From the heart of where innovation, money and power collide in Silicon Valley and beyond. This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Live from New York.
I'm Caroline Hyde and I'm Jackie Devalas in San Francisco.
This is Bloomberg Technology coming up in video. Shares slipping despite an upbeat view on the Blackwell lineup, has US investors see a mixed outlook after two years of blowout results. Plus investors unsure of Salesforce's new AI product if it can spur faster sales growth or break down the company's earnings. And we sit down with the CEO of Amazon after the company unveiled the long awaited AI version of its Elexor assistant and just announced its new quantum computing chip.
At first quick check on these markets, as we can currently, we are under pressure once again. This is a macro picture that weighs heavily on the market. Perhaps some inflatory pressures worries about Taris and Nvidiant numbers did not do enough to ease those concerns. Were down some three point seven percent. Looks still a three trillion dollar company, But here in lies the issue. Of whether or not Blackwell is ramping as fast enough to offset some of the
concerns around China and tariffs and limitations on exports. Jonson Wang does a lot to talk about the new cycle of scaling laws that come, of course from reasoning models. We move on to some other individual names that we're going to be diving into across the board. Salesforce under pressure off by two percent. Will discuss the earnings a
little bit later. Agent Force not bringing in the revenue as quickly has had been anticipated, And let's just finish on the all important Amazon currently trading as we see macro pressure on tech more broadly, we're currently flat a new quantum chip and most notably, of course, the generative AI infusion into Alexa Plus, which we can delve into in the CEO in a moment, because we now want to welcome to our TV and radio audiences worldwide. Amazon's
president and CEO, Andy Jesse. Great to have you on New York.
Thanks for having me. It's great to be here.
Back home where you grew up and you were unveiling generative AI infused Alexa Plus. How is this going to really well excite your customer base? What are you most excited for it.
Well, you know, we've had Alex has been around for ten years. We have six hundred million devices in customers' homes and offices. And Alexa Plus is our next generation Alexa Personal Assistant, and she's meaningfully smarter and more capable and useful than her prior self. You can do all the things that you used to do, but every single one of those functions is better.
And I can give you just an example. There are so many examples.
But you know, if you have smart home controls with Alexa now, you can say, Alexa, I have guests coming over at seven pm?
Could you raise the drapes, could you raise.
The temperature by five degrees, turn on the porch lights and the driveway lights, and put on Melo dinner music in.
The dining room.
And music you're not a guy. May I choose shop.
Fighters, but most people will choose Melo dining music. But you can do that all verbally and simply using conversational language like that.
You don't need a nap. It just happens.
And so Alexi Plus, with what we've just announced and what we're launching, it really is. There have been a lot of chatbots around that are good at answering questions, but they don't take actions. Alexi plus is really Alexa is going to be the first one that not only is highly intelligent to answer various questions, but she can do so many things for you. She can play music and play video, and control your smart home and make reservations for you and hire people to fix your oven.
I mean, it really is the first.
Big, large scale practical use of gender of AI. The consumers are going to be able to see and use naturally.
I can see how you're going to obsess over it, whether it's ordering the latest buffalo in New York and seeing where the best space is to do that. But how are your stakeholders of shareholder based going to obsess about this about gender to AI in Alexa plus. How is that adding value for them?
Well?
You know, I think if you think about what Alexa allows customers to do, it makes shopping more easy because it's so much more intuitive now to buy products. It makes enjoying music easier, It makes enjoying video and streaming media better. It allows you to control your smart home in a different way. So every single one of our consumer customer experiences gets better with Alexa Plus. And then you know, of course Alexa has its own business model. We have a brand new lineup of devices that are
coming in the fall. I think that are beautiful. I think people are going to really like we have opportunities to service new products and advertising in various interfaces like our mobile and our desktop interface that's coming in Alexa. And then we have subscriptions, and you know, so I think there's a sustainable business model there as well.
Talk to me about the subscriptions because you're getting it free. If you've got Prime, I get a lot with Prime. Now are you able to increase the prices there?
Do you think of Prime?
Well, Prime is an incredible value if you think about getting free shipping on three hundred million plus items. You know, when we launch Prime, it is free shipping on about a million items, to say, it's three hundred million items, and most of the time you're getting your products now
inside of a day. And so you know, between that and what you get with Prime Video and Prime Music and the grocery subscription, and you know our unique selling events Primes and incredible values you could increase to add on top of it Alexa Plus.
You know, it's just great value. So what do they plan right now?
But it's I do think prime is unusual value and it's why people use it so expansively.
And to increase that use has been this invention, this innovation of generative AI, and that costs money. And you've actually just took to the stage yesterday to say, out of all companies, you are spending the most on AI. How much are you spending on AI?
