From Mahard where Innovation Money and power Collie in Silicon Vallet NBN.
This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Like from New York. This is Bloomberg Technology coming up. AI investments, payoff for Meta details to come, and armed slumps as the chip company holds off boosting its outlook.
We speak to the CEO Rene has plus.
Nvidia shatters records, adding three hundred and twenty nine billion dollars to its market cap in a single session. Full coverage ahead. I want to start on that meta story. This is what the start looks like. You know, it's basically trading as it stands on track for its biggest jump since February. We know all about the capital expenditures commitment slightly boosting the bottom end of the range, but it looks it's like this whole AI thing is helping the top line at least if you look at the
sales outlook for the current period. Throughout the show, we're going to get a lot more on meta now. One stock that's going in the other direction is the chit design firm ARM.
I think we're down around fifteen percent as it stands.
They smashed it in the quarter gone relative to street expectations.
But the story around ARM, as we bring up the.
Stock here down more than fifteen percent, is simply that they resisted the urge to boost their outlook, and that raises some questions. The question should be answered now we have ARM CEO, Rene has standing by joining us here on Bloomberg Technology.
I mean, Renne, good morning to you. That that is the story. What were the factors behind you not boosting the outlook? What were the factors that made you cautious. Maybe it's specific end markets, maybe it's your view of the macro situation around the world.
Yeah, thank you, Ed, and a great question to kick off with. The way I I think about it as follows. This is our fourth quarter as a public company. It is our fourth quarter of record revenues. As you said, we smashed it last quarter, over nine hundred and thirty million dollars of revenue.
So super happy about the quarter. Last quarter.
Ninety days ago, we raised the annual guidance about eight to ten percent. So when we looked at the outlook for the year ninety days later, coming off a great quarter, we just didn't feel the need to raise expectations again. So that's really just the backdrop. It's quite simple. We raised the guidance for the year last quarter, record quarter this quarter, and we're maintaining at this.
Point, Renne, is there anything you can tell me about specific markets that you serve where you see some cause or some hesitation, but you're also able to see whatever it is holding you back working itself out.
Yeah.
Remember ed that we have two components to our business. We had the licensing business and the royalty business. The licensing business, which is really the forward indicator of demand for armed technology, never been stronger. The licensing revenue year on year up seventy percent. What's driving that, that's demand for building new complex chips, more demand for arm more compute capability, so that is a harborager of forward type
of demand. Royalties were also up year on year almost twenty percent, largely driven by smartphone growth where units have been modest, but our new version nine is driving high royalty growth. So in general, we're very very optimistic about the long term outlook, particularly because of the licensing activity being so strong.
One of the areas you know that I cover a bit more deeply is automotive technology, and I'm just trying to draw parallels with different names out there understand what's happening. Mobili told us this morning, for example, that particularly in China, but globally, some of their customers just stop making orders for the second half of this year. I understand that from arms perspective different Right you think about the pipeline of a specific chit that you're involved in the design of,
it's much further afield longer term. But do you see in that industry in particular any sort of either cyclical process happening or some specific weakness.
Now, I think the way we think about the automotive market is we are growing faster in terms of demand for our technology than the market itself. So we were actually up double digits last quarter in automotive royalties, and that's really a function of a gaining market share, But more importantly, the quality of the technology that's going in is much higher. These are more complex compute platform devices. They run a lot of software, whether it's for ibiev autonomous.
So we're very, very bullish about the long term automotive outlook. The near term inventory issues that go back and forth, we haven't been impacted by that so much because, as I said, we're gaining share and the complexity of our own technology being used just keeps going up.
Rennie, I don't know if you'd agree, but I think the common theme of this earning season is capital expenditures relating to infrastructure for AI. And my question simply is what direct benefit does ARM get from any of that process or investment cycle.
