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This is Bloomberg Tech coming up. The tech sell of accelerates as investors question valuations in the AI trade. This is mit flag's concerns about enterprise AI adoption. We speak but the return on tech investments, the Bank of America's top technology officer, and what AI infused gadgets to expect from Made by Google. Event that kicks off this afternoon. But first we return to these markets that are having
another ugly day, two straight days of losses. We are sinking significantly on the nastat one hundred, and they accelerate off by more than three percentage points. Let's get into some of the big points drags. We've got Netflix that's tumbling. But I'm also looking at Palenteed. It is having its worst two days in at least now four years. It's twenty twenty two. We're seeing it sell off. We're off by eight percent. Add that to the nine percent we
saw sell off yesterday. Those valuations that we were questioning are actually coming down a fair bit in Video is off by three point three percent after yesterday's about two or three percent sell off as well. And Intel. It's been outperforming the rest of the market previously, of course, on the hopes of US investment coming from the government and indeed two billion dollars coming from SoftBank, but today even it succumbs to some of the anxiety. Let's stick
with a sell off. Let's get Ryan Rastellika's take. Go really talk us through some of the worries in the market. Ryan, what are we saying. We're having a questioning of AI valuations, Is it macro concerns, is it August? And the fact that we've got thin liquidity, what is it?
You know, I've heard all of those sort of things. I've heard that this is sort of a seasonal issue that we've seen in past years. So there are some people saying this looks like an attractive time to be buying. The tech trade remains intact, but you do have a number of these names sort of really come up this year.
You mentioned Palenteer, also companies like Core, We've Nvidia, a lot of the MAGS seven names have been very strong performance this year that has brought multiples and valuations, so levels that are really kind of getting tougher to justify. We are out of the earning season, We're in sort of a slow news environment right now, and it just seems like when you've seen moves like this, some kind of consolidation or pullback.
Is going to be expected.
And when you have such high momentum names like Palenteer, like core Weave, you start to see some of the most aggressive selling in names like that.
First Palenteers, who said worst two days set off in three years, currently trading at one hundred and eighty times future profit, but that's down from two hundred and forty times street ship profits that it was current and previously trading app but two days ago. Ryan is interesting. You'd been digging into some of the valuations of the high
fliers that actually had only recently caught a bid. I think of Intel and the fact that they'd added what twenty four billion dollars in market capitalization in this month alone, that's coming down today, and it did show this desire to be getting into some AI related names.
Yeah, so Intel's a bit of a special case. You mentioned how there was reports of government wanting to take a stake. You had soft Bait coming out and looking to invest about two billion dollars into the company. You did see a pull up there. I think the stock rows twenty to thirty percent something like that. However, this is the third twenty percent rally that Intel has seen this year. We did see those previous rallies fade pretty quickly.
There still continues to be a lot of questions and concerns about whether Intel will be able to re establish itself as a major player within chip manufacturing but also chip design. It is very much behind Nvidia and AMD and AI chips. It's behind TSMC on the manufacturing side,
so there's still a lot of questions there. It's not necessarily surprising to see the stock pull back after that initial excitement, especially since you know, as we reported yesterday, the multiple gotta levels last scene in the dot com era.
And it's interesting that SoftBank's pulling back as well. It's sun about seven percent, and in Asia trade we have seen a bit of a global anxiety around tech by doos lower as well after its results. Telling us a little bit though about the next set of catalysts, because at the moment we have been treading water more around the macro concerns. We do get in Video's results next week, that could be a key catalyst.
Yeah.
Absolutely, I think a lot of people are waiting to see what is said there. I think there's a lot of optimism about this report because we did just come out of an earning season where all of its major customers Microsoft, Meta, Alphabet, Amazon, they really affirmed their plans to continue investing aggressively in AI, which is obviously going to help Nvidia kind of first and foremost among the
infrastructure plays. Now, if they say anything about the outlook weakening, or there's further skepticism about China or so on and so forth, there is room for us to continue moving down just because, like I said, we have seen really strong gains in some of these stocks so far this year. There is room for them to move down now. If in Vidia is very strong, It's very possible that that is a kind of sig people use to you know, buy the step and maybe move back into tech.
Ran plus SELCA as always, we thank you.
Let's get you some breaking news now actually revolving around a big tech player and China.
