From Mahard where Innovation of Money and Power Collie in Silicon Valley, NBN. This is Bloomberg Technology with Caroline Hyde and Ed loved Love.
Live from New York.
This is Bloomberg Technology coming up a victory for Micron as the company gets it's a weighted six billion dollar grant from the US government.
We discuss us, We break down the.
Tech earnings with Oracle falling the most in a year after posting lukewarm quarterly revenues, and we sit down with the CEOs of Omnicon and Into Public to dissect the deal creating the world's largest advertising company. But first we check in on these markets. The key points contributor to the upside on the Nasdaq, which does hold in the green is up three point seven percent.
It's all about Alphabet.
Look, actually, we had that head of Quantum AI on the show yesterday discuss saying the breakthroughs they're making in quantum computing in the Willow chip and this really feeds into a well virtuous cycle as to whether it's about quantum AI and cloud All eyes on Alphabet move on as someone to look at the drags to the downside note of them in the chips name Space, but software also we're looking at cloud and software, with Oracle off by seven percent at one point, down as much as
ten percent as look, an eighty percent ramp up in these shares so far this year, therefore, had a high bar for its earnings, and look, the forecast didn't beat expectations. Neither did the nine percent growth in revenue, even though they did delivering cloud Infrastructure'm looking at TSMC, also, a name that's up eighty percent so far this year. We're down one point seven percent, even though they show that November sales are ramping ever high and more than thirty percent.
We dig into that in a minute. Micron as well, off by two point two percent. Although finally they get certainty around that six billion dollar grant coming from the Chipsack coming from the US government to be able to expand memory offering and manufacturing here in the United States. It's a relief. Let's talk about it with Peter Elstrom and Peter.
I'm in to. This is a relief.
It was an overhang on the stock because we're worried that maybe the Trump administration would deny it.
Yeah, that's exactly right.
This is a program where the Biden administration has tried to rebuild the semiconductor industry in the United States. The Chips Act is one of the landmark programs that the administration had, and they wanted to make sure that they locked down this money because Trump personally had criticized these agreements is so bad and the Republicans that even floated the idea that maybe they try to repeal this even
though it was passed with bipartisan support. So the Commerce Department is trying to lock down these agreements now and finalize the details as much as they can before there's this transition in January. So Micron, the really big US maker of memory chips, won this award more than six
billion dollars. That's going to help them build out facilities in Idaho and New York to very key states and try to build up their ability to develop more advanced memory chips, including these HBM memory chips that are used with AI from Nvidia to be able to train AI models.
Well.
The manufacturing king is of course TSMC, and they're just showing how still that focus on AI is a living, breathing thing. Even though we'd have perhaps been worried about the buildout of data bass and more broadly slowing down.
That's right, TSMC sits in an unusual market in Taiwan. Companies have to report their monthly sales, so we get little drips and drabs of information throughout the quarter before we get the final results. So these are mostly just revenue that the company puts out there. But what we did see from TSMC is that revenue is up more
than thirty percent. As you said, they are a bell weather for AI because they make the most advanced chips in the industry, including the chips that Nvidia uses to be able to sell to the likes of Microsoft and open Ai and Google. So it gives us an early
indication of how that demand is holding up. One of the big questions overhanging the whole AI boom at this point is whether companies are going to be able to figure out whether there's a profitable way to deploy these models, whether they can actually makes some money after investing really tens of billions of dollars. At this point, TSMC is
getting a lot of that benefit right now. The question is whether it's a long term trend that TSMC and others are going to be able to benefit from or whether there's some tapering that comes up if the profits don't materialize pretty soon, what is the killer application?
Putilstrom thanks so much breaking down chip makers. Meanwhile, let's stick with Chinese president using pain saying that China has full confidence in achieving its five percent economic growth target this year. He also told international economic organizations gathered in Beijing that China is willing to maintain and promote the development of relations with the US.
Just take a listen.
I have repeatedly emphasized that human beings are a community.
Of shared future.
We should treat each other's developments as an opportunity rather than a challenge. We should see each other as partners rather than rivals. Let's so leadarity, unity, cooperation, mutual benefits and win win progress become the main theme of the times.
