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Caroline Hyde
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Various Bloomberg Reporters and Guests
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Caroline Hyde
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Various Bloomberg Reporters and Guests
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Caroline Hyde
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Various Bloomberg Reporters and Guests
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Caroline Hyde
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Various Bloomberg Reporters and Guests
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Caroline Hyde
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Various Bloomberg Reporters and Guests
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Caroline Hyde
Bloomberg Audio Studios Podcasts Radio News Bloomberg Tech is live from coast to coast with Caroline Hyde in New York and Ed Ludlow in San Francisco. This is Bloomberg Tech coming up. ASML says bookings for its most sophisticated chip making machines remain resilient thanks to the AI boom. Plus a whirlwind of data center news and Microsoft cutting a fourth deal with nscale among others. We'll break it all down. And Apple updates its top of the line iPad Pro and other products with its own in house chip. But first, asml, the maker of EUV equipment, the most sophisticated chip equipment that then gets sent to key partners around China but also around Asia. And they're showing strong bookings. Let's get the details of Bloomberg's equities reporter Henry Ren and what's so important is it's the EUV extreme ultraviolet lithography machines seem to be being still snapped up even as China has to pull away eventually.
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Various Bloomberg Reporters and Guests
Yes. So thanks for having me. And for this quarter which is the market focus is this EUV orders number and has risen to the highest level since late 2023, a huge plus for investors. And that's why we've been seeing stock trading higher now. So we know that actually mainland China invest chip makers they can't order EUV tools directly they can access a less advanced tool called duv. But it really is a sign that some other chip makers, including Samsung in South Korea, including TSMC in Taiwan is stepping up and to to investors it's an early sign that this rapid increase in AI infrastructure is actually translating to the orders that ASML has been seeing so far in this quarter.
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Caroline Hyde
What's so interesting is the dominance of Asia as the demand flow us starting to pick up for ASML's equipment. But they're in the heart of the geopolitical tension right now. They must be exposed to concerns around rare earth metals, let alone an ability to have to pull away from selling into China.
- [03:34]
Various Bloomberg Reporters and Guests
Yeah, indeed. A lot of discussions on us in the morning as well. And ASML said that it has stacked enough materials for at least several months because realize that we realize that the market has a lot of concerns regarding chip equipment makers reliance on those metals because analysts said that although in terms of the total material input for ASMR just accounts for a very small amount, but it's still a very critical component for its most advanced EUV machines, as you mentioned, but also for its partners, for example, because ASML works with other partners for mirrors for the components for UVs as well. So it's a very important ingredient into the EUV machines. But so far the company said that it hasn't seen major impact.
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Caroline Hyde
Most valuable European stock Henry Ren we appreciate the breakdown on asml. Let's stick with that very company and the broader conversation. Andrew Gardner is with us, is Citi Research, head of European Technology Equity Research. And you have a buy rating on ASML. You have a price target of more than €1,000. What takes us there? Andrew.
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Various Bloomberg Reporters and Guests
Good morning. Thank you for having me. Yes, we continue to be bullish on asml and I would say this morning's results and the orders in particular that you were highlighting with Henry just now are a step in the right direction in terms of the, the potential appreciation of this stock. I really think we've been on a, we've been on a journey over the last year in terms of resetting a base for 20 and they have confirmed this morning that, you know, expectations are at a reasonable level. They don't want to yet go so far as to call out growth, but at least we're not going to decline next year. And I think that's removed one of the key uncertainties for the stock and that's helped to get, get us to where we are today, just shy of €900 in terms of further appreciation from Here it's all about the growth beyond 2026 in my view. And that really comes down to some of what you've been alluding to with the from the artificial intelligence players into the data center here. You know, clearly there's a lot of momentum in terms of the news flow. ASML management were highlighting that just recently on the conference call. It's not yet fully reflected in their order flow, but it's something that we expect to come in the future quarters. And so it's really that momentum that will drive the stock higher.
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Caroline Hyde
I love that you say that, Andrew, because I pulled this part from your note, which I think was really important for our viewers because in particular you say smell acknowledge basically the momentum in the chip industry and market more broadly, but this is not yet reflected in firm orders. And there's a growing disconnect in the industry between the myriad of chip deals being announced and the amount of spend committed to these equipment companies. When will it show up? Are you really confident that it will show up? Because many are questioning the absolute financing of some of these orders.
