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Adobe drops after a disappointing annual sales outlook as investors fear AI startup competition. Our service Titan goes public shares indicated to lock it at the open. We speak with the software company's co founders and IPO in waiting. Klana joins us and the CEO discussing how it's all in on AI. For first quick check on these markets. We're down three tenths of a percent as we await the opening trades in certain IPOs. At the moment, the moon
music is a little bit lower. We had some of those overall inflationary numbers coming from the product size of the equation coming in a little bit hotter. Maybe that just dampens the spirits, but remember we are so close to record highs that we met yesterday.
Just maybe a bit of.
Profit taking move on from the nasack to some individual movers, and we have got a key points drag in Adobe.
It is the worst performer when you're looking at.
The Nasdaq one hundred in terms of dragging us Ler some thirteen percent worst day sins back to March when it had its underwhelming numbers. Then fast forward to today and that after the bell yesterday, they really signaled that the AI inflection point isn't there yet. We're still seeing revenue coming in and about eleven or thirteen percent the guide I'm looking at in video on the downside of
by one and a half percent. Look, it's interesting that it's pushing back against anxiety that maybe it's pulling back from China, taking to social media, in fact, the platform Wabo to emphasize that the significance of the Chinese market is still there despite the US trade curbs and the fresh Chinese antitrust investigation. In fact, Bloomberg reporting that the chip Giant is expanding its research capabilities in China, adding hundreds of staff to focus on autonomous driving technologies. Let's
bring in roombags, Peter Elstrom, and this is notable. They're pushing back against that worry and in fact beefing up in China.
It seems like, yeah, that's exactly right.
Now.
There are a lot of crazy rumors online in China, just like there are in the United States and elsewhere. But this got serious enough that Nvidia felt like they had to respond and just clarify. They're continuing to deliver products and services into China, and what our sources have told us is they're expanding quite a bit in China. Of course, the company has been growing by leaps and bounds, and they're expanding in many different countries, but what we've
heard is that in China they're expanding. They should go from about three thousand employees at the end of last year to about four thousand employees at the end of this year. As you alluded to, specifically, they want to expand in the autonomous driving area. China, of course, is
the biggest auto market in the world. It's also very important for some of these cutting edge technologies like EV's autonomous driving, etc. So Invidia can't sell its most advanced AI chips into China, but they do still want to invest in the market, and they want to invest in some of these growth areas like automobiles, and.
This has been an ever expanding area of new names getting into the EV space over in China. Just what are the regulations, is it far easier to be putting autonomous driving onto the roads. There's certainly that's something that Elon Musk has signaled.
Yeah, the government certainly has been supportive of some of these new technologies. The EV market there is booming. You have companies, domestic players like Huawei moving very aggressively into this space, providing the kinds of technologies that the car companies need to be able to expand in that market. So in Vidia wants to be present in that market. Also very importantly, they're forging relationships with important companies there.
They have a presence on the ground. They're expanding their headcount as we talked about, to sort of signal that they are supporting the Chinese market. They were able to sell advanced AI chips in the past. After a couple of rounds of X four controls from the Biden administration, they had to pull back on selling those most advanced AI chips. But Jensen Wong, the CEO, has been quite vocal that he'd like to be able to sell as much as he can into the market provided that the
regulations come around. So he's certainly investing in the market right now with a view to the long term.
How good is that from a business perspective when we have so much uncertainty weighing over US Chinese relations.
I mean, we do see well, it.
Seems as though Trump is extending the honive branch of an invitation to Sheed to come over for the inauguration. But more broadly, it feels like tit for tap is endless.
Yeah, it does look like that. When you look at the dynamics between Washington and Beijing right now, it does not look promising. There's been a lot of tensions in the past. Of course, the one thing that the Republicans and the Democrats can agree on is that they want to get tougher on China. So it seems like it's heading in that direction. But remember just ten years ago you had companies that were investing in China. The relationship between the two countries was very strong. And all the
these companies want to do is make money. They want to invest in the market, and they want to grow as much as they can. So I think a company like in Video wants to position itself so that it's able to capitalize if the market opens up. Right now again, it gets about fifteen percent of its revenue from China, so it's not small, but they can't sell their highest end chips, their most profitable chips right now. Instead they're selling those into the hyperscalers like Microsoft and open Ai,
Google and Amazon. But long term they'd like to be able to sell as many of them as they can, that includes the Chinese market.
He's astron, thanks so much for the breakdown. Let's just stick a little bit more with China because it has been signaling further stimulus measures.
