December 3, 2025 • 42 mins
Bloomberg’s Caroline Hyde digs into anxieties and losses coming from the Magnificent 7 as big tech stocks lag the wider market. Plus, Okta CEO Todd McKinnon discusses the software maker’s earnings as the company boosts its full year profit forecast. And TikTok plans to invest more than $37 billion to build its first Latin American data center in Brazil.
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news. Bloomberg Tech is live
from coast to coast with Caroline Hide in New York
and v Lovelow in San Francisco.
Speaker 2 (00:21):
This is Bloomberg Tech coming up. Big Tech lags as
investors remain skittish about the AI trade. We dig into
anxieties and losses coming from the magnificent seven plus earnings
that still roll in. We speak with Octo CEO Todd
McKinnon after the software company boosted its full year profit
Foradcast and TikTok. We'll invest more than thirty seven billion
dollars to build a data center in Brazil, this first
(00:43):
project in Latin America. But first we check in on
these markets that are volatile on this day. Look, we're
putting back on some of the gains made yesterday on
the Nastaq one hundred. We're off only by a tenth
of a percent in video flip flopping between gains and losses.
But all eyes on some of the key magnificent seven
names that like magnificent. On the day, Bitcoin so managing
to power up nine ten percent. We're at ninety two thousand,
(01:05):
so bit of dip bin and going on a sentiment
though still remains pretty sour on the asset class. Move
on and have a little look at what's really under
fired today. Reports out there that Microsoft potentially having to
tay you to its salespeople of co pilot of AI
productivity tools. Maybe you need to pull back on your
sales targets. There is counter reporting coming from the NBC
(01:25):
that this isn't currently true, but we're going to dig
into those details for you. Currently off by one point
eight percent. All of this speaks to the anxiety that
AI isn't going to give us the productivity gains many
and Hope Bailey Nipshew's sent piece to say is here
with us at the moment, really talking about more broadly
what we're seeing in this market at the moment. And Bailey,
are we seeing those sorts of anxieties.
Speaker 3 (01:46):
Well, we are seeing some of the uncertainties that we're
seeing that play out in real time. The big debate
really around a lot of the CI trade, and we
saw this play out throughout November, is how much of.
Speaker 4 (01:55):
This spend is going to be realized?
Speaker 3 (01:57):
Are the dollars going to make sense at the end
of the day, And if you're seeing companies dial back
there spending. What does that ultimately mean for the bottom
lines When you see a report like we've been seeing,
whether they're conflicting or not with Microsoft, it's a lot
for investors to chew on.
Speaker 2 (02:09):
And what's been being chewed on is in people who
have diversified since the bottom in October, since we really
saw the perhaps end of the significant setting. Tech still
lagged and we've seen underperformed health, tach, care and other
key sectors.
Speaker 3 (02:21):
Yeah, if you look so last time, we had an
all time higher looking back to October twenty eighth best
performers healthcare, communications, energy. As you mentioned, worst performing group
is tech. One thing to keep in mind when you
look at that SMP five hundred info Tech.
Speaker 4 (02:35):
The big names Nvidia, Apple.
Speaker 3 (02:36):
Microsoft are in there, missing Tesla, Alphabet and other names.
So a little bit of a grain of salt to
take it with that, But we are certainly seeing investors diversifying,
flocking to healthcare, Eli, Lilly, Cardinal Health, Biogen all out performing.
When I talk to portfolio managers, part of the debate
is we've come so far, so fast in a.
Speaker 4 (02:53):
Lot of these names.
Speaker 3 (02:54):
Yes, and as much as we like to think that
things only go up eventually, the question is can you
performing is their alpha generation, and that's why we see some.
Speaker 4 (03:02):
Of that repositioning.
Speaker 2 (03:03):
Repositioning still significant gains on the year if you're thinking
of an Nvidia, but the momentum traits we've seen on
the back of this, the fact that quantum stocks have
done so well, some of the crypto spheres, and they
still under a lot of pressure right now.
Speaker 4 (03:16):
They're under pressure. There's just a lot of volatility.
Speaker 3 (03:18):
You look at the moves that we saw, whether it
was a nuclear power or as you mentioned in quantum,
pretty much NonStop up into the right, whether that was retail,
whether that was momentum or just hedge funds trying to
juice their books. We've seen them pull back pretty markedly. Obviously,
Bitcoin has been quite volatile trying to recoup some of
those losses. But if you're really kind of macro investor
(03:38):
or running a book broadly from the equity side, we're
in December, if you're up quite a bit, maybe take
some gains off the table and maybe diversify into something
like a healthcare which could be positioned to benefit or
at least continue growing.
Speaker 4 (03:51):
If there are concerns around AI.
Speaker 2 (03:53):
And concerns as a macrob of picture. We just saw
the ADP figures today, I mean jobs market looking a
little bit weaker as well being lipstials. It's always a
joy to have him on talking to us through the markets.
We've got more market context for you now and more
broadly with Sylvia Deablonski Defiance ETF CEO CIO you've been
writing it's not all all over, but the pace of
spending is becoming more selective if upcoming macro data corporates,
(04:15):
we could be nearing a tradable bottom. As a longer
term investor, I continue to see these pullbacks as opportunities.
She joins us. Now so cooperating here, is market sentiment
not or is market sentiment going to shift to the
positive again?
Speaker 5 (04:33):
Good warning?
Speaker 6 (04:33):
Well, you know, barring external factors, which we've seen a
lot of right throughout the last year, whether it's been
geo politics, whether it's been tariffs or for things like this,
you know, if we're on pace here for kind of
the trend that we have here, and we do have
this growth of AI, you know, I know there's news
around spending being cut back and things like this, but
we're still in the infancy of AI and there has
(04:55):
already been so much spending that is now going to
kind of pile into the economy, pile into do these
different companies, different sectors and things like this. So I
think it plays out and benefits these these companies over time.
So I think, you know that coupled with a FED
that is likely to cut particularly if we have a
new FED chair in, you know, in with the president
(05:15):
and kind of you know, knowing where the predictions will
go on. That that's what the market's really looking for.
Right we have a little bit of a weaker labor number,
Consumer spending is holding up. You know, corporate earnings were
arguably great. You had over eighty percent of names beating
on the top and bottom line. You know, double digit
growth continues, positive GDP outlook. I think that we could
be in for a good market here, a.
Speaker 2 (05:38):
Good market led by the same names. It's interesting that
Innvidia CEO Jensen Wang is in Capital Hill today. We
understand he's just been seen entering US House speak at
Mike Johnson's office. How much will political tailwinds or headwinds
help will hindle some of these companies be worried about
access to China, well broadly, Cannon Vinie continue to lead
this market higher.
Speaker 6 (05:58):
So I think in a way, and Video still has
the monopoly on AI and chips right, and so I
think that you know, a lot of the other semiconductor
companies are starting to do you know better and take
some of the business away, but for now, and Video
remains the clear leader. In terms of Washington and politics.
Of course, all of these things impact these companies. You know,
(06:19):
they are the trillion dollar clubs. They lead the market
and policy effects them first. But the other side of
that argument is when the market falls back, you know
where do people invest. A lot of times they look
for defensive names, but you have these high again trillion
dollar companies, high quality, strong balance sheets that over time
tend to perform. Investors actually do look to those companies
for investments. And if you look at today, you know,
(06:40):
four hundred out of the five hundred names actually participated
in the bounce off of you know, the last pullback,
and so you see a little breath expansion there. I do, though,
think that the AI tech is going to continue leading
markets for years to come.
Speaker 2 (06:53):
You've actually got a lodge cap etf that is, excluding
magnificent seven, how is that performed of late and how
many people are wanting to put money into it?
Speaker 6 (07:04):
So interestingly enough, we've actually seen an increase in flows
into that ETF. And you know, it may sound like
a contradiction what I just said, it absolutely isn't. I
think that the average investor has exposure to MAG seven everywhere, right,
whether it's in ETFs or they hold the single name stocks.
And so when you're when the market pulls back and
you're looking to diversify it and broaden your exposure, we
take out those names because we're saying, hey, you already
(07:26):
have them, hang on to them, but participate in the
in the in the breath and the broadening of the
rallies in the years to come. And so you know,
very much like an equal which strategy x MAC excludes
the max haven't. But but what's you know we think
very favorable about that is you're still letting the winners win, right,
so you still have market.
Speaker 2 (07:44):
Caps rallying in that fund.
Speaker 6 (07:46):
And can you know do well over time.
Speaker 2 (07:48):
You really have created a lot of ETFs that have
been galvanized by this whole broadening out of the Trade
AI and Power Infrastructure ETF. For example, But I'm also
interested in the quantum side of things because there's an
interesting story. Key Nobel Laureate, winner of the Physics Prize,
has just been talking about how China looks like it's
really pulling ahead just a nanosecond behind the US in
(08:10):
terms of quantum compute scale and indeed innovation. How much
have people be wanting to get into the quantum side
of the equation?
Speaker 6 (08:17):
Well, I think, you know, what you just mentioned will
be a big reason, and we'll put a lot of
focus on the quantum names again for investors, because of
what happens when we think that, you know, other governments
are beating us in AI or technology or things like this.
The US government tends to invest right, and American corporations
tend to invest and catch up and try to win
(08:38):
the race, right. So I think that just you know,
on a basic level, you've seen some good news around quantum,
whether it's been HSBC, the advanced bond pricing models that
have come out of it. You know, you've seen some
good results around and kneeling from d Wave. You know,
some of the top quantum companies have done quite well
for investors. But I think you know, as this continues
and it becomes more commercial, you will see flows coming
into the space, and we think it's a longer term
(08:59):
hole for investors.
Speaker 2 (09:01):
What hasn't been a longer term held just in recent
days has been micro strategy. You have a lot of
ETFs giving either you long exposure to micro micro strategy
now called strategy or indeed leverage positioning for it, but
also to go short as well. So you're kind of
offering both sides of the pile here. What do you
make of the fact that maybe Michael Sailor isn't a
(09:24):
complete hoddler for the longer term, that maybe at some
point they might have to sell bitcoin.
Speaker 6 (09:29):
Yeah, I mean I think that that's you know, that's
a business decision for their firm in terms of how
best to to you know, generate ROI and and be
profitable over time. But you know what you just mentioned,
it is true. We have long funds, we have short funds,
and for us, we're just trying to democratize hedge fund
like products for investors that you know, are tactical and
knowledgeable about these markets and look for short term exposure opportunities.
(09:52):
So those products are simply there. We don't necessarily have
an opinion on you know, their view of that. We
want to give them the right tool to do that.
But I think you know, if Bitcoin rallies, you'll see
strategy do well. If it doesn't, you'll see it go
the other way, and perhaps the flows we'll also match
in terms of long and short leverage funds.
