Amazon CEO Talks AI Plans, Nvidia Results Underwhelm
47:44 Share

Developers like you are building the future, but you need the right tools to move fast and go further, right? That's where Microsoft comes in. With tools like GitHub Copilot, VS Code, and Azure AI Foundry, you have everything you need to push the limits and bring your ideas to life faster. And with security, compliance, and responsible AI built in, you can focus on what matters most, building the next big thing. Learn more at developer.microsoft.com.

This is a message from sponsor Intuit TurboTax. Taxes was waiting to get your money back, which turned into worrying about getting your money back. Now taxes is matching with a TurboTax expert who can do your taxes today and help you get up to a $4,000 refund advance loan fast. Get an expert on TurboTax.com.

♪♪♪

Live from New York, I'm Caroline Hyde.

And I'm Jackie Davalos in San Francisco. This is Bloomberg Technology. Coming up, Nvidia shares slipping despite an upbeat view on the Blackwell lineup. As its investors see a mixed outlook after two years of blowout results. Plus, investors unsure of Salesforce's new AI product. If it can spur faster sales growth or break down the company's earnings. And we sit down with the CEO of Amazon after the company unveiled the long-awaited AI version of its Alexa assistant and just announced its new quantum computing chip. A

First, a quick check on these markets. As we can currently see, we are under pressure once again. This is a macro picture that weighs heavily on the market, perhaps some inflationary pressures, worries about tariffs, and NVIDIA numbers did not do enough to ease those concerns. We're down some 3.7%. Look, it's still a $3 trillion company, but herein lies the issue of whether or not Blackwell is ramping as

fast enough to offset some of the concerns around China and tariffs and limitations on exports. Jensen Wang does a lot to talk about the new cycle of scaling laws that come, of course, from reasoning models. We move on to some other individual names that we're going to be diving into across the board. Salesforce under pressure off by 2% will discuss the earnings a little bit later. AgentForce not bringing in the revenue as quickly as had been anticipated.

And let's just finish on the all-important Amazon. Currently trading as we see macro pressure on tech more broadly, we're currently flat a new quantum chip. And most notably, of course, the generative AI infusion into Alexa Plus, which we can delve into in the CEO in a moment, because we now want to welcome to our TV and radio audiences worldwide, Amazon's president and CEO, Andy Jassy. Great to have you in New York. Thanks for having me. It's great to be here. Back home where you grew up. That's right. And you were unveiling...

generative AI infused Alexa Plus. How is this going to really, well, excite your customer base? What are you most excited for? Well, you know, we've had, Alexa's been around for 10 years. We have 600 million devices in customers' homes and offices. And Alexa Plus is our next generation Alexa personal assistant. And she's meaningfully smarter and more capable and useful than her prior self.

You can do all the things that you used to do, but every single one of those functions is better. And I can give you just an example. There are so many examples. But if you have smart home controls with Alexa, now you can say, hey, Alexa, I have guests coming over at 7:00 PM. Could you raise the drapes?

Could you raise the temperature by five degrees, turn on the porch lights and the driveway lights, and put on mellow dinner music in the dining room? Mellow music? You're not a guy who listens to mellow music. Me, I choose the Foo Fighters, but most people will choose mellow dining music. But you can do that all verbally and simply using conversational language like that. You don't need a nap. It just happens.

Alexa Plus, with what we've just announced and what we're launching, it really is there have been a lot of chatbots around that are good at answering questions, but they don't take actions. Alexa Plus is really, Alexa's going to be the first one that not only is highly intelligent to answer various questions, but she can do so many things for you. She can play music and play video and control your smart home and make reservations for you and hire people to fix your oven. I mean, it really is the first platform

Big large-scale practical use of gender of AI that consumers are going to be able to see and use naturally I can see how you're gonna obsess over it Whether it's ordering the latest Buffalo wings here in New York and seeing where the best space is to do that But how are your stakeholders of shareholder base can obsess about this about generative AI in Alexa Plus? How is that adding value for them? Well, you know, I think

If you think about what Alexa allows customers to do, it makes shopping more easy because it's so much more intuitive now to buy products. It makes enjoying music easier. It makes enjoying video and streaming media better. It allows you to control your smart home in a different way. So every single one of our consumer customer experiences gets better.

with Alexa Plus. And then, you know, of course, Alexa has its own business model. We have a brand new lineup of devices that are coming in the fall that I think are beautiful, that I think people are going to really like.

We have opportunities to service new products and advertising in various interfaces like our mobile and our desktop interface that's coming in Alexa. And then we have subscriptions. So I think there's a sustainable business model there as well. Talk to me about subscriptions because you're getting it free if you've got Prime. With Prime now, are you able to increase the prices there, do you think?

Of Prime? Well, Prime is an incredible value. If you think about getting free shipping on 300 million plus items. You know, when we launched Prime, it was free shipping on about a million items. Today, it's 300 million items. And most of the time, you're getting your products now inside of a day. And so, you know, between that and what you get with Prime Video and Prime Music and the grocery subscription and, you know, our unique selling events, Prime's an incredible value. So you could increase that? To add on top of it.

