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Go this is Bloomberg Tech coming up. AMD signs a historic deal with open Ai to roll out AI infrastructure, a packed the chipmakers said could generate tens of billions in dollars of new revenue.
Plus.
We speak with the White House AI and Crypto Zar David Sachs about relations between the US and China in the context of the AI race.
And metas cmo joins us to discuss how AI is changing the advertising landscape what that means for small businesses.
Here and now we turn our attention to the broader markets.
Bitcoin at a record high. Then, now's that one.
Hundred at a record high. We're up six tenths of a percent, the moon music around AIAI infrastructure, and the frenzy therein ed it continues. I'm looking at the socks up three point five percent, a new record high for the index that tracks the semiconductor industry.
But what is leading a game? Of course, you know it's one key name.
We look at AMD at one point hitting a record high We are up the most on this stock in nine years, twenty eight percent surge. At one point it was thirty seven percent higher. All as we hear that tens of billions are going to be added in terms of revenue because the open ai infrastructure pat a sign of real confidence in Lisa SU's AI accelerator and build out ed. We've got such an interesting conversation coming out about this new deal.
Welcome to Bloomberg radio and TV audiences around the world. AMD has signed a definitive agreement with open Ai to deploy six gigawatts of amdgpus. AMD says it will equate to tens of billions of dollars in revenue. Open Ai will get up to one hundred and sixty million AMD shares in tranches and set against both operational and financial milestone.
The focus is inference. Let's bring in a m D CEO Lisa Too and open Ai president Greg Brockman, both of whom join us on set here at Bloomberg Tech in San Francisco.
Good morning, Good morning, It's great to see you here.
Let's frame the opportunity. Lisa, you know that the market reaction is very clear, but for a m D and the AI industry at large. What do you think this represents.
Well, look, this is a huge milestone for a m D. You know, we are so thrilled with the partnership with the open Ai team, and it's also you know a huge moment for the AI industry because you know, when you get to the right down to it, you need more AI compute. I mean, that's where we are today. Compute is a foundation for all of the intelligence we can get from AI. And you know, we are a
compute provider. We have spent years on our roadmap, We've spent years working with open Ai and the team, and you know, together now we're embarking on you know, a massive build out of six gigawatts of AI compute, and it's it's a big deal for us, for our shareholders, for our teams, and for you know, the partnership and the overall AI ecosystem.
Greg I say that the top the focus is inference. I think that's really important to be specific about what you will do with this capacity. So so literally explain that part. And I'm conscious that you know, in the first instance, the first target is one gigawatt and then eventually six gigawatts, but what will you use it for?
Well, I think that the world continues to underestimate the amount of demand for AI compute. Right that we've seen this explosion of demand with things like chat GBT. You know, we're at eight hundred million weekly active users. Now this product didn't even exist three years ago, and we're in a position where we cannot launch futures, we cannot launch
new products simply because of lack of computational power. And we see these models continuing to get exponentially better, and I think we're just heading to a world where so much of the economy is going to be lifted up and driven by progress and AI. And so we're very much heading to a world by default that I think looks like a compute desert, right that there's just not enough compute to go around, and so we're trying to
build as much as possible, as quickly as possible. So we're starting with one gigawatt simply because you got to start somewhere. But honestly, we're building as fast as we possibly can and trying to bring as much computational power to bear for the economy and for the world.
Lisa, this is such a big commitment to Instinct in particular as a customer. Does it make open ai the largest for that particular product.
Well, this is certainly the largest deployment that we have announced by far. I mean, you know, six gigawatts of compute. As Greg said, we're going to start with the first gigawatt in the second half of twenty twenty six on our new next generation m I four to fifty chip. I think the thing to understand is, you know, these types of partnerships actually take you know, years to really get comfortable with the idea that we're going to you know,
go all in together. And this isn't all in partnership in terms of building out you know, the AI compute that open ai needs for everything that they're offering to the world. So yes, it's a huge deal, and it also says a lot about you know, how much needs to come together for you know, this entire ecosystem to operate.
So you know, we are setting up you know, certainly there's a lot of engineering work, but our teams are working together on hardware, software, We're ensuring the supply chain, all of those elements are set up and ready to deliver on this massive commitment.
Greg, talk us through a little bit about the players that you need to also lean on. This has been years in the making, as you say, with AMD, but what other cloud providers were involved. How are you thinking about this working with an Oracle all others out there.
