Applied Materials' Results, and OpenAI and Reddit's Partnership

Published May 17, 2024, 6:56 PM

Bloomberg's Caroline Hyde and Ed Ludlow break down Applied Materials' earnings which fail to impress investors. Plus, OpenAI and Reddit announce a partnership to bring its content to ChatGPT and other products, and CoreWeave secures nearly $8 billion in private debt. 

From Markhard We're Innovation of Money and Power colle in Silicon Valley, NBN.

This is Bloomberg Technology with Caroline Hyde and Ed Ludlove.

I'm Caroline Heid at Bloomberg's at World Headquarters in New York, and I'm Ed Ludlow in San Francisco.

This has Beenberg Technology coming up.

Full market coverage of a head of course, the largest US maker of chip making machinery fails to impress investors. What does it say around the rest of the chip sector. We talk applied materials.

Plus open Ai and Reddit announce a partnership to bring its content to chat, GPT and other new products.

Details ahead, and we sit down with the CEO of cloud computing company core Weave as it secures seven and a half.

Billion dollars in private debt.

All that and so much more coming up first, as check in on a market that has been ramping higher for four straight weeks, the longest winning street we see for the SMP and indeed the Nasdaq in well, at least since February.

We're actually seeing the best months.

So far for the entire year, and we're seeing again just tentative gains. We've called some of those gains as the week has progressed, but nevertheless still up almost ten points on the Nasdaq stock six hundred over in Europe. Less optimism on the day, we're off by a tenth of a percent, but again we've seen gains throughout the course of the week, and look, we're still near or at record highs for a.

Lot of these benchmarks.

Looking at ten year yields, actually just selling off a little bit on Neil's just pushing up somewhat, but this has been a reassessment of the Federal Reserve and whether we can still see cuts coming in for this year. Some of that data just showed a healthy cooling of the US economy. Move on, have a look at what's happened over the last five days, and we're looking at crypto and look on the up and up more than nine percent. We're at six hundred and seven, a way off far high as their ed but still notable risk on sentiment throughout this week. When it comes to crypto, what have you got on the micro Well.

Let's start, we've read it and read it is up a lot, flirting with a record higher bound for four fourteen percent. Since it's ipo, which you know is in March. So the deal with open ai is kind of a two way deal. Open ai basically licenses Reddit forum posts to get that text data's train models, but it can also show Reddit posts in the consumer facing products. And what does Reddit get out of it, Well, according to analysts, like forty million dollars of high margin revenue every year, which is great.

But also they are.

Talking about building ai products into the forum on top of open AI's large language models. Let's talk about that later in the show. The other name we're talking about is in the chip space applied materials. As you point out, the story here is about a company that makes the machines that makes the chips. It sells to the contract manufacturers like TSMC higher three tensven percent. It beat estimates, but at the upper range of the estimates that were given by the street it fell a little short. The question is where are we at in chip demand through the proxy of the companies that buy the machines that make the chips.

What a fun story it is, because ultimately, is this a bell weather? Is this some sort of ability for us to have a bird side perspective?

Wear's hot, wet's not?

Maybe not In autos, maybe not in connected devices, but certainly all things AI is still driving us. And what about the China exposure ed and pleased to say we can go broadly across the sector with Advisor's capital management partner and portfolio manager, Joe am Poenie. Always enjoyed to have you with us, Joeanne. And look, this is a chip equipment company. But what are you seeing in terms of where we are in chips more broadly?

Right now?

Yeah, good morning guys.

Apply Materials results better than expected, but their guidance was a little bit soft, and in this kind of an economy, this.

Kind of a market, that doesn't go over too well.

But when you look into what Applied said, they indicated continued strong demand from several of their end markets, except for China. Obviously with the US trade policy really trying to crack down on exports that would enable China to have its own leading edge chip business. Applied Materials find yourself in the cross fair, no surprise, and so that part of their business is going to fall off pretty sharply. But what we're seeing is that global demand for equipment because of the global demand for high end chips for AI and other things is still going to remain robust for many years to come.

That's really interesting.

So around on Monday, I'm going to speak in a conversation with Jensen Wang, Michael Dell, and Bill McDermott for twenty five minutes, and what I'm trying to get out of it is this idea of when do we move beyond AI as a market AI accelerators just being the hyperscalers.

So think about what you just said in demand, But.

