Nvidia Eyes China Expansion, ServiceTitan's Big IPO
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From the heart of where innovation, money and power collide in Silicon Valley and beyond, this is Bloomberg Technology with Caroline Hyde and Ed Ludlow. ♪♪

Live from New York, this is Bloomberg Technology. Coming up, Adobe drops after a disappointing annual sales outlook as investors fear AI startup competition. Plus, service titan goes public. Shares indicated to rocket at the open. We speak with the software company's co-founders. And IPO in waiting. Klarna joins us and the CEO discussing how it's all in on AI.

But first, quick check on these markets. We're down 0.3% as we await the opening trades in certain IPOs. At the moment, the moon music is a little bit low. We had some of those...

overall inflationary numbers coming from the product size of the equation coming in a little bit hotter. Maybe that just dampens the spirits. But remember, we are so close to record highs that we met yesterday. Just maybe a bit of profit taking. Move on from the Nasdaq to some individual movers. And we have got a key points drag in Adobe. It is the worst performer when you're looking at the Nasdaq 100 in terms of dragging us lower some 13 percent. Worst day since back to March when it had its underwhelming numbers then. Fast forward to today and

after the bell yesterday, they really signaled that the AI inflection point isn't there yet. We're still seeing revenue coming in at about 11 or 13% being the guide. I'm looking at Nvidia on the downside off by 1.5%. Look, it's interesting that it's pushing back against that anxiety that

Maybe it's pulling back from China, taking to social media, in fact, the platform Weibo, to emphasize that the significance of the Chinese market is still there, despite U.S. trade curbs and the fresh Chinese antitrust investigation. In fact, Bloomberg is reporting that the chip giant is expanding its research capabilities in China, adding hundreds of staff to focus on autonomous driving technologies. Let's bring in Bloomberg's Peter Elstrom. And this is notable. They're pushing back against that worry and, in fact, beefing up in China, it seems like. I was there.

Yeah, that's exactly right. Now, there are a lot of crazy rumors online in China, just like there are in the United States and elsewhere. But this got serious enough that NVIDIA felt like they had to respond and just clarify they're continuing to deliver products and services into China. And what our sources have told us is they're expanding quite a bit in China. Of course, the company has been growing by leaps and bounds, and they're expanding in many different countries. But what we've heard is that in China, they're expanding. They should go from about

3,000 employees at the end of last year to about 4,000 employees at the end of this year. As you alluded to, specifically, they want to expand in the autonomous driving area. China, of course, is the biggest auto market in the world. It's also very important for some of these cutting-edge technologies like EVs, autonomous driving, etc. So, NVIDIA can't sell its most advanced AI chips into China, but they do still want to invest in the market, and they want to invest in some of these growth areas like automobiles. And

This has been an ever-expanding area of new names getting into the EV space over in China. What are the regulations? Is it far easier to be putting autonomous driving onto the roads there? Certainly that's something that Elon Musk has signalled.

Yeah, the government certainly has been supportive of some of these new technologies. The EV market there is booming. You have companies, domestic players like Huawei, moving very aggressively into this space, providing the kinds of technologies that the car companies need to be able to expand in that market. So NVIDIA wants to be present in that market. Also, very

importantly, they're forging relationships with important companies there. They have a presence on the ground. They're expanding their headcount, as we talked about, to sort of signal that they are supporting the Chinese market. They were able to sell advanced AI chips in the past. After a couple of rounds of export controls from the Biden administration, they had to pull back on selling those most advanced AI chips.

But Jensen Huang, the CEO, has been quite vocal that he'd like to be able to sell as much as he can into the market, provided that the regulations come around. So he's certainly investing in the market right now with a view to the long term. Good is that, from a business perspective, when we have so much uncertainty weighing over U.S.-Chinese relations. I mean, we do see, well, it seems as though Trump is extending the olive branch of an invitation to Xi to come over for the inauguration. But more broadly, it feels like tit-for-tat is endless.

Yeah, it does look like that. When you look at the dynamics between Washington and Beijing right now, it does not look promising. There have been a lot of tensions in the past, of course. The one thing that the Republicans and the Democrats can agree on is that they want to get tougher on China. So it seems like it's heading in that direction. But remember, just 10 years ago, you had companies that were investing in China. The relationship between the two

countries was very strong and all these companies want to do is make money they want to invest in the market they want to grow as much as they can so i think uh... company like nvidia wants to position itself so that it's able to capitalize if the market opens up right now again it gets about fifteen percent of its revenue from china so it's not small

but they can't sell their highest end chips, their most profitable chips right now. Instead, they're selling those into the hyperscalers like Microsoft and OpenAI, Google and Amazon. But long term, they'd like to be able to sell as many of them as they can. That includes the Chinese market.

