December 11, 2025 • 42 mins
Oracle falls after reporting a jump in spending on AI data centers and other equipment. Plus, Disney agrees to invest $1 billion in OpenAI and license characters for use on the Sora generative video platform, and the CEO of chip-design software maker Synopsys joins to break down the company's earnings following a significant equity investment from Nvidia earlier this month.
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
from coast to coast with Caroline Hyde in New York
and Vavelow in San Francisco.
Speaker 2 (00:22):
This is Bloomberg Tech coming up Oracle Fools. After reporting
a jumping in spending on AI data centers and other equipment.
Speaker 3 (00:29):
We're going to discuss the.
Speaker 2 (00:29):
Impact and there is impact on the broader tech sector.
Speaker 4 (00:33):
Plus, Disney agrees to invest one billion dollars in Open
AI and license characters for use on the Sora generative
video platform.
Speaker 2 (00:41):
And more tech earnings with Chit design software maker. Synopsis
our conversation with the CEO later this hour.
Speaker 4 (00:48):
Meanwhile, we turn to some breaking news and it's geopolitical
in nature at the moment, so ed we are looking
more broadly at the Ukrainian President Vladimus Selenski floating the
prospect and putting the shoot of territorial control in a
piece deal to a referendum. Now, this as Kiev comes
under mounting pressure to agree to terms to end Russia's war.
(01:08):
Moscow has insisted that Ukraine withdraw its forces from the
eastern Donbass region, which the Russian military has failed to capture.
It in its nearly four year invasion, and I'm afraid
step aside J Powell. The focus is all on Larry
Ellison and what is happening at Oracle and how much
money is being deployed in the buildout of infrastructure ed.
Speaker 3 (01:30):
The anxiety is coming from Oracle.
Speaker 2 (01:32):
This is a two day chart to make a visual
representation of the point.
Speaker 3 (01:36):
It's a big drop right now on.
Speaker 2 (01:39):
Track if it closes at this level of decline, its
biggest drop in twenty one years, going twenty four years, sorry,
going back to two thousand and one, very simply capital
expenditures several billion dollars beyond what the street thought they
would be in the quarter. Cloud growth, We're talking cloud
growth way up there, particularly in the infrastructure unit, but
(02:00):
just shy of very high expectations. Interesting right now if
you look at the chip space, Nvidia also like broad Com,
big declines and at the index level that you were
just showing us, Caroline, those names are part of the drag.
Speaker 3 (02:14):
So we need to dig into what's going on.
Speaker 4 (02:16):
Yeah, and we've got broad Com numbers after the bell
as well. Let's focus in on Oracle bunning bugs. Brodie
Ford has been covering this story and we knew that
they were spending an awful lot on capital expendit ship,
but fifty billion and not enough in terms of the
revenue to show for it.
Speaker 5 (02:30):
Yeah, AI anxiety is right. I mean, the big question
for Oracle and all of its peers right now is
is building AI infrastructure a good business to be in.
Wall Street understands it takes a lot of upfront costs,
but it seems like every single quarter it's more than
we thought it would be and the revenue recognition is
(02:51):
further out than we thought it would be. And so
Oracle kind of gave the exact message that Wall Street
wasn't hoping for, which is we're spending more and it's
taking a little longer than you expected to see the
revenue uplift.
Speaker 2 (03:05):
But it's a trade off with growth. So I'm just
going to go through some of the numbers. Right the
Street thought that capsule expenditures in the quarter would be
about eight billion.
Speaker 3 (03:13):
They ended up being twelve billion.
Speaker 2 (03:15):
But overall cloud growth get into that and then infrastructure
growth like that, that is growth. It's just that it's
basically in line with consensus. What more is it that
the Street wants?
Speaker 3 (03:27):
Yes, it's big growth.
Speaker 5 (03:28):
But the question is is it empty calories?
Speaker 6 (03:31):
Right?
Speaker 5 (03:31):
I mean, what is it really? I mean the first
question on the earnings call last night was please tell
us how much it's going to cost to put up
these data centers.
Speaker 3 (03:39):
Give us a total number.
Speaker 5 (03:40):
It was a level of you know, i'd say aggression
that you don't typically hear on an earnings call.
Speaker 3 (03:45):
Because it's just still not clear.
Speaker 5 (03:46):
I mean, no one's put up gigglewat scale data centers
are for five of them at once. There's a lot
of questions about when Oracle is putting up these big
data centers for open ai or meta or in video,
what is the true cost profile? And the jury is
just still out.
Speaker 7 (04:03):
The jury is out, and also the questions are abound
of their overall exposure to one key player. Yes, three
hundred billion dollars is how much open Ai is saying
they will invest via Oracle.
Speaker 4 (04:16):
But when are we going to see that? When is
Oracle actually could be able to book that as real revenue?
Speaker 6 (04:20):
Right?
Speaker 5 (04:20):
A lot of us remember in September when Oracle stock
went gangbusters and they were the favorite child of the
market for a couple of days. But since then, what's
happened is open Ai has made a bunch of commitments
with really big billions numbers with a lot of other vendors,
and it's made the market say, wait a second, can
OAI really pay all of these bills? And so that
(04:42):
concentration risk on open ai is a key one for
Oracle and one the company has tried to push away
by saying, look at the big deals we've had with
Meta and Video or others.
Speaker 2 (04:54):
The most Brady Ford with the reporting, thank you very much,
just get more with Alex Zuki, Managing Directors, Senior analyst,
Covery Enterprise Software, Wolf Research. The price target two hundred
and seventy five dollars on this start trading at one
hundred ninety two eighty two. Okay, we accept there's some anxiety.
They are spending more then New Lot thought they would.
(05:17):
They have some growth. Where in the equation are they
sitting for you?
Speaker 8 (05:24):
Yeah?
Speaker 6 (05:24):
I think right now it's a timing mismatch. I think
we are getting overly penalized for a number of elements.
I think there's kind of a vote of no confidence
from this market around the ability to grow and serve
open Ai, both on the open aye front, quite frankly,
and the Oracle front, and I think that's a mistake.
We truly believe the compute demand at the moment is insatiable.
(05:48):
It's not just insatiable for open Ai, it's insatiable for
other foundation model companies. It's also insatiable for other hyperscalers.
I think even on the Microsoft call they noted how
much more demand that they had in the quarter for
Azure that they could in supplied. So we're pretty confident
that the demand is real, that the demand is there,
and we continue to see accelerating growth, with the company
(06:12):
stating pretty clearly they A expect to maintain an investment
grade credit B. They don't believe they will need to
spend more than and quite possibly significantly less than one
hundred billion dollars in debt. And on open Ai A
they believe they're very much good for it, but that
the demand is truly fungible. And if Opening I can't
(06:32):
make those commitments, there are a lot of other no.
Speaker 2 (06:35):
No, I appreciate that negative free cash flows ten billion, right,
and the debt pile you point out is hit one
hundred and six billion dollars in debt. This chart is
Oracle five year CDs Oracle CDs at the highest level
since two thousand and nine, credit default swaps the cost
of protecting debt against default. It's a chart, but it's
(06:56):
a reaction, and the three points you just made clearly
there's a large portion of the market that doesn't share
that viewpoint with you.
Speaker 9 (07:06):
Yeah.
Speaker 6 (07:07):
Look, I think the CDs chart, I think or it
was important for Oracle to state that they they expect
to maintain an investment grade credit worthiness. I think that
there's also a number of flexible options that they presented
them call yesterday, like the bring your own chips in
addition to the ability for customers to lease. So I
think that they are very vigilant about the level of
(07:29):
debt that they're willing to take. They have a number
of other options, including issuing equity. But at the end
of the day, the overall CDs level is still relatively
low for a company of Oracle size and stature, and
we don't believe that that is indicative of any kind
(07:49):
of risk for them to fail to meet their commitments.
Speaker 4 (07:54):
Alex, I loved your note, and I love the idea
that is saying this is a tough crowd basically, but
you did reach rate outperform, but you vastly decreased your
price target from four hundred dollars to China and seventy
five dollars. Is that more because the market is just
not going to push up the stock in the way
that you actually think could be vindicated. Do you still
think four hundred could be vindicated? Just the mark's not going.
Speaker 3 (08:15):
To go that Yeah.
Speaker 6 (08:16):
I think it's two points. I think it's important to
point out that since our last price start at the
comps have compressed, the relative multiples have come down. And
number two, look, we are vigilant of current performance as well.
I think for the stock to work back to some
of those more lofty angles, I think you need clear
evidence of meaningful outperformance on cloud revenue and the is
(08:40):
side not in line or slightly below, And as the
confidence kind of returns to seeing those investments converting to
revenue at higher and higher clips, to where at this point,
you know, it looks like Oracle is going to be
the fastest growing megacap software company and it is the
cheapest megacap software company. So as those two things start
(09:02):
to converge, I think you could get back to those
lofty highs.
Speaker 4 (09:05):
Alex what's so interesting about your coverage range is that
you're a software guy. You're also looking at Adobe, and
we just had Adobe numbers. But of course Oracle has
made this huge pivot into almost now infrastructure, eclipsing it's
software revenue that it brings in now. But just taking
a step back the whole AI bubble debate and whether
or not we're going to be good for productivity gains
(09:27):
in the amount that we're currently spending. Do you think
that there is a bubble or that we're in a
fine kind of space.
Speaker 6 (09:35):
I think it's always hard to call a bubble when
you're in the middle of it. We do see a
tremendous amount of productivity enhancement that is happening in the industry,
and I think depending on where you are and if
you're what part you're looking at, you can have a
completely different picture. I think at this point, if you're
an engineer or if you're a software developer, you can't
imagine life without agentic coding. You can't go back to
(09:59):
a time when you work using one of those tools.
