'Bloomberg Technology' Full Show (05/26/2023)
CAROLINE: THIS IS BLOOMBERG TECHNOLOGY. TECH IS ON TOP. DIVING INTO THE AI RALLY. NVIDIA, ALSO KATHY WOULD -- ANNMARIE: -- ANNMARIE: --CATHIE WOOD JOINS US. LET'S START WITH THE MACRO PICTURE. YOU KNOW WHAT IS WEIGHING OVER THIS, THE DEBT CEILING DEBACLE. THERE IS HOPE. VOLUME THINNER OF THE MEMORIAL
WEEKEND. THE TWO YEAR YIELD SEEING A REVERSAL, EIGHT BASIS POINTS. MACRO DATA COMING IN SHOWING THE FEDERAL RESERVE NEEDS TO TAMP DOWN ON THE PCE DATA THEY LOOK AT.
BITCOIN MANAGING TO GET A BID. LET'S GET THE LATEST ON THE DEBT CEILING NEGOTIATIONS. IS IT GOING TO BE A BUSY WEEKEND FOR YOU? JOE: IT WILL BE A WORKING WEEKEND FOR SOMEONE. STAFFERS WILL HAVE TO WORK THE WEEKEND TO WRITE REGISTRATION. WE ARE TALKING TOP LINE APPOINTS GOING INTO A POTENTIAL DEAL AND THAT WOULD START THE CLOCK TICKING.
FOLKS I TALKED TO OVER THE COURSE OF THE WEEK ON CAPITOL HILL WERE HOPING DEMOCRATS AND REPUBLICANS WOULD HAVE SOMETHING DONE BEFORE THE WEEKEND SO INVESTORS WOULDN'T HAVE FEAR GOING INTO THE LONG WEEKEND AND IT IS UNCLEAR IF THAT IS GOING TO HAPPEN. IT IS INTERESTING, SOME OF THE MORE SIGNIFICANT BUDGET CUTS THAT HAVE BEEN DEMANDED BY REPUBLICANS APPEAR NOT TO ACTUALLY BE HAPPENING. THIS COULD BE A BIT OF A WASH WITH WHAT WE ARE SEEING. EVEN SOME OF THE THINGS WE ARE HEARING COULD CHANGE OVER THE COURSE OF THE DAY -- AND GO CEDARS CONTINUED -- AS NEGOTIATORS CONTINUE THEIR WORK. TALKING ABOUT CAPPING DISCRETIONARY SPENDING FOR TWO YEARS EXCEPT DEFENSE SPENDING WOULD RISE 3% WHICH IS IN LINE WITH PRESIDENT BIDEN'S BUDGET PROPOSALS.
IT WOULD CUT $10 MILLION FROM AN $80 BILLION CHUNK THAT WAS GOING TO THE IRS AS PART OF THE INFLATION REDUCTION ACT. THERE ARE SOME THINGS WE DON'T KNOW ABOUT IN TERMS OF WHAT WOULD HAPPEN TO UNSPENT COVID FUNDING AND PERMITTING REFORM. IT IS A CRITICAL MOMENT. IT IS VERY QUIET IN WASHINGTON AND QUIET AROUND THE NEGOTIATING TABLE WHICH MIGHT MEAN WE ARE CLOSE TO A DEAL. CAROLINE: THE COLUMN BEFORE THE STORM. JOE MATTHEW, WE THANK YOU --
THE CALM FOR THE STORM. JOMA VALUE, WE THINK -- JOE MATHIEU, WE THANK YOU. TESLA GETTING A NICE RALLY.
FORD AND TESLA MAY BE CHARGING INFRASTRUCTURE. THEY GO ON TWITTER TO DISCUSS IT. NVIDIA UP 1.8% AFTER THE ENORMOUS RALLY THE PREVIOUS DAY, ADDING 180 BILLION IN ONE DAY TO THE MARKET CAPITALIZATION. WE HAVE ONLY SEEN THAT THREE TIMES IN HISTORY ON ONE SINGLE DAY. A $50 BILLION MARKET CAP FOR MARBELLA -- MARVELL TECHNOLOGY, SHOWING ARTIFICIAL INTELLIGENCE IS THE WAY FOR CHIPMAKERS. A RALLY AS IT SHOWS THAT
ARTIFICIAL INTELLIGENCE COULD BE DRIVING FUTURE REVENUE GROWTH. LET'S GET INTO THE AI RALLY. $200 MILLION TO GET FROM AD POWERED SILICONE AND IT IS GOING TO GROWTH TO FOR HER TO MILLION IN FISCAL 2024. MANDEEP: TALKING ABOUT 800 MILLION NOW,. ONE THING IS CLEAR INVENTORY BOTTOMING IS CLEANED OUT FOR MOST OF THE CHIP MAKERS.
FOR THE CHIP FIGURES, WE MADE IT WITH NVIDIA, RAISING GUIDANCE BY 40%. WE DIDN'T SEE THAT KIND FOR GUIDANCE RATES. CAROLINE: REMIND US WHERE MARVELL IS OFFERING IN TERMS OF NETWORKING AND THE ABILITY TO SERVICE WHAT IS BASICALLY A HUGE COMPUTER NEEDED BY EVERYONE. MANDEEP: THE BIG CHANGE IS THINGS ARE
MOVING FROM CPUS TO CUSTOM ACCELERATORS WHICH IS WHAT YOU NEED FOR DOING GENERATE OF AI. IT IS NICHE WHEN IT COMES TO NETWORKING AND STORAGE BUT THAT IS HOW YOU DESIGN THE CUSTOM CHIPS FOR WORKING AS ACCELERATORS AND YOU CAN DO THAT WITH CPUS. EVERY SCALER IS DOING A COMBINATION OF NVIDIA GPU AND CUSTOM CHIPS ON THE NETWORKING SITE AND THAT IS WHERE YOU SEE THE DEMAND WHEN IT COMES TO A SMALL CHIP MAKER LIKE MARVELL. CAROLINE: MEN DEEP SING, THANK YOU --MANDEEP SINGH, THANK YOU. WE ARE GOING TO TALK TO SARAH KUNST . YOU HIT ME UP SAYING THE NVIDIA PRICE POINTS, THE LEVEL THEY ARE TRADING AT, THE OVERALL PRICE IS REALLY HEFTY STUFF.