Peter Aylstrom, thanks so much for the breakdown. Let's just stick a little bit more with China because it has been signaling further stimulus measures, including raising the budget deficit ratio in 2025. All of this is about maintaining economic growth, some sort of stability that the market has been doubting of late.

Let's discuss US, China and indeed the economic outlook there. Empower Chief Investment Strategist Martin Norton is here with us. And what's so interesting is your view on valuations in China, opportunities to be investing in China in this context. Is it ripe for investment?

Well, it's a critical question here. Really, the argument for China and China big tech in particular is a valuation argument. When you take a look at big tech and the types of companies that you have there, very strong competitors, very strong balance sheets, shareholder friendliness.

strong earnings and very low valuations. In a world in search of low valuations, that's attractive. But of course, you don't get those low valuations without some headwinds. And there are headwinds galore in China. And of course, that's on the geopolitical front, but it's also on the economic front, whether you're looking at the property considerations or just looking at consumer demand. So there are

a lot of considerations that I think would get investors pause. The upside is that there's a margin of safety that can cover that. So we wouldn't suggest that investors pile all their assets into China, but we would argue that the valuation opportunity is compelling enough that maybe some exposure would make sense.

Well, then you compare and contrast to the valuation lack of opportunity here in the US. I'm looking at a Nvidia trading at 47 times, let's call it, future earnings. We've got a $3.3 trillion market cap. The margin for error there, very, very small when you're considering China.

That's, I mean, that's exactly right. So what you have in the U.S. is kind of a yin-yang with what you see in China. So, of course, you have very fundamentally strong companies, you have a strong economy, and you have some potential geopolitical concerns, but nowhere near what you're seeing in China. And yet the valuation argument isn't there. So if we're taking a look just over the course of 2024,

and we're looking at the MAG7, we saw a price to estimated earnings at the start of the year of around 35, and today it's around 40. That's not extreme. It's not at the extreme levels that we've seen over the past five years, but it's certainly above that five-year average. And it just means that it's going to take a lot more to surprise investors on the upside for there to be a positive reaction. And we've seen that over the course of this year, most notably in the summer when Nvidia largely beat expectations, but the market sold off.

So I think that just takes a lot of maybe the excess return feel out of these names. Look at Adobe, case in point today. They managed to deliver on this fiscal quarter, but the forward-looking forecast not living up to expectations and it's dragged significantly lower. I'm interested in, though Alphabet managing to reach to new heights, I don't want to go so much into individual names, but from an antitrust perspective, are we putting that to the backside? Are we not worried so much about the power, the domination of these Mag7s?

Well, it's an interesting question because the antitrust and really the regulation considerations around big tech have been something of an overhang for these companies for quite some time. And now we're starting to see that come to the fore a bit more. I think

When we're taking a look at Alphabet and we're looking at some of these considerations on the regulation or antitrust front in particular, there's still some unknowns, some challenges that will come about as these companies kind of navigate exactly how they're going to play out with the antitrust and what steps they're going to actually take. I don't think that's necessarily clear. And in the meantime, we still have a very strong, fundamentally healthy company that looks to

you know, accelerate some of the opportunities from AI. Look, you're helping oversee $57 billion in assets under management, Marta. I'm interested, therefore, where you do see the risk-reward right now. Is it about diversifying, broadening out from Mag7 at this moment? Well, listen, I mean, I think it's hard to step away from Mag7. Most...

Obviously, because it represents such a large part of the overall market, a third of every dollar in the S&P 500 is going to these names. So hard to diversify away from them completely. And yet at the same time, they're all really keying off AI. And as we've talked about, there isn't as much margin of safety. So as we head into 2025, our outlook calls for

for balance over conviction. And the way to play that, we think, is maybe to have just kind of a modest underweight to some of these MAG7 names that are the biggest companies in the market cap, and then add in some of these small cap areas that have more relative value in their corner, and also have some tailwinds when we start to think about Trump tax policy or when we're thinking about potentially lower rates over the course of the next year. And you mentioned rates. Where in

Well, ultimately, the stack should you be from an asset class perspective. Is it all about equities? Is it worth going into the credit side of these tech names? Well, it's interesting. I think when we're taking a look at where rates are headed, the expectation earlier in the year was that we were going to see potentially falling rates in a meaningful fashion over the next decade.

call it 12 months. But as the economy has come in a lot stronger and as the market grapples with what Trump policies might look like, I think the expectation is still there for lower rates, but maybe not quite to the same degree as people had thought previously. So when we're looking at the fixed income versus equity trade, I mean, yields are very attractive, but we're seeing this as more of a coupon clipping year

and less of a total return year in fixed income. We're actually expecting lower, more moderate returns on the equity side too. So in the sense of kind of returning to that theme of balance, we call it for a year for balance on an asset class perspective as well. What? You're not expecting another 100% increase on NVIDIA for the year, Martin Norton? It's so good to have time with you. Empowered Chief Investment Strategist. Appreciate it.