We're including raising the.
Budget deficit ratio in twenty twenty five. All of this is about maintaining economic growth, some sort of stability that the market has been doubting of late. Let's discuss us China and indeed the economic outlook there. Empower Chief investment Strategists Martin Norton is here with us, and what's so interesting is your view on valuations in China, opportunities to be investing in China in this context?
Is it right for investment?
Well, it's a critical question here. Really, the argument for China and China big tech in particular, is a valuation argument. When you take a look at big tech and the types of companies that you have there, very strong competitors, very strong balance sheets, shareholder friendliness, strong earnings, and very low valuations. In a world in search of low valuations, that's attractive. But of course you don't get those low valuations without some headwinds and or headwinds galore in China.
And of course that's on the geopolitical fund, but it's also on the economic front, whether you're looking at the property considerations or just looking at consumer demands. So there are a lot of considerations that I think would give investors pause. The upside is that there's a margin of
safety that can cover that. So we wouldn't suggest that investors pile all their assets into China, but we would argue that the valuation opportunities can calling enough that maybe some exposure would make sense.
Well, then you compare and contrast to the valuation lack of opportunity here in the US, I'm looking at a Nvidia trading at forty seven times let's call it future earnings. We've got a three point three trillion dollar market cap. The margin for error, they're very, very small when you're considering China.
That's I mean, that's exactly right.
So what you have in the US is kind of a a yin yang with what you see in China. So of course you have very fundamentally strong companies, you have a strong economy, and you have some potential you know, geopolitical concerns, but nowhere near what you're seeing in China.
And yet the valuation.
Argument isn't there. So if we're taking a look just over the course of twenty twenty four and we're looking at the mag seven, we saw a price to estimated earnings at the start of the year of around thirty five,
and to date it's around forty. That's not extreme, it's not at the extreme levels that we've seen over the past five years, but it's certainly above that five year average, and it just means that it's going to take a lot more to supplies investors on the upside for there to be a positive reaction, and we've seen that over the course of this year, most notably in the summer when in Video largely beat expectations, but the market's sold off.
So I think that just.
Takes a lot of maybe the access return feel out of these names.
Look at Adobe case in point.
Today they managed to deliver on this fiscal quarter, but the forward looking forecast not living up to expectations and it's drags significantly lower. I'm interested in the Alphabet managing to reach the new heights.
I don't want to go so much into individual names, but from an.
Anti trust perspective, all were putting that to the backside. Are we not worried so much about the power the domination of these Max sevens.
Well, it's an interesting question because the antitrust and really the regulation considerations around big tech have been something of an overhang for these companies for quite some time, and now we're starting to see that come to the four
a bit more. I think when we're taking a look at Alphabet and we're looking at some of these considerations on the regulation or anti trust funt in particular, there are still some unknown, some challenges that will come about, you know, as these companies kind of navigate exactly how you know they're going to play out with the antitrust
and what steps they're going to actually take. I don't think that's necessarily clear, And in the meantime, we still have a very strong, fundamentally healthy company that looks to, you know, accelerate some of the opportunities from AI.
Look, you're helping.
Oversee fifty seven billion dollars in assets under management Malta. I'm interested therefore, where you do see the risk reward right right now? Is it about diversifying broadening out from MAG seven at this moment?
Well, listen, I mean, I think it's hard to step away from MAG seven most obviously because it represents such a large part of the overall market a third of every dollar and the S and P five hundred is going to these names, so hard to diversify away from them completely. And yet at the same time they're all really keying off AI and as we've talked about, there
isn't as much margin of safety. So as we head into twenty twenty five, our outlook cause for balance over conviction, and the way to play that, we think is maybe to have just kind of a modest underwe to some of these maxim and names or you know, the biggest companies in the market cap, and then add in some of these small cap areas that have more relative value
in their corner and also have some tail ones. When we start to think about Trump tax policy or when we're thinking about potentially lower rates over the course of the next.
Year, and you mentioned rates, wherein what ultimately the stacks should you be From an asset class perspective, Is it all about equities? Is it worth going into the credit side of these tech names?
Well, it's interesting. I think when we're taking a look at where rates are headed, the expectation earlier in the year was that we were going to see potentially, you know, falling rates in a meaningful fashion over the next you know,
we call it twelve months. But as the economy has come in a lot stronger, and as the market grapples with what Trump policies might look like, I think the expectation is still there for lower rates, but maybe not quite to the same degree as people had thought previously. So when we're looking at the fixed income versus equity trade, I mean, yields are very attractive, but we're seeing this as more of a croup clipping year and less of
a total return year in fift income. We're actually expecting lower more matter re terms on the equity side too, so in the sense of and you know, kind of returning to that femal balance we call it for a year for balance. On an athic class perspective as well.