WHY ARE YOU STARTING TO SEE THE VALUE IN AD, PARTICULARLY WITH CHIPS OUT OF THE EQUATION? SARAH: HIGHLIGHT TAIWAN SEMI CONDUCTORS. THEY ARE A MANUFACTURER PROVIDING SERVICES TO MASSIVE COMPANIES LIKE THE APPLES OF THE WORLD BUT THEY HELP NVIDIA DO THEIR CHIP MANUFACTURING. NVIDIA IS A GOOD COMPANY.
IT HAS DONE A GREAT JOB OF BEING RELEVANT THROUGH CRYPTO, AI, GAMING OVER THE LAST COUPLE OF YEARS. THE REALITY IS, IT IS GETTING WAY TOO MUCH CREDIT FOR WHERE IT'S REAL EARNINGS ARE AND WHERE THE REVENUE IS AND I THINK THAT IS DANGEROUS TO KEEP BUYING INTO THAT KIND OF RALLY WHEN IT IS NOT CLEAR THEY ARE GOING TO GROW INTO THOSE SHOES. IT IS UNDERVALUED FOR ALL THE ACTUAL AMOUNT OF IT IS MANUFACTURING AND THE TECHNOLOGY.
THIS TECHNOLOGY IS NOT EASY TO BUILD BUT SOMETHING THERE ARE SEVERAL COMPANIES THAT DO IT AND THE REALITY, ONE OF THOSE COMPANIES IS GETTING CRAZY CREDIT AND THE OTHER COMPANIES ARE NOT FEELING THE LOVE. CAROLINE: 20 TIMES FUTURE EARNINGS CURRENTLY TRADING AND LOOKING AT WHAT THE PRICE POINT IS FOR NVIDIA, 55 TIMES FUTURE EARNINGS. PUTTING ON YOUR HAT AND THINKING ABOUT YOUR PORTFOLIO, HAVE YOU LENT IN TO POWERING THE AI BOOM WE ARE SEEING? OR IS IT FOR COMPANIES AND LANGUAGE MODELS? SARAH: IT IS A LITTLE BIT OF BOTH. I'M INVESTED IN A COMPANY SPUN OUT OF GOOGLE. THEY ARE WORKING ON CHIPS FOR A THOMAS VEHICLES BUT A LOT OF THE SAME TECHNOLOGY AND COMPUTE POWER NEEDED IS RELEVANT FOR AI.
THE REALITY IS, THERE ARE A LOT OF GREAT SOFTWARE COMPANIES BEING BUILT AROUND THIS. WE INVEST IN AN AI COMPLETE THAT IT BEEN DOING INCREDIBLY WELL FOR A FEW YEARS. A MINING COMPANY THAT USES AI TO FIGURE OUT WHERE CAN WE GET MORE LITHIUM AND MORE OF THESE RARE EARTH MATERIALS THAT WE NEED TO MAKE OUR BATTERIES FOR EVERYTHING FROM TESLA'S TO IPHONES. RIGHT NOW, IT IS INCREDIBLY EXPENSIVE TO SOURCE THAT SERIAL. IF SOFTWARE WAS EATING THE WORLD -- LEADING THE WORLD BEFORE, IT IS NOW AI.
CAROLINE: COMPANIES VAGUELY REWORKING THEMSELVES AND SEEMINGLY ADOPTING THIS NEW CHANGE. HOW EASY IS IT AN UNDERSTANDABLE IS IT TO ENSURE YOU ARE GETTING RIGHT FOUNDER AND BUSINESS MODEL BUILT UPON IT? SARAH: THE REALITY IS THAT A LOT OF PEOPLE WHO WERE WEB THREE COMPANIES A YEAR AGO AND BIG DATA COMPANIES ARE NOW SUDDENLY AI COMPANIES. YOU HAVE THE MOST VISIONARY FOUNDERS IN THE WORLD WHO CAN NEVER GET A PRODUCT LAUNCH. THEY ARE TRYING TO MAKE IT WORK BUT THE REALITY IS THEY ARE CHASING THE TREND.
THE NICE THING ABOUT AI IS IT IS NOT AN EASY SPACE, MEANING IF YOU DON'T COME IN WITH PRETTY SIGNIFICANT ENGINEERING EXPERIENCE OR EXPERIENCE WITH AI, LARGE LANGUAGE MODELS, ALL OF THOSE THINGS, IT IS HARD TO SAY YOU HAVE A CHANCE OF CREDIBLY BUILDING. COULD YOU BUILD A CONSUMER APPLICATION THAT PULLS IN AND RELIES ON APIS FROM EXISTING AI COMPANIES? ABSOLUTELY. MY PEOPLE SEE A LOT OF THOSE AND THAT IS NOT A BAD THING. IT IS SURPRISINGLY IT SOMEWHAT EASY TO TELL WHO IS REAL AND WHO IS NOT BECAUSE VERY FEW PEOPLE HAVE THE TECHNICAL BACKGROUND THAT IS GOING TO ABOUT THEM TO MAKE A FUNDAMENTAL BREAKTHROUGH IN AI AND EVEN THE FUNDAMENTAL RATE THROUGH'S TAKEN INCREDIBLY LONG TIME AND THEY ARE EXPENSIVE AND ARE NOT GOING PULL ON THAT. CAROLINE: WHEN YOU ARE A MULTISTAGE CAPITAL VENTURE FIRM, HOW DO YOU DECIDE WHAT SIZE OF COMPANY YOU WANT TO GET AT, WHAT VALUATION YOU COULD BE PICKING? BECAUSE WHAT ARE THE COMPARABLES IN THE PUBLIC MARKET WHEN YOU ARE SEEING SUCH ENORMOUS RALLIES IN A PLACE LIKE NVIDIA. SARAH: THINK YOU HAVE TO BE PRACTICAL.