Locally, Chain and of course Micron and and Vidio have been under pressure with rising tensions, for example, between the US and China and what that means for some US chip makers. Let's dig in to those tensions and indeed edtagomic economic growth more broadly with Janet Munit. It's just head of market analysis at RBC bruin Dolphin and interestingly.
You've been.
I wouldn't say full out positive, but leaning on some interest in Chinese names and Chinese economic stimulus that seems to be being promised more forcefully.
Oh hi, Caroline, thanks for having me so. Primarily, our strongest conviction is US stocks, particularly because of the US exceptionalism. I think this thing is still going to trade into the new year, and the fact that US companies are just so much more profitable, so we still much creit for US stars versus the rest of the world. However, for Chinese stocks, I think, you know, sentiment has been
very depressed. I think, you know, investors are still doubtful on the scale of the stimulus and whether it is going to work, so it is not that much of a consensus trade. I think this trade is having still a lot of resistance, and we feel that sentiment has been way too negative and you know, evaluations are very cheap.
There is a case to make that there could be more stumulous coming and the fact that economic data is stabilizing, so I think there's a case for investors to diversify a bit into the Chinese stocks as well.
Small overweight in Asia extra Pan on the back of that, what of therefore, the daily deluge we get on ramping up China US tensions. Yesterday it was about in video being investigated by Chinese regulators. There's a longgoing narrative around Micron as well. How have you been trying to price that in?
Well, I have to say it is very difficult to price it. I do believe that institutional investors have somewhat been more prepared this time, and you can see that in some of the sell off in the trade exposed
stock for example European x UK stocks for instance. So I think industrials I've already been making some adjustments and thoughts on the trade tariff issue is very difficult to press in, but I guess some of that is already reflected in market and overall speaking our views that the trade tariff's likely going to be.
Added for TAT and negotiation tactics.
Doubtful that the full extent of the threat is going to be fully implemented, although it is acknowledged.
That some of that will be through.
So keeping out of that, but it's not necessarily a deturn to the ongoing rally in the US equity market for example.
Okay, so the likes of an Nvidia that has got an enormous valuation continue to rally throughout twenty twenty four? Does that continue into twenty twenty five? Come we vindicate these value which is the run up that we've seen in stocks like an eight percent up on Oracle, an eighty percent up on the list of depository notes of TSMC.
Yeah, using gold out Nvidia there. I'm not going to make a specific comment, but this is obviously a great stock, huge profit margins, and still very strong guidance of the black Well chip architecture. And I think, I mean, this is a great company. Obviously investors have is dubbed on the high valuation. I think it can the rally can still go on given that you know, investors still like
strong quality growth. So I would feel that investors will still be very much leaning on the semiconductor sector and then tech in general, life chap in general. In the US, I also feel that investors are more shifting and rotating into more software related stocks instead of just the semi's hardware.
I think that makes sense because that there is likely to be more commercialization potential and realization as aiimals for it, from the infrastructure built out to the influencing and to the applications.
Will have names like Palenta. Coming up in the show a little bit later, Januinally, great to.
Get your expertise.
Head of market analysis at LBC brun Dolphin, thank you.
Coming up.
C three AIS focused on General to AI. Well, the products there are helping drive revenue, but at what cost? Company CEO Tom Siebel joins us next. Meanwhile, let's just check it back in on alphabet, which we'd said had been rallying almost four percent, having its best day on one point since April twenty twenty four. Here's what Google Quantum AI founder Hartman Navin told us yesterday.
FENM computing, It's definitely not that field.
There's steady progress, and our new chips if you just released a willow, will form the basis to start doing useful computations that will enable or solve problems that humankind has.
Let's get to another set of ownings for you. C three AI raising its full year sales forecast. General to AI, of course helping drive sales, but almost kind of cautioning of the lack of profitability in some areas. Joining us for more. C three AI CEO Tom Cebill, Look, your shares are down a little bit, but boy, they've ramped up sixty percent in less than a month. So a lot of optimism going into these numbers.
What drove you to raise the forecast?
Well, it was a it was a great quarter. If the year to day it has been great. I think our revenue growth year over your last quarter was twenty nine percent, which is huge. I think most importantly we informed.
