From the heart where innovation, money and power co lie in Silicon Valley, NBN. This is Bloomberg Technology with Caroline Hyde and Ed.
Luvedlove live from New York and San Francisco. This is Bloomberg Technology coming up. Tesl posts its first increase in quarterly sales this year, but it disappoints investors.
And Apple preparing to announce a new low end iPhone.
We have the Bloomberg exclusive.
US we talk to tech. Have you hitters?
Later in the our CEO of Pinterest coming from its advertising event, Ed, Let's.
Get strike to our top story.
Tesla just posted its first increase in quarterly sales this year, but for the quarter, deliveries came in just below street estimates. Shares are down sharply to the company delivered four hundred and sixty two thousand, eight hundred and ninety ebs in the third quarter, just shy of the four hundred and sixty three thousand, eight hundred and ninety seven estimate. And this all ahead of course of next week's robotaxi event. Bloomberg's Global Auto's editor Craig Trudell joins us from London.
Going into the data.
It's interesting because three and y the volume products beat estimates, the other bucket which is XS and cyber truck missed estimates.
What else do we know?
Yeah, I think this is a case of, you know, a narrowbeat giveth and a narrowmiss take it away. This is a company that, you know, its shares are known to be quite volidle. Just a quarter ago, they just barely exceeded expectations and the stock went kind of crazy. I don't think we necessarily learn a ton from these numbers. I think, you know, we do generally see a nice
upward trend, both sequentially and year over year. Having said that, if you kind of you know, pan out a little bit and look at the trend, you know, going a little further back, we really just see a sort of general kind of flattening and lack of growth from this company. You know, you know, year on a year to day basis, we may actually see a decline if if trends hold up. We've seen them drop a little over two percent for
the year. So this is a company that you know, is priced as a growth stock that that is having trouble growing.
And particularly in China.
Craig, Yeah, and I think a lot of the expectations going into these numbers was that this company was going to get a big boost from China increasing subsidies for people to trade in older cars and get an electric vehicle. We did see Tesla's wholesale numbers tick up as a result of that boosted incentive. But you know, those numbers
also are are wholesales. That means, you know, they're they're kind of closer to shipments as opposed to actual you know, vehicle deliveries, and so you know, we may actually see some of that you know, support coming into play in the fourth quarter of this yere.
As always, you go straight to social media. I posted the numbers there, and there this big body of people that say the cell side doesn't know what it's talking about. This isn't about delivering evs. It's about a future where Tesla own and operates a proprietary ride hailing app Craig, they run and operate robotaxis, and I think next week we will find out whether or not that's true.
Yeah, I think, you know, the counter to that argument would of course, just be that this is also a company that's talked about, you know, putting self driving cars on the road and offering a you know, a service that would be sort of uber like where you could hail one of their self driving cars. For for years now. I mean it's it's been a half decade at least since Elon Musk was openly musing about this. So you know, whether or not they're actually able to deliver that is
another question. I do think that, you know, if they're able to execute and sort of do what others haven't you know, pulled off, which is real they do this at scale, of course, that would be a massive for this company, but it's already a pretty massive valuation for you know, a manufacturer that is really struggling to increase sales.
All Eyes a little later this month, Creatudell. Thank you. Now let's get the investor perspective.
Multi team and global Chief investment Officer Nancy Kurton joins us with your view more broadly than just one single stock. But the AI play that is so key to Tesla is so key to the market, and we still question it.
Well, I think there's a couple of things to think about. We are strong believers that this is early innings and it's long term, medium term, hugely disinflationary, will bring great efficiency and productivity benefits. But near term, let's just look at some of the facts here. The hyperscalers are having to spend billions of dollars probably we'll go into the trillions. We're doing, you know, a one time shift from CPUs
to GPUs for extending data center capacity. But we also have to build power power not just for GENAI, but we just touched on autonomous vehicles and power demand looks like it's going to double over the next three to five years. These are huge, huge numbers, huge CAPEX investment, So it may be near term that actually this investment in capex, which ry the way we think is an
interesting investment opportunity to infrastructure. But this investment in capex and maybe shortages that it can bring near term if the monetization doesn't come as quickly, and could bring some inflation as well.