Well, you know, I think we don't disclose the exact amount, but you know we you know, we're spending a pretty significant amount of cappax, and the allion's share of it is on generative AI. We've said in our AWS business, even though general AI for US is a many billion dollar a year business and growing triple digit percentages year over year, that if we hadn't even more capacity, we could use.
It to monetize it.
And we have this really interesting and very fortunate flywheel and AI inside of Amazon, which is if your mission is to make customers' lives easier and better every day, which it is for.
Us, and if you believe that.
All the customer experiences we know of today are going to be reinvented through generative AI, which we also believe you believe those two things, you're going to be building a lot of genera AVEAI apps. If you build a lot of general of AI app By the way, other companies are too on top of AWS, which is the leading technology infrastructure platform.
So if there are a lot of AI apps being.
Built on top of you, you can't help but get a lot of feedback from people on how they want those building blocks that create gender AI to be better. And if you're willing to invest in those building blocks, which we are, as you know, with our own chips with Trainium and with our own frontier.
Model with Amazon Nova and Model.
Building Services and Sage Maker AI and better Rock, if you're willing to invest in those building blocks and you're getting a lot of feedback, they get better much more quickly, which can't help them make it easier and quicker for people to build gender AI applications, which means you get more running on the platform. So that flywheel is very unique for Amazon.
The line share though you did say basically one hundred billion dollar run rate for CAPEX expenditure, can you give us even like a percentage ratedown of how much that goes to distribution logistics and how much goes to AI?
Well, line shares, you know, you tell you boast of it, you know most of it. You know the lions share is more than fifty percent?
Yes, is it more than eighty percent?
We're playing the warmer and colder game.
Yes, exactly. I love a game. But taught us about that capacity that you talked about. Yeah, AWS could grow even faster if you had all the chips that you needed, all the power you needed, the motherboards you needed. How much faster could AWS go?
I could.
It's hard to put an exact percentage, but I do think it could be growing faster. I'm confident could be growing faster. And you know there is you know, for a long time, there still aren't as many chips as we all want.
We have.
We're fortunate in that we're very big partners with Nvideo, But then we also have our own custom AI silicon in Tradium.
Too, which we just released to Reinvent.
Which is thirty to forty percent more price performance than the GPU powered instances, which is a big deal at scale if you're doing gender of AI on the inference side. So we have maybe more chips than some others might have access to, but we still don't have enough, and then there just is not enough power in the world right now, and we're all working really hard on that.
I expect that to relieve some the second half of this year, but right now, you know, the world can change, but right now we have just insatiable demand.
We had amazing demand coming from Jensen Wong who had his numbers out yesterday and Nvidio. Was there a limitation on the in video chips in particular that pull back capacity And at what point do you think can depend even more on your own in house built chips offset any of that.
Well, you know, I would say, I mean there's a lot of demand for gener Ai right now.
People are very excited about it.
I think that all the different providers of chips have been constrained to some extent.
I think some of.
The some of the new generations maybe have gone through different evolutions and when they're going to be released maybe a little later than people thought. There are some components like motherboards and things like that that we all use, that particular ones that are in shorter supply than others. So you know, I do think there's some there are some supply chain issues which I expect to get better. I do you know, people are very excited about training
them too. To your question and whether we could see more demand there, and we have gone back at least a couple occasions to make more trainium too than we'd intended because we have so much demand. So I expect the will of customers for as long as I can foresee wanting to run compute on instances that have in vidio chips. But I think a lot of the demand will also be served by.
Training the customers that you couldn't serve because of the limited capacity. Is it that you just had to put it back from everyone a little bit more generally or who lost out here?
Do you think it's it's always a combination.
I mean, there's for people that just have a very small amount of accelerators that they need, they don't usually have a problem.
We have something called capacity blocks with.
It's kind of like an on demand way to use accelerators and and generate e chips, and that continues to go.
It's really the folks who.
Have built, you know, have an idea for a new application, but they need a lot of of chips, where if we don't have the capacity, we have to you know, we have to give them what we can give them and give it to them as fast as we can and push our partners to get it in sooner. And they can't get their initiatives done as quickly as they want to if the capacity isn't there.
Anthropics had all the capacity it needs. You've got on a close relationship.
Yeah, we have a very close partnership with Anthropic. We have this project called Project right near with them. They're building their next model, their next version of their frontier model on top of trainingum to and our custom AI silicon. They're going to use over four hundred thousand trainum two chips and so yes, they have capacity. They're they're ramping up and we're excited about that partnership and what they're building.
You mentioned the power side. How much is that something you're talking to the administration about? How much is the administration supportive of the buildout that you need to do.