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Various Bloomberg Reporters and Guests
Yeah, I think it's an, it's a critical question for this space. You know, as has been talked about already this morning on this program, you know, you're seeing all of these deals being announced by the likes of Nvidia OpenAI, you know, committing to certain volumes at AMD and Nvidia, the memory companies. And yet, you know, ASML sure was a healthy order intake of 5 billion euros, but nothing too out of the ordinary for them. You know, certainly they've had stronger quarters in terms of order intake. So I do think given the lead times in particular, we are going to see need to see orders pick up in the coming quarters in order to support the future demand that's being talked about by the artificial intelligence sector in particular. For example, ASML on the EUV tools that you've already highlighted, their lead times are roughly 12 months. So even if you're ordering today in the fourth quarter, you're not going to get those tools until the fourth quarter of next year, ramping production into 2027. So the lead times are quite long and therefore the supply chain needs to be prepared for, you know, for that ramp to come.
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Caroline Hyde
Andrew, you don't cover the stocks in particular, but if you are thinking about an announcement coming from Nvidia saying we're going to be there with thousands of chips ready by 2026 to be put into whichever data center that Open Air has just asked for and AMD as well, do you think the backlog is there that they've got them the inventory to be able to sustain the 2026 dates that we keep getting from, from these companies.
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Various Bloomberg Reporters and Guests
So in terms of thinking through the supply chain, you take ASML as a critical supplier, the only one in the world who can supply the EUV tools that are necessary for many of these chips. They are close to but not quite fully booked for 2026 deliveries. That will be the case by the end of 2025, given that 12 month lead time. And so really the capacity that is already planned to be installed next year, sure there could be a little bit of upside, but we're already getting close to the limits. And really, as I described earlier, what you're playing for is the growth into 2027. ASML management this afternoon here in Europe commented on the fact that they don't have perfect visibility because those orders aren't there yet. But they are trying, they're acknowledging the growth in the industry, the demand that is coming and they're trying to prepare themselves and indeed their suppliers to be able to make sure that they are not going to be a bottleneck into future years.
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Caroline Hyde
What was so notable about this quarter just gone that they reported on was the 42% exposure still to China in terms of revenue. How much smaller will that become eventually?
- [09:19]
Various Bloomberg Reporters and Guests
Yeah, so they have called that out in terms of the expectation for 2026 and saying it's going to be decline significantly, unquote, into next year. I would say on a year to date basis through September, they're at about 32% of system sales into China. As you point out, that was higher in the third quarter at about 42%. So they're still generating very strong business in China at the moment. They're just saying given the extended level of spend this year, last year, indeed the year before that, they think it should normalize into the future future. At the moment though, with the restrictions in the way that they are, the Chinese companies are ordering what they can and so, yeah, we'll just have to see exactly how that pans out into 2026. The lead times for the type of tools that the Chinese customers are buying are not 12 months in the way that they are for EUV. They're much shorter, six months, perhaps even less in some cases. So again, things could change as we look into 2027. 6.
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Caroline Hyde
Andrew, you cover ASML and the who's who of the European hardware sector. We appreciate you being on the show today. Andrew Gardner of Citi Research. Apple updated its top of the line iPad Pro as well as its Vision Pro headset and the 14 inch MacBook Pro rounding out a series of product refreshes, all ahead of the crucial holiday shopping season that the new products all use. Apple. Apple's latest in house chip, the M5. Consumer Tech Editor Mark Gurman joins us for more. How impactful is it that they're going yet more and more on their own supply chain, their own hardware?
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Various Bloomberg Reporters and Guests
Well, using in house chips of course is, you know, paramount to what Apple has been doing under Tim Cook for the last decade and a half or so. But in terms of these new products today, this is probably the most minor set of Apple product refreshes that I could remember in recent history. What they've done here is essentially taking designs from prior years, the iPad Pro design from last year, the MacBook Pro design they've been using since 2021. Obviously the vision Pro rolled out at the beginning of 2024 and they put new processors inside. So for the Vision Pro going from the M2 to the M5, that is a sizable leap. The UI should be a bit smoother, the device is now more comfortable, but still 30 $500. So the fundamentals of the product have not changed to any major extent. The Mac Book Pro, what they've done here is they've split the line in terms of rollout timing between the entry level and the high end. So the high end machines with higher end versions of the M5 chip that won't come out until early next year. And then of course, the iPad Pro that got a gigantic upgrade with the M4 version last year. So this is about just bringing up to the latest processor in terms of upgrades. Very unlikely that anyone should or will upgrade if they have the last generation versions of those products. But ahead of the holiday season they keep everything humming.