As far as I see, that's the only place it's going, and it's largely in the US. What's your kind of counter to that.

Well, what we're seeing, I believe is that there's a demand beyond just the US hyperscalers for other entities to have their own AI training and inference capabilities, notably countries that want want to keep their data private, and so we're going to see entities there develop the infrastructure to run those models and to deploy those models. So your Jensen has mentioned that in the past, you could try to get some numbers out of him for how big that is currently and how big he expects it to be, because it should be the case that wants the hyperscalers build up their capabilities for training and for inference that will see that other end the sovereign investments or even company specific investments where again data is likely to be kept private, become the next buyer.

You know what's so interesting?

And maybe I'm getting a bit in the weeds here, but like think about Dell's history, they're really good at selling to SMEs and governments. They're great sales channels that maybe like Nvidia, has never really operated him. And that's the bit I'm trying to scratch away at. Like everyone else in the world who wants a part of the AI story, how do they actually do it right? From their CAPEX spend And where do you Jo Anthony position yourself if you think that they're going to get there right?

So the others that they're going to do it, They're going to have to build the infrastructure ed if I understand your question correctly, And so whether it's through a Dell or a super micro or an HP or an IBM, right, they're going to have to bring the hardware in which will be powered by chips from Nvidia and the future AMD and perhaps.

In the future from some of these startups we're hearing about.

And how we position is we look at the fundamental suppliers that make it all possible, which are the chip guys and Vidia, AMD, Broadcom working in conjunction with Alphabet and others to bring the chips capable of this high end computing.

That's kind of a clean way to invest.

But also then on the application side, companies that are rolling out the capabilities to deploy AI like a service.

Now is one example, but it's broader than that. It's beyond the technology sector, it's into industrials.

It's into healthcare.

So you really have to dig deep to find those individual companies that are being successful at this early stage and starting to deploy the AI capabilities that.

Are just emerging.

I'm loving this entire show because we're going to many ways pick away all these different ways of telling the story. We've got core Weave coming on, of course, one of these new hyperscale entrance almost offering new data center footprints that's going to be closer to the companies that need the access to the compute.

You're then also going to be.

Discussing this new AI push towards regulation, but ultimately standards and investment coming from the US government. We just had Chuck Schumer, of course, right, that key AI thought leadership piece. Basically there's no real regulation in it yet. Will we be delving into that. But all of this very much focuses on the US and bits China and the worry there. But what about Europe, what about Japan? What about other areas that you can invest geographically?

Joanne, Yeah, I mean asking.

One of the big trends that I'm going that's related to this space is the desire for let's call it self sufficiency regionally to have for countries and regions like the US and Europe to have their own capability to manufacture those high end chips.

Whether regulation and how regulation evolves.

Over time is really hard a hard thing to sort out at this point, and so we don't try to make bets based on regulation changes.

It's just sort of too.

Early to know what Chuck Schumer's and that bipartisan groups proposals will actually mean. So instead, again, what we can do is look at how the subsidies are.

Evolving and how the tariff barriers and restrictions are evolving to push the manufacturing of advanced semiconductors around the world. And what it means, right is we're going to get more chip manufacturing, which is good for the equipment suppliers by the way, and probably get some cheaper chips as a result of a bit of overcapacity over time.

When you therefore look at some of the startups coming in, when you think about where to allocate to, where's already done?

Well?

Is in Vidio ahead of its earnings next week, still at the right valuation point to enter.

Well?

You know, a company like in Nvidia has many years of growth head of it, and its valuation reflects the expectations about how high that growth will be and for how long it can be maintained. And right now, and Video with its chip technology is well ahead of competition. Yes, a m D is coming along, and they will they will definitely have a good chip in the race. And we talked about Broadcom with their teaming up with Google and others. But ultimately, and Vidia has not only the hardware, the most advanced chips with the most capability for training AI.

But it also has the software that is needed to make all of that work, that Coupa software that it's been developing over decades. So it really does give Nvidia a substantial and defensive lead for several years to come.

That doesn't mean that we're not going to get.

Newsflow that disturbs those long term forecasts, and that could cause disruptions in the stock price. And that's why we think for Nvidia to be helped by clients. In our growth portfolio, it's a substantial position, But in our balanced strategy, where clients have a perhaps a more conservative view on what their portfolios need to do over time, it's a smaller position because of the volatility that we're likely to see as expectations can be disrupted at any time.