Home service software business ServiceTitan hits the public markets in what could be the last major US IPO of 2024. Shares indicated to jump to $109 after they were priced at $71. ServiceTitan CEO Aram Edessian is with us. President Vahe Kuzuyun is with us as well. They are joining us from the NASDAQ.

I mean, the indications offer a whopping jump in the share price. Ara, how do you feel on this day? We're very excited for this day. It's an important day for our company, but more importantly, this is a historic day for the incredible industry that we serve. We think of this as the national day

of the trades and we celebrate and honor all the hard work and salt of the earth contractors that work so tirelessly to serve their communities. Vahe, I mean this is a personal story. Both of you had fathers, immigrant fathers coming into nice estates as contractors, as plumbers. You're solving their problems. How differentiated is your offering from a technology perspective?

Well, we like to think that we provide a business in a box that provides an end-to-end solution that gives you anything you need to run a successful trades business. And when we were growing up, we saw the struggle that our parents had running the back office

shoeboxes full of receipts, we knew we had to do something. And so that's our big differentiation is it's an all-in-one, all-under-one roof solution for this industry. We can see the team based behind you. You're serving 100,000 plus contractors. We can now see that you've got about a $7 billion valuation when you were pricing. It's going to be more than that at the open. Is there a concern that you left money on the table that you could have raised more than $625 million?

What we're focused on are things that we can control. Most importantly, that's taking care of our customers, delivering success for them. And that happens to actually drive our own financial success. For us, this is our life's work. We've put over a decade into building this business. We think about this business for years and decades to come. And we're just excited for this next chapter in our journey where we get to partner with long-term investors who want to support that journey with us.

Vahe, what is in control is your control of the companies. You remain basically majority shareholders from a voting perspective with a class B. Vahe, therefore, what do you allocate this money raised into? Where do you push to expand the business?

Sure. So our mission is to build the operating system for the trades and that's our number one priority. The capital that we're raising today is going to go towards primarily continuing to evolve the product and making sure that this industry is not left behind from a technology perspective like our parents were when we were growing up. Okay, Aura, just spell out what technological innovation you can now present in the future.

plans. I mean, how does this innovate? Is it about talent you bring on? Is it about integrating generative AI? Where does the product go from here? It's interesting that you mentioned AI. I think it's a little bit almost ironic that such a blue-collar industry has such big applications.

for AI and this is not hype, this is already reality today. Service Titan already offers three AI based products for things like optimizing how contractors do marketing, optimizing and automating how they do scheduling and dispatching, and ultimately also improving the level of service that they provide their end customers that our customers, the contractors are already adopting and utilizing.

The team is having fun behind you. It's good to see. Vahe, I'm interested in, you said these long-term investors that you're now going to have, the institutional investors come on board, but a lot of people keep the overall exposure. What happens with iconic growth? What happens with some of the Bessemer Ventures and the TPGs? Do you think that this is them exiting more fully? How do you see your investor base changing?

Yeah, I mean, you'll have to ask them. As far as we're concerned, we're focused on the mission and bringing on a new family of long-term shareholders that we hope to deliver a similar level of success as we did our original batch that believed in us. We take the trust very seriously, and we intend to be great stewards of their capital as we deploy it to create more opportunities for our customers.

I'm going to go a slightly different direction here, but you are from parents of immigrants. You're thinking about servicing the contractors out there in the United States. What does your client base look like in the next administration in 2025?

You know, our customers have thankfully thrived through all kinds of macroeconomic situations, through all kinds of administrations, and it's simply because the work that they do is so critical, it's so essential. When your air conditioning isn't working in scorching summer heat waves, or your heater goes out in the dead of winter, or your plumbing breaks down right before your Thanksgiving family gathering,

you have to get that fixed and get that fixed immediately. And our customers are those unsung heroes that often fly across town, sometimes in the middle of the night, to take care of the communities that they serve. Who's been serving you in this IPO are Goldman Sachs, Morgan Stanley, Wells Fargo, Citigroup, 10 other banks have been working on the deal. I ask a tough question, Vahe, but if your shares do pop by, at one point indicated, more than 100% higher, do you think they've done a good job or a bad job?