Yeah, we really think of this as an industry wide effort, and in general, we think that compute is something that does require the entire supply chain to really wake up and to really to start building much more than people we're planning on. I think this starts from energy to try to get far more power to be built on. Things like nuclear I think are going to be very important to come online. The cloud providers are an important part of this as well. So we're going to be
deploying AMD in our own data centers. We'll be deploying them together with cloud providers. You know, we have a deal with Oracle, lots of other cloud providers out there. You can really see that we're very much in the
We just want compute as much compute as possible. We think this is important for the economy, We think this is important for the nation, we think this is important for humanity, and so really we're working with everyone in this whole industry in order to get as much compute power online as quickly as we can.
Lisa, I'm sorry specifics where is this data center going to be? Is it one single site? Is it orical that we'll partner with you on this?
Well, actually, what this really is is an announcement of what you know, A m D and open a are going to do together. You know, open ai has a lot of partners in terms of you know, where they deploy. I imagine a lot of it will be in cloud service providers. It's really up to you know open Ai and Greg and Sam and the team. But the way to think about it is, for this you know, amount of compute, it's going to have to be in a lot of different places.
It's a massive amount, multiple locations.
Multiple locations, I would imagine, you know, multiple providers to really get this online as fast as possible.
Greg, there is a lot of focus on where open ai is going to get the money from to fund all of this. Sam Altman's big picture commitment is well documented, right and the numbers to his mind are in the trillions. But have you specifically thought about debt financing for this relationship with AMD? Have you thought about doing a specific equity raise. You are very committed across multiple projects.
Yeah.
Look, the way that I would the way that I would look at this is that AI revenue is growing faster than I think almost any product in history, and that ultimately, at the end of the day, the reason this compute power is so important, it's so worthwhile for everyone to build, is because the revenue ultimately will be there.
Now.
As a company that is trying to move as fast as we can, we look at everything, right, we look at equity debt, we look at trying to find creative ways of financing all of this. That's been actually a huge focus of us for the past couple of years, thinking about how can we possibly build the amount of compute that is required in order to really transform this
whole economy into an aipowered economy. And so I think you'll see lots of creative ideas, but fundamentally, I think at the end of the day, it is because we believe.
Sorry to jump in an interrupt and carriage, just forgive me on this one. The condition of AMD issuing the stock to open AI requires you to spend money basically because you have to deliver that gig awad of capacity. First, Lisa, I have to ask you if you have assurances that open ai.
Is good for it.
Well, let me be clear. I mean, this deal is a win for AMD, it's a win for open Ai, and it's a win for our shareholders. And that's kind of the way we put this together. I have full confidence in open Ai, Sam, Greg Sarah. I mean, this is a massive opportunity for us right now, right here. It's about who has the most compute and how fast can we get it online? And we're committing to doing this together. And the fact is as open ai ad buys chips, that's great for AMD. Our revenue goes up,
our earnings go up. You know, we expect that it will also be very very accretive to our shareholders from day one. And as we do that, you know, we're very happy to have open Ai as a deep partner and we win together. So it's like a virtuous positive cycle in how we build out. You know, this big vision for having all this compute out there, right.
And yet we still question, as you were just talking about, Greg, some of the other supply chain elements.
You're talking about the need for nuclear for power.
What's really interesting is we are you feeling confident enough about the rest of the compute the supply chain is there, is this going to be US manufactured? From your perspective, were you looking and also building out internationally with AMD.
Yeah, we've been looking at really all options our preference and really the core thing that we try to do is build as much as possible in the US. And you can see the commitments that we've made over the past year, you know, five hundred billion dollars of investment in the US, and that's not stopping. We're continuing to build. Think the international that there it is also going to
be important for the world to have compute. I think that computer is going to become this like national security strategic resource, and every country is going to need computational power and so that we are really not limiting our sort of sites in terms of where to build, but we do think it is important that the US leads in this technology, leads in computational power, and we're expanding
the supply chain. But you can see that we've really been working with partners across the globe in order to actually meet the demand that we expect to becoming and upcoming years.
LISTA the manufacturing of these chips. Will do you look to Intel at all for it?
Do you think in the future, Well, as you know, the supply chain is something that we work on, you know, very very meticulously. I think we have a very strong supply chain. We're certainly deeply partnered with you know, TSMC across the supply chain. You know, just to that earlier question, we're absolutely prioritizing building in the United States because I think that's super important. This is the US AI stack. We want to have as much of it in the
US as possible. And you know, we continue to really look at, you know, how do we ensure that there will be a strong supply chain, you know.