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Caroline Hyde
So if you want something really new, we have to think about the new home devices eventually coming on tap. There's a great story on the terminal about where these are coming from. It seems as though they're leaning less on China all at the same time. As Tim Cooks trying to say he's going to invest more in the country.
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Various Bloomberg Reporters and Guests
Yeah, both can be true. They're going to up their investment in China, but at the same time for some newer products they're going to differentiate, they're going to diverse. The Phi, they're working with BYD obviously known as a electric carmaker, predominantly in Asia. They also do mass manufacturing. They've been doing some final assembly for Apple for some iPads in over the last year or so they're going to do these new home devices. Why is that interesting? Typically when Apple rolls out an entirely new product category, they start with China. This time around they're starting with Vietnam where they already, like I said, make some iPads. They make the vast majority of apple watches and AirPods for the US market and they also make some HomePods.
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Caroline Hyde
Bloomberg's Mark Gurman always with the latest. We so appreciate it. Meanwhile, in China, a fatality involving show me his SU70V sedan. Well, it's renewed scrutiny on flush door handle designs. Bystanders were unable to open the doors for the vehicle to rescue a suspected drunk driver during a collision who died when the vehicle burst into flames. Now, flush door handles, they've recently come under scrutiny globally. Tesla now facing an investigation after Bloomberg reported incidents related to the door design. And Rivian also saying they'll be redesigning their handles in an upcoming future model. For more, Bloomberg's Craig Trudell joins us. And your team have been so on top of what has become a global concern about the design of door handles in latest EVs.
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Various Bloomberg Reporters and Guests
And the big concern here, I feel like in these issues of crashes and battery fires is, is particularly the troubles that people are having with getting into these vehicles from the outside. Yes, there are issues with, you know, mechanical releases that are different from inside, inside the vehicle and different from the typical way you get out of the vehicle. But what's really, I think alarming for people and particularly for, for first responders is if these door handles are built from the outside to where they just aren't operable when the low voltage battery fails or sort of, you know, purposely goes out of commission to sort of prevent again against these battery fires, you're just not able to get into the vehicle without bashing through a window or some other means. And so to have built a vehicle where the external door handles are inoperable without low voltage battery, that's just a problem and sort of on its face, a concern for regulators.
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Caroline Hyde
Why we might see a rush of buying mini hammers and cutters to go inside vehicles at the moment, Craig, which is the latest purchase I just made, it might be focused on the regulatory pushback and you're seeing China in particular looking for feedback. Open comment by November 2020 November 22nd but what else are we expecting Chinese regulators to do here?
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Various Bloomberg Reporters and Guests
Yeah, I think it's interesting that, you know, this is, this has been spurred this rulemaking and this soliciting of, of views from the industry got underway because there was a similar incident back in March also involving a Zhao Me vehicle. And so, so we've seen the regulator in China move pretty quickly here in terms of, you know, there was an incident that got a lot of attention. There's the second incident and I think interestingly we may see some manufacturers not necessarily wait for the regulator to change the rules. I think Linda lose a story about this latest incident out today goes into this idea that, you know, some manufacturers already are changing their, their door handle designs to take into account that this is a concern. And I think one of the things that we've seen in China's car market is just the level of competition is so intense that any way you can sort of sell your car is being incrementally better from different performance aspects, including safety. You're going to jump at that opportunity.
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Caroline Hyde
Zika jumping at it. The nine exports utility vehicle already going back to an old school kind of handle and a return to common sense is what one consultancy called it. Bloomberg's Crate Ride Out. Thanks so much. Now coming up, we're going to be talking all things quantum. The CEO of D Wave joins us. This is Bloomberg Tech. When your business evolves, so does your risk of data loss. But with Veeam, your data is always on the map. Partner with Veeam for coverage that keeps you moving and get protection for workloads of all shapes and sizes, even the ones you haven't created yet so you can stay resilient as you scale. With Veeam, it's all good. Get workload coverage that works for your business. @veeam.com that's V E E A M.com.
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Various Bloomberg Reporters and Guests
There are two kinds of people in.
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Caroline Hyde
The world, people who think about climate change and people who are doing something about it.
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Various Bloomberg Reporters and Guests
On the Zero podcast we talk to both kinds of people, people you've heard of like Bill Gates. I'm looking at what the world has to do to get to zero. Not using climate as a more moral crusade and the creative minds you haven't heard of yet. It is serious stuff, but never doom and gloom. I am Akshat Ratty. Listen to Zero every Thursday from Bloomberg podcasts on Apple, Spotify or anywhere else. You get your podcasts.
