From Mahart of We're Innovation, Money and Power.
Collie in Silicon Vallet NBN.
This is Bloomberg Technology with Caroline Hyde.
And Ed Ludlow.
Im Ed Ludlow here in San Francisco. Caroline Hyde is off today. This is BlueBag Technology. Let's get after it. Coming up, Intel surging as it's longer way to come back is underway. We're going to break down the company's earnings with the CEO, Pat Gelsinger. Plus we're gonna have an exclusive interview with the CEO of by Now Pay Later company affirm his outlook on fintech and the payment space.
And we'll push ahead to what's going to be another crazy week in tech earnings with Amazon, Apple, and Qualcom all reporting next week. We're going to stick with tech out this way out West earnings next week include Apple, Amazon, and it's been an interesting dynamic where the market is so hyped up about AI, but if you look at the trading, I think we're kind of focused on some of the core businesses of these names.
Will that be the story next week?
Let's ask Jonathan Curtis, director of portfolio management for Franklin Equity, overseeing nine point five billion dollars in assets under management.
What do you make of that, Jonathan?
Investors love AI, but this week it seems like they traded on the fundamentals the core business.
Yeah, well so, certainly there's a lot of excitement and appropriately so around AI, but we are in the stage of this opportunity that we like to call the experimentation phase. Companies are learning about how to use generative AI. They've been reorientary, reorienting their product roadmaps to take advantage of AI. They're starting to figure out what their customers are going to be willing to pay for some of these capabilities.
But we're not really in the scale at stage.
We think that's going to come here in the next two day, three, maybe four quarters. And the biggest, most important thing to be watching there is what platforms like Microsoft or Adobe or other companies that have many hundreds of millions of users can do when they start putting these AI capabilities in their products where hundreds of millions of knowledge workers and media creators operate every single day.
We're quite excited about what that means.
And how that will put pressure on the underlying infrastructure and semi conductor layer and keep the growth going for a lot of these companies.
So we do this every quarter now, track the number of times AI as a phrase, a word is.
Mentioned on an earnings call.
Do you go through the transcript and say, okay AI number one, AI number two.
I mean, seriously, how much we did do that?
Yeah, so this past earning cycle, not this current one, because we're not completely through it. We did go through and count how many references there were to artificial intelligence, and then we compared it to references to things like mobile back around the launch of the iPhone, because we wanted to get a sense for how quickly this was dispersing through the economy relative to other big cycles that we've seen in the past.
And why why, Jonathan, they're just words? What do they tell you?
They're not just words?
Their intentionality And what's important about that intentionality is it tells you how much the other sectors outside of the outside of tech are gearing up and getting curious about this opportunity and ultimately what the big spending is going
to come. And what's fascinating about the analysis we did ninety days ago was that we saw much more dispersion for artificial intelligence than we did for mobile back at the start of the iPhone cycle, the iPhone opportunity, so that gives us a little bit of confidence that this could be even bigger than other big cycles we've seen in the past.
Like mobile.
Jonathan, I want to talk about the semiconductor name. We're going to be speaking to Pat Gelsinger in about five minutes time, the CEO of Intel. You do not hold Intel, but I believe you do hold Nvidia an AMD. Explain that thesis to me and why they are the winners in AI.
Yeah, so, certainly Intel's an amazing company. There are funds within Franklin that own Intel. They are in the midst of a challenging transformation, and they're a little too PC centric for our growth needs, and they're in a heavy investment stage right now. So we're watching Intel closely. We like Nvidia because they're highly aligned with the AI opportunity and an incredible mode there. We like AMD because they are a share gainer in the server space at the
expense of Intel. We also like TSMC, which is one of Intel's emerging competitors in the fabrication of chips and a MD and TSMC and Nvidia and TSMC together are really helping set the next stage of growth in the semiconductor space, and Intel is just playing catchup quite frankly and.
As a little two PC centric for our interests PC centric.
The other area we want to talk about is cloud, and we started this conversation Jonathan by pointing out that a lot of the trading this week was done on core legacy businesses. Abigail mentioned Microsoft, where investors looked at the performance of the cloud business from a top line growth perspective and weren't as happy.
