AI Spending Rolls On as Tech Wealth Hits Records

>> "BLOOMBERG TECH" IS LIVE FROM THE HEART OF SILICON VALLEY. WITH ED LUDLOW IN SAN FRANCISCO. ED: THIS IS "BLOOMBERG TECH." COMING UP, ANOTHER SIGN THAT A.I. SPENDING SPREE ISN’T SLOWING DOWN, WITH HON HAI BEATING EXPECTATIONS. THE A.I. BOOM LEADS TO A BILLIONAIRE BOOM. TECH’S RICHEST ARE NOW WORTH A COMBINE $ED 4.2 TRILLION. AND WE DIVE INTO HIGHWAY APPLE’S NEW -- HOW APPLE’S NEW C.E.O. IS MAKING STEIN A MUCH BIGGER PRIORITY. GOOD MORNING. WELCOME TO A NEW WEEK. THE NASDAQ 100 IS BUILDING ON THE RECORD CLOSE IT SET FRIDAY, UP ABOUT HALF A PERCENTAGE POINT IN THE SESSION. A LITTLE BIT OF UNDERPERFORMANCE IN CHIPS. THERE’S A LOT GOING ON IN FINANCIAL MARKETS. IT FEELS KIND OF WEIRD. IT’S LIKE SUMMER ARRIVED IN A MONDAY IN OCTOBER. WE WILL GET TO MORE OF THAT THROUGHOUT THE HOUR. LET’S GET TO OUR TOP STORIES. THE A.I. SPENDING BOOM ISN’T SLOWING DOWN. NVIDIA PARTNER HON HAI BEAT SALES ESTIMATES WITH REVENUE JUMPING 47% AS DEMAND FOR A.I. SERVERS SURGES. OUR SENIOR TECH EDITOR, MIKE SHEPARD, IS WITH US. THIS IS THE INFRASTRUCTURE STORY CONTINUING TO HAVE MOMENTUM. MIKE: YEAH, ED, EVERY WEEK WE’RE LOOKING FOR ANOTHER SIGN THAT THE A.I. BUILDOUT WILL CONTINUE UNABATED. IT’S SOMETHING THAT INVESTORS AND SILICON VALLEY LEADERS ARE COUNTING ON ON A WEEK BY WEEK BASIS. LAST WEEK WE SAW MICRON INDICATING THAT OUR SALES ARE GOING TO BE EXPECTED IN THE COMING QUARTERS. THIS TIME WE’RE SEEING THAT DEMAND FOR THE SERVICE THEY MAKE IS STRONGER THAN EXPECTED, AND THIS COMES AS WE’RE SEEING SOME HEAD WINDS FOR THE SECTOR. THERE’S INCREASED CONCERN OVER THE AMOUNT OF DEBT THAT A LOT OF THE HYPER SCALERS AND OTHER COMPANIES ARE TAKING ON TO ENSURE THAT CONSTRUCTION OF THESE DATA CENTERS CONTINUES TO PACE. THERE’S ALSO CONCERN WE’VE SEEN IN MORE RECENT WEEKS ABOUT THE IDEA OF PACING A.I. DEVELOPMENT AND WHAT IT COULD MEAN POTENTIALLY FOR THE CONSTRUCTION OF ALL THESE FACILITIES. BUT SO FAR WE ARE NOT SEEING ANY SIGN OF THAT KIND OF SLOWDOWN. FOR HON HAI, THIS IS KEY, BECAUSE THEY ALSO ARE KNOWN FOR MAKING IPHONES AND SMARTPHONES AND A LOT OF OTHER GEAR. BUT THE MARGINS ON THAT ARE MUCH LOWER. THE MARGINS FOR THOSE A.I. SERVERS CONTAINING CHIPS ARE MUCH HIGHER AND MUCH MORE LUCRATIVE FOR THEM. SO THIS IS A KEY MOMENT, NOT ONLY FOR THE A.I. TRADE BROADLY, BUT FOR HON HAI SPECIFICALLY. ED: THERE’S ANOTHER STORY OUT OF ASIA THAT I WANT TO GET TO, WHICH IS QUALCOMM AGREEING TO PATENTS, WHICH UNDERPIN HUAWEI’S TECHNIQUE. IT SEEMS LIKE AN IMPORTANT STORY TO ME. MIKE: ED, I LOVE DIGGING INTO THE TECHNICAL STUFF WITH YOU, ESPECIALLY THIS ONE, BECAUSE IT WAS ONLY BACK IN MAY THAT WE SAW HUAWEI UNVEIL THIS NEW IDEA OF LOGIC FOLDING, THAT IT WOULD BE ABLE TO PACK MORE TRANSISTORS TO A CHIP, AND SOMEHOW OPTIMIZE DATA TRANSMISSION SPEEDS, AND THIS WAS A WAY FOR THEM OF MAKING A STEP CHANGE IN FUNCTION THAT WOULD ALLOW THEM TO GAIN GROUND ON THE U.S. IN THE ADVANTAGE WHEN IT COMES TO CHIP MAKING AND DO SO USING DOMESTIC RESOURCES RATHER THAN HAVING TO RELY ON OUTSIDE SEMICONDUCTOR MANUFACTURING EQUIPMENT, WHICH HAS BEEN SUBJECT TO ALL THOSE EXPORT RESTRICTIONS IMPOSED BY THE U.S. AND OTHER LIMITS THAT THE U.S. HAS IMPOSED ON ACCESS FOR CHINA TO ADVANCE TECHNOLOGY. BUT THE QUESTION WAS WILL IT WORK? WILL IT GAIN PURCHASE? WE’RE SEEING WITH THIS PATENT LICENSING AGREEMENT FROM QUALCOMM, THAT, YES, PERHAPS THERE IS APPETITE FOR IT, NOT ONLY IN CHINA, BUT PERHAPS OUTSIDE CHINA AS WELL. WE DON’T KNOW THE FINANCIAL TERMS, BUT THIS IS CERTAINLY A SIGNAL AND A INDICATION FOR HUAWEI THAT ITS BET ON THIS LOGIC FOLDING TECHNIQUE COULD PAY OFF. ED: MIKE SHEPARD IN WASHINGTON, D.C., THANK YOU VERY MUCH. LET’S GET BACK TO FINANCIAL MARKETS. THE NASDAQ 100 IS EXTENDING ITS RECORD RUN THIS MORNING. CHIP STOCKS TAKING A BIT OF A BREATHER. YIELDS REMAIN HE ELEVATED, AND INVESTORS ARE ASKING HOW MUCH FURTHER THIS A.I.-DRIVEN RALLY CAN RUN. PERFECT CONVERSATION COMING UP, BMO CHIEF MARKET STRATEGIST, ALL OF THE ABOVE ACROSS YOUR DESK AT THE MOMENT. BUT IS THAT A FAIR ESTIMATION OF WHERE THE MARKET IS RIGHT NOW? >> IT IS TOTALLY A FAIR SUMMATION, AND MARKETS ARE TRYING TO DECIDE, DO THE HIGHER YIELDS, DO YOU DO TRADITIONAL DIVIDEND DISCOUNT MODELING AND BRING THE VALUATIONS DOWN? THEN YOU LOOK AT THE VALUATIONS ON A LOT OF THESE, AND THEY’RE ALREADY ACCOMMODATING HIGHER YIELDS. I THINK WHAT WE ALL FORGET IS THIS TECHNOLOGY IN PARTICULAR IS SCALED FASTER THAN ANYTHING PROBABLY ARGUABLY IN HUMAN INVENTION, AND WE JUST CAN’T WRAP OUR HEADS AROUND IT. THE FACT IS, IF YOU’VE GOT A MAJOR SECTOR CYCLE THAT IS MUTING, IF YOU WILL, THE CYCLICALITY OF A LOT OF THESE -- SEMICONDUCTORS ARE SUPPOSED TO BE CYCLICAL, BUT WE’RE STUCK IN THIS REASSURING, LONG-TERM SECULAR TREND, WHERE WE’VE GOT TO BRING US UP TO PAR, IF YOU