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From Mahart where Innovation, money and power Collie in Silicon Valley, Nbon. This is Bloomberg Technology with Caroline Hyde and Ed Ludlove.
I'm Caroline Heidel Bloomberg's World headquarters in New York.
Ed Ludlow is off.
This is Bloomberg Technology coming up exclusive reporting that chip giants TSMC and ASML well they can remotely shut down the key equipment in event of an invasion to Taiwan.
Details to come.
Plus, we hear from Microsoft CEO Saty Innadella as its Bill Developers conference kicks off, and actress Scarlett Johansson pushes back against open Ai and that eerily similar Sky Voice. All that and so much more ahead. But first, that's checking on these markets. We want to go higher. We want to keep those record highs going. It seems on the SMP. Certainly the NASDAK turns flat. I'm pushing forward
also to what's happening in crypto. We'll get back to what the MAINNGJA benchmarks are doing at the moment, but crypto has been a key story.
Of course.
This all eyes shifting from what we saw was a spot bitcoin ETF now to potentially a spot ETF. But there is the NASDAK currently just trading into positive territory. We are on a new record high. We're a new record high in the SMP. Not so on the stock six hundred and over in Europe actually off by about a quarter of a percent. But all eyes focused on FED talk today. Raphile Bostic of course, still trying to analyze the data many of FED talk coming to us.
But also we're seeing what's happening with the ten year yield currently off by some three basis points. So maybe a bit of buying into the bomb market right now, as we also push forward to what's happening in earnings. Let's have a look at some of the individual movers that we've been seeing, and Palo Alto Networks, one of the key forwards, is actually coming off of its lows.
We're down only now four percent.
Why cybersecurity company just posting revenue that's eleven percent, well, thirty fifteen percent growth on.
A year on year basis.
That's not the twenty to thirty percent revenue growth what we used to do with a cybersecurity company.
We go speaking to the CEO a little bit later, in the show in.
Vidia trading flat ahead of its all in important earnings tomorrow. But what's key is this relationship, of course with what they've been talking about in ai and Taiwan, how dependent they are on TSMC to deliver the sort of super chips that the market is so dependent on. And a really interesting piece of reporting therefore on ASML and TSMC today coming from Bloomberg SML is off.
By one and a half percent.
That's as we see that exclusive reporting coming from our colleague showing that in an event that China invades Taiwan, both TSMC and of course the chip equipment making company ASML could basically have a kill switch. They can remotely disable their chip making machines. We heard about the importance in fact of Taiwan from Nvidia's CEO Jensen one and the Dell World conference just yesterday.
Listen, Taiwan is at the epicenter of the world's technology supply flight chain. Without Taiwan, it would be very difficult for Michael and I to do our jobs, it would be very difficult for us to serve Bill and his company, And so the technology industry depends very heavily on Taiwan. Who continues to for some time.
The ai juggernaut has spoken and he's saying that Taiwan is really important as if we forgot, we'll pleased to go join in Washington bluebags. Mike Shephard, this is an extraordinary piece of reporting. Ultimately companies having to ease US government concerns here, Well, that's right.
And this is actually answering with this reporting one of the fundamental questions surrounding Taiwan, one of the big what ifs. For years, the US government has warned that, you know, China has its eyes on Taiwan and may try to reunite with the island using military force. Now Beijing has that they have no interest in doing so. They would prefer peaceful reunification, but they have not ruled out military intervention at the same time, so one of the key
questions is what happens if this takes place. One of the big questions is what happens to the semiconductor industry. Taiwan is responsible for ninety percent of the world supply the most advanced chips, the kind that supply and video. We just heard from Jensen, why are you talking about that? And it is so essential for the US we saw during the pandemic and more recently with the earthquake in Taiwan, the concerns about any sort of supply chain disruption.
Really, what's phenomenal here is that ASML is the lynchpin. Really, it's shipped more than two hundred of these very sophisticated EUV machines to clients outside of China. But they also do still ship to China, but far less technically sophisticated kinds of machines. Nevertheless, it looks as China has really been making strides in self sufficiency here.
Michael, Well, you're right, it has, and we saw a sample of that last year during US Commerce Secretary Gina Raymondo's visit to mainland China, they Huawei Technologies unveiled a brand new smartphone and May sixty that featured a much faster semiconductor a processing chip than anybody thought they were capable of generating and using in a consumer device like that.