What do you see there?
Well, encouragingly, we are starting to see some of that deceleration that we've been seeing in cloud in this post COVID era starting to calm down a bit, and in fact the deceleration that Microsoft witnessed and into cloud business slowed a bit, and encouragingly, we're starting to see the real positive impacts from the AI experimentation phase that we're in right now, impacting the cloud operators like Microsoft, like Google. So we think that we are getting through the optimization
is post COVID. We are getting into easier comps there and now we're starting to see AI become a material contributor to these cloud businesses. So we think in our broader digital transformation thesis, AI is still misunderstood by investors. They don't understand how profound the impacts of this is going to be. And then the cloud opportunity is going to be a big participant along with AI. But also as digital transformation continues, and we're starting to see that stabilization.
So we're quite encouraged by both what we're seeing in AI and in cloud.
All right, Jonathan Curtis, Franklin Equity Group Director, Report further Strategy. Just such a wide ranging conversation, and as we discuss, the next big conversation is going to be about the chip sector. Thank you very much. Coming up, stay tuned because we will sit down with the CEO of Intel, Pat Gelsinger.
The market really.
Liked what it had to hear about the quarter just gone and the outlook for the current quarter, but there are long term questions here about Intel returning to a position of leadership when it comes to the cutting edge of chip manufacturing, chip making technology, and also what is the future of this company in the field of AI. Pat Gelsinger, Intel CEO coming up next here here in San Francisco. This is Bloomberg Technology. I want to welcome
our global Bloomberg TV and radio audiences. Intel shares are jumping, with investors buying into signs that the chip maker's long awaited comeback is underway. Intel's forecasting sales in the current quarter of thirteen point nine billion dollars, ahead of expectations.
The company also notched.
A surprise profit of thirteen censor sharing in the corner just gone as a slump in demand for personal computers appears to be come into an it's not all good news. Serve demand isn't recovering as quickly. The company is still a little bit far from its heyday where margins where it's sixty percent sales were nearer to twenty billion dollars.
Even so, joining us now Intel's CEO Pat Gelsinger, You know, Pat, this is the second consecutive quarter where investors have cheered the earnings results shares her up and I think before twenty twenty three, ten out of the eleven earnings prints that you had shares fell. Is this job done for you in the turnaround at Intel?
Well, we have a long way to go yet, but boy, having two good beaten Ray quarters in a row, you know, was a super positive and really I think in the KP of that turning point for the company.
But we still have a lot of work to do yet.
You know, as we said, our client business as now healthy footing. You know, we've returned markers shared to where it traditionally was a strong roadmap. You know, the markets recovering, inventory levels are good, you know, Data Center, we still have work to do, but boy, you know, two quarters in a row where we did a bit better than we expected, you know, but we still have challenges and AI you know, and many of our really good products are only.
Coming to market over the next year. You know.
Networking is still a lot of inventory to work through, and our foundry business is still just a seedling, just starting to show some green shoots. So I'll say, boy, far from finish, but it is nice bouncing off the bottom of a bit.
And feeling that momentum in the market.
Response, Pat, why do you have the confidence to kind of cool the end of the PC slump and also at the same time state that the server recovery is delayed to the end of the year.
Yeah, and the.
PC side inventory levels are now healthy, right, you know, everything that we've seen and a lot of the issues that we worked through Q four, Q one and Q two were over inventory levels by the OEMs and the channel, and now everything is healthy. Our roadmap is very good. We've gained share multiple times in a row. I think we're now at five out of six quarters where we've
gained market share. So I just say in the PC business healthy, Our position is good, and we're looking forward to the AI PC and with our launch of our next generation product, meteor Lake later this year. You know, we believe that ushers in the AI PC generation and I've compared that to like Centrino and Wi Fi, you know two decades ago, a major new use case for why the PC is the best platform. So we're quite
excited about that. On the data center side, you know, we still saw that, you know, the inventory levels still persist. You know, China was weaker than expected. Their recovery is going slower. And you know, cyclically we see the shift toward AI you know, these big training machines. Every cloud vendor is shifting their dollars to more.
Focus on that.
