From the heart of where innovation, money and power collide in Silicon Valley and beyond. This is Bloomberg Technology with Caroline Hide and Ed Ludlow.
Live from New York and Caroline Hyde and I'm Tim Steinbeck in San Francisco.
This is Bloomberg.
Technology coming up in video.
CEO Jensen Wang unveils new AI chips and technology at the company's annual Developer conference, but fails to wow investors will have all the details. Plus China's ten Cent posts its fastest revenue growth since twenty twenty three for the company planning to ramp up AI spending and cloud flare out with new cybersecurity products aimed to help safeguard against
AI vulnerabilities. Who speak with the CEO Matthew Prince a first rechecking on these markets which are not all consumed with AI but instead all consumed with the FED.
We're currently up eight.
Five ten percent on the Nasdaq one hundred, bouncing back off what had been a significant sell off yesterday, and overall we still contend with the macro forces versus the micro on the points higher, though Apple doing well to push the NASDAK one hundred higher so to is in video when we go into that particular name.
As GtC continues, we're up nine tens percent.
Remember it fell three point four percent yesterday as Jenson Wang took to the stage unveiling our whole host of new AI improvements chips that move from the Blackwell Ultra onto vira Ubin. We used to also get a new scientist name for the next iteration, but tim it didn't wow investors.
It feels it didn't.
There's always today and there's always the rest of the week. From more on in video, Man Deep saying a Bloomberg Intelligence joins us. Now Mandeep, there's this narrative emerging that AI costs are just getting out of control. What did we see yesterday? What did you see yesterday from Nvidia said to customers, you're getting more value out of what we're bringing you.
Well, one, there was a clear shift towards reasoning, and you know the fact that he said reasoning requires one
hundred times more compute. So from that perspective, you know, the demand trends seem to be reassuring coming from Nvidia, and clearly they are ahead when it comes to you know, the performance per what that everyone seems to be focused on with these chips, and look, you could argue, you know, there isn't a new end market on the horizon, even though they announced, you know, the partnership with GM or
the Humanoids was part of the keynote as well. But to me, it's still all about data centers and servers, and they seem to have a very clear roadmap till twenty twenty seven in terms of what kind of performance improvements they're looking with the next version of their chips.
I think via Rubin expected to three x the improvements on Blackwell Ultra. We get Feynman being the next name for the future platform a focus. But look, analysts overall once again declaring that the moat is strong, that maybe eight years ahead of the competition. If you're talking to certain hyperscalers, what more can you do to douce what's currently in the valuation right now?
Well, so, if you look at the trajectory of Nvidia's numbers, they've always moved to the upside because they have come up with something new or you know, an additional customer that is of the same ramp.
Up all time.
It's not new enough for that.
Well, so you have to look at the hyper scale investment, and they are all developing their own A six. So the fact that you have competition on the horizon, even though Nvidia is way ahead of everyone else in terms of performance, but you just can't rule out the fact that A six are a real possibility. That's what Broadcom called out, and to me, that competitive environment will get challenging. And look, they made the pivot to reasoning after Deep Seek.
This wasn't six they're six months back. It was all about pre training. The keynote this time around was all about inferencing and reasoning. So they're very good at making those pivots. But the fact is the market keeps evolving and I think A six are still a real threat when it comes to in video sales at the data
center level. Yes, it's a one trillion dollar market, but who can give the assurance that it will be in Vidia who captures most of that in market because your competition is the four or five main hyperscalers that are still looking to develop that ac.
Option frenemies continue.
Man Deep seeing of Blue meg Intelligence love having him. Meanwhile, a wider investor look now at in Nvidia and some of the others in the chip sector, Kim forrest A Capital Partners CIO joins us and Kim. We mentioned how their own clients are becoming their competitors. Not to mention AMD still trying to be and also Ran in this space, not to mention Intel really languishing. But can Invidia remain the king when it comes to AI?
Well maybe I think it's a strong maybe there, and maybe they do rule the hardware world or a lot of it, because you know, there really is no substitute right now. Here's the thing, though, human beings are incredibly inventive, and in Nvidia, although they always trot out the fact that they have software that developers may use, I think the very largest developers that are using these chips are writing their own software, not depending on KUDA.
So keep that in the.
Back of your mind.
