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Resilience isn't just about bouncing back, it's about being ready. And when the threat comes, you hold back the chaos. Learn more@cohesity.com Resilience so have you heard the story about the prescription plan? With savings automatically built in, it's where a family of any size can feel confident the cost of their medication won't hold them back. Go to CMK Co Stories to learn how CBS Caremark helps members save just by being members. That's CMK Co staries As a contractor, I don't pay for materials I don't use, so why would I pay for stuff I don't need in my mobile plan? That's why my biz plan from Verizon Business is so perfect. Now I can choose exactly what I want and I only pay for what I need right now with my biz plan. Get our best price as low as $25 a line. Visit verizon.com business get started today. New lines only. Price per month with five plus lines includes auto pay and paper free billing and promotional discount, taxes fees, economic adjustment charge applicable. Add ons prices and terms apply. Guarantee applies to base monthly rated stated discounts only. Add on prices Additional offers in January 5, 2026.
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Bloomberg Audio Studios Podcasts Radio News.
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Bloomberg Tech is live from coast to.
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Coast with Caroline Hyde in New York and Ed Ludlow in San Francisco. Bloomberg Tech Coming up Big tech lags as investors remain skittish about the trade, we dig into anxieties and losses coming from the magnificent seven plus earnings still roll in. We speak with OCTA CEO Todd McKinnon after the software company boosted its full year profit forecast and Tick Tock will invest more than $37 billion to build a data center in Brazil, its first project in Latin America. But first you check in on these markets that are volatile on this day. Look, we're pulling back on some of the gains made Yesterday on the NASDAQ 100. We're off only by a 10% Nvidia flip flopping between gains and losses. But all eyes on some of the key Magnificent seven names that look less magnificent on the day. Bitcoin still managing to power up 9. 10 of a percent. We're at 92,000 so a bit of dip buying going on as sentiment though still remains pretty sour on the asset class. Move on and have a little look at what's really under fire today. Reports out there that Microsoft potentially having to say to its salespeople of co pilot of AI productivity tools, maybe you need to pull back on your Sales targets. There is counter reporting coming from CNBC that this isn't currently true, but we're going to dig into those details for you. Currently off by 1.8% all of this speaks to the anxiety that isn't going to give us the productivity gains many had hoped. Bailey Lipscholz, I'm pleased to say is here with us at the moment really talking about more broadly what we're seeing in this market at the moment. And Bailey, are we seeing those sorts of anxieties?
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Well, we are seeing some of the uncertainties and we're seeing that play out in real time. The big debate really around a lot of this trade and we saw this play out for throughout November is how much of this spend is going to be realized? Are the dollars going to make sense at the end of the day? And if you're seeing companies dial back their spending, what does that ultimately mean for the bottom lines? When you see a report like we've been seeing whether they're conflicting or not with Microsoft, it's a lot for investors to chew on.
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And what's been being chewed on is that people have diversified since the bottom in October, since we really saw the perhaps end of the significant selling. Tech still lagged and we've seen it underperform health care and other key sectors.
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Yeah, if you look so last time we had an all time higher. Looking back to October 20th and 28th, best best performers, health care, communications, energy as you mentioned, worst performing group is tech. One thing to keep in mind when you look at that S&P 500 infotech, the big names Nvidia, Apple, Microsoft are in there missing Tesla, Alphabet and other names. So a little bit of a grain of salt to take it with that. But we are certainly seeing investors diversifying, flocking to health care, Eli Lilly, Cardinal Health, Biogen, all outperforming. When I talk to portfolio managers, part of the debate is we've come so far so fast in a lot of these names.
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Yes.
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And as much as we like to think that things only go up eventually, the question is can you outperform and is there alpha generation? And that's why we see some of.
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That repositioning, repositioning still significant gains on the year if you're thinking of an Nvidia. But the momentum trades that we've seen on the back of this, the, the fact that quantum stocks have done so well, some of the cryptos fears and they still under a lot of pressure right now.
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They're under pressure. There's just a lot of volatility you look at the moves that we saw, whether it was in nuclear power or as you mentioned in quantum, pretty much nonstop up into the right. Whether that was retail, whether that was momentum or just hedge funds trying to juice their books, we've seen them pull back pretty markedly. Obviously Bitcoin has been quite volatile trying to recoup some of those losses. But if you're really kind of macro investor or running a book broadly from the equity side or in December, if you're up quite a bit, maybe take some gains off the table and maybe diversify into something like a health care which could be positioned to benefit or at least continue growing if there are.