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Caroline Hyde
News out of Europe from D Wave, which develops quantum computing systems. Today the company announced an agreement with the Swiss Quantum technology to deploy a D Wave advantage to quantum computer in Europe. It's expanding access to the technology globally. G Wave CEO Alan Baratz joins us now from Lake Como, which course very close to Switzerland in Italy where the announcement comes from. Alan, what does it mean to be deploying this right here, right now.
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Various Bloomberg Reporters and Guests
So we are going to be deploying an advantage to quantum computer here in the region. And it will be available to researchers, scientists, businesses in Italy to basically explore how to make the best use of quantum computers. This is a part of the Q and Q Alliance, which was announced yesterday. The WAVE is a founding member of the Q Alliance and that's all about bringing Quantum to Italy in support of their digital transformation initiative.
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Caroline Hyde
Let's Talk about the 4400/qubit advantage to system. What can it do that is more sophisticated than classical computers today?
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Various Bloomberg Reporters and Guests
Alan so our 4400qubit advantage to quantum computer is arguably the largest and most powerful quantum computer in the world. At over 4,000 qubits, we have almost 10 times more qubits than anybody else. And with respect to the power of the processor, we recently published in Science a paper showing that we are able to compute properties of materials on our quantum computer in minutes that it would take nearly a million years to compute on the fastest supercomputers in the world. So this is literally computing properties that can't be computed classically. This is what everybody in the quantum industry has aspired to, namely the ability to do something important and useful on a quantum computer that can't be done classically. And this advantage to quantum computer has achieved that goal.
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Caroline Hyde
I believe you solved a physics problem on the behavior of magnetism, particularly in certain solids. What's interesting is the turn of phrase arguably. Allen. Why is it only arguably the most powerful at the moment? How is your technology differing or all still trying to measure itself out versus others out there?
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Various Bloomberg Reporters and Guests
Yeah. So when it comes to the ability to perform a computation on a useful problem that can't be solved classically, we have the only quantum computer in the world that is capable of doing that today. I use the word arguably in the context of largest when I talked about 4400 qubits. And the reason why I did that is because D wave quantum computers today are what's called annealing quantum computers. Everybody else in the industry is pursuing a different approach called gate model quantum computers. And while they have many fewer qubits, the nature of the qubits is a little different between annealing and gate model. So we believe that at 4400 Annealing Qubits, we are significantly larger than anybody else because all these other gate model systems have tens to a few hundred qubits. But there is an academic debate around the difference between the qubits.
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Caroline Hyde
What's interesting is you are making and generating real revenue. It's small but it's there. But the market capitalization of yours and many other quantum computing companies companies has just gone so far up and to the right. Allen, is the promise and hope being shown up in reality from orders? Because this is Europe taking a 10 million euros step forward. What about other deals?
- [21:53]
Various Bloomberg Reporters and Guests
Yeah, so we announced at the end of last year that we had sold a quantum computer to the Eulik supercomputing center in Germany. They purchased that system to connect it to their Jupiter exascale supercomputer to explore new AI workflows. And then earlier this year we announced that we had signed a memorandum of understanding with Yonsei University and Incheon City in South Korea for the acquisition of a quantum computer there. And we have frankly a number of other countries and research centers that are interested in acquiring our quantum computers as well. And that's just with respect to purchasing of the quantum computers. Our quantum computers today are also used commercially in support of a broad array of business applications. For example, North Wales police is using us to compute the best way to forward place police vehicles to be able to arrive at incidents in a timely fashion. These customers use us over the cloud. So we have both a cloud based business and an on premise business.
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Caroline Hyde
North Wales UK or Australia uk. Fascinating. Absolutely fascinating. Thank you very much indeed. Alan Barratt is learning about the European focus that you seem to be having with the business in particular US based company and the new announcement out of Lake Como. We wish you well over there. Dwayne CEO, welcome back to Bloomberg Tech. Let's check in on these markets because we are trading higher. Once again new ideals AI compute deals helping push up the NASDAQ 100. We're up 1.2% amid some of the geopolitical risks. Continue trading higher. Let's go under the hood and look what's really moving from a points perspective. We know about the ASML numbers, we know about the optimism that chip equipment is still selling strong. Well, let's have a look at AMD and indeed Nvidia. Both of them getting some more mighty price target raises over at HSBC today up more than 8%. In fact AMD is your leader in terms of points moves on the NASDAQ 100. Again this hope that yet more compute needs means more desire for their chips and they are making an indent on the likes of Nvidia. But Nvidia could go higher to the the tune of what an $8 trillion company. So HSBC is currently outlining we're at 181 as we speak, up 9, 10% on the day. Let's dig into that particular report a little bit more and just the fervor more broadly with Bloomberg's equity reporter Ryan Vlastelica. And Ryan, they are seeing significant market cap accretion to Nvidia on what over at hsbc?
