Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business Wait inside from the reporters and editors who bring you America's most trusted business magazine, plus global business finance and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebek from Bloomberg Radio.

Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business Wait inside from the reporters and editors who bring you America's most trusted business magazine, plus global business finance and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebek from Bloomberg Radio.

All Right, everybody shares in Micron Technology. They are the biggest decliner in the Nasdaq one hundred. They are right now down I think about sixteen and a half percent. Yeah, pullin it up just off their lows of this session, So big hit down the most in more than four years, since March of twenty twenty. And this is coming after the largest US maker of computer memory chips put out a revenue forecast that miss projections, reflecting sluggish demand for smartphones and personal computers. And then there's also a headline involving Intel that we kicked off our hour with. So we've got a lot to talk about when it comes to the semi space.

All Right, everybody shares in Micron Technology. They are the biggest decliner in the Nasdaq one hundred. They are right now down I think about sixteen and a half percent. Yeah, pullin it up just off their lows of this session, So big hit down the most in more than four years, since March of twenty twenty. And this is coming after the largest US maker of computer memory chips put out a revenue forecast that miss projections, reflecting sluggish demand for smartphones and personal computers. And then there's also a headline involving Intel that we kicked off our hour with. So we've got a lot to talk about when it comes to the semi space.

Now, what we need to know when it comes to Intel, Micron and the broad world of semiconductors. Here with us as Bloomberg Intelligence, a semiconductor's analyst, Jake Silverman. Here in our Bloomberg Business Week studio, as Carol mentioned, Micron selling off big time, sixteen point five percent of the downside right now, worst day going back four years, sluggish PC and smartphone demand. Yesterday when this broke, I was thinking to myself, didn't we know about sluggish PC and smartphone demand? Why is this such a surprise.

Now, what we need to know when it comes to Intel, Micron and the broad world of semiconductors. Here with us as Bloomberg Intelligence, a semiconductor's analyst, Jake Silverman. Here in our Bloomberg Business Week studio, as Carol mentioned, Micron selling off big time, sixteen point five percent of the downside right now, worst day going back four years, sluggish PC and smartphone demand. Yesterday when this broke, I was thinking to myself, didn't we know about sluggish PC and smartphone demand? Why is this such a surprise.

Yeah, so part of that is that.

Yeah, so part of that is that.

This is more so an inventory correction than it is actually a change in demand profile suddenly. So over the last it seems like maybe six months, five six months, there was a build up of inventory.

This is more so an inventory correction than it is actually a change in demand profile suddenly. So over the last it seems like maybe six months, five six months, there was a build up of inventory.

Which happens in the semi space.

Which happens in the semi space.

Yeah, it does.

Yeah, it does.

It happens all the time. Yeah, it's frequent.

It happens all the time. Yeah, it's frequent.

You go through up cycles and down cycles, and so PC and smartphone customers were built, were building up inventory ahead of price increases which did occur. And so now what's happening is they haven't adequate levels of inventory and demand isn't necesscessarily that strong. So there's not a lot of demand for Micron's memory chips right now.

You go through up cycles and down cycles, and so PC and smartphone customers were built, were building up inventory ahead of price increases which did occur. And so now what's happening is they haven't adequate levels of inventory and demand isn't necesscessarily that strong. So there's not a lot of demand for Micron's memory chips right now.

So is it kind of like whoa, whoa whoa? Investors understand that the reason their's sluggish demand is not that you know, we've known that about the troubles in the PC market. But it's not like everything's going to hell in a handbasket, right, It's just a case of people had built up inventories.

So is it kind of like whoa, whoa whoa? Investors understand that the reason their's sluggish demand is not that you know, we've known that about the troubles in the PC market. But it's not like everything's going to hell in a handbasket, right, It's just a case of people had built up inventories.

Yeah, sure, no.

Yeah, sure, no.

And there's also something to keep in mind though that there's a number of different moving parts. I think there is obviously the AI aspect of it, but people are also I think somewhat concerned about just how long, how prolonged this inventory correction will last, and how much excess inventory is actually in the channel right now, because I thought they kind.

And there's also something to keep in mind though that there's a number of different moving parts. I think there is obviously the AI aspect of it, but people are also I think somewhat concerned about just how long, how prolonged this inventory correction will last, and how much excess inventory is actually in the channel right now, because I thought they kind.

Of checked the check the box when it came to AI.

Of checked the check the box when it came to AI.

Their AI, Yeah, I was pretty strong.

Their AI, Yeah, I was pretty strong.

Yeah, I mean data center related demand group forty six percent sequentially.

Yeah, I mean data center related demand group forty six percent sequentially.

So, well, remind everybody where where they play in this space where Micron fits in. If you look at the supply chain analysis feature on the Bloomberg terminal, you see that Apple's one of its biggest customers. Dell LG like Tronics, WPG Holdings is actually its biggest customer. Where does it play?

So, well, remind everybody where where they play in this space where Micron fits in. If you look at the supply chain analysis feature on the Bloomberg terminal, you see that Apple's one of its biggest customers. Dell LG like Tronics, WPG Holdings is actually its biggest customer. Where does it play?

Yeah, well, so it's pretty broad.

Yeah, well, so it's pretty broad.

I mean every consumer electronics device, everything that you know, every electronic device.

I mean every consumer electronics device, everything that you know, every electronic device.

Needs memory, needs storage to some extent.

Needs memory, needs storage to some extent.

And so what's been happening is you know, over time, it's well over the last several months, last year or so, demand has improved a lot in the data center. So now that you're starting to see more demand from customers like Nvidia as well as other like A six as well, you know, the customers of Broadcom and Marvel who are also you know, creating their own AI servers or you know a six Hey chick.

And so what's been happening is you know, over time, it's well over the last several months, last year or so, demand has improved a lot in the data center. So now that you're starting to see more demand from customers like Nvidia as well as other like A six as well, you know, the customers of Broadcom and Marvel who are also you know, creating their own AI servers or you know a six Hey chick.

One thing I'm going to as you said, the data center related revenue did okay, grew four hundred percent in the quarter. That's pretty okay from a year earlier. The unit now accounting for more than half the company's total sales, but it wasn't enough to offset the weaker our orders from makers of devices aimed at consumers. Having said, that is the data center, what this company really becomes that area in the future, Like that's going to be the dominant business.

One thing I'm going to as you said, the data center related revenue did okay, grew four hundred percent in the quarter. That's pretty okay from a year earlier. The unit now accounting for more than half the company's total sales, but it wasn't enough to offset the weaker our orders from makers of devices aimed at consumers. Having said, that is the data center, what this company really becomes that area in the future, Like that's going to be the dominant business.

Yeah, I mean, it depends entirely on how much additional AI infrastructure buildouts occur. If there's continual incremental spend over the next decade or so, you know. But the thing is, if you know, high bandwidth memory is an area that they're seeing a lot of demand for, but it's still so early for them. So what you're seeing a lot of the data center demand or growth this past quarter was actually not necessarily all related to HBM. In fact, the vast majority of it was actually like high capacity modules as well as LPDDR that goes into servers and AI servers. An area that was a little bit of a concern was actually that data center SSDs, though took a bit of a pause. They're moderated in terms of demand. We're not exactly sure if that's how temporary that is.