Alexa Plus, it's just great value. So we don't have any plan right now, but I do think Prime's an unusual value and it's why people use it so expansively. And to increase that use has been this invention, this innovation of generative AI, and that

costs money and you've actually just took to the stage yesterday to say out of all companies you are spending the most on AI. How much are you spending on AI? Well, you know, I think we don't disclose the exact amount but, you know, we, you know, the

We're spending a pretty significant amount of CapEx, and the lion's share of it is on generative AI. We've said in our AWS business, even though generative AI for us is a many billion dollar a year business and growing triple digit percentages year over year, that if we had even more capacity, we could use it and monetize it. And we have this really interesting and very fortunate flywheel in AI inside of Amazon, which is...

If your mission is to make customers' lives easier and better every day, which it is for us, and if you believe that all the customer experiences we know of today are going to be reinvented through generative AI, which we also believe, if you believe those two things, you're going to be building a lot of generative AI apps.

If you build a lot of generative AI apps, by the way, other companies are too on top of AWS, which is the leading technology infrastructure platform. So if there are a lot of generative AI apps being built on top of you, you can't help but get a lot of feedback from people on how they want those building blocks that create generative AI to be better. And if you're willing to invest...

in those building blocks, which we are, as you know, with our own chips, with Tranium, and with our own Frontier model, with Amazon Nova, and model building services, and SageMaker AI, and Bedrock. If you're willing to invest in those building blocks,

and you're getting a lot of feedback, they get better much more quickly, which can't help but make it easier and quicker for people to build generative AI applications, which means you get more running on the platform. So that flywheel is very unique for Amazon. The lion's share, though, you did say basically $100 billion run rate.

for capex expenditure. Can you give us even like a percentage breakdown of how much that goes to distribution, logistics, and how much goes to AI? Well, lion's share is, you know, tells you most of it. You know, the lion's share is more than 50%, yes. Is it more than 80%? We're playing the warmer and colder game? Yes, exactly. I love a game. But talk to us about that capacity that you talked about. AWS could grow even faster.

if you had all the chips that you needed, all the power you needed, the motherboards you needed, how much faster could AWS grow? It's hard to put an exact percentage, but I do think it could be growing faster. I mean, I'm confident it could be growing faster and

For a long time, there still aren't as many chips as we all want. We're fortunate in that we're very big partners with Nvidia, but then we also have our own custom AI silicon in Tradium II, which we just released at re:Invent, which is 30% to 40% more price performance than the GPU powered instances, which is a big deal at scale if you're doing gender of AI on the inference side.

So we have maybe more chips than some others might have access to, but we still don't have enough. And then there just is not enough power in the world right now. And we're all working really hard on that. I expect that to relieve some the second half of this year. But right now, and the world can change, but right now we have just insatiable demand.

We heard amazing demand coming from Jensen Huang, who had his numbers out yesterday in NVIDIA. Was there a limitation on the NVIDIA chips in particular that pulled back capacity? And at what point do you think you can depend even more on your own in-house built chips to offset any of that? Well, you know, I would say...

I mean, there's a lot of demand for generative AI right now. People are very excited about it. I think that all the different providers of chips have been constrained to some extent. I think some of the new generations maybe have gone through different evolutions and when they're going to be released, maybe a little later than people thought. There are some components like motherboards and things like that that we all use that

particular ones that are in shorter supply than others. So I do think there are some supply chain issues which I expect to get better. People are very excited about Tranium 2, to your question and whether we could see more demand there.

And we have gone back at least a couple occasions to make more Tranium 2 than we'd intended because we have so much demand. So I expect that we'll have customers for as long as I can foresee wanting to run compute on instances that have NVIDIA chips, but I think a lot of the demand will also be served by Tranium. The customers that you couldn't serve because of the limited capacity, is it that you just had to pull it back from everyone a little bit more generally, or who lost out here, do you think?

It's always a combination. I mean, for people that just have a very small amount of accelerators that they need, they don't usually have a problem. We have something called capacity blocks, which is kind of like an on-demand way to use accelerators and generative AI chips, and that continues to grow. It's really the folks who have built...

have an idea for a new application, but they need a lot of chips where if we don't have the capacity, we have to give them what we can give them and give it to them as fast as we can and push our partners to get it in sooner.

they can't get their initiatives done as quickly as they want to if the capacity isn't there. Anthropix had all the capacity it needs? You've got a close relationship? Yeah, we have a very close partnership with Anthropix. We have this project called Project Rainier with them. They're building their next version of their Frontier model on top of Tranium 2 and our custom AI silicon. They're going to use over 400,000 Tranium 2 chips.

And so, yes, they have capacity. They're ramping up, and we're excited about that partnership and what they're building. You mentioned the power side. How much is that something you're talking to the administration about? How much is the administration supportive of the build-out that you need to do?

We have been talking to administration, you know, multiple administrations in this country over the years, as well as in other countries as well. And I think the power shortage really snuck up on people, you know, really right after the pandemic. And I would say that the current administration is very receptive to it. They understand the constraints it's having on the economy right now and are convicted about solving it.