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Concerns around AI and concerns as a macro picture. We just saw the ADP figures today. I mean jobs market looking a little bit weaker as well. Bailey Lipscholes, it's always a joy to have him on talking us through the markets. We've got more market context for you now and more broadly with Silvio Jabronski, Defiance etf, CEO, cio, you've been writing it's not a rollover but the pace of spending is becoming more selective. If upcoming macro data corporates, we could be nearing a tradable bottom. As a longer term investor, I continue to see these pullbacks as opportunities. She joins us now. So cooperating here, is market sentiment not or is market sentiment going to shift to the positive again?
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Good morning. Well, you know, barring external factors, which we've seen a lot of right throughout the last year, whether it's been geopolitics, whether it's been tariffs or things like this, you know, if we're on pace for kind of the trend that we have here and we do have this growth of AI. You know, I know there's news around spending being cut back and things like this, but we're still in the infancy of AI and there has already been so much spending that is now going to kind of pile into the economy, pile into these different companies, different sectors and things like this. So I think it plays out and benefits these, these companies over time. So I think, you know, that coupled with a Fed that is, is likely to cut, particularly if we have a new Fed chair in, you know, in with the president and kind of, you know, knowing where the predictions will go on that that's what the market's really looking for. Right. We have a little bit of a weaker labor number. Consumer spending is holding up. You know, corporate earnings were, were arguably great. You had over 80% of names beating on the top and bottom line. You know, double digit growth CONTINUES positive GDP outlook I think that we could be in for a good market here. A good market led by the same names. It's interesting that Nvidia CEO Jensen Huang is in Capitol Hill today. We understand he's just been seen entering U.S. house Speaker Mike Johnson's office. How much will political tailwinds or headwinds help or hinder some of these companies? Been worried about access to China more broadly can in video continue to lead this market higher? So I think in a, in a way Nvidia still has the monopoly on AI and chips, right? And so I think that you know, a lot of the, the other semiconductor companies are starting to do better and take some of the business away. But for now Nvidia remains the clear leader in terms of Washington and politics. Of course all of these impact these companies. You know, they are the, the trillion dollar clubs. They lead the market and policy affects them first. But the other side of that argument is when the market falls back, you know, where do people invest? A lot of times they look for defensive names but you have these high, again trillion dollar companies, high quality, strong balance sheets that over time tend to perform. Investors actually do look to those companies for investments. And if you look at Today, you know, 400 out of the 500 names actually participated in the bounce off of you know, the last pullback. And so you see a little bit breath expansion there. I do though think that the tech is going to continue leading markets for years to come. You've actually got a large cap ETF that is excluding Magnificent seven. How is that performed of late and how many people are wanting to put money into it. So interestingly enough we've actually seen an increase in flows into that etf. And you know, it may sound like a contradiction what I just said, it absolutely isn't. I think that the average investor has exposure to Mag7 everywhere, right? Whether it's in ETFs or they hold the single name stocks. And so when you're, when the market pulls back and you're looking to diversify and broaden your exposure, we take out those names because we're saying hey, you already have them, hang on to them. But participate in the, in the, in the breadth and the broadening of, of the rallies in the years to come. And so you know, very much like an equal, which strategy ex Mac excludes the max 7. But, but what's, you know, we think very favorable about that is you're still letting the winners win, right? So you still have market caps rallying in that fund and can Do. Well, over time you really have created a lot of ETFs that have been galvanized by this whole broadening out of the trade AI and power infrastructure ETF for example. But I'm also interested in the quantum side of things because there's an interesting story. Key Nobel laureate, winner of the physics prize has just been talking about how China looks like it's really pulling ahead just a nanosecond behind the US in terms of quantum computer scale and indeed innovation. How much are people we wanting to get into the quantum side of the equation? Well, I think, you know, what you just mentioned will be a big reason and we'll, we'll put a lot of focus on the quantum names again for investors. Because what happens when we think that, you know, other governments are beating us in AI or technology or things like this? The US government tends to invest. Right. And American corporations tend to invest and catch up and try to win the race. Right. So I think that just, you know, on a basic level you've seen some good news around Quantum, whether it's been hsbc, see the advanced bond pricing models that have come out of it. You know, you've seen some good results around annealing from D Wave. You know, some of the top quantum companies have done quite well for investors. But I think, you know, as this continues and it becomes more commercial, you will see flows coming into the space. And we think it's a longer term hold for investors. What hasn't been a longer term hold just in recent days has been MicroStrategy. You have a lot of ETFs giving either you long exposure to microstrust microstrategy now called strategy or indeed leverage positioning for it, but also to go short as well. So you're kind of offering both sides the of the pile here. What do you make of the fact that maybe Michael Saylor isn't a complete hodler for the longer term, that maybe at some point they might have to sell Bitcoin? Yeah, I mean I think that that's, you know, that's a business decision for, for their firm in terms of how best to, to, you know, generate ROI and be profitable over time. But you know, what you just mentioned, it is true. We have long funds, we have short funds and for us we're just trying to democratize hedge fund like products for investors that you know, are tactical and knowledgeable about these markets and look for short term exposure opportunities. So those products are simply there. We don't necessarily have an opinion on, you know, their view of that we want to give them the right tool to to do that. But I think, you know, if Bitcoin rallies, you'll see strategy do well. If it doesn't, you'll see it go the other way and perhaps the flows will also match in terms of long and short leverage funds. Silvio gibraltronski Talking about what has been quite the volatile trade, certain retail of late. Defiance ETF CEO CIO it's always great to catch up with you. Coming up, we're going to hear from CEO Matt Garman about his take on the power demand the race with Nvidia. So much more, of course training three this is Bloomberg Tech.
