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1:10

Audio Studios. Podcasts.

1:12

Radio. News. From

1:15

the heart of where innovation, money

1:17

and power collide in Silicon Valley

1:20

and beyond. This is

1:22

Bloomberg Technology with Caroline Hyde and

1:24

Ed Ludlow. I'm

1:39

Caroline Hyde at Bloomberg's World Headquarters in New York. And

1:42

I'm Ed Ludlow in San Francisco. This is

1:44

Bloomberg Technology. Coming up, Intel,

1:46

it slides amid some tepid

1:48

forecasts. We're going to discuss all of

1:50

that with the CEO, Pat Gelsinger. Plus,

1:52

Microsoft and Google post strong results on

1:55

AI demand for cloud. Full coverage ahead.

1:57

And Jeff Bezos and Andy Jassy, deleting

1:59

chat. I mean an anti-trust probe,

2:02

now that's according to the FTC, we bring

2:04

you their response and the details. Right now,

2:06

Caro, we start with semiconductors. We do, let's dig

2:08

in on Ill Things Intel. Room-X

2:11

inking was on, of course,

2:13

across the earnings last night, discussing with

2:15

the business. And look, this seems to

2:17

be a worry about forecasts. Q1 actually

2:20

pretty resilient, the forecast tepid. Yeah,

2:23

no, you're absolutely right. All of the divisions

2:25

performed roughly where Wall Street was expecting, if

2:27

not a little bit better. The

2:30

issue that investors had was with the forecast

2:32

that Partners team put out there, and that

2:35

was considerably lighter than the

2:37

consensus. And that was

2:39

explained by Partners management team as

2:41

being related to a structural issue

2:44

that some of the excess demand out

2:46

there can't be met because of an

2:48

issue with a shortage of a certain

2:50

type of manufacturing. It's important to

2:52

talk about the server market. What did we learn about Intel's

2:55

place in the server market? Yeah,

2:58

I mean, as I forwarded

3:00

along to you, an analyst put it this way, look,

3:02

the server market, the basic server market that

3:05

Intel has owned for many years just

3:09

isn't growing at a rate that

3:11

it has in the past because spending is

3:13

going elsewhere, it's going

3:15

into AI accelerators, and that isn't a big

3:17

market for Intel yet. And finally,

3:19

we should talk about Foundry. Intel

3:21

is unique in that sense that it is pursuing

3:24

two business models. What did you learn there? Yeah,

3:26

I mean, that's the big story, isn't it? That

3:29

Pat is pursuing some long-term fundamental

3:31

changes to the chip industry, and

3:35

if it plays out how he projects,

3:38

we're going to see a whole different Intel and a

3:40

whole different industry. But in the meantime,

3:42

he's got to report quarterly earnings based upon what's happening

3:44

right now. Bloomberg's Ian

3:46

King, who leads our semiconductor coverage here

3:48

at Bloomberg. Thank you very much. And

3:50

Caro, it's the earnings context, right? They

3:53

are numbers relative to street expectations. But

3:55

like every earnings, it's about an outlook

3:57

and the long term, the story of it. with

4:00

Intel that I think the market is seizing on

4:02

right now. The long term we want to dig

4:04

into with the CEO. In the short term though, we

4:06

have to acknowledge the market reaction. At one point, the

4:08

worst sell-off that we've seen since 2020, July of 2020,

4:10

we're now coming off

4:13

of those lows there, but we're now at the worst since

4:15

January 2024. But just to

4:17

add to the fact that this is a company that's

4:19

lost a third of its market capitalization in this year

4:21

alone. We

4:23

know that AI is a complicated story.

4:26

Yes, AI accelerators, but the server market

4:28

needs CPUs. It also needs memory, which

4:30

we discussed with Micron just the other

4:33

day. A lot of this is happening

4:35

in parallel. And as we learned with

4:37

Microsoft and Google, some of the cloud

4:40

growth is not necessarily AI related. Data

4:42

center infrastructure is needed for non-AI

4:44

reasons as well. So let's try

4:47

and unpick what's happening in a

4:49

name that, as you say, is

4:51

down. We

4:53

welcome now our Bloomberg TV and radio

4:55

audiences worldwide. And joining us is the

4:58

Intel CEO, Pat Gelsinger. Pat, good morning

5:00

to you and thank you for your

5:02

time. The stock is down more than

5:04

10%. And we're kind of

5:06

here again, right, where there's the short

5:08

term and the long term where you're trying

5:10

to convince investors of a

5:13

return to technology leadership and

5:16

also grow a foundry business. Have

5:19

you an updated timeline on when you think you

5:22

will achieve that target? Yeah,

5:24

thanks, Ed. And obviously, hey, we delivered a

5:26

solid Q1, right? We met on revenue. We

5:29

beat on earnings a bit tepid in the first half,

5:31

as we said, but we see a lot of improvement

5:35

as we go through the year. And

5:37

with that, obviously, the foundry business, as

5:40

I would say, we're going to see progress

5:42

on the foundry business every quarter from now

5:44

to the end of the decade. It just

5:46

gets better and better as we move into

5:48

our new technologies. As we've said,

5:50

getting back to process leadership, which have better

5:53

ASPs and we can build

5:55

better products with them. We win more

5:57

external foundry customers as our scale grows.