We have been talking to administration, you know, multiple administrations in this country over the years, as well as in other countries as well. And I think the power shore is really knuck up on people, you know, really right after the pandemic. And I would say that the current administration is very receptive to it. They understand the constraints it's having on the economy right now and are convicted about solving it.
What about the restrictions around chips? And what's interesting is Microsoft just called on the administration today to say, this limitation on chip access for some of our close allies around the world is going to limit our global business. You are a global business. Is that something you're worried about?
Hey, we are? You know?
I think I think that you're really talking about that AI Diffusion Act. I think, and I'm going to be curious to see where that goes. I mean, it was enacted pretty quickly at the very end of the last administration.
I don't know how this administration feels about it, but I would say that we share the concern that it has limitations on certain countries who are natural allies of the US who just to be able to do their business, and those companies to be able to get done what they want to get done on top of these technology infrastructure platforms like AWS, they're going to need more chips, and so I think if we don't do it, we're going to basically give up that business and those relationships.
To other countries who can provide those chips, and I think we're better off being partners with them.
Is it a risk to AWS, It's not.
So much risk.
I mean, I mean it had it, you know, in the scheme of things. It's not a big swinger. But I also think that there are so many countries who are in the early stages of their economic development who both really need access to the most cutting edge sophisticated technology to build the right customer experiences. And that could be big geographic markets for companies like ours and lots of other technology companies where I think it would be a shame to limit them and to limit the companies.
Did the AI diffusion rules that was born in very swiftly by the Biden administration. All of this is in the context of US versus China and not wanting to get the most sophisticated equipment and chip and technology into China.
What rate for us for a moment the administration and whether it's been positive or negative for your business when it comes to China Dominimus, for example, the fact that Chinese competitors, if we call them nat Sheian and the like, it can have to pay more to get goods into the country. Does that help or hinder you?
Well, you know, I would say, you know, on Deminimus specifically, you know, we have a certain number of items that are shipped in that way as well, for things like Hall, which is our new low price offering. We maybe have less of it than some other companies, like the ones that you mentioned, but I think it's early in this administration. But what I would say is that it is encouraging to us that we have an administration that wants to hear from business. I would say that, you know, we've
been a business through six administrations. Every single A lot of them are primary for focuses to take care of customers. But we try to build a productive relationship with the administration because we want to help the country. And I would say that some administrations are more receptive to it than others. But this administration cares about what business thinks. And I've always been surprised that it isn't obvious that the best economic results for a country are going to
be when the public and the private sector collaborate. And you know, I don't expect the government to kout out to what companies want, but they should get their feedback and their input because they're going to make policies better together if they collaborate. And I'm encouraged early on that this administration wants to talk to businesses.
Are you taking calls passingly?
You know, I take calls. We talked to you know, the same thing with all the administrations. We talk to people in the administration. We share what's working for us, what's not working for us, concerns that we have. As I said, some administrations care more about our feedback than.
Others about yours.
Have you spoken to I've spoken to the president.
Look, as I said, this administration has been pretty busy the first month, and when I am encouraged that they are having conversations with businesses and they do care about our feedback. And we'll see what happens. But I you know, it starts with a dialogue. You have to have a dialogue to have any kind of relationship.
And they care about AI infrastructure. Just take stargate. Are we going to hear more from you on how much you're investing here in the United States on the AI infrastructure build out as well?
Well?
You know, as we talked about earlier, we said it was you know, directionally right in terms of the run rate on our capex. But you know, we're spending a lot on AI infrastructure, and the lion's share of it is not just on AI, but also in this country in the US. We spend elsewhere because we have a global business. We have customers everywhere. We have customers and you know, a couple hundred countries, but we have a pretty substantial investment that I don't expect to to attenuate soon.
Only we could get a number. I'm interested in something that perhaps is going to feel a more sensitive topic, and it comes around perhaps some words that were missing in your annual report this year, which were diversity and inclusion.
I put this in the context of the administration as it stands, because I know that Amazon strives to be the Earth's best employer, and I'm just wondering how your employees react to perhaps the lack of certain words now involved, and whether or not programs might be forced to change or not.
Yeah.
Well, what I would tell you, just at a high level, if you serve as many customers as we do, in as many diverse groups as we do, and we intend to moving forward, you have to have a diverse team to be able to build products that work for everybody, and that has always been our intention.
It continues to be our intention.
I think that you know, there were so many programs that we launched and other companies launched in the pandemic, and as you probably have seen over the last three years, we've gone through very thoroughly every single one of our business areas, and the programs that we had conviction about.
We doubled down on, and the programs that we don't have.
