominant.
Speaker 2: They're dominant in cloud computing, they're dominant in certain software categories,
Speaker 2: vital software categories, and when the firm takes that dominance
Speaker 2: and extends that dominance to other product markets and for
Speaker 2: closes competition in those markets, that violates the antitrust laws.
Speaker 5: I feel though AWS would have something to say about
Speaker 5: as you're being all that dominant. They feel that they
Speaker 5: have owned a lot of the market. I'm sure that
Speaker 5: even other areas Oracle fields that they've got a key
Speaker 5: state Google as well. Can you have broader provision less
Speaker 5: oligopoly like cloud operations when this ultimately is incredibly expensive
Speaker 5: to offer.
Speaker 2: I think that's one of the considerations that's kept in
Speaker 2: mind here. But we see many markets where there are
Speaker 2: not contractual arrangements that for closed competition, where competition flourishes.
Speaker 2: And it's specifically those arrangements like the arrangement between Microsoft
Speaker 2: and open Ai that will receive in ten scrutiny. And
Speaker 2: you know, especially because Microsoft is so dominant in cloud.
Speaker 5: Computing and dominant in cybersecurity and in many ways they're
Speaker 5: reporting is such that this investigation started because some of
Speaker 5: the failings to do with cyber when it came to
Speaker 5: federal provision is that what sparked all of this, David,
Speaker 5: how do you think this is going to weather a
Speaker 5: transition into a new administration?
Speaker 2: First of all, that suggests one of the real advantages
Speaker 2: of having a federal Trade Commission that deals with both
Speaker 2: consumer protection issues. They are failure to provide cybersecurity adequately
Speaker 2: and competition issues. I think this is an investigation that
Speaker 2: won't lose any steam in a new Trump administration. The
Speaker 2: kinds of legal issues here about when bundling is legal
Speaker 2: and illegal. I think there's a pretty strong consensus between
Speaker 2: Republican and Democratic and I try some forcers, so I
Speaker 2: expect this investigation will go full throughout in the next administration.
Speaker 5: David Balto, former Policy director of the Bureau of Competition
Speaker 5: at the FTC, thank you for your time. Now coming up,
Speaker 5: David Ellison is dying big changes to Paramount.
Speaker 4: We're on that next. This has pretty big technology time
Speaker 4: now for talking tech.
Speaker 5: First up, big changes may be coming to Paramount Global.
Speaker 5: According to sources, expected CEO David Ellison is exploring combining
Speaker 5: Paramount's TV units, investing more into streaming, and overhauling its
Speaker 5: top management. This is all expected to come when it's
Speaker 5: merged with Skydance. It's finalized next year. Plus Meta is
Speaker 5: looking towards nuclear energy to fuel its AI ambitions. The
Speaker 5: parent company of Facebook is asking developers to submit proposals
Speaker 5: to deliver one to four gigawatt's reactors, studying in early
Speaker 5: twenty thirty. For scale, one gigawa of electricity is enough
Speaker 5: to power seven and fifty thousand typical homes and millionaires.
Speaker 5: Ab O'Neil's Iliad is set to sell half of its
Speaker 5: data center business to French infrastructure fund INFRA via Capital.
Speaker 4: Partners, and the company is in exclusive.
Speaker 5: Talks to sell fifty percent stake in iLiad's Opcore for
Speaker 5: total enterprise value of nine hundred and four million dollars.
Speaker 5: Coming up plenty more when it comes to data centers.
Speaker 5: My conversation with Amazon Web Services CEO Matt Garmon on
Speaker 5: the company's major plans for AI. What's going to power it?
Speaker 5: That's next? This is Blue Meg Technology. Welcome back to
Speaker 5: Blue Meg Technology. I'm Caroline Hide, New York. A quick
Speaker 5: check on these markets that are at new record highs.
Speaker 5: The NASDAK, the S and P five hundred apples at
Speaker 5: a record, Amazon's at a record.
Speaker 4: You've got across the board.