So where in the stack does one invest Do you go still picks and shovels, chips, Do you go infrastructure? When it comes to energy, do you go to applications of AI?
We think you go a little bit to all of them. So, first of all, we are invested in infrastructure. We think it's super interesting digital infrastructure and power, and the combination, we think we can earn equity like returns essential services, less correlation to the market, with some great counter parties here, and with revenue escalation and inflation protection over time. That's
a pretty powerful story. But we also have investments at the other end of the spectrum with venture companies that are doing some things that are incredibly disruptive. We think there'll be winners and losers from Jenai, and we want to make sure we have exposure to that as well.
And then finally, we have a specialist technology manager because that allows us in the public markets to look where Jenai is not yet priced in, and I would say all valuations, particularly in data heavy industries, jena is not priced in today, and there's some really interesting opportunities there.
Nancy.
The problem for our Bloomberg technology audience, if they're just tuning in, is that Tesla's down five percent on a data set that comes out once a quarter. Even though if there's this big body of people that believe in this long term story that's very analogous with what you've just outlined. I think I'm right in saying that ALTI has some small exposures Tesla, but use that as a case study. What wins out here, this multi year horizon belief in AI or the short term pain of having to get there.
Well, we have a strong view that technology may underperform a little bit here. They're very high expectations. These stocks are trading at pretty high multiples thirty two times on average for the Magnificent seven. And meanwhile, the FED and other central banks in the world are easing interest rates, which we think will help the other four hundred and ninety three shares, which straight up more attractive valuations, and with the easing should support our earning's growth going forward.
So there are things to do in the market. You don't just have to play technology at the moment to benefit from what's happening with the soft landing and the FED easing. And as I said, we think it's going to be a little time here for monetization to take call. Maybe it's twenty six, maybe it's twenty seven. You know, Baying believes, you know, by twenty seven we'll see a trillion in revenue. Let's see, but it's going to take
more time. And remember in the enterprise, when you use jen Ai, it's not like the consumer, you have to embed it in business processes, you have to industrialize it. You've got to make sure that it doesn't have cyber threats, and so on and so forth. So this all takes time, so you know, a note of caution here near term
on jen Ai. We can do other things in the marketplace and benefit from the digital picks and shovel build while we're waiting, but we do ultimately think it will be transformational.
Nancy, is there a corner of the technology sector that's underappreciated by investors?
I think beyond the Magnificent seven as you look more broadly, you know, to other companies that will participate. You know, Nvidia is not going to be alone here. Maybe it's a winner take most as opposed to a winner take all, so there will be competition. There are other companies that also benefit. You know, think about data centers. They need cooling, so you know there are industrial companies that are providing
cooling services to data centers. The trade at really attract evaluations, So there are other ways of playing GENI in this infrastructure. But take a look at utilities, probably one of the best performing sectors year to date. Who would have thunk it right, So there are other ways to think about this.
You just have to think.
More broadly, where is JENI not priced in? Particularly in this period where we're in the CAPEX build. The monetization will take some time, and at the moment, I think investors may be getting ahead of what may be delivered next quarter.
What about where it's underpriced globally, Nancy, I think of the latest news that we'll go into a little bit later about KKR looking to take private Hong Kong based or traded chip company.
What about global.
Exposure, Well, I think there's some really interesting things happening globally. You might have seen as well, something like Blackstone just did a sixteen billion dollar deal in Australia called air Trunk, which is the largest Asia Pacific data center. Europe is further behind the US build. Asia Pacific is further behind the US build. So we think in our national exposure to data center infrastructure, power and build out is a
hugely interesting opportunity. They are much further behind the United States and prices are more reasonable on a relative basis. So yeah, there are opportunities here beyond the United States, and they are internationally.
Nancy Kahr and chief investment officer at ALLTT and then global really sizeable advisory.
And investment firm. Thank you very much.
Now coming up, Apple prepares for a new slate of iPhones and iPads as and this raised concerns about iPhone sales growth. We have a bluemeg exclusive coming out now. This is Blue Day Technology.