What you're not expecting another one hundred percent increase on NVIVIA for the year. Martin Norson, It's so good to have time with you, empowered chief investment strategist, appreciate it.
Home service software Business Service Titan hits.
The public markets what could be the last major USIP of twenty twenty four.
Shares indicated to jump.
To one hundred and nine dollars after they were priced at seventy one dollars. Service Titan CEO Are Medesian's with us President Vahey Kazoo and is with us as well.
They are joining us in the NASDAC.
I mean, the indications are for a whopping jump in the share price.
Aarrah.
How do you feel on this day?
We're very excited for this date. It's an important day for a company, but more importantly, this is a historic day for the incredible industry that we serve. We think of this as the National Day of the Trades, and we celebrate and honor all the hard work and soult of the earth contractors that work so tireless see to serve their communities.
By I mean, this is a personal story. Both of you had fathers, immigrant fathers.
Coming into the nicest states as contractors. As pommers, you're solving their problems. How differentiated is you're offering from a technology perspective.
Well, we like to think that we provide a business in a box that provides an end to end solution that gives you anything you need to run a successful trades business. And when we saw growing up, we saw the struggle that our parents had running the back office shoe boxes full of receipts, we knew we had to do something. And so that's our big differentiation is it's an all in one, all under one roof solution.
For this industry.
We can see the team based behind you. You're serving one hundred thousand plus contractors. We can now see that you've got about US seven billion dollar valuation when you were pricing, it's going to be more than that at the open Arah, Is there a concern that you left money on the table that you could have raised more than six hundred and twenty five million.
What we're focused on are things that we can control. Most importantly, that's taking care of our customers, delivering success for them, and that happens to actually drive our own financial success. For us, this is our life's work. We've put over a decade into building this business. We think about this business for years and decades to come, and we're just excited for this next chapter in our journey where we get to partner with long term investors who want to support that journey with us.
Ba Hey, what is in control is your control of the companies? You remain basically majority shareholders from a voting perspective with a class B by Hey, Therefore, what do you allocate this money raised into?
Where do you push to expan the business?
Sure?
So, our mission is to build the operating system for the trades, and that's our number one priority. The that we're raising today is going to go towards primarily continue to evolve the product and making sure that this industry is not left behind from a technology perspective like our parents were. We're growing up.
Okay Ara, just spell out what technological innovation you can now present and then forward plans. I mean, how does this innovate? Is it about talent you bring on? Is about integrating general Todai? Where does the product go from here?
It's interesting that you mentioned Ai. I think it's a little bit almost ironic that such a blue collar industry has such big applications for AI, and this is not hype,
this is already reality today. Service Titan already offers three AI based products for things like optimizing how contractors do marketing, optimizing and automating how they do scheduling and dispatching, and ultimately also improving the level of service that they provide their own customers that our customers, the contractors are already adopt in utilizing.
The team is having fun behind you. It's good to see. I'm interested in you said these long term investors that you're now going to have the institutional investors come on board, but a lot of people keep the overall exposure. What happens with iconic growth, what happens with some of the best ser ventures.
In the TPGs.
Do you think that this is them exiting more fully?
How do you see your investor base changing?
Yeah, I mean you have to ask them. As far as we're concerned, we're focused on the mission and bringing on a new family of long term shareholders that we hope to deliver a similar level of success as we did our original batch that believed in this. We take the trust very seriously and we intend to be great stewards of their capital as we deploy it to create more opportunities for our customers.
I'm going to go a slightly different direction here, but you are from parents of immigrants. You're thinking about service, seeing the contractors out there in the United States, what does your client base look like in the next administration in twenty twenty five.
You know, our customers have thankfully thrived through all kinds of macroeconomic situations, through all kinds of administrations, and it's simply because the work that they do is so critical. It's so essential. When your air conditioning isn't working in scorching summer heat wave, or your heater goes out in dead of winter, or your plumbing breaks down right before your Thanksgiving family gathering, you have to get that fixed,
and get that fixed immediately. And our customers are those unsung heroes that often fly across town, sometimes in the middle of the night, to take care of the communities that they serve.