Going forward.
Greg Sam posted on x that this deal with AMD is incremental to what's already being done with Nvidia, but as least enough. So I spent quite a lot of time looking at the MII family and the newer generations of products to come. Is there a very clear specific benefit to using a MD technology for inference relative to the capabilities of Nvidia, or do you just see it broadly as some sort of diversifying factor.
Well, I would look at it this way, that there's a huge fixed cost to getting AI models running on any platform, and so that when we look at what's out there, that actually getting AI training to work is a huge, huge amount of lift. That's something we've really only done the work for in VideA, but for inference that that's something that's much more that there's an easier
barrier to entry there. And one thing we found is that I think that the work that Lisai team have been doing on the m I four fifty series, it's looking like it's going to be a really incredible chip. I think that that there's the way that these things work is there's niches for different balances of memory and computational power, and so as we have a diversity of workload, we're finding that having a diversity of chips also really accelerates what we're able to do.
Lisa, at the beginning of this conversation, I said they were both operational and financial milestones to be met, and Greg explained, you've got to start somewhere. So in the first instance, one giga what, but would you just sort of draw out the pathway to that first giga what? You know, it seems like you're prepared to move quickly here.
Yeah, absolutely, and maybe if I can just build on some things that Greg said. I think he's absolutely right. You know, we're a believer in there's a diversity of workloads and there will be a diversity of workloads across you know, customers, models, use cases, and from that standpoint, you know, we feel really good about how we're positioned.
You know, we we love the work here because you know, Frankly, you know, open Ai is the ultimate power user of our chips and and test us in very good ways. So I think that's that's what gives us confidence that you know, the technology is there. And then to your point about milestones, yes, I mean this is clearly a case where we are tied to each other. The first gigawatt of deployment is super important. We're going to start that, you know, second half of next year, and we're going
to build on from there. And it really is not just the technology, but your commercial milestones, adoption milestones, and just how we proliferate the capability going forward. But I'm looking forward to building this as fast as possible. You know, we're already working with a number of cloud service providers who are also very active on our technology, and I think this is a great catalyst to get the industry to build faster.
Tied to each other is such an interesting ton of phrase, and Greg, you are seeing more AI users and chip makers and designers becoming more financially tied to each other.
Is this going to continue?
Is this the staf forward for how you see this financing going forward?
Well, I really see the world transitioning to this AI powered economy. And the interesting thing is within open AI that we've really seen what it's like when your progress is limited and accelerated as two sides of the coin by computational power. Like teams within open Ai, that their ability to deliver really is tied to the amount of compute that they get. And I think we're heading to a world where that is how the whole economy will function.
And we're starting to see it right that people having access to better AI tools. If you're a coder, you're able to do far more if you have access to better AI models. And we're heading to a world where if you can have ten times as much AI power behind you, you will probably be ten times more productive. And so I think that we're moving to a world where the whole industry is waking up to the fact
that we have just not planned. We have not planned for this moment where this explosion in AI demand is happening. So it's happening all the way from the power to the silicon, and I think this whole industry has to to find a way to actually rise to meet the occasion.
Lisa, you have given us a look into the future before about how you see the total addressable market the industry now that the ink is dry with open AI and Greg, are you rethinking either your bigger picture analysis of the market for AI accelerators and GPUs or do you see AMD now having an improved position in that market relative of course to your friends at Nvidia.
Well, again, I think, and I've told you before, I believe that this is a huge market. You know, we have size just the AI accelerator TAM being you know, over five hundred billion dollars in TAM over the next few years. I think some might say, you know, maybe I was a little conservative in that TAM analysis, but the way to think about it is there's so much
need from compute. I mean, you just heard it from Greg, so you know this is a huge pie and you're going to see the need for you know, more players coming into it, and you know, from my standpoint, this is a big validation of our technology and our capability. You know, as much as we love the work with OpenAI, we're working with a lot of other customers as well. There's a lot of excitement in the industry around m I four fifty, so we're ready for it.
MDCO Lisa Sou Open Ai President Greg Brockman, it's been a joy having you on the show.
Thank you both very much.
Thank you, and coming up more on AMD and its impact on the broader tech markets. We've got a key investor for you, Tony one of t row Price.
This is really metech.
Let's stay on that AMD open Ai story, it's impact of the broader tech markets. Tony Huang t row Price, Science and Technology from Portfolio Manager.
You have exposure to AMD.
It's added more than seventeen billion dollars in market cap on one day alone.
What does this deal signal?