WILL, TO ENABLE THIS NEXT PHASE OF THE INDUSTRIAL REVOLUTION. ED: I GOT MY SORT OF OFFICIAL, IS THIS WHAT WE SHOULD EXPECT THIS EARNINGS SEASON QUESTION THIS MORNING ON "OPEN INTEREST." THERE WAS SOME EARLY SIGNS IN THE SECOND QUARTER EARNINGS SEASON ABOUT A.I.’S IMPACT ON THE REAL ECONOMY, YOU KNOW, CALL IT PRODUCTIVITY. IS THAT THE NEXT CAPITALIST? WAIT FOR THIRD QUARTER EARNINGS SEASON AND LOOK FOR MORE EVIDENCE THAT A.I. IS HAVING SOME KIND OF BROADER IMPACT ON THE U.S. ECONOMY AND BEYOND. YOU. >> I THINK THERE’S THAT PIECE OF IT. IT’S DIFFICULT TO PARSE OUT EXACTLY THE RETURN ON INVESTMENT FOR A LOT OF US. I MEAN, A LOT OF US READ THE MCKENZIE REPORT THAT TALKED ABOUT 100% OF COMPANIES ARE EXPERIMENTING ONE WAY, SHAPE OR FORM WITH A.I. YOU CAN’T NOT DABBLE WITH IT. IT’S MUDDY IN THERE, BUT THIS WILL PROBABLY BE THE THE MOST IMPORTANT EARNINGS SEASON, BECAUSE THERE WILL BE A LOT OF PARSING, NOT JUST OF THE A.I. THEME, BUT ALSO COSTS AND HOW CAN COMPANIES OFFSET THOSE, BECAUSE WE’VE GOT A PRETTY STAGNANT OR STEADY LABOR SUPPLY. SO IS THE ONLY WAY TO OFFSET THE COST IS TO HURRY ALONG SOME OF THE A.I. IMPROVEMENTS, SO THERE WILL BE A LOT OF COMMENTARY, A LOT OF LEANING INTO THE Q&A THAT THESE MANAGEMENT DO IN THE CONFERENCE CALL THAT A COMPANY IS THE RESULT, LESS LOOKING AT THE RESULTS AND A LOT MORE MEANING INTO WHAT IT MEANS THE NEXT FEW QUARTERS. ED: AGAIN, THE NASDAQ 100 ALWAYS GOES WHERE IT’S A HIGHLY CONCENTRATED TECH-HEAVY INDEX, BUT PUSHING BEYOND THE RECORDS SET FRIDAY. THERE IS THIS KIND OF INTERIM PERIOD BETWEEN NOW AND NOVEMBER, WHICH ENCOMPASSES THE MIDTERM. IT’S BEEN A PRETTY STRAIGHT LINEUP SINCE APRIL, BUT WHAT KIND OF VOLATILITY IS ON DECK IN THIS KIND OF INTERIM PERIOD, CAROL? >> YEAH, WE EXPECT TO SEE VOLATILITY, ESPECIALLY BECAUSE WHO KNOWS WHAT WILL GET SET AS WE RELEASE EARNINGS IN THE NEXT FOUR TO SIX WEEKS, AND PARTICULAR STOCKS WILL BE VOLATILE. THE BROADER INDEX HAS MASKED THE FACT THAT THERE HAS BEEN A LOT OF UNDER THE HOOD VOLATILITY ALREADY. THE BREADTH HAS BEEN PRETTY NARROW. YOU HAVE HAD NARROW OR JUST A HANDFUL OF COMPANIES DRIVING THROUGH MOST OF THE LAST FEW YEARS IN PARTICULAR. SO THERE WILL BE A LOT OF EMPHASIS, PARTICULARLY ON THOSE EARNINGS AND WOULDN’T BE SURPRISED AT ALL TO SEE INCREASE THE VOLATILITY. WANT JUST THROUGH THE MIDTERMS, BUT HERE. ED: WHAT’S FUN? IS FUN THE RIGHT WORD? THE NEW CYCLE CHANGES, STORIES KIND OF COME AND GO. WHEN WE DO GET TO EARNINGS IN A FEW WEEKS’ TIME, THAT ENVIRONMENT THAT EVERYONE WAS TALKING ABOUT IN THE SECOND QUARTER IS STILL THERE. I MEAN, I’M TALKING ABOUT HIGHER COMPONENT COSTS AND HOW COMPANIES MANAGE THAT FOR THE BOTTOM LINE. IS THAT STILL A BIG FACTOR? IT DOESN’T JUST DISAPPEAR. >> YEAH, IT’S DEFINITELY A BIG FACTOR, AND THE FACT THAT YOU’VE GOT THE CHIP COMPANIES ALLOCATING RESOURCES TO THE DATA CENTERS INTO THE HYPER SCALERS, WHICH MEANS YOU’RE GOING TO SEE THE COST INCREASE THAT ARE GOING TO COME THROUGH. WE SAW IT WHEN APPLE ANNOUNCED THE NEW, ALL THE NEW ROUND OF FALL, THE FALL UPGRADES, AND WE’VE SEEN MORE HINTS OF THAT. I MEAN, SURE WE’LL SEE MORE OF THAT, AND THE ISSUE IS IT’S TRYING TO DEAL WITH THE SUPPLY CHAIN SHOCKS THAT WE HAD COMING OUT OF COVID, WHERE IT TOOK A WHILE WHERE THINGS WERE OPEN. YOU HAD SUPER HIGH INFLATION UNTIL YOU GOT IT DOWN. WE’RE GOING TO SEE THAT TEMPORARILY. THE ISSUE IS, TOO, TO MITIGATE SOME OF THE COST INCREASES, YOU NEED NEW FABS, YOU NEED NEW, PHYSICAL EQUIPMENT. THAT STUFF TAKES TIME. SO I WOULD THINK THAT’S WITH US FOR MORE THAN JUST THIS QUARTER. ED: TECHNOLOGY HAS CONTINUED TO PUSH HIGHER, EVEN WITH THE YIELDS CREEPING HIGHER. WHAT DOES THAT SIGNAL TO YOU? >> WELL, TECHNOLOGY IS CREEPING HIGHER AND FOCUSED ON THE WORD CREEPING, IT’S CRAWLING UP THE WALL OF WORRY, AND IT’S IMPORTANT TO REMEMBER, WHEN YOU LOOK AT WHERE VALUATIONS ARE ACTUALLY RELATIVE TO WHERE EARNINGS HAS COME IN, THE VALUATIONS HAVE COME DOWN PRETTY STARKLY IN THE LAST, YOU KNOW, QUARTER BY QUARTER. YOU’VE HAD COMPANIES LIKE NVIDIA ANNOUNCE REALLY GREAT RESULTS, AND MORE TIMES THAN NOT THE STOCK HAS COME DOWN, MEANING THAT YOU’VE GOT VALUATIONS THAT ALREADY ACCOMMODATE HIGHER INFLATIONARY IMPACT AND HIGHER RATES. BUT IT’S TRICKY FOR THE MARKETS, BECAUSE PSYCHOLOGICALLY WE’RE BEYOND LEVELS THAT WERE SUPPOSED TO BE PROBLEMATIC. MARKETS HAVE CONTINUED TO STRUGGLE HIGHER ANYWAY. AND NARROWER PARTS OF THE MARKET, SO THAT, AGAIN, ADDS TO WHAT WE TALKED ABOUT EARLIER, THE POTENTIAL FOR VOLATILITY. ED: CAROL SCLEIF, GREAT TO HAVE YOU BACK ON THE SHOW AND KICK OFF ANOTHER BUSY WEEK. I WANT TO TALK ABOUT CERBERUS REALLY QUICK. SAM ALTMAN POSTED ON X OVER THE WEEKEND THERE’S BEEN SPECULATION BETWEEN THE RELATIONSHIP BETWEEN OPENAI AND CERBERUS AND HE SAID IT WAS STRONG. LAST TUESDAY, THERE WAS A REPORT THAT SAID OPENAI WAS