Conviction about, we streamline and we stopped doing. And so we did the same thing and looking at all of our programs on diversity, and you know, we have some programs that we have doubled down on. A good example is our Career Choice inside our Fulfillment Network our Fulfillment Center, teammates are able to get an advanced education for free on us to advance their career and their own development.
And that has been very, very successful and very meaningful, and so we doubled down our program like that.
There are other programs.
That really just haven't been that successful and haven't moved the needle much, and those we just moved away from. But we have a diverse group we're trying to continue to build out a diverse group and that won't change.
And you can't can still use that word ultimately not having to reframe it.
That is.
I mean, look, you can call lots of people, call lots of different things, but we have a giant customer base of every imaginable group of people where we want builders who can build for them.
Culture is key. Yeah, and you just talked about how you're doing mores less. It's always a focus on frugality. That's in your very principles. That's something you've been doing at the employee base as well. You wrote out made it very clear that they were going to be reducing layers. How is that going?
Yeah, it's gone well.
You know, I look, if you have a company where the culture is an important ingredient in your success, which has absolutely been true for Amazon, it's not your birth rate to keep having a strong culture, you know, especially as you grow the number of people, the number of businesses you're in, the geographies that you're in, and so you have to work at it all the time. And for us, you know, there were two areas when we looked at it as a leadership team last year that
we wanted to strengthen. One was we have always fired really strong owners, smart ambitious, strong owners who get to own the allion's share of In this case, you know, I would say, you know ninety plus percent of the decisions, and they.
You know, as you add a.
Lot of people, you end up with a lot of middle managers. And those middle managers, all well intended, want to put their fingerprint on everything, So you end up with these people being in the pre meeting for the pre meeting, for the pre meeting for the decision meeting, and not always making recommendations and owning things.
The way we want that type of ownership.
So we took a goal collectively to increase the ratio of individual contributors to managers by over fifteen percent as a company by the end of this quarter. We've made very good progress in that we've beat that already and it's going to allow us for the people that are doing the work, they're going to have more ownership and they're.
Going to be able to move more quickly.
And then I think the other thing we saw was that if you're a culture that invents a lot and collaborates a lot like we do, if you don't have people in the office together doing that invention, it's just meaningfully worse. And you know, you don't invent the same way, you don't collaborate the same way, you don't connect with each other the same way, you.
Don't learn the culture the same way.
And so having people back in the office together more frequently, we felt very strong.
We bet it's going to be better for customers in the business.
Let's talk about that invention and that collaboration. We've got a new quantum chip us alot love the name. What does that mean for you to have this more efficient chip at this exact moment. Will we start seeing it be practically useful soon?
Welltum quantum computing is very high potential. It has the chance to solve some very computationally intense problems, and I still think it's realistically a few years away from having a real shot at solving those problems. But you have to solve a bunch of these challenges that relate to quantum computing along the way, and one of them really is around error correction on the cubits and that's what
Osilla does. It's a very unique inventive way to do error correction with CUBIS that makes a meaningful difference, and we're excited about that milestone. You can't get to something that has real impact unless you get those milestones done along the way, and you invent along the way.
And it's just another example of invention.
I feel the learning of how generative AI suddenly became not just in the business parlay, but suddenly everyone was discussing it. I think people are aware quantum could do the same thing. So when you hear people debating between two decades or five years, where do you sit on the grounder scope of that?
Gosh, you know, I don't know for sure.
You know, I would say I'm hopeful that it's more in the five ish year range than it is the twenty year range. You know, all these things that are successful are seven, ten, twenty year overnight successes. You know, it wasn't like you know, if you look at gener of AI, it's just kind of another evolution of AI. But we've been working on AI for fifty some odd years. I mean, like just boom, it happened, and it really shocked us when it actually was more accessible and worked.
And I think the same thing.
Could happen with quantum computing, which is you know, takes a long time, takes a long time, takes a long and then all of a sudden, it's functional and solves problems that you couldn't solve easily or cost effectively before. And it just feels like it happened overnight. But quantum computing we've been working on now for ten post years.
And then the euphoria comes, and then people try to make head or tail of how long that eu floria lasts. Going back to the investment that you make, and particularly in generous AI, do you think it's going to be peak year for generative AI in terms of that investment that Amazon makes, I don't know.
You know, it's funny.
I have this feeling that you're going to end up with some people that feel disillusioned about gender AI because the investment or.
You getting the commensurate return. It's still very early.
You have so many companies that are really doing pilots right now their gender of AI applications, and you already.
See a little bit of it.
But I think that the smart companies are going to figure out which are the initiatives that can really change their customer experience and their businesses and keep investing in general AI and the slower companies are going to wait to see if it's safe to go outside, and they'll be behind by two or three years, maybe more because the reality is even more soll than software development, general of AI is very iterative. It's not on software development.
