Nvidia Eyes China Expansion, ServiceTitan's Big IPO | Bloomberg Technology
>> FROM THE HEART OF WHERE INNOVATION, MONEY, AND POWER COLLIDE, IN SILICON VALLEY AND BEYOND, THIS IS "BLOOMBERG TECHNOLOGY." WITH CAROLINE HYDE AND ED LUDLOW. CAROLINE: LIVE NEW YORK, THIS IS "BLOOMBERG TECHNOLOGY." ADOBE DROPS AFTER A DISAPPOINTING ANNUAL SALES OUTLOOK AS INVESTORS FEAR AI START OF COMPETITION. SERVICETITAN GOES PUBLIC. SHARES INDICATED TO ROCKET AT THE OPEN. WE SPEAK WITH THE SOFTWARE
COMPANY'S COFOUNDERS. AND KLARNA JOINS US. THE CEO JOINS US HOW IT IS ALL-IN ON AI. BUT FIRST A QUICK CHECK ON THESE MARKETS.
WE ARE DOWN .3% AS WE AWAIT THE OPENING TRADE. AT THE MOMENT THE NEW -- THE MOOD MUSIC IS A LITTLE BIT LOWER. WE HAD SOME INFLATIONARY NUMBERS COMING FROM THE PRODUCT SIDE OF THE EQUATION COMING IN A LITTLE BIT HOTTER. REMEMBER, WE ARE SO CLOSE TO RECORD HIGHS WE MET YESTERDAY. WHIPPING ON FROM THE NASDAQ WE HAVE GOT A KEY POINT STRIKE IN ADOBE. IT IS THE WORST PERFORMER WHEN YOU ARE LOOKING AT THE NASDAQ 100. THE WORST DAY SINCE BACK TO
MARCH WHEN IT HAD ITS UNDERWHELMING NUMBERS THEN. FAST-FORWARD TO TODAY AND AFTER THE BELL YESTERDAY THEY SIGNALED THAT THE AI INFLECTION POINT IS NOT THERE YET. WE ARE STILL SEEING REVENUE COMING IN AT ABOUT 11% OR 14%. I'M LOOKING AT NVIDIA ON THE DOWNSIDE. LOOK, IT IS INTERESTING THAT IT IS PUSHING BACK AGAINST THAT ANXIETY THAT MAYBE IT IS PULLING BACK FROM CHINA. PULLING BACK FROM SOCIAL MEDIA TO EMPHASIZE THAT THE CHINESE MARKET IS STILL THERE DESPITE U.S. TRADE CURBS.
BLOOMBERG IS REPORTING THAT THE CHIP GIANT IS EXPANDING ITS RESEARCH CAPABILITIES IN CHINA, ADDING HUNDREDS OF STAFF. LET'S BRING IN BLOOMBERG'S PETER ELSTROM. THIS IS NOTABLE. THEY ARE PUSHING BACK AGAINST THAT WORRY AND BEEFING UP IN CHINA. >> THAT IS EXACTLY RIGHT. THERE ARE A LOT OF CRAZY RUMORS IN CHINA, THIS GOT SERIOUS ENOUGH THAT NVIDIA FELT THEY HAD TO RESPOND AND CLARIFY THEY ARE CONTINUING TO DELIVER PRODUCTS AND SERVICES INTO CHINA.
THEY ARE EXPANDING QUITE A BIT IN CHINA. THE COMPANY HAS BEEN GROWING BY LEAPS AND BOUNDS, BUT WE HAVE HEARD THAT IS IN CHINA THEY SHOULD GO FROM ABOUT 3000 EMPLOYEES AT THE END OF LAST YEAR TO ABOUT 4000 AT THE END OF THIS YEAR. SPECIFICALLY THEY WANT TO EXPAND -- EXPAND IN THE AUTONOMOUS DRIVING AREA. IT IS ALSO IMPORTANT FOR SOME OF THESE CUTTING-EDGE TECHNOLOGIES LIKE EV'S, ETC. NVIDIA CANNOT SELL ITS MOST ADVANCED AI CHIPS INTO CHINA, BUT THEY DO STILL WANT TO INVEST IN THE MARKET AND IN SOME OF THESE GROWTH AREAS LIKE AUTOMOBILES. CAROLINE:
THIS HAS BEEN AN EVER-EXPANDING AREAS OF NEW NAMES GETTING INTO THE EV SPACE IN CHINA. WHAT ARE THE REGULATIONS? IS IT EASIER TO BE PUTTING AUTONOMOUS DRIVING ON THE ROADS? IT IS NOT SOMETHING ELON MUSK HAS SIGNALED. PETER: THE GOVERNMENT CERTAINLY HAS BEEN SUPPORTIVE OF SOME OF THESE NEW TECHNOLOGIES. THE EV MARKET IS BOOMING. YOU HAVE DOMESTIC PLAYERS LIKE HUAWEI MOVING AGGRESSIVELY INTO THIS SPACE, PROVIDING THE TECHNOLOGIES THAT THE CAR COMPANIES NEED TO BE ABLE TO EXPAND IN THAT MARKET.
NVIDIA WANTS TO BE PRESENT IN THAT MARKET. THEY ARE FORGING RELATIONSHIPS WITH IMPORTANT COMPANIES. THEY HAVE A PRESENCE ON THE GROUND. THEY ARE EXPANDING THEIR HEADCOUNT. IT IS A SIGNAL THEY ARE
SUPPORTING THE CHINESE MARKET. THEY WERE ABLE TO SELL ADVANCED AI CHIPS IN THE PAST AFTER A COUPLE OF ROUNDS OF EXPORT CONTROLS FROM THE BIDEN ADMINISTRATION. THEY HAD TO PULL BACK ON SOME OF THOSE MOST ADVANCED AI CHIPS, JEN-HSUN HUANG HAS BEEN VOCAL THAT HE WOULD LIKE TO SELL AS MUCH AS HE CAN INTO THE MARKET, PROVIDED THAT THE REGULATIONS COME AROUND. HE IS CERTAINLY INVESTING WITH
A VIEW TO THE LONG-TERM. CAROLINE: HOW GOOD IS THAT FROM A BUSINESS PERSPECTIVE? WE HAVE SO MUCH UNCERTAINTY WEIGHING OVER U.S. AND CHINA RELATIONS SHEKEL IT SEEMS AS THOUGH TRUMP IS EXTENDING THE OLIVE BRANCH OF AN INVITATION TO XI JINPING TO COME OVER FOR THE MARKET -- FOR THE INAUGURATION.