What about the restrictions around chips? And what's interesting is Microsoft just called on the administration today to say this limitation on chip access for some of our close allies around the world is going to limit our global business. You are a global business. Is that something you're worried about?

And we are. You know, I think that you're really talking about that AI Diffusion Act, I think. And I'm going to be curious to see where that goes. I mean, it was enacted pretty quickly at the very end of the last administration. I don't know how this administration feels about it. But I would say that we share the concern that it has limitations on certain countries who are natural allies of the U.S.,

who just to be able to do their business and those companies to be able to get done what they want to get done on top of these technology infrastructure platforms like AWS, they're going to need more chips. And so I think if we don't do it, we're going to basically give up that business and those relationships to other countries who can provide those chips. And I think we're better off being partners with them. Is it a risk to AWS? It's not so much a risk. I mean, it has...

In the scheme of things, it's not a big swinger, but I also think that there are so many countries who are in the early stages of their economic development who both really need access to the most cutting-edge, sophisticated technology to build the right customer experiences, and that could be big geographic markets for companies like ours and lots of other technology companies where I think it would be a shame to limit them and to limit the companies.

With the AI diffusion rules that was brought in very swiftly by the Biden administration, all of this is in the context of US versus China and not wanting to get the most sophisticated equipment and chip and technology into China. What rate for us for a moment, the administration, and whether it's been positive or negative for your business when it comes to China, de minimis, for example, the fact that

Chinese competitors, we call them that, Xi'an and the like, are going to have to pay more to get goods into the country. Does that help or hinder you?

Well, you know, I would say, you know, on De Minimis specifically, you know, we have a certain number of items that are shipped in that way as well for things like Hall, which is our new low price offering. We maybe have less of it than some other companies like the ones that you mentioned. But I think it's early in this administration. But what I would say is that

It is encouraging to us that we have an administration that wants to hear from business. I would say that, you know, we've been a business through six administrations. Every single one of them, our primary focus is to take care of customers, but we try to build a productive relationship with the administration because we want to help the country.

And I would say that some administrations are more receptive to it than others. But this administration cares about what business thinks. And I've always been surprised that it isn't obvious that the best economic results for a country are going to be when the public and the private sector collaborate. And, you know, I don't expect the government to kowtow to what companies want. But they should get their feedback and their input because they're going to make...

policies better together if they collaborate. And I'm encouraged early on that this administration wants to talk to businesses. Are you taking calls personally? You know, I take calls. We talk, you know, same thing with all the administrations. We talk to people in the administration. We share what's working for us, what's not working for us.

concerns that we have. As I said, some administrations care more about our feedback than others. Has Trump cared about yours? Have you spoken to the president? I have spoken to the president. Look, as I said, this administration has been pretty busy the first month. But I am encouraged that they are having conversations with businesses and they do care about our feedback. And we'll see what happens. But, you know, it starts with a dialogue. You have to have a dialogue to have any kind of relationship.

and they care about AI infrastructure. Just take Stargate. Are we going to hear more from you on

how much you're investing here in the United States on the AI infrastructure build-out as well? Well, as we talked about earlier where we said it was directionally right in terms of the run rate on our CapEx, we're spending a lot on AI infrastructure and the lion's share of it is not just on AI but also in this country, in the U.S. We spend elsewhere because we have a global business. We have customers everywhere. We have customers in a couple hundred countries, but

We have a pretty substantial investment that I don't expect to attenuate soon. If only we could get a number. I'm interested in something that perhaps is going to feel a more sensitive topic. And it comes around perhaps some words that were missing in your annual report this year, which were diversity and inclusion. I put this in the context of the administration as it stands because I know that Amazon strives to be the Earth's best employer.

And I'm just wondering how your employees react to perhaps the lack of certain words now involved and whether or not programs might be forced to change or not. Yeah, well what I would tell you just at a high level, if you serve as many customers as we do in as many diverse groups,

as we do and we intend to moving forward, you have to have a diverse team to be able to build products that work for everybody. And that has always been our intention. It continues to be our intention. I think that...

You know, there were so many programs that we launched and other companies launched in the pandemic. And as you probably have seen over the last three years, we've gone through very thoroughly every single one of our business areas.

And the programs that we had conviction about, we doubled down on. And the programs that we don't have conviction about, we streamline and we stop doing. And so we did the same thing in looking at all of our programs on diversity. And, you know, we have some programs that we have doubled down on. A good example is our career choice inside our fulfillment network. Our fulfillment center teammates are able to get an advanced education for free on us.

to advance their career and their own development. And that has been very, very successful and very meaningful. And so we doubled down our program like that. There are other programs that really just haven't been that successful and haven't moved the needle much, and those we just moved away from. But we have a diverse group. We're trying to continue to build out a diverse group, and that won't change. And you can't...

you can still use that word ultimately, you're not having to reframe it. - That is, I mean, look, you can call it, lots of people call it lots of different things, but we have a giant customer base of every imaginable group of people where we want builders who can build for them. - Culture.