We formed this massive strategic alliance with Microsoft, the largest software company in the world, and all of Microsoft, as there are salespeople worldwide, will be selling C three AIS enterprise AI software solutions, you know, on their price list, getting ported credit being compensated, and so we C three AI goes from order of one hundred salespeople in September to order perhaps tens of thousands of salespeople in November.
So that is a very strong tailwind that builds extraordinary well for C three AI.
That is this slight worry about the profitability, saying that basically revenue, you're prioritizing growth rather than profitability.
What do you say to that.
Time In the short term, we're prioritizing growth. You know, I have this huge enterprise sales engine in the in the form of Microsoft that now we need to enable and for really to not invest in that channel to get thousands of people productive selling and servicing our product and not invest in that is crazy goodness, Caroline. We have three quarters of roughly three quarters of a billion
dollars cash in the bank. And what am I going to do with that if not invest in growth, not invest in market share, and not invest if not invest in market leadership. And I assure you the cash flow and profitability follows.
Okay, So how profitable, for example, would a deal like Microsoft the extension there be because you're obviously digging in on that partnership. They help distribute your offerings. But how much revenue do you have to give up for that?
You do?
Actually virtually one hundred percent of the revenue from the C three AI sales a cruise to C three AI. So it's you know, Microsoft gets the benefit of selling their infrastructure and cloud services. C three gets the benefit of selling the C three I applications. But uh, you know, a very small portion.
Of the revenue is given up.
And this is just a dramatic revenue accelerator. This is the largest software company in the world and they have chosen C three AI as their preferred enterprise AI solutions provider Strategic partnerships just don't get bigger than this.
They don't and Sertny Piper and the analysts over there saying this potentially drives material upside. There are though, and I hate to keep going back to some of the flies in the ointment, but Key Bank just worrying about the differentiation here, Tom of your AI offering. How do you make clear your USP versus rivals out there?
There is one company on the planet Earth, Carolion, that offers over one hundred turnkey enterprise AI applications for utilities, for oil and gas, for defense, for intelligence, for pharmaceutical Fortalit one company on the planet Earth, Okay that offers these kinds of solutions, and that is our differentiation.
And federal strength.
You enlisted a lot there within defense and with ultimately you've got a government focus in many ways that has seen a lot of selling it to federal Will that continue any issues about the administration coming on in twenty twenty five under Trump?
There are our business in the defense intelligence in federal community has been very strong. I expect that to accelerate in the Trump administration with people like elon getting involved.
I think their priorities if we listen to their conferences and we go to, for example, the Reagan Defense Forum that took place last week, there is one topic on the agenda, and that is AI applications, AI applications, AI applications, and then they also talk about cyber But this is clearly going to be a huge priority for making government more efficient okay making, and it is the future of
our defense and intelligence community. So this votes extraordinarily well for the commercial software providers like C three AI, and perhaps votes less well for the traditional kind of beltway systems integrators. I think that the tide might be going out for those guys.
Tom Siebel ultimistic on CVAI. Of course, the CEO thanks for joining yesterday. Let's stick with earnings and let's just check out what's happening with Oracle, because it has been on a tear of late, up eighty percent in terms of share price this year, and therefore its optimism didn't live up to well. The height was there, but the numbers didn't quite meet that height. We're down seven percent
after we saw nine percent increase in revenue. There was strong cloud infrastructure growth though Anna rag Grana breaks it down from Blomberg Intelligence. It just wasn't enough, was it.
See they did beat on constant currency, So in the reported there were slightly you know, slightly below, but that was effics oriented. But at the same time, you know, I think, as you mentioned, the expectations are really getting high for some of these names, that the beat has to be of a material enough, you know, rage we think the demand is still there. It's a question is whether the second half growth rate is going to be in the high fifties.
Or the low fifties.
But still that's a pretty impressive number.
All said and.
Done, That fifty percent is a fifty two percent increasing cloud infrastructure sales that you sort of reference.
What about the rest of the business.
How is just cloud continuing to perform for them?
How is software sales going?