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Resilience isn't just about bouncing back. It's about being ready. It's how you show up every single day. Because every name in your system is a person who trusts you and every password is a door you're responsible for locking. And when the threat comes, and it always comes, you hold back the chaos. Learn more@cohesity.com resilience support for the show comes from public.com you're thoughtful about where your money goes. You've got your core holdings, some recurring crypto buys, maybe even a few strategic option plays on the side. The point is, you're engaged with your investments and Public gets that. That's why they built an investing platform for those who take it seriously. On public, you can put together a multi asset portfolio for the long haul. Stocks, bonds, options, crypto. It's all there plus an industry leading 3.6% APY high yield cash account. Switch to the platform built for those who take investing seriously. 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The desire and the hunger out there for more power and more compute is almost insatiable. And so the more we can take an existing power footprint, an existing set of capabilities and bring more and more compute into that for customers to build cool applications and cool environments and to get value from that, that's we're focused on. And so we're going to be pushing that envelope as fast as we as we possibly can to get those new and new capabilities out to customers. The pitch for training, I mean both the training and inference use case is that it's a great deal, you know, cost effective, performant. At the same time you went on stage and said us is quite by far the best place to run Nvidia GPUs. How are both possible? Well, I mean both, both are possible because that is a great environment to run accelerators and compute in. And so we've been working for 15 plus years with the Nvidia team and Jensen and team to deliver outstanding capabilities for our customers. And for when you're running a large cluster of Nvidia GPUs, people will tell you is the best place you get the best performance, the most stable cluster, the best capabilities out there and broad scale. That's why folks like OpenAI and others are running in AWS and we have that choice. And so for others that want to be able to take advantage of Trainium and there's, there's some use cases that are best for training and there's other use cases where Nvidia GPUs are going to be your best option. We want to have all of those available. And so we think that if we can continue to push the envelope on what Trainium can deliver for customers and make sure that we are supporting the latest and greatest from everything that the awesome team at Nvidia is delivering, that's going to be the best outcome for our customers. The plan for us is to basically double capacity by end of 2027 to around 8 gigawatts. Do you have a sense of how you apportion that capacity in house silicon and server designs of training and versus Nvidia GPUs. We're just going to keep pushing as fast as we can and we'll see where customer demand drives us as we go. And as you said, we're massively adding capacity. In the last year alone we've added 3.8 gigawatts of capacity and we'll continue to add more and more over the Next couple of years and, and we'll let customer demand drive us a little bit on what they're looking for and what they want. And, and that's what we always listen to and that's what we'll continue to listen to. The focus with training, in the time I've been able to interact with you and talk about not again not just the accelerator, but at the server design level, there's a lot of benefits the customer. When does that benefit start accruing to AWS in terms of profitability? Like if it's such a good financial proposition, you must be able soon to say we're making a lot of money on this. Yeah, well you're already seeing some of the benefits accrue. You see things like Bedrock growing really, really rapidly and you see training empowering that under the covers. And we announced today that more than half of all tokens and inference done in Bedrock are done on training to servers under the covers. And so you're already seeing that benefit come you see the models that we're building and Nova and Nova to start to get better and better over time and be accelerated by training. And so we really think that there's a whole bunch of dimensions on which both our customers, our partners and our own products are going to get accelerated all from training. Every time you come onto the program, I always offer the audience opportunity to pose a question to you. There's a lot of interest in us, right? Many of your customers span global technology. Actually, most of the questions are about Anthropic much that wasn't much said on stage. I think people are trying to understand what is the benefit and advantage offers to Anthropic while they are ramping Trainium through Project Rainier but also ramping their TPU allocations as well. Well, look, our partners at Anthropic, our partnership with them is incredibly strong and it's never been stronger. And we do a ton of collaboration with them and as I mentioned through Project Rainier, it's a huge collaboration there to go build their current generation models and all their models run today and launch on day one. On top of of training.
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I'm in top of AWS CEO Matt Garman along with our own Ed Ludlow. Let's discuss this growing AI chip race and the big tech names. Who's winning, who's losing? Joanne Feeney is the perfect person to ask partner and portfolio manager over at Advisors Capital Management. So did Amazon manage to solidify its prowess when it comes to vertical integration, cloud and chip offering?