RUNNING GPT 6.1 ON NVIDIA-BASED PLATFORMS. THE CONCLUSION THAT THE MARKET HAD DRAWN BACK TO LAST TUESDAY IS THAT THEY LOST OUT, LOSING BUSINESS TO NVIDIA, BECAUSE IT WAS A CERBERUS PLATFORM BEING USED FOR 5.6SOL. SO SAM ALTMAN IS GOING TO COME OUT WITH SOME LATENCY, ADDRESS THE SITUATION OVER THE WEEKEND. BUT THE STOCK IS UP A LOT IN RESPONSE TO THAT VOTE OF CONFIDENCE ON THE SOCIALS. COMING UP, WE’RE GOING TO DISCUSS THE RACE FOR A.I. TALENT AND HOW TO ACTUALLY GET A.I. INTO PRODUCTION IN THE ENTERPRISE WITH PABLO DOMÍNGUEZ OF INSIGHT PARTNERS. THAT CONVERSATION IS NEXT. THIS IS "BLOOMBERG TECH." ♪ ED: COMPANIES ARE SPENDING BILLIONS ON A.I., BUT ACTUALLY GETTING IT INTO PRODUCTION REMAINS A MAJOR CHALLENGE. INSIGHT PARTNERS SEES FORWARD DEPLOYED ENGINEERS AS PART OF THE SOLUTION. EMBEDDING DIRECTLY WITH CUSTOMERS TO TURN A.I. INTO WORKING PRODUCT AND WORK FLOWS. THE FIRM IS LAUNCHING A DEDICATED PRACTICE TO HELP ITS PORTFOLIO COMPANIES BUILD THAT CAPABILITY, AND INSIGHT PARTNERS JOINS US NOW FOR MORE. I MEAN, THE IDEA IS NOT NEW TO THE AUDIENCE OF THIS PROGRAM. WE’VE DISCUSSED IT WITH THE HYPER SCALERS, SOME OF THE BIGGER NAMES IN SOFTWARE. BUT WHAT IS INTERESTING HERE IS HOW YOU GUYS AS A VENTURE FIRM AND AN OPERATING PARTNER ARE HELPING THEM DO THIS. JUST EXPLAIN HOW IT WOULD WORK. >> YEAH, FIRST OF ALL, THANKS FOR HAVING ME, ED. INSIGHT PARTNERS, VENTURE CAPITAL AND PRIVATE EQUITY FIRM BASED IN NEW YORK. WE’RE ONE OF THE LEADING FIRMS INVESTING IN TECH, A.I., SOFTWARE OVER THE LAST 30 YEARS. WE’RE REALLY PROUD OF THE SCALE. WE’VE HAD OVER 600 COMPANIES, SO THAT’S ALLOWED TO US SEE SOME OF THE BEST PRACTICES IN OUR PORTFOLIO, SO TODAY WE’RE ACTUALLY LAUNCHING THE INDUSTRY’S FIRST FORWARD-DEPLOYED ENGINEERING COUNCIL MADE UP WITH MEMBERS FROM MICROSOFT, DATABRICKS, S.A.P., SERVICE NOW, AND OTHERS, SO WE’RE SUPER EXCITED TO HAVE THESE LEADERS GET TOGETHER TO PROVIDE BEST PRACTICES, NOT ONLY TO OUR COMPANIES, BUT THE REST OF THE INDUSTRY. ED: HOW MUCH OF SETTING THIS UP IS JUST AN ADMISSION REALLY THAT THERE ARE ALL SORTS OF COMPANIES THAT JUST HAVEN’T WORKED OUT YET WHAT IT IS THEY CAN DO WITH A.I.? >> I THINK YOU’RE SPOT ON. I KNOW IBC CAME OUT WITH A REPORT EARLIER THAT 88% OF ALL A.I. LIMITATIONS HAVE NOT GOTTEN PASSED THE PLT STAGE. UNLIKE SOFTWARE, WHERE YOU IMPLEMENT IT AND IT’S READY TO GO, A.I. HAS ENDLESS POSSIBILITIES, SO YOU’RE SEEING THE ADDITION OF A LOT OF THESE ROLES, FORWARD-DEPLOYED ENGINEERS, TO REALLY HELP YOU GET THE MAXIMUM VALUE FROM A.I. I THINK THIS YEAR ALONE, THE TOP FIVE PLATFORM COMPANIES SPENT OVER $9.5 BILLION BUILDING THEIR OWN TEAMS TO REALLY HELP THEIR CUSTOMERS KEEP VALUE AS WELL. ED: I WANT TO GO TO A CASE STUDY, WHICH I APPRECIATE ISN’T WITHIN THE PORTFOLIO, BUT I’M THINKING BACK TO SOME OF THE REPORTING THAT WE DID AROUND COGNITION AND WHAT PEOPLE KEPT SAYING TO ME ABOUT COGNITION. YOU MEASURE THE TRACTION, OR JUST THE NUMBER OF CONTRACTS IT HAS. IT WAS REALLY GOOD AT GETTING INTO EVERYDAY COMPANIES AND JUST SAYING, THIS IS HOW YOU CAN USE DEVON AND WE’LL HELP YOU DO IT. THAT, IN SUMMARY, IS KIND OF WHAT YOU HOPE TO DO FOR YOUR PORTFOLIO COMPANIES, RIGHT? >> ABSOLUTELY. THE PURPOSE OF THE FORWARD-DEPLOYED ENGINEER AND SORT OF WHAT INSIGHT PARTNERS IS DOING WITH THEIR COMPANIES IS HELPING THEM MAXIMIZE THE VALUE OF THE SOLUTION, NOT JUST SIMPLY IMPLEMENT IT, SO IF YOU THINK ABOUT TRADITIONAL PROFESSIONAL SERVICES OR CONSULTING, YOU IMPLEMENT THE SOFTWARE AND THE COMPANIES ARE LEFT DOING THE REST OF THE WORK. WITH FORWARD-DEPLOYED ENGINEERS, THEY’RE EMBEDDED. THEY’RE MEASURED ON DRIVING VERY CLEAR OUTCOMES. AND EVERY SINGLE IMPLEMENTATION AND WORK THAT GETS DONE GETS FED BACK INTO THE PRODUCT. THE NEXT ENGINEERING INITIATIVE SORT OF COMPOUNDS ON WHAT IT’S LEARNED FROM OTHER FTE’S. IT’S VERY EXCITING. ED: WHAT IS THE VALUE PROPOSITION OR THE ECONOMICS OF TAKING IN FTE’S? IS IT SOMETHING THAT WOULD TIP THE BALANCE OF PAYING FOR A SYSTEM OR A SERVICE? IS IT AN ADDED LAYER OF COST? >> YEAH, WE SEE IT AS AN OPPORTUNITY TO EXPAND THE TOTAL ADJUSTABLE MARKET FOR A COMPANY, VERSUS JUST THINKING ABOUT WHAT THE PRODUCT CAN DO OUT OF THE BOX. A LOT OF THESE FORWARD-DEPLOYED ENGINEERS, BECAUSE THEY’RE EMBEDDED, ARE LOOKING TO FIND OTHER WAYS TO STREAMLINE AND AUTOMATE A LOT OF THE WORK FLOWS THAT THE COMPANY HAS. SO IT’S REALLY A COMPOUNDING EFFECT OF NOT JUST THE ORIGINAL SOLUTION, BUT WHAT’S POSSIBLE WITHIN THE COMPANY. ED: YOU GUYS ARE KICKING OFF YOUR CONFERENCE I THINK TOMORROW. WHAT DO YOU THINK PEOPLE ARE ACTUALLY GOING TO BE DISCUSSING AND TALKING ABOUT RIGHT NOW? >> IT’S A GREAT WEEK FOR US. THE FORWARD-DEPLOYED ENGINEERING COUNCIL GOES OFF TODAY. TOMORROW WE HAVE THE CONFERENCE HERE IN NEW YORK, WHERE WE ARE BRINGING IN LEADERS FROM ACROSS THE GLOBE, EXPERTS ON