Hello, I'm Stephen Carroll. I'm in Brussels, where many of Europe's biggest decisions get made. And I'm Caroline Hepker in London. We're the hosts of the Bloomberg Daybreak Europe podcast. We're up early every weekday, keeping an eye on what's happening across Europe and around the world. We do it early so the news is fresh, not recycled, and so you know what actually matters as the day gets going. From Brussels, I'm following the politics, policy and the people shaping the European Union right now. And from London, I'm looking at what all that means for markets, money and the wider economy. We've got reporters across Europe and around the globe feeding in as stories break. So whether it's geopolitics, energy, tech or markets, you're hearing it while it happens. It's smart, calm and to the point. And it fits into your morning. You can find new episodes of the Bloomberg Daybreak Europe podcast by 7am in Dublin or 8am in Brussels, Berlin and Paris. on Apple, Spotify, YouTube, or wherever you get your podcasts. Bloomberg Audio Studios. Podcasts, radio, news. Bloomberg Tech is live from coast to coast with Caroline Hyde in New York and Ed Ludlow in San Francisco. This is Bloomberg Tech. Coming up, Apple holds exploratory talks with Intel and Samsung to build their processes for its U.S. devices. Plus, Alphabet, Microsoft and XAI have agreed to give the U.S. government early access to their models for review before a public release, joining OpenAI and Anthropic. And Pinterest shares jumping after posting strong results and revenue forecasts. We speak exclusively with the CEO, Bill Reddy. Let's come in and have a look at what's happening in terms of these markets. A little bit of a tech issue at the start of this tech show, but we dig into what's happening in terms of really the key story that was a huge scoop overnight. The fact that Apple is starting to have conversations with getting production closer to home when it means for their own in-house chips. They design them, but then who fabricates them? Maybe less so TSMC. Maybe it's a move more to Intel, up 13% on this news. We're looking at Samsung Electronics, also up 8%. As we understand, Apple executives have started to look at their production out of Texas. Let's get to the man who helps break down all these sorts of bits of news. Mark Gurman's with us. Mark, talk to us about how Apple is rethinking its supply chain. Well, we've known for the last few years now that Apple is increasingly looking to do more in the United States. They've put out multiple announcements. They did a $600 billion investment alongside the Trump administration into the U.S. And now they're looking for secondary suppliers to its work on manufacturing its main processors. These are the SOCs, the engines that power the Mac, the iPhone, the iPad, you name it. As you know, for well over a decade, they've designed those processors in-house, and they've relied on TSMC to produce them in Taiwan. Increasingly, they've been shifting some of that manufacturing to a TSMC fab in Phoenix. But additional fabs have been slow to come online, even though Apple says they'll have 100 million chips out of the area by the end of this year. But they also need additional suppliers. Obviously, there's geopolitical tensions, there's supply chain issues. And there's just the idea that it's not smart to have all your eggs in one basket, in one geography, and in one supplier. So they've had early discussions with both Intel and Samsung about using new fabs that they're opening in the United States to potentially, down the road, produce these A-series and M-series chips for Apple. Does it have to make sense that it's the AI hardware, that this, the US, sorry, hardware that this goes into? Because is there going to be margin pressure here by making them in the United States? This is also sort of more of a political gambit? I mean, in some cases, there are politics involved here, right? Working with Intel will give Apple, you know, a better relationship or even better relationship they have already with the Trump administration, given they've sort of taken ownership through the US government of a stake of Intel. And obviously, you know, Donald Trump has been touting Intel significantly in recent weeks, including its stock price and their investment growth, given their recent market cap. So definitely there's a political factor here. But I think the biggest thing is concerns over what happened in Taiwan. If there's a situation with China, obviously geopolitically, it's not great. Many months ago, there were concerns for Apple related to tariffs and needing to do more chips in the US to avoid those tariffs. But I think the bigger picture overall is wanting additional suppliers for perhaps the most critical component in the entire supply chain. Even for things like displays or speakers, you see Apple using several different suppliers to offset supply chain issues, to not have all of their eggs in one geo or one basket. You never know what could happen. And so it's really for Apple-only smart business to have a backup here. If they're not able to get the chips they need out of Taiwan, they're not going to have a very good year. It's actually probably the biggest risk factor for Apple right now is getting all their chips out of Taiwan. So expansion on the Silicon front is necessary because without the silicon the apple products don't work i mean it's not just apple the entire world relies upon taiwan about 90 of all chips made out of their extraordinary reporting as always thank you mark german now away from chips ai heavyweights including alphabet microsoft and xai have agreed to give the u.s government early access to their models before public release and the deal allows the commerce department to conduct pre-release reviews in advance let's