Speaker 5: The key companies that are coming out with earnings also
Speaker 5: raising to new record highs Marvel coming out with its
Speaker 5: numbers that beaten raise and we see it at.
Speaker 4: A record high, and so is Salesforce.
Speaker 5: So move on as the Nazaq one hundred goes up
Speaker 5: nine tens percent, we in large part are being helped
Speaker 5: by the latest numbers that out of CRM, Salesforce up
Speaker 5: nine percent. Of course, its third quarter earnings looking strong.
Speaker 5: This is his AI agent Force comes through with a
Speaker 5: bang that adding thousand people to go out and sell
Speaker 5: this in particular. But we're seeing eight percent growth in
Speaker 5: their earnings as well in terms of revenue. Let's break
Speaker 5: it all down with Bloomberg Intelligence analyst Anna rag Rana,
Speaker 5: and I mean many were questioning the valuation the share
Speaker 5: price of Salesforce going into this earnings report, but they
Speaker 5: managed to vindicate it.
Speaker 9: Yeah, Caroline, if you look at the results, the margin
Speaker 9: number was above expectations, but other than that, everything else
Speaker 9: was generally in line to what people were expecting. But
Speaker 9: I think the real push is people are really buying
Speaker 9: Mark Bennehoff's agent for story and the potential for that
Speaker 9: down the road to add revenue. You know, it's not
Speaker 9: going to add revenue for the next twelve months to
Speaker 9: a point where it's going to move the needle. But
Speaker 9: I think after that it should start to add, you know,
Speaker 9: a good momentum to the overall revenue base.
Speaker 5: Executive VP Mike Spence is saying it was quote a
Speaker 5: good number of the amount of deals that they signed
Speaker 5: with Agent Force.
Speaker 4: What does a good numbers look like?
Speaker 9: Do you think, yeah, on the call they said something
Speaker 9: about two hundred deals or so. But at the same time,
Speaker 9: those two hundred deals are not moving the needle when
Speaker 9: it comes to the bookings data, and we don't think
Speaker 9: that's going to happen. I think what you're seeing right
Speaker 9: now is a lot of value realization by the street
Speaker 9: that says, Okay, at the end of the day, Salesforce
Speaker 9: is going to be a net beneficiary of GENNI. I
Speaker 9: think this is the biggest discussion around almost the entire
Speaker 9: software space, is what companies will benefit over the next
Speaker 9: two to three years or longer and which one's going
Speaker 9: to be you know, not so much. And I think
Speaker 9: that's where salesforces people are getting convinced that, you know,
Speaker 9: they have their act together because previously.
Speaker 5: People are worried about that act, right arag We were
Speaker 5: seeing a concern about Mark Beniov's desire to keep on
Speaker 5: doing M and A, perhaps not thinking about profitability. They
Speaker 5: made big layoffs, they've streamlined the business, but then they're
Speaker 5: still splashing three and forty four million dollars on zoom
Speaker 5: In's startup acquisition.
Speaker 4: Do you still like them adding on tucking in when
Speaker 4: they can.
Speaker 9: Yeah, the small acquisitions don't bother me one bit because
Speaker 9: that doesn't really impact the free cash flow. It's really
Speaker 9: the big ones that worry because that's going to change
Speaker 9: the momentum of the margin improvement. You know, we just
Speaker 9: looked at it the day he announced that it's not
Speaker 9: going to be any more M and A, it's going
Speaker 9: to focus on margins. Just from that point till today,
Speaker 9: their margins have gone up by ten percentage points. That's
Speaker 9: a very big number by any standard, And frankly speaking,
Speaker 9: when you look at a company like Microsoft or Oracle,
Speaker 9: salesforce has a long way to go before it can
Speaker 9: reach those numbers. So there is still more potential for
Speaker 9: margin improvement. As long as they they can get their
Speaker 9: organic growth rate up, you know, people will like it.
Speaker 5: Operating margin I think coming in at about thirty three
Speaker 5: point one percent.
Speaker 4: And what of Microsoft, what of.