We've been incredibly grateful to the partners that we've had throughout this process. As you know, this is our first time doing this, and so having people that we trust around the table shepherding us through the process has been really great. And for us, it doesn't really matter where the price ends today. We're focused on the long term, and what we really care about is building a generational business. At the moment, the business is loss-making. So are that going to change into 2025? We're grateful.

to be cash flow positive and have been cash flow positive for the several past quarters and that puts us in control of our destiny and that's what allows us to continue to invest in the success of our customers which is what's ultimately going to drive our own success. The same thing that has gotten to this point is the same thing that is going to get us towards this mission of building the operating system for the trades.

Come back as you continue to service there and see the growth. Service Titan CEO, Ara Madesian. It's great to speak with you, President Vahe Kuzuyun. Thank you very much indeed, both of you, as we await that first opening trade. Meanwhile, Meta, we're going to talk about its donation. $1 million to Donald Trump's inaugural fund. We'll bring you the details. This is Bloomberg Technology.

89% of business leaders say AI is a top priority, according to research by Boston Consulting Group. But with AI tools popping up everywhere, how do you separate the helpful from the hype? The right choice is crucial, which is why teams at Fortune 500 companies use Grammarly.

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I'm Shinali Basik, and I hope you'll join me and many of the most important institutional investors and money managers for the year's preeminent finance event, Bloomberg Invest, returning to New York on March 4th and 5th. Come face-to-face with leading voices in markets. Identify the next big investments. Forge meaningful connections and swap strategies. Register now at BloombergLive.com slash invest.

That's BloombergLive.com/invest. Google, Samsung just unveiling a joint push into mixed reality, introducing a headset and glasses version of Android in a bid to rival Apple and Meta in that space. Now the new Android will allow a range of companies to design their own extended reality devices, both headsets and lightweight glasses, while also taking advantage of the latest AI advances too.

Meanwhile, China's Instagram-style app, Xiaohongshu, is on track to double profits to more than a billion dollars in 2024, ahead of a potential IPO. The app took off among younger Chinese during the pandemic and experienced rapid growth, partly at the expense of e-commerce leaders Alibaba and JD.com.

And as we talk about a Chinese rival to Instagram, let's bring it home to Meta here, because it's just donated $1 million to President-elect Donald Trump's inaugural fund. It's part of an effort, it seems, to build a positive relationship with the administration after a pretty tense history. Bloomberg's Kurt Wagner joins us now. First of all, on the $1 million, this is but a drop in the bucket of what Meta could afford, but it's a signal here.

Right. This is symbolic, right? This is not about the number of dollars that are going to this fund. It is a signal from Meta and CEO Mark Zuckerberg that they are supporting the incoming president. Right. And we have seen Zuckerberg kind of move in this direction over the last couple of months. He has reached out to Trump on the phone. He had dinner, as you remember, Caroline, at Mar-a-Lago with President

President-elect Trump right before Thanksgiving. So this is just a continuation of sort of that signaling that the company wants to, you know, build a relationship and get in his good graces. And a lot is on the line when we're thinking of a potential ban of TikTok here in the United States, when we're thinking of there were even threats at one point that, you know, he really, Trump had a real, felt like, focus on Mark Zuckerberg himself.

But ultimately, where does that then take us? Because take us back to the context of where we left the last administration. Yeah, it was not that long ago that, you know,

candidate Trump was on the trail talking about how Facebook was the enemy of the people that Mark Zuckerberg you know suggesting perhaps even try to put him in jail over what had happened during the 2020 election so this is a pretty striking you know change in in relationship for those two I think when you look at what is meant to have to gain obviously you know perhaps Mark Zuckerberg is just trying to create some personal favor but also for his company we're not entirely sure what Trump and his

administration are going to do around tech regulation, right? And if you are Meta, the last thing you want is to have all of your new AI products, you know, heavily regulated, the Metaverse heavily regulated. And so the more that I think he comes in and, you know, builds that relationship with Trump, the hope is that it will be returned in some type of favorable pathway for all of these products that Meta is building. How do employees feel about it? I don't know. I feel like, you know, Trump is such an unpredictable person that it's, you know, all of these,

It's like on the one hand, it's a smart, perhaps business move by Mark Zuckerberg. I think people feel differently in 2024 than they did the first time he showed up in 2016 when we saw employees start to really like push back and, you know, complain internally. I just think people are maybe they know what to expect this time around. At least they think they do. So we're not definitely seeing that pushback that we had before. But I think a lot of that is because

You know, we don't know what this is going to look like long term. We still haven't gotten to inauguration yet. So at this point, it's just, you know, initial reach out. Kurt Wagner, so great to have you. Thank you on all things meta. Meanwhile, coming up, we get a read on the consumer this shopping season. Klarna CEO is joining us. This is Blue Meg Technology.