But I believe what deep Seek has shown the investing world is there's more than one way to skin a cat, and just throwing really expensive chips and tons of chips at a problem is not always the answer. So I'm looking out there for innovation in the software world to make the build out of a data center a little less like key into developing AI in the future, software less hardware Kim.
Do you think that the market has fully priced in the impact of deep seek?
No?
Actually, and I think this is a really difficult area to talk about AI without really nerding out. So let's keep it at the fifty thousand foot level.
This is a show to not out on, Kim. This is a show to net out on.
I'm just saying, okay, yeah, I'm yeah, okay, I'm trying to restrain myself. But here's here's what I see is the essential problem is there are limitations in the physical world power. You know, how quickly you can build a data center, how quickly you can build chips, the machines that create these exotic chips, how quickly you can build that.
It's all, you know, a physical world problem. In many ways, software is exactly what we've used in the past to become more productive, and why not use it on AI itself, to use these data centers that we already have and rethink the software and the training, testing and validation kind of exercises we do to build large language models. Why not make that better by better software?
Crazy, Well, you have.
The background to nerd out on this, because before finance, you spend more than a decade working on this stuff. I mean this was twenty years ago, so you've been thinking about this stuff for.
A long time.
But now, do the economics of inference work? Do the economics of agentic models work right now?
I don't think so, because they're so expensive to build and it doesn't look like people are lining up to buy it. I mean, is it really that simple? I think the answer is yes. I have not been convinced that there is a strong enough problem that can be easily identified and thus monetized in AI. I think it's the future, absolutely, but I think that businesses who have to put their assets at risk buying this stuff.
And then using it.
And remember a lot of language large language models are eighty five to ninety five percent correct, and that is underwhelming. You know, if you're going to build your business on something that's incorrect, you know, fifteen to ten to fifteen percent of the time. Yeah, these are real world problems that we have to get unexcited about and fix. And again my answer is software, because that's what I what about my book. I know that that area, as opposed to building better hardware, we'll.
Go to the software.
Go to the newly released open source software dynamo and look, there's growing that that makes deep sinks are one thirty x faster when you run this new open source software being offered by n videos. So are they not adapting quickly enough because it centainly feels as though they've gone answer for everything.
Well, I think we really have to do is attack.
I mean, faster is better, right, But then how do we stop wrong answers? That's where the humans have to come in and kind of build stuff around that to wall off the bad answers. And you know, whenever I was doing this back in the late nineties, that's where a lot of our time was spent on refining the models, was to make sure that we weren't returning bad answers. And I don't really see that as a focus. And again I'm talking my book what I know, And it's
still a problem. That's the crazy thing, you know, thirty years later, wrong answers are still a problem.
Kim forrest A Bocha Capital Partners is Kim always great to check in with.
You appreciate you joining us today.
Meanwhile, as many as four hundred thousand in Vidio chips are set to have a new home in the small city of Abilene, Texas. It's the site of the first data center complex, or open AI's Stargate infrastructure venture. According to the developer the prom project, it will be completed by mid twenty twenty six with support for hundreds of thousands of AI chips, though no word yet on how many chips have been committed to the project so far.
Caroline, coming up, we're talking connectivity and connectivity firm cloud Flair introducing new AI tools to take on vulnerabilities. When we're speaking with a CEO, Matthew Prince.
That's next. This is room meg Technology.
Cloud connectivity firm cloud Flare is in the midst of its annual security Week, announcing a slew of new products, including one to help safeguard against AI vulnerabilities. Here to discusses cloud Flare CEO Matthew Prince. Matthew just announced cloud Flare for AI this week. It essentially allows customers to safely use and develop AI tech. Up to now, though, what has been the problem, what has been the challenge?
What has been the vulnerability?
Thing that's really hard in the AI spaces, as your last segment was talking about, is everyone's just rushing as fast as possible everyone's bored is saying what are we doing in AI? And everyone is trying to go as fast as possible and what that means is mistakes get made, Data that shouldn't leave your enterprise gets sucked.
Up into an AI model.
People, maybe you're using AI in a way which might embarrass you or your firm. And what we've heard from our customers is that they want guardrails, they want controls to be able to make sure that even as they go as fast as possible, they're not going to break anything, which is really really important.
And so that's what we're launching with cloud Flare for AI, and.
We're really excited to see already customers using it to make sure they can go as fast as possible but not make those critical mistakes.
In the space of AI.