Who's been serving you in this ibo are Goldman, Sachs, Woman Stanley Wells, Fargo City Group, ten other banks have been working on the deal. I ask a tough question, Vaje. But if your shares do pop by at one point indicated more than one hundred percent higher.
Do you think they've done a good job or a bad job.
We've been incredibly grateful to the partners that we've had throughout this process. As you know, this is our first time doing this and so having people that we trust around the table shepherding us through the process has been really great. And for us, it doesn't really matter where the price ends today. We're focused on the long term and we really care about is building a generational business.
At the moment, the business is loss making, so Ara, that going to change into twenty twenty five.
We're grateful to be cashful positive and have been cashful positive for the several past quarters, and that puts us in control of our destiny and that's what allows us to continue to invest in the success of our customers, which is what's ultimately going to drive our own success. The same thing that has gotten to this point is the same thing that is going to get us towards this mission of building the operating system for the trades.
Come back as you continue to service there and see the growth Service Titan CEO, Ara Medessi, and it's great to speak with you, President of our Hey Kazuyan, thank you very much, indeed of you as we await that first opening trade. Meanwhile, Meta got to talk about its donation one million dollars to Donald Trump's inaugural fund. We'll bringing the details.
This is Bloomberg Technology.
Google Samsung just unveiling a joint push into mixed reality, introducing a headset and glasses version of Android in a bid to rival Apple and Meta in that space.
Now, the new Android will allow a range of.
Companies to design their own extended reality devices, both headsets and lightweight glasses, while also taking advantage of the latest AI advances too. Meanwhile, China's Instagram style app Sha Hongshu is on track to double profits to more than a billion dollars in twenty twenty four, ahead of the potential IPO. Then, the app took off among younger Chinese during the pandemic and experienced wrapping growth, partly at the expense of e
commerce leaders Ali Baba and JD dot Com. And as we talk about a Chinese rival to Instagram, let's bring it home to Meta here because it's just donated one million dollars to President elect Donald Trump's inorgal fund. It's part of an effort it seems to build a positive relationship with the administration after pretty tense history. I mean Mertz Kurt Wagner joins us now. First of all, only one million, This is but a drop in the bucket.
Of what Meta could afford. But it's a signal.
Here, right, This is symbolic. Right, This is not about the number of dollars that are going to this fund. It is the signal from Meta and CEO Mark Zuckerberg that they are supporting the incoming president.
Right.
And we have seen Zuckerberg kind of move in this direction over the last couple of months. He has reached out to Trump on the phone. He had dinner, as you remember, Caroline at mar Lago with the President elect Trump right before Thanksgiving. So this is just a continuation of sort of that signaling that the company wants to, you know, build a relationship and get in his good graces.
And a lot is on the line when we think of a potential ban of TikTok here in the United States, when we're thinking of there were even threats at one point that you know, he really had a real felt like focus on Mark Zuckerberg himself. But ultimately Where does that then take us, because take us back to the context where we left the last administration.
Yeah, it was not that long ago that you know, candidate Trump was on the trail talking about how Facebook was the enemy of the people that Mark Zuckerberg, you know, suggesting perhaps he'd even tried to put him in jail over what had happened during the twenty twenty election. So this is a pretty striking, you know, change in relationship for those two. I think when you look at what is Meta had to gain. Obviously, you know, perhaps Mark Zuckerberg is just trying to carry some personal favor, but
also for his company. We're not entirely sure what Trump and his administration are going to do around tech regulation, right, and if you are Meta, the last thing you want is to have all of your new AI products, you know, heavily regulated, the metaverse heavily regulated. And so the more that I think he comes in and you know, builds that relationship with Trump, the hope is that it will be returned in some type of favorable pathway for all of these products that Meta is building.
How do employees feel about it? I don't know.
I feel like, you know, Trump is such an unpredictable person that it's you know, all of these relationships. It's like, on the one hand, it's a smart, perhaps business move by by Mark Zuckerberg. I think people feel differently in twenty twenty four than they did the first time he showed up in twenty sixteen, when we saw employees start to really like push back and you know, complain internally. I just think people are maybe they know what to expect this time around, at least they think they do.
So we're not definitely seeing that pushback that we had before, But I think a lot of that is because, you know, we don't know what this is going to look like long term. We still haven't gotten into inauguration yet, so at this point it's just you know, initial reach out.
Co Wagner, so great to have you. Thank you on all things Meta. Meanwhile, coming up, we get a read on the consumer this shopping season.
Clan a CEO is joining us.
