Speaker 1: From Marhard where Innovation, Money and power Collie in Silicon Valley, NBN.
Speaker 2: This is Bloomberg Technology with Caroline Hyde and Ed loved Love.
Speaker 3: I'm Kroene Heindeer Bloomberg's world headquarters in New York, and
Speaker 3: I'm Med Lovelow in San Francisco.
Speaker 4: This is Bloomberg Technology.
Speaker 5: Coming up Intel.
Speaker 3: The shares they pop as the company's turnaround effort gains momentum.
Speaker 5: We'll discuss with the CEO, Pat Gelsinger.
Speaker 6: Plus we'll continue with the earnings coverage. Is Amazon's results
Speaker 6: show a boost in its cloud computing unit, We'll break
Speaker 6: down those numbers.
Speaker 3: And one year on since Elon must truck over, the
Speaker 3: company formerly known as Twitter and the Billionaire announces plans
Speaker 3: to take on the likes of YouTube, LinkedIn and push
Speaker 3: into payments more. We'll discuss that and so much more
Speaker 3: throughout the hour, but first has.
Speaker 5: Check in and what is a to finish up the week.
Speaker 3: It's notable, though, we're seeing a rally across stocks and bonds,
Speaker 3: which are usually at odds. And that's even as we
Speaker 3: see those inflationary pressures build. From a macro perspective, Certainly,
Speaker 3: consumers anticipated to see more inflation, so says Umiss, the
Speaker 3: University of Michigan numbers and indeed that all important PC
Speaker 3: number coming in strong. So we do though see tech
Speaker 3: on top. Is that all to do with earnings? We'll
Speaker 3: to get into it with you. Ed Nasdaq at one
Speaker 3: point two percent, but still down on the week. I'm
Speaker 3: looking at the two year yield just pulling in on
Speaker 3: the longer round, it's pulling in a little bit more.
Speaker 3: We're flat, but we're still above that five percent level.
Speaker 3: But is there like a risk aversion as we head
Speaker 3: towards the week and amid of course ongoing geo political concerns,
Speaker 3: particularly with the Middle East, Bloomberg Dollar Index is actually
Speaker 3: off by a quarter of percent despite that inflation gauge.
Speaker 3: Let's have a little look at what's happening in terms
Speaker 3: of the world a bitcoin, because over the last five
Speaker 3: days it has been on a tear. We're up some
Speaker 3: fourteen percent. Is this desire for haven Probably not. This
Speaker 3: is still more a focus, a hope, a prayer, a
Speaker 3: reality ed that maybe an ETF and spot bit coin
Speaker 3: is coming soon.
Speaker 6: Yeah, it's kind of like a broad risk on sentiment.
Speaker 6: And you talked about tech being on top and earnings
Speaker 6: is kind of the driver of that. Intel gave a
Speaker 6: sales forecast for the current period that at the top
Speaker 6: end of the range was way above street expectations, and
Speaker 6: the story that they're trying to tell is that the
Speaker 6: PC market is bottomed out. PC chips are their biggest
Speaker 6: sort of volume sales, and that's been important. We will
Speaker 6: speak to Pat Gelsinger later in the show. One point
Speaker 6: in the session where I'm pointing to over there, biggest
Speaker 6: jump on the stock since January of twenty twenty one.
Speaker 6: But it's also the third straight quarter where investors have
Speaker 6: looked at the story of Intel and said, yeah, we
Speaker 6: like it. We believe you that the turnaround's happening. That's
Speaker 6: what we're going to discuss. The other big, big name
Speaker 6: is Amazon, and with Amazon right now, we've paired some
Speaker 6: of the sessions gains. We were up a little more
Speaker 6: than that, but we're still up significantly. The story was
Speaker 6: actually beats across the board apart from aws in the
Speaker 6: top line relative to expectations, but if you look at
Speaker 6: the bottom line, the cloud unit brought in almost one
Speaker 6: point five billion dollars of operating and come more than
Speaker 6: the street was expect they've added customers in the quarter,
Speaker 6: and generative AI is what's going to be the driver
Speaker 6: of growth for AWS, the cash cow of Amazon's business
Speaker 6: for years to come.
Speaker 4: That's the story that Andy Jasse wanted to tell.
Speaker 6: Let's get more with Bloomberg's Poonam goil Bloomberg Intelligence.
Speaker 4: That's the story. But what did the numbers tell you? Poonam?
Speaker 7: The numbers actually looked really good.
Speaker 8: From a results perspective. Three Q was strong both for
Speaker 8: AWS in our mind, the twelve percent game was in
Speaker 8: line with last quarter, and the retail business did much
Speaker 8: better than expected, which bodes well going into the all
Speaker 8: important holiday season coming up.
Speaker 5: So consumer looking more resilient.
Speaker 3: What was it that Andy Jasse was able to get
Speaker 3: across on the cool poonam that really studded nerves around
Speaker 3: AWS and cloud in particular.
Speaker 8: I think for EWUS, you know, the real important thing
Speaker 8: was his tone and the fact that he said the
Speaker 8: deal books were good and that things weren't any further
Speaker 8: So it's like the trend is kind of just continuing
Speaker 8: to stabilize, which was very encouraging, and it was in
Speaker 8: contrast to what we heard from the other tech companies
Speaker 8: are cloud providers earlier so I think that really was
Speaker 8: what took the stock up during the call, and I
Speaker 8: think that's what you're seeing today, just the confidence and
Speaker 8: the cloud business near term and of course for the
Speaker 8: longer term. We remain very optimistic on the cloud business,
Speaker 8: both on the margin side and the top line.
Speaker 6: All right, Pounam Goyle of Bloomberg Intelligence, thank you very much, Caroline.
Speaker 6: Some news crossing the Bloomberg terminal that I've broken with
Speaker 6: colleagues around the world in the last few minutes. ASC,
Speaker 6: which is a Japanese battery maker, has just closed a
Speaker 6: one billion dollar Series B led by GIC, Singapore's wealth fund.