is key. And you just talked about how you're doing more with less. It's always a focus on frugality that's in your very principles. That's something you've been doing at the employee base as well. You wrote out, made it very clear that they were going to be reducing layers. How is that going? Yeah, it's going well. You know, look, if you have a company where the culture is an important ingredient in your success, which has absolutely been true for Amazon,

It's not your birthright to keep having a strong culture, especially as you grow the number of people, the number of businesses you're in, the geographies that you're in. And so you have to work at it all the time. And for us, there were two areas when we looked at it as a leadership team last year that we wanted to strengthen. One was we have always hired really strong owners, smart, ambitious, strong owners who get to own the lion's share of

in this case, I would say 90 plus percent of the decisions. And they, as you add a lot of people, you end up

with a lot of middle managers and those middle managers, all well intended, want to put their fingerprint on everything. So you end up with these people being in the pre-meeting for the pre-meeting for the pre-meeting for the decision meeting and not always making recommendations and owning things the way we want that type of ownership. So we took a goal collectively

to increase the ratio of individual contributors to managers by over 15% as a company by the end of this quarter. We've made very good progress in that, we beat that already. And it's gonna allow us, for the people that are doing the work, they're gonna have more ownership and they're gonna be able to move more quickly. And then I think the other thing we saw was that if you're a culture that invents a lot and collaborates a lot like we do,

If you don't have people in the office together doing that invention, it's just meaningfully worse. And you don't invent the same way, you don't collaborate the same way, you don't connect with each other the same way, you don't learn the culture the same way. And so having people back in the office together more frequently, we felt very strongly that it's gonna be better for customers and the business. - Let's talk about that invention and that collaboration. We've got a new quantum chip, Ocelot, love the name. What does that mean for you to have this more efficient chip

at this exact moment. Will we start seeing it be practically useful soon? Well, quantum computing is very high potential. It has the chance to solve some very computationally intense problems and I still think it's realistically a few years away from having a real shot at solving those problems, but you have to solve

a bunch of these challenges that relate to quantum computing along the way. And one of them really is around error correction on the qubits. And that's what OSLA does. It's a very unique, inventive way to do error correction on the qubits that makes a meaningful difference. And we're excited about that milestone. You can't get to something that has real impact unless you get those milestones done along the way and you invent along the way. And that's just another example of invention. My field

The learning of how generative AI suddenly became not just in the business parlay, but suddenly everyone was discussing it. I think people are aware quantum could do the same thing. So when you hear people debating between two decades or five years, where do you sit on the grander scope of that?

Gosh, I don't know for sure. I would say I'm hopeful that it's more in the five-ish year range than it is the 20-year range. All these things that are successful are seven, 10, 20-year overnight successes. If you look at generative AI,

It's just kind of another evolution of AI, but we've been working on AI for 50 some odd years. And then it just, boom, it happened and it really shocked us when it actually was more accessible and worked.

And I think the same thing could happen with quantum computing, which is, you know, takes a long time, takes a long time, takes a long time. And then all of a sudden it's functional and solves problems that you couldn't solve easily or cost effectively before. It just feels like it happened overnight. But quantum computing we've been working on now for 10 plus years. And then the euphoria comes and then people try to make head or tail of how long that euphoria lasts.

Going back to the investment that you make, and particularly in generative AI, do you think it's going to be peak year for generative AI in terms of that investment that Amazon makes? I don't know. You know, it's funny. I have this feeling that you're going to end up with some people that feel a little disillusioned about generative AI because of the investment or you're getting the commensurate return. It's still very early. You have so many companies that are really doing pilots right now of their generative AI applications.

And you already see a little bit of it. But I think that the smart companies are going to figure out which are the initiatives that can really change their customer experience in their businesses and keep investing in generative AI.

And the slower companies are going to wait to see if it's safe to go outside and they'll be behind by two or three years, maybe more, because the reality is even more so than software development, generative AI is very iterative. It's not, you know, in software development, you can get on a whiteboard with a team of architects and design something and maybe it doesn't work exactly as you designed it, but largely. You know, whereas in generative AI, the models,

they get better at kind of disproportionate rates. Sometimes, you know-- - Scaling law, have we got a new scaling law as Jefferson says? - Yeah, I mean, I think that a lot of times when you're building models and the model gets so much better and you talk to the scientists on the team, they just can't believe how much better it got 'cause the model is learning itself. And so, I think that if you actually aren't investing in generative AI, you're gonna be behind by even the amount of time that you waited because there are so many lessons you get from iterating and building applications today.

And you want to be the supermarket of AI, it feels like, agnostic to the models as it is with Amazon Alexa Plus? Well, you know, look, the truth is what we care most about in all our businesses, but as it relates to AWS and AI, we want our customers to be able to change their customer experiences and improve their businesses so they can last over a long period of time successfully. And if we do right by our customers and take the long-term approach we do,

and they're able to run their applications successfully on top of our technology infrastructure services, then they're successful and we ride along with them. And so, in all these areas, we have services we build ourselves in the models area. We have Amazon Nova, which people are really excited about because it's got comparable intelligence to the leading models in the world, but it's meaningfully less expensive and lower latency. But if customers prefer to run other models, we have a huge partnership with Anthropic and with Lama and

DeepSeq. MeStraw, DeepSeq. I mean, we have the largest collection of leading foundation models in the world. And if customers are having success with those, then we're happy. And the truth is, if you build a lot of generative AI applications, people don't realize this, you use multiple model types, often in the same application. Even Alexa Plus, as we talked about, uses multiple foundation models.