Yeah, thank you for the question. We get a bit of a dual benefit. There is a lot of capex going into overall infrastructure scale out, there's general purpose compute. ARMED benefits there because our low cost, low power processors are very very efficient in terms of building data centers. You have AWS, you have Microsoft, you have Google. They've all announced products based on ARM. And then you have the AI data centers, which are very very complex, require
a high degree of customization. Power efficiency even more important there, and that's been a great tailwind for our business. Just look at what Nvidia announced with Grace Blackwell, a very very complex not only chip but based on ARM, using their most advanced GPUs to drive the most complex AI data centers. So for US, we broadly view this AI capex expenditures as a tailwind for the business.
Rennie, you mentioned Grace Blackwell, it takes me to one of our audience questions. When I said you were coming on the show on social media, I actually got quite a number of submissions for you, and one is straightforward. Does ARM plan to design its own accelerator to compete I guess against some of the partners that you're with or out in the marketplace.
Yeah, no product announcements today, ed, Sorry, We're just here to kind of talk about the past quarter and our outlook going forward.
No products announcement that that would indicate from a source of I suppose academic or R and D standpoint that you at least think about it.
We think about a lot of things, right, I mean, our technology, as broad as it is, as many markets as we can play in. My job is to think about a lot of things. So I think that's a safe statement.
Away from the sort of scale of infrastructure data centers, I think the AIPC is something that's pretty much dominated the news cycle so far in twenty twenty four. One of the other audience questions was when do we see sort of a truly competitive ARM based Windows product that can take on the performance of Max or Apple's owned Silicon that goes into a MAC. I know that you think about this field a lot. But on the competition side, what do you make of that question?
Yeah, so I want to be respectful of my great partner Apple and their ecosystem, but there are some great products out there today. Dell XPS has some amazing technology. The battery life I think I was reading online. In fact, I was looking to buy one of them. The advertised battery life is nineteen hours now for a Windows machine. That's rather unprecedented in terms of battery life. All day
use don't need a brick. So Dell and Michael and his team have done an amazing job developing some great products. So I think there are great products out there today.
So all of the AIPC announcements, are there any examples of things that actually sort of translate into revenue for ARM?
Well, again, when you think about AIPCS running on ARM, that's revenue fore ARM, and I think we're you know, the way we think about the AIPC Windows on our market is probably less about the shipments this quarter, but the long term trajectory. I think what you're now seeing is single suppliers that are in the market today. We've heard from a lot of sources that in the upcoming years there's going to be more and more vendors building
chips for the Windows on our market. That's just going to be great for us because not only does it fill out the choices of units for the end market, but it's going to drive growth for US. So I said a few months ago that I thought ARM could be a fifty percent market share in the Windows market in five years. I do believe that we're about one hundred percent of the Apple operating system, so fifty percent of the Windows market doesn't seem too ambitious.
In five year, four quarters ago, probably in a number of years ago, you and I might have started a conversation talking about the smartphone market.
So we'll end there.
You know what's going on in the smartphone market right now and whatever is happening as sort of an industry wide level, Is there anything specific relating to ARM or the high end of the smartphone market VISA v sort of lower end models the middle market that you can tell me about.
Yeah, I don't want to sound like a broken record saying the trends that are going on in the smartphone market are good for ARM, but I'm going to say that, because what we're seeing in the smartphone market is while unit growth has been modest, single digits, there's been significant growth in the premium segment, the high end, and for ARM that's where we draw the highest level of revenue. The reason for that is we use Version nine up in that area of the stack. That's a much higher
royalty rate than the previous version. And those Version nine smartphones in the premium space, they use a lot of ARMED processors, in some cases twelve four or fourteen sixteen, depending on the mix. So it's a true compute platform solution which drives growth for us, which is why in the last quarter, where units were single digits, our smartphone royalties were up fifty percent year on year.
I had a similar conversation with Lisa suve AMD yesterday. But is that a reflective of a broad market movement or is it something special ARMS doing to outperform in the market.
I think it's a combination of both. You know, a number of years ago with Version nine, we added some significant compute capability that was really to drive performance. Now, what we're seeing, particularly in the near term and going forward, is the skws that are being built. People are trying to put as much compute performance as possible in those phones. You know, for example, when you think about the large language models such as Lama or Gemini. When those phones
were developed, those models didn't even exist. So not only are you having to run all the complex software the camera apps, but now you want to run an AI workload. So people are just put as much compute as possible in those high end ships, which is good for us.