Apple is preparing to announce a new low end iPhone early next year alongside upgraded iPads as all. According to sources bluem Eggs Mark German broke, the news brings us the details. Is this about India and China and the consumer there?
This is not about India and China specifically.
This is more of a global thing.
Right, if you look at how the iPhone sixteen has been performing across the world, right, it's not meeting expectations according to some analysts. But if the company comes out with the phone, obviously they'd been planning this for multiple years. That brings down the price point of features like an edge to edge stream face ID this thinner luck with the swirred off edges globally at a sub five hundred dollars price point, they're going to be bringing something quite compelling.
To the market.
Now, the reason this is not so much about.
India is because in India the market share leaders, they're not sub five hundred dollars phones, they're sub two hundred dollars phones, right, so they're still not playing in that that particular market. That would boost market share significantly in India, but this would help them make additional straws globally.
Mark project code name V fifty nine. What a source is telling you about a refreshed iPhone SE.
Yeah, so that's the iPhone SE. That's the new low end iPhone and this is going to look similar to the iPhone fourteen from a few years ago. It's going to have the internal specifications to support Apple Intelligence. There's going to be upgraded cameras over the prior SSE. The current SE launched in twenty two, that's when they added five G to it, but it still has the home button, right,
it's the only iPhone left with the home button. In fact, it's the only Apple product that hasn't been updated to remove the home button. They've already transitioned the low end iPad, right, they cut the price of that and made that a full screen design. So this was the laggard in the product line, and that's going to change now. And this is going to make things easier for Apple. They don't have to support older operating systems for that much longer
that support a home button. They're able to move to a user interface that's consistent across all.
Of its devices.
So this is a big deal for the consumer and for Apple as a company. And I think this is going to be an extremely strong seller.
How big a deal, How strong a seller is the new iPad egg going to be in the keyboards?
Yeah, The iPad air update's going to be quite minor, right. The iPad Air was less updated alongside the iPad Pro in May. What they did last May is they introduced a new larger size with the iPad Air. So what they were doing was they were bringing iPad pro size display down market and that actually is pretty significant for schools and businesses where you're buying these things in bulk and you may want to buy something with that bigger display but not spend the typical extra four or five
hundred dollars. So that was quite interesting. And then they're also manufacturing new keyboards for those new iPad airs. The current models actually used the old iPad pro keyboard. They didn't create a new iPad Air keyboard just for that device when they launched the new models earlier this year, and so by doing that, they're able to bring down market some of the new features of the iPad pro keyboard to that iPad Air family and create more of
a unified accessory in product ecosystem. So I think that's going to be a strong seller potentially as well.
Name based Mark Gunman with another big breaking story on Apple, Thank you.
Google.
Well, it's looking to take on open ai with new AI software that resembles the human ability to reason, similar of course to open AI's O one sort, according to sources who say multiple teams at Google have been making some progress in that area. Bloomberg's Rachel Metz has more, how much are they chasing open ai? How much were they already building this chain of thought?
Well, Google has been a pioneer actually in building the kind of technology that is used in a lot of
these systems. As you mentioned chain of thought. The idea behind that technique is that you're basically when a person gives an AI system a prompt, like a really hard math problem, let's say, with this kind of technique, the AI system takes the prompt and in the background, unseen to the user, it's kind of coming up with a bunch of different similar prompts and sorting through the problem sort of step by step, and then presenting what seems like the best answer to the user. So Google, Google
has a history here. But as we know, open Ai may this flashed recently with their O one model, and Google tends to be more cautious. I mean, is it is a huge company. There's a lot of moving parts there, so we'll see what happens.
It tends to be more cautious.
But since chat GPT's release in November twenty twenty two, it's been a it's been a wild ride. Since there's pressure there, right, and I think the competition, they're cognizant of it. So what does that look like, the pushback to catch up I suppose against open Ai.
Yeah, I mean, I think it looks like a few different things happening there.
Right.