Welcome back to Bloomberg Technology. I'm Caroline Hyde in New York. Let's get a quick check on these markets because, look, the Nasdaq is coming off of the world of the record highs that we saw yesterday. But we focus in on what's happening with crypto at the moment because Bitcoin just up three tenths percent still risk on their one hundred and one thousand. Let's call it one hundred and two riot platforms. Interestingly, getting a new activist investor, Starboard, coming on board and the shares pop.

How will they reinvigorate this miner, crypto miner? How will you also see potentially it start to service out to cloud perspective as we've seen with CoreWeave? We're up 8.5%. And more broadly, we want to shine a light on what's happening in the world of fintech, in the world of payments, in the world of Klarna, global payments and shopping service company. Oh, before we do that, sorry, just showing a light on what's happening with Adobe. We're off by some 13%.

We're currently trading lower on the back of its earnings. Look, forecasts not living up to expectations. Warner Brothers Discovery, though, we might see a bit of a restructuring. They're certainly signaling the way in which they're going to be dissecting cable away from streaming. We're up 15% on that name. But get back to the fintech side of things, because Klarna has said that they're able to use AI to help save it and its customers money this holiday season.

Let's dig into it with the CEO, Sebastian Chemetakowski, Klarna CEO. Great to have you here in the studio. And look, I actually want to signal how you're all in on AI. We actually just saw, what was it, two weeks ago, you updated the market as to your financials using not you, but a generated AI version of you. How are you trying to signal here that productivity can just be limitless?

I think it can, actually. I am of the opinion that AI can already do all of the jobs that we as humans do. It's just a question of how we apply it and use it. But I think also to some degree, part of doing the CEO AI was because when I met Sam and talked to him first time about this, I said, look, a lot of jobs are going to be threatened.

and what are the jobs that people like the least? It's lawyers, CEOs, and bankers. And I happen to be both CEO and banker. So I said, let's replace our jobs first, and AI is going to become more popular than if it replaces other jobs. So we're trying to play into that narrative. We've already played into that narrative by articulating how many customer service reps ultimately you don't have to hire going forward. You seem pretty easygoing about AI replacing you, but how do your employees feel? Well,

Well, I think what we've done internally hasn't been reported as widely. We stopped hiring about a year ago, so we were 4,500. Now we're 3,500. We have a natural attrition as every tech company. So people stay about five years, so 20% leave every year. And by not hiring, we're simply shrinking, right? What we've said to our employees, though, is what's going to happen is the total salary cost of Klarna is going to shrink

But part of the gain of that is going to be seen in your paycheck. So we're going to give some of the improvements that the efficiency of AI provides by increasing the pace at which the salaries of our employees increases. And that's because of that message being very consistent for myself and management for the last year. People in Tonle Klan are just rallying to deploy as much efficiency AI as they can because it just means it has direct implications on their equity and their cash compensation for working at Klan.

So other than customer services, how else have you felt the benefits? Where in your talent stack has it really benefited? No, it's across the board, really. You can use it for so many different use cases. I would say in our company by now, with the 3,500, I would say there's a core group of 200 people who have really learned how to apply it practically, to really deploy it to different purposes, automation, improvements, generating images, generating videos, marketing material,

running financial analysis, interpreting our customers' needs and demands, product development, cursor for engineering. There's endless right now opportunities to deploy it for moving faster, accelerate the business. You filed confidentially with the SEC ahead of an IPO, so I'm not going to ask you to comment on that, but you have been steering us as to how much you've seen an increase in revenue, 23% your AI-generated self told us.

But there's still a very small loss. Is it productivity gains that help you get to ultimately profitability too? It will be part of that, but it's also growth. I mean, we have a very healthy margin now in our U.S. business. We have a very healthy margin in our European business. So as that continues to grow, that also helps accelerate the profit-making.

And we're seeing a great uptick in buy now, pay later in the U.S. I think it was reported now during Black Friday and so forth that credit card sales were up like 11%, while buy now, pay later was up about 24%, 25%. So there's a major shift going on away from credit cards towards buy now, pay later in the U.S. I mean, you're everywhere. When you click on a website and try to pay, when you're on Apple Pay, you're doing deals with WorldPay, for example. How much more is there to bring in in the U.S.?