Speaker 2 (10:08):
Slovia jabonskiin talking about what has been quite the volatile
trade for certain retail of late Defiance ETF CEO CIO,
it's always great to catch up with you. Coming up,
we're going to hear from AWS CEO mcgarmond at his
take on the AI power demand, the race with Nvidia
so much more of course trainium three. This will be
a big tech.
Speaker 7 (10:31):
The desire and the hunger out there for more power
and more compute is almost insatiable. And so the more
we can take an existing power footprint, an existing set
of capabilities and bring more and more compute into that
for customers to build cool applications and cool environments and
to get value from that, that's we're focused on.
Speaker 8 (10:52):
Then.
Speaker 7 (10:52):
So we're going to be pushing that envelope as fast
as we as we possibly can to get those new
and new capabilities out to customers.
Speaker 9 (10:58):
The pitch for Trainium in both the training and infants
use case is that it's a great deal, you know,
cost effective performance. At the same time, you went on
stage and said AWS is quote by far the best
place to run in video GPUs. How are both if possible?
Speaker 7 (11:15):
Well, I mean that both both are possible because that
is a great environment to run accelerators and compute in.
And so we've been working for fifteen plus years with
the in Nvidia team and Jensen and team to deliver
outstanding capabilities for our customers. And for when you're running
a large cluster of Nvidia GPUs, people will tell you
(11:36):
AWS is the best place you get the best performance,
the most stable cluster, the best capabilities out there and
broad scale. And so why folks like OPENINGI and others
are running in AWS and we have that choice. And
so for others that want to be able to take
advantage of Trainium. And there's some uses cases that are
best for TRAININGUM, there's other use cases where in video
GPUs are going to be your best option. We want
(11:57):
to have all of those available and so we think
that if we can continue to push the envelope on
what TRAINUM can deliver for customers and make sure that
we are supporting the latest and greatest from everything that
the awesome team in Nvidia is delivering. That's going to
be the best outcome for our customers.
Speaker 9 (12:13):
The plan for AWS is to basically double capacity by
end of twenty twenty seven to round eight gigawatts, so
you have a sense of how you apportion that capacity
in how Silicon and serve a design to Trainium versus
and video GP is.
Speaker 7 (12:28):
We're just going to keep pushing as fast as we
can and we'll see where customer demands drives us as
we go. And as you said, we're massively adding capacity.
In the last year alone, we've added three point eight
gigawatts of capacity, and we'll continue to add more and
more as over the next couple of years, and we'll
let customer demands drive us a little bit on what
they're looking for and what they want, and that's what
(12:49):
we always listen to and that's what we'll continue.
Speaker 2 (12:50):
To listen to.
Speaker 9 (12:51):
The focus with Trainium in the time i've been able
to interact with you and talk about again not just
the accelerator, but at the server design level, there's a
lot of benefits the customer. When does that benefit start
accrueing to AWS in terms of profitability, Like, if it's
such a good financial proposition, you must be able soon
to say we're making a lot of money on this.
Speaker 5 (13:11):
Yeah.
Speaker 7 (13:11):
Well, you're already seeing some of the benefits of crew
You see things like bedrock growing really really rapidly, and
you see training empowering that under the covers. And we
announced today that more than half of all tokens and
inference done in bedrock are done on TRAININGUM two servers
under the covers, And so you're already seeing that benefit come.
You see the models that we're building and Nova and
(13:31):
Nova too start to get better and better over time
and be accelerated by Trainum. And so we really think
that there's a whole bunch of dimensions on which both
our customers, our partners, and our own products are going
to get accelerated all from TRAINUM.
Speaker 9 (13:45):
Every time you come onto the program, I always offer
the audience opportunity to pose a question to you. There's
a lot of interests in AWS, right, many of your
customers span global technology. Actually most of the questions were
about anthropic That wasn't much said on stage. I think
people are trying to understand what is the benefit and
advantage AWS office tanthropic while they are ramping trainum through
(14:07):
Project Raineer, but also ramping their TPU allocations as well.
Speaker 7 (14:12):
Well, Look, our partners are an anthropic. Our partnership with
them is incredibly strong and it's never been stronger, and
we do a ton of collaboration with them, and as
I mentioned through Project rain here, it's a huge collaboration
there to go build their current generation models and all
their models run today and launch on day one on
top of Trainium and on top of AWS.
Speaker 2 (14:31):
AWS CEO Matt Garman along with their own ed Ludlow.
Let's discuss this growing AI chip race and the big
tech names. Who's when, who's losing? Joan Feeney is the
perfect person to ask partner and portfolio manager over it
advises capital management. So did Amazon manage to solidify its
prowess when it comes to vertical integration, cloud and ship.
Speaker 10 (14:50):
Offering, Well, they seem to be doing a really excellent
job of that. And what's interesting about what Match has
said is they're going to let customer demand drive you know,
how they build out these different capabilities for AI applications,
which tells us that they are going to be different
models purposed to different types of workloads. So everybody's thinking, oh,
(15:14):
and Vidia is the market dominant player right now. They
have massive market share, and they're treating it like it's
one sort of big thing that's homogeneous. And I think
what people are going to realize over time is that
they're going to be different types of models for different workloads,
and different chips will be useful for developing such different
models and for running those models, for doing the inference.
(15:35):
So I think there's a lot of room for different
chip players here, and we should expect more of the
in house chips like what Amazon does in collaboration with Marvel,
or what Google does in collaboration with Broadcom, to continue
to rise in prominence, as we've been seeing in the
recent news coverage.
Speaker 2 (15:51):
I mean, yeah, let's talk about Marvel out with earnings
out with also a key purchase of Celestial AI. That's
all about lasers, and we can talk in lasers a
little bit more. But are we seeing a six really
starting to put a concern towards in video? Should they
be threatened by this custom built model?
Speaker 10 (16:08):
Well, no company likes any kind of competition right, So
I'm sure in video would just be happier if they
didn't exist.
Speaker 5 (16:15):
But clearly, look, ASEX are very powerful.
Speaker 10 (16:17):
That stands for applications specific integrated circuit right, So these
I believe these kind of xbus er TPUs are going
to be designed and going to be put to use
for the type of applications in AI for which they're
best designed. So it's clearly the case that in Vidia
is going to lose share over time in the big
(16:39):
world of AI compute. But nobody should be surprised by
set by that, and the pie is still growing so
massively they can't meet demand. They're not unlikely to be
able to meet demand for some years to come, and
so there's a lot of room for a sick approaches
to play roles in various types of models.
Speaker 5 (16:56):
So we should expect that.
Speaker 2 (16:57):
Before we talk more lasers, I want to go back
to where we sort of started, the fact that you're
getting specific chips for specific applications but also specific models.
And I think there's some threat in the market today
around Microsoft's are the part of the flywheel, because everyone
thinks Microsoft got very strong cloud offering, and clearly we've
seen as you not be able to fill demand with
its supply. We're now we're just basically about the applications,
(17:20):
about companies being willing to pay more for these AI
agents and actually the use of AI. What are you
hearing in the market. How much does that impact your
sector of chips?
Speaker 10 (17:30):
There is a lot of sporadic i should say, information
about how much AI agents and AI is being used
in different settings. So, right, there was a story today
about how Microsoft has reduced its sales targets for getting
AI agents you know, to be adopted by their customers,
and so that as people concerned, you know, Salesforce similarly
(17:53):
is trying to roll out right their AI agent capabilities
and some people are wondering whether that's going to happen.
But there are so many other applications in addition to
those kind of smart helper AI agents, and I think
the earlier in the week announcement with Nvidia in synopsis
is a good example of that. Right, the industrial uses,
whether it's these digital twins basically being able to model
(18:15):
out a whole factory or a whole building, or you know,
any other physical presence in simulation. You need this kind
of computational power. You need AI and so that kind
of collaboration I think really points to lots of other
applications for AI, and then you go to biotech and
pharma and.
Speaker 5 (18:33):
Computation.
Speaker 10 (18:34):
We've just been held back for so many years by
its limitations from the CPU side, and now that we
have these GPU based accelerators and innovations in fabric like
what Celestial is bringing to Marvel and what Broadcom already does,
is speeding up all of these computations, making farmer applications
possible across all industries.
Speaker 2 (18:54):
And some would say limitations have been in the fabrication
in the United States energy just making sure that we've
got more solid and trustworthy supply chains. I think about
just the news also earlier this week one hundred and
fifty million dollar steak in a chip startup by Pat Gelsinger.
Of course we all know him from Intel, but the
US is making that investment in x light a startup. Johanne,
(19:15):
you have some real insight as to how this technology
is being put forward. It's all about lithography taking on ASML.
Speaker 5 (19:22):
Yeah.
Speaker 10 (19:23):
So x light is developing a new laser technology and
that is a fundamental ingredient to doing lithography right. ASML
being the leader in extreme ultravilethography, which depends on these
very high end lasers. So x Light's taking a different
approach to laser development. And what's interesting is and also
reminds me of my past, is that this one hundred
(19:44):
and fifty million dollar investment by the federal government by
the Chips and Science Act, the work is going to
be done at a place called Albing Nanotech, which is
where I got my start in the semiconductor industry, you know,
twenty plus years ago. And it's a location for collaborative
R and D for development of new manufacturing techniques, development
of new materials, development of new recipes for designing and
(20:07):
building chips. And it's all the major players in the
industry are there, and it's pre competitive, and so for
x Light and Pat Gelsinger to be doing it there
with the support of the federal government sort of enhances
this model of get some public support for a technology
that can be spread and help the industry broadly speaking,
(20:28):
and does go towards this effort to enable more chip
equipment design and manufacturing to eventually occur.
Speaker 5 (20:35):
In the United States. It's going to take a long time.
Speaker 10 (20:37):
These programs, as I was involved with back in the
early two thousands. They take many years, but it's a
great way for the US to subsidize a general technology
which could ultimately help US position and equipment manufacturing and.
Speaker 2 (20:52):
The state of New York. I'm sure music to its
is to Joanne Feeni of Advices Capital Management. Thanks so
much time now for talking tech. First up, Uber launching
autonomous trips with ad Ride in Dallas, marking the latest
US city where the right hailing giant is offering such
a service. Uber's global head of Autonomous and Mobility and
(21:13):
Delivery sat down with our colleagues at Wall Street Week.
Speaker 11 (21:17):
It's an exciting time to be in the autonomous space
because we're really graduating from a technical problem that first
started as a science project to something that now is
increasingly being solved and can be commercialized and be offered
to more and more people who are using Uber.
Speaker 6 (21:32):
All around the world.