Yeah, see, when you look at Oracle, before the Oracle cloud infrastructure really push happened, this company was growing in that four five six percent range. So when you look at their SaaS business, so the cloud applications business that grew about ten percent, which is generally in line with what's happening with salesforce and workday workday slightly better than that but that space has been under pressure over the
last twelve months. The real area of growth is cloud infrastructure or because of AI workloads, and that's where bulk of the interest lies at this point.
Any mentioned around TikTok because they're a key client.
Yeah no, that wasn't really discussed, you know, on the call, But we think if there is an impact next year. First of all, that's not going to be immediate. It's going to take some time. But because of the backlock that they have, they should be able to offset that for with that, you know, maybe a quarter or two of some dent there, but you know, overall, we think the backlog is there for that.
And they mentioned new clients Meta in particular and increasing focus on that particular area. Anyone else that we were impressed by that they managed to snag that they're managing to woo in with the fact that it is a key offering now in cloud, whereas we've doubted it previously.
Yeah.
So one of the things I would say is almost all major clients out there, you know, whether that's Meta or any other vendor, is going to go out and try to tap into all cloud providers. I mean, unless they have some adversisdial relationship just because there is there isn't that much of capacity out there. In Oracle's case, it's actually getting work from Microsoft right now because Microsoft is fulfilling the needs or the workloads that are coming from open Ai and it's subleasing to Oracle to get
some of that work done. So there is you know, the entire space is going up. It's not just one or two vendors.
Anna Agrana on all things Oracle. We thank you of newberga intelligence time now for talking out tech first up. A door Dash funded study in Pennsylvania found that most of its gig workers preferred to remain independent contractors. This after the company began offering extra payments instead of benefits normally reserved for salaried employees. Class TikTok Shop comes to Europe after the in app shopping feature went live for
users in Spain. The roll out reflects TikTok's push to seek out alternative markets in the face of potential US shutout and the shares of food delivery firm and Talabat. It lost ground after a two billion dollar IPO in Dubai, the girl's biggest initial public offering this year. This adds to a slate of recent disappointing debuts of listings in the Middle East.
Now, let's just talk geopolitics a little bit more.
Now, because despite US and ally sanctions following Russia's invasion of Ukraine, Moscow has continued its ability to procure American tech, including chips from Intel analog Devices Ti Bloomberg reporting that it's discovered that the supply chain path which Russia has been able to secure those components, unknownst to the companies making it has been pretty easy for Morelos Alberta Nadelli joins.
US and now it's an extraordinary deep dive.
Nolberto, just how easy is it to order these sorts of pieces of equipment from Russia right now?
It's relatively simple if you think about the fact that you know, it's been a few years now that the war has been ongoing in Ukraine and the effort that governments have put on to crack down on these practices. There are websites within Russia where companies that are working to produce missiles and other weapons.
They can see.
The catalogs of companies like Texas Instruments on their own websites or stocks available prices and details like that, and then they're able to place order requests with Russian distributors, and then the goods are ordered by intermediaries, they get sent to third countries, other countries, and from there they get to Russia. So overall, that's pretty simple, given the fact that the war has been going on for years now.
Precisely, and the US government has time and time again been warning these sorts of suppliers to crack.
Down on this.
In fact, Shannon Thompson, the company's assistant general counsel that's or Texas Instruments, said, I want to be very clear, TI strongly opposes the use of our chips in Russian military equipment.
How are they able to stop this?
Well, that's a very good question from your questions for the companies more than for me. I think companies are trying to stop these practices from happening, and when issues are flagged, they do intervene. There was, however, for example, earlier this year, a Senate report that came out that suggested that companies.
Aren't doing enough. So they are.
Doing certain practices that would allow them to probably better detect these types of transactions before they actually happen.
So lots of the actions.
Happen later on in the sales process rather than early on trying to identify bad actors and things like that.
I'm Berta Nadelli. Extraordinary peace, Thank you for talking us through it. Welcome back to BLUEBG Technology. I'm Karen Hyde in New York. If we want to welcome our TV and radio audiences worldwide now to bloom Meg Technology. Because Omnicom has announced that they'll be buying into Public Group in a move that will create the world's largest advertising company with an annual revenue more than twenty five billion dollars.
Here to discuss in an exclusive interview, John Wren, Omnicon CEO and Philip Klekowski into Public Group CEO.