M Foinie, how are you and Advisor's Capital using AI at home and at work?

Well, I know from talking to the marketing guys, for example, that they're using AI to create We just had a conference, for example, they created a lot of the background material for the conference, the images. I worked with a colleague recently to do a podcast on behavioral finance, and he generated notes using AI.

Questioning, Hey, what did Danny Kahneman contribute?

And so I saw all these great notes, I'm like, wow, that's it's impressive. He said he did it in fifteen minutes. So it's an incredible time saver for folks. Quickly needing to generate content or get quick answers to questions and to generate images for marketing materials.

J am Feenie Advisors Capital Management. Great to have you back on the show. Thank you so much. Now coming up from Bloomberg Technology, we have all the details on that open Ai and Reddit relationship and a new partnership. Stay with us, We will be right back. This is Bloomberg Technology. So open ai unveiled a partnership with Reddit that will bring the social networks content to chat, GPT and other products, but also allow Reddit to add new AI features to its online communities. That's bringing Bloomberg Sharen Gafari for more a bit of a scramble last night because the market reacted right. Reddit shares now really high. Just give us the basics of the deal in both directions.

Sure.

So open ai, which has kind of an insatiable desire for data right to train its models and to just show data within its chat GPT app, will now have access to Reddit posts, and that's going to happen through the Reddit api. So you know, whatever people post on Reddit, open ai now has the legal right through this deal to actually use that in its products and to train its products on Reddit side. You know, they are presumably getting some kind of financial benefit from this, although the terms of the deal have not been disclosed.

Also, perhaps they fold in open AI's own large language model and AI applications within the use of Reddit. It seems as though there's going to be advertising involved, and the question to me sharing is what do they get that's different versus the Google agreement. We know the amount of money it seems that they got from Alphabet already, but why therefore so embed open ai from an actual AI architecture perspective and not Google's.

I think that these media companies, social media companies, publishers, they're kind of looking to just get the most value that they can out of the data that they have, right, so I think the deals are very similar. I think, you know, we just have a little bit more information about how much the value of that Google deal was on the advertising front, because there was a mention in there in their release I actually clarified with open Ai. So all that means is that open ai is actually going to place ads on Reddit as part of the deal, So we're not seeing a kind of deeper ad integration that's that some may have had thought.

Really fascinating.

And I think also we've got to remember the history of Reddit and Sam Altman. Even though it says really that it is Brad Lightcap that forged this deal, certainly is one of the key investors in Reddit at the IPO. Those ties go deep, and the fact that he is interrom CEO for a short while putting the Suran Gafari. We thank you so much for talking us through the latest deal. Meanwhile, let's talk about the space race that's upon us, because we're just so you can look at Elil Musk's Starlink.

It's launched, friends of competition for space dominance. Just take a listen.

The largest single constellation of satellites orbiting our planet is run by a mercurial individual who needs no introduction. It's this guy. It achieves this by maintaining a vast relay network in low Earth orbit. That's the area higher than a jetliner but below a GPS satellite.

Right now, Starlink has more than five six hundred satellites in orbit.

And it accomplished all this in less time than it took James Cameron to make a second Avatar movie.

At one point, SpaceX and vision launching up to forty two thousand satellites.

But this speed and relative success has raised eyebrows, concerned ones in government and excited ones in the boardrooms of potential rivals.

It's essentially a company trying to disrupt a somewhat complacent marketplace.

So you can catch the full thing from Bloomberg originals at Bloomberg dot com.

It's it must kind of watch.

And the speed and relative success of elon musk Starlink has encouraged the deep pocketive rivals like Amazon co founder Jeff Bezos and his Blue Origin, which is actually slated to resume space tourist flights this Sunday after it had stopped crude operations two years ago following a mid flight mishap. I want to go out to Chicago and Bloombo's Kyle Porter.

Let's start with the starlink doc.

Right.

That was one minute, but it's a longer thing. Tell us about the other items that you covered off in it.

Well, thank you for having me on ed. We cover quite a bit of ground in those seven minutes. We look into how the service performs, Elon's plans for growth of the service, potential rivals, and as that one minute alluded to difficulties geopolitical and technical.

With the service.

Let's talk about technical difficulties because there's been a few launches that have been delayed of late. We're also anticipating the re launch or well certain regalvanization of Blue Origin this weekend.

Things have been stopped start.