Rennie Haas, CEO of thank you very much, And for what it's worth, the stock hit session low down sixteen point two percent during that conversation, but a lot learned.
Let's stick with earnings and look at Etsy.
Which released their second quarter earnings on Wednesday after the closing bell. It's the CEO, Josh Silverman, join me. Let's talk about it. Have listened to this.
We're really proud of the fact that in an environment where we're really swimming upstream with a really tough macro, and I think the story of this quarter has been for discretionary products in particular. It's a tough it's a tough time.
And that's hitting the consumer directly.
Basically, it's hitting the consumer directly. Wells Fargo published a report just recently saying sixty percent of American say that by the time they're done paying their essential bills, they have very little money left over for anything else. And yet we are actually maintaining, you know, we have roughly the same number of active biuses are all time high
ninety one and a half million. We came in actually above the top of our guide or at the top of our guide on every metric, So we're really proud of how we're doing, and we're aware that it's a super vollato macro. But in this time when we're swimming upstream and maintaining, we're building muscle that we know is going to make us stronger, and most importantly, we're not letting ourselves be dragged down.
We're in a moment where.
There's a race to the bottom right now around who can sell things the cheapest, and Etsy is not focused
on that. We're focused on making ets even more. Etsy leaning into our point of differentiation, and to your point about AI AI is going to be so helpful for us because, as you know, there's over one hundred and twenty million things for sale on Etsy, and every single one of them is unique, Every single one of them is made just for you, so organizing that in a way that's easy to navigate is a very tough challenge.
There's no army of humans you could hire to do that, but lms are really good at organizing huge amounts of information in a way that's easy for humans to understand.
That was at CCO, Josh.
They're coming up Meta to the rescue, delivery on earnings and easing some of those big tech growth concerns. Stock up almost seven percent, But let's talk about this is bloombog technology.
There are all the jokes about how all the tech CEOs get on these earnings calls and just talk about AI the whole time.
It's because it's actually.
Super exciting and it's going to change all these different things over multiple time arise.
I think we should probably update that photo. That was Mark Zuckerberg, the Meta CEO. He doesn't look like that anymore. Meta posting better than expected Q two results and it signals that the company's AI investments are starting to pay off, triggering the stocks biggest one day rally in around five months. That level seven percent, game on track for his.
Biggest jumps in February.
Let's get right out to our meta reporter Cut Wagner. I mean that was the question. You spend all this money and the CAPEX number at the bottom end of the range slightly boosted, But does it help you make money in the sort of normal areas of your business?
Did it.
Well?
This is the story that they're trying to tell, right, which is that AI investment is impacting their current ads business. It's making their ads more relevant, it's helping advertisers even create new ads with gen AI tools. It's helping the timeline, it's giving people more relevant content, so they're sticking around longer. This is the narrative that they're trying to tell on
the more immediate side and the challenge of courses. As you point out, they're investing very heavily in the future as well, and so they're trying to balance like, hey, the AI is paying off now, but it will also pay off in a couple of years when these glasses, these large language models, the metaverse comes to fruition. It's a tough balance for them, but they were able to sort of do that with the Q two earnings.
This week, we're just showing the numbers or the revenue numbers by business line, and I think that's the bit that we're trying to understand. You and I have all these conversations with very smart people outside of Meta who give them a lot of credit for their work in the field of large language models and the future applications of generative AI. But it seems like the story here is that it's really helping advertising, which is what they've been basing their business on all along.
Yeah, and it's not as sexy as a story, right, because it's like, Hey, investing billions and billions of dollars into these large language models is going to improve the ROI on our ads product is not really the exciting AI story that a lot of people want to hear. You know, that's chatbots, that's AI smart glasses and assistants and things like that. But I do think there's an element of this investment that is paying off more in
the short term. We heard a lot about that yesterday, But I don't think that's what gets Mark Zuckerberg as excited, Right, That's a necessity, that's what's going to fuel and fund these bigger visions he has. But I really think you know, when he talks about AI, he's predominantly talking about this futuristic technology, this next wave of this next computing platform that he really wants Meta to own.