A.I., TECHNOLOGY, TO REALLY TALK ABOUT TRENDS, WHAT’S GOING ON WITH THE MODELS. WE HAVE LEADERS FROM ANTHROPIC. THE PRESIDENT OF DATABRICKS WILL BE THERE TO TALK ABOUT HOW THEY SCALED FROM ZERO TO SEVEN BILLION. AND OF COURSE, THE FORWARD-DEPLOYED ENGINEERING COUNCIL WILL BE THERE TO ANSWER QUESTIONS AND SHARE BEST PRACTICES. REALLY AN EXCITING TIME, NOT ONLY FOR INSIGHT PARTNERS, BUT FOR THE INDUSTRY TO GET A SENSE OF HOW A.I. IS TRANSFORMING THE INDUSTRY. ED: THIS IS INTERESTING. WE’RE GOING TO TALK MORE ABOUT THIS WITH NEA LATER IN THE HOUR. THEY’RE NOT NECESSARILY MUTUALLY EXCLUSIVE. PACING THE FRONTIER OF A MODEL’S CAPABILITY VERSUS THE RATE OF DEPLOYMENT IN THE ENTERPRISE, RIGHT? COMPANIES BIG AND SMALL CAN JUST PLOW ON WITH A.I. IRRESPECTIVE OF WHAT THE FRONTIER LABS ARE DOING. IS THAT THE GENERAL CONSENSUS BETWEEN AND YOU YOUR PARTNERS? >> YEAH, SO WHETHER THE FRONTIER MODELS SLOW DOWN OR SPEED UP -- I KNOW WE’VE SEEN IT SPEED UP IN THE PAST. THERE’S DISCUSSIONS ON IF THEY SLOW DOWN, WHAT HAPPENS. THEN YOU ALSO HAVE THE OPEN SOURCE MODELS AS WELL. BASICALLY WE’RE SEEING A LOT OF MOMENTUM STILL IN THE PORTFOLIO, SPECIFICALLY FOR INSIGHT PARTNERS, BUT ALSO THE INDUSTRY, BECAUSE WE TALKED ABOUT THE ADOPTION SORT OF LAGGING EARLIER. THERE’S STILL A LOT OF OPPORTUNITY AND MOMENTUM TO GET THE MAXIMUM VALUE OUT OF A.I., AND THAT’S WHY WE’RE DOUBLING DOWN ON THE FORWARD-DEPLOYED ENGINEERING COUNCIL. ED: PABLO DOMÍNGUEZ, THANK YOU VERY MUCH INDEED. COMING UP, NEW YORK CITY LAWMAKERS HEAR FROM SOME OF A.I.’S MOST VOCAL CRITICS AS THEY WAVE A PACKAGE OF A.I. SAFETY BILLS. WE’RE GOING TO HAVE THE DETAILS NEXT. ♪ ED: LET’S GO TO NEW YORK, WHY I CAN’T HAIR IS STANDING BY. YAHAIRA: PARAMOUNT SKYDANCE HAS ANNOUNCED DAVID ELLISON WILL SERVE AS CHAIRMAN AND C.E.O. THE NEW COMPANY WILL BE CALLED SKYDANCE. PLUS, JAPAN’S SECOND LARGEST BROKERAGE SAYS INFORMATION ON MORE THAN 100,000 CLIENTS MAY HAVE BEEN STOLEN. DATA INCLUDING NAMES AND ACCOUNT NUMBERS WERE LEAKED IN AN ATTACK ON AN EXTERNAL VENDOR. THEY SAY THEIR OWN SYSTEMS HAVE NOT BEEN BREACHED, AND THE INFORMATION CAN’T BE USED TO ACCESS SECURITY ACCOUNTS OR CONDUCT ONLINE TRADING. AND A.I. CAN NOW START PRESCRIBING ACNE DRUGS IN UTAH. A START UPCALLED NOLA HEALTH HAS BEEN GIVEN THE GROUP LIGHT TO SEND ORDERS TO PHARMACIES WITHOUT A DOCTOR. IT SETS THE STAGE FOR A NEW ERA IN A.I., WHERE A.I. TAKES ON A LARGER ROLE. HOW ABOUT THAT, A.I.? ED: THANK YOU, YAHAIRA. WE ARE LOOKING AT LIVE PICTURES OF NEW YORK CITY COUNCIL, WHICH IS CURRENTLY HOLDING A HEARING ON A.I. SAFETY. THIS AS CITY OFFICIALS TRY TO PLAY A LARGER ROLE IN REGULATING THE A.I. INDUSTRY. REPRESENTATIVES FROM SOME OF THE TOP A.I. COMPANIES ARE ALSO ATTENDING THE HEARING. OUR NATIONAL REPORTER IN NEW YORK JOINS US WITH DETAILS. WHAT’S GOING ON HERE? >> YEAH, THANKS FOR HAVING ME. THE BIG PICTURE HERE IS THAT NEW YORK CITY IS TRYING TO PUT SOME GUARD RAILS AROUND ARTIFICIAL INTELLIGENCE, AND TODAY LAWMAKERS ARE BRINGING BOTH THE INDUSTRY AND SOME OF ITS MOST OUTSPOKEN WHISTLE BLOWERS INTO THE SAME ROOM. ONE OF THE KEY RESEARCHERS IS JACOB COXON, WHO QUIT OPENAI LAST MONTH WITH A WARNING, HE SAID THAT A.I. COULD BECOME SO POWERFUL THAT HUMANS MAY EVENTUALLY LOSE CONTROL OF IT, AND HE ACCUSED ANTHROPIC AND OPENAI ESSENTIALLY OF GAMBLING WITH OUR LIVES. HE’LL BE JOINED BY OTHER RESEARCHERS FROM SOME OF THE BIGGEST A.I. COMPANIES, AND THESE PEOPLE WHO HAVE WORKED ON THIS TECHNOLOGY FROM THE INSIDE HAVE ALSO RAISED CONCERNS ABOUT THAT. AND ON THE OTHER SIDE, YOU’LL HAVE REPRESENTATIVES FROM ANTHROPIC, OPENAI, GOOGLE AND META. THAT INCLUDES PEOPLE WHO WORK ON A.I. SAFETY AND POLICY, ANTHROPIC, FOR EXAMPLE, IS SENDING THE HEAD OF A TEAM WHOSE JOB IS TO STRESS TEST ADVANCE A.I. MODELS TO SEE WHAT THEY’RE CANAL OF AND WHERE THEY CAN PUT THE RISKS. SOME OF THESE COMPANIES DIDN’T VOLUNTEER TO SHOW UP, BUT THEY GOT PRETTY MUCH EVERYONE IN THE ROOM. SPACEX IS THE ONLY ONE THAT HASN’T SHOWN UP. THE SPEAKER OF THE CITY COUNCIL SAID SHE’S TRYING TO GET A JUDGE TO BRING THEM IN AS WELL. ED: WE’RE LOOKING AT LIVE PICTURES OF THE HEARING THAT’S GOING ON. I THINK THE QUESTION A LOT OF PEOPLE HAVE IS WHAT WOULD A CITY, EVEN ONE OF NEW YORK’S SCALE, DO TO REGULATE A.I.? >> RIGHT, I AGREE, THAT’S A REALLY BIG QUESTION. WHAT CAN NEW YORK CITY ACTUALLY DO ABOUT A.I.? I THINK THERE ARE LIMITS. A LOT OF MAJOR DECISIONS ABOUT REGULATING A.I. ARE GOING TO COME FROM THE STATE AND FEDERAL LEVEL. BUT THE COUNCIL IS CONSIDERING REAL BILL THAT COULD HAVE REAL CONSEQUENCES FOR COMPANIES IN NEW YORK. ONE WOULD CREATE ANEN? ACTIVE FOR A.I. WHISTLE BLOWERS. SO IF SOMEONE INSIDE A COMPANY REPORTS WRONGDOING AND THAT ULTIMATELY LEADS TO A FINE, THAT WHISTLEBLOWER COULD RECEIVE A SHARE OF THE MONEY. ANOTHER WOULD ALLOW PEOPLE HARMED BY AN A.I. SYSTEM TO