IT FEELS LIKE THE TIT FOR TAT IS ENDLESS. PETER: IT DOES FEEL LIKE THAT WHEN YOU LOOK AT THE DYNAMICS BETWEEN WASHINGTON AND BEIJING RIGHT NOW. THERE HAVE BEEN A LOT OF TENSIONS IN THE PAST. ONE THING THE DEMOCRATS AND REPUBLICANS AGREE ON IS THEY WANT TO GET TOUGHER ON CHINA. IT SEEMS LIKE IT IS HEADING IN THAT DIRECTION, REMEMBER JUST 10 YEARS AGO YOU HAD COMPANIES INVESTING IN CHINA, WHEN THE RELATIONSHIP BETWEEN THE TWO COUNTRIES WERE STRONG. OF THESE COMPANIES WANT TO -- ALL THESE COMPANIES WANT TO DO IS INVEST IN WHAT THEY CAN. NVIDIA WANTS TO POSITION ITSELF
SO IT IS ABLE TO CAPITALIZE IF THE MARKET -- MARKET OPENS UP. IT IS NOT SMALL, BUT THEY CANNOT SELL THEIR HIGHEST-END CHIPS RIGHT NOW. INSTEAD THEY ARE SELLING THOSE INTO THE HYPERSCALERS LIKE MICROSOFT AND OPENAI, GOOGLE, AND AMAZON. LONG-TERM THEY WOULD LIKE TO SELL AS MANY AS THEY CAN. THAT INCLUDES THE CHINESE
MARKET. CAROLINE: THANKS SO MUCH FOR THE BREAKDOWN. LET'S STICK MORE WITH CHINA. IT HAS BEEN SIGNALING FURTHER STIMULUS MEASURES.
ALL OF THIS IS ABOUT MAINTAINING ECONOMIC GROWTH. SOME SORT OF STABILITY. LET'S DISCUSS U.S., CHINA, AND THE ECONOMIC OUTLOOK. CHIEF INVESTMENT STRATEGIST
MARTA NORTON IS THERE WITH US. WHAT IS INTERESTING IS YOUR VIEW ON VALUATIONS, OPPORTUNITIES TO BE INVESTING IN CHINA. IS IT RIGHT FOR INVESTMENT? >> IT IS A CRITICAL QUESTION. THE ARGUMENT FOR CHINA BIG TECH IN GENERAL IS THE VALUATION. YOU LOOK AT BIG TECH AND THE TYPES OF COMPANIES YOU HAVE THERE, VERY STRONG COMPETITORS, VERY STRONG BALANCE SHEETS, SHAREHOLDER FRIENDLINESS, AND VERY LOW VALUATIONS. IN A WORLD IN SEARCH OF VALUATIONS THAT IS ATTRACTIVE. BUT OF COURSE YOU DON'T GET
THOSE VALUATIONS WITHOUT SOME HEADWINDS. THAT IS ON THE GEOPOLITICAL FRONT, BUT ALSO THE ECONOMIC FRONT. WHETHER YOU ARE LOOKING AT THE PROPERTY CONSIDERATIONS OR CONSUMER DEMAND. THERE ARE A LOT OF CONSIDERATIONS I THINK WOULD GIVE INVESTORS PAUSE. THE UPSIDE IS THERE IS A MARGIN
OF SAFETY THAT CAN COVER THAT. WE WOULD NOT SUGGEST THAT INVESTORS PILE ALL OF THEIR ASSETS IN CHINA, BUT WE WOULD ARGUE DEVALUE IS ENOUGH THAT EXPOSURE WOULD MAKE SENSE. CAROLINE: YOU COMPARE AND CONTRAST TO THE LACK OF OPPORTUNITY HERE IN THE U.S. I'M LOOKING AT NVIDIA TRADING AT 47 TIMES, LET'S CALL IT, FUTURE EARNINGS. WE HAVE A 3.3 TRILLION DOLLARS MARKET CAP. THE MARGIN FOR ERROR THERE,
VERY SMALL WHEN YOU ARE CONSIDERING CHINA? MARTA: THAT IS EXACTLY RIGHT. YOU HAVE IN THE U.S. IS A YIN-YANG IN WHAT YOU SEE IN CHINA. THE VALUATION ARGUMENT IS NOT THERE. OVER THE COURSE OF 2024, LOOKING AT THE MAX SEVEN SELL SAW PRICED ESTIMATED EARNINGS AT THE START OF THE YEAR AROUND 35 AND TODAY IT IS AROUND 40. THAT IS NOT AT THE EXTREME LEVELS WE HAVE SEEN OVER THE PAST FIVE YEARS, BUT IT IS CERTAINLY ABOVE THAT FIVE-YEAR AVERAGE. IT MEANS IT IS GOING TO TAKE A
LOT MORE TO SURPRISE INVESTORS ON THE UPSIDE FOR THERE TO BE A POSITIVE REACTION. WE HAVE SEEN THAT OVER THE COURSE OF THIS YEAR. MOST NOTABLY IN THE SUMMER WHEN NVIDIA LARGELY BEAT EXPECTATIONS, BUT THE MARKET SOLD OFF. I THINK THAT TAKES A LOT OF, MAYBE THAT EXCESS RETURN FEEL AT OF THESE NAMES. CAROLINE: LOOK AT ADOBE.
CASE IN POINT TODAY. THEY MANAGED TO DELIVER ON THIS QUARTER, BUT THE FORECAST NOT LIVING UP TO EXPECTATIONS. I'M INTERESTED IN ALPHABET MANAGING TO REACH TO NEW HEIGHTS. FROM AN ANTITRUST PERSPECTIVE ARE WE PUTTING THAT TO THE BACKSIDE? ARE WE NOT WORRIED ABOUT THE POWER OF THESE MAG SEVENS? MARTA: THE ANTITRUST AND REGULATION CONSIDERATIONS AROUND BIG TECH HAVE BEEN SOMETHING OF AN OVERHANG FOR THESE COMPANIES FOR QUITE SOME TIME. NOW WE ARE STARTING TO SEE THAT COME TO THE FORE A BIT MORE. WHEN WE ARE TAKING A LOOK AT ALPHABET AND LOOKING AT SOME OF THESE CONSIDERATIONS ON THE REGULATION OR ANTITRUST FRONT THERE IS STILL SOME UNKNOWNS, SOME CHALLENGES THAT WILL COME ABOUT AS THESE COMPANIES NAVIGATE EXACTLY HOW THEY ARE GOING TO PLAY OUT WITH ANTITRUST AND WHAT STEPS THEY ARE GOING TO TAKE. I DON'T THINK THAT IS CLEAR,
AND IN THE MEANTIME WE SAW HOW A FUNDAMENTALLY HEALTHY COMPANY THAT LOOKS TO ACCELERATE SOME OF THE OPPORTUNITIES FROM AI. CAROLINE: YOU ARE HELPING OVERSEE $57 BILLION IN MANAGEMENT. I'M INTERESTED WHERE YOU DO SEE THE RISK-REWARD RIGHT NOW? IS IT ABOUT DIVERSIFYING AT THE MOMENT? MARTA: I THINK IT IS HARD TO STEP AWAY FROM MAG SEVEN. MOST OBVIOUSLY BECAUSE IT REPRESENTS A LARGE PART OF THE OVERALL MARKET.
A THIRD OF EVERY DOLLAR IN THE S&P 500 IS GOING TO THESE NAMES. SO, HARD TO DIVERSIFY AWAY FROM THEM COMPLETELY. YET AT THE SAME TIME THEY ARE KEYING OFF A HIGH. THERE IS NOT AS MUCH MARGIN OF SAFETY.