It was a seven animeter chip, very very small, and the US was taken aback by it, and it was made in part with older generation ASML machines, but with technology that came from other sources as well. It was a sign that the concern is that China will be able to catch up in terms of technological advances in producing these semiconductors, and it requires sensitive equipment like the
kind that ASML makes. ISML is the only producer of these machines called extreme ultraviolet machines, and they harness light waves to create these tiny, tiny transistors that you need a microscope to look at, and yet they do all these powerful computations of the likes that artificial intelligence and even military applications require. So the sensitivity of this is.
Very clear.
What we're talking about though, also is a maintenance function because these EUV machines, as they're known, they require a lot of upkeep and the company ASML needs to be able to turn them off remotely just for maintenance purposes. However, they now have a geopolitical significance too.
Michael Shepard weaving it all together for us so beautifully, we thank you so much, and look at has real effects on companies' earnings.
Here.
SML has said with the latest export controls on their ability to shift to China, they could see a revenue impact of some fifteen.
Percent this year.
We look ahead to what's happening within video earnings yet to come, and we know they've got exposure to China too, as we've all together with Christina Hooper, Investco's chief global market strategists, and I'm just going to kick off with ultimately, China is a headwind at the moment where record highs across.
All major benchmarks in the US. Is China much of a headwind from your perspective, I don't think so. Clearly.
There are always going to be geopolitical tensions, issues concerns, but markets have a funny way of putting blinders on and focusing on what's the most important fundamentals as well as monetary policy in these challenging.
Times and these unique times.
And so I think there's a calculus that has gone on that has said, yes, you know, there are a number of risks out there, but we're going to keep investing and we're going to continue to enjoy the earnings growth that we've seen.
And talking of earnings growth, everyone waiting with baited breath and what sort of growth in vidio does indeed post after the bell tomorrow in excess of two hundred percent increase in revenue is extraordinary. There is a market from the back of reporting coming from other titles today, that maybe there'll be some sort of pocket air pocket in between some of the more sophisticated chips that was being
made from a Grace Hopper perspective. Buy in Nvidia moving onto the Grace Blackwell and Amazon, for example, pausing the ones on the less sophisticated Grace Hopper. Does that ultimately matter more the Nvidia intricacies that who's buying who's not than say FED policy right now.
Well, for the tech sector, perhaps it's in Vidia, But I think when we take a step back and look at what is likely to help markets move forward, it's rate cuts. The reality is that it impacts the tech sector in particular because typically when we see higher yields, when the ten years higher, that exerts downward pressure on technology stocks and vice versa. The higher valuation names are more sensitive. So I think that that right now is important.
Certainly in Video's important for Nvidia, for for semiconductors, for the tech sector, but right now there is a weight on for central banks to start cutting.
We've gotten a.
Few little cuts so far Swiss National Bank, Risk Bank, but now we're ready for more.
And I look at it this way.
We you know, as a parent of teenagers, a son who went through the college process a couple of years ago. He got into school off the waitlist, some kids got in early decision. They all wound up graduating at the same time with the same degree. And so we're going to see probably the first mover is going to be the ECB, maybe the Bank of Canada given the inflation print, but the FED will be along this year as well,
and we'll get a few rate cuts. We'll all end up pretty much in the same place, but we're going to see We're probably going to see others start the ball rolling, other majors start the ball rolling before.
We see the FED. So in a way, be patient.
Christina, should you buy into tech for all viewers now?
On the biasis of macro policy?
Well, I'm not a believer in market timing because it is so hard to do, but I do think starting to increase exposure now as we wait for rate cuts to begin is arguably a very sensible strategy. Many investors, retail and institutional, are overweight to cash, and so certainly they should be taking some money off the sidelines and moving it into fixed income, locking in rates on the long end, but also they should be moving into equities,
and it's not just tech. I think tech's very attractive, but for valuation reasons, European equities, UK equities, Emerging markets equities, there are a lot of opportunities out there for different reasons.
On industry groups.
Utility is doing very well, but also because everyone thinks that's an AI play.
Absolutely, who would have ever thunk it. That was not on my Bingo card for this year, but utilities absolutely are ANAI play.
So do you.
Think that ultimately we should start spreading our wings from an industry perspective as well as a geographical perspective.
Yes, absolutely, But we have to recognize a lot of the very significant earnings growth is coming from.
The tech sector especially.