SUE THE DEVELOPER UNDER SOME CIRCUMSTANCES. AND THEN A THIRD WOULD REQUIRE INDEPENDENT THIRD PARTIES TO VALIDATE SOME SYSTEMS BEFORE THEY CAN BE DEPLOYED. THIS IS ABOUT A.I. ADVANCING QUICKLY, AND NEW YORK OFFICIALS ARE ASKING WHETHER THE RULES AND GOVERNMENT ARE MOVING QUICKLY ENOUGH TO KEEP IT UP. THE SPEAKER OF THE CITY COUNCIL PUT IT, THE IDEA THAT A.I. COMPANIES SIMPLY SELF-REGULATE IS NOT GOING TO WORK, WE REALLY NEED A PIECE OF LEGISLATION, AND THAT HOPEFULLY THE FEDERAL AND STATE JURISDICTIONS FOLLOW. ED: THANK YOU SO MUCH. YOU CAN WATCH THAT FULL HEARING, BY THE WAY, ON LIVE GO ON THE BLOOMBERG TERMINAL. COMING UP, IF 2026 FEELS LIKE A BANNER YEAR FOR THE WORLD TECH BILLIONAIRES, YOU’RE NOT WRONG, AND THE BLOOMBERG BITCOIN INDEX BACKS IT UP WITH NUMBERS. THAT’S NEXT. THE NASDAQ 100 PUSHING, EXTENDING ON THE RECORD THAT IT SET AS OF FRIDAY’S CLOSE. THERE HAVE BEEN MANY NEW RECORDS THIS YEAR, BUT TECH HIGHER. THIS IS "BLOOMBERG TECH" ED: WELCOME BACK TO "BLOOMBERG TECH." THE NASDAQ 1 IS HUNDRED HAS CONTINUED MOMENTUM, BUILDING ON THE RECORD THAT IS SET FRIDAY AFTER THE CLOSE. THERE’S A SLIGHT UNDERPERFORMANCE IN CHIP STOCKS, IN GENERAL, REFLECTED BY THE PHILADELPHIA SEMICONDUCTOR INDEX. IN THIS ENVIRONMENT WHERE YIELDS, WHAT WAS IT WE SAID EARLIER? YIELDS ARE CREEPING HIGHER. TECHNOLOGY STOCKS CONTINUE TO CRAWL HIGHER IN THE FACE OF BOND LOSSES. THERE’S A STORY OUT THERE I WANT TO GET TO FROM THE WEEKEND. THESE ARE THE U.S.-LISTED SHARES OF TSMC. THERE WAS A REPORT THAT SAID THAT TSMC IS HOLDING TALKS WITH THE TARIFF PROJECT, AND IT CAN LOOK IN DIFFERENT WAYS, LIKE EITHER TSMC OPERATES SOME FACILITY FOR THE TARIFF INITIATIVE, WHICH IS THE J.B. FOR LEADING-EDGE CHIPS, OR TERAFAB BECOMES AN ANCHOR. INTEL SIGNED UP FOR THE TERAFAB PROJECT BACK IN APRIL, AND WITH THOSE SHARES UNDER PRESSURE, THE KIND OF CONCLUSION THAT THE MARKET IS DRAWING HERE FROM THAT REPORT IS THE INCOME MIGHT GET PUSHED OUT A LITTLE BIT. WHAT ELON MUSK POSTED ON X WAS THAT THERE ARE DISCUSSIONS BETWEEN TERAFAB, WHICH MAY RESULT IN SOMETHING HAPPENING. WE’LL SEE. SCHNEIDER ELECTRIC IS MAKING ITS BIGGEST ACQUISITION EVER, BUYING INDUSTRIAL SOFTWARE FIRM FOR NEARLY $23 BILLION. INVESTORS ARE LOOKING AT THE PRICE TAG AND HAVE A FEW QUESTIONS. OUR BLOOMBERG DEALS REPORTER IS WITH US. SAW THIS ONE PLAY OUT OVER THE LAST 24 HOURS OR SO. I GUESS LET’S START WITH THE DEAL. WHAT IS SCHNEIDER ELECTRIC TRYING TO GET HOLD OF? >> SCHNEIDER ELECTRIC, LIKE MANY INDUSTRIAL COMPANIES, IS TRYING TO FIGURE OUT HOW TO INCORPORATE A.I. IN SOFTWARE INTO ITS PRODUCTS, BECAUSE EVEN THOUGH THEY’RE DEALING WITH HEAVY MACHINERY INFRASTRUCTURE, ALL OF THAT IS STILL BEING POTENTIALLY REVOLUTIONIZED BY SOME OF THESE STRIDES IN A.I. NO ONE WANTS TO BE LEFT BEHIND. SO HERE THEY’RE MAKING A BIG BET ON A U.S. COMPANY BASED IN BOSTON CALLED P.T.C. WE REPORTED BEFORE THAT AUTO DESK LAST YEAR HAD TAKEN A LOOK AT P.T.C. SO THIS IS A COMPANY ON THE RADAR OF OTHER BUYERS, BUT ULTIMATELY IT’S A COMPANY IN FRANCE MAKING ITS BIGGEST ACQUISITION YET WITH THIS ONE. ED: $IT 22 BILLION, WHY EYEBROWS BEING RAISED? >> IT WAS A BIT SHOCKING. THE ACQUIRE STOCK GOES DOWN WHEN YOU HAVE A BIG ANNOUNCEMENT. THE PREMIUM WAS PRETTY RICH FOR P.T.C., CLOSE TO 40%. SO IT DEFINITELY IS A BIG BITE. IT’S AN INTERESTING TIME IN FRANCE POLITICALLY. SO THERE COULD BE DIFFERENT REASONS HERE, BUT ULTIMATELY INVESTORS WILL DECIDE HOW IT PLAYS OUT. BUT ANALYSTS SEEM TO THINK THERE IS SYNERGY HERE. THESE COMPANIES HAVE TO BE AGGRESSIVE, ESPECIALLY WITH DEAL MAKING, BECAUSE THEIR BUSINESS LINES ARE CHANGING WITH ALL THE TRANSFORMATION DRIVEN BY A.I. ED: I STARTED THE SHOW SAYING THINGS ARE SLOW. MAYBE I’LL WALK THAT BACK. FIONA BAKER WITH A BIG DEAL ON THIS MONDAY. THANK YOU VERY MUCH. LET’S LOOK AT TODAY’S BIG NUMBER, 4.6 TRILLION DOLLARS. THAT’S THE COMBINED WORTH OF TECH BILLIONAIRES ON BLOOMBERG’S BILLIONAIRES INDEX, WHICH RELAUNCHES ONLINE TODAY, DESPITE MAKING UP ONLY ABOUT A FIFTH OF ITS MEMBER, THAT GROUP ACCOUNTED FOR ABOUT 36% OF THE INDEX’S WEALTH. LET’S TALK TO DYLAN SLOANE, $4.6 TRILLION IS A BIG NUMBER. GOOD JOB TO THE TEAM THERE. PUT THAT IN THE CONTEXT OF THIS RELAUNCH BLOOMBERG BILLIONAIRES INDEX AND WHAT WE’RE LEARNING ABOUT THE A.I. SIDE OF THIS STORY. >> YEAH, ABSOLUTELY, ED. $4.6 TRILLION, WE’RE TAKING THIS OPPORTUNITY TO REALLY LOOK AT HOW THE NUMBERS HAVE CHANGED THROUGH THE FIRST THREE QUARTERS OF THE YEAR. AND WE WERE SEEING A LOT OF DYNAMICS IN OUR LIST OF THE WORLD 500 RICHEST PEOPLE, REALLY ENCAPSULATING WHAT WE’VE SEEN IN THE MARKET MORE BROADLY, THIS YEAR AND THE PAST FEW YEARS. THE BIG ONE IS TECH A.I., LITTLE A.I. TRADE. THERE’S REALLY BEEN THIS DIVERGENCE BETWEEN BILLIONAIRE WHO IS OWE THEIR FORTUNE TO THE TECH INDUSTRY AND EVERYONE ELSE. YOU MENTION THE $4.2 