Speaker 4: But what I'm hearing from.
Speaker 6: Sources is that they're also working already on a Series
Speaker 6: C with their bankers and advisors that would value them
Speaker 6: in the billions of dollars. This is a battery company
Speaker 6: that makes the seals that go into evs. It has
Speaker 6: deals with the likes of BMW and Mercedes here in
Speaker 6: the US, some of the automakers in the UK. But
Speaker 6: here's the next step that sources tell us they're looking
Speaker 6: at a USIPO down the line as well.
Speaker 4: And it's interesting.
Speaker 6: It started life as a JV between Nissan and NEC
Speaker 6: back in two thousand and seven. But in twenty eighteen,
Speaker 6: a Chinese energy technology company called Envision bought a controlling
Speaker 6: steak and Jang Lai, who is the founder CEO of Envision,
Speaker 6: is also the chairman of ASC. So a lot of
Speaker 6: questions from investors and insiders about how that ownership and
Speaker 6: the Chinese relationships perceived, especially in the context of the IRA.
Speaker 4: Check that story out on Bloomberg dot com.
Speaker 3: Yeah, a great big school coming from ued. I don't
Speaker 3: know where you find the time. Meanwhile, someone else is
Speaker 3: busy at the moment, and it's one Sam mag Munfried.
Speaker 3: He has taken a stand again today in the FDx
Speaker 3: flaud trial, now this time in front of a jury. Yesterday,
Speaker 3: of course we understood that there was a focus where
Speaker 3: the judges being allowed, in particular for sanbackmcfree to testify
Speaker 3: on ftx' data retention before this jury. At the moment,
Speaker 3: he is currently discussing really the terms of service that
Speaker 3: were created, he says back in May of twenty twenty
Speaker 3: two documents currently being displayed on the monitor. Actually in
Speaker 3: that particular court, he said he skimmed over a few
Speaker 3: times overall, and that he went through parts of it
Speaker 3: in more detail when they were released, But his understanding
Speaker 3: was that this was referring to two different features on
Speaker 3: the platform, first look coordation of user accounts, and second
Speaker 3: clawbacks or socializing losses Bagmenfred is talking about. This is
Speaker 3: basically all about explaining how maybe funds were used, particularly
Speaker 3: when it comes in between Alameda Research, the Hedge Fund,
Speaker 3: and FTX.
Speaker 6: Part of what he was trying to explain was kind
Speaker 6: of the role that FTX lawyers had in the lead
Speaker 6: up to the collapse, that, you know, just drawing on
Speaker 6: my own experience. As a parallel, I covered Trevor Milton,
Speaker 6: the Nikola founder's trial on securities fraud, and I raised
Speaker 6: that because Milton chose not to testify or his lawyer's
Speaker 6: advice not to, it's highly unusual.
Speaker 4: Not only the SBF is.
Speaker 6: Testifying, but he's actually going to do so twice and
Speaker 6: put it all on the line on the stand.
Speaker 4: So we'll continue to cover that one character.
Speaker 3: And of course no cameras inside the courtroom. That's why
Speaker 3: I was thinking so much drawing of all of this.
Speaker 3: But what's notable is we have got our reporters on
Speaker 3: the ground. We are getting a tea live blog chee
Speaker 3: throughout so go. Of course, that's one of the most
Speaker 3: red stories on the Bloomberg terminal today Tea live if
Speaker 3: you're lucky enough to have a Bloomberg. But overall, the
Speaker 3: blow by blow blogging account of really what's going on
Speaker 3: within that trial.
Speaker 6: Welcome to our Bloomberg TV and radio audiences worldwide. Shares
Speaker 6: of Intel popping today as the chip maker predicted a
Speaker 6: return to sales growth in the fourth quarter, fueled by
Speaker 6: a rebound in the personal computer market but also a
Speaker 6: more competitive product lineup. Joining us now is Intel CEO
Speaker 6: Pat Gelsinger. And look, Pat, there was quite a long
Speaker 6: list of things that investors cheered, right. This is the
Speaker 6: third quarter where the market's basically said, Pat, we believe
Speaker 6: you on the turnaround story, on your to do list,
Speaker 6: where do you think you are and what do you
Speaker 6: think you have left to do on that turnaround story?
Speaker 4: Yeah?
Speaker 9: Thanks Ed, And you know, overall, hey, it was a
Speaker 9: great as we say, just a clean beat and raise
Speaker 9: on all the financial metrics, but even more important was
Speaker 9: the operational performance. And you know, as we said, hey,
Speaker 9: getting back to process leadership, and we delivered key milestones
Speaker 9: and we still have at least another year or two
Speaker 9: to go on getting that done, but major milestones starting
Speaker 9: to deliver foundry customers.
Speaker 2: You know, I promised one at the start of.
Speaker 9: The year, and now we have three on our most
Speaker 9: advanced process technology, major packaging wins, and of course the
Speaker 9: product execution you know, clean launch of the AI PC generation,
Speaker 9: but also the server business getting back to profitability ahead
Speaker 9: of schedule and a little bit better performance there and
Speaker 9: delivering the AI Everywhere message with our accelerators our server
Speaker 9: product line. So a really excellent quarter, and I'm just
Speaker 9: so grateful for the Intel team. It's been a journey
Speaker 9: and we are clearly coming.
Speaker 6: Back a pat You've talked to investors and indeed to
Speaker 6: Caroline and I about these new customers for the foundry business.
Speaker 6: When do we get names? When are you going to
Speaker 6: announce who these customers are?
Speaker 9: Well, you two things there, ed, One is it's not
Speaker 9: generally the practice of the foundry industry for the foundry
Speaker 9: to be declaring their customer names.
Speaker 2: So one, it's not practice, and also many of.
Speaker 9: The customers consider it confidential and part of their competitive advantage.
Speaker 2: And how and what technologies they choose.