It's amazing. I mean, there's two things. First, the credit card

It's a trillion-dollar market opportunity, and we're still a tiny, tiny piece of that. But more importantly, in the U.S., there's $1.3 trillion of credit card debt. People pay $120 billion in interest this year, and we calculated that the consumers that have used Klana by having interest-free payments have saved over $2 billion in the last few years by using Klana instead of credit cards. So this business model is going to present a serious threat to consumers

incumbent banks and credit card companies because it is a more healthy alternative for consumers and drives credit at zero interest for them, right? I'm sure they love that. I know that you felt that they've come for you in some way, but you're

You're looking towards a new administration here in the United States. How supportive do you think they will be of? I know you've had some interesting takes on some of Trump's promises. Yeah, well, first and foremost, I thought it was interesting that as much as Trump has been talking about just deregulation removing, there was one thing he said in the opposite direction, which was, you know, in the campaigning, he said we should put an interest rate cap on credit card fees at 10%.

And I think Bernie Sanders jumped on it and said, like, oh, we want to keep him accountable to that. I guess the great thing in a lot of European markets, there is a 20 percent cap, for example, on interest rate or even lower here in the US. The average interest rate on credit cards is 24 percent. So much higher than that. Now, I think that's what's interesting to me. But then he also announced recently that, you know, if you invest a billion dollars in the US, we can accelerate licensing,

and so forth. Klon is a bank in Europe. We want to become a bank in the US. We want to speed up our money-transmitting licenses applications. We are more than happy to take Trump's and actually do that billion-dollar commitment to the US market because it is so large. We want to accelerate and we want to create real competition. You can cap interest rates as one potential way to get away from this tremendous cost to society that credit cards present.

or we can create more competition. And we're happy to come in and increase competition even more. And I mean, we started on AI, we'll end on AI because we have got the LinkedIn post which actually was put out by your CMO talking about how you were using this generative AI version of yourself to update us on your numbers.

Do you think the regulation is there for generative AI as well in the US versus Europe? I mean, give us your take on you as a global company. There's you, but not you. Exactly. Look, I think that the challenge is, unfortunately, that Europe has taken a different path where they want to regulate before they know what to regulate, while in the US we've had the...

preference of being, you know, let it play out a little bit and see whether it needs to be regulated. I think in general, like, you know, I am in, I'm not an anarchist. I think some rules are helpful, but in general, obviously you want to give, and we need to make sure that the democratic world is ahead in development of AI from the non-democratic worlds. It's very important that we continue supporting it and don't over-regulate it too early. There are a few simple things that one should do. A simple rule that we've suggested in Brussels is

is maybe it should be legally obliged that if you communicate with someone on the screen, at least you have to tell if it's an AI or a human. There's basic rules, and obviously people would fraud that anyway, but there's basic rules that we can apply that could make common sense, that could make sense to pursue already. But other than that, I would be on the side of please allow us to innovate and push the envelope and see what the technology can do before we jump into regulating.

Sebastian, it's great to have you. I'm sure many in the market are expecting to see a bit more of you in 2025. Sebastian Szomankowski is partner CEO there.

Now, Walmart's financial services company, known as One, is set to lead a funding round of over $300 million, putting it at a valuation of, get this, $2.5 billion. Sources say the world's largest retailer is seeking to push into the financial services sector across its nearly 3 million monthly active users, which could pose a threat even more so to those traditional banks. One is an independent company that sits outside Walmart, while the retailer still maintains control.

Coming up, we're going to be joined by Index Ventures partner, Nina Achadjian, to talk about the IPO outlook for 2025, including, of course, Service Titan that they backed. We're still waiting on that opening trade. This is Bloomberg Technology. 89% of business leaders say AI is a top priority, according to research by Boston Consulting Group. But with AI tools popping up everywhere, how do you separate the helpful from the hype? The right choice is crucial, which is why teams at Fortune 500 companies use Grammarly.

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Join Bloomberg in Atlanta or via live stream on February 11th for The Future Investor, Finding the Opportunities. This 2025 event series will examine how companies are investing in their businesses to create efficiencies, innovate their products and services, and improve the customer experience. This series is proudly sponsored by Invesco QQQ. Register at BloombergLive.com slash Future Investor Atlanta.

For us, this is our life's work. We've put over a decade into building this business. We think about this business for years and decades to come. And we're just excited for this next chapter in our journey where we get to partner with long-term investors who want to support that journey with us.

That was Service Titan CEO speaking with us earlier, Ara Medassian. And someone who will be keeping a close eye on how those shares trade at the open and indeed what the long-term trajectory of the business is, Nina Achadyan, partner at Index Ventures, long-term investor in Service Titan. And I mean...

Is this spelling the way of things to come in 2025? Strong businesses will get a good exit? Well, Caroline, thanks for having me. It's great to be here. And we're really excited to celebrate Service Titan's IPO today. I think that there's a lot of positive signs on the macro. And also, even if you look back in 2024, we've had

a handful of successful tech IPOs. We have a new administration going forward, maybe some different regulation around AI and M&A. And so we hope that this will be a tailwind for a great crop of other fantastic private companies to go public. Nina, take us back to the journey of how it started with ServiceTitan. What were the key learnings from having made that first check into them and their trajectory since?