TRILLION, THERE’S AROUND 100 TECH BILLIONAIRES ON THE BILLIONAIRES INDEX RIGHT NOW. THEY’VE GAINED $845 BILLION IN TOTAL THROUGH THE END OF Q3. ON THE FLIP SIDE, EVERY OTHER INDUSTRY COMBINED HAS ACTUALLY LOST $62 BILLION. SO AGAIN, IT’S JUST THIS REAL DIVERGENCE BETWEEN TECH AND EVERYBODY ELSE. TECH JUST KEEPS RACING AHEAD AT THE EXPENSE OF SOME OTHER SECTORS. ED: THAT’S WHAT THIS BEAUTIFUL CHART IS SHOWING. AND AS YOU SAID, NET WORTH CHANGED THROUGH SEPTEMBER 30. I LOVE DATA. I LOVE INDEXES. LET’S TALK ABOUT PEOPLE THOUGH. THAT GROUP OF 100 TECH BILLIONAIRES, I HAVE SOME SUSPICIONS, BUT WHO ARE WE TALKING ABOUT HERE? >> WE’RE TALKING ABOUT 100, BUT REALLY IT’S MORE THE TOP 10 OR SO. YOU KNOW, ELON MUSK, WHO BECAME THE FIRST TRILLIONAIRE EARLIER THIS YEAR, HE’S ADDED $310 MILLION TO HIS FORTUNE THIS YEAR. SO IT’S ONE PERSON ALONE CONTRIBUTING SO MUCH TOE THAT, AND IT’S BEEN THE STANDARD CAP OF U.S. TECH CARRY YEARS WHO CONTRIBUTED THE MAJORITY OF THOSE GAINS. MICHAEL DEB HAS BEEN A BIG GAINER THIS YEAR. MARK ZUCKERBERG IS UP 23% ON THE YEAR. FOR THE FIRST TIME ACTUALLY, THIS WAS LAST MONTH, WE SAW ALL 10 INDIVIDUALS, THE TOP 10 ON THE LIST WERE ALL AMERICANS, FOR THE FIRST TIME SINCE BLOOMBERG BEGAN TRACKING WEALTH IN 2012. SO IT REALLY IS THIS SMALL CIRCLE OF U.S. BILLIONAIRES THAT HAVE CONTRIBUTED A LOT OF THE GAINS THERE. ED: WHEN YOU GREW UP IN THE SCHOOL OF THE BLOOMBERG NEWSROOM, YOU LEARN REALLY QUICKLY THAT THROUGH THE TERMINAL AND ONLINE, PEOPLE LOVE READING ABOUT THE STORIES BEHIND THE WORLD’S WEALTHIEST PEOPLE. SO WE’RE RELAUNCHING BLOOMBERG BILLIONAIRES INDEX ONLINE TODAY. WHAT KIND OF THINGS CAN YOU DO WITH THE DATA? WHAT CAN YOU PLAY AROUND WITH? >> YES, I ENCOURAGE YOU ALL TO CHECK IT OUT. THERE’S A BUNCH OF NEW FUNCTIONALITY IN TERMS OF COMPARING FORTUNES BETWEEN DIFFERENT INDIVIDUALS, FILTER THOSE, WHETHER THEY BE SPECIFIC INDUSTRIES, PARTS OF THE WORLD, AGE BRACKET, AND JUST SEE SOME OF THESE TRENDS THAT WE’RE TALKING ABOUT HOW, HOW THEY’RE PLAYING OUT, IN TERMS OF WHERE WEALTH IS GROWING ACROSS THE WORLD, IN WHICH INDUSTRIES, AND ALSO, OF COURSE, OUR COVERAGE IS ONGOING ABOUT HOW IT’S BEING DEPLOYED AND UTILIZED. CHECK IT OUT AT BLOOMBERG.COM/BILLIONAIRES. ED: DYLAN SLOAN, THANK YOU VERY MUCH. AS DYLAN JUST SAID, CHECK OUT OF THE THE BLOOMBERG BILLIONAIRES INDEX ONLINE FOR NEW WAYS TO BROWSE THE WORLD’S TOP RICHEST PEOPLE BY REGION, INDUSTRY, AGE, EVEN MORE. I RECOMMEND YOU DO THAT. STRATEGY IS BACK IN THE BLACK, THANKS TO BITCOIN. THE COMPANY POSTED A $21 BILLION GAIN ON ITS CRYPTO HOLDINGS IN THE THIRD QUARTER AS BITCOIN RALLIED 43%. BUT THE FIRM IS FACING WANING DEMAND FOR THE SECURITIES IT USES TO FUND BITCOIN PURCHASES AND HAS SPENT MORE THAN $1 BILLION BUYING BACK PREFERRED SHARES. STRATEGY NOW HOLDS 848,000 BITCOINS, WORTH ABOUT $73 BILLION. COMING UP ON THE SHOW, A.I.’S BIGGEST PLAYERS ARE DEBATING WHETHER IT’S TIME TO SLOW DOWN AT THE FRONTIER. BUT WOULD THAT ACTUALLY SLOW THE A.I. BOOM? WE’RE GOING TO DISCUSS WITH TIFFANY LUCK. THAT CONVERSATION IS NEXT. THIS IS "BLOOMBERG TECH." ♪ SOFT BANK CHIEF, ONE OF A.I.’S FERVENT BELIEVERS THAT EVEN HE’S WORRIED ABOUT SAFETY RISKS AS MACHINES QUICKLY GAIN MORE ABILITIES. COUNTRIES MUST BUILD TRUST AND WORK TOGETHER, SAID SUN, A MAJOR BACKER OF OPENAI. HE SPOKE ALONGSIDE WHITE HOUSE SCIENCE AND TECH POLICY ADVISOR ON THE SIDELINE OF THE SCIENCE AND TECHNOLOGY IN SOCIETY FORUM IN KYOTO OVER THE WEEKEND. >> I THINK WE DON’T HAVE ANY MORE AREA OF HAVING HUMAN FIGHT AGAINST HUMAN. THERE WILL BE A BIGGER ISSUE OF HUMAN AGAINST SUPER INTELLIGENCE, THAT IF THE SUPER INTELLIGENCE BECOMES SO SMART, AND IF YOU USE IT BY BAD HUMAN, THIS IS THE WRONG USAGE. THIS CAN BECOME SUPER DANGEROUS. ED: I WANT TO BUILD ON THAT TOPIC. WORLD’S LEADING A.I. LABS ARE PACING THE FRONTIER, AS INCREASINGLY POWERFUL MODELS RAISE SAFETY CONCERNS. BUT FOR BUSINESSES ALREADY DEPLOYING THE TECHNOLOGY, SLOWING MODEL DEVELOPMENT DOESN’T NECESSARILY MEAN SLOWING A.I. ADOPTION. WHAT WOULD PACING THE FRONTIER OF MODEL DEVELOPMENT MEAN FOR THE ENTERPRISE AND FOR THE RACE BETWEEN OPEN AND ANTHROPIC AND THE REST OF THE INDUSTRY? TIFFANY LUCK, PARTNER AT N.E.A., JOINS US FOR MORE. I THINK THE SIMPLE TRUTH FOR MANY V.C.’S IN YOUR FASHION IS IF THE FRONTIER LAB PACES THE FRONTIER, IS THAT FAIR? >> YEAH, I THINK THAT’S FAIR. THANK YOU FOR HAVING ME. I’M EXCITED TO BE HERE. ONE WAY I LIKE TO THINK ABOUT THIS IS YOU HAVE A FRONTIER, YOU HAVE WHERE THE TECHNOLOGY IS TODAY. AND THEN YOU ACTUALLY HAVE THE REALITY OF ADOPTION. AND ACTUALLY WAYMO IS A GOOD EARLY EXAMPLE OF THIS. PROBABLY THE CARS WERE READY TO BE ON THE ROAD FAR AHEAD OF WHEN THEY ACTUALLY GOT ON THE ROAD. AND WHAT DID IT TAKE TO GET THEM ON THE ROAD? IT TOOK TRAFFIC, REGULATION, SHIPPING THEM INTO PRODUCTION, AND SO I ALMOST