Speaker 9: So I can't promise names but we're going to characterize
Speaker 9: them as best we can. And as we said, these
Speaker 9: are high performance and AI customers. And we've really seen
Speaker 9: the surge of interest in using the Intel technologies and
Speaker 9: foundry for different AI offerings in the marketplace. And that's
Speaker 9: both a wafer but also a packaging and this idea
Speaker 9: of advanced packaging. In addition into the three on the
Speaker 9: wafer side, we had two advanced packaging customers in AI
Speaker 9: and that revenue materializes more rapidly and six more in
Speaker 9: the pipeline, so overall a really substantial quarter. And the
Speaker 9: AI space in particular has been the customers that have
Speaker 9: seen the most enthusiasm.
Speaker 3: And let's talk about the AI space because the running
Speaker 3: of AI models is where you see your future. It's
Speaker 3: not all just about the foundation models. It's actually the
Speaker 3: running of them, not the building. But can you just
Speaker 3: relieve some of the anxiety coming from investors about a
Speaker 3: lack of clarity over data center future and indeed, what
Speaker 3: is it that they need to hear from you? What
Speaker 3: more can you articulate that really makes it clear to
Speaker 3: them that you're going to be front of center in
Speaker 3: the AI race.
Speaker 2: Yeah, thanks Carolyn, And you know, really.
Speaker 9: You know, first, let's characterize what we're talking about in
Speaker 9: this idea of creating you know, these frontier or foundation models.
Speaker 9: This is described versus using right and the training and
Speaker 9: the inferencing against those models, and I sort of compare
Speaker 9: it to like weather models. Not that many people generate
Speaker 9: weather models, but a lot of people use them. And
Speaker 9: that's how we think about this next phase of AI.
Speaker 9: How do we make this inferencing or the use of
Speaker 9: the models broadly available. And that's going to be in
Speaker 9: the client, right we talked about the AIPC. It's going
Speaker 9: to be at the edge right in retail and manufacturing
Speaker 9: and supply chains. But it's also going to be an
Speaker 9: on premise data centers. And as we've said, instead of
Speaker 9: taking my data to the cloud, I want to bring
Speaker 9: the AI to my data center where the data is
Speaker 9: already and finally work in the cloud.
Speaker 2: And for the data center proper.
Speaker 9: As your question talks about, hey, you know, we knew
Speaker 9: we were going to lose some market share here, right.
Speaker 9: Those losses happened last year and they're sort of playing
Speaker 9: out in the marketplace. But our roadmap is strong and
Speaker 9: we over executed in the quarter on our next gen
Speaker 9: R Gen four product that did a bit better than
Speaker 9: we thought in a lot of AI use cases in
Speaker 9: this area of inferencing. The next generation Gen five, we're
Speaker 9: already ramping that in production and that's going to get
Speaker 9: announced in December. But next year's products, we're already seeing
Speaker 9: great health and we're ahead of schedule in those and
Speaker 9: those really improve our competitiveness. And the twenty five products
Speaker 9: will go into fab in the first quarter of next year.
Speaker 9: So our whole roadmap and execution has really improved, and
Speaker 9: we start to see ourselves regaining market share in twenty
Speaker 9: four in that area. And I think that will be
Speaker 9: sort of the final piece of the turnaround story. When
Speaker 9: you know the market sees okay, data center is backstrong,
Speaker 9: they're winning in the AI space. You know that'll be
Speaker 9: the end of the turnaround story and people say, Okay,
Speaker 9: they did it.
Speaker 3: We'll go back to that building that training of data.
Speaker 3: Can you talk a little about stability AI. Of course
Speaker 3: you've got to deal to build their AI supercomputer. Was
Speaker 3: that them really going to you for ultimately what GOUDI
Speaker 3: can provide over what in video would or is it
Speaker 3: that you wanted to really be sort of offering them
Speaker 3: some carrots in the situation to be able to be
Speaker 3: helping with the training of the models.
Speaker 2: Yeah, great question.
Speaker 9: And you know, now with Goudi, we're now deliver performance
Speaker 9: and benchmarks that are as good as the best in
Speaker 9: the industry. So we've gotten our performance there. You know,
Speaker 9: there was also some of this work that you know,
Speaker 9: the models were created and much of the software industry
Speaker 9: was working, you know, on the n video platform, so
Speaker 9: we had to do some of the software work to
Speaker 9: get those running on the Gaudy platform. And they're looking
Speaker 9: for more cost effective choices and ones that are supply
Speaker 9: chain available in the industry. And as we're ramping our
Speaker 9: Goudy product line, we're getting that software work done.
Speaker 2: You know, they're priced more competitively.
Speaker 9: Customers are saying, wow, I can do that work and
Speaker 9: do it at a much lower power performance envelope than
Speaker 9: the alternatives and have a much more cost effective model
Speaker 9: training and inferencing at scale. Okay, you were seeing a
Speaker 9: real surge of interest, and as I said, we doubled
Speaker 9: our pipeline of customers this quarter, you know, and we
Speaker 9: you know, like others in the industry, are now supply
Speaker 9: chain constrained and we're racing to catch up to that
Speaker 9: demand on our gaudy product.
Speaker 6: Line throppening by radio and television audience worldwide. We're speaking
Speaker 6: to the CEO of Intel, Pat Gelsinger. Pat, the story
Speaker 6: of this week has been chip companies entering the PC
Speaker 6: processor market on architecture, how do you hold off those newcomers?
Speaker 6: You know, attention for example one Apple this coming Monday,
Speaker 6: and they have done well in that domain.
Speaker 9: Yeah, and I think of the AI PC as an
Speaker 9: exciting category and this is one that we announced. We've
Speaker 9: been the first company on that and we're now ramping
Speaker 9: our first generation AI PC products called the Core Ultra.
Speaker 9: So others are talking about what they might do in
Speaker 9: a year or two years, we're ramping products in the marketplace.