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Well, they seem to be doing a really excellent job of that. And what's interesting about what Matt just said is they're going to let customer demand drive, you know, how they build out these different capabilities for AI applications, which tells us that there are going to be different models purposed to different types of workloads. So everybody's thinking, oh, Nvidia is the market dominant player right now. They have massive market share and they're treating it like it's one sort of big thing that's homogenous. And I think what people are going to realize over time is that they're going to be different types of models for different workloads and different chips will be useful for developing such different models and for running those models for doing the inference. So I think there's a lot of room for different chip players here and we should expect more of the in house chips like what Amazon does in collaboration with Marvell or what Google does in collaboration with Broadcom to continue to rise in prominence as we've been seeing in the recent news coverage.
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I mean, yeah, let's talk about Marvell. Out with earnings, out with also a key purchase of Celestial AI that's all about lasers and can talk in lasers a little bit more. But are we seeing Asics really starting to put a concern towards Nvidia? Should they be threatened by this custom built model?
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Well, no, no company likes any kind of competition, so I'm sure Nvidia would just be happier if they didn't exist. But clearly, look, ASICS are very powerful. That stands for Application Specific Integrated Circuit. Right. So these, I believe these kind of XPUs or TPU's are going to be designed and going to be put to use for the type of applications in AI for which they're best designed. So it's clearly the case that Nvidia is going to lose share over time in the big world of AI compute. But nobody should be surprised by that, by that. And the pie is still growing so massively they can't meet demand. They're unlikely to be able to meet demand for, for some years to come. And so there's a lot of room for ASIC approaches to, to play roles in various types of models. So we should expect that.
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Before we talk more lasers, I want to go back to where we sort of started, the fact that you're getting specific chips for specific applications, but also specific models. And I think there's some fret in the market today around Microsoft other part of the flywheel, because everyone thinks Microsoft's got very strong Cloud offering. And clearly we've seen Asia not be able to fill demand with its supply. We're now worried just basically about the applications, about companies being willing to pay more for these agents. And actually the use of AI, what are you hearing in the market? How much does that impact your sector of chips?
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There is a lot of sporadic, I should say information about how much AI agents and AI is being used in, in different settings. So right. There was a story today about how, you know, Microsoft has reduced its sales targets for getting AI agents, you know, to be adopted by their customers. And so that has people concerned, you know, Salesforce similarly is trying to roll out right there agent capabilities and some people are wondering whether that's going to happen. But there are so many other applications in addition to those kind of smart helper AI agents. And then I think the earlier in the week announcement with Nvidia in synopsis is a good example of that. Right. The industrial uses, whether it's these digital twins basically being able to model out a whole factory or a whole building or you know, any other physical presence in simulation, you need this kind of computational power, you need AI. And so that kind of collaboration I think really points to lots of other applications for AI. And then you go to biotech and pharma and you know, computation. We've just been held back for so many years by its limitations from the CPU side. And now that we have these GPU based accelerators and innovations in fabric like what Celestial is bringing to Marvell and what Broadcom already does is speeding up all of these computations, making far more, far more applications possible across all industries.
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And some would say limitations have been in the fabrication in the United States and just making sure that we've got more solid, solid and trustworthy supply chains. I think about just the news also earlier this week, $150 million stake in a chip startup by Pat Gelsinger. Of course we all know him from intel, but the US is making that investment in X Lite a startup. Joanne, you have some real insight as to how this technology is being put forward. It's all about lithography taking on asml.
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Yeah. So X Lite is developing a new laser technology and that is a fundamental ingredient to doing lithography. Right. ASML being the leader in extreme ultraviolet photography, which depends on these very high end lasers. So XLites taking a different approach to laser development. What's interesting is, and also reminds me of my past is that this $150 million investment by the federal government, by the Chips and Science act the work is going to be done at a place called Albany Nanotech, which is where I got my start in the semiconductor industry, you know, 20 plus years ago. And it's a location for collaborative R and D, for development of new manufacturing techniques, development of new materials, development of new recipes for designing and building chips. And it's all, all the major players in the industry are there and it's pretty competitive. And so for X Lite and Pat Gelsinger to be doing it there with the support of the federal government sort of enhances this model of get some public support for a technology that can be spread and help the industry broadly speaking, and does go towards this effort to enable more chip equipment design and manufacturing to eventually occur in the United States. It's going to take a long time. These programs, you know, as I was involved with back in the early 2000, they take many years. But it's, it's a great way for the US to subsidize a general technology which could ultimately help the US position in equipment manufacturing and the state of.
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New York, I'm sure. Music to its is to Joanne Feeney of Advisors Capital Management. Thanks so much.