MAV you've got so many current security offerings already when you think about web applications, firewalls of ability, API protection. What's new here in terms of cloud Flare for AI. Is it a new bundling thematic or is there really new offerings coming?
You know, I think that it is a combination of building on the foundation that we have where we can process just vast amounts of data flowing through our systems, do analysis do those controls? But then adding on top of it, not just how are we looking for hackers, how are we looking for threats?
But how are we actually looking for the ways.
That people might be using AI in a way that might be embarrassing to a company, in a way that might be revealing secrets that are there. And I think part of what's powerful here is, yes, we have a whole bunch of customers that care about keeping their use of AI secure, but a lot of the AI companies, in fact, most of the major AI companies also use Cloubler.
So we've been able to actually.
Integrate those two sides in a way that give you a holistic offering and make sure that you can again go as fast as possible with AI, but do it in a way which is secure and has real guardrails.
That speed, that desire to get out in front. When it comes to AI, many would cass as hype. Can you just set the broader context here of whether you think the AI hype is turning into AI productivity reality?
Yeah?
You know, I think there's anytime you have something which is as disruptive a new technology is AI. There are going to be a certain amount of money which is spent on it, which is just lit on fire. And I think that's just the reality that's there. But what we're seeing is that there's real value which is being
created as well. And so even if we assume that only one percent of what's being done today turns into value, what we see from our customers, what we see from the AI companies that are out there, is that that one percent has the opportunity to have enormous returns. And so again, I think anyone who's not doing at least something experimenting in AI is probably missing the boat here. And again I don't hear a lot of customers that
are saying, Gosh, we're going to shut down our AI efforts. Instead, I think people are stepping on the accelerator, finding more ways to use this. And again I think we have to acknowledge some of this is going to be just lighting money on fire, but a lot of it is going to turn into real innovation over the long term.
Matthew and investors watching right now probably are wondering how big of a business does this turn into. For cloud Flair, what are you modeling internally?
Again, we don't forecast anything in particular, but what I will say is customers are coming to us, and this was a real demand that was driven by our customers saying you are extremely well positioned to be able to solve this problem.
This is something that we want and that we want you to build.
And so I think that that gives us a lot of confidence that as we invest in this space, that is something where there will be real returns. It's something that customers want, it's something that the largest enterprises are realizing that.
They need that they can't just.
Go at the full throttle without those guardrails in place. And because of the unique position that cloud Flairer is in, we can deliver those guardrails and make sure that you can use AI safely.
Because you're offering the platform to build to deploy the apps, you're also offering the security. But paint a picture of the ecosystem right now because people might be thinking, Okay, your competitors are like AWS and fastly. But then there's this deal with Google buying wiz and what that does for overall security of infrastructure, cloud infrastructure.
Where do you fit in with cloud flair Matthew, I.
Mean those are all very different companies, and I think the first thing to say is congratulate to the Whiz team. It's incredibly hard to build companies, and the fact that they so quickly generate build something that had enormous value and we're able to sell it to Google, I think is something that again deserves an incredible amount of tip of the hat to them and what they're doing.
I think the fact that Google had to build Whiz.
Just shows how security has to be part of any cloud platform, and cloud Flair really started with security, and I think that's given us a huge advantage over over time. Wiz is really great at identifying what an enterprise's security vulnerabilities are. And what we're proud of at cloud Flair is that we have actually been the solution once Wiz that identified the problem to actually solving the security problem behind the scenes, where they're recommending us as that solution.
Google's been a long term partner of cloud Flair. We hope that will continue.
I expect that will continue over over time, and I think integrating Whiz actually makes it make more sense for them to be integrating closely with cloud Flair and being able to deliver our.
Services as one seamless, offering some of.
The best as I perspective of the internet. Writ large, we love having you on Matthew prints cloud flairer CEO.
Thanks so much, Tim I forgot well.
So I'm now for talking tech.
First up, Google launch Date redesigned version of its budget Pixel phone, upgrading the chip and battery life weeks after Apple's lower end iPhone sixteen went on sale. The new Pixel nine A costs four hundred and ninety nine dollars, in line with the price of last year's Pixel eight A plus. Tesla was granted approval to begin carrying passengers
in California. The approval does not allow Tesla to offer rides in autonomous vehicles, but a ride hailing business with human drivers could pave the way for Tesla to eventually introduce robotaxi service in the state where Weimo already operates here in San Francisco, and Shaomi is working to expand its production capabilities to meet demand. This comes after it raised its twenty twenty five delivery target for evs to three hundred and fifty thousand units, reflecting inroads into the
Chinese EV market. Shami Group Vice president and CFO A Lamb joined a Bloomberg Television in an exclusive interview to weigh in on this.