You can get on a whiteboard with a team of architects and design something and maybe it doesn't work exactly as you design it, but largely you know, whereas in general of AI, the models they get better at kind of disproportionate rates, sometimes scaling low.
Have We've got a new scaling law Stu.
I mean, I think that a lot of times when you're building models and the model gets so much better and you talk to the scientists and the team, they just can't believe how much better it got because the model is learning itself. And so I think that if you actually aren't investing in general AI, you're going to be behind by even the amount of time that you weighted, because there are so many lessons you get from iterating and building applications.
Today, and you want to be the supermarket of AI feels like agnostic to the models, as it is with Amazon alexiplus.
Well, you know, look, the truth is what we care most about in all our businesses, but as it relates to a WS and AI, we want our customers to be able to change their customer experiences and improve their businesses so they can last over a long period time successfully. And if we do right by our customers and take the long term approach we do.
And they're able to run their.
Applications successfully on top of our technology infrastructure services, then they're successful and we ride along with them. And so you know, we in all these areas, we have services we build ourselves. In the models area, we have Amazon Nova, which people are really excited about because it's got comparable intelligence to the leading models in the world, but it's meaningfully less expensive and lower latency.
But if customers prefer to run.
Other models, we have huge partnership with Anthropic and Lama and Deep Mistraw Deep Seeg. I mean, we have the largest collection of leading foundation models in the world and if customers are having success with those, then we're happy. And the truth is, if you build a lot of general of AI applications, people don't realize this. You use
multiple model types often in the same application. Even Alexa Plus, as we talked about using multiple foundation models, and so we want people to use the right model for their applications, and then we make it easy for them to switch between them and run it easily and successfully in AWS.
Andy Jesse, perfect place to leave it. Start with alexaplus and non Alexa plus and all the generation and generative AI that comes with it. We thank you so much, thanks for having me, Andy Jesse, President and CEO of Amazon. We're going to be right back talking more around what's happening with then. As that one hundred under pressure is in video sells us post its numbers, what Solace did in video give to its in besta base when it comes to generative AI adoption. Welcome back to mine mag techn.
On a jam Cautline hid to New York and I'm Jackie Devllas in San Francisco.
Let's get a check on the markets.
The Nasdaq one hundred is down on the day about five tenths of one percent, reflecting this tepid sentiment coming out of earnings, and that's after results in some cloud and chip players are leaving more questions than answers about the longevity of the AI rally. We're also looking at Microsoft, also down on the day about four tenths of one percent. The company today urged the Trump administration to rethink regulations that would cap the export of AI chips to what
it believes are vital markets. Microsoft argued those chip curbs could for countries to turn to China for advanced chips. Broadly, Microsoft is following a similar change as other tech stocks that are showing the nees about whether AIS boom is actually losing steam. Perhaps the most important barometer of that is in video. Shares are also down today, reflecting these concerns about profit margins that eclipsed a sales beat and upbeat revenue forecast. Bloomberg's Ian King joins US now to
break down some of these results. I really want to home in on what was really going on that probably left investors feeling weary. It's newer line of chips Blackwell, they're rolling out, but at what cost?
Yeah, I mean this is a continuation of what we saw three months ago, where they're saying, look, everybody wants these chips. We want to get them out as fast as you possibly can. Guess what, It's more complicated. The computers that are based on are way more complicated.
It's going to cost us.
More, but don't worry about it. Once we get to full production everything, we'll come back on our margins or go back cope. But at the same time, the margins are still above seventy percent.
I mean, people would weep to have more than seventy percent margins. And then we hear, of course from trying to signal that they'll get back to mid seventy percent by the end of the year. But when we've got the market still skating on thin ice here in was enough said about China? Was enough said about potential hits to their future demand from competitors such as Amazon for example.
Yeah, I mean the world as as you're indicating the words, several areas of concern coming into this, and the company had clearly done their homework. They pretty much answered everything in order and went at it pretty hard with statistics and assertions. But at the same I mean underlying this, though, is that this is a company that investors have got used to actually having every innings be a blowout, and this wasn't a blowout. This was just regular common garden brilliant. Right.
You said almost growth in revenue, Yeah, I mean.
We you know, one hundred and twenty our billion dollar company. Two years ago, we were in the twenties.
Right in terms of revenue.
Margins are up you know, ten fifteen basis points from where they were a couple of years ago.
So we're not suffering here.
But but we're just not surprising people on the upside in the way that.
We used to.
And let's talk about what took in videos wind out of its sales earlier this month. Last month when Deep secretly came onto the scene, sparked a lot of concerns that we might not need as many chips as we thought we might.
What did the company have to say about that?
Yeah, I mean a.