Yeah, I mean, it depends entirely on how much additional AI infrastructure buildouts occur. If there's continual incremental spend over the next decade or so, you know. But the thing is, if you know, high bandwidth memory is an area that they're seeing a lot of demand for, but it's still so early for them. So what you're seeing a lot of the data center demand or growth this past quarter was actually not necessarily all related to HBM. In fact, the vast majority of it was actually like high capacity modules as well as LPDDR that goes into servers and AI servers. An area that was a little bit of a concern was actually that data center SSDs, though took a bit of a pause. They're moderated in terms of demand. We're not exactly sure if that's how temporary that is.

Hey, Jake, I promise we talk a little bit about Intel. We learned just in the last hour that Intel has shortlisted a number of buyout firms for the next round of bidding for its Altera unit. This, according to people familiar with the matter, this is the chip maker faces headway on a process started by it's now ousted CEO. What do what does our investing audience need to understand about this?

Hey, Jake, I promise we talk a little bit about Intel. We learned just in the last hour that Intel has shortlisted a number of buyout firms for the next round of bidding for its Altera unit. This, according to people familiar with the matter, this is the chip maker faces headway on a process started by it's now ousted CEO. What do what does our investing audience need to understand about this?

Yeah?

Yeah?

No, I mean I think for Intel it's just an opportunity to really unlock value. We've seen them do very similar plays with their with Mobile Eye, for example, and one of their other businesses within their foundry. So this is an opportunity for a pretty high margin, data Center mostly play but still somewhat diversified in Altera for Intel to get so much needed cash, all.

No, I mean I think for Intel it's just an opportunity to really unlock value. We've seen them do very similar plays with their with Mobile Eye, for example, and one of their other businesses within their foundry. So this is an opportunity for a pretty high margin, data Center mostly play but still somewhat diversified in Altera for Intel to get so much needed cash, all.

Right, so it just sounds like stay tuned. More to come from Intel.

Right, so it just sounds like stay tuned. More to come from Intel.

Yeah.

Yeah.

I mean, we'll see how much value they can truly unlock. But you know, it is a higher margin business, somewhere around the mid mid to low sixty percent versus you know, much lower margins, well relatively speaking for their other businesses like PC and data center.

I mean, we'll see how much value they can truly unlock. But you know, it is a higher margin business, somewhere around the mid mid to low sixty percent versus you know, much lower margins, well relatively speaking for their other businesses like PC and data center.

All right, and I should say that Intel shares are just down a little bit. They were down about one percent at its lows up two percent, and its ties right now down about eight tens even percent, so it kind of bouncing around.

All right, and I should say that Intel shares are just down a little bit. They were down about one percent at its lows up two percent, and its ties right now down about eight tens even percent, so it kind of bouncing around.

Yeah.

Yeah.

PE firms including Francisco Park Ourtner silver Lake Management are competing alongside with Lattice Semiconductor in a second round for Altera.

PE firms including Francisco Park Ourtner silver Lake Management are competing alongside with Lattice Semiconductor in a second round for Altera.

All right, Jake and Lee with there. Thank you so much. Jake Silverman, he's sevenconductor analyst with our Bloomberg Intelligence team.

All right, Jake and Lee with there. Thank you so much. Jake Silverman, he's sevenconductor analyst with our Bloomberg Intelligence team.

You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm Eastern. Listen on Apple car Play and and Broud Auto with a Bloomberg Business app or want us live on YouTube, ACO hosting.

You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm Eastern. Listen on Apple car Play and and Broud Auto with a Bloomberg Business app or want us live on YouTube, ACO hosting.

It's ALS Day today and giving an update on its business. Shares of the company selling off the most in nearly two months, at least at its lows down about four and a half percent as we speak after the form Equipment Company projected net sales of nine point six billion in twenty twenty five, down from about twelve billion this year. That forecast, by the way, trailing the average analyst estimate of ten point seven billion dollars.

It's ALS Day today and giving an update on its business. Shares of the company selling off the most in nearly two months, at least at its lows down about four and a half percent as we speak after the form Equipment Company projected net sales of nine point six billion in twenty twenty five, down from about twelve billion this year. That forecast, by the way, trailing the average analyst estimate of ten point seven billion dollars.

Ahead of that meeting, the company's largest shareholder, Tractors in Farm Equipment Limited, urge management to address several issues, including what they call agco's quote lagging performance compared to peer's successive quarters of performance misses and downward revisions and guidance, diminishing compitive position, and value erosion through failed acquisition.

Ahead of that meeting, the company's largest shareholder, Tractors in Farm Equipment Limited, urge management to address several issues, including what they call agco's quote lagging performance compared to peer's successive quarters of performance misses and downward revisions and guidance, diminishing compitive position, and value erosion through failed acquisition.

It's a rough setup, but we're so delighted to have with us the CEO, chairman, President of a COO, Eric Hansodia. He's here in studio. We had to lay it out, but you know what's been going on more than most tell us first of all about the analyst meeting and some of the serious issues that investors wanted to know about.

It's a rough setup, but we're so delighted to have with us the CEO, chairman, President of a COO, Eric Hansodia. He's here in studio. We had to lay it out, but you know what's been going on more than most tell us first of all about the analyst meeting and some of the serious issues that investors wanted to know about.

Well, you know, this is a wrap up of a pretty amazing year on the one hand, but mostly is a forecast forward. So this year we made the largest ag tech deal in the history of the industry. We sold off our lowest margin, lowest growth business in the green and protein division, and managed through a significant downturn in the industry, one of the most severe in the last ten years.

Well, you know, this is a wrap up of a pretty amazing year on the one hand, but mostly is a forecast forward. So this year we made the largest ag tech deal in the history of the industry. We sold off our lowest margin, lowest growth business in the green and protein division, and managed through a significant downturn in the industry, one of the most severe in the last ten years.

These things happen, but it was all coming together this year. Now.

These things happen, but it was all coming together this year. Now.

Our analyst meeting was all about forecasting forward, and the first one I did we made a claim of being a ten percent margin, never done that in the history of the company.

Our analyst meeting was all about forecasting forward, and the first one I did we made a claim of being a ten percent margin, never done that in the history of the company.

We delivered.

We delivered.

Then the last time two years ago raised the bar to twelve percent and we're on track to deliver that.

Then the last time two years ago raised the bar to twelve percent and we're on track to deliver that.

Now.

Now.

We raised the bar again to day to a fourteen to fifteen percent range, and our team is very confident that we're going to deliver on that.

We raised the bar again to day to a fourteen to fifteen percent range, and our team is very confident that we're going to deliver on that.

Eric, you mentioned it's a quote amazing it's been a quote amazing year. An investor watching right now might have issue with that and say, what are you talking about. Shares are down about twenty five percent so far this year. Where's the disconnect?

Eric, you mentioned it's a quote amazing it's been a quote amazing year. An investor watching right now might have issue with that and say, what are you talking about. Shares are down about twenty five percent so far this year. Where's the disconnect?

Well, it's all about the cycle. So the industry went through like that. That was one of the three things that made it an amazing year. I mean amazing has.

Well, it's all about the cycle. So the industry went through like that. That was one of the three things that made it an amazing year. I mean amazing has.

Both positive and negative and good and bad.