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Time now for talking tech. First up, Uber launching autonomous trips with Avride in Dallas marking the latest US city where the ride hailing giant is offering such a service. Uber's global head of autonomous mobility and delivery sat down with our colleagues at Wall Street Week.
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It's an exciting time to be in the autonomous space because we're really graduating from a technical problem that first started as a science project to something that now is increasingly being solved and can be commercialized and be offered to more and more people who are using Uber all around the world.
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And Dell CEO Michael Dell says he sees the AI buildout as not stopping anytime soon, with more demand than supply at the moment. He weighed in after of course, announcing that $6.25 billion gift to fund accounts for 25 million American children 10 and under.
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Long term, we think, you know.
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Investing these accounts in The S&P 500 is a very good way to.
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Compound over time for these children. When I look at what's going on today in the enormous build out in AI, what I see is a lot more demand.
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Welcome back to Bloomberg Tech. Let's check in on these markets. Because it's a volatile trading day, a lot of macro data to digest. Services look stronger, but boy does that private payrolls number from ADP look pretty woeful. Worse since the beginning of 2023. Rough by a tenth of a percent. The idea of Fed cuts not managing to outweigh some of the anxiety around the trade today. Key names in the red like Microsoft as we worry about productivity gains and some of its provisions. But move on to some of the earnings that we've got. CrowdStrike just up about 6. 10 of a percent. They actually raised fiscal 2026 guidance. They're citing resiliency and demand for that AI enabled cybersecurity products. But this is a Stock that's up about 50% this year. Maybe expectations are run ahead of it and we just take a little bit of money off the table. Marvell up more than 4% even as it's splashing the cash on a new acquisition that we got to dive into in the world of lasers. But I'm talking about also Marvel earnings did beat expectations and we're more broadly seeing the adoption of its technology and custom chips being built across the infrastructure sphere. Let's get to Dina Bass who covers all things infrastructure. Marvel. I mean, only an $80 billion company, not nearly as large as Nvidia, but it is starting to show how it's building out in AI.
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Sure, as we've been talking about Nvidia a lot and last week we were talking a lot about the, the Google tpu.
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The TPU is one of these kind of custom chips. It's not one that Marvell does. It's one that Google works with Marvell's.
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Main competitor Broadcom on. Broadcom's had a lot of significant wins lately and so investors have been anxiously.
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Waiting, slash worried to see whether Marvell could post similar, similar interesting contracts. And yesterday Marvell CEO, you know, Matt Murphy gave a very bullish forecast for.
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The fourth quarter in that business. Indicated a new customer win wins that included what he called, quote, an emerging hyperscaler. We don't yet know who that is, but that kind of got people excited that maybe Marvell is also benefiting from.
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This interest in companies making their own.
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Chip designs for AI, not just using the Nvidia Watch months. Even though in most cases those companies also use a significant amount of Nvidia.
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I mean, needed a bit of optimism, right? The Stock is down 12% year to date even with today's gains. There's also optimism that maybe they're making bolt on acquisitions. Celestial AI. Why are they going into photonics?
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It's basically a new, new technology which.
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You know, it uses light to move data more rapidly.
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Now this is a technology that's been.
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In the works for a little while.
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And, and seems to always be kind.
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Of on the cusp of really, you know, taking off. So we' we'll have to see.
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There are other startups in this area.
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As well, like Light Matter. We'll have to see if there is.
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Significant uptake of this type of technology. But the idea is that you can.
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Use light to move data more quickly.
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Through chips and networking.
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And that's, you know, one of the.
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Major bottlenecks in AI chips at this point is, you know, stringing them together.
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The networking that connects them, the memory and how you move everything rapidly through those different bits.
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Dana Bass, across this infrastructure build out. Thank you very much indeed. Let's now though, stick with earnings more broadly. We're going to the software sector. We're going to Okta shares, as you see been on quite a volatile ride today. We're now up 3.3%. The company reported earnings and boosted their forecasts. We saw 20% growth. When you're looking more broadly at earnings, you're seeing 12% growth in revenue. OCTA CEO Todd McKinnon joins us now. And it looked to go while for the market to digest what they were seeing here, Todd, now they seem to be optimistic. What did you feel you delivered in terms of software and it not getting eaten up by big offerings?
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Well, the business is doing great. We had a solid third quarter. I think what the market is digesting is this massive opportunity ahead of us to secure AI. And what everyone's realizing is that to secure AI you have to secure identity. All these companies are trying to roll out AI agents, agents, and to make these agents useful, they have to be connected to all of a company's data. It's not connected to a company's data and the agent can't work on that data. It's no better than a consumer ChatGPT or Gemini. And we can help companies connect their agents to data in a secure and manageable way so they can get a great agentic experience for their customers and employees and keep it all secure.