get more with bloomberg's maggie eastland out of washington look this builds on where we were already going with OpenAI and Anthropic, right? Exactly. So, OpenAI and Anthropic have already had agreements since 2024 with specifically the Center for AI Standards and Innovation. That's an office within the Commerce Department that knows how to evaluate models. So, now you see three more firms agreeing to allow the U.S. to access their models early. Now, this does signal that there's at the very least appetite from U.S. officials to know what these models are capable of before they reach a wider audience. We have seen more relationships, well, more formalizing, more updated relationships being signed between the likes of Alphabet and the U.S. government. We know XAI has been working within it, and we're starting to see it really being deployed in the departments of war or defense, whichever way you term it, Maggie. More broadly, how different is this from the way that they operated before? Is this just a formalization? Well, it's certainly an expansion of the firms that have agreed to allow this center to evaluate their models. Now, I should note this center doesn't do any sort of regulation. So separately, there have been reports from the New York Times and the Wall Street Journal that the White House is weighing a cybersecurity executive order that would include some sort of oversight mechanism. Now, this news of these agreements could be part of the evaluation piece, but it's unlikely to be part of any sort of oversight mechanism, even though, of course, more evaluation of models could pave the way for, at the very least, new enforcement of existing laws even. Bloomberg's Maggie Eastland, always with the latest out of Washington for us. We appreciate it. Let's look at what else is moving in the tech markets. We're higher more broadly. NASA 100 up 1.3%. Guess what? Yet another record high. But look at the socks. This is all about semiconductors continuing to fly higher. We're up 3.7 percent, yet another record high. We want to dig into just the insatiable demand, it feels like, for tech stock in the bounce back. Lauren Webster's with us, Managing Director of Investment Banking, focused on technology at Piper Sandler. And look, just break down what is amid geopolitical tensions, amid concerns over Iran and the conflict. We're still seeing tech managing to catch a bid today. Yeah, it's a real turnaround from what we saw to start the year in terms of the massive sell-off, driven in part by uncertainty from the introduction of AI, what that would do to traditional software companies, traditional software stocks. In April, we really saw the first constructive tape for the software indices and moving higher, still lower than the broader market, but performing quite nicely. I think this is really where we're going to start to see a shift from kind of AI panic and uncertainty into AI execution and more discernment among investors around who's really going to be the winners, the beneficiaries from AI, and who may struggle to perform as we go into this new era. It's interesting. We have earnings still coming thick and fast. And when we're thinking about Palantir has been the eye of the storm in many ways of whether or not it's a software exposed stock and AI is going to manage to upset it in terms of competition coming from the frontier model makers or if they're able to plow their own path. And look, the numbers were again extraordinary, but the earnings are down. We're seeing Shopify also lower. How are you discerning who is able to retain a moat? Yeah, so there's a few things that I look for. First is enterprise adoption. So are you selling more to the SMB or are you selling more to the enterprise? In enterprise software, rip and replace is hard to do. These are projects that have been budgeted years in advance. Implementation timelines take a long time. You have a lot of services wrapped around that. So you can't rip that overnight. Things that are easier to deploy, you may be able to turn on a dime a bit more, adopt some of the newer technology that's coming out of the foundational labs. So that's one. The second is you mentioned Palantir, and there's a real rotation into the defense tech sector, particularly those names that have a software angle to them. So what is, you know, defense tech hardware, now software getting a lot of focus. And I expect we'll continue to see a lot of tailwinds there, given where you start in kind of the geopolitical landscape and the money that is pouring international security and particularly a new way of doing business and defense technology. Let's talk about the other theme about as we see more efficiency being sought by these companies. Unfortunately, that often means job cuts. Some of it comes with the view that it's because of AI that we're disrupting the labor force. Do you believe when we're hearing the latest out of Coinbase, 14% of workers to go PayPal going to be letting go thousands of workers? Is this AI washing? Is this just a different kind of focus from fintech, for example? You know, there's a couple interesting trends going on there. One, you definitely see investors pushing more towards profitability. The ratio of growth to profitability has changed over the past year with a focus on profitability mattering more than ever, and certainly looking for ways to make cuts that drive that profitability. Businesses are going to do that regardless of AI. But yes, AI is also going to displace certain types of tech workers but there is going to be a new opportunity that opens up One area that I really bullish on is the services sector that is going to emerge around AI adoption implementation projects. Again, some of these are hard to figure out. How do I want to put those in place? What are the