Both positive and negative and good and bad.

So the demand came down a lot, but the restructuring of the company to position it for the future much more focus on technology, high margin.

So the demand came down a lot, but the restructuring of the company to position it for the future much more focus on technology, high margin.

High growth, less distraction.

High growth, less distraction.

From a low growth business, really sets ad Co up to prosper as the industry comes back, and it will. You know, these industries go through a normal pattern where there's a big correction year.

From a low growth business, really sets ad Co up to prosper as the industry comes back, and it will. You know, these industries go through a normal pattern where there's a big correction year.

That's the year we're in.

That's the year we're in.

We went from about one hundred and five percent of the cycle down to ninety and one year.

We went from about one hundred and five percent of the cycle down to ninety and one year.

That's a big correction.

That's a big correction.

That's pretty rough.

That's pretty rough.

But in twenty five we'll probably find the bottom and then we'll start working back AUP. And our mission is to control what we can control. We can't control industry, but we can position the company to be strong on the way back.

But in twenty five we'll probably find the bottom and then we'll start working back AUP. And our mission is to control what we can control. We can't control industry, but we can position the company to be strong on the way back.

So Eric, twenty twenty five will be the bottom in your view.

So Eric, twenty twenty five will be the bottom in your view.

That's our first cycle, that's right.

That's our first cycle, that's right.

What about all the kind of global trade, you know, environment, tariff's trade, geopolitical, how might that change that?

What about all the kind of global trade, you know, environment, tariff's trade, geopolitical, how might that change that?

Well, you know, there's a number of balls in the air right now and things that are uncertain. At the end of the day, though, the same number of mouths want to eat, and so grain may shift around a little bit, maybe one farmer's advantage, one's farmer's disadvantage, but it'll just shift where that grain comes from. We're a very global company, you know, only twenty five percent of our businesses in North America, So if grain moves to a different market, we'll serve it from those markets, so you know we so.

Well, you know, there's a number of balls in the air right now and things that are uncertain. At the end of the day, though, the same number of mouths want to eat, and so grain may shift around a little bit, maybe one farmer's advantage, one's farmer's disadvantage, but it'll just shift where that grain comes from. We're a very global company, you know, only twenty five percent of our businesses in North America, So if grain moves to a different market, we'll serve it from those markets, so you know we so.

Global trade war would not impact farmer equipment purchases at least for you guys. I amsud your global.

Global trade war would not impact farmer equipment purchases at least for you guys. I amsud your global.

But I don't want to make it that concrete because any anybody buying capital.

But I don't want to make it that concrete because any anybody buying capital.

Goods wants certainty.

Goods wants certainty.

And so if we have a very uncertain, fast changing environment, then folks could hold back. But that's different from if the rules shift and say there's an advantage here and a disadvantage there, but they're stable. Now that we know the new rules, and then we know the new guard rails, then everybody can plan around that. And so I think the uncertainty is the bigger issue than a shift in the framework.

And so if we have a very uncertain, fast changing environment, then folks could hold back. But that's different from if the rules shift and say there's an advantage here and a disadvantage there, but they're stable. Now that we know the new rules, and then we know the new guard rails, then everybody can plan around that. And so I think the uncertainty is the bigger issue than a shift in the framework.

Sort of on Carol's questions about uncertainty and a potential trade work. If we look at the first Trump administration, the way that farmers in the US had to be bailed out as a result of retaliatory tariffs that were put into place by countries during that time. How do you prepare for the next Trump administration? How does that change your business? How does it change your outlook?

Sort of on Carol's questions about uncertainty and a potential trade work. If we look at the first Trump administration, the way that farmers in the US had to be bailed out as a result of retaliatory tariffs that were put into place by countries during that time. How do you prepare for the next Trump administration? How does that change your business? How does it change your outlook?

Well, we've done a lot of scenario planning looking at all types of things.

Well, we've done a lot of scenario planning looking at all types of things.

Because there's two levels.

Because there's two levels.

There are many different scenarios.

There are many different scenarios.

Oh over a dozen for sure, go ahead, Yeah, And so the notion here is you have to plan on a couple different levels. One is the cost for the company, but on the other one, it's the impact of farmers globally.

Oh over a dozen for sure, go ahead, Yeah, And so the notion here is you have to plan on a couple different levels. One is the cost for the company, but on the other one, it's the impact of farmers globally.

And that's what I was thinking of.

And that's what I was thinking of.

More so so it's the supply side and the demand side, and how do you respond to both of those. So none of it is certain yet you've got to kind of just decide where it could land. At the end of the day. Our major competitors also have very global supply chains, and so to some degree, this will impact all the companies to some degree the same. Now, there could be nuances of elements that'll be different, but at the macro level, we'll all have some of the same influences and the global grain will re establish itself and find its way to the market.

More so so it's the supply side and the demand side, and how do you respond to both of those. So none of it is certain yet you've got to kind of just decide where it could land. At the end of the day. Our major competitors also have very global supply chains, and so to some degree, this will impact all the companies to some degree the same. Now, there could be nuances of elements that'll be different, but at the macro level, we'll all have some of the same influences and the global grain will re establish itself and find its way to the market.

What about production cuts and your production schedules is the one any kind of cuts copying in the first quarter and then do you see production gradually increasing throughout the year.

What about production cuts and your production schedules is the one any kind of cuts copying in the first quarter and then do you see production gradually increasing throughout the year.

Yeah, we expect, you know, we're expecting this downturn, which was very dramatic in twenty twenty four, to continue into twenty twenty five probably start finding its way back up. Already, Asia and parts of South America are showing green.

Yeah, we expect, you know, we're expecting this downturn, which was very dramatic in twenty twenty four, to continue into twenty twenty five probably start finding its way back up. Already, Asia and parts of South America are showing green.

Shoots of growth.

Shoots of growth.

They were the first to go into the market or going to the downturn, they're coming to back out. So yes, the first quarter is going to be probably the worst as we're underproducing to retail demand, to c out the pipeline of inventory in our dealer network, and then likely recovery in the second half.

They were the first to go into the market or going to the downturn, they're coming to back out. So yes, the first quarter is going to be probably the worst as we're underproducing to retail demand, to c out the pipeline of inventory in our dealer network, and then likely recovery in the second half.

I want to take a step back because I don't think I said to you when you kind of walked in that we don't necessarily spend a lot of time talking about the agricultural economy. We just kind of assume all this stuff's going to happen until there's war and we have shortages and we're like, what's going on here. So what is different Eric about this agg downturn versus what we've seen in prior cycles. To help kind of people understand, well.

I want to take a step back because I don't think I said to you when you kind of walked in that we don't necessarily spend a lot of time talking about the agricultural economy. We just kind of assume all this stuff's going to happen until there's war and we have shortages and we're like, what's going on here. So what is different Eric about this agg downturn versus what we've seen in prior cycles. To help kind of people understand, well.

Two things. Number one is how fast agg co is responding.

Two things. Number one is how fast agg co is responding.

And I think some of our peers are doing the same thing, but much more aggressive response, way faster action on cost and on inventory. So instead of letting this downturn linger and stretch out, everybody's much.

And I think some of our peers are doing the same thing, but much more aggressive response, way faster action on cost and on inventory. So instead of letting this downturn linger and stretch out, everybody's much.