THINK, YES -- ED: ALSO TOOK IT CITY BY CITY, STATE BY STATE, OR FED LEVEL. >> TOTALLY, AND TRUST CONSUMERS WHEN I GET INTO A CAR, IT’S GOING TO BE SAFE. AND NOW I THINK YOU GET YOU INTO A WAYMO, AND YOU’RE LIKE, WOW, THE MAGICAL MOMENT OF RIDING IN AN AUTONOMOUS VEHICLE. SO I THINK WE WILL SEE THAT WITH A.I. WE’VE HAD SOME OF THAT TO CLOSE THAT GAP BETWEEN WHERE WE ARE ON THE ADOPTION FRONT AND THE TECHNOLOGY FRONT. OBVIOUSLY EVERY SINGLE MODEL THAT GETS RELEASED IS MORE AND MORE CAPABLE. WE’VE SEEN JUST INCREDIBLE BREAKTHROUGHS ON THE INTELLIGENCE FRONT. BUT IF YOU ASK ME, I THINK WE’RE STILL, WE HAVE SO FAR TO GO IN THE ADOPTION FRONT. SO ON THE ENTERPRISE SIDE, AS A PERSONAL CONSUMER AS WELL. ED: RIGHT, SO FAR, WE HAD THIS CONVERSATION EARLIER WITH INSIGHT PARTNERS ABOUT FORWARD-DEPLOYED ENGINEERS, WHICH IS NOT A NEW CONVERSATION. BUT DOES THE ADMINISTRATION THERE THAT YOU NEED ENGINEERS, BECAUSE LOADS OF COMPANIES HAVEN’T WORKED OUT WHAT IT IS THEY’RE SUPPOSED TO DO WITH A.I. YET. >> TOTALLY. >> I ACTUALLY JUST THINK THIS MEANS, EVEN IF WE’RE EARLY SINGLE DIGIT ADOPTION, LET’S SAY, TODAY ON AN OVERALL BROAD CURVE, THERE’S SO MUCH ROOM TO GROW. AND I THINK LIKE A COUPLE OF POINTS MAKE ME REALLY BELIEVE THAT INTELLIGENCE IS NOT ENOUGH. AND I THINK IT’S INCREDIBLE WE NEED TO KEEP GOING UP THE INTELLIGENCE CURVE, BUT WE REALLY NEED TO FIGURE OUT HOW TO GET THE ADOPTION CURVE, SO I THINK YOU HAD OPENAI AND ANTHROPIC PUBLICLY LAUNCHED DEPLOYMENT COMPANIES TO SAY, RAW INTELLIGENCE IS NOT ENOUGH TO TRANSLATE IT INTO REAL OUTCOMES, INTO THE INTERPRIZE. WE JUST SAW ANTHROPIC ACTUALLY TALK ABOUT THEIR FRONTIER ACADEMY, $100 MILLION TO TRAIN 10,000 ENGINEERS KIND OF BETWEEN NOW AND THE END OF NEXT YEAR. SO ACTUALLY TEACH PEOPLE HOW TO TAKE THIS INTELLIGENCE AND HOW TO GET IT INTO REAL-WORLD EXAMPLES. WHEREAS DEALING WITH OUTFLOWS, PRODUCING REAL, TANG I BELIEVE R.O.I., I THINK TODAY EVERYONE THINKS OBVIOUSLY YES, A.I. IS POWERFUL AND IS GOING TO HELP ME DO X, Y, AND Z, BUT NOW WHAT ELSE THE R.O.I. BASED ON VALUATION? WHAT IS THE VALUE BASE HE’D WHAT I’M SPENDING? ED: THERE IS A TREND, AN APPROACH OF OWNING YOUR OWN INTELLIGENCE. I THINK THAT’S SOMETHING YOU WOULD PRESCRIBE TO. EXPLAIN THAT PART TO ME. AND THEN WITHIN THAT, THE THING I SEE A LOT IS DEPENDING WHERE YOU ARE IN IN THIS, WHICH LAYER OF A.I. YOU’RE IN, IT’S LIKE WHAT ARE YOU PAYING FOR? RUN WITH BOTH IDEAS, YEAH. >> OWN YOUR OWN INTELLIGENCE, WHAT DOES THAT REALLY MEAN? I THINK IT MEANS A COUPLE OF THINGS. FROM AN ENTERPRISE PERSPECTIVE, THERE IS THIS TAIL WIND OF ENTERPRISES WANTING TO OWN A PIECE OF THEIR INTELLIGENCE BACK. WHETHER THAT ACTUALLY MEANS TRAINING THEIR OWN MODELS, HAVING MORE CONTROL OVER THEIR DATA, MORE CONTROL OVER THEIR INTELLIGENCE, I THINK THAT’S A TREND WE’LL CONTINUE TO SEE MORE OF. AND IT’S A REALLY IMPORTANT PART OF THE ECOSYSTEM. I JUST SAW OVERNIGHT, OR I GUESS YESTERDAY, THAT REFLECTION IS SUPPOSED TO BE LAUNCHING SOON. IT’S THE WESTERN VISION OF AN OPEN MODEL, WHICH IS SUPER IMPORTANT. I THINK THAT IT WILL HELP THE TREND OF OWNING YOUR OWN INTELLIGENCE. IT COMES DOWN TO THREE THINGS. ONE CERTAINLY IS THIS IDEA OF ENTERPRISE WANTS TO KEEP COMPOUNDING WORK FLOWS, KEEP IT WITHIN THEIR OWN ECOSYSTEM, IF YOU WILL. THE SECOND THING, OR THE SECOND TWO THINGS, WHICH ARE RELATED, JUST PERFORMANCE AND COST. SO IF YOU THINK ABOUT OWNING YOUR OWN INTELLIGENCE RELATIVE TO THE FRONTIER, THERE’S A WIDE SPECTRUM OF WHAT PATHS NEED TO BE TAKEN CARE OF BY THE FRONTIER. IS NOT EVERY SINGLE AGENT BEHAVIOR NEEDS TO BE HANDLED BY A FRONTIER MODEL, AND MAYBE LET’S SAY THE 80% THAT GETS DONE OR EVERYDAY THINGS THAT GET DONE, COULD BE TACKLED BY ENTERPRISE’S OWN MODEL. SO YOU HAVE A WHOLE ECOSYSTEM AROUND THIS, WHERE YOU THINK HIGHER PERFORMANCE THAN SOME OF THE MODELS AT A LOWER COST AS WELL. ED: YOU AVOID PAYING FOR TOKENS TWICE OVER. EVERYTHING THAT WE’VE DISCUSSED, I REALLY THINK WE UNDERAPPRECIATE THE SIZE AND SCALE, WHERE IT’S DEPLOYING CAPITAL. HOW DOES EVERYTHING YOU’VE DISCUSSED WITH ME IMPACT WHERE YOU GUYS ARE INVESTING? >> SURE, SO I WOULD SAY WE ARE INVESTING ACROSS THE A.I. ECOSYSTEM AND HAVE BEEN SINCE THE EARLIEST DAYS OF A.I. YOU KNOW, WHERE I SPEND THE MAJORITY OF MY TIME IS ACTUALLY ON APPLIED A.I., AND THAT’S WHAT I THINK AS THE DEPLOYMENT LAYER. WE TALKED EARLIER TODAY ABOUT FORWARD-DEPLOYED ENGINEERS. YOU SEE A LOT OF APPLIED A.I. COMPANIES SAYING HOW CAN I TAKE THIS? HOW CAN I PACKAGE IT? IN MANY CASES, IT’S LET ME GET SOME ENGINEERS INTO MY CUSTOMERS. FIGURE OUT HOW COMPANIES ARE USING MODELS, HOW THEY NEED TO USE THE MODELS, PACKAGE IT IN A WAY THAT MAKES SENSE. WE ALSO SPEND A LOT OF TIME ON, I WOULD SAY, UNIQUE MODELS, UNIQUE TOOLING, EVERYTHING THAT COMES AROUND THAT, INCLUDING CYBERSECURITY, OF COURSE. YOU