Speaker 2 (21:33):
And Dell CEO Michael Dell says he sees the AI
build out as not stopping anytime soon, with more demand
than supply at the moment. He weighed in after, of course,
announcing that six week two five billion dollar gift to
fund accounts for twenty five million American children ten an under.
Speaker 5 (21:48):
Long term, we think.
Speaker 12 (21:52):
Investing these accounts in the s and.
Speaker 4 (21:55):
P five hundred is a very.
Speaker 12 (21:57):
Good way to compound over time for these children. When
I look at what's going on today in the ignormous
buildout in AI, what I see is a lot more demand.
Speaker 2 (22:17):
We'llcome back to bo BEG tech. Let's check in on
these markets because there's a volatile training date. We're on
a macro data to digest services look stronger, But BOYD
does that private payrolls and I'm from ADB look pretty
woeful worse Since the beginning of twenty twenty three, we're
off by tenth of a percent. The idea of FED
cuts not managing to outweigh some of the anxiety around
the AI trade today. Key names in the red like
(22:38):
Microsoft as we worry about productivity gains and some of
its provisions. But move on to some of the earnings
that we've got. CrowdStrike just about six tenths of percent.
They actually raise fiscal twenty twenty six guidance. They're citing
resiliency and demand for their AI enabled cybersecurity products. But
this is a stop that's up about fifty percent this year,
maybe the expectations to run ahead of it and we
just take a little bit of money off the table.
(23:00):
Marvel up more than four percent, even as it's splashing
the cash on a new acquisition that we're going to
dive into in the world of lasers. But I'm talking
about also marvel earnings did beat expectations, and we're more
broadly seeing the adoption of its technology and a custom
chips being built across the AI infrastructure sphere. Let's get
to Dina Bass, who covers all things AI infrastructure. Marvel,
(23:22):
I mean, only an eighty billion dollar company, not nearly
as large as Nvidia, but it is starting to show
how it's building out in AI.
Speaker 13 (23:30):
Sure, we've been talking about in Vidia a lot, and
last week we were talking a lot about the Google TPU.
The TPU is one of these kind of custom chips.
It's not one that Marvell does, it's one that Google
works with. Marvell's a main competitor, Broadcom. On Broadcoms had
a lot of significant wins lately, and.
Speaker 14 (23:49):
So investors have been anxiously waiting a slash worry to
see whether Marvel could post similar, similar interesting contracts, and
yesterday Marvell's ce you know, Matt Murphy, gave a very
bullish forecast for the fourth quarter in that business indicated
a new customer wins.
Speaker 15 (24:08):
That included what he called, quote an emerging hyperscaler. We
don't know who that is, but that kind of got
people excited. And maybe Marvella is also benefiting from this
interest in companies making their own shift designs for AI,
not just using the in video ones, even though in
most cases those companies also use a significant amount of Nvidia.
Speaker 2 (24:27):
I mean, it needed a bit of optimism, right The
stock is down twelve percent year today, even with today's gains.
There's also optimism that maybe they're making bolt on acquisitions
Celestial AI. Why are they going into photonics.
Speaker 16 (24:40):
It's basically a new technology which you know, it uses
light to move data more rapidly. Now, this is a
technology that's been in the works for a little while
and seems to always be kind of on the cosp
of really you know, taking off. So we'll have to
see there are other startups in this area as well,
like light Matter. We'll have to see if there is
significant uptake of this type of technology. But the idea
(25:03):
is that you can use light to move data more
quickly through chips and networking. And that's you know, one
of the major bottlenecks and AI chips at this point
is you know, stringing them together, the networking that connect
some the memory and how you move everything rapidly through
those different bets.
Speaker 2 (25:21):
Dina Bass across this AI infrastructure build out, Thank you
very much. Indeed, let's now those stick with earnings more broadly,
we're going to the software sector. We're going to Octa shares.
You see, been quite a volatile ride today. We're now
up three point three percent. The company reported earnings and
boosted their forecasts. We saw twenty percent growth when you're
looking more badly at earnings, just seeing twelve percent growth
(25:42):
in revenue. Oct CEO Tom McKinnon joins us now and
it looks to go on for the market to digest
what they were seeing here Todd. Now they seem to
be optimistic. What did you feel you delivered in terms
of software and not getting eaten up by big AI offerings.
Speaker 5 (25:57):
Well, the business is doing great.
Speaker 17 (25:59):
We had a solid I think what the market is
digesting is this massive opportunity ahead of us to secure
AI and what everyone's realizing is that to secure AI,
you have to secure identity. All these companies are trying
to roll out AI agents and to make these agents useful,
they have to be connected to all of a company's data.
It's not connected to a company's data, and the agent
(26:20):
can't work on that data. It's no better than a
consumer chat GPT or Gemini. And we can help companies
connect their agents to data in a secure and manageable
way so they can get a great agentic experience for
their customers and employees and keep it all secure.
Speaker 2 (26:35):
Reflect then on actually the adoption of this agenta KI,
because we've got questions in the market abound about whether
Microsoft's having to really be able to scale in the
way that it thought it could in the adoption of agendaki.
What are you seeing? Are people jumping on it?
Speaker 17 (26:50):
Well, the inbound interest we have for these new products
Octa for AI agents is something like I've never seen
in my history at Octa, and so everyone is very interesting,
but they're all stuck. They're stuck because they're realizing they
have to connect it to their company's data and that's challenging.
Speaker 5 (27:07):
They have two choices.
Speaker 17 (27:08):
They can put it all in a data warehouse right
in the middle and give the agent's access to everything,
which is problematic because they don't know what the agents
are going to do with it. Or they can just
have a very vanilla, water down experience where it looks
just like the consumer chat GPTD you would use at home.
Speaker 5 (27:23):
So we offer a better choice.
Speaker 17 (27:25):
We can connect it to that data in a secure
way that lets them govern and manage it.
Speaker 5 (27:29):
And that's why the interest is so high.
Speaker 17 (27:30):
So this is having a big unlock and that's what
I think everyone is starting to realize.
Speaker 2 (27:33):
There are a few identity management cut offerings out there.
How do you compete against the Palo Alto networks, against
Microsoft itself and wants to offer it and offer you
the agentic KI as well.
Speaker 5 (27:43):
Yeah, the way I.
Speaker 17 (27:44):
Like to explain it is these companies have to choose
the right platforms and systems to build out this AI future.
And imagine, like an analogy I use is imagine if
you had to choose one streaming service, you had to
pick one, you had to pick either Prime Video or Netflix,
and then that's only when you could watch. That's what
some of these big platforms are saying. They're saying all
(28:04):
use everything from us. It's like, just you can only
use Netflix, and you better hope all your shows are
on Netflix. What we're saying is you can choose whatever
AI technology you want. Get some You can get a
model from Google, you can get infrastructure from Amazon, you
can get application data from Salesforce, and we'll make it
all work together. You can choose any show you want
to watch, so to speak. So we don't lock people in.
(28:25):
We give them a choice across all of the different platforms.
And that's very important in this innovation because these things
are changing.
Speaker 5 (28:31):
Every week.
Speaker 17 (28:32):
Google comes out of a brand new model. Open Ad
is going to have a new model, and customers want
choice and we give that to them.
Speaker 2 (28:37):
Ton it's interesting that you're saying you're seeing interest like
you've never seen before. And since you're time in Octa,
why then is the market still thinking then, actually, your
revenue growth is kind of going to flatline, be sub
ten percent growth. Can you see something different?
Speaker 18 (28:52):
Well?
Speaker 5 (28:52):
I think we see two things.
Speaker 17 (28:53):
We see a very solid business that is profitable and
growing at a nice clip, and then we see this
massive upside. I think the market is trying to understand
how quick it materializes, you know, how.
Speaker 5 (29:04):
Big it can be.
Speaker 17 (29:05):
When we're very excited, we think it could be bigger
than our core business. The opportunity to secure AI could
be bigger than anything we've ever done. But it's just
a matter of making that real and doing the hard
work with the customers to bring it to fruition.
Speaker 2 (29:17):
When we're hearing about how companies are actually adopting more borning,
what are you seeing most Are you seeing consultants coming in?
Are you seeing companies trying to build within in and
of themselves organically? Are you seeing the likes of the
sellers of these generative air offerings, the open AIS or
indeed the Microsoft's going in and almost consulting for them.
How are we better to streamline? As you say, we're stuck?
(29:40):
How do we unstick?
Speaker 5 (29:42):
I think, I mean, I think it's all of the above.
Speaker 17 (29:44):
We're seeing starting a lot of interest in the gentic
solutions that.
Speaker 5 (29:49):
The SaaS providers have rolled out.
Speaker 17 (29:50):
Again, those are powerful, but they're they're limited in the
sense they're constrained to one application or one service. We're
seeing a lot of companies start to build their own
where they're using tools and capabilities to connect the multiple
databases and warehouses across different SaaS applications. We're what we're
seeing organic internal development. We're seeing consultants, everyone's trying to
(30:12):
help them do this, and I think some of these
key unlocks like security and identity and context and the
right access permissions are going to help move this thing
along in a way that's very, very powerful, powerful for
everyone because this technology is real and it's quite profound,
and it can make employees more productive. It can help
companies grow into new industries and new markets. It's going
to be a big boon for established companies for new companies.
Speaker 5 (30:34):
It's very exciting.
Speaker 2 (30:36):
Tom McKinnon, oup to CEO, it's been great having you
on the back of your earnings today. Thank you very much. Now,
let's talk about open AI right now. Because it's nonprofit.
Foundation will award over forty million dollars in grants this
year to US nonprofits now. The organizations support AI literacy,
community innovation, economic opportunity. It's the foundation's first major action
(30:56):
since open AI is restructuring. Coming up, how news you
creators are turning to AI slot into content for kids.
More on that. Next, this is Boomberg Tech, Warner Brothers Discovery.
Of course, it's still receiving new rounds of bids, including
(31:18):
we talked about yesterday. Nearly all cash off are coming
from Netflix.
Speaker 18 (31:21):
Now.
Speaker 2 (31:21):
Comcast is reportedly looking to expand its entertainment empire, with
hopes emerging its NBC Universal division with Warner Brothers in
a cash and stock deal. It's according to sources. Let's
get home to Blombergs Michelle Davis, who's been covering this
M and A story across media. So what's new here
from the side of Comcast.
Speaker 18 (31:40):
So what's new is the big surprise is it sounds
like Comcast has offered Warner Brothers.
Speaker 2 (31:45):
Is David Zaslav, the CEO.
Speaker 18 (31:47):
A management position and the potentially new combined company that's
gonna be really big because it'll it'll be appealing to
David Zaslav if he, you know, as CEO of Warner
Brothers doesn't want to relinquish that sort of control right now.