AS WE HEAD INTO 2025 HOUR OUTLOOK CALLS FOR BALANCE OVER CONVICTION. THE WAY TO PLAY THAT, WE THINK, IS TO HAVE A MODEST UNDERWEIGHT TO SOME OF THESE MAG SEVEN NAMES, OR THE BIGGEST COMPANIES IN MARKET CAP, AND ADD IN SOME OF THESE SMALL-CAP AREAS THAT HAVE RELATIVE VALUE IN THEIR CORNER AND TAILWINDS WE START TO THINK ABOUT TRUMP TAX POLICY OR POTENTIALLY-LOWER RATES OVER THE COURSE OF THE NEXT YEAR. CAROLINE: YOU MENTIONED RATES. WHERE SHOULD YOU BE FROM AN ASSET CLASS PERSPECTIVE? IS IT ALL ABOUT EQUITIES? IS IT WORTH GOING INTO THE CREDIT SIDE OF THESE TECH NAMES? MARTA: I THINK WHEN WE ARE TAKING A LOOK AT WHERE RATES ARE HEADED THE EXPECTATION EARLIER IN THE YEAR IS THAT WE WERE GOING TO SEE POTENTIALLY FALLING RATES IN A MEANINGFUL FASHION OVER THE NEXT, CALL IT 12 MONTHS. AS THE ECONOMY HAS COME IN STRONGER AND AS THE MARKET GRAPPLES WITH WHAT TRUMP POLICIES MIGHT LOOK LIKE THE EXPECTATION IS THERE FOR LOWER RATES BUT MAYBE NOT TO THE SAME DEGREE AS PEOPLE HAVE THOUGHT PREVIOUSLY. WHEN WE ARE LOOKING AT THE FIXED INCOME TRADING YIELDS ARE ATTRACTIVE, BUT WE ARE SEEING THIS AS MORE OF A COUPON CLIPPING YEAR AND LESS OF THE TOTAL RETURN YEAR.
WE ARE EXPECTING MORE MODERATE RETURNS ON THE EQUITY SIDE TOO. IN THE SENSE OF RETURNING TO THAT THEME OF BALANCE, FROM AN ASSET CLASS PERSPECTIVE AS WELL. CAROLINE: YOU ARE NOT EXPECTING ANOTHER 100% INCREASE ON NVIDIA FOR THE YEAR? IT IS SO GOOD TO HAVE TIME WITH YOU. APPRECIATE IT. COMING UP, WE ARE EXPECTING A BIG POP WHEN THEY FINALLY OPEN SERVICETITAN GOING PUBLIC. IPO PRICING ABOVE THE RANGE WE ARE EXPECTING A BIG JUMP. WE HAVE THE FOUNDERS JOINING US.
MEANWHILE, SHARES OF WARNER BROS.. WE ARE CURRENTLY SEEING A DIVISION ONCE AGAIN. THEY ARE GOING TO BE PUTTING CABLE ASSETS ON ONE SIDE, STREAMING BUSINESSES ON THE OTHER. DOES THIS HINT AT THE DIRECTION OF TRAVEL POTENTIALLY SELLING OFF OR DOING OPPORTUNISTIC DEALS? THAT IS WHAT DAVID ZASLAV HAS BEEN TALKING ABOUT. WE ARE UP 14%. THIS IS "BLOOMBERG TECHNOLOGY." CAROLINE: SERVICETITAN HITS THE PUBLIC MARKETS IN WHAT COULD BE THE LAST U.S. IPO OF 2024.
SHARES INDICATED TO JUMP TO $109 AFTER THEY WERE PRICED AT $71. ARA MAHDESSIAN IS HERE. HOW DO YOU FEEL IN THE STATE? ARA: WE ARE VERY EXCITED. IT IS AN IMPORTANT DAY FOR OUR COMPANY, BUT MORE IMPORTANT FOR THE INDUSTRY WE SERVE. THINK OF THIS AS THE NATIONAL DAY OF THE TRADES AND WE CELEBRATE AND HONOR ALL OF THE HARD WORK AND ASSAULT OF THE YOUTH CONTRACTORS WHO WORKED SO TIRELESSLY TO SERVE THEIR COMMUNITIES. CAROLINE: BOTH OF YOU HAD FATHERS, IMMIGRANT FATHERS COMING INTO THE UNITED STATES AS CONTRACTORS, AS PLUMBERS.
YOU ARE SOLVING THEIR PROBLEMS. HOW DIFFERENTIATED IS YOU ARE OFFERING FROM A TECHNOLOGY PERSPECTIVE? VAHE: WE LIKE TO THINK WE PROVIDE BUSINESS IN A BOX, THAT PROVIDES A SOLUTION THAT GIVES ANYTHING YOU NEED TO RUN A SUCCESSFUL TRADES BUSINESS. WHEN WE WERE GROWING UP WE SAW THE STRUGGLE OUR PARENTS HAD, RUNNING THE BACK OFFICE, SHOEBOXES FULL OF RECEIPTS. HE KNEW WE HAD TO DO SOMETHING. THAT IS OUR BIG FOR NGA SHOULD. IT IS ALL UNDER ONE ROOF
SOLUTION FOR THIS INDUSTRY. CAROLINE: WE SEE THE TEAM BEHIND YOU. YOU ARE SERVING 100,000-PLUS CONTRACTORS. YOU HAVE ABOUT A $7 BILLION VALUATION. IT IS GOING TO BE MORE THAN THAT AT THE OPEN. IS THERE A CONCERN YOU LEFT MONEY ON THE TABLE, YOU COULD HAVE RAISED MORE THAN SIX ON A $25 MILLION? ARA: WE ARE FOCUSED ON THEIR THINGS WE CAN CONTROL. THAT IS OUR CUSTOMERS,
DELIVERING SUCCESS FOR THEM. THAT HAPPENS TO DRIVE OUR OWN FINANCIAL SUCCESS. THIS IS OUR LIFE'S WORK. WE HAVE PUT OVER A DECADE INTO BUILDING THIS BUSINESS. WE ARE EXCITED FOR THIS NEXT CHAPTER IN OUR JOURNEY, WHERE WE GET TO PARTNER WITH LONG-TERM INVESTORS WHO WANT TO SUPPORT THAT JOURNEY WITH US. CAROLINE:
WHAT IS IN CONTROL IS YOUR CONTROL OF THE COMPANIES. YOU REMAIN MAJORITY SHAREHOLDERS FROM A VOTING PERSPECTIVE. THEREFORE, WHAT DO YOU ALLOCATE THIS MONEY RAISED INTO? OR DO YOU PUSH TO EXPAND THE BUSINESS? VAHE: OUR MISSION IS TO BUILD THE OPERATING SYSTEM FOR THE TRADES. THAT IS OUR NUMBER ONE PRIORITY. THE WHEELED -- WE ARE RAISING TODAY IS GOING TO GO PRIMARILY TO CONTINUING TO AN -- 20 EVOLVE THE PRODUCT AND MAKE SURE THIS INDUSTRY IS NOT LEFT BEHIND FROM A TECHNOLOGY PERSPECTIVE, LIKE OUR PARENTS WERE GROWING UP. CAROLINE:
SPELL OUT WHAT TECHNOLOGICAL INNOVATION YOU CANNOT PRESENT. HOW DOES THIS INNOVATE CHECK OF IS IT ABOUT TALENT? IS IT ABOUT INTEGRATING GENERATIVE AI? WHAT IS THE PRODUCT GO FROM HERE? ARA: IT IS INTERESTING YOU MENTIONED AI. IT IS ALL MOST IRONIC THAT SUCH A BLUE-COLLAR STORY HAS COMPLICATIONS FOR AI. THIS IS NOT HYPED, THIS IS ALREADY REALITY. SERVICETITAN OFFERS THREE AI-BASED PRODUCTS FOR THINGS LIKE OPTIMIZING HOW CONTRACTORS DO MARKETING, AUTOMATING HOW THEY DO SCHEDULING AND DISPATCHING, AND IMPROVING THE LEVEL OF SERVICE THEY PROVIDE. OUR CUSTOMERS ARE ALREADY
ADOPTING AND UTILIZING. CAROLINE: THE TEAM IS HAVING FUN BEHIND YOU. IT IS GOOD TO SEE. I'M INTERESTED IN, HE SAID THESE LONG-TERM INVESTORS YOU ARE GOING TO HAVE. THESE INSTITUTIONAL INVESTORS COME ON BOARD, BUT A LOT OF PEOPLE KEEP THE OVERALL EXPOSURE. HAPPENS WITH ICONIC GROWTH?