Microsoft is on the move.
The company says it has curtailed Chinese companies access to advance notifications about cybersecurity vulnerabilities in its own technology. That, of course, is after investigating whether a leak led to a series of hacks exploiting flaws in its share points software. Now, the announcement from Microsoft follows a campaign of cyber attacks that Microsoft blamed on state sponsored hackers in China who targeted security weaknesses in its SharePoint servers. We're off by
just seven tens percent. It's not as bad as the rest of the market, but still trading lower. Let's get you full context on this market. Anna Rathbunners with US CEO founder of wealth management firm Grenandilla Advisory, And I mean, what a difference a couple of days makes. What do you make about this sudden AI valuation anxiety?
Yeah, good morning. In some ways it's expected, right, you can't expect everything to go up all the time. I do think that there is something to be said about the month of August being you know, special in a seasonal way. But the other thing is there are people who are taking gains. There's also when there's fear that comes into the markets. Usually the ones that are casualties first are the ones with the highest valuations and those are in the big techniques. So you know, this, this
I think is temporary. I don't think this is a start of anything that will become a trend, but certainly it's part of being an investor.
Part of being an investor, and how do you protect what have been profits made? Is this actually just a profit taking moment and people are locking in really big wins that they've seen run up this summer.
You know, it would be prudent to certainly lock in some of those gains, But I don't think you can be out of it because AI is where all the growth.
And investment is going into it.
I mean, you saw, you know, about a month ago Trump administration coming out and basically pledging its support behind AI and data centers and all the infrastructure and hardware.
That's a part of it.
And certainly I think this move into taking an equity stake in Intel is a part of that story and also part of the story of bringing manufacturing back into the United States.
So there's a lot of momentum here.
Now, government being a part of a private company is a double edged sword, but if we're to take a look at the upside, there's a lot of support around AI and text, So I don't think investors can really ignore it.
And to that point, I mean, when you get Intel suddenly prior to today running up valuation sword to well the most expensive it's been since the dot com era, should you be putting that much credence in government backing and in the ability for them to secure long term demand for future chip innovations.
Yeah.
I don't think this is just about the government, because we also had softwarek coming in and committing to or talking about committing two billion dollars in terms of investment. So I don't think this is the end of it. And also I know the Trump administraturs said that they're not going to be taking a governance role in this, but you know, if you're the US government and you're one of the largest shareholders, you can definitely influence through tweet.
And if the government has skin in the game, is it really going to sit to the sidelines and look at you know, Intel maybe not following through with the Ohio foundry. I could see a scenario, there's a speculation, but I could see a scenario in which the government can help to garner those customers for those chips. I don't think this is we'll take an equity steck and be done with it.
I don't think that's that.
It's interesting SoftBank came on board many fitting that with the help of ARM we could start to see real competition, maybe even to in video in the longer term. Had been some of the analysis written Anna, let's think about in video for a moment. It's two down over the last couple of days. We anticipate its earnings. Look more broadly, of the tech tail wins. The AI trade still on.
I think it's still on.
I mean, you know, Meta just came out, and I mean there I think there are issues there with the management and the team structure and everything, and I don't think it's necessarily good news for Meta.
But you know this hiring s Sorry. Why why is the restructuring of the AI department Alexander Wang leading when it comes to LMS and the breakdown of these four different areas of focus. Why is that perhaps not good news for Meta?
Well, it's not good news.
Good news in a sense that in the last two months we've seen a lot of restructuring.
This is the type of stuff.
That makes investors nervous in terms of effective management. You know, you can hire the smartest people at high price tag and.
Put them in a room.
If they can't work together, and if they can't like produce a product, then you don't really have anything.
You don't have an ROI on that right.
So this is a type of stuff that makes investors nervous. So I think that's a very meta specific problem.
I love that you have that idea of ROAI because that is what many are looking at this MIT report about. At the moment, we're blaming and it's in an unnuanced manner. This particular report out at MIT is saying, look, ninety five percent of the work done by company is to integrate AI hasn't returned money or productivity. What did you make of the report?
Ana, Well, I mean what would you expect? I mean, this is such new technology, you know. I think you have to expect a lot of these efforts to fail in the beginning. You have to have a lot of failures before you can have the wins. That's why I look at the AI efforts by these mag seven names as incubation. I mean to look at ROI and expect ROI within a year or two of them actually really embarking and investing in it. I think it's too soon.
