Intel Looks Outside the Box, Microsoft Faces FTC Troubles | Bloomberg Technology

Market News and Tech CEO Discussion

• A no-confidence vote in France's government could have significant implications for the country's technology startups, particularly if the government collapses and a new budget is not passed, which could impact companies' ability to hire low-income employees due to increased costs associated with inflation (1m57s).
• The collapse of the government could also mean that the 2024 budget will remain the same without any increases, which could have a big impact on companies in the long term (2m43s).
• Despite the political turmoil, the NASDAQ and S&P are at record highs, thanks in part to the strong performance of tech companies like Salesforce, which is up 8.7% after reporting record earnings (3m8s).
• Marvell Technology is also up 20% and has reached a record high after reporting better-than-expected results and a stronger earnings forecast, with CEO Matt Murphy committing to the company despite being a potential contender to lead Intel (3m37s).
• Intel is considering outside candidates for its new CEO, including Matt Murphy and Ed Boudin, which is a surprising move as it's the first time the company is looking outside its own bench for a CEO (4m13s).
• The decision to look outside for a CEO reflects the challenges facing the semiconductor industry, which requires a lot of expertise and long-term planning, and some people may view the role as a "poison chalice" due to the challenges and competition from rivals like AMD (5m6s).
• Intel is facing a massive challenge in finding a new leader, with Matt Murphy being considered for the role, who is a big advocate for making Intel more industrially and manufacturer-focused (5m32s).
• Intel is looking at four or five candidates and will likely shortlist one or two, with the goal of finding a new leader as soon as possible (6m1s).
• The chip space tech market is growing exponentially, with foundational models increasing in demand, and it will be advantageous for companies to capture this growth (6m54s).
• Marvell is a key player in the chip space, with Matt Murphy creating a lot of value over the years through M&A, capital allocation, and spinning off businesses (7m28s).
• If Matt Murphy were to leave Marvell for Intel, it would be a concern, but he has put a lot of work into Marvell and has a great team, giving him good reasons to stay (7m49s).
• Amazon is a major contributor to the growth of the chip space, with a raft of chip announcements, and its custom silicon is not a new development, but rather the evolution of compute and its general-purpose chips (8m39s).
• The growth of custom silicon is not a threat to NVIDIA, but rather a symbiotic relationship, with both companies coexisting and growing as the demand for chips increases (9m7s).
• NVIDIA's valuation is still expected to grow, despite being at high levels, as AI is increasingly used in everyday life and the company is well-positioned to capture this growth (10m19s).
• The current market cap is astounding, with reasonable profitability and cash flow, and a valuation of 30-35 times earnings, which is not extreme but indicates some concern over the sustainability of the numbers (10m40s).
• Salesforce has reached a record high in terms of market cap and share price, with its application potentially making the company more profitable (11m32s).
• AI could be the next productivity revolution, with digital agents and flavors that don't need breaks and can operate alongside humans, making it an exciting time for software companies (11m40s).
• Many software companies are seeing the opportunity in AI and going after it, with everyone wanting to be the platform where users store their data and operate (12m8s).
• The first big year of AI has been dominated by chip companies like NVIDIA on the infrastructure layer, but the apt layer is needed for these companies to continue doing well (12m34s).
• There has been a shift in movement from all-in on chips to software, with Palantir being the darling of the AI story with a valuation of 180 times earnings (12m55s).
• Not every company can be like Palantir, which has been an AI leader for the last decade and has a centralized tautology for AI that can be customized for clients (13m23s).
• The US government is trying to be more efficient and bring AI technology into automate things and modernize processing data, which is an area where Palantir can drive intelligence (13m50s).
• The FTC is investigating Microsoft over how they are bundling Windows operating systems with other software and their dominance in cyber, with reports saying the agency is asking about the real OpenAI (15m18s).
• The FTC is also asking about Microsoft giving the cloud giant the exclusive right to run on the service and a cut of the company revenue, which is a significant pursuit according to David Belton, a former employee of the Bureau of Competition (15m36s).
• The Microsoft case from the late 1990s was critical to the expansion and growth of the internet, leading to increased competition online (16m4s).
• Microsoft's Deputy Counsel General stated that the Inspector General is looking into improperly leaked information about antitrust investigations (16m28s).
• Leaks from third parties who oversee investigative demands can disclose information, which may be the case in this situation (17m1s).
• Bloomberg is focusing on Microsoft's intertwining of its operating system and dominance in cybersecurity, as well as its relationship with OpenAI (17m18s).