security measures I need to have when I'm implementing AI? And that's where you're going to see a big services push, and that requires some labor to do as well. Lauren Webster of Piper Sandler. Maybe some music to some of us laborers out there. We appreciate it. Now, let's talk about Anthropic. It's unveiling new AI agents designed to handle a broader mix of financial services tasks. It's part of the company's push to win over Wall Street. Now, CEO Dario Amadei will join Jamie Dimon of JPMorgan at an Anthropic event in New York today to discuss the move. As part of the new offerings, Anthropic says it also is enabling Claude to work better across third-party software, like Excel or PowerPoint or Outlook from Microsoft. and integrate data from partners in the financial services industry, such as Dun & Bradstreet or Moody's. Coming up, we hear from the CFO of Grab, Southeast Asia's leading ride-hailing and delivery app. It's a super app. This is Bloomberg Tech. Southeast Asian super app Grab topped first quarter estimates and shares are jumping after a quick dip this morning. CFO Peter Uwe joins us from Singapore to paint the full picture. What we have seen is 24% growth in GMV, that sort of record. You're seeing that similar sort of run rate for revenue growth as well. You've got record high users, Peter. What drives that growth? A lot of very exciting things, Caroline. It was what usually is Q1, a very soft quarter for us, just because of Ramadan, Lunar New Year. We saw the opposite. it. It was a very strong quarter. And this is despite some of the macroeconomic fuel prices that you're seeing towards the March period. But overall, it was very strong on food, very strong on mobility, and also our financial services also. We clipped over a billion dollars in loan dispersal. It was a very strong quarter. And a lot of that, Caroline, comes to just the product that we've been rolling out. And affordability has been really a critical piece that's really opened up the funnel for us, that continues to grow the MTUs, the users on our platform. We have 52 million monthly transacting users. One in 13 Southeast Asians are using our product now, which is great to see. And this has really helped for us to really penetrate the market more and more. Let's talk about trying to penetrate the market more and more when you're also seeing some pressure coming from, say, fuel prices at the moment. You are at the very heart, a mobility company. How is that going to impact longer term, do you think? How can you do to offset? that? Yeah, if you look at the markets that we're operating, we operate in eight markets in Southeast Asia. Not all of them are equal, where certain markets, say the Philippines, has been the hardest hit, where fuel prices has been up 2x, 3x in some cases. And you have the other extreme, say Malaysia or Indonesia, where the increase has been very nominal, hardly any, because just the way the structural macro has worked there from a fuel subsidy perspective. So it's very different markets to markets. But overall, we're pitching in, we're leaning in, and we're helping the drivers. How are we doing that? In March, we activated a number of initiatives, whether it's fuel vouchers, helping them getting discounts at the pump, working with the oil refineries, the oil companies. We've also deployed multiple lending programs also for drivers if they need it. But also, at the same time, we're continuing to accelerate EV adoption, actually. It's a great opportunity for us to accelerate EV adoption in two wheels and four wheels in our markets. And this is now an opportunity just to continue to pick up the pace. Talking about, well, picking up the pace, what's been interesting is the pace of regulatory change keeps shifting. And we're seeing that over in Indonesia. Peter, you seem to soothe the market a lot about what has been a very recent change to basically the maximum amount of commission you're able to take over in Indonesia to just 8%. How are you able to offset that and still drive for ultimate profitability? Yeah. So to put into perspective, our Indonesia, which is where the government announced over the weekend, the commission structural changes, it's roughly about less than 6% of our mobility GMB business overall. This is for the two wheels Indonesian business. And with the changes, which we understand where it's coming from, unexpected also at the same time. We'll work with the government to roll it out. We're still getting clarity of what the mechanics are and working with our industry peers is also across the platform. But if you look at what we've been doing with our drivers there, we've always been giving benefits. We have medical insurance. We've also have incentives for our drivers. So we have a number of levers that we could use to actually help neutralize some of that. Now, it does mean that we need to recalibrate some of the business model of two wheels in Indonesia or worse the fare structure. But we want to make sure also that we're not just passing it on to the consumers. That's the last thing we want to do. We want to make sure the marketplace continues to be very healthy, but the drivers are also benefiting. So we have enough levers in the business, Caroline, to be able to offset this. Peter, we need to remember you're big in fintech. How is the consumer feeling right now, briefly? So far, the credit quality in the first quarter has been very strong. We haven't seen any impact. Now, having said that, we're also very cautious. with these macroeconomic situations. So we're doing a lot of stress testing. We're putting a lot of new variables into the input, into the model itself, whether it's fuel prices increase, potential inflation also, the potential unemployment, all those factors are putting in so that we are a little bit more