I think this is more of a long term play, and so that report was sort of expected in my mind.
Anna Rathbund, it's great to have you back on. Thank you.
Brenna del Advisory now coming up and pleased to say we're going to be digging into the return on AI investment with Harry go Pel Krishnan is the chief Technology and Information Officer for Bank of America. All about where they've been focusing in on artificial intelligence and tech more broadly. Let's get tech more broadly for a moment. So we are in the eye the storm of a bit of
a sell off today. We're off by one and a half percent on the Nasdaq one hundred, coming off of our lows, the socks though Semiconductor Index, or by two and a half percent. In Video off by two point eight percent, Pallenteer having its worst couple of days in three years. This is the Bloomberg Tech Oracle's cloud infrastructure unit. Well, it's helped to propel CEO Larry Ellison to become the
second richest person in the world at one point. With the AI boom, the company saw huge demand for its computing and storage over the Internet, gaining foothold among key customers. TikTok Open Ai for more. Bloomberg's Brodie Ford, who covers Oracle, joins us now and many point in history, Oracle almost pushed against this trend, and now they are well and truly into it.
Two thousand and eight, Larry Ellison gave the speech people love citing. He said, this cloud is gibberish. And I mean, they were making so much money and continue on old school database software. But in the last couple of years they've managed to really reinvent themselves from a legacy company to one that's at the center of the AI boom. And yeah, I mean there's no better example in their
work with open ai and stargate. Right we have the details that on one new data center in West Texas they're going to be spending over one billion per year just to power the thing with gas. I mean that's before construction, that's before all the chips. The scale of the cloud build out happening for AI right now is just it's a comical scale that we haven't seen before, and Oracle has found itself at the center of it.
Let's just talk about who's driven this because the CEO is it called suffracats. How much has she been the pinpointing of this growth area. How much has Larry Alison really been playing a key role? What do you make of the internal work and so good this business.
We spoke with a lot of folks that are close to this business, and you know, the CEO. Everybody wants money from you, And for a long time, Saphra said, no, we are not giving you all the money that it takes to build these data centers. Right, I mean she was skeptical the business for a long time, and then these big deals started hitting. I mean, TikTok around twenty twenty two was making so much money that it was bigger than the entire rest of Oracle's Cloud all put together.
And so she saw deals like that, she saw deals like open Ai, and that's when it became clear that this isn't just part of Oracle's business. This is going to be the business. Wall Street expects that by twenty twenty nine that cloud Infra will actually be the largest share of Oracle's revenue. And so this is a true reinvention of the company for good and potentially for bad. Right, I mean it's a much lower margin business. There's more
risk to it. But clearly for now the sentiment is good and something is working well for them and the.
Breadth of customer here, Brodie, because we think of TikTok and we know they're a key strutch player for them, we know the relationship with Stargate and therefore open Ai.
But how broad is this getting It is a bit of a whale business right now. It's a bit concentrated, right The majority of their backlog is AI deals, largely training. There are questions out there around how long does the training boom last? What are the margins of it. It's
a very impressive customer list for sure, right. I mean, as you said, we got open Ai, we got TikTok, we got Elon Musk's Xai, we have Meta, we have a kind of cadre of you know, all the AI names that we all know, and so they've signed all the right people. But the real test I'm going forward is can you sell these folks more than just GPUs and what can.
They do with them? Punning Meg's Brodie Ford, fantastic to have you, thank you. Let's talk about what you can do with all of this GPU, this compute and how it ultimately brings productivity to study from MIT saying that actually, despite the billions enterprises have spent on general to AI, perhaps only ninety five percent of organizations, well they say they're actually getting a zero return. Thus far, only five percent have got any return. This is really true. Harry
gopel Chrishnan is with us. He is the new Chief Technology and Information officer over at Bank of America, but he leads the bank's global technology approach. You've been at Bank of America for fourteen years, but you've very recently taken on this real global helm job. And there is more nuance to that MIT report than the market has given credence to. Basically, it's saying, look, if you just tried to make it up and perhaps build some CHATCHBT
like products yourself, it didn't always work. But what have you been doing internally to make things work for Bank of America? Yeah?