You see a couple of our evs right that, the red one being the Strew seven, and then the yellow one, which is something that we just launched, is our s U seven Ultra, which we are start selling at a starting price of over five hundred thousand RMP. We are running one factory right now in Beijing which is fully rammed up. We are working very hard to squeeze the extra production volume out of that out of that factory.
But at the same time, obviously we need to continue to expand our production capabilities by adding new production sites.
Ten Cent posted its fastest pace of revenue grows is twenty twenty three revenue rising eleven percent for the three months.
Ending in December, and it also shed some light on its AI ambitions.
Makes Henry ren joys us now for a breakdown and ponymar are really setting out that they're kind of going to do in AI what they did for gaming with their own but also of the third parties.
Indeed, so so breakdown for results shows that the company is doing pretty strong across it's all its business lines, from gamings to social network of free chat as well as the payment and fintech, but of course AI is the key business focused for today, and the company said that it made it so called emergency purchase of GPUs in the fourth quarter because it was seeing a search
in AI demound. And indeed we're seeing this coming through on the revenue side of things as well, because the company said that it's AI cloud business double this revenue in the fourth quarter. And just to give you a sense of things in terms of how much the company is spending on AI these days, the company said that it's fourth quarter capital spending quadrupled from the same quarter
in twenty twenty three. So it really shows you the urgency that the company is having in terms of catching up on other Chinese big tech companies in terms of you know, enhancing its AI capabilities.
Whomberg's Henry Wrenn joining us from London. Henry, good to see you, Thanks so much. Meanwhile, Elon Musk invested a one hundred and fifty million dollars to acquire more shares in X last year at evaluation, approaching the price he paid for the company's equity back in twenty twenty two. Woomberg's Kurt Wagner joins us now with more Kurt, what's the endgame here?
Does he just want to own the entire thing?
Yeah, I mean he already owns around seventy five percent of X, So I'm not sure how much of this is. You know, buying one hundred and fifty million more in shares is not going to dramatically change his ownership. It could be he was, you know, buying out somebody who wanted out. I think more than that, it's it's perhaps a signal, right that this company is still valued at
where he or close to where he purchased it. We know they're out raising money right now from other investors, and so maybe having that sale at the end of last year sort of setting the benchmark, right, Like, if Elon's willing to buy in close to what he paid for it, maybe others should as well. So perhaps it was a little bit more of a signal than anything.
The signal was an amazing deep dive by you and other reporters into Kingdom Holdings and your report. That's a Saudi investment firm that seems to where we got the tip off that he was offering these sorts of prices for the equity.
Overall, the business seems to be improving.
Right, Yeah, well that's that's sort of the narrative, and there's signs that point to that, right. Number one, the fact that they're out trying to raise at this forty four billion dollar price tag is one sign we know, and we've talked about this on the show, that the banks that we're holding all of X's debt have been able to sort of offload that at around the same price at which they loaned it a couple of years ago.
And we have heard stories of advertisers returning. Now, I will caution on the advertiser front, X and Elon are also suing a bunch of advertisers, right, So there is some fear out there in the market that, hey, if we're not spending on X, we're sort of opening ourselves up to a potential legal dispute with this company. Maybe we throw them some money to avoid that. But yes, there are some signs that, you know, perhaps things are certainly better than they were, you know, six months ago.
Current you wrote the book on this, How is the product change under Elon Musk's ownership. I mean, we've all seen what the experience has been like, but how has the product actually changed?
Yeah, I mean I can only speak for myself here, but I would say the biggest thing is that the news value of Twitter or now X, in my opinion, has gone down right. I remember the first Trump presidency how much news was coming out of that administration, and Twitter was really like.
A must have for me.
I think the changes that Elon has made around verification, I think the changes they made around the ranking has just in my opinion, made it less useful as a news venue, and especially it's been hightened to me, given the fact that we're in this Trump you know, two point zero presidency and we're seeing that news cycle again pickup just like we did during the first time around. I just don't feel like I'm getting news through X in the way that I used.
To through Twitter.
And I think the verification thing in particular has a lot to do with that.