Just really quick.
Our audience around the world will have different relationships with Meta in its products. But I found the data on growth across the family of apps or family of products really interesting. Why is that going well?
Well?
I mean, they have WhatsApp, I think is sort of a secret weapon that a lot of people don't think about because it's not as big a part of the business, right. But I think this is also just to the stain power of the core network Facebook and Instagram. It's like these are products that are still growing, that are still finding new people despite years and decades of existence. And you know, they're adding threads to the mix now too. I don't think that's counted in that daily act of
people tally, but eventually it will be. And Mark Zuckerberg was talking about that with a lot of praise yesterday on the Earnians.
Call Bloomber's Kurt Wagner, thank you very much. Now, the other sext we're looking at is chips. The US is weighing unilateral restrictions on China's access to AI memory chips and equipment capable of making those semiconductors as soon as next month. Back with her latest reporting, Bloomberg's Mackenzie Hawkins actually quite a lot about this on Bloomberg Technology that you know, for all the hype around AI and the GPU, you've got to have that high bandwidth memory access as
well to make it competitive. Just give me the basics of what you've reported and when it's happening.
So the US government recognizes that too, that you can't make it in video GPU work without access to memory, and officials have been considering for months, adding to the restrictions.
That they've already replaced on China's access to.
Logic chips, which are the brains of devices to attack the memory side, which handles data storage. And they're working on this massive export controls package, probably the most significant one that we've seen since the October twenty twenty two rules initially rolled out and sort of changed the global
landscape for semiconductors. This list could include restrictions on high bandwidth memory above the two point zero generation, so capturing Samsung SKHINEX and Micron's latest models, also on the tools used to make those chips.
Then there's a separate massive restriction.
On additional tools and mint used across the industry that would primarily affect US equipment companies.
So think Lam Applied material.
KLA with carveouts for their Japanese and Dutch rivals.
So this is really a massive package. It's what will probably be.
The Biden administration's last big swing in this space, and it could be unveiled as soon as a couple weeks from now.
The strategy to make US chip sector more competitive is two sides, restrictions like you just outlined and incentives. And the other big story you reported was one name, Applied Materials not getting access to funds in incentives.
Right, So we have the expert control side of the coin, and we also have the Chips.
Act, which is a thirty nine billion dollar subsidy.
Program designed to bring chip manufacturing back to US soil. And so far we've seen over almost ninety percent of the funding committed to names like Intel, Samsung, TSMC, and Micron for these massive commercial fabrication facilities.
But more more than six.
Hundred and seventy companies expressed interest in the funding, so there were always going to be.
Companies that didn't get it.
The biggest name perhaps among them is Applied Materials. They have this four billion dollar research and development project that they're working on in Sunny Vale and they had hoped to get government.
Support for that.
Unfortunately that didn't work out for them after the US scrapped part of that grant program that was specifically designated for commercial r and D because of infighting about a separate program on military ships. So not a great piece of news for Applied Materials, and they've always said that the scope of that project will depend on US governments.
Mackenzie just very quickly, is there any money left then from the Chips actor.
It's now all accounted for.
There's a bit left, something on the order of six billion to allocate.
We should expect to see converce actor.
Romando has said that we'll see announcements through the end of the year eating up all of that funding.
And after we've seen announcements to the.
Major big foundaries, we'll probably expect to see a lot of smaller supply chain investments between now and.
The end of the year.
Bloombergs Mackenzie. Hawk is very busy with a lot of reporting.
Thank you. It's time now for talking tech.
First up Olympic partner Atos reported a loss of two point one billion dollars for the first half of the year on weaker customer demand. The French IT company has struggled with debts, accounting errors, and industry wide headwinds that has wiped out nearly fourteen billion dollars of its market value over the past seven years plus. Reddit acquires startup Memorable AI in its first acquisition since going public in March. The startup uses generative AI to help marketers create better
ads with more effective text, images, and videos. Reddit says the acquisition would improve the quality of its ads on their service, and Samsung's chips boss issues a warning saying the company.