Great, thanks for having me. And look, we get to serve seventy million clients every single day and AI is not new to us.
It's been part of our journey.
So if I could offer you some soundbites of what we've seen in the last five years, ninety nine percent of our customers and clients today interact with us digitally fully self serviced. Ninety nine percent of interactions in the consumer business our self service digital. We have sixty five percent of our account opening is digitally done. Ten years ago zero percent. Our client satisfaction number, which we care a lot about, has gone from the high seventies to
eighty nine point one. And yes we're counting, and so you think about it, better client satisfaction. Shift to more self service channels and more automation always yields great results. And AI has been part of that.
Journey for us.
And I think of as the client. The customer perspective is Erica. But your client and your other stakeholders, you can your own employee base. How have they been adopting general TODAI? Have them am using assistance?
Yeah?
And maybe if you just ruround the clock a bit right. Our first journey into AI started with things like fraud models and fraud algorithms. We have fourteen hundred plus patents and two hundred and fifteen models in production with things like AI models, and what we realized seventy eight years ago is humans wanted to interact with machines in a
more humanistic fashion. And long before the large language models came along, we thought about things like Erica, which allows a customer to simply say a few words and for us to figure out what they want rather than them trying to figure out what our systems actually did. And that's where we've now seen significant adoption. So this morning we had a press release that we now had three billion transactions that have been conducted on an aircut and that continues to grow at.
An exponential pace.
So that's our clients and customers saying we actually like.
To engage with you in this way.
When you then pivot to our employee base, they're like, well, why can't we use the same capability. So we've taken this platform and broadened it use. So today a high network advisor can actually look to Erica to say, look, I need to hear about some complex trust policy in Delaware. Can you summarize it for me and tell me how I should talk to the client about it. And one of the more recent implementation has been is I'm about to meet a client, how do I prepare for that meeting?
Before a junior banker would take days to prepare a docier for that. Now we can actually use Generati VI models to create the first version of a draft that saves hours and minutes, if not time, which then drops to the bottom line.
Harry, I know in many ways this is your secret source. But I'm reading that you've got what seven eight hundred patents of your own. How much are you having to depend on purpose built general to AI. How much are you looking to an open AI for the enterprise offering or are you going to build it yourself?
Well, I think we have a multi level approach to this, right, We're not you know, we have enough reality to know that we're not going to go build foundation models. We want to build upon all the investments that are happening in the industry. But the reason they're called foundation models is they let you do a lot of things on top of them. So we have a level of the stack where we absolutely will embrace.
Commodity, which ones I don't interest.
Well, I think a little bit of everything. Right, We are looking at it, and we intentionally want to be madalagnostic. Right, We intentionally do not want to be wedded to any one single solution, but then built upon it. When it comes to our complex workflows. When you think about our business processes, if it was just as simple as buy something off the shelf, every one of us would be done. The reality is you have to take these models in and back to your productivity question, the way you unleash
productivities applying these to your business process. Understanding how your current process work. Don't just try to replicate it, figure out where you can eliminate parts of it, simplify it, and then use AI to go after it.
And what we've seen is it's yield a tremendous results for us.
I mean you said, and we're counting. How are you measuring that productivity gain apart from the sheer scale of interactions and numbers that you're seeing?
Yea, I'll give you an example of it.
Right.
We now have seventeen thousand developers in my own team that use coding agents to help their day to day activities. Within that, we actually measure things like cost per story point, defect density. There's a set of metrics productivity metrics that we look at and we look at it before and after we expect to do similar things on a business
process by business process basis. To actually understand the metrics when we went into the problem how we deploy these capabilities because they're not cheap, so we need to make sure there's an ROI component to it. But coming out of it, be able to see what comes out and fail fast if it seems like a given process doesn't lend itself appropriately.
So I go to the sensitive question of those employees that are embracing these coding agents.
Yeah, to have a few of them.
How are they feeling about being augmented or replaced?
Well, I would say it actually allows us to get to a backlog we could never get to. There's always more work than you can get to. There's always things that you could modernize, There's always more things to do. And I actually tell you that our first reaction from our teammates is been this frees them to do more innovative work rather than the mundane work that was consuming their time and resources. And I think we're going to see that pattern play itself out over time.