Speaker 9: Today we announced over one hundred is svs in our
Speaker 9: AI Acceleration program, so they're coming on board, and before
Speaker 9: others have their products even shipping in the marketplace, we'll
Speaker 9: be launching our next generation, our lunar Lake product, which
Speaker 9: we've already demonstrated for next year, and panther La like
Speaker 9: our twenty five product. We're sending that into fab on
Speaker 9: our leadership Intel eighteen A process Technology and Q one
Speaker 9: so I feel like we have a very strong roadmap,
Speaker 9: and Hey, the idea of an ARM based PC, you know,
Speaker 9: they've always been sort of niche and low end, with
Speaker 9: the exception of Apple, and there it's not ARM, it's
Speaker 9: Apple and their ecosystem. So for the broader windows are market,
Speaker 9: you know, it's always been pretty low end and insignificant
Speaker 9: in the bigger context. And as long as we deliver
Speaker 9: our roadmap, I feel very confident that it's other surge
Speaker 9: into the AIPC space. You know, this is a lift
Speaker 9: to the overall PC market and will be uniquely positioned
Speaker 9: to benefit from that.
Speaker 6: Pat going back just a second to Stability in the
Speaker 6: AI supercomputer. That's kind of in the assembled component domain.
Speaker 6: But are you saying or are you able to confirm
Speaker 6: that's a paid relationship with Stability to praise you for
Speaker 6: use of Goudy.
Speaker 9: Oh yeah, yeah, this is a is a major customer
Speaker 9: and we'll be building that with them, of course, working
Speaker 9: closely with them, but this is a paid customer relationship.
Speaker 10: You know.
Speaker 2: We also see quite another set around our OEMs.
Speaker 9: We announced the major partnership with Dell right for not
Speaker 9: only Xeon's but also Goudy's as they come on premise
Speaker 9: and their cloud offerings. You know, we've seen a big
Speaker 9: upsurge in Goudy interest in the Intel Developer Cloud. We
Speaker 9: had a five x increase in the developers on our
Speaker 9: developer cloud, much of that on the Goudi platform. And
Speaker 9: as I said, we saw you well over a billion
Speaker 9: dollars last quarter. We've approximately doubled that to this quarter
Speaker 9: of Goudy demand worldwide, and those are largely paid customer engagements.
Speaker 9: So overall, we're just seeing a surge of interest with stability, AI,
Speaker 9: Dell and many others.
Speaker 6: Pat we every earnings look to your forecast for the
Speaker 6: PC market and you're slightly more positive than consensus in
Speaker 6: terms of literally how many PCs you think we'll ship
Speaker 6: around the world this year. I guess part of that
Speaker 6: is baked into your sales forecast for the current period
Speaker 6: as well. What gives you that confidence and why is
Speaker 6: it that consumers will return to buying PCs?
Speaker 2: Yeah, and there's probably three different factors there.
Speaker 9: You know. One is I can say, hey, we gave
Speaker 9: this two hundred and seventy million ish PCs being sold
Speaker 9: through this year, and we said that earlier in the year.
Speaker 2: Many thought that we were too optimistic.
Speaker 9: Hey, we look at it today and we're almost spot
Speaker 9: on with our accuracy on that forecast. Second, we've seen
Speaker 9: the industry, you know, not just Intel, but the industry overall.
Speaker 9: Inventory levels are now healthy, you know, and we look
Speaker 9: at our selling rate versus sellout rate, you know, the
Speaker 9: product is selling through. I'd also say, hey, we're off
Speaker 9: to a good start in Q four. We're a couple
Speaker 9: of weeks into the quarter, and as I said on
Speaker 9: the earnings call, really good start.
Speaker 2: To Q four as well.
Speaker 9: And you know, seasonality is a bit above in Q
Speaker 9: four or historical levels. We also have things like Windows
Speaker 9: ten end of service coming from Microsoft. Microsoft's about to
Speaker 9: release their copilot products. But I'd say the sizzle in
Speaker 9: the marketplaces around this AIPC brad new use cases for
Speaker 9: the PC. And I've compared it to the Centrino moment
Speaker 9: of twenty years ago when Centrino really ushered Wi Fi
Speaker 9: at scale into the industry. And we think that's exactly
Speaker 9: what's going to happen with the AIPC. It will be
Speaker 9: a driver of new applications and use cases for the
Speaker 9: PC and bringing a bit more excitement, a bit acceleration
Speaker 9: more users coming into the marketplace because it's going to
Speaker 9: give significant new capabilities to PC users.
Speaker 3: Is that what gives you your gross margin level of
Speaker 3: sixty percent? Again, is that where the confidence comes from.
Speaker 9: Well, to get our overall gross margins up above sixty percent,
Speaker 9: I need the whole business to improve, Carolyn. Obviously we're
Speaker 9: making good progress in the PC. I also need to
Speaker 9: improve my factory network. And as we get back to leadership,
Speaker 9: we finished this super aggressive five nodes in four years.
Speaker 9: You know, I'm churning through capital very rapidly to get
Speaker 9: back to leadership. That's a big factor getting the data
Speaker 9: center business healthy. Going back to one of your earlier questions,
Speaker 9: another factor in getting back to our margin structures. One
Speaker 9: of the other things we did this quarter was also
Speaker 9: have great operational success on our cost saving initiatives, and
Speaker 9: we said, you know, we would result in three billion savings.
Speaker 2: We've also cleaned up the company.
Speaker 9: I've exited ten businesses since I've been here, and now
Speaker 9: we think we're finished with that phase and we just
Speaker 9: get focused on growing the company again to the future.
Speaker 9: So part of its growth, part of it's this focus
Speaker 9: areas across the businesses and part of it's just increased
Speaker 9: operational discipline. But this quarter's results were well on our
Speaker 9: way to accomplishing that.