And so we want people to use the right model for their applications and then we make it easy for them to switch between them and run it easily and successfully on AWS. Andy Jassy, perfect place to leave it. Start with Alexa Plus, end on Alexa Plus and all the generation, generative AI that comes with it. We thank you so much. Thanks for having me. Andy Jassy, President and CEO of Amazon. We're going to be right back talking more around what's happening with the NASDAQ 100 under pressure as Nvidia sells off post its numbers.

What solace did NVIDIA give to its investor base when it comes to generative AI adoption?

Now, Taxes is easily uploading your forms to a TurboTax expert who's matched to your unique tax situation. An expert who's backed by the latest technology, which cross-checks millions of data points for 100% accuracy. While they work on your taxes, you get real-time updates on their progress. And you get the most money back, guaranteed. All while you go about your day. No stressing. No worrying. No waiting.

Now this is taxes. Intuit TurboTax. Get an expert now on TurboTax.com. Only available with TurboTax Live Full Service. Real-time updates only on iOS mobile app. See guarantee details at TurboTax.com slash guarantees.

The world is built on code. From the apps we use every day to the systems powering industries, developers like you are the architects of tomorrow. But let's be real, the road to innovation can get a little tricky. You need the right tools to move fast, but you also need a community to help you go further. That's where Microsoft comes in. Microsoft has the tools to help you move at lightning speed, like GitHub Copilot, VS Code, and a ton of AI resources to keep you on the cutting edge.

But here's the best part. You can build with confidence, knowing that Microsoft security and compliance are already taken care of. No more worrying about vulnerabilities or threats while you focus on your craft.

Welcome back to Blue Mag Technology. I'm Caroline Hyde in New York.

And I'm Jackie DeVallis in San Francisco. Let's get a check on the markets. The Nasdaq 100 is down on the day about five tenths of one percent, reflecting this tepid sentiment coming out of earnings. And that's after results in some cloud and chip players are leaving more questions than answers about the longevity of the AI rally. We're also looking at Microsoft, also down on the day about four tenths of one percent.

The company today urged the Trump administration to rethink regulations that would cap the export of AI chips to what it believes are vital markets. Microsoft argued those chip curbs could spur countries to turn to China for advanced chips. Broadly, Microsoft is following a similar trend as other tech stocks that are showing unease about whether AI's boom is actually losing steam.

Perhaps the most important barometer of that is Nvidia. Shares are also down today, reflecting these concerns about profit margins that eclipsed a sales beat and upbeat revenue forecast. Bloomberg's Ian King joins us now to break down some of these results. I really want to home in on what was really going on that probably left investors feeling wary. It's a newer line of chips, Blackwell. They're rolling out, but at what cost?

Yeah, I mean this is a continuation of what we saw three months ago where they're saying,

Everybody wants these chips. We want to get them out as fast as we possibly can. Guess what? It's more complicated. The computers they're based on are way more complicated. It's going to cost us more, but don't worry about it. Once we get to full production, everything will come back and our margins will go back up. But at the same time, the margins are still above 70%. I mean, people would weep to have more than 70% margins. And we hear, of course, from Colette trying to signal that they'll get back to mid-70% by the end of the year. But...

When we've got the market still skating on thin ice here, Ian, was enough said about China? Was enough said about potential hits to their future demand from competitors such as Amazon, for example?

Yeah, I mean, as you're indicating, there were several areas of concern coming into this. And the company had clearly done their homework. They pretty much answered everything in order and went at it pretty hard with statistics and assertions. I mean, underlying this, though, is this is a company that investors have got used to actually having every earnings be a blowout. And this wasn't a blowout. This was just regular common garden brilliant, right? Well, yeah.

Just 80% almost growth in revenue. Yeah, I mean, we're a $120-odd billion company. Two years ago, we were in the 20s, right, in terms of revenue.

Margins are up 10, 15 basis points from where they were a couple of years ago. So we're not suffering here, but we're just not surprising people on the upside in the way that we used to. Ian, let's talk about what took NVIDIA's wind out of its sails earlier this month. Last month when DeepSeek really came onto the scene, it sparked a lot of concerns that we might not need as many chips as we thought we might. What did the company have to say about that? Yeah, I mean, a lot of what they had to say was clearly disastrous.

designed to deal with that concern and Jensen Huang, the CEO, what he was saying is like, "Look, this is a new way of doing things, but don't worry, our chips are really good at that as well. And guess what? In the end, this is going to speed everything up. Everybody's going to be flowing into this way of doing things. This is good for everybody." And he gave a lot of technical explanations that were obviously self-serving, but at the same time logical and reasoned, and that appeared to sort of slay that dragon. But again, you know, the numbers are what people really focus on.