So those three things are leading to a bit longer recovery cycle.
On the data center.
Well, like I said, we performed a bit better than we thought on the data center in Q one AM Q two. So we're feeling like our momentum and execution is rebuilding despite some of those headwinds that are still persist in that area.
For our global TV and radio audience. Here at Bloomberg, we're speaking to Pat Elsing at the Intel CEO. Pat, you're forecasting gross margin of forty three percent in the current period, but it's a long way from that sixty percent gross margin level. You know, Wall Street used to look at Intel and say sixty percent. You know, they cheer you as a leader in that space. Can you just explain to our global audience the timeline and path to getting back to profit at that level.
Yeah, and we're working our way back to margins and obviously a nice bet in Q two on margins, and we forecast Q three a bit better and Q four a bit better, you know. And part of it is the cyclicality of the semiconductor industry is brutal on margins. And when we had an oversupply situation inventory, you know, that just depresses margins because you know, the factories cost the same whether they're full or whether they're empty, So you end up with these charges that you burden the
price points and depressed margins. We also realize that our own product execution has weakened our product position which doesn't have asps as strong as well, so that's another factor. And the last factor here is, you know, the plan that my CFO Dave and I have laid out is an expensive plan. We are making aggressive investments to build the capacity to get back to leadership and thus we're moving through nodes very rapidly. We sat five nodes in four years, so that causes us to have a lot
of undepreciated capacity that we're working through quite aggressively. Also building up a bit more capacity for our foundry initiatives. So all of those factors depressed margins to historically low levels in the first part of the year and we're just seeing ourselves now working to build back to margin levels. But we're still very confident that as we build our foundry business get back to leadership and process and products.
You know that those kind of margins, that's exactly what Dave and I aspire to to the future, and we feel like you two was a good marker. You know that, yes, we're building momentum to get back there.
Thank you for joining us here on Bloomberg Television and radio worldwide. We're joined by Pat Gelsinger, Intel CEO. You described the foundry business as a seedling, but every time you and I have spoken, you've hinted that there is a big customer waiting in the wings to give life to that business.
What can you tell us about that, Pat.
Yeah, and we're having good momentum, and as I said on the Ernie's call yesterday, we have two big customers in particular that we made very good progress over the last quarter for our foundry business. We did have one, i'll say confirmatory, not as big a customer, but the Ericsson announcement their commitment to eighteen A and our next
generation work with them that we announced this quarter. So I'll say overall, we're seeing good momentum and a really strong pipeline of customers, and we hope to make meaningful announcements later this year on that. We also pointed out on our earnings call that now we're seeing a lot of interest in our packaging technologies.
So it isn't just wayfer.
Manufacturing, it's also package assembly and tests.
And Intel has long.
Term been a leader in packaging technologies, and because of key areas like high performance computing and AI, there's tremendous interest in these advanced packaging technologies, and we're finding a lot of customer interest in that incremental area of the foundry business as well.
So overall, you.
Know, and the numbers were good for us in Q two for Foundry, great pipeline of activities, great progress on a couple of these most major opportunities. I'm feeling good like we're starting to really see that momentum build in this new business area for Intel or Intel Foundery services.
If we think about what a potential customer might be, you know, at the scale of Apple, Google or Video, what is it that they want from you? What is it do you think that you can provide them?
Yeah? You know, when I view it, you know, we have to go through four stages. You know.
One is are my transistors good? You know, can they build good products using Intel? Second is do I have the design tools? You know, the cadences and synopsis, c das and the IP libraries. Have we gotten all of those basics done so that they can design on us?
You know?
Then Third, you know, do we have good terms and conditions? Are they better off coming to me versus you know, TSMC or Samsung as an alternative, And then finally, are we customer oriented? Can they really have the support because my factory becomes their factory, you know, So we have to work through all four of those stages before they're ready to commit major businesses to us.
And that's why it takes a while.
You know, they got to do designs and tests and pilots, and you know, work through the financials, and you know, this isn't a mature business area for us. But I'll just say we're making great progress, and in particular, you know, the two most significant opportunities. It was a really good quarter and I'm feeling very optimistic that yes, we'll bring them across the line and start to really accomplish what we've laid out, you know, with our reshoring and building the Western founder.