cautious and careful. But so far, actually, we haven't seen any, from the stress testing, anything that's actually detrimental to the loan quality of our book. If anything, the loan disperser continues to be very healthy, but also we're very cautious also in certain countries where we might tighten up the funnel a little bit more also just to make sure that our risk appetite continues to be very balanced. Peter Uwe, always so balanced with us. It's very late, we'll say early in the morning for you there. We appreciate you live from Singapore, CFO of Grab. Coming up, we speak with the Pinterest CEO, Bill Reddy, after the company beats quarterly sales estimates too. This is Blue Bag Tech. shares pinterest best day in a year we're currently up 11 the company reporting first quarter sales that top down assessments and forecast revenue exceeding wall street expectations too already pinterest ceo joins us now exclusively it's great to speak with you bill what's what's driving the growth uh thanks for having me on um so you know we're really encouraged by the growth on the platform. It's 11 straight quarters of record high users, 10 straight quarters of double digit growth in users. And at the core of that is that we've really turned Pinterest into an AI powered shopping assistant that is really, really winning with users, especially Gen Z that's now more than half our platform and our fastest growing demographic. Pinterest is where Gen Z goes to shop. And that's been really great for users. And increasingly advertisers are leaning into that. And you see that reflected in our results. So ad targeting improves. We can see more efficiency. But look, you're getting 80 billion monthly searches. You're, as you say, record high of users. What is the AI strategy here longer term? Because already you're seeing the efficiency in a flywheel. That's right. So we've shared that we have more than 80 billion searches per month on the platform, which would have been unbelievable to say even a few years ago. And we've done that by really making it a visual first platform. So much of shopping is a visual journey, and so we are really focused on that. And I think in the world of AI, you've had a lot of discussion around general purpose winners, but you're also seeing specialization play out, and you're seeing that play out in sort of consumer versus enterprise. But even within consumer, there are a lot of different use cases, and we've been really focused on shopping and visual search and discovery, and we're using AI to power that, really based off the curation signal on our platform, and we're seeing that really, really resonate with users. And of those 80 billion searches per month, more than half of them are commercial, which is a much more significant skew towards commerciality than most chatbots would have and that you would see in sort of historical general purpose search. So it really has become a great shopping destination for our users. It's interesting. Those chatbots had been sort of some of the investor anxiety that this is where competition is coming from in visual search. It is Google. It is OpenAI and the others. But how dependent are you on other frenemies, shall we say, for the large language models? You're training your own, but how much are you using underlying models of others? That's right. So we primarily run our own compact fit-for-purpose models. I think this is one of the things that you will see over time is there's been so much discussion around AGI and general purpose models, but they can be really expensive to run. And we've demonstrated that through our own compact fit for purpose models, as well as leveraging open source and retraining that off of our unique data set, that we're able to see comparable or better results at oftentimes less than 10% of the cost. And in terms of shopping, we've shared that we're able to get to 30% better relevancy of recommendations on shopping for our users than what we'd see from leading off-the-shelf proprietary models, which just really gets to the uniqueness of Pinterest as a shopping destination. And it's important to note that what makes our model so powerful, it's not just the models themselves. The AI doesn't have taste or style. Humans have taste and style. And so people come to Pinterest to figure out their taste, to figure out how they want to put outfits together. And we're able to learn from that and make better and better recommendations that are aligned to a user's taste. And the result of that is users say things like, well, Pinterest just gets me. And that's something that we think we're doing really uniquely here at Pinterest. and where we just have totally different signal based on what our users do on the platform. And that's what lets us take much smaller but really fit-for-purpose models and deliver better results for users. It's not just signal on your platform, though. You've been doing M&A. Talk to us about TV Scientific and why you're going into performance-driven TV ads. Yes. So we now objectively, 630 million-plus users and 80 billion searches a month, more than half of them being commercial, have one of the highest commercial intent platforms anywhere in the world. And so far, we've been making that a really great platform for advertisers to connect with users here on Pinterest. But we're also looking at how we can make it so that we can help those advertisers meet those users in other places. Connected TV being one of the fastest growing areas of ad demand. It's projected to surpass linear TV in 2028. and we're able to help advertisers show more relevant ads that deliver better returns for advertisers on TV and users get to see things that are actually helpful and useful to them And we showed on this most recent call that when we add Pinterest audience data to