Speaker 2 (31:58):
The other information we.
Speaker 18 (31:59):
Have is that Comcast has offered cash and stock for
a combination, and they're proposing to combine their NBC Universal
division with Warner Brothers' streaming and studio division.
Speaker 2 (32:10):
And that's something analysts.
Speaker 18 (32:12):
Actually like because they see it as a way to
potentially unlock some value for Comcast. You'll see Comcast stock
was trading up on this news, as was Warner Brothers.
I think our Comcast is still up today, and it
seems like, you know, this deal situation is really heating up.
It sounds like while the different offers that are on
the table are not easily comparable, they are all compelling
in their own reasons.
Speaker 2 (32:33):
I mean, it's interesting that Comcast is doing something originally
similar to Warner Brothers Discovery, which is spinning off the
cable pop so that would still be distributed. This is
all still for them about the movie, the library, the streaming,
and that's still something that's interesting to Netflix, even though
we see it shares like hitting significant lows on the
back and forth with this.
Speaker 18 (32:51):
Yeah, so Comcast and Netflix both have made offers just
for the streaming and studios portion of Warner Brothers, which
is seen as kind of the crown jewel. Warner Brothers
or Paramount is still the only one making a play
for the whole company. But you know, if you are
the board right now, you have to think about whether
a combination with Netflix or Comcast, while potentially lower in
(33:12):
value than a full cash offer from paramount for the
whole company. You have to consider whether that would provide
future value that would exceed whatever cash you would get
today from you know, selling, the entire company is.
Speaker 2 (33:21):
Going to keep on folding. You'll be across at bloombergs
Michelle Davis, thank you very much. Indeed, let's talk about
content in a different way now, because AI generated videos
getting easier to make, and some YouTube creators are leaning
into low effort, low quality videos that churn out. What
critics school AI slot is aimed at a growing viewer base.
It's children. Bloomberg social media reporter and it Sorvine joins
(33:44):
us now, and you were kind of taken aback by
the amount of AI created kind of addictive, short form
videos that are getting out there on to YouTube kids.
Speaker 19 (33:53):
Well before I was even taken aback by the AI content,
I was taken aback by the fact that there are
so many babies on YouTube tube and YouTube Kids in.
Speaker 2 (34:00):
The first places that stop.
Speaker 19 (34:02):
So we know that kids are loving YouTube. They have
been for a very long time, so much so that
YouTube created YouTube Kids a decade ago to help create
a safer space for this audience. However, YouTube will be
the first to say that YouTube kids is not created
for babies under the age of two. It is recommended
really for kids ages two to twelve. But new Pew
data has shown that babies and infants are actually flocking
(34:25):
to YouTube in droves, and that is of course a
fact not lost on content creators who see in this
audience an incredibly valuable opportunity to make content.
Speaker 2 (34:34):
Their brain is still developing. That's the argument as to
why perhaps it should be limited to an extent. But look,
your heart goes out to families who almost need another
parent in the house when they're trying to juggle different jobs.
I can understand how it ends up entering your lifestyle,
But then what is entering the kids' heads at the moment.
How much of it is being created by AI video generation.
Speaker 19 (34:54):
It's hard to quantify exactly how much of this is
high quality content and how much of it is purely
AI generated, But and speaking two experts for the story,
it is clear that a lot of what you see
on YouTube kids is promoting itself as being educational. Titles
that say that they're educational, things like learning to talk
or how to say You're ABC's, and you certainly get
some good quality stuff. You've got the really popular children's
(35:16):
channels like Coco Melan, you've got creators like Miss Rachel,
but mixed in with results from those sort of vetted,
reputable places, you've got much more obscure videos that are
from sources that you can't really figure out where quite
where they're from.
Speaker 2 (35:29):
And there lies part of the issue for YouTube that
YouTube Kids is meant to be safe. It's so safe
and fat that over in Australia, even they're banning YouTube
and other social media for kids under sixteen, they're not
banning YouTube Kids. Is that an interesting fat for you?
And how much YouTube Kids are going to have to
start limiting exposure to the so called slop and when
you want to type in miss Rachel you get miss Rachel.
Speaker 19 (35:50):
Well, I think it is really interesting that in Australia
YouTube Kids is one of the few social media platforms
that is that is basically being spared in this band
for under sixteen. YouTube Kids may have a lot of
content that is safe, but I think it begs the
question of how much should kids be watching it in
the first place, and how short is too short. Some
(36:10):
of the experts we spoke to are concerned that some
of the shorter content can affect children's attention spans, and
how long is too long. Some of the content that
I was finding on YouTube Kids was four hours long,
and that is obviously far, far longer than is recommended
by experts. So I think the question is how YouTube
Kids balances that one of these are questions that they
address and sort of what they communicate to parents to
(36:33):
help parents feel more comfortable that the content that is
up there is actually vetted and not just simply chosen
by AI as something that could be appropriate for kids.
Speaker 2 (36:41):
You and I parents young children. How many parents are
worried about this?
Speaker 19 (36:45):
So you spoke to parents are very conflicted about this.
They're extremely worried. But at the same time, parents I
spoke to for the story said that they need YouTube.
One parent I spoke to described it as a third
parent sometimes when she just needs a break. Another father
told me how this is a really big internal struggle
because sometimes he just needs the kids to lock into
YouTube so he can deliver on other parts of being
(37:06):
a dad. At the same time, I think that there
were parents, their parents that I heard from, who described
wanting to get rid of YouTube Kids altogether because they
said that more than any other platform that their kids
are using or appy. They when they're told to turn
off YouTube kids, they actually can't turn it off.
Speaker 2 (37:24):
And they end up in a bad mood. Quite often,
I find off if they've ever consumed anything on the screen.
We appreciate this deep dive is a great read. Alex
Levine on her latest on YouTube kids, TikTok. When I
invest more than thirty seven billion dollars to build a
data center in Brazil, so the first project in Latin America.
(37:47):
The data center will be developed near the industrial port
of the same and will fully rely on clean energy
from wind energy parks, whom Marg's Peter Millard joins us
and you cover energy out of Rio. Why is Brazil
so well placed for this day to send to build out.
Speaker 4 (38:03):
Brazil?
Speaker 20 (38:04):
It's Latin America's largest economy, and it's also a renewable
energy powerhouse. Most of the energy comes from hydroelectric plants.
There's also been a rapid advance in wind energy and
most recently with solar energy, and so data centers they
(38:25):
want to have, they're basically looking for clean energy when
they build out these data centers. I know there are
some that are relying on natural gas, but ideally they
want renewable energy, and Brazil has it. It also has
a completely interconnected electricity grid, unlike the US, where you
have kind of certain where it's kind of split up geographically.
Speaker 5 (38:49):
And so that helps.
Speaker 20 (38:50):
You can have a renewable energy project far away from
where the data center actually is, and then they can
have a purchase agreement where they are and the electricity
goes into the grid and then the data center would
consume it.
Speaker 2 (39:02):
So the data center developer involved is omnia. You've got
Casidol's mentors, who's helping with the energy supply. Peter, How
big is this because in the US we've almost become
a bit numb to thirty seven billion dollars here, another
trillion there. But this must be pretty seismic in terms
of scale.
Speaker 5 (39:18):
Yes, that's right.
Speaker 20 (39:20):
When they talk about the first phase, they're talking about
three hundred megawatts. But at Pierson, the officials I've spoken
to have said that it could reach up the three gigawatts,
which is I mean, they would take about a decade
to get there, but that's half of what you currently
have in Virginia. So in terms of scale, it could be.
Speaker 2 (39:41):
Huge, And of course we'll be thinking a lot about
the relationship that Brazil has with China, and therefore Bite
Dance TikTok's parent from the Moost Peter Millard. It's a
great story. Thanks for bringing it to us. Meanwhile, let's
talk about Salesforce shares at a historic cheap valuation, as
this concerns well that its growth prospects could be eroded.
II the company releases its third quarter earnings later today,
(40:03):
what can we expect. Arag Rana joins us from Blombag Intelligence,
and there is this anxiety that even though they can
talk about agent Force until they're blue in the face,
it's not actually giving much bearing on revenue.
Speaker 8 (40:14):
Yeah, there are two elements of it, and you know,
one of the most important part is the size of
the company. It's a it's a very large software company,
very big revenue base. So even if you see adoption
of whether it's data cloud on the AI side or
agent Force, it doesn't move the needle if the macro
is bad. And that's really the big narrative for whether
it's Salesforce or Workday or a lot of other software companies.
(40:35):
Is enterprise tech spending on the non AI side of
it is not that strong. You're not at people are
not adding headcount at the same rate they were a
few years ago, and that is what's weighing in the
subscription growth rate of all these companies. And I think
that's the big narrative. And you know, from my experience,
unless the estimate starts to move up, you know, the
star kind of you know, it remains you know, I
(40:56):
would say range bound.
Speaker 5 (40:57):
On that case.
Speaker 2 (40:58):
What's really interesting is the narrative in the market is
being dictated by a report out of the information about
Microsoft sort of finding it tough to charge people for
its co pilots, for its agenda AI offerings and salespeople
sort of having pulled back on targets. Now we haven't
managed to match that thus far and around, But is
that really what is focusing the minds of those in
(41:18):
the market, Whether there's productivity gains from salesforce from copilot.
Speaker 8 (41:24):
So again, there are two aspects of it, and I
think one thing is very clear that there is no
shortage of revenue on the AI infrastructure site, So let's
keep that, you know. The other one one area, the
second piece is all these co pilot products that companies
are launching in the case of Microsoft, when it comes
to something like a GitHub copilot, highly productive and massive
updake just because of what it provides. In the case
(41:46):
of the office copilot, it has value to it for
the end customers, but at the same time, it's very
expensive to run at this point because the cost of
you know, token generation and inference is not that it
is not that low. That's going to come down and
it will lead to more and more people embracing that.
But that goes back to the first thing we talked
(42:06):
about is a slowdown in enterprise tech spending, and I
think that bays on everything, not just a handful of sectors.
Speaker 2 (42:14):
Many of those can perhaps show the benefits of Informatica
purchase today at least yeah, I.
Speaker 8 (42:20):
Mean, I think that you will see some revenue uplift
because of that, and that's good. But the question is
going to be what kind of cross selling can they
do using their distribution arm that could get Informatica's organic
sales growth a big lift, because I think that is
one of the benefits of accumulating some of these assets
under one umbrella.
Speaker 2 (42:39):
And rak Rana it's a busy day, a busy week.
Senior analysts Bloomberg Intelligence. Thank you so much for bringing
us your research that does it for this edition of
Bloombag Tech. Do not forget to check out our podcasts.