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B
Reflect then on actually the adoption of this agent AI, because we've got questions in the market abound about whether Microsoft's having to really be able to scale in the way that it thought it could in the adoption of Agenda. Ki what are you seeing? Are people jumping on it?
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Well, the inbound interest we have for these new products, Octave for AI agents is something like I've never seen in my history at Okta. And so everyone is very interested, but they're all stuck. They're stuck because they're realizing they have to connect it to their company's data. And that's challenging. They have two choices. They can put it all in a data warehouse right in the middle and give the agents access to everything, which is problematic because then they don't know what the agents are going to do with it. Or they can just have a very vanilla, watered down experience where it looks just like the consumer chatgpt you would use at home. So we offer a better choice. We can connect it to that data in a secure way that lets them govern and manage it. And that's why the interest is so high. So this is, I think, a big unlock and that's what I think everyone is starting to realize.
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There are a few identity management offerings out there. How do you compete against the Palo Alto networks, against Microsoft itself that wants to offer it and offer you the agenda ki as well?
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A
Yeah, the way I like to explain it is these companies have to choose the right platforms and systems to build out this AI future. And imagine, like an analogy I use is imagine if you had to choose one streaming service, you had to pick one, you had to pick either Prime Video or. Net Netflix, and then that's the only one you could watch. That's what some of these big platforms are saying. They're saying use all, use everything from us. It's like just you can only use Netflix and you better hope all your shows are on Netflix. What we're saying is you can choose whatever AI technology you want. You can get some, you can get a model from Google, you can get infrastructure from Amazon, you can get application data from Salesforce, and we'll make it all work together. You can choose any show you want to watch, so to speak. So we don't lock people in. We give them a choice across all of the different platforms. And that's very important in this, in this innovation because these things are changing every week. Google comes out with a brand new model, open ad is going to have a new model and customers want choice and we give that to them.
- [31:48]
B
Todd, it's interesting that you're saying you're seeing interest like you've never seen before. And since your time at Okta, why then is the market still thinking that actually your revenue growth is kind of going to flatline, be sub 10% growth. Do you see something different?
- [32:03]
A
Well, I think we see two things. We see a very solid, solid business that is profitable and growing at a nice clip and then we see this massive upside. So I think the market is trying to understand how quick it materializes, you know, how big it can be. And we're very excited. We think it could be bigger than our core business. The opportunity to secure AI could be bigger than anything we've ever done. But it's just a matter of making that real and doing the hard work with the customers to bring it to fruition.
- [32:28]
B
When we're hearing about how companies are actually investing, adopting more broadly, what are you seeing most? Are you seeing consultants coming in? Are you seeing companies trying to build within, in and of themselves organically? Are you seeing the likes of the sellers of these generative offerings, the open eyes, or indeed the Microsoft's going in and almost consulting for them? How are we better to streamline? As you say, we're stuck. How do we unstick?
- [32:53]
A
I think, I mean, I think it's all of the above. We're seeing a starting point, a lot of interest in the agentix solutions that the SaaS providers have rolled out. Again, those are powerful, but they're limited in the sense they're constrained to one application or one service. We're seeing a lot of companies start to build their own where they're using developer tools and capabilities to connect multiple databases and warehouses across different SaaS applications. We're seeing organic internal development, we're seeing consultants. Everyone's trying to help them do this. And I think some of these key unlocks like security and identity and context and the right access permissions are going to help move this thing along in a way that's very, very powerful for everyone because this technology is real and it's quite profound and it can make employees more productive. It can help companies grow into new industries and new markets. It's going to be a big boon for established companies, for new companies, it's very exciting.
- [33:47]
B
Tom McKinnon, Okta CEO some great happiness. You on the back of your earnings today. Thank you very much. Now, let's talk about Open Air right now. Because its nonprofit foundation will award over $40 million in grants this year to U.S. nonprofits and the organization Support Literacy, Community Innovation, Economic Opportunity. The foundation's first major action since OpenAI's restructuring. Coming up, how YouTube creators are turning to AI slop into content for kids. More on that next. This is Bloomberg Tech.
