April 26, 2024 • 41 mins
Bloomberg's Caroline Hyde and Ed Ludlow sit down with Intel CEO Pat Gelsinger as shares fall on its tepid outlook. Plus, AI demand sends shares of Microsoft and Google soaring after strong earnings results. And, Uber-backed Lime expands its fleet of e-scooters globally.
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:08):
From Mahard.
Speaker 3 (00:09):
We're Innovation, Money and Power Collie in Silicon Valley, NBN.
Speaker 4 (00:14):
This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 5 (00:32):
I'm Caroline Heid at Bloomberg's World headquarters in New York.
Speaker 6 (00:34):
And I Amed Ludlow in San Francisco. This is Bloomberg.
Speaker 7 (00:37):
Technology coming up.
Speaker 5 (00:38):
Intel, it slides amid some tepid forecasts. We're going to
discuss all of that with the CEO, Pat Girl Singer.
Speaker 6 (00:45):
Plus Microsoft and Google posts strong results on AI demand
for cloud full coverage ahead.
Speaker 5 (00:50):
And Jeff Bezos and Andy Jesse deleting chats in an
anti trust probe. Now that's according to the FTC. We
bring you their response and the details right now.
Speaker 7 (00:59):
Caro, we start with semiconductors.
Speaker 4 (01:01):
We do.
Speaker 5 (01:01):
Let's dig in on ill things Intel. Blumberg's in king
was on, of course, across the earnings last night, discussing
with the business and look, this seems to be a
worry about forecasts.
Speaker 8 (01:12):
Q one actually pretty resilient. The forecast Teppid.
Speaker 1 (01:16):
Yeah, no, you're absolutely right. All of the divisions performed
roughly where Wall Street was expecting.
Speaker 2 (01:21):
If not a little bit better.
Speaker 1 (01:23):
The issue that investors had was with the forecast that
Partner's team put out there, and I was considerably lighter
than the consensus, and that was explained by Partner's management
team as that being related to a structural issue that
some of the excess demand that out there can't be
met because of an issue with a shortages of a
(01:43):
certain type of manufacturing.
Speaker 6 (01:46):
It's important about the server market. What did we learn
about Intel's place in the server market?
Speaker 1 (01:51):
Yeah? I mean, as I forwarded along to you and
analyst to put it this way, look at the server market.
The fund you know, the basic server market that Intel
has owned for many years just isn't growing at a
rate that it has in the past because spending is
going elsewhere. It's going into AI accelerators and that isn't
a big market for Intel yet.
Speaker 6 (02:12):
And finally, we should talk about foundry. Intel is unique
in that sense that it is pursuing two business models.
Speaker 7 (02:18):
What did you learn there?
Speaker 1 (02:19):
Yeah, I mean that's the big story, isn't it. That
you know, Pap is pursuing some long term fundamental changes
to the chip industry and if it plays out how
he projects, we're going to see a whole different Intel
and a whole different industry.
Speaker 2 (02:34):
But in the meantime, he's.
Speaker 1 (02:35):
Got a report quarterly earnings based upon what's happening right now.
Speaker 6 (02:39):
Bloomberg's in king who leads our semiconduct to coverage here
at Bloomberg. Thank you very much, And Caro, you know
it's the earnings context, right. They are numbers relative to
street expectations, But like every earnings, it's about.
Speaker 7 (02:50):
An outlook and the long term.
Speaker 6 (02:52):
The story with Intel that I think the market's seizing
on right now.
Speaker 8 (02:56):
The long term we want to dig into with a CEO.
Speaker 5 (02:58):
In the short term, though, we have to ignore the
market reaction and one point the worst sell off that
we've seen since twenty twenty July of twenty twenty. We're
now coming off of those lows ed but we're now
at the worst since January twenty twenty four. But just
to add to the fact that this is a company
that's lost a third of its market capitalization in this year.
Speaker 6 (03:14):
Alone, we know that AI is a complicated story. Yes,
AI accelerators, but the server market needs CPUs. It also
needs memory, which we discussed with Micron just the other day.
A lot of this is happening in parallel, and as
we learned with Microsoft and Google, some of the cloud
growth is not necessarily AI related. Data center infrastructure is
(03:37):
needed for non AI reasons as well. So let's try
and unpick what's happening in a name that, as you say,
is down. We welcome now our Bloomberg TV and radio
audiences worldwide, and joining us is the Intel CEO Pat Gelsinger.
A Pat, good morning to you and thank you for
your time. You know, the stock is down more than
(03:58):
ten percent, and we're kind of here again right where
there's the short term and the long term where you're
trying to convince investors of a return to technology leadership
and also grow a foundry business. Have you an updated
timeline and when you think you will achieve that target?
Speaker 2 (04:17):
Yeah?
Speaker 9 (04:17):
Thanks Ed, And obviously, hey, we delivered a solid Q one, right,
We met on revenue, We beat on earnings a bit
tep it in the first half, as we said, but
we see a lot of improvement as we go through
the year. And with that, obviously the foundry business, as
I would say, we're going to see progress in the
foundry business every quarter from now to the end of
(04:37):
the decade. It just gets better and better as we
move into our new technologies, you know, as we've said,
getting back to process leadership, which have better asps and
we can build better products with them. We win more
external foundry customers as our scale growth, and we also
get past this period where we had to invest to
catch up right and create the capacity for a decade
(04:59):
plus of under investment. So everything there becomes a tailwind
going forward. And we hit key milestones and one of
those I was very proud of just this week we
went to production with our first server part on Intel three.
The US is back to leadership process technology being manufactured
on our shores for the first.
Speaker 7 (05:18):
Time in a decade.
Speaker 9 (05:20):
So some key milestones, and I'll just say everything is
coming together as we would say, and we're very optimistic
that yes, in fact, we will deliver the foundry business
and the manufacturing capabilities as we've laid out for the company,
the industry, and the world Stiphil.
Speaker 8 (05:36):
Interestingly, anais over there.
Speaker 5 (05:38):
Twenty twenty four should mark the bottom in many aspects.
Speaker 7 (05:41):
Pat but they.
Speaker 5 (05:42):
Really want to understand the pace of the climb that
is necessary. How can you tell us about how quickly
you'll be able to scale that market share that.
Speaker 8 (05:52):
You're so far lost.
Speaker 9 (05:54):
Yeah, And you know, we look at Intel now in
these two different perspectives Intel products, and we expose through
our recast financials that we have a very solid, fabulous
business with healthy financials and we expect those to improve
over time. But the big story has been about exposing
the foundry financials and the losses associated with those. And
(06:15):
what we see is over the decade, you know that
we'll cross through profitability in the middle of the period
for that business as we get back to process leadership
and start to moderate the level of investment required to
go rebuild that decade of under investment. And as we
do that, if we would have that today, we'd be
(06:36):
more than double the earnings this year that we're forecasting.
So it becomes a huge positive lever for us. And
as I like to say, all of that's in our control,
the wafers, getting back to leadership, the product implications of it,
all of these things are our control, and it gets
better as we win additional external foundry customers.
Speaker 6 (06:55):
The link I think pat is that is about growing
market share a server to support the costs necessary for
the foundry business. You're asked an interesting question on the
call in the context of servers built on x eighty
six versus on based alternatives, And you gave a pretty
thorough explanation about the place of all of those particular
(07:18):
data center CPUs. But what I didn't hear was what's
happening out there in the real world. Where are data
centers being built and what are they being built on
right now?
Speaker 9 (07:28):
Yeah, and this is important because we've been at the
period now for a number of quarters where data centers
CPUs have been fairly tepid, and we do see that improving.
We had good improvement in the first quarter of the year,
and we expect that to continue through the year, and
you know, there's time for refrash in those data centers.
Speaker 2 (07:46):
But we're also seeing that the.
Speaker 9 (07:47):
CPUs now has head nodes for AI use cases. We've
posted some pretty incredible results that we can now run
seventy billion parameter models natively.
Speaker 2 (07:58):
On the CPU.
Speaker 9 (07:59):
I don't need accelerator. I can do everything on the
software stack that I already use inside of data centers.
And we're seeing that these power efficient products that we're
bringing to the marketplace, such as our Xeon six that
we just announced, are going to enable us to stabilize
and regain market share with much higher core counts. The
(08:19):
asps are going up very nicely on that through the year,
So we saw growth in Q one. We expect that
to continue through the year, and as we get to
the back half of the year, our Accelerator product line
with Goudy Xeon plus Goudy, we become, we believe, becomes
a very compelling solution for enterprise customers, and we have
quite a number of announcements of those this quarter. Customers
(08:42):
such as Bosh and Dell and super Micro all bringing
those into the marketplace, Roach and IBM, and eCloud partners
like Nahvor, the fastest growing cloud provider in Asia, all
of those coming alongside the Intel strategy.
Speaker 7 (09:00):
So we see that momentum.
Speaker 5 (09:01):
Building it momentum, and we want to just remind us
that we are with TV radio audiences. The CEO of Intel,
Pat Gelsinger, Pat on the momentum. Everyone wants to talk
about AI in all.
Speaker 8 (09:13):
Of its ways and means.
Speaker 5 (09:14):
You've been focusing in on an AIPC and I'm just
really interested in Ultimately you're going to be watch shipping
in excess. Originally forty million AIPC CPUs that's target for
twenty twenty four, But what's the demand like at the moment,
pat and what's the cost like.
Speaker 9 (09:30):
Yeah, And when we announced the category at the end
of last year, Carolyn, it was sort of like everybody says, Wow,
what's going on the AIPC And you're seeing a flurry
of interest of other people coming into that market. But
Intel unquestionably the leader. You're first to declare the market,
first to describe the use cases. And our first product,
Core Ultra, is having a very robust ramp into the marketplace,
(09:53):
and to some degree, I'm racing the catch up to
the demand. We're meeting all of our supply commitments, but
not all of the upside requests yet that we're getting
from customers.
Speaker 7 (10:03):
So this is very robust.
Speaker 9 (10:05):
We expect that we'll exceed the forty million units this year.