TV Scientific capabilities the company that we acquired in Q1 we see a 65% improvement in the purchases that result from the ads that are shown, which is great for advertisers, but also just means as a user, when you're watching connected TV, you actually see more things. You say, oh, that's actually a product that would be useful for me. And so it's a great thing for users too. It's interesting. It's almost, it feels like diversification briefly, Bill, But there's also this moment of Gen Z and teen bans. How do you see that as your role in social media right now, briefly? Yes. So we've talked about this before, and I've been very outspoken on this publicly. When I came into Pinterest as CEO nearly four years ago, I wanted to prove that there was a more positive business model possible in social media. And so youth online safety has been very out in front for us. We made Pinterest private only for users under 16 approximately three years ago. We're the first and still the only platform to do that. And so I have publicly advocated for the fact that social media as currently configured is not safe for users under 16. So we turned off social features three years ago. And we actually think it's quite an encouraging thing to see regulators around the world starting to really pay attention to that. We have to leave it there. Thank you so much for talking to us through your numbers and your focus, Bill Reddy, Pinterest CEO. Up next, Palantir is a Bloomberg Tech. Welcome back to Bloomberg Tech. And let's take a look at today's big number. It's 9 billion euros. That is a record amount that Alphabet is issuing in euros in debt. They're also seeking up to $3 to $5 billion in Canadian-dollar-denominated debt. The proceeds, of course, you know why. It's general corporate purposes, but it's AI. This is a company that's got planned capital expenditure of up to $190 billion. Now, they sell debt, but the shares power to a new record high. We're up another 1.4%. We are inching closer to the NVIDIA market cap. They're at $4.69 trillion for Alphabet. NVIDIA is at $4.79 trillion. We'll see if one starts to eclipse the other. Let's look elsewhere in the earnings spectrum, though, because Palantir is actually down some 5%, even though they posted numbers that were better than anticipated on most of the lines, whether it's revenue, whether it's what they're posting in terms of earnings. but there was perhaps a little bit of commercial weakness in the U.S. Let's drill down into it with Bloomberg's Lizette Chapman, who covers this stock, which I might add trades at an extraordinary level. I mean, I think it's more than 80 times future earnings. Did it need to be even more perfect? You nailed it. It absolutely did. They, again, beat even the raised revenue guidance that they provided, And they raised it again for 2027, but they didn't raise it quite as much as they had the previous earnings. And so it was good, but it wasn't as great as they had done in the past. That said, you know, Karp kind of ended the conversation or it was at the end of the analyst call. And he was asked about hiring and about some of the other political wins. Some bears say that is one of the factors here. And he said, hey, nine-tenths of the world love us, one-tenth professionally hate us. So that might be what we're seeing right here is a lot of the bears, including the short sellers, coming in to drive it down. Often a controversial stock, often controversial statements coming to CEOs. But interestingly, CTO using this turn of frame, it's a no-slop zone. Now, what people have had anxiety around is that Anthropik, OpenAI, they're using forward-deployed engineers just as Palantir has. They're starting to get into the space and maybe prove competitive. How is Palantir trying to set itself apart? That's right. And so that is a concern that some have raised. The way that Palantir's executives explain it is that they've got something different, something special that they've worked on for several decades. It's called an ontology, which is a real-time mapping of all of an organization's data within the enterprise across apps, across different siloed information that they bring together in one real world view. They do this for defense purposes or in wartime to find out where IEDs are and improvised explosive devices. And they also do it to find out where supply chain hiccups are in things like Airbus and things like that. So that's the way they would explain it, would be that, you know, they've got something that is a layer that goes between, you know, the enterprise and the AI large language model that the Anthropic and some of the other ones have developed. There's always been this idea that they do very well in the United States. They've built a lot of business, I think, of the NHS, the United Kingdom, for example, Lizette. But how are they showing foreign deployment and growth at the same pace as you're seeing in the US? Yeah, it is strong in some areas and not as strong in others. You know, definitely the U.S. has been their bright spot that has been called out, especially for commercial sales in previous quarters this year, this quarter as well. U.S. concentration was a concern because so much of their business does come from the U.S. And I think that we talked about this yesterday, and you even flagged that, you know, is lack of international growth going to be a worry? and it appears that that was something that could be dragging it down today. With this stock, you really never know because, as you mentioned at the top of this, it's already been trading at such a large multiple to forward earnings that a lot of the growth is already baked in. 21 buys on the stock, though. Only two sells. Bloomberg, Lizette, Chapman. Great to get the breakdown. Thank you. Look, let's head actually