They certainly have a little bit, and Elon's been a little bit frustrated in his getting approvals to build out the size of the network that he wants. Starlink's biggest problem is getting satellites in the air. Doing things in low earth orbit is fantastic and it decreases the latency, which is the time it takes for the signal to get back and down to your dish. However, you really need to think of it like filling off a bath. You need an awful lot more satellites in the air to stop your service slimming down. Frankly, they're not doing it as quickly as they'd like.

Kyle, my understanding is you and I are under orders to be awake very early this Sunday because Blue Origin will try to launch its tourism offering again after two years.

Just give us the basics of that mission.

Yes, well you'll be earlier than I am. Thank goodness. The plan is after twenty twenty two. There was a mishapen I'm thankfully unmanned flight which saw Blue Origin ground its flights. This will mark the resumption. I believe it's the seventh flight to carry a crew, and it's also going to include someone rather special.

Ed D.

White, who was part of the original NASA program, would have been the first African American in space had he been picked.

And then not to mention what happens early next week Boeing's first cruise space flight maybe just maybe using its Starliner craft. So that's been delayed a little bit. Maybe it'll come on May twenty first. There is a lot going on in space, has always been most Carl Porter helping us tell that story. I hope you both have to get up too early someday. Meanwhile, coming up after a volatile week of trading the Memestock rally, coming to back down to Earth.

I could have used all the puns about to the moon, but I won't.

We will bring you the latest next as a rumored technology.

It is time for talking tech. These are some of the other stories we're following in the news. First up Snowflake is in talks to acquire startup Wreca Ai for more than one billion dollars. That's according to sources. RecA Ai is a producer of large language models and would enable software maker Snowflake to offer generative AI capabilities. Record Ai was founded in twenty twenty two and was valued at three hundred million dollars in a twenty twenty three investment round. Plus, Ingram Micro is preparing to move ahead with plans for an IPO that could raise more than one billion dollars. That also according to sources, who say Ingram's considering seeking evaluation of as much as ten billion dollars. The company has been working with Goldman Sachs and Morgan Stanley on the listing and is said to have added JP Morgan to its list of advisors, and Microsoft avoids a UK antitrust probe for its partnership with meestrel Ai. Last month, the UK Competition and Markets Authority announced that it was gathering information on whether the two companies threatened competition in the UK. The watchdog group reversed that decision, saying Microsoft does not have the ability to quote materially influence Miestrel's commercial policy.

Caroline, Let's just go back to what was quite the frenzy at the start of the weekend, all the mean stops, but now that's come to a bit of an abrupt halt. Came so off as you see now only up sixteen percent, shares falling for a third secutive day. In fact, as a company pre announced earnings. So it may set up to fully five million shares. Let speke it all down in the most Bailey lipshals. And the point here is that we had GameStop.

And AMC really soaring at the beginning of the week. AMC made the most of it. Now game stops trying to make the most.

Of it exactly.

AMC happened to have that at the market offering in the works before, so they were able to capitalize on that raise about one hundred and twenty five million.

Dollars through sales of new shares. They also then.

Announced a debt for equity swap, so diluting investors, but trying to shore up the fact that they had at least at the beginning of the week north of four and a half billion dollars in debt. Now game stop to be Fair doesn't really have debt, they don't need the cash. But when I talked to market watchers, they basically said, they are two times you sell shares, one when you're stupid not to and one when you need cash. And it does seem like games stop trying to move to capitalize on the rally. But as you mentioned, not only up seventeen percent this week, not up the two hundred and seventy percent it was at the start of the week on Tuesday, and.

We got a little bit of fundamental news unlike what has driven this meme stock rally.

And they pre announced their earnings. How do they fare? And it looks as though revenues are under pressure.

Under pressure missed what Wall Street had penciled in. But they're only how many I would say there are two analysts who follow it, so it's not really like we can say there are dozens of analysts who kind of are sharpening their pencils to come up with what they should be reporting.

But it is slowing.

They are focused really on getting back to profitability. So the net loss was more narrow in the last three months than it was this time last year, but still fundamentally there are pressures there's kind of they need a new game cycle, They needed a new console cycle. They are also battling with the fact that people download games and don't go to stores, and that's really been the bare Case four game stop even well before twenty twenty one's.