I spy Battle for the burd just over your shoulder. Brim bes Kote Wagner on the book, We thank you. Welcome back to Bluemoge Technology. I'm Caroline Hide in New.
York and I'm Tim Stanoveeck in San Francisco.
It's checking on these Markets tim because gone a little bit of a reprieve ahead of the FED. Of course, two pm New York time, we get what is the ultimate transcript? But then you get the press conference coming from Jpower. What will you say about the overall economy? Of of course, we're expecting no move in terms of rates, but we're up nine tens percent as some of the tech names catch a bid on.
The higher side.
Apple leaves the child in terms of points, but drill into actual individual moves.
Apple at one point four percent.
Even as a European commission once again coming out strong telling Apple to loosen its control over its iPhone operating system to comply with the law law being also the Digital Markets Act that they're warning Google about as well to comply with and eduging that favors it's in house services and prevents developers from offering alternatives, aside from, of course, the App Store Playstore.
Move on and have a little.
Look at what's happening in terms of Meta though, because Meta had been your outperformer of choice when it came to mag seven so far this year, but finally it tumbled into the red for year to date, and we're off by another quarter of percent. This time Kathy would seemingly uploading some shares she'd been buying them up all through last year. But now we understand they've finally taken
some profit in that meta holding. But let's turn back to the markets more broadly now, where please to welcome j Jacobs, his US head of Thematic and Active ets at black Frog.
And today is.
Such a case in point the macro kind of outweighs the micro and fundamentals. In video CEO Jensen Wang cannot catch the vibes back into his shares and into his market capitalization until basically we hear more better Moon music out of the fed.
Well, I think it's that at tension we're seeing, right, is this an interest rate driven market? Or is this a thematic driven market? And frankly, what we're seeing from our investors this year is more thematic. The developments in AI, the developments in geopolitics, that's what's driving a lot of the investment this year.
This is why we've seen continued.
Inflows into AI ETFs like Arty from black Rock. It's why we're seeing a lot of interest in areas like infrastructure amid geopolitics. But not every day is the same. We certainly see this tension playing out in real time. Leaning a little bit more thematic this year, though.
That sounds an odds I would have thought for many who feel that they might have lent in but they've actually lost money. We started to see investors pull out, in particular of some of the big winners, So you're saying people are allocating towards them even though ultimately they're in the rent for year today, that's right.
We've seen about fifty million come into our AI related ETFs. That's AARTI, which is an index s based ETF around AI, and then BAI, which is an actively managed fund where we're picking winners within the AI space. So people are buying the dip, and I think a lot of it comes back to valuation.
Just feel like it when you're looking at individual names.
In the fun space, they are and if you look at some of the valuations, you have these incredible AI companies, some of the biggest, fastest growing that are trading at the same pe as seventy five year old fast food companies right now. So there is value in AI which doesn't seem I wouldn't have said that three months ago, but that's absolutely the case right now.
Yeah, it's surprising to hear you say that, because I think a lot of people would argue a jay that there's still by many measures, these are still very expensive stocks. So where specifically are you arguing that there's value lost?
Audio? Oh, I don't think he can hear you.
But as we get the connection back again, Tim was asking about where exactly you think you're seeing value where, because you know, a twenty five twenty six times future earnings for video still feels kind of expensive, even if it is akin to a seventy five year old restaurant chain.
Well, I think it's what you're paying for that growth Right in the in the absolute, twenty five times earning sounds expensive, but when you get you know, earnings growth that's you know, thirty percent a year. Right now, you're seeing top line revenue growth in the high double digits. That is so much far superior towards even the broader technology sector, but even the S and P five SMP
five hundred. More broadly, generally speaking, you're seeing AI companies grow twice the speed of the S and P five hundred. So it's okay to pay a little bit more for those valuations. If you expect to see the growth back that up.
I suppose everyone was in on the hype and now it becomes okay, I'm committed to the long term trajectory. And Jens Welom did a good job at showing that he's still building a moat, that still his company is going to be there for the next eight or so years, ahead of others, as many analysts would single out.
But I think in the here and now, people.
Are seeing an opportunity costume by investing in certain names.
Are you seeing it's spread out?
Are you seeing people okay, go, I'll back the energy or I'll back in fact, the application of AI rather than the infrastructure, the ultimate you know, picks and shovels that we've seen committed to of.