Find it on the terminal as well as online on Apple, Spotify,
and iHeart and stick with earnings as they break after
the bell. This is Bloomberg Tech.
Bloomberg Audio Studios, Podcasts, radio news. Bloomberg Tech is live
from coast to coast with Caroline Hide in New York
and v Lovelow in San Francisco.
Speaker 2 (00:21):
This is Bloomberg Tech coming up. Big Tech lags as
investors remain skittish about the AI trade. We dig into
anxieties and losses coming from the magnificent seven plus earnings
that still roll in. We speak with Octo CEO Todd
McKinnon after the software company boosted its full year profit
Foradcast and TikTok. We'll invest more than thirty seven billion
dollars to build a data center in Brazil, this first
(00:43):
project in Latin America. But first we check in on
these markets that are volatile on this day. Look, we're
putting back on some of the gains made yesterday on
the Nastaq one hundred. We're off only by a tenth
of a percent in video flip flopping between gains and losses.
But all eyes on some of the key magnificent seven
names that like magnificent. On the day, Bitcoin so managing
to power up nine ten percent. We're at ninety two thousand,
(01:05):
so bit of dip bin and going on a sentiment
though still remains pretty sour on the asset class. Move
on and have a little look at what's really under
fired today. Reports out there that Microsoft potentially having to
tay you to its salespeople of co pilot of AI
productivity tools. Maybe you need to pull back on your
sales targets. There is counter reporting coming from the NBC
(01:25):
that this isn't currently true, but we're going to dig
into those details for you. Currently off by one point
eight percent. All of this speaks to the anxiety that
AI isn't going to give us the productivity gains many
and Hope Bailey Nipshew's sent piece to say is here
with us at the moment, really talking about more broadly
what we're seeing in this market at the moment. And Bailey,
are we seeing those sorts of anxieties.
Speaker 3 (01:46):
Well, we are seeing some of the uncertainties that we're
seeing that play out in real time. The big debate
really around a lot of the CI trade, and we
saw this play out throughout November, is how much of.
Speaker 4 (01:55):
This spend is going to be realized?
Speaker 3 (01:57):
Are the dollars going to make sense at the end
of the day, And if you're seeing companies dial back
there spending. What does that ultimately mean for the bottom
lines When you see a report like we've been seeing,
whether they're conflicting or not with Microsoft, it's a lot
for investors to chew on.
Speaker 2 (02:09):
And what's been being chewed on is in people who
have diversified since the bottom in October, since we really
saw the perhaps end of the significant setting. Tech still
lagged and we've seen underperformed health, tach, care and other
key sectors.
Speaker 3 (02:21):
Yeah, if you look so last time, we had an
all time higher looking back to October twenty eighth best
performers healthcare, communications, energy. As you mentioned, worst performing group
is tech. One thing to keep in mind when you
look at that SMP five hundred info Tech.
Speaker 4 (02:35):
The big names Nvidia, Apple.
Speaker 3 (02:36):
Microsoft are in there, missing Tesla, Alphabet and other names.
So a little bit of a grain of salt to
take it with that, But we are certainly seeing investors diversifying,
flocking to healthcare, Eli, Lilly, Cardinal Health, Biogen all out performing.
When I talk to portfolio managers, part of the debate
is we've come so far, so fast in a.
Speaker 4 (02:53):
Lot of these names.
Speaker 3 (02:54):
Yes, and as much as we like to think that
things only go up eventually, the question is can you
performing is their alpha generation, and that's why we see some.
Speaker 4 (03:02):
Of that repositioning.
Speaker 2 (03:03):
Repositioning still significant gains on the year if you're thinking
of an Nvidia, but the momentum traits we've seen on
the back of this, the fact that quantum stocks have
done so well, some of the crypto spheres, and they
still under a lot of pressure right now.
Speaker 4 (03:16):
They're under pressure. There's just a lot of volatility.
Speaker 3 (03:18):
You look at the moves that we saw, whether it
was a nuclear power or as you mentioned in quantum,
pretty much NonStop up into the right, whether that was retail,
whether that was momentum or just hedge funds trying to
juice their books. We've seen them pull back pretty markedly. Obviously,
Bitcoin has been quite volatile trying to recoup some of
those losses. But if you're really kind of macro investor
(03:38):
or running a book broadly from the equity side, we're
in December, if you're up quite a bit, maybe take
some gains off the table and maybe diversify into something
like a healthcare which could be positioned to benefit or
at least continue growing.
Speaker 4 (03:51):
If there are concerns around AI.
Speaker 2 (03:53):
And concerns as a macrob of picture. We just saw
the ADP figures today, I mean jobs market looking a
little bit weaker as well being lipstials. It's always a
joy to have him on talking to us through the markets.
We've got more market context for you now and more
broadly with Sylvia Deablonski Defiance ETF CEO CIO you've been
writing it's not all all over, but the pace of
spending is becoming more selective if upcoming macro data corporates,
(04:15):
we could be nearing a tradable bottom. As a longer
term investor, I continue to see these pullbacks as opportunities.
She joins us. Now so cooperating here, is market sentiment
not or is market sentiment going to shift to the
positive again?
Speaker 5 (04:33):
Good warning?
Speaker 6 (04:33):
Well, you know, barring external factors, which we've seen a
lot of right throughout the last year, whether it's been
geo politics, whether it's been tariffs or for things like this,
you know, if we're on pace here for kind of
the trend that we have here, and we do have
this growth of AI, you know, I know there's news
around spending being cut back and things like this, but
we're still in the infancy of AI and there has
(04:55):
already been so much spending that is now going to
kind of pile into the economy, pile into do these
different companies, different sectors and things like this. So I
think it plays out and benefits these these companies over time.
So I think, you know that coupled with a FED
that is likely to cut particularly if we have a
new FED chair in, you know, in with the president
(05:15):
and kind of you know, knowing where the predictions will
go on. That that's what the market's really looking for.
Right we have a little bit of a weaker labor number,
Consumer spending is holding up. You know, corporate earnings were
arguably great. You had over eighty percent of names beating
on the top and bottom line. You know, double digit
growth continues, positive GDP outlook. I think that we could
be in for a good market here, a.
Speaker 2 (05:38):
Good market led by the same names. It's interesting that
Innvidia CEO Jensen Wang is in Capital Hill today. We
understand he's just been seen entering US House speak at
Mike Johnson's office. How much will political tailwinds or headwinds
help will hindle some of these companies be worried about
access to China, well broadly, Cannon Vinie continue to lead
this market higher.
Speaker 6 (05:58):
So I think in a way, and Video still has
the monopoly on AI and chips right, and so I
think that you know, a lot of the other semiconductor
companies are starting to do you know better and take
some of the business away, but for now, and Video
remains the clear leader. In terms of Washington and politics.
Of course, all of these things impact these companies. You know,
(06:19):
they are the trillion dollar clubs. They lead the market
and policy effects them first. But the other side of
that argument is when the market falls back, you know
where do people invest. A lot of times they look
for defensive names, but you have these high again trillion
dollar companies, high quality, strong balance sheets that over time
tend to perform. Investors actually do look to those companies
for investments. And if you look at today, you know,
(06:40):
four hundred out of the five hundred names actually participated
in the bounce off of you know, the last pullback,
and so you see a little breath expansion there. I do, though,
think that the AI tech is going to continue leading
markets for years to come.
Speaker 2 (06:53):
You've actually got a lodge cap etf that is, excluding
magnificent seven, how is that performed of late and how
many people are wanting to put money into it?
Speaker 6 (07:04):
So interestingly enough, we've actually seen an increase in flows
into that ETF. And you know, it may sound like
a contradiction what I just said, it absolutely isn't. I
think that the average investor has exposure to MAG seven everywhere, right,
whether it's in ETFs or they hold the single name stocks.
And so when you're when the market pulls back and
you're looking to diversify it and broaden your exposure, we
take out those names because we're saying, hey, you already
(07:26):
have them, hang on to them, but participate in the
in the in the breath and the broadening of the
rallies in the years to come. And so you know,
very much like an equal which strategy x MAC excludes
the max haven't. But but what's you know we think
very favorable about that is you're still letting the winners win, right,
so you still have market.
Speaker 2 (07:44):
Caps rallying in that fund.
Speaker 6 (07:46):
And can you know do well over time.
Speaker 2 (07:48):
You really have created a lot of ETFs that have
been galvanized by this whole broadening out of the Trade
AI and Power Infrastructure ETF. For example, But I'm also
interested in the quantum side of things because there's an
interesting story. Key Nobel Laureate, winner of the Physics Prize,
has just been talking about how China looks like it's
really pulling ahead just a nanosecond behind the US in
(08:10):
terms of quantum compute scale and indeed innovation. How much
have people be wanting to get into the quantum side
of the equation?
Speaker 6 (08:17):
Well, I think, you know, what you just mentioned will
be a big reason, and we'll put a lot of
focus on the quantum names again for investors, because of
what happens when we think that, you know, other governments
are beating us in AI or technology or things like this.
The US government tends to invest right, and American corporations
tend to invest and catch up and try to win
(08:38):
the race, right. So I think that just you know,
on a basic level, you've seen some good news around quantum,
whether it's been HSBC, the advanced bond pricing models that
have come out of it. You know, you've seen some
good results around and kneeling from d Wave. You know,
some of the top quantum companies have done quite well
for investors. But I think you know, as this continues
and it becomes more commercial, you will see flows coming
into the space, and we think it's a longer term
(08:59):
hole for investors.
Speaker 2 (09:01):
What hasn't been a longer term held just in recent
days has been micro strategy. You have a lot of
ETFs giving either you long exposure to micro micro strategy
now called strategy or indeed leverage positioning for it, but
also to go short as well. So you're kind of
offering both sides of the pile here. What do you
make of the fact that maybe Michael Sailor isn't a
(09:24):
complete hoddler for the longer term, that maybe at some
point they might have to sell bitcoin.
Speaker 6 (09:29):
Yeah, I mean I think that that's you know, that's
a business decision for their firm in terms of how
best to to you know, generate ROI and and be
profitable over time. But you know what you just mentioned,
it is true. We have long funds, we have short funds,
and for us, we're just trying to democratize hedge fund
like products for investors that you know, are tactical and
knowledgeable about these markets and look for short term exposure opportunities.
(09:52):
So those products are simply there. We don't necessarily have
an opinion on you know, their view of that. We
want to give them the right tool to do that.
But I think you know, if Bitcoin rallies, you'll see
strategy do well. If it doesn't, you'll see it go
the other way, and perhaps the flows we'll also match
in terms of long and short leverage funds.