Sunny One, what a few weeks into the leading job. It's wonderful to speak with you, Harry. Harry go for Christian who's the chief technology and information officer over Bank of America. Time now for talking tech and first up, Shaomi says it's looking to sell its first EVS in Europe by twenty twenty seven, taking on the likes of Tesla and byd Now. The company announced its strategy after posting a thirty one percent rise in quarterly revenue, boosted
by the launch of its second EV Now. According to the Shaomi president, the company is doing research and preparation, has no specific product plan yet, plus shares a by do where they're lower today. The company posting second revenue that slips slightly as it faces an economic downturn in China and our AI rivals and difficulties in net growth areas. In particular, China's Internet search is looking to Genai to drive future growth, but it is struggling as open source
models like Deep Sea gain traction and startup. Game Science has unveiled its working on a successor to one of last year's best selling RPG titles now at games Con conference it was over in Germany, the company showed off a teaser trailer to Black Myth chron Qui, a sequel to twenty twenty fours Black Myth Wukong.
Now.
According to game Science back at tencent, the project is quote little more than an empty folder at its current stage, coming up Meta making those restructuring moves of its AI group. They have the details. Next, at first, that's check in on these markets. We are down, and we're down significantly. Then a's that one hundred really accelerating yesterday's losses. We bounce off our lowers, but still we're seeing some of the worst sell off that we've seen in a few months.
Are also saying names like Palenteer really eroding some of that valuation that we've seen, having its worst couple of days in three years, Other names such as Apple and contributing to the points perspective. This is the Blombg Tech. Welcome back to Bloomberg Tech. Let's take a look at these markets. We're in sell off mode. We are bouncing off our lows. Nevertheless, we're off by two point four percent in the last two days, worst sell off since
about April. In fact, we have some deep anxiety surrounding valuations, particularly in the AI trade, whether it's macro concerns as we anticipate. J. Powell and an awful lot of FED talk what rates mean, but also more broadly, what these valuations have got to extreme levels really mean. When you've got perhaps Enterprise not fully adopting in the productivity means that some anticipated that MIT research report causing some girations. Let's move on to the individual movers that we keep
an eye on. Look, I'm off by overall in the last few days, well five and a half percent for Palenteer, but worst couple of days set off in a few years. Intel is off by more than six percent, wiping out a lot of yesterday's gains. After we were enthusiasmor and soft Bank investing in this company, and indeed talk of the US government taking at least a ten percent stake. But we pull back on Intel as people really lock in profits. On Meta as well, we're off by one
point four percent. It's down the three straight trading days, having lost five point six percent in the course of those three days. Let's just stick with Meta more broadly. In the company announcing yesterday yet another restructuring of its AI group, pursuing superintelligence. Now it will be splitting its AI team into four distinct teams and move. The company says, we'll allow it to better capitalize on its recently acquired talent. Bloomberg's tech reporter Riley Griffin is here to break it
all down. You're in San Francisco really digesting what seems to be a focus on llms, still on the frontier research, but then there's the application of this research and the infrastructure. Of course, no doubt.
Yesterday we were able to obtain a memo that was shared by Alan are Weighing, the new chief of Metasuperintelligence Labs, and he's really laying out the new structure for this organization after weeks and weeks of an incredible effort to hire talent. As you might remember, Caroline, this is hundreds of millions of dollars sometimes nearing billion dollars in total compensation for individual AI researchers, and now they are finding their home within META, within these four teams.
Yeah, and the home how are you seeing the perhaps what some have reported by the scenes of some jostling or discomfort with what had been suddenly incredibly expensive talent coming in and a reorientation of where the focus is. Does this help better align that talent and actually push forward? And ultimately is it open large language models for example? Are they going to delve into closed ones? Potentially?
That is a really a burning question for all of us. What we do know is that one team will continue to be dedicated to large language models, the Lama product that under pins metas AI efforts broadly.
And the one team that I.
Really am keeping an eye on is the infrastructure team. Mark Zuckerberg has pledged to spend hundreds of billions of dollars specifically on AI infrastructure, and now we are seeing talent from within the company go and lead that specific effort. We expect more capital to be deployed there this year and then certainly next some.