KNOW, DATA, MEMORY, SEMICONDUCTORS, REALLY THE ENTIRE A.I. ECOSYSTEM. AND THEN I WOULD SAY THE OTHER AREA WE’RE SUPER EXCITED ABOUT IS PHYSICAL A.I. WE’VE HAD THE KIND OF AHA MOMENT, IF YOU WILL, FROM A TECH MODE AL IT’S PERSPECTIVE, AND NOW WE SEE WORLD MODELS AND UNLOCKING PHYSICAL A.I., ALSO PHYSICAL INTELLIGENCE, BUT PHYSICAL A.I. MORE BROADLY, AND I THINK THAT’S ANOTHER EXCITING WAVE. ED: I’M FOLLOWING YOU COMPLETELY. WE JUST HAD LISA AND FAITH HERE IN THE SEAT YOU’RE IN NOW AFTER THAT DEAL CLOSED, AND CLEARLY A.M.D. WAS THINKING ABOUT IT AS WELL. I REALLY APPRECIATE THE DEEP AND THOROUGH DISCUSSION WITH YOU. TIFFANY LUCK OF N.E.A., THANK YOU. COMING UP, APPLE’S NEW C.E.O. TAKES CONTROL OF DESIGN. WHAT IT MEANS FOR THE NEXT WAVE OF APPLE PRODUCTS. THAT’S NEXT. THIS IS "BLOOMBERG TECH." ♪ ED: DISNEY IS GIVING ABC NEWS THE TIKTOK TREATMENT. ITS VERTICAL VIDEO FORMAT LAUNCHES TODAY IN THE ABC NEWS APP. DISNEY FIRST ROLLED OUT VERT ON ESPN LAST YEAR, AND IT CAUGHT ON WITH MORE THAN 26 MILLION USERS, SPENDING A COMBINE 1.8 BILLION MINUTES WATCHING IT. APPLE’S NEW C.E.O. IS PUTTING HIS OWN STAMP ON THE COMPANY AND MAKING DESIGN A MUCH BIGGER PRIORITY. JOHN TERNUS IS TAKING A HANDS-ON ROLE AS APPLE PREPARES A WAVE OF NEW PRODUCTS. IT WAS THE TOPIC THIS PAST WEEKEND AT A PODCAST. MARK GURMAN, THE AUTHOR OF "POWER ON," NOW THE HOST OF THE POD. LET’S GET RIGHT TO THE DESIGN THERE. IS THAT SOMETHING YOU EXPECTED OF THE AREAS WHERE JOHN TERNUS WOULD SAY, OK, I’M GOING TO FOCUS HERE RATHER THAN LET OTHER EXECUTIVES DO THAT AREA? MARK: YEAH, VERY MUCH SO. I EXPECTED THIS. THE REASON IS THAT APPLE DOESN’T HAVE A CHIEF DESIGN OFFICER OR A HEAD OF DESIGN AT THIS POINT. THAT’S A POSITION THAT WAS NEVER REALLY FILLED SINCE THE DEPARTURE OF JOHNNY IVES IN 2019. THEY HAVE A HEAD OF INDUSTRIAL DESIGN, MOLLY ANDERSON, AND A HEAD OF USER INTERFACE DESIGN. AND THE TWO OF THEM WORKED TOGETHER, AND THEY’VE BEEN REPORTING TO TERNUS FOR QUITE SOME TIME. NOW THAT TERNUS IS C.E.O., HE’S SPENDING A LOT OF TIME IN THE DESIGN STUDIO, PART OF BOTH INDUSTRIAL DESIGN AND INTERFACE DESIGN, WORKING CLOSELY WITH THE LEADERSHIP TEAM AND THE DESIGNERS THERE. AND THIS IS A BIG CHANGE FOR APPLE IN TERMS OF THE C.E.O. PARTICIPATING IN THE DESIGN PROCESS. THAT’S SOMETHING THAT TIM COOK REALLY NEVER GOT INVOLVED IN. I’M TOLD THEY’D BE LUCKY TO SEE HIM IN THERE FOR AN HOUR A MONTH. HE WOULD COME IN FOR THE QUARTERLY REVIEWS, BUT DEFINITELY NOT IN THE THICK OF THINGS MUCH TERNUS, ON THE OTHER HAND, IS TRYING TO GET HIS HANDS DIRTY WITH EVERYTHING GOING ON IN THE DESIGN WORLD. ED: HOW DOES THIS SHOW UP? WE TALKED ABOUT A WAVE OF NEW PRODUCTS. ARE THERE SPECIFIC LINES WHERE JOHN TERNUS IN THE FIRST INSTANCE IS SAYING, OK, THIS IS WHERE I’M GOING TO HAVE MY PRODUCT EXPERTISE COME INTO PLAY? MARK: OH, IT’S VERY MUCH TO BE SEEN, RIGHT? THE DESIGN PROCESS, PRODUCT DEVELOPMENT PROCESS, THESE ARE THINGS THAT CAN TAKE THREE, FIVE, SEVEN YEARS, DEPENDING ON THE PRODUCT. SO HE’S WORKING ON VERY MUCH LONGER TERM STUFF. YOU KNOW, THE DESIGN TEAM, HE HAS BEEN PART OF THE ENGINEERING PROCESS OBVIOUSLY FOR DECADES AT THIS POINT. HE’S BEEN CARRYING THAT OVER TO THE C.E.O. ROLE IS QUITE NOTABLE. IT’S DIFFERENT FROM HOW HE’S HANDLING THINGS LIKE FINANCES, OPERATIONS, AND SALES. HE’S ESSENTIALLY TAKING THE OPPOSITE APPROACH TO COOK, AND EACH OF THESE C.E.O.’S ARE SPENDING THEIR TIME WHERE THEY CAN HAVE THE MOST VALUE, WHICH IS WHAT COOK TOLD TERNUS TO DO. ED: MARK, YOU’VE LAUNCH WOULD THE POWER ON PODCAST. WHAT’S IT BEEN LIKE? I MEAN, TO ME THE RECEPTION SEEMS JUST INCREDIBLE. MARK: YEAH, WE WERE RANKED PRETTY MUCH IMMEDIATELY IN THE TOP FIVE, TOP 10 ON AT LEAST APPLE PODCASTS FOR THE TECHNOLOGY SECTIONS AND THE TOP CHARTS. SO IT SEEMS TO BE RESONATING SOAR FAR. PEOPLE ARE REALLY ENJOYING IT. TO BE CLEAR, THIS IS SEPARATE FROM THE NEWS LETTER. THE NEWS LETTER CONTINUES. THE POWER ON PODCAST IS ITS OWN THING. WE RECORD EVERY WEEK. WE AIR EVERY THURSDAY. THIS WEEK’S EPISODE, WE’RE GOING DEEP ON THE CHANGES TERNUS IS MAKING, GO DEEPER ON THE VISION PRO. NEXT WEEK WE’LL LOOK AT THE BIG SMART HOME LAUNCH. LOOKING FORWARD TO THE NEXT TWO EPISODES AND BEYOND. ED: MARK GURMAN, THANK YOU VERY MUCH. CHECK OUT THE NEW "POWER ON" PODCASTS, WHICH EXTENDS TO THE NEWS LETTER, WEEK AM AUDIO DEEP DIVE AND VIDEO ON APPLE, BUT ALSO THE BIGGEST STORIES IN CONSUMER TECH, TOO, VERY MUCH WHAT MARK DOES FOR US HERE AT BLOOMBERG NEWS. THAT DOES IT FOR THIS EDITION OF "BLOOMBERG TECH." STARTED SLOW FOR THE WEEK, THEN THERE WAS A LOT OF NEWS, AND THINGS HAVE PICKED UP. TECH STOCKS PUSHING FRESH RECORD HIGHS. RECAP TALL OF IT ON THE PODCAST. IT’S A GOOD WAY TO START THE WEEK. FIND IT ON THE BLOOMBERG TERMINAL, AS WELL AS ONLINE ON APPLE, SPOTIFY, AND IHEART. FROM SAN FRANCISCO, THIS IS "BLOOMBERG TECH." ♪