More responsive and proactive. That number one.

More responsive and proactive. That number one.

Number two is the role of technology. You know, we just launched a kit that makes an existing tractor autonomous. You can take the driver right out. Yeah, it works with the combine drives up alongside, you, unload on the goal, and then the tractor drives away. Nobody in the tractor the whole time. So in artificial intelligence, in our spray identify there between a weed and a plant, only spread the weed. All this technology is making these machines much more capable and making the farmer much more productive. So even though there's ebbs and flows in the market, farmers see the opportunity to make themselves more profitable. Even in down markets. They say, I got to have that latest technology to make myself more efficient. So technology is playing a much bigger role this time than last cycle.

Number two is the role of technology. You know, we just launched a kit that makes an existing tractor autonomous. You can take the driver right out. Yeah, it works with the combine drives up alongside, you, unload on the goal, and then the tractor drives away. Nobody in the tractor the whole time. So in artificial intelligence, in our spray identify there between a weed and a plant, only spread the weed. All this technology is making these machines much more capable and making the farmer much more productive. So even though there's ebbs and flows in the market, farmers see the opportunity to make themselves more profitable. Even in down markets. They say, I got to have that latest technology to make myself more efficient. So technology is playing a much bigger role this time than last cycle.

The autonomous technology. Is it one hundred percent there for you?

The autonomous technology. Is it one hundred percent there for you?

Yeah, we're selling it today.

Yeah, we're selling it today.

So we demonstrated it last fall last fall to journalists and our analysts.

So we demonstrated it last fall last fall to journalists and our analysts.

And we're selling them right now.

And we're selling them right now.

And are there any regulatory issues around it in different parts of the world where can it be?

And are there any regulatory issues around it in different parts of the world where can it be?

Well, we don't take it on the we don't take it on the road. That's a big difference. So we're staying in the field. And the fail safe mold when it runs into a situation where it doesn't hasn't been, doesn't understand what to do, it stops and so then we can remotely monitor into that machine and say, okay, either pull back and drive around or go or drive through it.

Well, we don't take it on the we don't take it on the road. That's a big difference. So we're staying in the field. And the fail safe mold when it runs into a situation where it doesn't hasn't been, doesn't understand what to do, it stops and so then we can remotely monitor into that machine and say, okay, either pull back and drive around or go or drive through it.

But because it's not on the it's not regulated at all, so you don't have to worry about any of that stuff.

But because it's not on the it's not regulated at all, so you don't have to worry about any of that stuff.

Largely, that's true, that's right.

Largely, that's true, that's right.

Fundamentally, the regulations are on road and that's where the bigger challenges. That's why some of the automotive they have a much bigger challenge than we do.

Fundamentally, the regulations are on road and that's where the bigger challenges. That's why some of the automotive they have a much bigger challenge than we do.

But our opportunity, you know, our solution fits on multiple brands of equipment.

But our opportunity, you know, our solution fits on multiple brands of equipment.

It's a retrofit kit that then can take an existing machine and you can use it either way. You can either continue to drive it the way you do today or make an autonomous in many applications on the.

It's a retrofit kit that then can take an existing machine and you can use it either way. You can either continue to drive it the way you do today or make an autonomous in many applications on the.

Farm, I've said, I've driven a tractor like one of the big ones from a competitor. I'm not going to go into it, but it's pretty amazing.

Farm, I've said, I've driven a tractor like one of the big ones from a competitor. I'm not going to go into it, but it's pretty amazing.

These just tell us what color it was, then maybe we'll know right orange.

These just tell us what color it was, then maybe we'll know right orange.

Having said that, I mean, these are not inexpensive devices. So when a farmer or a big company is buying them, they have to think about it, right, and they have to think about what's coming. Talk to us about pricing. What's the outlook for next year?

Having said that, I mean, these are not inexpensive devices. So when a farmer or a big company is buying them, they have to think about it, right, and they have to think about what's coming. Talk to us about pricing. What's the outlook for next year?

Well, pricing is is uh, you know we say zero to one percent pricing with just.

Well, pricing is is uh, you know we say zero to one percent pricing with just.

A little bit of price probably.

A little bit of price probably.

Yeah, it's a low pricing environment with weak man where you know, we don't see much opportunity to put in price. You know, we priced a fair bit during the COVID time when there's a lot of inflation, and but we try and keep pricing just a little bit above our cost. So if costs are going up two percent, we try and price just a little over two percent.

Yeah, it's a low pricing environment with weak man where you know, we don't see much opportunity to put in price. You know, we priced a fair bit during the COVID time when there's a lot of inflation, and but we try and keep pricing just a little bit above our cost. So if costs are going up two percent, we try and price just a little over two percent.

So that's usually kind of how the industry.

So that's usually kind of how the industry.

Operates, and you stay with that.

Operates, and you stay with that.

Yeah, yeah, that's that's kind of how it's been going. As throughout the cycle.

Yeah, yeah, that's that's kind of how it's been going. As throughout the cycle.

Where are you seeing in the supply chain inflationary profess inflationary pressures right now?

Where are you seeing in the supply chain inflationary profess inflationary pressures right now?

If at all.

If at all.

We see a little bit of inflationary pressure still, but but largely it's muted. The supply chain has healed dramatically, you know, like our on time and full rating of how the supply performance it was in the seventies during COVID, Now it's in the mid nineties. It's it's better than it was pre COVID. So the supply chain is healed. Everything's flowing nicely. We still have friction in the in the freight situation where there's you know, areas where we have to go a longer route because of some of the Middle East issues, but not a huge problem, nothing like we had during COVID.

We see a little bit of inflationary pressure still, but but largely it's muted. The supply chain has healed dramatically, you know, like our on time and full rating of how the supply performance it was in the seventies during COVID, Now it's in the mid nineties. It's it's better than it was pre COVID. So the supply chain is healed. Everything's flowing nicely. We still have friction in the in the freight situation where there's you know, areas where we have to go a longer route because of some of the Middle East issues, but not a huge problem, nothing like we had during COVID.

When you look at markets and regions around the globes, into our global companies, you've reminded us, I mean, where are you most optimistic for the new year?

When you look at markets and regions around the globes, into our global companies, you've reminded us, I mean, where are you most optimistic for the new year?

Well, in the short term, you know, probably Asia Pacific. They went into the market, Australia New Zealand Asia. That region went into the downturn first, we're seeing them forecast to come out of it sooner. Next would be South America for a couple of reasons. One is just their natural cycle sequencing, but they may have the best benefit of this green moving around, and their currency is weaker and so on. So Brazil is you know, big picture, they're probably one of the biggest growth regions over time. They have more land to put into production, fantastic climate, they can grow two crops a year, so they're essentially as soon as the combind goes through harvesing, the plant comes right behind it and plants the next crowd.

Well, in the short term, you know, probably Asia Pacific. They went into the market, Australia New Zealand Asia. That region went into the downturn first, we're seeing them forecast to come out of it sooner. Next would be South America for a couple of reasons. One is just their natural cycle sequencing, but they may have the best benefit of this green moving around, and their currency is weaker and so on. So Brazil is you know, big picture, they're probably one of the biggest growth regions over time. They have more land to put into production, fantastic climate, they can grow two crops a year, so they're essentially as soon as the combind goes through harvesing, the plant comes right behind it and plants the next crowd.