You know, when we look at at the industries within tech, three of them are delivering double digit earnings growth. So that is a compelling place. We just have to recognize that valuations are higher.
This only our all eyes still on tomorrow's set of earnings or great macro perspective. Coming from Invesco Chief Global Strategist Christina Hooper, we love having her hair. Let's talk zoom video for a moment reporting as first quarter results and they beat expectations on the prior quarter.
It's the sales forecast perhaps.
That had some people trying to understand where there's conservative elements are lying and where the opportunities are too. Let's talk through it all as the shares push higher with Kelly Steckelberg Zoom CFO to have you here in New York with us, Kelly, and there is some concern about perhaps a more cautious forecast. Can you talk us through how you've seen small medium sized enterprise demand for your products at the moment.
Sure. So, first of all, we were very pleased with our Q one results. We beat analyst expectations across revenue, profitability, and free cash flow, and we reported you know, Q one revenue of one point one four one billion dollars up three percent year every year. We did see growth in our enterprise which was up five percent year every year. And then turn in terms of SMB, which we've gotten
a lot of questions about. We support that segment of our business, mostly through our online segment, and that actually did better than we expected this quarter. So very pleased with the results across all of our segments.
You are a numbers person.
We saw the number of enterprise customs declined slightly, but there was a reshuffling of who.
Actually fills into those gaps.
They accounting for the difference of of how you count customers.
But why are they declining? How do we digest that to climb Yeah.
What I really want to point out, as you just said, we did transition some customers from the direct segment online just to promote better self service. These are typically, you know, much smaller customers. Where we continue to see growth is in the upmarket. So when you look at customers that contribute more than one hundred thousand dollars of trailing twelvemonth revenue,
that was actually up eight percent year every year. So that's the segment of the business that is really helping us drive growth and where we're really focused, you know, on the smaller end those customers, we give them a lot of flexibility. They come and go as they please. They sometimes you know, turn the service off while they take a break with their kids, and then they come back when it serves them.
Well, let's talk about some of the areas that you have been pushing into to diversify. In particular, I'm thinking of contact central workforce engagement, management of AI now city group analysts and I know you love having analysts notes reported back to you, but they say it find it a bit hard to see a durable offway to reaccelerating growth.
Paint that picture therefore, Yeah, accelerating cround.
So we talked about this a lot on the call yesterday. We've said that we expect growth in the second half of the year to start to reaccelerate. You mentioned contact center. We announced yesterday we have over ninety customers now in our contact center that are contributing more than one hundred thousand dollars of trailing twelvemonth revenue, which highlights these are sophisticated buyers and our products are now competing with the top four in the Gartner Magic quadrant that you probably.
Know all the names of.
And that combined with the strength we continue to see with Zoom Phone work Vivo, which we were just there was news about this last week where Meta is discontinuing its workplace and we have been named the preferred partner for that transition, which opens up a whole new opportunity for us. So those are all the components that are going to lead to reacceleration in the back half of the year and then into FY twenty six.
And let's talk about competitors though, because Microsoft Teams is a strong one and we understand that perhaps there's been some regulatory conversations coming from Zoom about unfair competition.
How's that going.
Well, you know, there's a lot that's going on in the EU around bundling.
They unbundle it there.
However, until they really get to a competitive pricing for their products, it's not really a level playing field. And that's what would serve everyone in this industry, we believe the best, including customers, because having a really level playing field for the two strongest competitors, which is of course Zoom and Microsoft, we think is the best approach. Regulators listening, Yeah, I guess we'll wait and see how it continues to evolve.
Well, Europe's always quite busy and quite quick on their regulatory decision making. But I'm interesting in what therefore you are doing for an investor base who is still waiting for this regalvanization, this reacceleration of growth. They're seeing some of the areas that you're pushing into in products. Jeffrey's saying, look, we want to see perhaps a little bit buyback sometimes
of shares. We're thinking about potentially strategic M and A. Have we've got any news for the investor base there.
Yeah, So you know, reaccelerating and top line growth is at absolutely our number one priority. In the meantime, while we are focused on investing there, we are also focused on giving returns back to our shareholders. So last quarter we announced a one point five billion dollars share buyback program.
During Q one we did buy back two point four million shares, and we will continue to execute that over the next seven quarters, and in the meantime also looking for opportunities to deploy our cash if we see strategic M and A opportunities that would accelerate top line growth or accelerate tech development as well. Those are the two areas that we really keep front and center.