And the availability the abundance of compute is increasingly leading
to a renaissance of software development and code creation. I
think if you're kind of a traditional knowledge worker, you're
still kind of waiting to see that ten x, one
hundred x improvement in your capabilities. And I think that's
natural because those things are a little bit more nuanced
(10:21):
depending on where you work, what your role is, how
much data, how much risk your firm's willing to take.
So I think it's a natural progression, and folks have
to remember this is a journey. We are still way
away from that destination, but it's an extremely exciting time
to be in this space. And I do think that
we are on an accelerating growth path for many of
(10:42):
the companies that we cover.
Speaker 2 (10:44):
I think I'm going to recapture really quickly capital expenditures
slightly ahead a few billion dollars a where the street
thought it would be, but impressive growth in cloud the
stock a decline of fourteen to sixteen percent would be
if we close this level down the most in twenty
three twenty four years.
Speaker 3 (11:01):
Is Oracle good at technology? Alex very quickly?
Speaker 6 (11:04):
Yeah, I think Oracle's great at technology. I think Oracle
for multiple decades has been able to make the pivot
to the new exciting secular domain. It takes time like
it did for Oracle in the cloud, I would argue
that they've made the pivot to the AI compute cycle
much faster, and I think over time that will serve
(11:25):
in their favor as their ability to take their existing
customers and convert those customers to both an AI cloud
first and AI native world with a full stack experience
not that dissimilar from what Microsoft has done, will put
them at the forefront of a lot of these secular waves.
Speaker 4 (11:46):
Alex sir Ken, I've wolf research fantastic talking to you,
Thank you very much, indeed on all things Oracle and
beyond me. While coming up, Disney it agrees to invest
one billion dollars in open AI and license characters for
use on on chatchbt image. We'll dig into it next.
This is Bloomberg Tech. Disney will invest one billion dollars
(12:17):
in Open AI and license more than two hundred characters
for use on the sore regenerative video platform and in
chatchibt images. Is allso generate, short fan prompted videos and stills.
Bloomberg News entertainment reporter Hannahmana joins us now along with
Davely from Bloomberg Opinion and how do I go to
you for the news first, because this is a big
step in IP licensing in the world of generative AI.
Speaker 9 (12:40):
Yeah, there's been a lot of anxiety about how AI
will affect the entertainment industry, and Disney's support its investment
in open ai is a huge development. I mean, this
is something that you know, we didn't really expect. There's
been a lot of tension and controversy with AI in film.
Speaker 2 (12:58):
Davely of Bloomberg Opinion, I get what open ai gets
out of this a library of creature characters, two hundred
of them. What does Disney actually get out of it?
Speaker 10 (13:08):
Well, look, I was watching an interview with Bob Iger
earlier and it struck me that he's been in this
game a long time, and I think he's actually got
a very good deal. I think he's gone to open
ai and he said, your saur app, which people are using,
is only fun when you use essentially without deals stolen
material IP from other companies, whether it's Disney or Nintendo
or even the Premier League. And I think Bob Biber says, right,
(13:30):
you need this, you need consumer attention. We know there's
a lot of pressure from Google on open ai and
So what Disney gets it gets the slice of this
big exciting AI company. They get that billion dollar investment
with the chance to do more. They have a deal
that is only exclusive for a year. So if we
find that consumers are really into making these short videos,
which I'm not too sure they will be long term,
(13:53):
then he can shop it elsewhere and make more deals
like it. And he also gets to go to Google
and say, look, you know, open Eye've made a deal,
so now you should do as well, because that's how
this is going to run from now one. So I think, yeah, honestly,
I think bob Byga has Showny's experience here and made
a very smart deal.
Speaker 2 (14:10):
Indeed, Hannah, the companies also disclosed that basically Disney becomes
a major customer of open Ai. What are the technology
work are they going to do together?
Speaker 9 (14:21):
Yeah, I mean it's great that they get to use
these open ai tools. You know, they will be able
to give access to chat GPT to their employees. But
I think what we can see from this is this
is just the beginning that there could be more down
the line.
Speaker 4 (14:34):
What's really interesting, Dave, is we've heard in the same
breath bobb Igo really confirming that he's sent a season
assist to Google. We know that they've been litigious about
their IP when it comes to mid journey, when it
comes to Chinese general to AI opportunities. Are we then,
after this year of exclusion, just going to see a
whole myriad of deals being done And what will Hollywood
(14:57):
and creatives think about it?
Speaker 10 (15:00):
Two sides to it?
Speaker 3 (15:00):
Isn't there?
Speaker 10 (15:01):
I think yes, there'll there'll be deals done, or at
least there'll be attempts and maybe more lawsuits instead. If
the deals aren't made, you will see this increased uneasiness.
And we're already seeing out of Hollywood of people saying, well,
what's Disney's end game here? If they're going to start
using open AI's technology. I think this is, if anything,
quite troubling development for the AI companies, because you know,
(15:23):
if open eye is going to have to give away
a billion dollars of its firm to all these people
who want intellectual property, when then there's not going to
be enough of the company to go around, And you know,
I have to think to myself. You know, if if
you're someone who's backing open ai, you're thinking, okay, we've
got Mickey Mouse he's not allowed to talk probably and
they're going to be short clips. Is this really getting
(15:44):
us the super intelligence? Like, is this an important part
of that?
Speaker 3 (15:47):
I don't see it.
Speaker 8 (15:49):
Personally.
Speaker 10 (15:50):
I feel quite cynical about this entire deal, I have
to say, but there's a lot there that I think
is troubling for AI companies looking to do some of
the same things next year.
Speaker 2 (15:58):
Dave, Dave, just real quick. That's what I'm trying to understand.
Who has the balance of power here? Which side needs
the other more, the studios in Hollywood or the AI labs?
Speaker 10 (16:08):
And do you know what I think the question is
for the studios in Hollywood, they can live without being
working with these AI companies, so they might as well
just get as good a deal as they can get,
and if they're not happy with that, they can walk away.
And that's perhaps why Google was in a stronger position.
It'll be interesting to see how the talks now have
to you know, carry on with Google and Disney, because
Open Eye realized that they don't have any other business
(16:30):
with Disney, so there's no incentive for Disney to sort
of bend more to their will. I think in Google's case,
you know, Disney just signed a new multi year deal
with YouTube TV, for example, So there's a much more
sort of close meshing there between those companies. I wouldn't
be surprised if some agreement came out of, you know,
around SAUA and Google quite soon. But yeah, I think
(16:51):
that's where we're going to see these sort of interesting
power plays. But if you're an owner of an intellectual property,
really good stuff. But if you like I say, like
Nintendo or football Company, I think you're in a very
very strong position.
Speaker 4 (17:02):
And really is notable though. I think that some of
these large language model developers would say in chatbot owners
are saying, we are amazed at how much people are
using them for image generation. Even if it doesn't lead
us to superintelligence, it's an addictive element to the use
and maybe outperforms therefore, and who wants to be using
it and keeping eight hundred million people wanting to use
it every single week? But Hannah, when the power play
(17:24):
comes back to the worker, you've reported long and hard
about the strikes that happened in Hollywood. What do you
think the narrative is Bobiga needs to give to his workforce.
Speaker 9 (17:33):
Yeah, he needs to give reassurance. I mean people are
worried about their jobs. Hollywood has been through a lot lately,
you know, from the wildfires to layoffs at major entertainment companies.
So I think there is a lot of concern here
about replacement. If you're going to be able to use
AI tools to enemy, you know, why do you need
humans behind it?
Speaker 2 (17:52):
Bloomberganese reporter Pana Miller, Bloomberg opinion contributor Davely, thank you
to you both.
Speaker 4 (17:58):
We are sticking with tech learnings, going to deep dive
on chip design. Software maker Synopsis Now just out with
its own fourth quarter results, giving an upbeat first quarter forecast.
Is following a significant equity investment from Nvidia earlier in
the month that sent shares hire And maybe we're just
pairing some of the previous games. We're just down by
one point two percent on the day, So not so.
CEO Sasine Ghazi joins us now and even though your
(18:20):
shares are down a little bit, the analyst seem to
feel positively about these numbers. But JP Morgan asks that
maybe you're being slightly conservative on your fall year twenty
twenty six guidance.
Speaker 11 (18:29):
Are you?
Speaker 12 (18:31):
We're looking at it as being balanced and pragmatic regarding
Fox twenty six, given the global and the overall environment,
we guide it at nine point six billion, and that's
after finishing up Fox twenty five at seven billion. So
we're very excited about the opportunity.
Speaker 9 (18:47):
You had.
Speaker 2 (18:50):
Chip design right now, there are some bigger picture discussions
to be had a great debate about companies big and
small looking at customer A sixty doing more in house
versus not bothering because why in Nvidia is doing such
a full stack offering. What are the trends that you're seeing,
particularly when you think about your backlog susame, because the
(19:11):
analysts are also talking about your backlog Exensis.
Speaker 12 (19:15):
Yeah, we have a significant backlog entering FOY twenty six
at eleven and a half billion. And what's driving that
backlog is this strength across the portfolio. As for your question,
most hyperscalers they're looking for multiple alternatives to how to
build and optimize along the stack. The silicon is an
(19:36):
essential component, as you know, and almost every one of
these hyperscalers they have a strategy along three vectors. One
they buy merchant chips from Nvidia, AMD, Intel, etc. And
they build their software stack. Then there's the custom vector
or ask and they have their own customer on tooling
(19:56):
what it's called. We're designed the chip all themselves. All
three vectors are a fantastic opportunity because you need the
essentialness of what we provide in order to achieve that
silicon design all the way up to the system.