Is it safe to say?

Is it safe to say?

Can you know?

Can you know?

We've talked so much over the last year or two about the pushback on globalization and more near shoring or on shoring, and that's happening in your indoor as well. Right People are rethinking, certainly coming off the Russian Ukraine war like kind of rethinking where they're getting their food supplies.

We've talked so much over the last year or two about the pushback on globalization and more near shoring or on shoring, and that's happening in your indoor as well. Right People are rethinking, certainly coming off the Russian Ukraine war like kind of rethinking where they're getting their food supplies.

Absolutely, both food supply and then as a company we're thinking, we're changing the same thing in terms.

Absolutely, both food supply and then as a company we're thinking, we're changing the same thing in terms.

Of our supplier relationship walks.

Of our supplier relationship walks.

So absolutely we've changed more supplier relationships in the last two or three years than I think we did maybe in the last in the five or ten before that, lots of change in our supply base.

So absolutely we've changed more supplier relationships in the last two or three years than I think we did maybe in the last in the five or ten before that, lots of change in our supply base.

Hey, very briefly, have have you seen climate change affect your business at all?

Hey, very briefly, have have you seen climate change affect your business at all?

Well, climate change is a big thing on the mind of our farmers because they have a lot more severe weather impacts and so they have either too much water, not enough water.

Well, climate change is a big thing on the mind of our farmers because they have a lot more severe weather impacts and so they have either too much water, not enough water.

And things like that.

And things like that.

So they really want to use precision technology tools to make sure that they're planting with the most efficiency and then managing that crop through the growing cycle. So yes, it's something that we're managing. And we're also helping farmers take advantage of carbon sequestration, so taking the carbons in the air, trapping in the soil and helping the farmers.

So they really want to use precision technology tools to make sure that they're planting with the most efficiency and then managing that crop through the growing cycle. So yes, it's something that we're managing. And we're also helping farmers take advantage of carbon sequestration, so taking the carbons in the air, trapping in the soil and helping the farmers.

Get paid for ten seconds left, we said, your stocks down about four percent, so underperforming the market. What do you say to investors right now? Be patient, real quickly.

Get paid for ten seconds left, we said, your stocks down about four percent, so underperforming the market. What do you say to investors right now? Be patient, real quickly.

This is the cycle.

This is the cycle.

We're closer to the bottom than anything else. It will come back. It's not a matter of if, it's a matter of when we're positioned for the future.

We're closer to the bottom than anything else. It will come back. It's not a matter of if, it's a matter of when we're positioned for the future.

We're going to come back strongly.

We're going to come back strongly.

Well, we hope you come back to you and continue to give us an update. Eric Hansodia, he is Chairman Presidency. You have ag Co joining us right here on Bloomberg Business Week. This is Bloomberg.

Well, we hope you come back to you and continue to give us an update. Eric Hansodia, he is Chairman Presidency. You have ag Co joining us right here on Bloomberg Business Week. This is Bloomberg.

You're listening to the Bloomberg Business Week podcast. Listen live each weekday starting at two pm Eastern on Applecar Play and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa Play Bloomberg eleven thirty.

You're listening to the Bloomberg Business Week podcast. Listen live each weekday starting at two pm Eastern on Applecar Play and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa Play Bloomberg eleven thirty.

Okay, we heard a lot from beet Chow J. Powell yesterday on the economy, the consumer, and how the FED is thinking about rates. Here's just a couple of things that he said. Quote growth of consumer spending has remained resilient.

Okay, we heard a lot from beet Chow J. Powell yesterday on the economy, the consumer, and how the FED is thinking about rates. Here's just a couple of things that he said. Quote growth of consumer spending has remained resilient.

Check quote.

Check quote.

The economy is strong overall and has made significant progress toward our goals over the past two years. Check check quote. We think the economy is in a really good place, and we think policy is in a really good place.

The economy is strong overall and has made significant progress toward our goals over the past two years. Check check quote. We think the economy is in a really good place, and we think policy is in a really good place.

Tech tech.

Tech tech.

Okay, so that's what we heard. Sounds pretty good from the faget does sound pretty good? I mean yesterday's market reaction.

Okay, so that's what we heard. Sounds pretty good from the faget does sound pretty good? I mean yesterday's market reaction.

Not with standing.

Not with standing.

Yeah, exactly for a check out.

Yeah, exactly for a check out.

How the consumer is doing. Let's bring back Sylvia Tavares, CEO at the credit data and credit risk analytics from vantage Score. It's a joint venture of Experience, Equifax, and TransUnion. Sylvia joins us from San Francisco. Sylvia, I wanted to talk to you because you have so much good data about consumer health. How would you characterize the consumer right now?

How the consumer is doing. Let's bring back Sylvia Tavares, CEO at the credit data and credit risk analytics from vantage Score. It's a joint venture of Experience, Equifax, and TransUnion. Sylvia joins us from San Francisco. Sylvia, I wanted to talk to you because you have so much good data about consumer health. How would you characterize the consumer right now?

Well, Chairman Powell is spot on the consumers healthy and that's good news. That's good news for us as consumers. It's good news for the economy. The challenge that we have seen and the big change is that inflation is more stubborn than anticipated, and that's the big thing that changed. And we heard from Chairman power O, Well, they're going to keep rates higher for longer and that means less bank lending and probably less consumer credit utilization as well. Not great for merchants.

Well, Chairman Powell is spot on the consumers healthy and that's good news. That's good news for us as consumers. It's good news for the economy. The challenge that we have seen and the big change is that inflation is more stubborn than anticipated, and that's the big thing that changed. And we heard from Chairman power O, Well, they're going to keep rates higher for longer and that means less bank lending and probably less consumer credit utilization as well. Not great for merchants.

Hey, we had Mike McKeon earlier, but he made the point yesterday during his turn to speak that we haven't seen rates come down, that rates consumer rates excuse me, thank you, Carol, consumer rates come down when we're talking mortgages, we're talking credit cards.

Hey, we had Mike McKeon earlier, but he made the point yesterday during his turn to speak that we haven't seen rates come down, that rates consumer rates excuse me, thank you, Carol, consumer rates come down when we're talking mortgages, we're talking credit cards.

And the like.

And the like.

How are you looking at that over advantage score and what that means for your Well, I was going to say, your clients are customers, but kind of like we're all. You have a view of all of us, whether we know it or not.

How are you looking at that over advantage score and what that means for your Well, I was going to say, your clients are customers, but kind of like we're all. You have a view of all of us, whether we know it or not.

Yes, very much so. As you mentioned, van Score is the largest national credit scoring company, and we take data from trans Union experience in EQOFAX to assess the health of the consumer and lower interest rates. The cut was anticipated. The cut that happened this week was anticipated, and if you look back at November, basically banks anticipated it and they actually opened up more credit accounts credit new credit card accounts in particular were up modestly in November, but consumers only spent slightly more. Credit card balances were up a little bit, you know, about thirty bucks November compared to October and about two hundred bucks year over nearer. And so overall, the interest rates and the expected cut tended to increase new credit accounts and increase spending a little bit, but not a lot, And so that's not necessarily bad news. In some ways, it's good news. Consumers are being disciplined about their credit usilation not getting in over their heads, and banks are also somewhat modestly increasing credit lines but still being cautious and we're going to expect to see that continue into next year.