Great reporting Ridley Griffin, we so appreciate it. Let's get some of the investor and analysis take now. Rohit kol Con is with this managing director and scene analyst covering Internet and capital markets research at Growth Capital Partners. And that commitment to infrastructure that Riley articulates there, that money is it proving out?
I hey, thanks for having me.
I think so far, what we have seen looking backwards last twelve perhaps fifteen months, Meta is probably the best poster child in providing qualifiable returns on investment in AI in ffrastructure. By that, what I mean is the company has demonstrated accelerating revenues. The company has demonstrated upside to industry growth and a lot of other belts and vestles around AI investment. So looking backwards, yes, definitely is the poster child of showing written on investment looking forward.
That's the question mark in the stock today.
Okay, so they've been able to make it work for advertising in the business model, but now for superintelligence and the race to be one what business model does that align itself with?
For Meta?
How much are we going to see generative AI affect the way in which we interact and communicate.
I believe the problems that Meta is trying to solve using AI and using superintelligence are just compounding with the data that they're collecting and the possible business models that they are exploring. Remember, they have invested a lot of money in the augmented reality virtual reality glasses they are They have been working on that over the last four years.
There has been a reset in that and now probably we are not now looking at twenty twenty seven for the actual launch, So there is a timetable to build AI within those glasses. I believe that's going to take up a lot of money. And second, integrating the three apps that they have, and those are the three largest mobile apps in the world with billions of people using on a daily basis. To make those apps super intelligent and to make them extremely sticky is probably a monumental
investment opportunity for them. So these two are orthogonal investment opportunities, but I think both are probably going to be something that Zuckerberg is going to be fully invested in.
At one point eight seven trillion dollars, is that a full valuation for this full investment theme.
That you have ro head, I believe, like the layers unpacking in the future, it's just going to be something that we are going to be excited about.
I feel we are.
We have still not yet scratched the surface of the potential of jen Ai on a very large, multi dimensional platform like Meta, and I feel Zuckerberg has the founder whip if you feel he's investing behind this as if it's an existential, once in a lifetime opportunity, even bigger
than when iPhone was launched. So I feel the excitement and the kind of attitude that they can disrupt the Apple card while redoing something new is something that the investors are willing to be patient around on Metasta, and so are we.
Your patient is still got a buy rating. Compare and contrast to some of the other key companies that you do analyze. When I'm thinking that, you're looking at Alphabet and Amazon and they as bigger winners. Have they been as bigger winners in the capex? They've already spent and do they have as good a road map as you currently articulate for Meta?
So far, I think Meta is the clear winner.
Amazon is so far probably a number three, and Google is a number two player, number two winner as far as demonstrating returns on GENEI investments. Having said that, I think the complex problems that each of these very large, massive companies are solving or trying to solve using AI are essentially compounding with every day, and that is leading to more investment and more investment needed to solve those problems.
Think of the multi dimensional e commerce, cloud, advertising, prime video, same day delivery.
All of these elements.
Can be optimized using AI, and at any given time, probably Amazon.
Is focused on maybe one or two of those.
So I feel over the longer arc, the bigger winner is probably going to be a company like Amazon.
Given the surface area of improvement.
They have the potential, but in the near term probably a one pony like a Facebook, has executed better in the last eighteen months, and they are demonstrating better returns today.
I hate to talk about the near term because I know you're a man who likes to give longer term projections and price targets. But when you're seeing a sell off like we've had after the last couple of days, a lot of it tied up with worries about ROAI and the report coming out of MIT, the GENAI divide, and the state of AI and business. Do you give credence to that? Do you think there's a lack of nuance or do you think actually we should be worried about how much we're investing in the returns on it.
I think there are two ways to.
Interpret miit and just the overall questions that are being raised that hey, by the way we applied Genni algorithms llms, we invested so much, but we are not getting the returns as much as we wanted. I think these large
companies are trying to solve really large problems. The efficiency gains that they will provide over the next twelve months are something that we are very confident on whether that translates into revenue uplift that remains to be seen only a company like Meta has demonstrated that other guys are kind of TVD. That's why from AI winner standpoint, Meta is the one to buy on this weakness today.