And we also had great success.
With both the EU and the US chipsack this last quarter, which are affirming the strong support you know, of the Western governments on this strategy.
It's the right strategy at the right time. We're making good progress.
A big part of your smart capital approach, we have to talk about AI. You see, a world in which the PC plays a role for localized running of l l ms. But what are the use cases that you see PAT, The applications PC with AI specific chips is relevant.
Yeah, you know, to some degree. They're numerous ed. You know, let's just give one example. You know, in the future, my word processor, you know, I'm going to hit a button and say, give me a legal brief that describes this, and it's going to get locally generated. You know, my video conferencing, my zine, my teams or zooms. I'm going to say, you know, give me, you know, real time translation across multiple languages, you know, for this meeting, and I'm going to have that in real time on my PC.
You know, my games, you know, for my you know, all of that is going to become synthetically generated worlds locally on my PC in real time. So we see it across creator, across productivity, you know. And as I've said, this is sort of like a Wi Fi moment, you know, for the PC of the future, and that begins with our meteor like launch in the second half of this year.
PAT quickly a one billion dollar pipeline for AI products through twenty twenty four. Just me a sense of the pace at which that pipeline is growing.
Now, Yeah, we had a super exciting quarter. As I said, we six sect that pipeline in Q two, so we saw a huge uptick on that, you know, and I've deployed a lot more sales resources, software resources, you know, to jump on those opportunities worldwide. You know, when we have our Gouty two chip that is now in volume.
You know, we've just seen the first wafers on the next generation Gouty three, which will be our twenty twenty four product, and then we have our twenty five and twenty six products underway.
So you know, we're seeing a lot of momentum there.
And the world is looking for a great alternative, an open alternative, a more cost effective alternative, and Intel is a trusted supplier. We think this is a great area for us to put a lot of energy into and we're seeing the response from the marketplace now.
Intel CEO Pat Gelsinger, we appreciate your time here on Bloomberg TV and radio.
Thank you, thank you so much.
Always a pleasure.
Time for talking tech.
First up, KLA reported strong earnings for the current period. It signals that the chip industry may be nearing a recovery. Shares increase around four point five percent in this session, but it's unclear how long this upspring will last. Of course, it's a sign that chip makers are ready to spend on new equipment. Plus, a burning ship near the Netherlands
has almost five hundred electric cars on board. The cause of the blaze still unknown, but the Coast Guard has denied reports that the fire broke out in the section of the carrier where the electric cars were stored. And finally, China has asked its largest tech companies to provide case studies of their most successful startup investments. The askers the sign authorities are ready to grant them broaderly, way after a crackdown that brought them to a virtual halt two
years ago. All right, coming up, threads, The Twitter like app might help bring the center of Internet culture back to meta.
Look at the new app and its potential impact.
This is Bloomberg Technology. Welcome back to Bloomberg Technology ed lovelow here in San Francisco. This week we mentioned the idea of everything apps not only for x the company formerly known as Twitter, but that conversation now going to TikTok as well. Just twenty four hours ago, we spoke to metacfo Susanly about the concept of everything apps and if Meta would consider itself heading in that direction.
Here's what she had to say.
We're really invested in the opportunities that we have ahead of us across our family of apps right now, including Threads,
which is the newest standalone app in our portfolio. And then there's just a lot that we can do to make the experiences across our family of apps richer and more engaging with the investments that we've made already in AI and especially recommending content that you don't already follow, and we know that that's brought richer content experiences to people, is growing engagement across the apps, and we'll release you know, we'll be releasing features over the course of the next years.
But we're really excited about what we think that this is going to bring to bear for the consumer experience and of course also eventually for businesses to connect with consumers across the family of apps too.
The Everything app.
Let's break it down with Bloomberg's Alex Brinka, who covers the social platforms for US, and Rachel Tippograph, CEO and founder of mick Mac, a global e commerce enablement and analytics platform for multi channel brands.
First of all, Rachel, give me.
Your definition, your definition of an everything app?