Lot of what they had to say was clearly designed to deal with that concern. And Jensen Wang, the CEO, what he was saying is like, look, this is a new way of doing things, but don't worry. Our chips are really good at that as well. And guess what, in the end, this is going to speed everything up. Everybody's going to be flowing into this way of doing things.
This is good for everybody. And he gave a lot of technical explanations that were obviously self serving but at the same time logical and reason that that appeared to sort of slay that dragon. But again, you know, the numbers are what people really focus on.
What's so interesting is at this time we're wondering about what the administration means for Nvideo, for its access to selling chips to China but also to allies. And we've got this push from Microsoft today Brad Smith calling on the administration to basically avoid this focus on AI diffusion rule as was in Poe. What do you think Jensen's reaction would be to Microsoft letter.
I mean you could argue that, you know, in Video kind of the precursor to this sentiment, and you got a little bit of that from Aws as well. I mean, the fundamental argument here is like if you hobble, if your efforts to hobble China are totally successful, guess what
it might backfire. It might hobble us, it might hurt our research and development budgets, it might hurt our end market access, and eventually China is going to be so motivated that they're going to get there themselves and we'll have no play there and we'll have created a monster that we can't control. That's the fundamental argument that's been given in different ways and Invidia has been definitely one of the ones that's been voicing that m Magsie and King brilliant.
To wrap it up with you, thank you. Let's bring in the invested tate now. Ioka, Yoshioka is with US portfolio manager at Wealth Enhancement Group. Let's just go back to the fundamentals of Nvidia's business right now. What did you make of the numbers? Was they're not enough there to excite you at this three trillion evaluation?
Hi, Caroline, you know, we think we thought the results were actually pretty much in line with what we were expecting and maybe slightly better. You know, it's just that in this environment where there's so much uncertainty in the markets, you know, people are just a little skittish about just waiting and being a little bit more patient to see
some of these numbers come through. I mean, they did talk about how margins will expand in the second half once Blackwell becomes a greater portion of the mix, but you know, people are a little bit impatient in this environment.
Ayaka, what do you make.
Of the company already starting to talk about its next model of AI chips, the rubenschip. I mean, it just seems like a lot of these newer models are just coming out really fast. Do you think that's going to be a longer term drag on margins or even risk exhausting customers.
I think so, And I think we see this just in the sort of end use case and how quickly we can adopt AI into all of our everyday lives. I mean, Amazon's a perfect example of how they're trying to incorporate more agentic AI into our lives through Alexa Plus. But know, we have to see this in more areas, and consumer behavior is really slow to change when it comes to adopting new technology, and so we've got to really see the pace of consumer demand and enterprise demand
really match the build out of AI. But the structure, the underlying infrastructure of AI is going to take a lot more compute power, as jensen As has mentioned, and so that's going to continue, I think. In order to just set the stage, what did you make of.
The company's comments around inferencing and its ability to really take advantage of this next frontier where a lot of these new reasoning models are going to depend on this type of training. Are you confident that the company is poised to really benefit from that, you.
Know, I think I won't doubt Jensen and you know, the technological advances that he's been able to create at Nvidia, and I do believe that just the overall you know, inferencing market and just all the reasoning, just the amount of compute that they talked about, you know, one hundred times more compute power needed in order to do all the reasoning behind the scenes. I do believe that that
is probably the right direction. I know there was a lot of concern when deep seat came out, but you know, I think this is just a new level and another area that AI is going to continue to proliferate, you know, in more use cases for AI.
There are these limitations though, I think and agreed Jensen Wang did a lot to talk around these new scaling laws that come with the latest and greatest models and reasoning. He didn't really talk to those some of the geopolitical limitations right now, and when you've got Microsoft coming out brad with asking the government to basically do away with Biden's AI diffusion rule to allow companies to sell globally with ease, is that something that you're thinking about absolutely?
I think even you know, when you go back to when deep seeks you know news came out and really impacted the whole sector. It really goes to show the arms race or the AI race that's in hand at the moment. And you know, it is critical and really important for the US to be you know, in that pole position. And I think that's what's going on here, and we'd like to get as many you know, friendly faces on board with how we the United States and Nvidia and other chip companies are deploying.
AI okay pole positions. Then which companies are in the pole positions for you right now? Which ones do you want to be adding to at this moment?
Sure?
So, I mean I think you know, from a tech standpoint, you still want to have some of the big tech names. You know, in Vidia, we're not selling any Nvidia at the moment. We know it's been range bound for a while. We do believe in the long term it will continue to grow. Broad prom is another name in Microsoft as well.
I mean, Microsoft is you know, at the forefront here pushing for you know, additional globalization of their technology and allowing for their technology to be more ubiquitous so that they can again you know, everybody wants to be in that cole position, and I think we want to put America first.