The kind of aqua highest potentially.
Yeah, absolutely, Kenny, It's great to have you here, coming in from Texas to be here with us in New York.
Zoom CFO Candy Stackerberg. We really appreciate it.
Meanwhile, coming up, I've just got to talk about crypto for a moment, ether surging on science of momentum for that ETF approval, will it come to spot eth US next.
I Meanwhile, we've.
Just got to keep an eye on what's happening with ten Cent because there has been pressure.
There has been, of.
Course, well a big new game, a blockbuster game that everyone has been waiting for, but within an hour they had to basically put that game on ice because the servers were overloaded. Dungeon and Fighter Mobile has really got everyone very excited, but clearly some server fluctuations hurt on the interim. We're down by two point nine percent, and say this isn't going to be a long term impact.
This is Bluebeg technology.
Let's just talk about this rally rally in cryptocurrencies. It is underway amid signs of pretty much a momentum for approval of another spot ETF, but this time linked to ETH joining us. Now, James Sift from Bloemberg Intelligence, we're up twenty three percent in the last couple of days.
We used to volatility. But what are the tea leaves that you're reading here? James?
Yeah, So, I mean we've had these filings just pot of theory metfs for months since the fall even and nothing over the last couple months signified to us that there was any sort of approval if you talk to these issuers, exchanges, you name it.
No one thought it was going to happen.
And then we started hearing from different people yesterday that the SEC reached out with comments and requesting immediate basically responses and updates to filings.
The deadline for this was Thursday.
It's May twenty third, and the SEC was basically silent, not interacting with anyone on these topics until yesterday, which tells us this was a huge.
Change as far as I'm concerned.
So basically the SEC decided as of Monday when they reach up to issues. We don't know exactly when it started, made late morning, early afternoon, who knows, but the SEC basically started saying, all right, we're gonna, we're gonna, we're likely going to approve these things and basically took the approval odds out of the ABYSS as far as we were concerned.
And therefore you've moved your spot ether ETF likelihood probbability to seventy five percent from just twenty five percent.
Is this usual?
Is this typical to have a sudden resurgence in the drama, shall we call it?
No, Honestly, we were thinking about lowering our odds last week, but we were basically, we only went to ninety percent for the spot bitcoin ETFs, even though everything was pointing that it was going to get approved, and but the what we left that ten percent because we heard rumblings that the Biden White House was considering stepping in to stop the approval of spot bitcoin ETFs, which just signs a little bit crazy on its face. But honestly, it
seems like the exact opposite might have happened here. It seems like the SEC was likely planning to approve. There might even be denial letters drafted up, and it might be the Biden admin for political reasons, that came in and basically said you need to approve these things. We don't want to be too anti crypto.
Interesting perspective coming from you, James.
I'm interested therefore what it actually means in terms of institutional demand. What we saw was with the Bitcoin ETF, a whole host of new ETFs were launched and suddenly a whole wave of money came in.
Is the same thing going to happen for smart contract focus?
Yeah?
So I do think that there is going to be a wave of ethereym ETFs that launch. We don't know exact timing because this hasn't been planned out. The Bitcoin ETF was planned out for months in advance. There's a whole bunch of other filings besides this nineteen before approval that we're now expecting this week. There needs to be approval on the s onees or perspectuses as well. So we do think there's going to be significant demand for these things, but it will be probably some.
Fraction of the Bitcoin ETF demand.
So if you look at the market cap at bitcoin, etherium is about a third of that market cap. Also, these ETFs they're not going to be allowed to stake, which is like there's native yield in using ethereum. So if these ETFs cannot stake, that should probably likely diminish some of the demand. So if you take the demand in the native crypto market and say it's about thirty percent of bitcoin and then discount.
That a little bit, I think there will be demand.
So twenty maybe twenty five percent of the demand for Bitcoin ETFs over the long term or at least the near term after launch.
If you're comparing them to bitcoin, but that's still billions of dollars.
I mean thirteen We have twelve thirteen billion dollars of influenced the spotpack coin ETFs in just four months. So even if we get twenty five percent of that, there's still a pretty significant chunk of change coming into new ETFs that are potentially going to launch in the coming weeks and months.
All lies on that May twenty third spot Ether ETF application, James Seffert raising those probabilities.
We love having you on.