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Various Bloomberg Reporters and Guests
Well it's not going to come as a surprise and many people but they are touting the growth potential of artificial intelligence. Specifically they see the total addressable market of these AI chips expanding beyond the hyperscalers which are the major Nvidia customers right now. Microsoft, Amazon, Alphabet, Meta and so forth and really sees that expanding beyond them into other parts of the economy. So as this continues to grow, they see Nvidia's earnings continue to grow and eventually leading it to the market cap you set before four, I think was about, you know, nearly $8 trillion. So certainly a significant jump from where it is right now.
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Caroline Hyde
That the most bullish when it comes to the overall analyst recommendations. Ryan, how much you seeing portfolio managers echoing that sort of well, fervor and excitement? Because we've had a lot of talk of bubbles just yesterday we're discussing them all.
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Various Bloomberg Reporters and Guests
Mm yes, I do hear some people talking about, you know, having a certain amount of skepticism. Can this continue to go on the way it has been going on? But even when I asked them specifically do you see maybe new competition threats from AMD or Broadcom, just given some of the deals that those companies have announced this past week, they still continue to like Nvidia. They still see it as the market leader. It continues to have a dominant market share in the market for these GPUs. So no one is very bears. I think there is one analyst on Wall street right now who has a sell equivalent rating on Nvidia video. But other than that people are pretty positive about it. I'd also note that as it continues to grow the multiple has been coming in a little bit. So these are not the kind of dot com era multiples that you know, some of the bubble concerns might be indicating. These are certainly a little bit above their medium term average but certainly not at the levels that would be, you know, real nosebleed.
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Caroline Hyde
Bloomberg's run Seleca. Thank you so much for the breakdown. Let's talk more about the compute demand right now because it's time for talking tech and Microsoft datacenter builder developer N scale. Well they've just reached a fourth deal this time to build a site in Texas with power capacity as much as 240 megawatts. The UK startup says the site will have over 100,000 new Nvidia chips. The GB300 is scheduled to open in the third quarter of next year. Plus, an investment consortium including BlackRock's global infrastructure partner, Abu Dhabi's MGX, Microsoft and video and many more agreed to buy aligned data centers for $40 billion. This is the first deal for that partnership that the investors established a year ago to invest heavily in data centers and energy. And Core Weave is partnering with startup Poolside to develop a massive data center complex in West Texas. Now, the site will be powered using local natural gas and is expected to generate as much as electricity, the Hoover Dam. Look, let's talk more about all of this investment news. Thomas Martin's with us. Senior portfolio manager at Global Investments got north of $3 billion in assets under management. Thomas, is this a bubble?
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Various Bloomberg Reporters and Guests
Well, thanks for having me on your program. And of course, that is the question that people are asking when things like this just go, you know, parabolic, to use a word that captures the imagination. People wonder, you know, how long can this go on? And they start comparing it to the past. We don't believe that it's a bubble. The underlying factor in force is the, the usefulness that can be gotten from these AI models. And we're only at the very, very beginning of that. You know, companies are having varying degrees of success at implementing these, and the compute power that's needed is prodigious, it's already been said. And all of these deals really articulate various aspects of what is going on with bringing this kind of compute to the, the folks and companies that need it.
- [28:27]
Caroline Hyde
But Thomas, what fundamental data are you looking at that shows productivity and revenue will be there?
- [28:35]
Various Bloomberg Reporters and Guests
Well, that's kind of the rub is that that data is not really there yet in a way that you can put your finger on it and count on it. And I think that's why you're getting some of this questioning. So a lot of what's going on is betting on the future, that problems are going to be solved and this is going to be productive. And you see that in the beginning parts of what's going on. Just anybody as a consumer who is using AI to just ask questions about anything can see the improvement. But that's not what really is going to drive it. It's going to be very complex things driven by businesses and agents and automation that is still very much to come and which will require more chips than we have and more connectivity that we have.
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Caroline Hyde
Yeah.