RIGHT NOW VENTURE IS IN A BIT OF A DOWNTURN IN THE ONLY AREA YOU ARE SEEING THE SKYHIGH VALUATIONS IS IN AI. IF YOU THINK SOMEBODY IS BUILDING A COMPANY THAT HAS A FUNDAMENTAL, INTELLECTUAL PROPERTY MODE THAT CAN TRULY CHANGE THE WORLD AND YOU ACTUALLY BELIEVE IT IS THE NEXT GOOGLE, THEN MAYBE YOU DO INVEST IN A SLIGHTLY HIGHER VALUATION. WHAT A LOT OF PEOPLE DO IS JUMP ON ANY THING THAT INTERESTING AND PAYING PRICES OUT OF WHACK TO REALITY AND THE MARKET RIGHT NOW IN VENTURE.
FOR ME, I HAVE BEEN DOING A LOT OF AI INVESTING A LITTLE LATER WHEN IT IS INDEED RISKED -- DE-RISKED. WE STAGE AI INVESTING IS INCREDIBLY RISKY, UNLESS IT IS SOMETHING BUILDING A CONSUMER ENTERPRISE INTERFACE THAT UPFRONT THEY SAY, WE ARE USING GPT AND EXISTING AI TOOLS TO MAKE IT EASIER TO DO X, Y, Z, GREAT. THAT IS AN INTERESTING COMPANY THAT YOU MIGHT BE ABLE SCALE MORE EASILY. CAROLINE: CLEO CAPITAL MANAGER AND FOUNDER. LATE -- GREAT TO HAVE YOU WITH US. WE WILL HAVE A DISCUSSION WITH ERIC GLYMAN.
I AM WATCHING COMPANIES THAT PERHAPS HAVE ARTIFICIAL INTELLIGENCE IN THE NAME AND HAVE BENEFITED FROM THIS MODEL. THIS IS BLOOMBERG. ♪ CAROLINE: NAI POWERED SOFTWARE PLATFORM HAS RAISED $250 MILLION, LED BY QIA. I SAT DOWN WITH THE FOUNDER WHERE HE DISCUSSED INNOVATION AND THE INVESTMENT HE RECEIVED. TAKE A LISTEN. >> IT WAS $250 MILLION TURNAROUND. THE REGION IS IMPORTANT, NOT ONLY THE GCC BUT BECAUSE WE THINK BETWEEN THE MARKETS HERE THERE IS SO MUCH DIGITAL INNOVATION GOING ON AND BUILDING SOFTWARE.
THE SECOND THING IS, THEY ARE A VERY PATIENT INVESTOR AND LONGTIME CAPITAL AND WHEN YOU ARE TYING TO BUILD SOMETHING GENERATIONAL, YOU ARE GOING TO MAKE MISTAKES AND YOU ARE GOING TO LEARN FROM THOSE MISTAKES AND YOU WANT SOMEONE WHO IS THINKING ABOUT THE WORLD AT LARGE. CAROLINE: WHAT IS INTERESTING, DO VCS HAVE TO BE WORRIED ABOUT STARTUPS GOING TO SOVEREIGN WEALTH FUND? IS THAT BECOMING AN OBVIOUS FORM OF CAPITAL NOW AND NOT NEEDING MIDDLE PEOPLE WHO ARE VENTURE CAPITALISTS? >> I DEFINITELY THINK IT IS THE EARLY END OF IT BUT YOU CAN EASILY CROSS OVER INTO SOVEREIGN AT THAT POINT. IT DEPENDS ON WHAT YOU ARE BUILDING. IF YOU ARE BUILDING TO BE ACQUIRED YOU ARE PROBABLY MORE SUITED TO VENTURE. IF YOU ARE BUILDING WHERE IT IS MORE GENERATIONAL, IT IS A BIGGER PLATFORM AND YOU WANT TO HAVE THE RIGHT MIX. WE WANT TO HAVE AN ICONIC BUT
WE WANT TO HAVE A QIA. THEY GIVE US THE TOOLS AND CONNECTIVITY. CAROLINE: PERHAPS PEOPLE MIGHT HAVE GOTTEN THE WRONG END OF THE STICK WHEN THEY SAW YOU TOOK MONEY FROM MICROSOFT AND BUILDING WITHIN THAT PLATFORM AND OFFERING SERVICES ON MICROSOFT. WHY DID YOU DO THAT IF I'M READING BETWEEN THE LINES YOU ARE BUILDING TO BE A BIG COMPANY AND SCALE GREAT HEIGHTS? >> SOUND BRAZEN, BUT IT IS NEVER ABOUT THE MONEY AS MUCH AS MONEY IS IMPORTANT. WHEN YOU ARE LOOKING TO BUILD THAT BIG AND LOOKING TO BE THAT GRASS ROOTS AND HOW STUFF IS USED, OFFICE IS USED EVERYWHERE AND WINDOWS IS USED EVERYWHERE.
THE SECOND IS, IT IS BALANCE. WE HAVE TWO CORPORATE'S THAT HAVE WORKED WITH US. ONE WE HAVE NOT DISCLOSED FOR OBVIOUS REASONS. BUT FOR MICROSOFT THE KEY WAS ALIGNED ON OUR MISSION AND THEY WANT TO BASICALLY TRANSFORM THE WORLD. A LINE AROUND VALUES. WE JUST GET ALONG. IT IS SO IMPORTANT. IT IS A BALANCE BECAUSE IT IS NOT AN INVESTMENT BECAUSE IT IS AN EXIT BUT THERE IS JOINT VALUE THAT CAN BE CREATED AND YOU BRING THE TWO PLATFORMS TOGETHER. CAROLINE:
THEY HELP ANYONE ABLE TO BUILD WEBSITES. LOOKING AT THE IMPACT OF ARTIFICIAL INTELLIGENCE ON THE FINANCIAL SECTOR IN PARTICULAR. COMPANIES SLAPPING ON CHATBOT'S TO EXISTING MARKETING SAYING THIS IS AI. MAYBE WE ARE CALLING IT AI
WASHING. LET'S BRING IN ERIC GLYMAN FOR MORE ON THIS YOU HAVE BEEN USING THE TERM AI WASHING. WHO IS OUT THERE NAMING THEY HAVE LARGE LANGUAGE MODEL AND HAVE A CHATBOT THAT WILL SOLVE ALL YOUR ISSUES? ERIC: CATHIE WOOD --ERIC: FARMER COMPANIES ARE OUT THERE USING IT THAN TRYING TO SOLVE PROBLEMS. PEOPLE TEND TO ASK THINGS, I WOULD LIKE TO PAY LESS FOR THIS SERVICE AND I WOULD LIKE TO AUTOMATE MY ACCOUNT AND CLOSE MY BOOKS WICKER. -- QUICKER. IF YOU SEE COMPANIES CLAIMING AI WE CAN'T FIND REAL CUSTOMERS, THEY ARE NOT TALKING ABOUT HOW THEY ARE INTEGRATING AI INTO THE WORKFLOW OF THEIR SOFTWARE AND THAT IS PROBABLY AI WASHING. CAROLINE: HOW DO YOU ENSURE WHAT YOU ARE TRYING TO MARKET AND SAY DOESN'T COME ACROSS AS WASHING? ERIC: STARTING WITH THE CUSTOMER.