What's so interesting is at this time we're wondering about what the administration means for Nvidia for its access to selling chips to China but also to allies. And we've got this push from Microsoft today, Brad Smith calling on the administration to basically avoid this focus on AI diffusion rule as was imposed. What do you think Jensen's reaction would be to Microsoft's letter?

I mean, you could argue that, you know, NVIDIA are kind of the precursor to this sentiment, and you got a little bit of that from AWS as well. I mean, the fundamental argument here is, like, if your efforts to hobble China are totally successful, guess what? It might backfire. It might hobble us. It might hurt our research and development budgets. It might...

hurt our end market access and eventually China is going to be so motivated that they're going to get there themselves and we'll have no play there and we'll have created a monster that we can't control. That's the fundamental argument that's being given in different ways and Nvidia has been definitely one of the ones that's been voicing that.

Greenberg, Zee and King, brilliant to wrap it up with you. Thank you. Let's bring in the investor take now. Ayoko Yoshioka is with us, Portfolio Manager at Wealth Enhancement Group. Let's just go back to the fundamentals of NVIDIA's business right now. What did you make of the numbers? Was there not enough there to excite you at this $3 trillion valuation? Hi, Caroline. You know, we thought the results were actually pretty much in line with what we were expecting and maybe slightly better.

You know, it's just that in this environment where there's so much uncertainty in the markets, you know, people are just a little skittish about just waiting and being a little bit more patient to see some of these numbers come through. I mean, they did talk about how margins will expand in the second half once Blackwell becomes a greater portion of the mix. But, you know, people are a little bit impatient in this environment.

Ayako, what do you make of the company already starting to talk about its next model of AI chips, the Rubin chip? I mean, it just seems like a lot of these newer models are just coming out really fast. Do you think that's going to be a longer-term drag on margins or even risk exhausting customers? I think so. And I think we see this just in the sort of end use case and how quickly we can adopt

into all of our everyday lives. I mean, Amazon's a perfect example of how they're trying to incorporate more agentic AI into our lives through Alexa Plus. But we have to see this in more areas and consumer behavior is really slow to change when it comes to adopting new technology. And so we've got to really see the pace of consumer demand and enterprise demand really match the build out

of AI, but the structure, the underlying infrastructure of AI is going to take a lot more compute power as Jensen has mentioned. And so that's going to continue, I think, in order to just set the stage. - What did you make of the company's comments around inferencing and its ability to really take advantage of this next frontier where a lot of these new reasoning models are going to depend on this type of training? Are you confident that the company is poised to really benefit from that?

You know, I think I won't doubt Jensen and the technological advances that he's been able to create at NVIDIA. And I do believe that just the overall inferencing market and just all

the reasoning, just the amount of compute that they talked about, 100 times more compute power needed in order to do all the reasoning behind the scenes. I do believe that that is probably the right direction. I know there was a lot of concern when DeepSeek came out, but I think this is just a new level and another area that AI is going to continue to proliferate in more use cases for AI.

There are these limitations, though. I think, and agree, Jensen Wang did a lot to talk around these new scaling laws that come with the latest and greatest models and reasoning. He didn't really talk to, though, some of the geopolitical limitations right now. And when you've got Microsoft coming out, Brad Smith asking the government to basically do away with Biden's AI diffusion rule, to allow companies to sell globally with ease, is that something that you're thinking about?

Absolutely. I think even when you go back to when DeepSeek's news came out and really impacted the whole sector, it really goes to show the arms race or the AI race that's in hand at the moment. And it is critical and really important for the U.S. to be in that pole position. And I think that's what's going on here. And we'd like to get as many friendly faces on board with

how we, the United States and Nvidia and other chip companies are deploying AI. Okay, poll positions then. Which companies are in the poll positions for you right now? Which ones do you want to be adding to at this moment?

Sure, so I mean, I think from a tech standpoint, you still want to have some of the big tech names. You know, NVIDIA, we're not selling any NVIDIA at the moment. We know it's been range bound for a while. We do believe in the long term it will continue to grow.

Broadcom is another name, and Microsoft as well. I mean, Microsoft is at the forefront here pushing for additional globalization of their technology and allowing for their technology to be more ubiquitous so that they can again, everybody wants to be in that pole position, and I think we want to put America first. That's Ayako Yoshioka from the Wealth Enhancement Group. Thanks for joining us.

Shares of Salesforce under pressure the company telling investors on its earnings call yesterday that it expects its AI product agent force to give just a modest contribution to 2026 revenue Let's unpack it all with Alex Zirkin of a wolf research Alex Look, the forecast was what worried people here forty point five to forty point nine billion dollars is agent force Just not bringing enough force quickly enough. I

Look, I think with new innovations like AgentForce, particularly when you're dealing with very large, complicated customers, a lot of times in regulated industries, you want to be slow, you want to be methodical, you want to really be in there and delivering value, but you want to be conservative. And I think that's a feature, that's not a bug. And I think investors, generally speaking, they've seen this movie before with their

arrival of the cloud, where it does take time. And I think with agent force, we would expect it to be less than a point of contribution. A lot of times you're seeing companies start small, experiment, and then have the ability to get a lot bigger. I think it's also important to remember there's a labor

there's a labor, not cost, but there's a problem here where you want to be very careful and nuanced in how you treat this innovation because it can be disruptive to culture. And so you want to really have a great sense of what's durable, what's reliable, and then what's transferable.