Gentlemen, Welcome, Thank you, erl, Thank you John. I'm sat here on.
The Technology Show thinking about the technological disruption that has happened to advertising. Is this response to that, is this to take on alphabet meta and call that more of that global revenue?
Well, it is. Technology does play a role in this, and both Philip and I have focused on that in our conversations over the course of the last year. When you cut through quite a bit of what we're discussing if you look at our industry five years ago, ten years ago, the barrier to entry was very low. It was you just had to be a brilliant person right
with the great with a great idea. Now, in order to properly service clients in this new era, it's key to have those very very bright, very talented people, but it's incumbent upon us to enable them with the best tech in data that we possibly can for them to garner the insights the information at scale so they can react to the environment as they need. And we've each been on that journey, I guess, as all of our
competitors have as well. From an Omnium point of view, we made great strides with the creation of omni and earlier in the year when we acquired Flywheel the commerce stature that we've been able to put together, and that progresses and today we're working even beading all the generative AI possibilities to create tools for our folks. Philip on the other side, can talk to it as well, because he's had a very strong avenge. Sure.
I mean, I think to John's point, technology is playing so much more important a role in our sector, and that's because for our clients, the consumers they need to reach expect a high degree of personalization and the messaging they get, and a high degree of engagement in the experiences we deliver. So to John's point, he brought Flywheel into the family. It's a company that has this quite distinctive ability to understand everything that's happening in the digital
retail ecosystem down to the individual transaction level. And then for US, Axiom, as John said, is likely the largest consumer database.
Outside of the walled gardens.
So if you put those two together, and if we co invest in General of AI, we're very very strongly positioned, we believe to help our clients navigate this tech enabled world.
How does it strip out costs?
You clearly identified opportunities for seven hundred and fifty million dollars in annual cost savings, But the talent when it comes to General to AI's expenses is how do you strip out those costs?
Well, I think John's been really clear and I think we are fully in agreement a year in that it's about enabling the folks who interact with the clients, so those brilliant people.
Giving them more tools. There are ways in.
Which We're not going to invest more than once. We are going to look at infrastructure that is perhaps legacy infrastructure in businesses like ours, So there is a meaningful opportunity there to put the money against the future.
John, some of the concern maybe being priced in at the moment because as combined market capitalizations, they're now lower than they were on Friday.
People trying to digest how this deal works.
City Bernstein's saying the potential for revenue disynergy, rival agencies, stealing accounts, talent.
How do you make sure that people stay on board with you?
Sure, We've always always been the place for the best talented people to come to. Naturally, there's churn in everybody's business every year, fortunately or unfortunately. I've been through this movie once before, but did it badly and didn't complete it ten years ago. This one is a bit more thought a lot more thoughtful.
You're referring to the public steal back at twenty fourteen.
Clients who listen to us and see the capabilities that we've developed between us already, the power of what we're going to be able to continually bring to the marketplace, the changes and the focus and the single point of entry and investment that we're going to make to enable that talent to succeed. I'm not nearly as concerned as the nay sayers are looking for somebody to knock on the deal that we may be challenged by the odd
clients or two. I suspect not, because I think the offerings that we have and the response to those clients is at the core of what we've been discussing for the last year, and that's been first and foremost. So we've been focused on what is this going to mean for our clients, What is this going to mean for
our talent? What is it going to mean for us attracting talent going forward and enabling those people and most very talented people want to work with and for the very best and brightest and have available to them the most state of the art tools, and that's what we'll
be provided. And progress is every day. I mean, I haven't even focused in on what the advances that are very familiar with sorrow about what was going on this morning open and that has a positive impact used as a tool made available to our knowledge workers and so others will try. Someone will succeed, but we'll wind up at the end of the day, with the very best talent in the industry. I think, as we always have.
And Phillip, that talent wants to be enabled with the latest and greatest tools. John was though, talking about how the barriers for entry were very low and now they've got higher, but general to AI makes the barrier to entry for new upstarts incredibly low, do you not believe.
I'm not sure that I would agree with them, because ultimately, what you have to have is connectivity to a very
very broad range of capabilities. And so I think that if you're thinking about it in a very reductive sense and you're saying, well, anybody can create a piece of content, sure, but the reality is that unless that content is connected to a very sophisticated platform with a great deal of technology and a lot of data, then fundamentally it's not really very useful to the clients who need accountability, need outcomes, and are very sophisticated themselves.