It's a Blue Med Technology. Welcome back to Brumo Technology. I'm Karen Hide in New York. Let's get a quick check on these markets because look, the NASTAC is coming off of the world of the record highs that we
saw yesterday. But we focus in on what's happening with crypto at the moment, because Bitcoin just up three ts of percent, still risk on there, one hundred and one thousand, let's call it one hundred and two riot platforms interestingly getting a new activist investor, Starboard coming on board and the shares pop. How will they reinvigorate this minor cryptomnor how will we also see potentially it start to service out to cloud perspective, as we've seen with core Weave.
We're up eight and a half percent, and more broadly, we want to shine a light on what's happening in the world of fintech, in the world of payments, in the world of Klan, a global payments and shopping service company, or before we do that, sorry, just showing a light on what happening with Adobe. We're off by some thirteen percent. We're currently training lower on the back of its earnings
look forecast not living up to expectations. Warner brother Discovery, though we might see a bit of a restructuring, they're certainly signaling the way in which they're going to be dissecting cable away from streaming. We're up fifteen percent on that name, but get back to the fintech side of things, because Klana has said that they're able to use AI to help save it and its customers money this holiday season. Let's dig into it with the CEOs. Best in Shamintakovski,
Clana CEO. Great to have you here in the studio, and I actually want to signal how you're all in on AI. We actually just saw what was it two weeks ago? You updated the market as to your financials using not you but a generated AI version of you. How are you trying to signal here that productivity can just be limitless?
I think it can. Actually I am of the opinion that AI can already do all of the jobs that we as humans do. It's just a question of how we apply it and use it. But I think also to some degree this part of doing the CEOAI was because when I met Sam and talked to him first time about this, I said, look, a lot of jobs are going to be threatened, and what are the jobs that people like the least. It's lawyers, CEOs and bankers.
And I happen to be both CEO and banker. So said, let's replace our jobs first, and AA is going to become more popular than if it replaces other jobs. So we're trying to play into that narrative.
We've already played into that narrative by articulating how many customer service reps.
Ultimately you don't have to hire going forward.
You seem pretty easygoing about AI replacing you, but how do you employees feel?
Well?
I think what we've done internally hasn't been reported as widely. Is we stopped tiring about a year ago, so we were four thousand, five hundred now we're three thousand, five hundred. We have a natural attrition as every tech company, so people stay about five years, so twenty percent leave every year, and by not hiring, we're simply shrinking.
Right.
What we've said to our empolice, though, is what's going to happen is the total salary cost of CLAN is going to shrink, but part of the gain of that is going to be seen in your paycheck. So we're going to give some of the improvements that the efficiency AA provides by increasing the pace at which the salaries of our employees increases. And that's because of that message being very consistent for myself and management for the last year.
People internally CLAN are just rallying to deploy as much efficiency AA as they can because it just means it has direct implications on their equit and their cash compensation for working extonta.
So other than customer services, how else have you felt the benefits? Where in your talent stack has it really benefited?
Now it's across the board. Really you can use it
for so many different use cases. I would say in our company by now with the three thousand, five hundred, I would say there's a core group of two hundred people who have really learned how to apply it practically, to really deploy it to different purposes for automation improvements, generating images, generating videos, marketing material, running financial analysis, interpreting our customers customers needs and demands, product development cursor for
engineering like, there's an endless right now, opportunities to deploy it for moving faster, accelerate the.
Business you file confidentially with the SEC ahead of an IPO. So I'm not going to ask you to comment on that, but you have been steering us as to how much he's seen an increase in revenue twenty three percent, your AI generated self told us, but there's still very small loss. Does that is it productivity gains that help you get to ultimately profitability to it will be.
Part that, but it's also a growth. I mean, we have a very healthy margin now in our US business. We have a very healthy margin in European business, so as that's continues to grow, that also obviously helps accelerate their profit making. And we're seeing a great uptake in binappy Lada in the US. I think it was reported now during you know, Black Friday and so forth, that credit card sales were up like eleven percent. Why buyin appi Lata was up about twenty four to twenty five percent.
So there's a major shift going on away from credit cards towards fin appay lata in the US.
I mean, you're everywhere when you click on a website and trying to pay, when you're on Apple pay, you're doing deals with well pay for example. How much more is there to bring in in the US.