Speaker 3: And you talk of operations there, and we didn't get
Speaker 3: time to talk about it, but we know that you do,
Speaker 3: indeed have operations in Israel, and we think of your
Speaker 3: own employees and your infrastructure there at this time, Pats,
Speaker 3: so thank you, thank you very much for spending some
Speaker 3: time with us and walking us through your numbers.
Speaker 5: Intel CEO Pat Gelsinger.
Speaker 4: There time for talking tech. First up.
Speaker 6: Apple enthusiasts are getting ready for the company to real
Speaker 6: it's latest Imax and MacBook pros. Bloomberg's reported the new
Speaker 6: computers will likely include the new M three three nanometer processors.
Speaker 6: The product reveal will be Apple's last of twenty twenty
Speaker 6: three this upcoming Monday, plus Huawei's Mate sixty smartphone breakthrough
Speaker 6: driving sales to the company as profit doubles in the
Speaker 6: most recent quart, Adding to signs the Chinese tech leader
Speaker 6: is steadying a business rocked by US sanctions and Elon
Speaker 6: Musk setting his sites on YouTube and LinkedIn ex executives
Speaker 6: whole staff at a company meeting. They see the two
Speaker 6: sites as future competitors Bloomberg reports as must also planning
Speaker 6: to create a new service called x wire that would
Speaker 6: rither scisions, pr newswir and interesting one from us overnight Carrot.
Speaker 5: Yeah, I mean from you ed overnight.
Speaker 3: And really, ultimately this is coming down to wanting to
Speaker 3: be that global town hall, wanting stilled to be the
Speaker 3: place where you go to X for news in particular,
Speaker 3: I mean really got a lot of convincing of business
Speaker 3: or corporates there to want to be filing them press
Speaker 3: releases for example.
Speaker 4: Yeah, there's a lot of battlegrounds.
Speaker 6: Remember today is the one year anniversary of Musk closing
Speaker 6: the deal to take Twitter private now X and this
Speaker 6: was the first time the Acarina and Musk had done
Speaker 6: a joint all hands together, I'm told by sources.
Speaker 4: So some interesting data coming out of that one.
Speaker 5: Welcome back to Bloomberg Technology. I'm Caroline Hired in.
Speaker 6: New York and I'm Loavelo in San Francisco. Look, we
Speaker 6: made it to the end of a megaweek for megacat
Speaker 6: Tech earnings and it's interesting to see holistically how.
Speaker 4: The market looks right now.
Speaker 6: And that's that one hundred on a five day basis
Speaker 6: down for a second consecutive week, down two percent. We're
Speaker 6: up one percent in Friday session. Amazon a big part
Speaker 6: of the points moving to the upside driving that, but
Speaker 6: on the whole into kind of we're waiting for the
Speaker 6: next two Apple and Nvidia. Remember Carroe that we went
Speaker 6: into this earning season saying the big five are going
Speaker 6: to bring all of the EPs growth for the S
Speaker 6: and P five hundred. And if you took out those
Speaker 6: big five, the three of which reported this week, and
Speaker 6: then in Vidia and Apple to come, the SMP five
Speaker 6: hundred would have an earning's growth decline or lack of
Speaker 6: growth down around five percent. So we've been waiting and
Speaker 6: there's more to come. Dig in on one specific name,
Speaker 6: which is Amazon going gangbusters this Friday. We've got the
Speaker 6: perfect guests to talk about Amazon as well, and bring
Speaker 6: in a Yoko Yoshioka portfolio manager, a wealth enhancement group.
Speaker 6: You heard my pre amble on the big five tech names.
Speaker 6: Was your scorecard for the three that have gone so far?
Speaker 10: Well, clearly Microsoft is a big winner during earning season,
Speaker 10: but Amazon wasn't too shabby either, And it's really you
Speaker 10: know the story of AI and.
Speaker 7: The impact that AI is going to have going forward.
Speaker 10: Amazon did a great job on their conference call talking
Speaker 10: about the impact of AI and how that's going to
Speaker 10: add tens of billions of dollars of revenue for AWS,
Speaker 10: which was something that investors really like to hear.
Speaker 3: What they don't like to hear, IAKO is consumer concern
Speaker 3: or macro concerns, And that was a business macro perspective
Speaker 3: that we got that let us down on the metafront,
Speaker 3: for example, and maybe a little bit on Alphabet as well.
Speaker 3: What do you think about the resiliency of the macro
Speaker 3: pitch for these tech names right now?
Speaker 10: Sure, you know, from a overall standpoint, all of these
Speaker 10: companies have just very strong balance sheets, and so you know,
Speaker 10: it's it's been a flight to quality to a certain
Speaker 10: degree for many investors who are concerned about the overall
Speaker 10: macro environment. Having companies that have high quality balance sheets,
Speaker 10: that have cash that is now generating you know, five
Speaker 10: percent plus, that's a huge relief for a lot of
Speaker 10: investors that they can rely on despite the valuations being
Speaker 10: a little bit elevated, I think in the near term.
Speaker 3: And what we've seen over the course of this week
Speaker 3: is the idiosyncratic nature of big tech some of them
Speaker 3: doing well on earnings and leading gages high, and then
Speaker 3: the macro perspective just pushing back and over the course
Speaker 3: of the week, the Nazark is lower going for is AI.
Speaker 3: Do you think the silver line necessary to allow these
Speaker 3: companies to continue to go up into the right.
Speaker 7: Absolutely?
Speaker 10: And I think one of the things that Andy Jassey
Speaker 10: highlighted on the Amazon call yesterday was just the impact
Speaker 10: of some of these AI technologies. You know, whether it's
Speaker 10: code Whisper for Amazon's AWS or duet for Google and
Speaker 10: GitHub Copilot for Microsoft.
Speaker 7: You know, all of these are going to produce productivity gains,
Speaker 7: you know, just removing some of.
Speaker 10: That repetitive code for developers, and I think that's going
Speaker 10: to be a big game changer and really speed up
Speaker 10: the acceleration of the changes and the impact that AI
Speaker 10: can bring a you know, not just for these three companies,
Speaker 10: but across.