- [34:19]
A
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- [36:20]
B
Warner Brothers Discovery, of course, is still receiving new rounds of bids, including we talked about yesterday, nearly all cash offer coming from Netflix. Now Comcast is reportedly looking to expand its entertainment empire with hopes of merging its NBC ABC Universal division with Warner Brothers in a cash and stock deal, according to sources. Let's get over to Bloomberg's Michelle Davis who's been covering this M and a story across media so what's new here from the side of Comcast? So what's new is the big surprise is it sounds like Comcast has offered Warner Brothers. Is David Zaslav, the CEO, a management position in the potentially new combined company? That's going to be really big because it'll it'll be appealing to David Zone Aslav if he, you know, as CEO of Warner Brothers doesn't want to relinquish that sort of control right now. The other information we have is that Comcast has offered cash and stock for a combination and they're proposing to combine their NBC Universal division with Warner Brothers streaming and studio division. And that's something analysts actually like because they see it as a way to potentially unlock some value for Comcast. You'll see Comcast stock was trading up on this news, as was Warner Brothers. I think Warner. Comcast is still up today and it seems like, you know, this deal situation is really heating up. It sounds like while the different offers that are on the table are not easily comparable, they are all compelling in their own reasons. It's interesting that Comcast is doing something originally similar to Warner Brothers Discovery, which is spinning off the cable part. So that would still be distributed. This is all still for them about the movie, the library, the streaming. And that's still something that's interesting to Netflix, even though we see it shares like hitting significant lows on the back of all of this. Yeah. So Comcast and Netflix both have made offers just for the streaming and studio portion of Warner Brothers, which is seen as kind of the crown jewel. Warner Brothers or Paramount is still the only one making a play for the whole company. But you know, if you are the board right now, you have to think about whether a combination with Netflix or Comic Cast, while potentially lower in value than a full cash offer from Paramount for the whole company, you have to consider whether that would provide future value that would exceed whatever cash you would get today from, you know, selling the entire company. It's going to keep on folding. You'll be across it. Bloomberg's Michelle Davis, thank you very much indeed. Let's talk about content in a different way now because AI generated videos getting easier to make. And some YouTube creators are leaning into low effort, low quality videos that churn out what critics call a slot is aimed at a growing viewer base is children. Bloomberg social media reporter Alex Levine joins us now. And you were kind of taken aback by the amount of AI created kind of addictive short form videos that are getting out there onto YouTube kids. Well, before I was even taken aback by the content, I was taken aback by the fact that there are so many babies on YouTube and YouTube kids in the first place. That stuck. So we know that kids are loving YouTube. They have been for a very long time. So much so that YouTube created YouTube Kids a decade ago to help create a safer space for this audience. However, YouTube will be the first to say that YouTube Kids is not created for babies under the age of 2. It is recommended really for kids ages 2 to 12. But new Pew data has shown that babies and infants are actually flocking to YouTube in droves. And that Is a of course a fact not lost on content creators who see in this audience an incredibly valuable opportunity to make content. Their brain is still developing. That's the argument as to why perhaps it should be limited to an extent. But look, your heart goes out to families who almost need another parent in the house when they're trying to juggle different jobs. I can understand how it ends up entering your lifestyle. But then what is entering the kids heads at the moment? How much of it is being created by AI video generation? It's hard to quantify exactly how much of this is high quality content and how much of it is purely AI generated. But in speaking to to experts through the story, it is clear that a lot of what you see on YouTube kids is promoting itself as being educational using titles that say that they're educational, things like learning to talk or how to say your abc. And you certainly get some good quality stuff. You've got the really popular children's channels like Cocomelon, you've got creators like Ms. Rachel but mix mixed in with results from those sort of vetted, reputable places. You've got much more obscure videos that are from sources that you can't really figure out where quite where they're from. And therein lies probably the issue for YouTube that YouTube Kids is meant to be safe. It's so safe in fact that over in Australia, Even though banning YouTube and other social media for kids under 16, they're not banning YouTube kids. Is that an interesting fact for you and is it how much YouTube kids are going to have to stop start limiting exposure to this so called slop and when you want to type in Ms. Rachel, you get Ms. Rachel. Well, I think it is really interesting that in Australia YouTube Kids is one of the few social media platforms that is being, that is basically being spared in this, this ban for under sixteens. YouTube Kids may have a lot of content that is safe, but I think it begs the question of how much should kids be watching it in the first place and how short is too short. Some of the experts, experts we spoke to are concerned that some of the shorter content can affect children's attention spans and how long is too long. Some of the content that I was finding on YouTube kids was four hours long and that is obviously far, far longer than you know, than is recommended by experts. So I think the question is how YouTube Kids balances that, whether these are questions that they address and sort of what they communicate to parents to help parents feel more comfortable that the, that the conflict content that is up There is actually vetted and not just simply chosen by AI as something that could be appropriate for kids. You and I are parents of young children. How many parents are worried about this that you spoke to? Parents are very conflicted about this. They're extremely worried. But at the same time, parents I spoke to for the story said that they need YouTube. One parent I spoke to described it as a third parent sometimes when she just needs a break. Another, another father told me how this is a really big internal struggle because sometimes he just needs the kids to lock into YouTube so he can deliver on other parts of being a dad. At the same time, I think that there's, there were parents, there are parents that I heard from who described wanting to get rid of YouTube kids altogether because they said that more than any other platform that their kids are using or app, they when they're told to turn off YouTube kids, they actually can't turn it off and they end up in a bad mood quite often, I find if they've ever consumed anything on a screen. We appreciate this. Deep Dive is a great read. Alex Levine on her latest on YouTube kids.