Initially, when chat GPT was so popular with people, I think Google felt caught flat footed, but as and felt, you know, like, oh, we have to put something out so we can be competitive with that. But as more time has passed, I think they want to be really cautious. I mean, they have a lot of things to think about. They have so many users, and they have so many people working on different things within their company. So I think with this they're really trying to take their time
and get it right. And they have some amazingly smart people that have been working on this kind of technology for a very long time, so it'll be really interesting to see what comes out of there.
Haven't even discussed notebook LM yet, which is a lot of fun.
Ratro Metz, thank you so much.
Meanwhile, well, not everyone is bullish on aidur own a small group. Is a renowned professor at MIT, and it's not so sure that AI can deliver on the promise of an economic He wants to make clear that he does get the potential of artificial intelligence, but by his calculation, only a small percent of all jobs, a mere five percent, is right to be taken over or at least heavily aided by AI over the next decade.
And what have you got.
Okay, it's time for today's AI and action, and today we're taking a look at Codium, which aims to utilize AI to accelerate software development. Just last month, they raise one hundred and fifty million dollars in a series C round with evaluation of one point twenty five billion dollars. Codium CEO and co founder Varun Mohan joins us for more. Welcome to the program. A lot of people phone me and said that you've got to check out Codium, So let's start with the basics of what is Codium.
Thanks for having me ed so.
Codium is an AI software development toolkit that fundamentally enables developers to write software faster and review software faster. Right now, the platform has over seven hundred thousand individual developers that use the product in over one thousand enterprises, and one of the key things that we focus on is deep personalization based.
On the rest of the codebase.
Code is a very interdependent sort of knowledge and data source, and we try to make the responses as personalized to the private.
Data inside companies.
Right now, they're seeing around fifty percent of all their private code that's committed generated by Codium, as well as a twenty percent reduction in total application development time when using Codium.
I'm going to make an observation and you respond to it. You have seven hundred thousand users and a thousand enterprise customers. You've raised relatively little money compared to a number of companies that raised quite a lot of money that haven't started selling anything yet or anyone using their tech.
What do you make of that?
So?
I don't have a lot of comments on this.
I previously worked in an industry autonomous vehicles, where companies were raising larger and larger amounts of money without actually developing a product, So I think this is not uncommon in a bunch of categories.
What we believe in is we're in.
A space that is moving incredibly fast, and the only thing that would guarantee us the ability to actually earn the right to work with large enterprises is actually shipping incredibly quickly, staying really close to the technology.
Bern It's a relatively crowded space though. You've got GitHub Copilot, You've got Sam Altman telling me that his favorite thing to do on the latest version of chatchubt is to code. So how do you ensure you take market share?
Yeah?
I think we believe the space is going to be crowded, largely because the prize is quite large. If a tool is able to actually generate or reduce application development time by twenty percent, It would be surprising if there are only one player in the category. The way we sort of like to look at it is what can we do differentially better than other companies and compared to our biggest competitor being gethub copilot. The big thing we do is care a lot about security as well as being
a platform agnostic tool. Right no, noticing a very small fraction of large enterprises standardizing on getub Enterprise Cloud, and we, on the other hand, don't really tie ourselves to any one of these platforms. In addition to that, we don't actually require a company to send their IP outside of their firewall, which is one of the things that get up copile that actually requires.
Right now, Okay, so you feel you've got a unique selling point there, but you're going to keep on innovating. You told previously that you raise a load of money before and haven't actually even spent that.
Why do you need this money right now?
I think as we're starting to work with some of the world's largest enterprises companies like Dell, we want to make sure we're great sort of vendors to our customers, and that means continuing to invest in innovation. As you can imagine GPU costs are fairly high, but also beyond that increasing the amount of the size of our research
and development organization. We just don't want to be in a position where we are working and with large companies that trust us and we actually cannot provide support to them in the best way possible.
We raised sixty five million in a Series B and now just raise one hundred and fifty million a series See, you've got some money to spend on R and D. Cody and the CEO from in Mohan, thank you very much for joining us.
Welcome back to Bluemotechnology.
I'm Carolin Hide in New York and Imed Loveo in San Francisco.
Check on these markets which have turned around here.