Yes, very much so. As you mentioned, van Score is the largest national credit scoring company, and we take data from trans Union experience in EQOFAX to assess the health of the consumer and lower interest rates. The cut was anticipated. The cut that happened this week was anticipated, and if you look back at November, basically banks anticipated it and they actually opened up more credit accounts credit new credit card accounts in particular were up modestly in November, but consumers only spent slightly more. Credit card balances were up a little bit, you know, about thirty bucks November compared to October and about two hundred bucks year over nearer. And so overall, the interest rates and the expected cut tended to increase new credit accounts and increase spending a little bit, but not a lot, And so that's not necessarily bad news. In some ways, it's good news. Consumers are being disciplined about their credit usilation not getting in over their heads, and banks are also somewhat modestly increasing credit lines but still being cautious and we're going to expect to see that continue into next year.

Yeah, just listening to you, and I am curious, like the number of accounts being opened. Is that a good sign because people can do it and they get approval? Is it a bad sign because people are opening up new counts so that they can find new places to spend and create bigger credits. So help us understand the data that you get. You get so much in real time. It feels like, what are the words that you use to describe the consumer credit picture right now?

Yeah, just listening to you, and I am curious, like the number of accounts being opened. Is that a good sign because people can do it and they get approval? Is it a bad sign because people are opening up new counts so that they can find new places to spend and create bigger credits. So help us understand the data that you get. You get so much in real time. It feels like, what are the words that you use to describe the consumer credit picture right now?

Well, I would say it's healthy. You know, a low score credit score for consumer is three hundred. The maximum possible credit score is vantage score eight fifty, and the average consumer is seven oh two through the end of November and that's, you know, the earnest start of the holiday spending season. So consumers are credit healthy, and we're seeing modest increases in consumer spending and we're also seeing modest increases in consumer lending. So overall, steady as she goes, for sure. The challenge is as you look to next year. The news we got this week from the FED is they anticipate inflation to be much more a significant issue. Than before the election, And so that's the main area for concern as we go forward. Is the FED going to be able to tame interest rates? Because if those interest rates, if those inflation rates get out of control, they're not going to be able to cut interest rates as much and as aggressively as they signal to us before.

Well, I would say it's healthy. You know, a low score credit score for consumer is three hundred. The maximum possible credit score is vantage score eight fifty, and the average consumer is seven oh two through the end of November and that's, you know, the earnest start of the holiday spending season. So consumers are credit healthy, and we're seeing modest increases in consumer spending and we're also seeing modest increases in consumer lending. So overall, steady as she goes, for sure. The challenge is as you look to next year. The news we got this week from the FED is they anticipate inflation to be much more a significant issue. Than before the election, And so that's the main area for concern as we go forward. Is the FED going to be able to tame interest rates? Because if those interest rates, if those inflation rates get out of control, they're not going to be able to cut interest rates as much and as aggressively as they signal to us before.

You mentioned seven hundred and two for the average managage score four point zero credit score. Carol and I just both saying to each other, that seems high, given that the highest you could get is eight hundred and fifty.

You mentioned seven hundred and two for the average managage score four point zero credit score. Carol and I just both saying to each other, that seems high, given that the highest you could get is eight hundred and fifty.

Yah, is that high?

Yah, is that high?

That seems high for average?

That seems high for average?

You're absolutely right, and it's high by historical standards. And what that tells you is consumers overall are actually very credit healthy. They're managing their credit cards well, they're not getting in over their head on personal loans or their mortgage and that's a really good thing. And I think that's a bit of what's and lost as we saw the wild swings in the stock market since the FED announced its zero point two five percent cut. What's lost in all of that market swooning is the fact that overall the economy is doing very well and consumers are actually doing very well, and the key problem that the economy is facing is making sure that inflation doesn't get out of control. That's obviously that reaction to inflation is what impacted the election, and it's the main thing that all the new members of Congress are thinking about. It's what the President elect is thinking about, and it's certainly what the FED is focused on, is just managing that inflation so it doesn't get out of people. But the reality is we've got a great economy right now.

You're absolutely right, and it's high by historical standards. And what that tells you is consumers overall are actually very credit healthy. They're managing their credit cards well, they're not getting in over their head on personal loans or their mortgage and that's a really good thing. And I think that's a bit of what's and lost as we saw the wild swings in the stock market since the FED announced its zero point two five percent cut. What's lost in all of that market swooning is the fact that overall the economy is doing very well and consumers are actually doing very well, and the key problem that the economy is facing is making sure that inflation doesn't get out of control. That's obviously that reaction to inflation is what impacted the election, and it's the main thing that all the new members of Congress are thinking about. It's what the President elect is thinking about, and it's certainly what the FED is focused on, is just managing that inflation so it doesn't get out of people. But the reality is we've got a great economy right now.

Sylvia, tell us, though, what do you know about the demographics of the folks that from the data that you get and the credit scores that are issued, Like, what do we know about that pool of people? Because I also do wonder and something Tim and I talk a lot about folks at Bloomberg talk a lot about is the underbanked. You know, folks that maybe can't get that credit card, so they're not even in you know, that average score statistical bunch, if you will, so give us an idea of what you know about the demographics of your business and the people that you basically rank.

Sylvia, tell us, though, what do you know about the demographics of the folks that from the data that you get and the credit scores that are issued, Like, what do we know about that pool of people? Because I also do wonder and something Tim and I talk a lot about folks at Bloomberg talk a lot about is the underbanked. You know, folks that maybe can't get that credit card, so they're not even in you know, that average score statistical bunch, if you will, so give us an idea of what you know about the demographics of your business and the people that you basically rank.

Well, that's one of the advantages of the vantage score. We actually include a lot of people that traditionally were left out of credit scores, we actually include about thirty million more consumers. Many of those consumers are folks that historically didn't get a credit score, but we're able to score them using our advanced techniques. And you know, if you think about the average consumer overall, they are at fact doing better than they were a year ago, and they're actually using credit slightly more than they were a year ago. And that's the high end as well as the low end consumer when they can't access that credit. So we're seeing a pretty uniform picture overall, consumers doing modestly better than they were a year ago. The key, though, as we look into the new year, what we're expecting is the FED is going to keep rates interest rates higher for longer, and what that's going to mean is fewer consumers are going to get new credit accounts, and that's going to disproportionately impact the low end, but it also means that the high end consumer, they're going to be more reluctant to use credit.

Well, that's one of the advantages of the vantage score. We actually include a lot of people that traditionally were left out of credit scores, we actually include about thirty million more consumers. Many of those consumers are folks that historically didn't get a credit score, but we're able to score them using our advanced techniques. And you know, if you think about the average consumer overall, they are at fact doing better than they were a year ago, and they're actually using credit slightly more than they were a year ago. And that's the high end as well as the low end consumer when they can't access that credit. So we're seeing a pretty uniform picture overall, consumers doing modestly better than they were a year ago. The key, though, as we look into the new year, what we're expecting is the FED is going to keep rates interest rates higher for longer, and what that's going to mean is fewer consumers are going to get new credit accounts, and that's going to disproportionately impact the low end, but it also means that the high end consumer, they're going to be more reluctant to use credit.