Yeah, Well, I think it's a really exciting deal here for AMD and validates their roadmap and their silica and software's. I think it gives them a really big lead customer to really scale and I think that this will probably attract other customers to their roadmap and continue to build out ROCK.
And I've always had this like thesis.
That the TAM is really big and if companies can deliver on that compute, that there's there's a lot of companies that can win in the overall compute. TAM so overall very exciting, and you know, I think it's got a good setup for the next few years for the company's runway.
I mean, Lisa Sue just telling us that maybe she's being conservative when she puts the AI accelerate to TAM at five hundred billion dollars.
Tony, I'm interested.
Though, at opening eye telling us Greg saying that we're looking at all kinds of way of financing this.
How are you feeling.
About this knitting together of purchases and creators, designers of chips.
Yeah, well, I think that taking your step back over the last kind of ten years, everybody's underestimated this TAM.
And I think what's.
Exciting about AI is that there are a lot of productivity use cases here and we're starting to see AI agents really form. And then I think physical AI, so I think as long as like the n use cases are delivering a lot of value, and there's promise there. I think that's what matters in terms of the ROI, and I think a lot of these kind of contracts, I mean they are backstop by really blue chip companies like Mirosov or Oracle.
So in terms of you know, how I'm feeling.
About the financing, I think it's it continues to be probably a good attractive way to do as long as the use cases are intact.
Tony, the mechanics of the deal are the open AI has the right to buy up to one hundred and sixty million shares of AMD at a penny apiece, but that right contingent on the operational and financial milestones that we discussed. It is not circular financing, it's something different. But how comfortable are you with that mechanism.
Well, I think it could make a lot of sense, right.
I mean it puts the two companies of in co development and partnership, and I think there's shared economics and it's a win win for both companies. I think some of the prices the warrants are stricted at a pretty you know high price on the AMB stock price, So I think it's good for both sides and if they win, they win together.
So to me, I think it can make sense.
Does this alter AMD's position in the AI accelerator market in other words, they're closing the gap a little within video?
Yeah, well, I.
Think that both companies are doing really well and they're doing things a little bit differently.
But I think that you're.
Alluding to kind of the market narrative of AMB was kind of in between kind of in video on the GPU side and then Broadcom on the custom side, and I think this can help lift the narrative to go from like a second place GPU player to a co developed.
Partner of open Ai on the AI compute side.
So I think it positions them well, gives them credibility scale, an additional kind of kind of co development R and D to improve their roadmaps. So to me, it definitely is a big positive. And I don't think it's a zero sum game. I mean, I think it just further signifies the demand for AI computing. It's good for the country to build this much capacity because I do think the and payoffs are immense.
I mean, Tony, we're a new record high for the NASA that one hundred. At one point, MD was at a record high. The valuations kind of a higher. When I'm looking at your holdings top holding, Apple, Alphabet and Video Meta, do feel confident that these are going to continue to gain in value with this AI story.
I think there's a good long term story behind all our holdings, and I think a lot of them are beneficiars of AI. They're strong companies that are are great platforms and as a result, I think that you know, we are entering this inflection in AI driving a ton of productivity. You think about you know, output being productivity and labor. I think pun game is going up and labor is going to be relatively uncapped, I think as a limiting factors. So to me, I think it's exciting.
It's never been a better time to be a tech investor. I think there's just so much change in dynamism, So I'm excited for the multi.
Year here, Tony, if your humor me please, My colin today was about all of the debt deals that are underpinning the AI infrastructure build out that we're seeing. You know, everyone seems to have a different comfort level with that as well. How sanguine are you about the role of debt in what we're seeing?
Yeah, I think that you know, the key signal here is you know, what what is this AI capacity, this AI infrastructed capacity.
Worth, and what's the useful life?
I think a few years ago we're debating is the useful life for a GPU data center three or four years? And I think that was just too short. You look at a lot of the GP use you know from seven eight years ago. They're still being fully utilized because the AI workloads continue to evolve. And then when you fully appreciate these assets, like they're at a price.
Point that could make sense for other lms be running on them.
And so I think that you know, the useful life of these gps are definitely more than four or five years. And you know, there's just more and more use cases. You think about robotics, like you know, diagnostics, simulation, there's just a ton more than we thought there were three years ago. And I think that's what We'll keep the utilization high of these data sounds as long as that you know continues, I think it makes a lot of sense.
Totally a good pivot another part of your portfolio.
Verizon change at the top, hands verse bag, handing over the rainsidantialman, how'd you feel about it.