We were trading lower at the start of this program, and now we're up some four tenths percent. You've got some of the key chip makers to thank for that. We got broad coom and video leading from our points perspective. Also digesting the latest economic data, but largely Bitcoin, also bouncing.
Back from yesterday's sell off.
Of course, that all about geopolitical tension to search for safety amid what was, of course the key concerns of Iran missill attacks on Israel. We now await the comeback, but we're currently improving from a market sentiment perspective.
Ed some of the other single names we are watching. Ten slid down after the company posted quarterly sales coming just below estimates, but it's off its session lows. Apple's now flat. It had been down as much as one and a half percent after Bloomberg reported the company's near production of a new low end iPhone, which have come as early as next year.
Let's talk about the markets.
Bloomberg's jessmentton is here, I guess on a daylight today where at the index level we were treading water. Some of those megacap names, the moves are more notable DC a story when it comes to tech in markets today.
There is because if you look at the MLV function, which y'all were just alluding to you, when you're looking at obviously these big tech and growth companies and their waitings in the S and P five hundred, when you do have C and Vidia as well as broadcome among the biggest point contributors to the S and P five hundred.
The other side of that, though, of course, Tesla and you all have been talking about how to miss those third quarter delivery numbers there, especially some of the issues potentially with China.
But that's actually the biggest point decliner.
Here in the S and P five hundred, as well as some of the other names like Apple of Core, as well as Meta and Alphabet. So when you have more of the chip shares, because the socks was actually down last quarter, it snapped a streak of gains here and Evercore actually made a call for the fourth quarter going into year in that they did anticipate to see a potential rebound in those chip stocks, and you're beginning to see some of that this morning.
Guys.
Yeah, look at that Socks up more than two and a quarter of percent. You type in sent functions to see when that is the biggest moves in September the twenty sixth, we understand, is this just the knee jug reaction to yesterday's sell off or is this thesis changing in any way.
It looks like it's basically a knee jerk reaction because that was the biggest decline in almost a month for the S and P five hundred, and then especially a lot of these chip makers, even Micron Technology ahead of its earnings report last week. Obviously it boosted a lot of other chip companies after it had reported and had that optimistic outlook. We still have a lot of time before we would hear from Video though, that's going to
be well into November by that point. But when you're looking at that, a lot of those companies like Micron were trading at quite a discount there, and especially because of that, as will some of these other names in Video for instance, even once it had that stock splid back in June, I mean, it was actually underperforming Apple. So the question is moving forward, a lot of those that looked a little bit cheaper, maybe people are going back in and stepping up to buy those types of names.
Now, Caroline best menton, we thank you chip companies. Thinking about something else at the moment, Global Semiconductors Make is really monitoring supplies of quartz. That's after Hurricane Helene halted production of two North Carolina mines that provide basically.
Most of the world supplies for all Bloombergs. Daniel Woolman joins us to.
Explain why high purity courts matters to chip makers.
So I'm really glad to be here geeking out about this with you, courts is a prehistoric material. We're talking a mineral that is hundreds of millions of years old that developed at a time when there was very little water around and on the planet. And because that scarcity of water means fewer imperfections in the material, and fewer imperfections means that when it's used in this chip making process, it imparts fewer imperfections onto the eventual chip.
Its role in the manufacturing process is multifaceted because you have quartz wafers, it's used in frequency control. But if there's one thing I've learned about the industry in the last few years, it's that it's quite good at stockpiling the stuff that it needs. Is that the scenario that's playing out here.
Indeed, our reporters reached out to a whole bunch of major chip makers on different continents, TSMC, Samsung, sk Heinez, and all of them delivered comments to us that seemed very calm, unbothered. They all seem to for now be thriving off of these stockpiles they have. That said, to your point in the intro, these two mines in North Carolina account for about eighty percent or maybe even a
little more of the global supply of courts. So really their calmness in this situation depends on the assumption that these minds will eventually and hopefully soon be able to reopen after the hurricane.
It feels almost very painful that something that was focused on because of a lack of water is now prevented because of too much water and flooding in a certain area. Do we have any timeframe anything from the manufacturers in North Carolina as to when they might get back online.