Hey I'm curious about buy now, pay later and those types of firms, the sort of instant credit that's offered at checkout at places, are they using Vantage Score?

Hey I'm curious about buy now, pay later and those types of firms, the sort of instant credit that's offered at checkout at places, are they using Vantage Score?

Absolutely many of those firms use a credit score to manage the access to new BNPL accounts. However, many of those firms, by now Pay Later companies, they don't provide data on the performance of those loans, and that is a blind spot for the end history that we're working on because that has grown the utilization by now Pay Later. You want to get the data on whether people are actually paying up in three or fourth installment, are they Well, it's tough to tell. It's tough to tell. What we can see is that overall delinquencies that's the industry jargon for whether people pay their credit card loans on time, those delinquencies are actually pretty good, and in fact they're better than the pre pandemic averages and they're polding steady. We saw that in the most recent November credit gage. And what that shows is again consumers remain credit healthy. We're not seeing a significant deterioration in delinquencies, and that's actually very good news for the economy.

Absolutely many of those firms use a credit score to manage the access to new BNPL accounts. However, many of those firms, by now Pay Later companies, they don't provide data on the performance of those loans, and that is a blind spot for the end history that we're working on because that has grown the utilization by now Pay Later. You want to get the data on whether people are actually paying up in three or fourth installment, are they Well, it's tough to tell. It's tough to tell. What we can see is that overall delinquencies that's the industry jargon for whether people pay their credit card loans on time, those delinquencies are actually pretty good, and in fact they're better than the pre pandemic averages and they're polding steady. We saw that in the most recent November credit gage. And what that shows is again consumers remain credit healthy. We're not seeing a significant deterioration in delinquencies, and that's actually very good news for the economy.

Hey, how when it starts to go bad, though, does it all of a sudden turn quickly? Like, do you guys get indications that all right, we got some trouble here when it comes to consumer credit. Tell us about kind of that bill to kind of forecast, because I know in some indicators, when they start to go bad, they go bad really quickly and then they just drop off well.

Hey, how when it starts to go bad, though, does it all of a sudden turn quickly? Like, do you guys get indications that all right, we got some trouble here when it comes to consumer credit. Tell us about kind of that bill to kind of forecast, because I know in some indicators, when they start to go bad, they go bad really quickly and then they just drop off well.

And we've certainly seen that there's been a period of unprecedented credit volatility over the last two to three years. Things do change quite rapidly, and it's one of the reasons why we are seeing our customers, banks, our stakeholders in Congress and at the Federal Reserve, we're seeing them turn to more high frequency data. You've got to check what's happening in the market more regularly. It's one of the reasons that Vantage Score was an industry leader in publishing insights on a monthly based basis. We call that Vantage Coore Credit Age, and in fact, we're publishing that tomorrow morning. The data I'm sharing with you is an exclusive that we provided to Bloomberg in advance. But the reality is, if you're a bank, if you are a policymaker, you've got to be checking quickly more regularly because things move quickly, and I actually anticipate that's going to accelerate. Things are going to move even more quickly as we head into twenty twenty five. New administration, new regulators, new policymakers.

And we've certainly seen that there's been a period of unprecedented credit volatility over the last two to three years. Things do change quite rapidly, and it's one of the reasons why we are seeing our customers, banks, our stakeholders in Congress and at the Federal Reserve, we're seeing them turn to more high frequency data. You've got to check what's happening in the market more regularly. It's one of the reasons that Vantage Score was an industry leader in publishing insights on a monthly based basis. We call that Vantage Coore Credit Age, and in fact, we're publishing that tomorrow morning. The data I'm sharing with you is an exclusive that we provided to Bloomberg in advance. But the reality is, if you're a bank, if you are a policymaker, you've got to be checking quickly more regularly because things move quickly, and I actually anticipate that's going to accelerate. Things are going to move even more quickly as we head into twenty twenty five. New administration, new regulators, new policymakers.

All of that's going.

All of that's going.

To bring more.

To bring more.

Yes, a few things going on in the new year, no doubt about it. Sylvia, thank you so much. Have a good holiday, Happy New Year. Silvio Tavaris, he's chief executive officer Advantage Score, joining us on this Thursday from San Francisco.

Yes, a few things going on in the new year, no doubt about it. Sylvia, thank you so much. Have a good holiday, Happy New Year. Silvio Tavaris, he's chief executive officer Advantage Score, joining us on this Thursday from San Francisco.

You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm. Easter Listen on Applecarplay and then Broud Auto with a Bloomberg Business app, or watch us live on YouTube.

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Let's talk about kind of what's next.

Let's talk about kind of what's next.

Very that low hanging fruit the perfect segue, because that's exactly how our next guest describes what the last two years have looked like when it comes to AI. We got with us Rachel Met She's Bloomberg News AI reporter. She writes about what the AI giants are doing now that that low hanging fruit is gone two years after the introduction of chat GPT. She joins us from San Francisco. Check out Rachel's story on the Bloomberg Terminal and at Bloomberg dot com Slash business Week. Rachel what is the tone that we've heard over the last few weeks, over the last few months from these AI giants, I mean Anthropic, Google, Meta Open Ai about training these models and sort of what's next when it comes to this so called AI revolution.

Very that low hanging fruit the perfect segue, because that's exactly how our next guest describes what the last two years have looked like when it comes to AI. We got with us Rachel Met She's Bloomberg News AI reporter. She writes about what the AI giants are doing now that that low hanging fruit is gone two years after the introduction of chat GPT. She joins us from San Francisco. Check out Rachel's story on the Bloomberg Terminal and at Bloomberg dot com Slash business Week. Rachel what is the tone that we've heard over the last few weeks, over the last few months from these AI giants, I mean Anthropic, Google, Meta Open Ai about training these models and sort of what's next when it comes to this so called AI revolution.

Well, it kind of depends who you ask, when you ask them, and how you ask them, but definitely in our reporting we found that a number of companies, Anthropic, Google and OpenAI are having some challenges I would say, in training their cutting edge AI models. They are running out of data they are or not having the right kinds of data to train them to what they want them to be.

Well, it kind of depends who you ask, when you ask them, and how you ask them, but definitely in our reporting we found that a number of companies, Anthropic, Google and OpenAI are having some challenges I would say, in training their cutting edge AI models. They are running out of data they are or not having the right kinds of data to train them to what they want them to be.

And also, these models cost so.

And also, these models cost so.

Much money to make, so you really want to make sure that if you're putting a ton of money into something that is going to be good enough to be worth it.

Much money to make, so you really want to make sure that if you're putting a ton of money into something that is going to be good enough to be worth it.

Right.

Right.

So they're seeing, as we put it, I think, diminishing returns in some cases with their most cutting edge technology. And some people such as Google's CEOs under the CHAI have talked about this, and some other people have been you know, a little bit quieter about it, like you might see or they say the opposite, like you might see Sam Altman on social media saying there is no wall, and I'm like, well there was a wall exactly.

So they're seeing, as we put it, I think, diminishing returns in some cases with their most cutting edge technology. And some people such as Google's CEOs under the CHAI have talked about this, and some other people have been you know, a little bit quieter about it, like you might see or they say the opposite, like you might see Sam Altman on social media saying there is no wall, and I'm like, well there was a wall exactly.