Late, it is spreading up.
I think the picks and shovels theme is still very much in vogue right now. You're seeing it with semiconductor companies. You're seeing it with data centers and digital infrastructure where there's just there's a shortage, there needs to be more data centers.
Fact that we're just not seeing that in the share prices.
You've seen semiconductors absolutely obliterated this year but.
We're seeing in the vestment dollars where you have some of the mag seven companies spending hundreds of billions of dollars to build out this space. And so yes, markets are volatile in the short term and the long term, we see a lot of opportunity in aistill Digital infrastructure is really the first area. I think the next area of attention from the market is going to be on the data companies. Who owns the unique data that's going
to have to feed into these large language models. Right now, you could actually run out of data by next year in terms of what is training these models. They're ingesting so much data to get so much more powerful. That unique, high quality data is going to be where a lot of value lies. And then finally beyond that, I think we're going to see really transformative industries really build around
artificial intelligence. But you're seeing the users the adopters. That's where kind of in the back part of this decade, I think we're going to see a lot of value unlocked as well.
I'm interested as to where the fun flows are coming from.
Geographically, can you break it down, or even when it comes to age groups, how are you seeing people allocate towards the AI trade.
We don't get that much level of detail in the ETF space, but I can say it's being broadly felt right now. So you're absolutely seeing a combination of end investors as well as financial advisors who have been looking at the AI trade for a while and maybe even telling their clients I'm not ready. The evaluations look a little bit stretched. This thing's been on a run. Now that it's pulled back this year in a pretty significant way, they see it as the entry point for long term investing.
So we're seeing that pretty broadly across our investor base.
All right, black Rocks J Jacobs joining us there in New York, Jay, thanks so much for joining us well. Elon Musk's XAI and chip maker in Nvidia are joining forces with Microsoft and black Rock to build thirty billion dollars worth of AI infrastructure, mostly.
In the US.
The group also includes United Arab Emirates backed MGX and plans to focus on data centers and energy infrastructure. Both Microsoft and Blackrock have ties to XII rival open Ai, which is part of a one hundred billion dollar AI infrastructure plan Stargate. Caroline, I feel like I need some sort of chart here to keep track of the strange bedfellows. But I guess the opportunity brings somewhat frenemies together.
I mean, the whole well of the AI space seems to be one built on frenemies, as is more broadly intecting. But isn't it interesting that when we saw this Stargate announcement in front of the White House, Microsoft wasn't there. It seemed to be Open AI opening itself up to deals with Oracle, but Microsoft them in there all along with black Rock, really trying to integrate and ensure that
allocated dollars is going into data centers. And look, when you see the news as we reported at the top of the show, that four hundred thousand GPUs can be honed in the Texas building that's currently happening by Stargate, it does feel like the demand is still there for all things that Jensen builds.
Yeah, the demand is certainly remarkable. And look, walt to wait and see what we hear from Nvidia in the coming week as GtC wraps up. But no question that investment these companies are making, it's still happening.
Coming up though, we're going to talk about what it takes a stand up from the crowded market for building AI developer tools. Axcels Christin Nesmon is going to be joining us and that it's all about Graphite for them.
This is blue Meg Technology.
Google has agreed to pay thirty two billion dollars to buy cloud security startup Wiz. It's the most search giant has ever paid in an acquisition and it's a big win.
For the backers of Wiz.
Joining us now is Bloomberg's Katie Roof Katie. We're learning more about exactly how this deal came together. Even though it was over a long period of time, it was also just recently, really in.
The last week and a half or two weeks. What do we know.
Exactly?
So, you know, the Google first express interests after hearing the buzz about Wiz at RSA security conference last May, and then you know, talks picked up last summer and Wiz was not interested at all in selling at the time, even though twenty three billion, you know, which was so much money, especially for a company that it's time.
Is just four years old.
But what changed is the regulatory environment. There were people involved with Wiz who were very concerned about you know, another Adobe Figma type situation that you know, went on with regulators and slowed the company down. And so you know, there's a perception at least that this deal would be more likely to get approved under the current administration. Of course, that remains to be seen. And so yeah, really what we understand is in the last week or so, Google's persistence finally paid off.
It's interesting, isn't it.
We had the FDC chair Andrew Ferguson on the earlier in the week saying, look, we're going to get out of the way if we decide that we can't win in court or can't bring an antitrust case. But ultimately the still plowing ahead on other alphabet focused investigations.