Our reporting doesn't really nail down a specific timeline. I think the tone right now is rosy enough. I don't want to say rosie given the circumstances, but I think the manufacturer seem confident enough at this moment that the plants will eventually reopen.
Danil woman, we thank you so much.
Meanwhile, it is time for talking tech and first up, KKR considering a takeover bid for chips and electronics equipment maker ASMPT It's at According to sources, KKR has made a non binding preliminary approach for the company. The move follows similar attempts in the past by other bidders. Plus Oracle, set to spend six and a half billion dollars to
build out cloud service centers in Malaysia. The company hopes to establish a cloud region in the country, providing data center do corporate clients are called didn't offer timeframes or specifics of the build out, and a new law signed in the Philippines will impose a twelve percent value added
tax on non resident digital service providers. Sectors set to be impacted include online search engines, advertising platforms, digital marketplaces, cloud services, and even media like Netflix, HBO and Disney.
Meanwhile, coming up, we're going to be joined by the.
Former president and CFO of SoftBank Group International. We want to get behind the scenes to look at how tech VC firms were behind some of the biggest deals. What does he make of ARM, What does he make of the open AI valuation? This subruebeg technology.
We all know the powerhouse that is SoftBank, the tech investor, the backtor likes of ARM in video TikTok, Uber, Ali Barber and work, but we don't know as much about what goes on behind the scenes of these major deals. A new book gives us a peek into the dealings and into soft Bank's iconic founder, Masaoshi's son. It's called The Money Trap written by a Look Sama, a veteran Morgan Stanley banker and a former chief deal maker at soft Bank, and he joins us now in San Francisco.
Let's start by asking, now that the book is written and out, yea, what is soft Bank?
Well, first of all, thanks for having me. Great to be here. What is soft Bank?
I mean, I you must know you just wrote a book about the Well, the.
Name itself is a bank for software and gets back to Marsa ruts as a software distributor for Microsoft software. But soft Bank is really about Masa Yoshi Son and I consider it one of the great privileges of my life to have worked alongside him for a while, you know, kind of fancy titled aside. You know, my role really there was was chief you know, kind of deal maker
in chiefs, so to speak. And U and I think the one thing I would really highlight about him, the standout characteristic is uh is he's a futurist in the true sense of the word. And and yeah that that that term visionary genius. It gets thrown around a lot, but he's pulling a time and time.
It's an interesting point in sort of the mechanics of how soft Bank works. Right, it is a conglomerate. Then you have the vision fun part vision from one and two each has an investment committee. My point being that ultimately it's still in many senses, comes down to Massa making an instinctive call on whether or not to invest in something.
Is that what you found?
It's more than just instinctive and the answer is yes. For me at least, self Bank is all about Massa, and the standout thing about self Bank is he gets the big bits spectacularly, right, I mean, I mean stories like we work that kind of fun amusing. I talk about it too, But nobody's the movie about about for example, which is just a remarkable success story, right, and we can talk about that. And soft Bank Japan is a lesser known, low profile up. There's no reason a US audience,
so US investors would be familiar with that. But it's a remarkable story. I mean, you know, people think that that Massa has come back in the in the in two thousand and six, two thousand and seven had to do with Ali Baba and Alibaba is phenomenal. But soft Bank Japan, which is a mobile phone company Voteraphone, was so desperate to get rid of it they actually lent
Masa money to take it off their hands. And you know, he bought that company on the strength of a handshake from Steve Jobs to give him an exclusive for smartphones, and he kind of saw that coming.
So he's made these huge bets.
And by the way, these gain on that on a mark to markets basic basis on SoftBank Japan, sorry, on Votafone Japan is to the order of forty billion.
On arm it's one hundred billion.
So he gets these big bets spectacularly alert.
You have got some spectacular misses as well, and that's the VC way you bet big. Some of them hugely payoff, others don't. But there was this moment where money being thrown at we work, money being thrown at improbable in the UK, money being thrown at wag which rent horribly wrong, a dog walking service. What makes the open Ai potential bet that we're hearing about soft Bank bringing in five hundred million, is that the right one to be throwing money at right now?