6:00

And we'll also get past this period where

6:02

we had to invest the catch up, right,

6:04

and create the capacity for a decade plus

6:07

of underinvestment. So everything there becomes a tailwind

6:09

going forward and we hit key milestones. And

6:11

one of those I was very proud of

6:13

just this week, we went to production with

6:16

our first server part on Intel 3. The

6:19

US is back to leadership process

6:21

technology being manufactured on our shores

6:23

for the first time in a

6:25

decade. So some key milestones and

6:27

I'll just say everything is coming

6:29

together as we would say. And we're

6:31

very optimistic that yes, in fact, we

6:34

will deliver the foundry business

6:36

and the manufacturing capabilities as we've laid

6:38

out for the company, the industry and

6:40

the world. Steve,

6:42

interestingly, analysts over there, 2024

6:45

should mark the bottom in many aspects,

6:48

Pat, but they really want to understand

6:50

the pace of the climb that is

6:52

necessary. How can you tell us about

6:55

how quickly you'll be able to scale

6:57

back that market share that you've so

6:59

far lost? Yeah, and

7:01

we look at Intel now in

7:03

these two different perspectives, Intel products,

7:06

and we expose through our recast

7:08

financials that we have a very

7:10

solid, fabulous business with healthy financials,

7:12

and we expect those to improve

7:14

over time. But the big story

7:16

has been about exposing the foundry

7:18

financials and the losses associated with

7:20

those. And what we see is

7:22

over the decade, that will cross

7:24

through profitability in the middle of

7:26

the period for that business

7:29

as we get back to process leadership and

7:31

start to moderate the level of investment

7:34

required to go rebuild that decade of

7:36

underinvestment. And as we do that, if

7:38

we would have that today, we'd be

7:40

more than double the earnings this year

7:43

that we're forecasting. So it becomes a

7:45

huge positive lever for us. And as

7:47

I like to say, all of that's

7:49

in our control. The

7:52

wafers, getting back to leadership, the product implications

7:54

of it, all of these things are our

7:56

control, and it gets better as we win

7:58

additional external foundry. for the Foundry customers. Where

8:30

are data centers being built and what are they

8:32

being built on right now? Yeah,

8:35

and this is important because we've been

8:37

at a period now for a number

8:39

of quarters where data center CPUs have

8:41

been fairly tepid. And we do see

8:43

that improving. We had good improvement in

8:45

the first quarter of the year and

8:47

we expect that to continue through the

8:49

year. And there's time for

8:51

refresh in those data centers. But we're

8:53

also seeing that the CPUs now as

8:56

head nodes for AI use cases, we

8:58

posted some pretty incredible results that we

9:00

can now run 70 billion

9:02

parameter models natively

9:05

on the CPU. I don't need a

9:07

special accelerator. I can do everything on

9:09

the software stack that I already use

9:11

inside of data centers. And

9:13

we're seeing that these power efficient products

9:15

that we're bringing to the marketplace, such

9:18

as our Xeon 6 that we just

9:20

announced are gonna enable us to stabilize

9:23

and regain market share. With much higher

9:25

core counts, the ASPs are going up

9:27

very nicely on that through the year.

9:29

So we saw growth in Q1. We

9:32

expect that to continue through the year. And

9:34

as we get to the back half

9:36

of the year, our accelerator product

9:38

line with Goudy, Xeon plus Goudy,

9:40

we believe becomes a very

9:43

compelling solution for enterprise customers. And we

9:45

had quite a number of announcements of

9:47

those this quarter. Customers such

9:49

as Bosch and Dell

9:52

and Super Micro all

9:55

bringing those into the marketplace. Bosch

9:58

and IBM and Eclap. partners

10:00

like Naver, the fastest growing cloud

10:02

provider in Asia, all of those

10:04

coming alongside the Intel strategy so

10:06

we see that momentum building it.

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steeple.com. That's STI F-E-L. Stiefel,

12:00

Nicholas and Company Incorporated, Member SIPC and

12:03

NYSE. Momentum, and

12:05

we want to just remind us

12:07

that we are with TV radio

12:09

audiences, the CEO of Intel, Pat

12:11

Gelsinger. Pat, on the momentum, everyone

12:13

wants to talk about AI and all of its ways

12:16

and means. You've been focusing in on an

12:18

AI PC and I'm just really interested

12:20

in, ultimately, you're going to be shipping

12:22

in excess of originally 14 million AI

12:25

PC CPUs, that's a target for What's

12:28

the demand like at the moment, Pat? What's the cost

12:30

like? Yeah, when we

12:32

announced the category at the end of

12:35

last year, Carolyn, it was sort of

12:37

like everybody said, wow, what's going on?

12:39

The AI PC and you're seeing a

12:41

flurry of interest of other people coming

12:43

into that market. But Intel, unquestionably the

12:45

leader, first to declare the

12:47

market, first to describe the use

12:49

cases and our first product, Core

12:51

Ultra, is having a very robust

12:53

ramp into the marketplace. And

12:56

to some degree, I'm racing to catch up to

12:58

the demand. We're meeting all of our supply commitments,

13:00

but not all of the upside requests

13:02

yet that we're getting from

13:04

customers. So this is very robust. We

13:07

expect that we'll exceed the 40 million

13:09

units this year. We'll be introducing our

13:11

next generation product in the middle of

13:13

this year. So all of these pieces,

13:16

we are very optimistic. And you're seeing

13:18

use cases and communications

13:20

where all of a sudden

13:22

I get summarization, textualization, translation

13:24

in real time, all running

13:26

on my PC. Developers,

13:29

gamers, all of these use cases

13:31

are now becoming AI enabled and

13:33

Intel leading the AI PC parade.