Speaker 7: The board for every company.
Speaker 6: It's hard to believe, but we're already basically in November,
Speaker 6: and Caroline and I have been thinking about the end
Speaker 6: of the year. We started the year with just mass
Speaker 6: layoffs across big tech and cutting back costs. How much
Speaker 6: of that is what's showing up now, particularly on the
Speaker 6: bottom line with tech that all the pain that they
Speaker 6: went through, actually it seems to have benefited them at
Speaker 6: least financially.
Speaker 7: Absolutely.
Speaker 10: You know, it was you heard all of these companies
Speaker 10: talking about cloud optimization, and that's really their customers.
Speaker 7: Sort of dialing back a little.
Speaker 10: Bit in terms of how much cloud usage they're going
Speaker 10: to have with these big providers, and you know, you
Speaker 10: because of that, I think a lot of these Microsoft,
Speaker 10: Meta Amazon, they all pulled back on their own spend
Speaker 10: and I think you saw them see the benefit of
Speaker 10: you know, the lower expenses.
Speaker 7: Especially with Amazon.
Speaker 10: They talked about the lower headcount you know in AWS
Speaker 10: and just you know, fewer engineers there. So I think
Speaker 10: that was a huge positive for them and continue to
Speaker 10: sort of strengthen their overall financial position.
Speaker 6: It may seem premature, but I'm going to do it anyway.
Speaker 6: What does twenty twenty four look like for big tech
Speaker 6: in your mind?
Speaker 10: You know a lot of it is going to depend
Speaker 10: on the overall macro environment. But I think it is
Speaker 10: difficult to you know, slow down the impact of AI
Speaker 10: and you know, cloud is still relatively early and it's journey.
Speaker 10: There's still workloads that need to migrate to the cloud,
Speaker 10: and it's just going to accelerate.
Speaker 7: I think because of AI.
Speaker 10: You know, twenty twenty four will be determined by you know,
Speaker 10: other factors other than just AI. But I think a
Speaker 10: lot of these companies can whether through that over the
Speaker 10: long term.
Speaker 3: The reason why you're such a group group for to
Speaker 3: have on is not only how you're having to navigate
Speaker 3: what I think Wealth Enhancement Group has thousands, forty nine
Speaker 3: thousand households of wealthy individuals that you're helping manage their money,
Speaker 3: but your relationship having build up all the research analysis
Speaker 3: and they're moving into portfolio management. You've got a whole
Speaker 3: host of tech companies that you own, Io Cohen, are
Speaker 3: there any that are overlooked or how do you think
Speaker 3: about the Kathy Woods of this world that feel that
Speaker 3: in videos and some of the big cap names just
Speaker 3: too obvious when it comes to the aiplay.
Speaker 4: Sure.
Speaker 10: I mean we like a lot of the sort of
Speaker 10: value oriented tech names as well. Oracles been in that
Speaker 10: space as well, and Oracle has been talked about their
Speaker 10: cloud evolution has really come a long way.
Speaker 7: And so there are other names outside of just the
Speaker 7: big megacat tech that.
Speaker 10: We like Accenture is another name that we like in
Speaker 10: the space in technology. They have consultants who are going
Speaker 10: to help all of these companies adopt newer technologies like
Speaker 10: AI and so you know there there are other technology
Speaker 10: names outside of just the big five that we constantly
Speaker 10: talk about.
Speaker 6: It wouldn't be a week if we didn't speak FED speak,
Speaker 6: and you know, for our global audience and Bloomberg Technology,
Speaker 6: just give your perspective on why rates and the FED
Speaker 6: and the outlook for rates influences your decision about your
Speaker 6: allocation to technology names in a portfolio.
Speaker 10: It's a great question, ed. You know, we get this
Speaker 10: a lot, and you know, why do we focus so
Speaker 10: much on the FED and interest rates? And I go
Speaker 10: back to just sort of valuation one O one discounted
Speaker 10: cash flows. You know, you have to use the risk
Speaker 10: free rate, which tends to be the ten year, right,
Speaker 10: so the tenure treasury rate, and what we see there
Speaker 10: is what's used in order to discount all of those
Speaker 10: long term cash flows back to the present. And that's
Speaker 10: why there's such a huge focus on what the FED
Speaker 10: will do and how the treasury curve will.
Speaker 7: React to FED action.
Speaker 10: So yes, it is something that we continuously talk about
Speaker 10: but it impacts not just tech valuations, but valuations across
Speaker 10: the board, inequities as well as real estate and other markets.
Speaker 3: IACO great to have some time with you, Iico Yeshioka
Speaker 3: of Wealth Enhancement Group. We thank you coming to us
Speaker 3: from LA. Meanwhile, no, we're going to keep on talking
Speaker 3: about AI and indeed how machine learning can have kind
Speaker 3: of major impact on how companies and governments handle climate
Speaker 3: change questions since Witherspoon, head of Climate and Sustainability of
Speaker 3: Google deep Mind, spoke about it the use cases in particular,
Speaker 3: but also it's orangines and gaming take listen.
Speaker 11: Go was a really offha Go was a system that
Speaker 11: we developed that hopefully folks are familiar with. But games
Speaker 11: are a really interesting place to test AI because they
Speaker 11: have very clear goals, success metrics, clear benchmarks, and the
Speaker 11: end lots of data. And so that's the kind of
Speaker 11: system that is really interesting for AI because it's a
Speaker 11: perfect test bed. And one of the things that was
Speaker 11: really interesting about Alpha Go is that even though it's
Speaker 11: a game we've been playing for hundreds of years, using
Speaker 11: an AI system actually taught us new information that we
Speaker 11: didn't know about the game. Before, and we've really expanded
Speaker 11: this idea into other systems like Alpha fold. For instance.