Speaker 4 (20:11):
So the first time we've spoken to you since that
two billion dollar endorsement investment in your stock coming from Nvidia,
and at the same time in Video is trying to
gain in roads once again back into China. You've got
headwinds in the China part of the business. How do
you see that part of the world evolving.
Speaker 12 (20:28):
So the Nvidia investment was really driven and it's a
significant endorsement to our strategy to provide engineering solutions from
silicon to systems, where in Nvidia has been talking about
the whole physical AI, etc. That cannot happen without having
physics simulation inside the product development, and that's what Synopsis provides.
(20:52):
As far as the China market and opportunity f y
twenty five, we face this significant headwind in China. Our
business declined by about twenty percent due to these headwinds.
What we talked about in our FYI twenty six guide
is will continue on assuming that the environment in China
(21:13):
will remain status quo, the same stress that we saw
in twenty five, and we have derisped it out of
our forecast.
Speaker 2 (21:20):
Susain very very quickly thirty seconds. Why does Nynvidia need
to have an equity stake in your company?
Speaker 3 (21:27):
Is exactly what Jensen said.
Speaker 12 (21:29):
He sees a great opportunity to make money and to
make sure that he's participating and aligning. Could both companies
roadmap in order to accelerate the investment and deliver to
this opportunity.
Speaker 2 (21:44):
Sono Scia seeing Gasi, It's great to have you on
Bloomberg Tech. Thank you, Welcome back to Bloomberg Tech. This
is a story about rising AI spending, and that spending
rising at a level that is not satisfactory to investors
(22:04):
who want to see how it will convert into growing revenues.
Speaker 3 (22:08):
The story is Oracle the.
Speaker 2 (22:10):
Stock, and it shares on track for their biggest drop
in about twenty four years. That's the story capital expenditures,
in particular billions of dollars ahead of what.
Speaker 3 (22:23):
The market was expecting.
Speaker 2 (22:28):
Let's get out with the Bloomberg Intelligence reaction an A
rag Rana joins us, Now, I just wanted it to linger.
It's severe, and we spent all of yesterday's shows saying
this might happen. That's your reaction and your research. What's
your thesis when you woke up this morning.
Speaker 13 (22:46):
No, I mean I was surprised that they didn't talk
a lot about their supply constraints, because you know, we
heard it from Corvie, we heard it from Microsoft and
so forth. But they spend a little bit of time
trying to explain the funding issues. But it doesn't look like,
you know, the market's happy with their explanation. But you know,
one of the big things is when their cloud infrastructure
estimates were sixty nine percent growth in constant currency and
(23:09):
they came at sixty six And anybody who's followed you
know what happens with Microsoft, Azure or AWS numbers is
when you miss on a cloud growth rate by even
a little bit, I mean, that has an impact on
your stock. And that's what we are seeing here. On
top of that, they talked about, you know, increasing their
topics by fifteen billion dollars.
Speaker 3 (23:27):
That was another thing.
Speaker 13 (23:28):
So there are multiple factors that are affecting the stock.
But having said that, you know, you also go back
and see there was one day when they announced that
big open A ideal, the stock had gone up like
what twenty five thirty percent at that point, So there
is a there's a bit of digestion in here, and
it will take a few years to figure out how
much or how long will it take to take that
five hundred billion off backlog and convert it into sales.
Speaker 4 (23:49):
Talking of that backlog, many would say that the moon
music is still in their favor. Maybe why the shares
remain higher for the year an rag. I'm looking at
this really in depth survey that you've done on the
CC over at Bloomberg Intelligence, and one of the key
findings really was that all industries cite a shortage of
AI infrastructure as a roadblock. So when will we know
the oracle is good for the half a trillion dollars
(24:12):
in backclock that they have.
Speaker 13 (24:15):
Yeah, it's probably the most important questions for all of
these companies right now. But you know, you have to
separate the open AI oracle relationship with the rest of
the hyperscalers because the rest of the hyperscalers, if let's say,
you know, God forbid things go bad next year and
we don't need that much AI infrastructure. You know, It's
okay for the three hyperscalers because they have a lot
(24:36):
of other businesses that they can run. They have their
entire cloud businesses, search businesses, et cetera, for the three
of them combined together. But for Oracle Open Ai, the
big question is, you know, open Ai by the end
of the year is going to do twenty billion of
A and annualized revenue somewhere in that range, and it's
made commitments of hundreds of billions of dollars. So this
is one pocket that needs to be examined a lot
(24:57):
more carefully than the rest of the equation. But having
said that, we are very confident from what we learn
from these executives that AI infrastructure is the biggest Botto
neeck in deploying you know, all sorts of AI functionalities,
you know, in any part of whether it's hospitals, financial services,
or pharmaceuticals.
Speaker 4 (25:18):
Remote intelligence analyst Anna rag Rana with really important research.
We now want to talk about how that affect your investments.
Beth Kinding is here with us Need Tech analyst at
the IO Fund, and Beth we come to you because
of your semiconductor expertise. But here is Larry Ellison and
others over an Oracles saying, look, we will put in
whatever chip you want. We are not beholden on in video.
(25:40):
But what they do seem to be beholden on is
a supply issue, not a demand issue. Is that coming
down to semiconductors or is it more the build out
of data centers.
Speaker 8 (25:49):
Yeah, I think it's a natural statement for Larry Ellison
to say that because we know custom silicon will help
drive down those cavex costs. From my perspective, we really
are at the crux of this issue to where, for example,
Oracles estimated twenty six twenty twenty six capex was supposed
to be nine billion, We're now over twenty billion, low
(26:10):
twenty billion, assuming no more raises, we are significantly higher
two and a half x higher than what was originally estimated.
This is what one analyst is called drunken sailor type spending.
Speaker 3 (26:24):
However, what I.
Speaker 8 (26:25):
Would encourage investors to keep an eye on is the
moment that there's an inflection. We haven't gotten that inflection yet,
and that is really what these very smart tech CEOs
across the border banking on. As an investor, I need
to pay attention to what these CEOs are saying, and
they're talking about an incoming wave of monetization to where
some of these cash flow issues really do get relieved.
Speaker 4 (26:47):
So do you think the cash flow will not be
negative going forward? At the moment we're seeing well that
capex is seventy five percent of their full year revenue.
Speaker 8 (26:57):
There will be a moment, I don't know when. I
don't think it'll be twenty twenty six, maybe not even
twenty twenty seven where you're able to so rapidly monetize
AI that it can really absorb these capex costs.
Speaker 3 (27:11):
Now your.
Speaker 8 (27:13):
Bloomberg Intelligence. A correspondent just mentioned open AI. Open air
is a great example of just how quickly this ramp
can happen. It is the fastest run rate we have
seen from zero to twenty billion in all of tech's history.
That is a clue as to how quickly the inflection
can actually happen.
Speaker 2 (27:30):
Here, Beth, I just want to go back to what's
happening now in the market. You know, a single session
a market does not make but in video is down
almost four percent, on track for its biggest drop in
five weeks. Just going back to Kara's original question, why
what's the anxiety that's spreading to in video?
Speaker 11 (27:49):
Here?
Speaker 8 (27:51):
Tonight Broadcom will report and there are certainly some concerns
that in Video will start to lose market share to
competitors such as you know, Merchant potentially merchant TPUs. Right now,
they're mainly used for internal purposes. If those become commercialized,
the threat is could that eat into in Video's share. Now,
(28:13):
I've served some concerns with the market on this stock
for many, many many years. Technically when I first started
covering this stock in twenty eighteen twenty nineteen.
Speaker 3 (28:23):
TPUs were a threat actually.
Speaker 8 (28:25):
Back then, and I covered it back then. So you know,
my just in a nutshell, the AI market will widen,
it will include more revenue from Broadcom, but that does
not mean in Videos out of the picture by any means.
Speaker 2 (28:39):
The messaging from Oracle right that not beholden to video
and Carriage made that point smartly. The debate with A
six generally like Amazon has this issue is that there's
not the library of software. You know, that's why in
video is so good. You know that it's multi purpose,
easy to use the software, to support the stack it exists.
Speaker 3 (28:59):
Is that inging with TPU that that consideration to your mind.
Speaker 8 (29:04):
Yeah, the Kuda software platform is primarily very badly needed
on the training side, and video has a near monopoly
on training. As we move into inference, the Kudo mote
matters less. But what does continue to matter. But what
does continue to matter is consider that we are not
at a static point in videos, R and D is
(29:27):
world class. It will continue to iterate and improve, just
as TPUs can finally catch up, and video is already
going to be on to the next generation of GPUs,
which will challenge anything that's coming out of big tech.
Speaker 2 (29:42):
Beth Kindig of the Io Firm, we enjoyed that. Thank
you very much for the next episode of Bloomberg Tech Europe.
Speaker 3 (29:49):
The show profile is.
Speaker 2 (29:50):
ASML Europe's most valuable company and one of the most
important cogs of the global AI supply chain. Take listen
to what the company's CEO, Kristuque had to say about
AI bubble concerns.
Speaker 14 (30:03):
Well, you know, when people talk about AI bubble, I
think I don't know exactly what they mean, and usually
I say, there's two ways to look at it. If
you look at the industry. I don't think there is
a bubble. So the impact of AI in the industry
is just starting and the impact on the industry will
be positive for many, many years to come. So there
(30:24):
there is no bubble. I think that the value of AI,
the industrial value of AI, is extremely high, and this
will be developing over time. There's no bubble because, like
I said, we're just starting. Sometimes people talk about a
bubble in a reference to the stock market because we
have seen some company getting extremely high valuation as a
resource of the excitement of AI.
Speaker 3 (30:47):
There.