We'll be introducing our next generation product in the middle
of this year, so all of these pieces, we are
very optimistic. And you're seeing use cases and communications where
all of a sudden, I get summarization, contextualization, translation in
real time, all running on my PC. Developers, gamers, all
(10:28):
of these use cases are now becoming AI Enabled and
Intel leading the AIPC parade. It's a very exciting time
for I believe will be the biggest cycle of PC
refrash and expansion that we've seen in likely decades.
Speaker 5 (10:43):
Pat this is a conversation about your technology and about
ultimately your fundamentals of a business. I'm just going to
take a turn for a moment, and it's a sensitive question,
so I give you a moment to.
Speaker 8 (10:52):
Think about it.
Speaker 5 (10:53):
But giving your relationship with Israel and the fact that
you are one of the largest employers over there, how
are you currently feeling about Well, students in the United
States protesting against endowments being invested in companies that are
associated with Israel.
Speaker 8 (11:07):
At this moment.
Speaker 9 (11:09):
Well, we have been in Israel for forty years now
and it's been an incredible country for us, incredible innovators,
and extraordinary resilience by the Israeli people, and they continue,
despite the challenges of the war that's going on there,
(11:29):
to deliver against their objectives. So we're very committed to
support our teams wherever they are in the world that said, hey,
we seek peace, and we've been clearly emphasizing that we
need to find routes of sustainable peace in the region.
I've been supporting perspectives that reinforce that across the region,
(11:52):
and as we look across the world, we say, boy,
you know, there continues to be the turbulence. And fundamentally,
our strategy is around building globally rec zillient supply chains
that are balanced across the world. So our core strategy
is so emphasizing that there will be these challenges across
the world, you know, whether that's in Israel, Ukraine or Asia,
and we are committed to making sure that we can
(12:13):
support the global markets that we serve right with a
strategy that really was built for a turbulent world.
Speaker 6 (12:21):
Pat let's end on AI accelerators. Goudi is on track
for five hundred million this year, AMD's MI I three
hundred X will probably do three and a half billion,
and Nvidia with its generations will do forty billion. You've
said that choice is important and also the CPU is important,
and I accept that many share it, but do you
(12:42):
see a clear path where the numbers I just outlined
rebalance in your favor in the AI accelerator market going forward.
Speaker 9 (12:50):
Given the strength that we saw at our vision event
that we had, we had twenty plus customers coming out
publicly in support of our accelerator and our Z plus
accelerator strategy. We're really starting to see that pipeline of
activity convert and ultimately much of the activity that you've
seen so far on generative AI has been in cloud
(13:14):
training and now and I think the ultimate monetization of
AI happens as business deployments start to occur, and those
are the areas that we see strength. We launch the
open platform for Enterprise AI. How do we enable these
use cases inside of the enterprise, but in an open
architecture that many get to participate in. We announced the
(13:35):
open AI Networking, you know, from closed proprietary networking to
standard ethernet based scale up and scale out networking. We
announced that this quarter, and obviously the momentum that we're
seeing with Goudy, know, all of that half a billion,
almost all of it's in the second half of the year,
so you can see a very accelerated cycle, a lot
of enthusiasm for Goudy, you know, the unquestioned leader in
(13:58):
TCO total call the ownership for enterprises, building on the
Xeon franchise and the position that we have in the
enterprise and literally ISVs and cloud providers, but most importantly
enterprise customers seeing that value proposition. Yeah, we feel like
we're gaining a lot of momentum now in this category
and feel good about the potential for our AI everywhere AIPC,
(14:21):
AI Edge, AI Enterprise and AI cloud.
Speaker 5 (14:24):
Ending on an optimistic mote, we thank you so much,
Intel CEO Pat Gelsinger there on all things AI, all
things Intel numbers. Got to get back to those earnings,
got to get back to the new two trillion dollar
entrant Google Microsoft two shares absolutely popping higher after the
(14:47):
surge and.
Speaker 8 (14:47):
Cloud revenue those businesses.
Speaker 5 (14:49):
And fueled in part, I guess what booming use of
artificial intelligence services is helping deliver strong earnings results and
we want to get to it with Clearbridge Investments Senior
research analyst Hillary Frish, who just comment on the one
that's moving the most today and alphabet.
Speaker 8 (15:03):
Parent at Google.
Speaker 5 (15:05):
Interestingly, cloud always been seen as the laggard there, but
infusing artificient intelligence is helping bring about market share, particularly
with startups.
Speaker 10 (15:12):
Indeed, it is thanks for having me cure line.
Speaker 3 (15:15):
Yeah.
Speaker 10 (15:16):
Google is well known for having a strong presence among
startups tech companies and they have among the best AI
assets around historically, and so they're going to benefit from
this along with everybody else. And we've seen two quarters
of improvement at Google Cloud now, and.
Speaker 5 (15:32):
I think many were waiting for Okay, you've got these offerings,
how are people using them, adopting them and actually boosting
their own productivity? Microsoft shone a light on the fact
that what is It's like sixty five percent of the
Fortune one hundred are using their Azure Cloud at the moment.
I mean, they must be just ripping away market share
from everyone else. Even though cloud is still good for Google,
Microsoft still firing on all the senators for you.
Speaker 10 (15:55):
Indeed, it is, in fact, those cylinders are just really
starting to get going. It's interesting because Microsoft is absolutely
benefiting from a share perspective due to their leading position
in AI across all their businesses. Certainly cross cloud and
I view AI as ultimately, you know, an ultimate contributor,
but it's definitely an accelerant to cloud migrations.
Speaker 7 (16:16):
Hillary, good morning, It's ed in San Francisco.
Speaker 6 (16:18):
The share reactions of each are interesting, you know, alphabet
more pronounced when I talked to Ruth poor Out on
the phone last night, about cloud.
Speaker 7 (16:26):
She basically said AI.
Speaker 6 (16:28):
Solutions did make a meaningful contribution to that that twenty
eight percent cloud growth year on year, but she didn't
put a number on it. Now, Microsoft and amy Hood
did put a number on it. They said thirty one
percent asure growth, seven percent of which came from AI.
Speaker 7 (16:43):
So really interesting share reaction.
Speaker 6 (16:45):
I put it to you that Alphabet probably isn't jumping
as much on that cloud narrative as it is the
sweetener of a dividend.
Speaker 8 (16:55):
I think you're right about that, Ed.
Speaker 10 (16:57):
I think investors were pleased to see the results across
the board.
Speaker 8 (17:01):
I think they breathe a.
Speaker 10 (17:02):
Sigh of relief that cloud accelerated, that all businesses accelerated
quarter over quarter. But the big piece of new information
here was was operating margin improvement and commitment to that
through the year, as well as the dividend. And that
can draw a whole new class of users. But importantly,
it signals a shareholder friendlier stance than we've seen from
(17:23):
Google historically.
Speaker 6 (17:25):
Hillary, do you believe now through the lens of Alphabet
and Microsoft earnings, that corporate America is actually spending on
and using generative AI.
Speaker 8 (17:37):
I believe they are.
Speaker 10 (17:38):
I believe most of corporate America is experimenting with AI
and testing generative AI, and in Microsoft's are cloud and elsewhere,
certainly in Amazon and Google as well, there are some
early adopters who are starting to get to some level
of scale. Microsoft seven points of AI contribution were good.
I would say they were generally in line, though, but
(17:59):
Mycrosoft did signal on their call that they were actually
a capacity constrained, alluding to the idea that that number
would have actually been higher were it not for those constraints.
I still believe it's going to be starting in the
second half where we see that Microsoft inferencing base of
users doing inferencing on their Azure Cloud really broaden out
and start to drive that number.
Speaker 5 (18:20):
I want to dig into basically the broadening idea.
Speaker 8 (18:23):
Here we're talking about two names.
Speaker 5 (18:25):
That have already done phenomenally well on the hype around AI.
We're waiting for the spin over effects. Now you shine
a light on certain companies that I keep an eye
on because they're New York based Mongo dB.
Speaker 8 (18:34):
We also think about what data dog is up to.
Speaker 5 (18:37):
How are these companies going to benefit from the adoption
of jener to AI.
Speaker 10 (18:40):
So these companies will benefit the whole consumption complex, Cloud
Consumption Complex, Mango, dB Snowflake, Data Dog, the.
Speaker 8 (18:49):
First and third being in New York.
Speaker 10 (18:50):
They'll benefit with a lag what they will. So I
agree with your Caroline that we're not seeing it on
a broad based basis yet there are select few who
are actually going to benefit. But what they will benefit
from is the absence of the extreme cost optimization we
saw last year, companies going on a buyer strike in
terms of new projects. They're going to see the flow
(19:11):
through of what's effectively a cyclical upturn in cloud consumption.
And we actually heard that from Microsoft last night that
companies are commencing new projects, that they're starting to do things,
they're taking out mothballed projects and bringing those back. So
I think that's a positive for this whole group.
Speaker 6 (19:28):
Hillary, we're down week one of megacap Tech and I'm
bracing for week two. What do you think is the
kind of blanket takeaway of this seven day period so far?
Speaker 10 (19:40):
I'd say overall cautiously optimistic. Again, I stick to the
names where expectations are low, valuations are reasonable, and companies
have idiosyncratic drivers. Microsoft with AI and share gains the
cloud consumption complex with the A and some negatives. Amazon
(20:02):
should show some pretty good results based on the fact
that they have a lot of tech companies and startups
on their platform too who are experimenting with AI. But
it's really company by company and enterprise budgets overall remain
somewhat constrained in first half. I'd experience more of that
opening up in second half.
Speaker 8 (20:19):
Lud Fresh all is.
Speaker 5 (20:20):
So good to get your expertise on the time that
we have earnings and all the time actually clearbridge investments.
Speaker 8 (20:25):
We thank you for being here and what have you got.
Speaker 6 (20:28):
Let's get some news in talking tech and first up
food delivery service Metwan is planning to launch its international
platform in Reard, its first location outside of China, according
to sources involved in discussions. The companies looked into expanding
in the Middle East for months and could launch as
early as a few months from now. The move comes
as Chinese companies seek growth abroad to combat a domestic slowdown. Plus,
(20:52):
US Secretary of State Anthony Blincoln and Chinese President Jijingping
met in Beijing. She's China. She issued a warning to
blink in against quote vicious competition between the two countries,
saying quote, China and the United States should.
Speaker 7 (21:05):
Be partners rather than rivals.