Get be at risk of getting a quote.
Vicious cycle if it doesn't revamp its workplace culture. In an unusually harsh memo to employees, the head of the chip division.
Said Samsung must take steps.
To eradicate com communication barriers and stop quote hiding or avoiding problems. The letter comes after recent missteps by the company in supplying memory chips for AI. Now coming up, we're going to be joined by Denny Fish, portfolio manager at Janis Henderson to dive deeper into meta and the other tech earnings real quick check on shares of Mobilize. So this is the Jerusalem, Israel based maker of chips for advanced driver assistance systems that stock down twenty percent,
trading at a record low. Why because two h it downgroaded its its revenue outlook, its automotive customers stop placing orders. This is Bloomberg Technology. Welcome back to Bloomberg Technology, Ed Ludlow here.
In New York.
We're going to check in on the markets. Big tech earnings in focus this week, Met posting better than expected quarterly results, helped by new investments in AI. The attention now turning to Apple, Amazon, both reporting after the closing bell.
But let's stick with the equity story then, as that.
One hundred pulling back after a monster rally led by Nvidia on Wednesday, the stock recording its biggest advance in over five months. And here's the bit, adding a record three hundred and twenty nine billion dollars to its market cap, destroying the single day record that it had previously already owned. There's a lot to talk about. Let's keep the conversation going. Denny Fish is portfolio manager at Janis Henderson Investors, and let's start with Nvidia. We say it's a moment in
market's history. It broke its own record, but it's one of the bigger positions you hold, Denny. So when you see the red headline on the Bloomberg terminal, how do you react?
How does that make you think?
Well?
I think you know, in Vidia has been a remarkable stock for the last year and a half, and that's primarily been because of the financial performance. I mean, the ramp and revenues that we've seen with its AI chips and GPUs is like nothing we've ever seen before. And you know, where the market's at right now, it's really this push and pull and what we've seen if you just look at the hyperscaler earning so far and particularly the cap X forecast, the market is just really hinging
on every word that we're hearing. And you know, effectively, what we've heard is that nobody's blinking. And you have
seen Capex go up at Google. You've seen Capex go up at Microsoft, and you're seeing Capex go up at Meta, and all of those companies seem to be implying that there's no end in sight at least, you know, through twenty twenty five, and that should be good for Nvidia, and you know it's you know, if we actually look at the other data points in the end, you no, AMD just reported and the numbers were fine, but you know, it's really just a really really small fraction of the
amount of AI related chips that in video's selling and in videos embarking on. It's probably its most significant product cycle ever with blackwell as it goes to a full system's.
Approach this far.
So actually I ask you that about that specific point. You know, I've discussed with Gensen one the annual cadence of new product refresh. But the bit that's kind of concerning or hard to understand is what about all those companies, the hyperscalers but also others that invested at the H one hundred generation and they may have only just got that capacity online and then suddenly they have the option or choice of whether they buy the next cutting edge
generation of chip upgrade. And I think that Jensen's probably talked to you as well, right about swap the ability to swap and in and out those those generations of GPU quite easily, But it's hard to fathom really.
Yeah, Well, what's really interesting and I'll give you a couple of data points. Last night, Mark Zuckerberg announces publicly he talked about that LAMA four, which is the next iteration of their open source large language model that they just you know, have been evolving, is going to require ten x the compute that LAMA three required. And why that's important is, you know, if you talk to the leaders in industry, you'll hear a comment, and that comment
is we want tomorrow's GPUs. And the reason you hear that comment is because one of the single biggest bottlenecks to actually advancing these large language models, whether it's open AI, Anthropic, Google, Gemini, Lama, whatever it might be, you need increased compute power. And that is exactly what Blackwell brings. And so the important part for these companies is making sure that they have the ability to actually create fungibility with the GPUs.
So that when you use.