Speaker 14 (30:47):
I think what you will see is more players coming
over time. So initially a few company where I would
say very much the only winner out of AI because
of the demand. Because industry, the industrial demand will be
so high, we need more players, and you will see
more and more company designing chips, designing AI, product manufacturing chips,
(31:11):
et cetera, et cetera. That could create, of course some
change on the stock market. But you know the two
are a bit unrelated.
Speaker 15 (31:21):
Because I can make me three hundred million dollars just
this year, a long from hyper scale is maybe four
hundred million next year. Yeah, that translates into real orders
for your kids in the years ahead.
Speaker 14 (31:30):
You start to see it over time and sometimes, you know,
the last few months, I used to joke with some
of our investor because they told us, why you know,
two hundred billion here, five hundred billion here. I say, well,
I still do not have the equation to translate doorse
order into order for us, and it takes a bit
of time, but you're right. Over time that demand translate
(31:51):
into cheap demand to our customer. This translate into a
need for more capacity, and this translate into demand for
ISML and our peers in the industry.
Speaker 15 (32:03):
The infrastructure span from the hyper scales and the kind
of deal making that open ai has done almost a
trillion dollars worth of deals committed just by that one
company alone, which isn't making a profit this year.
Speaker 4 (32:14):
That makes sense to.
Speaker 14 (32:16):
You, Well, I think the investment makes sense overhaul, because
you cannot play in AI without investing in hyperscaler and
there may be even a few cycle of investment because
the investment today is done on certain chips.
Speaker 3 (32:33):
The chips in two three.
Speaker 14 (32:34):
Years from now, if you look at Nvidia announcement, there
will be a lot more powerful and people may be
tempted again. In twenty twenty seven to invest again in
hyperscaler to make use of those chips. So you have
different cycle and you have a bit of a harm
rest because if you don't invest today, you're out.
Speaker 4 (32:54):
That was Christopher Forget, CEO and president of ASML, along
with you. Back to Europe host Tom McKenzie. You can
find the full episode of Bloomberg Tech Europe tonight. You
have to stay up a bit late one thirty am
Eastern but six thirty am over and in London time,
and we'll be online mean while. Coming up, we'll be
joined by the CEO of Medra on how the company
is trying to revolutionize drug development and other life science
(33:15):
fields the physical AI. This is boombog tech.
Speaker 2 (33:32):
Drug development and other life science fields have relied on
industrial automation for decades. Startup Medra is aiming to take
that step further, building software that scientists can use to
direct lab robots using natural language the way they would
with the chatbot. The company's just closed a fifty two
million dollars Series A funding round. There are some big
(33:53):
names in it. Medra CEO Michelle Lee is with us
in San Francisco. This is very interesting when you and
I first met a few years ago, you had an
idea and a concept.
Speaker 3 (34:05):
Now you have a company moving forward with it.
Speaker 2 (34:08):
I think actually, as a start, let's explain why having
that degree of interaction with what is a robotic arm
in that lab environment through natural language is necessary?
Speaker 3 (34:20):
What is it solved for?
Speaker 11 (34:21):
Yeah, so we want to give scientists directly, not just engineers,
with scientists directly the ability to actually run experiments at scale,
and that is why we are building the physical AI
scientist physical AI that allows to allows them to automate
their scientific experiments at scale, and also the AI scientist
(34:43):
so they can talk to it. They can copilot design
experiments with this AI scientist.
Speaker 4 (34:50):
What is it that you bring the others have in
terms of the physical AI. Is it your data that's
paramounting on. Is it the fact that your scientists a
paramount on? Is it the technol plogy?
Speaker 6 (35:00):
What is it?
Speaker 11 (35:01):
It is all of those things and more. Industrial automation
has been the key way that live sciences has automated
their labs. But we're seeing a huge paradigm shift across
every industry that's using robotics, where industries are shifting away
from industrial automation to physical AI, and that is also
(35:23):
what Medra is bringing to life science, the ability to
flexibly automate their lab experiments instead of using brittle lab
automation technologies from before.
Speaker 2 (35:34):
I want to think about this and I review the
photos and images. I hope we have some images to
share with our audience. I think a little bit about
Tony Stark and Jarvis. It's the idea that there is
an artificial intelligence that one interacts with through the robotic mechanism.
When we first spoke, and this is a long time ago, now,
this was about like efficiency. Labs are difficult environments. It's
(35:56):
hard to move around them, takes physical strength and time,
you know, but fifty two million dollars a lot of money.
Speaker 3 (36:04):
You know, you just click your fingers and you can
suddenly do it. You've solved it.
Speaker 11 (36:08):
No, I mean, we have so much more to be
building because again it's not just about automating the work,
but about this idea. Can we automate science itself? Can
we have a scientific AI that can reason about the science,
generate hypotheses, design experiments, and when we actually run the
experiments with our physical AI, once that data is generated,
(36:30):
can we take that data and then can we think
about what are the new optimizations and changes necessary to
make that science better.
Speaker 2 (36:38):
We started the conversation by introducing this as in the
context of drug development of the life science fields, what
is the industry there and therefore your customer.
Speaker 11 (36:49):
Yeah, So we are working with some of the leading
biopharma companies, including Genetech, to help them use our technology
to really create this lab in the idea, and we
are working with some of the best machine learning teams
at our customers where their machine learning teams can then
propose new experiments they want to run, new ideas they
(37:12):
want to test, and then again our physical AI scientists
can take those ideas, those predictions and turn that into
data that then feeds back into their machine learning models.
Speaker 4 (37:22):
Its fifty two million. Where is it going to be spent?
Most predominantly talent marketing? Well, all of those again, all
of those above.
Speaker 11 (37:32):
We are growing our team and expanding our team across engineering, robotics, AI, hardware, software,
and also on operations and go to market. We're expanding
partnerships with other biopharma companies and also we will be
building our own lab. We will be opening up an
autonomous lab with one hundred robots next year to be
(37:54):
able to run experiments and generate data at scale.
Speaker 4 (37:57):
Do you think the US is leading Ham Mischelle.
Speaker 11 (38:00):
We want to be leading, and Medro is going to
be that force that helps the US lead in this area.
Speaker 4 (38:07):
Medra ceo Mislie. Great having some time with you. Congratulations
on the rays. We appreciate it.
Speaker 2 (38:12):
The new lawsuit claims open ai and its largest investor
Microsoft are liable for a Connecticut murder suicide. It's the
latest case to blame chat GPT for dangerous psychological manipulation
of users. Representatives from both companies declined to comment, and
open ai CEO s Altman, who's also named in the suit,
(38:32):
didn't reply to a request for comment was sent to
open ai representatives on his behalf. I want to get
more details of Bloomberg AI reporter Rachel Metz. Let's start
with the suit. What is alleged in the suit and
some of the most important details in the reporting.
Speaker 16 (38:47):
Rachel, Yeah, Well, this suit is alleging that this man
used chat GBT over a long period period of months,
and that it was consistently telling him that these delusions
that he had were accurate and they were real delusions
related to him being under surveillance to people wanting to
(39:09):
kill him, particularly surveillance related to his mother in the
home where they were living together.
Speaker 4 (39:16):
Rachel sadly Ai psychosis is not the first time we're
talking about this. It's even got a sort of technical
name if you go out and look for it. But
when we hear from Opena are responding to this saying
we continue to improve chatchipt's training to recognize and respond
to signs of mental or emotional distress, to de escalate
conversations and guide people towards real world support. People understanding
(39:40):
that message, are you seeing signs that on this occasion
things could have been improved through improvements in the chatbot?
Speaker 16 (39:47):
Through this case, I mean, I guess what I would
say is through the extens of reporting that I've done
and work that I've done with my colleague Ellen Hewitt,
We've seen a lot of o reasonunfold that are really
similar actually to what we're seeing in this story. This
story just happened to have a horrible, horrible outcome. So
(40:09):
I'm not sure if the changes that they've made are
really going to change how people are using the chatbot.
It sounds like a lot more is going to have
to be done as far as both changes and education
to users in order to make a meaningful change here.
But we're just going to have to see going forward. Also,
there are a growing number of these court cases and
(40:29):
we'll have to see how all of that shakes out
as well.
Speaker 2 (40:34):
It's a funny thing to ask, but in the landscape
of generative AI tools and chatbots, is this something that
other technology companies face as well? You and I have
discussed character AI, for example, in the context of people
that interact with the technology, maybe for emotional support or otherwise,
(40:55):
But that is a very specific design of a chatbot.
Speaker 3 (41:00):
Yes exactly.
Speaker 16 (41:01):
I mean the Opening Eye is absolutely not the only
company that is facing this either, facing situations where people
are saying that a powerful chatbot led to or reinforced
untrue beliefs that they had. But you're also seeing this
definitely stick with this idea of powerful chatbots. I think
(41:22):
one thing that I think needs to be looked at
more is are there certain chatbots that seem more likely
to lead to.
Speaker 4 (41:29):
These kinds of situations.
Speaker 16 (41:31):
That isn't totally clear to me yet. If Replica AI,
for instance, is a service that is more intended for
emotional connections between a person and a chatbot. But does
it make a difference if a person goes into that
kind of experience knowing and desiring that.
Speaker 4 (41:48):
I'm not sure. So it'll be interesting to see in.
Speaker 16 (41:50):
The next few years how researchers determine what's actually going
on here.
Speaker 4 (41:56):
Ratual Matts, it's a thoroughly reported piece. Thank you very
much indeed for telling it to us and our audience today. Meanwhile,
that does it for this edition. A Bloomberg Tech ed.
Speaker 2 (42:07):
Yeah, our markets are under pressure, right, and Oracle is
at the heart of that story. Thought it was really
interesting that Beth Kinding, one of our guests, talks about
Broadcom after the Bell and like the similar themes there.
That Oracle decline of fourteen percent on track for its
biggest drop in twenty three to twenty four years. That's
the severity of it. We'll see where it closes. Check
(42:27):
out the podcast. There were loads of conversations worth recapping.