• AWS CEO expressed interest in offering OpenAI models to clients, but currently cannot due to a partnership issue (17m34s).
• The FTC is investigating Microsoft's relationship with OpenAI, which may have foreclosed other rivals and forms of competition (18m21s).
• The FTC will take a close look at the nature of the relationship between OpenAI and Microsoft (18m29s).
• Microsoft's dominance in cloud computing and software categories may lead to antitrust law violations if it extends that dominance to other product markets and forecloses competition (18m51s).
• Other cloud companies, such as AWS, Oracle, and Google, may also be looked at by the FTC, but Microsoft's dominance is a key consideration (18m48s).
• The high cost of offering cloud operations may lead to oligopoly-like market structures, but contractual arrangements that foreclose competition will receive intense scrutiny (19m34s).
• Microsoft's dominance in cybersecurity and reported failings in federal provisions may have sparked the investigation (20m5s).
• The investigation is expected to continue despite a potential transition into a new administration, thanks to the Federal Trade Commission's role in dealing with consumer protection and competition issues (20m26s).
• Former FTC Director David Balto expects antitrust enforcement to continue in the next administration, with a strong consensus between Republican and Democratic enforcers on issues like bundling, which is expected to go full throttle in the future (20m54s).
• Paramount Global is expected to undergo significant changes under its new CEO, David Ellison, including combining TV units, investing more in streaming, and overhauling top management, with these changes expected to occur after the merger with Sky Dance is finalized next year (21m47s).
• Meta is exploring the use of nuclear energy to power its AI ambitions, asking developers to submit proposals for 1-4 gigawatt reactors starting in early 2030, which would be enough to power 750,000 homes (22m4s).
• Iliad is in exclusive talks to sell a 50% stake in its data center business to a French company for a total enterprise value of $904 million (22m22s).
• Amazon Web Services CEO Harmon has major plans for AI, which will be discussed in an upcoming conversation (22m34s).
• The NASDAQ, S&P 500, Apple, and Amazon have reached record highs, with key companies reporting strong earnings and Marvell reaching a new record high (23m14s).
• Salesforce reported strong third-quarter earnings, with 8% growth in revenue, and its AI agent force is expected to contribute to revenue growth in the future, although not in the next 12 months (23m49s).
• Bloomberg Intelligence analyst Anurag believes that Salesforce's recent earnings report vindicated its share price, with the company's potential for future revenue growth being a key factor in its success (24m9s).
• Anurag also believes that Salesforce will be a net beneficiary of AI, and that the company has its act together in terms of its AI strategy, although there are still concerns about the company's M&A activity and its impact on profitability (24m59s).
• Anurag is not concerned about Salesforce's small acquisitions, but is worried about the impact of large acquisitions on the company's momentum and margin improvement (25m41s).
• Since Marc Benioff announced a focus on margins, Salesforce's margins have increased by 10%, although there is still potential for further improvement (25m53s).
• Amazon's cloud division annual Reinvent conference rolled out powerful new chip arrays to compete with rivals, featuring Amazon-designed custom silicone that gives unparalleled performance for AI capabilities (27m29s).
• The new chip arrays are part of a massive cluster of homegrown ships that will win top processing power, with innovation starting from silicon down to the entire stack of AI to control everything in those clusters (27m43s).
• The alternative chip arrays are expected to provide customers with lower-cost options, with potential cost savings of 30% to 40% due to performance benefits, and are seen as a supplement to existing options rather than a replacement (28m37s).
• Amazon's partnership with Intel and AMD has been successful, and the company expects its usage of NVIDIA technology to continue growing, with the choice between different technologies being powerful for customers (29m40s).
• Intel's change at the top has not been a concern for Amazon, with the company looking forward to continuing its partnership with Intel and rolling out the latest technologies for customers (30m14s).
• Amazon's Blackwell technology has shown fantastic early returns, with a 2.5 times gain expected, and is anticipated to be available to customers early next year (31m5s).
• The supply side for Blackwell has been a challenge, but Amazon is excited to put the technology in the hands of customers as soon as it is available (31m18s).
• Salesforce's Service Cloud has a lot to depend on with back-office customer support, where automated chatbots can provide a big cost-benefit by reducing the need for human involvement (26m34s).
• Microsoft faces FTC troubles, but the details of the troubles are not specified in the conversation (26m19s).
• A discussion is held about investors' views on NVIDIA dependency and AWS having its own offerings, with the conclusion that AWS and its partners can coexist and grow together in the market (31m37s).
• The idea of a "frenemy" relationship is mentioned, where companies can be both partners and competitors, and it's stated that AWS is a great partner with NVIDIA and will continue to be so (32m30s).