OUR MISSION IS TO HELP COMPANIES SPEND LESS MONEY AND TIME AND WE HAVE THEM CUTTING BY 3% A YEAR. WITHIN THE USER INTERFACE WE START TO SHOW COMPANIES WHEREUPON RENEWAL CUSTOMERS MAY BE GETTING QUOTED HIGHER RATES THAN THE REST OF THE MARKET. IF YOU ARE PAYING FOR A SOFTWARE VENDOR AND ANOTHER COMPANY IS GETTING LESS, INTERFACING. IT IS NOT CREATING NEW BUTTON PUTTING IT IN WHERE PEOPLE DO THINGS AND THEN HAVING IT FADE AWAY. WE AUTOMATE EXPENSE REPORTS BY PULLING RECEIPTS WHETHER IT IS EMAIL, TEXT MESSAGES SO YOU DON'T NEED TO ADD AN ADDITIONAL STEP. A GREAT AI IS INVISIBLE.
CAROLINE: RUNNING IN THE BACKGROUND AND BEING MORE EFFICIENT. FROM THE PERSPECTIVE OF WHICH COMPANIES ARE COMING TO YOU ASKING, EVIE YOU HAD CALL SAYING I JUST NEED TO UNDERSTAND WHAT YOU'RE ARTIFICIAL INTELLIGENCE OFFERING IS OR ARE THEY CALLING FROM WHERE THEY ARE GEOGRAPHICALLY SAYING I NEED TO CUT EXPENSES IN THE CURRENT ECONOMIC ENVIRONMENT? ERIC: CERTAINLY THE LATTER. WE ARE WITH SIERRA NEVADA ROWING COMPANY AND LOCAL BUSINESSES AND OFTEN WITH A ARE TRYING TO DO IS SAY I'M SPENDING A LOT ALREADY, THOUSANDS TO MILLIONS A YEAR AND I WOULD LIKE TO CUT EXPENSES DOWN. WE SPENT A LOT MORE TIME ON CLOSING BOOKS MANUALLY, KEEPING BOOKS AND RECORDS TIED TO TRANSACTIONS. INSTEAD THEY SAID THEY WOULD LIKE TO CALL THAT DOWN SO CONTROLLERS CONNECT STRATEGIC QUESTIONS AND NOT BOGGED DOWN IN MANUAL WORK. CAROLINE: WHAT ABOUT YOU AS AN EMPLOYER.
HOW ARE YOU THINKING ABOUT THE PRODUCTIVITY OF YOUR LABOR FOR THE FACT THAT PERHAPS YOU DON'T HAVE TO BEEF UP YOUR OWN TALENT POOL? ERIC: IF YOU CAME TO SOMEONE AND SAID WE WILL MAKE SOMEONE ON YOUR SALES TEAM ABLE TO SELL 50% MORE CONTRACTS, YOU WOULD SAY I WANT MORE SALES PEOPLE LIKE THAT AND WE THINK THAT IS THE CASE HERE WHEN YOU HAVE THE FINANCE TEAM THAT HAVE A LOT MORE TIME IN THE DAY AND ARE ABLE NOT TO BE TAGGING RECEIPTS, CHECKING ON WHAT PRICES ARE BUT GETTING BETTER DEALS AND CLOSING BOOKS FASTER AND FUNDAMENTALLY FOCUSING ON AREAS WHERE YOU CAN INVEST FOR A HIGHER RETURN ON INVESTMENT, I WANT FOLKS LIKE THAT. IT IS SALE -- IT IS TRUE WITH SALES AND FINANCE. I BELIEVE PEOPLE WILL BE MORE PRODUCTIVE OVER TIME RATHER THAN WORKING ON LOW VALUE TASKS BECAUSE IT IS BETTER, MORE PROFITABLE BUSINESSES. CAROLINE: WE THANK YOU.
A UNIQUE PACT BETWEEN TESLA AND FOR. IT SEEMS -- AND FORD. CAROLINE: A RARE PARTNERSHIP BETWEEN TESLA AND FORD. CUSTOMERS WILL HAVE ACCESS TO 12,000 TESLA SUPERCHARGERS IN THE U.S. AND CANADA. MODELS IN THE LATER YEARS WILL HAVE THE TESLA MODEL BUILT IN. CNBC REPORTING TRADEMARK PRODUCTS CALLED INDEX GPT WILL HELP CUSTOMERS SELECT INVESTMENTS TAILORED TO THEIR SPECIFIC NEEDS.