Well, at INDEX, when we make investments and we try to invest as early as possible, it is really all about the entrepreneurs. And it's hard to find a more mission-driven set of co-founders than Ara and Vahe, who, as they shared, really built this business to solve a problem that their dads had.

And then they realized that this market was absolutely enormous and actually one of the backbones of America. And what really drives them is bringing cutting edge technology, like, for example, now even AI to some of these industries that were very much forgotten by technology for a very long time.

A lot of them haven't been forgotten. Wizz, cyber security, for example, another tailwind, I'm sure, unfortunately, because we keep seeing more and more upending of whether people are trying to get money from us, trying to be able to penetrate businesses in certain ways. What are the other tailwinds going into 2025?

Yeah, well, I think that identity is going to be really important. You know, everybody is talking about these AI agents, and you can imagine how important it's going to be to actually prove you are a human being and the person that you say you are. So, for example, one of our portfolio companies, Persona,

that started doing KYC for a lot of crypto and fintech companies is now being used by some of the leading edge AI companies to make sure that the person that is using the LLM on the other side is actually who they say they are. And so I think we'll start to see a lot more companies like this really in the wake of the incredible technological shift that AI has brought to the world. Not all eyeball scanners as a world coin, but I'm interested, Nina, about

some of the valuations that you're seeing on these generative AI, AI adjacent businesses. Are they still incredibly heady? Are you still able to get in any decent price?

You know, the valuations are still pretty high for AI, and it's definitely a tale of two cities. Whether you're an AI company, you get a premium on evaluation. And if you're not, you know, it's more the traditional SaaS metrics. But I think 2025 is going to be all about show me the ROI of investing and buying AI. And that's why I think a lot of companies that are industry-specific AI solutions will probably have

a front row seat to being able to demonstrate how they have embedded AI into their value proposition for their end customers that has either helped them generate revenue or save costs. And so it's going to be interesting to watch how those numbers come out in 2025 on ROI. And there's been a lot of hand-wringing around that. And a lot of people trying to say, just show me. When you hear nonstop agentic AI,

Are you slightly, this is a hype, or are you actually like, look, there is real productivity to be had here and we're going to show you?

Well, I think you always have to think of investments and trends as bottoms up and tops down. You know, tops down, we got the foundational models and the LLMs, which have been absolutely incredible. And I think 2023 and 2024 have all about been, you know, how does the dust settle on how we use this technology? And then bottoms up is starting really with a customer problem. What is the problem you're willing to solve for your customer and how much are they willing to pay you? And I think we're still in the early innings of that.

And I think that will be the future of AI investments in the next two years. Nina, Chadian, it's going to be a busy 2025. Come back, join us. But congratulations on the day with Service Titan, partner at Index Ventures. We appreciate it. Now it's time for Talking Tech. And first up, Huawei's electric vehicle partner, Series Group. It's considering a second listing in Hong Kong. That's according to people familiar with the matter. The company is said to have been speaking to prospective advisors about a potential share sale that could help it raise more than a billion dollars.

Plus, President-elect Trump has given an interview to Time magazine after, of course, he's been named the person of the year for the second time. Wide-ranging conversation, but it did touch on subjects from geopolitics to EVs, in which he said he's a big fan of them, but says the EVs mandate is a disaster. This after Bloomberg actually spoke to Lucid CEO Peter Wallinson, who says that President-elect Trump could be a tailwind for autos in the US. Take a listen.

I think that both Trump and Elon Musk are very accomplished businessmen. And this, you know, there is a business imperative for jobs in America. And what we're doing is creating great jobs, high-tech jobs in automotive. Take away EVs, just, it's a car. It's automotive jobs in middle America. Great, high-quality, high-tech jobs.

Peter Wallinson there. And Elon Musk has become the first ever person in the world to reach $400 billion in net worth. This after reports of an insider share sale of his SpaceX, of course, boosted his net worth, we understand, by $50 billion. And, of course, the shares of Tesla have rallied to all-time highs on Wednesday. Coming up, Adobe not at all-time highs, quite the reverse, but down by 10%, 11%. Disappointing in terms of a weaker sales outlook than had been anticipated.

We'll dig in. This is Bloomberg Technology. Check out shares of Adobe, significantly lower today after the company posted what is being seen as disappointing sales forecasts, underscored by this rising competition from AI startups. Let's bring in Brodie Ford, who, I mean, $30 billion has been wiped out of the market cap on one day alone. It's down for the year. They cannot get this AI adoption to bear fruit for the investor base.