Speaker 6 (21:07):
The two day meeting composed the dialogue on trade, geopolitical tensions,
and even an announcement of AI talks that will begin
in the coming weeks. And finally, Huawei's latest smartphones are
said to be utilizing an updated version of its made
in China chips. According to an independent analysis, the purest
seventy phones sport a kirre In ninety ten processor, which
(21:28):
is a new version of the nine thousand chips that
alarmed Washington officials due to their seven nanimeter tech, long
thought to be beyond China's capabilities. According to Jeffreys, the
Pure seventy smartphones sold out within two days of being launched.
Speaker 8 (21:43):
Carol, fascinating.
Speaker 5 (21:45):
Coming up, Look, we're going to talk FTC allegations against
the Amazon founder Jeff Bezos and it's currency Leo Andy Jesse. Apparently,
according to the FDC, they've been destroying messages amid an
antitrust probe. We'll get you the details and the response
from Amazon next you more just of course happening with
dark Trace today, UK listed company up sixteen percent. Why
the UK cyber Companies actually agreed to sell itself to
(22:07):
a private equity firm Tomo Bravo for an equity.
Speaker 8 (22:10):
Value of five point three billion dollars.
Speaker 5 (22:12):
That's basically a twenty percent premium. So still a little
bit of caution in the market that this deal will
get done. Remember tom O Bravo actually walked away back
in twenty twenty two for talks to buy dark Trace.
But really interesting and this is a company, of course
in somewhat an interesting relationship with the battle British entrepreneur
Mike Lynch who is on trial for Ford. Here in
the US, we shine a light on dark Trace today.
(22:32):
This is Broome, their technology.
Speaker 6 (22:45):
Welcome back to Bloomberg Technology. Ed Ludlow in San Francisco.
Speaker 8 (22:48):
Aaron Hyed back in New York.
Speaker 6 (22:50):
Let's get to one of the top stories on the
Bloomberg terminal and dot com. Top Amazon executives, including founder
Jeff Bezos and CEO Andy Jesse destroy Lloyd's text messages
discussing business, according to allegations by the FTC, A raising
evidence the agency could have used in an antitrust case
against the retail giant. I want to bring in Bloomberg's
(23:12):
Mike Shepherd, who leads our coverage of the kind of
intersection of tech and politics. Now, Amazon is pushing back
against this FTC allegation with some force. We will get
to that, but we're talking about communications made by executives
on the Signal app. Mike explain it to us, well, I.
Speaker 3 (23:33):
Think it's important to turn the clock back a couple
of months to September, and this is when the FTC
filed its initial anti trust case against Amazon, and they've
gradually been increasing the pressure on the company in this
particular matter, in this lawsuit.
Speaker 7 (23:49):
In November, they had.
Speaker 3 (23:51):
A less redactive version of the case released to the public,
and that indicated that they had concerns executives have been
concealing some information, but they didn't name names.
Speaker 7 (24:02):
Today.
Speaker 3 (24:03):
We learned last night we're discussing today the latest and
that is that they are naming names, including CEO Andy
Jase and the founder of Jeff Bezos. And that indicates
the kind of pressure that the agency is putting on
the company, and it echoes what this broader effort against
big tech by anti trust and forces here in DC.
Speaker 5 (24:25):
Mike, turn the clock back even further, and you go
to twenty nineteen, when Jeff Bezos indeed made clear and
evident that his phone had been hacked, he felt and
that is the argument as to why executives moved to
signal and these automatic discussions that can delete themselves.
Speaker 8 (24:42):
And I'm noting.
Speaker 5 (24:43):
That Amazon has currently said, Look, the FDC has a
complete picture of Amazon's decision making in this case, including
one point seven million documents from sources like email, internal
messaging applications, and laptops, among other sources, over.
Speaker 8 (24:55):
One hundred terabytes of data.
Speaker 5 (24:58):
What more needed they do to prove that they weren't
using signal for well, conversations they didn't want seen by
the FTC.
Speaker 3 (25:07):
Well, you know, the FTC is actually alleging that maybe
there was more that they needed to know about.
Speaker 2 (25:14):
Maybe there was more in.
Speaker 3 (25:16):
Those conversations that disappeared that they don't have access to
and are not privy to in the case yet, and
that they should therefore be able to see to have
a clear and complete picture. But Amazon is saying that, look,
you already have enough, You have more than enough. Then
you need to be able to carry on your work here.
(25:36):
And I'm glad you brought up, Caroline, the point about
twenty nineteen, because of course that's when Jeff Bezos's texts
were purportedly hacked, and his desire to maintain some degree
of privacy is another driver here, and so the company
is saying, look, we've done enough, and also we had
cause to try to protect some of these communications against
(25:59):
people on the outside.
Speaker 5 (26:01):
Mike Shepherd, you always sum it up so beautifully, Thank
you very much. Indeed, of all things FTC and Amazon.
Speaker 7 (26:06):
Today.
Speaker 8 (26:07):
Meanwhile, a shift gears a little bit. Elon Musk's artificial
intelligence startup.
Speaker 5 (26:11):
Xai parently is nearing a deal to raise six billion
dollars in funding, and that would value the company at
eighteen billion. It's all according to a person familiar when
the matter. Bluembg's Max Chafkin all in on Elon Inc.
Joins us now, and I'm interested by the fact that
this year at mount they're raising versus the capitalization of
the business. But we did know they were going for
funding to beef up XAI.
Speaker 4 (26:31):
Well, here's the thing.
Speaker 11 (26:33):
Elon Musk was able to kind of spin this open
ai competitor. This is this company basically it makes large
language models very similar to open ai.
Speaker 4 (26:42):
He did this kind of quickly and with a very
small staff.
Speaker 11 (26:45):
But the thing is to keep these models training, you
need an insane number of very very expensive GPUs.
Speaker 4 (26:52):
These are the graphics chips that artificial intelligence companies use.
Speaker 11 (26:55):
Elon Musk on a x spaces interview last month's said
that they were using twenty thousand already of these Nvidia
each one hundreds. They would need one hundred thousand of
these chips. So this is you know, that's an expense
that's in the hundreds of millions of dollars, if not
the billions of dollars.
Speaker 4 (27:13):
So that's why he's raising this money and why they
need it.
Speaker 6 (27:17):
There is a little backstory of all of this that
the Zett, Chapman and I have. Bloomberg News reported on
January nineteenth that Xai was in talks to raise funds
at evaluation between fifteen and twenty billion dollars. Eighteen billion
is pretty much between fifteen and twenty billion, and Elon.
Speaker 7 (27:34):
Must denied it.
Speaker 6 (27:34):
He said false, fake, and then the ft followed up
with the same report and he said fake. And then
the information came out yesterday with the report which Bloomberg
then reported too, And he hasn't said anything yet. The
main thing is irrespective of what Elon Musk says. He's
got an edibility to raise money for pretty much any
project he's doing max well.
Speaker 11 (27:53):
And it's not that he only has an ability, but
he has to raise money here because you know, Elon Musk,
as many people know, is you know, very wealthy, right,
but he is not very liquid. Most of his wealth
is tied up in Tesla stock, SpaceX stock. He does
not have billions of dollars. He spent a lot of
money to buy Twitter turn it into x. He does
(28:14):
not have billions of dollars rattling around his pocket without
selling some assets, which would you know, create some disruption
within his empire. So he needs this outside money if
he has any prayer of sort of catching up to
open Ai. And from the point of view of investors,
you can see why they're happy to give it to him,
because Open Ai anthropic.
Speaker 4 (28:33):
These companies, you know, there are some.
Speaker 11 (28:35):
Real questions about the business models, but they have been
able to achieve huge valuations, a lot of adoption. You know,
taking a flyer on Elon Musk and the hottest category
in business makes a lot of sense if you're these
venture capitalists who are considering this.
Speaker 6 (28:48):
Deal, and to his credit, a lot of these projects
then do tend out to be influential, and it's a
lean team at XAI, and it looks like they're making
progress doing best match Taffick and Happy Friday to you.
A quick news story that we're looking at shares of
IBM a little lower down a percentage point, but they're
backing a project in Canada seven hundred and thirty million
US dollars one billion Canadian dollars. This is for semiconductors,
(29:11):
but in the context of what IBM is involved in,
which is packaging and also testing labs, it's.
Speaker 7 (29:17):
An interesting bet.
Speaker 6 (29:18):
We haven't really talked as much about Canada in the
context of, well, are they going to be on shoring
making some kind of domestic effort when it comes to
semi conductors like the United States are, Well, IBM's doing
something to the tune seven hundred and thirty million dollars.
Speaker 7 (29:34):
We will be right back. This has Bienbo Technology.
Speaker 5 (29:51):
Cybersecurity firm Rubric remember jumped yesterday on its IPO day.
Speaker 8 (29:56):
And well it's holding on to its gains.
Speaker 5 (29:58):
Remember it about seven hundred and thirty two million dollars on.
Speaker 8 (30:02):
The back of that IPO.
Speaker 5 (30:03):
One of the key backers long term backers was gray
Lock PRIP please to say that we have grey.
Speaker 8 (30:07):
Lock partner asheme Chanda with us and.
Speaker 5 (30:09):
Ashme you there stock exchange, ringing the bells, celebrating and
how does it feel ultimately to see an early payoff
like that? What was the signals that you got early
on to know that will go public.
Speaker 8 (30:22):
And do so so well?
Speaker 12 (30:23):
Yeah, so now thanks so much for having me. You know,
the hounderstand sor of when you back a company very early,
you don't really fully know what lies ahead. I'd say
this is this company is really a story of an
exceptional leadership team, exceptional leader targeting a very very large market.
So I think early on in the company's history it
was very clear like the size of the markets that
(30:45):
they were targeting, you know, our market sizes that most
companies don't really go after, and then the quality of
the people.
Speaker 7 (30:49):
Yeah.
Speaker 5 (30:51):
And I think what's interesting more broadly about the direction
of travel with Rubric is that vantage they popped, they've increased,
but also that there are other cybersecurity companies I'm sure
in your portfolio eyeing the market, but there's also the
juggernaut that is Microsoft. And the same day that they
went public, Microsoft came out with its earnings saying, look,
we're still making strides in cybersecurity, all interlaced with generator
of AI. How much room is that for this sort
(31:13):
of element of competition.