NARROWING THE ANNUAL FOR WORKDAY, MEASURING DEMAND FOR SOFTWARE THAT HELPS BUSINESSES HANDLE HR RELATED TASKS. COMING UP, HOW IS AI IMPACTING THE TRAVEL INDUSTRY? CAROLINE: WELCOME BACK TO BLOOMBERG TECHNOLOGY. THANK ABOUT THE WAY IN WHICH YOU GET THROUGH AN AIRPORT. OTHER FEES WORTH IT NOW THAT THE TSA LINES ARE GETTING FASTER. LINES HAVE BEEN BACKING UP WITH ANNOYED TRAVELERS CITING A LACK OF STAFF AND CLUMSINESS IN ESCORTING TO CHECKPOINTS. LET'S STAY IN THE TRAVEL
INDUSTRY AND TAKE A LOOK AT HOW GENERATIVE AI CAN TRANSFORM IT. CHOICE HOTELS CEO BRIAN KIRKLAND JOINS US NOW. HOW HAS GENERATIVE AI BEEN ABLE TO ENSURE HOTELS ARE FULL? BRIAN: WE HAVE BEEN USING AI FOR A LONG TIME. GENERATIVE AI HAS THE BUZZ AND
IS WHAT PEOPLE ARE TALKING ABOUT . WE HAVE A LOT OF SYSTEMS LIKE OUR CHOICE MAX SYSTEM, A PROGRAM THAT PUTS THE DECISION-MAKING IN FRONT OF THE FRANCHISEE TO LOOK AT MILLIONS OF DATA SETS FROM ALL OVER THE INTERNET TO FIGURE OUT WHAT IS THE RIGHT TRAVEL STRATEGY, AND LOOK AT THE RATE AND REVENUE MANAGEMENT STRATEGY FOR THEIR HOTELS AND THEY CAN DO THAT FROM A BEACH ON THEIR OWN VACATION. IT IS FUN TO MANAGE YOUR HOTEL THAT WAY. WE HAVE BEEN USING AI TO DEAL WITH WHAT YOU ARE TALKING ABOUT. CAROLINE: I HOPE YOU ARE NOT ADVOCATING PEOPLE SHOULD BE WORKING ON VACATION.
I UNDERSTAND PERHAPS THIS WEEKEND WILL BE BIG AND I AM GOING TO HAVE 90% OF MY HOTEL FULL, IS IT MORE ABOUT ENSURING YOU HAVE THE RIGHT STAFFING? WHAT IS IT THEY TAKE FROM THESE DATA POINTS? BRIAN: IT IS EVERYTHING, FROM THE DEVELOPERS TO FIGURE OUT WHAT IS THE RIGHT HOTEL. THE FRANCHISEES MANAGING AND OPTIMIZING STAFFING AND LOOKING AT THE INVENTORY THEY ARE BUYING AND THE WAY THEY MAXIMIZE THEIR EFFICIENCY IN THE HOTEL AND PUTTING IN FRONT OF THE CONSUMERS WHERE THEY WANT TO GO AND WHAT MATCHES THEM VERY FOR THE CHOICE PRIVILEGE CUSTOMERS, WILL MAKE YOU HAPPIEST IN YOUR JOURNEY AND TRIP. THEY MAKE SURE THE HOTELS ARE TO BE FULL WHEN YOU SHOW UP. CAROLINE: CREATING YOUR OWN CLOUD-BASED SYSTEM, HOW HAVE YOU THOUGHT AS CIO TO BE AHEAD OF THE CURVE? BRIAN: AFTER THE JOURNEY WITH THE CLOUD AND TRANSFORMATIVE TECHNOLOGY, IT STARTED YEARS AGO. WE WERE THE FIRST COMPANY TO PUT PROPERTY MANAGEMENT IN THE CLOUD. WHEN WE ROLLED OUT CHOICE EDGE,
IT WAS THE FIRST OF ITS KIND. IT BOILS DOWN TO HAVING A BOARD AND LEADERSHIP GROUP THAT UNDERSTANDS THAT AT THE END OF THE DAY, CHOICE IS THREE COMPANIES IN ONE, HOSPITALITY, TECHNOLOGY, AND FRANCHISING COMPANY. WE PUT THE EFFORT AND ENERGY INTO BUILDING CHOICE MAX IN THE MIDDLE OF THE PANDEMIC, WORRYING ABOUT THE PANDEMIC AND THE ENERGY WAS PUT INTO INVESTMENT AND FIGURING OUT HOW DO WE COME OUT AHEAD. WE ROLLED IT OUT IN THE MIDDLE OF THE PANDEMIC AND IT HAS BEEN A HUGE ASSET. CAROLINE:
POTENTIALLY IN TALKS THAT CHOICE HOTEL HAD BEEN LOOKING AT WYNDHAM. HOW EASY OR HARD WOULD THAT BE TO INTEGRATE ANOTHER COMPANY IF A DEAL WAS GOING THROUGH? BRIAN: I CAN'T SPECULATE ON DEALS LIKE THAT, BUT GENERATIVE AI ALLOWS YOU TO TAKE DATA FROM ALL OVER THE WORLD AND PICK FROM MILLIONS OF DATA SETS AND REACT QUICKLY. THE THINGS WE ARE DOING WITH TRIP PLANNING AND GUESTS AND PICKING A LOCATION AND THE RIGHT INVESTMENT STRATEGY IS ALL IN THE ABILITY TO USE AI AND WITH TECHNOLOGY WHERE IT IS AT AND THE CLOUD WHERE IT IS AT, WE GET TO DO IT FASTER, QUICKER AND BETTER THAN THE PAST. ALL OF THOSE TECHNOLOGIES
LEAD TO THE ABILITY TO REACT AND MAKE DECISIONS BETTER AND FASTER. CAROLINE: YOU SAID GENERATIVE AI IS THE HOT THING, WILL THAT BE MOVED MORE INTO THE CUSTOMER EXPERIENCE? YOU ARE ALREADY DOING IT PREDICTIVE BUT FROM GENERATIONAL ARE YOU ABLE TO SAVE ON THE HOTEL FRANCHISEES OWN SERVICES? BRIAN: ONE OF THE THINGS WE ARE PAYING ATTENTION TO AND WORKING ON IS A GENERATIVE AI HAS THE BUZZ AND IS THE THING EVERYONE IS LOOKING AT. TO BE COMMERCIALLY VIABLE AND TRANSFORM HOW WE DO BUSINESS, NOT JUST HOW GUESTS AND PEOPLE USE GENERATIVE AI FOR THE THINGS IT DOES BUT TO COMMERCIALLY USE IT WE NEED TO MAKE SURE WE CAN SECURELY USE IT. HOW DO WE MAKE SURE IF WE USE THE SYSTEM TO ENABLE OUR GUEST TO FINANCE WITH A ARE DOING AND FIGURE OUT WHAT IS THE RIGHT STRATEGY AND POLICIES AROUND HOW THEY RUN THE BUSINESS, TO MAKE SURE THE RIGHT ANSWER IS COMING BACK SO IT IS NOT BASED ON OLD DATA BUT CURRENT DATA. WHEN WE MERGE THE POWER OF GENERATIVE AI WITH THE ABILITY TO DO IT WITH A PRIVATE DATA SET THAT IS CURATED, THEN YOU REALLY HAVE SOMETHING AND THAT IS WHAT WE ARE TALKING ABOUT WITH OUR PARTNERS AND I KNOW AMAZON WITH BEDROCK TALKED ABOUT THAT AND MICROSOFT IS TALKING ABOUT THAT. THOSE THINGS ARE COMING AND WILL BE TRANSFORMATIVE. CAROLINE:
GREAT TO SPEAK WITH YOU. HAVE A WONDERFUL MEMORIAL WEEKEND. COMING UP, NVIDIA GETTING A $1 TRILLION VALUATION. WE WILL GET CATHIE WOOD'S THOUGHTS ON THE RECENT FRENZY. HELEN TEAR -- HELEN TEAR -- FROM NEW YORK, THIS IS BLOOMBERG. CAROLINE: WELCOME TO BLOOMBERG TECHNOLOGY.