And everything app is a place where I'm going to spend the majority of my time to connect with my friends and family, be inspired, potentially, do work, start a business, and transact.
So the newspeg this week is X, the everything app. It's officially happened. Twitter logo's gone, the Bluebird's gone, we have an X, But TikTok and meta is still part of this conversation. Do you realistically see a world in which we see all three move towards in everything app?
I think for everything apps to work, we have to let go of the notion of wald gardens because to be everything you need to integrate with the infrastructure of society. So if you want to drive commerce, you need to integrate with the biggest players in commerce, Amazon, Target, Walmart, payments like PayPal. If you want to integrate into work, you got to integrate into Salesforce and Slack and Oracle and SAP.
The approach that the wald.
Garden apps have taken is, hey, we want to do everything ourselves.
That typically doesn't work out.
So for everything apps to come to life, there really needs to be a partner ecosystem that allows them to flourish in everyday life.
So I want to go back to the metapart of this equation, Alex Brinka, You've written a story published on Bloomberg this morning. Meta has a rare opportunity to seize momentum with threads, and I know you were watching the interview with Susan Lee really closely. They're playing down the sort of near term monetization of threads. But is that the app that represents an opportunity for Meta to broaden itself out a bit?
And the reason I made that argument is because it's not just Twitter or the formerly known as Twitter X. It's not just x that is kind of the biggest competition here for Meta. Even if, as CFO Susan Lee says, the Everything app isn't their kind of current focus, it's actually TikTok. Meta used to be kind of the king maker of Internet culture. Instagram used to really rule the zeitgeist,
and things that happened online happen there first. Right now, TikTok really has that position and That's the argument I kind of laid out it in that piece is Meta has a rare community here, not to kill Twitter, but to actually bring kind of the center of Internet culture back to Meta because TikTok, while that is the place
right now, TikTok's a video platform. Making videos is a lot harder than posting text online, so there could be this moment of opportunity and Edwhen you and Caroline chatted to Susan Lee yesterday, I was really struck when you asked her about kind of how you bring that zeitgeist back. She went straight to talking about product updates and changes to features, which is a little bit different than I
know that TikTok thinks of itself. They talk about culture and bringing creators and you know, music and fashion, and it's a little bit of a different flavor. But I think it's an important distinction as they continue to figure out what threads fits, how threads fits into the meta universe.
I like the historic dynamic, which is that you know what people say right when something's trending on TikTok, your parents might see it on reels or Instagram six weeks later. So with that in mind, Rachel, you know Alex tried to outline Meta's position, which is that they want to seize the cultural moment. Do you see that happening or do you think TikTok leads in that respect?
So first to debunk the myth. There are plenty of gen X and boomers on TikTok. Nearly fifty percent of their users are not millennials and not Gen Z. So culture is happening there, but culture is now multi generational in terms of TikTok. Yes, it is taking over search, which I think is a key indicator that culture is moving there. When it comes to Meta, there is a
huge difference. Meta is an identity service, and because it's an identity service, it had an enormous amount of data to build a really really robust advertising business on top of and move people down the path to purchase. TikTok has stayed more upper funnel has focused on consumer engagement. They do a great job of that, and now are trying to figure out, hey, can we actually steal market share from Meta by monetizing the data that we have
on the platform. How they both use the data, and how they've been building advertising businesses and commerce businesses on top of each other have differed because of the nature of the apps, but Meta, being a center for culture, they have yet to demonstrate that they have the ability to do that again.
All right, thanks to Rachel Tippograph and our own an It's Brinker, we probably could do a full hour on the media social media landscape right now.
We will have both of you back. Thank you very much. Affirm.
The popular buy now pay Lata service has gained traction in recent years as inflation repressures way on consumer purchasing power. With more than sixteen million active customers and more than two hundred and forty five thousand merchants, the company as a marker for tracking consumer trends across various set is now it's expanding its reach in the travel space by
partnering with airline Cafe Pacific. Very happy to welcome Max Leftchin to the show, CEO of a firm and my good friend Blimberg's Shnali Basic.
