Microsoft and AMD Earnings, and Nvidia and Meta CEOs Discuss AI | Bloomberg Technology

Microsoft and AI Investments

• The segment discusses Microsoft and AMD earnings, with a focus on Microsoft's investment in AI infrastructure and its impact on topline growth.
• Nicole Webb, a financial advisor from the Wealth Enhancement Group, highlights the importance of analyzing each company's unique business model.
• Webb notes that Microsoft's capacity is currently below demand, leading to high spending, particularly in GPUs.
• She expects strong bookings for the past quarter and believes Microsoft can offset some of its cost spending through efficiency measures.
• Webb also anticipates a shift in focus towards the software subsector, with both Microsoft and Salesforce being key players.
• The segment emphasizes the importance of Microsoft's AI contribution to its cloud unit's topline growth, with a 7% contribution in the last quarter.
• Webb believes that investors are looking for evidence that Microsoft's AI investments are translating into tangible revenue growth.
• The speaker, Nicole Webb, discusses the difficulty in predicting the future impact of AI, particularly in terms of return on investment. She highlights the recent market volatility and the need to adjust positions as valuations fluctuate.
• Webb emphasizes Microsoft's position as a widely held stock due to its role as a "utility of business" and its strong free cash flow, making it a difficult stock to sell.

SoFi's Growth Strategy

• SoFi CEO Anthony Noto discussed the company's growth strategy, which focuses on three key areas: financial services, tech platform, and lending.
• Financial services is the fastest-growing segment, driven by growth in assets under management (AUM), deposits, and interchange.
• Noto believes SoFi will remain competitive in a declining interest rate environment, as several of its businesses will benefit from lower rates, including loans on the balance sheet, home loans, and student loans.
• SoFi's high annual percentage yield (APY) on its SoFi Money product will remain competitive due to its origination platform, which allows it to offer a higher APY than competitors.

Tesla's Full Self-Driving Technology

• PayPal's stock price jumped by almost 8%, its biggest gain in 20 months, after the company reported adjusted earnings per share (EPS) that beat expectations.
• Truist Securities Managing Director William Stein will discuss his experience using Tesla's Full Self-Driving technology, which Elon Musk has said is crucial for investors to understand the company.
• William Stein, a Bloomberg Technology contributor, conducted two tests of Tesla's Full Self-Driving (FSD) system, the first after the Q1 earnings report and the second after the Q2 report.
• Both tests were conducted under similar conditions, with sunny, dry weather and easy visibility.
• Stein used a Tesla-owned car, which he obtained by visiting a showroom and signing up as a potential buyer.
• The first test took place a quarter ago, after Elon Musk instructed investors to experience FSD to assess the company's value.
• The second test was conducted on Friday, using FSD version 12.3.6, as version 12.5 was not yet available to the public.
• Stein reached out to Tesla management proactively to inform them of his findings and avoid any perception of an attack.
• Tesla's response was minimal, acknowledging Stein's opinion but not providing substantial feedback.
• Stein's tests involved looking away from the wheel, which he found to be a risky maneuver, as FSD did not always maintain safe driving conditions.
• Stein's son filmed parts of the trip, but unfortunately, they did not capture the most critical moments, including a near-crash.
• William, a Tesla owner, experienced a concerning incident with his car's Autopilot feature. While driving, he turned his head completely away from the road to look in the backseat, and the car allowed him to do so for approximately 30 seconds.
• William believes this behavior is potentially dangerous and could lead to accidents. He suggests that the car's behavior might be designed to make the experience more user-friendly for inexperienced users.
• William also discussed a near-accident he experienced with his Tesla while using Autopilot. He was stopped at a light in a congested area, and when the light turned green, the car in front of him made a right turn but did not complete it. Despite this, the Tesla accelerated as if the road was clear, potentially leading to a collision.
• William believes that the current version of Autopilot (12.3.6) is inadequate for full autonomy and that the feature needs significant improvement. He is unsure if future versions, such as 12.5, will be able to achieve full autonomy.
• William's experience highlights the potential dangers of relying on Autopilot and raises questions about Tesla's ability to deliver on its promise of full autonomy.

Security and Digital Transformation

• The conversation discusses the recent technology outage that impacted the airline, Kerry, and the potential legal action they may take against CrowdStrike and Microsoft.
• Shlomo Kramer, CEO of Cato Networks, emphasizes the importance of learning from mistakes, especially in a world where everything is digital. He highlights the need for gradual deployment of security updates to avoid widespread disruptions.
• Kramer believes that the next security incident will likely be an attack, not a mistake, and stresses the need for pervasive security measures.
• He founded Cato Networks to simplify security and make it more accessible and affordable for all organizations.
• Kramer commends CrowdStrike's response to the outage and believes that security needs to be operationalized and digitally transformed to be more effective.