Well, I'm not sure trying money is the way I described it. I think you have to keep in mind that in the Masters is he's been fascinated by AI.
He was talking about.
This when I first got to know him back in twenty fourteen, and I described this in that book, sitting on his porch and his home in Tokyo, and you know, he was talking about obsessively about AI, about singularity and what would mean from a technology perspective, and I honestly I didn't take him seriously at the time. So it's it's and he's been very clear now it is.
I think in.
June at his AGM, he announced that everything we've seen before is a warm up deck, so he's ready to make some some He's ready to make some big moves.
And that's a long winded way of answer your question.
I mean, you look at soft Bank and the scale on which it operates. I think it's sitting on certainly north of thirty billion, probably close it a forty billion in cash, so A I don't I don't think of a five hundred million in open AI as a big bet by soft Bank standards. I think it's it's a it's it's it's it's sort of.
Being in the game, so to speak.
I mean, I'm kind of waiting for Sonson to make his next big move. And it will be big. Knowing him, that's just just that's just the way he wrotes to what.
End paints us the vision Therefore, because we too have heard the AI thesis, this is why the deal that you helped orchestrate was first the target.
But to what end?
What does he build eventually?
Because sometimes he's purchasing with soft Bank, sometimes he's purchasing with the vc ARM.
Well, let's be clear, the first vision fund was a true fund inasmuch as it involved third party.
Money mainly from the Middle East.
The other Vision funds are on balance sheet, so you know, the the subtlety of soft Bank versus the vc ARM to me, it's it's it's it's not meaningful in that context, right, I mean, so, for example, when you read about soft Bank buying Graphcore, my understanding is that's a strategic deal. In what Sonson intends to do with that in conjunction with his ownership of ARM, you know, I think, I
think remains to be seen. But talking about vision again, I mean I speak is I've been out a soft Bank for five years now, so I'm obviously not an insider. But but you know, in terms of what I see, first of all this ARM ARM is and I don't follow stocks. I'm not a research analyst, so I'm not going to comment on the valuation. But ARM for me is remarkably well positioned as AI moves to the edge of the network. ARM has always been about blueprints for
chip design. Energy efficiency has always been their secret source. And when you get to the edge, you know AI, you know, with Apple Intelligence and smartphones and autonomous cars,
that gets to be really really important. I think that, you know, I think the graph Core acquisition is a signal at and I think the company has been pretty explicit about it that that that ARM intends to be a challenger to to in video in terms of Individia's dominances in data centers, So ARM intends to to challenge in video in that regard to So there's a lot of that going on.
My own view of AI.
Uh, you know, I do spend a fair bit of time with Warber Pinkers as a senior advisor, and what they're seeing They've avoided getting into the you know, l l ms, but but they've been you know, what they're seeing is AI very folk push on their portfolio and the implications for deploying AI margin Improumus. Jensen want talked
about it in his last earnings release. I mean he gave the example of m ducts and a thirty percent reduction in customer service cars by deploying an AI agent, So that that stuff is very, very real.
Let me ask you saying end conversation.
They were in early in nvideo SoftBank, but then they got out early and threw that, Yeah, five hundred million in open AI may not be big. You said that they will make their next big bet. How do you know that he'll time it right and that in the end with AI, whatever happens, he'll be a part of whatever.
The conversation we're having is.
What Because the track record speaks for itself. He's done it over and over again, right.
I mean, I think with smartphones he was at least two to three years ahead of it. I don't know what his next big move will be, but I do know it's going to be big, and I think he's come out and said it will be something to do with AI and it may well involve me. Look, I
mean energy is another space by soft Bank Energy. Enough money people get this, but soft Bank Energy is one of the leading solo bar generators and that, as we know, is a huge bottleneck in terms of the built out of these data centers, I mean the hugely power hungry, so could be something in that space, for example.
Alo Summer.
We thank you so much for spending some time with our senior advisor at Wilbert Pinker's former presidency of a SoftBank Group.
International.
Interest has just launched Performance Plus ahead of the holiday season. It's a new suite of AI and jen Ai tools to help advertisers optimize targeting, drive results.
Hit explain as pinterest CEO Bill Ready, And I'm assuming the better.