DO YOU THINK THIS IS THEM EXITING MORE FULLY? I DO YOU SEE YOUR INVESTOR BASE CHANGING? VAHE: YOU HAVE TO ASK THEM. AS FAR AS WE ARE CONCERNED WE ARE FOCUSED ON THE MISSION AND BRINGING ON A NEW FAMILY OF LONG-TERM SHAREHOLDERS THAT WE HOPE TO DELIVER A SIMILAR LEVEL OF SUCCESS AS WE DID OUR ORIGINAL BATCH THAT BELIEVED IN US. WE TAKE THE TRUST VERY SERIOUSLY AND WE INTEND TO BE GREAT STEWARDS OF THEIR CAPITAL AS WE DEPLOY IT TO CREATE MORE OPPORTUNITIES FOR OUR CUSTOMERS. CAROLINE: I'M GOING TO GO A SLIGHTLY DIFFERENT DIRECTION HERE, BUT YOU ARE FROM PARENTS OF IMMIGRANTS. YOU ARE THINKING ABOUT SERVICING THE CONTRACTORS IN THE UNITED STATES. WHAT DOES YOUR CLIENT BASE LOOK LIKE IN 2025? ARA: OUR CUSTOMERS HAVE, THANKFULLY, THRIVED THROUGH MANY MACROECONOMIC SITUATIONS. IT IS SIMPLY BECAUSE THE WORK
THEY DO IS SO CRITICAL, IT IS SO ESSENTIAL. WHEN YOUR AIR CONDITIONING IS NOT WORKING OR YOUR HEATER GOES OUT IN THE DEAD OF WINTER, OR YOUR PLUMBING BREAKS DOWN RIGHT BEFORE YOUR FAMILY GATHERING YOU HAVE TO GET THAT FIXED, AND GET THAT FIXED IMMEDIATELY. OUR CUSTOMERS ARE THOSE UNSUNG HEROES THAT OFTEN FLY ACROSS TOWN TO TAKE CARE OF THE COMMUNITIES THEY SERVE. CAROLINE: WHO HAS BEEN SERVING YOU IN THIS IPO ARE GOLDMAN SACHS, MORGAN STANLEY, WELLS FARGO, CITIGROUP, 10 OTHER BANKS WORKING ON THE DEAL. IF YOUR SHARES DO POP BY MORE THAN 100% DO YOU THINK THEY HAVE DONE A GOOD JOB OR BAD JOB? VAHE: WE HAVE BEEN INCREDIBLY GRATEFUL TO THE PARTNERS WE HAVE HAD THROUGHOUT THIS PROCESS. THIS IS OUR FIRST TIME DOING THIS, SO HAVING PEOPLE WE TRUST AROUND THE TABLE, SHEPHERDING US THROUGH THE PROCESS HAS BEEN REALLY GREAT.
FOR US IT DOES NOT MATTER WHERE THE PRICE ENDS TODAY. WE ARE FOCUSED ON THE LONG-TERM AND WHAT WE CARE ABOUT IS BUILDING A GENERATIONAL BUSINESS. CAROLINE: AT THE MOMENT THE BUSINESS IS LOSSMAKING. IS THAT GOING TO CHANGE INTO 2025? ARA: WE ARE GRATEFUL TO BE CASH FLOW POSITIVE, AND HAVE BEEN FOR THE PAST FEW QUARTERS. THAT PUTS US IN CONTROL OF OUR DESTINY AND ALLOWS US TO CONTINUE TO INVEST IN THE SUCCESS OF OUR CUSTOMERS, WHICH IS WHAT IS ULTIMATELY GOING TO DRIVE OUR OWN SUCCESS. THE SAME THING THAT HAS GOTTEN
US TO THIS POINT IS THE SAME THING THAT IS GOING TO GET US TOWARD THIS MISSION OF BUILDING THE SYSTEM FOR THE TRADES. CAROLINE: COME BACK AS YOU CONTINUE TO SERVE US. SERVICETITAN CEO ARA MAHDESSIAN. THANK YOU VERY MUCH, INDEED, BOTH OF YOU.
META, $1 MILLION TO DONALD TRUMP'S INAUGURAL FUND. THIS IS "BLOOMBERG TECHNOLOGY." ♪ CAROLINE: GOOGLE, SAMSUNG, JUST UNVEILING A JOINT PUSH INTO MIXED REALITY, INTRODUCING A HEADSET AND GLASSES VERSION OF ANDROID IN A IT TO RIVAL APPLE AND MENA. IT WILL ALLOW A RANGE OF COMPANIES TO DESIGN THE DEVICES, BOTH HEADSETS AND LIGHTER-WEIGHT CLASSES, WHILE TAKING ADVANTAGE OF THE LATEST AI ADVANCES TOO? WE MOCK, CHINA'S INSTAGRAM-STYLE APP ON TRACK TO DOUBLE PROFITS IN 2024 AHEAD OF A POTENTIAL IPO. THE APP TOOK ON -- TOOK OFF AMONG THE YOUNGER CHINESE DURING THE PANDEMIC.
PARTLY AT THE EXPENSE OF ALIBABA AND JD.COM. LET'S BRING IT HOME TO META HERE, BECAUSE IT HAS JUST DONATED ONE MILLION DOLLARS TO DONALD TRUMP'S INAUGURAL FUND. IT IS PART OF AN EFFORT TO BUILD A POSITIVE RELATIONSHIP WITH THE ADMINISTRATION. KURT WAGNER JOINS US NOW. FIRST OF ALL, ONLY $1 MILLION. THIS IS A DROP IN THE POCKET OF WHAT MEDIC COULD AFFORD, BUT IT IS A SIGNAL HERE. KURT: THIS IS SYMBOLIC, RIGHT? THIS IS NOT ABOUT THE NUMBER OF DOLLARS GOING TO THIS FUND. IT IS A SIGNAL FROM META AND
MARK ZUCKERBERG THAT THEY ARE SUPPORTING THE INCOMING PRESIDENT. WE HAVE SEEN ZUCKERBERG MOVE IN THIS DIRECTION OVER THE LAST COUPLE OF MONTHS. HE HAS REACHED OUT TO TRUMP ON THE PHONE.