THE BIGGEST STORY SURROUNDING ARTIFICIAL INTELLIGENCE AND A RECENT RALLY IN THE CHIPMAKER NVIDIA. WE ARE JOINED BY CATHIE WOOD, A EK FOUNDER. --A AEK FOUNDER --AR ARK FOUNDER. CATHIE: WE HAVE BEEN POSITIVE ON NVIDIA AND WE BOUGHT IT WHEN IT HIT NEARLY $100 IN THE FOURTH QUARTER LAST YEAR AND THEN IT TRIPLED AS SOME OF OUR OTHER AI ORIENTED STOCKS STOOD STILL. IF WE ARE LOOKING AT, BELIEVE IT OR NOT, PEOPLE DON'T BELIEVE THIS BOUT US BUT WE ARE LOOKING AT VALUATIONS OF NAMES IN THE AI SPACE AND LOOKING AT NVIDIA 25 TIMES SALES WHICH IS WHERE IT IS AT AND TESLA WHICH IS PROBABLY THE BIGGEST AI STORY OUT THERE IS AT SIX TIMES EARNINGS.
I MEAN SIX TIMES SALES. YESTERDAY IT WAS REPORTED THAT IT IS A BEAUTIFUL AI PLAY AT SIX TIMES SALES. AS FAR AS NVIDIA GOES, THERE ARE A FEW REASONS WE TAKE SOME PAUSE .
IT STILL MEETS THE 15 COMPOUND ANNUAL RATE OF RETURN OVER FIVE YEARS IN YOU WILL SEE IT IN THE SPECIALIZED PORTFOLIOS. THE RISKS TO NVIDIA WOULD INCLUDE CYCLICAL. WHEN I HEAR SHORTAGES, SHORTAGES OR SHORTAGES AND CPUS ARE ANYTHING, I THINK ABOUT THE CYCLICALITY, COMPETITION. TESLA COMING UP WITH ITS OWN CHIP, M ETA AND GOOGLE, AND WE ARE LEARNING FROM META PLATFORMS, LESS COMPUTING POWER BUT MORE DATA AND ABLE TO DELIVER BETTER MODELS. CAROLINE: YOU FRUSTRATED INVESTORS HAVE GOTTEN IN TOUCH WITH YOU? THERE MUST BEEN A LOT OF FRUSTRATION THAT YOU KEPT IT IN SOME FUNDS BUT NOT THE MAIN FUND.
CATHIE: PEOPLE WHO UNDERSTOOD THE NVIDIA STORY OF -- STORY, MANY PEOPLE PUT IT IN THEIR PORTFOLIOS AND THEY MAY HAVE HELD IT. WE HAVE NOT GOTTEN MUCH PUSHBACK AND THE REASON IS PEOPLE KNOW THAT WE ARE ON AI BUT WE ARE DOING IT IN A LITTLE BIT OF A DIFFERENTIATED WAY. NVIDIA HAS BECOME A CHECK THE BOX STOCK AND THAT IS WHY THE VALUATION IS WHERE IT IS BUT WE ARE LOOKING FOR THOSE LAYS -- PLAYS THAT HAVE NOT ONLY THE VISION FROM MANAGEMENT AND BROAD DISTRIBUTION BUT ALSO PROPRIETARY DATA AND AI EXPERTISE. WE ARE JUST PIVOTING TO ANOTHER SET OF PLAYS THAT MOST PEOPLE HAVE NOT DISCOVERED YET, MUCH LIKE THEY DID NOT UNDERSTAND THAT NVIDIA WAS IN AI PLAY UNTIL VERY RECENTLY. CAROLINE: HELEN TEAR -- PALANTIR YOU MENTIONED AND TESLA. ARE THERE FIRMER AI EXPOSURE WITHIN YOUR FLAGSHIP FUND OR ARE YOU DECIDING THERE WILL BE A FEW KEY NAMES? CATHIE: WILL LEO -- TWILIO WOULD BE ANOTHER NAME AND ALSO COMPANY'S LIKE EXACT SCIENCES ARE USING THEIR OWN PROPRIETARY DATA AND BROAD DISTRIBUTION EFFORTS TO GATHER INFORMATION AND CREATE BETTER PRODUCTS AND SERVICES. I WOULD SAY ALMOST EVERY
COMPANY THAT WE HAVE IN THE PORTFOLIO IS IN SOME WAY, SHAPE OR FORM, WE ASKED THE QUESTION, HOW ARE YOU HARNESSING THIS POWERFUL TOOL CALLED ARTIFICIAL INTELLIGENCE? I WOULD SAY 90% OF THE NAMES IN THE PORTFOLIO ARE HARNESSING IT AND DO HAVE A PROPRIETARY DATA. CAROLINE: WE'VE SEEN SO MUCH DISRUPTION TO THE MARKET CAPITALIZATION OF COMPANIES WHEN THEY HAVE A FATHER'S HOUSE DISRUPTED BY CHET TTP. -- CHATGPT. YOU MENTIONED APPLE, IS THAT A KEY COMPANY WE NEED TO WORRY ABOUT BEING DISRUPTED? WHAT OTHER NAMES COME TO MIND WHERE THE MARKET HAS IT WRONG AND HOW MUCH THEY CAN BE OVERWHELMED BY THIS NEW COMPETITOR? CATHIE: FOR GOOGLE, CHET TTP WAS -- CHATGPT WAS EITHER THE WORST THING THAT HAPPENED OF THE BEST THING. WE THINK IT WILL BE DISSENTER MEDIATED BY CHET DTP -- DISINTERMEDIATED.