Speaker 2 (10:08):
Slovia jabonskiin talking about what has been quite the volatile
trade for certain retail of late Defiance ETF CEO CIO,
it's always great to catch up with you. Coming up,
we're going to hear from AWS CEO mcgarmond at his
take on the AI power demand, the race with Nvidia
so much more of course trainium three. This will be
a big tech.
Speaker 7 (10:31):
The desire and the hunger out there for more power
and more compute is almost insatiable. And so the more
we can take an existing power footprint, an existing set
of capabilities and bring more and more compute into that
for customers to build cool applications and cool environments and
to get value from that, that's we're focused on.
Speaker 8 (10:52):
Then.
Speaker 7 (10:52):
So we're going to be pushing that envelope as fast
as we as we possibly can to get those new
and new capabilities out to customers.
Speaker 9 (10:58):
The pitch for Trainium in both the training and infants
use case is that it's a great deal, you know,
cost effective performance. At the same time, you went on
stage and said AWS is quote by far the best
place to run in video GPUs. How are both if possible?
Speaker 7 (11:15):
Well, I mean that both both are possible because that
is a great environment to run accelerators and compute in.
And so we've been working for fifteen plus years with
the in Nvidia team and Jensen and team to deliver
outstanding capabilities for our customers. And for when you're running
a large cluster of Nvidia GPUs, people will tell you
(11:36):
AWS is the best place you get the best performance,
the most stable cluster, the best capabilities out there and
broad scale. And so why folks like OPENINGI and others
are running in AWS and we have that choice. And
so for others that want to be able to take
advantage of Trainium. And there's some uses cases that are
best for TRAININGUM, there's other use cases where in video
GPUs are going to be your best option. We want
(11:57):
to have all of those available and so we think
that if we can continue to push the envelope on
what TRAINUM can deliver for customers and make sure that
we are supporting the latest and greatest from everything that
the awesome team in Nvidia is delivering. That's going to
be the best outcome for our customers.
Speaker 9 (12:13):
The plan for AWS is to basically double capacity by
end of twenty twenty seven to round eight gigawatts, so
you have a sense of how you apportion that capacity
in how Silicon and serve a design to Trainium versus
and video GP is.
Speaker 7 (12:28):
We're just going to keep pushing as fast as we
can and we'll see where customer demands drives us as
we go. And as you said, we're massively adding capacity.
In the last year alone, we've added three point eight
gigawatts of capacity, and we'll continue to add more and
more as over the next couple of years, and we'll
let customer demands drive us a little bit on what
they're looking for and what they want, and that's what
(12:49):
we always listen to and that's what we'll continue.
Speaker 2 (12:50):
To listen to.
Speaker 9 (12:51):
The focus with Trainium in the time i've been able
to interact with you and talk about again not just
the accelerator, but at the server design level, there's a
lot of benefits the customer. When does that benefit start
accrueing to AWS in terms of profitability, Like, if it's
such a good financial proposition, you must be able soon
to say we're making a lot of money on this.
Speaker 5 (13:11):
Yeah.
Speaker 7 (13:11):
Well, you're already seeing some of the benefits of crew
You see things like bedrock growing really really rapidly, and
you see training empowering that under the covers. And we
announced today that more than half of all tokens and
inference done in bedrock are done on TRAININGUM two servers
under the covers, And so you're already seeing that benefit come.
You see the models that we're building and Nova and
(13:31):
Nova too start to get better and better over time
and be accelerated by Trainum. And so we really think
that there's a whole bunch of dimensions on which both
our customers, our partners, and our own products are going
to get accelerated all from TRAINUM.
Speaker 9 (13:45):
Every time you come onto the program, I always offer
the audience opportunity to pose a question to you. There's
a lot of interests in AWS, right, many of your
customers span global technology. Actually most of the questions were
about anthropic That wasn't much said on stage. I think
people are trying to understand what is the benefit and
advantage AWS office tanthropic while they are ramping trainum through
(14:07):
Project Raineer, but also ramping their TPU allocations as well.
Speaker 7 (14:12):
Well, Look, our partners are an anthropic. Our partnership with
them is incredibly strong and it's never been stronger, and
we do a ton of collaboration with them, and as
I mentioned through Project rain here, it's a huge collaboration
there to go build their current generation models and all
their models run today and launch on day one on
top of Trainium and on top of AWS.
Speaker 2 (14:31):
AWS CEO Matt Garman along with their own ed Ludlow.
Let's discuss this growing AI chip race and the big
tech names. Who's when, who's losing? Joan Feeney is the
perfect person to ask partner and portfolio manager over it
advises capital management. So did Amazon manage to solidify its
prowess when it comes to vertical integration, cloud and ship.
Speaker 10 (14:50):
Offering, Well, they seem to be doing a really excellent
job of that. And what's interesting about what Match has
said is they're going to let customer demand drive you know,
how they build out these different capabilities for AI applications,
which tells us that they are going to be different
models purposed to different types of workloads. So everybody's thinking, oh,
(15:14):
and Vidia is the market dominant player right now. They
have massive market share, and they're treating it like it's
one sort of big thing that's homogeneous. And I think
what people are going to realize over time is that
they're going to be different types of models for different workloads,
and different chips will be useful for developing such different
models and for running those models, for doing the inference.
(15:35):
So I think there's a lot of room for different
chip players here, and we should expect more of the
in house chips like what Amazon does in collaboration with Marvel,
or what Google does in collaboration with Broadcom, to continue
to rise in prominence, as we've been seeing in the
recent news coverage.
Speaker 2 (15:51):
I mean, yeah, let's talk about Marvel out with earnings
out with also a key purchase of Celestial AI. That's
all about lasers, and we can talk in lasers a
little bit more. But are we seeing a six really
starting to put a concern towards in video? Should they
be threatened by this custom built model?
Speaker 10 (16:08):
Well, no company likes any kind of competition right, So
I'm sure in video would just be happier if they
didn't exist.
Speaker 5 (16:15):
But clearly, look, ASEX are very powerful.
Speaker 10 (16:17):
That stands for applications specific integrated circuit right, So these
I believe these kind of xbus er TPUs are going
to be designed and going to be put to use
for the type of applications in AI for which they're
best designed. So it's clearly the case that in Vidia
is going to lose share over time in the big
(16:39):
world of AI compute. But nobody should be surprised by
set by that, and the pie is still growing so
massively they can't meet demand. They're not unlikely to be
able to meet demand for some years to come, and
so there's a lot of room for a sick approaches
to play roles in various types of models.
Speaker 5 (16:56):
So we should expect that.
Speaker 2 (16:57):
Before we talk more lasers, I want to go back
to where we sort of started, the fact that you're
getting specific chips for specific applications but also specific models.
And I think there's some threat in the market today
around Microsoft's are the part of the flywheel, because everyone
thinks Microsoft got very strong cloud offering, and clearly we've
seen as you not be able to fill demand with
its supply. We're now we're just basically about the applications,
(17:20):
about companies being willing to pay more for these AI
agents and actually the use of AI. What are you
hearing in the market. How much does that impact your
sector of chips?
Speaker 10 (17:30):
There is a lot of sporadic i should say, information
about how much AI agents and AI is being used
in different settings. So, right, there was a story today
about how Microsoft has reduced its sales targets for getting
AI agents you know, to be adopted by their customers,
and so that as people concerned, you know, Salesforce similarly
(17:53):
is trying to roll out right their AI agent capabilities
and some people are wondering whether that's going to happen.
But there are so many other applications in addition to
those kind of smart helper AI agents, and I think
the earlier in the week announcement with Nvidia in synopsis
is a good example of that. Right, the industrial uses,
whether it's these digital twins basically being able to model
(18:15):
out a whole factory or a whole building, or you know,
any other physical presence in simulation. You need this kind
of computational power. You need AI and so that kind
of collaboration I think really points to lots of other
applications for AI, and then you go to biotech and
pharma and.
Speaker 5 (18:33):
Computation.
Speaker 10 (18:34):
We've just been held back for so many years by
its limitations from the CPU side, and now that we
have these GPU based accelerators and innovations in fabric like
what Celestial is bringing to Marvel and what Broadcom already does,
is speeding up all of these computations, making farmer applications
possible across all industries.
Speaker 2 (18:54):
And some would say limitations have been in the fabrication
in the United States energy just making sure that we've
got more solid and trustworthy supply chains. I think about
just the news also earlier this week one hundred and
fifty million dollar steak in a chip startup by Pat Gelsinger.
Of course we all know him from Intel, but the
US is making that investment in x light a startup. Johanne,
(19:15):
you have some real insight as to how this technology
is being put forward. It's all about lithography taking on ASML.
Speaker 5 (19:22):
Yeah.
Speaker 10 (19:23):
So x light is developing a new laser technology and
that is a fundamental ingredient to doing lithography right. ASML
being the leader in extreme ultravilethography, which depends on these
very high end lasers. So x Light's taking a different
approach to laser development. And what's interesting is and also
reminds me of my past, is that this one hundred
(19:44):
and fifty million dollar investment by the federal government by
the Chips and Science Act, the work is going to
be done at a place called Albing Nanotech, which is
where I got my start in the semiconductor industry, you know,
twenty plus years ago. And it's a location for collaborative
R and D for development of new manufacturing techniques, development
of new materials, development of new recipes for designing and
(20:07):
building chips. And it's all the major players in the
industry are there, and it's pre competitive, and so for
x Light and Pat Gelsinger to be doing it there
with the support of the federal government sort of enhances
this model of get some public support for a technology
that can be spread and help the industry broadly speaking,
(20:28):
and does go towards this effort to enable more chip
equipment design and manufacturing to eventually occur.
Speaker 5 (20:35):
In the United States. It's going to take a long time.
Speaker 10 (20:37):
These programs, as I was involved with back in the
early two thousands. They take many years, but it's a
great way for the US to subsidize a general technology
which could ultimately help US position and equipment manufacturing and.
Speaker 2 (20:52):
The state of New York. I'm sure music to its
is to Joanne Feeni of Advices Capital Management. Thanks so
much time now for talking tech. First up, Uber launching
autonomous trips with ad Ride in Dallas, marking the latest
US city where the right hailing giant is offering such
a service. Uber's global head of Autonomous and Mobility and
(21:13):
Delivery sat down with our colleagues at Wall Street Week.
Speaker 11 (21:17):
It's an exciting time to be in the autonomous space
because we're really graduating from a technical problem that first
started as a science project to something that now is
increasingly being solved and can be commercialized and be offered
to more and more people who are using Uber.
Speaker 6 (21:32):
All around the world.
Speaker 2 (21:33):
And Dell CEO Michael Dell says he sees the AI
build out as not stopping anytime soon, with more demand
than supply at the moment. He weighed in after, of course,
announcing that six week two five billion dollar gift to
fund accounts for twenty five million American children ten an under.