And I think Salesforce is kind of in the mix and in the middle of really driving that massive innovation for these customers. Let's talk about Salesforce's own labor quandary, because not only are they having to get rid of some to put in more AI talent, they're also having a real change of ship in terms of the executive level. What do you make of all the changes?

I think as companies get bigger and they evolve, it creates the opportunity to attract new talent with different levels of experience. I think Salesforce has done this probably better than many other companies in the past. You've seen it as they went through multiple very senior co-CEOs like Keith Block, like Brett Taylor, injecting just the right amount of stuff that the company needed at that time. I think with the current

change. I think Robin brings a lot to the table. She really brings a lot of experience, the new COFO, as they call it, where she inhabits both the COO and the CFO title. I think there's a lot of opportunity with that change. I think it's right for investors to understand that it's a little bit riskier from an execution perspective, but they've got the right set of hands on the controls to, I think, get you smooth sailing.

Alex, Salesforce has been an evangelist for agents and this is seen widely as the next big application that will actually justify just how much investment has gone into the space because it's seen to be useful. Things in customer service will be able to be taken over by agents in the future. Are you worried that what Salesforce said about its demand for agent force portends something deeper about adoption going forward?

It's a great question, and I think that Salesforce is not the first company to create a moniker around generative AI utilization in the enterprise. I would say that goes to Microsoft with Copilot. And I think Salesforce has a real opportunity, and they want to be very careful. They want to go slow. They want to

really doubled down on the successes that they're seeing. And they talked about some pretty marquee large customers, Singapore Airlines. They talked about Accenture. There were even examples with OpenTable and Shark Ninja where those companies actually discussed

agent force on their own earnings calls. So I would view the demand is off the charts, the fact that they went from 300 deals to 3,000 deals in one quarter, but I think you have to look at this over a period of time where the amount of value that these customers will be able to realize in their own organizations and the amount that they will be willing to pay to Salesforce versus the amount they currently pay, it could be a meaningful multiple of that amount, but I think it's going to take time.

Speaking of customers, Marc Benioff said that the Department of Government Efficiency, DOGE, has actually been using Slack for some of its work. What did you make of that? Sounds like they have a really good collaboration platform that they acquired. And I think part of the vision for Salesforce, part of the vision for AgentForce, is to have a ubiquitous communication platform because you can

it has a lot of data that's very relevant in a lot of workflows, and the data model that Salesforce can effectively enrich by having those conversations available directly in the application is going to be important. So, look, I look at this as these people need to have relationships with everybody, and I think that Mark talked a lot about how many administrations he's worked with, the company he's worked with, so I would view this as a positive for Salesforce.

Thanks, Alex Zukin from Wolf Research. Appreciate you coming in to unpack that for us. Turning to the entertainment sector, Warner Brothers, Discovery and Paramount both out with their earnings. Here to unpack them for us is Bloomberg's Hannah Miller. Hannah, streaming was a bright spot, which is something that we haven't really heard that often when you look at some of the streaming players out there in recent months. What was driving the demand here and profits as well?

Yeah, so both Warner Brothers and Paramount focused on the huge streaming gains that they had in the fourth quarter. And they were kind of trying to draw attention away from the fact that they missed on revenue estimates and are still struggling with their cable TV businesses. If you're looking at Warner Brothers with subscribers, they did a huge international push early in 2024, especially in Europe and Latin America. So that helped drive subscriber gains for them.

It really was an international focus and subscribers coming up to 117 million with that advertising revenue really being buoyed. What then a paramount, because look, the paramount plus ads were good and better than expected, but elsewhere fell short.

Yeah, I mean, Paramount really emphasized the fact that, you know, their streaming business is growing. They are aiming to be profitable by the end of this year. And they really leaned on the fact that they have this wide range of content, especially shows created by Taylor Sheridan, who is of Yellowstone fame and has that hit success. So that's what they really tried to push forward in their earnings. You know, again, drawing attention away from the fact that their TV businesses are not doing as well as they would hope.

Anna, what did the company say about how it plans to sustain some of that content generation because it's really expensive to invest in and it takes time as well?

Yeah, I mean, Warner Brothers really emphasized this morning that they have a diverse range of content. You know, they're pulling from sports. They're doing scripted HBO shows. The White Lotus came up. That's a big one. The Pit, a new medical show, is also something that they're really pushing forward. So they're really emphasizing the fact that they're willing to invest in creative ideas and that this is how they're getting customers.

Hannah Miller, we appreciate it. Thank you. Talking of creatives, YouTube star Mr Beast is seeking to raise a couple of hundred million dollars to expand his business in a funding round that would value the company at about $5 billion. It's all according to sources. Talks still in the early stages, not yet clear who will invest. Coming up, more on Amazon's Alexa Plus, its quantum computing chip announcement and more. This is Bloomberg Technology. ♪

This is a message from sponsor Intuit TurboTax. Taxes was dealing with piles of paperwork and frustrating forms, and then waiting and wondering and worrying if you were going to get any money back.