Efficiency and targeting for advertisers means more repeat advertisers on your platform.
Yeah, that's exactly right, Caroline.
You know, we just had pinterest Presents yesterday, which is our annual marketing event for advertisers, and a record turnout for that. And really at the core of that is that over the last two years, we have transformed Pinterest from a place that was just digital window shopping to a place where people are actually clicking and buying and shopping, you know, directly with retailers, and that's given us our
best product market fit ever with users. But it's also cutting through for advertisers where we have more than double the number of clicks to advertisers a year on year for three consecutive quarters. And as we're bringing them great AI driven ad tools, it's like more and more advertisers take advantage of that.
You're brought on.
Because your expertise and commerce and payments and a whole wealth at Google. I'm interested Bill as to where the clicks are being made, which products, which demographic you serve well.
So that's a great question, Caroline, because we have really become the place that gen Z goes to shop. So we have more than forty percent of our users our gen Z and it's our largest, fastest growing demographic. And gen Z states that the number one reason they go to pinterest is for shopping, and more than sixty percent of them say that they're always shopping. So when you think about the rise of gen Z, where they're buying
power is just growing tremendously. In fact, over the next five years, gen Z is predicted to bypass Baby boomers in buying power over the next five years. And Pinterest is where gen Z goes to shop, and so obviously a great place for advertisers to meet that really important growing audience.
Bill, do you have a sense for this upcoming holiday season if what the biggest funnel.
For you will be, or at least who you will help the most.
You and I have talked a lot about the relationship with Amazon, for example, but also some of the other names from China are becoming increasingly important for you.
Yeah, So we're really broadening our reach with advertisers. So as we opened up the stores on our platform, we saw the largest, most sophisticated advertisers lean in first, which is great because they're the hardest to please, the most discerning. But what we're seeing now is that that's really widening, and when with Performance Plus and those AI driven tools, it's really making it easier for a broader set of advertisers to take advantage where it gives them automated campaign creation,
automated creative and so we're seeing big advertisers win. For example, Walgreens is seeing a fifty five percent improvement and click through rate by using our generated backgrounds so the products look more attractive, so you can see that shampoo or that hand soap and what your bathroom might look like. But we're also seeing as we go down to smaller up and coming advertisers like Ruggables, which is a really
fantastic home goods company. We are now their largest traffic source by volume and efficiency, literally driving three times the clicks at half the costs. So these AI driven tools are really broadening out the set of advertisers on our platform.
Bill we've been taking a lot about augmented reality. Check out my piece on metas o Ryan, will Pinterest make investments in hardware for AR or partner with meta snaping span what you're doing?
We're not a hardware platform, but we are seeing that we have become increasingly a destination for our users. More than eighty percent of our usage is people coming to our mobile app directly, and that usage increasingly is more than half our easier here to shop, This even more so with gen z. So I think as you look at these visual exploration journeys, this is really where pinterest is winning that on visual exploration.
Visual search shopping is inherently a visual journey.
So these kinds of things are really where Pinterest stands out, and we see users coming to us directly for that increasingly.
Are you llm agnostic?
What's the underlying technology driving these innovations.
Yeah, great question. So you know, AI has become a core competency for us.
I've talked about previously how when we move to GPU serving in large models, you have models one hundred times larger than what they were two years ago. That gave us a ten percentage point lift in real andy of
our recommendations. But the AI is only as good as a signal upon which it's acting, and what we have is really unique signal where, unlike other platforms, users come to Pinterest and curate their taste, how's that handbag going to look with that dress, with this pair of shoes, and hundreds of millions of users do that every day, and so that gives us really unique signal to say, what's a great recommendation not just for that user but
for other users. So when we're training models, we're training on completely unique signal to our platform. We actually see that when we test llms off the shelf from major LM providers, we actually see that when that same LLM is tuned on our signal, we get three hundred basis points of additional engagement from our unique signal, which really makes tangible how unique our signal is relative to what these lms have elsewhere.
Interesting CEO Phil Ready, We thank you for your time. Now that does it for this edition of BlueBag Technology ED.
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