Craze Bailey, Hello Happy Friday. I was talking to somebody interesting last night, let's call them a market participant, and I asked about Roaring Kitty And I was like, has anyone yet worked out what Roaring Kitty was trying to communicate through social media? And this person, again let's call them a market participant, was like, do we even know that it is Roaring Kitty?

If we don't, And that's why it's scary, because we haven't seen the person who operates under the moniker Raring Kitty. Keith Gill hasn't been on social media. He used to be streaming on YouTube and different means back in twenty twenty one. In twenty twenty he hasn't physically appeared, so that x handle was back to posting a number of videos.

But to your point, no one's been able to confirm or.

Talk to Gil himself to see if he actually has resurfaced after almost three years of being away from social media, or to read between the lines that what your source is pointing at.

It could be other actors, but no one really knows.

What is interesting is that loads of people tried to play the game this week.

Right.

People have taken to social media and said, oh, look, I made a small amount of money by buying or selling games of AMC shares. Is there any sense that there was something bigger than that, beyond just retail trade is playing the moment?

Well?

We wrote about this throughout the week, and when you look at the trading flows on the likes of a Fidelity or an interactive brokers, it's a small portion compared to what we saw in twenty twenty one. And if you look at Fidelity's platform over the past week, the number of buy and sell orders has basically been matched. So when you look at the hundreds of millions of shares that have traded four game stop in the north of a billion shares in AMC that have traded, the underlying factors would point towards this likely being some form of momentum or quantitative funds trading in it.

Bloomberg's Bei lip Schultz, Well, week, it's been tha. Thank you.

Now coming up on the show, cloud computing company Core. We've received seven point five billion in private debt. We're going to speak to the CEO next. Stay with us because we'll be right back.

This is Bloomberg.

Welcome back to Bloomberg Technology, Ed Lovelow here in San Francisco.

Caroline had in New York.

Let's get your cold check on these markets, because it has been a week, and it's been a macro fueled week in many ways, some of the data points shining a light that maybe the FAG can still cut. We've got therefore, benchmarks near or at record highs. There certainly have been for the Nasdaq one hundred, the Nasdaq SMP five hundred, of course, the Dow hitting more than forty thousand.

We're just wavering on the days.

Perhaps we just trade into this weekend and take a little bit of profit. But stock six hundred not as strong a week, up less than a percentage point, but still up for two straight weeks and still near a record high as well. Remember it was four straight weeks on the US benchmarks as the longest winning street that we've seen since February. I'm looking at Bitcoin up three hundred quarter percent. It's having a good week two and we're currently up at sixty seven thousand. Move on and have a look what's happening in terms of individual names that are on the move, and notably Take two is actually one of the best performers on the NASDAK one hundred gaming company coming out and saying sorry, we're delaying it again the latest grand theft auto. But at least we're getting a timetable a little bit more resolutely, and so investors seem to be in a forgiving mood when maybe some of the numbers did have to be daled back more broadly for this year, the school year's revenue because of the delay to the start of twenty twenty five PDD I'm looking at, of course, TMU ubs upgrading their stock saying that look, we're all over exaggerating the limitations of TEMU into geographical diversity on the back of geopolitical threats. In fact, they think that they're still going to be a winning formula. PDD get their numbers on the twenty second of May. Who else gives us their numbers next week in video we're currently down by eight tens percent, but ed we're looking at in terms of the world of AI.

Well, a name that's very closely tied to in video. In one of the largest private financings to date, cloud computing company core Weave has received a seven point five billion dollar debt package led by Blackstone, Magnetar and Co. Two and please to say were join now by the core Weave CEO, Michael and Tranter. Okay, let me frame it this way. Seven point five billion dollars is a lot of debt financing. It's a very large number. You are an unusual company because you're doing something with pace but very closely tied to in video. So I think our audience would appreciate that you just kind of explain how you got the debt financing and how it's structured, because the cast of character in there are also unusual.

Yeah, so first of all, thank you for having me back on again. They appreciate the opportunity to, uh to speak with you in your in your audience. So, uh, this is a very exciting financing for us, and it follows very closely on the coattails of a one point one billion dollar equity round that we.

Completed last week.

And so it's been a very very active period of time for for Core. We've in the capital markets, the the uh the.

Syndicate of lenders, which is really who's who.