We are, of course, speaking with Philip Krakowski of Interpublic Group and John Wren of Omnikrom and John going back to ultimately this pie that at the moment is being redistributed among new players. It's not just meta and alphabet I mean byte dancers in their taking space Amazon as well. Do you think ultimately the agencies that four that become three will own as much as the one trillion of the market that it does it today or will that continue to erode?
Well, many of these players have been competitives of ours now for quite a while. I mean, so it's not new. Some of the tools, some of the capabilities that are being created today, on one hand, would be very welcome and usable by smaller marketers, but larger marketers I refer to Felipa's talented mentioning a minute ago, are going to have to be a bit. You have to bring brand
safety into considerations as you do this. You have to bring in considerations do you have the right to use your image and your voice my next commercial, even though it might be a perfect setting for what I'm trying to accomplish. So there are a lot of considerations. Europe is different than the US, Chinese is going to be different than everybody else, So that competitive set has always
been out there. We with the resources that we have defending ourselves in this environment have been very successful and we will continue to be successful, will be more successful now this will be more focused and we will have more resources to respond to things that change.
Things that change are like a new administration Phllip And everyone's been saying, what about the regulatory outlook? I mean, if you are it's global jurisdictions here, how confident are you that this deal actually gets through?
Well?
To John's point, it's been a long time in the making. We've been very deliberate, So you can assume that you know, we took advice as we were heading into this because to your point, we're going to be looking at a dozen or more jurisdictions in which this will need to clear that hurdle, and we have a high degree of confidence that that's something that we can achieve.
Do you have a high degree of confidence judged in your client in the macro perspective that they currently have. How willing are people to commit to big campaigns in this macro environment as we do have so much geopolitical uncertainty.
Sure, clients still wake up in the morning. They're running their businesses, and they're running their factories and have to sell their products. Maybe the nature of what they're advertising or the channel in which they're trying to reach their customer change, but that's what we're best at and the velocity of that change, and people will do different things to respond to the market approach differently. I think the
change the administration is probably a positive thing. I suspect the new administration is going to be more business friendly than anyone's complained about the existing administration. So I'm not anticipating and we've been well advised, but we have to go through the process. But there are a lot of competitors out there, so that won't be an issue in the final days. Now, the whole focus is on the
flexibility and the agility. Even though people who want to tend to look at size and look at the negative aspects of size, we see sizes empowering because it will give us more resource. And what's key is to keep the agility and lead creativity to the talented people that we both have in our employee and responsible for us both being here today, but enabling them with the best tools, cutting edge so they can go into the largest advertisers in the world and with great confidence tell them that
it's always changing. Nothing yesterday doesn't exist anymore. It's what's tomorrow. But where the place to come.
To Thanks for coming to us today, John Man of Omnicom. I thank Philip Berkowski of Into Public Group. We appreciate it. Meanwhile, of course today Blue Meg Television is having live coverage of an inaugural women Money and Power event. It's convening influential women voice says in finance to discuss.
The future of business.
Look, they've got to talk AI, they've got to talk fintech in global finance.
Just take a listen to what the panel is happening underway. Then when you.
Come to a data dwiffen selection of customers, and this is something that is no border, we love for it for all the insights that we can provide information about the market that you know buyers and sell it from different regions in the country, can be can can benefit from it.
All of you have talked.
About this idea of kind of assessing risks and as we were walking on stage, I heard, you know, folks from deep Miving, we worry about everything the existential crisis of AI. Whose values are encoded in these things, whether it's like misinformation at scale or whatever that might be.
What are the.
Risks of the scenarios that you all are describing, What are the risks of having your AI look at a contract and be like, seems good.
What there are great risk but can something what And it's kind of not not that me say. They've been discussed a lot about, right I think for me think I keep thinking system.
There is an effect which apparently.