It's amazing. I Mean there's like two things. Like, first, the credit card industry is a trillion dollar market opportunity and we're still tiny, tiny piece of that. But more importantly, you know, in the US there's one point three trillion dollars of credit card debt people pay one hundred twenty billion dollars in interest this year, and we calculated that the consumers that have used Klana by having interest free payments have saved over two billion dollars in the last
few years by using clan instead of credit cards. So this business model is going to present a serious threat to incumbent banks and credit card companies because it is a more healthy alternative for consumers and drives credit ad is zero interest for them, right.
I'm sure they love that.
I know that you've felt that they've come for you in some way.
But you're looking towards the new administration.
Here in the United States, How supportive do you think they will be of I know You've had some interesting takes on some of Trump's promises.
Yeah, well, first and foremost, I thought it was interesting that as much as Trump has been talking about just deregulation removing, there was one thing he said in the opposite direction, which was, you know, in the campaigning he said we should put an interest rate cap on credit card fees at ten percent, and I think Bernie Sanders jumped on it and said, like, oh, we want to keep him accountable to that think that's a great thing.
In a lot of.
European markets, there is a twenty percent cap, for example, on interest rate or even lower. Here in the US, the average interest rate on credit cards is twenty four percent, so much higher than that. Now, I think that's what's interesting to me. But then he also announced recently that you know, if you invested billion dollars in the US, we can accelerate licensing and so forth. Klan as a bank in Europe, we are we want to become a bank in the US. We want to we want to
speed up our money transmitting, licenses, applications. We are more than happy to take trumps and actually do that billion dollar commitment to the US market because it's so large. We want to accelerate and we want to create real competition. You can cap interest rates as one potential way to get away from this tremendous cost to society that credit cards present, or we can create more competition, and we're happy to come in and increase competition even more.
And I mean we started on AI, we'll end on AI because we have got you know, the LinkedIn post which actually was put out by your CMO talking about how you were using this generative AI version of yourself to update us on your numbers. Do you think the regulation is there for generative AI as well? In the US versus Europe, I mean, give us your take on you as a global company.
There's there's you, but not you exactly.
Look, I think that the challenge is, unfortunately that Europe has taken a different path where we do want to regulate before they know what to regulate, while in the US we've had there, you know, the preference of being you know, let's let it play out a little bit and see whether it needs to be regulated. I think in general, like you know, I am in I'm not
an anarchist. I think some rules are helpful, but in general, obviously you want to give and we need to make sure that the democratic world is ahead in development of AI from the non democratic world. So it's very important that we continue supporting it and don't overregulate it too early. There are a few simple things that one should do.
A simple rule that we've suggested in Brussels is maybe it should be legally obliged that if you communicate with someone on the screen, at least you have to tell if it's an AI or a human like, there's a basic rules and obviously people would fraud that anyway, and the people can, you know, but but there's basic rules that we can apply that could kind of make common sense,
that could make sense to pursue already. But other than that, I would be on the side of like, please keep it, allow us to innovate and push push the envelope and see what the technology can do before we jump into regulating.
Sbastian, it's great to have you.
I'm sure many in the marketer expect to see a bit more of you. In twenty twenty five, Sebastian Shouma Katawski's part a CEO there now, Walmart's financial services company, known as One, is set to lead a funding round of over three hundred million dollars, putting in an evaluation
of get this two point five billion. So also say the world's largest retailer is seeking to push into financial services sector because it's nearly three million monthly active users, which could pose a threat even more so to those traditional banks. One is an independent company that sits outside Walmart,
while the retailer still maintains control. Coming up, we're going to be joined by Index Ventures partner Nina and Chajian to talk about the IPO outlook for twenty twenty five, including a core Service Titan that they backed, were still waiting on that opening trade. This is Bloomberg Technology.
For us, this is our life's work. We've put over a decade into building this business. We think about this business for years and decades to come, and we're just excited for this next chapter in our journey where we get to partner with long term investors who want to support that journey with us.
Our Service Titan CEO speaking with us earlier, Ara Medician and someone who will be keeping a close eye on how those shares trade at the open and indeed what the long term trajectory of the business is Nina Italian partner Index Ventures long term investor in Service Titan, and I mean, is this spelling the way of things to come in twenty twenty five strong businesses, we'll get a good exit.
Well, Caroline, thanks for having me.
It's great to be here and we're really excited to celebrate Service Titans IPO today. I think that there's a lot of positive science on the macro and also even if you look back in twenty twenty four, we've had a handful of successful tech IPOs. We have a new administration going forward, maybe some different regulation around AI and M and A, and so we hope that this will be a tailwind for a great crop of other fantastic private companies to go public.