Speaker 12 (31:15):
Yeah, I would say, you know, so cybersecurity is a
you know, is a secular kind of growing market. These markets,
you know, have become very, very large and today, you know,
it's one of the most important parts of intermission technology.
Most large and mid sized companies spend anywhere from five
to ten percent of the IT budget on cyber and
so there's a lot of room for multiple providers, you know,
(31:36):
provide different pieces of the stack. And then and then
and then Rubric is an important partner with you know,
Rubrick and Microsoft have a strong partnership together.
Speaker 6 (31:46):
Ashan, I'm really really interested in Rubik's very close relationship
with Microsoft. There's a financial element to it. But given
how AI in all of its guys is playing out,
I just wondered if you had a particular thesis on
how that relationship continues.
Speaker 12 (32:03):
Yeah, I would say, it's it's, it's it's it's a
multifaceted relationship, but fundamentally you know, what what Microsoft and
Rubric are trying to do is really provide customers with
cyber resilience, so, you know, and just bring different pieces together.
Speaker 7 (32:18):
So what's next? A gray lot?
Speaker 6 (32:20):
I mean, you have a lot going on, you would claim,
I think, and and many of your colleagues who said
on this show that you guys early on generative AI
and organized on generative AI, wondered if you've kind of
sharpened your focus on any other areas in particular.
Speaker 12 (32:37):
Yeah, I would say, you know, so I've been a
greylock now just a little over two decades. It's never
been a more exciting time to be in venture capital,
just with everything going on with Jene AI. You know,
the I'd say that, I'd say the average day in
the life of a VC has it's really become an
AI job. And you know, we think of it fundamentally
at three layers, kind of the foundational layer at the
lowest level, enabling infrastructure in the middle, and then applications
(33:01):
at the top. And you know, it's say, in particular
for VC backed startups, there's a lot of opportunity around
enabling infrastructure and also in applications. You know, I think
it's a safe statement to say that over the coming
five to ten years, you're going to see lots of
applications completely reinvented, you know, with new workflows, you know,
leveraging generator AI.
Speaker 5 (33:22):
And you've got companies in the portfolio already doing that,
and you can name some of the other key AI
companies that you might want to anticipate coming to the market,
I'm sure, But what about the companies that aren't in
inherently AI focused and just tried to become So how
do you advise those?
Speaker 12 (33:38):
Yeah, I think I think for I think any company
that started let's say more than three or four years
ago there at risk of being completely disrupted by a
new startup. So I think it's as a company that's
you know, that's that has a product line that whether
whether it's a publicly traded company or in newer startup,
they have to really go in AI enable. They have
to go and look at the application of AI, you know,
(34:00):
to their product line and you know and kind of
re imagine you know, other ways and either you know,
in a copilot mode or really you know, the more
important trend, if you know, if you take him the
one year review from here is it's all about asient
frameworks and agentic approaches. So most companies you know, really
should be looking at like, you know, how do these
technologies really apply, you know, to the product area.
Speaker 6 (34:24):
Assuming there's one thing Caroline and I have learned in
the last I say, twelve months or so, it's that
not just a company is being founded incredibly quickly, but
a platform or products being built very quickly. You guys
have this EDGE program where that basically is what you
facilitate an idea from an individual through to a business quickly.
(34:46):
Just explain the process and how that's playing out.
Speaker 12 (34:49):
Yeah, I know, thanks for asking about that, Ed. So, yeah,
we have a bespoke company building program at Graylock.
Speaker 7 (34:55):
It's called Edge.
Speaker 12 (34:56):
We're very selective about you know, who we pick in
the program, and uh, you know, once we do mutually
once an entrepreneur in Graylock, you know, kind of mutually
select each other. We basically work very closely with engineers
and founding teams all the way from market segmentation to
product strategy to insertion you know for initial product, working
(35:17):
with initial customers, building customer advisory boards. Then you know,
over time helping you know, recruit go to market. So
it's a very beastpoke program. And you know many years
ago Palo Alto Network start in our office through that,
you know, through you know, through that approach. You know
another one that when public started through that approach is
Zoomo Logic as well.
Speaker 3 (35:35):
Uh.
Speaker 12 (35:36):
And you know, more recently, you know a company called
Abnormal Security started in that process as well. They've rapidly
grown to become a late stage company. And we have
another one in stealth mode today, saying the San Francisco office.
Speaker 6 (35:48):
You know in that program, shame Shan now Gray Lot partner.
It's great to have you on the program out of
New York. We really appreciate it. The Operator Have Shared
Electric Bikes and Scooters line, which is backed by the
likes of Uber, is planning to invest more than fifty
(36:10):
five million dollars this year to expand its fleet globally.
Joining us now is the line CEO Wayne Ting and
Wayne I find this really interesting because it's not just
San Francisco. The story of and relationship of micro mobility
here is well told, but you're looking at other regions
around the world. Which region is most receptive right now
(36:31):
to adding more to the microability offering?
Speaker 13 (36:34):
Ed Thank you for having me. We actually see demand
from all of the world. Line is today in thirty countries,
five continents, three hundred plus cities. And the reason why
cities are so interested is because the biggest challenge of
our time is the challenge of the climate crisis. And
the number one source or corbon pollution in Europe and
in the United States is from transportation. The vast majority
(36:56):
of that is from personal cars and trucks. And if
we're going to need the challenge of climate change, that
we must transition away from cars and adopt more green
transportation alternatives like bikes and scooters, which is why I
think you're seeing cities all around the world embrace microability
as a way to reduce their reliance on cars.
Speaker 6 (37:16):
Wait and I told our audience who are coming on
the show, and I put a poll out there to
ask do cities need more electric scooters and bikes? The
majority of respondents said no. Yeah, well almost the majority,
and in some cases they voted for few. There's still
sort of frustration and skepticism and disinterest out there.
Speaker 7 (37:37):
How do you overcome it?
Speaker 13 (37:40):
I think the best way we need to earn the
trust of residents and city governments in order to operate.
Speaker 2 (37:47):
I think the best way to.
Speaker 13 (37:48):
Ensure that is to make sure that our scooters and
bikes are parked responsibly, that we have a great safety record,
which we do that we continue to invest in technology
and line builds and r and ds every scooter bike
that we put on the street to ensure that they're
the safest, best ride on the out there. And when
we continue to deliver an excellent service, we will continue
(38:09):
to hopefully build that trust with cities to expand.
Speaker 8 (38:12):
Waan, you're talking to a bike addict here.
Speaker 5 (38:16):
I actually prefer the non electric ones than the electric
ones here, but I do it a lot here in
New York City.
Speaker 8 (38:21):
I do it when I'm over in London.
Speaker 5 (38:22):
I use the Uber apt to get what you're currently
seeing on your screen the line bike. But they're a
mess and they're everywhere, and I think that's a key
concern here. How do you ensure do you have to
spend more on infrastructure to ensure that people do have
places to park them? What is the responsibility of you,
Visa VI, the overall government right now?
Speaker 2 (38:38):
I think it's it's a joint effort.
Speaker 13 (38:41):
So you mentioned London, So London has two.
Speaker 2 (38:45):
And a half million cars.
Speaker 13 (38:46):
There are one hundred times more cars in London than
there are electric e bikes, and each parking spot can
fit six to eight e bikes. So if you say
there's over abundance of something, there's an over of cars
and London there's you know, if anything, if we can
even take a tenth of the parking spots of London
(39:07):
and turn it into bike parking corrals, we can easily
solve any parking issues we have in London. So we
have to continue to work with cities and city governments
the makeage infrastructure transition, to build more bike lanes and
protective bike.
Speaker 2 (39:20):
Lanes, and to build more places where you can safely
respectfully park your e bikes.
Speaker 5 (39:25):
You're someone who's building out spending money while you're also
thinking about profitability. And I know you've been thinking about
a bit dar positive.
Speaker 8 (39:32):
For a couple of years now.
Speaker 5 (39:32):
You probably took a leief out of the book of
Uber having worked so closely with Daara Costa Shah and continuing.
Speaker 8 (39:37):
To work with Uber at line now.
Speaker 5 (39:38):
But I'm interested as to what ultimately the goal is
at the moment you have to remain profitable in this
current environment.
Speaker 8 (39:44):
Is that what the VCS are asking.
Speaker 13 (39:47):
Yeah, so, Caroline, as you point out, twenty twenty three,
Line grew by over thirty percent and hit over six
hundred million dollars in gross bookings. It's actually a third
year of thirty plus percent growth in a role. More impressively,
our profitability five x to nearly one hundred million dollars
and adjust the ebitah, and that is actually what's enabled
(40:08):
us to invest fifty plus million dollars into.
Speaker 2 (40:11):
Scaling e bikes. And I absolutely think.
Speaker 13 (40:14):
That today's public markets demand sustainable and profitable companies, and
Line is showing that we can do it in a
very tough industry. As we continue to expand our profitability
and profit margins you go in public scene, well, I
think that depends on both the macro markets and our
internal business results.
Speaker 2 (40:35):
What we can focus on is making sure that.
Speaker 13 (40:36):
Line continues to grow rapidly and continues to expand our profitability.
The macro market still, I would say a little bit iffy,
Like you guys were chatting about Rubric. Rubric great, IICO
read it had a good ICO and then you had
an Instacar last year. But then it's still like one
step forward, three steps back. I would say the overall
ifield market is probably still.
Speaker 2 (40:55):
A little frosty.
Speaker 13 (40:57):
So we're doing everything we can to ensure that line
has the business, the profitability and the internal controls to
be ready to live as a public trading company. And
whether or not the right time is going to have
to depend on the macro markets, which is outside of
our control.
Speaker 5 (41:10):
Waiting Lime CEO eyeing that market. Thank you for telling
your internals of the business. Meanwhile, let's get back to
those public markets.
Speaker 12 (41:16):
Sad.
Speaker 6 (41:18):
Yeah, astonishing week in earnings and then next week it's
another astonishing week in earnings.
Speaker 5 (41:24):
Well, we've just had so much focus on AI spend,
the fact that they're what forty billion dollars a piece
on AI spend, But what can you get from that?