13:35

It's a very exciting time, but

13:37

I believe will be the biggest

13:39

cycle of PC refresh and

13:41

expansion that we've seen in likely

13:44

decades. Pat, this is a conversation

13:46

about your technology and about

13:48

ultimately your fundamentals of a business. So

13:50

I'm just going to take a turn for a moment. And

13:52

it's a sensitive question. So I'll give you a moment

13:54

to think about it. But given your relationship with Israel

13:56

and the fact that you are one of the largest

13:58

employers How are

14:00

you currently feeling about students in

14:03

the United States protesting against endowments

14:05

being invested in companies that are

14:07

associated with Israel at this moment?

14:10

Well, we have been in Israel

14:13

for 40 years now, and

14:15

it's been an incredible country

14:18

for us, incredible innovators,

14:21

and extraordinary resilience by

14:23

the Israeli people. And

14:26

they continue, despite the challenges of

14:29

the war that's going on there, to

14:31

deliver against their objectives. So we're very

14:33

committed to support our teams wherever they

14:36

are in the world. That

14:38

said, hey, we seek peace. And

14:41

we've been clearly emphasizing

14:43

that we need to

14:45

find routes of sustainable

14:48

peace in the region. They've been

14:50

supporting perspectives that reinforce that across

14:53

the region. And as

14:55

we look across the world, we say,

14:57

boy, there continues to be the turbulence.

14:59

And fundamentally, our strategy is around building

15:02

globally resilient supply chains that are balanced

15:04

across the world. So our core strategy

15:06

is emphasizing that there will be these

15:08

challenges across the world, whether that's

15:11

in Israel, Ukraine, or Asia. And we

15:13

are committed to making sure that we

15:15

can support the global

15:17

markets that we serve with

15:19

a strategy that really was built for a

15:21

turbulent world. Pat,

15:24

let's end on AI accelerators. Gaudi is

15:26

on track for 500 million this year.

15:29

AMD's MI300X will probably do

15:31

3.5 billion. And

15:33

Nvidia, with its generations, will do 40

15:36

billion. You've said that choice

15:38

is important, and also the CPU is

15:40

important. And I accept that. Many share

15:42

it. But do you see

15:45

a clear path where the numbers I

15:47

just outlined rebalance in your favor in

15:49

the AI accelerator market going forward? Given

15:53

the strength that we saw at

15:55

our vision event that we had,

15:57

we had 20-plus customers coming out

15:59

publicly and supporting. of our accelerator

16:01

and our Xeon plus accelerator strategy,

16:03

we're really starting to see that

16:05

pipeline of activity convert, Ed. And

16:09

ultimately, much of the activity

16:11

that you've seen so far

16:13

on generative AI has been

16:15

in cloud training. And

16:17

now, and I think the ultimate monetization

16:19

of AI happens as

16:21

business deployments start to occur. And those

16:23

are the areas that we see strength.

16:26

We launched the open platform for enterprise

16:28

AI. How do

16:30

we enable these use cases inside

16:32

of the enterprise, but in an

16:34

open architecture that many get to

16:36

participate in? We announced the open

16:38

AI networking from closed proprietary networking

16:40

to standard Ethernet based scale up

16:42

and scale out networking. We announced

16:44

that this quarter. And obviously the

16:47

momentum that we're seeing with Goudy,

16:49

all of that's a half a billion, almost all of

16:51

it's in the second half of the year. So you

16:53

can see a very accelerated cycle, a

16:56

lot of enthusiasm for Goudy. We're

16:59

the unquestioned leader in TCO, total

17:01

cost of ownership for enterprises, building

17:04

on the Xeon franchise and the

17:06

position that we have in the

17:08

enterprise and literally ISVs and cloud

17:11

providers, but most importantly, enterprise customers,

17:13

seeing that value proposition. Yeah, we

17:15

feel like we're gaining a

17:17

lot of momentum now in this category

17:19

and feel good about the potential for

17:22

our AI everywhere, AI PC, AI Edge,

17:24

AI Enterprise and AI Cloud. Depending

17:27

on an optimistic moat, we thank you so

17:29

much Intel CEO, Pat Gelsinger there on

17:31

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17:34

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17:36

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and Y Se. Ne.

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ne sais trillion dollar and trying to

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say though much success as i say

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something higher i'll set aside and cloud

19:44

reading it as as as as a

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the old and part my guess was

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filming years of artificial intelligence services helping

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deliver strong earnest results on and get

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to say about him as a senior

19:54

research analyst hillary says his says it's

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comment on the one that's me the

19:59

nice today and alphabet paired with

20:01

Google. Interestingly,

20:05

cloud has always been seen as a laggard there, but infusing

20:07

artificial intelligence is helping bring about market share, particularly with startups.

20:10

Indeed it is. Thanks for having me,

20:12

Caroline. Google

20:15

is well known for having a strong presence

20:17

among startups, tech companies, and they have

20:19

among the best AI assets around

20:21

historically. And so

20:24

they're going to benefit from this along with everybody else,

20:26

and we've seen two quarters of them at Google Cloud

20:28

now. And I think many were waiting

20:30

for, okay, you've got these offerings, how are people

20:33

using them, adopting them, and actually boosting their own

20:35

productivity? Microsoft shone a light on the fact that

20:37

what is it? 65%

20:39

of the Fortune 100 are using their Azure

20:41

cloud at the moment. I mean, they must

20:44

be just ripping away market share from everyone

20:46

else, even though cloud is still good for

20:48

Google. Microsoft still firing on all the

20:50

cylinders for you? Indeed it

20:52

is. In fact, the cylinders are just really starting

20:55

to get going. It's interesting

20:57

because Microsoft is absolutely benefiting from

20:59

a shared perspective due to their

21:01

leading position in AI across all

21:03

their businesses, certainly across cloud. And

21:06

I view AI as ultimately an

21:08

ultimate contributor, but it's definitely an

21:10

accelerant to cloud migrations. Hillary,

21:13

good morning. It's Ed in San Francisco.