H one hundreds and then you're going to move to Blackwell, you can actually use those H one hundreds for inference, or you can use them for other parts of your of your company, you know, whether you know, for Microsoft, that could be to support Office three sixty five and co pilot or a GitHub co pilot or in metas case, to support the recommendation engine or content creation or whatever
it may be. And so having that fungibility of the GPUs, but then also having the ability to lean in hard to the latest generation so that you can push the envelope with these frontier models.
So, Denny, this is a good point to go to Apple because it's a different story.
Right.
They are not a hyperscala. They don't make the same direct investment in infrastructure to Capex.
Has always been low. But the AI story is the same.
It's a smaller position for you that you're going into this evening.
Well, it's always hard going.
You just never know, right, you know, we're here on the day of earnings. But here's what I can say. We were really impressed with Apple Intelligence and what we saw. You know, the world was waiting to hear what they were going to deliver. It's not ready for prime time yet. This is unlikely to be a massive cycle, you know, with the with the sixteen, but as we start looking into next year and if they get Siri right and
they're actually here's the beauty of the Apple model. All this Capex, this two hundred billion plus dollars that the hyperscalers are deploying into CAPEX. Apple gets to leverage that because they are the gateway to the AI enabled Internet, you know, through the iPhone interface, and I think that's really underappreciated as it's related to Apple. It's a very capital efficient model.
And Denny, sorry to jump around, but Amazon, I mean, I think with the focus then switches back to AWS and whether the CAPEX still and the investment cycle is still intact.
Yes, you know, Amazon's a little different. The reason it's a little different is, you know, as I mentioned, if you think about Alphabet, you think about Microsoft, you think about Meta and that fungibility element of GPUs and capital expenditures.
Amazon doesn't quite have that.
You know, they can't really repurpose a bunch of GPUs into their core business because it's not a daily engagement app like Office three sixty five or Copilot or Meta or Search, and it really does hinge on their ability to provide the underlying compute for other companies.
And so they're really in.
A push and pull of you know, having been the dominant provider of cloud computing services for the last fifteen years and now pivoting their business to try to compete as aggressively with Microsoft and Alphabet in this next generation of cloud compute, which is any AI.
Enabled portfolio manager there at Janis Henderson really appreciate it.
Thank you.
Some breaking news crossing the wire. We're getting more details on the prisoner swap between the US and Russia where Wall Street Journal reporter Evan Gershkovich and former US marine Paul Willen are being returned. Vadimir Krasikov will be released in the historic seven count prisoner swap.
Krasikoff was serving a life.
Sentence in Germany for the twenty nineteen killing of a former Chechen rebel in Berlin. Will bring you any additional updates as they cross the wire. President Biden plans to deliver remarks at noon about the Americans freed from Russia. Okay, back to one of the other Bloomberg technology stories. Amazon is showing interests in robot software maker Covariant.
That's according to sources.
The company, which was founded in twenty seventeen, has raised two hundred and forty five million dollars from investors, and it was valued at six hundred twenty five million in a twenty twenty three funding round, joining me is Bloomberg's Katie Ruth and Katie you and I broke this story together last night along with Bloomberg's Spencer Sofa. It's it's very in line with what Amazon's focused on.
Give me the details that.
We know exactly, and so this is a warehouse robots software maker using AI. For those who have been paying attention for a while, it reminds of Amazon's acquisition of Kiva Systems in twenty twelve, where they bought a warehouse robot maker. But this is obviously, you know, modern technology in this space, and it could sync with other you know, warehouse type robots that you know, can put things together and package things, which is exactly what Amazon needs.
We should point out that Amazon and Covariant both declined to comment on the story. You know, Amazon's at a stage where it has more than like seven hundred and fifty thousand robots around the world doing all sorts of things. You know, one one source kind of outlines me like Covariant, even though it's raised all this money is a little bit of more of an R and D like research project,
and you kind of need Amazon to get going. The market is interesting because is money hard to come by, Katie, Do you need kind of a savior like an Amazon to come in if you're a smaller startup that's still kind of building out your tech.
Sure, I mean there's certainly capital available for the very cream of the crop top startups right now, but a lot of investors are a little skittish given that we've been you know, there were a couple of years of a correction. So having a you know, large strategic like Amazon, you know, provide resources would certainly help this startup continue to grow and have inside Amazon.