Google A performs, Microsoft performs. Will see what Apple, AMD
and Amazon have for us. That's it for this edition
of bringbour Technology.
Speaker 6 (41:40):
Check out the podlodod This is BTech
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:08):
From Mahard.
Speaker 3 (00:09):
We're Innovation, Money and Power Collie in Silicon Valley, NBN.
Speaker 4 (00:14):
This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 5 (00:32):
I'm Caroline Heid at Bloomberg's World headquarters in New York.
Speaker 6 (00:34):
And I Amed Ludlow in San Francisco. This is Bloomberg.
Speaker 7 (00:37):
Technology coming up.
Speaker 5 (00:38):
Intel, it slides amid some tepid forecasts. We're going to
discuss all of that with the CEO, Pat Girl Singer.
Speaker 6 (00:45):
Plus Microsoft and Google posts strong results on AI demand
for cloud full coverage ahead.
Speaker 5 (00:50):
And Jeff Bezos and Andy Jesse deleting chats in an
anti trust probe. Now that's according to the FTC. We
bring you their response and the details right now.
Speaker 7 (00:59):
Caro, we start with semiconductors.
Speaker 4 (01:01):
We do.
Speaker 5 (01:01):
Let's dig in on ill things Intel. Blumberg's in king
was on, of course, across the earnings last night, discussing
with the business and look, this seems to be a
worry about forecasts.
Speaker 8 (01:12):
Q one actually pretty resilient. The forecast Teppid.
Speaker 1 (01:16):
Yeah, no, you're absolutely right. All of the divisions performed
roughly where Wall Street was expecting.
Speaker 2 (01:21):
If not a little bit better.
Speaker 1 (01:23):
The issue that investors had was with the forecast that
Partner's team put out there, and I was considerably lighter
than the consensus, and that was explained by Partner's management
team as that being related to a structural issue that
some of the excess demand that out there can't be
met because of an issue with a shortages of a
(01:43):
certain type of manufacturing.
Speaker 6 (01:46):
It's important about the server market. What did we learn
about Intel's place in the server market?
Speaker 1 (01:51):
Yeah? I mean, as I forwarded along to you and
analyst to put it this way, look at the server market.
The fund you know, the basic server market that Intel
has owned for many years just isn't growing at a
rate that it has in the past because spending is
going elsewhere. It's going into AI accelerators and that isn't
a big market for Intel yet.
Speaker 6 (02:12):
And finally, we should talk about foundry. Intel is unique
in that sense that it is pursuing two business models.
Speaker 7 (02:18):
What did you learn there?
Speaker 1 (02:19):
Yeah, I mean that's the big story, isn't it. That
you know, Pap is pursuing some long term fundamental changes
to the chip industry and if it plays out how
he projects, we're going to see a whole different Intel
and a whole different industry.
Speaker 2 (02:34):
But in the meantime, he's.
Speaker 1 (02:35):
Got a report quarterly earnings based upon what's happening right now.
Speaker 6 (02:39):
Bloomberg's in king who leads our semiconduct to coverage here
at Bloomberg. Thank you very much, And Caro, you know
it's the earnings context, right. They are numbers relative to
street expectations, But like every earnings, it's about.
Speaker 7 (02:50):
An outlook and the long term.
Speaker 6 (02:52):
The story with Intel that I think the market's seizing
on right now.
Speaker 8 (02:56):
The long term we want to dig into with a CEO.
Speaker 5 (02:58):
In the short term, though, we have to ignore the
market reaction and one point the worst sell off that
we've seen since twenty twenty July of twenty twenty. We're
now coming off of those lows ed but we're now
at the worst since January twenty twenty four. But just
to add to the fact that this is a company
that's lost a third of its market capitalization in this year.
Speaker 6 (03:14):
Alone, we know that AI is a complicated story. Yes,
AI accelerators, but the server market needs CPUs. It also
needs memory, which we discussed with Micron just the other day.
A lot of this is happening in parallel, and as
we learned with Microsoft and Google, some of the cloud
growth is not necessarily AI related. Data center infrastructure is
(03:37):
needed for non AI reasons as well. So let's try
and unpick what's happening in a name that, as you say,
is down. We welcome now our Bloomberg TV and radio
audiences worldwide, and joining us is the Intel CEO Pat Gelsinger.
A Pat, good morning to you and thank you for
your time. You know, the stock is down more than
(03:58):
ten percent, and we're kind of here again right where
there's the short term and the long term where you're
trying to convince investors of a return to technology leadership
and also grow a foundry business. Have you an updated
timeline and when you think you will achieve that target?
Speaker 2 (04:17):
Yeah?
Speaker 9 (04:17):
Thanks Ed, And obviously, hey, we delivered a solid Q one, right,
We met on revenue, We beat on earnings a bit
tep it in the first half, as we said, but
we see a lot of improvement as we go through
the year. And with that, obviously the foundry business, as
I would say, we're going to see progress in the
foundry business every quarter from now to the end of
(04:37):
the decade. It just gets better and better as we
move into our new technologies, you know, as we've said,
getting back to process leadership, which have better asps and
we can build better products with them. We win more
external foundry customers as our scale growth, and we also
get past this period where we had to invest to
catch up right and create the capacity for a decade
(04:59):
plus of under investment. So everything there becomes a tailwind
going forward. And we hit key milestones and one of
those I was very proud of just this week we
went to production with our first server part on Intel three.
The US is back to leadership process technology being manufactured
on our shores for the first.
Speaker 7 (05:18):
Time in a decade.
Speaker 9 (05:20):
So some key milestones, and I'll just say everything is
coming together as we would say, and we're very optimistic
that yes, in fact, we will deliver the foundry business
and the manufacturing capabilities as we've laid out for the company,
the industry, and the world Stiphil.
Speaker 8 (05:36):
Interestingly, anais over there.
Speaker 5 (05:38):
Twenty twenty four should mark the bottom in many aspects.
Speaker 7 (05:41):
Pat but they.
Speaker 5 (05:42):
Really want to understand the pace of the climb that
is necessary. How can you tell us about how quickly
you'll be able to scale that market share that.
Speaker 8 (05:52):
You're so far lost.
Speaker 9 (05:54):
Yeah, And you know, we look at Intel now in
these two different perspectives Intel products, and we expose through
our recast financials that we have a very solid, fabulous
business with healthy financials and we expect those to improve
over time. But the big story has been about exposing
the foundry financials and the losses associated with those. And
(06:15):
what we see is over the decade, you know that
we'll cross through profitability in the middle of the period
for that business as we get back to process leadership
and start to moderate the level of investment required to
go rebuild that decade of under investment. And as we
do that, if we would have that today, we'd be
(06:36):
more than double the earnings this year that we're forecasting.
So it becomes a huge positive lever for us. And
as I like to say, all of that's in our control,
the wafers, getting back to leadership, the product implications of it,
all of these things are our control, and it gets
better as we win additional external foundry customers.
Speaker 6 (06:55):
The link I think pat is that is about growing
market share a server to support the costs necessary for
the foundry business. You're asked an interesting question on the
call in the context of servers built on x eighty
six versus on based alternatives, And you gave a pretty
thorough explanation about the place of all of those particular
(07:18):
data center CPUs. But what I didn't hear was what's
happening out there in the real world. Where are data
centers being built and what are they being built on
right now?
Speaker 9 (07:28):
Yeah, and this is important because we've been at the
period now for a number of quarters where data centers
CPUs have been fairly tepid, and we do see that improving.
We had good improvement in the first quarter of the year,
and we expect that to continue through the year, and
you know, there's time for refrash in those data centers.
Speaker 2 (07:46):
But we're also seeing that the.
Speaker 9 (07:47):
CPUs now has head nodes for AI use cases. We've
posted some pretty incredible results that we can now run
seventy billion parameter models natively.
Speaker 2 (07:58):
On the CPU.
Speaker 9 (07:59):
I don't need accelerator. I can do everything on the
software stack that I already use inside of data centers.
And we're seeing that these power efficient products that we're
bringing to the marketplace, such as our Xeon six that
we just announced, are going to enable us to stabilize
and regain market share with much higher core counts. The
(08:19):
asps are going up very nicely on that through the year,
So we saw growth in Q one. We expect that
to continue through the year, and as we get to
the back half of the year, our Accelerator product line
with Goudy Xeon plus Goudy, we become, we believe, becomes
a very compelling solution for enterprise customers, and we have
quite a number of announcements of those this quarter. Customers
(08:42):
such as Bosh and Dell and super Micro all bringing
those into the marketplace, Roach and IBM, and eCloud partners
like Nahvor, the fastest growing cloud provider in Asia, all
of those coming alongside the Intel strategy.
Speaker 7 (09:00):
So we see that momentum.
Speaker 5 (09:01):
Building it momentum, and we want to just remind us
that we are with TV radio audiences. The CEO of Intel,
Pat Gelsinger, Pat on the momentum. Everyone wants to talk
about AI in all.
Speaker 8 (09:13):
Of its ways and means.
Speaker 5 (09:14):
You've been focusing in on an AIPC and I'm just
really interested in Ultimately you're going to be watch shipping
in excess. Originally forty million AIPC CPUs that's target for
twenty twenty four, But what's the demand like at the moment,
pat and what's the cost like.
Speaker 9 (09:30):
Yeah, And when we announced the category at the end
of last year, Carolyn, it was sort of like everybody says, Wow,
what's going on the AIPC And you're seeing a flurry
of interest of other people coming into that market. But
Intel unquestionably the leader. You're first to declare the market,
first to describe the use cases. And our first product,
Core Ultra, is having a very robust ramp into the marketplace,
(09:53):
and to some degree, I'm racing the catch up to
the demand. We're meeting all of our supply commitments, but
not all of the upside requests yet that we're getting
from customers.
Speaker 7 (10:03):
So this is very robust.
Speaker 9 (10:05):
We expect that we'll exceed the forty million units this year.
We'll be introducing our next generation product in the middle
of this year, so all of these pieces, we are
very optimistic. And you're seeing use cases and communications where
all of a sudden, I get summarization, contextualization, translation in
real time, all running on my PC. Developers, gamers, all
(10:28):
of these use cases are now becoming AI Enabled and
Intel leading the AIPC parade. It's a very exciting time
for I believe will be the biggest cycle of PC
refrash and expansion that we've seen in likely decades.