Thank you Ed, and thank you Max for joining us. When you took a look at this deal that you just cut with Cathay Pacific, This idea that more airlines, more travel is drawing by now pay later options. You know it's very expensive to travel right now. How much kind of heat is there in the consumer wallet to be traveling with these kinds of prices, given kind of strains all their wallet right now.
Well, I think we're still recovering from COVID and the need to get out of the house to see the world is intense, and prices are absolutely high. We are seeing very expensive travel, and yet we're almost at the peak of twenty.
Nineteen, right before the pandemic.
And so part of a reason for the reason we're seeing so much success, so much pick up in the travel industry is the airlines cannot do enough to bring all these people chance to travel, but it is expensive. So being able to afford it and with affirm without lateps, without gimmicks, without tricks, is a really powerful sales pitch.
Well, here's a course partner I have about the airlines as well, because if you think about it, the credit card companies just reported earnings, they're extending loans like crazy. The consumer looks a little stretched when you look at how much debt they've taken out. There's a question about whether they'll hit a cliff at the end of this year.
So how much can.
They really buy now pay later even more to fund things that they want to do, go out and buy luxury goods, and to take an airplane to Europe.
I think fundamentally consumers will borrow to meet their goals, and my job is to provide a bible, transparent, and fundamentally better alternative credit cards. If you see the growth of buy now, pay later, you can see that we are making a real dent and taking over more and more of than consumer or spend. We are absolutely not adding to it in terms of incremental debt.
That is unsustainable as a firm.
Other players can do other things, but our fundamental design criteria is if we don't believe you can pay us back, we will not lend you money. That is what's enshrined in our design notion of no light fees, no gimmick, no tricks. We will not benefit if you cannot pay us back. Therefore will only lend if you can.
Max.
I understand the technological and cash flow advantage of buying now, pay later. My question is what is the limit in use cases? So you know an airline ticket can cost you a few hundred dollars or a few thousand dollars. I wonder what the point is where a firm says, you know what we cannot do this, be it you know, another luxury item or another product category.
So one of the advantage of bin now appilator to the consumer is that, in particular with a firm, again, we evaluate every transaction separately. So every time when you choose to use a firm, there is a chance we will tell you we think you are over extending yourself. It is not financially healthy for you to make this transaction. Please to make a larger down payment, don't transact. Find something cheaper, and so you will or someone will hear that every minute of the day today, and on and on.
We underwrite every single transaction. That's why our credit results have been as strong as they have been. That is part of the design, and that's why buy now apailiator and a firm in particular is better than credit cards.
Max.
Twenty four hours ago, we had Zach Pere, the Plaid CEO, on the show, and he talked about using AI in assessing credit worthiness and lending. I wondered if you could explain to our audience what a firm is doing with AIS in its decisions on buy now, Pay later.
I'll nerd out for a couple of seconds, because I think it's important to AI is now this overused umbrella term that means everything to every So there's a couple of different flavors of machine intelligence.
Let's call it something neutral.
There's machine learning, which has been around for quite some time, and it is statistical learning all sorts of different terms, but what it means is using statistical analysis and more sophisticated mathematical techniques to assess ability to repay by looking at past trends and data.
And we use that and have been using it since inception.
That's where a lot of our underwriting advantage comes from. The other more currently exciting, excitable part of machine intelligence is generative AI, things like Dolly and open AI and chatbots. We do not use that to assess your credits because we don't think the technology is mature enough and frankly, it wasn't built for that. We do use it for exciting things like developer productivity, making more data available internally faster
through chat interfaces. So there's lots and lots to gain from various flavors of machine intelligence, but each tool is for a different job, and we've been using it since the day we're start the company.
You know, Max, You think about technology, You think about what the PayPal mafia has done, and when it comes to payments online, and you have Elon Musk trying to expand on this everything app What role is social media going to be playing in payments ultimately and how long will it take to get there.
I think social media has already emerged as kind of the next shopping format. We're all sort of swiping up on Instagram and TikTok and on and on, and we see a beautiful thing warn't by a beautiful person. Sometimes we want to buy it. I think again, not to serve food my own horm too much. A firm brings certainty and sense of control and lack of gimmicks and
these into a situation that is sped up. When you're tapping to buy something on your social media environment, you're not thinking very hard about what financial tool you're going to use, but you do want that peace of mind, so picking a firm will help you, will keep you protected. We are seeing a huge percentage of interaction with computers and with phones in particular, shift to the bite sized social media modalities, and that's just in your normal talk.