When it comes to the speed of this particular set of negotiations, boy it was fast.
It came together a week and a half, you say here in New York.
Yeah, so we're hearing it's about that, you know, earlier this month. Is our understanding is when talks picked up again. And you know, if you even look at what wiz was doing even as of January, they hired an IPO ready CFO. They fully thought that they were going to IPO at some point and they were.
Taking steps for that.
But yes, recently wiz was in the middle of a funding round and changed course and decided they had, you know, ten billion dollars more reasons to sell. There's the thirty two billion that was announced, and there's also an additional billion bonus, an employee retention bonus that they may receive.
Some real cash, not just for the founders, but also for the venture capitalists who backed the company. Bloomberg's Katie Roof joining us on that. Now it's time for our VC spotlight. The market for AI developer tools is quickly becoming crowded as more companies turned to AI generated code for deeper look at this space. We're joined by Excel partner Christine Esherman. Christine, good to have you on set
with us here in San Francisco. Excel just invested in this fifty two million dollars Series B in a Graphite.
What is the opportunity that you see here?
Yes, well, thank you for having me, Tim. Yesterday we announced our fifty two million dollars Series B in Graphite
dot dev. Graphite is an AI powered code review platform and like you mentioned, I don't think it's any surprise that the amount of code that's being generated has just absolutely exploded in recent months, largely thanks to the success of companies like Cursor and Windsurf and Copilot, And as a result of all the activity and codegen there's just been an increased emphasis on reviewing that code, testing it, and deploying it.
And that's where Graphite fits.
In graphit's really the collaboration layer where human developers and AI agents can collaborate on code changes.
So you mentioned it's a collaboration layer. But I think when people hear about products such as this, they think about their.
Own jobs being at risk.
How do you see this disrupting the engineer and the software developer market.
Yeah, it's a really good question, and I think there's a lot of conversation and a lot of people that are saying, will the software developer cease to exist?
And what's the future of that career path?
Anecdotally, just across then Excel portfolio and across conversations that I'm having with technology leaders in the enterprise, everybody is trying to hire more and more software developers, and it's actually a war for talent. That's largely due to the fact that software developers can just be much more productive
with tools like Graphite. We're seeing incredible productivity gains and companies are going multi product faster, and I actually think that this is going to be an accelerant to the software development career.
We talked about this being a crowded space when it's actually coming to using AI to build code.
This is about assessing that code.
But there are other thought ups busily building in that direction. I think if a person who helped build GitHub Copilot is but the building pool side, how do you decide that Graphite is a win a hit?
In what capacity will it win?
Yeah? Well, there's certainly a number of companies that are vying to be the next multi billion dollar company in the developer tool landscape. I personally think Graphite is you in a number of ways. First and foremost, the team is just absolutely exceptional. It's it's founded by three co founders, Merrill, Thomas and Greg They all met while studying computer science at Harvard, and they've just built an exceptional team in
culture in New York City. Secondly, this this team has just been able to.
Move very fast and ship new features.
Yesterday they launched their standalone AI code review product called diamond, and I think it's just really important to stay ahead of the curve, constantly be iterated, iterating on.
Product, and Graphite is able to do that.
I'm gonna be a bit selfish here because this company is based in New York, where I happened to sit, and I just think of AI lab Cognition as well, raising a ton of money, huge valuation, and that busy actually trying to build an AI software engineer.
What's New York got thus? Is the West Coast?
Definitely? It's a It's a great question.
And at Excel we're global both in terms of where our offices are and where we invest in companies. We've long believed that great founders are everywhere across the globe, and it's important for us to be able to find those founders no matter where they're building their companies. Graph it's unique and that they're in person five days a week and really care about building a strong culture, and I think that's given them an edge in this very competitive time.
Your own portfolio companies include Graphite, Linear, Merge, Remote, and Headway. What's exciting to you now as you look across the startup landscape.
Yeah, Well, I'm having a ton of fun. I think that there's no time like this when companies are just growing so quickly and buyers just have so much willingness to spend on technology. So it's been amazing just to see the interest in enterprise technology.
As a whole.
But what I look for when making new investments in consumer and enterprise and AI and and infrastructure is really just phenomenal founders. This is a people business, and I'm just so fortunate to be able to work with exceptional founders across all those different companies.