HE HAD DINNER AT MAR-A-LAGO WITH PRESIDENT-ELECT TRUMP RIGHT BEFORE THANKSGIVING. THIS IS A CONTINUATION OF THAT, SIGNALING THAT THE COMPANY WANTS TO BUILD A RELATIONSHIP AND GET IN HIS GOOD GRACES. CAROLINE: A LOT IS ON THE LINE WHEN WE ARE THINKING ABOUT A POTENTIAL BAN OF TIKTOK IN THE UNITED STATES.
THEY WERE EVEN THREATS AT ONE POINT THAT TRUMP HAD A REAL FOCUS ON MARK ZUCKERBERG HIMSELF. BUT ULTIMATELY WHERE DOES THAT TAKE US? TAKE US BACK TO THE CONTEXT OF WHERE WE LEFT LAST DIMINISHED RATION. KURT: IT WAS NOT THAT LONG AGO THAT CANDIDATE TRUMP WAS ON THE TRAIL TALKING ABOUT HOW FACEBOOK WAS THE ENEMY OF THE PEOPLE AND MARK ZUCKERBERG, YOU KNOW, SUGGESTING HE WOULD EVEN PUT HIM IN JAIL OVER WHAT HAPPENED DURING THE 2020 ELECTION. THIS IS A STRIKING CHANGE IN RELATIONSHIP FOR THOSE TWO. I THINK WHEN YOU LOOK AT, WHAT DOES META HAVE TO GAIN? HER HEART -- PERHAPS MARK ZUCKERBERG IS TRYING TO CURRY FAVOR. WE ARE NOT ENTIRELY SURE WHAT
TRUMP AND HIS ADMINISTRATION ARE GOING TO DO AROUND TECH REGULATION. IF YOU ARE MET ON THE LAST THING YOU WANT IS TO HAVE ALL OF YOUR AI PRODUCTS REGULATED, THE METAVERSE HEAVILY REGULATED. THE MORE HE COMES IN AND BUILD THAT RELATIONSHIP WITH TRUMP THE HOPE IS THAT IT WILL BE RETURNED IN SOME TYPE OF FAVORABLE PATHWAY. CAROLINE:
HOW DO EMPLOYEES FEEL ABOUT IT? KURT: I'M SORRY? CAROLINE: HOW DO EMPLOYEES FEEL ABOUT IT? KURT: I DON'T KNOW. TRUMP IS SUCH AN UNPREDICTABLE PERSON THAT ALL OF THESE RELATIONSHIPS, ON THE ONE HAND IT IS A SMART BUSINESS MOVE MARK ZUCKERBERG. I THINK PEOPLE FEEL DIFFERENTLY IN 2024 THAN THE FIRST TIME THEY DID IN 2016, WHEN WE SAW EMPLOYEES PUSH BACK AND COMPLAIN INTERNALLY. I THINK PEOPLE KNOW WHAT TO EXPECT THIS TIME AROUND. OR AT LEAST THEY THINK THEY DO. WE ARE NOT SEEING THAT PUSHBACK WE HAD BEFORE, BUT A LOT OF THAT IS BECAUSE WE DON'T KNOW WHAT THIS IS GOING TO LOOK LIKE LONG-TERM.
WE STILL HAVE NOT GONE TO INAUGURATION YET. AT THIS POINT IT IS INITIAL REACH OUT. CAROLINE: SO GREAT TO HAVE YOU. MEANWHILE, WE GET A READ ON THE CONSUMER.
CAROLINE: WELCOME BACK TO "BLOOMBERG TECHNOLOGY." I AM CAROLINE HYDE IN NEW YORK. THE NASDAQ IS COMING OFF RECORD HIGHS WE SAW YESTERDAY. BITCOIN UP .3%, 102,000 DOLLARS. A NEW ACTIVIST INVESTOR COMING ON BOARD. HOW WILL THEY REINVIGORATE THIS CRYPTO MINOR? THE CLOUD PERSPECTIVE.
UP 8.5%. WE WANT TO SHINE A LIGHT ON WHAT IS HAPPENING IN THE WORLD OF FINTECH, PAYMENTS, KLARNA. SHINING A LIGHT ON ADOBE. OFF BY 13%. FORECAST NOT LIVING UP TO EXPECTATIONS. WE MIGHT SEE A RESTRUCTURING WITH WARNER BROS.
UP 15% ON THAT NAME. BACK TO THE FINTECH SIDE OF THINGS. KLARNA HAS SAID THEY ARE ABLE TO USE AI TO SAVE IT AND ITS CUSTOMERS MONEY THIS HOLIDAY SEASON. LET'S DIG INTO IT WITH KLARNA CEO SEBASTIAN SIEMIATKOWSKI. GREAT TO HAVE YOU IN THE STUDIO. HOW ARE YOU ALL IN ON AI KLARNA? UPDATING FINANCIALS USING A GENERATED AI VERSION OF YOU. HOW ARE YOU TRYING TO SIGNAL THAT PRODUCTIVITY CAN BE LIMITLESS? SEBASTIAN: I AM OF THE OPINION AI CAN ALREADY DO ALL THE JOBS WE ASK HUMANS TO DO IT IS JUST A QUESTION OF HOW WE USE IT.
WHEN I MET SAM AND TALK TO HIM ABOUT THIS, WE SENT A LOT OF JOBS WILL BE THREATENED. ONE OF THE JOBS PEOPLE LIKE THE LEAST ARE LAWYERS, CEOS AND BANKERS. LET'S REPLACE OUR JOBS OF FIRST. WE ARE TRYING TO PLAY INTO THE NARRATIVE. CAROLINE: YOU ALREADY PLAYED INTO IT BY ARTICULATING HOW MANY CUSTOMER SERVICE REPS YOU DO NOT HAVE TO HIRE GOING FORWARD. YOU SEEM EASY-GOING ABOUT AI REPLACING YOU BUT HOW DO YOUR EMPLOYEES FEEL? SEBASTIAN: WE STOPPED HIRING ABOUT A YEAR AGO. WE WERE 4500 AND NOW WE ARE 3500.