Of private lending, including you know, as you said, Blackstone, magnutar Co two, but you also have Carlisle, CDPQ, Digital Bridge, black Rock, Eldridge, you know, like really wonderful names, really great supporters that that have a deep understanding of the business and you know, really provide in coordination with the equity round that closed last week and a deep validation for the solution that we are delivering to the market, our approach to building you know, ait cloud infrastructure. And so it's been really oneful few weeks here for the company as we really pushed towards enormous scale.

I mean, this is a big pot of money.

As you referenced one point one billion equity funding just done two weeks ago. You've now got the seven and a half billion dollars more of debt put to work, and it's about infrastructure. Seems to be the fact that you want to be doubling your.

Footprint when it comes to data centers.

You've already expanded into London outside of the US, You're going to be buying those chips the infrastructure, So where will you put the data centers first and foremost?

Michael, Sure, So.

A couple of things.

One is, in total, over the past twelve months, we've raised twelve billion dollars into COREWAK and that is representative of an incredibly capital intensive build out of infrastructure, initially across the United States.

But now, as you said, we're pushing into Europe. We've we've we've got too data centers that we're building in London, We've got.

A footprint in Spain, will be up in the Nordics.

In total, we'll have twenty eight data centers by the the end of this year that we will be providing our clients infrastructure from. You know, we try to build our data centers approximate population centers. You know, think to like as the you know, the NFL strategy, you know, in terms of trying to put our data our data centers so that they are relatively low latency providers of infrastructure. But you know, as I said, our footprint is getting much larger very quickly. And you know this, this this pool of capital here is seven and a half billion, is really focused on the physical infrastructure that we have to build in order to deliver our products to our clients.

Michael, I think a lot of people are really starting to become concerned or at least inquisitive about energy and power consumption. Have you a clear strategy for energy and power sourcing and all the geographies you've just outlined, Yeah, we do.

And it's a work in progress.

You know, the rate at which we're scaling, we are continually addressing that. My background is actually from energy, and you know that's where I grew up, and prior to that, I really focused on environmental commodities, and so it's something.

That's near and dear to me. It's near and dear to the company.

We have an entire team internal to the company that are building a strategy we'll have in place by two thousand and thirty as we go through this rant. And so, you know, we understand that there is a moral imperative to take responsibility for the energy that is required to be able to deliver this type of resource to the world.

So what is it? Is it nuclear?

Is it just having to be more efficient with what you've got, go for more power efficient chips.

Yeah, So the answer is is, like so many things around energy is it's a combination of a number of things, right. So a great example is in the next iteration of our technology build, we'll be moving from air cooled data centers into liquid cooled data centers, and the savings that are associated with liquid cooled provide maybe thirty percent more energy efficiency within the data center because you don't have to run all the air fans, you don't have to move so much cooling through it. It's just more efficient. And so there'll be a significant step function.

That you will be able to achieve by just evolving the technology into the most modern energy efficient component.

The other thing to think about is from computational perspective, the the.

The hardware that that is being delivered, Yeah, right now is enormously more energy efficient per flop than it has ever been in the past.

I know somebody that will make that argument. Next week on Monday, I'm going to speak to Jensen Wang, Michael Dell, and Bill McDermott, all at the same time. The success of those companies, Michael, to which one is your fate most closely tied?

So look, you know we have a wonderful partnership with in Video.

You know they are absolutely at the epicenter of anyone's approach to building out the physical infrastructure.

For serving the AI markets.

That is a reality of where we are right now and will be for for quite a while.

You know, Michael dell.

Is is you know, del is an extremely important partner of ours there. You know, we require them to be able to build, uh the infrastructure that that incorporates the the the the GPUs that we use, and so you know, we we are you know, working with with with many partners across the space.

Are you too dependent Michael though, Are you too dependent on a video?

Uh?

So the world is dependent on in video at this juncture. Their technology is defining the space, and so we work with them because our clients demand the technology that they drive and deliver into the market.

No I m D not any of us.

So so we we we look at all different types of silicon, We look at all different types of solutions, but our clients have clearly indicated that for the time being, the type of.

Silicon that they require to build their products, to build the artificial intelligence that's changing the world is currently being driven in large part by the Nvidio infrastructure.

Well, the share price reflects at core Wee've CEO Michael and Treta, thanks so much for coming on to talk about.

Your own funding.

I mean, while coming up, we're going to be hearing from the Salesforce CEO Mark Benioff about the future of artificial intelligence.

Who'd have thought it? This is Bloomberg Technology.