Speaker 5 (10:43):
Pat this is a conversation about your technology and about
ultimately your fundamentals of a business. I'm just going to
take a turn for a moment, and it's a sensitive question,
so I give you a moment to.
Speaker 8 (10:52):
Think about it.
Speaker 5 (10:53):
But giving your relationship with Israel and the fact that
you are one of the largest employers over there, how
are you currently feeling about Well, students in the United
States protesting against endowments being invested in companies that are
associated with Israel.
Speaker 8 (11:07):
At this moment.
Speaker 9 (11:09):
Well, we have been in Israel for forty years now
and it's been an incredible country for us, incredible innovators,
and extraordinary resilience by the Israeli people, and they continue,
despite the challenges of the war that's going on there,
(11:29):
to deliver against their objectives. So we're very committed to
support our teams wherever they are in the world that said, hey,
we seek peace, and we've been clearly emphasizing that we
need to find routes of sustainable peace in the region.
I've been supporting perspectives that reinforce that across the region,
(11:52):
and as we look across the world, we say, boy,
you know, there continues to be the turbulence. And fundamentally,
our strategy is around building globally rec zillient supply chains
that are balanced across the world. So our core strategy
is so emphasizing that there will be these challenges across
the world, you know, whether that's in Israel, Ukraine or Asia,
and we are committed to making sure that we can
(12:13):
support the global markets that we serve right with a
strategy that really was built for a turbulent world.
Speaker 6 (12:21):
Pat let's end on AI accelerators. Goudi is on track
for five hundred million this year, AMD's MI I three
hundred X will probably do three and a half billion,
and Nvidia with its generations will do forty billion. You've
said that choice is important and also the CPU is important,
and I accept that many share it, but do you
(12:42):
see a clear path where the numbers I just outlined
rebalance in your favor in the AI accelerator market going forward.
Speaker 9 (12:50):
Given the strength that we saw at our vision event
that we had, we had twenty plus customers coming out
publicly in support of our accelerator and our Z plus
accelerator strategy. We're really starting to see that pipeline of
activity convert and ultimately much of the activity that you've
seen so far on generative AI has been in cloud
(13:14):
training and now and I think the ultimate monetization of
AI happens as business deployments start to occur, and those
are the areas that we see strength. We launch the
open platform for Enterprise AI. How do we enable these
use cases inside of the enterprise, but in an open
architecture that many get to participate in. We announced the
(13:35):
open AI Networking, you know, from closed proprietary networking to
standard ethernet based scale up and scale out networking. We
announced that this quarter, and obviously the momentum that we're
seeing with Goudy, know, all of that half a billion,
almost all of it's in the second half of the year,
so you can see a very accelerated cycle, a lot
of enthusiasm for Goudy, you know, the unquestioned leader in
(13:58):
TCO total call the ownership for enterprises, building on the
Xeon franchise and the position that we have in the
enterprise and literally ISVs and cloud providers, but most importantly
enterprise customers seeing that value proposition. Yeah, we feel like
we're gaining a lot of momentum now in this category
and feel good about the potential for our AI everywhere AIPC,
(14:21):
AI Edge, AI Enterprise and AI cloud.
Speaker 5 (14:24):
Ending on an optimistic mote, we thank you so much,
Intel CEO Pat Gelsinger there on all things AI, all
things Intel numbers. Got to get back to those earnings,
got to get back to the new two trillion dollar
entrant Google Microsoft two shares absolutely popping higher after the
(14:47):
surge and.
Speaker 8 (14:47):
Cloud revenue those businesses.
Speaker 5 (14:49):
And fueled in part, I guess what booming use of
artificial intelligence services is helping deliver strong earnings results and
we want to get to it with Clearbridge Investments Senior
research analyst Hillary Frish, who just comment on the one
that's moving the most today and alphabet.
Speaker 8 (15:03):
Parent at Google.
Speaker 5 (15:05):
Interestingly, cloud always been seen as the laggard there, but
infusing artificient intelligence is helping bring about market share, particularly
with startups.
Speaker 10 (15:12):
Indeed, it is thanks for having me cure line.
Speaker 3 (15:15):
Yeah.
Speaker 10 (15:16):
Google is well known for having a strong presence among
startups tech companies and they have among the best AI
assets around historically, and so they're going to benefit from
this along with everybody else. And we've seen two quarters
of improvement at Google Cloud now, and.
Speaker 5 (15:32):
I think many were waiting for Okay, you've got these offerings,
how are people using them, adopting them and actually boosting
their own productivity? Microsoft shone a light on the fact
that what is It's like sixty five percent of the
Fortune one hundred are using their Azure Cloud at the moment.
I mean, they must be just ripping away market share
from everyone else. Even though cloud is still good for Google,
Microsoft still firing on all the senators for you.
Speaker 10 (15:55):
Indeed, it is, in fact, those cylinders are just really
starting to get going. It's interesting because Microsoft is absolutely
benefiting from a share perspective due to their leading position
in AI across all their businesses. Certainly cross cloud and
I view AI as ultimately, you know, an ultimate contributor,
but it's definitely an accelerant to cloud migrations.
Speaker 7 (16:16):
Hillary, good morning, It's ed in San Francisco.
Speaker 6 (16:18):
The share reactions of each are interesting, you know, alphabet
more pronounced when I talked to Ruth poor Out on
the phone last night, about cloud.
Speaker 7 (16:26):
She basically said AI.
Speaker 6 (16:28):
Solutions did make a meaningful contribution to that that twenty
eight percent cloud growth year on year, but she didn't
put a number on it. Now, Microsoft and amy Hood
did put a number on it. They said thirty one
percent asure growth, seven percent of which came from AI.
Speaker 7 (16:43):
So really interesting share reaction.
Speaker 6 (16:45):
I put it to you that Alphabet probably isn't jumping
as much on that cloud narrative as it is the
sweetener of a dividend.
Speaker 8 (16:55):
I think you're right about that, Ed.
Speaker 10 (16:57):
I think investors were pleased to see the results across
the board.
Speaker 8 (17:01):
I think they breathe a.
Speaker 10 (17:02):
Sigh of relief that cloud accelerated, that all businesses accelerated
quarter over quarter. But the big piece of new information
here was was operating margin improvement and commitment to that
through the year, as well as the dividend. And that
can draw a whole new class of users. But importantly,
it signals a shareholder friendlier stance than we've seen from
(17:23):
Google historically.
Speaker 6 (17:25):
Hillary, do you believe now through the lens of Alphabet
and Microsoft earnings, that corporate America is actually spending on
and using generative AI.
Speaker 8 (17:37):
I believe they are.
Speaker 10 (17:38):
I believe most of corporate America is experimenting with AI
and testing generative AI, and in Microsoft's are cloud and elsewhere,
certainly in Amazon and Google as well, there are some
early adopters who are starting to get to some level
of scale. Microsoft seven points of AI contribution were good.
I would say they were generally in line, though, but
(17:59):
Mycrosoft did signal on their call that they were actually
a capacity constrained, alluding to the idea that that number
would have actually been higher were it not for those constraints.
I still believe it's going to be starting in the
second half where we see that Microsoft inferencing base of
users doing inferencing on their Azure Cloud really broaden out
and start to drive that number.
Speaker 5 (18:20):
I want to dig into basically the broadening idea.
Speaker 8 (18:23):
Here we're talking about two names.
Speaker 5 (18:25):
That have already done phenomenally well on the hype around AI.
We're waiting for the spin over effects. Now you shine
a light on certain companies that I keep an eye
on because they're New York based Mongo dB.
Speaker 8 (18:34):
We also think about what data dog is up to.
Speaker 5 (18:37):
How are these companies going to benefit from the adoption
of jener to AI.
Speaker 10 (18:40):
So these companies will benefit the whole consumption complex, Cloud
Consumption Complex, Mango, dB Snowflake, Data Dog, the.
Speaker 8 (18:49):
First and third being in New York.
Speaker 10 (18:50):
They'll benefit with a lag what they will. So I
agree with your Caroline that we're not seeing it on
a broad based basis yet there are select few who
are actually going to benefit. But what they will benefit
from is the absence of the extreme cost optimization we
saw last year, companies going on a buyer strike in
terms of new projects. They're going to see the flow
(19:11):
through of what's effectively a cyclical upturn in cloud consumption.
And we actually heard that from Microsoft last night that
companies are commencing new projects, that they're starting to do things,
they're taking out mothballed projects and bringing those back. So
I think that's a positive for this whole group.
Speaker 6 (19:28):
Hillary, we're down week one of megacap Tech and I'm
bracing for week two. What do you think is the
kind of blanket takeaway of this seven day period so far?
Speaker 10 (19:40):
I'd say overall cautiously optimistic. Again, I stick to the
names where expectations are low, valuations are reasonable, and companies
have idiosyncratic drivers. Microsoft with AI and share gains the
cloud consumption complex with the A and some negatives. Amazon
(20:02):
should show some pretty good results based on the fact
that they have a lot of tech companies and startups
on their platform too who are experimenting with AI. But
it's really company by company and enterprise budgets overall remain
somewhat constrained in first half. I'd experience more of that
opening up in second half.
Speaker 8 (20:19):
Lud Fresh all is.
Speaker 5 (20:20):
So good to get your expertise on the time that
we have earnings and all the time actually clearbridge investments.
Speaker 8 (20:25):
We thank you for being here and what have you got.
Speaker 6 (20:28):
Let's get some news in talking tech and first up
food delivery service Metwan is planning to launch its international
platform in Reard, its first location outside of China, according
to sources involved in discussions. The companies looked into expanding
in the Middle East for months and could launch as
early as a few months from now. The move comes
as Chinese companies seek growth abroad to combat a domestic slowdown. Plus,
(20:52):
US Secretary of State Anthony Blincoln and Chinese President Jijingping
met in Beijing. She's China. She issued a warning to
blink in against quote vicious competition between the two countries,
saying quote, China and the United States should.
Speaker 7 (21:05):
Be partners rather than rivals.