WE HAVE A NATURAL ATTRITION. 20% LEAVE EVERY YEAR. WHAT WILL HAPPEN IS THE TOTAL SALARY COST OF KLARNA WILL SHRINK BUT PART OF THE GAIN WILL BE SEEN IN YOUR PAYCHECK. WE WILL GIVE SOME OF THE IMPROVEMENTS BY INCREASING THE PACE THAT SALARIES INCREASE. THAT IS BECAUSE OF THE MESSAGE BEING CONSISTENT FOR THE LAST YEAR. PEOPLE ARE RALLYING. IT HAS DIRECT IMPLICATIONS ON EQUITY AND CASH COMPENSATION FOR WORKING AT KLARNA. CAROLINE: OTHER THAN CUSTOMER SERVICES,
HOW ELSE HAVE YOU FELT THE BENEFITS? SEBASTIAN: IT IS ACROSS-THE-BOARD. YOU CAN USE IT FOR SO MANY USE CASES. IN THE COMPANY RIGHT NOW WITH THE 3500, THERE IS A CORE GROUP OF 200 WHO HAVE LEARNED TO APPLY IT PRACTICALLY, TO DEPLOY IT FOR PURPOSES. GENERATING IMAGES, VIDEOS, MARKETING MATERIAL, RUNNING FINANCIAL ANALYSIS, INTERPRETING CUSTOMERS' NEEDS, ENGINEERING. ENDLESS OPPORTUNITIES TO DEPLOY IT FOR OPPORTUNITIES. CAROLINE:
YOU FILE CONFIDENTIALLY WITH THE SEC SO I WILL NOT ASK YOU TO COMMENT BUT YOU HAVE BEEN STEERING US TOWARD HOW MUCH YOU HAVE SEEN AN INCREASE IN REVENUE. THERE IS STILL A VERY SMALL LOSS. IS IT PRODUCTIVITY GAINS THAT HELP TO GET THE PROFITABILITY? SEBASTIAN: IT WOULD BE PART THAT BUT ALSO GROWTH. WE HAVE A HEALTHY MARGIN IN OUR U.S. BUSINESS AND IN OUR EUROPEAN BUSINESS.
AS THAT CONTINUES TO GROW THAT HELPS WITH PROFITABILITY. IT WAS REPORTED DURING BLACK FRIDAY THAT CREDIT CARD SALES WERE UP 11%. THERE IS A MAJOR SHIFT GOING ON AWAY FROM CREDIT CARDS. CAROLINE: EVERYWHERE, WHEN YOU CLICK ON THE WEBSITE AND TRY TO PAY, WHEN YOU ARE ON APPLE PAY, HOW MUCH MORE IS THERE TO BRING IN IN THE U.S.? SEBASTIAN: TWO THINGS. THE CREDIT CARD INDUSTRY IS A $1 TRILLION MARKET AND WE ARE A TINY PIECE OF THAT. IN THE U.S. THERE IS $1.3 TRILLION IN CREDIT CARD DEBT.
THE CONSUMERS THAT HAVE USED KLARNA BY HAVING INTEREST REPAYMENTS HAVE SAVED OVER $2 BILLION BY USING KLARNA INSTEAD OF CREDIT CARDS. THIS BUSINESS MODEL WILL PRESENT A SERIOUS THREAT TO CREDIT CARD COMPANIES BECAUSE IT IS IT IS HEALTHIER FOR CONSUMERS. CAROLINE: I AM SURE THEY LOVE THAT. I KNOW YOU HAVE FELT THEY HAVE
COME FOR YOU IN SOME WAY. HOW SUPPORTIVE DO YOU THINK THE NEW ADMINISTRATION IN THE U.S. WILL BE? SEBASTIAN: I THOUGHT IT WAS INTERESTING THAT IS MUCH AS TRUMP HAS BEEN TALKING ABOUT THE REGULATION, THERE WAS ONE THING HE SAID IN THE OPPOSITE DIRECTION. WE SHOULD PUT AN INTEREST RATE
CAP ON CREDIT CARD FEES AT 10%. BERNIE SANDERS JUMPED ON IT. IN EUROPEAN MARKETS THERE IS A 20% CAP. IN THE U.S. THE AVERAGE INTEREST RATE ON CREDIT CARDS IS 24%. HE ALSO ANNOUNCED RECENTLY THAT IF YOU INVEST $1 BILLION IN THE U.S. WE CAN ACCELERATE LICENSING.
KLARNA'S BANK IN EUROPE, WE WANT TO BECOME A BANK IN THE U.S. WE WANT TO SPEED UP OUR LICENSING APPLICATIONS. WE ARE MORE THAN HAPPY TO DO THAT $1 BILLION COMMITMENT. WE WANT TO CREATE REAL COMPETITION. YOU CAN CAP INTEREST RATES AS ONE WAY TO GET AWAY FROM THE TREMENDOUS COST TO SOCIETY. OR WE CAN CREATE MORE COMPETITION AND WE ARE HAPPY TO COME IN AND INCREASED COMPETITION. CAROLINE:
WE STARTED ON AI AND WE WILL END WITH AI. TALKING ABOUT HOW YOU WERE USING THIS JENNIFER OF AI VERSION TO UPDATE YOUR NUMBERS -- GENDER -- THEIR ISSUE BUT NOT YOU. SEBASTIAN: LOOK, THE CHALLENGE IS UNFORTUNATELY THAT EUROPE HAS TAKEN A DIFFERENT PATH. THEY WANT TO REGULATE BEFORE
THEY KNOW WHAT TO REGULATE. IN THE U.S. WE HAVE THE PREFERENCE OF LETTING IT PLAY OUT AND SEE IF IT NEEDS TO BE REGULATED. I AM NOT AN ANARCHIST. I THINK SOME RULES ARE HELPFUL. IN GENERAL WE NEED TO MAKE SURE
THE DEMOCRATIC WORLD IS AHEAD IN AI VERSUS THE NONDEMOCRATIC WORLD. IT IS IMPORTANT WE DO NOT OVERREGULATED TO EARLY. A SIMPLE RULE BEEN SUGGESTED IN BRUSSELS IS MAYBE IT SHOULD BE LEGALLY OBLIGED THAT IF YOU COMMUNICATE WITH SOMEONE ON THE SCREEN AT LEAST YOU HAVE TO TELL IF IT IS AI OR HUMAN. THERE ARE BASIC RULES THAT WE CAN APPLY THAT CAN MAKE COMMON SENSE, THAT COULD MAKE SENSE TO PURSUE.
OTHER THAN THAT I WOULD BE ON THE SIDE OF ALLOW US TO INNOVATE AND PUSH THE ENVELOPE AND SEE WHAT TECHNOLOGY CAN DO. CAROLINE: SEBASTIAN, IT IS GREAT TO HAVE YOU. MANY IN THE MARKET EXPECT TO SEE MORE OF YOU IN 2025. SEBASTIAN SIEMIATKOWSKI, KLARNA CEO. A VALUATION OF $2.5 BILLION. WALMART IS SEEKING TO PUSH INTO THE FINANCIAL SERVICES SECTOR. 3 MILLION MONTHLY ACTIVE USERS.