Speaker 5: Competitors in this agent offering and co pilot offering that
Speaker 5: we hear so much about.
Speaker 9: So when you look at Salesforce, the two of their
Speaker 9: biggest products are sales Cloud and service Cloud. Service Cloud
Speaker 9: is a lot to depend on people who are looking at,
Speaker 9: you know, back office and customer support functions. This is
Speaker 9: where the agents are really going to benefit because think
Speaker 9: about it, if you are calling a human to get
Speaker 9: transaction done or taking care of your work, it's going
Speaker 9: to cost the company or the end market, whether it's
Speaker 9: an airline or a phone company, a lot of money.
Speaker 9: If you can get that done through an automated chat
Speaker 9: pot that can actually execute the operation for you, that
Speaker 9: can change your phone plan without getting a human being involved,
Speaker 9: that can return your stuff and refund you the money
Speaker 9: before you know, without getting any human involved in it.
Speaker 9: That's a very big cost benefit for the end customer.
Speaker 9: And that's really where Salesforce is going right now.
Speaker 5: Through meg Intelligence analyst Anna Ragrana, thank you so much.
Speaker 4: Talking of application of AI.
Speaker 5: Amazon It's trading at a record high today after its
Speaker 5: cloud divisions annual Reinvent conference and it rolled out there yesterday.
Speaker 5: Powerful new chip arrays a large language model to compete
Speaker 5: with leading rivals. Mark Garman Awico joined us after his
Speaker 5: stage appearance and we started discussing the massive cluster of
Speaker 5: homegrown chips. He says, we'll quintuple the processing path for
Speaker 5: its AI partner, Anthropic.
Speaker 4: Take a listen.
Speaker 3: That is the first innovation is our Amazon designed custom
Speaker 3: silicon that gives us really unparalleled performance for generative AIA capabilities.
Speaker 3: And then we build these together with high performance networking
Speaker 3: that we also build in house. And then of course
Speaker 3: they'll be cooling and heating and power that we need
Speaker 3: to go to go build the data centers. But it
Speaker 3: really starts with that silicon down at the level, and
Speaker 3: we innovate on the entire back of AI to make
Speaker 3: sure that we can control everything that goes into those clusters.
Speaker 4: Can you talk to us a little bit compare and
Speaker 4: contrast here.
Speaker 5: This is about less dependency on Nvidio GPUs too many
Speaker 5: ways doing an alternative for your clients. What sort of
Speaker 5: cost saving will clients get? What sort of energy and
Speaker 5: efficiency will they get?
Speaker 7: Yeah?
Speaker 3: Well, first of all, I think we like to think
Speaker 3: of it as a supplement to in video GPUs and
Speaker 3: Vidia has a fantastic product that team has done an
Speaker 3: outstanding job executing, and we think that the vast majority
Speaker 3: of workloads are going to continue to run in VideA
Speaker 3: processors for a long time. But customers want choice, and
Speaker 3: they want choice that can give them some lower cost options,
Speaker 3: and we think that for certain workloads, for many workloads,
Speaker 3: Trainium two can give customers thirty to forty percent cost
Speaker 3: performance benefits over today's GPU powered instances. And so we
Speaker 3: think that that's a huge win for customers, particularly as
Speaker 3: they're looking to lower the cost from Generator I workloads.
Speaker 3: But we'll be great partners with Nvidia and continue to
Speaker 3: lean in on building great technologies together with them for
Speaker 3: a long time.
Speaker 5: Train to Trainium two available, Training three in the works,
Speaker 5: and all of this is as Nvidia at the moment,
Speaker 5: it's estimated has about ninety five percent market shared. Do
Speaker 5: you agree with that sort of number they have and
Speaker 5: what sort of area do you think that that will
Speaker 5: come down to?
Speaker 3: Yeah, I mean, I think it's probably higher than that.