Nina, take us back to the journey of how it started with service title. What were the key learnings from having made that first check into them and their trajectory.
Since well, at Index, when we make investments and we try to invest as early as possible, it is really all about the entrepreneurs. And it's hard to find a more mission driven set of co founders than Aar and Vahe who, as they shared, really built this business to solve a problem that their dads had and then they realized that this market was absolutely enormous and actually one
of the backbones of America. And what really drives them is bringing cutting edge technology like for example now even AI to some of these industries that were very much forgotten by technology for a very long time.
A lot of them haven't been forgotten with cyber security, for example, another tail when I'm sure, unfortunately, because what we keep seeing more and more upending of whether people are trying to get money from us trying to be able to penetrate businesses in certain ways. What are the other tailwinds going into twenty twenty five.
Yeah, well, I think that identity is going to be really important. You know, everybody is talking about these AI agents, and you can imagine how important is going to be to actually prove you are a human being and the
person that you say you are. So for example, one of our portfolio companies, PERSONA, that started doing KYC for a lot of crypto and fintech companies is now being used by some of the leading edge AI companies to make sure that the person that is using the LLLM on the other side is actually who they say they are. And so I think we'll start to see a lot more companies like this really in the wake of the incredible technological shift that AI has brought to the world.
No old eyeballscanas as a well coined.
But I'm interested, Nina about some of the valuations that you're seeing on these generative AI AI adjacent businesses.
Are they still incredibly heady? Are you still able to get in any decent price?
You know, the valuations are still pretty high for AI, and it's definitely a tale of two cities. Whether you're an AI company, you get a premium on evaluation and if you're not, you know, it's more of the traditional SaaS metrics. But I think twenty twenty five is going to be all about show me the ROI of investing
and buying AI. And that's why I think a lot of companies that are industry specific AI solutions will probably have a front row seat to being able to demonstrate how they have embedded AI into their value proposition for their end customers that has either helped them generate revenue or save costs. And so it's going to be interesting to watch how those numbers come out in twenty twenty five on ROI.
And there's been a lot of hand ringing around that and a lot of people trying to say, just show me. When you hear NonStop AGENTICAI, are you slightly this is a hype or you actually like that there is real productivity to be had here when we're going to show.
You well, I think you always have to think of investments and trends as bottoms.
Up and tops down.
You know, tops down. We got the foundational models and the lams which have been absolutely incredible, and I think twenty twenty three and twenty twenty four have all about been you know, how does it dost settle on how we use this technology? And then bottoms up is starting really with a customer problem. What is the problem you're willing to solve for your customer and how much are they willing.
To pay you?
And I think we're still in the early innings of that, and I think that will be the future of AI investments in the next two years.
You know.
And Taddy, and it's going to be a busy twenty twenty five, come back join us. But congratulations on the day with service Titan. Partner at Index fensures we appreciate it.
Now it's time.
For talking tech and verst up Huawe's Electric Vehicle Partner Series Group. It's considering a second listing in Hong Kong, that's acording to people familiar with the matter. The company is said to be been speaking to prospective advisors about a potential share sale that could help it raise more.
Than a billion dollars plus.
President elect Trump has given an interview tube Time magazine, after, of course, he's been named the Person of the Year for second time wide ranging conversation, but it did touch on subjects from geopolitics to EV's in which he said he's a big fan of them but says that Eve's.
Mandate is a disaster.
This after Bloomberg actually spoke to Lucid CEO Peter Warllinson, who says that President Elect Trump could be a tailwind for autos in the US.
Take a listen.
I think that both Trump and Elon Musk are very accomplished, business made and this you know, there is a business imperative for jobs in America, and what we're doing is creating great jobs, high tech jobs in automotive. Take away, Ev, It's just it's a car. It's automotive jobs in Middle America. Great high quality, high tech jobs.
Peter warllingson there, and Elon Musk has become the first ever person in the world to each four hundred billion dollars in net worth. This after reports of an insider share sale of his SpaceX of course boosted his net worth.
We understand, by fifty billion dollars.
And of course the shares a Tesla rallied to all time highs on Wednesday, coming up Adobe not at all time highs, quite the reverse, but down by ten eleven percent. Disappointing in terms of a weaker sales outlook than haven't been anticipated.
We'll dig in. This has been my technology check out.
Shares of Adobe significantly lower today after the company posted what is being seen as disappointing sales forecasts, underscored by this rising competition from AI startups. Let's bring in Brodie Ford. Who I mean, thirty billion dollars has been wiped out of the market cap on one day alone.