Now, Taxes is easily uploading your forms to a TurboTax expert who's matched to your unique tax situation. An expert who's backed by the latest technology, which cross-checks millions of data points for 100% accuracy. While they work on your taxes, you get real-time updates on their progress. And you get the most money back, guaranteed. All while you go about your day. No stressing. No worrying. No waiting.

Now this is taxes. Intuit TurboTax. Get an expert now on TurboTax.com. Only available with TurboTax Live Full Service. Real-time updates only on iOS mobile app. See guarantee details at TurboTax.com slash guarantees.

The world is built on code. From the apps we use every day to the systems powering industries, developers like you are the architects of tomorrow. But let's be real, the road to innovation can get a little tricky. You need the right tools to move fast, but you also need a community to help you go further. That's where Microsoft comes in. Microsoft has the tools to help you move at lightning speed, like GitHub Copilot, VS Code, and a ton of AI resources to keep you on the cutting edge.

But here's the best part. You can build with confidence, knowing that Microsoft security and compliance are already taken care of. No more worrying about vulnerabilities or threats while you focus on your craft.

And with Azure AI Foundry, you can build your way. The future is yours to build, no strings attached. From ready-to-code tools to full flexibility, it's all in one place. The future's in your hands. So learn more at developer.microsoft.com.

So we kicked off this show with Amazon CEO Andy Jassy joining on artificial intelligence. And this is the company, of course, also just announced its first quantum computing chip. Well, significant move. Joining the likes of Google and Microsoft, who also recently came out with their own quantum hardware. Let's break it all down with Bloomberg's Matt Day. And first on the quantum chip, they really are going for, like, efficiency. Once again, it's kind of Amazon's MO. Oh, it's totally their playbook. They were talking about how much they could reduce the overhead of building a quantum chip. They were reminding us, hey, listen, if you actually build one of these things in practice, it might cost you a billion dollars. So they're going to do it.

It's a very AWS playbook to say, listen, we think we can build a cheaper mousetrap that might get more uptake. Matt, how much of this is just companies trying to plant a flag to show that they're in the quantum computing game? Are we actually expecting to see anything come out of this in the short term? Short term, I'm not so sure. But I think it's notable talking about AWS's announcement this week that

They said a decade is maybe pretty aggressive, right? Which is a lot more sober than you had Microsoft a few weeks back saying years, not decades. So there's definitely a lot of positioning going on right now, but put AWS down on the more conservative side saying, listen, there's still a whole lot of work to do. I think the change that has happened is folks are saying it's a when, not an if, and you're hearing that really from around big tech.

They're not conservative when it comes to spending. And try as I might, I tried to get Adi to spell out what lion's share of $100 billion CapEx is on AI. Just take a listen to what he said.

You did say basically $100 billion run rate for CapEx expenditure. Can you give us even like a percentage breakdown of how much that goes to distribution, logistics, and how much goes to AI? Well, lion's share is, you know, tells you most of it. You know, the lion's share is more than 50%, yes. Is it more than 80%? We're playing the warmer and colder game? Yes, exactly.

Do we need more specifics? I think we will, but he did make some news, I think. Amazon's been real careful about their generative AI franchise. They've had multiple billions of dollars in revenue. I think Andy told you many billions, so we're parsing adjectives here, but I think they're getting a little bit more specific, and they're going to have to as this business grows for them.

Matt, what do you make of some of the competition? Of course, you know, you've been looking at quantum very closely. Alexa is now really competing in that hardware space all over again. But kind of shifting back to the quantum piece for a little bit, I kind of want you to break down if there are any differences in what Jassy said about how they're approaching it versus what Microsoft and some other players have said.

Not particularly. Everybody says, you know, quantum is a really hard problem to solve. Everybody says there are so many errors inherent in quantum computing. I think, again, the AWS approach here seems to be sort of simplicity and trying to take out as much of that cost as they can, right? Microsoft's in a little bit different boat technologically. You know, they're talking about inventing states of matter. Those aren't claims you're going to hear from Google or Amazon for sure. Very briefly, it seems like they're still committed to stripping out the layers within the company, though, and that's going well?

you know it's not a crisis right like we've we've heard you know retention issues like a lot of folks feel people a little upset about rto but you know for now no big layoffs in 2025 we'll see that day it's been a joy having you here in new york as well he's gonna bid farewell and jump on a plane to seattle but that does it for this edition of bloomberg technology do not forget to check out our podcast find it on the terminal as well as online on apple spotify and iheart this is bloomberg technology

Terms apply. Limited time offer.

This episode is brought to you by Intuit Enterprise Suite. As businesses grow, so do the challenges. Data gets scattered, tools struggle to keep up, and manual tasks pile up. With the all-new Intuit Enterprise Suite, you can keep expanding with

out the headaches. Intuit Enterprise Suite is an AI-powered solution that brings all your data together in one place, managing financials, payroll, payment processing, marketing, and more. Learn more at intuit.com slash enterprise. Money Movement Services by Intuit Payments, Inc., licensed by NYDFS.