over to the Milken Conference. It's on in California, where a Palantir executive vice president, Josh Harris, is among the CEOs speaking, while some of the company leaders speaking, and a panel focused on how builders and investors are shaping the future. Seamless, not constantly having to re-represent yourself. And at this point, we've onboarded 26 million people in the United States to facilitate these seamless experiences. And someone signs up on our platform every one to two seconds, 24 hours a day, seven days a week. Now, each of you, I mean, have not only built businesses, but you've actually done things that took a long time to do. I mean, these weren't really sort of overnight successes. And I think about Palantir, which is kind of, you know, the overnight success. It took, you know, more than a decade to sort of get there. And the patient capital that was required. But more importantly, really the idea, Josh, of kind of staying the course when you know you have a good idea, even if the initial traction wasn't necessarily there. Absolutely. I think, first of all, thank you very much for having me. Sorry I was late. That's okay. The, yeah, staying the course, and I think also it does require a huge amount of sort of internal self-confidence to know that what you're working on is important, even if you're not necessarily hearing that in, like, the broader tech echo chamber, which was very much our experience. And just for, to sort of come out with it early in the session, the only reason I know anything about what we do at Palantir is because of Erin Price-Wright, who is a former colleague of mine. I was a little too late to the game in understanding. I've been at Palantir for 14 years, but exactly what we do. So she very kindly explained it to me in the bottom room of a bar in Paris. I think it was like 2 a.m. Yeah, about 10 years ago. And that is pretty much the pitch I still use. So much credit to Erin for anything I say correctly or incorrectly, on this panel. But yes, staying the course and understanding that what you're doing is right and helpful even if it's not what it looks like everyone else around you is doing. So it's very interesting for all of us and I'm sure Aaron feels the same way. Palantir in this moment has a huge amount of attention on it. It's become an example. People are sort of taking things like FDEs, which were concepts that we used and came up with decades ago that are now sort of commonplace in the vernacular, the tech vernacular and ecosystem. But at the time, we would go into meetings and people would be like, what do you do? This doesn't fit into a certain box. This company can do this or this company can do that. And while talking about data integration, talking about Foundry, didn't necessarily check a box that a CTO or a COO or a CEO was looking for when they were talking about business transformation. we had strong conviction because we went through the process ourselves as you mentioned over a decade, much longer to say this is actually what's fundamental to allow things like agentic AI and anything else you want to do on top of it you need to have a reliable data asset that basically you need to have a single source of truth which has been our thing for a long time but that's a very hard concept to explain and we had everyone and anyone against us saying that it didn't work It was consulting. It wasn't software. It wasn't necessary. And now, you know, people are starting to be proven wrong. But it was very much staying the course and also making sure that our employees were good. That was Palantir Executive Vice President Josh Harris speaking at Milken alongside my colleague, Romain Bostic, who's helping orchestrate that. We also have Erin Price-Wright, general partner of Andreessen Horowitz. You've got Bombardier there, along with Metropolis. So more of that conversation you can go and check out on LiveGo on the Terminal. Coming up, we're actually going back to Milken with a conversation with Seth Borrows, Toma Bravo managing partner. This is Bloomberg Tech. Let's get back to the Milken conference over in California where Bloomberg Open Interest anchor Danny Berger standing by with a special guest. Hi, Caroline. Thank you so much. I am here with Seth Borrows, managing partner at Toma Bravo. Seth, thank you so much for joining. Great to see you, Danny. Thanks for having me. And I'm really, I'm always excited to talk to you. But you oversee a lot of cybersecurity investments for Tom Brov. And I feel like now is kind of your moment to get peppered with questions about what in the world is going on. It feels like the pace of change is so rapid. Can you just contextualize your portfolio companies, the industry writ large, just how fast things are moving right now? Incredibly fast. And, you know, our portfolio companies, like you mentioned, have a deep expertise in cyber. really across every facet of the cyber industry, which is a complex, very technical market to operate in. There's a lot of deep domain expertise there, and they have been reacting over the last several years to what we have seen coming. Now, the latest model releases have expedited the threat landscape. So like Mythos and all that kind of thing? Mythos and every other model that's going to come next, and there's going to be a lot of them, and we're talking about Mythos today mainly because that's the one that people have been talking about in the news in terms of big cyber risk, but we see a lot more coming. And our companies are preparing for that You have to operate today at a speed that is different than we ever seen before Companies are going to be exposed to threats faster than they ever seen before And so you need a layered security approach that our portfolio companies, which in combination produce about $8 billion of