This is where you can find it from New York
City and San Francisco. This is Bloomberg Tech
Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
from coast to coast with Caroline Hyde in New York
and Vavelow in San Francisco.
Speaker 2 (00:22):
This is Bloomberg Tech coming up Oracle Fools. After reporting
a jumping in spending on AI data centers and other equipment.
Speaker 3 (00:29):
We're going to discuss the.
Speaker 2 (00:29):
Impact and there is impact on the broader tech sector.
Speaker 4 (00:33):
Plus, Disney agrees to invest one billion dollars in Open
AI and license characters for use on the Sora generative
video platform.
Speaker 2 (00:41):
And more tech earnings with Chit design software maker. Synopsis
our conversation with the CEO later this hour.
Speaker 4 (00:48):
Meanwhile, we turn to some breaking news and it's geopolitical
in nature at the moment, so ed we are looking
more broadly at the Ukrainian President Vladimus Selenski floating the
prospect and putting the shoot of territorial control in a
piece deal to a referendum. Now, this as Kiev comes
under mounting pressure to agree to terms to end Russia's war.
(01:08):
Moscow has insisted that Ukraine withdraw its forces from the
eastern Donbass region, which the Russian military has failed to capture.
It in its nearly four year invasion, and I'm afraid
step aside J Powell. The focus is all on Larry
Ellison and what is happening at Oracle and how much
money is being deployed in the buildout of infrastructure ed.
Speaker 3 (01:30):
The anxiety is coming from Oracle.
Speaker 2 (01:32):
This is a two day chart to make a visual
representation of the point.
Speaker 3 (01:36):
It's a big drop right now on.
Speaker 2 (01:39):
Track if it closes at this level of decline, its
biggest drop in twenty one years, going twenty four years, sorry,
going back to two thousand and one, very simply capital
expenditures several billion dollars beyond what the street thought they
would be in the quarter. Cloud growth, We're talking cloud
growth way up there, particularly in the infrastructure unit, but
(02:00):
just shy of very high expectations. Interesting right now if
you look at the chip space, Nvidia also like broad Com,
big declines and at the index level that you were
just showing us, Caroline, those names are part of the drag.
Speaker 3 (02:14):
So we need to dig into what's going on.
Speaker 4 (02:16):
Yeah, and we've got broad Com numbers after the bell
as well. Let's focus in on Oracle bunning bugs. Brodie
Ford has been covering this story and we knew that
they were spending an awful lot on capital expendit ship,
but fifty billion and not enough in terms of the
revenue to show for it.
Speaker 5 (02:30):
Yeah, AI anxiety is right. I mean, the big question
for Oracle and all of its peers right now is
is building AI infrastructure a good business to be in.
Wall Street understands it takes a lot of upfront costs,
but it seems like every single quarter it's more than
we thought it would be and the revenue recognition is
(02:51):
further out than we thought it would be. And so
Oracle kind of gave the exact message that Wall Street
wasn't hoping for, which is we're spending more and it's
taking a little longer than you expected to see the
revenue uplift.
Speaker 2 (03:05):
But it's a trade off with growth. So I'm just
going to go through some of the numbers. Right the
Street thought that capsule expenditures in the quarter would be
about eight billion.
Speaker 3 (03:13):
They ended up being twelve billion.
Speaker 2 (03:15):
But overall cloud growth get into that and then infrastructure
growth like that, that is growth. It's just that it's
basically in line with consensus. What more is it that
the Street wants?
Speaker 3 (03:27):
Yes, it's big growth.
Speaker 5 (03:28):
But the question is is it empty calories?
Speaker 6 (03:31):
Right?
Speaker 5 (03:31):
I mean, what is it really? I mean the first
question on the earnings call last night was please tell
us how much it's going to cost to put up
these data centers.
Speaker 3 (03:39):
Give us a total number.
Speaker 5 (03:40):
It was a level of you know, i'd say aggression
that you don't typically hear on an earnings call.
Speaker 3 (03:45):
Because it's just still not clear.
Speaker 5 (03:46):
I mean, no one's put up gigglewat scale data centers
are for five of them at once. There's a lot
of questions about when Oracle is putting up these big
data centers for open ai or meta or in video,
what is the true cost profile? And the jury is
just still out.
Speaker 7 (04:03):
The jury is out, and also the questions are abound
of their overall exposure to one key player. Yes, three
hundred billion dollars is how much open Ai is saying
they will invest via Oracle.
Speaker 4 (04:16):
But when are we going to see that? When is
Oracle actually could be able to book that as real revenue?
Speaker 6 (04:20):
Right?
Speaker 5 (04:20):
A lot of us remember in September when Oracle stock
went gangbusters and they were the favorite child of the
market for a couple of days. But since then, what's
happened is open Ai has made a bunch of commitments
with really big billions numbers with a lot of other vendors,
and it's made the market say, wait a second, can
OAI really pay all of these bills? And so that
(04:42):
concentration risk on open ai is a key one for
Oracle and one the company has tried to push away
by saying, look at the big deals we've had with
Meta and Video or others.
Speaker 2 (04:54):
The most Brady Ford with the reporting, thank you very much,
just get more with Alex Zuki, Managing Directors, Senior analyst,
Covery Enterprise Software, Wolf Research. The price target two hundred
and seventy five dollars on this start trading at one
hundred ninety two eighty two. Okay, we accept there's some anxiety.
They are spending more then New Lot thought they would.
(05:17):
They have some growth. Where in the equation are they
sitting for you?
Speaker 8 (05:24):
Yeah?
Speaker 6 (05:24):
I think right now it's a timing mismatch. I think
we are getting overly penalized for a number of elements.
I think there's kind of a vote of no confidence
from this market around the ability to grow and serve
open Ai, both on the open aye front, quite frankly,
and the Oracle front, and I think that's a mistake.
We truly believe the compute demand at the moment is insatiable.
(05:48):
It's not just insatiable for open Ai, it's insatiable for
other foundation model companies. It's also insatiable for other hyperscalers.
I think even on the Microsoft call they noted how
much more demand that they had in the quarter for
Azure that they could in supplied. So we're pretty confident
that the demand is real, that the demand is there,
and we continue to see accelerating growth, with the company
(06:12):
stating pretty clearly they A expect to maintain an investment
grade credit B. They don't believe they will need to
spend more than and quite possibly significantly less than one
hundred billion dollars in debt. And on open Ai A
they believe they're very much good for it, but that
the demand is truly fungible. And if Opening I can't
(06:32):
make those commitments, there are a lot of other no.
Speaker 2 (06:35):
No, I appreciate that negative free cash flows ten billion, right,
and the debt pile you point out is hit one
hundred and six billion dollars in debt. This chart is
Oracle five year CDs Oracle CDs at the highest level
since two thousand and nine, credit default swaps the cost
of protecting debt against default. It's a chart, but it's
(06:56):
a reaction, and the three points you just made clearly
there's a large portion of the market that doesn't share
that viewpoint with you.
Speaker 9 (07:06):
Yeah.
Speaker 6 (07:07):
Look, I think the CDs chart, I think or it
was important for Oracle to state that they they expect
to maintain an investment grade credit worthiness. I think that
there's also a number of flexible options that they presented
them call yesterday, like the bring your own chips in
addition to the ability for customers to lease. So I
think that they are very vigilant about the level of
(07:29):
debt that they're willing to take. They have a number
of other options, including issuing equity. But at the end
of the day, the overall CDs level is still relatively
low for a company of Oracle size and stature, and
we don't believe that that is indicative of any kind
(07:49):
of risk for them to fail to meet their commitments.
Speaker 4 (07:54):
Alex, I loved your note, and I love the idea
that is saying this is a tough crowd basically, but
you did reach rate outperform, but you vastly decreased your
price target from four hundred dollars to China and seventy
five dollars. Is that more because the market is just
not going to push up the stock in the way
that you actually think could be vindicated. Do you still
think four hundred could be vindicated? Just the mark's not going.
Speaker 3 (08:15):
To go that Yeah.
Speaker 6 (08:16):
I think it's two points. I think it's important to
point out that since our last price start at the
comps have compressed, the relative multiples have come down. And
number two, look, we are vigilant of current performance as well.
I think for the stock to work back to some
of those more lofty angles, I think you need clear
evidence of meaningful outperformance on cloud revenue and the is
(08:40):
side not in line or slightly below, And as the
confidence kind of returns to seeing those investments converting to
revenue at higher and higher clips, to where at this point,
you know, it looks like Oracle is going to be
the fastest growing megacap software company and it is the
cheapest megacap software company. So as those two things start
(09:02):
to converge, I think you could get back to those
lofty highs.
Speaker 4 (09:05):
Alex what's so interesting about your coverage range is that
you're a software guy. You're also looking at Adobe, and
we just had Adobe numbers. But of course Oracle has
made this huge pivot into almost now infrastructure, eclipsing it's
software revenue that it brings in now. But just taking
a step back the whole AI bubble debate and whether
or not we're going to be good for productivity gains
(09:27):
in the amount that we're currently spending. Do you think
that there is a bubble or that we're in a
fine kind of space.
Speaker 6 (09:35):
I think it's always hard to call a bubble when
you're in the middle of it. We do see a
tremendous amount of productivity enhancement that is happening in the industry,
and I think depending on where you are and if
you're what part you're looking at, you can have a
completely different picture. I think at this point, if you're
an engineer or if you're a software developer, you can't
imagine life without agentic coding. You can't go back to
(09:59):
a time when you work using one of those tools.