Now is uncontroversial, which is in fears from now twenty fifty AI will be the most intelligent being on on on the planet. It's no doubt mosk of at nights yeah, yeah, but by a factor of there's not even ten. Right, So when you think about that, this is the first
time in ISS that's ever happened. All of a sudden can be very scary, right, So in the risk associdity there are a lot because all of a sudden we can lose control all of a sudden in the in the short term even we can delegate too much and know and lose a sense of reality.
What's real? What's real?
And the contra is the contral done well or not? But if you project in the in the long term, it could be even bigger risks in that, right, So it's about losing control. And so how do we put some boundaries, How can we still make sure, we're control, we're in charge, and I think.
I don't think there's a solution yet.
But there are probably two ways and needs to be explored in parallel. So one is the usual way of controls and boundaries. So now for example, which is you know, quality ssurance, limitation of the level of delegation. For example, if we now use AI for a contract, cause somebody should review it, and of course it.
Should uman be a human should review A human should review.
It right in the short and maybe we get to a point where we'll have another reviewing it. It's already happening, you know, on applications, but that needs to happen.
And the other side is.
And we'll be more and more is heataches because as sort of boy, you know, as the model gets very advanced, you need to ingrain the rules so behavior in the model itself. And that's why I think there's a lot of not all the discussion, but starting now about how can you make it happen?
Right, I think that's the main risk.
How do you maintain control without leveraging the power AI? And it will fascinating in the next few years to see what kind of solutions come in place.
I'm putting in terms of the deployment of you know, digital solutions, in terms of people using their phones.
For all these things. One of the.
Realities I'm thinking about the Apple context. You know, to use AI on an iPhone, you have to have the very latest, most expensive version of what is already a very expensive smartphone. All of you kind of operating in context where not all of your customers might have the
very latest, most expensive versions of things. How are you including, you know, the hundreds of millions of people who don't have access to spend twelve hundred dollars on a device to take advantage of some of the technology that we're talking about.
I think it's very dependent on the community that you're operating in and what we found. I think certainly when you look at the African continent with products such as Empesa, which is a product that provides access to financial services to people on the African continent, it works on the most basic of mobile phones, and so anybody through the use of mobile telephony can be able to you know,
transfer capital or whatever the case is. And in that case, actually it just shows the extent to which FINTACH at its most basic level has been able to actually you know, hit through many many levels of industry that were actually not even there because financial industry has not been very robust in many countries on the African continent, and so mobile money has ensured.
That you can leapfrog that.
But you know, so, so from that perspective, you can use the most basic phones for some of the most basic products that you can make available because in terms of sophistication, the level of sophistication in terms of technology is not the same everywhere, certainly where we oppor data access, data access absolutely absolutely, so, you know, so we we found it to still we're able to use it as
it's applicable across the African continent. In South Africa where mobile telephony is very high and you have access to a lot of more sophisticated phones there, you're able to make access to a number of products with the use of AI to consumers that are using whether it's our e commerce platform or they're using any of our platforms, our payments platforms are classifieds platforms.
Yeah, to excess our products.
Michelle. When you know, you've talked a lot about focusing on solving the needs of your SMPS entrepreneurs, what has been like the weirdest problem that they have had in trying to adapt to all of these many changes that seem to be happening at light speed.
Yeah, definitely.
When we talk about SMBs, sometimes we're talking about company with less than ten people already entrepreneurs.
They are multitask.
I think one of the challenge for us is first to develop technologies and innovations and AI solutions.
I mean, this is targeting for what they need.
And that's why we have been working for over twenty five years and we're very happy to have been, you know, supporting these.
Can catch more bluebags, women, money.
And power evenom right here on Bloomberg Television and for now we check in on these markets, says the NASDAK tennds into the red. A key contributor to the downside in the SMP, for example, has been Oracle of by more than seven percent after it's forecast did not live up to expectations. And in general we're seeing nine percent growth in revenue, not enough to vindicate the eighty percent ramp up in the shares we've seen so far this year.
Move on to other individual movers that we're seeing, notable ones to the downside include Mongo dB off by thirteen percent, shares declining significantly. Databased software company reporting pretty strong third call results, but they also announce the departure of their CFO and COO, Michael Gordon. Markets worrying about that despite the strong results. I'm looking at at microstrutuy off by one and a half percent, Pallenteer up by seven ten
percent in a down market. This is we understand that maybe these names could be the ones next added to the Nasdaq one hundred. So we keep a keen eye on whose in and out of these benchmarks. But meanwhile, coming up, we go to the private markets. V see investing trends in cybersecurity sector and nu K Salam.