- [42:46]
Tick tock. Well, it invests more than $37 billion to build a data center in Brazil, the first project in Latin America. The data center will be developed near the industrial port of the same and will fully rely on clean energy from wind energy parks. Bloomberg's Peter Millard joins us. And you cover energy out of Rio. Why? Why is Brazil so well placed for this datacenter build out.
- [43:09]
A
Brazil, it's Latin America's largest economy and it's also a renewable energy powerhouse. Most of the energy comes from hydroelectric plants. There's also been a rapid advance in wind energy and most recently with solar energy. And so data centers they want to have, they're basically looking for clean energy when they build out these data centers. I know there are some that are relying on natural gas, but ideally they want renewable energy. And Brazil has it. It also has a completely interconnected electricity grid, unlike the US where you have kind of certain where it's kind of split up geographic quickly. And so that helps. You can have a renewable energy project, you know, far away from where the data center actually is. And then they can have a purchase agreement where they are and the electricity goes into the grid and then the data center would consume it.
- [44:08]
B
So the data center developer involved is Omnia. You've got Casa do Spentos who's helping with the energy supply. Peter, how big is this? Because in the US we've almost become a bit numb to $37 billion here, another trillion there. But, but this must be pretty seismic in terms of scale.
- [44:24]
A
Yes, that's right. When they talk about the first phase, they're talking about 300 megawatts. But at Piscean, the officials I've spoken to have said that it could reach up to 3 gigawatts which is, I mean it would take about a decade to get there. But that's half of what you currently have in Virginia. So in terms of scale, it could be huge.
- [44:48]
B
And of course we'll be thinking a lot about the relationship that Brazil has with China and therefore ByteDance TikTok's parent, Bloomberg's Peter Millard, it's a great story. Thanks for bringing up to us. Meanwhile, let's talk about Salesforce shares at a historic cheap valuation as this concerns swell that its growth prospects could be eroded by the company releases its third quarter earnings later today. What can we expect? Anuragrana joins us from, from Bloomberg Intelligence. And there is this anxiety that even though they can talk about Agent Force until they're blue in the face, it's not actually giving much bearing on revenue.
- [45:20]
A
There are two elements of it and one of the most important part is the size of the company. It's a, it's a very large software company, very big revenue base. So even if you see adoption of whether it's Data cloud on the AI side or Agent Force, it doesn't move the needle if the macro is bad. And that's really the big narrative for whether it's Salesforce or Workday or a lot of other software companies is enterprise tech spending on the non side of it is not that strong. You're not people are not adding headcount at the same rate they were a few years ago. And that is what's weighing in the subscription growth rate of all these companies. And I think that's the big narrative. And you know, from my experience, unless the estimate starts to move up, you know, the stock kind of, you know, remains, you know, I would say rangebound on that case.
- [46:04]
B
What's really interesting is the narrative in the market today is being dictated by a report out of the information about Microsoft sort of finding it tough to charge people for its co pilots for its agenting AI offerings and salespeople sort of having pulled back on targets. Now we haven't managed to match that thus far. But is that really what is focusing the minds of those in the market, whether there's productivity gains from Salesforce from Copilot.
- [46:30]
A
So there are two aspects of it And I think one, one thing is very clear that there is no shortage of revenue on the infrastructure side. So let's keep that in the other 1, 1, 1 area. The second piece is all these co pilot products that companies are launching. In the case of Microsoft, when it comes to something like a GitHub copilot, highly productive and massive uptake just because of what it provides. In the case of the Office copilot, it has value to it for the end customers but at the same time it's very expensive to run at this point because the cost of token generation and inference is not that it's not that low. Over time that's going to come down and it will lead to more and more people embracing that. But that goes back to the first thing we talked about is a slowdown in enterprise tech spending. And I think that weighs on everything, not just, you know, a handful of sectors.
- [47:20]
B
Mark Benioff though can perhaps show the benefits of Informatica purchase today at least.
- [47:26]
A
Yeah, I mean I think that you will see some revenue uplift because of that and that's good. But the question is going to be what kind of cross selling can they do using their distribution arm that could get Informatica's organic sales growth a big lift because I think that is one of the benefits of, of accumulating some of these assets under one umbrella and.
- [47:46]
B
Rag Rana it's busy day, a busy week. Senior Analyst Bloomberg Intelligence thank you so much for bringing us your research that does it for this edition of Bloomberg Tech. Do not forget to check out our podcast. Find it on the terminal as well as online on Apple, Spotify and Iheart. And stick with earnings as they break after the bell. This is Bloomberg Tech.
- [48:04]
A
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B
Offer for first three months only.
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A
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B
Where did that rabbit come from.
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A
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