Speaker 5 (21:48):
Long term, we think.
Speaker 12 (21:52):
Investing these accounts in the s and.
Speaker 4 (21:55):
P five hundred is a very.
Speaker 12 (21:57):
Good way to compound over time for these children. When
I look at what's going on today in the ignormous
buildout in AI, what I see is a lot more demand.
Speaker 2 (22:17):
We'llcome back to bo BEG tech. Let's check in on
these markets because there's a volatile training date. We're on
a macro data to digest services look stronger, But BOYD
does that private payrolls and I'm from ADB look pretty
woeful worse Since the beginning of twenty twenty three, we're
off by tenth of a percent. The idea of FED
cuts not managing to outweigh some of the anxiety around
the AI trade today. Key names in the red like
(22:38):
Microsoft as we worry about productivity gains and some of
its provisions. But move on to some of the earnings
that we've got. CrowdStrike just about six tenths of percent.
They actually raise fiscal twenty twenty six guidance. They're citing
resiliency and demand for their AI enabled cybersecurity products. But
this is a stop that's up about fifty percent this year,
maybe the expectations to run ahead of it and we
just take a little bit of money off the table.
(23:00):
Marvel up more than four percent, even as it's splashing
the cash on a new acquisition that we're going to
dive into in the world of lasers. But I'm talking
about also marvel earnings did beat expectations, and we're more
broadly seeing the adoption of its technology and a custom
chips being built across the AI infrastructure sphere. Let's get
to Dina Bass, who covers all things AI infrastructure. Marvel,
(23:22):
I mean, only an eighty billion dollar company, not nearly
as large as Nvidia, but it is starting to show
how it's building out in AI.
Speaker 13 (23:30):
Sure, we've been talking about in Vidia a lot, and
last week we were talking a lot about the Google TPU.
The TPU is one of these kind of custom chips.
It's not one that Marvell does, it's one that Google
works with. Marvell's a main competitor, Broadcom. On Broadcoms had
a lot of significant wins lately, and.
Speaker 14 (23:49):
So investors have been anxiously waiting a slash worry to
see whether Marvel could post similar, similar interesting contracts, and
yesterday Marvell's ce you know, Matt Murphy, gave a very
bullish forecast for the fourth quarter in that business indicated
a new customer wins.
Speaker 15 (24:08):
That included what he called, quote an emerging hyperscaler. We
don't know who that is, but that kind of got
people excited. And maybe Marvella is also benefiting from this
interest in companies making their own shift designs for AI,
not just using the in video ones, even though in
most cases those companies also use a significant amount of Nvidia.
Speaker 2 (24:27):
I mean, it needed a bit of optimism, right The
stock is down twelve percent year today, even with today's gains.
There's also optimism that maybe they're making bolt on acquisitions
Celestial AI. Why are they going into photonics.
Speaker 16 (24:40):
It's basically a new technology which you know, it uses
light to move data more rapidly. Now, this is a
technology that's been in the works for a little while
and seems to always be kind of on the cosp
of really you know, taking off. So we'll have to
see there are other startups in this area as well,
like light Matter. We'll have to see if there is
significant uptake of this type of technology. But the idea
(25:03):
is that you can use light to move data more
quickly through chips and networking. And that's you know, one
of the major bottlenecks and AI chips at this point
is you know, stringing them together, the networking that connect
some the memory and how you move everything rapidly through
those different bets.
Speaker 2 (25:21):
Dina Bass across this AI infrastructure build out, Thank you
very much. Indeed, let's now those stick with earnings more broadly,
we're going to the software sector. We're going to Octa shares.
You see, been quite a volatile ride today. We're now
up three point three percent. The company reported earnings and
boosted their forecasts. We saw twenty percent growth when you're
looking more badly at earnings, just seeing twelve percent growth
(25:42):
in revenue. Oct CEO Tom McKinnon joins us now and
it looks to go on for the market to digest
what they were seeing here Todd. Now they seem to
be optimistic. What did you feel you delivered in terms
of software and not getting eaten up by big AI offerings.
Speaker 5 (25:57):
Well, the business is doing great.
Speaker 17 (25:59):
We had a solid I think what the market is
digesting is this massive opportunity ahead of us to secure
AI and what everyone's realizing is that to secure AI,
you have to secure identity. All these companies are trying
to roll out AI agents and to make these agents useful,
they have to be connected to all of a company's data.
It's not connected to a company's data, and the agent
(26:20):
can't work on that data. It's no better than a
consumer chat GPT or Gemini. And we can help companies
connect their agents to data in a secure and manageable
way so they can get a great agentic experience for
their customers and employees and keep it all secure.
Speaker 2 (26:35):
Reflect then on actually the adoption of this agenta KI,
because we've got questions in the market abound about whether
Microsoft's having to really be able to scale in the
way that it thought it could in the adoption of agendaki.
What are you seeing? Are people jumping on it?
Speaker 17 (26:50):
Well, the inbound interest we have for these new products
Octa for AI agents is something like I've never seen
in my history at Octa, and so everyone is very interesting,
but they're all stuck. They're stuck because they're realizing they
have to connect it to their company's data and that's challenging.
Speaker 5 (27:07):
They have two choices.
Speaker 17 (27:08):
They can put it all in a data warehouse right
in the middle and give the agent's access to everything,
which is problematic because they don't know what the agents
are going to do with it. Or they can just
have a very vanilla, water down experience where it looks
just like the consumer chat GPTD you would use at home.
Speaker 5 (27:23):
So we offer a better choice.
Speaker 17 (27:25):
We can connect it to that data in a secure
way that lets them govern and manage it.
Speaker 5 (27:29):
And that's why the interest is so high.
Speaker 17 (27:30):
So this is having a big unlock and that's what
I think everyone is starting to realize.
Speaker 2 (27:33):
There are a few identity management cut offerings out there.
How do you compete against the Palo Alto networks, against
Microsoft itself and wants to offer it and offer you
the agentic KI as well.
Speaker 5 (27:43):
Yeah, the way I.
Speaker 17 (27:44):
Like to explain it is these companies have to choose
the right platforms and systems to build out this AI future.
And imagine, like an analogy I use is imagine if
you had to choose one streaming service, you had to
pick one, you had to pick either Prime Video or Netflix,
and then that's only when you could watch. That's what
some of these big platforms are saying. They're saying all
(28:04):
use everything from us. It's like, just you can only
use Netflix, and you better hope all your shows are
on Netflix. What we're saying is you can choose whatever
AI technology you want. Get some You can get a
model from Google, you can get infrastructure from Amazon, you
can get application data from Salesforce, and we'll make it
all work together. You can choose any show you want
to watch, so to speak. So we don't lock people in.
(28:25):
We give them a choice across all of the different platforms.
And that's very important in this innovation because these things
are changing.
Speaker 5 (28:31):
Every week.
Speaker 17 (28:32):
Google comes out of a brand new model. Open Ad
is going to have a new model, and customers want
choice and we give that to them.
Speaker 2 (28:37):
Ton it's interesting that you're saying you're seeing interest like
you've never seen before. And since you're time in Octa,
why then is the market still thinking then, actually, your
revenue growth is kind of going to flatline, be sub
ten percent growth. Can you see something different?
Speaker 18 (28:52):
Well?
Speaker 5 (28:52):
I think we see two things.
Speaker 17 (28:53):
We see a very solid business that is profitable and
growing at a nice clip, and then we see this
massive upside. I think the market is trying to understand
how quick it materializes, you know, how.
Speaker 5 (29:04):
Big it can be.
Speaker 17 (29:05):
When we're very excited, we think it could be bigger
than our core business. The opportunity to secure AI could
be bigger than anything we've ever done. But it's just
a matter of making that real and doing the hard
work with the customers to bring it to fruition.
Speaker 2 (29:17):
When we're hearing about how companies are actually adopting more borning,
what are you seeing most Are you seeing consultants coming in?
Are you seeing companies trying to build within in and
of themselves organically? Are you seeing the likes of the
sellers of these generative air offerings, the open AIS or
indeed the Microsoft's going in and almost consulting for them.
How are we better to streamline? As you say, we're stuck?
(29:40):
How do we unstick?
Speaker 5 (29:42):
I think, I mean, I think it's all of the above.
Speaker 17 (29:44):
We're seeing starting a lot of interest in the gentic
solutions that.
Speaker 5 (29:49):
The SaaS providers have rolled out.
Speaker 17 (29:50):
Again, those are powerful, but they're they're limited in the
sense they're constrained to one application or one service. We're
seeing a lot of companies start to build their own
where they're using tools and capabilities to connect the multiple
databases and warehouses across different SaaS applications. We're what we're
seeing organic internal development. We're seeing consultants, everyone's trying to
(30:12):
help them do this, and I think some of these
key unlocks like security and identity and context and the
right access permissions are going to help move this thing
along in a way that's very, very powerful, powerful for
everyone because this technology is real and it's quite profound,
and it can make employees more productive. It can help
companies grow into new industries and new markets. It's going
to be a big boon for established companies for new companies.
Speaker 5 (30:34):
It's very exciting.
Speaker 2 (30:36):
Tom McKinnon, oup to CEO, it's been great having you
on the back of your earnings today. Thank you very much. Now,
let's talk about open AI right now. Because it's nonprofit.
Foundation will award over forty million dollars in grants this
year to US nonprofits now. The organizations support AI literacy,
community innovation, economic opportunity. It's the foundation's first major action
(30:56):
since open AI is restructuring. Coming up, how news you
creators are turning to AI slot into content for kids.
More on that. Next, this is Boomberg Tech, Warner Brothers Discovery.
Of course, it's still receiving new rounds of bids, including
(31:18):
we talked about yesterday. Nearly all cash off are coming
from Netflix.
Speaker 18 (31:21):
Now.
Speaker 2 (31:21):
Comcast is reportedly looking to expand its entertainment empire, with
hopes emerging its NBC Universal division with Warner Brothers in
a cash and stock deal. It's according to sources. Let's
get home to Blombergs Michelle Davis, who's been covering this
M and A story across media. So what's new here
from the side of Comcast.
Speaker 18 (31:40):
So what's new is the big surprise is it sounds
like Comcast has offered Warner Brothers.
Speaker 2 (31:45):
Is David Zaslav, the CEO.
Speaker 18 (31:47):
A management position and the potentially new combined company that's
gonna be really big because it'll it'll be appealing to
David Zaslav if he, you know, as CEO of Warner
Brothers doesn't want to relinquish that sort of control right now.
Speaker 2 (31:58):
The other information we.