That's a Yako Yoshioka from the Wealth Enhancement Group things for joining.
US shares a salesforce under pressure. The company telling investors on its earning school yesterday that it expects its AI product Agent Fools to give just a modest contribution to twenty twenty six revenue. That's unpacket all with Alex Okin of Wolf Research, Alex, look, the full cost was what red people here? Forty point five to forty point nine billion dollars? Is Agent Force just not bring enough force quickly enough?
Look, I think with new innovations like Agent Force, particularly when you're dealing with very large, complicated customers, a lot of times in regulated industries, you want to be slow. You want to be methodical, you want to really be in there and delivering value, but you want to be conservative. And I think that's that's a feature, that's not a bug.
And I think investors generally speaking, they've seen this movie before with the Arrival of the Cloud, where it does take time, and I think with Agent Force, we would expect it to be less than a point of contribution. A lot of times you're seeing companies start small, experiment and then have the ability to get a lot bigger.
I think it's also important to remember there's a labor, there's a there's a labor, not cost, but there's a problem here where you want to be very careful and nuanced in how you treat this innovation because it can be disruptive to culture, and so you want to really have a great sense of what's durable, what's reliable, and then what's transferable. And I think Salesforce is kind of in the mix and in the middle of really driving that massive innovation for these customers.
Let's talk about Salesforce's own labor quandary, because not only they're having to get rid of some to put in more AI talent, they're also having a real change of ship in terms of the executive level. What do you make of all the changes.
I think as companies get bigger and they evolve, it creates the opportunity to attract new talent with different levels of experience. I think Salesforce has done this probably better than many other companies in the past. You've seen it as they went through multiple very senior co CEOs like Keith Block, like Brett Taylor injecting just the right amount of stuff that the company needed at that time. I think with the current change, I think Robin brings a
lot to the table. She really brings a lot of experience. The new COFO as they call it, where she inhabits both the COO and the CFO title. I think there's a lot of opportunity with that change. I think it's right for investors to understand that it's a little bit riskier from an execution perspective, but they've got the right set of hands on the controls to I think, get you smooth sailing.
Alex Salesforce has been an evangelist for agents, and you know, this is seen widely as like the next big application that will actually justify just how much investment has gone into the space, because it seemed to be useful like things in customer service, you know, will be able to be taken over by agents in the future. Are you worried that what Salesforce said about it's demand for agent force pretends something deeper about adoption going forward.
It's a great question, and I think that Salesforce is not the first company to create a moniker around generator. The utilization in the enterprise. I would say that goes to Microsoft with Copilot, and I think Salesforce has a real opportunity and they want to be very careful. They want to go slow, they want to really double down.
On the successes that they're seeing.
And they talked about some pretty marquee large customers Singapore Airlines, They talked about accenture. There were even examples with Open Table and Sharkeningja where those companies actually discussed agent Force on their own earnings calls. So I would view the demand is off the charts, the fact that they went from three hundred deals to three thousand deals in one quarter.
But I think you have to look at this over a period of time where the amount of value that these customers will be able to realize in their own organizations and the amount that they will be willing to pay to Salesforce versus the amount they currently pay, it could be a meaningful multiple of that amount, but I think it's going to take time.
Speaking of customers, Mark Benioff said that the Department of Government Efficiency DOGE has actually been using slack for some.
Of its work. What did you make of that?
Sounds like they have a really good collaboration platform that they acquired, and I think it part of the vision for Salesforce. Part of the vision for Agent Force is to have an ubiquitous communication platform because it has a lot of data that's very relevant in a lot of workflows, and the data model that Salesforce can effectively enrich by having those conversations available directly in the application is going
to be important. So look, I look at this as these people need to have relationships with everybody, and I think that Mark talked a lot about how many administrations he's worked with the company has worked with, so I would view this as a positive for Salesforce.
Thanks Alex Zukan from Wolf Research. Appreciate you coming in to unpack that for us. Turning to the entertainment sector, Warner Brothers, Discovery and Paramount both at with their earnings. Here to unpack them for us is Bloomberg's Hannah Miller. Hannah, I think was a bright spot, which is something that we haven't really heard that often when you look at some of the streaming players out there in recent months. What was driving the demand here and profits as well.
Yeah, So both Warner Brothers and Paramount focused on the huge streaming gains that they had in the fourth quarter, and they were kind of, you know, trying to draw attention away from the fact that they missed on revenue estimates and you know, are still struggling with their take
cable TV businesses. If you're looking at Warner Brothers with subscribers, they did a huge international push early in twenty twenty four, especially in Europe and Latin America, so that helped drive subscriber gains for them.