AS YOU SAID, APPLE, MANY PEOPLE WHO THINK EVEN AMAZON WILL BE DISRUPTED NOT ONLY BY SOCIAL COMMERCE, PEOPLE SHOPPING THROUGH INSTAGRAM AND OTHER SOCIAL MEDIA SITES, PINTEREST, BUT IT ALSO COULD BE DI SINTERMEDIATED TO SAY I WANT EXACTLY THIS ITEM AT THE CHEAPEST PRICE ANYWHERE IN THE WORLD. AND GO DIRECTLY TO THAT SOURCE. SO ANY PLATFORM THAT HAS SERVED AS AN INTERMEDIARY IS AT RISK, WE WOULD SAY. CAROLINE: YOU MENTIONED INSTAGRAM, IS META SOMETHING YOU ARE DUMBING DOWN ON? CATHIE: META IS INTERESTING TO US.
WE LOVE THE FACT THAT MARK ZUCKERBERG IS PRIORITIZING ARTIFICIAL INTELLIGENCE AS OPPOSED TO THE METAVERSE, WHICH WAS REALLY WHAT HE WAS FOCUSED ON LAST YEAR. SO YES, WE ARE INTERESTED IN META'S PLAY. DON'T HAVE IT IN THE FLAGSHIP BUT WE HAVE IT IN OTHER PORTFOLIOS. CAROLINE: IS TO GO BACK TO WHERE WE STARTED AT NVIDIA, IS THERE ANY ENTRY POINT THAT GETS YOU BACK IN? YOU HAVE BEEN SELLING OUT THE OTHER FUNDS A LITTLE BIT PERHAPS WITH A PROFIT YOU HAVE RECENTLY TAKEN IN THE RUNOFF OF THE LAST COUPLE OF DAYS.
ANYTHING THAT MAKES YOU GO, IT IS NOT GOING TO BE DISRUPTED IN THE WAY WE ARE WORRYING AND WE WON'T SEE THE SUPPLY CHAIN WREAK HAVOC? CATHIE: I THINK FOR A PRICE I WOULD SAY. WE TEND TO THINK WE ARE GOING TO HAVE A HARDER LANDING THAN MOST ECONOMISTS DO. IF THE CYCLE WERE TO HIT IT AND NVIDIA SURPRISINGLY GETS HIT HARD BY CYCLES BECAUSE THE INVENTORY BUILDS UP AND I WOULD SAY WE ARE IN ONE OF THOSE RIGHT NOW, THEY ARE SO SPECTACULAR. IF WE HAVE THE COMBINATION OF A CORRECTION AND RECOGNITION BY THE MARKETPLACE, PERHAPS SOME OF THESE MODELS DON'T HAVE TO BE AS LARGE AND DON'T NEED AS MUCH COMPUTING POWER AS MORE COMPANIES USE MORE SPECIALIZED MODELS. YOU HAVE THE CONFLUENCE OF A
REALITY CHECK. NVIDIA IS A POWERFUL COMPANY. THEY ARE SO EXQUISITELY POSITIONED IN THIS SPACE, BUT YOU ARE PAYING FOR IT NOW. CAROLINE: HAVING BOUGHT IT AT FOUR DOLLARS, HOW DID YOU FEEL IN YOUR STOMACH WHEN YOU SAW 180 BILLION ADDED IN ONE DATE LIKE IT DID YESTERDAY? CATHIE: THE FRUSTRATION YESTERDAY WAS ANOTHER AI PLAY. IT REVEALED SOME PRODUCTS, AI
PRODUCTS, AND OPENED IT MORE IN TERMS OF WHAT IT IS DOING ON THE AI FRONT AND IT IS GOING TO BEAT ONE OF THE MOST INTERESTING PLAYS OUT THERE. IT WAS DOWN 10% AFTER BEATING NUMBERS BECAUSE IT TALKED ABOUT THE ECONOMY BEING SOMEWHAT VARIABLE, I THINK IS THE WORD. IT WAS FOCUSED ON THE MACROS AND THAT IS WHAT ANALYSTS FOCUSED ON NOW IT IS HAVING A GOOD DAY, UP 10% TODAY.
CAROLINE: YOU DIDN'T FEEL ANY FRUSTRATION ON NVIDIA? CATHIE: WE PUBLISHED OUR TRADES AT THE END OF THE DAY AND YOU WILL SEE THAT WE BOUGHT YOU I PASS ALL OF OUR PORTFOLIOS. WE USED THOSE OPPORTUNITIES WHEN WE FEEL LIKE THE MARKET IS SEEING SOMETHING WE AREN'T, ESPECIALLY WHEN IT COMES TO OFFICIAL INTELLIGENCE. CAROLINE: TELL US WHAT YOU ARE SEEING WITH TESLA'S FOCUS ON AI AND TESLA DID A DEAL WITH FORD IN THE WAY THEY CHARGE CARS APPEARED WHAT ARE WE MISSING BEING THE ONE AI PLAY? CATHIE: THE AUTONOMOUS TAXI NETWORK WE BELIEVE TESLA IS BUILDING. IT HAS MORE PROPRIETARY DATA, MORE DATA OF REAL WORLD DRIVING THAN ANY OF THE OTHER TECHNOLOGY COMPANIES LIKE WEYMOUTH -- WAY MORE -- WAYMO. WE BELIEVE THE AUTONOMOUS TAXI PLATFORM OPPORTUNITY IS A WINNER TAKE MOST OPPORTUNITY. THE COMPANY THAT GETS A PERSON IN AN AUTONOMOUS VEHICLE FROM .82 POINT BE AS QUICKLY AND -- FROM POINT A TWO POINT B AS QUICKLY AS POSSIBLE, WE BELIEVE IT WILL BE TESLA AND WE BELIEVE GLOBALLY THAT WILL SCALE FROM ZERO TODAY TO EIGHT TO 10 BILLION IN REVENUES BY 2030.