Right here, Kolk Carney, Managing director and Senior analyst at Growth Capital Partners, it's great to catch up with you. This is Bloomberg Tech and you're looking at a live shot of the principal room. Bloomberg is live at Jackson Hole this week. Tune in a continuing coverage leading up to a special episode of Bloomberg Surveilience on Friday. This is Bloomberg. Elisei, which ultimates complex healthcare housing systems, has just announced a two hundred and fifty million dollars Series
E round led by Andrews and Horowitz. The startup, which was founded back in twenty seventeen, off is Conversational AI, a platform for users. And I'm pleased to say that the CEO and founder and Lisa Mina Song is here with me. You're based in New York and just how was it raising these funds? How quickly are you able to raise such an enormous amount of money?
Thank you for having me.
It was pretty quick actually to raise the round of funding. I think investors are incredibly excited about investing in vertical AI, which is AI that solves specific problems for specific industries, which is exactly what we do, particularly focused in the housing and healthcare industries.
And why those particular industries. Was it just the pain points were just so obvious and glaring to you.
I think so it's pretty obvious to all of us how inefficient and how limited the technology is when we interact with these industries. But the core mission of the company has always been to develop advanced technology for industries that serve fundamental human needs.
So housing and healthcare are some of the.
Most important decisions we make and the important, most basic needs that we have as humans.
So the way in which the business works is you're selling your conversational AI in a B to B manner, but then it's me that ends up experience it as a consumer. How have you seen healthcare institutions, housing institutions willingness to just these sorts of products thus far?
Yeah, they're extremely excited to use it. So we serve on the housing side, One in every eight apartments in the US today are using our AI software and they we're using AI to automate manual processes to make operations more efficient and to make them more cost effective. And these inefficiencies really affect all of us. When an industry is inefficient, then those that drives up costs for owners, which ultimately trickles down to renters, which is really important
and really affects all of our lives. So there's a lot of excitement about AI.
Okay, And so with the money you do want.
A significant amount of the funds are going to be going to expanding our teams, so a lot of engineering team members, product team members, research operations and more. We're expanding our offices in New York City, San Francisco, Chicago, in Boston. So we're looking for people who want to have real world impact and solve really important problems that impact millions of people's lives.
We've talked a lot about talent wars and how expensive certain researches have become. Is it the mission that therefore attracts them or have you got to up the paycheck significantly? And indeed, the.
Reward of equity absolutely the mission. I think people who want to apply these great advancements in artificial intelligence, but want to see that that has real world impact and that it can affect all of us is what attracts people to working at alys Ai.
How do you tend to offer when you think about packages. Are people coming on board wanting to see a roadmap for you to go public? I mean you're already a series stage.
We're focused on building a generational company. That's what's really important to us. We want to change the face of housing and healthcare and want people to look back on it and say, I can't imagine what it was like back when all of these services were so expensive expensive?
Were they like that?
And people who are joining want to be part of making that change happen.
How do you calm any anxiety that you're not going to do a wind surf, You're not going to do suddenly a big purchase where you, as the founder get lifted Alexander Wang style but leave others behind. How do you ensure that this idea that you take the team with you remains resilient.
I think we've been through and through dedicated to the mission of the company, and there's so much more that we all want to be a part of. To make this happen and it's a really exciting journey to be on.
We have no plans to do that well. Thus far, it seems as though the clients have loved you and speak very highly about the impact that your technology is having serving people in healthcare, people in housing. Mina Song, founder and CEO of Elise AI.
On that fundraise, we can gractually done.
Meanwhile, soaring valuations are coming from the likes also of the major foundational models think open Ai, think Anthropic, but also data bricks. They've also been boosting, but they're creating perhaps a bit of a full sense of strength among
the VC markets. In reality, only the top one percent of companies are pulling in the majority of capital, and now more investors are beginning to worry about the health of the young Silicon Valley startups who most k Clark joins us for more And really you've been uncovering, as you always do within tech and venture capital. That's some of the trends. So these big whopping valuations cover up a dark side.
Yeah, there's a tale of two markets and venture capital.
Right now.
You have the AI mega companies Open ai Andthropic, Deta Bricks raising rounds in what feels like in a monthly cadence. And then you have all of the other startups and many of them are actually struggling or even raising down rounds.
So who are those types of startups because we just had a lease AI on these very two hundred and fifty million, relatively young startup and actually managing to well raise. But who are those who have been left behind, particularly those peraps who did well in twenty twenty one and don't really want to admit that they're going to have to face a downroute.