Speaker 3: I think that the vast majority of workloads in generative
Speaker 3: AI today run on in Vidia technology and they've absolutely
Speaker 3: been the leaders in that space. But we do think
Speaker 3: we hear from customers that they want choice, and just
Speaker 3: with our processors where we're type partners with Intel and
Speaker 3: with AMD, but we decided to go build a general
Speaker 3: purpose processor called Graviton, and it's been hugely successful with
Speaker 3: our customers. But we also provide lots of Intel and
Speaker 3: lots of AMD processors in our cloud today and those
Speaker 3: businesses continue to grow. So I expect that our usage
Speaker 3: of Nvidia will continue to grow from our customers and
Speaker 3: that choice is really going to be powerful. And as
Speaker 3: you see this explosion of generative AI usage, I think
Speaker 3: there's going to be plenty of business for multiple different
Speaker 3: people to be successful.
Speaker 5: I keep partners Intel. How concerned have you've been about
Speaker 5: the change at the top?
Speaker 7: Oh, it's okay.
Speaker 3: I wish pat the best.
Speaker 7: You know, he's no patent.
Speaker 3: He's been a good partner of ours. But we've been
Speaker 3: partners with Intel for a long time. It's been eighteen
Speaker 3: years since we launched our first Intel instance when AWS
Speaker 3: and EC two first launched, and we'll continue to be
Speaker 3: great partners with Intel, and they have a great technology
Speaker 3: team there and we look forward to continuing to roll
Speaker 3: out the latest technologies from Intel for our customers to
Speaker 3: be able to use, and he've been.
Speaker 5: Continuing to roll out, as you say in video offerings.
Speaker 5: Last time you're on, we're talking about Blackwell. Of course,
Speaker 5: many have been frustrated, perhaps by some slowness to market there.
Speaker 5: When do you anticipate that Blackwell will be unfolding? And
Speaker 5: how difficult has it been to ensure the supply side
Speaker 5: is there?
Speaker 3: Well, They've obviously had some manufacturing things that they're going through,
Speaker 3: but we're very excited about it. I think the early
Speaker 3: returns and the early looks at Blackwell look fantastic. We
Speaker 3: expect almost a two and a half times gain in
Speaker 3: the compute power that you get from Blackwell that we
Speaker 3: saw from H one hundreds, and so I think it'll
Speaker 3: be a really material jump for customers once we get
Speaker 3: those out, and you know, I think those will be
Speaker 3: early next year, and we're excited about putting them into
Speaker 3: gun customers hands, and we'll get them out there as
Speaker 3: soon as they're available.
Speaker 5: Investors, though they find it wild, this whole frenemy existence
Speaker 5: that's going on. Do you truly think that investors here think, oh,
Speaker 5: we want to see in video dependency as well as
Speaker 5: AWS having its own offerings. Is that something you think
Speaker 5: everyone can swallow or do you think ultimately there will
Speaker 5: be a broadening out other than just in video winning all.
Speaker 3: Look, I do think it's a partner if you think
Speaker 3: about AWS. We started from the very beginning thinking about
Speaker 3: this partnership mindset, and we built the entire business around
Speaker 3: AWS thinking about how AWS would have services and our
Speaker 3: partners would have services, and that there's plenty of space
Speaker 3: for all of us to really grow and build our businesses.
Speaker 3: And that is true for software providers, it's true for
Speaker 3: service providers, and it's true for technology providers. And so
Speaker 3: I think that we've proven time and time again over
Speaker 3: the last eighteen years that AWS can have products and
Speaker 3: our partners can have products, and then as we make
Speaker 3: them all available, that the whole pie gets bigger. And
Speaker 3: so I think there's plenty of opportunity for both. And
Speaker 3: so it really isn't I think it makes for a
Speaker 3: fun narrative that it's either or, But we're great partners
Speaker 3: with n Video. We will continue to be, and this
Speaker 3: is all about making the pie get bigger.
Speaker 5: Fighting the Frenemi discussion my conversation with AWSCO Matt Garmon
Speaker 5: Coming up plenty more on AI and the investment opportunities.
Speaker 5: Liney Lyman underscore VC managing partner can be joining us.
Speaker 4: This is really my technology