Speaker 6 (21:07):
The two day meeting composed the dialogue on trade, geopolitical tensions,
and even an announcement of AI talks that will begin
in the coming weeks. And finally, Huawei's latest smartphones are
said to be utilizing an updated version of its made
in China chips. According to an independent analysis, the purest
seventy phones sport a kirre In ninety ten processor, which
(21:28):
is a new version of the nine thousand chips that
alarmed Washington officials due to their seven nanimeter tech, long
thought to be beyond China's capabilities. According to Jeffreys, the
Pure seventy smartphones sold out within two days of being launched.
Speaker 8 (21:43):
Carol, fascinating.
Speaker 5 (21:45):
Coming up, Look, we're going to talk FTC allegations against
the Amazon founder Jeff Bezos and it's currency Leo Andy Jesse. Apparently,
according to the FDC, they've been destroying messages amid an
antitrust probe. We'll get you the details and the response
from Amazon next you more just of course happening with
dark Trace today, UK listed company up sixteen percent. Why
the UK cyber Companies actually agreed to sell itself to
(22:07):
a private equity firm Tomo Bravo for an equity.
Speaker 8 (22:10):
Value of five point three billion dollars.
Speaker 5 (22:12):
That's basically a twenty percent premium. So still a little
bit of caution in the market that this deal will
get done. Remember tom O Bravo actually walked away back
in twenty twenty two for talks to buy dark Trace.
But really interesting and this is a company, of course
in somewhat an interesting relationship with the battle British entrepreneur
Mike Lynch who is on trial for Ford. Here in
the US, we shine a light on dark Trace today.
(22:32):
This is Broome, their technology.
Speaker 6 (22:45):
Welcome back to Bloomberg Technology. Ed Ludlow in San Francisco.
Speaker 8 (22:48):
Aaron Hyed back in New York.
Speaker 6 (22:50):
Let's get to one of the top stories on the
Bloomberg terminal and dot com. Top Amazon executives, including founder
Jeff Bezos and CEO Andy Jesse destroy Lloyd's text messages
discussing business, according to allegations by the FTC, A raising
evidence the agency could have used in an antitrust case
against the retail giant. I want to bring in Bloomberg's
(23:12):
Mike Shepherd, who leads our coverage of the kind of
intersection of tech and politics. Now, Amazon is pushing back
against this FTC allegation with some force. We will get
to that, but we're talking about communications made by executives
on the Signal app. Mike explain it to us, well, I.
Speaker 3 (23:33):
Think it's important to turn the clock back a couple
of months to September, and this is when the FTC
filed its initial anti trust case against Amazon, and they've
gradually been increasing the pressure on the company in this
particular matter, in this lawsuit.
Speaker 7 (23:49):
In November, they had.
Speaker 3 (23:51):
A less redactive version of the case released to the public,
and that indicated that they had concerns executives have been
concealing some information, but they didn't name names.
Speaker 7 (24:02):
Today.
Speaker 3 (24:03):
We learned last night we're discussing today the latest and
that is that they are naming names, including CEO Andy
Jase and the founder of Jeff Bezos. And that indicates
the kind of pressure that the agency is putting on
the company, and it echoes what this broader effort against
big tech by anti trust and forces here in DC.
Speaker 5 (24:25):
Mike, turn the clock back even further, and you go
to twenty nineteen, when Jeff Bezos indeed made clear and
evident that his phone had been hacked, he felt and
that is the argument as to why executives moved to
signal and these automatic discussions that can delete themselves.
Speaker 8 (24:42):
And I'm noting.
Speaker 5 (24:43):
That Amazon has currently said, Look, the FDC has a
complete picture of Amazon's decision making in this case, including
one point seven million documents from sources like email, internal
messaging applications, and laptops, among other sources, over.
Speaker 8 (24:55):
One hundred terabytes of data.
Speaker 5 (24:58):
What more needed they do to prove that they weren't
using signal for well, conversations they didn't want seen by
the FTC.
Speaker 3 (25:07):
Well, you know, the FTC is actually alleging that maybe
there was more that they needed to know about.
Speaker 2 (25:14):
Maybe there was more in.
Speaker 3 (25:16):
Those conversations that disappeared that they don't have access to
and are not privy to in the case yet, and
that they should therefore be able to see to have
a clear and complete picture. But Amazon is saying that, look,
you already have enough, You have more than enough. Then
you need to be able to carry on your work here.
(25:36):
And I'm glad you brought up, Caroline, the point about
twenty nineteen, because of course that's when Jeff Bezos's texts
were purportedly hacked, and his desire to maintain some degree
of privacy is another driver here, and so the company
is saying, look, we've done enough, and also we had
cause to try to protect some of these communications against
(25:59):
people on the outside.
Speaker 5 (26:01):
Mike Shepherd, you always sum it up so beautifully, Thank
you very much. Indeed, of all things FTC and Amazon.
Speaker 7 (26:06):
Today.
Speaker 8 (26:07):
Meanwhile, a shift gears a little bit. Elon Musk's artificial
intelligence startup.
Speaker 5 (26:11):
Xai parently is nearing a deal to raise six billion
dollars in funding, and that would value the company at
eighteen billion. It's all according to a person familiar when
the matter. Bluembg's Max Chafkin all in on Elon Inc.
Joins us now, and I'm interested by the fact that
this year at mount they're raising versus the capitalization of
the business. But we did know they were going for
funding to beef up XAI.
Speaker 4 (26:31):
Well, here's the thing.
Speaker 11 (26:33):
Elon Musk was able to kind of spin this open
ai competitor. This is this company basically it makes large
language models very similar to open ai.
Speaker 4 (26:42):
He did this kind of quickly and with a very
small staff.
Speaker 11 (26:45):
But the thing is to keep these models training, you
need an insane number of very very expensive GPUs.
Speaker 4 (26:52):
These are the graphics chips that artificial intelligence companies use.
Speaker 11 (26:55):
Elon Musk on a x spaces interview last month's said
that they were using twenty thousand already of these Nvidia
each one hundreds. They would need one hundred thousand of
these chips. So this is you know, that's an expense
that's in the hundreds of millions of dollars, if not
the billions of dollars.
Speaker 4 (27:13):
So that's why he's raising this money and why they
need it.
Speaker 6 (27:17):
There is a little backstory of all of this that
the Zett, Chapman and I have. Bloomberg News reported on
January nineteenth that Xai was in talks to raise funds
at evaluation between fifteen and twenty billion dollars. Eighteen billion
is pretty much between fifteen and twenty billion, and Elon.
Speaker 7 (27:34):
Must denied it.
Speaker 6 (27:34):
He said false, fake, and then the ft followed up
with the same report and he said fake. And then
the information came out yesterday with the report which Bloomberg
then reported too, And he hasn't said anything yet. The
main thing is irrespective of what Elon Musk says. He's
got an edibility to raise money for pretty much any
project he's doing max well.
Speaker 11 (27:53):
And it's not that he only has an ability, but
he has to raise money here because you know, Elon Musk,
as many people know, is you know, very wealthy, right,
but he is not very liquid. Most of his wealth
is tied up in Tesla stock, SpaceX stock. He does
not have billions of dollars. He spent a lot of
money to buy Twitter turn it into x. He does
(28:14):
not have billions of dollars rattling around his pocket without
selling some assets, which would you know, create some disruption
within his empire. So he needs this outside money if
he has any prayer of sort of catching up to
open Ai. And from the point of view of investors,
you can see why they're happy to give it to him,
because Open Ai anthropic.
Speaker 4 (28:33):
These companies, you know, there are some.
Speaker 11 (28:35):
Real questions about the business models, but they have been
able to achieve huge valuations, a lot of adoption. You know,
taking a flyer on Elon Musk and the hottest category
in business makes a lot of sense if you're these
venture capitalists who are considering this.
Speaker 6 (28:48):
Deal, and to his credit, a lot of these projects
then do tend out to be influential, and it's a
lean team at XAI, and it looks like they're making
progress doing best match Taffick and Happy Friday to you.
A quick news story that we're looking at shares of
IBM a little lower down a percentage point, but they're
backing a project in Canada seven hundred and thirty million
US dollars one billion Canadian dollars. This is for semiconductors,
(29:11):
but in the context of what IBM is involved in,
which is packaging and also testing labs, it's.
Speaker 7 (29:17):
An interesting bet.
Speaker 6 (29:18):
We haven't really talked as much about Canada in the
context of, well, are they going to be on shoring
making some kind of domestic effort when it comes to
semi conductors like the United States are, Well, IBM's doing
something to the tune seven hundred and thirty million dollars.
Speaker 7 (29:34):
We will be right back. This has Bienbo Technology.
Speaker 5 (29:51):
Cybersecurity firm Rubric remember jumped yesterday on its IPO day.
Speaker 8 (29:56):
And well it's holding on to its gains.
Speaker 5 (29:58):
Remember it about seven hundred and thirty two million dollars on.
Speaker 8 (30:02):
The back of that IPO.
Speaker 5 (30:03):
One of the key backers long term backers was gray
Lock PRIP please to say that we have grey.
Speaker 8 (30:07):
Lock partner asheme Chanda with us and.
Speaker 5 (30:09):
Ashme you there stock exchange, ringing the bells, celebrating and
how does it feel ultimately to see an early payoff
like that? What was the signals that you got early
on to know that will go public.
Speaker 8 (30:22):
And do so so well?
Speaker 12 (30:23):
Yeah, so now thanks so much for having me. You know,
the hounderstand sor of when you back a company very early,
you don't really fully know what lies ahead. I'd say
this is this company is really a story of an
exceptional leadership team, exceptional leader targeting a very very large market.
So I think early on in the company's history it
was very clear like the size of the markets that
(30:45):
they were targeting, you know, our market sizes that most
companies don't really go after, and then the quality of
the people.
Speaker 7 (30:49):
Yeah.
Speaker 5 (30:51):
And I think what's interesting more broadly about the direction
of travel with Rubric is that vantage they popped, they've increased,
but also that there are other cybersecurity companies I'm sure
in your portfolio eyeing the market, but there's also the
juggernaut that is Microsoft. And the same day that they
went public, Microsoft came out with its earnings saying, look,
we're still making strides in cybersecurity, all interlaced with generator
of AI. How much room is that for this sort
(31:13):
of element of competition.