And Katie real quick with short time XAI looking at Character musk Wade in what's going on?
Sure this is enough Ai acquisition rumor? You know we've heard there have been some sort of interaction between Character Ai and Xai about a potential acquisition. Obviously a deal is not yet done and that is what Elon is weighing in about. But you know, we have heard that there is something going on there, so it remains to be seen whether a deal actually happens.
Yeah, I heard there's something going on there too. Bloombays Katie Ruth, thank you very much. Okay, before we head to break, we want to turn our attention to the Bank of England for a moment. The Bank of England cut interest rates for the first time since early twenty twenty and signaled further cautious reductions ahead. Moments ago, we sat down with Governor Andrew Bailey.
Have a listen.
Don't expect we're going back to zero because zero was the product of huge global shocks and it started with financial crisis and I'm seeing COVID as well. I think to get there, something really bad has to happen that we're not currently expecting will be lower than where we are today. But I think it's sorry to him that we're not going back.
I want to talk about GitHub, a leading AI powered developer platform. The company announced expansions in their AI strategy with increased access to and new extensions.
Of their co pilot models.
GitHub CEO Thomas Stomka joins us now for more. And you've been very busy on social media.
You've been hinting at what you've been working on.
Now is the opportunity for you to talk about it a bit more explicitly.
What's going on. It's an exciting day, you know.
I'm so much, so full of energy this morning with GitHub models. We're bringing the power of industry leading AI models small and large, you know, open and close directly to the over one hundred million users on our platform, and you'll not develop us are no longer US wedding back end and front end code. They have to integrate different machine learning models right into their apps, and we want to catch them early in the autoper life cycle.
So they're giving them access to popular models like Lama three point one or Mistrial large Poon. Of course the opening IGBT models, Microsoft's models for free ride on GitHub. So to enable them to explore, to play with these models and put them into their apps, and when they're ready to go to production, to give them a light path into Azua AI.
You said on on X that hint, it's not co pilot, but it's not not AI. Just just explain in layman's terms what you were trying to get at with that.
Yeah, you know, in the past, when I was on the show of when I was on media, we talked with an AI at GitHub mostly about Copilot, our AI plap program that helps develop us write code. It helps them, you know, to do the work on a day to day basis. With gidub models, we're giving them a component to put into the app. If we're giving them access to models like Lama Kohea, AI twenty one labs that they can play with, that they can send and then put that model, you know, into their application code and
run their own scenarios on top of these models. So it's not copiled, but it's AI and it's machine learning models readily available for developers.
The other big news of the week came during microsoft S earnings and the discussion around GitHub.
It's your growth.
I think the number to go to is the is the annual revenue run rate of two billion dollars? You know, for you something that seemed like a really important milestone.
Why it's important, you know, from two perspectives. One six years ago, I was part of the team at Microsoft that acquired GitHub, and we had high hope for this to be a successful acquisition. So I think, you know, the two billion revenue run rate shows that we have done a good deal.
At Microsoft.
We not only bought a company, but we actually invested into GitHub. We set on the power of this developer community to create, you know, in an ever growing a revenue stream. In the earnings before this one, we said we are growing forty five percent year over year. This time, we announced that the rendred is now over two billion US dollars and more so, you know, in the last year, forty percent of our growth came from co pilot. Seventy
seven thousand organizations are now on copilate. It's no longer you know, it's no longer about the early adopters.
Coporlate has casted the chasm.
The question really everybody needs to ask themselves, am I part of the early majority or am I going to evade and become you know, the laggards of adopting AAI technology in my developer life cycle.
Thomas Dumcare, CEO Hub, It's great to have you back on the show. Greats catch up, Thank you very much. Let's get back to matter and matters results. The stock, by the way of session highs to SILL up six percent, the tech giant beating estimates on its advertising growth. In particular Rachel Tippograph, founder and CEO of the e commerce
marketing platform. Mickmac joins us now and Rachel, you have this rich data set tracking where advertisers invest their dollars across not just meta but it's competitive landscape as well, and I think what's interesting is that the data you track was basically justified by their forecast for sales in the current period.