And the availability the abundance of compute is increasingly leading
to a renaissance of software development and code creation. I
think if you're kind of a traditional knowledge worker, you're
still kind of waiting to see that ten x, one
hundred x improvement in your capabilities. And I think that's
natural because those things are a little bit more nuanced
(10:21):
depending on where you work, what your role is, how
much data, how much risk your firm's willing to take.
So I think it's a natural progression, and folks have
to remember this is a journey. We are still way
away from that destination, but it's an extremely exciting time
to be in this space. And I do think that
we are on an accelerating growth path for many of
(10:42):
the companies that we cover.
Speaker 2 (10:44):
I think I'm going to recapture really quickly capital expenditures
slightly ahead a few billion dollars a where the street
thought it would be, but impressive growth in cloud the
stock a decline of fourteen to sixteen percent would be
if we close this level down the most in twenty
three twenty four years.
Speaker 3 (11:01):
Is Oracle good at technology? Alex very quickly?
Speaker 6 (11:04):
Yeah, I think Oracle's great at technology. I think Oracle
for multiple decades has been able to make the pivot
to the new exciting secular domain. It takes time like
it did for Oracle in the cloud, I would argue
that they've made the pivot to the AI compute cycle
much faster, and I think over time that will serve
(11:25):
in their favor as their ability to take their existing
customers and convert those customers to both an AI cloud
first and AI native world with a full stack experience
not that dissimilar from what Microsoft has done, will put
them at the forefront of a lot of these secular waves.
Speaker 4 (11:46):
Alex sir Ken, I've wolf research fantastic talking to you,
Thank you very much, indeed on all things Oracle and
beyond me. While coming up, Disney it agrees to invest
one billion dollars in open AI and license characters for
use on on chatchbt image. We'll dig into it next.
This is Bloomberg Tech. Disney will invest one billion dollars
(12:17):
in Open AI and license more than two hundred characters
for use on the sore regenerative video platform and in
chatchibt images. Is allso generate, short fan prompted videos and stills.
Bloomberg News entertainment reporter Hannahmana joins us now along with
Davely from Bloomberg Opinion and how do I go to
you for the news first, because this is a big
step in IP licensing in the world of generative AI.
Speaker 9 (12:40):
Yeah, there's been a lot of anxiety about how AI
will affect the entertainment industry, and Disney's support its investment
in open ai is a huge development. I mean, this
is something that you know, we didn't really expect. There's
been a lot of tension and controversy with AI in film.
Speaker 2 (12:58):
Davely of Bloomberg Opinion, I get what open ai gets
out of this a library of creature characters, two hundred
of them. What does Disney actually get out of it?
Speaker 10 (13:08):
Well, look, I was watching an interview with Bob Iger
earlier and it struck me that he's been in this
game a long time, and I think he's actually got
a very good deal. I think he's gone to open
ai and he said, your saur app, which people are using,
is only fun when you use essentially without deals stolen
material IP from other companies, whether it's Disney or Nintendo
or even the Premier League. And I think Bob Biber says, right,
(13:30):
you need this, you need consumer attention. We know there's
a lot of pressure from Google on open ai and
So what Disney gets it gets the slice of this
big exciting AI company. They get that billion dollar investment
with the chance to do more. They have a deal
that is only exclusive for a year. So if we
find that consumers are really into making these short videos,
which I'm not too sure they will be long term,
(13:53):
then he can shop it elsewhere and make more deals
like it. And he also gets to go to Google
and say, look, you know, open Eye've made a deal,
so now you should do as well, because that's how
this is going to run from now one. So I think, yeah, honestly,
I think bob Byga has Showny's experience here and made
a very smart deal.
Speaker 2 (14:10):
Indeed, Hannah, the companies also disclosed that basically Disney becomes
a major customer of open Ai. What are the technology
work are they going to do together?
Speaker 9 (14:21):
Yeah, I mean it's great that they get to use
these open ai tools. You know, they will be able
to give access to chat GPT to their employees. But
I think what we can see from this is this
is just the beginning that there could be more down
the line.
Speaker 4 (14:34):
What's really interesting, Dave, is we've heard in the same
breath bobb Igo really confirming that he's sent a season
assist to Google. We know that they've been litigious about
their IP when it comes to mid journey, when it
comes to Chinese general to AI opportunities. Are we then,
after this year of exclusion, just going to see a
whole myriad of deals being done And what will Hollywood
(14:57):
and creatives think about it?
Speaker 10 (15:00):
Two sides to it?
Speaker 3 (15:00):
Isn't there?
Speaker 10 (15:01):
I think yes, there'll there'll be deals done, or at
least there'll be attempts and maybe more lawsuits instead. If
the deals aren't made, you will see this increased uneasiness.
And we're already seeing out of Hollywood of people saying, well,
what's Disney's end game here? If they're going to start
using open AI's technology. I think this is, if anything,
quite troubling development for the AI companies, because you know,
(15:23):
if open eye is going to have to give away
a billion dollars of its firm to all these people
who want intellectual property, when then there's not going to
be enough of the company to go around, And you know,
I have to think to myself. You know, if if
you're someone who's backing open ai, you're thinking, okay, we've
got Mickey Mouse he's not allowed to talk probably and
they're going to be short clips. Is this really getting
(15:44):
us the super intelligence? Like, is this an important part
of that?
Speaker 3 (15:47):
I don't see it.
Speaker 8 (15:49):
Personally.
Speaker 10 (15:50):
I feel quite cynical about this entire deal, I have
to say, but there's a lot there that I think
is troubling for AI companies looking to do some of
the same things next year.
Speaker 2 (15:58):
Dave, Dave, just real quick. That's what I'm trying to understand.
Who has the balance of power here? Which side needs
the other more, the studios in Hollywood or the AI labs?
Speaker 10 (16:08):
And do you know what I think the question is
for the studios in Hollywood, they can live without being
working with these AI companies, so they might as well
just get as good a deal as they can get,
and if they're not happy with that, they can walk away.
And that's perhaps why Google was in a stronger position.
It'll be interesting to see how the talks now have
to you know, carry on with Google and Disney, because
Open Eye realized that they don't have any other business
(16:30):
with Disney, so there's no incentive for Disney to sort
of bend more to their will. I think in Google's case,
you know, Disney just signed a new multi year deal
with YouTube TV, for example, So there's a much more
sort of close meshing there between those companies. I wouldn't
be surprised if some agreement came out of, you know,
around SAUA and Google quite soon. But yeah, I think
(16:51):
that's where we're going to see these sort of interesting
power plays. But if you're an owner of an intellectual property,
really good stuff. But if you like I say, like
Nintendo or football Company, I think you're in a very
very strong position.
Speaker 4 (17:02):
And really is notable though. I think that some of
these large language model developers would say in chatbot owners
are saying, we are amazed at how much people are
using them for image generation. Even if it doesn't lead
us to superintelligence, it's an addictive element to the use
and maybe outperforms therefore, and who wants to be using
it and keeping eight hundred million people wanting to use
it every single week? But Hannah, when the power play
(17:24):
comes back to the worker, you've reported long and hard
about the strikes that happened in Hollywood. What do you
think the narrative is Bobiga needs to give to his workforce.
Speaker 9 (17:33):
Yeah, he needs to give reassurance. I mean people are
worried about their jobs. Hollywood has been through a lot lately,
you know, from the wildfires to layoffs at major entertainment companies.
So I think there is a lot of concern here
about replacement. If you're going to be able to use
AI tools to enemy, you know, why do you need
humans behind it?
Speaker 2 (17:52):
Bloomberganese reporter Pana Miller, Bloomberg opinion contributor Davely, thank you
to you both.
Speaker 4 (17:58):
We are sticking with tech learnings, going to deep dive
on chip design. Software maker Synopsis Now just out with
its own fourth quarter results, giving an upbeat first quarter forecast.
Is following a significant equity investment from Nvidia earlier in
the month that sent shares hire And maybe we're just
pairing some of the previous games. We're just down by
one point two percent on the day, So not so.
CEO Sasine Ghazi joins us now and even though your
(18:20):
shares are down a little bit, the analyst seem to
feel positively about these numbers. But JP Morgan asks that
maybe you're being slightly conservative on your fall year twenty
twenty six guidance.
Speaker 11 (18:29):
Are you?
Speaker 12 (18:31):
We're looking at it as being balanced and pragmatic regarding
Fox twenty six, given the global and the overall environment,
we guide it at nine point six billion, and that's
after finishing up Fox twenty five at seven billion. So
we're very excited about the opportunity.
Speaker 9 (18:47):
You had.
Speaker 2 (18:50):
Chip design right now, there are some bigger picture discussions
to be had a great debate about companies big and
small looking at customer A sixty doing more in house
versus not bothering because why in Nvidia is doing such
a full stack offering. What are the trends that you're seeing,
particularly when you think about your backlog susame, because the
(19:11):
analysts are also talking about your backlog Exensis.
Speaker 12 (19:15):
Yeah, we have a significant backlog entering FOY twenty six
at eleven and a half billion. And what's driving that
backlog is this strength across the portfolio. As for your question,
most hyperscalers they're looking for multiple alternatives to how to
build and optimize along the stack. The silicon is an
(19:36):
essential component, as you know, and almost every one of
these hyperscalers they have a strategy along three vectors. One
they buy merchant chips from Nvidia, AMD, Intel, etc. And
they build their software stack. Then there's the custom vector
or ask and they have their own customer on tooling
(19:56):
what it's called. We're designed the chip all themselves. All
three vectors are a fantastic opportunity because you need the
essentialness of what we provide in order to achieve that
silicon design all the way up to the system.
Speaker 4 (20:11):
So the first time we've spoken to you since that
two billion dollar endorsement investment in your stock coming from Nvidia,
and at the same time in Video is trying to
gain in roads once again back into China. You've got
headwinds in the China part of the business. How do
you see that part of the world evolving.