IT COULD POSE A THREAT TO TRADITIONAL BANKS. ONE IS A TRADITIONAL COMPANY OUTSIDE OF WALMART WHILE THE RETAILER MAINTAINS CONTROL. COMING UP WE WILL BE JOINED BY INDEX VENTURES PARTNER NINA ACHADJIAN TO TALK ABOUT THE IPO OUT OF 2025. WE ARE WAITING ON THE OPENING
TRADE. THIS IS "BLOOMBERG TECHNOLOGY." ♪ STEPH CURRY TONIGHT ON BLOOMBERG TELEVISION AT 10:00 EASTERN. >> FOR US, THIS IS OUR LIFE'S WORK. I HAVE PUT OVER A DECADE INTO BUILDING THIS BUSINESS. WE THINK ABOUT THIS BUSINESS FOR YEARS AND DECADES TO COME.
WE ARE EXCITED ABOUT THE NEXT CHAPTER WHERE WE PARTNER WITH LONG-TERM INVESTORS. CAROLINE: THAT WAS A CEO SPEAKING WITH US EARLIER. SOMEONE WHO WILL BE KEEPING A CLOSE EYE ON HOW THOSE SHARES TRADED AT THE OPEN AND THE LONG-TERM TRAJECTORY OF THE BUSINESS, NINA ACHADJIAN, INDEX VENTURES. IS THIS SPELLING THE WAY OF THINGS TO COME IN 2025? STRONG BUSINESSES WILL GET A GOOD EXIT? NINA: THANK YOU FOR HAVING ME. IT IS GREAT TO BE HERE. WE ARE EXCITED TO CELEBRATE SERVICE TIGHTEN'S IPO. -- SERVICE TITAN'S IPO.
WE HAVE A NEW ADMINISTRATION GOING FORWARD. MAY BE SOME DIFFERENT REGULATION AROUND AI. WE HOPE THIS WILL BE A TAILWIND FOR A GREAT CROP OF OTHER FANTASTIC PRIVATE COMPANIES TO GO PUBLIC. CAROLINE: TAKE US BACK TO THE JOURNEY OF HOW IT STARTED. WHAT WERE THE KEY LEARNINGS FROM MAKING THE FIRST CHECKED IN TO THEM AND THEIR TRAJECTORY? NINA: WHEN WE MAKE INVESTMENTS IT IS REALLY ALL ABOUT THE ENTREPRENEURS. IT IS HARD TO FIND A MORE
MISSION DRIVEN SET OF COFOUNDERS. AS THEY SHARED, THEY REALLY BUILT THIS BUSINESS TO SOLVE A PROBLEM THEIR DADS HAD. THIS MARKET IS ENORMOUS. ONE OF THE BACKBONES OF AMERICA AND WHAT REALLY DRIVES THEM IS BRINGING CUTTING EDGE TECHNOLOGY , EVEN AI, THROUGH SOME OF THESE INDUSTRIES THAT WERE VERY MUCH FORGOTTEN BY TECHNOLOGY. CAROLINE: A LOT OF THEM HAVE NOT BEEN FORGOTTEN. I AM SURE -- WE KEEP SEEING
MORE AND MORE UPENDING OF WHETHER PEOPLE ARE TRYING TO GET MONEY FROM US, TRYING TO BE ABLE TO PENETRATE BUSINESSES, WHAT ARE THE OTHER TAILWINDS GOING INTO 2025? NINA: IDENTITY WILL BE VERY IMPORTANT. EVERYONE IS TALKING ABOUT AI AGENTS. HOW IMPORTANT IT WILL BE TO PROVE YOU ARE A HUMAN BEING AND THE PERSON YOU SAID YOU ARE. ONE OF OUR COMPANIES, PERSONA, THAT STARTED DOING KYC FOR A LOT OF CRYPTO COMPANIES, IS BEING USED BY LEADING EDGE AI COMPANIES TO MAKE SURE THE PERSON USING THE LMM ON THE OTHERS IT IS WHO THEY SAY THEY ARE.
WE WILL SEE COMPANIES LIKE THIS IN THE WAKE OF THE TECHNOLOGICAL SHIFT AI HAS BROUGHT TO THE WORLD. CAROLINE: I AM INTERESTED ABOUT SOME OF THE VALUATIONS YOU ARE SEEING ON THESE AI ADJACENT BUSINESSES. ARE YOU STILL ABLE TO GET IN AT A DECENT PRICE? NINA: THE VALUATIONS ARE STILL PRETTY HIGH FOR AI AND IT IS A TALE OF TWO CITIES. IF YOU ARE AN AI COMPANY YOU GET A PREMIUM. I THINK 2025 WILL BE ALL ABOUT SHOW ME THE ROI OF INVESTING AND BUYING AI. A LOT OF COMPANIES THAT ARE
INDUSTRY-SPECIFIC AI SOLUTIONS WILL PROBABLY HAVE A FRONT ROW SEAT TO DEMONSTRATE HOW THEY HAVE EMBEDDED AI INTO THEIR VALUE PROPOSITION FOR THEIR END CUSTOMERS THAT HAS OF THEM GENERATE REVENUE OR SAVE COSTS. IT WILL BE INTERESTING TO SEE HOW THE NUMBERS COME OUT IN 2025 ON ROI. CAROLINE: THERE HAS BEEN A LOT OF HANDWRINGING. WHEN YOU HEAR NONSTOP -- ARE YOU SLIGHTLY THINKING THIS IS A HYPE OR IS THIS REAL PRODUCTIVITY? NINA: YOU HAVE TO THINK OF INVESTMENTS AND TRENDS AS BOTTOMS UP AND TOPS DOWN. WE HAVE FOUNDATIONAL MODELS THAT HAVE BEEN INCREDIBLE. 2023 AND 2024 HAVE BEEN ABOUT, HOW DOES THE DUST SETTLE ON HOW WE USE THIS TECHNOLOGY? BOTTOMS UP AND STARTING WITH A CUSTOMER PROBLEM. WHAT IS THE PROBLEM YOU ARE
WILLING TO SOLVE AND HOW MUCH ARE THEY WILLING TO PAY? WE ARE IN THE EARLY INNINGS OF THAT. THAT WILL BE THE FUTURE OF AI INVESTMENTS. CAROLINE: IT WILL BE A BUSY 2025. COME BACK AND JOIN US. CONGRATULATIONS ON THE DAY WITH SERVICE TITAN.
NOW IT IS TIME FOR TALKING TECH. A SECOND LISTING IN HONG KONG. THE COMPANY IS SAID TO BE SPEAKING TO PROSPECTIVE ADVISORS THAT COULD HELP IT RAISE MORE THAN $1 BILLION. PRESIDENT-ELECT TRUMP HAS GIVEN AN INTERVIEW TO TIME MAGAZINE FOR BEING NAMED THE PERSON OF THE YOUR FOR THE SECOND TIME.
IT TOUCHED ON GEOPOLITICS AND EV'S. HE SAID THE EV MANDATE IS A DISASTER. THIS AFTER BLOOMBERG SPOKE TO THE LUCID CEO THAT SAID PRESIDENT-ELECT TRUMP COULD BE A TAILWIND FOR AUTOS.