Speaker 11: Alpha fold is a system that takes in amino acid
Speaker 11: sequences and tells us how proteins are folded. We developed
Speaker 11: a database that basically works like Google Search for proteins,
Speaker 11: and we were able to give that to the research
Speaker 11: community in order to further their research. So if you
Speaker 11: look at kind of the development of systems like alpha fold,
Speaker 11: you can see that some of the scientists that might
Speaker 11: use that would understand proteins, for instance, if they're engineering enzymes.
Speaker 11: We actually do work with a partner who is looking
Speaker 11: into enzymes that biodietegrade plastics and are able to do
Speaker 11: their work more quickly because they have access to the
Speaker 11: library that Alpha fold provides.
Speaker 8: Deep Mind CEO is a big guitar you fan, so
Speaker 8: stories let your kids play video games.
Speaker 12: I mean the answer to how do you go from
Speaker 12: Alpha go to climate science is where you just go
Speaker 12: via you know, two hundred million protein Yeah, you know
Speaker 12: which is which is which is great? So you know
Speaker 12: in the episode that you are in next month, we
Speaker 12: take a very global view because it's a global show,
Speaker 12: but we're here in the UK with.
Speaker 4: Our fantastic climate and weather.
Speaker 2: You know, it's lovely today.
Speaker 12: So can you tell us about something you've done here,
Speaker 12: that you've been, that you've seen and that is going
Speaker 12: to excite everybody.
Speaker 11: Yeah, we'll talk about the weather, since the UK loves
Speaker 11: talking about especially rainfall, so maybe i'll go with that example.
Speaker 11: We did a partnership with the Met Office, particularly working
Speaker 11: with some of their expert meteorologists looking at heavy rainfall
Speaker 11: because heavy rainfall is what causes damage to people and property,
Speaker 11: and so we developed a system that was a generative
Speaker 11: AI system so effectively you can think about it, you
Speaker 11: know when you look at the weather and you see
Speaker 11: those you know, beautiful pictures on screen with lots of
Speaker 11: colors of like where where rain is going to happen,
Speaker 11: like where it's going to be heavy, where it's going
Speaker 11: to be light, how it's going to move throughout the UK.
Speaker 11: And we basically fed that radar data to our system
Speaker 11: and it watched it like a movie effectively and predicted
Speaker 11: the next frame. So we were able to This is
Speaker 11: something we call precipitation now casting, so it's the forecasting
Speaker 11: for two hours ahead of time, so very short term
Speaker 11: for forecasting.
Speaker 13: And we worked with the Met Office to do this.
Speaker 11: They were an incredible partner because actually ninety nine percent
Speaker 11: of the country here in the UK is covered by
Speaker 11: the radar data.
Speaker 6: That was Sims Witherspoon, Climate and Sustainability lead at Google
Speaker 6: Deep Mind and now come out here on Bloomberg Technology
Speaker 6: ion CUE shift into commercialization is fully underway. We're going
Speaker 6: to talk it to the CEO, Peter Chapman, about recent partnership,
Speaker 6: some departures and one roller coaster.
Speaker 4: This has been bot Technology.
Speaker 3: Quantum computing company ion Q, when it's placing some big
Speaker 3: bets on it shift into national security. How Q is
Speaker 3: actually teaming up with the US Air Force Research Lab
Speaker 3: to develop and apply quantum systems. Now, this news comes
Speaker 3: in the wake of the co found at Chris Monroe's
Speaker 3: departure from the company. Now all of this rattle the
Speaker 3: stock and we want to really get clarity the picture
Speaker 3: forward with none other than well the CEO Peter Chapman,
Speaker 3: who joins us. Now and Peter, going back to basics,
Speaker 3: like your aim at the company is to build the
Speaker 3: best quantum computers and basically solve some of the most
Speaker 3: complex tasks out of there.
Speaker 5: You came out of universities, out of the labs into
Speaker 5: the real world. But your chief science officer is sort of.
Speaker 3: Going back into the labs, back into the research, back
Speaker 3: into the universities. And some analysts are saying, look, they're
Speaker 3: worried about the timing and the reasoning. Explain the timing
Speaker 3: and the reasoning for us.
Speaker 8: Yeah.
Speaker 10: Sure.
Speaker 14: So the company was co founded by two college professors
Speaker 14: originally from the University of Maryland and Duke, although both
Speaker 14: are today at Duke University. They in Chris's case, he
Speaker 14: still teaches classes at Duke and they run Duke's Quantum Lab,
Speaker 14: which is a significant undertaking unto itself. And we have
Speaker 14: a relationship with Duke University where the work that they
Speaker 14: do there, funded by the government, is exclusively licensed and
Speaker 14: royalty free to the company. So Chris is going back
Speaker 14: to Duke University to lead that program. But the relationship
Speaker 14: between Duke and and Chris is really not It's not
Speaker 14: changed in any way, shape or form. Chris would be
Speaker 14: the first one to tell you that the physics for
Speaker 14: what it is that we're doing was solved long, long ago.
Speaker 14: If you'll go back and listen to Chris, you know,
Speaker 14: from several years ago, you will find tapes where he
Speaker 14: says exactly that where the company is today is no
Speaker 14: longer about academic research. It's not about fundamental physics. And
Speaker 14: that's actually quite a difference between I and Q and
Speaker 14: many of our kind of competitors. They're still working on
Speaker 14: fundamental physics sometimes, you know, and we're we're not. We're
Speaker 14: actually migrating out of an academic phase and now into
Speaker 14: an engineering and product phase, and so we're in the
Speaker 14: middle of that transition, Peter.
Speaker 6: One of the analysts that that Caroline reference was Benchmark's
Speaker 6: David Williams, and he basically says that the timing and
Speaker 6: motivation of Chris's departure is curious. Just on the timing part,
Speaker 6: could you just explain why now, why the process that
Speaker 6: you just outlined is being announced this week?
Speaker 14: Well, I think I'm not sure I'd want to speak
Speaker 14: for Chris, but I think there's a number of likely factors.