It's down for the year.
They cannot get this AI adoption to bear fruit for the investor base.
The question for every sas company this year has been, you know, is AI going to be a tailwind or is there going to disrupt your business? And the constant fear for Adobe has been that, hey, these kind of newer, lightweight tools can come out and if you can generate something, are you going to to pay for as many photoshop licenses and investors have really pingponged on that idea, whether I think it's a disruptor or whether it's a tailwind
for Adobe. And so when you see, you know, every cloud vendor out there having their own photo and video models and it's such a competitive market. Folks are getting more anxious about Adobe.
They're anxious about Sora baking people's hands, whereas the latest innovations from Firefly in terms of video generations get taken till twenty twenty five. So how can they say that the subscriptions are going to go higher? This is just perhaps a little bit of natural caution in our numbers.
Yeah, what Adobe has consistently said is, right now, we are optimizing for adoption. You know, they have a bit of a reputation with their user base of you know, charging a lot for things, and they certainly don't want to reinforce that, and so they have been really saying that we're going to optimize, make sure everyone's using our stuff before we jack up the prices. And investors are saying, WHOA, well, will you ever be able to get that pricing leverage here? That's the big investor anxiety.
But customers, this seems to be disconnect because the CEO is very buoyant. We're also seeing customers saying that they love it. It really is to see investor base that remains.
Yeah, Adobe's general thesis here, which makes sense to me, is that if you're already using a product like Photoshop. You want an AI tool that's right in there that you can just circle Caroline and say, you know, at a different chair, at a different background. Don't you don't want to have to, you know, get the open AI plug in. But you know, the question is whether people are going to pay more for that. I think with
creative software, maybe the moat is lower. Right, if you're thinking about a salesforce or Microsoft, the fact your data is all in there, that's hard to replicate. But if you're creating something an image from you know, requires less context, and maybe the switching is more likely for users.
Well fastest setters. That's I'm ready for such a way. Appreciate it. Meanwhile, sticking with earnings, Broadcoms set to report fourth quarter results after the closing bell today. Investors are hoping that the company really may show that outperformance in their stock is actually showing in terms of AI demand for its networking chips.
Conjin Sovannis with u S Blomberg Intelligence.
They rallied hard yesterday on the news the interpretation that they're gonna be working closer with Apple on chips going forward. Can they vindicate the sixty percent run up?
I mean they are for surely set up for that. You know, we again expect a strong four Q driven by a seasonal iPhone ramp in their wireless segment, sequential strong growth in AI revenues and VMware, and finally the non AI chip business turning the corner slowly. We think, though focus will be on two key AI metrics. One is the one Q outlook. There have been some concerns of like a flatish or a low single digit growth, and there's a lot of expectation of getting a new
full year fiscal AI guide. I think if they come up with that guide above the street, that would be really good for the stock.
Okay, talk to us about the really where the customer base is coming from and how diverse that looks Kunjin.
Yeah, so I'm going to look as a whole company. They're very diverse, about forty percent from software and the rest from chips. But the focus right now is all on the custom side, which is the air revenues. Right So on the custom side, they have been expanding the customer base. Right now, it's driven primarily by one large TPU customer, but as we go into twenty twenty five, we have the second customer ramping and beyond twenty five
the rest of the customer's ramping as well. So we see the diversification getting better and better over time.
It really has been exposed to the best in the worst of the chip sectors of late. We'll see which one bears out today. Cunjin Savanni of Bloomberg Intelligence all things for com Now, we're also going to be keeping a close eye what's happening with Intel as well, keep an eye on those particular shares as we anticipate well at one point five percent higher guide at the moment, Intel executives say that you could see us probably selling some of our position in Mobile Eye over time. That
is currently what's being articulated. The CFO say that there's going to be a big reduction in force that is currently underway. They plan to ultimately take Altra public, the CFO is saying, and they're going to be bringing in financial partners for that AATERA unit. We're getting more guidance from the executives and how they look to sell more of the mobilized steak over time. This is at a Barclays conference, and we really are standing to see about
a separation of the foundry still an open question. According to the co CEO, that's Lintner. He used to be, of course the CFO now that does it for this edition of Blue Meg Technology, all things chips all the time. You don't want to miss out in broad Coon's numbers after the bell today, but you also don't.
Want to forget to check out on our podcast.
You can find it on the terminal as well as online on Apple, Spotify, an iHeart this is Blue Meg Technology.