You can you come again now that question.
With Verizon, we are seeing executive changes at the top on certain companies.
How do you feel, for example of.
Verizon seeing hands verse bag changing over the rain today.
Yeah, actually we don't own verses, so I probably that's a little bit outside of my wheelhouse.
To carment.
Tony Wong with tro Price, we're trying to get you on all the news of the day, but we really appreciate the insight into the AMD open aideal.
Thank you very much, Carrot.
Time now for talking tech.
First up, Apple ed is facing an investigation in France over the storing of voice recordings made by its Sirie assistant. Probe is related to claims that subcontractors and had access to sensitive recordings. The iphonemaker says it uses Syrian interactions to improve services and only stores them in users opt in.
Apple declined to comment on the investigation.
Plus Fox con reported sales growth of eleven percent in the third quarter and projective further sales growth this quarter.
The gains by and video partner officially named Honhai.
Signals that demand for AI chips and servers remains strong, and Tesla shares jumped after the company posted cryptic videos teasing a possible product. Unveil Saysa's last addition to its product lineup was a cyber truck two years ago.
Executives have said, an affordable model. Why it's on the works. Welcome back to Blue med Tech. We check in on these markets.
New record highs October apparently has been coined, certainly for looking at the crypto world, Bitcoin one hundred and twenty two hundred and thirty up two percent. We had a risk on rally throughout the weekend. That risk on rally continues into money with the NAZ that one hundred and seven ten seven percent.
And you know why.
There is a key player at the moment that is helping us push up and to the right. It is AMD up twenty six percent at one point, hitting a record high, up the most in nine years. Extraordinary new deal soaring after of course, it's doing this deal with open Ai for AI infrastructure that can generate tens of billions of dollars in new revenue.
Ed.
We had a great conversation with Lisa Su and Greg Brockman a moment ago. Another great conversation coming up.
Yeah, really looking forward to this one.
Joining us now as the White House, AI and cryptos are David Sachs. He's also the co founder and partner of Craft Ventures all of course as well. David, there is something that I wanted to talk to you about for a long time, and we will get to it, the debate around should the United States or should the United States not export some form of AI chip to China,
And we will get to it. But I'm sure you can appreciate, you know, the AMD and Open AI agreement is very interesting, and so as a place to start, could I just ask your sort of interpretation of what it signals when you have a US chip maker like AMD after Nvidia, and one of the frontier model shops like open Ai working so closely together on infrastructure.
Well, and I think the main thing here is this, there's an AI boom going on and the market is highly competitive. We have a number of leading model companies, we have a number of leading chip companies, and they're all competing with each other and they're all booming. And what we see here is that this AI boom just keeps going and going and keeps driving businesses to new highs. And this is all a result of President Trump's pro innovation,
pro export, pro AI policy. We saw this help drive us GDP to three point eight percent growth rate in the second quarter. So I think this seems this boom just seems like you going to keep going and going, and we just heard I think it's.
Just justson One was the latest on a podcast shouting you out, shouting out those that are in the team at the White House at the moment guiding when it comes to technology, David. But I'm interested as to whether you, as an investor, have great comfort in these relationships being built, financial relationships between chip designers and the chip users.
Well, I think it's up to them. You know, I don't really take sides in these deals. We want all of our American air companies to be successful, and they're all competing with each other and cooperating with each other. I guess it's called coopetition, and that's a great thing to see. We just want, you know, putting my AI hat on, we just want these markets to be competitive, and we want American companies to be successful, and that's what's happening right now.
I'm looking therefore at the future rollout, the buildouting that gives you pause in terms of actually the infrastructure needs here at the moment.
David, Well, anytime you're working in the world of atoms, it's going to be more complicated than when you're working in the world of bits, and so it's very important for us to scale up the amount of power that's available to AI companies. And you're seeing that thanks to President Trump's policies that are pro energy. The President back the idea of drill baby drill going back many years. I think he was very far sighted in this regard. He understood that energy is a basis for everything. It's
certainly the basis for this AI boom. And we're in the process of allowing a lot more power generation in the US. President Trump is allowing so called behind the meter power generation. In other words, these AI companies can stand up their own power generation. We need to squeeze more out of the grid, and we're enabling new oil and gas and nuclear so all the above. So I think that energy is the main thing, and President Trump is supporting that.
David.
Final question on on AMD and open AI. Did the parties consult the White House about moving forward with this arrangement and their plan to work together?
No?