Thank you very much from Blue Megan Intelligence. Welcome back to Blue meg Technology. I'm Caroen Had in New York. Let's get your quick check on these markets. Halfway through this trading day, and we're seeing Look, just sensitivity, shall we say to the markets right now, as we still near those record highs across most benchmarks in the United States, we're just down by five points on the Nasdaq one hundred as we digest and FED speak today, how quickly
might we see rate cuts? Raphael Postik saying, look, maybe we're going to reanalyze really where the neutral rate lies.
Stock six hundred currently off by two tens percent.
Europe under pressure as we wait with beta breath for some key earnings that we'll get to win. And I'm also having a look at what's happening in the crypto space. We're just talking about it on the up and up in particular, a shine a light on what's happening with eth We're currently up more than eight percent as we potentially start to get ourselves ready for a spot ETF here in the United States. Move on, let's have a look at what's happening on in individual stocks on the move.
Amazon down by more than a percentage point. Really interesting story coming here being reported by the Financial Times that maybe Amazon is putting pause on its well demand or at least its orders for the most high rate and most sophisticated tech chip architecture coming from in Vidia, and instead of getting that Grace Hopper, they're waiting and they're going for the Grace Blackwell, while in Video is still up a tenth of a percent in spite of that,
perhaps just air pocket, as the City Group has been talking about, we get the earnings after the bell. On Wednesday, Microsoft up by a more than of almost a percentage point. They are enhancing co Pilot in particular, then racing Google.
Remember yesterday we're.
Hearing how they're taking on Apple with a new AIPC. But we've got so much to hear from the leader of Microsoft right now because they are launching the team co Pilot and they've got a new AI feature that's going to be helping you with your project management, fostering competition, he says. And the chairman of CEO, Stia Nadella, sat down with bringing Back Original's host Emily Chang, and.
They talked about just how it can help with maybe a little bit of drudgery and meetings.
Take a listen and everybody complains about meetings, but what one should really complain about is not being prepared for meetings, not paying attention in meetings, not remembering what happened in meetings. The Meetings co Pilot helps keep the knowledge always front and center for an organization. So the feature we are launching is really this thing called.
Team core Pilot.
This Team core Pilot is going to be in the meeting and everywhere your team is working on. For example, if you're doing a project and you want project management assistant, this team Copilot will help you and all your teammates. It's kind of like having an AI teammate that helps you well.
On that note, you know, for all of this to really work, you've really got to trust your PC with everything about you. Will it know you better than a real assistant or a friend or a colleague.
And are we in relationship territory?
Yeah, it's a super important one, right, which is to me, there are two things. One is how should one think about privacy? How should one think about safety? And then the third is how should we relate to AI?
Right?
All of these are important.
So let's take them even unpack them. Right on the privacy side, that's why I think there are going to be needs for real private information and whether it's in the enterprise side where people say, don't train on my data. That's the assurance we have for anybody in the cloud, even or the new PCs we just launched yesterday, right, which are all about keeping everything that you're doing on the PC local. So that's on the privacy side. Safety is another one, right, which is how do I make
sure that whatever I am doing is safe? You know, I'm safe from adversarial attacks? And then the third is the relationship side is I don't I believe of I don't like anthropomorphizing AI. I sort of believe it's a tool. It has got intelligence if you want to give it that, as you know, Moniker, But it's not the same intelligence that I have, right, I think one of the most unfortunate names is artificial intelligence.
It's a different I wish we would call it a.
Different intelligence, even because I have my intelligence. I don't need any artificial intelligence. I just want my intelligence to compose with this different intelligence so that I have more agency.
Quite frankly, Microsoft Chairman CEO tier Nadella, there a blue max Emily Chang. Now let's turn our attention to another key company on the move and shares. Palo Alto Networks have been under pressure. That is, the company telling us where it's forecast is going. Fourth quarter revenue coming in two point one five to two point one seven billion dollars. Now we get a chance to talk through those forecasts
and where the direction of strategy is. When Nikeshiro is Paralo Alto Networks CEO and Nikesha's great to have some time with you, and I thinkultimately the forecasts we used to get the growth we have been used to of revenue from palowel To Networks is what twenty thirty percent year on year growth. We're now having to get more used to potentially an eleven percent growth perspective, Is this buyer fatigue for cyber not really?