21:15

The share reactions of each are interesting,

21:18

alphabet more pronounced. When I talked to

21:20

Ruth Poirat on the phone last night

21:22

about cloud, she basically said AI solutions

21:24

did make it a meaningful contribution to

21:27

that 28% cloud growth year on year,

21:29

but she didn't put a number on

21:31

it. Now Microsoft and Amy Hood did

21:33

put a number on it. They said 31% Azure growth,

21:35

7% of which came from AI. So

21:41

really interesting share reaction. I want to

21:43

put it to you that alphabet probably

21:45

isn't jumping as much on

21:47

that cloud narrative as it is the sweetener of

21:49

a dividend. I

21:57

think you're right about that Ed. investors

22:00

were pleased to see the results across the

22:02

board. I

22:05

think they breathed a sigh of relief that cloud

22:07

accelerated, that

22:10

all businesses accelerated quarter over

22:13

quarter. But the

22:15

big piece of new information here was operating

22:17

margin improvement and

22:20

commitment to that through the year as well as

22:22

the dividend. And

22:25

that's what we're seeing historically.

22:30

Hilary, do you believe now through the lens of alphabet and Microsoft's earnings

22:35

that corporate America is actually spending on and using

22:37

generative AI? I

22:40

believe they are. I believe most of

22:42

corporate America is experimenting with AI and

22:46

testing generative AI in Microsoft Azure Cloud and elsewhere,

22:51

certainly in Amazon and Google as well. And

22:54

that's just some level of scale. Microsoft's

22:56

seven points of AI contribution

22:59

were good. I would say they were generally in line

23:01

though, but Microsoft did signal on their

23:03

call that they were actually capacity constrained. Alluding

23:06

to the idea that that number would have actually been higher were

23:09

it not for those constraints. I

23:12

still believe it's going to be starting in the second half where

23:14

we see that Microsoft

23:16

inferencing base of users doing inferencing on their

23:18

Azure Cloud and

23:20

they're going out and start to drive that number. I

23:23

want to dig into basically the broadening idea

23:25

here. We're talking about two names that have

23:27

already done phenomenally well on the hype around

23:29

AI. We're waiting for the spillover effect. Now

23:31

you shine a light on certain companies that

23:33

I keep an eye on because they're New

23:35

York based, MongoDB. We also think

23:37

about what Datadog is up to. How

23:40

are these companies going to benefit from the adoption

23:42

of generative AI? So these companies will benefit the

23:44

whole consumption complex, MongoDB,

23:48

Snowflake, Datadog,

23:51

First and Third being in New York. They'll benefit

23:53

with a lag. I

23:55

agree with your care line that we're not

23:57

seeing it on a broad based basis yet.

24:00

let you who are

24:02

actually going to benefit, but what they will

24:04

benefit from is the absence of the extreme

24:06

cost optimization we saw last year. Companies

24:09

going on a virus strike in terms

24:11

of new projects. They're going to see

24:13

the flow through of what's effectively a

24:15

cyclical upturn in cloud consumption. We actually

24:17

heard that from Microsoft last night that

24:19

companies are conducting new projects, that they're

24:22

starting to do things, they're taking out

24:24

mothball projects and bringing those back. So I

24:26

think that's a positive for this cohort. Hilary,

24:30

we're down week one of MegaCap Tech

24:32

and I'm bracing for week two. What

24:34

do you think

24:36

is the kind of blanket takeaway of

24:39

this seven day period so far? I'd

24:42

say overall cautiously

24:45

optimistic. Again,

24:47

I stick to the names where

24:49

expectations are low, valuations

24:51

are reasonable, and

24:54

companies have idiosyncratic drivers. Microsoft

24:56

with AI and share gains.