No, I mean not with me. And I wouldn't expect them to. We just don't get involved in the deal making between private companies. Again, We're here to create a policy environment that is supportive for all of RII companies.
I appreciate that.
Okay, So, David, I asked you to come on the program because we spoke at the end of last week for a story that was done out of DC on the idea of well, what is a China Hawk? But also within that broad description, should the United States or should the United States not export deprecated AI chips to China. You've been very generous with your time, but I just
invite you again for our Bloomberg Tech audience. Explain how you view yourself in this debate and what you think is strategically most important for this country.
Well, first of all, I would say that I consider myself to be a China Hawk. I want the US to win this AI race. We understand that China is our main competition globally in this AI race, and we want to do everything we can to win. And President Trump and his AI speech on July twenty third laid out some of the tempoles of that strategy. We need to be pro innovation, We need to be pro infrastructure and pro energy, and we need to be pro exports
so that the American technology stack dominates the world. So this is all in the service of the United States winning this AI race. We understand that it's going to have major economic and national security ratifications, and we're in it to win it.
There is a lot of focus on the direct to China part. But the other way that some look at it is there is a marketplace outside of America and outside of China, the Middle East being an example. What's your position on that and whether the United States wants to kind of leave the world open to China to sell its own technology.
Well, there was of you in the previous administration that we shouldn't sell chips to many countries, including the resource rich Gulf States, and I think that was a major mistake because every time you tell a country that they can't buy the American tech stack, what's their action going to be? They're going to turn to China and adopt the Chinese tech stack. I have a very simple metric for measuring weatherwoiting the AI race, which is global market share.
If we look around the world and say five years and we see that the American technology stacks has say eighty percent market share, that means that we won. But if we look around the world in five years and we see that the Chinese technology stack and I'm talking about Huawei chips and Deepseak models for example, has a eighty percent market share, then obviously we lost. By the way, that's what happened in five g We don't want to
repeat of that. So again, the strategy here should be for the US to dominate the world and have the greatest market share. And I think this is pretty obvious to everyone in Silicon Valley because we understand that the way to win technology races is to have the biggest eco system. If you're a technology platform, you want to have the most developers using your API. If you're an app store, you want to have the most apps in your app store. In a similar way, we want as
many users on the American technology stack as possible. And I find it hard to understand why the previous administration would exclude these rich countries from participating on our tech stack. It certainly didn't help us in the race with China. If anything, President Trump's policy boxes out China from the Middle East, whereas the previous administration's policy forced these countries into China's arms.
You've reworked, therefore the diffusion ideals set by the previous administration.
But when you're allowing only less.
Powerful chips, I mean, I think the President even called them obsolete versions of in Video's chips into China. Does that mean that ship of innovation in China's already sailed because they need to have the most sophisticated and they're going to have to build it themselves.
Well, but when you're talking about what we export to China, that's obviously going to be a very complicated question, and there's arguments on both sides. I think there's a pretty strong argument for not selling China our latest and greatest chips because that would be too beneficial for them. However, if you don't sell them anything, then, like you're saying, that will accelerate their desire to be independent of the
American stack. And so I do think there is a compelling argument for selling them a let's call it deprecated American chip or a less great American chip. And by the way, this is why the Biden administration approved the H twenty in unlimited quantities for export to China. Now, when President Trump came in, he said that those H twenty sales have to be licensed and they're subject to a fifteen percent surcharge, And nonetheless, all the people who
approved the Biden policy started attacking President Trump. I think this is a classic case of no one had a problem with it until President Trump agreed to do it.
David Jensen Woe went on Brad Gersner's podcast, and there was a reaction to what he said. You would point out you are an official of the government. Jensen is a private citizen and CEO. But at the root of what he was saying was also the idea of talent. Many talented computer scientists and engineers come from China. I think that was the point he was making. But the personnel part of this story, where do you stand on that?
Well, it's true that something like half the world's AI researchers are from China, and so I do think that we have to somehow be open to working with this talent or allowing this talent to use the American chip stack to some degree. So it's a complicated question always of what you allow China to do. But I think Jensen was making a point there about again the talent pipeline, and we have to be open to it to some degree. Again,
I could serder myself to be a China Hawk. But I wasn't triggered by what Jensen said because I watched the entire two hour podcast, not just the thirty second clip, and I understood what he was trying to say in context, and it is a nuanced question. And look, let me just say to all these people who are criticizing Jensen, what have you done to help us win the AI race?