In an exclusive interview with Bloomberg Salesforce CEO Mark Bennioff suppose to us about working with activist investors, competition with service Now, and his outlook for the future of artificial intelligence.

Listen to this.

I think I might be one of the few CEOs that actually really enjoyed working with these activist investors. I had never heard so many great new ideas in my career, including such out of the box thinking and look, we were able to really transform and evolve Salesforce over the last year, and you can see it with our incredible financial results that we had last year and our idea that we're able to continue to move forward with these incredible new characteristics of our company and our last earning result we'veven talked about that we've started to create a dividend. That's something that was beyond my imagination even just a few years ago. So it's exciting to be the number one CRM to help companies connect with our customers in a whole new way. Right now, we're about to enter an incredible new world, which is the world of artificial intelligence and how it's going to transform these customer relationships. And I think we're about to see some technology that we never thought we'd see in our lifetimes. We're going to see just some incredible new ways to run our businesses.

Competition and CRM is feerce mark. You've got Service now trying to poach a bunch of salesforce employees. I believe they stopped using Slack after you bought it. They're trying to build more of a consumer brand. They started their own trailblazer program. Are they trying to pick a fight with you?

Well, they're an interesting company, you know. I just think they need to be careful. They might be getting a little ahead of their skis. We just replaced them at Disney. Of course, we already had run Disney stores and Disney guides in the Park, and we had done a lot of things with Disney with their customer relationships. But I think everybody knows that when they went to have Disney Plus and wanted to have a call center, and they chose that company. Well, unfortunately, Salesforce had to come in and rescue the entire operation and rebuild all of the customer success and call centers for Disney and which was at that point had been called out as a marquee customer of their as well. Salesforce is actually a tremendous company that does real customers and delivers solutions in sales service marketing for so many great companies around the world. Now obviously standardized the Disney, but for so many other or great organizations, banks, insurance companies all over the world. And I think we're doing pretty well on.

Our own iding talk coming from the Salesforce CEO Mark Benioff as if you expect anything less.

Meanwhile, the Senate's bipart of some AI.

Working Group finally released is AI roadmap this week, but it's getting some mixed reactions from civil groups, for example, who feel that the industry is playing.

An outsized role in shaping this legislation. Let's dig deeper with all of it.

Linda Moore is with US president and CEO of tech net, which represents bipartisan network of Innovation economy, CEOs, senior executives like the open aiyes of this world and Linda, I can imagine that thus far, what's being said, the thirty two billion dollars of investment coming for AI. The focus on innovation is music to your ears. But are you listening to what the civil side of the equation is and the fact that they feel that regulation and god rails aren't coming soon enough.

Yes, I understand, and they were involved in all of the AI insight forums that were held in the US Senate, and I'm sure their voices will still be heard as we go through the process. One thing that I think that they need to understand and the public should understand is last summer, these big AI companies in America made voluntary commitments with the White House to secure the systems to mitigate bias, all the risks and harms that can be anticipated, and they also went beyond that to make their own internal evaluations on all the risk mitigation that need to be done.

This will go through a committee.

Process in the US Senate and also in the.

House, and everyone's voice will be heard, including civil society and our companies. The tech companies in the US are working very closely with them and want to address all their concerns.

Apologies for the sneeze to our Bloomberg technology audience around the world. It's allergies season, but I've recently discovered flow nase.

Other products are available.

Linda Caroline summed it up perfectly earlier when we were talking about Chuck Schumer. There's a lot of speak coming out of DC, but it's basically thought leadership. It's not substantive, codified rules or way forward with AI. When do we start seeing some concrete action.

Well, we already saw concrete action just this week. On Wednesday, the Senate Rules Committee passed three bills related to the use of AI and elections. Eighteen states have already done that, and there will be another hearing on AI policy next.

Week in the US Senate.

So I expect some of this to move pretty quickly. There are other committees that will.

Take a little bit more time, but I think you'll see pretty expeditious action here in the next few months. I can't say that every single part of AI policy this reflected in the roadmap will be addressed, but I think that they'll make good progress.

In the next few months.

I've been really pleased to see that AI is an area of great curiosity and cooperation across the aisle. We see such a partisanship in DC right now, and that's another case with AI policy. We see people working together and that's really great to see.

Tech that President CEO, Linda Moore, we really appreciate your perspective and analysis. Thank you so much. Coming up on Bloomberg Technology, we're going to be joined by the CEO of Visco. Remember Visco, the company reached two hundred if well exactly it reads two hundred million users worldwide. Talk about photos, talk about their turnaround.