Speaker 12 (31:15):
Yeah, I would say, you know, so cybersecurity is a
you know, is a secular kind of growing market. These markets,
you know, have become very, very large and today, you know,
it's one of the most important parts of intermission technology.
Most large and mid sized companies spend anywhere from five
to ten percent of the IT budget on cyber and
so there's a lot of room for multiple providers, you know,
(31:36):
provide different pieces of the stack. And then and then
and then Rubric is an important partner with you know,
Rubrick and Microsoft have a strong partnership together.
Speaker 6 (31:46):
Ashan, I'm really really interested in Rubik's very close relationship
with Microsoft. There's a financial element to it. But given
how AI in all of its guys is playing out,
I just wondered if you had a particular thesis on
how that relationship continues.
Speaker 12 (32:03):
Yeah, I would say, it's it's, it's it's it's a
multifaceted relationship, but fundamentally you know, what what Microsoft and
Rubric are trying to do is really provide customers with
cyber resilience, so, you know, and just bring different pieces together.
Speaker 7 (32:18):
So what's next? A gray lot?
Speaker 6 (32:20):
I mean, you have a lot going on, you would claim,
I think, and and many of your colleagues who said
on this show that you guys early on generative AI
and organized on generative AI, wondered if you've kind of
sharpened your focus on any other areas in particular.
Speaker 12 (32:37):
Yeah, I would say, you know, so I've been a
greylock now just a little over two decades. It's never
been a more exciting time to be in venture capital,
just with everything going on with Jene AI. You know,
the I'd say that, I'd say the average day in
the life of a VC has it's really become an
AI job. And you know, we think of it fundamentally
at three layers, kind of the foundational layer at the
lowest level, enabling infrastructure in the middle, and then applications
(33:01):
at the top. And you know, it's say, in particular
for VC backed startups, there's a lot of opportunity around
enabling infrastructure and also in applications. You know, I think
it's a safe statement to say that over the coming
five to ten years, you're going to see lots of
applications completely reinvented, you know, with new workflows, you know,
leveraging generator AI.
Speaker 5 (33:22):
And you've got companies in the portfolio already doing that,
and you can name some of the other key AI
companies that you might want to anticipate coming to the market,
I'm sure, But what about the companies that aren't in
inherently AI focused and just tried to become So how
do you advise those?
Speaker 12 (33:38):
Yeah, I think I think for I think any company
that started let's say more than three or four years
ago there at risk of being completely disrupted by a
new startup. So I think it's as a company that's
you know, that's that has a product line that whether
whether it's a publicly traded company or in newer startup,
they have to really go in AI enable. They have
to go and look at the application of AI, you know,
(34:00):
to their product line and you know and kind of
re imagine you know, other ways and either you know,
in a copilot mode or really you know, the more
important trend, if you know, if you take him the
one year review from here is it's all about asient
frameworks and agentic approaches. So most companies you know, really
should be looking at like, you know, how do these
technologies really apply, you know, to the product area.
Speaker 6 (34:24):
Assuming there's one thing Caroline and I have learned in
the last I say, twelve months or so, it's that
not just a company is being founded incredibly quickly, but
a platform or products being built very quickly. You guys
have this EDGE program where that basically is what you
facilitate an idea from an individual through to a business quickly.
(34:46):
Just explain the process and how that's playing out.
Speaker 12 (34:49):
Yeah, I know, thanks for asking about that, Ed. So, yeah,
we have a bespoke company building program at Graylock.
Speaker 7 (34:55):
It's called Edge.
Speaker 12 (34:56):
We're very selective about you know, who we pick in
the program, and uh, you know, once we do mutually
once an entrepreneur in Graylock, you know, kind of mutually
select each other. We basically work very closely with engineers
and founding teams all the way from market segmentation to
product strategy to insertion you know for initial product, working
(35:17):
with initial customers, building customer advisory boards. Then you know,
over time helping you know, recruit go to market. So
it's a very beastpoke program. And you know many years
ago Palo Alto Network start in our office through that,
you know, through you know, through that approach. You know
another one that when public started through that approach is
Zoomo Logic as well.
Speaker 3 (35:35):
Uh.
Speaker 12 (35:36):
And you know, more recently, you know a company called
Abnormal Security started in that process as well. They've rapidly
grown to become a late stage company. And we have
another one in stealth mode today, saying the San Francisco office.
Speaker 6 (35:48):
You know in that program, shame Shan now Gray Lot partner.
It's great to have you on the program out of
New York. We really appreciate it. The Operator Have Shared
Electric Bikes and Scooters line, which is backed by the
likes of Uber, is planning to invest more than fifty
(36:10):
five million dollars this year to expand its fleet globally.
Joining us now is the line CEO Wayne Ting and
Wayne I find this really interesting because it's not just
San Francisco. The story of and relationship of micro mobility
here is well told, but you're looking at other regions
around the world. Which region is most receptive right now
(36:31):
to adding more to the microability offering?
Speaker 13 (36:34):
Ed Thank you for having me. We actually see demand
from all of the world. Line is today in thirty countries,
five continents, three hundred plus cities. And the reason why
cities are so interested is because the biggest challenge of
our time is the challenge of the climate crisis. And
the number one source or corbon pollution in Europe and
in the United States is from transportation. The vast majority
(36:56):
of that is from personal cars and trucks. And if
we're going to need the challenge of climate change, that
we must transition away from cars and adopt more green
transportation alternatives like bikes and scooters, which is why I
think you're seeing cities all around the world embrace microability
as a way to reduce their reliance on cars.
Speaker 6 (37:16):
Wait and I told our audience who are coming on
the show, and I put a poll out there to
ask do cities need more electric scooters and bikes? The
majority of respondents said no. Yeah, well almost the majority,
and in some cases they voted for few. There's still
sort of frustration and skepticism and disinterest out there.
Speaker 7 (37:37):
How do you overcome it?
Speaker 13 (37:40):
I think the best way we need to earn the
trust of residents and city governments in order to operate.
Speaker 2 (37:47):
I think the best way to.
Speaker 13 (37:48):
Ensure that is to make sure that our scooters and
bikes are parked responsibly, that we have a great safety record,
which we do that we continue to invest in technology
and line builds and r and ds every scooter bike
that we put on the street to ensure that they're
the safest, best ride on the out there. And when
we continue to deliver an excellent service, we will continue
(38:09):
to hopefully build that trust with cities to expand.
Speaker 8 (38:12):
Waan, you're talking to a bike addict here.
Speaker 5 (38:16):
I actually prefer the non electric ones than the electric
ones here, but I do it a lot here in
New York City.
Speaker 8 (38:21):
I do it when I'm over in London.
Speaker 5 (38:22):
I use the Uber apt to get what you're currently
seeing on your screen the line bike. But they're a
mess and they're everywhere, and I think that's a key
concern here. How do you ensure do you have to
spend more on infrastructure to ensure that people do have
places to park them? What is the responsibility of you,
Visa VI, the overall government right now?
Speaker 2 (38:38):
I think it's it's a joint effort.
Speaker 13 (38:41):
So you mentioned London, So London has two.
Speaker 2 (38:45):
And a half million cars.
Speaker 13 (38:46):
There are one hundred times more cars in London than
there are electric e bikes, and each parking spot can
fit six to eight e bikes. So if you say
there's over abundance of something, there's an over of cars
and London there's you know, if anything, if we can
even take a tenth of the parking spots of London
(39:07):
and turn it into bike parking corrals, we can easily
solve any parking issues we have in London. So we
have to continue to work with cities and city governments
the makeage infrastructure transition, to build more bike lanes and
protective bike.
Speaker 2 (39:20):
Lanes, and to build more places where you can safely
respectfully park your e bikes.
Speaker 5 (39:25):
You're someone who's building out spending money while you're also
thinking about profitability. And I know you've been thinking about
a bit dar positive.
Speaker 8 (39:32):
For a couple of years now.
Speaker 5 (39:32):
You probably took a leief out of the book of
Uber having worked so closely with Daara Costa Shah and continuing.
Speaker 8 (39:37):
To work with Uber at line now.
Speaker 5 (39:38):
But I'm interested as to what ultimately the goal is
at the moment you have to remain profitable in this
current environment.
Speaker 8 (39:44):
Is that what the VCS are asking.
Speaker 13 (39:47):
Yeah, so, Caroline, as you point out, twenty twenty three,
Line grew by over thirty percent and hit over six
hundred million dollars in gross bookings. It's actually a third
year of thirty plus percent growth in a role. More impressively,
our profitability five x to nearly one hundred million dollars
and adjust the ebitah, and that is actually what's enabled
(40:08):
us to invest fifty plus million dollars into.
Speaker 2 (40:11):
Scaling e bikes. And I absolutely think.
Speaker 13 (40:14):
That today's public markets demand sustainable and profitable companies, and
Line is showing that we can do it in a
very tough industry. As we continue to expand our profitability
and profit margins you go in public scene, well, I
think that depends on both the macro markets and our
internal business results.
Speaker 2 (40:35):
What we can focus on is making sure that.
Speaker 13 (40:36):
Line continues to grow rapidly and continues to expand our profitability.
The macro market still, I would say a little bit iffy,
Like you guys were chatting about Rubric. Rubric great, IICO
read it had a good ICO and then you had
an Instacar last year. But then it's still like one
step forward, three steps back. I would say the overall
ifield market is probably still.
Speaker 2 (40:55):
A little frosty.
Speaker 13 (40:57):
So we're doing everything we can to ensure that line
has the business, the profitability and the internal controls to
be ready to live as a public trading company. And
whether or not the right time is going to have
to depend on the macro markets, which is outside of
our control.
Speaker 5 (41:10):
Waiting Lime CEO eyeing that market. Thank you for telling
your internals of the business. Meanwhile, let's get back to
those public markets.
Speaker 12 (41:16):
Sad.
Speaker 6 (41:18):
Yeah, astonishing week in earnings and then next week it's
another astonishing week in earnings.
Speaker 5 (41:24):
Well, we've just had so much focus on AI spend,
the fact that they're what forty billion dollars a piece
on AI spend, But what can you get from that?
Google A performs, Microsoft performs. Will see what Apple, AMD
and Amazon have for us. That's it for this edition
of bringbour Technology.
Speaker 6 (41:40):
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