revenue, are providing to the market. But it's a really exciting time, but it's also one where our companies are needing to move very quickly to put the defenses up there for the industry and for our enterprise customers that really trust us to protect them. It seems like moving quickly isn't even enough, though. If you have these models that can find zero-day vulnerabilities in minutes and see things that have been overlooked for 20 years of human history combing through it, I mean, how prepared are we in this world for that type of technology to be released? It's so true. And we're sitting in a place today that companies have not had to operate this way before. And so we have companies like Proofpoint, for example. They have a massive network of 14,000 customers that every day they see all of the malicious emails that are inbounded into those enterprises and all of the behavior, the way that their employees interact with those malicious emails. Those sorts of network effects give Proofpoint and their customers the ability to see zero-day threats, which is what we call them, very, very quickly and then respond very quickly. It's really not as quickly as like a mythos though, right? The way that we see the threats is very quick. And so, of course, mythos hasn't hit the market yet. True. But now we should all expect that it is out there and that perhaps people are already using it. By the way, do you think any of it is just marketing ahead of IPOs? Do you think some of it is just whipping up, you know, excitement and obviously fear alongside of it? I've heard that, but I'm going to take the optimistic view that this is much more about protecting everybody who might be interacting with it in the future. But I also think it's been a really good heads up for the world, for enterprises, for consumers to see what else is coming. Because, again, it might be the anthropic model today, but it's going to be someone else's model later. The big thing that comes out of all of this also is that as these agents get deployed, and today, obviously, we're in a world where it's very minimal agentic deployment, although we're starting to see it pick up quite a bit. The governance around that is going to become critical. So what are the agents doing? What information do they have? Where's the data coming from? What are they doing after they get the information operating in the world? And that's what companies in our portfolio like SailPoint and Ping, ProofPoint and Darktrace are monitoring that environment to make sure that there's nothing malicious going on. And then, you know, acting very quickly. And you're right that this is all new. It's happening very fast. But that's where you need incredible technologists, you know, behind the products that are in the market to react quickly. By the way, you've been one of the first to announce a partnership with one of the big LLMs. In your case, it was Google. We learned yesterday that Anthropics doing a partnership with Goldman Sachs, H&F. Before that, there was this like Bain, OpenAI, JV going on. What is going on in this industry right now? It feels like every single day we're getting some sort of announcement of some sort of partnership. Yeah. I mean, I can speak to our partnership with Google, which is, you know, they approached us to engage with us in our portfolio in terms of deploying their full-stack technologies. We have a great relationship with them. We moved really quickly to take the portfolio there. And then on the cyber side, we're going to work with them to identify early any threats through our portfolio. You know, I can't speak to the other JVs that might be going on in the industry. I'm sure everybody has their own reason. We are model agnostic, so we have great relationships with OpenAI, with Anthropic. We know those companies very well. We have ongoing discussions all the time, and certainly our portfolio companies are big consumers of theirs also. And I think it's really just our industry trying to understand and figure out more where this is going, how to deploy the technology, working with experts to help us do that. And then also, again, on the cyber side, making sure that we can get as far ahead as we can of these next models as they get out into the market. So I was having a conversation yesterday that was talking about how inference costs are really, really high for, you know, anthropic Googles of the world. But right now they're not they're not passing that on that led by Google. They're trying to offer something more cheap. Are you preparing for a world in which these, you know, Google, what have you, start to make their product more expensive and start to eat into more margins? How are you thinking about where the pricing world heads for AI, which is a really expensive project that we're undertaking? Yeah, it's a great question. And I think today people don't quite understand the cost of rolling out a lot of these solutions. And there's some pretty interesting research out there today that says currently for most higher functioning roles, it's much more expensive to bring tokens into your organization to do it agentically than it is through a human. That's not true for everything. And of course, it's not always going to be there. But I think it's unclear today how much this will all cost. I think the reality is, especially as you sit in the enterprise and you have to budget for these costs and you have to re-engineer process, all of this takes longer, actually, than people realize. And that's before really absorbing what might be the true cost of deploying inference on a daily basis. Now, what you're seeing in reaction to that is very specific model use cases. So you see in our companies, both in our portfolio and their customers, they're deploying specific use case models that are