24:58

The cloud consumption complex with

25:01

the absence of negatives. Amazon

25:03

should show some pretty good results based

25:06

on the fact that they have a lot

25:08

of tech companies and startups on their platform

25:10

too who are experimenting with AI. But it's

25:12

really company by company and enterprise

25:14

budgets overall remain somewhat constrained

25:16

in first half, I

25:18

think, more of that opening up in second half. New

25:21

fresh, always so good to get your expertise on

25:23

the time that we have earnings and all the

25:25

time actually coverage investments we thank you for being

25:27

here. And what have you got? Let's

25:30

get some news in talking tech

25:32

and first up food delivery service,

25:34

Meituan is planning to launch its

25:36

international platform in Riyadh, its first

25:38

location outside of China. According to

25:40

sources involved in discussions, the company's

25:42

looked into expanding in the Middle

25:44

East for months and could launch

25:46

as early as a few months

25:48

from now. The move comes as

25:50

Chinese companies seek growth abroad to

25:52

combat a domestic slowdown. Plus, US

25:54

Secretary of State Anthony Blinken and

25:56

Chinese President Xi Jinping met in

25:58

Beijing. She's trying to she. issued a

26:00

warning to Blinken against quote vicious

26:02

competition between the two countries saying

26:05

quote China and the United States

26:07

should be partners rather than rivals

26:09

the two-day meeting composed a dialogue

26:11

on trade geopolitical tensions and

26:13

even an announcement of AI talks

26:15

that will begin in the coming

26:17

weeks and finally Huawei's Latest smartphones

26:19

that says been utilizing an updated

26:21

version of it's made in China

26:23

chips according to an independent analysis

26:25

the purest 70 phones sport

26:28

a Kirin 90 10 processor Which

26:30

is a new version of the 9000 chips

26:32

that alarms Washington officials due to

26:34

their 7 nanometer tech long thought

26:37

to be beyond China's capabilities according

26:39

to Jeffery's the purest 70 smartphones

26:41

sold out within two days of

26:44

being launched scarra Fascinating

26:46

coming up. We're gonna talk FTC

26:48

Allegations against the Amazon founder Jeff

26:51

Bezos and its current CEO Andy

26:53

Jesse Honey according to the

26:55

FTC they've been destroying messages amid an antitrust

26:57

probe But we'll get you the details and

26:59

the response from Amazon next you want to

27:01

of course happening with that trace today UK

27:04

listed company up 16% why the

27:06

UK say the company's actually agreed to sell

27:09

itself to a private equity firm from a

27:11

Bravo an equity value of 5.3 billion dollars

27:13

that's basically a 20% premium So

27:15

still a little bit of caution in the market that this deal will

27:17

get done Remember from a Bravo actually

27:19

walked away back in 2020 do that talks

27:21

to buy dark trace but really interesting and

27:23

this is a company of course in somewhat

27:25

a Interesting relationship with the

27:27

embattled British entrepreneur Mike Lynch who is on

27:29

trial for fraud here in the US

27:32

We shine a light on dark trace today. This is been

27:34

their technology What

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Visit www.choosestifel.com. Stiefel Nicholas and

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Company Incorporated, member SIPC and NYS. Welcome

29:47

back to Bloomberg Technology, Ed Ludlow in

29:49

San Francisco. Alan Hyde back in the

29:51

morning. Let's get to one of the

29:53

top stories on the Bloomberg terminal and

29:56

dot com. Top Amazon executives, including founder

29:58

Jeff Bezos and CEO Andy Jesse,

30:01

destroyed text messages discussing

30:03

business according to allegations

30:05

by the FTC, a

30:07

raising evidence the agency could have used

30:09

in an antitrust case against the retail

30:11

giant. I want to bring in Bloomberg's

30:13

Mike Shepard who leads our coverage of

30:16

the kind of intersection of tech and

30:18

politics. Now, Amazon

30:21

is pushing back against this FTC

30:23

allegation with some force. We will

30:26

get to that. But we're talking

30:28

about communications made by executives on

30:30

the Signal app. Mike, explain it to

30:32

us. Well, I

30:34

think it's important to turn the clock

30:37

back a couple of months to September.

30:39

And this is when the FTC filed

30:41

its initial antitrust case against

30:43

Amazon. And they've gradually been increasing

30:45

the pressure on the company in

30:48

this particular matter, in this lawsuit.

30:50

In November, they had a less

30:53

redacted version of the case released

30:55

to the public. And that indicated

30:57

that they had concerns. Executives have

31:00

been concealing some information, but they

31:02

didn't name names. Today, we

31:05

learned last night, we're discussing today

31:07

the latest. And that is that

31:09

they are naming names, including CEO

31:11

Andy Jassy and the founder Jeff

31:13

Bezos. And that indicates the kind

31:15

of pressure that the agency is

31:18

putting on the company. And it

31:20

echoes what this broader effort against

31:23

big tech by antitrust and forces

31:25

here in DC. Mike, turn

31:27

the clock back even further. And

31:29

you go to 2019 when Jeff

31:31

Bezos indeed made clear and evident

31:33

that his phone had been hacked,

31:35

he felt. And that is the

31:37

argument as to why executives move

31:39

to Signal and these automatic discussions

31:42

that can delete themselves. And I'm noting

31:44

that Amazon has currently said, look, the FTC

31:46

has a complete picture of Amazon's decision making

31:49

in this case, including 1.7 million

31:51

documents and sources like email, internal messaging

31:54

applications and laptops, among other

31:56

sources, over 100 terabytes of

31:58

data. What more? more needed

32:00

they do to prove that

32:02

they weren't using signal for, well,

32:05

conversations they didn't want seen by the FTC? Well,

32:08

you know, the FTC is actually alleging

32:11

that maybe there was more that

32:13

they needed to know about. Maybe

32:16

there was more in those conversations that

32:18

disappeared that they don't have access to

32:21

and are not privy to in the

32:23

case yet and that they should therefore

32:25

be able to see to have a

32:27

clear and complete picture. But Amazon is

32:29

saying that, look, you already have enough.

32:32

You have more than enough than you

32:34

need to be able to carry on

32:36

your work here. And I'm glad you

32:38

brought up Caroline the point about 2019, because

32:41

of course that's when Jeff Bezos'

32:44

texts were purportedly hacked and

32:47

his desire to maintain some

32:49

degree of privacy is another

32:52

driver here. And so

32:54

the company is saying, look, we've done

32:56

enough and also we had cause to

32:58

try to protect some of these communications

33:00

against people on the outside. Right,

33:03

Shevard, you always sum it up so beautifully.

33:05

Thank you very much indeed of all things

33:07

FTC and Amazon today. Meanwhile, I'll shift

33:09

gears a little bit. Elon Musk's

33:11

artificial intelligence startup, XAI, is

33:14

nearing a deal to raise $6 billion in funding,

33:16

and that would value the company at $18 billion.

33:18

That's all according to a person familiar with the matter.