To us about competition, this idea of Apple pay later. You are also partnered with large tech companies yourself, like Amazon, but Apples move into the buy now, pay later space. How much of an impact could that have on you in the future.
You know, for the moment, we're all taking share from credit cards and perhaps even more fundamentally cash. The online e commerce in the O salone is nearing a trillion farmer correctly, offline is four times that size. The penetration into that entire thing is sub one percent if you take the totality, and sub five percent.
If you look at just e commerce.
And so for the moment, most buy now pay latter players are not exactly bumping into each other in a hallways trying to convince that last consumer.
There's lots and lots and lots of greenfield before.
Competition matters more than just converting folks from credit cards onto a firm, And we're making pretty good progress.
There, Max, really quick.
I do want you to reflect again on your PayPal days and the idea of turning X into a place of transactional e commerce. Do you see it as a reality?
You know, don't ever put anything past you on.
I think I think he has proven time and time again that he can achieve crazy things.
I do think.
That the Everything app worked really well in a place and a time in a different country. I don't think us consumer is looking for a version of a ten cent product.
All right, thanks to a firm CEO Max Levchin, alongside, of course Bloomberg Snali Bassett, Happy Friday to you both. Right back here in SF, California's largest utility, PG and E says it's more prepared than ever for the threat of wildfires. The company spent five years modernizing its infrastructure in America's most popular state. It's now turning to AI to predict and control wildfire impact. Take listen to my exclusive interview with PG and E CEO Patti Poppy.
Ed I think you'd be quite impressed if you could see the wildfire science that underpins the activation of the technology. The hardware is activated by the software we have that data system. We've actually divided up our entire service area two thirds of the state of California into two kilometer polygons we call them, and we have readings because of our weather stations, our high definition cameras that are using artificial intelligence to know the difference between fog and smoke.
That are identifying the fuel, moisture levels, the humidity, the wind speed, the temperatures, the grass levels, any open maintenance tags, and that two kilometer block, any tree that's within strike distance of the line and that two kilometer block. And we have technology then that we can activate when the conditions are such that a catastrophic wildfire is possible.
So we're talking about spread modeling essentially trying to predict the path that a fire would take if it was her cust exactly.
So we use the spread modeling with this artificial intelligence engine in to then activate our hardware on any given.
Day of the year.
We have an operation center that's monitoring conditions twenty four hours a day, seven days a week, three hundred and sixty five days a year, and they monitored those real time indicators and then use that AI model to predict risk and then we activate our hardening system. We've put in layers of protection, including our ten thousand mile undergrounding plan, which is sort of old school construction, but it works.
It's very risk mitigating combined with our technology platform to be prepared every single day to prevent the next catastrophic wildfire?
Do you have to make further investment?
I mean he talked about it being old school putting the cabling underground, but that's how it's worked in the past, right above ground cables through a number of factors contributing to the.
Cause of a fire.
Where else do you have to invest and continue to grow your tech play?
Yeah, well, the.
Tech play in undergrounding is actually quite excited. We use those models and all of that AI to determine what's the next best mile to bury. We get lots of calls people want us to bury the lines. So a lot of people would like this to bury their strategic about it. Yes, but we have to use ask that risk modeling to determine the best miles, and then we're deploying all sorts of new technology to make it way
less old school. We actually demoed at an investor event in San Ramon a couple of maybe a month or so ago, what we call at grade undergrounding, utilizing a new steel form with a polymer insert with conduit where we run the conductor and can bury the lines much less deeply right at surface, and it takes a diamond
cutter to cut through this. So there's infrastructure technology that we're deploying, and of course we're deploying all sorts of tools to make sure that every minute we spend doing work, we're doing it in a smarter way.
That was PG and Eco Patty Poppy the main takeaway. Wildfire risks from equipment ninety four sent less likely now than in twenty seventeen because of that tech investment. Check out the full interview on bloomberg dot Com.
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