much more efficient. I think we're going to end up in a place also where efficiency and power consumption end up being the focus. And there's going to be a lot of innovation around that. So you don't need to use for every function a general purpose model. That's where we are today. And you're right. The true cost of what this ultimately will be on a marginal basis for an enterprise customer, it's kind of unknown right now. True. Seth, this has been so fascinating. Thank you so much for joining. Appreciate your time here at the Milken Conference. Caroline, with that, I'll throw it back to you. That is, of course, Seth Burrow of Toma Bravo. Fascinating discussions throughout. We so appreciate it. Danny Berger, live from Milken. Coming up, markets, well, they are braced for more tech earnings. We'll discuss what to expect from AMD and Disney. This is Blue Med Tech. Checking in on Paramount Skydance shares. We're lower by 4.6%. Even though many were impressed that the company had beaten certain expectations in their fiscal first quarter results, but investors are really looking at how the company executes its acquisition of Warner Brothers. Bloomberg, Hannah Miller is here with us. So we're all waiting on WBD. But there was real signs of strength in terms of streaming in particular. Yes. Paramount's really happy with the momentum it's made since the merger with Skydance. And we did see an earnings beat for them and also a strong outlook for this year. They think things are going really well. Why the stock pressure? I mean, were there any flies in the ointment? Is it more just about uncertainty looking forward? Yeah, there was a little bit of weakness. on streaming. They lost some subscribers due to the end of an international streaming agreement. So they didn't see a ton of growth there. But they're expecting that to just be sort of a blip. Even though they saw a good gain in average revenue per user and domestic subscribers, we look as to what the streaming pitch for Paramount Skydance means maybe for Disney, but Disney's just got so much exposure to the consumer right now. Is that what we're watching? Yeah, we know with Disney that, you know, they said that it was a tepid quarter for them in February, you know, that they weren't expecting, you know, big results for what we're going to hear about tomorrow. But all eyes are going to be on parks and cruises and streaming. And all eyes are going to be on the new CEO. Exactly. Just tomorrow. We'll keep an eye on how he reports in the morning. Hannah Miller with the latest on how Paramount performs after, of course, their numbers came out yesterday. Who else's numbers came out yesterday? was AMD delivering its earnings. And we're expecting that after Bell today. The stock has had its biggest one-month gain since 2001. But the company is facing some headwinds. Bloomberg's Ian King is here to tell us all on how much the stock moved in April and how much it can price to perfection now if the earnings are coming out tonight. Yeah, I mean, the numbers are going to be good. It'll just be a case of, are they good enough? You'll remember three months ago, Caroline, we had exactly the same scenario. Tremendous run up in the stock. A lot of strong reports around AMD. AMD came in, were bullish, but just not bullish enough. And that's really the challenge that this company is facing right now. 30% growth on a quarterly basis is fantastic, but maybe not fantastic enough for some. I mean, how does AMD basically signal that they can capture as much total addressable market of the shift to AI and the new trillions of dollars that are being invested? Yeah, I mean, this is it. The management team, Lisa Su, who we obviously have spoken to, you know, she is innately conservative. She's not a kind of cheerleader. She's more of a sort of, hey, we'll execute, and then we'll show you how well we executed type person rather than a shout about it person. But that's not the times we're living in, right? The times we're living in is everybody talks about multiple billion dollar agreements. Everybody makes very bullish forecasts, and that's what kind of investors are signing up for. and that's kind of the frequency that they're tuned to. So if you're not saying that, if you're not doing that, then maybe you're missing out is the concern. But so far, AMD has not missed out. They certainly haven't. Have we seen anyone miss out? Because ultimately, the semiconductor index again and a new record high in. Yeah, no, I mean, we're seeing Intel shares up very strongly today. And materially, they had missed out. Their earnings haven't yet caught up with the overall sort of cavalry charge up and to the right. but even they, just on signs of promise, on signs that they're doing better, are being rewarded in the stock market. So that's really the environment that AMD is in. Expectations couldn't be any higher. And is there more broadly a signal that more deal? We were all worrying about circular financing, Ian. Is that kind of like past tense now? Well, Jensen Wang, the CEO of NVIDIA, was at the Milken Institute yesterday, and he said, look, I've put a lot of money to work to help get this going. Hopefully, I've done enough, and hopefully we don't need this going forward. Hopefully, these companies are now sort of on a gross margin basis doing much better and kind of become self-sustaining, then hopefully it won't be necessary. If that's a signal, then perhaps not as many deals going forward. New Magazine King, always across those deals, always across these earnings. You'll be bracing for after the bell tonight. We appreciate it. That does it for this edition of Bluebeck Tech. Do not forget to check out our podcast. Find it on the terminal as well as online on Apple, Spotify and iHeart. From New York, this has been Merck Tech.