>> I THINK BOTH TRUMP AND ELON MUSK ARE ACCOMPLISHED A BUSINESSMEN. JOBS IN AMERICA. WHAT WE ARE DOING IS CREATING GREAT JOBS, HIGH-TECH JOBS. TAKE AWAY EV'S, IT IS A CAR. AUTOMOTIVE JOBS IN MIDDLE AMERICA. GREAT, HIGH-QUALITY, HIGH-TECH
JOBS. CAROLINE: ELON MUSK HAS BECOME THE FIRST EVER PERSON IN THE WORLD TO REACH $400 BILLION OF NET WORTH. HIS NET WORTH WAS BOOSTED BY $50 BILLION. SHARES HAVE RALLIED TO ALL-TIME HIGHS. COMING UP, ADOBE NOT AT ALL-TIME HIGHS. DOWN 10%.
DISAPPOINTING IN TERMS OF A WEAKER SALES OUTLOOK. WE WILL DIG IN. THIS IS "BLOOMBERG TECHNOLOGY." ♪ CAROLINE: CHECK OUT SHARES OF ADOBE. SIGNIFICANTLY LOWER TODAY AFTER THE COMPANY POSTED DISAPPOINTING SALES FORECASTS. RISING COMPETITION FROM AI START UPS. $30 BILLION HAS BEEN WIPED OUT OF THE MARKET CAP. CANNOT GET THIS AI ADOPTION TO
BEAR FRUIT. >> THE QUESTION FOR EVERY COMPANY HAS BEEN, IS AI GOING TO BE A TAILWIND OR DISRUPT YOUR BUSINESS? THE CONSTANT FEAR FOR ADOBE IS THESE NEWER LIGHTWEIGHT TOOLS CAN COME OUT AND IF YOU CAN GENERATE SOMETHING, WILL YOU NEED TO PAY FOR AS MANY PHOTOSHOP LICENSES? THEY ARE PING-PONG THE IDEA OF WHETHER IT IS A DISRUPTION OR TAILWIND. HAVING THEIR OWN PHOTO AND VIDEO MODELS. SUCH A COMPETITIVE MARKET. FOLKS ARE GETTING MORE ANXIOUS ABOUT ADOBE. CAROLINE: THE LATEST INNOVATIONS FROM FIREFLY IN TERMS OF VIDEO GENERATIONS WILL TAKE UNTIL 2025. HOW CAN THEY SAID THE SUBSCRIPTIONS WILL GO HIGHER? BRODY: WHAT ADOBE HAS CONSISTENTLY SAID IS RIGHT NOW WE ARE OPTIMIZING.
THEY HAVE A REPUTATION WITH THEIR USER BASE OF CHARGING A LOT FOR THINGS AND THEY DO NOT WANT TO REINFORCE THAT. WE ARE GOING TO OPTIMIZE AND MAKE SURE EVERYONE IS USING OUR STUFF BEFORE WE JACK UP THE PRICES. WILL YOU EVER BE ABLE TO GET THAT PRICING LEVERAGE? THAT IS THE BIG INVESTOR ANXIETY. CAROLINE: CUSTOMERS, THERE SEEMS TO BE A DISCONNECT.
CUSTOMER SAY THEY LOVE IT. IT IS THE INVESTOR BASE THAT REMAINS ON SUEDE. BRODY: ADOBE'S GENERAL THESIS IS IF YOU ARE USING A PRODUCT LIKE PHOTOSHOP THAT YOU WANT AN AI TOOL THAT YOU CAN JUST CIRCLE CAROLINE AND SAY, "ADD A DIFFERENT CHAIR." YOU DO NOT WANT THE AI PLUG-IN. WITH CREATIVE SOFTWARE, IF YOU ARE THINKING ABOUT A SALESFORCE OR MICROSOFT, THE FACT YOUR DATA IS ALL IN THERE IS HARD TO REPLICATE. IF YOU ARE CREATING AN IMAGE THAT REQUIRES LESS CONTEXT AND MAY BE THE SWITCHING IS MORE LIKELY FOR USERS. CAROLINE: MORE FESTIVE SWEATERS.
BRODY FORD IN HIS FESTIVE SWEATER. WE APPRECIATE IT. SET TO ANNOUNCE FOURTH-QUARTER RESULTS. INVESTORS HOPE THE COMPANY WILL SHOW THE OUTPERFORMANCE IN THEIR STOCK IS SHOWING IN TERMS OF AI DEMAND FOR ITS NETWORKING CHIPS. IT RALLIED HARD YESTERDAY ON THE NEWS THE INTERPRETATION THEY WILL BE WORKING CLOSER WITH APPLE GOING FORWARD. CAN THEY VINDICATE THE 60%
RUN-UP? >> THEY ARE SET UP FOR THAT. WE EXPECT A STRONG 4Q DRIVEN BY THE SEASONAL IPHONE RAMP AND STRONG GROWTH IN AI REVENUES. THE NON-AI CHIP BUSINESS TURNING THE CORNER. WITH THINK THE FOCUS WILL BE ON TWO KEY AI METRICS. ONE IS THE 1Q OUTLOOK.
THERE IS A LOT OF EXPECTATION OF GETTING A NEW FULL YEAR FISCAL AI GUIDE. I THINK IF THEY COME UP WITH THAT NEW GUIDED WOULD BE GOOD. CAROLINE: TALK TO US ABOUT WHERE THE CUSTOMER BASE IS COMING FROM AND HOW DIVERSE THAT LOOKS.
>> AS A WHOLE COMPANY THEY ARE VERY DIVERSE. 40% FROM SOFTWARE AND THE REST FROM CHIPS. THE FOCUS IS ON THE CUSTOM SIDE, AI REVENUES. THEY HAVE BEEN EXPANDING THE CUSTOMER BASE.
IT IS DRIVEN PRIMARILY BY ONE LARGE CUSTOMER. AS WE GO INTO 2025, THEY HAVE THE SECOND CUSTOMER RAMPING. WE SEE DIVERSIFICATION GETTING BETTER OVER TIME. CAROLINE: IT HAS BEEN EXPOSED TO THE BEST AND THE WORST OF THE CHIP SECTORS OF LATE. NOW, WE WILL ALSO BE KEEPING A CLOSE EYE ON WHAT IS HAPPENING WITH INTEL. WE WILL WATCH THOSE PARTICULAR SHARES AS WE ANTICIPATE A 1.5% HIGHER GUIDE.
WE COULD BE SELLING SOME OF OUR POSITION OVER TIME. THAT IS WHAT IS BEING ARTICULATED. THE CFO SAYING THERE WILL BE A BIG REDUCTION. THEY PLAN TO ULTIMATELY TAKE IT PUBLIC. THEY WILL BRING IN FINANCIAL PARTNERS FOR THAT UNIT.
WE ARE GETTING MORE GUIDANCE FROM THE EXECUTIVES HOW THEY LOOK TO SELL MORE OF THE MOBILIZED STEAK OVERTIME. THIS IS AT A BARCLAYS CONFERENCE. WE ARE SEEING A SEPARATION. NOW, THAT DOES IT FOR THIS EDITION OF "BLOOMBERG TECHNOLOGY ." ALL THINGS CHIPS, ALL THE TIME. DO NOT FORGET TO CHECK OUT OUR PREP TEST -- PODCAST. THIS IS
"BLOOMBERG TECHNOLOGY."
2024-12-14 22:23