That's coming up next. This is Bloomberg.

Visco, a platform for photographers and visual storytellers, just announced first time profitability.

Under its new leadership.

But it's also a mass two hundred million users worldwide. I want to dig into that with Visco CEO Eric Whitman joining me here on set in San Francisco. So our producer John Highland was reflecting that, like in the early days of Visco, part of it was the technology offering right specific filters, photo editing, and imaging. Two hundred million users is a lot. The question is how they're using it, Are they paying users, where are they and principally what are they using it for?

Yeah, great question, Thanks for having me on again too. Yeah, you know, I think Visco has had a very long journey. It's been around for ten years and we've seen multiple versions of the company. It's really started by creators for creators. So these were photographers, ad agency folks who are really trying to support more people like them. And you know, for a lot of these users, right, they come to Visco for the tools, for the looks. They come because they're trying to get a certain look and Visco is a really easy way for them to do that. What we find though, is people come for the tools and they ended up staying for this really healthy creative community where people can get to meet other people, get inspired by their work, collaborate on other projects. And that's what we're finding is where Visco is really sticking for a lot of folks. And as we've been making our transition more as a business to support more of those serious creators like photographers, they're staying around for more of that.

Of those two hundred million, how many of them are a paying customer?

Will subscribe it in some form?

Yeah, so pay we primary our business models primarily subscription, primarily membership, so it's a fraction of that two hundred million. And where we're seeing most of our growth is actually with a professional tier, which we just introduced a year ago.

Okay, and I'm assuming that the professional is more opportunity not only to be seeing business done between brands and photographers, but also you taking yet further opportunity to boost revenue.

How do you do that?

Yeah?

I mean first is really spending some time listening to our customers, and what we're finding with a lot of them, especially pro photographers, is it's increasingly difficult for them to promote themselves, to find work to be discovered by brands or other potential clients, and especially with traditional social media and the algorithm's changing, where it's becoming increasingly harder for those people to be discovered.

There.

What Visco is doing is we're providing a great way for these people to create and express that creative identity and then be discovered by other people. And in our recent introduction of Visco Hub, which is this is a very smart and powerful AI driven engine that allows people to get discovered by brands and other potential people who want to hire them.

Where are you, Eric?

Though?

In terms of those two hundred.

Million, how many are actually just people in gen Z millennial wanting a different type of social media. That's how you initially catalyzed growth. You were an alternative where you didn't want to be garnering just likes and the anxiety that came with that. Do you benefit from the backlash that we can still see and the push out potentially of TikTok?

Yeah.

I still think that there's a lot of people who come to Visco because they want that safe place to engage and connect with other people.

We get over a million.

Signups a month.

Organically, we don't do any paid advertising, and this is something that I think many people come to Visco for.

However, that's not our focus.

We do find that a lot of gen Z who want to increasingly become professional creators or professional photographers themselves. They come because they.

Quick carry So I think there's a lot of skepticism about two hundred million, and so Visco uses two hundred million of view around the world which have a camera. I'm looking at If you are a Visco, use a contact us. I'd like to hear from you. Caaren mentioned one TikTok and one million on board a month.

Are you onboarding from anywhere? Specifically? It's organic.

I mean a lot of people are just right now.

They've got to be coming from somewhere. It's a battle for eyeballs. Yeah.

The biggest, the biggest place we're finding these customers is actually coming from Instagram. So that's our biggest referral source is people who are coming over from Instagram. Second is people just finding Visco on the web. They're looking for alternatives. They are looking for places where they can express themselves creatively in a healthy and authentic way, and Visco is that place fascinating.

Risco CEO Eric Whitman on being a bit dea positive on a million people adopting your platform every single month.

We thank you for talking us through where they're coming from. Now.

That does it from this edition of Bluebod Technology, and what a week it has been, and we brace ourselves from an amazing conversation come Monday, ed.

Yeah, yeah, just an incredible week.

You know, earnings AI it all continues, and it does continue Monday.

Thank you know.

I'm having this big conversation with Jensen Wang and Mike Michael Dell recap today. Though we cover a lot of ground, you know where to find the pod. Thank you to everyone that tunes in, and thank you to those who listen to the podcast.

That's where you can see it and hear it. This is Bloomberg

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