Venture Capital Discussion (Interrupted)

• The conversation shifts to a discussion with Lily Lyman, managing partner of Underscore VC, about strategies of major multibillion-dollar firms with specialized funds diverging venture asset in the new year (33m12s).
• Lily Lyman introduces herself as the managing partner of Underscore VC, a community-driven early-stage venture firm based in Boston (33m32s).
• Breaking news interrupts the conversation, reporting on the shooting death of United Health Care CEO Brian Thompson in New York City (33m48s).

Breaking News: United Health Care CEO Shooting

• Breaking news interrupts the conversation, reporting on the shooting death of United Health Care CEO Brian Thompson in New York City (33m48s).
• The NYPD holds a news conference, providing preliminary details about the incident, including that the shooting was premeditated and targeted, and that the suspect is still at large (33m51s).
• The police commissioner asks for the public's help in identifying and apprehending the shooter, offering a $0,000 reward for information (35m2s).
• The NYPD assures the public that they will be present at holiday events to keep people safe, despite the incident (35m27s).
• The chief of detectives provides more details about the incident, including the time and location of the shooting, and the victim's identity (35m38s).
• A shooting incident occurred at 6:44 A.M. near the Hilton hotel, where the victim was walking alone towards the hotel to attend the UnitedHealth Group Investors Conference scheduled to start at 8 A.M. (36m42s)
• The shooter, described as a light-skinned male wearing a light brown or cream-colored jacket, black face mask, black and white sneakers, and a distinctive gray backpack, stepped off the sidewalk and approached the victim from behind, shooting him in the back. (37m15s)
• The shooter walked towards the victim and continued to shoot; the gun malfunctioned, but he cleared the jam and fired again. (37m21s)
• The shooter then fled on foot northbound into an alleyway between 54th and 55th streets, got onto an electric bike, and rode northbound on the Avenue of the Americas towards Central Park. (37m30s)
• At the scene, three live nine-millimeter rounds and three discharged nine-millimeter shell casings were recovered. (37m49s)
• The motive for the murder is currently unknown, but based on the evidence, it appears that the victim was specifically targeted. (38m1s)
• The police are seeking any information from the public to identify the shooter and have offered rewards of up to $0,000 for information. (38m15s)
• The victim left his hotel like he was going to attend the conference, and the police are working with his coworkers to get more information. (38m48s)
• The police are still tracking the electric bike, which has GPS, and are working with the company to locate it. (39m12s)
• A cell phone was recovered in an alleyway on the shooter's escape route, which the police will process forensically. (39m27s)
• There was one witness standing next to the victim when he was shot, and the police are still trying to identify that witness. (39m37s)
• The police are reaching out to law enforcement in Minnesota and interviewing coworkers to gather more information about the victim. (40m5s)
• A search warrant is being executed in the victim's hotel room to gather more information. (40m15s)
• The police have no way of knowing if the shooter is a professional, but based on the video, he seems proficient in the use of firearms. (40m41s)
• The incident will not affect the tree lighting ceremony, which will have a massive police presence around Rockefeller Center. (40m58s)
• A special strategic response group and Intel division assets are being utilized to ensure public safety, with additional police officers in subways to facilitate travel into the city for the tree lighting event (41m23s).
• Evidence was recovered at the scene indicating the event was not random, with a gun appearing to have a silencer, but the investigation is still ongoing to determine the details (41m51s).
• A cell phone was recovered in the alleyway and will be processed forensically to see if it is connected to the shooting (42m31s).
• The suspect was staying close by and arrived in New York City on Monday, with no evidence of prior interactions with the victim (43m2s).
• The victim typically did not travel with a security detail and did not seem to have any issues when leaving the hotel by himself (43m40s).
• There is no indication of any issues with patient coverage or threats against the victim at this early stage in the investigation (43m51s).
• The NYPD is urging New Yorkers to be alert and go about their daily lives, with a heavy deployment of resources in Manhattan, including drones, aviation, and canines (45m2s).
• The police are encouraging people to look at the suspect's picture and call 911 if they see or hear anything suspicious (45m8s).
• The NYPD is investigating the fatal shooting of Brian Thompson, CEO of UnitedHealth Care, in Manhattan, and they are still working to determine how the perpetrator obtained a city bike used in the crime (45m49s).
• The police have recovered a cell phone from a nearby alleyway, which will undergo forensic testing, and they are reviewing video footage from numerous locations to track the perpetrator's movements (46m24s).
• The NYPD has confirmed that the shooting was premeditated, but they are unsure why Thompson was targeted specifically (47m0s).
• The police are increasing their presence in subways and streets to ensure public safety following the shooting, and they are offering a $0,000 reward for information leading to the perpetrator's arrest (48m40s).
• Thompson, a 50-year-old longtime executive of UnitedHealth Group, was shot outside the New York Hilton Midtown at 6:40 am on Wednesday, with two shots to the back and one to the leg, and he was pronounced dead at Mount Sinai West hospital (48m1s).
• UnitedHealth Group is working closely with the NYPD to assist in the investigation (47m40s).
• The shooting will not impact the Rockefeller Center tree lighting, and the NYPD is working to ensure public safety during the event (47m11s).