33:21

He's got him like Max Chafkin, all in on

33:23

Elon Inc. joins us now. And I'm

33:25

interested by the fact that the sheer amount they're

33:27

raising versus the capitalization of the business. But we

33:29

did know they were going for funding to beef

33:31

up XAI. Well, here's the

33:33

thing. Elon Musk was able to kind

33:36

of spin this open AI

33:38

competitor. This company basically

33:40

it makes large language models very similar

33:42

to open AI. He did this kind

33:45

of quickly and with a very small

33:47

staff. But the thing is, to keep

33:49

these models training, you need an insane

33:51

number of very, very expensive GPUs. These

33:54

are the graphics chips that artificial intelligence

33:56

companies use. Elon Musk on X

33:58

spaces in a... Last

34:01

month said that they were using 20,000 already

34:04

of these Nvidia H100s. They would need

34:06

100,000 of these chips. So

34:08

this is a, you know, that's an expense that's

34:10

in the hundreds of millions of dollars, if

34:12

not the billions of dollars. So that's why he's

34:15

raising this money and why they need it. There

34:18

is a little backstory of all of

34:20

this that the Zet Chapman and I

34:23

of Bloomberg News reported on January 19th

34:25

that XAI was in talks to raise funds

34:28

with a valuation between 15 and $20 billion.

34:31

18 billion is pretty much between 15 and 20

34:34

billion. And Elon Musk

34:36

denied it. He said false, fake. And then the

34:38

FT followed up with the same report and he

34:40

said fake. And then the information came out yesterday

34:42

with a report which Bloomberg then reported to and

34:45

he hasn't said anything yet. The main thing is,

34:48

irrespective of what Elon Musk says, he's

34:50

got an ability to raise money for

34:52

pretty much any project he's doing, Max.

34:55

Well, and it's not that he only has an ability,

34:57

but he has to raise money here because Elon Musk,

35:00

as many people know, is very

35:02

wealthy, right? But he is not

35:04

very liquid. Most of his wealth

35:06

is tied up in Tesla stock,

35:08

SpaceX stock. He does not

35:10

have billions of dollars. He spent a lot

35:13

of money to buy Twitter, turn it into

35:15

X. He does not have billions of dollars

35:17

rattling around his pocket without selling some assets,

35:19

which would create some disruption

35:22

within his empire. So he needs

35:24

this outside money if he has any

35:26

prayer of sort of catching up to open AI.

35:28

And from the point of view of investors, you can see

35:31

why they're happy to give it to him because open AI,

35:33

anthropic, these companies, there

35:36

are some real questions about the business models,

35:38

but they have been able to achieve huge

35:40

valuations, a lot of adoption, taking a flyer

35:43

on Elon Musk and the hottest category in

35:45

business makes a lot of sense if you're

35:47

these venture capitalists who are considering this deal.

35:50

And to his credit, a lot of these projects

35:53

then do tend out to be influential and it's

35:55

a lean team at XAI and it looks like

35:57

they're making progress. Boom, best match, Tafquette, and happy

35:59

Friday. to you. A quick news story

36:01

that we're looking at. Shares of IBM, a

36:03

little lower, down a percentage point, but they're

36:05

backing a project in Canada, US$730

36:07

million, US$1 billion Canadian dollars. This

36:11

is for semiconductors, but in the context of

36:14

what IBM is involved in, which is packaging

36:16

and also testing labs. It's

36:19

an interesting bet. We haven't really talked as

36:21

much about Canada in

36:23

the context of, well, are they going

36:25

to be on-shore and making some kind

36:27

of domestic effort when it comes to

36:29

semiconductors like the United States are? Well,

36:31

IBM's doing something to the

36:33

tune of US$730 million. We

36:35

will be right back. This has been Bo Technology. What

36:45

if everyone at work were an expert

36:47

communicator? What if every doc, message and

36:49

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36:54

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36:56

everyone would be more productive. That's

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Incorporated, member SIPC and NYSE.

38:46

Cyber

38:48

security firm Rubrik, remember? Jumped yesterday

38:50

on its IPO day and well,

38:53

it's holding onto its gains. Remember

38:55

it raised about $732 million on the back of that IPO. One

39:00

of the key backers, long term backers, is

39:02

Greylock. Probably pleased to say that we have

39:04

Greylock partner Ashim Chander with us. And

39:06

Ashim, you were there, stuck at Shange, ringing

39:08

the bell, celebrating. And

39:11

how does it feel ultimately to see an

39:13

early pay off like that? What was the

39:15

signals that you got early on to know

39:17

that Rubrik would go public and do so, so well? Yeah,

39:20

so thanks so much for having me. The

39:23

honest answer is when you back a company very early,

39:25

you don't really fully know what lies ahead. I'd

39:28

say this company is really a story of

39:30

an exceptional leadership team, exceptional leader

39:33

targeting a very, very large market.

39:36

So I think early on in the company's

39:38

history, it was very clear like the size

39:40

of the markets that they were targeting, market

39:43

sizes that most companies don't really go after, and then the

39:45

quality of the people. I

39:48

think what's interesting more broadly about the

39:50

direction of travel with Rubrik is that when

39:52

they pop, they've increased, but also that there

39:55

are other cybersecurity companies, I'm sure, in your

39:57

portfolio, eyeing the market, but it's also the

39:59

job that is Microsoft. And the same day that they

40:01

went public, Microsoft came out with its earnings, saying

40:04

that we're still making strides in cyber security all

40:06

interlaced with generative AI. How much

40:08

room is that for this sort of element of competition?