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Various Bloomberg Reporters and Guests
So the need for that compute is gigantic.
- [29:33]
Caroline Hyde
Amid supply chain headaches and worries and anxiety around China, whether or not keep buying some chips the US makes more broadly, whether we'll get the rare earth metals that are needed for a lot of the supply chain. Thomas, how do you factor in the risks of geopolitical.
- [29:47]
Various Bloomberg Reporters and Guests
Well, they're, they're very significant. And the issue with the rare earths and the magnets that they go into is that when you have one country like China that possesses a very high level, call it 70, 80%, depending on what we're talking about, of that, they have a lot of leverage to be able to shut that down if they want to, or to extract from the markets. And they know they have that power and so does the United States. So if they decide that, that they're going to start using that and escalating, it will take a bigger escalation to kind of resolve that. I think what the markets are looking at is the opportunity is so great that that will not be allowed to happen.
- [30:34]
Caroline Hyde
Look, you have been managing money for a long time. I mean, even just 2014 over at Global, and I think, Thomas, you are kind of talking a narrative where we have to believe you have to ultimately, ultimately have hope that this all comes to bear. Is that kind of the narrative? You have to talk to your own clients about that. Ultimately there aren't that many tangible, fundamental data points you can use. You just have to use a product to know how much more productive it's made you as an individual, even if you're not paying for it.
- [31:03]
Various Bloomberg Reporters and Guests
Yeah, concepts are very difficult and they're very easy to get excited about and to capture the imagination. But where you really get the, where the rubber meets the road, right, Is are they actually being used? And if you point back to the Internet and to connectivity back then with the laying of fiber, et cetera, and the switches, that got ahead of itself and it wasn't really implemented. It was easy to imagine, but the implementation took a long time to get to where we are now. But where we are now is absolutely using all of those things and is enabling this revolution and this one is just happening a lot faster. And so yes, you have to believe, but of course you have to look for proof. And in the third quarter earnings and as we go forward, that's what everybody is going to be looking for. But these deals that you just talked about are concrete evidence that, that real money is being put to work by a diversified number of very sophisticated and well capitalized players.
- [32:13]
Caroline Hyde
Real money and some promises of money To Thomas Martin, senior portfolio manager at Global Investments. Great speaking with you. Now let's talk about billionaire philanthropist Mackenzie Scott reducing her stake in Amazon by 42% over the past year, according to regulatory filings. That was on Tuesday. Tuesday, the latest disclosure from the end of September. So she now holds 81.1 million shares. It's down 58 million from a year earlier. Scott had ended up with about 4% of the tech giant after her 2019 divorce from Amazon founder Jeff Bezos. Coming up, Salesforce pushes its agent to ki experience in this year's Dreamforce conference. More on that next. This is Bloomberg Tech.
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Various Bloomberg Reporters and Guests
We love Agent Force and we're investing huge amounts in Agent Force, huge amounts. But listen to this. We've gone faster with Agent Force than we have gone with any other technology.
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Caroline Hyde
Salesforce CEO Mark Benioff speaking yesterday at that Dreamforce 2025 conference during which Salesforce revealed its AI customer service tool saves its own company $100 million a year. Bloomberg's Brody Ford covered this story and joins us now. And that's basically the sales pitch. We're using it, we're saving. You should do it too, right?
- [33:44]
Various Bloomberg Reporters and Guests
But to me, the fact that they're leaning so, so heavily on internal implementation, internal savings, it could be a bit of a red flag, right? I mean, traditionally companies like to lean on their customer stories. And it kind of brings us back to the whole question of the moment, which is which companies benefit from the AI boom in the enterprise? Is it the old school leaders like Salesforce? Is it the young ones like OpenAI? Right now the anxiety is towards companies like Salesforce.
- [34:12]
Caroline Hyde
The question also at the moment, is any of this making real productivity gains for other companies? And we've heard time and time again the MIT report, the 95% of pilots aren't working. How is Salesforce able to combat that narrative?
- [34:24]
Various Bloomberg Reporters and Guests
Yeah, yeah, there's this huge gap right now where a lot of people anecdotally will say, AI has made my own life much more effective. I can use chat GPT for all these things and it's great. In the enterprise, there is just still this big gap right now. And so Salesforce is saying that, look, we have new features all the time. We're making it easier for you to use pricing wise and all these other ways. And here's how you can adopt. But still, adoption has been a little more tepid than most would have thought maybe two years ago.