Speaker 14: One is, he did state that he wants to go
Speaker 14: back to his academic roots. He seems to enjoy that,
Speaker 14: and and that's exactly what it is that he's doing.
Speaker 14: The other aspects just in terms I think you know,
Speaker 14: the companies often outgrow their founders. The You know, we're
Speaker 14: at a place today where it's no longer an academic endeavor.
Speaker 14: It really is a engineering and product based endeavor. And
Speaker 14: I think that the Chris felt that his skill set
Speaker 14: is better in the academic.
Speaker 4: Side of it.
Speaker 3: So let's talk about the application of the technology now, Peter,
Speaker 3: where do you feel.
Speaker 5: The reward of your investors? Start to push in on.
Speaker 3: We were just talking about applications in national security for example.
Speaker 4: Yep.
Speaker 14: So we're just on the verge of We just announced
Speaker 14: just recently a news system which is going to have
Speaker 14: enough we call them algorithmic cubits sixty four algorithmic cubits,
Speaker 14: and this will allow you to explore our computational space
Speaker 14: of two to the sixty four in parallel and so
Speaker 14: two to the sixty four is eighteen quintillion different possibilities
Speaker 14: states in a single instruction in a fraction of a second,
Speaker 14: similar to the instruction speeds you have on your laptop.
Speaker 14: This will allow now applications to be developed which can
Speaker 14: take on the world's largest supercomputers. Quantum is not good
Speaker 14: for everything. It strangely has a tough time adding one
Speaker 14: plus one, and at the same time, maybe is good
Speaker 14: for solving differential equations. In terms of applications that we
Speaker 14: have seen so far, machine learning is certainly one area
Speaker 14: where quantum seems to have a huge advantage. My guess
Speaker 14: would be that strong AI will be another area. The
Speaker 14: original premise of quantum is that exploring the natural world,
Speaker 14: which is not digital, it's not analog, it's quantum, is
Speaker 14: that you need a quantum computer to be able to
Speaker 14: model mother nature. So you know, it has been thought
Speaker 14: that at about ninety six good enough cubits, algorithmic cubits,
Speaker 14: you could model the photosynthesis and be able to unlock
Speaker 14: how plants can turn sunlight into energy, and that would
Speaker 14: produce the next generation of solar cells that would be
Speaker 14: four times more efficient than what they are today.
Speaker 6: Peter, much of our global audience does think in floating
Speaker 6: point operations the second that are just unimaginable as the
Speaker 6: human brain. But just quickly, in a layman's perspective, explain
Speaker 6: what's proprie tree about your technology quickly.
Speaker 14: So what we do is we use atomic clocks. Actually
Speaker 14: have one of them here, and it's a chip which
Speaker 14: is sitting in a little vacuum chamber, and it's using
Speaker 14: thirty two to sixty four atoms, and it uses those
Speaker 14: atoms for computation. And what's unusual about it is that
Speaker 14: it can run at room temperature. We're down at point
Speaker 14: zero two nanometers, so you know, the standard silicon at
Speaker 14: seven nanometers is way up from where we are. And
Speaker 14: we use white to program the atoms. We shine little
Speaker 14: lasers onto these atoms and put a spin on them
Speaker 14: and entangle them to be able to do the computation.
Speaker 6: All right, Pizza Chapman, CEO, I Cut, thank you very
Speaker 6: much for your time.
Speaker 13: It's official. Tailor's is a billionaire. Welcome to the Aristour.
Speaker 13: Her Aristour alone is a party generating hundreds of millions
Speaker 13: of dollars. It's a multinational conglomerate with the world's most
Speaker 13: devoted customer base and an ultra charismatic CEO. Swift has
Speaker 13: made her fortune almost exclusively from her music. Bloomberg estimates
Speaker 13: Swift has made one hundred and twenty five million dollars
Speaker 13: over the years from record sales.
Speaker 1: We estimate that her total income from streaming is one
Speaker 1: hundred and seventy five million.
Speaker 13: The biggest part of our earnings is undoubtedly her concert revenue.
Speaker 1: We estimated that Taylor, and that's about thirty five percent
Speaker 1: of the ticket sales. Is profit about five hundred million
Speaker 1: from touring over the years.
Speaker 13: Her tours, her record sales, and streaming royalties are all earnings,
Speaker 13: but she also has assets, including her recording catalog.
Speaker 1: We estimate that her catalog is worth about four hundred million.
Speaker 13: Then, of course there's her actual property.
Speaker 1: That include a condo in the state in Nashville, in
Speaker 1: a state in Los Angeles, a large apartment in Tribeca
Speaker 1: in New York City, as well as a summer house
Speaker 1: in Rhode Island. The total value of her properties is
Speaker 1: about one hundred and ten billion.
Speaker 13: Subtract her expenses, taxes, staff costs, and so on, and
Speaker 13: you get a net worth of one point one billion dollars.
Speaker 6: Some reporting from the Bloomberg Big Tight team there on
Speaker 6: Swift's influence, reach and wealth and Karen never in her
Speaker 6: wildest dreams, which she probably thinks she'd be where she.
Speaker 5: Is now, Well never know. She might have thought that
Speaker 5: from very young, age ed, big ambious man.
Speaker 3: But what's so interesting is, well, maybe her success isn't
Speaker 3: always paying off completely. To Universal Music Group, of course,
Speaker 3: she is the biggest seller in terms of artists, but
Speaker 3: actually their numbers came out amsonam based company and actually underwhelmed.
Speaker 3: They saw a lot of growth but did missanish estimate overall,
Speaker 3: but Midnight album the release was the biggest impact and
Speaker 3: indeed perhaps she's outformed too much in previous years.
Speaker 5: That's it from Bloomberg Technology.
Speaker 6: Check out the podcast wherever you get your podcast from
Speaker 6: SF in New York.
Speaker 4: This is Bloomberg Technology.