First of all, Karen, thank you for having me here. Remember, we are planning to deliver close to two billion dollars of revenue in Q four. That makes us close to an eight billion dollar company for the year and our growth rates our forecast beteen ten and fifteen percent, So there is no buyer fittigue in cybersecurity. We are the first company to break the barrier and get to that scale in cybersecurity, making us not to one hundred billion dollars.
In market cap.
So no, I think cybersecurity is a very robust market from a demand perspective, and our teams are executing amazingly around the world.
Let's talk about where therefore the robust among comes from and what for You've talked a lot about ultimately sort of being in everything, offering a platformization is what's necessarily that's heard of the strategy, if I'm correct, the idea that yes, you want to be able to ensure that all parts are sophisticatedly protected, but how does that win out versus what people have called sort of a best in breed offering where you're focusing on one particular element of cyber.
I think the important way to think about it, Caroline, is if you will take back fifteen twenty years ago, we used to have a multitude of applications across an enterprise which did customer management things. Today you don't think about having fifteen different applications to manage your customers. You either use Salesforce or Oracle or Microsoft Dynamics. You don't use fourteen bestor breed applications to solve your customer problems.
Take the problem in HR.
You use people systems, whether it's workday or others. So you are getting to place where these concepts require integration across these best bid capabilities. Otherwise, the owners of integration goes on the customer, which means every customer has to be able to take these best to breed, stitch them together and create amazing security outcomes. On the other side,
you got bad actors who've changed their tactics. They can get in and out of your business in under an hour and axtiltrat large amounts of data.
So I think it's a.
Problem that's stacked up against companies if they plan to stitch this stuff together for years to come. That's why we need to move towards and more integrated things that work together and a more real time out from the security strategy as opposed to the best to breed strategy which has worked historically.
But with your shares.
Under pressure, is the market understanding that is the market saying, okay, I buy the platformization.
Well our shared We're done very well over the last one year. I think these short term bumps are part of the absorption by the market where the market needs to go. We've done really well in the last five years. We're done really well in the last one year. I think the important part is to understand it is a very
strong demand market. We're executing amazingly. We are the largest player in the market, and the number of conversation, a number of platform deals we did this quarter far exceeded any that we've done in history, which sets us in the right direction to try and achieve a fifteen billion dollar AR number, which we've targeted in the next few years. So we think things are on track and we're executing.
You're likely AAR number.
There is a number in your metrics that you don't like people really focusing on, and that's a billing forecast. You say, look, it's volatile, and ultimately it's it's sort of an artificial metric. But can you talk us through that a little bit, because why is it artificial? You say, it's due to payment terms changing. But it's a bit worried about this billing forecast being the slowest since your IPO.
Well, I think what happened is when we lived in a zero interest rate and environment, people were willing to pay you upfront for years of upcoming service. Today, CFOs get involved a saying listen, I'll pay you when you deliver service. You look at the companies your name, companies, Jurned, Arr business which are on an analyzed payment plan. There they give you ar and annual values, and that seems to work for us. People look at are you collecting
all the money upfront? So that's what billings is in our view. The right number is RPO or remaining performance obligations. Our URPO grew at twenty three percent. We have a leven point five billion dollars or the services we intend to deliver to our customer over the next three years. So that's an important metric. The growth is important because that tells you how big your book of businesses that is committed by your customers. That gives your truth understanding
of the strength of the business. I think buildings can be a managed depending on when customers use to pay you, So I think that becomes a less reliable metric, particularly in a higher interest rate and environment where customers are conscious about when they want to pay you.
Is there need to be pressure on contract length going forward though, and what does that say about enterprise's desire to commit to cybersecurity protection.
Actually things are in the opposite direction, Caroline, because if you take along the contract you get price protection, and in a higher interestate environment, you have the risk of higher prices in the future. So actually you're seeing customers say, guarantee me the price for longer because I don't want to deal with inflationary impacts or price increases.
When you look at ultimately, what all the analysts are saying rem versus your particular earnings, they really are saying that this is a kneeja reaction. You got vital knowledge, really saying the core fundamentals remain very healthy.
A lot of the.
Analysts out there saying they believe in the leadership. Right now, Nakesh, talk to us there for about what you believe in, how artificial intelligence is changing your role as a leader and changing the way in which we protect against cybersecurity. We will talk about how much harder it's made life. But has it really in terms of attacks?