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Caroline Hyde
And looking at the share price, that tepid adoption is pretty painful. Stock is down 28% so far. This Year and still Dreamforce is a dream. And they got Matte Calico and they got Benson Boone and they're throwing all the money at the situation. How is that reading for those in San Francisco and more broadly?
- [35:10]
Various Bloomberg Reporters and Guests
I mean, Salesforce is a cash flow monster, right? Let's say that they aren't able to capitalize in this next wave. They're still making tons of money. But the question is, are they losing the mind share? Are they losing the growth potential for this new investment wave? And investors can't decide. Every six months the narrative changes. Right now applications, application leaders like them, like Adobe, Even like a ServiceNow, they're a bit in the penalty box. Right. And so so far Benioff hasn't been able to convince them otherwise. But there is an analyst day today and you know, maybe, maybe we'll tomorrow be able to say actually they're doing great.
- [35:46]
Caroline Hyde
Yeah, I mean we've just had SAP. You got Oracle talking up it's particular event at the moment. Can you steer us as to who of the new God they're almost worried about?
- [35:54]
Various Bloomberg Reporters and Guests
Yeah, who of the new guard? It's the AI native workplace tools. I mean, I would even throw a chat GPT into this. I would throw people using anthropic models and coding their own apps. I mean, what's so interesting is that there aren't a lot of super clear competitors at this point, but it's more the conceptual idea that a company like Salesforce was the center of gravity for so long in enterprises and that maybe that paradigm is changing. It's not a tangible competitor yet, but it's this kind of creeping anxiety.
- [36:26]
Caroline Hyde
I mean, while Salesforce is trying to get itself integrated within chat CBT and doing that success, see who uses it in the product. And Brody Ford is always breaking it down brilliantly. Look, as Salesforce works to sell its Agent Force experience, our next guest says customers are not really ready for it yet. And quote, salesforce knows it. Rebecca Weddman, biology and principal analyst joins us now. So what's your read on Dreamforce and Agent Force? Is it being adopted? Hey, Caroline, Great to be here. Thanks for having me. So I'm here in San Francisco at Dreamforce and I will tell you that there's a lot of talk about the agent enterprise and what that means for customers. And what we saw yesterday was exactly what, with all due respect to Brody, we're talking about the need to show real customer adoption with real recognizable brands, talking about real business results. Results. And I think what we've seen with AI is we Went from sort of fear of missing out in the beginning to what we're calling fomo, the fear of messing up. Now customers are really concerned because they experimented on those big projects that you talked about that didn't necessarily yield results. And so are they more willing to experiment with a known trusted partner that's already part of their overall spend from an internal software basis or are they more to willing, willing to go out on a limb and try the new recruits that are coming in terms of startups? Well, we definitely heard from Salesforce customers yesterday was that trusted partner is really important. But I think we're probably seeing the biggest innovators dilemma that we've ever seen in tech. Salesforce knows and when I was talking to Mark about this yesterday, we talked about it. They have to bring all of those customers along, which means not just innovating and driving the latest and greatest in AI technology, but really providing those safety nets, providing that guidance, providing those examples of customers like them who've achieved real business success with AI. What customers can you brag about that are making that sort of leap? Well, I've, I've Talked to probably 20 or 30 Agent Force customers from small to large organizations across multiple verticals that have really achieved success today. The poster children yesterday were folks like Pepsi, Williams and Sonoma, Pandora, Dell. So really across both consumer brands and more, more tech brands would you say really focused on how they're delivering success today. Compare and contrast what you've learned at some of the other big bring together moments that we've had. You've been over in saps, you've also been at Oracle, Apples, AI world. Is that service reality that they're vindicating the overall market capitalization in these companies and the AI bubble narrative that's brewing? You know, I think that the challenge is customers don't want to be educated, they want to be successful. And those vendors that are really able to show and not tell how their customers are achieving AI success today are ultimately going to be the ones that win. Can I, can I ask a little bit about what your view is from the work that you're doing with customers, with people as to whether too much money is being thrown at this for the amount of productivity gains we're getting in the here and now? You know, I think we've seen a lot of folks sort of dip their toe in the pool and get incremental results. They really need to be comfortable diving in to get those kind of exponential benefits that we're talking about about. And most folks simply aren't there yet. So how are they getting that? Well, it's, it's like