Speaker 18 (31:59):
Have is that Comcast has offered cash and stock for
a combination, and they're proposing to combine their NBC Universal
division with Warner Brothers' streaming and studio division.
Speaker 2 (32:10):
And that's something analysts.
Speaker 18 (32:12):
Actually like because they see it as a way to
potentially unlock some value for Comcast. You'll see Comcast stock
was trading up on this news, as was Warner Brothers.
I think our Comcast is still up today, and it
seems like, you know, this deal situation is really heating up.
It sounds like while the different offers that are on
the table are not easily comparable, they are all compelling
in their own reasons.
Speaker 2 (32:33):
I mean, it's interesting that Comcast is doing something originally
similar to Warner Brothers Discovery, which is spinning off the
cable pop so that would still be distributed. This is
all still for them about the movie, the library, the streaming,
and that's still something that's interesting to Netflix, even though
we see it shares like hitting significant lows on the
back and forth with this.
Speaker 18 (32:51):
Yeah, so Comcast and Netflix both have made offers just
for the streaming and studios portion of Warner Brothers, which
is seen as kind of the crown jewel. Warner Brothers
or Paramount is still the only one making a play
for the whole company. But you know, if you are
the board right now, you have to think about whether
a combination with Netflix or Comcast, while potentially lower in
(33:12):
value than a full cash offer from paramount for the
whole company. You have to consider whether that would provide
future value that would exceed whatever cash you would get
today from you know, selling, the entire company is.
Speaker 2 (33:21):
Going to keep on folding. You'll be across at bloombergs
Michelle Davis, thank you very much. Indeed, let's talk about
content in a different way now, because AI generated videos
getting easier to make, and some YouTube creators are leaning
into low effort, low quality videos that churn out. What
critics school AI slot is aimed at a growing viewer base.
It's children. Bloomberg social media reporter and it Sorvine joins
(33:44):
us now, and you were kind of taken aback by
the amount of AI created kind of addictive, short form
videos that are getting out there on to YouTube kids.
Speaker 19 (33:53):
Well before I was even taken aback by the AI content,
I was taken aback by the fact that there are
so many babies on YouTube tube and YouTube Kids in.
Speaker 2 (34:00):
The first places that stop.
Speaker 19 (34:02):
So we know that kids are loving YouTube. They have
been for a very long time, so much so that
YouTube created YouTube Kids a decade ago to help create
a safer space for this audience. However, YouTube will be
the first to say that YouTube kids is not created
for babies under the age of two. It is recommended
really for kids ages two to twelve. But new Pew
data has shown that babies and infants are actually flocking
(34:25):
to YouTube in droves, and that is of course a
fact not lost on content creators who see in this
audience an incredibly valuable opportunity to make content.
Speaker 2 (34:34):
Their brain is still developing. That's the argument as to
why perhaps it should be limited to an extent. But look,
your heart goes out to families who almost need another
parent in the house when they're trying to juggle different jobs.
I can understand how it ends up entering your lifestyle,
But then what is entering the kids' heads at the moment.
How much of it is being created by AI video generation.
Speaker 19 (34:54):
It's hard to quantify exactly how much of this is
high quality content and how much of it is purely
AI generated, But and speaking two experts for the story,
it is clear that a lot of what you see
on YouTube kids is promoting itself as being educational. Titles
that say that they're educational, things like learning to talk
or how to say You're ABC's, and you certainly get
some good quality stuff. You've got the really popular children's
(35:16):
channels like Coco Melan, you've got creators like Miss Rachel,
but mixed in with results from those sort of vetted,
reputable places, you've got much more obscure videos that are
from sources that you can't really figure out where quite
where they're from.
Speaker 2 (35:29):
And there lies part of the issue for YouTube that
YouTube Kids is meant to be safe. It's so safe
and fat that over in Australia, even they're banning YouTube
and other social media for kids under sixteen, they're not
banning YouTube Kids. Is that an interesting fat for you?
And how much YouTube Kids are going to have to
start limiting exposure to the so called slop and when
you want to type in miss Rachel you get miss Rachel.
Speaker 19 (35:50):
Well, I think it is really interesting that in Australia
YouTube Kids is one of the few social media platforms
that is that is basically being spared in this band
for under sixteen. YouTube Kids may have a lot of
content that is safe, but I think it begs the
question of how much should kids be watching it in
the first place, and how short is too short. Some
(36:10):
of the experts we spoke to are concerned that some
of the shorter content can affect children's attention spans, and
how long is too long. Some of the content that
I was finding on YouTube Kids was four hours long,
and that is obviously far, far longer than is recommended
by experts. So I think the question is how YouTube
Kids balances that one of these are questions that they
address and sort of what they communicate to parents to
(36:33):
help parents feel more comfortable that the content that is
up there is actually vetted and not just simply chosen
by AI as something that could be appropriate for kids.
Speaker 2 (36:41):
You and I parents young children. How many parents are
worried about this?
Speaker 19 (36:45):
So you spoke to parents are very conflicted about this.
They're extremely worried. But at the same time, parents I
spoke to for the story said that they need YouTube.
One parent I spoke to described it as a third
parent sometimes when she just needs a break. Another father
told me how this is a really big internal struggle
because sometimes he just needs the kids to lock into
YouTube so he can deliver on other parts of being
(37:06):
a dad. At the same time, I think that there
were parents, their parents that I heard from, who described
wanting to get rid of YouTube Kids altogether because they
said that more than any other platform that their kids
are using or appy. They when they're told to turn
off YouTube kids, they actually can't turn it off.
Speaker 2 (37:24):
And they end up in a bad mood. Quite often,
I find off if they've ever consumed anything on the screen.
We appreciate this deep dive is a great read. Alex
Levine on her latest on YouTube kids, TikTok. When I
invest more than thirty seven billion dollars to build a
data center in Brazil, so the first project in Latin America.
(37:47):
The data center will be developed near the industrial port
of the same and will fully rely on clean energy
from wind energy parks, whom Marg's Peter Millard joins us
and you cover energy out of Rio. Why is Brazil
so well placed for this day to send to build out.
Speaker 4 (38:03):
Brazil?
Speaker 20 (38:04):
It's Latin America's largest economy, and it's also a renewable
energy powerhouse. Most of the energy comes from hydroelectric plants.
There's also been a rapid advance in wind energy and
most recently with solar energy, and so data centers they
(38:25):
want to have, they're basically looking for clean energy when
they build out these data centers. I know there are
some that are relying on natural gas, but ideally they
want renewable energy, and Brazil has it. It also has
a completely interconnected electricity grid, unlike the US, where you
have kind of certain where it's kind of split up geographically.
Speaker 5 (38:49):
And so that helps.
Speaker 20 (38:50):
You can have a renewable energy project far away from
where the data center actually is, and then they can
have a purchase agreement where they are and the electricity
goes into the grid and then the data center would
consume it.
Speaker 2 (39:02):
So the data center developer involved is omnia. You've got
Casidol's mentors, who's helping with the energy supply. Peter, How
big is this because in the US we've almost become
a bit numb to thirty seven billion dollars here, another
trillion there. But this must be pretty seismic in terms
of scale.
Speaker 5 (39:18):
Yes, that's right.
Speaker 20 (39:20):
When they talk about the first phase, they're talking about
three hundred megawatts. But at Pierson, the officials I've spoken
to have said that it could reach up the three gigawatts,
which is I mean, they would take about a decade
to get there, but that's half of what you currently
have in Virginia. So in terms of scale, it could be.
Speaker 2 (39:41):
Huge, And of course we'll be thinking a lot about
the relationship that Brazil has with China, and therefore Bite
Dance TikTok's parent from the Moost Peter Millard. It's a
great story. Thanks for bringing it to us. Meanwhile, let's
talk about Salesforce shares at a historic cheap valuation, as
this concerns well that its growth prospects could be eroded.
II the company releases its third quarter earnings later today,
(40:03):
what can we expect. Arag Rana joins us from Blombag Intelligence,
and there is this anxiety that even though they can
talk about agent Force until they're blue in the face,
it's not actually giving much bearing on revenue.
Speaker 8 (40:14):
Yeah, there are two elements of it, and you know,
one of the most important part is the size of
the company. It's a it's a very large software company,
very big revenue base. So even if you see adoption
of whether it's data cloud on the AI side or
agent Force, it doesn't move the needle if the macro
is bad. And that's really the big narrative for whether
it's Salesforce or Workday or a lot of other software companies.
(40:35):
Is enterprise tech spending on the non AI side of
it is not that strong. You're not at people are
not adding headcount at the same rate they were a
few years ago, and that is what's weighing in the
subscription growth rate of all these companies. And I think
that's the big narrative. And you know, from my experience,
unless the estimate starts to move up, you know, the
star kind of you know, it remains you know, I
(40:56):
would say range bound.
Speaker 5 (40:57):
On that case.
Speaker 2 (40:58):
What's really interesting is the narrative in the market is
being dictated by a report out of the information about
Microsoft sort of finding it tough to charge people for
its co pilots, for its agenda AI offerings and salespeople
sort of having pulled back on targets. Now we haven't
managed to match that thus far and around, But is
that really what is focusing the minds of those in
(41:18):
the market, Whether there's productivity gains from salesforce from copilot.
Speaker 8 (41:24):
So again, there are two aspects of it, and I
think one thing is very clear that there is no
shortage of revenue on the AI infrastructure site, So let's
keep that, you know. The other one one area, the
second piece is all these co pilot products that companies
are launching in the case of Microsoft, when it comes
to something like a GitHub copilot, highly productive and massive
updake just because of what it provides. In the case
(41:46):
of the office copilot, it has value to it for
the end customers, but at the same time, it's very
expensive to run at this point because the cost of
you know, token generation and inference is not that it
is not that low. That's going to come down and
it will lead to more and more people embracing that.
But that goes back to the first thing we talked
(42:06):
about is a slowdown in enterprise tech spending, and I
think that bays on everything, not just a handful of sectors.
Speaker 2 (42:14):
Many of those can perhaps show the benefits of Informatica
purchase today at least yeah, I.
Speaker 8 (42:20):
Mean, I think that you will see some revenue uplift
because of that, and that's good. But the question is
going to be what kind of cross selling can they
do using their distribution arm that could get Informatica's organic
sales growth a big lift, because I think that is
one of the benefits of accumulating some of these assets
under one umbrella.
Speaker 2 (42:39):
And rak Rana it's a busy day, a busy week.
Senior analysts Bloomberg Intelligence. Thank you so much for bringing
us your research that does it for this edition of
Bloombag Tech. Do not forget to check out our podcasts.
Find it on the terminal as well as online on Apple, Spotify,
and iHeart and stick with earnings as they break after
the bell. This is Bloomberg Tech.
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