It really was an international focus and subscribe as coming up to one hundred and seventy million with the advertising revenue really big void what then a Paramount because the Paramount plus ads were good and better than expected, but elsewhere fell Shure.
Yeah, I mean, Paramount really emphasized the fact that, you know, their streaming business is growing, they are aiming to be profitable by the end of this year, and they really leaned on the that they have this wide range of content, especially shows created by Taylor Sheridan, who is of Yellowstone
fame and has that hit success. So that's what they really tried to push forward in their earnings, you know, again drawing attention away from the fact that their TV businesses are not doing as well as as they would hope.
And what did the company say about how it plans to sustain some of that content generation because it's really expensive to invest in and it takes time as well.
Yeah, I mean, Warner Brothers really emphasize this morning that they have a diverse range of content. You know, they're pulling from sports, They're doing scripted HBO shows. The White Lotus came up. That's a big one. The Pit, a new medical show, is also something that they're really pushing forward. So they're really emphasizing the fact that they're willing to invest in creative ideas and that this is how they're gaining customers.
Annamella reappreciate it, thank you. Talking of creatives YouTube style, mister Beast is seeking to raise a couple of one hundred million dollars to expound his business in a funding round that will value the company at about five billion dollars. It's all according sources. Talk still in the early stages, not yet clear who will invest. Coming up more on Amazon's Alexa plus, It's Quantum computing chip announcement and more.
This is bluem Meg technology. So we kicked off this show with Amazon CEO Andy Jasse joining on artificial intelligence. And this is the company, of course, also just announced its first quantum computing chip, will significant move, joining the likes of Google and Microsoft, who also recently came out with their own quantum hardware. Let's break it all down on Bloomberg's mat day and first on the quantum chip. They really are going for like efficiency once again, it's kind of Amazon zmmo.
Oh, it's totally their playbook. They were talking about how much they could reduce the overhead of building a quantum chip. They were reminding us, hey, listen, if you actually build one of these things in practice, might cost you a billion dollars. So very wus playbook to say, listen, we think we can build a cheaper mouse trap that might get more more update, Matt, how much of.
This is just companies trying to plant a flag to show that they're in the to computing game. Are we actually expecting to see anything come out of this in the short term?
Short term? I'm not so sure, but I think it's notable talking about a ws's announcement this week that they said, you know, a decade is maybe pretty aggressive, right, which is a lot more sober than you had Microsoft a few weeks back, saying years not decades. So there's there's definitely a lot of positioning going on right now, but you know, put abs down on more conservative sides, saying, listen,
there's still a whole lot of work to do. I think the change that has happened is, you know, folks are saying it's a win, not an if, and you're hearing that really from around big tech.
They're not conservative when it comes to spending. And try as I might, I tried to get Addie to spell out what Lion's share of one hundred billion dollar capex is on AI. Just take a listen to what he said. You did say, basically, one hundred billion dollar run rate for CAPEX expenditure. Can you give us even like a percentage ratedown of how much that goes to distribution logistics and how much goes to AI my shares?
You know most so you've boast of it, you know most of it. You know the Lion's share is more than fifty percent?
Yes?
Is it more than eighty?
We're playing the warmer and colder.
Goo, yes, exactly. Do we need more specifics?
I think we will, But he did make some news.
I think Amazon's been real careful about their general They franchise. They've had multiple billions of dollars in revenue. I think Andy told you many billions. So we're parsing adjectives here, but I think they're getting a little bit moreptific and they're gonna have to as this business grows for them.
Matt, what do you make of some of the competition. Of course, you know you've been looking at quantum very closely. Alexa is now really competing in that hardware space all over again. But kind of shifting back to the quantum piece for a little bit, I kind of want you to break down if there are any differences in what Jase said about how they're approaching it versus what Microsoft and some other players have said.
Not particularly everybody says, you know, quantum is a really hard problem to solve. Everybody says there are so many errors inherent in quantum computing. I think again, the AWUS approach here seems to be sort of simplicity and trying to take out as much of that cost as they can. Right, Microsoft's a little bit different boat technologically. You know, they're they're talking about limitting states of matter. That's those aren't claims you're gonna hear from from Google or Amazon for sure.
Very briefly, it seems that they're still committed to stripping out the layers within the company though, and that's going well.
You know, it's not a crisis right like we've heard, you know, retention issues like a lot of folks. He people a little upset about urto but you know, for now, no big layoffs in twenty twenty five.
Wilson that day, it's been a joy having you here in New York as well. He's going to bid farewell and jump on a plane to Seattle. But that does it for this addition of Bloomberg Technology. Do not forget to check out our podcasts. Find it on the terminal as well as online on Apple, Spotify, and iHeart This is Bloomberg Technology.