YOU CAN SEE WHY WE ARE SO EXCITED ABOUT TESLA. IT IS THE FURTHEST ADVANCED FROM AN AI POINT OF VIEW AND IT IS EVEN BECOMING A MANUFACTURER OF FACTORIES USING ARTIFICIAL INTELLIGENCE AND BECOMING MORE AND MORE EFFICIENT IN MANUFACTURING FACTORIES AND CARS. WE THINK IT IS THE MOST EFFICIENT IN THE WORLD RIGHT NOW. CAROLINE: IN CHINA AND INTERESTED THAT YOU REFERENCE THE WORRY ABOUT AT LEAST IN THE U.S., ARE YOU LOOKING AT CHINA AND REMAINING EXPOSED AMID THE TRADE AND TECH TENSIONS? CATHIE: OUR HISTORY WITH CHINA AFTER COVID WAS WE PLOWED IN DURING COVID BECAUSE WE LIKED WHAT CHINA WAS DOING FROM A MONETARY AND FISCAL POINT OF VIEW. THEY WERE NOT OVERDOING IT.
THEN WE ENTERED THE PERIOD STARTING IN MEMBER 2020 WHERE MANAGEMENTS WERE BANISHED FROM THEIR COMPANIES AND THERE WAS ONE RESTRICTION AND REGULATION AFTER ANOTHER. WE HAVE PULLED AWAY QUITE SIGNIFICANTLY. COMMON PROSPERITY IT SEEMS MEANS VERY LOW PROFIT MARGINS AND SERVICES THAT REACH INTO TIER ONE, TIER TWO CITIES.
JD LOGISTICS, WE HAVE SOME OF THAT. WE HAVE MINIMIZED OUR EXPOSURE UNTIL CHINA BASICALLY SEEMS MORE INVITING TO CAPITAL ONCE AGAIN. CAROLINE: LET'S TALK POLITICS CLOSER TO HOME, THE DEBT CEILING. CAN WE SAY DEBACLE OR DEBATE. THE DEAL STILL NOT DONE AND
DEFAULT BEING UTTERED. ARE YOU WORRIED? CATHIE: WITH OUR FIVE YEAR INVESTMENT TIME HORIZON AND HAVING BEEN AROUND THIS BLOCK A NUMBER OF TIMES, WE KNOW THEY ARE GOING TO COME TO A DEAL. THEY ARE NOT GOING TO DEPRIVE GOVERNMENT EMPLOYEES OF THEIR PAYCHECKS, SOCIAL SECURITY, RETIREES AND THEIR PAYCHECKS. THAT WOULD BE POLITICALLY DISASTROUS AS WE ARE HEADING INTO THE ELECTION YEAR AND ALREADY THE FEEL HAS HEATED UP SO SIGNIFICANTLY.
THEY ARE GOING TO GET THROUGH THIS. IT IS A SHORT-TERM PHENOMENON AND MAYBE A SHORT-TERM FIX. HOPEFULLY THEY DO GET SERIOUS ABOUT THIS AT SOME POINT IN TIME BUT WE DON'T THINK NOW IS THE TIME. CAROLINE: WE ARE SPEAKING TO CATHIE WOOD, CEO OF ARK INVESTMENT.
YOU SAID INFLATION IS SOMETHING THE FED SHOULD BE LOOKING AT. WE GET A PCE PRINT LIKE WE DID TODAY, 4.4%, IS THAT STILL TO YOU THE WRONG DATA TO BE LOOKING AT OR DO YOU THINK DEFLATION IS COMING OFF OF THIS SWIFTLY? CATHIE: WHEN HISTORY BOOKS ARE WRITTEN, WE WILL LOOK BACK AT THIS PERIOD AND WE WILL SEE THE SHARP RISE IN INFLATION WHICH WAS CAUSED BY MASSIVE SUPPLY CHAIN, EARLY SUPPLY SHOCKS FROM COVID AND WAR IN UKRAINE. SO A SHARP INCREASE AND IT FEELS LIKE IT IS SO SLOWLY COMING DOWN BUT WHEN YOU START LOOKING AT THE CHARTS IN HISTORY, THIS DECLINE WILL LOOK LIKE IT WAS VERY RAPID AND WE WILL DESCEND INTO DEFLATIONARY TERRITORY.
DON LAWSON -- DON LU SSM WROTE AA PIECE ABOUT THIS AND I THINK THE FED WILL BE BLAMED FOR SENDING USN ALREADY WE ARE GETTING NEGATIVE SIGNS FOR BIDENS. HOME DEPOT SALES DOWN 3% TO 5% FOR THE YEAR THEY ARE EXPECTING. WE GOT GDI, THE OTHER SIDE, GROSS DOMESTIC INCOME, WHICH IS THE OTHER SIDE OF GROSS TO MYSTIC PRODUCT, AND THEY NEED TO EQUAL BUT THEY ARE AT A RECORD GAP RIGHT NOW.
IT HAS BEEN NEGATIVE, IN RECESSION TERRITORY FOR THE LAST TWO QUARTERS. I THINK MANY COMPANIES ARE GOING TO HEAL A HARD LANDING COMING FROM UNITS AND PRICES. I THINK MORE AND MORE COMPANIES ARE REPORTING THIS ON THEIR REPORTS, THESE ECONOMIC STATISTICS THAT TAKE ALL OF THE OXYGEN OUT OF THE ROOM ARE HUGELY LAGGING AND NOT EVEN GETTING IT RIGHT. IF YOU LOOK AT THE DIGITAL WORLD, GROSS TO MYSTIC PRODUCT WAS DEVISED IN THE INDUSTRIAL AGE WE ARE IN THE DIGITAL AGE RIGHT NOW. WE PAY MORE ATTENTION TO GROSS MASTIC INCOME -- DOMESTIC INCOME THAT TENDS TO BE MORE IN THESE INCONSISTENCIES. CAROLINE: THANK YOU FOR TALKING ABOUT THE
WORLD ECONOMIES WITH US. WE WISH YOU A GOOD ONE. THAT DOES IT FOR THIS EDITION OF BLOOMBERG TECHNOLOGY.
2023-06-02 02:16