I can't think of a more strategic asset in the I race than in Nvidia and Jensen himself, who for thirty years have been working on these GPUs and Jensen is a source of huge American advantage in this AI race. So let's trow them a little bit of grace here.
Context is everything. We appreciate you talking about the complicated as well. White House, AI and Cryptois are David Sachs great.
To have you with us.
Now coming up met his chief marketing officer, Alex Schultz, discusses how AI is changing the advertising landscape. Joins us next as a Bluebertet. A new book is out click here, The Art and Science of digital marketing and advertising. It's by Alex Schultz, and he says that AI is going to be a game changing for advertisers if used correctly. Schultz the chief marketing officer, of course a meta there's a thing all too about direct advertising and directing it.
You also understand entirely the analytics and the raw data pine all of this.
Alex, welcome to the show.
I'm so interested in how you have seen the unfolding over the last decade or two. Incremental growth is something that you talk about so much, having direct impact with direct targeted ads in many ways, but then you've got to think of how a company has got long term vision, a north star, as you put it. How are company small and large managing to balance.
This right now?
Yeah, thank you for having me. This is awesome to be here. I mean, look, incremental growth is about being incremental to what would have happened without you doing your actions. You need to be incremental to what would have happened. You need to see what the lift is of your work. That fits totally with thinking long term and what is your north star? What is the goal you want to achieve? That is absolutely a question of like I have a goal. How do I incrementally lift that goal?
Your north star was writing this book. I laid in many ways as well as the day to day in which you're understanding the analytics underneath what's happening in terms of marketing for meta and.
The growth story. Why how did you put this out here?
Yeah?
Well, I mean my north staff of the book is to be useful, Like I want small businesses and large businesses to be able to actually be better at using the tools like you go back Ogilvie on advertising nineteen eighty five Bible, Absolutely incredible book, but there are new channels that have evolved since then. Digital marketing is seventy five percent of the global advertising industry. There's no book for that.
I kept being asked for a book for that, so I wanted to produce a useful book to help people be good at that.
Alex.
In the back part of the book on AI and its impact on marketing, you talk about an audience of one, the idea that the AI can make the ad so targeted to the individual.
What are the risks with that?
You're clearly needing a lot of data about that person to make that audience of one relevant ad.
Yeah, I mean, from my perspective, there are clear Now we've reached the point where there are clear laws out there. There are clear platform policies out there about purpose use, limitation of data, and so it's very clear what you can use the data for. And people like personalized ads, so people have control. You can get young people really understand how to manage their algorithm, and they love the personalized ads that they get where there's something relevant that's
actually useful for them. So I think the balance is actually in a way better place than it was, say ten years ago, in terms of people's understanding of these things. So I think the risks are much much lower, and I think the biggest risk is not taking advantage of it. You look where Europe is, You look at how they regret the current regulations, You look at the draggy report.
They are regretting the lack of growth they have versus the growth the US has, and I think one big part of that is they've hurt advertising.
The big picture with meta has been that all of the work in AI has paid off for like the bread and butter core business. Can you give us any sort of insight into how much more valuable an AI powered ad is what the conversion on it is relative to traditional advertising, how it drives growth on the top line.
Yeah, I mean you can step back completely. Our business has been completely transformed by AI. When TikTok came along, like five years ago, everything that you were looking out on Facebook and Instagram was connected content. You joined, you'd liked, you'd friended, you'd followed. Today, the majority of Instagram and Facebook are unconnected content. And you can see in our earnings results what the impact of AI allowing you to rank content based on semantic understanding of content and semantic
understanding of the individual does for engagement. And then you see it too on the ads in terms of the revenue that's coming through and the results were providing for advertisers. So it's very high double digit percentage uplifts if you adopt things like advantage plus shopping campaigns, make sure you feed the data through with cappy and do the basics right, which I describe in this book, both with meta but also using anyone else's tools.
What about human creativity at this moment, Yeah, one of my struggles is creativity is always about pixels and look, I love my creative seemed they're incredible.
We closed Fifth Avenue. We had Lewis Hamilton do donuts on Fifth Avenue. It was amazing. Things were great and it really really worked. But there's a ton of creativity with data. There's a ton of creativity with target. There's a ton of creativity with conversion rate optimization and flow optimization. And what I get at in this book is creativity in the factors where it isn't David Ogilvy saying stick a car to a billboard with super glue to sell superglue.
It's creativity and how you use data to give people amazing personalized experiences and high conversion rate flows.