But is there a type of technology right now that you see on the horizon that's really exciting and you want to get behind. We under staying that the people make the companies, but the tech has to exist too.
For sure, and we've are seeing an incredible platform shift right now. I mean, software development is entering a new paradigm, and I think it's really important to just be paying attention to all the different technology innovation. If history is going to repeat itself, I think we're going to see new winners across productivity, collaboration, and insecurity, and we're paying close attention to all three of those areas.
Christina, I'm going to go.
Back to something you said that graph it's unique because it's in the office five days a week.
Is that something you care about.
In person collaboration when ultimately engineers can be based anywhere and what together?
Yeah, for sure.
So we work with companies that are in person and also companies that are remote. And I think it really depends on the subcategory that you're building in right now. In developer tools specifically, I think it's really important for teams to be able to move quickly and be in
person together. This market is moving so so so fast, and like you mentioned, it's very competitive and we're waking up every day to the companies that are raising hundreds of millions of dollars, and in order to be able to keep up, I think it is really important to be in person together and to be able to pay attention to everything that's going on in the competitive landscape.
Music to many of some of those in finance here in New York, at least Christin Essamond Partner and Axel, we thank you so much for joining us. Meanwhile, we want to update you on a developing story outside of the world of technology. President Trump says he just completed a one hour phone call with Ukraine's leader.
Trump says the call with Zelinsky was very good.
I'll remember that the two presidents had a dramatic disagreement to the White House recently. It resulted in Course Selinsky being told to leave an interheriation in the relationship. Will continue to monitor and bring you any more information from that call. Adobe unveiling a new suite of product innovations
integrating AI to really help drive the customer experience. Please to welcome Adobe Digital Media Business President David Wardwani to the show and just tell us what is going to be happening to a customer right now, How much are they going to be interacting with agents?
What does it change in terms of their experience?
Thanks for having me on the show.
Yeah, it's been amazing having the world's biggest brands and so many companies together talking about the evolution of how creativity and how agentic an AI is going to change what we call the content supply chain. And the question here is around how do you create more content in a personalized way to reach audiences with messages and content
that really resonates with them. So the entire show that we are at an Adobe summit today has been really around enabling enterprises to create more content at scale through AI and agentic experiences that can create better engagement with their customers.
Some of that is about interroperability as well.
You recently added Google's model example for users, where else are you integrating?
Who else are you adding?
Yeah?
So, first of all, just so everyone understands, we have the world's broadest set of AI models focused on creativity, and we developed those models in a way that is more controllable and toolable than anyone else in the world. We also recognize that customers want to have a broad set of models that have their own individual personalities, so we announced partnerships with Google to bring the Google models for both image and video in We also are working
with Flux. We're also working with a host of other third party models, including Runway for video and these kinds of things. So we're very excited about making sure that Adobe becomes the one stop shop people can come to for the most controllable AI models and the trusted partner in terms of getting access to everything agentic and everything AI based.
David, how does this affect pricing here? How can you move the lever when it comes to pricing? Can you keep pushing for more pricing increases because of what you're adding.
If you look at where we are, creativity is the foundation of everything that is happening and change that's happening in the world today when it comes to communication, whether you're a business professional or a consumer, whether you're a creative professional and needing to produce more content, whether you're an enterprise trying to create a lot more scaled content for personalized experiences, that foundation of creativity is what we
bring to the market. We are bringing a lot more offerings around freemium offers and webin mobile to reach billions of users at with business professionals and consumers. We're bringing a lot more value to existing creative professionals where we can bring in more tiers, and we're bringing a lot more solution and value to enterprises. So across this entire ecosystem, there's room to bring in more users, provide more value, and drive more increased monetization.
Very briefly, can you just give us a timeline here about achieving AI sales of one billion dollars. You've recently disclosed a run rate of one hundred and twenty five million dollars. You'll be able to that by November. How long until AI sales reach a billion?
Well, first of all, we are already influencing billions of dollars of Adobe business because AI is pervasive in everything we do. But to your point, we also announced that we have standalone value new products that have hit one hundred and twenty five million today. We expect that to double in the next nine months, and everything we see shows a lot more acceleration in that space and those products, so we're very bullish about that continue to grow and actually accelerate in the years ahead.
David Willmanni great to catch up with you half the heels of course of Adobe Summit. You're the Adobe Digital Media Business President. Now that does it for this edition bloembg Technology, you do.
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