The question for every SaaS company this year has been, you know, is AI going to be a tailwind or is it going to disrupt your business? And the constant fear for Adobe has been that, hey, these kind of newer, lightweight tools can come out. And if you can generate something, are you going to need to pay for as many Photoshop licenses? And investors have really ping-ponged on that idea of whether they think it's a disruptor or whether it's a tailwind for Adobe. And so when you see, you know,

every cloud vendor out there having their own photo and video models and it's such a competitive market, folks are getting more anxious about Adobe. They're anxious about Sora being in people's hands, whereas the latest innovations from Firefly in terms of video generation is going to take until 2025. So how can they say the subscriptions are going to go higher? This is just perhaps a little bit of natural caution in our numbers.

Yeah, what Adobe has consistently said is right now we are optimizing for adoption. They have a bit of a reputation with their user base of charging a lot for things, and they certainly don't want to reinforce that. And so they have been really saying that we're going to optimize, make sure everyone's using our stuff before we jack up the prices. And investors are saying, whoa, will you ever be able to get that pricing leverage here? That's the big investor anxiety.

But customers, there seems to be a disconnect because the CEO is very buoyant. We're also seeing customers saying that they love it. It really is just the investor base that remains unswayed. Yeah, Adobe's general thesis here, which makes sense to me, is that if you're already using a product like Photoshop, you want an AI tool that's right in there, that you can just circle Caroline and say, you know...

add a different chair or add a different background. Less time. You don't want to have to get the open AI plug-in. But the question is whether people are going to pay more for that. I think with creative software, maybe the moat is lower. If you're thinking about a Salesforce or Microsoft

The fact your data is all in there, that's hard to replicate. But if you're creating something, an image from, you know, requires less context, maybe the switching is more likely for users. More festive sweaters. That's what I'd switch out. Brody Ford in his festive sweater. We really appreciate it. Meanwhile, sticking with earnings, Broadcom set to report fourth quarter results after the closing bell today. Investors are hoping that the company really may show that outperformance in their stock

is actually showing in terms of AI demand for its networking chips. Kunjan Savani is with us, Bloomberg Intelligence. They rallied hard yesterday on the news, the interpretation that they're going to be working closer with Apple on chips going forward. Kunjan, can they vindicate the 60% run-up?

I mean, they are for surely set up for that. You know, we again expect a strong 4Q driven by a seasonal iPhone ramp in their wireless segment, sequential strong growth in AI revenues and VMware, and finally the non-AI chip business turning the corner slowly. We think the focus will be on two key AI metrics. One is the 1Q outlook. There have been some concerns of like a flattish or a low single-digit growth, and we're

there's a lot of expectation of getting a new full year fiscal AI guide. I think if they come up with that guide above the street, that would be really good for the stock. Okay, talk to us about really where the customer base is coming from and how diverse that looks, Kanjan.

Yeah, so I mean, look, as a whole company, they're very diverse, about 40% from software and the rest from chips. But the focus right now is all on the custom side, which is the AI revenues, right? So on the custom side, they have been expanding the customer base. Right now, it's driven primarily by one large TPU customer. But as we go into 2025, we have the second customer ramping and beyond 2025,

the rest of the customers ramping as well. So we see the diversification getting better and better over time. It really has been exposed to the best and the worst of the chip sectors of late. We'll see which one bears out today. Kunjan Savani of Bloomberg Intelligence, all things Broadcom. Now, we're also going to be keeping a close eye. What's happening with Intel as well? Keep an eye on those particular shares as we anticipate, well, a 1.5%

higher guide at the moment. Intel executives say they could see us probably selling some of our position in Mobileye over time. That is currently what's being articulated. The CFO is saying that there's going to be a big reduction

in force that is currently underway. They plan to ultimately take Altera public, the CFO is saying, and they're going to be bringing in financial partners for that Atara unit. We're getting more guidance from the executives and how they look to sell more of the mobilized stake over time. This is at a Barclays conference and we really are starting to see about a separation of the foundry...

Still an open question, according to the co-CEO at Zinsner. He used to be, of course, a CFO. Now, that does it for this edition of Bloomberg Technology. All things chips, all the time. You don't want to miss out on Broadcom's numbers after the bell today, but you also don't want to forget to check out on our podcast. You can find it on the terminal as well as online on Apple, Spotify and iHeart. This is Bloomberg Technology.

Join Bloomberg in Atlanta or via live stream on February 11th for The Future Investor, Finding the Opportunities. This 2025 event series will examine how companies are investing in their businesses to create efficiencies, innovate their products and services, and improve the customer experience. This series is proudly sponsored by Invesco QQQ. Register at BloombergLive.com slash Future Investor Atlanta.