Well, Caroly, let me break that question in two parts. First, in the last five years, our company has gone off five times in value, so I think we've done really well to our for our shareholders were willing to run really well. From an execution perspective, we're you know, we're one of the largest companies now, we have an evergreen portfolio, like you mentioned, and we've brought the notion that large cybersecurity companies can continue to innovate so our customers don't
have to. In that context, if we look at AI, most recently we announced is ceries of AI security products because the enthusiasm for AI, both on unfortunately the bad actor side and the company's side is high. People want to trial AI. You had a segment earlier. You know, we're seeing copilots being introduced, so everybody wants an AI buddy, an AI assystem to make their lives more productive in that environment, every company is raring to go out and
deploy that technology. You've got to be careful when you deployed. It has to be secured by design. You have to make sure these lms don't hallstenate. You have to make sure nobody get inside, gets inside your LM, poisons it with lots of data, and we're going to see a lot of those attempts because bad actors have also learned the technology. So it's very important to deliver AI in such a way that it is secure for our customers
and their end customers. And we've already pioneered at our essay most recently it comprehensive suite of products which we intend to make available to all of our customers in the next four weeks, which allows them to go down this journey and be secured from the get go.
Hello el to Network CEO Pikshu Or thanks to spending some time with us on your latest results and indeed the latest threats that you're trying to combat. I Meanwhile, coming up, we're going to be hearing from the CEOs of Dell and Nvidio, both of course, at the Dell World Conference in Las Vegas, and they sat down with their own.
And Ludloan and let's just check in on what Sodos is doing.
Yeah, you know them for speakers, Well, now they want to get in your headphone space too.
The market they see.
For a four hundred and forty nine dollars device, it's all part of their effort to basically go from home speaker company to a broader maker, a consumer.
Tech nine tens five percent. This is to make technology.
Now.
The Dell World conference is still in full swing today in Las Vegas and Ludlow He sat down yesterday with some of the key note speakers, which included Dell chairman and CEO Michael Dell an Nvidia CEO Jensen Juan take a listen.
At Dell Technologies World.
We love to bring our customers and partners together and talk about what's new and what's exciting. And you know, this AI opportunity is really tremendous and we can never do anything by ourselves, but this is a great example of how you have an ecosystem of companies coming together along with all these incredible innovations in GPUs and compute storage and networking and the AI models and software companies that are utilizing all this power and it's causing a new industrial revolution.
There are five things that I would like to talk about, the first being the relationship between the three of you and your companies, how you work together. The second being AI infrastructure, how durable. What's happening is AIPC. You know, you've been talking about AIPC on social media for some time, and officially of course as well US leadership. You know, I reflect that I have three American CEOs that around me,
all pulling towards the same sort of goal. And finally, increasingly people ask me to ask you about power and energy consumption and whether we should start talking about that. But really, gentsen, the origin of this, and one of the reasons I wanted to have the conversation was GtC. I'm paraphrasing, but you said, basically, there is no one better end to end systems at scale than Dell. You basically said, if you want a server, you phone Michael Dell.
But why specifically, how is it that Nvidia interacts with that part of Michael's business.
Well, this is a.
Really important time where we've re engineered and reinvented every layer of computing from the chip, to the operating system, to the system servers, to the way that these data centers are put together. There's only one company in the world that can have the ability to build the computing system, the storage system, the networking system, all of the software that goes along with it, and the path to the
world's enterprise. We want to bring this generative AI capability to every company in the world, and some of them can use it in the cloud, but many of the applications still has to be done on prem and so in order for us to bring them into the generative AI revolution, we're going to have to go through a partner that can help us take this completely new reinvention of a computer, the data center, these AI factories and help every customer have a you know.
Just remport Tensen. Yeah, on prem is back, just really quick, yes or no?
On prem never.
Left, but on prem never left, but on prem is on prem is you know, on Prem is cool.
Again, as if it ever wasn't cool. We you thank him, of course.
In video CEO Joseph Wang, it was Dell chairman and CEO Michael Dell speaking, of course, along with their own ed Ludlow and alongside the Service Now CEO Bill McDermott. You probably caught a lot of it yesterday, but it was a great interview. Meanwhile, let's just talk about AI and the startups scene their scale. AI it's helping, of course, top tech companies improve the data used to build a eye products, basically to ensure that it's tagged in.
The right way.