Just your response to that.
Yeah, thanks Meta for verifying our data. So yesterday Zuckerberg reported eleven percent year of a year revenue growth. Mickmac works with over seventeen hundred of the biggest brands in the world powering their commerce media. What did we see in our data? We saw ten percent year of a year revenue growth, So it's absolutely spot on. Meta remains the most traffic brand advertising channel at Nickmac. On any given day, it represents about forty percent of our total traffic.
So what's interesting is you have the data and then what you need to do is find the reason behind the data. Right, And we went into the earning sprint solely focused on artificial intelligence. It seems like the early work and investment metas made in AI is just making their ads more competitive.
Is that fair?
AI is part of it, But I actually think something comes before it.
For the last two and a half years.
Meta has stopped focusing on shiny objects like the metaverse, and it got back to business and focused on its core revenue stream, which is advertising. Meta had to respond to Apple's privacy changes, and it.
Responded in a big way.
Meta did a huge campaign to every big global advertiser and essentially encouraged them to integrate with their Event Attribution API, which bullet proved the effectiveness of the ads. That was number one.
Number two.
Metas also made a concerted effort to partner with retailers and essentially enable off site retail media.
Within the META platform that also.
Improves the effectiveness of their ads.
I would argue that AI is number three.
What AI is doing for Meta and for really all advertising platforms is lowering the barrier to entertry. One of the major barriers to entry in advertising is creative and so if MENA can remove that barrier, it actually opens themselves up to any business on the planet. So I suspect with the investments in AI, you will see their small media business advertising grow.
So I want to linger on that point at a moment longer.
We just showed the pie chart breaking down where advertisers a place of their money.
The story is so the one that you're.
Telling at least is so similar to last week with Alphabet. Again, we went into it really focused on AI, but the biggest.
Contributor to growth.
To growth was just the search business, the legacy business.
One hundred percent.
It's all about making every dollar stretch for the biggest advertisers in the world world. You know, on top of the big tech earnings, you've also had the big CpG earnings in the past few days.
And what they're struggling with is top wine growth. Where is top wine.
Growth going to come from for these advertisers investing in channels like Meta, Google and TikTok. Going back to that pie chart, what you also see is, yes, Meta is the most traffic source within the micmac platform, But what's number two TikTok. TikTok now represents twenty percent of our total traffic. If we were speaking four years ago, TikTok
wouldn't even be in that pie chart. So if I was Meta, I think the big headwind that they now need to worry about is TikTok, and they alluded to that in their earnings as well.
We did allude to it, okay, So let's look at it from the opposite perspective. TikTok faces a divest or band scenario in the United States. If you're an advertiser, why would you keep putting dollars into that platform if you know that that's a potential risk down the road.
Of the effectiveness of TikTok.
The reality is with advertising, it's very easy to move dollars from channel to channel. We've been on the show, We've talked about X in the past.
We saw one hundred percent the client and X traffic.
Did that matter to advertisers No, they just realitated the dollars elsewhere. So until something actually happens with TikTok, you will continue to see brands invest in that platform because of the effectiveness of the apps. In one year, we've seen one hundred and ninety percent year.
Over year increase in TikTok traffic.
We only saw ten percent in Meta.
Again I was Meta, I would be very concerned about TikTok right now.
Ratil Tipograph, founder and CEO of Mick Mac excellent breakdown of your data and linking it to Meta's own data.
Thank you very much.
That does it for this edition of Bloomberg Technology. There is one big earnings evening left to go, but so much to recap on the podcast. You know exactly where to find it. Apple, Spotify also on iHeart this is what's to come right, and this is the picture of the markets right now. We await Apple which is down nine tens of percent. We aweight Amazon which is down
nine tens of one percent. AI is going to be the story, but as our guest outline in the show, in very different ways, Meta off session highs but continues to trade contract for its biggest jump since February of this year with at the index level then as that one hundred down significantly now down one point five percent, and video a part of it.
This is Bloomberg Technology