Speaker 12 (20:28):
So the Nvidia investment was really driven and it's a
significant endorsement to our strategy to provide engineering solutions from
silicon to systems, where in Nvidia has been talking about
the whole physical AI, etc. That cannot happen without having
physics simulation inside the product development, and that's what Synopsis provides.
(20:52):
As far as the China market and opportunity f y
twenty five, we face this significant headwind in China. Our
business declined by about twenty percent due to these headwinds.
What we talked about in our FYI twenty six guide
is will continue on assuming that the environment in China
(21:13):
will remain status quo, the same stress that we saw
in twenty five, and we have derisped it out of
our forecast.
Speaker 2 (21:20):
Susain very very quickly thirty seconds. Why does Nynvidia need
to have an equity stake in your company?
Speaker 3 (21:27):
Is exactly what Jensen said.
Speaker 12 (21:29):
He sees a great opportunity to make money and to
make sure that he's participating and aligning. Could both companies
roadmap in order to accelerate the investment and deliver to
this opportunity.
Speaker 2 (21:44):
Sono Scia seeing Gasi, It's great to have you on
Bloomberg Tech. Thank you, Welcome back to Bloomberg Tech. This
is a story about rising AI spending, and that spending
rising at a level that is not satisfactory to investors
(22:04):
who want to see how it will convert into growing revenues.
Speaker 3 (22:08):
The story is Oracle the.
Speaker 2 (22:10):
Stock, and it shares on track for their biggest drop
in about twenty four years. That's the story capital expenditures,
in particular billions of dollars ahead of what.
Speaker 3 (22:23):
The market was expecting.
Speaker 2 (22:28):
Let's get out with the Bloomberg Intelligence reaction an A
rag Rana joins us, Now, I just wanted it to linger.
It's severe, and we spent all of yesterday's shows saying
this might happen. That's your reaction and your research. What's
your thesis when you woke up this morning.
Speaker 13 (22:46):
No, I mean I was surprised that they didn't talk
a lot about their supply constraints, because you know, we
heard it from Corvie, we heard it from Microsoft and
so forth. But they spend a little bit of time
trying to explain the funding issues. But it doesn't look like,
you know, the market's happy with their explanation. But you know,
one of the big things is when their cloud infrastructure
estimates were sixty nine percent growth in constant currency and
(23:09):
they came at sixty six And anybody who's followed you
know what happens with Microsoft, Azure or AWS numbers is
when you miss on a cloud growth rate by even
a little bit, I mean, that has an impact on
your stock. And that's what we are seeing here. On
top of that, they talked about, you know, increasing their
topics by fifteen billion dollars.
Speaker 3 (23:27):
That was another thing.
Speaker 13 (23:28):
So there are multiple factors that are affecting the stock.
But having said that, you know, you also go back
and see there was one day when they announced that
big open A ideal, the stock had gone up like
what twenty five thirty percent at that point, So there
is a there's a bit of digestion in here, and
it will take a few years to figure out how
much or how long will it take to take that
five hundred billion off backlog and convert it into sales.
Speaker 4 (23:49):
Talking of that backlog, many would say that the moon
music is still in their favor. Maybe why the shares
remain higher for the year an rag. I'm looking at
this really in depth survey that you've done on the
CC over at Bloomberg Intelligence, and one of the key
findings really was that all industries cite a shortage of
AI infrastructure as a roadblock. So when will we know
the oracle is good for the half a trillion dollars
(24:12):
in backclock that they have.
Speaker 13 (24:15):
Yeah, it's probably the most important questions for all of
these companies right now. But you know, you have to
separate the open AI oracle relationship with the rest of
the hyperscalers because the rest of the hyperscalers, if let's say,
you know, God forbid things go bad next year and
we don't need that much AI infrastructure. You know, It's
okay for the three hyperscalers because they have a lot
(24:36):
of other businesses that they can run. They have their
entire cloud businesses, search businesses, et cetera, for the three
of them combined together. But for Oracle Open Ai, the
big question is, you know, open Ai by the end
of the year is going to do twenty billion of
A and annualized revenue somewhere in that range, and it's
made commitments of hundreds of billions of dollars. So this
is one pocket that needs to be examined a lot
(24:57):
more carefully than the rest of the equation. But having
said that, we are very confident from what we learn
from these executives that AI infrastructure is the biggest Botto
neeck in deploying you know, all sorts of AI functionalities,
you know, in any part of whether it's hospitals, financial services,
or pharmaceuticals.
Speaker 4 (25:18):
Remote intelligence analyst Anna rag Rana with really important research.
We now want to talk about how that affect your investments.
Beth Kinding is here with us Need Tech analyst at
the IO Fund, and Beth we come to you because
of your semiconductor expertise. But here is Larry Ellison and
others over an Oracles saying, look, we will put in
whatever chip you want. We are not beholden on in video.
(25:40):
But what they do seem to be beholden on is
a supply issue, not a demand issue. Is that coming
down to semiconductors or is it more the build out
of data centers.
Speaker 8 (25:49):
Yeah, I think it's a natural statement for Larry Ellison
to say that because we know custom silicon will help
drive down those cavex costs. From my perspective, we really
are at the crux of this issue to where, for example,
Oracles estimated twenty six twenty twenty six capex was supposed
to be nine billion, We're now over twenty billion, low
(26:10):
twenty billion, assuming no more raises, we are significantly higher
two and a half x higher than what was originally estimated.
This is what one analyst is called drunken sailor type spending.
Speaker 3 (26:24):
However, what I.
Speaker 8 (26:25):
Would encourage investors to keep an eye on is the
moment that there's an inflection. We haven't gotten that inflection yet,
and that is really what these very smart tech CEOs
across the border banking on. As an investor, I need
to pay attention to what these CEOs are saying, and
they're talking about an incoming wave of monetization to where
some of these cash flow issues really do get relieved.
Speaker 4 (26:47):
So do you think the cash flow will not be
negative going forward? At the moment we're seeing well that
capex is seventy five percent of their full year revenue.
Speaker 8 (26:57):
There will be a moment, I don't know when. I
don't think it'll be twenty twenty six, maybe not even
twenty twenty seven where you're able to so rapidly monetize
AI that it can really absorb these capex costs.
Speaker 3 (27:11):
Now your.
Speaker 8 (27:13):
Bloomberg Intelligence. A correspondent just mentioned open AI. Open air
is a great example of just how quickly this ramp
can happen. It is the fastest run rate we have
seen from zero to twenty billion in all of tech's history.
That is a clue as to how quickly the inflection
can actually happen.
Speaker 2 (27:30):
Here, Beth, I just want to go back to what's
happening now in the market. You know, a single session
a market does not make but in video is down
almost four percent, on track for its biggest drop in
five weeks. Just going back to Kara's original question, why
what's the anxiety that's spreading to in video?
Speaker 11 (27:49):
Here?
Speaker 8 (27:51):
Tonight Broadcom will report and there are certainly some concerns
that in Video will start to lose market share to
competitors such as you know, Merchant potentially merchant TPUs. Right now,
they're mainly used for internal purposes. If those become commercialized,
the threat is could that eat into in Video's share. Now,
(28:13):
I've served some concerns with the market on this stock
for many, many many years. Technically when I first started
covering this stock in twenty eighteen twenty nineteen.
Speaker 3 (28:23):
TPUs were a threat actually.
Speaker 8 (28:25):
Back then, and I covered it back then. So you know,
my just in a nutshell, the AI market will widen,
it will include more revenue from Broadcom, but that does
not mean in Videos out of the picture by any means.
Speaker 2 (28:39):
The messaging from Oracle right that not beholden to video
and Carriage made that point smartly. The debate with A
six generally like Amazon has this issue is that there's
not the library of software. You know, that's why in
video is so good. You know that it's multi purpose,
easy to use the software, to support the stack it exists.
Speaker 3 (28:59):
Is that inging with TPU that that consideration to your mind.
Speaker 8 (29:04):
Yeah, the Kuda software platform is primarily very badly needed
on the training side, and video has a near monopoly
on training. As we move into inference, the Kudo mote
matters less. But what does continue to matter. But what
does continue to matter is consider that we are not
at a static point in videos, R and D is
(29:27):
world class. It will continue to iterate and improve, just
as TPUs can finally catch up, and video is already
going to be on to the next generation of GPUs,
which will challenge anything that's coming out of big tech.
Speaker 2 (29:42):
Beth Kindig of the Io Firm, we enjoyed that. Thank
you very much for the next episode of Bloomberg Tech Europe.
Speaker 3 (29:49):
The show profile is.
Speaker 2 (29:50):
ASML Europe's most valuable company and one of the most
important cogs of the global AI supply chain. Take listen
to what the company's CEO, Kristuque had to say about
AI bubble concerns.
Speaker 14 (30:03):
Well, you know, when people talk about AI bubble, I
think I don't know exactly what they mean, and usually
I say, there's two ways to look at it. If
you look at the industry. I don't think there is
a bubble. So the impact of AI in the industry
is just starting and the impact on the industry will
be positive for many, many years to come. So there
(30:24):
there is no bubble. I think that the value of AI,
the industrial value of AI, is extremely high, and this
will be developing over time. There's no bubble because, like
I said, we're just starting. Sometimes people talk about a
bubble in a reference to the stock market because we
have seen some company getting extremely high valuation as a
resource of the excitement of AI.
Speaker 3 (30:47):
There.
Speaker 14 (30:47):
I think what you will see is more players coming
over time. So initially a few company where I would
say very much the only winner out of AI because
of the demand. Because industry, the industrial demand will be
so high, we need more players, and you will see
more and more company designing chips, designing AI, product manufacturing chips,
(31:11):
et cetera, et cetera. That could create, of course some
change on the stock market. But you know the two
are a bit unrelated.