I talked with Mark about yesterday. The vendors have to bring customers along and that's not about delivering the latest innovation, which is important. It's about providing those baby steps to help them get there, to help them understand what the payback is, to help them understand what the business case is, to help them focus their efforts not on that shiny AI object, but on the one that's likely to deliver the most real value for their organization. Rebecca, is an organization doing enough wholesale change in terms of interlacing human resources, people, management with the CTO and the technical side of the business to actually implement this right now? Well, no, Caroline, the short answer is no. I mean, we see fewer than 20% of companies have a policy on the use of AI today and fewer than 10% have tried training and reskilling in place not just to train people on how to use AI effectively, but how to train them for what their future job is going to look like. And that's going to be a key part of this moving forward too. Is there a standout company that you think is been taking its clients along and helping them educate at the pace you think is necessary? Who's doing the best job today? Yeah, again, if we go back to the narrative that you have to show them, not tell, not tell them in terms of being able to show actual customers receiving results with agent tech AI today, Salesforce is way out ahead. Rebecca Ederman of Valois, we thank you very much being an optimism, optimistic voice when it comes to the agentic dream ever at Salesforce. Meanwhile, coming up, Waymo plans to launch its driverless ride hailing service in London next year. We'll have all those details. That's next. This is Bloomberg Tech. Waymo is planning to launch its driverless ride hailing service in London, London next year marking its second international expansion and its first in Europe. Bloomberg's Natalie Leung covers the gig economy for us and joins us now. What's interesting is they're not going to be partnering with Uber and Lyft longer term here. They're going to have their own app offering. Yes, way more is going to work with an Uber backed company Move.
- [42:15]
Various Bloomberg Reporters and Guests
They were founded in Africa and they used to do vehicle financing and now expanding globally.
- [42:20]
Caroline Hyde
They're going to manage these fleets for.
- [42:22]
Various Bloomberg Reporters and Guests
Waymo and they actually were going to planning to raise, you know, more than $300 billion at like 2 billion valuations according to report by our colleagues last month. So there's real Business here for fleet companies like Move.
- [42:37]
Caroline Hyde
But London seems to be welcoming with open arms. Both we got Waymo and also Uber seems to be on a similar flight path. Right. In terms of having robo taxis in London. Yeah.
- [42:49]
Various Bloomberg Reporters and Guests
So what happened was earlier this year, the UK government moved forward their regulatory framework to pilot these autonomous vehicle trials to next year. So both companies are eyeing sort of that same timeline.
- [43:01]
Caroline Hyde
What's interesting, so you go back to the days when Uber was first coming into London and the backlash from black cabs over there at the time. Are we anticipating lobbying or is that the government just so wants to be all welcoming to innovation right now? That's really part of what's need to.
- [43:17]
Various Bloomberg Reporters and Guests
Be done and what needs to be seen as these trials go on. As these trials start, you know, what does the community, how, how do they respond and how do, you know, regulators.
- [43:27]
Caroline Hyde
You know, sort of consider all, you.
- [43:30]
Various Bloomberg Reporters and Guests
Know, all kind of forces from different.
- [43:31]
Caroline Hyde
Of course, it's not Wemos first rodeo. They've been piloting and successfully unrolling in plenty of cities already. What is it? How are they going to do it in London? How will we see that integration into the ecosystem? So they're starting with a very small fleet of vehicles around a hundred square.
- [43:48]
Various Bloomberg Reporters and Guests
Mile radius in London and so in the coming months. And so this will sort of lay the groundwork for when they launch it commercially next year.
- [43:56]
Caroline Hyde
And I think more broadly, how are they doing elsewhere? I mean, you said this is the second international destination and so the first.
- [44:02]
Various Bloomberg Reporters and Guests
International city was in Tokyo.
- [44:04]
Caroline Hyde
There's currently still test investing with the.
- [44:06]
Various Bloomberg Reporters and Guests
Local, local app and local taxi company. They haven't launched commercially yet, but in.
- [44:12]
Caroline Hyde
The US We've seen different launch approaches.
- [44:15]
Various Bloomberg Reporters and Guests
Whether it's launching exclusively on the Uber app in Austin, Atlanta or on their.
- [44:20]
Caroline Hyde
Own app in San Francisco and L. A. So we're seeing different approaches that they're trying. Horses, of course, is robo taxis of courses. Bloomberg's Natalie Lang, we appreciate it. Now that does it for this edition of Bloomberg Tech. Remember to keep checking these markets. Amd, Nvidia on a high. We get an upgrade for HSBC on both of these stocks. Don't forget to check out our podcast digest all the data center news on your terminal as well as online on Apple, Spotify and Iheart. This is Bloomberg.