40:11

Yeah, I would say, you know, so cyber

40:14

security is a, you know, is

40:17

a secular kind of growing market. These

40:19

markets have, you know, have become very, very large. And

40:21

today, you know, it's one of the most important parts

40:23

of information technology. Most large and

40:25

mid-sized companies spend anywhere from 5% to 10% of

40:27

their IT budget on cyber. And

40:30

so there's a lot of room for multiple providers

40:32

in order to provide different pieces of the stack.

40:36

And then Rubrik is an important partner

40:38

with, you know, Rubrik and Microsoft have

40:40

a strong partnership together. Ashim,

40:43

I'm really, really interested in Rubrik's

40:46

very close relationship with Microsoft. There's a

40:48

financial element to it, but

40:51

given how AI

40:53

and all of its guises is playing out, I

40:55

just wondered if you had a particular thesis on

40:58

how that relationship continues. Yeah,

41:00

I would say it's a multi-faceted

41:02

relationship, but fundamentally, you know,

41:04

what Microsoft and Rubrik are

41:07

trying to do is really provide customers with cyber

41:09

resilience, so, you know, and

41:11

just bring different pieces together. So

41:14

what's next, the gray lock? I

41:16

mean, you have a lot going on. You

41:20

would claim, I think, and many of your

41:22

colleagues have said on this show that you

41:24

guys, early on generative

41:26

AI and organized on generative AI,

41:29

I wondered if you've kind of sharpened your focus

41:31

on any other areas in particular. Yeah,

41:34

I would say, you know, I've been in gray lock now just

41:37

a little over two decades. It's never been a

41:39

more exciting time to be in venture capital, just

41:42

with everything going on with journey AI. You know,

41:44

I'd say the average day in the life

41:46

of a VC has really

41:48

become an AI job, and, you know, we think

41:50

of it fundamentally at three layers, kind

41:52

of the foundation layer at the lowest level, enabling

41:54

infrastructure in the middle, and then applications at the

41:57

top. And, you know, In

42:00

particular for VC backed startups, there's

42:02

a lot of opportunity around enabling

42:04

infrastructure and also in

42:07

applications. I think it's

42:09

a safe statement to say that over

42:11

the coming five to 10 years, you're

42:13

gonna see lots of applications completely reinvented

42:15

with new workflows leveraging generative

42:18

AI. You've got companies

42:20

in the portfolio already doing that and

42:22

you can name some of the other key AI

42:24

companies that you might want to anticipate coming

42:26

to the market, I'm sure. What

42:29

about the companies that aren't inherently

42:32

AI focused and just try to become so? How

42:34

do you advise those? Yeah, I

42:36

think any company that started, let's

42:38

say more than three or four

42:40

years ago, they're at

42:42

risk of being completely disrupted by a new

42:44

startup. So I think it's the company that

42:46

has a product line that

42:49

whether it's a publicly traded company or a newer

42:51

startup, they have to really go and AI enable,

42:53

they have to go and look at the application

42:56

of AI as a product line

42:58

and kind of reimagine other

43:00

ways. And either in the copilot

43:03

mode or really the more important

43:06

trend, if you take even the one year view

43:08

from here, it's all about

43:10

agent frameworks and agentic approaches. So

43:13

most companies really should be looking at how

43:16

do these technologies really apply to the

43:18

product area? There's

43:21

one thing Caroline and I have learned in the last, I

43:23

say, 12 months or so. It's

43:26

that not just a company is

43:28

being founded incredibly quickly, but a

43:30

platform or products being built very

43:32

quickly. You guys have this Edge

43:34

program where that basically is what

43:36

you facilitate, an idea

43:38

from an individual through to a business playing

43:40

out. Yeah, I know, thanks

43:42

for asking about that Ed. So we have

43:44

a bespoke company building program at Greylock. It's

43:47

called Edge. We're very selective

43:49

about who we pick in the program. And

43:53

once we do mutually, once an entrepreneur in Greylock,

43:55

kind of mutually select each other, we

43:58

basically work very closely with engineers. and

44:01

founding teams, all the way from

44:03

market segmentation to product

44:05

strategy to insertion for initial

44:07

product, working with initial

44:10

customers, building customer advisory boards, then

44:12

over time helping recruit go to market.

44:14

So it's a very peaceful program. And

44:17

many years ago, Palo Alto Networks started in our

44:19

office through that approach. Another

44:24

one that went public, started through that approach is

44:26

Sumo Logic as well. And

44:28

more recently, a company called

44:30

Abnormal Security started in that process

44:32

as well. They've rapidly grown

44:34

to become a late stage company. And

44:37

we have another one in stealth mode today,

44:39

Sengna, San Francisco office in that program. A

44:43

shame to have that, great lot of partners. It's great to have

44:45

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incorporated member as I, Pc

46:40

and and Y Se. He

46:51

operates or said electric bikes and skaters

46:53

line which is that by the likes

46:55

to do that is trying to invest

46:58

more than fifty five million dollars this

47:00

us to expand it's fleet globally. join

47:02

yes now is the line sea ice

47:04

Wayne saying of and when I find

47:06

is really interesting because it's not to

47:08

San Francisco the story as and relationship

47:11

is my from ability his well told

47:13

the you're looking at other reasons around

47:15

the world which region is is most

47:17

receptive right now to adding more to

47:19

the microbus. the offering. And thank

47:21

you for having me out where she sees

47:24

demand from over the world on. Line

47:26

is today and thirty countries five thousand

47:28

as three hundred plus cities. And

47:31

the reason why cities are so interested is

47:33

because the biggest challenge of our time is

47:35

the challenge of the climate crisis. And.