Nvidia and the Future of AI

• Nvidia's stock price is down significantly, dragging the Nasdaq 100 lower. This follows weak earnings reports from Microsoft and AMD, both of which are heavily involved in AI infrastructure.
• Nvidia CEO Jensen Huang and Meta CEO Mark Zuckerberg discussed the future of generative AI and the role of open source at the SIGGRAPH computer graphics conference.
• Zuckerberg believes that even if progress on foundation models stopped today, there would still be five years of product innovation as the industry figures out how to best utilize existing technology. He also believes that progress on fundamental AI research is accelerating.
• Nvidia is launching a new service called MIMS (Microservices) which aims to simplify AI development for businesses. MIMS provides users with models, hardware, software, and data, allowing them to focus on their specific business needs.
• Nvidia is hoping to expand the use of MIMS beyond its current four or five large customers and make it a pervasive tool in the economy.
• The conversation between Huang and Zuckerberg highlights Meta's commitment to AI development and its reliance on Nvidia's technology.
• Meta is a major customer of Nvidia's GPUs, using them to train AI models for its services like Facebook.
• Meta's CEO, Mark Zuckerberg, acknowledged the company's massive investment in GPUs, highlighting the importance of AI infrastructure.
• Nvidia's earnings are expected to be impacted by the increasing infrastructure commitments from companies like Microsoft and Meta.

AI Governance and Credo AI

• Credo AI, a company focused on AI governance, raised $21 million in funding, doubling its valuation to $101 million.
• Credo AI aims to address the growing concerns around AI risks, particularly deepfakes, which are increasingly interfering with elections.
• The company plans to use the funding to ensure AI oversight and accountability, equip organizations for global regulatory changes, and enable the confident adoption of generative AI at scale.
• Navrina Singh, the founder and CEO of Credo AI, emphasizes the importance of AI governance in understanding and managing the risks associated with this complex technology.
• Navrina Singh, CEO of Credo Labs, believes that government funding will be crucial for enabling responsible AI development and ensuring that companies like Meta and Microsoft can bring frontier AI capabilities to the market with confidence.
• Singh emphasizes the need for governance in AI, stating that traditional governance, risk, and compliance tools are inadequate for the complex and emerging nature of AI.
• She believes that regardless of the outcome of the upcoming US presidential election, governance of AI will be paramount, and companies will need to prioritize it as they adopt this technology.
• Singh agrees with Mark Zuckerberg's vision of empowering people to create their own AI agents, stating that reliance on a single AI model will not be the future.
• Credo AI's CEO, Ed, discusses the need for a single governance system for AI tools and models, emphasizing the importance of oversight and accountability.

J.D. Vance and Silicon Valley

• The stock price of Nvidia has dropped significantly, trading at its lowest level since May 2024. This follows a similar trend last week, despite the stock's strong performance year-to-date.
• The segment then shifts to a discussion about J.D. Vance, Donald Trump's potential running mate, and his potential impact on Silicon Valley.
• Some guests believe Vance's pro-growth and pro-innovation stance could benefit Silicon Valley, while others express concerns about his views on privacy and competition.

Kamala Harris and the Tech Industry

• The segment concludes with a discussion about the potential impact of Kamala Harris's running mate choice on the tech industry, with Katie Jacobs Stanton, founder and general partner of Moxxie Ventures, highlighting the diversity of opinions within the industry.
• Katie Haun, a venture capitalist, expresses her enthusiasm for Kamala Harris's campaign, highlighting her understanding of technology, innovation, and responsibility.
• Haun believes Harris's experience in the Bay Area and her understanding of technology make her a strong candidate for re-election.
• Haun emphasizes the importance of supporting entrepreneurs and innovators to address challenges like climate change, economic uncertainty, and lack of access to healthcare and housing affordability.
• Haun's venture capital firm, Moxxie, has raised $95 million for its third fund, focusing on investing in founders who improve life and work for millions globally.
• Moxxie's portfolio companies are characterized by a diverse group of founders, with a majority being technical, 50% being immigrants, and a third being women.
• Haun's experience in the Obama administration, Twitter, Google, and Yahoo! board positions provides valuable insights and influences her investment decisions.
• Katie Jacobs Stanton, founder and general partner of Moxxie Ventures, discusses the importance of cross-pollination within their network to support founders.

Paris Olympics and AI Spending

• The Paris Olympics organizers postponed the men's triathlon due to insufficient water quality in the Seine River, causing disappointment among athletes.
• The U.S. is leading in total medal count, while Japan and China are leading in gold medal count.
• AMD and Microsoft are reporting earnings after the bell, and the market is moving as we speak.
• Nvidia's stock is down significantly with no news headline, indicating growing skepticism about the return on investment for AI infrastructure spending.
• Mandy from Bloomberg Intelligence suggests that Google's recent announcement about reaching their cap on spending is a positive sign for Nvidia, as hyperscalers make up a significant portion of their revenue.
• Despite the positive news, Nvidia's stock decline could be attributed to concerns about companies' ability to monetize GPUs as quickly as they would like.
• The "Bloomberg Technology" audience is diverse, and not everyone is an institutional investor.
• The focus is on understanding how much capital spending is happening in the AI space.
• The discussion revolves around the impact of AI on various tech companies, particularly Microsoft, AMD, Nvidia, and Meta.
• The speaker highlights the significant investments made in AI infrastructure, particularly by Alphabet, but questions the tangibility of its impact on revenue.
• Nvidia's success is attributed to the supply-demand imbalance for GPUs, but the speaker predicts challenges if supply catches up and companies can train AI models outside of Nvidia's GPUs.
• Microsoft's upcoming earnings are anticipated to be crucial, with expectations for increased contributions from AI to its Azure business.
• The speaker emphasizes the importance of seeing AI translate into revenue growth for companies like Microsoft, Amazon, and Meta.
• Meta's focus on AI is highlighted through its development of custom chatbot tools for Instagram, which could potentially boost ad revenue.
• The overall theme of the discussion is the need for tech companies to demonstrate the tangible impact of AI investments on their financial performance.