Is going to be joining us.
But in capital ventures this is Bloomberg technology. In the first half of this year, Palo Alto Networks forty two reported in one the four percent increase in ransomware victims compared to the first half of twenty twenty three. Higher level of activity observed last year was no fluke. This makes cybersecurity a hot sector to invest in if you're a venture capitalist.
We got one of them.
Enrickie Salem, partner at being Capital Ventures and former CEO Simantec, and we're all about this on VC Spotlight continued focus on cyber Does ransomware make a keen interest for you?
Well, obviously it's one of the biggest attack vectors today and what we're seeing is no one's immune. You've basically got small businesses, hospitals, governments. You saw recently that at Starbucks the baristas couldn't access their schedules because of a ransomware attack, and you're seeing it pretty prevalent across all industries.
Today, affecting one in ten companies each year according to JP Morgan.
What are the best ways of preventing this?
How is the technology changing to ensure that we're getting one of a kind founders coming to the space.
Well, so we're always looking to find new solutions to how do you prevent an attack from happening? And that's the key is first try to prevent it, and what that means is try to understand what is the activity or behavior that a ransomware attack will do, which is ultimately try to encrypt the data on your computer and also exfiltrated. But the most important thing now is be
prepared to recover. How do you make sure that you can decrypt it successfully and get all your data back without having to pay the ransom, which is what they're targeting to try to get you to do.
Has that been some of the most fruitful areas allocating right now?
There's also just cyber is just so prevalent.
More generally, we're worrying about supply chain threats as well. Where else have you seen opportunities to be putting money to work?
Well, you talked about supply chain security. We saw the major attack on solar winds which hit eighteen thousand companies, and what we saw then was an executive order for President Biden that said every company needs to take supply chain security very seriously, and ultimately that gave rise to a whole new set of companies, companies like Stacklock, chain Guard, and a number of others that are now actively providing solutions to businesses to protect their supply chains.
We find you so interesting because of course you were a CEO yourself. You're also appointed to President Barack Obama's Management Advisory Board. You understand how politics works at hand in hand with leading businesses. How are you advising your portfolio companies now? As we start to look towards the next administration in twenty twenty five.
Well, I think it's going to be an interesting opportunity for a lot of companies. The biggest trend that we've all been talking about is AI, and AI is going to completely change how many of our businesses work. The attackers we've talked about security, what we're seeing is they can be so much more aggressive now on targeted phishing attacks that are custom made to really get somebody to react.
You know, we're seeing deep fakes.
And so we're telling all our companies how do you take advantage of AI? And then the new administration I think will give us opportunities to drive potentially consolidation M and A. And we're hoping that the IPO market comes back in twenty twenty five.
Riki Salem, have you back when an IPO market starts to creak open partner capital ventures?
We thank you.
Let's talk about geopolitics a little bit more. Huawei suppliers are facing more limitations this as a US lawmakers are moving to restrict the Pentagon from doing business with companies that sell chips and services to the Chinese company who mergs Mike Sheppard joins US for now, for more, this continues to be the narrative China US facilities dialing up. From a tech perspective, already, it is pretty hard if you were supplying to Huawei, but not hard enough clearly.
Well, apparently not for lawmakers on Capitol Hill who want to bar defense contractors from doing any sort of business whatsoever with Huawei, which is a national champion in China, but here in Washington it's considered an outcast and pariah. It's been subject to a growing list of US sanctions and export controls that have limited American companies greatly from doing business with Huawei already, and now we're seeing more restrictions coming their way, this time through the Pentagon. This
is likely to become law. The provision is attached to must pass defense policy legislation that we will see action on in coming weeks before lawmakers leave town for the holidays. So this is something coming down the piking. Companies will have to deal with it within a nine month span that is when the provision actually takes effect, and there are very rare exemptions granted under the law that would allow companies to continue to do business with Huawei and the Pentagon at the same time.
Mike Shepherd breaking it all down in the latest tit for tat tech trade tensions China US.
We appreciate it.