I have to tell you you saying this. I am obsessed with this story that our Linda Wan put out on December thirteenth, and I highly recommend, just like Rachel, read everything she writes. Check out the story because it basically said AI wants more data, more chips, more power, more everything. But that concept of more data, I think we thought, oh, the world is a wash in data. I give it tons of data every day, and yet there was this concept of actually really useful smart data that helps AI kind of keep growing and get to the next level. I mean that sounds like that could be kind of a supplied demand imbalance.

I have to tell you you saying this. I am obsessed with this story that our Linda Wan put out on December thirteenth, and I highly recommend, just like Rachel, read everything she writes. Check out the story because it basically said AI wants more data, more chips, more power, more everything. But that concept of more data, I think we thought, oh, the world is a wash in data. I give it tons of data every day, and yet there was this concept of actually really useful smart data that helps AI kind of keep growing and get to the next level. I mean that sounds like that could be kind of a supplied demand imbalance.

Yeah.

Yeah.

I mean it's important to keep in mind that not all data is created equal, and a lot of the data that is used to build these large language models, which is the kind of AI that powers chatbots like chat GBT, it's a lot of it is coming from the Internet and it has been largely scraped at this point. So if you want to make bigger, better models, you need more and more data. So companies are starting to think about, well, where could we get more data from, and some of that could involve paying professionals, people with PhDs or other type of higher degrees to label data for like math models that can be really good at math or coding things like that. You might look to people in the medical field, like a nurse, for instance, to label data related to medical professions, because you really want to have good data to train these models to be accurate and good at specific things going forward.

I mean it's important to keep in mind that not all data is created equal, and a lot of the data that is used to build these large language models, which is the kind of AI that powers chatbots like chat GBT, it's a lot of it is coming from the Internet and it has been largely scraped at this point. So if you want to make bigger, better models, you need more and more data. So companies are starting to think about, well, where could we get more data from, and some of that could involve paying professionals, people with PhDs or other type of higher degrees to label data for like math models that can be really good at math or coding things like that. You might look to people in the medical field, like a nurse, for instance, to label data related to medical professions, because you really want to have good data to train these models to be accurate and good at specific things going forward.

Here, why don't you take all this stuff so I won't have a job anymore. Why don't I teach you how to do my job?

Here, why don't you take all this stuff so I won't have a job anymore. Why don't I teach you how to do my job?

So then if that sarcasm, mister, that's just I know, I know.

So then if that sarcasm, mister, that's just I know, I know.

I'm oversimplifying it, Rachel, but I see you're laughing.

I'm oversimplifying it, Rachel, but I see you're laughing.

So my mission is a competent Okay, There'll still be plenty for us to do.

So my mission is a competent Okay, There'll still be plenty for us to do.

Okay, I'm so glad. I'm so glad. I don't know, So how do you read this? Because I do feel like it has been nothing, but you know, not even a marathon. It's been just a fast race the last one and a half years, two years. In terms of the AI spend ramping up, it just feels like anything that came, you know, in terms of AI or you know, when we do earnings, right, we wanted to see is the AI spending there and so on and so forth. But it does feel like a reminder that all of this is going to take time. How do you think about this cycle?

Okay, I'm so glad. I'm so glad. I don't know, So how do you read this? Because I do feel like it has been nothing, but you know, not even a marathon. It's been just a fast race the last one and a half years, two years. In terms of the AI spend ramping up, it just feels like anything that came, you know, in terms of AI or you know, when we do earnings, right, we wanted to see is the AI spending there and so on and so forth. But it does feel like a reminder that all of this is going to take time. How do you think about this cycle?

I think that what you said that at the end there is really spot on. It is going to take time.

I think that what you said that at the end there is really spot on. It is going to take time.

And also, as we've seen in other industries, sometimes the piece of innovation doesn't always you know, it's not always the same. It goes and fits and starts. Sometimes things are really fast, sometimes things even seem to go backwards a little bit. I spoke for this story is latest story. I spoke with Jonathan Frankel, who is a scientist and he works at Data Bricks Yet Data Bricks, Yeah, and he said something that I thought was really spot on. And I've actually heard this from a couple people that we should look to the chip industry, and you know, the chip industry, we've seen different innovations over time, and sometimes directions change depending on where's the best way to innovate. And that seems to be what we're seeing with AI, and that's what I would expect to see going forward, is people trying different things. Sometimes they work, sometimes they don't, and sometimes things go fast and sometimes they go.

And also, as we've seen in other industries, sometimes the piece of innovation doesn't always you know, it's not always the same. It goes and fits and starts. Sometimes things are really fast, sometimes things even seem to go backwards a little bit. I spoke for this story is latest story. I spoke with Jonathan Frankel, who is a scientist and he works at Data Bricks Yet Data Bricks, Yeah, and he said something that I thought was really spot on. And I've actually heard this from a couple people that we should look to the chip industry, and you know, the chip industry, we've seen different innovations over time, and sometimes directions change depending on where's the best way to innovate. And that seems to be what we're seeing with AI, and that's what I would expect to see going forward, is people trying different things. Sometimes they work, sometimes they don't, and sometimes things go fast and sometimes they go.

A little slower, hey, Rachel, really quickly ten fifteen seconds. I mean, might twenty twenty five be that, like, I don't know, take a breath, you know, slow you slow your roll everybody when it comes to AI, Might that be the twenty twenty five year or who knows?

A little slower, hey, Rachel, really quickly ten fifteen seconds. I mean, might twenty twenty five be that, like, I don't know, take a breath, you know, slow you slow your roll everybody when it comes to AI, Might that be the twenty twenty five year or who knows?

I don't think so. Actually, I mean that would be really nice. It would be relaxing for the news cycle.

I don't think so. Actually, I mean that would be really nice. It would be relaxing for the news cycle.

But I think that we're going to see a lot of people working on so called AI agents. This would be AI software that can perform more complicated tasks with not much help from humans and some other things that we're going to see compies doing. I think they're really pushing ahead, and we have to remember they still have a lot of these companies will have lots of money to burn, so they're going to keep plugging away.

But I think that we're going to see a lot of people working on so called AI agents. This would be AI software that can perform more complicated tasks with not much help from humans and some other things that we're going to see compies doing. I think they're really pushing ahead, and we have to remember they still have a lot of these companies will have lots of money to burn, so they're going to keep plugging away.

Well good, that means we get to continue talking to you. So love, so love Rachel Matt's Bloomberg News AI reporter. Check her out on the Bloomberg Time, Bloomberg Terminal, and of course at Bloomberg dot com.

Well good, that means we get to continue talking to you. So love, so love Rachel Matt's Bloomberg News AI reporter. Check her out on the Bloomberg Time, Bloomberg Terminal, and of course at Bloomberg dot com.

Um brother, mac.

Um brother, mac.

Journal, Now about you let me drive? No no, no job, honey, please?

Journal, Now about you let me drive? No no, no job, honey, please?

How do the riding gravels?

How do the riding gravels?

Let's wait I want to try it.

Let's wait I want to try it.

It's a good question.

It's a good question.

This is the drive to the Globe dot com. Tim think we'll buy around yother.