It's roughly doubled its valuation to get this thirteen point eight billion dollars and it's raising one billion in one of the largest financing deals of the year. The round was led by Axcel, participation from mix of new corporate backers. They're all the rage too now Amazon Meta Venture arms from AMD Service Now and indeed Intel.
Meanwhile, coming up.
We'd just been noting that Disney's saving some money. They're continuing to do that with Pixar announcing layoffs to the tune of some fourteen percent of the business.
Have all the details.
Next, it's been going viral. Actress Scarlett Johansson said that she was quote forced to hire legal counsel to demand the removal of an artificial intelligence voice for open AI's chatpot.
That sounded only like herself.
When most Rachel Metz joins us for more and basically this is Sky and we already heard that maybe open ai was pressing pause on the use of Sky.
Yeah. Absolutely so just the other day open Ai stopped using the voice at least for now, and users would if they tried to use it within like the chat GBT app, for instance, they would hear a different voice called Juniper.
I do think it's And to remember.
These voices, and the Sky voice in particular, didn't just launch. They actually launched last year in September, which Scarlett said is around when or is the same month when Sam Martman reached out to her and asked her if she'd be interested in presenting one of these voices with her voice.
And she decided, after a lot of thought, apparently not to provide her own voice.
Now.
All of this, of course, goes back to the fact that there was a movie years old now called Her, where Joaquin Phoenix plays a part that falls in love with an artificial intelligence well chatbot basically, who happens to be voiced by Scarlett Johansson.
Interestingly, we saw Sam Altman just while the announcements of Chat GBT four oh were launched.
He put in a post just literally her, but he says, yeah, it wasn't based on Scarlett ju Hanson.
Yeah, I mean that's kind of tricky, right, I mean, you're tweeting her and everybody knows what you mean by that, and I guess you could say, oh, well, it is an homage, but it sounds like she didn't want any part of it. So I think it's going to be really interesting to sort of see what the next move is, either from Open Ai or from Scarlet Johansson's camp. As far as what happens next, I mean, will this voice come back? I don't know. It's another actress, but it
does sound quite a bit like her. I think a lot of people would agree.
And to be sure, Open Ai've tried to make clear how they found this voice, and it was found a year ago through four hundred applications and they managed to find these five voices they eventually went with. But there is another actress who just so happens to sound a bit like Scotlettohnson, who now might not get paid for the use of it within.
The app Yeah, I mean, I think we also need to keep in mind that this is a real person's voice that is being used to train a voice model, So I have no way of knowing how much modification has been done to the voice. You know, they would have recorded probably quite a number of samples of this person speaking, and then I'm not really sure what kind of speaking they would have done to present the final actual voice. So it's possible that there was some works
done there. Maybe they just need to change the voice a little bit, Maybe they need to retire the voice. Maybe they're going to say, you know what, this is not her voice, so we're going to keep using it. It'll be interesting to see what happens.
Well, certainly it's highlighted that there are more voices on chut ChiPT four, at least for many. Rachel Metz, we thank you so much for running us through what is almost a bit of a celebrity story, but sticking with
content for a moment. Pixar, the pioneering animator that made of course, toy story finding Nemo's cutting fourteen percent of a staff as part of an ongoing cost cutting effort with parent company Disney, finished Jollette here briefly for more and well, we'd anticipated that we would see cuts here.
Yeah, I mean, this is part of Bob Iger's broader term to bring down costs at Disney Pixar, you know, for years couldn't do anything wrong, just had hit after hit after hit. During the pandemic, they released a couple of movies right to the streaming service. You know, their last couple Elemental was not a big hit.
Light Year was not a big hit.
So this has kind of been an expector for a while. They also at some point switched to you know, envisioning doing more TV production for the streaming service, and now they've basically decided we're going to go back to just making movies.
So it's related to that.
Also, is there anyway and briefly we could say that AI is going to be doing it.
I mean, I'm sure that AI will be part of the mix. That's not what they're crediting these cuts to. At this point, they are pointing to the shift back to movie production. And again there's been you know, Bob Ayer's been looking for you know, something like eight billion dollars worth of cuts all across Disney. So this has been just the latest of multiple waves of people losing their jobs.
Felix Shudette, thank you for running us through it with Disney. Meanwhile, that does it for this edition of Blue meg Technology. Don't forget to check out the podcast. You can find it on the terminal as well as online on Apple, Spotify, iHeart, wherever you get your information.
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