Alex Schultz, chief marketing officer for Meta, thank you very much and tune in to Bloomberg's screen Time on Thursday for a deep dive on the creator economy with the head of Meta's Instagram Adam Missi.
That's what we're really looking forward to.
Okay, coming up, we're going to get back to the deal between AMD and open Ai and what that means for concerns around circular financing, the build out of AI infrastructure, and everything else.
This is Bloomberg Tech.
We'm going to get back to open AI and am the deal pushing broader.
Markets high, certainly pushing it AMD high.
Joining Usskaya is with US Swiss quote senior market analyst IBEC. These ongoing deals between chip designers and ultimately those that are perching the GPUs.
What do you make of it?
Well, actually, it's very amazing, especially for those who are questioning the circular nature of the business and the deals that are being announced right now but infinite when. And we'll look at the MD and open Ai deal today. While open Ai is outstriking deals with data centers and chip makers from inside the US and outside of the US in order to stay ahead of the game and make sure that they are not constrained by capacity constraints.
So that basically means that this company today is more worried about not having enough supply for the huge demand than the contrary. And that's outright positive for the aiballs and.
The sentiment here and for AMD.
There is nothing else to say that the jackpot their moment looks like it has come.
Yeah, certainly biggest move in nine years Epech. What's interesting is in video did sync pulled back a little bit after it had risen higher on the hopes that on hire and the server demand was clearly there.
But then we question market share.
I mean, is there anything that gives you any anxiety about videos dominance?
No, absolutely not, and that's due to the context. As you always say, context is everything. The sequence on which we are receiving the information has been very insightful in what's coming. Actually, NVDA announced last week that they would be investing up to one hundred billion US dollars in open Ai. That is announcing today that they will be
taking a ten percent's sake in AMD. So there is a circularity there that suggests that m viderships are not going to replace in the context of this open Ai deal, but rather complemented now beyond the still this could give some leverage to AMD, but it looks like the companies are considering today that the AIPI is big enough to feed everyone grandly.
Epek for public market investors.
Is open Ai the private company becoming some kind of macro level factor that they have to model in.
Well, absolutely, I mean they are so huge now, they are the biggest startup in the world.
They are worth five hundred.
Billion US dollars and d do you have these huge deals with publicly traded companies, and those are the market moving deals of market moving stocks. We are talking about NVIDIAs, we are talking about AMD So definitely, open ai is pretty much the center of this AI revolution. It has been the well the starting point, and it is gaining importance every single day, and with each deal that they announced, they are actually securing their position at the center of this game.
Should we be asking more questions about how open ai is going to pay for all of this, then.
Well yes, I mean some automol recently say that they will be looking at some funding possibilities that he didn't give details about.
But one of the questions here is.
That ai is actually a very capital intensive place, so this company needs funding now. Nvidia coming to the rescue could open the way for other companies also looking to help open ai and take a sake in this company that has not yet gone public. So I think that open Ai, if anything, is not going to really having any funding problems at the stage of the game because they are dominating the AI business right now, and even though it was it's it's a private company, it does
have all the fundings that it needs. I think from private and public investors are just eager to take take part of this company actually because.
The growth story is so clear in terms of revenue.
But when you compare thirteen billion dollars in revenue per year and then you're thinking the trillions and dollars it has to spend. What gives you comfort that that revenue will match the amount that ultimately needs to be financed on.
It, Well, it's it's definitely the reach that they have. We have seen over the past three years other companies like Meta or a Chinese company's aside, but many companies right now perplexity met her. We have x for example, wet Grog and other models that are trying to compete open Ai, and so far they have not been successful in meeting the level of enthusiasm.
That open Ai had so far. So open Ai is actually surfing.
It has been to first to come in and it still has this popularity and this leverage of being the first comer. So I think that they do have a very good leverage in expanding their business and making more revenue in the future.
They just need to play the game right.
They just need to find the right partners and that's exactly what they are doing right now.
Eupe Oscar Deskaya Swiss. Quite great to have you back on the program. Appreciate it a lot more a program it was that does it for this edition of Bloomberg Tech, Caro, tune in later today we have more news due to come from Open AI. We're going to speak with the CEO Brad Lightcap on the sidelines of Open AIS.
Develop a day.
Gosh a lot going, can't stop, won't stop, ed you know it for us, we so appreciate it. Meanwhile, check out our podcast why don't you There are so many conversations you've got to dial back in. Get into Lisa Sue, get into Greg Brotman, get into David Sachs and of course Alex Schultz.
Of Meta as well all online. This is a Bloomberg Tech