Speaker 15 (31:21):
Because I can make me three hundred million dollars just
this year, a long from hyper scale is maybe four
hundred million next year. Yeah, that translates into real orders
for your kids in the years ahead.
Speaker 14 (31:30):
You start to see it over time and sometimes, you know,
the last few months, I used to joke with some
of our investor because they told us, why you know,
two hundred billion here, five hundred billion here. I say, well,
I still do not have the equation to translate doorse
order into order for us, and it takes a bit
of time, but you're right. Over time that demand translate
(31:51):
into cheap demand to our customer. This translate into a
need for more capacity, and this translate into demand for
ISML and our peers in the industry.
Speaker 15 (32:03):
The infrastructure span from the hyper scales and the kind
of deal making that open ai has done almost a
trillion dollars worth of deals committed just by that one
company alone, which isn't making a profit this year.
Speaker 4 (32:14):
That makes sense to.
Speaker 14 (32:16):
You, Well, I think the investment makes sense overhaul, because
you cannot play in AI without investing in hyperscaler and
there may be even a few cycle of investment because
the investment today is done on certain chips.
Speaker 3 (32:33):
The chips in two three.
Speaker 14 (32:34):
Years from now, if you look at Nvidia announcement, there
will be a lot more powerful and people may be
tempted again. In twenty twenty seven to invest again in
hyperscaler to make use of those chips. So you have
different cycle and you have a bit of a harm
rest because if you don't invest today, you're out.
Speaker 4 (32:54):
That was Christopher Forget, CEO and president of ASML, along
with you. Back to Europe host Tom McKenzie. You can
find the full episode of Bloomberg Tech Europe tonight. You
have to stay up a bit late one thirty am
Eastern but six thirty am over and in London time,
and we'll be online mean while. Coming up, we'll be
joined by the CEO of Medra on how the company
is trying to revolutionize drug development and other life science
(33:15):
fields the physical AI. This is boombog tech.
Speaker 2 (33:32):
Drug development and other life science fields have relied on
industrial automation for decades. Startup Medra is aiming to take
that step further, building software that scientists can use to
direct lab robots using natural language the way they would
with the chatbot. The company's just closed a fifty two
million dollars Series A funding round. There are some big
(33:53):
names in it. Medra CEO Michelle Lee is with us
in San Francisco. This is very interesting when you and
I first met a few years ago, you had an
idea and a concept.
Speaker 3 (34:05):
Now you have a company moving forward with it.
Speaker 2 (34:08):
I think actually, as a start, let's explain why having
that degree of interaction with what is a robotic arm
in that lab environment through natural language is necessary?
Speaker 3 (34:20):
What is it solved for?
Speaker 11 (34:21):
Yeah, so we want to give scientists directly, not just engineers,
with scientists directly the ability to actually run experiments at scale,
and that is why we are building the physical AI
scientist physical AI that allows to allows them to automate
their scientific experiments at scale, and also the AI scientist
(34:43):
so they can talk to it. They can copilot design
experiments with this AI scientist.
Speaker 4 (34:50):
What is it that you bring the others have in
terms of the physical AI. Is it your data that's
paramounting on. Is it the fact that your scientists a
paramount on? Is it the technol plogy?
Speaker 6 (35:00):
What is it?
Speaker 11 (35:01):
It is all of those things and more. Industrial automation
has been the key way that live sciences has automated
their labs. But we're seeing a huge paradigm shift across
every industry that's using robotics, where industries are shifting away
from industrial automation to physical AI, and that is also
(35:23):
what Medra is bringing to life science, the ability to
flexibly automate their lab experiments instead of using brittle lab
automation technologies from before.
Speaker 2 (35:34):
I want to think about this and I review the
photos and images. I hope we have some images to
share with our audience. I think a little bit about
Tony Stark and Jarvis. It's the idea that there is
an artificial intelligence that one interacts with through the robotic mechanism.
When we first spoke, and this is a long time ago, now,
this was about like efficiency. Labs are difficult environments. It's
(35:56):
hard to move around them, takes physical strength and time,
you know, but fifty two million dollars a lot of money.
Speaker 3 (36:04):
You know, you just click your fingers and you can
suddenly do it. You've solved it.
Speaker 11 (36:08):
No, I mean, we have so much more to be
building because again it's not just about automating the work,
but about this idea. Can we automate science itself? Can
we have a scientific AI that can reason about the science,
generate hypotheses, design experiments, and when we actually run the
experiments with our physical AI, once that data is generated,
(36:30):
can we take that data and then can we think
about what are the new optimizations and changes necessary to
make that science better.
Speaker 2 (36:38):
We started the conversation by introducing this as in the
context of drug development of the life science fields, what
is the industry there and therefore your customer.
Speaker 11 (36:49):
Yeah, So we are working with some of the leading
biopharma companies, including Genetech, to help them use our technology
to really create this lab in the idea, and we
are working with some of the best machine learning teams
at our customers where their machine learning teams can then
propose new experiments they want to run, new ideas they
(37:12):
want to test, and then again our physical AI scientists
can take those ideas, those predictions and turn that into
data that then feeds back into their machine learning models.
Speaker 4 (37:22):
Its fifty two million. Where is it going to be spent?
Most predominantly talent marketing? Well, all of those again, all
of those above.
Speaker 11 (37:32):
We are growing our team and expanding our team across engineering, robotics, AI, hardware, software,
and also on operations and go to market. We're expanding
partnerships with other biopharma companies and also we will be
building our own lab. We will be opening up an
autonomous lab with one hundred robots next year to be
(37:54):
able to run experiments and generate data at scale.
Speaker 4 (37:57):
Do you think the US is leading Ham Mischelle.
Speaker 11 (38:00):
We want to be leading, and Medro is going to
be that force that helps the US lead in this area.
Speaker 4 (38:07):
Medra ceo Mislie. Great having some time with you. Congratulations
on the rays. We appreciate it.
Speaker 2 (38:12):
The new lawsuit claims open ai and its largest investor
Microsoft are liable for a Connecticut murder suicide. It's the
latest case to blame chat GPT for dangerous psychological manipulation
of users. Representatives from both companies declined to comment, and
open ai CEO s Altman, who's also named in the suit,
(38:32):
didn't reply to a request for comment was sent to
open ai representatives on his behalf. I want to get
more details of Bloomberg AI reporter Rachel Metz. Let's start
with the suit. What is alleged in the suit and
some of the most important details in the reporting.
Speaker 16 (38:47):
Rachel, Yeah, Well, this suit is alleging that this man
used chat GBT over a long period period of months,
and that it was consistently telling him that these delusions
that he had were accurate and they were real delusions
related to him being under surveillance to people wanting to
(39:09):
kill him, particularly surveillance related to his mother in the
home where they were living together.
Speaker 4 (39:16):
Rachel sadly Ai psychosis is not the first time we're
talking about this. It's even got a sort of technical
name if you go out and look for it. But
when we hear from Opena are responding to this saying
we continue to improve chatchipt's training to recognize and respond
to signs of mental or emotional distress, to de escalate
conversations and guide people towards real world support. People understanding
(39:40):
that message, are you seeing signs that on this occasion
things could have been improved through improvements in the chatbot?
Speaker 16 (39:47):
Through this case, I mean, I guess what I would
say is through the extens of reporting that I've done
and work that I've done with my colleague Ellen Hewitt,
We've seen a lot of o reasonunfold that are really
similar actually to what we're seeing in this story. This
story just happened to have a horrible, horrible outcome. So
(40:09):
I'm not sure if the changes that they've made are
really going to change how people are using the chatbot.
It sounds like a lot more is going to have
to be done as far as both changes and education
to users in order to make a meaningful change here.
But we're just going to have to see going forward. Also,
there are a growing number of these court cases and
(40:29):
we'll have to see how all of that shakes out
as well.
Speaker 2 (40:34):
It's a funny thing to ask, but in the landscape
of generative AI tools and chatbots, is this something that
other technology companies face as well? You and I have
discussed character AI, for example, in the context of people
that interact with the technology, maybe for emotional support or otherwise,
(40:55):
But that is a very specific design of a chatbot.
Speaker 3 (41:00):
Yes exactly.
Speaker 16 (41:01):
I mean the Opening Eye is absolutely not the only
company that is facing this either, facing situations where people
are saying that a powerful chatbot led to or reinforced
untrue beliefs that they had. But you're also seeing this
definitely stick with this idea of powerful chatbots. I think
(41:22):
one thing that I think needs to be looked at
more is are there certain chatbots that seem more likely
to lead to.
Speaker 4 (41:29):
These kinds of situations.
Speaker 16 (41:31):
That isn't totally clear to me yet. If Replica AI,
for instance, is a service that is more intended for
emotional connections between a person and a chatbot. But does
it make a difference if a person goes into that
kind of experience knowing and desiring that.
Speaker 4 (41:48):
I'm not sure. So it'll be interesting to see in.
Speaker 16 (41:50):
The next few years how researchers determine what's actually going
on here.
Speaker 4 (41:56):
Ratual Matts, it's a thoroughly reported piece. Thank you very
much indeed for telling it to us and our audience today. Meanwhile,
that does it for this edition. A Bloomberg Tech ed.
Speaker 2 (42:07):
Yeah, our markets are under pressure, right, and Oracle is
at the heart of that story. Thought it was really
interesting that Beth Kinding, one of our guests, talks about
Broadcom after the Bell and like the similar themes there.
That Oracle decline of fourteen percent on track for its
biggest drop in twenty three to twenty four years. That's
the severity of it. We'll see where it closes. Check
(42:27):
out the podcast. There were loads of conversations worth recapping.
This is where you can find it from New York
City and San Francisco. This is Bloomberg Tech
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