47:37

The number one source or carbon pollution in

47:39

Europe and is in the United States is

47:41

success that he said. The vast

47:43

majority of Dallas personal cars and trucks.

47:46

And. If we're going to meet the

47:48

challenge of climate change the we

47:50

must transition away from cars and

47:52

A.white green Transportation Alternatives like advice

47:54

is scooters which is why I

47:56

think you're seeing cities all around

47:58

the world. And brace. micro mobility as

48:00

a way to reduce their reliance on cars. I

48:04

told our audience who are coming on the show

48:06

and I put a poll out there to ask,

48:08

do cities need more electric scooters and bikes? The

48:12

majority of respondents said no, well

48:14

almost majority. And

48:16

in some cases they voted for fewer.

48:18

There's still sort of frustration

48:21

and skepticism and disinterest

48:23

out there. How do you overcome it? I

48:27

think the best way, we need to earn

48:29

the trust of residents and city

48:32

governments in order to operate. I think

48:34

the best way to ensure that is

48:36

to make sure that our scooters and

48:38

bikes are parked responsibly, that we

48:40

have a great safety record, which we do,

48:42

that we continue to invest in technology and

48:45

line bills and R&D's every scooter and bike

48:47

that we put on the street to

48:50

ensure that they're the safest, best ride out

48:52

there. And when we

48:54

continue to deliver an excellent service, we will

48:56

continue to hopefully build that trust with cities

48:58

to expand. Wayne, you're

49:01

talking to a bike addict here.

49:03

I actually prefer the non-electric ones

49:05

than the electric ones here, but I do it a lot

49:07

here in New York City. I do it when I'm over

49:09

in London. I use the Uber app to get what you're

49:11

currently seeing on your screen, the line bike. But they're

49:13

a mess and they're everywhere. And I think that's

49:15

the key concern here. How do you ensure, do

49:18

you have to spend more on infrastructure to ensure

49:20

that people do have places to park them? What

49:22

is the responsibility of you vis-a-vis? The overall government

49:24

right now? I think

49:27

it's a joint effort. So

49:29

you mentioned London. So London has two

49:32

and a half million cars. There

49:34

are 100 times more cars in London than

49:36

there are electric e-bikes. And

49:39

each parking spot can fit six to eight

49:41

e-bikes. So if you say

49:43

there's overabundance of something, there's

49:46

an overabundance of cars in London,

49:49

because if anything, if we

49:51

can even take a tenth of

49:53

the parking spots in London and turn it

49:55

into bike parking corrals, we can easily solve

49:57

any parking issues we have in London. So

50:00

we have to continue to work with cities

50:02

and city governments to make an infrastructure transition

50:05

to build more bike lanes and protected bike

50:07

lanes and to build more places where

50:09

you can safely, respectfully park your e-bike.

50:13

You're someone who's building out, spending money while you're

50:15

also thinking about profitability. And I know you've been

50:17

thinking about Abbott-Dah positive for a couple of years

50:19

now. You probably took a leaf out of the

50:21

book of Uber, having worked so closely with Daruk

50:23

Al-Sashahi and continuing to work with Uber at Lime

50:25

now. But I'm interested as to what

50:28

ultimately the goal is at the moment. Do you have

50:30

to remain profitable in this current environment? Is that what

50:32

the VCs are asking? Yeah. So,

50:36

Caroline, as you pointed out, the 2023 line grew

50:39

by over 30% and hit over $600 million in

50:43

gross bookings. It's actually our

50:45

third year of 30-plus-percent growth in a row. More

50:48

impressively, our profitability of 5X

50:50

to nearly $100 million in

50:52

adjusted EBITDA. And that

50:54

is actually what's enabled us to

50:57

invest $50-plus million into scaling e-bikes.

51:00

And I absolutely think that today's public

51:02

markets demand sustainable and profitable companies.

51:04

And Lime has shown that we

51:07

can do it in a very

51:09

tough industry as we continue

51:11

to expand our profitability and profit margins. Are

51:13

you going public soon? Well,

51:17

I think that depends on both the

51:19

macro markets and our internal business

51:21

results. What we can focus

51:23

on is making sure that Lime continues to

51:25

grow rapidly and continues to expand our profitability.

51:28

The macro market is still, I would

51:30

say, a little bit iffy. You guys were

51:32

chatting about Rubrik. Rubrik, great IPO. Rednet

51:35

had a good IPO. And then you had Instacart

51:37

last year. But it's still one step forward, three

51:39

steps back. I would say the overall

51:41

IPO market is probably still a little bit frosty. So

51:44

we're doing everything we can to ensure that Lime

51:46

has the business, the profitability, and the internal controls

51:48

to be ready to live as a public trading

51:51

company. And whether or not the right time is

51:53

going to have to depend on the macro markets,

51:55

which is outside of our control. Winting,

51:58

Lime CEO, iNetMarket. We thank you for

52:00

telling us the internals of the business. Meanwhile, let's get

52:02

back to those public markets, Ed. Mm-hmm. Yeah,

52:05

astonishing week in earnings. And then next

52:07

week, it's another astonishing week in earnings.

52:11

Well, we've just had so much focus on AI

52:13

spend. The fact that there's, what, $40 billion

52:15

apiece on AI spend? But

52:17

what can you get from that? Google

52:20

outperforms, Microsoft outperforms. We'll see what Apple,

52:22

AMD, and Amazon have to us. That's

52:24

it for this edition of Bloomberg Technology. Check

52:27

out the pod, the pod, pod, pod. This is

52:29

me talking. bloomberg.com/AI

53:00

slash radio.