I mean, it's exactly companies like that. A lot of the unicorns that were minted in twenty twenty one, a lot of the companies that were founded before twenty twenty one. The vcs like to call these sort of the non A native companies that are maybe trying to catch up, trying to incorporate AI, but really they were They were born before chat GPT, born before CHATCHAPT.
Some of them have made the pivot, like I think of a Figma, for example, managed then IPO at evaluation that they were previously going to be bought at, and people have really managed to think of them as generative AI business even though they've integrated it as they grew. Where are some of the pitfalls? Where are the industry exposures that we're not liking right now?
I mean, I think you have to look at e commerce, fintech, cryptocurrency. There are many areas in which investors are not as excited because they don't see how generative AI can really help that business. I think, though, the main point of weakness are the companies that raise at extremely high valuations during the last hype cycle, and investors now just don't see a path to allowing them to raise money at
an even higher price. So those companies are kind of becoming what again VCS call like zombie unicorns and are just sort of slowly, slowly dying.
Will they be allowed to die? Will they be forced to consolidate?
What happen?
I think there'll be some consolidation, But I do think you'll you'll sadly see a lot of just companies quietly disappearing and slowly dying over time. But of course there'll be M and A, and of course there will be winners. There will be companies like Figma and many others that were born pre CHATDPT and still find success.
And you'll be there to document it. Okay, comeup, we appreciate it.
Google. Well, it's set to show off new Pixel hardware later today and it's made by Google. Event just bringing man leap Sing who has technearch of Bloomberg Intelligence and talk about well, how important is the hardware for Alphabet parent company of Google.
I mean everyone realizes Google has an advantage on the custom chip side because of their TPUs. I think that's going to show up in repeatedly, like they release Pixel every year, so you will see a much better Pixel version that can run LLLMS natively. That's the one thing everyone wants Apple to do. I think Google is already doing that obviously on device l LAMS is not that
big off an opportunity right now. But look, whatever people think in terms of AI agents, to me, AI agent opportunity will come through on device l LAMS and yes there will be apps that run AI. LLMS browser is very important. I mean, in the case of Google, they have the Chrome browser for now now and then layering it on operating system I think gives them a unique advantage along with the chips. So that's what I feel they will emphasize at the event.
This asset is incredibly useful to them and really only useful to them and will wither and die on the vine if sold to another. But compare and contrast how important it is to show off it within their hardware. That's to say, a Samsung which was also infused with Gemini too.
Yeah, and look, Android operating system is used by a lot of other OEMs. So from that perspective, what Google has done well is to showcase AI capabilities on all kinds of hardware. I mean, even the earbuds that they will showcase I expect at the event will have some integration of AI into variables because that's what they want to show. At the end of the day. Your llms right now will be distilled into smaller versions that can
do intelligent tasks, whether it's scheduling or voice assistance. And that's where Google has a unique advantage because it has the chips, it has the LLM, it has all the data, and it has the family of apps with you know, over two billion plus users, and that is why it knows so much that it can do personalized AI that others can. So to my mind, they are in a
unique position. Obviously, they have a small market share when it comes to smartphones, but they're doing enough to showcase that embedded AI element which could potentially drive up their share when it comes to the hardware side.
Yeah, briefly, how much could they steal from a cluster theory offering.
Well, I mean, look, Apple has their problems. They have to figure out a way to integrate llms, whether through partnerships or through their own I think it will be through partnerships. In the case of Google, they will use all the OEMs, so really the advancements will be at the operating system later, but they have to showcase that in their own hardware first. So that's why this event is quite important.
So too is as we wait in anticipation of Judge Metas ruling on whether or not they're able to keep Chrome as well. Bloombig Intelligence man Deep saying we love having him as always as we anticipate some of that hardware coming out. But that does it for this edition a Bloomberg Tech. One last check on these markets before we leave, because it's been a volatile hour of trading during the show. We're off by one and a quarter percent on then astat one hundred socks is feeling the
pain and video is down significantly. We're off by two percent on the Semiconductor Index scrypto though turning back into the red. There is risk and anxiety building about some of the valuations in the market. We see some profit taking. Don't forget, though, to check out our podcast. You can find it on the terminal as well as you do online on Apple, Spotify, and iHeart from New York. This is Boomberg Tech.
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